Tax hike for wealthy Americans won't kill growth: CBO

Comments (17)
ruhr wrote:

Why not tax reform to solve once and for all the impact of realizing a “fiscal cliff”? What better time to reform personal tax with a tax code that is easy to implement, understand and work with, reduces federal administrative costs on an annual basis, and benefits middle and low income earners whilst retaining the incentive to increase income?
Consider a flat rate tax of 20% on all income irrespective of source whether wages or capital gains, with a tax free allowance of $20,000 per person replacing all allowable deductions. The tax free allowance will reduce by $0.50 for each dollar of income greater than $75,000 per year; meaning income greater than $115,000 per year, will be taxed at the rate of 20%.
Additionally income greater than $250,000 annually will be subject to a tax surcharge of 10%, until such time as the national debt is expunged, and the budget returned to surplus, whereupon the tax surcharge will reduce to 5%.
To those who assert a flat rate tax works to disadvantages low incomes earners, this is allowed for by exempting from taxation the first $20,000 of income earned per individual, irrespective of marital status.
It is important to note this taxation method shies away from the regressive nature of tax charges, whereby a higher tax liability applies as income increases. The strength of this system is in the use on one tax rate only of 20%, combined with a tax free allowance of $20,000 per year to low income earners.

Nov 08, 2012 4:35pm EST  --  Report as abuse
TheNewWorld wrote:

The CBO says that taking money out of the private economy and putting it into the government’s hands wont kill growth. How ridiculous is that? Raising taxes is necessary, it is going to stiffle growth. Be honest with America for a change.

Nov 08, 2012 6:28pm EST  --  Report as abuse
TheNewWorld wrote:

@ruhr

I think the system is fair, however it would actually raise taxes on everyone, and I doubt that it would close the deficit, much less make head way on the debt. You are addressing only one aspect of the system and that is the income. If you give the government more money they will spend more money. The biggest way you can attack the deficit and the debt is with a balanced budget ammendment. You have to balance the budget, if you want to increase spending, you have to increase revenues. All other aspects of finance work on this basis. Keynesian economics is not economically sound. Want proof? Look at Europe and the US.

Nov 08, 2012 6:31pm EST  --  Report as abuse
AlkalineState wrote:

All I know is I was watching this economist on FoxNews named Karl Rove. He said this tax study is flawed. It doesn’t even address Benghazi!

Anyway, that economist seemed like he knew what he was talking about. He has no reason to lie.

Nov 08, 2012 6:58pm EST  --  Report as abuse
bobber1956 wrote:

The one that will hurt the most is obmacare. Employers are talking about three of the 4 possibilities. 1. Mass lay-offs. 2. Total part time work force. 3. Paying the “penalty” tax and not providiing insurance. Most are not even consiering the 4th, just providing insurance, it is too expensive. It is the combination of these taxes that will break the system. But no one has listened yet and still won’t, not even to the alomost 500 point drop in the Down in 2 days which the main stream does not even want to report. But hey, it is all Bush’s fault.

Nov 08, 2012 7:37pm EST  --  Report as abuse
Robert76 wrote:

I would like to see the rich taxed at the same rate as I am taxed. My tax rates for the last two years before I retired was 28%. While the rich and their lackies cry about their overtaxation, there are a great many rich who pay little or no income taxes due to loopholes written specifically for their income.

Why is it Ok to tax their income at a lesser percentage that wages, and interest from Savings accounts, CD’s, Savings Bonds, etc.

Heck even Mitt Romney only paid 13.9% income taxes. And do not get me wrong, with all the money he donates, he is the exception rather than the rule. There are many corporations and millionaires hiding their money in the Caymans and other secret bank accounts without ever paying any taxes on the money.

We need a flat tax, applied to all, and applied fairly to all income, regardless of source. We can not pay off our debts by only cutting spending, we also have to raise revenue. Any household knows that.

Nov 08, 2012 8:41pm EST  --  Report as abuse
Mott wrote:

Despite the near $5T tax cuts to date, it amounted to no job increase in US and is one more well engineered deceptive docrtine by Bush and buddies.

If mere $85B auto bailout save 1.5M jobs, spending $5T tax cuts toward a meager 200k jobs is a shear scam.

It’s high time to stop this $500B tax cuts and use it to balance the budget or use toward debt downpayments to lower the ridiculous $400B+ payments on interest alone per year.

Nov 08, 2012 8:49pm EST  --  Report as abuse
crod526 wrote:

Once again the Republicans in the House will go out and defend the tax breaks to the wealthy.

Nov 08, 2012 8:52pm EST  --  Report as abuse
BlueCannon wrote:

Now Obama has no reservations to get tough with GOPs on tax hike on the rich. He knows he stands no chance to run for the third term of presidency, so why back off as he didn’t during last term ? Hurting the economy is not this band of tax, but the drastic cuts in public spending that make Bernanke need to stockpile his baby – QE cash.

Nov 08, 2012 8:54pm EST  --  Report as abuse
BUCKEYEGAL wrote:

All I can say about taxing the rich and small businesses is from the experiences my husband and I have had.

We sank almost everything we had, including selling our home and put our savings into an insurance business that insured contractors. We had very tight restrictions on who we would insure and by golly we grew and prospered. My husband paid his own way to London,he got re-insurers to pick up our accounts in London and we continued to expand.

I had my own interior design business in Los Angeles, that I closed, just so I could answer phones and other duties around the office. We put our daughter and her husband on board and began to grow. Then we began to hire additional people and after 7 years our office staff was at 9 people. Times were good and we just had to keep hiring. That was a good thing!

Until..the government taxes and state taxes and a personal injury on the job claim etc. etc. The woman that claimed a file fell on her and she hurt her back..We found later that she and her boyfriend went on a cruise to Mexico on the workers compensation money she got paid.

The entire strangling of our business by government and state taxes and the myriad of rules that thrown at small businesses, not to mention insurance coverage for employees was overwhelming!

Bottom line is, we sat down and had a long talk with each other and let out daughter and son-in-law go and closed the business, taking out of it what we had left. We recovered part of our investment to some degree, but could have kept employing more and more people had we not have been hit with all of the restrictions of state and government.

We miss those days, because even though it was tough, it was fun, because we were building something for ourselves and others too. I feel those days will soon be coming to an end. It sure was fun while it lasted though..

Nov 08, 2012 9:34pm EST  --  Report as abuse

I am small business owner. My profit margin is currently 17%. If I am forced to buy expensive health care policies for all of my employees, my profit margin will be reduced to 8%. If you take an extra 3% from me, thereby reducing my profit margin to 5%, I’ll be better off buying a long-term annuity and retiring at 38. I’m struggling to find the best way to tell my employees that they will be fired. Obama is good at giving speeches. Perhaps he can tell them? I hope Obama, who has never had a real job in his life, understands that small business owners are not slaves who will work solely to provide entitlements to those who claim to be helpless. We work 60 hours per week for our own families, not for your warped version of the European Dream.

Nov 08, 2012 9:38pm EST  --  Report as abuse
TheNewWorld wrote:

@Mott

Tax breaks work as a stimulus, but not long term. In the long term everything goes back to normal. The Auto bailout did not save 1 million jobs. That is using fuzzy math. We saved 50,000 jobs that supported another 100,000 jobs that supported another 500,000 jobs that supported another 1,000,000 jobs and so on. If you use that logic, it eventually saved every job in America. It did save jobs, and the tax cuts stimulated the economy for several years.

Raising the tax rates which is going to happen even if the Bush tax cuts stay in place completely (Capital gains increases as part of Obamacare), will cause GDP growth to slow further and more than likely dip into a recession. Not raising fixing the budget and addressing the debt limit will cause our credit rating to drop, and weaken the dollar. Everything will become more expensive, your paycheck will buy less, you will have to make choices and cut back on spending. That will cause a downward spiral. If inflation on the US dollar takes off, it will cause a world wide recession that can hit a depression. If Americans get nervous and start a run on the banks, we can crash the US economy for decades. That is what TARP was designed to prevent.

To properly address the deficit and the debt, we have to raise taxes, we have to cut spending across all government spending programs (Social Security and Medicare are not government spending programs) including education, defense, food stamps, free phones, etc. etc. This will pull money out of the economy both through raised taxes and through loss of government spending. We will hit a recession. No matter what our elected officials decide to do we have rough times ahead of us. We have ran out of road to kick the can down.

Nov 08, 2012 10:39pm EST  --  Report as abuse
BUCKEYEGAL wrote:

Texas BlueBlood

If you read my above comment.then you know what I’m talking about. We are on the same page,and like you said..Obama has never had a real job and tried to run a business. He has no clue and never will..small business owners are screwed while he is in office, thus the demise of the American Dream.

Nov 08, 2012 10:54pm EST  --  Report as abuse
BUCKEYEGAL wrote:

The New World

You are so right..I see ads in the local paper every day, that if you “Qualify” aka..no job and on welfare, then you qualify for free phones and service hours..How the hell does that work??It makes one wonder..why kill yourself working when all the freebies are there for the taking?? Socialism is alive and well now and if this keeps up under the current administration the USA as we have known it is lost.

Nov 08, 2012 11:31pm EST  --  Report as abuse
Mott wrote:

@TheNewWorld – Raising the tax rates .. the Bush tax cuts stay.. will cause a world wide recession that can hit a depression..

Heard enough of these fear-mongering false-docrtines to justify the handouts to the addicted at the top.

Sounds more like – TheOldWorld and not so TheNewWorld?

Nov 09, 2012 1:05am EST  --  Report as abuse
anarcurt wrote:

Raising taxes on 250K+ is only on a tax on owners who pull out more than 250k from their business. If you plow some of that money back in to your business either through hiring, machinery or inventory you won’t see a dime increase. The tax isn’t on revenue it’s on profit. If you reinvest in your business instead of taking the money out to buy a yacht the taxes do not touch you.

And if paying for insurance is such a big thing then why don’t more of you support single payer? I can think of nothing more pro-small business than getting them out of the insurance game.

Nov 09, 2012 3:58pm EST  --  Report as abuse
grasspress wrote:

how about a ‘flat tax’ that varies each year depending on agreed-upon economic criteria? a ‘personal deduction’ of 12,000 (for conversation starters) for each person, regardless of age. so a single tax filer would get a deduction of 1 x 12,000=12,000, and a family with spouse and four children would get a deduction of 5 x 12,000=60,000. all ‘new income’ would be taxed at the same rates.

the part that varies would be the percentage rate of taxation (8%, etc.) and the amount of the individual deduction (12,000, 11,800, etc.); these two variables would depend on the health of the economy.

there would be no ‘business tax’ but all profits would have to be dispersed and attributed to payrolls, shareholders, or reinvested in the business as research and development or capital improvements, much like it is now.

Nov 09, 2012 10:55pm EST  --  Report as abuse
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