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Time to Talk Tax Hikes
Raising America's taxes is an excellent idea.
House leaders deserve credit for beginning the debate on exactly who should pay how much more and when. Regardless of the outcome, it will make our politics slightly more honest while relieving some internal pressures on the Democratic Party.
The latter issue is raised by those on the left who are disturbed by how income has tilted toward the top in recent decades and believe the tax system should take a more aggressive role in offsetting that trend. That the revenue raised could finance programs they like or reduce record anticipated deficits is icing on the cake.
White House efforts to mend capitalism rather than end it have troubled this group, which notes that responses have been more successful in saving banks than reducing foreclosures and that executives in semi-socialized firms are still making big bucks.
So asking the rich to pay a bit more sends a reassuring signal to this group while providing a way to fund our government, which is spending quite a bit more than it is currently taking in.
Whether such a tax increase is actually included in the health package ultimately approved -- and my personal bet is that at least a sliver of it will be -- isn't terribly important. What is important is that this faction of the Democratic Party has an opportunity for a public test of something it thinks should be on the agenda.
At best, they'll win something. At worst, they'll have a clearer picture of who's unsympathetic to their views. A final benefit is that this avoids a sticky debate about taxing employer-paid health insurance premiums, a disruptive move of unpredictable benefit that they see as a dagger aimed at one of their key constituencies, union members.
Raising this issue can also start a debate about our chronic deficit issue. Few argue with the need for red ink now given the economic stresses of the moment. But fewer yet think that the deficit problem will solve itself over time. And some think America is becoming increasingly vulnerable to a potential lenders' strike. If others decide to stop loaning us money, we'd confront a real crisis.
Balancing the budget is one of those questions that's simple, but not easy. Either we spend less or bring in more. Today's debate in California suggests that waiting for the arrival of the revenue fairy or outlawing waste, fraud and abuse are faux strategies that deflect attention from the tough decisions that ultimately will be required.
When the House votes on legislation to raise taxes as part of health reform, we'll see the opening chapter of that overdue debate.
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"No business wants to invest in a place where the government skims 20% off the top." - Barack Obama speaking in Kenya. We already tax our businesses at 39%, personal income tax for high wage earners will soon top 50%, and Obama has made sure that the 55% top rate on estate taxes will be reimposed. How much higher do people really want to make the tax rate when even President Obama understands the destructive nature of a confiscatory government? To preempt the argument that businesses avoid taxes, that involves hiring accountants, lawyers and people to lobby representatives, which all eat into the companies profits. To a business it really shouldn't matter if it is government taking the money, just the fact that the money is being taken as a result of government policies.
How about cutting bloated public employee pensions first? The fire chief of a small fire district near San Francisco, with under 40,000 people, recently retired with an annual pension of $241,000 per year + medical benefits. Then he was hired back for a few months while the district searches for a new chief. There are all too many instances where government employees retire with great pensions and then are hired back at very comfortable salaries. We need to roll back the public employee pension formulas in California to what they were at the beginning of 1999. Even at those levels they were more generous than what the typical private sector employee can look forward to. A 50 year old policeman with 30 years experience can retire at 90% of his final year's salary. What is wrong with this picture?
Any doofus can raise taxes - no imagination, no hard work, no nothing attached to that. We should expect more from politicians. First, to divert a crisis - second, to plan for disasters, etc. - the same thing applies to them as they expect us with our household budget at home. If they cannot follow
this simple thing then they have no business in their jobs. How about going thru the budget with a fine tooth comb and see where the waste occurs? We know government wastes a lot, so let us start therre and exhaust all that stares us in the face.
I wonder how 9 states get away with no state income tax. Maybe it is about the spending.
http://www.irs.gov/efile/article/0,,id=130684,00.html
Take a look at N. Dakota's State Bank system. They have to spend just like every other state, yet they've been running a surplus for several years. Wyoming is the only other state with a budget surplus.
Ellen H. Brown has an excellent post about resolving these deficit issues and particularly that of CA.. Check it out at www.webofdebt.com. Her proposal serves as a concrete example on how to structure monetary policy not only for CA but the entire nation.
It's a shame so many who know about debt free currency are frightened to death to support it at the National level. None of what this country is experiencing now would have happened had we simply told the Fed to stay out of the business of lending money to the Federal Government. Afterall, its just a series of ledger entries and fiat money. The Treasury can do that and not charge itself interest.
Our income tax payments go right to the bond holders who own the Fed banks. Yes, they reduce the deficit first. Oh, a small amount is returned to the General Fund, but this year with a deficit approaching $2 trillion, none of the tax revenue will likely be returned. We never did get roads and federal programs funded from tax revenue. That's the big con.
See Jim Jaffe's Profile
they tend to tax more in other areas, like sales takes. and often provide fewer services.
bullshit.....provide some proof.....
I'd like to see how those taxes affect personal income, savings rates, and the extent to which tax reciepts are returned in program benefits. N. Dakota has a huge surplus. Maybe because of higher taxes on non-income but it works along with a conservative approach to investing the banks money .
Moreover, according to the President of the Bank who's been there for nine years, more and more state officials from across the country are making the trek to N.D. to get the lowdown on how they do it.
We should send Geitner out there.
What about just cutting services? It seems like California is bleeding investment and businesses fast enough as it is; I don't see why you would want to accelerate the process by a tax hike.
California's expenditures have consistently grown faster than their population or their state GDP over the past 7 years, that was unsustainable and cut backs are now long over due.
See Jim Jaffe's Profile
cutting services in general is easy. cutting particular services are difficult. where to you start -- eliminating kindergarten, closing jails and let bad folks roam the community, ending medical to the indigent, closing fire houses. not a lot of easy choices there.
I think kindergarten can be eliminated without too many ramifications, and they are already paroling prisoners en masse. Its time to make hard choices, which includes renegotating contracts with their entire state work force, probably turn some of their paved roads into gravel, esp. in the northern and western portion of the state to cut down on costs. They will also have to think about cutting school funding. (Seriously, they add more funding and the quality of the education declines; maybe the inverse will hold true?)
Its a crappy situation, but they have been digging this whole for years. If they up taxes, any business that isn't tied down will flee the state, further reducing their tax base. They are going to have to buckle down for several years of reduced services, and painful cuts.
how about a 15 percent reduction across the board.....no exceptions...
Thanks for talking about this important issue, Jim. Californians won't have to vote to raise taxes because each week the financial crisis continues will cost them millions of additional dollars and will lead to higher tax rates. You are right, waiting for the arrival of the revenue fairy or outlawing waste, fraud and abuse are faux strategies that deflect attention from the real issue. That issue is that California hasn't had a balanced budget in more than five years. Trying to balance a budget that is over $26 billion in the red, in one year, will not work. The governor knows this. He's sitting back smoking his cigars, waiting patiently for the federal government to come to the rescue. This didn't happen in June and it may be a very long time before anything is done, which will do serious harm to the economy. If the media covered this issue more thoroughly and a group of bankers provided a solution, it would help California's school children, college students, the poor and current and future taxpayers in this state. But the boring budget situation is not what interests the media or the people, until it hits them hard in the wallet.
as i have said before...tn. snatched nissan from cali for one reason...your taxes are already too high....
Simple solutions are best usually. If we must have taxes. Have one tax rate for everyone on gross income, everyone. Say 6%. No deductions, none. Everyone pays the same and no loopholes for those that can pay an accountant to find them.
Net result, more revenue for the government and fair, across the board, taxes for everyone.
Then mandate the Fed. government live within its means, like every state, county, city, and individual. Simply, do not spend more than you earn.
It doesnt sound very fair that someone making 20,000 dollars a year and has to struggle to make ends meet pays the same exact rate as someone making over a million a year and doesnt pay taxes already because they send their money to offshore accounts
I have had many jobs that have paid less than 20k, but during those times I worked two jobs. Without dependents I still had to pay taxes.
Why, because I made a conscious decision based on the over population of the world not to procreate and the fact that I knew I could not afford a child, should I have to cover the cost of a irresponsible individual who cranks out puppies they can not afford?
I have lived with TV's, cell phones, new cars, vacations, play stations, etc. I saved money even if it was pennies a month so that when I hit rough times I had something to fall back on. Is it too much to ask that others do the same?
Note: I am a cattle farmer now, so don't go off on how rich I must be. I own my land free and clear and I am debt free. The price on cattle in the last four years has dropped over 40% while inputs have doubled and taxes, property and income, have gone up for me. I still average 70 hours of work a week, have done so all my life.
So is it fair that some pay taxes and others don't? NO!!!
Am I less than sympathetic to those who live irresponsibly, buy things they cannot afford? YES!!
Sorry, but I do not see the fairness that you do.
See Jim Jaffe's Profile
Interesting idea. Guess the rate would be somewhere in the neighborhood of 22% given today's spending levels. that would be a big tax hike for those with below average earnings, many of whom aren't paying any income taxes at all now and a big tax cut for the wealthy, who typically pay a higher percentage of their income in taxes. To some, that seems fairer, but I'm not convnced.
they do pay social security taxes...and a state income tax...and sales tax....but it would be fairer than any tax that now exists..and a private option on social security would not be a bad idea....
So by the current system... the poor do not pay taxes? They are through withholding and social security taxes. They might get credits to off set these taxes through the current system.
The "wealthy" get those same credits and more through schedule c and through charitable donations and other loop holes.
Thus, middle income workers are bearing the cost of government. If an income tax was based on gross income with no deductions or credits and was an equal percentage across all income levels, then the "wealthy" and the poor and middle class would all be contributing evenly. The poor would be getting their input back in the form of the social welfare programs that would more than likely still be in place.
Why should someone that works hard and responsibly stays out of debt be taxed more than everyone else? This is thievery, and unfair taxation by the point of a gun. Being childless, and never have collected any form of welfare (I have always had a job, even if it meant cleaning horse stalls) I have always had to pay taxes. Yet I have seen the money I have had to pay in go to career welfare recipients and corporate bailouts. I have worked hard all my life, now own my own farm debt free. Sorry that I am a bit tired of the "system" which is unfair to others like me. It is a system that punishes the responsible and rewards the irresponsible and crooked.
No lets cut government spending instead. Pensions especially.
Most state workers are getting several dollars per hour less than they'd make at the same job in private industry. A defined benefit pension is what they get as a trade-off. They also don't participate in Social Security unless they spent enough time in the private sector to become vested, in which case they will receive a reduced benefit. Taking the pensions from retired state workers would certainly save money, but it would be neither wise nor fair. How will you get anyone to work for the state if they know they'll be eating Alpo when their done, as well as driving a less flashy car right now?
There's a real problem with working at a job for 40 years and putting a substantial amount of your income into a retirement account. You create a pile of money that every lazy, crooked thief wants to dip into. This time it's girly-man himself who wants to steal my pension from me. This thieving governor and the republican mob he associates with have to go!
By the way, if Arnold were to fire every state employee, cancel every state contract, and sell all the property the state owns, it wouldn't come close to curing California's budget deficit.
I figure let the morons have what they so desperately want. They'll love it when they have to stand in line for days to register their Cadillacs.
Doh! "they're done", not "their done".
Yes, let's please give the ultra-rich a bit more tax burden.
Let's also remove any/all tax breaks given to business that outsource jobs overseas. Those outsourced positions accomplish 2 negative things for the U.S. economy: 1. contributes to loss of jobs/increase in unemployment; and 2. those outsourced employees are not paying into the U.S. tax system thus either increasing individuals' tax burden or increasing deficits due to lost tax revenues. Corporations who utilize this particularly damaging type of cost-savings should have a relatively higher tax obligation and no breaks to make up this tax revenue loss. Keeping jobs in the U.S. means less unemployment benefits being paid out and more people paying into the tax/SS system which is good for everyone.
There isn't a revenu problem there is a SPENDING problem!
Name the government services we could do without. Just because you don't personally need them is not sufficient criteria. I guess I could live without cops. Since my recent divorce, I've been forced to become my brother's roommate in a house in a barrio. I'm big, heavily tattooed, and kinda mean-looking. My brother appears to be either so respected or feared in the neighborhood that he often leaves his doors unlocked. I'm uncomfortable with this, but he never has anything stolen, despite junkies hanging around on the corner. The little old lady next door can't say either of these things, though, and we all do have some responsibility to people like her.
We could stop prosecuting and imprisoning non-violent drug offenders. We could shorten prison terms; if we put half the savings to making it more likely that offenders would be caught and convicted at all, we would increase public safety. We could cut a lot of administration and extras from higher education. We could spend less on keeping the dying alive for an extra few hours hooked to a dozen machines, when they would rather die in comfort and with dignity than slightly later. We could drop a bunch of agricultural subsidies.
We could also raise some taxes.
Despite what you might believe there was a time that there was no Social Security (people saved for their later years), no unemployment benefits (churches, charitable organizations, friends and neighbors took care of that and people were quick to look for work), no medicare and health insurance (physicians treated everyone and those that could pay did), no funding for roads (roads were funded by private individuals and states), no large standing army (troops were only brought in when necessary) and so on.
The role of the Federal government was merely a diplomatic one, protection from outside invasion, and charged with making sure the Constitution was observed. There was no national debt because currency was based on gold (no gold reserve, no greenbacks).
The Federal government stayed out of the politics and squabbles of other nations and looked only for trade relations. It did not have troops stationed in 130 countries and it respected the sovereignty of other nations and did not enter into treaties like NATO that would suck it into wars it did not want to be in.
This was the status until FDR. Even then, income tax was to be a temporary measure with the promise it would go away once the nation was on tract. Social Security was meant to be a supplement not something to live off of.
How far we have come?
I'm a CA native so CA is my main concern. What about cutting all the waste in education? We are educating fewer students today than a few years ago yet they say they need more money for education. What about cutting about 8 BILLION by deporting ILLEGAL ALIENS? We need to heavily fine those who hire ILLEGALS. Once we do this they will self-deport. What about cutting all the gang programs that don't work? What about cutting all the committees and boards that do nothing but pay members, political cronies, at least $100,000? What about implementing all those cuts that Arnold was elected to cut? He came up with a long list and not one this has been done. What about making pension plans more in line with those in the private sector? No one deserves 100% of their pay when they turn 50. NO ONE!
A couple more ideas:
Ten cent tax on ink cartridges, digital photos, songs, videos, text and email. Legalize and tax prostitution, polygamy, marijuana. Increased taxes on foods and beverages. Increase taxes on alcohol, pop, sugar, candy, salt, fast food and meat. Also a tax per calorie consumed.
Health and CO2 tax for height and weight. Add an exercise tax, as this generates more CO2. Increased gasoline tax, social security tax unlimited on all pay, social security on unearned income, medicare on unearned income. Increase the death tax and include taxes on the service and coffins.
Entertainment tax of 50% on income of over $1 million for actors or athletes. They make more, they can afford more taxes. Windfall profits tax on any legal settlement over $1million. Luxury taxes on boats, planes, RV's, shoes, purses, jewelry, fragrances, watches, beauty products. Remove all deductions. Age tax (aka duty to die tax). Tax a college education because we know they generally make more. Increase capital gains back to 39%. It was previously more, so this could be counted as a tax reduction. A 15% national sales tax.
Limit families to one car, 100% tax on additional vehicles. Each car will have a transponder to tax excess speed, excess acceleration, single occupant and total miles driven. Benefits tax for all employer paid insurance, pensions and 401K’s. Tax all gains each year in 401K or pension plans. Reinstate the marriage penalty.
Federal housing taxes on excess house size over 3,000 sq ft. 10% luxury tax on any extra homes above one, yard size tax, tax grass. Tax all power mowers and power tools, including electric. Tax pets for their contribution to green house gases. Include a 100% excess pet tax for all pets over one. Also a pet weight tax. All farm animals will be considered pets.
This list only took a few minutes. Imagine what we can do when we put our best minds in Washington to a concerted effort to find more taxes.
How about limiting SPENDING!
So does that mean you will support cutting the defense budget in half and shutting down a lot of these bases and ending programs like the F-22? If not, then be silent.
What about the money we send to red states?
Exactly. We need to call in those loans immediately. THey need to learn to live within their means.
Loans? What loans? Mississippi didn't borrow any money from California!
After 30 years or so of taxing the rich less and less I think it's well past time to reverse the trend.
Time to tax the uber-rich esp all the venture capitalists in CA.
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