The ‘Post of the Day’ is about tax reform
By Dan
Note from Dan: This policy-oriented and nonpartisan post comes form Ron May. He posted it to Thursday’s OPEN thread.
“I promised that I would continue to comment about tax reform in the days ahead. Previously I made suggestions about how to make changes to Social Security in order to make it more financially stable. Today I want to begin my comments regarding taxes and how to reform them in an equitable way.
If I was to ask you what the largest “expenditure” is in the federal budget I’m sure I would get some interesting answers. The Office of Management and Budget has recently said that our projected deficit for this year’s federal budget is going to be in the neighborhood of $1.4 Trillion. There are all sorts of proposals floating around to reduce that number. Some are actually worth looking at. Some, in my view, should be cast aside without much thought.
The Office of Management and Budget outlines the following major expenditures in the 2012 Budget. Defense & Security ($800+ Billion); Medicare & Medicaid (Approx. $700 billion); Social Security (Slightly less than $700 Billion); Other Mandatory Programs (Approx. $610 Billion); Domestic Discretionary Programs (Approx. $475 Billion); Interest on the Debt ($200 Billion) and last but not least Tax Expenditures ($1.1 Trillion).
Did you see that last item? The biggest expenditure in our federal budget each year is the total cost for individual & corporate tax expeditures. If we eliminated that one item we would eliminate nearly 80% of our annual deficit. You say, well that should be easy. But you would be wrong. A good many of you enjoy deducting your mortgage interest, charitable contributions, state and local taxes, etc. from your annual tax return. You do if you itemize anyway. Corporations like their tax expenditures as well. Nonetheless, if we are to be successful at tax reform, in my view, we have to begin with the biggest item in our federal budget which is our tax expenditures.
I will close this post by suggesting there are some guidelines which need to be in place as we reform tax expenditures. First, acknowledging that tax expenditures are, in fact, spending. Second, like all forms of federal spending, tax expenditures should be assessed for cost effectiveness. Third, “upside down” subsidies should be made more fair and be better targeted. Fourth, eliminating tax expenditures benefitting seniors living on Social Security, working families, and people with very low incomes would be misguided. Fifth, the tax code should be scrubbed of ineffective business subsidies. Last, common sense, fiscally responsible reforms to tax expenditures do not have to wait for comprehensive tax reform.
Well folks, there’s some of my thoughts on beginning to seriously attack the deficit we now face and the tax and budget reform we need to put in place to put us on a different path. In future posts I will outline more specific ideas on these matters.”
September 14, 2012 - 2:43 PM
I knew the OP was going to be stupid, and Ron didn’t disappoint. “Tax expenditure”. LOL. It’s not “an expenditure” when the government never had it in the first place. This is more hocus pocus nonsense. Again to the J. C. Penney example, it’s the same as saying Penney’s paid me $30 when I bought a sweater marked $30 off.
I can’t decide if Ron’s playing a game here, or if he’s truly not smart enough to know the difference.
Ron, I’m not sure what an “up-side down subsidy” is, but I agree with your other points, which if “effectively implemented” should go a long way toward determining what the levels to which personal and corporate tax rates should ultimately be re-set. By the way, I have grave misgivings about the “effectively implemented” part…
Ron
Your posts on social security and tax reform show a great deal of thought and excellent questions and suggestions. Re: social security: I don’t believe raising the age for drawing benefits is the answer. But I have long held that lifting the cap on the payroll tax was the best way to deal with the shortfall. At this point a disproportianate share of the burden for paqying for social security falls upon the upper middle to lower income population. I believe that step plus establishing a plan to begin paying off the debt to the trust fund that has been accumulated over the years will make social security work for all future generations
as long as Congress and Presidents stop treating the fund as their personal bank for balancing the budget..
As for tax reform, it is time for us to end the corporate welfare in the form of tax credits and huge writeoffs for the corporate giants. They have no loyalty to the United States because virtually all are global based and they take advantage of our tax system to accumulate huge amounts of capital while moving jobs to China, India, Pakistan, Mexico,Indonesia, and anywhere they can get cheap labor.We must begin to reducethe deficit with a goal of getting the budget balance within ten years and after that to begin to reduce the debt for our long term financial help. We are kidding ourselves if we think that can happen simply by making cuts There are efficiencies that can be found. Medicare can be given the authority to negotiate drug prices. Foreign aid commitments can be reduced. Duplicative services can be eliminated.
Our military can be trimmed substantially and still be the largest, most powerful, and efficient military in the world. We have to stop being the world’s policeman and useour military only where our own interestsaare substantially at stake. We have to start treating all income eqwually for tax purposes, whether it is wages earned, dividends, capital gains or whatever. And with all that, we are still deluded if we think we casn eliminate the deficit and start reducing the debt without paying higher taxes. There are things that our citizens see as essential including social security, adequate health care, education, research, infrastructure
among others to maintain our way of life. We can only sustain those things if we step up and pay for them. I believe those things are worth it and they make us the country we are and aspire to be. And they won’t be free.
Ron
I notice the DSCC is pouring some money into what appears to be a winnable Senate race in Indiana, much to the discomfort of the Republicans and the outside groups who had initially planned to limit their expenditures there. The number that I saw was that outside groups had spent 2.5 million there. They’ve already spemt almost eleven million in Va. running negative ads against Tim Kaine . That would be a huge pickup seat for Democrats if they can pull it off.
Hmm. I wonder if we can do our accounting the way 0bama’s Office of Management and Budget does it.
Last year, my husband was thinking of bidding $7 million for a municipal contract. He went back and forth and finally decided on just over $6.5 million. He ended up getting the job. Later, he found out through the grapevine that he could have had the job for the $7 mil.
Now, after reading Ron’s post, I’m thinking we can declare a $500,000 loss in revenue for tax purposes, for that half million we didn’t get. That’s how the 0bama admin does it.
dave,
I hope, later today, to post some ideas that I have gleaned from my research this summer on tax reform. I’ve read both Simpson-Bowles and the Domineci-Rivlin Commission Reports. There’s stuff in both with which I agree and disagree. However, there are some workable ideas in my view. It will be interesting to see what others think.
The Donnelly-Mourdock race in Indiana is hard to call. Donnelly is a 4 or 5 term member of Congress who has a “yellow dog Democrat” voting record. Mourdock is the current state treasurer who, while in that role, challenged in the courts the auto bailout and spent several million of state dollars on that case. He’s being hit on two counts for that. One the auto industry in Indiana is important. His spending of state dollars on the case while the state was laying people off and cutting appropriations is getting hammered. You are correct that the Republicans has awakened to the possibility that Donnelly could possibly win and the outside money has poured in since Labor Day. And by the way, incumbent Senator Dick Lugar is standing quietly on the sidelines and was very critical of Mourdock early in the race. If he could bring himself to say a few positive things about Donnelly before election day, Mourdock wouldn’t have a chance.
$11,000,000.00 ? Probably not true, however, I would think that all we would have to do to prduce negativity against Tim Kaine is to bring up his name.
“Last year, my husband was thinking of bidding $7 million for a municipal contract. He went back and forth and finally decided on just over $6.5 million. He ended up getting the job. Later, he found out through the grapevine that he could have had the job for the $7 mil.”
Ain’t that sweet. Hubby’s drinking from the taxpayer’s trough, raking in millions from the city, yet he & Suze boycotted city restaurants (small businesses) to punish them for the city meals tax.
Very good explanation, Suzie…But, I think that it will have to be much simpler for `you know who` to understand it.
#5 So “hubby” did some shoddy homework and ended up costing you all $500,000. Tough beans.
Ron and Dave, enjoyed your analses of tax issues and entitlements. Raising the cap on earnings subject to social security witholding is vital, as is eliminating corporate “welfare.”. I often wonder how heathy social security would be now if Al Gore’s lockbox had been implemented.
RWT2557 aka Jeff the Dodo Dolto at 9:10
Start here asnd see if you can refute this information.
http://www.huffingtonpost.com/2012/09/13/senate-races-2012_n_1879617.html?utm_hp_ref=elections-2012
Suzie, why do you have to be such a bitch? Very first words out of your mouth, “I knew the OP was going to be stupid, and Ron didn’t disappoint…”
Why?
Mr. May, my sense is you’re on the right track with your discussion. I’d like to suggest, when you have time, that you ‘abstract’ the problem a bit. Step back farther when looking at our economy. Right now you’re focused on tax reform which is OK if you’re interested in that subject only. But if you can, step back even farther and look at macro-economics. Consider the history of money. What a dollar is now. Where does money come from? What does it mean for a country that issues it’s own currency to be in debt? Can a country owe itself?
Although I’m not going to try to answer these questions here directly, I’d like to point you to a couple of links in general you may find interesting in the long run.
http://barefootbum.blogspot.com/
http://www.rationalrevolution.net/articles/capitalism_economy.htm
Frank,
The “upside down” expenditures are those that provide the largest government subsidies to those who need them the least while providing little or no benefit to those who could use them the most.
The mortgage interest deduction is the best example. Those in the current 15% tax bracket receive a benefit, if they itemize and have a mortgage, less than one tenth as big as those who are at the current 35% tax bracket. Those at the 35% bracket would likely buy a house whether they had a tax break for doing so or not.
Ain’t that sweet. Hubby’s drinking from the taxpayer’s trough, raking in millions from the city, yet he & Suze boycotted city restaurants (small businesses) to punish them for the city meals tax.
Um, it wasn’t Roanoke City.
Suzie, why do you have to be such a bitch? Very first words out of your mouth, “I knew the OP was going to be stupid, and Ron didn’t disappoint…”
Why?
I guess it’s because Ron posts so much stupid stuff.
Very good explanation, Suzie…But, I think that it will have to be much simpler for `you know who` to understand it.
Yeah, RT. I probably should have dumbed it down more.
#5 So “hubby” did some shoddy homework and ended up costing you all $500,000. Tough beans.
No, it was a case of an expected bidder having to pull out. But I don’t see why it should be ‘tough beans’. Ron doesn’t agree with you. He thinks such “expenses’ should be eradicated.
No Suzie, it’s not because someone posts stupid stuff. You may disagree with someone. Another person may be uneducated. They may even be blind to the concept of changing.
But someone making a good faith effort to hash out idea, to exchange in discussion, etc. doesn’t deserve what you spew out.
No amount of excuses will do.
Mr. May, here’s another perspective on SS from a Ph.D. economist. I routinely follow David Ruccio. You should consider doing so.
http://anticap.wordpress.com/2012/09/15/what-social-security-crisis/
The other day in class, I made two—what I thought were very straightforward—assertions about Social Security:
1. Social Security is solvent, and will be for at least 20 years (without any changes whatsoever).
2. Raising the taxable earnings base, without any other changes, would eliminate the projected deficit.
Simple, right? Except none of the students believed me. They all thought Social Security was doomed—and, while they expect to pay into Social Security, they don’t expect to receive any Social Security benefits when they retired.
So, let me share with you the information I gave to them:..
more….
But someone making a good faith effort to hash out idea, to exchange in discussion, etc. doesn’t deserve what you spew out.
Scott M,
Liberal Ron is a troll who puts out stuff to get a reaction. He (and you) knows it’s crazy as hell to count money that was never the government’s as an “expense”. My examples prove that. My guess is your outrage is very selective depending on ideology. I see plenty of “bitchiness” from leftwingers, but have yet to see a comment from you about them.
#20 Scott M, you’re trying to be rational with suzie? Weird. Just look at her irrational reply claiming Ron is a troll. Ron, of course, is one of the most reasonable, honest people on this blog. That simple fact makes him suzie’s enemy — in her mind.
Suzie’s not “being” a bitch. She is one. Read the myth of the Scorpion and the Frog.
Suzie, I don’t spend a great deal of time on Dan’s blog so I don’t know that Ron May (no need to call him Liberal Ron unless you’re purposely intending to be insulting – again) is a troll or anything else.
As for his accounting practices, personally I didn’t get the feeling he was actually counting uncollected taxes as an expense so much as he was intending to illustrate how closing loopholes would bring in more money. In the example you used from your personal experience, I don’t think you can count not bidding $7 million for a contract as a long as a learning experience. My impression is that’s what Mr. May was doing.
You’re probably right that my reaction to “bitchiness” is a bit selective. I am a liberal and more importantly a human. So I’m bound to miss some of these things. I shall try to do better. But what I am reacting to is the level of “bitchiness”. We all have our off-days and we all gripe and are entitled to it. You lead off with insults instead of returning an insult with one.
Scott M,
Ron May is a former conservative who hasn’t changed his positions. The political spectrum changed. It shifted way to the right. Ron hasn’t moved, and now he’s a moderate.
Trolls such as Suzie claim there’s no such thing. She’s a black-and-white thinking who can’t conceive of the possibility of gray. She defines everyone to her left as a liberal.
That includes Sen. Richard Lugar, R-Indiana, who was recently bumped off the GOP ticket by a Tea Party idiot, Richard Mourdock, who may end up losing the general election to a Democratic challenger.
#26 “She’s a black-and-white thinking who can’t conceive of the possibility of gray. She defines everyone to her left as a liberal.”
And this is exactly why the FOP refuses to endorse Romney. Too many people like suzie out there.
Be that as it may, while my patience lasts, I’m still going to advocate civility.
Scott M.,
Thanks for urging civility on the blog. I’ve learned not to pay much attention to SuzieQ and her sometimes vitrolic comments. Dan is correct that I grew up as a Republican conservative. My type of Republican has been a problem solver. That’s not where the Republican party is right now.
For example, the Republican candidate for the U.S. Senate in Indiana right now believes Social Security is unconstitutional. That’s despite the fact that both his parents are living on Social Security benefits. He also sued to stop the auto bailout despite the fact that the auto bailout saved more than 200 thousand jobs in Indiana alone. He has also said his view of bipartisanship on an issue is to impose his view on those who have different view than he does. His views and actions have put in play a U.S. Senate seat that has been in the hands of Republicans for more than 50 years.
The last four years our elected leaders from both parties have failed us miserably in my view. They have put partisan advantage ahead of confronting and working together to solve the challenges confronting our nation. As a result, the great recession of 2008 has been worse and deeper than it needed to be and our nation continues to suffer unnecessarily.
My point in posting comments about the social security and tax reform issues is to remind us that that’s what Obama, Romney and other political candidates need to be talking about and debating. Instead they have just been standing “40 yards apart” throwing brickbats at each other.
I’ll present some more ideas tomorrow about tax reform that I have been looking at over the summer.
Re: Comment by Dan Casey — September 16, 2012 @ 3:06 pm
“The political spectrum changed. It shifted way to the right.”
—————-
I don’t think the “political spectrum” has shifted — unless one only considers the major parties. See http://tinyurl.com/ahl78 has a good list of the more recent national, State minor parties, and historical parties, as well a non-electoral organizations like the TP. They range from Nazis to The Communist Party, USA.
Within the major parties and the various minor parties there has long been wing-nuts — right and left (or left and right, if that is more acceptable to the reader).
What has happened of late is the capture of one of the major parties by the wing-nuts — not a shift of the entire spectrum, IMHO. That capture has also brought with it an increased theocratic element to that party and a general dismissal of “Our commitment to religious tolerance [that] goes back to the very beginning of our nation”, as astutely observed by our Secretary of State, recently.
In addition to the the capture of that party, there has been a increase of authoritarianism in both major parties, IMHO. The willingness, of both major parties, to use the power of office to force their ideology or religious doctrinal dictates on others is unexceptional, IMHO.
I don’t want the goverment in the bedroom or the boardroom. I don’t like all the warrant-less searchs/wiretaps, bills of attainder type incarcerations, civil forfeiture of property w/o criminal conviction, etc.
I support all the BofR.
Hence, I find myself voting of the lesser objectionable of the candidates w/ a viable chance of election.
Ron May is a former conservative who hasn’t changed his positions
Think about the idiocy of this statement.
But frankly, Scott M. “the first words out of my mouth” were a criticism of Ron’s post, not Ron. Others in this thread have called me “a bitch” or insulted my husband and otherwise gotten all personal.
Perhaps, being the fair-minded person you want to be, you might scold them for their far more egregious offenses to “civility”.
The political spectrum changed. It shifted way to the right. Ron hasn’t moved, and now he’s a moderate.
You can’t name any differences between conservatism of 1980 and of today: low taxes, low spending, pro-life. Those are the Big Three and they haven’t changed.
Democrats on the other hand have moved markedlly left. In JFK’s day, the were for low taxes and were fiercely patriotic about national defense, battling far-left regimes, and supporting our allies. Nowadays, they are anti-capitalist, support terrorist regimes, and refuse to stand by our allies. It’s the DEMOCRATS who have changed; not conservatives.
Suzie, your criticism is valid. I shall try to be objective and when it comes from the left, I shall try to call it out then too.
Suzie, your criticism is valid. I shall try to be objective and when it comes from the left, I shall try to call it out then too.
Thank you, Scott M. It’s not often liberals in here are reasonable like that, so kudos to you.
So no time like the present to start.
Looks as if someone is ignoring the the neo-con wing-nut’s plan to raise taxes on the middle class, when talking about lowering taxes.
Notice how poster #33 uses 1980 as a benchmark for gauging shifts in the “conservative” mainstream, but uses 1960 as the benchmark for Democrats. And then recall that the twenty years between 1960 and 1980 saw enormous social and political changes in the U.S., including political realignment as the GOP welcomed in regressive whites disaffected by civil rights progress.
So one or the other conclusion should apply: either poster #33 is dishonest for using a double standard for comparison, or stupid for using a double standard for comparison, although the rules of logic don’t preclude both being true.
Sorry, it’s 0bama who will raise taxes on the middle class, not Romney. 0bama will do so by rescinding the Bush tax cuts and through 0bamacare.
The talking point about Romney raising them is a lie, plain and simple.