Meanwhile........

[dales]

(sorry, no rubato graph to go with this one)

By David Lawder

WASHINGTON (Reuters) - The top ten tax deductions, credits and exclusions will keep $12 trillion out of federal government coffers over the next decade, and several of them mainly benefit the wealthiest Americans, a new study from the Congressional Budget Office shows.

The top 20 percent of income earners will reap more than half of the $900 billion in benefits from these tax breaks that will accrue in 2013, the non-partisan CBO said on Wednesday.

Further, 17 percent of the total benefits would go to the top 1 percent of income earners -- families earning roughly $450,000 or more. The same group that was hit with a tax rate hike in January.

The benefits of preferential tax rates on capital gains and dividends, a break worth $161 billion this year, go almost entirely to the wealthy, including 68 percent to the top one percent of earners.

House Democrats, who requested that Congress' budget referee conduct the study, argued that it backs up President Barack Obama's proposed approach to tax reform and deficit reduction: raise revenues by limiting the amount tax preferences for the wealthy.

"This shows that we could achieve a significant amount of deficit reduction by limiting the preferences to the highest income earners," said Representative Chris Van Hollen, the top Democrat on the House Budget Committee.

Although the study did not provide income thresholds, U.S. Census Bureau data for 2011 shows the top 20 percent of household income extends to down to $101,582, a level that is considered middle-class in many parts of the United States. The lowest quintile topped out at $20,262 in the Census data.

MIDDLE-CLASS AID

But the study also showed that benefits for the largest of the tax preferences, the exclusion for employer-paid health benefits, worth $3.4 trillion over 10 years, are more evenly distributed, with well over half of the benefits going to the middle 60 percent of earners.

The middle 20 percent of earners also got the biggest benefit from excluding a portion of Social Security and Railroad Retirement benefits, a perk worth $414 billion over 10 years.

Three other big tax breaks, the $2 trillion exclusion of net pension contributions and earnings over 10 years, the $1 trillion deduction for mortgage interest and the $1.1 trillion deduction for state and local taxes, also benefited the top 20 percent disproportionately.

Representative Sander Levin, the highest ranking Democrat on the House Ways and Means Committee, the panel that is trying to advance tax reform this year, said the study shows that Republicans would have to greatly reduce tax breaks that benefit the middle class in order to achieve their goals of reducing tax rates and balancing the budget.

"The CBO report underscores the need to go beyond the rhetoric of lowering tax rates without indication of how that would be achieved or the implications for economic growth and tax equity," Levin said.

A spokesperson for Ways and Means Committee's Republican Chairman, Dave Camp, could not immediately be reached for comment on the study.[i wonder why?]

Republicans want to reform the tax code by eliminating certain deductions, credits and exclusions, but they do not want to divert any resulting revenues toward deficit reduction. Instead they want to use the savings to lower rates, which they say will accelerate economic growth and increase revenue collection.

Democrat Van Hollen said his favored approach would be to limit the total amount of deductions for the top 2 percent of income earners, or families earning $250,000 or more, while leaving intact much of the top 10 tax breaks, which also include deductions for charitable contributions and tax credits for earned income and children.

These latter two tax breaks, which are largely aimed at the working poor, provide two thirds of their $118 billion in 2013 benefits to the lowest 40 percent of wage earners, the CBO said in the study. Over 10 years, these two credits will cost $1.2 trillion.

[oldr_n_wsr]

Over 10 years, these two credits will cost $1.2 trillion.

You know, I always have trouble when they use the term "cost" when applied to future moneys not yet collected. It does not "cost" (the price of buying something) the government anything. They will simply not "collect/take/receive" that money over those ten years.

If my salary drops next year (I have less money coming in), it does not "cost" me anything, it means I have less to spend. If the price of bread goes up, that "costs" me $X more to buy.


Now all you online dictionary addicts can quote the meaning of the word "cost".

[MajGenl.Meade]

Well if your salary drops sufficiently, maybe it will cost you your house - or your car - or who knows what?

For the government, which has Budget X, if the expected income is X minus y, then something must be taken from one category and used for another. Maybe, a nice social programme will suffer - which to that programme is a "cost"

Just sayin'

[rubato]

For budgeting purposes a tax cut is exactly equal to a spending increase.

yrs,
rubato

[rubato]

Taxing Capital Gains at a lower rate is a subsidy for the rich and an additional tax on the poor.


yrs,
rubato

[oldr_n_wsr]

Well if your salary drops sufficiently, maybe it will cost you your house - or your car - or who knows what?

No, a cost (IMHO) is the price to get something. The cost of my house is my monthly payment. If I don't have the money I cannot pay that payment and I could lose my to forclosure or be forced to sell the house at which time the buyers cost is the price of the house.

For the government, which has Budget X, if the expected income is X minus y, then something must be taken from one category and used for another. Maybe, a nice social programme will suffer - which to that programme is a "cost"

It's a "loss" of revenue to that program.

It might just be semantics, but calling something a "cost" when, to me, it's less money coming in, is incorrect terminology. Call it a projected shortfall or a planned less money coming in.

For budgeting purposes a tax cut is exactly equal to a spending increase.

No, it's a budget deficit.
If one budgets to spend $X, but only has $X-$Y to spend, he is now spending $X+$Z?
An increase means "goes up".
His spending did not go up (aka spending increase). His budget got reduced.

[MajGenl.Meade]

I thought I was a language Nazi. OK oldr. Whatever. I hope you never do something that costs your life! Don't bunk off work - it might cost you your job. I ignored her cry for help at a terrible cost. (Clue: there's no money involved in those three either).

[dgs49]

The most interesting point about this "study" is the fact that it was done at all. They have taken my Federal Tax dollars to "conclude" what any moron knew before the study was initiated.

Take for example the mortgage interest deduction. How much "study" does it take to conclude that a person borrowing a million dollars for his house is going to benefit more than the schlub who borrows $40 thousand for a fixer-upper? In fact the difference in benefit could well be INFINITE, because the schlub probably doesn't pay any income taxes anyway - and may even pay negative taxes due to the EITC.

Parenthetically, one might consider that the mortgage interest deduction has TWO primary purposes, one of which is to stimulate the housing industry, which could well benefit Mr. Schlub (with a job, for example) in the long run. In which case, it doesn't cost anything.

How much "study" did it take to figure out that the beneficial treatment of capital gains benefits high earners more than low earners? How many MPA's* does it take to screw in a light bulb? And again, the purpose of this preferential treatment is to promote investment, which it manifestly does, to the eventual benefit of Mr. Schlub.

There are occasional tax deductions and credits that cost the government money - for example the recent ill-advised reduction in the SS payroll tax. But for the most part, these arcane provisions in the Tax Code are intended to not only benefit the individuals who benefit immediately, but to have a ripple effect that benefits all. If they don't, then repeal the fucking things.

Agreed?

Is it even possible that this "study" was initiated for any reason OTHER THAN to inspire resentment against 'The Rich"?

_________________________
* Master of Public Administration

[dales]

Only someone who has been sleeping for the past 50 years would be unable to ascertain the growing income disparity between the uber-rich and the rest of us.

[Rick]

It's ok Dales we all know the Proletariat will rise and over throw the Bourgeoisie.

The king is dead long live the king...

[dales]

Yeah and opium is the religion of the people.

It astounds me how the average joe in the US is getting royally screwed and is so blase about it.

I guess it's just where I live, multi-million dollar homes are being snatched up with cash (much of it overseas money) and homes that would've been great starter homes around here ($500k) are being bought up by investors.

I sincerely hope that this is an aberation and the bubble goes POP again!

[Rick]

Whatcha gonna do?

I'll see if I can pick you out of the crowd...

[dales]

I'm only letting off steam.

[Rick]

I'm only letting off steam.

Be careful look what happened to editec when he let out all his steam.

So save some steam...

[dales]

.

Kindergartener gets detention, forced to apologize for Lego gun the size of a quarter
The Daily Caller – Wed, May 29, 2013..


Yet another student has landed in a heap of trouble for having something that represents a gun, but isn’t actually anything like a real gun.

This time, the perpetrator was a six-year-old boy. The menacing weapon in question was a plastic Lego G.I. Joe gun roughly the size of a quarter, reports WGGB-TV.

The incident unfolded Friday morning on a school bus headed to Old Mill Pond Elementary School in Palmer, Mass. Another student on the bus spotted the Lego piece and promptly shouted to the driver.

Mieke Crane, the mother of the unnamed kindergartener who made the mistake of bringing the miniature weapon on the bus, is not happy.

“I think they overreacted, totally. I totally do,” Crane told WGGB.

“I could see if it was you know, an Airsoft gun or some sort of pistol or live bullets or something, but this is just a toy,” she added. “At six-years-old, I don’t really think he understood the zero-tolerance policy and related it to this as the same.”

School officials, who declined to speak to the ABC affiliate, promptly sent a letter home to all parents explaining the incident. The letter assured parents that there was no real gun, only a small molded piece of plastic from a Danish toy conglomerate.

According to Crane, her son was forced to apologize to the bus driver in a letter. He has to serve detention on Tuesday. Also, he may face a temporary suspension from riding the bus.

Bizarrely, the student who tattled on the boy also had to apologize to the bus driver, WGGB says.

This incident is the latest incident of anti-gun hysteria to erupt in a school setting. There have been many others just this academic year.

[Rick]

I think all these young perps should be sent to GTMO.

That'll teach em...

[oldr_n_wsr]

I thought I was a language Nazi. OK oldr. Whatever. I hope you never do something that costs your life! Don't bunk off work - it might cost you your job. I ignored her cry for help at a terrible cost. (Clue: there's no money involved in those three either).

I understand those examples of the word "cost". But when they say it will cost the gov $X when they don't have the money in hand to buy anything, that (to me) is incorrect usage.

[rubato]

I'm only letting off steam.

Be careful look what happened to editec when he let out all his steam.

So save some steam...

But that was self-esteem; the most dangerous kind.

yrs,
rubato

[dales]

rubato made a funny...........................i think.

[Lord Jim]

I'm only letting off steam.