Sorry, I meant "budget deficit" instead of "trade deficit". And the deficit is, Chet, as you mentioned, about $9 trillion, WAY up from the Clinton era mainly because of the Bush tax cuts.

And that figure does represent how deeply we're in debt to other countries, who are starting to resent the fact and wanting to move to other fluid currencies. People don't trust the U.S. economy like they used to.

chet wrote:Income taxes are no way to balance the deficit. They make up 33% of the federal spending budget. From '96 to '00, I think it was 60% of USA corporations paid no income tax, and 70% of foreign based firms in the USA paid no income tax. Raise taxes all you want; they'll just hire more accountants to deduct everything to 0. Even Nader was against the federal income tax for this reason.

So, your argument against taxing corporations is that they'll just dodge the IRS anyway? Why don't we strengthen the penalties against such corporate malfeasance and spend more time investigating it instead? That way the crooks will be kept in line and we'll have enough revenue.

33% of the spending budget is not a negligable figure. Raising taxes on the wealthy and on corporations would significantly contribute to chipping away at the deficit. And doing so is a huge priority right now.

Here's how I solve our revenue/spending problems, in a nutshell: Raise taxes on the wealthy. Cut spending on hi-tech/Pentagon projects/corporate welfare (the Iraq war costs more in *one month* than a nationalized health care system would cost for *one year*; this figure represents a deplorable misappropriation of resources). Raise spending on health care/education/social programs/welfare/federal regulatory committees. Make balancing the budget a top priority.

Do you guys know how much the wealthy used to pay in taxes back when Republicans were fiscally responsible? Between 50% and 80%! Now that supply-siders have taken over Washington, they pay around 23%, if I remember correctly. Palpably unfair.

Now, I can hear the objection right now: More governmental power means more invasive actions like the Patriot Act! But I don't see the correlation at all. Under Paul's system, which will of course never be realized because's it's lunatic, he would still maintain enough federal power to defend ourselves against foreign enemies and illegal immigrants. So, how would he be immune from the ill usage of such power himself? Any government would be able to breach the boundaries erected by the Constitution. It's just a question of electing the people we think will try to uphold its standards. I don't think Paul understands the first thing about the Constitution, as evidenced by his crazy averral that the Framers wanted there to be a strong religious presence in America. Nonsense.

Someone tell me if this sounds unachievable. It sounds pretty sensible to me. Keep in mind that military-related spending takes up about 50% of federal spending, so cutting a bunch of that will free up a lot of extra revenue.

The Bushies only cut taxes because they were operating under the fraudulent supply-side thesis, which holds that cutting taxes will actually help to reduce the deficit. It's actually the other way around. Cheney himself said, though, that "Reagan proved that deficits don't matter." So you can see that the current Republican drive is towards permanent fiscal irresponsibility. That's one of the main reasons, among others, that you should vote for Democrats instead of Ron Paul.

NerblyBear wrote:So, your argument against taxing corporations is that they'll just dodge the IRS anyway? Why don't we strengthen the penalties against such corporate malfeasance and spend more time investigating it instead? That way the crooks will be kept in line and we'll have enough revenue.

Not tax evasion or anything illegal, Im talking about legal means of paying less taxes. Corporations have teams of knowledgeable accountants that will nickel and dime every deduction and write off to make your income amount to 0, so they pay no taxes. It would be really hard to beat this under a progressive tax system. Thats why Im for a flat tax system; they'll actually have to pay something under that system (while middle/lower class will actually pay less in taxes). Everyday people don't have access to teams of high-priced accountants, and will get hit with a lot of the burden. A progressive tax system also has some other faults I can get into if you want (more minor points).

I agree with you 100% that spending is out of control and that were wasting tons of money on the war and the military. Balancing the budget should be a priority. I guess I just don't want to raise taxes at the same time. It really hits the middle/lower class heavily and limits economic opportunities. Many tax experts believe that 40% should be the maximum tax rate, after that the willingness to work is reduced (and at the same time, people are more likely to not pay), and actual income from taxes will be reduced. In the USA, I have been quoted that about 1/3 of our money every year goes to the government (in Canada its about 47%/48%). Don't you think this is cutting some people off at the knees? Putting money back into the peoples hands should make things grow at a more competitive and exponentially faster rate than if it was run through government bureaucracy.

chet wrote:Thats why Im for a flat tax system

Yeah, noooooooobody's gonna duck that one.
Get ready for the black market big time.


Plus, you know overtaxing the poor is sooo awesome.

Ah, but they get prebates to make it progressive.

Then what is your problem with progressive taxation again??

Ughhhhhhhhhhhhhhhhhhhhhhh I don't know

chet wrote: It would be really hard to beat this under a progressive tax system. Thats why Im for a flat tax system; they'll actually have to pay something under that system (while middle/lower class will actually pay less in taxes). Everyday people don't have access to teams of high-priced accountants, and will get hit with a lot of the burden. A progressive tax system also has some other faults I can get into if you want (more minor points).

This makes no sense to me. Correct me if I'm wrong, but isn't a "flat tax" where everyone pays the same amount? So, for instance, a working family would pay the same amount as a CEO or even a corporation (legally a person)? Wouldn't this drastically reduce the amount that the wealthy pay (even with fancy accounting practices)?

So, in effect, you're trying to mollify my concerns about a dearth of revenue by showing that the wealthy would pay *less* than they do now under the graduated system? How does this mollify me?

chet wrote:I agree with you 100% that spending is out of control and that were wasting tons of money on the war and the military. Balancing the budget should be a priority. I guess I just don't want to raise taxes at the same time. It really hits the middle/lower class heavily and limits economic opportunities. Many tax experts believe that 40% should be the maximum tax rate, after that the willingness to work is reduced (and at the same time, people are more likely to not pay), and actual income from taxes will be reduced. In the USA, I have been quoted that about 1/3 of our money every year goes to the government (in Canada its about 47%/48%). Don't you think this is cutting some people off at the knees? Putting money back into the peoples hands should make things grow at a more competitive and exponentially faster rate than if it was run through government bureaucracy.

Chet, you can't balance the budget if you continue to cut taxes. Show me how this could possibly occur--I can't conceive of a way.

And you're forgetting that I'm in favor of reducing the burden on middle/lower classes and only of raising it on the wealthy. If you want to set the figure at some arbitrary percentage like 40%, then that's at least a good starting point. It's a considerable improvement on the 23% the wealthy currently pay under the Bush system.

Your argument that cutting taxes will "make things grow at an exponentially faster rate" ignores the reality of the situation. Many conservatives make this argument, and I don't understand it. If you cut a wealthy man's taxes by giving him, oh, let's say, $44,000 a year which he would have given away, *how does this make him more competitive*? He will put it right back into the bank and let it grow interest. Savings does not equal economic venture, nor does it equal more spending. Businesses are doing the exact same things now that they were doing before the Bush tax cuts. The only difference is that the wealthy have more money to spend, and the gap between the rich and the poor is "exponentially greater". Huge gaps between the rich and the poor do not signify a healthy economy. The gap would only increase under the implementation of libertarian principles.

Your argument would make sense if you were urging us to cut taxes on wealthy/corporations from, say, 60% to 35%. Because you could make a case that, above 40%, you'll get diminishing returns. But the Bush tax cuts let the rich keep their money, not spend it. The economy is worse now than it was under Clinton. How do you explain this under your theory that cutting taxes necessarily generates growth?

VOTE EDWARDS. Period.

NerblyBear wrote:This makes no sense to me. Correct me if I'm wrong, but isn't a "flat tax" where everyone pays the same amount? So, for instance, a working family would pay the same amount as a CEO or even a corporation (legally a person)? Wouldn't this drastically reduce the amount that the wealthy pay (even with fancy accounting practices)?

A flat tax would give everyone the same rate of taxation (everyone would not be paying the same amount). So, lets say our hypothetical rate of taxation is 15%. That means if I make $50,000 a year, I have to pay $7500, and the rich guy who makes $500,000 a year has to pay $75,000 a year. So no, we don't pay the same amount. The rich guy has to pay more, rather than the system we have now where the middle class guy has to pay at a higher rate, and the rich guy deducts his income with accounting tricks near to 0, so he pays next to nothing. You cant do that with a flat tax; they dont allow all the deductions.


No one is going to keep their money sitting in a bank account either. Interest on a savings account barely covers the rate of inflation today. People invest this money (usually in a diverse portfolio) in order to pay for retirement, start a new business, put the kids through school, etc. If you let it just sit around, inflation alone will eat away at the value.


EDIT: This is one way the gap would be not as wide also. The rich have to actually pay taxes for once, while the lower/middle class will have to pay less, allowing them greater economic freedom and growth.

50,000 a year minus 7500 =42500 of income left

500,000 a year minus 75000= 425,000 of income left

Not exactly hurting the rich guys pockets.

Plus, people under a certain income level pay no taxes under our current system? How does a flat tax make them pay less?

A national flat tax on goods means that the poor and middle class will dodge it through the black market. It also means the rich will sink their money into investments that wouldn't be taxed and that they could just buy overseas to avoid the taxes.

Didn't Reagonomics teach you that this kind of stuff won't work?

I'm assuming you are advocating a sales tax here. If you are advocating for a straight regressive income tax, there is simply nothing that can help you.

o_d_m wrote:50,000 a year minus 7500 =42500 of income left

500,000 a year minus 75000= 425,000 of income left

Not exactly hurting the rich guys pockets.

So, is the problem for you more economic, or social? I mean the need for bigger government. If we can have a flat tax, like Chet has suggested, but get rid of our medieval drug laws and decriminalize narcotics, let the states become more autonomous, put an end to illegal wire tapping, end the war, and reduce the budget of the military, wouldn't smaller government be a benefit in regards to individual rights?

I ask because the social factor doesn't seem to be covered very much in this discussion.

Chet: there's nothing inherent to a flat tax that gets rid of deductions. If we overhauled the tax code completely (whether it was for a flat or a progressive system) we could get rid of all the existing loopholes once... but nothing stops interest groups and lobbyists from adding them back in as soon as Congress reconvenes the following year. I do agree, though, that a simple flat tax would probably result in fewer loopholes (there'd be less political pressure to re-add them).

Also, rich people currently cannot deduct their taxes down to 0%. No matter how many normal deductions they have, the Alternative Minimum Tax (which has a lower rate, but lacks most deductions) hits them on wage income. The main tax dodge used by wealthy people is shifting compensation into stock options, so it's taxed at the lower capital gains rate instead. But getting down to 0%, or anything close to it, would have to involve actual fraud/shady offshore stuff.

Corporations are another story -- they can reduce tax in all sorts of ways, since profit is a much looser concept than income. But I think (and I'd welcome a correction if I'm wrong here) that publicly traded companies can only distribute dividends out of their declared profits, so they can't really weasel out of every dime of profit without pissing off their shareholders.

Nerbly: the top marginal rate right now is 35%. It was over 90% from the '40s to the '60s, and gradually fell to 28% in the '80s before rising again. But that's the top marginal rate. The actual income paid depends on deductions and where the brackets fall. For example, if the top rate is 90%, but that bracket only starts at $10 million, then a rich guy is still getting a lower rate on his first $9,999,999.

The real measure would be the actual percentage of income paid, and that rate was never close to 80%. The older tax codes had a lot more loopholes to be exploited by accountants. I remember Lee Iacocca recalled Henry Ford II's annoyance when his tax bill went from $0 to a low five-figure amount.

Also, one other point of clarification: the budget deficit is the ongoing (e.g., monthly or annual) gap between revenue and spending. This is the number that officially dropped below $0 during the Clinton administration, and was something like $250 billion for 2006. The debt is the total outstanding amount owed, and that's what stands at $9 trillion. I think most of that is owed to Americans, but I'd guess that the percentage is decreasing fast.

Skronk wrote:wouldn't smaller government be a benefit in regards to individual rights?

Sure, as long as they are not protecting corporate rights in the process.

Which, unfortunately seems bound to happen.

And why couldn't we have a government with a hearty amount of social programs and not have all of the agreeably wonderful things you mentioned?

You can have those things, just don't take away socialized medicine, abortion rights, education funding, and arts funding to do it.

I don't think Ron Paul and I agree on much more than the War on Drugs/Iraq issue. I also agree with Rick that he couldn't really get most of his batshit crazy agenda through Congress. I'll still just keep on voting people who I agree with the most. Ron Paul is not this person.

o_d_m wrote:50,000 a year minus 7500 =42500 of income left

500,000 a year minus 75000= 425,000 of income left

Not exactly hurting the rich guys pockets.

Plus, people under a certain income level pay no taxes under our current system? How does a flat tax make them pay less?

A national flat tax on goods means that the poor and middle class will dodge it through the black market. It also means the rich will sink their money into investments that wouldn't be taxed and that they could just buy overseas to avoid the taxes.

Didn't Reagonomics teach you that this kind of stuff won't work?

I'm assuming you are advocating a sales tax here. If you are advocating for a straight regressive income tax, there is simply nothing that can help you.

The flat tax system allows people under a certain income to pay 0. I was talking about a flat tax on income, not a sales tax (which would be a regressive tax, i.e. taxing the poor at a higher rate than the rich).

Buying goods on the black market? Offshore holding accounts? People will do these things no matter which tax rate you use. Why would it make a difference with the flat tax?

Look at the system that Alberta has now. They did a whole study on this in the 1980's, then actually put it through. They run at a huge surplus (not just because of this though, obviously also because they have so much oil/resources).

Im not arguing for a regressive tax. That would be a sales tax.