Republican 2012 Nomination Thread

[southsider2k5]

Only if you ignore every tax except FIT, and they would see massive income tax hikes under Huntsman's plan.

 

 

Back to picking and choosing taxes I see. You were just talking about income taxes.

[StrangeSox]

Back to picking and choosing taxes I see. You were just talking about income taxes.

 

I don't even know what the point of your post was. I even posted an article explaining exactly how people come to have a zero or negative federal income tax burden a few posts before literally the post right before yours.

 

We were discussing Huntsman's plan and its impact. It would eliminate those credits that allow for zero or negative FIT burdens while cutting upper brackets, capital gains, dividends and corporate taxes heavily. I posted data showing that those last three cuts will go almost entirely to the wealthy and not at all to the bottom 40%, and explained how the whole plan would result in a massive tax increase for low and middle income America and a giant tax break for the very top. What, exactly, did pointing out that the bottom 40% have a negative FIT rate accomplish?

Edited September 1, 2011 by StrangeSox

[NorthSideSox72]

I don't even know what the point of your post was. I even posted an article explaining exactly how people come to have a zero or negative federal income tax burden a few posts before.

 

We were discussing Huntsman's plan and its impact. It would eliminate those credits that allow for zero or negative FIT burdens while cutting upper brackets, capital gains, dividends and corporate taxes heavily. I posted data showing that those last three cuts will go almost entirely to the wealthy and not at all to the bottom 40%, and explained how the whole plan would result in a massive tax increase for low and middle income America and a giant tax break for the very top. What, exactly, did pointing out that the bottom 40% have a negative FIT rate accomplish?

As my reading has so far revealed, this is at least not entirely true. Nor is it true that EIC is the only thing to give lower incomes a zero or negative tax rate. More later.

 

 

[StrangeSox]

As my reading has so far revealed, this is at least not entirely true.

 

Here's a direct copy from Huntsman's PDF:

 

 

Simplify The Personal Income Tax Code And Lower Rates. Rather than nibble around the edges of the

existing tax code, Gov. Huntsman will introduce a revenue-neutral tax plan that eliminates all deductions and

credits in favor of three drastically lower rates of 8%, 14% and 23%. Eliminating deductions and credits in

favor of lower marginal rates will yield a simpler and more efficient tax code, decreasing the burden on

taxpayers

 

 

Now I'll admit that this is only a vague outline, but all deductions and credits presumably includes the EITC, the standard deduction and really any other credit or deduction that could possibly allow you to get below your marginal rate. The idea is a "simplified" tax code, simply look at your rate and multiply by your income. Perhaps he's elaborated more in a speech, but my reading of this simple paragraph means 51% of Americans who currently pay zero or negative rates will see a jump up to 8%.

 

Nor is it true that EIC is the only thing to give lower incomes a zero or negative tax rate. More later.

 

I know, I posted that Forbes article that gives a high-level explanation of the main credits and deductions.

[Texsox]

I'd need to take a better look, but haven't we discussed before how deductions and credits dramatically lower the rate for the wealthiest Americans? If it is revenue neutral or even results in incremental increases, I'd be for it. Across each stratus of tax payers.

[StrangeSox]

I'd need to take a better look, but haven't we discussed before how deductions and credits dramatically lower the rate for the wealthiest Americans?

The Forbes article points that out.

 

If it is revenue neutral or even results in incremental increases, I'd be for it. Across each stratus of tax payers.

 

If it's revenue-neutral, it's because you're shifting a huge portion of the tax burden from the very wealthy (who control most of the income and wealth) to everyone else.

[Texsox]

He's a grinder! Lifetime record 10-0; Here are the stories from his crushed foes . . .

 

http://www.texasmonthly.com/2011-09-01/feature7.php

 

 

 

 

Forget about death and taxes. Today, there are only two sure things in life: Every few years Rick Perry will run for office, and every few years Rick Perry will grind his opponents into dust. Since 1984, the man once derided as "Governor Good Hair" has participated in ten contested elections and won all of them. A few were against relatively weak opposition, but many were against prominent figures who were expected to give Perry a run for his money. Jim Hightower, John Sharp, Tony Sanchez, Chris Bell, Carole Keeton Strayhorn, Kay Bailey Hutchison, Bill White—you could competently govern a medium-sized republic with political talent like that. But all of them fell to Perry's deep coffers, disciplined campaign style, occasional refusal to debate, and (semi-) popularity among Texans. What is it like to run against the man who may well be the most successful state politician in Texas history? To find out, we spoke to eleven people with intimate knowledge of what is, after dying and paying taxes, the most unpleasant experience a politician can endure. Mitt Romney, Michele Bachmann, Barack Obama: Read closely.

 

 

 

 

[Texsox]

The Forbes article points that out.

 

 

 

If it's revenue-neutral, it's because you're shifting a huge portion of the tax burden from the very wealthy (who control most of the income and wealth) to everyone else.

 

 

Not necessarily, which is why I would like to understand the plan better. How many billionaires have we read about that pay zero taxes? How many corporations receive more than they pay? I don't mind an overhaul. But it will never happen. It would put too many accountants and lawyers out of work and perhaps cause the wealthiest to pay more, and they are the usual donors.

[StrangeSox]

Not necessarily, which is why I would like to understand the plan better. How many billionaires have we read about that pay zero taxes? How many corporations receive more than they pay? I don't mind an overhaul. But it will never happen. It would put too many accountants and lawyers out of work and perhaps cause the wealthiest to pay more, and they are the usual donors.

 

How many billionaires derive most of their income from capital gains and dividends, which would now be completely tax-free?

 

It cuts taxes at the top and raises them at the bottom necessarily if it eliminates all credits and deductions. A family of four making $22k will go from a zero FIT burden to a $1760 burden while the hedge fund manager making $22M in dividends will go from a tax burden of 3.3M to zero.

[StrangeSox]

The tax policy center scored several of the thought exercises in Simpson-Bowles, which is where most of these proposals appear to be lifted from.

 

On eliminating cap and dividend taxes the breaks go almost exclusively to the top quintile and then overwhelmingly to the top 1%.

 

 

How much of this plan being "revenue-neutral" is based on really bad Laffer Curve assumptions that 'tax cuts always pay for themselves'?

Edited September 1, 2011 by StrangeSox

[NorthSideSox72]

The tax policy center scored several of the thought exercises in Simpson-Bowles, which is where most of these proposals appear to be lifted from.

 

On eliminating cap and dividend taxes the breaks go almost exclusively to the top quintile and then overwhelmingly to the top 1%.

 

 

How much of this plan being "revenue-neutral" is based on really bad Laffer Curve assumptions that 'tax cuts always pay for themselves'?

Not that I necessarily agree with it, I don't know yet, but keep in mind that the cap gains and dividend breaks predominantly help the wealthy only in the most direct sense. I don't know a number, but I am 100% sure that anyone looking for a job and anyone with a 401k or other investments would be helped at least SOMEWHAT by the positive effect that would have on corporate sheets and equity markets. No doubt in my mind. I just don't know how MUCH effect it would be.

 

[Balta1701]

Not that I necessarily agree with it, I don't know yet, but keep in mind that the cap gains and dividend breaks predominantly help the wealthy only in the most direct sense. I don't know a number, but I am 100% sure that anyone looking for a job and anyone with a 401k or other investments would be helped at least SOMEWHAT by the positive effect that would have on corporate sheets and equity markets. No doubt in my mind. I just don't know how MUCH effect it would be.

Do you realize that only a fraction (less than half) of the country even is offered a basic 401k?

[StrangeSox]

Not that I necessarily agree with it, I don't know yet, but keep in mind that the cap gains and dividend breaks predominantly help the wealthy only in the most direct sense. I don't know a number, but I am 100% sure that anyone looking for a job and anyone with a 401k or other investments would be helped at least SOMEWHAT by the positive effect that would have on corporate sheets and equity markets. No doubt in my mind. I just don't know how MUCH effect it would be.

 

Trickle-down economics doesn't actually result in wealth trickling down, it results in wealth accumulation for the very top. Record profits, historically low tax rates, record income and record wealth disparity and the "job creators" still aren't creating jobs. I don't see how cutting their taxes further is going to really have a positive effect for everyone else who will have raised taxes and/or slashed services.

 

And, as Balta and my earlier link pointed out, 40% of Americans don't have a 401k or other investments, and the bottom 60% only see direct benefits of 3% of the tax cut. There's really no way to paint this as anything but a huge tax break for the rich and a tax hike on everyone else.

[NorthSideSox72]

Trickle-down economics doesn't actually result in wealth trickling down, it results in wealth accumulation for the very top. Record profits, historically low tax rates, record income and record wealth disparity and the "job creators" still aren't creating jobs. I don't see how cutting their taxes further is going to really have a positive effect for everyone else who will have raised taxes and/or slashed services.

 

And, as Balta and my earlier link pointed out, 40% of Americans don't have a 401k or other investments, and the bottom 60% only see direct benefits of 3% of the tax cut. There's really no way to paint this as anything but a huge tax break for the rich and a tax hike on everyone else.

 

You keep saying this, and yet, you don't know that. Neither do I. You have decided that the math isn't worth doing, and made a sweeping set of assumptions.

 

Now, you may be right on this. But I think you are vastly oversimplifying, and also ignoring some basic realities.

 

And trickle-down economics forhe purpose of income tax doesn't work... but that is not what the cap gain and dividend tax breaks, which is what I was referring to there, are. That is different.

 

[StrangeSox]

I pointed you to the Simpson-Bowles analysis above that does the math on the cap and dividends tax elimination. There are similar breakdowns available on the same website for the other part of his proposal.

 

You've yet to explain how eliminating every tax credit and deduction doesn't push millions of current non-payers on to the FIT roles while simultaneously dropping the top tax rates and completely eliminating cap and dividends taxes isn't a huge tax cut for the wealthy. What basic realities am I ignoring here that change that situation? What sweeping assumptions are being put in place here? It seems like you're ignoring the basic realities of what this plan actually states in order to paint it as somehow moderate. Pretending that eliminating all capital gains and dividends taxes, which is where the very wealthy derive most of the income, is anything but a windfall for the very wealthy at the expense of everyone else is pretty absurd. If we're cutting tens of billions of dollars in those taxes while also significantly cutting the top income tax rates, the only way for this plan to be revenue neutral is to raise taxes on everyone else. We've cut capital gains and dividends before, and it didn't result in some magical job growth boom; there's no reason to expect that it will benefit anyone in any serious way except the very wealthy who control most capital gains and dividend income.

 

[StrangeSox]

From the Tax Policy Center, a study in 2008 on the effects and size of tax expenditures. The conclusion:

 

Tax expenditures vary in their distributional effects; special rates for capital gains and dividends disproportionately favor the highest income taxpayers, while refundable

credits go almost entirely to taxpayers in the bottom two income quintiles. Overall, individual tax expenditures raise after-tax incomes more for high-income than for lowerincome taxpayers, so their net effect is regressive. That conclusion depends, however, on what the tax rate structure would be like in their absence. If, for example, the alternative

to tax expenditures were a proportional across-the-board cut in marginal income tax rates, higher-income groups would see their after-tax incomes increase on average and lower income groups would lose out. Alternatively, if revenue from eliminating tax expenditures were used to fund an equal per capita increase in direct expenditures, lower income groups would be the biggest winners.

 

The tax expenditures we estimated have a huge opportunity cost—about $750 billion in tax year 2007 alone. These revenues could be used to lower marginal tax rates, fund more social programs, improve infrastructure, eliminate budget deficits, or promote various other purposes. If used to lower rates across the board, for example, the top marginal income tax rate could fall to 20 percent. While many tax expenditures further important social goals that are worth public fiscal support, either through continued tax subsidies or direct spending programs, others are of more dubious merit. The savings from paring back provisions with lesser economic justification could be used to advance the policy goals of liberals and conservatives alike

 

The Huntsman plan uses the opportunity cost to lower marginal tax rates, which benefits higher-income groups at the expense of lower income groups.

[StrangeSox]

Here's Politifact checking Nyquist's claim in July that cutting cap gains taxes always causes growth, raising them always causes contraction.

 

We looked for other research on the issue and found that Troy Kravitz and Leonard Burman put Norquist’s contention to the test in a simple study published in the respected nonpartisan journal Tax Notes in 2005. They looked at changes to capital gains taxes and compared them with both to stock market performance and overall economic growth. They found a weak relationship between tax changes and the stock market, but virtually no correlation to overall economic growth, measured by gross domestic product (GDP). "Capital gains rates display no contemporaneous correlation with real GDP growth during the last 50 years," they noted. They also tested whether the tax changes had any delayed effects, testing lags up to five years, but found no statistically significant effect.

[StrangeSox]

Tax Policy Center also has a more rigorous analysis of why some "tax units" (lol at that phrase) pay no federal income tax

http://www.taxpolicycenter.org/publication....cfm?ID=1001547

 

If Huntsman's plan is just too broadly stated and he would leave the standard deduction in place, that would move only half of the non-paying tax units into the paying column, basically anyone over $30k who pays no taxes would now be payers.

[Balta1701]

Horse's mouth.

HUNTSMAN: I'm going to drop a plan on the front steps of the Capitol that says we need to clean house, get rid of all tax expenditures, all loopholes, all deductions, all subsidies, all corporate welfare. Use that to lower rates across the board and do it in a revenue-neutral fashion.

 

(END VIDEO CLIP)

 

SCHIEFFER: That's pretty clear. Let me just ask you some details on that. Does that mean that there will be no deduction for interest on mortgages, Governor? Does it? That's what it means?

 

HUNTSMAN: That means no deductions. That means no deductions at all.

 

SCHIEFFER: What about -- what about no child tax credit? I guess it means none of that, no earned income tax credit...

 

HUNTSMAN: None of that.

The one thing the host didn't ask is why he's taking that money and using it to slash the top tier tax rate.

[EvilMonkey]

Horse's mouth.

The one thing the host didn't ask is why he's taking that money and using it to slash the top tier tax rate.

If the top tier payers don't have any of THEIR deductions, they may still end up paying more, even if it is at a lower rate. Eliminate Buffet and his 'I pay less than my secretary' type of people, because they won't need to hire an army of accountants to hide and shelter all their money, they will pay regardless.

[Balta1701]

If the top tier payers don't have any of THEIR deductions, they may still end up paying more, even if it is at a lower rate. Eliminate Buffet and his 'I pay less than my secretary' type of people, because they won't need to hire an army of accountants to hide and shelter all their money, they will pay regardless.

Not if you slash their rate from 35 to 23%.

[StrangeSox]

Not if you slash their rate from 35 to 23%.

 

And eliminate all capital gains and dividends taxes.

[Balta1701]

Fair to say that the most interesting policy exchange last night was Rick Perry calling Social Security a joke and a ponzi scheme and Mittens saying that it needed tweaks but protection?

[vandy125]

Fair to say that the most interesting policy exchange last night was Rick Perry calling Social Security a joke and a ponzi scheme and Mittens saying that it needed tweaks but protection?

 

That was interesting. One thing I'm curious about is how many people in their 30s and younger are counting on Social Security being around for their retirement? Who has that as part of their retirement plan? I know that I'm not. I totally expect everything being thrown into there by me will be used up and gone by the time I hit retirement.

[Balta1701]

That was interesting. One thing I'm curious about is how many people in their 30s and younger are counting on Social Security being around for their retirement? Who has that as part of their retirement plan? I know that I'm not. I totally expect everything being thrown into there by me will be used up and gone by the time I hit retirement.

If you have an understanding of how the program works, there's no reason for it to not "Be around" unless some politician actively decides to end it.

 

Its biggest issue, IMO, is that not every portion of it adjusts for inflation in the same way. Benefits actually go up at slightly above the rate of inflation, while the tax is actually decreasing relative to inflation, creating a long-term deficit. But because of how it is structured, there's no reason for it not to exist at ~current benefit levels unless someone stops it.