Entries in Federal Budget (6)


What Would France’s 75% Tax Rate Look Like in US?

iStockphoto/Thinkstock(NEW YORK) -- The French government’s budget presented Friday, which is imposing a 75 percent tax rate for income exceeding 1 million euros ($1.39 million), is expected to inspire a number of wealthy French to move their residency to other countries. The 75 percent rate seems shockingly high, but if it were instituted in the U.S. it would still not be enough to even balance the budget.

How much money would a 75 percent tax rate for people with incomes over $1 million earn in the U.S.?

It’s tough to say, says William McBride, chief economist of the conservative think-tank, The Tax Foundation.  In the “rosiest” scenario of a higher tax-rate, millionaires would continue working, not renounce their citizenship nor find tax shelters, he said.

In France, one’s tax status is mostly based on residency, as opposed to the U.S., which requires all U.S. citizens regardless of residency to file with the Internal Revenue Service.

If the U.S. were to tax 75 percent of millionaires’ entire incomes, not just their income over $1 million, that would yield around $532 billion in tax revenue, he said.

McBride points out that such a tax rate here would make only a 48 percent dent in the nation’s deficit, which is expected to reach $1.1 trillion this year, the Congressional Budget Office said in August.  And that still would not pay down by one dime the $16 trillion plus national debt.

Again, that is in the “rosiest” situation. In France, the 75 percent tax rate is levied on millionaires' incomes only over €1 million and will last only for two years.

“It’s not as if it comes at no cost. The cost is a huge waste of resources in the form of tax planning, investors leaving the country, or investors who stay will stop investing,” McBride said. “There would be a loss in investment over time due to lower productivity, lower wages for everyone. It would cause massive harm to the economy with little or no gain in revenue.”

The top marginal tax rate in the U.S. has ranged from a high of 94 percent during World War II to 91 percent from 1950 to 1963 then gradually falling to the current rate of 35 percent.

Copyright 2012 ABC News Radio


As 'Fiscal Cliff' Looms, Obama to Sign Bill Detailing Budget Cuts

Ingram Publishing/Thinkstock(WASHINGTON) -- Layoff notices could begin going out this fall, warning many of those who work for and with the federal government that they'll lose their jobs if previously agreed upon spending cuts take effect.

Unless a deal to avoid the so-called "sequester" is reached, taxes will go up on everyone and the nation will go over the so-called "fiscal cliff."

A bill passed by both houses of Congress would require the administration to detail the drastic government cuts that would kick in Jan. 2.  White House spokesman Jay Carney says President Obama will sign that bill, saying there won't be a way out of the sequester unless Republicans agree to the president's tax proposals.

"Congressional republicans are trying to get out of what they agreed to because they’d rather protect tax cuts for some of the wealthiest Americans than make tough choices needed to reduce the deficit," Carney said Thursday.

Republicans contend tax increases would kill hundreds of thousands of jobs.

Copyright 2012 ABC News Radio


Aquarius, World's Only Undersea Lab, Endangered by Budget

National Oceanic and Atmospheric Administration(NEW YORK) -- Sixty feet down in the waters off Key Largo, Fla., the water around the National Oceanic and Atmospheric Administration's Aquarius laboratory is clear, warm and blue.  Marine scientists -- aquanauts -- have been coming to live in this underwater habitat since 1993.

But the future of Aquarius is, at the moment, dark and clouded.  The lab, the only one of its kind in the world, has fallen victim to budget cuts from Washington. NOAA was under orders to tighten up, and the $3 million annual budget for Aquarius was eliminated.

"There were signals that the budget was tight, but we didn't think it would be zeroed out," said Thomas Potts, Aquarius' director at the University of North Carolina at Wilmington, which has operated the lab for NOAA.  "By the end of July we will have lost two permanent and three temporary staff members and will no longer be mission-ready."

"Mission-ready," as Potts put it, means keeping the lab in condition to be a safe habitat for up to six visitors at a time.  The lab, a 48-foot-long cylinder, made it possible for ocean scientists to study coral reefs or other ocean life, typically on 10-day "missions."

The lab has basic amenities -- bunk beds, laptops and a mini-kitchen -- but its greatest advantage is that scientists do not have to dive from the surface, do their work and come back up repeatedly.  That protects them from the bends, the debilitating condition that can happen if one surfaces too quickly and nitrogen bubbles form in one's muscles.

More than 100 groups of divers have gone to live in Aquarius in the last two decades, studying biology and the ocean environment.  NASA used Aquarius for its own missions, called NEEMO -- a chance for astronauts and engineers to get practice at living in closed quarters like a spacecraft, with limited support from mission control.

But while the lab had an aura of adventure to it, and the scientists who used it said it was valuable, Washington is struggling with budget realities.

"NOAA's core mission is to conduct and support scientific research and exploration of the oceans," said NOAA Administrator Jane Lubchenco -- herself a marine ecologist -- in a statement.  "The Aquarius program has been a vital part of this research and we fully recognize its importance.  Unfortunately, our budget environment is very, very challenging and we are unable to do all that we would like."

There is an Aquarius Foundation trying to raise private funds to keep the lab going, but Potts said its goal is $750,000 -- a fraction of what it would take to fund active work.  One disadvantage the lab has always faced is that it's expensive to maintain; even when it's not being used, divers need to go down each week to keep its systems working in salt water.  As it is, the lab's metal skin is encrusted in marine vegetation.

The lab's defenders say they hope a large donor will come forward.  They say there are possibilities, but so far nothing solid to report.

"Unless we get some pretty good news," said Potts, "our staff is going to start to drift away.  They're very talented people; they won't remain unemployed long."

Copyright 2012 ABC News Radio


CBO Reports First Monthly Budget Surplus in Three Years

Comstock Images/Thinkstock(WASHINGTON) -- The Congressional Budget Office has reported a monthly budget surplus of $58 billion, which would be a first in nearly three years.

The improved numbers are attributed to a 10 percent increase in tax revenue.  The month of April coincides with tax season which typically results in a yearly surplus, but that hasn’t happened since the 2008 financial crisis when tax revenue fell.

“It is a clear signal that the government’s fiscal situation is finally moving definitively in the right direction,” said Mark Zandi, who is the chief economist for Moody’s Analytics.

Next month’s report will likely show a budget deficit, but the small surplus is an important milestone in the nation’s struggle to fend of a future debt crisis.

Some economists argue that a rush to curb the deficit through immediate spending cuts could harm the economy in the short term.  Britain recently announced that it fell back into recession, with some blaming the drop in gross domestic product on harsh austerity measures.

The other school of thought says that a massive budget deficit is too risky because the interest on the debt could grow to become unmanageable.

Lawmakers will likely have to find a way to cut the deficit over the long run.

“Policymakers have a lot more work to do to establish fiscal sustainability,” said Zandi.

The conventional wisdom is that Congress will address the long-term problem after the election is over.

Copyright 2012 ABC News Radio


Small Budget Boost Won't Help National Parks

Design Pics/Robert Cable/Valueline/Thinkstock(WASHINGTON) -- President Obama's fiscal 2013 budget is no walk in the park for those seeking employment with the National Park Service.

While it's true that the blueprint the president submitted to Congress does actually call for an additional $13.5 million for the nation's parks next year, the $2.6 billion total request doesn't allow much leeway in bringing on additional seasonal help.

Parks service spokesman Jeffrey Olson says the higher cost of insurance premiums, steeper rents and other factors mean the parks won't be hiring as many temporary workers compared to past years.  These are the staffers generally on the front lines, greeting visitors to the parks and answering their questions.

The 397 parks and other wilderness areas will also have to make do with 218 fewer full-time employees since operating costs would be sliced by $21.6 million.  Most maintenance work, unless it's an absolute emergency, would also be scaled back.

What the White House doesn’t want to sacrifice is conserving ecologically sensitive land, meaning the budget request is 30 percent higher than last year's level.  This $450 million request is expected to be picked apart by Republican lawmakers, who don't see the point of buying more land within parks as well as other purchases to reduce sprawl and development.

Copyright 2012 ABC News Radio


Economists Shift Concern to Federal Deficit

Stephen Chernin/Getty Images(NEW YORK) -- The jobs market appears to be getting better at last, and consumers are spending more.  So what's the biggest thing that now has economists worried?

"I think that the number-one issue is the deficit," Chad Moutray with the National Association for Business Economics said.  "There definitely is a concern about getting the deficit down."

Moutray added that most economists backed the stimulus but now the government must start cutting the budget deficit, and soon.

"The more we continue to borrow, the more we continue to depend on deficit spending to be able to do all the programs we are doing, the less likely we're going to be able to maintain our standard of living going forward," he said.

Copyright 2011 ABC News Radio

ABC News Radio