The Fiscal Cliff is just accidental austerity

[Odysseus]

Originally Posted by Arkie

When Warren Buffet says he only pays a 15% effective tax on his income, that's because his income mainly comes from capital gains and dividends, and he is completely ignoring the fact that the companies he owns must pay a corporate income tax of as much as 35% before he can receive those gains and dividends.

Fortunately, we do have access to facts that do not distort or color the picture. The chart below uses the numbers as crunched by the Congressional Budget Office. The effective total tax rate shown is the ratio of total federal taxes (income, social security, corporate, excise) divided by comprehensive household income. As Greg Mankiw notes, our tax system is highly progressive: "the rich face average tax rates more than twice those of the middle class, and about seven times those of the lowest quintile." And these effective tax rates include all the benefits of whatever deductions may have been available to individuals and companies along the way.

This is inaccurate as you are only talking about one side of the equation. An accredited investor is outside the normal rules that govern FDIC. Once you achieve this you are, without a doubt, offered better investments, more sophisticated means to bypass federal rules, and despite Sarbannes Oxley are more than capable of getting insane returns on investments 80% of Americans have no idea even exist.

The bottomline is the party is over and the loopholes need to be closed. I think it is nothing short of childishness that the "wealthy" are being so immature about the larger issue of our own nation building and are so obsessed with profits. Do they not see the profits they can make right here in America? I do not ask them to stop pillaging but pillage so that it benefits us all.

[Fedaykin]

Originally Posted by Arkie

When Warren Buffet says he only pays a 15% effective tax on his income, that's because his income mainly comes from capital gains and dividends, and he is completely ignoring the fact that the companies he owns must pay a corporate income tax of as much as 35% before he can receive those gains and dividends.

EDIT: I was wrong about dividends.

As for capital gains, the sale of a stock has no tax implications for the company (except in the case where the company itself is buying back its own stock). Except in that special case, the company isn't even a party to the transaction.

When you trade a stock, you aren't selling it to the company and you are not receiving money from the company's coffers. You are receiving money from the person or entity buying that stock from you, based on a perceived value not a concrete value.

[SoCalBronco]

Originally Posted by Taco John

I agree with Krugman. Obama shouldn't seek a deal. Neither should the Republicans. This "so called fiscal cliff" is a step in the right direction.

Of course, I'd rather see us reduce spending AND reduce taxes. But this will be the first reduction in spending in who can guess how many decades. I'll take it, even if it comes with a tax hike.

I would prefer a "grand bargain", but having the threat of the cliff hanging over Washington's head isn't bad, either. One way or another, we need real progress on the debt. If the automatic cuts come and the Bush tax cuts expire, that's great....I'm fine with that. At least it will result in some real savings for once. Yes, it will lead to a recession, but that's a small price to pay for some long term gains.

Look, everyone's ox is going to get gored. The tax cuts for the wealthy will have to expire...even if they already pay a high share of the overall taxes. Medicare and SS will have to be adjusted. Now that Obama has won re-election, it means vouchers are probably out, but at the very least, eligibility ages are going to go up...albeit incrementally over time, but they will increase, and inflationary increases are going to be tightened....alot. Defense is going to take a haircut.

The fiscal cliff is the best thing that could have happened to this government. Because nothing gets done without a gun to the head. No kicking the can down the road. They need to come up with a package of at least 4 trillion in spending cuts/new revenues. That's the minimum the credit rating agencies see as a viable answer to the debt issues.

[L.A. BRONCOS FAN]

Election has still more consequences:

Now that Congress is trying to reach a deal on the debt, one side has leverage.

(Hint: it's not the Republicans. Second hint: Democrats know it.)

In debt talks, failure is an option

By Steve Benen

Mon Nov 12, 2012 8:00 AM EST


Associated Press

President Obama and congressional leaders have about seven weeks until the end of the calendar year, at which point automatic spending cuts, which both parties oppose, will kick in, and all Bush-era tax cuts will expire. Policymakers seem to believe a debt-reduction agreement is still possible to avoid these measures, but it's an uphill climb.

The dirty little secret, though, is plenty of Democrats seem to realize that a deal isn't entirely necessary.

Sen. Patty Murray (D-Wash.) on Sunday said Democrats were prepared to allow the expiration of all George W. Bush-era tax rates if Republican lawmakers objected to raising taxes on the wealthiest.

"We can't accept an unfair deal that piles on the middle class and tell them they have to support it. We have to make sure that the wealthiest Americans pay their fair share," said Murray on ABC"s "This Week."

Murray said one option would be to let the lower rates expire across-the-board and then return to the table next year with new talks on a tax-cut package.

Murray, who's likely to become the new chair of the Senate Budget Committee, specifically said if Republicans fail to compromise, "[W]e will reach a point at the end of this year where all the tax cuts expire and we'll start over next year. And whatever we do will be a tax cut for whatever package we put together. That may be the way to get past this."

Quite right. It's easy to imagine the talks collapsing before New Year's Eve, and then President Obama proposing a new approach with the new Congress, focused on tax cuts for the middle class, and Clinton-era rates for income above $250,000. If it took a few weeks to pass, policymakers have the option of making it retroactive to Jan. 1.

It would get the support of the Democratic Senate, and if House Republicans balk, they'd be responsible for higher middle-class taxes.
Given this, Murray's comments yesterday offer a reminder of why the pressure is on the GOP, and why the White House need not accept a bad deal. One side has leverage, it's not the Republicans.

http://maddowblog.msnbc.com/_news/20...e-is-an-option

[SoCalBronco]

Letting the Bush tax cuts expire in their entirety is fine. That's like 2T in savings just right there. A recession is a small price to pay to ensure those savings. I'd hope it doesn't get to that....ideally they could reach a grand bargain to avoid that....but if push comes to shove...let it all expire.

[Blart]

http://krugman.blogs.nytimes.com/201...usterity-bomb/


"It can’t be emphasized enough that everyone who shrieks about the dangers of the austerity bomb is in effect acknowledging that the Keynesians were right all along, that slashing spending and raising taxes on ordinary workers is destructive in a depressed economy, and that we should actually be doing the opposite."

[cutthemdown]

Originally Posted by SoCalBronco

Letting the Bush tax cuts expire in their entirety is fine. That's like 2T in savings just right there. A recession is a small price to pay to ensure those savings. I'd hope it doesn't get to that....ideally they could reach a grand bargain to avoid that....but if push comes to shove...let it all expire.

Obama is window shopping for a recession of his very own. What do you want for Christmas!

[cutthemdown]

Investors are running for the hills! Stock market down another full 1%. Turmoil in the mideast. Turmoil in the EU. But Obama thinks its a good time to raise income tax, and raise capital gains on the big boys with the fat wallets. Of course they are selling off why wouldn't you if you made money and taxes are only going to go up.

Recession, here we come, this one is all on you liberals. Enjoy it.

[Requiem]

All sales on Black Friday just go to the government. Every cent.

[Odysseus]

Originally Posted by L.A. BRONCOS FAN

And that's why libertarianism will never be taken seriously by mainstream America.

Messing with the social contract/safety net = political suicide.

You are assuming suicide is rational. It is not. America is thinking and responding foolishly. We have lost our central communities and compassion so we have become a hoard of vigilantes hungry to do each other in.

[L.A. BRONCOS FAN]

This idiot learned nothing from the election...

Boehner's refusal to support middle-class tax cuts is the root of the stalemate.

http://www.dailykos.com/story/2012/1...into-the-abyss



Boehner steps into the abyss

Speaker John Boehner declared an impasse Friday negotiations with the White House over avoiding the fiscal cliff.

“There’s a stalemate,” Boehner said at a news conference.

[L.A. BRONCOS FAN]

It's a dark day for Mr. Turtlehead...

Mitch McConnell makes a fiscal cliff offer and proves he can't count...

[TonyR]

The reality should be seeping in to viewers of the Sunday shows that the Republicans don’t have a game plan. They don’t have a single, specific proposal to avoid the fiscal cliff. And even if they had one, they don’t have a roadmap to get there. They keep expecting Obama to come back with something more to their liking, which they’d also reject. Many Republicans literally don’t understand what is happening. Sen. Charles Grassley tweeted over the weekend that he was frustrated that President Obama hadn’t embraced the recommendation of the Bowles-Simpson Commission. Apparently, he is one of the many people in Washington who doesn’t understand that Bowles-Simpson recommended letting the Bush tax rates on the wealthy expire, while also proposing to cap or eliminate deductions primarily enjoyed by the wealthy.

http://www.thedailybeast.com/article...st+Articles%29

[TonyR]

Really good read from Bruce Barlett.

http://economix.blogs.nytimes.com/20...-fiscal-cliff/

In my opinion, the fiscal cliff is akin to the so-called Y2K problem in late 1999, when many people worried that computers would freeze, elevators would stop running and planes would fall from the sky. Of course, nothing of the kind happened.

So if the fiscal cliff is a faux problem, why do we hear that industry and financial markets are deeply fearful of it? The answer is that there is a very real fiscal problem that will occur almost simultaneously – expiration of the debt limit. Much of what passes for fiscal-cliff concern is actually anxiety about whether Republicans in Congress will force a default on the nation’s debt in pursuit of their radical agenda.

[TonyR]

From the same article...

In short, the debt limit is a hostage that Republicans are willing to kill or maim in pursuit of their agenda. They have made this clear ever since the debt ceiling debate in 2011, in which the Treasury came very close to defaulting on the debt.

[Rohirrim]

Originally Posted by cutthemdown

Investors are running for the hills! Stock market down another full 1%. Turmoil in the mideast. Turmoil in the EU. But Obama thinks its a good time to raise income tax, and raise capital gains on the big boys with the fat wallets. Of course they are selling off why wouldn't you if you made money and taxes are only going to go up.

Recession, here we come, this one is all on you liberals. Enjoy it.

Not so fast, cupcake.

While 53 percent of those surveyed say the GOP would (and should) lose the fiscal cliff blame game, just 27 percent say President Obama would be deserving of more of the blame. Roughly one in 10 (12 percent) volunteer that both sides would be equally to blame.
Those numbers are largely unchanged from a Post-Pew survey conducted three weeks ago and suggest that for all of the back and forth in Washington on the fiscal cliff, there has been little movement in public perception. The numbers also explain why Republicans privately fret about the political dangers of going over the cliff, while Democrats are more sanguine about such a prospect.
http://www.washingtonpost.com/blogs/...-fiscal-cliff/

The American people have figured out who are being the immature brats on this one.