AP: GOP may OK tax increase that Obama hopes to block

[Prosperity]

I'll go ahead and post this again

[alexey]

I'd also like to add that the Republican argument against higher taxes is bull. A profitable enterprise will make profits regardless of tax rates (ok, not if its taxed at 110%)

[Wrong Direction]

The "Republican approach" of cutting taxes to stimulate investment will not work because there is a shortage of CONSUMERS. There is no shortage of INVESTORS.

We need to implement long-term economic policies aimed at narrowing the income gap and growing the middle class.

The Republican approach I was referring to was general, for what it's worth. It's not a current policy prescription being offered right now, as far as I know.

I disagree with the second statement. We need more people working and improving their standard of living. That can happen with or without narrowing the income gap.

If you have a specific policy prescription that will result in a narrowed income gap and more people working, I'd love to hear it. Until then, it's all noise.

---------- Post added August-23rd-2011 at 04:35 PM ----------

I'd also like to add that the Republican argument against higher taxes is bull. A profitable enterprise will make profits regardless of tax rates (ok, not if its taxed at 110%)

This post is 100% UNinformed. Making blanket statements like this is unhelpful.

[Prosperity]

If you have a specific policy prescription that will result in a narrowed income gap and more people working, I'd love to hear it. Until then, it's all noise.

capital gains taxes

recruit more solidiers (or police officers, firemen, bureaucrats, construction workers... whatever)

[alexey]

The Republican approach I was referring to was general, for what it's worth. It's not a current policy prescription being offered right now, as far as I know.

I disagree with the second statement. We need more people working and improving their standard of living. That can happen with or without narrowing the income gap.

If you have a specific policy prescription that will result in a narrowed income gap and more people working, I'd love to hear it. Until then, it's all noise.

Were you just making noise when you were talking about benefits of the "general Republican approach"?

Because people actually tried to implement that particular noise, and here we are. Our economic policies benefitted the rich more than the poor, and it caused problems. Let's begin by acknowledging that. Doing so would reduce noise, I promise you that much.

This post is 100% UNinformed. Making blanket statements like this is unhelpful.

I invest $1000 and make a $100 return. If taxed at 10%, I end up making a profit of $90. If taxed at 30%, I end up making a profit of $70. If I am taxed at 90%, I end up making a profit of $10.

Here is the math behind my statement: A profitable enterprise will make profits regardless of tax rates.

Is that helpful? Where is your math?

[Predicto]

My point is that demand-side stimulus is less sustainable.

To answer your questions, rich people are sitting on money for many reasons,

They have been sitting on the money for the past few decades, in ever increasing amounts.

There is literally ZERO evidence that lowering the individual income tax rate on individual rich people has created any jobs, anywhere, ever. That is a powerful myth, but it simply isn't true.

[Ancalagon the Black]

I invest $1000 and make a $100 return. If taxed at 10%, I end up making a profit of $90. If taxed at 30%, I end up making a profit of $70. If I am taxed at 90%, I end up making a profit of $10.

Here is the math behind my statement: A profitable enterprise will make profits regardless of tax rates.

Is that helpful? Where is your math?

I am speculating, but I believe that Wrong Direction is tacitly referring to economic profit (which factors in opportunity cost) rather than nominal profit. To crudely oversimplify, there is a point at which I don't invest the $1000 because the return - even if positive - is outweighed by some other use I could put the $1000 to.

[Larry]

I am speculating, but I believe that Wrong Direction is tacitly referring to economic profit (which factors in opportunity cost) rather than nominal profit. To crudely oversimplify, there is a point at which I don't invest the $1000 because the return - even if positive - is outweighed by some other use I could put the $1000 to.

This, however, assumes that there is some alternative investment which is immune from the tax.

[alexey]

If you have a specific policy prescription that will result in a narrowed income gap and more people working, I'd love to hear it. Until then, it's all noise.

Here is one specific policy that comes to mind:

Provide heavy disincentives for companies that are too big. Not just in the financial market - we have a huge problem with large corporations taking over local businesses. They enjoy great cost reductions by being big. They also pose a greater risk to the system. Make it more expensive to dominate a market niche. Discourage conglomerates. Encourage small and medium innovative, nimble, specialized companies. Discourage large-scale agriculture. Encourage local food production. Try to re-build local business ecosystems.

On the energy front, I really like the idea of people borrowing from the government to make alternative energy installations. The monthly payment could be less than the cost of saved energy. This approaches uses free market forces to put the borrowing power of the US Government behind consumers who wish to purchase things that pay for themselves. These installations will keep producing energy for a long, long time. The program would by definition pay for itself, and it is all free market - government will not be picking winners and losers. Consumers will be making choices, although the government will probably have to establish some basic certification criteria for qualified installations…

Please let me know if you see any problems with these approaches… I'm especially curious about the one on energy policy. If you think it's a good idea, maybe we should send it to somebody

[JimboDaMan]

I am speculating, but I believe that Wrong Direction is tacitly referring to economic profit (which factors in opportunity cost) rather than nominal profit. To crudely oversimplify, there is a point at which I don't invest the $1000 because the return - even if positive - is outweighed by some other use I could put the $1000 to.

Or, since profit is usually not guaranteed, the return doesn't justify the risk involved. But nobody is talking about 90% tax rates so it still doesn't ring true.

[twa]

On the energy front, I really like the idea of people borrowing from the government to make alternative energy installations. The monthly payment could be less than the cost of saved energy. This approaches uses free market forces to put the borrowing power of the US Government behind consumers who wish to purchase things that pay for themselves. These installations will keep producing energy for a long, long time. The program would by definition pay for itself, and it is all free market - government will not be picking winners and losers. Consumers will be making choices, although the government will probably have to establish some basic certification criteria for qualified installations…

Please let me know if you see any problems with these approaches… I'm especially curious about the one on energy policy. If you think it's a good idea, maybe we should send it to somebody

What's the govt overhead on processing these loans and payments?....how many employees and executives are gonna be needed and how will they be funded?

How will you enforce payment?...will you simply create a bubble?

In general I like the idea,but the US is not a public bank(except to the big boys)

as to the first I would be a bit leery as large corps were formed to compete internationally,but as a small businessman I certainly find it appealing(and I have no love for corps)

[Madison Redskin]

On the energy front, I really like the idea of people borrowing from the government to make alternative energy installations. The monthly payment could be less than the cost of saved energy. This approaches uses free market forces to put the borrowing power of the US Government behind consumers who wish to purchase things that pay for themselves. These installations will keep producing energy for a long, long time. The program would by definition pay for itself, and it is all free market - government will not be picking winners and losers. Consumers will be making choices, although the government will probably have to establish some basic certification criteria for qualified installations…

Please let me know if you see any problems with these approaches… I'm especially curious about the one on energy policy. If you think it's a good idea, maybe we should send it to somebody

The federal government, and most state governments, have enacted legislation creating substantial tax credits and rebates in connection with the purchase of solar panels, geothermal heating/cooling systems, etc. I believe those credits and rebates can offset up to 50% of the cost of many such purchases.

[twa]

The federal government, and most state governments, have enacted legislation creating substantial tax credits and rebates in connection with the purchase of solar panels, geothermal heating/cooling systems, etc. I believe those credits and rebates can offset up to 50% of the cost of many such purchases.

But they do not enable the upfront price really, though I suppose you could use a home improvement loan....do manufacturers,installers currently provide financing?

btw I might have spoke too soon about the US not being a bank

http://thinkprogress.org/yglesias/2011/08/23/302169/bank-nationalization-proposals-are-back/

[Madison Redskin]

But they do not enable the upfront price really, though I suppose you could use a home improvement loan....do manufacturers,installers currently provide financing?

It depends on what you're buying and whether you're buying it for commercial or residential use. The Federal government offers loan guarantees in connection with the purchase alternative energy equipment used for commercial purposes. I also think certain states offer rebates and grants in connection with the purchase of alternative energy equipment used for residential purposes. The precise nature of the programs vary from state to state, municipality to municipality, and by the type of equipment.

You might want to check out this site to learn more about federal, state, and local programs offering grants, rebates, and tax incentives. There are a LOT of great programs out there. My folks just built their dream home out near Santa Barbara and installed solar panels. My father told me he expects to recoup his investment within the next few years, largely due to various government programs he took advantage of.

I don't know what programs/incentives manufacturers are offering, but I imagine some of them offer unique financing that piggyback off the government programs.

[Hubbs]

Come'on Dock. Did you read the same article I did? I think both parties are F'd up. However, from what I read (not all of it TBH), this is a proposal to reduce SS tax. How is that saying the "GOP wants to increase the tax on the poor". It's that kind of talk that makes politics so ridiculous.

I do have (as one of the "rich", according to IRS) major issue with a incredibly large contingent of Americans, already paying no federal income tax, possibly having their tax bill reduced even more, especially when that is their "retirement" money. Especially with the state the budget is already in.

It's not saying that. In normal English. However, when translated into Republican English, everything changes. See, the GOP has loudly told everyone over and over again that letting tax cuts expire is exactly the same as raising taxes. This message has been shouted from mountaintops. When the Bush tax cuts were most recently set to expire (again), Fox News ran a continuous graphic on its news ticker called "Countdown to the Biggest Tax Hike in History" with a nice little clock depicting how many days, hours, and minutes were left until this Earth-shattering event was set to occur. Of course, nobody happened to mention that it was only the "biggest tax hike in history" if you treated the expiration of supposedly temporary tac cuts as "raising taxes" while simultaneously stretching the math further than Dr. Doom can stretch Mr. Fantastic. Anyway, point is, if the GOP wanted to treat all expiring tax cuts the same, they already have a paint-by-numbers approach to follow. They're choosing to do something else. So now you have to ask yourself why they might be doing that.

---------- Post added August-23rd-2011 at 11:27 PM ----------

Here is one specific policy that comes to mind:

Provide heavy disincentives for companies that are too big. Not just in the financial market - we have a huge problem with large corporations taking over local businesses. They enjoy great cost reductions by being big. They also pose a greater risk to the system. Make it more expensive to dominate a market niche. Discourage conglomerates. Encourage small and medium innovative, nimble, specialized companies. Discourage large-scale agriculture. Encourage local food production. Try to re-build local business ecosystems.

On the energy front, I really like the idea of people borrowing from the government to make alternative energy installations. The monthly payment could be less than the cost of saved energy. This approaches uses free market forces to put the borrowing power of the US Government behind consumers who wish to purchase things that pay for themselves. These installations will keep producing energy for a long, long time. The program would by definition pay for itself, and it is all free market - government will not be picking winners and losers. Consumers will be making choices, although the government will probably have to establish some basic certification criteria for qualified installations…

Please let me know if you see any problems with these approaches… I'm especially curious about the one on energy policy. If you think it's a good idea, maybe we should send it to somebody

This may come as a bit of a surprise to you, alexey, but I agree with everything you just said. Including the eco stuff. It would take a while to explain all of the details, so I'll just say that there are models that have been put into practice on the local level in several locations in the US, and they've been extremely successful. The one I'm most familiar with is in Colorado. There's no reason why a national-level system wouldn't also work, and assuming that it's done correctly (a big assumption, I know), it uses market forces to its advantage.

[twa]

That it is a dedicated tax makes no difference?

Income tax is just one of the govt's revenue sources,SS tax is the sole one (unless we simply borrow more to fund that as well)

It might be better to simply do away with the dedicated taxes and simply fund out of general revenue though

add

According to a recent poll conducted for Investor’s Business Daily, only 40 percent of us realize that the Social Security trust fund is composed of IOUs.

http://www.sentinelsource.com/opinion/editorial/who-borrowed-the-social-security-taxes-we-paid/article_691d6976-e4a1-5d21-96d3-aa8871f86c92.html

like lambs to a slaughter

[alexey]

This may come as a bit of a surprise to you, alexey, but I agree with everything you just said. Including the eco stuff. It would take a while to explain all of the details, so I'll just say that there are models that have been put into practice on the local level in several locations in the US, and they've been extremely successful. The one I'm most familiar with is in Colorado. There's no reason why a national-level system wouldn't also work, and assuming that it's done correctly (a big assumption, I know), it uses market forces to its advantage.

That's cool Hubbs, glad to hear we're on the same page! I emailed the energy portion to Van Hollen, maybe he'll bring it up at the super committee :pfft:

Please share leads I could research, I'd love to read up on pilot programs, lessons learned, etc.

[gbear]

TWA,

I keep saying we should simply fund it out of general revenue. Truth told, we have been. It's not like the money collected for it has been used only for SS in practice, and it's not like the money it will take to cover the elderly 10 to 30 years down the road when the "SS tax" no longer covers the payouts will come from anywhere other than general revenue even if it is again barrowed money, just from a different source.

The added benefit would be the impact on our debt number. The debt to GDP numbers would make more sense.

[Ancalagon the Black]

This, however, assumes that there is some alternative investment which is immune from the tax.

Well, you could spend it instead of investing it. And spend it buying a cheap manufactured good from overseas.

---------- Post added August-25th-2011 at 11:04 AM ----------

Or, since profit is usually not guaranteed, the return doesn't justify the risk involved. But nobody is talking about 90% tax rates so it still doesn't ring true.

Yes, good point. But alexey's hypothetical was about the theory of investment and taxes, not referring to any specific proposal.

[bird_1972]

I'm impressed by the tap dancing by Republicans on this one. Especially impressed by Romney's preference for taking the tax break away from low-income employees and giving it to their employer instead. Awesome.

At least the republicans are coming out and just saying it now rather than trying to pretend it's not what they do.

For some reason, repubs seem to think an increasing gap between the wealthy and the rest of us is good for the country. Very strange logic.

[December90]

Can I just opt out of SS?

Please? Let me just pocket that money and my employer pocket the tax they pay on me?

Sorry you must "invest it" in a poorly conceived Government Pyramid Scheme. At least they can take your money before the pyramid is completely upside down, but if your age (29) is correct, good luck collecting when it is your turn to draw from it.

[Larry]

Well, you could spend it instead of investing it.

Yes, rich people could simply spend their money without attempting to maintain it, let alone increase it.

OTOH,

1) They didn't get to be rich by saying "I don't need any more, I'm just gonna live off of what I've already got".

2) At least, if they do that, then the money will be trickling down.

3) It would tend to reduce the concentration of wealth, wouldn't it?

---------- Post added August-25th-2011 at 03:35 PM ----------

Can I just opt out of SS?

Please? Let me just pocket that money and my employer pocket the tax they pay on me?

Sorry you must "invest it" in a poorly conceived Government Pyramid Scheme. At least they can take your money before the pyramid is completely upside down, but if your age (29) is correct, good luck collecting when it is your turn to draw from it.

Can I just opt out of education? I don't have any kids. Can I just have back all the money I've paid to educate other people's kids?

How about if I call it some names, would that help?

[alexey]

Well, you could spend it instead of investing it. And spend it buying a cheap manufactured good from overseas.

You bring up a good point, but it so happens that the biggest problem with our economy is consumers who are holding back instead of making purchases.

[Ancalagon the Black]

Yes, rich people could simply spend their money without attempting to maintain it, let alone increase it.

OTOH,

1) They didn't get to be rich by saying "I don't need any more, I'm just gonna live off of what I've already got".

2) At least, if they do that, then the money will be trickling down.

3) It would tend to reduce the concentration of wealth, wouldn't it?

it so happens that the biggest problem with our economy is consumers who are holding back instead of making purchases.

I don't disagree, but I think we're getting away from the purpose of my offhand response to you, alexey. You asked how a tax rate under 100% could make an economic activity unprofitable when it was previously profitable. I simply wanted to point out that if you define "profitable" as "a better option than an alternative" (which is how it's defined in economics), then taxes definitely can render once-profitable activities unprofitable.

But as long as we're digressing, what the heck.

1) Yes, but investing in an activity that provides employment to US laborers is not necessarily the only option.

2) Possibly trickling down to China.

3) Yes, but potentially in a way that doesn't benefit the US poor and middle class.

I'm not sure that consumers holding back is the biggest problem for our economy. That would imply that we have a ton of wealth and we're just not spending it. Now that may be the case for the top 1%, but for most of the country we're in a massive deleveraging process, getting out of debt and bringing consumption closer in line with production. Increasing consumption alone will just kick the can down the road.

[Seabee1973]

http://www.google.com/hostednews/ap/article/ALeqM5hcv66ONtPUG-K0C2EstqsYBU77yg?docId=5e01f49a8f5546578066437dd437299d

How much hypocritical bull**** is this? The GOP is fighting tooth-and-nail to a keep a "tax cut for the rich" from expiring, but are ok with allowing a "tax cut for poor families and the working class" to expire?

This line pisses me off especially: "says Rep. Jeb Hensarling, "but not all tax relief is created equal for the purposes of helping to get the economy moving again." considering when you tax the lower income brackets, you DIRECTLY impact money that is spent on all the consumer goods that drive the economy and...well make the rich rich. Whereas when you tax the rich, you merely impact an almost insignificant fraction of their savings.

nothing hypocritical about it Why should we continue to bring in less money to SS which that was