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Reports Show Why It Is Hard To Create Satisfactory Tax Policy

June 8, 2010 by  

Reports show why it is hard to create satisfactory tax policy A pair of recently released reports shows why politicians are often in a quandary when it comes to fashioning taxation policies—the first suggests that lower taxes increase national debt, while the other blames poverty on state income taxes.

According to a new report by the Pew Economic Policy Group, a think tank, extending the 2001 and 2003 federal income tax cuts would sharply increase the national debt, even if extensions are limited to individuals earning below $200,000.

These cuts have been proposed in the administration’s budget, but "in light of the escalating national debt, policymakers need to understand the long-term costs of any extension of the tax cuts," said Ingrid Schroeder, director of the Pew Fiscal Analysis Initiative.

Meanwhile, another economic policy institute estimated that 13 states had fiscal policies that pushed working families deeper into poverty last year.

The Center on Budget and Policy Priorities found that in some of those states low-earning families faced several hundred dollars in state income taxes, a significant amount for anyone living paycheck-to-paycheck.

"States’ budget challenges are real, but so are the challenges that hard-working families are facing in today’s tough economy," said Nicholas Johnson, director of the Center’s State Fiscal Project.

He added that "states have better ways to balance their budgets than to make their tax codes tougher on low-income workers."ADNFCR-1961-ID-19817679-ADNFCR

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  • Brian Rich

    For all the other excuses and confusing rhetoric, historically the
    smoke and mirrors ploy of hitting them where they ain’t, the simple fact of the matter is that Government has for FAR TOO LONG been profligately irresponsible with the monies generated by a working electorate. Now we have 15 million Americans unemployed, a large percentage of elderly and veterans being screwed by the Feds while they continue to increase their benefit packages at OUR expense send vast amounts of tax dollars overseas as “foreign aid, in one form or another, recently FORCED a healthcare plan on a majority that didn’t want it and, favors entitlements and blanket amnestization of illegals before the needs and wants of American citizens as a matter of political expediency for THEIR benefit. They are killing the golden gooose and comitting political suicide as the lemmings they are. If they think an aging populace will oblige them by having the decency to accept reductions in Social Security and Medicare FORCED on them without an opportunity to vote and simply die on a mountaintop somewhere, THEY are DEAD WRONG. We will use our numbers in the polling places of the nation to utterly DESTROY those who have done this to us. If it is a fight they want, it is a fight they will get. Unlike them, we who fought the wars, paid our taxes, made the economy the strongest in the world for generations and are now being told what to do by a basically Communist president and Congress,WE HAVE EARNED THE RIGHT TO A SECURE OLD AGE!. I am 65 and
    if necessary, would take up arms to retain what I have paid for all my life in both blood and money. Obama and company have quadrupled our debt in 18 months, offended veterans and elderly alike, particularly ELDERLY VETERANS and disdained the average citizen. There are 23.6 million veterans in this country and not all of us are elderly. STOP the financial bleeding, reduce the debt, cut GOVERNMENT jobs, ENFORCE our laws, DEPORT illegals, STOP every nickel of Foreign aid, Cut your benefit packages or have them cut for you, subject czars to Congressional approval or eradicate them altogether, balance the budget and live within it! This would be an Excellent start to OUR economic recovery. Don’t you WASHINGTON WEASELS understand that just now, The vast majority does not care about the rest of the world? We are concerned about what is happening to us; not people in Haiti, Darfur or elsewhere. Charity should begin at home and we will make you see the light in November and, if for some reason Obama and company declare martial law to postpone those elections; we WILL fight. The question will be for you, will the military fire on American citizens if ordered to? The betting here is that after blowing off the Memorial day wreath laying at Arlington and not asking active military about DADT before FORCING it on them, THEY WILL NOT; nor should they. Obama and company in the 111th Congress are on very thin ice with this electorate. We have been abused by you more than enough. WE WILL TAKE NO MORE. Citizen soldiers created this country. Unlike the puke of a president sitting in office, we will defend and uphold the Constitution. We have before, We WILL again!

  • Will Robin

    This report is hardly surprising. If you cut income (taxes) the deficit goes up. Duh? If your income goes down and you are in debt, doesn’t your debt go up?

    The perverted economic theory that cutting taxes reduces the deficit is pure exploitation capitalists’ propaganda that has been proven wrong by both Ronald Reagan’s and George W Bush’s misguided tax cuts without spending cuts.

    When Clinton raised taxes, the deficit disappeared! (Encore not recommended!)

    As to regressive state income taxes, check the states – bet they’re all red! (See “exploitation capitalism”, above.)

    As a pragmatist, I espouse “well regulated”, free enterprise capitalism – which works long term. Exploitation capitalism works, if at all, only in the short term.

    Communism was invented as a reaction to “exploitation capitalism”! Communism has never existed without totalitarianism to enforce it.

  • jimmyd

    The problems of soaring debt both at the state and federal levels can be traced to the creeping socialistic policies of the last 50 years. First comes the politicians mantra give em what they want to get elected, the comes the labor unions increasingly higher wage and benefit packages, then comes off shoring of jobs to get away from crushing labor settlements, then comes free trade which only makes it worse with high balance of trade deficits, then comes the tree-hugger mentality which makes it difficult to utilize our natural resources like oil, then comes higher and higher taxes to deal with all the money we are paying the arabs for oil….it goes on and on and on. Certainly we need to take care of our environment, but what good is a pristine environment if we don’t have the ability to enjoy it, because nobody has jobs, and the socialistic big gov’t is taxing the crap out of those that do have jobs to support those that don’t because of big socialistic gov’t policies. WAKE UP AMERICA, THE END OF OUR COUNTRY AS WE USED TO KNOW IT IS NEAR.

  • Yvan

    In an ideal world this would be the way to go. The problem with this, you have to bring all the people together to agree on something and that it’s almost impossible. Also with no taxes you wouldn’t have an army. Remove the army and there is nothing left of the great bankrupt USA.

    • Dan Burke

      There was a time I have learned before the income tax. I knew that at one point the income tax was created it was billeted as something that would only impact the rich but then time proved that once again that when government was given an inch that it would take ten miles. So, knowing this, I often wondered how did our government pay off its early debts and obligations, pay for military service, etc.. I have kept that question in my mind a very long time it feels like. Well, this year, I finally learned that our government once managed its budget off the tariffs. While I am not a great fan of tariffs myself, I thought this next thought: Could our government manage its finances using tariffs alone once again? The answer was NO! Not a chance. No way. These politicians cannot even balance their own checkbooks. Plus, they pass a pay as you go bill and then bypass that legislation at nearly every chance to avoid actually applying it. If they cannot be responsible with billions and trillions of dollars, why should we believe they will better with any amount of money. The only real way I would trust them with money is to trust them with absolutely no money. When will put responsible citizens (not politicians) in to represent our interests?

      • Yvan

        Agreed, politicians should not be allowed to control the money but the problem no body would run for office. That is what attract them to the job. Can anybody come up with a solution? The system is so corrupt than an honest politician that doesn’t want play the game would get kill in no time flat.

      • RandyB

        What would happen if you abolish withholding? With each paycheck you have to pay your federal taxes, Medicare taxes, Social Security taxes and state taxes manually. When the government wants to spend more, every tax payer would be painfully aware of what it means for them.

  • WarriorH

    Spend, spend, spend.

  • s c

    First, states must find ways to sever their ties to a corrupt, incompetent federal government. Raising taxes is a form of THEFT that CORRUPT, INCOMPETENT governments rely on to transfer wealth, and oppress and enslave its citizens.
    Politicians rely on semantics and ‘we’ll do better next time.’ Politicians are LIARS who rarely get the comeuppance they need. Politicians are DICTATORS who deserve swift, inescapable justice.
    Any government that can’t live on a budget is inherently CORRUPT. Any leaders who live to make government bigger every year are FILTH. They do NOT deserve our support. What they deserve is a) fixed terms behind bars and/or b) a firing squad.
    America is supposed to be a constitutional republic. It was NOT designed to be a democracy. A democracy is a government of, by and for the HERD.
    We deserve a constitutional republic and all the blessings that go with it. We do NOT deserve a democracy and all the CURSES that go with it.

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