The Buffett Tax

[CBWx2]

A lot of solid points here. I'll just embolden and comment on a couple of areas of contention.

The stimulus bill failed because it was a watered down version of what was actually called for by some Keynesian economists. The results of the stimulus were mitigated by the fact that by the time it was passed, it had become nothing more than a half-measured attempt at tackling the issue.

And THAT is the big criticism of Keynesian economics. By the time Congress passes a spending bill and the money goes thru all the various bureaucracies, it is so watered down and miss-directed
that it fails to achieve the desired results.

Is that really a criticism of Keynesian economic theory, or is it more a direct criticism of congress?

Also, not all govt spending is the same.

Spending on a new road creates immediate jobs for engineers, construction folk, etc.AND creates business opportunity due to the new traffic pattern leading to new shops restaurants, etc. and those new businesses then impact all their suppliers, etc. etc.

Spending on military equipment has an immediate impact on defense contractors and their suppliers, then the impact peters out.

Spending on military personnel deployed overseas only partially impacts our economy IF the personnel have US-based families  The rest of the $$$ benefits foreign economies where it is spent.

Spending on Foreign Aid has almost no benefits to our economy.

Spending on regulation has very little economic impact. And in some cases has a very negative impact as regulation can stunt new building/business growth.

And what was the positive impact of "Cash for Clunkers" other than reducing the supply of used vehicles, thereby driving up the price??

No arguments here.

Very few economists consider it wise for the government to reduce spending at times of recession. Cutting government spending and laying off government employees during a recession only increases the number of unemployed during a time of already high unemployment. All it serves to do is exacerbate the problem.

This is a false assumption. You don't have to lay off Govt. employees in order to cut spending. Tons and tons of businesses cut spending in tough times without having to lay off workers

No arguments here either, however many of the Republican spending cuts proposed at federal and state levels have, in fact, lead to the layoff of government employees, and it has had a negative impact on the recovery.

While it may be easier to eliminate negative taxes, it isn't the most wise approach. If you aim to increase revenue through taxation, then taxing the rich is certainly a smarter approach than taxing the middle class or the poor, because doing so is also going to do nothing more than exacerbate the problem. '

When people who qualify for those negative tax returns get them, they spend that money. It gets recirculated into the economy almost immediately. That may or may not be the case with certain top end tax breaks, but it is always the case for middle to low end ones. For example, using the same line of logic as you did in the tax revenue argument, enabling 1 million people buying $300 TV sets has a bigger positive impact on the economy than enabling 100,000 people to buy $2,000 TV sets.

2 problems with that analogy:

1) There are no US made TVs so enabling 1 million people to buy TVs has a bigger impact on the Chinese and Korean economies, not so much on ours.

TV sets was just a random example. But it does still have a positive impact on the economy given that most people can't fly to China or Korea to buy these TV sets. Places like Best Buy, Wal-Mart, etc. are going to benefit from the bump in sales, and the overall economy will be better off for it.

2) Those people getting the negative taxes aren't spending the money on durable goods. Odds are the extra $300 would go to beer, cigs (maybe food) and other consumables which has much less permanent impact. OTOH, the "millionaires" will first try to recoup any tax increases by tightening the BUSINESSES they own thru fewer raises, benefits, capital spending and finally wages. AFTER that is exhausted, then they will start cutting their own spending.

We aren't simply talking about an extra $300 though. I just used that as a price marker for a low-end TV set. If we are talking about eliminating the EIC, then we are talking about thousands of dollars per low income family. People don't just buy smokes and brewski's with that money. They buy electronics, cars, furniture, go on vacations, etc. That is thousands of dollars per family going into the pockets of businesses that otherwise would not be.

By the logic of your OTOH, wages and benefits should increase when taxes get cut for the top end, but they don't. That is supply side economic theory, and it has not been proven successful in the least. Income inequality is at it's highest levels in the US than it has been since the 1920's, and the top end tax rate is simultaneously at it's lowest levels since that same time period.

While I agree that raising taxes on the rich isn't alone going to solve the problem, we do have a revenue problem, and the least negative impactful way to increase revenue through taxation is to raise taxes on the rich.

But again, taxing the rich is just too small a drop in the bucket.

Perhaps, but it's better than holding an empty bucket.

[dbucfan]

No - you're wrong there CBW - when the drop in that bucket comes from the chief executive office targeting a segment of the population, misrepresenting the intent and impact every step of the way, it isn't better than having nothing at all. 

[Col. Klink]

No - you're wrong there CBW - when the drop in that bucket comes from the chief executive office targeting a segment of the population, misrepresenting the intent and impact every step of the way, it isn't better than having nothing at all.

How exactly is he misrepresenting the intent and impact?

[chicharone]

When the government gets $1 more in taxes...it spends $5 more. Increasing the money those thieves take in is not the solution.

We the people are the government so how can we be stealing from ourselves? o.O

Didn't mean to offend you, Senator...

[dbucfan]

No - you're wrong there CBW - when the drop in that bucket comes from the chief executive office targeting a segment of the population, misrepresenting the intent and impact every step of the way, it isn't better than having nothing at all.

How exactly is he misrepresenting the intent and impact?

Now whose having memory issues?  Check out early representations from Pres. Barry - this was to bring equity as well as impact the deficit.  The first is at best questionable unless the definition of income is amended - and the second it at best - at best a small drop in a huge bucket.  Caught with his proverbial hand in the cookie jar Barry ran out of the kitchen with the cry of fairness - getting hot in the kitchen.   

[John Galt?]

The proposed tax in question is on people earning OVER $1 million per yr. In 2009 there were only 237,000 of those.  http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96981,00.html

If you doubled their effective tax rate that would only add $95 billion. That is 7% of the deficit.

If you want to do that and find $200 billion in waste to cut and find another $500 billion in additional revenue and package it all together, then I'll get on board. But don't give me the smallest piece of that and call it a "solution"

[dbucfan]

Oh - you mean something like this JG?


Billions in Bloat Uncovered in Beltway
By DAMIAN PALETTA


WSJ's Damian Paletta discusses a GAO report that uncovers billions of dollars in wasteful spending by the U.S. government due to duplicate work done by dozens of agencies.

The U.S. government has 15 different agencies overseeing food-safety laws, more than 20 separate programs to help the homeless and 80 programs for economic development.

These are a few of the findings in a massive study of overlapping and duplicative programs that cost taxpayers billions of dollars each year, according to the Government Accountability Office.

A report from the nonpartisan GAO, to be released Tuesday, compiles a list of redundant and potentially ineffective federal programs, and it could serve as a template for lawmakers in both parties as they move to cut federal spending and consolidate programs to reduce the deficit. Sen. Tom Coburn (R., Okla.), who pushed for the report, estimated it identifies between $100 billion and $200 billion in duplicative spending. The GAO didn't put a specific figure on the spending overlap.

GAO Report


See the report, 'Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue.'

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The GAO examined numerous federal agencies, including the departments of defense, agriculture and housing and urban development, and pointed to instances where different arms of the government should be coordinating or consolidating efforts to save taxpayers' money.

The agency found 82 federal programs to improve teacher quality; 80 to help disadvantaged people with transportation; 47 for job training and employment; and 56 to help people understand finances, according to a draft of the report reviewed by The Wall Street Journal.

Instances of ineffective and unfocused federal programs can lead to a mishmash of occasionally arbitrary policies and rules, the report said. It recommends merging or consolidating a number of programs to both save money and make the government more efficient.

"Reducing or eliminating duplication, overlap, or fragmentation could potentially save billions of tax dollars annually and help agencies provide more efficient and effective services," the report said.

There have been multiple efforts to cull the number of federal programs in recent years, but they often run into opposition from lawmakers in both parties who rush to defend individual spending provisions. In fact, GAO's recommendations are often ignored or postponed by federal agencies and lawmakers, particularly when they could require difficult political votes.

Washington Wire

House GOP Leaders Tout Report
Sen. Shaheen: Report Should Be Guide for Budget Cuts
Dept. of Overlap: GAO Finds Hundreds of Duplicative Programs
The report says policy makers should consider creating a single food-safety agency because of a number of redundancies. The Food and Drug Administration makes sure that chicken eggs are "safe, wholesome, and properly labeled" while a division of the Department of Agriculture "is responsible for the safety of eggs processed into egg products."

Spokespeople for the Department of Agriculture and FDA pointed to the Obama administration's creation of the Food Safety Working Group, which works to better coordinate the government's regulators.

The report says there are 18 federal programs that spent a combined $62.5 billion in 2008 on food and nutrition assistance, but little is known about the effectiveness of 11 of these programs because they haven't been well studied.

The report took particular aim at government funding for surface transportation, including the building of roads and other projects, which the administration has made a major part of its push to update the country's infrastructure.

Journal Community


The report said five divisions within the Department of Transportation account for 100 different programs that fund things like highways, rail projects and safety programs.

One program that funnels transportation funds to the states "functions as a cash-transfer general-purpose grant program, rather than as a tool for pursuing a cohesive national transportation policy," the report said. Similarly, it chided the government over encouraging federal agencies to purchase plug-in hybrid vehicles while having policies that agencies reduce electricity consumption. It said government agencies have purchased numerous vehicles that run on alternative fuels only to find many gas stations don't sell alternative fuels. This has led government agencies to turn around and request waivers so they didn't have to use alternative fuels.

A spokesperson for the Department of Transportation said the president's budget for fiscal year 2012 "proposes to cut waste, inefficiency and bureaucracy by consolidating over 55 separate highway programs into five core programs, and by merging six transit programs into two programs."


On teacher quality, the report identified 82 programs that often have similar descriptions and goals and are spread across 10 federal agencies, including the Department of Education, the Department of Energy and the National Aeronautics and Space Administration. Nine of these programs are linked to science, technology, engineering and mathematics. Fifty-three of the programs are relatively small, receiving $50 million or less, "and many have their own separate administrative processes."

The GAO highlighted 80 different economic development programs at the Department of Commerce, HUD, Department of Agriculture and Small Business Administration, that spent a combined $6.5 billion last year and often overlapped. For example, the four agencies combined to have 52 different programs that fund "entrepreneurial efforts," 35 programs for infrastructure, and 26 programs for telecommunications. It said 60% of the programs fund only one or two activities, making them "the most likely to overlap because many of them can only fund the same limited types of activities."

Journal CommunityDISCUSS
Rather that cry about this as waste we should look at it as an opportunity to use the dollars spent today in a more efficient process, with a wider reach, instead of all of the overlap. It would not require firing anyone necessarily, just having them more focused. It is the administration of all of these separate groups that is "overhead" waste.
—Sandra Schirmang
The report took aim at several military programs, which could prove thorny because many lawmakers from both parties are wary to cut defense spending. It said there were 130,000 military and government medical professionals, 59 Defense Department hospitals and hundreds of clinics that could benefit from consolidating administrative, management and clinical functions.

For example, it said the government "may have developed duplicate" programs to counter improvised explosive devices, with the Marine Corps and the Army paying to develop similar "mine rollers." The Marine mine roller costs $85,000, and the Army mine roller costs $77,000 to $225,000. "Officials disagree about which system is most effective, and [the Pentagon] has not conducted comparative testing and evaluation of the two systems," the report said. The Pentagon didn't immediately respond to a request for comment.

The GAO study was required by a provision inserted by Sen. Coburn into a law that raised the federal borrowing limit last year. This report is the first produced in response to the provision.

Write to Damian Paletta at damian.paletta@wsj.com
http://online.wsj.com/article/SB10001424052748703749504576172942399165436.html

[CBWx2]

The proposed tax in question is on people earning OVER $1 million per yr. In 2009 there were only 237,000 of those.  http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96981,00.html

If you doubled their effective tax rate that would only add $95 billion. That is 7% of the deficit.

If you want to do that and find $200 billion in waste to cut and find another $500 billion in additional revenue and package it all together, then I'll get on board. But don't give me the smallest piece of that and call it a "solution"

When did he call it a solution?

[Biggs3535]

This idea is going down the drain rather quickly.  Reports are the proposal will cost Federal Revenue:

http://online.wsj.com/article/SB10001424052702304444604577341832674519416.html?mod=googlenews_wsj

The case for the Buffett tax keeps eroding. When President Obama announced the idea, he said it would help "stabilize our debt and deficits over the next decade." Then came the inconvenient revelation that the new 30% millionaire's tax would raise only $46.7 billion over 10 years, and would leave about 99.5% of the deficit intact in 2013. It was a far cry from "stabilizing the debt."

Now we learn that the Buffett tax the Senate is expected to vote on early next week will make the deficit worse. That's because both Mr. Obama and Senate Democrats have made it clear that their new "fairness" tax is to offset the revenue loss from another provision related to the Alternative Minimum Tax.

That measure would exempt more than 20 million middle class Americans with incomes as low as $80,000 a year from getting nailed by the AMT. This year's Obama budget clearly describes their intent: "The Buffett Rule should replace the Alternative Minimum Tax, which now burdens middle-class Americans rather than stopping the richest Americans from paying too little as was originally intended."

The Joint Tax Committee—the official scoring referee on tax bills—calculates that the combination of AMT repeal for the middle class and the Buffett tax would add $793.3 billion to the debt over the next decade. As Mr. Obama has said, "This isn't politics, this is math."

[dbucfan]

The proposed tax in question is on people earning OVER $1 million per yr. In 2009 there were only 237,000 of those.  http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96981,00.html

If you doubled their effective tax rate that would only add $95 billion. That is 7% of the deficit.

If you want to do that and find $200 billion in waste to cut and find another $500 billion in additional revenue and package it all together, then I'll get on board. But don't give me the smallest piece of that and call it a "solution"

When did he call it a solution?

When he noted on the record "it (the millionaire tax) would stabilize the debt and deficits over the next decade"?

[John Galt?]

Oh - you mean something like this JG?

http://online.wsj.com/article/SB10001424052748703749504576172942399165436.html

egg-xactly!!!

Fix all that crap and you achieve 2 things, 1- reduce the deficit. 2- instead of 50 odd well-intentioned programs tripping over each other with contradictory rules and forms that end up not helping anyone, by consolidating the intentions might actually benefit those who it is supposed to.

[Col. Klink]

No - you're wrong there CBW - when the drop in that bucket comes from the chief executive office targeting a segment of the population, misrepresenting the intent and impact every step of the way, it isn't better than having nothing at all.

How exactly is he misrepresenting the intent and impact?

Now whose having memory issues?  Check out early representations from Pres. Barry - this was to bring equity as well as impact the deficit.  The first is at best questionable unless the definition of income is amended - and the second it at best - at best a small drop in a huge bucket.  Caught with his proverbial hand in the cookie jar Barry ran out of the kitchen with the cry of fairness - getting hot in the kitchen.   

I'm over fighting windmills on stuff like this. Not sure what you mean by when he said "this was to bring equity" and what effect he actually said this would have on the deficit. Links sampling his reprehensible misrepresentations would be helpful for meaningful discourse.

[CBWx2]

The proposed tax in question is on people earning OVER $1 million per yr. In 2009 there were only 237,000 of those.  http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96981,00.html

If you doubled their effective tax rate that would only add $95 billion. That is 7% of the deficit.

If you want to do that and find $200 billion in waste to cut and find another $500 billion in additional revenue and package it all together, then I'll get on board. But don't give me the smallest piece of that and call it a "solution"

When did he call it a solution?

When he noted on the record "it (the millionaire tax) would stabilize the debt and deficits over the next decade"?

Did he say "it would", or did he say "it would help"? Because here's the quote I found:

“Now you’ll hear some people point out that the Buffett rule alone won’t raise enough revenue to solve our deficit problems. Maybe not. But it’s definitely a step in the right direction.”

http://cnsnews.com/news/article/obama-buffett-rule-maybe-not-solution-deficit-step-right-direction

[dbucfan]

Evolution is a wonder isn't it CBW.  This has been going on a while, and Barry has been 'walking it back' on the outcome for a while. 

[VinBucFan]

While it may be easier to eliminate negative taxes, it isn't the most wise approach. If you aim to increase revenue through taxation, then taxing the rich is certainly a smarter approach than taxing the middle class or the poor, because doing so is also going to do nothing more than exacerbate the problem. '

When people who qualify for those negative tax returns get them, they spend that money. It gets recirculated into the economy almost immediately. That may or may not be the case with certain top end tax breaks, but it is always the case for middle to low end ones. For example, using the same line of logic as you did in the tax revenue argument, enabling 1 million people buying $300 TV sets has a bigger positive impact on the economy than enabling 100,000 people to buy $2,000 TV sets.

I hope someone corrects the fallacies in this statment later on in this thread.  Here's the very simple version.  Let's start with the part in bold.  Wealthy people do not stuff money in mattresses.  They by big expensive things, they invest in companies, which provides them witrh capital, they invest in their own company(ies) which leads to jobs, they kepp money in backs, which allows the back to lend, etc. So the notion that money retained by wealthy people is some how less valuable then that money retained by poorer people is .  . well  . ..  way off base.  Wealthy people return money to the ecomony, almost immediatley,  and often in MUCH MORE meaningful ways.  So, the false premise of the stament above is that the "100,000" people would just buy more expensive TVs.  That's not how it works in the real world.  Some do, but they also return money exactly as aIU described above.

The key to a strong economy is not consumption, it is innnovation and the production and then jobs that flow from it --- and all of this takes CAPITAL.  The goverment is the worst place to put that capital becasue often times it is not creating anything or if it is trying to it is doing so in a grossly inefficient way.   Like it or not -- and I am speaking from the experience of own two different small businesses in my career (and I mean small, $1-5 million, 8 to 25 employees)  -- the best way to keep an ecomony thriving is to keep the capital in the hands of the free market business people who create jobs.  The idea that successful business people just pack away money in suticases is a joke.  A small business is like a boat or a house, when you won one you generally take pride into building IT into something that you are porud off.  This means, for example, going from leasing plant and eguipment to owning, buying the latest piece of equipment or HIRING additional people to do the work that the owner USED to do..

On the stimulus bill, and I could certainly be wrong about this so I am happy to be corrected, wasn't one of the BIGGEST areas of spending the education department? If that is correct (and here is a link --  http://projects.propublica.org/tables/stimulus-spending-progress ) then that fact alone undercuts the very idea behind the spending because there is NO WAY that education spending (other than maybe construction jobs associated with building physical plant) could really be STIMULUS if the word stimulus means what most thing it to mean.  That type of spending might be INVESMENT, but not stimulus and, in any event, not the best use of funds.  Hell, the government would have done better to just use the same stimulus money to guarantee bank funding because the lag in the economy is due, in part, to banks NOT lending.  Again, CAPITAL is what is needed.  The government is not the solution, free markets are the solution . . . .  unless wea re talking about more than just the economy .. . . .  which . . .  is . . . . really ..  . waht's going on.