I don't think a 3-5% tax increase would help anything. We're already spending more than we bring in. To counter that, we need huge spending cuts or huge tax increases (like 15-20% higher).
Did I say only increase taxes by 3-5%? I mentioned several changes.
If we're talking about the economy, spending cuts will only hurt it. What we need is more spending and in the right areas. The economy needs to get going in the short-term, and we need to raise more tax revenue to pay down debt in the long-term. With a healthy economy, more people will be have an income at all, and the tax revenues will go up on that basis alone. We need to increase rates to further accelerate the rate at which we pay down the debt.
401(k) and Roth IRAs are already tax deferred. I don't think placing Traditional IRAs in there would do anything.
I didn't say raise the rates on these. I said keep them the same.
39%? I think we'd see fewer people investing at all, which isn't good for the economy.
Trading derivatives isn't investing. It's gambling. Having the idle rich putting their money into hedge funds that trade derivatives and engage in short sales is what isn't good for the economy.
Plus, I don't see too much real estate flipping going on. If you hadn't noticed, housing prices have stagnated. My house has gained 2% value in the last five years; not exactly a big return for a flip.
Home flipping hurt individual home buyers during the housing bubble by artificially inflating home values.
The idea is to prevent this from happening again. I'll take my meager 2% gain on my home now over the risk of buying my next home artificially inflated by 30%.
There is nothing wrong with derivatives and short sales. What we need is better transparency on what is actually being traded. Mortgages being granted to people who couldn't afford them is what caused the housing collapse, not the derivatives they were packaged in.
The housing collapse alone did not cause the banking crisis. It's all the derivatives trading (i.e. side bets) on mortgage backed securities that caused the crisis. The total value of the credit default swaps for which the banks were obligated to pay was greater than the combined value of all the mortgages being insured by the credit default swaps. That's insanity.
Besides there being everything wrong with the very idea of credit default swaps, derivatives trading and short sales are simply gambling and pure speculation. They are not forms of investing, and they contribute little to the economy. The government offers lower tax rates on long term capital gains to encourage long term investing. Likewise, the government should impose higher taxes to discourage risky trading.
I do agree with treating capital gains as income. What difference does it make where the money came from? Income is income. If everyone paid 10% on the total income they made, I bet we'd see an increase in tax revenue.
On what evidence are you placing this bet? Besides, a flat tax is regressive and penalizes the poor.
Last year there were more people who paid no taxes than there were people who did pay.
Uh, no. If you're talking strictly "federal income taxes", that's true. However, they do pay sales, property, payroll taxes, and (maybe) state income tax. That over half of all tax payers don't pay any federal income tax isn't reflective of a problem with the tax structure. This is reflective of a problem with income imbalance. If these people actually made more money, they would be paying income tax.
The bottom 50% of taxpayers take in 13% of the adjusted gross income of all taxpayers, while the top 50% earners take in 87%. What good is taxing the bottom 50% (even at 100% tax rate) really going to do?
Don't confuse a symptom of the problem as the cause of the problem.
The system will never work if that's happening and the class divide will only widen.
Taxes don't cause a class divide. Wealth imbalance causes a class divide.
Bring the troops home (except where needed to finish cleaning up, i.e. Afghanistan) and cut the military budget in half. Use the money to pay down the national debt. Once we're debt free and have a surplus every year, then we can start talking about increasing social programs.
What would do you with all the unemployed troops? I say put them to work doing public works projects. We have thousands of bridges, levees, and dams that need fixing.