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Tax Breaks

Your tax breaks may be on the chopping block at the fiscal cliff.  Home mortgage interest, state income tax and charitable deductions. We’ll add it all up.

James Dresch of MND Partners Inc. works on the floor of the New York Stock Exchange in New York. (AP)

James Dresch of MND Partners Inc. works on the floor of the New York Stock Exchange in New York. (AP)

Fiscal cliff talk is everywhere now.  Will we crash?  Won’t we crash?  Is it real?  What’s the deal?  There is no deal yet.  There may not be one, as the clock ticks down.  But if there is, it is likely to include a deal on what Washington now likes to call “tax breaks.”

Like the home mortgage interest deduction.  Like tax-free employer-provided health insurance.  Like deducting state income taxes.  You may not think of these as tax breaks at all.  Just what you’ve got coming.  But they’re in play.  And more, too.

This hour, On Point:  the fiscal cliff and your deductions.

-Tom Ashbrook

Guests

Lori Montgomerycovers U.S. economic policy and the federal budget for the Washington Post.

Roberton Williams, senior fellow at the Tax Policy Center.

Diane Lim, chief economist at the Concord Coalition.

From Tom’s Reading List

Christian Science Monitor “So this clarifies the political situation, right? President Obama’s solution wins, Speaker John Boehner needs to cave, taxes on the rich rise, Republicans andDemocrats walk arm in arm out of the Capitol to a bipartisan catered lunch at the Hawk and Dove.”

CNN “Republicans have officially gotten on board with raising revenue for deficit reduction — by curbing tax breaks in conjunction with lowering tax rates. The idea of curbing tax breaks isn’t new. Tax policy experts have touted it for years and Democrats, including President Obama, have proposed it in one form or another. That’s why it may offer a key to resolving the fiscal cliff.”

New York Times “A tax break that has long been untouchable could soon be in for some serious scrutiny. Many home buyers deduct their mortgage interest when assessing their tax bill, a perk that has helped bolster the income of millions of families — and the broader housing market.”

 

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  • Mike_Card

    Reagan got away with eliminating the consumer interest deduction and only enabled the 2nd mortgage market.  No reason to further enrich the banks; let them lower the rates they charge–checked your credit card rate?–and suffer with the rest of us.

  • Wm_James_from_Missouri

    I believe that if the government were to allow taxpayers to participate in the budgeting process by allowing us to apportion a part of our taxes to SPECIFIC projects we would all feel a little better about giving up some of our hard earned money ! I may choose to support NASA, you may choose to support the proposed, 20 new bridge projects ( used as an example only). I am confident that you will have the wisdom to determine what is valuable to you !

    Also, in the scheme of things it may be small potatoes but a Federal Lottery, prepaid at tax time would help to alleviate revenue shortfalls. Did you notice the recent Power Ball frenzy? People WILLINGLY gave up their money. (Me too!)

    • John_in_Amherst

       Your scheme presupposes a level of citizen knowledge about infrastructure, R&D, strategic goals, etc.  and a higher level of civic participation than seems warranted.  Careers are based in specialized knowledge.  People cannot be expected to know enough medicine, auto mechanics, electronic repair, etc. to be self-sufficient in modern society.  Nor can they be expected to have a knowledge base broad and deep enough, and enough time to compare options, to allow for your “a la carte’ governance.  Which is why we have specialists in governance and compromise, i.e.: politicians, to make those choices.  Granted, the electorate continues to make choices of politicians who demonstrate a woeful lack of skill.  But people re-elect incumbents because they believe THEIR choice at the polls is good, and everyone else in the country is screwing up. 

    • hennorama

      Interesting ideas.  I would propose a modification:

      Let taxpayers designate some EXTRA money toward specific projects.  They could either reduce their refund or add to their tax payment.  A list of projects could be put on the Web, and interested parties could vote for those that would wind up with checkoff boxes on Form 1040.  There could also be a write-in box.

      This would be similar to the checkoff boxes for charities that are on many state income tax forms.

      As to your lottery idea – a Federal voter lottery may be preferable, to increase voter participation.

      • Wm_James_from_Missouri

        You have some good ideas. Too bad we are not in control. We could probably hammer out a deal. Don’t forget. The cost to implement a program is always a consideration.

        • hennorama

          Thank you for your response and your kind words. Cost is always a factor, but the benefits of either of our ideas regarding taxes would far offset any costs, in my view. Certainly a lottery’s costs would be factored into the payouts, negating any net cost to the Treasury.

          We can have a tiny bit of influence by contacting our Congressional legislators and the President, and it’s so easy to do.

          You can find out how to contact Congress here (or use your favorite search engine):

          http://www.congress.org/congressorg/mail/?alertid=61046526&type=ML

          Contact the President here:

          http://www.whitehouse.gov/contact

  • StopSketch

    That CNN quote is moronic and misleading, like Republican tax policy. ‘Curbing tax breaks and lowering rates’ does not produce enough revenue. It dosn’t work. Thats why Romney refused to identify what breaks would be curbed, bad politics plus bad math.
    Will your guests consider a ‘Tobin’ type tax on financial transactions, particularly the mult-trillion dollar deritives market?
    Also, when is the last time the Pentagon was properly audited? Oh never you say? Aren’t they still trying to account for 2 trillion dollars?
    Finally, the plutocrats must pay. There’s ample historical evidence of the corrosive effects of deep economic inequality on societal stability. And leys face it this ‘trickle-down laffer curve ‘ business was always a con job the economic elites hired Reagan to seduce ‘middle lunchpail management America’ with. They’re still trying to figure out why their real wages have remained stagnant for the last 30 years as their productivity has risen. Ask Mitt. All those raises and pensions are sitting overseas in executive’s private Swiss and Cayman Island acc poo unts. There are 2 kinds of Republicans, millionaires and what and whatever you call person who shimes the boot thats kicking him.
    The Democrats had better run away from Pete Petersen and 3rd way SimpsonBowles ‘deficit’ orcs or they’ll end up as incontrovertably and explicitly servile and supine to Plutocrat wishes over and above the nation’s needs as the pathetic Republicans.

  • StopSketch

    Ahh my mobile spelling: doesn’t, multi, derivatives, lets, account, shines.

    • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

      I especially like the “Cayman island acc poo”. Is that the bank where they store strategic reserves of guano?

      Seriously, the Futurama fan in me wonders if much further along archeologists will dig up the first decades’ worth of mobile-device posts and wonder why people’s spelling took a backward step a decade into this millenium.

  • http://wh.gov/IVp4 Yar

    I am amazed that our economy works at all, when so few people do little meaningful work.  I see the entire financial sector primarily as a tax on the use of money. 
    I see money as a false indicator of wealth, I see an economy based on consumption where our ‘security’ is based on making the world unstable.  I see exploitation everywhere I look.  Is this what we really want?
    What is the purpose of money? I see it as the marker of trading work over time.  This is the best description I can come up with.  Trades currently are not fair, even in the short term, much less what happens to the value of our work over the longer term.  
    I see the role of Government as tasked with making trading work fair, and don’t believe our current government is doing its job.  Money has no value without work, and work can’t be traded over time without some form of government.  

    Time is the most valuable resource, once used, it can never be recovered.
    This is why I am amazed that our economy works at all.  

    I see our current economic drivers as cheap energy, including food and fuel, and cheap labor, which includes slavery both domestic and worldwide. Neither are sustainable even for the very short term.  In less than a generation our world is on a path to not sustain its current human population, much less the expected population growth.  The bible paints a picture of wailing and gnashing of teeth.  I hope we will strive to become more civil, although I currently see little civility.  
    Fiscal cliff or lemmings at a physical cliff,  I believe we are on a path of destruction unless we change our goals, change behavior, and change our economy.  
    I believe the first step is to invest in our youth, that is why I started the petition below on the Whitehouse website.  It is for all youth to spend two years in public service.
    I have only promoted it here, it is my finger in the dike, I don’t know what else to do.
    If you see value in my words, please copy and paste this to everyone you know.  This is how change works. How you use your time matters.
    Thanks
    Ray T.
    Enough of my rant, here is the link to the petition.
    https://petitions.whitehouse.gov/petition/create-requirement-all-us-residents-between-ages-18-and-24-serve-two-years-public-service/CTCfT6yL?utm_source=wh.gov&utm_medium=shorturl&utm_campaign=shorturl

  • ttajtt

    computers will give a brake, like the couch, electric tooth brushes, sugar, nicotine, cars, our brains need awake sleep time too like night sleep.   do you really think one kneeds a brain.  have all one can ate, happy hours, smoke rooms, pop & chips with white milk strawberry dark chocolates.

    it is a niche thought before a emotional feeling of trained behavior.  slow and dragging already i knew it before i saw it?  think about it?  what do we need it for? once dead we’ll leave it.  pay no mind.

  • AC

    ah. a subject i am totally ignorant about. seriously.

    for instance, why do corps get tax breaks for buying luxury boxes at sporting arenas? is that a federal or local break? what does Tom Brady think of this perk (lol)…..

    i will be listening closely, feel free to tell the guests to speak as though the audience is filled with children…. :)

    • Gregg Smith
      • AC

        link doesnt work?

        • JGC

          WSJ has a pay wall, but I was able to do a work around by googling “tax breaks for skyboxes”, and they offer it as a free pass to read. The article was written by Daniel Golden.

        • Gregg Smith

          That’s odd, it works for me. It is an article about the break for luxury boxes and the subsequent boom in stadium renovations as a result.

          • Don_B1

            You must be a WSJ subscriber!

  • Gregg Smith

    Why on earth do we call them “tax breaks”? There are no tax breaks on the table, only massive gargantuan hikes for every single taxpayer. 

    We have been operating under this tax code for over a decade. It’s the law of the land.

    • Don_B1

      Every year, particularly since the Republicans dispensed with “PayGo,” new big tax expenditures have been inserted into the tax code, though not so many since 2008.

      One that is justified is the temporary F.I.C.A. reduction, though its removal will be controversial. But it must go away when unemployment has dropped to around 6%.

  • jimino

    Don’t forget the largest one of all:  the exclusion of employer-provided health insurance from being counted as income for employees.

    • Gregg Smith

      Anything the employer provides ultimately comes out of the pocket of the employee.

      • John_in_Amherst

         and/or out of the pockets of the consumers who buy the employer’s products or services, or out of the dividends and capital gains paid to the stock holders.  Which is why big business was (at least initially) behind a single-payer system that shifted health care funding away from employers, as happens in the rest of the industrialized world….

        • Gregg Smith

          Consumers are free to buy or not buy wherever they choose. 

          Again, “single-payer” means taking the money out of the economy first. There is no “payer” with money.

          • Don_B1

            And EVERYONE having health insurance is a monetary BENEFIT for EVERYONE.

            Everyone will pay LESS for healthcare if EVERYONE is insured.

            The wealthy owners of companies may pay more directly, but through less sick-leave being taken by their workers, who also perform better on the job, their companies will make more, covering those expenditures.

          • Gregg Smith

            Then why have insurance costs doubled with more increases inevitable since Obamacare?

          • Don_B1

            Insurance costs have been rising because, with the technology input growing, a lot of new expensive procedures are being performed with little or no benefit, and the cost of providing care for the uninsured is huge.

            PPACA begins the process of evaluating procedures for efficacy, and already other provisions are slowing the growth of costs.

            But the cost of insurance does not reflect all the benefits of insurance, so it does not have to go down in absolute terms for the fact of everyone being insured to still have a positive cost-to-benefit ratio.

          • Ellen Dibble

            There is already a single payer in the sense that emergency room care is available to all.  If more reasonable, cost-conscious care were available to all, then we would be paying for value, not for excess.  Meanwhile, we can always buy, or try to buy, health insurance to cover what the single payer does not, and there is huge room for competition in that Gap market.

          • Don_B1

            Not having healthcare insurance leads to different behavior patterns by those in that condition. Healthcare in the emergency room is NOT a  substitute for regular doctor visits. See:

            http://www.nytimes.com/2012/10/15/opinion/krugman-death-by-ideology.html

            andhttp://krugman.blogs.nytimes.com/2012/10/15/ways-the-uninsured-die/

          • Gregg Smith

            Fair point but the numbers aren’t killing us. Reluctance is now discouraged.

          • Wm_James_from_Missouri

            Greg, Single Payer also means that all cost to the consumer are known up front and are prepaid. When you get sick and are old it is too late then to try and catch up with the bills. My father is going through this at this very moment. He had a stroke and is near death. The “home” and hospital will take everything he has worked for his entire life and he will still be in the “red” when he dies. He started working when he was 11 years old, retired when he was 70 years old, has maximum Soc. Sec. a teamster pension, and a small “other” pension. It is not even close to what is needed to cover his bills. AND (!) the home he is in is NOT the best or in the best area, AND(!) he shares a very , very , small ,room ! Major, and I mean Major rip-off ! This system is nothing short of CRIMINAL !

          • John_in_Amherst

             Right.  So the choice is between a compassionate society in which at least a modicum of health care services are available to people, (whether or not they have the ability to foresee the inevitability that sooner or later, they will need care, regardless of their income and/or ability and/or willingness to save or pay for insurance), OR a society in which we have to sidestep sick and dying people on the sidewalks. 
            Personally, I have only visited countries where I have seen lines of those who are legless & destitute on wheely carts, flies landing on exposed fistulas, and mothers desperately pleading for the infants in their arms with suppurating eye sockets outside gilded cathedrals begging for charity.  And I prefer to live in a country where I can part with some of my hard-earned money to pay for single payer health care.
            With your attitude toward health care, I assume you are republican, and of the stripe who believes in a wrathful judgmental God, rather than a Jesus (Allah, Buddha, etc.) who commands compassion toward the sick, poor and imprisoned.
            If a vision for economic growth means giving up on the fundamental teachings of every religion, the price is too high.

  • MadMarkTheCodeWarrior

    First let’s tear down the Reagan myth. I hear that Boehner said their plan is to grow our way out of debt like there’s a magic growth switch. What a load of crap! Reagan showed that tax breaks don’t work, as he had to raise taxes many times, including elimination of consumer loan interest, to limit the growth in debt… the national debt only tripled
    under his leadership. Dubya took us from the Black into the Red and doubled down on tax breaks stimulating growth and now the world is awash in capital with no place to grow.

    To get us out of the fiscal mess that they created through a decade of tax cuts for the wealthy and laissez-faire regulation of Wall Street, Republicans now want to protect the wealthy and hammer the poor and middle class… increasing retirement age, cutting benefits and worst of all, pushing for privatization – the least inefficient means of managing healthcare and the riskiest means of delivering retirement benefits.

    Let’s start with
    1) Taxing capital gains like wages… why should gambling proceeds be treated preferentially over the product of blood sweat and tears? Current tax policy only encourages short term investment producing wild fluctuations in the market and the economy.
    2) Eliminate the limits on contributions to SSI, medicare and medicaid taxes be they income or capital gains. You pay the full rate on 100k or 100m in earnings.
    3) Start striking down loopholes, one bill at a time; no more  omnibus shenanigans.

    I value the health of this country over my personal wealth so I support the $250,000 cutoff. If we don’t start making living wages a reality and economic advancement more likely than wining the lottery, America will become a third world country as poverty expands at an increasing rate.

    • Gregg Smith

      There is no way to tax our way out. There is no way to cut spending enough to make a difference. The only way is growth and the policies you cite kill growth. We’re probably past that point of no return too. America is being fundamentally transformed. The fix is in.

      • http://wh.gov/IVp4 Yar

        Cancer is one way to grow, is that what you suggest?  Not all growth is good.  The only way to grow out of debt is for inflation to make debt a small enough percentage of GDP that it is manageable.  Does the average age of our country affect growth?  We can also grow by opening our boarders to young educated workers.  First we need to find useful things for  youth to do.  I have some ideas. What kind of growth do you want?

        • Gregg Smith

          We need 4% to 5% growth in GDP for a decade to make a dent. Growth happens by itself if there is no interference. While it may be tricky to manage and encourage it, it is very easy to stifle it. We should stop.

          • Don_B1

            @MadMarkTheCodeWarrior:disqus @Yar_From_Somerset_Ky:disqus 

            Growth in INCOME for the WEALTHY has been doing just fine for the last three years, as more than 90% of the profits from growth in productivity has gone to the 1%.They genuinely LIKE high unemployment because it allows them to keep wages LOW and gain even bigger pieces of GDP growth.

            It is the policies advocated by Gregg that will keep the country in recession and discredit real growth policies, allowing the Republicans to try to win total control of the Federal government to further entrench themselves with Supreme Court and lower court appointments.

            It will be a cross between a plutocracy and a theocracy before the ignorant voters know what they have done to themselves.

            The “social welfare” the caller just talked about helps to compensate the middle class for the advantages the wealthy have in setting high wages for themselves while paying as little as possible for workers, as if they were no different than a piece of machinery.

          • Gregg Smith

            Oh please. You sound like it’s your money. If you want what’s not yours then it’s better to encourage wealth not punish it. That way the tax base expands. Employers (risk takers) can make more profit by hiring more workers and expanding. Treating employees well is better business than treating them poorly. For money to be put at risk there needs to be confidence that a responsible, innovative business plan can succeed. Look at Henry Ford (for one). The economy has a ball and chain on it’s leg and a chokehold on it’s neck. Set it free and we’ll be fine.

          • http://www.facebook.com/alexander.brunelle Alexander Brunelle

            The problem is though that employers do not take their excess revenue and put it towards hiring and expanding. They use it to fill their own pockets.

          • Don_B1

            @google-327b60c55221432e499267aebfb70c09:disqus 

            Exactly correct!

            While there are some employers that do treat their employees well, there are others, the majority, who do not.

            In the news this past weekend was WalMart, a company that could raise its workers’ wages to $25,000/yr while only increasing the average register slip of its customers by $0.17 (Demos study just published:

            http://www.demos.org/data-byte/retails-hidden-potential
            ).

          • Gregg Smith

            They can make more profit if they expand. Greed is good.

      • John_in_Amherst

         In a real sense, we taxed our way into this mess during the past decade (or 2, or 3) by lowering rates and expanding loopholes.  The resulting excess money at the top of the economic food chain then produced bubbles in housing and derivatives trading, which were helped along in their growth by lax regulation and oversight until they burst.  And now the wealthiest among us, whose incomes have continued to grow, expect the rest of us to shoulder the burden to close the deficit??  It sounds “fair and balanced”, just like the news source that propagandizes for this solution…..

      • MadMarkTheCodeWarrior

        Taxes are not the only solution, but we’ve got to start raising taxes. We are at a historic low by some estimations. Look where that’s got us.

        We grew well before the Bush tax cuts were enacted and had anemic growth in jobs so there is no data backing up your assertion.

      • http://www.facebook.com/alexander.brunelle Alexander Brunelle

        Growth in a capitalist economy doesn’t happen if the consumers of the major employer’s products are not being sold to those they employ cause the employers wont allow them the money to buy them!

  • ttajtt

    roll back to nixon eara, what if money becomes absolute for the attic road show.

  • J__o__h__n

    End tax Bush tax cuts for individuals making more than $80,000 and couples making more than $150,000.  End mortgage interest deduction for anything other than primary residence and cap it for primary residences based on median house values geographically.  Raise the amount of income subject to social security.  Tax dividends as income.  Increase capital gains tax for investments in companies that have been in business for more than 10 years and remain at current rate for new businesses to spur investment in startups.  End or reduce charitable deductions (if we subsidize it, it isn’t a gift).  Maybe something creative like forgive $30,000 of student loan debt if recipient delays SS and/or medicare eligibility for a year or two.  More educated people tend to live longer and have jobs that they can hold longer so they can afford it later and this will help them now.  Poorer laborers with lower life expectancy won’t have their eligibility delayed.

    • Gregg Smith

      How will raising taxes on nearly a quarter of the population fix anything?

      • J__o__h__n

        I think we all need to pay our share once the economy picks up.  These should be phased in then. 

        • Gregg Smith

          Well at least you didn’t say “fair share”. I hate the meaningless ambiguity of that phrase. But I agree with you, this is not the time. The economy can’t handle it. How about tying tax hikes to GDP?

          • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

            I figure your hypothesis means “from right this very second” rather than normalizing tax rates first?

          • Don_B1

            If taxes are to be tied to anything, I would rather tie them to the unemployment rate, where the marginal rates would be lowered as the unemployment rate rose, and vice-versa, with the exception that the upper rate go to 50% if the unemployment rate does not drop below 6% within a year or two.

            That might be an interesting test of how well the “job creators” can create jobs. They certainly would have an incentive to do so and thus they might not sit on over $2 trillion in cash waiting for investment “opportunities.”

            Put in a wealth tax on those with estates over $50 million and that “incentive” would be even stronger.

            Companies might be encouraged to pay more to their workers instead of buying back stock which enriches their C-level officers.

      • DrewInGeorgia

        How will not raising taxes on nearly a quarter of the population fix anything? We can’t agree on what to do or not to do so we should just continue doing nothing, right?

        • Gregg Smith

          We all agree what not to do and that’s let the sequester nightmare unfold.

          Not raising taxes will not stifle growth.

          • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

            I hear enough about “raising taxes” when people mean “letting cuts expire as planned.

            Don’t try moving the goal posts. This ain’t Fox Nation.

          • Gregg Smith

            The “tax cuts” no longer exist. All we have is the law of the land.

          • http://www.facebook.com/alexander.brunelle Alexander Brunelle

            The Bush tax cuts were designed to end at some point. You can’t just say “it’s been here for ten years so let it stay” especially since the last ten years, specifically the first six, got us in this mess!

          • Don_B1

            When passed, they were temporary with an expiration rate and when extended they had an expiration rate.

            Sounds like they were “temporary” to me.

          • Gregg Smith

            Obama extended them, new game. Bush is gone.

          • Don_B1

            Raising taxes on those with income under $250,000 would slow growth, but a less than 5% increase in taxes on amounts earned by individuals above that will have little effect on the economy. That would affect less than 5% of individuals.

        • Flytrap

           http://www.zerohedge.com/news/2012-11-29/millionaire-man-exodus-what-obama-can-learn-uks-tax-rich-plan

      • ttajtt

        raising taxes, is it a targeted population fix, fixed amount, a fix tax rate(s), rating?

        this goes to a flat rate or % per grade(s). Or 

      • Don_B1

        Seventy-five percent (75%) of individuals 15 years of age or older with non-zero income (244 million) had income LESS than $75,000.

        So you agree that taxes have to go up on not only those earning over $250,000, but those earning $75,000 or more?

        Certainly “broadening the tax base” will do just that! But the real target of the “base broadening” are those earning $250,000 to $400,000, or certainly less than $1 million, who will lose their tax loopholes while the mega-rich skate by with their low rates. See:

        http://krugman.blogs.nytimes.com/2012/11/27/the-stiffs-and-the-players/.

        To anyone who believes anything Gregg says, caveat emptor.

        • Gregg Smith

          No, I don’t agree taxes need to go up on anyone while the economy stinks. Buffet’s suggestion to raise taxes on those making over $400 million is as far as I will go… but it won’t go far. Broadening the tax base means new taxpayers not new taxes. The math works far far better with more taxpayers paying lower taxes than it does with fewer taxpayers paying higher taxes.

          And you bring Krackpot Krugman?!

    • JGC

      Did you submit your ideas to your representatives?  I still need to contact mine, and unfortunately they are mostly of the Grover Norquist ilk.  But your suggestions are good ones, and I plan to pass them on.

      • J__o__h__n

        Thanks. 

    • ccbard

      And limit the home sale exemption ($500,000 tax free capital gains on primary residence filed jointly) to once- in-a-lifetime total  instead of every two years.  (IRS publication 523)

    • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

      I don’t want to quibble, John, but let’s use the proper verbs. Not “End the Bush tax cuts” so much as “let them expire as planned”.

      To pivot a bit, I have grown very weary of every mainstream media report on this situation screaming “What about your tax cuts, middle-class America??????” (the proverbial “crumbs” the Bush cuts gave the middle class).

      Why’s this a pisser? Because at the same time, one cannot get a seat at the table without the “secret handshake”, i.e. “something has to be done about Social Security”.

      And when a panel full of Beltway Inbreds says “something has to be done (reformed)”, it ain’t gonna be good for regular people, and it ain’t gonna make economic sense.

      PS Bravo for addressing the “Plumber’s Crack”.

      • J__o__h__n

        Agreed, “expire” is more accurate.

        I hadn’t heard of the “plumber’s crack.”  I’m not sure I want to know what that is.

        • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

          Well, you gots Beltway Inbreds, and you gots the rest of us.

          The former are in love with the idea of continually raising the eligibility age of SocSec. Why? One reason is that they’re not plumbers. Their jobs are pretty damn easy, getting dressed up, going to offices or before cameras, and being white collar experts. (Disclaimer: I’m white collar too.)

          The biggest excuse for raising the SocSec age is LifeExpectancyLifeExpectancyLifeExpectancyLifeExpectancy! has increased since the mid 30′s when the program started.

          Drill down into it, however, and you find that this, like many of capitalism’s rewards, are unequally distributed: Rich people are living longer, and better. Much longer and much better.

          Poor people, the kind who are proverbial plumbers? Their life expectancy has increased maybe two years in the last quarter century.

          So what it boils down to is that these folks are doing are giving up a great percentage chunk of their SocSec collecting lifespan in order that well-off people can add a couple year of collecting, when the latter are already living into (say) their late late 70s.

          (PS A bit of poetic license with the use of “plumber”, but it gets across the idea of someone who works onsite with their hands and has to get crap done, rather than push papers all day.)

          • Ellen Dibble

            I hope this is being addressed with level head in DC.  Besides the life expectancy, you now have people who have, by necessity, created second careers for themselves, out of whole cloth sometimes, and perhaps far fewer who worked for one employer for 45 years.  It seems to me even an accountant after 45 years would need a change, and there is no obvious new career in his/her sights if the one career has been sustaining for that span of time.
                But perhaps there is a way of encouraging those who are happily in the workforce after age 70 to stay there.  I know I plan to, but the Social Security doesn’t go up at all if I keep working afterwards.  You only get increased Social Security up to age 70; that’s it.  What idiocy.  Or — what am I missing?

          • Don_B1

            @J__o__h__n:disqus 

            Workers who are janitors, ditch-diggers, miners, warehouse workers are typical members of the low life-expectancy at 65 growth cohort.

            In fact, what TF just stated for the less educated is even worse for those earning less than $30,000: their life expectancy at 65 is actually DECREASING.

            So this is a ruse by the rich to avoid paying benefits to those that have been the butt of market forces all their lives.

            The reason that the SS Trust Fund has not grown over the last decade as expected/projected by the Greenspan Commission, which led to the withholding increases that were actuarially calculated to provide the money to cover the needs of the Baby Boom bubble is that worker wages have not grown as they projected.

            The lack of worker wage growth for those earning less than $100,000 has meant that there was less money to tax than expected and is caused by the wealthy refusing to share worker productivity gains with the workers who learned new skills and worked hard to help achieve them.

            The ONLY fair response is to raise the cap on witholding taxes so those that have benefitted by not raising worker wages at least compensate for part of workers’ losses.

            Raising the Medicare eligibility age has even more complications, from forcing companies that provide healthcare to cover more expensive workers longer, as well as letting insurance companies cherry pick the healthy non-workers leaving unemployed people with health problems at the mercy of emergency care or the policies offered under the PPACA which will raise costs there.

            Note that the CBO has a long history of over estimating the growth in medical costs, by 25% or more, and “solutions” based on its estimates are not likely to be kind to the middle to lower income workers.

          • J__o__h__n

            I included raising the cap in my list.

          • Don_B1

            You did, and I should have credited you for it; I got carried away with explaining why that should be the “fix” when that issue is addressed, separately from the Bush Tax Cut Expiration, Sequestration and Debt Limit problems.

    • Flytrap

       http://www.zerohedge.com/news/2012-11-29/millionaire-man-exodus-what-obama-can-learn-uks-tax-rich-plan

  • J__o__h__n

    I hope Mitt Romney is bringing a brown bag lunch so as not to add to our debt. 

    • DrewInGeorgia

      Nah, he’s getting a Free Lunch. It’s okay when the recipient of a Free Lunch is Entitled to it. Wonder if he’s driving himself to the White House? Maybe he’ll even car pool.

      • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

        Will Paul Ryan be there to re-wash the pots and pans?

      • Don_B1

        Romney was even seen pumping gasoline into his car!

  • Flytrap

    All these fantasies about taxing the “rich” to end our problems might as well be Greek myths.  We don’t have a tax problem, we have a spending problem.  

    • TomK_in_Boston

      No need for the 999999999th repetition of righty talking points, we’ve heard them enough.

      • J__o__h__n

        If we taxed the repetition of them, we’d have a surplus even bigger than the one Clinton left Bush to squander.

        • TomK_in_Boston

          LOL

          We have a huge non-taxing problem. I assume everyone knows that the top marginal rate is second lowest since 1929, and the con artists who can claim the 15% rate have the lowest. Having romney types paying 13% or less is unsustainable!

          Here’s the effective, as opposed to nominal,  top rate since the end of WW2. It’s bizarre that all the deficit hystericals don’t zero in on this problem – unless you realize their real agenda is grabbing even more for the rich.

          Why do we let the rich pay less and less when we are supposedly concerned about the deficit and inequality is soaring? It’s crazy!

          http://upload.wikimedia.org/wikipedia/commons/thumb/3/31/Effective_tax_rates%2C_US_high-income.png/220px-Effective_tax_rates%2C_US_high-income.png

          • Flytrap

             Okay then, show me where taking 100% of income of the folks making over $500K will get us out of debt assuming they pay willingly.

          • J__o__h__n

            Show me where anyone proposes taking 100% of their income.

          • Flytrap

             No one has proposed it, I just want to see what the numbers are because I suspect even that won’t fix our problem.

          • TomK_in_Boston

            I told you.

          • TomK_in_Boston

            Where is this 100% straw man coming from? Show me where anyone said anything about taking 100% of anything.

            As I posted in another comment, the total annual USA income is about $14 trillion and the 1% have about 20% of that, $2.8 trillion. Nobody has ever said anything about taking all that, but $2.8 trilion/yr would get us out of debt – not that we need to get out of debt.

            I propose a modest extra 10% from the 1%, for $280 billion/yr, a very nice start on a healthy budget.

          • Flytrap

             Where do you get $14 Trillion?  On the IRS site all I see is this http://www.irs.gov/uac/SOI-Tax-Stats—Tax-Stats-at-a-Glance

          • http://www.facebook.com/alexander.brunelle Alexander Brunelle

            Even France isn’t taking 100% of the rich’s earnings. What Kool Aid are you drinking?

          • Don_B1

            Increasing the taxes on income changes behavior! It gives the rich an incentive to invest in more long-term projects rather than short-term speculation like that in mortgage-backed derivatives.

            This drives the money into job-production which generates more GDP and more tax revenue than what the rich on their own would pay.

            Everyone, including the rich, benefits, as otherwise the rich will eat the golden egg and the next hen will not arrive.

          • TomK_in_Boston

            Absolutely. Put more $ into the company instead of taking them out in bonuses to executives. Do something with your $ besides play the wall st casino. Long term vs short term thinking.  As you say, it eventually pays off for the rich that way, too. The corporate media  never mentions this stuff.

          • Flytrap

             http://www.zerohedge.com/news/2012-11-29/millionaire-man-exodus-what-obama-can-learn-uks-tax-rich-plan

          • Flytrap

             http://www.zerohedge.com/news/2012-11-29/millionaire-man-exodus-what-obama-can-learn-uks-tax-rich-plan

          • Don_B1

            A different, and equally revealing, perspective is provided here:

            http://krugman.blogs.nytimes.com/2011/09/20/taxes-and-the-wealthy/

            While tax cutting for the rich is probably a small part of the forces driving the growing wealth inequality, it is one of them, and an unnecessary one.

          • TomK_in_Boston

            Don, I think it’s a big part. I agree strongle with the conclusion of the report by the Congressional Research Service, which the GoP suppressed. This is nonpartisan statistics. Seems like common sense to me:

            http://graphics8.nytimes.com/news/business/0915taxesandeconomy.pdf

            “The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie.

            However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. As measured by IRS data, the share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to how the economic pie is sliced—lower top tax rates may be associated with greater income disparities.”

          • Don_B1

            I agree that there is a definite correlation, but economists have not studied the problem much until recently and the results are fuzzy.

            Technology has had a big effect here in manufacturing, where many previously high-paying jobs have been automated.

            One of the big good things about technology is the way it can eliminate boring, drudge jobs, but the other side of that coin is the way it puts a premium on a better educated workforce.

            The downside is the way it combines a number of good jobs into fewer (or a single) jobs requiring high skills.

          • TomK_in_Boston

            I agree that technology is an important contributor. It’s not even obvious to me that the same number of jobs can be maintained with education. Also, the remaining boring jobs are being offshored and outsourced. We could provide carrots and sticks to try to discourage that, but the right would scream that we were interferign with”free trade”, as if there is such a thing. A boring job is better than no job.

      • Flytrap

         Yes, your opinion is the only one worth listening to, opposition is merely “talking points.” 

        • Don_B1

          His opinion is based in empirical data which anyone who attempts to opine on this issue needs to account for.

          As far as I can see, you don’t account for that data; you seem to deny it exists.

    • http://www.facebook.com/alexander.brunelle Alexander Brunelle

      Have you ever heard of the saying: “You have to spend money to make money”?

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    I’d like someone to explain the rationale that says passively allowing a temporary tax cut for the rich to expire is a tax increase, but actively reducing or eliminating tax deductions for the middle class that have existing for decades and decades isn’t.

    • http://profile.yahoo.com/ZKG7NEG53UKVK7OTIT7Y4VMBOM Jay D

       Yes!, please explain that to me also!

    • Don_B1

      Because the former apply to the wealthy who shouldn’t have to pay taxes and the latter apply to the middle class who don’t deserve any benefits from the government.

      Don’t you remember the Middle Ages where the “Lords of the Manor” extracted taxes from their serfs and field workers?

  • ccbard

    Tax capital gains as ordinary income.  While the economy was on the brink of collapse, and taxpayers were rescuing big banks, there were day traders and hedge funds that made immense profits. They became richer as the banks became poorer.  Bring down a bank: pay zero Social Security tax.  Even Ronald Reagan signed into law having capital gains treated as ordinary income.

    • ccbard

      If Repubs cut entitlements, then trickle-up will hurt businesses. Six members of the Waltons (who owned Walmart) have a combined wealth of $89 billion dollars. They didn’t get that from wealthy people shopping at their stores. 

    • Ellen Dibble

      Doesn’t the home mortgage deduction favor the banks — hugely!  How many people would wait as long as possible before buying a house, depriving the banks of that income, as well as the possibility of “playing” that corner of the market till it bubbled and burst.  How “Big” does the banking sector need to be?  Do they really “need” almost all Americans in privately owned homes?

      • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

        The MID may be a Gordian knot. If we were starting with a clean sheet, that’d be one thing. But we’re dealing with a big chunk of change for the strata of society who hasn’t had a raise since the start of the Bush II recovery.

        Maybe tweak it at the upper edges, and keep it from being an excuse for flipping expensive houses.

        PS You get my regular kudos for noting how outsized the banking industry has become for pushing paper around. It it hard to keep up with that kind of faux “economic activity” even if one is selling Starbucks coffee, or iPads. Such a distortion throws the whole shebang out of whack.

        • Ellen Dibble

          Thanks for the kudos.  Agree that the clean slate is not what we are being presented with.  In Congress they get to talk about realities.  Here, I use a longer leash, and see what else is out there.  Flipping expensive houses — if that starts up again, I’m going to hold my ears!

      • Don_B1

        The purchase price of a home is based on its cost to build and what the buyer can afford. If there are no buyers able to afford it, the owner eventually lowers the price.

        The ability of a buyer to afford a house depends on his income and the real estate taxes and mortgage payments that will be incurred minus the tax deduction taken on income and real estate taxes.

        Thus eliminating the tax deduction(s) lowers the value of any home a person can buy. But this difference has been “built-in” to the current prices of homes, which is why the deduction elimination is considered a drag on the recovery of the housing market, as current owners would have to lower their selling price, which could put some of them under water on their mortgages.

        Canada does not have a mortgage deduction and it has ownership levels comparable to those here.

        The mortgage tax deduction can, and probably should, be phased out as it only encourages the building of larger, more energy inefficient homes. But a slow phase out would not help the deficit, so VSPs will not like that.

        (They can’t say so, but the VSPs could care less whether the unemployment rate drops or the economy fully recovers, as long as the rich keep making more money by extracting it from the 99%.)

  • MadMarkTheCodeWarrior

    We have a systemic problem where the tax code rewards outsourcing and gambling on Wall Street. IN 2011 we had a number of giant corporations paying next to nothing on huge profits. They have the best congress men and women that money can buy. Our debt is a sign of the pandemic corruption of Washington by big money. Dubya and Cheney raised that to new heights with their tax policies. It is time to to end the trend and bring back the balance.

  • Ellen Dibble

    The builders of yachts and high-end housing may take a hit if someone crimps the style of the uber-rich, and the whole feeding chain from the top down suffers.  If Egypt could afford to build the pyramids and still be impressing us with them millennia later, we Americans can have our splashy expressions of modern excess.  But we may last longer as a superpower if we concentrate on enabling the broader population, and there are plenty of people struggling with getting education enough to fulfill their abilities, health enough to be working with the full deck of cards, those things.   Some of those might best be government responsibilities, but some of them depend on resources in the pockets of the majority.  Everything has to be on the table, that’s for sure.

  • http://wh.gov/IVp4 Yar

    The only way to significantly change the amount of taxes paid by our wealthiest citizens is to change tax rates, limiting deductions doesn’t affect them very much at all.  If we have to go over the ‘Fiscal cliff’ to do this then so be it.  Deductions just won’t cut it.  
    Inflation is also a tax, we are in for huge inflation increases in the next few years.  We should but an inflation index into the minimum wage, this will help protect us from civil unrest.  I want to see wages connected to the price of energy.  Instead of returning to a gold standard I look for future with a calorie standard.

  • http://profile.yahoo.com/QMDZ3LH5U2B4GAT7J2HS4TCP6E Jim

    if they mess with the mortgage interest deduction (MID) they will destroy the middle class. it is a further shift of wealth from the middle class to the rich and super rich. Messing around with MID would also cause the housing market to falter which is barely attempting to recover recently.

    i prefer to have personal income tax hike across the board. that would only be fair to everyone. 

    • Ellen Dibble

      What about blocking the MID for second homes, which are less about community anchoring and more about sheltering income, it seems to me?  And what about encouraging the creation of urban, energy-efficient, walkable-type communities by giving a tax push to apartment buildings.  Lately, cities specify they want “yuppies” in those apartments, and they define that “yuppie” population by making sure the apartments are upscale, which tends to drive a lot of upwardly mobile sorts away to where they can conserve their resources better.

      • http://profile.yahoo.com/QMDZ3LH5U2B4GAT7J2HS4TCP6E Jim

        I prefer capping the MID deduction to $50,000 per year, since second home is an alternative investment for middle class families. the other viable investment is commodities (gold, silver).

        Right now, you and i are losing money by putting it in banks and many are losing in this stock market ponzi scheme. only the lucky insiders do have positive returns in the stock market. there is no such thing as “investors”, only traders in today’s market.

        • Ellen Dibble

          Whether or not the investments are profitable, there are a lot more productive places to put your savings than in a “house.”  A house generates work you yourself have to do, on an ongoing basis, or hire help to do it.  And it generates work while it’s being built.  However, a house is bubble-like labor-wise, and ceases to “produce” as a tax-generator for the government once the contractors leave.  I think it is better to invest in almost ANYthing that is forward-thinking, employs people, and improves the way most of us live.  What would that be?  Budweiser?  Sikorsky?  You know, I’d rather lose money in soybeans than invest it certain other ways, and without getting into the weeds, I think the investment policies of retirement funds should be scrutinized.   College endowments divested from South African associated businesses once and achieved real results.  Other divestitures seem to be floated nowadays.  There are other goals besides profit when it comes to savings.  The “house” seems to me WAY down on the totem pole.

          • Don_B1

            The organization 350.org is beginning a drive to get everyone to divest from fossil fuel companies, which if allowed to take their desired course, will bring devastation to the planet and ALL human beings.

        • hennorama

          A $50,000 MID limit would be practically the same as the current limits.

          The MID is currently limited to the interest on $1 million of acquisition debt on a taxpayer’s main home or a second home.  One can also deduct the interest on up to $100K of home equity debt, regardless of what the debt was used to pay for. 

          (These are simplified calculations for demonstration only)

          $50,000/($1,000,000 + $100,000) = 4.55%.  Current mortgage rates are below this.

          As an aside – one thing that many taxpayers who re-fi do not realize – ONLY the balance of the old mortgage principal just before the refinancing qualifies as home acquisition debt, so if they take money out when refinancing, the amount above the old balance is now either home equity debt (deduction allowed up to $100K) or is NOT deductible  interest on aquisition debt.  This goes all the way back to the original acquisition mortgage, not each refinanced mortgage.  Serial re-fiers BEWARE.

    • Don_B1

      While I liked the mortgage deduction, the value of it is built in to the price of the home you buy (though that value correspondence may differ somewhat for different taxpayers) in the calculations that the banks make to determine what mortgage level the purchaser can afford.

      But an abrupt termination of the deduction would decrease the mortgage size that purchasers could afford, putting additional downward pressure on home valuations, not something that the current housing industry should have to deal with.

      But Canada does not allow a mortgage deduction and it has comparable home ownership levels, so the threat to the middle class is overstated.

      What the mortgage deduction undoubtedly does is to encourage the building of McMansions with the wasted energy and money such buildings entail.

  • MadMarkTheCodeWarrior

    While the income of 98+% of the population has fallen, the income of the wealthy has gone up how many hundred percent? Growing even in this recession!!! How much is wealth enough for these ‘job creators’ to start investing all that capital that they have sitting on the side lines.

    I say give them some certainty and roll back tax rates 20 years!

  • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

    Please dig into the terms “tax rate hikes” when it comes to Republicans.

    Every reporter I’ve heard is ready to put any GOP senator on the Bipartisan Mount Rushmore simply for letting the artificially low tax rates expire as planned.

    For this, Democrats are supposed to “slay something on the altar”? Is there a “left of the President” or “left of Bowles-Simpson” here? Because when the GOP is in power, there’s always a place in the argument for rightwards.

    And Montgomery from the WaPo said “The president doesn’t need to go alllllllllll the way to 39.6%” (top marginal rate)? Is this low or high historically? I’ve been getting my headlines from the NPR and WaPo forever, and have no idea.

    • nj_v2

      Top personal tax rate for many years following WW2, during the period of highest economic expansion in U.S. history was 91%. Under Eisenhower!!

      • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

        Now that’s what I call “the leftmost term of debate” worthy of the name, simply to remind people what didn’t destroy the economy then.

        To be followed up with “Whatsamatter, you folks on the right don’t like Ike?”

  • Tamara2012

    It seems to me like the point of these “breaks” is to promote pro-social behaviors (e.g., home ownership, healthcare coverage, charitable donations). Have we now decided that these things are no longer worth promoting? Wouldn’t it just make sense to continue these tax deductions for the poor and the middle class and eliminate them for people who don’t actually need need a break (i.e., the 1%, and other high earners)?

    • BHA_in_Vermont

        Some are ridiculous. You can write off $100K of home mortgage interest.
      If you can afford a house that has that much annual interest on the mortgage,
      you DO NOT need help from others to buy a home – the ORIGINAL intent of
      the deduction.  So, yes!  :)

      • Ellen Dibble

        If you have $100K of home mortgage interest, you probably also own stock in the bank, so you’re interested in banks having lots of outstanding mortgages just like yours.  Also.

      • hennorama

        $100K of MID is highly unlikely currently.  It would require an effective combined interest rate of 9.09% on the deductible part of mortgage interest and home equity interest, which is limited to a combined $1.1 million of principal.

        The Mortgage Interest Deduction (MID) is currently limited to the interest on $1 million of acquisition debt on a taxpayer’s main home or a second home.  One can also deduct the interest on up to $100K of home equity debt, regardless of what the debt was used to pay for.

    • MadMarkTheCodeWarrior

       Well said.

  • Michiganjf

    Isn’t it obvious???

      Republicans have to save face with their intransigent base, so everyone will let the U.S. “go over the cliff.”

    … then, the next few months will be spent hashing out a deal for a middle-class and poor tax break.

    The wealthiest Americans will most certainly pay more, but the future of America’s middle-class and poor will still be at the mercy of Republican pigheadedness.

  • BHA_in_Vermont

    I’ll pay higher taxes when:
    - People who make $20M a year pay a higher tax rate than I do.
    - Middle class people who get laid off at the end of the year and get severance pay don’t get hit with AMT while people making $20M pay only 13.5%

  • MrNutso

    Rates for everyone need to return to pre-Bush levels.  Then issue quarterly rebates gradually reducing based on income level and over time phased out as the economy improves.

  • J__o__h__n

    The Republicans claim that their offer of closing loopholes is a concession is not true.  Romney ran and lost on this. 

    • BHA_in_Vermont

       The truly bizarre thing is that they won’t come out and say the obvious. Closing loopholes and getting rid of deductions IS a tax hike. They seem to think changing the specific % in the tax rate table is the only way to raise taxes.

      OK, in the next two weeks, leave the tax tables alone and remove ALL itemized deductions from people who make over $250K. Viola, no tax hike on the wealthy.

      Yes, the entire tax system needs a major overhaul. But it won’t happen in two weeks. I doubt it will happen in 2 years, heck not even 2 decades, too many special interests with money.

  • http://www.facebook.com/steev.lynn Steev Lynn

    Mortgage interest deduction:

    This saves me hundreds of $ per year, but I’ll give it up because it’s unfair. It rewards owners of expensive homes the most, and those who take maximum loans vs. down payments, at the expense of lower-income people who rent or own cheaper homes. I understand that ending the mortgage interest deduction would bring a political backlash because Americans all want to put the burden on someone else, but if you’re trying to make sensible decisions, this is one that most economists agree on.

    • Mike_Card

      Don’t worry; the home-building lobby has your back.

      • http://www.facebook.com/steev.lynn Steev Lynn

        No, they’re all in favor of this loophole, it helps sell houses

        • Mike_Card

          That’s what I meant; you can offer to forego it, but the lobby won’t allow it to die.

  • toc1234

    Obama is not so much interested in more revenue (thru limiting deductions, rasing cap gains / dividend rates a bit, etc.. – which would by far hit the rich).. he is interested in a headline that says he raised tax rates on the rich even though it doenst raise nearly enough revenue.  way to rise above the partisianship, mr President..

  • Ellen Dibble

    Romney is probably reminding Obama today that he suggests zero tax on investments, which made me wring my hands, because at great tax cost I have moved my retirement funds into Roth IRAs.  So I won’t be paying taxes on the interest anyway.  I figured that out for myself.  Romney would be undoing my careful planning.  Planning for long-term care is another enormous expense that can be handled well or poorly, and public opinion has to stand up to the profit-making side of things.  Ditto with prisons, and the profit-making side of that.  Dealing with felonious behavior can be expensive to the nation, the community, and the families, or it can be contained efficiently.  “Efficiently” doesn’t always produce the most profit, neither in health care nor in justice.

    • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

      Hey, Sasha and Malia are probably reminding their dad how they’ve been good girls this year. But somehow I’m not worried that he’s gonna spoil them on Christmas.

      • Ellen Dibble

        ‘Fraid so.  I wonder what they’re asking for.

  • Denis

    Tom,
    Would you please have your guest explain how the reduction in top tax rates are in fact “pro-growth?” As we all know the rates have been low for some time and seemingly no jobs were created by those reductions. So the question becomes what is in fact pro-growth? Historically hasn’t pro-growth come from government spending?

  • Lillaby85

    Tom,  the American people want ONE thing – for the wealthy to pay their fair share.  If Congress is talking about the standard middle class deductions for mortgages, child care, etc they need to establish a cut-off point for these deductions 100,000 – 2000,000.  If you make over 200,000 a year you don’t earn the deductions – if you make less you can still use them.  All I see Congress doing is trying to find a way to stick to the middle class using different methods….successful businessmen and citizens of this country OWE this country for their success – yes they worked hard but people work hard everywhere – the US is the place where you can do great things with hard work – People making more than 200,000 a year need to protect the country that gives them so much.  Enough said

  • Rex Henry

    Why do these representatives hold press conferences to air out their differences? I wake up to negative Mitch McConnell sound bites every morning and as soon as any Republican broke ranks, they are chided by THEIR team leader for breaking ranks.

    I thought they were all on the same team.

  • http://www.facebook.com/steev.lynn Steev Lynn

    .

  • MrNutso

    Also, income from real work, that is going to a job should be taxed at lower rates than paper income.

  • http://www.facebook.com/people/James-Patrick-Dwyer-Jr/100002088204784 James Patrick Dwyer Jr.

    We would be a hell of a lot better off if we undid everything Bush was involved in.  Raise taxes on the wealthy to pay for the two wars he started, the way it has been since Washington, with only two exceptions that I know of,  then see what we need to do.

    • Ellen Dibble

      What about the idea that businesses will flee, incorporate elsewhere, say the Canary Islands?  Or migrate to Texas and secede?  It seems to me if our infrastructure doesn’t begin to keep pace with the rest of the world, that might be advisable for anyone.  Much faster internet in countries far far less established.  Built-in protections against power outages in case of storms, all of that.  Roads and bridges that are well maintained, railroad systems fast and safe…  Don’t businesses look for that too?

  • Ellen Dibble

    I have never found the state tax deduction, and I’m supposing the standard deduction incorporates that.  Actually, the standard deduction displaces a lot of the things that are on the chopping block.  Perhaps even Obama’s tax cut is in the standard deduction.  I have never discovered that cut, which is so touted by the administration.  Once I found a sheet that seemed to allow me a $400 break, and I filed that, and since there was no line on the tax form to show that, I wrote it in and said I couldn’t find where it fit.  And back came a letter saying that was not an allowable deduction.  So it goes.

    • Kathy

      The $400 “making work pay” refundable credit was available to everyone. It was on line 8 of the 1040EZ with a worksheet on the reverse page or Line 64/Schedule M of the 1040. You’re correct about the state tax deduction though. It’s only if you itemize. 

      • Ellen Dibble

        I think I filed the schedule M, but didn’t find the line 64 on the 1040.  The paperpusher at the IRS didn’t help, that’s for sure.

  • http://profile.yahoo.com/D6Q6ZCMSW27KPX7ZITIKEWI3WQ Fred S.C.L

    What is the total compensation for the Legislature, House and Senate????

    Maybe we should have had R & R installed in the Executive branch and run this country like a business because like the Donald the entire legislature should be “fired” for collecting salary and NOT DOING ANYTHING and replaced.

    Then we can elect an entire NEW legislature at a lower cost to the Government.

    Hmmmmmmmm, that should take care of a DO NOTHING Congress.  Right?

    • http://www.facebook.com/alexander.brunelle Alexander Brunelle

      However I do not agree that we should have elected Romney (for many reasons), I do agree that we should not allow Congress to set their own wages. That’s like giving a the CEO’s check book to managers of their branches. They should also be accountable for a “Do Nothing” Congress with possible wage garnishments and replacements. The problem is that they are also the only ones who have the power to write and pass the law to do this. 

  • Dab200

    Yes, taxes should be higher and I am happy to pay but only on condition that my taxes stay in Massachusetts, to rebuild our roads and bridges and not get sent to Alabama, Mississippi, etc

  • ccbard

     What would happen if we raise the marginal tax rate but give MORE deductions?– a “use-it-or-lose-it” tax policy.  In some sense, deductions are a great idea. 

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    The “fiscal cliff” was a bipartisan agreement to painfully but responsibly start dealing with our out of control spending and deficits. “Avoiding” the fiscal cliff is basically kicking the can down the road again while allowing Washington to screw certain groups (like the middle class) for the temporary benefit of other groups (like the rich).

    The bottom line is we are not the rich country we were – we have to start behaving like the poorer country we are. But instead of making painful choices it’s being used as another opportunity to pander to the rich.

    • Kathy

      Actually we’re quite wealthy. Our economy continues to grow. It’s just that the rich are the only ones benefiting from that.

      • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

        But that’s due to $1 trillion infusions of debt every year, which will need to grow to just maintain current levels. It’s unsustainable.

        • Kathy

          The US government isn’t the US economy though. Our country can afford everything we need. We just refuse politically to raise taxes to do so.

      • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

        “Money’s like manure: Doesn’t do much good unless you spread it around.”

        But I guess the right’s fascination over Harry Truman is passe.

    • BHA_in_Vermont

       This likely wouldn’t be as bad if they hadn’t kicked the can down the road to an election year.

      No one would do ANYTHING until the presidential election was over and now they have to scurry like rats to safe their hineys.

      Obviously no one made use of the year that “can kick” gave them to actually DO SOMETHING about the problem.

  • TomK_in_Boston

    Every discussion of this topic should start with an explanation  that taxes at the top are currently ultra-low by our historical standards. Otherwise the rest makes no sense.

    Total income is about $14 trillion and the 1% get about 20% of that. If they paid a modest extra 10% it would be $280 bil/yr, a very nice start on reducing the big bad deficit that the class warriors love to scare us with.

  • Ellen Dibble

    There is some feature that says, according to a tax lawyer I called, that uncovered medical expenses can be accumulated over a number of years, and taken all at once, and I’ve got something like $20,000 over two or three years, and never really expect to take those.  Lately I haven’t had the time to compile it all and take the time to sort it out.  But I’m sure that’s on the chopping block.  I’m always on the chopping block it seems.

  • http://wh.gov/IVp4 Yar

    The richest of the rich don’t get as much from deductions.  Mitt Romney gets much more out of his 15 percent rate than his deductions.  Tell it like it is.  Define what you mean by rich, this is the same ruse like when Republicans talk about small business.  

    • BHA_in_Vermont

       The “ALL capital gains are taxed at 15%” loophole is one of the things that has to go. Subject it to AMT or “step it out” with higher percentages as income increases.

  • J__o__h__n

    Let’s invade the Caymen Islands and subject all of that hidden money to US taxes.  Let the Republicans have to take a freedom-hating vote against a war. 

  • http://www.facebook.com/profile.php?id=100000626898036 John Towndrow

    How about a discussion of the all companies who operate iin America and yet have their offices offshore to avoid taxes in the US?

  • http://profile.yahoo.com/TSSZX2JK43AU7VFAF5XIZ34ZIE Left Righty

    Concord Coalition is another Pete Peterson astro turf group.

    Pete Peterson is the billionaire who’s stated goal is to end Social Security and Medicare.

    Remember that as Diane Lim speaks.

    • http://profile.yahoo.com/TSSZX2JK43AU7VFAF5XIZ34ZIE Left Righty

      If you are online it is always beneficial to see who is funding these talking heads.

      That way you know, friend or foe.

  • JGC

    Does anyone hear remember when credit card interest used to be deductible?  This was phased out under Reagan’s tax reforms, right?  The mortgage interest deduction could also be (mostly?) phased out over a long time frame (10 or 12 years?), under guidelines suggested by J_o_h_n below.

    • http://profile.yahoo.com/TSSZX2JK43AU7VFAF5XIZ34ZIE Left Righty

      How hard is it to make the law if your gross income is this you can deduct this amount. And phase out up to $150,000 where there is no more deduction?

      $250,000 is way too high when the average annual income in this country is now in the 40 thousand dollar range.

  • MadMarkTheCodeWarrior

    All of the polls I’ve seen indicate that roughly 75% of Democrats and 60+% of Republicans want tax rates to go up on the wealthy. If we were all to vote on this as a national referendum, it would pass and be veto-proof!

    I can only conclude that the Republicans marching in lock step with Grover Norquist are focused on their own tax rates and that of their friends, not the majority of America.

  • terry7

    Are we likely to see the end of the “carried interest” benefit enjoyed by the hedge fund people?

    • http://profile.yahoo.com/TSSZX2JK43AU7VFAF5XIZ34ZIE Left Righty

      No, they have bought their senators and congressman and they won’t be getting their taxes raised.

  • nj_v2

    I guess “fiscal bump” or “fiscal obstacle course” is not sensational enough.

    There’s no “cliff.” Nothing would happen all at once. It would take years for consequences to manifest, during which time a reasonable plan could be developed.

    But here everyone seems to be scrambling to develop last-minute, hasty solutions to problems created by the last round of last-minute hasty, “solutions.”

  • http://www.facebook.com/profile.php?id=809738280 Bengt Mutén

    If the Republicans are so worried about high marginal tax rates, how can they argue for fading out deductions and credits with higher incomes.  Many middle class tax payers have marginal tax rates of 60-70% because of credits that disappear with income increases (In 2009 a single California parent with a child in pre-school and a child in college making $80K, and buying his/her first home would have a marginal tax rate of 102.4%). 

  • Kell55

    Why aren’t we considering generating revenue from corporations who get billions in breaks?  the tax subsidies which agri-business gets; subsidies enjoyed by the oil and gas industries; hidden  lost revenue from corporations deferring taxes on foreign subsidiaries, a loophole called “deferral”.

    What about a carbon tax rather than cap and trade? 

  • McGrain

    Why is the military budget like a third rail?  60% of the budget goes to the military, less than 10% to social programs.  Why are my tax dollars subsidizing oil, coal and gas when all three are reaping huge profits.  Why are we sending millions of dollars to countries who outright hate us?  WHY do these and  many more receive funds while the middle class struggles?

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    One big plus for the “fiscal cliff” is that it actually includes real reductions in defense spending, which is requisite to reducing debt spending.

    Factiod: the biggest air force in the world is the USAF – the second biggest air force in the world is the US Navy. That’s just crazy.

    • Kathy

      I agree on that. The balanced budget and booming economy of the late 90s was a mixture of tax increases and military cuts from George HW Bush. Unfortunately, the military needs to be cut by something like 50%, not the meager less than 10% of the fiscal cliff.

  • toc1234

    why does TOm keep implying that the mortgage deduction would go away for the middle class?  No one in DC is talking about taking this away from everyoine.   If total deductions are capped at say 25k or 50k then no middle class person will be hit.  Stop being a alarmist, Tom

    • http://www.facebook.com/profile.php?id=1091744903 Tracy Estabrook Boal

      That’s true, but most of the deficit reduction committees recommended it, and they’re recommendations seem to be dictating the overall initial frame of the talks in Washington. However, I suspect you are correct that in the end, deductions will just be capped, which seems a good compromise to me.

  • Paul Loefstedt

    WHy not start with eliminating deductions for second homes, boats (it’s true), etc?  My inlaws have owned two boats each worth more than our home, and in both cases, the mortgage interest has been deductible.

    • GreeningBlueHillAveRoxbury

      I thought the mortgage deduction was being phased out for 2nd homes, similar to reduced benefit for consumer debt? Re boats, or other “leisure” or “pleasure” purchases, that is great argument for a VAT or “consumption” tax — if you want that boat, it is prob. going to happen; you just have to chip in a bit more for it. VAT will definitely tamp down some spending, and industries like boatbuilding will squawk loudly, but anything we do that is drastically diff. today than yesterday will hurt someone/some business.

    • TinaWrites

      I agree with your first idea because it put fishermen out of their homes, which got torn down, lots of times, and some couldn’t afford to commute the distances they had to with fishing restrictions, in addition.  Did it add jobs for designers and architects and tradesmen?  For a short while until the space was used up.  But the boatbuilding industry was more long-term sustainable (which is what we should be thinking about rather than “growth”!), including using real materials that tradesmen can fix up rather than using cheaper replaceable materials.  Any way, when RI put a tax on high-cost boats, people wanting boats went to other states, and the boat builders lots jobs and the state lost taxes.  If the tax happened at the federal level, I don’t know for sure what would happen, but too many people have totally forgotten  about their loyalty to good workmanship within their neighborhood and done by their neighbors.  Globalism isn’t about learning about other parts of the world and helping poorer countries, or else we would pay them what we expect to be paid.  I’d prefer loyal localism, plus some factor(s) that rise up the wages and opportunities in the poorer parts of the world, including letting them get the profits from their own resources.  I’d love a discussion about this at the world level.   

  • BHA_in_Vermont

    Oh god (and I am an atheist) AGAIN with the damned “Job creators” argument!

    MOST PEOPLE WHO WOULD BE AFFECTED BY RAISING THE TOP RATE BACK TO THE REAGAN ERA 39% DO NOT CREATE ONE SINGLE JOB!

    Those who would be are NOT GOING TO CREATE ONE SINGLE JOB if there is no DEMAND for the goods and services it would provide REGARDLESS OF TAX RATE CHANGES. If this were not true, the jobs would have been created years ago, when the Bush cuts started and when they were extended.

    PAYROLL IS A BUSINESS EXPENSE and NOT TAXABLE. If there is a NEED for the goods and services a job would create, IT WILL BE CREATED REGARDLESS OF ANY CHANGE (or no change) TO THE TAX RATES BECAUSE IT CREATES NET INCOME FOR THE “small business owner”.  What business person would say: “I don’t want to make an extra $100K this year because I will have to pay $39K in taxes instead of $36K”??

  • http://pulse.yahoo.com/_KBKCC4LDFF3DJP6AYMRJT67QPE Colleen

    What is the definition of “middle class” used to come up with the $2K being thrown about?  

    What annual income are they talking about?  Because if you go be self-definition, just about everyone considers themselves “Middle Class”.  

    • GreeningBlueHillAveRoxbury

      I like the question — we throw the term around a lot but many want to to be MC or think they are — where does Lower Middle Class begin, or Higher Middle Class start?
      I have seen estimates like, “50k-90k” for the core MC, with obvious “layers” within that range. For one rough comparision: Harvard gives full tuition waiver for families up to about 60k; from there to 120k, the tuition waiver is phased lower until disappears at 120k, implying that MClass ends at 120? [N.B.: Generally, financial aid still exists for some families with unusual finances (ie, high helathcare, grandparent/child dependents, etc), or multiple kids in college.]

  • HWW89

    mortgage interest deduction also favors urban homeowners due to higher real estate prices than rural owners. It’s GOP’s plot to target the liberal coastal urbanites

  • toc1234

    Now TOm is acting like he’s never heard of the Deduction Cap (at 25k or 50k) Plan…  wow…

  • dontlookup

    Let’s stop coddling the richest one or two per cent because we think they are essential to the health of the economy.  For an honest appraisal by a successful venture capitalist, check out  the TED talk by Seattle’s Nick Hauauer.

    http://www.youtube.com/watch?v=bBx2Y5HhplI

  • McGrain

    Why is the military budget not ever a part of these discussions?  It’s 60% of the budget!  Why are taxpayers still subsidizing big oil, coal and gas when those industries are making huge profits?  Why do we continue to send millions of taxpayer dollars to countries who hate us?  Why does it always come down to taking from the middle class to pay for outrageous expenditures?

  • http://profile.yahoo.com/QMDZ3LH5U2B4GAT7J2HS4TCP6E Jim

    oh, i am glad some caller mentioned about the carried interest benefit. and this does NOT relate only to individual tax payers… this loophole strongly STRONGLY relates to big, multinational corporations.

    • Mike_Card

      And most hedge fund managers are in that oh-so-critical class of “small businesses.”  Everyone KNOWS that small businesses are the REAL job creators.

  • George_Dedham_MA

    Just let all the tax rates go bak up to pre-bush amounts.  Except, or even that, for a few things like low rate for Capital Gains it is very hard to be “fair,” We are only talking a couple of percent.  Also regarding “deduction” or “tax breaks” if you want to be “fair” the world is too complex to write rules that only do exactly what you want.  You cannot feed the birds without feeding some squirrels. We had 2 wars we have to pay for them. And cut militaru budget.

  • dt03044

    What about tweaking the corporate tax code?   Corporations are often able to pay no taxes at all through a variety of loopholes.  I don’t understand why all the focus is on individual taxes.

  • nj_v2

    Corporate welfare (tax breaks, bargain-basement land leases, subsidies, etc.) over $100 billion in 2012.

    Not a peep about that.

    • Ellen Dibble

      Possibly those who benefit from corporate welfare have a team of lobbyists who would be very vocal if those corporate breaks were being discussed publicly.  Some things are best done quietly, maybe at 2:30 AM on January 1st.  Let us go over the cliff, and then, when all rates would be going DOWN not up, let the legislators meet and reach some real decisions.  2:30 AM.  Make it a date.  On Capitol Hill.  With the president’s alarm clock set for 5:00 AM.

  • J__o__h__n

    How come whenever a spending cut won’t raise much money (like to public broadcasting) the right says that all the cuts will add up, but when a loophole that benefits the rich is mentioned, they claim that it won’t add much and thus shouldn’t be touched?

  • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

    Why is it the left-wing Tax Policy Center guest is the one who has to introduce many of the bedrock facts? Isn’t that regular reporters’ jobs, or background information?

  • TinaWrites

    I forget what benefits retiring Congresspeople and Senators receive FOR LIFE (and don’t have time to look them up).  How about getting rid of those FOREVER — not any deductions allowed on them, but the benefits themselves!  That might help the budget AND also make our representatives serve US rather than themselves throughout their careers.  Maybe the rich who run for office will no longer run, and we will have a more balanced House of Reps and Senators:  varied professions, tradespeople, at home parents, all elected thru campaign finance reform!  A lot of home runs with one sweep of a change!

    +++++++++

    And yes… what a scam!  A lot of high-end earners don’t even have mortgages and a lot of them have them on SECOND homes which already wreaked havoc on many neighborhoods (waterfront areas, especially, where fishermen used to live.  Now many fishermen can’t live anywhere near where they work!).

    +++++++++

    And adding to the cost of health care by taxing what is provided by employers only PROVES that we should have done single payer instead!!!

    ++++++++++

    Too many of America’s wealthiest Congresspeople and Senators are only scheming to keep their own wealth, NOT to serve their constituents!  Isn’t that close to treason???

    • J__o__h__n

      What age are they “entitled” to start collecting?

      • TinaWrites

        As I said, I don’t have enough time today to look it up, but I was reminded about it when a mention was made of it on NPR — but I didn’t hear the whole thing.  Sorry.  I just hoped it would be food for thought, especially if other people DO know what Congressional Entitlement includes.  Thanks!

    • http://www.facebook.com/profile.php?id=1091744903 Tracy Estabrook Boal

      You might’ve been fooled by some of the myths that are circulating about Congressional benefits. They work basically the same way as the benefits for all federal employees. Their health care plan is a good one, but it isn’t free, they do pay into social security (except a few that started serving before 1984…ETA: ok, apparently they ALL now pay into social security. Prior to 1984 they didn’t), they contribute to their pension, which is calculated and awarded the same way as to other federal employees (i.e., they don’t receive ‘salary for life’ ETA: as of 2006, average pension was ~35K/year), they have the option to contribute to a 401k type plan with the gov’t matching up to 6% of their salary.

      If you want to cut or change congressional (and other federal employee) benefits, that’s a totally appropriate conversation to have. But be sure you have accurate info about what they actually are.

      Having said that, Congress people are mostly worthless because they won’t damn well do their job, so therefore they don’t deserve their salaries, let alone their benefits.

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    The rich are getting richer faster than ever – and the middle class has been largely stagnant or losing ground. Can someone remind me why again the rich should not be paying more in taxes? And the middle class is being expected to pick up the slack?

    • BHA_in_Vermont

      Because people look at the dollars and say “it wouldn’t be fair”.

      True fact. Guy at work and I had this discussion. He thinks Romney’s 13.5% is reasonable because he paid $2M in taxes. Never mind that both of us make a WHOLE lot less than Romeny (5% of Romney’s income would be an increase for both of us) and pay a higher tax percentage. Plus we pay SS and Medicare taxes, Romney does not, he doesn’t have a job.

      We agree that ALL deductions should be phased out and tax rates dropped. He says flat tax: everyone should pay the same percentage. I say tiered tax rates: if you make more money than you can reasonably (or POSSIBLY) spend you can pay a higher percentage because some people don’t make enough to live on at it is.

      • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

        Now, more than ever, when someone stops using percentages and starts using full numbers, they’re hiding something.

  • Lillaby85

    Tom,  We need to protect the middle class because they are the backbone of this country.  Anyone who can’t see that doesn’t want to see it.  The wealthy in this country have had a great ride starting with Reagan the greatest transfer of wealth out of the middle class started then – it is time for the well-off/wealthy to pay their fair share and to support and give back to the country that is responsible for their success. Lots of people work HARD in this country and elsewhere but there is not place where working hard pays off like it does in the USA. 

    BTW I consider myself solid middle class and I don’t make anywhere near $200,000.  If you protect people whose income ranges from $50,000 up to 250,000 you are protecting the full range of the middle class and then some.  

  • GreeningBlueHillAveRoxbury

    Some truth; but even if true that urban R/E higher, so is income, so is deduction value as %age, so net is “fair” vs. more rural areas (benefit relative to income). But, renters don’t benefit at all?

  • TessinArlington

    I can’t believe Tom Ashbrook just mentioned Greece as a comparison with what the government is trying to do to raise revenue and cut the deficit.  If another person gets on the “Greece” bandwagon, I am going to scream!!!  The United States is not Greece and never will be.  We have a $14 trillion economy.  Our tax collection process and revenue stream needs to be revamped, but not instituted as Greece’s does.  My understanding is that over 80% of Greeks do not pay ANY taxes.  Please!  Does NPR feel the need to pander to this red herring like Fox News does?  

    • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

      If it were only actual pandering. What I hear is the accepted “reasonableness” of something which is gospel in the Beltway. That’s even worse.

  • Ellen Dibble

    Roberton Williams says I get no tax break from paying for my own insurance.  Not so.  I get to deduct almost $10,000, including a large part (all) of long-term care insurance. There is a line for that deduction right above the line for deducting half of what you owe the government for FICA (Social Security and Medicare) tax. Possibly if there is no earned income you don’t get to deduct that, but then you’d be deducting it from zero. I’m sure Roberton Williams meant something, but not me.

  • Ellen Dibble

    Roberton Williams says I get no tax break from paying for my own insurance.  Not so.  I get to deduct almost $10,000, including a large part (all) of long-term care insurance. There is a line for that deduction right above the line for deducting half of what you owe the government for FICA (Social Security and Medicare) tax. Possibly if there is no earned income you don’t get to deduct that, but then you’d be deducting it from zero. I’m sure Roberton Williams meant something, but not me.

    • BHA_in_Vermont

       Is that because you are self employed and is it treated differently than someone with a job that does not provide insurance and has to pay the highest “no buying power” rates?

      * this assumes I remember correctly that you ARE self employed :)

      • http://profile.yahoo.com/TSSZX2JK43AU7VFAF5XIZ34ZIE Left Righty

        Self employed “sole proprietor” can deduct even if under the percentages.

        The real losers are the new W-2 “freelance” workers who can’t deduct the health insurance they pay for themselves. 

        This is a third of the workforce in America now.

        • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

          Strictly speaking, what percentages of sole proprietors are skating on the thin edge when it comes to HC?

          I’m asking you not in particular, but because the press seems to talk little about the distribution of this. I want to see a distribution curve on those folks, and also the W-2 “permatemps” (if that’s what you mean).

          It’s very undercovered.

          • BHA_in_Vermont

             My guess is: Most.

            These are not the “small business owners” who would be affected by the > $250K tax hike thing. And being in the “You have no pull” pool of buyers, they pay a LOT more for the same insurance than a big corporation pays.

            Which is why the Obamacare insurance pools are NEEDED.

            And why SINGLE PAYER is the REAL answer.

          • Ellen Dibble

            Yes, and I’m supposing Obama got plenty of letters from those in that part of the curve.  Schedule C is the form where self-employed tote up their earnings and costs, and yes, it’s 1099 income or sometimes not even 1099.  But you can report it.  If having a W-2 from some part-time work means you can’t then deduct your own health-insurance, wow, that’s a Catch-22.  Awesome.  Awful.  Patch that hole in the tax system ASAP!

        • BHA_in_Vermont

           Never hear of the W-2 “freelance” category. Couldn’t a person just start a “one employee” ManPower like business and freelance through it?

          I’m sure it is more complicated than that. Maybe this category doesn’t pay SS and Medicare taxes like a self employed person does (both the employer and employee sides)

          • http://profile.yahoo.com/TSSZX2JK43AU7VFAF5XIZ34ZIE Left Righty

            That’s how all these companies are hiring these days.

            You are hired through an agency so you are an “employee” to them. (But still a temp to the company you are working for.)

            So you are not 1099 where you can take deductions.

            Screwed is what you are. You don’t get the benefits of being a real employee (no health insurance or vacation or sick days or retirement) and you don’t get the benefits of being an independent contractor.

          • Steve__T

             Yes that, its killing me softly.

    • http://profile.yahoo.com/TSSZX2JK43AU7VFAF5XIZ34ZIE Left Righty

      Only if it is over 6.5 or 7.5 percent of your net income.

      If under, you don’t. Please affirm someone.

      • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

        Is that the “excess over 7.5″ (I sorta think so), or “the whole amount if it is over 7.5%”. That would make a big difference on a balance sheet.

        (Disclaimer: I’m healthy enough that I’m nowhere near that and recognize that as a good thing.)

        • Mike_Card

          I’m pretty sure it’s the whole amount, IF you clear the 7.5% of AGI hurdle.

          This is INCORRECT. See my reply to OPC, above.

          • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

            Thanks. Big hurdle, hope to never need it; can’t say I envy anyone who uses it.

          • http://profile.yahoo.com/TSSZX2JK43AU7VFAF5XIZ34ZIE Left Righty

            This sounds correct to me.

        • OnPointComments

          You are correct that it is the excess over 7.5%, not the whole amount if it is over 7.5%.

      • BHA_in_Vermont

         I think there is confusion between deducting the cost of INSURANCE with deducting the cost of HEALTH CARE. I have never been able to deduct the cost of my INSURANCE even when I was able to deduct the actual cost of medical services.

        Unlike TF, there are health issues in my family.

        • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

          In that case, “thegennlemunyields”.

          (That’s the nearly run-on polite sentence when one congresscritter yields the floor to another congresscritter.)

        • Ellen Dibble

          Do you know where the Social Security deduction is on the 1040?  About 10 lines up from the bottom?  The health insurance deduction is right next to it.  If you’re self-employed, you can deduct health insurance, or I’ll eat my returns.  ;>)

        • Ellen Dibble

          Well, BHA, then someone who itemizes would want to pay as much as possible in health care “costs,” and have the lowest legitimate health care “insurance,’ the no-frills baseline insurance.  However, someone who does NOT itemize, with no mortgage for instance, wants to have health care costs as much as possible covered by the insurance, since it is deductible outside of the Schedule A.  (Although somewhere it is explained that if someone has any W-2 income, part-time or whatever, the health care insurance is no longer deductible.  Say it ain’t so!  OMG!)

      • Ellen Dibble

        This is on page 1 of the tax forms, not on schedule A.  You can take it whether or not you itemize.  Itemized expenses would be medical expenses that are NOT covered (for me, tens of thousands), and  I’m making note of that 6.5 or 7.5 percent, thinking that for me, with nothing else deductible, still I should try to nail that while it’s still available — as the lawyer in town said, those costs can be accumulated into one year.  (I’ll believe it when it happens.)
        I don’t think it matters the proportion of your income, but I’ve heard that gold-plated deluxe plans are going to be taxed.  Gold-plated, HAH!  Since my coverage does NOT cover the care I need, I feel my insurance is actually covering everybody else, and it really should be a deduction, regardless of how much it amounts.  If you get to be old enough, that is more or less what you pay, and then only if you agree to use certain hospitals.  This is Massachusetts, where we haven’t figured out that side of the equation (controlling costs), though I’ve just crossed into Medicare, so this year things will be different.

  • http://profile.yahoo.com/TSSZX2JK43AU7VFAF5XIZ34ZIE Left Righty

    Don’t worry the number of people getting health insurance from employers is going down. So tax it.

  • toc1234

    here Tom goes again… walking thru these tax breaks… again under the capping deductions plan no middle class person would be affected….  Tom just being an alarmist again for the sake of his audience …

  • Mike_Card

    I thought there was already a surtax on the “cadillac health plans.”  Did Bush get rid of that, too?

    • http://profile.yahoo.com/TSSZX2JK43AU7VFAF5XIZ34ZIE Left Righty

      He’s talking about taxing plans from employers as income. Not just cadillac health plans.

      • Mike_Card

        Yes, but he’s also talking applying the tax over some cutoff, which is the same thing.

      • J__o__h__n

        We should just nationalize health care instead of these stupid public private rube goldberg schemes.  There is no way that taxes to pay for health care could increase at the same rate the health care industry currently raises them.  And the US should use purchasing power to drive down drug costs.  We shouldn’t pay any more than any other Western government pays for drugs.

        • Mike_Card

          No argument from me, but it seems that battle was fought–unsuccessfully–in the original Obamacare legislation.  Not going to get it done in the next month.

  • http://profile.yahoo.com/TSSZX2JK43AU7VFAF5XIZ34ZIE Left Righty

    This whole program could be greatly shortened by stating in advance that the code was written to benefit the wealthy over everyone else.

    That’s a given.

    And the Republicans want to keep it that way.

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    What’s really happening is they are resetting where “poor” is – what’s a livable income now, minus all the deductions people currently get, won’t be.

  • toc1234

    Durbin, like Obama, is looking for a headline not additional tax revenue…

    • StilllHere

      Durbin is a partisan hack.  Look into the employers of his wife and children and you’ll see he works the system both ways.

  • http://www.facebook.com/profile.php?id=1397811067 John Ciavarella

    I’m really unhappy with where this discussion today is focused on. Where are the progressive ideas? This debt was created primarily by Bush’s cuts for the rich and two unfunded wars (as well as the recession). The rich enjoyed the party, so they should clean up the mess. Middle class breaks are penny ante stuff, and reducing them will only widen the gap between the rich and the rest of us, and leave in place a grossly unfair system. 

    Tax capital gains as ordinary income, raise the top marginal rate to at least 39%, limit deductions for the rich, pass a wealth surcharge tax, pass a tax on Wall Street transactions, get rid of subsidies and preferences that favor wealthy corporations, and cut Pentagon spending.

    • GreeningBlueHillAveRoxbury

      I agree wth some of your points; but Bush cut everyone’s taxes, not just the rich, right? And yes, wars were expensive, but GWB was elected, so enough people trusted him to be our leader… (not me). Gotta pay the piper now, regardless. Say, why not just tax registered Republicans who prob. voted for GWB (and are mostly rich anyway, right?)?

      While I believe strongly that carried interest, overseas accounts, highly-paid executive deferred comp. plans are all unfair and should be taxed heavily, these “rich” are not the only ones with capacity for capital investment. 

      Whatever system/taxes we create should be thoughtfully done. Example: many middle class folks have enjoyed the significant appreciation of a home if bought post-WWI or even in the 70s, the government has helped many low and middle income plan for retirement by “sheltering” of their 401(k) or union/government retirement funds (and their capital gains), or, in many cases, facilitated purchase of small second homes, say, in NH (that policemen, teachers or city/state employees often own, in addition to the software engineer, lawyer and doctor — just different values). They are middle class, right? Are they OK with your plan for higher capital income taxes, too?

      Then you have the complexities of a successful small-business, family farm or other “middle class” stories. WHile we do need to clean up the tax code, and make it fairer, it can’t be done slap dash unless we simply make every income taxable and go with a flat (or some progressive) rate with phase-in so everyone can plan and adjust to the ramifications.

  • Mike_Card

    Where is the discussion of Corporate Welfare, too?

  • MadMarkTheCodeWarrior

    Key point here… when you consider raising taxes on the 98%, you decrease expendable income which decreases consumer demand in the economy.

    Expendable income is THE driver of economic growth. Expendable income spurs investment. Without expendable income, you get NO CAPITAL INVESTMENT.

    So right now, focus on the wealthy who have seen their wealth grow obscenely, this will have sero effect on economic growth. As the economy get stronger, we’ll have to “broaden the base” which is the Republican euphemism for taxing the middle class.

    What about corporate tax rates which are EFFECTIVELY lower Norway’s?

    • GreeningBlueHillAveRoxbury

      Yes, consumers drive our economy — 2/3 to 70% as I read things. (what does that say about our society?). But the rich spend, too — larger houses, boats, travel, second homes, landscapers, etc. They WILL reduce some of that.

      Even tho I agree this cut of the pyramid needs to pay more, everyone needs to be aware there will be a ripple effect of some sort. We just need to phase in changes to allow people/industries to adjust, and be sure what ever the new system is, it is simpler/fairer than now.

  • ThirdWayForward

    Tax all types of income at the same rates (wages, capital gains, corporate income, etc.). 

    This is a no-brainer, both in terms of fairness and in terms of maximizing economic growth (supply-side, trickle down economics is voodoo economics, which is about as likely to be true as life after death).Make the highest marginal tax rates contingent on the unemployment rate (e.g. 75% when unemployment is above  10% graded down to 30% when unemployment is under 4%. That would get all sectors of our society pulling for full employment.

  • Rex Henry

    Why are the wealthy always considered “job creators?” Give them tax breaks IF they are a business and WHEN they create jobs.

    • Ellen Dibble

      It seems to me they already get a break when they hire someone.  This happens even right at the bottom, more or less where I am.  You can deduct what you pay to employees.  And even better (for the government), then THOSE people get to pay taxes.

      • GreeningBlueHillAveRoxbury

        I get your logic but labor “deduct” is really a biz “expense” — if they produced more product, they would be able to “deduct” material/raw product as an expense, so why is it not ok to deduct the labor which is required to make WIP?

        Related, the tax should be on net income (and less at the corporate level and more at the take-home: whether that is salary (regardless if paycheck, sub-chapter S, or carried interest), stock comp, dividends, etc. Things like writing off a leased Mercedes car as a biz expense should go away — create “norms” for vehicles or trucks, instead, or “overhead” caps so payrolls are not bloated by family members who do no work, but take cash out of small businesses to reduce corporate net income. Lots of abuses here…

      • GreeningBlueHillAveRoxbury

        I get your logic but labor “deduct” is really a biz “expense” — if they produced more product, they would be able to “deduct” material/raw product as an expense, so why is it not ok to deduct the labor which is required to make WIP?

        Related, the tax should be on net income (and less at the corporate level and more at the take-home: whether that is salary (regardless if paycheck, sub-chapter S, or carried interest), stock comp, dividends, etc. Things like writing off a leased Mercedes car as a biz expense should go away — create “norms” for vehicles or trucks, instead, or “overhead” caps so payrolls are not bloated by family members who do no work, but take cash out of small businesses to reduce corporate net income. Lots of abuses here…

        • Ellen Dibble

          A labor deduct is a business expense, at least on the business form that I use.  I assume that it is a business expense for larger businesses too, regardless of the form of the legal entity.  I would rather have “abuse” of the employee deduction by, say, having someone sitting there and watching the weather channel while waiting for people to check in at reception — rather that than have unemployed people.  Is that what you mean?

          • GreeningBlueHillAveRoxbury

            I think we agree — I would tolerate a “watcher” (like the antiquity from the ol’ railroad days; a sinecure called “Signalman,” required well into the modern age despite total lack of need and changes in euquipment…). Positions Paid/Deducted provide some people at least a nominal income. I am not sure that happens much but yes, those are abuses i can tolerate.

            The abuse I dislike strongly, and frequently see at small biz w/which I consult, are multiple fam. members on the payroll, doing absolutely nothing–some not even coming into the office–but receive outsized comp. and benefits (think big “highly-paid exec. deferred comp plans, on top of the tax-protected 401(k)s on top of (some) older defined bene. plans — annuities geared to one’s “last 5″ year average comp figures), and all 5 members (mom, dad, 3 kids) drive MBenz’ which US and you and me are subsidizing… This is the one of the last bastions of tax avoidance in my opinion — compounded when a significant portion of business is either done under the table (cash or barter).

    • http://profile.yahoo.com/TSSZX2JK43AU7VFAF5XIZ34ZIE Left Righty

      Even that they game. 

      Lots of “churn” to get the tax break.

  • Markus6

    Will we ever get into specifics on how who the “rich” are and how much we need to take from them? My guess is that to take a dent out of the deficit, there aren’t enough “rich” unless you start labeling people making more than 80K per year, rich. 

    Can anyone do the math on this? 

    Though it’s more fun to speak in broad generalities and cute cliches. 

    • Kathy

      Well 80k would be the top fifth and to my mind, if 80% of households make less than you, you’re doing pretty well and can afford a tax increase. I believe Mr. Obama made a huge strategic blunder in defining the limit for tax increases at 250k. You’re right, it’s just not enough.

      However, that doesn’t change the fact that taxes for those over 250k don’t just need to go up a little, but need to go up a lot and need to be completely restructured to deal with the reality that most of their income is in capital gains, not salary.

      • Markus6

        Someone making 80K with a few kids living in NYC is barely making it. Course, you could suggest they move, but if that’s where there job is …  Also, someone making 250K who is creating a business and on their second mortgage to finance it and is putting 80 hours in a week, well for that person it may reach the point where it isn’t worth the risk and they may as well join a company instead of building one.

        I’m with you that those making huge amounts should pay more. I think the payouts we’ve seen over the last 10 years for CEOs are obscene. Of course, maybe it’s because I don’t get obscene amounts. But I think it’s too easy to say that someone making more than what you make should pay more. Also, I think that the 47% who pay no federal taxes should pay something – they need some skin in the game. 

        • GreeningBlueHillAveRoxbury

          Someone “building a business” should not be taking home 250k, especially if they have leveraged their personal life is (mortgage); defer that income or plow back into the capital equipment or investments and you get both tax bene AND a better-financed company. 250k annual income is pretty damn wealthy to me, and, yes, it is far more than I earn; needs to have decently higher marginal rate, even if you scaled versus COL of a certain zipcode or geography.

          My guess is that, even at 80 hrs a week, they will still be motivated if, say, the last 25 or 50k of that payday is taxed at 3-5 more bps. Really, 50k at +5% is still yielding them 47.5k, right? They are not going to want that? And small biz offers many other ways to “hide” personal expenses like nice cars, trips, equipment, etc., which USam and you and I all subsidize. 90% of these entrepreneurs will never go back to a big company and plain vanilla W-2…

        • Steve__T

           7 or 8 of the top wealthiest don’t pay taxes. That was something I laughed at when Romney made his statement. He put some of his own friends in the 47%.

  • http://profile.yahoo.com/TSSZX2JK43AU7VFAF5XIZ34ZIE Left Righty

    Why should everyone make sacrifices?

    All the money went to the top this past 12 years.

    The 16 trillion dollar debt was run up to benefit the rich.

    No, the rest of us don’t owe this money and we shouldn’t be the ones to sacrifice.

  • Stephen_Mangion

    . A tax code of 70,000 (?) must have a many many many targeted, special interest tax breaks.  Do away with them!
    .  As for carried interest:  “only 5 billion dollars there” said one of the guests.  Well, I bet that break goes to very few people.  Do away with it.
    .  Charity – charity is not charity if you want something back – ie a deduction.  Do away with it.  (At Boston’s MFA, a stairway is named after a donor . . . )
    . Mortgage interest: cap it and the middle class will be help harmless.

  • Stephen_Mangion

    . A tax code of 70,000 (?) must have a many many many targeted, special interest tax breaks.  Do away with them!
    .  As for carried interest:  “only 5 billion dollars there” said one of the guests.  Well, I bet that break goes to very few people.  Do away with it.
    .  Charity – charity is not charity if you want something back – ie a deduction.  Do away with it.  (At Boston’s MFA, a stairway is named after a donor . . . )
    . Mortgage interest: cap it and the middle class will be help harmless.

    • GreeningBlueHillAveRoxbury

      I agree with you on carried interest. Not only wasn’t this necessary to motivate investors, thye then abused it by redefining their managemnt fees and annual comp as “deferred. They take last year’s fees out as “Carried Interest” but at half the rate!.

      I will take issue on Charity – yes, all of us should give and perhaps not be motivated by the deduction. But, changing the system will cause major disruption in how Colleges, Museums, Health Research, Soup Kitchens, Homeless shelters, etc. finance their ops. While some may not feel art falls into “need” category, that MFA “stairway” was an expense of constructing the museum and the MFA simply “recognized” some donor with a plaque on a space; yes there is legacy and PR value, but essentially, MFA built the new spaces/galleries on the cash flow of those gifts. It would not have happened otherwise. AMT should have solved former abuses (and instead ensnared a not of middle/upper middle income people), and the proposed “Deduction Caps” will create more “fairness” but everyone needs to accept that Charitable giving will prob dip significantly at least in the first few years of tax change.

      • Stephen_Mangion

        Speaking of cash flow:  The presumed 501(c)3 MFA is now charging 25 dollars per visit.  That will keep most people out – and no, 1 free evening a week does not “cut it” for the out of towners . . .

  • http://www.facebook.com/djdanahja Daniel Titcomb

    There are other ways of raising revenue besides placing on the shoulders of the american people. what about ending substidies for Oil companies ?  the NFL is a multi-billion dollar a year NON-PROFIT paying no taxes ? if the american people are expected to make sacrifices and supreme court rules corporations are people too, then they should be looked to as well. 

    • Stephen_Mangion

       It would be interesting to look at all the non-profits and how the money is spent.  The organization may be a non-profit, but individuals sure do make much money while working at the non profits.
      (At the risk if being dismissed:  several years ago the Washington Post ran a story that listed the salaries of some DC-based organizations, including NPR.  The salaries were, to be kind, generous.  The point is that non-profits for which we get charitable deductions need scrutiny and oversight.)

      • GreeningBlueHillAveRoxbury

        Agreed! Certainly some basic “%age of revenue or services “caps” should apply. IRS no doubt has (or can easily create) some basic calculator test of the 501(c)3′s returns to “test” excess salaries and expenses. If the org misses the litmus test, it gets audited, or fined. 2 years in 5, it loses its charitbale status. Period. Look at how badly Jennifer and Scott (of Gen. Petraeus and Allen fame) abused the basic structure with their “cancer/kids” foundation. Not sure they did anything but throw parties for the brass in Tampa and curry favor. (Why they really did this really should be determined…) 

    • hennorama

      One point to remember always, is that Individual Income Taxes are less than HALF of total Federal Revenue.  Here are ALL the sources of Federal Revenue, by percentage (2011):

      Individual Taxes  47.4%
      Payroll Taxes     35.6
      Corporate Taxes    7.9
      Customs & Duties  5.7
      Excise Taxes       3.1
      Estate/Gift Taxes  0.3

      Source:http://www.heritage.org/federalbudget/federal-revenue-sources

      • nj_v2

        Note items 4 and 5 on h’s list.

        G. Washington’s Secretary of the Treasury Alexander Hamilton helped to institute the young country’s industrial policy which included raising import tariffs from 5 to 12.5 percent.

        These continued to go up—25% during War of 1812; 40% a few years later; 50% under Lincoln; fluctuating around that point for the rest of the 19th and most of the 20th century until Reagan.

        For most of our history, import duties funded most of the government.

        And more recently, “Between the 1950s and the mid-1990s, US federal government funding accounted for 50-70% of the country’s total R&D funding.”  (Ha-Joon Chang , Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism)

        So-called “free-trade” agreements, supported by both corporate parties, continue to ship jobs to other countries, enrich the investor class, and destroy the lives of middle-income workers.

  • GreeningBlueHillAveRoxbury

    Caller Bob’s inference that loopholes are just welfare of a different nature is correct. We could cut a lot of IRS jobs (and CPA? Atty??) if we went with a flat tax — all income counts, and a progressive rate system applied against it. Phased in over a decade, this would be the simplest and most effective way. Saves going through this long-winded debate over tax reform every few years…

    It will hurt, for a while. Flat tax means no incentives for charity (college/universities, hospitals, disaster relief, food kitchens, etc.), or the home-building (which also stimulates purchases of appliances, furniture, commuting cars, landscaping, etc.).

    • Ellen Dibble

      We might start to reverse the build-out that started with Eisenhower’s superhighway system and the flowering of suburbia and “the commute.”  And reverse the diaspora of local cohesion, the nexus that defined community, into far-flung workforces, and families, and cities and towns that seem happenchance, flung together by realtors and car dealerships, not necessarily with traditions and values that stem from generations back.  You’d have to give the same kind of tax treatment to multiunit housing, and it would take architects and engineers to use the same imagination (and greed) that energized the growth of suburbia, but it would vitalize the building of renewable and distributable, sharable utilities.  It would point us in the direction of sustainability, if not take us there in one leap.

    • ThirdWayForward

      Specific deductions are not all “welfare”  – this is just empty rhetoric. Every tax system encourages some kinds of economic activity and discourages others. 

      Tax incentives are not automatically “welfare” in the derogative sense of that word that conservatives have attachéd to it.

      IRS jobs are an insignificant government expense, and cutting these jobs reduces legitimate tax revenues.Should billionaires pay the same flat rates as a family making $50,000/year that is just getting by? That’s obscene. A new economic aristocracy has been created in the last few decades by the systematic favoring of very big fortunes, and they are busily trying to solidify their hold on our political and economic systems.

      • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

        To put it in terms even the “RunGummintLikeABidness” folks can understand: Firing IRS employees is akin to slashing one’s Accounts Receivable department.

    • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

      Pshaw. Some lobbyist in DC is salivating for people to respond with “the tax code is so screwed up the only thing to do is make it the same for everyone, from Mitt Romney and the Walton heirs to the chambermaid who (if she’s lucky) gets $2 extra in that envelope every night”.

      That’s a feature, not a bug.

      You’re being conned. You think you’re discovering these things yourself, but it’s just a trail of breadcrumbs they’ve left for you to follow.

      • GreeningBlueHillAveRoxbury

        Sorry, I think I confused — “flat” should be “all income” with no preferential deducts; the “Rates” should be progressive scale. Why Romney should pay net 11 or 14% of his incredible income but I pay 25% on far lower gross (I checked; that is what I paid last year, even with itemizing mortg. interest, 5% charitable giving, and no out-sized med or investment losses)?

        The “bug” is a code which is so complicated, that only the rich know the loopholes (or can hire the tax CPA to avoid ‘em). right now, it allows Mitt to hide what we all know to be huge income. Example: How come his “retirement” plan is so big? B/C Bain found a way to put the same type of every-day-business transactions (used to be called “ordinary income”) as “special investments” in partners’ tax-deferred vehicles. B/C he found other ways to wash “expenses” against income, or defer other types of ordinary income as capital, inapprpropriately, he essentially has skirted the full intent of our tax code.

  • ThirdWayForward

    “The biggest problem is the Republican opposition to……” This is not really an argument — Republicans will oppose any measure that compels the rich to contribute more.

    The Republicans, with their reverse-Robin Hood policies, are the biggest obstacle to American economic progress. 

    When the uber-rich garner the largest share of a society’s wealth, the economy stagnates — there is not enough demand to support producing more goods and services.

  • horse06516

    Tom, how about the new discussion
    Taxing Wealth Is the Answer for Boosting Long-Term Growth: Daniel Altman
    please read more at
    http://finance.yahoo.com/blogs/daily-ticker/taxing-wealth-answer-boosting-long-term-growth-dan-132914787.html
     very interesting, middle class no income tax :)

    • StilllHere

      And no chance for wealth.

  • ttajtt

    i heard on a station there is 16 trillionair families, in the world then.   

  • horse06516

    what about taxing wealth?
    Taxing Wealth Is the Answer for Boosting Long-Term Growth: Daniel Altman. An interesting argument, middle class pays no income tax. Read the article  at this link for Yahoo.
    http://finance.yahoo.com/blogs/daily-ticker/taxing-wealth-answer-boosting-long-term-growth-dan-132914787.html

    • Gregg Smith

      If you want less of something, tax it.

      • StilllHere

        Undeniable.

  • hennorama

    Tax deductions matter far less than income tax rates to those with high incomes and accumulated wealth.

    For example:

    The wealthier one is, the less likely one is to have a mortgage, so mortgage interest deductions become moot.

    The wealthier one is, the greater flexibility one has in choice of state of residence.  If one chooses a state with no income tax, state income tax deductions are unimportant.

    The higher one’s income, the more likely the income is largely in the form of dividends and capital gains, which are highly favored in the tax code, with much lower rates than for wages and other ordinary income.

    The higher one’s income, the less likely it is to be in the form of wages, which are NOT favored in the tax code.  Even if one has high wage and/or self-employment income, payroll and SE taxes phase out above certain levels.  Medicare tax is collected on all wage and SE income, but the much larger Social Security tax is not collected on this type of income over $111,100 (for 2012).

    The wealthier one is, the more likely one is to use all available tax-deferral and other retirement plan incentives, such as IRAs, 401-k’s, SEPs, Keoghs and other similar plans.  Plus, the limits are larger for those who are self-employed (SEPs, for example.)  And having greater income gives one greater ability to make maximum contributions.

    The higher one’s income, the more likely it is that one’s itemized deductions and exemptions are phased out.  The amount of itemized deductions and personal exemptions you can take are normally phased out as your income rises. In 2010, however, those income limits were been repealed, and the recent tax relief act extends the repeal for two more years, through 2012.  Again, favoring wealthier Americans.

    As I said, lower rates are generally much better than deductions for high income and wealthy taxpayers.

  • jimino

    As Ross Perot would say, “here’s the deal”:  Republicans indicate willingness to eliminate these deductions, which affect at least 30-40% of taxpayers, including most of the middle class, because they know it will NEVER be popular enough to actually pass, and oppose an increase in marginal tax rates, that affect maybe 5% of taxpayers, including NONE of the middle class, because that is who they actually represent on economic matters.

    This is solely a debate over political power, not economic matters.  If it was, the real deficit hawks would be celebrating the ridiculously-termed fiscal cliff since it is EXACTLY what they have so loudly been clamoring for:  Decreased federal spending and making the “47%” pay federal income taxes.  The fact that they are so concerned about the effects of actually implementing their “ideas” says it all.

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    The rich know these deductions are limited, and therefore regressive, providing more benefit for lower incomes.

    On the other hand, the sky is the limit for income, so given the choice of course they will choose eliminating deductions over having taxes raised on their quickly increasing incomes.

    • StilllHere

      Who’s rich?

  • OnPointComments

    For those logging on late to this On Point program, I’ll summarize about 95% of the comments made so far:  raise taxes and eliminate deductions on somebody else but not me.

    • StilllHere

      The other 5% were cut spending that affects somebody else but not me.

    • TomK_in_Boston

      Wrong. It’s “If we’re so concerned about the deficit and we’ve been cutting taxes at the top for 30 years, wouldn’t it make sense to take a step back toward our historical norms?”

      Personally, I get more income from dividends than they pay you at wal-mart. I’m asking that my taxes be raised, because I’m a USA patriot, I know we all do better in an economy of broad prosperity eventually, and I can easily afford it. And no, I’m not going to make a donation, since I know that comes up on your talking point screen now. The USA is a gvt of laws, not a bake sale. Our past middle class prosperity was based on strong progressive taxation, and that’s what we need now.

      • TinaWrites

        Thank you!  Not from me so much, personally, but for your broader vision that “the past middle class prosperity was based on strong progressive taxation, and that’s what we need now.”  That, to me, is strong systemic thinking. Too much alternate thinking is thinking segmentally only.  

        I wonder about this phenomenon:  IF the upper class holds that they are the “job creators”, where are the jobs?  They brag that they create jobs when they already have a tax rate they are pretty happy with (they seem to be fighting it’s going up, not trying to force it down even farther), where ARE those jobs?  And, if some small business owners get caught in a tax category with the wealthy who don’t necessarily work or create jobs, why not create another tax category for them (I know this period is not about discussing changing the tax code.)?

        • TomK_in_Boston

          Thanks Tina. Yeah, from my perspective we’ve been trying all the GoP solutions for 30 years and they haven’t worked, so it’s not rocket science – and it’s not “punishing the rich” – to go back to what did work.

          As you say, the USA has been paradise for the “job creators”. They are richer than since 1929. Ditto for corporations. So, where is the broad prosperity? The righty answer is we need even more tax cuts and deregulation. I don’t think so. A letter to the sunday Globe magazine said that was like russian communists in the 80s saying the cause of the USSR’s economic problems was the ideological deviations of some politbureau members :)

    • StilllHere

      Those who believe their own taxes are too low should feel free to send in an extra check.

  • TomK_in_Boston

    Top rate on ordinary income second lowest since 1929.
    Financial schemers who can claim all income as divs and cap gains get a 15% rate
    Estate tax gutted
    Corporations paying lowest share of total tax since WW2

    Why is there any debate at all here!!!??? We have given away the store to the rich and, surprise, we’re cutting everything we need and inequality is soaring. Raise the dam rates! There is no counter argument by anyone who is not blotto on righty Kool-Aid.

    • OnPointComments

      No need for the 999999999th repetition of lefty talking points, we’ve heard them enough.
       
      Does your longing for the top tax rates of the good old days also extend to longing for federal spending as a percentage of GDP from the good old days, and the rates for the lower brackets from the same period?

  • StilllHere

    The simplier we make the tax code, the better for all, except for those who benefit from its complexity.

    We have $16T of bond debt and another $100T in liabilities in the form of entitlements.

    Cutting spending is crucial to the solution.  I would favor $10 in cuts for every $1 tax increase.

    • jimino

      I agree about simplification.

      Concerning your solution, you must support the much less drastic cuts and increases represented by the “fiscal cliff” as a good start, right?  And regard the doomsday scenarios we keep hearing as political claptrap, right?

      And could you flesh out your 10-to-1 details for us?  What gets cut and whose taxes would increase?

      • TomK_in_Boston

        Everyone loves simplification, like highway safety. Unfortunately, it’s used as a distraction and a diversion from the real need to raise the rates. Let’s raise the top rates now and simplify later.

        I’d favor $10 in revenue for $1 in cuts. How did this discussion get biased so there are always more cuts than revenue, when we’re in an ultra-low tax environment already? Shouldn’t it be more cuts when taxes are high, more revenue when taxes are low?

        • Coastghost

          Are we no longer in an ultra-high debt and deficit environment?

          • TomK_in_Boston

            What does that have to do with anything I said?

            We’re in the expected deficit environment for the aftermath of a “systemic banking crisis” with low taxes at the top and runaway military spending. FYI deficits increase in recessions, and they increase more following a banking crisis, which typically takes 3.5 yrs to bottom out.

      • StilllHere

        Fiscal cliff is certainly overstated but there’s nothing like a crisis to motivate media and politicians to focus on difficult decisions, or at least pretend to.

        I think timing of the cliff’s changes is perhaps too abrupt but could be convinced otherwise.

        I don’t think deductions are part of it, nor is simplification. 

        Everything gets cut and everyone’s taxes go up.

        I would start with the premise that earned income belongs to the earner and that every dollar confiscated has to be justified.  I would encourage savings over consumption, beyond staples.

  • peacherino

    I wish I knew more about mortgage deductions. Do they apply to all residences, or just the primary residence? I think that supporting people in owning their own homes is socially valuable, so it makes sense to keep this deduction in place for primary residences. But other residences (second or third homes, vacation homes, rental housing bought as investments) are not valuable to society in the same way. Multiple residences are luxuries and we don’t have to provide mortgage deductions for them. Investment properties should be taxed as businesses, not as homes.  

    • hennorama

      The Mortgage Interest Deduction (MID) is currently limited to the interest on $1 million of acquisition debt on a taxpayer’s main home or a second home.  One can also deduct the interest on up to $100K of home equity debt, regardless of what the debt was used to pay for.

      Mortgage interest on rental properties is fully deductible as a rental expense.  This is a business expense and not a personal expense.  Providing rental housing is of course valuable to society – where else would the about 1/3 of Americans who aren’t homeowners live otherwise?

      Investment/rental properties are subject to similar rules as businesses, with significant limits on rental losses for individuals.  Rental profits for individuals are taxed the same as other ordinary income, such as wages.

    • GreeningBlueHillAveRoxbury

      Owning homes is good; in some ways. But are renters (who chose or have to rent?) cut out unfairly? Should US Tax Code subsidize McMansions? Once someone has (affordable) housing, should the mortg. deduction still apply, say, over the Jumbo Mortgage (>420k or so)? Should we “subsidize” unnecessary furnishing of such large homes, and the resultant waste of energy, space, commuting cars, lawn fertilizer, etc?

      I recommend some plan which phases out Mortgage Deduction beginning at “jumbo mortgage” level, say, but disappearing completely by 600k, and index both to inflation. 600k is a 750k purchase if the purchaser puts down 20% (better credit risk these days, and avoids PMI). Don’t know why taxpayers should subsidize such a high-cost property, and clearly anyone buying more than that, regardless of COL, does not need a handout.

    • GreeningBlueHillAveRoxbury

      PS Rental prop is a business, usually; owners get all expenses deducted, including interest, maintenance, taxes, etc. It is just a different form of “business” or investment, and does provide a social good: housing for those who cannot afford to purchase.

  • middle_class_homeowner

    I’ve stayed in my home despite my mortgage being deeply underwater. If the mortgage deduction were to go away, that would probably be the last straw…

  • CitizenMarty

    No one ever mentions the separate health coverage and retirement that government employees, ie Congress, get.  Wouldn’t it save money to combine with SS and Medicare?

    • GreeningBlueHillAveRoxbury

      what!? and give away my “perq” for serving the nation?? and eliminate waste? inefficiency?? You must live in one of those recreational smoking states…

  • astrom1970

    What percentage of their incomes would Romney and Buffet pay if Obama got 100% of his plan through?  

    What percentage of their incomes would white collar Manhattan office workers with paychecks of over 250K pay if Obama got 100% of his plan through?

    • GreeningBlueHillAveRoxbury

      Romney types still have loop holes, don’t forget. Mitt hid real comp in deferred retirement accounts (took income as capital investments and parked in 401(k)s — his, Anne’s, for benefit of “all my sons”)

      Outside of the uber-rich, how many people do you think are in the 250k ballpark? I would bet we are only talking 2-3 million, tops (that’s about 1%). Take out the bottom of the pyramid, say, 250k up to 500k, and you prob. cut that pool of taxpayers more than half. I will go look for IRS stats, but just say, 1mm people, at +5% (the proposed higher marginal rate which is only the tax on their last dollar of income, not the lower levels), times “average” marginal income of 2m (again, this is the “extra” income over the 500k base) means 100B of new tax revenue — a good start on our deficit. Who was it who said “a hundred billion here, a hundred billion there; pretty soon, you’re talking about real money…”?

      • astrom1970

        Ok. Who’s really going to be hit for additional “shared sacrifice” if Obama’s plan succeeds?

      • Markus6

        Finally, some people who actually look at the math rather than just throw around terms like “rich” and “fair share”. Thanks.

        As you say, 100B is a good start, but this looks like we’d have to go broader and deeper to make a real dent in 16T. 

        And I still think the 47% who don’t pay fed taxes should contribute. It’s a little like war. If people can’t see the cost of the wars we get ourselves into (like a draft or war tax), we get more of them and they last longer. 

      • OnPointComments

        According to the latest IRS data, if a 5% additional tax was levied on all of the income of everyone making more than $200,000 per year, the additional revenue would be slightly over $81 billion dollars a year; over the next decade this additional 5% tax on the rich would bring in $824 billion.  The Bush middle class tax cuts that Obama wants to keep will cost $3.7 trillion over the next decade.

  • markw8

    A cap on deductions seems so eminently sensible. Tax simplification and wholesale removal of deductions sounds nice on the surface but would take years to phase in and would probably end up not-so-simple, for the very reasons they were instituted in the first place.

    Slightly off-track, I wonder how modest increases in high-income personal tax rates or indeed corporate tax rates are supposed to have a massive effect on job creation, when amounts reinvested in a business are mostly excluded from taxable income or recoverable through depreciation and expensing. Less money for dividends to investors, of course.

    • Joseph_Wisconsin

       The answer is in your question.  An increase in the top tax rates would have almost no effect on job growth, a positive effect on decreasing income in equality and wealth concentration in the hands of the few, and would be a significant contributor to deficit reduction.  The top tax rates are already at such historical lows, especially the capital gains rate of 15% that basically only applies to the very well off, that letting the Bush tax cuts expire for the top few percent would not hurt the economy.  The whole taxing the “job creators” (Republican for high income and wealthy people whether they have anything to do with job creation or not) would kill jobs  is just misdirection to get what the Republicans always want; lower taxes on the wealthy.  The same with trying to make Social Security and Medicare the bad guys that must be cut.  While there are modest changes that will be required to SS in the future, and more pressing issues to do with Medicare (mostly relating to medical costs [what it actually costs for medical insurance for any individual, public or private] increasing so much faster than general inflation and most peoples wage, something that the Republicans have no proposals to address), the deficits over the last 30 years and the current debt were not in anyway caused by SS or Medicare.  The reason the deficits have been what they are is excessive tax cutting combined with excessive military spending.  The other contributor to the deficits over the last four years is that we have been in a major recession, all while the “job creators”have not seen their taxes go up.

  • hennorama

    While this is not exactly on topic, one needs to consider only a
    couple of items to understand why this income tax discussion is
    important, and why there is a sort of general feeling of malaise among wage earners:

    1. Corporate Profits as a percentage of GDP are at or near an
    all-time high of just under 11%.  The bulk of corporate profits
    accrue to high-income taxpayers and the wealthy, through divdends and increases to stock values.  These are less likely to be spent and
    recirculated throughout the economy.

    Since 1970, corporate profit’s share of GDP has more than doubled
    (from 5% to almost 11%).

    2. Wages as a percentage of GDP are at or near an all-time low of
    just over 44%.  Wages go principally to those in the lowest income
    levels.  Wages are almost entirely spent and recirculated throughout the economy, and are therefore the major source of revenues of consumer-oriented businesses.

    Since 1970, Wages’ share of GDP has declined by nearly one-fifth (from 54% to 44%).

    This is coincident to the decline in union membership as a share of
    the U.S. workforce, from about 25% in 1970 to about 12% today.

    Sources:http://www.businessinsider.com/corporate-profits-just-hit-an-all-time-high-wages-just-hit-an-all-time-low-2012-6
    http://en.wikipedia.org/wiki/Labor_unions_in_the_United_States

    This chart shows Wages as a percentage of GDP (in red) and Corporate Profits as a percentage of GDP (in blue) using Federal Reserve Economic Data (FRED).

    • harverdphd

       Maybe in your world…in my world corporate profits are held from shareholders because of the feds, suppressing share value and dividends….give me my money and I will spend it. 

      • hennorama

        Thank you for your response.

        Following along, you would see that my chain of reference went from “corporate profits” to “the bulk of corporate profits accrue to high-income taxpayers and the wealthy” to “These are less likely to be spent and recirculated…” In other words, high-income taxpayers and the wealthy both receive the bulk of corporate profits and spend a lower portion of their income, in general.

        Good for you if you are either a high-income taxpayer or/and? wealthy. Congrats.

        Corporate profits essentially get broken into 3 parts after operating (and other) expenses:

        1. various taxes paid on said profits

        2. Retained earnings, used for a variety of corporate purposes, hopefully to enhance profitability, and generally increasing value of the corporate shares

        3. Dividends to shareholders

        How “…in [your] world [are] corporate profits … held from shareholders because of the feds, suppressing share value and dividends…”?

        Thank you again for you reply. I look forward to your explanatory response.

      • Mike_Card

        You must be a real fan of penny stocks.

    • StilllHere

      I couldn’t get past your first point because you post no data to support your contention.  Please locate details regarding shareholder ownership distribution across pension funds, 401k, foundations/endowments, and individuals by income.  Thanks.

      • hennorama

        I see. You need proof of my statement before you can comment, eh? Conditional commentary is accepted in here, such as “Assuming what you say is true…” or similar.

        While DIRECT ownership of Equities (listed stock shares) by individuals has certainly declined (currently about 36%), INDIRECT ownership through various pension vehicles and mutual funds has increased. There are a number of sources for this info, from the Federal Reserve, the Census Bureau, various academic and private studies, etc.

        All of them show the same essential info – wealthy/high-income individuals hold the vast majority of Equities, either directly or indirectly.

        For example, according to Working Paper No. 589 by Edward N. Wolff of the Levy Economics Institute of Bard College (March 2010), “The Percent of Total Assets Held by Wealth Class*, 2007″:

        Asset Type Top 1% Next 9% Bottom 90%

        Stocks & Mutual Funds 49.3% 40.1% 10.6%

        Stocks, directly or 38.3 42.9 18.8
        indirectly owned

        *Households are classified into wealth class according to their net worth. Brackets for 2007 are:

        Top 1 percent: Net worth of $8,232,000 or more
        Next 9 percent: Net worth between $883,800 and $8,232,000
        Bottom 90 Percent: Net worth less than $883,800

        Source:http://www.levyinstitute.org/files/download.php?file=wp_589.pdf&pubid=1235 (Table 9)

        According to Federal Reserve data, as of 2010, these are the percentages of Equities owned by various Types Of Investors:

        Type of Investor % Equities Owned

        Household Sector 36.55

        Rest of the World 13.27

        Life Insurance Cos. 6.11

        Private Pension Funds 8.51

        State & Local Retirement Funds 7.64

        Mutual Funds 20.61

        Exchange-traded Funds 3.67

        Assuming that the beneficiaries of both the Private Pension Funds and the State & Local Retirement Funds are eventually going to be individuals in the Household Sector, we can add another 16.15% to the Household Sector, for a Subtotal of 52.7%

        Using the same source, about 55% of Mutual Funds are owned by the Household Sector, so extrapolating (20.61% X 55%) gives us another 11.34%. Now we get a new Subtotal of 64.04% of Equities owned by the Household sector, either directly, via pension/retirement funds, or through Mutual Funds.

        Adding in the portion of Mutual Funds owned by Private Pension Funds and State & Local Retirement Funds (30.06% combined), we get another 6.20% (20.61% X 30.06%).

        This gives us a Grand Total of 70.24% of Equities owned directly or indirectly by the Household Sector. Using Edward N. Wolff’s work, which concluded that the wealthiest top 10% of households held 81.2% of Stocks, we then come up with the top 10% owning 57.03% of Equities (70.24% X 81.2%).

        This excludes any data on ETFs, which are no doubt predominantly owned by Households, directly or indirectly. It also excludes “The Rest Of The World” share of Equity ownership (13.27%). Had we only examined the 86.73% non-foreign owned Equities, the ownership percentages would have been about 15% higher. This would turn the Grand Total owned by the Top 10% be nearly two-thirds of all Equities. (65.76%)

        So … any way you look at it, the wealthy own the vast majority of Equities, and receive the vast majority of the benefits of said ownership.

        Sources:http://www.federalreserve.gov/releases/z1/20100311 (Tables 1201 & 1215)

        http://www2.ucsc.edu/whorulesamerica/power/wealth.html

        • StilllHere

          I thought your point was about income, not wealth, perhaps you need to restate or please locate some pertinent data.  Also what’s the link between corporate profitability and dividends paid, my understanding is that payout ratios are well below historic averages.  Moreover, since we’re talking about circulation through the economy, if companies are paying out less maybe it is because they are reinvesting more (property, plant, equipment, R&D) and paying more in taxes (foreign.)

          • hennorama

            StilllHere – you can do your own homework.

            My original point 1., which you say “I couldn’t get past …” was about “Corporate Profits as a percentage of GDP” being at or near an all-time high, which I charted in my post. A subpoint was that “The bulk of corporate profits accrue to high-income taxpayers and the wealthy, through divdends and increases to stock values,” which I demonstrated quite clearly by showing the breakdown of Equity Ownership in my second post.

            My only mention of the word “income” in the original post was only as part of the phrase “income tax discussion.” I deliberately avoided using the term “add to the income of” and instead used the phrase “accrue to” so as to include both dividends (income) AND increases to stock value (wealth and/or income).

            As I said, “… any way you look at it, the wealthy own the vast majority of Equities, and receive the vast majority of the benefits of said ownership.”

            This is true whether one is discussing income, wealth, or both.

          • StilllHere

            You showed no evidence that corporate profits accrue to high income taxpayers.  In fact, you haven’t shown any relationship between corporate profitability and dividend payments.  Moreover, valuations have fallen considerably over the last 12 years so profitability increases are not translating into stock price increases.  You have failed to show any causal relationship whatsoever, that’s why I can’t get past your first point.  I don’t think you know what you’re talking about.  

          • hennorama

            Okie dokie then. Perhaps you’d care to try to DISPROVE anything I’ve stated. Best of luck.

          • StilllHere

            That’s not my burden.  You draw unsupported conclusions that frankly no one else was much interested in, and when you are questioned, you concede.  I think I’ll take the path of everyone else at this point and ignore your post.  Have a good one.

  • BEC49

    Tom, here’s a fiscal cliff story idea. By the mid-’90s Canada was in a worse fiscal position than the US is now. Yet today Canada is one of the fiscally strongest countries in the OECD thanks to a cleverly conceived and executed campaign that required sacrifice from everyone. The Economist’s Washington correspondent Greg Ip had a ringside seat as he was then economics writer for Canada’s Financial Post. There are many other excellent guests to choose from, and you might even be able to get plain-talking David Dodge, one of the most senior govt officials at the time who went on to head the Bank of Canada. I don’t know if the Canadian experience offers any lessons for the US, but your listeners might well find the little-known story interesting. 

    • hypocracy1

      Sounds like socialist magic…

      • harverdphd

         Don’t let the door hit you in the hypoCRACy1 on the way out

      • Pointpanic

        Wait ,I thought it was the “free market” that wielded the “magic hand”.

  • grfiv

    The tax rate on interest and dividends is often referred to as a tax break for the rich, but it also affects retirees and retirees have been abused by ultra-low rates since 2007 and are struggling.

    • hennorama

      There is no Federal “tax break” on interest income, other than for municipal bond interest.  Non-muni interest is taxed at ordinary rates and receives no “tax break” at present.

      At the Federal level, qualified dividends are taxed at a 0% rate if you are in either the 10% or 15% marginal tax brackets.  That’s TAXABLE income (Adjusted Gross Income, minus deductions, minus exemptions) of up to $70,700 Married Filing Jointly) or $35,350  (Single).  In the higher brackets, qualified dividends are taxed at a maximum rate of 15%.

      If one is dependent on “ultra-low rates” currently paid on bank deposits, etc., for a significant share of one’s income, there are alternatives (such as dividend-paying stocks, preferred stock, REITs, etc.).  But your point is well-taken.  Those who ARE dependent on interest income have seen it fall to near zero.  It’s almost as if they banks expect one to pay THEM to hold one’s funds.

      Sadly, this low-rate environment has actually resulted in some NEGATIVE interest rates, crazy as that may sound.  Royal Bank of Canada has recently imposed negative rates on certain customers holding select European currencies, for example.

      Source:http://www.bloomberg.com/news/2012-10-09/rbc-offers-negative-interest-rates-on-danish-krone-swiss-franc.html

      • grfiv

        Your response is more sophisticated than my comment warranted. I am merely reflecting on the fact that a lot of fixed-income retirees were counting on 6% and instead are getting 1% or less and paying income taxes to boot. It is my impression that when many people talk about tax rates on interest and dividend income they’re thinking of Mitt Romney rather than their Aunt Millie.

        • hennorama

          Thanks for your reply. I understand your comments.

          The post’s “sophistication” was meant to not simply as a response to you, but to:

          A) dispel the notion that interest income gets a tax break

          B) clarify how qualified dividends are taxed, and that most taxpayers actually pay no tax on them

          c) point out some alternatives that have higher yields

          D) commiserate with “a lot of fixed-income retirees” depending on that income

          These “fixed-income retirees” are likely not paying any tax on their dividend income, however, as described in my post.

          The lower rates on qualified dividends (and long-term capital gains) greatly benefit higher-income taxpayers, due to the large differential between their higher marginal tax rates and the maximum Federal tax rate on qualified dividends. This differential ranges from 10 percentage points for those in the 25% bracket, to 20 percentage points for those (such as the Romneys) in the 35% bracket.

          This amounts to a 40% tax savings on these dividends and long-term capital gains for those in the 25 percent bracket, and a 57% tax savings for those in the 35 percent bracket.

          THAT’S why they LOVE those lower rates, and will fight VERY hard to retain them.

          Thanks again for your response.

  • Steve__T

    Disqus

  • harverdphd

     The simple solution, then, is not to borrow money.  In 8th grade we learned interest is money paid for the use of money.  But then, borrowing and paying back money is trading work over time…literally

    • OnPointComments

      Over my career I have done work for many, many state and local governments.  Nearly every one has huge infrastructure debts and huge unfunded liabilities for pensions and healthcare.  As long as politicians have the ability to make very expensive promises with the knowledge that the bills won’t come due until after they leave office, they will continue to make very expensive promises.  As you said, the simple solution is not to borrow money, or at a minimum to make sure that there is sufficient revenues set aside to assure repayment of the liabilities.

  • Bruce94

    Thanks OnPoint for having an informative and knowledgeable panel to discuss a topic of real impact to most Americans whether they pay taxes or not…unlike the show Tuesday that featured an excess of secessionist claptrap of interest to only a few delusional TNM types and their GOP sympathizers.

    This is not to say that conservative Texas Republicans can’t contribute meaningfully to fashioning tax reform and increasing revenues.  Surely, our elected representatives in Washington whether to the Left or Right can walk and chew gum at the same time, that is, can reform the tax code, raise marginal rates, cut defense and other federal spending, and reform entitlements in a way that neither shreds the social safety net, nor stifles business.

    We don’t have to look that far in our history for examples of  successful efforts to address federal deficits in a fair and equitable manner.  The “People First” agenda of Bill Clinton offers some insight.  Clinton presided over the longest period of peace-time economic expansion in U.S. history with the top two marginal tax rates significantly higher than they are today.  His approach balanced spending cuts with tax hikes on the wealthiest Americans, a new energy tax as well as a new tax on benefits received by nearly one-fourth of Social Security recipients.  At the same time, Clinton expanded the EITC providing relief to low-income families by reducing their fed. income tax and FICA burdens.

    In addition, public investments in education, training and infrastructure by Clinton created the conditions necessary for an historic improvement in social mobility and expansion of the middle-class.  Economic growth soared, unemployment dropped to the lowest level in 30 years, joblessness among ethnic and racial minorities fell to historic lows, home ownership rose to an all-time high AND a 236 billion dollar surplus was handed to George W.

    The economic expansion that occurred under Clinton shows just how destructive the conservative obsession with maintaining the Bush-era tax cuts for the wealthy is.  This obsession together with an agenda to reduce the estate tax and allow the wealthy to move more of their income to capital gains, represents the biggest obstacle to getting our fiscal house in order and once again creating a dynamic, growing economy.

    • StilllHere

      Why should we focus on tax policy during a bubble when we’re in the midst of a tidal wave of deleveraging?

  • http://twitter.com/cmbenda Carl Benda

    One of the comments on air was that the solution can not be just on spending.  Not true.  Everyone makes this decision every day.  Most can not say, I’m going to increase my income and so I won’t have to reduce my spending to meet my current income.  What most people do is ADJUST their spending to MATCH their income.  The government should ADJUST their spending to match its income.  WHY is this so VERY difficult to understand when 9 year olds mowing lawns understand this EVERY DAY.

    • Mike_Card

      Don’t repeat that inane teabagger trope here.  The government is NOT a “family sitting around the kitchen table.”  Or maybe you should go to high school and learn some basic civics.

      • crandle27

        Been there done that.  Maybe you should take a business course or perhaps move to Greece.

        • jefe68

          What is it with you right wingers and Greece? We are not Greece. Why not use another small country for your hyperbole, such as Denmark or Iceland?

        • StilllHere

          Greece is our future for sure.

      • Ray in VT

        Come on, Mike.  We can do better than that.  I’d hate to have a first time commenter have the well poisoned.  I know that it gets pretty contentious some times, but at least we could cite some facts about how the Federal government’s collection relative to GDP is at a 60 year low.

        http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=205

        These numbers look to be in line with the historic spending tables.  I get sick of the same arguments too, but let’s give the guy a chance.  We could balance the budget with all cuts, it’s just that I don’t think that most Americans would like the outcome.

        For instance, in FY 2011 defense, social security and medicare took up about 80% of federal revenues (1.808936 of 2.3035 trillion).  That leaves about 500 billion what went out to Health and the VA, or Income Security or Education, Interest and Other Functions (Function and Superfunction titles).  I’m sure that some would like to see some of those drastically reduced or eliminated, just so long as they don’t hurt them, but those would be some pretty tough choices.

      • crandle27

        The government should not steal money or spend recklessly.  Maybe you should take a business course and read Ayn Rand and get off your lazy ass

        • Pointpanic

          The Government isn’t stealing ,money, the multi-nationals and Big banks are. Why blame the government when it Wall St that crashed the economy ,got bailed out by taxpayers who also provided bonuses for WallSt, henchmen?

          • FredP11

            Totaly agree. Wall Street should not have been bailed out their was not implied insurance policy.  Every wall stree firm that could not pay it’s debts should have closed permanently.

          • StilllHere

            No doubt, same with every mortgage holder, pay up or get out.

        • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

          You forgot to call Mike a moocher, a “47%er”.

        • StilllHere

          Democrats want a bigger government; stealing is the only way to get it and spending recklessly is how they buy votes to keep themselves in power.  

      • pete18

        Demand a
        balanced federal budget,
        simplify the tax system, limit annual
        growth in federal spending, reduce earmarks, and reduce taxes.

        Yes, hopelessly
        “inane” ideas. What are those people thinking?

    • StilllHere

      Well said Carl, but even starting to think like that would be open for criticism by those who want to grow and perpetuate the welfare state.  

  • Benburrito

     If the republicans can’t actually get any legislative work done because
    they are beholden to a non-elected blowhard who wrote his pledge at the
    age of 12, they have ceased to be a viable party. The party should be
    giving them cover and support to make deals and pass legislation, and
    are instead at the mercy of talk radio and other non-elected entities
    with purely private interests.

    • hennorama

      Legislators from both the Senate and the House can’t focus on legislation because their main job is actually fundraising for their next election.

      The most expensive race in the House (Florida’s 18th, where Allen West was defeated by Patrick Murphy) had nearly $25 MILLION in total spending by the candidates and outside groups.  Over a 2 year term, that’s about $33,800 per DAY.

      In the Senate, it was even higher – over almost $82 MILLION in total spending in Virginia, where Tim Kaine was elected.  That’s over $37,250 EVERY DAY for 6 YEARS.

      All legislators have to look at this, and know it will be even higher next time around.  Money is such a pernicious problem, it is difficult to wrap one’s mind around.  It’s no real surprise that little gets accomplished.

      Source:http://www.opensecrets.org/overview/topraces.php?cycle=2012&display=allcandsout

    • pete18

      Actually, they are at the mercy of the voters of their state.
      Making Grover Norquist some sort of Svengali character in this drama is an absurd notion. If the voters weren’t interested in keeping taxes low and government small,
      the Norquist pledge would have no sway with anyone.

  • Benburrito

    It’s good that they are talking about reforming the filibuster, and make people stand up for their convictions as opposed to blocking things simply by stating they disagree with it coming to a vote.

  • Pointpanic

    Allison, who called later in the hour, suggested all all of us should ‘sacrafice a little something for the country”. WHile her heart may be in the right place, I hope she’ll rethink such sweet sentiments when she finds out that Itwas the bailed out Wall St bankers who crashed the economy, who got bonuses on top of the bailouts, and who now have the gall to demand cuts in social security for the rest of us while gangsters like Lloyd Blankenfein pull in$16 million a year.So who really should make the “sacrafice”?

    • FredP11

      I totally agree.  Any
      business that is not viable should be closed.  All of those banks should have been shuttered
      like Lehman.  Gone. No bailouts.  It’s not right.

      • FredP11

        If you think your money is safe, let’s everyone go ahead and pull out all your cash from all your accounts and put it in a safety deposit box.  The interest rate won’t be that much different…  Perhaps the money is not really there….

        • Pointpanic

          Good point ,Fred. Scary.

  • Gregg Smith

    This is crazy. To avoid the “fiscal cliff” Congress needs to agree on how to cut $1.2 Trillion over 10 years. That’s 120 billion a year. That won’t fix squat, it’s a drop in the bucket. They can’t even do that. All this fuss is for nothing more that another kick of the can.

    To put it in perspective consider: In the last four years of the Bush Presidency the deficit averaged about $281 billion per year. The deficit under four years of Obama averaged $1.17 trillion. Notice, Congress could meet the requirement just by cutting the  deficit less than the amount over a trillion. 

    So, the average deficit over four years of Bush has quadrupled after four years of Obama and congress cannot figure out a way to cut even one seventh of the difference? It’s a disgrace. 

    • hennorama

      Technically, the sequestration is over 9 years, from 2013 through 2021.  And the “cuts” are not actual reductions in spending, but are only reductions in the overall projected growth in spending.

      But I won’t quibble with your main point – 1.2 trillion over 9 years is small – far less than 1% of GDP.  Even a total of $4 trillion over 10 years (Pres. Obama’s rumored deficit reduction proposals) is not terribly significant, amounting to 2.5% of current GDP.  But we need to start somewhere.

      This is an eye-opening article from back when sequestration came about, in Nov. 2011.  It discusses and illustrates Federal spending with and without sequestration.   There’s also an update of the same article, and a 394 page report showing the sequestrations, line by line.

      http://mercatus.org/publication/federal-spending-without-sequester-cuts
      http://mercatus.org/publication/update-federal-spending-without-sequester-cuts-fy2012-2021
      http://graphics8.nytimes.com/packages/pdf/national/20120915-sequester/STAReport_sequester.pdf

      My recommendation is that everyone voice their opinion to their Congressional legislators and the President.  You can find out how to contact Congress here (or use your favorite search engine):
      http://www.congress.org/congressorg/mail/?alertid=61046526&type=ML

      Contact the President here:

      http://www.whitehouse.gov/contact

      • Gregg Smith

        Reducing the deficit is by definition reducing the rate of growth. The task for the committee was to reduce the deficit $1.2 trillion over 10 years (not 9) or the sequestration would happen. They’ve been kicking the can for a year now.

        • hennorama

          Thanks for your response. Looks like we were talking about different things – deficit reduction vs. spending “cuts” from sequestration. So .. we are both correct. My apologies. Again, I agree with your main point that these are not huge “cuts” overall.

  • TinaWrites

    Thanks, Tracy Estabrook Boal.  As I said, I didn’t have time to look up what I’d heard as I usually try to do (maybe a half hour before), if I’m not solidly positive about my info, so thanks for the correction.  I had heard, or thought I’d heard that they got their salary for life with free health care.  But, no, I do think that federal workers deserve  benefits, as do state and municipal employees except for the bad apples, but that must be established by good review practices.  I don’t like cronyism employment at all, and think that civil service examinations should apply in  federal, state, and municipal governments, altho there are probably some jobs where that does not apply.  That said, we had extraordinary corruption follow the exceptions to those testing requirements in one place that I lived for years, and life was horrible there except for the connected, or those just movin’ thru. 
    I think I said it in this post (thanks to Discus, I can’t easily access it, tho), that I think that the degree to which the people representing their constituents are NOT doing that representing is bordering on treasonous.  Why should Grover Norquist get so much more representation than the rest of us??!! Thanks for your considerate way of correcting my information.  If you’re a public employee, I am pleased to have someone working for us who is so articulate.  I hope this posts okay, my computer is acting up; I’m pretty certain this post will be out of order, rather than next to yours. 

  • http://www.facebook.com/people/Tom-Dixon/747968308 Tom Dixon

    Since I can’t find the story and your reduction of contacts to comments at the bottom of a story, I post here that the “Secession” segment you had on the other night is quite possibly the best indication of how insidious and facile your program has become – attempting to make equal arguments where there are none for Republican (non) policies and then trying to push the idiots with the pots on their heads as real stories.  Please get real –  the best program you have had for a long time was your interview with Kurt Vonnegut where he literally had to tell you to shut the f.. up so he could finish a thought and story about Mark Twain.

  • garbanzobean1

    I’ve always thought of the mortgage interest deduction as an incentive to get more Americans into homes and to therefore become more invested in their communities. Because of the way mortgages work, the deduction decreases gradually over the life of the loan. I can say that without this deduction, I could never have purchased a home. The deduction totally made it possible. Of course, I don’t think that the rich need such incentives, but the middle class definitely does. Ultimately, the goal of tax reform should not be to redistribute wealth up or down; it should  be to help our society as a whole.

  • ExcellentNews

    Alleluia! The republican shills have found a solution to keeping the billionaire oligarchs whole and hale, while socking it to the middle class – despite losing the election!

    Step 1: Spin the populace with talk about “closing loopholes”… let the peons think that it is the Koch Brothers, job-exporting CEOs, or vulture capitalists that  are losing their perks.

    Step 2: Cut deductions that benefit upper-middle class voters who are predominantly liberal, highly-educated Democrats.

    It is so brilliantly diabolical! Like Bush “tax cuts for job creators” (25,000,000 jobs leaving the US for Asia, thank you!), “war on terror” (3.1 TRILLION funneled in the accounts of private contractors, thank you!) and so forth.

    America, you were great because of a strong middle class. But that is over. Welcome to the club of banana oligarchies, where a few insider billionaires lord it over the masses of desperate peons… 

    • ExcellentNews

        No wonder that education for the masses is the #1 program that Republicans want to weaken. They should not worry… given the comments here and the insane views aired by the corporate shill invited on the program – they have already succeeded.

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Aug 20, 2014
A man holds his hands up in the street after a standoff with police Monday, Aug. 18, 2014, during a protest for Michael Brown, who was killed by a police officer Aug. 9 in Ferguson, Mo. (AP)

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