Posted on 07/18/2011 8:46:26 AM PDT by SeekAndFind
Late last week, it looked like Tom Coburn might rejoin the Gang of Six in the Senate, which restarted their efforts to find a compromise on the budget as the debt-ceiling limit debate rages. Today, however, Coburn will become a Gang of One by releasing his own plan to reduce the deficit by twice the amount of the Paul Ryan plan. Unlike Ryan, Coburn plans on increasing federal revenues, but through reform of the tax code:
Sen. Tom Coburn (R-Okla.) said Sunday the federal government can save $1 trillion though tax reform, a proposal that will put him at odds with some GOP colleagues.
Coburn plans to unveil a $9 trillion deficit-reduction package Monday that would give lawmakers a menu of policy options to reduce the deficit.
Coburn has suggested $1 trillion in savings could come from eliminating special tax breaks, such as the tax subsidy for ethanol, which he has fought to end.
“We can increase revenues by adjusting the tax code and lowering it,” Coburn said on CBS’s “Face the Nation” Sunday morning. “We can save over $1 trillion doing that.”
Coburn’s plan also relies on cutting one trillion dollars from the Pentagon’s budget over the next ten years. That would be greater than a 10% reduction in spending at the Pentagon, a component that won’t make his fellow Republicans very happy, even if it does provide a “skin in the game” argument to conduct seven trillion dollars of cuts elsewhere, in discretionary and entitlement spending.
Coburn calls it “common sense” that the Pentagon’s budget can be reduced by this amount, but it’s only “common sense” if the cuts come as part of a redefinition of the use and extent of American military power around the globe. We can’t fight three wars and expect to literally decimate defense spending over the next decade, and we probably can’t afford our heavy investment in Europe, either. If those cuts come as part of a rethinking of America’s political and military approach, then it’s certainly possible, but it will mean a serious rethinking of our role in global security.
That’s exactly the approach that Coburn does take with federal revenues. Instead of just hiking taxes or only “closing loopholes,” Coburn wants to lower overall rates while flattening and simplifying the system. That takes some of the sting out of revenue increases and gives both parties something to win. Republicans get their tax reform and simplification, and Democrats get to take credit for more “fairness” through the elimination of arcane tax deductions, especially in the corporate tax code. That kind of compromise has been easily achievable — and almost entirely ignored by the White House.
When Coburn unveils his plan later today, he will have trumped his former Gang of Six colleagues and could perhaps vault to the front of the debate over the debt and deficits. The Gang is still mulling over its options, and the Senate has now gone 809 days without passing a budget plan at all. The White House still won’t offer specifics for a resolution to the impasse. So far, it seems all of the ideas have come from the Republicans, while Democrats dither and delay.
It’s a first step.
I would wait to overhaul Social Security AFTER Republicans have control of Congress and the White House.
As for Medicare and Medicaid: I firmly believe Medicaid is best left to the States to handle. They are closer to the problem and medical treatment is licensed by each state.
Medicare should be means tested. My dad was forced into Medicare by his company even though he still has medical insurance and can pay his own expenses. It’s unsmart and smacks of wasteful government spending combined with that craving for control.
Don’t trust him. Period.
I want $9T cut over the next FIVE years. Cap the Federal budget at 5% of GDP.
I agree with everything you’ve said.
But either would be better than we have now.
Yes, the method we use to collect revenue does indeed impact on tax policy. When we ALL feel the pain, we ALL want to minimize it. I have been using this argument for 14 years. I'm glad someone else said it out loud. All other things equal, the broader the base, the less appetite there is in DC to increase taxes.
The broadest possible base is all consumers - whether tourists, criminals, illegals, etc - is a national retail sales tax. In such a case, not only does every single voter feel the bite of the federal spending beast - so does every single consumer.
'Course there's a side benefit of border adjustability but that's another thread!
I would like to see all subsidies gone, tax loopholes, etc. A straight across the board tax rate.
That’ll never happen because then they couldn’t hide the bs they are doing.
I have heard of "fairtax.org" but didn't realize how close their vision of revenue collection was to what my preferred method was.
And I thought it was just me who thought this way. ; )
“is a national retail sales tax”
Yes, consumption-based taxation would be objectively fair. And would restrain spending. Certainly Hamilton sold that concept in the Federalist bible.
As opposed to the wildly fluctuating subjective ‘fairness’ of the progressive income tax.
There are many tax reform ideas floating about. That’s a good thing. I, for one, would prefer a big switch to sales-tax, amend away the income tax and all that.
But, just like with candidates, I’m not waiting for the perfect one to save us. If folks have doable reforms in mind that bring us closer to objective taxation, I’m all for it.
One thing we could do without need for amendments and such is to flatten and broaden the income tax and eliminate the corporate tax completely. Redistributionists would cry us river, but sympathy would soon be lost in a flood of jobs.
Facism: when leftists decide that previously too-big-to-be-fair ‘monopolistic’ corporations somehow become too-big-to-fail.
Doesn't all spending have to originate in the House? Don't the Republicans control the House? What's the problem ... except cowardice?
I'm betting those same liberal entrepreneurs would howl in anger at the proposals that would actually threaten their wealth.
Enough of this garbage.
Get rid of departments that are useless. I’ve posted over $1 trillion in eliminations and reductions - which could take effect in 2012.
Talk of revaming the tax code, changing taxes, replacing taxes with other taxes, etc.
IS A 3-CARD MONTE GAME.
There are sensible mechanisms like Depreciation which actually make sense. If Congress is allowed to start messing with the tax code, nothing good will come of it. Depreciation is a good example - getting rid of those schedules for deductions or messing with them could potentially hammer companies who sell capital goods, and articially increase taxable profits of most corporations - who would pay the bill by getting a huge whammy of a loss when they retire capital goods that are recorded as a 100% expense in their final year of service. What an idiotic idea that does not reflect reality. Expenses must be accrued as they happen, and Depreciation is designed to do that as closely as possible to reality.
I shudder to think of what Congress-critters will come up with when overhauling Taxes.
INSTEAD, why not start hacking these things out of spending - NEXT YEAR, RIGHT AWAY (THESE FIGURES ARE FOR 1 YEAR !):
Proposed spending cuts in 2011 spending levels, in Billions, without touching Social Security, Medicare or Defense:
_________________________________________________________________________
Education__________________ $129.8 billion
Transportation (I propose
a limit of $10 billion)_________ $84.5 billion
Basic research______________ $18.7 billion
Agriculture, forestry
, fishing and hunting _________ $32.8 billion
Fuel and energy_____________ $26.9 billion
Pollution abatement_________ $10.9 billion
Protection of biodiversity
and landscape_______________ $13.9 billion
Housing development_______ $35.5 billion
Community development_____ $25.7 billion
Recreational and
sporting services_____________ $4.1 billion
General Government
(I propose cutting the
current amount in half)_______ $16.6 billion
Welfare (eliminate)_________ $495.0 billion
Grants to States
for Medicaid________________ $276.2 billion
R & D Health
(includes NIH)______________ $36.1 billion
Total reduction to annual
spending_________________ $1,206.7 billion
“I’m betting those same liberal entrepreneurs would howl...”
That may be true. But I’m not a betting man.
It would be a bit like fishing for pyromaniacs while using dynamite and matches for bait. Yeah... it’s fun and all, destroying a caricatured segment of the citizenry. But you COULD get some on you. And the once timidly persuasive angel on my right shoulder now has a Glock 17 in my ear.
It might be a sign.
Stealing is stealing.
Stealing A LOT does not score your zeal above your steal.
Stealing simply for revenge is salt in your own moral wound.
What I’d like to see is a decent reporter. (Yeah, yeah, I know, look under ‘Fiction’.) I’d like that reporter to ask Bill Gates, who is very generous and has employed millions and donated billions, what he accomplishes with a billion bucks when donated, as he does, privately. Then detail the sloth a billion funds federally. Then ask why. Or just punch him on the shoulder and say ‘no wonder your company is losing to a piece of fruit.’
Replacing income tax with a “fair tax” helps such “posturing” millionaires and billionaires.
A balance sheet is a financial statement as of a point in time, for example, at year end, where an income statement, or profit and loss statement (p & l statement) is a financial statement that covers financial activity over a period of time, for example, 1 year.
If I have a net worth of $10 million, that means on my balance sheet, my assets are $10 million greater than my liabilities. The basic presentation of a balance sheet is Assets - Liabilities = Equity (or net worth).
If I have net income of $200,000 per year, that would be represented on my personal “tax-basis” “p & l” (which is what is used primarily to fill out an income tax return) as, say, $400,000 Gross income, minus $200,000 in deductible expenses, yields a taxable income of $200,000.
A very wealthy person’s income is mostly income from investments: interest, dividends and capital gains (the increase in value of investments, i.e., selling price minus purchase price = gain/loss). Losses generally can only be used to offset gains, so taxable income can’t go negative. Capital gains on investments held over one year are considered “long-term” and are taxed at a lower rate than “short-term” investments (held less than one year). This is designed to produce more responsible investing and it has always worked - investors know that they need to have an investment that won’t go broke quickly, because they need to stay invested at least one year.
In addition, the taxable gain/loss is realized at the point where the investment is sold - but there are provisions for rolling the money over into a new investment in certain situations and not realizing the gain. For the economy - this keeps money / capital invested, so for the government it’s worth putting off charging the tax. Of course, eventually, the investor will want or need to exit an investment in order to spend some of the money. That’s the point at which they cannot escape the tax (legally).
Clearly, a person can live very nicely off of after-tax income of several hundred thousand dollars. If Congress eliminates taxes on investment income, someone who’s invesment income is much higher than that, say in the millions, will suddenly see their 15% long-term capital gains tax removed - and voila - it’s all profit. No differentiation between long and short-term gains. That could generate a lot of unintended consequences, like rampant speculation, since there would be no tax reason to hold on to investments for one year.
And don’t forget, to the wealthy, income from their job is only a small part of their income - or perhaps they don’t even have any W-2 regular income from a job. That is why they love the idea of raising income tax rates on REGULAR income - W-2 earnings. Woo-hoo ! Because they can simply stop earning W-2 income if they have any since they don’t need it.
Of course, a consumption tax like “fair tax” will be built into the price of all goods and services. Very smooth move by the “posturing” billionaires - pass off much more of the tax burden to everyone who buys food at the grocery store. And eliminate all taxes on themselves - other than on what they buy at the grocery store ? Most of their income IS REINVESTED, NOT SPENT. Come on.
A true “fair tax” includes all the taxes we have now - so NO ONE can COMPLETELY escape paying some tax. If anything is left as UNTAXED - the tax planners for the wealthy will legally funnel all the profits and income of the wealthy through that tax-free channel.
That is why the current system of a hodge-podge of taxes is not all that bad. There are taxes on consumption, income (both regular and investment) and wealth, in the form of real estate taxes. If any one of those were eliminated, enormous amounts of wealth would jump into the hold to avoid paying taxes. I’m always especially worried when they start talking about more and higher taxes on wealth (a balance sheet tax, not a p&l tax). That means if I sit on money I earned plus things I’ve bought over the years, the gubmit wants to simply take part of what I’ve got - and it’s up to me to use my assets to earn money. If I run a loss that year - the gubmint would still collect a wealth tax on what remains. That type of tax, IMHO, is confiscatory much moreso than a “p & l” based tax on income. It can lead to the elderly being stripped of their assets by the gubmint once they can no longer think and act sharp enough to make enough profit for themselves every year, whent they should be able to live off their assets accumulated. Their income would generally taper off a bit, so therefore their income tax should go down accordingly.
The bottom line is that Congress, the elites and the media have the populace arguing about who will pay tax and how much - and forgetting temporarily about government spending, which is what requires higher taxes.
For income taxes, the only true fair way is to have everyone at the same rate with no exclusions or deductions. I like the idea of long and short-term capital gains, with short term being taxed at the same rate as regular income the way it is now and long term getting a bit of a lower rate. Other than that, every dollar earned by a person should have the same x cents taken out for income tax, if income is to be taxed, whether a person makes $10,000 per year or $10 million. That way - everyone is paying the same x cents on the dollar for their income - everyone feels the same bite on their income. The dollar the rich person earns is taxed at the rate as the poor person. There is every incentive to make more income - since making more will not put anyone into a higher “bracket”. Since there are deductions and exclusions the rich can make use of, the real rate they pay can vary from the published rate of taxation for their income.
If I inherit $10 million - is that not income to me in the year I inherit it ? Why not have that at the same rate.
IMHO...
Eliminate the mandate for ethanol. I heard somewhere that 40% of the corn in this country goes to alcohol production.
“...consumption tax ... built into the price of all goods and services. Very smooth move by the “posturing” billionaires “
Not really.
Think about it a minute. Consumption tax. Consumers. It’s not a production tax that the evil producers would be snaking out of paying.
“Most of their income IS REINVESTED, NOT SPENT. Come on.”
I find it disturbing that someone on FR would have a problem with that. Your ideas for a fair flat income tax are reasonable. Your comments on sales tax, on the other hand, sound populist and progressive.
“If I inherit $10 million - is that not income to me in the year I inherit it?”
No.
It is a wealth transfer. I do not think that the passing of one’s parent and the electronic move from dad’s account to mine is some voluntary act of interstate commerce worthy of full federal government intrusion taking their potentially HUGE cut for my trouble.
It’s a pot of money. Earned, taxed and saved by my dad. Why should I have to stop at the IRS on my way home from the funeral just because I’m carrying the pot of money from his house to mine?
The democrats apparently figured out how to do that with ObamaCare.
My reason for saying that States should handle Medicaid is because a huge bloated Federal bureaucracy is incapable of policing itself.
A State, being smaller, has a better chance to discover fraud and abuse, keep costs down, then correct its own program. Why? Because voters are closer to the problem in a State and can have a huge impact on State programs via the ballot box. Not so much with Federal programs.
I would wager that 40% number would come down if there weren't stupid and wasteful Federal regulations involved.
Did you bother to look at the video? John better get on this like white on rice. There is little chance of cleaning up that nonsense, if they won’t even talk about it.
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