Greece could generate budget revenues amounting to 5 percent of national output annually if it reforms tax collection and clamps down on tax cheats, the European Union’s tax chief told a Greek newspaper.

Athens plans reforms next year to combat rampant tax evasion as it struggles to shore up public finances and achieve a primary budget surplus, both necessary to continue receiving bailout aid from international lenders.

The euro zone agreed on Thursday to provide nearly 50 billion euros ($64 billion) in long-delayed aid to Greece, averting a catastrophic default and securing its survival in the zone after months of doubt and political turmoil.

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Budget negotiations between the White House and Republican House Speaker John Boehner have progressed steadily in recent days, people close to the process said, breathing life into talks that appeared to have stalled.

Both sides still face sizable differences before any agreement might be reached by the end of the year, and talks could well falter again over such controversial issues as taxes and Medicare before any deal is ultimately reached.

The people familiar with the matter say talks have taken a marked shift in recent days as staff and leaders have consulted, becoming more “serious.” Both sides have agreed to keep details private, according to the people, who declined to detail where new ground was being broken.

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For more than a year, politicians have been fighting over whether to raise taxes on high-income people. They rarely mention that affluent Americans will soon be hit with new taxes adopted as part of the 2010 health care law.

The new levies, which take effect in January, include an increase in the payroll tax on wages and a tax on investment income, including interest, dividends and capital gains. The Obama administration proposed rules to enforce both last week.

Affluent people are much more likely than low-income people to have health insurance, and now they will, in effect, help pay for coverage for many lower-income families. Among the most affluent fifth of households, those affected will see tax increases averaging $6,000 next year, economists estimate.

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From there:

[Here is a list of]…the most expensive tax breaks in the current tax code, based on what those breaks would cost the U.S. Treasury in lost revenue from 2013 to 2017:

1) Exclusion of employer contributions for medical insurance premiums & medical: $1 trillion

2) Mortgage interest deduction: $606 billion

3) Deduction for 401(k) plans: $429 billion

4) Accelerated depreciation of machinery & equipment: $375 billion

5) Exclusion of net imputed rental income: $337 billion

6) Capital gains: $321 billion

7) Charitable contributions: $293 billion

….seasoned Washington hands say that once this rather gloomy back and forth has played out – and it might take another week or more – the work towards reaching a solution that both sides can sell to their parties and their lawmakers will begin in earnest.

A deal by Christmas, a week before the fiscal cliff deadline, remains uncertain but not out of the question. The so-called fiscal cliff is a combination of U.S. government spending cuts and tax increases due to be implemented under existing law in early 2013 that may cut the federal budget deficit but also tip the economy back into recession.

The pattern of little happening until very close to a holiday is well-established on Capitol Hill. The past three pre-Christmas seasons brought important eleventh-hour developments on health care in 2009, tax cut extensions in 2010 and the payroll tax holiday in 2011.

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….President Obama’s call for a return to Clinton-era tax rates is misleading: If the Bush upper-income tax cuts go away, tax rates will exceed those in place at the end of the 1990s.

The top effective federal marginal tax rate on work income would rise to roughly 44.6% from 37.9% in 2012.

That’s higher than under President Clinton because of a 0.9-percentage-point Medicare payroll tax hike for upper-income households, which passed with Obama-Care and takes effect in January.

Tax rates on long-term capital gains also will be higher than when Clinton left office if Bush tax cuts expire as ObamaCare’s new 3.8% Medicare tax on investment gains takes effect. Up to now, only wage and salary income has been subject to Medicare taxes.

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At first blush, it seems to make policy sense, too. The rich fabric of America’s civic life, from Boy Scouts to community orchestras to soup kitchens, is the envy of the world. Its diversity reflects in part how much it depends on private givers with diverse interests and motives, and not just on the government. Their giving is encouraged by the charitable deduction, enacted in 1917, just four years after the income tax itself. The deduction lets people feel they are beating the system even as they practice virtue.

But there’s a question of fairness that complicates the issue. Overwhelmingly, the deduction benefits the wealthy ”” and the rest of the country has to make up the gap.

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The Primate of All Nigeria Anglican Communion, Most Rev. Nicholas Okoh, on Saturday dismissed calls in some quarters for Churches in the country to be mandated to pay tax to government.

Okoh said this in Abuja at the 2012 Carnival for Christ, organised by the Abuja Diocese of the Anglican Communion.

The Carnival for Christ is an annual gathering of the various archdeaconries in the diocese to praise and worship God.

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I listened to NPR yesterday for over an hour back and forth from a doctors appointment.

The entire time they talked about President Obama’s proposal to implement the middle class tax cut now.
Everywhere I turn its middle class tax cut, middle class tax cut…

Except it isn’t but no one thinks about these things.

What is being proposed is not letting the current tax code STAY THE SAME.
So 98% of Americans WON”T HAVE A TAX INCREASE.

Since when is not having an increase a cut?

Anyone you know say I am getting the same number of days vacation this year as last year I am angry I get a benefits cut!

For the first time in decades, a bipartisan consensus has emerged in Washington to raise taxes. But negotiators working to avert the year-end “fiscal cliff” remain far apart on crucial details, including how taxes should go up and who should pay more.

Neither side gave ground in an opening round of staff-level talks last week at the Capitol. As President Obama and congressional leaders prepare for a second face-to-face meeting as soon as this week, the divide over taxes presents the biggest obstacle to replacing the heap of abrupt tax hikes and spending cuts, set to hit in January, with a less-traumatic debt-reduction plan.

People in both parties are exploring ideas for bridging the gap. Without a deal on taxes, there is not much hope for agreement on a broader strategy for restraining the national debt that also tackles the skyrocketing cost of federal retirement programs such as Social Security and Medicare.

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Most of the increases would result from the expiration of Bush-era tax cuts, which would cause marginal rates to rise. Simultaneously, several temporary tax breaks pushed by President Barack Obamaafter the financial crisis also would end.

And most households””121 million in all””would be hit by an increase in the payroll tax that employees pay to 6.2% from 4.2%.

Also expiring at year-end is a provision to reduce the so-called marriage penalty, a set of tax provisions that require many couples to pay higher taxes when they file jointly. And millions more families’ earnings this year would be subject to the alternative minimum tax. The AMT was originally intended to prevent the very wealthy from avoiding taxes but would apply to middle-class households if policy makers don’t renew a provision that expired last year.

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…the biggest loopholes in the U.S. Tax Code ”” generally referred to as tax expenditures ”” aren’t just the tricks of the trade for millionaires with offshore bank accounts. For the vast majority of Americans, they’re just how things work: You don’t pay taxes on your health insurance or Medicare benefits; you contribute tax-free to your 401(k); and your mortgage interest pushes down your tax bill each year.

And even if you dump the biggest of the set, these tax perks don’t even come close to closing the deficit. At best, the top 10 would pull in an extra $834 billion a year, according to Joint Committee on Taxation figures. Considering the hole lawmakers are trying to fill is several trillion dollars large, it’s clear they wouldn’t even come close.

Here are the 10 biggest tax loopholes ”” and the reasons why most of them will survive the fiscal cliff….

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U.S. companies are scaling back investment plans at the fastest pace since the recession, signaling more trouble for the economic recovery.

Half of the nation’s 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next, according to a review by The Wall Street Journal of securities filings and conference calls.

Nationwide, business investment in equipment and software””a measure of economic vitality in the corporate sector””stalled in the third quarter for the first time since early 2009. Corporate investment in new buildings has declined.

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As the high-stakes wrangling over the fiscal cliff gets underway, we though it might be the proper moment to remind everybody just how the United States managed to become the world’s biggest debtor.

So, here’s how….

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Talks to agree the EU’s 2013 budget have collapsed, after negotiators from the EU and member states were unable to agree on extra funding for 2012.

The EU Commission and European Parliament had asked for a budget rise of 6.8% in 2013.

But most governments wanted to limit the rise to just 2.8%.

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Should lawmakers not reach agreement prior to the end of the year, the US budget deficit for 2013 would be cut almost in half, to $560 billion.

Which doesn’t sound like a bad thing. After all, the US is staggering under a monumental pile of debt and could potentially begin to face the kinds of difficulties that have plunged several euro-zone countries into crisis. It is a viewpoint shared by the ratings agencies — a year ago, Standard & Poor’s withdrew America’s top rating, justifying the measure by pointing to the unending battle over the debt ceiling. The agency noted that “the political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed.”

From afar, it is difficult to argue; the ongoing battle between Democrats and Republicans in the face of a horrendously imbalanced budget looks catastrophically absurd. As their country heads toward the edge of the abyss, lawmakers preferred to debate whether or not French fries and pizza should be considered vegetables.

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France’s main sales-tax rate will increase in January 2014 to 20 percent from 19.6 percent, while the second band on home renovations and restaurants will rise to 10 percent from 7 percent currently. A third rate that applies to food and energy will be cut to 5 percent from 5.5 percent in an effort to support the spending power of France’s poorest households, French Prime Minister Jean-Marc Ayrault said today.

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Heavenly Father we ask that you will have mercy on America today and bless us in spite of ourselves. We ask that you will give wisdom to all who go to the polls to cast their votes. Help us as we make difficult decisions on a variety of issues and as we seek to elect men and women who will hunger for righteousness and seek the common good to positions of authority in our towns and cities, in our states and in our nation. We pray against any voter fraud or any corruption of proper voter access and ask that justice be done in each and every election, whatever the locale. We also pray for peace and grace with one another as the results are received and digested, through Jesus Christ our Lord, who with you and the Holy Spirit lives and reigns in glory everlasting, Amen–KSH.

Finance chiefs of the world’s 20 leading economies are ringing alarm bells over the U.S. fiscal cliff and Europe’s debt woes at a meeting in Mexico this weekend as they look to push back deficit reduction targets to help boost growth.

Unless a fractious U.S. Congress can reach a deal, about $600 billion in government spending cuts and higher taxes are set to kick in on January 1, threatening to push the American economy back into recession and hit world growth.

“The Americans themselves acknowledge that this is a problem,” a G20 official said on condition of anonymity. “The U.S. administration says it doesn’t want to fall off the fiscal cliff, but right now it can’t tell us how exactly it will address it because that issue is on ice ahead of the election.”

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French leader François Hollande is uncomfortably close to a collapse in credibility. His poll rating has sunk to 36pc. The speed of decline has been shocking.
The latest broadside comes from ex-German chancellor Gerhard Schröder, supposedly his ally on the Left.
“The election promises of the French president are going to shatter on the walls of economic reality,” he said in Paris.

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State officials say someone hacked into the Department of Revenue, exposing about 3.6 million South Carolina tax returns.

Gov. Nikki Haley said Friday about 387,000 credit and debit card numbers were also exposed, and 16,000 of those were unencrypted. State officials are urging anyone who has filed a state tax return since 1998 to call a toll-free number to determine whether their information is affected.

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The Ontario Medical Association’s call to slap hot fudge and French fries with a so-called fat tax is a regressive measure that will hurt consumers without any provable benefit. The association is also off-base with its proposal to put graphic photos of diseased organs and limbs on junk food packaging. While the association’s aim of raising awareness is laudable, food is not tobacco and shouldn’t be treated as an inherently harmful substance….

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Indeed, the impact of this latest round of unconventional monetary policy is already fading. Analysts at Morgan Stanley this week decided that returns in the high-yield market were no longer attractive in the face of deteriorating fundamentals. The stock market is struggling to make further headway, while yields on mortgage-backed securities have started to turn up after an initial drop. A drop in third-quarter capital expenditure suggests the Fed policy hasn’t been a catalyst for corporate investment at all.

One major reason for the lack of effectiveness of this latest round of quantitative easing may well be a growing concern with the “fiscal cliff”, automatic US tax rises and spending cuts due to kick in on January 1. Uncertainty over “cliff risk” ”“ and the prospects of a deal in Congress on deficit reduction ”“ seems to be offsetting any positive impact of Fed policies.

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An Episcopal priest who, with her husband, brings in about $65,000 a year tells Marketplace that they are lower middle class. A woman posting at dcurbanmom.com identifies her family as middle class, and their income is $100,000 a year. CNN talks to a man struggling to save for his son’s education who defines “middle class” as families with too much to qualify for federal Pell Grants””which is at most about $48,000 for a family of three. I was eligible for Pell Grants, and before that for subsidized school lunches, but I’ve always understood my family of origin to be middle class.

A majority of Americans consider themselves middle class, a recent Pew survey found, despite a wide variance in their earnings. So what does “middle class” mean if it applies to most of the country? And if we are all middle class now, what are the political and cultural implications?

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From an interview with the authors of the Simpson-Bowles reform plan and Goldman Sachs CEO Lloyd Blankfein:

“…We just met with — a dozen of the largest high-tech company CEOs in the country. Not only are they hoarding cash. All their customers, all their suppliers are. They’re scared to death we’re going to go over this cliff and it could be a catastrophe….”

You can find a summary article to read there, it has briefer video links, but the best use of your time is to watch the full interview over here or read the transcript (about 42 1/2 minutes). Also, David Brook’s piece on the debt indulgence is worth a careful revisit.

A potentially serious complication has arisen in California’s latest effort to avoid billions in spending cuts, which threaten the state’s education and welfare systems.

Gov. Jerry Brown’s Proposition 30 intends to forestall “draconian” budget cuts by temporarily raising taxes, including sales taxes and income taxes on the wealthy. The initiative could largely determine his legacy, as well as the state’s fiscal health for at least a decade. Moreover, if successful, Prop. 30 could begin to shift the national conversation on taxes after decades of extreme antitax sentiment across the country.

Polls show that a thin majority of state voters support Prop. 30. But that support could be undercut by another proposition that aims to raise taxes for public education. Molly Munger, the millionaire behind the rival initiative, has even suggested she might start airing comparison ads arguing why voters should vote for her proposition, not Governor Brown’s Prop. 30.

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And to draw, dear reader, what I think are critical relative comparisons, look at who’s in that ring of fire alongside the U.S. There’s Japan, Greece, the U.K., Spain and France, sort of a rogues’ gallery of debtors. Look as well at which countries have their budgets and fiscal gaps under relative control ”“ Canada, Italy, Brazil, Mexico, China and a host of other developing (many not shown) as opposed to developed countries. As a rule of thumb, developing countries have less debt and more underdeveloped financial systems. The U.S. and its fellow serial abusers have been inhaling debt’s methamphetamine crystals for some time now, and kicking the habit looks incredibly difficult.

As one of the “Ring” leaders, America’s abusive tendencies can be described in more ways than an 11% fiscal gap and a $1.6 trillion current dollar hole which needs to be filled. It’s well publicized that the U.S. has $16 trillion of outstanding debt, but its future liabilities in terms of Social Security, Medicare, and Medicaid are less tangible and therefore more difficult to comprehend. Suppose, though, that when paying payroll or income taxes for any of the above benefits, American citizens were issued a bond that they could cash in when required to pay those future bills. The bond would be worth more than the taxes paid because the benefits are increasing faster than inflation. The fact is that those bonds today would total nearly $60 trillion, a disparity that is four times our publicized number of outstanding debt. We owe, in other words, not only $16 trillion in outstanding, Treasury bonds and bills, but $60 trillion more. In my example, it just so happens that the $60 trillion comes not in the form of promises to pay bonds or bills at maturity, but the present value of future Social Security benefits, Medicaid expenses and expected costs for Medicare. Altogether, that’s a whopping total of 500% of GDP, dear reader, and I’m not making it up. Kindly consult the IMF and the CBO for verification. Kindly wonder, as well, how we’re going to get out of this mess.

Please take the time to read it all and examine the chart closely. The only difference on this between Mr. Gross and myself is that I believe he understates the problem with the 60 trillion dollar figure. As has been discussed on the blog in the past, the correct figure may be as much as three plus times that amount–KSH.

According to the non-partisan Tax Policy Center, the U.S. is on the threshold of one of the largest tax increases in history, a tax hike that could average $3,500 for every American household.

Without actions from Congress, the report says taxes will go up next year by 20 percent, or $536 billion overall. It will hit Americans at every income level including those living below the poverty line. For a middle income family making $40,000 per year, the tax increase is $2,000.

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Support for Gov. Jerry Brown’s plan for billions of dollars in tax hikes on the November ballot is slipping amid public anxiety about how politicians spend money, but voters still favor the proposal, according to a new USC Dornsife/Los Angeles Times poll.

The findings suggest that voters are leery of sending more cash to Sacramento in the wake of a financial scandal at the parks department, spiraling costs for a multibillion-dollar high-speed rail project to connect Northern and Southern California and ill-timed legislative pay raises.

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An overwhelming majority of Greeks believe new austerity measures the government has promised its international lenders in exchange for more financial aid are unfair and hurt the poorest sections of society, a poll showed on Saturday.

Near-bankrupt Greece needs the European Union and International Monetary Fund’s blessing on measures worth nearly 12 billion euros ($16 billion) to unlock its next tranche of aid, without which it faces default and a potential exit from the euro zone.

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