It's beginning to look like a tax increase on the wealthiest 3% of Americans will be a part of what will fund the increased healthcare benefits for the millions of Americans who have no such coverage.

Of course, there has been a knee-jerk reaction to the idea of increased taxes on any segment of the population. But before everyone gets too upset over how bad it's going to be, it might be instructive to look at how the wealthiest have benefitted from significant tax reductions over the last 25 years or so. Here's a chart of the marginal tax rates for the top income class since 1980.



As can be seen, even with the Bush tax cuts being allowed to expire plus the new, proposed surtax to pay for healthcare, the rich are still doing pretty doggone well. Even with the increased taxes, their marginal rate for 2011 income will be a full 25% lower than it was in 1980 and substantially lower than the years when the highest marginal rates were applied to the highest-income class (94% in 1944-45 and 91% for an entire decade in the late 1950's and early 1960's).

Now, how do we begin paying off the national debt? Without doing a whole lot of calculations, it looks like the national debt could be paid off pretty quickly with more tax increases, but not producing a top marginal rate even close to what it was as recently as in 1980-81. The better alternative is reduced government spending, of course. But we all know what the chances of that happening is, regardless of what party controls Congress and the White House.

So you really believe that 97% of American tax payers will see no tax increase to pay for health care? What I read showed even a single person making over $9000 a year would see an increase. How can two people who are supposedly intelligent get such a 180 degree different picture. You must use different math then I know. My guess is we are both wrong, but I will bet you a steak dinner in a place of the winners choice that anyone earning over $50K see's an increase. Willing to take it?

Originally Posted by Villages Kahuna

It's beginning to look like a tax increase on the wealthiest 3% of Americans will be a part of what will fund the increased healthcare benefits for the millions of Americans who have no such coverage.

Of course, there has been a knee-jerk reaction to the idea of increased taxes on any segment of the population. But before everyone gets too upset over how bad it's going to be, it might be instructive to look at how the wealthiest have benefitted from significant tax reductions over the last 25 years or so. Here's a chart of the marginal tax rates for the top income class since 1980.



As can be seen, even with the Bush tax cuts being allowed to expire plus the new, proposed surtax to pay for healthcare, the rich are still doing pretty doggone well. Even with the increased taxes, their marginal rate for 2011 income will be a full 25% lower than it was in 1980 and substantially lower than the years when the highest marginal rates were applied to the highest-income class (94% in 1944-45 and 91% for an entire decade in the late 1950's and early 1960's).

Now, how do we begin paying off the national debt? Without doing a whole lot of calculations, it looks like the national debt could be paid off pretty quickly with more tax increases, but not producing a top marginal rate even close to what it was as recently as in 1980-81. The better alternative is reduced government spending, of course. But we all know what the chances of that happening is, regardless of what party controls Congress and the White House.

I think, and this is just me and I am prepared for all the name calling that goes with it, even if you could covince me mathmatically I would oppose it on principal...ie. the health plan. Especially if you are cutting Medicaire and increasing Medicaid. There may be somethings that your math, which by the way is pretty simple...does not go into small busness or job loss, would inspire me to support but not this health plan.

I also want to make it clear...I KNOW and support health care change, just not being done this quickly with very little public debate. It is much too big of a committment !

Sounds like the old class envy baloney to me. What your chart doesn't say is where the money goes instead of going to the government. The more people have.. the more they spend. When rich people spend they put people to work. Purchasing luxury items, from vehicles to yachts makes the economy hum. Around my area, when they increased taxes people stopped buying boats. Put many people out of a job. When capital gains were lowered yacht sales boomed and there was actually a shortage of skilled workers to fill the orders.
I was never hired by a poor man. Put money in people's pockets and they will put an addition on their house or trade up to a bigger home. They trade in their clunker for a new upgraded vehicle. They buy that new lawn tractor or they hire back that landscaper, who puts more people to work.
It is amazing what will happen when the shackles of taxation are unlocked.

And if you think the taxes will be on just the top 3-10%...your living in a dream world.

Originally Posted by l2ridehd

So you really believe that 97% of American tax payers will see no tax increase to pay for health care?

No, I don't. But I do believe that the real "heavy lifting" to pay for it will be done by the wealthiest. And that's probably as it should be.

Originally Posted by Bucco

...I KNOW and support health care change, just not being done this quickly with very little public debate. It is much too big of a committment !

I agree that's it seems to be moving along pretty quickly, Bucco. But I think the whole process will come to a screeching halt when the bill hits the Senate. I'm hopeful that they will turn out to be the "deliberative body" that the framers of the Constitution had in mind.

But then, those were the same guys who put the money back into a funding bill for the F-22 Raptor jets that the Pentagon doesn't want. Maybe they only deliberate on issues that don't affect their constituencies and special interests.

Originally Posted by Keedy

Sounds like the old class envy baloney to me. What your chart doesn't say is where the money goes instead of going to the government. The more people have.. the more they spend. When rich people spend they put people to work. Purchasing luxury items, from vehicles to yachts makes the economy hum. Around my area, when they increased taxes people stopped buying boats. Put many people out of a job. When capital gains were lowered yacht sales boomed and there was actually a shortage of skilled workers to fill the orders.
I was never hired by a poor man. Put money in people's pockets and they will put an addition on their house or trade up to a bigger home. They trade in their clunker for a new upgraded vehicle. They buy that new lawn tractor or they hire back that landscaper, who puts more people to work.
It is amazing what will happen when the shackles of taxation are unlocked....

Guess what? I AGREE with your premise. But there's only one problem. How do we balance the budget and pay off the national debt? It's pretty clear it won't be done with reduced government spending. So what else is there except increasing taxes?

Originally Posted by Villages Kahuna

Guess what? I AGREE with your premise. But there's only one problem. How do we balance the budget and pay off the national debt? It's pretty clear it won't be done with reduced government spending. So what else is there except increasing taxes?

Your idea of distributing needs fine tuning, just a little. When people spend money that puts people to work. When a person has a job they take away alot of his pay to go to the government. More jobs=more money to government. You take away the money from people who have the money....they don't spend it.



What the heck am I missing here??????

Originally Posted by Villages Kahuna

Guess what? I AGREE with your premise. But there's only one problem. How do we balance the budget and pay off the national debt? It's pretty clear it won't be done with reduced government spending. So what else is there except increasing taxes?

Yeah, cutting spending obviously is an old fashioned idea ! Bush was nuts with his spending and this congress is making him look like a piker !!!

Originally Posted by Keedy

...When a person has a job they take away alot of his pay to go to the government. More jobs=more money to government. You take away the money from people who have the money....they don't spend it.
What the heck am I missing here??????...

I don't think you're missing anything. Other than the fact that for the last decade or so our government has spent amounts that so far exceed our collective ability to pay for the spending that we have become the largest debtor nation in the history of the world.

You're right. More jobs=more money...the thing that has to change is your last few words, "...to the government". Until government spending decreases, there is no other alternative than more of our hard-earned money going back to the government.

We're near the end of the line of being able to "borrow our way" out of this problem.

Originally Posted by Villages Kahuna

I don't think you're missing anything. Other than the fact that for the last decade or so our government has spent amounts that so far exceed our collective ability to pay for the spending that we have become the largest debtor nation in the history of the world.

You're right. More jobs=more money...the thing that has to change is your last few words, "...to the government". Until government spending decreases, there is no other alternative than more of our hard-earned money going back to the government.

We're near the end of the line of being able to "borrow our way" out of this problem.

Fact One - Government spending never decreases.
Fact Two - New laws each year add to the number of federal "obligations" that occur.
Fact Three - There has never been any "surplus" funds at the Fed. The last time the federal debt was under $1billion was in 1863 - and what was a dollar worth then compared to now? (see http://www.treasurydirect.gov/govt/r...t/histdebt.htm)
Fact Four - You make a dollar available to a federal politician, and s/he spends it and more.

So, giving the fed more money means the fed just spends more, and goes deeper in debt because none of is it real until some special interest group threatens to vote elsewhere.

The bottom line - the fed can have whatever it wants, as soon as it give up something else dollar-for-dollar. Anything less screws all of us.

Originally Posted by SteveZ

[U]...Fact Three - There has never been any "surplus" funds at the Fed....

Actally, Steve, there was a time relatively recently when we were pretty close to having a surplus. Alan Greenspan discussed it at some length in his book, The Age Of Turbulence. As I recall, a surplus almost happened right at the end of the second Clinton term.

Greenspan described waking at night worrying about what would happen if the country actually generated a surplus. He was worried that the only possible alternative would have been that the Congress would have to make decisions to invest the money. He believed that the absolute worst and most incompetent group to make actual investment decisions would be the U.S. Congress. But he didn't think that would ever happen and that the Congress, if they ever found out that a surplus was expected, would go on a crazy spending spree. He assigned little to no chance that if a surplus occurred that the Congress would actually cut taxes. Greenspan decided that he would do everything in his power to disguise or mislead the Congress regarding the possibility of a surplus during Congressional hearings so as to avoid what he thought would be the inevitable unrestrained spending.

As it turned out, the economy slowed and a surplus was never created. Shortly thereafter, Congress let the Pay-Go requirement to force a balanced budget which had been in effect since 1990 expire thru a sunset provision in the original law. What followed was 9-11, dramatic increases in military spending as well as the "crazy spending spree" that Greenspan worried about, which was made possible by the expiry of Pay-Go.

That pattern of unrestrained government spending continued throughout both terms of George W. Bush and continues now in the early months of the Obama administration. We have become the greatest debtor nation in world history in less than a decade. But we came awfully close--less than a decade ago--of actually having a federal surplus. Now we're approaching the point that spending will have to be reigned in because of restrictions we are likely to encounter in being able to continue to borrow in order to finance our deficit spending.

Originally Posted by Villages Kahuna

Actally, Steve, there was a time relatively recently when we were pretty close to having a surplus. Alan Greenspan discussed it at some length in his book, The Age Of Turbulence. As I recall, a surplus almost happened right at the end of the second Clinton term.

Greenspan described waking at night worrying about what would happen if the country actually generated a surplus. He was worried that the only possible alternative would have been that the Congress would have to make decisions to invest the money. He believed that the absolute worst and most incompetent group to make actual investment decisions would be the U.S. Congress. But he didn't think that would ever happen and that the Congress, if they ever found out that a surplus was expected, would go on a crazy spending spree. He assigned little to no chance that if a surplus occurred that the Congress would actually cut taxes. Greenspan decided that he would do everything in his power to disguise or mislead the Congress regarding the possibility of a surplus during Congressional hearings so as to avoid what he thought would be the inevitable unrestrained spending.

As it turned out, the economy slowed and a surplus was never created. Shortly thereafter, Congress let the Pay-Go requirement to force a balanced budget which had been in effect since 1990 expire thru a sunset provision in the original law. What followed was 9-11, dramatic increases in military spending as well as the "crazy spending spree" that Greenspan worried about, which was made possible by the expiry of Pay-Go.

That pattern of unrestrained government spending continued throuhout both terms of George W. Bush and continues now in the early months of the Obama administration. We have become the greatest debtor nation in world history in less than a decade. But we came awfully close--less than a decade ago--of actually having a federal surplus. Now we're approaching the point that spending will have to be reigned in because of restrictions we are likely to encounter in being able to continue to borrow in order to finance our deficit spending.

Please review http://www.treasurydirect.gov/govt/r...t/histdebt.htm

The government's definition of "balanced budget" is not needing any additional revenue by virtue of taxes or borrowing to pay the obligations. Unfortunately, that does not mean paying down on the debt principal or paying the interest in many cases.

Since 1957 the debt has increased each year despite all the rhetoric of balanced budgets, surplus, et cetera.

So, even in the Clinton years with all the hoopla of a balanced budget, "he left a surplus," Pay-go and the like, the Treasury kept going deeper into the hole - the debt has just gotten larger - the value of the dollar versus other currencies continued to dip.

In other words, it was all BS. The numbers prove it.

Originally Posted by SteveZ

...The government's definition of "balanced budget" is not needing any additional revenue by virtue of taxes or borrowing to pay the obligations. Unfortunately, that does not mean paying down on the debt principal or paying the interest in many cases.

I checked the link and don't deny that some in the government might define "balanced budget" the way you describe. But others define it differently. About.com says...Definition: A balanced budget occurs when the total sum of money a government collects in a year is equal to the amount it spends on goods, services, and debt interest. I can only conclude that Greenspan defined balanced budget the same way About.com does.

What's really interesting is that neither includes the repayment of debt as an expense to be counted when determining whether a budget is balanced. Unlike any normal household which has a mortgage or car payment to make, I guess the politicos feel that once borrowed, they needn't worry about repaying the debt any more.

Originally Posted by Villages Kahuna

I checked the link and don't deny that some in the government might define "balanced budget" the way you describe. But others define it differently. About.com says...Definition: A balanced budget occurs when the total sum of money a government collects in a year is equal to the amount it spends on goods, services, and debt interest. I can only conclude that Greenspan defined balanced budget the same way About.com does.

What's really interesting is that neither includes the repayment of debt as an expense to be counted when determining whether a budget is balanced. Unlike any normal household which has a mortgage or car payment to make, I guess the politicos feel that once borrowed, they needn't worry about repaying the debt any more.

Then they use the Clinton Dictionary in which anything can mean something else.

The numbers don't lie. Either the interest was not fully paid during the Clinton years, or more debt was incurred, or both. No matter what, ALL definitions for "balanced budget" were violated. And if the intent is to return to the Clinton Definition of Balanced Budget, the red ink just continues to get brighter, and we are no better off than the person with the 5-year interest-only ARM who never gets a raise.

And any loan I've ever seen which allows only interest payments curing any time frame - and no requirement to pay principal at any percentage - eventually has a balloon payment due. Not placing anything in escrow to cover that balloon payment, while living at 100% income-outgo, requires a windfall somewhere down the pike to make the balloon payment. That's the major reason for the "mortgage crisis" which led to the financial institution bailout mess. What makes anyone think the same isn't true for the federal debt? Where's the windfall to come from?

What the Treasury"s own historical numbers show is that the press, the politicians, and the financial lobby - all of whom who had to know the truth in the numbers - lied to all of us.

An old mentor of mine once told me, "Watch for the little lie. If they will lie to you about something small, they will have no compunction to tell you the big lie. And if you accept the little lie, you'll really get socked when the big one (which will eventually happen) is told to you."

Have we heard the $Trillion "little one," or was that the big one?