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A couple of articles about tax policy - the first is on the impact of taxing "Cadillac" health plans, the second on the possiblity of both state and federal (and maybe local) increases in the gasoline tax. The federal part is at the end.

http://www.star-telegram.com/business/st...84910.html

http://www.star-telegram.com/local/story/1785155.html

It is a little exercise into theorectical politics, of tax increases that can never happen because Obama promised that people earning less than $250K would not see a dime of tax increase. I trust him to keep that promise.
(11-24-2009 06:10 PM)OptimisticOwl Wrote: [ -> ]It is a little exercise into theorectical politics, of tax increases that can never happen because Obama promised that people earning less than $250K would not see a dime of tax increase. I trust him to keep that promise.

I don't trust politicians...even the one I like!
(11-24-2009 06:57 PM)Sleepy Owl Wrote: [ -> ]
(11-24-2009 06:10 PM)OptimisticOwl Wrote: [ -> ]It is a little exercise into theorectical politics, of tax increases that can never happen because Obama promised that people earning less than $250K would not see a dime of tax increase. I trust him to keep that promise.

I don't trust politicians...even the one I like!

Politicians are inherently untrustworthy - you never know when they might actually do what they said they would do.

Obama has broken enough promises that nobody expects that one to be kept.
I certainly took the no tax increases below $250k to be regarding the federal income tax, not what the Republicans used to call "user fees" like the gasoline tax. But then I did not study that part of the debate much (at all).

I have agreed, since Perot suggested it in the 1990s, that increased gasoline taxes would be good for the USA, despite the regressive effect.
(11-25-2009 10:34 AM)Owl75 Wrote: [ -> ]I certainly took the no tax increases below $250k to be regarding the federal income tax, not what the Republicans used to call "user fees" like the gasoline tax. But then I did not study that part of the debate much (at all).
I have agreed, since Perot suggested it in the 1990s, that increased gasoline taxes would be good for the USA, despite the regressive effect.

I don't think Obama was ever pressed for many details--not by McCain, not by the other democrats, and certainly not by the media. So I think "no tax increases" means whatever Obama wants to spin it to mean. That won't help the people who have less money to spend than they anticipated, but c'est la vie.

I do agree that gasoline taxes should be raised. The impact can be mitigated by at least partially offsetting it with tax cuts elsewhere.

As for regressive effect, there's an interesting article on pages 78-79 of this week's Economist, and an accompanying editorial up front, indicating that Europe's tax systems are much less progessive than ours, and suggesting that we are probably going to have to go to a less progressive/more regressive tax system if we want to see any economic growth.

Greg Mankiw's blog from a couple of days ago references a David Brooks column that talks about the tradeoff between equality and vitality, and suggests that we may be choking off our vitality to achieve equality. That's where Europe found itself in the 70s and 80s (which were pretty miserable times to be in Europe) and they ultimately hit on the VAT (highly regressive) and flatter, less progressive income taxes as the way out, hence the trend noted in the Economist article.

I like what I call the 15-15-15 approach that the former Iron Countries have pretty much all landed on, in some form of another. 15% business profits tax (on all forms of business, proprietorship, partnership, corporation), 15% payroll tax (like our social security but with no cap), 15% consumption tax (VAT/GST/"fair tax"), and no personal income tax (no 1040, no April 15). We could include a 30% Boortz-Linder prefund to mitigate the regressive impact, and that package would have balanced the pre-TARP/pre-bailout/pre-"stimulus" budget. This approach has been modeled and predicted to add 1-2% to annual economic growth over the current structure (the eastern European countries adopted it for that reason), as opposed to Obama's platform which has been modeled to reduce annual economic growth by 1-2%. For that kind of vitality differential, I think we can live with the equality consequences.

On top of that structure, I would put substantially higher excise taxes on every activity with undesirable social consequences--oil, tobacco, alcohol--and would set those taxes at levels sufficient to recover the social costs. I would also include marijuana, which I would legalize, but I'm not holding my breath there.

Perot had a lot of good ideas. He saw problems that we still aren't addressing. Hence the mess we are in, which will only get worse until we do address those issues.
I'm curious for anyone in the know. When you say:

Quote:15% payroll tax (like our social security but with no cap)

What happens at payout time? Do you continue to accumulate at your high AGI for a much higher payout from the system for Social Security, or do you get capped in what you get credit for earning in a given year (despite paying higher taxes) and/or get taxed at regular income rates if you're above a certain level? (Or something else which I haven't thought of.)

In concept, I think we have to raise our payroll tax limits, reduce benefits, increase eligibility ages, or increase returns (if any money were actually being held in a "lockbox" instead of being spent in the budget cycle - this is where the current generation is stealing from future generations). One or all of them are needed to fix the situation.
(11-25-2009 10:34 AM)Owl75 Wrote: [ -> ]I certainly took the no tax increases below $250k to be regarding the federal income tax, not what the Republicans used to call "user fees" like the gasoline tax. But then I did not study that part of the debate much (at all).

I have agreed, since Perot suggested it in the 1990s, that increased gasoline taxes would be good for the USA, despite the regressive effect.

The taxing of the cadillac plans would be part of the FIT, and would most certainly affect many lower wage earners - the schoolteacher in the article being one example.
(11-25-2009 11:17 AM)Owl 69/70/75 Wrote: [ -> ]I don't think Obama was ever pressed for many details--not by McCain, not by the other democrats, and certainly not by the media. So I think "no tax increases" means whatever Obama wants to spin it to mean. That won't help the people who have less money to spend than they anticipated, but c'est la vie.

What he said, what he meant, and what he will now say he meant (spin)may well all be different things.
The idea of "higher returns" and a "lockbox" is part of the problem...

If you actually put this money away in an account... the only way to GUARANTEE that it doesn't lose money is to pay treasury rates. Everything else has risk. Limited though it may be, it is there. Let's assume for a moment we can overcome THAT...

When you add to that the fact that a trillion or more "new" dollars invested in our economy would overwhelm the float for most securities... we would find our Social Security system invested in a small number of entities... Either the Treasury... Agencies... Mortgage Backed Securities... Car loans... That's REALLY about it... We want higher rates than treasuries... Agencies are only marginally higher and have mortgage exposure... Do we REALLY want an additional trillion dollars of leverage on our auto and mortgage system?? REALLY??

The idea sounds great... but it is entirely impractical and impossible to administer in a financially prudent manner...
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