120 Days to Go Until the Largest Tax Hikes in US History

[Vulcan]

Originally Posted by VladtheImpaler

Uhhh, what Reaganomics response? I said that tax hikes are inevitably borne by the wage-earning middle class, as the poor don't pay taxes and the rich can take advantage of various breaks and incentives to reinvest their money... and that taxing the middle class would cause less consumer spending, and hurt the economy. Is that Reaganomics?

This is what I know.
Incentives for the rich may work but straight tax breaks to the largest earners didn't. It was supposed to work like you said making the largest earners spend more, causing a trickle down effect (Reagonomics) but the only thing that happened was it created some low paying service jobs and the rich got richer.

Besides that this isn't a tax that will be borne by the majority of the middle class. Just the earners over $250,000.

[opendoor]

Originally Posted by VladtheImpaler

Uhhh, what Reaganomics response? I said that tax hikes are inevitably borne by the wage-earning middle class, as the poor don't pay taxes and the rich can take advantage of various breaks and incentives to reinvest their money... and that taxing the middle class would cause less consumer spending, and hurt the economy. Is that Reaganomics?

You may be correct in the short term; however, there is the much larger issue of trying to prop up the economy with borrowed money, which is effectively what is happening in the US with their current budget situation. Their tax rates are being kept artificially low by the government who borrows massive amounts of money to essentially subsidize the country's lifestyle. What's going on in the US is akin to using your credit card to pay for a nicer house and car than you can actually afford.

The United States is going to need much larger fundamental shifts in their economics than minor tax changes in order to turn things around; however, keeping tax rates a few percentage points lower than they could be just so the middle class will spend more money they don't have on things they don't need in a probably futile attempt to maintain the country's standard of living isn't the answer either.

The country couldn't afford the tax cuts then with spending as it was and they certainly can't afford to maintain them now. They've had much, much higher marginal rates in the past (see: http://en.wikipedia.org/wiki/Income_..._rates.5B21.5D ; note the top bracket rates from the '30s until the Reagan presidency, they're insane by today's standards), yet people are freaking out about a few percentage point increase. I think most Americans could stand to put their tax burden in both an historical and a worldwide context.

[BlackEleven]

Originally Posted by VladtheImpaler

The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:
- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%

Quoted from the OP...

The brackets are quite different than the ones we have in Canada. In case anyone is wondering what those brackets represent:

10% $0 - $8375
15% $8376 - $34 000
25% $34 001 - $82 400
28% $82 401 - $171 850
33% $171 851 - $373 650
35% $373 651 +

(that's for a single person. There's different rules depending on marital status).

http://en.wikipedia.org/wiki/Income_..._and_tax_rates

Here are the federal rates in Canada, for comparison:

• 15% on the first $40,970 of taxable income, +
• 22% on the next $40,971 of taxable income (on the portion of taxable income between $40,970 and $81,941), +
• 26% on the next $45,080 of taxable income (on the portion of taxable income between $81,941 and $127,021), +
• 29% of taxable income over $127,021.

http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html

[Vulcan]

Obama has announced a batch of new ideas to jump start the economy.

http://www.msnbc.msn.com/id/38997222

and like I said, the tax we are discussing will only affect those earning over $250,000, not the middle class.

INDIVIDUAL TAXES
Tax cuts for all individuals expire at year-end unless Congress takes action to extend them. Obama has stood firm on his pledge to extend the lower tax rates for what he calls the middle class -- individuals making less than $200,000 and couples earning $250,000 and under.
Obama and fellow Democrats say the wealthy are unlikely to spend the extra funds while Republicans say such individuals fuel consumption spending, investment and hiring.
Story continues below More below
Sponsored links


Advertisement | ad info


Advertisement | ad info



Some Democrats, however, are pushing for an extension of all Bush-era tax cuts at least for another year while the economy is still on the mend.

[Flames Fan, Ph.D.]

Originally Posted by calculoso

If you have a problem with it, take it up with the author of the original article.

No need to anymore. Everyone on the thread now knows it's false.

Crisis averted.

[VladtheImpaler]

Originally Posted by opendoor

The United States is going to need much larger fundamental shifts in their economics than minor tax changes in order to turn things around; however, keeping tax rates a few percentage points lower than they could be just so the middle class will spend more money they don't have on things they don't need in a probably futile attempt to maintain the country's standard of living isn't the answer either.

Oh, I agree - this is a drop in the bucket, compared to the issues surrounding the cost of social security and medicine....

[Flames Fan, Ph.D.]

Originally Posted by Vulcan

This is what I know.
Incentives for the rich may work but straight tax breaks to the largest earners didn't. It was supposed to work like you said making the largest earners spend more, causing a trickle down effect (Reagonomics) but the only thing that happened was it created some low paying service jobs and the rich got richer.

It's interesting to note that Reagan actually spent much time raising taxes. When he entered office he made a big splash on the tax cut front. However, the rest of his years were punctuated with (various) tax increases.

Of course everyone romanticizes about the past...

[Azure]

Originally Posted by Vulcan

and as has been pointed out this isn't a tax the rich issue anymore (it was when Bush enacted it), it's the non-renewel of a temporary tax break that the government isn't in a position to pay for.

You do realize that not renewing the tax cuts wouldn't do much to fix the debt load the US has?

[Azure]

Originally Posted by Vulcan

Obama has announced a batch of new ideas to jump start the economy.

http://www.msnbc.msn.com/id/38997222

and like I said, the tax we are discussing will only affect those earning over $250,000, not the middle class.

And you actually think that will do something? Jump-start the economy? The US economy is being propped up by temporary public jobs right now. Investors are sitting on trillions, waiting....and not investing. The private side has effectively stalled. And you think Obama is going to change that? Laughable. He's only made things worse in the past 2 years.

As for your other ridiculous notions, fact is that tax cuts are needed in a recession. The government spend a trillion dollars trying to 'jump-start' the economy and it didn't help. The US needs the PRIVATE side to get involved, to invest their money. You need to give people who HAVE the money the incentive to buy the car, buy the house, buy the yacht. You need to give them the incentive to buy smaller companies, to invest into larger companies, to start a new business, etc, etc. You don't take even more of their money away to fund more ridiculous government spending.

The US is completely living beyond their means right now. The whole government is operating on a different level of the sub-prime mortgage stupidity. Its only a matter of time before something is going to go dearly wrong, if a recession where they are faltering even more now while the rest of the world slowly recovers, wasn't bad enough.

More tax revenue will change absolutely nothing. Except to discourage investment, show government tax revenues as being slightly hire, and making the morons on Capital Hill think they can borrow even more money.

[Vulcan]

Originally Posted by Azure

And you actually think that will do something? Jump-start the economy? The US economy is being propped up by temporary public jobs right now. Investors are sitting on trillions, waiting....and not investing. The private side has effectively stalled. And you think Obama is going to change that? Laughable. He's only made things worse in the past 2 years.

As for your other ridiculous notions, fact is that tax cuts are needed in a recession. The government spend a trillion dollars trying to 'jump-start' the economy and it didn't help. The US needs the PRIVATE side to get involved, to invest their money. You need to give people who HAVE the money the incentive to buy the car, buy the house, buy the yacht. You need to give them the incentive to buy smaller companies, to invest into larger companies, to start a new business, etc, etc. You don't take even more of their money away to fund more ridiculous government spending.

The US is completely living beyond their means right now. The whole government is operating on a different level of the sub-prime mortgage stupidity. Its only a matter of time before something is going to go dearly wrong, if a recession where they are faltering even more now while the rest of the world slowly recovers, wasn't bad enough.

More tax revenue will change absolutely nothing. Except to discourage investment, show government tax revenues as being slightly hire, and making the morons on Capital Hill think they can borrow even more money.

No, what will do something is the the multi-millionaires getting off their butts and investing in the States. I don't think they'll do anything, no matter what Obama offers because the Senate is in the back pocket of these investors on both sides of the house.

but thanks for the insults from a know it all who has amply proven in the past that he doesn't know a hell of a lot.

[CaramonLS]

Originally Posted by VladtheImpaler

Uhhh, what Reaganomics response? I said that tax hikes are inevitably borne by the wage-earning middle class, as the poor don't pay taxes and the rich can take advantage of various breaks and incentives to reinvest their money... and that taxing the middle class would cause less consumer spending, and hurt the economy. Is that Reaganomics?

To be fair... if you're increasing taxes to people who make over 250k per year, that isn't really the middle class.

Saying the rich can simply "re-invest" their money is also a bit of a misnomer. I can tell you that most people making 1+ million a year aren't stuck paying 0% tax, because they've given to charity, invested, etc. There are limits to those types of things. I do agree that there are a lot of ways to avoid some taxation, but not all.

The key to an effective tax strategy is pretty simple if you want to stimulate the economy - tax the people who aren't spending to their means and lower taxes for the ones that are (yes I do realize it is a lot more complex than that).

Cedric Millionare's money doesn't do a lot for the economy if it sits in a trust for 70 years.

[Azure]

Originally Posted by Vulcan

No, what will do something is the the multi-millionaires getting off their butts and investing in the States. I don't think they'll do anything, no matter what Obama offers because the Senate is in the back pocket of these investors on both sides of the house.

Isn't that exactly what I said? That 'rich' America has to see the incentive to invest their money? You act as if they should just throw it away, which is a pretty naive position.

People don't invest their money without seeing a benefit in it, nor should they. Unlike the government, people who have made their millions made it because they make smart decisions, and manage their money properly. Emphasis on good return, with a willingness to take risk, but not a willingness to just throw it away.

Right now there is obviously very little incentive in the US to invest, which isn't surprising because the tax structure is so screwed up that somehow the Forbes 400 list gets off paying 17% taxes, while the rest of America pays around 30%.

Nevermind that the US economy doesn't look very well, unemployment is through the roof and would be even worse if not for the temporary jobs being created by census and IRS jobs.

but thanks for the insults from a know it all who has amply proven in the past that he doesn't know a hell of a lot.

Thanks, but at least I'm not naive enough to believe that Obama and his idiotic policies of 'big government' are going to 'jump start' the US economy.

[Azure]

Originally Posted by CaramonLS

To be fair... if you're increasing taxes to people who make over 250k per year, that isn't really the middle class.

Saying the rich can simply "re-invest" their money is also a bit of a misnomer. I can tell you that most people making 1+ million a year aren't stuck paying 0% tax, because they've given to charity, invested, etc. There are limits to those types of things. I do agree that there are a lot of ways to avoid some taxation, but not all.

The key to an effective tax strategy is pretty simple if you want to stimulate the economy - tax the people who aren't spending to their means and lower taxes for the ones that are (yes I do realize it is a lot more complex than that).

Cedric Millionare's money doesn't do a lot for the economy if it sits in a trust for 70 years.

Its pretty well established that the richest people in the US, i.e. the Forbes 400 list pays very little tax. So they have some way to get around the tax laws. This needs to be changed. I'm not a big believer in 'taxes' as I believe the economy should be powered by the private side, with private money, not the money the government collects and then promptly wastes a percentage of it because it is the government. If there will be taxes, they should be fair across the board.

Exactly why the flat tax would work perfectly.

As for someone making $1 million/year, most people will invest that money. Problem is right now people aren't buying, people aren't investing because the US economy isn't looking too great. 2 years ago it was a problem worldwide, but now with a lot of other countries recovering, and the US still sitting in a hole, one has to wonder what exactly will happen. Even the speculation of things not going well, which is abundant right now is enough to discourage people to take that $50,000 sitting in a bank account collecting minimal interest and invest it somewhere else.

Nevermind the people with millions, or the companies with billions.

[Azure]

Article talking about the trillions in cash, and why companies aren't investing it.

Feb. 11 (Bloomberg) -- A majority of companies in the Standard & Poor’s 500 stock index increased cash to a combined $1.18 trillion while simultaneously reducing spending, keeping a jobs recovery on hold.

Companies may be wary of investing and hiring because of questions about government stimulus, taxes and other federal policies that impact business, Lazear said. Subsidies designed to create jobs “just don’t work” and only drive up deficits that may require higher taxes to control, he said.

“What you need to do is make sure the climate for business continues to be positive, and talking about tax increases is not the right way to do that,” Lazear said.

http://www.bloomberg.com/apps/news?p...d=a6kXsL1Q5FYc

Yet all the good news from big business hasn't translated into much promise for jobless Americans, leading many to wonder: If corporations are sitting on so much money, why aren't they hiring more workers?

The answer to that question has become a political flash point between the White House and big business groups such as the U.S. Chamber of Commerce, which held a jobs summit Wednesday and accused the Obama administration of dumping onerous regulations on businesses. That has created an environment of "uncertainty," which is causing firms to hold back on hiring as the unemployment rate has hovered near 10 percent, the Chamber said.

When asked why companies are holding back so much, many economists cite broader uncertainty that goes well beyond anything happening in Washington. Firms aren't sure whether the economy can sustain a strong recovery. And as long as consumer spending remains low, there's not much incentive for companies to ramp up.

One explanation, said finance professor René Stulz at Ohio State University, is that as competition has become more global, it's become harder for individual companies to survive, and so they hold on to more cash to be safe. He added that companies have also increased their cash holdings in the wake of the financial crisis, particularly since the bankruptcy of Lehman Brothers in September 2008, as the banking system has become more fragile and credit has become scarce.

http://www.washingtonpost.com/wp-dyn...T2010082003981

Interesting how the banking system in the US is still causing problems. I guess the sweeping regulations made by the Obama administration didn't give a lot of companies hope that it'll change anything for the better.


http://www.washingtonpost.com/wp-dyn...T2010082003981

[Vulcan]

Right now there is obviously very little incentive in the US to invest, which isn't surprising because the tax structure is so screwed up that somehow the Forbes 400 list gets off paying 17% taxes, while the rest of America pays around 30%.

and this won't change since the government is in the Forbes 400s back pocket.

So what kind of incentive is Obama supposed to give these people and corporations. They aren't investing now and they won't invest in the future until they have a puppet in office again. Right now all Obama has, is to try and give some impetus so small business gains some confidence. According to that article I linked, that's what he's doing or did you even read it before reacting.

[Azure]

See, I don't agree with the tax cuts as they were implemented. I don't think they went far enough, nor was it done the right way. The Forbes 400 list paying 17% was happening before those tax cuts too.

I would restructure the cuts. Leave the middle class completely alone, as they are the consumer that can tell the corporation he should start investing some more money to create jobs in order to meet demand.

Somehow the tax structure on people making a certain amount of money needs to be reworked. Not to necessarily tax them MORE, but just to make sure they pay an equal amount of taxes percentage wise as the people who make $60,000/year, which by some accounts is good money.

Outside of that I think there is an obvious problem with the banking system, and the way the financial system works. A lot of smarter people have mentioned these apparent flaws, and like everything else American, it seems the US government is too arrogant to actually look at other banking systems, like Canada, where it was relatively stable during the worst years of the recession.

But, Obama and his administration, along with Bush and his adminstration which basically includes all Republicans and Democrats gave these 'bankers' billions for their screwups, so I doubt any GOOD regulation that FIXES things is coming anytime soon.

I wouldn't be surprised if the US struggles beyond 2012 to fix their economy.

[longsuffering]

Originally Posted by Azure

And you think Obama is going to change that? Laughable. He's only made things worse in the past 2 years.

Yeah, he's done absolutely nothing right.

http://www.economist.com/node/16846494

Oh wait, maybe The Economist is slightly more credible than Azure? Weren't you predicting doom and gloom on the GM bailout?

I'll wait for you to explain why The Economist has it all wrong.

[Vulcan]

Obama could bring the USA out of the recession, bring peace to the Middle East, win the war in Afghanistan and send a successful mission to Mars and Azure wouldn't be happy.

[Nehkara]

If ever there was a country that needed tax hikes, it is the US... and let's be honest, all they are doing is not renewing tax cuts made by Bush that never should have been allowed to happen. They need major investment in social programs and re-invention of health care and education and they need money to do it.

[Azure]

Originally Posted by longsuffering

Yeah, he's done absolutely nothing right.

http://www.economist.com/node/16846494

Oh wait, maybe The Economist is slightly more credible than Azure? Weren't you predicting doom and gloom on the GM bailout?

I'll wait for you to explain why The Economist has it all wrong.

NEW YORK/DETROIT, Sept 3 (Reuters) - The U.S. government is likely to take a loss on General Motors Co [GM.UL] in the first offering of the automaker's stock, six people familiar with preparations for the landmark IPO said.

The Obama administration has pledged to exit its investment in GM as quickly as possible while holding out the prospect that taxpayers could ultimately be paid back in full.

http://www.reuters.com/article/idUSN0315109920100903