What should be done in the new term?

[Argus]

Assuming, of course, that the president, whomever that might be, can persuade congress to go along. And I have to admit that Romney is more likely to be able to get his agenda passed than Obama simply because Democrats don't tend to be as intransigent or as united as Republicans.

First, you need to address the 'fiscal cliff'. Now I don't think the results of not addressing it would be as severe as most commentators, but because of those commentators failing to address it would result in panic in the markets, which is not what a president wants shortly after inauguration day. The problem is that one way or the other, whoever has power has to address the deficit in a major way, and there's no adequate way to do that without raising new revenues. No matter what Romney may say you aren't going to do it simply by eliminating loopholes. Furthermore, many of those tax writeoffs have a purpose and shouldn't be eliminated.

You also can't do it by reducing 'entitlements', unless you mean 'eliminate' and he can't do that either.

But tax reform is necessary. It's the heart of two major issues. One is the deficit. The other is the growing gap between rich and poor, and the dwindling middle class.

So to start, I would crack down on the most abused corporate tax loopholes. Google, as an example, is not an American corporation. Surprised? Almost all its operations are in the US but it has a postal box in Bermuda and lists that as its headquarters. So does Microsoft. As a result, they pay minimal taxes. On their foreign earnings it's 2.4%

The US personal income tax rates need to be cleaned up, too. A single person earning $35k pays the same rate as someone earning $85k.That's silly. US personal tax rates seem higher than here, but in reality, state taxes are usually treated as deductions for federal taxes. In Canada, provincial taxes go on top of federal taxes. In the US, someone making $175k would pay (theoretically, without talking about loopholes) 28% combined federal and state taxes. In Canada he would pay 29% federal taxes, and then provincial taxes on top of that. That would add another 11.5% - 21% to the total making the tax rate between 40%-50%.

And the Americans wonder why they're going broke. Taxes need to be raised.

Taxes on dividends and capital gains need to be raised on the higher end of the scale. As an example, the tax rate on all dividends is 15%. I'd suggest moving that to 20% for those with incomes over $75k, to 25% for those with incomes over $100k, and so on up to 50% at the top end. I'd do the same for capital gains taxes.

[Bonam]

Assuming, of course, that the president, whomever that might be, can persuade congress to go along. And I have to admit that Romney is more likely to be able to get his agenda passed than Obama simply because Democrats don't tend to be as intransigent or as united as Republicans.

First, you need to address the 'fiscal cliff'. Now I don't think the results of not addressing it would be as severe as most commentators, but because of those commentators failing to address it would result in panic in the markets, which is not what a president wants shortly after inauguration day. The problem is that one way or the other, whoever has power has to address the deficit in a major way, and there's no adequate way to do that without raising new revenues. No matter what Romney may say you aren't going to do it simply by eliminating loopholes. Furthermore, many of those tax writeoffs have a purpose and shouldn't be eliminated.

You also can't do it by reducing 'entitlements', unless you mean 'eliminate' and he can't do that either.

But tax reform is necessary. It's the heart of two major issues. One is the deficit. The other is the growing gap between rich and poor, and the dwindling middle class.

I'd like to see some stats that actually show the size of the middle class over time, along with good explanations of how the middle class is defined.

But mostly I agree. Here's where I'd start:

Taxes:

Referring to this chart: http://blogs.ajc.com.../deductions.jpg

1) Remove the deductions for home mortgage interest. Let's face reality here, people like to buy the best home they can afford. If someone's budget has, say, $1500/month to spend on home-related expenses, that's what they're gonna spend. If government pays for a portion of the cost of homes, the cost of homes will simply go up commensurately, cause people will still be willing to pay the same for them. The supply-demand curve for housing is not altered by government subsidizing it. Get rid of the home mortgage interest deduction, home prices will come down commensurately and remain just as affordable as they are now. That saves $100 billion / year.

2) Get rid of the deduction for state income taxes. Why should the federal government care if you are paying tax in a state? If a state wants to impose an extra tax burden on people within its jurisdiction, it is not the federal government's job to mitigate that burden. States need to live with the consequences of raising their own income taxes, since states with state income taxes still benefit just as much from federal government spending as other states. Kill the deduction for state income tax. That saves $50 billion/year.

3) Kill the special tax rate for capital gains and dividends. Trading and investing is just another job. There is no reason it should be taxed differently than normal income. That's another almost $100 billion/year.

4) Charitable donations. When people donate to charity, they should be donating their own money, not everyone else's. A federal tax deduction for charitable giving means that whenever someone gives to a charity, everyone else is subsidizing a part of that gift, a rather large part in the case of high income earners, who can use this deduction to eliminate millions of dollars in tax liability. Eliminate this deduction, saving $50 billion annually.

5) Continue the current tax rates as they are, across all tax brackets. With the deductions above eliminated, America's current progressive tax rate structure is fair and balanced.

Entitlements

Refer to this date here:

http://en.wikipedia...._retirement_age

http://greenhellblog...-expectancy.jpg

1) The retirement age at the start of social security in 1938 was 65. At that time, life expectancy was about 62. That is, social security kicked in 3 years after the average life expectancy. That means, most people never lived long enough to collect social security, but for those that did live into their old age, it was there for them. Since then, life expectancy has risen dramatically, but the age has only risen from 65 to 67. The social security retirement age should be indexed to life expectancy. That means today's social security full benefits age should be about 80, not 67. Obviously, this should be phased in gradually, since people close to retirement will have planned around social security benefits as currently structured. But this would reduce social security spending from $800 billion annually to about $200 billion annually, saving $600 billion/year. There is no reason people should be living for 20+ years on social security.

Together, the above proposals would save $900 billion/year ($1 of revenue increases for $2 of entitlement cuts, a more balanced approach than the republicans and democrats discussed), eliminating 70% of the annual deficit. The rest can come from reduced war spending as the war in Afghanistan winds down and increased revenues as the economy recovers over the next few years.

Non-economic Issues

1) Immigration reform. This needs to be done. The US gets millions of illegals, while millions of highly skilled legal immigrants are waiting years/decades and paying tends of thousands of dollars in lawyers fees to try to immigrate. This is a screwed up situation and needs to be fixed.

2) Healthcare. Decouple healthcare from employment. All that putting the healthcare responsibility on employers does is raise their costs of hiring employees, reduce people's mobility between jobs, add huge amounts of bureaucracy and red tape, and confuse the issues associated with healthcare reform. People should be paid more (add to their salaries what employers currently pay for health insurance) and purchase their own insurance, in a free and competitive insurance market where individuals can buy what insurance they want/need. And, states that want to make sure everyone is covered should look at state-wide single payer systems, or two-tier healthcare options, as befits any given state.

3) Campaign finance reform. Superpacs and the like are stupid. Constitutional amendment should be looked at here if necessary.

4) Energy. Remove excessive regulatory barriers to nuclear power and particularly new reactor designs. Invest in new energy infrastructure (better grids).

5) Science and research. Increase investment in basic and applied research as well as science and math education, keep America ahead of the game when it comes to science. This is a tiny tiny budget item compared to the big ones.

Edited November 4, 2012 by Bonam

[Pliny]

You both seem to be thinking from the point of view that government is legitimately entitled to your income. They will certainly keep government great.

Income tax is a slave tax. Make the country great again and get rid of it.

[bush_cheney2004]

Many Canadians love to be taxed in exchange for their false collectivist notions of gain and pain. That won't work in the United States, as there are many competing national, state, and local interests that influence tax policies. A flat tax on all income could easily balance revenue needs with leaner spending and spending growth, but the often proposed flat tax is a political non-starter.

Personally, I avoid any taxable income above $150,000 because bad things start to happen to my tax return. Others will follow this strategy if Uncle Sam begins to take more and more in the name of a more "progressive" tax code.

Edited November 4, 2012 by bush_cheney2004

[Bonam]

You both seem to be thinking from the point of view that government is legitimately entitled to your income. They will certainly keep government great.

Income tax is a slave tax. Make the country great again and get rid of it.

It's not a matter of being "entitled" to our income, but a matter of government having certain legitimate functions it has to carry out: military, infrastructure, law & order, basic research. And then there are things that are needed to just avoid even greater costs, such as a basic social safety net. And those things have to be funded with something other than debt. I'm certainly not one to propose expanding the reach of government. I don't think US income taxes are oppressively high right now, nor do I think they should be raised, I think they are just fine, and can be kept around that level, and the budget should balanced around them being roughly where they are.

[bush_cheney2004]

I not convinced that government is responsible for investment in research, and certainly not at the levels seen in the U.S. Canada and many other nations certainly do not allocate spending at such levels.

[Guest Derek L]

Many Canadians love to be taxed in exchange for their false collectivist notions of gain and pain. That won't work in the United States, as there are many competing national, state, and local interests that influence tax policies. A flat tax on all income could easily balance revenue needs with leaner spending and spending growth, but the often proposed flat tax is a political non-starter.

Personally, I avoid any taxable income above $150,000 because bad things start to happen to my tax return. Others will follow this strategy if Uncle Sam begins to take more and more in the name of a more "progressive" tax code.

That’s just it……..Both my wife and I feel exactly the same way, though we hardly have a gold house, rocket car(s) and legions of servants, we are “comfortable”. As such, what sense would it be to continue “earning” money only to then have the Government take it away? Like they say, “you can’t take it with you”, but the Government most certainly can.

[eyeball]

Income taxes could be replaced with consumption taxes. Taxpayers could reduce how much income they lose by reducing how much they consume instead. This would benefit our ecosystems that produce so much of what taxpayers consume which would be like leaving money in the bank for future generations instead of the public debt we're handing off.

[Mr.Canada]

I think a study should be conducted to find out if the world powers are conspiring to kill off 90% of the worlds population. They are poisoning us with aspartame which breaks down into strichnine and through medical vaccines to make us sterile. This population control cannot be allowed to continue.

[bush_cheney2004]

... As such, what sense would it be to continue “earning” money only to then have the Government take it away? Like they say, “you can’t take it with you”, but the Government most certainly can.

It would make no sense whatsoever, with the only saving grace being an ability to shift before-tax income to retirement vehicles. But frankly, I don't even think IRAs, 401ks, or Roths are safe from the tax man and possible changes. A long time ago I learned that government can only take money from those who have it.

[Michael Hardner]

Income taxes could be replaced with consumption taxes. Taxpayers could reduce how much income they lose by reducing how much they consume instead. This would benefit our ecosystems that produce so much of what taxpayers consume which would be like leaving money in the bank for future generations instead of the public debt we're handing off.

Yes, this is a Green tax that conservatives also like because it's regressive. Something to think about in any case.

[Michael Hardner]

They are poisoning us with aspartame which breaks down into strichnine and through medical vaccines to make us sterile.

Cite ?

[Pliny]

What August and Bonam suggest as "solutions" I would call tinkering.

A consumption tax, as proposed by eyeball, is indeed an improvement over an income tax. There is at least some choosing in consumption, often needed when an individual or family or business finds saving more necessary than spending, and the rich would obviously be paying more, if that would please the more liberal crowd.

Edit: Sorry, should have been "Argus" not "August".

Edited November 4, 2012 by Pliny

[Michael Hardner]

What August and Bonam suggest as "solutions" I would call tinkering.

A consumption tax, as proposed by eyeball, is indeed an improvement over an income tax. There is at least some choosing in consumption and the rich would obviously be paying more, if that would please the more liberal crowd.

I think that it's generally acknowledged that they would pay less than today though, isn't it ?

[Guest Derek L]

Income taxes could be replaced with consumption taxes. Taxpayers could reduce how much income they lose by reducing how much they consume instead. This would benefit our ecosystems that produce so much of what taxpayers consume which would be like leaving money in the bank for future generations instead of the public debt we're handing off.

I agree whole heartedly…………Along the lines of Herman Cain’s plan……Such notion is truly a “fair tax”.

[Guest Derek L]

It would make no sense whatsoever, with the only saving grace being an ability to shift before-tax income to retirement vehicles. But frankly, I don't even think IRAs, 401ks, or Roths are safe from the tax man and possible changes. A long time ago I learned that government can only take money from those who have it.

But that raises the question, would those with “money” be better off taking their ball and going elsewhere? Personally we’re thinking Arizona, but the next 48 hours could change that idea………I hear the Philippines are nice this time of year………And just think, for a couple of grand a month, you could live better than Marcos

[Pliny]

I think that it's generally acknowledged that they would pay less than today though, isn't it ?

It seems you have a gripe with the rich. You want them to pay all the taxes which is the only thing that would satisfy your concept of fairness. If you want everyone to participate and fulfill a role in society it should be on the basis of having contributed not on the basis of how much you feel some should be entitled to for existing.

[Michael Hardner]

It seems you have a gripe with the rich.

? Here's your quote again:

rich would obviously be paying more, if that would please the more liberal crowd.

You want them to pay all the taxes which is the only thing that would satisfy your concept of fairness.

I want them to pay all taxes ? You're telling me what will satisfy my concept of fairness ? The wealthy have done pretty well since 1980 or so, so why is questioning that attacked with such strawmen as this ?

I think I should be a corn farmer with all the time I spend cleaning up after strawmen.

[bush_cheney2004]

But that raises the question, would those with “money” be better off taking their ball and going elsewhere?...

Yes, as there is a tipping point that will drive those with wealth to a friendlier tax environment. Those who cite Warren Buffet for higher taxes are free to cut a check to the U.S. Treasury whenever they get the urge to pander to such interests. The real threat is a shift from income to wealth taxes, as seen by the return of higher "death tax" rates in 2011.

Many of the poor serfs don't realize that the uber rich will always have ways of sheltering wealth from the greedy hand of government. Companies like The Hartford specialize in such things for "high net worth" individuals.

[bush_cheney2004]

...I want them to pay all taxes ? You're telling me what will satisfy my concept of fairness ? The wealthy have done pretty well since 1980 or so, so why is questioning that attacked with such strawmen as this ?

Taking money from one citizen to give it to another is inherently unfair, using the power of government to confiscate wealth. The only argument is to what degree this unfairness will be tolerated.

[Mr.Canada]

Cite ?

http://en.wikipedia.org/wiki/Aspartame_controversy#Metabolites

Aspartame metabolizes in the body into Phenylalanine, Formaldehyde, Methanol, Aspartate and others. These are not good for you to be ingesting. They can cause major health problems with use. This drug should never have been approved.

People need to wake up and realize that at the Bilderberg meetings the leaders from each section is represented at the meetings. Big Oil, Pharma, News agencies, Government, every industries leader is represented at the meetings and they decide on issues and how to resolve them. That's right, your government is attending meetings and deciding on policy with people outside of your elected officials.

[Michael Hardner]

Taking money from one citizen to give it to another is inherently unfair, using the power of government to confiscate wealth.

So are conscription, jury duty, prescriptions on free speech, noise restrictions, banning substances, first-past-the-post voting, eminent domain, endless copyright extensions, licensing of exploration rights to friends of government, affirmative action... and countless other things.

I don't know... sometimes it seems like there are more unfair things about our organized society than fair things. And yet, we continue.

The only argument is to what degree this unfairness will be tolerated.

And we won't know that answer until it's not tolerated, and then it will be too late.

[Michael Hardner]

http://en.wikipedia....rsy#Metabolites

Your own link says " In healthy adults and children, even enormous doses of aspartame do not lead to plasma levels of metabolites that are a concern for safety."

And the conspiracy theory part is, of course, unprovable but still unsupported by any evidence from you.

[bush_cheney2004]

So are conscription, jury duty, prescriptions on free speech, noise restrictions, banning substances, first-past-the-post voting, eminent domain, endless copyright extensions, licensing of exploration rights to friends of government, affirmative action... and countless other things.

Then we shall have no more silly talk about tax fairness, eh?

[Michael Hardner]

Then we shall have no more silly talk about tax fairness, eh?

Well, you and Pliny brought it up as far as I can see. I`m careful not to bring up `fairness` as a rationale for economic decisions since having read your signature line a while back.