Treasury deficit report says 66% TAX INCREASE needed

Submitted by charlie.collins on Thu, 05/29/2003 - 08:50

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Politics

Wow. I knew it was bad when the government voted the other day to increase the amount its allowed to borrow. I knew the deficit was growing OUT OF CONTROL under the "less government" Republican administration. But I was not aware it was THIS BAD. The Treasury department has recently concluded a study of the economy and the deficit that says "U.S. currently faces a future of chronic federal budget deficits totaling at least $44 trillion in current US dollars." CHRONIC DEFICITS 44 TRILLION. The Bush administration, in all of its never ending infinite wisdom, has decided not to include the silly little report in the annual budger report for 2004. WTF!, leave it out? Cant you just leave out something that critical? I guess, if youre the President, you can. The report says that in order to keep up in the future we will either need MASSIVE tax increases or GREATLY REDUCED services or BOTH. There is good news though, with a mere "66% across the board" tax increase we can solve the problems!!! So lets see, rates are already 17-40 percent or so, hmmm. In a typical middle of the road case, lets say a 25% current tax rate, add 66%, thats only 91% tax rate, we can handle that right? And we recently enacted tax CUTS that I happen to agree with? Dont get me wrong with TAX CUTS. I dont agree tax cuts will stimulate the economy. On the contrary I feel changing the code all the time and sending "Refund" checks and other such stunts is a great example of HOW TO WASTE MONEY. How much does it cost to re-tool for new rules all the time and send out on the spot checks. Yet I do feel that we are taxed FAR TOO MUCH as a population right now. Its another discussion but certainly things can be managed more efficiently with the amount of revenue the US has, or even with LESS? We should NOT have to give up any damn services, on the contrary services should be BETTER, AND WE SHOULD PAY LESS TAX. (Again, the solution is FairTax, but that likely wont ever happen, it makes to damn much sense.) For more on the "leave the damning report out" debacle see the linked MSNBC article. White House shelved deficit report: MSNBC

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Re: Treasury deficit report says 66% "across the board" tax INC

Submitted by Nathan (not verified) on Thu, 05/29/2003 - 09:40.

Charlie, let me start by saying that I'm glad to see this forum moving more towards a techie site, with a touch of politics thrown in here and again, instead of the reverse. Let me also say that this is in no way meant to start [another] flame war. Now, for the meat and potato's of my question. You've stated, on numerous occasions, that you don't believe that the tax cuts will help stimulate the economy, but I can't agree, and here's why. In the event of a tax cut, people (productive, working people) take home more of what they earn. Many of those people will spend that money in the economy (many of the rest will stoe it away in mason jars buried in their back yards for 'hard times'). When more people start spending more money, buying more 'stuff', more 'stuff' has to be made. When factories see this increase in demand, they want to meet it (or loose out to the factories that can meet it), so they hire more people (who may have been unemployed previously). Those more people now have paychecks (that are taxed), and can afford to buy more stuff (and pay taxes on it), and the cycle continues. Now, that's for the average Joe like myself, making a decent salary. When you think about the guy out there making 7 figures, that tax break that allowed me to take my wife out to dinner a little more frequently has allowed Mr. 7 figures to expand his business (build a new factory, which means grading companies get work, building designers get work, construction companies get work, and then the new folks needed to populate this new facility get work), which feeds even more money into the economy. This is just my 2 cents worth, but I really can't understand how the tax cuts won't have a positive impact on the economy.

Re: Treasury deficit report says 66% "across the board" tax INC

Submitted by atrox (not verified) on Thu, 05/29/2003 - 10:06.

Well, I am not interested in our previous flame stuff either. I think you have useful things to say and I appreciate the opposite viewpoint being expressed here. I would like to thank you for that (and for the record, you should post stories with your viewpoints too, you dont have to just respond to me, login and post an article, anyone can, and then this site would have more views, which is what its about). All that aside, I just dont think what we are getting is ENOUGH money to stimulate anything. I dont think businesses will start releasing capital spending until there is demand for their goods or services, and I dont think this cut will do it. I DO think its a turn in the right direction, lower taxes, but without curing the mismanagement of services the government offers and making them more efficient lowering the revenue they have will just increase the deficit. I WILL JUST QUOTE WHAT PRESIDENT BUSH HAD TO SAY ABOUT THIS TAX CUT, HE ALSO SAID IT WOULD NOT WORK "As a result, Bush lowered his sights to $550 billion and traveled widely to sell it. In Ohio, he said senators supported $350 billion 'might have some explaining to do' because the 'little bitty tax relief package' wouldn't be enough to spur economic growth." Taken from ABC NEWS - http://abcnews.go.com/wire/Politics/ap20030529_65.html So the President may now be playing politics and saying how great this cut is, because thats his job, but even HE DOESNT BELEIVE IT WILL HELP.

Re: Treasury deficit report says 66% "across the board" tax INC

Submitted by Andy (not verified) on Thu, 05/29/2003 - 10:08.

Pardon me if I'm dead wrong here, but wouldn't a 66% increase in the current tax rate mean you take the current rate (say 25%), and increase that by 66% of the current rate? So in other words, the calculation is .25 + (.25*.66) as opposed to just .25 + .66. That makes a huge difference (41.5% vs. 91%). Granted, both are re-freakin-diculous, but I'm just wondering how that calculation should work.

Re: Treasury deficit report says 66% "across the board" tax INC

Submitted by atrox (not verified) on Thu, 05/29/2003 - 10:15.

both are ridiculous agreed. i took an increase of 66% in the tax rates across the board to mean, current rates plus another 66% on top of that. i understand your calculations and you may be correct, i dont know. either way its ludicrous and obviously it would never happen. so spending is going to have to GREATLY decrease AND management is going to have to get MUCH MORE EFFICIENT. (also things that will likely never happen, so who knows what WILL happen?)

Re: Treasury deficit report says 66% "across the board" tax INC

Submitted by Andy (not verified) on Thu, 05/29/2003 - 10:17.

Ohh man! My job exists because of bloated federal spending, yet I still get taxed up the ass...tough call for me :)

Re: Treasury deficit report says 66% "across the board" tax INC

Submitted by Shmooze (not verified) on Thu, 05/29/2003 - 10:31.

I think your scenario will work in a simple form of 'village' economics, however our economy is so globally complicated now and so driven by wall street that I am not sure the custs will have the impact we want. If you're considering building a plant to increase capacity you are looking at a lot more factors than some of your customers getting a $400 check, espcially if you know 2 years from now that extra money will be gone. I personally think a lot of the confidence in the economy during the 90's came from that big push to eliminate deficit spending - if you feel your government is in control and making smart decsions you are more likely to take capital risks (like building a new plant). It's uncertainty that really kills economic growth. Just look at the price of oil, as soon as the risk factor came down so did the price. I really would like someone to explain to me why the Republicans (the anti-big govt. people right?) are not making a big push for bringing spending under control. I have a theory - both parties are exactly the same and they are both afraid of appearing extremist - so what you end up with is Democrats that are more fiscally conservative (because they don't want to be percieved as big spenders) and Republicans who are big spenders (because they don't want to be perceived as cold hearted) Back to the inital post, I think you can take these statistics with a grain of sand - as soon as there is real growth that 66% number will shrink drastically.

Re: Treasury deficit report says 66% "across the board" tax INC

Submitted by atrox (not verified) on Thu, 05/29/2003 - 10:38.

agreed totally. i know the numbers arent a real 66%. they are the report authors way of trying to illicit some alarm. they are just a calculation of current trends and current spending and what would be required to resolve the deficit. obviously they are not ever going to really apply to anything (other than hopefully wake some congresspeople up and start dealing with this issue). and i totally agree with the deficit issue. we need to live by a real budget in over governments, if the money aint there man, you cant spend it! its not econ 7000 or anything.

Re: Treasury deficit report says 66% "across the board" tax INC

Submitted by Shmooze (not verified) on Thu, 05/29/2003 - 11:16.

I remember thinking a few year ago when all those projections called for us running a surplus and debt free in so many years that it was probably bogus, but it didn't stop congress from spending lots of it...