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Topic: Federal Debt and Deficit

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847badgerfan

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Re: Federal Debt and Deficit
« Reply #126 on: July 30, 2024, 10:46:25 AM »
Quote from: betarhoalphadelta on July 30, 2024, 10:40:49 AM
Not sure what term limits will solve, when every Congressperson just votes party line anyway...

They have to in order to keep their jobs. If they break with the party, the power players cut them out of campaign cash and primary them.

There are really very few "players" in both chambers. Maybe 3-4 per "side" and even that may be high. Everyone else falls in line for the most part.

We need more Sinemas and Manchins.
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U RAH RAH! WIS CON SIN!

Cincydawg

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Re: Federal Debt and Deficit
« Reply #127 on: July 30, 2024, 10:52:37 AM »
One thing about our income tax is that it is quite progressive, more so than in most Euro countries.

And the thing about FICA taxes is they are quite REGRESSIVE, a flat tax on low to moderate incomes.  And if you're self employed ...
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medinabuckeye1

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Re: Federal Debt and Deficit
« Reply #128 on: July 30, 2024, 11:11:31 AM »
Quote from: betarhoalphadelta on July 30, 2024, 10:40:49 AM
Not sure what term limits will solve, when every Congressperson just votes party line anyway...
I do not think there is a practical way to solve this but the problem isn't the money-brokers cited below:
Quote from: 847badgerfan on July 30, 2024, 10:46:25 AM
They have to in order to keep their jobs. If they break with the party, the power players cut them out of campaign cash and primary them.
The problem isn't the power players cutting their cash, the problem is the other thing that @847badgerfan mentioned, primaries.  Specifically, the problem is extremely low turnout in primaries.  

I'll give an example that isn't exact but it isn't all that far off:
Suppose that ~15% of the electorate believes that Abortion should be legal up until the umbilical cord is cut and also encouraged and paid for at government expense.  We'll call them pro-choice radicals and they all vote in the Democratic Primaries.  

Then suppose that another ~15% of the electorate believes that the morning after pill should be banned and birth control tightly regulated.  We'll call them pro-life radicals and they all vote in the Republican Primaries.  

So 70% of us have opinions on Abortion that fall between these two extremes.  One would think that elected officials would reflect something nearer the middle but it doesn't work that way and the reason is the extremely low turnout in primary elections.  

If we had 100% turnout in the primaries then pro-choice radicals would only make up 30% of the Democratic electorate and the pro-life radicals would only make up 30% of the Republican electorate so candidates with more moderate positions could and would win some elections.  Instead, turnout in primaries is very low so the 15% of the electorate that are pro-choice radicals more-or-less control Democratic primaries while the 155 of the electorate that are pro-life radicals more-or-less control Republican primaries.  Then we get to the general election, the other 70% show up, and their only choices are two radicals.  

The only thing I can think of that would materially improve this situation would be to make voting in the primary* a precondition for voting in the general election but that would NEVER gain popular support and even if it did I don't know that it would help much.  
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Cincydawg

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Re: Federal Debt and Deficit
« Reply #129 on: July 30, 2024, 11:13:43 AM »
I can argue, I think,  that candidates were better when they were chosen by the Party Insiders, and not by primaries.  The took out any "one trick ponies" and stuck with experienced known pols, and some third parties.
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betarhoalphadelta

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Re: Federal Debt and Deficit
« Reply #130 on: July 30, 2024, 11:20:32 AM »
Quote from: Cincydawg on July 30, 2024, 10:52:37 AM
One thing about our income tax is that it is quite progressive, more so than in most Euro countries.

And the thing about FICA taxes is they are quite REGRESSIVE, a flat tax on low to moderate incomes.  And if you're self employed ...
But that's the thing with FICA taxes, or at least Social Security. That was the design. The design was that your benefits would be tied to your contribution level, and that since benefits were capped at a maximum, contributions should be also. If this is a "retirement" program and not just welfare for old folks, why should I be taxed on my full income rather than the capped income when I won't get any higher benefits for it? 
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Cincydawg

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Re: Federal Debt and Deficit
« Reply #131 on: July 30, 2024, 11:22:51 AM »
Yes, that was/is the intent.  Some here have softly proposed just adding it to the income tax gig and doing away with FICA.  Then it would clearly be a government expense.

I'd guess income tax rates would need to go up an additional 10% or so, from 30% to 40% etc.
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betarhoalphadelta

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Re: Federal Debt and Deficit
« Reply #132 on: July 30, 2024, 11:26:40 AM »
Quote from: Cincydawg on July 30, 2024, 11:22:51 AM
Yes, that was/is the intent.  Some here have softly proposed just adding it to the income tax gig and doing away with FICA.  Then it would clearly be a government expense.

I'd guess income tax rates would need to go up an additional 10% or so, from 30% to 40% etc.
>10%. The thing most people don't think about with the payroll tax is the employer portion. Which is again, just a way that Congress chose to hide the price of the system. "You don't pay it, your employer does!" Yeah, well it's part of the cost of employing someone, and if the employer didn't have to pay that I could negotiate for higher wages. So the current rate is 12.4% on all income up to the cap. 
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medinabuckeye1

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Re: Federal Debt and Deficit
« Reply #133 on: July 30, 2024, 11:28:08 AM »
Quote from: Cincydawg on July 30, 2024, 11:22:51 AM
Yes, that was/is the intent.  Some here have softly proposed just adding it to the income tax gig and doing away with FICA.  Then it would clearly be a government expense.

I'd guess income tax rates would need to go up an additional 10% or so, from 30% to 40% etc.
It would be a LOT more than that.

SS and Medicare are a combined 15.3% but you couldn't just swap 15.3% of payroll taxes for 15.3% of income taxes because payroll taxes generate a lot more revenue.
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medinabuckeye1

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Re: Federal Debt and Deficit
« Reply #134 on: July 30, 2024, 11:29:43 AM »
Quote from: betarhoalphadelta on July 30, 2024, 11:26:40 AM
>10%. The thing most people don't think about with the payroll tax is the employer portion. Which is again, just a way that Congress chose to hide the price of the system. "You don't pay it, your employer does!" Yeah, well it's part of the cost of employing someone, and if the employer didn't have to pay that I could negotiate for higher wages. So the current rate is 12.4% on all income up to the cap.
15.3% if you include Medicare so:
  • 15.3% up to $168k (I think, didn't look it up but it is close to that), then
  • 2.9% above the cap

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Gigem

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Re: Federal Debt and Deficit
« Reply #135 on: July 30, 2024, 11:55:32 AM »
Quote from: medinabuckeye1 on July 30, 2024, 09:52:38 AM
I wanted to respond to this the other day and forgot so I'm returning to it. 

Term limits are a terrible idea that sounds appealing but this is perhaps the worst argument for them that I have ever seen put forward. 

Your argument is that if Members of Congress absolutely KNEW without a doubt that they would NOT be in Congress 20 years from now to deal with the consequences of their decisions today for some reason they would be MORE forward thinking.  That logic is completely inverted. 

A 40-50 year old Congressional Representative today knows that he/she *MIGHT* still be in Congress in their 60's 20 years from now so they have at least SOME reason to think about the long-term. 

Terms limits reduce the power of the voters.  If the voters make stupid decisions that is on us but taking power away from us doesn't give us more power it gives us less and that gap is filled in by bureaucrats, lobbyists, and the parties. 

On term limits generally:
Please know that if you say you are in favor of term limits, what you are saying is that you want the bureaucrats and lobbyists to have MORE power.  That is the unavoidable reality of term limits.  We adopted them in Ohio for State legislators and now our State Legislature thinks of NOTHING but the short-term because they KNOW they won't be around in the long-term anyway so who cares.  The bureaucrats and lobbyists run the show because they are the only ones with staying power and institutional knowledge. 
My term limits would be very generous.  3 terms as senator, which I think would capture a good amount of them (18 years), 10 terms for congressional representatives (20 years).  All I'm really wanting to weed out are the 30-45 year people like Pelosi, Biden, Shelby (Alabama), and the rest of the geriatric bunch.  I'm trying to remember the name of the senator from Georgia or somewhere very southern that was in there a long, long time and was really racist.  Byrd maybe?  The reality of it is that 75 years of age is the max I want anybody serving in congress.  

But you make a very good point.  
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Cincydawg

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Re: Federal Debt and Deficit
« Reply #136 on: July 30, 2024, 12:05:44 PM »
Quote from: medinabuckeye1 on July 30, 2024, 11:28:08 AM
It would be a LOT more than that.

SS and Medicare are a combined 15.3% but you couldn't just swap 15.3% of payroll taxes for 15.3% of income taxes because payroll taxes generate a lot more revenue.
Yes, but income taxes would apply to every income level, so it would remove the cap.  I'm assuming that would be $$$$.
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betarhoalphadelta

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Re: Federal Debt and Deficit
« Reply #137 on: July 30, 2024, 12:41:08 PM »
Quote from: Cincydawg on July 30, 2024, 12:05:44 PM
Yes, but income taxes would apply to every income level, so it would remove the cap.  I'm assuming that would be $$$$.

I haven't done a significant analysis (obv), but as medina points out by making it part of income taxes you'll actually collect a LOT less than 10% if you just raise income taxes across the board by 10% from everyone under the cap. Because their AGI will be lower than their actual income, so their tax rate will be based on a smaller amount of income than the current payroll tax. 

Whether a 10% rise for the income brackets above the cap is enough to make up for that, I don't really know. But as you often point out, the wealthier you are the more you can structure things to avoid taxation (even without being uber-wealthy), and raising the top marginal rate by 10% will give taxpayers even more incentive to do that to avoid it. Laffer curve and all. 

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Cincydawg

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Re: Federal Debt and Deficit
« Reply #138 on: July 30, 2024, 12:44:26 PM »
It's tough to shelter earned income from salary.

Anyway, it does sound like it would be a hit somehow even if net revenue stayed the same.
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betarhoalphadelta

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Re: Federal Debt and Deficit
« Reply #139 on: July 30, 2024, 12:51:02 PM »
Quote from: Cincydawg on July 30, 2024, 12:44:26 PM
It's tough to shelter earned income from salary.

Anyway, it does sound like it would be a hit somehow even if net revenue stayed the same.
It is tough to shelter income from salary, I'd agree. However I think at the higher ends of the income scale you have a lot more flexibility to itemize deductions and minimize your AGI. For many who are small business owners there end up being a lot of deductions and other ways to keep your reported income low even if your lifestyle is higher, etc. 

Maybe 10% is enough. Maybe it's not. I'm just saying without a LOT more analysis we shouldn't really assume the validity of any particular number. 
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