Bill Clinton: More immigrants and value-added tax will reduce deficit

[antagon]

there couldn't be a VAT like europe's in the US, whatsoever.

 

[American Horse]

<SNIP>
To american horse, salient points, but again the story isn't complete there. Oftentimes the underlying issues (unsound economic fundamentals, recessions, economic security dilemmas between members) are what caused EU members to raise the VAT rate, not the other way around.

For instance, i know norway has one of the highest rates if i remember right and they have more GDP per capita than us and have for quite some time. Add to the fact that they also benefit from health care and free public education and I'd have to disagree that a vat tax MUST be negative.

Also, it's not always true they get raised. I'm thinking about Luxembourg specifically, which also has a higher GDP per capita than us and maintains a pretty low VAT tax.

greece's issues aren't just its vat taxes, most of the European's economic policy issues aren't just taxation, they are just a part of it. It's always dangerous to try to blame ONE issue on such a comprehensive problem, because then it causes us to lose focus or possibly exclude other more important factors.

Norway is an outlier in a number of ways. What is possible and efficacious in Norway may be very different from the rest of Europe or America. Norway is very sparsely populated, at less than 5-million. They have a strong industrial base left over from WWII.

The sparseness of their population makes them more like a smaller Canada, and less European in nature than probably any other country. Canada is at least one state (not European) that, after introducing a VAT reduced the rate rather than increased it. But Canada is in a good position to benefit from its proximity to the US, and more than Europe shares America&#8217;s social attitudes about independence. Like Canada, Norway is rich in natural resources one of which is its maritime tradition because of its vast seacoast making heavy transportation efficient for its industrial base. Norway is the worlds 5th largest oil exporter, with petroleum accounting for one quarter of its GDP.

Norway has approximately $400 billion dollars (USD) in its government pension fund, for example. A dense population is usually an urban population, with all the social problems inherent in that. A sparse population has a wholly different social attitude about responsibility interdependence in social relationships; I would suggest it makes citizens more responsible to each other, and interdependent, more like Alaska, say than Italy. Remember Alaska&#8217;s sharing of the wealth from oil resources?
Furthermore, for similar reasons we are not Luxembourg.

Your are right, a VAT tax need not always be negative, but it is helpful for us to look around and see where it, as a tax of what should be last resort, may have enabled excessive government spending as compared to the ability of the population to pay those taxes, and what incentives economic social polices have on those who create wealth and jobs, versus those who only enjoy the transfer of wealth, while being hurt by loss of jobs and opportunities, beyond finding a government sinecure.

I personally believe that Europe, with its imbedded bureaucracies going back centuries, is better fitted to manage government services to the citizenry than is the US, which bodes ill for the US with the passage of a VAT. Where their bureaucrats are drawn from a class long used to public service, ours are drawn from a base of political elites and opportunistic thugs.

Any expansion of the bureaus in the US is seen by the political class (and that class is exclusively one party, the party-of-government) as a new avenue to power and employment for their minions to be parked when electively out of power. For instance exactly why we see an inability of our political class writing legislation to deal with recent financial/economic failures, completely ignore the primary impetus of that failure, the GSEs Fanny Mae and Freddy Mac. Why might they be seen as being beyond any sort of finding of blame by their most ardent supporters? Because the Party-Of-Government uses those agencies to park both its up-and-comers and its temporarily failed politicos who have fallen out of power to reap financial benefits there so they can store up wealth for better opportunities, when they eventually arise.

Of course, as you say, Greece&#8217;s issues aren&#8217;t just VAT taxes, but where it is excessive it is symptomatic of underlying problems; especially because it is too much a &#8220;hidden&#8221; taxation which enable a system that transfers more and more of the citizens onto some sort of government subsidy or sinecure until there simply are no more sources of new revenue.

It&#8217;s important for Americans considering recent events to FOCUS, but not to exclude other important interrelated factors such as healthcare/financial/economic/illegal immigration.

 

[Foxfyre]

We could have more tax payers, as Bill Clinton suggests, if we somehow got that 49% of the population who pays no taxes to begin to pay taxes. Who knows, if that same 49% of the population that pays no taxes began to pay taxes, maybe, just maybe, our taxes could actually go down or because Washington would suddenly have more money than they could spend they would be forced to begin to payback some of that money we owe China.

Both the national sales tax and the flat tax, which are both conservative favs, would raise taxes on lower income Americans.

A little irony there, eh?

Yup. And that would be a very very positive thing. It would not hit them hard enough to sigificantly diminish their quality of life, but it might wake them up enough so that they would start paying attention. And as Dave suggested, they might take a whole different view re tax policy and government spending when the changes in that affected them too.

When we have half the country paying little or no federal income taxes and smugly wanting the other half to pay more, there is all sort of incentive to government to keep that half voting for them by funneling more and more money their way. I'm sure that those in government figure they've already got theirs and they'll be out of office before it all comes apart at the seams.

The thing is, if everybody has a stake in the process and it is truly fair, we would almost certainly see a resurgence of prosperity in this country that would benefit everybody. Those doggedly resisting that fairer system seem to have a kind of tunnel vision that keeps them from seeing that.

 

[antagon]

have you considered, fox, that progressive tax has economic virtues which outshine the political ones?

what economic principals is your 'good thing' flat-tax based on?

 

[Foxfyre]

have you considered, fox, that progressive tax has economic virtues which outshine the political ones?

what economic principals is your 'good thing' flat-tax based on?

It is based on the principle of fairness and equitable treatment of all citizens. It is without reward or punishment making it impossible for politicians to use to manipulate the system and is without corrupting influence on the people. It does not punish success nor put unreasonable burden on the less successful while opening doors for many more Americans to be successful. It is sufficiently simple that any literate person can understand it and would reduce the bureacracy by monumental proportions.

Finally it provides huge incentive for our elected leaders to implement policy that punishes no one and spurs vigorous economic growth for that is the only way they can increase their own power, prestige, and personal fortune.

 

[antagon]

have you considered, fox, that progressive tax has economic virtues which outshine the political ones?

what economic principals is your 'good thing' flat-tax based on?

It is based on the principle of fairness and equitable treatment of all citizens. It is without reward or punishment making it impossible for politicians to use to manipulate the system and is without corrupting influence on the people. It does not punish success nor put unreasonable burden on the less successful while opening doors for many more Americans to be successful. It is sufficiently simple that any literate person can understand it and would reduce the bureacracy by monumental proportions.

Finally it provides huge incentive for our elected leaders to implement policy that punishes no one and spurs vigorous economic growth for that is the only way they can increase their own power, prestige, and personal fortune.

so no economic principals at all?

leninism counts itself among attempts to displace economic principals with idealistic ones. that didn't work out or produce the intended result.

what do you say to the contention that we should deal with economic principals when we deal with issues like tax?

i feel fairness has marginal relevance in this issue, but how about looking at fairness in terms of the percentage of disposable income or above poverty income burdened by tax which a flat rate would distort in deference to high earners?

 

[Foxfyre]

have you considered, fox, that progressive tax has economic virtues which outshine the political ones?

what economic principals is your 'good thing' flat-tax based on?

It is based on the principle of fairness and equitable treatment of all citizens. It is without reward or punishment making it impossible for politicians to use to manipulate the system and is without corrupting influence on the people. It does not punish success nor put unreasonable burden on the less successful while opening doors for many more Americans to be successful. It is sufficiently simple that any literate person can understand it and would reduce the bureacracy by monumental proportions.

Finally it provides huge incentive for our elected leaders to implement policy that punishes no one and spurs vigorous economic growth for that is the only way they can increase their own power, prestige, and personal fortune.

so no economic principals at all?

leninism counts itself among attempts to displace economic principals with idealistic ones. that didn't work out or produce the intended result.

what do you say to the contention that we should deal with economic principals when we deal with issues like tax?

i feel fairness has marginal relevance in this issue, but how about looking at fairness in terms of the percentage of disposable income or above poverty income burdened by tax which a flat rate would distort in deference to high earners?

If you think I am speaking of Leninism here, you are not at all understanding what I'm saying.

It is not a constitutional function of government and should not be a function of the tax code to establish or regulate anybody's disposable income.

But a flat tax applies the exact same percentage of tax on everybody's income and therefore advantages or disadvantages nobody.

 

[antagon]

fox, it just seems that your arguments are based entirely on ideologies regarding fairness, and pay no heed to scholars or observations of how taxes effect economics. lenin felt ideology superseded economics, although clearly the application is different.

the constitution has nothing to input with respect to progressive taxation. where do you derive that judgment?

i think there are some distinct disadvantages to flat tax for the economy altogether. a flat rate delivers a greater disadvantage to those who earn income closer to the poverty line, removing them from economic participation which our economy currently benefits from, and pressing them closer to poverty. on the other end of the spectrum, flat taxes, particularly those which eliminate expensibility, would deliver a greater advantage to those with many times more income, relieving them from motivation to invest in our economy in ways from which it currently benefits.

 

[Oddball]

the constitution has nothing to input with respect to progressive taxation.

That it is mute on progressive direct taxes on the productive speaks volumes, for those who aren't ideologically tin-eared.

 

[Foxfyre]

fox, it just seems that your arguments are based entirely on ideologies regarding fairness, and pay no heed to scholars or observations of how taxes effect economics. lenin felt ideology superseded economics, although clearly the application is different.

the constitution has nothing to input with respect to progressive taxation. where do you derive that judgment?

i think there are some distinct disadvantages to flat tax for the economy altogether. a flat rate delivers a greater disadvantage to those who earn income closer to the poverty line, removing them from economic participation which our economy currently benefits from, and pressing them closer to poverty. on the other end of the spectrum, flat taxes, particularly those which eliminate expensibility, would deliver a greater advantage to those with many times more income, relieving them from motivation to invest in our economy in ways from which it currently benefits.

Fairness and observations of how taxes affect economics are two separate subjects and neither are based on ideology, so you really can leave Lenin out of it for now.

When I say 'fairness', I mean equal treatment under the law for everybody, not equality of effect or outcome for everybody. And I did not address whether or not the Constitution has anything to do with progressive taxation. (It doesn't actually--the 16th amendment gives Congress authority to tax income and does not address a progressive income tax.)

It is not healthy for any of the people when 50% of the population pays little or no income taxes and bears no direct consequences for whatever for whatever taxes are imposed on the other half. I do believe however, according to the chapter in Economics 101 that you may have missed, increasing the disposable income of the wealthy, along with incentive to spend or invest it, will almost invariably result in increased opportunity for that bottom half.

 

[boedicca]

The WSJ has an interesting column today regarding the "stickiness" of federal tax receipts at around 19% of GDP. The author calls is Hauser's Law":

U.S. fiscal policy has been going in the wrong direction for a very long time. But this year the U.S. government declined to lay out any plan to balance its budget ever again. Based on President Obama's fiscal 2011 budget, the Congressional Budget Office (CBO) estimates a deficit that starts at 10.3% of GDP in 2010. It is projected to narrow as the economy recovers but will still be 5.6% in 2020. As a result the net national debt (debt held by the public) will more than double to 90% by 2020 from 40% in 2008. The current Greek deficit is now thought to be 13.6% of a far smaller GDP. Unlike ours, the Greek insolvency is not too large for an international rescue.

As sobering as the U.S. debt estimates are, they are incomplete and optimistic. They do not include deficit spending resulting from the new health-insurance legislation. The revenue numbers rely on increased tax rates beginning next year resulting from the scheduled expiration of the Bush tax cuts. And, as usual, they ignore the unfunded liabilities of social insurance programs, even though these benefits are officially recognized as "mandatory spending" when the time comes to pay them out.

The feds assume a relationship between the economy and tax revenue that is divorced from reality. Six decades of history have established one far-reaching fact that needs to be built into fiscal calculations: Increases in federal tax rates, particularly if targeted at the higher brackets, produce no additional revenue. For politicians this is truly an inconvenient truth.

The nearby chart shows how tax revenue has grown over the past eight decades along with the size of the economy. It illustrates the empirical relationship first introduced on this page 20 years ago by the Hoover Institution's W. Kurt Hauser—a close proportionality between revenue and GDP since World War II, despite big changes in marginal tax rates in both directions. "Hauser's Law," as I call this formula, reveals a kind of capacity ceiling for federal tax receipts at about 19% of GDP.

What's the origin of this limit beyond which it is impossible to extract any more revenue from tax payers? The tax base is not something that the government can kick around at will. It represents a living economic system that makes its own collective choices. In a tax code of 70,000 pages there are innumerable ways for high-income earners to seek out and use ambiguities and loopholes. The more they are incentivized to make an effort to game the system, the less the federal government will get to collect. That would explain why, as Mr. Hauser has shown, conventional methods of forecasting tax receipts from increases in future tax rates are prone to over-predict revenue.

For budget planning it's wiser and safer to assume that tax receipts will remain at a historically realistic ratio to GDP no matter how tax rates are manipulated. That leads me to conclude that current projections of federal revenue are, once again, unrealistically high....

David Ranson: The Revenue Limits of Tax and Spend - WSJ.com


Implementing a VAT in order to expand the size of the Federal Government is doomed to failure. All it will lead to is more aggressive tax cheating and avoidance, and increasing deficits and debt as the overly optimistic tax receipt projections are used to justify budgetary spending increases.

Tax receipts were below forecasts in 2009, and are abysmal this year - one of the reasons why Congress is avoiding preparing a budget. They don't want to face having to cut spending in the face of lower tax receipts.

VAT will not plug the gap.

 

[NYcarbineer]

Raise taxes... I'm all for it... you raise what the little entitlement junkies and mass Obamabots pay in income taxes to the same % as I pay... we'll see how much they keep with their support of the tax rate and huge government spending after that

You're just supporting what I've been saying ever since this little nugget of how many Americans pay no federal income taxes came out. The conservative call for lower taxes isn't quite what it appeared to be.

I am not for 'lower taxes' in the way that many people chant...

I am for equal treatment in taxation... I am for equal % payed on every dollar earned by every citizen... in combination of severely reduced government spending.... I am in no way in support of the Robin Hood IRS and government we have and have had

That toothpaste isn't going back in the tube. Neither party is going to run on a platform that the lower income working families in America are undertaxed relative to their higher income counterparts.
This is the trap Republicans have fallen into. In their neverending quest to get lower taxes for the upper half of the income spectrum, they have had to include meaningful tax cuts for the lower half. This has led to the lower half being down around zero income taxes.

Makes one wonder what tax cutting agenda the Republican are running on or will be running on.

 

[DiamondDave]

You're just supporting what I've been saying ever since this little nugget of how many Americans pay no federal income taxes came out. The conservative call for lower taxes isn't quite what it appeared to be.

I am not for 'lower taxes' in the way that many people chant...

I am for equal treatment in taxation... I am for equal % payed on every dollar earned by every citizen... in combination of severely reduced government spending.... I am in no way in support of the Robin Hood IRS and government we have and have had

That toothpaste isn't going back in the tube. Neither party is going to run on a platform that the lower income working families in America are undertaxed relative to their higher income counterparts.
This is the trap Republicans have fallen into. In their neverending quest to get lower taxes for the upper half of the income spectrum, they have had to include meaningful tax cuts for the lower half. This has led to the lower half being down around zero income taxes.

Makes one wonder what tax cutting agenda the Republican are running on or will be running on.

And this is the trap the lefties have fallen in to... selective equality being justified by greed and jealousy...

Hell... then don't lower my taxes... bring everyone else up to my tax rate....

You guys love to have no stake in the game, while wanting something from the game

 

[Foxfyre]

I am not for 'lower taxes' in the way that many people chant...

I am for equal treatment in taxation... I am for equal % payed on every dollar earned by every citizen... in combination of severely reduced government spending.... I am in no way in support of the Robin Hood IRS and government we have and have had

That toothpaste isn't going back in the tube. Neither party is going to run on a platform that the lower income working families in America are undertaxed relative to their higher income counterparts.
This is the trap Republicans have fallen into. In their neverending quest to get lower taxes for the upper half of the income spectrum, they have had to include meaningful tax cuts for the lower half. This has led to the lower half being down around zero income taxes.

Makes one wonder what tax cutting agenda the Republican are running on or will be running on.

And this is the trap the lefties have fallen in to... selective equality being justified by greed and jealousy...

Hell... then don't lower my taxes... bring everyone else up to my tax rate....

You guys love to have no stake in the game, while wanting something from the game

But here is where self preservation kicks in when the system is equal and fair. That lower half doesn't WANT to pay what the upper half pays. They don't care, however, if the upper half have to pay more and more and more to keep it all afloat.

You make that lower half pay their fair share, and all of a sudden they will CARE how much the upper half pays. And they will CARE how much of that money the government fritters away, wastes, uses to exploit, and will not defend all that as many of them do now.

Give all Americans a stake in the process, and I guarantee the process will become much more effective, efficient, responsible, and honest.

 

[antagon]

The WSJ has an interesting column today regarding the "stickiness" of federal tax receipts at around 19% of GDP. The author calls is Hauser's Law":

U.S. fiscal policy has been going in the wrong direction for a very long time. But this year the U.S. government declined to lay out any plan to balance its budget ever again. Based on President Obama's fiscal 2011 budget, the Congressional Budget Office (CBO) estimates a deficit that starts at 10.3% of GDP in 2010. It is projected to narrow as the economy recovers but will still be 5.6% in 2020. As a result the net national debt (debt held by the public) will more than double to 90% by 2020 from 40% in 2008. The current Greek deficit is now thought to be 13.6% of a far smaller GDP. Unlike ours, the Greek insolvency is not too large for an international rescue.

As sobering as the U.S. debt estimates are, they are incomplete and optimistic. They do not include deficit spending resulting from the new health-insurance legislation. The revenue numbers rely on increased tax rates beginning next year resulting from the scheduled expiration of the Bush tax cuts. And, as usual, they ignore the unfunded liabilities of social insurance programs, even though these benefits are officially recognized as "mandatory spending" when the time comes to pay them out.

The feds assume a relationship between the economy and tax revenue that is divorced from reality. Six decades of history have established one far-reaching fact that needs to be built into fiscal calculations: Increases in federal tax rates, particularly if targeted at the higher brackets, produce no additional revenue. For politicians this is truly an inconvenient truth.

The nearby chart shows how tax revenue has grown over the past eight decades along with the size of the economy. It illustrates the empirical relationship first introduced on this page 20 years ago by the Hoover Institution's W. Kurt Hauser—a close proportionality between revenue and GDP since World War II, despite big changes in marginal tax rates in both directions. "Hauser's Law," as I call this formula, reveals a kind of capacity ceiling for federal tax receipts at about 19% of GDP.

What's the origin of this limit beyond which it is impossible to extract any more revenue from tax payers? The tax base is not something that the government can kick around at will. It represents a living economic system that makes its own collective choices. In a tax code of 70,000 pages there are innumerable ways for high-income earners to seek out and use ambiguities and loopholes. The more they are incentivized to make an effort to game the system, the less the federal government will get to collect. That would explain why, as Mr. Hauser has shown, conventional methods of forecasting tax receipts from increases in future tax rates are prone to over-predict revenue.

For budget planning it's wiser and safer to assume that tax receipts will remain at a historically realistic ratio to GDP no matter how tax rates are manipulated. That leads me to conclude that current projections of federal revenue are, once again, unrealistically high....

David Ranson: The Revenue Limits of Tax and Spend - WSJ.com


Implementing a VAT in order to expand the size of the Federal Government is doomed to failure. All it will lead to is more aggressive tax cheating and avoidance, and increasing deficits and debt as the overly optimistic tax receipt projections are used to justify budgetary spending increases.

Tax receipts were below forecasts in 2009, and are abysmal this year - one of the reasons why Congress is avoiding preparing a budget. They don't want to face having to cut spending in the face of lower tax receipts.

VAT will not plug the gap.

derr, hauser's law is rigged by considering social security and medicare selectively to pull off its 19.5%. feeble.

a VAT, simply wont be ever enacted, furthermore.

 

[Mr.Fitnah]

Thats the European model. Islamic immigration and vat tax ,it isnt working out to well.
And they had the USA paying for there defense to a large extent.
We cut spending or we go under and take everyone with us.

 

[skookerasbil]

You're just supporting what I've been saying ever since this little nugget of how many Americans pay no federal income taxes came out. The conservative call for lower taxes isn't quite what it appeared to be.

I am not for 'lower taxes' in the way that many people chant...

I am for equal treatment in taxation... I am for equal % payed on every dollar earned by every citizen... in combination of severely reduced government spending.... I am in no way in support of the Robin Hood IRS and government we have and have had

That toothpaste isn't going back in the tube. Neither party is going to run on a platform that the lower income working families in America are undertaxed relative to their higher income counterparts.
This is the trap Republicans have fallen into. In their neverending quest to get lower taxes for the upper half of the income spectrum, they have had to include meaningful tax cuts for the lower half. This has led to the lower half being down around zero income taxes.

Makes one wonder what tax cutting agenda the Republican are running on or will be running on.

what a dummy..............the wealthy pay more taxes now than before the Bush tax cuts!!!

 

[antagon]

fox, it just seems that your arguments are based entirely on ideologies regarding fairness, and pay no heed to scholars or observations of how taxes effect economics. lenin felt ideology superseded economics, although clearly the application is different.

the constitution has nothing to input with respect to progressive taxation. where do you derive that judgment?

i think there are some distinct disadvantages to flat tax for the economy altogether. a flat rate delivers a greater disadvantage to those who earn income closer to the poverty line, removing them from economic participation which our economy currently benefits from, and pressing them closer to poverty. on the other end of the spectrum, flat taxes, particularly those which eliminate expensibility, would deliver a greater advantage to those with many times more income, relieving them from motivation to invest in our economy in ways from which it currently benefits.

Fairness and observations of how taxes affect economics are two separate subjects and neither are based on ideology, so you really can leave Lenin out of it for now.

When I say 'fairness', I mean equal treatment under the law for everybody, not equality of effect or outcome for everybody. And I did not address whether or not the Constitution has anything to do with progressive taxation. (It doesn't actually--the 16th amendment gives Congress authority to tax income and does not address a progressive income tax.)

It is not healthy for any of the people when 50% of the population pays little or no income taxes and bears no direct consequences for whatever for whatever taxes are imposed on the other half.

my point with lenin persists. it has to do with the separation of fairness and the economic effect of taxation. i will address it directly without tying your assertions to others who promote justice issues over economic consequence on economically sensitive issues like tax:

I do believe however, according to the chapter in Economics 101 that you may have missed, increasing the disposable income of the wealthy, along with incentive to spend or invest it, will almost invariably result in increased opportunity for that bottom half.

this is where i feel, indeed, our basic econ books do vary. perhaps it is your accounting for the way that our (world's finest) tax system functions. my understanding of the tax code has it that it one of the largest incentives for private investment and charitability active in our economy. through expensibility and deductibility, our tax code rewards, or at least precludes monies which are invested for the benefits you espouse. as a deductions junkie myself, this is why i challenge your association between investment and taxation: most investment is not taxed in modern tax systems like ours. there's your incentive.

now, classic economics has a concept of hoarding, which in more primative economies, prevents this trickle-down. by extension of that, demand is compromised and the over-all performance of the economy follows suit. can you separate your 'disposable income of the wealthy' from this econ 101 concept, after expensibility in the tax code has already done so?

ultimately, i think that the US tax code is the best measured on the planet with respect to how it is set up structurally, leaving just the nuance of rates and brackets within the paradigm to be considered. i think analyzing it for its merits is a better tack than knocking its social justice repercussions from a single perspective. dont forget that you are challenging a fundamental of the heavyweight champion of economies with principals adopted by lightweight post-bolshevic economies, with as-yet determined effect.

 

[antagon]

the constitution has nothing to input with respect to progressive taxation.

That it is mute on progressive direct taxes on the productive speaks volumes, for those who aren't ideologically tin-eared.

better than what preceded it, dude. are you tone-deaf to the economic implications, buddy?

 

[Oddball]

the constitution has nothing to input with respect to progressive taxation.

That it is mute on progressive direct taxes on the productive speaks volumes, for those who aren't ideologically tin-eared.

better than what preceded it, dude. are you tone-deaf to the economic implications, buddy?

Your opinion as to which is or isn't better is irrelevant.