The proposed 2012 budget...

[tater]

Tax revenues are already very nearly 20%.

There is no need to mess with them unless you scrap them and start over. The tax that most needs reduction right now is the corporate income tax. Slash it to a reasonable level, but eliminate all loopholes so that they actually pay.

Raising the payroll tax (or cap), OTOH, should be out of the question. SS/MC need to come from the payroll taxes as they are. If there is a shortfall, cut benis. It's not fair for people who paid in at under even the current 15.3% FICA to expect workers now to shell out more, when all the money they paid in was already spent—on themselves.

Right now, what is the democrat plan, exactly? Spend ourselves into solvency?

[Armistead]

Originally Posted by tater

Tax revenues are already very nearly 20%.

There is no need to mess with them unless you scrap them and start over. The tax that most needs reduction right now is the corporate income tax. Slash it to a reasonable level, but eliminate all loopholes so that they actually pay.

Raising the payroll tax (or cap), OTOH, should be out of the question. SS/MC need to come from the payroll taxes as they are. If there is a shortfall, cut benis. It's not fair for people who paid in at under even the current 15.3% FICA to expect workers now to shell out more, when all the money they paid in was already spent—on themselves.

Right now, what is the democrat plan, exactly? Spend ourselves into solvency?

I've said 100 times here, corporations don't care about the tax as long as they can buy regulation/loopholes. Both parties have been behind the loopholes, but the GOP are the big players. Everytime they've lowered corporate taxes, we got more loopholes not less, you think I would believe
them again. Let's get rid of all the loopholes first, then we can talk lowering the rate.

I cringe when I see corporations giving 300-600 million dollar stock options to CEO's, they generate hefty tax deductions.

Obama was right when he said.

"There are so many loopholes that have been written into the tax code...that we actually see our businesses pay effectively one of the lowest tax rates in the world."

They pay about 25% at best. Has it created more jobs, built our economy, nope? It's creating a two class economy

In the end it's a stupid smoke and mirrors game. I agree we need spending caps, but again, let's see what they choose to spend on. As I understand this is just a cap, later behind closed doors they'll decide what to spend on what.

[tater]

I agree. Actually the US corporate tax system is more like the old income tax system when it had higher rates, and far more loopholes.

That's why I said up the thread that the US should pass a very l;ow corporate rate, but with zero loopholes. 14 or 15%, flat.

BTW, I think that the rate should apply to churches as well. The "gentleman's agreement" that churches will not engage in ay political activity has always been BS. As such, I don't think they meet 501c3 (note that this applies to any entity that is at all partisan).

Anyway, you cannot compare income taxes from the past without a heavy weighting applied, as well as good data on what the actual effective rates were. The weighting applies to tax revenue as a % of GDP weighted to spending. For a long time it was thought enough for the federal government to spend ~1% of GDP per year. It's past 20% now. Even under FDR it was mostly under 10% of GDP.

SPENDING is the problem, not taxation. Cut federal spending to 10% of GDP, and taxes can be far lower. The pitch to democrats can simply be "we want a New Deal, exactly the same as FDR had it!" (don't tell the hoi polloi that this means hacking spending by over a factor of 2, just pitch it as Rooseveltian socialism).

This is easy to accomplish. ~2/3 of spending is "entitlements." Cut entitlements by 75%, and you've just halved the budget—and you'll still be spending far more than FDR did on social programs.

That's why I said up the thread that the US should pass a very l;ow corporate rate, but with zero loopholes. 14 or 15%, flat.

Which would be bad for business, "loopholes" are there for a reason, you need to stop abuse of "loopholes" not close them.
Passing a low corporate rate will achieve very little, there is always somewhere which will offer a lower rate.

So you know what that means don't you...more government and more regulation
The very things they say they need less of.

[tater]

Originally Posted by Tribesman

Which would be bad for business, "loopholes" are there for a reason, you need to stop abuse of "loopholes" not close them.
Passing a low corporate rate will achieve very little, there is always somewhere which will offer a lower rate.

So you know what that means don't you...more government and more regulation
The very things they say they need less of.

No loopholes.

Loopholes are there as payback. The US tax code is so large no one understands it. Lawyers specialize in segments of it (I know a few tax attorneys). They also exist because the rates are too high. The base US rate is very high because they know there are a million loopholes and no one pays the base rate.

That's why you pick a low rate, then stick to it. Loopholes are not "abused," they are used as intended. Eliminate loopholes entirely, but set a rate that is fair.

Total corporate profits are what, around 1.5 trillion dollars? That means that 15% would generate 225 billion. Corp income taxes during the Bush admin (collected) were higher than right now, at over 300 billion. Assuming our 1.5 trillion profit (~10% of GDP), this means that maybe the corporate rate should be a little higher than 15% (I just picked a number). At 20%, flat, we'd be looking at ~300T$.

There is no good reason for tax loopholes, IMO. Better to design a good tax to start with, and avoid the unfairness that comes from one business getting a break while another does not.

That means LESS regulation, and fewer tax collectors since no one has to determine who falls into the special class of payers that get a subsidy. The same applies to a flat income tax.

Note also that this creates a more predictable business environment. You can easily tell what your tax liability should be.

Loopholes are not "abused," they are used as intended.

You have problems understanding some very basic concepts on tax and business.

There is no good reason for tax loopholes, IMO.

That shows you have very little understanding of what they are.

[tater]

Originally Posted by Tribesman

You have problems understanding some very basic concepts on tax and business.

No, I don't. The loopholes were specifically created to incentivize certain businesses—often (always?) as payback by politicians. Pol A will vote for a certain bill in return for votes to add a new tax code that allows the principle employer in his district to pay lower taxes. That is exactly how such loopholes are created.

That shows you have very little understanding of what they are.

The good reason would be (as I said) incentives. Economists love incentives, but they are poorly understood in reality, such that they always have unexpected consequences. Such unexpected consequences are NOT "abuse." In fact, there should be no unexpected consequences—they know everyone who possibly can will take advantage of every possible loophole. That is a given, it's why tax attorneys are on staff for every major company (and retained by every smaller one).

I think that a fair tax system eliminates the need for incentives. I also think that incentives are bad in general. If, for example, "green" energy is viable, then it does not need to be incentivized. It should sink or swim on its economic merits, not based on government subsidy by " tax incentives."

BTW, there is a reason why some companies get to use the loopholes who congress didn't mean to. It's because congress cannot single out specific businesses. They want to (because of the political payback/give-and-take mentioned above), but the code must be written to look like it doesn't single anyone out. So they can give a break for making widgets of a certain material using a certain process, thinking that only their target firms will get the break, but then another type of firm figures out they can alter what they make to fit the broadly written law, and then they get it too.