A Sensible Approach to Developing a Federal Budget Plan
By Dan, Seattle
11/19/2010
What's notably missing from the two plans proposed so far is justification for choosing various revenue sources over others. As well, the plans don't realistically capitalize on the vast wealth available; incredible disparity among individuals has emerged over the past few decades. In truth, there is plenty of money available.
So then it comes down to the steps and logic of choosing what to tax--the rules:
(1) Identify large, taxable revenue sources.
(2) Assess the impact of taxing sources, and weigh each against each other.
(3) Keep an eye out for beneficial side-effects.
The Simpson-Bowles plan derives only about 5% of the savings coming from increased general revenue. The Rivlin-Domenici plan appears no better.
As well, related to (2) above:
The Simpson-Bowles plan proposes nixing the deduction for mortgage interest? That will hurt the poor and the middle-class. This is unacceptable, especially in a practical recession (supposedly officialy over.)
The Rivlin-Domenici plan proposes a national sales tax? That will hurt the poor. This is unacceptable, especially in a practical recession.
Now, starting over...
To begin with, the Bush tax cuts need to expire, period.
Moody's bond rating agency has given notice--an IMPORTANT signal that the US is in fiscal danger. This fact cannot be understated. The US cannot endanger its credit rating (see link below).Then, plans need to start at square one, and provide key steps; the first of which is composing tables and graphs of projected revenues, based on federal marginal tax brackets without the Bush cuts, plus a set of new brackets and rates for the ultra-rich, well beyond the current highest tax bracket. This includes the assumption of capital gains being treated as ordinary income.
Next, federal corporate income taxes need to be addressed--a surtax must be added for all profits derived from offshore foreign affiliates. This makes sense as it will be both lucrative, and have the side-effect of bringing jobs home.
Also, a financial transactions tax needs to be implemented--which will have the side-effect of limiting reckless market trading, and hence reign in activity which can lead to stock market crashes.
Once the revenue from all the above is calculated, then it's a game of give and take, with more sensitive areas such as mortgage interest and charitable donation deductions.
And THEN you can proceed with a plan for cuts. You cannot cut spending as your initial and primary action, as it will negatively impact GDP, and likely lead to another recession or worse. You have to size up what revenues you have first, and then reel back initial taxing proposals as approriate. Nothing could be more sensible.
p.s. Oh yes, and taxing soda pop seems fine. And why not even a larger cigarette tax?
"...a report that a Moody’s Investors Service analyst said extending the Bush tax cuts would be bad for the U.S. credit rating..."
http://www.marketwatch.com/story/treasurys-pare-losses-after-data-2010-11-15?dist=afterbell
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(456 posts)
Send PM |
Profile |
Ignore
