President Obama and congressional Republicans agreed Monday to a tentative deal that would extend for two years all the Bush-era income tax breaks set to expire on Dec. 31, continue unemployment benefits for an additional 13 months and cut payroll taxes for workers to encourage employers to start hiring.
The deal has been in the works for more than a week and represents a concession by Obama to political reality: Democrats don’t have the votes in Congress to extend only the expiring income tax breaks that benefit the middle class. The White House estimates that the proposed agreement would prevent typical families from facing annual tax increases of about $3,000, starting Jan. 1.
So much for making the national debt top priority. Looks like business as usual to me. The Dems will get unfunded billions for the unemployed and the GOP will get unfunded tax cuts, including billions for Wall Street bankers. Meanwhile the rest of us will get the bill…
And the due date on that bill is closer than people think.
That’s right, Ad orientem. You can’t have both tax cuts and deficit reduction, while fighting two wars. But at least the money going to the unemployed will allow them to continue spending, and will reduce their misery until businesses start spending.
I would add a caution. The legislation purports to “cut payroll taxes by 2 percent for every American worker through the end of next year.” I don’t believe this to be the case. What they are doing is lowering the payroll tax withheld. The amount of tax that will be ultimately paid by the tax payer will remain the same. Only in the cloud coo-coo land of Washington DC could a reduction in withholding be touted as a tax cut. And heaven forbid the press accurately report this.
#3 Aren’t payroll taxes different than other sorts of taxes? Link please!
RE: “You can’t have both tax cuts and deficit reduction, while fighting two wars.”
Sure you can. Put me and Bart and Matt and any other constitutional conservative in the same room and I can guarantee it.
So far what we have is a redo of the usual divide between the conservatives and the libs.
The conservatives want to allow more people to keep more of their money. The libs want the State to be able to spend more money.
That’s why we need to keep our eye on the prize. We had a great election in November — need a great one two years from now too so that we can weed out yet more people who have the same foundational worldview as John Wilkins, and put in yet more constitutional conservatives.
The conservatives
[blockquote]The deal includes the temporary two percentage-point reduction in the payroll tax to replace Obama’s “making work pay” tax credit from the 2009 economic stimulus package for lower-income Americans. An administration source familiar with the talks said the one-year reduction of the payroll tax would bring savings of about $1,000 for someone making $50,000.[/blockquote]
http://www.cnn.com/2010/POLITICS/12/06/obama.taxes.debates/index.html?hpt=C1§ion=money_topstories
A payroll tax is defined as:
[blockquote]Payroll tax generally refers to two different kinds of similar taxes. The first kind is a tax that employers are required to withhold from employees’ wages, also known as withholding tax, pay-as-you-earn tax (PAYE), or pay-as-you-go tax (PAYG). The second kind is a tax that is paid from the employer’s own funds and that is directly related to employing a worker, which can consist of a fixed charge or be proportionally linked to an employee’s pay.[/blockquote] http://en.wikipedia.org/wiki/Payroll_tax
So the question is whether the actual tax rates are going to be reduced so that less tax actually owed by the tax payer or the amount withheld is going to be lowered so that less is taken out of the taxpayer’s paycheck, but the total amount is still due at tax time. The news articles are not entirely clear as to what is going on.
I remember to well Lyndon Johnson gave a “tax cut” and that was how it was touted. In reality only the withholding was lowered which I found out when I had to pay a substantial tax bill later because I was under withheld.
I might add that withholding is pre-payment of your income and social security/medicare taxes.
They did this trick a couple of years ago. They reduced the witholding so that people got more cash in their weekly paycheck, but the tax was still due the following April 15th. The idea was that it would stimulate the economy by injecting more money into the economy because people would spend the extra they received. I believe that a bunch of folks had an unexpectedly high tax bill the following year and not enough withheld to pay it. When they did this last time, I manually increased my withholding to compensate and didn’t get stuck having to pay my taxes with not enough withheld.
If this is what they are actually doing, it is a dirty trick on the working class.
If it is an honest to goodness tax cut, I wish it were connected to meaningful spending cuts.
Br. Micheal, my understanding (based on radio reports this morning) is that the actualy tax has been reduced by 2% next year. I haven’t heard anyone suggest is it just the withholding.
Unfunded unemployment benefits are rejected because they increase the deficit, but unfunded tax breaks to the richest 2% of Americans are okay. Except, as a compromise, we’ll also allow the unfunded benefits. Great job – we get to increase the deficit *and* reward Wall Street millionaires for it.
We’re also rewarding many small businesses, Scott, who have been leery of hiring because they had no idea of the tax consequences for next year – businesses that would have been extremely hard hit by an increase in the tax rate. All we’re doing is keeping the same tax rates we’ve had for the past 10 years – only to Dems would that be a tax “cut.”
RE: “reward Wall Street millionaires . . . ”
Yeh — that’s the ticket.
Branford, it’s just hopeless. I’m now convinced that the folks who talk that way are people who don’t and have never worked at a small business or owned one.
And that means that all we’re talking about, of course, is rewarding “Wall Street millionaires.”
Besides all that, there is, of course, the notion that taking money away from individuals to spend on what they see fit and giving it to a giant bureaucratic maw to redistribute — at pennies on the dollar in efficiency — to those whom the maw deems more worthy.
I’m a low-income person myself — and ABSOLUTELY THRILLED that “Wall Street millionaires” et al will get to keep more of their own money rather than surrender it to The Great Masticating Maw.
So what happens when big “Wall Street” millionares get to keep more of their money? I believe Fortune Magazine answered that a few years ago: buy 2nd & 3rd big houses, buy big yachts, buy new expensive cars, buy an airplane or two, take some expensive trips and eat out in some expensive places. That’s great news for the people who build the houses, yachts, cars, airplanes and work in the service industries. Those folks then go out and buy things and the people who make those things get paid and they buy things……..and on, and on, and on.
And that Ladies and Gents is how wealth is created. It’s not created by Government, the Fed, and certainly not by Barack Obama.
The best explanation I ever saw of “stimulus spending” was of the guy who filled a bucket with water from one end of the swimming pool and ran like mad, spilling water left and right, to pour it in the other end…..and then wondered why the pool level kept falling.
So there’s no difference between personal income tax and small business taxes? Seven figure income bonuses are essential to small business? Okay.
For the record, I work for an $11 billion company that, somewhat ironically, is more successful when middle- and low-income people have less money to spend. But I still believe it’s scandal that we’d rather main low taxes on the wealthy (during a time of massive deficit) than to provide benefits for folks who have lost their jobs and homes thanks to unemployment and the housing bubble, while the top 2% of income earners whine that their tax cuts were going to expire exactly when they were designed to ten years ago when they were passed.
NO! NO! NO! None zero zippo new tax breaks or spending of ANY KIND that is not FULLY PAID FOR upfront! NO MORE DEBT! We are committing national suicide. This must stop. And it must stop now. If and only if the unemployment benefits and or tax cuts are 100% paid for then fine… otherwise forget it. Not one penny in new debt!
Show me the money.
Well, yes – if this were a tyranny, and a handful of people were in charge so that they could do what they wanted, yes, they could do things differently. However, the constitution has a separation of powers which include lots of different checks and balances. Clearly, there are smart people who would consider themselves “constitutionalists” who think differently than those who consider themselves “conservatives” – who imply they have the only legitimate interpretation of the constitution.
I could also reduce the deficit pretty miraculously.
I do agree with the idea that since 1980, the Republicans of the more conservative stripe have done their best to ensure that the government works poorly. Those of us who were part of the dying breed of “good government” Rockerfeller Republicans found ourselves crowded out.
#12 Captain Lawrence – you’re talking about the multiplier effect and you’re right.
But people who get paychecks from the government; who are consumers; who work in construction; in factories; and in all sorts of middle class jobs also buy things. They buy houses and christmas gifts and shoes. The problem is that after $250,000, the rich tend to save and put the money away. How many yachts can one have? How many houses can a rich person buy?
The multiplier effect is certainly true. The problem, however, is how do you disincentivize the tendency to hoard in periods of instability, when businesses are not confident. If the rich decided that it was their obligation to start hiring people – that would be one thing. A rich businessman making shoes won’t buy another yacht until people are buying his product. And if people are unemployed, getting fired from their jobs, they’re not going to buy shoes.
On myth is that higher taxes on the rich means they would have less of an incentive to produce. If that were truly the case, then businessmen would have stopped producing when Eisenhower was president. They also would have stopped producing after Bush’s tax increase in 1990 and Clinton’s tax increase in 1994. Instead we saw the opposite. Some tax increases force businesses to reinvest in their company rather than save or issue dividends. It forces them to buy, and stop hoarding and saving. And when they buy from other businesses, they help other businesses, who hire. They hire consumers. Who buy from businesses. And when people are employed they pay taxes, which reduces the deficit.
Let’s be clear: small businesses (under 1 million dollars profit a year), are a little different than banks giving out bonuses for half a million. Taxing bankers also incentivizes people to enter into other important professions, and it disincentivizes greed.
The multiplier effect doesn’t work just for the rich. It works also for all consumers who buy the products the “producers” make. But without consumers, producers won’t make at all. And they’ll just hoard until they think things will get better.
I’m with you Sarah. In addition, to me it’s a matter fairness. If the tax cuts are to made available, they should be available to all taxpayers, not just those at the lower end and middle. I don’t have to like the “Wall Street Bankers” but it’s simply not fair to treat them differently than the rest of us when it comes to taxing our income.
Well, first of all there is no tax cut. It’s maintaining the status quo. Secondly I have been burned once and avoided the second withholding scam. I’ll wait to see what this is and I have zero confidence in the press to report it accurately.
As far a “checks and balances” the progressives have gutted the constitution so that is largely meaningless. The Feds don’t enforce the immigration laws and have expanded the commerce clause to make a mockery of any pretense that the Federal Government is one of limited powers. Obama rules by executive order and the Federal agencies rule by regulation where there is no enabling legislation.
Scott, you say “So there’s no difference between personal income tax and small business taxes?” Many, many small businesses are NOT incorporated – they are partnerships or sole proprietorships so that the small business tax IS the personal tax. A look at the tax code might be helpful.
Br. Michael – I’m not sure how the progressives have gutted the constitution. Although I’m sure you have the talents of a judge (most of the federal ones had been appointed by Republicans), I wonder why most of them don’t throw out progressive laws.
As far as Obama ruling by executive order – I wish he did more of that (and I expect he’ll do more). But if you want to really talk about executive order, you might want to analyze his predecessor’s tendencies – who’d simply cross out parts of legislation he didn’t like. I, like others, think Obama might be less executive heavy when it comes to, for example, the “war” on terror. But as it is, he seems to be far too eager to do what the Republicans say, even though it’s in their political interest to oppose ANY legislation he suggests.
Sometimes I wish you’d give some documentation, Br. Michael, and some notes of comparison. As far as Obama being an executive, well – he IS the president of our country.
It’s interesting the use of the word “hoarding” as far as what the “rich” do with their money. I don’t know if it is intentional or not in this thread of posts, but the word “hoarding” is probably going to start showing up more and more. People who store food will be accused of hoarding, people who save money or gold are being accused of hoarding. In the “old days” we use to refer to holding on to one’s money as saving it, but since that is not a Progressive virtue, now we have to demonize it.
What have Progressives done to the Constitution? Just look at what they have done to the country. To ask that question almost seems a little arrogant or condescending: after all the record, of Wilson, Teddy Roosevelt, FDR, LBJ, Carter, and Bush I, Clinton, and Bush II are plainly laid out in history.
The hangover of all their “accomplishments” is an octopus Federal Government that has grown to the point that there is not any issue it won’t insert itself into. I believe recently there was even a legislative push to control the volume of commercials on TV.
And let’s by all means encourage the President (not that any encouragement is needed) to issue more and more executive fiats. At some point the legislative branch will be irrelevent and can go home. Then we will have a dear leader just like Cuba, North Korea, and the former Soviet Union. Haven’t those situations worked all well for the countless millions of malcontents who have died in front of the killing squads?
As 20 says this transcends party. Both are equally guilty and both are leading this country into dictatorship. And the judiciary has been a willing accomplice ever since FDR tried to pack the Court. And the first lady wants the government to regulate high school bake sales!
Capn Deacon,
There’s a difference between hoarding and saving. Saving implies that there is an end product – it’s rarely for its own sake. I save for a trip to Tuscany, or for a rainy day. Hoarding is just because I like to count my money.
If, for example, a wealthy person in a town decided to buy all the food in all the supermarkets. They have the money, and it is their right to spend their money as they choose. They put it in a bunker for their own sake. Whenever the local farmer comes to town, he buys all the food- because he can, and he is worried about not having food himself. When others come knocking, he blames them for being lazy. Do we approve of such a person?
I can make a list of things progressives worked for.
They ended the trusts.
They implemented important regulations (think Triangle Fire) and meat packing;
They helped make sure working men could have jobs with which they could support a family;
They created rural electrification, among other things.
Of course, there was a time when there were also progressives in the Republican party.
And they prosecuted a farmer for growing his own wheat to feed his own family.
One more comment: there are still Progressives in the Republican Party. Too many in fact.
I read what Sarah has to say and think of the professional athletes who make, in one year, more money than most of us put together in a lifetime. Playing a game, mind you. And shall the tax “plan” favor them who have more money that entire towns? The tax break favors the very rich, an enormous tax loss to the government, and no vital loss to them. In the meantime, I cannot get a COLA on my little social security payment. And I live at the bottom end of the money scale. All I do is grow food. This is wise social policy how? Larry
Since the fall of the Soviet Union and the vast 100,000,000 million democide of the last century committed by socialists, I prefer to think of them as “Regressives” because that is what they want…to regress toward socialism with its myriad and murderous faults. Socialism is failed. We need to find the right balance for Capitalism. Clearly, we can no longer allow the foxes to watch the hen house, as happened on Wall Street. I think the direction that meaningful reform should take is a diligent prosecution of fraud, insider trading, etc. with severe, perhaps draconian penalties for such crimes. Perhaps such crimes, since they involve tens of thousands of investor victims, if not millions, and have such devastating consequences for national security, should be treated as crimes against humanity with penalties as severe as death for bilking people out of their life savings. Folks that are willing to rob senior citizens of their nest egg and deprive them of a secure retirement are wicked and should be punished commensurately. As it stands now, moral hazard as been all but removed from the system, too. We need to erase “too big to fail” from our vocabularies. That is corporate socialism and it is even more wicked than common Wall Street fraud, because it uses the coercive power of the government’s hired guns to enforce the theft from the citizenry. I don’t believe that any of this would be possible if we followed the US constitution and used a hard currency, quit playing king maker, quit playing nation builder, and quit trying to equalize outcomes for individuals…and started protecting citizens from the criminals in suits.
#26 Sick and tired – I think you’re confusing Stalinists with socialists. Stalin purged his own party of socialists pretty early on. In the Night of the Long Knives, the Nazis got rid of most of their socialists.
Do you mean socialists like Tony Blair or Willy Brandt? Olaf Plame? Or Ben-Gurion and Golda Meir?
But I do believe you’re right – we do have socialism for the rich. there are, of course, a wide variety of socialisms. Not that we have much to worry about. The government owns perhaps about 2% of the entire economy.
Stalinists and nazis are just the extreme end of the socialist spectrum. Murder, slavery, and misery are part of the DNA of socialism…they just don’t usually manifest themselves early on. One month pregnant is still pregnant, while 9 months pregnant still has not given birth.
Is that a lot like how slavery is an extreme end of the capitalist spectrum?
I suppose you’re waiting for all those Canadians, Finns, Belgians and Danes to demonstrate how miserable they are? Interesting.
Well, given the amount of poverty in those American states most enamored of whatever they call the “free market” more power to them. Seems as though Europe has a lot more social mobility and freedom than lots of Americans do.
However, if misery, slavery and murder are a part of a socialist DNA, then why would anyone be one? Perhaps every person who is employed by the state – teachers, policemen, firefighters, etc – has some socialist DNA in them, as they are sucking off the hard work of others. And secretly, they seek the enslavement of others.
It’s an interesting worldview.
[i]Seems as though Europe has a lot more social mobility and freedom than lots of Americans do. [/i]
Wonder what that would look like if Americans had not saved their butts in WWI, WWII, and held their hands via NATO to this day?
I note that in all of this back and forth everyone is ignoring the elephant in the living room. WE ARE BROKE! We can’t afford these tax cuts or anymore spending on unemployment or anything else. All through the election the Tea Party people screamed about the debt. Now however that topic is conveniently (yet again) shunted off for another day as the same old Washington game is played. Live for today and let someone else worry about the bill later on.
ENOUGH!
NO MORE DEBT! NOT ONE CENT! NO TAX CUTS FOR ANYONE! NO MORE BENEFITS FOR ANYONE! STOP THE MADNESS!
If you want tax cuts or unemployment benefits or to send people into space or to do anything at all… then show me the money or go away!
Actually, what I said was:
[blockquote]
If it is an honest to goodness tax cut, [b] I wish it were connected to meaningful spending cuts. [/b][/blockquote]
#31, let’s make sure we are on the same page here: there are no tax cuts being debated in Congress. What is being debated is maintainence of the current tax rates for everyone. If these are not maintained, the thinking is that pulling so much new money out of everyone’s hands will lead to a further decline in consumer and business spending which will almost certainly lead us into another recession. Then you will see deficits soar as our spend-forward Government tries to “jump start” the economy it just killed for the second time.
As has been demonstrated many times high rates of taxation do not produce correspondingly high rates of revenue because everyone who can goes into avoidance behavior. None other than Barack Obama now understands that as he tries to find a politically covered way not to raise the rates. A shame it took him so long to see the light.
Re #34
Capt Warren
What is being debated are unfunded tax cuts and additional unfunded spending. The Bush tax cuts were not permanent nor were they intended to be. Next years tax rates are set. What is being attempted is to lower them. We can play all the word games we want but they are not paid for. They in combination with the massive spending will add another $1 Trillion to the national debt which is already unsustainable.
Nor am I a fan of the keep cutting taxes and revenue will increase theory. That is nonsense. People need to stop drinking Grover Norquist’s Kool-Aid. If this were true we could just abolish all taxes and the national debt would magically disappear. Our tax rates are among the lowest in the industrialized world. I don’t like taxes, but I loathe debt.
NO MORE DEBT! NOT ONE DIME! NO UNFUNDED SPENDING AND NO UNFUNDED TAX CUTS!
If you want tax cuts fine. But first pay for them and pay off the national debt. All of these tax cuts are going to add to the national debt. That means money that I will owe. Money that has to be paid back with interest.
I FORBID ANYONE TO BORROW ANYMORE MONEY EITHER THROUGH TAX CUTS OR ADDED SPENDING THAT I WILL BE LIABLE TO REPAY ANY PART OF! THIS MADNESS STOPS NOW!
Again, there are no tax cuts being debated. The question is whether we continue today’s rates or let them rise.
Arthur Laffler never advocated zero taxes and he never claimed that tax revenues always go up if tax rates go down. What he explained is that beyond a certain level of tax rate, the next incremental increase produces no new revenue. And beyond that incremental increase total revenue will decline. We saw this in the 1920’s, 1960’s and in the 1980’s.
But beyond that symantic issue, what about our Constitutional respect for property rights? From a Constitutional or moral viewpoint, what gives the Government the right to confiscate private property so as to turn around and hand it to someone else? What word should we use to describe that besides, “stealing”? The current tax rates are not unfunded deficit spending. The deficits illustrate that Government spending is higher than what the people have assented to, through the taxes they pay. We could make the deficit issue disappear with one policy change in Washington and clear up the moral issue of Government sanctioned stealing. And that policy change would be to have the Federal Government only involved in those things delegated to it by the Constitution of the United States.
If anyone here feels undertaxed, I just saw the other day that you can actually send additional money to the IRS as a gift to the Federal Government