I’m with Dan, unfortunately. We can’t have our cake and eat it too. If we can’t curb spending, we need to raise the revenue to pay for it.

As a side note: after returning to the US following many years spent living in Europe, I’ve been amazed at how lightly we Americans get off, tax-wise.

Of course I vote to raise taxes. Especially on those making more than a million a year. I think that will require drastic changes to our income tax system, which I am all for.

Spending is a major issue, too. My feeling is that the “defense industry” has a not-at-all hidden agenda to keep America at war, expand military spending, and not to be terribly efficient at it. I think the privatization of military services alone is a huge monetary boondogle, and I can’t think for the life of me how the American government was snookered into contracting out all sorts of services to companies that make huge profits doing what the military could do itself. Unfortunately, I also think defense is among the last places politicians will have the appetite to look for cuts. I think Secretary Gates’ has been refreshingly honest about defense waste, but I think he was only on the tip of the iceberg there.

Happy Memorial day!

Also, there are so clearly some easy tweaks that everyone can endorse in medicare, which needs changes. I just can’t see how raising the retirement age is controversial. It makes perfect sense that raising it a year per decade over the next 50 years will not catch anyone by surprise. That adjustment makes so much sense. That commission came up with a bunch of ideas I hope people will jump on.

I find McConnell a terribly unappealing politician. At least PRETEND you are taking a principled stand and not just being obstinate to increase your own personal power!

The tax and spending discussion missing the most critical point: We must boost economic growth or our nation will suffer in the future.

To reduce unemployment, we need more jobs.

To reduce the deficit, we need more tax revenue.

To pay for our future entitlement burden, the economy must get bigger.

To out-China and India and other fast growing nations, we must pick up the pace.

To provide our children opportunity, we must expand economic opportunity.

Creating economic growth must be our national priority — not health care or even deficit reduction. Every government action needs to be evaluated whether it increases or decreases economic activity.

My suggestions:

* Our tax burden on corporations is bizarre. We have one of the highest corporate tax burdens in the world, only matched by Japan. Today, US companies are holding over $2 trillion in cash, much earned overseas. They are reluctant to bring it back to the U.S. because of our high corporate tax rates. We need to reduce rates dramatically to boost investment in the U.S.

* Some above are urging the raising of tax rates on the rich. Big mistake. That will encourage folks to find tax shelters, stop investing, etc. — reducing our economic growth. Instead, we need to dramatically simplify our tax system, lower rates — but broaden which activities taxes are applied to.

* Immigration policy — our current approach is backwards. Our current policy focuses on re-uniting families. And, we are consumed by enforcement issues. Instead, we should do what Canada and Australia do — encourage folks that have education, money and entrepreneurial energy to move/stay in the U.S. Basically we should boost certain kinds of immigration. We want the Indian doctor, the Brazil businessman and the Chinese scientist to come to our country. We educate many foreign students and than drive them out of our country. Big mistake.

* Our budget issues are multi-fold. First, we spend much on those who are unemployed and poor. Higher economic growth will reduce those costs. Social security, Medicare and Medicaid must see their costs curbed (If not the Ryan plan than some other alternative that caps future costs). Defense and discretionary spending should take their share but they really are the big contributors. Spending control with economic growth can lead to balanced budgets.

* We need to focus on regulatory burdens. Many think government needs to regulate this or that. But, the real impact of regulation is that it discourages businesses from getting started and expanding. Cap & trade, health care, etc. may all have some validity. But, in the current environment, additional burdens are a mistake. Instead, we should be eliminating current burdens.

My bottom line is that our nation’s focus should shift to boosting growth. Nothing else should shift the attention.

Raise taxes.

You realize of course that when the GOP is screaming about lowering taxes, they aren’t talking about lowering the taxes for you and Bill in any noticeable way? They’re talking about lowering the taxes on people that contribute thousands of dollars to political campaigns.

And it isn’t as simple as a little government shutdown if the debt ceiling isn’t raised. It will be a lot worse than you not being able to renew your drivers license. It could mean our creditors charging higher interest, reduce the value of 401ks and investments, and destroy any progress that has been made with the economy. It’s a big deal.

#5 Peter, it doesn’t FEEL like too little. It feels like we personally pay a huge tax bill.

What about total tax reform and the flat tax? Would the flat tax bring in more revenue?

I like what Steve and Devyn and Tom have to say.

Just curious, how many of you who said to raise taxes are Democrats? I’m a Republican (not terribly dedicated, but still…)And I assume Steve, Devyn, and Tom are, too. Am I right? If so, interesting how opinions come down on party lines.

A flat tax is simpler but just saying “flat tax” doesn’t mean anything. You still have to decide at which point the flat tax will be, 10%? 20%? 30%?, and whether to allow any deductions, etc., and until you decide those things it’s impossible to say if it’s a revenue enhancer or not. The flat tax also has approximately zero chance of being implemented, especially any time soon, so it’s really not worth talking about.

Those saying “raise taxes” really haven’t decided anything either. You can’t get out of a recession by raising taxes, so you need to decide whether you want economic growth or not. A delayed recovery or more recession will mean Obama will almost certainly lose in 2012. Is that what you want?

Also, an across the board tax increase isn’t going to pass, so what taxes do you propose raising? It’s much more likely that you could pass a proposal to eliminate certain deductions and credits, along with eliminating or delaying certain entitlements. But it still probably isn’t enough to impact the deficit without a significant increase in economic growth. Growth changes everything, so the emphasis should probably be on creating economic growth rather than just trying to eliminate the deficit with checkbook balancing tactics like raising taxes.

That’s because people in the west are descended from people who moved west partly to get out of paying taxes.

Only US economic growth can produce the types of revenue streams that are needed to right our fiscal outlook. Raising taxes won’t get us there. Not even close. Only growth will. A 4% growth rate would do it. I don’t anticipate a 4% growth rate anytime soon so I don’t see an end to our economic problems for a few more years.

“. , think it’s impossible that one party has the best candidates for every single office during any election season.
I agree.

Good point, ESO. Anybody out here that I’ve talked to about this is sick of taxes going up and up. Well, except the ones who don’t pay taxes.

A lot of what’s been said is totally over my head. But the points about economic growth did catch my attention. I didn’t watch the whole Meet the Press yesterday, but this wasn’t brought up when I did watch. How would this be done? You’re talking about GDP?

How can the government achieve this?

There’s a lot of disagreement on how to achieve economic growth, but one thing’s for sure: raising taxes doesn’t help. We better get out of the recession before we start raising taxes much.

One of the odd things is that we think of George W. Bush as a tax cutter, but not Barack Obama. Under President Obama, though, not only were the Bush tax cuts continued, but he reduced OASDI employee withholding from 6.2% to 4.2%, and he pushed through the $400 Making Work Pay Credit reduction in federal income tax.

Go to page 5 of this link and look at Summary Figure 1. It shows revenues and expenditures as a percentage of GDP since 1971 and compares each year to the average over that time period. Looking at 2011, you see that revenues are lower than at any time since 1971 and spending is higher than at any time since 1971. (OK, except for 2009. Actually, you could go all the way back to the end of WWII and the story would be the same.) So the answer to the question “Which is it?” is “both.”

You will also see in the linked graph that if there are no changes to the tax law, revenues will increase dramatically by 2014. That is because the Bush tax cuts are (once again) scheduled to expire at the end of 2012. All by itself, that will bring revenues into line with where spending has been over the last 40 years. And, of course, this will destroy the economy just like the Clinton tax rates destroyed the economy in the 1990s! Oh, wait… that was when the economy was booming and we actually balanced the budget.

As for spending, however, it is not going to automatically revert to its 40-year average–we are going to have to deliberately cut it. And those cuts are going to have to come largely from Medicare. (Why not cut foreign aid instead, you ask? Well, there are lots of good reasons, but fundamentally, you could eliminate foreign aid, redraw the linked graph, and not be able to discern any difference. There just isn’t enough of it to matter.) Ryan’s idea of premium support for Medicare is actually not a bad one, but he screwed up by proposing what has become known as “totally inadequate premium support,” and now the whole concept has been discredited. That is unfortunate (even Bill Clinton agrees), because we really have no clue how to get Medicare spending under control otherwise.

There’s a lot of disagreement on how to achieve economic growth, but one thing’s for sure: raising taxes doesn’t help.

Neither does cutting spending. So I guess to answer the original question: neither.

Last lemming, thank you, that’s helpful to me.

Jjohnson, I’m uncomfortable with talks about $$ so my conversations with friends have been met with responses like “I know, it seems like we’re paying more, too!” Or “I’m getting back thousands more than I paid.”

Pretty much those two extremes.

I’ll take a look at out tax records and see if I can figure out percentages and get back to you. We are making less money, even with two incomes, but that’s due to the economy and Bill’s chosen profession of GM sales.

annegb,

I can assure you that nobody is looking to raise your taxes. At least not at a federal or state level. Property taxes are another issue. The real debate is what the rate should be on people that make over $250k a year. No offense, but I’m guessing you’re not in that category.

Well, it looks above like MAC might think you personally need to pay more, but sane policy makers don’t.

a random john —

We did have higher growth after WWII with high rates. But, that was triggered by the post-War rebuilding and suppressed demand in the U.S.

Also, higher rates were often offset by loopholes that allowed folks to poor money into other areas.

The best test of high rates has been Europe. Most of those countries have fairly hefty marginal rates. And, the overall track record has been relatively moderate growth and, often, near zero job growth.

Ironically, the best test of low rates today is China. Their total tax burden is between 10-11% of GDP, almost half the U.S. rate. They are seeing higher levels of economic growth and a dramatic burst of entrepreneurial activity. Of note, their corporate tax rates are low.

The main purpose of the ‘tax THEM more’ talk is to distract and divide. Here in MA on the state return form is a line offering you to voluntary be taxed at a higher rate. Of course no one participates! A true believer would willingly offer more of his own resources without coercion. Shut up and put up, stay out of my pocket. I wish to share my wealth in an efficent manner. To those with whom I discuss this I tell them that obviously they can and should give more, independent of what I do.

John,

The prosperity of the 1990s was caused by the tax cuts of the era, not the tax increases.

The tax increases of 1993 are remembered but the tax cuts under the new GOP Congress were critical . . cutting capital gains from 28% to 20%, eliminating capital gains on most home sales, 4500 per child tax cut, reducing estate taxes, creating Roth IRAs & education IRAs, etc.

I agree with Steve. You can’t argue that the tax increases in the 90s are the cause of the economic growth in that era when Clinton’s agenda was rejected in the 94 elections. Growth caused the surplus. The question is: what caused the growth? Anyone who says it was caused by tax increases is just crazy.

But all of this is irrelevant, because until we get out of the recession there will not be a tax increase. We can cut spending to some extent while trying to create growth, but any major tax increase will have to wait.

I would not argue that the Clinton tax increases caused the economic growth in the 90s–just that they did not inhibit it. They did, however, directly contribute to the budget surpluses of the late 90s. The various tax cuts cited by Steve did not occur until well after the expansion was under way. Capital gains realizations had already undergone two years of near-record increases before their rate was cut (see http://takingnote.tcf.org/2008/04/a.html). Child credits are a pure drain on the Treasury, the estate tax wasn’t cut until after the boom was over, and Roths did absolutely nothing to preventing the personal saving rate from dropping below zero a few years later.

I honestly don’t know what to tell you then annegb. It’s a fact that federal income taxes have not been raised in the past two years. If you are paying more you either might have made a mistake on your return, or were making a mistake in the past that had you paying less than you actually owed.

The only two taxes Obama has raised are for cigarettes and tanning salons. And as a Utahn the only tax that has increased in the past two years is the cigarette tax (and that was done by a Republican legislature and a Republican governor who promised they wouldn’t raise taxes).

The Democratic President absolutely has not raised income taxes. Period. What he did do is lower taxes more than once. He extended the Bush tax cuts. He passed a payroll tax holiday. He passed the Making Work Pay tax cut.

There is one tax that may affect you and Bill depending on what you make. Starting in 2014 there is an additional Medicare tax of 0.9 percent on any couple making over $250,000. But again, nothing in the past two years.