Amanda Terkel / Huffington Post & William Alden / Huffington Post & Jake Bialer / Huffington Post – 2011-04-18 23:38:39
http://capitalismisover.com/the-war-in-afghanistan-how-much-are-you-paying/
The War In Afghanistan:
How Much Are You Paying?
Amanda Terkel / Huffington Post
WASHINGTON (April 18, 2011) — As Americans breathe a sigh of relief over finally filing the returns on what they owe (or are owed from) Uncle Sam this Tax Day, the progressive group Rethink Afghanistan wants them to consider how much of their money is funding the war in Afghanistan, now in its 10th year.
The group, a project of the Brave New Foundation, has created a Cost of War calculator, allowing Americans to figure out how much of their tax dollars are going toward the war, based on their income and filing status.
For example, a single person making $40,000 in 2010 essentially paid $1,694 for the war. A married couple filing jointly and earning a combined $100,000 has $4,757 of their tax dollars going toward the effort.
The United States is spending more than $100 billion a year in Afghanistan, amounting to about $2 billion a week.
The Defense Department received $513 billion in funding in the FY 2011 continuing resolution, approximately $5 billion above last year’s level. Another $158 billion is provided for overseas contingency operations (emergency funding). The war in Afghanistan will receive $108 billion of that funding, while the war in Iraq will receive $50 billion.
Last week, a bipartisan group of lawmakers, along with groups like the Liberty Coalition and Sojourners, participated in an event hosted by Rethink Afghanistan on Capitol Hill highlighting the cost of war.
“We can’t pay our bills here, yet we’re spending $8 billion a month in Afghanistan,” Rep. Walter Jones (R-N.C.), one of the event’s panelists, recently told The New York Times. “I don’t know what our country is trying to accomplish. History says Afghanistan will never be a nation. It will be a country of tribes. We’re wearing out the troops and spending money we don’t have.”
In a CNN interview last week, Senate Majority Leader Harry Reid (D-Nev.) said he’s not “confident” that the war in Afghanistan will be successful, remarking, “[T]he American people have, and rightfully so, a very short attention span. We cannot continue to keep dumping this money…. Think of what that would do for renewable energy for this country.”
Cost Of Tax Cuts For America’s Rich
Exceeds Value Of Budget Cuts
William Alden / Huffington Post
Over two years, tax cuts for the wealthy will cost the government about $120 billion and will create or save about 290,000 jobs, according to analysis by the White House-aligned research group Center for American Progress. That’s a cost of about $400,000 per job, many of which will likely yield salaries far below that value.
NEW YORK (April 18, 2011) — Today, as Americans submit their tax returns, the wealthiest earners will each reap hundreds of thousands of dollars in tax savings.
As part of a law passed late last year, the Bush-era tax cuts for the richest Americans were extended for two years. The estimated cost to the government of that portion of the tax deal, $42 billion this fiscal year, exceeds the stated $38 billion value of the savings from the federal budget cuts lawmakers approved last week.
Those budget cuts, which will affect many services for poor Americans, add more strain to a still weak economy, leading some economists to lament that this allocation of federal resources is not the most efficient way to promote economic growth.
“I don’t think it’s a good time to be trimming federal outlays if you’re interested in the vulnerability of the economy,” said economist Gary Burtless, formerly with the Labor Department and now at the Brookings Institution. “I’m not quite sure where the theories come from that this is going to strengthen economic growth over the next 12 to 18 months. It’s going to have the reverse effect. It’s going to slow it down.”
In the wake of the worst economic downturn since the Great Depression, the economic recovery has been uneven. The financial sector, which employs some of the country’s wealthiest citizens as its executives, has seen profits rebound. Pay at top financial firms has multiplied, while wages for most Americans have stagnated.
Between January 2008 and January 2010, the private sector lost nearly 8 million jobs. Last year, payrolls began to expand, but the pace of the recovery has been slow. With companies reluctant to spend their reserve cash on hiring, the unemployment rate remains high. Last month, 8.8 percent of the workforce was unemployed, a figure that would be significantly greater if it included the millions of jobless Americans who have entirely given up looking for work.
Thanks to the tax cut extension passed last year, struggling Americans will get to keep a few thousand dollars that otherwise would have gone to the government. A family making between $50,000 and $75,000, for instance, saves just over $2,000 on average, according to the non-partisan Tax Policy Center. From a broad economic perspective, that’s money Americans can spend on themselves, theoretically boosting demand, stimulating business activity and generally helping promote a recovery.
But the extension of the tax breaks for the wealthy have proven more controversial, especially as job-creation has remained slow. Under the extension, a family that earns between $500,000 and $1 million gets an average $25,000 tax break, according to the Tax Policy Center. A household earning more than $1 million gets more than $130,000.
Over two years, tax cuts for the wealthy will cost the government about $120 billion and will create or save about 290,000 jobs, according to analysis by the White House-aligned research group Center for American Progress. That’s a cost of about $400,000 per job, many of which will likely yield salaries far below that value.
The tax extension seems especially hard for critics to swallow in light of last week’s federal budget deal, which calls for spending cuts of about $38 billion. In comparison, tax breaks for the wealthy will cost the government $42 billion during this fiscal year, according to Michael Linden, director for tax and budget policy at the Center for American Progress.
The cuts come at a period of economic weakness, when those who most rely on government services struggle to put food on the table. Last week, the International Monetary Fund cut its forecast for US economic growth — by the same degree as it cut its forecast for Japan, whose economy faces a major strain as the country attempts to rebuild after a devastating earthquake and tsunami.
But some fiscal restraint is necessary for supporting long-term economic growth, said Mark Zandi, chief economist of Moody’s Analytics. In theory, government spending cuts encourage private businesses to boost their own spending, thereby helping stimulate economic activity. A reduction of public spending might also help stem inflationary pressures and boost investor’ confidence.
While these proposed cuts represent only a small percentage of the year’s budget, they are an important first step, said Zandi, who has advised lawmakers from both parties.
“I think it’s entirely appropriate to focus on discretionary spending, and how we can reduce it going forward,” Zandi said. “My druthers would not have been to cut as deeply right now, until the economy is off and running.”
The deficit-reduction plan put forth by President Barack Obama in a speech on Wednesday includes a combination of cutting spending and ending tax breaks for the wealthy when those naturally expire. He laid out a strategy for reducing the deficit by $4 trillion over 12 years, calling for additional cuts across the board.
“If they make serious cuts over time, that’s actually going to be quite good for the economy,” said Andrew Lo, professor of finance at the MIT Sloan School of Management. “It’s bitter medicine, but we’ve got to take it.”
Top 10 Tax Breaks and
How They Help the Wealthy
Jake Bialer / Huffington Post
(April 18, 2011) — This is the time of year when we are most aware of our tax burdens. But what we may be less aware of are all the huge tax breaks built into our system. Most Americans benefit from one or more — but it’s the wealthy who benefit the most.
The government spends money through appropriations and writing checks, but it also showers individuals and companies with a astonishing array of special exemptions, credits and deductions that amount to a $1.1 trillion giveaway each year. (For comparison: the big budget fight that concluded last week cut spending by about $38 billion.)
About half of the money lost to “tax expenditures” comes from the 10 breaks listed below.
Few of the biggest breaks directly benefit corporate America. Most are widely distributed among the population and are meant to reward and encourage what is generally considered responsible behavior. Each break also represents a powerful, and in some cases broad-based, constituency.
But in stark contrast to, say, social programs, tax breaks vastly favor the rich over the middle class and the poor.
They vastly favor people who own homes (especially expensive homes), can put a lot away for their retirements, have generous health insurance plans and live in high-tax states. Even something as simple as the deduction for charitable donations favors the wealthy: Because they pay higher marginal tax rate, they get a bigger federal subsidy for each dollar they give.
Some of these terms may require a little explanation:
1. Tax-free health insurance contributions.
The tax exclusion for employer-provided health benefits is the single largest tax break — it alone will cost the government $1 trillion in foregone taxes over the next five fiscal years. This huge tax expenditure massively subsidizes the nation’s employer-based health insurance system.
It also provides an incentive to employers to overspend in health benefits (which are tax free) and pay less in salary (from which, of course, the IRS takes a bite). This tax break only helps families with at least one member employed by an employer who offers them health benefits. Others have to buy health insurance with after-tax dollars.
2. The mortgage interest deduction.
The second-largest tax break is essentially the nation’s largest housing program. By letting taxpayers who itemize deduct the interest they pay on their home mortgages, the government massively subsidizes home ownership. The more expensive the home — and the higher the homeowner’s tax bracket — the bigger that subsidy is.
3. Treatment of capital gains at death.
When you die, the government forgives your capital gains tax on appreciated assets that you pass on to your heirs. In accounting terms, this is the “step up in basis” on death. From the heirs’ perspective, it means that the “basis” going forward (the amount above which anything is considered taxable capital gains) is the value of the asset at the time they received it. So if you buy stock at $1,000 and it’s worth $10,000 when you die, your heir gets $10,000 as the basis. No one ever pays taxes on the $9,000 in appreciation. Now imagine a multi-million-dollar stock portfolio and multi-million-dollar homes — and you’re talking real money.
4. Tax-free contributions to 401(k)s.
Federal government policy encourages savings for retirement by allowing employees and employers to make tax-free contributions to retirement plans, the most common of which is the 401(k). This break is a big gift to the financial securities industry, which is where most of this money goes, and to the very wealthy.
Indeed, the bulk of benefits go to high-income households, while little goes to the lower and moderate income households. There are limits to how much can be contributed tax-free, but the amount of tax foregone through contributions to 401(k) plans, along with employer plans, when combined still make tax-deferred retirement savings the second largest tax expenditure.
5. Exclusion of net imputed rental income.
Homeowners don’t pay themselves rent. If they didn’t own their own homes, they would pay rent — and whoever received that rent would have to declare it as income and pay taxes on it. But this “imputed rental income” goes untaxed — another major subsidy to homeowners. The foregone rent is called “rental income,” and the White House Office of Management and Budget calculates the foregone tax that results from it at $50 billion a year.
6. Deductibility of state and local taxes.
The rationale behind this deduction is that taxes paid to state or local governments reduce a taxpayer’s ability to pay federal income tax. But state and local taxes essentially “pay” for services that, if purchased directly by the taxpayer, would not be deductible. The benefits of this deduction are disproportionately enjoyed by the wealthy, property owners, and residents of high-tax states. Because so many of those high-tax states are blue, this is one tax deduction that some conservative activists actually want dead.
7. Acclerated depreciation.
The tax code allows businesses to deduct the costs of investing in such things as equipment faster than the objects in question actually wear out. Seth Hanlon writes for the Center for American Progress: “Accelerated depreciation in general should be thought of as a multibillion-dollar federal spending program that subsidizes business investments. And when they single out specific industries for special benefit, depreciation rules are akin to spending ‘earmarks.'”
8. Capital gains.
Salaries, rents, royalties, interest — they’re all considered regular income by the IRS, and get taxed at marginal rates up to 35 percent. But income from the sale of capital assets held for more than a year is considered long-term capital gains, and gets taxed at a flat 15 percent rate. This is a huge windfall for the investor class — and represents a quarter of a trillion dollars in lost revenue over 5 years.
9. Deductibility of charitable contributions.
The IRS allows taxpayers to deduct charitable contributions from their taxable income. This amounts to an approximately $43 billion a year subsidy to charitable organizations — and because of progressive taxation, the deduction is more valuable to rich taxpayers than to poor ones. One scholar recently proposed doubling the deduction temporarily to stimulate job growth; but there is actually more talk about reducing or adjusting it instead.
10. Employer plans.
This refers to employment-based retirement plans other than 401(K)s. See No. 4.
Posted in accordance with Title 17, Section 107, US Code, for noncommercial, educational purposes.
