Here is another long discussion I had with a progressive about taxes, the debt crisis, and reforming entitlements. I am the red text, the progressive is the blue.
Reliable conservative economist Ben Stein agrees taxes should be raised in millionaires.
http://newsroom.blogs.cnn.com/2012/01/25/ben-stein-i-agree-with-obamas-plan-of-raising-taxes-on-millionaires/?iref=obinsite
Now before my conservative family/friends chime in, I agree we need to reduce much of our government spending and some entitlements but millionaires should still be taxed at rates at least similar to the 90’s.
[some other person]: I think so too but I don’t like the idea of raising taxes on investments. I heard that debate on t.v. yesterday and I don’t want investment tax raised. We want to encourage people to save money.
I completely disagree. I think if you make the majority of your income off of investments it should be taxed at a higher rate. Low investment taxes make perfect sense for someone planning for retirement with investments or trying to supplement their income with investments but that completely shifts when you make most of your money that way. I know there’s a slippery slope here but perhaps having a graduated investment tax based on % of the ratio of your investment earnings to your other earnings would be a better approach. Having someone who’s inherited his wealth and just invests it so they never “do an honest day’s work” and then taxing all of that income at very low rates does not make sense to me. I’m sure there’s a rational balance to be found.
It will be extremely difficult and take a long time to get out of this mess. You are right Bob, we do need to cut government spending. The main problem is without a doubt government spending. A 5% tax increase on the rich will not increase the federal income by no more than 2.5% since federal income tax only makes up 47% of government income. A 5% increase will not solve anything. Even a 5% increase on all taxes(capital gains, sales, corporate, income) on everyone will do little if anything. Increases in taxes hurt the economy. The more you tax the more money people send out of this country and the less money people spend in this country. In 2010 the government took in $2.16 trillion, and spent $3.72 trillion. The difference is 1.56 trillion between what the government spent and what it took in. If we raise taxes by 5% it will (ideally) raise federal income to 2.27 trillion still leaving a 1.45 trillion deficit. Increasing the taxes is a bad idea and will not even come close to solving this problem. The only thing this nation should be focusing on and talking about is cutting spending. Anything else is a waste of time.
I think it’s short sighted to act like taxes should be abolished and that they only hurt the economy. We should spend our money wisely, something we both agree (but not always for the same reasons) is not being done now and if necessary consider raising revenue by returning to, what I believe, is a better tax graduation similar to what was in effect in the 90’s. I’m not talking about taking all the rich people’s money away no matter how many times conservatives try to paint it that way.
The fact that you only see value in cutting government spending and refuse to consider even returning to minor tax increases that were in place fairly recently and that others are unwilling to cut even obvious government waste is why this issue is not getting resolved. We need to find out how to use a balanced approach to solve this issue. Unfortunately in our polarized society and with politicians (both left and right) more tied to special interests than good decision making will make solving these even more impossible.
I never said taxes should be abolished. They are necessary for the government to function. I do however think that the tax code is currently unfair, way too complicated, and that your idea of a death tax and an increase in capital gains tax you propose is unfair and counterproductive. But that wasn’t my argument.My argument is that raising the taxes on the rich right now will not solve any problems. If you return to the 90s 40% tax on the rich, which is a 5% increase from what it is now, that will do little or nothing to help or economy and or debt situation.I would consider taxes increases, only if they were accompanied with major spending cuts. Why should the right let the left use the excuse of the debt crisis to raise taxes when the problem isn’t taxes, it is spending.
Both sides agree on cutting spending, and that we need to cut a lot. Let’s do that first, and then we can go back to debating taxes. Why waste time, debating the tax code, when 90% of the problem is in spending and only 10% is taxes.
Negotiation and compromise doesn’t work like that, right or wrong, especially in an election year.
The debate isn’t even settled if higher taxes are best for solving the debt crisis or not. You can’t just suppose that higher taxes is the best option. Yes immediately it might give us some extra cash but down the line it could hinder the economy. That bottom line is do you agree or disagree that we should cut spending? If both sides do, then what do we have to negotiate? Lets decide to cut spending and then negotiate and compromise on what to cut. Stop trying to throw in a bonus for your side. You can’t say we will not cut spending unless we get our way and get to raise taxes, when we both agree it is vital that we reduce spending. Who is then, quoting from Obama “holding the nation hostage”?
It’s so interesting how different the filters are for this(everything?) depending on your perspective. If anything, I think that that republicans, specifically in the house, are holding us hostage but of course that’s from my perspective and you wouldn’t agree. I think that Mitt Romney’s 15% taxes is not enough. Period. I have seen enough of an argument from that scenario to believe that it is better for our country if taxes are higher than that. It’s true that this debate isn’t settled. I don’t think it will be but I do think that 30 years of supply side economics (voodoo economics) have failed and that’s basically what you’re arguing for when you say that higher taxes, (even the 2% being discussed in returning to Clinton era levels on income [not investments]), would hurt the economy. I think massively higher taxes might hurt the economy but I’m not calling for massive tax increases. Regarding off-shoring of funds, I think that should be discouraged. My bottom line is what is best for the citizens of the U.S. in some ways that is to cut funding in other ways I think tax revenues can be used wisely and effectively. I don’t subscribe to the notion that the free market will solve all problems and I don’t think the government can solve all problems.I also think that businesses appropriately and massively benefit sometimes from the way government spends tax revenues so looking at just what they pay in taxes is only part of the picture. A good example of this is the education system. If businesses had to educate all of their employees it would be a massive expenditure and in some ways businesses are employing people educated in other countries with better subsidized higher learning rather than someone with a lower quality education here or the inability to even get a collegiate education. The cost to society ends up being higher for us when that person, basically playing in an uneven field, can’t get good employment. I think there are ways that us collectively paying money to support certain systems is wise, prudent, efficient and compassionate and simply good policy. I think Social Security is a good example of this, provided that crappy politicians don’t raid those funds like they were from their own piggy bank.
To sum up, I don’t think that cutting every penny we can from spending is the best policy. I think cutting funds from some areas now will cost us much more in the long run.
Why do you think the past 30 years have been strictly supply side economics? In the past 30 years we have been using something called the “Progressive Income Tax” and yet you say that the past 30 years didn’t work. In the past 30 years that didn’t work we used YOUR tax system, the progressive income tax, not the one I subscribe to. You can’t use the past 30 years as being the best example of supply side economics. That is utterly ridiculous. If you want to argue that supply side economics does not work, argue using the first 30 years instead of the last 30 heavily regulated years. In the beginning there was little regulation, now there is a tremendous amount of taxes, barriers, and regulations. The bottom line I am saying is we HAVE TO make cuts, we cannot continue to spend like we have both on the right and the left, and that changing the tax system right now will do little to solve the problem. I think lowering the taxes would be better, you think raising taxes would be better, but it doesn’t matter what any of us thinks about taxes right now because we need to make cuts. Yes it would be nice if we could pay for the best education for everyone in this country, but we can’t afford that. Yes it would be nice if we could keep increasing the defense budget, but we can’t afford that. If we continue running trillion dollar deficits, we are finished. I would rather cut back spending and avoid an economic collapse, rather than continue investing (going into debt) for the future and suffering an economic collapse. You can’t have everything.
The basis of the Reagan Revolution was that taxes were too high and if they were lowered businesses would invest more money in to the economy where it would “trickle down” to those making less money. During the 1980 Republican primary when Reagan was vocalizing this George HW Bush ridiculed the idea calling it “Voodoo economics”. Reagan slashes taxes 3 times in his presidency vastly changing the weighting of our tax system towards supply side economics. In doing so he vastly increased the debt cut tons of funding for programs, increased defense spending significantly and basically used government spending to make up the difference so that it would appear to be having the effect he wanted.This was followed by Bush I who started the horrible NAFTA discussions and raised taxes slightly and Clinton who got NAFTA in place and thereby reduced many of the few remaining protections for American industries and workers.Clinton was a “New Democrat” a moderate business friendly Democrat who sealed the Democratic party even closer to interests that plague the party. He also raised taxes moderately, sensibly IMO, to a level that could pay back the debt and started doing so. Why he never gets credit for this I’ll never understand. Don’t get me wrong. I’m not a Clinton fan and could write for hours about how much I hated his incrementalist approach and his triangulation tactics but he should at least get credit for starting to pay back the debt.
Then Bush II came in lowered taxes to pre Clinton levels, started 2 wars. Increased the size of National Government significantly (due to post 9-11 pressures and of course congress). And then as a parting give he gives away all the TARP funds with absolutely no restrictions on how these government funds would be used.
[This section more my personal opinion than the previous sections]
Obama, (another centrist no matter how much you want to paint him otherwise) comes in, tries to spend government money in a way that will inject fuel in to the economy but is so poor at negotiation and posturing that a combative congress hamstrung by ties to special interests and unwillingness to help legislates much of the bailout money he in a way that gives temporary tax breaks that help individuals somewhat but don’t help the economy in the way a more focused approach he originally espoused would have.
Now I’m sure you and I could find much to agree with about the bailouts but to call them Socialist is a stretch, particularly when much of them were to be paid back including the GM bailout. (I’ll get more in to this on the other thread where you said we were heading to socialism.
So to argue that this represents rational taxing or a Progressive income tax that I would espouse would just be ridiculous.
We’ve had a “Progressive Income Tax” for almost as long as we’ve had income tax it’s not something that started with Reagan. In the first 30 years of the country (i’m guessing that’s what you’re referring to) our tax structure was based on tariffs and usary taxes. I guess you wouldn’t call them regulations but we were also a foundling nation so regulations would be a bit less likely. If you’re espousing a return to tariffs and a decrease in income taxes we probably could find a good area to agree about.
The effect of the Reagan revolution and changes to our policies since on the poor, middle and rich classes has been astounding with far more gains going to the rich and far less to the rest despite their labor and consumption fueling much of those gains. Our society cannot survive without a healthy middle class and eventually the rich will lose much of what they have and value if we don’t ensure all Americans have a secure safety net to fall back on and a way to improve their situation without breaking their backs and spirit to do it.
Part of the conservative movement in our country started a carefully crafted trend in the late 70’s that continues to this day that is fueling much of this problem. When Conservatives hold power spend like mad to bring us more in to debt and then when they are out of power whine and moan about the debt and how we have to cut all the programs that might actually the common man or help someone out of poverty, particularly those born in to it.
You’ve spoken about welfare causing some of this problem and I’m sure there’s areas where we agree about that but allowing a child born in to poverty starve and be completely unsupported will cost more in the long run because society will eventually have to take care of them in another way, frequently in prison. Spending money wisely and carefully to create a system where that person can grow out of poverty is far cheaper in the long run.
So you won’t find me espousing the slash and burn policy you’re describing. I think it would cause more harm than good but I do agree we need to find a sensible way to spend our money more effectively. As long as we are so polarized on these issues I don’t see it happening.
So instead of cutting back, you say we should just spend money we don’t have more wisely and sensibly? Bob, how do you have so much faith in this modern day government? You just went through the past 30 years bashing it and yet you think the government can turn around and start to spend our money more wisely and effectively? I do not have faith in this current government and its leaders, and would like to see it and its spending decrease because of that.
It’s all about the slash and burn. I think cutting at all costs will have ramifications down the road worse than the problem we’re trying to fix. Again, I do think much of our spending should be cut back but I think our present position is being used as an excuse to cut programs that are good investments to prevent future costs. I think we need to get big money out of politics and remove some of the incumbent benefits so that status in congress is more fragile and our politicians have to become accountable to the people rather than special interests.
Oh, and for the record I have very little faith in our current government. I have even less faith in a system controlled solely by the free market (as it exists today), and peoples charitable whims.
The debt is at 15.3 trillion, we have to something about that. We can’t even balance the budget, Obama can’t even create a budget. If we do not do anything about it, people will lose a lot more than their welfare, medicaid, unemployment, and social security benefits. They will lose even more of their retirement, they will lose their jobs, their money will turn worthless, and I pray to God they don’t lose their lives to starvation or looting mobs after this system collapses. How compassionate and caring is it if giving what you can’t pay to give ends up destroying you and those who you give it to? We cannot get out of this without cutting back, if someone comes up with a plausible way on how to keep all the benefits and spend our way out of this, I’m all for it. But for four years injecting fake money into the economy has failed, and we will not survive another 4 years, we may not even survive another 2 years. Cutting back and stopping these foolish stimulus packages look like our only option now. I am not saying completely get rid of all the entitlements like you leftists always paint it. I know a lot of people who do not need these benefits and could live without, they just get them because they can. I know people who do not get a job because the the government would stop giving them free money through unemployment. I know people who are on food stamps, who do not need them but get them solely because they can. I have seen people buy ice cream with food stamps. If you are starving, you don’t buy ice cream, you buy rice, beans, or potatoes. We are creating a system where there is less personal responsibility and more government dependency. We are creating a society where people think they are entitled to everything. There are big problems with these entitlements and we have to reduce and reform them so this nightmare doesn’t happen again. We have to get to the point soon where we are not running a deficit, then we can slowly start reducing our debt.
I think this statement is pretty accurate:
“Bush behaved incredibly irresponsibly for eight years. On the one hand, it might seem unfair for people to blame Obama for not fixing it. On the other hand, he’s not fixing it.” “And,” he added, “not fixing it is, in a sense, making it worse.”This article from 2009 (a bit out of date for sure) claims the current reversal from 2001 when estimates showed that at 2009-2012 we’d be running an 800 billion a year surplus to the (at that time) current 1.2 trillion per year deficit levels was caused by the following:37% by the Business cycle (or reduced revenues due to recession and a poor economy including greater expenses for the higher use of the “safety net” due to the economy.
33% Legislation signed by Bush like Tax Cuts, the Medicare prescription drug benefit and increased interest payments due to these expenses.
20% Obama’s extension of Bush policies, like the Iraq war and tax cuts for households making less than $250,000 and the Wall street bailout signed by Bush and supported by Obama.
7% Obama’s poorly legislated stimulus bill signed in February 2009
3% Obama’s agenda on health care, education, energy and other areas.
Obviously this is out of date but the point I take from it is that getting our economy running again and returning to Clinton era tax levels (at least on those making over $250,000 is the key. I think the poorly handled stimulus bill didn’t do this because it was hamstrung by timidity on the left and sabotage on the right and I’m sure you feel that the government spending this money was wrong and immoral and that them just getting out of the way would help the economy faster.
In short, we disagree. Or, more accurately, we disagree on the best path forward although we do agree about some of the steps to get there.
freedomforge 