And replace it with a revenue neutral sales tax?

The story…

“The bottom line is that for too long, Louisiana’s workers and small businesses have suffered from having a state tax structure that is too complex and that holds back economic prosperity,” Jindal said in a statement released by his office. “It’s time to change that so people can keep more of their own money and foster an environment where businesses want to invest and create good-paying jobs.”

Jindal said the plan would be revenue-neutral and that the goal would be to keep sales taxes “as low and flat as possible.”

But…

The governor’s office has not yet confirmed or denied an article in The Monroe News-Star that reports eliminating the state income tax could require increasing the state sales tax from 4 percent to 7 percent.

As most of you know, this is hugely regressive for lower income folks who pay very little income tax in the first place and live from paycheck to paycheck. The sales tax goes up on all the essentials they buy. It’s merely tax replacement. Because guess what the tax rates are in Louisiana for individuals? 2% for income up to $12,500 for individuals and up to $25K for couples. 4% for income up to $50K for individuals and $100K for couples. And over $50K for individuals and over $100K for couples…it’s 6%. You don’t need to be a numbers expert to see which income brackets are getting their income taxes cut in half and which will see theirs raised.

Listen, I get that Republicans think that people will spend more if they have more in their pockets. And they will. But only if they’re closer to the bottom. Those who benefit from it the most (the wealthy) do not spending it to drive the economy. Sure, they spend some, but they are much more likely to either invest (which may or may not help the overall economy…I’ll get to that soon) or they save. That’s great for them, but when our economy relies pretty much solely on consumer spending…you can see how tax cuts like these do not help stimulate job growth.

Let’s look at this in a different way. What do wealthy people do with tax cuts? Invest. A lot. So they become shareholders. Partial owners of a company, so to speak. What do they expect that company to do for them? Make them money. How do companies make money? By maximizing profits. How do you maximize profits? By running an efficient business. How do you run an efficient business? By producing the most amount of revenue with the least amount of overhead. What is always the most expensive overhead? Employees.

See how investment doesn’t necessarily provide a clear line to jobs?

And remember, private companies are holding the biggest amount of cash reserves they have EVER had. They’re not spending. They claim that it’s because of economic uncertainty, but if you’ve ever worked in a corporate environment…waiting is not rewarded. Never. Ever. The corporate culture demands plans, action, now! These companies are keeping that money because they don’t need to spend it, not because they don’t want to spend it. At the same time, they’re squeezing every last hour out of their smaller workforces because all of that economic uncertainty makes it harder for workers to ask for better pay for the extra work they’re doing, thus benefitting all of those companies bottom lines even more. And once companies start hiring again…that’s a signal to workers to demand more pay. So it doesn’t benefit any of these companies to hire unless they absolutely need to.

What this all boils down to is that what Jindal is saying makes a decent sound bite…but does it make economic sense? On paper, no. It doesn’t. At least it doesn’t appear to make sense. And it’s not like Louisana’s poorest is in any great shape to begin with. And I personally care much more about them than those near the top. Because those near the top will always do well. They’ll find a way, tax cuts or not, to try and make as much money as is humanly possible. Our focus should be helping those who don’t have those skills to find a way up out of their situations. And raising their taxes isn’t going to do that.

Your thoughts?

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Looks like Obama doesn’t want to go over the cliff after all.

Here’s more from NBC News…

So, the heads of the Senate went to work…

After weeks of fruitless negotiations between the president and Speaker John A. Boehner, Mr. Obama turned to Senator Harry Reid, the majority leader, and Senator Mitch McConnell of Kentucky, the Republican leader — two men who have been fighting for dominance of the Senate for years — to find a solution. The speaker, once seen as the linchpin for any agreement, essentially ceded final control to the Senate and said the House would act on whatever the Senate could produce.

“The hour for immediate action is here. It is now,” Mr. Obama said in the White House briefing room after an hourlong meeting with the two Senate leaders, Mr. Boehner and Representative Nancy Pelosi, the House Democratic leader. He added, “The American people are not going to have any patience for a politically self-inflicted wound to our economy, not right now.”

But what are they not addressing?

Despite the new optimism, it was clear that any deal in the next three days would only alleviate the worst aspects of the “fiscal cliff” while leaving big decisions on taxes and spending to the next showdown, most likely by February when Congress must raise the government’s debt limit. A Republican aide briefed on the meeting said the speaker told the other negotiators that House Republicans would not turn off $100 billion in automatic military and domestic spending cuts in 2013 without equivalent cuts elsewhere. Also likely to be left out of a deal is any agreement to raise the debt limit.

Those three things could really grind this fledging recovery to a halt if they don’t get figured out…especially raising the debt ceiling. But just remember who brought all of this on our heads. We could easily raise the debt ceiling, but Tea Party House members refuse to do it. And if we default…wow. Bad news.

More as it develops…

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If Boehner can’t get House Repubs to play ball on a bill that Obama didn’t even agree to…what can we expect for something that’s worse in their eyes?

Answer: nothing.

Hopes of a grand-bargain — to shave trillions of dollars off the deficit by cutting entitlement programs and raising revenue — are shattered. House Republicans already failed to pass their “Plan B” proposal. And now aides and senators say the White House’s smaller, fall-back plan floated last week is a non-starter among Republicans in Senate — much less the House.

On top of that, the Treasury Department announced Wednesday that the nation would hit the debt limit on Dec. 31, and would then have to take “extraordinary measures” to avoid exhausting the government’s borrowing limit in the New Year.

So how is this going to get done? I see a couple different scenarios.

First, Republicans realize they’re giving Obama a huge political win and pass a stop gap measure to make sure unemployment insurance and tax cuts for those making under $250K don’t expire, while not cutting military spending, etc. Then they can do additional deals down the road.

Second, we wait until after the first of the year…and a new deal is cut. This also gives Obama a political win because now these are the “Obama tax cuts” and the word “Bush” is wiped away.

But the big looming question in all of this is the debt ceiling. Republicans are going to fight tooth and nail to not raise it…and that’s the truly catastrophic situation we’re facing.

More as it develops…

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So much for moral hazard…

9:39AM EST December 11. 2012 – WASHINGTON (AP) — The U.S. Treasury Department said Tuesday that it has sold all its remaining shares of American International Group (AIG), moving to wrap up the government’s biggest bailout of the 2008 financial crisis.

Treasury said it received $32.50 per share for its 234.2 million remaining shares, which represented a 16% ownership stake in the giant insurance company.

And let’s remember how much of AIG we owned…

Treasury conducted six public offerings of AIG stock the past 19 months, selling a total of 1.66 billion shares of the company. At the start of the sales, Treasury had owned 92% of AIG’s outstanding common stock.

Listen, nobody liked it, and AIG was at the heart of why we were plunged into The Great Recession.

But four years later we’re in a much stronger position. And let’s remember that the bailout happened under George W. Bush’s watch. Hardly somebody who believed in bailouts.

The moral of this story: extraordinary times sometimes call for extraordinary measures. This was one of them. And we did the exact opposite of losing our ass. And it only took 4 years.

Basically, it would have been catastrophically irresponsible to let AIG fail and just wait to see what would happen to the companies it was insuring against massive losses.

Last, but certainly not least…

With the AIG stock sales, the government has gotten back $380 billion, or more than 90% of the $418 billion it disbursed through TARP.

More as it develops…

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Before we get into the details…Buffett points out the single biggest logic flaw of all the arguments from those who oppose higher taxes for the wealthiest. And it’s stupid simple.

Here we go…

Suppose that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.”

Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.” Only in Grover Norquist’s imagination does such a response exist.

In other words…people want to make money. And whether their profits get taxed at 15% or 25%…they’ll still want to keep making money. Duh.

This also goes back to my firm belief that a lot of Americans DO NOT understand how our progressive taxation system works. Granted, this is based on non-scientific evidence, but I bet you that if you asked 20 people how we were taxed, at least 5 would say that when you earn over a certain amount of money…it’s ALL taxed at that rate, not just the amount that goes above that threshold. I was shocked at how many of my friends and colleagues didn’t understand something this basic, but they didn’t. And that’s what the Norquists of the world have been preying upon.

Anyway, back to Buffet’s proposal…

The Forbes 400, the wealthiest individuals in America, hit a new group record for wealth this year: $1.7 trillion. That’s more than five times the $300 billion total in 1992. In recent years, my gang has been leaving the middle class in the dust.

A huge tail wind from tax cuts has pushed us along. In 1992, the tax paid by the 400 highest incomes in the United States (a different universe from the Forbes list) averaged 26.4 percent of adjusted gross income. In 2009, the most recent year reported, the rate was 19.9 percent. It’s nice to have friends in high places.

The group’s average income in 2009 was $202 million — which works out to a “wage” of $97,000 per hour, based on a 40-hour workweek. (I’m assuming they’re paid during lunch hours.) Yet more than a quarter of these ultrawealthy paid less than 15 percent of their take in combined federal income and payroll taxes. Half of this crew paid less than 20 percent. And — brace yourself — a few actually paid nothing.

This outrage points to the necessity for more than a simple revision in upper-end tax rates, though that’s the place to start. I support President Obama’s proposal to eliminate the Bush tax cuts for high-income taxpayers. However, I prefer a cutoff point somewhat above $250,000 — maybe $500,000 or so.

Additionally, we need Congress, right now, to enact a minimum tax on high incomes. I would suggest 30 percent of taxable income between $1 million and $10 million, and 35 percent on amounts above that. A plain and simple rule like that will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultrarich paying rates well below those incurred by people with income just a tiny fraction of ours. Only a minimum tax on very high incomes will prevent the stated tax rate from being eviscerated by these warriors for the wealthy.

It is simple enough in theory, but does anybody think it’ll fly with Congress? Seriously doubt it. Especially when the House is still under GOP control.

Still, there have been signs that Republicans are willing to work on this and ignore the Norquist pledge. But they’ve said that income tax rates can’t be touched. Revenue must come from other sources. Is that a sign that they’ll agree to up the payroll tax and hike the capital gains tax?

At this point, I’m not really sure what we’re going to be seeing with regards to a grand bargain, but I like Buffet’s plan.

What do you think?

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Well, it didn’t take long for Mitt to put his foot in his mouth yet again and make him seem completely out of step with where the rest of the country is.

First, let’s listen to what he said…

I like how when Obama gives people money…they’re gifts. When Mitt gives people money…it’s sound economic policy.

I believe Governor Bobby Jindal was the first Republican to come out and say these comments were not smart. Here’s that interview…

Next, former RNC chairman Michael Steele calls the comments stupid…

Last, Senator Kelly Ayotte has a softer rebuke…

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