<p>mapesy, I don’t think his plans are vague at all. I strongly believe that we should encourage more workers to have a private plan in addition to social security. A lot of people are just depending on social security. </p>
<p>Privatizing part of social security is not a bad idea, it has being done in some parts of the world, and it is working. </p>
<p>There are a lot of references on this topic, if you are interested in reading more about it let me know. </p>
<p>The Democratic party and the labor unions are not in favor of this idea, but the current social security format is unsustainable, and their plan will further put a lot of retirees at risk (those without any private plan of their own).</p>
<p>Obama plan is not a good plan; it is not going to fix the problems facing the social security program. </p>
<p>In fact, I don’t buy a lot of his economic plans. His plans are good for winning elections, but they are not good for the country.</p>
<p>I know the media have it biases, but facts are facts. As my statistics professor used to say; " In god I trust, but for everyone else, bring data" I don’t think the WSJ will publish anything that doesn’t make any economic sense.</p>
<p>I will be glad to read another analysis of Obama’s social security policies from an independent source.</p>
<p>tega, Would you please post a link that provides a more in-depth analysis of McCain’s social security plan than is found on his website? I can’t seem to find the information anywhere.</p>
<p>I agree with you that Obama’s plan won’t fix the Social Security problem, but I haven’t read anything that leads me to believe that privatization–full or partial–is the permanent answer either. Even with partial privatization, there still seems to come a point where Social Security would become insolvent without adopting additional measures such as increased taxes or lower benefits. </p>
<p>As for Obama’s other economic policies, my biggest problem is with his capital gains increase plan. IMHO, he’ll have problems getting an across-the-board capital gains tax increase passed. Because so many baby boomers will be dependent on income from capital gains, Obama will probably face massive resistance to his plan. He might have to compromise with age and/or income limits.</p>
<p>Tega, the WSJ article has an important fact hidden in plain sight - the fact that workers have been subsidizing the wealthy through the diversion of SS taxes to paper over the deficit caused by setting income tax rates far below the level needed to balance the budget. What that means is that people who rely on earned income have been subsidizing those who received passive investment income for the past 25 years - and it doesn’t look like Luskin thinks that the wealthy should pay it back. Ever.
What he’s referring to is this: in 1986, the average tax paid by the top 1 % of taxpayers was 33%. In 2005, it was 23%. That’s a huge drop in tax payments, particularly when you consider that the take of the top 1% of taxpayers has risen to 21% of all income earned. At the same time, government spending has remained relatively stable in relation to the overall economy - a little higher under Republican Administrations, a little lower under Democratic administrations, but overall, not much change. So what do you do about the fact that the taxpayers with 21% of the nations income are paying 2/3 the taxes they used to? Simple - you raise social security taxes - the ones that take 14% of every worker’s paycheck right off the top, except for really high income earners, who benefit from a payment cap. Then you take that cash and transfer it to the general fund, to make up for the trillions that represent the difference between what the “greatest generations” wealthy folks paid and what the Reagan/Bush/Bush era rich folks pay.</p>
<p>Oh - but that’s OK, because it’s just a loan, right? Well - only if you plan on paying it back. But you can’t pay it back without raising the rich folks taxes back up to the levels they were at before Voodoo economics took hold. And that’s the problem. ANyone who proposes restoring taxes on the wealthy to the level they were at just 30 years ago is going to be beset by the usual suspects accusing them of “hating the rich”, fomenting “class warfare”, etc. </p>
<p>Lufkin makes his position clear: he doesn’t think the income tax paying public should have to repay the money borrowed from the workers tax. That’s “double taxation” (only if you earned your income by working, of course, which is only true of a small fraction of the income of the wealthy - but ignore that awkward fact.)</p>
<p>We have been grossly irresponsible fiscally for the past 30 years. Ever since Reagan started playing with smoke and mirrors, and the neocons decided to “Starve the Beast.” There’s no way out which doesn’t involve raising taxes - on somebody. Anyone who thinks otherwise is simply deluding themself. It’s just a question fo who will pay those taxes - to pay our way in the future, and to pay off the debts run up by Reagan, Bush and Bush (to add insult to injury.)</p>
<p>Yes. Facts are facts. And those are the facts.</p>
<p>Thanks, Kluge, for setting the record straight. You can count me as a former registered Republican who finally saw the light several years ago. I’m disgusted at the fiscal irresponsibility of my former party.</p>
<p>Malakas - the employee’s labor earns all of it. The “7 1/2 & 7 1/2” is just accounting sleight of hand to make it look like he only pays half. In fact, every employee’s labor is taxed at 96% of the total combined FICA rate. If you don’t work, no FICA tax is paid. (There’s a historical reason why it was put the way it’s expressed, but now it’s just hiding the ball.)</p>
<p>Honest. Self-employed people pay exactly the same FICA as employees. It’s just not disguised.</p>
<p>My understanding is that Obama is not proposing an across the board capital gains tax increase. It will be tied to income. As the law is written now, the max will go to 20% in 2009 anyway. The current cap times out. Obama has said his max would be at 28% - if that high. That was the max during the Reagan administration.</p>
<p>Kluge, I agree with you that we have not been fiscally responsible for the last couple of years, but why should the rich shoulder the burden in ameliorating this deficit problem? </p>
<p>I don’t think that workers have been subsidizing the rich, rich people have the highest tax burden, and they also demand few government services compared to the other groups, so I think they have been subsidizing the other groups. I think if we want to be “fair”, everyone should pay the same percentage in income tax, and all deductions should abolished. </p>
<p>Decreasing taxes,and increasing government spending does not make an economic sense, unless, the decrease in taxes is going to generate growth that will make up for the loss in revenues, and the increase spending. </p>
<p>Government is very inefficient right now because it has pass its economies of scale, so increasing taxes is not going to address the deficits problem. What the government need to do is to become efficient by cutting down on all the wastes, and it can start by eliminating pork barrel.</p>
<p>I will talk more about your other points later, I have to go somewhere.</p>
<p>I’m sorry, Tega, but all you’ve done is repeat a bunch of soundbites which actually lack substance. In fact, you’ve packed so many together it’s hard to know where to start. </p>
<p>The rich shouldn’t “shoulder the burden”? All I’m talking about is restoring the relative balance of taxation which existed before Reagan. Right now, the wealthy take home a higher percentage of their income than the middle class. It’s hardly “soak the rich.”</p>
<p>The rich use fewer government services? That must explain all the poor folks using the services of the SEC, Coast Guard, TASA, ATSA, profiting from the internet, receiving farm subsidies, oh - and did you notice that the large corporations which were kicked out of Iraq back in Saddam’s day now have new Iraqi oil contracts - yeah - the government really did a job for the non-rich there, eh? (Sorry for the sarcasm, but I get frustrated with people who seem to think that the only services the government provides are the obvious things like food stamps. In fact, government at all levels exists and functions largely to help business make more money. I’m involved in municipal government and that’s basically all I do. If you don’t believe that try taking a look at where all the money in the budget really goes.)</p>
<p>Decreasing taxes (within the fairly narrow range we’re talking about in America) has no net long term positive effect on economic growth and does decrease government revenues over time.</p>
<p>Increasing taxes will “address the deficits problem.” It’s the only thing that will “address the deficits problem.” This is such a basic fact of life that people up until about thirty years ago didn’t even have to discuss it. Since then it appears that repetitive propaganda has taken the place of simple common sense (and reference to actual data) and convinced people that deficits can be reduced without paying taxes to balance the budget. Sorry - no free lunch.</p>
<p>Government needs to become more efficient, blah, blah, blah. Of course, efficiency in all endeavors is to be sought, and waste and corruption should be attacked. But the government’s about as efficient as an enterprise of its nature realistically can be. There’s no magic wand anywhere that suddenly will give us a billion dollars worth of government for eight hundred million dollars. Saying it should be so won’t make it happen - do you think nobody’s tried? (See above re: free lunch?/no.)</p>
<p>In short, the simple wisdom of previous generations was correct. All we really need to do is return to the sound economic policies which prevailed before Reagan’s Voodoo economics and the neocons “Starve the Beast” philosophy took over. Otherwise, we’ll just keep stealing from our children.</p>
<p>Kluge, I agree with your taxation position (and Obama’s). I believe that the tax structure needs to get significantly more regressive in order avoid becoming a South American plutocracy/aristocracy. </p>
<p>However, that trend in the US certainly doesn’t come exclusively from our tax structure. The level of irresponsibility by the prole American is downright depressing. Ridiculous levels of credit, substandard academic performance, pathetic child illegitimacy, increasing drug use, etc. All these things point to a further stratification of our society.</p>
<p>The sad thing is that I do not agree with his spending position. The deficit can be closed not just by raising taxes. Obviously one can reduce spending as well or do Democrats not even count that as a possibility? You can see my fear over both of our candidates.</p>
<p>Can you name some of the soundbites which luck substance? </p>
<p>I just don’t understand your increase in taxes argument. There is no guarantee that an increase in taxes is going to bring in more revenue, even if it brings in more revenue, a significant burden of the tax increase will be placed on the rich. This is because, a tax increase can create an unintended consequence of reducing the number of hours worked, (which can actually reduce the revenue generated from workers that are paid by the hour, you wont have this effect if everyone is on a salary). Since most rich people derive part of their income from investments they can end up paying the bulk of the tax burden. Unless we run simulations to go through the different scenarios to make sure that this will increase revenue, I don’t think it will be a good idea to implement this policy. It can make the current situation worse.</p>
<p>Can we be guaranteed that congress will be spending the extra revenue generated towards the deficits? What is going to prevent congress from increasing spending? For me, the fundamental issue of addressing the deficits is to cut spending. Increasing taxes and increasing spending at the same time might not help with the deficits. </p>
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<p>Can we be guaranteed that we will be able to generate enough revenue without adversely affecting the different income groups? Is there any indication that increasing the tax level to the levels before Reagan will generate enough revenue to make a dent in the deficit without decreasing spending? Why can’t rich people take home a higher percentage of their income? </p>
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<p>Do you have the data on the amount of money spent on MEDICAID, INCOME TAX CREDIT PROGRAM, FOOD STAMPS, UNEMPLOYMENT BENEFITS, CHIP, DISABILITY BENEFITS, ETC. I will change my mind if you can provide data to show that the amount of money spent by the government on all these programs is less than the programs for the rich you listed above. I don’t support the Farm Bill, in fact, this is one of the reasons why I am supporting McCain. </p>
<p>NOTE: I am not saying these programs are not necessary, what I am saying is that the government spends more money on these programs. </p>
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<p>Increasing taxes without holding spending constant (or even decreasing it) will not address the deficits problem. These two have to go together, if you are trying to pay off your credit card debt but keep on spending more and more, your balance wont decrease significantly. Even increasing the amount you pay every month without decreasing spending wont help. </p>
<p>Do you have the data that shows that an increase in tax level will reduce the deficits? </p>
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<p>Yes there are, its called pork barrel, if the government decide to get rid of pork barrel, it will have some money to fund its programs without charging its citizens more in taxes. Like I said, the government has passed the point of being efficient, it can reduce its size to increase efficiency, it does not need a magic wand to do this. Any increase in the size of government will just increase the inefficiency of government. </p>
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<p>I agree with you that we have to return to sound economic policies, just increasing taxes without holding spending is not a good economic policy. There are a lot of consequences of an income tax increase, and I think we should explore all before adopting this policy.</p>
<p>I agree that raising taxes without reducing spending is a losing proposition—kind of like the self-delusional proposition government has been laboring under for the past 8 years: Greatly increased spending despite lower tax revenues. The question to answer is, where do we reduce spending? A giant whack off the Iraq War budget would be a good start.</p>
<p>Id like to point out that the United States uses the tax code to achieve economic and political goals. Since the Reagan era, the tax code has disproportionately favored the wealthy. In addition to tax cuts, the wealthy have benefited enormously from tax-sheltered savings plans, lower tax rates for capital gains, mortgage interest deductions, and other tax loopholes that offer absolutely no benefit to the millions of Americans who live paycheck to paycheck. The US Treasury says that fully one-third of Americans have no assets available for investment, while another fifth have only negligible assets.</p>
<p>And a comment about McCains plan to lower the corporate tax rate from 35 to 25%: Since most corporations make extensive use of tax loopholes, the effective tax rate is actually far lower than 35%. The GAO reported that 94 percent of corporations reported tax liability of less than 5 percent earlier this decade. Fully 60% of those corporations didnt pay any taxes at all, thanks in part to tax loopholes that allow corporations to shelter income offshore. The GAO says corporate tax receipts dropped from around 4.8 percent of GDP during the 1950s to 1.3 percent of GDP in 2003, while payroll taxes as a percentage of federal revenues increased dramatically during that period.</p>
<p>Obama’s plan would increase taxes for only the wealthiest Americans. I doubt there are many taxpayers at those income levels who are paid by the hour.</p>
<p>poetsheart, I think the working class are also taking a higher percentage of their income home. However, the rich can afford good tax experts to find all the loopholes in the tax code, but I don’t think this is their fault. </p>
<p>mapesy, I agree with you, I think that there are too many loopholes in the tax codes, and a lot of people and corporations are taking advantage of it. There are a lot of tax shelters floating around that are defeating the whole purpose of taxes.</p>
<p>There are some corporations who don’t even pay any corporate tax. My solution id to simplify the tax code, and get rid of a lot of the deductions. In this case, it will be difficult for corporations and individuals to generate paper losses to offset their tax liabilities. </p>
<p>We really need a tax reform in this country.</p>