OT: How to deal with our skyrocketing deficit...

[FLaw47]

What is "wealthy?" What is a "fair share?"

I'm not wealthy, but I pay 2-2.5 times the average federal effective rate. I pay double-digit multiples of the average actual federal tax payment. I use very little government services relative to the general public.

Am I paying my "fair share?"

Why should "feeling it" be used as a way to logical way to enact tax policy?

"Feeling it" is a decent subjective measure because the marginal utility of a dollar reduces the more money you have. For example, someone living paycheck to paycheck will be impacted by a 5% increase in taxes than you or I would. As such, it only makes sense to contribute more.

You also take advantage of Government services more than you act like you do. Sure, you're probably taking advantage of direct benefit programs less than the poor but you also benefit more from roads, education, property protections, FDIC insurance, etc etc (indirectly) than you probably think you do. We're all in this together.

Without getting into what an exact % fair share is, fair share to me is things like capital gains being taxed as income (why should money you didn't work for be taxed less?) and reverting the pass through income back to where it was pre-Trump.

I know you have specific objections to the AMT but I'm not sure I've ever heard what they were and, as I'm not subject to it myself, am not intimately familiar with how it works. My understanding is that it basically sets a floor for how much you'll pay in taxes (if you otherwise would have had a lower burden because of write-offs and the like). What's unreasonable about that (or incorrect with my understanding)?

 

[scotchtiger]

"Feeling it" is a decent subjective measure because the marginal utility of a dollar reduces the more money you have. For example, someone living paycheck to paycheck will be impacted by a 5% increase in taxes than you or I would. As such, it only makes sense to contribute more.

You also take advantage of Government services more than you act like you do. Sure, you're probably taking advantage of direct benefit programs less than the poor but you also benefit more from roads, education, property protections, FDIC insurance, etc etc (indirectly) than you probably think you do. We're all in this together.

Without getting into what an exact % fair share is, fair share to me is things like capital gains being taxed as income (why should money you didn't work for be taxed less?) and reverting the pass through income back to where it was pre-Trump.

I know you have specific objections to the AMT but I'm not sure I've ever heard what they were and, as I'm not subject to it myself, am not intimately familiar with how it works. My understanding is that it basically sets a floor for how much you'll pay in taxes (if you otherwise would have had a lower burden because of write-offs and the like). What's unreasonable about that (or incorrect with my understanding)?

On capital gains, I think there should be some cap for the money that is taxed at the lower rate. Maybe $500K per year or something. Everything above that is taxed at ordinary income rates. That solves the billionaire paying less than his secretary issue.

The issue with AMT was that it didn't keep up with the times once it was originally put in place. It was never intended to impact upper-middle earners and because of wage growth relative to AMT policy updates, it began creeping into the returns of those that shouldn't have been impacted.

The new tax bill wisely addresses this by increasing the income limit of those that will be affected to $500K individual and $1M married. Good, smart tax policy move.

 

[FLaw47]

On capital gains, I think there should be some cap for the money that is taxed at the lower rate. Maybe $500K per year or something. Everything above that is taxed at ordinary income rates. That solves the billionaire paying less than his secretary issue.

I don't understand. That billionaire didn't work less for their capital gains than I do. Just count the whole thing as income and tax accordingly; there's already tax brackets. Is there a compelling reason that a billionaire's capital gains should be taxed more than yours and mind?

The issue with AMT was that it didn't keep up with the times once it was originally put in place. It was never intended to impact upper-middle earners and because of wage growth relative to AMT policy updates, it began creeping into the returns of those that shouldn't have been impacted.

The new tax bill wisely addresses this by increasing the income limit of those that will be affected to $500K individual and $1M married. Good, smart tax policy move.

I'm not really interested in the original intent of the AMT but with how it actually affects things. What makes it smart tax policy to not ensure people in your income range are paying taxes? Or what am I misunderstanding?

 

[scotchtiger]

I don't understand. That billionaire didn't work less for their capital gains than I do. Just count the whole thing as income and tax accordingly; there's already tax brackets. Is there a compelling reason that a billionaire's capital gains should be taxed more than yours and mind?

I'm not really interested in the original intent of the AMT but with how it actually affects things. What makes it smart tax policy to not ensure people in your income range are paying taxes? Or what am I misunderstanding?

The billionaire would be paying normal income taxes on the majority of his distributions (everything above $500K). Normal people would still benefit from capital gains rates though in my scenario.

I was paying taxes regardless. And I was paying a high rate of taxes regardless. AMT basically forced you to calculate your taxes using two different methodologies and if the AMT methodology came in a bit higher, you had to pay an "AMT penalty" to make up the difference. This difference was usually a few thousand dollars. It generally isn't a very material % of the overall tax liability for folks in the now-excluded income range.

Now that the $1M limit is set for married couples, my CPA can save the time of going through that process. This was a smart move that simplifies the tax system for 99%+ of the population.

 

[1Clemzunfan]

@FLaw47 @1Clemzunfan and others. Thought of this while sitting at the Hampton inn waiting for my two year old to wake up...

If the deficit is roughly $1B and there are $325M people in the US, everyone could contribute an extra $3 and close the gap. That’s three American dollars. 12 quarters. The cost of a cup of coffee.

Seems easy enough to add a $5 flat fee to all Americans’ tax bill, regardless or age, income, whatever. Family of four pays $20.

All of a sudden we are running a $600M surplus and we can pay down the debt. Everyone pitches in. Problem solved.

Add in some of the cost containment ideas ITT and we’re reallly in business.

What am I missing?

I don’t like a tax increase, but will happily pay $15 per year for my family of 3 to solve the problem.

The annual deficit is almost $1 Trillion a year. That's trillion with a T, not billion. Your plan would fall about $999 Billion short.

Also, we might have 300 million people, but all of those are not taxpayers. You have to look at retired and children and take them out at the least. Then remove the disabled and those making less than $10k a year. You are probably looking at around $10k to $15k at least, per individual tax payer, to get close to closing the gap and that isnt happening. A family of 4 making $40k cant write a check for $30k in extra taxes. Not happening. Heck, a family making $100k couldn't afford that.

It's a big problem. There is no way to resolve it in a meaningful way with the tax cut bill we just passed. I wish there was, but there isn't. We will need BOTH tax reform and entitlement reform as well as defense spending adjustments to close the gap. Can't be just one or the other.

 

[scotchtiger]

The annual deficit is almost $1 Trillion a year. That's trillion with a T, not billion. Your plan would fall about $999 Billion short.

Also, we might have 300 million people, but all of those are not taxpayers. You have to look at retired and children and take them out at the least. Then remove the disabled and those making less than $10k a year. You are probably looking at around $10k to $15k at least, per individual tax payer, to get close to closing the gap and that isnt happening. A family of 4 making $40k cant write a check for $30k in extra taxes. Not happening. Heck, a family making $100k couldn't afford that.

It's a big problem. There is no way to resolve it in a meaningful way with the tax cut bill we just passed. I wish there was, but there isn't. We will need BOTH tax reform and entitlement reform as well as defense spending adjustments to close the gap. Can't be just one or the other.

Ha, dropped an “illion.” That’s what I get for mixing drinking and math.

At that multiple, the average family of four would need to pay $30K in taxes just to cover their non SS and Medicare share of the budget.

Doesn’t it seem silly for someone not even covering their share to ask someone else to pay more? I mean, they’re already being supplemented and are complaining that I’m not paying enough?

 

[firegiver]

Fire the cut taxes and spend republicans.

 

[FLaw47]

Ha, dropped an “illion.” That’s what I get for mixing drinking and math.

At that multiple, the average family of four would need to pay $30K in taxes just to cover their non SS and Medicare share of the budget.

Doesn’t it seem silly for someone not even covering their share to ask someone else to pay more? I mean, they’re already being supplemented and are complaining that I’m not paying enough?

Well I'm covering my share and am asking both of us to pay more. Does that count for anything?

 

[scotchtiger]

Well I'm covering my share and am asking both of us to pay more. Does that count for anything?

Sure. It's much better than someone not paying their share asking others to pay more. Respect for that.

I have zero respect for someone not paying their own way trying to dump the burden on others.

I still believe I pay my fair share. A 25%ish effective rate and huge overall tax liability is plenty. The problem is the vast majority of Americans who are net negatives on the P&L ledger.

One cost cutting idea that I haven't seen ITT is to increase the eligibility age for Medicare in addition to SS. Phasing it up to age 70 over time would save a bunch of money from a huge expense item.

My dad just retired at age 70. No big deal. If you want to retire early, just pay for your own retirement and healthcare until that point.

 

[CUAngler]

 

[nytigerfan]

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the Wall Street Journal is liberal propaganda. Oh, wait...

 

[CUAngler]

 

[firegiver]

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Doesn't matter, I wont be here when the bill on the debt comes due. Not my problem.
-DT ... probably

 

[FLaw47]

Doesn't matter, I wont be here when the bill on the debt comes due. Not my problem.
-DT ... probably

No, he ACTUALLY said that.

https://amp.businessinsider.com/trump-debt-crisis-fine-wont-be-here-report-2018-12

 

[Rychek4]

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Big tax cuts without offsetting spending cuts, so much for the Fiscally Conservative party.

 

[CUAngler]

Tax cuts don't quite seem to be paying for themselves like we were told.

 

[FLaw47]

Tax cuts don't quite seem to be paying for themselves like we were told.

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You stupid libtard. We just didn't cut taxes enough. If we cut taxes more it'll start to trickle down! /s

 

[hopefultiger13]

Fair discussion. Clinton did a great job of stabilizing but the last 3 in office have spent like drunken sailors. At least the last two have improved the economy, but there has to be a breaking point. It’s a scary problem we all collectively share.

This is true, BUT he also had substantial help from Republican especially in the House. Which brings us back to one of the points above. It's going to take a bipartisan effort. I'm a moderate, but given the ultra conservative nature of the board, I'll suppose that I represent the loony left here.

I have no problem with our Defense Spending. Personally, I'd like to see it go back up to about 7 percent or so of the budget and wouldn't be upset if it got to around 10%. It's a mean old world out there and there are plenty of folks that don't like us. Furthermore, WE are the ones helping out... no one is going to ride to our rescue if we get in trouble. If we want to survive, we'd better be willing and able to kick ass whenever and wherever.

Social Security. I like the program, but DAMNIT, congress needs to quit spending out of the pool of cash. The way I understand it, SS would be just fine if we didn't use the money for anything else. Possibly we need to up the age a bit as we are living longer now, but I say keep this.

Health Care. We have to stop the amount we are spending here. There's lots of ways to skin this cat and I honestly don't know which way is best. For one, the government should be able to negotiate really good deals with Big Pharma. That doesn't happen thanks to lobbying and there's plenty of blame for both parties here. I'm a capitalist, but there seems to be something fundamentally wrong with helping people for profit... It kind of remind me of rich televangalists saying send me your money and I'll help you get to know Jesus. I'd actually be open to some form of universal health care and optional private insurance if it helped bring down prices. Again, I don't know enough to offer much in the way of solutions, but the spending in this area HAS to come down. In the absence of good ideas, I'll look around the world for countries that do a better job for less money (that's not a difficult task) and slavishly copy them.

Taxes. FDR taxed the shiit out of the rich in the early 30s and that catapulted the country right out of the Great Depression and fueled the rise of the middle class in America. Reagan cut the taxes on the rich and other Republican Presidents cut those taxes further. Unsurprisingly, the numbers of poor AND rich increased while the middle class shrunk. IMHO, Trump's latest cuts were totally unnecessary. The rich in this country were doing just fine w/o the latest tax cuts. You want to cut the tax rate on companies (especially small businesses? Fine by me). The rich folks did not need a tax break. I think the bottom line here is that to get out of our debt, we are all going to have to pay a bit more, so taxes are going to HAVE to go up, but I have no problem with matching that increased Tax with spending cuts and legislating that the savings go to reduce the debt.

 

[1Clemson]

This is true, BUT he also had substantial help from Republican especially in the House. Which brings us back to one of the points above. It's going to take a bipartisan effort. I'm a moderate, but given the ultra conservative nature of the board, I'll suppose that I represent the loony left here.

I have no problem with our Defense Spending. Personally, I'd like to see it go back up to about 7 percent or so of the budget and wouldn't be upset if it got to around 10%. It's a mean old world out there and there are plenty of folks that don't like us. Furthermore, WE are the ones helping out... no one is going to ride to our rescue if we get in trouble. If we want to survive, we'd better be willing and able to kick ass whenever and wherever.

Social Security. I like the program, but DAMNIT, congress needs to quit spending out of the pool of cash. The way I understand it, SS would be just fine if we didn't use the money for anything else. Possibly we need to up the age a bit as we are living longer now, but I say keep this.

Health Care. We have to stop the amount we are spending here. There's lots of ways to skin this cat and I honestly don't know which way is best. For one, the government should be able to negotiate really good deals with Big Pharma. That doesn't happen thanks to lobbying and there's plenty of blame for both parties here. I'm a capitalist, but there seems to be something fundamentally wrong with helping people for profit... It kind of remind me of rich televangalists saying send me your money and I'll help you get to know Jesus. I'd actually be open to some form of universal health care and optional private insurance if it helped bring down prices. Again, I don't know enough to offer much in the way of solutions, but the spending in this area HAS to come down. In the absence of good ideas, I'll look around the world for countries that do a better job for less money (that's not a difficult task) and slavishly copy them.

Taxes. FDR taxed the shiit out of the rich in the early 30s and that catapulted the country right out of the Great Depression and fueled the rise of the middle class in America. Reagan cut the taxes on the rich and other Republican Presidents cut those taxes further. Unsurprisingly, the numbers of poor AND rich increased while the middle class shrunk. IMHO, Trump's latest cuts were totally unnecessary. The rich in this country were doing just fine w/o the latest tax cuts. You want to cut the tax rate on companies (especially small businesses? Fine by me). The rich folks did not need a tax break. I think the bottom line here is that to get out of our debt, we are all going to have to pay a bit more, so taxes are going to HAVE to go up, but I have no problem with matching that increased Tax with spending cuts and legislating that the savings go to reduce the debt.

Rational. Sadly, none of this or any other sane policy has chance as it lacks ardent extremism (left and right) necessary to elect a congress to enact any of it.

 

[FLaw47]

Rational. Sadly, none of this or any other sane policy has chance as it lacks ardent extremism (left and right) necessary to elect a congress to enact any of it.

I think @hopefultiger13 's healthcare stuff would have broad Democratic support. Hell, even my very conservative parents support single payer healthcare. I think it's more than conservative politicians reject these sort of measures almost out of hand and healthcare tends to be a lower priority for GOP voters so there isn't a lot of movement on that side of the aisle.

Same thing with taxes. Those two broad proposals also have broad public support.

 

[CUAngler]

Party of the fiscally conservative.

Now that the deficit is being run up and revenue is down we can focus on true cost cutting measures like entitlement reform.

 

[1Clemson]

I think @hopefultiger13 's healthcare stuff would have broad Democratic support. Hell, even my very conservative parents support single payer healthcare. I think it's more than conservative politicians reject these sort of measures almost out of hand and healthcare tends to be a lower priority for GOP voters so there isn't a lot of movement on that side of the aisle.

Same thing with taxes. Those two broad proposals also have broad public support.

I agree that it is rational and would probably be broadly supported, but it is the extremes of both parties that gets elected. Thus, any universal healthcare would be embellished to the point of unaffordability by Democrats and excoriated as socialism by Republicans.

Same extremism with taxes, immigration, education, foreign policy, infrastructure investment, science, addressing poverty, etc. As is the way of American politics, it isn't about what is good for the country as a whole, it's about feeding each party's base. Tribalism, jingoism and xenophobia reign supreme.

 

[aCase4thetigers]

I honestly think we will keep inventing new financial tools (like derivatives) and layering them on top of each other to keep the system going for hundreds more years.

Would you expound on that.

 

[Rychek4]

Would you expound on that.

Basically I agree it is a house of cards, I just see another century of stacking more cards before it comes crumbling down. It's hard to expound on tools that have yet to be invented, but something like Milton Friedman's helicopter money might be an example of unconventional monetary policy that has yet to be attempted (as far as I know).