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Aaron747
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Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 9:58 am

Well, now President Reagan's former OMB director has come out on 60 Minutes tonight saying that both the Democrats and GOP have got it all wrong - the government is headed into the toilet unless all taxes go up, and now. According to him, even with drastic spending cuts a tax hike would still be necessary to avoid future insolvency. What a mess...the last 25 years of ineptitude and graft, thanks largely to greedy public sector administrators and their politician overlords, has put us in this position.

STAHL: Well, you've come out and said that all the Bush tax cuts should be eliminated. Not just on the rich, but on the middle class as well. Explain why.

STOCKMAN: Well, we just can't afford them. We couldn't afford them when they were adopted in 2001 and 2003. Since then, we've had two giant unfinanced wars, a huge bailout of Wall Street. This trillion-dollar stimulus program, and we have now created so much national debt, and such large permanent deficits that we're going to have to do some very difficult and painful things to close the gap, or we're going to destroy the economy, and render the federal government insolvent. As hard as that is to believe, we're edging in that direction.


http://www.cbsnews.com/8301-504803_162-20021193-10391709.html
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connies4ever
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 11:51 am

I have for a long time thought that the USA simply has to move in the direction of a VAT (value added tax) of some kind, similar to what Canada and I believe pretty much all of Europe have in place. Introduction of a VAT, properly done, can result in a lowering of overall income tax rates and/or payroll taxes. VATs are enormous cash cows, front and centre, and IMHO, are 'good' taxes in that the very wealthy and the merely wealthy, pay more per capita, sine they spend more and tend to have more expensive tastes than us plebes.

With the introduction of the GST (Goods and Services Tax) in Canada in 1993 at 7%, there was a lot of uproar. It was a visible tax, added to the sale price, as opposed to a number of hidden taxes that were eliminated at the same time. Also, an offset program was instituted for lower-income citizens wherein they got quarterly cheques to offset their somewhat higher costs. A mistake was the amount of paperwork imposed on small business owners, which to my understanding has been streamlined somewhat with the HST (Harmonised Sales Tax) which combines the original GST + any provincial sales taxes in effect. The GST component, b.t.w, has been reduced over time to 5%.

The other observation I'd make about the American economic situation is that, and I may very well be wrong, it seems to me that the plurality of Americans want their Social Security, they want their Medicaid/Medicare, they want good VA care for vets, a strong military, good schools, etc. - but no one wants to pay the real cost. All of this is expensive. Politicians see this and of course offer to balance the books and lower taxes, so that 'people can decide to spend their money as they see fit'.

Hence the dilemma facing America today, I think. without getting finances in order and soon, I would expect serious devaluation of the greenback, which will spur inflation. That might be one way to reduce the real amount of the overall foreign debt and also at least temporarily spur exports and curb imports, but I've always tended to think that a strong, or at minimum stable currency is in everyone's overall best interest.

It will be interesting to see what happens in the USA going forward.
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Quokka
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 12:08 pm

Quoting connies4ever (Reply 1):
are 'good' taxes in that the very wealthy and the merely wealthy, pay more per capita,


There are those who argue that VAT (GST) is regressive in that people on lower incomes may end up paying a higher proportion of their income. This is because the greater your income, the more optional spending becomes, whereas if you only have a low income, by the time you pay mortgage/ rent, water, electricity, food, there isn't that much left for discretionary spending. Those on higher incomes may "spend" more in transactions that don't attract tax - like purchasing shares, speculating on the currency market, etc. To counteract this regressive feature, many countries (including Australia) have exempted basic food items and power from the VAT (GST). So yes, on a per capita basis the rich may pay more tax than the poor, but is debatable whether they pay more as a proportion of disposable income.

An advantage of VAT (GST) is that it makes tax avoidance and evasion a bit more difficult, though not impossible.
 
connies4ever
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 1:40 pm

Quoting Quokka (Reply 2):
Those on higher incomes may "spend" more in transactions that don't attract tax - like purchasing shares, speculating on the currency market, etc. To counteract this regressive feature, many countries (including Australia) have exempted basic food items and power from the VAT (GST).

For the original GST, now HST, in Canada, services were taxed at the same rate as everything esle. So purchasing shares either through an investment firm or directly from the seller, is deemed a service and therefore subject to tax. So there really wasn't much getting around it.

As I indicated in my 1st post, lower income people/families got a quarterly rebate from the government to partially defray GST-related costs. At the same time as the GST came in, personal deductions on income tax were raised such that several hundred thousand people were effectively removed from the group of people actually paying income tax.
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comorin
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 1:43 pm

Excellent comments from someone who has on axe to grind. The most chilling part of the interview is when he explains to Leslie Stahl that the economy has recovered, and this is it! It will take along time for unemployment to come down. Stockman points out that the 30-year party is over.

Perhaps the simple folk of the Tea Party knew this all along in their gut and that's why they're mad as hell? Trouble is, there is no solution:

1. Devaluing the dollar means raw materials costs go up = inflation.
2. Inflation means home prices go up - a good thing?
3. Cut "Govt Waste"? a drop in the bucket compared to Defense + SS/Medicare.
4. Flooding the market with dollars hasn't helped - cheap money is getting hoarded by Corporations and not spent, and Banks not extending credit either.



We are approaching coffin corner....
 
DfwRevolution
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 1:48 pm

Quoting Aaron747 (Thread starter):
What a mess...the last 25 years of ineptitude and graft, thanks largely to greedy public sector administrators and their politician overlords, has put us in this position.

The two biggest problems we face are the outstanding liabilities to cover social security and Medicare benefits. They dwarf all other budget problems by an order of magnitude. And this did not start in the last 25 years.

Raising taxes alone won't solve the problem. There must be drastic cuts in the federal budget ASAP.
 
connies4ever
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 2:16 pm

Quoting comorin (Reply 4):
1. Devaluing the dollar means raw materials costs go up = inflation.
2. Inflation means home prices go up - a good thing?
3. Cut "Govt Waste"? a drop in the bucket compared to Defense + SS/Medicare.
4. Flooding the market with dollars hasn't helped - cheap money is getting hoarded by Corporations and not spent, and Banks not extending credit either.

1 - Yes, there will be rising prices on imported goods, which should accelerate the Buy American trend, hopefully putting more people to work, and make exports cheaper, again hopefully putting more people to work. This is a fairly short-term 'solution', longer term the structural problems in the revenue/spending arena need to be addressed.
2 - CDN $ will be loosely tied to the Ameribuck, and Canadian softwood lumber is a big input to new builds, so the price might not rise as much as inflation, and particularly so with 3M or so unsold new homes on the market acting as a drag on price increases.
3 - There is always room for efficiency, but that generally translates into layoffs, which means more noses at the trough of unemployment insurance etc.
4 - There is no doubt the banks are sitting on a wad of cash, in fact I don't think American banks have ever been this liquid. I think the stimulus has helped, but that the message has been drowned out:

http://www.theatlantic.com/business/...-about-major-economic-facts/65397/

Quoting DfwRevolution (Reply 5):
Raising taxes alone won't solve the problem. There must be drastic cuts in the federal budget ASAP.

What was done in Canada in the 90s and could be done by the USA now is to move several government services out of the public service arena and putting them on a for fee basis. Not a tax, but a fee for service. if you don't want the service, you don't pay and don't get. Spending cuts yes, this would be a real fur fight but a discussion that needs to take place.
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dxing
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 2:51 pm

Quoting Aaron747 (Thread starter):
What a mess...the last 25 years of ineptitude and graft, thanks largely to greedy public sector administrators and their politician overlords, has put us in this position.

It goes back farther than that Aaron. It goes almost directly back to 1967 and the start of the unified budget. Also the last year we didn't have a deficit minus 1995-2000. I watched the report and had to disagree on a couple of his points. He said if locked in a room the GOP couldn't come up 50 billion in cuts. That is incorrect as they have already said stimulus spending under the American Reinvestment and Recovery Act needs to stop. That alone is worth 50 billion and doesn't even begin to scratch the health care law spending. He said that both parties are comfortable with a 24% GDP as well as SS and Medicare spending which is simply not true. He used the same tired explanation of how the wealthy have gotten wealthier as if they took the money from the poor in a closed pie system. He advocated a 15% surtax on wealthy individuals that he says might cut the public debt by 50%. While that might be true unless substantive spending cuts are enacted, as well as refinance and reorginization of the public entitlement programs and a balanced budget amendment enacted the surtax would all be for nought as the debt would immediately begin to acrue again. Finally he demonized those that advocate tax cuts and actually presented nothing new other than higher percentages of what has already been discussed, namely raising taxes and cutting spending.

Quoting connies4ever (Reply 1):
I have for a long time thought that the USA simply has to move in the direction of a VAT

Agree 100% but only after the 16th amendment (income taxes) has been repealed and discarded forever. I believe a VAT is now the only way to be able to balance the books on a year by year basis.

Quoting Quokka (Reply 2):
This is because the greater your income, the more optional spending becomes, whereas if you only have a low income, by the time you pay mortgage/ rent, water, electricity, food, there isn't that much left for discretionary spending.

Since a majority of persons in this country don't pay any income tax now that really doesn't apply here. Now don't read that the wrong way. Everyone with a job making above a certain amount has income taxes withheld from their checks but at the end of the year when they file, through the use of the earned income tax credit as well as other programs mean that they get a refund of all that they paid in, and in some specific cases more than they paid in in withholding. If you take into account food stamps and other entitlement programs .

Quoting Quokka (Reply 2):
So yes, on a per capita basis the rich may pay more tax than the poor, but is debatable whether they pay more as a proportion of disposable income.

I would disagree since the rich don't buy the generic corn flakes and the poor don't buy the Chilean wine. The rich aren't using medicare and the poor aren't getting a whole lot of optional plastic surgery.

Quoting Quokka (Reply 2):
An advantage of VAT (GST) is that it makes tax avoidance and evasion a bit more difficult, though not impossible.

Correct and it can virtually eliminate one of the bigger departments in the government saving even more money.
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DfwRevolution
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 3:07 pm

Quoting connies4ever (Reply 6):
What was done in Canada in the 90s and could be done by the USA now is to move several government services out of the public service arena and putting them on a for fee basis. Not a tax, but a fee for service. if you don't want the service, you don't pay and don't get. Spending cuts yes, this would be a real fur fight but a discussion that needs to take place.

I am a HUGE proponent of this approach, but I also think it would just scratch the surface of some of the cuts that need to be made.

Quoting dxing (Reply 7):
Correct and it can virtually eliminate one of the bigger departments in the government saving even more money.

If you are suggesting that the IRS would get smaller if we implemented a VAT then I believe you are sorely mistaken. Income taxes would not go away and you would only need more personnel to manage the collection of the VAT.
 
dxing
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 3:32 pm

Quoting DfwRevolution (Reply 8):
If you are suggesting that the IRS would get smaller if we implemented a VAT then I believe you are sorely mistaken. Income taxes would not go away and you would only need more personnel to manage the collection of the VAT.

Disagree. Sales taxes are done automatically by the cash register. The IRS would not need the amount of auditors it has in its employ, specifically the additional 50K they are hiring to administer the health care portion of tax revenue. Texas does not have an income tax and government spending on the comptrollers office, responsible for collection of taxes, is pretty small compared to the rest of the budget.
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texan
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 3:54 pm

The Diane Rehm Show discussed this topic today on NPR. Thought you all might be interested in listening to the program: http://thedianerehmshow.org/shows/2010-11-01/jobs-and-us-economy

The guests were Bruce Bartlett, a former Reagan economic policy aide; James K. Galbraith, a well-known economist from The University of Texas at Austin; and Rea Hederman, a senior policy analyst at The Heritage Foundation. In other words, two conservatives and one liberal. Thought it was a pretty good discussion.

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seb146
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 4:07 pm

Quoting dxing (Reply 7):
through the use of the earned income tax credit as well as other programs mean that they get a refund of all that they paid in, and in some specific cases more than they paid in in withholding. If you take into account food stamps and other entitlement programs .

You refuse to take into account all the collateral spending for two wars and the fact that both wars are "off budget" yet you include food stamps and entitlements when accounting for the fact that some people might get more in return? Explain, please.

What gets me is: this Reagan right-winger helped put us in this position and is now saying it is all bad. But, why should these people care? Most of them are too old to care or dead what happens to us in the middle or lower incomes. All the right-wingers that insist that Christian values become a part of the party seem to have forgotten: The love of money is the root of all evil.
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windy95
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 4:17 pm

Quoting seb146 (Reply 11):
The love of money is the root of all evil.

Do not forget to deadly sins for the Progressives. Greed for other peoples money to "redistibute" and envy of the rich who they want to tax the hell out of so they can have their share owed them....
 
dxing
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 4:20 pm

Quoting seb146 (Reply 11):
You refuse to take into account all the collateral spending for two wars and the fact that both wars are "off budget" yet you include food stamps and entitlements when accounting for the fact that some people might get more in return? Explain, please.

Both those wars have finite costs. They will end and the spending on them stop. Not so with entitlement programs. That's the beauty of a VAT. You can adjust the sales tax on almost an annual or even semi-annual basis to reflect unanticipated costs such as a devestating hurricane/earthquake/or major flood as well as a war. When the relief or combat is finished you can then reduce the sales tax by the corresponding amount. No arguments about varied rates or loop holes.

[Edited 2010-11-01 09:22:50]
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windy95
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 4:22 pm

Quoting dxing (Reply 13):
Not so with entitlement programs.

This where the cuts or outright elimination need to be made.
 
DfwRevolution
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 4:36 pm

Quoting dxing (Reply 9):
Disagree. Sales taxes are done automatically by the cash register. The IRS would not need the amount of auditors it has in its employ

But a VAT would not replace the income tax, it would be in addition to income taxes. To say that we could "virtually eliminate one of the bigger departments in the government" is a misnomer, IMHO.

You also have to consider that if you implement a higher sales tax, transactions have a habit of moving away from the cash register to a black/grey market.

Quoting dxing (Reply 9):
Texas does not have an income tax and government spending on the comptrollers office, responsible for collection of taxes, is pretty small compared to the rest of the budget.

Small, but greater than zero. The IRS would get bigger if we add a VAT.
 
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 5:13 pm

Quoting DfwRevolution (Reply 15):
But a VAT would not replace the income tax, it would be in addition to income taxes. To say that we could "virtually eliminate one of the bigger departments in the government" is a misnomer, IMHO.

I say not only no, but hell no. Either we keep the current system or ditch the 16th amendment for a VAT system. No way in hell could I support having both of them. Most of the advocacy I've seen for the VAT is based on abolishing the current mess of an income tax system.

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slider
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 5:19 pm

Wrong as usual.

CUT SPENDING NOW.

Tax policy is almost irrelevant right now in this discussion when you consider spending that is out of control.
 
dxing
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 5:32 pm

Quoting DfwRevolution (Reply 15):
But a VAT would not replace the income tax, it would be in addition to income taxes. To say that we could "virtually eliminate one of the bigger departments in the government" is a misnomer, IMHO

Which is why I said:

Quoting dxing (Reply 7):

Agree 100% but only after the 16th amendment (income taxes) has been repealed and discarded forever. I believe a VAT is now the only way to be able to balance the books on a year by year basis.

I would support the implementation of a VAT tax only after the repeal of the 16th amendment.

Quoting DfwRevolution (Reply 15):
You also have to consider that if you implement a higher sales tax, transactions have a habit of moving away from the cash register to a black/grey market.

Straw man arguement. There is no way you can black market large numbers of transactions in legal operations such as Wal Mart and other retailers where the vast majority of VAT taxes will be collected.

Quoting DfwRevolution (Reply 15):
Small, but greater than zero. The IRS would get bigger if we add a VAT.

You'll have to prove that. Simply put since the register will automatically record the VAT tax and it is passed directly on to the customer there is no incentive for a retailer to hide the tax since it does not affect the actual cost of the item to the retailer. The retailer still makes whatever profit they charge. Since it is based on a percentage of sales its eaiser to figure out than having to have armies of tax professionals reading through volumes of tax law to figure out what is taxable and what is not.
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Ken777
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 5:39 pm

Quoting connies4ever (Reply 1):
it seems to me that the plurality of Americans want their Social Security, they want their Medicaid/Medicare, they want good VA care for vets, a strong military, good schools, etc. - but no one wants to pay the real cost.

Bingo!

The change I'm seeing is that there are those who are willing to dump Social Security (and everyones investments in that program) and certainly see no need to have their hard earned money stolen from them to pay for Veterans care.

Quoting Quokka (Reply 2):
An advantage of VAT (GST) is that it makes tax avoidance and evasion a bit more difficult, though not impossible.

That's true, but how many countries have a GST or VAT and have actually eliminated income taxes? Or property taxes?

We also have various local level governments (state level and lower) that rely on sales taxes (at the point of sale) that need to be addressed. Part of our sales taxes are operational.

Quoting DfwRevolution (Reply 5):
Raising taxes alone won't solve the problem. There must be drastic cuts in the federal budget ASAP.

We are facing a unique situation in this election as several states (like CO & MA) have ballot questions that will cut billions out of state budgets if passed.

So we have states already making major cuts because of the Great Recession.

We see more cuts being delivered at the state level via the ballot questions.

And we have people who want dramatic cuts, like eliminating the Dept of Education - which eliminates any federal funding to states. So the burden at the state level increases as their funding decreases.

Quoting comorin (Reply 4):
Perhaps the simple folk of the Tea Party knew this all along in their gut and that's why they're mad as hell? Trouble is, there is no solution:

1. Devaluing the dollar means raw materials costs go up = inflation.
2. Inflation means home prices go up - a good thing?

A falling dollar is supposed to increase exports and decrease imports. But that obviously has limits. The lower dollar will eventually mean that the standard of living for the Average American will be reduces. As will their children.

As for home prices, the home crisis will have a long term impact on pricing for a long time to come and this is still a depressed market. We have found that deflation in home pricing is worse than inflation in many locations.

Quoting dxing (Reply 7):
It goes back farther than that Aaron. It goes almost directly back to 1967 and the start of the unified budget.

See, we can agree some something, "Ian".  

Maybe we can move back to the pre-unification days. It certainly will take away a lot of hidden realities.

Quoting dxing (Reply 7):
That alone is worth 50 billion and doesn't even begin to scratch the health care law spending.

There is no hiding health care costs. Push it back to uncontrolled private insurance and it still increases dramatically - just as it did under Bush/Cheney. When core care is covered by taxes on income & profits (which allows private companies to be very successful, BTW) you can then have restraint on costs. Until then you're screwed one way or another.

Quoting dxing (Reply 7):
Agree 100% but only after the 16th amendment (income taxes) has been repealed and discarded forever. I believe a VAT is now the only way to be able to balance the books on a year by year basis.

VAT would be in addition to income taxes. A country with a deficit like ours isn't going to drop the income tax.

Quoting dxing (Reply 9):
Sales taxes are done automatically by the cash register.

And there is some major auditing needed in order to catch fraud (which even the tooth fairy agrees happens) and ensuring correct payments are made.

Quoting seb146 (Reply 11):
But, why should these people care? Most of them are too old to care or dead what happens to us in the middle or lower incomes.

Because we have sons and daughters and grandkids. Can you find a better reason to care?

Quoting windy95 (Reply 12):
Greed for other peoples money to "redistibute" and envy of the rich who they want to tax the hell out of so they can have their share owed them....

At a macro level the redistribution of wealth in this country as been in the other direction. The distribution of the total wealth has shifted wealth from the "lower 90%" to the top 10%.
 
DfwRevolution
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 5:44 pm

Quoting dxing (Reply 18):
Which is why I said:

Quoting dxing (Reply 7):

Agree 100% but only after the 16th amendment (income taxes) has been repealed and discarded forever. I believe a VAT is now the only way to be able to balance the books on a year by year basis.

I would support the implementation of a VAT tax only after the repeal of the 16th amendment.

I realize that, but it's not of practical consequence. Repealing the 16th amendment (i.e. Fair Tax) is just not on the table. Adding a VAT to supplement the income tax is. It will probably be one of the recommendations of the deficit commission. The reason I urge caution toward a VAT is because it exposes us to the potential for a massive bait-and-switch. For example, we'll probably be told that in exchange for a low VAT rate, we can keep the Bush-era tax brackets for a few more years. But then we'll revert back to higher tax brackets anyway, and now we're stuck with a VAT.

Quoting dxing (Reply 18):
You'll have to prove that.

I don't think I needs proving that if you add a function to government, then the government gets bigger.
 
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 6:04 pm

Quoting Ken777 (Reply 19):
So we have states already making major cuts because of the Great Recession.

More likely because of unfunded federal mandates and federal dollars that disappear after a few years like the stimulus funds aimed at keeping teachers and other public union employees at work. Once the stimulus money is gone the States are left with the burden of paying for these programs. Same goes with medicaid spending as it relates to Obama care. The federal government will pick up a majority of the tab for the first couple of years, and then the funding goes away and the States are left holding the bag. Why do you think there was a Louisanna purchase and Nebraska cornhusker deal?

Quoting Ken777 (Reply 19):
Maybe we can move back to the pre-unification days. It certainly will take away a lot of hidden realities.

On the budget we will have too. Unfortunately due to the borrowing that the federal government has done over the past 40 years SS and medicare are going to have to be refinanced and reorganized in order to have any hope of saving them financially. If you are talking about going back to the tax rates of the 1950's it has already been explained several times that the world is completely different now in economic terms than it was then.

Quoting Ken777 (Reply 19):
There is no hiding health care costs.

Correct but by paying only 93-97% of medicare costs and only 70% of medicaid costs the government does a beautiful job of hiding the true costs of both programs all the while cost shifting the rest to private insurers. If proper reforms and sensible oversight were employed there would be no need to change a system that works and a majority of people are happy with.

Quoting Ken777 (Reply 19):

VAT would be in addition to income taxes. A country with a deficit like ours isn't going to drop the income tax.

That is simply not true. Texas is able to balance its books as are 6 other States with no income tax.

Quoting Ken777 (Reply 19):
And there is some major auditing needed in order to catch fraud (which even the tooth fairy agrees happens) and ensuring correct payments are made.

Which can all be computer generated. As you yourself have said many of the supposed savings in medicare will come from detecting fraud. The banking reform law moves the government into just about every cash register in the country large and small and does it mostly electronically.
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Aaron747
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 6:21 pm

Quoting dxing (Reply 7):
He used the same tired explanation of how the wealthy have gotten wealthier as if they took the money from the poor in a closed pie system.

No, I believe what he was insinuating was that those that comprised that huge sector of growth in wealth did so as part of the bubble and did not actually put anything of value into the overall system.

Quoting windy95 (Reply 14):
This where the cuts or outright elimination need to be made.

Find a single politician anywhere who is willing to take an axe to both SS and Medicare - it will never happen.

Quoting Slider (Reply 17):
CUT SPENDING NOW.

Um, as we always go round in circles on this - how, exactly? Liberals won't cut SS, both parties won't touch Medicare/Medicaid (Dems for the "moral handout" side and GOPers for the big pharma benefit), and conservatives won't cut pork projects that feed the defense complex. All of them need to be substantially cut to have any effect - who's gonna do all three??
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connies4ever
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 6:38 pm

Quoting dxing (Reply 9):
Quoting DfwRevolution (Reply 8):
If you are suggesting that the IRS would get smaller if we implemented a VAT then I believe you are sorely mistaken. Income taxes would not go away and you would only need more personnel to manage the collection of the VAT.

Disagree. Sales taxes are done automatically by the cash register. The IRS would not need the amount of auditors it has in its employ, specifically the additional 50K they are hiring to administer the health care portion of tax revenue. Texas does not have an income tax and government spending on the comptrollers office, responsible for collection of taxes, is pretty small compared to the rest of the budget.

I don't think you would get rid of either the IRS or income tax with a VAT -- we didn't. But income tax rates definitely dropped, and substantial numbers were removed from the tax rolls altogether.

VAT is also not just a sales tax, it is a tax on the value added to a good or service between delivery by the supplier and sale by the vendor. So the 5% for arguments sake is applied on the difference between the $100 wholesale price and the $200 retail price. For a service it is actually just a straight sales tax.

Quoting DfwRevolution (Reply 15):
But a VAT would not replace the income tax, it would be in addition to income taxes. To say that we could "virtually eliminate one of the bigger departments in the government" is a misnomer, IMHO.

You also have to consider that if you implement a higher sales tax, transactions have a habit of moving away from the cash register to a black/grey market.

This has certainly happened in Canada. Not sure how big the grey economy is, but some estimates place it >10%.
For home handyman work, for example, one price for cash, another for a recorded transaction. As our former CFO was fond of saying, "Cash is King !"
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787atPAE
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 11:31 pm

60 Minutes is still relevant?
 
dxing
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 11:42 pm

Quoting DfwRevolution (Reply 20):
I realize that, but it's not of practical consequence.

Sure it is.

Quoting DfwRevolution (Reply 20):
But then we'll revert back to higher tax brackets anyway, and now we're stuck with a VAT.

That is why no one should vote for a VAT tax until the 16th amendment is repealed.

Quoting DfwRevolution (Reply 20):
I don't think I needs proving that if you add a function to government, then the government gets bigger.

Only if you don't get rid of the income tax. That is where the volumes of regulations and loop holes are.

Quoting Aaron747 (Reply 22):
No, I believe what he was insinuating was that those that comprised that huge sector of growth in wealth did so as part of the bubble and did not actually put anything of value into the overall system.

They would not have accumulated wealth without having something of value to offer in return. That it is not material in nature in no way makes it less valuable.

Quoting connies4ever (Reply 23):
VAT is also not just a sales tax, it is a tax on the value added to a good or service between delivery by the supplier and sale by the vendor. So the 5% for arguments sake is applied on the difference between the $100 wholesale price and the $200 retail price. For a service it is actually just a straight sales tax.

I understand that but at its most basic level it is a sales tax placed on a product or service as it makes its way from the manufactuer to the customer.

Quoting connies4ever (Reply 23):
This has certainly happened in Canada. Not sure how big the grey economy is, but some estimates place it >10%.
For home handyman work, for example, one price for cash, another for a recorded transaction. As our former CFO was fond of saying, "Cash is King !"

That already happens here in the States so nothing will change.
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RE: Stockman: Tax Hikes For All A Must

Mon Nov 01, 2010 11:53 pm

Quoting Quokka (Reply 2):
There are those who argue that VAT (GST) is regressive in that people on lower incomes may end up paying a higher proportion of their income. This is because the greater your income, the more optional spending becomes, whereas if you only have a low income, by the time you pay mortgage/ rent, water, electricity, food, there isn't that much left for discretionary spending. Those on higher incomes may "spend" more in transactions that don't attract tax - like purchasing shares, speculating on the currency market, etc. To counteract this regressive feature, many countries (including Australia) have exempted basic food items and power from the VAT (GST). So yes, on a per capita basis the rich may pay more tax than the poor, but is debatable whether they pay more as a proportion of disposable income.

If we the definition of "rich" that is used to support higher taxes on them, then you're not rich if you don't spend money. You're not living the posh high life. Why tax these people into oblivion? They shouldn't have to pay anything more than someone who makes a lot less but spends the same amount. The money they are saving ends up invested, which creates jobs, wealth, which in turn, create more consumption and more tax revenues.

Also remember that even if the rich consume a smaller percentage of their income, that percentage is still likely higher than the total a poor person spends. Therefore, the progressive effect is still there.
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 12:03 am

Quoting Aaron747 (Reply 22):
Find a single politician anywhere who is willing to take an axe to both SS and Medicare - it will never happen.

They will have to one day. They cannot tax us enough to cover the costs of theses programs. Especially with the SS Kitty being full of IOU's.

Quoting Aaron747 (Reply 22):
All of them need to be substantially cut to have any effect - who's gonna do all three??

If we the people carry this anger over to the next election and keep turning out Politicians who do not have the fortitude or courage to do this i think eventually they will get the message...

Quoting Ken777 (Reply 19):
VAT would be in addition to income taxes. A country with a deficit like ours isn't going to drop the income tax.

Sorry but any form of VAT needs to abolish the Progressive income tax.
 
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 12:56 am

Quoting connies4ever (Reply 1):
I have for a long time thought that the USA simply has to move in the direction of a VAT (value added tax) of some kind, similar to what Canada and I believe pretty much all of Europe have in place. Introduction of a VAT, properly done, can result in a lowering of overall income tax rates and/or payroll taxes. VATs are enormous cash cows, front and centre, and IMHO, are 'good' taxes in that the very wealthy and the merely wealthy, pay more per capita, sine they spend more and tend to have more expensive tastes than us plebes.

  

Quoting connies4ever (Reply 1):
I would expect serious devaluation of the greenback, which will spur inflation.

It's already beginning I think. Before too long, dollars won't be worth the paper they're printed on.

Quoting 787atPAE (Reply 24):
60 Minutes is still relevant?

No.
Why do Aerospace Engineering students have to turn things in on time?
 
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 1:29 am

Quoting dxing (Reply 25):
They would not have accumulated wealth without having something of value to offer in return. That it is not material in nature in no way makes it less valuable.

Fundamentally disagree. Lloyd Blankfein may claim that i-banking is "god's work" but I'd say the entrepreneur who gets rich developing a cutting edge data management service has added far more tangible value than he has personally received - unlike the hordes of bankers who sit in front of computer screens all day before running off to the Hamptons.

Quoting windy95 (Reply 27):
If we the people carry this anger over to the next election and keep turning out Politicians who do not have the fortitude or courage to do this i think eventually they will get the message...

I highly doubt it....short of far more extreme actions. Start damaging the personal property of wealthy magnates or politicians and we'll start seeing some real change. Short of that, I don't expect much.
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 2:03 am

Quoting Aaron747 (Reply 29):
Fundamentally disagree.

I spent 18 years making my living with my voice. What material attributes did I add to society? Yet I still made a pretty good buck doing voice overs for commercials.
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 2:32 am

Quoting windy95 (Reply 27):
any form of VAT needs to abolish the Progressive income tax.

Can you name a major country where the income tax has been eliminated with a VAT?

It's far easier to name countries where the income tax has been retained when a VAT (or GST) has been added. 
 
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 3:19 am

Quoting Aaron747 (Thread starter):
According to him, even with drastic spending cuts a tax hike would still be necessary to avoid future insolvency.

Here's a question: what would happen if we didn't? What does "insolvency" mean, practically, for the U.S.?
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 4:41 am

Quoting dxing (Reply 25):
That is why no one should vote for a VAT tax until the 16th amendment is repealed.

This error gets repeated every time the taxation subject is brought up...

Repealing the 16th Amendment will not eliminate income taxes. It will eliminate taxes on income from property. It will not eliminate taxes on income from labor, a.k.a. wages.
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 4:55 am

Quoting Yellowstone (Reply 33):
This error gets repeated every time the taxation subject is brought up...

Here we go again.    If not to institute an income tax that is not considered a direct tax that is subject to apportionment or based on the census, what was the purpose of the 16th amendment?

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 5:10 am

Quoting PPVRA (Reply 26):
Also remember that even if the rich consume a smaller percentage of their income, that percentage is still likely higher than the total a poor person spends. Therefore, the progressive effect is still there.


If VAT is set at a percentage rate, for arguments sake 10%, no matter what proportion of your income you spend, you are still paying at the 10% on what you spend. A grossly, over-simplified example:
Person A earns $100.00 , spends $90.00 + 10% VAT. Saves $1.00. Effective tax rate = 9%
Person B earns $1,000, has more expensive habits spends $500.00 + 10% VAT. Saves, invests, gives to charity $450.00 Effective tax rate = 5%.
These figure are simplified to show the regressive nature. Despite paying more tax, the person on the higher income is paying less as a proportion of income. Even if Person B spent $900.00 he would not be paying any more tax as a percentage. If by "progressive tax" one means that as you earn more you enter a higher tax bracket, clearly VAT does not fit the bill.

It is precisely for this reason that all VAT systems of which I am aware have various means to overcome the disparity. Some have different bands where some items may be rated at different rates. The UK system at the time it was introduced was an example. In Australia there is one fixed rate, but some items are tax exempt - such as basic foods, water and electricity. Connies4ever has indicated how Canada dealt with this issue. Please note that I am not making moral judgments on VAT systems but outlining how it works in practice in some countries where one has been adopted.

However, I am not aware of any country that has scrapped income tax as a result of introducing a VAT. In many instances the introduction of VAT has allowed cuts to income tax rates, particularly at the upper levels, although some countries did raise the threshold at which a person commences paying income tax. In Australia GST (VAT by another name) replaced Sales Tax and some other some taxes at both State and Federal level.

[Edited 2010-11-01 22:31:47]
 
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 6:53 am

Quoting dxing (Reply 30):

I spent 18 years making my living with my voice. What material attributes did I add to society?

Assuming you're talking about TV or radio, the station made ad revenue that allowed it to serve the community, as most local media entities tend to do. I'd call that a highly valuable enterprise, unlike watching money move back and forth across computer monitors.
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 11:48 am

Quoting Aaron747 (Reply 36):
Assuming you're talking about TV or radio, the station made ad revenue that allowed it to serve the community, as most local media entities tend to do. I'd call that a highly valuable enterprise, unlike watching money move back and forth across computer monitors

But it didn't add a single material thing of value to the world. As soon as the ad run was up the commercial was erased and gone forever save the few I saved for posterity. It was no different than making a trade on the stock market, holding it till it increased in value, and then selling the stock. Nothing real was produced. What was done is that my voice helped sell a few more items and make the store owner some profit just like my capital investment via the stock helped the company in some small way have more capital to make more widgets to sell. So saying people moving money around in the market is not adding value or material wealth to the nation is not correct.
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 1:34 pm

Quoting DfwRevolution (Reply 20):
For example, we'll probably be told that in exchange for a low VAT rate, we can keep the Bush-era tax brackets for a few more years. But then we'll revert back to higher tax brackets anyway, and now we're stuck with a VAT.

Not the experience in Canada. Income tax rate shave in fact dropped since the introduction of the GST back in the 90s. They are stable at the moment, and despite the deficit being run currently due to our own stimulus program, do not look to increase.

Minor segue regarding stimulus: our federal Auditor-General recently issued a report assessing the stimulus program and concluded that it was, on balance, effective in buffering citizens from the tremendous forces sweeping through our society (Western society as a whole, not just Canada).

http://www.theglobeandmail.com/news/...e-fragrant-bouquet/article1773923/

These programs take time to work their way through the system, require some patience, and my minor two cents to our Americans A.net members is to be patient. Things will get better. It will take longer in the US becuase the economic/financial situation there is and has been worse than generally perceived for quite some time. We were starting from the position of having run a federal surplus for over a decade, so it has not been as painful as it has for America.
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 2:51 pm

Quoting connies4ever (Reply 38):
Things will get better.

They would have gotten better without the stimulus. All it is doing is prolonging the recovery as tax policy has remained in limbo while more public debt was incurred. I don't blame a small business man from treading water in a wait and see action until some sort of idea of how much all this is going to cost finally gets some sort of shake out.
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 3:56 pm

Quoting windy95 (Reply 12):
Do not forget to deadly sins for the Progressives. Greed for other peoples money to "redistibute" and envy of the rich who they want to tax the hell out of so they can have their share owed them....

So, it is okay for the Church to be socialist (re-destribute wealth) but not okay for anyone else?

Quoting Ken777 (Reply 19):
Because we have sons and daughters and grandkids. Can you find a better reason to care?

I think that is the best reason of all, but the right-wing is not interested in the future. They know you can't take it with you, so they just get all they can here and now.

Quoting DfwRevolution (Reply 20):
But then we'll revert back to higher tax brackets anyway

As a side note, those tax brackets would revert back to the Clinton era when we all became a little better off. We all paid more but all got more because the debt was going down and companies were hiring and spending.
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 3:59 pm

Quoting seb146 (Reply 40):
So, it is okay for the Church to be socialist (re-destribute wealth) but not okay for anyone else?

Yes because they live off of donations willingly given by individuals not by automatic withholding and threat of legal action if you don't pay.
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windy95
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 5:17 pm

Quoting seb146 (Reply 40):
So, it is okay for the Church to be socialist (re-destribute wealth) but not okay for anyone else?

Yes because we give willingly. Not at the tip of the Roman spear. And the more the the Feds steal from me the less I have to give to the charities of MY choice. Not the choice of some progressive/Socialist. Forced redistrubution of weath is slavery plain and simple. God and the founders gave us free will. Try it sometimes.

Quoting seb146 (Reply 40):
I think that is the best reason of all, but the right-wing is not interested in the future. They know you can't take it with you, so they just get all they can here and now.

I will take care of my families and my own future. Keep the feds grubby hands out of it.
 
windy95
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 5:23 pm

US to spend $200 mn a day on Obama's Mumbai visit

Quote:
"The huge amount of around $200 million would be spent on security, stay and other aspects of the Presidential visit," a top official of the Maharashtra Government privy to the arrangements for the high-profile visit said.

About 3,000 people including Secret Service agents, US government officials and journalists would accompany the President. Several officials from the White House and US security agencies are already here for the past one week with helicopters, a ship and high-end security instruments.

Read more at: http://www.ndtv.com/article/india/us...y-on-obama-s-mumbai-visit-64106?cp


More tax dollars well spent 3,000 people...really?
 
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 5:30 pm

Quoting Aaron747 (Reply 22):
Um, as we always go round in circles on this - how, exactly? Liberals won't cut SS, both parties won't touch Medicare/Medicaid (Dems for the "moral handout" side and GOPers for the big pharma benefit), and conservatives won't cut pork projects that feed the defense complex. All of them need to be substantially cut to have any effect - who's gonna do all three??

Paul Ryan's Roadmap sets the course to do all of that.

http://www.roadmap.republicans.budget.house.gov/

Some tough decisions and choices certainly, but these issues can no longer be the proverbial third rail. The hour is too late.
 
DfwRevolution
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 5:31 pm

Quoting seb146 (Reply 40):
So, it is okay for the Church to be socialist (re-destribute wealth) but not okay for anyone else?

It is my choice to give to the Church or not. It's even my choice to believe whether charitable giving is a moral imperative or not. Taxes are collected by force. We have no choice in the matter.

Quoting seb146 (Reply 40):
As a side note, those tax brackets would revert back to the Clinton era when we all became a little better off. We all paid more but all got more because the debt was going down and companies were hiring and spending.

Companies were hiring and spending because our consumption economy was growing. If we increase taxes now, then we will hamper consumer spending. It is a fallacy to say that because the economy grew faster in 1997 when we had higher tax brackets, the economy would grow faster now if we raised tax brackets.
 
PPVRA
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 5:47 pm

Quoting Quokka (Reply 35):
A grossly, over-simplified example:
Person A earns $100.00 , spends $90.00 + 10% VAT. Saves $1.00. Effective tax rate = 9%
Person B earns $1,000, has more expensive habits spends $500.00 + 10% VAT. Saves, invests, gives to charity $450.00 Effective tax rate = 5%.
These figure are simplified to show the regressive nature. Despite paying more tax, the person on the higher income is paying less as a proportion of income. Even if Person B spent $900.00 he would not be paying any more tax as a percentage. If by "progressive tax" one means that as you earn more you enter a higher tax bracket, clearly VAT does not fit the bill.



Quote:
The key thing to bear in mind is that for the world as a whole, spending equals income.
http://www.nytimes.com/2010/11/01/opinion/01krugman.html?_r=2

Which means sales taxes are really income taxes, and what is usually meant by income taxes is more of a complex income+capital tax all in one thing  

In any case, that's just a delayed effect until the wealthier person actually spends that money. Then the effect is reversed out.

[Edited 2010-11-02 10:50:11]
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
Ken777
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 5:47 pm

Quoting DiamondFlyer (Reply 16):
Most of the advocacy I've seen for the VAT is based on abolishing the current mess of an income tax system.

And there is some big money pushing for that approach - like those in the top 10% of income.

Quoting dxing (Reply 18):
I would support the implementation of a VAT tax only after the repeal of the 16th amendment.

So we repeal the 16th Amendment and then the VAT is rejected by politicians and voters. Ooooops!

At that time the Peso would be worth more than the Dollar.

Quoting dxing (Reply 21):
Same goes with medicaid spending as it relates to Obama care.
Quoting dxing (Reply 21):
Unfortunately due to the borrowing that the federal government has done over the past 40 years SS and medicare are going to have to be refinanced and reorganized in order to have any hope of saving them financially.

Step One would be to present an honest accounting of the Social Security Fund, including the loans to the Treasury that have been made over the years and the interest that has been paid by the Treasury over the years. At that point we could actually see what financial shape Social Security is in.

As for Medicare and Medicaid, they are short term funding - money giong in each year goes out each year without any major long term liabilities.

These types of expenses will not reduce until core health care is paid via Medicare for all. Notice I said "core care". That approach still allows private insurance and private care - just at a significantly reduced rate.

Quoting dxing (Reply 21):
If proper reforms and sensible oversight were employed there would be no need to change a system that works and a majority of people are happy with.
Quoting dxing (Reply 21):
Texas is able to balance its books as are 6 other States with no income tax.

Where does Texas get their funding then? Property taxes low to help home owners? Or just a lot of oil & gas royalties? And a lot of Federal Dollars?

Quoting dxing (Reply 21):
As you yourself have said many of the supposed savings in medicare will come from detecting fraud.

Medicare fraud is huge - especially places like Florida. It's one of those areas where we can save money by spending money, but we'll probably see budget cuts in the investigation and prosecution of fraud, making it easier and more profitable.

Quoting dxing (Reply 21):
Which can all be computer generated.

We're still trying to have a decent computer system put into the FBI - billions lost and still not up to speed. Don't assume any progress without throwing a lot of money at the problems.
 
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 5:59 pm

Quoting Ken777 (Reply 47):
We're still trying to have a decent computer system put into the FBI - billions lost and still not up to speed. Don't assume any progress without throwing a lot of money at the problems.

Hold up there - doesn't this suggest that there are some serious administrative woes at FBI that would need to be corrected? How about holding people in director positions accountable for the time and money they've wasted??
If you need someone to blame / throw a rock in the air / you'll hit someone guilty
 
dxing
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RE: Stockman: Tax Hikes For All A Must

Tue Nov 02, 2010 7:44 pm

Quoting Ken777 (Reply 47):
So we repeal the 16th Amendment and then the VAT is rejected by politicians and voters. Ooooops!

It would be extremely easy to insert a provision in a law authorizing a VAT that made it dependent on repeal of the 16th amendment before the law could take effect.

Quoting Ken777 (Reply 47):
Step One would be to present an honest accounting of the Social Security Fund, including the loans to the Treasury that have been made over the years and the interest that has been paid by the Treasury over the years. At that point we could actually see what financial shape Social Security is in.
Quoting Ken777 (Reply 47):
As for Medicare and Medicaid, they are short term funding - money giong in each year goes out each year without any major long term liabilities.

No they are not.

http://www.washingtonpost.com/wp-dyn...le/2009/05/24/AR2009052401979.html

Unfortunately, the Medicare and Social Security trust funds won't be exhausted until 2017 and 2037, respectively, by the latest projections. Although these bankruptcy dates are moved up from last year's estimates (2019 for Medicare and 2041 for Social Security), they're still fairly distant. Between now and then, the drain on the rest of government will occur invisibly. The inadequate trust funds will steadily diminish. The government bonds in these trust accounts will be presented to the Treasury for payment. Those payments can be financed in only three ways: bigger deficits, higher taxes or spending cuts.

Quoting Ken777 (Reply 47):
Where does Texas get their funding then? Property taxes low to help home owners? Or just a lot of oil & gas royalties? And a lot of Federal Dollars?

All of the above plus a State sales tax. I'm having to look at moving to Chicago and just in taxes alone I'll take a major hit in pay.

Quoting Ken777 (Reply 47):
We're still trying to have a decent computer system put into the FBI - billions lost and still not up to speed. Don't assume any progress without throwing a lot of money at the problems

As you linked in another thread, the former head of GE says that one business he was affliated with does the same numbers with half the people, thanks to technology.
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