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If you make less that 250k your taxes will not increase!

Discussion in 'Political Zone' started by sacase, May 13, 2009.

  1. sacase

    sacase Well-Known Member

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    Smokers, drinkers to carry tax burden?


    If you make big bucks — or enjoy alcohol, cigarettes and Coke — the government might hit you up to pay for fixing the nation’s health care system.

    On Tuesday, the Senate Finance Committee peeked into vending machines and liquor stores, company payrolls and health savings accounts, looking for a mix of tax increases and spending cuts as a way to pay for a health overhaul — which could cost more than $1.5 trillion over 10 years.

    Experts thought the big debate might be public plan vs. no public plan. But that may well pale in comparison to the difficulty of settling on a way to finance health care reform.

    “I wish there were a number of painless options,” Robert Greenstein, executive director of the Center on Budget and Policy Priorities, wrote in his prepared testimony. “There aren’t.”

    There appeared to be a bubble of support among the experts for taxing bad behavior, including a $2 tax on a pack of cigarettes and a higher excise tax on alcohol.

    But soda and sugary drinks found a friend Tuesday in Sen. Chuck Grassley (R-Iowa), the ranking member on the Finance Committee.
    He categorically rejected the idea during a conference call with reporters.

    “No,” he said swiftly, when asked if there was any chance of taxing it. “I think, quite frankly, the only reason it’s being brought up is to get it shot down early so it doesn’t become part of the debate. I don’t think it’s going to have any legs at all.”

    Still, it’s easy to see why the bad-habits tax was so tempting: Taxing tobacco, junk foods and alcohol could raise $600 billion over 10 years.

    Lots of other options will also get a look.

    People who like the tax-free status of their company health benefits could be asked to ante up. Money in the pot: more than $700 billion over 10 years.

    Treasure the tax benefits from your health savings account? Some experts say the accounts encourage “excess consumption” of health services — and committee Chairman Max Baucus (D-Mont.) agreed they’re worth a look. Money in the pot: $60 billion over 10 years.

    The committee is far from settled on any one option — of which Baucus said there are many. Each item, down to the snickerdoodle, has a lobby behind it, paving the way for weeks of horse trading as the committee stitches together a tax package.

    A panel of economists presented the committee with a menu of scenarios, from wringing savings out of Medicare and Medicaid to cutting medical costs by reducing sodium levels in packaged foods and at restaurants.

    Non-health-related items remain in the mix, including capping the deduction on charitable donations, which received a chilly welcome on Capitol Hill after President Barack Obama proposed it in his budget.

    “The proposals that we have discussed,” Baucus said, “will not come easily. The reforms that we are planning are not cheap. ... Finding money that we can all agree on will not be easy.”

    Baucus gave one of the clearest signals yet that limiting the tax-free status on employer-based insurance remains a serious option. Obama opposed it during the campaign and repeatedly went after Republican John McCain for making it the centerpiece of his health care plan. Labor unions are also against it.

    Yet the idea is attractive because of the money it could generate: $250 billion annually if the deduction was lifted altogether. Baucus insisted a full repeal was not under consideration, but he said lawmakers must look at the deduction.

    “I know that there is some controversy around doing so,” Baucus said. “But the current tax exclusion is not perfect. It is regressive. It often leads people to buy more health coverage than they need.”

    Six of the 13 witnesses, including economists from the conservative American Enterprise Institute and the liberal Center on Budget Policies and Priorities, argued explicitly for the proposal.

    Employer-provided health insurance is considered part of workers’ compensation but is not taxed as wages are. Proponents of eliminating the benefit say it is poorly targeted because it gives the biggest benefit to those with the highest incomes and is unfair because self-employed individuals don’t qualify for the same break. It also encourages individuals to buy gold-plated insurance plans that can drive up health care costs, experts say.

    But a warning in the testimony from Gerald Shea of the AFL-CIO underscored why this option will be a thorny issue for Democrats. He said the idea could “disrupt the primary source of health coverage and financing for most Americans.”

    Way to go Barry, looks like you have other people raise taxes for you. Of course he will sign it into law. The funny thing to me about all the taxes they are proposing is that they are going to shrink consumer spending and they are going to hit the poor much harder than they are going to hit the rich.

    Our congressmen do not represent the people and the states anymore, they represent their parties and themselves.

    Why can't they consider something like...I don't know....cutting government spending, especially in areas where they don't belong. Time to significantly shrink the federal government.
  2. masomenos

    masomenos Less is more

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    Consumer spending won't drop because there are increased taxes on soda, alcohol and cigs. Very few people will stop buying the products.

    As an example of how there's almost no correlation between the cost of a product and the rate of consumption*, take a look at these two links.



    The first link shows the $ amount of cigarette taxes, by state. The second link shows the percentage of the population who are smokers.

    To break down the data...

    Ten lowest taxed states and their percentage of smokers

    1. South Carolina - $0.07 - 24.7%
    2. Missouri - $0.17 - 26.3%
    3. Mississippi - $0.18 - 24.1%
    4. Virginia - $0.30 - 22.9%
    5. Florida - $0.34 - 22.0%
    6. North Carolina - $0.35 - 24.7%
    7. Louisiana - $0.36 - 25.5%
    8. Georgia - $0.37 - 23.7%
    9. Alabama - $0.43 - 24.6%
    10. North Dakota - $0.44 - 23.8%

    AVGs - $0.30 - 24.23%

    Ten highest taxed states and their percentage of smokers

    1. Rhode Island - $3.46 - 22.7%
    2. New York - $2.75 - 24.3%
    3. New Jersey - $2.58 - 19.9%
    4. Massachusetts - $2.51 - 20.9%
    5. Washington - $2.03 - 21.4%

    Eight states are tied for 6th at $2.00: Alaska, Arizona, Connecticut, DC, Hawaii, Maine, Maryland, Michigan

    Respectively, their percentages are: N/A, 21.9, 21.1, N/A, N/A, 22.4, 22.4, 27.4

    AVGs - $2.73 - 22.44%

    That's an 810% markup in cost between the two groups, with a 7.4% drop in use. That's an incredibly weak correlation.

    The increase in soda cost would be something small, a nickle maybe, and I don't think that would stop a single person from purchasing their favorite fizzy drink. Here in Washington, liquor prices are controlled by the state and there was just a report about how a tax increase was going to pass on it later this summer. I went online to see what a bottle of Beulleit whiskey would cost in the future, compared to now, and it was going to be $1.50 more. I know that wouldn't stop me.

    I doubt the support for this will amount to anything though, at least not in such a basic form. Even if it did get passed though and if people did stop consuming "sin" items, then they'd just spend their money on something else. It wouldn't shrink consumer spending.

    *That's within a certain range. Obviously, if the price of a pack of smokes goes up to $100, then things are different.
  3. Yeagermeister

    Yeagermeister Active Member

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    Doesn't it always?
  4. masomenos

    masomenos Less is more

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    Estate taxes don't. :D
  5. Yeagermeister

    Yeagermeister Active Member

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    I'll never know because I'll be dead. :D
  6. sbark

    sbark Well-Known Member Zone Supporter

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    Cap & Trade at 3100.00 per family isnt a tax hike?...........

    Inflation in double digits as the only recourse to repay the 12 trillion fun money spewed out to crony groups insnt a tax hike?
  7. masomenos

    masomenos Less is more

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    Huh? I didn't say anything about those not being tax increases, I was talking about the claim that higher sin taxes would shrink consumer spending.

    edit: Besides, even if the Cap & Trade is a tax hike, at least you can know that you're $258.00 a month is going towards fighting global warming. ;)
  8. Yeagermeister

    Yeagermeister Active Member

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    Don't make me ban you this morning ;)

  9. Temo

    Temo Well-Known Member

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    Well, it may. Say you have 20$ of disposable income. You currently spend 5 bucks on cigarettes and 5 bucks on alcohol. The other 10 is used to go to the movies.

    Now with the tax cigarettes cost 6 bucks and alcohol costs 6 bucks. Well, like you said the demand for cigarettes and alcohol is inelastic, so you're not going to not buy that. But now you only have 8 bucks left for entertainment, meaning consumer spending as a whole has gone down.

    (Approximate numbers only, I doubt people spend more than 10% on "sin tax" items, so this example is a little heavier than in actual practice)
  10. Doomsday101

    Doomsday101 Well-Known Member

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    Even with the taxes added on certain products it is not going to change the fact that we will get hit by a tax increase fairly soon. As the deficit numbers have come out much larger than expected the administration will come back and hit us up with a tax increase. The ideal that the rich will pay for larger than expect deficit, health care or any other project this administration has in mind is pure bunk, we will see income tax increase I have no doubts about it
  11. masomenos

    masomenos Less is more

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    Your money just gets spent somewhere else, you pay 8 dollars for a round of putt-putt instead of 10 dollars at the movie. Your spending level remains the same. The only way it decreases is if your disposable income/credit goes down.
  12. Temo

    Temo Well-Known Member

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    The point is that your now spending 8 dollars instead of 10. The extra two goes to the government. (Not that that is always a bad thing)
  13. masomenos

    masomenos Less is more

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    Well that's not how consumer spending is calculated, but I see the point that you're making. In that case it just depends on whether or not those two dollars go towards paying another need. If those $2 mean that you no longer have to pay a health insurance premium, then you probably come out as a winner, monetarily speaking.

    I do see what you're saying though, I missed it in the first post.
  14. masomenos

    masomenos Less is more

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    I guess I should watch myself, sometimes I get a little out of line. :eek::
  15. Jordan55

    Jordan55 Active Member

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    Time for a reality check, as we get buried by government spending

    Entitlement Program Insolvency
    As the Obama administration continues to plan the biggest expansion of entitlements in American history via health care "reform," comes a report from his own administration that key existing entitlement programs are very nearly insolvent:

    The financial outlook for Medicare and Social Security has significantly worsened, as the bad economy and mounting job losses have pushed both programs years closer to insolvency, according to a grim report issued Tuesday by the Obama administration.

    The new projection, in an annual report from the programs’ trustees, says that Medicare’s hospital insurance trust fund will be exhausted in 2017, just a year after President Obama would leave office if re-elected to a second term. Last year the trustees said they expected the fund to last until 2019.

    The trustees also said that Social Security’s reserves now face depletion in 2037, four years sooner than the previous projection of 2041. The projections assume that there are no changes in current benefits, policies and tax rates. ...

    The darker picture facing the two programs will complicate the president’s spending plans and policy ambitions; just Monday, the administration raised its estimate of the federal budget deficit this year to $1.84 trillion, the largest on record.

    The time is past when Obama could just shrug this sort of news off as fallout from the prior administration. He owns this deficit. It's his budget. He has responsibility for entitlement reform, especially since his party controls both houses of Congress. Yet, he plans to open the federal tap even wider. It makes no sense.

    The Obama administration wants you to believe, as Andrew Biggs observes, that:

    ... the real culprit is rising per capita health care costs – called "excess cost growth" – which push up spending even if the population doesn't get older. ... Under [this] view, only comprehensive health care reform – meaning, reform of private sector health provision in addition to government health plans – can stop rising prices. ...

    [In fact, however,their own data] shows is that aging will be the largest driver of entitlement cost growth out through 2040 and likely beyond. ... Over the next 30 years, population aging is our main entitlements problem and it makes sense to seek solutions that are based on the problem we have, not the problem we want to have. Without downplaying healthcare funding issues, which are significant today and will grow even more so in the future, I can't help but think that some on the left have latched onto this new view because it promotes a policy outcome they happen to favor: increased government control over private sector health care provision for working-age people. I suspect that many of these folks would favor more government control even if health care costs weren't rising.

    In other words, we're going to socialize 17% of the economy and it won't solve a damned thing. This has to be the issue of the 2010 election cycle.
  16. Bizwah

    Bizwah Well-Known Member

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    I kinda think the fact that cigarettes are addictive has a little bit to do with those numbers.

    I am an avid Coke Zero guy....but I would significantly cut down my consumption if the taxes were big enough.
  17. masomenos

    masomenos Less is more

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    Well sure, that's why I included my little asterisk comment at the end, at some point price will have an effect. But really, how much would you cut back on your Coke Zero (good stuff, btw) intake if each can were 3 cents more?
  18. theogt

    theogt Surrealist Zone Supporter

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    I don't even look at the price when I buy it. Just walk by, put it in the cart, and walk on. I could be paying $10 for a 12-pack and I wouldn't have a clue.
  19. Bizwah

    Bizwah Well-Known Member

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    I honestly don't know.

    The principle of the thing bothers me. Where will it stop? What else are they going to tax?

    I would much rather see us cut spending....
  20. Doomsday101

    Doomsday101 Well-Known Member

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    I agree. I think if we get national health care then the Government will do even more to interfere in people’s lives, what you eat, what you drink and how you live your life and if you don't do what they want they will tax you for it.

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