U.S. Budget Negotiations

[farce©]

By 2029 SS Trust fund depletes to around 1 Trillion. Much of what keeps it going is the revenue derived from the trust fund which will be gone by around 2033. By that point, it would take an extra 300 B to 350B to make up the difference annually if I can remember the math correctly.

Perhaps you're are saying, fix healthcare and the general revenue can be transferred to make up the difference? If so, then that's a heck of a difference to make up.

However the fix for SS is simple. Remove the withholding cap.

 

[TangledUpInBlue06]

Tax capital gains. That's the solution in my view. We can start with baby steps: treat the use of equity as collateral as a realization event.

The Budget Lab at Yale had interesting proposals on how to accomplish this: https://budgetlab.yale.edu/research...reatment-borrowing-against-appreciated-assets

Option (1): Deemed Realization for Borrowing​

This option, based on a proposal by Liscow and Fox (2024), would treat loan proceeds as a “deemed realization” of unrealized capital gains. That is, borrowing would be treated as a realization event. After tax is paid, the basis of the affected assets would reset to fair market value, preventing double taxation if the assets are later sold.​

​

Option (2): Withholding Tax on Borrowing​

This option would apply a simple flat-rate “withholding” tax on loan proceeds, with the withheld amount creditable against future capital gains tax liability. Under the proposed 10% withholding rate, a $10 million loan would trigger an immediate $1 million tax payment regardless of the taxpayer's basis in their assets.​

​

Option (3): Annual Excise Tax on Loan Balances​

This reform, based in part on a Bipartisan Policy Center proposal, would impose a 0.5% annual tax on the outstanding balance of covered loans.1 In contrast with the prior two reform options, which would apply to net new flows of borrowing, this option would apply to the stock of debt. For example, a $10 million loan balance would incur an annual liability of $50,000.​

 

[BlueSmoke]

Tax capital gains. That's the solution in my view. We can start with baby steps: treat the use of equity as collateral as a realization event.

Treat long term gains at a taxpayers normal tax rate or raise the rate? Seem like Biden proposed 28%, which we had for three to five years from 1988 to 1990 which happened to be the tax rate for those three years. Then 1991 and 1992 started going up on the top rate but kept the Long term Capital gains rate at 28% for those two years. What happened after that period of time really showed that the game for Congress was to raise tax rates but then give it back in special breaks like capital gains.

 

[superrific]

The Budget Lab at Yale had interesting proposals on how to accomplish this: https://budgetlab.yale.edu/research...reatment-borrowing-against-appreciated-assets

Option (1): Deemed Realization for Borrowing​

This option, based on a proposal by Liscow and Fox (2024), would treat loan proceeds as a “deemed realization” of unrealized capital gains. That is, borrowing would be treated as a realization event. After tax is paid, the basis of the affected assets would reset to fair market value, preventing double taxation if the assets are later sold.​

​

Option (2): Withholding Tax on Borrowing​

This option would apply a simple flat-rate “withholding” tax on loan proceeds, with the withheld amount creditable against future capital gains tax liability. Under the proposed 10% withholding rate, a $10 million loan would trigger an immediate $1 million tax payment regardless of the taxpayer's basis in their assets.​

​

Option (3): Annual Excise Tax on Loan Balances​

This reform, based in part on a Bipartisan Policy Center proposal, would impose a 0.5% annual tax on the outstanding balance of covered loans.1 In contrast with the prior two reform options, which would apply to net new flows of borrowing, this option would apply to the stock of debt. For example, a $10 million loan balance would incur an annual liability of $50,000.​

I proposed the realization for borrowing a hell of a long time before 2024 but I guess I didn't publish it. You don't get credit for comments in workshops or job talks lol.

 

[superrific]

One thing that pisses me off -- I know I'm not the only one -- is why the billionaires are seeking tax cuts in the first place.

The point of being rich is that you no longer have to trouble yourself with such details. You don't have to make enemies just to save $20M on taxes when your net worth is 200x that. Do they also haggle over whether they got full credit for their discount rewards points at Subway?

 

[BlueSmoke]

However the fix for SS is simple. Remove the withholding cap.

It would certainly help. I guess you mean raise the 176,100 cap I think it is? If you raise it too much, especially since basically talking about executive pay and then with the employer payroll match, you'd get into all kinds of motivated workarounds like stock options and such ,

 

[BlueSmoke]

The Budget Lab at Yale had interesting proposals on how to accomplish this: https://budgetlab.yale.edu/research...reatment-borrowing-against-appreciated-assets

Option (1): Deemed Realization for Borrowing​

This option, based on a proposal by Liscow and Fox (2024), would treat loan proceeds as a “deemed realization” of unrealized capital gains. That is, borrowing would be treated as a realization event. After tax is paid, the basis of the affected assets would reset to fair market value, preventing double taxation if the assets are later sold.​

​

Option (2): Withholding Tax on Borrowing​

This option would apply a simple flat-rate “withholding” tax on loan proceeds, with the withheld amount creditable against future capital gains tax liability. Under the proposed 10% withholding rate, a $10 million loan would trigger an immediate $1 million tax payment regardless of the taxpayer's basis in their assets.​

​

Option (3): Annual Excise Tax on Loan Balances​

This reform, based in part on a Bipartisan Policy Center proposal, would impose a 0.5% annual tax on the outstanding balance of covered loans.1 In contrast with the prior two reform options, which would apply to net new flows of borrowing, this option would apply to the stock of debt. For example, a $10 million loan balance would incur an annual liability of $50,000.​

This is interesting, but over my head. Will have to study this later and get back.

 

[Calheel]

One thing that pisses me off -- I know I'm not the only one -- is why the billionaires are seeking tax cuts in the first place.

The point of being rich is that you no longer have to trouble yourself with such details. You don't have to make enemies just to save $20M on taxes when your net worth is 200x that. Do they also haggle over whether they got full credit for their discount rewards points at Subway?

I could totally see Musk getting into a shouting match at the local Subway over his discount rewards point.

 

[nycfan]

 

[p5mmr9]

By 2029 SS Trust fund depletes to around 1 Trillion. Much of what keeps it going is the revenue derived from the trust fund which will be gone by around 2033. By that point, it would take an extra 300 B to 350B to make up the difference annually if I can remember the math correctly.

Perhaps you're are saying, fix healthcare and the general revenue can be transferred to make up the difference? If so, then that's a heck of a difference to make up.

No. I'm saying the Social Security shortfall is mostly irrelevant and a distraction. As you note - Social Security is solvent for the time being. Its shortfalls in the future are easy to fix - remove the cap, reduce benefits for high earners, and raise the retirement age. Healthcare is a far more perilous problem and one that is eating away at federal, state, and individual budgets. Your post references messaging politics. I'm saying that SS is a distraction - fixing healthcare should be the message.

 

[nycfan]

 

[nycfan]

 

[Zoo_View]

I remember the interview with Dick Cheney when asked about the increased deficits ...good times

Is that mealy-mouthed wimpy interviewer a younger Jake Tapper?

 

[Zoo_View]

The elephant in the room for Democrats, is what are they going to run on in 2028 to fix the budget and fix social security to have any credibility and win?
A huge tax increase?

You actually think deficit spending and/or the debt matters to the American people?

How very Howard Baker of you.

 

[BlueSmoke]

You actually think deficit spending and/or the debt matters to the American people?

How very Howard Baker of you.

Poor Howard. Good point. I suppose its on my mind due to the rise in bond rates yesterday. Seem like the ten year was above 5%. Plus the downgrade in our credit rating. The math is not working. In four years, this issue may matter to the American people simply because how its connected to everything and how the problem is starting to compound.

 

[DiehardHeelFan]

Heather Cox Richardson

May 21, 2025

Just after 1:00 this morning, the House Rules Committee began its hearing on what congressional Republicans have officially named The One Big, Beautiful Bill.

heathercoxrichardson.substack.com

 

[nycfan]

The House is expected to vote on the mega maga tax bill this morning … GOP seems to think they have the votes …

 

[nycfan]

 

[nycfan]

 

[nycfan]

MAGA freeing Americans from the scourge of expensive silencers …