Posts Tagged ‘taxes’
Five leading economists, spanning the political spectrum from the libertarian Russ Roberts to the liberal Robert Frank, were polled by the team at Planet Money to come up with an economics platform they could all support. Surprisingly, they were able to agree on a radical overhaul of the US tax system, one of the most dysfunctional parts of Federal government.
Six major policy proposals to “fix” our economy – sounds like a bi-partisan winner to me. Read on and you will instantly understand why none is likely to see the light of day in Washington DC anytime soon.
- Eliminate the home mortgage interest deduction
- End the deduction that corporations get for paying for employee health insurance
- Eliminate the corporate income tax altogether
- Eliminate all personal income and payroll taxes
- Replace Federal tax income with a progressive national consumption tax and additional taxes on activities that cause environmental damage such as energy use.
- Legalize drugs
Before you dismiss these politically unfeasible notions out of hand, read the summary arguments, or give the full 26 minute podcast a listen. One day we will have a thoughtful and respectful public discussion of the serious economic issues facing our country. Judging by the increasingly banal media coverage of politics and the associated pandering to the public by those running for office, that day does not yet appear to be at hand.
A global super-rich elite had at least $21 trillion (£13tn) hidden in secret tax havens by the end of 2010, according to a major study. The figure is equivalent to the size of the US and Japanese economies combined.
This from a BBC article on a recent study, The Price of Offshore Revisited, released by the Tax Justice Network.The banks with the most offshore assets are found to be UBS, Credit Suisse and Goldman Sachs.
While the amount is contested, the breathtaking scope of the sums involved does explain the intensity with which the Treasuries of the US and UK in particular are pursuing banks in such well-known tax-havens as Switzerland and Lichtenstein. Let’s see, a conservative back-of-the-envelope calculation would see nominal income of $1T, in investment of $21T at 5%. Lost taxes on that amount, at say a 30% tax rate, would equal $300B, every year, and compounding.
Tax has become a dirty word in the U.S. debt crisis debate.
But almost unanimously, experts agree that raising taxes – perhaps significantly – is key to the country’s long-term salvation.
Unlike Greece, which is broke, the United States is rich and has the fiscal capacity to tax its way out of its debt mess. Policy makers may be reluctant to do so while the economy is weak. But longer-term, there’s room for tax rates to go up: Contrary to what most Americans believe, the United States is one of the least-taxed countries in the developed world. They pay much lower taxes than any other G7 country. Among wealthy OECD countries, only Chile and Mexico tax their people and companies less.
This the view from Canada’s Globe and Mail. It’s worth reading the whole article for another (and I would argue, saner) view of the current debate. There is an interesting chart showing that total US tax liability is at its lowest level since 1965, and still falling.
As painful and rancorous as the Congressional fighting was these past two months, I am afraid we are in for many, many more similar face-offs. This chart from Bloomberg (h/t The Big Picture) puts the scope of our longer-term problem in perspective.
Some argue passionately that Washington has a “spending problem.” Others argue as determinedly that government has a “revenue problem.” One way or the other, we do have a long-term shortfall that we will have to begin to close one way or the other.
And the conclusions the e-mag reaches (note, Slate is hardly non-partisan) are fairly damning.
* Between 2001 and 2011, the top 1% of earners received 38% of the benefit of the cuts.
* The US experienced the slowest rate of job and GDP growth since WWII.
* Median real wages (the best measure of average earnings) actually declined and inequality continued to skyrocket.
* The Bush tax cuts added $2.6T to the national debt, about 1/2 the debt increase over the past decade.