Obama's Tax Increase on the Middle Class. YES, Increase

[Jhhnn]

The cuts and increases aren't necessarily going to the same people though. Indeed I wouldn't be surprised if there is very little overlap between those in the middle class who get the benefits vs. get higher taxes.

Also, OP was speaking of one particular feature of the Obama plan which is a tax, so it's appropriate to describe it as a tax increase and it can and should be discussed on its own merits outside the larger tax plan.

If the proposed changes to 529 tax treatment were a stand alone proposal, discussing them in a vacuum would be appropriate. They're not. They're a very small part of a broader proposal intended to reduce overall middle class taxes.

If I give up a dollar from my right pocket to keep 2 in my left pocket, I've come out ahead, haven't I?

All the whining in this thread is just a manifestation of well-conditioned Obama hate. If any of his proposals are 99% favorable & 1% otherwise, it's that 1% that gets zeroed in on.

 

[glenn1]

An HONEST thread title would be "A part of Obama's proposed tax legislation would increase taxes for some middle-class Americans." But we already know that an HONEST discussion is not what some on ATPN are interested in.

Agreed, and if I had started the thread I would change it thusly.

That doesn't make any sense considering this tax increase wouldn't be implemented on its own. It should be discussed in the context that it would be implemented in, which is as part of a larger plan.

That's silly, lots of single features of larger plans are discussed in isolation and you've been part of those discussions. For example, Obamacare had several: "death panels," creating a penalty for those without insurance, "Public Option," ad nauseum. Would you be OK with saying "Iraq has to be discussed only as part of the larger War on Terrorism"? Of course not.

 

[fskimospy]

That's silly, lots of single features of larger plans are discussed in isolation and you've been part of those discussions. For example, Obamacare had several: "death panels," creating a penalty for those without insurance, "Public Option," ad nauseum. Would you be OK with saying "Iraq has to be discussed only as part of the larger War on Terrorism"? Of course not.

Yes, all of those topics should be discussed within the larger context they sit in. It would be like discussing the individual mandate that's part of the ACA without talking about guaranteed issue.

 

[Doc Savage Fan]

The interest rates were temporarily cut in 2008 and they returned to the previously scheduled rate in 2012, as per legislation. This is like saying Obama raised payroll taxes by cutting payroll taxes temporarily and then having them return to their normal levels.

In 2012 a new law was passed that currently has student loan APRs significantly lower than their previous 6.8% level. (I'm not the world's biggest fan of this law, but still)

I'm super shocked he left out those details, haha.

I'm not saying anything of the sort....I'm talking about the 2013 law. Obama "strongly supported" passage of the Smarter Solutions for Students Act (H.R. 1911) in 2013. Elizabeth Warren was against it and she's completely right in my opinion...“I cannot support a plan that raises interest rates in the long-term while the federal government profits off them” “This is obscene. Students should not be used to generate profits for the government.”

 

[fskimospy]

I'm not saying anything of the sort....I'm talking about the 2013 law. Obama "strongly supported" passage of the Smarter Solutions for Students Act (H.R. 1911) in 2013. Elizabeth Warren was against it and she's completely right in my opinion...“I cannot support a plan that raises interest rates in the long-term while the federal government profits off them” “This is obscene. Students should not be used to generate profits for the government.”

Well that wasn't what the person you were replying to was talking about.

I'm not the biggest fan of that legislation either, but at least since its implementation it has led to substantially lower borrowing costs for student loans.

 

[Doc Savage Fan]

Well that wasn't what the person you were replying to was talking about.

I'm not the biggest fan of that legislation either, but at least since its implementation it has led to substantially lower borrowing costs for student loans.

You've got to be joking. This is what "substantially lower borrowing costs" looks like.

In contrast...10 year Treasurys are going for 1.77% today!

 

[fskimospy]

You've got to be joking. This is what "substantially lower borrowing costs" looks like.

No, definitely not joking. I'm simply describing reality.

Before passage of the bill student loan interest rates from 2012 forward would have been 6.8%. Between passage of the bill and today have they been above or below 6.8%? If you answer below, then case closed.

The CBO projects that federal interest rates will rise in the coming years, at which point students would in fact be paying a higher APR than under the old system, although rates have a good bit further to rise before that would happen.

 

[fskimospy]

In contrast...10 year Treasurys are going for 1.77% today!

Funny you mention that. If treasuries stay at the same level until May the rates will go back down further, making the CBO's projection pretty wrong in that case.

 

[Doc Savage Fan]

No, definitely not joking. I'm simply describing reality.

Before passage of the bill student loan interest rates from 2012 forward would have been 6.8%. Between passage of the bill and today have they been above or below 6.8%? If you answer below, then case closed.

The CBO projects that federal interest rates will rise in the coming years, at which point students would in fact be paying a higher APR than under the old system, although rates have a good bit further to rise before that would happen.

Everybody agreed that the program needed to be fixed in 2013...the rub here is that the "fix" sucks big time and I'm highly disappointed that Obama strongly supported it. He doesn't give me warm fuzzies that he's really looking out for the middle class.

 

[fskimospy]

Everybody agreed that the program needed to be fixed in 2013...the rub here is that the "fix" sucks big time and I'm highly disappointed that Obama strongly supported it. He doesn't give me warm fuzzies that he's really looking out for the middle class.

That's fine, but seriously that's a totally different thing than what you were replying to.

I'm not a big fan of tying student loan rates to market rates either, but then again I'm not a big fan of student loans period.

 

[Jhhnn]

No, definitely not joking. I'm simply describing reality.

Before passage of the bill student loan interest rates from 2012 forward would have been 6.8%. Between passage of the bill and today have they been above or below 6.8%? If you answer below, then case closed.

The CBO projects that federal interest rates will rise in the coming years, at which point students would in fact be paying a higher APR than under the old system, although rates have a good bit further to rise before that would happen.

How dare you introduce facts into any discussion!

Especially when they're just getting worked up into an irrational rant.

 

[Doc Savage Fan]

How dare you introduce facts into any discussion!

Especially when they're just getting worked up into an irrational rant.

Isn't it ironic that your post is completely devoid of facts and that you've added absolutely nothing to our discussion? You aren't very bright it seems....but I guess that's pretty much par for the course for your ilk.

 

[Doc Savage Fan]

That's fine, but seriously that's a totally different thing than what you were replying to.

I'm not a big fan of tying student loan rates to market rates either, but then again I'm not a big fan of student loans period.

Not a fan of student loans...why? The costs are crazy.

 

[bshole]

That's fine, but seriously that's a totally different thing than what you were replying to.

I'm not a big fan of tying student loan rates to market rates either, but then again I'm not a big fan of student loans period.

Well I am, I would never have gotten my degrees without them.

 

[fskimospy]

Not a fan of student loans...why? The costs are crazy.

I view student loans as a bad way to finance higher education as it forces people to take out large amounts of debt at an age where people generally have poor decision making skills and they do so while being highly uncertain of their future earnings and ability to repay them.

I'd rather switch to either a publicly financed model or an income based model. (ie: the cost of going to a college is a certain percentage of your earnings for the next 20 years.)

 

[Doc Savage Fan]

I view student loans as a bad way to finance higher education as it forces people to take out large amounts of debt at an age where people generally have poor decision making skills and they do so while being highly uncertain of their future earnings and ability to repay them.

As a father of 3 college grads all with advanced degrees (doctor, economist, and nurse practitioner) and one more entering college this Fall (doctor wanna be), I hear you as far as the debt goes...but fortunately they all have good earnings potential. I boggles my mind why some choose to go into such massive debt just to have the "college experience" without any reasonable prospect of having a viable profession to pay for it after they graduate. I understand that it's not uncommon for some to still have school debt well into their 50s and 60s...wow.

I'd rather switch to either a publicly financed model or an income based model. (ie: the cost of going to a college is a certain percentage of your earnings for the next 20 years.)

Public financed model...our spending is out of control as it is and I can't see that going anywhere. Percentage of earnings for the next 20 years sounds dandy except what about those that don't earn squat? It falls back on the tax payers. I don't know the answer...but it sure looks to me like we're in desperate need of a new paradigm.

 

[fskimospy]

As a father of 3 college grads all with advanced degrees (doctor, economist, and nurse practitioner) and one more entering college this Fall (doctor wanna be), I hear you as far as the debt goes...but fortunately they all have good earnings potential. I boggles my mind why some choose to go into such massive debt just to have the "college experience" without any reasonable prospect of having a viable profession to pay for it after they graduate. I understand that it's not uncommon for some to still have school debt well into their 50s and 60s...wow.

I think this problem is actually somewhat exaggerated. The whole "art major with $200k in debt" thing is pretty rare. Still, it's a hard thing to enter adulthood with. It's also notable that student debt is uniquely hard to get rid of. It's the one financial mistake you are saddled with for life. (well, almost)

Public financed model...our spending is out of control as it is and I can't see that going anywhere.

Well our spending as a percentage of GDP is considerably lower than the OECD average, so I can't say I agree that our spending is out of control. (assuming you mean overall govt. expenditures) Not to mention this is simply taking the place of other spending that is already happening. Now, instead of the government giving money to people who then give it to colleges we just give it to colleges.

Percentage of earnings for the next 20 years sounds dandy except what about those that don't earn squat? It falls back on the tax payers. I don't know the answer...but it sure looks to me like we're in desperate need of a new paradigm.

It doesn't actually fall back on the taxpayers at all. In fact, some states and schools are already flirting with this model. It's really just an economics projection. You need say, $10k per student per year, so let's just say $40k lifetime in 2015 dollars. Taking the demographics of your graduates you need to figure out a way in which, taken together, comes out to $40k lifetime on average. Sure you're going to have plenty of people who pay less, but you'll also have plenty of people who pay more.

 

[OverVolt]

Durrrrrrr usual P&N.

 

[OverVolt]

It doesn't actually fall back on the taxpayers at all. In fact, some states and schools are already flirting with this model. It's really just an economics projection. You need say, $10k per student per year, so let's just say $40k lifetime in 2015 dollars. Taking the demographics of your graduates you need to figure out a way in which, taken together, comes out to $40k lifetime on average. Sure you're going to have plenty of people who pay less, but you'll also have plenty of people who pay more.

Yea except that system isn't in place for the majority and the student loans are backed by the taxpayers durrrrrrrrrrrrr. I mean you can type well and all, thank goodness for spell check, but literally the first thing I read I know isn't true.

This is truly pie in the sky, a new model "coming soon" while the govt. is backing $1.2T or so in student loans just makes me laugh man.

 

[fskimospy]

Yea except that system isn't in place for the majority and the student loans are backed by the taxpayers durrrrrrrrrrrrr. I mean you can type well and all, thank goodness for spell check, but literally the first thing I read I know isn't true.

This is truly pie in the sky, a new model "coming soon" while the govt. is backing $1.2T or so in student loans just makes me laugh man.

I don't think you read what I wrote very well. This is a proposed replacement for student loans, it is not a description of what currently exists. Durrr?

 

[theeedude]

GOP keeps doubling down on trickle down. Just give the super wealthy 30 more years of taking all the benefits of your productivity gains, and it will trickle down back to you.

 

[Doc Savage Fan]

I think this problem is actually somewhat exaggerated. The whole "art major with $200k in debt" thing is pretty rare. Still, it's a hard thing to enter adulthood with. It's also notable that student debt is uniquely hard to get rid of. It's the one financial mistake you are saddled with for life. (well, almost)

It's not only hard for the student entering adulthood with a lot of school debt, it's also a huge burden for their parents...especially those nearing retirement age such as myself.

Well our spending as a percentage of GDP is considerably lower than the OECD average, so I can't say I agree that our spending is out of control. (assuming you mean overall govt. expenditures) Not to mention this is simply taking the place of other spending that is already happening. Now, instead of the government giving money to people who then give it to colleges we just give it to colleges.

Considerably lower? We're currently spending 20.5 percent of GDP and the OECD average is 21.6 percent.
http://www.cbo.gov/publication/45010
http://stats.oecd.org/Index.aspx?DataSetCode=SOCX_AGG
Anyway, I'm not sure what you're talking about when you say "Now, instead of the government giving money to people who then give it to colleges we just give it to colleges."

It doesn't actually fall back on the taxpayers at all. In fact, some states and schools are already flirting with this model. It's really just an economics projection. You need say, $10k per student per year, so let's just say $40k lifetime in 2015 dollars. Taking the demographics of your graduates you need to figure out a way in which, taken together, comes out to $40k lifetime on average. Sure you're going to have plenty of people who pay less, but you'll also have plenty of people who pay more.

I'd like to see somebody try this model to see if it's really viable...I'm skeptical.

 

[fskimospy]

Your link says 19.2 vs 21.6. I consider 2.4% of GDP to be pretty large. That's about $370 billion per year of spending just to bring us up to average. I find it hard to categorize that as out of control.

Regardless I inagine we will see someone try this model sooner or later. I guess we will see how it goes!

 

[Doc Savage Fan]

Your link says 19.2 vs 21.6. I consider 2.4% of GDP to be pretty large. That's about $370 billion per year of spending just to bring us up to average. I find it hard to categorize that as out of control.

Regardless I inagine we will see someone try this model sooner or later. I guess we will see how it goes!

20.5% vs 21.6%

Federal outlays are expected to increase by 2.6 percent this year, to $3.5 trillion, or 20.5 percent of GDP—their average percentage over the past 40 years. CBO projects that under current law, outlays will grow faster than the economy during the next decade and will equal 22.4 percent of GDP in 2024.

 

[IGBT]

go ahead. raise the taxes. It will just get passed along in higher prices for all goods and services. Gawd you guys are dense.