Plenty of deductions to close for incomes above $250k. It would simply be if you made X amount, this deduction doesn't apply. Raising taxes doesn't mean increased revenues as people will find ways to avoid paying higher taxes. We see it now with many companies paying out dividends now, selling their business, selling stocks, etc. They're going to avoid paying the taxes.
Not really. The problem is you screw over those that make a lot of income, but have a lot of expenses. Small business owners come to mind. So the whole "no deductions after $x" doesn't really make any sense.
Secondly, the vast majority of deductions (in terms of dollars) apply to the lower/middle classes more then to the upper classes, so you can't find enough deductions to cut to make a significant dent in the deficit.
I'm all for a flat tax with no deductions. You do realize that the Dems are going after the sacred cow of home mortgage interest deductions? I said years ago if that ever went away, I would walk from my house as it is no longer beneficial to keep a house for financial matters.
Playing devils advocate: Why should the tax code be used to try and drive economic activity? If you need the deduction to afford a house, then I would argue that housing prices are still too high.
Secondly, a flat income tax is by its nature regressive in nature. You'd essentially be raising taxes on low income workers, and lowering taxes on high income ones.
A sales tax as a REPLACEMENT for an income tax is interesting, but that also has some issues (specifically, being VERY hostile to new business startups versus established businesses). Much fairer then a flat income tax though.
Revenue is not revenue. $800B raised by increasing taxes can't be guarenteed. You're going off a number based on different factors
Nor can any tax, but assuming an economy that grows at an average rate of 2% (which is below 20th century norms), should average out over any timespan.
The income tax is actually VERY recession intolerant; unemployment = no income tax collected. Property and sales taxes handle economic swings better for the most part.
Nor can closing loopholes guarentee the amount, but it would be far more likely to keep higher earners from decreasing their income, thus paying more by income tax. Raising income tax rates would simply mean more to write off to counter the increase.
Not without new deductions.
Secondly, understand how the tax code works: the rates are MARGINAL, so every $ earned after a certain point gets taxed at a higher rate. As such, the whole "enticing people to make less money" argument is flat out wrong.
Under current tax rates, my own effective rate has been 13%. I'm in the 28% tax rate currently. I used a lot of write offs. Raise my rates, doesn't matter, I'll find a way to keep them lower. Close the loopholes and I'm SOL. Close them and reduce tax rates.. say to 20% for me and I'm ok paying taxes on that. Win-Win for both.
Thats the way it probably should be, but thats VERY unlikely to happen for political reasons. Too many deductions that help too many people.
It is very simple. Raising tax rates across the board does not even dent the spending issue. Cuts HAVE to be made. Whereas in Greece too many people were dependent on the gov't and they couldn't pay out: riots happen.
I'm sure the fact the previous government cooked the books had NOTHING to do with the problem?
Secondly, by cutting spending, you slow the economy. By doing that, you put more people out of work, and thus not paying any income tax. As a result, revenue falls, necessitating more cutting. Repeat until economic collapse. Theres a reason why Greece STILL has a deficit: Because all that cutting has flatlined tax revenue, leading to a deficit just as big as before, but with less revenue then you had at the start.
My point being: Any spending that increases GDP by at least as much as the cost of the program should NEVER be touched.
Greece is what we are trying to avoid by giving too much back to a population that doesn't put enough in. We have to act in order to avoid that.
In 2000, we had an almost balanced budget.
We implemented tax cuts that caused ~$800 Billion in yearly deficits.
We have a ~$800 Billion yearly deficit.
Conclusion: We spend too much?
Hence the silly assumption that spending, and not revenue, is the problem.
We can afford to gracefully cut spending. We have $800B in increased revenues on the board from the Republicans. Let's cut spending on a lot of unnecessary programs. Cutting it across the board wouldn't be useful.. as you said, defense spending does actually employ people, whereas entitlement spending doesn't benefit as you can never get more than 100% of that money back.
Sure you can. You ignore economic growth factors. Give a guy a house for free, and you employee the electrician, plumber, the automakers, places that sell furniture, and so on and so forth. Its called the multiplier effect. The vast majority of entitlement spending is offset by increases they produce in GDP. Again, unemployment and food stamps make about $1.50 for every $1, according to the CBO. So don't give me "entitlement spending produces nothing".
In short: put money in the poor/middle classes hands, and they spend it, producing economic growth. Give it to the wealthy instead, and watch that money get stuffed in a bank, producing nothing economically. Which is more effective?
Regardless, spending cuts need to happen. How they happen should be the discussion, not raising the tax rates to generate $800 billion over 10 years. Hello, the deficit is $1.4 trillion a year! If we only raise taxes we will be having this same conversation again next year. Remember we had this same one last year about the debt ceiling?
$1 Trillion per year as of 2010. $600-$800 Billion can be traced to the Bush tax cuts in their entirety. Another $400 billion or so can be blamed due to a decline in revenue due to the recession. Undo the Bush tax cuts, and when the economy recovers, you are back at a balanced budget without cutting a dime in spending.
Secondly, its OK to have a 2% deficit if GDP grows faster then 2%. Theres a reason why the US has had deficits almost every year of its existence. GDP growth offsets the debt. Simple example: Person A makes $100 and has a debt of $90. Person B makes $1,000,000,000,000 and has a debt of $1,000,000. Which person is in better financial shape? The dollar amount of the debt is irrelevent.
EDIT
Also, can we stop this "over 10 year" BS? Seriously, thats a political cop out if I ever saw one.
Unless you aced your ACT and were the top of your high school class. I'm going to guess probably not as most people are not.
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