Cliff Notes

CBO: Letting upper-income tax cuts expire would barely hurt economy

Letting the high-income Bush tax cuts lapse, for example, generates $42 billion in 2013 but hardly hurts GDP at all. By contrast, the defense cuts amount to $24 billion but hurts growth by 0.4 percent

What's in the fiscal cliff?

$7 trillion worth of tax increases and spending cuts over a decade. ..... While that might seem like a deficit hawk's dream come true, it's anything but. ..... "It's too big, too quick, and focuses on the wrong parts of the budget" ..... reductions in both defense and non-defense spending; the expiration of the Bush tax cuts; the end of a payroll tax holiday and extended unemployment benefits; and the onset of reimbursement cuts to Medicare doctors. ...... If left in place, the fiscal cliff would lead to the biggest single-year drop in the annual deficit as a percent of the economy since 1969. ...... But because it would be so abrupt and arbitrary, it also could throw the United States back into a recession next year, when more than $500 billion will be taken out of the economy. ...... automatic spending cuts to commence on Jan. 2 that will amount to $1.2 trillion in deficit reduction over 10 years. ..... $55 billion will be cut in 2013 from projected levels of discretionary defense spending. That translates into at least a 10% cut to every program, project and activity that's not explicitly exempt. ...... $55 billion will be cut from projected levels of nondefense spending, which includes things like education, food inspections and air travel safety. Budget experts estimate the cuts will result in at least an 8% cut to programs, projects and activities .... Income tax rates: Rise to 15%, 28%, 31%, 36% and 39.6%, up from 10%, 15%, 25%, 28%, 33% and 35%.

Here's What's Probably Going To Happen With The Fiscal Cliff

an agreement will be reached AFTER January 1st - so that the Bush tax cuts can expire and certain politicians can claim they didn't vote to raise taxes (silly, but that is politics). ...... the tax cuts for low to middle income families will be reenacted ...... tax rates on high income earners will increase a few percentage points to the Clinton era levels ..... Not only is there no 'bang' event on January 1, but letting the tax rates jump is a way for politicians to then vote to lower them, which is easier

CBO warns of fiscal cliff risk

The biggest threat posed by the $7 trillion fiscal cliff is that it could throw the U.S. economy into recession next year. ..... Congress may choose to avert the cliff in whole or in part ..... The fiscal cliff as a whole, if it went into effect for all of next year, could result in a drop of 0.5% in real gross domestic product, according to the CBO. And that contraction could push unemployment to 9.1% by the end of 2013

My Reason To Drive Off The Roof
Bad Advice From Paul Krugman

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Sales Tax, Wealth Equity Tax

Image via WikipediaThere are right wingers claiming close to half the country does not pay any taxes. But everybody pays the sales tax. When you buy potato chips you are paying the sales tax.

Instead I think there is an urgent need to introduce a wealth equity tax. As soon as a company's valuation exceeds a billion, the American people end up owning 10% of it. That should be the arrangement. The US federal government would represent the American people. This would apply to all corporations whose market value might already exceed a billion.

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The Stupid, Stupid Bush Tax Cuts

Image via WikipediaThe Bush tax cuts are the reason the Great Recession happened. The continuation of the same is the reason we are not fully out of the recession yet. And now I have Warren Buffett seconding that opinion.

New York Times: Stop Coddling the Super-Rich: While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors. ........ These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places. ...... Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent. ....... If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot. ....... Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot. ........ I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation. ........ In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent. ........ 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.) ....... I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get. ....... for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.

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The Bush Tax Cuts: Why There Are No Jobs In America

Image via WikipediaCreating jobs is no rocket science. The entrepreneurs in the private sector do it. But people in DC can get in the way in a major way. And they have been doing it. The single biggest reason why America does not have the jobs it needs would be the Bush tax cuts.

I am for a small, efficient government. Heck, I am a tech entrepreneur, I want the government out of my face as much as possible. And cutting taxes is one way to achieve that goal of small government. But you have to create surpluses first.

You don't engage in a trillion dollar war in Iraq a-n-d spend another trillion dollars on tax cuts with borrowed money. That is like saying the small government agenda in America is China's responsibility.

The single best thing DC can do to create jobs is to balance the budget. And so getting rid of the Bush tax cuts is going to have to be the center piece of the Obama 2012 effort. If you want to keep the Bush tax cuts, vote for someone else, vote for Arizona Palin, or whoever. Because Barack Obama is for eliminating the irresponsible Bush tax cuts and creating jobs for the American people.

The US Military Budget Needs To Come Down To 100 Billion From 600

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