How did we get here?
Tenacious
7/25/2011 11:50:56 AM
Scott
How did we allow it to get this bad? Why was Uncle Vinnie so darn accomodating for so long? This seems beyond comprehension for any rational person, which probably explains why these decisions were made by politicians.
Re: How did we get here?
Ann Logue
7/25/2011 12:56:47 PM
I know how it got so bad. We've decided that taxes are always and everywhere evil, but we don't want to accept any spending cuts at all. No one wants to break the news to the voters that there is no Santa Claus.
That's all there is to it.
Ann: Pretty good summary.
Politicians (and voters) want to have their cake and eat it too.
Maybe I can get Congress to write the next post for "The Spin." These guys have me beat; their truth and my truth are certainly different.
Re: How did we get here?
Tenacious
7/25/2011 8:17:26 PM
Uh, Michael, you know truth is banned in Congress. And unlike the bans on salacious activities involving social media or interns, this one is really really enforced, on both sides of the aisle.
restructuring
driven
7/25/2011 12:03:55 PM
Where do you see this crisis going Scott? Given that we've reached the point of no return, how to we restore a sane economy? How do we rationally restructure without setting off a global collapse?
As much as we complain about taxes, the US is actually an extremely low-tax country compared to the other economically advanced countries. If we boost taxes. we'd be a lot closer to a balanced budget.
So how many of you are willing to pay higher taxes -- not stupid ones like AMT, but reasonable, generally fair taxes?
Noreen,
Agreed. I would pay a little more taxes if Washington could guarantee they went to paying down debt and not to some stupid new programs, a few more speculative wars, higher Congressional salaries, or pork projects.
In fact, I don't see what the disaster was with moderate tax rates in the 1990s. They seemed to work fine when the budget was balanced. The problem with the Bush tax cuts is they were accompanied by two wars, a recession, and gigantic government spending increases.
To the supply-siders: Supply side tax cuts only work when you balance the budget and have a disciplined U.S. Congress. Since we NEVER have a disciplined U.S. Congress, supply-side doctorine just doesn't work. Both parties are to blame. That's why Bush II approach was a failure -- tax cuts + spending increase = disaster.
Now for the Democrats: They have to get real on Social Security and Medicare. We have promised way more than we can afford. Cuts will have to be made evenutally, so why not start planning now.
The orginal Simpson-Bowles plan to be made a lot of sense. It was bi-partisan and made some tough choices. I as a voter would have signed off on it. It was sad to see it wasn't taken seriously.
Unfortunately, Washington is not a place for making realistic tough choices these days. It's a place where people play games.
I would pay a little more taxes, if Washington could guarantee they went to paying down debt and not to some stupid new programs
Congress has made that deal with the voters several times. Every time we get the tax increases but we never get the debt reduction. Your chart shows how the spending line grows faster than the tax receipts line (which also grows.)
Does anyone feel like we're getting twice the level of service from the Federal goverment, compared to 2000? That's what the spending shows - it's doubled since early 2000.
I don't know anyone who feels that we are getting that kind of value from our government, so the extra money seems to be unnecessary from ths voters view.
I would be willing if I knew it was fair across the board. It gets frustrating when so many don't pay or can work around paying with inflated deductions etc.
Tracking Our Trip Down the Rabbit Hole
Street Smart
7/25/2011 6:29:11 PM
Excellent Infographic and article in this past Sunday's New York Times about how the deficit grew so large and out of control. HIGHLY recommend it.
In her commentary, the piece's author, Teresa Tritch, summarizes the following primary factors:
"First, the Bush tax cuts have had a huge damaging effect. If all of them expired as scheduled at the end of 2012, future deficits would be cut by about half, to sustainable levels.
Second, a healthy budget requires a healthy economy; recessions wreak havoc by reducing tax revenue. Government has to spur demand and create jobs in a deep downturn, even though doing so worsens the deficit in the short run.
Third, spending cuts alone will not close the gap. The chronic revenue shortfalls from serial tax cuts are simply too deep to fill with spending cuts alone. TAXES HAVE TO GO UP (caps mine)."
#Scott Raynovich, would you and Teresa mind heading up to Capitol Hill with a couple of baseball bats and talking some sense into our elected officials?
Re: Tracking Our Trip Down the Rabbit Hole
Phoenix
7/26/2011 8:16:47 AM
Thank you for the information. Things sure look bad. And it looks like we are heading for another big recession. I doubt even the baseball bats will make them make the much needed changes.
While I agree that the US has a relatively low tax rate compared to other countries I don’t think we get anywhere the services and protection offered in other countries that have healthcare for all, significant unemployment benefits and retirement benefits etc. I would be fine raising taxes if it meant an increase in services and a reduction in debt and useless spending on Census chochtkes.
Scott, excellent article which really lays everything out. I think I might actually understand it now. Still have no idea how it gets fixed but at least I know the background. Looks ugly!
Interesting graphic
Tenacious
7/26/2011 11:02:05 AM
This chart really puts the cost of presidential policies in perspective:
Change the system?
tokyogai
7/26/2011 11:54:57 AM
Maybe it really is time to change the system. Our current tax code has rates, but almost no one pays them. With over 70,000 pages in the tax code, there are ways around almost anything. It is time to simplfy and have rates taht are really paid so we can actually manamge the system. That would make things transparent and much more fair. It this type of world people might be more willing to pay their fair share.
Re: Change the system?
Tenacious
7/26/2011 2:14:25 PM
I would love a flat tax. I know some people argue it's unfair, but it seems just the opposite to me.
Re: Change the system?
tokyogai
7/26/2011 2:18:19 PM
It will put thousands of tax lawyers and CPAs out of business.
Re: Change the system?
driven
7/26/2011 2:19:10 PM
That is reason enough to support it.
Re: Change the system?
AskAsa
7/27/2011 12:54:40 PM
Flat tax has a much better chance of being truly fair than the system that's now in place.
About the only consistency in the mountain of current tax regulations is that they screw anyone with ambition and enterprise into the ground.
Re: Change the system?
Phoenix
7/26/2011 2:28:15 PM
Yes. I agree. A clear and concise system which is easy to understand would be the best. The new tax system should not encourage a society in which the rich get richer and the poor get poorer. I also feel a better legal system is needed to prosecute tax evaders not to mention a good system to investigate and identify them.
Alternative minimum taxes have been quietly robbing the middle class in high tax states like New York and California for years. So to fix the system, we have to eliminate taxes that are punitive at best. Then we have to write a code that a reasonably intelligent person can understand. It seems obscene to have a tax policy that requires participation, yet makes the rules so bizarre and hard to decipher that the average person has to ask a professional for help.
there's no doubt we need a more simple and easy to understand tax code
probably won't ever happen because the myriad lobbyists want all of their complicated loopholes.
Politically I belong to the Comon Sense Party, I can understand any argument from any side if it makes sense.
Now, cutting government, defense spending, and slowing government all makes sense to me.
But I get a kick at the folks complaining that the tax code has become punitive on the wealthy when in fact taxes are at a ALL TIME HISTORICAL LOW, and in fact the division between the wealthy and the middle-class is at an all time high.
On our current trajectory, the middle-class will have nothing and Warren Buffett will have everything. Is this really what Tea Partiers want?
Also -- case in point, even Warren Buffett says the tax code is unfair to the middle class.
Re: Tax policy
Broadway
7/26/2011 11:00:59 PM
If all we have to do is find more investors, then we're fine. As long as the Chinese have money to invest, they're stuck giving to us. They don't want to pull out of treasuries because it'll affect their current huge investment in them ... That is, if they have somewhere else to park all that money. Which they don't.
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