Economy
Related: About this forumCost of interest on federal debt in 2012 is a staggering
the cost of paying interest on the debt for fiscal 2012: $359,796,008,919.49
That is $340 Billion paid out EVERY YEAR! How many people can be helped with that much money
instead of paying it out for interest, and half of it goes outside the country!
And that is lower because the federal reserve has artificially kept interest very low,
in fact lowest in many decades. That number will rocket up when and if economy picks up.
Here is the article where I got the numbers.
http://www.usnews.com/opinion/mzuckerman/articles/2012/12/28/mort-zuckerman-brace-for-an-avalanche-of-unfunded-debt
MannyGoldstein
(34,589 posts)Before we lowered taxes on the wealthiest Americans and started two nutty wars.
Ah well.
There are ways out of this that have been proven to work. Sadly, they're far off from anything that's under consideration today.
JDPriestly
(57,936 posts)people now working and earning money should pay the tax rates that we paid when we were on our way to balancing our budget. Go back to the rates we had when we were more prosperous.
We don't need to cut Social Security. We do need to cut military expenditures.
golfguru
(4,987 posts)mbperrin
(7,672 posts)before George (goddamn him) Bush stuck his dic, I mean, foot in it.
progree
(10,932 posts)in the "{#} Budget Deficits and Surpluses" section
which refers to
http://www.whitehouse.gov/omb/budget/Historicals
. . # Table 1.1 - http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/hist01z1.xls
And yes, Bush inherited a string of 4 surpluses and managed to nearly double the national debt (1.86 X)
http://www.democraticunderground.com/111622439#post5
And although Obama's debt record is not great (to put it mildly), at least it was incurred to try to begin to heal the economy after a Bush-era financial calamity.
Whereas, under G.W. Bush, the accumulation of debt was totally unnecessary and pointless -- the last 4 years under his predecessor (Clinton) were all years of budgetary surplus. Bush quickly returned us to budget deficits and debt accumulation via massive tax cuts, 2 wars (one based on lies about weapons of mass destruction), and the Medicare Part D drug benefit (which was written by and for the insurance and drug companies) -- all of which were totally unpaid for (unlike Obamacare which the non-partisan Congressional Budget Office -- the official arbiter of the fiscal cost of legislation -- scores as creating a slight 10-year surplus through cuts elsewhere and to a wide assortment of fees and taxes). Whereas the debt increase under Obama was to stop the plunging economy he inherited (4.3 million jobs lost in the last 10 months of the Bush admimistration) and to get the economy pointed in the right direction.
mostlyconfused
(211 posts)But I don't hear anybody advocating going back to pre-Bush spending levels....just the tax levels, and that won't come close to fixing he problem.
mbperrin
(7,672 posts)is that what you're saying?
Weird, because I think that what you said was that it's an all or nothing game, not the usual in economics...
mostlyconfused
(211 posts)Taxes cannot be raised high enough to fix this from the revenue side.
mbperrin
(7,672 posts)Raise taxes to that level, and you're covered. The current deficit is a shade over a trillion. That's about a quarter of current revenue, so raise the average tax by 33%, and you're there.
I'd personally prefer to collect most of it in the upper brackets, but that's just a preference. For a start, let's reinstitute the 92% top rate from 1952, the year I was born.
Once we're in balance, decide how long you want to take to pay off the accumulated $16 trillion and you've got it.
Absurd to think that Americans owe $58 TRILLION in private debt to banks and credit cards and the like, and that a measly ONE trillion can't be got for taxes. Isn't it? That 1.7% additional burden would just tear down everything? Nonsense.
progree
(10,932 posts)[font color = blue]Absurd to think that Americans owe $58 TRILLION in private debt to banks and credit cards and the like, and that a measly ONE trillion can't be got for taxes. Isn't it? That 1.7% additional burden would just tear down everything? Nonsense.[/font]
The $58 trillion in private debt is a cumulative number, accumulated over many decades, not just a one-year number. Whereas the one trillion deficit is a one year number. Its not like the additional taxes we need to collect annually to raise an additional $1 trillion to balance the budget is just 1.7% of the amount we're paying annually to service the private debt.
And the private debt figure doesn't include I don't recall how many tens of trillions (present worth in todays dollars) in unfunded future government liabilities (unfunded meaning the part of future liabilities that current tax rates will not be able to cover). On top of the $16 Trillion in government debt that you already mentioned. (actually 16.43 T$ now, wow, it was just a few months ago (Aug. 31) that we crossed the 16 T$ threshold http://www.treasurydirect.gov/NP/BPDLogin?application=np )
mostlyconfused
(211 posts)When the top margin rate was 92% only a couple of hundred people reached that level. If you raised the top marginal rate to 92% today if would impact millions. That money is not going to be there to tax year after year anyway, so any long term projections based on taxes at that level are pure fiction.
But for sake of argument, let's say you raise the top marginal rate to 100%. That will not raise enough tax revenue to cover the $1.1 trillion deficit for one year.
mbperrin
(7,672 posts)You seem unaware that the highest bracket was 50% as late as 1987, and that was after the tax cuts of JFK and Ronald Reagan. Quite normal for those who receive huge amounts of service from the government to pay huge amounts of tax as well. Otherwise, it's theft, which it has been for decades now.
Check your population figures again for the 1950s. I was alive then, but someone as young as you apparently doesn't realize that we were the wealthiest country on earth then as well as now, with quite a few wealthy individuals, as well as a growing and healthy middle class with real upward mobility, not like now.
This is not a theoretical discussion - I'm basing it on historical fact. When a country grows, as we are now and always have, you need more expense from the government, not less, unless you think less education, worse roads, bad air, and sick people are good things to be embraced.
Please show me in arithmetic that an economy of $16 trillion in size cannot raise $4 trillion in taxes with a rate of 100%. See how silly that claim is? Of COURSE there is a taxing level that will allow the federal government to spend 25% of the nation's economy, because 25% is less than 100%.
And somewhere in your argument is some sort of idea that the economy is static, with just the same actual money in it year after year and that somehow taxes reduce the size of an economy, both simply wrong by any economic analysis.
We DO tax everybody in some way now. For example, here in Texas, the poorest person still pays the 8-3/4% state sales tax. So do three year olds if they are buying something with grandpaw's gift money. Renters pay their landlord's property taxes, even if it's awful housing. And on and on.
Of course, the tax segment getting the best treatment is the artificial person catergory - corporations. They pay nearly nothing, about 1/10 of all federal taxes, even though their profits this year of about $6 trillion are nearly half of the total economy. In fact, by simply charging a net effective rate of 16% on corporate profits alone, without adding to any other tax group at all, would raise the $1.1 trillion deficit and close it. 35% would allow us to pay the debt off completely in 10 years and accumulate large surpluses in excess of $2 trillion per year after that.
That would be my personal preference, but hey, I'm not running things, obviously. And we didn't even discuss new tax possibilities, like a transaction tax on every stock trade. There's money everywhere in this richest of all countries that ever existed. There's just lots of people who don't want to pay the government some of it.
mostlyconfused
(211 posts)We can take a look at corporate tax revenue separately...I've not dug into those figures as deeply. But in terms of personal income taxes there is simply no way you can tax the rich enough to come close to dealing with the deficit. My source...IRS data of actual tax returns. The most recent tax year with detailed information available was 2009.
Source: http://www.irs.gov/uac/SOI-Tax-Stats---Individual-Statistical-Tables-by-Size-of-Adjusted-Gross-Income
The IRS data does not break out returns above $250K (which is roughly that top 2%), so let's take returns with taxable income above $200K.
> Number of returns in that category in 2009: 723,191
> Total taxable income from those returns: $903.1 billion
> The portion from returns in excess of $200K: $758.4 billion
> Of that, the portion not from capital gains: about $535 billion
> Tax collected on those dollars at a 34% rate: $182 billion
> Additional tax collected at a new 39% rate: $27 billion. Really no impact on the deficit.
And if you raised the income tax rate on those dollars to 100%?
> Additional tax collected at 100% rate: $354 billion, or 32% of last year's annual deficit. Pretty good chance this is not something you could do year after year.
Quick thoughts on corporate taxes...according to IRS data corporations paid $175 billion in taxes in 2011. ThinkProgress says that was 12.1% of profits on activities within the US.
http://thinkprogress.org/economy/2012/02/03/418171/corporate-taxes-40-year-low/
Bump that effective rate to 16% and you bring in about $56 billion more. A rate of 35% means $331 million more taxes each year.
So a roughly tripling of the effective tax rate on corporations, plus a 100% rate in income above $200K...and you raise $685 billion in new taxes. That's not paying off the debt in 10 years, it's covering 78% of last year's annual deficit.
mbperrin
(7,672 posts)Corporations have paid less than $250 billion all in this year in income tax. That's about 4%. Just arithmetic.
But go ahead and show, since you didn't, that $4 trillion in taxes cannot be extracted from a $16 trillion economy. I'll be interested in that.
mostlyconfused
(211 posts)I provided a link to IRS data of actual tax returns. If the income tax rate on all dollars above $200K were raised to 100%, you'd bring in enough additional tax to address 32% of a $1.1 trillion deficit. Follow the link, look at the actual data from the IRS.
At that same IRS website you can download an excel spreadsheet which breaks out tax receipts by source. In 2011 corporations paid $175 billion in taxes. The 12.1% tax rate reported by ThinkProgress suggests total corporate profits of about $1.4 trillion in 2011.
Detailed IRS data is available for 2009, in which taxable corporate profits totaled $894 billion. Corporations that year paid $205 billion in taxes, or 23% of that $894 billion. This data can be found here:
http://www.irs.gov/uac/SOI-Tax-Stats-Table-22-Returns-of-Active-Corporations,-Other-Than-Forms-1120S,-1120-REIT,-and-1120-RIC
If you have a credible source for that $6 trillion figure, I'd like to take a look.
Show you that $4 trillion in taxes cannot be raised? No, I can't do that. I'll show you precisely how $4 trillion could have been raised in 2009, since that's the most recent year where detailed information is available. You'll could get to that amount by doing the following two things...
#1 - Tax all corporate profits at 100%. If you wish, you could describe this as making corporate profits illegal. All will be paid in taxes.
#2 - Cap personal income in the US at $23,000. Collect 100% of everything (income and capital gains) above that amount.
mbperrin
(7,672 posts)will show quarterly profits at $1.671 trillion. Even 3 quarters of that is $5 trillion, so 6 for the year is no problem.
You really are young, aren't you? The taxable income they pay on is far less than their actual profits reported to stockholders, because of the games they get to play.
Here's a simple graphic that will show that corporations have paid about 10% of all federal income taxes so far this year:
http://www.usdebtclock.org/
They have actually paid about $240 billion this year in taxes - their profits are $6 trillion, maybe more, that's a net rate of 4% of real income, not the hocus-pocus of accounting for tax purposes.
You are aware that many large companies pay NO tax at all, right?
http://www.ctj.org/corporatetaxdodgers/CorporateTaxDodgersReport.pdf
And if you can't see the absurdity of claiming that $4 trillion is a larger number than $16 trillion, I cannot help you.
Now I have spent enough time on this - I can't tell if you're trolling me, attempting to aggravate me, or just like giving me a poke, but it's time for you to follow the clues about the tax system: real people pay the taxes, while artificial people get a huge walk.
See you around DU.
mostlyconfused
(211 posts)In other words, when you see it reported that corporate profits were $1.671 trillion in the first quarter, they were actually less than that DURING THE QUARTER, but for reporting purposes they take that quarter's profits and calculate what that equates to over the course of a year. They annualize it.
Some publications do not do a good job of identifying that (your source included), others do a better job. Look at the data direct from government sources:
http://www.bea.gov/newsreleases/national/gdp/2012/pdf/gdp3q12_3rd.pdf
http://www.gpo.gov/fdsys/pkg/ERP-2012/pdf/ERP-2012-table91.pdf
Google the news stories. Annualized corporate profits were $1.671 trillion in Q1, they fell to $1.665 trillion in Q2, and came back up to $1.75 trillion in the most recent quarter. In every case that is a calculation of an annual rate of profits.
They have never, ever been $6 trillion a year. At record levels they are approaching 1/3 of that figure today.
"And if you can't see the absurdity of claiming that $4 trillion is a larger number than $16 trillion, I cannot help you."
I never made such a claim, so I don't need your help on that one.
We were both wrong...you for assuming $1.671 trillion represented a single quarter's worth of profits, me for using data from the 2009 tax year which was a very difficult economic year and makes the numbers a bit of an anomaly. I appreciate you pushing me to dig into the numbers a bit more so I could be accurate based on current year data.
Unfortunately the IRS has not provided the detailed figures for any of this since the 2009 tax year. Don't know why that is, but if you can find that data I'd love to run my models on 2010 or 2011 tax year data.
Can you point me to a source on that $240 billion? I didn't see it in your first link. I've not had a chance to get through the 60+ page report behind your third link, but it looks like that is all data for prior to 2012.
bemildred
(90,061 posts)golfguru
(4,987 posts)My daughter is studying in Univ of Cadiz in Spain, and the situation there is not so good.
bemildred
(90,061 posts)Riots, of course, are quite real.
progree
(10,932 posts)golfguru
(4,987 posts)I swear the checks they sent me as interest were real. I was able to buy "real"
stuff with that money, such as food & housing. I sold the Treasuries but still hold
the savings bonds. I sure hope the interest accumulating on them is real also.
progree
(10,932 posts)golfguru
(4,987 posts)I read that link and see what you mean. It is intellectually dis-honest of him,
and that kind of dis-honesty is of the lowest form.
progree
(10,932 posts)I've learned to feel pity and sorrow about this, not anger. Kind of an "it is what it is" feeling of resignation.
[font color = blue]"It is intellectually dis-honest of him"[/font]
To be intellectually dishonest presumes having an intellect ...
bemildred
(90,061 posts)The checks are real, the money it represents is not.
FlyDaddy145
(7 posts)Even with zero interest, if we could lower spending enough to have one million dollars per day left over (and put it against the debt), it'd take us 45,000 YEARS to pay this off...again, that's paying ONE MILLION DOLLARS per DAY against it.
sendero
(28,552 posts)... realize that this "debt" is never going to be paid and it was never intended to be paid. It would be mathematically impossible to pay the debt because of the way money is created to begin with.
All the politicians preening about the debt fall into one of two categories: idiots (teabagers), and those who rely on the idiocy of the Average American (the rest of them).