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On The Inevitable Surge Of Tax Rates
For all who doubt the Obama administration will raise tax rates into the stratosphere in the very near future, here is a chart created by dshort.com
which compares the total level of debt to GDP with Federal tax brackets
over the past century. The correlation between the two isunmistakable .
Unless the administration promptly finds a way to reduce the massive
amount of debt that it continues to issue (in March alone the US
Treasury issued a massive $333 billion in
net debt), tax rates will have no option but to spike to levels not
seen since the 50's. And that means a tax bracket for the highest
earners of about 90%... You didn't think socialism comes cheaply now
did you?
Here are some additional charts that correlate major moves in the Debt-GDP ratio with key external events...Is it time for WW3 yet?
And with US presidents...
»
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Didn't know there were those who thought taxes would be unchanged.
Didn't it go something like "For those of you who make less than $250K your taxes won't go up one dime! Not!! ONE!!! DIME!!!!!!"
Yeah, of course he was a lying sack of crap as a candidate, and is now a lying sack of crap as President.
"For those of you who make less than $250K your taxes won't go up one dime."
The Messiah spoke the truth there. Your taxes won't go up "one dime", they will go up a HELL OF A LOT more...
Much of the money raised via tax rate hikes will be spent on debt servicing to the banks who then give their top mangement hefty bonuses.
I can't see where the socialism comes in here.
It's not socialism; it's fascism. Read Mussolini again and look at what we have today. There is a reason that the government controlled education establishment doesn't educate about fascism properly and instead treats it as a bogeyman-under-the-bed to frighten children.
Or if you prefer another name, call it corporatism. But it's not a free market and it's not socialism.
THE MERCURY RULE OF SOCIALISM AND THE MIDDLE CLASS
If you are forced to give more than $1 away to strangers for every $1 that you're allowed to keep for yourself, that's socialism...or worse.
If you are neither rich nor poor enough to afford socialism and it's trade-offs, you're middle class.
it's not socialism (yet), it's a gentlemen's club.
Who are we kidding. Socialim IS a gentlemen's club. So is communism. You just have to have the right connections, party or otherwise. Some in the Soviet System lived quite nicely for themselves at everyone else's expense.
What is the plan here exactly? This just intensifies deflationary pressures.
In order to simply neutralize the negative impact of this, they would have to vastly increase tax breaks on debtors (accelerated mortgage interest deduction, suspension of AMT, etc.) Otherwise, this just takes M2 through the floor. Its WAY too late to begin raising taxes.
Ordinary citizens are starting to get this crazy idea that corrupt politicians have been bribed by crooked lobbyists to raise taxes to bail out the failed trading positions of financial criminals.
Pitchfork time!
I guess thats why the rich are making as much money as they can now to prepare for this. No wonder the markets are up bigtime and the insiders are still liquidating.
It's facism. Government-run private enterprise.
Fascism... Mussolini style.
I've been telling people this since Bush abandoned all pretext of leadership.
I'm not passing judgement on its merits, however poorly it has performed in the past, I'm just calling Corporatism, Fascism... just like Mussolini did.
It feels more like private-enterprise-run government to me.
I guess maybe it is a distinction without a difference....
"The correlation between the two is unmistakable"
Until about 1982, you mean.
The problem with raising taxes is that you can only raise them a little bit at a time, otherwise people resist. With the current level of hyperinflationary deficits, there is no way that taxes can be raised fast enough to fill the gap.
Exactly right. Pretty soon, if taxes start rising faster than palatable, all politicians will run on the higher-tax or lower-tax plat form. No one will care about healthcare, Iraq, banking. They'll only care about their tax bracket. That which is most personal is most sensitive.
Here's the dirty little secret. The federal and state governments have discovered that they don't need to raise personal income tax rates to generate revenue. Businesses have proven that they can be quite an effective dupe, passing increased taxation to the consumer and absorbing the blame that should have been directly placed on governments who are utterly incapable of going on a diet.
This system, while still resulting in mass starvation, does ensure that the beast will be the last one to run out of food.
Well having squandered the Reagan-era chance at productive investment and the 'peace dividend' with 30 years of delusional binging on cheap credit for consumption, WHAT DO YOU EXPECT?
It's not Obama's fault, it's Greenspan's, Baker's, and Rubin's. With some aiding and abetting by 'useful idiots' like Summers Geithner and Bernanke.
Get ready to Pay The Muthafuckin' Tab.
Having said that I would still be interested in rolling the Federal budget back to about 1980 levels. Interesting thought experiment: please bring the 30-40% cuts, but only in your own ideologically preferred spending.
Alternatively, cut in direct proportion to lobbying expenditure over the past 30 years.
We'll have to cut across the board. Defense, means-testing on Social Security and Medicare, to get any real savings. Other social programs and earmarks too, but they don't impact the budget as much as people think.
Defense and entitlements are the big ones.
We have to understand that improvements to the American quality of life since the mid-1980's were never "real" - they were all borrowed. As many many households are learning now, when time comes to pay it back, that means austerity. Sack lunches and wearing your old clothes. When your car breaks down, you switch to the bus instead of buying a new one.
The entire American society is about to switch to the bus, but the sheeple don't believe it yet.
You cant cut on Defense when you owe the rest of the world so much money. Defense is the only thing that the US can boast of nowadays. The only way out is to raise Defense spending and basically remove our creditors from the equation. Unfortunate but looking more like this everyday.
+100
Divided States says:
Defense is the only thing that the US can boast of nowadays. The only way out is to raise Defense spending and basically remove our creditors from the equation.
May I suggest you put down whatever you are smoking and come back from moon base alpha. The USA can't even beat a bunch of donkey riding mujaheddin with RPGs and IEDs. What makes you think the PRC is somehow a walkover? Those 10,000+ nuclear weapons, as if they're any use to anyone? (Other than getting rich through a contract to build, install and finally decommission them.) You jarheads are all the same, shoot first and ask questions later.
Tax hikes, austerity, limited choices. Go ask your grandparents what life used to be like. Get over it and get used to back to the future. $1trillion to blow up Iraq and Afghanistan, gee looks like your economy has its priorities right.
The solution is actually simple, but unfortunately the only people with balls it seems in the USA are the faux lesbians entertaining michael steele. Its called property tax, the end of negative gearing and for good measure let's end tax havens. That isn't socialism, that's restructuring society so longer term it doesn't end up going the way of afghanistan, sudan or chad, and other such places where lots of people have no money, no job and bugger all hope.
The fact that 1% of Americans have the vast majority of wealth in your country speaks volumes for the democracy you don't have. Your forefathers stole the country from the natives, now another group has stolen it from you. Let's call that squaring the circle jerk.
You cannot blame banks, or individuals, for trying to make money on Obama's socialism... I'm trying too! It's not up to banks, or any business, to stop the spending manics in Washington, it's up to us, the voters.
Most people-- like you it would appear-- have only an inkling of the calamity that has befallen their investments, their life savings, and the US and world economies. They have almost no idea of the impact it will have on their future safety, security and wellbeing-- and that of generations of Americans to come, if the status quo is allowed to continue.
Our problems are not about politics or ideology-- they're about money and the power and will to do anything to get more of it. Blaming "Obama's socialism" doesn't even skim the surface.
For those who prefer knowledge to ignorance (or denial), here's a brilliant must-read report from David DeGraw comprehensively deconstructing the capture, looting and financial enslavement of America and 99% of its citizens.
http://ampedstatus.com/is-it-time-for-law-abiding-american-citizens-to-stop-paying-their-taxes-and-start-a-new-government
For a somewhat shorter, more Wall Street corruption focused approach, also see: http://calltoaccount.wordpress.com/
They look at this chart and say, WOW! , we've got some room to raise 'em!
Work less, be less productive, buy online, out of state to save on sales taxes, drive less, buy less, live little, starve the US Gov! Until they take away all our income!
Be careful about use/excise taxes when buying online and when the price is substantial. Skirting state sales tax will be IMHO a limited opportunity going forward, especially considering the amount of enforcement the taxing authorities are starting to employ.
Good! I welcome back the 90% tax bracket as long as it starts at a level high enough to not hit a surgeon's earned income. (250K is too low)
Something like everything over 2M at 90% is fine by me. If you can't find happiness making 2M a year you need a shrink not more money.
Graduate the capital gains tax too. And uncap the SS tax or do that doughnut hole plan. We had high tax brackets for decades......
Right now calling our tax system a "graduated" system is a lie. Even Warren Buffet says that it's fucked.
...and i'm not a left winger...stop giving the poor cash credits for having babies and maybe they'll discover birth control.
rotflol you sir are a very funny man! Taxes don't hit the big boys. The rules are made to keep the big boys exempt for much of their income and make it impossible for the new rich to get to their wealth level. A big part of that burden falls on those aspiring to real wealth, on the way up you are hit ferociously. Oh we'll get a higher tax rate, expect it to touch down to 50k a year. Buffet calls it a lie but he openly evades and buys tax credits. Ted Kennedy screamed about inheritance taxes but the Kennedy family holds onto wealth from illegal activities. I watch watch what people do not what they say.
I figure when taxes get worse here then in Europe and offer less social bennies you will see even more people look for the door. After all what will the point in staying be?
Shameful,
You are right. Taxes get evaded by the big boys because the tax system has been molded to their liking. I'm not sure exactly what you mean by "real wealth" but again there you are probably correct. A family of two doctors gets hit harder than a Wall street banker who "earns" much more. Yes, again I agree with you that the working class will take the brunt of the tax increases. Yes Buffet is a tax cheat and that's why he knows first hand how fucked the system is. He's not going to lobby the goverment to fix it obviously.
"I figure when taxes get worse here then in Europe and offer less social bennies you will see even more people look for the door. After all what will the point in staying be?"
You're probably right there as well. Hell, taxes don't even have to rise. I often think "if i'm going to sit here and pound a key board like a dumb fucking monkey for 40 -50 hours a week for the man and be poor anyways I might as well move to somewhere in Europe where they work less and have more time to enjoy the simple things in life."
However, I still say that our fake graduated tax system is the underlying cause. Wealth distribution is too lop-sided. Absence of a real graduated system allows unelected people too much wealth and therefore power. And they use their wealth to further rig the game in their favor. (Deregulate, more tax breaks etc)
I should have said "I would welcome a 90% tax bracket". Do I think it will happen anytime soon? Unfortunately not. But if we had a revolution...a "real" graduated tax system should be put back in place. Do you not agree?
Real wealth you can't spend in a lifetime. Rich you can burn through with a summer and a drug addiction, wealth you almost can't get rid of. Wealth is almost impossible to amass with criminal activity these days.
The graduated tax system is to keep people from amassing wealth. So lets say there is a revolt and we go 90% tax, so we still lose. The people with real wealth are not stupid. They will move it offshore and then will come back and over time buy politicians. Even if it takes 30 years they will use their existing wealth to take back over. The real answer is to let people create their own wealth and get the government out of peopels' affairs. Don't let the gov wield hte power to set winners and losers.
Example who does the SEC work for? Doe sit work for you or me, or does it work for GS? Taxes don't fix that, unless you plan on crusading around the world looting the rich (good luck with that). The real answer is not allow the gov the power to make those advantages to those who already have wealth. You cannot find a nation in the history of humanity that the rich cannot steer government, and like it or not the rich can and will wait for their time to leverage back in. 90% tax rate, hell why not a 200% tax rate?
Also how the hell is it fair for a guy to pay 90%? Why is person forced to shoulder a much larger burden? Even if you ignore the morality of excess taxation then you are telling the productive to leave. "Wow you are incredibly hardworking and innovative, we hate that get the hell out!" If a man can make a real fortune without using the levers of government don't we won't them to make that wealth and provide economic power for America and provide jobs or do we want ot run them out of the country and only keep those who are not inspired to create wealth?
By deregulating and giving tax advantages to the elite they already have weilded the power to set winners and losers. They need to close the tax loop holes for the rich and reinstate the death tax and return to a "real" graduated tax system. How is it fair that money earned from capital gains are taxed less than money earned from labor?
Apparently you would like life to be like playing a game of monopoly. Sooner or later one person has it all and then the game ends. That's what is slowly happening here. Except here, unlike in the game, each player does not start with the same cash. And who ever gets to be the banker in the game is allowed to steal and borrow for free from the bank. And here if the banker makes a bad deal he gets to take a little bit from each of the other players to make up for his mistake.
I fail to understand the cumbaya chant of "less government". It was in fact less government (deregulation) that allowed for the Wall Street sociopaths to create the current economic crisis while they pocketed amounts of cash like a comic book villan. According to your theory everyone should just be a wall street banker and if not then they deserve to be poor huh? Everyone in the country should go to Harvard business school and learn how to game the system? Maybe everyone should just trade stuff around and nobody actually work?
We need fair government, smart government, better government. Yes, in the end that should be less government. But this no government utopia, every man for himself lacks common sense.
The playing feild is so slanted now. It must be leveled. We are entering another guilded age. Capitalism can work but it must have restrictions.
Right tax the most productive people the most. Certainly that won't result in a mass exodus.
Oh wait! It already has! That's why there isn't any industry in this country any more!
I might add that with continuous and everlasting inflation, those tax brackets will apply to you a lot sooner than you seem to think. There was a time when the income tax was only to be levied against the "super rich" who made more than 20K/year.
"Right tax the most productive people the most. " So you are saying that wall street bankers are productive people? Hedge fund managers? What do they produce? How about Wallmart. What does Walmart produce? What good are the Waltons and their 100 billion doing for our country? (yes you could argue that they save you a couple bucks on a t-shirt that you don't need.)
"Certainly that won't result in a mass exodus.
Oh wait! It already has! That's why there isn't any industry in this country any more!"
Puhleeeeeze. Industry left because corporations prefer to use extremly cheap labor in undeveloped countries. Get a fucking clue dude. Companies were plenty profitable here. They just wanted more more more.
"I might add that with continuous and everlasting inflation, those tax brackets will apply to you a lot sooner than you seem to think. There was a time when the income tax was only to be levied against the "super rich" who made more than 20K/year."
Wow..fucktarded. Of course they would need to adjust brackets for inflation. Not saying it has alwasy kept up but a family that earns 20K a year probably doesn't pay a penny in taxes these days.
That has to be one of the dumbest posts I've ever seen on Zerohedge. Go back to watching fox news buddy.
I completely agree.
First, eliminate the Bush CG tax cuts, and impose a graduated rate up to 25% for all CG income over, say, 2MM.
Second, remove the cap on SS taxes (currently around $109,000) and make permanent the 3.85% CG surcharge for HC reform and impose another 5% surcharge on all CG income and earmark this for Social Security.
Third , impose a national 3% VAT on all goods and services, with rebates or tax credits for those below 3-4X the poverty level, and earmark this for debt retirement.
Finally, get serious about spending cuts. Eliminate all entitlements earmarked for Corporations (subsidies, targeted tax credits, etc.).
Just my zweipfennigs worth....
KrvtKpt. laughing swordfish
Deficit Hawk
I could see a national sales tax / vat tax comming along with the tax hikes as well.
I believe the mortgage interest deduction has been repealed. Wait till that becomes noticed next year.
What? Do you have a link to that info?
NAR Opposes Mortgage Interest Deduction Provision on Obama's Budget Proposal
http://www.realtor.org/government_affairs/mortgage_interest_deduction/mid_obama_budget_proposal
I wonder if this is why short sales are ok again? Loss of the deduction next year means today's "market" price may be as good as it gets for a good long time... especially with rates crossing 5%.
The Case for Ending the Mortgage Deduction
http://www.nytimes.com/2010/03/23/business/23views.html
(Remember that dinky 8 month inventory of homes? Agnes can stretch it to 8 years! Woot!)
like we didn't know that was coming
Consider this. With the most qualified health care professionals faced with the daunting choice of working even harder, paying more to taxes and being subjected to a massive bureaucratic tidal wave how many will decide to just pick up and retire. Especially those who can tap social security and draw down the retirement accounts.
What will that do to the quality of the health care system? At a time when they want to jam how many more millions into a system that is already woefully under staffed. Violins anyone.
One big question is do they intend to pay for the
present excesses? That would be more honest than I
expect.
The problem with Reagonomics was that money
doesn't trickle down: it floats to the top and stays
there.
Raising tax rates is a just response to how the investment
class took advantage of low taxes. They engaged in a strange
kind of a "Carry" trade, extracting profits here to invest
in slave labor over seas.
I say lower taxes for those who create jobs. The better
the jobs the better the tax breaks.
I can't think
of a good formula but thats the beauty of it. Congress
could be kept busy figuring it out, preventing them
from causing more harm where it really counts
Yes, wealth is a magnet for more wealth. Trickle down was just a trick on us. The more they make the more jobs they'll make for us. Who said I ever wanted to work for them???
I'd like to start my own business (And no, not as an independent I.T. consultant). But that seems about as likely as me hitting the lotto these days.
No Hope, just another Dope!
OMG...all those British rock stars who moved to the US to avoid UK taxes will have to move home? Terrible drain on our culture, just horrid!
Laffer curve anyone???
Several states are already experiencing massive decreases in tax revenues due to their failure to understand the laffer curve...
Hey, time to face the facts.... it is impossible to tax rich people at high rates. Rich people will just move their money to somewhere else in the world. Just one example, entertainers set up a corporation, which they own 100%, in a low tax country and become a low paid US employee of the foreign corporation.
Like Wesley Snipes, yeah :)
Give the government even more money to waste. Some of you are clueless.That has never worked and it never will. Add a VAT on top of being taxed at every turn. People wonder why we are so screwed. Just look at some of these posts that think by giving Uncle Sam more of your hard earned cash problem will be solved. You have got to be kidding.
Divided States says:
Defense is the only thing that the US can boast of nowadays. The only way out is to raise Defense spending and basically remove our creditors from the equation.
May I suggest you put down whatever you are smoking and come back from moon base alpha. The USA can't even beat a bunch of donkey riding mujaheddin with RPGs and IEDs. What makes you think the PRC is somehow a walkover? Those 10,000+ nuclear weapons, as if they're any use to anyone? (Other than getting rich through a contract to build, install and finally decommission them.) You jarheads are all the same, shoot first and ask questions later.
Tax hikes, austerity, limited choices. Go ask your grandparents what life used to be like. Get over it and get used to back to the future. $1trillion to blow up Iraq and Afghanistan, gee looks like your economy has its priorities right.
The solution is actually simple, but unfortunately the only people with balls it seems in the USA are the faux lesbians entertaining michael steele. Its called property tax, the end of negative gearing and for good measure let's end tax havens. That isn't socialism, that's restructuring society so longer term it doesn't end up going the way of afghanistan, sudan or chad, and other such places where lots of people have no money, no job and bugger all hope.
The fact that 1% of Americans have the vast majority of wealth in your country speaks volumes for the democracy you don't have. Your forefathers stole the country from the natives, now another group has stolen it from you. Let's call that squaring the circle jerk.
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