Budget Crisis My Ass! We Have a Refusal 2 Levy Adequate Taxes on Those that Can Afford it Crisis

[revolutionnow45]

The Battle of Madison, in addition to being about Wisconsin Gov. Scott Walker’s desire to cripple his state’s public sector unions, is also at least ostensibly about budgetary matters. Walker wants to get those nasty teachers and other government workers to foot more of the bill for their retirements, right? Well … wrong actually. And one of the worst kinds of wrong, a factual error so broadly accepted by the journalists covering the story that it distorts everyone’s understanding of it.



That’s the conclusion reached by Tax.com’s David Cay Johnston, who won a Pulitzer Prize for coverage of tax loopholes with the New York Times in 2001. Johnston, in a must-read for anyone who has been following the Wisconsin battle (and the similar showdowns playing out in places like Indiana and Ohio, among others), points out that the notion of asking the workers to pay a “greater share” of their retirement is deeply inaccurate. He writes:

Out of every dollar that funds Wisconsin's pension and health insurance plans for state workers, 100 cents comes from the state workers.

How can that be? Because the "contributions" consist of money that employees chose to take as deferred wages – as pensions when they retire – rather than take immediately in cash. The same is true with the health care plan. If this were not so a serious crime would be taking place, the gift of public funds rather than payment for services.

Thus, state workers are not being asked to simply "contribute more" to Wisconsin' s retirement system (or as the argument goes, "pay their fair share" of retirement costs as do employees in Wisconsin' s private sector who still have pensions and health insurance). They are being asked to accept a cut in their salaries so that the state of Wisconsin can use the money to fill the hole left by tax cuts and reduced audits of corporations in Wisconsin.


By Robert Schlesinger
http://www.usnews.com/opinion/blogs/robert-schlesinger/2011/02/28/the-big-myth-in-wisconsin-gov-scott-walkers-union-busting-crusade

[RUMMYisFROSTED]

1. Welcome aboard.

:applause:

[Bozita]

2. Great job on the title of your OP. ... Recommended.

And, welcome to DU!

[Liberal_in_LA]

55. agreed. +100

[leftstreet]

3. K&R

:applause:

[Starry Messenger]

4. k&r

[HockeyMom]

5. I was very fortunate to know a DEMOCRAT self made Multi Millionaire

He told me one year he paid $500,000 in taxes. He also said, "I can afford this". "If my taxes can help people less fortunate than me, I am more than willing to pay it."

This country needs more rich people like him.

[rdking647]

8. wealthy democrat

500k in taxes based on what income???

the fact is people in the country are tired of high taxes.. raising taxes isnt going to happen. it isnt politically feasable. and I dont see that changing in the near term.. so spending has to be cut.

[sabrina 1]

17. Wrong, We the people have had enough of the wealthy

getting away with Corporate Welfare in the form of not paying taxes.

This Wisconsin moron, Walker, has awakened the people to what needs to be done to fix any budget problems, problems that were created by the wealthy in the first place.

Raise taxes on the wealthy and make it a substantial amount. They are a liability to this country now, they do not provide jobs for all the tax breaks they get, they outsource them.

If they don't like it, let them go to one of the countries where they are using slave labor to replace American workers with and being rewarded with tax cuts for doing so. It is ludicrous, crazy and it has to end.

I hope they enjoyed the free ride, but now they are going to have to pay like everyone else, or get out of the way, leave, go to Dubai or wherever they have their ill-gotten money hidden.

The working class did not create these problems, and they should not even consider paying for them.

[rdking647]

21. not going to happen.

raise taxes on the wealthy alot and they will find a way legal or illegal to avoid them.. all that would happen is they would start to cheat on their taxes in a meaningful way. and our tax system is based on voluntary compliance since even under the threat of audit the government doesnt have the means to force people to pay taxes.

[W_HAMILTON]

25. Yeah, because they're not doing that already.

:sarcasm:

I like the idea someone else proposed: tax them till their dicks fall off.

[sabrina 1]

26. Tell that to anyone who is sitting in jail for not paying taxes.

Leona Helmsley comes to mind. It will happen, and what else needs to happen is prosecutions of those who collapsed this economy as is happening in other countries, and a retrieval of the stolen money.

In fact, people like Walker are a gift because without them, the people might have stayed asleep. Let them keep pushing. I am grateful for bullies like him, stupid as he is.

[jacquelope]

27. Unfortunately

Bank of America's corporate execs aren't among those sitting in jail for not paying taxes.

They paid zero taxes... but tea partiers think they're taxed too much.

How much does it cost to emigrate from Planet Bizarro?

[rdking647]

31. b of a corporate exec

where do you get the idea that BOA execs paid zero taxes..

[jacquelope]

35. The execs paid taxes, right.

It was the company itself that paid no taxes.

Oh and apparently my long-ago former bank isn't paying taxes either...
http://www.americanconsumernews.com/2010/03/no-taxes-for-bank-of-america-nyse-bac-and-wells-fargo-nysewfc.html

[rdking647]

36. no boa taxes

thats becasue BOA had a net loss in the us in 2009 . they earned a lot of money overseas.
and thats a problem with our current corporate tax code. becasue of the ass backwards ways we treat corporate income taxes,companies have hige amounts of cash tucked away outside of the us. teh companies wont bring that cash to the us becasue its subject to a 30+% tax rate if it is. A better idea would be reduce the tax on the money held overseas to 10% or so. right now there may be a trillion dollars held overseas by us companies.. we will never see a dime in revenue from that cash if we keep things the same..
if we were to reduce the rate to 10% for companies repatriating cash that would raise 100b.
and 100b is better than the zero we get now.

[jacquelope]

39. Is there no way to

ding them for holding that money overseas?

I am not at all convinced that lowering taxes, anywhere, will cause them to repatriate money or do anything but pocket the difference. If I had a zillion dollars overseas paying low taxes why would I subject it to any taxes by bringing it back here? And what countries are they keeping their money in? I hope it's not Ireland or the Cayman Islands or some place like that. They're bankrupt, been bankrupt, or going bankrupt.

I could use a little clarification, of course. I'm going by my gut here.

[rdking647]

44. corporate taxes

from what i understand,teh US is one of teh few if not the only country that taxes a company based on worldwide earnings. but the US taxes are only due when the money shows up in theg us.
Using Cisco for an example. lets say cisco makea a billion dollars,750m outside of the US. Cisco pays immediate taxes on the 250m in US profit and on the 750M when they repatriate the money back to the US. Well for a company liek Cisco there is no reason to repatriate the money and pay the US corporate tax rate. so the money sits overseas,concievably forever..
lets say the US drops the rate to 10% on repatriated earnings.. Most companies will take that opportunity to bring the cash back to the US and will then pay a lot of that cash out to shareholders in the form of dividends. (that is one of the major reasons a lot of tech companies dont pay dividends). the dividends will then also be taxable to the shareholders.

so lets say there is 1T in earnings overseas.. right now we get zero .. lets say they reduce the rate to 10% and 1/2 the money comes home.. thats 50B in new revenue. Lets say that of that 500b brought home 25% is used to pay dividends.. thats 125B in dividends.. Using the 15% dividend tax rate thats another 18.75B in taxes.
so we would have a net gain of 68.75B in new revenue that otherwise we would never see.. corporate shareholders would have more money to spend,helping the economy.
all in all its a win win..

and as for where they are keeping the money,it tends to be invested in low yielding US govt bonds.
and there is no way to ding them for the money held overseas.. The profits have already been earned and you cant tax them retroactively.

[W_HAMILTON]

51. What are you even talking about?

What are you saying the reason is tech companies don't pay dividends?

I can't even make sense of the rest of your post. The USA has tax treaties with most major nations, meaning that taxes paid in that country are offset against tax obligations here.

And you are being naive if you think lower income taxes will cause companies to invest more in America. You can lower corporate income taxes to 5%, and they will complain that it's not 0%. You can lower it 0%, and they will complain they aren't receiving tax subsidies to entice their business. Nevada has a 0% corporate state income tax, but it has the highest unemployment in the nation. Lower corporate state income taxes do not correlate with private sector jobs or investment.

That's not even pointing out that all payroll expenses are deducted from revenues, which means they are not taxable income to begin with. I never understood the silliness in that we needed lower corporate income taxes for companies to create jobs, when they don't pay corporate income taxes on their salaries and wages to begin with.

Again: tax them till their dicks fall off, and if they do flee the country (they won't) go back to imposing tariffs on any such corporation that then tries to sell their products in this country, thereby elminating any savings they received from going to a cheap labor country.

It's time corporations invest in America like the American workers have been investing in them.

[rdking647]

53. us tax law

under us law companies can transfer costs to hi tax countries and profits to low tax countries.
and reducing the tax rate is not without precedent
in 2004 we reduced the rate.
companies brought 312B back and paid a 5.25 tax rate. that was a 16B revenue gain for the US
most of the money went to dividends and buybacks further increasing revenue.

the amount of porfits US companies hold overseas has increased by 70% in the last few years.
better we get something for that than nothing.

[W_HAMILTON]

57. You are just going on and on without knowing what you are talking about.

If the US companies are so interested in transferring their costs to "high tax" countries, why are they choosing to create jobs in China rather than here? We have the second highest corporate income tax in all the world, remember?

Moral of the story, we've cut taxes and cut taxes through the years, and it has not improved America's working class. As we cut their taxes, they took our jobs. Supposedly now a ~7% unemployment rate is the "new normal." That's bs.

Tax them till it hurts. If they choose to go elsewhere, impose tariffs so they can't benefit from our spending while depriving us of jobs and decent wages. It's that simple.

But this wasn't a discussion about federal problems, it was about state spending; did you ever answer what you thought the states were spending too much money on?

[jacquelope]

58. And they won't flee the country

Because we're their biggest market.
If we go, the world goes.

I know that sounds a bit chauvenistic but even I know that a Depression here would become global... again.

[jacquelope]

59. Clarification

They won't leave the country as in they won't stop selling to America. They may try to set up corporate HQ's elsewhere but deciding to pull out of the U.S. market is suicide.

[rdking647]

33. jail

If taxes where raised to the point that cheating became commonplace,there arent enough jails. Look at the tax collection rates in some places with high taxes.
If you are "rich" a lot of your income doesnt come fro ordinary income that shows up on a w2. all you need is a stock account in a foreign country with strict secrecy laws.. The US would never see a dime in taxes from any money held in these places.
And if you have a few million bucks opening a foreign account is very easy.

[Name removed]

30. Deleted message

Message removed by moderator. Click here to review the message board rules.

[rdking647]

32. rw????

the far right wing calls me a commie liberal. the far left call me a right wing tea bagger.
I myst be in the mainstream

[W_HAMILTON]

41. If you oppose raising taxes on the rich...

...and approve of SS cuts (which you indirectly approve of by increasing the retirement age to 70), you are not in the mainstream, my friend.

[rdking647]

45. without raising teh retirement age

how do you keep SS solvent..

the retirement age was originally set when life expectancy was a lot shorter.. thats how SS was going to remain solvent. a lot of people would die before collecting.. thats not true anymore.

[W_HAMILTON]

50. It's still solvent till the 2030s.

There is absolutely no need to cry chicken little about Social Security when we have other more pressing matters to attend to.

If we just have to do something, raise the income cap on SS taxable wages.

[rdking647]

52. shared sacrifice

both retirees and taxpayers have to sacrifice. raise the income limit and the retirement age.
an if we wait til the 2030's th ess deficit will be to big to fix.. its much cheaper to fix ir now instead

[W_HAMILTON]

56. Raising the income cap is shared sacrifice.

The middle class have been essentially paying a SS tax on 100% of their wages for years, while those earning over 1m/year have only been paying a SS tax on ~10% of their wages.

I agree, time for shared sacrifice richie riches :)

[Dappleganger]

48. Pay attention.

They have found ways to avoid them for THREE DECADES.

[Dappleganger]

47. High taxes? You've gotta be shittin' me.

Even your hero Ronald Fuckin' Raygun didn't lower them this much on those who should be investing more in this fantastical business environment they are privileged to live in.

[Name removed]

60. Deleted message

Message removed by moderator. Click here to review the message board rules.

[PufPuf23]

6. How true! Great title. Freaking obvious. Welcome. nt

[rdking647]

7. devils advocate

im going to play devils advocate here...

while i agree that walkers budget balancing plan is a crock of shit,raising taxes isnt the solution.. the simple fact is that states spend to much money. and wisconsin has one of he higher tax rates in the country. raising taxes isnt possible in this political enviroment. nor is it the right move.
spending however can be cut without screwing over the public employees.

wisconsin ranks 13th highest in state taxes based om tax freedom day... it ranks 4th highest in state taxes as a percentage of state income..

[W_HAMILTON]

11. Bullshit.

What do the states spend "too much" money on? States only started to have budget issues when they started this run on cutting taxes. We've now reached the point where we've cut so much revenue that we complain about not being able to fund the glamorous life a teacher leads. It's bullshit. Our infrastructure is crumbling, our schools are not modernized...you can go on and on. What are they spending "too much" on? What, we're in billions of debt because of food stamps?

Don't give me that crap. You can look all around you and see signs that we are NOT investing enough in our country. So, what the hell do you propose the states are "spending" too much money on?

It's not a spending problem on the state-level, it's a revenue problem. When you keep cutting taxes, there's going to be a point where even a pack of Post-It Notes will put you in debt. This is the problem. Go back to the tax policies of the post Great Depression era and let's see how long our budget problems persist. You may suggest that the corporations will just run like rats to other countries, but that wouldn't bother me because I'd reinstitute tariffs as well.

[rdking647]

12. not bullshit

you may not like it but the average american doesnt want higher taxes.
and as for taxing the "rich" at a higher rate,how much would you raise their state taxes??? while tax rates used to me much higher on a federal level the effective tax rate wasnt much higher.
if you look at teh effective tax rate for the top 5% of americans it has ranged from 27 to 31.8% since 1979. currently its 29% (as of 2006). so it really spending that has outstripped taxes revenue.
so yes spending needs to be cut dramaticlly. but there are ways to do it w/o screwing workers over..
start with the military..

but raising taxes isnt going to happen..

[W_HAMILTON]

15. Actually, the "average American" wants higher taxes...

...on the rich, per recent polls. I would assume they would also favor higher corporate income taxes, seeing as how the race to cut them in recent years has led to absolutely no positives on the job front here in America.

As for your stats, I didn't say raise rates back to the Reagan era. I said raise them to heights of the post-Great Depression era, when we had the greatest economic boom and largest increase in middle class wealth we ever experienced. Of course, even I probably wouldn't go as high as 91% percent, but I would raise the top rate to around 50% and increase capital gains taxes (on short-term holdings) since a great portion of all that accumulated wealth is being traded around on the stock market, and it is subject to statutory tax rates lower than most Americans endure.

As for the military, that is more of a federal obligation, not a state obligation. You complained about states spending too much. That is not the problem. Our infrastructure and schools are outdated, we don't have the social safety net programs of most European nations, and I'm not dumb enough to believe poor people and teachers are the cause of billions and billions of dollars in debt. If we are spending too much money, again, where is it going?

It's not a spending problem, at least not at the state level -- it's a revenue problem.

[rdking647]

16. tax rates

looking at taxes when the rates were much higher,say for example 1979
the top bracket was 70% but the effective tax rate on the top 5% was still only 31.8% and on the top 1% was only 37%. back then,when rates were higher there were also a lot of deductions that lowered people rates so very few people paid the highest rates.

as for capital gains rates. under current law short term capitol gains are taxed at the same rate as ordinary income.

and as for corporate rates,I could see raising them. as of 2009 corporate income taxes in teh use where 2.2% of GDP. even if that was raised to the OECD average of 3.4% of GDP that would only be a matter of 168 Billion and a lot of the gap between the current US tax rate and the OECD average is due to corporations passing the income to their shareholders where it is still taxed.

and at teh state leven its defenitly a spending problem

using wisconsin as an examplethis is wisconsins state spending per year
2006 45.3b
2007 46.6B
2008 49.3B
2009 55.6B
2010 62.8B (EST)

even if you ignor 2010 numbers and only look at tbe actual spending the states spending went up by 22.7% between 2006 and 2009. that is the root of teh problem.

[W_HAMILTON]

24. Re: tax rates

(1) Very few people (or corporations) pay their marginal statutory rate today. They take advantage of numerous deductions, just as they always have.

(2) I should have made it clear: I believe the capital gains taxes on short-term holdings should also increase. I also personally believe that the "short-term" holding period should be lengthened as well. For instance, I would say that any security held for less than five years would be considered "short-term" and taxed at the appropriate rates, with maybe a sliding scale tax rate the longer you hold it. Holding a security 366 days and selling it and only being taxed 15% (at the most) is just another way people are cheating our nation out of revenues it once had.

(3) You keep bouncing back and forth between federal and state spending, so I don't know what to debate you on. I had a problem with you saying that the problem was states were spending too much. I asked you that you specifically tell me what they are spending too much on. I understand that states are obviously going to run a deficit in a recession due to declining revenues and increased reliance on social programs, so I do not have a problem with states running a deficit in the short-term, say, since the recession started in 2008. But these states have been running deficits long before that, even during the best of times. So again, please tell me, what are they spending too much on?

[rdking647]

38. state spending

look at wiscosnin state spending. its up over 20% between 2006 and 2009. at a time when revenue was stagnant.

[W_HAMILTON]

40. Tell me what they are spending "too much" on.

You keep giving me the figures. I want to know what you think they are spending "too much" on, especially pre-recession. You said it yourself, and I took exception to it. I would like to know what you personally think the STATES are spending too much on.

[sabrina 1]

42. What do you mean 'state spending'? What are they 'spending'

money on?

We KNOW that tax breaks for the wealthy have done nothing to create jobs or help the economy, after ten years of Bush tax cuts.

And we know that giving huge tax breaks to big Corps causes a shortfall in revenue both at the state and federal levels. As a matter of fact, that was one of the issues that this president ran on, wasn't it, only to change his mind after being elected.

People are not dumb. When jobs are being shipped overseas by the very Corps getting the biggest tax breaks, the loss of revenue from jobs that are NOT being created here PLUS from the tax breaks themselves, have had a devastating effect on the economy. Along with of course the real cause of the economic collapse which has yet to be investigated, the corruption on Wall St.

[rdking647]

46. corruption on wall street

wall street is dirty no doubt about it.. I have a way to clean it up but wall street has bought to many politicans for it to happen..
the bush tax cuts should go away.

but even without the bush tax cuts we would still have an unsustainable deficit.

[sabrina 1]

54. It isn't the deficit that is the problem. It is the corruption that

according to some of the country's most respected economists, disappeared 15% of this country's wealth over the past several years. Where did it go and why is no one looking for it?

In Iceland, eg and Ireland and soon to be other European countries, this question is not only being asked, but corrupt bankers are being prosecuted and there is an active effort to retrieve the money they stole.

There is no way the American people should be asked to pay the gambling debts of Wall St. I don't know why anyone is even considering it.

Start going after the thieves and we will at least find out where our money went and hopefully retrieve at least some of it.

[Dappleganger]

49. "Devil's advocate"

otherwise known around these parts as "trolling".

[rdking647]

9. taxes paid by the wealthy

the top 1% of taxpayers earned 23% of the total income in the country and paid 40% of the taxes

[Poiuyt]

13. Gee, I really feel bad for them

If a person makes $10,000 a year, at 10% rate, he'll pay $1000 in taxes and have $9000 left over to pay his or her bills. A person who makes $10mil a year will pay about $3mil a year and have $7mil left over. They shouldn't have too much trouble buying groceries.

You teabaggers can't see what is best for the greater good of this country.

[rdking647]

19. not a tea baggers

im as far from a tea bagger as you can get.. I just realize 2 things.

1. the effective tax rate paid by teh wealthy has remained fairly steady over time
2. except for the repeal of teh bush tax cuts (which I think should have happened) raising taxes above that level isnt going to happen. anyone that thinks its goign to happen is living in a fantasy world.
3. there are huge amounts of waste in current government spending. and the spending needs to be reduced drastically. there are many ways to reduce that heres how I would start

a. cut the military. we dont need to outspend teh rest of the world on defense. europe can defend itself. Id cut teh military budgetr by 1/3 to 1/2 for a savings of 200-300b
b entitlements. not sustainable at current leves. id do the following
raise the retirement age to 70. the fact is people are living longer
raise the cap on ss taxes to 250.000
these 2 would create solvency for ss into the forseable future.
c replace the current medicare system including the precription drug plan with a universal medicare for all americans. Id raise the medicare tax to pay for it.
d. "discresionary spending" Id cut some of the fat out of the budget. for instance NPR... while I admit its a good program its not something teh federal goverment should be financing. Its not governments job. same thing for most art programs.. its not teh job of government to fund the arts. Id also raise the rates we charge for mining and drilling on government land. id also sell off a lot of government land. the government doesnt need to own 70% of alaska. sell it to private owners and maintain an interest in the mineral rights.

[reformist2]

10. Exactly! We are not broke.

[Poiuyt]

14. I like your name for the current crisis!

[Poboy]

18. recommend!

[highplainsdem]

20. K&R

[Hannah Bell]

22. kr

[lonestarnot]

23. Not to mention the poor kids that are going to be without any and I do mean any education.

[kentuck]

28. kick

and rec

Welcome!

[eShirl]

29. Tax the filthy rich. eom

[rdking647]

34. raising taxes

how do you propose raising taxes. and politician that campaigns on raising taxes loses. period.

raising taxes but a lot even if its just on teh wealthy guarantees a GOP victory.

thats not to say taxes cant be raised at alll.

but state spending has far outaced revenue growth or inflation in recent years.
wisconsin spending is up over 20% between 2006 and 2009.thats in a time on low inflation. thats what needs to be rolled back

[closeupready]

37. Absolutely. From the states to the federal budget, that is the major problem.

nt

[Major Hogwash]

43. So true.

The rich get away without paying their fair share and the burden is put on the rest of us poor schmucks.

[Le Taz Hot]

61. Spelling Nazi Alert:

"2" does not equal "to."

:hide:

Other than that, loved the article and welcome to DU. :hi:

LTH