Budget expert: Taxing millionaires won't fix the economy

(CBS News) Federal budget expert Maya MacGuineas, president of the nonpartisan Committee for a Responsible Budget, said the "Buffett Rule" is not "going to come anywhere close to fixing the problem" of income inequality or the national debt.

"Because...growing income inequality has been so pronounced in the past year, what you can't do is pretend that only taxing millionaires is going to come anywhere close to fixing the problem," MacGuineas said on CBS News' "Face to Face."

President Obama is on the campaign trail this week, ahead of tax day, promoting the "Buffett Rule," named after Warren Buffett who advocates higher taxes for the wealthy. The proposed plan would impose a minimum tax rate on those earning more than a million dollars per year.

MacGuiness told host John Dickerson that raising taxes on the wealthy could have a negative impact on the economy as those who would be impacted make much of their money from dividends and capital gains.

"Having further taxes on the things that incentivize people to save and invest, [is] not necessarily good for the economy at a time when we're very focused on how do we grow the economy," she said. "It's going to have to be much more far-reaching than just looking at millionaires to fix this problem."

While Republicans and Democrats have been standing their ground, refusing to compromise, on tax policy, MacGuineas said there are ways to agree -- including getting rid of tax breaks for things like corporate jets.

"Big broad-based tax reform means that if you got rid of a lot of those tax breaks you could dramatically lower the rates, and still raise money to help close the deficit," she said.

During this election year, MacGuineas said be wary of election-year promises.

"Be careful of anything that sounds too good to be true. And unfortunately, what we're going to need are the things politicians don't love to talk about... And so if a politician is sort of peddling a budget that sounds great, filled with things you love and more tax cuts, those numbers aren't going to add up," MacGuineas said.

However, MacGuineas said the tax code can, and needs, to be fixed.

"The tax code is so bad there are a lot of ways to improve it," MacGuineas said.

[purplestates]

Trickle down economic has not worked in the last 15 to 30 years, so nonpartisan suggest to close corp jet tax loophole, is that it? Is that the enough solution? sound like a lot of BS.

[purplestates]

cross out [the]

[AOCGUY]

While I agree that increasing taxes for millioaires (alone) won't solve our economic problems, suggesting that increased taxes would somehow cause the rich to quit investing is just ludacrous.

Let's say I have a million dollars. Under current law I choose to invest that money with an annual return of 8% or $80K. My taxes on my unearned income would be $12K so I realize a profit of $68K. Now should taxes on unearned income rise to 25% my tax would be $20K and I realize a net profit of $60K. Now should the taxes rise does one really thing that the rich would forego an opportunity to make $60K after tax profit and instead sick it in the bank where (given a 1.25% interest rate) they would only make $11.5K? I suppose instead of saving or investing the rich could spend their million dollars but even that would result in increased sales/jobs/tax revenue for federal and state coffers.

[Charleys_Mom]

Increased taxes definitely will cause the rich to quit investing. If I have $1 Million to invest and could be garunteed no an 8% return on my money with NO risk then netting a $68,000 profit would not be so bad. But this is not the way it works. When I invest that $1 million, I don't know if the value of that million will go up $80,000 or down by $200,000. I'm taking a risk. To MOTIVATE me to take that risk there must be a significant benefit involved. Simple fact is that right now the markets are NOT gaining. People are for the most part losing money or remaining flat. So the rich have ALREADY DECREASED their investments. So now Obama wants double the capital gains tax from 15% to 30%. So now the "rich guy" who invested his $1 Million is actually getting typically less than 5% gain on his money (less than $50,000)but risking loosing ALL of it! and Obama wants to take $25,000 or that $50,000 for taxes! Lets put this another way. If you went to the Casino and instead of paying even money to winners at the black jack table they told you that you still risk loss of all your money BUT if you win, you will only receive half the amount you formerly did....Would you still play??????
Your second point in which you suggest that the rich will spend their money if they don't invest it? Radiculous. They don't spend it. They just leave it sitting on the sidelines (the market equivalent of stuffing it in your mattress) and wait..Hoping for better days and a new President! This is exactly what they are doing right now!!!

[alphaa10000]

ASTROTURF PUNDITRY

RealiteBites said, "... So she's already crossed off rich people and capital gains. And surely she's crossed off the other 99%, because a greater proportion of spending in that bracket is consumption. So she's limited repealing tax breaks to corporate jets?... The sign of a wonk is that somebody will know to look for a solution that solves BOTH competing needs of growing the economy and cutting down the deficit. For people who don't think that's achievable, you're clearly not a wonk.
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Clearly, MacGuineas has no wonkish pretensions, but is simply a messenger for others.

In fact, her "non-partisan" Committee for a Responsible Budget is newly-minted Astroturf, because MacGuineas was adviser to McCain in 2008 on Social Security policy.

Her key responsibility was to make sure whatever McCain said matched GOP agenda.

So, what MacGuineas was delighted to have the opportunity to say to John Dickerson is essentially the same message she gave McCain to deliver, after a fashion.

And that message is, "Go easy on the fatcats. Yes, they are making more money than ever, and paying less in taxes for it, but these are Job Creators, for heaven's sake. Leave the poor, poor babies alone."

Bush tax breaks for the wealthy have an inglorious history, and account (along with the breaks of Reagan) for a majority of the massive national debt. In 2002, G.W. Bush tried to jump start an economy in the doldrums by massive tax breaks to the wealthy, but which were budget killers.

After repeated attempts, what Bush delivered was a set of tax breaks so injurious to the federal revenue base that even the GOP-dominant congress declared a date on which the tax breaks would have to end.

Put differently, Bush plundered the treasury to give a party for his friends, the wealthy. "Some people call you the elite... I call you my base," declared Bush at an exclusive 2001 fundraiser.

[alphaa10000]

ASTROTURF PUNDITRY

RealiteBites said, "... So she's already crossed off rich people and capital gains. And surely she's crossed off the other 99%, because a greater proportion of spending in that bracket is consumption. So she's limited repealing tax breaks to corporate jets?... The sign of a wonk is that somebody will know to look for a solution that solves BOTH competing needs of growing the economy and cutting down the deficit. For people who don't think that's achievable, you're clearly not a wonk.
------

Clearly, MacGuineas has no wonkish pretensions, but is simply a messenger for others.

In fact, her "non-partisan" Committee for a Responsible Budget is newly-minted Astroturf, because MacGuineas was adviser to McCain in 2008 on Social Security policy.

Her key responsibility was to make sure whatever McCain said matched GOP agenda.

So, what MacGuineas was delighted to have the opportunity to say to John Dickerson is essentially the same message she gave McCain to deliver, after a fashion.

And that message is, "Go easy on the fatcats. Yes, they are making more money than ever, and paying less in taxes for it, but these are Job Creators, for heaven's sake. Leave the poor, poor babies alone."

Bush tax breaks for the wealthy have an inglorious history, and account (along with the breaks of Reagan) for a majority of the massive national debt. In 2002, G.W. Bush tried to jump start an economy in the doldrums by massive tax breaks to the wealthy, but which were budget killers.

After repeated attempts, what Bush delivered was a set of tax breaks so injurious to the federal revenue base that even the GOP-dominant congress declared a date on which the tax breaks would have to end.

Put differently, Bush plundered the treasury to give a party for his friends, the wealthy. "Some people call you the elite... I call you my base," declared Bush at an exclusive 2001 fundraiser.

[marychgo]

The Committee for a Responsible Budget is about as "nonpartisan" as Planned Parenthood. Neither of them is officially affiliated with a party, but their ideas "fit" better with one party than the other.

CRB is committed to "trickle down" economics (as McGuineas' comments about capital gains make clear). So she's a Republican shill, not a "nonpartisan" think-tanker. So what else is new...?

[RealiteBites]

Be careful of anything that sounds too good to be true.
___________________________________________________________________________________

Just to be clear, is she actually saying fixing the tax code will fix 'the problem'.

And just what is 'the problem' in her eyes?

Sigh ... the bar for what qualifies as a so-called expert these days is so incredibly low.

I think this expert comes across as ambiguous and inarticulate because she can't reconcile the two competing goals. So then she just glossed over it intellectually because she wanted to be on tv.

But really, you have to fill in the blanks. So she wants to cut down on the deficit. Except that she acknowledges that using money to pay down the deficit is economically contractionary.

So she's already crossed off rich people and capital gains. And surely she's crossed off the other 99%, because a greater proportion of spending in that bracket is consumption. So she's limited repealing tax breaks to corporate jets?

Does she have ANYTHING ELSE on her list?

So is she working to cut back the deficit or not? Not really.

Does she believe the economy ought to be stimulated now, and paid off later? Because that's what Barack's been doing for the last 4 years, and it's barely keeping the economy affloat.

AND now there's a debt crisis.

Well this person's no expert of any sort - heck, she's not even wonkish really - because wonks don't think in stupid circles like that and leave ends hanging.

That's how I knew Barack was a phony - he's got the same contradictory ideas.

The sign of a wonk is that somebody will know to look for a solution that solves BOTH competing needs of growing the economy and cutting down the deficit. For people who don't think that's achievable, you're clearly not a wonk. It used to be achievable when the US had a lock on manufacturing. Because whichever countries in the world are home to the worlds' Corporations will have wealthy corporate titans, and whichever countries in the world are home to the worlds' workers will have (relatively) a wealthy worker base. When the US had a lock on manufacturing, the corporate profits streamed in from other countries for BOTH corporate heads AND workers. Now it's just the fat cats that are still rich - and hence the increase in wealth divide. You can't fix the divide without fixing the fundamental alteration of the system, without causing the economy to come to a grinding halt.

And for anybody who thinks that you can't reverse 'progress', outsourcing is not necessarily progress!! It just redistributed wealth from the Western world to developing countries. So now all the workers of the world are poor. The thing is, that that won't change, and the US economy won't grow unless politicians are willing to alter the system they adopted of outsourcing jobs. Without jobs, you can't have a prosperous economy. And you can't have jobs in the Western world if everything can be made and done for cheaper elsewhere unless you completely revise TRADE laws, not tax laws.

I don't think this 'expert' is much of an intellectual :/

[tmittelstaed]

"...and whichever countries in the world are home to the worlds' workers will have (relatively) a wealthy worker base..."

"...So now all the workers of the world are poor..."

So if all the world's workers are poor and workers who live in a country that does manufacturing will be wealthy, where exactly is this magical, wealth-producing manufacturing actually taking place?

Sounds to me that you are having your own problem coming across as ambiguous and inarticulate because you can't reconcile two competing goals.

Manufacturing is not a panacea. Assuming that Manufactuing is king pretty much assumes we live in a disposable economy where everything you buy you throw in the trash when it breaks down. But we tried that and consumers found out that making this assumption consigns them to a life of buying cheap junk that falls apart after a few months. And that quickly becomes unaffordable.

I see more and more people now buying products that they are demanding that they are going to get a 20 year lifespan out of. People who drop $2500 into a stainless steel refrigerator for their home kitchen don't expect that this will be a throwaway item if it breaks in 3 years. Instead they are expecting that someone is going to fix it. That's why we are seeing a demand rising for servicepeople who can fix things, rather than make more of them.

[RealiteBites]

tmittlestaed ... sigh, two differences between you and me - your thoughts aren't very sophisticated, so it's not hard for you to be thorough in explaining what's going through your mind. I DID in fact miss adding a definition that made my thoughts SEEM contradictory - when in fact they're not, because I AM capable of reconciling contradictory thoughts to get a big picture assessment of complex issues. You, on the other hand, are not capable of that, and I'll point out the flaw in your reasoning after I clarify my statements.

Now, stuff is cheaper in China. So while workers are poor by our standards, they're rich by theirs. Cars only cost like $3000 in China, while they cost like $30000 here. If a worker is paid $10000 a year in the US in salary, they're considered the 'working poor'; if a worker makes that in China, they're rolling in the money. Hence, it's not a contradiction of THOUGHT to say that all the workers are poor (by our standards), but that the workers of the world are wealthy in developing countries (by theirs).

So now, you know what contradiction of thought you didn't reconcile? Is the fact that after manufacturing got shipped to China, their GDP went through the roof. If technology accounted for the loss of manufacturing jobs, there'd be no such explosion of growth. Hence, your actual belief is factually incorrect. Whereas mine are all accurate.

But thanks for asking for clarification - didn't realize how that came across ...

[sooner_schooner]

I didn't need a budget expert to tell me this. Anyone without a doctorate in liberalism could've done the second-grade math and figured this one out. Unfortunately, too many of Obama's supporters are ill-equipped for even that much cognitive muster.

[alphaa10000]

SECOND GRADER (MATH) EXPLAINS BUDGET PROBLEM

sooner_schooner said, "I didn't need a budget expert to tell me this. Anyone without a doctorate in liberalism could've done the second-grade math and figured this one out..."
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Don't worry, a budget expert is not likely to volunteer.

As for "second-grade math", a class in federal budget-making is considerably more complex than Mr. Limbaugh suggested to you.

Which leaves many wondering about your own "cognitive muster", if you subscribe to the notion all this country needs is to throw more taxpayer money at the wealthy. The last time we heard that one was the plaintive defense advanced for the bank bailout (a ransom note from Bush and Paulson).

Unfortunately, what many GOP partisans conveniently ignore is that a tax bill spared the wealthy must be paid by the rest of us, on their behalf-- and such a privilege. Presumably, we'll pay their tax bill with unspent pennies from our last paycheck.

As for the idea America's wealthy are "job creators", that one started with GOP strategists like Fred Luntz, who believes the only thing that matters is not what you say, but how you say it.

Job creators, you say? Bush tried to equal the economy of Bill Clinton for eight years by force-feeding tax breaks to the 10 percent who could brag of their financial assets. The Bush economy, at best, did little to advance the claim the wealthy are job creation machines, and at worst, disproved the whole idea.

At this moment, corporate America is awash for capital, but we remain in the fourth year of a recession launched by GOP-sanctioned Wall Street white collar crime, a recession marked by high unemployment. Job creators, indeed.

[vpcharan]

No one is claiming that taxing the rich is for fixing the economy. What is at the heart of the argument is FAIRNESS. Why people forget that from 2001 to 2011, the Bush tax cuts plus unpaid Medicare prescription legislation plus two unpaid wars have together contributed to the historic budget deficit and in crease in national debt. In addition we had the recession plus the bust of the housing sector that contributed to even less inflow of revenue.

[alphaa10000]

Exactly-- a clear lack of fairness is the argument the American middle class makes every day.

While Bush doubled the national debt through deficit spending and the GOP was silent, the rich got their wealth from Bush tax breaks without returning a fair share to the American community that made their wealth possible-- further advancing the national debt.

And to add insult to injury, some 67 percent of American corporations pay little or no income tax, at all, thanks to the world's most lavish system of tax breaks lobbied from a congress of, by and for the wealthy few.

Taxation is the issue that serves as a litmus test for any speaker claiming to be "non-partisan"-- the moment we hear the claim "Tax breaks for the Job Creators!", we know immediately the speaker is a paid messenger for the GOP.

[haddada-2009]

His press conference today looked so fake, the people behind him staring and some nodding. I'm thinking to myself who cares that these people agree, majority rules and this country is not rant his way, sometimes I think he thinks he is a king

[VeteranCarl]

I'm sure if you are commenting on this issue, then you already know about: http://www.usdebtclock.org/ , if not, then go to it and get scared.

The "Buffet Rule" is ok but it's like throwing a glass of water on a forest fire (as I previously alluded to).

Research Dr. Ron Paul on youtube. PLEASE!!!

[alphaa10000]

Ron Paul campaigns and votes (often) under the GOP flag.

In that manner, Paul contributes to the forest fire, although he surely understands the tax system favors the wealthy and urgently needs reform.