Ok, smart guy. YOU solve the deficit!

[Castout]

Well from a foreigner's perspective, a bit heavy on tax maybe because it will not be me who's going to take it

http://www.nytimes.com/interactive/2...oices=gj1645lm

[tater]

^^^ funny that the only option is reducing benefits for high incomes. Reduce benefits across the board.

Reduce employer tax break... how about we dump employers providing insurance in the first place, let the employees do that.

They also give an option of reducing Medicare growth, which sounds fine, but due to the way things work that also changes contractual obligations with real insurers. medicare already pays below cost in some cases, yet to save money they want to reduce payments to providers. Keep payments the same, and ration what care is paid for. The docs doing the work should get paid, and not cut-rate, but the same as real insurance. If medicare lacks the money, then medicare can tell people to pay up themselves, or not get X done. Docs should not be forced to have to PAY to work.

Also, they probably project the "cost" of tax increases and costs very simply, and do not include (how could they?) possible growth due to tax reduction, or contraction due to increases (since revenues remain pretty constant as a % of GDP regardless of tax rates).

[mookiemookie]

Originally Posted by tater

how about we dump employers providing insurance in the first place, let the employees do that.

And watch emergency rooms become clogged to the point of shutdown as people flood them for basic medical care.

and do not include (how could they?) possible growth due to tax reduction, or contraction due to increases (since revenues remain pretty constant as a % of GDP regardless of tax rates).

Because there's absolutely zero evidence for increases or decreases in tax rates having an effect on any measurable metric of growth, be it unemployment, GDP or personal income.

[CaptainHaplo]

http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?choices=zx1k4270

What is really bad is they didn't have the things in there that I really would have pushed for.

Elimination of the social safety net for the "undocumented".
Denial of all but emergency services for the "undocumented".
Elimination of the Federal Department of Education.
Elimination of income tax, replacing it with a consumption tax instead.
Elimination of Social Security.
Elimination of all other expenditures not directly authorized by the US Constitution...

Of course - the last one alone would balance the button with one click, and remove Federal government from being the all encompassing monstrousity it has become.

[August]

Originally Posted by mookiemookie

Because there's absolutely zero evidence for increases or decreases in tax rates having an effect on any measurable metric of growth, be it unemployment, GDP or personal income.

So a tax rate of 100% wouldn't have an effect either?

[mookiemookie]

Originally Posted by August

So a tax rate of 100% wouldn't have an effect either?

In the Soviet Union people still worked under an effective 100% tax rate. Not saying that's the model we should aspire to, but saying that hours worked are inelastic to tax rates.

[August]

Originally Posted by mookiemookie

In the Soviet Union people still worked under an effective 100% tax rate. Not saying that's the model we should aspire to, but saying that hours worked are inelastic to tax rates.

If it's not a model to aspire to then it's not really worthy of being used as an example to prove your point Mookie. People only worked those hours because the government would send them to the gulag if they refused.

[mookiemookie]

Originally Posted by August

If it's not a model to aspire to then it's not really worthy of being used as an example to prove your point Mookie. People only worked those hours because the government would send them to the gulag if they refused.

Hours worked in this country is not ineleastic due to the threat of gulag, but it's inelastic due to the fact that the majority of us are full time salary workers. I know I am - no matter what the tax rate, I still work the same full time contract rate. I can't adjust my work hours. Again, hours worked are not elastic with respect to marginal tax rates. You either work or you don't.

[Castout]

After some thoughts

http://www.nytimes.com/interactive/2...oices=gj1140m3



I think that would be a better policy

As a foreigner I'm worried about the growing China military aggression towards its fellow Asia neighbors and to think they are just beginning to expand militarily.

A reduced US military presence in Asia could tighten Chinese political and military influence in Asia and South East Asia.

So I decided to cap Medicare growth to GDP growth plus one percent starting from 2013 not sure how it would affect the public. I care less about expensive doctors and hospitals.

But I think the bankers will start a riot because of the bank tax and many other Americans for many other things in the policies.

[tater]

Originally Posted by mookiemookie

And watch emergency rooms become clogged to the point of shutdown as people flood them for basic medical care.



Because there's absolutely zero evidence for increases or decreases in tax rates having an effect on any measurable metric of growth, be it unemployment, GDP or personal income.

So revenues plunged when the top marginal rate dropped from 70 to 40%? (along with the other brackets dropping in lockstep) Even though the bulk of taxes collected are on the top 20% of earners?

Nope.

The taxes collected wobble between 16 and 20 percent regardless of the marginal tax rate. So either more people are paying at the lower rate, or the economy grows, otherwise the collections should have plunged.

[mookiemookie]

Originally Posted by tater

The taxes collected wobble between 16 and 20 percent regardless of the marginal tax rate. So either more people are paying at the lower rate, or the economy grows, otherwise the collections should have plunged.

Amount of tax collected is not an accurate measure of economic growth. GDP and employment are.

[tater]

Originally Posted by mookiemookie

Amount of tax collected is not an accurate measure of economic growth. GDP and employment are.

Income tax collected as a function of GDP remains remarkably constant. The marginal rates drop, taxes stay about the same (collected).

What happened?

Either more people start falling into the higher brackets (people earning more), or the GDP increases enough to offset the presumably lower returns you'd expect at lower rates.

In the end it doesn't matter. The OP's NYT calculator is suggesting that a tax reduction means a reduction in revenues. That's what that thing does. Select a tax cut, and it "costs" the budget. In RL, however, tax cuts have happened and government revenue has not dropped in any meaningful way in the long term (maybe the first year it takes effect (catching people who plan ahead long term, basically).

That's the relationship between this thread and tax rates. If the calculator is going to claim a cost due to a tax reduction, they need to demonstrate that the economy won't correct to bring revenues into the "normal" range as a % of total economic activity (when it always seems to).

I'm not arguing that any, arbitrary tax cut would increase growth, but clearly tax burden plays some role on economic decision making, and the economy corrects for most tax changes fairly quickly (resulting in constant revenue). That's just fact. Revenues are remarkably constant.

Note also that they give a big positive for adding a carbon tax, but how can they tell what negative it might have on the economy to start taxing, well, everything, for carbon? Economics is not science. It's not. If economic theory was actually predictive...

I don;t even take a calculator like the one on the NYT with a grain of salt to the extent that ANY of the variables might possibly affect the economy in general (and hence government revenues). Astronomy (my background) is what I'd call a "zeroith order" science in many cases, sometimes 1st order. Meaning in an expansion, only the first terms we know enough to talk about . Unlike physics in general where certain things (mechanics, EM, etc) can be characterized to a very fine level. Economics isn't even zeroith order. Making a calculator based on what is in effect guess work (predictions for 2015, much less 2030) is silly.

Simpson-Bowles suggested capping spending at 21% of GDP. That's too high. Cap it lower, then cut ruthlessly, and cut based on the % of the budget something is. SS and medicare need to take large hits.