Perdue Hints at a Tax Increase?

May 14, 2014 8:37 am

by Tim Darnell · 12 comments

There are two words no candidate should ever utter in any campaign, especially one as tight as next week’s GOP Senate primary: tax increase.

But front-running David Perdue may have done just that during a meeting with The Macon Telegraph’s editorial board.

As reported by The AJC’s Jim Galloway, a Telegraph board member asked Perdue whether it would be better to get out of the economic “ditch” by cutting spending or increasing revenue.

“Both,” Perdue said.

The questioner then said, “And that’s a euphemism for some kind of tax increase, of course.”

Perdue answered:

“Well here’s the reality: If you go into a business, and I keep coming back to my background, it’s how I know how to relate is to refer back to it — I was never able to turn around a company just by cutting spending. You had to figure out a way to get revenue growing. And what I just said, there are five people in the U.S. Senate who understand what I just said. You know revenue is not something they think about.”

Perdue spokesman Derrick Dickey later said the candidate was talking about growing the economy in general.

Here’s an audio transcript of the entire meeting. The exchange is around the 49-minute mark.

{ 12 comments… read them below or add one }

South Fulton Guy May 14, 2014 at 8:49 am
analogkid May 14, 2014 at 9:45 am

Just like that old RINO Ronald Reagan, right?

Two bills passed in 1982 and 1984 together “constituted the biggest tax increase ever enacted during peacetime,” Thorndike said.

The bills didn’t raise more revenue by hiking individual income tax rates though. Instead they did it largely through making it tougher to evade taxes, and through “base broadening” — that is, reducing various federal tax breaks and closing tax loopholes.

For instance, more asset sales became taxable and tax-advantaged contributions and benefits under pension plans were further limited.

“What people forget about Ronald Reagan was that he very much converted to base broadening as a means of reducing deficits and as a means of tax reform,” said Eugene Steuerle, an Institute Fellow at the Urban Institute who had helped lay the groundwork for tax reform in 1986 and served as a deputy assistant Treasury secretary during Reagan’s second term.

More here: http://money.cnn.com/2010/09/08/news/economy/reagan_years_taxes/

DavidTC May 15, 2014 at 11:30 am

You want to know a tax I wish that politicians would get behind?

The transaction tax on stock trading.

A nearly microscopic tax every stock purchase, something like 0.1%. On a normal person, even one that invests in the stock market, it comes to nothing at all. If you buy $100 worth of stock, pay 10 cents tax. (And considering you probably just paid $5, aka 50 times that, in transaction fees to your broker, you wouldn’t would notice.) And it’s one time, of course…you just pay it when you buy the stock.

But those high frequency traders that sit there and make money faking stock transactions, and getting between normal people selling their stock and the buyers and making money that they have no right to be making, and causing all sorts of problems. The people who turned the stock market, a place where you’re supposed to be able to invest in the future of corporate American, and turned it into a giant casino and they’re the house. Well, either they’d have to stop, or, alternately, we’d make a huge amount of tax revenue from them. Either way, we win.

Think of it as a sin tax, but one aimed at the super-rich’s sinful (and actually harmful) behavior instead of the poor’s.

Of course, the super-rich would never allow it.

Doug Deal May 15, 2014 at 7:13 pm

Except for what it would do to liquidity. The reason why you can sell your stock at a reasonable price in comparison to what it cost to buy it is because there are people constantly buying and selling stock. Many of these transactions are traders that hold stock for short periods of time, others are long term investors, but the fact that there is a higher than otherwise velocity of trades means that you do not have to offer a significant discount on your stock to entice someone to buy it or pay a premium because no one is selling. Look up bid-offer spread. (Of course then you guys would complain about this.)

These things look good to the person who wants to scape goat societies problems on someone else, but they are foolish in the extreme and are always proposed by people who have no idea how things work behind the scenes or by those who want to set people against each other based on envy and class warfare.

DavidTC May 16, 2014 at 10:32 am

Uh, before there were high-frequency trading, the stock market had plenty of liquidity.

If you want to assert that liquidity would be reduced by a small amount, you are probably right…people might have to wait seconds, or maybe even two or three minutes, before their stock sale goes through instead of milliseconds. My God! What disaster have I proposed?! (I feel I must point out, that’s about a billion times more liquid than *any other investment*.)

It’s people like you that don’t actually understand how the stock market is *supposed* to work. It’s supposed to be an *investment*, and you’re supposed to make money from *the companies you have invested in doing well*.

It’s not supposed to be a damn casino where the object is to hold on to a piece of stock for a few seconds in hopes the price goes up, and it’s certainly not supposed to be a casino where super-investors get to look at your trades *before you make them* and manipulation the prices by faking massive sales and buys before yours goes through, which is exactly what’s going on now. We’d all be a lot better off if you only could exchange stock once *hourly*. (Which still would be plenty damn ‘liquid’…how long does it take to sell off any other investment?)

Doug Deal May 16, 2014 at 11:48 am

You assume everyone owns stock in Apple or some other over-hyped investment. For smaller companies, which is what I invest in, liquidity is a big deal.

The irony is that your fix would just mean more profit for those who trade because the bid-offer spread would be larger than the tax. This means more money taken from real investors and more profit for speculators.

Dumb idea.

DavidTC May 16, 2014 at 8:19 pm

You assume everyone owns stock in Apple or some other over-hyped investment. For smaller companies, which is what I invest in, liquidity is a big deal.

Uh, no. I assume that a few minutes liquidity is not actually a big deal. Which is true. It’s not.

There is no other investment on the planet that has anywhere *near* the liquidity of the stock market.

The irony is that your fix would just mean more profit for those who trade because the bid-offer spread would be larger than the tax. This means more money taken from real investors and more profit for speculators.

Uh, no. That makes no sense at all.

Firstly, while less liquidity would (obviously) increase the spread, there is no reason that the spread would be ‘larger than the tax’. That is, quite literally, an impossible rule, unless you think that stock prices changes cannot alter direction. The average spread is related to liquidity, and liquidity only, it has nothing to do with taxes, except to the extent that taxes affected liquidity.

Secondly, I have no idea why you think increasing the bid-offer spread would mean ‘more money taken from real investors and more profit for speculators’. An increased spread means more money spent in transaction costs, which means, duh, it’s going to hurt most the people who do the most trades. People who buy stock and hold onto it for a week or longer would see no real difference at all. (Or, rather, they *would* see a real difference, but that would be because the market would seriously settle down.)

The spread only matters when you’re aiming to make a tiny tiny fraction of the stock price as a profit. When you’re trying to make 2 cents profit on a $50 stock sale. Which means you are, at best, a day trader, not a real investor.

DrGonzo May 14, 2014 at 11:19 am

Of course he ‘hints’ at a tax increase. If Perdue is sent to Washington, he will be Saxby Chambliss’s ideological twin. Perdue will sell us all out if it means he can help “get something done” with the Democrats, when he should be fighting them. Then again, he’ll have to show up for the vote first, which apparently is a problem for him.

northside101 May 14, 2014 at 11:57 am

Can anyone sum up any of the candidate’s plans for balancing the budget? (Like “specifics”, not “I’ll eliminate waste, fraud and abuse” or some agency hardly anyone has heard of that accounts for less than a fraction of a fraction of the budget.) I notice Dr. Phil (Gingrey) has been promising to repeal Obamacare in his first term or go home—any of the candidates promising to balance the budget in 6 years or go home?

MattMD May 15, 2014 at 6:26 am

Can somebody tell Gringrey that he isn’t running for dictator? You cannot repeal legislation on your own.

I have a little bit of money yet you will not see me pissing and moaning about taxes.

Additionally, after that first bout with a Perdue there is no way in hell I will ever trust that family to govern again. If I want another do-nothing governor I know how to write “Joe Frank Harris”.

Harry May 15, 2014 at 7:24 am

Are you old enough to remember Joe Frank? I had the idea you were a relatively young dude.

Harry May 15, 2014 at 7:41 am

I sincerely hope Perdue is not serious about a tax increase. Taxed Enough Already.