What should the progressive tax rate be?

@maporsche,

Code:

      Income     :     Tax Rate   Maximal Tax/subsidy

                                  within bracket 

_________________________________________________



     $0 - $20,000:     -40%*      -$8,000     

$20,000 - $35,000:      10%        $1,500

$35,000 - $50,000:      20%        $4,500

$50,000 - $65,000:      30%        $9,000

$65,000 - $80,000:      40%       $15,000

        > $80,000:      50%       

_________________________________________________

* this is a subsidy on the difference between 

your income and $20,000, which is about half the 

current median income. It replaces welfare etc.

1 Reply

@Cycloptichorn,

Cycloptichorn wrote:

There is no possible way to cut spending and pay off our deficits and debt while maintaining the integrity of the country. We must combine cuts in spending with raises in taxes - period.

Right now the country is in a mess that might require additional taxes to get out of, but only because of those who insist that austerity is not an option. I would prefer to see much smaller government. There isn't only one way to address a deficit.

2 Replies

@Robert Gentel,

Both austerity AND taxes are needed. I have spent some time looking over this and I cannot plot a viable path forward that doesn't involve both cuts in spending and simultaneous tax raises. We just can't get around to servicing the debt without raises in some form of taxes.

I would like to hear the austerity plans of those who claim that would solve the problem - with details about what would be cut.

Cycloptichorn

1 Reply

@Cycloptichorn,

That doesn't mean the only possible solution is to raise taxes it just means you aren't willing to give up the spending that I am willing to.

1 Reply

@Robert Gentel,

Robert Gentel wrote:

That doesn't mean the only possible solution is to raise taxes it just means you aren't willing to give up the spending that I am willing to.

That's what I'd like to know - what level of spending are you willing to give up? And in what areas?

It's easy to be casual about it but hard to find specifics.

I would remind that taxation in the US is pretty much at it's lowest historical level in a long time... top marginal rates were MUCH higher in past decades.

Cycloptichorn

1 Reply

@Cycloptichorn,

Cycloptichorn wrote:

That's what I'd like to know - what level of spending are you willing to give up? And in what areas?

The spending can't be cut overnight (some of what I want to cut would take years to untangle) but here is the quick version of what I want off the budget:

1) Stop spending about a third of our budget on warmongering. This kills two birds with one stone for me (moral and financial) and is a huge part of American spending. I would reduce military spending by 75% (more if I could).

This alone would represent about 40% of the deficit.

2) I would kill the Department of Homeland Security. Jesus this is stupid, we hae law enforcement agencies (police, FBI), we have intelligence agencies (CIA, NSA), we have military (coast guard...), basically I'm saying we should ******* have enough security without needing a new agency and it's 42 billion. Hell I think all of the existing agencies could probably do a better job for a lot less. It's insane how much money is spent for such little difference in security.

3) Healthcare. I don't want to spend money on sending people to the ridiculous for-profit healthcare system in America. For a lot less we could just have public hospitals (or non-profit at least, like in Japan) and not be giving private enterprise such a blank check.

The system is broken. When foreigners live in the US for a while one of the first things they notice is that the TV tells you what prescriptions you need. Nowhere else do you hear "ask your doctor..." and doctors prescribe drugs, not television ads. Those billions of dollars don't need to be a part of a sane healthcare system.

America already spends more per capita on healthcare than other first-world countries and the solution isn't to throw more money at this. We already spent too much and can get more bang for our buck. I want us to reduce our healthcare spending by 40% (don't whine, we'd still be spending more per capita than Canada) or more.

Medicare ($453 billion) + Medicaid ($290 billion) = $743 billion. For just about the costs of those programs alone we could have Japan's healthcare (based on their per-capita costs) for all 307 million Americans. The US (the government, I'm not considering the 65% of healthcare not currently paid for by the government) already spends enough to have the best healthcare in the world but instead plans to just throw more money at it to increase coverage instead of fixing the broken for-profit system.

There are hundreds of billions of dollars to save in years to come that are going to a broken for-profit healthcare system.

4) I am also willing to overhaul Social Security and eventually end this crazy program . This is the largest spend by any government in the world and is unsustainable as structured. I want it to phase out entirely and I want a much smaller (around 20%) program aimed at the truly disadvantaged (disabled etc). Americans should learn to save instead.

With a great deal more austerity, and smaller government in every way (no more drug prohibition etc) there is a lot that I am willing to cut from the budget.

2 Replies

@Robert Gentel,

Quote:

The spending can't be cut overnight (some of what I want to cut would take years to untangle) but here is the quick version of what I want off the budget:

1) Stop spending about a third of our budget on warmongering. This kills two birds with one stone for me (moral and financial) and is a huge part of American spending. I would reduce military spending by 75% (more if I could).

This alone would represent about 40% of the deficit.

Be more specific please. Exactly what are you willing to cut?

I think it's fair to say that a 75% cut in defense spending isn't going to happen, so I would say you have started with an unrealistic scenario.

Even if we go with your plan that's only 40% of the deficit right there - not counting the debt or servicing of it.

Quote:

2) I would kill the Department of Homeland Security. Jesus this is stupid, we hae law enforcement agencies (police, FBI), we have intelligence agencies (CIA, NSA), we have military (coast guard...), basically I'm saying we should ******* have enough security without needing a new agency and it's 42 billion. Hell I think all of the existing agencies could probably do a better job for a lot less. It's insane how much money is spent for such little difference in security.

Okay, fine with me. Another 4% of the deficit.

Quote:

3) Healthcare. I don't want to spend money on sending people to the ridiculous for-profit healthcare system in America. For a lot less we could just have public hospitals (or non-profit at least, like in Japan) and not be giving private enterprise such a blank check.

The system is broken. When foreigners live in the US for a while one of the first things they notice is that the TV tells you what prescriptions you need. Nowhere else do you hear "ask your doctor..." and doctors prescribe drugs, not television ads. Those billions of dollars don't need to be a part of a sane healthcare system.

America already spends more per capita on healthcare than other first-world countries and the solution isn't to throw more money at this. We already spent too much and can get more bang for our buck. I want us to reduce our healthcare spending by 40% (don't whine, we'd still be spending more per capita than Canada) or more.

Medicare ($453 billion) + Medicaid ($290 billion) = $743 billion. For just about the costs of those programs alone we could have Japan's healthcare (based on their per-capita costs) for all 307 million Americans. The US (the government, I'm not considering the 65% of healthcare not currently paid for by the government) already spends enough to have the best healthcare in the world but instead plans to just throw more money at it to increase coverage instead of fixing the broken for-profit system.

There are hundreds of billions of dollars to save in years to come that are going to a broken for-profit healthcare system.

I don't know how to calculate how much money this would save from the budget. I would also add that the complete and total reorganization of our health care system will have wide-reaching effects that make it really difficult to predict the outcomes of. I would thirdly add that this would take many years to accomplish and would be fought tooth and nail by the Republicans.

Let's say however that your plan will save (and this is generous) 200 billion a year. That's another 20% of the deficit for a total of about 65% cut now.

Quote:

4) I am also willing to overhaul Social Security and eventually end this crazy program . This is the largest spend by any government in the world and is unsustainable as structured. I want it to phase out entirely and I want a much smaller (around 20%) program aimed at the truly disadvantaged (disabled etc). Americans should learn to save instead.

This doesn't allow the government to save any money on the deficit at all , because SS taxes are levied separately from income taxes. If you get rid of SS you get rid of the taxes that fund it. You can't fund the deficit from cutting these monies. What more, there are real negative effects to not having SS in place that I think you have failed to take into account from an economic standpoint.

---

In total, you've done a good job highlighting what you would cut - but even if we did take these drastic measures - which won't happen, as I'm sure you know - you still didn't identify enough savings to close the DEFICIT hole, let alone servicing the debt!

This is why I repeat my earlier contention: it will be impossible to get our financial house in order without both cutting spending and raising taxes. And to date nobody has been able to identify any alternative.

Cycloptichorn

2 Replies

@Cycloptichorn,

My plane is about to take off, so I'll give details later. But here's where I'll go: other countries can and do spend less per capita and in our ideal socould we. We have big government to unwind but it's clear we can spend a lot less.

1 Reply

@Robert Gentel,

Robert Gentel wrote:

My plane is about to take off, so I'll give details later. But here's where I'll go: other countries can and do spend less per capita and in our ideal socould we. We have big government to unwind but it's clear we can spend a lot less.

Have fun on your trip to Brazil!

One question I would have about these other countries: do they in fact have lower rates of taxation then we do?

Cycloptichorn

1 Reply

@Robert Gentel,

Cycloptichorn wrote:

That's what I'd like to know - what level of spending are you willing to give up? And in what areas?

Robert Gentel wrote:

1) Stop spending about a third of our budget on warmongering. This kills two birds with one stone for me (moral and financial) and is a huge part of American spending. I would reduce military spending by 75% (more if I could).

Interesting -- you're more libertarian there than I am. I would only cut defense spending by half, bringing its percentage of GDP in line with the rest of the world's.

Robert Gentel wrote:

2) I would kill the Department of Homeland Security.

I approve, but that's not going to save you much money. The Department of Homeland Security is basically an administrative umbrella above a dozen-or-so agencies that do the real work. Most of those agencies are needed (border patrol, FBI, CIA, etc.), and the umbrella itself doesn't cost much.

Robert Gentel wrote:

3) Healthcare. I don't want to spend money on sending people to the ridiculous for-profit healthcare system in America. For a lot less we could just have public hospitals (or non-profit at least, like in Japan) and not be giving private enterprise such a blank check.

Assuming that you're right about the increased efficiency, this will reduce the amount of consumer spending, but increase the amount of government spending. You're going to need taxes for that.

Robert Gentel wrote:

4) I am also willing to overhaul Social Security and eventually end this crazy program .

Again, I like the spirit of this. But if you execute any of the honest privatizations plans, your immediate savings will be zero, (You would essentially shift spending from the Social Security budget to the interest-on-national-debt budget, then pay down the national debt over the decades.) It will take you generations to finish the transition. And if the example of Chile is any guide, you will still need the government as the re-insurer of last resort.

As much as I hate to admit it, I don't see any major chunks of American government spending that could be cut easily.

1 Reply

@Cycloptichorn,

Cycloptichorn wrote:

One question I would have about these other countries: do they in fact have lower rates of taxation then we do?

On my way to Brazil I bet myself that you'd ask this, even if it makes no difference to whether we can get by with spending less per capita as they do.

0 Replies

@Thomas,

Thomas wrote:

Interesting -- you're more libertarian there than I am. I would only cut defense spending by half, bringing its percentage of GDP in line with the rest of the world's.

I don't see it as a libertarian issue so much as one of military strategy, we do not face threats that that money resolves in any way, it's just a handout to specific industries that manipulate the war drums well.

Even if we spend less of our GDP than most other countries, our huge economy means that would still be a military that does not face a conventional threat.

And the non-conventional threats aren't solved by throwing money at the war industry.

Quote:

I approve, but that's not going to save you much money. The Department of Homeland Security is basically an administrative umbrella above a dozen-or-so agencies that do the real work. Most of those agencies are needed (border patrol, FBI, CIA, etc.), and the umbrella itself doesn't cost much.

It's 42 billion, and with enough of those we're talking about real money here. I'd cut alot more of the FBI, CIA and other "defense" spending as well though. There is way too much security theater and I think we can be as safe for a fraction of what we spend.

Quote:

Assuming that you're right about the increased efficiency, this will reduce the amount of consumer spending, but increase the amount of government spending. You're going to need taxes for that.

You didn't understand me. For roughly the amount we already spend (through medicare and medicaid) per-capita Japan provides their citizens public healthcare. Due to population density differences (for just one, there's also that Americans lead less healthy lives) we can't achieve the same efficiencies but my point is that we already spend enough to have a top notch health care system, but we are just going to throw more money at our health care racket instead.

So my claim is that we already spend almost en0ugh to have good healthcare, and instead of fixing the system America will do what it usually does and just commit to having the government throw billions of dollars at the problem.

It's an insane mentality to me, instead of fixing the broken system they decide to give it a windfall.

Quote:

Again, I like the spirit of this. But if you execute any of the honest privatizations plans, your immediate savings will be zero, (You would essentially shift spending from the Social Security budget to the interest-on-national-debt budget, then pay down the national debt over the decades.) It will take you generations to finish the transition. And if the example of Chile is any guide, you will still need the government as the re-insurer of last resort.

Yeah, like I said there is a lot of spending to unwind. So think of my post as my theoretical guide that would shape my practical measures. In practice we can't do much in the short term, but in practice we don't need to if we can get things under control in the long term.

Quote:

As much as I hate to admit it, I don't see any major chunks of American government spending that could be cut easily.

In practice it's a painful political process alright, but it's because big government is addicting and people get addicted to the handouts (all that money is going somewhere, and those people have votes) that are government spending (I swear, they are such cush deals most of the time, government money is easy money).

In theory it's easy though, it's a willingness problem.

0 Replies

@Cycloptichorn,

Cycloptichorn wrote:

Be more specific please. Exactly what are you willing to cut?

Most R&D spends (where real industry handouts occur), and I'd want to consolidate the services for increased military and economic efficiency.

Do you really need much detail beyond that? It would be a lot of work to tell you just how many aircraft carriers etc I think we need (of our Nimitz-class I think we need 3 of the current 10 at the most) and if you just compare how much we spend vs how much the next most-powerful countries do you can see how much room we have to cut.

If you really think we need to spend that much (as opposed to it being difficult and politically costly to cut) then I can do more detail but I'm not sure you even disagree here.

Quote:

I think it's fair to say that a 75% cut in defense spending isn't going to happen, so I would say you have started with an unrealistic scenario.

It's not going to happen because people don't want it to. But that doesn't make it a bad idea, just an unpopular one. It's not going to happen because people like you prefer to raise taxes and because people like your political opponents prefer to cut social programs and increase military spending.

My proposed budget isn't wrong, the people are retarded.

Quote:

Even if we go with your plan that's only 40% of the deficit right there - not counting the debt or servicing of it.

"Only" 40% of our deficit isn't something to sneeze at. And we don't need to erase the deficit overnight, we've run deficits for years and can survive a few more.

Quote:

Okay, fine with me. Another 4% of the deficit.

See? In just two paragraphs we have almost half the deficit cut. You see the glass as half empty, I see it as half full. Perhaps one reason I feel this way is because I am also counting on economic growth after this recession to make up for a part of it.

Remember that there isn't only 2 ways (taxes and spending cuts) to address a deficit either. Economic growth can contribute to closing the gap.

Quote:

I don't know how to calculate how much money this would save from the budget. I would also add that the complete and total reorganization of our health care system will have wide-reaching effects that make it really difficult to predict the outcomes of. I would thirdly add that this would take many years to accomplish and would be fought tooth and nail by the Republicans.

If the accountants are mad and won't use the budget, that doesn't mean the budget is wrong though.

I know how hard this would be, and it's not just Republicans in the way, it's folks like you and the Democrats who'd rather just throw more government money at the problem (and increase taxes if necessary) than do what makes the most sense.

I have a pretty good idea of how much political capital what I propose would cost, but these problems should be addressed in two ways: what is the ideal? and what is viable?

I'm talking about ideal conditions (to me, of course) and in practice it would be very painful to achieve (the easiest way is the Republican strategy of "starving the beast" or bankrupting the country into smaller government but I find that too dishonest a strategy for my tastes).

Quote:

Let's say however that your plan will save (and this is generous) 200 billion a year. That's another 20% of the deficit for a total of about 65% cut now.

You say that like it's a bad thing!

Quote:

This doesn't allow the government to save any money on the deficit at all , because SS taxes are levied separately from income taxes. If you get rid of SS you get rid of the taxes that fund it.

Good! I hate that tax the most (I for one will never see a dime of my SS taxes) but while I get your point about it not having a direct impact on deficit I hope you see mine about how much it would save us when the system breaks in a bit. It's on a path to insolvency, we can either throw more money at it (and taxes) or we can fix it?

I'm less concerned with erasing today's deficit than avoiding tomorrow's bundles of cash thrown at SS.

Quote:

You can't fund the deficit from cutting these monies. What more, there are real negative effects to not having SS in place that I think you have failed to take into account from an economic standpoint.

I agree that SS is a very strong economic stimulus. It lets Americans not care about saving or taking care of their parents.

Still, it doesn't have to be this way. It doesn't have to be retarded. The key that works for the system is the enforced retirement deduction, not the use-Peter's-money-to-pay-Paul part.

And it's broken because the idea of using population growth to fund it can't last forever, so my proposal is to move it to direct, enforced retirement savings (at levels just enough to keep people alive, not be retirees on QVC all day) and more private pension plans (if you want more than the austere minimum enforced savings).

Quote:

In total, you've done a good job highlighting what you would cut - but even if we did take these drastic measures - which won't happen, as I'm sure you know - you still didn't identify enough savings to close the DEFICIT hole, let alone servicing the debt!

I think you seriously downplay cutting nearly three quarters of the deficit. And this is just my start, I think the American government spends insane amounts of money in nearly every sector. I don't want a single public dollar going towards the American football/prom culture in education for example. I find it absurd that American schools spend millions on gyms and stadiums and that we spend as much as almost anyone per-student on education with such dumb uneducated results.

I want to cut 10-25% of about every government program in America (there are very few exceptions, I want to spend more on higher-education for example).

Quote:

This is why I repeat my earlier contention: it will be impossible to get our financial house in order without both cutting spending and raising taxes.

It's "impossible" because you'd rather increase taxes than cut spending. You prefer more taxes. But if you just look around the world you'll see plenty of people who survive just fine without spending such ridonkulous amounts per-capita.

So don't tell me it's "impossible", it's difficult and unpopular but certainly not "impossible". I see millions of other people doing it just fine. It's a self-fulfilling prophecy, "it's impossible because we don't want to do it".

Quote:

And to date nobody has been able to identify any alternative.

This is an alternative, it's not as easy as just throwing more money at the machine but just because it's not popular doesn't mean it's not an option.

0 Replies

@Thomas,

I guess I'm officially a liberal now. Via Paul Krugman, I'm looking at The People's Budget from the Congressional Progressive Caucus. It contains tax hikes for the rich that are similar to the ones I suggested in this thread, though the Progressive Caucus's are still somewhat more modest. Despite its modesty, though, it seems clear that their budget has no political chance of passing. Even Krugman treats it as a bit of a pipe dream, albeit a good one. Has the American mainstream drifted so far to the right, or have I morphed into a raving collectivist? I reported, you decide.

0 Replies

@Robert Gentel,

Quote:

but only because of those who insist that austerity is not an option

Gutting SS and Medicare is not an option at the same damn time that the super rich are collecting more and more of the total wealth of this nation into their hands.

0 Replies

@maporsche,

OK, how about these improvements,
in the interest of fairness:

Tax Rate-----Married Couples Filing Jointly-----Most Single Filers
35%-------------Not over $20,000------------------Not over $10,000
33%-------------$20,000 to $70,000----------------$10,000 to $35,000
23%-------------$70,000 to $140,000---------------$35,000 to $80,000
20%-------------$140,000 to $210,000--------------$80,000 to $170,000
10%-------------$210,000 to $375,000--------------$170,000 to $375,000
5%-------------Over $375,000----------------------Over $375,000

This is with the provision of a MAXIMUM CAP
that no human taxpayer will ever pay over $1,000,000.

2 Replies

@OmSigDAVID,

Did you specifically attempt to make the most idiotic tax structure you could?

Cycloptichorn

1 Reply

@Cycloptichorn,

Cycloptichorn wrote:

Did you specifically attempt to make the most idiotic tax structure you could?

Cycloptichorn

NO; the FAIREST.

Remember:
5% of $375, 000
is a lot more
than 35% of $10,000.

1 Reply

@OmSigDAVID,

Quote:

OK, how about these improvements,
in the interest of fairness:

under 20,000 0 percents
20,000 t0 100,000 20 percent
over 100,000 30 percents
Over 250,000 40 percents
over 1 million 50 percents
over 10 millions 70 percents

1 Reply

@BillRM,

No; that 's no good, because the rich r not getting their money 's worth in terms of services,
whereas, in contrast, the poor r getting all kinds of (unConstitutional) free services.

David

2 Replies

What should the progressive tax rate be?

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