Taxes, the Deficit/Debt, and the Fiscal Cliff

[TreeA10]

Interesting tax rates for the Greeks due to their overspending.

Greeks earning 42,000 Euros to be taxed at top rate under plan

ATHENS, Greece (AP) — Greeks earning more than €42,000 ($55,000) per year will now be taxed at a new top rate of 42 percent, under a major new tax reform bill submitted to the country's parliament late Thursday.

Under the new guidelines, the 42 percent top tax rate and earnings threshold replaces the previous level of 45 percent for incomes above €100,000 ($130,770). The new rate is part of a simplification of the country's tax rules. There are currently eight tax bands ranging from 18 percent to 45 percent. These will be replaced by three tax rates: 22 percent, 32 percent and 42 percent.

Greeks earning less than €25,000 ($32,700) a year are set to benefit from the new system in spite of the raise in the basic tax band as the government is proposing to raise the threshold on which income is taxed.

The new tax rates, part of the austerity measures demanded by the country's international rescue lenders, were submitted to parliament hours after the finance ministers from the 17 European Union countries that use the euro agreed in Brussels to restart rescue loan payments. Greece is in line to get €49.1 billion ($64 billion) between now and March, with €34.3 billion of that amount due in the coming days.

Greek finance minister, Yannis Stournaras, presented his colleagues form the other 16 European Union details of his country's long-awaited tax overhaul before the bill was submitted.

In return for the rescue loans, Greece's international lenders have insisted on a series of reforms, tax raises and spending cuts.

But the successive hikes in taxes, required to meet deficit-cutting targets, have hammered the economy, pushing unemployment up to 26 percent, and with more than 20 percent of the population now officially living in poverty — earning less than €7,200 ($9,420) per year.

Conservative Prime Minister Antonis Samaras promised the speedy settlement of state debts and the recapitalization of the country's troubled banks with the money from the new loan installments, while spending €11.3 billion ($14.78 billion) on a debt buyback scheme.

"Today ends a long and difficult period of anxiety for Greece," Samaras told Greek reporters in Brussels.

"It ends the rumors, blackmail and pressures on our country to exit the euro. Today, Greece gained a great opportunity to stand on its feet and get out of the crisis — standing, not kneeling."

Samaras' center-right New Democracy party lost ground to its main rival, the left-wing Syriza Party, according to an opinion poll released late Thursday.

The Public Issue survey for private Skai television gave Syriza a 4.5-point lead, on 30.5 percent, while the extreme right Golden Dawn was in third place with a projected support of 10.5 percent.

It found that more Greeks now have a negative view of the European Union: 50 percent compared to 46 percent with a positive view — a major shift from the respective positions of 37 and 61 percent six months ago.

[Guest]

Multiplier effect.

[pawnman]

What do you mean by this? Does that fact that you receive money from the government mean that your tax contributions are meaningless? What's your view of tax credits that can and often drive a person's federal income taxes to zero or below?

What I mean is, if they aren't using their own money to pay the taxes you claim gives them "skin in the game" in the first place, it's meaningless. If I give you a hundred dollars, and the local government collects twenty dollars in taxes, do you really care? No, because you're still up eighty bucks.

People who aren't paying into the system, but are collecting from the system, have no incentive to cut the spending. They don't care that politicians are wasting billions of dollars, because it's someone else's money.

[pawnman]

Is there anything out there to back that up other than your gut feeling on it? Do people really care less about government spending when they pay no federal income tax? I mean, if we're just going off of anecdotal thoughts, the elderly make up a sizable chunk of those not paying federal income tax and they vote pretty strongly Republican, supposedly the party of fiscal conservatism that wants to cut spending in Washington. How does that fit with your theory? Doesn't necessarily disprove it, but it's your theory, the burden of proof is on you.

What do you say to my proposal to have everyone pay at minimum $1 plus the cost of processing the claim they otherwise might not have had to file (say $6.90). Bar napkin math said that brought in an extra $500 million in revenue per year. Does that satisfy the need for people to have "skin in the game," with the game being narrowly defined as federal income taxes? Do you think that will change people's opinions on public policies that drive deficit spending?

Or do you actually want to specifically raise federal income taxes on the poor to some kind of noticeable level? Do you think that's a good policy for economic growth? Maybe you want to raise rates on all earners?

Yes, I really, truly believe people who aren't paying any taxes not only don't care about government spending, they want to see the spending increase because it directly benefits them.

And when was the last time the republicans were the party of "fiscal conservatism"? Sometime right after Clinton's first election? Neither party has been fiscally conservative for a LONG time.

What I'd really love to do is force everyone to pay something. And I would completely stop payroll deductions. People don't even realize they're paying taxes. Force people to write a check, and let them see just what they are really paying.

I'm not especially in favor of raising taxes, but I'm not seeing a lot of alternatives to generate the sort of revenues we're going to need to pay off any portion of our national debt and get back to a balanced budget. If we are going to raise taxes, I see no reason NOT to raise them for everyone instead of declaring class warfare and attempting to stick the rich with the entire bill.

[raimius]

What happens when the Republicans give in on the top rate hike, and get little in return. What is their next move to get the budget closer to the black?

[Guest]

A bad reason to raise taxes on everyone is because it feels "fair".

Is fairness a bad reason to raise taxes on anyone then?

A good reason to not raise them on everyone is that it allows the government the ability to simultaneously reduce the deficit, but also keep 98% of the country spending on consumer goods, cars, homes, and such. Things that help with an economic recovery.

Why not simply broaden the base?

Raising taxes on the rich

Here is the root of the problem. We're not talking about a mathematical formula anymore when using words like "the rich." Doing so seems like an ideological judgement is being made and a selective group is being singled out for punishment.

Punishing a selected minority of the population is not how we should decide on how to raise revenue, is it?

Think about the danger of going down that road.

And consider the difficulty using that language contributes to finding a compromise. It is unnecessary unless your motives are more political than fiscal.

[Guest]

Has anyone read this yet?

https://www.nieman.harvard.edu/reports/article/102808/Defying-Gravity.aspx

[pawnman]

What happens when the Republicans give in on the top rate hike, and get little in return. What is their next move to get the budget closer to the black?

Passing a budget would be a reasonable start.

[matmacwc]

Passing a budget would be a reasonable start.

HA! The Senate is going to block this all day long. Easier to spend on random crap when there is no budget. (And yes, I'm baiting).

Edited December 16, 2012 by matmacwc

[congressman]

Passing a budget would be a reasonable start.

Been done every year. Your beef is with the Senate...and Harry Reid

[matmacwc]

THEN PROMOTE IT BETTER!! Bty, I agree with you, and support you.

[congressman]

Oh we promote it, tell the media to cover it. Good luck with that! And thanks by the way

[disgruntledemployee]

The same party that lost the Presidential election? Yes, they're in the wrong. It will be so pathetically easy to spin the GOP as abandoning the middle class if we go over the fiscal cliff because they couldn't give up a tax cut to the richest 2%.

All Democrats really need to do is fire up the spin machine and sit by as the GOP continues to self-destruct and alienate vast segments of the voting population in its quest to remain ideologically pure.

I would prefer Democrats get off their high horse, stop playing games, and get their hands dirty. All Democrats are doing is looking for the deal that makes them look good and everyone else look bad. Show me a Democrat that is proposing the spending cuts that our budget requires. And that is why America should flush the Congressional toilet because the stagnant shit stinks. But if you want Deomcrats to fire up the spin machine, get out your pom poms and cheer for them all the way.

So here is my spin on this mess, "Its the spending, stupid!"

Disgustingly Out

[Magnum]

That's an amazingly biased view of the situation. Both parties are playing politics; the problem is that the Democrats actually have all of the political capital. The Republicans have been negotiating as if they have any leverage whatsoever, and everybody knows that they don't. So, at this point it's just a waiting game as more and more GOP lawmakers start capitulating to reality, instead of living in this fantasy dreamworld where standing their ground and wrecking the economy is actually a viable strategy.

So, I forsee two likely situations: the Democrats get what they want with a few concessions because the GOP had the good sense to realize their incredibly weak negotiating position and participate in the governmental process, or that the GOP stands their ground, we go over the cliff, get blamed for the 2nd recession, and get absolutely crushed in 2014 because people are tired of the gridlock.

I prefer the former since it saves the economic recovery, but the GOP wants to self-destruct, I'm okay with that too. We'll just have to wait and see what they end up choosing.

Interesting. So you think the republicans are wrong for attempting to put together a sustainable financial plan? The national debt has increased $6T over the past 4 years. Obama's plan calls for $1.6T in new taxes over the next 10 years as well as increased stimulus. Something doesn't add up here. Please explain to me how this plan would be better for the economy?

[disgruntledemployee]

That's an amazingly biased view of the situation. Both parties are playing politics; the problem is that the Democrats actually have all of the political capital. The Republicans have been negotiating as if they have any leverage whatsoever, and everybody knows that they don't. So, at this point it's just a waiting game as more and more GOP lawmakers start capitulating to reality, instead of living in this fantasy dreamworld where standing their ground and wrecking the economy is actually a viable strategy.

So, I forsee two likely situations: the Democrats get what they want with a few concessions because the GOP had the good sense to realize their incredibly weak negotiating position and participate in the governmental process, or that the GOP stands their ground, we go over the cliff, get blamed for the 2nd recession, and get absolutely crushed in 2014 because people are tired of the gridlock.

I prefer the former since it saves the economic recovery, but the GOP wants to self-destruct, I'm okay with that too. We'll just have to wait and see what they end up choosing.

Biased, huh? OK, Mr Smarty Pants, what seems to be the big economic problem we have here? Not enough taxes or too much spending? Do I even care about political capital in the capitol, hells no. Would I prefer those elected get their hands dirty and solve the problem, hells yeah. What I mean by getting hands dirty is stop playing politics and do some actual work. This isn't a fucking basketball game where fans cheer for outdoing each other with political slam dunks. Dems are so falling all over themselves from Nov that they see that as a sign from the heavens that they can't be wrong, at least that is what they want you to think.

I don't want the Dems to get what they want because they are flat out wrong. So, like I said, get out your poms and cheer them on. I expect no less from you.

Out

[Homestar]

The Republicans have been negotiating as if they have any leverage whatsoever, and everybody knows that they don't.

The Republicans control the majority of the House. That is leverage despite what the President may say, which is exactly why the Framers devised a bicameral legislature with a separate Executive. The President, the House, and the Senate have to reach a compromise and Boehner is not wrong to demand spending cuts for tax hikes.

[Vertigo]

Boehner is not wrong to demand spending cuts for tax hikes.

Which is what the President has been proposing all along... so you're saying the R's leverage is to force Obama to do what he wanted to do in the first place?

[matmacwc]

Spending cuts now, not in 10 years.

[Magnum]

Both.

Whether you care about political capital (and what you expect out of me) is pretty much irrelevant. The sad truth is that this is a fight that the GOP can't win. The fact that these guys are willing to send us over the fiscal cliff, do significant damage to the economy, do significant political damage to their own party's future, do significant damage to military readiness, and increase taxes for everyone because they refuse to agree to a tax cut for a rich is completely and utterly irrational. You're sabotaging your primary goal for a meaningless symbolic victory.

If they want to self-destruct as a party, then all I can do is sit back and enjoy the show.

Its this kind of thinking that makes me hope we do fall off the cliff. That would let EVERYONE feel some of the pain from out of control spending. I find it amazing that you see this as Dem's vs Rep's. If the republicans conceded completely to the dem's, guess what? We would still have massive and uncontrollable debt. I also find it amazing that you are so confident that it would be the republicans sending us over the cliff even when most have already agreed to tax increases. How are Conservatives not caving in to the liberal demands of no spending cuts somehow the GOP's fault? Concessions work both ways, Rep's agrees to some taxes, Dem's agree to cuts. Republicans aren't trying to win a symbolic victory like you think, they are attempting to be responsible and save the country from massive debt and continued deficits. Personally, I think all taxes should be increased slightly and sweeping cuts get made nearly across the board. Or maybe...and I'm just throwing this out there...we start with a balanced budget!

Maybe all conservatives should just say "fuc-k it" and stop trying to be the responsible ones in this country. Just let the US continue to spiral into deeper debt and roll the bones!

Edit: Fuc-k, I can't say ######

Edited December 19, 2012 by Magnum

[Buddy Spike]

Its this kind of thinking that makes me hope we do fall off the cliff. That would let EVERYONE feel some of the pain from out of control spending. I find it amazing that you see this as Dem's vs Rep's. If the republicans conceded completely to the dem's, guess what? We would still have massive and uncontrollable debt. I also find it amazing that you are so confident that it would be the republicans sending us over the cliff even when most have already agreed to tax increases. How are Conservatives not caving in to the liberal demands of no spending cuts somehow the GOP's fault? Concessions work both ways, Rep's agrees to some taxes, Dem's agree to cuts. Republicans aren't trying to win a symbolic victory like you think, they are attempting to be responsible and save the country from massive debt and continued deficits. Personally, I think all taxes should be increased slightly and sweeping cuts get made nearly across the board. Or maybe...and I'm just throwing this out there...we start with a balanced budget!

Maybe all conservatives should just say "fuc-k it" and stop trying to be the responsible ones in this country. Just let the US continue to spiral into deeper debt and roll the bones!

Edit: Fuc-k, I can't say ######

Fuck it.

[pawnman]

Which is what the President has been proposing all along... so you're saying the R's leverage is to force Obama to do what he wanted to do in the first place?

Except that Obama rejected this plan too. What was it the president wanted to do in the first place?

[Vertigo]

Except that Obama rejected this plan too. What was it the president wanted to do in the first place?

He did?

[Guest one]

What happens if every Republican votes like Barack H. Obama before he became President.

"Present "

Didn't seem to hurt his record in the press much

This is what they should do. If as a unit, they all voted present it would be a win-win for the Republicans. If the economy ends up doing worse in the next couple years they will not be held accountable for raising taxes. If the economy does well the Republicans will still be able to say that it was because the Republicans worked with the Democrats even though they were being unreasonable.

Edited December 22, 2012 by one

[Prozac]

Good article on CNN.com. Not a big fan of pundits, but I usually respect David Gergen's opinions.

https://www.cnn.com/2012/12/21/opinion/gergen-washington-madness/index.html?hpt=hp_t2

Poor leadership from both the Speaker and the Pres displayed by leaving town if you ask me. There are plenty of guys and gals that will be serving their country over Christmas in places far worse than Washington. Seems the least our elected officials could do would be to stick around and get us through this.

[HeloDude]

Good article on CNN.com. Not a big fan of pundits, but I usually respect David Gergen's opinions.

https://www.cnn.com/2012/12/21/opinion/gergen-washington-madness/index.html?hpt=hp_t2

Poor leadership from both the Speaker and the Pres displayed by leaving town if you ask me. There are plenty of guys and gals that will be serving their country over Christmas in places far worse than Washington. Seems the least our elected officials could do would be to stick around and get us through this.

True, but this should have been figured out a long time ago--both parties kicked the can down the road. And why didn't you list Reid in that mix? I thought he recessed the Senate yesterday?