[ame]http://www.youtube.com/watch?v=XX8EswfGKQw&feature=player_embedded[/ame]

Originally Posted by Donna2

You want some more arithmetic? How much revenue is lost each week while people aren't paying taxes from non-existent pay checks and how much are we also losing from paying billions to those unemployed. who do you think is paying the unemployment checks?
Funny how problems go away when everybody is working.
What is the democrat leadership doing for jobs lately????

I'll take these in order.

1) Well, considering that we have 90% employment, one could to a rough guesstimate that we could have 11% more income tax revenue (I don't know how that correlates for differences in wages - like what kind of workers are most likely to be unemployed - or how that cascades into other taxes like sales and meals taxes).

2) The latest proposal is $9B additional for the latest Unemployment 'bailout' proposal. I don't know offhand how long it's supposed to be good for.

3) Most of the unemployment checks are paid for by the local state's Unemployment Insurance agency. It's a separate tax that employers pay into a fund out of which unemployment benefits are paid. Most of the time, it "pays it's own way". Employers who constantly fire more workers have to pay higher premiums (for presumably making bad hiring decisions). Employers are NOT penalized for workers who quit (and are, therefore, ineligible for benefits).

4) They're trying to promote green jobs - but not doing a good job of that. They're trying to ramp up infrastructure construction and maintenance spending - but that's slow going due to the lack of 'shovel ready' projects (with obstructionist planning rules probably getting in the way). But apparently lots of teachers and beaureaucrats are being hired.

Originally Posted by djplong

I'll take these in order.

1) Well, considering that we have 90% employment, one could to a rough guesstimate that we could have 11% more income tax revenue (I don't know how that correlates for differences in wages - like what kind of workers are most likely to be unemployed - or how that cascades into other taxes like sales and meals taxes).

2) The latest proposal is $9B additional for the latest Unemployment 'bailout' proposal. I don't know offhand how long it's supposed to be good for.

3) Most of the unemployment checks are paid for by the local state's Unemployment Insurance agency. It's a separate tax that employers pay into a fund out of which unemployment benefits are paid. Most of the time, it "pays it's own way". Employers who constantly fire more workers have to pay higher premiums (for presumably making bad hiring decisions). Employers are NOT penalized for workers who quit (and are, therefore, ineligible for benefits).

4) They're trying to promote green jobs - but not doing a good job of that. They're trying to ramp up infrastructure construction and maintenance spending - but that's slow going due to the lack of 'shovel ready' projects (with obstructionist planning rules probably getting in the way). But apparently lots of teachers and beaureaucrats are being hired.

The real figures for unemployment hovers around 20%. That includes people who have given up, people who are working part time and people who are over qualified for their present employment. My guess is that would bring the revenues to closer to 25%.

Don't kid yourself that the employers are paying the people who aren't working. They only cover the first 6 months or so. Congress has extended unemployment to 24 months.

Originally Posted by Bucco

Let us begin by insuring somehow that EVERYONE pays income taxes and is not using our government as an income source, as almost HALF of americans are doing !

We are getting nowhere trying to tell fiscal Liberals the facts of life on Taxing job producers.

They refuse to listen because they depend on votes from the non-producers. Keeping them on the dole provides the votes.

Raising taxes reduces payrolls and increases those on the dole which increases Liberal voters.

The arithmatic is simple: reducing taxes on businesses and the producers leaves more resources with the producers and always results in more jobs and more government revenues. More jobs cuts the welfare costs.

It is hopeles for us to keep trying to convince Fiscal Liberals of this basic fact.

Originally Posted by cashman

...The arithmatic is simple: reducing taxes on businesses and the producers leaves more resources with the producers and always results in more jobs and more government revenues. More jobs cuts the welfare costs.

It is hopeles for us to keep trying to convince Fiscal Liberals of this basic fact.

Well, not quite, Cashman. I'll address these in reverse order.

• I suspect you might be referring to me as a "fiscal liberal" (if not, forget this). I am a fiscal conservative. That is, I believe that government spends too much and however much it spends, expenditures should be no greater than tax revenues--no deficit spending! We must begin to spend less than we take in and begin to pay down the enormous national debt.
  
  What I am however is a fiscal realist. While I understand the economic theories, I also understand the numbers themselves. As you know, as much as I would hope it's not the case, I'm convinced that to solve the problems of deficit spending and ballooning national debt, it will take both drastic spending cuts as well as substantially increased taxes. Both will substantially change the American way of life. The arithmetic simply doesn't work any other way.

• But I disagree with you on the thought that reducing taxes always leaves more resources with producers and always results in more jobs and government revenues.
  
  First, reducing taxes on the producers doesn't increase spending, demand, the need for more production, more jobs and then more tax revenues. For that to work, the reduced taxes must put money in consumers pockets, not the producers.
  
  But even that doesn't work too well anymore. That theory worked well for 30-40 years when the U.S. savings rate was near zero. Then any money from reduced personal taxes went immediately to fund more spending, starting the cycle mentioned above. But economists are almost unanimous in noting that there has been a structural change in the U.S. economy. The core savings rate is now about 4%, up from zero. Almost all economists believe this change to be permanent.
  
  The effect of an increased savings rate is that tax savings are now being applied most often to the reduction of debts and/or savings--not spending. Paying off debt or saving doesn't create one new job, increases in GDP or increased tax revenue.
  
  Paying off debt and saving doesn't produce any new spending, jobs and increased tax revenues. The theory will still work, but on a much more watered down basis. Until taxes are cut substantially more than the 4% core savings rate, there is almost no new spending and very few new jobs are created, and certainly no increased tax revenues.
  
  I did the arithmetic on this idea in another post. In order to have personal tax cuts have a positive effect on spending, jobs and new tax revenues, the cuts would have to be of a size that would make an already critical level of deficit spending an almost fatal blow to our economy. An 8% cut in personal taxes, as an example, would increase the annual deficit from $1.4 trillion to almost $1.7 trillion!
  
  George Bush found out that the old, oft-repeated theories didn't work with the tax rebates in 2007. The effect on employment and increased tax revenue was nil because almost all the recipients of the rebates paid off debt or saved the money. Even if personal taxes were reduced again now, there would be little if any increased economic activity and employment because the money would be directed to debt reduction and savings.

So Cashman, when you say "the arithmetic is simple", I'd suggest you actually DO the arithmetic. You may change your mind and not just keep repeating all those old maxims and adages which you claim are "basic facts" but are decidedly not.

But why do we need to raise taxes if 47% are not paying taxes? Why not just change the tax laws so that EVERYONE pays taxes to some degree?

Originally Posted by spk7951

But why do we need to raise taxes if 47% are not paying taxes? Why not just change the tax laws so that EVERYONE pays taxes to some degree?

A flat tax would go a long ways to stability but that would ruin the system that is advantageous to the politicians. Government is the problem. Too much of it is a bigger problem.

VK, I'm just trying to understand your theories and educate myself. Are you a Keynesian?

Originally Posted by spk7951

But why do we need to raise taxes if 47% are not paying taxes? Why not just change the tax laws so that EVERYONE pays taxes to some degree?

Good idea. Personally, I think a VAT would raise the most revenue, be less noticed than a change in the personal tax rates, and would wind up targeting exactly that segment of the population who is paying so little and benefitting so greatly from government programs.

A VAT tax is a consumption tax and is a definite shift away from the progressive taxation system we have now (lower income earners pay a smaller percentage of their incomes in taxes than higher income earners).

The liberals will argue that a consumption tax places an unfair and disproportionate burden on the lower income classes because a much greater proportion of their income is spent on consumables than the higher income classes. Frankly, I don't know what position the conservative right would take, other than maybe no tax is any good. (Remember, candidates of both parties are pandering for the votes of the lower classes.)

But one thing is for sure according to my analysis--tax revenues are going to have to be increased substantially.

[QUOTE=
But one thing is for sure according to my analysis--tax revenues are going to have to be increased substantially.[/QUOTE]

Keep beating your tax drum VK. You give them more money, they will find a way to use it to buy more votes. We are on the Titanic and the politicians are rearranging the deck chairs.

Originally Posted by bkcunningham1

VK, I'm just trying to understand your theories and educate myself. Are you a Keynesian?

Hmmm, never thought about that much. I'd have called myself a pragmatist, but there's no such macroeconomic theory.

There are probably a dozen or more macroeconomic theories, but maybe those of John Maynard Keynes is on one end of the spectrum and those of Milton Freidman might be on the other end.

Keynesian economics advocates a mixed economy—predominantly private sector, but with a large role of government and public sector. Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore, advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle.

Friedman became the main advocate opposing Keynesianism. Friedman argued the central government could not micromanage the economy because people would realize what the government was doing and change their behavior to neutralize such policies. Friedman's claim that monetary policy could have prevented the Great Depression was an attempt to refute the analysis of Keynes, who argued that monetary policy is ineffective during depression conditions and that fiscal policy — large-scale deficit spending by the government — is needed to decrease mass unemployment.

Simply put, I guess, Keynes says that there is a definite role for government in neutralizing bad decisions by the private sector and using fiscal policy to smooth the business cycle. Friedman argues that the free market is most efficient in achieving economic results and that entrepreneurial and profit-motivated decisions will always result in the most favorable economic outcomes.

Given the choice of one end of the spectrum or the other, I'd definitely side with John Maynard Keynes. The events of at least 4-5 major economic crises just in the last fifty years seems to support Keynes' theory that there is a definite role for government in the overall management of the economy. When government was permitted to play a strong role in the oversight of the economy, things ticked along pretty well. When political decisions were made to reduce government's authority over the economy, really bad things happened...as we all so sadly know now.

Originally Posted by Donna2

...We are on the Titanic and the politicians are rearranging the deck chairs.

Sadly, you may be right, Donna.

So that seems to leave us with a couple of choices--try to do our tiny little thing to possibly change that outcome. Or simply sit back on a comfortable deck chair and enjoy the ride to the bottom.

Our generation might not even get our feet wet. But ohh, future generations will suffer a lot while drowning as the result of what our generation did and didn't do.

Originally Posted by Villages Kahuna

Sadly, you may be right, Donna.

So that seems to leave us with a couple of choices--try to do our tiny little thing to possibly change that outcome. Or simply sit back on a comfortable deck chair and enjoy the ride to the bottom.

Our generation might not even get our feet wet. But ohh, future generations will suffer a lot while drowning as the result of what our generation did and didn't do.

Yes, "LBJ, LBJ have we spent our grandchildren's future today" ( a little take-off on an old anti-war chant)

Originally Posted by Villages Kahuna

Well, not quite, Cashman. I'll address these in reverse order.

• I suspect you might be referring to me as a "fiscal liberal" (if not, forget this). I am a fiscal conservative. That is, I believe that government spends too much and however much it spends, expenditures should be no greater than tax revenues--no deficit spending! We must begin to spend less than we take in and begin to pay down the enormous national debt.
  
  What I am however is a fiscal realist. While I understand the economic theories, I also understand the numbers themselves. As you know, as much as I would hope it's not the case, I'm convinced that to solve the problems of deficit spending and ballooning national debt, it will take both drastic spending cuts as well as substantially increased taxes. Both will substantially change the American way of life. The arithmetic simply doesn't work any other way.

• But I disagree with you on the thought that reducing taxes always leaves more resources with producers and always results in more jobs and government revenues.
  
  First, reducing taxes on the producers doesn't increase spending, demand, the need for more production, more jobs and then more tax revenues. For that to work, the reduced taxes must put money in consumers pockets, not the producers.
  
  But even that doesn't work too well anymore. That theory worked well for 30-40 years when the U.S. savings rate was near zero. Then any money from reduced personal taxes went immediately to fund more spending, starting the cycle mentioned above. But economists are almost unanimous in noting that there has been a structural change in the U.S. economy. The core savings rate is now about 4%, up from zero. Almost all economists believe this change to be permanent.
  
  The effect of an increased savings rate is that tax savings are now being applied most often to the reduction of debts and/or savings--not spending. Paying off debt or saving doesn't create one new job, increases in GDP or increased tax revenue.
  
  Paying off debt and saving doesn't produce any new spending, jobs and increased tax revenues. The theory will still work, but on a much more watered down basis. Until taxes are cut substantially more than the 4% core savings rate, there is almost no new spending and very few new jobs are created, and certainly no increased tax revenues.
  
  I did the arithmetic on this idea in another post. In order to have personal tax cuts have a positive effect on spending, jobs and new tax revenues, the cuts would have to be of a size that would make an already critical level of deficit spending an almost fatal blow to our economy. An 8% cut in personal taxes, as an example, would increase the annual deficit from $1.4 trillion to almost $1.7 trillion!
  
  George Bush found out that the old, oft-repeated theories didn't work with the tax rebates in 2007. The effect on employment and increased tax revenue was nil because almost all the recipients of the rebates paid off debt or saved the money. Even if personal taxes were reduced again now, there would be little if any increased economic activity and employment because the money would be directed to debt reduction and savings.

So Cashman, when you say "the arithmetic is simple", I'd suggest you actually DO the arithmetic. You may change your mind and not just keep repeating all those old maxims and adages which you claim are "basic facts" but are decidedly not.

No fiscal conservative talks like you do. I disagree with everything you say about taxes. Your understanding of economics is tainted by your ideology.

I may agree that a VAT will work because all individuals will pay it therefore generating more revenues.
Of course I would want spending cuts first and Income taxes either eliminated or cut very low which will not happen if Liberals have anything to say about it.

How about the deal that was supposed to have happened in previous administrations?

One side says "I'll raise taxes $1 for every $1 you cut from the budget"