Obama budget 'targets middle class'

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http://www.bizpacreview.com/2013/04/14/ ... lass-61578

Obama’s budget boldly targets the middle class
April 14, 2013 by Cheryl Carpenter Klimek Leave a Comment
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President Obama has said in more than one speech, “If you make under $250,000 you will not see your taxes increase by a single dime.” But as Neil Cavuto said on Fox’s Cavuto on Business Saturday, “That was then.”

The president’s new budget includes tax increases totaling $1.1 trillion dollars, including higher cigarette taxes, higher fees for aviation security, and new energy taxes which will hit the gas pumps. In addition, bank and insurance company fees are getting a big hike, which will probably be passed on to the consumer, according to Cavuto.

“It just hit me, the president said, ‘not by a single dime’,” guest Charles Payne of WStreet.com said. “He was telling the truth, that’s a lot of dimes. How many dimes are in a trillion?”

Dagan McDowell of Fox Business Network said she found the cap on the amount that can be saved in a tax-deferred retirement account to be most troubling. She said the $3 million cap was set “because they know what we should be able to live on.”

“I think this is just a preview of coming attractions,” Cavuto told the panel.

At $3.77 trillion, the Obama budget is the costliest ever for a single fiscal year, increasing the 2014 deficit by $128 billion over the Congressional Budget Office baseline.

See the discussion on the budget and ramifications for middle class taxpayers from Fox News here.

This article seems a bit confused on what it's talking about. On the one hand it's complaining about a trillion dollar tax increase, but on the other it seems to be complaining about the high deficit.

[Knife]

It's the corner they've painted themselves into. On the one hand, they have to hate everything he does, they hate tax increases, but on the other hand, are on a huge deficit kick right now, but know they can't talk too much about cutting things people like.

[Broomstick]

Taxes on things everyone pays for - gasoline, airline tickets, etc. - are not specifically targeting the middle class. Taxes on something like cigarettes, which are an optional luxury, are not "targeting the middle class".

[Stark]

Person who commits to not raising income tax raises indirect taxes. Who could have predicted?!?!?!?!?

And man the 3M thing is gold. Encouraging little people to prepare for retirement is bad if it doesn't allow rich people to avoid tax!

[Tanasinn]

Taxes on things everyone pays for - gasoline, airline tickets, etc. - are not specifically targeting the middle class. Taxes on something like cigarettes, which are an optional luxury, are not "targeting the middle class".

They are, however, taxes that disproportionately affect the less wealthy. Someone making 250k+ a year doesn't give a flying fuck about gas prices or how much the TSA makes grabbing your balls, they can afford it. You and I, though?

I don't give a shit about cig taxes, though, honestly.

[Grumman]

The president’s new budget includes tax increases totaling $1.1 trillion dollars, including higher cigarette taxes, higher fees for aviation security, and new energy taxes which will hit the gas pumps.

Oh yay, people get to pay more for the clowns at the TSA.

[Mr Bean]

I don't give a shit about cig taxes, though, honestly.

You should, on top of existing taxes it's going to grow the black market for cigarettes from states with lesser taxes. If the tax is not so much then there's no profit in it. But at an extra .92 on top of the existing tax means it's quite possible to set up a operation buying cigarettes in West Virgina and selling them across state lines to New Jersey, New York and DC. As in these cigarettes cost 3.00$ a pack there and 6.75$ a pack there meaning it's quite profitable to buy a bus load of cartoons and resell them them a hundred miles away. There are states where it's so bad (New York and Rode Island are the two poster children of this) that there are entire semi-legal operations set up with 20-40 smokers pooling money to send one guy to Virgina to buy 2000$ worth of smokes then travel back. If you push an excise tax to high you promote smuggling which is a bad thing for society to have since one you start smuggling one thing... to make more money you will start smuggling other things perhaps a lot more dangerous than smokes.

There's a fine line you have to walk with these type of taxes and frankly I think we are already over that line as it is making the .92 cent taxes another step to far.
For the record any excise tax more than a 100% increase on the price of the product is pretty much sure to generate some sort of black market in it.

[Guardsman Bass]

The cigarette tax applies across the board, so it's not as easily as smuggling cigarettes from one state to another. You'd need to move them across the borders, and the process margins for them aren't that high.

Moreover, higher taxes on cigarettes seem to deter smoking in younger and poorer populations of people (wealthy and 25-44 smokers not so much).

[Mr Bean]

The cigarette tax applies across the board, so it's not as easily as smuggling cigarettes from one state to another. You'd need to move them across the borders, and the process margins for them aren't that high.

Moreover, higher taxes on cigarettes seem to deter smoking in younger and poorer populations of people (wealthy and 25-44 smokers not so much).

To high a federal tax generates tax free cigarettes (IE home made) since raw tobacco does not have the same taxes that already made cigarettes do. More over the difference between New York (4.35) and Virgina (.30) means a potential four dollar profit margin. In the economics of it tends to be a two dollar per pack profit to the cross state seller meaning there is money to be made. Not millions but tens of thousands is not bad for a few weeks a year.

[bilateralrope]

The cigarette tax applies across the board, so it's not as easily as smuggling cigarettes from one state to another. You'd need to move them across the borders, and the process margins for them aren't that high.

Moreover, higher taxes on cigarettes seem to deter smoking in younger and poorer populations of people (wealthy and 25-44 smokers not so much).

To high a federal tax generates tax free cigarettes (IE home made) since raw tobacco does not have the same taxes that already made cigarettes do. More over the difference between New York (4.35) and Virgina (.30) means a potential four dollar profit margin. In the economics of it tends to be a two dollar per pack profit to the cross state seller meaning there is money to be made. Not millions but tens of thousands is not bad for a few weeks a year.

It sounds like the problem isn't the tax itself. It's that the tax is inconsistent.

[Mr Bean]

It sounds like the problem isn't the tax itself. It's that the tax is inconsistent.

One is a state to state tax, the other is a federal tax. The federal tax of about a dollar is not yet enough to really create illegal distributors of cigarettes. There is a good deal of profit in dodging state taxes but not yet federal taxes. This tax increase of .92 is enough to possibly create such a market for dodging federal as well as state taxes.

The point I'm trying to get across is right now there is a decent sized market in dodging state taxes but as yet there is little market for dodging federal taxes because it's not yet broke the 100% mark

[xt828]

I can't say that I think that the suggestion that a tax increase could lead to people breaking the law is a good reason to not pass the tax increase.

[Mr Bean]

I can't say that I think that the suggestion that a tax increase could lead to people breaking the law is a good reason to not pass the tax increase.

I can because a tax increase that results in an increase in the crime rate and a reduction in tax revenue is an obviously bad idea. If at the end of the day you pass a tax increase that not only collects less tax (Because people start actively trying to dodge it) and your paying for more prisoners (For putting smugglers and home producers in jail) you've fail.

Because crazy me I think the idea of taxes increases is to raise revenue. Yes you can add a tax revenue that ends up discouraging behavior you don't like (Example a tax on any vehicle with under X MPG to promote fuel efficiency) as a happy benefit. However if the main reason your raising taxes on something is to discourage behavior I'd ask you to consider carefully the alternatives.

[Hillary]

Because crazy me I think the idea of taxes increases is to raise revenue. Yes you can add a tax revenue that ends up discouraging behavior you don't like (Example a tax on any vehicle with under X MPG to promote fuel efficiency) as a happy benefit. However if the main reason your raising taxes on something is to discourage behavior I'd ask you to consider carefully the alternatives.

The alternative being what? Prohibition? That would really cut crime...

Taxes have been used to encourage/discourage behaviour for many years and, as Guardsman Bass pointed out, this is actually rather effective. Can you give a reason why this is a bad approach other than "because I have a very fixed idea".

[aieeegrunt]

To high a federal tax generates tax free cigarettes (IE home made) since raw tobacco does not have the same taxes that already made cigarettes do. More over the difference between New York (4.35) and Virgina (.30) means a potential four dollar profit margin. In the economics of it tends to be a two dollar per pack profit to the cross state seller meaning there is money to be made. Not millions but tens of thousands is not bad for a few weeks a year.

Tobacco is also extremely easy to grow and process. The basic infrastructure amounts to what you'd need to grow houseplants, some plastic bags, and a clothesline. The quality you get is usually much better than what you get in a store to boot.

[LaCroix]

Tobacco is also extremely easy to grow and process. The basic infrastructure amounts to what you'd need to grow houseplants, some plastic bags, and a clothesline. The quality you get is usually much better than what you get in a store to boot.

You got any idea of how much tobacco a smoker uses? A single plant will not yield more than 3-4 ounces of tobacco, probably less, which might get you 50-100 smokes. At two packs a day, that will get you less than a week from a year's harvest. Better quality? Maybe. But apart from occasionally sampling, home-grown tobacco will never be a viable competition to buying.

Also, smuggling is a state problem due to their own diverging taxes/costs. The federal tax applies everywhere, so no matter where people buy their stuff, and no matter where they haul it to after they did, the feds get their share (Maybe even twice if they re-sell it "officially" in another state).

[Mr Bean]

The alternative being what? Prohibition? That would really cut crime...

No the alternative is not to raise the tax as far. You want to kick the tax up another .30 cents? That should work as the profit won't quite be there yet to encourage large scale avoidance.

Taxes have been used to encourage/discourage behaviour for many years and, as Guardsman Bass pointed out, this is actually rather effective. Can you give a reason why this is a bad approach other than "because I have a very fixed idea".

Have you missed the fact that taxes are already in place on cigarettes? This is not a new idea, there has already been a dollar a pack tax on smokes for years now. This new tax by Obama doubles that. If he wanted to kick it up slowly over ten years by ten cents a year maybe, or just push increase it by .02 cents to around .40 cents per pack again the market should simply bear that without an increase in avoidance of the tax.

Because what I'm arguing is that this is a tax to much to fast while the reverse side seems to be saying "Any tax at any time" if .92 cents is good to cut down usage why not 9.20$? Unless you concede the point that at some point raising a excise tax to high starts generating large scale smuggling and illegal distribution all we are really talking about at this point is where that tipping point occurs.

[Hillary]

The alternative being what? Prohibition? That would really cut crime...

No the alternative is not to raise the tax as far. You want to kick the tax up another .30 cents? That should work as the profit won't quite be there yet to encourage large scale avoidance.

Taxes have been used to encourage/discourage behaviour for many years and, as Guardsman Bass pointed out, this is actually rather effective. Can you give a reason why this is a bad approach other than "because I have a very fixed idea".

Have you missed the fact that taxes are already in place on cigarettes? This is not a new idea, there has already been a dollar a pack tax on smokes for years now. This new tax by Obama doubles that. If he wanted to kick it up slowly over ten years by ten cents a year maybe, or just push increase it by .02 cents to around .40 cents per pack again the market should simply bear that without an increase in avoidance of the tax.

Because what I'm arguing is that this is a tax to much to fast while the reverse side seems to be saying "Any tax at any time" if .92 cents is good to cut down usage why not 9.20$? Unless you concede the point that at some point raising a excise tax to high starts generating large scale smuggling and illegal distribution all we are really talking about at this point is where that tipping point occurs.

I hope you didn't put your back out shifting those goalposts like that. You argued that taxes should NEVER be used primarily to affect behaviour - I disputed that and Guardsman Bass posted evidence as to their effectiveness as a behaviour change tool. Your response - that it may be too much too quickly - is a completely separate argument.

Of course there is a point at which raising taxes starts to become counter-productive, but I was not disputing this.

[Mr Bean]

Hillary please point to the shifting of goalposts since I have mentioned in almost every post the existing taxes on cigarettes.

[Broomstick]

Taxes on things everyone pays for - gasoline, airline tickets, etc. - are not specifically targeting the middle class. Taxes on something like cigarettes, which are an optional luxury, are not "targeting the middle class".

They are, however, taxes that disproportionately affect the less wealthy. Someone making 250k+ a year doesn't give a flying fuck about gas prices or how much the TSA makes grabbing your balls, they can afford it. You and I, though?

The implication behind the headline and article is that these taxes are somehow targeting the middle class. They aren't. It's like saying raising food prices is "targeting the less wealthy". It's not. It applies to everyone equally. Yes, the wealthy aren't as bothered by it, they aren't as bothered by the cost of anything, that's one of the benefits of being rich. On the flip side, the rich tend to buy more shit (because they can afford to do so) so any tax on purchases might wind up with them paying more in absolute dollars.

Bottom line is that these increases, applied to everyone, are NOT "targeting" anyone. To that extent the article and headline are false.

[Irbis]

You got any idea of how much tobacco a smoker uses? A single plant will not yield more than 3-4 ounces of tobacco, probably less, which might get you 50-100 smokes. At two packs a day, that will get you less than a week from a year's harvest. Better quality? Maybe. But apart from occasionally sampling, home-grown tobacco will never be a viable competition to buying.

Two packs a day?

That's like, equivalent to heavy alcoholism at that point, not the standard benchmark. Even a pack a day is already heavily overdoing it, at least in my experience. And if you get to that stage, you might as well be buying 250 cigarette shells "fill it yourself" bags, so alternative still does exist.

The implication behind the headline and article is that these taxes are somehow targeting the middle class. They aren't. It's like saying raising food prices is "targeting the less wealthy". It's not. It applies to everyone equally. Yes, the wealthy aren't as bothered by it, they aren't as bothered by the cost of anything, that's one of the benefits of being rich. On the flip side, the rich tend to buy more shit (because they can afford to do so) so any tax on purchases might wind up with them paying more in absolute dollars.

Bottom line is that these increases, applied to everyone, are NOT "targeting" anyone. To that extent the article and headline are false.

Going by that line of thinking, nothing but heavily regressive tax targets the poor. Absolute dollars mean jack shit (as they can be easily used to justify even such dumb ideas as flat tax), what you need to do is to look how much relatively each social group tends to pay given average habits. Rich buy more shit? Um, no - there is hard limit how much human being can consume, they might buy more expensive shit but not more of it, and in certain cases much less, seeing good quality goods often last longer.

True, it might not 'target' the middle class like right-wing idiot in OP suggests, but justification above isn't much better.

[Tanasinn]

The implication behind the headline and article is that these taxes are somehow targeting the middle class. They aren't. It's like saying raising food prices is "targeting the less wealthy". It's not. It applies to everyone equally. Yes, the wealthy aren't as bothered by it, they aren't as bothered by the cost of anything, that's one of the benefits of being rich. On the flip side, the rich tend to buy more shit (because they can afford to do so) so any tax on purchases might wind up with them paying more in absolute dollars.

Bottom line is that these increases, applied to everyone, are NOT "targeting" anyone. To that extent the article and headline are false.

It's not unfair to point out, however, that taxes like this lay an unfair burden on the less wealthy. I imagine this is by design. Politicians get to say "it's fair!", the rich don't whinge about being the poor oppressed job makers, and the tax increases are relatively invisible to the common consumer so that they don't know who to blame unless they hear about about de facto increases on their taxes in this manner.

[Broomstick]

I disagree - you don't need malice and intent to result in adverse effects on a particular group. All it takes is thoughtless indifference.

[Vendetta]

That's like, equivalent to heavy alcoholism at that point, not the standard benchmark. Even a pack a day is already heavily overdoing it, at least in my experience. And if you get to that stage, you might as well be buying 250 cigarette shells "fill it yourself" bags, so alternative still does exist.

Most of the smokers I know will go through 5-7 a day, before and after work, lunch and break times? Out for a cig. So even for an actual average smoker home growing isn't really going to be viable, if it gets you three weeks worth of smoke at best.

[PainRack]

http://www.gallup.com/poll/157466/smoke ... -ever.aspx

So, based on survey data, 30% of Americans smoke one pack of cigs a day and more than 60% smoke less than one pack a day.


As for cigarette smuggling and etc...... shouldn't the answer to that be it depends? Singapore has one of the world heftiest smoking taxes in the world. It also enjoys a very high tax revenue from sin taxes. This even when cigarette smuggling is a prevalent problem, and not just smuggling, people popping across the border to buy cigs.