The Fiscal Cliff

[Goatnapper'96]

e.g. history has shown a tax increase on capital gains almost always resulted in less tax revenue. It will be interesting to see if history repeats itself given that long term cap gains tax is now 23.8% (20% base + the new obamacare tax), up from 15%.

I think that capital gains needs to be significantly below the rate that the top % pays. Since most of the folks taking advantage of capital gains likely also make $450,000/yr my guess is this will not adversely impact economic growth or cap gains tax revenue. I would have preferred it stay at 15%, but IIRC Obama wanted to make it taxable at your tax rate so while not optimal this was a compromise I can live with.

[Goatnapper'96]

Hey! We can't all be plutocrats now.

With lower tax rates a good trickle down effect, YES WE CAN! Of perhaps if the Chinese continue to finance 1/3 of our spending we might not all be Plutocrats but at least we can live like it, baby!

[Goatnapper'96]

I'm betting that the revenue debate is not over by a long shot. Among other things, all itemized deductions will be looked at.

I agree, but the reality is how much more is there for the Democrats to go after? They can hit those making between $250,000 and $450,000 for more income tax revenue, I do think that part of this deal hits itemized deductions for this echelon or income, but how much more is available to the Democrats before they have to face the grim reaper of draconian cuts or losing power by taxing the middle class?

[Bo Diddley]

I agree, but the reality is how much more is there for the Democrats to go after? They can hit those making between $250,000 and $450,000 for more income tax revenue, I do think that part of this deal hits itemized deductions for this echelon or income, but how much more is available to the Democrats before they have to face the grim reaper of draconian cuts or losing power by taxing the middle class?

I think they'll push the envelope with the middle class. How far is too far? We'll see.

[Uncle Ted]

Why the left got taken to the cleaners:

Jennifer Rubin (quoting Yuval Levin in part):

I was actually surprised that the left agreed to raise income taxes only on folks earning $400K/$450K or more. This only applies to about 0.6% of the tax payers instead of 2% (with the original $200K/$250K proposal that Obama wanted).

[Goatnapper'96]

I think they'll push the envelope with the middle class. How far is too far? We'll see.

It will be hard to do with the joyous use of the word "permanent" I have heard the talking heads use. Folks will remember. I could see increasing the income tax rates for those making $250,000-450,000 but I cannot see Democrats going after the middle class right now. If they do 2016 will be a disaster for them without having the first black President on the ballot and that hanging over their head.

[Goatnapper'96]

I was actually surprised that the left agreed to raise income taxes only on folks earning $400K/$450K or more. This only applies to about 0.5% of the tax payers instead of 2% (with the original $200K/$250K proposal that Obama wanted).

I wonder if it is calculated because they know they are going to have to make drastic cuts and if they can start with $450,000 and then inch it down $100,000 each time there is another huge fight it satisifies the liberal base that more of the affluent are paying more enough to deal with the cuts that are coming. It gives the appearance that there is the ability of the US government to compromise. How much more revenue would the government get if the top tax rates were extended down to $250,000 more in revenue? I think they might double at the max. That means that with a $1 trillion dollar deficit the liberals get roughly $150 billion in new revenues. That leaves a hell of a lot of cutting until we are running a "sustainable" deficit.

[old_gregg]

i get that most people understand this in terms of marginal rate increases, but what about the deductions/exemptions that remain in place? 179 and bonus depreciation are artificial credits that every small business will (should, at least) take advantage of. what about the credit for investment in wind energy and the ridiculous nascar speedway depreciation exception? the exemptions, deductions, and credits have an impact that is as significant as a 4.6% marginal rate increase, imo, and should be a much bigger part of the tax reform discussion.

[Bo Diddley]

It will be hard to do with the joyous use of the word "permanent" I have heard the talking heads use. Folks will remember. I could see increasing the income tax rates for those making $250,000-450,000 but I cannot see Democrats going after the middle class right now. If they do 2016 will be a disaster for them without having the first black President on the ballot and that hanging over their head.

They can keep the rates permanent, but by trimming deductions, they increase revenue. This is where they will push the envelope, along with what you also suggest, moving the top tax rate down to lower income earners.

[Uncle Ted]

Wuap, looks like you will get 2% of your 5% tax increase...

According to the Associated Press, many average American workers will also be paying more in taxes. There will be a 2-percent increase in the Social Security Payroll Tax. The money will be taken right from your payroll check.

Two years ago, there was a tax cut so workers would pay less to Social Security, but on Jan. 1, 2013 that tax cut expired and Congress agreed not to make it part of fiscal cliff negotiations.

Of course, social security taxes only applies to the first $113,700 of income.

[Goatnapper'96]

They can keep the rates permanent, but by trimming deductions, they increase revenue. This is where they will push the envelope, along with what you also suggest, moving the top tax rate down to lower income earners.

I think they can look for more revenue and probably find it but my point is that if they want to be re-elected they are really close to the threshold of maximum revenues. This is the first shot fired in the oncoming war of the middle class against the poor. If Democrats want to stay in power they need the middle class.

Further, I am convinced that their desire for more revenue was motivated by envy rather than accounting practices. I am not sure many of them really have crunched the numbers and my guess is over the next two months that reality might set in. Even commies like Frank realize spending needs to be cut, I will add "significantly."

[Bo Diddley]

Wuap, looks like you will get 2% of your 5% tax increase...



Of course, social security taxes only applies to the first $113,700 of income.

I hated this move when they did it because eventually the rug would be pulled out from under everyone who didn't realize it wouldn't be permanent. People living paycheck to paycheck--and there are a lot of them in the US--will be hurt.

That said, I'm glad they did away with that "tax holiday". Since it was funded, it was essentially a spending cut.

[Goatnapper'96]

I hated this move when they did it because eventually the rug would be pulled out from under everyone who didn't realize it wouldn't be permanent. People living paycheck to paycheck--and there are a lot of them in the US--will be hurt.

That said, I'm glad they did away with that "tax holiday". Since it was funded, it was essentially a spending cut.

I agree Republicans fended off this effort to turn SS into a progressive entitlement rather than a government administered pension fund. Obviously since other than us Mormons the rest of the US has ignored the first, or the 2nd who can keep up?, great commandment given to Mother Eve and Father Adam, and to be honest even some of our fellow children of the birthright are slowing down on babymaking, it is likely to move towards a progressive entitlement lest we hear the howls of Robin Finderson about how much old people dislike Gravy Train, but at least it will be on Republican terms and hopefully much more sustainable.

[byu71]

Wuap, looks like you will get 2% of your 5% tax increase...



Of course, social security taxes only applies to the first $113,700 of income.

I wish someone at a news conference would ask Obama, what exactly is the payroll tax. Are people paying into it for the right to have some kind of retirement income or is this truly a tax like a poll tax, gas tax, cigarette tax. It sure as hell isn't an "income tax" because the money doesn't go into a general fund.

Please don't anyone show their ignorance by saying it does go into a general fund. When it comes to discussing these matters, it is really astonishing how many of you clearly intelligent people have your heads firmly entrenched up your butt.

[byu71]

Is anyone is going to argue with me that if Obama gets his way with further increase in taxes and his level of spending cuts coupled with government "investments", when his term ends the spread between the rich and middle class will be even greater.

Also I can't believe no one took a shot at my question of, if we took all the wealth and divided amongst the whole population, how many years before we would have people bitching about unfairness and the rich. I put, 50,100,150 and 200 as choices. Most of the answers around the office was 20 years.