Government Shutdown Prevention Act: lolwut?

[Looneybomber]

Time is almost up. Looks like they might make a deal.
http://news.yahoo.com/s/ap/ap_on_bi_ge/ ... g_showdown

[heliochrome85]

http://news.yahoo.com/s/ap/us_spending_showdown

[srellim234]

Letter to the editor in the L.A. Times today put a lot of perspective on how inept and full of BS both sides in Congress are.

"Dealing in Washington

Re "Budget deal averts shutdown," April 9

Our geniuses in Washington trimmed $38 billion out of a $1.65-trillion deficit for 2011. If our acclaimed "budget deal" is put into comprehensible (household) numbers, here's how $38 billion cut from $1.65 trillion would compare:

- That $16,500 price for a used truck is reduced by $38. Balance due: $16,462.

- That $1,650 credit card bill is reduced by $3.80. Balance due: $1,646.20.

- That $165 electricity bill is cut by 38 cents. Balance due: $164.62.

We'd all laugh at these "cuts" being cuts at all, let alone "draconian." Our politicians had better lay out this elementary math before our country isn't worth one red cent.

Mark Collins
Altadena"

http://www.latimes.com/news/opinion/letters/

Congress and this Administration are pathetic. Not only this, but they'll do the same garbage all over again the day after tomorrow.

[szh]

Congress and this Administration are pathetic. Not only this, but they'll do the same garbage all over again the day after tomorrow.

Indeed, yes.

Pathetic situation we are in with our politicians.

Z

[IBCoupe]

President is expected to advance the Simpson-Bowles plan that came out of his Comission way back when, today, as a more even handed plan than Ryan's budget:
http://tpmdc.talkingpointsmemo.com/2011 ... budget.php

Cuts to medicare, defense, and a reshaping of the tax structure, and possibly fixes to Social Security, though not as a budget measure, because it contributes less than what Congress just cut.

[stebo0728]

Intresting plan, Im not seeing a road for it to get anywhere. Reducing the top tax bracket is not going to sit well with the proggies. That said, I do like some of the bullet points, but dont really know if its any better or worse than the Ryan plan. I thought I had heard about this plan including means testing for Social Security benefits, but I couldnt find evidence of that, so maybe that was a different plan, or just a notion. I would definitely be opposed to means testing. Looking forward to seeing a better breakdown of this plan roll out. Its like the Ryan plan though, just a blueprint, and not an actual budget, so maybe the 2 big plans can marry in some fashion?

[IBCoupe]

Ryan's plan is to cut taxes and privatize Medicare. That's it. He doesn't touch defense and doesn't attempt to fix Social Security.

He'd turn Medicare into a voucher system, and slowly shrink the voucher in relation to the projected medical cost increase. The potential flaw is that he assumes two things:

First, that shrinking the vouchers will have any greater control over costs than the current idea of shrinking Medicare payouts.
Second, he assumes the elderly will be able to participate in the market. Medicare was created because old people weren't worth insuring. Now, Obamacare would solve that problem by requiring insurance companies to insure anyone that applies, but Republicans still seem hell-bent on undermining that law. So, if they're successful, privatizing Medicare would effectively eliminate it, not make it less costly or more efficient.

After all, Medicare's overhead was just over 1% last year. Your average insurance companies run around 20%. In theory, Ryan's plan could make things less efficient.

[stebo0728]

Then again, the Simpson/Bowles Plan would increase corporate taxes. Big mistake. That kills jobs and increases cost of living. Dems still seem to believe the myth that corporations actually pay the taxes they write checks for, that they actually allow their profits to be reduced by these taxes. Z has stated, and I agree, remove all corporate taxes, place them on individuals. This does three big things:

1. Increases incentive for businesses to operate, increasing number of businesses, number of jobs, and reduces cost of living.

2. Virtually ends necessity for lobbyists, as there is no need for special breaks and exemptions for certain companies and industries.

3. Places all taxation on individuals, thereby placing taxation in plain sight, where individuals can see them, and know what they are actually paying.

[IBCoupe]

They'd lower the tax rates and eliminate deductions, Stebo. That might create a net increase, or it might not, but it will make entering the market much easier, no?

[IBCoupe]

And does Z's plan involve raising taxes on individuals, or is he proposing that what the budget needs is lower revenues?

[stebo0728]

Well I shouldnt speak for Z, he can answer, but my idea of the plan is that all taxes are at the individual level, be it income, capital gain, estate, or what not, its at the individual level. If taking taxes off corporations means raising taxes on individuals, so be it. But if thats the case, it should be close to a wash, as you were paying the taxes already when you bought goods, now your just paying them directly to the government yourself, rather than passing them through corporations.

[stebo0728]

They'd lower the tax rates and eliminate deductions, Stebo. That might create a net increase, or it might not, but it will make entering the market much easier, no?

Did you go ninja edit that article? I swear I read in it that they considered raising corporate tax rates. Couldnt find it the second time around though, my badz.

[IBCoupe]

Bwahaha!

[szh]

I have not thought through the implication of "no corporate tax", to be honest, so do not have a comment on that per se.

FWIW, I have been somewhat in favor of a VAT on purchases in lieu of (i.e., not in addition to) a corporate tax.

Here, one could also argue that the rich would pay more taxes (on the assumption that they consume more), so it might be a better way to handle the "rich need to pay more" problem.

But, this is not well thought through on my part ... yet, so ... please take these comments way lightly.

Z

[IBCoupe]

Fair enough. I don't know much about a value-added tax, so I can't speak to it. I'll go do some reading.

My impression is that all of the things tax reformers want to do are things that can be accomplished in the marginal rate system we have, but for some reason (perhaps political feasibility) they want to impose a kind of upheaval and disruption instead, and absorb all the costs associated with that.

[IBCoupe]

And from Wikipedia's summary of how it works, it doesn't seem like it would be any different than the so-called FairTax. It is, by its structure regressive, but I think that it might actually play out to be worse than the FairTax, as the more steps there are in a chain, the more expensive the product is on the shelf.

Anybody who's ever complained about big-box stores should not be in favor of a VAT tax. Further, the more complicated an item that's made in the U.S. is, the more expensive it is to buy, which is going to spread out access to certain goods. If any if those goods (say, a personal computer) contribute to economic mobility, there might be an impact there.

Also, come to think of it, it would encourage outsourcing, too. Imagine your toaster, with all of it's individual pieces, is taxed at every transaction - each piece, made in the U.S., costs a little bit more to the manufacturer that assembles them together. Then it goes to the distributor. Then it goes to a retailer. Then it goes to the consumer.

On the shelf next to that American toaster, there's one made and assembled in Vietnam. That's two links in the VAT chain that have been removed. Couple that with the disparity in wages and regulatory costs (five workers a year die from lead poisoning? Oh well) and you've got two identical items that cost a very different amount.

And I think one of the biggest problems that all consumption-based tax will face is the fact that we're buying in stores a lot less frequently. That's not a burden placed on the VAT only, but it does get placed on it.

[stebo0728]

VAT is trouble. Its nothing like the FairTax, please do not confuse the two.

[IBCoupe]

I didn't.

[szh]

VAT is trouble. Its nothing like the FairTax, please do not confuse the two.

Not confusing the two here either.

Maybe I should call it a "consumption" tax ... or a Federal Sales tax.

Z

[szh]

But, again ... my thoughts on this topic of VAT or Federal Sales Tax, etc., are not well-formed or researched yet, so please do not take my initial spoutings as anything other than that!

Z

[IBCoupe]

I wasn't meaning to hold you to it, Z; I am just learning about it as we go, and I was offering my initial perceptions of the policy implications.

[stebo0728]

VAT is bad because it hits at each different level of prodution, rather than a solid percentage on each purchase, and would require alot more bureacracy to keep up with, plus it would add needless considerations to changes in production processes. For example, say a company makes every piece of a product, but then decides one day that company B could make one piece cheaper, giving company A more time to manufacture faster, and would be able to bring the cost of the product down. VAT sees that as another place to tax, and is a step that would have to be fondled on multiple levels before implemented, which feasibly could further limit job production.

Consumption tax is definitely the answer for us, but responsible consumption tax, not the VAT.