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Just wanna brainstorm some ballsy nuclear options on taxes, if we go "over the cliff." Post your ideas in the comments, and, any lawyers out there, let us know about the feasibility of the proposals.

Here's one to get started:
If by Dec 31, President Obama doesn't get the rates he wants, he could issue a pardon to all americans for not paying federal taxes on their first $100,000 of income. Simple. You still have to file your tax return, but, a pardon for non-payment on your first $100,000 of income.

variations: a pardon for all americans for not paying up to half of your federal taxes on your first $250,000 income. a little more complicated... but you get the idea.

What other ideas does everyone have?

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Comment Preferences

  •  I think Obama is comfortable with Clinton rates (3+ / 0-)
    Recommended by:
    Mindful Nature, VClib, DeminNewJ

    on everybody.

    He'd prefer to keep them lower in the sub 250k range, but actually the poorest aren't paying income tax and the threshold for paying is something like 50kish family income.  There will be some pain in the 50-100k income bracket but they can probably cope.  Anyone making 6 figures can afford Clinton rates easily, along with all of the other "fiscal cliff ending" stuff (speaking as someone who makes in the low end of 100-250k, and who is a homeowner in one of the most expensive regions in the country)

    Seriously, the ending of unemployment extension, the social program cuts and the reversion of social security tax to normal levels is likely a much larger shock to the economy, because it affects the "under 50k" crowd the most and has a bit of a ripple effect on the 50-100K folks.  If he's going to take some kind of emergency, unilateral action, it'll be something to help with that...something to help the bottom of the pyramid with austerity.

    Forgiveness of the clinton tax rates in the 50-250k range won't do very much and might be destructive  (because the govt actually DOES need the revenue), so he'd be better to spend his political capital elsewhere.

    •  Depends on their financial situation (0+ / 0-)

      Many of those making over $50,000 and even $100,000 are still struggling if they live in a high cost area or have high out of pocket medical costs. Remember, someone might be self-employed and make $100,000, but most people who are self-employed have to spend at least $10-15,000 a year in premiums for a decent health insurance plan, not to mention all of the copays and deductibles. Plus, people who are self-employed pay double the payroll tax. Lots of people have student loans to pay off and other expenses that eats a lot of what you would think would be a comfortable salary. $100,000 doesn't go as far as you would think depending on circumstances.

      •  People making 100k (0+ / 0-)

        Can afford to have health insurance, food, a roof over their head and to educate their family.  This includes servicing student loan debt, if any.

        (keep in mind, 100K is PROFIT on the small business for self employed, not REVENUE)

        I don't care where they live, self employed or not unless they have more than 4 dependents in the household, they're capable of doing that now, and they're also capable of doing it while paying 5%ish more in taxes.

        In the 50-100K range, whether or not they can do that depends more on how many dependents they have, and where they live.   They might be renting rather than owning, they may be limited to state or community colleges instead of ivy league etc.   But they're not worried about losing their house or healthcare or starving with a 5% variance in their income.

        I have lived making 10k a year, I have lived making 20k a year, 40k, 50k, 80k, 100k and 130k, and through all of that I've lived in extremely expensive zip codes.

        Under 50k, where I live, in 2012 dollars, you are often a couple paychecks away from disaster, but you can absorb small shocks (like a car repair or health insurance deductible if illness/injury strikes in a given year) and under 25k you're barely able to deal with food and shelter, and the slightest emergency will trip you up.

        The only time that the increase in taxes we're looking at in 2012 would have caused me to lose anything than a fraction of my emergency resilience was in the 20k a year range (which might be ~30k in today's dollars).  Then it might have halved my entertainment budget (which at the time was about half my gas budget).

        In the 10k range, even in today's dollars (15kish), I'd not be paying anything but the payroll tax, and was making so little that the bite of a few percent translates into less than 25c/hour, half of which is payed by the employer anyway.  Probably about a dime per hour, or less than $5 a week.   Now I'm not saying $5 extra a week doesn't have an impact at that level.  It does.  But it isn't enough to really make the difference between gas and no gas, food or no food, heat or no heat, rent or no rent.

    •  The main thing is the 10% bracket for bottom (0+ / 0-)

      earners. That saves most individuals $450 a year (as it applies to the first $9000 of taxable income). The change at the top end of the middle class can more easily be borne.

      The other issue is the FICA holiday. All holidays need to end, but there is cause to think a sudden end will hit consumer spending. I think we need to reinstate the 10% rate bracket, and phase out the FICA holiday over 2 years.

      Non enim propter gloriam, diuicias aut honores pugnamus set propter libertatem solummodo quam Nemo bonus nisi simul cum vita amittit. -Declaration of Arbroath

      by Robobagpiper on Tue Dec 11, 2012 at 10:12:12 AM PST

      [ Parent ]

      •  Yeah, that's true (0+ / 0-)

        It would be nice to keep the 10% bracket where it is, and also keep the payroll holiday for those in that tax bracket.

        •  The payroll tax holiday needs to expire for (3+ / 0-)
          Recommended by:
          VClib, DeminNewJ, Pete Cortez

          everyone. That's how SS gets funded.

          People make the mistake of looking at FICA as if it were a random tax that gets dumped into the general fund, from which people only get a nebulous return.

          But unlike income taxes, FICA is a premium for a defined benefit, predominantly a cash benefit. FICA's effect on the poor can not be considered without simultaneous effect of the SS and Medicare benefits. The poor get far more out of SS and Medicare relative to what they put in relative to higher income groups; and thus, the flat nature of FICA is not punitive to them. Money the poor pay in FICA is compounded to become money they don't have to pay to support their parents and grandparents, or pay their medical bills.

          Non enim propter gloriam, diuicias aut honores pugnamus set propter libertatem solummodo quam Nemo bonus nisi simul cum vita amittit. -Declaration of Arbroath

          by Robobagpiper on Tue Dec 11, 2012 at 10:29:46 AM PST

          [ Parent ]

          •  Make Fica progressive instead of regressive (0+ / 0-)

            Leave the tax holiday for those in poverty level income.

            Eliminate the cap AND do social security tax on dividend and capital gains income.

            Social security would be funded forever, easily.  Hell, just eliminating the income cap might do the job, but I'm less certain, since most high earners make the bulk in capital gains and dividends.

            •  You're making the very mistake I cited (1+ / 0-)
              Recommended by:
              Pete Cortez

              FICA can not be viewed in isolation, without looking at how the benefit it pays for is structured. Because SS benefits are regressive, the fact that FICA is flat (not regressive) is irrelevant.

              SS benefits are indexed, regressively, to your inflation-adjusted contribution for the best 35 years of your working career. It is regressive because the ratio of benefit to contribution gets smaller the contribution gets bigger - that's what regressive means.

              Secondly, the SS component of FICA is flat, not regressive, because earned incomes over the cap, and capital gains incomes, do not exist as far as Social Security is concerned. The cap is a limit on the size of income SS will insure, not a break given to the rich. Social Security is not sympathy-based welfare, it is an insurance plan where the bigger the policy, the more proportionally it costs; but only for incomes up to a certain level. For money above the cap, or unearned income, SS will not insure that income by promising to pay an annuity on it after a certain age.

              Furthermore, the premise that SS needs the money is false - the projections of shortfall presume an economy that spends the next 3 decades on the edge of recession. In a healthy economy, SS never experiences a shortfall.

              None of the above is relevant to Medicare; there is no cap on the medicare portion of FICA; but the benefit (as a fraction of contribution) is still vastly higher for lower income earners than anyone else.

              Non enim propter gloriam, diuicias aut honores pugnamus set propter libertatem solummodo quam Nemo bonus nisi simul cum vita amittit. -Declaration of Arbroath

              by Robobagpiper on Tue Dec 11, 2012 at 10:48:41 AM PST

              [ Parent ]

              •  OK, that's interesting (1+ / 0-)
                Recommended by:
                Pete Cortez

                But from a political standpoint, the idea that it is a lockbox income insurance has been dead since the 80s.

                As evidenced by raising the retirement age in the 80s, and then using a tax cut on it as stimulus in 2010.  And the fact that it goes into the general fund and is thus raided for all and sundry as we go.   Also as evidenced by the fact everyone calls it an "entitlement", not what it actually is, which is closer to a combination pension plan and disability insurance.

                It also isn't done like real life insurance or disability insurance.  Money I paid in 1990 isn't saved for my retirement, it was used to pay for the retirement of a SS recipient in 1990.

                Basically, if SS is going to be endangered whenever the economy is weak or whenever the Rs are in power, it needs funding to the point where it never appears to be in trouble.    If it is going to be treated like every other government program ("put on the table") then it should be funded  like every other government program (via tax on all types of income, regardless of the eventual benefit)

                However, I hear you, and that might be more radical than you can swallow.  (my generation has been cynical about SS my entire life.  I'm pushing 50 but I never assumed I'd get a dime from SS...until I was proved wrong by my wife getting disabled at age 30.  Still, I think there is a good chance it won't exist by the time I'm eligible.  There's still nearly 20 years for politicians to defund it or raid it)

                Here is a fairly simple fix that will reduce the risk of "SS is in trouble" concern trolling and preserve the formula you approve of....tie the cap to the COLO increase, so people stop trying to raid the COLO increase to "fix" the program.  If COLO requires more money, raise the income cap to match,  year by year.

            •  There's a place to take from the rich and give (2+ / 0-)
              Recommended by:
              VClib, Pete Cortez

              to the poor - it's called "income taxes and welfare". That's not Social Security's job.

              Non enim propter gloriam, diuicias aut honores pugnamus set propter libertatem solummodo quam Nemo bonus nisi simul cum vita amittit. -Declaration of Arbroath

              by Robobagpiper on Tue Dec 11, 2012 at 10:49:35 AM PST

              [ Parent ]

            •  greblos - why we have a cap (1+ / 0-)
              Recommended by:
              Pete Cortez

              and why investment income isn't part of SocSec.

              It's important to understand the fundamental structure of the Social Security system. It is a wage insurance plan, it has never been intended to be a vehicle to redistribute income from the wealthy to those earning less although as currently designed has a progressive feature in the benefit calculations. There is an important reason for the cap and removing it completely would end SocSec as FDR designed it and as we have always known it.

              SocSec is a wage insurance program. Each person "insures" their own salary and wages based on the contributions they, and their employers, make into the program. The reason for the cap is that high income earners have other retirement assets and don't need to "insure" all of their earnings. It's also why investment income is excluded from SocSec payments, because investment income doesn't stop when we retire so there is no need to "insure" it. If SocSec had no cap some people would have six figure annual SocSec retirement benefits. If you take the cap off of contributions, but cap payments, you have changed SocSec as we know it. SocSec is not a plan to redistribute income and that is why it has its own funding program and isn't funded by general tax revenues.

              The sensible path is to raise the cap over the next ten years until 90% of all wages and salaries are captured and allow benefits to increase as well. That solves the funding problems with SocSec.

              "let's talk about that"

              by VClib on Tue Dec 11, 2012 at 11:14:45 AM PST

              [ Parent ]

              •  As I said in another comment (0+ / 0-)

                I agree pretty much with your last paragraph.

                Instead of all these separate mechanisms (COLO, income cap, etc)...all should be tied together and raised together, automatically.

                If there is a correct formula for income insurance, to the threshold SS is supposed to provide, make it a formula, not a fixed amount, and have it rise automatically, all elements of it, based on either a "top 90% of salary" or cost of living approach (I prefer the latter, actually, given how salaries have stagnated).    Also I fail to see why capital gains and dividends don't count, if below the income cap.  Income should be income, regardless of source.

                •  Ok re-reading your post (0+ / 0-)

                  I see what the argument is on investment and dividend income is.   I'm not sure I believe it really works that way in real life.  Not for small investors anyway (those who make less than or equal to social security cap after considering investment/dividend income)

                  In my experience, investment and dividend income in the range that falls under the SS income cap is highly variable and usually tied to employment.

                  Most of my investment income, for example, in my working career has come from employee stock purchase programs.  Lose my job, I lose that income.

                  Likewise income in my retirement accounts has fluctuated wildly with the stock market, and "safe" investments have earned less than inflation my entire lifetime.  So either there isn't any actual income in real terms (vs inflation) or I have years with a lot of investment income, and some with zero (or "negative" income).

                  When I'm retired, I won't have the company-supported investment vehicles, and I can't be sure that in any given year my nest egg will actually generate income.

                  So at least some portion of my investment income should be affected by SS taxes (the portion I can't do unless I'm employed...stock options and stock purchase plans) and some kind of public insurance policy for the randomness of investment income seems also like a good idea.  I'd LOVE to pay into a policy that could insure me against a year like 2009 when I'm retired.

  •  Where are all the tax advisors out there? (0+ / 0-)

    Sharing their concern here in DK Land while they serve and defend their onepercenter Masters,

    The "extreme wing" of the Democratic Party is the wing that is hell-bent on protecting the banks and credit card companies. ~ Kos

    by ozsea1 on Tue Dec 11, 2012 at 09:58:32 AM PST

    •  Bit of a harsh blanket stereotype, no? (4+ / 0-)

      I have a friend that works for a Tax Firm in DC... I wouldn't exactly call her a servant and defender of her 1% masters.  

      A bit dickish, that.

      Красота спасет мир --F. Dostoevsky

      by Wisper on Tue Dec 11, 2012 at 10:34:22 AM PST

      [ Parent ]

      •  That's in the " I know a guy..." catagory (0+ / 0-)

        I'm sure your friend is a wonderful person, but it doesn't follow that your exception disproves my experience here. Neither does calling my comment "dickish".

        Your concern is noted.

        The "extreme wing" of the Democratic Party is the wing that is hell-bent on protecting the banks and credit card companies. ~ Kos

        by ozsea1 on Tue Dec 11, 2012 at 11:58:06 AM PST

        [ Parent ]

        •  But, I ACTUALLY know a woman... (0+ / 0-)

          anyway, anecdote v evidence semantics aside, you purposefully lumped thousands of professionals into a personally insulting category.  If you stand by that and not think its dickish, okay.... noted as well.

          Красота спасет мир --F. Dostoevsky

          by Wisper on Tue Dec 11, 2012 at 04:44:56 PM PST

          [ Parent ]

  •  The Actual Difference Ain't Much (0+ / 0-)

    Below $100,000 gross, the actual tax difference isn't all that much between Clinton rates and the Bush Mistakes.  When I was full-time employed making $106,000 gross, the difference amounted to about $230.  The Bush Mistakes were pitched towards the Really Rich -- his "Haves and Have Mores"   So, we could simply let the Bush Mistakes time out and not be all that worse for wear.  

  •  Um, no. (4+ / 0-)

    That would cut tax rates to effectively zero. Not good.

    We are all in the same boat on a stormy sea, and we owe each other a terrible loyalty. -- G.K. Chesterton

    by Keith Pickering on Tue Dec 11, 2012 at 10:10:36 AM PST

  •  Couldn't work (4+ / 0-)
    Recommended by:
    emelyn, coffeetalk, VClib, nextstep

    Crimes can be pardoned, but can debt to the IRS?  Not sure, and I doubt it.  And it's politically impossible.

    •  Pardons (5+ / 0-)

      Pardons have to be given for actual convicted federal crimes, not handed out as some kind of blanket-statement to cover future transgressions. (You are thinking of Catholic Indulgences)

      Pardons have to be petitioned INDIVIDUALLY so you are asking for 200+ million pardons here.  They have to be reviewed by the Office of the Pardon Attorney within the DOJ and each one summarized with a formal recommendation.  They are issued to a specifically named person and have to be formally accepted as the acceptance carries with it the admission of guilt.

      In short:  This is a nonsensical idea.

      Красота спасет мир --F. Dostoevsky

      by Wisper on Tue Dec 11, 2012 at 10:33:05 AM PST

      [ Parent ]

      •  Not to mention that this is wild and dangerous. (2+ / 0-)
        Recommended by:
        misslegalbeagle, Wisper

        The executive pardon serves as a check for injustices caused by imperfect legislation that the judiciary has no power to correct on a case-by-case basis. It is woefully underused, to be sure, but it does not exist as a way to pre-emptively circumvent the legislative mechanism.

        Is this just math that you do as a Republican to make yourself feel better?

        by ConfusedSkyes on Tue Dec 11, 2012 at 11:16:26 AM PST

        [ Parent ]

      •  Wisper - I agree it is a nonsensical idea (2+ / 0-)
        Recommended by:
        ConfusedSkyes, Wisper

        But didn't Jimmy Carter issue a blanket pardon for all the draft dodgers who went to Canada during the Vietnam War?

        "let's talk about that"

        by VClib on Tue Dec 11, 2012 at 11:18:58 AM PST

        [ Parent ]

        •  He made an Executive Proclimation (2+ / 0-)
          Recommended by:
          VClib, ConfusedSkyes

          whereby if you fell under the criteria outlined you could apply directly for a pardon.

          Still required a conviction though.  See the link next posts below (even though he/she did not actually read it).

          Красота спасет мир --F. Dostoevsky

          by Wisper on Tue Dec 11, 2012 at 04:38:26 PM PST

          [ Parent ]

      •  not true - Pres Carter's Draft Dogger Amnesty (1+ / 0-)
        Recommended by:
        ConfusedSkyes

        See http://www.justice.gov/...

        No criminal prosecution was necessary.

        Still the diary's idea is terrible.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Tue Dec 11, 2012 at 12:18:32 PM PST

        [ Parent ]

        •  Um... dont just post links, read them too! (0+ / 0-)

          Nice link... please click it and read whats there.  It is very educational.

          It has some interesting facts about this like:

          you may obtain an individual certificate of pardon evidencing the fact that this Pardon Proclamation applies to you. The certificate will be issued only if you were convicted of such an offense.

          If you were arrested for and/or charged with a Military Selective Service Act violation for an offense committed during the relevant time period, but your prosecution ended in some fashion other than conviction (such as dismissal of charges or an acquittal), you are not eligible to seek a certificate of pardon.

          Красота спасет мир --F. Dostoevsky

          by Wisper on Tue Dec 11, 2012 at 04:42:26 PM PST

          [ Parent ]

  •  Future Republican Confusion.... (0+ / 0-)

    ..."I don't get it. We took away people's food stamps, insurance, unemployment benefits. Why has the crime rate gone up?"

  •  Similar idea has been raised. (0+ / 0-)

    From the Hill:

    The White House has the power to temporarily protect taxpayers from middle-class tax hikes even as upper income rates rise if Congress does nothing and all of the Bush-era tax rates expire in January.

    Experts and lawmakers alike agree that Treasury Secretary Timothy Geithner has the power to adjust how much is withheld from paychecks for tax purposes — for all taxpayers or just for some.

    Not sure if this is legal, but then again not even sure who would have standing to challenge it. Though if this passes legal muster, might prove to be a double edge sword should a Republican Administration emerge again.  After all, if the rates are only upper limits...
  •  What's the point of this plan? (0+ / 0-)

    Maybe I'm just not getting it, but what is this supposed to accomplish, other than just total chaos?  

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