Tag Archives: Tax Reform

The Talk: Tax Increases or Class Warfare?

The Talk: Tax Increases or Class Warfare?
September 22, 2011

Chip Lebovitz: The president finally released a concrete deficit reduction plan Monday. Taking a populist stance, the president’s plan features GOP opposed tax increases including one specifically on millionaires called the “Buffett Rule,” named after the billionaire hedge fund manager who suggested the idea in a recent New York Times op-ed. What’s your take on the president’s proposal Ross?

Ross Freiman-Mendel: The president has once again proven that he’s either woefully lost or willfully destructive with the economy. Senator Tom Coburn said it best: “The plan is a giant tax increase [with] maybe 81 billion in cuts and 1.45 trillion in revenues.” The best example is the “Buffett Rule,” is nothing but class warfare and political posturing at the expense of job creation.

Chip Lebovitz: The plan just represents what I find to be the current political reality. Republicans would have seized on any concessions the president had thrown out in his opening offer and pulled him past where a natural agreement should lie. The Buffett Rule, however, is anything but class warfare – it’s an idea supported by the people suggested by a member of the truly rich. The basic thrust that the extremely wealthy should pay as much in taxes as someone from middle class – hardly an unfair notion.

Ross Freiman-Mendel: And with what authority can Mr. Buffett speak, when he has relied on bailouts — i.e. Goldman and Bank of America — to make his investments successful? A tax is fundamentally a punishment; President Obama proposes we should take more from rich people because they’re successful and have more of something. But ideology aside, the plan is terrible economics, because the government now demands a share of capitals gains only 2.5 years after Bernanke went to infinite and beyond to pump up the “wealth effect” for the richest 1% of Americans. That’s contradictory.

Chip Lebovitz: That’s a bold statement on the nature of taxes; basically, you are declaring that the payroll tax is punishing people for wanting to have Social Security. Turning back to Mr. Buffett, his investments would still be an overall success with or without the government bailouts of Goldman Sachs and Bank of America. If anything, he realizes the value of government preventing a complete economic meltdown – instead of a very large scale one – and feels that maybe he and his fellow millionaires might contribute a bit to help the government balance its budgets after it took the time to support their industry. Furthermore, the timing of this tax plan is in fact its best part; most economists support stimulus now to get the economy going with long term deficit reduction to prevent a ballooning of debt to GDP over the long run.

Ross Freiman-Mendel: But you haven’t responded to the impacts on the wealth effect. When you say “a bit” that’s totally disingenuous; increasing the tax on capital gains could cut actually income for those invested in the stock market by 25 percent, encouraging all to exit the market at the current lower rate capital gains rate of 15 percent and forcing more downward pressure on the stock market. Crash anyone? I’m all for “smart” stimulus now, but all this plan does is continuing to make the country inhospitable to business and economic growth in the name of “fair share.”

Chip Lebovitz: That’s because the wealth effect isn’t even relevant here. David Backus, an NYU economist, showed that the wealth effect, when people perceive their money is more valuable then it is, isn’t visible in stock prices. But regardless, Republican leadership has ruled out tax reform, the best revenue raising concept, for super committee consideration. How else you would you raise revenue to help balance the deficit.

Ross Freiman-Mendel: I (and I believe basically every member of the Federal Reserve, including the Chairman himself) respectfully will question David Backus’ claim, because the wealth effects applies directly to the stock market. I see two great ways to raise revenue. First, have Mr. Buffett (and his cohort Mr. Gates) donate 90% of their wealth to the Treasury, and second, implement tax reform that closes loopholes and brings individual rates down across the board.

Chip Lebovitz: Speaker Boehner has ruled out tax reform, and a vast majority of Mr. Buffett’s wealth has been marked off for charity. You’re points however sum up an irresponsible view of debt reduction, “Either let someone else do it, or push it down the road so it’s not your problem.” At least the president is trying to create a comprehensive solution now that doesn’t gut a major entitlement or two.

Ross Freiman-Mendel: Any attempt to solve our debt with lots of revenue and pathetic spending cuts implies the president wants to fund current spending levels. As I’ve said before, the he will continue to punt the can down the road, but one day it obstinately will remain motionless. That’s when our real problems will begin.

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Source: Dave Makes

Grover Norquist on Shrinking Government

“(The federal government) has no business explaining to the peasants that they need to be sending more money into the king because the king would like another castle. No more castles for the stinking King, and what the king needs to do is live within the means of the peasants he’s been looting.”

– Grover Norquist on the need for less taxes and government

ChrossTalk Episode 13: Grover Norquist

Our interview with the Grover Norquist, head of Americans for Tax Reform, is now online. We primarily discuss his organization’s taxpayer pledge which asks all candidates running for elected office to promise not to raise taxes. The full interview with Norquist is after the jump.

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The Talk: A Feast of Presidential Jobs Plans

The Talk: A Feast of Presidential Jobs Plans
September 9, 2011

Chip Lebovitz: This week America was treated to a jobs plan trio. GOP president candidates Jon Huntsman and Mitt Romney began the week by tossing their plans in the ring, only to be followed up by the actual president outlining his plan in front of a joint session of Congress last night. Which of the three plans did you find to be the most convincing?

Ross Freiman-Mendel: Obviously of the three, Huntsman and Romney have more conservative bents, thus I value their plans over Obama’s. Considering the specifics, Huntsman demonstrates the greatest understanding of what needs to be done. Romney’s plan is too timid and, considering his weak performance in Massachusetts, I put little faith in vague promises of spending cuts.

Chip Lebovitz: You’ve missed the main thrust of these plans, and it’s important to put these plans in context – they are campaign plans. They aren’t suppose to focus on the granular in order to avoid staking out damaging positions that might hurt them in the general election. Do you think that wanting to end the Alternative Minimum Tax, one of the most popular tax breaks, is going to go over well for Huntsman in a general election? Furthermore, you also missed the point of Romney’s plan; it’s more a veritable stew of tax cuts and more oil drilling than spending cuts, only guaranteeing $20 billion a year: no vague promises there.

Ross Freiman-Mendel: Of the two plans, Romney’s is more vague and affords him more wiggle room. On tax reform, for example, he says that he’s in favor of it “in the long run” and outlines only nominally how those reforms would manifest. That’s instructive. In contrast, Huntsman provides Krauthammer-esque specifics (a plus for me)! Regardless of what Romney promises — and citing one specific doesn’t obscure the fact that the plan is generally vague — his record in Massachusetts pales in comparison to Huntsman’s; if he can’t perform the task as Governor, why should I believe he’ll do it as the president?

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