CLT UPDATE
Tuesday, April 19, 2011
The national crisis is upon us
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". . . Federal agencies reported an estimated
$125.4 billion in improper payments for fiscal year 2010. The $125.4
billion estimate of improper payments federal agencies reported in
fiscal year 2010 was attributable to over 70 programs spread among
20 agencies. Federal agencies' fiscal year 2010 estimated improper
payment amount is an increase of $16.2 billion from federal
agencies' prior year reported estimate of $109.2 billion. . . ."
Improper Payments:
Recent Efforts to Address Improper Payments and Remaining Challenges
Government Accountability Office
April 15, 2011
A key credit agency issued an unprecedented
warning to the United States government Monday, urging Washington to
get a grip on its finances or risk losing the nation's sterling
credit rating.
For the first time, Standard & Poor's lowered its
long-term outlook for the federal government's fiscal health from
"stable" to "negative," and warned of serious consequences if
lawmakers fail to reach a deal to control the massive federal
deficit.
An impasse could prompt the agency to strip the
government of its top investment rating in the next two years, S&P
said. A loss of the triple-A rating would ripple through the
American economy, making loans more expensive and credit more
difficult to obtain.
Associated Press
Tuesday, April 18, 2011
S&P warning: Fix deficit or risk credit rating
Democrats and Republicans reacted swiftly on Monday to the news that
Standard & Poor’s had downgraded its outlook on America’s long-term
credit rating from “stable” to “negative,” with each party seizing
on the warning to back up its position in the escalating
debt-ceiling debate.
Republicans argued that the news illustrates the
gravity of the country’s debt crisis and the need for any debt
ceiling vote to be accompanied by a plan to tackle the country’s
longer-term fiscal problems.
The Washington Post
Monday, April 18, 2011
Lawmakers seize on Standard & Poor’s outlook in debt-ceiling debate
Throwing down the gauntlet, Republican Sen.
Jim DeMint threatened Monday to block a vote in Congress on
raising the U.S. debt ceiling unless he wins a balanced-budget
amendment to the Constitution.
The filibuster threat comes a day after
Treasury Secretary Tim Geithner suggested Republican leaders had
offered private assurances to the White House that they
ultimately would vote to raise the $14.3 trillion ceiling,
regardless of whether a deal is reached on long-term spending
cuts.
Publicly, Republicans say they will demand
spending cuts as a condition for supporting a hike in the debt
ceiling. They stood by that claim following Geithner's comments,
and DeMint took their demands a step further.
"I will oppose any attempt to vote to raise
the limit on our $14 trillion debt until Congress passes the
balanced-budget amendment," the South Carolina conservative
said.
Fox News
Monday, April 18, 2011
DeMint Threatens Filibuster on Debt Ceiling Vote
As millions of procrastinators scramble to
meet Monday's tax filing deadline, ponder this: The super rich
pay a lot less taxes than they did a couple of decades ago, and
nearly half of U.S. households pay no income taxes at all....
There are so many breaks that 45 percent of
U.S. households will pay no federal income tax for 2010,
according to estimates by the Tax Policy Center, a Washington
think tank....
More than half of the nation's tax revenue
came from the top 10 percent of earners in 2007. More than 44
percent came from the top 5 percent....
Eric Schoenberg says to sign him up for
paying higher taxes. Schoenberg, who inherited money and has a
healthy portfolio from his days as an investment banker, has
joined a group of other wealthy Americans called United for a
Fair Economy. Their goal: Raise taxes on rich people like
themselves....
Sen. Orrin Hatch of Utah, the top Republican
on the Senate Finance Committee, said he has a solution for rich
people who want to pay more in taxes: Write a check to the IRS.
There's nothing stopping you.
"There's still time before the filing
deadline for them to give Uncle Sam some more money," Hatch
said.
Schoenberg said Hatch's suggestion misses the
point.
"This voluntary idea clearly represents a
mindset that basically pretends there's no such things as
collective goods that we produce," Schoenberg said.
Associated Press
Sunday, April 17, 2011
Super rich see federal taxes drop dramatically
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Chip Ford's CLT
Commentary
Every time we taxpayers demand that government
(at all levels) cut its profligacy, or when we try to cut taxes or
just resist a tax increase, we are assaulted with the mantra “Where
would you cut?” Regardless of how often or how many examples we
provide, it’s never a good enough answer for those who really don’t
want to hear it.
CLT took on the challenge in 2005
– provided a couple billion dollars of
savings in a slew of places where the state was wasting taxpayers' money
before giving up. In the end we termed it "An exercise in futility"
when our recommendations were simply ignored.
Still they kept asking "Where would you cut?"!
We're hearing that mantra again on the national
level these days as the debate rages between those who want to cut
government and save the nation and those who want to raise taxes
higher and dig us deeper into debt until it smothers our country and
generations to come.
But with little fanfare the U.S. Government
Accountability Office released a report last week documenting $125.4
billion in "improper payments" made by various federal agencies
– money paid out but not owed!
The previous week the federal government was
almost shut down when House Republicans fought for a federal budget
cut of a measly $38 billion – one
quarter of the amount "improperly" paid but not owed.
Now the debate in Washington is over whether or
not to again increase the national debt ceiling
– as if the nation isn't deeply enough
in debt already. Since this came up we've been wondering what a
"debt ceiling" is, if each time it's reached it's simply raised once
again.
Standard & Poor's grasps what's happening. The
worldwide credit-rating agency has put the United States of America
on notice that the nation's financial house is becoming so unstable,
further credit so potentially risky, that it is facing an imminent
downgrade of its triple-A rating. Like the dollar, "the full faith
and credit" of the nation is being devalued. It that happens,
interest on borrowing will become more expensive
– the $14 trillion debt will increase
by billions due just to the cost of maintaining it.
Imagine the response if you maxed out your credit
card, are struggling just to keep up with its minimum payment each
month, and asked the bank to increase your credit line so you can
borrow and spend more? That's the debate occurring in Washington
today over the current debt ceiling. $14-plus trillion isn't
enough debt for the USA to be carrying; Washington wants to borrow
and spend even more!
Naturally the Democrat-Socialists want to not
only raise the debt ceiling but hike taxes as well. If they get
either or both the result will be more spending, more squandering,
and even greater debt.
That's how we got here, and it's going to
continue until someone stops it.
It's past time to cut up the credit card, pay
down the debt, and start living within the nation's means.
The crisis is upon us, here and now. Can
the nation survive through it?
The nation has just about run out of time.
It's now down to which side blinks first.
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Chip Ford |
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Improper Payments:
Recent Efforts to Address Improper Payments and Remaining Challenges
GAO-11-575T
April 15, 2011
Summary
GAO's work over the past several years has highlighted
long-standing, widespread, and significant problems with improper
payments in the federal government. Fiscal year 2010 marked the 7th
year of implementation of the Improper Payments Information Act of
2002 (IPIA).
IPIA requires executive-branch agencies to identify programs and
activities susceptible to significant improper payments, estimate
annual amounts improperly paid, and report these estimates and
actions taken to reduce them. On July 22, 2010, the Improper
Payments Elimination and Recovery Act of 2010 (IPERA) was enacted.
IPERA amended IPIA and expanded requirements for recovering
overpayments across a broad range of federal programs. This
testimony addresses (1) progress federal agencies have reported in
estimating and reducing improper payments in fiscal year 2010, (2)
challenges that continue to hinder full reporting of improper
payment information, and (3) recent efforts by Congress and the
executive branch intended to improve transparency and accountability
for reporting, reducing, and recovering improper payments. This
testimony is primarily based on prior GAO reports. GAO summarized
available fiscal year 2010 improper payment information reported by
federal executive-branch agencies and actions taken by the executive
branch and Congress intended to improve transparency over,
accountability for, and reduction of improper payments.
Federal agencies reported an estimated $125.4 billion in improper
payments for fiscal year 2010. The $125.4 billion estimate of
improper payments federal agencies reported in fiscal year 2010 was
attributable to over 70 programs spread among 20 agencies. Federal
agencies' fiscal year 2010 estimated improper payment amount is an
increase of $16.2 billion from federal agencies' prior year reported
estimate of $109.2 billion.
(1) Progress Reported in Estimating and Reducing Improper Payments.
Since the initial implementation of IPIA in fiscal year 2004,
federal agencies have consistently identified new programs or
activities as risk-susceptible and reported estimated improper
payment amounts. In addition, federal agencies have reported
progress in reducing improper payments and payment error rates in
some programs and activities. From fiscal years 2004 through 2010,
28 programs have consistently reported estimated improper payment
error rates for each year. Of these 28, 17 agency programs reported
reduced error rates in comparison with their initial or baseline
error rates reported in fiscal year 2004.
(2) Challenges Remain in Meeting Legislative Requirements to Fully
Report Improper Payments Information. Agency reporting highlighted
challenges that remain in meeting the requirements of IPIA,
including determining the full extent of improper payments across
the federal government and in reasonably assuring that effective
actions are taken to reduce improper payments. Specifically, two
agencies did not report on risk assessments of their programs and
activities and three agencies did not develop and report on improper
payments estimates for seven risk-susceptible programs with
significant amounts of outlays.
(3) Recent Efforts to Address Improper Payments. During fiscal year
2010, a number of changes and initiatives were put in place that are
intended to strengthen the framework for reducing and reporting
improper payments. For example, the President issued Executive Order
13520, Reducing Improper Payments. The President also issued two
memoranda intended to expand agency efforts to recapture
overpayments and directed that a Do Not Pay List be established to
help prevent improper payments.
Further, IPERA was enacted. In addition to amending the IPIA
existing requirements, IPERA establishes additional requirements,
among others, related to (1) federal agency management
accountability; and (2) recovery auditing aimed at identifying and
reclaiming payments made in error. We view these actions as positive
steps; however, it is too soon to determine whether these activities
will achieve their goal of reducing improper payments while
continuing to ensure that federal programs serve and provide access
to intended beneficiaries.
Read the full GAO
report on improper payments:
http://www.gao.gov/new.items/d11443r.pdf
More:
GAO: Federal Agencies Made $125.4 Billion in Improper Payments in FY
2010
April 16, 2011
Associated Press
Tuesday, April 18, 2011
S&P warning: Fix deficit or risk credit rating
By Paul Wiseman, Economics Writer
WASHINGTON (AP) — A key credit agency issued an unprecedented
warning to the United States government Monday, urging Washington to
get a grip on its finances or risk losing the nation's sterling
credit rating.
For the first time, Standard & Poor's lowered its long-term outlook
for the federal government's fiscal health from "stable" to
"negative," and warned of serious consequences if lawmakers fail to
reach a deal to control the massive federal deficit.
An impasse could prompt the agency to strip the government of its
top investment rating in the next two years, S&P said. A loss of the
triple-A rating would ripple through the American economy, making
loans more expensive and credit more difficult to obtain.
The downgrade was interpreted as a rebuke to President Barack Obama
and congressional Republicans, admonishing them to put politics
aside and come up with a long-term financial plan as soon as
possible.
"This is a warning: Don't mess around," said Robert Bixby, executive
director of the Concord Coalition, a nonpartisan group that is
pushing for deficit reduction.
Analysts at S&P have never before used the outlook to cast doubt on
the nation's credit worthiness.
In response, stocks suffered their worst slide in a month. The Dow
Jones industrial average plunged 245 points before recovering to
close down 140 points for the day.
"The credit quality of U.S. debt is sacrosanct, and legislators will
do everything within their power to avoid a downgrade," said Jack
Ablin, chief investment officer at Harris Private Bank.
The government is on pace to run a record $1.5 trillion deficit this
year, the third consecutive deficit exceeding $1 trillion.
But so far, S&P sees little chance that the White House and Congress
will agree on a deficit-reduction plan before the November 2012
elections, and the rating agency doubts that any plan would be in
place until 2014 or later.
Obama and congressional Republicans are sparring over how to reduce
the nation's red ink. If Congress refuses to raise the nation's debt
limit this spring, and the U.S. Treasury lost authority to borrow
additional money, the government would not be able to pay its bills
and would default on its debt.
Both sides have proposed cutting $4 trillion from future deficits
over the next 10 to 12 years.
The White House wants to reduce the deficit through spending cuts
and by ending the Bush-era tax cuts for the wealthy. Republicans
reject that, calling it a tax increase. They seek instead to narrow
the deficit largely by overhauling Medicare and cutting spending
elsewhere.
The credit report called the two proposals a "starting point" of the
process, but warned that the gap between the parties remained wide.
S&P took no position about how to reduce the deficit or how to
change spending and revenue plans.
"But for any plan to be credible, we believe that it would need to
secure support from a cross-section of leaders in both parties," S&P
said in its report.
A lower credit rating would drive up the U.S. government's borrowing
costs. It could lead to higher interest rates on everything from
mortgages to car loans and threaten to slow U.S. economic growth.
Ablin said the credit worthiness of the country is the underpinning
on which all other asset classes are valued.
"If all of a sudden the credit quality of U.S. Treasurys isn't as
high as people perceive, we could see erosion of confidence," he
said.
For now, S&P continues to give the U.S. government its top
investment ranking. That means S&P believes that the U.S. government
can and will repay its debts and that Treasury investments are
virtually risk-free. But the agency says the U.S. faces a one in
three chance of a downgrade in the next two years. That would likely
happen if the White House and Congress could not come up with a
credible plan for reducing its debt.
The other major credit agencies — Moody's and Fitch Ratings — did
not match S&P's outlook warning.
S&P gives its top investment rating to just 19 of the 127 countries
it analyzes. But it says Britain, France and Germany moved much
faster to contain deficits after the 2008 financial crisis and
2007-2009 recession, which cut tax revenues and forced governments
to spend more on unemployment benefits, aid to the poor and bailouts
of the banking system. Those countries also have top-notch
investment ratings.
S&P noted that the U.S. deficit grew to 11 percent of economic
activity in 2009, a risky percentage. The deficit had averaged less
than half that percentage in the previous six years.
A credit warning can jolt politicians into action on government
debt.
In May 2009, Standard & Poor's downgraded its long-term outlook on
the United Kingdom to negative, saying that the country's debt could
double in four years.
Prime Minister David Cameron and his Conservative-Liberal coalition
government laid out plans to cut nearly 500,000 jobs and reduce
welfare spending. Britain's economy also posted modest gains, and
the ratings agency changed its outlook in October back to "stable,"
noting the government's "political resolve."
The Obama administration embraced the warning as a welcome call for
cooperation among the two political parties. Press secretary Jay
Carney said the White House believes the political process will
outperform the agency's expectations because the president and
Congress recognize the problem.
A budget showdown is likely in the next few weeks. Treasury
Secretary Timothy Geithner has said the government will reach its
debt limit no later than May 16. He can juggle funds to keep the
government running until about July 8, after which the government
could not pay its bills.
On Sunday, Geithner said Republican leaders have privately assured
the Obama administration that Congress will raise the government's
borrowing limit in time to avoid an unprecedented default on the
nation's debt.
But Rep. Eric Cantor, the No. 2 Republican in the House, took a hard
line Monday, calling the S&P announcement "a wake-up call to those
in Washington asking Congress to blindly increase the debt limit."
He said Republicans would only agree to raise the debt ceiling if
the White House agrees to "serious reforms that immediately reduce
federal spending and to end the culture of debt in Washington."
A bipartisan deficit-reduction commission appointed by Obama
recommended late last year that about $4 trillion be slashed from
budget deficits during the coming decade.
Under the commission's plan, roughly two-thirds of the savings would
come through spending cuts and one-third through increased tax
revenue. Although overall tax rates would decline, dozens of popular
tax breaks would be scaled back or eliminated, including the child
tax credit, mortgage interest deductions and deductions claimed by
employers who provide health insurance.
Obama praised the panel for its work, but embraced few of its
recommendations, and none of the major ones on new taxes.
For now, U.S. politicians are at a stalemate. "There is bipartisan
agreement on the need to reduce the debt by $4 trillion over roughly
the next decade," said Sen. Charles Schumer, D-N.Y. "Now we just
need to resolve how to do it."
Associated Press writers Pallavi Gogoi and Janna Herron in New York
and Derek Kravitz, Andrew Taylor, Jeannine Aversa and Ben Feller in
Washington contributed to this report.
The Washington Post
Monday, April 18, 2011
Lawmakers seize on Standard & Poor’s outlook in debt-ceiling debate
By Felicia Sonmez
Democrats and Republicans reacted swiftly on Monday to the news that
Standard & Poor’s had downgraded its outlook on America’s long-term
credit rating from “stable” to “negative,” with each party seizing
on the warning to back up its position in the escalating
debt-ceiling debate.
Republicans argued that the news illustrates the gravity of the
country’s debt crisis and the need for any debt ceiling vote to be
accompanied by a plan to tackle the country’s longer-term fiscal
problems.
“Serious reforms are needed to ensure America’s fiscal health, and
today S&P sent a wake-up call to those in Washington asking Congress
to blindly increase the debt limit,” House Majority Leader Eric
Cantor (R-Va.) said in a statement. “Today’s announcement makes
clear that the debt limit increase proposed by the Obama
administration must be accompanied by meaningful fiscal reforms that
immediately reduce federal spending and stop our nation from digging
itself further into debt.”
Sen. Mark Kirk (R-Ill.), a former five-term House member who won
election last fall to Obama’s former Senate seat, argued that the
coming debt-limit vote “offers the chance to save the dollar and our
economy.”
“If we miss this chance or if congress sends the president a blank
check, then the following quote from S&P is a stark warning for our
future: ‘We believe there is a material risk that U.S. policymakers
might not reach an agreement on how to address medium- and long-term
budgetary challenges by 2013; if an agreement is not reached and
meaningful implementation is not begun by then, this would in our
view render the U.S. fiscal profile meaningfully weaker than that of
peer ‘AAA’ sovereigns,’” Kirk said in a statement.
Meanwhile, a group of more than 100 House Democrats led by Rep.
Peter Welch (D-Vt.) on Monday reiterated its call for a “clean” debt
limit vote, or a vote with no conditions attached.
In a statement, Welch contended that the New York Stock Exchange’s
sharp drop in reaction to the Standard & Poor’s ratings change
Monday morning could be a harbinger of worse things to come if a
political showdown on the debt limit raises doubts about whether the
country will fulfill its financial obligations.
“America pays its bills,” Welch said. “I hope Majority Leader Cantor
and those in Congress seizing upon debt ceiling pressure as a
‘leverage opportunity’ are listening to the markets today and
thinking twice about their risky strategy. ... By playing
brinksmanship with the debt ceiling, he is willfully risking the
full faith and credit of the United States of America. The markets
have doubts about America’s ability to get its fiscal house in
order. And they are right. If Mr. Cantor persists in playing
politics with the debt limit he will be held accountable for
unleashing the financial hounds of hell.”
The group of 114 House Democrats, comprised of mostly liberal
members, sent a letter Monday to House Democratic leaders urging
them to convene a party caucus to establish a Democratic position in
favor of a clean debt limit extension.
Even if House Democrats stake out a firm position on a clean debt
limit vote, it’s not certain Obama would join them. House Speaker
John Boehner (R-Ohio) told reporters last week after a meeting at
the White House that Obama said he’d be open to proposals that would
not include a clean vote.
The Treasury Department estimates that the country will reach its
debt ceiling by mid-May, although the government could take measures
to extend to early July the drop-dead date for a vote.
Fox News
Monday, April 18, 2011
DeMint Threatens Filibuster on Debt Ceiling Vote
Throwing down the gauntlet, Republican Sen. Jim DeMint threatened
Monday to block a vote in Congress on raising the U.S. debt ceiling
unless he wins a balanced-budget amendment to the Constitution.
The filibuster threat comes a day after Treasury Secretary Tim
Geithner suggested Republican leaders had offered private assurances
to the White House that they ultimately would vote to raise the
$14.3 trillion ceiling, regardless of whether a deal is reached on
long-term spending cuts.
Publicly, Republicans say they will demand spending cuts as a
condition for supporting a hike in the debt ceiling. They stood by
that claim following Geithner's comments, and DeMint took their
demands a step further.
"I will oppose any attempt to vote to raise the limit on our $14
trillion debt until Congress passes the balanced-budget amendment,"
the South Carolina conservative said. He first made the remarks to
McClatchy, which his office confirmed to Fox News.
A balanced-budget amendment would prohibit the U.S. government from
running a deficit. Such a provision would take a two-thirds vote in
Congress, in addition to ratification by the states.
White House spokesman Jay Carney did not address DeMint's threat
directly during his briefing with reporters on Monday, but he did
say that the "cleanliness" of the bill -- in other words, that there
are no policy attachments to it -- is not an issue.
"The issue here is the debt ceiling has to be raised, and it cannot
be held hostage to a process that is very complicated and
difficult," he said. "We hope we will reach an agreement on deficit
reduction -- a bipartisan agreement on deficit reduction within the
time frame. We believe that's possible."
All GOP senators already have signed onto a balanced-budget
amendment proposal, reviving a push from the mid-'90s -- when the
House approved such an amendment, and the Senate fell one vote short
of doing the same.
DeMint's demand, though, goes beyond those of other Republicans who
say they just want to see a serious plan for closing the deficit as
a condition for support on a debt-limit increase.
Sen. Tom Coburn, R-Okla,, said on "Fox News Sunday" that he needs to
have "absolute certainty" a deficit reduction plan includes
"critical changes."
"Unless we do that, there's no way I'll support it," Coburn said on
the debt ceiling increase.
Sen. Rand Paul, R-Ky., on CNN's "State of the Union," said it's "yet
to be determined" whether he would support a filibuster on the debt
ceiling vote.
Rep. Chris Van Hollen, D-Md., though, said Congress should not
"monkey around with the full faith and credit of the United States."
"Linking the two and saying you're only going to vote for the debt
ceiling if something particular happens on deficit reduction I think
is playing Russian roulette with, like, the fully loaded revolver,"
he said on "Fox News Sunday."
Geithner said repeatedly Sunday that lawmakers who want to take the
country to the "brink" will bear the responsibility for the risk
that creates.
He suggested that merely flirting with that edge would create a
problem. But he said if Congress ultimately rejects an increase in
the debt limit, it would trigger a crisis that makes that 2008
meltdown look tame. Geithner reiterated warnings that such a vote
would force the government to halt benefits payments to seniors and
veterans and would risk the government defaulting on its interest.
Associated Press
Sunday, April 17, 2011
Super rich see federal taxes drop dramatically
By Stephen Ohlemacher
WASHINGTON – As millions of procrastinators scramble to meet
Monday's tax filing deadline, ponder this: The super rich pay a lot
less taxes than they did a couple of decades ago, and nearly half of
U.S. households pay no income taxes at all.
The Internal Revenue Service tracks the tax returns with the 400
highest adjusted gross incomes each year. The average income on
those returns in 2007, the latest year for IRS data, was nearly $345
million. Their average federal income tax rate was 17 percent, down
from 26 percent in 1992.
Over the same period, the average federal income tax rate for all
taxpayers declined to 9.3 percent from 9.9 percent.
The top income tax rate is 35 percent, so how can people who make so
much pay so little in taxes? The nation's tax laws are packed with
breaks for people at every income level. There are breaks for having
children, paying a mortgage, going to college, and even for paying
other taxes. Plus, the top rate on capital gains is only 15 percent.
There are so many breaks that 45 percent of U.S. households will pay
no federal income tax for 2010, according to estimates by the Tax
Policy Center, a Washington think tank.
"It's the fact that we are using the tax code both to collect
revenue, which is its primary purpose, and to deliver these spending
benefits that we run into the situation where so many people are
paying no taxes," said Roberton Williams, a senior fellow at the
center, which generated the estimate of people who pay no income
taxes.
The sheer volume of credits, deductions and exemptions has both
Democrats and Republicans calling for tax laws to be overhauled.
House Republicans want to eliminate breaks to pay for lower overall
rates, reducing the top tax rate from 35 percent to 25 percent.
Republicans oppose raising taxes, but they argue that a more
efficient tax code would increase economic activity, generating
additional tax revenue.
President Barack Obama said last week he wants to do away with tax
breaks to lower the rates and to reduce government borrowing.
Obama's proposal would result in $1 trillion in tax increases over
the next 12 years. Neither proposal included many details, putting
off hard choices about which tax breaks to eliminate.
In all, the tax code is filled with a total of $1.1 trillion in
credits, deductions and exemptions, an average of about $8,000 per
taxpayer, according to an analysis by the National Taxpayer
Advocate, an independent watchdog within the IRS.
More than half of the nation's tax revenue came from the top 10
percent of earners in 2007. More than 44 percent came from the top 5
percent. Still, the wealthy have access to much more lucrative tax
breaks than people with lower incomes.
Obama wants the wealthy to pay so "the amount of taxes you pay isn't
determined by what kind of accountant you can afford."
Eric Schoenberg says to sign him up for paying higher taxes.
Schoenberg, who inherited money and has a healthy portfolio from his
days as an investment banker, has joined a group of other wealthy
Americans called United for a Fair Economy. Their goal: Raise taxes
on rich people like themselves.
Shoenberg, who now teaches a business class at Columbia University,
said his income is usually "north of half a million a year." But
2009 was a bad year for investments, so his income dropped to a
little over $200,000. His federal income tax bill was a little more
than $2,000.
"I simply point out to people, 'Do you think this is reasonable,
that somebody in my circumstances should only be paying 1 percent of
their income in tax?'" Schoenberg said.
Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance
Committee, said he has a solution for rich people who want to pay
more in taxes: Write a check to the IRS. There's nothing stopping
you.
"There's still time before the filing deadline for them to give
Uncle Sam some more money," Hatch said.
Schoenberg said Hatch's suggestion misses the point.
"This voluntary idea clearly represents a mindset that basically
pretends there's no such things as collective goods that we
produce," Schoenberg said. "Are you going to let people volunteer to
build the road system? Are you going to let them volunteer to pay
for education?"
The law is packed with tax breaks that help narrow special
interests. But many of the biggest tax breaks benefit millions of
American families at just about every income level, making them
difficult for politicians to touch.
The vast majority of those who escape federal income taxes have low
and medium incomes, and most of them pay other taxes, including
Social Security and Medicare taxes, property taxes and retail sales
taxes.
The share of people paying no federal income tax has dropped
slightly the past two years. It was 47 percent for 2009. The main
difference for 2010 was the expiration of a tax break that exempted
the first $2,400 of unemployment benefits from taxation, Williams
said.
In 2009, nearly 35 million taxpayers got a tax break for paying
interest on their home mortgages, and nearly 36 million taxpayers
took the $1,000-per-child tax credit. About 41 million households
reduced their federal income taxes by deducting state and local
income and sales taxes from their taxable income.
About 36 million families cut their taxes by nearly $35 billion by
deducting charitable donations, and 28 million taxpayers saved a
total of $24 billion because their income from Social Security and
railroad pensions was untaxed.
"As a matter of policy, there would be a lot of ways to save money
and actually make these things work better," said Leonard Burman, a
public affairs professor at Syracuse University. "As a matter of
politics, it's really, really difficult."
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NOTE: In accordance with Title 17 U.S.C. section 107, this
material is distributed without profit or payment to those who have expressed a prior
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Citizens for Limited Taxation ▪
PO Box 1147 ▪ Marblehead, MA 01945
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