I'm all for tax cuts, but how are we supposed to pay for this brilliant new health care plan, or social security for that matter?
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Yeah. I don't think we can afford them. It would be more fiscally prudent to let them expire and show bondholders we have the political will to dig ourselves out of the debt situation.
They're paying for it by offering incentives to transfer your tax deferred retirement accounts (think IRA / 401(K)) over to a tax free account (Roth equivalents). In doing this (a roll over) the tax payer is now taxed today, in an effort to avoid tax later. Whereas if they left the money in the IRA or 401(K) they never paid the tax up front, and will pay the tax later down the road.
The take away is this:
Good chance the gov't will tax the fuck out of tax free retirement accounts later on. Make everyone pay tax to move over to the new retirement plan, then tax those fuckers again later by changing the tax code. They've done it before. "cuz I got bombs and battle ships and shit and you old so fuk you lulz."
I tried to keep this really short, but that's the general idea.
I don't doubt that one day 401(k) plans will no longer be "tax free." I can't imagine the tax rate being any LESS in 40 years than it is today, so I suspect we're all screwing ourselves by taking part in this scheme.
I don't know about that. After this evening, I think the country will go bankrupt before we have to worry about our retirement accounts. (I'm only half joking. :-) )
Obama is scrambling to gain his political footing.
Nothing will get done until we are at the brink of destruction.
Are we there yet?
Regards
Tax cuts are one thing but I'm completely against extension of the unemployment benefits any further.
Agreed. The unemployment benefits only provide an incentive for one to give up on their job search. The effect of the tax cuts will be somewhat negligible, but IMO, a better choice over expiration. This administration has proven to be more liberal than most bargained for, and the tax cuts may help remove some of the uncertainty that is preventing many from investing and hiring.
Government spending needs to seize and tax increases will only further slow private sector growth (which is somewhat inexistent).
We don't need tax cuts right now. We need tax increases and spending cuts.
Excuse me, I need to go buy a loaf of bread while it's still less than $10.
I don't mind there being tax cuts, and all in all it wouldn't be prudent to raise taxes during a depressed economy. Eventually I think that its obvious that taxes will need to be either raised or reformed (Fair Tax, Flat tax, or VAT), and thats why these tax cuts are never done so for perpetuity. The politicians know that eventually taxes will need to increase and "letting the cuts expire" sound better than "voting to raise taxes".
Obama is doing this for the simple reason that he no longer has the support of Congress or, by association, the American people. He slipped in the payroll tax cut and unemployment thing to cater to his last bastion of support (unions) while putting on a facade of actually wanting to do what the people want/need.
I would argue that tax cuts and spending cuts are what is needed because it could counteract the deficit by encouraging spending and reducing government waste. Although I am sure many of you will want to contradict me, it is not certain that we are below the most effective tax rate. The problem in America lies more in the incentivization of spending in government (porkbarrel projects, warmongering, welfare, etc.).
If we can fix the spending problem in America we wouldn't even consider raising taxes. No-bid contracts for the government, earmarks, and unbalanced budgets are easily rectified, but it is political suicide in many areas.
The notion that raising taxes will increase government revenue is not true either. The only contemporary example that we have of this occurring was during the 1990s during the economic expansion that I would contend was due to exogenous factors. If Americans are incentivized enough by external factors in a limited amount of time they will still go out and spend their money/make more money (to a point).
I don't think there is a large enough incentive to get Americans to go back to their profligate past. We are essentially saving 4 times as much as we were before to pay down credit card bills and mortgages. We need some serious infrastructure investment to get more people to work. That means new roads, bridges, nuclear power plants, water works and electricity infrastructure.
Instead of wasting it on nation building, medicare fraud, tax loopholes, etc.
I agree, and that proves my point in that I don't think increasing taxes will lead to increased revenue for the government
Talk about a "WTF moment in American politics." Obama's Deficit Commission must be scratching their heads at this move. If there was any doubt that the federal govt is NOT committed to balancing the budget, there is none now.
The irony here is: when did I vote for a Republican? So far, Obama is acting like Bush III.
If he's not, and he's acting like some sort of independent hoping to compromise his way back into popularity, the Republicans took his no Bush tax cuts agenda and dunked on him worse than the infamous Scotty Pippen / Patrick Ewing slam.
(Yes, I chose a Knicks moment since I know every NY trader older than 30 probably remembers that dunk.)
I know, I laugh when people call Obama a socialist. Healthcare reform is almost the same as George H. W. Bush's. He has upped the anty on a pointless war, and has balked at any liberal reforms.
We just have to cut all the ridiculous programs/spending. Like I said, I love those tax cuts, but if the spending isnt pulled in real fuckin quick there isn't going to be any government worth speaking of left.
If you look at historical data (correlation between taxes and gov revenues), you will notice that when government increased taxes, their revenues went down (for the plurality). Tax cuts, like those done by Kennedy and Reagen led to increased government revenues due to larger levels of spending versus saving.
A tax increase by any margin, especially in a recessionary phase, will likely shrink gov revenues and further slow economic growth. The most effective way to cut down the deficit would be to rid the fraud in our system, crack down on illegal immigration, shrink the national defense, and start reforming our entitlement programs (ei; as life expectancy increases, shouldn't the age in which you can claim SS increase commensurately?). Additionally, start investing in infrastructure.
The fact is, people are tightening their wallets, avoiding risk, and lack confidence in the system and increasing taxes will only exacerbate these issues, leading to less spending, less growth and less revenues (sorry for being redundant). Government needs to take a "make people richer approach" instead of a "make people poorer approach." Let prosperity take care of the deficit.
Taxes should always be cut. Fact.
The government wastes money like it is their job. Wait, wasting money is probably the only job the government does with efficiency. If the US Government could only take their propensity and love of pissing other peoples hard earned money away and focus it on something productive, we could change the world.
Raise the SS age. People are living longer and saving for their retirements. No reason the government should be the sole income for older people. My dad bitches about raising the retirement age and I kindly tell him that you can retire at any age you want, you just have to wait to XYZ age to get money from the government. Not that big a deal.
Medicaid / Medicare - I would revamp the shit out of those programs. I cannot imagine the sheer amount of waste that goes on there.
DoD - Scale down the wars and get NATO involved. Once we are done with this war time mode troop levels will decrease as well as military expenditures.
We need higher taxes for the time being. You can't have a limited government if you don't have a limited debt.
I will repeat it again, but efforts to raise taxes in order to service debt will be and always has been futile. There is a negative correlation with tax raising and government revenues because of the decreased levels of spending by the private sector. The government must focus on stimulating private sector growth, not stymieing it, and the revenues will increase (debt will decrease).
Has taxing ever improved any economic environment, other than when the economy is in a rapid expansionary phase and the government raises taxes in an attempt to stabilize things.
In any case, most economists will say that the Laffer peak is between 60 and 70% marginal tax rates. We're well below that right now- though New York would do well to get its budget under control.
Take a look at Canada or Australia. The countries that have high taxes and pay their bills are doing pretty well right now. There also tends to be less cyclicality in countries that have moderately higher tax rates. So we get our debt paid off and we reduce the severity of the next recession- I'd say that's a pretty good deal.
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