Obama vs. Ryan's plan to Reduce Federal Debt

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One this you are right. Corporations receiving tax funded subsidies that they could not earn by honest and competitive business in the market place are the true Welfare Queens of the Welfare State. Money redistributed to the likes of Archer Daniels Midland's Corp. does more harm to the economy and body politic than all the crack whores who are on the take. Why? Because it takes money away from smaller more productive business firms. The real locomotive of the American economy are not the Giants like General (oops.... Government) Motors but the small and medium size firms the truly innovate and put it all on the line in the market place. Small and medium business is the portion of the economy that is providing most of the jobs and they are not exporting the jobs to China either.

ruveyn

Don't forget Best Buy and Walmart. They're destructive to the areas they're located in by reducing pay for workers (as opposed to if they worked in a smaller local store) and forcing competition out by sheer massive size and the locals' inability to compete with such mass of sales and low profit margins.

Charles Krauthammer has a nice article out today about the Obama and Ryan budget debate. Thought to post some of his thoughts.

Tax Reform Can Be The Bridge To Compromise

http://www.investors.com/NewsAndAnalysi ... romise.htm

From the article:

I'm glad that minimum wage finally did get increased, and think consideration should be given to increasing it more as the cost of living goes up.

Gas prices are one of the biggest enemies of a minimum wage earner. But, if Gas prices continue to rise it may provide an incentive to find alternate fuel sources, so I'm not sure what the good answer is there for the distant future, other than increases in affordable public transportation.

The healthcare reform act creates a benefit above and beyond any minimum wage increase, for those those single and married people working minimum wage jobs; for some it is their only chance at health insurance coverage.

We have housing subsidies to make renting a place to live more affordable, for those that make minimum wage, but the availability of these subsidies is restricted. Food stamps are available, also.

Although these people still pay taxes other than federal income tax, the government acknowledges their difficulty in living, with generous tax credits.

Many of our service industry jobs are restricted to minimum wage, so it is not reasonable to think that the majority of these people can live a decent life, without some kind of assistance. Easy to say find a job making more money or starve, but not a reality that all can attain.

It is one of the problems with Ryan's plan; defunding the healthcare act and reducing funding for programs like food stamps for those people that rely on it, just to survive.

Minimum wage workers are the backbone of many services we all use on a day to day basis; we can't afford to reduce funding to programs, that makes it possible for them to have food, clothing, and shelter.

It makes more sense to raise revenue with sensible tax reform, than to penalize a person, working hard just to survive. Take away the ability to survive and crime will inevitably go up.

But when have the Republicans ever cared about people working hard just to survive? That is, other than to score votes by playing up on fear of gay marriage and shariah law.

-Bill, otherwise known as Kraichgauer

In my opinion minimum wage workers have some of the toughest jobs. I think that many politicians don't consider the real consequences of what they propose. Even an idea like raising eligibility for medicaid until age 69 or 70.

On the one hand medical science reports that many young people are overweight, get no exercise and have cardiovascular issues of a 50 year old person. On the other hand we need to raise the medicaid age because people are living longer and longer.

It is a nice thought that modern medicine can cure all ills, but the reality is when a human is worn out they don't last as long.

A recent study showed that older people that have jobs where they sit 8 hours a day have a greater than 50 percent greater chance of having a heart attack. One should consider that many of these older people had an active youth and young adulthood.

This will not likely be the case for older people with sedentary jobs in the future.

I suspect that with the exponentially rising levels of stress in our society, and a more sedentary lifestyle, we are seeing the peak of longevity now.

Thirty or forty years from now there may be a huge social security surplus, if a tiny minority of people live past the age of 69. I take that back though, if SSDI is still available. It is possible that a larger percentage of younger people will become disabled from health problems in the future.

All the more reason to get as many people covered by healthcare as possible to identify issues, take corrective action, and prevent catastrophic illness leading to disability. And, another reason to at least modify Ryan's plan that seeks to defund the healthcare reform act.

It's not engineers, but it's not, in general, bankers either; a few may make over a million a year, but most do not. The individual returns that report more than a million in income are mostly owners of subchapter S corporations generally employing tens or low hundreds of people. Those returns are really represent the profits of small businesses, rather than individuals. That money is what gets reinvested into making those businesses grow, which is why it's prime job creation money.

It may be worth explaining more about how a subchapter S business works. All of the business's profits are treated as income for the owner. However, that doesn't mean the owner takes all that money for himself. Rather, the money stays in the subchapter S business's bank account until it gets "distributed" - the small business version of dividends - to the owner. Generally the owner will take a distribution that covers his tax payments, and perhaps some amount of distribution if he's not paying himself a salary, but most of the profit will usually stay in the business's account and be reinvested in the business.

Any extra taxes a subchapter S business pays comes directly out of its funds for reinvestment and expansion.


I would agree that closing large corporation tax loopholes would be difficult since large corporations can afford to hire lawyers and accountants to exploit whatever is there. I think that with large corporations, we'd have better luck trying to change the system so they distributed more of their income to stockholders, who could be taxed on that money at their individual rates.

However, I don't think corporations care much about the loopholes in the individual income tax code, which represent a much larger potential source of tax revenue. Getting rid of the mortgage interest deduction, for example, would permit a substantial increase in the personal exemption for everyone, not just those who own houses, while also permitting the marginal tax rates to be lowered, providing more incentive for people in situations like the doctor example to continue to work and contribute to the economy, and more capital for small businesses to expand and hire.

Getting rid of the mortage interest deduction would affect higher income people more than middle income. Interest rates are historically low and the standard deduction is high enough now where it is not worthwhile for many middle class workers to itemize deductions.

Those with homes worth millions in the highest income brackets reap the largest benefit. Interestingly the deduction, I think, is still viewed as a middle class tax break to be able to afford a home, although the numbers are no longer there to support that assumption.

However in an attempt to enact a change like this, it could be easily disproven. The money provided to increase a personal exemption would be significant. I think it could easily be increased by 2K, which would mean about a $8,000 decrease in taxes for a family of four.

No real impact here for a family of four making $30,000; their deductions and exemptions already meet the tax requirements. Considering that 47% of Americans don't pay taxes, the percentage might go into the fifties.

I see a potential problem, though, with this and the doctor example you gave. I don't think it would be unusual for a family like your example to own a Million dollar home at about a five percent interest rate. For this family that is a $50,000 mortgage interest deduction.

The difference in not having the deduction in your scenario would mean an increase in taxes of approximately $16,500, figured at the current 33% tax rate. If they were a family of four they also get the higher exemptions and reduce that figure to $8,500. This, though still makes the $2100 Obama tax increase a docile one in comparison.

If the exemption could be doubled they are better off than they would be with the tax increase, by a few hundred dollars and significantly better off if their mortage interest is well below $50,000.

I don't mention the marginal tax decrease because I think the most that could be hoped for would be for the Democrats to compromise on keeping the current rates, and perhaps an alternate method of reforming the tax code to generate more revenue.

I think, if the personal exemption could be doubled, the country could get behind it. I don't see this kind of increase as possible in addition to a marginal tax decrease. With an additional tax savings of approximately 15K for a family of four, I could imagine that not many people in the middle class would pay taxes.

It would have a positive effect on some small business owners and a negative effect on others.
But, maybe most would be happier that there was no technical increase in tax brackets. That seems to be one of the biggest Republican concerns.

Obama is standing firm in his commitment to let those tax increases expire. I wonder if he is willing to compromise on that point. It seems to be an impasse for both sides, that requires a compromise of somekind.

The Right is promoting a very unhealthy population with their worship of stress as some kind of supreme motivating force as people run around in that hamster wheel. Such causes people to mutate and die sooner. Why can't they just stop their vile experimentation and leave us all in peace?

I think most politicians do whatever it takes to get re-elected, It is easier to take advantage of the weak or disadvantaged, than to cause discomfort to the powerful or advantaged. There is no equal playing field. If one thinks there is an equal playing field, it is evidence of their advantage.

Over stress has been found to change people at the cellular level permanently. This is a vicious assault, isn't it.

It is impossible to escape, unless someone moves to Amish country or takes up a similiar way of living. Humans weren't made to live the way we do today. What we see as good over stimulation (positive stress) can have a destructive effect like the stress we see as negative. The physiological assault of adrenaline and cortisol plays a part in both instances.

It's all we need to turn on the TV and listen to someone like Donald Trump say the people on his level of success don't have a chance to make it in our economy.

Then listen to someone else tell us that the poor, disadvantaged, and people with health problems, should be able to make it in life without government assistance.

Meanwhile, the people in Amish country are tending their farms. They don't watch TV. No opportunity to feed their minds with this stuff.

People wonder why so many don't understand politics and what is going on in the world. Public broadcasting news is mellowed out and not exciting enough for many people. And, the other stuff is presented on purpose to elicit fear and a sense of vigilance to keep people's attention. It is no wonder some people stay as far away as possible.

Indeed. That may be why Ryan is okay with getting rid of loopholes like that. Contrary to popular opinion, Republicans like the working class - that's why they prefer for people on welfare to start working, rather than to stay on welfare.


True, and that rather illustrates how Ryan's plan is not a giveaway to the rich. However, this comes out of the first income, not out of the second income, so unlike Obama's plan, it doesn't provide any additional incentive for the wife to quit working, and it doesn't tend to shrink the economy.

Now, one could argue that it's a bigger hit to the doctor family than is reasonable. That's why part of the extra money from removing the loopholes should go to lowering the upper tax rates, and only part of it to increasing the exemptions. And that's what makes the Ryan plan better for the economy: by lowering the top tax rate, not only will our doctor wife be able to continue to work, but other highly educated spouses who are currently not working will be encouraged to start working - and pay taxes - as well.

Are the Democrats really so antitax that they'll blindly refuse to accept a good plan just because they want to stick it to rich doctors and lawyers? Maybe. However, the Massachusetts tax system suggests otherwise. Massachusetts is one of the most liberal states in the nation, and we have a low, flat income tax rate that's the same for everyone, with very few deductions.

I don't see a problem with lowering taxes across the board, if other people don't have to suffer for it.

The medicaid issue is down the road, so it is hard to say at this point what the end result would be, but cuts to programs like the healthcare act, foodstamps, and pell grants makes it more difficult for people to have the opportunity to feed their family and almost impossible to get health care themselves, if they work hard at a minimum wage job.

And, a pell grant may be one of the few opportunities a person has, coming from a family without means, to gain an education to better themselves.

The money, to reduce the deficit, has to come from somewhere; I don't think it is possible for a solution that is going to please everyone. Whatever congress comes up with is going to have to appease both sides to some degree for passage. Chances are the general public won't be much happier with the end result than they were with the healthcare reform act.

To the contrary, even McDonalds' minimum wage job provides health care for full time workers. And the individual mandate in Obamacare will force low wage workers to pay for more expensive health care that, frankly, will make it more difficult for them to pay for food.

Of course, it's looking like the individual mandate will be ruled unconstitutional, which means Obamacare won't even significantly improve health care coverage. It will just be an expensive waste of money.

I'm not a big fan of Pell grants, either. Why should some people get a college degree for free when others have to go into debt or take on a four year military commitment to get theirs? The point of a college degree is to increase a person's future earning power; that increased earning power can be used to repay debts. Loans, not grants, are the way to go.

I went to school largely on Pell grants just to let you know. Everyone who's had to take out loans tell me that even years after graduation, they're still saddled with a debt that is an unbearable hindrance for them. I'm all for grants for EVERYONE, Goddamn it!

-Bill, otherwise known as Kraichgauer