The Demise of the United States is Inevitable

[jasetaro]

Well, talk to Warren Buffet about his crazy idea then.
I roughly calculated that the US has dropped 660 Billion in taxes since 2000.
The revenues have to come from somewhere.

My other reply to your idea is that if raising taxes for billionaires won't help alot, then raise the taxes higher than that !

Ok, lets backup a second, first there's a couple important flaws in Mr. Buffett's numbers that need to be pointed out:

1. When Buffett receives dividends and capital gains, it is true that he pays “only” 15 percent of that money on his tax return. But dividends and capital gains are both forms of double taxation. So if he wants honest effective tax rate numbers, he needs to show the 35 percent corporate tax rate.

Moreover, as I noted in a previous post, Buffett completely ignores the impact of the death tax, which will result in the federal government seizing 45 percent of his assets. To be sure, Buffett may be engaging in clever tax planning, so it is hard to know the impact on his effective tax rate, but it will be signficant.

2. Buffett also mischaracterizes the impact of the Social Security payroll tax, which is dedicated for a specific purpose. The law only imposes that tax on income up to about $107,000 per year because the tax is designed so that people “earn” a corresponding retirement benefit (which actually is tilted in favor of low-income workers).

Imposing the tax on multi-millionaire income, however, would mean sending rich people giant checks from Social Security when they retire. But nobody thinks that’s a good idea. Or you could apply the payroll tax to all income and not pay any additional benefits. But this would turn Social Security from an “earned benefit” to a redistribution program, which also is widely rejected (though the left has been warming to the idea in recent years because their hunger for more tax revenue is greater than their support for Social Security).

Second, the kind of class-warfare taxes Mr. Buffett is advocating are, at the very least, misguided:

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Third, he's just wrong, Stephen Moore explained why in The Wall Street Journal a few weeks ago:

I don't know the details of Warren Buffet's personal taxes, and he hasn't made them public. But the IRS does provide reliable data on effective tax rates—the overall share of their income that various groups pay in federal income taxes (not including state or local taxes) after accounting for all deductions and exemptions. These are different than marginal tax rates, which are paid on the next dollar of income and now peak at 35% for individuals.

IRS data for 2008, for example, show that households in the top 10% of earners (above about $114,000) paid 19% of their income to the feds. Those in the top 1% (above $380,000) paid 23.3%. The top 0.1% of earners, with incomes of $2 million or more, end up paying a slightly lower tax of 22.7%, because they get more of their income from investments (more about this below).

So what about the rest of us? According to IRS data, a median-income household ($35,000) in 2008 paid about 4% of its income in federal income tax.

Fourth, I've pointed this out once before, but it's worth repeating: Even if we confiscated all the assets of this nations 400 or so billionaires, it wouldn't even cover this years budget deficit much less make dent in the debt.

Finally, If Mr. Buffett was really serious about paying higher taxes he could just write a check... And he probably wouldn't have put the bulk of his wealth into tax sheltered foundations to avoid estate taxes.

I'm not saying we shouldn't look at the revenue side, what I am saying have to do it a comprehensive way the a) broadens the tax base and b) flattens rates... There just aren't a enough rich people that can be taxed at a high enough rate to make a difference. Grant point out a one of the potential flaws in flat tax system, so adopting a 3 tiered system like the one proposed by Robert Samuelson's might be the most practical approach:

Lower income tax rates by reducing tax breaks — and make the system more progressive.The idea: Spur economic growth. There should be three rates — 10 percent, 20 percent and 30 percent. Capital gains (profits on sales of stocks and other assets) should be taxed at ordinary income rates, not at today’s top rate of 15 percent. This low rate is the biggest tax break for the rich; two-thirds of capital gains go to the wealthiest 1 percent. The overhaul should be revenue neutral; all money from ending tax breaks should go to lower rates.

And I know this goes with out saying, we're still going to have to cut spending... The real solution here is economic expansion coupled with fiscal discipline. One of the problems with this whole debate is something that isn't well understood by most people... Because of baseline budgeting the federal budget automatically increases every year. What Congress does is use a bit of smoke and mirrors to make spending cuts that aren’t really cuts at all. For example if program or agency is scheduled to receive an 8% increasing in spending Congress will reduce that increase to 3% and call it a cut 5% spending cut. When in reality it’s still a 3% percent increase over the previous years budget.

 

[grant sarver]

While I take exception with some of your source material, I can agree with much of it. Especially when you avoid the divisive epithets that others seem to favor. Blaming the #$@& liberals or the ?$%&# conservatives only further divides us at a time when we need to work in "common cause". You'd be surprised how many board rooms are evenly split (left and right) and it's considered a strength, not a weakness. Boards understand "common cause".

In the seventies we had "long-term" and "short-term" capital gains. Speculators were punished with a full tax and investors were rewarded with a lower rate. This added to the stability in the markets. We also had the 10% investment tax credit. Some ideas that should be revisited.

 

[SchmitzIT]

The main issue I see with politics everywhere is that very few are thinking long-term. It's all about the short term; the next elections. Screw the country/population in 5/10/15/20 years.

 

[Forsaken]

The main issue I see with politics everywhere is that very few are thinking long-term. It's all about the short term; the next elections. Screw the country/population in 5/10/15/20 years.

I seriously thought the issue with politics were the politicians...

 

[Carlos]

I seriously thought the issue with politics were the politicians...

Actually, if you read the comment that Schmit posted... he's agreeing with you.

I think that most politicians don't really look into the future - always present, and that IS a political problem.

I said it before, and I'll say it again: Nobody other than Obama is doing anything about it.

 

[SchmitzIT]

I said it before, and I'll say it again: Nobody other than Obama is doing anything about it.

Obama's "solutions" are either throwing more money into something, or growing the government more. That's actually about as short-term as one could get. In this case, I would say the Tea Party, as cooky as some of their ideas are, are right, when it comes to the fiscal aspects.

For the long term, the only solution is to decrease spending.

 

[Fufu]

Obama's "solutions" are either throwing more money into something, or growing the government more. That's actually about as short-term as one could get. In this case, I would say the Tea Party, as cooky as some of their ideas are, are right, when it comes to the fiscal aspects.

For the long term, the only solution is to decrease spending.

What would the US decrease spending on that would not start a flame-war among citizens?

 

[SchmitzIT]

What would the US decrease spending on that would not start a flame-war among citizens?

Beats me. Hence I'm not a politician.

Cutting costs across the whole spectrum would seem to be the way to go. The same is happening pretty much everywhere.

 

[Anthony Parsons]

The main issue I see with politics everywhere is that very few are thinking long-term. It's all about the short term; the next elections. Screw the country/population in 5/10/15/20 years.

Yep... some Australian cities are now experiencing this exact issue with infrastructure as a result. Promises at election time... then little to no action, distraction or even completely off-topic projects that are reactive, not proactive.

The El Niño & La Niña effects. We were in the hot effect, drought, etc... so they reacted with billions invested into desalinisation plants, and now with the normal weather patterns, the effect has switched and suddenly Australia is flooded, literally, with water... so now consumers pay the costs in increased prices for the wrong infrastructure that can be avoided by listening to scientists with the facts and a little preparation. Instead, for a decade you now pay for a plant to do little to nothing, then the next decade it will do some work, as weather pattern effects change.

Point is... reactive vs. proactive. Noting that these states that entered this, had the Labor party in at the time, and they are a reactive Government which do immense damage vs. the Coalition Government which are proactive, but then that pisses people off when they see them cutting something now, or implementing now, because they are looking forward... so those who can't look forward crack it.

Its a lose lose mentality IMO. It all comes back to politics and who can spin the most BS to the public and get away with it.

 

[Peggy]

What would the US decrease spending on that would not start a flame-war among citizens?

Government and their excessive spending habits.
Oh, here' s novel idea.... their own salaries. And why not? They sure have cut ours. It's time for them to taste their own medicine.
It'll never happen tho.

 

[Peggy]

Its a lose lose mentality IMO. It all comes back to politics and who can spin the most BS to the public and get away with it.

There ya go.

 

[EQnoble]

There ya go.

Politics is like a game of holdem, it's about bs and who has cash to throw on the table to back said bs.

 

[Digital Doctor]

Ditch the President ?

Does America need a prime minister?
By Fareed Zakaria, CNN
After the S&P downgrade of the United States, no country with a presidential system has a triple-A rating from all three major ratings agencies. Only countries with parliamentary systems have that honor (with the possible exception of France, which has a parliament and prime minister as well as an empowered president).

More...

 

[Digital Doctor]

I've found where the taxes need increasing.

 

[Digital Doctor]

USA. USA. USA.
Congrats on coming in 64th income equality.

 

[Digital Doctor]

World of Class Warfare - Warren Buffett vs. Wealthy Conservatives
http://www.thedailyshow.com/watch/t...fett-vs--wealthy-conservatives?xrs=share_copy

 

[Digital Doctor]

Looks like it'll take 10 years to get the AAA rating back.

United States Debt/GDP ratio:
now - 74%
2015 - 81%
2021 - 85%

Hmmm ... not so good.

 

[jasetaro]

I've found where the taxes need increasing.
View attachment 17897

This is getting tiring... No you haven't, you just keep regurgitating the same "we need to raise taxes on the rich" argument that's been shot down every time you trot it out.

According to the IRS, in 2007, the top 1% of earners (those with an adjusted gross income of $410,096 and up) paid 40.42% of the total federal income tax bill. The top 5% (those with an adjusted gross income of $$160,041 and up) paid 60.63% of the total federal income tax bill.

Anyway, here's an interesting chart from the Wall Street Journal editorial titled "Millionaires Go Missing" that should help put things in to perspective:

In 2007, 390,000 tax filers reported adjusted gross income of $1 million or more and paid $309 billion in taxes. In 2009, there were only 237,000 such filers, a decline of 39%. Almost four of 10 millionaires vanished in two years, and the total taxes they paid in 2009 declined to $178 billion, a drop of 42%.

Those with $10 million or more in reported income fell to 8,274 from 18,394 in 2007, a 55% drop. As a result, their tax payments tanked by 51%. These disappearing millionaires go a long way toward explaining why federal tax revenues have sunk to 15% of GDP in recent years. The loss of millionaires accounts for at least $130 billion of the higher federal budget deficit in 2009. If Warren Buffett wants to reduce the deficit, he should encourage policies to create more millionaires, not campaign to tax them more.

The millionaires who are left still pay a mountain of tax. Those who make $1 million accounted for about 0.2% of all tax returns but paid 20.4% of income taxes in 2009. Those with adjusted gross income above $200,000 a year were just under 3% of tax filers but paid 50.1% of the $866 billion in total personal income taxes. This means the top 3% paid more than the bottom 97%. Yet the 3% are the people that President Obama claims don't pay their fair share. Before the recession, the $200,000 income group paid 54.5% of the income tax.

There simply aren't a enough rich taxpayers that can be taxed at a high enough rate to make a difference. We have to cut spending and broaden the the tax base... in other words, we need more people paying taxes -- we can't keep trying to shift the more and more of the burden onto a very small minority of taxpayers. The numbers just don't work.

 

[jadmperry]

The only things important about a downgrade in rating for the US is whether investors will stop buying our debt and the cost of that debt. So far, regardless of the downgrade, investors are pouring into US Treasuries and doing so at a lesser cost to the US than before the downgrade.

(Note, that I think there may be some downstream consequences for the debt of individual states or localities issuing debt/notes...this is not insignificant- but it does not address directly the issue of the "creditworthiness" of the US).

I am not saying we (the US) are in great shape. I am saying that the market thinks we are the best bet in town.

(Though, for growth, Brazil is on fire).

 

[jadmperry]

This is getting tiring... No you haven't, you just keep regurgitating the same "we need to raise taxes on the rich" argument that's been shot down every time you trot it out.

According to the IRS, in 2007, the top 1% of earners (those with an adjusted gross income of $410,096 and up) paid 40.42% of the total federal income tax bill. The top 5% (those with an adjusted gross income of $$160,041 and up) paid 60.63% of the total federal income tax bill.

Anyway, here's an interesting chart from the Wall Street Journal editorial titled "Millionaires Go Missing" that should help put things in to perspective:
View attachment 17901

There simply aren't a enough rich taxpayers that can be taxed at a high enough rate to make a difference. We have to cut spending and broaden the the tax base... in other words, we need more people paying taxes -- we can't keep trying to shift the more and more of the burden onto a very small minority of taxpayers. The numbers just don't work.

Problem with the figures is that it takes into account the revenues during the worst economic crisis since the Great Depression. (Plus, I am not sure that the tax code changes in the differing years are accurately controlled for...not saying that this is an apple and oranges comparison...maybe a "Granny Smith" and "MacIntosh Apple" comparison). As President Clinton's presidency demonstrated, if the economy grows, so will revenue...to me, this means that the focus should be on job creation. If we can crack that nut, then the underlying assumptions would all change....(Forgive the excessive use of ellipses...ah, hell, it's late, you get the idea).

In addition, I think that you have to look at corporate taxation reform to get a whole picture.

But, yes, expenditures must be looked at, too...my point is not to disagree, just to say that revenues are part of the solution and that if we could get jobs growing, we would be in a much better place to solve our problems.