1/1, 2/1, or 3/1 ?

#1
lawgator1

lawgator1

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#1
One of the frameworks that has been floated for the debate over how to manage the deficit issue is the ration of cuts to revenue increases through taxation. In fact, the same type of discussion was had at the end of Bush I and transferring over into Clinton.

The proposal is that, for every dollar in cuts on the spending side, revenue increases are implemented in some ratio. Example, for every $2 in cuts, revenue collection is increased by $1.

This makes the deficit reduction more fair because it cuts benefits to those using entitlement programs and in some ratio also reduces the deficit by generating more revenue.

The figure I heard the other day being floated at this time is 3/1. For every $3 in spending cuts, revenue would be increased via taxation by $1.

Thoughts on this kind of approach as a general framework for the two sides to come together on this?
 
#2
#2
why would it increase tax revenue? i don't think anyone really is arguing that.
 
#3
#3
revenue is fine where it is just quit spending money you don't have. More taxes isn't going to solve jack if they can't quit spending and no one has shown that can be done
 
#4
#4
A novel concept... I think I'll try this the next time my company asks for budget cuts.
 
#5
#5
droski said:
why would it increase tax revenue? i don't think anyone really is arguing that.
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Let me restate it.

The debt exists because we have spent more than we've taken in. To address the current deficit and to pay off the debt, you reduce spending and increase taxes. Obviously, the Dems and the GOP are at loggerheads over how to do it.

The proposal is to agree on a ratio. Do you go 1-to-1, meaning that for every dollar in spending cut you increase taxes by a dollar?

Or, as a policy matter, do you make it a different ratio that places the burden more on one segment, i.e., that for every$2 you cut in spending, you increase tax revenues by a dollar?
 
#6
#6
utvolpj said:
revenue is fine where it is just quit spending money you don't have. More taxes isn't going to solve jack if they can't quit spending and no one has shown that can be done
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But that's the point: By agreeing up front to a framework of where we want to end up, then the debate can be had as to what individual cuts will be and what the tax increases will be.

Example: Let's say we want to trim the debt by $10 trillion over the next 15 years. If its a 2/1 ratio, that means the agreement is to cut $6.6 trillion in spending over that period and to increase taxes by $3.3 trillion over the same period.
 
#7
#7
so you need to both cut spending AND raise taxes? that sounds great for the economy/
 
#8
#8
droski said:
so you need to both cut spending AND raise taxes? that sounds great for the economy/
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Yes. And it seems inevitable that it is what is going to happen. There is no way that Ryan's proposal of making the ratio negative will ever pass. Can't make the ratio -$2/1, for example (i.e. for every dollar cut in spending you reduce taxes on the wealthiest by $2).

So, instead of having everyone run around debating it in those terms, i.e. balance the budget solely through cuts and no tax increase, why not agree on the front end to a ratio that makes cuts occur twice as much as tax increases and thereby force both sides to make the painful decisions about where the cut/tax will be implemented.
 
#10
#10
put together a balanced budget to show you're serious about it then maybe taxes can come up for a discussion (and they really won't need to). Until then they should not be raised since it will hit every American and not just the rich you wish to target.

droski said:
maybe because class warfare is unamerican?
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if only that was true
 
#11
#11
Ryan's proposal is 1/0 - all cuts and no increase/decrease in taxes. It is not a negative ratio. Obama's characterization of the tax cuts in the proposal completely ignores the impact of removing tax exemptions for corporations (as one example).

That being said, I believe the UK is doing the 3/1. I could live with that IF I believed the 3 part was real and permanent. If we are just raising taxes to spend more then count me out.
 
#12
#12
droski said:
maybe because class warfare is unamerican?
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Both sides can throw around that charge. The GOP can make it against Obama for saying that its unfair to balance the budget based solely on spending cuts whilst lowering taxes on the rich. Obama can make the same claim against the GOP for making their plan 100 % spending cuts and lowering the tax rates on corporations and the wealthiest.

The reality is that the budget and taxation IS, by definition, class warfare. It causes recoil (i.e. your blithely throwing out that "class warfare is unamerican"), but the fact is that asking the bottom side of the economic ladder to give up a lot while giving even more to the top side is not going to pass.

This is as true as if the tables were turned. The budget deficit will also not be cured by substantially increasing taxes on the wealthiest and corporations while expanding spending on entitlement programs.

Got to have both curs in spending and tax increases. The question is in what measure.
 
#14
#14
volinbham said:
Ryan's proposal is 1/0 - all cuts and no increase/decrease in taxes. It is not a negative ratio. Obama's characterization of the tax cuts in the proposal completely ignores the impact of removing tax exemptions for corporations (as one example).

That being said, I believe the UK is doing the 3/1. I could live with that IF I believed the 3 part was real and permanent. If we are just raising taxes to spend more then count me out.
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I'm thinking somewhere between 2/1 and 3/1. Cuts/Tax.
 
#17
#17
mallardfillmore20110414.gif
 
#22
#22
droski said:
link that suggests otherwise?
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Ryan Budget?s Tax-Rate Target Would Force $2.9 Trillion in Tax-Break Cuts - Bloomberg

He cuts the top rate from 32 percent down to 25 percent. The attached article documents that and also discusses what would be required if you wanted to keep overall tax revenues at their current levels, i.e. you'd have to eliminate the mortgage interest deduction, the deduction for charitable gifts, and the exclusion for employer-provided health coverage.
 
#23
#23
Here's a novel concept for government.....

1. Figure out how much we realistically need to spend to run our government efficiently.
2. Cut the rest of the BS agencies and pig fat from the budget.
3. Cut taxes around the board to promote growth.
4. Stick with it, till we have paid off our debt.

That's pretty simple, but it takes a 1,000 page bill just to get anything done up there.
 
#24
#24
lawgator1 said:
I'm not suggesting otherwise. Once there is an agreement in place to cut 2 for 1, or 3 for 1, what have you, then you move forward with both.
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It's not so much a matter of you suggesting it...let's just say my trust in the government not spending what they have is limited. Hell, they've shown great aptitude in spending what they don't have.
 
#25
#25
lawgator1 said:
Ryan Budget?s Tax-Rate Target Would Force $2.9 Trillion in Tax-Break Cuts - Bloomberg

He cuts the top rate from 32 percent down to 25 percent. The attached article documents that and also discusses what would be required if you wanted to keep overall tax revenues at their current levels, i.e. you'd have to eliminate the mortgage interest deduction, the deduction for charitable gifts, and the exclusion for employer-provided health coverage.
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Getting to $2.9 trillion would likely require him to eliminate some of the largest items, such as the mortgage interest deduction, the deduction for charitable contributions and the exclusion for employer-provided health insurance.

it's supposed to be tax neutral. i assure you eliminating interest deduction would not be a tax break for the wealthy.
 
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