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      11-13-2012, 05:42 PM   #1
MiddleAgedAl
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Obama requires BALANCED approach to fiscal cliff plan

Obama says he's open to all new ideas, but will reject any approach which is not "balanced".

I think it would be really nice if he chose to explain exactly what balanced means to him.

Based on the raw, irrefutable hard numbers available from the Congressional Budget office, the numbers are already quite unbalanced, but not the way the Democratic party propaganda machine would have you believe. The most current available figures from the CBO is from 2009. (considering all this data must exist in an electronic format, you'd think it would be easy to compile and produce more current numbers than that, but the wheels of Government turn more slowly than the private sector).

Linky for all the numbers below: http://www.cbo.gov/publication/43373

The top 20% (in terms of income) represented 50.8% of before-tax income. They paid 67.9% of all federal income taxes collected.

Conversely, the bottom 20% represented 5.1% of before-tax income, yet paid 0.3 % of all federal income taxes collected.

How can you possibly slice these numbers in a way that produces a conclusion that the wealthy are paying less than their fair share?
If you based it on percentages, you could say that the top 20% might be responsible for 20% of the tax burden. They currently pay more than triple that. If you base it on income, you could say the group which enjoys the 50% of all money earned might be responsible for 50% of all taxes collected. They currently pay far more than that as well.

Due to the crappy economy, people are making less $ than before. But, the loss there is not proportional either. From 2007-2009, average declines in before-tax income were 5 percent or less for households in each of the four lowest income quintiles and 18 percent for households in the top quintile. For households in the top one percent, income fell by 36 percent.

And yet, as the top 20% saw their incomes drop more than any other group (at least 3times more, in fact), they think that now is a good time to crank up the rates and make them pay even more.

OK, how exactly is that balanced ?

Full disclosure: I am not in the top quintile, although I am diligently working towards it, so the proposed changes at the top end dont affect me. However, not being shortsighted, I do realize that the people who own my company do fall into it, and flipping them the proverbial fiscal bird like this is not what I would prefer to see happen in the interest of keeping my job, especially when it is easier for them than ever before to ship things overseas.
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      11-13-2012, 05:53 PM   #2
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Does he mean "balanced" between revenue increases (tax increases) and program costs cutting, rather than what you've described?
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      11-13-2012, 05:55 PM   #3
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To put it another way, it's like being in a lifeboat at sea with 10 shipwreck survivors. Two of them are doing almost 70% of the rowing, and yet the group decides that the best way to get that boat to move even faster towards an island in the distance is to get those two people to row even harder, while the rest do nothing different, or even row less than before?

Even if you argue that the two at the front do honestly have bigger muscles than everyone else, and thus could theoretically handle increases in load better, wouldnt it be in the best interest for everyone if the others in the boat all try and row a bit harder too, even if they know their stroke still wont be quite as powerful as the two at the front?

I guess in an election where all votes count the same, the 2 strongest at the front have no chance against the 8 at the back.
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      11-13-2012, 05:57 PM   #4
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Originally Posted by DieselDiner View Post
Does he mean "balanced" between revenue increases (tax increases) and program costs cutting, rather than what you've described?
Maybe? I honestly dont know. Perhaps focusing on cuts vs. revenue is one area where you might achieve balance, because looking at the numbers I've highlighted, we're sure as hell nowhere close to balanced there.
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      11-13-2012, 05:58 PM   #5
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There are numerous other ways to increase taxes besides the personal income tax, but back to my question: do you think he meant what I posted, or do you think he's talking about changing the personal tax rates? I thought he meant the former, sounds like you think he means the latter. We need to decide what he means, and if you have it right, then everything you posted in the op is compelling.

Edit: You posted as I typed, so I missed your reply. Sorry.
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      11-13-2012, 06:08 PM   #6
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Quote:
Originally Posted by DieselDiner View Post
Does he mean "balanced" between revenue increases (tax increases) and program costs cutting, rather than what you've described?
Yes, you nailed it. It's a pretty simple concept, really and both sides agree that solving the debt crises and balancing the budget will require BOTH spending cuts and increasing revenue. This was the recommendation of the much heralded Simpson Bowles commission plan.

Pretty straight forward. Not sure what all the fuss is about.
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      11-13-2012, 06:13 PM   #7
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Yes, you nailed it. It's a pretty simple concept, really and both sides agree that solving the debt crises and balancing the budget will require BOTH spending cuts and increasing revenue. This was the recommendation of the much heralded Simpson Bowles commission plan.

Pretty straight forward. Not sure what all the fuss is about.
What is one of the primary principles of his plan for the "increasing revenue" half of his balanced approach ?

It's no secret he's keen to increase personal tax rates at the top end, as he's been very explicit about that many, many times, both before and after his re-election. So, it stands to reason that he would want any changes that are enacted to avoid the fiscal cliff to contain some component of increasing their taxes.

I'd bet he would like to bundle those increases with some spending cuts to make it easier to spin the final result as balanced, (ie: rather than make the top 20% handle a LOT more, I'll make them handle a LITTLE more, and cover the rest of the gap with spending cuts).

That plan would depend on the premise that most folks dont examine the amount of "rowing" that is being distributed across the board already. Probably a pretty safe bet, considering how far they were able to leverage the general publics ignorance of corporate bankruptcy proceedings when distorting Romney's comments on GM bailouts.

I would argue that even in half of the gap is covered by revenue increase, and half by spending cuts, that is still not balanced if the hard numbers behind the revenue increase are still in the same ballpark as the CBO figures.
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      11-13-2012, 06:43 PM   #8
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Quote:
Originally Posted by MiddleAgedAl View Post
What is one of the primary principles of his plan for the "increasing revenue" half of his balanced approach ?
As you said the president ran on the idea of letting the Bush tax cuts expire for the wealthiest Americans and perhaps eliminating subsidies for Oil Companies and other corporations. Most Americans agree with this approach. In addition there will need to be cuts in spending which means paring down some entitlement programs which many on the left will not be happy about. But it's necessary to solve the financial and debt problems we face.

Bottom line is there will be pain on both sides and neither side will be completely happy. That's what compromise is all about and that's the mark of a good deal.
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      11-13-2012, 07:15 PM   #9
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Most Americans agree with this approach
Yup, because most Americans fall into the bottom 4 quintiles which wont be nearly as affected by the tax increases as those in the top quintile.

If the vote was weighted by the amount they contribute to the pot, the result would have been different. (not entirely unreasonable approach, if I own 5 units in a condo tower, I get more votes during HOA meetings than someone who owns 1, because more of my money is being spent by the HOA, so I should have more of a say)

The fact that it was as close as it was should tell you something, as clearly 48% of people dont represent the top earners, but they realized that putting the screws to job creators who already pay more than their fair share (based on CBO data above) might encourage them to look at just how green the pastures are elsewhere.

In your example, the left may not be happy with reductions in entitlements, but there is NO risk of them all leaving and consuming their entitlements elsewhere, thus putting the American providers of these services out of work.

Pretending that two groups with vastly different opportunities of choice will react the same to a theoretically balanced loss of benefit is naive, and downright self-defeating if you are trying to create jobs and economic investment.
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      11-13-2012, 11:57 PM   #10
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All I know is if someone like mitt Romney who is worth 270 million dollars
Pay a lower tax percentage than me, when I make 80,000 a year
The tax system is f$&d up
he pays 14%, I pay about 22%
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      11-14-2012, 12:25 AM   #11
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Quote:
Originally Posted by kmarei View Post
All I know is if someone like mitt Romney who is worth 270 million dollars
Pay a lower tax percentage than me, when I make 80,000 a year
The tax system is f$&d up
he pays 14%, I pay about 22%
At least you're hating the game and not the player. The ignorance of the american public shines brightly on this subject.
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      11-14-2012, 06:10 AM   #12
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Quote:
Originally Posted by kmarei View Post
All I know is if someone like mitt Romney who is worth 270 million dollars
Pay a lower tax percentage than me, when I make 80,000 a year
The tax system is f$&d up
he pays 14%, I pay about 22%
Maybe you need to get some help preparing your returns. I don't make what Romney does but I've always managed to get my effective tax rate into the teens. If I gave as much to charity as he does I could probably go lower.

Watch Kalifornia--now that they have one-party government they will continue to try to tax their way out of their problems. Let's see how that works.
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      11-14-2012, 09:35 AM   #13
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Quote:
Originally Posted by kmarei View Post
All I know is if someone like mitt Romney who is worth 270 million dollars
Pay a lower tax percentage than me, when I make 80,000 a year
The tax system is f$&d up
he pays 14%, I pay about 22%
What percentage of your income was capital gains, taxable interest, and dividends?

Like MP0WER said, the ignorance of the American public with regard to the tax code is midblowing.
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      11-14-2012, 10:13 AM   #14
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Quote:
Originally Posted by MP0WER View Post
The ignorance of the american public shines brightly on this subject.

Quote:
Originally Posted by smohr33 View Post
Like MP0WER said, the ignorance of the American public with regard to the tax code is midblowing.
True, so very true.
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      11-14-2012, 10:48 AM   #15
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What I think he means, as mentioned by others, is a way to raise revenue and also reduce spending. Although the only thing I hear him saying lately is that americans need to pay their "fair share" of taxes which means he wants to raise taxes on the top earners who pay way more than their fair share in the first place. I'm not sure how people can keep believing that the rich don't pay enough taxes when the numbers are easily found on the internet.

This article sums it up nicely too if you don't feel like crunching them yourself:
http://www.forbes.com/sites/peterfer...on-tax-policy/
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      11-14-2012, 11:45 AM   #16
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Originally Posted by MP0WER View Post
At least you're hating the game and not the player. The ignorance of the american public shines brightly on this subject.
if i were him, i'd be doing the same thing
as long as the system allows it
so no i don't hate him, god bless him, he earned that money
not my job to envy him or hate him for it
i'm just pissed when i have to pay a higher percentage tax than him
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      11-14-2012, 11:50 AM   #17
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What percentage of your income was capital gains, taxable interest, and dividends?

Like MP0WER said, the ignorance of the American public with regard to the tax code is midblowing.
to be fair, you do have a convoluted tax code system in this country
i find it downright unfair that 2 people are making the same annual salary
but are paying different amounts because one guy managed to figure out all the loopholes, and has a smart tax guy
and the other just filled in his forms and is taxed higher
most countries i have lived in, the tax rate was decided by your gross income
so if you get 10 people who all make 100,000 a year
they are all taxed the same, no loopholes, no deductions, no other misc crap

this system favours the rich, because they can afford tax guys who's sole job is to sift through all the paperwork and forms to try to find as many deductions and loopholes as possible.
heck in most countries a tax guy is only used at the corporate level, not for individuals
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      11-14-2012, 11:52 AM   #18
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Originally Posted by smohr33 View Post
What percentage of your income was capital gains, taxable interest, and dividends?

Like MP0WER said, the ignorance of the American public with regard to the tax code is midblowing.
my tax stuff is pretty easy
i make about 80,000 a year
no other source of income
no 401K
no shares, no CDs, nothing other than salary
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      11-14-2012, 12:53 PM   #19
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i'm just pissed when i have to pay a higher percentage tax than him
Rest assured that in raw dollars, he is contributing far more to the pot than you and I combined. If we all drive over the same bridge, we all get the same benefit from it, it's not as if he gets a special lane to use to cross it faster, even tho he paid for a much bigger section of that bridge than you did. It's not as if the bridge costs less to maintain when someone drives a 15 year old Camry over it, compared to a new M5. Raw dollars matter when paying for the stuff that makes society function, not percentages.

If you are interested in not being pissed, I'd suggest trying not to think about it too much, because then you'll realize that he pays the same for a gallon of gas as you do, or a jug of milk, etc, so he's also paying a much lower percentage of his income than you are for those commodities, not just income taxes. If you are trying to make life "fair" on a percentage basis, you'd have to charge him more for milk, etc.
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      11-14-2012, 01:00 PM   #20
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my tax stuff is pretty easy
i make about 80,000 a year
no other source of income
no 401K
no shares, no CDs, nothing other than salary
So you are saying that no matter how the income is generated (salary, dividends, capital gains) people that make the same amount should be paying the same taxes?
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      11-14-2012, 02:16 PM   #21
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this system favours the rich, because they can afford tax guys who's sole job is to sift through all the paperwork and forms to try to find as many deductions and loopholes as possible.
Only the rich can afford a "tax guy"? I paid $175 for my personal income tax preparation last year, and I have a decent amount of deductions, does that make me rich?
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      11-15-2012, 03:02 PM   #22
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So you are saying that no matter how the income is generated (salary, dividends, capital gains) people that make the same amount should be paying the same taxes?
yes
it's all money earned
how you earn it should make no difference to how you are taxed
so if i have no salary and i make 1 million a year in the stock market i should pay less tax than someone who has a salary of 1 million?

as long as its money earned
not inheritance (estate tax) etc
it should be taxed the same
why is that unfair?
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