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sadface
I haven't made a political post in a long, long time.

I'd make one now, except just thinking about it depresses me. I was not happy about the results of the midterm, needless to say... and I am even less happy, if possible, about this "compromise" that Obama has made with the GOP on taxes. From where I sit, it smells more like capitulation than compromise. Give a lot, get almost nothing.

Obama is the most intelligent president we've had since Jimmy Carter... and, sad to say, he is looking more and more like Jimmy every day. A good man, but not a good leader. At least not so far. He doesn't seem to have the stomach for a fight. We need another FDR, another JFK, another LBJ. NOT Jimmy II. (And, yes, I know, Obama has accomplished some important stuff. But so did Jimmy. Camp David accords, remember?)

Yeats was writing about his own time in "The Second Coming," I know, but sometimes I think he was prescient:

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

And could that rough beast whose hour has come round at least be... Sarah Palin?

No, please. Tell me that's just a bad dream. Somebody wake me up.

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Comments

m0beus
Dec. 16th, 2010 04:10 am (UTC)
Re: Actually
And, while this may be overkill, to respond to another point: Congress acted, and thereby made taxes lower in 2011 than they would have been without its action. I will go ahead and call that a tax cut, thank you very much. The opposite of your point is true: If the low tax rates had been allowed to lapse on schedule, Congress would merely have adhered to the plan of taxation the 2001 Congress implemented.

Granted, they only implimented the sunsetting provisions because they didn't have the votes to get permanent ones. So what? A law's a law.
dalimar2
Dec. 16th, 2010 02:11 pm (UTC)
Re: Actually
Okay mobeus, no intellectual dishonesty here, here is your link:

http://www.cbo.gov/budget/data/historical.pdf

Bush cut taxes in 2003 in which the federal government had revenue of 1.782 trillion

In 2004, after the cuts, the feds had revenue of 1.88 trillion. Significantly lower tax rates, yet more revenue. Is this a credible source for you?

Remember, Bush did not cut taxes his first year. Some people think he did, he didn't.

http://en.wikipedia.org/wiki/Jobs_and_Growth_Tax_Relief_Reconciliation_Act_of_2003

That is the bill known as the "Bush Tax Cuts"

In 2001 Bush tried a stimulus, like Obama did in 2009, that gave a tax rebate advance to people making certain incomes among other things, it failed to help the economy, like Obama's in 2009. Don't confuse that law, with the tax act of 2003. It is ironic how similar the two presidents ended up being on this isn't it? Both tried a stimulus program first.

You can argue all day what "Woulda coulda shoulda" been if Bush hadn't cut taxes, and say we would have made more money anyways or something, tax cuts had nothing to do with it, except you'd be disagreeing with every economist on the planet that says more money in the economy increases economic growth, and, you STILL wouldn't be helping your point that Bush's cuts added to the deficit, because they didn't.

I think sometimes if these were the Gore Cuts of 2003 and otherwise exactly the same there wouldn't be such animosity. I think hatred of George Bush carries over to everything he touched. I'm sure his increase in aid to Africa would likely also be lamblasted somehow.

You are right Mobeus that everyone who works pays FICA taxes, however that does not dispute my point that the bottom 40% pays no income tax and does not support the federal government. Entitlement programs are outside of the regular budget. Social Security isn't really a tax, it is a forced retirement savings program. The reason it is capped at a certain income is that it is capped in benefits as well. That is the way FDR designed it. Medicare taxes, by the way, is uncapped.

You are right, a person who makes 2 million in regular income will not pay SS on 95% of it. But he will pay over $800,000 in taxes, so don't act like he isn't paying "his fair share."

Additionally consider the small business owner mobeus. Who has to pay both the employee and employer's share of FICA. Thus doubling the tax rate to about 15%, or just consider the income limit doubled. So a small business owner who makes $250k a year actually is going to pay SS FICA taxes on $212k of income, and medicare on potentially all of it, twice. Ouch. And he ends up in the highest tax bracket, and most deductions (child, studen loan interest, etc) phase out for him too. Making his effective rate pretty high.

I'm sure if the tax law was written for the $2 million a year people you mention it would have far less opposition, too bad it isn't.

You said "Corporations refusing to hire/loan so others can hire are currently sitting on tremendous cash hoards given them by the Government's grace" which I find offensive. Money a business or individual earns is only theirs by government grace? That explains your attitude as a tax raised. All money earned in the US is the property of the government, and letting the person who earned it keep more of it is government spending that must be justified, and if that entity is "rich" or a business it is a gift or a giveaway. I hold the position that what I earn is mine, and anything I give to the government is a giveaway. Not the other way around.

dalimar2
Dec. 16th, 2010 02:11 pm (UTC)
Re: Actually
Well, I can tell you that we can cut 100% of discretionary spending and not erase the defecit long-term. So please tell me, in light of no tax increases what gets slashed: Social Security, Medicare, or National Defense?

All three mobeus. SS needs the age increased, and it needs to be means tested. It is kinda a bad incentive to do so (it would punish people who are responsible and save for retirement on their own) but it should be done. I also think a portion should be privatized, and by that I mean put into an account with your name on it which the government can never take money from. Defense spending needs to be cut, especially nation building spending. I'm not so much for cutting spending on advanced weaponry, because that provides a lot of jobs, a lot of offshoot benefits (the Internet, etc) and as such kills multiple birds with 1 stone. Medicare and the whole healthcare system needs common sense market based reforms that will slow the rate of medical inflation. (Obamacare does not do this).
dalimar2
Dec. 16th, 2010 03:39 pm (UTC)
Re: Actually
oh and mobeus the reason why businesses are sitting on cash is because of uncertainty created by Obama's policies. You can't foster an antibusiness environment and spew angry antibusiness rhetoric from the pulpit and expect businesses not to react defensively.

Imagine you're a business owner. You don't know what you will pay in taxes next year, you don't know what your employee healthcare costs will be. You don't know what your financial reporting requirements will be. If you are in an industry at all related to fossil fuels or that uses more than a small amount of energy, you don't know what those costs will be. Meanwhile the economy looks shakey still, because Obama's policies have failed thus far to make a significant impact on the unemployment rate.

Why would you spend any money expanding or hiring someone new? Especially when many expansions can be multi-year efforts. Businesses need certainty. Plus, with the economy being anemic, a business who doesn't want to end up in bankruptcy will save up, like ants or Starks when winter is coming.

I bet you Obama moves to the middle and starting with this compromise and the South Korea trade agreement continues with more progrowth probusiness policies and we will finally start seeing the economy come back strong, then businesses will start spending. You heard it here first.
m0beus
Dec. 16th, 2010 08:50 pm (UTC)
Re: Actually
My accusation of dishonesty was uncalled for. I apologize. You've clearly done your homework, but I still disagree.

I asked for a link on cuts/revenue, you gave one. Fair enough. I think that the economy was expanding anyway, and slightly higher taxes would have meant more revenue, but that is just an opinion.

A small business owner has to account for their, and their employees' FICA taxes. Not sure what that proves. The business owner will account for this when hiring, and set wages such that it can still make a profit. It doesn't disadvantage the employer relative to competition: everyone must pay it. It cuts across industries, so prospecive employees lack incentives to switch jobs. On margin there are some jobs which an employer might not be able to fill at a living wage, in light of taxes, but that distortion is common to any tax. For my money, SS is worth it.

The taxes under consideration in this deal, as I understand it, were those on individual income, ie what the owner takes home after doing his business accounting, and deducting his expenses. If, after all of this, he clears over $250K, I have no problem with his tax burden on marginal income in excess of $250K going to Clinton rates, which would still leave it lower than every other first world country except Switzerland.

Corporations owe large profits to government's grace because they did cut payroll/jobs to brace for hard times. Government stabilized the economy, major banks are secure on their big debts and should have money to lend. Interest rates are low. Yet businesses are sitting on the money. I don't mind corporations maximizing their profits, but the reason they have profits is taxpayer intervention. The government bent the market for them, they should return the favor.

Uncertainty is a reason not to spend, fair enough, but that is as much a creature of Republican obstructionism as Obama's efforts. Certainty is hard when nothing can get passed.

The rich pay most taxes, and have most of the money. When the top 20% have 85% of the net worth, they can pay more taxes than the other 80%. I view taxes as a fee for the better lifestyle America gives you by rule of law, access to markets, etc. Someone who doesn't have a better life than they would elsewhere in the world- who scrapes to afford food/shelter, little money for leisure/healthcare- has no moral obligation to pay taxes.

An entrepreneur really didn't earn it alone. They aren't bringing back a deer they killed to feed the family. Talent, good ideas and hard work are important, but they only get one so far. The rule of law and access to capital matter too. American society allows people with the drive/talent to earn $250K to live in safety, comfort and-by most world standards- incredible luxury.

In Somalia, the government has no power to take anything away from a person. It has no power at all. Anything earned by being smarter or stronger is yours. A person with the drive, smarts and talent to make over $250K here could probably do quite well there, get a fair number of followers, carve out some land. Trouble is, someone can kill you for it.

That's an extreme example, so how about America, 19th century? No income tax, very little regulation, but still national defense. How did small business owners do? Well, just fine, until representatives from US Steel or Standard Oil came in to buy them out. And if they said "no" then Carnegie's boys would show up with clubs. Rockefeller was more civil, he'd just drive them to bankruptcy. At the end of the day, Carnegie owned all the Steel, Rockefeller owned all the oil.

Or the 80's, where Reagan preached low taxes and hands-off government. Ballooning peacetime deficits, junk bond kings engaging in racketeering.

Regulation-including very intrusive antitrust regulation- and income taxation, to my mind, are vital to the small American entrepreneur, and he should be fine with paying for them.

Last, these social safety nets serve a cynical function: they keep the masses content. Without them, in the 30's, unemployed veterans took to the streets in Washington, and the US Army wound up fighting them with flamethrowers. One lesson history teaches clearly: If you don't help the poor a little, they will help themselves to a lot.
dalimar2
Dec. 16th, 2010 10:18 pm (UTC)
Re: Actually
I don't have time right now to respond fully mobeus, but I wanted to clarify something.

A small business owner has to account for their, and their employees' FICA taxes. Not sure what that proves.

A small business owner is both an employee of, and owner of, a business. He pays FICA taxes on himself as an employee, and FICA taxes on himself as an employer. As such the fica tax rate on the small business owner, as an individual, is double that of other people.

So, at a 40% tax bracket, a small business owner is actually paying around 55% of every dollar he earns to the feds. Add in state and local taxes and it gets pretty obscene.

Furthermore, the tax rate on profits of an s-corp, which is the legal entity used by most small businesses, is actually higher than that of a c-corp, which is used by big multinational corporations.

I will be honest with you? Would I survive with a tax hike to clinton levels? Yes. It wouldn't be the end of the world, only in good years do I make any significant amount over 250k (another thing, income fluctuates greatly for many small business owners). I would still vehemently oppose an increase in capital gains and dividend taxes as I feel that would cause a stock market crash (http://politics.usnews.com/news/blogs/washington-whispers/2010/12/2/delaying-tax-vote-could-crash-stock-market.html) but I could survive, and do well, with the 250k+ bracket going back up to 40%.

However, I don't think it is a good idea, I think it would hurt economic growth, and in the end hurt everyone through a more anemic recovery with a weaker job market.

And mostly I get my hackles up about labeled a millionaire or a billionaire, saying I'm not a working american, or I don't pay my fair share. (if 55% plus isn't my fair share, what is?).

But if I were to accept a income tax increase, I would demand significant spending cuts as well. I will not stand for my taxes to be increased just to chase ever higher levels of wasteful spending from an ever larger and more intrusive federal government.
m0beus
Dec. 17th, 2010 12:08 am (UTC)
Re: Actually
Well dalimar, thanks for taking what time you did have, and coming forth with some well-though well-researched points. Lot of politics these days is screaming heads, and I fell into a bit of that myself.

Guess at bottom here's where I come from: Under Clinton we had a balanced budget. Probably due somewhat to overinflated economy. But if the economy really was overinflated/stimulated, those tax rates couldn't have been depressing it too much. More to the point, if we had a frenzied bull market, as most think we did, then I don't see how we could/should be shooting for an even more active economy, which is what we would need to reach balance with lower tax rates.

And of course, since Clinton, the country has shouldered some massive burdens that everyone agrees we're on the hook for: 2 wars, and a much-increased domestic security budget. Regardless of where you stand on health overhaul, etc., those few things should be paid for. We could modify some of the entitlement programs, like you suggest, but if they're to maintain their basic services, and the wars are to be paid for, and the budget is to be balanced, taxes must go up.

In time of war, taxes should go up.

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