If not the Bush plan, then what?
The purpose of this thread is to discuss the new Bush tax cut plan.
I believe this plan is very, very good. Tax cuts have been proven to historically stimulate the economy. Kennedy did it. Reagan did it. They work. The elimination of the dividend tax will encourage investment in the market. A strong market will lead to a better overall economy. Many Americans have large dividends paid to them, inlcuding a large number of seniors. The rate cuts will benefit all Americans. The average tax cut will be $1,083. Those are facts. That's not just a one year thing...that's $1k a year,.... every year. Bush also proposes eliminating the marriage penalty. There is not a person on earth who can make a case not to eliminate that.
Criticisms that this plan will benefit the rich and destroy the country in general are typical, tired democratic reprisals. First, they are simply not true. The Dems vicious rhetoric is based, as usual, on the fact that the "rich" will get a higher total dollar tax cut than the "average joe". Well, seriously, no shit. It's called PERCENTAGE. They cannot be stupid enough *not* to realize this, which means the attacks regarding the benefit of the rich are purely politically motivated.
My gripe is how the Democrats have criticized the plan without any real stimulus alternative. Their counter-plan involves a one time $300 rebate check for every taxpayer...REGARDLESS of income or taxes paid. That's absoutely ridiculous. It's the same thing they crammed into the original plan. Isn't it interesting that the Democrats had no plan whatsoever until one day before the Bush plan was announced? No economic stimulus plan whatsoever. As usual, the leadership is simply reacting to what the President is doing. They are absolutely desperate. Leader Pelosi said
[quote] "This morning, at the same time that the new job loss numbers were being announced, Vice President Cheney was out touting the Bush economic plan. And yet most economists agree that the Bush plan is not a stimulus plan at all and will not have any real immediate impact on the economy," Pelosi said in a written statement. "When is President Bush going to realize that job creation needs to be his top priority?" <hr></blockquote>
And what will do that, exactly? Who are these economists? If not tax cuts, then what will do it? I mean really, Ms. Pelosi and Mr. Daschle, isn't the old "this will only benefit the rich" line getting a bit, well, OLD?
Discuss. If you feel the plan is flawed, please be specific as to why and what would work better in its place.
[ 01-10-2003: Message edited by: SDW2001 ]</p>
I believe this plan is very, very good. Tax cuts have been proven to historically stimulate the economy. Kennedy did it. Reagan did it. They work. The elimination of the dividend tax will encourage investment in the market. A strong market will lead to a better overall economy. Many Americans have large dividends paid to them, inlcuding a large number of seniors. The rate cuts will benefit all Americans. The average tax cut will be $1,083. Those are facts. That's not just a one year thing...that's $1k a year,.... every year. Bush also proposes eliminating the marriage penalty. There is not a person on earth who can make a case not to eliminate that.
Criticisms that this plan will benefit the rich and destroy the country in general are typical, tired democratic reprisals. First, they are simply not true. The Dems vicious rhetoric is based, as usual, on the fact that the "rich" will get a higher total dollar tax cut than the "average joe". Well, seriously, no shit. It's called PERCENTAGE. They cannot be stupid enough *not* to realize this, which means the attacks regarding the benefit of the rich are purely politically motivated.
My gripe is how the Democrats have criticized the plan without any real stimulus alternative. Their counter-plan involves a one time $300 rebate check for every taxpayer...REGARDLESS of income or taxes paid. That's absoutely ridiculous. It's the same thing they crammed into the original plan. Isn't it interesting that the Democrats had no plan whatsoever until one day before the Bush plan was announced? No economic stimulus plan whatsoever. As usual, the leadership is simply reacting to what the President is doing. They are absolutely desperate. Leader Pelosi said
[quote] "This morning, at the same time that the new job loss numbers were being announced, Vice President Cheney was out touting the Bush economic plan. And yet most economists agree that the Bush plan is not a stimulus plan at all and will not have any real immediate impact on the economy," Pelosi said in a written statement. "When is President Bush going to realize that job creation needs to be his top priority?" <hr></blockquote>
And what will do that, exactly? Who are these economists? If not tax cuts, then what will do it? I mean really, Ms. Pelosi and Mr. Daschle, isn't the old "this will only benefit the rich" line getting a bit, well, OLD?
Discuss. If you feel the plan is flawed, please be specific as to why and what would work better in its place.
[ 01-10-2003: Message edited by: SDW2001 ]</p>
Comments
as things stand, i think the Bush tax cut is fine, but i'm sure it can be improved on.
it sounds like the Dems. have decided that to just criticise gets you nowhere, and will start coming up with plans on their own. this tends to lead (IMO) to the best solution, where both sides present their ideas, based on their ideals and then compromise the hell out of them to get things passed.
it should be an interesting few years.
1. Let's be honest that stimulus plans are things politicians do to take credit for inevitable future economic rebounds. Dole killed Clinton's 1993 stimulus plan - deservedly so - and this plan should be killed too. The whole idea of stimulus plans is Keynesian liberal economics in the first place. I thought government policies couldn't create growth?
2. About the numbers: Bush is using average figures, which are inflated because a very few upper numbers are extremely high. Average my net worth and Bill Gates' and you get a couple billion, even though only one of us is a billionaire. The middle quintile would receive $265, not $1000. Half of taxpayers would receive less than $100. The top 1% would get $24,000, millionaires and higher would get $89,000. (That from <a href="http://www.cbpp.org/1-9-03tax.htm"; target="_blank">the tax policy center and the Center for Budget and Policy Priorities</a>.
3. Although stimulus is a dumb idea, the one thing we do have control over is the fiscal situation, and this plan is the worst thing in the world for the fiscal situation. I know as a Democrat I'm not allowed to talk about Social Security, but this is another nail in its coffin. And remember Bush said his original tax cut would both spur economic growth (oops) and keep the budget balanced (double oops). Why do more of the same?
Now, is this good stimulus? No, for three reasons:
1. Most of it doesn't take effect now. Of the 700 billion figure, only about 10-15% of that happens in the first year.
2. It's permanent. A stimulus package should be temporary, in order to spur economic growth without increasing the long-term deficit.
3. It goes mostly to the upper class, who won't spend anyway. The lower and middle classes spend, so a better stimulus would be to give them more money (not that I think that's a valid reason anyway, but at least it would be consistent with the whole "stimulus" approach).
So this isn't a stimulus plan, it's just more of the same of what we already had two years ago that didn't work and has sent us into the red.
About fairness - Republicans always insist that cutting taxes has to benefit the wealthy more than the lower and middle classes. The implication is that it is a mathematical necessity rather than a political decision. But cutting percentage rates is not the only way to cut taxes. You could also cut a flat dollar amount for each tax payer, for example by halving everyone's payroll tax or increasing the standard deduction. Even cutting the lowest rate, such as the Bush tax cut did from 15 to 10%, has that effect, because it only covers up to a certain amount of income. Those would benefit the rich and poor equally, and so are arguably more fair than cutting a percentage. The point is that the distribution of benefits of Bush's tax plans is an intentional one, not just a "cut taxes and this is how the chips fall" as he implies.
Why is this important to Democrats? Yes, the rich are a natural constituency for Republicans and the poor for Democrats. But it goes beyond that. Historically, the wealthy are doing great right now. The upper incomes have done fantastically well over the past several decades, with their wealth and buying power increasing dramatically - especially during Clinton, BTW. The lower and middle-classes have stagnated. So why not give tax cuts to people who need it the most rather than the least?
I think they should reverse Bush's 2001 tax cut, or at least stop it where it is now, and have some fiscal responsibility. Sure, extend unemployment benefits. But in general just do things right for the long-term, and let things take care of themselves.
<strong>
1. Let's be honest that stimulus plans are things politicians do to take credit for inevitable future economic rebounds. Dole killed Clinton's 1993 stimulus plan - deservedly so - and this plan should be killed too. The whole idea of stimulus plans is Keynesian liberal economics in the first place. I thought government policies couldn't create growth?</strong><hr></blockquote>
Apples and oranges. Clinton's stimulus package was just a bunch of spending proposals. It had nothing to do with tax policy. (Clinton's tax proposals passed both Houses of Congress despite the opposition of not just Dole but pretty much the entire Republican party.) Moreover, the recovery was well underway when Clinton presented his stimulus package. To call Bush's plan stimulus is to mislabel it. His proposal to end the double taxation of dividends will be stimulative to one of the specific areas of the economy that has been most depressed (and depressed the longest) - Wall Street. But it's also just good tax policy (corporate profits shouldn't be taxed twice) and would be beneficial to better corporate governance.
[quote]<strong>... Now, is this good stimulus? No, for three reasons:
1. Most of it doesn't take effect now...</strong><hr></blockquote>
Like I said, this isn't merely a stimulus package.
[quote]<strong>So this isn't a stimulus plan, it's just more of the same of what we already had two years ago that didn't work and has sent us into the red...</strong><hr></blockquote>
Didn't work? How deep was that recession anyway? Measuring a recession by the deficits run by the Federal government is kind of bizarre.
[ 01-11-2003: Message edited by: spaceman_spiff ]</p>
1. Democrats want a tax cut in the Payroll taxes, not income. THis makes no sense to me. Cutting Payroll taxes hurts social security and other gov't programs that are vital to millions of americans.
2. Bush's proposal actgually does not have aid for the states... BIG MISTAKE.
Hopefully, the compromise they reach will be more reasonable, and will domore to help the states.
The Bush plan has the following flaws. By giveing a tax break on dividends it increases the yields on stocks that pay dividends. In doing so, money will leave other forms of investement such as bank accounts, Bank CDs and non dividend growth stocks.
In the case of banks, fewer funds will result in higher interest rates on loans. This will happen as they will have to increase interest rates on bank accounts and CDs to compete with the dividends stocks pay out. This will have a negative effect on loans on home improvement and new house building which have been the bright spots in the economy. Also less money will be availabe as loans to small businesses. Real growth occurs in small an medium business. Large companies are usually resistant to taking large risks and tend to grow when they do by buying small and medium businesses out.
Growth stocks don't pay out dividends. They keep their profits to fund investment in the company and increase company equity. With the Bush plan dividend paying stocks will go up in price and growth stocks will go down. Venture capitalists will be even more reluctant to fund new companies as their payout will be at the IPO. It would take a significantly longer time to get a company to the point where they can payout a dividend and are out of the growth phase. Growth stocks are the ones that theoretically are the ones increasing the number of jobs and helping your economy, kicking them in the nuts as this plan does is basically nuts.
<strong>To call Bush's plan stimulus is to mislabel it.</strong><hr></blockquote>
I agree completely. But then why is Bush is marketing it as such?
About this "double taxation" line:
1. Most corporate income isn't even taxed once! There are so many loopholes for corporations, that many end up paying no taxes at all, or even negative taxes. (<a href="http://www.ctj.org/itep/corp00pr.htm"; target="_blank">Examples of corporations</a> getting money from the gov't, not paying: Texaco, Pepsico, GM, Enron, Chevron, etc.)
2. Most people's dividends aren't taxed right now either, because most stocks are held in tax-sheltered retirement accounts.
3. If you want to find multiple taxation, look at individual income. It's taxed by the feds, the state, the city; it's taxed for social security, medicare, unemployment; then when you get it and spend it it's taxed by sales taxes. In fact, individual income is a secondary taxation in itself - it was taxed once as corporate income, and then taxed again when it was paid as individuals' salaries. Then when you buy stuff it's taxed with sales taxes, then when the corporation gets it it's taxed as corporate income, etc.
My point is that taxing dividends does not violate some basic principle. Our tax system is filled with lots of taxes, and when different people get their hands on money at different times, it's taxed again. Maybe this is a bad idea, and we should just have one big tax somewhere along the line. But focusing on corporate "double taxation" is a political choice by Bush, not a desire to right some glaring wrong as he implies.
And I don't get what it has to do with corporate governance.
[quote]Didn't work? How deep was that recession anyway? Measuring a recession by the deficits run by the Federal government is kind of bizarre.<hr></blockquote>Yes that would be bizarre, but that's not what I'm saying. They're two separate issues.
1. Bush said his original plan would act as a stimulus to get the economy going again. Now he's saying the same thing about this new plan. Since we need it so badly now, it mustn't have worked the first time around.
2. Bush said it was possible without going into deficit. He was very clear about that, and accused Gore of using fuzzy math. Although people mocked Gore's "lock box," Bush agreed with him on that. Now that's completely out the window, and we're back to deficits as far as the eye can see. Who'd a thunk it?
[edit] [quote]Originally posted by spaceman_spiff:
<strong>Clinton's stimulus package was just a bunch of spending proposals. It had nothing to do with tax policy. </strong><hr></blockquote>It was half spending and half tax cuts for businesses.
[ 01-11-2003: Message edited by: BRussell ]</p>
1) Trickle down economics doesn´t work. Or more correct doesn´t work as good as giving the money to the lowest paid first hand. The higher income/fortune you have the more likely it is that that money is used for investments than comsumption. Consumption is more likely to help production, at least on the short run.
2) In the 90s we did in fact use a mild version of keynesian economic policy to give our economy a much needed spark in the right direction. It worked! We are probably the only european country with a surplus on our national budget and on the export/import, much unlike rest of europe that have large difficulties to stay within the limits of the european economic unions economic goals. And not until the last quarter have we had a raise in the unemplyment figures. So keynesian policies work as long as you don´t let it go wild like it did in a lot of countries in the 70s.
[quote] Monetary policy, which fortunately is beyond the reach of the political branches, can have short-term effects. But not today, because Alan Greenspan's bandolier is running out of bullets: after 11 interest-rate cuts in 2001 and one last year, rates are at a 40-year low.
However, low rates are a mighty stimulus that has been working for months. They are one reason the housing market remains strong. And three-quarters of new mortgages are refinancings, which mean, on average, an increase of $200 a month in the refinancer's disposable income.
Low rates are one reason why consumption, the economy's engine (about two-thirds of GDP), has not been paralyzed by consumer debt that, relative to disposable income, has been trending upward for many years. Because of low rates, consumer debt payments are no higher, relative to income, than they were 20 years ago.
When critics say the plan the president proposed Tuesday will have negligible short-term stimulative effects, the right responses are: Of course. And: good. Good, because government is too blunt an instrument for fine-tuning an industrial economy.
The original idea of a $300 billion stimulus dribbled out over 10 years -- to spur a $10.5 trillion economy with $30 billion increments -- was even more derisory than 10-year economic projections generally are. Even the proposed 10-year, $674 billion stimulus is modest relative to the economy.
The president's proposed tax cuts have provoked the usual jejune rhetoric about favoring "the rich." However, any significant cut, meaning any cut large enough to prod this enormous economy, must be largely a cut for the rich because only they pay significant taxes. In 2000, the highest income among America's second-richest quintile of households was $81,960. This quintile paid 19.9 percent of federal taxes -- more than the bottom three quintiles combined (0.7, 3.9 and 10.2 percent, respectively). The top quintile (mean income, $141,620) paid 65.1 percent. <hr></blockquote>
The reason I like what George mentions is because we have seen a prime example of it in California. California, for all intents and purposes is a Democratic playground. The laboratory where all their little plans can be tried and tinkered with.
California has a projected 34 billion dollar budget hole. Now there is talk from Davis that we need structural tax reform to stop the boom and bust of tax revenues coming in.
I, of course, find it amazing that no restructuring was needed during the boom, just the bust.
The restructuring though is pretty much impossible becaus what is causing this problem is the fact that your income is coming from such a narrow range of people, the rich. Quite simply, all the eggs are in one basket.
The rich lost a couple trillion in the stock market, I didn't. The fact is that consumption and home buying haven't stopped during during this recession. Those activities, which as mentioned make up two-thirds of the economy are doing just fine. They are also activities that all economic classes participate in.
California often leads the nation in trends and I can guarantee you that the trend that Democrats will be seeking is taking more from EVERYONE since taking it from the few simply isn't enough for their tastes. If you look at the history of income, property and sales taxes, they all started on the rich and moved on to everything and everyone.
Nick
<strong>
About this "double taxation" line:
1. Most corporate income isn't even taxed once!</strong><hr></blockquote>
That doesn?t apply here. If a corporation is paying dividends, they?re paying corporate income taxes.
[quote]<strong>2. Most people's dividends aren't taxed right now either, because most stocks are held in tax-sheltered retirement accounts.</strong><hr></blockquote>
Then removing the taxes on the remaining dividend income shouldn?t be that big of a deal. It?s not like there?s some kind of principle to defend.
[quote]<strong>3. If you want to find multiple taxation, look at individual income. It's taxed by the feds, the state, the city; it's taxed for social security, medicare, unemployment; then when you get it and spend it it's taxed by sales taxes. In fact, individual income is a secondary taxation in itself - it was taxed once as corporate income, and then taxed again when it was paid as individuals' salaries.</strong><hr></blockquote>
A company?s payroll doesn?t count as part of their corporate income. It only counts when calculating the payroll tax - the half of your Social Security that?s paid by your employer.
[quote]<strong>And I don't get what it has to do with corporate governance.</strong><hr></blockquote>
Larry Kudlow over at NRO covers this one nicely.
[quote]... Investors, of course, will now demand greater dividend payouts from companies - a good thing. Cash dividends will be tax-free, while interest payments from corporate bonds will be taxed at the top personal rate (which could drop to 35% under the president?s new proposal). Shareholders will keep 100 cents on each new dividend dollar, compared with only 65 cents on each dollar of interest paid from corporate bonds. That will force corporations to reduce their issuance of new debt and rely more heavily on dividend-paying stock finance.
This tax-induced shift in shareholder demand from interest-bearing bonds to dividend-paying stocks will have wide-ranging benefits. It will stop firms from over-borrowing and debt leveraging up to their eyeballs - a practice that has worsened economic downturns and hastened business bankruptcies. And as the system of corporate funding better balances equity and debt, the business sector will grow healthier and the economy stronger.
Also, a new model of corporate governance will take hold. Just as taxpayers wish to keep more of what they earn from the government, tax-free dividend payments will encourage shareholders to demand more of what corporations earn. This will force companies to reduce their excess cash-on-hand and pay more money out to their shareholders.
In recent years too many CEOs have used corporate cash for ill-conceived acquisitions that all too often put empire-building over higher shareholder returns. Now boards of directors will pressure management to turn the cash over to investors. This change in corporate behavior will streamline operations and avoid the failed over-conglomeratization that sank stock market prices in the 1990s, especially in the telecom, media, and energy businesses.
Many firms, especially technology companies, will now be forced to start paying out their unnecessarily high cash balances to shareholders. Outfits like Microsoft, Cisco, and Dell will undoubtedly go down this road.
Additionally, investors will more often judge corporate creditworthiness on the basis of dividend yields (dividends divided by stock prices) instead of conflicted research reports. In fact, greater dividend payouts and yields will become the key benchmarks in judging the worth of stock investments...<hr></blockquote>
...
[quote]<strong>1. Bush said his original plan would act as a stimulus to get the economy going again. Now he's saying the same thing about this new plan. Since we need it so badly now, it mustn't have worked the first time around.</strong><hr></blockquote>
Again I ask: how deep was that recession? We aren?t growing as fast as we should but we also aren?t in a recession anymore. Of course his original plan worked.
[quote]<strong>Clinton's stimulus package was just a bunch of spending proposals. It had nothing to do with tax policy.
It was half spending and half tax cuts for businesses.</strong><hr></blockquote>
That?s not right. The whole thing amounted to about $16 billion. What kind of a tax cut for business comes in at only $8 billion?
BRussell obviously has his point of view, which I respect, though disagree with in many places. We must keep in mind the important "Lag Theory" in economics. Bush's economic polices are just taking effect now. It takes two to three years for fiscal policy to be effective. Monetary policy seem to be more like 18 months.
On your solutions, BRussell, I must take issue. Giving out flat dollar figures is going to be ineffective, not to mention immoral. I disagreed with the rebate last time, and I do now as well. Bush's plan accelerates cuts dramatically, especially with the marriage penalty, so your argument about this not being effective in the short term doesn't make sense. I agreed with this reasoning with the FIRST cut.
Now, on the rich, consider this:
[quote]Scripps Howard News Service
(January 10, 2003 9:15 a.m. EST) - Why is it that if the "rich" Smith
family wants to keep more of the money that it has earned to spend as it
sees fit, it is declared greedy by partisan Democrats, but if those partisan
Democrats want to take the Smith family's money to spend on government
programs as they see fit, that is somehow compassionate?
That question wasn't answered this week as, true to form, Democrats
pounced on the president's just-released $670 billion dollar package of tax
cuts as "favoring the rich."
Ah, but the Democrats have two problems here, aside from any merits of the
president's plan: their definition of "rich," and more important, the fact
that a majority of Americans don't care if the tax cuts benefit the wealthy.
Just who are the "rich" anyway? One might easily agree that the top 10
percent of American income earners is in that crowd. But according to the
Internal Revenue Service and a new report by the Tax Foundation in
Washington, D.C., that 10 percent includes any household with an annual
income of $92,000. And according to the Bureau of Labor Statistics, that
means a lot of two-earner families, with kids, headed by teachers,
policemen, and blue-collar workers, who think of themselves as anything but
rich. That may be because it's this group that pays a whopping 67 percent of
all federal income taxes.
The top 25 percent of all earners, those who make over $55,000, pay 84
percent of all federal income taxes.
The top 50 percent of earners, by definition the "other-half," or those
who make a little over $27,000 a year, pay an astounding 96 percent of all
federal income taxes.
These then are the "rich."
OK, but what about those at the very top of the income scale? Aren't they
getting a real break? Well that top 1 percent, those making over $313,000 a
year, pay 37 percent of all federal income taxes. And that's way up from
1990, when the top 1 percent paid 25 percent of all federal income taxes.
In other words, it's impossible to provide any kind of meaningful tax cut
without that cut going to the people who pay the taxes - and almost all of
those people are the "rich," according to the liberal elite.
Which brings up the second problem the Democrats have. As CNN reported on
Monday, a slight majority of Americans think the tax cuts do favor the
"rich," (though "rich" was not defined) but so what? As CNN also reported,
most Americans don't care. Maybe because mainstream Americans, in contrast
to people in so many other countries in the world, don't mind the other guy
being rich. In fact they might downright admire him. It's just that they
would like to be rich too.
Whatever the reason, class-warfare rhetoric doesn't work. Successful
Democrats know it and don't use it. Case in point: Bill Clinton.
What's amazing is only that while the class warfare argument has no merit,
and is not a winning political strategy, still partisan Democrats are
overwhelmingly attracted to it like bees to honey, or better yet like a
two-year old to the cookie jar. They just can't help themselves.
Why are they the only ones in America who buy the class warfare line?
Because unlike mainstream America, which includes so many Democrats,
partisan Democrats really do resent the successful and the rich. Even though
many of them, like senators and presidential contenders John Kerry of
Massachusetts and John Edwards of North Carolina ARE the rich. Perhaps they
just feel guilty about it.
In any event, these are the folks who think that if the "rich" Smith
family wants to keep more of its hard-earned $92,000 a year, or $55,000 a
year, or even its $27,000 a year to spend as it sees fit, that's greed; but
if Washington takes that hard-earned money from the Smiths, by force, to
spend as it sees fit, somehow that's compassionate.
Huh? There's still no making sense of that riddle.
In contrast, President Bush has made the simple argument that everyone who
pays taxes should get a tax cut.
Quite a distinction. No wonder the partisan Democrats seem to be the only
ones who buy their own rhetoric.
Betsy Hart, a frequent commentator on CNN and the Fox News Channel, can be
reached at [email protected].
<hr></blockquote>
[ 01-12-2003: Message edited by: SDW2001 ]</p>
Geddoe:
[quote]The Bush plan has the following flaws. By giveing a tax break on dividends it increases the yields on stocks that pay dividends. In doing so, money will leave other forms of investement such as bank accounts, Bank CDs and non dividend growth stocks. <hr></blockquote>
That's the whole idea. People are keeping their money out of the market, and that's the problem. I disgaree with the rest of your analysis. You are essentially saying that a tax cut will kill the home market. You seem to think that tax cuts will make interest rates go up, and if successful they will. But rates are.....wait for it....TOO LOW now. Yes, rates can be to low. The money supply would hardly be tight if rates were 5%.
[quote]Growth stocks are the ones that theoretically are the ones increasing the number of jobs and helping your economy, kicking them in the nuts as this plan does is basically nuts. <hr></blockquote>
That's a very general statement. In fact, I can't accept it. I think you are over-analyzing the situation.
[quote]Then removing the taxes on the remaining dividend income shouldn?t be that big of a deal.<hr></blockquote>I don't think it is a big deal. But Bush seems to think it is.
[quote]A company?s payroll doesn?t count as part of their corporate income. <hr></blockquote>OK. But what do you think about my point that the "double taxation" of dividends is not unique to our tax system?
[quote]Again I ask: how deep was that recession? We aren?t growing as fast as we should but we also aren?t in a recession anymore. Of course his original plan worked. <hr></blockquote>We really don't know yet. We may not have reached the trough yet. But if it worked so well why are we, two years later, still talking about stimulus? And what part of Bush's plan stimulated the economy in the short-run? That part of Bush's plan that was actually the Democrats' plan?
[quote]That?s not right. The whole thing amounted to about $16 billion. What kind of a tax cut for business comes in at only $8 billion? <hr></blockquote>
The 16 billion was the spending part of the proposal. There was another 15 billion of business tax credits. I had a hard time finding links that described it but here was one.
<a href="http://the-tech.mit.edu/V113/N3/stimulus.03w.html"; target="_blank">this link.</a>
[quote]Clinton aides are crafting a stimulus package, expected to include up to $16 billion in new spending and $15 billion in tax credits, in a way that will give the president room to argue that he is not increasing this year's $327 billion federal deficit.<hr></blockquote>
" The top 25 percent of all earners, those who make over $55,000, pay 84
percent of all federal income taxes. "
This is because of the volume of money they make! They don't like to pay these taxes but, they aren't measuring how to pay them and afford groceries at the same time! They measure it against can they pay them and afford that trip to Hawaii this summer!
This plan is so typical Bush. Designed for the rich to get a break. So give me one! <img src="graemlins/bugeye.gif" border="0" alt="[Skeptical]" />
Ps. I thought a while ago you weren't seeing anything wrong with the economy?
<strong>By SDW,
" The top 25 percent of all earners, those who make over $55,000, pay 84
percent of all federal income taxes. "
This is because of the volume of money they make! They don't like to pay these taxes but, they aren't measuring how to pay them and afford groceries at the same time! They measure it against can they pay them and afford that trip to Hawaii this summer!
This plan is so typical Bush. Designed for the rich to get a break. So give me one! <img src="graemlins/bugeye.gif" border="0" alt="[Skeptical]" />
Ps. I thought a while ago you weren't seeing anything wrong with the economy?</strong><hr></blockquote>
Typical jimmac: Delibrately twist words into meanings you KNOW weren't intended. I never said the economy was faultless...never.
I'm not sure of your point. I think you are saying that this group pays a large portion of taxes because of their sheer numbers. I happen to agree with that, but that wasn't the only point of the piece I posted. You obviously missed that the piece was making the point that the very definition of "rich" was problematic.
Your last statement is simply bait, I assume. Again, I refer you to this statement I made:
[quote] Discuss. If you feel the plan is flawed, please be specific as to why and what would work better in its place. <hr></blockquote>
Typical.
<strong>On your solutions, BRussell, I must take issue. Giving out flat dollar figures is going to be ineffective, not to mention immoral. I disagreed with the rebate last time, and I do now as well. Bush's plan accelerates cuts dramatically, especially with the marriage penalty, so your argument about this not being effective in the short term doesn't make sense. I agreed with this reasoning with the FIRST cut. </strong><hr></blockquote>
Why in the world is cutting flat dollar figures immoral while cutting rates is fine? I truly don't understand that.
However, I do agree with this part of your article:
[quote]Which brings up the second problem the Democrats have. As CNN reported on Monday, a slight majority of Americans think the tax cuts do favor the "rich," (though "rich" was not defined) but so what? As CNN also reported,
most Americans don't care. Maybe because mainstream Americans, in contrast to people in so many other countries in the world, don't mind the other guy being rich. In fact they might downright admire him. It's just that they would like to be rich too.
Whatever the reason, class-warfare rhetoric doesn't work. Successful Democrats know it and don't use it. Case in point: Bill Clinton. <hr></blockquote>
It does seem to be true that arguments against tax cuts favoring the rich don't have much traction. And to be honest it drives me frickin crazy.
There was an editorial appearing in the Times by conservative David Brooks about this, <a href="http://www.nytimes.com/2003/01/12/opinion/12BROO.html"; target="_blank">The Triumph of Hope over Self-interest.</a>
[quote]The Democrats couldn't even persuade people to oppose the repeal of the estate tax, which is explicitly for the mega-upper class. Al Gore, who ran a populist campaign, couldn't even win the votes of white males who didn't go to college, whose incomes have stagnated over the past decades and who were the explicit targets of his campaign. Why don't more Americans want to distribute more wealth down to people like themselves?
Well, as the academics would say, it's overdetermined. There are several reasons.
People vote their aspirations.
The most telling polling result from the 2000 election was from a Time magazine survey that asked people if they are in the top 1 percent of earners. Nineteen percent of Americans say they are in the richest 1 percent and a further 20 percent expect to be someday. So right away you have 39 percent of Americans who thought that when Mr. Gore savaged a plan that favored the top 1 percent, he was taking a direct shot at them.
It's not hard to see why they think this way. Americans live in a culture of abundance. They have always had a sense that great opportunities lie just over the horizon, in the next valley, with the next job or the next big thing. None of us is really poor; we're just pre-rich.
Americans read magazines for people more affluent than they are (W, Cigar Aficionado, The New Yorker, Robb Report, Town and Country) because they think that someday they could be that guy with the tastefully appointed horse farm. Democratic politicians proposing to take from the rich are just bashing the dreams of our imminent selves. <hr></blockquote>
<strong>OK, but what about those at the very top of the income scale? Aren't they getting a real break? Well that top 1 percent, those making over $313,000 a
year, pay 37 percent of all federal income taxes. And that's way up from 1990, when the top 1 percent paid 25 percent of all federal income taxes.</strong><hr></blockquote>
A few things to put this in perspective:
1) Many of the very rich (well in excess of $313,000/year) don't even get compiled into these US statistics. (<a href="http://www.michaelparenti.org/Superrich.html"; target="_blank">The Super Rich Are Out of Sight</a>)
2) In the span from 1977 to 1999, the US after-tax income of the top 1% <a href="http://www.cbpp.org/9-4-99tax-rep.htm"; target="_blank">increased by 115%</a>. It's hard to match this to the 1990-to-some-unspecified-recent-year statistics above for increased proportion of total taxes, but it looks like the concentration of wealth shifted more into the top 1% during that time, so they should have carried a higher tax burden anyway.
3) <a href="http://www.cbpp.org/9-4-99tax-rep.htm#Wealth Disparities" target="_blank">In 1995, the wealthiest 1% owned 39% of America's wealth.</a> The trend has been upwards, and so it's likely the top 1% now have even more than 39%.
There's nothing unfair or burdensome about the people who own at least 39% of the nation's wealth paying 37% of the taxes. This actually represents a slightly regressive, rather than progressive, tax system. Given such a lopsided distribution of wealth, I have no trouble at all thinking that these people should be taxed at a higher rate, and that they by no means need or deserve any tax breaks.
I have nothing against the existence of income disparities, and I'm very far from believing in trying to use the tax system to massively redistribute wealth. But I also don't believe that every outcome of a free-market economy is somehow sacrosanct. There are many distortions in our economic system, and when 1% has 39% of the wealth, I strongly believe in making that top 1% bear a significantly higher proportion of taxation.
Do you really believe that it's the terrible tax burden of the wealthy that's holding back our economy? That unless those who own 39% of our wealth get a tax break, they'll stall out the economy by tightly gripping their still-not-fat-enough wallets?
Do you believe that it's worth it in the long run to pile up huge federal deficits now in order to give the top 1% a break, and that this will magically fix the economy a year or two down the road? Enough to pay off the deficits we're running up?
I think we'd be much better off eliminating all of Bush's tax cuts made so far, and if we were to drop taxes at all, drop them only for the lower 99% while INCREASING TAXES for the top 1%.
<strong>
Are you saying that all corporations that pay dividends also pay a net income tax? Are you sure?</strong><hr></blockquote>
Name a company that doesn't.
[quote]<strong>OK. But what do you think about my point that the "double taxation" of dividends is not unique to our tax system?</strong><hr></blockquote>
Sounded like a fine anti-tax rant but I know that wasn't your point... I do have a problem with the way government reaches again and again into our wallets but state and local income taxes are deductable. And at least sales taxes rarely reach or exceed 10%. The double taxation of dividends means that before you realize anything from your investment Uncle Sam has already touched you for 50 cents or more on every dollar you receive. It is an especially egregious form of double taxation
[quote]<strong>But if it worked so well why are we, two years later, still talking about stimulus?</strong><hr></blockquote>
Because 3% growth isn't enough. Because some sectors of the economy are still flat.
[quote]<strong>The 16 billion was the spending part of the proposal. There was another 15 billion of business tax credits. I had a hard time finding links that described it but here was one.</strong><hr></blockquote>
Also from that link:
[quote]Clinton would pay for an additional $15 billion in tax credits for business equipment purchases by pushing that cost into the next fiscal year, which begins Oct. 1, and incorporating any cuts in other programs as part of his overall budget package for next year. <hr></blockquote>
(my emphasis) What Dole defeated didn't have the tax credits.
[ 01-15-2003: Message edited by: spaceman_spiff ]</p>