New Ideas (Potential Disasters) From Congress

Posted By on November 17, 2010

Looks like the VAT (Value Added Tax) or what is also known as the Consumption Tax is picking up steam.  We suggest that time and understanding be entered into any equation of change.  Let’s try to simplify the tax system going forward, not complicate things further.

All of this spending got us nowhere.  The nation cannot grow its way out of the deficits according to the Bipartisan Policy Center in Washington.  Just to stabilize the debt at 60 percent of gross domestic product, the economy would have to grow at a sustained rate of more than 6 percent a year for at least the next 10 years, it says. The economy hasn’t grown by more than 4.4 percent in any decade since World War II.

Reviewed Below From The Wall Street Journal

Chart above from the WSJ

A panel of Democrats, Republicans, economists and other experts is set to say Wednesday that a complete overhaul of the U.S. tax code is the best way to address the nation’s fiscal problems—a new and likely controversial idea aimed at tackling the growing deficit.

The most recent report, put together by a group called the Bipartisan Policy Center, will call for a one-year payroll-tax holiday in 2011 that it says will create between 2.5 million and 7 million jobs.    Never going to happen.

The plan would lower income and corporate tax rates and offset them with a 6.5% national sales or “consumption” tax as well as an excise tax on sugar drinks like soda.  More likely.

Last week’s proposal, from Democrat Erskine Bowles and Republican former Sen. Alan Simpson, also called for an overhaul of tax and spending programs. Other similarities include:

• Changing the formula for social-security taxes so that they are levied against 90% of all wages, compared with the current system, which caps the tax at a certain income level.

• Major cuts in discretionary spending. Both singled out a government policy that allows military retirees to collect full benefits after 20 years.

• Cuts to farm subsidies and either eliminating or limiting certain politically popular tax breaks, such as the mortgage-interest tax deduction.  This would likely make the housing situation a decade long disaster…….come to think about it, we may already be there!

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