The Republican's want to extend the Bush tax cuts but how are they going to pay for them. Ten years ago the Republicans who controlled both houses of Congress and the White House passed two tax cuts for the very rich without paying for them with spending cuts. The only way tax cuts can be legislated without paying for them by law is through budget reconciliation. This limits the tax cuts to a maximum of ten years, then the tax rates must return to the pre-Bush cuts, which were in place during the Clinton era that had the highest growth in wealth for the middle class and the very wealthy since the gilded age of the 1890's through 1929.
They knew back then that they could not afford the tax cuts after they consumed the budget surplus they inherited from the Clinton administration, so they decided to passed them under the reconciliation process.
This also setup the situation that if they did not control Congress and the White House when they expired, the Republicans knew they could make it sound like a tax increase created by the Democrats. They also knew there was no way to pay for them without cutting Social Security and Medicare, which was untouchable at that time. Also at that time they wanted to win over seniors to vote for Bush in '04, so they passed the Medicare Part D Prescription Drug Plan without paying for it either. Both of these actions helped contribute to the economic collapse of 2008 by creating a deficit of 4 trillion dollars over the 8 years Bush was in office.
Should Congress agree to legislate to make the Bush tax cuts permanent, the cost of them, estimated to be about 2 trillion dollars, will have to be paid for with an equal amount of budget cuts for programs controlled they the Senate Budget Committee. The only programs this committee can reduce budget for are Social Security, Medicare, Food Stamps and Medicaid funding. This would mean that all of these programs would have to be abolished in order to pay for the tax cuts for the very wealthy, those who make $250,000 a year or more, like me.
Yes I have enjoyed the tax cuts the past ten years, but the increase when these expire in January would not break me and I feel a moral obligation that my mother and siblings who depend on these social programs are funded. I do not want to see more and more of our citizenry living on the streets and having to find food at charity shelters in dangerous parts of towns. Is that the society we want to become?
If there should be changes to the tax code, then raise taxes on the wealthy, reduce taxes on the middle-class, eliminate corporate welfare and eliminate the tax loop holes that allow the very wealthy and large multi-national corporation avoid taxes all together.
To help small business, allow them to keep the federal tax withheld from themselves and their employees to hire more employees with the money. They could not keep the social security and medicare premiums withheld, since they are essentially an insurance plan. This would be less costly than extending the Bush tax cuts for the very wealthy and will encourage hiring new employees or at least retaining employees, rather than letting employees go.
you state "If there should be changes to the tax code, then raise taxes on the wealthy, reduce taxes on the middle-class, eliminate corporate welfare and eliminate the tax loop holes that allow the very wealthy and large multi-national corporation avoid taxes all together. "and then "To help small business, allow them to keep the federal tax withheld from themselves and their employees to hire more employees with the money."
ReplyDeleteNOTE: Most small businesses process their business receipts as a single payer which means all of their business receipts are counted as income then deductions are taken for expenses. Which means you have just raised all small business taxes.
Tax receipts and expenditures have nothing to do with each other. If you double your income but triple your spending your deeper in debt than when you started. Cut taxes (which raised revenue to the government - look it up) but they need to cut spending.
You missed my point. If a sole-proprietor and have a net operating profit over $250,000 to be taxed as individual income, then you would have a tax increase of 4 percentage points, back the the Clinton era rate.
ReplyDeleteFor me, that is a very modest increase in my tax rate to help reduce the debt rather than an employee with a family of 5 who I may only pay $70,000 a year.
My suggestion of of federal tax withholding reinvestment is a short term stimulus that small business can quickly take advantage of to retain some cash flow to offset a new employee's wage. But that assumes you have enough business to hire a new employee. If not used for a new hire, then no retention would be allowed. If the middle-class pay so little of the total tax collected, then the withholding reinvestment would have little effect on the national debt. If the middle-class pay too much of the total amount of tax collected, then it should be reduced and the wealthy should then pay more.
A Conservative Libertarian would say to eliminate social entitlements to offset the reduction in tax revenue. But if we are to compete with other nations that have social safety nets that protect their populations and thus they become more productive, and in turn this improves their economy and our suffers due to the deplorable socioeconomic condition of our populous. We will turn into a 3rd world nation, no matter how big a purchasing market we once was.
You have to look at the BIG picture in a global point of view.