weak Obama proposal

[Jim in CT]

Originally Posted by JohnnyD

If the interest deduction is the only reason they were able to afford a house then, they never should have bought one in the first place.

No different than buying a two-family. If you can only afford the two-family as long as the other unit is rented out then, you can't afford the house. I have a few friends in this latter category that got close to serious trouble because of an vacant unit.

The worst thing about removing the deduction is, it will send housing prices WAY down, because the same house will suddenly cost a couple hundred more each month. It would be horrible...

[Piscator]

Originally Posted by zimmy

By the way, if my family of 4 was making >$250,000 a year and wasn't living comfortably, that would be pathetic.

Living comfortably and wealthy are 2 very different things. I think most here would agree that a family with children making $250Kare living comfortably. They are very far from Wealthy though and should not be asked pay the tax burden.

The other thing to consider is cost of living. A family making 250K in Boston/New York/San Fran is not as “wealthy” as that same family in another area of the country where the cost of living is cheap. It’s all relative.

A family making 250K has to maximize contributions as much as they can to 401K’s, 529’s etc so they aren’t bringing home as much spendable $$ as most people would think. Making higher salaries incur much more cost than just taxes. Most families that make over 250K have both spouses working. That means less dependents to claim. That same duel family income typically has to pay for additional costs such as Childcare, commuting to work, etc etc as one spouse isn’t staying home. If they are near the 250K number they most likely are near the Alternative Minimum Tax as well which prevents many of the write offs that most others enjoy putting that family at an additional disadvantage. Higher wage earners working in the Corporate world pay higher premiums for benefits than lower wage earners in many cases. In both my company and by wife’s, your medical insurance rates increase the higher up the pay scale you go. You make more $$, you pay more for your healthcare to subsidize the rest of the company. Lots of hidden expenses that don’t appear on the surface.

This can often de- motivate a family from being productive. People on the edge of the $250K line might sometimes be better off if there were less productive and had one spouse stay home so they would not cross the line when it comes to taxes. It should be this way and if done in masses would hurt our economy.

Government has an unsustainable spending problem. The answer isn’t to raise taxes, it is to look at the root cause (spending) and fix it. People families should not be punished for being successful, they should pay a fair share in taxes, the question is what is fair?

[Jim in CT]

Originally Posted by zimmy

Democrats won't do the cuts and 'pubes won't raise taxes. Both things need to be done.

I'm not convinced we need to raise taxes. I say, get rid of the indefensible waste first, and if we see that's not enough, then raise taxes. But there is an enormous amount of waste begging to be cut. Tax hikes hsould be a last resort...

[mosholu]

I agree that we have to get really hard core regarding the amount of money that flows out of the government with no real benefit. Part of that is wrapped up in the tax system. Why have lower taxes for capital gains or carried interest it makes no sense when you have a deficit like ours.
As far as the mortgage deduction it will probably be phased out over time starting with second homes and mortgages over X amount and then there will be a drop dead date where it will not be available for any new home purchase.
One of the few things I liked about the President's remarks the other day was when he said everyone wants the deficit cut until it touches on of their perks. Until we get over that mentality I think this is going to be a slow painful process.

[Piscator]

Originally Posted by mosholu

I agree that we have to get really hard core regarding the amount of money that flows out of the government with no real benefit. Part of that is wrapped up in the tax system. Why have lower taxes for capital gains or carried interest it makes no sense when you have a deficit like ours.
As far as the mortgage deduction it will probably be phased out over time starting with second homes and mortgages over X amount and then there will be a drop dead date where it will not be available for any new home purchase.
One of the few things I liked about the President's remarks the other day was when he said everyone wants the deficit cut until it touches on of their perks. Until we get over that mentality I think this is going to be a slow painful process.

What "perks" does he mean? They can have mine. I'm saving for "non-Social Security" living know for when I get old. T

[zimmy]

Originally Posted by Jim in CT

I'm not convinced we need to raise taxes. I say, get rid of the indefensible waste first, and if we see that's not enough, then raise taxes. But there is an enormous amount of waste begging to be cut. Tax hikes hsould be a last resort...

Can you point out a relatively nonpartisan economist that thinks we can fix our debt problem at this point by cuts alone? I can't find it. I hear politicians say it, but that is mostly because they are looking to incite their voters. The #'s don't add up.

[PaulS]

Restore the Bush tax cuts and cut spending to balance the budget. I can do it. No one will be happy.

[Jim in CT]

Originally Posted by zimmy

Can you point out a relatively nonpartisan economist that thinks we can fix our debt problem at this point by cuts alone? I can't find it. I hear politicians say it, but that is mostly because they are looking to incite their voters. The #'s don't add up.

That's a fair question, and the answer is "no", I haven't heard any leading economists say that. But I have heard conservative legislators say it, and I also trust my own common sense.

I see a small iota of that waste every day, and so does everyone else who has eyes. The entire stimulus bill ($800B) was essentially useless pork...it's not like lots of new highways or bridges went up.

Tax revenue in this lousy economy, I believe is around $1.5 trillion. The federal budget in 2000 was around $1.5 trillion. In other words, to balance the budget, we need to get spending back to what we spent in 2000.

Can that be done? Certainly. Get rid of wasteful defense programs, Medicare fraud, start cutting services to all the illegals. Reform the tax code so that EVERYONE pays SOMETHING. I think 35% of citizens pay $0 federal income taxes? The folks at the top of that range can pony up a little, they use the roads too, and they rely on the military. It won't be easy, but I am positive we can do it without raising taxes.

The homeowners deduction will not be eliminated while the GOP controls the House. They won't let it happen. Even if they had to filibuster it, they would do it.

I can't believe Obama is even considering that. He's amazing, he cannot even get one right by accident.

[UserRemoved]

I have a family of 4 and made less than 1/5 that last year.

Johnny D it's not any reason to buy a house unless you look at what you would be paying a landlord and losing all your money forever vs paying a mortgage company for the rest of your life that is being subsidized by the us govt. It would raise the cost of living in a home too much for many because of higher taxes.

The system is effin broken. Whether it's health care, home ownership, insurance, whatever.

We're #^&#^&#^&#^&ed no matter what.

[Jim in CT]

Originally Posted by PaulS

Restore the Bush tax cuts and cut spending to balance the budget. I can do it. No one will be happy.

Lots and lots and lots of people would be happy. Everyone killing themselves to make ends meet would be happy. Freeloaders wouldn't be happy. Those abusing the system wouldn't be happy.

I don't believe we have to make masive cuts, I just think we have to eliminate the stupidity. Consider a local example. I have said this before, and I'll say it again. Public unionized employees have absolutely no right collecting pensions while the rest of us live with 401(k)s. Here in CT, a whole lot of state and local debt would go away if we demanded that public servents be compensated in a way that doesn't dwarf what's available to those they claim to serve. Cops retiring at age 45 with masive pensions? We simply cannot have that anymore.

I believe those cuts would do it. But the liberals won't go against their constituency.

the other problem with hitting filers that make over $250k is that a lot of small businesses file that way. This is no time to increase taxes on small businesses, but liberals think that's free money to them.

[mosholu]

For the sake of discussion at what point should higher rates kick in if not 250k. If it is not 250 should it be 300 or 500? I personally find it offensive that the tax rates stop increasing at a certain point. I have read a lot of articles that point to the higher concentration of wealth in the top 1% of the country. I think that it is only fair that these people have a higher rate of tax as their income goes higher especially given the crisis we are facing.

[zimmy]

Originally Posted by mosholu

For the sake of discussion at what point should higher rates kick in if not 250k. If it is not 250 should it be 300 or 500? I personally find it offensive that the tax rates stop increasing at a certain point. I have read a lot of articles that point to the higher concentration of wealth in the top 1% of the country. I think that it is only fair that these people have a higher rate of tax as their income goes higher especially given the crisis we are facing.

I would be in favor of a higher starting point than 250000 since it really isn't that much many places. 350,000 would be my vote, but again I would defer to economists who know a heck of alot more about what drives the economy.

[spence]

Originally Posted by RIJIMMY

get your facts straight. the bi-partisan commission called for LOWER tax brackets across the board AND removing the major deductions FOR ALL. So revenues would increase overall. But it wasnt just the top earners bearing the ENTIRE burden

You should really read the plan. From Section II of

http://www.fiscalcommission.gov/site...h12_1_2010.pdf

Maintain or increase progressivity of the tax code. Though reducing the deficit will require shared sacrifice, those of us who are best off will need to contribute the most. Tax reform must continue to protect those who are most vulnerable, and eliminate tax loopholes favoring those who need help least.

-spence

[spence]

Originally Posted by Piscator

Define wealthy.............................

a familiy with young kids making $250K a year isn't wealthy..........they may not be hurting, but they are not wealthy. Toss in the alternative minimum tax scam and they can't write anything off.

Ethical implications?? It's not ethical to make the few pay for the many.

The earlier Obama plan didn't really kick the hurt until your income was 500K or above. Unless you live a pretty excellent life this would be considered wealthy by most people.

-spence

[JohnnyD]

Originally Posted by fishbones

I don't think that's the only reason many people can afford the house, but it's a significant amount of money that usually goes back into the economy. In my case, we spend our tax refund money on a vacation and other non-essential things. If our refund is much smaller because of that deduction, we won't be spending as much. If others do the same thing, it's only going to hurt the economy.

Effect on the economy wasn't my point. My point was with regards to the extremely poor financial decisions a huge portion of the country makes. If Salty is right in saying that people will have to sell their homes without the deduction, then it is just another example of John Q. Public making poor decisions with his money and playing his small (as minuscule as it is) role in hurting the economy. The sad part is that I know at least a handful of people facing this exact situation.

People should not be buying houses without 6 months worth of bills saved up and a surplus of income each month. Strict? Yup. Means many people wouldn't be living in a home right now? Yup. But it's the responsible decision.

Originally Posted by Jim in CT

The worst thing about removing the deduction is, it will send housing prices WAY down, because the same house will suddenly cost a couple hundred more each month. It would be horrible...

Absolutely. An already battered market would crash even harder. The government subsidizes everyone's house so you're paying for it either way.

Originally Posted by Saltys

Johnny D it's not any reason to buy a house unless you look at what you would be paying a landlord and losing all your money forever vs paying a mortgage company for the rest of your life that is being subsidized by the us govt. It would raise the cost of living in a home too much for many because of higher taxes.

I'm guessing by the above that you believe home ownership is a good investment. I disagree and see it as a luxury purchase. Even with prices as low as they are right now, I think home ownership is a poor investment in most cases - assuming you purchase a home at market-value that is in good condition and doesn't require any major repairs.

In my area, you can rent a house for almost the same price as the mortgage would be for a similar house. However as a renter: no property taxes, costly repairs are covered by the owner, no maintenance costs, etc. Obviously there are downsides as well: don't own the home, terms to using the property, a lease, asking permission to change use of the land.

I read this article a few years ago and, granted, it's from before the economy blew up. I still think many of the points are very applicable today.
Renting vs. Buying: The Realities of Home-Ownership

Everyone, please keep in mind that all of the above is on a personal, case-by-case basis. It's not about what's best for the overall economy, but about individuals owning homes in general. I'm sure Jim in CT will dig up something I didn't think of though.

[Jim in CT]

Originally Posted by mosholu

For the sake of discussion at what point should higher rates kick in if not 250k. If it is not 250 should it be 300 or 500? I personally find it offensive that the tax rates stop increasing at a certain point. I have read a lot of articles that point to the higher concentration of wealth in the top 1% of the country. I think that it is only fair that these people have a higher rate of tax as their income goes higher especially given the crisis we are facing.

The top 1% of Americans pay about 38% of the federal taxes. The share they pay is higher than it was 15 years ago. To me, that's pretty damn progressive.

I agree no one needs a billion dollars. But if someone has the ability to earn it and does, how much of that should be confiscated by taxes? How much of someone else's pile do you feel entitled to?

Here in CT, those at the top pay 35% in federal income tax, and 6+% in state income tax. That's 41% of their earnings that they hand over. That seems like a whole lot to me.

As I said, let's restore some sanity to the spending levels, and see where that gets us. If we can't eliminate the deficit with reasonable cuts, then yes we have to raise taxes, and common sense says you start with the billionaires. But you have to cut spending as much as you can, before you take more of someone else's money.

How do you raise taxes on working folks so that cops can keep retiring in their 40's? Anyone want to try explaining that to me?

[UserRemoved]

IRS Paid $513M In Undeserved Homebuyer Tax Credits - Politics News Story - WCVB Boston

[Chesapeake Bill]

Jim, You said, "...those at the top pay 35% in federal income tax, and 6+% in state income tax. That's 41% of their earnings that they hand over. That seems like a whole lot to me." That's a good point.

Don't forget that they probably also hit the AMT so the 35% is on the first dollar earned (that is, the entire amount with no deductions). That adds to the total tax burden.

Home ownership meant something before the Supreme Court (particularly Justice Souter) ruled in favor of imminent domain and destroyed the concept af ownership.

[spence]

Sometimes, I find it amusing when people talk about who's paying taxes without mentioning who's making money.

-spence

[Jim in CT]

Originally Posted by spence

Sometimes, I find it amusing when people talk about who's paying taxes without mentioning who's making money.

-spence

Spence, no one denies that the wealthy are, by definition, wealthy because they have more money than people who are not wealthy. So don't pat yourself on the back for what you thought was a GOTCHA! comment.

The fact is, 1% of the population provides 38% of the federal income tax revenue. So, just how much of Bill Gates; money do you feel entitled to? How much of Bill Gates' money should cops get to confiscate, so that they can retire at age 42? Can you answer that?

[mosholu]

I think we all can agree that the pension system for many municipal employees needs to be changes on a going forward basis. People should not be able to retire after 20 years and collect a pension for the rest of their lives. Based upon what I have read on this board this is agreed. While the top earners may pay 38% I think you have to look at how much their income has increased over the last 20 years to put this in the proper context. At the end of this post I will put a link to an article citing how much the upper strata of income has gained over the last few years. The American citizens have bailed out the financiers and indirectly the hedge funds and allowed them to continue to make massive amounts of money. It is only fair and equitable that they pony up and contribute to bringing our country back to stability.

Who Rules America: Wealth, Income, and Power

[Jim in CT]

Originally Posted by mosholu

I think we all can agree that the pension system for many municipal employees needs to be changes on a going forward basis. People should not be able to retire after 20 years and collect a pension for the rest of their lives. Based upon what I have read on this board this is agreed. While the top earners may pay 38% I think you have to look at how much their income has increased over the last 20 years to put this in the proper context. At the end of this post I will put a link to an article citing how much the upper strata of income has gained over the last few years. The American citizens have bailed out the financiers and indirectly the hedge funds and allowed them to continue to make massive amounts of money. It is only fair and equitable that they pony up and contribute to bringing our country back to stability.

Who Rules America: Wealth, Income, and Power

Mosholu, the rich will always increase their wealth faster than the rest of us. That's the way the math works, because they have more disposable income to invest and grow.

To me, the answer is, if you want what they have, then do what they did to get it. But I don't see any right I have to make a claim to someone else's pile.

We bailed out some of these folks with TARP, and many conservatives were adamantly opposed to that, myself included. Bad businesses should be allowed to fail.

[scottw]

Originally Posted by mosholu

I think we all can agree that the pension system for many municipal employees needs to be changes on a going forward basis. People should not be able to retire after 20 years and collect a pension for the rest of their lives. Based upon what I have read on this board this is agreed. While the top earners may pay 38% I think you have to look at how much their income has increased over the last 20 years to put this in the proper context. At the end of this post I will put a link to an article citing how much the upper strata of income has gained over the last few years. The American citizens have bailed out the financiers and indirectly the hedge funds and allowed them to continue to make massive amounts of money. It is only fair and equitable that they pony up and contribute to bringing our country back to stability.

Who Rules America: Wealth, Income, and Power

lotta interesting stuff at that link...


As the very phrase "power structure" suggests, it is not easy to change power arrangements, even in a country where people have won freedom of speech and the right to vote. To start with, it is necessary to understand the intricacies of a power structure and how it was constructed in order to change it -- that's where the power structure research discussed in other parts of this site comes in. The following articles include analysis of the successes and failures of social change movements in the U.S. as well as advice for progressive activists on how to move forward.

What Social Science Can Tell Us About Social Change
It's necessary to know what works and doesn't work, and what role activists can play. So the centerpiece of this section describes what can be learned from the social sciences about creating greater equality.

The Left and the Right In Thinking, Personality, and Politics
This is an essay based on research in psychology and social psychology that brings together ideas and findings that may shed some light on the differences between leftists and rightists.

Stop Blaming the Media!
Activists spend an enormous amount of time worrying about, dissecting, and criticizing the media as a major source of their problems, but this document suggestions that the media are not that influential and can, in fact, be used constructively by activists on many occasions.

Bridging the Gap Between Liberals and Leftists: Where Douglas S. Massey's New Liberal Vision Falls Short
Massey claims that many centrist Americans will vote for candidates who stand up for their liberal principles, but I don't think they'll be willing to bet on a divided and contentious set of liberals and leftists who cannot develop new strategies to work together in the face of their ongoing failures in bringing about greater equality and access to markets. Liberals cannot do it alone, and leftists have to refocus their energies.

Introducing Social Change to Future Elites
Social change may require change-oriented elites on the inside as well as activists on the outside. Social psychologist Richard L. Zweigenhaft -- with whom I have co-authored several books -- explains this point in a wonderful talk he gave at an elite private school in 2006. He then follows up with a paper originally published in Radical Teacher in 2009.
.......................


we could...just for giggles...confiscate all of the wealth of the top earners at whatever level you determine will make you feel good and then proceed to run the government for a few months, barely put a dent in the debt and deficit and point fingers and scoff at the formerly wealthy as they writhe in misery and allow the Obama types prove that they are the "ONES" that truly know how to run and manage a fair and equitable society with massive expanding social programs and noone to fund them or create wealth and jobs...
Atlas Shrugged

ooooooh...we can turn all of their mansions and vacation homes into affordable housing apartments and homeless housing...not sure who will pay the property taxes though...oh, well, I'm sure the towns and cities can get by without the money

[mosholu]

Originally Posted by Jim in CT

But I don't see any right I have to make a claim to someone else's pile.

Unless they work for the state, of course!

[Jim in CT]

Originally Posted by mosholu

Unless they work for the state, of course!

I never said I wanted to take something away from anyone who works for the state...I want those people to take less from me. That's not even remotely the same as me saying I want to take what's theirs, is it???

[UserRemoved]

Super rich see federal taxes drop dramatically - Yahoo! News

:deadh orse:

[buckman]

S&P just lowered the US rating to "negative". This is the big boys hitting Obama over the head.

[likwid]

Originally Posted by buckman

S&P just lowered the US rating to "negative". This is the big boys hitting Obama over the head.

Obama?
Try the entire government, including the GOP.

And to be clear (where's the fun in that?) they changed the OUTLOOK, not the rating from stable to negative, meaning the OUTLOOK is for us to drop from AAA/A-1+.

Which means, not much.

Because the U.S. has, relative to its 'AAA' peers, what we consider to be
very large budget deficits and rising government indebtedness and the
path to addressing these is not clear to us, we have revised our outlook
on the long-term rating to negative from stable.

Basically, fix the budget, fix the outlook.