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The latest gimmick to fund the payroll tax cut - stupidity
We have a week left to resolve the issue of extending the 2% break on Social Security taxes (FICA&SECA). I still think there will be a last minute fix on this; it’s too important. Without this tax break the economy will hit a wall next year. Whatever your thoughts are today about the prospects for a recession in the next 12 months, you’ll have to revise the odds way up if congress fails to get a deal. It’s a measure of just how economically vulnerable we are that 2012 is make-or-break as a consequence of how this plays out.
The latest insanity on this topic comes from the WSJ today.
The deep thinkers in D.C. are trying to offset the cost of the one-year 2% reduction ($115B) in payroll taxes by levying an incremental cost onto Fannie and Freddie and therefore those with mortgages. This is the worst kind of whack-a-mole thinking. There is not an economist worth his salt that does not recognize that housing/mortgage costs are central to any long-term recovery for the economy. The knuckleheads in Washington want to add $38billion a year (for the next decade) onto mortgage borrowing costs. I’m sorry, but they’re idiots for even proposing something dumb like this.
My proposal is simple. Make corporate America pay for this tax break. Raise the FICA tax on large corporations by ½% (from 6.25% to 6.75%) for the next five years. That’s peanuts ($30B a year). They will never feel it.
My suggestion is that smaller companies be excluded from the incremental tax. Those entities that hire less than 1,000 workers or have revenues less than $25 million would be exempt. This group of companies represents about 20% of all companies. The other 80% would foot the bill. It would, therefore take 5 years to “pay” for the 2012 tax-break for workers.
I’m not in favor of any tax increases or more government spending. But if there has to be a tax break in 2012 I can’t think of better way to raise the revenue than from large corporations. Consider the history of tax revenue in this country. (Data from Congressional Research Service PDF-Link)
1952 corporate tax as a % of GDP = 32.1%
2010 corporate tax as a % of GDP = 1.3%
(A 95% drop)
1952 Payroll taxes (Social security) as a % of total federal revenue = 9.7%
2010 Payroll taxes (Social security) as a % of total federal revenue = 40.0%
(A 400% increase in the burden on workers)
Our political leaders are so deeply in bed with large corporate America that they have not even considered a very small and temporary corporate tax increase to fill an important bucket. Instead, they want to pass the cost onto those who desire to own a home.
This business about the payroll tax cut is hardly worth noticing in our big economy. But we can’t figure out how to pay for even this small step. The reality is we need a plan to raise about $2 trillion of additional revenues over the next decade. If our leaders can’t suck it up and realize that corporate America has to shoulder its share of the burden on a one-year payroll tax cut, then we don’t stand a chance in hell of coming up with the $2T we need.
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BRUCE KRASTING FOR PRESIDENT!
The reality is that the welfare states are bankrupt all across the world but the parasites refuse to accept it. Bruce thinks nibbeling around the fringest of the tax code and raising rates will solve the problem. The best solution is put SS into bankruptcy NOW and make them settle out all the claims. The sooner the entire shit pile collapses the better off we will all be. We need to stop the looting, and looters is what all those SS recipients who are currently receiving more benefits than they ever put in are.
Bruce, here is great look into FDR and how we are reaping what he sowed:
FDR's Class Warfare: A Tutorial For Obama
http://spectator.org/archives/2011/12/08/fdrs-class-warfare-a-tutorial
Here is more about how WWII was a continuation of the the new deal and how FDR planned the entire thing:
http://lewrockwell.com/buchanan/buchanan198.html
Bruce, sooner or later you will give up on your new deal progressivism.
A tax increase to fund a tax cut. Problem solved. hahahahaha!
My proposal is that the self-professed "experts" and "professionals" consult outside their exclusive clubmembers for others' views.
Try this wisdom...The more experts there are, the less is actually known about the subject and there is less agreement on what is, in fact, known.
Do you know of any self-professed arithmetic [add,subtract, multiply, divide] experts. Not even one? Curious,ain't it.
Albert Einstein, the famous physicict, had this to say, on this very subject:
"Let us first consider the question from the point of view of scientific knowledge. It might appear that there are no essential methodological differences between astronomy and economics: scientists in both fields attempt to discover laws of general acceptability for a circumscribed group of phenomena in order to make the interconnection of these phenomena as clearly understandable as possible. But in reality such methodological differences do exist.
The discovery of general laws in the field of economics is made difficult by the circumstance that observed economic phenomena are often affected by many factors which are very hard to evaluate separately. In addition, the experience which has accumulated since the beginning of the so-called civilized period of human history has—as is well known—been largely influenced and limited by causes which are by no means exclusively economic in nature.
For example, most of the major states of history owed their existence to conquest. The conquering peoples established themselves, legally and economically, as the privileged class of the conquered country. They seized for themselves a monopoly of the land ownership and appointed a priesthood from among their own ranks. The priests, in control of education, made the class division of society into a permanent institution and created a system of values by which the people were thenceforth, to a large extent unconsciously, guided in their social behavior.
But historic tradition is, so to speak, of yesterday; nowhere have we really overcome what Thorstein Veblen called “the predatory phase” of human development. The observable economic facts belong to that phase and even such laws as we can derive from them are not applicable to other phases. Since the real purpose of socialism is precisely to overcome and advance beyond the predatory phase of human development, economic science in its present state can throw little light on the socialist society of the future.
Second, socialism is directed towards a social-ethical end. Science, however, cannot create ends and, even less, instill them in human beings; science, at most, can supply the means by which to attain certain ends. But the ends themselves are conceived by personalities with lofty ethical ideals and—if these ends are not stillborn, but vital and vigorous—are adopted and carried forward by those many human beings who, half unconsciously, determine the slow evolution of society.
For these reasons, we should be on our guard not to overestimate science and scientific methods when it is a question of human problems; and we should not assume that experts are the only ones who have a right to express themselves on questions affecting the organization of society. ..."
For more, see Einstein's
http://monthlyreview.org/2009/05/01/why-socialism
What a lot of words that do not enlighten anyone.
"(W)e don't stand a chance in hell."
There. Fixed it for you. None of this matters.
Hell will come. And the Trillions will be cut.
OK, where is Bruce and what have you done to him?
So this is how fucked up this has become:
The REPUBLICRATS are salivating for a TAX INCREASE!
The DEMICANS are salivating for a TAX BREAK!
Hey all you DUMBFUCKS!
YOU CAN'T EVEN KEEP YOUR PET PANTYY WETTING MEME'S ON THE RIGHT SIDE OF THE FENCE!
Just jump off the nearest tall building all you politicians, will ya'!!!
JFC!
Quick question. The Supreme Court has seen fit to grant Corporations the same status and freedoms as citizens. Does this go for offshore companies, too?
use an appraised value for land and make all taxes only from land,,,,,,,,,,,,,,,,,,,,, fair taxing! stop income taxes
Does anyone believe this? I think it's 32% of Federal Revenues.
Of course the tax break will get extended; we are entering a Presidential election year.
Yes sir. Things seem to be running pretty darn smoothly here in the ole U.S.A. Smooth frickin' sailing!
Navy has purchased 450,000 gallons of biofuel for about $16 a gallon (about 4 times the price of its standard marine fuel, JP-5, which has been going for under $4 a gallon).
Now that's the kind of gubmint you can really trust.
A member of Obama’s presidential transition team, T. J. Glauthier, is a “strategic advisor” at Solazyme, the California company that is selling a portion of the biofuel to the Navy.
Don't anyone tell me you can't make money in this economy.
Cut payroll taxes and pay for it by cutting spending on unemployment, food stamps, welfare, pbs, foreign aid, imf funding, etc......
So General Electric from what I read does not pay any tax? Other large corporations go off shore to avoid tax.
This is Really Simple.
Let the American Citizen use these off shore tax breaks like the super wealthy. Every one should be given the same opportunity to off shore themselves and the family. Equal opportunity sort of thingy. Then the worker does not have to worry about SS tax or income tax.
It will simplify the system and save huge money.
All this Country needs is creative thinking like MF and AIG and we can all be rich.
"deep thinkers in D.C." is, for the most part, an oxymoron
Stupidity is not the latest gimmick, but a tried and true one. Unfortunately we get exactly the government we deserve.
Bruce,
You are just advocating for replacing one stupidity for another. Worse, you are equating a failure to decrease $115B in payroll taxes with this $15 Trillion dollar economy "hitting a wall" next year, and then playing the "Let's steal from next year to pay for this year" game. Please, next time you sit down to write something, drink a cup of strong coffee and turn on your brain!
Dump the DEA, legalize cannibis and tax it like tobacco and alcohol. Problem solved. Actually, this might make a huge dent in the national debt.
It would certainly make the populace docile. If you think the hoipoloi are apathetic now just wait until they are all stoned.
Why is it these idiots don't understand that any tax increase on anyone, individuals or corporations, just grow the damn government at the expense of individual taxpayers as a whole????
All real wealth is produced by individuals working alone or collectively.
Government(s) are just parasites on their citizens.
I been saying this a long time. This was a plate I had years ago in Virginia :)
http://i1198.photobucket.com/albums/aa451/pocketlint48/taxcut2.jpg
back-door amnesty
The middle class needs so back door amnesty . They've been getting it in the bum for 60 years.... without lube.
We need to stop spending. The payroll tax rollback was a "gift" from Congress that we taxpayers were not even expecting. Now, somehow, just like the extension of unemployment benefits ad infinitum, it seems to be etched in granite. STOP! We can't afford these goodies.
No government.
At all.
No taxes.
At all.
THEN debate.
How about a fifty cent tax on each equity trade that isn't held for over 6 hours?
"Who do you think pays all corporate taxes anyway? Consumers do. "
Tell you what. I'm a consumer and taxpayer. Raise corporate taxes. Cut personal taxes and let me worry about it.
Sounds like someone doesn't want to pay their fair share...
*choke, sputter, gag* Huh?
Why not cut spending (for real - not games-type "cuts") rather than raise ANY kind of taxes?
Recession? Duh?
Your whack-a-mole thinking is no different than theirs. Who do you think pays all corporate taxes anyway? Consumers do. Even if you buy the silly arguments that make you believe only some rich guy who is the CEO or a board member is paying those corporate taxes it doesn't matter. The money comes out of the economy regardless.
These shell games of spending here, taxing there, and "paying for it" with yet another shell game is ludicrous, only the mathematically challenged (that's most of America) is falling for it. At the end of the day the US federal debt keeps right on increasing at faster and faster rates.
Rearranging the chairs on the Titanic doesn't keep all the chairs from going to the bottom of the sea.
I agree. The US is quickly turning into one of the worst places to do business in the world: one of the highest corporate tax rates in the world, customer base that has no money, government that is hostile to the private sector, burdensome regulations, poorly educated workforce, and massive welfare state that needs funding. We are desperate for jobs and are running a $1+ trillion deficit.
Yet the solution to all of that is.....*drumroll*.....higher corporate taxes! Higher corporate taxes on the same behemoths that hire armies of lawyers and accountants to bypass them right now!
The core of the Zero Hedge site is solid. But the guest posters are an absolute joke. It started with Leo who was an embarassment, then came "Phil's Stock World" and Bruce Kastings. All of these "Contributors" reflect poorly on the efforts of the Tylers.
Reggie Middleton is the only solid contributor.
Bruce and Phil are the best. You're a troll.
Kindly cite a corporation in the Fotune 500 that actually PAID taxes last year, and/or did not recieve a TAX REBATE from the IRS...the tax code for business, individuals, and everything else in between is a JOKE and needs drastic overhaul or emlimation in favor of a flat tax... why only in America can you be declared as a NON-PROIT and legally make MILLIONS tax free...That's what I'll come back as in my next life...a T.V. preacher...
/crickets
i guess there's similar dichotomy between serfs and elites as there is small businesses and big business?
Crickets...not really.
I gave it a greenie a long time ago over my thought of 501 3c's.
I agree...abolish the "progressive" tax code and implement a flat tax on earnings...of any type...not just wages...stock options, dividends the whole deal. Give Buffet his wish.
Let the stuck pig squealing commence ;-)
Prince to pauper pays...for roads, to bridges, to war, to welfare. It will be a whole lot clearer then, for everyone. And, as a side benefit, corruptable pols don't get to hand out special goodies to favored constituents through the tax code.
Which is why it has a snowballs chance in hell of getting anywhere...many prefer to steal.
$115 Billion was last year's Bankfine's Bonus, right? Can't he skip a year?
Maybe he can wait another year before refurbishing his yacht with a new helipad.
You are falling for typical Kensyian BS. We have to stop pretending that moving imaginary $ from one bucket to another can create wealth or change GDP.
Approach this from an Austrian perspective. Ignore the $ and focus on allocation of labor and materials. Is the government doing it efficiently vs the private sector? If it is, then GDP and wealth are being created. If the government is taking labor and materials from the private sector and misallocating them, then wealth and GDP are being destroyed.
How we choose to "fund" (debt vs taxes) is largely irrelevant. Although one type of tax can change behavior vs another.
If we cut the payroll tax, the government will have to raise another tax or borrow $. If you believe the debt market is maxed out, then in order for the government to borrow the $ a corporation will have to go without. If the government raises corporate taxes, their will be correspondingly lower pay raises or less dividends to spend.
Point is - this vote won't effect GDP in 2012 at all. Or if it does it will reduce it relative to the government using less labor and resorted so that the private sector can put them to work.
I'm sure I'm not explaining it right, but I'm sure someone smarter can expound on it.
Bingo.
By the way, how was TARP paid for? How about "Stimulus 1.0, 2.0, and 3.0". What taxes were raised and on whom.
For that matter, where is the $15 Trillion in US Debt going to be "paid for".
I'm assuming the take-home message is that some things have to be "paid for" and others can be funded by borrowing to infinity and beyond.
There is no f'ing spoon!
bruce, i would refer you to numerous peter schiff videos.
the problem is not that government doesn't collect enough taxes.
the problem is that government is too big, it spends too much.
the government is too over-reaching it chokes business and drains the life out of the citizenry.
the only solution is to drastically cut back the government.
When will these Guys get real? The bottom line is that we are SPENDING too much and borrowing around 40 cents of every dollar spent, which is UNSUSTAINABLE. Which part of "Unsustainable spending" do they not understand?
Bruce, why are you worried about making up this tax cut? Don't you know we have a FED that can monetize the debt necessary to make up this small difference? Print baby, print! Seriously, we are trying to find ways to keep our debt funded lifestyles at the current level and will do anything to maintain the status quo. So, why not just go to the FED, it will appear painless until prices go up but the first folks to get the dough will get to spend current price dollars and we'll spread the pain later when we have price inflation. It isn't that much different from your proposal, it's just how we get there and who feel the pain first.
If we aren't going to cut governent spending then how we fund the deficits are open to debate.
Nobody was talking about paying for the Bush tax cuts, even though we were putting two wars on the credit card at the time.
TURN THOSE DAMNED MACHINES BACK ON!!!!!
-Trading Places, last scene
Let the Bush tax cuts expire and the automatic spending cuts kick in and that should pretty much wipe out what's left
1952 corporate tax as a % of GDP = 32.1%
2010 corporate tax as a % of GDP = 1.3%
(A 95% drop)
1952 Payroll taxes (Social security) as a % of total federal revenue = 9.7%
2010 Payroll taxes (Social security) as a % of total federal revenue = 40.0%
(A 400% increase in the burden on workers)
Spot on Bruce. Crony capitalism/corporatism along with war mongering are some of the leading causes to ruining the wealth and credibility of the great America that was after the second world war.
Bruce, have to say... This one missed the mark.
Even down to the (common) misuse of Robin Hood - RH didn't steal from the rich and give to the poor, he stole people's money BACK from a thieving government and returned it to them.
Of the rich, by the rich, for the rich.
eat the rich
"My proposal is simple. Make corporate America pay for this tax break. Raise the FICA tax on large corporations by ½% (from 6.25% to 6.75%) for the next five years."
What prevents corporations from passing this on to their customers in the form of higher prices?
Why is it that government can't find 38 billion to cut per year? Afterall, thirty eight billion is nothing but a rounding error for these friggin jokers.
"What prevents corporations from passing this on to their customers in the form of higher prices?"
Nothing but the fact that people won't be able to afford their products if they stick it to the consumer.