Free Markets, Free People

Taxes – They Have To Go Up Say Economists

For those of you who believe that you can spend yourself out of debt and enjoy the same level of taxation, a little dose of economic cold water is in order, appropriately on the day after tax day.

Many economists, including some who voted for Obama, do not believe that he can indefinitely avoid imposing tax increases much further down the income scale — on the middle class.

“You just simply can’t tax the rich enough to make this all up,” said Martin A. Sullivan, a former economic aide in the Reagan administration who said he backed Obama last fall.

“Especially just for getting the budget to a sustainable level, there needs to be a broad-based tax increase,” said Sullivan, now a contributing editor at Tax Analysts publications. “If you want to do healthcare on top of that, almost certainly, it just makes [a middle-class tax increase] all the more certain.”

And toss a little “cap-and-trade” on top of that, and whoa Nellie, the sky is the limit when it comes to the taxation necessary to support all of that.

How about those that believe that taxes should be used for “income equality” (also known as “tax the rich”)?

But even economists sympathetic to tackling income inequality say it will be difficult to avoid other tax hikes.

“There’s no way we’re going to be able to pay for government 10, 20 years from now without coming up with a new revenue source,” said Leonard Burman, director of the Tax Policy Center, during a forum on Obama’s tax proposals earlier this month.

Burman said a value-added tax is “inevitable.” Burman, deputy assistant Treasury secretary during the Clinton administration, said Obama should consider using revenue from the broad-based VAT to fund his healthcare plan. That would give middle-class and lower-income people incentive to keep taxes and health costs low, he said.

Translation for those who didn’t pick up on Burman’s last point – the “incentive” provided by the VAT (or Value Added Tax) is it will discourage “middle and lower income people” from using the medical system thereby keeping “health costs low”. If you want the real short version – rationing by price, the price being the cost of a visit plus the tax. Naturally, as a percentage of income, that would hit the middle and lower income levels much harder than the higher income levels.

And that 95% tax cut for Americans?

The president’s overall tax proposals, including perpetuating most of Bush’s tax cuts rather than allowing them to expire, will lead to $3 trillion in lost tax revenue over the next decade, according to an estimate by the Joint Committee on Taxes, which provides independent projections to congressional tax writers.

So $3 trillion in lost tax revenue, but an increase in the debt and debt service requirements:

More revenue will be needed to service the growing national debt. Because annual deficits are expected to remain above $500 billion for the next decade, Sullivan expects debt payments to more than double, from about 1.2 percent of GDP to more than 3 percent.

What does that mean for that “permanent” tax cut for the 95%?

The usual:

Obama’s budget proposed that his signature Making Work Pay tax credit be made permanent, but it was not included in either the House or Senate budget blueprints, partly because doing so would have increased the size of the deficit on paper.

Lies, damn lies and “permanent” tax cuts.

All the promises are BS, folks – and that’s not because I want them to be, its simply how the law of economics works. We will end up paying for all of this fiscal profligacy somewhere in the very near future. And anyone that says differently or promises otherwise is blowing smoke up your skirt.

~McQ

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33 Responses to Taxes – They Have To Go Up Say Economists

  • I’ve been saying for months that it wouldn’t be long before the dreaded VAT was mentioned as a way to pay for all the new entitlements the Obama adminisrtation drools over.
    I’m an American living in Ireland, and we currently pay a 21.5% VAT on all goods and services(except food) as well as numerous other fees and taxes as well as an annual Television tax of E160.00,up from E120.00 just last year. Thank God they only charge for one TV and not all 3!!
    Social Services are being cut and salarys are being reduced but the taxes keep getting higher to make up for shortfalls,but as always; the politicians and beaureucrats keep getting the same pay and benefits while the working stiff tightens his belt.
    This is America’s future if Obama calls for VAT,more money for nuthin’!

  • You wingnuts make me laugh, always, always with the risible doom-n-gloom. By July 2009 the recession will be over…the economy will be growing robustly. Meaning the rich, who take the largest percentage of the economic pie, will be able to invest more for the rest…eliminating one source of broad-based tax cuts. Also, there will millions of new Green Jobs, and that tax money will flow into the Federal coffers. Under this Administration we will see growth, ecologic sustainability, and income disparities fall…You defenders of the rapacious One Percenters just don’t like the fairer, greener America that is being created. Remember We Won.

    • /snarkon
      (Raises hand)
      Professor Joe, will there be millions of new green jobs BY July of 2009, or can we expect those to arrive  on the backs of the pretty unicorns & moonponies earlier than July of 2009?

      And when will we notice the suffering of the rapacious 1 percenters?  We’re hoping to see that very very soon.  Is there a chance the politically correct rapacious 1 percenters will be making shows about the incorrect 1 percenters so we can all enjoy their sufferings on a weekly basis?

      And which night of the week might the show be on, and….uh….is it going to replace one of the shows I like, I mean, American Idol, Survivor Moon Base Alpha, and Dancing with the Stars are safe, right?  Please tell me they are.

      Also, a further question, is the President’s dog house trained yet do you know?
      And what about Michelle’s garden?  Do they have any pests or bugs in the garden that will impede the victory plants? 

      I hate to ask these tough questions, but, someone has to, we owe it to the American people.
      /snarkoff

    • On the assumption that Jim is not being sarcastic,  nobody is saying the recession will be over by mid 2009.  Most seem to be thinking 2010 and even then sluggish growth.

      The report coming out of Spain on their experience with “Green Jobs” is they lose 2.2 jobs for each one created.  That would seem to be unhelpful at a time of high unemployment.

      Winning is one thing.  Staying “won” is a different matter.

      Rick

  • Joe Maybe you want to read this.

    http://news.yahoo.com/s/ap/economy;_ylt=AqSstyAmJj1GI7xIBEetYges0NUE;_ylu=X3oDMTI4NXJra2g2BGFzc2V0A2FwLzIwMDkwNDE2L2Vjb25vbXkEY3BvcwMxBHBvcwMyBHNlYwN5bl90b3Bfc3RvcnkEc2xrA2Vjb25vbWljZGF0YQ

    WASHINGTON – The number of people receiving jobless benefits exceeded 6 million for the first time, the government reported Thursday, and housing construction unexpectedly plunged to its second-lowest level on record — fresh evidence that the recession is far from over.
    Analysts expect the labor market to remain weak for the most of this year with companies reluctant to hire new workers until an economic recovery is well under way. And the latest housing data show the slump in that market, a major factor in triggering the recession, has yet to hit bottom.
    …..

    The Federal Reserve expects the unemployment rate will probably “rise more steeply into early next year before flattening out at a high level over the rest of the year,” according to minutes from the central bank’s March meeting released earlier this month. Many private economists expect the rate will hit 10 percent by year’s end.

    I guess they didnt get word there Joe.  Maybe you should tell them that you won, I am sure that will change their minds.

  • “Joe is putting us on Rick.”

    I don’t believe that for a second.  I never have.

  • Sorry wingnuts, the OMB predicts POSITIVE GDP growth by the 3rd quarter 2009. We can have the unicorns and ponies ONLY if we step up efforts to provide alternative transportation, thru a modest gas/carbon tax and thru cap-n-trade….
    Now unemployment will not begin to fall until after several quarters of GDP growth, everyone knows that, it’s an economic law, so don’t start talking about a “jobless recovery.”

    Which, of course, brings us to the necessity of a structured bankruptcy of GM and the take-over of Chrysler by Fiat…without those things, with a significant Federal input, workers may lose their jobs, at the plants themselves and the feeder plants. Further, workers cannot be left bereft of wages and benefits so a certain degree of Federal support may, temporarily, be necessary to tide these corporations and their union employees over, until their business restructurings have returned them to profitability.

    Now there will be some sector specific job losses, housing and construction may be one area, but the green economy will more than make up for losses in that area. I So much so that we will be forced, nativists kicking and screaming, to pass Immigration Reform so as to allow the undocumented the complete access to the American Dream they are currently denied and to provide the labour force that our nation will need to continue to grow for the next 8-10 years of t he Obama Administration. I wouldn’t pay much attention to a study that discusses Spain and its economic problems.

    Beck proves himself to humour-impaired…but then what’s new? Anyone not toeing the An-Cap line is to considered suspect, a “splitter” and a Statist…

  • If you ask me, The Clown™ is waiting to get re-elected in 2012before imposing any higher taxes, no matter how bad the deficit is. Only then will he impose his higher taxes that will bring on a depression, not a recession. And what will the people do? He lied to get elected in 2008, so what if he lies to get re-elected in 2012? Besides, all that happens is that Democrats in the House and Senate will get busted. The Clown™ will be able to bask in the glow of being a two-termer, and we can bask in the glow of sinking this country forever.

  • Joe

    NEXT 8-10 YEARS.  Sorry (actually I am not)  but Obama has less than 8 at most.

    As for immigration reform.  You will drive the national debt further as they will legally be able to apply for food stamps, medicare, medicade, free health care, etc.  In addition, you will then have millions of people eligible for Social security which they didnt pay into.  All of that is a recipe for disaster.

    And you said above millions of new green jobs but it has been shown that one green job costs about 2 and a half regular jobs.  So that means that to create 2 million new green jobs that will put 5 million people out of work.

    Combine the 10+ percent unemployment rate with the inflation rate that WILL come since the money supply has about quadrupled (another economic law there that you dont think about) and you will hit stagflation again unless you have another recession.  take your choice.

    And nice to know that unemployment picks up at the end of the recession cycle.  Something that you guys didnt remember when Bush was in office and inherited the recession from the Clinton administration after the Dotcom bust.

    The cap and trade tax will further deepen the recession. 

    In short you are smoking dope.

     

    • 1. *NEXT 8-10 YEARS. Sorry (actually I am not) but Obama has less than 8 at most.*

      Sorry can’t help you…the President talked about the 8-10 years of his Administration…if you can’t read I can’t help you…He’s very smart, graduated from an Ivy League university and was Editor of the Harvard Law Review, so if he says ten years, I have every reason to believe him. If you’re some kind of hater, that’s your problem.

      *As for immigration reform. You will drive the national debt further as they will legally be able to apply for food stamps, medicare, medicade, free health care, etc. In addition, you will then have millions of people eligible for Social security which they didnt pay into. All of that is a recipe for disaster.*

      One, it is almost every person’s right to be an American! The US has exploited the planet and the people of this planet for so long, sexism, racism, imperialism, and capitalism that a little payback is in order. I say you are afraid of having Brown People as your neighbors and having them share in your good fortune. Good enough to mow your lawn and patch your roof, but stay away from my entitlement(s) and my daughter, eh?

      *And you said above millions of new green jobs but it has been shown that one green job costs about 2 and a half regular jobs. So that means that to create 2 million new green jobs that will put 5 million people out of work.*

      First, that is one study…looking at a small European nation, I don’t think the two situations are at all comparable. And two, the 5 million unemployed, well if they are investment bankers and Wall Street financiers, well we’re all better off. Plus, many of the unemployed will be white hetero-sexual males, the beneficiaries of the exploitative US system, it will be social justice for them to take a back seat to Womyn, and People of Colour, for a change. Finally, these green jobs will pay probably 3-4 times the rate of the jobs they displace, so with the additional taxation, they will be better off and the displaced employees will be better off, thru an improved social justice safety net (to include health care for all). The country will be better off, fairer, richer and GREENER.

      *Combine the 10+ percent unemployment rate with the inflation rate that WILL come since the money supply has about quadrupled (another economic law there that you dont think about) and you will hit stagflation again unless you have another recession. take your choice.*
      More wingnut doom-n-gloom…unemployment will be shrinking within 1-1.5 years. The additional safety net and the education and retraining benefits will cushion the shock for displaced workers. A deficit CAN be a problem, but the deficit will be halved within 4-5 years of Obama taking office. Increased economic activity and increased taxation will see to that. The result will be far lessened pressure on the US financial picture.

      *And nice to know that unemployment picks up at the end of the recession cycle. Something that you guys didnt remember when Bush was in office and inherited the recession from the Clinton administration after the Dotcom bust.*

      Whew boy are you getting hard to deal with…..With Bush it was different, his problems were self-inflicted, focusing on the rich 1% of our nation, rather than the needs of the working poor and the middle class.

      *The cap and trade tax will further deepen the recession.*

      It will make America a better place, one that we can be proud of for the first time in our lives, or at least MY lifetime. It will benefit the world AND it will benefit the workers of the US, too. Green Collar jobs are GOOD jobs.

      *In short you are smoking dope.*

      Argument by snarky personal attack is just what I’d expect from some kind of over-emotional wingnut, when that aforesaid wingnut is confronted with logic and facts. Try watching Olberman rather than Faux News and you’ll be better prepared the next time.

  • Where is Ott Scerb when you need him?

  • So my question is, where was this Mr Sulliavn during the Campaign. He supported Obama, and even during the campaign Obama was talking Health Care Reform (Naional Healthcare), increased Social Spending, and Cap and Trade…so why wasn’t it OBVIOUS then that Obama couldn’t keep his promises of a net spendnign CUT and a tax break for 95% of the US?

    I mean did Mr Crankypants and his Chillbilly running mate scare or offend Mr Sullivan SO much that he couldn’t do the sums in his head or a piece of scratch paper, and just NOW he’s discovering that Obama is going to have to raise taxes on EVERYONE?

    I am reminded of the Biblical phrase, “There none so blind as those who will not see.”

  • Joe, I have to wonder if you are serious.

    “He’s very smart, graduated from an Ivy League university and was Editor of the Harvard Law Review, so if he says ten years”  

    Per the constitution he can only get elected twice.   You can only serve 1 day less than 10 years if you do 1 day under 2 years as VP and then get elected twice.  I dont care what Obama says.   Of course democrats dont like the constitution.

    “One, it is almost every person’s right to be an American!”

    Umm where is that stated?  The constitution, the Declaration of Independence?, the Magna carta?  the bible?    Oh wait I know. Your ass.  That is where you pulled it out of. 

    ” I don’t think the two situations are at all comparable”

    And because you want to ignore basic economic principals that makes it so correct?

    “Plus, many of the unemployed will be white hetero-sexual males, the beneficiaries of the exploitative US system, it will be social justice for them to take a back seat to Womyn, and People of Colour, for a change’

    I have to laugh at this one.  If you think that people of color take a back seat during good economic times than what makes you think they will take a front seat during bad ones.  All that happens is the poor get poorer and the rich get poorer with very few winners.

    ” Finally, these green jobs will pay probably 3-4 times the rate of the jobs they displace”

    Really?  Got some study to prove that?  I mean other the one coming out your rear end.

    “A deficit CAN be a problem, but the deficit will be halved within 4-5 years of Obama taking office”

    So first Obama triples the debt then cuts it in half.  If yo ulook at at even Obama’s projections the deficit still grows by $500 billion a year every year.  that is still more than any year under Bush.  In addition, the social security surplus will go away in a few years and that is currenlty being counted against the debt. Once it goes away the deficit gets LARGER.

    “With Bush it was different, his problems were self-inflicted”

    You mean he caused the dot com bubble t burst under Clinton. It was his fault right?  He caused 911 as well right?  If you look at the facts (yes I know that is something strange to  you)  the recession under Bush was very shallow and revenue to the govt increased to record levels. 

    “Cap and trade”

    When you increase the cost of doing business a business will do one of 3 things to maintain profit levels (after all that is why they are in business and they arent in business to provide jobs). 
    They will
    a.  cut costs and this will most likely be labor as most of their other costs are fixed or at least steady. 
    b.  Raise prices which means you get less goods for the same money (it is also called inflation.
    c.  go out of  business because they cant compete.
    Again this is a BASIC law of economics.
    “Argument by snarky personal attack is just what I’d expect from some kind of over-emotional wingnut, when that aforesaid wingnut is confronted with logic and facts”

    Your descripton of yourself is perfect.

    Olberman?   HAHAHAHA.  BTW I dont watch Faux news or even Fox news.  I do something called RESEARCH.

  • Joe with Obama in charge and you following I am reminded of another phrase. 

    The blind leading the blind.

  • Although Joe in your case it is the blind leading the DUMB and the blind.

  • You know as long as the fish keep biting, I’m going to keep chumming the waters…

    Retired Military:
    1) Switch to decaf; and
    2)Check out Looker at 9.28.

  • a.  I am bored 
    b.  I have no idea what “looker at 9.28″ is.  Enlighten me.

  • The commenter “Looker” made a comment at 9.28 (AM-PST) examine it….much may be revealed…you TEA Party Right Wing Extremist. I oughtta run you into DHS right now, having read about the danger YOUR KIND represent.

  • Bah humbug.

    But but but you sounded just like them. 

    I owe you one.
     

  • And toss a little “cap-and-trade” on top of that, and whoa Nellie, the sky is the limit when it comes to the taxation necessary to support all of that.

    Cap n’ Trade is taxation.  It is a tariff applied to locally produced goods. 

  • joes seeming purpose is to chime in when the usual leftish commenter fail to get on a thread fast enough.  He’s been doing it long enough that he has to have canned scripts for just about everything now.

    • He’s parodying the left.  Honest.  It’s hard to tell some times because the left is a self-parody of itself.

  • Personally, I would support a VAT, as long as it is revenue neutral, preferably getting rid of payroll and corporate taxes. Its essentially a consumption tax, and it applies to imports, too, while exports get a VAT rebate. 

    I would not support it to pay for healthcare, and anyone who thinks that the average consumer of healthcare is going to watch their own spending because of a VAT is smoking whacky weed. A gas tax might encourage you to drive less, but does it encourage you to avoid using government services to keep it down? LOL.

  • Wow, Joe is outdoing himself.

    But the scary thing is, he is hard to tell from the left fringe.

  • I am going to make one of my famed predictions right now.

    The Clown™ doesn’t have to worry about being a one-termer. No President in the history of this country as far as I know has engendered mass demonstrations against his administration only three months in. Against Bush it took years; against
    The Clown™ it took three months.

    The schmuck is not even in a full 100 days, and already people are marching in the streets – approximately 500,000 yesterday – denouncing him, his tax plans, his deficits, and his maladministration as a whole.

    So, you say…the prediction? By November 2010, hatred against The Clown™ and The Clownettes™ will be sto strong that Dems lose 35-45 seats in the House and Nancy Shmancy is out as Speaker. In the Senate, the GOP picks up 2-4 seats; Spector goes down in Pennsylvania, Dodd in Connecticut, and Roland “The Crook” Burris loses the Senate seat he stole to a Republican. The Clown™ panics, does a Jimmy Carter, and tries to make nice with the new Speaker, John Boehner of Ohio, to get the Republicans to enact some of his silly legislation (The Clown’s™ silly legislation, that is), but the Republicans do not go along and the Shmancyless Dems cry and hew and haw about “the Republicans not cooperating with us.”

    Mitt Romney gets the Republican nomination for President in 2012, names Jindal as his running mate, and makes The Clown™ and Hairplugs Joe™ one termers. It will be a re-run of the 1980 campaign, when the people were so glad to be rid of the jerk in the White House that they would vote for Wendell Willkie if it means getting someone new in there.

    That’s my prediction. Cut it out, save it like a coupon, and come back to me when events transpire to see if I am right.

  • It’s known as the Laugher Curve.  The idea that I’m going to go to work and let the government take all my money and split it with someone who stays home and goofs off is a laugher.

    I just paid an effective 20% income tax,  15% SS and Medicare, $6K in property taxes,  and large amounts of tax buried in gas, energy, phone and internet bills and  8.5% sales tax.  Yes, the government needs tax revenue to do what only it can do. 

    But do I need to subsidize wealthy agricultural interests?  A lot of money is wasted already.  Obama will add to that waste.  I’m tempted to just stop funding my 401K and go buy things before Obama can inflate it away. 

  • “The schmuck is not even in a full 100 days, and already people are marching in the streets – approximately 500,000 yesterday – denouncing him, his tax plans, his deficits, and his maladministration as a whole.”

    Perhaps you are correct.  However, how many of those 500,000 supported him to begin with?  I suspect the answer is a resounding “not many”.