Buffett rule won’t close federal deficit

April 14, 2012


— Here we go again.

At the beginning of his presidency, Barack Obama argued that the country’s spiraling debt was largely the result of exploding health care costs. That was true. He then said the cure for these exploding costs would be his health care reform. That was not true.

It was obvious at the time that it could never be true. If government gives health insurance to 33 million uninsured, that costs. Costs a lot. There’s no free lunch.

Now we know. The Congressional Budget Office’s latest estimate is that Obamacare will add $1.76 trillion in federal expenditures through 2022. And, as one of the Medicare trustees has just made clear, if you don’t double count the $575 billion set aside for the Medicare trust fund, Obamacare adds to the already crushing national debt.

Three years later, we are back to smoke and mirrors. This time it’s not health care but the Buffett Rule, which would impose a minimum 30 percent effective tax rate on millionaires. Here is how Obama introduced it last September:

“Warren Buffett’s secretary shouldn’t pay a (higher) tax rate than Warren Buffett. ... And that basic principle of fairness, if applied to our tax code, could raise enough money” to “stabilize our debt and deficits for the next decade. ... This is not politics; this is math.”

OK. Let’s do the math. The Joint Committee on Taxation estimates this new tax would yield between $4 billion and $5 billion a year. If we collect the Buffett tax for the next 250 years — a span longer than the life of this republic — it would not cover the Obama deficit for 2011 alone.

As an approach to our mountain of debt, the Buffett Rule is a farce. And yet Obama repeated the ridiculous claim again this week. “It will help us close our deficit.” Does he really think we’re that stupid?

Hence the fallback: The Buffett Rule is a first step in tax reform. On the contrary. It’s a substitute for tax reform, an evasion of tax reform. In three years, Obama hasn’t touched tax (or, for that matter, entitlement) reform, and clearly has no intention to. The Buffett Rule is nothing but a form of redistributionism that has vanishingly little to do with debt reduction and everything to do with re-election.

As such, it’s clever. It deftly channels the sentiment underlying Occupy Wall Street (original version, before its slovenly, whiny, aggressive weirdness made it politically toxic). It perfectly pits the 99 percent against the 1 percent. Indeed, it is OWS translated into legislation, something the actual occupiers never had the wit to come up with.

Clever politics, but in terms of economics, it’s worse than useless. It’s counterproductive. The reason Buffett and Mitt Romney pay roughly 15 percent in taxes is that their income is principally capital gains. The Buffett Rule is, in fact, a disguised tax hike on capital gains. But Obama prefers to present it as just an alternative minimum tax because 50 years of economic history show that raising the capital gains tax backfires: It reduces federal revenues, while lowering the tax raises revenues.

No matter. Obama had famously said in 2008 that even if that’s the case, he’d still raise the capital gains tax — for the sake of fairness.

For Obama, fairness is the supreme social value. And fairness is what he is running on — although he is not prepared to come clean on its price. Or even acknowledge that there is a price. Instead, Obama throws in a free economic lunch for all. “This is not just about fairness,” he insisted on Wednesday. “This is also about growth.”

Growth? The United States has the highest corporate tax rate in the industrialized world. Now, in the middle of a historically weak recovery, Obama wants to raise our capital gains tax to the fourth highest. No better way to discourage investment — and the jobs and growth that come with it.

Three years ago, Obama promised universal health care that saves money. Today, he offers a capital gains tax hike that spurs economic growth. This is free-lunch egalitarianism.

The Buffett Rule redistributes deck chairs on the Titanic, ostensibly to make more available for those in steerage. Nice idea, but the iceberg cometh. The enterprise is an exercise in misdirection — a distraction not just from Obama’s dismal record on growth and unemployment but, more importantly, from his dereliction of duty in failing to this day to address the utterly predictable and devastating debt crisis ahead.

— Charles Krauthammer is a columnist for Washington Post Writers Group.


Abdu Omar 3 years, 6 months ago

The problem, Chuck, is that the republicans do not offer an alternative health care plan, and they refuse to raise taxes on the wealthy. Where does that make sense? They want to take away the entitlements for the elderly, and have no plan for their medical care except to lower it. The elderly worked and paid for their care in a unique way and now there is nothing for them? We need to seriously look at our tax plan, make it equitable between the rich and poor, and not tamper with our seniors medical care. Everyone dies, but they shouldn't be left to suffer because one of our political parties don't care about them.

Orwell 3 years, 6 months ago

Republicans, who don't need a majority to obstruct Senate action, have created the roadblock so they can have something to complain about. If you don't understand that functional reality your comments are, shall we say, unpersuasive.

Richard Heckler 3 years, 6 months ago

Voting can work

The voting process can work. Replace 90% of incumbents each voting cycle. Perhaps Occupy can get this off the ground.

I say replace all republicans with green party thinkers and 90% of democrats with new democrats each voting cycle.

Think this way..... maybe? Why do we americans vote in the right wing rich which are supported by too many of the rich to make decisions for the entire middle class and low income?

Too many of the right wing rich want to destroy the middle class so they have sent tens of millions of middle class jobs abroad with no job replacement in sight. Isn't their something wrong with this picture?

Ask yourself why do we voters tend to vote for the largest spending candidates? What good has this choice been for the USA and our local government?

Let's demand a new system and vote in Fair Vote America : http://www.fairvote.org/irv/ Demand a change on the next ballot.

Let's have public financing of campaigns. Citizens cannot afford special interest money campaigns for it is the citizens that get left out. Let citizens vote on this issue. http://www.publicampaign.org/

Bribery of elected officials and bribed officials = the most stinky of all bribery!

Flap Doodle 3 years, 6 months ago

You're going deep into your catalog of copy/paste to find this piece of drivel.

Flap Doodle 3 years, 6 months ago

The Buffet Rule is another piece of theater that the current regime is hoping will distract American voters from their fail-arama.

kochmoney 3 years, 6 months ago

You're right that it's theater. No way the Republicans would let King Grover down.

Richard Heckler 3 years, 6 months ago

Obamacare is the result of narrow minded repub thinking. Of course improving the existing scam, aka medical insurance industry, opened doors for the industry to further gouge those who can still afford some sort of medical insurance...... leaving many under insured I would assume. And did nothing for the 50-70 million who cannot afford medical insurance.

What could have happened without the new narrow minded repub party of say 33 years? Can we say a practical approach that would very good for business people and consumers alike?

Repubs have nothing better to offer. All they and their parrots have is nonsense rhetoric without substance to back up anything they spit out.

Listening to politicians on this issue is a dangerous route to accept. Listening to CEO's and lobbyists from the insurance industry is equally as dangerous as this is the source for statements coming from politicians.

Did you know the health care industry has 6 high dollar lobbyists per elected official? Do you know who is paying for these high dollar lobbyists? YOU ARE!

This is something to never forget. It is the private medical insurance industry that cancels YOUR medical insurance AFTER taking YOUR MONEY for years.

Richard Heckler 3 years, 6 months ago

Let's get practical!

Smart National Health Insurance for All will not only improve our quality of life but also our wallets. Yes we would have more expendable cash for birthdays,Christmas, vacations and investments.

Smart National Health Insurance for All cannot be cancelled

National Health Insurance does not remove competition from the actual health care industry. It will be alive and well. Profits will be based on customer service and clinic performance based on the clients experience. This is my perception of competition.

Shouldn't taxpayers have the choice of National health Insurance For All? Absolutely!

National Health Insurance would cover every person for all necessary medical care including: long term care such that cancer demands prescription drugs wellness hospital surgical outpatient services primary and preventive care emergency services dental mental health home health physical therapy rehabilitation (including for substance abuse) vision care hearing services including hearing aids chiropractic durable medical equipment palliative care * long term care.

National Health Insurance ends deductibles and co-payments. National Health Insurance would save hundreds of billions annually by eliminating the high overhead and profits of the private health insurance industry and HMOs.

National Health Insurance for All http://www.healthcare-now.org/

Doctors for Single Payer http://www.pnhp.org/

Richard Heckler 3 years, 6 months ago

Healthcare Reform Report Card

Let's Compare: Single-Payer (HR 676 and S 703) Expanded Medicare for All Vs. Proposed Healthcare “Private insurance with Public Option” http://www.healthcare-now.org/docs/spreport.pdf

http://www.pnhp.org/facts/single-payer-resources Physicians for a National Health Program

Richard Heckler 3 years, 6 months ago

In the end big debt and super duper bailouts were the results which does not seem to bother Republicans, as long as they are in power.

Repub Entitlements: In fact, by the time the second Bush left office, the national debt had grown to $12.1 trillion:

  • ENTITLEMENT - Over half of that amount had been created by Bush’s tax cuts for the very wealthy.

  • ENTITLEMENT - Another 30% of the national debt had been created by the tax cuts for the wealthy under Presidents Reagan and George H.W. Bush.

• ENTITLEMENT - Fully 81% of the national debt was created by just these three Republican Presidents. http://www.dollarsandsense.org/archives/2010/0111orr.html

Repub ENTITLEMENT - Starting in 2003, George W. Bush destroyed the world economy by encouraging U.S. banks to make loans to those who could not afford them, through schemes such as the "American Dream Downpayment Initiative".

Also through the destruction of oversight, such as lawsuits to prevent state securities laws from being enforced on Bush's watch.

Once Bush's policies led to their inevitable result of economic collapse, the United States found itself in a situation where it had to take on debt in order to restore the economy.


handley 3 years, 6 months ago

It is not about closing the debt it is about the wealthy paying their fair share. That will raise confidence for the middle class.

cato_the_elder 3 years, 6 months ago

"As an approach to our mountain of debt, the Buffett Rule is a farce. And yet Obama repeated the ridiculous claim again this week. “It will help us close our deficit.” Does he really think we’re that stupid?"

Given the number of uninformed, deluded people who voted for him the first time, I have no doubt that he does.

just_another_bozo_on_this_bus 3 years, 6 months ago

Gawd, Chuck, this is nothing but spin and half (at best) truths.

But one truth he leaves out-- if Romney is elected, the rich will get even richer, working/middle class folks will get poorer and the deficit will still continue to grow. And the scenario is only slightly better under a second Obama administration.

kochmoney 3 years, 6 months ago

Any solution that makes a problem slightly less worse but doesn't completely solve it should be rejected in favor of doing nothing and making the problem much worse.

imastinker 3 years, 6 months ago

I wonder what this will do to the stock market - everyone selling to lock in gains at the lower rate.

jafs 3 years, 6 months ago

Sure, but how little are people willing to sell for, in order to get a modest tax decrease?

The lower the price, the less they wind up with after the sale, right?

One would have to do a very accurate calculation to determine the best price/tax ratio.

Flap Doodle 3 years, 6 months ago

In former Soviet Union, little children can only copy/paste once a year because decadent American planet-killer is using waaaaay more than fair share of copy/paste. (from a source)

Richard Heckler 3 years, 6 months ago

Paul Krugman - Economist

April 10, 2012, 1:25 pm Another Bogus Attack on Health Reform

Oh, boy. It turns out that the WaPo featured on its front page a report by Charles Blahous of the (yes, Koch-funded) Mercatus Center — although the Post describes him as a Medicare trustee, giving the impression that this is somehow an official document — claiming that the Affordable Care Act will actually increase the deficit. Jonathan Chait does the honors:

You may wonder what methods Blahous used to obtain a more accurate measure of the bill’s cost. The answer is that he relies on a simple conceptual trick. Medicare Part A has a trust fund. By law, the trust fund can’t spend more than it takes in. So Blahous assumes that, when the trust fund reaches its expiration, it would automatically cut benefits.

The assumption is important because it forms the baseline against which he measures Obama’s health-care law. He’s assuming that Medicare’s deficits will automatically go away. Therefore, the roughly $500 billion in Medicare savings that Obama used to help cover the uninsured is money that Blahous assumes the government wouldn’t have spent anyway. Without the health-care law, in other words, we would have had Medicare cuts but no new spending on the uninsured. Now we have the Medicare cuts and new spending on the uninsured. Therefore, the new spending in the law counts toward increasing the deficit, but the spending cuts don’t count toward reducing it.

So saving Medicare money isn’t a deficit reduction, because Medicare is going to run out of money and cut benefits anyway. Right?

OK, this is crazy. Nobody, and I mean nobody, tries to assess legislation against a baseline that assumes that Medicare will just cut off millions of seniors when the current trust fund is exhausted. And in general, you almost always want to assess legislation against “current policy”, not “current law”; there are lots of things that legally are supposed to happen, but that everyone knows won’t, because new legislation will be passed to maintain popular tax cuts, sustain popular programs, and so on.

To take the really big example: on current law, the whole of the Bush tax cuts will expire at the end of this year. If that’s your baseline, then plans like the Ryan budget, which not only maintains those tax cuts but adds another $4.6 trillion to the pot, are wildly deficit-increasing — in fact, the Ryan plan would be a huge budget-buster even if hell freezes over and his secret loophole-closers turn out to be real. Somehow, though, I suspect we won’t get a front-page WaPo story about that insight.

So this is basically a sick joke that doesn’t pass the laugh test. Unfortunately, it seems that some news organizations don’t have mandatory laugh-testing.


kochmoney 3 years, 6 months ago

Very good. Keep it up. Next you can call him a loser who takes Ron Paul wayyyy too seriously.

Richard Heckler 3 years, 6 months ago

How much is the sick U.S. health care system costing you? http://www.dollarsandsense.org/archives/2008/0508harrison.html

By Joel A. Harrison

Paying through the Taxman

The U.S. health insurance system is typically characterized as a largely private-sector system, so it may come as a surprise that more than 60% of the $2 trillion annual U.S. health care bill is paid through taxes, according to a 2002 analysis published in Health Affairs by Harvard Medical School associate professors Steffie Woolhandler and David Himmelstein.

Tax dollars pay for Medicare and Medicaid, for the Veterans Administration and the Indian Health Service. Tax dollars pay for health coverage for federal, state, and municipal government employees and their families, as well as for many employees of private companies working on government contracts.

Less visible but no less important, the tax deduction for employer-paid health insurance, along with other health care-related tax deductions, also represents a form of government spending on health care.

It makes little difference whether the government gives taxpayers (or their employers) a deduction for their health care spending, on the one hand, or collects their taxes then pays for their health care, either directly or via a voucher, on the other.

Moreover, tax dollars also pay for critical elements of the health care system apart from direct care—Medicare funds much of the expensive equipment hospitals use, for instance, along with all medical residencies.

All told, then, tax dollars already pay for at least $1.2 trillion in annual U.S. health care expenses. Since federal, state, and local governments collected approximately $3.5 trillion in taxes of all kinds—income, sales, property, corporate—in 2006, that means that more than one third of the aggregate tax revenues collected in the United States that year went to pay for health care.

Recognizing these hidden costs that U.S. households pay for health care today makes it far easier to see how a universal single-payer system—with all of its obvious advantages—can cost most Americans less than the one we have today.

Medicare must exist in the fragmented world that is American health care—but no matter how creative the opponents of single-payer get, there is no way they can show convincingly how the administrative costs of a single-payer system could come close to the current level.

kochmoney 3 years, 6 months ago

How many Nobel Prizes for economics have you won, math?

Richard Heckler 3 years, 6 months ago

Conservatives and liberals may disagree about the constitutionality of the individual mandate requiring all uninsured Americans to buy health insurance from private companies or pay a penalty to the IRS.

But there is no debate about whether single-payer Medicare For All would be constitutional. No one — not even the most hard core, right-wing libertarians — disputes that the federal government has the constitutional authority to tax all Americans to pay for Medicare-style health insurance for all, as it pays for Medicare for everyone over 65.


Armstrong 3 years, 6 months ago

I have to hand it to Obama, stupid, trivial garbage like this is a great distraction from his horrid record ( the one he can't run on you know economy, unemployment, failed stimulus X 2, foreign policy, .... ). This goes back to the age old tradition of ' If facts don't work baffel 'em with B S "

sciencegeek 3 years, 6 months ago

Oh, PUH-LEEEZE! Because it doesn't solve the entire problem, it isn't worth doing? Give me a break!

And BTW--the administrative costs of Medicare have been known to be much less than those of private insurers, on the order of 11% versus 26%. Medicare doesn't have to produce enough profit to pay shareholders, overpaid CEOs, lobbyists and members of Congress. What's so hard to understand?

Armstrong 3 years, 6 months ago

Ok, name 1 Govt agency that does not lose money ? Name 1 Govt agency concerned about it's bottom line. Name 1 Govt agency that runs efficiently. Wake up

pace 3 years, 6 months ago

I don't see the argument convincing me the wealthiest should not pay a fair share of taxes. I hear it won't be a miracle cure, The wealthiest paying their fair share will help more than the middle class carrying the rich mans water. The argument that billionaires should get out of their tax bill is insulting. Where is the banner, Asking billionaires to pay fair tax won't cure cancer. It is a cancer to exclude the wealthiest from being responsible. Why should they be exempt from taxes? The "job creators" doesn't fly that wide or high. It is a lie.

pace 3 years, 6 months ago

You prove you can be fooled and a fool. You think the billionaires should not pay a fair share of tax because they have so much money. Smart as a rock. Yet you can't even dribble out the lie that by giving them the free pass get out of paying taxes will create all these job. No sound reason they should not pay a fair share.

pace 3 years, 6 months ago

Boo hoo, no, billionaires don't pay their fair share of the taxes. You claim because they have so much money they deserve to pay a lower rate. That is your stand. I think they deserve to be treated as responsible adults. The trickle down theory is bull.

pace 3 years, 6 months ago

Is it possible you don't understand the difference between amount and rate? The only way your comments make any sense at all, is you don't understand what rate refers to. I don't even want to put a lol on that. it is just sad.

pace 3 years, 6 months ago

So you have been caught denying that many billionaires pay a lower rate than working families. You now claim I don't pay taxes. Why do the conservatives cases resort to lies? It is just demeaning to any sound argument they might make. It is sad to remind you that you were defending their lower rate because you thought they created jobs. It is very stupid to use the accusation that I don't pay taxes because I understood the difference between billionaires paying a lower rate compared to what quantative amount they pay. I don't actually feel sorry for you. You and I know that your accusation is just your sidestep, a falsehood, a lie, now you wish we can argue that you were joking?being facetious? really meant it? Baloney. Billionaires paying a lower rate than working families DOESN"T create jobs.

pace 3 years, 6 months ago

I never said " the wealthy don't pay taxes" if you can't discuss an issue without lying about what I said, you should remove yourself from the discussion or accept being branded as a liar.

pace 3 years, 5 months ago

I don't see the argument convincing me the wealthiest should not pay a fair share of taxes. I still claim the wealthiest don't pay their fair share in taxes. Thank you for correcting your remarks. You are entitled to your belief that tax cuts and loop holes to the wealthiest create jobs. I do not share that faith, It is not true, I don't see the argument convincing me the wealthiest should not pay a fair share of taxes

pace 3 years, 5 months ago

You also claimed I didn't pay taxes and then claimed falsely I made statements I never made. Your argument is lie and denigration. I don't see the argument convincing me the wealthiest should not pay a fair share of taxes. I call you a liar because you made false statements about me, and changed my words. You falsely call me a liar because I have a different opinion than you about rather tax cuts, loopholes and lower rates for capital gains are fair.
I don't want blood, the Buffet rule is a beginning, if congress and senate think a flat tax is more fair and would address the deficit and if the flat tax is not set at an artificially low level based on the false idea that lower taxes for the richest magically create jobs. They have had years to put that to bill. They fight the Buffet bill but then offer nothing of substance. I don't want blood, but I don't want ruin. The trickle down theory is ruinous to working families.

Geiiga 3 years, 5 months ago

Mitt Romney last year paid 13.9% of his income in federal income taxes.

My mother, a schoolteacher, paid an effective rate of 24%.

Yeah, the rich don't pay their taxes.

pace 3 years, 6 months ago

Are you arguing for a simpler tax rate that taxes billionaires instead of giving them a pass?

I don't care to identify all the inconsistency in people or government and express my emotions. Sick of emotions and pious arguments that don't include solution. . Congress should get to work and get over their attitude.

pace 3 years, 6 months ago

It is always someone else job. Nothing stops you from writing. My guess is you haven't, too busy with the emotional blame game. Are you arguing that billionaires shouldn't be taxed fairly/ I don't care to go into institutions and take the care money from helpless dying people, as much as going into mansions and demanding people capable of paying a fair share of tax do so.

pace 3 years, 6 months ago

You were the one begging me to write Reid to fix the mess the republicans have made. You should feel capable of doing your own letter writing. All the whining that Obama isn't fixing the economy fast enough doesn't sell me. If the republicans don't take responsible action don't expect a miracle from the democrats to fix everything. Everything won't ever be fixed by the weak limp blame game. Congress should do something. It should be about jobs and homes.

pace 3 years, 6 months ago

You always want people to stop. You are so comfortable with what Claiming it is good the billionaires don't pay their fair share. Good you say in a quavering voice, hands over your ears because if you hear the truth you might have to deal with it.

jafs 3 years, 6 months ago

I love all of the workers making businesses possible and profitable, along with the customers that do the same.

pace 3 years, 6 months ago

Good for you, I never meant to be dismissive of all the small businesses, manufacturing, farms, laborers, industries, customers, young people all working at jobs and making jobs. I sometimes forget to stop and laud the real worker and contributors. We need to remember the returning vets, they are ready to rebuild their home lifes, we should be ready to work with them.

jafs 3 years, 6 months ago


My comment was for rockchalk.

pace 3 years, 6 months ago

You claim billionaires are creating jobs because they get big tax rides. That is a lie. You seem to have sincerely bought that lie. Denigrating people is your argument. You think because they have fattened their portfolios they deserve special exception from paying a fair tax. You want working people to have faith, against the numbers against the math, and you then call working families greedy. At least they aren't stupid. No, exempting billionaires from paying a fair tax is not trickling down to the working families. Their taxes are being sucked up to pay for corporate welfare rather than education, infrastructure. The numbers support that theory.

kochmoney 3 years, 6 months ago

Hypocrites because he's pushing a rule that would raise his own taxes? Um, ok.

Richard Payton 3 years, 6 months ago

Quantitative easing is being spoken in Wall Street and DC as a round 3 possible solution. Looking at the production price index instead of the consumer price index to better determine possible inflation a word that is feared for many reasons. I often wonder if China's data is as skewed as the United States data? My 12% that I and my employer pay into social security appears spent already. Now, I'm wondering if my generation will ever get to retire. Just thinking the Unites States has one of the top retirement ages in the world and we don't have health care either. We have spent so much could a flat tax or national sales tax close the deficit?

Armstrong 3 years, 6 months ago

Not at our current rate of spending and spending and spending....

Kendall Simmons 3 years, 6 months ago

And exactly what do Cloward and Piven have to do with Obama or his "brain trust"???

Cloward has been dead for over a decade while Piven has no role in the Obama administration or any relationship with him.

Heck, they wrote this strategy in 1966...when Obama was 5 years old.

Flap Doodle 3 years, 6 months ago

Speaking of the Mope and taxes: "How sincere was the president when he complained that the current system is so unfair that he, a rich guy, gets to “keep hundreds of thousands of dollars in additional income” while other parents struggle to send their kids to college? Suffice it to say that he wasn’t sufficiently bothered to resist helping himself to a loophole in the tax code that decreased his taxable income in 2011 by nearly $50,000. The Washington Free Beacon reports; President Obama and his wife, Michele, gave a total of $48,000 in tax-free gifts to their daughters, according to tax records made public on Friday. The president and his wife separately gave each daughter a $12,000 gift under a section of the federal tax code that exempts such donations from federal taxes. As if to underscore the irony of the disconnect between his words and actions, the president has been using this shelter—likely to fund his daughters’ college educations—since 2007. As the Free Beacon notes, there is nothing illegal about the president’s decreasing his tax indebtedness, but isn’t this the sort of behavior he has been militating against for the past three years? Isn’t this an example of a rich fat cat refusing to pony up his “fair share”?" http://hotair.com/greenroom/archives/2012/04/14/hypocrisy-alert-obama-used-tax-loopholes-in-2011-to-lower-his-tax-bill-2/

Fossick 3 years, 6 months ago

Simple solution: eliminate the corporate income tax and treat all capital gains as regular income to be taxed at the marginal rate.

The argument for a lower tax on dividends is quite valid: the corporation has already paid a 35% tax on the profit that is used to pay the dividend. That means that Mr. Buffet, while he pays a low personal rate, is paying that rate on money that has already been taxed once. So the argument, being as complex as the tax code, is unfortunately reduced to slogans that are as understood as they are effective, which is to say, not at all. Eliminate the corporate tax and you eliminate any argument for treating dividends differently than wages.

One huge argument you'll get from the GOP is the need to "reward" long-term investors by taxing 1-yr capital gains at a rate below short term. The present stock market is a game and ought to be treated as such - earnings from stock capital gains ought to be treated like earnings from the lottery. If you don't agree, spend a day reading the financial press and give yourself a noogie every time you read the word "play" in relation to investing in markets.

Free bonus: natural gas hit a fourth decade low in a row in Friday. There are some really nice, NYSE-listed, Kansas-based natural gas trusts one can buy at record lows. Capital gains, ftw.

jafs 3 years, 6 months ago

Most corporations don't pay anything near the nominal 35% rate on profits, due to a number of loopholes and exclusions.

And, the argument on dividends might have some validity, but for capital gains it has none, especially if they're the kind gotten by buying some stock and selling it for a profit - that should be treated as normal income and taxed at the same rate.

Also, many many things are examples of "double taxation" and more - when I take after tax income and go to a store and buy something, that gets taxed as sales, and also as income to the business, etc.

If a corporation makes money which is taxed, and then distributes it to shareholders, that's an exchange of money, just like it is if I buy something with after tax income. It's a profit to the shareholders, and should probably be taxed just like other income.

Otherwise, where do we draw the line with other money in circulation? If I buy a cup of coffee, we can tax it as income to the business, but not sales? Or once it's taxed as business income, when employees get paid, we shouldn't tax it as income to them? Etc.?

Fossick 3 years, 6 months ago

Jafs: "If a corporation makes money which is taxed, and then distributes it to shareholders, that's an exchange of money just like it is if I buy something with after tax income..."

No, it's not. When you buy a cup of coffee, you get coffee and the coffee shop gets money. That's an exchange. When the company pays a dividend, it's merely transferring money from a corporate account ultimately owned by the shareholder to a personal one owned by the shareholder. There's no exchange because the corporation gets no "value" from being owned by a particular individual nor from giving them their own money.

jafs 3 years, 6 months ago

If that were true, then corporations wouldn't have shareholders.

They get an enormous benefit from them.

Corporate structures are odd, to say the very least.

Fossick 3 years, 5 months ago

Corporate structures are odd, no doubt, but I think you misunderstand that oddity. A publicly held corporation cannot be without shareholders any more than a pet can be without an owner. Lose the owner, and Sparky is no longer a pet. He's just a dog.

Public companies have owners (hell, even the Federal Reserve has owners), but they do not get any tangible benefit from having owners. Therefore when they pay dividends, there is no 'exchange.' It's just a legal transfer of assets from one account to another.

jafs 3 years, 5 months ago

If they can't exist without the owners, then having them is a huge benefit, it seems to me.

usnsnp 3 years, 6 months ago

Let see: Republicans want to defund some of the following, NPR, AMTRACK, ART FUNDING , PLANNED PARENTHOOD, ETC. they say every little will help, so the Buffett rule will not clear up the debt, but in Republicans own words, every little bit will help. A second thing to look at is how many people that you personnaly know will be affected by this rule.

Armstrong 3 years, 6 months ago

Let see: Republicans want to defund some of the following, npr, amtrack, art funding , planned parenthood, etc

What part of you can't spend what you don't have do you still not understand. $ 15 trillion and counting. Hello ?

usnsnp 3 years, 6 months ago

And if you check the Ryan plan it continues to add to the defisit in a big way, but it gives the top 1% a whole lot of more money.

jayhawklawrence 3 years, 6 months ago

Charles Krauthammer is a liar, plain and simple but the kinds of lies he tells are very popular and he gets paid handsomely for his brand of fiction.

Here is a link to a good article which gives a history of taxes in the US.

"Today's income tax rates are strikingly low relative to the rates of the past century, especially for rich people. For most of the century, including some boom times, top-bracket income tax rates were much higher than they are today."

For more info: http://www.businessinsider.com/history-of-tax-rates

Today's Republican Party and the so called Christian Right who support them are not on the right side of history. Neither were the religious and political leaders at the time of Jesus.

The Buffet rule is about doing the right thing rather than following the example of Cayman Islands Romney and the rest of his gang. It is about changing the culture of greed and getting millions of Americans to pull their head out of the sand.

Kendall Simmons 3 years, 6 months ago

And when Eisenhower did it, how did that work out???

jafs 3 years, 6 months ago

You are extremely fortunate to have so much money that you can pay multiples of what many people make in a year's time in taxes, don't you think?

jafs 3 years, 5 months ago

There are many things that contribute to success, some of them may involve merit, but many of them are in fact luck.

Having been born to a white middle class family that valued education, with well educated parents, I consider myself very lucky - that beginning helped shape my life in a number of positive ways.

And, of course, I didn't do anything to "merit" that - it simply happened.

There are many other examples of that in most people's lives.

But, there are those of us who have been born on third base and think they hit a triple.

Kendall Simmons 3 years, 6 months ago

Are we supposed to feel sorry for you? Jealous? Impressed? Or simply think "Good for you. That means you make more money than most people do and, through your taxes, have now helped yourself and others in many ways"?

Peacemaker452 3 years, 5 months ago

Or you could simply think "What in the hell are we doing? Why is the government spending so much money that some people have to pay $65K in federal income tax and we are still borrowing money by the shipload?"

No person, no matter their income, should be paying that kind of money to the government every year.

This country has a spending problem, not an income problem.

machiavelli 3 years, 6 months ago

Making a dent in the federal deficit will require two actions:

1) Raise taxes, dramatically, for all income levels 2) Cut spending, dramatically, for all government programs

Richard Heckler 3 years, 6 months ago

If the LJW is going to publish a person like Charles Krauthammer the LJW should at least publish a person of substance such as Paul Krugman at the same time.

The Gullible Center By PAUL KRUGMAN Published: April 8, 2012

So, can we talk about the Paul Ryan phenomenon?

And yes, I mean the phenomenon, not the man. Mr. Ryan, the chairman of the House Budget Committee and the principal author of the last two Congressional Republican budget proposals, isn’t especially interesting. He’s a garden-variety modern G.O.P. extremist, an Ayn Rand devotee who believes that the answer to all problems is to cut taxes on the rich and slash benefits for the poor and middle class.

No, what’s interesting is the cult that has grown up around Mr. Ryan — and in particular the way self-proclaimed centrists elevated him into an icon of fiscal responsibility, and even now can’t seem to let go of their fantasy.

The Ryan cult was very much on display last week, after President Obama said the obvious: the latest Republican budget proposal, a proposal that Mitt Romney has avidly embraced, is a “Trojan horse” — that is, it is essentially a fraud. “Disguised as deficit reduction plans, it is really an attempt to impose a radical vision on our country.”

The reaction from many commentators was a howl of outrage. The president was being rude; he was being partisan; he was being a big meanie. Yet what he said about the Ryan proposal was completely accurate.

Actually, there are many problems with that proposal. But you can get the gist if you understand two numbers: $4.6 trillion and 14 million.

Of these, $4.6 trillion is the revenue cost over the next decade of the tax cuts embodied in the plan, as estimated by the nonpartisan Tax Policy Center. These cuts — which are, by the way, cuts over and above those involved in making the Bush tax cuts permanent — would disproportionately benefit the wealthy, with the average member of the top 1 percent receiving a tax break of $238,000 a year.

Mr. Ryan insists that despite these tax cuts his proposal is “revenue neutral,” that he would make up for the lost revenue by closing loopholes. But he has refused to specify a single loophole he would close. And if we assess the proposal without his secret (and probably nonexistent) plan to raise revenue, it turns out to involve running bigger deficits than we would run under the Obama administration’s proposals.

Meanwhile, 14 million is a minimum estimate of the number of Americans who would lose health insurance under Mr. Ryan’s proposed cuts in Medicaid; estimates by the Urban Institute actually put the number at between 14 million and 27 million.

Con't http://www.nytimes.com/2012/04/09/opinion/krugman-the-gullible-center.html?_r=1&partner=rssnyt&emc=rss

Kendall Simmons 3 years, 6 months ago

Why do you claim he's a discredited hack? Please point to some actual evidence?

kochmoney 3 years, 6 months ago

Because he stubbornly insists on misinterpreting something he said once. Also, Krugman disagrees with everything L_O stands for, so he must therefore be a "hack."

jafs 3 years, 6 months ago

Yes, I went through this once with him - I read the original article, and it didn't say what he claimed it said at all.

I wonder why he's so committed to that distortion, especially since one of his main complaints is that others lie and make things up.

kochmoney 3 years, 5 months ago

Keynesianism isn't about housing bubbles. That's a silly misinterpretation. Greenspan wasn't a Keynesian, and the very next paragraph makes the comment that "Greenspan still thinks he can pull that off" making it clear that the column was analysis of the current situation and not advice urging for a bubble. The movie analogies make perfect sense when you read the last line of the piece. "And while I like movies with happy endings as much as the next guy, a movie isn't realistic unless the story line makes sense."

The whole thing is just wishful thinking on your part.

chootspa 3 years, 5 months ago

You think Greenspan was a Keynesian? Really? You've clearly missed the large amounts of sunshine that he and Friedman would blow up each other's bums. Maybe it was obscured by the smoke from him and Ayn Rand.

jafs 3 years, 5 months ago

A quick google search arrives at the following description of Keynesian economics - it's the idea that the government has an active role in the economy, and that role is to stabilize it, by acting "counter cyclically" - that means it would try to slow the economy during boom times and stimulate it during slow times.

Thus it's really the opposite of what you claim, that it's all about propping up bubbles, and leads to more boom and bust cycles - if followed (if the theory works), it would in fact reduce those cycles, and make the economy more stable.

Whether or not it's a good idea is another question, but there's really no reason to waste time and energy on a faulty portrayal of it.

jafs 3 years, 5 months ago

That's not at all true, from my research.

The idea is to stabilize the economy.

They are also more concerned with unemployment than inflation, that's true.

But why exaggerate and distort the theory? It's not necessary to do that in order to analyze and criticize it.

Richard Heckler 3 years, 6 months ago

"The truth is that corporations wield enormous power in Congress and in state legislatures. It is hard to tell where government ends and corporate America begins: the transition is seamless and overlapping.” Justice James C. Nelson

camper 3 years, 6 months ago

What Krauthammer does not mention is the budget defecit impact if the Affordable Care act were invalidated. According to an April GAO report:

"If the legislation were thrown out, though, the forecast becomes considerably more gloomy. The report does not go into detail about the consequences of an invalidated law — but as TPM reports, it clearly implies that "if key cost-control measures in the law, and other automatic cuts to Medicare spending baked into current law, are ignored, or overridden by Congress, the implications for the national debt are vast."

Rising Governmental health care costs are a function of the rising trend of people falling out of employer provided and private insurance. This is what is putting pressure on Medicare and Medicaid.....not "Obamacare".

Armstrong 3 years, 6 months ago

Any mention of Obama's clever accounting methods ??? Any mention of the true cost of Obama care ??? If you are to believe whatever report you are reading I have land in South Lawrence to sell you and Merrill

camper 3 years, 6 months ago

I also believe that a public option would have been a better approach than the law that was passed. This would have increased coverage and increased the number of those paying into the system. This alone would have done much to relieve the budgetary pressure on Medicare and Medicaid.

jafs 3 years, 6 months ago

That's an interesting idea - I've thought it should certainly be possible to create a non-profit health insurance company.

It would be able to either offer similar benefits at a lower cost (because of the lack of need to make a profit), or better benefits at the same cost, as for profit companies.

The high cost of insurance is undoubtedly due to a number of factors, of which rising costs of health care are one, but large CEO salaries and profits are another.

jafs 3 years, 6 months ago

I don't know.

There are also advertising costs, various perks, etc.

A non-profit company could either offer the same coverage at a lower price, or better coverage at the same price - that's clear.

Remove the need to make a profit, and you reduce expenses. Lower CEO salaries/perks, and you reduce expenses. Reduce advertising costs, etc.

notaubermime 3 years, 6 months ago

Insurance profits are a problem. Insurance companies have recently been posting record profits. Insurance premiums are higher than ever, large numbers of hospitals are closing all over the country, but insurance companies have record profits?

It is also far from the only problem. An aging population, the rise of obesity-related disorders, uninsured patients who receive treatment and do not pay... the list goes on.

jafs 3 years, 6 months ago

I know those are all costs of running a business - that's self evident.

I don't know what percentages they comprise for different businesses.

Do you disagree that all of those are expenses for businesses, and that they must take in enough revenue to cover those?

And, that if a non-profit business didn't need to make profits, and paid CEO's less, and spent less on advertising, that they'd need to bring in less revenue than a for-profit business in that situation?

jafs 3 years, 6 months ago

They're all factors - the question you're posing is how much of a factor they are.

The argument that we have to pay CEO's top dollar to get the "best and the brightest" isn't very convincing to me, given the track record of many CEO's.

I'll do a little research, and see if I can find some numbers.

jafs 3 years, 5 months ago

Well, given the track records relative to compensation, many companies aren't getting their money's worth.

So, they're paying too much, in my view.

The underlying idea is that money is the only factor in attracting intelligent hard working people, I suppose, and I don't think that's true.

Are the CEO's who ran the automobile companies to the verge of bankruptcy the "best and brightest"? If so, we're all in trouble.

Given the way that contracts are often structured, even if CEO's are fired for poor performance, they make gobs of money, which gives them less of an incentive to perform well.

jafs 3 years, 5 months ago

Well, first you have to identify who the better ones are, which is a bit of a value judgement - do you want a stable, conservative, long term thinker or a cutting edge innovator, for example? A mature, seasoned veteran or a young hotshot? Etc.

Then you'd have to match your offer to their desires, which may also vary - some of them may want to work at a well established company with a track record, others at a new exciting company charting a new course, etc.

Then, in order to make sure that there is a real incentive to perform well, I'd structure the contracts without guaranteed severance packages and the like, so that their compensation was tied in some way to their performance.

Also, there are intangibles, like the company culture, values, etc. A non profit company that's trying to do some good in the world may be able to attract good management without paying too much, if they can find people who care about their mission.

For example, my wife works at Cottonwood, and the CEO there makes a small fraction of the multimillion dollar salaries some CEO's make, but she's quite good.

jafs 3 years, 5 months ago

You know, there was an interesting article in a business magazine, that analyzed CEO performance - their general conclusion was that the better CEO's actually did less.

So we have to pay people more money to do less?

camper 3 years, 5 months ago

CEO's are highly overpaid and are rewarded for short term stock appreciation...compared to other other countires. I just read a book on the subject and can supply some numbers.

Kendall Simmons 3 years, 6 months ago

Personally, I'm sick of people confusing tax rates with percent of income and with donations to the government. I'm also sick of people confusing effective tax rates with marginal tax rates.

Oddly, so many of these confused complainers wouldn't be negatively affected by tax increases on the rich. Indeed, they could be positively affected. But they apparently prefer to cut off their noses to spite their faces.

I wonder if it's because they've been illogically convinced that the rich are "job creators"...no matter how many times it's explained - even by rich business owners - that new jobs are created because of increased demand that can't be met by existing workers, NOT because of increased profits. I mean, it should be obvious that people don't become rich by hiring additional workers when they don't need them. After all, what are those new, unnecessary workers supposed to do? Sit on their thumbs and unproductively eat up those increased profits? Oh yeah...that is the way to become rich. Yeesh.

(As an aside to BAA, you might want to check out the difference between personal earnings and corporate earnings for a C corp. Buffett understands the difference. You obviously don't.)

jafs 3 years, 6 months ago

The excess monies necessary for creating a new business are huge, much more than the extra money necessary to expand a business, by simply hiring a new employee.

So, taxes would have to be dramatically slashed or raised to have much of an effect on that.

In addition, if there isn't demand for your new business, it will fail. So in addition to having the large amounts of necessary capital, you need to be willing to take a rather substantial risk to create a new business.

Right now, with demand low, high unemployment, and not a few business failures (Borders, for example) most people probably aren't taking those sorts of risks much.

jafs 3 years, 6 months ago

Well, Lawrence is a bit of an anomaly, in a few different ways.

For example, our housing market hasn't seen the dramatic drop in prices that have been happening all over the country.

In addition, even though the costs of living here are high relative to wages, lots of people still want to live here.

And, the basic point is still correct - demand is what drives all of this - somebody wouldn't expand a business, or create a new one, unless they were pretty sure there was enough demand for them to be able to make money.

So the millionaire who saves $100K/yr wont use that to start a business unless he's pretty sure it will succeed - without demand, it will fail.

Unless he's sure of that, he'll just pocket the money, buy some government bonds, etc.

jafs 3 years, 6 months ago

And, it's harder these days to get loans of all kinds, including commercial loans.

jafs 3 years, 5 months ago

Well, the argument seems to have shifted ground a bit.

I agree that the government could and should be run better, in a variety of ways.

But I don't agree that simply leaving more money in wealthy people's pockets will lead inevitably to job creation.

Demand is what drives the economy.

jafs 3 years, 5 months ago

Well, there is this little aspect of the picture that has a big effect - advertising.

It's very effective at manipulating and creating demand.

But, if you can't do that, you can't sell your products.

As you mention, most businesses fail - that means there are a lot of products out there over time that nobody wants, even with advertising, and the businesses that can't sell them go out of business.

Gregory Newman 3 years, 6 months ago

You are all right and wrong? The fact is that NAFTA/GATT has done us in. So now we are pointing the finger at each other. The Fact is Reagan re-initiated racism when he went down to Philadelphia Ms. in his first speech. Plus he raised taxes 11 times and the right plays oblivion whenever one says something against them and they pride themselves on that.

GW Bush started class warfare when he said I've got to give the people their money back, its not the governments money its the people's money. Then it was a split of $300 and $45,000.

To me Obama was trying to revenge for his momma against the insurance companies. Which should have been put on the back burner. Another fact there is a segment in society that hate Blacks just on the basis of their skin color and nothing to do with character. Folks loves to bring up Farrakhan well White people made him. You shouldn't have started it.

For the most case senario Blacks don't hate whites we are too broke to pay attention so we live among you and around you because we understand the norm and the same goes for other whites. But if a Black brings up Hannity, Limbaugh, Colter, Savage and etc. they go into a rage as if its fair. Those that agree with them are the ones that are full of anxiety and then blame Blacks and Liberals for their degredation. Yet they will not look in the mirror of their heart where lies the real issue of their fear and uncertainty

That comes from that deep belief of white male privilege. That will not work anymore immigration and all women is bringing things to an even keal. The logical thing to do is to repel NAFTA/GATT but that will not work because Wall Street has signed contracts with foreign Nations in the EU, China and India. Then we have that H-1B visa that keeps foreignors coming and then that debilitating EB-5 visa that Romney will push.

That will usher Chinese Nationals in the Nation living and working in Foreign Trade Zones. Obama is a buffer to hold it off but he has to deal with redneck Mitch McConnell who's whole purpose is to hurt Obama based on race.

Here is his quote. “that he feels his “single most important” job is to defeat President Obama in 2012:” We need to be honest with the public. This election is about them, not us. And we need to treat this election as the first step in retaking the government." Nobody can tell me about code words "this election is about them, not us." Folks the fact is that the NWO is in full affect this is bigger than Obama or Romney.

A President will never be savior or Lord. Jesus the Christ has that on lock down and he does not operate in any government or a political group or any religious denomination. He operates in individuals in spirit and in truth and they are to operate in “love, joy, peace, longsuffering, kindness, goodness, faithfulness, gentleness, and self-control?”

BiPolarWookie_w_PhD 3 years, 5 months ago

Maybe if Americans stopped eating substances that are known to cause disease and would get of their lazy bums and excersise a little, maybe healthcare costs would decrease. One could also sequence everyones genome and determine disease risks and pay accordingly. Like in a car insurance policy, higher risks like speeding tickets and DUI etc, constitutes higher insurance costs. Higher disease risks or unhelathy living would raise your premiums.

tbaker 3 years, 5 months ago

The country currently spends more borrowed money in one day than the Buffret rule would raise in a year, and this assumes some pretty rosey predictions about the effect it will have on the job-creators. It is laughable economic policy. It's nothing more than a political stunt designed to get the dumb masses to ignore Mr. Obama's pathetic record. He can't run his campaign on his accomplishments becuase his policies have made things worse, so he has to find something that the focus groups say will resonate with at least a part of the electorate. He is wasting his time becuase this idea only appeals to the people who would vote for him anyway.

pace 3 years, 5 months ago

What is really funky, Charles Krauthammer is somehow claiming that anyone said the Buffet rule was THE fix for the deficit. What a crack pot column.

tbaker 3 years, 5 months ago

Fair share? More taxes? Really? The US government spends one billion dollars every two and half hours. The US has the highest effective tax rate in the world. Nearly half of the population doesn't pay any income taxes.

Consider: The tax year of 2008 was the last to date that the IRS has done this kind of analysis. In 2008 the highest marginal tax rate of 35% applied to all AGI above $357,700.00. In that year the total amount of AGI subject to the highest rate was $622.8 Billion. The government collected in taxes $218.0 Billion (35%).

In 2012 the annual budget deficit is about $1.6 trillion. Lets say congress raises the highest marginal rate, how much more would Washington D.C. receive, assuming no change in behavior and a general eagerness to pay more?

If the highest rate of 35% were raised by a factor of 20% to 42%, then the additional tax revenue would be $43.5 Billion, not much of a dent in $1.6 trillion. So, let's raise the rate by a factor of 50% to 52.5%; the additional revenue would be $108.9 Billion. Still nowhere near enough, so let's just tax it at a rate of 100%, bringing in an additional $404.8 Billion.

Even if the federal government confiscated 100% of all the "income" earned by the evil rich, the country would still be $1.26 trillion in the hole for the year.

Mr. Obama cannot run on his record. Wealth envy is a lot easier a campaign platform to run on than facts and figures and the painful truth.

Do the math 'copter. Raising taxes doesn't even begin to address the problem.

jafs 3 years, 5 months ago

Nearly half don't pay "federal income taxes".

And, that group is composed mainly of the elderly and the working poor - not a bunch of "freeloaders".

Nobody sensible has ever argued that simply raising the marginal tax rate a little bit would balance the budget, but it's part of a solution, one that involves both raising revenue and lowering spending.

When that was suggested, with a 1/10 ratio of tax increases/spending cuts, the Republicans wouldn't go for it.

tbaker 3 years, 5 months ago

Jafs - when you say additional taxation it is part of the solution, you have to consider it is a drop in the ocean. We differ on this point becuase people who share your sentiment simply do not grasp the scope of the problem. Government spending has reached such an insane level additional taxation is no longer a viable option. Consider the numbers I explained in the post above. Take 100% of the income earned by the people filing in the top bracket and it doesn't even begin to address the problem.

Know that every time The President utters this “Buffett pays a lower tax rate than his secretary” nonsense he knows that statement to be untrue. He knows he’s lying.

Warren Buffett pays exactly the same income tax rate on the same taxable earned income that his secretary pays. His secretary pays exactly the same rate on her capital gains income that Warren Buffet pays. Why are capital gains taxed at a rate lower that earned income? To encourage investment. When the capital gains tax rates go up people with money to invest -- and that’s where capital gains come from -- simply send that money somewhere else. Maybe overseas, or maybe into tax-free municipal bonds. History has shown ... without fail ... every single time you raise capital gains tax rates the amount of money the government earns in capital gains taxes goes down.

The top 60 percent of taxpayers paid 100 percent of all income taxes. The bottom 40 percent collectively pay no income taxes. From 2000 to 2004, the share of all individual income taxes paid by the bottom 40 percent dropped from zero percent to -4 percent, meaning that the average family in those quintiles received a subsidy from the IRS. By contrast, the share paid by the top quintile of households (by income) increased from 81 percent to 85 percent.

The spending is ruining our country. Raising more taxes is no longer a way to fix it.

jafs 3 years, 5 months ago

Do you not read my posts at all?

I said part of the solution, and pointed out a 1/10 ratio that was suggested of revenue increases/spending cuts.

Historically, spending is high, but revenue is low - those are just the facts. The last time the budget was balanced, revenue and spending were both about 18% of GDP. To get back to that number, we'd need to both increase revenue and decrease spending.

I've seen charts showing that tax rates are actually rather low, compared to the past.

Source for the claim that raising capital gains taxes results in less revenue?

No "federal" income taxes. And again, that group is mainly made up of the elderly, who have worked and contributed their entire lives and the working poor. Neither of those groups deserve a tax increase in my view.

tbaker 3 years, 5 months ago

Yes I read your posts. I say any increase in taxes is wrong and will make the low revenue even lower. I've demonstrated that even a 100% rate on the top bracket wouldn't begin to put a dent in the problem, therefore the so-called "balanced" approach is just a meaningless political slogan. The US now has the highest corporate tax rate in the world, and when you examine the effective tax rate, the minority of Americnas who actually pay income taxes are among the highest taxed people in the world. The harm that will be caused by any additional tax increase far out-weighs any symbolic value it may have.

pace 3 years, 5 months ago

Are you out of your mind, you base your argument on the effects of a 100% tax rate?

tbaker 3 years, 5 months ago

Pace - you need to read the thread. Even if you raise the rate on the top bracket to 100%, you are still not collecting enough revenue to even begin to solve the deficit. Those who advocate raising taxes to solve our massive deficit are out of their minds.

jafs 3 years, 5 months ago

I think your ideology is blinding you to what people are saying, since nobody's saying that (at least nobody sensible, and nobody on this thread).

pace 3 years, 5 months ago

You are claiming people think raising the rates and closing loop holes and dodges for the top bracket will fix the deficit by it self? Then you are countering that by saying even a 100% tax rate wouldn't work. You claim that people who are advocating raising taxes are out of their mind. I read the thread, still think you are odd to use the argument of a 100% . I don't think people who advocate raising some taxes are "out of their mind" I think there are some valid reasons for raising some revenues.

jafs 3 years, 5 months ago

Well, the last time the budget was balanced, tax rates were higher, which tends to counter your argument.

tbaker 3 years, 5 months ago

Thats a strawman argument. Spending was much lower the last time the budget was balanced and the economy was booming.

jafs 3 years, 5 months ago

That's the point exactly - it's more complex than simple statements, or ideologies.

I've said over and over again the only real solution is a combination of increased revenues and decreased spending - why is it so hard for you to hear that?

We can add to that that a healthy economy would be a plus as well.

No sensible person is advocating that we should keep spending where it is, and just raise taxes. It makes about as little sense as the argument that we should just slash spending to me.

jafs 3 years, 5 months ago

And, last time I checked the numbers, there was actually only a slight mismatch between those - something like spending 6% high, with revenue 4% low relative to when the budget was balanced.

jafs 3 years, 5 months ago

I did a little research, and the claim that raising the capital gains tax rate will lower revenues is highly dubious.

Generally speaking, the two have mirrored each other, which makes more sense to me.

It's much more complicated than a simple statement, of course, and there's undoubtedly some point at which raising the rate will result in less revenue (as the Laffer curve theory has such a point), but right now the rate is 15%, and last time the budget was balanced, it was significantly higher.

tbaker 3 years, 5 months ago

Really. Cite an example where raising the capital gains rate increased revenues. The last time the budget was balanced, spending as a percent of GDP was much lower than it is now. The amount of deficit spending under Mr. Obama's administration (using White House numbers) is $6.2 trillion. Thats more debt than was accumulated by all U.S. presidents from George Washington through Bill Clinton combined.

100% of the problem is out of control spending Jafs. We are well past the point where raising taxes would do any good.

jafs 3 years, 5 months ago

I found a rather good in depth analysis of the correlation between capital gains rates and revenues, which doesn't support your contention. You can find it if you google the subject. I await your source for your claim.

And, the last time the budget was balanced, revenues were a higher percentage of GDP, and various tax rates were higher, including the capital gains rate, which was almost double what it is now - why do you insist on ignoring those facts?

That suggests pretty strongly that your contention that 100% of the problem is spending is just wrong, and that the best (only?) solution is a combination of increased revenues and decreased spending.

That was proposed by Democrats, who proposed a modest $1 tax increase/$10 spending cuts - Republicans wouldn't go for it.

tbaker 3 years, 5 months ago

  1. The last timne the budget was balanced, spending was MUCH lower than it is now. The deficit was A LOT smaller.

  2. I've demonstrated that raising income taxes is a not a viable solution. Assuming it won't harm the economy, it doesn't raise nearly enough money.

  3. In 1977, when the capital gains tax was 39.9%, realized gains amounted to less than 1.57% of GDP. From 1987 to 1996, when the capital gains tax was 28%, realized gains rose to 2.3% of GDP. Since 28% of 2.3 is larger than 39.9% of 1.57, the lower tax rate clearly raised more tax revenue.

From 2004 to 2007, when the capital gains tax was 15%, realized gains amounted to 5.2% of GDP. Since 15% of 5.2 is larger than 28% of 2.3, the lower tax rate again raised more tax revenue. The government cannot afford to raise this tax, particularly on those most likely to pay it. You raise capital gains tax, you get less revenue.

jafs 3 years, 5 months ago

Check out the analysis I mention - it explains why a simple statement that higher capital gains taxes correlates with less tax revenue is incorrect.

You can cherry pick a few years to try to make the case, but it ignores a lot of other evidence.

The time that matters is when the budget was balanced - the only time in the last 40 years or so that was the case, spending was lower, but revenues were higher, and the capital gains tax was about twice as high as it is now.

One obvious error in your calculations - the actual amount of GDP matters, so you can't make the claim in your 3rd paragraph without knowing that. If GDP was larger in '77 by a certain amount, then the actual taxes raised would be higher then.

Also, "realized gains" aren't the same thing as taxes collected - that's the number that would count.

tbaker 3 years, 5 months ago

One more time...

In 1977, when the capital gains tax was 39.9%, realized gains amounted to less than 1.57% of GDP. From 1987 to 1996, when the capital gains tax was 28%, realized gains rose to 2.3% of GDP. Since 28% of 2.3 is larger than 39.9% of 1.57, the lower tax rate clearly raised more tax revenue.

From 2004 to 2007, when the capital gains tax was 15%, realized gains amounted to 5.2% of GDP. Since 15% of 5.2 is larger than 28% of 2.3, the lower tax rate again raised more tax revenue. The government cannot afford to raise this tax, particularly on those most likely to pay it.

jafs 3 years, 5 months ago

Check the analysis.

And, again, "realized gains" aren't equivalent to tax revenue - changes in the GDP have to be taken into account.

And, again, last time the budget was balanced, capital gains tax rates were about twice what they are now.

jafs 3 years, 5 months ago

28% of 2.3% of GDP can't be compared to 39.9% of 1.57% of it without knowing the two differing GDP numbers.

And, it's very interesting that you choose numbers from times other than the time the budget was balanced, which is what I thought we wanted. Why not compare them from the period of 1992-2000?

During that time, we had consistently shrinking deficits, followed by consistently increasing surpluses. Seems like what we did then worked, rather than what's been done before and after that for quite some time now.

Flap Doodle 3 years, 5 months ago

"We all must pay more and take less..." Good luck selling that to the professional welfare class.

jafs 3 years, 5 months ago

Well, the $1/$10 ratio of tax increases to spending cuts sounded like a real possibility that might work - it's too bad the Republicans wouldn't go for it.

Probably has something to do with that Norquist pledge, I'd think.

jafs 3 years, 5 months ago

No, it would have to be actual cuts in spending, relative to what we're spending now, I would think.

jafs 3 years, 5 months ago

That's the tough question.

I would start with the things that all, or almost all of us, could agree are simply wasteful.

Then I would cut military spending down to a size necessary to actually defend the country, but not necessarily expand our "influence" around the world.

Then I'd re-structure SS/Medicare - I'd stop collecting separately for them, and I'd make them "as needed" programs, means testing some sort of combination of assets/income to determine who's eligible.

Also, I'd try to figure out some sort of way to reduce unnecessary testing in them, by changing from a "fee for service" structure to a different one that wouldn't encourage those.

And, I'd legalize drugs, regulate and tax them to create a new revenue stream. And stop incarcerating non violent offenders.

If I were king of the world, that is :-)

jafs 3 years, 5 months ago


I think Congress decides budgets, though, so I'm not sure that the President can simply cut the DOD budget.

tbaker 3 years, 5 months ago

Congress won't even cut the rate of spending increases, let alone cut actual spending. L1 is right. The only way out of this is a very large devaluation of the currency so the debts the US owes can be paid-off with much cheaper money. The US dollar will not be the world reserve currency when this is done, commodities once traded in dollars will cost much more, and all dollar denominated assets will be worth much less, like your IRAs and 401Ks.

verity 3 years, 5 months ago

Who are those people who are not paying any federal income tax?


By Andrea Coombes | MarketWatch – Mon, Apr 16, 2012 12:01 AM EDT

In fact, 1,470 millionaires were among those who paid no federal income tax in 2009, according to IRS data. . . .

Meanwhile, 46% of taxpayers won’t owe any federal income tax for 2011, according to the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution.

But those taxpayers will pay a hefty portion of their income to levies at the federal, state and local level. Those include payroll taxes for Social Security and Medicare; state and local sales taxes on groceries, clothing and other purchases; and federal and state excise taxes on things such as gas, cigarettes, alcohol and airline tickets.

Those taxes can hit different income groups in different ways. For instance, the payroll tax for Medicare is paid by all workers, but the Social Security tax isn’t levied on income over $110,100 (in 2012). So people with bigger six-figure salaries pay a lower portion of their income to Social Security taxes than those earning less. . . .

Then there are state and local taxes to add in. People in the lowest 20% of income earners paid about 17% of their income to federal, state and local taxes in 2011, versus about a 30% effective rate for the top earners, according to an estimate from the Institute on Taxation and Economic Policy. But the share of total taxes paid roughly matches the share of total income for each of the income groups. . . .

Sales taxes can have an outsize effect on lower-income people. “After they buy basic necessities, they typically won’t have a lot of money left over to save or invest,” Wamhoff said. A wealthier family is “more likely to have a portion of their income that they can put to savings or investments that will never be subject to sales taxes.”. . .

Roberton Williams, a senior fellow at the Tax Policy Center, said 23% of U.S. taxpayers don’t make enough money to owe that tax once they take their personal exemption and standard deduction. Another 23% qualify for tax breaks that bring their bill to zero or provide a refund.

jafs 3 years, 5 months ago

I saw that on my home page as well - it's interesting.

camper 3 years, 5 months ago

Conservatives have used this in their playbook for years. They say that 50% of Americans do not pay Federal Income Tax. This might be true, but they use it advantageously because most people to not realize that they are not including Federal Payroll taxes (ie Medicare/Medicaid). If you are working, you cannot get out of paying Federal Payroll taxes.

verity 3 years, 5 months ago

"app. 50% pay zero taxes"

See my 10:13 am post.

It's your credibility that is zero.

gudpoynt 3 years, 5 months ago

by "Liberaltine bs", do you mean "algebra"?

gudpoynt 3 years, 5 months ago

Absolutely verity. It's a concept that challenges their crusty WASPish political identity spoon fed to them by Barnum-and-Bailey-esque "news" people.

Their minds have been shut off, and thus have atrophied down to a size incapable of admitting any new ideas that run contrary to those already well rooted.

To accept that you may have a point would require a tremendous amount of courage on their part, since it may result in them having to alter their world view. Clearly these knuckleheads lack that courage.

A wise person once said, do not argue with fools, for others won't be able to tell the difference.

verity 3 years, 5 months ago

You are absolutely right, gudpoynt, and usually I try to stay away from pointless arguments with trolls, but sometimes the misinformation is so blatant and/or disingenuous that I feel it needs to be corrected.

A side note, my spell check changed your name to gunpoint.

tbaker 3 years, 5 months ago

What would you call someone who insists tax increases can solve our country's fiscal problems when every rational measure clearly shows we are way past the point where raising already high taxes would do any good? Someone who's mind has been shut off and has thus atrophied down to a size incapable of admitting spending must be dramtically cut; the size and scope of government must be dramtically reduced? Would this be arguing with a fool?

tbaker 3 years, 5 months ago

For those who actually pay income taxes, the effective rate of taxation is one of the highest in the world.

gudpoynt 3 years, 5 months ago

really? You should clue in the folks over at businessweek (http://buswk.co/Ijzqs7).

Perhaps by "those who actually pay income taxes" you mean we folks in the middle class? Are you saying that people with average incomes, who pay income tax, are paying an effective rate that is one of the highest in the world?

And if so, then to rectify the discrepancy, wouldn't it be prudent to propose more tax relief for the middle class, and less tax relief for the rich?

Or am I misunderstanding you?

gudpoynt 3 years, 5 months ago

a) Who is arguing that "tax increases can solve our country's fiscal problems"? I'm not. Obama certainly is not. I don't think that any posters on this thread have either. It's a pretty transparent strawman argument, to deride people for making claims they aren't making.

b) What people are actually arguing, is that the current tax structure has too many breaks for the very wealthy, and these breaks are doing more to harm the country through decreased revenue than they are helping the country through increased investments in domestic, private sector businesses. That's is the actual argument.

c) If someone thinks that closing tax loopholes for the wealthy would carry more benefit than cost, in terms of the national budget, it does not mean that they are opposed to cuts in spending. Again, false claim. Strawman. Rather, it's the details of what should be cut, for who, and for how much? That's where the intense bickering ensues.

tbaker 3 years, 5 months ago

OK...how does this sound: a law passed by congress that results, directly or indirectly, in someone paying more taxes, "wealthy" or otherwise. The US federal government spends a billion dollars every 2.5 hours and 600 million of that is borrowed. Raising taxes will not solve our fiscal problems. Not even close. Closing a loophole would be a "tax increase." For example - do you own a home? Being able to deduct the ammount of your mortgage interest expense is called a "loop hole." Thats not a a strawman argument, thats being discussed in congress.

What needs to be "cut" are six or seven cabinet-level agencies. Troop presence in Europe. War in Afghanistan. What needs to be reformed (read: young people can opt for private plans) is MEDICARE, MEDICADE, and the Social Security programs as we currently know them. The numbers don't lie. If we do not act, they will cease to exist. They are important safety nets but they need to be restored to that status. They have turned into hammocks. They were intended to be the last resort, now they are part of retirement planning.

The 16th amendment needs to be repealed and with it the IRS and the Income Tax code. We need the FairTax (HR 25)

gudpoynt 3 years, 5 months ago

Do you understand the concept of progressive, versus regressive taxation? Do you understand how sales tax is effectively a regressive tax? Do you understang how regressive taxation results in exacerbated wealth disparity? Do you understand what happens to a society when all the wealth is concentrated in the hands of the very, very few?

gudpoynt 3 years, 5 months ago

Oh look! There's a dollar bill on the ground. I should pick it up and put it in my pocket. After all, I have a lot of huge bills I have to pay.

But wait! One single dollar is only a tiny fraction of those huge bills! Surely picking up that dollar won't amount to a hill of beans as far as being able to pay them off more quickly.

Boy howdy, so glad I'm good at the maths. Otherwise, I would have wasted time picking up that silly dollar.

gudpoynt 3 years, 5 months ago

Just to clarify, Krauthammer doesn't get it right when he says "the Buffett Rule would impose a minimum 30 percent effective tax rate on millionaires."

Actually, the Buffet Rule would impose a minimum 30 percent effective tax rate on those whose annual income is $1 million or more.

But if you have $1 million in the bank and you make $300K annually, then technically you are a millionaire, but the Buffet rule would not apply to you.

08Champs 3 years, 5 months ago

Of course it won't SOLVE the problem. Neither will world peace, but I still want it.

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