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March 24, 2008

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Reagan proved deficits don't matter. Besides after we bomb, bomb, bomb Iran Jesus is coming back and we'll all get raptured up to heaven.

it also doesn't matter if McCain would be able to get this stuff passed or not, either: the proposal stands in sharp contrast to what the Dems are proposing, so he can run on a message of "lower taxes, lower regulation, unlike those socialist tax-and-spend liberals".

John McCain is a Maverick Straight-Talker who holds BBQ parties for the press! What else do you need to know?

(b) "John McCain will fight the Democrats' crippling plans for a tax increase in 2011."

Yes, the same tax code that was in place in 2000, when, as we all remember, and as Justice Scalia might say, we had to resort to eating little babies in order to survive. I'm sure, as soon as midnight strikes bringing in the 2011 new year, all of the investment bankers, lawyers, and other high-paid talent will refuse to work the long hours they had, just moments before, agreed to do. All because the marginal tax rates and estate tax went up.

(c) "Cut The Corporate Tax Rate From 35 To 25 Percent."

Why not ZEEEERRRRROOOOOO!!! Pu$$y.

(d) "Allow First-Year Deduction, Or “Expensing”, Of Equipment And Technology Investments."

Because we don't have enough vacant, poorly built commercial real estate already.

(a) Repeal the Alternative Minimum Tax.

Huzzah! We might as well give up on the idea that the super-rich need to contribute to the public fisc then.

What about the cost of staying Iraq for a hundred years? The "fiscally conservative" GOP is at it again..

McCain is yet another "pro-America" conservative polition who seems determined to drive the US into the ground.

Whenever I see a story like this I am grateful anew that the majority of Canadians and most of the political spectrum here seem to have avoided this borderline-insane obsession with one side of the government's balance sheet.

I'm aware that the political right in the US has been steady and loud in its propaganda efforts for decades on this front, but what kink in the collective US mind allows this complete disconnect from reality to thrive? The Canadian right has also been laying on similar propoganda for a long time and yet the simple-minded "tax cuts are the answer to every problem" message has remained largely on the fringe.

What will it take to break the US fever?

Whenever I see a story like this I am grateful anew that the majority of Canadians and most of the political spectrum here seem to have avoided this borderline-insane obsession with one side of the government's balance sheet.

I'm aware that the political right in the US has been steady and loud in its propaganda efforts for decades on this front, but what kink in the collective US mind allows this complete disconnect from reality to thrive? The Canadian right has also been laying on similar propoganda for a long time and yet the simple-minded "tax cuts are the answer to every problem" message has remained largely on the fringe.

What will it take to break the US fever?

What will it take to break the US fever?

something big, scary and life-changing... a depression, perhaps ?

Ugh: As Bush argued on FOX in a Chris Wallace interview:

If they're going to say, oh, we're only going to tax the rich people, but most people in America understand that the rich people hire good accountants and figure out how not to necessarily pay all the taxes and the middle class gets stuck.

We've had -- we've been through this drill before. We're only going to tax the rich and all you have to do is look at the history of that kind of language and see who gets stuck with the bill.

I’m not saying I disagree with all this, but…

Both Clinton and Obama are proposing new spending of over $200B annually. Neither has a plan to pay for it beyond “letting Bush’s tax cuts for the rich” expire (money pretty much already claimed). In the best case both will increase the deficit, in the worst both will increase it by a lot.

So if you want to say that the D candidates would only be half as bad as McCain I can agree with that. ;)

replace "rich people" with "large corporations" and "accountants" with "lobbyists" and I'd agree with Shrubby.

Yukoner: "what kink in the collective US mind allows this complete disconnect from reality to thrive?"

I have no idea. Back when I lived in the part of California known as the Inland Empire, and had David Dreier as my Rep, I used to get these missives from him that would begin: Dear Constituent: I know how frustrated you are by the high taxes and bloated bureaucracy in Washington... and would then outline some idiotic idea that reflected my supposed wishes.

I took to writing him replies that would begin: Dear Rep. Dreier, I don't know what makes you think that you know about my frustrations, but whatever it is, you're wrong. I am frustrated by your unwillingness to raise my taxes to pay for any of the programs I feel are underfunded, and that you and your fellow Congresspersons are unable to pay for by any other means. -- And then I would detail some of them, new ones every time.

This, of course, was the origin of my screed on the foster child program, which was one of the first I thought of.

Curiously, this never affected his positions in any way that I could see.

money pretty much already claimed

What do you mean by that?

OCSteve,

I imagine that withdrawing forces from Iraq will free up some cash, ne? Or do you think that enough accounting fraud has been perpetrated regarding budgeting for the Iraq War that lots of costs were deferred to the future?

Or do you think that enough accounting fraud has been perpetrated regarding budgeting for the Iraq War that lots of costs were deferred to the future?

Whether fraudulent or not, I think lots of costs have been deferred. Think of care for wounded veterans and replacement of equipment for example.

OCSteve: I think all the candidates need to explain how they are going to pay for things. One of the things Obama plans to do with the money saved by the Bush tax cuts is to pay for some of his plans. I believe he also plans to raise the highest bracket of the capital gains tax, and eliminate various loopholes, like the one that allows hedge fund managers to count their income as capital gains, which are taxed at a lower rate. I'm less familiar with Clinton's proposals. And, of course, there's Iraq.

More to the point: suppose that Obama and Clinton do, in fact, propose $200billion/year in completely unpaid-for spending. It's also worth asking what we get for all that debt. Under McCain's plan, the answer is: basically nothing, unless you're in the top 1%. Under Clinton and Obama, the answer might be: guaranteed health insurance. I'd want to factor that into the equation, rather than just saying: only half as bad. (Likewise, if I were married to someone who flushed $400 thousand down the toilet, and you were married to someone who spent $200 thousand on a new home when the two of you needed one, I wouldn't say: hey, your spouse is half as bad as mine.)

something big, scary and life-changing... a depression, perhaps ?

Ouch, hopefully not that big and scary.

Hilzoy:
It's also worth asking what we get for all that debt.

Now there's a question that deserves to be asked. And not just of a hypothetical McCain admininistration.

Turb: A lot of deferred costs yes – but also I don’t have the faith that either will actually be able to do anything quickly.

Hilzoy: One of the things Obama plans to do with the money saved by the Bush tax cuts is to pay for some of his plans. I believe he also plans to raise the highest bracket of the capital gains tax, and eliminate various loopholes, like the one that allows hedge fund managers to count their income as capital gains, which are taxed at a lower rate.

I’m OK with all that – I just recall that people have been planning on using that same money (when the tax cuts expire) for a lot of different things over the past few years. And on Iraq, again I just don’t think either will be able to quickly take action that would result in large $$$ savings.

It's also worth asking what we get for all that debt.

True – but a deficit dollar doesn’t care if it was spent on a bullet for the military or an aspirin for an uninsured child.

I’m not advocating for McCain’s plan BTW. After all, he’s already admitted to not knowing much about the economy. And I’m fine with much of the new spending either C or O want. Just saying that none of the above have impressed me with any plans for getting the deficit under control…

Ugh: You might agree with Shrub's assumptions. But do you agree with the conclusion, namely that there is no point in even trying to tax the wealthy for just that reason?

I'm not entirely sure what the justification is for the highest capitals gains bracket to be lower than the highest income tax bracket, but I've never understood. Maybe the idea is that capital gains don't track wealth as well as high incomes do (most people probably post their largest capital gains when they sell their homes for their retirement). Or maybe the idea is unabashedly supply-sideish.

Or maybe the reason is to offset the fact that the capital gains tax doesn't take inflation into account.

More specifically, on ending the Iraq war being “found money”…

Even if Obama were to declare it over on his first day in office it will take months and billions to return men and equipment. Obama says 16 months, a good chunk of his term. Even he plans to leave some forces in the region, and they will be expensive to maintain. Then we have to rebuild the Army, and Obama has promised to actually expand it, adding 65,000 Army soldiers and 27,000 new Marines. That is a boatload of money. Finally, much of the money funding the war is borrowed money – redirecting how that money is spent still means borrowing it.

OT News Flash—"I heard Ambassador Peck on an interview yesterday," Wright declared. "He was on Fox News. This is a white man and he was upsetting the Fox News commentators to no end. He pointed out, a white man, an ambassador, that what Malcolm X said when he got silenced by Elijah Muhammad was in fact true: America's chickens are coming home to roost."
In">http://snipurl.com/22ild">In fact the Rev. Wright’s message was one of self- examination. (AlterNet) The so-offensive sermon. Not.

True – but a deficit dollar doesn’t care if it was spent on a bullet for the military or an aspirin for an uninsured child.

Au contraire. A deficit dollar spent - or invested, if you will - on universal healthcare might lead to a reinvigorated economy, and increased tax revenue.

Then again, it might not. But I'd say it's got a better chance at paying for itself than a deficit dollar spent in Iraq.

Ara: But do you agree with the conclusion, namely that there is no point in even trying to tax the wealthy for just that reason?

No no no. The wealthy will (and do) pay income tax, as any WSJ editorial on the tax code will tell you (however misleading said editorial may be). I was just saying that large corporations (in general) do a fairly decent job of lobbying for tax breaks to keep their tax rate down. But they still pay taxes, even the most tax efficient US based corporation pays 16-20% of its income in taxes.

I'm not entirely sure what the justification is for the highest capitals gains bracket to be lower than the highest income tax bracket.

There are several justifications. It makes up for inflation; it makes up for double taxation (tax at the corporate level and tax at the shareholder level); it attempts to level the playing field b/t savings and consumption; etc. One of the problems of such a huge difference in the rates b/t ordinary income and cap gains (20% difference in the marginal rate, right now) is that people will do all sorts of things to try to conver ordinary income into cap gains.

hilzoy: and eliminate various loopholes, like the one that allows hedge fund managers to count their income as capital gain

Indeed, the worry that congress may close that loophole dates back to the early 1960s. There is absolutely no justification for it.

Thank goodness we have a press corps that will give these issues the full airing they deserve, and not get sidetracked by nonsense like what associate of which presidential hopeful said something cuh-razy years ago.

(shoots self in head)

It's sad that McCain has, in essence, made the same choice that Rudy "Il Douche" Giuliani made: to give Grover Norquist control of his economic agenda lock, stock and barrel. On the other hand, if Obama gets to the general, I'm pretty confident that he'll be able to bash McCain's head in on this one, exposing his plan as both immoral and deeply, deeply stupid.

Obama wants to tax the GDP and give the money to poor countries, I'm really not sure who................. he sponsored the same legislation as tony blair, I'm not really sure if he's a socialist...........

As Canada is; Americans probably don't want to hear voices, see things, have accidents or luciferian possessed people shooting guns a schools. If an american wants to deal with Canada, he's just going to screw americans. Crack heads.

Tractarian a U.S. dollar spent in Iraq most likely takes the form of a part of a backpack sized 'brick' of shrink wrapped $100 bills. Untracable and unaccountable that money makes its way into the hands of wingnut welfare recipients and Republican candidates all over the country.

So you see it does create jobs here. Money spent in Iraq creates exactly the kinds of jobs most needed in America according to our Republican overlords, jobs for them.

The WSJ *is* a 'bastion of liberalism' on all but its op-ed page. Its investigative reporting into the way individual businesses and whole industries game the systems in which they operate is unmatched. Bob Davis' writeup of his interview with McCain made no overt editorial comment but plainly exposed every absurdity you've highlighted here. That's par for the course for the paper's reporters (as opposed to its can't-get-enough-war-or-torture opinion staff).

A successful businessman pays somewhere around fifty percent of his earnings to the federal, state, and local governments. That’s probably a fair percentage given today’s realities but it can’t be raised without causing large numbers of businessmen to hang it up or leave.

Soon, anyone in the six figures will get hit with the 26/28% Alternative Minimum Tax. That’s probably a fair tax rate as well. Good luck on raising it though.

It is not possible to significantly raise capital gains taxes. In a global economy, it’s not only companies and labor that have to compete. So do countries. And the high net worth folks can easily become Citizens of the Bahamas (see Bloomberg), Dominican Republic (see Clinton), Belize (see Gates), or Paraguay (see Bush). Taxes there can be made to be zero. Welcome to the world.

I’d argue that the government’s tax structure in the current form is probably getting as much revenue out of our population as reasonably can be achieved from income and capital gains. The only other places to turn would be wealth taxes (won’t work; see above and France), or federal sales taxes.

We need to drastically cut entitlement spending. Which, of course, we can’t.

Amazing that you liberals think that the government is entitled to all your money and it is doing a favor by letting you keep some. Mc Cain's plan sucks not because he wants to decrease taxes, but because he has no plan to significantly reduce spending.

Gosh, your corporate tax is still higher than ours is! Well, thank heavens President McCain is going to bring it down to our manageable levels. That way you can have the same tax system as a poor, Third World country, without, of course, becoming exactly like a poor, Third World country.

Oh, wait . . .

Ugh: I was just saying that large corporations (in general) do a fairly decent job of lobbying for tax breaks to keep their tax rate down. But they still pay taxes, even the most tax efficient US based corporation pays 16-20% of its income in taxes.

When you combine state and federal the average is 40%. So I don’t think their lobbying has been that effective.

U.S. States Lead the World in High Corporate Taxes

Currently, the average combined federal and state corporate tax rate in the U.S. is 39.3 percent, second among OECD countries to Japan's combined rate of 39.5 percent.1 Lowering the federal rate to 30.5 percent would only lower the U.S.'s ranking to fifth highest among industrialized countries.

So I do not think that talk of lowering it is totally insane…

Amazing that you liberals think that the government is entitled to all your money and it is doing a favor by letting you keep some.

medic! strawman down! strawman down! i repeat, strawman down! send help immediately!

Currently, the average combined federal and state corporate tax rate in the U.S. is 39.3 percent,

No. It's not. This is the top statutory rate. The effective rate, what corporations actually pay, is 24%. See here.

That's still above average for OECD countries, but bear in mind that the US has no VAT, so I'm dubious that our corporate rates are as oppressive as all that, despite the misinformation being spread by the Tax Foundation. Lots of data on comparative taxes can be found here, by the way.

As always, it is deceptive to single out a specific tax and claim that it is too high or too low. It is necessary to look at the entire set of relevant taxes.

Bernard: despite the misinformation being spread by the Tax Foundation

The article you linked seems to agree with the Tax Foundation.

Adding state taxes to federal ones gives an overall rate of 39%. That is the second highest in the OECD, in which the average rate is 31% (see chart).

And as you noted:

Ranked by this “effective marginal tax rate”, America lags behind by less, though its rate of 24% is well above the OECD average of 20%.

Plus the overall point of the article: It needs to be cut but the question is by how much and it’s not politically feasible in the current climate. And when Charles Rangel wants to slash it by 5%...

Plus – all I said is that discussion on lowering it is not totally insane.

Yukoner,

The obsession with taxes is not borderline insanity. It is full-blown. The strangest part is that half a century ago, the Republicans were as obsessed with a balanced budget.

Complex thinking is not a hallmark of Republicans.

Steve,

The Economist article describes the 39% as the "headline" rate, and then goes on to point out that the actual effective rate is 24%. The Tax Foundation simply says the US rate is 39.3%, with no distinction between statutory and effective rates. I'd say that's deceptive, since it leads the reader to think that US corporations actually pay 39.3%.

And let me repeat that the comparison of income tax rates, in isolation, is pretty meaningless, as is, IMO, the claim that allegedly high US corporate taxes undermine "the competitiveness of American workers." Without something more than the opinion of business leaders (no bias there - just tender concern for the workers) I'll wait for stronger evidence.

Is it insane to discuss lowering the corporate tax? No. But my understanding of a "discussion" is that it includes arguments for and against, not just unsupported claims of benefits. What's going on is not a discussion but a rally.

Freelunch:
The obsession with taxes is not borderline insanity. It is full-blown.

I'll take your word for it!

The strangest part is that half a century ago, the Republicans were as obsessed with a balanced budget.

I'm afraid that this is now becoming a fixation in Canada. The federal government has run a surplus every year since 1996 or so and conventional wisdom now is that any government that runs even a tiny deficit will get clobbered. For the moment it's not a problem but I'm afraid that it will cause problems when the next deep economic slump comes along.

Bernard Yomtov:
And let me repeat that the comparison of income tax rates, in isolation, is pretty meaningless, as is, IMO, the claim that allegedly high US corporate taxes undermine "the competitiveness of American workers."

Yes, yes, yes. I've tried to make it a habit now to only discuss taxes and tax rates explicitly within the context of the overall basket of taxes that a government collects AND the spending of those revenues.

A laser-like focus on e.g., the top marginal rate of tax on incomes leads straight to, well, the US federal government's current fiscal problems.

I thought this sounded quite good

'Mr McCain, speaking in Orange County in southern California on Tuesday, said he would leave all options open for dealing with current US economic troubles and would not allow dogma to override common sense.

"I will not play election-year politics with the housing crisis," he said.

"I will evaluate everything in terms of whether it might be harmful or helpful to our effort to deal with the crisis we face now." '

pity what he means is "I won't play left leaning politics" and "secret squirrel : I'll be as far right as it takes to get the far right on side"

still - cynical as I am I'm not sure Hillary or Obama won't spend the next few months making potentially stupid promises trying to win votes.

John McCain is for massive government debt and endless war.

im at schooool :)
idkk

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