Economy adds 625,000 jobs in last 2 months

[Lawrence of Arabia]

to prevent bracket creep the brackets are indexed to inflation.

[DanS]

It's a lot different. We don't have VAT. State and local is funded by sales taxes, income taxes, and real estate taxes. For the federal, the upper income tax bracket is 35%. Capital gains and dividends are taxed at 10%. Deductions from income are generous.

[DanS]

to prevent bracket creep the brackets are indexed to inflation.

Since the per capita economy grows faster than the rate of inflation, only about half of the bracket creep is avoided by indexing the brackets to inflation. Even less is avoided in high growth years like our current one.

[Az]

Could you inform me of what is the difference between sales tax and VAT?

and yes, I almost forgot, we have real estate taxes for local authorities, as well ( those, and some levies on infrastructure improvement, as well as State money, are their sources of income )

and also, the terrible Automobile taxes:

100% Gasoline tax, something similar on new Automobile purchases, as well as an annual Automobile tax.



hmmm, maybe that explains it.

[Whoha]

Originally posted by chegitz guevara
Cutting spending . . . like getting rid of the Children's Insurance Program? Or taking more cops off the street than the 25,000 who've already been cut. We could shrink Pell grants even more, so less people can go to college.

Yup, conservatives are evil.

cutting Childrens cancer research!

Kerry says that he will limit growth of all but about a dozen spending programs to the rate of pop and inflation, unfortunately the programs he excluded amount to about 85% of the budget. You have to get the money from where it is being spent.

[Colon™]

Most of US' budget deficit is structural, not cyclical.

(at least according to the IMF)

[pchang]

US Budget is divided into
Fixed
Military
Discretionary

Discretionary is the smallest part of the pie
Military is smaller than Fixed
Social Security and Medicare are part of Fixed

When politicians talk about cuts or spending freezes, they are really only talking about the Discretionary part.

[Colon™]

Yes, but they usually cut in the fixed anyway because they can't get rid of their pork addiction.

[pchang]

When? I have never seen an actual cut in the fixed portion. The most I have seen is a freeze in increases.

[DanS]

(at least according to the IMF)

Well, the IMF has to assume that spending will continue to increase as much as it has in the past and that taxes won't be increased. As I've discussed in the past, income taxes increase naturally in our system. Also, even though I fear that the lame duck congress will blow the doors out spending this year after the election, I don't think it will happen.

[Colon™]

Originally posted by DanS As I've discussed in the past, income taxes increase naturally in our system.

That's the cyclical factor they've stripped out, that's why it's called "structural".

Go read for yourself if you like to: http://imf.org/external/pubs/ft/weo/...f/chapter2.pdf

[DanS]

I meant that income tax rates increase naturally in our system because the brackets are only indexed to inflation rather than indexed to nominal per capita income growth. My bad.

Regarding the $525 billion deficit for fiscal year '04 referenced in the IMF report, it will no longer be that. Rather, it is now estimated at $420 billion. Add $25 billion additional for Iraq/Afghanistan that likely will be introduced soon for a $445 billion deficit. State and local budgets are coming in better than expected as well.

http://www.washingtonpost.com/wp-dyn/articles/A64130-2004May3.html

Of course, the House is acting like a bunch of drunken sailors on shore leave.

[Ogie Oglethorpe]

Yep, that was anotherthing they mentione din the CSPAN airing. If the establishment survey is wrong and the household survey is correct and/or the trajectory of employment continues the deficit projection will be continue to be downgraded as everyone on the panel was saying the deficit projections were extremely if not overly pessimistic.

[Colon™]

Originally posted by DanS
I meant that income tax rates increase naturally in our system because the brackets are only indexed to inflation rather than indexed to nominal per capita income growth. My bad.

Well, that would be pretty much a tax increase (relative to GDP), just an unintentional/disguised one. It's politically feasible, but in macro terms it's no different from outright raising the tax income percentage.

Regarding the $525 billion deficit for fiscal year '04 referenced in the IMF report, it will no longer be that. Rather, it is now estimated at $420 billion. Add $25 billion additional for Iraq/Afghanistan that likely will be introduced soon for a $445 billion deficit. State and local budgets are coming in better than expected as well.

http://www.washingtonpost.com/wp-dyn/articles/A64130-2004May3.html

Of course, the House is acting like a bunch of drunken sailors on shore leave.

Copy! Copy! Copy! I hate to register.

[DanS]

Well, that would be pretty much a tax increase (relative to GDP), just an unintentional/disguised one. It's politically feasible, but in macro terms it's no different from outright raising the tax income percentage.

Yep. Politically, it is not considered as one. Clinton raised taxes throughout his presidency.

Copy! Copy! Copy! I hate to register.

Federal Deficit Likely to Narrow by $100 Billion
Tax Receipts Pare Borrowing

By Jonathan Weisman
Washington Post Staff Writer
Tuesday, May 4, 2004; Page E01

Smaller-than-expected tax refunds and rising individual tax receipts will pare back federal borrowing significantly for the first half of this year and could reduce the $521 billion deficit projected for the fiscal year by as much as $100 billion, Treasury and congressional budget officials said yesterday.


The Treasury Department's borrowing estimates may prove to be more good news for President Bush on the economic front, as opponents attempt to make his fiscal stewardship a campaign issue. The $184 billion the government is now expected to borrow through June is a 27 percent improvement from Treasury's February projection of $252 billion, the department said.

G. William Hoagland, a senior economic aide to Senate Majority Leader Bill Frist (R-Tenn.), said he dashed off a memo to GOP leadership predicting the 2004 deficit could be trimmed to $420 billion, a record in dollar terms but considerably lower than the White House's $521 billion projection.

"This is better than what everybody expected," Hoagland said.

Democratic and Republican budget aides in the House warned yesterday that it was too early to reach conclusions. Spending could still take an unexpected jump because of surging hostilities in Iraq. The improving federal borrowing picture, they said, may just be bringing the administration's $521 billion deficit forecast more into line with the $477 billion deficit predicted by the nonpartisan Congressional Budget Office, Capitol Hill's official budget scorekeeper.

Individual disappointments last month could prove to be to the government's fiscal advantage. Earlier this year, Bush had boasted that this year's average income tax refund would be $300 larger than it would have been without last year's tax cut. But refunds have fallen well short of that mark. Treasury officials also cited lower-than-expected government spending and higher payroll and individual income taxes as reasons that less borrowing may be needed.

All of this indicates that the improving economy is beginning to slow a three-year slide in overall tax receipts.

"The 5.5 percent average [economic growth] pace in the latest three quarters was the largest since 1984," said Mark J. Warshawsky, assistant Treasury secretary for economic policy, in a statement to the department's borrowing advisory committee. "With the assistance of tax cuts, growth has become self-sustaining."

An improving picture could strengthen the political hands of the president and House Republican leaders as they wrangle with the Senate over more tax cuts and a budget blueprint for the fiscal year that begins Oct. 1. For weeks, the negotiations have been stalled, with a majority of the Senate demanding new procedural hurdles for further tax cutting and the House and White House steadfastly refusing.

The latest compromise would mandate that tax cuts over the next three years be offset by equal tax increases or spending cuts, unless 60 Senate votes could be mustered to set the restriction aside. However, under the compromise being floated, some tax cuts -- $92 billion worth in 2005 -- would be exempted from that restriction under Congress's annual budget resolution.

So far, House tax cutters have been undaunted by federal red ink. Last week, lawmakers in both parties voted overwhelmingly to make permanent Bush's tax cuts for married couples, a bill that would cost the Treasury $105 billion over 10 years. For the next three weeks, the House has scheduled successive votes on more tax cuts totaling hundreds of billions of dollars.