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You have to hand it to Republicans. There is no disaster so awful that they're not willing to give those who caused it a pass and point toward some long treasured goal of the right as the solution. How nice it must be to be both the instigators and the benefactors of a crisis.

Despite the calls for radical change that run from the Ryan plan to the more-crazy-than-thou efforts of the growing field of Republican presidential contenders, the truth is that the current deficit crisis is of their own making. The biggest factor by far is simply the Bush tax cuts. The second biggest factor is the decline in revenues brought on by the economic downturn. After that comes the expenses of the wars in Iraq and Afghanistan.  If you allow the tax cuts to expire (which they will), allow the economy time to recover (which it will), and bring the troops home (which we will) the deficit problem will go from mountain to... well, if not molehill, certainly not much more than a middling incline. If Republicans really would just leave things alone, things would get better.

Of course, the last thing Republicans want is for recovery to set in and the deficit to decline. That would rob them of their crisis-generated opportunity to go Galt on America. Instead they want to use this moment to see just how far they can push. Forget Overton windows, they've opened up the Overton skylights and knocked down whole Overton walls in an effort to drive the national conversation into realms of rightness previously unknown.

Naturally, the first step in any Republican fiscal plan is reward those least in need of assistance by cutting income taxes, estate taxes, and capital gains tax. All of these get shoved down in the latest Republican budget, and now that Ron Paul has ramped up the 2012 edition of his traveling medicine show, expect the idea of eliminating the IRS and instituting some fair tax / flat tax / national sales tax to become the center of the fight to claim the right.

But before we start compromising toward whatever madness wins the day (I'm guessing no capital gains, no estate tax, and everyone with a net worth greater than $1b gets a free polo pony), why not strike back with a tax proposal of our own? And it even cuts taxes... just not the taxes that interest the GOP.

The thing is, those taxes the Republicans want to cut won't do diddly to pick up the economy. Cutting taxes on capital gains only generates more concentration of wealth, which is the opposite of economic health. It doesn't create jobs. It doesn't stimulate growth. It just encourages those who want to treat our economy like a game of high stakes poker. The same goes for the potential stimulative effect of chopping estate taxes or lowering the top income tax rate. The people at the top of the charts are already sitting on the biggest piles of cash in human history. The reason they're not creating jobs has nothing to do with their tax rates being one, or two, or ten percent too high. The reason they're not creating jobs is that making rich people richer doesn't create jobs. Not now, not ever -- and we have the numbers to prove it.

Both jobs and economic health are generated through one thing: demand. Demand comes when the majority of people at all levels of society have the cash available to spend on the things they need. And for the vast majority of people, income taxes are not the biggest burden placed on them by government.

Take a look at this chart.

More than 80% of Americans are burdened more by state and local sales taxes alone than they are by income taxes. Only for the top 1% of earners do income taxes take a greater percent of their income than sales and property taxes.

Why is this? Because most Americans do something really interesting with the money that comes their way: they spend it. They buy food. They buy clothes. They buy toothpaste, toys, tool chests and toilet paper. Through that spending, they create demand. What doesn't get spent on consumables gets turned into the kind of long term assets that most people need to get by in the world. It turns into a roof over their heads and transportation to get to work. Which creates more demand. More jobs.

By spending their money, the majority of Americans fuel the health of the economy. They're the juice in the system. The churn. The fire in the boilers.

Meanwhile, up at the top end of the scale, those top 1% of earners don't neither spend their income or turn it into property. They don't consume it. They don't convert it. They just sit on it. This chart alone is enough to demonstrate that cutting the tax for those at the top is worse than pointless. The very rich are not turning their money into things / demand / jobs. They have so much more than they need that their money is simply stagnant. Sending them more cash would be no more effective than throwing it into a volcano.

Unfortunately, those spending and converting actions that most Americans engage in are attacked by regressive systems that hit from dollar one. These are not invisible taxes. They're all too visible. They're part of every transaction, large or small. They're the reason your dollar bag of pretzels can't be purchased with a dollar. They're the reason that new Chevy or Ford costs you extra both when you buy it and every year you own it.

The real tax burden on Americans, the tax that actually contributes most to gumming up our economy and slowing the creation of demand, is not income tax at all. It's sales tax. The result of sales tax is that not only do the great majority of Americans pay a larger percent of their income in taxes than the wealthy, but the stimulative effect of their spending is reduced.

Suppose that instead of the chart above, we had one that looked like this:

The first thing you might notice about the distribution of the three types of taxes on this chart is... there are only two types of taxes. Sales tax is gone. Replacing sales tax is an increase in income taxes. However, this increase is not created by directly raising rates. It's from first allowing the income disparity generating Bush tax cuts to expire and secondly addressing some of the items that make the huge bar on the left of this graph.

If you look at all those itemized deductions on your tax form as government expenditures, they're the largest "government program" going. Yes, they do reward specific activities that we generally consider both desirable and stimulative, but they do it in a way that's a lot less direct and immediate than eliminating the negative impact of sales taxes. By dropping most deductions, everyone -- including those in the lowest income bracket -- would pay more income tax, but the impact would be most felt by those whose income is currently most sheltered by deductions and not being converted into goods and jobs. The overall impact of eliminating sales tax and most income tax deductions is that over 80% of Americans would pay less tax and the tax directly eliminated would be the one they face every day in their transactions. It would be possible to shift the numbers around and protect the poor from the increased impact of income taxes, but I'd just as soon not arm the GOP with ammunition for the "poor people don't pull their own weight" arguments. Seeing most of the regressive burden that the majority of Americans currently shoulder turned into progressive taxes that are shifted to those most able to afford them is good enough for me.

Of course, there's one big sticking point in this plan. There is no federal sales tax in the United States. Sales taxes are their business of states and localities. If the federal government was to crush all sales taxes by fiat (assuming that it could), it would leave a monster gap in the budget of already smarting state and local governments. To get around that issue, the program would need to be phased in, with more dollars from income tax distributed to the states to compensate for reductions in their regressive sales taxes. Hey, we could even make it in the form of block grants that the states could use as they please. In fact, we should.

Of course, some states might not want to go along. They might keep their sales taxes high, refusing to give up on a funding mechanism that punishes the majority of Americans while giving those at the top a free ride. So let them. When "high tax state" really means "high sales tax state," we'll know which state legislators care more about their constituents than their wealthy donors.

Now, about those property taxes...

Notes

Most of the graphs and numbers for this morning came from the Center for Budget and Policy Priorities. That second graph, the one that shows "no sales tax world"? That one's straight from my imagination bolstered by CBPP data and a lot of massaging in Excel. If you're interested in the details, by going through state budgets one by one, I came up with a total estimate for annual sales tax revenues somewhere around $400B. This does not include local taxes (though it does include some extremely optimistic ideas about revenues) so I bumped it to $500B. I'm willing to believe I'm off by 50% in either direction. With that number in hand, I went looking for income tax deductions and found some of the cuts here, here, and in a lot of programs that many people (myself included) like. Rather keep the alternative energy credit and just boost the top rate? I'm right there with you.

If you're interested in how sales taxes are distributed across the country, here's a peek.



Yes, it's too small. Click for a larger view.

Some states clearly get it. Delaware, Oregon, and New Hampshire have no sales tax. Some other states that look low on that chart are not quite as tax-free as they seem. Both Montana and Alaska allow local sales tax, so the rates there are not actually zero. Other states also allow local taxes on top of the state tax, so don't let that chart fool you.

Wikipedia has a nice run down of all the states.

 

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Comment Preferences

  •  Even the Homeless Pay Sales Tax nt (27+ / 0-)

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Sun May 15, 2011 at 06:12:56 AM PDT

  •  two takeaways-- (14+ / 0-)

    1. We are the richest society that has ever existed in all of human history--richer than the Roman Empire, richer than the Spanish Empire, richer than the British Empire, richer than all of them combined. The very idea that there are things we "can't afford" as a society, is laughably idiotically jaw-droppingly stupid.

    2. Economies are driven not by the rich fucks at the top buying second or third yachts and private jets. Economies are fueled by the millions of "little people" buying the things they need in life.

    •  We also... (0+ / 0-)

      ...have a far, far higher population than any of this places that consumes far higher resources per capita. When you're talking about expenditures that must be amortized across all of us, the cost adds up very quickly.

      (-5.50,-6.67): Left Libertarian
      Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

      by Sparhawk on Sun May 15, 2011 at 06:32:30 AM PDT

      [ Parent ]

      •  nonsense (3+ / 0-)
        Recommended by:
        JG in MD, Odysseus, yaque

        The British Empire at its height ruled over half a billion people--a higher proportion of the world's population in the late 19th century than the US today.

        And of course we consume more per capita than other empires---we are richer per capita than they were.

        As for expenditures amortized over all of us, most other industrialized nations don't seem to have much difficulty with that. How come we do?

        •  I don't know but don't we have (0+ / 0-)

          military in about 80% of the countries right now?

          We may not rule these countries but we are highly, highly influential in them.

          -6.13 -4.4 Where are you? Take the Test!!!

          by MarciaJ720 on Sun May 15, 2011 at 07:25:13 AM PDT

          [ Parent ]

          •  we do indeed (3+ / 0-)
            Recommended by:
            JG in MD, historys mysteries, beemerr

            We spend a higher percentage of our budget on the military than Britain ever did. Partly because we have far more wealth and money than Britain ever did.

            But if we are going to count the people in countries where we have "military control" as part of our population, then we also have to count their economic GDP as part of our own.

            Which still leaves us far and away the most wealthy society, per capita, that has ever existed in all of human history.

            The very idea that "we don't have the money for this boo hoo hoo", is laughably idiotic.  We have more money than anyone else has ever had in all 200,000 years of our existence as a species.

            We simply don't want to spend it.

    •  There are things we can't afford as a society (0+ / 0-)

      and there always will be as long as neither resources nor knowledge are unlimited.

      This is true even though we are far richer than older societies and poor Americans are richer than 18th century British monarchs.  

      •  there is nothing we need that we can't afford (8+ / 0-)

        though of course we waste a tremendous amount of our wealth on things we don't need.

        Our problem has NEVER, EVER, been that "we don't have the money".

        Our problem has always been that (1) a small minority of our population owns most of our money and (2) they don't want it spent on anyone but themselves.

        •  But... (0+ / 0-)

          ...didn't we accumulate all this wealth under a free market, capitalist system?  

          Our poor are far richer than many other societies.  Shouldn't we judge our economic structure based on how all economic groups are doing rather than on the difference between the top and the bottom.  As long as the all boats are rising with the tide, why should we care if a few tallented people get rich along the way.  More middle class people become millioniares in American than anywhere else in the world.

          •  No. (2+ / 0-)
            Recommended by:
            historys mysteries, OKParrothead

            "I set up a stage, put up a few banners, stuck a podium up there, and started shouting 'Yes we can.' Next thing you know there's 150,000 people here." -Joe

            by Geiiga on Sun May 15, 2011 at 09:12:59 AM PDT

            [ Parent ]

          •  If only they were talented (5+ / 0-)

            If you actually look, most of them started out rich because they inherited that wealth.  Their talent is limited to not blowing it all, and managing to hire a few people to take care of it.

            I've got no problem with truly talented people who share that talent with the world making tons of money because of that.

            •  indeed, the rich don't need any business talent (1+ / 0-)
              Recommended by:
              historys mysteries

              They simply hire people who do to run their business for them so they don't have to get their manicured hands dirty with it.

              •  If it's so easy... (0+ / 0-)

                ...why don't you just start a business and get rich.  I think anyone owning a business will tell you it is a lot of hard work.  It's too easy to say all rich people don't work hard.  Most of the rich people I know work harder than the average Joe.  Many busted their ass in Med school or Law school or risked everything to start a business.  

                The majority of millioniars in America are self made.  Just look at the Billioniars.  Buffett, Gates, Bloomberg, virtually all professional athelets...the list goes on and on.

            •  I have read that... (0+ / 0-)

              ...the majority of millionires in the US are self made.  That book, the Millioniare Next Door, had some interesting stats.  Do you have a link or a reference?

          •  No, actually we didn't (3+ / 0-)
            Recommended by:
            historys mysteries, Odysseus, Blueiz

            We built the wealth of the middle class under the regulated American system that was dominant before 1980. Since then the wealth of the middle case has been absolutely stagnant and all growth has taken place at the top.

            •  Are you suggesting... (0+ / 0-)

              ...that the US from 1776 thorugh 1940 was heavily regulated?  And since the 1980s, it's just been a wild west of deregulation?  How many workers were employed by the SEC in 1940?  Was HUD a major influence in the Civil War reconstruciton?  How many forests did the EPA save during the post WWII boom?

              You an say that we have bad regultion now and you'll get no arguement from me.  But to say we were hevily regulated from 1776 through 1980 and then all the regulators got fired flies in the face of reality.

          •  just as everyone else ended up poor under the (2+ / 0-)
            Recommended by:
            historys mysteries, Odysseus

            "free market".  If we're going to give credit to "the free market" for the good things, we also have to give it blame for the bad things.  To my mind, the very PURPOSE of an economic system is to feed and cloth people and give them the necessaries of life---and any economic system that fails utterly to do that for all its people is, by any measure, an abject utter failure.

            BTW, regarding this "we" that you speak of, perhaps you're not aware that the vast majority of "our" wealth belongs to just one tenth of one percent of its population. So the answer to your question is "no", "we" didn't accumulate wealth under the "free market"---a handful of people at the top did.

            •  Name me the exceptions... (0+ / 0-)

              ...to the rule that the lower class is better off in free market based economies than in centerally planned economies.

              China?  North Korea?  Cuba?  

              Our bottom 20% get more in gov't benefits and charitable support than most of the world lives on.  Free health care doesn't do you much good when there isn't an MRI machine for miles and you live on $5,000/yr.

              You can argue that a little more socialism would do us some good (i.e. health care), but it does come at a high cost of freedom.  Most of Europe is finding out that too much socialism isn't the answer either.  

          •  btw, about those "other countries" . . . . (2+ / 0-)
            Recommended by:
            historys mysteries, Odysseus

            Are there any of them that are not capitalist too?

            And if we are going to judge the capitalist free market, should we not judge it by the standards of everyone who lives under it?  Including people in, say, Somalia, Sudan, Bangladesh, and several dozen others?

            Why is it that "the free market" is ALWAYS responsible for all the "successes" that the tiny minority at the top gain, but is NEVER responsible for the massive level of failure that afflicts the vast majority of the population at the bottom?

            What definition of "success" do you offer for an economic system that includes leaving roughly half its population with income less than $600/year? By what line of reasoning is that a "successful" economic system?

            Or is it your opinion that most of the world's population (especially the nonwhite part) is just lazy and shiftless and doesn't want to work hard and become rich . . . . ? (snicker)  (giggle)

            •  I'm saying that... (0+ / 0-)

              ...free markets are a neccessary pre-condition to the low earners achieving an above average standard of living.  I would also say that democracy and the rule of law (basic human rights, constitution, etc.) are neccessary pre-conditions.  With few exceptions, if you put those three together, you end up with a lower class that is in good shape.  If you have only one or two of those three, you are worse off.  If you have none, the lower classes are living on 600/yr.

              My response was to the idea that capitalism caused our problems.  Without it, we wouldn't be so lucky to complain about our poor living on 10-20x the $600/yr you quoted.

          •  No such thing as free markets. (0+ / 0-)

            US markets have always been and always will be manipulated by big business.

            Without the US Gov. giving away huge chunks of land to the railroad companies, the continental railroad would have taken a lot longer to be built, if ever.

            If the US Gov. hadn't sent men to the moon, there wouldn't have been all the R&D that brought us most of the communications and electronics devices we have today.

            The list is endless.

            Free markets also depend on consumers having perfect knowledge of what they're buying. If you've ever watched an infomercial, you know that's baloney.

            Plus there's market manipulation like what was perpetrated by big pharma regarding products like Viox. Lie to regulators, consumers and doctors to create an artificial market for your product.

            No such thing as free markets

            Capitalism is anathema to free markets. Capitalism is about manipulating markets to benefit capitalists.

            In a world of the blind, the one eyed man is a pariah. Ask Galileo. Ask Darwin.

            by OKParrothead on Sun May 15, 2011 at 01:03:03 PM PDT

            [ Parent ]

            •  indeed the corporados do everything in their power (0+ / 0-)

              to ELIMINATE the "free market"--and they succeeded over 100 years ago.

              When most of the 100 largest economic entities on the planet are privately-owned corporations, not national governments, it is either ideological blindness or crashing pig-ignorance that even allows anyone to seriously talk about a "free market" anywhere in the world.

              The Adam Smithian world that the libertarians are so much in love with, hasn't existed for over a century.  It's dead, gone, and will never return.

              •  Let's not forget... (0+ / 0-)

                ...that those larest 100 companies get their unfair advantage by buying congressmen.  Their power comes from two sources.  One is cutomers who buy their products.  If you make crappy products, you dissappear.  Check the top 100 companies 50 years ago.  Most are gone now.

                The other power source is congress.  People have tried to cheat for thousands of years.  That's nothing new.  But most ills in the world are perpertrated by, or at the very least condoned by, gov't.  

                Stalin wasn't a corporation.  Neither was Hitler.  Exxon isn't responsible for the Suddan.  

                Heck, most people are killing themselves to be controlled by a corporation. It's called a job, and it's not so bad.

            •  So... (0+ / 0-)

              ...what's the alternative?  

              Unfree markets?  Less free markets?  Central planning?  Communism?

              Those haven't worked out too well either.

              Capitalism isn't perfect, but is there a non-capitalistic country you'd rather live in?

      •  yes - we can't afford our military n/t (2+ / 0-)
        Recommended by:
        historys mysteries, OKParrothead

        big badda boom : GRB 080913

        by squarewheel on Sun May 15, 2011 at 11:41:44 AM PDT

        [ Parent ]

  •  An additional aspect of the Republican (15+ / 0-)

    game plan was the part of the Ryan plan which cuts $600 million annually from tax enforcement.  GAO studies have shown that every dollar spent on tax enforcement yields $10 in additional revenue.  So, since tax enforcement mostly falls upon the rich (who are the ones who have all the exotic deductions etc.), not only do they save their buddies (and themselves) some money, but they further increase the deficit.  It's a twofer!

    One of the painful things about our time is that those who feel certainty are stupid, and those with any imagination and understanding are filled with doubt and indecision -- Bertrand Russell

    by Its the Supreme Court Stupid on Sun May 15, 2011 at 06:24:06 AM PDT

  •  Sales taxes are awfully regressive. (5+ / 0-)

    As are lotteries. But the Average Joe seems to consistently prefer them to higher income taxes. It's entirely psychological, IMO. People hate to see their $4,000/month salary reduced by a lot when they get their paycheck. But paying an extra 8 cents when you buy something seems more innocuous. Legislatures nation-wide recognize this. Other than OR, NH, DE, and AK, every state has a sales tax. While most states exempt food (with the glaring exception of TN, which charges 5.5% on food), perhaps the best politically-acceptable solution would be to add other exemptions (such as for childrens' clothing and shoes and other basic necessities).

    I'm in the I-fucking-love-this-guy wing of the Democratic Party!

    by doc2 on Sun May 15, 2011 at 06:26:49 AM PDT

    •  It's a leadership failure (3+ / 0-)
      Recommended by:
      Rebecca, psnyder, historys mysteries

      We have no defined mission, no media strategy.  We are not seen or perceived as fighters for the little people, so they don't give a shit about us.  Some passionate political education would go such a long way, but our leadership won't even try, they don't want to.

      •  I don't know. Barack Obama could (3+ / 0-)
        Recommended by:
        paradox, wishingwell, eXtina

        have a massive teach-in about taxes and basic economics. But I think it would get little attention. People just don't give a shit, or don't have the basic educational skills to make sense of the world of economics. And FoxNews is on TV in most bars, dentist offices, etc. I don't see any easy solutions here.

        I'm in the I-fucking-love-this-guy wing of the Democratic Party!

        by doc2 on Sun May 15, 2011 at 06:43:56 AM PDT

        [ Parent ]

        •  He Couldn't. He Doesn't Oppose Reaganomics, (7+ / 0-)

          the party as a whole doesn't, and given Reaganomics there isn't a lot worthwhile to teach. It's a subject Democratic leadership likes to avoid altogether to avoid putting them on the spot to deliver.

          45 years ago the far rightwing had no voice in the media and no power in their party. The way they fixed that was working, organizing, mobilizing and messaging independently of the party to feed issues and candidates into it.

          That's what has to be done to the Democratic Party; possibly the first baby steps of this are being seen in the labor coalition rallies pushing back against state Republicans.

          We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

          by Gooserock on Sun May 15, 2011 at 06:52:04 AM PDT

          [ Parent ]

          •  He totally opposes Reaganomics. (4+ / 0-)
            Recommended by:
            wishingwell, Matt Z, Geiiga, All In

            Reaganomics is David Stockman's (prior) philosophy that lower taxes lead to higher revenues. Barack Obama has publicly rejected this theory, in fact he does virtually every time he talks about economics. I know that calling Obama a "corporatist" or "plutocrat" or "neoliberal" is in vogue in some circles, but that does not make it so.

            Barack Obama IS a believer in capitalism, which (understandably) ruffles the feathers of the anti-capitalists. But his only positive comments on Reagan had to do with how Reagan communicated.

            I'm in the I-fucking-love-this-guy wing of the Democratic Party!

            by doc2 on Sun May 15, 2011 at 07:11:01 AM PDT

            [ Parent ]

            •  Obama's fiscal priority is a huge $3T tax cut (3+ / 0-)
              Recommended by:
              BuzzLightyear235, Ivan, Rebecca

              and $2T in spending cuts and $1T in tax expenditure cuts.

              How can you possibly say that opposes Reaganomics? That's exactly a Reaganomic policy.

              •  Obama's stimulus was enormous. (2+ / 0-)
                Recommended by:
                wishingwell, Matt Z

                I'm surprised you missed that. And he has no desire to lower taxes on the rich, that was a concession that he felt it necessary to make. Controversial, yes, but not so much so that people in the know actually think he supports the Bush tax cuts for the wealthy.

                I'm in the I-fucking-love-this-guy wing of the Democratic Party!

                by doc2 on Sun May 15, 2011 at 07:20:02 AM PDT

                [ Parent ]

                •  did I say tax cut for the rich? No. (2+ / 0-)
                  Recommended by:
                  Ivan, eXtina

                  But since you have no clue how much the tax cuts actually cost, you're babbling nonsense.

                  The Obama "middle class" tax cuts cost $3 trillion.

                  Let me repeat: even without the "tax cuts for the rich", Obama's high-priority tax cuts cost $3 trillion.

                  If you believe that Obama's tax cuts "for the middle class" are free, you're completely ignorant of his proposal and basic arithmetic.

                  And Obama is fully behind making his $3 trillion "middle class" tax cuts permanent, which is exactly what I said.

                •  The stimulus was a fraction of what most (3+ / 0-)
                  Recommended by:
                  Rebecca, historys mysteries, Odysseus

                  economists said it needed to be. 1.2 trillion of direct spending vs. the ~400 billion we actually got. Obama has repeatedly stated that there will be no further Keynesian stimulus spending. All Washington is talking about now is how much to cut. This is a direct rejection of the Keynesian economics that got us out of the Great Depression and an embrace of the bullshit "supply side" economics that the right started selling in the 70's.

                  •  You only say that... (0+ / 0-)

                    ...because you (or Obama) have no intention of actually paying it back.  If it's stimulative on the way out, it's de-stimulative when it comes back in.  Plus, you have to pay interest along the way.

                    The stimulous only works if it actually encourages people to create and get jobs.  This round of stimulous did neither very well.  

                    Does it shock anyone that giving Congress a $1 T slush fund would result in corporations increasing earnings while the rest of us struggle under double-digit underempoyment...and that's before we actually tried to payoff the mountain of debt we've created.  Even if we get back to even, our kids will be burdened with a massive drag on their oppurtunities.

                    It's intergenerational theft.  It's (future) taxation without representation, and it's wrong.

                    •  I find it awfully amusing to (4+ / 0-)

                      listen to business apologists swear to us on their grandmother's graves that all they really want to do is give us all good-paying jobs but the damned socialists just won't let them do it--------right before the business owners close down all our workplaces and move everyone's job to China.

                      I don't understand why anyone even pays the slightest attention to the business apologists' bullshit anymore. They've already shown us, in the most concrete terms possible, exactly what they think of us and our jobs.

                    •  No, the stimulus was (and is) actually very (4+ / 0-)

                      successful at creating jobs and economic demand. It just wasn't enough. Most economists agree on these two points.

                      Corporations increasing their bottom lines, while doing nothing for job creation, is what happens when you cut taxes as "stimulus". It's indirect at best and a complete waste at worst.

                      As far as debt and "intergenerational theft" goes, what do you think about leaving our children crumbling bridges, a 19th century energy plan, and frontier-era education standards? Is that better or worse than some short term national debt that only dimly affects their personal lives?

                      The right screams about debt and deficits (notably, only when they're not in charge) and pretends all spending is the same. But some government spending is necessary, like Medicare and the VA. Some is wasteful, like corporate tax breaks and military spending. And some of it is long term investment, like energy research and infrastructure spending.

                      Oh, and guess what? The last time we went into massive debt as a nation, it got us out of the Great Depression, won WWII, and we paid it all back within 5 years. This "generations of debt" is bullshit fearmongering from the right (and chutzpah, considering they're the ones who racked most of it up in the first place).

                      •  Reality check... (0+ / 0-)

                        ...You call 9% unemployment a success?  

                        If paying it all back in 5 years is so easy, than why doesn't Obama's budget even consider calling for a balanced budget during his second term?  This is a different kind of hole we're in becaue we also have a huge structural deficit to deal with and a wall of entitlement spending, as well as States that are nearly bankrupt.

                        I'm with you on the birdges, energy plan and education standards (although, we spend more on Edu now than ever before...or what most othe countries do).  This only makes it more unfair to give our kids a bunch of debt they didn't befefit from.

                        I'm hardly a teabagger.  I just think all of the crooks in Washington are cheating our kids.  And I'm not afraid to call both sides of the Isle a bunch of cowards.

                    •  And after reading some of your comments, I'm (1+ / 0-)
                      Recommended by:
                      historys mysteries

                      kicking myself for spending any time responding to an obvious teabagger troll. Are you even getting paid for carrying billionaires' water?

                •  Krugman said stimulus small and weak. He's right. (2+ / 0-)
                  Recommended by:
                  Rebecca, historys mysteries

                  When Obama proposed his weak stimulus bill, Krugman, Stiglitz, Roubini, the Nobel economists who have been proven right by economic events of the last 30 years ALL said it was too little and too short and to much geared to Wall St. not Main St.

                  They were proven correct.

                  Obama didn't listen to them. Obama was proven incorrect.

                  I'm surprised you missed that.

                  •  It was the largest stimulus, in real dollars, (3+ / 0-)
                    Recommended by:
                    energysaver, Matt Z, Uncle Milty

                    ever. Including the Great Depression. There was no magic number. Krugman of course wanted more. But no one can say that a few hundred extra billion would have done anything more. And the debt is something that must be considered. While the GOP is over-hyping the deficit, it is not the case that deficits don't matter at all. Obama is a smart guy who does what is best, but he is not a dictator, and cannot do anything he pleases.

                    I'm in the I-fucking-love-this-guy wing of the Democratic Party!

                    by doc2 on Sun May 15, 2011 at 07:38:39 AM PDT

                    [ Parent ]

                    •  Uh, their numbers weren't pulled out of a hat. (1+ / 0-)
                      Recommended by:
                      BuzzLightyear235

                      There were many (many!) calculations as to the shortfall in gross domestic spending and GDP caused by the recession, and how much government spending (and what kind) it would take to make it up. The stimulus bill ended up being ~1/3 of what the economists said was needed.

                    •  Factually incorrect. 1932 vs 2011 dollars (0+ / 0-)

                      That you try to use bogus numbers to cover Obama's too little, too short stimulus shows that you know Obama failed on the stimulus, failed to listen to best economic minds of the decade, and failed the nation.

                      Much of Obama's aid was aimed at banks and Wall St. firms.  Mortgage help was nothing for homeowners and massive failure as it gave banks money to cover foreclosure losses so banks had and INCENTIVE to foreclose and that's what they did.  There's $200B of the "stimulus" down the Wall St rathole.

                      •  Just because I made up bogus numbers (0+ / 0-)

                        doesn't prove anything about Obama's stimulus. His stimulus was huge by any standards, and your belief that anything that I could say could influence the validity of the president's policies is ridiculous. I'm just some guy on the internet, dude.

                        I'm in the I-fucking-love-this-guy wing of the Democratic Party!

                        by doc2 on Sun May 15, 2011 at 03:09:41 PM PDT

                        [ Parent ]

            •  Obama defines Reaganomics. (1+ / 0-)
              Recommended by:
              Rebecca

              1.  Tax cuts for the rich that US cannot afford. Obama just signed them.  Added in defunding of Social Security.

              2. Massive military budget. Obama's is the current record of $1.3T.  Another DKOS front page diary graphically showed how out of control US military spending is, 10 times that of China, the next largest after US.

              3. Cuts to Social Security and Medicare.  Obama cut SS funding by $400B via his just signed Reagnomics tax cut bill and cut Medicare funding by $500B in his Reaganomics insurance company welfare bill, aka "landmark health care reform."

              Those are the basics of Reaganomics. Obama is following Reagan's playbook to the letter.  

              •  I think we both know he doesn't support (2+ / 0-)
                Recommended by:
                wishingwell, Matt Z

                tax cuts for the rich. And under his leadership, Robert Gates cut more entrenched defense systems than had been cut in the prior 30 years.

                I'm in the I-fucking-love-this-guy wing of the Democratic Party!

                by doc2 on Sun May 15, 2011 at 07:30:57 AM PDT

                [ Parent ]

                •  I know we know Obama Tax Cuts are a killer. (0+ / 0-)

                  Just as they were a killer under their previous advocate, George Bush.

                  The deficit and debt from the Obama tax cuts is used by the GOP (and Obama) to justify cuts to Social Security and Medicare as a means to pay off the Bush/Obama deficits/debt.

              •  an inconvenient fact (0+ / 0-)

                It's the "for the middle class" tax cuts that are budget busters ($3 trillion), not just the "for the rich" tax cuts ($0.7 trillion).

                But the $3 trillion price tag is an inconvenient fact because "for the middle class" sounds so good, and is therefore ignored.

                But it's still just as expensive even if you ignore it.

        •  Folks don't care about career or kid's education? (2+ / 0-)
          Recommended by:
          Rebecca, historys mysteries

          You sell our people way too short.  Even if failure was the result of the first try, well, try again.

          Without the little people we are forever lost and pathetic, if we can't serve their mission we belong with no mission at all. We are sneered at and despised for not even trying, everyone knows and expects who the Republicans serve.

          All people instantly get plain rhetoric that explains Intel building all their new fabs in China quickly and inevitably leads to fuckdom.  Market rules mean gas doesn't zoom to $4.50 in April.  Not hard to do at all.

    •  We can make them less regressive (1+ / 0-)
      Recommended by:
      JG in MD

      We should first expand sales taxes to services. The states that exempt lawyers, consultants and accountants from collecting sales taxes are doing even more to make them regressive.

      Second, even if we expand sales tax to more items, we can give back $1,000 to each taxpayer to make it somewhat progressive.

      The GOP is the party of mammon. They mock what Jesus taught.

      by freelunch on Sun May 15, 2011 at 07:38:20 AM PDT

      [ Parent ]

    •  Alabama also charges tax on food nt (1+ / 0-)
      Recommended by:
      historys mysteries

      "I've taken up sculpting recently. Landscapes mostly." ~ Yogi Bear

      by eXtina on Sun May 15, 2011 at 09:43:20 AM PDT

      [ Parent ]

    •  What taxes need to be... (1+ / 0-)
      Recommended by:
      Odysseus

      Simple to calculate.
      Easy to collect.
      Evenly applied.

      There also should be a variety of taxes to spread the load and make it harder to avoid.  I would be reluctant to simply eliminate one of the common types of tax..

      Sales taxes actually meet the simple and easy criteria.  Income taxes fail on all counts.
      But I think one huge problem with sales taxes is that they apply to some merchandise, but not others and not services.  How about if instead of a sales tax we did a 1% gross receipts tax on all businesses.  

      I also think there is merit in having an asset tax instead of a property tax.  Why only tax real estate?  How about taxing all assets over say a $100k deduction.  Then substantially lower or even eliminate the income tax, partly because it's too damn complicated.  

      Frankly, I blame everything on Nixon.

      by J Orygun on Sun May 15, 2011 at 11:10:04 AM PDT

      [ Parent ]

      •  1% gross receipts does not work. (2+ / 0-)
        Recommended by:
        historys mysteries, Odysseus

        For some businesses, 1% is close to their profit margin (such as for grocery stores). Others have wide margins. Anyhow, as internet retail expands, sales taxes are getting progressively tougher to collect.

        I'm in the I-fucking-love-this-guy wing of the Democratic Party!

        by doc2 on Sun May 15, 2011 at 11:18:14 AM PDT

        [ Parent ]

    •  yep - hate lotteries too (0+ / 0-)

      I hope that it's not lost on people as to the lottery being a key element of 1984.

      The lottery is a great indicator of how predatory state govt's are.

      big badda boom : GRB 080913

      by squarewheel on Sun May 15, 2011 at 11:42:36 AM PDT

      [ Parent ]

    •  and Oklahoma which charges sales tax on food. (1+ / 0-)
      Recommended by:
      eXtina

      Not the state, but local munis.

      In a world of the blind, the one eyed man is a pariah. Ask Galileo. Ask Darwin.

      by OKParrothead on Sun May 15, 2011 at 01:06:36 PM PDT

      [ Parent ]

  •  The issue is to keep the currency (2+ / 0-)
    Recommended by:
    paradox, historys mysteries

    flowing through the economy from hand to hand.  Local government spending, like federal spending, does that.  Wall Street speculation doesn't.  Wall Street just passes the money back and forth, like a team that plays keep-away to run out the clock.
    Evidence for this can be found in the fact that once upon a time, every dollar of GDP passed through 3.5 hands in the early '80s.  Nowadays we're lucky if one and a half of us gets to see that buck.  And this despite the fact that an ever increasing number of transactions are mediated by the exchange of cash (child care, elder care, personal care, health care, auto repair, food preparation, etc.).  So, while the quantity of money has vastly increased, its velocity has significantly decreased.

    Why?  Because some people have found it convenient to attempt to regulate the economy by restricting the flow of our currency. If you think of money as a token of energy expended, similar to the alphabet as a token or symbol of meaningful sound, then restricting the currency is not unlike restricting who's permitted to learn how to read and write.

    http://research.stlouisfed.org/...

    http://www.youtube.com/cyprespond

    by hannah on Sun May 15, 2011 at 06:27:03 AM PDT

  •  a Tenther briar patch: enacting Federal VAT (0+ / 0-)
    Of course, there's one big sticking point in this plan. There is no federal sales tax in the United States. Sales taxes are their business of states and localities. If the federal government was to crush all sales taxes by fiat (assuming that it could), it would leave a monster gap in the budget of already smarting state and local governments. To get around that issue, the program would need to be phased in, with more dollars from income tax distributed to the states to compensate for reductions in their regressive sales taxes. Hey, we could even make it in the form of block grants that the states could use as they please. In fact, we should.

    I am off my metas! Präsidentenelf-maßschach; Warning-Some Snark Above join the DAILY KOS UNIVERSITY "Nous sommes un groupuscule" (-9.50; -7.03)

    by annieli on Sun May 15, 2011 at 06:44:25 AM PDT

  •  Value added tax (2+ / 0-)
    Recommended by:
    Sparhawk, Uncle Milty

    1. Yes, income taxes on the higher income folks need to go up., and up a lot. Period.

    2. A value added tax is used in just about every developed nation, including countries far to the left of the US in economic matters. VATs do not have to be that regressive.

    The idea behind a VAT is essentially to penalize, to some degree, consumption and instead promote saving. It is true that no country has ever consumed its way to prosperity.

    The US has run a trade deficit for 35 odd years. That means it has been consuming more than it has been selling consistently over a long period. That is called living beyond one's means. Government policies that encourage consumption over investment are at least partially to blame.

    One way to change the situation is to put in a consumption based tax (a VAT). Its regressive nature can be reduced by a) putting it on all goods and services but excepting food/rent and b) providing tax rebates to lower income people (so that effectively they may end up actually making money off the deal - if the rebates are set high enough).

    Unfortunately the tone of this piece is what is wrong with the current economic approach to the recession - if we wait and do a few things (let tax cuts expire, end wars, etc.) things will get back to how they used to be. That will NOT happen.

    Major structural reforms are required in how the US economy and government function if there is ever to be a true recovery. To date NOTHING much has been done, except the waiting and printing money part.

    Its hard to say this - but until there is a real crisis (most likely a currency crisis), nothing will happen and the underlying problems will get worse and worse. This is looking more and more like a Japan style slow motion train wreck.

    "I can live with doubt and uncertainty and not knowing. I think it's much more interesting to live not knowing than to have answers which might be wrong". Feynman

    by taonow on Sun May 15, 2011 at 06:49:41 AM PDT

    •  Yes (2+ / 0-)
      Recommended by:
      taonow, Rebecca

      No one wants to upset the apple cart. Clinton, Bush, and Obama have all tried desperately to avoid having to make major structural change. In essence, every decision Obama has made (including pushing the poorly constructed health care bill) has been in defense of this mission of non-change.

      "God, let there not be negative economic news that I'll be blamed for" is the mantra of every president since Carter. As long as there isn't a recession right now, we must be doing the right things.

      (-5.50,-6.67): Left Libertarian
      Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

      by Sparhawk on Sun May 15, 2011 at 07:08:50 AM PDT

      [ Parent ]

      •  the structural change has already been made (1+ / 0-)
        Recommended by:
        historys mysteries

        and it has been a profound one that most of us still have not even accepted.

        We have, in just the past 15 years, changed from a nation-based economic system to a global one where nation-states simply don't matter anymore.

        We have changed from national-government control over economic policies to one of international control of economic policies----where national governments no longer make the decisions, and where international bodies have legal veto power over any economic decisions made at the national levels.

        This is no longer the 20th century. Our old ways of thinking about the economy, no longer apply.

        •  Nonsense. (0+ / 0-)

          Either borders mean something or they don't.  Labor must be as free to move as capital is.  Capital must be as constrained as labor is.

          Until we reach that state, there is no global economy.

          -7.75 -4.67

          "Freedom's just another word for nothing left to lose."

          There are no Christians in foxholes.

          by Odysseus on Sun May 15, 2011 at 02:07:25 PM PDT

          [ Parent ]

          •  nice snark :) (0+ / 0-)

            Borders of course DON'T mean anything. That's why "free trade agreements" do indeed mean that labor will be entirely free to move across national borders just as products are. And all efforts to prevent that (including ours) will simply fail in the face of reality.

            Multinational corporations have no country, and don't care a fig about national borders.  (shrug)

      •  Oddly enough, I agree with you on this! ; ) n/t (0+ / 0-)
    •  alas, your approach is also outdated (1+ / 0-)
      Recommended by:
      historys mysteries

      Nations and governments are no longer the most powerful entities in the economy----multinational companies which belong to no nation and owe loyalty to no government are. They are richer, larger, exercise more direct control over resources, and have more power over people's lives than any national government, including ours.

      As long as we remain mired in the "nation-state" framework of the 20th century, we will never be able to deal with the real-world supranational economy of the 21st century.

      As an example, the very idea of "balance of trade" is now irrelevant, since so many "American" companies are located overseas and vice versa. Those who point to "trade deficits" with China or elsewhere forget that much of those imports come from American-owned companies operating there. Indeed, American companies now have roughly 60% of their entire manufacturing capacity located outside the United States. In a world where global companies are not limited to nation-states and don't care about national borders, the very idea of "balance of trade" is outdated, outmoded, and useless.

      There is virtually nothing that national governments, anywhere, can do to manage or control the economy. That is because the economy is no longer nation-based---it is supranational, and its power centers are no longer in national capitols.  There simply is no longer any such thing as an "American economy" or a "Chinese economy" or a "Somalian economy".  The economic world is now so interpenetrating and co-determining that there is simply no longer any line between it--it is a global economy run by global entities who care nothing at all for "national interests".

      The economic world has changed beyond recognition since 1995.  Our economic outlooks must change too.

    •  Nonsense on the trade deficit. (1+ / 0-)
      Recommended by:
      bartcopfan
      The US has run a trade deficit for 35 odd years. That means it has been consuming more than it has been selling consistently over a long period. That is called living beyond one's means.

      GDP = Consumer Spending + Business Investment + Government Spending + (Export - Imports).

      The Trade deficit is only one of those four items.  Having a trade deficit may be a drag on the other sectors, but it can certainly be sustainable.

      The question is what you are trading for.  Blowing $20B per month on foreign oil is a waste of money.  We need Consumer, Business, and Government investment in clean energy technology.  Energy Independence IS National Security.

      -7.75 -4.67

      "Freedom's just another word for nothing left to lose."

      There are no Christians in foxholes.

      by Odysseus on Sun May 15, 2011 at 02:05:25 PM PDT

      [ Parent ]

      •  national borders are meaningless when (0+ / 0-)

        the stuff we are importing comes from American companies operating overseas.

        American companies have moved about 60% of their productive capacity offshore, and nearly all the 100 largest corporations now get over half their profits from overseas.

        So when Americans are essentially buying American stuff that is made in China, it makes the whole concept of "balance of trade" meaningless. Just as it does when Germany and Japan build auto and steel plants in the US.

        The corporations have no country anymore.  The very concept is outdated.

      •  Amen!! (0+ / 0-)
        The question is what you are trading for.  Blowing $20B per month on foreign oil is a waste of money.  We need Consumer, Business, and Government investment in clean energy technology.  Energy Independence IS National Security.

        "Push the button, Max!" Jack Lemmon as Professor Fate, The Great Race

        by bartcopfan on Mon May 16, 2011 at 10:21:20 AM PDT

        [ Parent ]

  •  "Biggest factor" is the OBAMA tax cuts. (5+ / 0-)
    Recommended by:
    paradox, Flying Goat, ferg, tle, Rebecca

    Used to be the Bush Tax Cuts but after campaigning on the importance of the repeal of the Bush Tax Cuts, an importance the diary details extensively, Obama broke his campaign promise and signed and passed the Obama Tax Cuts.

    Of Obama's broken campaign promises, public option and the Bush Tax Cuts are by far the most corrosive and damaging to the US.

    Much of the GOP Reaganomics revival is based on the deficits and debt attributable to the Obama Tax Cuts. Obama made it worse by ADDING to the Bush tax cuts by Obama's substantial defunding of Social Security.  This money will never be restored to Social Security and the tax, like the Obama Tax Cuts, will be made permanent.

    The damage Obama Tax Cuts are doing is as much political as economic.  It forms the basis for the current GOP attack on Medicare and Social Security, neither of which caused the deficits and debt but both are favorite targets of Reaganomics ideologues. Obama Tax Cuts are the basis for the Obama Cat Food Commission which proposed big cuts to Social Security and Medicare to pay for past, present and future tax cuts, Reagan's, Bush's and Obama's.

    Obama himself can be accurately called a Reaganomics ideologue based up his support for the three key facts of Reaganomics.

    1. Tax cuts for the rich. Tax cuts US cannot afford.

    2. Cuts to Social Security and Medicare to pay for the tax cuts.

    3.  Massive military spending.  A graphic of which another recent DKOS front page diary shows US military spending out of control, beyond our economic means to support and beyond any threat justification.

    4.  Bonus Reaganomics.  Drill baby drill. Obama has signed onto to drill baby drill fantasy of Reaganomics that destroying US environment for oil company profit will make US energy independent.  Obama killed the energy bill which would have helped with US greenhouse gases and reduced oil use. Obama has pushed oil drilling in the US despite the BP Gulf disaster where Obama covered for BP.

    •  it's not just the "tax cuts for the rich" (1+ / 0-)
      Recommended by:
      Uncle Milty

      The rest of the Bush/Obama tax cuts costs $3 trillion. That's 80% of the total Bush tax cuts.

      •  Defunding of Social Security adds $500B. (2+ / 0-)
        Recommended by:
        Rebecca, historys mysteries

        Remember, Obama acheived what Reagan and the Bush's never could, the actual DEFUNDING of Social Security, cutting Social Security revenue. Those cuts to Social Security funding will never be restored and Social Security benefits will be cut to pay for them.

        Bad Obama.

        •  well, that one is more complicated (1+ / 0-)
          Recommended by:
          BuzzLightyear235

          because it did transfer the revenue from the general fund and the payroll tax cut does have a high multiplier.

          So economically and budget-wise the cut wasn't a disaster.

          Politically, it was stupid, though.

          Politically, it further reinforced the Republican message that tax cuts are the cure for everything. Spending on infrastructure or spending to the states (avoiding teacher layoffs), would have been a much better choice.

  •  I am pretty ignorant about this issue, BUT (0+ / 0-)

    it seems to me that VAT works so well in Europe (and GST & PST in Canada) because the distribution of wealth/income is so much flatter than in the Not-So-United States. With the skewed distribution back in the Land of the Brave and the Home of the Free, much higher income taxes - city, state & federal - make the most sense. Realistically, a wealth tax is impossible, so concentrate on PROGRESSIVELY taxing income and avoid joining us in the 3rd World.

    I voted with my feet. Good Bye and Good Luck America!!

    by shann on Sun May 15, 2011 at 07:01:29 AM PDT

    •  The US is actually MORE progressive... (0+ / 0-)

      ...because we don't have a VAT tax.  Almost 50% of the people don't pay ANY federal income taxes.  In most other countries in Europe with more expansive social services, everyone pays in with a VAT tax.

      The most expensive part of the Obama tax cut were keeping Bush's deeply progressive tax cuts for the middle and upper-middle class.  The "rich" got 700B while everything else was well into the Trillions.

      •  perhaps you've not noticed the relative numbers (2+ / 0-)
        Recommended by:
        historys mysteries, bartcopfan

        between "the rich" and "everyone else".

        How anyone can even argue with a straight face that $700B to two percent of the population is "more progressive" than the couple trillion that went to the other 98%, is a mystery to me.

        The very idea that the oppressed rich are burdened by too many taxes boo hoo hoo, is utterly ludicrous.

        Perhaps they'd be happier moving to England or France.

        •  You missed my point... (0+ / 0-)

          ...I'm not arguing that the rich are undertaxed.  Our problem is that the middle-class is undertaxed.  In Europe they have crazy-high VAT taxes.  Most are in the teens, I think.  In the US, nearly 50% of us don't pay ANY federal taxes at all and many of those get refunds from child an the EITC.

          If we want Europe style health care and other benefits, the middle class will have to start paying for it, along with the rich.  Just taking back the 700B won't plug the hole created by couple trillion to the middle class.

          I'm not even saying the middle-class should pay the same rate as the upper-class.  But they should pay something.

          What % do you think should pay nothing at all?  How is that a "fair share?"

  •  they get it both ways because they have 1000 radio (2+ / 0-)
    Recommended by:
    Rebecca, historys mysteries

    stations getting a free speech free ride from the left while the RW think tanks use its local and national blowhards to reach 50 mil a week with a coordinated pro corporate message.

    they completely control the message and they only get to do it because they have the biggest one-message soapbox in the country 24/7 and the left lets them have it.

    Progressives will lose all major messaging battles until they picket the limbaugh/hannity megastations and boycott those stations' local sponsors.

    by certainot on Sun May 15, 2011 at 07:09:33 AM PDT

  •  Progressive Democrats Caucus Good Budget. (3+ / 0-)
    Recommended by:
    hmi, US Blues, ferg

    There is a good alternative budget out there if Democrats would unite and support it.

    The Democratic Progressive Caucus wrote a good alternative budget that Democrats should unite around and push as good for America.

    Of course, Obama in his new role as Reagan's heir, does not even want to consider the Progressive Caucus budget or even allow the Progressives to the table.

    Rep. Raul Grijalva (D-AZ) told TPM that though he's been "somewhat disappointed" with the response from Democratic leadership, and the White House, he thinks it's because"we have a platform that probably scares people more than anything else."

    "Scared" is the key word when dealing with Obama.  He has just been cowardly as a president, abandoning campaign promise after promise,  rolling over on issue after issue to the GOP.

    Now he is going to sign another Reaganomics budget continuing the Obama Tax Cuts, continuing the massive military budget, continuing to push oil drilling and environmental disasters, continuing to cut Social Security and Medicare.

  •  I adore graphs (1+ / 0-)
    Recommended by:
    historys mysteries

    and I always will.   But apparently trying to use them is political suicide.  

    Americans don't WANT to know about complex interrelationships of time, demographics, and money.  

    "The extinction of the human race will come from its inability to EMOTIONALLY comprehend the exponential function." -- Edward Teller

    by lgmcp on Sun May 15, 2011 at 07:20:15 AM PDT

    •  Yup. Most Americans don't even understand the (4+ / 0-)

      simple concept of the time value of money and end up paying usurious interest. Teabaggers buy into bullshit "the rich pay the most taxes" and "death tax" arguments and and very loudly perpetuate them. Good luck teaching them anything about the finer points of points of tax policy and how it really impacts their finances.

  •  Income tax is related to income, not spending. (0+ / 0-)

    Percentage of income going towards income tax is related to income..it has nothing to do with spending habits. If Rich people bought proportionally more tool chests, they would still pay the same income tax.

    Maybe I'm missing the point?

  •  Thank you for pointing this out (2+ / 0-)

    Right now, investment firms like Schwab and Fidelity are recommending that their clients put their money, at least 20% to 25% into foreign and emerging markets.

    Think that is going to help here in America?  

    And then if they hold their money for at least a year and make a profit, they only have to pay 15% in taxes.

    The system is set up for the wealthy, pure and simple.

    -6.13 -4.4 Where are you? Take the Test!!!

    by MarciaJ720 on Sun May 15, 2011 at 07:23:50 AM PDT

  •  Obama is a moderate republican.. (1+ / 0-)
    Recommended by:
    tle

    It blows me away that this site supports him.Look at his record.With the exception of a dumbed down health care plan his record is in line with Bush.Tax CUTS, extension and expansion of Bush wars,bombing Libya,rendition and now talk of expansion of oil drilling and development in the US JUST TO NAME A FEW!When are we going to wake up and see we are being played?Primary this pretend liberal!

  •  Republican Game Plan? (0+ / 0-)

    "the truth is that the current deficit crisis is of their own making. The biggest factor by far is simply the Bush tax cuts. "

    What part of their game plan was it to have the Democrats, when they still controlled the Congress, fail to actually introduce and pass a budget? Sorry, but the Dems shot their own goddam feet off on this one.

  •  What about the most regressive tax of them all? (4+ / 0-)
    Recommended by:
    tle, eXtina, squarewheel, Odysseus

    That would be the social security tax, which is applied to the first dollar earned, produces benefits that decline as you pay more, and disappears altogether once you make $106,000?

    Once upon a time, the SS tax was more closely tied to benefits and acted more like an insurance premium, or a pension pay-in, but once upon a time, the SS tax was just a bit under 2% when you include both halves.

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

    by dinotrac on Sun May 15, 2011 at 07:39:33 AM PDT

    •  I wonder about that first graph. (1+ / 0-)
      Recommended by:
      Odysseus

      Is the income tax portion for state income tax, or both state and federal?  If it includes federal, then clearly it does not include Social Security, which, with the employer part, comes to 12.4% alone, with no deductions or credits applicable.

      I am become Man, the destroyer of worlds

      by tle on Sun May 15, 2011 at 08:17:04 AM PDT

      [ Parent ]

    •  I thought that the more you made, the (2+ / 0-)
      Recommended by:
      historys mysteries, dinotrac

      higher your social security would be when you claimed your benefits.

      •  True, but not as true as you think. (1+ / 0-)
        Recommended by:
        Odysseus

        Don't have the numbers handy, but it's a sliding scale, so...

        I don't know the exact dollar cutoffs, but it works like this:

        Once they figure out your average monthly income (with indexing for inflation, etc), you gut

        90% of the first $700 or so
        32% after that, going up to around $4,000
        and 15% after that, until you reach the cap at a bit under $9,000.

        One could argue that the payout structure -- more for those earning less than $700 a month (!) somewhat "undoes" the regressive nature of the tax, but that's no consolation to the people making  anywhere near the $15k minimum wage now.

        As you look a that last bracket especially, it also puts the lie to Social security as annuity or some other financial instrument.  It's a welfare program, and that's fine. Pretending otherwise means accepting horrible tax inequities.

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

        by dinotrac on Sun May 15, 2011 at 10:43:13 AM PDT

        [ Parent ]

  •  I still think that a three tiered flat tax, with (1+ / 0-)
    Recommended by:
    Odysseus

    no deductions, State and Federal, eliminating most consumption taxes, would the fairest.   Poorest third pays no taxes, middle third pays 20%, top third pays 35%. I don't know the actual math for this, but something along those lines, with corporations paying a flat 25%, no deductions.  

    I can't believe we don't have the will to do something to fix our tax codes, State and Federal, to make them simpler and fairer.  

    I can't wait to see how we fix the motor fuel tax to account for electric cars.  

    If you lose your disc or fail to follow commands, you will be subject to immediate de-resolution. That will be all.

    by SpamNunn on Sun May 15, 2011 at 07:44:33 AM PDT

    •  Laugh... study some accounting.... (2+ / 0-)
      Recommended by:
      tle, psnyder
      with corporations paying a flat 25%, no deductions.

      25% of what?  Revenue?  Well, that obviously doesn't work - few companies have a 25% margin that they could use to pay that 25% tax on revenue out of.

      So then it has to be profit... but what is profit?  That's the big issue with corporate taxes, not the deductions.

      For example, if my China JV has a $100MM profit but I have no legal ability to take the money out of China (because my JV partner wants to reinvest the money) do I still have to pay taxes on it?  Do I even have the cash in the US to do that?

      How do capital expenditures impact my profit?

      What about one off charges when I write down the value of an acquisition?

      I can keep going, but please don't imagine that you can do some simple flat tax on companies and eliminate all the fiddling.

    •  "simple" and "fair" are mutually exclusive (1+ / 0-)
      Recommended by:
      Odysseus

      That's just the way it is.

      And since the top 1% own almost half the country's wealth all by themselves, they should have their own bracket.  And since much of that 1% doesn't even pay any income tax (they don't NEED a job, dahling), they should also have all their "unearned income" (interest, dividends, inheritance) taxed as income just like everyone else.

  •  That's a huge power grab for the feds (3+ / 0-)
    Recommended by:
    coffeetalk, eXtina, Odysseus

    You would be having the federal government collect all taxes and the give it out in block grants to the states.

    This would mean that the states would totally lose control of the revenue side of their budgets - they would be totally reliant on the federal government to decide how big their budgets should be.

    The consequences of this would be pretty extraordinary:
    1. When Republicans are in power in Washington they would control how much money California, New York, and other liberal states can spend.
    2. It is unlikely that states would be able to borrow money at any reasonable interest rate when they do not have the power to raise their own taxes and there is no guarantee that the block grants from the federal government will be enough to pay back their bonds.
    3. The fight (and ongoing fights) over the block grants formula would be enormous.
    4. Unless the formula was simply to return to the states what was collected from their residents then states would not be penalized for economic mismanagement - they could just free ride on other states and use the taxes collected from those other states.

    Your concept is totally unworkable in a federal system.

    You could push the states to eliminate sales taxes and go to income taxes, but unless you got almost all of them to go along (and the exceptions were difficult places to work from like Alaska) it would be unlikely to work.

    Consider - you're a billionaire running a hedge fund with take home pay of $1 billion per year.  If you live in New York you will pay income tax of 10% - $100MM on that.  If you live in State X you get to keep that $100MM but you need to pay sales tax on goods and maybe some services you use in that state.  Unless State X is Alaska is this a hard choice?

    As for the VAT idea, if done by the federal government it is probably not constitutional.  It's obviously not an income tax - that's its whole point.  And it doesn't fit the other taxes that the federal government is allowed to apply.

  •  My Idea: A Semi-Progressive "Fair Tax" (1+ / 0-)
    Recommended by:
    orange dog

    You have a flat rate income tax with no deductions, but you allow a one time "cost of living" deduction for everyone. That cost of living deduction is tied to the listed poverty income level, created by the HHS. Two times the poverty level, to be exact.

    Everyone would do their taxes the same way -- a one page document: Write Income, Subtract COL-deduction (a set number for everyone), equals taxable income (taxed at a flat rate for everyone).

    I think the  best way to find the tax rate itself is to design the system, then figure out what the rate would have to be to have someone making 300k to see no change in their taxes. This would mean people making under that would see a reduction, getting bigger as you slide down the income scale (people making under 2x the poverty level would pay no taxes, and possibly receive some sort of tax bonus), and everyone above would pay more (much, much more at the upper levels) without a way to hide their income.

    It's a rough idea...but I think it's a great sell. A flat/fair tax, as everyone is taxed the same. A cost of living deduction -- basically the government setting the goal that 2x the poverty level is the MINIMUM standard of living we want our citizens living at. Easy to understand, hard to argue against.

  •  Progressives killing the nonprofit sector? (0+ / 0-)

    Eliminating deductions, as this proposal and many other "progressive" ones do, kills the tax incentive to donate to nonprofits, which have filled the gap left by a service-weak government.  The American system relies on this "third sector" to make up for all of what government does everywhere else.  Without the charitable deduction, or a massive rise in government responsibility and spending, the "safety net" would become vastly more tattered than it already is.

  •  Only the little people pay taxes seems to be (0+ / 0-)

    the ideology for the last 30 years of the evil rotten Ronnie and his evil minions. Otherwise get rid of or privatize the rest since the non-free "free market" is the solution to everything.

    The more things change......the more our government is taken over in a leveraged buyout.

    Civilization costs money but looks like the evil rich don't want to pay. Oops I said that first only in a different way.

    The radical Republican party is the party of oppression, fear and loathing.

    by a2nite on Sun May 15, 2011 at 09:03:02 AM PDT

  •  Problems with chart (1+ / 0-)
    Recommended by:
    Odysseus

    Specifically, the "State and local taxes are Regressive" chart.

    I agree with the sentiment, but the chart seems just a bit off.

    I'm about as "middle class" as you get, so that would put me in the third 20% column.

    For 2007 (and years that follow), my overall income tax burden as a percentage of my income (gross) was about 13%.

    Sales tax where I live would average, I guess, around 4%.

    Property taxes for that year would have been around 1% (yeah, low property taxes, they've gotten higher since, but maybe 2% now.)

    Add that up...I'm around 18% tax burden for my income for that year. And I think I'm either average on tax burden or perhaps slightly below average.

    So how do they arrive at the totals on that bar chart? Ten percent is average for my income bracket?

    Don't think so.

  •  End divided sovereignty (0+ / 0-)

    The need for a rational system of taxation is yet another reason for us to face the reality that the Founders' vision of divided sovereignty was an unworkable ideal.  

    Leave the question of a progressive, income, tax, vs a regressive, sales, tax to the states, and red states, states that want to sustain a permanent underclass, will, of course go for funding state govt from sales taxes.  Just so, leave the question of voting rights and qualifications to the states, and red states will do their level best to disenfranchise the "undesirables" they wish to form part of that permanent underclass.

    We need to abolish states as anything but administrative divisions of the Union.  The Equal Protection clause in particular, and the 14th and 15th Amendments in general, have us most of the way there already.  But there are holes in the protection these give against state persecution of an underclass even if the federal judiciary is filled with judges who actually want to enforce these provisions that limit state sovereignty.  When it's not, when we have all of these Federalist Society stooges on the bench, those holes are big enough to sink a battleship.

    Repeal the 10th.  Repeal all the language in the Constitution that mentions the states as sovereign and prior to the Union in rights and privileges, and pass an amendment that clarifies that the states are mere adminstrative divisions of the Union.  Until we do that, we will not have an actual Union.

    We should have destroyed the presidency before Obama took office. Too late now.

    by gtomkins on Sun May 15, 2011 at 09:26:41 AM PDT

    •  That's find as long as blue states don't have to (0+ / 0-)

      subsidize them, and redistribute their income because they responsibly taxes their residents to them.

      Leave the question of a progressive, income, tax, vs a regressive, sales, tax to the states, and red states, states that want to sustain a permanent underclass, will, of course go for funding state govt from sales taxes.  Just so, leave the question of voting rights and qualifications to the states, and red states will do their level best to disenfranchise the "undesirables" they wish to form part of that permanent underclass

      "I've taken up sculpting recently. Landscapes mostly." ~ Yogi Bear

      by eXtina on Sun May 15, 2011 at 09:58:55 AM PDT

      [ Parent ]

    •  we already did that. (2+ / 0-)
      Recommended by:
      psnyder, gtomkins

      The "state rights" loonies should read up on the "Articles of Confederation", and why it was such a disastrous failure that we scrapped it and replaced it.

      The very purpose of the Constitution was to move power from the states to the Federal Government.

      •  I always think of the Articles of Confederation (0+ / 0-)

        when I hear rightists declaiming as to how the Framers were all about limited government. You'd think the Anti-Federalists had won the argument a couple hundred years ago. Well, they lost, but their arguments and the feudal sentiments behind them live on.

        "It's called the American Dream because you have to be asleep to believe it." George Carlin

        by psnyder on Sun May 15, 2011 at 12:22:08 PM PDT

        [ Parent ]

      •  Not a real Union (0+ / 0-)

        No doubt the Constitution was further down the road to Union than the Articles.  But it wasn't full Union.

        The Founders knew perfectly well what actual Union would have looked like.  They had before them the recent (for them) historical example of the union of Scotland and England.  The Act of Union passed by the parliaments of both countries created one new Parliament of Great Britain, ending the parliaments of England and Scotland.  It ended separate armies, navies and judiciaries for the two formerly separate countries.

        The Constitution didn't do any of those things.  The 13 states remained that, sovereign states, not provinces or departments of one united state.  They retained their own legislatures and judiciaries, and their own armies.  They retained powers not granted to the federal govt.

        Granted, in practice, sovereignty has effectively concentrated in the federal govt.  But we never changed the Constitution to reflect that practical reality.  This has left open the potential for judges sympathetic to state sovereignty, using original intention as their rationalization, to give us back states' rights in practice.  That is exactly the conservative program right now.

        We should have destroyed the presidency before Obama took office. Too late now.

        by gtomkins on Sun May 15, 2011 at 04:28:06 PM PDT

        [ Parent ]

      •  They've done their reading, and prefer disaster (0+ / 0-)

        What they think of as disaster is states like TX and AZ turning blue as they become majority minority.  That propsect is exactly why the Rs in such states are so radical.  Their hold on power in their states is threatened if undesirables get to vote.

        They don't think in terms of the country as a whole, or even the good of all the people in their own states, or the long-term consequences even for themselves.  They think of disaster and its opposite in terms of their hold on power.  So any sermons you might have about the bad effects for the nation as a whole of the Articles of Confederation, or the states' right provisions of the Constitution that make ours an imperfect Union, are wasted on them.  They don't care if a program of repressing the "wrong" sort of people in their borders, most importantly not letting them vote, will lead inevitably to permanent class warfare, and be a lose-lose situation.  They are convinced that they have more guns, and will permanently come out on top in any permanent class warfare.

        These people think the Whiskey Rebellion was a good thing.  They think that the Nullification Crisis of 1830 is a model of the right way for the states and the federal govt to relate, by threatening war and invasion.

        We should have destroyed the presidency before Obama took office. Too late now.

        by gtomkins on Sun May 15, 2011 at 04:40:50 PM PDT

        [ Parent ]

  •  Middle Class, middle age to older folks (0+ / 0-)

    feel these taxes very profoundly. This is the source, along with every-rising property taxes of the 'tax revolt' by teapartiers, as well as regular folks all over. They feel it and they are overtaxed. It's not about federal taxes at all, but it is easy to harness this rage and direct it at the federal government. It does affect people's willingness to cut pensions and benefits of public workers though, because this is how they are funded.

    "I've taken up sculpting recently. Landscapes mostly." ~ Yogi Bear

    by eXtina on Sun May 15, 2011 at 09:27:23 AM PDT

  •  What's interesting is that the higest sales (2+ / 0-)
    Recommended by:
    Mark Sumner, Odysseus

    tax states are the ones that have no state income tax. With the exception of SD  and AK the rest of the no state income tax states--TX, NV, WA, FL, and TN--have higher than average sales tax rates. So they seem to be making up the difference from sales taxes.

    I've always viewed states like SD, NV, TX, TN, WA, AK, and FL to be a scam. Yes they don't take out state income tax, but they take it out every other possible way.

    •  FL is even more of a scam (2+ / 0-)
      Recommended by:
      psnyder, Odysseus

      The reasoning that is generally given for the "no state income tax but higher sales tax" is that "we want the tourists who come here to spend money to pay towards our state budget so the locals don't have to."  It's the same reasoning they give for all the state-owned toll roads everywhere, too.

      Of course, the total number of tourists is just a fraction of the total number of locals---so the whole argument is pure unalloyed bullshit.

    •  Higher property taxes, too! (0+ / 0-)

      Conservative OK politicians always compare w/ TX's 0% state income tax, but are as silent as a whore in church (as my grandfather used to say) about TX's property tax (~3x OK's).  

      "Push the button, Max!" Jack Lemmon as Professor Fate, The Great Race

      by bartcopfan on Mon May 16, 2011 at 10:41:56 AM PDT

      [ Parent ]

  •  The tax benefits for the rich that I would (0+ / 0-)

    support would connect directly to activities that benefit the economy, such as investing in new facilities and hiring people. I would support tax for the rich that reward expanding businesses and hiring people. I wouldn't just cut taxes just based on income, but on business activity that benefits the economy.

  •  Delaware can 'get it' because they get (0+ / 0-)

    they can afford to by allowing credit card companies to operate regulation-free in their state, and create usurous interest rates. I think I'd rather pay 5% sales tax than 30% cc interest rate.

    "I've taken up sculpting recently. Landscapes mostly." ~ Yogi Bear

    by eXtina on Sun May 15, 2011 at 09:52:11 AM PDT

  •  NY recently raised sales tax and got rid of (0+ / 0-)

    millionaire surtax, a 2% tax on upper upper incomes. Now Gov. Cuomo is calling for a property tax cap. This will lower taxes for 'upstaters', but not relieve people in NYC where property ownership is low, once again shifting the burden from upper class to middle and lower, and from the state to the City.  

    As soon as there is a budget shortfall sales tax is the first thing to be raised. it will not change. NYC removed the $110 exemption where any clothes below that dollar value were not supposed to be charged tax.

    "I've taken up sculpting recently. Landscapes mostly." ~ Yogi Bear

    by eXtina on Sun May 15, 2011 at 09:57:09 AM PDT

    •  Sounds like New Yorkers (0+ / 0-)

      elected the wrong Cuomo.

      "It's called the American Dream because you have to be asleep to believe it." George Carlin

      by psnyder on Sun May 15, 2011 at 12:16:50 PM PDT

      [ Parent ]

      •  His approval ratings are stratospheric (1+ / 0-)
        Recommended by:
        psnyder

        I don't think people yet realize what effects his proposals will have. Sure, everyone wants lower property taxes, right? But that means either something gets cut, or someone else pays more. And it remains to be seen what or who will pay.

        "I've taken up sculpting recently. Landscapes mostly." ~ Yogi Bear

        by eXtina on Sun May 15, 2011 at 02:16:23 PM PDT

        [ Parent ]

        •  I'm not a New Yorker, (0+ / 0-)

          but my impression has always been that his dad was a strong liberal. The son seems to have drunk the neoliberal kool-aid.

          "It's called the American Dream because you have to be asleep to believe it." George Carlin

          by psnyder on Sun May 15, 2011 at 06:25:56 PM PDT

          [ Parent ]

  •  These charts do not account... (0+ / 0-)

    ...for one important factor -- not all people utilize government services equally.

  •  Try explaining regressive taxation to the (0+ / 0-)

    average person on the street and watch their eyes glaze over in non-comprehension.  Our educational system has turned out a generation with almost no understanding of economics other than government is bad and business is good and no idea that they are being screwed over.  Amazing.

  •  Charts are state and local only (0+ / 0-)

    Maybe it's just me, but the text of this otherwise excellent article seems to conflate federal and state income tax policies.  The chart on the regressive nature of state and local taxes does represent only state and local taxes.

  •  I f*cking _hate_ property taxes n/t (0+ / 0-)

    big badda boom : GRB 080913

    by squarewheel on Sun May 15, 2011 at 11:41:16 AM PDT

  •  Guess who would take credit ... (1+ / 0-)
    Recommended by:
    psnyder

    for this ...
     

    If Republicans really would just leave things alone, things would get better.

    My guess is the Republicans.
  •  "we have the numbers to prove it." (1+ / 0-)
    Recommended by:
    Odysseus

    You see, that's where you lose the argument, as far as Republicans and their minions are concerned. Because for them, proving it is always only "proving it" unless it supports their agenda.

    Instead of seeing confirmation bias as something to try to mitigate, they see it as their most dependable resource and ally and seek to exploit it and extend its reach, regardless of the price that they necessarily pay in intellectual integrity or the price that they make the rest of us pay as they ruthlessly seek to impose their empirically disconfirmed but cherished political beliefs.

    "It's called the American Dream because you have to be asleep to believe it." George Carlin

    by psnyder on Sun May 15, 2011 at 12:14:26 PM PDT

  •  welcome to flori-duh (1+ / 0-)
    Recommended by:
    psnyder

    an arguably blue state, with a total tea-bagger (douche-bagger- i'm having a hard time telling the difference) governor
    and no state income tax!!!
    no wonder all the big sports stars hang out here!!
    and lots of rich people too!! (south beach, palm beach, jupiter.. etc...)
    and yet,  despite our (supposedly tourist targeted) sales  tax and schools funded by the lottery (that's a WHOLE can of worms itself, lol!!)
    we're still broke....

  •  Not only that, but plenty of (1+ / 0-)
    Recommended by:
    bartcopfan

    businesses collect sales tax, and don't turn over the entire total to the state. Some places were notorious for shipping goods at the out of state (lower) tax rate, when the goods were really remaining in the state. electronic cash registers were supposed to cut down on the problem, but people found ways around it. And urban enterprise zones created two classes of buyers, one who could get there and buy more cheaply, and those that couldn't, aka more rural shoppers.

    •  Good point! (0+ / 0-)
      Not only that, but plenty of businesses collect sales tax, and don't turn over the entire total to the state.
      Back in the 1980s here in OK, a study found non-compliance (businesses collecting sales taxes from customers, but not remitting it to the state) at nearly half!  In the nearly 30 years since, I don't remember ever hearing anything more about it; no penalties, no punishments, no prosecutions--not even any more studies to see if things have improved or worsened!

      Wanna know something even crazier about it?  The biggest proponent of the study results was a Republican state legislator, Helen Cole, the mother of now-Oklahoma 4th District Congressman and hard-right strategist, Tom Cole.  His conservative mom would be considered a liberal today....

      "Push the button, Max!" Jack Lemmon as Professor Fate, The Great Race

      by bartcopfan on Mon May 16, 2011 at 11:01:19 AM PDT

      [ Parent ]

  •  I'd like to see the (0+ / 0-)

    top 1% broken down further. I bet there's a giant difference between .1% and 1%.

  •  AZ tax rate is some cities/counties (0+ / 0-)

    is over 13% - I think they might be the highest in the nation.

    Republicans totally abandoned conservatism in the 1980s ..

    by shpilk on Mon May 16, 2011 at 08:07:44 AM PDT

  •  Profit from speculation and (0+ / 0-)

    income from non-labor sources [inheritance, interest, dividends] is grossly under taxed in relation to taxes on goods, labor and services. It's part of the reason of concentration of wealth: those who have it are taxed less than those who don't, both in tax rates as well as in percentage of disposable income.

    Restoring capitalism to a place where it can function sustainably requires that this imbalance get fixed: we at a point now where capitalism is about to fail because of the massive concentration of wealth and lack of circulation of money.

    Republicans totally abandoned conservatism in the 1980s ..

    by shpilk on Mon May 16, 2011 at 08:13:18 AM PDT

  •  Excellent post! SUPER-Excellent would include (0+ / 0-)

    Social Security/FICA (flat 6.2% on the first $106.8K of wage/tip income) and Medicare/Medicaid (flat 1.45% on all wage/tip income) taxes.

    "Push the button, Max!" Jack Lemmon as Professor Fate, The Great Race

    by bartcopfan on Mon May 16, 2011 at 11:06:10 AM PDT

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