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europhilz said...
But what's the point behind saying it? Why even bring it up? Nobody does anything alone. We ALL use the stuff he's referring to. Why not say- if you own a home, you didn't do that by yourself. Or- if you have a job, you didn't do that by yourself. Or even- if you raised children, you didn't do that alone.
VBCock
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Aaron Burr Cock said...
well it appears for all the world to me like hussein barrack obamma mama barry whateverhisnameis...he is going to be reelected president. you might begin trying to come to grips with that
when that occurs the gop is going to have a choice. let all the bush tax cuts lapse or renew them for folks making say half a million a year. obama can let them lapse, he will be secure.
the day of reckoning is drawing near. taxes are going to have to go up for a lot of people. defense spending needs more scrutiny. s.s. & medicare need reform. we need to set our fiscal house in order.
when this is done the economy will begin to recover. when we have a reasonable path to debt reduction the economy will begin to recover
i think we are in for better days. i think obama will get to take credit, for good or bad. i hope the nation begins to do better
usa usa usa
VBCock
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VBCock said...
the problems with the economy have virtually nothing to do with the federal debt at the present time.
People talk about it, but it isn't really an issue. The government is borrowing money below the rate of inflation for goodness sake. It is a long term concern, one that would be relatively easy to fix, but right now the global malaise isn't based on concerns about the US's long term debt burden.
You may run like Hayes, but you hit like $*!#
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maxcy124sc90
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VBCock
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CockAtLaw said...
Please explain how Obama's plan does not help people with incomes over $250,000. Does it not also provide lower rates for the first $250,000 of income for those people? If so, it seems that Obama's plan is helping everyone, you just want him to help higher income earners more.
GrandpaCock77
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GrandpaCock77 said...
The tax rate cuts for those making over $250,000 (couple-$200,000 single) would not be extended and therefore most believe the tax rate would revert back to the Clinton tax rates which include the top rate of 39.6%. The President's plan however adds an additional 1.2 % to the effective rate due to phase out of certain deductions for high wage earners which brings the effective rate to 40.8%. In addition, some pass through income for businesses will be subject to a 2.9% medicare tax thus raising the effective rate to 43.7%. In 2013 the 2.9% medicare tax will be raised to 3.8% under the healthcare law bringing the effective rate to 44.6%. The healthcare law also kicks in an additional 3.8% tax called the Unearned Income Medicare Contribution which will be used against interest and some pass through income. Dividends rates will also rise (no determination as to how much yet) and capital gains tax rates will go to 20% from 15%. So you can see that top wage earners will notsimply be going back to the Clinton era tax rates.
Due to the projected increase in medical care costs (medicare and medicaid) and Social Security the President cannot possibly recover enough revenue from the top 2-3% of wage earners to cover this deficit. The hunt for additional revenue will trickle down into the middle class. It's the only place tax hikes can come from.
It should be noted that the success of President Clinton was due to his work with a Republican Congress which included tax hikes coupled with responsible reduced spending. Since President Obama refuses to reduce federal spending his tax hike strategy will only exacerbate an already bad economic problem.
It is time for a new President.
This post has been edited 2 times, most recently by CockAtLaw on 8/4/2012 at 8:00 PM
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CockAtLaw
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CockAtLaw said...
The tax rates for every person up to $250,000 of income are lower. It is not based on the total income. Therefore, every person's income up to $250,000 is taxed exactly the same. To say tax rate cuts on those making over $250,000 would not be extended is not correct. The rates for all income over $250,000 would not be extended. It's based on the income, not the individual.
With regards to the phase out, that depends on what deductions you are talking about. There are no phase-outs for 162 ordinary and necessary expenses or other deductions incurred in operating a business. In fact, 179 deductions and accelerated depreciation are not phased out. The phase outs are for deductions that are unrelated to operating a business, such as charitable contributions and second home mortgage interest.
The 3.8% Obamacare tax applies only on passive income, such as market investments. It does not apply to pass-through income from an active trade or business. In other words, small business owners who are involved in the operations are not subject to this.
You are right that there is no certainty what the capital gain rate will be. However, even at 20%, that is the lowest rate ever. Funny how our economy worked well when the rate was 28% and even higher before there was a capital gain preference rate (i.e., capital gains and ordinary income taxed at same rate).
To say Obama hasn't reduced spending misses the point. Federal spending has grown at a slower rate under Obama than any president in the last 30+ years. The main driver for that is increased unemployment benefits from the recession of 2008. Cutting spending would have resulted in the same austerity results the UK is experiencing; a double-dip recession. The reason unemployment is as high as it is is because of the massive lay-offs from the public sector.
Also, to say Obama hasn't tried to work with Congress is also incorrect. Obama offered $10 of spending cuts for every $1 of tax increases. Guess who refused to negotiate here. 10 to 1 cuts to increases seems like a reasonable approach, but the GOP shot it down.
I'm on mobile and probably missed something so I will try to respond later to address anything I missed.
GrandpaCock77
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GrandpaCock77 said...
My first question to you is "Have you ever worked for the Federal or your State/Local government?". Because if you had you would know that no government actually creates any infrastructure that is used by citizens and businesses. Government uses the taxes collected from citizens to hire local or national "businesses" to build the infrastructure thus ensuring that the money is implemented properly to meet the requirements stated in the budget of the government agency. These budget items are the result of requirements submitted to the government by citizens and businesses. If it isn't done this way we can end up with bridges that go nowhere. Infrastructure is based on the demands of the citizenry including businesses and is moderated based on the available tax base. We do not have an endless tax base and when government uses the limited resources of it's citizenry and businesses to fund requirements that bust the budget and do not meet critical requirements the people and businesses suffer with higher taxes, New and higher taxes on businesses (to make up the difference for poor government decisions) create all sorts of problems with maintaining job creation at an acceptable level.
By the way all governments would cease to exist without the very infrastructure created by the requirements of the citizens and business world. Business does not need government, government needs business. The citizens of this country use government to oversee the creation, construction, or maintenance of many common services since it is more efficient to do so. Without the articulated needs of those common services by citizens and business, government would have no job period.
This is not rocket science and yes I did work for the Federal goverment for over 30 years. My agency never created a job. It simply met the needs (in our case those of national defense) articulated by the common defense service need of the citizens and businesses in this country. We hired contractors and provided those contractors with a set of requirements and a budget for completing the project. The contractor decided how many positions he would be hiring to complete the project. The citizens hired and need-specifically trained by the business provided the government with a completed service. The government is just another customer.
Hope this clarifies the issue for you.
GrandpaCock
Two grand boys, Two state championships. 3-peat USC
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GrandpaCock77 said...
To reply to your points:
Point 1 - We are basically saying the same thing. My main point is that President Obama has claimed that high wage earners would revert back to the Clinton era tax rates. This is not entirely true.
Point 2 - I stated "some deductions". I did not state which ones and I do not dispute your listing of certain deductions. The main point was that the phase out of certain deductions would result in an effective rate increase of 1.2% for some high wage earners bringing their effecttive rate to 40.8%.
Point Three - I stated 'some pass through income and interest". I am assuming you are referring to the UIMC tax at 3.8% and not the Medicare Tax on wages and some pass through income that will rise to 3.8% in 2013. The UIMC is scheduled to be implemented in 2013 on high wage earner interest and most of their pass through business income not subject to the Medicare Tax.
Point 4 - Relative agreement but I do believe that this could change when the increased taxes on high wage earners don't do what President Obama wants.
Point 5 - My point here is that bringing the economy under control will require a combination of modest tax increases coupled with strategic, permanent spending cuts to be effective. Tax increases without spending cuts is useless. The current gridlock is due to intransigence on both sides but specifically a lack of leadership by the President. We haven't had a budget since the President began his term. This is unacceptable especially since the Democratic Senate has refused to accept any of President Obama's budget submissions. Slow Federal spending growth with the current federal deficit just means we are dying a slow economic death. Tax increases and Permanent cuts have to be implemented.
Point Six - I am sorry but this dog don't hunt as they say. The offer was predicated on implementing the tax increases first with a "trust me IOU" on the back end spending cuts. The taxpayer has been burned with this Democratic promise before. The nice thing about the Clinton era during his second term was that Dems controlled the WH and Repubs the Sen/House. There was a definite checks and balances atmosphere and the government was able to get things done. We need that kind of atmosphere again.
This post has been edited 4 times, most recently by CockAtLaw on 8/4/2012 at 10:24 PM
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CockAtLaw said...
Thanks for the response, and to your points:
1. I thought we were, I just want to make sure we both understood that when a person reaches $250,000 of income, they don't magically flip over and pay more tax on that first $250,000.
2. I think this depends mostly on what deductions those people gae taken in the past. My understanding of the phase-outs is they are non-business related items. In other words, these are items where Congress has previously provided tax benefits to encourage certain activity; the type of stuff that makes the tax code so complicated Nd what people generally want toget rid of anyway. It's not like these phase outs are limiting deductions for salaries paid by employers.
3. I'm not sure what this is. I know for employment tax purposes, the wage base limitation is currently 110,000 so that any income above that amount is taxed for employment tax purposes at under 3%. Is this being increased?
4. Not Obama, Congress. Long after Obama is gone, Confress controls the tax code. All deductions and income exclusions are a matter of legislative grace, not executive grace.
5. Agree 100% with the first part of your statement about requiring a balance. That's what Simpson-Bowles was designed to do. The Presdent even went further and offered 10 to 1 spending cuts for revenue increases. That is the most austere plan I've seen in my time. Nobody from the GOP was willing to negotiate because in the current republican party, working WITH the President toxic. Even Mann and Orstein (one of whom works at the American Enterprise Institute) acknowledged in their book that the gridlock is principally due to GOP obstructionism. The President can't make people work with him, all he can do is try to come to a middle ground which he has, IMO. I agree with you 100% on the economic way forward, I just disagree as to the reason a sensible plan hasn't been agreed to so far.
6. That atmosphere is a long ways off. The only deal that could be agreed to, sequestration, is 100% tax cuts with no revenue increases. Now, the GOP leaders are even trying to backtrack on their own deal.
It doesn't sound like we disagree on economics or tax policy that much at all, just as to underlying reasons as to why things haven't been accomplished, and that is purely a matter of perspective.
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