Obama's Raw Deal?
Tax cuts for the rich could come at a heavy price
And Democrats appear to understand that they have the political advantage, as they voiced support for a proposal by Senate Budget Committee Chairman Kent Conrad (D-N.D.) to reduce future deficits by $4 trillion with an even split between increased revenues and reduced spending.
But just when the Republicans are showing fear and losing momentum, there is one important Democrat who seems to think it is time to wave the white flag—and give his enemies a historic victory on the eve of his own re-election bid.
According to The Washington Post, President Obama wants "significant" cuts to Social Security and Medicare in exchange for Republican agreement to let tax breaks for the nation's wealthiest families expire at the end of this year. While White House press secretary Jay Carney would say only that the president is opposed to "slashing" Social Security benefits, that is a semantic dodge leaving open the prospect of substantial cuts.
Why would the president undermine his party's long-standing support for the two highly popular federal programs—especially when polls consistently show overwhelming majorities in both parties continue to oppose cutting Social Security and Medicare benefits? It isn't as if there is any great enthusiasm for Obama or his economic leadership among Democratic voters. Indeed, he and congressional Democrats only began to achieve political traction again—for the first time since the midterm elections—when the Republicans foolishly lined up behind the plan promoted by House Budget Chairman Paul Ryan (R-Wis.) to transform Medicare from a public entitlement to a privatized voucher.
Over the past several weeks, Democrats pressed that advantage by portraying the Republicans as defenders of tax loopholes for corporate jet owners and oil companies and enemies of middle-class families. Ideological and belligerent, the Republicans eagerly leaped into that trap. But the Democratic strategy worked so well that even the most extreme elements in the Republican leadership—such as Cantor—suddenly saw that they had closed themselves into a very dangerous box.
That is why Cantor—and Senate Minority Whip Jon Kyl (R-Ariz.)—began to babble the usual euphemisms about "increased revenues," "user fees" and "closing loopholes" over the past few days, using language that directly contradicts their earlier hard-line rhetoric.
Of course, Republican support for fee hikes and closed loopholes that add up to a negligible amount—or to nothing at all, as Cantor apparently prefers—won't satisfy Democrats who now know that pushing back works. They might well imitate Republican intransigence, accept the concessions by Kyl and Cantor, and push back even harder.
The Senate Democratic budget plan would reduce the deficit from $4 trillion to $5 trillion over the coming decade, according to Conrad's calculations. By requiring that half of the total come from tax increases and ending tax loopholes, Conrad would raise roughly $2 trillion to match a similar amount in spending cuts, which is far more than the president has proposed. Last spring, for instance, the White House suggested that Congress should cut $3 in spending for every dollar in revenue raised.
Conrad is among the most conservative of Senate Democrats, but he is retiring after this year, which may permit him to take positions he might avoid if facing re-election in his home state. What he proposes would be fairer to American families, better for the American economy and more desirable for his party, too, than Obama's deal.
But the restored courage demonstrated by Democratic senators in support of his plan will not accomplish much if the president is determined to capitulate on fundamental principles. Should he prove to be so foolish, then he will find himself another step closer to the end of his presidency.
© 2011 Creators.com
Gee, David, maybe some poeple like having deadbeat dads making low-income babies... isn't that what private business and taxpayers want?
Business wants a labor force that is willing to live a low class life, won't complain as loudly about having a lower pay grade.
And taxpayers want government employees, civil servants, school teachers (daycare providers) that are willing to take a lower paycheck, okay with a lower cost standard of living.
While you are at it, let food stamps buy booze and weed. This could keep the low-paid working class high and happy, they won't feel the need for activism or voting blue.
I think people are buying booze and weed with food stamps -- ever notice the drug dealers than hang out at liquor stores and corner bodegas? Waukesha dude - I espected a longer essay. Yes businesses love a low class labor force. Its working out quite nicely for them in Mexico, China, and India. But in USA, the low class labor force is retiring on welfare and unemployment, leaving business to have to pay higher wages or import workers from Mexico. If we eliminate the goverment dole, we can drive wages down so our profits increase. The smarter cowards have learned how to get by on goverment welfare paid by the working taxpayers. They are extending unemployment AGAIN. The good news is its make Obomer look bad. The bad news is it encourages people not to enter the low wage workforce where we need them the most. Instead of picking watermelons in Georgia, they laying in the hammock drinking lemonaide.
I'm hoping with all this new gerrymandering we can finally build a Chicago style political machine for Republicans. We need to really crack down on these recall elections so not only not to lose seats, but gain more!!! We need to get get these fake Democrats a victory so we only have to choose between two Republicans. And we need to defeat all Democrats up for recall as well. We could turn this state from a welfare magent into a profit center. We should be the ones exporting labor to the farm fields of Texas, Florida and Georgia, not Mexico Wisconsin should be profiting, not Mexico. We should have the call centers, not India.
Business is generally taxed on their net profit, not their gross. Its the leftover after subtracting off the costs of doing business, which includes the materials they buy, the wages paid to its workers (bonuses to its execs), the interest paid on its loans. Just like you and I need a loan to get that house and car so it can be used now, pay it off while working, business needs loans to buy that factory building, buy those machines, buy those delivery trucks, buy those storefronts. Suppose a year goes by, had record earnings. Want to avoid paying the IRS? Give out enough dividends to stockholders, bonuses to CEO, so that there is no profit left to tax! Corporations do not pay taxes if their accountants are on the ball!
Personal tax on the other hand is way different. I need to eat food to keep my body able to work, do I get to deduct that? No, I pay for that food AFTER my wages were taxed! Can I deduct my mass transit fare, my car payments, my gasoline costs? Can I deduct the cost of shelter in a place that keeps my commuting costs down? With PERSONAL income tax, I am taxed on almost all of my gross, I cannot deduct the "full cost of doing business" in the American middle class economy. We may deduct healthcare premiums taken by our job, and deduct some health expenses only when they are way above what normal people face. We used to be able to deduct the interest on loans, home, auto, credit card. Now we can only deduct interest on mortgages (1st home only?). That also encouraged real estate markets to rise until the bubble burst.
Income tax was made "Progressive" (higher income pays more tax in proportion to gross), the theory being that it takes a certain amount just to live, and the excess is gravy. Result, tax the gravy, not the cost to live (cost of doing business). Dropping the tax rate at the top has big affect to those with the gravy, very little affect on those who barely make enough to live. -- Note also that "income" means paycheck wages, savings deposit interest, investment dividends, "capital gain" money made by selling an investment that went up in value. Means both money made by "time working", and money made by "holding wealth".
This IRS money is the money that pays for the military, bureaucracy and regulatory costs, corporate welfare, and the hated "medicaid" entitlements and block grants... the classic "redistribution of wealth". When the economy has lots of dollars being circulated, these revenues are what pays for government operations. When businesses or people stop participating in that circulation, revenues stop, government operations cannot proceed as before. When business slow down, they lay off enough workers, sell off enough assets to be in the black. When people lose jobs, they must fall back to savings to keep up the spending. When government does not have tax revenue, where is the "savings" that was accumulated surplus?
Oh, people don't save anymore, "good marketing" convinced us to spend it all! Which provided more revenue to both business and Uncle Sam. And then we gave that government surplus away as tax breaks! Thanks, Reagan, H Bush, W Bush.
Social Security tax (includes Medicare) is "regressive" tax (lower income pays more tax in proportion to gross), the theory that it is only the working class that needs some minimal standard of living when they can no longer work, so don't bother taxing the higher classes (who should already be setting aside some "gravy" for that). Here, only the "working wages" were taxed, not the bank interest, dividends, or capital gains.
This is the money that provides the elderly and disabled Social Security benefits, disability SSI checks, even when "disabled" is thought to be nothing more than some welfare mom's undisciplined kid in public school (the part that gives Paul Ryan any traction). -- Also pays Medicare benefits (not Medicaid). Healthcare for people that legally worked, legally revealed their income, legally paid taxes. That's why it was not touched all these years, it was good!
This is the one that Paul Ryan is beating us up on. Back when it was started, not many "workers" lived long enough to collect. Regulations forced on business by activist and Union sponsored politics made workplaces safer, and drove employers to unwillingly provide health insurance, if for no other reason than to keep the workers from forming a union. Safer workplaces and better workers health now has too many workers surviving long enough to collect this money. Is that a bad thing? If you want a change, adjust the regressive cap on the Social Security part, raise it to 10% from top of "district" I note below.
These 2 money pools were to be separate. People tell me that good old Russ Feingold was booted out because he voted for raiding the Social Security fund to keep the politically driven IRS side going. Social Security had been piling up while the Baby Boomers were working, healthy, and not retiring, and all that money was political temptation. Temptation to give IRS tax breaks, give more "redistribution" entitlements. "Lets take that money so we don't have to raise Reagan's tax cuts back up the Eisenhower, JFK, LBJ levels"
---------------------- WaukeshaGuy's reforms -----------------------
Knock down tax on incorporated business to Zero, no more need to incorporate offshore. Money staying in the business stays in tax free. Tax small business proprietorships and partnerships as personal income tax, make them incorporate if they want to dodge tax on gross take. Do not let business deduct company cars, company yachts and homes used for personal lifestyle by its owners and officers. Make the corporation pay its owner and officers a salary if that owner or officer wants "a life" (goes for church clergy, they are just "church employees"). That will be taxed as personal income.
Keep Personal income tax going with a strong Progressive system of tax brackets, but raise the standard deductible high enough to cover the median middle class lifestyle, adjusted for the congressional district they live in (gerrymander THAT). Keep the 50% plus bracket on all income for those in the top 3%, maybe they will keep the money in the business instead of taking advantage of the slowdown. No more COLA adjustments on "selected costs", look at all income dollars filed on IRS forms when setting that standard deduction at median lifestyle and at setting the top 3%, done every 10 years like the census. Also set Married Filing Joint to be equal to 2 Head of Households, eliminates the marriage penalty.
Keep all capital gains tax rates, the dividend tax rates, interest tax rates at a 50% level, this is money coming in from "holding, not from "working". Let the high standard deduction apply as noted in previous paragraph, applying it first to wages before applying it to this mailbox money. That will give the retired and non-working the break needed to live "median of district" life.
Do not allow deductions for any kind of loan interest, that's what got us into this mess.
Do not allow deductions for healthcare premiums, only excess healthcare costs. Let premiums for "Cadillac insurance" be taxed as personal income. The consumer will then demand lower premiums from the insurers, and therefore lower prices from the healthcare providers, will then keep themselves healthy so they do not need to use the major services.
Dividends are not tax deductible for corporations. They are actually a form of double taxation. But all your other ideas are ok, wacky, but to me a wash with our current system.
I never liked the capital gains thing. I do 400-500 stock trade a year and its a real mess with record keeping. Plus a lot of gains are nothing more than from inflation.
Worse yet, capital losses are limited while capital gains are unlimited. Tax system is pretty messed up. Most of us have got it figure out and know how to avoid - legally avoid paying taxes. A VAT tax might be more affective,. I'd have to come up with all kinds of new ways to avoid taxation.