Boehner and the Republicans stall fiscal cliff progress again
WASHINGTON: As the election cycle comes to an end the American people spoke with resounding force that fixing the fiscal cliff should involve tax cuts on the wealthy. Republicans seemingly bought into the idea striking down their anti tax pledges and committing to work in a bipartisan manner in getting this issue resolved, however today has proven that both parties are loud on words and short on action. A once bright light of promise has now dimmed to the bleakness of impending doom as Republicans once more stand by their insistence on cutting spending without raising taxes on the wealthy.
Speaker of the House John Boehner (R Ohio) seemed someone gloomy after having a call with Obama on Wednesday followed by a face to face with Treasury Secretary Tim Geithner the day following. The bid Geithner proposed was Obama’s latest effort to find bipartisan resolve to this neverending crisis. The offer included approximately 1.6 trillion in new revenues by levying a tax on the wealthy while simultaneously cutting spending in a fair and balanced approach.
In this budget included stimulus pork of $50 billion, aid to homeowners underwater in their house payments and unemployment benefit extensions in the amount of $30 billion dollars. The new budget also posed new rules of dealing with raising the debt limit. As you remember this was the the debacle that led to a lowering of our credit rating. A move largely blamed on Republicans unwillingness to compromise.
Boehner was, to say the least, very disappointed. In his mind compromise consists of no give and take just take. With four weeks before the fiscal cliff takes effect, this is no laughing matter. The Republican party needs to begin taking this seriously before these automatic cuts take place sending the economy back into a recession say experts.
Neither party moved from their positions they were previously and Republicans are taking a stand against only raising taxes on the wealthy. These automatic tax increases would affect 98% of the population if something isn’t done soon.
Some think that this is political posturing for a party that is becoming, largely unpopular with the common man, As it stands now if taxes increase on anyone besides the wealthy the Republicans are to blame. This will essentially add a tax hike of over $2,200 to the average household’s tax bill. With 98% of the population at risk for this $2,200 tax increase the Republicans are against the wall and have no where to run.
Republicans no longer have popular support and their arguments against this fair and balanced approach are slowly running out of steam. This political posturing and do nothing congress mentality not only hurts our future, it hurts our image to the rest of the world.
Both sides do agree that a fair and balanced approach needs to be taken to avert this disaster that includes revenue increases as well as spending cuts however the details of that are still a bit unclear. It seems as if the Republicans still insist on balancing the budget on the backs of those that can least afford it so that they can bow to their masters in fur coats.
With this type of persistent name calling and hostage taking by the Republican party who knows when anything will get done. This may be the beginning of the end of the greatest nation on earth. All because of the bullheadedness of bought and paid for federal officials on capital hill.
Categories: Federal Tax, Income Tax Tags: federal income tax, federal tax, fiscall cliff, grover norquist, republican, Republican Tax, tax code, tax pledge, tax reform
Payroll Taxes: A Growing Concern
You think corporations are paying their fair share on taxes? Keep this in mind…in 1969 payroll taxes and federal income taxes accounted for almost the same share of revenue going to our government. Today individuals make up 6 times the amount of corporate taxes. Still think its fair?Tax reform needs to focus on balancing the share of revenue that comes from each source.
Since the 1970’s payroll taxes have almost doubled until they reached about 2/5 of the federal revenue collected. This rise surpassed the single largest source of revenue for the federal government in 2009.
These types of taxes pay for the things individual citizens love the most including Social Security and Medicare. With these types of cuts being on the table the pressure is building to find a solution for the fiscal cliff we soon face.
So what is the problem here? Since 1970 disability recipients in the US has increased 600% of what they were in the 70’s. This bubble has led to expenses to exceed revenues by almost thirty four billion dollars. You may be aware of this intensifying welfare nation status quo and with this costs are on the rise. The number of baby boomers retiring and the number of still unemployed cast a shadow of doubt on whether or not these programs are financially viable in the long term.
Even worse health care costs are spiraling out of control and with the new advent of Obamacare who knows what will happen to the cost curves. If something isn’t done in the health sector soon to reign in costs Medicare as we know it will be in jeopardy.
Payroll taxes are regressive and only paid on income up to $110,000. Payroll taxes are also not paid on capital gains or passive income. Because of this regressive model payroll tax cuts tend to benefit the poor and middle class more than they do the wealthy and typically pack more a stimulus punch than other typical income tax cut strategies.
Something needs to be done and no one is stepping up to the plate. The AARP and other social groups show little support for any types of cuts to programs that may jeopardize the social safety net for those most in need. Their argument is that these types of programs help balance the inequality faced by the income classes in our nation.
Of course if you tampered with these payroll taxes and delinked them from the programs they support the government would have to find other sources of revenue to make up any shortfalls that may exist. We can do this by limiting the tax breaks on the wealthy or even revising the tax code to bring in more revenue thereby allowing us to retain and fund some of these programs our most desperate individuals rely on. Other ideas include implementing a carbon tax or a use tax that would disproportionately effect the wealthy and increase revenue generated by the federal government.
With the rising cost of technology in the health care industry and a lack of skilled labor cost will become an issue in the near future. This is one trend we face in the future. Are you ready to face that future?
Categories: Income Tax, Tax Law Tags: federal income tax, federal tax, fiscal cliff, income tax, payroll tax, tax increase, tax law, tax reform
Buffet says raise taxes on the rich
Warren Buffet, renowned billionaire and investor, is again renewing his bid to have congress assess taxes on the wealthy. With the fiscal cliff looming and many programs on the chopping block, this Buffet rule would raise much needed capital to avert this debt crisis we are facing.
Buffet, in a recently released op ed is urging congress to compromise on spending cuts and increases on those he coins as the “ultrarich”
Congress, who returned to work after Thanksgiving, will be presented with this op ed in hopes that they make a fair decision when it comes to the looming fiscal cliff. Critics of the buffet rule claim that instigating this type of tax increase will spook investors out of the market. Buffet mocked this idea claiming that in his many years of investing he hasn’t’ seen any sort of tax increases effect the market, ven when capital gains taxes were above 25 percent, well above what they are now.
Buffet serves as the Chairman and CEO of Berkshire Hathaway has been trying to blow the whistle on congress’ treatment of the wealthy for several years. Currently gaining steam President Obama has coined this class warfare as the “Buffet Rule”. This rule seeks to balance the budget in a fair and just manner without causing excess burden on those that can least afford it.
Only time will tell how the fiscal cliff will be dealt with by congress. If Buffet has his way it could mean the “ultrarich” will be paying a lot more in taxes than they do now.
Categories: Federal Tax, Income Tax Tags: buffet rule, federal income tax, federal tax, income tax, tax code, tax increase, tax reform