Posted on 01/01/2005 5:03:38 PM PST by SmithL
The issue -- Soon after his November re-election, President Bush vowed to reform what he called an "outdated tax code."
Weeks later, at a White House conference on the economy and tax policy, the president called for an overhaul of the ailing Social Security system.
And the president has made it clear that he will push hard to coax Congress into making the tax cuts of his first term permanent. Bush is also said to be considering a single tax rate, sometimes known as a flat tax, or at least several fewer tax brackets than what exist now. The president and his allies reason fewer tax brackets and other changes could drastically simplify the income tax system.
Those proposals are part of the president's quest to spur the economy and bring about what he has called an "ownership society" populated by residents who own homes and stocks and can keep more of their earnings.
Bush figures that lower taxes will spur consumers and businesses to spend money on goods and services. In turn, that could fuel increased hiring and a stronger job market.
To achieve those goals, the president wants to make permanent the top maximum rate of 35 percent for personal income taxes, as well as the 15 percent top rates for taxes on dividends and capital gains. Most of Bush's tax cuts are currently set to expire in 2011. It's also possible the president will seek to do away with taxes on dividends altogether. And the current elimination of the marriage penalty, which punishes two-income married couples, would be preserved.
The estate tax, sometimes labeled the death tax by its critics, might vanish entirely. Under Bush's previous tax plan, the estate tax is being gradually phased out and will disappear in 2010. But the repeal of the estate tax lasts only for that one year and then reverts to the previous top rate of 55 percent on estates worth $3 million or more. The president wants to permanently eliminate the estate tax.
The centerpiece of Bush's policy on Social Security would include setting up individual savings accounts that would be filled by a portion of the payroll taxes extracted from every employee's paycheck. This proposal is sometimes called a partial privatization of Social Security.
The trustees of the Society Security system foresee tough times ahead for the popular government retirement program. The trustees have estimated that by 2018, annual spending on Social Security benefits will exceed tax revenues to bolster the system. In 2042, the system is expected to become insolvent.
To prevent that, the president wants to give workers the option to plow some of their paychecks into the personal savings accounts. Employees would decide how much of their payroll taxes, up to a certain amount, would be invested in stocks or bonds. The investing procedure would be similar to the way people have money deducted from their paycheck and contributed to a 401(k) account that's typically invested in mutual funds or bond funds.
Younger workers, who potentially would have a higher rate of return by investing in the stock market over a period of decades, would have, as a trade-off, smaller direct benefits from Social Security when they retire. The president hopes that the smaller benefit payments 40 or 50 years from now would help keep the Social Security system from imploding.
The outlook -- Some observers believe the president has a good chance to at least make his tax cuts permanent, unless a later Congress undoes or modifies them.
The top income tax bracket, which was nearly 40 percent in 2001, has been lowered to 35 percent. Including the top bracket, the federal tax code has six income brackets. It's possible those brackets could be consolidated into two or even one.
"With the president re-elected and the Republicans in firm control of both houses of Congress, you could see some progress," said Nicholas Cochran, a financial services adviser with American Investors Co. in San Ramon.
But Bruce Bartlett, a senior fellow with the National Center for Policy Analysis, believes sweeping tax reform might not happen right away. Instead of everything happening all at once, a gradual approach is possible.
"Things might be more modest than some anticipate," Bartlett said. "The reforms might be phased in over a period of time. That would minimize their impact in the immediate future."
Perhaps surprisingly, Social Security reform might come sooner than later. The president has already received a report from a commission he appointed to study the matter. And the politicians in Washington, D.C., might want to get some sort of reforms completed in 2005 to provide the maximum amount of elapsed time before they have to face voters in 2006.
What it means for investors -- The prospect of additional tax cuts and Social Security reform could bolster the nation's stock markets.
"Any effort to simplify and reform the tax code will be welcomed with open arms," said Eric Flett, a portfolio manager with Bay Isle Financial in Oakland. "There is a huge incentive to be an investor today."
What's more, the prospect that the current tax reductions could be increased, or at least made permanent, brings about the kind of certainty that investors love.
"The investor confidence level will rise," said Brian Wesbury, an economist with Griffin, Kubik, Stephens & Thompson, an investment firm. "When you get the certainty that the tax cuts are here to stay, investors and entrepreneurs will be more buoyant and optimistic."
As a result, the prospect of tax reform could bolster the stock market during 2005.
"People would know what to count on regarding taxes for a long period of time," said Sherman Doll, partner with Capital Performance Advisors, a Walnut Creek-based investment firm.
Social Security reform also is expected to bolster the stock markets but not until it is clear just what shape the facelift for the retirement program takes.
Some analysts cautioned that it is crucial for the government to strictly control the kinds of investments the payroll tax money would be steered toward. They hope the reforms would ensure that people can't just gamble away their retirement money.
"I saw the colossal mistakes investors made in 2001 and 2002," Flett said.
Still, it seems clear the markets would get a boost.
"Even if it's just a small percentage of the payroll tax that goes into the Social Security savings accounts, there would be added demand for stocks," said Jack Schannep, editor of The Dow Theory, an investment publication. "There would be a repetitious demand for stocks, because every paycheck, more money would be put into the stock market."
Flett agreed, saying that a shift of payroll taxes would pump plenty more money into stock mutual funds.
"Any sort of privatization would create a tremendous demand for equities and would definitely provide a boost to the market," Flett said.
The Big Lie is that Social Security is some kind of retirement savings plan.
It is NOT.
Social Security is a socialist income redistribution scheme, nothing else.
Those who are working are taxed to provide a "safety net" for those who are less fortunate.
Originally, this meant retirees and surviving dependents.
Congress has, of course, complicated it far beyond this over the last 65 years.
But one fact remains: it is NOT a "savings plan", it is an income redistribution scheme.
A major facet of The Big Lie is that "we have to do something so that Social Security remains solvent in the future.
Poppycock!
In today's age of modern computerization, the computation for operating an income redistribution scheme that remains perpetually solvent is quite simple:
The only change necessary to the current system is that monthly payments to eligible recipients would be a variable amount, not fixed.
THERE IS ABSOLUTELY NO NEED FOR A MULTI-TRILLION DOLLAR "TRUST" FUND!!!
Congress should NEVER have been permitted to confiscate so much money from the American People in the name of The Big Lie. This fund is nothing but a slush fund that Congress raids to pay for other government expenditures. If private sector employers did the same thing with their companies' pension funds, they'd be placed in prison. The "privatization" plan proposed by Bush is merely an attempt by Wall Street brokerage firms and financial institutions to get in on the scam: grab a portion of a constant revenue stream (guaranteed by taxation) from which they can skim their commissions.
The American People need to wake up and put these liars and thieves in prison.
tax ping
I have never understood why we should tax un-earned income at a different rate than earned income. Limousine liberals like Teresa Kerry and the Kennedy family, many of whom have not had a real job for a single day of their lives, pay less in taxes than a hard-working man with a real job due to the fact the former group gets their income mostly from dividens.
"Limousine liberals like Teresa Kerry and the Kennedy family, many of whom have not had a real job for a single day of their lives, pay less in taxes than a hard-working man with a real job due to the fact the former group gets their income mostly from dividens."
No kidding... Teresa Heinz has $1 billion in assets. She has to be earning $60-70 million in annual income from those assets at a minimum, assuming a 6-7% annual return. But she only reported $5 million in income, and paid $750,000 in taxes in 2003. So she paid $0.75 million in taxes on capital gains and dividends which had to exceed $50 million unless she has it hidden in a shoebox.
Also.. the election's over... I'm sure it's Teresa Heinz again. The Kerry name isn't worth much nowdays.
A Trust Fund HAH! What a joke and another lie. What's funny is listening to these lying AS* politicians concern about breaking the SS Trust Fund. Workers put into it their whole lives, the politicians spend it 50 times over and replace it with a big IOU - and who gets to pay back the big IOU???....you, and your kids, and your grand kids WITH INTEREST! Have Fun Suckers!
seems to me that if this 401k scam had any viability, the gov't would invest the current social security balance into a 401k...Just imagine all the cash that would pour into the "fund"...
If you would like to be added to this ping list let me know.
John Linder in the House & Saxby Chambliss Senate, offer a comprehensive bill to kill all income and SS/Medicare payroll taxes outright, and provide a IRS free replacement in the form of a retail sales tax:
H.R.25, S.1493
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.Refer for additional information: http://www.fairtax.org, http://www.salestax.org & http://www.geocities.com/cmcofer/ftax.html
I'll tell you briefly why I think eliminating the tax on dividends would be good policy. When you buy corporate stock, you use funds on which income taxes have already been paid. How can you get your money back without paying taxes on it? Right now, the only way is by selling the stock. If the corporation has excess funds that are not needed to build the business (by hiring more employees or buying more equipment, for example), the corporation should be able to return those funds to the shareholder WITHOUT A TAX IMPACT so the shareholder can invest in another company that needs the capital and will use it in a productive way. Secondly, when the corporation has that excess capital, corporate income taxes have already been on it. So if the income is taxed again when received as dividends by the shareholder, taxes paid by the corporation plus taxes paid by the shareholder totaled about 55% to 60% (round numbers). THE MOST IMPORTANT ASPECT OF THIS TO THE MAN OR WOMAN WHO WORKS FOR WAGES is that their wages will increase faster in proportion to the amount of capital available to be invested in production equipment. The more productive the worker is (with the equipment available to him), the higher the wages will be. The more capital available for production, the more jobs will be available, too.
Mickey D's has added a lot of capital, I don't see the wages of hamburger flippers rising faster.
Seems to me n-tres-ted has already answered you.
"The more productive the worker is (with the equipment available to him), the higher the wages will be."
How much more productive can a hamburger flipper be, Just building more Mikey D's with more flippers is not a productivity enhancing action.
You want more than the $14k a year of yours, I suggest finding a position that enhance your productivity, earning that bit more that comes with it.
Sell more hamburgers per worker, you will get that increase in wages. Just expanding and hiring more workers means the dollars get spread wider not more productively.
And I tell you again: a retail sales tax - as proposed - will invite states into our lives.
Better my state that is closer to the local situation and responsive to local politics that the Federal government anyday.
Since the only way to enforce the tax on home rentals is to require registration, all rentals will be required to be registered.
Not at all, if he doesn't register, all the NRST is paid by the landlord in his own purchases of the rental as well as in maintaining and providing services at full retail rather than intermediate business costs, which he will be certain to pass down to you anyway.
Actually works out in the tax administration's favor if he doesn't register as they don't have to provide him with any of the credits he would otherwise receive as a business remitting the NRST.
Sorry, I want the state OUT of my home - or are you willing to let them into your home as well? Didn't think so.
Since I'm not a landlord and don't expect to be, that is irrelavant. If I chose to rent to someone, as a retail business that is what goes with the territory of being in business(which by the way is a choice not a mandated situation).
As far as you are concerned, you have indicated you certainly have no such worry as you can't qualify to purchase your own home on your $14k income, much less place for you to rent to someone else besides.
Looks to me like you will never be in a position of making the choice to be a landlord or not.
I notice you neglect to mention that both the state and the federal government are in you financial privacy today without any excuse of doing business. LOL, that's the way it breaks. I'll take the option getting rid of the IRS any day and only worry about one set of rascals to contend with at my option when it comes down to that level.
"A hand from Washington will be stretched out and placed upon every man's business; the eye of the federal inspector will be in every man's counting house....The law will of necessity have inquisical features, it will provide penalties, it will create complicated machinery. Under it men will be hauled into courts distant from their homes. Heavy fines imposed by distant and unfamiliar tribunals will constantly menace the tax payer. An army of federal inspectors, spies, and detectives will descend upon the state."
-- Virginian House Speaker Richard E. Byrd, 1910, predicting the consequences of an income tax.
What I like about the IRS:
Oh yeah..we wouldn't want to disappoint the investors. ~sarcasm off~ When did this nation become of the investors, by the investors, for the investors? How about our politicians do something for the citizens for a change...not the stock market and special interests. I know...I'm dreaming.
The wages are higher than they would be without the capital, I assure you. And the wages are higher and jobs more plentiful than when I was happy to have the only job in town flipping hamburgers and making DQ sundaes.
Welcome to Capitalism
When the people, each for themselves, earned and saved enough (after taxes) to have some savings/capital to invest. Until they have savings to invest, they can invest only their sweat and ingenuity. Their accumulated capital pretty much equals their standard of living. And more power to them.
When greed overtook morality as the guiding force in the conduct of the western empire.
When did this nation become of the investors, by the investors, for the investors?
About the time the pilgrims at Plymouth Rock nearly went extinct.
This is a weird thread, in that it's on a conservative website, yet conservatives are basically calling for class warfare. Why all the hate towards dividend-earners?
Its my money! If I want to spend it on beer and hookers who is to tell me what I should do with what I sweated for? Forget privitization, let me opt out altogether. Up with freedom, down with paternalism!
I'm saying that a national sales tax will put the camel's nose into the tent, leading to annual government inspections of my home
You may say anything you wish. But that camels rearend has already breached that particular tent along time ago with nothing to do with taxes.
Are you maintaining no such thing will happen?
You already have that now with state Social Services people HUD, and other nosy busybodies wondering what going on behind those rental doors and making sure them nasty landlords aren't abusing their charges ... That camels rear end is already through that door along time ago and has never needed the excuse of a tax system to get their.
Sorry that one don't fly anywhere.
- but you will be exempt from such intrusion by government.
Sniffle sniffle my eyes just bleed with tears for your plight.
At least until the sheriff here abouts decides he needs a look inside home for imagined drugs or pot because some nosy neighbor provides sufficient trumped up complaint to write a warrant against. Then Katie bar the door my friend, them swat folks don't even see doors much less bother to wait for a breath after knocking.
So government isn't currently getting behind my rental doors.
Wait for the nosy neighbor's complaint my friend.
Why do you want to encourage them to do so? (Oh, I know...you're exempt.) That's the good 'ol homeowner attitude: screw the rentals, no skin (or tax!) off my nose.
Or out here in the boonies as a landowner, it could be that last mouse your garden tractor ran over that'll do you in.
I suggest you check you meds. Your flights of fancy are getting ahead of you.
Goodnight. I don't bet on hypotheticals.
LOL, as I said I don't bet on hypotheticals, certainly when the reality is already manifest.
Secondly, I don't bet with people I don't know and will never see to collect. goodbye.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.