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12/28/2010
The facts – we CAN balance this budget with no new taxes

We’re going to hear it over and over – President Obama has promised we’re going to hear it – two years is enough and after those two years, watch out rich people, your taxes are going up.

It took me a while (through Christmas, anyway!) to read and then to figure out the numbers and wisdom shared by Cato Institute fellow Alan Reynolds.

When tax rates go up, taxes collected will go down. Always have, always will.
The “Top 1% take home 20% of all income” claim is bunk – and meaningless besides.
Top income earners in the U.S. pay, by far, the highest share of taxes among other high income earners in the developed world.
Taxes in the US are more progressive than among the world’s 24 leading economies. They are least progressive in Sweden.

Imagine all of that. Read the piece. Bone up on the facts.

Pair Reynolds with a quick read of Michael Barone’s commentary the day after Christmas.

American voters are not seething with envy over income inequality and are not convinced that we'll all do better if the government takes away more of Bill Gates' money. Obama, like the academics in whose neighborhoods he has always chosen to live, think they should be seething and that if the message is just delivered the right way they can be convinced.

Imagine that. The class envy whining might not work for Obama after all. Still… you never know when you’ll need the logic and global comparisons Reynolds tries to make clear.

And lastly, while you’re reviewing key posts on taxes and the economy, this early December piece from the Reason Foundation is a keeper and deserves to be read again - and again.

The 19% solution – How to balance the budget without raising taxes
Nick Gillespie and Veronique de Rugy

So, what would it take to bring federal spending into line with plausible levels of revenue?

The CBO, the non-partisan agency charged with estimating the effects of legislation on government costs, has produced a long-term budget outlook in which Bush-era tax rates remain unchanged. Their conclusion is that over the next decade, "government revenues would remain at about 19 percent of GDP, near their historical averages." That's actually a bit higher than the historical average, but is within the bounds of reason.

A balanced budget in 2020 based on 19 percent of GDP would mean $1.3 trillion in cuts over the next decade, or about $129 billion annually out of ever-increasing budgets averaging around $4.1 trillion. Note that these are not even absolute cuts, but trims from expected increases in spending.

Read the whole thing; it’s great. Then push for it with your U.S. Representative and Senator. America can do this thing.

Jo Egelhoff, FoxPolitics.net

COMMENTS

By all means, Jo, let's protect the rich guys. But IF you are going to balance the budget without raising their taxes, you will have to stop giving them unwarranted taxpayer assets and they'll be equally peeved. What will you do then?

Jack Lohman (Tue Dec 28 08:34:59 2010)

Jo, I don't have time right now to go to the Cato link but I can respond to some of your post.
>>>•When tax rates go up, taxes collected will go down. Always have, always will.<<<
Yer talkin about the Lafer curve again and it all depends on where we are on that curve...When were we ever on that side of the curve? Maybe back in the days of Eisenhower.

Krugman;
>>>So the way I see it, even quite high marginal tax rates on high earners — even rates in, say, the 70 percent range that prevailed pre-Reagan — are unlikely to put us on the wrong side of the Laffer curve by discouraging effort. High earners won’t work much less; they might even work harder, because it takes more effort to make enough to buy that fourth home.

That doesn’t mean, however, that it’s OK to go back to Eisenhower-era 91 percent top marginal rates. The problem with super-high rates isn’t so much that they reduce incentives to work; it’s that they create huge incentives to avoid or evade.

But we’re nowhere near Laffer country now. In terms of taxes and revenue, up is up, down is down.<<<
http://krugman.blogs.nytimes.com/2010/08/10/the-laffer-test-somewhat-wonkish/

Dean Weichmann (Tue Dec 28 12:31:51 2010)

>>>Imagine that. The class envy whining might not work for Obama after all. Still… you never know when you’ll need the logic and global comparisons Reynolds tries to make clear.<<<

Yet conservatives have not problem invoking class envy when it comes to teacher salaries or unions. Why is that?

Dean Weichmann (Tue Dec 28 12:37:24 2010)

Just another quick one, your post is so full of misinformation it is easy to find counter info.
Try this for facts;

>>>In 2008, the top 1 percent of tax returns paid 38.0 percent of all federal individual income taxes and earned 20.0 percent of adjusted gross income<<< and that was a down year for high earners.

>>>For the top 1 percent (as well as the top 0.1 percent), their average income tax rate actually increased from 2007 to 2008, despite shrunken income. This counterintuitive result is explained by the diminished capital gains and dividend income on high-income tax returns, income sources that are taxed at lower rates. With their 2008 income more dominated by ordinary income taxed at higher rates, then, the average rate on high-income returns rose in 2008.<<<
http://www.taxfoundation.org/news/show/250.html

Gotta go back to work,

Dean Weichmann (Tue Dec 28 12:57:53 2010)

First of all Dean, you must read the article before you comment on it. That's kind of a good rule. Class envy and teachers unions? You've got the wrong definition. It's called accountability, productivity and results. Usually it's called the bottom line - but that's very tough to find in most public sector jobs.

Jo (Tue Dec 28 16:04:54 2010)

Jo, go back to your Cato (WSJ) article and read the first comment.

"For those that would prefer to believe the lies in the article, please read the original source document - the author turns the study on its head and expects you to buy the opposite of the truth, so as to protect the tax rates of the rich....."
http://online.wsj.com/article/SB10001424052748703581204576033861522959234.html#articleTabs%3Dcomments

Dean Weichmann (Tue Dec 28 16:13:12 2010)

>>> "It's called accountability, productivity and results."

Oh come on Jo. AT ALL COSTS??? Does that trump "compassion" and what your bible tells you about being an honorable and responsible member of society?

All I see is a bulls-eye painted of the wealth of the nation, with the conservative's goal of maximizing their piece of the pie at whatever human costs necessary.

Please see these charts: The first is very telling. We are at the same point that we were at in 1929. Do the Righties have any ideas on recovering our economy (outside on their getting an even bigger piece of the pie for themselves)?

Jack Lohman (Tue Dec 28 18:24:08 2010)

>>>First of all Dean, you must read the article before you comment on it. That's kind of a good rule.<<<
I did read your article, and I commented on your quote from it.
>>>Class envy and teachers unions? You've got the wrong definition. It's called accountability, productivity and results. Usually it's called the bottom line - but that's very tough to find in most public sector jobs.<<<
You want "accoutability" from teachers yet do not care when the top "earners" get even more advantages handed to them.
OK, fine, tax the lower 90% more but provide services like health, retirement, infrastructure, and education. Cato was right about the Nordic countries, they do have less progressive taxation... but they provide far more services.

Jo (Tue Dec 28 16:04:54 2010)

Dean Weichmann (Tue Dec 28 18:38:11 2010)

"When tax rates go up, taxes collected will go down."

Clearly we should then eliminate all taxes and the government would then have all the money in the world.

Upton Sinclair said it best:
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it."

Marcus (Sat Jan 01 14:45:10 2011)

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