Let em expire!

[scoutingagain]

"Until there is a serious (or even some) discussion of spending cuts, tax increase proposals will only be seen as a political strategy to turn Americans against Americans. "

 

Agreed, and until there is some form of tax reform such that the average person believes everyone is paying their fair share there is likely to be little agreement on spending cuts. The average wage earner is not going to agree to cuts in Social Security, Medicare and other government programs they benefit from when they see folks like Mitt Romney paying 15% of their income in taxes and they're paying a much higher percentage of their income.

 

The point is, any meaningful discussion of signficantly reducing the defit/debt has to include the revenue side of the equation, i.e. tax reform. Barry is correct, we can't make significant dents in the defict just by taxing the 1% more. Ultimately we will all need to pay more in taxes and see some reduction in government services.

 

SA

 

 

 

 

[packsaddle]

There is a solution for the tax system, the Fair Tax (fairtax.org).

As for the national debt and deficit, there is a solution for that as well which I have suggested numerous times: end Social Security - now - for everyone; End Medicare - now - for everyone; End Medicaid - now - for everyone. I could add to this list but this is the way to do it. I wish everyone weren't too cowardly to take the measures needed to do it.

[scoutingagain]

The problem with the so called Fair Tax is that it isn't. It's a national sales tax and your effective tax rate is based on how much of your income you spend. If your a lower middle income familiy living from pay check to pay check you are essentially taxed on 100% of your income. If your in the top 20% and saving/investing 20% of your income your only taxed on 80% of your income and earning more on the money you invest and save. It's no wonder the investor class fully supports this approach.

 

A true Fair tax would be a simple flat tax on all income. Treat all income the same, wages, dividends, inheritance, capital gains etc. and tax all of it at the same rate, no deductions for anyone for any reason.

 

Simple.

 

Take the National Budget divided by National Income and that's the tax rate for all income and apply to everyone.

 

SA

 

 

[Eagledad]

Taxes for most politicians are a tool to manipulate the behavior of the masses, not for paying the bills. That is why a 15 trillion dollar deficit is not a big deal to most in Washington. As a result, Fair Tax style reform of any kind is not seriously considered since only small minority of politicians would consider it.

 

Barry

[packsaddle]

Scoutingagain, the flat tax approach you advocate leaves the IRS intact. Moreover, there would still be incentive (and opportunity) for tax fraud and evasion.

 

Under the Fair Tax, a family living check-to-check would actually have a GREATER take home pay because there would be nothing withheld from the check. Yes, purchases would cost more. But at worst they would see no change (See Prebate: http://www.fairtax.org/PDF/PrebateExplained2012.pdf). Under the prebate which is built into the Fair Tax for everyone, a family of four with an income of $30K would see no tax at all. It would be progressive after that up to a rate of 23% of all expenditures. A family with an income of only $15K would see an effective increase to that income of 23%. Best of all, they would have an incentive to spend less, same as the rest of us. Plus, the IRS would be greatly diminished or else go away completely, saving even more. Under the Fair Tax, because of the way it is built into the cost of goods and services, it would be much more difficult to evade the tax or to commit fraud.

Actually, best of all, on April 15 each year, we can all sleep soundly because there will be no returns to file, no tax audits, no fees to pay or software to buy in order to make sense out of over 3 million words of unintelligible tax code.

 

Everyone should read about the Fair Tax in detail before they reject it. (Unless, of course, you're one of those 'cash-only' persons who evades taxes and wants to keep the status quo)

[Beavah]

A $15 trillion dollar deficit is not a big deal at the moment because yields on long-term U.S. Treasury Bonds are at absolute historical lows, eh? Less than 1.6%, with inflation running at around 2.5%.

 

In other words, we're making a 1% return on every dollar we borrow. People are paying the U.S. treasury to loan us money.

 

Who wouldn't borrow money at a negative interest rate? We should be borrowin' like mad.

 

Now, it's important what we do with that borrowed money, eh? Investin' in infrastructure is good. That will lead to economic growth and more taxes and a higher return. Paying Medicare bills or keepin' our Marines in Afghanistan is bad, economically speakin'. That won't lead to economic growth and more taxes, and will mean we won't be in as good a position when those bonds eventually mature.

 

As a conservative policy, the Fair Tax is a fine thing. Lots of advantages. A few downsides that aren't well described on the site. And of course da politicians can muck anything up.

 

For an OK independent analysis of the FairTax, try http://www.factcheck.org/taxes/unspinning_the_fairtax.html

 

B

 

[packsaddle]

The Fact Check discussion is a good one. I was already aware of the difference between the 'effective rate' estimates. To me the concept is the most important thing and the numbers are something that will 'evolve' as the details are examined more and more carefully. The numbers are always going to be constrained by the need to collect enough revenue to cover the costs of doing government business.

 

I agree with the comment about politicians, it's a primary reason I'm not optimistic about the Fair Tax ever happening. As far as the numbers go, I think we all realize that those numbers will change if something like this gains a serious chance of happening. Actually, they're supposed to change periodically in order to balance budgets while remaining revenue-neutral. But, spin aside, the concept is a good one.

To me, the prospect of ending tax returns and reducing or eliminating the IRS are among the most attractive features...regaining the time that is currently wasted in keeping records, navigating the tax forms or tax software that must be purchased, or paying tax preparers to do it for us. Such a waste.

 

Here's the problem that Fact Check has NOT addressed. The Achilles Heel of the Fair Tax is: How to implement it. There is no way to gradually make this the law. Any attempt to gradually move toward the Fair Tax and away from the current status would just provide too much opportunity for those 'politicians' to do what Beavah and I know they would do. The effort would either likely fail or produce something even worse than the current status.

No, the only way to do this is to go 'cold turkey' and do the complete switch on April 15 of whatever year. And I think we all know that THAT would be an upheaval of proportions that few of us can comprehend. I know I can't. So my support of the Fair Tax is dampened by my awareness of the realities of life. For the time being, I'll plan to continue my purchases of TurboTax.

[scoutingagain]

Sorry Pack,

 

For now I'll stand by the conclusion reached by the Factcheck folks, "We found that while there are several good economic arguments for the FairTax, unless you earn more than $200,000 per year, fairness is not one of them."

 

While the Flat Tax would not totally eliminate the IRS it would drastically reduce it's size and scope. If there's no deductions for anyone for any reason, most people would not need to file a return, they won't get anything back. The only reason to file a tax form, would be to declare cash income that did not have the Flat tax deducted from it. Ultimately I believe it would be a fairer tax. But I have no confidence politicians from either party would embrace the flat tax or the fair tax. Either would substantially reduce their influence on the tax code and their value to the special interests that currently own them.

 

Neither approach allows the kind of special interest meddling that the current tax code allows and encourages. And with the Citzens United ruling it looks like we're stuck with special interest politics for the foreseeable future.

 

SA

 

 

[packsaddle]

I thought I'd bring this old chestnut back to life since the Tea Party has succeeded in confirming my prediction that their plan was NOT to have a plan and was rather merely to let the sequester take hold. The whole thing was supposed to be so awful that it would provide incentive to compromise and govern. Wrong again.

 

Does anyone know how much Congressional pay will be cut as a result?

 

I have plenty of old friends in the federal system who are going to be hurt badly as a result. As much as I enjoyed the work, the people I worked with, and the command structure of the Army, I count myself lucky to have had the opportunity to leave that workplace and enter the dreamworld of academia. I understand that at least one forum member is in the federal system and others are dependent through contracts. How is all of this going to affect you?

[Sentinel947]

I thought I'd bring this old chestnut back to life since the Tea Party has succeeded in confirming my prediction that their plan was NOT to have a plan and was rather merely to let the sequester take hold. The whole thing was supposed to be so awful that it would provide incentive to compromise and govern. Wrong again.

 

Does anyone know how much Congressional pay will be cut as a result?

 

I have plenty of old friends in the federal system who are going to be hurt badly as a result. As much as I enjoyed the work, the people I worked with, and the command structure of the Army, I count myself lucky to have had the opportunity to leave that workplace and enter the dreamworld of academia. I understand that at least one forum member is in the federal system and others are dependent through contracts. How is all of this going to affect you?

I am rather anxiously wondering if the Army will have money to spend on my ROTC scholarship.

[packsaddle]

Sentinel947, I'm not sure how the pain will be allocated. But I will ask our ROTC people here and let you know how they reply. I'm thinking it should work the same for you.

 

Answer to my question: Congressional pay and Presidential pay are NOT AFFECTED by the sequester. They won't feel a thing.

[Twocubdad]

Yeah, that would be the 27th Amendment to the Constitution, huh? Kinda hard to argue with that.

 

I don't know if this was the Tea Party's plan or not, but if it was, I'd like to thank them. Maybe next time we can cut more than a paltry $85B.

[Brewmeister]

This is one of the topics that showed up as having a new comment on it, so I thought I'd comment to make that statement true.

[Brewmeister]

I thought I'd bring this old chestnut back to life since the Tea Party has succeeded in confirming my prediction that their plan was NOT to have a plan and was rather merely to let the sequester take hold. The whole thing was supposed to be so awful that it would provide incentive to compromise and govern. Wrong again.

 

Does anyone know how much Congressional pay will be cut as a result?

 

I have plenty of old friends in the federal system who are going to be hurt badly as a result. As much as I enjoyed the work, the people I worked with, and the command structure of the Army, I count myself lucky to have had the opportunity to leave that workplace and enter the dreamworld of academia. I understand that at least one forum member is in the federal system and others are dependent through contracts. How is all of this going to affect you?

I made some corrections:

 

"I thought I'd bring this old chestnut back to life since Obama has succeeded in confirming my prediction that his plan was NOT to have a plan and was rather merely to let the sequester he created take hold. The whole thing was supposed to be so awful that it would pressure the Republicans into accepting one tax increase after another. Wrong again."

 

These "cuts" could affect the fat in the budget, but instead Barry will let them be as painful as possible. It's as stupid as starving your family so you can afford a trip to Disneyland.

[packsaddle]

I thought I'd bring this old chestnut back to life since the Tea Party has succeeded in confirming my prediction that their plan was NOT to have a plan and was rather merely to let the sequester take hold. The whole thing was supposed to be so awful that it would provide incentive to compromise and govern. Wrong again.

 

Does anyone know how much Congressional pay will be cut as a result?

 

I have plenty of old friends in the federal system who are going to be hurt badly as a result. As much as I enjoyed the work, the people I worked with, and the command structure of the Army, I count myself lucky to have had the opportunity to leave that workplace and enter the dreamworld of academia. I understand that at least one forum member is in the federal system and others are dependent through contracts. How is all of this going to affect you?

IT would sure be nice to actually QUOTE someone when you use quotation marks.