Biden proposes tax hikes to pay for $2 trillion infrastructure package

[Waddy]

That's not entirely true. The incidence of a tax can be a complicated topic. I can give you an example to show a situation where an income tax will be shouldered entirely by a business. Let's say that you are in NY and I am in FL and we are gold producers. Our firms are identical in every single way and we produce an ounce of gold daily. For simplicity we will say that an ounce of gold is $1000. It costs both of us $500 to mine, produce and otherwise refine the gold so we both have a $500 profit. Now forget other taxes, let's just say NY imposes a 10% income tax and FL doesn't. That means now I continue to make $500 and sell the $1000 gold and you make $500 and pay $50 in income tax to the State of NY.

That doesn't change the market price of gold in CA, so the guy in CA doesn't care that you are paying an income tax in NY. So, as much as you might like to charge $1,050 for the ounce of gold, you're a 'price taker' in my contrived example. That is an extreme example of course where it can be identified that the producer bears the entire burden of the tax. The truth is usually somewhere in the middle. The tax winds up getting shared between producers and consumers depending on various factors.

Yes, saying that the consumer pays all corporate (business) taxes is a generality. There can be exceptions, but they are rare. And usually only apply to state and local taxes. But even then there are ways to pass down those state and local taxes. There are adjustments that can be made by chain franchises that mom and pop can't do, so they get run out of business. But at the federal level, the subject of this thread, taxes are passed to the consumer.

Let's say I am a pharma company. Foreign governments set low price controls on my products; I simply charge more for them here in the USA. The consumer here pays the difference; hence the consumer is paying those costs.

In markets that are local; the price of a hamburger, or cigarettes, or beer, in high tax NYC is going to be higher than Valley Falls, Kansas. Again, the consumer is paying those higher costs.

In your gold analogy, if the profit margins are high enough the NYC gold dealer will survive, even in high tax NY. But if gold margins drop, to say the 1% profit margin many grocery stores operate at, the NYC gold business will close. Or move to a low tax state.

And that is the problem many high tax states are now facing. Buying online levels that playing field, and makes just about every market very, very competitive. I no longer have to buy gold from a NYC dealer; I can buy it online from anywhere. This makes taxes a very important consideration when you set up a business. And it's a major reason companies are moving out of high tax states, and/or, if they can swing it, moving out of the country altogether.

 

[jpn]

We can't say where prices would have been of course because that policy wasn't pursued but we absolutely know that the price levels were higher than they would have been but for the Fed's quantitative easing.

Where do you think unemployment would have been without the easy money policy? Or is not just not a concern?

If you're so concerned with inflation, won't increasing the taxes on corporations help reduce demand and thus work against inflation?

 

[Lord Zerg]

I dont know why they even bother with tax hikes. They will still just spend more anyway. They just increased spending in the last bill, so theyve already spent the next tax hike and the one after that. The deficit will be over 5 trillion this year. Now, here comes another package theyre calling infrastructure, but its actually called a "Jobs Act". And it contains all the pork they missed in the last bill.

-broadband
-high speed rail
-public transit
-electric vehicles
-energy efficiency
-wages for home care workers
-green jobs
-unions

etc. This basically the green new deal. Hopefully this will cost Dems the House in the next election so we can get some obstruction going again.

No spending bill is absolutely perfect. But most of the things you listed are infrastructure. Maybe in 1950 they weren't but they are part of modern infrastructure and we need a bill that addresses a modern America.

Our country can't live without the internet and broadband is essential. We have growing congestion in our cities and high speed rail are great investments. Public transit also helps congestion and low income people as well. We need to transition off fossil fuels and EVs and energy efficiency are vital.

Speaking of deficit, Trump proposed a 2 trillion infrastructure bill, and he didn't even propose a way to pay for it. So Biden's bill is better from a debt perspective.

 

[Waddy]

Where do you think unemployment would have been without the easy money policy? Or is not just not a concern?

If you're so concerned with inflation, won't increasing the taxes on corporations help reduce demand and thus work against inflation?

The short answer is yes. The more complete answer is yes, if the government didn't spend that money. Because when they spend it, they are increasing demand. "Demand" doesn't know where the money comes from that enters the market, it just reacts to the money showing up. Too much money and you get inflation. Doesn't matter if it's government of private spending.

What would reduce demand is government paying down debt (not just interest on debt) with that tax increase or even send it off in foreign aid, so long as the foreigners don't buy US products with it.

 

[jpn]

The short answer is yes. The more complete answer is yes, if the government didn't spend that money. Because when they spend it, they are increasing demand. "Demand" doesn't know where the money comes from that enters the market, it just reacts to the money showing up. Too much money and you get inflation. Doesn't matter if it's government of private spending.

What would reduce demand is government paying down debt (not just interest on debt) with that tax increase or even send it off in foreign aid, so long as the foreigners don't buy US products with it.

Is reducing demand when unemployment is around 6 percent a good idea?

 

[Waddy]

Is reducing demand when unemployment is around 6 percent a good idea?

Now we're on to a different question. The answer is; it depends on how you plan to reduce demand. I don't see how that can be done at the moment. Coming out of the Covid lockdowns there is a lot of pent up demand. Government is spending like crazy. So in the final analysis your question is moot. There is nothing on the horizon that can curtail demand. The FED won't be raising rates, nor will the money supply tighten, and lending standards have already relaxed. The only thing that I can see that could possibly reduce demand is if the record debt now held by Americans somehow peaks. I see no sign of the credit economy, which we have, abating any time soon. I am not predicting hyperinflation, but we are seeing some serious easy money driven inflation. Get used to it. The price of that 2X4 you're paying $7.50 for won't ever go back down to $3..... people get used to higher prices.

 

[newpublius]

Is reducing demand when unemployment is around 6 percent a good idea?

Yes, because the government enacted measures which specifically reduced supply with the lockdowns. 6% isn't that bad either all things considered but we're about 5 million below pre pandemic employment I believe +/- (or is it 10mn? Its in the last BLS report though).

In WW2 where the US essentially diverted a significant amount of the production of products that would have been purchased by US consumers to produce the necessary war material to end the war, they didn't just reduce demand for consumer products, they throttled it with ration cards.

This is over and above the basic unemployment and increased welfare costs I might add.

Yes, when they locked down to 'flatten the curve' they should have also said, "And since we're producing less we will have to consume less"

There's a tradeoff, but they didn't want to make that tradeoff just like the 60s where they wanted Guns AND Butter, right? But they wanted 'lockdown' but no negative consequences or reduction in consumption, right?

 

[newpublius]

there is a lot of pent up demand. .

Exactly everybody wants to go on a trip, etc. Really the physical creation of money ITSELF doesn't cause inflation, in theory I could print $1tn and leave it in my garage where nobody knows about it and if nobody ever knows about it, it never gets spent. Indeed, its really the velocity of money, but take the reopening, plus pent up demand, plus all the stimmies and you get spending and potentially the expectation of inflation and that's it if the psychology takes hold, you'll have a problem.

 

[Waddy]

Exactly everybody wants to go on a trip, etc. Really the physical creation of money ITSELF doesn't cause inflation, in theory I could print $1tn and leave it in my garage where nobody knows about it and if nobody ever knows about it, it never gets spent. Indeed, its really the velocity of money, but take the reopening, plus pent up demand, plus all the stimmies and you get spending and potentially the expectation of inflation and that's it if the psychology takes hold, you'll have a problem.

yes, it's that surplus money getting into circulation that pushes inflation. We will see some serious inflation as the economy picks up. plenty of money, lots of demand = inflation.
The economy is going to pick up, regardless of who is president. There is now the greatest transfer of wealth the world has ever seen going on as the baby boomers die and someone inherits. They won't be saving that inheritance, they will be spending. And that transfer has just begun. It will accelerate over the next decade. And it will allow quite a few younger people who will never earn what their parents did to stay in the middle class. Sort of an inter-generational bailout.

 

[Taylor]

Bush ran the deficit up, Obama reduced it and got it back to somewhat manageable, and Trump ran it up again. Don't pretend you're a fiscal conservative. It's completely incompatible with Republican policy.

LMAO! Obama more than doubled Bush on deficits.

 

[jpn]

Yes, because the government...etc.

Your fantasy economics would bring ruin to our nation. Which is right-wing rags like The Federalist are rooting for, because then they could blame Democrats. Just like they did in 2010.

Beginning in 2009, Ideologues like Paul Ryan promised that the Fed's QE policy would bring crippling inflation to our shores and destroy our currency:
--Representative Dan Burton of Indiana (p. H459): “We are heading toward hyperinflation again.”
--Senator John McCain of Arizona (p. S1392): “My great worry is that if we do not account for this debt in some way, if we continue trillions of dollars of unnecessary and wasteful spending, then obviously we will find ourselves back in the situation we were in the 1970s, when we had hyperinflation and had to debase the currency.”
--Representative Paul Broun of Georgia (p. H3796): “I think we’re fixing to head for hyperinflation.”

They were all wrong, but their hysteria worked: in response to their rhetoric and "analyses" by right-winger economists, the stimulus package was smaller than it needed to be, and subsequent budgets were relatively frugal, which caused the recovery to be much longer and painful than necessary. And the Democrats were crushed in 2010.

It's not working this time. Sorry.

 

[jpn]

LMAO! Obama more than doubled Bush on deficits.

The lesson of the Obama years is that we didn't spend enough. As a result more people suffered and for a longer time than if we had stimulated the economy adequately.

 

[jonny5]

The question isn't, "Do we need to spend money on infrastructure?" -- because the answer is yes, the issue is one of degree and how now 2.5% of GDP which, I might add is the same percentage of a much higher national income than in the 1960s is now somehow insufficient?

If it isn't actually enough then the question should be, "Why aren't we holding the government accountable?"

2.5% of GDP, that's the budget, get the ****ING JOB done.

The federal govt may spend 2.5%, but private people and companies spend much more than that. Why is the answer yes that the federal govt should spend money on infrastructure? To support defense, sure, but beyond that? Theres no provision in the constitution for it beyond postal roads.

 

[Taylor]

The lesson of the Obama years is that we didn't spend enough. As a result more people suffered and for a longer time than if we had stimulated the economy adequately.

Actually, the people Obama targeted - the rich - did quite well.

Obama admits 95% of income gains gone to top 1%

President Obama agrees with recent study that found the economic recovery since the financial crisis has overwhelming favored the richest Americans, with 95% of the income gains from 2009 to 20012 going to the top 1% of the earning population

money.cnn.com

 

[jpn]

Actually, the people Obama targeted - the rich - did quite well.

You mean he didn't try to lie or dissemble his way out of it? How boring.
Here's yet another example of the "liberal media" attacking a Democratic political leader.
The 2009 stimulus contained some tax cuts in the hopes of garnering support from Republicans. This was before the Democrats understood the new burn-the-nation-down-if-it-helps-us-win-elections game the GOP was playing.
While the Democrats held the White House and the Congress, they passed a law bringing health care to tens of millions of Americans, paid for largely by taxes on the rich.
After 2010 they lost control of the House.

Meanwhile, what specific policies were the Republicans proposing that would address inequality?
What did they propose since?
What do they propose now?

 

[Taylor]

The 2009 stimulus contained some tax cuts in the hopes of garnering support from Republicans. This was before the Democrats understood the new burn-the-nation-down-if-it-helps-us-win-elections game the GOP was playing.

The 2009 "tax cuts" were just stimulus checks. The same thing most republicans opposed when Bush did it in 2008.

They did, however, support Obama's decision to extend - and later make permanent - the Bush income tax cuts.

Meanwhile, what specific policies were the Republicans proposing that would address inequality?
What did they propose since?
What do they propose now?

If you like income inequality, vote Democrat.

 

[jpn]

The 2009 "tax cuts" were just stimulus checks. The same thing most republicans opposed when Bush did it in 2008.

You know not of what you speak.

Tax incentives for individuals
Total: $237 billion

• $116 billion: New payroll tax credit of $400 per worker and $800 per couple in 2009 and 2010. Phaseout begins at $75,000 for individuals and $150,000 for joint filers.[30]
• $70 billion: Alternative minimum tax: a one-year increase in AMT floor to $70,950 for joint filers for 2009.[30]
• $15 billion: Expansion of child tax credit: A $1,000 credit to more families (even those that do not make enough money to pay income taxes).
• $14 billion: Expanded college credit to provide a $2,500 expanded tax credit for college tuition and related expenses for 2009 and 2010. The credit is phased out for couples making more than $160,000.
• $6.6 billion: Homebuyer credit: $8,000 refundable credit for all homes bought between January 1, 2009, and December 1, 2009, and repayment provision repealed for homes purchased in 2009 and held more than three years. This only applies to first-time homebuyers.
• $4.7 billion: Excluding from taxation the first $2,400 a person receives in unemployment compensation benefits in 2009.
• $4.7 billion: Expanded earned income tax credit to increase the earned income tax credit – which provides money to low income workers – for families with at least three children.
• $4.3 billion: Home energy credit to provide an expanded credit to homeowners who make their homes more energy-efficient in 2009 and 2010. Homeowners could recoup 30 percent of the cost up to $1,500 of numerous projects, such as installing energy-efficient windows, doors, furnaces and air conditioners.
• $1.7 billion: for deduction of sales tax from car purchases, not interest payments phased out for incomes above $250,000.

Tax incentives for companies
Total: $51 billion

• $15 billion: Allowing companies to use current losses to offset profits made in the previous five years, instead of two, making them eligible for tax refunds.
• $13 billion: to extend tax credits for renewable energy production (until 2014).
• $11 billion: Government contractors: Repeal a law that takes effect in 2012, requiring government agencies to withhold three percent of payments to contractors to help ensure they pay their tax bills. Repealing the law would cost $11 billion over 10 years, in part because the government could not earn interest by holding the money throughout the year.
• $7 billion: Repeal bank credit: Repeal a Treasury provision that allowed firms that buy money-losing banks to use more of the losses as tax credits to offset the profits of the merged banks for tax purposes. The change would increase taxes on the merged banks by $7 billion over 10 years.
• $5 billion: Bonus depreciation, which extends a provision allowing businesses buying equipment such as computers to speed up its depreciation through 2009.

 

[jpn]

The 2009 "tax cuts" were just stimulus checks. The same thing most republicans opposed when Bush did it in 2008.

You know not of what you speak (with such confidence).

Tax incentives for individuals
Total: $237 billion

• $116 billion: New payroll tax credit of $400 per worker and $800 per couple in 2009 and 2010. Phaseout begins at $75,000 for individuals and $150,000 for joint filers.
• $70 billion: Alternative minimum tax: a one-year increase in AMT floor to $70,950 for joint filers for 2009.
• $15 billion: Expansion of child tax credit: A $1,000 credit to more families (even those that do not make enough money to pay income taxes).
• $14 billion: Expanded college credit to provide a $2,500 expanded tax credit for college tuition and related expenses for 2009 and 2010. The credit is phased out for couples making more than $160,000.
• $6.6 billion: Homebuyer credit: $8,000 refundable credit for all homes bought between January 1, 2009, and December 1, 2009, and repayment provision repealed for homes purchased in 2009 and held more than three years. This only applies to first-time homebuyers.
• $4.7 billion: Excluding from taxation the first $2,400 a person receives in unemployment compensation benefits in 2009.
• $4.7 billion: Expanded earned income tax credit to increase the earned income tax credit – which provides money to low income workers – for families with at least three children.
• $4.3 billion: Home energy credit to provide an expanded credit to homeowners who make their homes more energy-efficient in 2009 and 2010. Homeowners could recoup 30 percent of the cost up to $1,500 of numerous projects, such as installing energy-efficient windows, doors, furnaces and air conditioners.
• $1.7 billion: for deduction of sales tax from car purchases, not interest payments phased out for incomes above $250,000.

Tax incentives for companies
Total: $51 billion

• $15 billion: Allowing companies to use current losses to offset profits made in the previous five years, instead of two, making them eligible for tax refunds.
• $13 billion: to extend tax credits for renewable energy production (until 2014).
• $11 billion: Government contractors: Repeal a law that takes effect in 2012, requiring government agencies to withhold three percent of payments to contractors to help ensure they pay their tax bills. Repealing the law would cost $11 billion over 10 years, in part because the government could not earn interest by holding the money throughout the year.
• $7 billion: Repeal bank credit: Repeal a Treasury provision that allowed firms that buy money-losing banks to use more of the losses as tax credits to offset the profits of the merged banks for tax purposes. The change would increase taxes on the merged banks by $7 billion over 10 years.
• $5 billion: Bonus depreciation, which extends a provision allowing businesses buying equipment such as computers to speed up its depreciation through 2009.

So, about a third of the cost was tax cuts.

 

[dave8383]

Biden proposes tax hikes to pay for $2 trillion infrastructure package

We need serious infrastructure work. We're way behind. We need to pay for it. What's so difficult about that?

 

[dave8383]

China:




Boston:

 

[Taylor]

Also China:



Also Boston:

 

[dave8383]

Also China:

View attachment 67328276

Also Boston:

View attachment 67328277

Assanine comparison.

 

[jpn]

We need serious infrastructure work. We're way behind. We need to pay for it. What's so difficult about that?

Exactly. We need to make up for decades of insufficient investment.

In terms of government spending as percentage of GDP the U.S. is near the bottom of industrialized nations, despite spending far more on defense than most.

With the exception of about forty years from the New Deal to the 1970s, the U.S. has had a weaker commitment to public goods than every country that possesses anywhere near our wealth.

In those forty years we built the infrastructure we have relied on ever since. It's time to build again.

 

[jpn]

We need serious infrastructure work. We're way behind. We need to pay for it. What's so difficult about that?

The difficulty for Republicans is that they have entirely bought into the "small government is always good" ideology. They are in an ideological box they can't escape from.

 

[dave8383]

The difficulty for Republicans is that they have entirely bought into the "small government is always good" ideology. They are in an ideological box they can't escape from.

Well someone should clue them in to the benefits that an upgraded infrastructure will have for the private sector.