Tax Cuts

[Rufus BugleWeed]

Correct me if I am wrong. Did not GWB push through some massive tax cuts when he initially got elected? Now he's saying his proposed tax cuts are for job creation.
Was there any job creation from the last round?
Or should we believe that the US economy would really be down and out if the last round had not taken place?

[Jason Menard]

Hannity & Colmes the other night were interviewing some woman who was a spokesman of some Democrat organization (I wish I could remember the details of who she was, sorry). She was complaining about the Bush tax cuts and how we don't spend enough on social programs and how the tax cuts are skewed towards the "rich". Hannity mentioned that the top 10% income-wise in this country pay 70% of the taxes, and asked her how much more she thought they should pay. He kept pressing this question but she refused to answer it.
So my question is, to all who might hold a similar view as this woman, just how much more should they pay? Eighty percent? Ninety percent? More?

[SJ Adnams]

In the UK Maggie Thatcher introduced the 'poll' tax.
Personally I think it's not a political question, it's something that should be decided using an economic model (written in java of course).
At the moment the top tax rate is 40% + 1% NI ( +17.5% VAT + fuel tax etc..) if a new tax band was introduced, say 60% at 100K, the gov might find tax reciepts go down.
1) people in the top band decide to work less
2) people move overseas
3) tax avoidance
Tax avoidance is a fairly big issue even at 40%. people can set up their own business and collect dividends at a lower rate, or move money overseas etc.
Social programs tend to get abused, I pay NI and also MUST pay for private health care (compulsory) I'd rather pay no NI take my private health care & private pension.
Having worked for a medical company I also have opinions about medical spending/charities, but thats getting off topic.

[Paul Stevens]

Here are the stats as of 2000. From the IRS.

Total income tax share (percentage):
1% 5% 10% 25% 50%
1986: 100.00......25.75......42.57......54.69......76.02......93.54
1987: 100.00......24.81......43.26......55.61......76.92......93.93
1988: 100.00......27.58......45.62......57.28......77.84......94.28
1989: 100.00......25.24......43.94......55.78......77.22......94.17
1990: 100.00......25.13......43.64......55.36......77.02......94.19
1991: 100.00......24.82......43.38......55.82......77.29......94.52
1992: 100.00......27.54......45.88......58.01......78.48......94.94
1993: 100.00......29.01......47.36......59.24......79.27......95.19
1994: 100.00......28.86......47.52......59.45......79.55......95.23
1995: 100.00......30.26......48.91......60.75......80.36......95.39
1996: 100.00......32.31......50.97......62.51......81.32......95.68
1997: 100.00......33.17......51.87......63.20......81.67......95.72
1998: 100.00......34.75......53.84......65.04......82.69......95.79
1999: 100.00......36.18......55.45......66.45......83.54......96.00
2000: 100.00......37.42......56.47......67.33......84.01......96.09
Adjusted gross income floor on percentiles (current dollars):
1986: N/A......118,818......62,377......48,656......32,242......17,302
1987: N/A......139,289......68,414......52,921......33,983......17,768
1988: N/A......157,136......72,735......55,437......35,398......18,367
1989: N/A......163,869......76,933......58,263......36,839......18,993
1990: N/A......167,421......79,064......60,287......38,080......19,767
1991: N/A......170,139......81,720......61,944......38,929......20,097
1992: N/A......181,904......85,103......64,457......40,378......20,803
1993: N/A......185,715......87,386......66,077......41,210......21,179
1994: N/A......195,726......91,226......68,753......42,742......21,802
1995: N/A......209,406......96,221......72,094......44,207......22,344
1996: N/A......227,546......101,141......74,986......45,757......23,174
1997: N/A......250,736......108,048......79,212......48,173......24,393
1998: N/A......269,496......114,729......83,220......50,607......25,491
1999: N/A......293,415......120,846......87,682......52,965......26,415
2000: N/A......313,469......128,336......92,144......55,225......27,682

The democrats always say the tax cuts should be directed to the bottom. The top 50% of wage earners pay 96% of income taxes. The dem senators and reps aren't stupic they know it. They just know that the sheeple that follow them don't know it.
BTW Rufus the tax cut was not massive and most of it was back loaded on a ten year plan. Kind of like when spending "cuts" are promised. They always seem to get promised but never happen.

[Matthew Phillips]

As Paul mentioned, the tax cuts that were passed shortly after Bush got into office were spread out over a 10 year period. I may be incorrect on this, but I think that the tax cut he is currently proposing would simply accelerate to this year.
History has shown that tax cuts result in revenue increases to the government. This is a result of more spending which creates more jobs. It is generally the rich* who are in the position to create the jobs. Since they are the ones paying the taxes anyway, it is a double benefit to give them the tax cut.
*Using the term rich in relation to taxes is a little misleading. A more appropriate term would be income earners.

[Rufus BugleWeed]

source for my data besides that listed above was google ( "consumumer price index" ) take the top link to the CPI home page from the Bureau of Labor Statistics
group 1986 2000 delta
CPI 109.6 172.2 157%
50% 17.3K 27.7K 160%
25% 32.2K 55.2K 171%
10% 48.7K 92.1K 189%
1% 118.8K 313.5K 264%
So those at the 50% are barely keeping up and those in the top 1% are doing real well.
1986 1 * 118.8K +
9 * ( ( 48.7K + 118.8K)/2 ) +
15 * ( ( 32.2K + 48.7K)/2 ) +
25 * ( ( 17.3K + 32.2K)/2 ) = $2098.1K
2000 1 * 313.5K +
9 * ( ( 92.1K + 313.5K)/2 ) +
15 * ( ( 55.2K + 92.1K)/2 ) +
25 * ( ( 27.7K + 55.2K)/2 ) = $4279.7K
So 42797 / 20981 = 204% rise in income
1986 50% got 173/20981 or 0.82% of the pie
1% got 1188/20981 or 5.66% of the pie
2000 50% got 277/42797 or 0.65% of the pie
1% got 3135/42797 or 7.33% of the pie

JM - ... just how much more should they pay?

Just how much more of the pie should they have Jason? Tell me they worked so much harder in 2K than they did in 86. Tell me they deserve more because they are sacrificing more. Call me a bleeding heart socialist again.

[Matthew Phillips]

Originally posted by Rufus BugleWeed:
Just how much more of the pie should they have Jason?

I know you asked Jason, but I hope you don't mind if I respond.
The top income earners should get as much of the pie as they are willing to earn, just like the the lower levels of income earners. If the lower level income earners want a bigger piece of the pie, then instead of using government to take it away from the higher income earners by force, they should do the things that the upper income earners do to get to that point.

[Rufus BugleWeed]

Oh! Do things like inherit a fortune? Like bribe congressmen? Like fix investment banking on Wall St? Like flood the ballot box with votes to tax the working person and spend it on prescrition drugs for the weathiest segment of society?
GOP want to help the poor Iraqi but do they want to kabosh a Dept of Education, cut funding for college educations, cut funding from the SEC and add funding for Homeland Security?
Why funding has to go up for homeland security? Now that they have reogranized they cut so much waste and inefficiency that we should be getting a rebate. At least we should get greatly enhanced services for the same price?
Or maybe big brother want to be better able to qwell political dissent? They all admit campaign finance is corrupt and they refuse to allow reform. Can the Internet or grass roots political action compete with big money?
I see US is pulling troops out of Saudi Arabia. Did OBL win a major victory this last week?

[Jason Menard]

Matthew pretty much said what I would have. Sorry if I don't buy into the Robin Hood mentality of our progressive tax system.
The definition of "rich" as applied to our tax system is a bit off from reality, and many of the "rich" very definitely aren't, yet they get screwed anyway while the Dems play their class warfare games trying to convince the masses that these people don't deserve what they work for.
And yes, inheritence taxes are a joke. It is a tax on things that have already been taxed, and is simply an excuse for the government to steal yet more money from people. In a similar vein, what is the justifiable reason for skimming 50% from a worker's bonus money?
I'm all for any system that is fair. In a fair system, those who earn more still pay more, just not disproportionately so.

[Rufus BugleWeed]

Seem to me that just like the woman on TV or where ever, the question is being dodged...

[Jason Menard]

Nothing was dodged since Matthew answered your question and I stated my agreement. But I will re-iterate for your benefit:
The pie is a big one. One person having a bigger piece does not mean that some other person must have a smaller piece. So as was already stated, everyone is entitled to as big a piece as they can earn for themselves.

[Jason Menard]

And regarding socialism... Why on earth would we want to move further away from a highly successful economic system and more towards a proven failure of an economic system? I don't know what the particular term is for the European blend of capitalism and socialism, but you only need to look at the European economy to realize what a mistake it would be for us to try to emulate it.

[Rufus BugleWeed]

I think it's clear that Bill Gates and MS have violated the anti-trust laws of this nation. I think it is clear that when a person of influence is caught stealing 100M they get a 10M fine. Taxes are the only way we can get our other 90M back.
The adage is that the difference between old monay and new money is that people have forgoten how old money was stolen.
The other adage is that it takes money to make money.
Take they two adages together blend in economies of scale and extrapolate to infinity. At that point there are a few rich and a lot of poor. Society has deemed killing and plundering is unacceptable but that stealing is human nature. So survival of the fitest, what it looks like to me, the capitalism you espouse - is a polished Saddam Hussein.
Society and government is starving public universities. Private universities are raising there fees at a rate that exceeds inflation. Money keeps putting more anti-abortion, anti-affirmative action judges on the supreme court.
Let me rephrase the question - Do you categorically believe that a few should hold the wealth of this planet and that the masses should live in at the minimum level that holds off riots?
Do you really believe that the American dream isn't just a fairy tail that's getting exponentially harder and harder to achieve?
The theory is that giving the rich more money fosters trickle down economics. Did it work? Or are the rich getting richer and the poor are getting poorer?
When the government taxes what does it keep? My goodness, you say it has spent more than it has taken in.

[Matthew Phillips]

Do things like inherit a fortune?

We are talking about an income tax. If a person is not earning an income, then they are not getting taxed. While inherting a fortune will result in an inheritance tax, it does not get taxed as income.
Keep in mind that we are not talking about taxing the rich. Income taxes only tax people who earn income, i.e. the working class. Our system only taxes the upper 50% of the working class.

Like bribe congressmen?

That is an illegal activity and should be punished as such, but let me play devil's advocate for a moment.
Let's assume that business owner A wants congressman A to make sure a law gets passed that results in $1,000,000 in profit to the business. He pays congressman A $500,000 to make sure that happens. Business owner A is not stupid, or he wouldn't have gotten where he is. If he can make $1,000,000 in profit with the current production schedule then he can double it by doubling production. In order to double production he is going to have to hire more workers which will result in increased spending. The increased spending creates more jobs at other businesses. The end result is economic growth.
Let me reiterate that I am not advocating bribing congressmen is a good thing because there are also ill effects that really aren't on this topic.

Like fix investment banking on Wall St?

Again, this is an illegal activity that should be punished.

Like flood the ballot box with votes to tax the working person and spend it on prescrition drugs for the weathiest segment of society?

I'm sorry, but I don't see the logic in this statement. If the upper income earners who are paying the majority of the taxes are flooding the ballot box to tax the lower income earners then wouldn't the tax burden on this country be reversed from what it currently is?

GOP want to help the poor Iraqi but do they want to kabosh a Dept of Education, cut funding for college educations, cut funding from the SEC and add funding for Homeland Security?

The state of Georgia spends more money per student on education than any other state. It ranks last in education. I don't remember which state it is that spends the least amount of money per student but it ranks near the top in education. Throwing money at the problem does not make it go away.

Why funding has to go up for homeland security? Now that they have reogranized they cut so much waste and inefficiency that we should be getting a rebate. At least we should get greatly enhanced services for the same price?

I'm in complete agreement here. It just goes to show that government is not efficient. That's why I advocate eliminating government programs that the U.S. Constitution does not give the government authority to run in the first place. Things like education, charity, etc. would be better funded if they weren't in control of the government.

[Matthew Phillips]

Originally posted by Rufus BugleWeed:
Seem to me that just like the woman on TV or where ever, the question is being dodged...

Maybe I misunderstood the question, because I felt I answered it completely.

[Thomas Paul]

Originally posted by Matthew Phillips:
That's why I advocate eliminating government programs that the U.S. Constitution does not give the government authority to run in the first place. Things like education, charity, etc. would be better funded if they weren't in control of the government.

Education isn't in the control of the federal government. It is controlled by state and local governments. There is some federal funding that is supposed to help poor states. But federal funding is a tiny percentage of all money spent on education.

[Matthew Phillips]

Originally posted by Thomas Paul:
Education isn't in the control of the federal government. It is controlled by state and local governments. There is some federal funding that is supposed to help poor states. But federal funding is a tiny percentage of all money spent on education.

The Department of Education is a federal department. I honestly don't know what degree of control they have. My point is that revenue should not be passed to the federal government to be distributed back to the states and the local school boards. I probably should have been more specific that I do not believe that the federal and state governments should have any role in education, particularly the role of collecting money and then paying bureaucrats to distribute a portion of it back to local school boards. I should have worded my original post a little differently.
[ May 02, 2003: Message edited by: Matthew Phillips ]

[Paul Stevens]

Rufus,
You are asking us to argue from your false premises.
1. The rich inherent their money.
This happens in some cases but nowhere near all. New rich are formed all the time and those who where rich fall out of the category. (Sports and entertainment are probably the largest categories.)
2. If someone is rich, they somehow got it illegaly.
Again a false premise.
3. The pie is a certain size.
Your premise here is that if someone gets a larger share, they got it from everyone else. The pie is not a fixed size. It grows.
4. Money is somehow the governments to dispense.
Money belongs to those who earn it. Giving tax cuts is not the government granting blessings onto people. It is giving them back money that was taken from them.

[Matthew Phillips]

Originally posted by Paul Stevens:
Rufus,
You are asking us to argue from your false premises.
1. The rich inherent their money.
This happens in some cases but nowhere near all. New rich are formed all the time and those who where rich fall out of the category. (Sports and entertainment are probably the largest categories.)
2. If someone is rich, they somehow got it illegaly.
Again a false premise.
3. The pie is a certain size.
Your premise here is that if someone gets a larger share, they got it from everyone else. The pie is not a fixed size. It grows.
4. Money is somehow the governments to dispense.
Money belongs to those who earn it. Giving tax cuts is not the government granting blessings onto people. It is giving them back money that was taken from them.

Or, more appropriately, never taking it from them in the first place.

[Paul Stevens]

Matthew,
Good point.
When was the last time you heard a Senator or Congressman say. "Can the people afford this increase in spending?" You hear it all the time when tax cuts are discussed though.
Matthew maybe we should start a new thread on what is federal and what is state responsibilty based on the Constitution. It appears many don't know and don't care.

[Matthew Phillips]

Originally posted by Paul Stevens:
Matthew,
Good point.
When was the last time you heard a Senator or Congressman say. "Can the people afford this increase in spending?" You hear it all the time when tax cuts are discussed though.
Matthew maybe we should start a new thread on what is federal and what is state responsibilty based on the Constitution. It appears many don't know and don't care.

Good idea. I'll try to do that tonight.

[Jason Menard]

Originally posted by omar khan:

Money is not the only index.
HRI

Economy != HRI. As the discussion has been about the economy, I believe my original statement stands.