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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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His proposal is half of one percent...but its not that with me...its the root of it all that bugs me...the boiling of the frog syndrome. Where the heat is slowly turned up so he doesn't jump out, until the frog cooks. And we're the frogs. We always have been and always will be.
The tax code has become an unwieldly, burdensome monstrosity just because of this kind of nonsense. They've massaged and tweaked and tickled the thing until we have half of those who file a return wind up paying nothing at all.
The larger issue is why do people always think there can be a painless tax? And what rate/level is that...when its enough and then no more? I would think sometime before they come out and say, "ya know, taxes are a little too high on ole Joe. We should cut them. Give him a little break."
Isn't that just what they're saying now? A thousand bucks over a year makes a difference to Joe? Really?
The average Joe is that close to the edge? (Alarm bells and whistles going off!!!)
How screwed up is that? If thats the case tax rates at his level should be cut in half if they were really serious about tax cuts. But they're not.
I know a war or two we could cut and save the money in much less than five years.
Stopping the ridiculous practice of baseline budgeting would too.
Let's go back to the failed socialism that defined America in the 1950s? Insane.
SRex.... a rare junking for you....
Doncha know that saying the S-word is like waving a steak at Doberman
Obvious joke was obvious. To me, anyway.
Don't worry, I got the gist of it..... (and by junking I was not being self-referential) The S-word does strange things to people here....
Red flags and blue flags. It's amazing how pavlovian we have allowed ourseleves to become.
Humor minus the personal contact is a very iffy thing. Especially for those among us who love irony. Too much opportunity to misunderstand when all that is presented is the post--no raised eyebrow, not suble alteration of audible tone or timing--just the words themselves, out there for all time, subject to misinterpretation.
Plato mused in Phaedrus that writing was a mixed blessing for just such reasons.
"Doncha know that saying the S-word is like waving a steak at Doberman"
More like a pit bull ;-)
Statists do such a wonderful job of swerving from one crisis to the next, don't you think? Watch the pea. Oh, you meant the other S-word...lol.
How is that EU thingy goin anyways? Have they (by extension, you) gone full retard on their debt load without any wars of conquest (oil, lithium, rubber duckies, dual purpose gas chambers and guillotines) to speak of?
Can't we just say they ain't got a clue what the fuck they're doin outside of enriching themselves and leave it at that, with all the implications to your chosen philiosophy that entails?
Um, actually the failed socialist is Obama.
A politician has only failed when ejected from public "service".
Ultimate political failure results in a short drop amid cheers.
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.
Great, Krasting. A five-year tax increase to pay for a one-year tax cut. And what happens when we get to the end of 2012? You think the economy will be great by then and politicians will let the payroll tax rise?
Tax cuts don't need to be "PAID FOR", you dumbass republicrats. The money doesn't belong to the gov't in the 1st place. Starve the ZOGBEAST!