A Super Offer Rejected by Democrats

Discussion in 'News / Current Events' started by carpro, Nov 10, 2011.

  1. carpro

    carpro
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    http://online.wsj.com/article/SB100...7028083997201376.html?mod=djemEditorialPage_h

    A Super Offer Rejected
    Republicans bid $500 billion in new revenues. Democrats want more..

    Pessimism is growing about the Congressional super committee on deficit reduction, so we were eager to listen yesterday when Pat Toomey called with the latest lowdown. Most notably, the Pennsylvania Senator explained why he and his five fellow Republicans have decided to put new tax revenues on the table.

    The rap from Democrats has been that Republicans refuse to touch revenues, preferring only to cut spending. But Mr. Toomey explained that this week the GOP Six offered to raise revenues by $500 billion over 10 years as part of a tax reform that would lock in lower tax rates in return for giving up deductions. Democrats have rejected it, which is puzzling since it would achieve so many of their stated goals.
     
  2. targus

    targus
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    Obama and Crabby both overlook this sort of thing in order to continue the fiction of Republicans as obstructionists.

    That myth is Obama's best (if not only hope) of reelection since he is doing nothing of substance about any of our country's problems.

    Let me amend that to "nothing other than making our problems worse."
     
  3. billwald

    billwald
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    "The GOP offer would raise about $250 billion over 10 years by using some variation of economist Martin Feldstein's proposal that no combination of deductions could exceed, say, 2% of a taxpayer's adjusted gross income."

    This would mostly be paid by the bottom 80% of taxpayers, some of whom tithe to their local church and claim the deduction.
     
  4. Ruiz

    Ruiz
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    Could you provide a source for this? Not that I am doubting you, but I am observing an economics class where I teach and I appreciate macro-economics and working out ramifications of these things.
     
  5. targus

    targus
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    No he can't provide a source because as usual he is just talking through his hat.
     
  6. billwald

    billwald
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    The devil is in the details

    Ruiz:

    The story doesn't define "deductions."

    "The GOP offer would raise about $250 billion over 10 years by using some variation of economist Martin Feldstein's proposal that no combination of deductions could exceed, say, 2% of a taxpayer's adjusted gross income. (See Mr. Feldstein's Journal op-ed, "The Tax Reform Evidence From 1986," Oct. 24.) That's a big revenue hit, especially for earners in the top tax brackets who benefit more from tax breaks. Grover Norquist of tax-pledge fame would probably not be pleased."

    This is basic Republican propaganda the intent of which is to start start class warfare to divide the well paid working class from the blue collar/white class working class and to direct our attention away from the top 1%, the rich people.

    The logical dividing line between working class and rich class is between the people who work for wages and those who live by selling off some of their capital gains. The very rich don't have "wages" or much in the way of personal deductions. The rich only pay 15% capital gains on the money they spend. How much would eliminating "deductions" cost them?

    Exactly which deductions is Feldstein talking about? For the working class, the the largest deduction is probably the mortgage deduction. Rich people don't have mortgages. They pay cash.

    Is it the working class or the rich class who tithes AND itemizes? Most people go short form. For a few years after the kids turned adult we were spending over $50K/year retirement income, tithed, and still came out ahead going short form. Fact, the IRS told us were didn't have enough taxable income to file - that only went on for 3 or 4 years. My point - how many very rich people tithe?

    Say a working union family makes $120K and tithes. They can deduct $12K. Under this new, wonderful proposal, The deduction would drop to $2.4K and their cost to tithe would increase 80%.

    "In return for these cuts in deductions, Mr. Toomey says the top individual tax rate would fall to 28% from 35%, with the other tax-rate brackets falling by similar proportions. The current top rates for capital gains and dividends (15%) and the estate tax (35%) would remain unchanged. The GOP negotiators agreed to the Democrat request that these tax changes be statically scored—which assumes no revenue gains from economic growth—yet they would still yield $250 billion in additional revenue over a decade even with the lower tax rates."

    So if the tithing family making a good union wage is going to pay more taxes, exactly who will be paying less taxes - especially if the top tax rate is dropped?

    Who in this list would be paying less taxes if deductions were capped at 2%?

    Our money guy works to keep our marginal tax rate below the top tax rate. If this plan was put into effect as described we would spend more and pay less.
     
  7. targus

    targus
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    billwald makes a lot of unfounded assumptions and is still just talking through his hat.
     

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