Not A Revenue Problem, It's A Spending Problem

Great post. Great video.

The libs will never understand.

During the debate last year on whether to extend the Bush tax cuts, Mitch McConnell thought the same way. "We have a spending problem. We spend too much. We don't have a taxing problem. We don't tax too little," McConnell told reporters Tuesday.
http://www.washingtonpost.com/...010091406838_pf.html

Now, let's move that kind of thinking into the real world. It's lunch time, you're hungry, and go to buy something to eat.

Say you want to buy a cheeseburger, coke and fries from me. I give you the cheeseburger, coke and fries and say, okay, that'll be $4 please. You hand me $3. I say, um, sir, we have a payment problem here. You say, "No, we have a price problem. You're charging too much. We don't have a payment problem. I'm not paying you too little."

The effective federal tax rate on people making over $1m per year fell by a third from 1995 to 2007. Effective tax rates on the richest 400 filers fell from 30% to just 17%; both are mainly due to reductions in the capital-gains tax.

To get spending down to the level we're taxed at, we'd have to cut back to persistent levels of federal spending we haven't seen in 50 years. Average federal spending in the 1960s was 18.6% of GDP. In the 1970s it was 20.1% of GDP. In the 1980s it was 22.2% of GDP. In the 1990s it was 20.7% of GDP. In the 2000s it was 20.0% of GDP. In the 1950s, federal spending was 17.6% of GDP, but in the 1950s, there was no Medicare or Medicaid.

In the cheeseburger analogy, I might propose to you that if you only want to pay $3, you can cut out the coke, or you can cut out the fries. But this isn't what Mr McConnell is doing. Instead, he's reaching over and grabbing back one of the dollar bills with tax cuts, and saying that actually, because he's making do with less income, he's decided he only wants to pay $2.

If Mr McConnell were to explain how he proposes to cut $4 trillion out of the federal budget, and put that to the voters, they could decide whether we have a taxing problem or a spending problem.

Cheeseburger analogy:
http://www.economist.com/blogs...ica/2010/09/tax_cuts

Okay, I see your point.

At first I was quick to think that you are assuming that there is no waste in goverment spending that could be cut to offset the difference.

However, I have to be honest and admit, that while waste exists, complete elimination of such waste is still not going to lower the deficit substantially. Not even factoring into the equation how you determine "true waste". Nor the dangers of the "throwing the baby out with the wash water".

So moving past that I quickly jumped to the tax cuts of Mellon and Kennedy that treasury department data has shown led to increase revenues for the government. But there's a problem there also. The growth from the Mellon and Kennedy tax cuts came primarily from an injection of funds into the growth of our industrial base. Our industrial base has moved and we are now more of a "service" oriented economic model.

So by granting the tax cuts, the money has more than likely been injected into foreign based industry, leading to a growth in foreign revenues and lowering our revenue at the same time.

So now, wise one, assuming that with a tax increase the modern day robber barons will not take "the money and run", how do we:

a.) increase revenues
b.) bring about a "re-investment in America"
c.) granting that during the 90% tax rate, most "robber barons" paid less than 30%, how do we close the loop holes of the tax code that allows such

Excuse the rambling for your scenario has opened my eyes to something I have been blinded too and the mind is reeling at the moment.

None of this is going to matter if Rand Paul lives up to his campaign promise and filibusters the vote to raise the debt ceiling and puts the country into default and destroys what is left of the economy. And, if you think it can't happen, you haven't been paying attention.

quote:

Originally posted by The Propagandist:
During the debate last year on whether to extend the Bush tax cuts, Mitch McConnell thought the same way. "We have a spending problem. We spend too much. We don't have a taxing problem. We don't tax too little," McConnell told reporters Tuesday.
http://www.washingtonpost.com/...010091406838_pf.html

Now, let's move that kind of thinking into the real world. It's lunch time, you're hungry, and go to buy something to eat.

Say you want to buy a cheeseburger, coke and fries from me. I give you the cheeseburger, coke and fries and say, okay, that'll be $4 please. You hand me $3. I say, um, sir, we have a payment problem here. You say, "No, we have a price problem. You're charging too much. We don't have a payment problem. I'm not paying you too little."

The effective federal tax rate on people making over $1m per year fell by a third from 1995 to 2007. Effective tax rates on the richest 400 filers fell from 30% to just 17%; both are mainly due to reductions in the capital-gains tax.

To get spending down to the level we're taxed at, we'd have to cut back to persistent levels of federal spending we haven't seen in 50 years. Average federal spending in the 1960s was 18.6% of GDP. In the 1970s it was 20.1% of GDP. In the 1980s it was 22.2% of GDP. In the 1990s it was 20.7% of GDP. In the 2000s it was 20.0% of GDP. In the 1950s, federal spending was 17.6% of GDP, but in the 1950s, there was no Medicare or Medicaid.

In the cheeseburger analogy, I might propose to you that if you only want to pay $3, you can cut out the coke, or you can cut out the fries. But this isn't what Mr McConnell is doing. Instead, he's reaching over and grabbing back one of the dollar bills with tax cuts, and saying that actually, because he's making do with less income, he's decided he only wants to pay $2.

If Mr McConnell were to explain how he proposes to cut $4 trillion out of the federal budget, and put that to the voters, they could decide whether we have a taxing problem or a spending problem.

Cheeseburger analogy:
http://www.economist.com/blogs...ica/2010/09/tax_cuts

OK...I'll freely admit, maybe it's me...but none of this really makes sense to me.

"We" have $3, but we continually want to spend $4 on lunch...that is the problem.

Once again...it doesn't seem to be a revenue problem...it is a spending problem. "We" want the $4 lunch, but don't have the money.

So we go "beat up the fat, rich kid" and take his money or we make do with $3 for lunch...

The cheeseburger analogy doesn't address the problem:

1. Over the last 60 plus years, regardless of the tax rate, government revenues average about 18% of GDP.

2. Over the last 60 plus years, government on average spends about 20% GDP.

2% GDP year after year adds up...so far to about $14 trillion.

quote:

Originally posted by JimiHendrix:
None of this is going to matter if Rand Paul lives up to his campaign promise and filibusters the vote to raise the debt ceiling and puts the country into default and destroys what is left of the economy. And, if you think it can't happen, you haven't been paying attention.

This is silly fear mongering.

The debt ceiling is not really the focus of this thread, but all this talk of catastrophic collapse if the government is restricted from running up more debt is exaggeration.

What would be "catastrophic" to most of the politicians is that they'd actually have to make some tough decisions if they were told they couldn't go deeper into debt.

But saying "no increase in the debt ceiling" is the same as the "Treasury defaulting" is just not true.

If Treasury default would be so catastrophic, then don't default...The Treasury can prioritize interest and debt payment to keep from defaulting...but the government would be on a pay as you go basis...and of course for most politicians on both sides, this would be "catastrophic".

In the 3rd quarter last year the government brought in $604 billion in revenue. To service the debt last year, worked out to about $104 billion per quarter...so only about 1/6 of incoming revenues could service the debt.

So there is plenty of revenue to honor the debt...no default...no catastrophy...The only thing the Treasury couldn't do would be to issue more debt.

quote:

So now, wise one, assuming that with a tax increase the modern day robber barons will not take "the money and run", how do we:

a.) increase revenues
b.) bring about a "re-investment in America"
c.) granting that during the 90% tax rate, most "robber barons" paid less than 30%, how do we close the loop holes of the tax code that allows such

Excuse the rambling for your scenario has opened my eyes to something I have been blinded too and the mind is reeling at the moment.

If one looks at the evening news one can see a rather chaotic world with citizens rioting and governments collapsing. Businessmen like to invest capital in stable countries where they can get good returns on their investment. The Japanese will need some time to get back on their feet after the catastrophes inflicted upon them. The one child per family policy in China will probably bite them in a decade or two as their population ages. Mexico is in the process of disintegration. Austerity measures in the Euro-zone aren't being too well received by the populace used getting free stuff from the nanny state. The first nation that can get its financial house in order should get a lot of interest from capitalists looking for stability.

The source of capital is actually easy to find, it could come from changing the tax code to encourage companies to bring back capital from overseas. It just takes a little courage to change the tax laws that were intended to rebuild the world following WW2. John Kennedy wanted to revamp those laws when he was president:

"I have asked the secretary of the treasury to report by April 1 on whether present tax laws may be stimulating in undue amounts the flow of American capital to the industrial countries abroad through special preferential treatment."

– John F. Kennedy, Feb. 6, 1961, message to Congress on gold and the balalnce of payments deficit

Read more: John F. Kennedy on taxes http://www.wnd.com/news/articl...=39517#ixzz1JZAEG9qH

"In those countries where income taxes are lower than in the United States, the ability to defer the payment of U.S. tax by retaining income in the subsidiary companies provides a tax advantage for companies operating through overseas subsidiaries that is not available to companies operating solely in the United States. Many American investors properly made use of this deferral in the conduct of their foreign investment."

– John F. Kennedy, April 20, 1961, message to Congress on taxation

Read more: John F. Kennedy on taxes http://www.wnd.com/news/articl...=39517#ixzz1JZAfmCJ9

quote:

One trillion dollars is roughly the amount of earnings that American companies have in their foreign operations—and that they could repatriate to the United States. That money, in turn, could be invested in U.S. jobs, capital assets, research and development, and more.

But for U.S companies such repatriation of earnings carries a significant penalty: a federal tax of up to 35%. This means that U.S. companies can, without significant consequence, use their foreign earnings to invest in any country in the world—except here.

The U.S. government's treatment of repatriated foreign earnings stands in marked contrast to the tax practices of almost every major developed economy, including Germany, Japan, the United Kingdom, France, Spain, Italy, Russia, Australia and Canada, to name a few. Companies headquartered in any of these countries can repatriate foreign earnings to their home countries at a tax rate of 0%-2%. That's because those countries realize that choking off foreign capital from their economies is decidedly against their national interests.

http://online.wsj.com/article/...533880328930598.html

quote:

Originally posted by Mr.Dittohead:

quote:

In 2004, Congress approved a one-year tax holiday as part of a jobs package, resulting in companies bringing back $362 billion. But, as Fortune's Tory Newmyer pointed out in February, studies have shown that most of the funds went to shareholders. Even while Congress passed several rules to make sure the funds would get invested back into the companies, not very much went to research, investment or hiring.

If the cost savings from lower taxes don't go to new investments or more jobs, could they at least lead to higher wages for workers, as Ryan's plan suggests?

If history tells us anything, that's unlikely. The effective corporate tax rate has been steadily declining for decades. Corporations paid more than 49% of their profits in federal taxes in the 1950s, 38% in the 1960s, 33% in the 1970s and 25% in the 1980s. All the while, U.S. wages have been stagnant for years even as productivity has risen. Between 1989 and 2010, U.S. productivity grew by 62.5% -- far outpacing wages, which grew by only 12% during the same period

http://finance.fortune.cnn.com...nt-create-more-jobs/

quote:

Originally posted by JimiHendrix:
None of this is going to matter if Rand Paul lives up to his campaign promise and filibusters the vote to raise the debt ceiling and puts the country into default and destroys what is left of the economy. And, if you think it can't happen, you haven't been paying attention.

You can't borrow your way out of debt. Don't believe everything you read jimmy. Not raising the debt ceiling will not be the end of the world. It will be like tearing up your wifes credit card. There'll be a lot of noise but in the end it will be for the good.

quote:

Originally posted by Renegade Nation:
[QUOTE]Originally posted by JimiHendrix:
None of this is going to matter if Rand Paul lives up to his campaign promise and filibusters the vote to raise the debt ceiling and puts the country into default and destroys what is left of the economy. And, if you think it can't happen, you haven't been paying attention.

This is silly fear mongering.

The debt ceiling is not really the focus of this thread, but all this talk of catastrophic collapse if the government is restricted from running up more debt is exaggeration.

What would be "catastrophic" to most of the politicians is that they'd actually have to make some tough decisions if they were told they couldn't go deeper into debt.

But saying "no increase in the debt ceiling" is the same as the "Treasury defaulting" is just not true.

If Treasury default would be so catastrophic, then don't default...The Treasury can prioritize interest and debt payment to keep from defaulting...but the government would be on a pay as you go basis...and of course for most politicians on both sides, this would be "catastrophic".

In the 3rd quarter last year the government brought in $604 billion in revenue. To service the debt last year, worked out to about $104 billion per quarter...so only about 1/6 of incoming revenues could service the debt.

So there is plenty of revenue to honor the debt...no default...no catastrophy...The only thing the Treasury couldn't do would be to issue more debt.[/QUOTE]

Which is exactly what we want them to do.

The debt ceiling will be raised because the Repubs want their earmarks.

Revenues as a percentage of GDP are at 60 year lows, even though corp profits are at record highs.

Well I will be the first to chime in here from my perspective. I made over $250K last year, and I assure you my tax rate was no where near 17%. Don't know who does Stephen King's taxes, but the H&R Block program that did mine has me paying 37%, on top of the self employment taxes, alternative minimum taxes (AMT), and other little assorted goodies that most self employed business owners pay. WE are the ones who will be hurt by Obam's tax increases. We are the ones who will be either taxed into submission or decide to hell with it and just cut back our hours and cease to be productive.
until the government learns to cut back on their spending, stop funding ridiculous community organizing organizations and foreign governments, don't ask me to pay a higher rate. Also don't tell me that those making less than I do pay a bigger share of their income. Certain taxes such as gas, food, etc are "consumption" based taxes. you basically pay what you use. I know I pay a ton of them. Feeding four, buying gas for vehicles, car tags, property tax, etc, those are all things that we all do and are taxed at the same rate, like they should be. Progressive tax rates however are punitive and are based on a society whereby we want to redistribute wealth. And don't give me the old "to those who are given much is expected" BS, cause it is available to anyone out there who wants to go to school, get an education, and work for it.

quote:

Originally posted by teyates:
Well I will be the first to chime in here from my perspective. I made over $250K last year, and I assure you my tax rate was no where near 17%. Don't know who does Stephen King's taxes, but the H&R Block program that did mine has me paying 37%, on top of the self employment taxes, alternative minimum taxes (AMT), and other little assorted goodies that most self employed business owners pay. WE are the ones who will be hurt by Obam's tax increases. We are the ones who will be either taxed into submission or decide to hell with it and just cut back our hours and cease to be productive.
until the government learns to cut back on their spending, stop funding ridiculous community organizing organizations and foreign governments, don't ask me to pay a higher rate. Also don't tell me that those making less than I do pay a bigger share of their income. Certain taxes such as gas, food, etc are "consumption" based taxes. you basically pay what you use. I know I pay a ton of them. Feeding four, buying gas for vehicles, car tags, property tax, etc, those are all things that we all do and are taxed at the same rate, like they should be. Progressive tax rates however are punitive and are based on a society whereby we want to redistribute wealth. And don't give me the old "to those who are given much is expected" BS, cause it is available to anyone out there who wants to go to school, get an education, and work for it.

If you are self-employed, you should incorporate and be paying yourself with stock options which are taxed as capital gains

I am self employed, and while I am not in the same neighborhood as TE, I am paying the same rate he is. Heck, I'm not in the same zip code LOL.

I am incorporated and take every deduction I legally can take. I don't see how stock options would help, considering that we already own all the stock anyway.

I believe what you are thinking, and forgive me for assuming, is that CEO's of major corporations take stock options in lieu of salary and then sell the stock and only pay the captial gains tax instead of earned income tax. Is there something I am not aware of??? Help me save money and lunch is on me

Don't get me wrong, I have no problem paying taxes for the services that I receive in exchange. Question is, how do we get Hillary, Warren, Steve and the rest to pay their fair share?

They can always voluntarily send a check to the treasury.

http://www.treasurydirect.gov/...rts/pd/gift/gift.htm

How do you make a contribution to reduce the debt?

There are two ways for you to make a contribution to reduce the debt:

* You can make a contribution online either by credit card, checking or savings account at Pay.gov
* You can write a check payable to the Bureau of the Public Debt, and in the memo section, notate that it's a Gift to reduce the Debt Held by the Public. Mail your check to:

Attn Dept G
Bureau of the Public Debt
P. O. Box 2188
Parkersburg, WV 26106-2188


Note: The Bureau of the Public Debt's Office of Public Debt Accounting maintains this FAQ. Keep in mind that these questions may not fit all situations and are only intended as a guideline.

quote:

Originally posted by Mr.Dittohead:
The debt ceiling will be raised because the Repubs want their earmarks.

No doubt and don't dispute that...but so do the dems...

quote:

Originally posted by Mr.Dittohead:
Revenues as a percentage of GDP are at 60 year lows...

Well when you compare the last a couple of years to GDP, you have to factor in the slow down in the economy...So there is no real signifigance in a historical sense to your quote...

Oh wait...I see you are trying to make a socialist/fascist point:

quote:

Originally posted by Mr.Dittohead:
...even though corp profits are at record highs.

So what? It's theirs to do with as they wish...unless of course you believe all profits, capital, resources, productivity, etc. first belongs to the central state...

quote:

Well when you compare the last a couple of years to GDP, you have to factor in the slow down in the economy...So there is no real signifigance in a historical sense to your quote...

You aren't very smart are you?



Compared as a percentage, the actual amounts are not relevant.

quote:

Originally posted by Mr.Dittohead:

quote:

Well when you compare the last a couple of years to GDP, you have to factor in the slow down in the economy...So there is no real signifigance in a historical sense to your quote...

You aren't very smart are you?



Compared as a percentage, the actual amounts are not relevant.

That doesn't change anything I've said...or the fact that over the course of 60 plus years the government always spends more than it takes in.

What exactly are you trying to prove?

What is shows me is Obama blew the hell out of the spending curve.
It also shows that the 'horrendous' Bush tax cuts (2001-2003) dropped revenue for a year or so then it went right back up again, until Obama caused all the businesses to flee to other countries and revenue dropped like a rock.

Notice how the spending curve is not coincidental to the revenue curve even when the Repubs controlled the House, Senate and White House?

We should have given Clinton a third term.

Since Clinton was a pansy, yes, we would not be paying for wars, however, we might all be under Sharia law.

quote:

Originally posted by b50m:
Since Clinton was a pansy, yes, we would not be paying for wars, however, we might all be under Sharia law.

MOVE TO TEXAS, WITCH!!!!!!!!!!!!!!!!!
MAN just how stupid ARE you??????????????
Now you are on "Sharia" law!!!!!!!!!!!!
You are a CLASSIC rethugliteacon FOXOPHILE who they are counting on being too ignorant to know you are being screwed by the thugs!!!!!!!!!!!!!!!!!!!
You REALLY deserve whatever they do to you!

No fear, Rocky. The pictorial representation of the ineptitude of the Repubs made her resort to hyperbole, since there is no logical defense.

quote:

Originally posted by rocky:

quote:

Originally posted by b50m:
Since Clinton was a pansy, yes, we would not be paying for wars, however, we might all be under Sharia law.

MOVE TO TEXAS, WITCH!!!!!!!!!!!!!!!!!
MAN just how stupid ARE you??????????????
Now you are on "Sharia" law!!!!!!!!!!!!
You are a CLASSIC rethugliteacon FOXOPHILE who they are counting on being too ignorant to know you are being screwed by the thugs!!!!!!!!!!!!!!!!!!!
You REALLY deserve whatever they do to you!

Grow up kid.

quote:

Originally posted by Renegade Nation:

OK...I'll freely admit, maybe it's me...but none of this really makes sense to me.

"We" have $3, but we continually want to spend $4 on lunch...that is the problem.

Once again...it doesn't seem to be a revenue problem...it is a spending problem. "We" want the $4 lunch, but don't have the money.

So we go "beat up the fat, rich kid" and take his money or we make do with $3 for lunch...

The cheeseburger analogy doesn't address the problem:

1. Over the last 60 plus years, regardless of the tax rate, government revenues average about 18% of GDP.

2. Over the last 60 plus years, government on average spends about 20% GDP.

2% GDP year after year adds up...so far to about $14 trillion.

We only have $3 to spend because that is all we demand from taxes.

The American people are very clear on the services that they want government to provide: Cheeseburger, fries, and coke.

A $4 lunch still costs $4, but we have decided to content ourselves to having only $3 to spend by lowering taxes and getting the other $1 to spend by borrowing.

Also, remember that $2 a day we are borrowing from our neighbor to hit up two bars, Afghanistan and Iraq, on the way home from work.

Our problem would be solved if we stopped hitting the bars on the way home, and started picking up that other $1 we leave lying in the dresser drawer. Then we would have the $4 for a $4 lunch.

quote:

Originally posted by ferrellj:

You can't borrow your way out of debt. Don't believe everything you read jimmy. Not raising the debt ceiling will not be the end of the world. It will be like tearing up your wifes credit card. There'll be a lot of noise but in the end it will be for the good.

You will be tearing up your wife's credit card because it is no good anymore. A default means you can't pay your bills. A default means nobody will loan you money -- for any reason. A default would mean a cash only payment system.

So, even if you still have soldiers in foreign lands when the last dollar is spent, nobody will loan you the money for the jet fuel to fly them back home.

Something similar has already happened with a civilian aircraft:

TWA Flight 847 was an international Trans World Airlines flight which was hijacked by Lebanese Shia extremists, later identified as members of Hezbollah and Islamic Jihad, on Friday morning, June 14, 1985, after originally taking off from Cairo. The flight was en route from Athens to Rome and then scheduled to terminate in London. The passengers and crew endured a three-day intercontinental ordeal. Some passengers were threatened and some beaten. Passengers with Jewish-sounding names were moved apart from the others and U.S. Navy diver Robert Dean Stethem, was tortured and murdered. His body was thrown onto the tarmac. Dozens of passengers were held hostage over the next two weeks until released by their captors after some of their demands were met.

Flight attendant Uli Derickson was widely credited with calming the hijackers and saving the lives of many passengers. Because her German was the only common language with the hijackers, who spoke poor English, she acted as translator and liaison for most of the ordeal.[citation needed] Notably, she defused a tense situation in Algiers when airport officials refused to refuel the plane without payment by offering her own Shell Oil credit card, which was used to charge about $5,500 for 6,000 gallons of jet fuel, for which she was reimbursed.

http://en.wikipedia.org/wiki/TWA_Flight_847

Not raising the debt ceiling means the government is not authorized borrow any more money. What will you do when that last dollar is spent -- send everybody home and the last person leaving US Government facilities all over the world please turn out the lights? There is no more money to keep them on?

Not raising the debt ceiling might indeed mean the end of the world as we know it. When the government runs out of money, it still has interest on the debt to pay. Not paying it means you are in default. Even if borrowing is again authorized, the interest you have to pay is substantially higher, if you can borrow at all. A government reneging on its just debts is serious business.

I shown this before and shall continue to do so. Revenue increased after Bush's tax cut, increased significantly. Now, the lefties will state that corporate taxes increased the most. I've tried to explain that that is a correlation of private income tax reduction to corporate tax increase without success. Math-wise, some of our lefties aren't too swift.

So, I'll put it plainly Corporations provide goods and services -- they sell them. The more they sell, the more profits they make. When, the private income tax is reduced, people have more funds to spend. They spend their extra wealth on good and services - goods and services provided by the corporations. Capish! That produces more wealth for the corporations, who pay higher taxes. You can drag a horticulture, but you can't make her think. You can drag a mule to knowledge, but you can't make him understand.

quote:

Originally posted by ferrellj:

quote:

Originally posted by rocky:

quote:

Originally posted by b50m:
Since Clinton was a pansy, yes, we would not be paying for wars, however, we might all be under Sharia law.

MOVE TO TEXAS, WITCH!!!!!!!!!!!!!!!!!
MAN just how stupid ARE you??????????????
Now you are on "Sharia" law!!!!!!!!!!!!
You are a CLASSIC rethugliteacon FOXOPHILE who they are counting on being too ignorant to know you are being screwed by the thugs!!!!!!!!!!!!!!!!!!!
You REALLY deserve whatever they do to you!

Grow up kid.

That is never going to happen. I stand by the pansy statement since he was a draft dodger. That makes him worth "0" in my book.

quote:

Originally posted by Ubu:
I am self employed, and while I am not in the same neighborhood as TE, I am paying the same rate he is. Heck, I'm not in the same zip code LOL.

I am incorporated and take every deduction I legally can take. I don't see how stock options would help, considering that we already own all the stock anyway.

I believe what you are thinking, and forgive me for assuming, is that CEO's of major corporations take stock options in lieu of salary and then sell the stock and only pay the captial gains tax instead of earned income tax. Is there something I am not aware of??? Help me save money and lunch is on me

Don't get me wrong, I have no problem paying taxes for the services that I receive in exchange. Question is, how do we get Hillary, Warren, Steve and the rest to pay their fair share?

Tax Benefits of Incorporating
(each section explained at website)

Tax Deductions For Fringe Benefits

Tax Deductions For Business Losses

Income Shifting

Dividends From Other Corporations

Leasing Assets to your Corporation

http://www.webpronews.com/tax-...ncorporating-2004-05

If you are looking for the best tax position, and PROVEN liability protection, why not file as a real corporation instead of an LLC?

Any of the "mythical" problems with operating as a real corporation would exist if you operated an LLC as a real corporation. I use the word mythical because, double taxation, excess retained earnings, or any of the other claims are unfounded, or have no effect when a corporation is properly used.

So, what advantages does a real corporation have?

For tax purposes, A Corporation pays no payroll taxes on its income (payroll taxes are SS, Medicare, workers comp, unemployment) as a General PArtnership those taxes would be paid on ALL the income. Corporations pay lower federal taxes. Corporations can write off 100% of all medical expenses for all employees, the GP tax return will require attributing those expenses to the partners as income. Real corproations have many other deductions that are either disallowed or very limited for individuals in business.

http://en.allexperts.com/q/Tax...on-Tax-advantage.htm

Both the debt commission and Ryan suggest a lower corporate tax rate, 26 and 25 percent, respectively from 35 percent. In return, territoriality would be practiced. That is, income produced in the US from either corporations HQed in the US, or branches would only be taxed upon income produced in the US, but income produced in other countries would be taxed in those countries. That is the norm in most countries.

Then, elimination of over 30 General Business Tax Credits and over 75 Other Tax Expenditure. IAW, all special breaks given to corporations.

quote:

Originally posted by elinterventor01:
I shown this before and shall continue to do so. Revenue increased after Bush's tax cut, increased significantly. Now, the lefties will state that corporate taxes increased the most. I've tried to explain that that is a correlation of private income tax reduction to corporate tax increase without success. Math-wise, some of our lefties aren't too swift.

So, I'll put it plainly Corporations provide goods and services -- they sell them. The more they sell, the more profits they make. When, the private income tax is reduced, people have more funds to spend. They spend their extra wealth on good and services - goods and services provided by the corporations. Capish! That produces more wealth for the corporations, who pay higher taxes. You can drag a horticulture, but you can't make her think. You can drag a mule to knowledge, but you can't make him understand.

"...neither the president nor anyone else in the administration is claiming that tax cuts alone produced the unexpected surge in revenue...When the distribution of income shifts upward, as it has in recent years, you get a revenue kicker from that."

October 17, 2006

Economists said Bush was claiming credit where little is due. The economy has grown and tax receipts have risen at historic rates over the past two years, but the Bush tax cuts played a small role in that process, they said, and cost the Treasury more in lost taxes than it gained from the resulting economic stimulus.

"Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that," said Alan D. Viard, a former Bush White House economist now at the nonpartisan American Enterprise Institute. "It's logically possible" that a tax cut could spur sufficient economic growth to pay for itself, Viard said. "But there's no evidence that these tax cuts would come anywhere close to that."

Robert Carroll, deputy assistant Treasury secretary for tax analysis, said neither the president nor anyone else in the administration is claiming that tax cuts alone produced the unexpected surge in revenue. "As a matter of principle, we do not think tax cuts pay for themselves," Carroll said.

If growth induced by Bush's cuts doesn't explain the surge, where did all those extra tax dollars come from? The short answer is spectacularly high corporate profits and the advancing fortunes of wealthy Americans, economists said.

Holtz-Eakin and other economists said they can only speculate about why that economic growth generated a disproportionate jump in revenue. There have been changes in the tax code, such as the 2004 expiration of a tax that allowed businesses to immediately deduct half the value of new assets. Economists said corporations chastened by recent accounting scandals may also be paying more taxes on more of their income. And with large and growing incomes going to chief executives, athletes, entertainers, and even star lawyers and academics, those people are paying more taxes.

"The simplest way to think about it, I think, is we know we have growing income inequality, especially at the top," said Isabel V. Sawhill, a Brookings Institution economist who worked for the Clinton administration. "The very rich are pulling away from the ordinary rich and the middle class. Those very rich people pay higher tax rates. When the distribution of income shifts upward, as it has in recent years, you get a revenue kicker from that."

http://www.washingtonpost.com/...006101601121_pf.html

These top taxpayers increased their own incomes by enough to raise receipts:



Lowered tax rates wouldn't do much to increase the lower 50% of incomes (and their increased spending you say raised corporate profits) to raise receipts.



See also:
Tax Cuts: Myths and Realities
Updated May 9, 2008
http://www.cbpp.org/cms/?fa=view&id=692
PDF of this report (10pp.)

quote:

Originally posted by b50m:

quote:

Originally posted by ferrellj:

quote:

Originally posted by rocky:

quote:

Originally posted by b50m:
Since Clinton was a pansy, yes, we would not be paying for wars, however, we might all be under Sharia law.

MOVE TO TEXAS, WITCH!!!!!!!!!!!!!!!!!
MAN just how stupid ARE you??????????????
Now you are on "Sharia" law!!!!!!!!!!!!
You are a CLASSIC rethugliteacon FOXOPHILE who they are counting on being too ignorant to know you are being screwed by the thugs!!!!!!!!!!!!!!!!!!!
You REALLY deserve whatever they do to you!

Grow up kid.

That is never going to happen. I stand by the pansy statement since he was a draft dodger. That makes him worth "0" in my book.

You were obviously not around during the Vietnam experience.

This "we have a spending problem not a revenue problem" mantra is now the standard talking point used by the Republicans who want to dismantle the New Deal.
They are wrong, wrong, wrong. We have a revenue problem.
What they are saying is tantamount to if you are having a hard time paying for your groceries, then going to your boss and asking him for a decrease in your salary. Just plane logically stupid.
If we were to return to the Clinton era tax rates, that alone would cut the deficit by half, and I would also add we should return to the Clinton era Defense spending, which would also blow a hole in the deficit.
All this crap about worrying about a small percentage of the budget , just to satisfy the ideology of a group of people who hate anything that does not help big business, and will do little or nothing about the budget is just that- crap.

quote:

Originally posted by The Propagandist:

quote:

Originally posted by Renegade Nation:

OK...I'll freely admit, maybe it's me...but none of this really makes sense to me.

"We" have $3, but we continually want to spend $4 on lunch...that is the problem.

Once again...it doesn't seem to be a revenue problem...it is a spending problem. "We" want the $4 lunch, but don't have the money.

So we go "beat up the fat, rich kid" and take his money or we make do with $3 for lunch...

The cheeseburger analogy doesn't address the problem:

1. Over the last 60 plus years, regardless of the tax rate, government revenues average about 18% of GDP.

2. Over the last 60 plus years, government on average spends about 20% GDP.

2% GDP year after year adds up...so far to about $14 trillion.

We only have $3 to spend because that is all we demand from taxes.

The American people are very clear on the services that they want government to provide: Cheeseburger, fries, and coke.

A $4 lunch still costs $4, but we have decided to content ourselves to having only $3 to spend by lowering taxes and getting the other $1 to spend by borrowing.

Also, remember that $2 a day we are borrowing from our neighbor to hit up two bars, Afghanistan and Iraq, on the way home from work.

Our problem would be solved if we stopped hitting the bars on the way home, and started picking up that other $1 we leave lying in the dresser drawer. Then we would have the $4 for a $4 lunch.

"We only have $3 to spend because that is all we demand from taxes."

OK...I get that. I don't necessarily agree with your assessment of the proper role of government...but that's another thread.

You say we "content ourselves" to having only $3 by lowering taxes...but in my orginal post and in the video, it is clear that despite very high tax rates and relatively low tax rates, historically government revenues are about 18% GDP...regardless of the tax rate.

Back to one of my orginal questions...why is that so? And how can higher taxes change that?

I think your analysis is a bit biased...you say our problem would be solved if "we stopped hitting the bars"...but we would also go a long way to solving the problems as well if instead of the "cheeseburger, fries, and coke" we settled for the bologna sandwich we could afford...

quote:

Originally posted by The Propagandist:
...A default means you can't pay your bills. A default means nobody will loan you money -- for any reason. A default would mean a cash only payment system...

...Not raising the debt ceiling means the government is not authorized borrow any more money...

...Not raising the debt ceiling might indeed mean the end of the world as we know it. When the government runs out of money, it still has interest on the debt to pay. Not paying it means you are in default...

Not raising the debt ceiling DOES NOT equal defaulting. I addressed this in an early post:

"In the 3rd quarter last year the government brought in $604 billion in revenue. To service the debt last year, worked out to about $104 billion per quarter...so only about 1/6 of incoming revenues could service the debt."

Not raising the debt ceiling does not mean the government can not borrow money...it just caps the limit of debt we are willing to take on.

Once again there is plenty of revenue to service our debt...no default...no catastrophy.

quote:

Originally posted by seeweed:
This "we have a spending problem not a revenue problem" mantra is now the standard talking point used by the Republicans who want to dismantle the New Deal.
They are wrong, wrong, wrong. We have a revenue problem.
What they are saying is tantamount to if you are having a hard time paying for your groceries, then going to your boss and asking him for a decrease in your salary. Just plane logically stupid.
If we were to return to the Clinton era tax rates, that alone would cut the deficit by half, and I would also add we should return to the Clinton era Defense spending, which would also blow a hole in the deficit.
All this crap about worrying about a small percentage of the budget , just to satisfy the ideology of a group of people who hate anything that does not help big business, and will do little or nothing about the budget is just that- crap.

Wrong, wrong, wrong.

The just approved budget with all these so-called "historic" cuts still spends MORE than last years budget...as every budget, every year does.

You can repeat your "mantra" all you want (by the way I'm not republican)...but that doesn't change historical facts.

REGARDLESS of the tax rate revenue has averaged about 18% GDP...and REGARDLESS of the revenue taken in government has averaged spending 20% GDP.

That seems like a spending problem to me.

You may not like that...it may not fit your ideology...but no one has shown where these numbers are wrong.

It doesn't matter if you want to spend trillions on welfare or trillions on bombs...we have a spending problem.

quote:

Originally posted by Renegade Nation:

"We only have $3 to spend because that is all we demand from taxes."

OK...I get that. I don't necessarily agree with your assessment of the proper role of government...but that's another thread.

You say we "content ourselves" to having only $3 by lowering taxes...but in my orginal post and in the video, it is clear that despite very high tax rates and relatively low tax rates, historically government revenues are about 18% GDP...regardless of the tax rate.

Back to one of my orginal questions...why is that so? And how can higher taxes change that?

I think your analysis is a bit biased...you say our problem would be solved if "we stopped hitting the bars"...but we would also go a long way to solving the problems as well if instead of the "cheeseburger, fries, and coke" we settled for the bologna sandwich we could afford...

GDP is the variable in the equation; it can be, for example, $1 or $1 million.

GDP is the value of all final goods and services produced within the country during a year. What determines the overall level of output in an economy?

Demand determines output. You won't produce produce you can't sell. What determines the demand for your products?

The amount of disposable income in your aggregate customer pool determines demand (provided you have a desired product!). What determines the amount of disposable income?

How many people are employed and what they are paid determines the disposable income in your aggregate customer pool. Fewer employed workers and a stagnation or lowering of nominal wages will reduce disposable income, reduce demand, reduce output, thereby reducing GDP -- unless the difference is made up on credit, as has been increasingly done by the middle class.

Loss of jobs through outsourcing; lowering of wages by pushing higher-paid industrial workers into the lower-paid service sector; and the stagnation of wages from technological gains, where the increased profits floated directly to the top instead of being shared with the workers all lead to a lowering of GDP.

If GDP is a healthy $1 million, that 18% of GDP you speak of would amount to $180 thousand. If GDP is an anemic $1, GDP would equal 18 cents. $180 thousand provides more of social benefits people have come to expect than the figurative 18 cents.

Remember, GDP is variable. The cost of those social benefits is not. That is why we have only $3 to spend on a lunch that costs $4. A $4 lunch still costs $4, no matter how many dollars we choose to carry around in our pocket.

If you were a rich person, which would rather see: 1)your personal taxes increased to maintain that 18% of GDP, or 2)increase domestic hiring, with good wages for a broad-based increase in demand, so others can help you pay that 18% of GDP?

The dollar value of that 18% of GDP determines if we get a cheeseburger, fries, and coke; a bologna sandwich; or steak with all the trimmings.

quote:

GDP is the variable in the equation; it can be, for example, $1 or $1 million.

GDP is the value of all final goods and services produced within the country during a year. What determines the overall level of output in an economy?

And tax rates affect GDP, just ask Christina Romer:

quote:

Recall that we find that a tax increase of one percent of GDP lowers real GDP by about 3 percent, implying a substantial multiplier.

http://www.economist.com/blogs...2008/12/tax_or_spend

A link at the website will take you to the full paper.

quote:

Originally posted by Flatus the Ancient:

quote:

GDP is the variable in the equation; it can be, for example, $1 or $1 million.

GDP is the value of all final goods and services produced within the country during a year. What determines the overall level of output in an economy?

And tax rates affect GDP, just ask Christina Romer:

quote:

Recall that we find that a tax increase of one percent of GDP lowers real GDP by about 3 percent, implying a substantial multiplier.

http://www.economist.com/blogs...2008/12/tax_or_spend

A link at the website will take you to the full paper.

Naturally, their is a different viewpoint. Else, there would be no debate.

A caveat—obvious but critical—is in order. Simultaneity does not equal causation. Annual growth rates are a consequence of many factors, macro and micro, and the isolated impact of marginal tax rates on growth is hard, if not impossible, to discern from these numbers alone.

That said, it's obvious that there is no correlation between higher marginal tax rates and slowing economic activity. During the period 1951-63, when marginal rates were at their peak—91 percent or 92 percent—the American economy boomed, growing at an average annual rate of 3.71 percent. The fact that the marginal rates were what would today be viewed as essentially confiscatory did not cause economic cataclysm—just the opposite. And during the past seven years, during which we reduced the top marginal rate to 35 percent, average growth was a more meager 1.71 percent.

More sophisticated efforts to analyze this relationship also produce decidedly murky results. An excellent review of this in the Yale Law Journal, "Why Tax the Rich? Efficiency, Equity, and Progressive Taxation," concludes that there is scant, if any, legitimate academic support for the proposition that moderate, as opposed to dramatic, increases in marginal rates have any impact on the willingness of the wealthy to participate in the economy.

http://www.slate.com/id/2245781/