Comments for TaxVox

Comment on A New Urban Institute Calculator Shows What Taxes and Transfers Mean for Low-Income Families by That sure looks like a disincentive to me. « Roth & Company, P.C

That sure looks like a disincentive to me. « Roth & Company, P.C — Fri, 25 May 2012 13:49:02 +0000

[...] links to “A New Urban Institute Calculator Shows What Taxes and Transfers Mean for Low-Income Families” that illustrates the problem that Linda Beale waves away: A single parent in Connecticut [...]

Comment on Capital Gains Taxes Are Going Up by alex

alex — Thu, 24 May 2012 23:28:50 +0000

We’ve all be hearing about the facebook ipo and how the new millionaires are
faced with only a 15% capital gains tax, but isn’t it a fact that they will
actually pay 15% federal tax and 10-12% additional tax to the state of
california, in other words almost 25-27% total tax on their capital gains?
Why does the media always refer to a 15% tax….????

Comment on How a Delay in the Debt Limit Will Change America’s Fiscal Politics by Michael Bindner

Michael Bindner — Thu, 24 May 2012 19:43:49 +0000

One reason that the debt limit won’t be breached so fast is that many people are likely cashing out their capital gains before rates go up, either automatically or due to compromise. That increased revenue should be good for a few months of lower borrowing.

Comment on How a Delay in the Debt Limit Will Change America’s Fiscal Politics by Michael Bindner

Michael Bindner — Thu, 24 May 2012 19:38:21 +0000

Tax increases are automatic and will occur before Romney is sworn in, especially if the Democrats retain the Senate or take the House, which removes unilateral tax cut extensions under Reconciliation from the mix. That prospect makes compromise very possible once primary season is over and the Tea Party can no longer threaten any incumbent member with a challenge from the right. The prospect that the Republicans won’t run the table means that getting some kind of compromise on tax policy must come before the election. The GOP faces the classic existential confict between admitting their is a possibility that they will lose in November (something authoritarians hate to admit) and putting their donors at risk of a major tax increase (the wealthy have far more to lose from the expiration of the 2001/2003/2010 tax cuts than the lowest quintile (which stands to lose $10 a week according to TPC). I predict the donors will win the debate. The fact that the Speaker is saying he will default the debt is a sign he is about to cave. He always talks tough before compromising.

Comment on The Boehner/Obama Fiscal Brawl by AMTbuff

AMTbuff — Thu, 24 May 2012 17:10:50 +0000

The context for all of this, of course, is the coming fiscal train wreck. Sometime in late 2012 or early 2013, the U.S. will reach its legal borrowing limit

No, the fiscal train wreck will occur when the bond market will no
longer lend money to the US Treasury at any reasonable interest rate. Extending the borrowing limit without fundamental change to the long-term imbalance between spending promises and revenues does not postpone the real fiscal train wreck; it brings it closer. Any show demonstration of serious intent to attack the long-term fiscal imbalance will reassure the bond market even if, and possibly especially if, that demonstration involves temporary cessation of borrowing.

I don’t see how blithely raising the debt limit and putting unsustainable spending and current tax policy on autopilot will convince the bond market of anything but our complete lack of intent to repay the money we are borrowing.

Comment on California’s Budget Crisis: Part XII by AMTbuff

AMTbuff — Thu, 24 May 2012 17:06:07 +0000

In 1994 California’s voters overwhelmingly passed Proposition 187 to end state spending on illegal immigrants. Federal judges overruled millions of voters. Governor Davis, a Democrat, refused to defend California’s voters and taxpayers in court.

This anti-democratic action made bankruptcy inevitable for California. Had Proposition 187 been enforced, California would be in no worse financial condition than many other states. Health care spending on poor illegal immigrants is the budget buster.

Comment on A Path Forward on Tax Reform by AMTbuff

AMTbuff — Thu, 24 May 2012 16:27:38 +0000

Correct. We need agreement on a spending limit and also on the policy changes that will ensure spending remains below the limit. Without major policy changes any spending limit will be breached. It would be like promising to lose 20 pounds without changing your eating habits.

Comment on A Path Forward on Tax Reform by Tax Roundup, 5/24/2012 « Roth & Company, P.C

Tax Roundup, 5/24/2012 « Roth & Company, P.C — Thu, 24 May 2012 13:46:49 +0000

[...] A Path Forward on Tax Reform. We’ll go down that path when there are no others [...]

Comment on A Path Forward on Tax Reform by Vivian Darkbloom

Vivian Darkbloom — Wed, 23 May 2012 20:10:36 +0000

There is something missing in Holz-Eakin’s roadmap—and in Gleckman’s response to it. Before we get to that, I’ve got an issue with the nomenclature. The discussion here is about “tax reform”. That term seems to be mis-used here. Most dictionaries would define “reform” as an “improvement”. But, very little, if anything, discussed in these steps has to do with improving the tax code (although I agree step 4 might contribute to such an improvement). The discussion, rather, is on how we can agree to merely change it—presumably to raise additional revenues? Change for the sake of change cannot be said to be an “improvement” and therefore would not constitute a “reform”, at least in my lexicon. I don’t know what criteria, if any, are used to annoint a tax bill with the name “Tax Reform Bill”; however, if you look at the history of the Code, very few bills are called that. That would be an interesting topic for discussion…

What is missing from these steps is any agreement on the level of spending that will accompany those “tax reforms”. Associated with that is any agreement on the level of federal deficit that is considered to be acceptable, much less sustainable. It strikes me that an agreement to target tax receipts at x percent of GDP is not necessarily going to ensure any agreement unless we also have an agreement to limit spending to y percent of GDP. The two are inextricably bound.

Comment on A Path Forward on Tax Reform by Kevin

Kevin — Wed, 23 May 2012 14:35:46 +0000

Very well said Howard. The main problem is the frame of the debate. Instead of arguing over the relevant policy (what should the overall level of taxation be), all of the debate focuses on the change in marginal taxation with respect to some arbitrary baseline. To me the debate seems to be taking place in reverse of what it should. Congress is trying to decide on marginal rates (btw who is to say that either the Bush levels or the Clinton levels are correct) and then is content to let the overall level of taxation be what it may. Rather, they should be deciding what the overall level of taxation should be, and then figure out what rates will get us there.

So the relevant question becomes, how do you reframe the debate in the manner suggested by Howard and Doug? I’m not holding my breath waiting for it to happen…