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  •  What is the purpose of revenue neutral? Sounds (12+ / 0-)

    like a waste of time.

    Unless the purpose of it is to shift the burden from the rich to the poor.

    "Drudge: soundslike sludge, islike sewage."
    (-7.25, -6.72)

    by gougef on Tue Jan 22, 2013 at 06:37:05 AM PST

    •  The purpose is to balance out what upper (6+ / 0-)

      income level households and businesses pay, so you don't have two households at the same income, one paying an effective tax rate of 30% and one paying an effective tax rate of 15%.  You do that by eliminating deductions/exemptions and flattening the rates, so they both pay an effective rate of, say, 25%.  Right now, that is very much what is happening with upper level household incomes.  You can have two working professionals, making in that range between $250,000 an $1 million, paying an effective rate of 28% because of the AMT, and another household at the same income level, or even a millionaire, paying an effective rate of 15% or less.  

      For business, the same principle applies, and it has the added benefit of having  business make decisions based on what is best for their business rather than what tax breaks are available.  It's importantly for households for fairness.  It's important for business so that tax policy doesn't play a huge role in shaping business decisions.  

      •  To fix that, you'd have to treat capital gains (15+ / 0-)

        as ordinary income.  Something that I support, but I don't see the Republicans as supporting anytime soon, as their core constituency seems to be the rich...

        •  Yes you would (3+ / 0-)
          Recommended by:
          Sychotic1, NormAl1792, VClib

          If you lower the top rate enough, you can do that for upper incomes.  

          Historically, the effective rate for the top 1% has been at 20-22% or so (I think it peaked during the Clinton years).  If the top marginal rate was around 25% and there were few to no deductions, you probably could, for upper incomes, tax capital gains as ordinary income without losing revenue.    

          There are legions of people running the numbers.  

          •  :: sigh :: (8+ / 0-)

            How about simply taxing capital gains at the individual's marginal rate, and ending the discussion there.

            I hope that the quality of debate will improve,
            but I fear we will remain Democrats.

            Who is twigg?

            by twigg on Tue Jan 22, 2013 at 07:56:34 AM PST

            [ Parent ]

            •  twigg - that's only happened once (1+ / 0-)
              Recommended by:
              twigg

              After the Tax Reform Act of 1986 when the top rate was 28%. Historically long term capital gains tax rates have been one half of the taxpayers top effective rate.

              Every country in the G20 taxes long term capital gains at a lower rate than earned income. The US would never want to be the sole outlier and tax them both at the same rate, unless the rate was very low like after the TRA86. Countries with high capital gains tax rates have seen capital flight, and reduced long term economic growth. It would also reduce foreign investment in the US.  

              "let's talk about that"

              by VClib on Tue Jan 22, 2013 at 08:39:53 AM PST

              [ Parent ]

              •  That's not true (1+ / 0-)
                Recommended by:
                RandomNonviolence

                The UK taxes capitals gains at an individual's marginal rate.

                There is a calculation that strip inflation from the apparent gain, so that only the "real gain over time" is taxed, but then it is taxed at margin.

                I hope that the quality of debate will improve,
                but I fear we will remain Democrats.

                Who is twigg?

                by twigg on Tue Jan 22, 2013 at 08:57:29 AM PST

                [ Parent ]

                •  twigg, your source is wrong. UK rates are lower (1+ / 0-)
                  Recommended by:
                  twigg

                  for Capital Gains than ordinary income.

                  From the UK equivalent of the IRS HM Revenue and Customs

                  If you have overall gains work out which Capital Gains Tax rates apply and how to use your tax free allowance. For gains made in 2011-12 Capital Gains Tax is charged at 18 per cent, or 28 per cent for higher rate tax payers.
                  Ordinary income rates in the UK are higher than 18% and 28% with a top rate of 45% in 2013.
                    See
                  Income Tax rates and taxable bands

                  If you want to show the above is wrong, please do so using links to the official HM Revenue and Customs website.

                  The most important way to protect the environment is not to have more than one child.

                  by nextstep on Tue Jan 22, 2013 at 11:16:29 AM PST

                  [ Parent ]

                  •  Thanks (0+ / 0-)

                    They have changed it.

                    They should charge at the higher rate too, that is what they did when I was involved in finance.

                    There is no excuse for unearned income to be charged at a lower rate than earned income.

                    I hope that the quality of debate will improve,
                    but I fear we will remain Democrats.

                    Who is twigg?

                    by twigg on Tue Jan 22, 2013 at 12:30:11 PM PST

                    [ Parent ]

                •  Whatever we do (0+ / 0-)

                  it should be adjusted for inflation, like many other things in the tax code - interest income, for one. Not that I think that will ever happen. But isn't it a kick in the pants to pay income tax on the 1% you got from the bank when inflation was 3%?

                  We decided to move the center farther to the right by starting the whole debate from a far-right position to begin with. - Former House Majority Leader Tom DeLay

                  by denise b on Tue Jan 22, 2013 at 02:46:46 PM PST

                  [ Parent ]

          •  There are people who still buy that argument? (0+ / 0-)
            If the top marginal rate was around 25% and there were few to no deductions, you probably could, for upper incomes, tax capital gains as ordinary income without losing revenue.
            Best numbers I've seen say that you could set the highest tax bracket at 60% and the capital gains tax at 40% and see huge revenue increases. Honestly, anyone who actually believes the Laffer curve optimum point is below 50% is either cynically manipulating numbers or has been deeply deceived. (Indeed, it's probably up around 90%.)
            •  The comment wasn't about the Laffer curve (0+ / 0-)

              It was what appears to be a very rough estimation of what level of taxation would be needed to replace current revenue from high-income taxpayers, if capital gains and wage income were taxed at the same rate.  That's compared to the current preferential treatment given unearned income.

              The Laffer curve is something else entirely and you're right that the inflection point is likely well above 50%.  Of course, there are many variables that Laffer discussions never seem to take into account.  One is the relatively easy movement of capital across international borders, but the another is the social factor.  Getting to spend "only" 30% of your 10th or 100th million in income on luxuries still means you get lots more stuff.  It's a social construct that this extra stuff is somehow inadequate reward for being super rich.  But if you have a political and media establishment telling people that they might as well quit working if taxes go above 36% marginal rate, that's going to motivate some of them to do exactly that.  There's a social pressure to "go Galt."

              "And the President of the United States - would be seated right here. I would be here. And he would be here. I would turn - and there he’d be. I could pet ‘im." - Lewis Black

              by libdevil on Tue Jan 22, 2013 at 10:32:15 AM PST

              [ Parent ]

      •  adding to that... (1+ / 0-)
        Recommended by:
        NormAl1792

        ...one reason healthy care is so expensive is because there's a massive hidden tax subsidy that encourages shifting compensation into health care plans (because it is untaxed). i don't remember the ultimate resolution, but there was some stuff done on this in ACA, but there's still a huge problem. I don't really have a specific point other than it's just another example of how a convoluted tax code distorts preferences and economic action. a big part of the reason, i suspect, is that it's always easier to write a tax credit/cut than to spend money, so lawmakers look to the tax code to shape policy and reward supporters.

        •  The ACA did not help that, frankly. (1+ / 0-)
          Recommended by:
          VClib

          Speaking as an employer, we have continued to see premiums rise.  And, from a purely economic perspective, it would be much more advantageous to our business to pay the tax rather than subsidize health insurance.  We want to continue to provide good health insurance coverage for our employees, but the ACA is not making that easy.

          Here's just one example.  For a young and healthy employee, a comprehensive policy of the kind required by the ACA with low deductibles and little out of pocket expenses makes no economic sense.  They are much better off financially with a very very high deductible policy -- the kind that covers mainly catastrophic health care -- and to pay the costs of things like annual visits out of pocket, ESPECIALLY when they could combine that kind of catastrophic coverage with a HSA.  The out of pocket costs are generally far less then the premiums.  The ACA is going to effectively do away with that option, and the employee contribution for those employees is going to go up significantly.

          The ACA did two things, I think:  (1) it taxes "Cadillac" plans (which is going to provide a further financial disincentive for us to continue to provide the kind of coverage we have been providing); and (2) it says that we have to put on the paycheck the amount we are paying that employee in non-taxable income in the form of health care premiums.  Most of our employees believe that is a prerequisite to taxing those benefits as income.  

          •  George Will wrote a column yesterday (0+ / 0-)

            about the hidden consequences of the ACA tax in conjunction with community rating/guaranteed issue rules.  I didn't look into it, but he said Roberts said the tax could not be penal, ensuring it remained a choice vs. a mandate.  Thus people would pay the tax, and then jump in when sick.  Meaning the healthy pay higher premiums.

            It was a pretty strong argument at face value, and I say that about once every election cycle with George Will.

            This must, Lambert thinks, have momentous — and deleterious — implications for the functioning of the ACA. The problems arise from the interplay of two ACA provisions — “guaranteed issue” and “community rating.”

            The former forbids insurance companies from denying coverage because of a person’s preexisting health condition. The latter, says Lambert, requires insurers to price premiums “solely on the basis of age, smoker status, and geographic area, without charging higher premiums to sick people or those susceptible to sickness.”

            The point of the penalty to enforce the mandate was to prevent healthy people — particularly healthy young people — from declining to purchase insurance, or dropping their insurance, which would leave an insured pool of mostly old and infirm people. This would cause the cost of insurance premiums to soar, making it more and more sensible for the healthy to pay the ACA tax, which is much less than the price of insurance.

            ...

            So, Lambert says, the ACA’s penalties are too low to prod the healthy to purchase insurance, even given ACA’s subsidies for purchasers. The ACA’s authors probably understood this perverse incentive and assumed that once Congress passed the ACA with penalties low enough to be politically palatable, Congress could increase them.

            But Roberts’s decision limits Congress’s latitude by holding that the small size of the penalty is part of the reason it is, for constitutional purposes, a tax. It is not a “financial punishment” because it is not so steep that it effectively prohibits the choice of paying it. And, Roberts noted, “by statute, it can never be more.”As Lambert says, the penalty for refusing to purchase insurance counts as a tax only if it remains so small as to be largely ineffective.

            http://www.washingtonpost.com/...

            "Small Businesses Don't Build Levees" - Melissa Harris Perry

            by justmy2 on Tue Jan 22, 2013 at 07:21:19 AM PST

            [ Parent ]

            •  I agreed with Will on that as well (2+ / 0-)
              Recommended by:
              slinkerwink, VClib

              The financial incentives in the ACA are perverse.  

              The ACA provides a financial incentive for a business (1) to keep the number of full-time employees under 50; (2) to reduce employees from full-time to part-time whenever possible; and (3) to cancel health insurance and pay the tax instead.  

              And the more employers chose option (3), the more expensive health insurance will become for those of us who do provide it.  

              •  Yes, end employer-based health insurance (3+ / 0-)

                which accomplishes little other than to depress wages and drive up healthcare costs by keeping employees blind to the true costs of their care.

                Once we reach a critical mass of people on the exchanges, single-payer or single-payer-lite (public option) will be a breeze.

                (-2.38, -3.28) Independent thinker

                by TrueBlueDem on Tue Jan 22, 2013 at 07:54:23 AM PST

                [ Parent ]

                •  There is one little problem with that, noted by (2+ / 0-)
                  Recommended by:
                  coffeetalk, VClib

                  the CBO --

                  coverage on the exchanges is very expensive to the government, about 50% more than Medicaid.

                  But -- good to see that you agree with my continuing assertion that the CBO headline is false, that ACA will increase the deficit, not decrease it.

                  If you don't think that you agree, dig more deeply into the CBO report and you'll find that they expect only about 4 million people to lose employer-provided health benefits.

                  If that goes up greatly, projected deficit reductions disappear, and that's even though subsidies are based on the second lowest cost "silver" plan in an area. Silver plans cover only 70% of health care costs, a concern when those costs are rising as they are.

                  Maybe that's the pain we have to endure to reach the gain, but I think some people are going to be unpleasantly surprised next year.

                  LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

                  by dinotrac on Tue Jan 22, 2013 at 08:13:52 AM PST

                  [ Parent ]

                  •  Well, ideologically I'm fine with that (0+ / 0-)

                    No deficit hawk here. Breaking up our inefficient patchwork system and centralizing healthcare even further around the public purse will speed reform dramatically.

                    (-2.38, -3.28) Independent thinker

                    by TrueBlueDem on Tue Jan 22, 2013 at 08:23:30 AM PST

                    [ Parent ]

                    •  Which would be great if people only suffered (0+ / 0-)

                      ideological illnesses, injuries, and bankruptcies.

                      It probably is good to get people yelling and screaming, though. If we really want our economy to do its job, we can't keep weighing it down with exorbitant costs for sub-standard care.

                      LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

                      by dinotrac on Tue Jan 22, 2013 at 08:41:31 AM PST

                      [ Parent ]

                      •  I don't see how this hurts individuals (0+ / 0-)

                        as much as it does the government coffers. With subsidies, expanded Medicaid, and guaranteed issue, personal bankruptcies should drop noticeably. The red ink shifting from the bank accounts of the ignored masses to the federal budget is the bitter pill for what ails us. I'm hopeful (without reason given recent history) that the ACA is the beginning of a long arc towards more progressive taxation, as well.

                        (-2.38, -3.28) Independent thinker

                        by TrueBlueDem on Tue Jan 22, 2013 at 09:06:37 AM PST

                        [ Parent ]

                        •  I'm not sure that it does, not sure that it (1+ / 0-)
                          Recommended by:
                          TrueBlueDem

                          doesn't.

                          Don't know about that expanded Medicaid.  CBO estimated that 6 million (not sure about that number, but I think it was 6) would be forced off Medicaid, and only half of them would purchase insurance on the exchanges.

                          Whether bankruptcies will go up or down will be dependent on

                          1) the cost of care,
                          2) benefits available to people prior to ACA and after.

                          The silver plan only covers 70% of costs. 30% can be a pretty big number. Mind you, lots of people have insurance that leaves them on the hook for 20%, so the net may be a wash if more people are buying insurance, and especially if people opt to apply their subsidy to a gold plan instead of silver.

                          My real hope is not that the government simply picks up the tab, but that some real health care reform happens, care that encourages making and keeping people well instead of piling up prescriptions and procedures.

                          LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

                          by dinotrac on Tue Jan 22, 2013 at 09:21:53 AM PST

                          [ Parent ]

                          •  Well, then you should certainly... (0+ / 0-)

                            ...hope that government picks up the tab. Because given the huge financial disincentives currently in place for preventative care, that's the only way it's going to happen.

                          •  I grew up with military care. (0+ / 0-)

                            I don't care that much about who pays, but I do care about the crappy way we deliver care today.

                            LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

                            by dinotrac on Tue Jan 22, 2013 at 10:10:12 AM PST

                            [ Parent ]

                          •  Absolutely agree (0+ / 0-)

                            Cost containment is just as big of a reason for government-funded healthcare as ease of access. It's time to generate the mother of all "large groups" and negotiate fair prices and practices with providers and manufacturers.

                            (-2.38, -3.28) Independent thinker

                            by TrueBlueDem on Tue Jan 22, 2013 at 10:52:14 AM PST

                            [ Parent ]

                        •  Remember, one half of the states are not expanding (0+ / 0-)

                          Medicaid to include beneficiaries up to 133%, and one-half aren't setting up state exchanges.

                          Regarding it not "hurting individuals."  Are you aware that the typical catastrophic policy in the Mass Health Exchange was running $800 plus per individual (seniors) several years ago.  

                          If the federal exchange has premiums anything near that high (accounting for regional pricing), many senior couples will be priced out of the market.

                          The subsidy cuts off at annual income of $46,000 for couples.

                          Not to be contentious, but how many couples do you know who gross that meager of a 'household income,' are in the position to shell out $1600-$2000 per month for health insurance premiums?  Very few, I'm sure.

                          It's going to be a mess, I'm afraid (for some folks).

                          Mollie

                          “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

                          by musiccitymollie on Tue Jan 29, 2013 at 12:18:14 AM PST

                          [ Parent ]

                  •  I absolutely believe this (2+ / 0-)
                    Recommended by:
                    VClib, nextstep
                    If you don't think that you agree, dig more deeply into the CBO report and you'll find that they expect only about 4 million people to lose employer-provided health benefits.

                    If that goes up greatly, projected deficit reductions disappear, and that's even though subsidies are based on the second lowest cost "silver" plan in an area. Silver plans cover only 70% of health care costs, a concern when those costs are rising as they are.

                    I think the number of people who lose employer-provided health benefits is going to grow significantly.  As I said above, the ACA provides financial incentives for employers NOT to provide health benefits.  
                    •  It's not news for anybody who actually looks at (1+ / 0-)
                      Recommended by:
                      VClib

                      the numbers.

                      Unfortunately, it's a lot easier to spout headlines.

                      And, honestly, I got caught a bit myself. Though I always realized the disincentives to employers, I didn't catch the 70% coverage part until quite recently.

                      One red flag in the last CBO report that was missed by many -- maybe intentionally -- was that several million current Medicaid recipients would end up uninsured because they would choose not to buy insurance on the exchanges.  The interesting part of that discussion was the revelation that it would cut earlier deficit reduction estimates because the exchanges are much more expensive than Medicaid -- in spite of being keyed to the so-called silver coverage.

                      LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

                      by dinotrac on Tue Jan 22, 2013 at 08:38:21 AM PST

                      [ Parent ]

                    •  Employers retain a strong incentive (0+ / 0-)

                      Employers have a strong incentive to offer health care benefits.  Offering health insurance ties the employee to the workplace.  They can't leave their job without risking their financial well-being, and in some cases their very lives.  The exchanges and must-issue clause will alleviate this somewhat, but it's still going to be true of employers who offer better coverage than the mid-level exchange plans.

                      Of course, this also only applies to employers who don't have freely interchangeable employees.  For unskilled workers who are easily replaced, the employer has little need to indenture the employee through this method - poverty already does the trick.

                      "And the President of the United States - would be seated right here. I would be here. And he would be here. I would turn - and there he’d be. I could pet ‘im." - Lewis Black

                      by libdevil on Tue Jan 22, 2013 at 10:41:12 AM PST

                      [ Parent ]

                  •  You're spot on. That's the reason that the ACA (0+ / 0-)

                    didn't go into effect until AFTER the presidential election.

                    Mr. Mollie has been told that it's highly unlikely that his company will provide health insurance beyond 2013.

                    Mollie

                    “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

                    by musiccitymollie on Tue Jan 29, 2013 at 12:10:53 AM PST

                    [ Parent ]

            •  My guess is the George is on vacation (2+ / 0-)
              Recommended by:
              justmy2, tommymet

              and an intern wrote the column.

              How else do you explain this?

              It was a pretty strong argument
            •  I suppose a rough comparison (0+ / 0-)

              would be with states that allow auto owners to opt out of carrying insurance.  The question is the extent to which that changes the risk pool as many carriers now offer uninsured motorist coverage to owners who do carry coverage

            •  Who is "Lambert," please? N/T (0+ / 0-)

              Mollie

              “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

              by musiccitymollie on Tue Jan 29, 2013 at 12:06:46 AM PST

              [ Parent ]

          •  Why health care is tied to employment (4+ / 0-)

            in the first place seems wrong.

            "Onward through the fog!" - Oat Willie

            by rocksout on Tue Jan 22, 2013 at 07:37:21 AM PST

            [ Parent ]

          •  I don't disagree with some of that, but... (1+ / 0-)
            Recommended by:
            graphixart
            For a young and healthy employee, a comprehensive policy of the kind required by the ACA with low deductibles and little out of pocket expenses makes no economic sense.
            Speaking for myself, when I was a young and healthy employee (I'm still healthy, by the way) I checked out the high-deductible-plus-HSA plans. Only to find that none of them made financial sense, unless I literally never went to the doctor. Basically, two doctor visits in a year, plus one lab work-up, say for a culture for a sinus infection, and the low-deductible PPO plan was the same price (and the Kaiser HMO, which also qualifies for the ACA, was cheaper still.) Add the one (generic) maintenance drug that I'm on now, and the difference becomes stark.

            Everywhere I worked, I did the same calculation. It has never once made sense. They would have come out differently if I were paying 100% of the premiums of both plans, I admit, but not as much different as you think. The savings in a good year would have been on the order of hundreds of dollars, and the potential losses would have been one to two orders of magnitude greater.

            (2) it says that we have to put on the paycheck the amount we are paying that employee in non-taxable income in the form of health care premiums.  Most of our employees believe that is a prerequisite to taxing those benefits as income.
            That's one of the silliest 'slippery slope' arguments I've ever seen. If the government decides to tax those benefits as income, then they can do that at any time, and putting those numbers on an employee's check makes it no easier.

            Indeed, one of the major ideas behind that (IIRC proposed by a Republican) was the whole 'free market'/'people should know what they're spending on health care' argument.

            I'm no ACA partisan, but blaming the ACA for the fact that providing health insurance is becoming more and more onerous for employers is like blaming your cell phone for your $800-a-month power bill.

          •  Well, it is a prerequisite to taxing that benefit (0+ / 0-)

            as income.

            As recommended by the Fiscal Commission under "Tax Reform."

            Mollie

            “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

            by musiccitymollie on Tue Jan 29, 2013 at 12:03:41 AM PST

            [ Parent ]

        •  one example of this was the killing of (3+ / 0-)
          Recommended by:
          coffeetalk, VClib, BrianParker14

          the consumer interest deduction under Reagan.  Banks immediately responded with home equity lines thereby allowing consumers to keep their consumer interest deduction hidden as a home mortgage.  Great for the banks as it moved unsecured credit into secured credit but lousy for the homeowner as such lines usually carried rates comparable to credit cards instead of traditional mortgages.

          Even when there is an attempt to correct a distortion of economic policy, it can result in new, unintended distortions

          •  Great example. (2+ / 0-)
            Recommended by:
            VClib, BrianParker14

            I remember when you could deduct consumer interest, and the rise in home equity loans when that was changed.  

            And home equity loans played a role in the bursting of the housing bubble, because many "underwater" homeowners are "underwater" not because of original mortgages, but because they had taken a lot of equity out of their houses in the form of home equity loans.  That all happened because for consumers, interest is not deductible unless it's secured by your home.  

            •  absolutely (1+ / 0-)
              Recommended by:
              coffeetalk

              We bought a condo at short sale.  The original buyer paid $61K.  We bought for 79K- but in the meantime, the owner took out mortgages totalling $150K and then walked away.  If they had kept their original mortgage, they would be in an equity position, instead, they kept the $90K  taxfree and the rest of us bailed out the bank for the loss.  Normally, the 71K  difference between the loan and the eventual sale price would have been taxable- but  current relief for under water houses makes that gain a free ride paid for by the rest of us.

              Many lost equity in the housing crash, especially if they bought at the peak.  But many also made out like bandits, if they mortgaged up their houses and took the cash.

              As my father used to say,"We have the best government money can buy."

              by BPARTR on Tue Jan 22, 2013 at 08:52:28 AM PST

              [ Parent ]

              •  Do you really believe that? (0+ / 0-)
                But many also made out like bandits, if they mortgaged up their houses and took the cash.
                Actually, that sort of thing was so microscopically, vanishingly rare that it surprises me to see anyone who actually experienced it firsthand.

                I went hunting statistics on that kind of thing last year, and was literally unable to find any numbers at all. Just a few spectacular news stories in a few places. (And incidentally, in at least some states the bank can sue someone for doing something like that, because it's either considered fraud or bad faith, and get their money back anyway.)

                •  well, yes, I do believe it. (0+ / 0-)

                  We have purchased several condos at short sale and foreclosure in the past 3 years.  Most of the sellers 1) had a second mortgage which was eliminated by the sale- and for which they simply got to keep the cash and 2)  had not paid a mortgage payment for over a year.  As the purchasers, we saw the individuals' records.  In a typical example, the individuals had put 5% down on a 150K condo, but did not pay their mortgage or condo HOA fees for 12-15 months.  Rent for an identical condo is $1250/mo, so they saved  more than $15K in rent, living rent-free.  They also kept the second mortgage of 4$50,000.  that much more than covered their initial downpayment.

                  We have seen this a number of times in the condos we bought.
                  Were the banks largely responsible for setting up this scam, and did they steal from the rest of us when they sliced and diced the mortgages and sold them as derivatives?  Of course.  the banks stole far more from us than the individuals.  Andthey made "loans" on properties which should not have ever been given a loan regardless of the buyer's financial situation.  Did all those buyers who have actually profited from foreclosure set out to scam the system- I don't believe so. ( Unlike the banks who deliberately set out to screw the system.)

                  None-the-less, many of the unfortunate who "lost their homes" actually made out better financially than if they had rented for the entire period.

                  The rest of us paid for both the banks and the inidviduals.  
                  By the way, every time a house sells at short sale, realtors start knocking on the doors of the houses nearby trying to convince the neighbors to walk away from their homes too.

                  Those of us who pay our mortgages pay for everyone else.   I understand that this is a more nuanced view than most here have of the housing crisis, but I believe there is lots of blame to go around.

                  As my father used to say,"We have the best government money can buy."

                  by BPARTR on Thu Jan 24, 2013 at 09:54:57 AM PST

                  [ Parent ]

      •  here is how you do that... (3+ / 0-)
        Recommended by:
        grrr, TrueBlueDem, BrianParker14

        stop passive investment income lower than active working income...

        see...easy...no need to try to spin the public to think the only way forward is to "pretend' to eliminate deductions...

        "Small Businesses Don't Build Levees" - Melissa Harris Perry

        by justmy2 on Tue Jan 22, 2013 at 07:16:06 AM PST

        [ Parent ]

        •  so, how would you cover retirement? (0+ / 0-)

          isn't passive investment income replacing active working income the definition of retirement?

          •  Roth 401ks/IRAs would work fine (1+ / 0-)
            Recommended by:
            justmy2

            Tax-free retirement income, but in strictly limited amounts. Works great. Of course, some people (Romney) can get away with fudging the numbers in a significant way, but it certainly wouldn't shelter more than a few percent of his investment income, so I'm not even too bothered by that.

          •  Are you supposed to be taxed differently when (0+ / 0-)

            you retire?

            When did that start?

            Passive investment income is passive investment income regardless of age.

            Roth 401K and Roth IRA if you want to pay a different tax rate.  Just because you deferred the tax doesn't make one more eligible for a lower tax rate.

            "Small Businesses Don't Build Levees" - Melissa Harris Perry

            by justmy2 on Tue Jan 22, 2013 at 10:57:04 AM PST

            [ Parent ]

      •  I think very few businesses make decisions (3+ / 0-)
        Recommended by:
        TrueBlueDem, Kickemout, orlbucfan

        based upon tax policy.  Sure they may decide to buy a van instead of an auto because the van is treated as a truck or they may accelerate a vehicle purchase a couple of months so as to crowd their purchases into the same tax year.  However it is naive to think a small business buys a van because of an associated tax break instead of because it needs a new van

        •  Absolutely incorrect. (2+ / 0-)
          Recommended by:
          VClib, BPARTR

          The way our business is structure is due, in large part, to tax considerations. Once you get above a handful of people, only a fool would run a business without tax advice as to how to structure your operations for the most favorable tax treatment.  The tax policy is not always the factor that ultimate drives everything, but tax policy figures into almost everything  business does, and sometimes decisions are changed by the tax considerations.  That goes from the basic business structure to how and when the owners are paid to how you compensate employees to decisions about leasing business space to long-term capital investments in IT.  I have a hard time thinking of any major decision where tax policy does NOT play a role.  Even when we buy things, whether we expense it or whether it's a capital expenditure often comes up and factors into decision making.  I am a lawyer, but not a tax lawyer, but the person who assists us in running the business side of our firm makes those consequences clear.  

          With our clients, I have seen multi-million dollar business deals shaped by tax considerations.  Any time a client makes a significant investment, or a merger, or an expansion, the tax lawyers are in the middle of it, calculating the tax consequences.  

          •  Which is basically the problem (1+ / 0-)
            Recommended by:
            entlord

            First of all, you and entlord are talking about two different things.

            You are thinking of 'business' the same way Republicans do, as 'big business' (or at least medium-to-large business). Remember, 'a handful of people' describes the vast majority of businesses in the US. So he's quite right... a relatively small percentage of businesses, the bigger ones, base their major actions around tax law.

            Second of all, perhaps one of the major problems in the US today is the very attitude you talk about. The 'lower your tax burden in every way possible' is certainly one of the major reason that business has purchased the US government wholesale, and gets very good returns on that investment.

            And in my personal experience I have seen a company purchase another company, and treat it in very specific ways due to specific tax implications... and these behaviors caused the merger to fail pretty badly, and the purchased company get entirely shut down and written off as a loss after two years. There is no guarantee that things would have worked better with more integration between the two companies, but they couldn't have gone any worse. Basically, the tax lawyers scuttled any chance of success for the merger, because they wanted everyone kept at arms' length for some unknown reason ('subsidiary' vs 'merger' or some such rot). Result? Huge waste of company money, 120 people laid off.

            Another, less dramatic example: company I worked for suddenly decided that they wanted to lease laptops instead of buying them, for tax reasons. We had to change suppliers (old supplier didn't have in-house leasing and the companies offering leases gave awful prices), the new supplier was much less reliable (over a 100% failure rate per year!), and we lost a lot of employee productivity (every field laptop failure means a day or more of lost employee time, possible lost data, and lost morale). It clearly cost us more in productivity than we were saving in taxes. We switched back, but that was extremely painful and expensive too.

            These days, if a company I was working at were to start making decisions too heavily weighted towards the advice of their tax accountants, I would seriously consider my options.

            •  thank you for clarifying what I was saying (0+ / 0-)

              After 40 years owning businesses, I never allowed tax considerations to be the ultimate driving force behind my decisions; they were part and parcel of the process of decision making.
              Coffeetalk's POV smacks more of Wall Street, in my eyes, while my experiences are grounded in Main Street

              •  I assure you I am not Wall street (1+ / 0-)
                Recommended by:
                VClib

                I'm a partner in a local law firm.

                But even simple things -- like whether you are a corporation or an LLC -- are often driven by tax implications (Louisiana has a corporate franchise tax that applies to corporations, not LLC's).  Or you might vary the  timing of a major purchase.  Or you might change the structure of a payout to a retiring partner.  Or you might negotiate certain renovations of your office space into your lease.   Or taxes factor in when you decide whether to buy or lease equipment.  Or when deciding whether to hire an employee or an outside contractor for a service.  

                I agree that when people look SOLELY at tax consequences, that can lead to bad decision making.  But I can't imagine running a business without looking at the tax consequences of what you are doing.  No rational business wants to pay more in taxes than it owes under the law.  We certainly don't.  If people were happy to pay more than the smallest amount they owe under the law, companies like H&R Block would go out of business.  

                We don't make tax consequences the sole factor in decision making.  No sane company does.  But it factors in, and can sometimes -- certainly not always -- change what we do, how we do it, or when we do it.  

                These days, if a company I was working at were to start making decisions too heavily weighted towards the advice of their tax accountants, I would seriously consider my options.
                I never allowed tax considerations to be the ultimate driving force behind my decisions; they were part and parcel of the process of decision making.
                I agree with this.  The key is "too heavily weighted."  You certainly won't do something that's a bad business idea just because of the tax break -- that's stupid.  But if a company I was working at made major decisions without factoring in tax implications, I would seriously consider my options.  Because that means they are not smart about finances.  

                The point is, the more complex the tax code -- the more that exemptions, deductions, special rules for special circumstances factor into what you pay -- the more tax policy figures into that decision making.  If you are going to pay roughly the same regardless of those decisions, tax policy is far less of a factor.  I'd prefer the latter situation -- if a business has $x in profit, it's generally going to pay about  $y in taxes, and there's not much room for maneuvering to adjust your tax burden.  That's how you  lessen the role tax policy plays in decision making.  

                •  if you are referring to Mom & Pops (0+ / 0-)

                  the majority of them do not pay anything in income taxes because they are sole proprietorships, S corps, PAs or other possible tax structures.  Tax consequences are a very small consideration in their decisions. but then the businesses I had grossed less than $1M annually

              •  Anyone with more than the most primitive (2+ / 0-)
                Recommended by:
                VClib, BrianParker14

                understanding of business, union agreements or economics knows that when evaluating the profitability dimension of alternatives, the relevant profit to consider is on an after tax basis.  The profit dimension is not the only dimension to consider in first rate decision making.

                The most important way to protect the environment is not to have more than one child.

                by nextstep on Tue Jan 22, 2013 at 03:38:37 PM PST

                [ Parent ]

                •  In many business decisions, the tax consequences (0+ / 0-)

                  are secondary to other considerations as least on the Mom and Pop level of S corps, sole proprietorships and such entities but then what do I know?  I am only a farmer, the grandson of a sharecropper.

                  •  It is not a matter of basing decisions on taxes (1+ / 0-)
                    Recommended by:
                    VClib

                    It is basing the profit part of the decision making on after tax profit instead of before tax profit.

                    One should not ignore tax consequences, nor should one decide based on what minimizes taxes.

                    The most important way to protect the environment is not to have more than one child.

                    by nextstep on Tue Jan 22, 2013 at 04:50:38 PM PST

                    [ Parent ]

          •  That tax policy spurred the purchase of (0+ / 0-)

            HummVee's.  Something they all needed.

      •  Regressive tax alert (2+ / 0-)
        Recommended by:
        happymisanthropy, liberte

        "flattening the rates" = punish the poor

        Good explanation of the thinking behind this idea.  Thank you.

        •  That's such an incorrect way of thinking (1+ / 0-)
          Recommended by:
          VClib
          "flattening the rates" = punish the poor
          The top marginal rate is pretty meaningless to me when viewed in the abstract.  What is important is how many dollars I pay -- and for that, I need to look at the EFFECTIVE tax rate.  

          You can lower top marginal rates and have the rich pay MORE in federal income taxes.  Look at the fact that the rich paid MORE under Clinton, with a top marginal rate of 39.6%, than they when the top marginal rate was 70% in 1979.  See the SECOND chart here.  That's due primarily to the Tax Reform Act of 1986, which put into place a system of lower marginal rates and fewer deductions/exemptions/shelters.

          •  I'm curious... (1+ / 0-)
            Recommended by:
            denise b

            ...do you know how misleading that comparison is?

            In 1979, the top marginal rate applied to much fewer taxpayers than the top marginal rate in 1996. So what you're implying is that the top 1% in 1979 found ways to get around the 70% tax bracket, when in reality very few of them earned enough to be in it. Very few.

            Here are the real numbers: people making over $201k in 1979 were in the top tax bracket, and in 1979 it applied to less than 0.1% of the population. Income distributions were a lot flatter in 1979, because we had not really started the 'all the money goes to the rich and everyone else gets nothing' that came into fashion in the 1980s and has continued to this day.

            Whereas the top bracket in 1996 was $263,750, and applied to the entire top 1% since the income cutoff for the top 1% of taxpayers was $283k. (citation).

            So what you're really saying is, 'taxing less than 0.1% of the population at 70% for part of their income, and then averaging that amount earned in with the other 0.9% of the top 1%, didn't earn as much in 1979, when the income distribution in the country was MUCH flatter, than taxing 1% of the country at up to 39.6%.'

            Oh, and need I mention that in 1979 the US economy was heading into a really nasty recession? And everyone was earning less as a result? And therefore paying less taxes? Whereas in 1996, well, I don't know if you're old enough to remember 1996, but we were doing pretty well.

            •  No, you misread what I was saying. (2+ / 0-)
              Recommended by:
              nextstep, VClib

              I wasn't using "paid more" as "overall revenue to the federal government."  I was using "paid more" as the percentage of income paid in federal income taxes. Someone at the cut-off level for the top 1% paid more, as a percentage of that household income, in 2000 with a top marginal rate of 39.5% than someone in the top 1% in 1979 when the top marginal rate was 70%.  

              My link was to historical EFFECTIVE federal individual income tax rates, based on CBO data.  What the data shows is that, in 1979, when the top marginal rate was 70%, the top 1% of households paid an effective federal individual income tax rate of 22.7%.  In 2000, when the top marginal rate was 39.6%, the top 1% of households paid an effective federal individual income tax rate of 24.5%.  A household in the top 1%, as  general matter, paid more in federal individual income taxes when top marginal rates were "flatter" with fewer deductions than a household in 1979 before the rates were flattened and many deductions/exemptions were limited.  

              The point is that a system where you flatten rates and eliminate deductions does not necessarily mean that a rich household pays less in federal individual income taxes.  It can, or it cannot -- depending on how you structure it -- where those top rates start (your point) and what income is actually subject to those rates (my point).

              •  Not picking a fight (0+ / 0-)

                Just some feedback.  Statements like this make me suspicious:

                "paid more" as the percentage of income paid in federal income taxes
                Often relative percentages are used to obfuscate what is happening.  

                I also just might not understand, and have not meditated enough on what you replied.

                Thanks for the reply!

                •  What it means is that, on average (1+ / 0-)
                  Recommended by:
                  VClib

                  (to overly simplify) someone making $1 million in 1979, when top marginal rates were 70%, would have paid, on average, $227,000 in federal income taxes, after factoring in all deductions, exemptions, etc.

                  Someone making that same $1 million in 2000, when top marginal rates were 39.6%, would have paid, on average, $245,000 in federal income taxes.  That's because, in part, less of that $1 million was deductible, exempt, or sheltered (due to the Tax Reform Act of 1986), and in part because where the top bracket started -- more of that $1 million was subject to the 39.6% rate than in 2000 than was subject to the 70% rate in 1979 (adjusted for inflation).  

                  The point is that you can lower marginal rates, eliminate deductions and exemptions, and have a situation where a household making $1 million actually pays more -- in actual dollars -- in federal income taxes.  "Flattening rates and eliminating deductions" does NOT necessarily mean that the rich pay less and the poor pay more.  It depends on how you do it.  And you can calculate that in advance, using IRS data.  

      •  Yes. And it's time for all of us to stop giving (0+ / 0-)

        credence to Politico.  It is much more like Fox News than a legitimate news organization.  When will we ever learn?

    •  Whenever anyone mentions these two loaded phrases: (0+ / 0-)

      Entitlement reform and
      Revenue neutral tax reform....

      Hold tight to your wallet and watch...
      And don't bend over!!!!!

      The Republicans are fixing to screw anybody who works for a living....or ever has worked for a living.

    •  Modern jurnalism r to checks on internuts blogs (0+ / 0-)

      den cull it research. Real facts not onboard at this time.

      Our money system is not what we have been led to believe. The creation of money has been "privatized," or taken over by private money lenders. Thomas Jefferson called them “bold and bankrupt adventurers just pretending to have money.” webofdebt

      by arealniceguy on Wed Jan 30, 2013 at 07:55:06 PM PST

      [ Parent ]

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