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Discussion: (52 comments)

  1. Eric Johnson

    It’s amazing that Liberals forget or omit that invested funds for the most part are “at risk.” Meaning there is a chance of actually losing those funds if something goes sour with the company stock or venture. How much is Hostess stock worth this week? Likely much less than just weeks ago due to the bankruptcy & union strike.
    We need to award folks for putting their hard earned money at risk and reduced tax rates are one of the simplest ways to do it.

    1. Eric Johnson

      Let’s eliminate ALL business fed income taxes!

      While companies write a check for the taxes, the cash comes from three groups: the consumer of their products who pay a higher price, reduced pay & benefits to their workers, or reduced dividends to their investors.

      Eliminating most personal exemptions & loopholes in our taxes will greatly simplify getting taxes done and should balance out the corporate taxes.

      1. I’ll accept any plan – that balances. any proposal that is independent of downstream consequences is worthless.

        we have to deal with the realities of the budget no matter our theories and philosophies.

      2. You realize when you pay wages it reduces taxable income, hence taxes.

        Taxes paid by a company may or may not come from workers as the cost may or may NOT be passed on to consumers depending on market conditions.

  2. Max Planck

    To Mr. Johnson-
    it doesn’t matter that the funds are “at risk.” If I buy a stock or a bond, all I am doing is trading the asset with another owner. The company affiliated with those assets gets nothing. After the issue has been floated and the capital has been raised, my owning it doesn’t do much for the firm.

    To Mr.Pethokoukis: I have been following American Conservative for some time and what these folks are trying to do is to reclaim the good name of Conservatism, after people like you have trashed it.
    To tax one’s labors at a far higher rate than fallow capital sitting in a closed end fund, is not only immoral, it’s not even remotely in keeping with Conservative values, and for you to advocate this proves what a counterfeit conservative you are.

    When those who claim the mantle of economic prudence place such a value of capital over the value of one’s labor, they are not Conservatives. They are plutocrats, and advocate the theft of one of humanity’s greatest possessions: their contribution to labor.

    It is hoped that the growing clout of AmCon shows a way that Conservatism can save itself. You and your kind have got to go. You’ve ruined America.

    1. Eric Johnson

      Max,

      You are forgetting companies pay corporate taxes on those dividends that taxpayers receive. Thus 20% to 35% effective tax rate PLUS 15% individual dividend tax rates = 35% to 70% effective tax rates in many cases.

      “To tax one’s labors at a far higher rate than fallow capital sitting in a closed end fund, is not only immoral, it’s not even remotely in keeping with Conservative values, and for you to advocate this proves what a counterfeit conservative you are.”

      1. Max Planck

        Your response is not relevant to the argument.

        Corporations are NOT people.

        1. Eric Johnson

          How is my argument irrelevant? Just because you say it is, does not make it so.

          My point is the profits have been taxed once before so a lower rate for the individual makes sense. Plus we need to encourage savings & investments and that is a second reason to keep investment tax rates lower.

          What does “Corporations are NOT people.” have to do with what I said?

          1. Plus we need to encourage savings & investments and that is a second reason to keep investment tax rates lower“…

            maxie boy now playing at being a social engineer…

            Amazing!

          2. Max Planck

            This site is filled with crazy people.

            Look- let’s take a corporation that makes widgets. It has 5000 employees. The employees are taxed ON THEIR WAGES. The corporation makes a profit from the sale of the widgets on the efforts of their employees. It pays taxes on those profits, (which for 90% of companies, doesn’t come anywhere near “35%”) and then taxpayers pay a small tax on the dividends.

            The employees are paying a higher tax on their labors.

            Encouraging savings is a good thing. But as some economists have pointed out, it may not be good for the economy as a whole (i.e., the paradox of savings)

            The question here is a matter of not “if” but to what degree, and what are our obligations if we’re going to tame the deficit.

            If I were king, I would raise the dividend tax to at least 20%, cap gains to 25% and let the top rate rise to the piddling 39.6% rate that this site is having a coronary seizure over.

            There are plenty of corporate give aways we could close first before doing anything besides those three measures I suggested.

            By the way, did you know the National Football League, which generates over $9 billion in revenues pays no taxes? Its considered a “non profit” under the tax laws.

            How’s that for laughs?

          3. non only non-profit but usually scams the locality into buying their stadiums.

          4. The corporation gets a deduction for the wages it pays employees. Dividends do not get deducted and therefor the corporation pays taxes on dividends but not on wages. Most corporations that pay dividends are paying taxes at a pretty good clip. Corporations in the US have the highest tax rates in the world. They also pay state and local taxes on the dividends at the corporation level – again this is because they are not a deductible item. So – when the amount gets paid out to a shareholder, they get the post tax amount which is likely smaller than it would be had they been deducted like wages. Therefore, it makes total sense that the shareholder should pay a lower rate. Indeed, it has been suggested that the rate should be zero since it is double taxation. Hope this makes sense. It is a shame the media does not do its homework. Fairness is in the eye of the beholder.

          5. Max Planck

            “Corporations in the US have the highest tax rates in the world. ”

            No they do not. Nominally, the corporate rate tops out at 35%, but there are so few companies that actually do, it’s better not even to discuss “rates” as such. Especially when GE can pay anywhere from Zero to 6%.

            This rubric is repeatedly trotted out, but if you think our PERSONAL tax code is a pile of spaghetti, the corporate rules are worse- and of course, slanted well in their favor.

  3. Here’s my thinking. You get your tax policy the way you want it – but at the end of the day, I want to see a real balanced budget proposal from you.

    this chewing around the fringes is totally unproductive.

    1. “Here’s my thinking. You get your tax policy the way you want it – but at the end of the day, I want to see a real balanced budget proposal from you.”

      Shorter Larry: Balance the budget, raise taxes, but keep your hands off my government checks!

  4. I have been following American Conservative for some time and what these folks are trying to do is to reclaim the good name of Conservatism, after people like you have trashed it“…

    ROFLMAO!

    Good one maxie boy!

    Has there ever been a rational argument for a capital gains tax?

    Aren’t capital gains taxes basically a tax on inflation (at least for the most part)?

    1. Max Planck

      The only “tax” I would worry about if I were you was the one placed on your limited intellect.

    2. re: ” Aren’t capital gains taxes basically a tax on inflation (at least for the most part)?”

      how about a taxes on inflation-adjusted capital gains?

  5. Max:

    You seem to be confused, throwing around phrases like “corporations are not people.”

    Whether or corporations are people or not, is irrelevant for the purposes of taxing them — they make profits, and are taxed on those profits just as an individual earns wages and is taxed on those wages.

    There is something to be said for equalizing the tax treatment of all inputs — namely labor and capital. This view of the world is fairly simplistic, though, and most economists recognize this — as such most economists support a capital gains tax of zero.

    Here’s why.

    Taxing income is pretty straightforward — you make money, you pay X percent of it to the government. The tax incidence is borne entirely by the worker earning the income (though you could argue that there is some marginal impact on producers because the worker is left with less disposable income).

    Taxing corporations is a whole different ball game. When you tax corporations, those taxes can easily be passed on: in the form of lower wages, lower dividends, and higher prices. This makes the tax less efficient, because the tax incidence is borne by employees, shareholders, and consumers in addition to the corporation itself. Estimates have pegged at least 25 percent of the tax incidence falling on employees.

    Now, when shareholders get their money in the form of dividends, that money has already been taxed — therefore, they receive less of it. Nonetheless, they pay taxes on it once again, making the net tax significantly higher.

    Moving on to capital gains. Capital gains are taxed when they’re realized. Thus, higher capital gains taxes increase the “lock-in” incentive, that is to hold onto capital gains and not realize them. This reduces potential revenues and keeps capital trapped in a less efficient allocation.

    On the latter point, think of it like this: if I realize that I could make a better return by taking out my $1,000 from Widget Corp. and investing it in Widget Enterprises, that is the economically efficient allocation. However, introducing capital gains taxes into the mix mean that if my new return is less than the capital gains tax rate I have to pay, I will just leave my money where it is.

    If you want to equalize the treatment of capital gains and labor, you have to take into account the double taxation of capital gains as well as the inefficient allocation that capital gains taxes invoke.

    A preferable system would tax only consumption.

    1. we need to figure out what we will do to deal with the fact that we take in about 1.5 trillion in income taxes and we spend about twice that much.

      we can argue about this and that and who shot John but at the end of the day – we need to arrive at something that balances the budget – and then some – to buy down at least some of the debt.

      What I keep hearing is why we can’t do this or do that – and there it stops.. no more progress towards balance.

      we went 4 years doing this.

      1. The discussion here was very clearly about capital gains taxes versus taxes on income.

        Balancing the budget is a totally different story and is contingent more on political maneuvering than economic reality or feasibility.

        Balancing the budget will probably require some combination of tax hikes/reforms, but even more severe spending cuts.

        My feeling is that a real 2:1 ratio (one that doesn’t include savings from ending the wars) of spending cuts to tax increases may be warranted.

        1. ” The discussion here was very clearly about capital gains taxes versus taxes on income.

          Balancing the budget is a totally different story and is contingent more on political maneuvering than economic reality or feasibility.

          Balancing the budget will probably require some combination of tax hikes/reforms, but even more severe spending cuts.

          My feeling is that a real 2:1 ratio (one that doesn’t include savings from ending the wars) of spending cuts to tax increases may be warranted.”

          the discussion over capital gains taxes is IN THE CONTEXT of “why”. Why is it being discussed?

          it’s not an idle conversation. It’s directed related to what to do about the deficit.

        2. Max Planck

          “My feeling is that a real 2:1 ratio (one that doesn’t include savings from ending the wars) of spending cuts to tax increases may be warranted.”

          The deal POTUS struck with Boenher was 82% cuts and 17% revenue. Boehner welched.

          1. The GOP keeps blathering about a “spending” problem but revenues are the lowest in decades and the GOP refuses to make enough cuts to actually balance the budget.

            Instead they want to cut entitlements but not enough to balance the budget.

            they spend their time talking about tax “policy” and what is right and wrong – but that’s all they do – they never move on to a real proposal to actually balance the budget.

            Ronald Reagan knew when to fish and cut bait.

            the current crop of GOP like to wear the mantle of “fiscal conservatism” but their actions and behaviors totally undermine that image.

            Romney could have easily bested Obama is he just had a valid tax plan but the man blathered on about a “revenue-neutral” tax reform – and claimed it would balance the budget without a scintilla of evidence as to how such a tax neutral plan would generate additional revenues.

            But Romney was only doing what the GOP has done for the last four years. They have never put forth a real budget proposal.. that has cuts plus revenues – that balanced.

          2. Oh! oh! larry g is having another psychotic break with reality: “The GOP keeps blathering about a “spending” problem but revenues are the lowest in decades and the GOP refuses to make enough cuts to actually balance the budget“…

            The GOP isn’t a monolithic block goose stepping to a single theme…

            Sen. Rand Paul’s budget ideas

    2. Max Planck

      Your response begs many questions:

      “Whether or corporations are people or not, is irrelevant for the purposes of taxing them — they make profits, and are taxed on those profits just as an individual earns wages and is taxed on those wages.”

      It IS relevant. If you people are such believers that tax policies incentivize people and organizations to behave in certain ways, it is a logical conclusion to draw that there an ENORMOUS amount of relevancy to this issue, ESPECIALLY since the U.S. economy has mestacized into what it has become today.

      “There is something to be said for equalizing the tax treatment of all inputs — namely labor and capital. This view of the world is fairly simplistic, though, and most economists recognize this — as such most economists support a capital gains tax of zero.”

      I have never seen any consensus or constituency among economists for the complete elimination of capital gains.

      “Taxing income is pretty straightforward — you make money, you pay X percent of it to the government. The tax incidence is borne entirely by the worker earning the income (though you could argue that there is some marginal impact on producers because the worker is left with less disposable income).”

      The worker is left with “less disposable income” but in return he gets things like potable water, a law enforcement apparatus, courts of law to enforce contracts and make sure that people are bound to them, a large defense establishment, and a whole bunch of other things. This reasoning is facile nonsense. THINGS MUST BE MADE TO WORK, AND THE PEOPLE WHO DO THEM MUST BE PAID, JUST AS THOSE “WORKERS” DO.

      “Taxing corporations is a whole different ball game. When you tax corporations, those taxes can easily be passed on: in the form of lower wages, lower dividends, and higher prices. This makes the tax less efficient, because the tax incidence is borne by employees, shareholders, and consumers in addition to the corporation itself. Estimates have pegged at least 25 percent of the tax incidence falling on employees.”

      Except that is not what really happens in the real world as a genuine result. Corporations act in their sovereign interests and they do a fine job of minimizing any cost or impact on themselves at the expense of everyone else. And this goes to the heart of the social contract we once had that was torn apart. Let me give you an example:

      When I was growing up, I knew of people who had worked for firms like Sears, Roebuck, and JCPenney. When the war came, they either enlisted or got drafted. And if and when they came home, those same jobs they had left were waiting for them. There was no law forcing companies to do this, and these were not unionized jobs. But there was an understanding that some employers had that has completely disappeared. A lot of these people worked at these firms until they retired, with pensions and benefits intact. And now?

      On another subject, I compared George Romney to his son. The father was a genuine industrialist who ran factories requiring a lot of skilled labor. The son? His only asset ARE his assets, which he deploys to take over the company, squeeze the juice out of it, and throw the rind to the side of the road. And the employees? No more value than the widgets they made.

      Let me tie this all together for you: a tax – no matter how or who or where it falls on- is merely a construct. I don’t care if its capital gains, I don’t care if its profits, I don’t care if its on tanning salons. And those taxes buy you something. You may hate everything they buy, don’t approve of the “efficiency” of the way its bought (as if private enterprise were any better) but there it is.

      Taxing a corporation more should not have any affect on wages because labor is a market, and it really shouldn’t have any effect on product costs, because frankly, people are going to pay what the perceived value of the widget is worth. That’s how Apple gets 40% margins while Dell can’t get 9% for what essentially a similar product. The idea that it is the EMPLOYEE who gets whacked because of higher taxes on the corporate entity that employs him is nonsense.

      “Now, when shareholders get their money in the form of dividends, that money has already been taxed — therefore, they receive less of it. Nonetheless, they pay taxes on it once again, making the net tax significantly higher.”

      Again, a phony argument. The corporation is taxed, and then it declares a dividend to the shareholder, who is also taxed, so we have the “injustice” of double taxation. Except if the shareholder goes out and buys a product, he pays a sales tax, OR, if he compounds the dividends by reinvesting them, he get’s taxed AGAIN on the same dollar. So while I’ve heard this argument a million times, its a facile one. Again, it doesn’t matter.

      “Moving on to capital gains. Capital gains are taxed when they’re realized. Thus, higher capital gains taxes increase the “lock-in” incentive, that is to hold onto capital gains and not realize them. This reduces potential revenues and keeps capital trapped in a less efficient allocation.”

      On the latter point, think of it like this: if I realize that I could make a better return by taking out my $1,000 from Widget Corp. and investing it in Widget Enterprises, that is the economically efficient allocation. However, introducing capital gains taxes into the mix mean that if my new return is less than the capital gains tax rate I have to pay, I will just leave my money where it is.”

      Again, a phony construct. First, you’re assuming the tax drives the decision, not the inherent need. Secondly, capital is capital. If I hold it, or recognize it as “revenue” what is the difference? The asset is still there, I’ve just decided to deploy it differently. If the opportunity presented by deployment is greater than that of retention, that is what will drive the decision. You’ve had a capital gains rate of 15%, which is damned cheap. Tell me what benefits we’ve enjoyed economically from this policy, and how did it affect the decisioning process of the deployment of capital? My guess is, damned little.

      “If you want to equalize the treatment of capital gains and labor, you have to take into account the double taxation of capital gains as well as the inefficient allocation that capital gains taxes invoke.”

      ibid, my comments on low cap gains we’ve had for over 20 years now. And again, the “double taxation” meme is nonsense. it could easily be considered triple or quintuple if you like. You keep thinking there is some sort of natural order that must be obeyed, but as I have pointed out before, there are none. Soybean subsidies are not mentioned in the Bible, and neither are taking deductions for entertaining clients. They’re just tools, that’s all. You keep trying to attach some transcendental meaning to these tools in the tax code we use to keep our society going. It’s not Holy Writ. There’s no Great Truth behind them.

      “A preferable system would tax only consumption.”

      I ain’t gettin’ started on that.

  6. Max: it seems that our discussion is pretty pointless because you denounce the very idea of economic efficiency as being “nothing more than a construct.” I’ve presented logical arguments predicated on economic theory. You responded with populist rhetoric. Can’t argue with someone that ignores reason.

    LarryG: revenues are at a historic low partly due to stunted economic growth. The GOP believes in living within our means — that includes cutting spending while finding responsible ways to raise taxes that don’t push us to the bring of another recession. Entitlement spending has grown unabated for years, and without serious caps or cuts it will keep adding to our debt. No way around it. Democrats have refused to make real changes to the programs.

    1. re: ” LarryG: revenues are at a historic low partly due to stunted economic growth. The GOP believes in living within our means — that includes cutting spending while finding responsible ways to raise taxes that don’t push us to the bring of another recession. Entitlement spending has grown unabated for years, and without serious caps or cuts it will keep adding to our debt. No way around it. Democrats have refused to make real changes to the programs.”

      obviously not YF. When the GOP had the Presidency and both houses of Congress they did NOT balance the budget.

      Blaming the Democrats is just more evasion of their supposed philosophy.

      Don’t blame the Dems. We expect the Dems to tax and spend but we always expected the GOP to stick to RESPONSIBLE fiscal conservatism.

      that went overboard under Bush and continued under Obama.

      No matter what the Dems do – it does not prevent the GOP from presenting a principled budget proposal and standing behind it.

      instead, the GOP has refused to walk-the-walk.

      they went off the trolley under Bush and form that point on, I have yet to see an honest budget from them.

      I used to vote GOP but I refuse to do it now until they get their crap back together.

      1. There have been quite a few GOP proposals — the Paul Ryan plan for starters, and while it was a bit extreme, offered a starting point for negotiation.

        Republicans also participated in the crafting of the Bowles-Simpson plan.

        I’ll admit that I’m a bit disenchanted with the current breed of GOP legislators, but the heart of conservatism is still well and alive. Had Romney not have had to pander to the far right, perhaps we’d be in a different situation right now. That being said, Romney’s proposal to cap itemized deductions is an excellent starting point for negotiation.

        There’s no reason to expect “tax and spend” from the dems. The Clinton years were a time of responsible taxation, with appropriate reforms where necessary. At the same time, it isn’t enough to align oneself with the GOP to be considered “fiscally conservative.”

        There are going to be hard choices in the coming negotiations, but I trust the GOP more than I do the dems to make the right ones (or at least the less bad ones).

        1. ” There have been quite a few GOP proposals — the Paul Ryan plan for starters, and while it was a bit extreme, offered a starting point for negotiation.”

          too extreme – not realistic. did not reach balance until 2030 and no cuts to DOD and supply-side only .

          “Republicans also participated in the crafting of the Bowles-Simpson plan.”

          they walked away from it and did not present a minority report plan.

          “I’ll admit that I’m a bit disenchanted with the current breed of GOP legislators, but the heart of conservatism is still well and alive. Had Romney not have had to pander to the far right, perhaps we’d be in a different situation right now. That being said, Romney’s proposal to cap itemized deductions is an excellent starting point for negotiation.”

          no..they FAIL guy! they have “principles but they do not deliver the “goods”. I agree with you about Ryan but why in the hell is he STILL talking about “takers” AFTER the election? What does that achieve?

          “:There’s no reason to expect “tax and spend” from the dems. The Clinton years were a time of responsible taxation, with appropriate reforms where necessary. At the same time, it isn’t enough to align oneself with the GOP to be considered “fiscally conservative.”

          in no small part because the GOP held his feet to the fire on fiscal responsibility.

          :There are going to be hard choices in the coming negotiations, but I trust the GOP more than I do the dems to make the right ones (or at least the less bad ones).”

          I expect the party that claims to be fiscal conservatives to present an honest balanced budget proposal.

          until then .. they’re impostors in my book.

          Ronald Reagan KNEW when the revenues were insufficient to pay expenditures that something had to be done and he did it.

          Under Bush.. Cheney said “deficits don’t matter” and from that point on – the GOP abandoned their fiscal conservatism in my view.

        2. Max Planck
    2. Max Planck

      “Max: it seems that our discussion is pretty pointless because you denounce the very idea of economic efficiency as being “nothing more than a construct.” I’ve presented logical arguments predicated on economic theory. You responded with populist rhetoric. Can’t argue with someone that ignores reason.”

      Stop flattering yourself. Everyone has “theories” and in case you haven’t noticed, a lot of them don’t work. There’s a guy named Fama at the Chicago School of Economics who probably won’t get the Nobel he was expected to get when 2008 blew up in his face.
      If you don’t see that dropping capital gains rates to 15% didn’t do anything, what point would there be in eliminating them altogether? Is that what you REALLY think is some sort of economic game-changer? You’re kidding yourself.

      I choose reality over “theory.” Sorry.

      1. re: ” I choose reality over “theory.” Sorry.”

        not when you’re advocating tax cuts on theory and you
        have no Plan B if revenues fall further.

        It’s not what you believe – it’s what actually happens and what your plan to deal with it is if your theory fails.

        1. Max Planck

          Correct, especially since YK’s “theories” are completely detached from reality. They sound authoritative, but in practice they fail.

          How do we know this?

          By the results we’re living with. It’s that simple.

          My suggestion to YK that instead of attempting to apply the theory to the economy, LET THE REALITY OF THE ECONOMY DICTATE THE THEORY.

          1. That’s pretty cute, Max. Fortunately the theories I reference are supported pretty well by fact.

            If you want to look for the impact of capital gains taxes, you look at what they directly impact — VC activity, and capital gains revenues. When capital gains taxes have been lowered, revenues have always gone up and so has investment activity.

            Tax cuts and revenue raisers come in different shapes and sizes. Raising capital gains taxes in the interest of “fairness” won’t gain much, if any revenue.

            You ignore the reality of the incidence of corporate and capital gains taxes. You also ignore the risk borne by entrepreneurs and investors relative to the lack of risk borne by a worker.

            I don’t think you actually understand what the “results we’re living with” are. Your anecdotal evidence makes for good rhetoric but proves nothing.

            All you’ve done is throw around words like “construct” to sound intelligent, but you haven’t actually made any argument. Instead, you talk about what you have “guessed.”

            I’m happy that you think a 15 percent capital gains tax is “damned cheap” and that there is “ENORMOUS relevancy” in whether we consider a corporation a “person” philosophically.

            Corporations avoid taxes? Yes. They do. That behavior intensifies under higher tax burdens. Guess what, people avoid taxes as well. No one pays the statutory rate that they fall into.

            And if you’re criticizing me for only basing my arguments on theories (theories which have been supported by observations, no less) I have to wonder how you come to the bewildering conclusion that corporate taxes have no impact on wages. Higher taxes reduce after-tax profits. A profit-maximizing and cost-minimizing firm will either try to avoid said taxes, or cut other costs. This isn’t theory; this is how businesses make decisions.

            I hate to burst your bubble, but you haven’t disproved any economic theories with your cute ramblings.

          2. what is your plan if you cut taxes and revenues do not increase enough to offset and a deficit results?

            what’s your contingency plan if that happens?

            you’re advocating a theory not a demonstrable fact.

            but worse than that -you have no Plan B if the cuts fail to produce enough revenues to offset the loss in taxes.

            that’s not a responsible approach. that’s an approach an ideologue would take and then runs away if it fails.

            this is all in the school of “starve the beast”.

            the “theory” is if you lower revenues.. then cuts will have to be made.

            unfortunately that theory does not work as the budget goes into deficit and never recovers.

            then the next proposal is … ta da… cut taxes to increase revenues…with no plan B if it fails….

            this is why we’re in the fix we are in right now.

            we got theories. we got no answers if the theories don’t work – we just go into deficit.

          3. Eric Johnson

            Larry,

            Your side is theory too! You assume if we raise taxes we’ll get $X revenue based upon today’s economic activity. Folks and companies are always busy looking for ways to reduce their taxes and other expenses. There are plenty of tax experts that spend time reading those dreadful tax laws and regulations to figure out how to set finances up to minimize them. This is all legal and shouldn’t surprise anyone.

          4. re: ” Your side is theory too! You assume if we raise taxes we’ll get $X revenue based upon today’s economic activity. ”

            actually not. I say we have to do what it takes to get the revenues (and cuts) needed and that’s the bottom line.

            we did this under Reagan and Clinton but now we seem to be “theory bound” basically saying that the circumstances are “different” and we have no choice but to rely on theory and if we still don’t get enough revenues, then “oh well”.

            this is why we are in deficit.

            entitlements have to be “cut” but Social Security is a flea on a dogs butt in terms of it’s influence on the CuRRENT budget. Longer term reforms have to be made but those reforms are fairly modest and include such things as changing the cost-of-living escalator – which is too generous and other consequential but “doable” things.

            Medicare, B,C,D is out of control and has to be fixed. We have to boost the premiums on these programs. People will have to pay more premiums and share cost but make no mistake – that’s the very same as a tax increase which the “you can’t increase taxes” folks don’t mind doing on Medicare so let’s be clear – taxes have to go up to pay for entitlements and DOD.

            we have people who own two houses, multiple cars and have significant personal assets – paying $100 a month for medical care – that is 75% subsidized by taxpayers, it’s unsustainable.

            People forget – the “entitlement” part of Medicare is that the B,C,D portions are ENTIRELY VOLUNTARY and not a penny was pre-paid via payroll taxes.

            what seniors are “entitled” to is the availability of community rated insurance – not heavily-subsidized bargain-priced insurance – except for the poor.

            DOD is just as bad – we’ve doubled it from the Clinton years and that’s not the whole “Defense” picture. You have to add in Homeland Security, the Va, NASA military satellites, CIA,etc. Do not ignore the fact that the military is paying “entitlements” also as they have almost twice as many retired as active duty – all receiving pensions and health care – and ironically when a retired serviceman turns 65 – they get social security AND the Military makes them buy Medicare and make it the primary payer.

            all of that that totals to about 1.5T in spending – when our total tax revenues (sans FICA) are about 1.5T.

            So we have all this talk about percent of GDP and “theories” about tax cuts – and we currently spend on National Defense almost totally what we current are taking in – in taxes.

            that’s the reality – not theory.

            There is no way to fix this without dealing with all 3- cuts to both entitlements and DOD and increases in revenue and theories that don’t work do not allow you to walk away – we have to keep at it until it balances.

            under Bush after the tax cuts “worked” but not sufficiently enough cover spending but instead of actually dealing with the problem – we walked away.

            basically our excuse was that we “had no choice” in the two wars… but we chose not to pay for them because taxes would “hurt” the economy – as if the REALITY was that we could not really afford the two wars.

            Ironically the very same folks who increased spending under Bush now refuse to cut the things they increased nor will they go back and bump up taxes so they STILL do not want to pay for the spending they approved.

            so their answer is essentially to do nothing because doing something might not “work”.

            that’s what the GOP has come to.

          5. Max Planck

            “That’s pretty cute, Max. Fortunately the theories I reference are supported pretty well by fact.”

            No they are not.

            “If you want to look for the impact of capital gains taxes, you look at what they directly impact — VC activity, and capital gains revenues. When capital gains taxes have been lowered, revenues have always gone up and so has investment activity.”

            Really? Why don’t you provide us with some empirical evidence to back that up? In fact, the statement is the stuff of myth.

            “Tax cuts and revenue raisers come in different shapes and sizes. Raising capital gains taxes in the interest of “fairness” won’t gain much, if any revenue.”

            We’re just trying to take a bite out of the deficit, which, by the way, is already shrinking quite rapidly. Even the Neo-Nazis at IBD admit it:

            http://news.investors.com/blogs-capital-hill/112012-634082-federal-deficit-falling-fastest-since-world-war-ii.htm

            “You ignore the reality of the incidence of corporate and capital gains taxes. You also ignore the risk borne by entrepreneurs and investors relative to the lack of risk borne by a worker.”

            A stupid bromide, born of a bankrupt tautology that has left our economy in ruins, and the American future shattered.

            “I don’t think you actually understand what the “results we’re living with” are. Your anecdotal evidence makes for good rhetoric but proves nothing.”

            Uhm, the loss of 11 million jobs in a matter of months, and the laying waste of our biggest corporations hardly qualifies as “anecdotal.” If you haven’t noticed it, check your pulse.

            “I’m happy that you think a 15 percent capital gains tax is “damned cheap” and that there is “ENORMOUS relevancy” in whether we consider a corporation a “person” philosophically.”

            It IS “damned cheap!” And it does nothing for economic growth, and benefits few people.

            “Corporations avoid taxes? Yes. They do. That behavior intensifies under higher tax burdens. Guess what, people avoid taxes as well. No one pays the statutory rate that they fall into.”

            Then you never had a case to begin with, by your own admission. I think that’s funny.

            “And if you’re criticizing me for only basing my arguments on theories (theories which have been supported by observations, no less)”

            If they were “supported by observations” we would not be having this discussion. You have to be blind not to see the consequences of these policies, and they do nothing but trainwreck the economy after the effects of the dope wear off.

            “I have to wonder how you come to the bewildering conclusion that corporate taxes have no impact on wages.”

            They don’t. There’s no empirical evidence for it, and since you haven’t noticed, American corporate profits have been at the highest since the founding of the Republic, while American wage stagnation and decline has been an irrefutable matter since 1999, when wage growth topped out. You apparently know little of current economic history.

            “Higher taxes reduce after-tax profits. A profit-maximizing and cost-minimizing firm will either try to avoid said taxes, or cut other costs. This isn’t theory; this is how businesses make decisions.”

            They can try all they like. That doesn’t mean they can’t be raised. If we do, they will still have to pay more. By shifting the burden to corporate taxes, employees will shoulder less. You should applaud that.

            “I hate to burst your bubble, but you haven’t disproved any economic theories with your cute ramblings.”

            Again, I don’t cling to fossilized theories. I have history and facts on my side. The America that was created by the policies you have advocated- and indeed, attained- have ruined the country. its time to redress the balance, and I daresay that is precisely what is going to happen.

  7. I’m not sure what’s so difficult to understand about the basics of how this works.

    You cut taxes; that generates increased economic growth as people have higher after-tax incomes.

    Meanwhile you complement tax cuts with caps on itemized deductions, cuts/caps on Medicare, Medicaid and Social Security. You eliminate widely used deductions (like the mortgage interest deduction) or severely limit them — the mortgage interest deduction is particularly nasty because it contributed significantly to the housing crisis.

    On the corporate side, there are simple revenue generators and stimulants: eliminate worldwide taxation scheme, replace with territorial taxation with a bare minimum repatriation tax. Firms will actually repatriate money then rather than hoarding it abroad. While revenue would likely be minimal (at most a little over $100 billion) the money coming back to the U.S. would stimulate a lot of economic activity.

    1. Max Planck

      This is what passes for intellectual integrity in today’s Conservative world:

      1)
      You cut taxes; that generates increased economic growth as people have higher after-tax incomes.

      2) Meanwhile you complement tax cuts with caps on itemized deductions, cuts/caps on Medicare, Medicaid and Social Security.

      In other words, in step one you cut taxes. In step two, you raise them. The difference is that, as Romney kept repeating, your “take home” pay would go up, only to be snatched back from you on April 15th.

      This is how intellectually bankrupt American conservatism has become. Watch as AEI and AmCon get into more pissing matches. If American Conservativism is going to be relevant, it must snatched from phony cheerleaders like AEI, and CATO, which recently barely survived a putsch from the Koch Brothers.

      The hand wringing has begun.

    2. Max Planck

      “On the corporate side, there are simple revenue generators and stimulants: eliminate worldwide taxation scheme, replace with territorial taxation with a bare minimum repatriation tax. Firms will actually repatriate money then rather than hoarding it abroad. While revenue would likely be minimal (at most a little over $100 billion) the money coming back to the U.S. would stimulate a lot of economic activity.”

      This is another famous fable. You may recall we DID have a one time tax amnesty for American firms to repatriate funds held overseas. There was no measurable impact on the US economy. Hewlett Packard brought back over $5 billion, if memory serves. Shortly after, they laid off 5000 employees.

      Any other suggestions?

  8. This is BS. More conservative talking points, rather than ACTUAL EVIDENCE…

    First off, do small businesses REALLY sell or own that much CAPITAL-TAXED stuff?? I’ve heard that that’s really more of a myth than anything.

    Secondly, it’s called CAPITAL GAINS tax, not “capital savings tax.” You only get taxed ON THE RETURN WHEN YOU SELL! I mean, if you invest $1 Million but make a profit of $10 Million, YOU’D STILL KEEP $8.5 MILLION under our current regime. Even if it were 35%, you’d keep AT LEAST $5 Million. That’s a pretty decent return, wouldn’t you say??? Are American investors REALLY gonna “create far less jobs” just b/c they would keep A LITTLE BIT less even with a large ROI?

    Thirdly, I KNOW I’ve seen at least 1 or 2 credible studies showing NO CORRELATION between economic growth and capital gains tax rates. Not only that, but I KNOW that we had CGT rates as high as 30 or 40% UNDER REAGAN’S ADMINISTRATION (you know, the “high growth” one you always LOVE to talk about?). In fact, didn’t we have at 40-45% rate AT ONE POINT, and in some high-growth years, it didn’t seem to do much to HINDER success?
    GTFO
    Stop making excuses for ultra-greedy, shortsighted fatcats, conservatives…
    This is just PITIFUL. Why do you worship these people so much?? I mean, OF COURSE I want plenty of jobs and economic growth, but we don’t need to RUN A RACE TO THE BOTTOM in terms of tax rates and deregulation to do it!

    We can have fair tax rates, plenty of tax revenue AND growth! We did before, and we can do it again. There’s no tradeoff needed. The rich just have to get used to NOT BEING QUITE SO SUPER-RICH (maybe just a little rich or moderately rich) anymore. Shareholder capitalism is obviously A FAILURE for the majority of Americans; stakeholder capitalism will do. We’re all in this TOGETHER, after all!

  9. “Syracuse University’s Maxwell School, presented a graph at the joint hearing that plotted capital gains tax rates against economic growth from 1950 to 2011. He found no statistically significant correlation between the two. This was true even if Burman built in lag times of five years. After several economists took him up on an offer to share his data, none came back having discovered a historical relationship between the rates and growth over those six decades. “I certainly did throw the gauntlet down for the true believers,” says Burman. ‘If they found the relationship, they’re saving it for a special time.'”

    “In mid-September CRS released a paper that analyzed economic growth and changes to the top marginal tax rates, both for personal income and capital gains, from 1945-2010. “The reduction in the top tax rates appears to be uncorrelated with saving, investment and productivity growth,” it concludes. “The top tax rates appear to have little or no relation to the size of the pie.”

    1. Max Planck

      The CRS study was immediately disavowed by the GOP, since, like the AEI, they merely discard any hard evidence that doesn’t suit their views.

      Here’s the report’s findings.

      http://www.cnbc.com/id/49059989/Study_Tax_Cuts_for_the_Rich_Don_t_Spur_Growth

    2. Syracuse University’s Maxwell School, presented a graph at the joint hearing that plotted capital gains tax rates against economic growth from 1950 to 2011. He found no statistically significant correlation between the two“…

      Well maybe this individual should consider taking a course or two in basic economics…

      Just saying…

      1. Max Planck

        Right, just deny the data and substitute blind faith, and our decisioning will be that much better.

        Do you ever actually LISTEN to yourself?

        1. maxie boy says with blind faith: “Right, just deny the data and substitute blind faith, and our decisioning will be that much better“…

          Hmmm, you saw the raw data?

          Do you ever actually LISTEN to yourself?“…

          Funny I was going to ask you the samething…

  10. Thomas Sullivan

    Reducing capital gains taxes results in much more economic growth, as the Gingrich capital gains tax cut proves, and much more federal revenue. Before passage in 2003, Democrats predicted a 2% drop in total capital gains revenue over the total period 2003-2006. In fact, there was an increase of 64% in total revenue 2003-2006. CBO forecast (prior to the tax cut) for 2006 revenue of $57 billion, but the actual revenue was $110 billion, 93% higher than forecast.
    http://www.americanthinker.com/2010/09/the_successful_clinton_economy.html

    Fair is a Marxist, foolish concept when it comes to economic growth. Democrats like Obama want to trade economic growth for tax rate increases in order to achieve “fairness”.

    1. Max Planck

      “Reducing capital gains taxes results in much more economic growth, as the Gingrich capital gains tax cut proves, and much more federal revenue.”

      Rubbish. Capital gains were cut from 28% to 20%. Now they stand at 15%, so where is all this “economic growth” you think this is generating.

      I’ve never seen such warped perspectives. You take ONE metric, change it, and tell yourselves that this alone changes the economic fortunes of a multi trillion dollar economy with dozens of conflicting forces acting on it at the same time. Unreal.

      1. Rubbish. Capital gains were cut from 28% to 20%. Now they stand at 15%, so where is all this “economic growth” you think this is generating“…

        Being wasted on other forms of government extortion

  11. … I don’t think we want savings and invenstements, America is a consumer economy. We buy things to move the economt along. If everyone hoarded their money in savings (like the rich do) or invested in stocks (only the upper half of americans who een own stocks benefit from this) I think it would be a bad thing.

    You can argue and theorize all you like but there is a hard fact that all the wealth consistenly is moving up to the rich. If you don’t find a way to redistribute some of the wealth in a constructive way (i.e. something less socialist then confiscating wealthy assests) then the country is doomed.

    I suggest taxing the rich the same or even a little more thenthe rest. Im pretty sure they will stil be rich and continue to profit. But I would prefer some incentive in the tax code for teh rich to get out of investing in the cayman island and instead invest in business that have employees. Make them the actual job creators they claim to be

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