Law School Discussion

Law students, beware of new tax hikes

Re: Law students, beware of new tax hikes
« Reply #10 on: February 27, 2008, 11:04:09 AM »
I'm not about to go through the 1,000,000+ comments. Is this post true? Will Obama slice into new associate pay?

If he follows through with everything that he is promising to the American people by somehow getting congress to agree with him on everything, then yes, everybody in the top tax brackets who have worked very hard to get where they want to be will have the ratio of what they contribute to society to what how much they are rewarded financially for it considerably altered. 

Freak

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Re: Law students, beware of new tax hikes
« Reply #11 on: February 27, 2008, 12:37:59 PM »
You know, I wouldn't mind paying a ton for a while to control the debt. But every friggin time the government raises a tax surplus, they waste it. Repubs/Dems it doesn't matter. Neither will reduce spending by any significant amount. I don't think the Feds have reduced spending since WWII ended. I doubt many states have either.

e.g. In IL the State Leg. funded new expressways by making them toll roads with the express promise to eliminate the tolls once the initial construction was paid for. They still have the tolls after 20 years.

The government will never decrease social spending b/c politicians know how to generate votes by spending money. They may slow the increase in spending, but that is obviously not the same.

Therefore, I always oppose raising taxes to pay down debt & always support tax breaks. The government has enough money, if they would use it wisely. They will never use it wisely b/c of the votes/support generated by using it foolishly.

Re: Law students, beware of new tax hikes
« Reply #12 on: February 27, 2008, 01:49:34 PM »
I am just scratching my head here. If you don't pay, if the people who have the means don't pay, then who will pay for this disaster the current Republican president got us into? Or do you think huge growing national debt continuously is sustainable?

Which programs are you talking about? The military? It's the largest national expenditure. Social security? You honestly think ANY president is going to cut that program? OLD PEOPLE VOTE!

As a "liberal" who thinks we do need to get spending under control, we need to pay down the national debt, and we need to stop giving tax breaks when we can't afford to pay for what we already owe, I ask you, seriously, what is the alternative?

Raising taxes is an inefficient means of raising money. There are a lot of distributional effects (such as the Laffer curve (http://en.wikipedia.org/wiki/Laffer_curve) and other disincentives to work). Moreover, government is less than efficient with out money. There are so many problems with logrolling, lobbying and etc that I would have no faith in them spending my money. Any economist will tell you the same thing...
The only way we can get out of the debt is to curtail our spending. If you feel that you want to help the government, then go ahead and donate your 30 K. But i sure as hell don't want to be obliged to do that.

saradsun

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Re: Law students, beware of new tax hikes
« Reply #13 on: February 28, 2008, 07:48:58 AM »


You're basically asking us "young people" to just suck it up about SS- no thank you. I don't know how to fix the system, but raising the cap is not a solution I'm willing to field OR vote for. Further, I realize old people vote and that the AARP is ridiculously powerful, but that's no objection (as you're using it). Is Obama about change or is he about getting people to vote?

No, I'm not (asking "young people" to suck it up), the ridiculous policies of spend, spend, spend, and cut cut cut taxes is what's going to force the issue. After being poor most of my life, I'm not thrilled about the idea of once I actually have some money, I'll have to pay for the mistakes and handouts to the super rich of the 2000-2008 years.

However, I AM a realist. Our debt situation is not sustainable. I'm perfectly happy for that something to be drastic military cuts, however, a lot of Americans aren't and therefore its not really something someone can campaign on. Also, no one is going to win an election by telling people they are going to cut their social security. For many elderly around here, that's their only income. And I'm truly hoping this election is different, that young people come out and vote in force for their interest. And I think it could happen. But historically, young people don't vote. And so the "old folks" get to decide.

Again, I'm simply being a realist.


The only way we can get out of the debt is to curtail our spending. If you feel that you want to help the government, then go ahead and donate your 30 K. But i sure as hell don't want to be obliged to do that.

Ok, tell me what you are going to cut? Military is by far the biggest chunk. I'm all for it, but a campaign with that as a platform will surely fail. Then we're left with spend and cut McCain.

There are only a few options here. Pay now, or pay later. But at some point the American citizens are going to have to pay for the giant handout of the 2000's. I'd rather pay now, while the baby boomers are still alive and paying TOO. Otherwise, they are all gonna die and never have to pay for their mistakes. It's unfortunate that the rest of us, Gen X and Gen Y, are going to have to pay for their party, but there it is.

Freak

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Re: Law students, beware of new tax hikes
« Reply #14 on: February 28, 2008, 09:14:43 AM »
This gives the history of the Fed. Budget, but I lacked time to read it in depth.

Fed. Budget Historical Tables

Re: Law students, beware of new tax hikes
« Reply #15 on: February 28, 2008, 10:32:30 AM »


You're basically asking us "young people" to just suck it up about SS- no thank you. I don't know how to fix the system, but raising the cap is not a solution I'm willing to field OR vote for. Further, I realize old people vote and that the AARP is ridiculously powerful, but that's no objection (as you're using it). Is Obama about change or is he about getting people to vote?

No, I'm not (asking "young people" to suck it up), the ridiculous policies of spend, spend, spend, and cut cut cut taxes is what's going to force the issue. After being poor most of my life, I'm not thrilled about the idea of once I actually have some money, I'll have to pay for the mistakes and handouts to the super rich of the 2000-2008 years.

However, I AM a realist. Our debt situation is not sustainable. I'm perfectly happy for that something to be drastic military cuts, however, a lot of Americans aren't and therefore its not really something someone can campaign on. Also, no one is going to win an election by telling people they are going to cut their social security. For many elderly around here, that's their only income. And I'm truly hoping this election is different, that young people come out and vote in force for their interest. And I think it could happen. But historically, young people don't vote. And so the "old folks" get to decide.

Again, I'm simply being a realist.


The only way we can get out of the debt is to curtail our spending. If you feel that you want to help the government, then go ahead and donate your 30 K. But i sure as hell don't want to be obliged to do that.

Ok, tell me what you are going to cut? Military is by far the biggest chunk. I'm all for it, but a campaign with that as a platform will surely fail. Then we're left with spend and cut McCain.

There are only a few options here. Pay now, or pay later. But at some point the American citizens are going to have to pay for the giant handout of the 2000's. I'd rather pay now, while the baby boomers are still alive and paying TOO. Otherwise, they are all gonna die and never have to pay for their mistakes. It's unfortunate that the rest of us, Gen X and Gen Y, are going to have to pay for their party, but there it is.

Saradsun, I agree with you that we've got a problem and that we'll have to suck it up and deal with a tax hike until we get it under control.  Nonetheless, I feel compelled to point out a few things:
- Tax raises aren't enough to get us out of our problem.
- Military spending, which accounts for about 20% of federal spending, is not the cause of our nation's fiscal problem.
- The pending bankruptcy of Social Security has nothing to do with Military spending.  SS expenses will soon outstrip SS revenue, and will continue to do so at an increasing rate until well after the entire accumulated trust fund has been depleted.
- Although discretionary spending is responsible for a large part of our current national debt, entitlement spending is the real threat to our future.  It accounts for between 53% and 60% of all federal spending.  It is growing at a faster rate than other federal spending and federal revenue.  It is harder to cut when budget problems arise--indeed, it usually rises during times of fiscal problems.  It is hard to cut because it is "entitlement" spending and thus creates an expectation that people rely upon.
- The last eight years, despite virulent anti-Bush rhetoric to the contrary, have not been a constant handout to the rich.  On the contrary, the rich now pay a greater portion of the nation's tax burden than they did when Bush entered office.  The bottom 30% of income earners now pay "negative income tax" (that is, they get a refund even though they do not pay taxes). 
- I prefer not to be called Generation X or Generation Y --- My TV tells me I'm a member of the Pepsi Generation! ;-)

I agree that we have a big problem and that it is going to hurt to fix it.  It seems that your solution is "just make the rich hurt."  Unfortunately, that is not a solution because the problem isn't just on the tax side--and it certainly isn't that the rich are not paying their fair share.  The problem is on BOTH the tax side and the spending side.  And it isn't just on the rich.  We need a solution, and the solution will hurt.  It will have to include multiple components, including:
- Eliminating the Social Security tax wage cap (even though this will destroy its justification as a "social insurance" "trust fund" and fully embrace the reality of a mode of wealth distribution)
- Raising other taxes across the board (and not doing this typical cop out by excluding 55% of the population from them)
- Drastically cutting social security benefits, eligibility, and benefit increases
- Cutting the federal budget across the board
- Avoiding new entitlement spending
- Implementing deficit reduction methods, like were used in the 1990s

Miss P

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Re: Law students, beware of new tax hikes
« Reply #16 on: February 29, 2008, 03:35:09 AM »
It's really disappointing that such a seemingly intellingent group of people (including Obama) has bought this old canard about a Social Security crisis hook, line, and sinker.  Social Security runs a huge surplus.  It will continue to do so for about the next fifteen years, assuming benefits, tax rates, and caps stay the same.  If you calculate in the value of the notes in the trust fund (which are there because the government has been borrowing from it for general revenues), Social Security is supposed to remain entirely solvent, again, assuming the same benefits, rates, and caps, until either 2042 (trustees' estimate) or 2052 (CBO estimate). And at that point, Social Security could still cover most of its expenses; it's not as if it would suddenly turn into an unfunded mandate.  Krugman said a few years ago that Social Security could remain solvent for another 100 years after 2042 with a tax increase equivalent to one quarter of the Bush tax cuts.  This is not, in any sense, a program on the verge of bankruptcy.

Right now, Social Security tax is a regressive tax.  Everyone, from people who make $300 per year to people who make $300,000 per year to people who make $30,000,000 per year, pays 6.2% on the first $100K or so of their income (before deductions).  This means that the guy who makes $100K pays $6200 in SS tax and the guy who makes $300K per year pays exactly the same amount.  To a lot of people, this doesn't seem fair, and it especially doesn't seem fair when the system will eventually face a budget crunch.  One proposal is to raise or remove the cap on income, and this is what Obama said he might do to respond to this so-called crisis.  He has also said he might create a "donut" where, for instance, the first $100K of income is taxed at the same rate and then all income over $250K is taxed at the same or another rate, leaving the $150K in the middle untaxed.  Another proposal is to exempt some income from SS tax and impose a slightly larger spread.  For instance, the first $30K of income could be untaxed and then all income between $30K and $150K could be taxed.  This would increase revenue while making the burden fall slightly more heavily on people with higher incomes (this stylized example would cost biglaw associates about $1250 in additional SS taxes per year.

I don't blame you all for your concern about the amount of your student loans.  That said, I urge you to get a bit of perspective.  This is a minor problem with a huge range of solutions.  If you end up paying a few thousand dollars per year, you will benefit, both by receiving Social Security yourselves and by securing benefits for your parents, who will therefore rely on you less for support.  And in the worst case scenario where the cap is completely removed, an event that seems highly unlikely if you know anything about politics, at least you will be in the top five or six percent of American wage earners and moving up.  If I were you, I might just thank my blessings.

Re: Law students, beware of new tax hikes
« Reply #17 on: February 29, 2008, 04:13:32 AM »
It's really disappointing that such a seemingly intellingent group of people (including Obama) has bought this old canard about a Social Security crisis hook, line, and sinker.  Social Security runs a huge surplus.  It will continue to do so for about the next fifteen years, assuming benefits, tax rates, and caps stay the same.  If you calculate in the value of the notes in the trust fund (which are there because the government has been borrowing from it for general revenues), Social Security is supposed to remain entirely solvent, again, assuming the same benefits, rates, and caps, until either 2042 (trustees' estimate) or 2052 (CBO estimate). And at that point, Social Security could still cover most of its expenses; it's not as if it would suddenly turn into an unfunded mandate.  Krugman said a few years ago that Social Security could remain solvent for another 100 years after 2042 with a tax increase equivalent to one quarter of the Bush tax cuts.  This is not, in any sense, a program on the verge of bankruptcy.

The problem is that the funding for those notes doesn't actually exist. It is a substantial value not calculated into public debt figures. Do you really want to see what happens to interest rates when the government is forced to start converting those special run notes into traditional public debt instruments?

In any event, the SS problem is not without well-known economic solutions (imo, the most intuitive partial solution given the intentions of the program as a safety net / social insurance program is to replace wages with prices as the indexing factor for determining benefits, but this will never get sufficient support). The problem is wholly political now, consisting of how to choose between the potential solution tactics and how to form sufficient coalitions.

The Medicare problem is substantially more dire, both because there are fewer well-established solutions and because the magnitude of the present value of projected future obligations is so much higher. We really do need to start working on a healthcare system solution soon (nationalizing without adequately altering cost structures does not solve the problem at all) or we are - for lack of a better word - screwed.

Miss P

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Re: Law students, beware of new tax hikes
« Reply #18 on: February 29, 2008, 06:14:49 AM »
It's really disappointing that such a seemingly intellingent group of people (including Obama) has bought this old canard about a Social Security crisis hook, line, and sinker.  Social Security runs a huge surplus.  It will continue to do so for about the next fifteen years, assuming benefits, tax rates, and caps stay the same.  If you calculate in the value of the notes in the trust fund (which are there because the government has been borrowing from it for general revenues), Social Security is supposed to remain entirely solvent, again, assuming the same benefits, rates, and caps, until either 2042 (trustees' estimate) or 2052 (CBO estimate). And at that point, Social Security could still cover most of its expenses; it's not as if it would suddenly turn into an unfunded mandate.  Krugman said a few years ago that Social Security could remain solvent for another 100 years after 2042 with a tax increase equivalent to one quarter of the Bush tax cuts.  This is not, in any sense, a program on the verge of bankruptcy.

The problem is that the funding for those notes doesn't actually exist. It is a substantial value not calculated into public debt figures. Do you really want to see what happens to interest rates when the government is forced to start converting those special run notes into traditional public debt instruments?

In any event, the SS problem is not without well-known economic solutions (imo, the most intuitive partial solution given the intentions of the program as a safety net / social insurance program is to replace wages with prices as the indexing factor for determining benefits, but this will never get sufficient support). The problem is wholly political now, consisting of how to choose between the potential solution tactics and how to form sufficient coalitions.

The Medicare problem is substantially more dire, both because there are fewer well-established solutions and because the magnitude of the present value of projected future obligations is so much higher. We really do need to start working on a healthcare system solution soon (nationalizing without adequately altering cost structures does not solve the problem at all) or we are - for lack of a better word - screwed.

I agree with most of this.  I do think there's good evidence out there that a true national health plan would itself radically alter the cost structures of our healthcare system, though.  :)

Miss P

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Re: Law students, beware of new tax hikes
« Reply #19 on: February 29, 2008, 06:26:20 AM »
Is Miss P the smartest person on this site?  I vote maybe.

I vote definitely not!  Silly boy!