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  #1  
Old 03-01-2009, 12:47 AM
mgburg's Avatar
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Thumbs down ** Out of a sow's ear...er...ah...what purse? **

FEBRUARY 26, 2009

Printed in The Wall Street Journal, page A12



The 2% Illusion


Take everything they earn, and it still won't be enough.

President Obama has laid out the most ambitious and expensive domestic agenda since LBJ, and now all he has to do is figure out how to pay for it. On Tuesday, he left the impression that we need merely end "tax breaks for the wealthiest 2% of Americans," and he promised that households earning less than $250,000 won't see their taxes increased by "one single dime."

This is going to be some trick. Even the most basic inspection of the IRS income tax statistics shows that raising taxes on the salaries, dividends and capital gains of those making more than $250,000 can't possibly raise enough revenue to fund Mr. Obama's new spending ambitions.

Consider the IRS data for 2006, the most recent year that such tax data are available and a good year for the economy and "the wealthiest 2%." Roughly 3.8 million filers had adjusted gross incomes above $200,000 in 2006. (That's about 7% of all returns; the data aren't broken down at the $250,000 point.) These people paid about $522 billion in income taxes, or roughly 62% of all federal individual income receipts. The richest 1% -- about 1.65 million filers making above $388,806 -- paid some $408 billion, or 39.9% of all income tax revenues, while earning about 22% of all reported U.S. income.

Note that federal income taxes are already "progressive" with a 35% top marginal rate, and that Mr. Obama is (so far) proposing to raise it only to 39.6%, plus another two percentage points in hidden deduction phase-outs. He'd also raise capital gains and dividend rates, but those both yield far less revenue than the income tax. These combined increases won't come close to raising the hundreds of billions of dollars in revenue that Mr. Obama is going to need.

But let's not stop at a 42% top rate; as a thought experiment, let's go all the way. A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That's less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable "dime" of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.

Fast forward to this year (and 2010) when the Wall Street meltdown and recession are going to mean far few taxpayers earning more than $500,000. Profits are plunging, businesses are cutting or eliminating dividends, hedge funds are rolling up, and, most of all, capital nationwide is on strike. Raising taxes now will thus yield far less revenue than it would have in 2006.

Mr. Obama is of course counting on an economic recovery. And he's also assuming along with the new liberal economic consensus that taxes don't matter to growth or job creation. The truth, though, is that they do. Small- and medium-sized businesses are the nation's primary employers, and lower individual tax rates have induced thousands of them to shift from filing under the corporate tax system to the individual system, often as limited liability companies or Subchapter S corporations. The Tax Foundation calculates that merely restoring the higher, Clinton-era tax rates on the top two brackets would hit 45% to 55% of small-business income, depending on how inclusively "small business" is defined. These owners will find a way to declare less taxable income.

The bottom line is that Mr. Obama is selling the country on a 2% illusion. Unwinding the U.S. commitment in Iraq and allowing the Bush tax cuts to expire can't possibly pay for his agenda. Taxes on the not-so-rich will need to rise as well.

On that point, by the way, it's unclear why Mr. Obama thinks his climate-change scheme won't hit all Americans with higher taxes. Selling the right to emit greenhouse gases amounts to a steep new tax on most types of energy and, therefore, on all Americans who use energy. There's a reason that Charlie Rangel's Ways and Means panel, which writes tax law, is holding hearings this week on cap-and-trade regulation.

Mr. Obama is very good at portraying his agenda as nothing more than center-left pragmatism. But pragmatists don't ignore the data. And the reality is that the only way to pay for Mr. Obama's ambitions is to reach ever deeper into the pockets of the American middle class.

Printed in The Wall Street Journal, page A12

Copyright 2008 Dow Jones & Company, Inc. All Rights Reserved

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  #2  
Old 03-01-2009, 11:01 AM
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Quote:
Originally Posted by mgburg View Post
And the reality is that the only way to pay for Mr. Obama's ambitions is to reach ever deeper into the pockets of the American middle class.
A factually incorrect statement.

Mr. Obama clearly has shown that he has no problem saddling future generations with monumental debt, in similar manner to his predecessor, and without the propensity to reach into any middle class pocket.

I will note, with interest, that Mr. Burg never once mentioned the mountain of debt accumulated by GWB during his eight years in office. Going from $5T to $10T was no small accomplishment for Mr. Bush. I would have figured it was worth at least an honorable mention.
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  #3  
Old 03-01-2009, 11:08 AM
RichC's Avatar
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Jeeesh, this pious, prtisan bullshiest is just nauseating.

Arent you the same guy that railed a few months ago how amerikens should honor their president no matter what.
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  #4  
Old 03-01-2009, 11:36 AM
mgburg's Avatar
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Quote:
Originally Posted by Brian Carlton View Post
A factually incorrect statement.

Mr. Obama clearly has shown that he has no problem saddling future generations with monumental debt, in similar manner to his predecessor, and without the propensity to reach into any middle class pocket.

I will note, with interest, that Mr. Burg never once mentioned the mountain of debt accumulated by GWB during his eight years in office. Going from $5T to $10T was no small accomplishment for Mr. Bush. I would have figured it was worth at least an honorable mention.
We are talking about the current situation...if we want to go down the history lane, then we aren't talking about this scenario...but have at it...let's excuse the new debt because of the old debt, and the older debt and the debt before that debt...as a matter of fact...let's not call it debt at all. Let's just call it fairy dust...just sprinkle a little on every problem, and the problem will magically go away...

Throw in a lot of short-sighted blindness and we'll ignore everyone with two eyes and a real budget they have to take care of for themselves and their families, and we'll magically have no trickle-down debt infecting the middle-class, 'cause one person says it won't happen.

I feel so safe now...

I won't make over $250,000 dollars 'cause I don't want to be considered part of the EVIL GREEDY GUYS and if I manage to stay working for the next 34 years, I might still meet my goal of not needing Social Security as part of my retirement plan and I might still manage to stay out of a box on a city sewer-grate...

Oh, wait...I can't do that ANYMORE because of ALL THE DEBT that occurred before Mr. "O's" fairy dust...he came along too late to save me...

Yah...right...

How much further, and for how much longer, do we need to keep digging the black hole of the financial future?

Eh?
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'10 - Dakota SXT - Daily Ride / ≈ 172.5K
.'76 - 450SLC - 107.024.12 / < .89.20 K
..'77 - 280E - 123.033.12 / > 128.20 K
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.....'87 - G20 Sportvan / > 206.00 K
......'85 - 4WINNS 160 I.O. / 140hp
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  #5  
Old 03-01-2009, 03:57 PM
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Quote:
Originally Posted by mgburg View Post


Take everything they earn, and it still won't be enough.

President Obama has laid out the most ambitious and expensive domestic agenda since LBJ, and now all he has to do is figure out how to pay for it.
Nu uh. At least he put it up front, saved me the trouble of reading the rest.
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  #6  
Old 03-01-2009, 05:20 PM
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It is funny...By letting the (hated) Bush tax cuts expire and by actually trying to get rid of them a year early, your tax rates will go from
10, 15, 25, 28, 33, and 35 percent to
15, 28, 31, 36, and 39.6 percent.

Since it looks to me like ALL the rates will go up, how is that soaking the rich?
Looks like we will ALL be paying more with most of us (MB Shoppers) falling into the 31 or 36% brackets. I don't know about you, but I want my rate to stay where it is...

On top of this Obama wants to put an additional 2% on the top bracket bringing it up to almost 42%.

Now I am not rich by any means,, but even under Bush I was in the 33% bracket and had to pay AMT. I can't wait to see my rate go up 3%!

Not everyone here can live like certain people who write praising socialism and who live primarily via bartering things (which is actually very capitalistic ) MOST of us depend on actual money to survive...
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  #7  
Old 03-01-2009, 07:32 PM
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Quote:
Originally Posted by LUVMBDiesels View Post
It is funny...By letting the (hated) Bush tax cuts expire and by actually trying to get rid of them a year early, your tax rates will go from
10, 15, 25, 28, 33, and 35 percent to
15, 28, 31, 36, and 39.6 percent.
Now that you've spread your ill-informed disinformation, let's get back reality:

Originally published Saturday, February 28, 2009 at 12:00 AM
The Seattle Times Company

How your taxes would change — if Obama gets his way
President Obama wants to let the Bush-era tax cuts for the wealthy expire as well as limit itemized deductions for those in the highest...

Super-rich would be taxed most under Obama plan
President Obama wants to let the Bush-era tax cuts for the wealthy expire as well as limit itemized deductions for those in the highest income brackets.

If his wishes become law, the wealthiest Americans will lose the most and individuals with lower incomes will gain in many ways. Have an income in the $200,000-to-$400,000 range? You may not be affected as much as you fear.

The chart shown here outlines how Obama's proposals would affect typical individuals and families at various income levels. Figures are in dollars. Negative tax figures mean no federal income tax would be owed, and those taxpayers instead would receive refunds.

Status Children Income Taxes Change
Single 0 $35,000 3,000 — 400
Married 2 $35,000 4,100 — 1,200
Single 0 $50,000 6,000 — 400
Married 2 $50,000 4,440 — 800
Single 0 $150,000 26,200 — 400
Married 2* $150,000 15,500 — 6,800
Single 0 $300,000 73,500 +5,000
Married 2 $300,000 60,200 +1,100
Single 0 $500,000 140,700 +19,200
Married 2 $500,000 131,700 +11,300
* One child is in college
Source: Deloitte Tax LLP
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  #8  
Old 03-01-2009, 10:27 PM
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Originally Posted by tankdriver View Post
Nu uh. At least he put it up front, saved me the trouble of reading the rest.
And that's the point...if you and I were in a boxing ring...I'm not going to knock your block off your shoulders 'til I've either worn you out, "roped" you (the "dope") or I finally have you where you're just too lazy to fight anymore...then I'll hit you with the final shot...your taxes that you have to pay...or should I say...FEES?

If you're too "bothered" to read the rest, you deserve to pay every penny that you failed to protect from those that want to pick your pocket.

Simple truths are VERY hard to swallow...
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..'77 - 280E - 123.033.12 / > 128.20 K
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......'85 - 4WINNS 160 I.O. / 140hp
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  #9  
Old 03-02-2009, 05:43 PM
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Quote:
Originally Posted by Brian Carlton View Post
I will note, with interest, that Mr. Burg never once mentioned the mountain of debt accumulated by GWB during his eight years in office. Going from $5T to $10T was no small accomplishment for Mr. Bush. I would have figured it was worth at least an honorable mention.
I will note with interest that Mr. Carlton whined incessantly during the Bush administration about deficits. That same Mr. Carlton seems to be ok with them under Hussein.
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Old 03-02-2009, 06:13 PM
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Originally Posted by Chris Bell View Post
That same Mr. Carlton seems to be ok with them under Hussein.

That's an false assumption on your part. I made no statement regarding the deficit that Obama is accumulating. Nor would I make any positive statement in that regard. The debt was a huge problem that developed under GWB. The Republicans did nothing when they had the capability. The Democrats are continuing with business as usual.
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  #11  
Old 03-02-2009, 06:33 PM
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Originally Posted by Brian Carlton View Post
That's an false assumption on your part. I made no statement regarding the deficit that Obama is accumulating. Nor would I make any positive statement in that regard. The debt was a huge problem that developed under GWB. The Republicans did nothing when they had the capability. The Democrats are continuing with business as usual.
At least the Demo's are investing it in America, and not some lump of sand called Iraq. We got nothing in return for that expenditure except sand, bankruptcy and deaths.
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Last edited by 450slcguy; 03-02-2009 at 08:07 PM.
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  #12  
Old 03-02-2009, 07:15 PM
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Quote:
Originally Posted by mgburg View Post
And that's the point...if you and I were in a boxing ring...I'm not going to knock your block off your shoulders 'til I've either worn you out, "roped" you (the "dope") or I finally have you where you're just too lazy to fight anymore...then I'll hit you with the final shot...your taxes that you have to pay...or should I say...FEES?

If you're too "bothered" to read the rest, you deserve to pay every penny that you failed to protect from those that want to pick your pocket.

Simple truths are VERY hard to swallow...
The simple truth is Reagan didn't pay for his spending, Bush I didn't pay for his spending, and GWB didn't pay for his spending. Why does Obama have to start the new tradition of paying for his spending? Is this some kind of extra burden Democrat Presidents must assume?
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  #13  
Old 03-03-2009, 02:05 AM
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Originally Posted by Chris Bell View Post
I will note with interest that Mr. Carlton whined incessantly during the Bush administration about deficits. That same Mr. Carlton seems to be ok with them under Hussein.


Who is Hussein? Saddam Hussein is dead.


Or are you trying to recycle the right wing nut job Republicans' character assassination attempts against Barack Obama that was tried in the election last year, implying that he is some kind of Muslim, anti-American terrorist by calling him Hussein and not Barack Obama?



Your people's candidates LOST the election, GET OVER IT.
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  #14  
Old 03-03-2009, 06:12 AM
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The whole key is people working and earning money and spending it. Without that the tax rate is completely irrelavent.

During the Bush era more money went to the uber rich and less to ordinary folks (relatively speaking) until the ordinary folks did not have enough to spend on goods and services. The economy slowed and slowed.

The cheap credit fueled spending for a good while masking the underlying weakness in the basic economy.

Putting ordinary folks back to work and restoring their confidence in the entire American way of life is the only way to rejuvinate the economy. Rejuvinating the economy will increase government revenue.

Hopefully that will meet the debt service needs.

More tax cuts will not reassure anybody who is presently fearful of spending what little they have after meeting basic expenses.
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  #15  
Old 03-03-2009, 08:17 AM
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Quote:
Originally Posted by Jim B. View Post
... Your people's candidates LOST the election, GET OVER IT.
Ah, yes...the candidate for President lost...but the same party that's in control of Congress, that helped write these wrongs, is still in power and still leading the blind as if the Reps had EVERYTHING to do with the current crisis...and "they" still believe...even though the Reps are the minority...

Gotta' luv da' sheep...they're so soft and cuddly...

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M. G. Burg
'10 - Dakota SXT - Daily Ride / ≈ 172.5K
.'76 - 450SLC - 107.024.12 / < .89.20 K
..'77 - 280E - 123.033.12 / > 128.20 K
...'67 - El Camino - 283ci / > 207.00 K
....'75 - Yamaha - 650XS / < 21.00 K
.....'87 - G20 Sportvan / > 206.00 K
......'85 - 4WINNS 160 I.O. / 140hp
.......'74 - Honda CT70 / Real 125

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. . . . . . . . . . . . . . . . . . ~ Yogi Berra ~
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