Taxes
To help eliminate our budget/debt problems, the debate includes taxation, increase taxes or decrease taxes the left and right will say respectively. Both will say we have a need for a new tax code, but will not agree on a proposal for a new code. Everyone who manages a checkbook has seen budget problems before and knows how to correct it - reduce expenses and increase income. Everything else we here about this subject beyond these two facts is just noise and should be ignored. The political left and right cannot agree on how to correct this problem. Doing something is also better than doing nothing, which is what this stalemate is giving us now. The left's solution to our problem is to increase taxes on the rich to increase income. Currently the top 20% of income earners pays 80% of the federal tax burden. So do we want them to pay 100%? 110%? 120%? Maybe just write the check every year for the entire cost of government, whatever it is? Clearly this is not the solution. They also consistently disparage the Bush Tax Cuts, as causing income inequality and the deficits we currently enjoy. Yet these tax policies actually reduced taxes at all income levels. Plus, when faced with a chance to end them, the left extended the cuts as a positive factor on the economy. The right wants us to reduce spending and taxes, which is also a poor solution in a recessionary economy. But the truth is we must do both (reduce expenses and increase income), we must do it now and it will not be easy. Untouchable entitlements are the problem and must be restructured. Adding another entitlement, Obamacare, to this mix just makes the problem worse. All the political hot air outside these facts is simply a distraction from the difficult but obvious answer. As to a new tax code - a must. The current tax code is over 60,000 pages long! A 2012 report estimated that it took 6.1 billion hours preparing taxes. What a waste. See the 2017 Income Tax tables for your information.

Connecticut, Nation’s Wealthiest State, May be Tapped Out on Taxing the Rich

5/19/17
from The Wall Street Journal,
5/19/17:

Connecticut’s budget office expects 2017 income-tax collections to fall for the first time since the recession.

The wealthiest state in the U.S. is having trouble collecting enough money to pay its bills, and the Democratic governor doesn’t think taxing the rich is the answer anymore. After two decades of robust growth, Connecticut forecasts it will come in $400 million short in income-tax collections this fiscal year, worsening a budget crisis that has prompted all three major ratings firms recently to downgrade the state’s credit rating. Connecticut’s budget office estimates that income-tax collections will fall in fiscal 2017 for the first time since the recession. About $200 million of the drop in receipts came from the state’s closely watched top 100 earners, who are the source of an outsize proportion of the state’s revenue. Many of the state’s richest residents work for hedge funds, which have been hurt by a downturn in the industry. Gov. Dannel Malloy has twice before bet that taxing the wealthy would help solve the state’s fiscal problems. But neither increase resulted in sustained revenue growth, according to his administration, which says it would be a mistake to do it a third time.

“You can’t go back to that well again,” said Kevin Sullivan, commissioner of Connecticut’s Department of Revenue Services. “The idea that there is yet another significant amount, in terms of long-term stability, to get out of that portion of the population is just not true.” The tax question in Connecticut, where several thousand tax filers with adjusted gross incomes of more than $1 million a year account for about a third of all income tax receipts, comes amid a shift in tax policy nationally. President Donald Trump, who campaigned on promises to lower taxes, has proposed lowering business and individual rates. But he is also seeking to repeal a deduction on state taxes that will especially hit high-income earners, making it tougher for states to raise taxes among the richest. Connecticut’s fiscal troubles come as a majority of states face budget holes this cycle, according to a recent report issued by Standard & Poor’s. At least nine states are considering some form of tax increase, such as raising corporation taxes and sales taxes, according to the report. Connecticut is one of seven states, including Pennsylvania, New Jersey and Illinois, that is vulnerable to fiscal stress “even as the broader economy shows signs of gathering momentum,” the report concluded.

It’s a strange turn for Connecticut, which has the highest per capita income in the country, according to the Bureau of Economic Analysis, and is home to hundreds of hedge funds, Yale University, and businesses like insurer Aetna Inc. and industrial giant United Technologies Inc.

Connecticut introduced its income tax in the early 1990s, and income-tax growth averaged 9% a year from 1993 through 2008. Since then, the average has been 2% a year. Gov. Malloy put through two tax income increases, in 2011 and 2015, raising the top rate to 6.99%. Opponents of the past tax hikes have said yet another one would scare away the very people the state relies on.

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