Any tax increases would be too taxing on our economy.

Any tax increases would be too taxing on our economy.
taxing [tak-sing] (adj) Burdensome;demanding, onerous, and wearing

"the tax code is 10 times longer than the Bible, without the good news."  -Rep. Dave Camp (R) Michigan

The centerpiece of President Obama's plan is to raise taxes on the rich (households making $250.000 or more). The only problem with this "solution" is that it is deceptive and intellectually dishonest. President Obama likes to give the impression that his plan to tax the rich could significantly reduce the deficit, a claim which is false... and Obama knows it to be false.

Everybody knows that the rich have a lot of money, so it may appear reasonable to non-economists that taking some of this wealth can fill the hole in the budget. What the public does not understand, and what President Obama will not tell them, is that there are just too few rich people in America for this plan to work.

According to the Congressional Budget Office, over the next 10 years the Obama budget would produce a deficit of $10.9 trillion, or 5.3% of GDP on average. According to the left's own calculations, and as reported by the New York Times, Obama's plan to raise taxes on the rich will generate $700 billion in additional revenue over the next decade, or just a pathetic 0.3% of GDP. In other words, the plan to raise taxes on the rich will only cover one of fifteen dollars of deficit spending. Where is President Obama going to get the other fourteen?

Any honest economist who knows the facts can tell you that a measly 70 billion in revenue per year from the rich will not come close to cover Americas future unfunded mandates of at least $63 trillion dollars. Fact is, even if we could confiscate all the assets of the rich without any risk to the economy, this one-time solution would just pay for around six months of the 2011 deficit. Also consider that the top 10 percent of wage earners already cover 70 percent of all federal tax receipts. And perhaps even more striking is that while the top 1 percent of Americans makes 22.8 percent of the wages, and they pay over 40 percent of the overall tax bill, according to the National Taxpayers Union.

Sometimes you hear from the left that repealing the Bush tax cuts will raise 3.7 trillion over the next 10 years, but that figure includes the Bush tax cuts for the middle class. The key to remember is that 3 trillion of the Bush tax cuts mainly went to households making less than $250.000. Obama has no plan to repeal that part of the Bush tax cuts. The Democrats and their allies in the media who cite the 3.7 trillion figure are playing a game of bait and switch to confuse the public into supporting their policies. I saw this trick used recently by John Stewart to deceive his economically unsophisticated audience. The media meanwhile has only a selective interests in educating the American public. When miss-perceptions help the left, the sympathetic media suddenly loses interest in their duty to inform the policy debate.

Keep in mind that we live in what has increasingly become a consumer driven economy. Consumer spending now accounts for nearly 70 percent of economic growth. Whether for the better or worse, doesn't really matter.... It is a fact - and a fact that cannot be ignored when determining tax policy. Consumer confidence has now become more critical than ever to creating and perpetuating a strong, sustained economic growth.
According to economist Mark Zandi, the top 2 percent of income earners in America, those targeted by Obama’s plan, account for nearly 1/4 of all consumer spending, the top 5% are credited with 37% of the spending, and the top 20% provide nearly 60%. Ending the Bush-era tax rates would be a perceived tax hike that would lower consumer confidence, resulting in reduced consumer spending and capital investment in our economy. Add to that, a 25 percent increase in capital gains taxes (by allowing the Bush tax cuts to expire) will certainly divert money away from job creation and sustainable investments. And sustainable investment is precisely what a recovering economy requires.

Perpetuating the policies of the past three years, and increasing taxes on the highest consumers and wealth creators, would just serve to slow the pace of economic growth and hurt everyone. Further attempts to generate more tax revenue with no regard to their effects on economic growth, and continuing to use tax credits to direct a reallocation of capital throughout our economy isn’t working. It wasn't going to work, it hasn’t ever worked, and it never will work.

The tax code is a complicated mess that annually requires 7.6 billion hours of paperwork to comply with. Paul Ryan's aim is "fundamental" tax simplification, understood the usual way — broadening the base (eliminating loopholes) to make lower rates possible. It starts out as a revenue neutral tax reform, but it has the added benefit of stimulating the economy, providing jobs, and an increase in tax revenue overall. He would lower the top rate to 25 percent — three points lower than Ronald Reagan achieved in 1986, with what proved then to be perishable simplification. Since 1986, the tax code has acquired more than 15,000 complications, using the tax code not simply to raise revenues efficiently (with minimal distortion of economic behavior), but to pamper pet causes, appease muscular special interests and make social policy. It is time, once again, to trim that fat from our tax code.

The Path to Prosperity, cuts $4.4 Trillion over 10 years if we’re going by CBO’s numbers or, if you prefer to use Obama’s cynical, unserious, catastrophic budget proposal as the baseline, it’s $6.2 trillion over the next decade.

It reduces the debt as a percentage of the economy, and puts the nation on a path to actually pay off our national debt. The proposal brings federal spending to below 20% of gross domestic product (GDP), consistent with the postwar average, with a renewed focus on growth by reforming the nation’s outdated tax code, consolidating brackets, lowering tax rates, and assuming top individual and corporate rates of 25%. It maintains a revenue-neutral approach by clearing out a burdensome tangle of deductions and loopholes that distort economic activity and allow some corporations to pay no income taxes at all.

A study just released by the Heritage Center for Data Analysis projects that The Path to Prosperity will help create nearly one million new private-sector jobs next year, bring the unemployment rate down to 4% by 2015, and result in 2.5 million additional private-sector jobs in the last year of the decade. It spurs economic growth, with $1.5 trillion in additional real GDP over the decade. According to Heritage’s analysis, it would result in $1.1 trillion in higher wages and an average of $1,000 in additional family income each year.

"Targeted" tax adjustments are popular complexities, favored by President Obama and his Democratic, socialistic ilk, because they serve a bossy government's agenda of behavior modification: You can keep more of your money if you do what Washington wants. The tax code should not be a "tool of industrial policy" or of "crony capitalism". Politicians should not pick the industry or socioeconomic group of the day. Returning to tax simplification, for reasons of fairness, and to reduce the economic drag that "poorly designed tax policy" imposes on our economy, is the obvious revenue strategy required to help address our growing deficit and debt issues. Removing loopholes and tax breaks for the few, that have come largely at the expense of the many, would allow for further broad-based tax rate reductions, while at the same time, increase economic activity and government revenue. By doing this, it also would help prevent the need to cut too deeply into needed government departments, when addressing our spending reduction strategy.

Many conservatives believe that, although most Americans should be paying a smaller government less taxes, more Americans should be paying taxes. The fact that 46.7 million earners pay no income tax, creates moral hazard — incentives for perverse behavior: Free-riding people have little incentive to restrain the growth of government when their not paying for it with income taxes. You've got to have some responsibility for the government you allow, the government you helped to elect.. Most people have co-payments under Medicare, and everyone should similarly have some "skin in the game" during the income tax and spending policy decisions. In addition to the one-third of the 150 million tax returns filed by individual earners that showed no tax liability, additional millions of households have incomes low enough to exempt them from even having to file. Worse yet, the bottom two quintiles of earners have negative income tax liabilities, and they receive cash payments from the government via refundable tax credits. Any payout provided by the government, not related to taxes paid into the system, should be done solely through the welfare system, and only to those at or near poverty level.

All projected budget deficits in our future will be caused by rising spending, NOT than by insufficient revenues!!

(Even with the 2001 and 2003 tax cuts made permanent)

In 2007, entitlements (excluding net interest) accounted for 56 percent of all federal spending and 14 percent of GDP--up from 10 percent of GDP three years prior.

The three largest entitlements are Social Security, Medicare, and Medicaid. Their total cost is projected to leap from 8.4 percent of GDP in 2007 to 18.4 percent by 2050.

Rising spending--not low revenues--is driving the long-term budget deficits. By 2020, spending is projected to be +6.2 percent of GDP above the historical average, while projected 2020 revenues are +0.2 percent of GDP above the historical average.

Between 2008 and 2020, the cost of Social Security, Medicare, Medicaid, and net interest is projected to rise from 10.2 percent of GDP to 15.6 percent of GDP--making them, along with the interest on the debt, responsible for nearly the entire rising budget deficit.

The federal budget historically has been at or around 20% of Gross Domestic Product (GDP). State and local government are spending an additional 13% of GDP, so the total cost of government amounts to nearly 1/3 of the economic output. Assuming rapid growth in entitlements, due to retirement of baby boomers and longer human life spans, the Government Accountability Office (GAO) projects federal expenditures at 23% of GDP by 2015, 33% of GDP by 2030, 45% of GDP by 2040. Those numbers do not include state and local spending.

How will your childs personal finances be different from yours, when their taxes are doubled and interest rates are more than tripled? It's time to get serious! For their sake...if not your own.

Under this status-quo scenario, CBO sees the deficit growing consistently as a percentage of GDP, from 7.4 percent of GDP in 2020 to 17.2 percent in 2040, 28 percent in 2060 and 42.8 percent in 2080. As for debt, the situation is similar. According to CBO, the status-quo model produces debt levels that reach 433 percent of GDP by 2060 and 716 percent of GDP by 2080.

The comparable debt numbers for Ryan’s plan are 77 percent of GDP by 2060 and a surplus in 2080.

Our current level of national debt and future unfunded liabilities are so grotesquely gigantic as to hypnotize most of the nation’s leaders. Our unfunded liabilities are at least $100 trillion — more than twice the economic output of the entire world." Traditional Medicare composes about 69 percent, Social Security roughly 17 percent and our current deficits and interest account for the remaining 14 percent. With a total population of 304 million, from infants to the elderly, the per-person payment to the federal treasury would come to $330,000. This comes to $1.3 million per family of four—over 25 times the average household's income."

If I'm not able to appeal to your love of country, maybe your love of family is the way to go. I'll make it plain and simple.....If we don't fix this, our children and grand children will have quality of life far lower than we were blest with. Now.....let's get to work!

DISCRETIONARY SPENDING

Unnecessary government programs should be eliminated, such as agricultural subsidies, "corporate welfare," and tax credits for favored industries. These programs do not serve the interests of the general welfare(general public), and the beneficiaries do not need government support. Agricultural subsidies primarily benefit big agribusinesses and wealthy landowners, for example, while driving up food prices for all Americans.

Another problem is duplication. Federal programs often have overlapping objectives, resulting in "turf wars" and/or unnecessary costs to ensure coordination, e.g., several different agencies have been involved in water resources development. The solution is to pick the best programs, merge programs, and terminate the rest.

Federal grant programs should be eliminated, with the functions involved being left to state & local governments or the private sector. Some $426 billion in federal grants were paid in 2005, ranging from $186 billion for the federal share of Medicaid and the $71 billion cost of the Department of Education (mostly grants) to 50 different grant programs for the homeless in eight federal agencies. Grant programs encourage overspending for the stated grant purposes They foster the growth of federal, state and local bureaucracies to document compliance with federal mandates, and they reduce the flexibility and innovation of recipients. Is there truly some reason to believe, for instance, that the states, school districts, teachers, and parents of this country cannot be trusted to determine how our young people should be educated? Other than money, what good is the federal government, in regards to....anything the states actually provide? We need to cut out the Federal government, and the taxes they impose, and let the individual states and localities impose the taxes required for the funding they need.

ENTITLEMENTS

As already noted, over half of the federal budget currently goes for "entitlements" (Social Security, Medicare, the federal share of Medicaid,etc,) and these programs will continue to grow rapidly unless corrective action is taken. What should be done?

While many conservatives support entitlements, they do not support their increased size and scope. Multi-millionaires shouldn’t receive Social Security checks or have their knee replacements paid by Medicare. Scaling benefits to income is called means-testing, and we should all embrace it for entitlement programs. Ryan’s budget introduces means-testing into Medicare, and this, probably more than any other component of his plan, is needed to prevent our downward spiral into insolvency.

The answer for the Social-Security pyramid scheme is well-known. Chile fixed its Social Security disaster decades ago, by giving large IRA-style allowances and phasing out the government payments to younger recipients. The sooner we do this the easier it will be. Permit younger workers to use the payroll taxes that they pay for Social Security to set up individual retirement accounts in lieu of traditional retirement benefits, which would help keep the system solvent as baby-boomers retire, and make it far more equitable going forward.

Restructure Medicare and Medicaid. No one wants to oppose healthcare for people who need it, but there is no escaping the fact that the escalation of medical costs has been fueled by government policies that cut the perceived linkage between the consumption of medical services and the payment for them. To make things better, this linkage must be restored – which means reducing government control over the healthcare marketplace, not further increasing it. (There are already 100,000 pages of Medicare regulations, and what good have they done?).

THE BUDGET PROCESS

A balanced budget amendment to the Constitution, either prohibiting deficit spending except in time of declared war or requiring a 2/3 majority to approve deficit spending in any given year, would be a tremendous help -- if it could be adopted.

A biennial budget process would allow Congress to step up their oversight, with the hopeful goal of increased spending efficiency. Congress has completed only two budgets on time in the last 30 years. They’ve become a Congress of omnibus appropriations and lack of oversight. Every two years, one-third of the Senate faces reelection, as does the entire House of Representatives. As those campaigns rev up, lawmakers are torn between their legislative duties and retaining their seats. With the implementation of a biennial budget, during the off-year, lawmakers can focus on oversight and implementation, instead of debating another budget.

Also mentioned are the "pay as you go" rules that were recently reinstated, but these rules are far from a panacea. First, they have never been viewed as applying to mandated spending programs, such as entitlements. Second, their primary effect is to limit tax cuts (including extension of tax breaks enacted for a limited period of time, e.g., provisions designed to prevent millions of middle class taxpayers from being subjected to the Alternative Minimum Tax).