Clinton's higher taxes on the middle class were the reason we balanced the budget.

[dkf]

Irony is it's all Bush's tax cuts for the middle class and child tax credits and marriage penalty and Medicare part D that really screws up the budget going forward.

When Obama campaigned on not raising taxes for anyone making less than $250,000 he was basically pledging to keep us in growing deficits.

Unless we completely readdress the tax structure situation, increasing taxes on the top 2% won't get us far.

[Incitatus]

1. That is one way. We could not spend trillions on unnecessary wars and not give corporate tax breaks

[dkf]

4. The wars weren't even in Bush's budgets and we were still in deficit.

And if we are going to raise corporate taxes we need to figure out how to keep them here.

[Kaleva]

2. If the middle class tax cuts are made permanent, that'd cost about 3.3 trillion in 10 years

4 trillion total if the tax cuts for the wealthy are also made permanent.

[DJ13]

3. Theres more to it than income taxes

Capital gains and corporate rates returning to even Reagan era rates would drastically reduce the deficit, even if the middle class rates stayed lower than Clinton.

Of course in addition the top 2% could see a return to Reagan era rates (50% in the early 80's) and then we would likely even run surpluses again.

[dkf]

8. Which goes to my point that the current tax cut for the rich wouldn't go very far.

I don't understand why some think ending this one tax break is the main thing Obama promised or that it will solve much.

[WinkyDink]

25. "Solve" isn't the entire issue. "FAIRNESS" is a component.

[Hannah Bell]

47. yes, they would go very far, since the top 10% has most of the income.

[GSLevel9]

5. correct...there just aren't enough 250k+ earners... nt

[Hannah Bell]

48. the top 1% has 24% of the income. that's 1.4 million tax returns.

and that's just individual filers making over $458K.

the top 5% has 40% of the income. that's 7 million individual tax returns with income over $168K.

2007 data from the irs.

[lumberjack_jeff]

51. Read and understand what Hannah said. The number of "earners" is irrelevant.

What's relevant is their share of total income.

[demandTheGoodLife.co]

6. complete nonsense!!

The reason why there isn't enough money is because rich people PAY A LOWER TAX RATE!

Deficits exist because the rich DO NOT PAY THEIR FAIR SHARE!!! If the rich paid the same rate as the middle class, there would never be a deficit.

In our current system, Warren Buffet, the world's richest man, pays just 17.7% of his income towards tax while his secretary pays 37.5%, more than double.

The reason why Warren Buffet pays so much less is because rich people have successfully lobbied government to reduce the amount of taxes the wealthy pay.

Rich people have successfully lobbied government to tax their income from stock dividends (their primary source of income) at a maximum rate of only 15%, while regular wage earners get their income taxed at a maximum rate of 35%.

Rich people have also successfully lobbied government to make all of their income from interest, dividends and capital gains completely EXEMPT from the FICA tax. The rest of us wage earners have to pay a 15% FICA tax.

And just in case rich people do generate some income from wages, they have also successfully lobbied government to make all of their wage income above $106,801 completely EXEMPT from the FICA tax.

The solution is to have EVERYONE pay a simple, flat, 50% tax on ALL their income. And then use a portion of that tax revenue to pay every adult a $20k yearly dividend and an additional $30k yearly dividend to every worker, or every post-secondary school student, or every person who is interested in volunteering (such as those who are unemployed) at an approved civic or charitable organization so that every citizen is guaranteed a decent standard of living.

[dkf]

7. Are you sure your numbers calculate properly or are you guessing that a tax of 50% will pay everyone

That sum?

[demandTheGoodLife.co]

10. here are the calculations

It is based on the assumptions that the economy is producing $18 trillion per year in total income (which we would have reached in about 4 years if we weren't in a recession). If this was implemented today the numbers would be about 20% lower.

Here are then the calculations:

$18 trillion: Total National Income
$6.3 trillion: Total Revenue Raised From 35% Income Tax (6.3 = 18 * 35%)
$2.7 trillion: Total Revenue Raised From 15% FICA Tax (2.7 = 18 * 15%)
$9 trillion: Total Revenue Available To Pay Out In Dividends (9 = 6.3 + 2.7)

$4.4 trillion: Cost of Paying $20,000 To All 220 Million Adults
$3.8 trillion: Cost of Paying $30,000 To All 126 Million Workers
$0.3 trillion: Cost of Paying $30,000 To All 10 Million Unemployed/Volunteers
$0.5 trillion: Cost of Paying $30,000 To All 18 Million Students
$9 trillion: Total Cost Of Dividends (9 = 4.4 + 3.8 + 0.3 + 0.5)

[dkf]

22. But isn't the biggest unknown whether this type of structure would generate the same

revenue? Also it would seem a huge boon to the lower cost of living states. A person could conceivably use the governments largesse to live on.

[demandTheGoodLife.co]

26. no

Unlike our current tax system which depends on the type of income you earn and what deductions people take, this tax would just be a flat percentage of whatever the GDP is. The GDP has very little overall volatility. So the tax revenue generated will be very stable.

You would benefit more if you live in a state with a lower cost of living. You could have the dividend indexed to a cost of living based on where you live. But I don't know if that is necessary.

[Phlunk]

32. You give people that kind of money to do nothing

A bunch of them will literally do as little as possible, then you have fewer earners which will create less revenue, it would be a viscous circle downward. It's human nature for many to take the path of least resistance.

[demandTheGoodLife.co]

33. we should strive for a 55% unemployment rate

People will get bored of doing nothing pretty quickly. And most people want to earn more than $20k so there is plenty incentive to work.

But if a job exists that people have no interest in doing, we should eliminate it with automation. There is no benefit to having people work jobs they don't want to do. The goal should be to have the freedom to pursue whatever lifestyle you want.

More than half the jobs we do are completely pointless. They are make-work jobs that can be automated with existing technology. We can have a 55% unemployment rate and maintain our same GDP.

We don't need retail sales people or waiters or truck drivers or warehouse workers or office clerks. They make up half our jobs and they can be automated with existing technology. Those jobs just waste human lives.

Machines should do all the jobs (which are boring, menial and best suited for machines) and people should do all the leisure activities (where we get to have fun, express our creativity and apply our intellect).

A job is work that nobody has any interest in doing. It is work that people do only because they need a paycheck, such as working in a warehouse, as restaurant staff, in transportation and in retail sales.

A productive leisure activity is the opposite of a job - it is an activity that people naturally want to do, that people do in their free time, that people do even if they aren't getting paid for it, that people would do more of if they didn't have a job to go to, that is recreational and done primarily for pleasure. But it is also an activity that is productive. Some examples are any activity that people currently do as a hobby or volunteer for or pay to do such as writing books, making music, filming movies, raising a family, furthering basic science, building robots, programming open source software, occupying a position of power, designing stuff and developing new inventions.

The fact that most of us spend the vast majority of our brief moment in time in this universe working a job is a tragedy. Our work on this planet should be a source of growth and well-being, not a chore. The work we do should be leisure activities, not jobs.

The waste and inefficiency trying to keep this ancient system going is criminal.

Human beings are the most advanced machines in the known universe. Using people, that nature spent the last 13.7 billion years developing, to perform mundane jobs like shuffling papers in an office, asking people what they would like to eat, moving a plate of food in a restaurant from the kitchen to the dining table or driving around in trucks all day is a comical waste of the most valuable and precious resource we have.

[Phlunk]

37. RU Serious or is that post sarcastic?

[demandTheGoodLife.co]

42. completely serious

What benefit do we gain from having people work jobs that they have no interest in doing that a machine can do?

We can eliminate 55% of the jobs we do with existing automation technology today. And we should strive to eliminate the other 45%. Jobs are for machines, they are not for humans.

People should spend their time doing the kind of work they would be doing if they didn't have a job to go to.

Read the info at the site in my signature. People should live a life of leisure. Jobs only hold us back. We no longer need to live 19th century lives.

[Hannah Bell]

43. serious, as i linked to the IRS data in my earlier post.

in 2007, 70 million individual filers making under $32.4 K paid income tax at an average rate of 13.4%.

[demandTheGoodLife.co]

11. view DemandTheGoodLife.com if you want to read details

[LAGC]

17. That's a pretty fascinating web-site and idea.

I just see one problem with it: inflation. MASSIVE inflation.

Imagine everyone suddenly having the buying power to purchase new homes or nice energy efficient all-electric vehicles.

The demand for it all would go through the roof, outstripping supply, which would raise prices across the board. It would take decades to build up the automation required to meet such demands so that inflation didn't skyrocket and eat away at the benefits.

I'm not saying its a bad idea, just that it would take some time to implement.

We could start with a more meager Basic Income Guarantee (or Citizen Dividend as your web-site calls it) of say: $1000 a month to every citizen, and eliminate welfare, unemployment, Social Security, etc. And steadily increase the dividend as national income raises.

It would be a good direction to work toward such a goal though, that's for sure.

[demandTheGoodLife.co]

20. no inflation

Thanks!

This program actually does not cause inflation.

Inflation is caused by increasing the money supply greater than the amount of stuff available to buy. However, the dividend is paid for using taxes, not by printing new money. Taxes do not increase the total money supply, so it does not cause inflation. It just redistributes existing income. Some people will get more income, some people will get less.

If our GDP was $18 trillion and then we implemented this program, the GDP would still be $18 trillion.

If we implemented this program all at once, it would cause a disruption that would have an effect on the prices of some goods and services while the economy adjusts. But that would only be temporary. And it would not offset the increase in income, so it really wouldn't matter that much. I would argue to implement the whole package all at once. But that is unlikely to happen anyway.

[demandTheGoodLife.co]

40. it is no longer the '80s, full automation has arrived

LAGC: "The demand for it all would go through the roof, outstripping supply, which would raise prices across the board. It would take decades to build up the automation required to meet such demands so that inflation didn't skyrocket and eat away at the benefits."

It definitely would NOT take decades! The basic income would require us to change what we produce, but it would not require us to necessarily increase production.

But we have the ability to significantly ramp up industrial output in a very short amount of time.

We already have the ability to automate 55% of the jobs we do. And manufacturing makes up just 8.9 million jobs. We could quadruple our industrial output in less than 5 years if we wanted to. Even if we had a shortage of employees, that would not matter.

FANUC, the company that makes factory robots, operates a lights out factory. Their factory is fully automated. It requires ZERO employees. They check on it once per month.

It is no longer the '80s. We have the technical capability to fully automate most of our economy today.

[pa28]

9. You don't have a problem with Bush's tax cuts for the wealthiest?

The middle class tax cut was the liability you chose to cite?

I would really like to hear how you think keeping tax rates for the wealthiest Americans at historically low rates while shifting more of a burden onto middle tax payers will give us a remedy. Wait, before you do that maybe you could justify why the tax reform plan we're looking at now (Simpson-Bowles) enhances your argument. That plan gives the wealthiest a huge cut at the expense of deductions and credits for middle and low earners.

If we really wanted to fix our problem we would be thinking of ways to shake accumulated capital loose like a european style asset tax. The other solution is a fairly harsh estate tax which takes time but accomplishes the same goal. Unfortunately we recently disrupted that fail safe as well.

[dkf]

12. I'm just saying it doesn't get us very far and I don't understand why that is the hill we choose to

Die on as the saying goes. Moreover the next tax discussion is going to be a lot more broad than this.

As a solutions based person, raising taxes 2 or 3 percent on a small segment of the population is pretty meaningless when you look how far away we are from balancing the budget.

[Hannah Bell]

13. it gets us very far indeed. when that "small segment" has a disproportionate income share.

bottom 90% gets 50% of all US income.

top 10% gets 50%.

top 1% gets over 20%.

http://www.nytimes.com/2007/03/29/business/29tax.html


$250K is the bottom end of the top 3%.

Per the IRS using the pre-1980 calculation methods, in 2007:

The top 10% of income tax filers started at $115K.

Top 5% started at $168K.

Top 1% at $458K.

The average tax rate for the top 1% was 20%; for the top 10%, 17%.

(Under Clinton (1994) the top 1% paid 26.6 & the top 10% paid 19.9%.)

In 2007:

The top 1% took 23% of all income; top 5% took 39% of all income.

Top 25% took 69% of all income, leaving the bottom 75% to share the remaining 31%. The bottom 50% of filers received only 12% of total income.

This is *tax filers*.

Under Clinton the top 1% took 14.3%; top 5% took 28.8%, top 10% took 40%, top 25% took 63%.

http://www.irs.gov/taxstats/indtaxstats/article/0,,id=133521,00.html#_grp3


So we would actually get very far indeed by increasing taxes progressively at the top.

[dkf]

21. And you think we solve this inequity by reinstating the bush cuts for the rich?

How far does that get you? Doesn't solve the deficit problem from what I see, nor does it fix the inequity.

[WinkyDink]

45. You perhaps are myopic.

[Sherman A1]

14. Agreed & Well Said

The Bush tax cuts should have expired for everyone, along with whatever that thing was Obama did in early 2009 as part of the stimulus. They should simply all go away.

Now we need to get costs under control and getting the troops home and cutting the defense budget will help, but we ain't going to grow our way out of this deficit without some revenue increases.

I also believe that the uber wealthy need to contribute at a much higher (like the 90% Eisenhower era) rate. The Nation was very prosperous in those days and I don't think the mega rich were hurting at all.

[Hannah Bell]

15. In 2007 the top 1% of tax filers took 23% of all income. The top 5% took 39%.

The top 25% took 69% of all income.

The bottom 75% took 31%.

The bottom 50% took 12%.

http://www.irs.gov/taxstats/indtaxstats/article/0,,id=133521,00.html#_grp3

[Sherman A1]

52. I agree with you

both. The rates need to be much much higher on the top 1%, but I don't know if that will be the complete fix. I believe that taxes need to go up a bit for everyone so that we can get the Bush mess cleaned up.

[Hannah Bell]

55. the top 10% has half the income, the top 5% has 40%, & you want rates to go up a bit "for everyone"?

i disagree.

[Sherman A1]

56. Then disagree

:hi:

[Hannah Bell]

57. i do, as i said. when 90% of the population shares 50% of the income, & 50% of the population

shares only 12%, i see no reason why taxes should go up for everyone.

if you took away *all* the income of the bottom 50% it would be less than the top 1% get.

1.4 million individual filers in the top 1% receive more than double the income the bottom 70 million filers making under $32.4K receive.

[pa28]

16. Well yes. From a "solutions" standpoint I can see what you mean.

In this case I think we're talking about a long term agenda which the Republicans have skillfully brought to harvest. The issue on the table with those "very serious people" is restructuring the responsibility for incurred debt down to the people who benefitted least from all those years unfunded budgets. That's me and probably you.

Over many years the wealth of our society has concentrated at the top through favorable tax and trade law. That's pretty well documented fact and I don't think we'd disagree on that point. I also think we'd agree that income tax hikes would not solve the problem. We're already too deep in the hole . . . even a massive tax hike on the top tier would still leave us with a huge deficit.

The fact is we've concentrated the wealth of our society into a small group through decades of specifically intentioned legislation and and tax policy. The only way to get that capital moving through the economy again is with an asset tax or a stiff estate tax.

We have two real options. The first is a wealth tax as I mentioned above and the second is to strip the equity from working class earners who are already standing at the edge of the cliff. From what I've read it looks like we are going for door number 2.

[lumberjack_jeff]

50. That "small segment of the population" is most of the income.

2 or 3 percent increase on their incomes would bring in more revenue than a 100% tax rate on the bottom 50%.

[Hannah Bell]

18. that's baloney. his higher taxes on the rich were the reason. Tax rates at the middle changed very

little.

It's rates at the top that changed a lot.

In 1994 the percent of total US income taken by each % of individual income tax filers and their effective tax rate ( ) was:

Top 1%: 14.3% (25.9%)

Top 5%: 28.8% (21.6%)

Top 10%: 40.0% (19.5%)

Top 25%: 63.0% (16.6%)

Bottom 50%: 14.8% (14.8%)


In 2007 the percent of total US income taken by each percent of income tax filers and their effective tax rate ( ) was:

Top 1%: 23.4% (20.6)

Top 5%: 39.0% (18.8%)

Top 10%: 49.6% (17.5%)

Top 25%: 69.9% (15.2%)

Bottom 50%: 12% (13.6%)

[dkf]

23. How can the bottom 50% be taxed at 13.6% when 42% don't pay federal taxes?

Something is off here

[Statistical]

31. 42% don't pay FEDERAL INCOME Tax. They pay a lot of taxes just not that one tax. n/t

[Hannah Bell]

34. According to the IRS, the bottom 50% of individual filers paid at an average rate of 13% in 2007.

This is everyone making under $32.4K.

So I'm not sure where the "42% don't pay" in that article comes from.

[Hannah Bell]

35. It's IRS data. I linked to their website. So either the article is misleading

or the IRS is putting lies on their website.

Because the IRS says the bottom 50% of filers paid at an average rate of 13%. Everyone making under 32K.

[dkf]

36. Oops I guess it's 47%. And it's based on more current numbers than 2007 including Obamas cuts

"About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization."

In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by the consulting firm Deloitte Tax.

Tax cuts enacted in the past decade have been generous to wealthy taxpayers, too, making them a target for President Barack Obama and Democrats in Congress. Less noticed were tax cuts for low- and middle-income families, which were expanded when Obama signed the massive economic recovery package last year.

http://finance.yahoo.com/news/Nearly-half-of-US-households-apf-1105567323.html?x=0&.v=1

[Hannah Bell]

38. that's not all families making $50K (or $40K or whatever). It's families who meet the criteria

for tax credits, etc.

It doesn't mean low income families as a group don't pay income taxes.

[dkf]

41. Apparently there were quite a few breaks aimed at the lower and middle classes after 2007 though.

So your numbers don't apply very well.

[Hannah Bell]

44. uh, no, a rebate check of $300 in 2008 isn't a "break".

and they're not *my* numbers, they're the irs numbers.

and your statistic = the percent of HOUSEHOLDS, not the percent of FILERS.

In 2007, 70 million individual filers making under $32K paid income taxes at an average rate of 13%.

[dkf]

58. Don't they call it households for married couples and individuals?

I doubt they are counting two single filers who live under the same roof as a household.

[Hannah Bell]

61. the article isn't about tax filers. it's about households. the residents may or may not be filers.

[WinkyDink]

46. Look, if the wealthy weren't getting an inordinate number of "breaks," as you phrase it, they

wouldn't BE as extraordinarily wealthy as they are.

DO YOU HAVE A CLUE ABOUT THE WEALTH INVOLVED HERE? PEOPLE WHO OWN ISLANDS? THEIR OWN 727'S? MEGA-YACHTS?

[The Magistrate]

59. You Just Demonstrated, Sir, You Are Unfit To Discuss The Topic

The usage of 'federal taxes' for 'federal income tax' gives your game away....

[ixion]

19. Perhaps he should have focused on fraud, corruption and waste

rather than generating for revenue for such things, and thus wasting people's money.

[GeorgeGist]

24. Any data to back up your assumptions?

[tabasco]

27. Why are you a liar? n/t

[Nite Owl]

28. That's why I was for letting them

all expire. The middle class tax cuts were far more costly. The middle class might need help but it is in wages which won't be done until corporations need workers. That would mean that they need to start manufacturing here and stop sending jobs abroad. It's a structural problem that will be difficult to undo. It may cause the corporations pain but we weren't founded to make laws that benefit them at the cost of the people.

[pinboy3niner]

29. No. What 'screws up the budget' is defense and war spending. nt

[TBF]

30. Remind me again why it is that you keep posting your right wing propaganda. nt

[Hannah Bell]

39. +1

[lumberjack_jeff]

49. No. taxes on the rich were the reason.

If you exempt the bottom 75% of income earners from taxes, that still leaves 70% of the income available for taxation.

If income is going to be taxed, the only ones who are going to pay will be the rich, because they get all of it. There is nothing left to squeeze from the bottom 75%.

[kentuck]

53. When Reagan had the huge deficits...

He raised the FICA taxes, which saved Social Security benefits at the same time it brought down the deficit. Perhaps President Obama will read about how he did it in that new book he is reading over in Hawaii?

[Hannah Bell]

54. he also rehiked taxes on the rich -- something the wingers seem to forget.

[quaker bill]

60. A grain of truth

higher taxes on the wealthy also played a role.

But the main thing that worked was economic growth and asset appreciation. During the Clinton Administration, I paid capital gains taxes, because I actually had capital gains. During the Bush administration, I largely did not pay capital gains because my losses in the market generally offset any gains I made.

The biggest thing Clinton did to balance the budget was to raise the minimum wage. This impacted businesses in that sales improved when the people who would spend had more money. Each person making minimum wage owed more taxes immediately. Folks earning near minimum wage got raises to prevent wage scale compression, and all paid more taxes. Growing the base of income that you then tax is the way to generate revenue resolve the deficit.

[Hannah Bell]

62. top effective tax rate decreased 5 percentage points since clinton.

income share of the top 1% increased correspondingly.