Tag: Tax Reform

Herm’s Social Security Plan

We hear daily about the Cain tax plan of 999….everybody is all a twitter (the feeling not the social media) about his plan….but I want to talk about what he has in store for Social Security……but first……Cain’s economic adviser is NOT an economist…..the “999″ plan was dealt its biggest blow when one of Cain’s own economic advisers said it wasn’t a tax plan he would back. While Gary Robbins, who scored the plan for Cain’s campaign and is a paid consultant, praised the plan, he made it clear that it wouldn’t be the plan he picked.  That pretty much tells you just how effective it would be…..

But let us move on…..Herman Cain likes to call his proposal for Social Security as the “Chilean Model”……okay but what is the “Chilean Model”?  In short, the Chilean Model — if actually enacted and administered as it is in Chile — would be a far, far cry from the abolition of the welfare state. Instead, it would represent government partnering with private business in order to administer the social welfare guarantees that conservatives are often so quick to denounce.

Under the Chilean system, workers must contribute 10% of their income, up to a certain limit — similar to Social Security taxes in this country — to a private pension fund administrator.

Workers then choose which funds to invest in, according to the different classifications of risk levels. But even then, there is no true free-market risk of total failure and being left out in the cold — at least, not for the pensioners.  In fact, the government has maintained a social guarantee of minimum pensions for retirees. Thus, in case of serious under-performance or losses by a fund — or outright bankruptcy of a failing AFP — the government will essentially perform a bailout of retirees, by paying for the difference up to the minimum benefit. Indeed, the reforms that have taken place in the system have been done to address the wide-ranging low payments from the system, with expanded efforts to cover poorer workers and to increase the minimum benefits that the government will provide.

In other words….it is a snow job that still requires governmental involvement…if in fact he is proposing using the Chilean Model…..so just like his fallacy of the 999 Plan so goes his Social Security plan….maybe he should spend more time on the mechanics of his plan and less time doing interviews that he pisses up every time he opens his mouth…..just a thought!

Cracks In The Nordquist Wall?

In case there are still those who do not know who Grover Nordquist is let me assist……he is the guy that has the Tax Pledge that almost all Repubs sign promising to NEVER raise taxes….and there is where the rub is in the debt debate…..Repubs want nothing but cuts and Dems are calling for cuts and revenue sections to any bill…..up until about a year ago…cracks are starting to form in his wall of tax cuts only…….

One of the leaders of the hammer brigade is Sen. Coburn, a Repub, but it is more in the form of a technicality than an outright dismissal of the Pledge he signed when he came to Washington……

This from the Fiscal Times……

The Wall Street Journal reportedthat Coburn was among the members of a small bipartisan group of senators who are willing to consider taxes as part of a deficit reduction package. Norquist immediately went after the three Republicans named in the article: Coburn, Saxby Chambliss of Georgia, and Mike Crapo of Idaho. (The Democrats are Kent Conrad of North Dakota, Richard Durbin of Illinois, and Mark Warner of Virginia.)The same day the Journal article appeared, Norquist fired off a letter to Chambliss, Coburn and Crapo, threatening them with retaliation for their apostasy:

I was disappointed this morning to read an article … in which you were implicated as parties to a bipartisan budget deal containing a net tax increase…. Needless to say, support for such a deal would most likely be a violation of your Taxpayer Protection Pledge. That pledge which you made to your constituents and the American people obligates you to “…oppose any net reduction or elimination of deductions and credits, unless matched dollar-for-dollar by further reducing tax rates.”

I urge you to reject this so-called “deal” which is little more than a transparent attempt to hike taxes and put off the spending restraint the country clearly called for in the 2010 elections.

Chambliss, Coburn and Crapo immediately wrote back to Norquist, rejecting his threat and the logic of his argument. They said there is a huge difference between a legislated tax increase and the natural rise in revenue that would accompany faster growth resulting from tax reform.

To Nordquist, the deficit is NOT important at all…….

Norquist is backed into a corner and forced to admit that he doesn’t really care about the deficit. He told the Washington Post’s Ezra Klein on March 9, “The goal is to reduce the size and scope of government spending, not to focus on the deficit.”When asked to explain how the size and scope of government is reduced by the tax pledge, Norquist fell back on a discredited doctrine called “starve the beast,” which says that tax cuts somehow or other automatically reduce spending and that the only thing to talk about is spending.

There must be revenue increases if there is to be a true recovery……cuts alone will do little to nothing….hopefully there are those that can do the math…….it is basic math not some exaggerated formula…….

So I ask again, is there cracks appearing in the Nordquist wall?

But wait!  There is an addendum……..this from yesterday’s Think Progress……

The Washington Post editorial board reported this morning that Norquist himself stated that allowing the Bush tax cuts to expire in 2012 would not technically violate his pledgeas “not continuing a tax cut is not technically a tax increase”:

Would allowing the Bush tax cuts to expire as scheduled in 2012 violate this vow? We posed this question to Grover Norquist, its author and enforcer, and his answer was both surprising and encouraging: No.

In other words, according to Mr. Norquist’s interpretation of the Americans for Tax Reform pledge, lawmakers have the technical leeway to bring in as much as $4 trillion in new tax revenue — the cost of extending President George W. Bush’s tax cuts for another decade — without being accused of breaking their promise. “Not continuing a tax cut is not technically a tax increase,” Mr. Norquist told us. So it doesn’t violate the pledge? “We wouldn’t hold it that way,” he said.

Norquist is quickly trying to walk back that statement, declaring that “any failure to extend or make permanent the tax cuts of 2001 and 2003, in whole or in part, would clearly increase taxes on the American people.” However, even while reaffirming this principle on MSNBC this morning, Norquist stated again that there are technical ways to allow the tax cuts to expire that “and not violate the pledge.”

Cracks are forming……’Mr. Nordquist…tear down this wall’………(sorry could not resist)………

When Did One Person Make Policy?

Washington is all a buzz with the negotiations between the Congress and the Prez on what to do about our spiraling debt….yet NO matter what they say, and they all want their couple of minutes in front of the media, they are being held hostage by ONE man……

I was under the impression that the Congress and the Prez made fiscal policy…….I thought the two houses and the Prez sat around and negotiated on all fiscal policy…….and with the help of special interests, of course…..but it seems that one person makes all the tax policy for the country…..especially when we are talking about what ti do with those tax policies……..who am I speaking of?……….Grover Nordquist!

Yep, good old Grover is the single most productive person in our government….and he is NOT even elected….but just who is Grover Nordquist?

Mr. Norquist is president of Americans for Tax Reform (ATR), a taxpayer advocacy group he founded in 1985 at President Reagan’s request. ATR is a coalition of taxpayer groups, individuals and businesses opposed to higher taxes at the federal, state and local levels. ATR organizes the TAXPAYER PROTECTION PLEDGE,which asks all candidates for federal and state office to commit themselves in writing to oppose all tax increases. In the 112th Congress, 236 House members and 41 Senators have taken the pledge. On the state level, 13 governors and 1249 state legislators have taken the pledge.

And that is the short form……now ask yourself just how can ONE person control so much power when making legislation?  It is that damn pledge!  If the Repubs break their word and vote for some sort of tax increase it will come back and bite them in the butt during their next election……even though the majority of people , that is regular people, in this country say that some sort of tax increase should be part of our debt solution…..but may not be considered because the GOP are spineless worms and ONLY care about their next campaign (not that Dems are any better)……..
I ask again….how can one person hold up a whole fiscal policy because of some ideological crap that does NOTHING to help the country and everything to with helping corporations?
When did our government allow one person to wield that much power?  What amendment gave a single civilian this much control?  If a single individual has that much power….what hope is there that your concerns will be heard?
ONE man controls the fate of the nation….ONE MAN!

How Many Corporations Pay Their Taxes?

Riddle me that…….

(sorry this is a bit longer than most of my posts….but it needs to be said….)

I know that some of my more conservative readers will not want to hear these proposals…..I believe that if the middle class must suffer and sacrifice then so should the others……I believe in shared sacrifice…..in action not in the idle words of politicians…….

For years conservs have been rattling on about the high corporate taxes in the US…..but they seemingly leave out the part that they get enormous tax breaks and tax cuts almost yearly….and in some states, mine to be exact, the conserv legislature is trying to eliminate corporate income tax, even though they pay very little as compared to what the working stiffs pay……

Think not?  This from Politifact Ohio……..

To back up her assertion, Fudge’s office cites media reports about particular companies – like General Electric and Bank of America — that did not pay 2009 taxes as well as a July 2008 report from Congress’ Government Accountability Office that showed it’s relatively common for big companies to pay no taxes.

Between 1998 to 2005, GAO found that about 72 percent of large foreign controlled companies and 55 percent of large U.S. controlled companies reported zero tax liability for at least one year. About 57 percent of foreign controlled large companies and 42 percent of U.S. large companies paid no taxes in two or more years, and a third of the foreign companies and one quarter of their U.S. counterparts paid no taxes for at least four of those years. Just 45 percent of large U.S. companies and 28 percent of foreign companies reported a tax liability for each of the eight years. The report defined large companies as those with at least $250 million in assets, or at least $50 million in receipts

I say if I pay a 30% tax then corporations pay the same….a shared sacrifice….that they all keep going on about……and there are other ways that corporations can be more socially involved…….I read a piece in the UK’s Guardian by Nicholas Shaxson and I say it is worth considering…..

1) Corporate profits depend on tax-financed public goods: healthy and educated workforces; good infrastructure; publicly enforced respect for contracts and property rights, and so on. When corporations avoid or evade tax, legally or illegally, they free ride on the backs of the rest of us. Stop taxing them, and you savagely undermine political community.

2) Corporation taxes are an essential backstop to personal income tax. Cut them to zero, and wealthy individuals will increasingly reclassify their earnings as corporate income, typically using offshore corporate structures, and escape tax. Gauke’s arguments about employees footing the corporate tax bill are irrelevant.

3) Gauke’s claim of a “consensus among economists” that the burden of corporation taxes falls on employees and not on capital owners, is false. The US Congressional Budget Office said last week that it was “unclear” how much of the corporation tax burden fell on employees; earlier, it said that capital bore most or all of the corporate tax burden. The Institute for Taxation and Economic Policy (ITEP) in Washington said this month that the incidence of corporate tax fell mostly on capital owners, not employees. It added that corporate income tax was among the most progressive taxes, because stock ownership was heavily concentrated among the wealthiest taxpayers. This is an especially precious tax.

4) When Gauke talks about “employees”, who does he mean? Goldman Sachs employees earned $430,700 on average last year. To the extent that the burden falls on them, taxing such firms makes the tax system more progressive. It would also cut into excessive bank remuneration, which has been a big factor in the recent financial crisis. Taxing financial corporations also curbs the “too big to fail” problem where large banks can hold governments hostage and shift losses on to taxpayers.

5) If corporation taxes didn’t fall on the owners of capital, as Gauke claims, then corporations, responding to shareholders’ wishes, shouldn’t mind being taxed. So why do they spend so much time and money designing tax avoidance strategies?

6) Limited liability companies are separate legal persons, greater than the sum of their parts. So they should be taxed separately: this is not “double taxation”. Limited liability lets shareholders dump costs on to society when things go wrong. Corporations must pay for this privilege.

7) Many corporations earn what economists call rents. These – like oil money that flows effortlessly into Saudi or Kuwaiti coffers – are earnings that arise not from hard work and real innovation but from accidents of nature or good fortune. Adair Turner recently explained how banks in the City of London are particularly adept at earning rents, such as from exploiting insider knowledge and expertise; from natural oligopolies in market-making and other activities; and from “valueless” trading activity. Economists since Adam Smith – including Turner – have advocated taxing rents especially hard.

8) Corporate tax avoidance, despite hiding behind weasel words such as “tax efficiency”, is unproductive and inefficient. When corporate managers pursue tax avoidance they take their eye off what they do best – producing better or cheaper goods or services – and focus instead on engineering transfers of wealth from taxpayers to corporations. Clamp down on it, hard, to make markets more efficient.

9) It matters where company owners and business activities are. Take a US mining company digging gold in Zambia. If Zambia raises corporation taxes, wealth will flow from wealthy US stockholders to ordinary African taxpayers. The investor will stay, because that’s where the gold is – and even if it goes, another will take its place. That basic formula works for profitable opportunities in general. Tax corporations, within reason, and they may bluff and bluster – but they will stay.

10) The “Laffer argument” that corporation tax cuts pay for themselves has been thoroughly debunked. Even Greg Mankiw, formerly chairman of George W Bush’s Council of Economic Advisers, calls Laffer’s adherents “charlatans and cranks”.

Good stuff and excellent proposal……it will NEVER come about……special interests are in control….they have almost always been in control…….but what about shared sacrifice?

Was The Recent Tax Deal Good News?

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…………

Tea Partiers And Reality

Daily Agitator

Subject:  Tax Day Protests

Yesterday was tax day and the Tea Party was out in droves…there was suppose to be 661 separate protests across the country…..but there is a couple of things that are interesting…..Tea Partiers have been labeled as low info voters but a survey has shown that most are well off and well educated and 6% of the Partiers say that the economic problems were Bush’s doing…..while 37% blame Obama…….apparently they may well be more educated by they do not seem to pay attention to what is happening in their lives…….oh yeah, 89% of the Partiers are white….just thought you might like to know…….

And another complete mystery is their opposition to the tax increases of the Obama and yet about 95% of the population will get tax relief in the next year or so…..so what is the taxes that they are so concerned over?

Most of the Partiers are not bitching about Social Security, Medicare or Defense, which makes up about 75% of the budget……it is the other 25% that they are so concerned about….nice, huh?……then what is the problem and what do they want to eliminate?

There is more……many of them say that they want and know what the Founding Fathers intended and that we have to get back to that…..but somewhere they neglect to say just what it is that they intended and few that mention the Constitution but never mention why or what they are talking about…somehow revs up the crowd just to mention the Constitution…..the reality is that the mention of the document is just that…a mention…..it is political rhetoric….if they truly think that something is un-Constitutional then they need to provide proof….if they cannot do that then ignore the babble…..

I understand the frustration and the anger….we all have that, especially if you are in the Middle Class…..but for God’s sake be specific…..

We are told that the Tea Party is a movement by  the media….but is it?….I want someone to give me a workable definition of what the Tea Party stands for…I mean in real terms not some obfuscated thing like “freedom”…….I have a feeling that I have a lengthy wait…..how about you?

The Tea Party is not facing reality….they think that “Obama sucks” and that somehow is enough to carry the “movement” forward…….after the Taxes….what then?  Where will the “Party” go….will it go away?  Or move on to another fictional boogieman?


Now It Is Tax Reform?

Inkwell Institute

Budget Deficit Series #3

I was wondering when there would be a new bill dedicated to tax reform….the GOP has been hinting at it for almost a year now…..and now my wait is over….I am talking about the Gregg-Wyden Tax Reform Bill……and I am not disappointed the usual suspect are in there….tax cuts, corporate tax cuts, and on and on…

But I will let the WSJ take it from there:

The plan put forth by Sens. Judd Gregg (R., N.H.) and Ron Wyden (D., Ore.) would lower the number of marginal income tax rates to three: 15%, 25% and 35%. It also would eliminate the alternative minimum tax, which lawmakers scramble to “patch” each year in order to minimize its impact on middle-income taxpayers.

The plan would create a single corporate income tax rate of 24%, but allow small businesses with receipts of up to $1 million to expense all of its equipment and inventory costs.

The plan would target “direct payments and indirect subsidies to businesses each year,” but would leave it to the nonpartisan Congressional Budget Office to identify “the least productive” of those subsidies. Politically, that would be a tough task, as lawmakers fiercely guard subsidies that benefit their states and districts.

The capital gains tax also would see broad changes under the plan. The legislation would exempt the first 35% of capital gains income from the tax. Also, the first $500,000 of investment would be held for at least six months to be considered long-term capital gains income, and the next $500,000 would have to be held for a year to be considered long-term.

As usual this is NOT reform….this is the same thing that ALL health reform plans offer…..not reform but a tweaking of the system to benefit some but not all…..This is just an attempt to slow the criticism for the hyper-partisanship in Washington…..

If they truly wanted to reform the system then they would go with everyone pays a flat 15% of income with those making under $35,000 as exempt……they would call for ALL income to be taxed for FICA…there would be no exemption because of earnings ceiling….

The corporate tax thing….for decades the conservs have been bitching about the US has the highest corporate tax rate in the world….but they fail to mention once the tax breaks, incentives and deductions kick in it will be one of the lowest…..

I will go along with the 24% that these guys are calling for if there are NO breaks, cuts or incentives…..but that is a pipe dream on my part…why?….this section is the one that is most important…..the special interests of the corporations are pushing for this…the rest is just cover to get this section passed……

If they want REFORM then come up with REFORM…tweaking is a cowards way out….but true reform takes guts and hard choices (a future post) and those are sadly missing in Washington.