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A Trillion of revenue is on the plate
We’re coming down to the wire on the debt limit. “Hard”
deals are now being put on the table. The Republicans have said all
along they don’t want any new taxes. But only a fool could think this
can be done without a significant amount of revenue increase. So if we’re to get a deal what has to give? Easy. Rather than increase taxes the government can phase out deductions.
This data looks at individual deductions. This come to a whopping $950
billion. You tell me, are you on this list? Have a mortgage? Pay state
or property taxes? School debt? Health care costs? Charity? Kids?
Veterans? At one point or another every American is on this hit list.
Consider the deductions at the corporate level in America. It’s only $65b. Peanuts compared to the tax breaks of individuals.
Now think of yourself in a room trying to negotiate this big deal. It’s
all well and good to say that the end result will be more taxes for
corporations. But at a ratio of 15 to 1 you have to hit individuals pretty hard in order to raise any serious money. At this point everyone understands that. Cutting personal deductions in a very big way is the only possible outcome where all sides can save some face.
The way that these cuts in deductions will be phased out will hit high incomes the hardest. But don’t kid yourself; this will end up in three to four years as a very middle class tax increase.
Should something like this come about you have to look askance at
owning real estate. You’ll get hit with a tax from employer 401
contributions. You might think twice about having a child. Those
charitable deductions are just that, charity.
I guess this is what has to happen when you need to raise a trillion in revenue to sell a deal. We’re going to hate it a few years from now when all this kicks in.
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It'd be nice if the defense/homeland security/black ops budget would be slashed the $300 billion per year that could easily be done before we got into raising taxes on the middle class.
Who pays for NATO and the UN.........prolly could save a dollar or 2 there also
Give to Caesar what is Caesar's......
Tru dat!
Take not thy thunder,,,,,but take away my pride.
+ Infinity
When hungry wolves get together, they always agree a sheep is for dinner - or sheople.
Here, the oligarchs will take more from the serfs, so banks and multinational corps can continue to reap windfalls. (they don't pay taxes, and everything they spend on is deducted. Not so for people.)
Of course, it'll sink the economy more, making sure no one has extra income. But no one cares about that apparently. Meanwhile Ben Bernanke is on TV right now claiming that if the people don't get screwed on behalf of the banks, we'll all suffer for it. I can't watch all these lies, presented by the corporate press.
Banksters uber alles.
YOu know, endowments and foundations have TRILLIONS in unspent wealth just enriching asset managers and they represent the single largest source of permanently deferred taxation in the country. a 50% tax on it, would take care of your trillion right there.
And while we're at it, eliminate the entire 501 section of the tax code. No more exempt organizations, they may be not for profits, but they're definitely not for losses either. Time to broaden the base.
Yes, there are rational responses to most if not all the problems; but no one can consider them or implement them; they are "radical". Eliminating the 501 section would have very beneficial effects on the culture, as well as the accounting problem.
Another reasonable aspect would be to call a spade a spade and take a harder stance on taxing the activities of churches... many conduct business no different than others that get the hell taxed out of them... and, moreover, non profits get to compete for resources (lots/land/acreage for example).
Do people still pay taxes? That's like so last Century.
Thanks for the chart.
Just look at that big, fat #G.! $128b in Long Term Capital Gain Tax Deductions, the largest single and total category of 'em all. Then #B., tax deferred investments at $167.3b. 30% of all deductions which do little of anything to actually "create" anything.
Could they ever really be seriously reduced?
Bruce,
One more thing, Beardsley Ruml, former head of the NY Federal Reserve Bank in a speech printed in American Affairs magazine in 1946 spoke on why income taxes were really obsolete in a fiat currency economy.
http://www.scribd.com/doc/57808966/Taxes-Are-Obsolete-by-Beardsley-Ruml-...
Income taxes, in his opinion were really an instrument of social policy, not revenue collection
"Should government refrain from regulation and taxation, the worthlessness of the money becomes apparent and the fraud can no longer be concealed."
John Maynard Keynes
ipso facto the only logical thing to do is to spread the fraud through the immutable virus of credit.
That Keynes, he was a smartie, I tell ya. /sarc/
Bruce,
I guess we can just give them all of our money. I mean, what the heck, why work? More than half the folks pay no income tax anyway so why shouldn't we who show up and actually work just give them everything? I have no problem with being taxed on my investments at the same rate as my hourly income, that is only fair. But what you are talking about would shove me into the over 60% bracket by a lot. So, I come back to my initial reaction, screw that, I am firing my 65 employees and calling it quits. I am tired of supporting the rest of the country. If we can't or won't live within our means and the only way we can go forward is by extorting even more money from the working productive American folks then I am out. Levelize taxes to include investment income and income from labor if you will. Income is income under our current system. But remember, we have deliberatly induced people into certain behaviors by shaping the tax code the way we have. To pull the rug out now would harm inumerable families who are not rich but who make a good living and who run businesses which employ others. Be very careful with where you go here
Counting chickens before they hatch.
Fantastic, I think we ran out of Corperations here in the Homeland to tax. Now we soon run out of actual wage earners to be taxed above a certain income number on the tax return yes?
Ha! I don't work, and to a degree we are not TOO subject to Bruce's scary scenario re deductions going away.
Just easing my way out of the system folks! Yeah, I still have to pay a fair amount of income tax, but, I am not busting my ass doing it.
Buy gold. Look at ways to prepare for the coming storm, which now really looks like it will hit soon...
There are a couple of IPO's coming out tomorrow. One is Zillow and the other is named Skull I believe. They are doing the 20 Dollar asking again, and Zillow being a realestate website I can't see it doing to well either. These IPO's are going to crash like crazy.
"At one point or another every American is on this hit list."
you sure about that?
You say you are not?
consider this:
"Consent Coefficients - numerical feedback indicating victory status. Psychological basis: When the government is able to collect tax and seize private property without just compensation, it is an indication that the public is ripe for surrender and is consenting to enslavement and legal encroachment. A good and easily quantified indicator of harvest time is the number of public citizens who pay income tax despite an obvious lack of reciprocal or honest service from the government."
http://www.lawfulpath.com/ref/sw4qw/#thirty
whether true or not, 'taxation w/o representation' is embedded in the mythology of the founding of the U.S. so how large does this coefficient need to get to 'balance the books' and how large can it get before it snaps back?
I don't know the bend point. My question again, you think you are outside of this?
I expatriated, so I am outside of this. Every week that goes by this marxist/progressive administration convinces me even more that I made the right decision.
TPTB realize that they are running out of other peoples money to bribe the public, they can do the math. That is why they are so busy preparing to stay in power even after TSHTF. It's evidenced by Homeland Security, TSA, Patriot Act, FACTA, gunrunner, drones. Obama is the one they have chosen to bring about the "change".
Yes, the problem is entirely this administration and not the last 40 years of spending more than they brought in... Keep thinking that if it makes you sleep better at night.
2 comments from others that may answer your question:
"Zero is zero is zero."
"we have deliberatly induced people into certain behaviors by shaping the tax code the way we have"
don't forget that there is also a coefficient between quantity of income and quality of life. most americans are focused on maximizing income while not giving a snot about the coefficient (nor quality of life for that matter, but that's another discussion). i, on the other hand, happen to be focused on maximizing the coefficient multiplier which is actually not that difficult in a waste-based economy if you're willing to make an effort. last time i checked this was all perfectly legal and imho, all perfectly ethical given current circumstances as long as one does not willingly extract any services in return.
whether that puts me 'outside of this', we shall see. even if not, zero is still zero is still zero.
"last time i checked this was all perfectly legal and imho, all perfectly ethical given current circumstances as long as one does not willingly extract any services in return."
Excellent point.
Ethics & truth are usually the first casualties in the "art" of lawmaking these days.
thought you'd like that one. though, for the lurking lawyers in the house, 'willingly' should be changed to 'willfully'.
I did like it ;-)
The conflict isn't really about how to reduce the debt. Its about the relative role of government and how much GDP it consumes. Right now its about 24% of GDP, but revenue is only 18%. And its been 18-20% of GDP for over 30 years! So, the problem is the government needs to get its consumption of GDP down to below 19%. No more dept of Education, TSA, Dept of energy etc., foreign basis, foreign aid, bloated defense budgets, disability and medicaid fraud. Everything else, taxes, spending cuts is a distraction. Only economies with government consumption (really income transfer) below 20% can grow real wealth. When one adds in state and local government consumption we may get up to 40-50% of economic activity being the government. This is unacceptable. We know the stagnation which results from this much government since we've been observing European welfare state collapse for the last 3 decades and perhaps in the next couple of months we'll see the complete unraveling of that ponzi starting with Greece.
1st step, cut the cost of imperialism. Then, I'd like to see less regulation on what people can do. In Germany they are allowed to have a raw milk vending machine outside a farm. Here they raid farmers markets. It is not the entitlements that are the bad thing in this country. Here, there is legislation that makes it illegal to take pictures of factory farms because the corporations don't want the people seeing how horribly they treat the animals. Here they close down kids lemonaide stands.
As far as the European welfare state collapsing, our state is collapsing too. It's the monetary ponzi that is collapsing it, not entitlements, and the US has the additional factor of the costs of policing the empire that drag on it.
Actually, revenue is around 15% now - lowest since the 50s I think. Huge gap there.
True. But crappy economy == lower revenues.
Federal revenues have been 17-18 percent of GDP since about 1960. Only during the dot.com bubble did they creep over 20.
Spending has been below 20% of GDP pretty much never since 1960.
GAAP spending, or reported spending? And aren't we at 25%+ right now, just with Fed Spending ($3.7t on $14.7t GDP)?
Reported spending, actually. Good point.
And yes, we're at about 1/4 GDP right now. And that's just Fed.Gov - add their junior partners and we're probably over 30%.
yeh , i knew these sell outs would fold. yep, we are the fault for this debt problem so we have to pay for it......yeh sure........man these people just don't get it......it is time to take care of business...........
"They" ain't gonna touch the corporations.
Bend over, middle class Amerika. You will shoulder the brunt of this again.
What middle class? You can't tax the Chinese...or can you?
All of those tax deductions cause inflation, and eventually lead to bubbles. All of those tax deductions are tools of central planners, who bail out the bubblers. Bailouts lead to hyperinflation. Hyperinflation leads to war and/or revolution.
I have only been reading ZeroHedge for a couple of years. But I thought the consensus here was for sound money policy. Get rid of all of them. (deductions)
Yes indeedy... a tax code of 16,000+ pages. Strip it all out, make it a page long. That would free up quite a lot of wasted resources every year.
that makes too much sense
Stop Making Sense
* I am not endorsing any scripture or particular version of these scriptures. Just need approximate numbers for the discussion, which of course I am plagiarizing from smarter people than me on the Internets. 80,000 words in the Torah 788,250 words in the Bible 18,250 words in Holy Quran _________ round it up to 1 million and then multiply by 9 it to accommodate a total of 27 similar religions' scriptures total The tax code has approximately 10 million words by itself. The best case justification is incompetence/arrogance, but I think there is something inhuman going on... Most people agree that if a law is so complex that no one can understand it, then it should not be a law. Re-org the IRS into the DOE and use all that brain power for energy independence research so we can bring our boys and girls home.
"use all that brain power to do energy independent research"
ha ha ha ha if they had much of a brain they wouldnt be in IRS or the DOE in the first place.
Soon time for a "retained earnings" tax. I have no problem with corporations not paying taxes. I have a huge problem with them hoarding cash.
They can hoard cash. I'm hoarding PMs.
Yes. Most of your stuff is very good.
So why the silly populist statement that corporations should not "hoard" cash. What should they do with it. commisar?
My first junk. Thank you. At least someoneis readng my stuff.
But Ghost honestly. You're better than this. So why"?
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