Lets call them the Obama tax increases...

[john_galt]

There has been some talk about the Bush tax cuts being repealed or more accurately allowed to lapse next year. They are not cuts anymore, they are current law and have been for 10 years. If we are talking history or partisan politics you can call them tax cuts but lets face the facts. Everyone who paid taxes got a 5% cut. Now rich people do better with their cuts than regular people. But as Thomas Jefferson once said, "a rising tide raises all boats". I suppose the opposite is true, an ebbing tide lowers all boats.
So what we need to be concerned with is the accurate Obama tax increase coming in January. All it it takes to stop this increase is a vote in the Congress and Senate, they did seem to be inclined to pass it before the election, and then the President signs it before 1 January, 2011. It is just another promise broken...

[catnipdipper]

I define it as deficit reduction!

[Omahan]

I define it as job killers.

[Cheaper2buyit]

your changing the name but still beating the same damn dead horse if you look at the time they were in place & ask yourself what good did it do look at the econ now. Anything done during the bush time is a reflation of the hell we are in now.

[northdak2003]

It's been proven time and time again - cut taxes and federal tax revenue rises (from both corporate and private income taxes).

[CuteOldGuy]

Originally Posted by catnipdipper

I define it as deficit reduction!

Catnip, I will wager you a cold beer and a hot lap dance (not from me) if the deficit goes down after the taxes go up.

(Not sure if that made sense, Grace just left, and there is very little blood in my brain, but I think you know what I meant.)

[catnipdipper]

COG; I drink Dos Equis Dark and like a salt shaker nearby.

[lacrew_2000]

COG, you should define some terms. 2009 was an all time high deficit, and 2010 is on pace to beat that....but current projections are for 2011 to have a slightly lower deficit...with or without continued tax cuts. So its gonna drop, and you'll owe that lapdance...but will it be due to higher taxes?

If we expect most tax cuts to stay in place, with only the following increases on the wealthy:

1. Increase rates on income, dividends, and cap gains for those over 250k income

2. Phase out personal exemptions for top brackets, and limit itemized deductions for top brackets

That will increase revenue to the government $68 billion (assuming no drop in these people's income)

This year's deficit is pushing 1.4 trillion. So, the revenue side of expired tax cuts will be less than 5% of today's deficit.

If we let all tax cuts expire, thats worth 366 billion, or 26% of today's deficit. Of course, that assumes there would be no impact on economic activity and other taxes.

Impact on defict? Not much.

Impact on politics and class warfare? Yep.

[catnipdipper]

How about letting the top brackets expire and let the estate tax die.

[KCJoe]

Personal exemptions are phased out and itemized deductions are limited also under current law and the previous tax law for the wealthy.

I say do away with the home mortgage interest deduction. Maybe this will encourage people to only buy what they can afford. My house is paid for, what do I care about keeping it.

Also, eliminated the state income tax, sales tax, and property tax deductions. Might as well get rid of charitable deductions also. Only keep medical deductions, that's really the only one individuals have no control over.

[CuteOldGuy]

Hey, whoever wins, I'm drinking beer and getting a lapdance.

[lacrew_2000]

All taxes will be on the table....and the mortgage interest deduction has already been identified as a target. Its worth 100 billion a year, so it could make up for 7% of our deficit.

Of course, it would slow home sales.

But I see a pattern here. Eliminate 80 billion in 401k tax breaks, you've covered 6% of the deficit. Property tax deduction of 20 billion, you get another 1.5%. Charitable contributions of 30 billon, thats 2%. Shit can the Bush tax cuts, 26%.

So, after cutting all these tax breaks, you've got less than half the deficit covered (assuming no impact on economic activity). Where would the other half come from?

Perhaps it would be wise to examine the spending side of the budget at least as much as the revenue side. President Obama's budget request for 2010 was 3.55 trillion. GNP is 14 trillion. That means that in order to have a balanced budget, the federal government would have to find some way to tax 25% of the economy. Presently, the federal government gets 17% of the economy. So literally taxes would have to increase by 50% to balance the budget. Can we really rely on raising taxes that much? Without affecting GNP in the process?

[catnipdipper]

Sooner or later you end up paying income tax on the 401-K investments. Offer an incentive to convert them to Roth's and get a cash influx. Phase out 401-K over time to Roth.

Fraud and waste should be a focus and then perhaps rejustify the areas. Remove cap on Soc Scty contributions as a form of tax increase on the rich. Go hard after corporate perks and benefits. Come down hard on cost overruns on Fed projects and instead incentivise for early and under budget projects.

I will be curious to read the Deficit Panel's recommendations. Good brains accumulated there and it will likely be enlightening if someone has the guts to take them up on the findings

[john_galt]

As a holder of a 401K I would object. That was not the promise made to the American people. Kind of like Social Security. Funny how the party that says that SS is holy (though they are carrying all the gold out the back door) will now say that 401Ks are fair game. I guess because only rich people have them...

[JRLawrence]

Originally Posted by lacrew_2000

All taxes will be on the table....and the mortgage interest deduction has already been identified as a target. Its worth 100 billion a year, so it could make up for 7% of our deficit.

The tax policy is designed to promote the economic health of the country; this is the study of macroeconomics. The deduction of mortgage interest is a method of promoting the construction of housing for the people. All people can claim this tax advantage; but if you rent, the landlord gets the benefit. In turn, low interest loans are promoted by the government so that the people can benefit.

It has worked well for the development of the housing. Elimination of this tax savings would be without benefit to the country, and cause a limitation of growth or a downturn in the housing industry. The effect would be less tax collected from a slower economy. Construction is one key component of a healthy economy.

JR