President Obama Unveils Aspects Of Budget Proposal

Some highlights:

-increasing taxes on the wealthiest Americans and using revenues from a new program: selling carbon credits to manufacturers as part of a cap-and-trade plan meant to slow climate change.

-a proposal to phase out government payments to crop producers making more than $500,000. Additional revenues are posited from a tightening of tax-code enforcement.

-use revenues from the centerpiece of his environmental policy — a plan under which companies must buy permits to exceed pollution emission caps — to pay for an extensionof a two-year tax credit that benefits low-wage and middle-income people.

[More . . .]

-reduce the value of itemized tax deductions for everyone in the top income tax bracket, 35 percent, and many of those in the 33 percent bracket — roughly speaking, starting at $250,000 in annual income for a married couple.

Under existing law, the tax benefit of itemizing deductions rises with a taxpayer’s marginal tax bracket (the bracket that applies to the last dollar of income). For example, $10,000 in itemized deductions reduces tax liability by $3,500 for someone in the 35 percent bracket. Mr. Obama would allow a saving of only $2,800 — as if the person were in the 28 percent bracket.

-a $634 billion “reserve fund” that Mr. Obama will set aside in his budget to address changes in the health care system. The other half would come from proposed cost savings in Medicare, Medicaid and other health programs. . . . [T]he White House said it would finance coverage for the uninsured in part by “rebalancing the tax code so that the wealthiest pay more.”

- [R]equire drug companies to give bigger discounts, or rebates, to Medicaid, the health program for low-income people. Drug makers now must provide Medicaid with a discount equal to at least 15.1 percent of the average manufacturer price for a brand-name product. Mr. Obama wants to require discounts of at least 22.1 percent. Pharmaceutical companies have strenuously resisted such proposals in recent years.

-propose cutting Medicare payments to health insurance companies that provide comprehensive care to more than 10 million of the 44 million Medicare beneficiaries. [Obama] says he can save $175 billion over 10 years with a new competitive bidding system, under which payments to private Medicare Advantage plans would be based on an average of the bids they submit to Medicare.

Let's see what happens now.

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    Sanity! (5.00 / 1) (#1)
    by lambert on Thu Feb 26, 2009 at 10:07:46 AM EST
    Of course, sanity should be a mere baseline.

    Obama's appproach to the budget (5.00 / 2) (#7)
    by ai002h on Thu Feb 26, 2009 at 11:44:02 AM EST
    generally and universal healthcare specifically is the complete opposite of the one he took with the stimulus bill. He's actually matching his bold rhetoric with bold actions. Maybe he believes he has the political capital for UHC cause he campaigned on it, whereas the stimulus was something that was debated on after the election.

    Either way, if you look at the details, whats better than the 634 Billion downpayment for healthcare expansion is the way the downpayment is paid for and its intended uses. It shows that they aren't trying to patch up some peacemeal plan and call it healthcare reform or universal healthcare. It's up to us now to put the necessary pressure on the left to make sure these things aren't watered down during the legislation process.

    Small business owner (5.00 / 3) (#20)
    by samtaylor2 on Thu Feb 26, 2009 at 01:05:01 PM EST
    Many small business owners make much more then 250,000 dollars take home as their cell phones are paid for by the business, if they travel their car and gas is paid for by the business, going out to dinner is a business expense because you are talking about the dinner with your office manager that happens to be your husband/ wife/ son.  

    If someone can point me in the direction of evidence that says that raising the taxes on those making over 250,000 dollars a year decreases jobs (vs. the Clinton raising taxes and leading to an economic BOOM) I might listen.  But right now the anti-tax crowd just uses lame straw man arguments without facts to back up the claims, or even worse uses an anecdote of a single event to prove a their theory.  

    besides that (5.00 / 3) (#21)
    by TimNCGuy on Thu Feb 26, 2009 at 01:17:06 PM EST
    as I understand this, it is only the income OVER the 250,000 that would be subject to the higher rate.  So, if the rate is going from 35% up to 39% the small business owner would only be keeping 61 cents on every dollar over 250,000 instead of 65 cents.  And, I'm supposed to believe that this 4 cent difference will cause small business owners to avoid trying to earn over 250,000.  They would rather throw away an additional 61 cents than have to pay 4 cents .

    Ha! (none / 0) (#46)
    by pluege on Thu Feb 26, 2009 at 08:52:17 PM EST
    using rational arguments against republican insanity is a huge waste of time and effort.

    I trust that (5.00 / 1) (#25)
    by KeysDan on Thu Feb 26, 2009 at 01:54:44 PM EST
    the President will take a roll-out track unlike that employed for the Stimulus Bill.  For any semblance of success, explanations need to be made early and often, with an offensive against right wing talking points and talking heads.

    I like it, but I thought we were eliminating (5.00 / 1) (#32)
    by masslib on Thu Feb 26, 2009 at 05:01:33 PM EST
    Medicare Advantage and just putting those people back on Medicare.  What's this about "competitive bidding"?  

    The big double down... (none / 0) (#2)
    by kdog on Thu Feb 26, 2009 at 10:14:10 AM EST
    we don't even have 11, we've got a 7 or 8, and the dealer is showing a face card...we better hope we draw an ace to even have a shot of winning this hand...the odds are stacked against us.

    I've sat at this table before (none / 0) (#3)
    by Jlvngstn on Thu Feb 26, 2009 at 10:32:33 AM EST
    and said "surely the dealer cannot have 20 AGAIN", and of course I "trip" 8's to 24.

    Know the feeling... (none / 0) (#5)
    by kdog on Thu Feb 26, 2009 at 11:34:07 AM EST
    to bad we're just gamblers and not called "shareholders" in kdog and jlvgnstn corp....then the house would just pay us when we lose so as not to "offend" us:)

    Part of a loaf (none / 0) (#4)
    by cal1942 on Thu Feb 26, 2009 at 11:28:45 AM EST
    If the pledge is to really raise taxes on high incomes then add several new higher percentage brackets.

    Put in brackets for the excess over, say, $750,000 and another bracket for excess over $1,000,000 and another for excess over $5,000,000, etc., etc.

    And why not put dividend income back into the gross income stream. Seperating dividend income and taxing it at 15% was one of Bush's more outrageous gifts to the obscenely wealthy.

    And for crying out loud raise the capital gains tax.

    Lowering itemized deduction caps looks like another example of timidity.

    If you pledge to raise taxes on the wealthy then raise taxes on the wealthy for crying out loud. And talk about your bargaining chips.

    Whoa, wait, am I missing something? (5.00 / 1) (#33)
    by masslib on Thu Feb 26, 2009 at 05:07:16 PM EST
    Isn't the ridiculous cap gains tax on cash dividends one of the expiring tax cuts?  CEO's, corporate execs, and loafers who inherited their wealth make nearly all their income in cash dividends.  That means they pay about 15% income tax.  It's criminal.  It is the number one part of the tax code that accounts for growing income inequality.  Surely, the cap gains are set to go back to at least 20%(though they should be closer to regular income than even that), right?  Also, there must be something in there about raising hedge fund and private equity tax rates to 20% at least, no?

    I believe (none / 0) (#34)
    by CST on Thu Feb 26, 2009 at 05:14:30 PM EST
    nothing in this budget suggests extending bush's tax cuts which should still expire on schedule.  I think these are supplementary (in the mean time) changes and do not effect what will happen to those cuts.

    I could be wrong, may want to double check that...


    Ok, no this is very, very good. (none / 0) (#36)
    by masslib on Thu Feb 26, 2009 at 05:15:14 PM EST
    He would raise cash dividends to 20%(though he would keep Bush's preferential treatment of corporate dividends, anyone know what that means?), and here is the big one, he would tax hedge funds and private equity at regular tax rates.  That's very good policy.

    Oops! (none / 0) (#6)
    by cal1942 on Thu Feb 26, 2009 at 11:34:19 AM EST
    Forgot the first paragraph.  The itemized deduction caps threw me into a timidity rant.

    Any details on paragraph one or is the itemized deduction cap the only increase?


    You're being way too harsh (none / 0) (#8)
    by ai002h on Thu Feb 26, 2009 at 11:46:41 AM EST
    To critique Obama of timidity in a budget bill that has 634 B on healthcare being paid for largely by those making over 250,000 is unfair. He may not have everything you'd like but this budget is MUCH MUCH better than I thought it'd be. Personally, I'm happy about this.

    It would be more honest to increase tax rates (none / 0) (#14)
    by Green26 on Thu Feb 26, 2009 at 12:26:39 PM EST
    rather than do backdoor tax increases via limited deductions.

    The relative dishonesty of some politicians and pundits gripes me. Of course, a tax deduction for someone in a higher tax bracket results in more tax savings for that taxpayer. It's because they are paying a higher percentage of their income--as well as a much higher amount of taxes. In my view, deductions ought to be fully useable by all taxpayers.

    Another dishonest claim is characterizing the amount of additional earned income credit to lower income taxpayers as a "tax cut". BS. It is not a tax cut. It is essentially additional welfare.

    While the $250,000 cut off point seems relatively high to most people, it apparently does catch alot of small business owners. At some point, small business owners, as well as most taxpayers, will feel the tax system is unfair and will lose incentive or take corrective action. This may or may not be a rational decision on their part.


    heard an explanation of this the other day (5.00 / 4) (#15)
    by TimNCGuy on Thu Feb 26, 2009 at 12:36:33 PM EST
    may have been on Keith Olberman's show.  They basically said that any "small" business earning over $250,000 and still filing their taxes as an "individual" and not incorporating has an IDIOT for an accountant.

    As a self-employed person (5.00 / 6) (#17)
    by gyrfalcon on Thu Feb 26, 2009 at 12:42:22 PM EST
    I don't quite get this gripe about the $250K.  Isn't that $250K after expenses?  If so, what's the problem?  If you plow the business income back into the business instead of into vacations and expensive cars, there's no issue here.  I don't get why taxing income over $250K that doesn't go into business expenses is in any way hard on people.  Sounds to me actually like a good incentive to spend that business profit on expanding the business rather than keeping it for personal use and paying income taxes on it.

    But I must be missing something.  Can anybody elucidate?


    YGBSM (none / 0) (#9)
    by Pragmatist on Thu Feb 26, 2009 at 11:47:41 AM EST
    As someone who has worked, invested, and started my own business and who is quickly approaching the $250K cap), I have to ask: "why should I continue being successful if I'm going to be punished for my success"?  Punished how?  We'll instead of having more expendable income, I'll have less (by paying more taxes).  Rather than allow that to happen, I'll cut back to ensure that I don't penalize myself.  But in doing so, I now will penalize my employees and future employees because I will cut back production vice expanding. Yes, everyone should pay taxes; but, only their fair share.  What is fair?  I wish I knew what percentage is fair, but I don't.  I do know that it's unfair to tax a person to the point where they stop being productive.  Perhaps it's time for the Fair Tax.

    Do you think (5.00 / 4) (#10)
    by ai002h on Thu Feb 26, 2009 at 11:55:21 AM EST
    going from 35% to 39% would suddenly make you unproductive?? I mean it's not like its being raised to 60%. At the end of the day, the Bush Tax Cuts were tax cuts that should've never happened, letting them expire isn't raising taxes as much as correcting an old mistake.

    Interesting reaction (5.00 / 4) (#11)
    by Inspector Gadget on Thu Feb 26, 2009 at 11:56:36 AM EST
    I know I would be so proud of my ability to reach a point of success that I could be among those who are providing such a huge value to my fellow citizens that I would probably be inclined to strive to double my $250,000 rather than push hard to avoid reaching it because I would resent anyone but me was receiving benefit.

    You do what you feel is right, but please don't try to take business from a competitor who is willing to do what he/she can for the country.


    I used to say.... (none / 0) (#12)
    by kdog on Thu Feb 26, 2009 at 12:14:44 PM EST
    tax the rich to pay for everything, f*ck 'em...then I started to question the righteousness and/or wisdom of taxing production instead of consumption.  We are all supposed to be free to pursue our happiness...accumulating wealth isn't my cup of tea, I'm more about accumulating pleasure and experience...but who am I to deny the next guy his right to pursue happiness in the form of a big pile o' money.

    Wouldn't it be wiser to place the incentive on production, and the disincentive on consumption?  Staples like food, basic shelter, gasoline and heat, generic clothing could all be exempt, and we fund the fed by taxing luxury items like sports cars, mansions, jewelery, electronic toys and such instead of income.  The poor would pay no taxes as they can't afford luxuries, the middle class would pay based on their quality of life choices in regards to possessions, and the rich would pay the most...unless they wanna live like the poor and not consume so much.

    Bonus side effects could include a renewed emphasis on simplicity and frugality instead of excess and gluttony, and conservation of resources.

    I wonder how/if it would work.


    Comsumption taxes ... (5.00 / 1) (#28)
    by Robot Porter on Thu Feb 26, 2009 at 03:20:00 PM EST
    are inherently regressive.

    There have been a lot of plans like the one you propose, but the numbers never work, they always end up being regressive.

    Even your rough plan presents many problems.  What constitutes basic shelter?  Is it a dollar amount?  A size?  What?  Would all clothes be exempt?  What's a sports car?  An electronic toy?

    Our current system already provides benefits to actual production.  For example, there are tax incentives for reinvesting in your own business.


    I'll second you on that Kdog... (none / 0) (#13)
    by vml68 on Thu Feb 26, 2009 at 12:24:24 PM EST
    I am all for taxing consumption. As far as I am concerned while $250,000 is a nice chunk of change it does not qualify for "wealthiest americans" if you live in the NY/NJ metro area.

    kdog, if you didn't fill out an application (none / 0) (#22)
    by Inspector Gadget on Thu Feb 26, 2009 at 01:17:06 PM EST
    for one of the jobs in Obama's administration, have you thought about running for office? I bet your district would love to hear some of the changes you believe in :)

    Pays really, really well for not much effort, too.


    I do drugs, I gamble... (none / 0) (#23)
    by kdog on Thu Feb 26, 2009 at 01:47:04 PM EST
    I smoke, I drink, I fornicate...refuse to apologize for any of it....I'd never survive the vetting process Inspector:)

    Sure you would pass vetting (none / 0) (#24)
    by Inspector Gadget on Thu Feb 26, 2009 at 01:53:03 PM EST
    as long as the media doesn't get involved. If you don't have a record, you can sneak by :)

    We need some colorful dissent in the current gov't.


    No felony record.... (none / 0) (#26)
    by kdog on Thu Feb 26, 2009 at 02:04:16 PM EST
    a few arrests though.

    Thanks for the vote of confidence, but the lines in the sand are drawn, my government and I are on seperate sides.  Sad but true.

    Sh*t, I won't even apply for a civil service post office job, much less a job in the administration:)


    :) Doesn't it seem like (none / 0) (#30)
    by Inspector Gadget on Thu Feb 26, 2009 at 04:28:23 PM EST
    putting only the more virtuous, lacking street smarts and real life experiences, in charge of our well being is just a bit crazy?

    Who knows better how to fix something than the person who actually uses it?


    That it does... (none / 0) (#38)
    by kdog on Thu Feb 26, 2009 at 05:42:25 PM EST
    it certainly does seem counter-productive the way we demand some kind of warped perfection of our leaders.

    I always vote for the third party no-shot most like a normal person candidate...unfortunately so few others join me:)


    This POTUS of Change and Hope should (none / 0) (#39)
    by Inspector Gadget on Thu Feb 26, 2009 at 06:04:58 PM EST
    consider putting an oversight group in place to watch the gov't. This would be what our media may once have been.

    A group of regular citizens who are problem solvers in their own lives...able to ask the right questions and when the dots don't connect logically, they know how to point that out and follow the trail backward to see if something just might be amiss.

    No congressional committee meetings should be allowed to take place without a citizen's action group watching it with the ability to ask questions and report what they heard back to the people.

    Imagine what would be different today if those of us who knew those weekly meetings of home builders were arbitrarily raising the price of new homes $1,000-10,000 every single week could have notified the public that something was just not right and back off buying right now until they could explain why that was happening. It sure wasn't because their costs were on the rise.


    wouldn't you avoid the problem (5.00 / 1) (#16)
    by TimNCGuy on Thu Feb 26, 2009 at 12:39:21 PM EST
    if you stopped filing your small business taxes as an individual and incorporated?

    Filing taxes as a corporation does not solve (none / 0) (#29)
    by Green26 on Thu Feb 26, 2009 at 03:45:56 PM EST
    the problem. The majority of small business entities are set up as pass-through entities, i.e. S Corps, LLC's or partnerships, in which all taxable income is pass-through to the individual owner(s) and taxed at ordinary income rates. This avoids double-taxation--at the corporate level and again at the individual owner level when the funds distributed out of the corporation (as in a C Corp). Pass-through entities also have significant tax advantages with regard to real estate and sale of the company.

    It's my understanding that about 1/2 of business income is taxed at individual and not corporate tax rates (corporate tax rates are lower); about 2/3 of all flow-through business income is earned by small business owners with income exceeding $200,000; and almost 1/3 of business income is taxed at the 33% and 35% marginal rates.

    Note that raising the tax rate on capital gains and dividends also impacts small businesses.

    While raising tax rates a few percentage points may not impact the incentive of many small business owners to work hard at their businesses, it may impact the number of people they employ and the salaries and benefits they pay.

    I don't know stats on jobs, but based on some direct experience and anecdotal evidence, higher tax rates does have some amount of negative impact on jobs, and lower tax rates does have some amount of positive impact on jobs--as well as salaries and benefits.


    an additional 4% (5.00 / 2) (#35)
    by TimNCGuy on Thu Feb 26, 2009 at 05:14:44 PM EST
    an additional 4% on income over 250,000 would only amount to $4,000 on each additional 100,000 in income.  A "small" business would have to earn an additional 300,000 in order to have an additional tax bill of 12,000.

    You are suggesting that if a business owner EARNED an additional 300,000 they would either layoff or not hire an employee to make up the 12,000 of added tax because they would only be able to pocket 288,000 for their personal benefit of the 300,000?


    oops, bad math (5.00 / 2) (#37)
    by TimNCGuy on Thu Feb 26, 2009 at 05:23:44 PM EST
    should read that they could only pocket 183,000 instead of 195,000 of the additional 300,000 income.

    I guess you're right.  It hardly seems worth earning an additional 300,000 if I could only keep 183,000 of it as opposed to 195,0000.  That extra 12,000 will probably stop me from being able to pay my bills.  Well, the ones I don't run through the business expenses anyway.


    Yes, that's what I'm saying. (none / 0) (#40)
    by Green26 on Thu Feb 26, 2009 at 06:44:08 PM EST
    Note that some small businesses make much more than $250,000, so the increased tax amounts could be more significant than your assumptions.

    Note that caps on deductions will also have some impact on taxes paid.

    Individuals in small businesses will either decide to absorb the additional taxes, or negate the drop in after-tax income in some other manner--some of which will likely be along the lines of what I suggested.

    As for quantifying this, I don't have any stats or even a good impression. I'm sure we'll see some comments, and perhaps some estimated quantifying, from the small business types and lobby in the coming weeks.

    The same thing is going to happen with the capped deductions. People earning over $250,000, but who are not very rich, are now going to think about things like the amount of charitable contributions they make (as the after-tax cost is now going to go up). Charities are already starting to say the deduction cap is going to have an impact on their donations.

    With a number of his tax-related proposals, I think Obama has just picked some huge fights.


    BTW, I work for a local group and know (5.00 / 0) (#42)
    by Inspector Gadget on Thu Feb 26, 2009 at 06:58:44 PM EST
    that the highest percentage of charitable donations come from the people who can barely afford their own lives, but know what a true joy it is to give.

    Well, that's fine (none / 0) (#41)
    by Inspector Gadget on Thu Feb 26, 2009 at 06:56:27 PM EST
    People earning over $250,000, but who are not very rich, are now going to think about things like the amount of charitable contributions they make (as the after-tax cost is now going to go up).

    Their charitable contributions go down and so does the tax credit they get for it.

    I think the people you are talking about are probably looking for any reason at all to claim a little higher tax rate on the earnings over $250,000 will come with a punishment to the citizens of the country just to scare them. It gives them some sense of justification for their greed. Those people can keep their d*mn money and enjoy their selfish lives.

    It's the wealthy people who proudly share their wealth who have more money come back to them than they gave away.


    It's the proposed cap on deductions (none / 0) (#50)
    by Green26 on Thu Feb 26, 2009 at 11:28:41 PM EST
    that will impact charitable giving more than increases in tax rates. This will make charitable giving more expensive on an after-tax basis.

    Increases in tax rates have both a negative and positive impact on charitable giving. Increased tax rates means the taxpayer has less after-tax income, but increased tax rates means the contribution is less expensive on an after-tax basis.


    People who give money to charity (none / 0) (#59)
    by Inspector Gadget on Fri Feb 27, 2009 at 09:31:07 AM EST
    based solely on the tax benefit they personally receive from it can keep their money. Those are not charitable, kind people.

    People who think to be charitable and generous with others are always pleased to simply get whatever is allowed in return. They don't need a tax cap to tell them when they've given enough.


    Inspector G, that is not a very practical (none / 0) (#60)
    by vml68 on Fri Feb 27, 2009 at 10:03:28 AM EST
    viewpoint. Charities need the money no matter what the reasoning is behind the giving. Realistically speaking some big donors give based on the tax benefit they receive, so telling them to keep their money because of a false sense of pride/dignity is essentially scr*wing the people who need the money the most.

    People who give money to charity based solely on the tax benefit they personally receive from it can keep their money.

    Many donors consider the after-tax cost (none / 0) (#61)
    by Green26 on Fri Feb 27, 2009 at 10:45:48 AM EST
    of the donation, in determining how much to donate.

    If the tax benefits are greater, then many donors will donate a higher amount--and vice versa.


    the amount over 250,000 (none / 0) (#45)
    by TimNCGuy on Thu Feb 26, 2009 at 08:28:33 PM EST
    doesn't matter.  The additional cost is still only 4,000 on each 100,000.  And, that isn't each 100,000 in sales, it's on each 100,000 in PROFIT.

    I would personally be extremely happy to receive 61,000 for myself instead of 65,000 for myself for each 100,000 additional profit.

    You have to pay something in taxes.  Just waht figure is it that you think is fair if 39% on the $$$ over 250,000 seems unfair to you.

    Especially when you consider how much of these business owners' personal expenses are being illegally run through the business.


    The idea (none / 0) (#43)
    by cal1942 on Thu Feb 26, 2009 at 07:00:29 PM EST
    that tax rates affect the number of jobs is ludicrous.

    Businesses hire people to make more money, period. The idea that taxes on profits are a drag on jobs is an ongoing crock that we constantly hear from Conservatives along with the line about not working as hard if taxes are raised.

    Makes about as much sense as the fairy tales in a Milton Friedman essay.


    Cal I have to respectively disagree (none / 0) (#49)
    by coast on Thu Feb 26, 2009 at 10:58:02 PM EST
    with that.  Taxes in general, not necessarily just income taxes, are often a very important part of locating or expanding a business.  If a major company has built or are planning to build any substantial facility near you, look into what kind of tax breaks they are being offered.  I can bet they are numerous.  You can't think of it just in terms of a single rate.  Its the overall cost of earning that extra dollar that is of significance, not just what tax you have to pay on the dollar earned.  If I wanted to add another $100K in gross revenues to my business, I have to hire another employee.  This means increased salary, payroll tax, health and benfit, training, and technology cost.  When its all said and done, to add $100K in gross revenues I've spent $70K in cost.  So after taxes I've go another $20K.  The question remains, is all that worth another $20K in profit.  Some would say yes and others will say they are content where they are.  Given the current environment, I would say most are content sicne the prospects of increasing revenues is rather slim.

    I'm referring to (none / 0) (#52)
    by cal1942 on Fri Feb 27, 2009 at 01:10:01 AM EST
    federal income taxes and exclusively taxes on profit.

    Inasmuch as state and local tax abatements are concerned I fully understand your point. I've seen it all too often.

    Now I'm not an attorney but it seems to me that local tax abatement schemes aren't exactly kosher and the effect on the nation is, IMO, harmful. Allowing states to screw other states has instituted a race to the bottom regarding critical public goods and that ain't good, in the long run, for anyone.

    We've seen all to many firms turned into gypsies flitting about from place to place.  When the abatement expires in location A it's off to find the next abatement.

    The choice to expand, whether in capacity or by expanding a line is a choice made by the firm to increase its profit.  The public should not be made to pay for the expansion of private profit. It's welfare where no need for welfare is present.


    Agree with you wholeheartedly on the (none / 0) (#54)
    by coast on Fri Feb 27, 2009 at 06:44:12 AM EST
    point about the abatement issue.  I would follow-up on the income tax issue with this final thought.  As you decrease the reward for a person or business taking a risk, the less likely they are to take that risk.  For instance, in my example the cost of that additional employee is guaranteed cost.  The additional $100K in revenues are what I hope that additional employee will generate.  I'm taking a risk hiring that that employee with the hope that it will payoff with an overall larger net profit.  Increase the tax on that profit too much and the risk does not justifiy the ever decreasing reward.

    No offense intended, but (none / 0) (#57)
    by Green26 on Fri Feb 27, 2009 at 08:26:39 AM EST
    this statement is incorrect (in fact, it's ludicruous):

    "that tax rates affect the number of jobs is ludicrous."

    Another poster has explained how increased tax rates reduce the reward, and that changes the risk-reward analysis. This analysis can impact jobs.

    Tax rates impact the cost of labor, although are not necessarily one of the major factors of cost of labor. Cost of labor is a factor in causing businesses to outsource. Cost of labor and tax rates are also factors in causing larger companies to move operations outside of the U.S. Outsourcing and moving operations results in fewer jobs.


    Well, no (5.00 / 5) (#18)
    by gyrfalcon on Thu Feb 26, 2009 at 12:49:49 PM EST
    I dont think so.  You won't have less income if you make more money, you just won't have quite as much more.  You're still wallowing in luxury compared to most of us, so I can hardly see how you're being "punished."

    How much luxury do you need to live in so you feel happy?  Just curiously, how much do you pay your employees?  How much over cost are your customers paying for your products/services?

    Call me a fool, but I don't think the vast majority of small business people have the attitude you appear to have.


    I will never understand this kind of thinking. (5.00 / 6) (#19)
    by Teresa on Thu Feb 26, 2009 at 12:50:47 PM EST
    It's not like they are taxing 100% of your additional income. You will cut your own throat and make less money to pay less taxes? We could all do that as individuals and then we'd all be losers.

    Bravo Teresa (5.00 / 1) (#44)
    by cal1942 on Thu Feb 26, 2009 at 07:03:52 PM EST
    Right on the money. Understanding that line of thinking however is IMO quite easy: It's simply whining to get out of paying taxes.

    I agree that most small business people (none / 0) (#51)
    by Green26 on Thu Feb 26, 2009 at 11:36:30 PM EST
    won't cut their income due to higher tax rates. However, many of them will not employ as many people and/or pay them as much. Some of them will retire sooner, perhaps selling or passing along their busines, but some won't be able too. Some of them will decide it isn't worth it to expand their businesses.

    Several percentage points may not have a huge impact, but higher rate increases, combined with caps on deductions, combined what else may be coming (like higher payroll/social security taxes) will have a more significant impact.

    This is just one factor, and a negative one, to be weighed along with other other ones, including the benefits of tax increases.


    No offense intended (5.00 / 1) (#53)
    by cal1942 on Fri Feb 27, 2009 at 01:28:15 AM EST

    I'll have less (by paying more taxes).  Rather than allow that to happen, I'll cut back to ensure that I don't penalize myself.

    If you were to do that you'd be a fool.  You don't seem to understand that an increase in tax rate is only an increased percentage on what you've earned ABOVE a given point.  You'd still make more money. You would not have less. If you actually understand that but are posting a comment here in the belief that your going to fool someone then you're barking up the wrong tree.  The people who comment on this site know better.  

    So far as the "Fair Tax" is concerned you do realize that implementation of that type of crackpot scheme would plunge the nation into an unimaginable depression.


    Did anyone actually say this, or (none / 0) (#55)
    by Green26 on Fri Feb 27, 2009 at 08:18:10 AM EST
    is this just your straw man, Cal1942?

    "I'll have less (by paying more taxes).  Rather than allow that to happen, I'll cut back to ensure that I don't penalize myself."


    How about this? (none / 0) (#27)
    by jbindc on Thu Feb 26, 2009 at 02:49:04 PM EST
    Here's the whole budget proposal:

    From p. 54

    Increases the Size of the Army and Marine

    The 2010 Budget supports additional permanent
    forces in the Army and Marine Corps,
    which will increase to 547,400 and 202,000, respectively, by the end of 2009. This growth is two
    to three years ahead of schedule and will reduce
    stress on servicemembers and their families,
    while ensuring heightened readiness for a full
    spectrum of military operations.

    Or this from page 55?

    The President is working with his military commanders to increase the number of U.S. troops in Afghanistan while responsibly removing combat forces from Iraq. To address the costs of military operations in Iraq and Afghanistan, the Administration requests $75.5 billion for the remainder of 2009 and $130.0 billion for 2010. The Administration will provide the details of the 2009 supplemental appropriations request to the Congress in the next few weeks, and will transmit the detailed 2010 request with the President's 2010 Budget.

    The Budget includes placeholder estimates of
    $50 billion per year for 2011 and beyond. These
    estimates do not reflect any policy decisions about specific military or intelligence operations.

    Attention (none / 0) (#31)
    by Slado on Thu Feb 26, 2009 at 04:34:29 PM EST
    We are in a recession if not a depression.  This budget doesn't address Medicare, Social Sercurity and adds a tax called "cap and trade".

    Dumb Idea

    Obama deserves same chance Reagan had (none / 0) (#47)
    by reg373 on Thu Feb 26, 2009 at 10:23:27 PM EST
    Obama should get his chance to implement an economic plan, just as Reagan and Bush Jr. did  -- more at Balkingpoints.com  --

    While increasing taxes on those who (none / 0) (#48)
    by coast on Thu Feb 26, 2009 at 10:32:40 PM EST
    make over $250K is all well and good, those who believe that because you make less than that you won't be paying a higher percentage in in tax in four years are living in a dream world.  This is Obama's "read my lips moment".  He will regret stating that a majority of us will receive either no increase in the percentage of taxes that we pay or possibly even a tax decrease.  The numbers don't support it.  Sure it makes a good sound bite, but its not reality.

    In 2006, those making over $200K paid in $500 billion in tax of the total $1.2 trillion taken in by the government from income taxes.  Increasing the tax on this group even 10% won't put a dent in the deficits that are being projected.

    Even within the information above, there is a tax that most of will feel in one way or another.  Requiring companies to purchase permits to exceed pollution emmission caps.  Do you not think that that cost will be passed on to us.

    The President can say all he wants, but all I know is that I'm going to be paying more in tax in one way or another.  And I'm not even close to that magic $250K threshold.

    bravo (none / 0) (#56)
    by Slado on Fri Feb 27, 2009 at 08:26:02 AM EST
    thanks for pointing out the obvious.

    "Cap and Trade" is tax on power companies and corporations that will be passed on in our electric bill.  Never mind that it's only justifcation is bogus global warming theory.   All this will happen during a recession/depression which the avrage person won't be able to afford.

    This tax won't be progressive.  You will see the same percentage increse that everybody else dose becuse power companies and corporations don't work like the IRS.

    Obama is going to run the US like the governator ran California.  Lots of spending, lots of promises and then the rent will come due.


    Increasing tax rates on capital gains and (none / 0) (#58)
    by Green26 on Fri Feb 27, 2009 at 08:29:46 AM EST
    dividends, especially on capital gains, will also have negative impacts. Increasing capital gains tax rates is a factor in reduceing investment.