We Don't Need a Middle Class Tax Cut (1 Viewer)

[Absentglare]

Utter and complete nonsense. "We haven't done it, therefore, it's impossible." That's your take.

Surely, "impossible" was intending to indicate "so politically impractical that it obviously will not happen".

 

[Jack Hays]

That's certainly part of it. Here's an interesting article on corporate accounting and reserves.

So I have to agree that a lower corporate rate might translate to more repatriated funds -- but that still doesn't translate to jobs and lower prices. Only demand and competition can accomplish those goals.

To be clear: I'm not opposed to lower corporate taxes, provided that capital gains are taxed as income. I want policy that encourages domestic investment. I don't want regressive tax schemes that stifle working Americans to the benefit of the wealthy.

Let's find a way to get the money back into the US first.

 

[iguanaman]

As described in the article:

". . . The Congressional Budget Office reported in 2016 that the average federal income tax rate for the middle class — here meaning the middle 60 percent of the income distribution — declined from 7.8 percent in 1979 to 3.4 percent in 2013. . . ."

The problem wit taxing the middle class more is that those taxes will come straight out of the GDP as reduced consumer spending. If we want REAL revenue increases it has to come from the top 5% in the form of more tax brackets above $250,000 annual income.

 

[haymarket]

You would abolish inheritance taxes?

Yes, I would abolish the special discriminatory tax on inheritances and simply tax the money as income using the normal schedules. Same with capital gains.

 

[Harshaw]

Our healthcare costs are a huge part of our federal deficit.

How much, exactly?

We pay much more than the countries that have universal health care policies. Health care reform is central to any discussion of deficits or debt. Why should we continues to pay too much for a troubled system when better real-world models exist?

Your solution appears to be to spend even more than the current levels.

 

[Absentglare]

It has been obvious for some time that tax revenue has been inadequate, given the demonstrated impossibility of radical spending cuts. Therefore, the last thing we need right now is another middle class tax cut. In fact, the middle class (and the wealthy, of course) should be paying more. Tax reform? Sure, but we need more revenue.


We don’t need tax cuts for the middle class


We need more tax revenue from the middle class, not less.

• Kirk J. Stark, Eric M. Zolt

Amid the partisan rancor surrounding the framework for tax reform developed by GOP congressional leaders, there is one area of remarkable consensus: lower taxes for the middle class. The political logic is not hard to understand. The middle class continues to struggle, and, with midterm elections just around the corner, both parties need the support of middle-class voters.
But missing from the tax debate is an appreciation that lawmakers have already crafted a tax-friendly regime for middle-income taxpayers. The result is a more progressive tax system that raises less revenue. Unless Congress is willing to dramatically cut major entitlement programs and eschew new social programs to address poverty and declining economic mobility, we need more tax revenue from the middle class, not less. . . .

I'd be happy to pay more in taxes. My biggest concern there is that the people who make 10x+ more than i do don't end up paying a lower rate en masse.

I'm not sure why capital gains, which is less productive than real work, gets preferential rates:

Someone who works full time shouldn't be paying so much more in taxes than someone who doesn't.

 

[GhostlyJoe]

How would you expand the tax base?

Lower the earned income credit.

 

[Jack Hays]

The problem wit taxing the middle class more is that those taxes will come straight out of the GDP as reduced consumer spending. If we want REAL revenue increases it has to come from the top 5% in the form of more tax brackets above $250,000 annual income.

I said up front the increases should hit the wealthy too.

 

[GhostlyJoe]

Let's find a way to get the money back into the US first.

No. That's just ignoring the bigger problem. Let's fix the systemic imbalances.

 

[HowardBThiname]

Because, as I wrote, the impossibility of radical spending cuts has been irrefutably demonstrated.

Not impossible. Not by a long ways.

We just need to elect representatives that will cut spending and send social programs to private funding sources.

 

[Jack Hays]

Yes, I would abolish the special discriminatory tax on inheritances and simply tax the money as income using the normal schedules. Same with capital gains.

So you would abolish the current inheritance tax exclusion?

Do you understand that money invested to create capital gains has already been taxed once as income?

 

[<alt>doxygen]

It has been obvious for some time that tax revenue has been inadequate, given the demonstrated impossibility of radical spending cuts. Therefore, the last thing we need right now is another middle class tax cut. In fact, the middle class (and the wealthy, of course) should be paying more. Tax reform? Sure, but we need more revenue.


We don’t need tax cuts for the middle class


We need more tax revenue from the middle class, not less.

• Kirk J. Stark, Eric M. Zolt

Amid the partisan rancor surrounding the framework for tax reform developed by GOP congressional leaders, there is one area of remarkable consensus: lower taxes for the middle class. The political logic is not hard to understand. The middle class continues to struggle, and, with midterm elections just around the corner, both parties need the support of middle-class voters.
But missing from the tax debate is an appreciation that lawmakers have already crafted a tax-friendly regime for middle-income taxpayers. The result is a more progressive tax system that raises less revenue. Unless Congress is willing to dramatically cut major entitlement programs and eschew new social programs to address poverty and declining economic mobility, we need more tax revenue from the middle class, not less. . . .

The whole tax system needs to re-done without any input from lobbyists or other special interests. We could easily lower the rates most people pay, but it would mean closing the loopholes and stopping certain types of income from being favored. There's a lot of money that keeps sensible reform like that from happening.

 

[Jack Hays]

I'd be happy to pay more in taxes. My biggest concern there is that the people who make 10x+ more than i do don't end up paying a lower rate en masse.

I'm not sure why capital gains, which is less productive than real work, gets preferential rates:

Someone who works full time shouldn't be paying so much more in taxes than someone who doesn't.

Because capital gains can also be capital losses.

 

[AlbqOwl]

It has been obvious for some time that tax revenue has been inadequate, given the demonstrated impossibility of radical spending cuts. Therefore, the last thing we need right now is another middle class tax cut. In fact, the middle class (and the wealthy, of course) should be paying more. Tax reform? Sure, but we need more revenue.

<<<snipped to stay within character limitations>>>>

How about EVERYBODY whether more or less rich paying whatever percentage is considered a fair share and the government restricting its spending to what revenues that produces?

How about the federal government spending only what it HAS to spend to meet its constitutional obligations?

How about a non partisan citizen board sitting down and evaluating the 'constitutionally non-essential' projects the government chooses to fund and giving a thumbs up or thumbs down when they decide whether a project is or is not in the taxpayers' best interests to fund?

How about we stop thinking that a $20 TRILLION dollar debt that significantly exceeds the national GDP is okay and though it has slowed somewhat under Trump austerity, it is still growing at an alarming rate. By anybody's definition we are bankrupt and yet the left wants to increase spending?

We have long known from bitter experience that Congress will not use additional revenues to pay down the debt but will instead use them to justify more spending.

And yes, some in the middle class do not need a tax cut because they already pay little or nothing in federal income taxes. We DO need to cut corporate/business taxes as we are at the highest of those in the free world and we need to create a tax friendly environment that will encourage business to stay and provide jobs and revenues here instead of locating overseas in more tax and regulation friendly environments. THAT would benefit the U.S. middle class more than any single other thing we could do.

And we need to shout down the liberal nonsense that it isn't fair the the rich benefit so much while some people don't benefit from tax cuts when those people are already paying little or nothing in federal income tax. The rich are paying the huge lion's share of the taxes as it is.

Of all taxpayers

Percentages Ranked by AGI	AGI Threshold on Percentiles	Adjusted Gross Income Share (Percentage)	Percentage of Federal Personal Income Tax Paid
Top 1%	$480,930	20.65	39.04
Top 5%	$195,778	36.07	59.58
Top 10%	$138,031	47.36	70.59
Top 25%	$79,655	68.99	86.62
Top 50%	$39,275	88.72	97.17
Bottom 50%	<$39,275	11.28	2.83

https://www.ntu.org/foundation/page/who-pays-income-taxes

 

[Fenton Lum]

It has been obvious for some time that tax revenue has been inadequate, given the demonstrated impossibility of radical spending cuts. Therefore, the last thing we need right now is another middle class tax cut. In fact, the middle class (and the wealthy, of course) should be paying more. Tax reform? Sure, but we need more revenue.


We don’t need tax cuts for the middle class


We need more tax revenue from the middle class, not less.

• Kirk J. Stark, Eric M. Zolt

Amid the partisan rancor surrounding the framework for tax reform developed by GOP congressional leaders, there is one area of remarkable consensus: lower taxes for the middle class. The political logic is not hard to understand. The middle class continues to struggle, and, with midterm elections just around the corner, both parties need the support of middle-class voters.
But missing from the tax debate is an appreciation that lawmakers have already crafted a tax-friendly regime for middle-income taxpayers. The result is a more progressive tax system that raises less revenue. Unless Congress is willing to dramatically cut major entitlement programs and eschew new social programs to address poverty and declining economic mobility, we need more tax revenue from the middle class, not less. . . .

That's gonna be a tad tough with half of US wage earners now draggin home less than $30K per year. But perhaps we can drive that lower and redistribute even more societal wealth to the donor class.

 

[haymarket]

So you would abolish the current inheritance tax exclusion?

Do you understand that money invested to create capital gains has already been taxed once as income?

I would abolish the entire inheritance tax altogether and simply have the money taxed as income.

Lots and lots of money is taxed many many many times. Why should capital gains be special and get a lower rate than income.

 

[iguanaman]

Let's find a way to get the money back into the US first.

What are the benefits of repatriating that money anyway? Please don't say the money is needed for "investment". That is a lie. It is far more likely that the cash would be used for buying out competitors (costing jobs) and stock buy-backs like the last time we did this in 2004.

In assessing the 2004 tax holiday, the nonpartisan Congressional Research Service reports that most of the largest beneficiaries of the holiday actually cut jobs in 2005-06 – despite overall economy-wide job growth in those years – and many used the repatriated funds simply to repurchase stock or pay dividends. Today, when U.S. corporations have ready access to cash they have accumulated and are holding here in the United States, it is even harder to make the case that a repatriation holiday will unlock new investment and job creation.

https://www.treasury.gov/connect/blog/Pages/Just-the-Facts-The-Costs-of-a-Repatriation-Tax-Holiday.aspx

 

[holbritter]

I'd be happy to pay more in taxes. My biggest concern there is that the people who make 10x+ more than i do don't end up paying a lower rate en masse.

I'm not sure why capital gains, which is less productive than real work, gets preferential rates:

Someone who works full time shouldn't be paying so much more in taxes than someone who doesn't.

Hasn't the money you inherit already been taxed through the earnings the person made that left it to you? That's why it is lower, they are only paying tax on the profit made on the inheritance. I think.

 

[holbritter]

I would abolish the entire inheritance tax altogether and simply have the money taxed as income.

Lots and lots of money is taxed many many many times. Why should capital gains be special and get a lower rate than income.

I believe you are incorrect. Lots of money is not taxed multiple times.

 

[fmw]

It has been obvious for some time that tax revenue has been inadequate, given the demonstrated impossibility of radical spending cuts. Therefore, the last thing we need right now is another middle class tax cut. In fact, the middle class (and the wealthy, of course) should be paying more. Tax reform? Sure, but we need more revenue.


We don’t need tax cuts for the middle class


We need more tax revenue from the middle class, not less.

• Kirk J. Stark, Eric M. Zolt

Amid the partisan rancor surrounding the framework for tax reform developed by GOP congressional leaders, there is one area of remarkable consensus: lower taxes for the middle class. The political logic is not hard to understand. The middle class continues to struggle, and, with midterm elections just around the corner, both parties need the support of middle-class voters.
But missing from the tax debate is an appreciation that lawmakers have already crafted a tax-friendly regime for middle-income taxpayers. The result is a more progressive tax system that raises less revenue. Unless Congress is willing to dramatically cut major entitlement programs and eschew new social programs to address poverty and declining economic mobility, we need more tax revenue from the middle class, not less. . . .

The tax revenue is inadequate because the government spends like a drunken sailor. I do agree that we don't need a personal income tax cut. But the corporate cut will make a big difference economically for everyone and should happen even if they decide to do nothing else with the tax code. Actually they don't even need to cut the tax rate for corporations. They can just eliminate the double taxation of corporate income earned abroad. That would bring the money home. I'd rather see the congress work on spending.

 

[jimbo]

The problem wit taxing the middle class more is that those taxes will come straight out of the GDP as reduced consumer spending. If we want REAL revenue increases it has to come from the top 5% in the form of more tax brackets above $250,000 annual income.

And is we want real spending cuts, which by any logic must be part of the equation, those cuts must come from the groups that are the recipients of the spending.

That would be the 50% that pay no taxes and receive most of the benefits, and the next 25%, which we call the middle class.

How can the left demand that 1% of the taxpayers pay the bills for the entire country and call it fair share?

 

[JasperL]

Raising taxes has proven be a similar political non-starter.

The difference, at least IMO, is that raising taxes is only a non-starter for the GOP, starting roughly with the Gingrich 'revolution' in 1994 and Grover Norquist's stupid no tax pledge. Both Clinton and Obama raised taxes during their terms. On the other hand, both parties have proven unwilling to and in fact uninterested in cutting spending. Bush II had a GOP Congress and increased spending across the board, including expanding entitlements.

People warned back in 2008/9 that a trillion-dollar ad-hoc stimulus package, let alone two of them, would raise the baseline of spending by that much. It did. If spending were still on the curve it was on prior to those 30%+ sudden jumps, the budget would be in surplus with current revenues.

3.46 trillion in revenue is quite enough. Spending more than that is spending too much.

I'm not sure that's true, so you'll need to show your work on that. Table 1.2 at the link show revenue and expenditures as a share of GDP. We're at 21% for spending and roughly 18% revenue as of 2016. In 2007 those numbers were 19% and 18%, and in 2008 20% and 17%. We got close in 2007 admittedly, at the top of the biggest bubble most of us will see in our lifetimes, so I don't actually think that's a legitimate example when we're talking about long term trends. Over the longer term, we've been stuck somewhere around 20% or higher of GDP for spending. It's taxes that have fluctuated quite a bit, but only RARELY have gotten higher than 18% for a few of the Clinton years during the tech bubble.

And the problem going forward as everyone recognizes is an aging population, the baby boomer bubble drawing from SS and Medicare, and significantly cutting those benefits is political suicide.

 

[Jack Hays]

How about EVERYBODY whether more or less rich paying whatever percentage is considered a fair share and the government restricting its spending to what revenues that produces?

How about the federal government spending only what it HAS to spend to meet its constitutional obligations?

How about a non partisan citizen board sitting down and evaluating the 'constitutionally non-essential' projects the government chooses to fund and giving a thumbs up or thumbs down when they decide whether a project is or is not in the taxpayers' best interests to fund?

How about we stop thinking that a $20 TRILLION dollar debt that significantly exceeds the national GDP is okay and though it has slowed somewhat under Trump austerity, it is still growing at an alarming rate. By anybody's definition we are bankrupt and yet the left wants to increase spending?

We have long known from bitter experience that Congress will not use additional revenues to pay down the debt but will instead use them to justify more spending.

And yes, some in the middle class do not need a tax cut because they already pay little or nothing in federal income taxes. We DO need to cut corporate/business taxes as we are at the highest of those in the free world and we need to create a tax friendly environment that will encourage business to stay and provide jobs and revenues here instead of locating overseas in more tax and regulation friendly environments. THAT would benefit the U.S. middle class more than any single other thing we could do.

And we need to shout down the liberal nonsense that it isn't fair the the rich benefit so much while some people don't benefit from tax cuts when those people are already paying little or nothing in federal income tax. The rich are paying the huge lion's share of the taxes as it is.

Of all taxpayers

Percentages Ranked by AGI	AGI Threshold on Percentiles	Adjusted Gross Income Share (Percentage)	Percentage of Federal Personal Income Tax Paid
Top 1%	$480,930	20.65	39.04
Top 5%	$195,778	36.07	59.58
Top 10%	$138,031	47.36	70.59
Top 25%	$79,655	68.99	86.62
Top 50%	$39,275	88.72	97.17
Bottom 50%	<$39,275	11.28	2.83

https://www.ntu.org/foundation/page/who-pays-income-taxes

Serious Constitutional issue ceding Congressional power of the purse to your "non partisan citizen board."

 

[PIPEWRENCH]

Pop the cap gains discount, add more tax brackets, have much higher rates on the top brackets, AND expand the tax base. While only about half the country pays the FIT after credits and deductions, taxation as a whole it relatively flat. It should be more progressive.

The fact remains that the rich do not have enough money to pay off the debt and run our government. We need to move millions of people who are a drain on society to a point where they are productive member of society. This is a double win. Ever person we can remove from poverty where we are paying them money and move them to the side of paying to the government is the real solution. Moving people up is the solution not taxing people into poverty.

 

[Jack Hays]

What are the benefits of repatriating that money anyway? Please don't say the money is needed for "investment". That is a lie. It is far more likely that the cash would be used for buying out competitors (costing jobs) and stock buy-backs like the last time we did this in 2004.



https://www.treasury.gov/connect/blog/Pages/Just-the-Facts-The-Costs-of-a-Repatriation-Tax-Holiday.aspx

That money still enters the investment cycle at some point.