StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



People Support Higher Taxes to Reduce the Deficit by a 2-to-1 Margin

14 Jul 2011
Posted by Bruce Bartlett
It appears that Republicans have walked away from a historic opportunity to reduce the deficit because of their obsessive insistance that not one penny come from higher revenues. Recent polls, however, suggest that the American people are not so obstinate and are more than willing to accept some increase in taxes to reduce the deficit. There is a high degree of consistency in every poll I could find on this topic.
 
Can/Should the Budget Deficit Be Reduced with Spending Cuts Alone
or Should There Be Some Increase in Taxes?
Poll
Date
Some/All Taxes
Spending Cuts Alone
7-14
67
25
7-13
73
20
6-9
61
37
5-13
64
33
5-12
61
27
4-29
76
20
USC/LA Times (California only)
4-25
62
33
4-22
66
19
4-20
62
36
3-15
67
31
12-12
62
36
Average
 
65
29

Most notably, only 26% of

Most notably, only 26% of REPUBLICAN voters think the deal should involve spending cuts only.

http://fivethirtyeight.blogs.nytimes.com/2011/07/13/house-republicans-no...


Obviously, these polls must

Obviously, these polls must be wrong, because the GOP leadership has assured us that the American People absolutely demand MASSIVE SPENDING CUTS AND NO TAX INCREASES. And they would never be less than truthful.


Although there are limits to

Although there are limits to this analogy, if the US budget problem was a household problem, wouldn't one consider both reducing spending and increasing revenues to solve the problem? Yes, I would cut down my expenses, by prioritizing my spending and cutting out those things that were luxuries, but my wife and I might also have to get another job in order to increase the amount we had if we could not solve our problems through cutting our expenses.


^^ That is a primary tactic

^^ That is a primary tactic in Dave Ramsey's program. Not only do you reduce spending, but you find additional sources of revenue (sell stuff, get a second job, etc) in order to bring your finances into order.

In keeping with the analogy, he also advocates for sinking funds and emergency savings accounts. I seem to remember at the turn of the century a lot of Republicans saying tax cuts were necessary because the government was running surpluses. I keep hearing the word "lockbox" repeat in my mind but I can't remember where that came from. Joke.

Revenue needs to increase while cuts need to be enacted. The pain has to be shared by all sides. Once we get on sure footing again then we can talk openly about "Starve the Beast" versus responsible governance.


Analogies to household

Analogies to household budgets are simplistic - and wrong. Where's the nationwide jobs to transition from being a consumer to a producer of goods? It takes decades and consistent policies to make that transition - you can't do this overnight.

If your policy prescription "worked," Britain would not have just experienced 2 consecutive quarters of lowered GDP. If your policies worked, austerity would lead to expansion. But it does not - and never will.

In your Dave Ramsey analogy, you recommended getting a second job. However, your policy recommendation based on that solipsistic nonsense fires people outright.. it does not add jobs. Private market hires staff based on INCREASING margin per widget sold.. and so we need more people with money in this country if you ever want private business to actually hire.


Tax Question

Perhaps this is because the Democrats are spinning the tax question by implying the increase is on "Rich" or "Hedge Fund Investors" or "corporate Jet Owners". I would wonder if worded so all Federal taxes (including Medicare and SSI)were increased 5% or 10% would you support it? I would hope we still would have a majority but probably not!


Click on the links

That's why they're there. 


Works the other way too

Most people dont understand that spending cuts will effect them. They think it will go to cut wasteandfraudandcorruption BS.

If you put in specific spending cuts which effect people personally, they will back off so quick it will make your head spin.
for example, as a small business owner if he will agree to spending cuts that will take away his business expense deduction, a trader his margin deduction and a homeonwer his mortgage deduction.


Right and Wrong

You are right in your basic premise that the people answering the questions almost certainly were imagining that their answers would have negative effect on themselves.

But all your examples are wrong.

Deductions of various kinds, also known as tax loopholes reduce the total tax take of the federal government. So eliminating those deduction would INCREASE tax revenue.

Some of these loopholes are supported by very few Americans, on the other hand some of them would make little difference in the revenue picture either.

Let's eliminate the home mortgage deduction and then watch people scream bloody murder.

Or lets change things so that EVERY American is paying some share of the tax burden. You'll get different answers then.

On the other hand most Americans are not aware of the extent of wasteful activities (and non-activities) in Washington DC, because 60-minutes isn't allowed to pop into Federal offices and show all the empty desks at two in the afternoon. If Those polled knew the true situation the results would be very different.


Taxes

So most Americans want tax increases. Does that mean that the 50% that pay no taxes want to begin to pay taxes ? Or does it mean, especially if you are in that 50%, that you want someone elses taxes to increase?

The polls would have more validity if they were weighted to reflect the existing tax burden that the pollee (?) bears.


Twisting the Facts Again

Seriously doubt that the 18,000 households in the top 1% who paid No, Zero, Zip, Nada, Nothing in income taxes want to pay something.

Seriously doubt all those uber wealthy who have their money in Tax Free muni bonds want to pay taxes.

And yeah, the 18,000 number comes from the US Treasury data.

ANd how much would you tax someone - like an $8 an hour retail clerk who is single and is alrady paying 7.65% in payroll taxes and about 3% in income taxes? They have nothing left and can't even pay the essentials like food and shelter.

Income tax was originally designed (by Republicans) to be borne by the top 5 -10% and the rest of the US paid nothing. (Check your history.) The idea was you taxed them that's got the money and benefit the most froom a stable society. Bill gates wouldn't be Mr. Microsoft he had been born in the Sudan.

BTW, can the lie about 50% not paying Federal taxes. Every single person who works pays payroll taxes. And payroll taxes as a percentage of income are much higher for the worker making the average $32,000 a year vs Dimon with his $73,000,000 or whatever the obscene number is. And those who don't pay income tax are primarily low income retirees, students with de minimis part-time jobs, unemployed etc.


There are lots of taxes other

There are lots of taxes other than income taxes, e.g. payroll taxes, which are paid by the poor and middle class at much higher effective rates than by the rich/upper middle class. Saying that these people don't pay any taxes and therefore should be ignored, is logically the same as saying that precticing Mormons dont pay any taxes (only excize taxes on Beer, Booze and Butts being considered). Seriously, are you saying that one of our big economic problems is that the after tax incomes of the poor in this country are too HIGH?


Many of those would, because

Many of those would, because there is a chunk of people in that ~50% who don't have income tax liability right now who are in that category solely because they've lost their jobs. Get new job = paying taxes again. I think they'd take that trade. Add to the number those people like me, who have a job (as does my wife) and pays lots of tax already, but knows that we're not getting out of this mess w/o additional revenue. I don't *like* it, because who likes paying more? But I think it's needed.

The 50% number is sad, but not because it indicates our income tax system is too progressive. It's sad because it means that half the population earns very little income, either b/c they've got no job or b/c their job pays poorly.


taxes

An increase in taxes is of course okay, so long as the increase is to be paid by someone else. A generic "Would you support an increase in taxes as part of a plan to reduce the deficit?" means little. The question instead is, "Would you personally be willing to pay more taxes to help reduce the deficit?" I wonder how many of the above-cited polls asked that question?


Yes I would pay

And so would Warren Buffet. And so would most of us. For the life of me I don't understand where "the American People" means the less than 3% of people whose AGI is 250000. Your comments are shameful and on the order of a Fox News broadcast.

If you asked most of us who DO belong to this category we'd say fine, raise it. We can afford it. I'd also say get rid of the cap on SS for us too, as long as our take goes up when we retire.

So please don't speak for us Yet Another. We didn't get where we are with your help and we don't need it now. I too am a Republican and I am ashamed at the craziness. These people will kill the party for a generation. The next election is going to be slaughter. Unless, of course, you live in some state like Iowa.


I say if people want to pay

I say if people want to pay more tax, then go to the gov website and make a donation to pay down the debt.
This increase in gov spending since BO took over adds to 5 trillion in debt. Cut back all the department expansion over the last two tear,. Cut fed salaries progressively as the salary increases - the more you make the greater the cut in salary - after all they can afford to earn 75,000 a year instead of 150,000. The private sector does not live and work to fund gov workers.
If the gov wants to increase inflows, sell holdings, release people to work by granting permissions, especially when it comes to energy et all.

B.O. wants to keep all his pet projects funded, all the increases in EPA, Dept of energy etc to keep going. And we have to carry the load. Bernacky is taking taking more stimulus and more printing. Then what -inflation and all of us pay another tax called monetary6 devaluing…
we are paying for our sins. May God have mercy on us all…


Well thanks at least for

Well thanks at least for presenting the link to the recent Gallup poll.

With 20% saying ONLY spending cuts, 30% saying MOSTLY spending cuts, 32% saying equal amounts of spending cuts and tax increases (no breakout as to whether one should occur before the other - you know because government is the habitual liar here in delivering what it promises), 7% mostly tax increases, and 4% only tax increases.

So -- 96% of Americans want some/all spending cuts and %4 want tax increases alone (presumably on corporate jets and "someone else"). Good to know that it isn't the polling itself that is distorted.

What the poll indicates to me is that there is zero chance that tax revenues will rise above 19-20% of GDP (and even then only when the economy starts booming). It has never happened in history and it won't start now. Spending above that level is the source of the structural problem. And DC is the perpetually whiny cause.


Poverty

How much exactly do we want a family of four living on $28,000 with both parents working or a single mother of two living on $16,000 to pay in income taxes? Understanding that the more money we take, the more food stamps and other help they will need? Is the reason for making them pay more so that we will get our vengeance on them for not making $50,000 like the 'real' Americans do? Do they get a break on all the other taxes they pay (which causes them to pay a way higher effective tax rate than the selfish greedy pigs who advocate impoverishing them more?


No one at that income level

pays any federal income taxes. 


Thanks for the reply

Thanks for answering last time, but I don't think that it sufficiently answers my questions. For instance, if Reagan raised taxes so much, why didn't he just go ahead and raise them enough to get rid of the deficit? I understand that in '82 to about '84-'85, he needed to keep some cuts to let the tax cut work. But why didn't he just close off the deficit entirely. He raised them in '86, why not go all the way then or in 87-88? Also that other comment I mentioned said that Congress gave Reagan less spending than he wanted, is that true?

Thanks again, hope to hear from you. I apologize for seeming so annoying and persistent. You are just someone I respect and admire, and I think the world of what you have to say.


What about the stock market?

I have yet to read, one way or another, of the effect a default would have on the US stockmarket. Is anyone projecting that? If it would be a negative effect, why isnt anyone talking about it. For those of us close to retirement, this would be a HUGE motivating factor in getting out in the face of our Congressional representatives.


You have that right. Many of

You have that right. Many of us who earn reasonably high incomes have lots more to lose with the stockmarket collapse than with an increase in our income taxes that might close the deficit a bit and prevent a huge market loss.


What the people want...

... is genuinely the least important factor in how this really strange negotiation is going to resolve itself.

The President, a Democrat, seems to keep trying version after version of a Grand Bargain heavily weighted to policies favored by the median Republican voter. I find it hard to believe that President George W Bush, in an analogous situation with a Republican Senate and Democratic House, would be pitching deals that reflect the preferences of your average Democrat.

The Senate, majority Democratic, seems to be a silent partner. Senate Republicans appear to spend their energy on complex voting structures that more or less set up the status quo ante.

House Republicans are dragging negotiations further and further to the right by their demonstrated intransigence to tax increases, happily kneecapping their Speaker. This is either genuinely superb and carefully planned skill (never agree to a good deal if you think you have a strong chance of getting a better one), luck at drawing a poor opponent, or Marx Brothers lunacy with some kind of ludicrous final scene still to be played out. I've been following British and American politics for 40 years, and it's the damnedest thing I've ever seen.


if you can't answer my questions

just say so. Or could you give me some other place to contact you so you could answer them at length?


One more thing

I'm sorry if I seem rude. These are questions I just really want an answer for.


What about this?

We need to fund the military and all the wars we are engaged in.

What would be the net Federal Tax Receipt effect of a mandatory permanent "War on Terror Tax" of 10% across the board on all individual and corporate gross earnings? This would be structured so it could not be deducted away or in any way reduced.

Bruce, could this approach balance the budget? Although, I suspect it would not actually pass Congress.


Its the economy stupid

The problem is the right wing controls everything we hear. You would think that with a democratic president that dems would have the bully pulpit. Unfortunately the president we have is a DINO who simply parrots the right wing message. Where were these defict hawks when bush started two wars and didn't ask any one to pay?

Everyday dems should be counteracting the republican rhetoric and blast them for focusing on the deficit instead of job creation. The stimulus bill was what, 60-70% tax cuts with a little direct relief to the states and 15% on infrastructure- maybe? We tried tax cuts not job creation with the stimulus bill and it didn't work. Say that every day.

Another message, why in the world would we cut social security or unemployment or food stamps or make states lay off teachers and fireman and police when the unemployment rate is already so high. Those things translate into demand and demand creates jobs. Tax cuts especially to the wealthy can't possibly translate into enough demand to boost the economy. Henry Ford had one thing right. Pay your workers enough to buy your product and you will do well.

For 30 years right wingers have been destroying the middle class and this is the consequence. Americans kept themselves above water but using debt for a little while but that can't go on forever. We have a revenue problem in this down economy not a spending problem. Why isn't that out there everyday. We had a surplus after Bill Clinton raised taxes only a little, the economy still boomed and we were starting to pay down the huge deficits that republican administrations had built up right until the time that Bush gave those surpluses to the wealthy and dems enabled him. Those tax cuts were given on the backs middle american's social security profits and that should be messaged everyday.

Where are those messages? Are there any democrats in Washington at all?


Flawed comparisons

It seems to be that the comparisons in the column headings are flawed. The correct comparisons should be "spending cuts alone", "tax cuts alone", "mixed approach". It seems to me that you co-opted the middle ground for one side of the argument.

I just looked through the Quinnipiac poll, and if the others are similar, it just seems like a loaded question made to elicit a directional vote. It doesn't really seem like a good question to determine national feeling towards what the correct mix is, but then again it is just a poll.

I know this goes beyond the scope of any poll (I don't trust polls, I trust votes), but the real question is tax rate increases versus tax expenditure reductions. As Mr. Bartlett is well aware, there is a huge difference. I care far more about marginal rates than effective tax rates and what is taxed than how much is taxed.

I guess I'd probably be fine repealing all the non-marginal parts of the Bush tax cuts. The 2001 and 2003 tax changes were pretty terrible. Didn't Larry Lindsey even have to resign over the how bad the 2001 results were (my memory is a little foggy)? I'd even be fine letting the marginal rate reductions expire if we could work on the cap gains and corporate tax rates.


increase taxes

Congress feels that its job is to spend money. If Congress loves to party at the punch bowl, it would make sense to take the punch bowl away by not raising our taxes. Were the polls' questions improperly worded, to skew the results in the direction the Democrat-inclined pollsters wanted? My congressman tells me that he has yet to have even one constituent ask him to raise his taxes.


Fair Tax Hearing

I hope you will tell the "whole" truth about the Fair Tax Amendment and the Ways & Means hearing. It is the best thing that could happen to our country and I think it is about time you see the proposed bill as it is, not as you would like it to be.

Thank You




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