In the course of the lengthy discussion regarding the national debt and deficits I couldn’t help but wonder if we all understood the accepted definitions of terms. In so many cases the same terms were used in different contexts.
For example; the term “budget cuts”? For you and me, a cut to my budget is spending less in the next cycle than I did in the current cycle. For the government cutting the budget is not spending less, it’s cutting the rate of growth of government spending. You and I would spend less, they would spend more, but supposedly decrease the year over year rate of growth. Where did they learn their math?
How about “tax reform”? Is “tax reform” raising rates or changing structure? Republicans tried to focus on cutting spending to reduce current deficits while Democrats wanted to incorporate “tax reform” into the debate to achieve the desired outcome. They seem to think that if a guy can afford a jet he isn’t paying enough tax. According to Democrats, balancing the budget must include both cuts in spending and tax reform. I could go along with that if “reform” meant addressing the tax code in total rather than just raising the rates higher on the folks who are already paying the lion’s share of the taxes already.
In a perverted way, I’ve been amused about the characterization by the “left” that the country is being screwed by the nation’s high earners because they aren’t paying their fair share of taxes; yet according to the Congressional Budget Office 51% of Americans pay no Federal Income Taxes at all. That is Zero Federal Income Tax paid by 51% of Americans but according to the Democrats in Congress, they’re over taxed.
While the top 5% of American earners pay 40% of the Federal Income Tax collected and the top 15% of American earners pay 75% of the Federal Income Tax but according to Democrats in Congress they aren’t paying their fair share. What am I missing? One side pays no tax but is over taxed and the other side pays all the tax but is not paying their fair share.
I think most Americans agree the Tax Code is too complex to be fair. And “fair” is variable that moves back and forth depending on your personal interests. I suspect that if we were given a choice of keeping the current federal income tax system or dumping it all for a flat tax of maybe 8%, most Americans would opt for a flat tax that treats everyone the same. If you earn $100,000 you pay $8,000; if you earn a million bucks you would pay $80,000 and if you earned $25,000 you would pay $2,000. Everyone would pay based upon what they earned (at the same rate). Everyone pays the same rate but based upon their earnings they pay more or less. That sounds like tax reform.
And finally, this agreement between the parties regarding raising the debt limit; the Democrats didn’t get tax increases, but the Republicans didn’t get any meaningful cuts and the President got an agreement to increase the national debt by 20% over the next 18 months. That is another increase of the debt from $14.2 Trillion to $16.4 trillion by election day in 2012. Then factor in the 12 person committee that will either cut a trillion or so in government spending or cut the Defense budget by another $800 Billion. How could Republicans view any of this as a victory? As far as I can tell, this was another huge giveaway to the Democrats. I am baffled how we let this happen.
Posted on August 8, 2011 at 2:01 pm in Federal Government, Public Budgets | RSS feed
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No Loss for Words
Only in Government is Cutting Spending Increasing Spending
by Steve DanaIn the course of the lengthy discussion regarding the national debt and deficits I couldn’t help but wonder if we all understood the accepted definitions of terms. In so many cases the same terms were used in different contexts.
For example; the term “budget cuts”? For you and me, a cut to my budget is spending less in the next cycle than I did in the current cycle. For the government cutting the budget is not spending less, it’s cutting the rate of growth of government spending. You and I would spend less, they would spend more, but supposedly decrease the year over year rate of growth. Where did they learn their math?
How about “tax reform”? Is “tax reform” raising rates or changing structure? Republicans tried to focus on cutting spending to reduce current deficits while Democrats wanted to incorporate “tax reform” into the debate to achieve the desired outcome. They seem to think that if a guy can afford a jet he isn’t paying enough tax. According to Democrats, balancing the budget must include both cuts in spending and tax reform. I could go along with that if “reform” meant addressing the tax code in total rather than just raising the rates higher on the folks who are already paying the lion’s share of the taxes already.
In a perverted way, I’ve been amused about the characterization by the “left” that the country is being screwed by the nation’s high earners because they aren’t paying their fair share of taxes; yet according to the Congressional Budget Office 51% of Americans pay no Federal Income Taxes at all. That is Zero Federal Income Tax paid by 51% of Americans but according to the Democrats in Congress, they’re over taxed.
While the top 5% of American earners pay 40% of the Federal Income Tax collected and the top 15% of American earners pay 75% of the Federal Income Tax but according to Democrats in Congress they aren’t paying their fair share. What am I missing? One side pays no tax but is over taxed and the other side pays all the tax but is not paying their fair share.
I think most Americans agree the Tax Code is too complex to be fair. And “fair” is variable that moves back and forth depending on your personal interests. I suspect that if we were given a choice of keeping the current federal income tax system or dumping it all for a flat tax of maybe 8%, most Americans would opt for a flat tax that treats everyone the same. If you earn $100,000 you pay $8,000; if you earn a million bucks you would pay $80,000 and if you earned $25,000 you would pay $2,000. Everyone would pay based upon what they earned (at the same rate). Everyone pays the same rate but based upon their earnings they pay more or less. That sounds like tax reform.
And finally, this agreement between the parties regarding raising the debt limit; the Democrats didn’t get tax increases, but the Republicans didn’t get any meaningful cuts and the President got an agreement to increase the national debt by 20% over the next 18 months. That is another increase of the debt from $14.2 Trillion to $16.4 trillion by election day in 2012. Then factor in the 12 person committee that will either cut a trillion or so in government spending or cut the Defense budget by another $800 Billion. How could Republicans view any of this as a victory? As far as I can tell, this was another huge giveaway to the Democrats. I am baffled how we let this happen.
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Posted on August 8, 2011 at 2:01 pm in Federal Government, Public Budgets | RSS feed | Reply | Trackback URL
3 Comments to “Only in Government is Cutting Spending Increasing Spending”
August 8, 2011 at 2:40 pm
Steve –
I’m going to solve my credit and cash flow problems the easy way. I plan not to spend an extra hundred thousand, that I don’t even have, compounded in each of the next five years. So that’s 100 + 200 + 300 + 400 + 500k = $1.5 mil. So will you loan me $1.5 mil based on my good intentions and reduced spending plan? You know I’m good for it, because I told you I’m not planning to spend it elsewhere any more.
Good. I need to go do some community organizing.
September 20, 2011 at 5:08 pm
I would definitely go for the “tax reform” idea. I think where the problem of calculating how “fair” taxes are begins and ends with the endless loopholes and tax shelters that many of the rich have. I used to analyze tax returns for people applying for mortgage loans. Some of these people owned apartment houses, boats, huge homes, etc… and yet paid fewer taxes than I did (and I was making about $1200 a month). They could write off all kinds of things that I could never afford, much less write off…. these people were wealthy by my standards, yet they paid far less in taxes than i did.
I see that as a problem.
So the view of “who” is paying the taxes and how much is a little skewed (in my opinion) without doing some in-depth analysis of exactly “who” is getting out of paying “what” and “how”.
So I like the idea of a flat tax rate. I would, however, probably still excuse those who work and yet are under the poverty line. (We have a lot of those, myself being one of them at the moment). When you already can’t make a living wage, taxing it seems a bit much.
I’m getting more liberal as I get older, by the way.
September 20, 2011 at 6:57 pm
There is no question that our tax code is skewed in favor of earners with higher incomes, but the bottom line still comes back to what is or how do we calculate what “fair share” means? A study was unveiled in the last couple days showed approximate percentages of income paid in taxes for folks in different income groups. I don’t have the info here to cite, but I seem to remember that the earners in the less than $25,000 range paid about 6%, earners in the $25k-75k range paid about 11%, earners in the $75k to $200k paid about 17% and earners above $200k paid about 29%. Don’t hold me to those numbers specifically, but approximately they give you the picture.
The President said in his most recent speech that everyone should pay their fair share which suggested that everyone should be paying something but he spent most of his time suggesting that the guy who pays five times as much as a percentage of his earnings was not paying his fair share while the low end guy was getting screwed.
I don’t care what kind of economics you use, that is not fair.
As a business owner employing thirty employees, I risked everything I owned for the chance to make a few bucks while my employees risked nothing. They got paid every other week whether my business made a profit or not and there were many, many weeks when we made no profit. By your measure, am I entitled to make a profit for the risk I take? How much profit can I make before I make too much? If I invest $500,000 in my business how much of a return on my investment should I be allowed to make before my fair share goes up?
If Federal Income Tax was the only tax we had to worry about, things would be rosy. Keep in mind that for every employee, we match their contribution for Federal Withholding. We pay for unemployment insurance and L&I mostly out of our pocket. If we are fortunate enough to offer health care benefits to our employees, we pay so much per month for each of them out of our pockets. And the employee takes absolutely no risk. I risk everything and my employees risk nothing. Do you really want to talk about fair share?
Small business owners understand the plight of our work force. I doubt many in government have a clue. For every dollar spent in a government program, that dollar had to come from a tax payer. For every government worker, their pay came from taxes levied on tax payers. The more government programs and government workers the greater the taxes the government must take from private sector businesses since government jobs cannot create wealth, only consume it.
Keep in mind that government regulations have not been friendly to job creators. Manufacturing jobs have historically been the bread and butter of the American workforce. The middle class are typically folks working in manufacturing. The government in its infinite wisdom decided that we needed to improve the quality of life in third world countries so they adopted international trade agreements that shipped most of the middle class manufacturing jobs to Asia. Even GE’s Jeffrey Emhelt justified slashing 35,000 American jobs in favor of creating 20,000 over seas jobs by suggesting it was good for American trade. Emhelt is supposed to be President Obama’s Jobs Guru.
In the news today they highlighted the new San Francisco Bay Bridge. The bridge was made in China because it was $400 million cheaper. Even in ultra-left California they are cutting the throats of their own manufacturing businesses and American middle class job holders. How do we explain that?