With the passage of the extension on the Bush tax cuts (now and forever, to be called the Obama tax cuts) has revved up the calls for extensive tax reforms….from the Prez and his minions and even from some in the Tea Party….but what are the chances?
From the WSJ…..
This week’s great debate over the fate of the Bush-era tax cuts is doing something more important than determining tax levels for a couple of years: It’s helping set the table for a fundamental reform of the tax system.
That may be a blessing in disguise. Today’s tax compromise is laying the groundwork for tomorrow’s badly needed national debate over how to perform a much more fundamental makeover of the tax code, most likely after the next presidential election.
Actually, this week’s tax debate is merely the second big recent event pushing the country closer toward this rendezvous with real tax reform. The first came in the form of the report issued by the bipartisan deficit-reduction commission Mr. Obama created to deal with Washington’s tide of red ink.
A real conversation on tax reform is needed but will it ever come?
Ezra Klein makes a very astute observation in the WaPo……..
I doubt it. If you could agree on what the words “revenue neutral” meant, you really could redesign the tax code to feature lower rates, simpler forms and less economic drag. But given the coming expiration of the Bush tax cuts, you can’t agree on what revenue-neutral means, as Democrats will say it means revenue after the cuts expire, and Republicans will say it means revenue if the cuts were extended. Until that question is resolved, every tax reform conversation will break down when Republicans realize Democrats are trying to lock in the expiration of the Bush tax cuts and Democrats realize Republicans will only reform the tax code if it means the Bush cuts live forever and ever, amen.
Conservatives want lower taxes, particularly on the rich. They want a larger percentage of Americans to pay federal income taxes, as they believe that paying federal income taxes makes you less likely to support federal spending (Question: Is there any evidence for this view?). They want major cuts in existing government programs and a high bar to creating new programs, which means total revenues have to remain below current spending and far below projected spending.
Liberals have their own concerns: They want more revenues, as they know that their programs can’t survive forever unless taxes rise to meet spending. They want the tax code to be more progressive, and they want to see inequality fall. They want taxes on wealth-income brought into line with taxes on work-income. They want the social spending that runs through the tax code, like the Earned Income Tax Credit or the breaks for clean energy development, to survive, and even be expanded.
All this back and forth….only proves ONE thing….there will be little change in the tax code and structure in the near future……the working class will pay and the wealthy will get the benefits of their station in life…………
I’m sure you’re right about most of that – it’s all going to come down to some kind of stalemate that has its foundation in political posturing.
I am, as you know, a believer in the idea that there should be NO income tax at all – it was after all an English invention that originated several hundred years ago and was introduced to fund some war or other and we’re all still bloody well paying it!
However, although I don’t have any in depth understanding of the American tax system, I don’t quite get your claim that the working class are the only ones who pay and the wealthy just rake in the dosh. If a person is wealthy, why would you not expect them to enjoy their wealth? If you have a car, I presume you enjoy your possession. Are you claiming that everyone else should have access to it – particularly if they are poorer than you? If you’ve got something, you want to keep it and enjoy it – and why not?
I am told that the US is the only major economic country (though the EU and others are trying to jump on this bandwaggon) that will tax in the US, a wealthy person’s income abroad, even though they have paid tax on that money in the country in which it was earned and they do not bring the money into the US – so they get taxed TWICE on the same money! What a rip-off! Simply THEFT! FRAUD! Frankly, a f*cking cheek!
The result of that is, of course, that a number of people (relatively wealthy people) have found it worthwhile to RENOUNCE their US citizenship (not worth much these days anyway) to prevent themselves being cheated out of thousands (even millions) of dollars. How does the US gain from losing these people, their wealth and all the taxes they DID pay?
Great system you have!
The system is a very bad blowjob……..and it will end in a stalemate or maybe some form of minor reform……but the bottom line that the rich will retain ALL or most of their benefits…….
Nothing wrong with the wealthy enjoying the fruits of their labor. What irks me about their taxes is that capital gains is taxed at 15%. It really is income created from their wealth. I can assure you, after deductions and what not, my tax rate is greater than 15%. Why should I pay a greater percentage of taxes because I earn my living by creating real products or services?
Heck, look at some of the things that the conservative pundits are saying. Effectively, they are saying that the wealthy should not have to pay taxes at all. How messed up is that especially considering how they rant about how half of the people in this country do not pay federal taxes[1]?
[1] – There is a problem here especially since some people have an effective negative tax rate.
I do not have a problem with people becoming wealthy…..but I do have a problem that we all do not pay the same in taxes…..and in my state with the Repub governor they want to end income tax for corporations……..they say it will create jobs….like that will ever happen…nothing here has created one job and yet they still sell that premise to people who do not bother to check this stuff out….
Terrant is right. They bitch about poor Americans not paying a proper share and in the same breath say that priviledged folks shouldnt even have to pay a proper share. Its nonsense, but its what ive heard my whole life. I agree that big change wont ever come.
Gov. Barbors corp. Tax plan is a sham. Trickle down theory is a nice dream. And mississippi is still suffering. Create jobs my ass.
Watch for more on Barbour….I have known the man for 30 years and have NOT agreed with him on much…….
Trickle down was always a load of bollocks. However, wealthy people do well and the poor do less well – that’s life. I don’t understand why everyone is stuck on this idea of income tax – there should be NO income tax for ANYONE – it’s bloody disgusting tax!
On top of that, you goddamned Yanks have NO idea! MOST people in the UK pay a MINIMUM total of 50-70% of their income to the government in one tax or another – and it’s increasing all the time! Even income tax STARTS at 20% (apart from on a VERY tiny income that shouldn’t even be taxed at all). The top rate is 50% and then there’s NI up to 12% on top of all those rates plus employers’ NI at up to 12% also and then VAT at 20%, plus duty on this that and every damn thing (like fuel is around 10 dollars a gallon because of tax). And all that doesn’t even BEGIN to deal with the LOCAL (like state to you) taxes, which are enormous for nothing in return. You guys don’t know you’re BORN!
note to self: do not move to the U.K. How do people survive?
I have NO idea – I moved out (though I still have connections and still pay some tax there). I couldn’t (and WOULDN’T) afford to live there though.