Closing the Deficit At The Source

[NJ Stinks]

While Congress focuses on spending cuts on discretionary programs (that would adversely affect the nation's poorest citizens) and the cost of running the government, the country continues it's plunge to financial ruin. If Congress is serious about addressing what really ails this country, taxes and tax rates are the key IMO. An obvious place to start is on corporate tax rates and the tax rates on capital gains and dividends. Then move on to income tax rates later on.

Consider the facts below from a recent article in the Washington Post.
_______________________________________

* To offset that tax loss and cut budget deficits, we should then increase individuals’ taxes on corporate dividends and capital gains (profits from sales of stock or property). They enjoy a ridiculously low top rate of 15 percent (http://en.wikipedia.org/wiki/Dividend_tax) — a giveaway to the rich that makes no sense as economic policy. The wealthiest 1 percent of Americans receives two-thirds of capital gains (http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States) and dividends.

* Our top corporate tax rate of 35 percent is one of the highest, though some tax breaks reduce the effective rate. Europe’s average rate is closer to 25 percent. Meanwhile, successive presidents and Congresses cut the capital gains rate from 28 percent under President Ronald Reagan to 20 percent and then 15 percent — a rate also enjoyed unjustifiably by hedge fund managers. In 2003, Congress cut the rate on dividends, once taxed as ordinary income, to 15 percent.

That’s all backward, say economists Rosanne Altshuler, Benjamin Harris and Eric Toder in a paper from the nonpartisan Tax Policy Center (http://www.taxpolicycenter.org/UploadedPDF/412093_progressivity_global.pdf). We should lower the tax on corporations. That would make the United States more attractive to American and foreign multinationals. We should then raise taxes on the people who receive the benefits of profits. The economists suggest cutting the corporate rate to 26 percent and increasing the capital gains rate to 28 percent; dividends would be taxed as ordinary income. Eliminating unwarranted business tax breaks would generate extra revenue.

If done properly, this switch would create jobs, reduce the budget deficit and diminish tax avoidance. The idea that raising rates on capital gains and dividends would harm the economy is contradicted by experience. After all, the Tax Reform Act of 1986 (http://en.wikipedia.org/wiki/Tax_Reform_Act_of_1986) — proposed by Reagan with bipartisan support — raised the capital gains rate to 28 percent, and the economy did fine. Indeed, ending the low 15 percent rate for hedge funds would remove a tax subsidy that favors paper investing over real production.
________________________________

The entire article is at the link below:

http://www.washingtonpost.com/opinions/the-real-tax-avoidance-scandal-centers-on-dividends-and-capital-gains/2011/04/01/AFRz6TXC_story.html

[Ocala Mike]

The way our pols are attacking the deficit reminds me of that old canard about going into a bathroom where the tub is overflowing and there is a bucket, a mop, a sponge, and a vacuum hose available and you have to decide what to do first.

The correct answer, of course, is to TURN THE WATER FAUCET OFF!

I don't understand why there can't be a FLAT 10% across the board reduction in ALL spending, yes, even entitlements, coupled with a FLAT 10% increase (surcharge) in all taxes and elimination of loopholes. Don't know the math, but couldn't something like this work, or would it be too burdensome on the poor?


Ocala Mike

[maddog42]

I agree about the corporate tax rate should at least be reduced to the european average of 25 percent. I don't think we can do it all at once. Reducing it by %5 would cost us about 500 billion according to the 60 minutes article. I would recommend a tax cut of 3 percent per year for 5 years. This is one of the good ideas republicans have. Some of the others are not so good.

[Robert Goren]

The most profitable companies pay the highest rates. The oil companies, Netflix and Whole Foods all pay high rates. I think when a company starts griping about and looking for way to avoid taxes, It is time to sell their stock. They have run out steam when it comes of ways to increase their profits by running their core business and now the only way they can do it is by lower their tax burden. For instance I would not be caught dead owning GE. They are devoting to much energy into avoiding taxes and not near enough into getting those profits in the first place. Just my opinion, take for what it is worth.

[Tom]

We do not have a revenue problem.
We have a spending problem.

There are not enough rich people in the world to offset Obama's spending.
A balanced budget is imperative - immediately.

Start with a budget of $0 and let everything be added one line item at a time, fully disclosed how much, where it is going, and who sup[ports it and why it is needed. Start with national security and then go in some priority of need to all, and when the budget is used up, nothing more gets added. Period.

Any good panel of successful businessmen could do this.
The government is full of short-sighted losers who never had success as a criteria for anything. No wonder we are id hock up to our ears.

Get government out of it and we have a chance.

[mostpost]

We do not have a revenue problem.
We have a spending problem.

There are not enough rich people in the world to offset Obama's spending.
A balanced budget is imperative - immediately.

Start with a budget of $0 and let everything be added one line item at a time, fully disclosed how much, where it is going, and who sup[ports it and why it is needed. Start with national security and then go in some priority of need to all, and when the budget is used up, nothing more gets added. Period.

Any good panel of successful businessmen could do this.
The government is full of short-sighted losers who never had success as a criteria for anything. No wonder we are id hock up to our ears.

Get government out of it and we have a chance.

We have a spending problem only because we have a revenue problem. Everyone complains that taxes are too high, but the truth is taxes are not too high. Our problems began when Reagan and other Republicans started to cut taxes without matching cuts in spending. That is when deficits and the national debt began to soar. (tripled in Reagan-Bush years.) Had we kept the tax rates of 70's we would have been able to fund our current programs without a problem. Instead we cut taxes in half. In the meantime we did nothing to curtail spending and even increased some spending a great deal. i.e. military spending under Reagan and the war in Iraq/Afghanistan under Bush II.

Lower taxes do not stimulate the economy. As proof of this I offer a tale of two decades. 1951 to 1960 and 2000 to 2009.

.....................1951 to 1960.................................2000 to 2009

TAX Rate.........91%.................................. ...40%; 39.1%; 38.6%; 35%
.................................................. ........................last 7 yeaars

annual GDP growth 3.55%..................................1.82%


average annual
unemployment.......4.53% .................................... 5.54%


% salary growth
over the ten years....30%...................................... basically flat.


A 91% top tax rate may be high, but clearly that rate did not impede strong economic growth in the 50s and the low taxes of the oughts did not foster economic growth during that period. Furthermore the low tax rates directly led to the deficits we have endured recently.

Top earners can cry all they want that they are being overtaxed, but the fact is they are paying, by percentage, less than half what they were then. The fifties were, by all measures, a more prosperous decade than the most recent one.

Let me finish by saying that there do need to be cuts, but indiscriminate cuts for the sake of cutting is not the answer. Furthermore giving a blank check to the military at the expense of social programs is shortsighted. Make the military account for its spending. Make them prove the items they request are really needed and being gotten from the most economical (But safe) sourcess.

[prospector]

when do you libs understand you are not taxing a corporation? you are taxing the shareholders and employees and those who buy the product...
the best tax code is straight 10% on all individuals..gov can live with that revenue or fail..
every dollar my corporation paid in taxes was less money for raises, bonus and profit sharing..which is why i did my best to pay almost zero taxes..and proud of it..:)

its long past time to fire the lawyers in congress and replace them with businessmen who understand how to run a business....profitably

[Tom]

How much wealth does the "rich" you want to rape have, mostie?
What percentage of the Obama debt?

We have a spending problem because our government is 100% incompetent and most have their own golden parachutes. Look at all the waiver to Obama policy - why is that, do you think?

Because the jackass knows his policies are poison to anyone who comes in contact with them.

[ArlJim78]

tax increases are not in the cards, only lunatics like the socialist Bernie Sanders are pushing for them. you simply can't go back to the way the rates were decades ago without destroying the economy. the rich are no longer benefiting from those cuts. once you change the rates everything aclimates to the new norm. trotting out the same old tired marxist slogans about the rich don't pay enough is nothing more than putting your head in the sand.

[mostpost]

How much wealth does the "rich" you want to rape have, mostie?
What percentage of the Obama debt?

We have a spending problem because our government is 100% incompetent and most have their own golden parachutes. Look at all the waiver to Obama policy - why is that, do you think?

Because the jackass knows his policies are poison to anyone who comes in contact with them.
Wait a minute! I thought I was on IGGY!! How can you be answering me if I'm on IGGY?

[newtothegame]

The most profitable companies pay the highest rates. The oil companies, Netflix and Whole Foods all pay high rates. I think when a company starts griping about and looking for way to avoid taxes, It is time to sell their stock. They have run out steam when it comes of ways to increase their profits by running their core business and now the only way they can do it is by lower their tax burden. For instance I would not be caught dead owning GE. They are devoting to much energy into avoiding taxes and not near enough into getting those profits in the first place. Just my opinion, take for what it is worth.
Seriously...do you ever read what you post??
Let me ask you this Robert....WHY do investors invest in a company?? Is it because they like the color of a particuliar companies logo? When you get to the answer of this question, here is another....
If your above answer is due to returns to the investor through profits, how can a company be profitable if your willing to take their profits in taxes???
Then you have enough gall to say that if "they run out of steam when it comes of ways toincrease their core business"....what the hell does that mean? Did you ever think thsat a company might not run out of steam if you werent taxing them to death? I mean why would I become creative if I am just gonna give it to the government in taxes???
Why not control what your government spends so maybe they wont need so much in taxes??

[mostpost]

when do you libs understand you are not taxing a corporation? you are taxing the shareholders and employees and those who buy the product...
the best tax code is straight 10% on all individuals..gov can live with that revenue or fail..
every dollar my corporation paid in taxes was less money for raises, bonus and profit sharing..which is why i did my best to pay almost zero taxes..and proud of it..:)

its long past time to fire the lawyers in congress and replace them with businessmen who understand how to run a business....profitably

Taxes are a part of doing business in the same way that salaries and raw materials are. A shareholder should understand that their dividend will be affected by those things. I do not for a minute believe that the full burden of corporate taxes falls on the consumer. The corporation has to eat some of that burden in order to remain competitive. Your idea that corporations should pay no taxes is nonsense. Should they be allowed to reap the benefits of our society without paying anything for those benefits.

We can and we should raise taxes, but we should also reinstate tariffs on foreign goods. It would be counterproductive to make our businesses pay higher taxes and compete with foreign businesses who enjoy a lower rate.

[newtothegame]

]We have a spending problem only because we have a revenue problem.[/b] Everyone complains that taxes are too high, but the truth is taxes are not too high. Our problems began when Reagan and other Republicans started to cut taxes without matching cuts in spending. That is when deficits and the national debt began to soar. (tripled in Reagan-Bush years.) Had we kept the tax rates of 70's we would have been able to fund our current programs without a problem. Instead we cut taxes in half. In the meantime we did nothing to curtail spending and even increased some spending a great deal. i.e. military spending under Reagan and the war in Iraq/Afghanistan under Bush II.

Lower taxes do not stimulate the economy. As proof of this I offer a tale of two decades. 1951 to 1960 and 2000 to 2009.

.....................1951 to 1960.................................2000 to 2009

TAX Rate.........91%.................................. ...40%; 39.1%; 38.6%; 35%
.................................................. ........................last 7 yeaars

annual GDP growth 3.55%..................................1.82%


average annual
unemployment.......4.53% .................................... 5.54%


% salary growth
over the ten years....30%...................................... basically flat.


A 91% top tax rate may be high, but clearly that rate did not impede strong economic growth in the 50s and the low taxes of the oughts did not foster economic growth during that period. Furthermore the low tax rates directly led to the deficits we have endured recently.

Top earners can cry all they want that they are being overtaxed, but the fact is they are paying, by percentage, less than half what they were then. The fifties were, by all measures, a more prosperous decade than the most recent one.

Let me finish by saying that there do need to be cuts, but indiscriminate cuts for the sake of cutting is not the answer. Furthermore giving a blank check to the military at the expense of social programs is shortsighted. Make the military account for its spending. Make them prove the items they request are really needed and being gotten from the most economical (But safe) sourcess.
Mosty Mosty mosty...your first sentence says everything anyone needs to know about you. You have this fixation that an entity or person can spend HOWEVER much they want and somehow the income needs to be adjusted to fit that spending.
More entitlements?? How about we just tell everyone to "go spend whatever you like"....the government will subsides the rest???
Your whole opening shows what's wrong with this country.
People and companies should spend within their means versus the opposite!

[bigmack]

A 91% top tax rate may be high, but clearly that rate did not impede strong economic growth in the 50s and the low taxes of the oughts did not foster economic growth during that period.
What % of people do you think paid 91%?

You continue to get data that means nothing in the real world.

[prospector]

Taxes are a part of doing business in the same way that salaries and raw materials are. A shareholder should understand that their dividend will be affected by those things. I do not for a minute believe that the full burden of corporate taxes falls on the consumer. The corporation has to eat some of that burden in order to remain competitive. Your idea that corporations should pay no taxes is nonsense. Should they be allowed to reap the benefits of our society without paying anything for those benefits.

We can and we should raise taxes, but we should also reinstate tariffs on foreign goods. It would be counterproductive to make our businesses pay higher taxes and compete with foreign businesses who enjoy a lower rate.
no offense intended, but i'm guessing you never filled a payroll or signed checks and dealt with the taxes..paying taxes does not make you competitive..profit does..it enables you to do all the things your competitors can't do to retain their customer base..sorry, don't feel like teaching or preaching...goodnight:)

[mostpost]

What % of people do you think paid 91%?

You continue to get data that means nothing in the real world.

It would be more reasonable to compare the average person from the fifties to the average person from the 2000s. So I did.

We can't make a comparison of people who have the same salaries because inflation makes that meaningless. What I did was use the average salary in 1955 which was $28000 and compared it with the average salary in 2005 which was $50000. Both those numbers are approximate since I got them from a chart which was not very detailed.
What I found was that a person earning $28000 in 1955 paid $8520 in federal income taxes. That is 30.4% of his salary. His top rate was 43% on the last $4000 of that $28000. At the time there were seven different rates before one reached $28000.

In 2005 a person earning $50000 paid $6770 in federal income taxes, or 13%. In other words he paid less taxes than a person earning half as much fifty years earlier. His highest tax rate was 15%. That was on the last $35400 of his salary.

What all this means is that in the past our tax burden was much higher than it is now. Yet we prospered in those times and we are not prospering now. Why? Because it is not about the taxes. It is about how the money is distributed. We have fallen into a pattern in which the money is distributed unevenly to a small cadre at the top. What they get is far out of proportion to what they contribute. It's not about redistribution; it's about fair distribution.

[bigmack]

What I did was use the average salary in 1955 which was $28000 and compared it with the average salary in 2005 which was $50000. Both those numbers are approximate since I got them from a chart which was not very detailed.
:eek: According to my numbers the average salary in '55 was less than $4500.

[dartman51]

:eek: According to my numbers the average salary in '55 was less than $4500.

Thanks Mack. I was wondering what dreamworld mosty was living in. The average income in 1955 was $4137.

http://www.fiftiesweb.com/pop/50s-cost.gif Prices for 1955

House: $22,000
Average income: $4,137
Ford car: $1606-$2944
Milk: $.92
Gas: $.23
Bread $.18
Postage stamp: $.03
Sirloin chops: $ .69 lb.
Pot Roast: $.43 lb.
Eggs, doz.: $.61
Coffee: $.93 lb.
Milk, ½ gal. $.43
Potatoes, 10 lb. bag: $.53
Starkist Tuna, 6 ½ oz. can: $.25 lb.
Oreo cookies, 11¾ .oz pkg: $.39
Potato Salad, pint: $.29
Cracker Jack, 24 pac: $1.49
Apple cider,½ gal.: $.49
Gum Drops, 1½ lb. pkg: $.29
Ivory Soap, 2 bars: $.29
Mickey Mouse lunchbox: $.88
Slinky: $.88
Nylons, pair: $1.00
Home permanent: $1.50
Baseball Glove: $9.95

[ArlJim78]

http://www.youtube.com/watch?v=661pi6K-8WQ&feature=player_embedded
lets just confiscate it all, all the money of the wealthy, then sit back while the living is easy. well for about 9 months anyway.
661pi6K-8WQ

[Pace Cap'n]

Taxes are a part of doing business in the same way that salaries and raw materials are. A shareholder should understand that their dividend will be affected by those things. I do not for a minute believe that the full burden of corporate taxes falls on the consumer. The corporation has to eat some of that burden in order to remain competitive. Your idea that corporations should pay no taxes is nonsense. Should they be allowed to reap the benefits of our society without paying anything for those benefits.

We can and we should raise taxes, but we should also reinstate tariffs on foreign goods. It would be counterproductive to make our businesses pay higher taxes and compete with foreign businesses who enjoy a lower rate.

Where on God's green earth would a corporation obtain any money to pay taxes if not from consumers of its products?

[mostpost]

:eek: According to my numbers the average salary in '55 was less than $4500.
This is where I got my figures.
http://visualecon.wpengine.com/wp-content/uploads/2008/05/avg-income-2006.jpg

[bigmack]

This is where I got my figures.
http://visualecon.wpengine.com/wp-content/uploads/2008/05/avg-income-2006.jpg
UCBerkeley :rolleyes: "Income per tax unit" :confused:

That's how things get askew, not unlike the multitude of graphs from hcap.

[mostpost]

UCBerkeley :rolleyes: "Income per tax unit" :confused:

That's how things get askew, not unlike the multitude of graphs from hcap.
I don't know what "income per tax unit" means either. But I did figure out the reason for the discrepancy. My graph is in 2006 dollars. Which means I should have compared 1955 $28000 to 2005 28000.

[bigmack]

I don't know what "income per tax unit" means either. But I did figure out the reason for the discrepancy. My graph is in 2006 dollars. Which means I should have compared 1955 $28000 to 2005 28000.
I wouldn't work too hard on that endeavor; seems an exercise in futility.

I'd start wrappin' your head around it being a spending problem rather than not enough taxes. Take a gander at that vid, AJ just posted. There ain't enough money to keep pace with spending.

If you want a real eye opener start looking into G-spending in '55 and today. :eek:

[cj's dad]

The thing I find most amazing about Most Posties is that he relies heavily on charts and graphs from God knows where, but never, ever, relies on common sense.

[lsbets]

What all this means is that in the past our tax burden was much higher than it is now. Yet we prospered in those times and we are not prospering now. Why?

We prospered in the 50s because we were the only developed nation in the world to emerge intact from WWII. Everyone else was rebuilding and needed our help to do it. When they were able to buy stuff they had to buy it from us because no one else made anything. As they rebuilt, they started making stuff and bought less from us and sold some to us. That's why we prospered in the 50s, we were the only game in town.

[mostpost]

We prospered in the 50s because we were the only developed nation in the world to emerge intact from WWII. Everyone else was rebuilding and needed our help to do it. When they were able to buy stuff they had to buy it from us because no one else made anything. As they rebuilt, they started making stuff and bought less from us and sold some to us. That's why we prospered in the 50s, we were the only game in town.

That was definitely a part of it, but the high taxes did not prevent us from taking advantage of those circumstances. The fact that those same countries are now flooding our markets is the reason we need to reestablish tariffs.

[mostpost]

I wouldn't work too hard on that endeavor; seems an exercise in futility.

I'd start wrappin' your head around it being a spending problem rather than not enough taxes. Take a gander at that vid, AJ just posted. There ain't enough money to keep pace with spending.

If you want a real eye opener start looking into G-spending in '55 and today. :eek:

Who knows how much time that guy spent on that video when he could have been doing something productive. Nobody expects Exxon Mobil and Walmart to turn all their profit over to the government. Not even Michael Moore. We expect them to do more and they can do more because they have done more in the past with little ill effect.

[Tom]

If you were to TAKE OVER all the oil companies and all the major corporations, you would not come close to paying of the Obama mountain of debt.

We have a spending problem - not a revenue problem.

We have a government out of control and unresponsive to reality. I am sure you can relate to that? :rolleyes::D

[JustRalph]

I was just about to put that video in the thread when I saw Jim had already. That video says a ton.

Prospector......... dead on :ThmbUp:

LS....... good stuff...........

excellent point about PostToastie and common sense too......