Federal Deficit Commission Draft Proposal a Good Start

[MasterComposter]

I answered the question directly when you asked it.

You gave me an either or. I responded that it was just a question of how much theft was involved.

The _fact_ is that they will always endeavor to seal up deductions and then raise rates. You don't think they're going to permit the government to get any smaller, do you? Ever voluntarily decrease the nannystate?

Actually, it wasn't meant as an either/or question. Those were two questions, not alternatives --- the proposal offers both of these trades, not a choice between the two. Let me rephrase the two questions without the "or."

1. Would you take a much lower simplified tax rate, in exchange for fewer deductions?

2. Would you take a higher total tax bill, in exchange for cuts in spending?

My answer is that I would take the trade.

1. I would take a much lower simplified tax rate, in exchange for fewer deductions, because I think deductions are just back door spending disguised as tax cuts. I think the deductions have gotten out of hand. Take them out of the tax code, and if we really want these subsidies, pass them again as spending items. Now, I LOVE receiving the mortgage interest deduction, and I have benefitted from it personally. But why should the government (or other tax payers) subisidze my mortgage? Instead of paying taxes at the 33% rate and getting a deduction for my mortgage, I think it makes more sense for the deduction to go away and for me and everyone else in the tier to pay 26%. If we start at a new lower tax rate, and no deductions, then maybe we can decide if we really do want these programs and pay for them honestly. So if we decide we do want to subsidize mortgages, then instead of giving a tax deductoion and raising rates, we could pass s spending bill that authorizes the government to mail everyone a check for a portion of their mortgage, and it'll mean the top tax rate will increase from 26% to 33% to pay for it. That would be more honest, and it would disourage the back door spending in the form of tax expenditures.

2. I would take a higher total tax bill, in exchange for cuts in spending, because I think the only way the deficit will ever be "fixed" is a compromise solution that includes both tax increases and spending cuts.

 

[adrenalynn]

There is one of two ways this will go. Grace Commission (ie. "Here's a ton of money, thanks for the study, we'll file it here in the circular files with the others and then spend like drunken sailors")

OR

"Great ideas! We'll raise the tax rates, get rid of any deductions, and then spend like drunken sailors"

In no way will they relinquish any hold they currently have. Anything that looks like it is designed to keep the unrest to a minimum as long as possible - because sheeple have an attention span of about three nanoseconds.

 

[MasterComposter]

There is one of two ways this will go. Grace Commission (ie. "Here's a ton of money, thanks for the study, we'll file it here in the circular files with the others and then spend like drunken sailors")

OR

"Great ideas! We'll raise the tax rates, get rid of any deductions, and then spend like drunken sailors"

In no way will they relinquish any hold they currently have. Anything that looks like it is designed to keep the unrest to a minimum as long as possible - because sheeple have an attention span of about three nanoseconds.

I'll accept that you will not or cannot answer the direct questions.

Anyone else willing to give it a try?

1. Would you take a much lower simplified tax rate, in exchange for fewer deductions?

2. Would you take a higher total tax bill, in exchange for cuts in spending?

 

[adrenalynn]

1. Yes
2. No

 

[JeffreyNYA]

I would have to look, but I think I paid about 14k in interest last year on my home. I was able to write that off. If that goes away that is a 14k tax increase.

Wrong!

If you write off $14,000, then that comes off your INCOME, not off your TAXES. You don't save a dollar on taxes for reducing a dollar of income! Multiply by your tax rate!

Maybe you make around $373,000 a year and are in the highest possiblle tax bracket, and your tax rate is 35%, then that means your taxes would go up by about $4,900, not $14,000. (But you make $373,000 or more, so maybe you can handle 5 grand). Or maybe you make a LOT less than $373,000, and your taxes would go up by a lot less. There's no way to tell unless we know your actual marginal tax rate.

Also, you said this increase would apply to mortgages of over $500,000, and if your interest is $14,000, then my guess is your mortgage is much less than $500,000, and this doesn't even apply to you, and your tax increase would be ZERO!

Can you afford to pay ZERO more? If not, how much less than zero would be satisfactory?

Well all I know is that interest deductions along with donations and child credit I can pretty much get my owed taxes close to nothing. Take that away and I will move a tax bracket and my taxes will go up a lot.

While personally I will use the system to my advantage and if it turns out I pay no taxes then so be it. But I agree with what was said that a flat rate tax of 10% would be great. No deductions at all. I can live with that. I am all for the fair tax as well. We are just a consumption society that a sales tax like the fair tax would work well.

 

[bearack]

1. Would you take a much lower simplified tax rate, in exchange for fewer deductions?

I would be willing to eliminate tax deductions with a more simplified tax rate like a consumption tax or flat tax. Yes

2. Would you take a higher total tax bill, in exchange for cuts in spending?

Why would you need a higher tax bill if you curtail spending? Reduce government to where taxes for only essentials are necessary. Raising taxes to cut spending is more or less an oxymoron.

 

[mental_avenger]

What we really need to do is:
1. Reduce or eliminate waste in government.
That would include eliminating cushy unnecessary government jobs, prevent overpaying by government agencies for goods and services, recycling usable goods, and keeping usable furniture, vehicles, etc. instead of buying new all the time.

2. Cut unnecessary spending
Eliminate government spending on non-essential services. Stop using government funds to pay for projects that are clearly outside the purpose of government to provide. Get back to following the guidelines of the Enumerated Powers without resorting to the General Welfare clause to allow government to do virtually anything they want.

3. Adjust the tax rate to fund what is left.
That includes getting rid of a tax code designed to control the economy by giving people incentives to use their money the way the government thinks they should. A nice flat tax with deductions only for family.

 

[MasterComposter]

1. Yes
2. No

Thanks for the answer.

As currently proposed, the draft would do both of these things, so you may or may not like it overall. It would reduce or eliminate most deductions in return for a lower simplified rate tier structure. But the rate tier structure would be set up so that overall taxes would increase by $80 billion in return for guaranteed spending cuts of $200 billion. So you might not like that second part, but that's what compromise is about, isn't it? And it does not necessarily mean that every individual's tax bill would go up, just that the overall revenue collected would be higher as part of the compromise --- my guess is that those who can claim the most deductions and credits would be the ones whose bills might rise, but I'm not sure about that.

 

[MasterComposter]

I would have to look, but I think I paid about 14k in interest last year on my home. I was able to write that off. If that goes away that is a 14k tax increase.

Wrong!

If you write off $14,000, then that comes off your INCOME, not off your TAXES. You don't save a dollar on taxes for reducing a dollar of income! Multiply by your tax rate!

Maybe you make around $373,000 a year and are in the highest possiblle tax bracket, and your tax rate is 35%, then that means your taxes would go up by about $4,900, not $14,000. (But you make $373,000 or more, so maybe you can handle 5 grand). Or maybe you make a LOT less than $373,000, and your taxes would go up by a lot less. There's no way to tell unless we know your actual marginal tax rate.

Also, you said this increase would apply to mortgages of over $500,000, and if your interest is $14,000, then my guess is your mortgage is much less than $500,000, and this doesn't even apply to you, and your tax increase would be ZERO!

Can you afford to pay ZERO more? If not, how much less than zero would be satisfactory?

Well all I know is that interest deductions along with donations and child credit I can pretty much get my owed taxes close to nothing. Take that away and I will move a tax bracket and my taxes will go up a lot.

While personally I will use the system to my advantage and if it turns out I pay no taxes then so be it. But I agree with what was said that a flat rate tax of 10% would be great. No deductions at all. I can live with that. I am all for the fair tax as well. We are just a consumption society that a sales tax like the fair tax would work well.

If your taxes are close to zero now with a $14,000 mortgage interest deduction, then I think there is a good chance your taxes would still be close to zero. The draft proposal suggests increasing the personal exemptions, so I would think that would very nearly balance out. Would have to check to be sure.

 

[MasterComposter]

1. Would you take a much lower simplified tax rate, in exchange for fewer deductions?

I would be willing to eliminate tax deductions with a more simplified tax rate like a consumption tax or flat tax. Yes

2. Would you take a higher total tax bill, in exchange for cuts in spending?

Why would you need a higher tax bill if you curtail spending? Reduce government to where taxes for only essentials are necessary. Raising taxes to cut spending is more or less an oxymoron.

Thanks for answering the questions.

To answer your question, the reasons for the higher tax revenues is to reach a political compromise on how to reduce the deficit. As proposed, it looks like about $80 billion increase in total tax revenue in exchange for $200 billion ins spending cuts. Those two together ($280 Billion) come very close to reducing the total structural deficit to a sustainable level. Also, I would point out that much of the increased tax revenues come from eliminating "spending" that is in the tax code in the form of deductions. Tax expenditures are spending disguised as tax cuts.

 

[silylene]

How would you fix the budget deficit? here is a real good tool (fun and revealing):
http://chartporn.org/2010/11/15/how-would-you-fix-the-budget/

I found $468B for next year, more than required - and it didn't even seem that harsh.

 

[MasterComposter]

What we really need to do is:
1. Reduce or eliminate waste in government.
That would include eliminating cushy unnecessary government jobs, prevent overpaying by government agencies for goods and services, recycling usable goods, and keeping usable furniture, vehicles, etc. instead of buying new all the time.

2. Cut unnecessary spending
Eliminate government spending on non-essential services. Stop using government funds to pay for projects that are clearly outside the purpose of government to provide. Get back to following the guidelines of the Enumerated Powers without resorting to the General Welfare clause to allow government to do virtually anything they want.

3. Adjust the tax rate to fund what is left.
That includes getting rid of a tax code designed to control the economy by giving people incentives to use their money the way the government thinks they should. A nice flat tax with deductions only for family.

Thanks for commenting. You should read the proposal. I think there is a lot in there you would approve of. I'm glad you do include the need for compromise on the tax code to fund the necessary functions of government, and that was the purpose of the commission in keeping tax issues on the table.

In the one option I have looked at the closest, the tax code they suggested is not exactly "flat." There are tiers, but they are simpler and they are much lower. Most of the deductions, or "incentives" as you called them, are reduced or eliminated. The deductions for family remain, like you suggested, and they are increased.

 

[MasterComposter]

How would you fix the budget deficit? here is a real good tool (fun and revealing):
http://chartporn.org/2010/11/15/how-would-you-fix-the-budget/

I found $468B for next year, more than required - and it didn't even seem that harsh.

Thanks for posting this. I'll check it out.

 

[adrenalynn]

That toy won't let me do the right thing. Even so, I'm $100+ BILLION ahead in 2030 without a single increase in taxes, and without gutting the military.

Let me do the right things and I'll pay off the deficit day after tomorrow and you all get to keep your money in your pocket where it belongs.

 

[crazyeddie]

The bipartisan Federal Deficit Commission that Obama launched earlier this year has released it's draft proposal. Recommendations would reduce the federal deficit by $4 trillion over ten years using a combination of tax increses (including some sacred cows such as reducing the mortgage interest deduction) and significant spending cuts in every area of government (including other sacred cows such as cuts to Medicare, Social Security and Defense).

I think it is a good starting point for a serious plan to reduce the deficit and debt. One of the reasons it seems realistic to me is that there is something for everyone to hate in it. The deficit is a big s**t sandwich, and everyone is going to have to take a bite.

I don't often disagree with you, MC, but the Federal Deficit Commission plan is, to put it bluntly, crap. This article tells you why:

http://motherjones.com/kevin-drum/2010/ ... on-serious

It's just another tax giveaway to the rich. And it will never fly with the middle class, who will boot any politician out of office who takes away their mortgage tax deduction. The whole thing should be scrapped (although some parts, such as cutting defense spending, are good ideas).

 

[silylene]

That toy won't let me do the right thing. Even so, I'm $100+ BILLION ahead in 2030 without a single increase in taxes, and without gutting the military.

Let me do the right things and I'll pay off the deficit day after tomorrow and you all get to keep your money in your pocket where it belongs.

My fiscal changes had that result too, didn't gut the military or increase most taxes. Really wasn't harsh at all. Everyone on the thread should run the deficit simulator and see what they could accomplish.

 

[MasterComposter]

That toy won't let me do the right thing. Even so, I'm $100+ BILLION ahead in 2030 without a single increase in taxes, and without gutting the military.

Let me do the right things and I'll pay off the deficit day after tomorrow and you all get to keep your money in your pocket where it belongs.

I haven't run the simulator yet, but isn't this graphic showing that you have managed only to reduce the pojected 2030 deficit from $1,462 Biliion down to a pojected $1,345 billion? That ain't gonna cut it! If you can only cut $120 billion out of a projected deficit that is a full 20 years away, we'll already be bankrupt by then!

If a congressman or president proposed a deficit reduction plan that only took a $120 billion off the deficit projected for 20 years out, they'd be laughed out of town! With good reason!

 

[adrenalynn]

No. You should probably run the simulator before you comment.

The little boxes are gray at the start. Each time you trim, they turn blue towards the projected shortfall. When you exceed the projected shortfall and go into the black, the arrow appears at the bottom highlighting the excess.

Really... Run it then comment.

 

[vladdrac]

Maria "Metropolis" but which one? Symbolic / Avatar...what drew you to the avatar? Or did someone figure the place needed a little t&a. I'll say those little boxes are people and you'll say......

 

[phaze]

What we really need to do is:
1. Reduce or eliminate waste in government.
That would include eliminating cushy unnecessary government jobs, prevent overpaying by government agencies for goods and services, recycling usable goods, and keeping usable furniture, vehicles, etc. instead of buying new all the time.

2. Cut unnecessary spending
Eliminate government spending on non-essential services. Stop using government funds to pay for projects that are clearly outside the purpose of government to provide. Get back to following the guidelines of the Enumerated Powers without resorting to the General Welfare clause to allow government to do virtually anything they want.

3. Adjust the tax rate to fund what is left.
That includes getting rid of a tax code designed to control the economy by giving people incentives to use their money the way the government thinks they should. A nice flat tax with deductions only for family.

Just curious. Why do you favor this bit of Socialism, Comrade?

 

[MasterComposter]

I don't often disagree with you, MC, but the Federal Deficit Commission plan is, to put it bluntly, crap. This article tells you why:

http://motherjones.com/kevin-drum/2010/ ... on-serious

It's just another tax giveaway to the rich. And it will never fly with the middle class, who will boot any politician out of office who takes away their mortgage tax deduction. The whole thing should be scrapped (although some parts, such as cutting defense spending, are good ideas).

I actually disagree that it is a tax giveaway to the rich. You would have to do a careful analysis to see exactly how it would impact each income level to be sure. But taking the mortgage interest deduction as an example, many people don't even claim it, because if your mortgage isn't very big, the standard deduction is higher. There are 3 differrent tax proposals. Under one of them, the mortgage interest deduction goes away, but the standard deduction triples to $30,000 ($15,000 for individuals). For a lot of people, that would be a pretty fair trade.

Also, I took a look at the link you posted, and I don't think the guy is doing a proper analysis.

Your reaction to this thing, and all the other negative reactions I've seen that single out one component of the proposal are exactly what make me think this thing is probably on the right track --- like I said before, it has something for EVERYONE to hate. (Meaning it's not too one-sided.)

One thing your article said that is true is that this is only a draft proposal, not a bill, not even a final version of the proposal voted on and released by the full commission. I'm sure they released the draft to flush out the opposition postitions. Once the reaction has been guaged, they'll have a better idea where the total deal-breakers are, and they can adjust the final proposal accordingly.

I'm sure the final recommendation will be different from this, but I'm mostly interested in the kinds of compromises being offerred.

 

[R1]

I don't see why SS was included, but yet it didn't let me choose a flat SS rate for everyone.
What if everyone paid a flat 20% to Social Security in that case?
Then, any time there was a reasonable term projected surplus for one full year, subsequent years would allow a slightly lower accross the board rate?

 

[adrenalynn]

Twenty percent of my income to social security? That's more than I could spend in my life. Why in the world would I pay into it more than I could ever spend?

If that ever came to be, I would just kill you all and keep 100% of my money - and yours.

 

[R1]

If everyone across the board pays the same rate, it could be a much lower rate.

 

[adrenalynn]

You only NEED food, water, shelter, and a minimal amount of clothing. Why do you have a computer? A television? An mp3 player? A phone? You don't NEED any of those. Why do you have them?

Your posts remind me of the one thing in this world I literally _hate_.