Comparing the Candidates' Tax Plans

[Night Strike]

Eastern Europe's transition from command economies would actually be a good case study of how to go about enacting budget cuts. They all went about it different ways and I think there has been a decently significant amount of time to properly study it (there's a wealth of research into it already).

This is a good point.

But in the case of Nightstrike, the issue is that he doesn't see the need for a lot of things.

Excuse me? The blanket cuts would only be used if specific programs equal to that amount of money aren't cut.

[BigBallinStalin]

Across the board cuts (at the same rates) aren't the best way of reducing government expenditures, but what's a more practical (and actually implementable) standard of cutting?

Politicians who favor program A will want a proportional cut in other programs if their own program has to be cut. It's political compromise, which results in stupid consequences.

The most reasonable way to cut government is targeted cuts. "Do we need a ministry of silly walks? no. no we don't Let's cut that ministry" or even cutting specific programs within a certain ministry. That's more effective than having a bunch of under funded government agencies.

I understand what you're getting at that institutional entrenchment and bureaucracies will resist that. What's needed is sufficiently formidable political will ( I don't think this is present in the USA atm).

Exactly, which goes to the heart of this matter. But why do the politicians lack that will?

Because the government can continue borrowing on the cheap (10-year US treasury securites @ 1.83%). Imagine getting a student loan at that rate! Continued deficit spending becomes the "path of the least political resistance." Their incentive is to 'kick the can down the road,' and the political institution rewards such behavior (it becomes reinforcing).

And without specific and enforceable conditions set on borrowing this money, then not much will happen until something significant strongly changes their incentives. (lol @ the thought of having the government enforcing conditions on itself).

RE: bureaucracies
All bureaucracies can be labeled as underfunded because they adhere to the incentive which rewards their ability to overestimate their capabilities---"if only they were given more cash, they'd be able to perform better!" "The Bureau of Silly Walks provides valuable research which based on our economists' estimates will improve social welfare by 11.2% over the next 5 years. You can't cut our funding!"

There's also the consequence where if revenue is cut, one must become more efficient. That's how profit and loss incentives work, but with bureaucratic and political incentives, you won't get similar outcomes in efficiency. Nevertheless, it does induce them to become more efficient (e.g. Pentagon must do more will less, as in it can't fund unnecessary projects like the F-35, which of course was deemed necessary by the Pentagon.

Eastern Europe's transition from command economies would actually be a good case study of how to go about enacting budget cuts. They all went about it different ways and I think there has been a decently significant amount of time to properly study it (there's a wealth of research into it already).

Yeah, "development economics." The WB and the IMF churn out loads of data on this.

[BigBallinStalin]

Eastern Europe's transition from command economies would actually be a good case study of how to go about enacting budget cuts. They all went about it different ways and I think there has been a decently significant amount of time to properly study it (there's a wealth of research into it already).

Important point from development economics:

in order to implement changes, the governing body must have the right incentives which will reward them for behaving in a desirable manner. For example, if the IMF loans BrokeAssCommieLand (BACL) $10bn, there are conditions attached with the loan. So, BACL must adhere to the conditions or lose the incremental drip-drip-drips of cash from the loan.

Apply this to the first set of rounds in the Eurozone in cases like Greece and Spain, and it was no surprise that their governments stalled on the necessary cuts. They were going to get the money anyway. Whoops.

[thegreekdog]

I have another question for the gallery - Where are Democrats getting the idea that the Republicans' tax plan would be paid for by middle class tax hikes? Is there something in the plan that I missed?

According to Factcheck.org, he has not specifically said he would tax the middle class. The claim comes from the idea that he would either have to raise taxes on the middle class or raise the deficit, but there may be other options:

Here, from Fact check:

The ad also says that Romney’s plan “gives the wealthy huge new tax breaks.” Romney’s plan would keep the Bush-era tax cuts in place and cut the marginal income tax rates an additional 20 percent. It also would eliminate the estate tax. Upper-income taxpayers would benefit disproportionately from across-the-board rate cuts. They also would benefit solely from the elimination of the estate tax, which is imposed only on estates exceeding $5.1 million.

The TPC’s detailed calculations showed that — before any elimination or reduction of tax credits, deductions or exclusions — Romney’s plan would result in an average tax cut of $256,603 for those making $1 million a year or more who get a tax cut. But, we stress, that’s before any other changes in the tax code to offset the $4.8 trillion.

The $5 trillion question is how would Romney offset the tax revenue loss in order to make his plan revenue neutral? Romney hasn’t provided specifics — saying he will work with Congress on a plan to make up the lost revenue and insisting that the economy will grow enough to make up for the rest. Mitchell made a point of noting Romney’s lack of specifics in her fact-checking segment, as did we in our debate fact-checking article.

The ad offers voters a false dichotomy when it says Romney has only two choices: “raise taxes on the middle class or increase the deficit to pay for it.” There are other options. Romney, for example, could reduce the size of his tax plan, perhaps not cut tax rates so deeply. He could, too, keep his promise to cut low- and middle-income tax brackets 20 percent, but not upper-income brackets. He hasn’t suggested either option. But the point is that he has other options. And he has emphatically said, as he did in his acceptance speech, that he will not raise taxes on the middle class.

From my perspective, tbe fact that he has given so few details and its just one month until the election is worrisome. That combined with his clear plans to decrease the taxes of the wealthy seem to indicate he is making promises, but not necessarily going to stick by them. We need details.

I agree with most of this until your last paragraph.

Is it worrisome to you that the president has "given so few details [about his own tax plan] and its just one month until the election?" I bet not. REPOCRAT!

[Night Strike]

Is it worrisome to you that the president has "given so few details [about his own tax plan] and its just one month until the election?" I bet not. REPOCRAT!

Doubtful, because as soon as Obama said he would raise taxes on "the rich", she was settled on his tax plan being the best.

[thegreekdog]

Is it worrisome to you that the president has "given so few details [about his own tax plan] and its just one month until the election?" I bet not. REPOCRAT!

Doubtful, because as soon as Obama said he would raise taxes on "the rich", she was settled on his tax plan being the best.

Okay, but the Obama tax plan doesn't actually say that. It says he's going to close loopholes, which is the same generic and vague language used in the Romney tax plan. Which brings me back to my point.

Obama - I'm not going to cut (significant) spending or taxes.
Romney - I'm going to cut spending and taxes.

Obama - I'm going to pay for this by closing loopholes.
Romney - I'm going to pay for this by closing loopholes.

Media/Pundits/Democrats - Romney isn't giving details!
thegreekdog - Romney and Obama aren't giving details!

[Night Strike]

Is it worrisome to you that the president has "given so few details [about his own tax plan] and its just one month until the election?" I bet not. REPOCRAT!

Doubtful, because as soon as Obama said he would raise taxes on "the rich", she was settled on his tax plan being the best.

Okay, but the Obama tax plan doesn't actually say that. It says he's going to close loopholes, which is the same generic and vague language used in the Romney tax plan. Which brings me back to my point.

Well, he wants increase the top tax rate from 35% to 39.6% by failing to extend the current rates. Furthermore, he doesn't necessarily have to talk about raising more taxes because he already did so in Obamacare. Those increased taxes start in 2013 or 2014, so he's already accomplishing his goal of making "the rich" pay more.

[thegreekdog]

Is it worrisome to you that the president has "given so few details [about his own tax plan] and its just one month until the election?" I bet not. REPOCRAT!

Doubtful, because as soon as Obama said he would raise taxes on "the rich", she was settled on his tax plan being the best.

Okay, but the Obama tax plan doesn't actually say that. It says he's going to close loopholes, which is the same generic and vague language used in the Romney tax plan. Which brings me back to my point.

Well, he wants increase the top tax rate from 35% to 39.6% by failing to extend the current rates. Furthermore, he doesn't necessarily have to talk about raising more taxes because he already did so in Obamacare. Those increased taxes start in 2013 or 2014, so he's already accomplishing his goal of making "the rich" pay more.

It doesn't say that in his tax plan on his website (at least on the website itself).

[jimboston]

Hey can someone show me how to link this post to that thread from a few weeks ago asking people how often they admit error?

At the top of your post next to the author and timestamp, there is a red or white notebook page. Click that and it will give you the direct link to the post.

I wasn't really asking... I was being silly.

but thanks

[jimboston]

Exactly, which goes to the heart of this matter. But why do the politicians lack that will?

Because the government can continue borrowing on the cheap (10-year US treasury securites @ 1.83%).

Which is why the Tea Party wing of the Republican Party was against ANOTHER increase in the Debt Ceiling.

It WAS the right thing to do!

Now the Congress should get it's act together to put targetted cuts in place. The Fiscal Cliff we are approaching is bad... real bad... but continued increases in the debt Ceiling would also be bad.

[BigBallinStalin]

Exactly, which goes to the heart of this matter. But why do the politicians lack that will?

Because the government can continue borrowing on the cheap (10-year US treasury securites @ 1.83%).

Which is why the Tea Party wing of the Republican Party was against ANOTHER increase in the Debt Ceiling.

It WAS the right thing to do!

Now the Congress should get it's act together to put targetted cuts in place. The Fiscal Cliff we are approaching is bad... real bad... but continued increases in the debt Ceiling would also be bad.

The Fiscal Cliff will likely be slightly recessionary. The uncertainty over the past year from the unknown change in tax rates has had a stagnating effect on growth. If the president wanted to decrease this certainty, he could've easily pushed Congress into extending it or not--but of course, that may backfire as voters would realize what exactly Obama wants to do.

Obama in this sense is willing to let the economy stagnate in order to secure his election. Any Republican president would very likely do the same. The main point is that this is political incentives have consequences on millions of Americans, and that the negative effects of the uncertainty due to the fiscal cliff have been and are being felt for awhile.

[Night Strike]

Is it worrisome to you that the president has "given so few details [about his own tax plan] and its just one month until the election?" I bet not. REPOCRAT!

Doubtful, because as soon as Obama said he would raise taxes on "the rich", she was settled on his tax plan being the best.

Okay, but the Obama tax plan doesn't actually say that. It says he's going to close loopholes, which is the same generic and vague language used in the Romney tax plan. Which brings me back to my point.

Well, he wants increase the top tax rate from 35% to 39.6% by failing to extend the current rates. Furthermore, he doesn't necessarily have to talk about raising more taxes because he already did so in Obamacare. Those increased taxes start in 2013 or 2014, so he's already accomplishing his goal of making "the rich" pay more.

It doesn't say that in his tax plan on his website (at least on the website itself).

I'm guessing all it says is "fair share" while never defining what that means. However, the other things I mentioned are all currently written into the law so he doesn't have to campaign on them: he's already doing them.

[thegreekdog]

Night Strike, if I didn't know that you already get free premium, I would bet you a premium membership based on the following wagers:

If President Obama is reelected, there will not be a law that is signed by him that raises tax rates on capital gains.
If President Obama is reelected, he will sign a law that extends the Bush tax cuts for everyone.

[BigBallinStalin]

Bet him for a future premium.

[thegreekdog]

Bet him for a future premium.

He gets it for free as a member of Team CC. You, of all people, should know that. SNAP!

[BigBallinStalin]

Bet him for a future premium.

He gets it for free as a member of Team CC. You, of all people, should know that. SNAP!

Apparently, I keep forgetting.


Bet him a can of sardines.