CBO Budget and Economic Outlook, House and Senate Budget Committees
The Tax Cut and Jobs Act gave most people neither a real tax cut or jobs. The goal was to stimulate an already growing economy by giving tax breaks to "job creators." The reality is that these cuts went to asset speculators, as they always do. It does not matter what the asset markets do, they are their own master and their prices are about too much money chasing too few good instruments, which leads to funding such garbage as Bitcoin. Eliminating that inflation through bond sales is a good method, as is making such sales unnecessary through higher tax rates on the wealthy, preferably from an income and inheritance surtax.
Low tax rates on the CEO and Mega-owner class give them an incentive to get even richer by saving labor costs. If that savings were taxed away, labor costs CEOs would not seek economic rent to the detriment of their employees. Cutting labor costs eventually cuts purchasing power so much that the economy requires large worker debt loads to grow.
The TCJA is offset by the omnibus biennial spending deal, which increases GDP by every measure. To say otherwise is bad economics. The CBO needs to clean house and fire anyone who is operating on belief over fact. Indeed, the cuts in output from the shutdown confirm the truth of this proposition.
Low taxes for the donor caste do nothing for GDP, which equals Government Purchases plus consumption from government employees, government transfer payments to retirees and the poor and second order consumption in the private sector who provide services to government payees and themselves. Their consumption leads to business investment in plant and equipment. While companies can certainly issue primary share offerings to the secondary market to finance investment, they could also use spare cash or issue securities or bonds.
The other elements of GDP are exports less imports. If imports are more than exports, foreign borrowers are providing goods to the US for our Treasury Bills. US Government Bond sales counter the asset inflation from tax cuts, especially if government spending over and above net interest rolled into new debt is more than the tax cut for the wealthy.
If taxes go up on the rich, it is safe to cut spending and the economy will grow at a nice 3% clip, which does not cause inflation to any great extent. That is what happened under Clinton until he cut capital gains tax rates (which fueled the tech boom) and it was starting to happen for Obama once he raised taxes on the wealthy in 2013. The steam in the economy comes from that spending and the new spending insisted on by Pelosi, which Ryan agreed to. That spending is why the economy still hums.
The tax used to pay back the debt without crashing the economy is the income tax (FICA goes to an insurance fund, although it is borrowed from).Transforming it to an income and inheritance surtax is the best way to balance the budget long term. Cash from an estate, but not the assets, are taxed as normal income when received or sold after a $100,000 standard deduction for joint filers, half that for singles. The ESOP exemption would be maintained. The surtax would be earmarked for debt reduction, starting with funding the retirement of the Social Security Trust Fund as baby boomers use it, the funding of net interest to stop the bleeding and war (both nuclear and imperialistic), which is usually funded by deficits.
Because we finance war with deficit spending, to get out of debt we must make the rich pay pay for it through higher taxes. The same is true for reimbursing the Baby Boom in retirement (in other words, now) and in shifting from rolling over interest payments to new debt. Payment of an income and inheritance surtax on all income received over $100,000 to fund these things while adopting a Goods and Services Tax and an Employer paid VAT for discretionary and social spending,will demonstrate why the rich need to pay more now We do not have a per capita direct tax. It was never actually implemented though written into the Constitution.
The Sixteenth Amendment allowed a progressive income tax, which provided a revenue stream that could handle a larger debt. The liability for the debt, therefore, is not per capita but a function of income tax paid. Currently, $1 paid means $13 owed in debt. $10,000 paid means owing $130,000 in debt. $100,000 paid means a debt load of $1,300,000, etc.
Not paying now makes the problem worse and leaves it to the children of large income tax payers. We suspect that when this is made obvious, most will happily do their share. To be clear, per capita measures of responsibility for the debt are erroneous because it could never be retired that way and poor families cannot afford to pay their share. We do not have a head tax. If we did, the debt would not exist and we would be speaking Russian.
Making debt finance a matter for income surtaxes means that everyone else, including the wealthy, must pay more using a consumption tax. It could all be loaded onto a Subtraction VAT/Net Business Receipts Tax, which would leave most delightfully unaware of a larger tax burden, however a GST is more easily border refundable and a carbon tax serves its purpose as well, with both financing current military and civil domestic spending (from military bases to the FBI).
The SVAT would fund social spending, from an adequate refundable child tax credit of $1000 per month per child (which is in line with the USDA estimate for the actual cost of raising a child), which is four times more generous than the Harris proposal. Using an SVAT also implicitly (if not explicitly) burdens childless taxpayers with lower salaries, but also takes away the incentive to fire older workers with children because it is easier to replace them with two recent graduates.
This would especially be the case if we shift longevity funding to ownership of preferred or voting shares in employer stock.This makes it possible to bring more democracy to the workplace and to use such firms to shift social spending to the employer from the government, taking away the sting of higher rates. Crediting retirement savings (both public and private) through the SVAT at an equal basis rather than linking it to income, allows for higher collections and more generous distributions, including to current retirees and the disabled.
Low tax rates on the CEO and Mega-owner class give them an incentive to get even richer by saving labor costs. If that savings were taxed away, labor costs CEOs would not seek economic rent to the detriment of their employees. Cutting labor costs eventually cuts purchasing power so much that the economy requires large worker debt loads to grow.
The TCJA is offset by the omnibus biennial spending deal, which increases GDP by every measure. To say otherwise is bad economics. The CBO needs to clean house and fire anyone who is operating on belief over fact. Indeed, the cuts in output from the shutdown confirm the truth of this proposition.
Low taxes for the donor caste do nothing for GDP, which equals Government Purchases plus consumption from government employees, government transfer payments to retirees and the poor and second order consumption in the private sector who provide services to government payees and themselves. Their consumption leads to business investment in plant and equipment. While companies can certainly issue primary share offerings to the secondary market to finance investment, they could also use spare cash or issue securities or bonds.
The other elements of GDP are exports less imports. If imports are more than exports, foreign borrowers are providing goods to the US for our Treasury Bills. US Government Bond sales counter the asset inflation from tax cuts, especially if government spending over and above net interest rolled into new debt is more than the tax cut for the wealthy.
If taxes go up on the rich, it is safe to cut spending and the economy will grow at a nice 3% clip, which does not cause inflation to any great extent. That is what happened under Clinton until he cut capital gains tax rates (which fueled the tech boom) and it was starting to happen for Obama once he raised taxes on the wealthy in 2013. The steam in the economy comes from that spending and the new spending insisted on by Pelosi, which Ryan agreed to. That spending is why the economy still hums.
The tax used to pay back the debt without crashing the economy is the income tax (FICA goes to an insurance fund, although it is borrowed from).Transforming it to an income and inheritance surtax is the best way to balance the budget long term. Cash from an estate, but not the assets, are taxed as normal income when received or sold after a $100,000 standard deduction for joint filers, half that for singles. The ESOP exemption would be maintained. The surtax would be earmarked for debt reduction, starting with funding the retirement of the Social Security Trust Fund as baby boomers use it, the funding of net interest to stop the bleeding and war (both nuclear and imperialistic), which is usually funded by deficits.
Because we finance war with deficit spending, to get out of debt we must make the rich pay pay for it through higher taxes. The same is true for reimbursing the Baby Boom in retirement (in other words, now) and in shifting from rolling over interest payments to new debt. Payment of an income and inheritance surtax on all income received over $100,000 to fund these things while adopting a Goods and Services Tax and an Employer paid VAT for discretionary and social spending,will demonstrate why the rich need to pay more now We do not have a per capita direct tax. It was never actually implemented though written into the Constitution.
The Sixteenth Amendment allowed a progressive income tax, which provided a revenue stream that could handle a larger debt. The liability for the debt, therefore, is not per capita but a function of income tax paid. Currently, $1 paid means $13 owed in debt. $10,000 paid means owing $130,000 in debt. $100,000 paid means a debt load of $1,300,000, etc.
Not paying now makes the problem worse and leaves it to the children of large income tax payers. We suspect that when this is made obvious, most will happily do their share. To be clear, per capita measures of responsibility for the debt are erroneous because it could never be retired that way and poor families cannot afford to pay their share. We do not have a head tax. If we did, the debt would not exist and we would be speaking Russian.
Making debt finance a matter for income surtaxes means that everyone else, including the wealthy, must pay more using a consumption tax. It could all be loaded onto a Subtraction VAT/Net Business Receipts Tax, which would leave most delightfully unaware of a larger tax burden, however a GST is more easily border refundable and a carbon tax serves its purpose as well, with both financing current military and civil domestic spending (from military bases to the FBI).
The SVAT would fund social spending, from an adequate refundable child tax credit of $1000 per month per child (which is in line with the USDA estimate for the actual cost of raising a child), which is four times more generous than the Harris proposal. Using an SVAT also implicitly (if not explicitly) burdens childless taxpayers with lower salaries, but also takes away the incentive to fire older workers with children because it is easier to replace them with two recent graduates.
This would especially be the case if we shift longevity funding to ownership of preferred or voting shares in employer stock.This makes it possible to bring more democracy to the workplace and to use such firms to shift social spending to the employer from the government, taking away the sting of higher rates. Crediting retirement savings (both public and private) through the SVAT at an equal basis rather than linking it to income, allows for higher collections and more generous distributions, including to current retirees and the disabled.
posted by Michael Bindner at 10:00 AM
0 Comments:
Post a Comment
<< Home