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Fixing 'Fiscal Cliff' Will Mean 'High, Higher' Taxes: Gross
CNBC ^ | 11/7/2012 | Jeff Cox

Posted on 11/08/2012 3:19:39 AM PST by gotribe

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To: CincyRichieRich

“I don’t see where Boehner has anything to lose; he should play the game of chicken. . . “

My prediction. Boehner compromises. Income tax rates for those at $250K and above will revert to the pre Bush tax cut rates or higher. The return to previous payroll tax rates will stand. Spending cuts will be reduced and pushed to future years. Extended unemployment benefits will be allowed to expire. All of the Obamacare tax increases will be preserved.

During early 2013 Obama and the Dems will propose numerous new spending bills and comprehensive immigration reform. The House will reject immigration reform as Obama expects. Obama will then use his pardon power to declare a general amnesty for illegals and dream up some executive authority to decree a fast track pathway for citizenship thereby guaranteeing millions of new Dem voters for the 2016 elections. He and the press will demagogue Republicans for not approving all of the job creating new social welfare spending he is creating. This will be used to deflect attention from the worsening unemployment rate which will of course be blamed on Congress not passing his spending plans. By mid to late 2013 the unemployment rate will be back over 10% and the Republicans will feel they have to compromise and provide new stimulus spending.

Meanwhile tax receipts will be dropping as the economy shrinks and fewer people are working or paying taxes. Obama will propose comprehensive tax reform taking millions off the tax rolls at the bottom end, reducing rates for the middle tier, raising rates again for the upper income groups, phasing out all deductions for the upper income group, and cutting 2% from the payroll tax. This fairness reform will include a small VAT of 1-2% plus a small tax on IRA’s, 401K’s and pension plans of the upper income group. He might even include a millionaire’s asset tax of 1-2% on financial assets owned over $1 million in the name of fairness. The United Nations financial transaction tax might also be buried in this bill. Finally, he might try to put some kind of carbon tax on utilities and refineries in this bill.

The fall will be all about Obama’s tax reform. It will be popular with the middle class and lower classes who will gain and not perceive the VAT to be significant and won’t perceive the asset tax as ultimately applying to them. Republicans will fight at first and face a media firestorm calling them the protectors of the rich. Eventually they will fold and the Democrats will have both a political victory and a stealth tax system in place (VAT, asset tax, IRA tax, financial transaction tax) they can increase every time they want additional revenue.

Based on the experience of the past 2 years, I have every reason to believe Boehner will compromise and Obama will end up with the winning hand. He is a deal maker, not a principled and courageous statesman.


21 posted on 11/08/2012 5:23:08 AM PST by Soul of the South
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To: ctdonath2

“Federal revenue never exceeds 20% of GDP.
Never.
We’re at 19%.
Raising taxes won’t work.”

Give that man a cigar. Everything else is moot.


22 posted on 11/08/2012 5:34:48 AM PST by headstamp 2 (What would Scooby do?)
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To: Wildbill22

Depends on whether you think your retirement withdrawals will be taxed at a higher rate than your income today. For most people the answer would be No.


23 posted on 11/08/2012 6:07:46 AM PST by gotribe (He's a mack-daddy http://www.youtube.com/watch?v=AV415yit7Zg)
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To: Chgogal

That increase would be relatively minor. Dividends would be taxed as ordinary income, while the top capital gains tax rate would rise from 15% to 20%. Interestingly enough, a large gap between income and capital gains tax rates would result in a climate that encouraged highly speculative investments that offered no income up front but some prospects for long-term growth. This was exactly the scenario that led to the dot-com boom of the late 1990s.


24 posted on 11/08/2012 4:51:19 PM PST by Alberta's Child ("If you touch my junk, I'm gonna have you arrested.")
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To: LibLieSlayer
My prediction is that the Democrats in the Senate and the Obama administration are going to come up with a plan that includes large tax increases on "the rich," and the GOP-led House might even get on board.

But after sifting through the details, we're going to find that it contains some hidden "land mines" that end up very costly for people who initially think they're getting away unscathed. One example of this will be the gradual elimination of the mortgage interest deduction. It won't be something that is clearly written into the tax code, but other changes will effectively eliminate it anyway. People who fall in the alternative minimum tax (AMT) bracket, for example, basically lose their mortgage interest deduction because their itemized deductions are all replaced with one large standard deduction (at which point it doesn't matter whether you pay mortgage interest, state and local taxes, etc.).

This is just one example of how the tax code will be used to "hide" tax hikes on people who are supposedly middle-class taxpayers. There will be plenty more.

25 posted on 11/08/2012 4:59:53 PM PST by Alberta's Child ("If you touch my junk, I'm gonna have you arrested.")
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To: Soul of the South

My prediction. Boehner compromises. Income tax rates for those at $250K and above will revert to the pre Bush tax cut rates or higher. The return to previous payroll tax rates will stand. Spending cuts will be reduced and pushed to future years. Extended unemployment benefits will be allowed to expire. All of the Obamacare tax increases will be preserved.

During early 2013 Obama and the Dems will propose numerous new spending bills and comprehensive immigration reform. The House will reject immigration reform as Obama expects. Obama will then use his pardon power to declare a general amnesty for illegals and dream up some executive authority to decree a fast track pathway for citizenship thereby guaranteeing millions of new Dem voters for the 2016 elections. He and the press will demagogue Republicans for not approving all of the job creating new social welfare spending he is creating. This will be used to deflect attention from the worsening unemployment rate which will of course be blamed on Congress not passing his spending plans. By mid to late 2013 the unemployment rate will be back over 10% and the Republicans will feel they have to compromise and provide new stimulus spending.

Meanwhile tax receipts will be dropping as the economy shrinks and fewer people are working or paying taxes. Obama will propose comprehensive tax reform taking millions off the tax rolls at the bottom end, reducing rates for the middle tier, raising rates again for the upper income groups, phasing out all deductions for the upper income group, and cutting 2% from the payroll tax. This fairness reform will include a small VAT of 1-2% plus a small tax on IRA’s, 401K’s and pension plans of the upper income group. He might even include a millionaire’s asset tax of 1-2% on financial assets owned over $1 million in the name of fairness. The United Nations financial transaction tax might also be buried in this bill. Finally, he might try to put some kind of carbon tax on utilities and refineries in this bill.

The fall will be all about Obama’s tax reform. It will be popular with the middle class and lower classes who will gain and not perceive the VAT to be significant and won’t perceive the asset tax as ultimately applying to them. Republicans will fight at first and face a media firestorm calling them the protectors of the rich. Eventually they will fold and the Democrats will have both a political victory and a stealth tax system in place (VAT, asset tax, IRA tax, financial transaction tax) they can increase every time they want additional revenue.

Based on the experience of the past 2 years, I have every reason to believe Boehner will compromise and Obama will end up with the winning hand. He is a deal maker, not a principled and courageous statesman.


I’m afraid I can’t make a logical, reasoned argument against what you are predicting. I hate it, though.


26 posted on 11/09/2012 5:09:14 AM PST by CincyRichieRich (Keep your head up and keep moving forward!)
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