{"id":2412,"date":"2010-12-01T08:36:58","date_gmt":"2010-12-01T15:36:58","guid":{"rendered":"http:\/\/www.jasonapollovoss.local\/?p=2412"},"modified":"2018-08-17T08:52:52","modified_gmt":"2018-08-17T12:52:52","slug":"deficit-reduction-commission-report-a-rare-bit-of-d-c-honesty","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2010\/12\/01\/deficit-reduction-commission-report-a-rare-bit-of-d-c-honesty\/","title":{"rendered":"Deficit reduction commission report: a rare bit of D.C. honesty"},"content":{"rendered":"<p><span style=\"font-size: 16px;\">This morning saw the release of a very important document by the White House&#8217;s deficit reduction commission, chaired by\u00a0Republican, Alan Simpson, and Democrat, Erskine Bowles.\u00a0 Expect me to write about this earthquake of a document for many months going forward as I track the aftershocks emanating from the epicenter of this moment.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">The 59 page document entitled &#8220;The Moment of Truth&#8221; cuts through polarized partisan bunk and tells it like it is.\u00a0 Namely, regardless of who is to blame for the country&#8217;s poor, debt-burdened, balance sheet, something needs to be done and quickly.\u00a0 Duh!\u00a0 Focused squarely on how the United States collects taxes and spends money, TMOT proposes the following:<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 16px;\">The $1.1 trillion in tax breaks that pepper the tax code are to be systematically evaluated.\u00a0 These breaks\u00a0include the mortgage tax deduction &#8211; perhaps the largest tax subsidy for an industry (home builders) ever.\u00a0 But don&#8217;t worry if passed as legislation as proposed, most of you would never be affected.\u00a0 The specifics are that all taxpayers would receive a 12% nonrefundable tax credit.\u00a0 The mortgage-interest deduction would be for loans less than $500,000.\u00a0 Additionally, second home mortgages would receive no tax credit.<\/span><\/li>\n<li><span style=\"font-size: 16px;\">Capital gains and dividends would be taxed at regular income tax rates rather than at special reduced rates.<\/span><\/li>\n<li><span style=\"font-size: 16px;\">Limitations would be placed on the ability of individuals to deduct the cost of health insurance premiums on a pre-tax basis.<\/span><\/li>\n<li><span style=\"font-size: 16px;\">To offset some of these large blows to subsidies, the report proposes a reduction of tax rates under some scenarios.<\/span><\/li>\n<li><span style=\"font-size: 16px;\">The report proposes increasing the retirement age to 68 by 2050 and to 69 by 2075 to help make Social Security more solvent.\u00a0 An exemption would be created for people who are absolutely unable to work beyond age 62.\u00a0<\/span><\/li>\n<li><span style=\"font-size: 16px;\">To jump start the economy they propose a payroll tax holiday.\u00a0 <strong>NOTE:<\/strong> This was a suggestion I made on the blog nearly a year ago, well before this idea made it into the mainstream.\u00a0 You likely heard it here first.<\/span><\/li>\n<li><span style=\"font-size: 16px;\">It would cut 200,000 Federal government jobs by 2020.\u00a0 This is roughly 10% of the current workforce.\u00a0 Additionally, the government&#8217;s share of gross domestic product would be capped at 21% by 2035.<\/span><\/li>\n<li><span style=\"font-size: 16px;\">A reduction in military spending &#8211; which is overwhelmingly the single-largest contributor to the debt of the United States.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 16px;\">The goals of these proposals are:<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 16px;\">To achieve a $4 trillion reduction in the budget deficit by 2020.<\/span><\/li>\n<li><span style=\"font-size: 16px;\">Reduce\u00a0the deficit\u00a0to a\u00a0very paltry 2.3% of gross domestic product by 2015.\u00a0 This way of thinking of government debt is very intelligent.\u00a0 Think of it in personal terms.\u00a0 If only 2.3% of your income was spent on debt payments wouldn&#8217;t you be happy?\u00a0 Wouldn&#8217;t you likely be very soundly secure in your finances?\u00a0 Thought so.<\/span><\/li>\n<li><span style=\"font-size: 16px;\">Reduce total debt to 40% of GDP by 2035.\u00a0 Here, think of the U.S.&#8217;s total debt as\u00a0you would think of your home&#8217;s mortgage as a percentage of your total assets.\u00a0 In other words, this is your net worth.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 16px;\">I could address each of these points in turn, but feel that would be a waste of time because these points will be debated and re-debated many times.\u00a0 I can say that I am a proponent of all of the major points, especially a reduction in military spending.\u00a0 Currently the U.S. spends more on its military, and its wars, than all of the rest of the countries on the planet <strong>COMBINED<\/strong>.\u00a0 No, I am not kidding.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">One aspect of the proposal I am very\u00a0opposed to is the taxation of investment gains at overall income tax levels.\u00a0 The reason is that of all of the things I would want to incentivize for your average Jane and Joe American is investments.\u00a0 My suggestion would be to tax capital gains that are short-term in nature at overall income tax levels.\u00a0 I would also change short-term capital gains to a 18 month horizon from its current 12 month horizon.\u00a0 The effect would be to encourage investors to initially invest in things they felt would perform well over longer periods of time.\u00a0 This, in turn, would reduce the amount of speculation in the stock markets and lead to lower volatility.\u00a0 After 18 months, I would suggest a gradual reduction in the tax rate to 0%.\u00a0 The longer you hold, the lower the taxes.\u00a0 My idea is to get folks focused on their future wealth, and not so much on their short-term need for an adrenaline rush.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>This morning saw the release of a very important document by the White House&#8217;s deficit reduction commission, chaired by\u00a0Republican, Alan Simpson, and Democrat, Erskine Bowles.\u00a0 Expect me to write about this earthquake of a document for many months going forward as I track the aftershocks emanating from the epicenter of this moment. The 59 page [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-2412","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/2412","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=2412"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/2412\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=2412"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=2412"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=2412"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}