WSJ Article re: Federal Tax Proposals

[Anonymous]

http://online.wsj.com/article/SB10001424052702304354104575568643889337142.html?mod=ITP_pageone_0

I find the proposals mentioned at the beginning of the article to be out of touch given the economic climate. Particularly eliminating the mortgage interest deduction. Most people take this deduction into account when buying a home, and I have to think that this proposal would put home ownership out of reach for many people as well as forcing some current homeowners into foreclosure.

[Anonymous]

Did you seriously think closing the budget gap would be painless?

I remember posting on Facebook, a few months ago, my ideas for tackling spending in Social Security, defense, Medicare, and Medicaid. The only comments were from other liberal-moderates who by and large agreed with me (my ideas -- get out of Northeast Asia and Western Europe, reduce our nuclear arsenal, means test Social Security, have Medicare only kick in after 10% of a senior's income, and allow doctors to pay off med school debt by doing Medicaid work.) My conservative friends who rant daily about government -- total and complete silence.

I've come to think that most right-wingers are ideologically conservative but functionally liberal in that any cuts to programs they personally benefit from are vigorously opposed. When they complain about government, they're just venting and don't really want to solve the problem.

[Anonymous]

Um, why assume I'm a right-winger? The proposals mentioned at the beginning of the article would discourage home ownership and make health insurance more expensive...I didn't think those things were part of a liberal agenda.

I just think a tax that could cost homeowners hundreds of dollars a month isn't a good thing right now.

[Anonymous]

I'd like to know exactly which unnamed people put mortgage interest deductions "on the table". It is the most widespread middle class tax break out there. It is more likely that this is Rupert Murdoch trying to scare people into voting Republican. I can't imagine a single pollitician taking it on.

[jsteele]

I fear the deficit commission will produce all kinds of ridiculous ideas aimed at the middle class taking it in the you-know-what. Creating this commission is just one more of Obama's actions with which I disagree. But, since I'm on the left rather than the right, my criticisms don't carry any validity and I should be drug tested.

[Anonymous]

16:37 again.

Why yes, the middle class is going to have to make some sacrifices, unless you think we can run deficits at 8-10% of GDP indefinitely.

(FWIW, there's folks on this board that think 150k-200k a year is middle class.) Out of curiosity, Jeff, what do you define as middle class? I'd personally define it as 2x to 4x the poverty line, which would be $44,100 to $88,200 for a family of four, although this is skewed in the DC area.

16:46, why is home ownership an absolute good?

The subprime debacle only increased ownership rates from 65% to 70% over the course of the 2000s.

I've paid less in taxes than renters for years now.

If we have to ditch the mortgage interest deduction to help balance the budget, then let's do it. Yeah, it'll suck. But I'd be a freakin' hypocrite if I advocated "pain for everyone but not me."

[Anonymous]

jsteele wrote:I fear the deficit commission will produce all kinds of ridiculous ideas aimed at the middle class taking it in the you-know-what. Creating this commission is just one more of Obama's actions with which I disagree. But, since I'm on the left rather than the right, my criticisms don't carry any validity and I should be drug tested.

Got to agree with this. The absolute first step, before we talk about anything else, is to raise the income tax on the top 1% of households to the Clinton-era tax rate. Then raise the rate on capital gains income above, say, $500k to the same rate as the top bracket of income.

After that, you may not actually need to do anything else.

The fact that the panel is comprises a full-spectrum of American political thought--from radical right-wingers like Alan Simpson, all the way to center-right New Democrats like Erskine Bowles--is about the biggest indictment of Obama we've seen to date. I'm not sure he could be more of a chump.

[Anonymous]

If we have to ditch the mortgage interest deduction to help balance the budget, then let's do it. Yeah, it'll suck. But I'd be a freakin' hypocrite if I advocated "pain for everyone but not me."

10:08 here: Funny how we always start making the sacrifices at the middle-class, and always manage to cut taxes to the bone for those accruing never-before-seen-in-history levels of wealth.

Know why Social Security is facing a funding shortage? We've known the Baby Boomers were retiring for a long time now. In fact, we created the concept of a lock-box so that we could pre-fund their retirement. A great idea. So we increased Social Security taxes on the middle class for ten or twenty years. But unfortunately, that money was taken to cover general deficits--in large part funding tax cuts for the wealthiest Americans. So now we have to cut social security to the bone in addition to the previous decade or so of increased Social Security taxes on the middle class.

It would be nice to think that middle-class America sits by docilely while they get fucked up the ass year after year out of a spirit of bottomless generosity, but my guess is that there's just so little generational memory, they can't remember what happened five years ago, much less 20.

[Anonymous]

We thirty years ago the top tax rate was 70%

We act like we have reached a peak but we have not

[Anonymous]

Anonymous wrote:We thirty years ago the top tax rate was 70%

We act like we have reached a peak but we have not

I believe that was 50 years ago, during the Kennedy admin when they cut the top rate.

At that time, the top rate applied to only a fraction of the population that would be impacted today.

[Anonymous]

No, no, no it wasn't 50 years ago, and it wasn't for the super rich as you will see below after I adjust for inflation. You young people have no idea.

1980 tax table (Single)

Rate For income over
14% 2300
16% 3400
18% 4400
19% 6500
21% 8500
24% 10800
26% 12900
30% 15000
34% 18200
39% 23500
44% 28800
49% 34100
55% 41500
63% 55300
68% 81800
70% 108300

The numbers above are 1980 dollars. You can multiply by 2.57 to get to 2009 dollars. So our top rate for single incomes today is 35% for incomes above $373K. They were paying 34% for incomes of $18K or $46K adjusted for inflation. The 70% is for income of 108,300, or $278K in current dollars.

The comparison looks better if you look at Married filing jointly numbers, but it it still sickeningly high compared to our current tax rates.

http://www.taxfoundation.org/research/show/151.html

[Anonymous]

Anonymous wrote:

If we have to ditch the mortgage interest deduction to help balance the budget, then let's do it. Yeah, it'll suck. But I'd be a freakin' hypocrite if I advocated "pain for everyone but not me."

10:08 here: Funny how we always start making the sacrifices at the middle-class, and always manage to cut taxes to the bone for those accruing never-before-seen-in-history levels of wealth.

Know why Social Security is facing a funding shortage? We've known the Baby Boomers were retiring for a long time now. In fact, we created the concept of a lock-box so that we could pre-fund their retirement. A great idea. So we increased Social Security taxes on the middle class for ten or twenty years. But unfortunately, that money was taken to cover general deficits--in large part funding tax cuts for the wealthiest Americans. So now we have to cut social security to the bone in addition to the previous decade or so of increased Social Security taxes on the middle class.

It would be nice to think that middle-class America sits by docilely while they get fucked up the ass year after year out of a spirit of bottomless generosity, but my guess is that there's just so little generational memory, they can't remember what happened five years ago, much less 20.

Why are you assuming I am against taxing the rich? I'd be all in favor of equalizing capital gain/dividend taxation with other sources of income taxation. Jack up taxes for those making above $250k -- it's not like they were creating jobs during the past decade, so the bemoaning of "you're taxing the PRODUCERS!" is just hollow. F*** them. They haven't done anything for the rest of us recently. So why elevate them?

I agree -- the first step is what 10:08 suggests (return taxes on the top 1% to the Clinton rate and treat capital gain/dividend income above $500k as normal income). I do not, however, think this will be enough.

Another possible first step -- strike a grand bargain with business. If the private sector creates 15 million net jobs in the USA. -- with at least 75% paying 2x the minimum wage -- by October 1, 2012 or the Clinton tax rates return. Win-win.

Then, set a sliding scale so that the lower unemployment is, the lower corporate taxes and the taxes on the most wealthy are. I've no problem with giving good treatment to the wealthy/privileged *as long as they're helping the overall community.* It's when they're living large and not creating jobs that they become parasites.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

If we have to ditch the mortgage interest deduction to help balance the budget, then let's do it. Yeah, it'll suck. But I'd be a freakin' hypocrite if I advocated "pain for everyone but not me."

10:08 here: Funny how we always start making the sacrifices at the middle-class, and always manage to cut taxes to the bone for those accruing never-before-seen-in-history levels of wealth.

Know why Social Security is facing a funding shortage? We've known the Baby Boomers were retiring for a long time now. In fact, we created the concept of a lock-box so that we could pre-fund their retirement. A great idea. So we increased Social Security taxes on the middle class for ten or twenty years. But unfortunately, that money was taken to cover general deficits--in large part funding tax cuts for the wealthiest Americans. So now we have to cut social security to the bone in addition to the previous decade or so of increased Social Security taxes on the middle class.

It would be nice to think that middle-class America sits by docilely while they get fucked up the ass year after year out of a spirit of bottomless generosity, but my guess is that there's just so little generational memory, they can't remember what happened five years ago, much less 20.

Why are you assuming I am against taxing the rich? I'd be all in favor of equalizing capital gain/dividend taxation with other sources of income taxation. Jack up taxes for those making above $250k -- it's not like they were creating jobs during the past decade, so the bemoaning of "you're taxing the PRODUCERS!" is just hollow. F*** them. They haven't done anything for the rest of us recently. So why elevate them?

Sorry, was moving from the specific to the general case--wasn't calling out you in particular. In general, though, it seems there's a general consensus of support for policies that continue to bleed the middle-class while catering to the top 1%. This is an unfortunate effect stemming from the GOP's laser-like focus on cutting taxes for the wealthiest, and the coalition of center-right Democrats who enable them.

So you end up with the sort of "bipartisan consensus" like the Bowles commission looks set to implement. Everyone knows there'll have to be belt-tightening, so all Americans will need to sacrifice. Except those in the top 1%--can't have them going Galt on us, y'know.

Anyway, it's not entirely clear what our deficit picture would look like with the various sensible tweaks to the tax-rate structure, eliminating the cap on social security taxes, and a future return to economic growth post-recession, etc...