WSJ.com: Key Tax Breaks at Risk as Panel Looks at Cuts .

[Thiebear]

Why am i not shocked they are going for the low hanging fruit once again:

http://online.wsj.com/article/SB10001424052702304354104575568643889337142.html?mod=WSJ_hp_LEFTopStories

At stake, in addition to the mortgage-interest deductions, are child tax credits and the ability of employees to pay their portion of their health-insurance tab with pretax dollars. Commission officials are expected to look at preserving these breaks but at a lower level, according to people familiar with the matter.

The officials are also looking at potential cuts to defense spending and a freeze on domestic discretionary spending. It is unclear if the 18-member panel will be able to reach an agreement on any of the items by a Dec. 1 deadline.

Even if they do reach an agreement, any curbs on current tax breaks would likely face tough sledding in Congress. The banking and real-estate lobbies have fiercely rebuffed efforts to rescind the mortgage-interest deduction in the past.

Still, officials have found there aren't any easy ways to balance the budget, and they are expected to steer clear of more polarizing issues like Medicare, Medicaid, Social Security and a broad rewrite of the tax code in their short-term recommendations. The panel could still make long-term recommendations to change these issues, but they would be less concrete.

Going after individuals homes at this time to make them even less valuable seems like a horrible idea.

Look, were making medical more expensive also, as thats what everyone wants.

From some of the comments on the first page:

----------------------------------

The problem is identified early in the article.

"...these and other breaks cost the government about $1 trillion a year."

NO

THEY

DON'T.

This inside-out, upside-down thinking is why we're wearing just a barrel and wishing we had learned to swim.

Anticipated revenue is NOT A COST.

----------------

[alexey]

Why am i not shocked they are going for the low hanging fruit once again:

Because a fruit is a fruit. By all means get all those low hanging ones, just don't stop there.

The problem is identified early in the article.

"...these and other breaks cost the government about $1 trillion a year."

NO

THEY

DON'T.

This inside-out, upside-down thinking is why we're wearing just a barrel and wishing we had learned to swim.

Anticipated revenue is NOT A COST.

----------------

You are making a good point. However, I think it is important to highlight the fiscal impact of these tax cuts.

In terms of language, the term "cost" could be appropriate if previous rates are assumed as the baseline: e.g. Bush gave tax cuts at a cost of reduced revenue.

[SnyderShrugged]

Anyone under the illusion that our taxes weren't going up after the last decade of ridiculous spending, is a complete fool.

[Larry]

NO

THEY

DON'T.

YES

THEY

DO

Deficit(or surplus) = Revenue - Expenditures

Now as much as you'd like to pretend that one of those two numbers doesn't exist, it does. Absolutely.

You may prefer changes in one number over the other. (I might agree with you.) But let's not go ignoring half of reality.

[DCsportsfan53]

Anyone under the illusion that our taxes weren't going up after the last decade of ridiculous spending, is a complete fool.

Agreed, that was destined to happen regardless of who was elected. Spending trillions on war in addition to all the other waste with a tanking economy...it was inevitable.

[alexey]

YES

THEY

DO

Deficit(or surplus) = Revenue - Expenditures

Now as much as you'd like to pretend that one of those two numbers doesn't exist, it does. Absolutely.

You may prefer changes in one number over the other. (I might agree with you.) But let's not go ignoring half of reality.

I think he's making a distinction between "cost" as in paying money, and "cost" as in having less money coming in... imho this distinction makes little difference from the fiscal standpoint, plus both outlays and losses incurred fall under the dictionary definition of "cost".

[twa]

How is it a loss if the taxes are not in the budget?

I can see defining it as a projected cost to change it,but a projected cost is not really a cost but rather a level of taking.

[December90]

Why is it that people who budget like politicians end up in bankruptcy or in jail, but politicians who continue to spend money they don't have simply get re-elected?

stop the wasteful spending and let the people keep what they earn. When the economy turns around and their is more economic activity then tax revenues will rise, simply raising the rates or removing the deductions is a recipe for failure.

[Larry]

How is it a loss if the taxes are not in the budget?

I can see defining it as a projected cost to change it,but a projected cost is not really a cost but rather a level of taking.

If the federal government were to repeal all taxes, the deficit would:

a) Get bigger

Stay the same

c) Get smaller.

Take all the time you need to think about it.

(Note: The answer is not "But what if, at the same time, something else happened, too?")

[twa]

(Note: The answer is not "But what if, at the same time, something else happened, too?")

Why not since we are dealing with projections?

I certainly agree if you budget a certain tax rate then lower it the deficit will rise unless spending is cut.

But then we don't even have nor abide by a budget do we?:evilg:

[Larry]

Why is it that people who budget like politicians end up in bankruptcy or in jail, but politicians who continue to spend money they don't have simply get re-elected?

stop the wasteful spending and let the people keep what they earn. When the economy turns around and their is more economic activity then tax revenues will rise, simply raising the rates or removing the deductions is a recipe for failure.

Right. Got it. You've memorized the rhetoric just fine.

Defecits bad.

So, what methods of reducing deficits will you permit?

To pick a specific example, how do you feel about not passing any more tax cuts? :halo:

[Thiebear]

If the federal government were to repeal all taxes, the deficit would:

a) Get bigger

Stay the same

c) Get smaller.

Take all the time you need to think about it.

(Note: The answer is not "But what if, at the same time, something else happened, too?")

Your what if is not allowed a what if? Nice try.

Yes, if they repealed all taxes the income to the government would go down.

Yes, if they replealed all tax cuts the income to the government would go up.

The wording i was referring to seems to start from the fact that a standard mortgage deduction was taking FROM the Gov't.

I'm sure if they changed the 28percentile to 100percentile that would bring in more money also. to the Next Party.

[December90]

If the federal government were to repeal all taxes, the deficit would:

a) Get bigger

Stay the same

c) Get smaller.

Take all the time you need to think about it.

(Note: The answer is not "But what if, at the same time, something else happened, too?")

OK you run a company that has two customers. Each customer pays you 100K per year.

One of those customers fires you and hires someone else for 90K to do what you were doing for them. So you now have only one customer.

Did your expenses just go up 100K?

Would you raise your prices on the other customer to make up for lost revenue?

[December90]

Right. Got it. You've memorized the rhetoric just fine.

Defecits bad.

So, what methods of reducing deficits will you permit?

To pick a specific example, how do you feel about not passing any more tax cuts? :halo:

To answer

1) cut spending. Includes some military spending where appropriate. pick the places where the most money is spend and find cuts. (this will target entitlements most)

2) We have cut taxes too far but not in the way you think. we now have more tax filers who pay no taxes than we have tax filers who actually pay taxes. Everyone should have a stake in the game. When the majority of people pay nothing, then they don't care about those who pay for them. When everyone has some stake then they tend to care more.

I guess you could interpret that as reduce the floor so that people making 35K would pay a little.

Again the problem with the budget or the deficit is not now, has never been, and will never be receipts. The problem is that those we elect spend too much, they "buy" votes with IOU's built off future tax receipts.

[Larry]

Yes, if they repealed all taxes the income to the government would go down.

Yes, if they replealed all tax cuts the income to the government would go up.

Excellent. We now agree that revenues are one of the things that affect deficits.

[Thiebear]

Thiebear's plan on reduced deficits:

Non-Discretionary:

Social Security is now 70yrs of age for everyone that is not 60+, with an under 4K a month requirement at the time.

Medicaid/Chips need to be poverty levels + but not 300%.

Military:

SKorea/Phillipines/Germany/Iraq/Afghanistan should take a 90% cut in troops. (i spent a year in SKorea for some unkown reason) (Turkey was at least to spy and thats gone)

Govt:

End of year buy-athons from every branch/Division should be outlawed: All the commercials in the DC area in Sept are focused on all the money laying around to spend. (thought being, if you don't spend it, you won't get more the next year)... ugh!

50million for stoves to 3rd world countries stop global warming? = no. (are they burning styrofoam now)?

125billion more for Fannie Freddie for another round of cleanup = no

[insert here]

[alexey]

The problem is that those we elect spend too much, they "buy" votes with IOU's built off future tax receipts.

Ditto with Bush tax cuts.

[Thiebear]

Excellent. We now agree that revenues are one of the things that affect deficits.

Individual tax collection $1,366,241,000,000

Corporate: 395,536,000,000

(not sure if that is 100% correct) but all Tax collections = 8? years of Universal healthcare at current figures..

[Larry]

OK you run a company that has two customers. Each customer pays you 100K per year.

One of those customers fires you and hires someone else for 90K to do what you were doing for them. So you now have only one customer.

Did your expenses just go up 100K?

Nope.

Your revenues went down by 100K.

Which means that your finances are now 100K worse.

(See, nobody tried to claim that revenues don't affect revenues. Some people, however, did try to claim that revenues don't affect deficits.)

[December90]

Nope.

Your revenues went down by 100K.

Which means that your finances are now 100K worse.

(See, nobody tried to claim that revenues don't affect revenues. Some people, however, did try to claim that revenues don't affect deficits.)

you cut the quote short.

I guess that means you dont have an answer.

Would you raise the amount you charge your second customer to make up for the lost revenue?

[alexey]

Would you raise the amount you charge your second customer to make up for the lost revenue?

That depends on switching barriers... it could be a viable option if the second customer would have to move to another country if he wanted to take his business elsewhere

[Larry]

you cut the quote short.

I guess that means you dont have an answer.

Would you raise the amount you charge your second customer to make up for the lost revenue?

Nope.

Now, let's look at the differences between your analogy and the subject of the thread.

1) Our 100K revenue reduction didn't occur because our customer left us. It occurred because the CEO decided to give one customer free service for a year.

2) When we decided to hand out freebies to select customers, our expenses didn't go down. (In you analogy of the customer leaving, we lost his revenues and his expenses.)

3) Now that customer #1 has been given free service for a year, he's demanding that it must be free next year, too, or else he's going to yell that you're charging him a price hike. He's demanding that he be given free service forever, and insisting that we make up for the lost revenue by cutting back on the service we deliver to Customer #2.

[Popeman38]

And this will get blamed on Bush. Obama promised not to raise taxes on anyone making less than $250K/year. If the cut out the mortgage interest and child tax credit, he will essentially increase my taxes by 12% or more. And I can assure you I make no where near $250K. He also guarantees that single income families will never be able to afford to own a home within 20 miles of an urban center. It will be impossible. How much you wanna bet if this happens there is a concerted effort to say that he didn't raise taxes made by the same people that got Bush thrown out for saying read my lips?

[Larry]

And this will get blamed on Bush. Obama promised not to raise taxes on anyone making less than $250K/year. If the cut out the mortgage interest and child tax credit, he will essentially increase my taxes by 12% or more. And I can assure you I make no where near $250K. He also guarantees that single income families will never be able to afford to own a home within 20 miles of an urban center. It will be impossible. How much you wanna bet if this happens there is a concerted effort to say that he didn't raise taxes made by the same people that got Bush thrown out for saying read my lips?

Uh, I have to admit that I'm having a lot of trouble believing your 12% claim. But I'll also admit that I'm not fully aware of how the child tax credit works. Haven't really played with those numbers, much.

(That's an invitation to educate me, if you'd like.)

[Larry]

BTW, on a broader issue:

I'm glad to see that Obama went ahead and created this commission. (Even if it doesn't have near the mandate or authority of the one that Congress wanted to create, legislatively.)

Still I think the effort needs to count for something. (Just not, necessarily, for much.)

Frankly, I really liked what I'd heard about what Congress supposedly proposed.

They were supposedly going to empower a group which, every year, would make proposals to reduce the deficit. And Congress would be required to hold a straight, yes-no vote on the entire proposal, no amendments. Take or leave the entire package.

Sounded to me like pretty much the only way this problem is ever gonna get dealt with.