Tax Increases

[domtoni]

OK guys, now's your chance to respond. What do you say to this? Can you support your argument with fact? The web address is below if you want the source.

In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses January 1, 2011, says Americans For Tax Reform.

The first wave will be the expiration of 2001 and 2003 Tax Relief. In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:

Personal income tax rates will rise; 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 return of the Death Tax:

This year, there is no death tax.
For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million.
A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.
Higher tax rates on savers and investors:

The capital gains tax will rise from 15 percent this year to 20 percent in 2011.
The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.
These rates will rise another 3.8 percent in 2013.
Some of the other taxes the Obama administration has planned:

There are over 20 new or higher taxes in ObamaCare; several will first go into effect on January 1, 2011.
When Americans prepare to file their tax returns in January of 2011, they'll be in for a nasty surprise -- the Alternative Minimum Tax (AMT) won't be held harmless, and many tax relief provisions will have expired.
Source: Ryan Ellis, "Six Months to Go Until The Largest Tax Hikes in History," Americans for Tax Reform, July 1, 2010.

For text:

Six Months to Go Until<br> The Largest Tax Hikes in History

For more on Taxes:

Taxes - Page 1 | National Center for Policy Analysis



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I actually expect the double dip to hit, the jobless rate to go back up again, the stock market will go down, and its too early for the new majority to do anything about this until maybe late spring.

 

[tom pritchett]

ummmm happy 4th of July.

 

[domtoni]

Sorry to warm your heart Tom.

 

[Ron R.]

Its as if the government were redistributing income among its population based on voting habits, rather than efficiently providing the limited services outlined in the constitution.

Humm.

 

[Bill Dietz]

Obama at his best, spinning his tales.

 

[Charlie Farley]

Ron,
You have it right.
Thats exactly what Gordon Brown and his cronies did here.
Created a shed load of bogus, ineffectual public service jobs in his voting heartlands.
By shed load, i mean shed load. Last count it was 1.6 million.
Good luck.
Now who was it that said you can't buy the vote in modern western democracies ?
Happy Dependance Day !

 

[Nick]

Ron,
You have it right.
Thats exactly what Gordon Brown and his cronies did here.
Created a shed load of bogus, ineffectual public service jobs in his voting heartlands.
By shed load, i mean shed load. Last count it was 1.6 million.
Good luck.
Now who was it that said you can't buy the vote in modern western democracies ?
Happy Dependance Day !

Sorry Charlie,

Gordon Brown never won an election so if he did attempt to buy the vote it was pretty ineffectual.

 

[Jeff Young]

I hate taxes as much as anyone.

But aren't the same people in this thread who are criticizing these (modest, at least on an individual taxation level since we are just going back to Clinton era rates) increases the same ones who are (rightfully) scared about our debts/deficits?

Sorry guys. Yes, I know Obama promised no tax increases on folks who make less than 250k, but at this stage of the game with the deficit and debt where it is, it is time to pay up.

 

[J. Salmon]

I hate taxes as much as anyone.

But aren't the same people in this thread who are criticizing these (modest, at least on an individual taxation level since we are just going back to Clinton era rates) increases the same ones who are (rightfully) scared about our debts/deficits?

Sorry guys. Yes, I know Obama promised no tax increases on folks who make less than 250k, but at this stage of the game with the deficit and debt where it is, it is time to pay up.

The point is to reduce the debt and deficit by reducing spending.

 

[Jeff Young]

Neither Republicans or Democrats have been capable of that (reducing spending) since WWII. Politically, it doesn't appear possible.

That leaves two means of reducing the deficit and debt: economic growth (like we had under Clinton) or higher taxes (like the slightly higher ones we had under Clinton).

A surefire recipe for disaster is cutting taxes and either keeping spending the same, or increasing it. See 1980 to 1992 and 2000 to 2008.

 

[Mike Christian]

I personally have no probelm with a tax increase if it is spent actually reducing debt if spending is curtailed and the focus of the spending is adjusted....I will just find a way to make more money. There is plenty of opportunity out there.

 

[Garry]

A surefire recipe for disaster is cutting taxes and either keeping spending the same, or increasing it. See 1980 to 1992 and 2000 to 2008.<!-- google_ad_section_end -->

Jeff,
You are using this data without corresponding facts of the previous time periods where the actual debt burden was placed. The 1980 t0 1992 growth of debt occured due to 1st: Carter and the sour economy he left in shambles and later, the Gulf War. During that period, was one of the greatest economic miracles in modern times. The sad fact is that Reagan had to correct the stinking economy and create a sustainable military response to the USSR, which he won,is evidence if you will look beyond the deficit focus. There were more new businesses started and created from his reduction of taxes and the stimulus of new tecnology that happened on his watch with his incentives to grow new industries. Bush I simply maintained the basic program but with one caviat, he raised taxes and tried to fund a WAR, which resulted in increases deficits. Maybe he should have left the taxes alone.
Under Bush II was one of the greatest economic miracles of our time. If you will look at the growth of the GDP, adjusted for inflation, you will find that it was the greatest expansion of new jobs and business creation since our economy was created. If we had kept our watchdogs in the Government on top of things (which they are PAID to do), most of this would not have happened. The truth is that Government Policies, created by the Democratic party, which was in power, that led to Fannie May and Freddie Mac pulling the real-estate 2-step and which led to the banking crisis. I will admit the GOP did nothing to stop it either. They were too focused on WAR in Iraq and Afghanistan and their elitest buddies were focused on making bigger bonuses.
There is plenty to go around in the blame game. Your focus on Reagan and Bush (I&II) has outed you my friend. You claim to be fair and balanced, but you are looking at one indicator of economics and not the whole picture.
Let your research glance toward total jobs created in the private sector, the growth of the GNP adjusted for inflation and other markers of a healthy economy. While you are at it, look to see if there was a major miltary build-up or a war when the deficits are growing. These are not the president's fault. It takes Congress to make war.
Garry

 

[Jeff Young]

A lot of "huhs?" in that post, sorry.

1. There was expansion and contraction in the 80s -- remember the stock market crash of 87? I will grant you that cutting taxes had a stimulative effect. THe problem is Reagan, like every politician Democrat or Republican in the post war era before and after him -- was not able to reel in spending.

The numbers don't lie. Debt as a percentage of GDP exploded under Reagan, and that debt (and spending!, not just the tax cuts) fueled growth. Temporarily. As debt increases, it skews long term interest rates and that has a negative impact on the economy.

2. Bush II???????? We lived in a fantasy economy created by Wall Street -- with complacency by the government and this irrational idea that everyone should own a home and those who had homes should extract every penny of equity out of them --that created false prosperity. We started paying that bill in late 2008.

Bush II also exploded spending.

3. Only Congress makes war????? Huh? Since WWII, name one declared war by Congress? ZERO. The Executive in this country has effectively taken over that function. And more importantly, it is the scope of military spending that was so vastly increased in the 80s under Reagan that brought us a huge bill to pay in the early 90s. Now was it necessary? It was certainly succesful. But coupled with tax cuts, it was fiscally irresponsible.

You can't escape it. Republicans have blown debt through the roof since 1980. They've done it because they think they can cut taxes and increase spending, or make promises about cutting spending they can't keep. You are right, I'm not without an agenda, I'm pretty liberal on social issues but I think fairly centrist on monetary policy, and I will tell you that Democrats can't/won't/don't cut spending either. But for whatever reason, and the numbers DO NOT LIE, debt as a percentage of GDP has gone down under each and every Democrat president since 945.

I happen to think that is because they are actually more pragmatic about the situation. They realize spending can't be cut, so they are more reasonable about tax policy.

We'll see how it goes with the rest of Obama's term. Clinton's debt to GDP ratio rose early on too, and then fell as the economy came around. Obama will need the same thing to happen.

 

[domtoni]

Jeff, I don't agree with you. Catch this:

CBO report: Debt will rise to 90% of GDP - Washington Times

Did I miss something or has Obama become a Republican?
America is sinking under Obama?s towering debt – Telegraph Blogs

 

[domtoni]

Here's another one from Bloomberg:
U.S.'s $13 Trillion Debt Poised to Overtake GDP: Chart of Day - Bloomberg

As I read the chart in 2008 (right before the collapse) the differential between GDP and debt was a plus 6 Trillion for GDP. When Bush 2 took office, the difference was about 3,5 Trillion.

If this is true, how is Garry wrong Jeff?

 

[Garry]

Jeff,
FDR wanted War with Japan and the Axis. I think he was in the right on that call. We won, so that is also why he was right. But, Congress has to pass a vote to declare war. It's in the constitution. I know that Executive power has grown, but congress still must vote up or down. Bush II's war,as the left calls it, was voted in the senate and if memeory serves me, at 98-2 in favor. I could be off a little but I don't feel like researching the data today. The point is, every president sues the congress for a war declaration. The fact that it is rubber stamped by them is another debate.
Garry

 

[Mark Worthington]

Debt as a percentage of GDP exploded under Reagan, and that debt (and spending!, not just the tax cuts) fueled growth. Temporarily. As debt increases, it skews long term interest rates and that has a negative impact on the economy.

If debt exploded under Reagan, it just went supernova under Obama.

I happen to think that is because they are actually more pragmatic about the situation. They realize spending can't be cut, so they are more reasonable about tax policy.

Just so you are on record about what you really think about the administration's tax policy as outlined above. Reasonable.

What do you do for a living that allows you to call this reasonable?

 

[domtoni]

I agree with Mark. Jeff, what do you do for a living?

If you don't do anything in business, you may want to give it a try. Its not easy to make a few bucks.

 

[domtoni]

Jeff, I know you will not like the source, but that doesn't again matter. Look at the numbers. Can you see that the states quoted in the article have added public service jobs while shedding private sector jobs?

"Analyst: Obama has U.S. economy in 'death spiral'" - Patriot Update

You may wish to review what the conservatives are doing in the UK about cutting public sector jobs from 6.2 million to 5 million over the coming years. The public is saying to get rid of the public sector managers, who are paid very well, get great pensions, and contribute virtually nothing. You can hear this on BBC Radio news.

 

[Jeff Young]

Domtoni it is as if you don't read our posts. Look at the Debt as a percentage of GDP chart that I and others have posted over and over in this thread and the other one.

It went DOWN from 45 to the early 70s, stayed flat, and then erupted under Reagan, nearly doubling, and then doubling again under Bush II. It only went down under Clinton because TAX policy was reasonable and the economy was growing. Meaning, we didn't enact tax cuts without spending cuts.

Mark, it appears your chart is of the DEFICIT, not the debt. I can't have a discussion with someone who doesn't understand the difference between the two. Plus, 2009 was a Bush budget, and we would have gotten TARP and the stimulus regardless of who was in office.

White House projects record deficit for 2009 - CNN.com

And again, you miss my point. I don't like out of control spending from either side. What I like even LESS is out of control spending coupled with tax cuts. Which is what we tend to get from Republicans.

That is why I consider tax policy from the Democrats since 1945 (Kennedy passed a huge tax cut by the way, when it was feasible to do so) to be far more reasonable. It isn't great, and the spending is still out of control, but at least we are trying to pay our way.

Garry, EVERY US military action since 1945 (Korea, Vietnam, Lebanon, Grenada, Panama, the Gulf War I, Somalia, Afghanistan, and the Gulf War II) has been at the behest of the President without a formal declaration of war. Whether Congress supports it by resolution or not has been superfluous. In the post WWII constitutional milieu, the President makes war. It's not what the Constitution says, but it is how it works.

Oh yeah, I'm a community organizer.

NOT....I own 4% of a small (about $18 MUSD/year) business. Pay six figures a year in taxes.