U.S. Debt discussion

[Slava]

Originally Posted by fotze

I like the idea of raising taxes on every group that does not include me. That is like 99.9% of the population paying more taxes than before, surely this would pay off the debt.

I definitely agree. Also, I'm willing to pay 100% of my "fair share" of the US debt, or approximately zero.

[MarchHare]

The national median has put every single person in the same basket and doesn't differentiate between a single guy/gal vs a 4 person household.

So?

I'm not being facetious -- you seem to be implying that a household with one or more children should be viewed differently than a household with no children. If that is indeed your opinion, why do you feel this way? For educated professional adults with easy access to birth control, having children is a lifestyle choice. Why should a couple who chooses to spend a portion of their income on child-raising expenses be classified differently from a couple who chooses to instead spend that money on other items (vacations, luxury items, retirement savings, charitable donations, whatever)?

When you have illegal immigrents not paying taxes and receiving benefits like medicade for their children there is a problem with the entire system.

How much money is being spent to provide government services to illegal immigrants and their American-born children? If you were somehow able to magically eliminate 100% of this expense, would the deficit problem be solved? If not, how much savings would be realized? I don't have statistics to back me up, so take this claim with the appropriate grain of salt, but I think pointing the finger at illegal immigrants is just looking for a boogeyman and is not seeing the forest for the trees.

[seattleflamer]

Originally Posted by MarchHare

Once again, having a household income of $250k puts one in the top 1.5% of American families. If being richer than 98.5% of Americans doesn't classify you as being part of the wealthy elite, then what does? What number do you think makes one "wealthy"?

Healthcare and post-secondary education costs are indeed lower in Canada, but that's because they're both heavily subsidized by the government which is one of the reasons we collectively pay higher taxes than you do. I'm not sure if anyone has ever done a study to show which nation's citizens come out ahead in the end: Canadians who pay higher taxes but have lower out-of-pocket healthcare and education expenses or Americans who have a lower tax burden but must pay higher tuition fees and purchase private health insurance.

Moreover, wouldn't a family making a combined income of "only" $125k (which is itself four times the national median) have those same healthcare and education expenses too? How do they cope if a household with double that income "struggles" by your reckoning?

How's this for a metric of who comes out ahead: Canadians live to about 81 years old; Americans to ~78 years old. That is a big difference and I'm sure there are some racial/geographic factors that may skew the difference downward on the American side but it is telling.

Financially, you make and keep more in the US but the quality of life is better in Canada notwithstanding the weather from November to April.

[MarchHare]

Originally Posted by seattleflamer

How's this for a metric of who comes out ahead: Canadians live to about 81 years old; Americans to ~78 years old. That is a big difference and I'm sure there are some racial/geographic factors that may skew the difference downward on the American side but it is telling.

Financially, you make and keep more in the US but the quality of life is better in Canada notwithstanding the weather from November to April.

Sorry, I should have been a bit more specific. I was referring only to which country's citizens came ahead in terms of disposable income, not any other metric like quality of life.

Take two hypothetical families of four (one American, one Canadian) where the children are at or near university age. Which of these has more money remaining after taxes, healthcare, and education costs are taken into consideration?

Canadian family: higher taxes, government-provided healthcare (paid with tax dollars rather than private insurance), lower post-secondary education expenses (because of government subsidies funded through taxation)

American family: lower taxes, private health insurance costs, higher post-secondary education costs

[yads]

Originally Posted by MarchHare

So?

I'm not being facetious -- you seem to be implying that a household with one or more children should be viewed differently than a household with no children. If that is indeed your opinion, why do you feel this way? For educated professional adults with easy access to birth control, having children is a lifestyle choice. Why should a couple who chooses to spend a portion of their income on child-raising expenses be classified differently from a couple who chooses to instead spend that money on other items (vacations, luxury items, retirement savings, charitable donations, whatever)?

Because the children of today are the future tax payers of tomorrow. Do you not think its in a nation's best interest to maintain an above zero population growth given increasing life expectancy?

[MarchHare]

Originally Posted by yads

Because the children of today are the future tax payers of tomorrow. Do you not think its in a nation's best interest to maintain an above zero population growth given increasing life expectancy?

How many parents do you know who chose to have kids solely for tax-benefit reasons or because they think they're providing a great benefit to society by producing the next generation of tax payers? I'm guessing zero. Educated professionals with access to birth control make a conscious decision to have children because they think it will enhance their life satisfaction. There's no difference between a married couple with children and a married child-free couple who opt to spend their money on non-parenting things. Both are doing what they think will give them the most enjoyment and satisfaction, and both should be taxed equally given equivalent incomes.

If maintaining above zero population growth is a priority, then it can be achieved through immigration policy. One could make the case (and this is going WAY beyond the subject of this thread now) that population growth through immigration is actually better for the nation since we can pick and choose the best and brightest to let in whereas we have no control over who is born here.

[Slava]

I can't remember where I read this the first time...might have even been here? Anyway, here is an amusing article by the creator of Dilbert with some ideas of how to fix things: http://online.wsj.com/article_email/...TExNDEyWj.html

[yads]

Originally Posted by MarchHare

How many parents do you know who chose to have kids solely for tax-benefit reasons or because they think they're providing a great benefit to society by producing the next generation of tax payers? I'm guessing zero. Educated professionals with access to birth control make a conscious decision to have children because they think it will enhance their life satisfaction. There's no difference between a married couple with children and a married child-free couple who opt to spend their money on non-parenting things. Both are doing what they think will give them the most enjoyment and satisfaction, and both should be taxed equally given equivalent incomes.

If maintaining above zero population growth is a priority, then it can be achieved through immigration policy. One could make the case (and this is going WAY beyond the subject of this thread now) that population growth through immigration is actually better for the nation since we can pick and choose the best and brightest to let in whereas we have no control over who is born here.

You're making a strawman out of my post. Obviously it's not solely based on the tax breaks and government programs. However, having 52 weeks of paid leave and other tax breaks helps make it easier for parents to choose to have children.

[jtfrogger]

Here is the breakdown of how the money is spent for the Jones's. It includes:
* $35k to $47k on housing
* $18k to $23k on cars
* $8292 on utilities
* $8650 eating out (inc. takeout and lunch at work)
* $41k in savings for retirement & children's college

Housing + utilities alone is ridiculous. If you are spending that much, you should be taxed more. For those that are ahead, they can clearly afford it. For those that are not keeping up, consider it a tax on the stupid.

[Azure]

Hasn't it already been pointed out that the top earners in the US pay the most taxes?

The problem I see is that rich people are able to exploit loopholes to reduce their rate to 15%. That, and the tax floor is obviously too high.

[Flames Fan, Ph.D.]

Originally Posted by Azure

Hasn't it already been pointed out that the top earners in the US pay the most taxes?

I've never understood the point or thrust of this comment.

The rich make the most money, so of course they pay the most in taxes (in absolute dollars). This would remain so even if it was a flat tax / equal percentage for everyone.

So what is the big message behind that comment?

[Azure]

Originally Posted by Flames Fan, Ph.D.

I've never understood the point or thrust of this comment.

The rich make the most money, so of course they pay the most in taxes (in absolute dollars). This would remain so even if it was a flat tax / equal percentage for everyone.

So what is the big message behind that comment?

Well, I realize that.

But there are constant comments about the fact that people like Buffet are paying 15% rates, while his secretary pays 30% rate. Most people seem to think the rich actually have a 15% rate, while the middle class has a 30% rate.

Or is Buffet paying those kind of rates because he can exploit numerous loopholes that rich people like he pressured Congress to create?

And instead of just taxing the rich MORE, why not just make them pay the rates that already exist and remove all the loopholes that give them a huge advantage over people like their secretaries?

Obama comes out and says he wants to increase taxes on people that make more than $250,000 because they can afford to pay more. Well sure they can. But is everyone conveniently ignoring the fact that billions upon billions in revenue is being lost because of the loopholes that Congress created to help rich people and corporations keep their money? Why should a family that has a combined income of $250,000 have to pay more, while GE actually gets a multi-billion dollar refund on their taxes?

Hell, just closing loopholes on corporations was said to increase revenues by up to $600 billion. You could run a second Pentagon with that kind of money.

But no, instead we'll argue over whether or not people who make $250,000 should pay more. Because they can obviously afford too!

[MarchHare]

Most people seem to think the rich actually have a 15% rate, while the middle class has a 30% rate.

"Most people"? I don't know of anyone who actually believes that. Certainly I haven't seen any posts in this thread where someone has made that claim. Please provide a citation to support your assertion.

As for the rest of your post re: tax loopholes, who are you arguing against? Haven't there been many people in this thread who have proposed doing just that? Wasn't that, in fact, part of Obama's plan which the Tea Party types in congress rejected out of hand?

[Azure]

Originally Posted by MarchHare

"Most people"? I don't know of anyone who actually believes that. Certainly I haven't seen any posts in this thread where someone has made that claim. Please provide a citation to support your assertion.

As for the rest of your post re: tax loopholes, who are you arguing against? Haven't there been many people in this thread who have proposed doing just that? Wasn't that, in fact, part of Obama's plan which the Tea Party types in congress rejected out of hand?

Generally, a lot of people, including yourself seem to be in favor of just taxing rich people 'more.' The last few pages you've talked about increasing taxation on people making more than $250,000.

I only assume you're talking about personal taxes.

And in my honest opinion its easy to just throw that around. Whenever there is a revenue problem, a deficit problem or a debt problem, the solution that always to just 'tax the rich more.'

Obama used it very well during his campaign run, while conveniently ignoring, along with the rest of the Washington, that closing the loopholes and lowering the overall corporate tax rate to make it competitive with the rest of the world would give you more than enough revenue to balance the budget. Of course, the fact that they're ignoring that point that would suggest that Washington has been taken over by Wall Street, which I'm sure is a completely ridiculous notion. No way big business and the government would be in bed.

So again I ask, when you can increase revenues by $600 billion by closing those loopholes, why would you even look at increased personal taxation for people making more than $250,000/year? Not that I'm against it, but it seems like a convenient method of just screwing the upper middle class even more. If they're paying their 30% rates, which most of them are why would you increase their rates even more, while leaving the true upper class alone to exploit the loopholes that never got fixed.

Families who make around $250,000/year will almost certainly not use those loopholes. But people like Buffet or Gates, who make billions per year, will almost certainly have a team of lawyers and accountants on hand to help them keep their money.

In the end increasing taxation on the middle/upper class won't solve any problems. Your real revenue lies in the extremely rich, both person and corporation. And the reason they're not paying their fair share is STRICTLY because of the loopholes.

So fix the loopholes, you fix your revenue problem.

The only other way to make everything better tax wise is with a fair/flat tax.

[Yasa]

Wouldn't fixing the loopholes also be raising the taxes for the wealthy? Isn't it the same thing done in a different way?

[MarchHare]

One other point:

With respect to what you call "loopholes", in many cases these are tax credits that the government authorized to provide an incentive for a particular behaviour. We have many of these in Canada, too. For example, the government thinks it would be a good idea if post-secondary education was more affordable to a greater number of Canadians (a higher educated work force will, at least in theory, lead to a stronger economy), so you can claim tuition fees as a tax credit. Likewise, promoting retirement savings was seen as a good thing, so you can also subtract RRSP contributions from your taxable income (the money will eventually be taxed when you withdraw it during your retirement, but the idea is that you'll be at a lower marginal rate at that time). More recently, we had the Home Renovation Tax Credit to help the economy during the last recession.

It goes without saying that someone who is already wealthy is in a better position to send their kids to university, maximize their RRSP contributions, and renovate their home compared to someone living paycheque-to-paycheque who struggles to pay their rent and feed their family. So in effect, while the government has provided economic incentives that I'm sure most people agree are valuable (higher education, retirement savings, economic stimulus, etc.), they amount to tax "loopholes" that primarily benefit the wealthy.

Those are just three examples that a layman like me knows about from filing my own tax returns. Professional tax accountants (who are more often employed by the rich than the poor) undoubtedly know of many other government programs to reduce one's tax burden, thus enabling the wealthy to pay even less than their fair share of the cost to run society.

So when you talk about closing "loopholes", just be careful what you wish for. We undoubtedly agree that GE shouldn't be allowed to pay zero taxes to the US government by creatively shuffling its earnings to various tax havens around the globe, but are you also against "loopholes" for things like tuition and RRSP credits?

[MarchHare]

Originally Posted by Azure

Obama used it very well during his campaign run, while conveniently ignoring, along with the rest of the Washington, that closing the loopholes and lowering the overall corporate tax rate to make it competitive with the rest of the world would give you more than enough revenue to balance the budget. Of course, the fact that they're ignoring that point that would suggest that Washington has been taken over by Wall Street, which I'm sure is a completely ridiculous notion. No way big business and the government would be in bed.

This is factually inaccurate. Obama actually proposed to do exactly what you're suggesting (lower the corporate tax rate but offset the lost income by closing loopholes) earlier this year. His plan was, of course, rejected by the Republicans.

http://www.reuters.com/article/2011/...70P1GX20110126

U.S. President Barack Obama called on lawmakers on Tuesday to work with him to cut the corporate tax rate, but his pitch to offset lost revenues by slashing tax breaks cherished by companies could stall the effort.

"I'm asking Democrats and Republicans to simplify the system. Get rid of the loopholes," Obama said in his State of the Union address to a joint session of Congress. "A parade of lobbyists has rigged the tax code to benefit particular companies and industries."

[...]

The president has proposed cutting tens of billions of dollars in corporate tax preferences in his first two budgets, and on Tuesday he repeated his call for eliminating what he terms loopholes.

Among the business tax benefits Obama wants to scrap are those letting companies defer taxes on income earned abroad. Corporate America -- especially pharmaceutical and technology companies and multinationals like General Electric Co -- prize these tax provisions.

[Flames Fan, Ph.D.]

Originally Posted by MarchHare

With respect to what you call "loopholes", in many cases these are tax credits that the government authorized to provide an incentive for a particular behaviour. We have many of these in Canada, too. For example, the government thinks it would be a good idea if post-secondary education was more affordable to a greater number of Canadians (a higher educated work force will, at least in theory, lead to a stronger economy), so you can claim tuition fees as a tax credit. Likewise, promoting retirement savings was seen as a good thing, so you can also subtract RRSP contributions from your taxable income (the money will eventually be taxed when you withdraw it during your retirement, but the idea is that you'll be at a lower marginal rate at that time). More recently, we had the Home Renovation Tax Credit to help the economy during the last recession.

I think the "loopholes" that people are talking about involve means that people use to evade the intent of the law. In that respect, I don't think an RRSP / IRA is really a loophole: the purpose is explicit.

I think the more relevant provisions are strategies like "transfer pricing" that are used by companies purely to hide revenue from US authorities.

One of my favorites was the tax exemption about 10 years ago that said vehicles over a certain weight qualified as farm equipment and their purchase provided advantageous tax treatment. The net result: Hummer's also qualified due to their weight, and normal people were buying them and using a significant portion of the purchase price as a tax write-off. Sheer silliness.

[Azure]

Originally Posted by MarchHare

One other point:

With respect to what you call "loopholes", in many cases these are tax credits that the government authorized to provide an incentive for a particular behaviour. We have many of these in Canada, too. For example, the government thinks it would be a good idea if post-secondary education was more affordable to a greater number of Canadians (a higher educated work force will, at least in theory, lead to a stronger economy), so you can claim tuition fees as a tax credit. Likewise, promoting retirement savings was seen as a good thing, so you can also subtract RRSP contributions from your taxable income (the money will eventually be taxed when you withdraw it during your retirement, but the idea is that you'll be at a lower marginal rate at that time). More recently, we had the Home Renovation Tax Credit to help the economy during the last recession.

It goes without saying that someone who is already wealthy is in a better position to send their kids to university, maximize their RRSP contributions, and renovate their home compared to someone living paycheque-to-paycheque who struggles to pay their rent and feed their family. So in effect, while the government has provided economic incentives that I'm sure most people agree are valuable (higher education, retirement savings, economic stimulus, etc.), they amount to tax "loopholes" that primarily benefit the wealthy.

Those are just three examples that a layman like me knows about from filing my own tax returns. Professional tax accountants (who are more often employed by the rich than the poor) undoubtedly know of many other government programs to reduce one's tax burden, thus enabling the wealthy to pay even less than their fair share of the cost to run society.

So when you talk about closing "loopholes", just be careful what you wish for. We undoubtedly agree that GE shouldn't be allowed to pay zero taxes to the US government by creatively shuffling its earnings to various tax havens around the globe, but are you also against "loopholes" for things like tuition and RRSP credits?

I doubt the government is losing much revenue because they're providing incentives for post secondary education or RRSP credits, or the variety of other things you can claim tax credits for. I agree with those kinds of 'loopholes.'

But, subsidizing the oil industry, or allowing GE to get away without paying ANY taxes at all while they have $10 billion dollar quarters is where you're losing your major source of revenue.

Tax credits for post secondary education might help to increase your overall education level throughout the country. RRSP credits will help make sure people put money away for retirement. Things like that are necessary and contribute to the overall health of your country.

When GE gets a multi-billion dollar tax surplus, its not necessary at all. Fair should be fair....and GE should have to pay taxes just like the rest of us.

[Azure]

Originally Posted by MarchHare

This is factually inaccurate. Obama actually proposed to do exactly what you're suggesting (lower the corporate tax rate but offset the lost income by closing loopholes) earlier this year. His plan was, of course, rejected by the Republicans.

http://www.reuters.com/article/2011/...70P1GX20110126

I actually applauded his plan.

But, I was referring to his campaign earlier, when the '$250,000' number was thrown around a lot.

He never really brought up closing the loopholes while he was running for President, IIRC. And it should have been a major sticking point.

The majority of the people in the US don't seem to understand how the system even works.