A Very Simple Plan To Avoid the Fiscal "Cliff"
 

The Ringleader 3-Point Plan:

1. Give Obama the tax increases for wealthy individuals spread out across 8-years (going up .9% every two years until it reaches the full 3.6%).

2. Enact meaningful spending reforms that takes effect immediately and serves as a trigger for each tax increase above.

3. Enact meaningful tax reform with small business taxes reduced across the board and a benchmark to define what qualifies as a small business. For too long Democrats AND Republicans have been too unwilling to carve out this definition.

Politically, it gives the GOP some cover (it's less than a 1% increase, requires reform, requires spending cuts) while giving Obama what he promised. And fiscally it could actually bring capital to the market from those who are actually employing people and not hiding behind the 'S' Corp designation. It wouldn't be perfect and some people would try to skirt it, but it would work for most, benefit business growth and provide encourage capital investment, and actually force some real change to entitlements and spending.

Thoughts on how to make it better?

Subchapter S includes a definition of small business. Less than 100 people (family members are included as one), and some other things.

I'll take the "fiscal cliff" with the automatic across the board spending cuts and tax increases.

Tax increases...on everyone. If everyone has to pay—>true reform.

It only cuts military to 2006 levels which by the sound of the politicians is draconian?

This "fiscal cliff" mantra is all about save the govt and the bureaucrats. I say FREE the people from both of 'em!

Time to start is NOW!

Right, but if you're increasing rates on individuals you have to put some type of minimum employee threshold or create an individual business definition. Otherwise everyone will just incorporate to protect their individual rates.

I don't agree with tax increases at all, but if you're going to do it you have to do it in a way that protects real business and targets just the personal income taxes.

Well, the fact is that even these "grand bargains" don't do anything meaningful. Cutting $4 trillion from a budget due to bloat by another $10 trillion doesn't do much to really solve the problem. The spending reforms have to go farther because the tax increases could never fill the void.

I don't expect either the spending cuts or taxes to handle it completely...just reduce it. I just think if everyone across the board suffers we'll never get any significant change. Afterall, if the voters keep electing politicians that create the problem, then they need to feel the consequences.

Okay, I'm a little confused by what you're arguing. Most small businesses are sole proprietorships or partnerships, and partnership taxes pass through to the partners, who are then taxed as individuals.

how about we just get rid of the income tax?

Sounds pretty reasonable to me. Both sides get some of the things that they want, but both sides also will get things that they will bitch about. Usually, when both sides are not entirely happy with a deal, it is a good compromise.

Plus, I like the fact that the tax increases are tied to the spending cuts. If the spending cuts fail to happen, then so do the tax increases. It keeps everyone honest.

Hmmm, what about funding Obamacare? Especially those exchanges that some states refuse to set up and the Medicaid expansion. I'd trade tax increases on all, small, to dump the whole expensive and bloated program.

Since the main spending problem by far is on Medicare and Social Security, structural reforms to these programs are a pretty effective way of reducing long run spending and dont rely on budgetary gimmicks like caps. They also tend to work out, for instance the Reagan increase in the SS eligibility age has slowly but surely taken effect with little complaint. The discretionary component of our budget has been fairly stable over the past decades, as well.

Correct, but there has to be a way to segregate the tax rate for business from that of personal income or the Dems won't reduce the rates (which is needed to get them to go with something other than an across-the-board increase) and the GOP won't go along with the income tax increase if it impacts business.

I'd be ok with it if the incremental tax increases were across the board over 8 years instead of just on one class.

Ring "3 point" is out of style :doh!: it has to be a 5 or more point plan nowadays :shake: ;)