[Newsbot]

Filibuster Cartoons
Title: Milk the rich! (click to view)
Date: August 2, 2010
You may remember that one of the first things President Bush did in office was pass a flurry of sweeping tax cuts, many of which specifically targeted the wealthiest subset of the America population. The cuts contained a sunset clause, and were renewed once, in Bush's second term, but now have expired once again. Should they be renewed a second time?

A lot of Democrats say no, including President Obama. He would like to see some elements of the cuts preserved, but only those that affect middle class Americans. For the wealthy, hike away, he says. Republicans, of course, are opposed to any hikes for anyone, so doctrinal is their support for tax cuts in any and all contexts.

We're a long way away from the first term of the Bush administration, however, and the glory days of surplus revenue. The US is now in severe, and ever-growing debt, a crisis which nearly everyone — especially the voters — agrees should be one of Washington's top priorities to adress. Debt is, of course, caused by deficit spending, while deficit spending is caused by a lack of usable cash in the government budget. A tax raise for the wealthy seems, in many ways, the easiest and most immediate way to address the problem; more taxes equals more revenue right away, billions and billions, in fact.

The Republican counter-proposal is more long-term and speculative. If taxes are cut for all Americans, including the wealthy, people will be more willing to spend spend spend, and that will stimulate economic growth for the nation as a whole — as well as bring in increased revenue through sales taxes and other after-purchase deductions. We cannot jack up taxes on the rich, they say, because that would compromise the much-beloved GOP "trickle down" theory, which postulates that the spending habits of the top 10% eventually results in a downward flow of jobs and sales for the merchants and laborers in the lower classes.

Democrats think this is nuts, and say America can't afford to take chances at a time like this. And indeed, if pressed, Republicans will usually concede that tax cuts are only part of the solution, and that massive spending cuts will need to be implemented as well, if we want to make a serious dent in the national debt. Problem is, spending cuts — especially massive ones — are much easier said than done. So why not just take the path of least resistance?

[BartSimpson]

I say let the tax cuts expire completely and then the 15% of the poorest Americans who didn't have to pay taxes at all under Bush will be back to paying their fair share and they'll be proud to be helping Obama make America a new worker's paradise.

[Misthiocracy]

Since 47 per cent of Americans pay zero income tax, shouldn't THEY be the target of new tax hikes?

[DerbyX]

http://www.newsweek.com/2010/08/01/rais ... ident.html

Quote:

For the last few months, we have heard powerful, passionate arguments about the need to cut America’s massive budget deficit. Republican senators have claimed that we are in danger of permanently crippling the economy. Conservative economists and pundits warn of a Greece-like crisis, when America can borrow only at exorbitant interest rates. So when an opportunity presents itself to cut those deficits by about a third—more than $300 billion!—permanently and relatively easily, you would think that these very people would be in the lead. Far from it.

The Bush tax cuts remain the single largest cause of America’s structural deficit—that is, the deficit not caused by the collapse in tax revenues when the economy goes into recession. The Bush administration inherited budget surpluses from the Clinton administration. What turned these into deficits, even before the recession? There were three fundamental new costs—the tax cuts, the prescription-drug bill, and post-9/11 security spending (including the Iraq and Afghanistan wars). Of these the tax cuts were by far the largest, adding up to $2.3 trillion over 10 years. According to the Congressional Budget Office, nearly half the cost of all legislation enacted from 2001 to 2007 can be attributed to the tax cuts.

Those cuts are set to expire this year. The Republicans say they want to keep them all, even for those making more than $250,000 a year (less than 3 percent of Americans). They say that higher taxes will hurt the recovery. But for months now they have been arguing that the chief threat to the economy is our gargantuan debt and deficit. That’s what’s scaring consumers, creditors, and businesses. Given a chance to address those fears by getting serious about deficit reduction, though, they run away. Look by contrast at British Prime Minister David Cameron, a genuine fiscal conservative. To deal with his country’s deficit, which in structural terms is not so different from America’s, he concluded that he would have to raise taxes as well as cut spending.

The Democrats, for their part, are also running scared, proposing to keep all the tax cuts except those affecting the very rich. But they were opposed to these tax cuts in 2001 and 2003. If they were a bad idea when budget deficits were small, why are tax cuts a good idea when deficits are in the $1.3 trillion range?

The idea that the average American is overtaxed is a nice piece of populist pandering. In fact, federal taxes as a percentage of the economy are at their lowest level since the presidency of Harry Truman. Chuck Marr and Gillian Brunet of the Center on Budget and Policy Priorities have calculated that a family of four at the exact middle of the income spectrum will pay only 4.6 percent of its income in taxes. Remember, almost half of the country pays no income taxes at all. The top 3 percent of Americans contribute almost 50 percent of federal income taxes.

The simple fact is this: all the Bush tax cuts were unaffordable. They were an irresponsible act of hubris enacted during an economic boom. Conservatives thought they would force us to shrink the government. But with Republicans controlling the White House and both houses of Congress, did reduced taxes cause reduced spending? No, they led to ever-increasing borrowing and a ballooning deficit.

We have one of the smallest governments among all the rich countries in the world. Yet we refuse to pay for it. (Yes, health-care spending is the big exception and, yes, we will have to get those costs under control.) I understand the fear that this is not a good time to raise taxes. But the impact of marginal shifts in tax rates on growth is pretty unclear. Clinton raised taxes in 1992 and ushered in a period of extraordinarily robust growth. Bush cut taxes massively in 2001 and got meager growth in return. Three tax cuts enacted since the financial crisis have done little to spur growth. In any event, if timing is the issue, Congress could extend the tax cuts for a year but then let them expire. Better yet, spend money on far more efficient ways to spur job creation, such as tax credits for jobs, which the CBO estimates would create four to six times as many jobs as would tax cuts.

I don’t like our current tax system. It’s unwieldy, taxes the wrong things (income instead of consumption), and is filled with loopholes that are legalized corruption. But we are not going to create the perfect tax code today. We have in front of us a simple, easy way to bring America’s fiscal house in order, reduce our dependence on foreign borrowing, restore U.S. credibility and power, and give us a stable revenue base from which to make key investments for future growth. All we need is for Congress to do what it does so well—nothing.

[davidstvz]

Did we forget one option? Cut spending instead of raising taxes? As if that will ever happen.

[Zipperfish]

In Class Warfare, Guess Which Class Is Winning

Quote:

Mr. [Warren] Buffett compiled a data sheet of the men and women who work in his office. He had each of them make a fraction; the numerator was how much they paid in federal income tax and in payroll taxes for Social Security and Medicare, and the denominator was their taxable income. The people in his office were mostly secretaries and clerks, though not all.

It turned out that Mr. Buffett, with immense income from dividends and capital gains, paid far, far less as a fraction of his income than the secretaries or the clerks or anyone else in his office. Further, in conversation it came up that Mr. Buffett doesn’t use any tax planning at all. He just pays as the Internal Revenue Code requires. “How can this be fair?” he asked of how little he pays relative to his employees. “How can this be right?”

Even though I agreed with him, I warned that whenever someone tried to raise the issue, he or she was accused of fomenting class warfare.

"There’s class warfare, all right," Mr. Buffett said, "but it's my class, the rich class, that’s making war, and we’re winning."

[BartSimpson]

davidstvz wrote:

Did we forget one option? Cut spending instead of raising taxes? As if that will ever happen.

Exactly. +1 - Welcome to CKA!

[DerbyX]

We can start by eliminating 4 full carrier battle groups, downsizing the military by a full 10% and withdrawing all US forces currently occupying foreign land.

[mentalfloss]

DerbyX wrote:

We can start by eliminating 4 full carrier battle groups, downsizing the military by a full 10% and withdrawing all US forces currently occupying foreign land.

Hey, that reduces a hell of a lot of spending!

[BartSimpson]

DerbyX wrote:

We can start by eliminating 4 full carrier battle groups, downsizing the military by a full 10% and withdrawing all US forces currently occupying foreign land.

We? Since when are you a US citizen?

[BartSimpson]

mentalfloss wrote:

DerbyX wrote:

We can start by eliminating 4 full carrier battle groups, downsizing the military by a full 10% and withdrawing all US forces currently occupying foreign land.

Hey, that reduces a hell of a lot of spending!

Especially as Derby's a Canadian.

[DerbyX]

BartSimpson wrote:

DerbyX wrote:

We can start by eliminating 4 full carrier battle groups, downsizing the military by a full 10% and withdrawing all US forces currently occupying foreign land.

We? Since when are you a US citizen?

I meant "you". I guess I made a grammatical error.

[Proculation]

davidstvz wrote:

Did we forget one option? Cut spending instead of raising taxes? As if that will ever happen.

Great first post

Welcome !

[commanderkai]

One of my concerns about taxing the rich is that the rich commonly have the disposable income to move away, or have the various connections and accountants to find tax loopholes to escape major tax increases.

The group of wealthy that is most affected by tax increases are not the excessively wealthy, but working professionals and small/medium sized business owners. They're usually hit with the burden of tax increases, and either will cut down on spending on luxuries for personal use, or they slow down expansion plans/cutting expenses.

[Robair]

Zipperfish wrote:

In Class Warfare, Guess Which Class Is Winning

Quote:

Mr. [Warren] Buffett compiled a data sheet of the men and women who work in his office. He had each of them make a fraction; the numerator was how much they paid in federal income tax and in payroll taxes for Social Security and Medicare, and the denominator was their taxable income. The people in his office were mostly secretaries and clerks, though not all.

It turned out that Mr. Buffett, with immense income from dividends and capital gains, paid far, far less as a fraction of his income than the secretaries or the clerks or anyone else in his office. Further, in conversation it came up that Mr. Buffett doesn’t use any tax planning at all. He just pays as the Internal Revenue Code requires. “How can this be fair?” he asked of how little he pays relative to his employees. “How can this be right?”

Even though I agreed with him, I warned that whenever someone tried to raise the issue, he or she was accused of fomenting class warfare.

"There’s class warfare, all right," Mr. Buffett said, "but it's my class, the rich class, that’s making war, and we’re winning."

I'd give you a positive rep if you didn't already have more than your share.
Decent cut and paste!