U.S. Debt discussion

[Flames Fan, Ph.D.]

Originally Posted by Azure

Lowering the corporate tax rate was also part of the plan.

Yes, and I'm all for it.

For those that are interested, the number being tossed around was 21-23% flat rate and removal of the loopholes.

This proposal, however, appears to be getting heavy behind-the-scenes criticism from think tanks like Heritage and AEI. That makes it pretty clear that the effective tax rate for wealthy corporations in the US is significantly below 21-23%. In essence, this proposal has become a small business owner vs. large corporation issue.

I know where I'd place my bet.

[Azure]

Originally Posted by Slava

I actually think that part of the reason that the Republicans can only get whackos and unqualified candidates out to run against Obama though is that there are no easy solutions. Its great to say "Obama has spent too much and mishandled things"...but what exactly should've taken place?

Other than saying the government is too far in debt the Republicans can't really point to anything that they would do differently that would make an enormous difference. Sure, they would change healthcare...how exactly?

In reality the one solution is obvious: raise taxes and cut spending. That solution gets you approximately zero votes though, on either side of the aisle.

If you can't afford a trillion dollar healthcare program, you don't sign the bill. Obama pushed it through when he should have done everything he trying to do now instead.

Other than that, I pretty much agree. The Republicans haven't exactly done anything else over the past 10 years than implement some stupid tax cuts and spend money like a drunken sailor.

The solution is obvious. But it doesn't involve 'raising taxes.' It involves closing loopholes and restructuring the corporate tax rate to create an even playing field for everyone. Apparently that will increase revenues by up to $500-$600 billion per year, which is a pretty win/win situation I'd say.

Also, you HAVE to reform entitlement spending. There is no way around it anymore.

[Azure]

Originally Posted by Flames Fan, Ph.D.

I'm for it, but the left/right arguments are:

Left: It's terribly regressive, unless you remove food / clothing. But once you identify a loophole, those with the financial means will exploit the loophole. Then you're back where you began, and the middle class takes it in the shorts.

Right: Oppose it because it is a tax. 'Nuff said.

Meh.

I'm as right wing as they come and I would agree with it. We need taxes. Not MORE taxes, but enough to pay for basic services.

[Frequitude]

Originally Posted by Flames Fan, Ph.D.

I'm for it, but the left/right arguments are:

Left: It's terribly regressive, unless you remove food / clothing. But once you identify a loophole, those with the financial means will exploit the loophole. Then you're back where you began, and the middle class takes it in the shorts.

Right: Oppose it because it is a tax. 'Nuff said.

Sure, exclude the basic necessities or at least some of them a la the GST.

Everyone knows tax hikes need to be a part of the solution. I imagine the right would prefer this over income hikes.

Don't tax people's hard work. Tax their non-basic spending.

[Tinordi]

If you can't afford a trillion dollar healthcare program, you don't sign the bill. Obama pushed it through when he should have done everything he trying to do now instead.

Many development economists would argue that you can't afford NOT to implement a broad-based healthcare program. For many of the hated social programs among the right, there are solid economic reasons to support them and for the government to pay for them. Health is a good example, a healthy population is a productive population and even if it's expensive it could make you a wealthier nation based on different welfare indicators. Health in this view is seen as an investment with gains in productivity, happiness, etc being the returns. Same goes (even moreso for education).

Maintaining a healthy population or at least starting the process of reforming the incentives in the current system to reduce the costs is an expense that I would argue the government couldn't afford to neglect.

And your statement is highly revealing in just how down the road some people are. "If you can't afford it then don't do it." The U.S. is the richest country in the world. How could it "not afford" to do it? What's more appropriate is what are people willing to pay for? A slight increase of taxes or closing loopholes could pay for the system. You can afford to do it at that point.

[Azure]

How can you afford it when you're running at trillion dollar deficit and you're in danger of defaulting on your debt because you can't raise the debt ceiling.

The US has to seriously cut back spending. And considering they already spend MORE per capita on healthcare, I don't see how spending EVEN more is the solution.

[Tinordi]

Well first off the debt ceiling is a political limitation not a market limitation. Which is why we're here. Without this procedural impasse then the markets would still happily keep lending money to the U.S.

One of the main reasons that the U.S. can't afford it is because they made a policy decisions 8 years ago to significantly reduce the amount of revenue the government was taking in in heavy tax cuts. That's a spending decision as well. They government couldn't afford to cut taxes based on their future income outlays, which is why we're here but I didn't hear people railing against that and I don't hear them talking about how they can't afford such low taxes now.

[J pold]

I'm very interested to see what Obama has to say in his speech tonight. Also when did Erin Burnett move to CNN? I no longer have a reason to watch CNBC.

[Calgaryborn]

Originally Posted by afc wimbledon

From the New York Times.

WASHINGTON — Freshman House Republicans who rode a wave of voter discontent into office last year vowed to stop out-of-control spending, but that has not stopped several of them from quietly trying to funnel millions of federal dollars into projects back home.

They have pushed for dozens of projects in their districts, including military programs opposed by the president, replenishing beach sand lost to erosion, a $700 million bridge in Minnesota and a harbor dredging project in Charleston, S.C. Some of their projects were once earmarks, political shorthand for pet projects penciled into spending bills, which Republicans banned when they took over the House.
An examination of spending bills, news releases and communications with federal agencies obtained under the Freedom of Information Act shows that nearly two dozen freshmen have sought money for projects that could ultimately cost billions of dollars, while calling for less spending and banning pork projects.

As the Who put it 'Meet the new boss, same as the old boss'

So did these fellows introduce a bill or were they just applying for some of the unused stimilus money?

[SebC]

Congress Continues Debate Over Whether Or Not Nation Should Be Economically Ruined

[Azure]

Originally Posted by Tinordi

Well first off the debt ceiling is a political limitation not a market limitation. Which is why we're here. Without this procedural impasse then the markets would still happily keep lending money to the U.S.

One of the main reasons that the U.S. can't afford it is because they made a policy decisions 8 years ago to significantly reduce the amount of revenue the government was taking in in heavy tax cuts. That's a spending decision as well. They government couldn't afford to cut taxes based on their future income outlays, which is why we're here but I didn't hear people railing against that and I don't hear them talking about how they can't afford such low taxes now.

Its not a political limitation if the US is having problems recovering. Much of the talks have been about tax reform, or more specifically, closing the loopholes to create a level playing field for all businesses alike, not just the big ones like GE. Many people say small businesses are a driving point in the economy, and right now they're not driving anything. Canada has a much more simple tax code, with a lot less loopholes, and a lower overall corporate tax rate. When we talk about lowering the corporate tax rate, we're talking about lowering it from 17% to 16%. The US is talking about lowering it from 35% to roughly 23%.

You can possibly claim that such a change to the system is political. The change in the business community would be HUGE.

[Azure]

If you just think it is all about politics.

CNN's Erin Burnett reported Monday night that S&P may be favoring the Reid plan over the GOP plan because of the size of the cuts. The credit rating agency has been the most vocal about the changes Congress has to make in order for the country to maintain its AAA rating. Burnett added that the cuts need to be closer to $3 trillion — all at once — in any plan to avoid a downgrade. More details here.

http://www.businessinsider.com/heres...#ixzz1TAW6wu7T

[Calgaryborn]

29 billion is all Obama needs to service the debt for August. The Government will have at least 175 billion dollars in revenue. Social security checks will go out because it would be illegal fo Obama not to do so. Also, there is still enough contributors into Social security to cover all those checks. If the government goes into August without a deal struck all that will happen is a shut down of government departments which has happened before. The military will be paid and all other obligations.

There will be no default. What is most concerning is that both parties are working together to frighten the American people.

Also, for those of you who have been defending Obama can you show me his plan? Because to the best of my knowledge he has been unwilling to produce one.

[Azure]

I don't think its his job to produce one. Congress is supposed too.

They had a great plan. Too bad they couldn't agree on it.

[Flame Of Liberty]

Originally Posted by Flames Fan, Ph.D.

Yes, and I'm all for it.

For those that are interested, the number being tossed around was 21-23% flat rate and removal of the loopholes.

This proposal, however, appears to be getting heavy behind-the-scenes criticism from think tanks like Heritage and AEI. That makes it pretty clear that the effective tax rate for wealthy corporations in the US is significantly below 21-23%. In essence, this proposal has become a small business owner vs. large corporation issue.

I know where I'd place my bet.

This will never take place, doesn't matter if the president is Republican or a Democrat.

General Electric, the nation’s largest corporation, had a very good year in 2010.

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan “Imagination at Work” fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.

http://www.nytimes.com/2011/03/25/bu...x.html?_r=4&hp


Over 100 companies on the S&P500 paid less than 20 percent in taxes, according to a study by Capital IQ and the NYT. That's not even counting 37 companies like Citigroup and AIG that received more in tax credits than they paid. All this thanks to loopholes in the immensely complicated tax code.
America's corporate tax rate is supposed to be 35 percent.

Example:

Xcel Energy (XEL)
Pre-tax income: $4,334 million
Taxes paid: $77 million
Tax rate: 1.78%



Read more: http://www.businessinsider.com/16-mo...#ixzz1TAd2Ypcf


We can talk taxes till we are blue in the face, but the fact is that big companies are in bed with policy makers and law makers from both sides and it is you as a joe average tax payers who's being raped.


PS from the NY article:

"President Obama has said he is considering an overhaul of the corporate tax system, with an eye to lowering the top rate, ending some tax subsidies and loopholes and generating the same amount of revenue. He has designated G.E.’s chief executive, Jeffrey R. Immelt, as his liaison to the business community"

all I can say is...lol...the change is coming!

[RougeUnderoos]

Originally Posted by Calgaryborn

4. Taxes for the rich is the only thing being proposed. Right now if they do nothing the Bush tax reductions will already be disappearing next year. Can't see that helping the economy if these are the guys who are suppose to hire the unemployed.

The theory behind this line of thinking is "give the job creators a tax break, they'll create jobs". Okay, the job creators have their tax breaks right now, but I don't see many jobs being created. The numbers aren't really moving.

In other words, the tax breaks for the job creators aren't creating jobs.

If you remove tax breaks that don't create jobs, will jobs continue to not be created by the job creators? Are they going to say "we'll continue to not create jobs if you take away our tax breaks"?

[freedogger]

Its a broken system. What is the purpose of the debt ceiling if they can just vote and get it raised? Mind boggling.

I would love to see this kind of a tax system:

In order to raise the same amount of revenue as our current tax system, a "revenue neutral" APT tax would impose a single tiny tax rate on each and every transaction in the economy. All deductions and exemptions would be eliminated. By declaring a "zero tolerance" policy for any exemption, we wipe out every special interest loophole that now riddles our overly complex tax code. Since the volume of all transactions is estimated to be 100 times larger than the current tax base, the flat tax rate needed to raise the same amount of revenues is just a hundredth of the current average tax rate of roughly 30%. So if transactions stayed at their current level, the APT tax rate would be three tenths of one percent (0.3%) on each transaction. Even if total transactions fell by 50%, the revenue neutral APT tax rate would only be six tenths of one percent (0.6%) split equally between the buyer and seller in each transaction so each would pay 0.3%. Feige details how the replacement of our current tax system with an APT tax could save the government and its citizens as much as $500 billion annually by eliminating the compliance, collection, enforcement and inefficiency costs of our current tax system.

http://www.apttax.com/

[Azure]

Originally Posted by RougeUnderoos

The theory behind this line of thinking is "give the job creators a tax break, they'll create jobs". Okay, the job creators have their tax breaks right now, but I don't see many jobs being created. The numbers aren't really moving.

In other words, the tax breaks for the job creators aren't creating jobs.

If you remove tax breaks that don't create jobs, will jobs continue to not be created by the job creators? Are they going to say "we'll continue to not create jobs if you take away our tax breaks"?

The hilarious part is that the big companies are mostly hiring people. Its the smaller businesses that are NOT, and they won't as long as they're stuck in the uneven playing field.

[SebC]

Originally Posted by giver99

I would love to see this kind of a tax system:

In order to raise the same amount of revenue as our current tax system, a "revenue neutral" APT tax would impose a single tiny tax rate on each and every transaction in the economy. All deductions and exemptions would be eliminated. By declaring a "zero tolerance" policy for any exemption, we wipe out every special interest loophole that now riddles our overly complex tax code. Since the volume of all transactions is estimated to be 100 times larger than the current tax base, the flat tax rate needed to raise the same amount of revenues is just a hundredth of the current average tax rate of roughly 30%. So if transactions stayed at their current level, the APT tax rate would be three tenths of one percent (0.3%) on each transaction. Even if total transactions fell by 50%, the revenue neutral APT tax rate would only be six tenths of one percent (0.6%) split equally between the buyer and seller in each transaction so each would pay 0.3%. Feige details how the replacement of our current tax system with an APT tax could save the government and its citizens as much as $500 billion annually by eliminating the compliance, collection, enforcement and inefficiency costs of our current tax system.

http://www.apttax.com/

That sounds terrible. First of, it would have the same artificial favouring of vertically integrated companies (i.e., the rich get richer) that a straight sales tax does (as opposed to a value-added tax).

There's such thing as an optimal tax mix. It's hard to determine exactly, but generally, it's higher consumption taxes and lower income taxes (hence why Harper's GST cut was absolutely assinine).

The tax you support may be simple, but it isn't optimal.

[Calgaryborn]

Originally Posted by RougeUnderoos

The theory behind this line of thinking is "give the job creators a tax break, they'll create jobs". Okay, the job creators have their tax breaks right now, but I don't see many jobs being created. The numbers aren't really moving.

In other words, the tax breaks for the job creators aren't creating jobs.

If you remove tax breaks that don't create jobs, will jobs continue to not be created by the job creators? Are they going to say "we'll continue to not create jobs if you take away our tax breaks"?

Perhaps there is more than one factor that inspires business to create jobs. They've got the money to invest in jobs but, lack the will. Do you think maybe the uncertain liability of Obamacare going foreward and possibly the fact that the President wants to take more from them and will if given a chance might factor in. Imagine if you owned a small business and were considering taking the risk of expanding. How comfortable would you be with the Presidents constant talk of more taxes or the fact that the true cost of Obamacare is still going to hit in the next couple of years. Would you risk expanding to over 50 employees and be required by law to provide government sanctioned health care for all of your employees?

One thing is certain: Business don't expand without capital and taxes never improves business. Businesses that are just hanging on will go under. Big business will find loop holes or move their operations to a place with lower taxes. Either way America loses.

Texas is responsibile for half the new jobs being created in America today. They are doing it with low taxes rates and by stream lining regulation. Obama wants to go the other way.