Taxes, Spending, the Fiscal Cliff, and Austerity

[kiwiman127]

I see Clinton experienced pretty high GDP growth during his term. It magnifies his negative growth.

Clinton was one lucky SOB, first he gets Ross Perot to divide the conservative vote and get elected, at a time when the US economy was just starting to boom. At least he was smart enough to work with the Gingrich House to get something done in his 2nd term. I remember they had something of a standoff for awhile, before they found a way to compromise. Wonder if Obama will do the same; kinda doubt it but we'll see.

Compromise! It's the magic word. It would be great if both sides could be work more like a team and get things done, rather as enemies and accomplish nothing.

 

[Wiseacre]

I see Clinton experienced pretty high GDP growth during his term. It magnifies his negative growth.

Clinton was one lucky SOB, first he gets Ross Perot to divide the conservative vote and get elected, at a time when the US economy was just starting to boom. At least he was smart enough to work with the Gingrich House to get something done in his 2nd term. I remember they had something of a standoff for awhile, before they found a way to compromise. Wonder if Obama will do the same; kinda doubt it but we'll see.

Compromise! It's the magic word. It would be great if both sides could be work more like a team and get things done, rather as enemies and accomplish nothing.

Clinton did it. Every other president managed to work with the opposition, why can't Obama? Answer: cuz he doesn't want to.

 

[Trajan]

Clinton was one lucky SOB, first he gets Ross Perot to divide the conservative vote and get elected, at a time when the US economy was just starting to boom. At least he was smart enough to work with the Gingrich House to get something done in his 2nd term. I remember they had something of a standoff for awhile, before they found a way to compromise. Wonder if Obama will do the same; kinda doubt it but we'll see.

Compromise! It's the magic word. It would be great if both sides could be work more like a team and get things done, rather as enemies and accomplish nothing.

Clinton did it. Every other president managed to work with the opposition, why can't Obama? Answer: cuz he doesn't want to.

thats the way it seems, he hasn't said a word since boehner gave him a counter offer and he is going to disappear on vacation now.

Personally NONE of them should go anywhere until this is done. BUT- I have a feeling that Obama wants it to go to the last minute.


I have made this point before and will again- in 194 and half of 65, when Medicare/Medicaid was passed in July 65, LBJ had 65 dem. senators and 255 dems in the house, he didn't need 1 gop vote. BUT he got 45% of the gop senators to vote yea and over half the house reps too ( the bill was just 296 pages btw). He did that not by shutting shouting them out but by cajolery and compromise.


and, here is the cloture vote on the SS act of 1965-

House of Representatives

Democrats
237 – Yea
48 – Nay
8 – Not Voting

Republicans
70 – Yea
68 – Nay
2 – Not Voting

Senate

Democrats
57 – Yea
7 – Nay
4- Not Voting

Republicans
13 – Yea
17 – Nay
2 – Not Voting

Why? Because he knew that in order for it to work down the road, he had to have everyone on board, even if to share the blame ( and there is plenty to share but thats another story). And there was plenty of opposition to Medicare, it was no slamdunk, they passed Kerr-Mills in 1960, first which was just a prgm for the indigent etc. and took up the battle there after.... .

 

[Sactowndog]

The Clinton era surplus was due to TAX CUTS and SPENDING CUTS that Clinton had to swallow. Guys like you always blame the GOP, but I don't see the democrats offering any reforms to the entitlement programs. Every deomcrat I see on TV is saying hell no, we can't have that!

The truth is that you guys want complete capitulation, total surrender. You don't want cooperation or compromise, you want it all your way. Sorry dude, Obama may have been re-elected but so did the House republicans.

This is incorrect on many levels. Clinton raised them to 39%. You also state "you guys want complete capitulation". Well I would agree that liberal democrats like Nancy Pelosi want complete capitulation but that certainly isn't what I want. I want to see the budget deficit addressed.

You do know the repubs got some tax cuts passed under Clinton, right? Not on the top rate, actually it wasn't that much EXCEPT they lowered the cap gains tax, and that makes a difference to investors. From 28% down to 20%, and after that was when Clinton got his surplus. Of sorts.

To me that means Republicans should prioritize spending cuts and entitlement reform first. If they really cared about the deficit this would be their focus instead of preventing us from returning to the tax rates of the Clinton era.

When I see the Republicans really prioritizing spending cuts and entitlement reform by making those the key trade-offs instead of taxes for the wealthy.

Will it make much difference what the repubs do about spending cuts and entitlement reform if the democrats will not negotiate over it? I mean real cuts now instead of in the future. I'd like to think people from both sides are dickering over what to cut, and also how to reform the entitlements AND the tax code. Why do you put the onus just on the repubs, don't the dems have an equal duty to bargain in good faith?

Because currently I see the Republican leadership prioritizing protecting the tax cuts for the wealthy above all else. I have heard and believe Obama would push Medicare cuts to the Democratic Party leftists if the Republicans would bend on taxes. I am willing to be proven wrong but only when the Republicans set aside their opposition to the tax hike and focus on entitlement reform. At that point if Obama doesn't move my perspective will shift.

Luckily some pragmatic Republicans who really care about the deficit are coming to this conclusion. Unfortunately none of them are in the leadership. I truely think this is what the voters want by returning both Obama and the Republican congress.

 

[Sactowndog]

Compromise! It's the magic word. It would be great if both sides could be work more like a team and get things done, rather as enemies and accomplish nothing.

Clinton did it. Every other president managed to work with the opposition, why can't Obama? Answer: cuz he doesn't want to.

thats the way it seems, he hasn't said a word since boehner gave him a counter offer and he is going to disappear on vacation now.

Personally NONE of them should go anywhere until this is done. BUT- I have a feeling that Obama wants it to go to the last minute.


I have made this point before and will again- in 194 and half of 65, when Medicare/Medicaid was passed in July 65, LBJ had 65 dem. senators and 255 dems in the house, he didn't need 1 gop vote. BUT he got 45% of the gop senators to vote yea and over half the house reps too ( the bill was just 296 pages btw). He did that not by shutting shouting them out but by cajolery and compromise.


and, here is the cloture vote on the SS act of 1965-

House of Representatives

Democrats
237 – Yea
48 – Nay
8 – Not Voting

Republicans
70 – Yea
68 – Nay
2 – Not Voting

Senate

Democrats
57 – Yea
7 – Nay
4- Not Voting

Republicans
13 – Yea
17 – Nay
2 – Not Voting

Why? Because he knew that in order for it to work down the road, he had to have everyone on board, even if to share the blame ( and there is plenty to share but thats another story). And there was plenty of opposition to Medicare, it was no slamdunk, they passed Kerr-Mills in 1960, first which was just a prgm for the indigent etc. and took up the battle there after.... .

That was a very different generation that worked together to win WW2 and had a history of setting aside differences to focus on the common good. This Congress is led by boomers who have a history of taking ideologically extreme positions and has been labeled as the me generation.

I think this is as much generational and a failure of the boomer generation as many other factors.

 

[Sactowndog]

This is incorrect on many levels. Clinton raised them to 39%. You also state "you guys want complete capitulation". Well I would agree that liberal democrats like Nancy Pelosi want complete capitulation but that certainly isn't what I want. I want to see the budget deficit addressed.

You do know the repubs got some tax cuts passed under Clinton, right? Not on the top rate, actually it wasn't that much EXCEPT they lowered the cap gains tax, and that makes a difference to investors. From 28% down to 20%, and after that was when Clinton got his surplus. Of sorts.

To me that means Republicans should prioritize spending cuts and entitlement reform first. If they really cared about the deficit this would be their focus instead of preventing us from returning to the tax rates of the Clinton era.

When I see the Republicans really prioritizing spending cuts and entitlement reform by making those the key trade-offs instead of taxes for the wealthy.

Will it make much difference what the repubs do about spending cuts and entitlement reform if the democrats will not negotiate over it? I mean real cuts now instead of in the future. I'd like to think people from both sides are dickering over what to cut, and also how to reform the entitlements AND the tax code. Why do you put the onus just on the repubs, don't the dems have an equal duty to bargain in good faith?

if the media were playing this fairly, they would have burped up that debate where in obama even after being told by Gibson that cap gains being jacked lowers receipts in the long run and obama said it was a a matter of fairness........not economics mind you, but 'fairness'.


GIBSON: All right. You have, however, said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, "I certainly would not go above what existed under Bill Clinton," which was 28 percent. It's now 15 percent. That's almost a doubling, if you went to 28 percent.

But actually, Bill Clinton, in 1997, signed legislation that dropped the capital gains tax to 20 percent.

OBAMA: Right.

GIBSON: And George Bush has taken it down to 15 percent.

OBAMA: Right.

GIBSON: And in each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down.

So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness.

that last comment is outrageous, seriously....


but they focus on Grover Norquist who has been repudiated to the point here its just a smokescreen now.....

Again this is completely wrong and misleading. Yes the vast majority of people own stock but for a high percentage of those people the stock is held in 401K's and will never be subject to the capital gains tax. All disbursements from a 401K are subject to Income Tax.

The Capital Gains tax rates are one of the poorest choices we make in the tax code, given that today most wealthy who would hold stock outside of 401K's diversify their portfolios globally. Why should we provide an incentive rate to invest in China? Those who are creating jobs in China should not be getting a break for funding the government in the United States.

If you care about jobs reduce the Corporate Income tax because that benefits investors who put money in the US from all countries.

 

[Trajan]

Clinton did it. Every other president managed to work with the opposition, why can't Obama? Answer: cuz he doesn't want to.

thats the way it seems, he hasn't said a word since boehner gave him a counter offer and he is going to disappear on vacation now.

Personally NONE of them should go anywhere until this is done. BUT- I have a feeling that Obama wants it to go to the last minute.


I have made this point before and will again- in 194 and half of 65, when Medicare/Medicaid was passed in July 65, LBJ had 65 dem. senators and 255 dems in the house, he didn't need 1 gop vote. BUT he got 45% of the gop senators to vote yea and over half the house reps too ( the bill was just 296 pages btw). He did that not by shutting shouting them out but by cajolery and compromise.


and, here is the cloture vote on the SS act of 1965-

House of Representatives

Democrats
237 – Yea
48 – Nay
8 – Not Voting

Republicans
70 – Yea
68 – Nay
2 – Not Voting

Senate

Democrats
57 – Yea
7 – Nay
4- Not Voting

Republicans
13 – Yea
17 – Nay
2 – Not Voting

Why? Because he knew that in order for it to work down the road, he had to have everyone on board, even if to share the blame ( and there is plenty to share but thats another story). And there was plenty of opposition to Medicare, it was no slamdunk, they passed Kerr-Mills in 1960, first which was just a prgm for the indigent etc. and took up the battle there after.... .

That was a very different generation that worked together to win WW2 and had a history of setting aside differences to focus on the common good. This Congress is led by boomers who have a history of taking ideologically extreme positions and has been labeled as the me generation.

I think this is as much generational and a failure of the boomer generation as many other factors.

you are making an argument in/of mitigation.


and so what? Clinton was of what generation?

 

[Trajan]

Will it make much difference what the repubs do about spending cuts and entitlement reform if the democrats will not negotiate over it? I mean real cuts now instead of in the future. I'd like to think people from both sides are dickering over what to cut, and also how to reform the entitlements AND the tax code. Why do you put the onus just on the repubs, don't the dems have an equal duty to bargain in good faith?

if the media were playing this fairly, they would have burped up that debate where in obama even after being told by Gibson that cap gains being jacked lowers receipts in the long run and obama said it was a a matter of fairness........not economics mind you, but 'fairness'.


GIBSON: All right. You have, however, said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, "I certainly would not go above what existed under Bill Clinton," which was 28 percent. It's now 15 percent. That's almost a doubling, if you went to 28 percent.

But actually, Bill Clinton, in 1997, signed legislation that dropped the capital gains tax to 20 percent.

OBAMA: Right.

GIBSON: And George Bush has taken it down to 15 percent.

OBAMA: Right.

GIBSON: And in each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down.

So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness.

that last comment is outrageous, seriously....


but they focus on Grover Norquist who has been repudiated to the point here its just a smokescreen now.....

Again this is completely wrong and misleading. Yes the vast majority of people own stock but for a high percentage of those people the stock is held in 401K's and will never be subject to the capital gains tax. All disbursements from a 401K are subject to Income Tax.

The Capital Gains tax rates are one of the poorest choices we make in the tax code, given that today most wealthy who would hold stock outside of 401K's diversify their portfolios globally. Why should we provide an incentive rate to invest in China? Those who are creating jobs in China should not be getting a break for funding the government in the United States.

If you care about jobs reduce the Corporate Income tax because that benefits investors who put money in the US from all countries.

I agree with that but what you said about 401k's being stock portfolios is "misleading'" you get co. stock by grant and discount purchase price in THAT co., it doesn't go into your 401K.

and that has what to do with revenue?

as far as poor choice, risk taken should be rewarded. they get rate not based on income level, becasue it is NOT income tax as we know it, taking a check form a job incurs zero risk, so thats probably as fair as it can get, most especially since you can only write off 3K in losses a year. And if they invest in China well so what? If you are against providing cap. gains rates to an investment made in china, which is taxed when it comes home, then you must be against free trade....are you?

 

[oldfart]

This is consistent with a new paper called “The Design of Fiscal Adjustments,” by Harvard economists Alberto Alesina and Silvia Ardagna. Building up on their previous work, they provide even more evidence that fiscal consolidations based mostly on the spending side result in smaller recessions, or none at all, when compared to tax-based adjustments. Additionally, they find that private investment tends to react more positively to spending-based adjustments. Thus, they argue that spending cuts are more sustainable and effective in reducing debt and raising economic growth; expansionary fiscal consolidation is possible.

These are the folks who invented the idea of "expansionary austerity" the most thoroughly discredited intellectual disaster in economic thought in a half-century. They point to Ireland as an outstanding success. They convinced the Cameron government o try austerity. Notice the resulting train wreck. The IMF has reversed policy 180 degrees, first joining the bandwagon and now seeing the devestation, deciding to completely reverse policy. In dozens of countries those who chose austerity have decimated their economies to the point of financial and social collapse. Recovery is only occuring where people did not drink the koolaid. I have not seen an economic theory so discredited in practice since Andrew Mellon was Secretary of the Treasury, and look how that turned out.

PLEASE, PLEASE, do not try to use anything by A & A to justify anything. This was a bad idea from the git-go with no foundation in economic theory at all, no support in the historical record, and now a horrible track record in application. In a just world they would be tried for crimes against humanity.

And if you did not realize that this paper was proposing expansionary austerity, then I would say that you have had a lot of company and that there are much worse things than being bamboozled.

 

[Wiseacre]

This is consistent with a new paper called “The Design of Fiscal Adjustments,” by Harvard economists Alberto Alesina and Silvia Ardagna. Building up on their previous work, they provide even more evidence that fiscal consolidations based mostly on the spending side result in smaller recessions, or none at all, when compared to tax-based adjustments. Additionally, they find that private investment tends to react more positively to spending-based adjustments. Thus, they argue that spending cuts are more sustainable and effective in reducing debt and raising economic growth; expansionary fiscal consolidation is possible.

These are the folks who invented the idea of "expansionary austerity" the most thoroughly discredited intellectual disaster in economic thought in a half-century. They point to Ireland as an outstanding success. They convinced the Cameron government o try austerity. Notice the resulting train wreck. The IMF has reversed policy 180 degrees, first joining the bandwagon and now seeing the devestation, deciding to completely reverse policy. In dozens of countries those who chose austerity have decimated their economies to the point of financial and social collapse. Recovery is only occuring where people did not drink the koolaid. I have not seen an economic theory so discredited in practice since Andrew Mellon was Secretary of the Treasury, and look how that turned out.

PLEASE, PLEASE, do not try to use anything by A & A to justify anything. This was a bad idea from the git-go with no foundation in economic theory at all, no support in the historical record, and now a horrible track record in application. In a just world they would be tried for crimes against humanity.

And if you did not realize that this paper was proposing expansionary austerity, then I would say that you have had a lot of company and that there are much worse things than being bamboozled.

You're bashing Harvard economists? HAHVAHD? What's the world coming to.

What about Estonia and the other Baltic States? Did they not severely cut spending instead of significantly raising taxes? Worked out well for them, Estonia is the only EU nation that is in surplus according to this:

Let’s Copy the Baltic Nations and Really Cut Spending « International Liberty

and this:

http://danieljmitchell.wordpress.co...ity-another-exploding-cigar-for-paul-krugman/

A lot of the EU countries that are in dire economic straights didn't really cut spending, they raised taxes instead. And their economies suffered. Spending cuts are no picnic either, those Baltic countries went through a lot of pain for a few years. I'm not saying you gotta go big all at once and balance the budget; I'd be good with a gradual reduction to the point where spending increases do not exceed GDP growth. And I'd be good with higher taxes if and when the economic experiences sustained growth and UE drops because we're creating a lot more jobs rather than because 350,000 people left the workforce.

But I also think we and those European countries have to restructure their social contract; deals and promises were made that cannot be kept. And nobody is willing to do that, so the can gets kicked and the problems get bigger and worser. And the really bad part is, future generations will have to deal with the consequences of our prolificacy.

 

[saveliberty]

This is consistent with a new paper called “The Design of Fiscal Adjustments,” by Harvard economists Alberto Alesina and Silvia Ardagna. Building up on their previous work, they provide even more evidence that fiscal consolidations based mostly on the spending side result in smaller recessions, or none at all, when compared to tax-based adjustments. Additionally, they find that private investment tends to react more positively to spending-based adjustments. Thus, they argue that spending cuts are more sustainable and effective in reducing debt and raising economic growth; expansionary fiscal consolidation is possible.

These are the folks who invented the idea of "expansionary austerity" the most thoroughly discredited intellectual disaster in economic thought in a half-century. They point to Ireland as an outstanding success. They convinced the Cameron government o try austerity. Notice the resulting train wreck. The IMF has reversed policy 180 degrees, first joining the bandwagon and now seeing the devestation, deciding to completely reverse policy. In dozens of countries those who chose austerity have decimated their economies to the point of financial and social collapse. Recovery is only occuring where people did not drink the koolaid. I have not seen an economic theory so discredited in practice since Andrew Mellon was Secretary of the Treasury, and look how that turned out.

PLEASE, PLEASE, do not try to use anything by A & A to justify anything. This was a bad idea from the git-go with no foundation in economic theory at all, no support in the historical record, and now a horrible track record in application. In a just world they would be tried for crimes against humanity.

And if you did not realize that this paper was proposing expansionary austerity, then I would say that you have had a lot of company and that there are much worse things than being bamboozled.

The austerity program was never implemented as suggested. It never reached the level it should have in a short period of time. Since it was watered down, it never achieved its intended effect. Cutting spending is common sense. Spending your way out of debt is the lunatic approach.

 

[Sactowndog]

The Clinton era surplus was due to TAX CUTS and SPENDING CUTS that Clinton had to swallow. Guys like you always blame the GOP, but I don't see the democrats offering any reforms to the entitlement programs. Every deomcrat I see on TV is saying hell no, we can't have that!

The truth is that you guys want complete capitulation, total surrender. You don't want cooperation or compromise, you want it all your way. Sorry dude, Obama may have been re-elected but so did the House republicans.

Any Clintonesque centrism etc. has gone by the wayside bro- like the Old Guard marching up that slope to oblivion at Waterloo, Pelosi marched every blue dog into the cannon of obamacare, yet its the extremist gop that wants to cut back the $830Bn and then some from every obama spending year there after 2009, as he attmpts to enshrine it in a new baseline for the future, thats why they won't do a budget, they can't, so we roll on Continuing Resolutions.

And that is the problem. The Democrats have veered so far left, there is little common ground anywhere with the Republicans who have also shifted left but not far enough to find any middle ground. Plus many Republicans have the additional problem of making a solemn promise of fiscal responsibility in order to get elected in the first place, and if they capitulate on raising income taxes and some other measures, they break that pledge.

You do know that most of the world views both parties as center right parties?

 

[Trajan]

Any Clintonesque centrism etc. has gone by the wayside bro- like the Old Guard marching up that slope to oblivion at Waterloo, Pelosi marched every blue dog into the cannon of obamacare, yet its the extremist gop that wants to cut back the $830Bn and then some from every obama spending year there after 2009, as he attmpts to enshrine it in a new baseline for the future, thats why they won't do a budget, they can't, so we roll on Continuing Resolutions.

And that is the problem. The Democrats have veered so far left, there is little common ground anywhere with the Republicans who have also shifted left but not far enough to find any middle ground. Plus many Republicans have the additional problem of making a solemn promise of fiscal responsibility in order to get elected in the first place, and if they capitulate on raising income taxes and some other measures, they break that pledge.

You do know that most of the world views both parties as center right parties?

and that is germane how? who cares?

 

[Sactowndog]

thats the way it seems, he hasn't said a word since boehner gave him a counter offer and he is going to disappear on vacation now.

Personally NONE of them should go anywhere until this is done. BUT- I have a feeling that Obama wants it to go to the last minute.


I have made this point before and will again- in 194 and half of 65, when Medicare/Medicaid was passed in July 65, LBJ had 65 dem. senators and 255 dems in the house, he didn't need 1 gop vote. BUT he got 45% of the gop senators to vote yea and over half the house reps too ( the bill was just 296 pages btw). He did that not by shutting shouting them out but by cajolery and compromise.


and, here is the cloture vote on the SS act of 1965-

House of Representatives

Democrats
237 – Yea
48 – Nay
8 – Not Voting

Republicans
70 – Yea
68 – Nay
2 – Not Voting

Senate

Democrats
57 – Yea
7 – Nay
4- Not Voting

Republicans
13 – Yea
17 – Nay
2 – Not Voting

Why? Because he knew that in order for it to work down the road, he had to have everyone on board, even if to share the blame ( and there is plenty to share but thats another story). And there was plenty of opposition to Medicare, it was no slamdunk, they passed Kerr-Mills in 1960, first which was just a prgm for the indigent etc. and took up the battle there after.... .

That was a very different generation that worked together to win WW2 and had a history of setting aside differences to focus on the common good. This Congress is led by boomers who have a history of taking ideologically extreme positions and has been labeled as the me generation.

I think this is as much generational and a failure of the boomer generation as many other factors.

you are making an argument in/of mitigation.


and so what? Clinton was of what generation?

Clinton was the first and the Congressional leaders of that era were not boomers. My point is the problem in not Obama specifically but then generation as a whole that has never learned to set aside their ideological extreme positions for the good of the country as a whole.

 

[Sactowndog]

The Clinton era surplus was due to TAX CUTS and SPENDING CUTS that Clinton had to swallow. Guys like you always blame the GOP, but I don't see the democrats offering any reforms to the entitlement programs. Every deomcrat I see on TV is saying hell no, we can't have that!

The truth is that you guys want complete capitulation, total surrender. You don't want cooperation or compromise, you want it all your way. Sorry dude, Obama may have been re-elected but so did the House republicans.

This is incorrect on many levels. Clinton raised them to 39%. You also state "you guys want complete capitulation". Well I would agree that liberal democrats like Nancy Pelosi want complete capitulation but that certainly isn't what I want. I want to see the budget deficit addressed.

You do know the repubs got some tax cuts passed under Clinton, right? Not on the top rate, actually it wasn't that much EXCEPT they lowered the cap gains tax, and that makes a difference to investors. From 28% down to 20%, and after that was when Clinton got his surplus. Of sorts.

To me that means Republicans should prioritize spending cuts and entitlement reform first. If they really cared about the deficit this would be their focus instead of preventing us from returning to the tax rates of the Clinton era.

When I see the Republicans really prioritizing spending cuts and entitlement reform by making those the key trade-offs instead of taxes for the wealthy.

Will it make much difference what the repubs do about spending cuts and entitlement reform if the democrats will not negotiate over it? I mean real cuts now instead of in the future. I'd like to think people from both sides are dickering over what to cut, and also how to reform the entitlements AND the tax code. Why do you put the onus just on the repubs, don't the dems have an equal duty to bargain in good faith?

I don't accept that Obama and some Democrats won't negotiate over it. Everything I have seen and heard indicates they will if the Republicans give on tax increases for the wealthy.

The Tax increase for the wealthy is the single largest impediment to reaching a deficit reduction deal and it is the Republicans blocking it. We had an election and they lost on that question. Time to move on a focus on entitlement reform.

 

[oldfart]

Inadvertent post. Complete post follows.

 

[Sactowndog]

Again this is completely wrong and misleading. Yes the vast majority of people own stock but for a high percentage of those people the stock is held in 401K's and will never be subject to the capital gains tax. All disbursements from a 401K are subject to Income Tax.

The Capital Gains tax rates are one of the poorest choices we make in the tax code, given that today most wealthy who would hold stock outside of 401K's diversify their portfolios globally. Why should we provide an incentive rate to invest in China? Those who are creating jobs in China should not be getting a break for funding the government in the United States.

If you care about jobs reduce the Corporate Income tax because that benefits investors who put money in the US from all countries.

I agree with that but what you said about 401k's being stock portfolios is "misleading'" you get co. stock by grant and discount purchase price in THAT co., it doesn't go into your 401K.

and that has what to do with revenue?

as far as poor choice, risk taken should be rewarded. they get rate not based on income level, becasue it is NOT income tax as we know it, taking a check form a job incurs zero risk, so thats probably as fair as it can get, most especially since you can only write off 3K in losses a year. And if they invest in China well so what? If you are against providing cap. gains rates to an investment made in china, which is taxed when it comes home, then you must be against free trade....are you?

A stock grant or option is different than a company match in a 401K. The claim was that virtually everyone holds stock of some sort and a capital gains tax cut benefits everyone. This statement is simply not true as the general public holds stock within their 401K and disbursements from a 401k are treated as income not capital gains. Therefore a capital gain tax cut does not help much of the middle class.

Second capital gains apply to much more than risky venture capital start ups. Items like dividends are not particularly risky and still qualify for a capital gains treatment. Second, the only reason to provide a beneficial tax treatment for return on capital is historically the investment has produced local jobs which ultimately increases the total tax base. Also historically people had not shifted their income to be predominately capital gains based. Both these factors have resulted in providing tax benefits with very little value back to the government in terms of increased jobs.

Eliminating the break on capital gains and replacing it with a dramatically lower corporate income tax should be job 1.

 

[Trajan]

That was a very different generation that worked together to win WW2 and had a history of setting aside differences to focus on the common good. This Congress is led by boomers who have a history of taking ideologically extreme positions and has been labeled as the me generation.

I think this is as much generational and a failure of the boomer generation as many other factors.

you are making an argument in/of mitigation.


and so what? Clinton was of what generation?

Clinton was the first and the Congressional leaders of that era were not boomers. My point is the problem in not Obama specifically but then generation as a whole that has never learned to set aside their ideological extreme positions for the good of the country as a whole.

exactly- if I recall Clinton and the rep. congresses got things done, they fought, they cajoled, they compromised, of course it may not have seemed that way then, but they managed things pretty well.

 

[Sactowndog]

you are making an argument in/of mitigation.


and so what? Clinton was of what generation?

Clinton was the first and the Congressional leaders of that era were not boomers. My point is the problem in not Obama specifically but then generation as a whole that has never learned to set aside their ideological extreme positions for the good of the country as a whole.

exactly- if I recall Clinton and the rep. congresses got things done, they fought, they cajoled, they compromised, of course it may not have seemed that way then, but they managed things pretty well.

I don't disagree but this debate mirrors what is occurring on capital hill. No one here as argued that entitlement reform doesn't have to be part of the solution and that spending especially in Medicare and Medicaid has to be reduced.

Just like in Congress the sole impediment to us reaching agreement on a meaningful deficit reduction approach is your unwillingness to move on increasing the top income tax rate and worse the rate on capital gains.

Just like on the Hill Republican insistence on maintaining these historically low tax rates in the face of crushing deficits is the main problem. This is a center- far right debate not a center - left debate like Fox News likes to paint it.

 

[Trajan]

Again this is completely wrong and misleading. Yes the vast majority of people own stock but for a high percentage of those people the stock is held in 401K's and will never be subject to the capital gains tax. All disbursements from a 401K are subject to Income Tax.

The Capital Gains tax rates are one of the poorest choices we make in the tax code, given that today most wealthy who would hold stock outside of 401K's diversify their portfolios globally. Why should we provide an incentive rate to invest in China? Those who are creating jobs in China should not be getting a break for funding the government in the United States.





I agree with that but what you said about 401k's being stock portfolios is "misleading'" you get co. stock by grant and discount purchase price in THAT co., it doesn't go into your 401K.

and that has what to do with revenue?

as far as poor choice, risk taken should be rewarded. they get rate not based on income level, becasue it is NOT income tax as we know it, taking a check form a job incurs zero risk, so thats probably as fair as it can get, most especially since you can only write off 3K in losses a year. And if they invest in China well so what? If you are against providing cap. gains rates to an investment made in china, which is taxed when it comes home, then you must be against free trade....are you?

A stock grant or option is different than a company match in a 401K. The claim was that virtually everyone holds stock of some sort and a capital gains tax cut benefits everyone. This statement is simply not true as the general public holds stock within their 401K and disbursements from a 401k are treated as income not capital gains. Therefore a capital gain tax cut does not help much of the middle class.

Second capital gains apply to much more than risky venture capital start ups. Items like dividends are not particularly risky and still qualify for a capital gains treatment. Second, the only reason to provide a beneficial tax treatment for return on capital is historically the investment has produced local jobs which ultimately increases the total tax base. Also historically people had not shifted their income to be predominately capital gains based. Both these factors have resulted in providing tax benefits with very little value back to the government in terms of increased jobs.

Eliminating the break on capital gains and replacing it with a dramatically lower corporate income tax should be job 1.

it appears you are stuck on 401K as a repository of stock for the 'middle class', the professional middle class gets grants and discounted purchases, these do NOT go INTO your 401K, you may select as an option IN your 401K to invest in the co. stock or other stocks for the % of your pay up to the limit that you have allocated for that purpose.

Further my finance guy advised me not to, since I was getting grants and discounted purchases in co. it would behoove me NOT put all my eggs into one basket, I should diversify, by NOT selecting co. stock as a basket 401K allocation, but a low, mid or high cap fund(s), depending on where you are vis a vis your age vs. retirement plans etc.


and-

For some time, 401(k) plans were also heavily used to acquire employer stock, mostly in public companies. About 19% of 401(k) assets were held in employer stock in 2001, but that number fell to about 10% by 2009 in the wake of the accounting scandals at Enron et. al. and, later, the stock market crash. Employees decided (wisely, we think) to be more careful about diversification in plans primarily designed for retirement. ESOPs and individual equity plans, meanwhile, remain good vehicles for asset building.

A Comprehensive Overview of Employee Ownership


19% doesn't sound huge to me. My wife and I both work/worked for fortune 500 co's that provide grants at focal time and purchase prgms. That stock given or purchased is put in your stock account portfolio- NOT a 401K, now if you had profit sharing to as I did you had a selection choice if you wanted to, to have it all held as co. stock, but that was profit sharing and 'free money', that was and deserves to be taxed at a non cap gains rate, but at a Roth style withdrawal rate to encourage thrift.