Obama and the Bush Tax Cuts

[dhickey]

[quote]Gambit_Lost wrote:
Bill Roberts wrote:
rainjack wrote:
And how can another tax increase on the top half possibly be a good thing for the bottom half?

Answer: In the immediate short-term, it looks like a benefit to the lower 50% of income earnersif the tax increase on the upper half of income users is then partially or entirely used to give “tax relief” in the form of cashable “tax credits” to themselves even when having paid either no income tax or much less income tax than the “credit.”

When some politicians say “tax relief,” their Newspeak meaning of it is paying out money to people that don’t pay taxes or paying them more than the taxes paid. Not reduced taxes for those that actually pay substantial taxes. That, in contrast, is a “give-away” and that would be bad.

In the long-term, if they are employed, no benefit as the money was taken from those that employ them, thus leaving less to pay employees; and if they buy groceries, food, clothes, or anything else, no benefit as the cost of producing these go up as the producers have to pay more taxes.

But it looks like a benefit and buys votes.

Really the first obligation of a government, in terms of the economy, is growth. If an economy isn’t growing, the country is in trouble. But once that threshold has been achieved, there are other options and other questions for a government to answer. This, I believe, is the key point in what you said Obama said earlier. Essentially obligation #1 is growth. If the economy isn’t growing, actions should be taken to make it grow. However, when an economy is growing we have other questions to ask.

For the last 10 years growth has been concentrated primarily in the hands of the very top of the economy. So a government, and in a democracy a people, must ask, should the government work to more evenly spread growth?

If you think the answer is “no” let an economy grow as it does regardless of if that growth is concentrated, then you wouldn’t talk about “fairness” and the like. Obama seems to believe that he will be able to “spread” the growth throughout the economy. So middle income people’s wealth will increase along with the higher levels of people.

Essentially trickle down economics believes that when the top grows, everyone grows. That hasn’t happened in the last 10 years. We have to ask “why?” “Should we try to change this?” and “how?”

[/quote]

Should you pile up debt to grow the economy? What are the long term effects of this?

I just watched a story on CBS comparing Obama’s tax plan to McCain’s against real families. One family made $33k and paid no taxes. Under McCain they would continue to pay no tax. Under Barry they would get a check for $2200. Upper income tax rates would go from 33/36% to 36/39%. How is that not redistribution of wealth? Is that what you concider “spreading growth”.

Should people that do nothing to improve their situation share in the growth? I work 60hrs a week and am away from my familiy at least 3 days a week. I make these sacrifices and pay more while other that choose not to make these sacrifices get a check. Great solution.

[dhickey]

[quote]Gambit_Lost wrote:

I honestly don’t understand the question. Are you asking if the economy has grown in the last 10 years? Are you asking if wages have stagnated? Do you have access to wsj.com? Just type in a search.
Here’s a quickly found article that I posted earlier

The report, an annual snapshot of living standards, also showed that income in the typical U.S. household remained lower than in 2000, despite six years of economic expansion.
Ranks of Uninsured Fell in '07, Census Says - WSJ [/quote]

My question is how the economy can grow without matching average income growth. Were does the money go? The article refenses the “typical familiy”. I don’t know what a typical family is or where all this missing money is going.

[dhickey]

[quote]rainjack wrote:

Who is this “most” you speak of? I went from making less than 18K per year in 2000 to being in the top tax bracket in 2007. I expect to triple my income tax liability for 2008.

[/quote]

Similar story here. Broke in 1998 40k a year in 1999, top tax bracket last year.

All of this with average intelligence and above average genatalia. Just seeing if anyone is paying attention.

[thunderbolt23]

[quote]Gambit_Lost wrote:

If you honestly don’t know the answer to this question, you might want to look it up. [/quote]

Negative - I know the answer.

Do you have an argument as to why we should keep taxes low during the dangers of a recession on the theory that the growth is good, but why taxes should be raised outside of those dangers?

[ajcook99]

[quote]Bill Roberts wrote:
I didn’t see it as sarcastic, but facetious. It was not to be taken in the literal sense, but it was hardly “flesh-cutting” in nature, intent, or style.

Yes, the big difference is that if businesses and employers know that next year, and on into the future, tax rates will be low then they can expand accordingly.

Whereas if they thought rates would be high and then, surprise surprise, there are “stimulus checks” next year, the benefits of appropriately planning ahead were not able to happen.

If taxes will be (for example) $600 lower for everyone next year, it’s better to know that in advance than to have investors and businesses budgeting less for investment and capital improvements because they’re expecting taxes to be higher than they in fact will be.

I agree that there’s a difference, but not in the direction that the difference is.

And on this:

However, with a change in tax rates that would nominally result in a $600 benefit to the taxpayer, most of that benefit would be eaten up by the employment market (ie through lack of raises, increased compensation, etc…). The labor market adjusts for after-tax wages not pretax wages.

I just don’t understand your point. Perhaps I am missing what you’re intending to communicate (entirely possible.)

Reading it the way that it seems to me that it’s saying, it seems to me you’re saying it’s different for say an employee to have to pay $600 less on April 15th because the percentage tax rate was lower, than it is for him to pay it (along with the rest of his taxes) on April 15th but get a $600 check in May. I do not see where your parts about after-tax wages and so forth change there being no difference, except a couple weeks’ time, in those two equal-dollar cases?[/quote]

I’ll try to explain what I am trying to convey here. As wage earners, workers make their employment and work decisions based on the money that they get to keep. Taxes is just one of the major items that is deducted or taken away from their earnings before they get desposable income. From the supply side, at the margin, we determine how much work we will provide and for how many hours based on how much disposable income will either need or desire.

The demand side (businesses) know this also and hence match a decrease in taxes with a small restriction in demand for labor. Net net, what works out of the situation is that employers know that if you were willing to do a particular job one year for $50,000 less your taxes, then you’d be willing to (or someone else would be) willing to do that same job the next year for that same number. If there is a decrease in tax rates for individuals, businesses react and simply either hold wages steady or decrease the amount that they pay their next hire. Does that clarify?

[Bill_Roberts]

[quote]Gambit_Lost wrote:
If you think… then you wouldn’t talk about “fairness” and the like. [/quote]

I must not have been clear enough, I was using the term as some others do, that supposedly (for example) raising capital gains taxes to 30% even granting that it will reduce revenues to the government is, because it takes money away from “the rich,” “more fair.”

I was not referring to whether I view such as “fair.” I was stating only that, for example, Obama calls that “fair.”

As to your other points, IMO you are mistaken to believe that the government causes economic growth. Government can impede economic growth, and lessening the interference represents relative improvement, but government does not cause economic growth. It can’t: it has no means to do so. It cannot cause, for example, productivity increases, though it can cause decreases.

[ajcook99]

[quote]Bill Roberts wrote:
dhickey wrote:
Yep, this is reaction to corporate taxes not individual taxes.

Also, with regard to personal income taxes and rebates on those, a very large number of people are employed by small-business owners who in fact pay income taxes, not corporate taxes in many such cases.

So yes, these businesses having inaccurate information on what taxes will be due for the year, due to it supposedly being “better” to tell them it’s one value and then surprise them with a rebate next May, is not better than their having accurate information in the first place, which would have let them know they COULD in say the middle of 2007 have afforded a $600 improvement to their business or whatever, rather than only finding out in May of 2008 that it’s a doable deal.

There’s just nothing better about not overcharging in the first place versus saying it’s going to be more and then rebating some.
[/quote]

One issue here is that most small businesses have the choice to taxed either as a corporation or flow it through to their personal income tax (taxed as a partnership). If there were a true differential between the two then the choice would be clear. There are also issues on whether to take income at the company or individual level. If you take it at the individual level, you pay both sides of FICA; whereas, if you take at the corporate level then you avoid that and could possibly pay yourself a qualified dividend that would be only taxable at the cap gains rate.

If we really want to influence small business owners to be entrepreneurial, grow their businesses and create great new american jobs we should incent not to take income out (low income taxes) but to reinvest that money as a fully deductible expense (avoid income tax on investment) in human capital (wages). This is my problem with Supply Side Economics, it concentrates on the wrong tax. I agree to give businesses breaks, but do it in a way that entices them to grow, not to pull cash out of the business.

[Bill_Roberts]

[quote]ajcook99 wrote:
Bill Roberts wrote:
I didn’t see it as sarcastic, but facetious. It was not to be taken in the literal sense, but it was hardly “flesh-cutting” in nature, intent, or style.

Yes, the big difference is that if businesses and employers know that next year, and on into the future, tax rates will be low then they can expand accordingly.

Whereas if they thought rates would be high and then, surprise surprise, there are “stimulus checks” next year, the benefits of appropriately planning ahead were not able to happen.

If taxes will be (for example) $600 lower for everyone next year, it’s better to know that in advance than to have investors and businesses budgeting less for investment and capital improvements because they’re expecting taxes to be higher than they in fact will be.

I agree that there’s a difference, but not in the direction that the difference is.

And on this:

However, with a change in tax rates that would nominally result in a $600 benefit to the taxpayer, most of that benefit would be eaten up by the employment market (ie through lack of raises, increased compensation, etc…). The labor market adjusts for after-tax wages not pretax wages.

I just don’t understand your point. Perhaps I am missing what you’re intending to communicate (entirely possible.)

Reading it the way that it seems to me that it’s saying, it seems to me you’re saying it’s different for say an employee to have to pay $600 less on April 15th because the percentage tax rate was lower, than it is for him to pay it (along with the rest of his taxes) on April 15th but get a $600 check in May. I do not see where your parts about after-tax wages and so forth change there being no difference, except a couple weeks’ time, in those two equal-dollar cases?

I’ll try to explain what I am trying to convey here. As wage earners, workers make their employment and work decisions based on the money that they get to keep. Taxes is just one of the major items that is deducted or taken away from their earnings before they get desposable income. From the supply side, at the margin, we determine how much work we will provide and for how many hours based on how much disposable income will either need or desire.

The demand side (businesses) know this also and hence match a decrease in taxes with a small restriction in demand for labor. Net net, what works out of the situation is that employers know that if you were willing to do a particular job one year for $50,000 less your taxes, then you’d be willing to (or someone else would be) willing to do that same job the next year for that same number. If there is a decrease in tax rates for individuals, businesses react and simply either hold wages steady or decrease the amount that they pay their next hire. Does that clarify?

[/quote]
It clarifies what you were wishing to communicate but doesn’t, so far as I can tell, support the argument you were making or invalidate what I and others had posted to the contrary.

But now each person can read each position and decide for themselves which, if any, seems to make sense or seems to be right to them. That is the beauty of open forums.

[ajcook99]

[quote]Bill Roberts wrote:
ajcook99 wrote:
Bill Roberts wrote:

It clarifies what you were wishing to communicate but doesn’t, so far as I can tell, support the argument you were making or invalidate what I and others had posted to the contrary.

But now each person can read each position and decide for themselves which, if any, seems to make sense or seems to be right to them. That is the beauty of open forums.
[/quote]

Agreed on the open forums. I don’t think I was trying to invalidate your’s or anyone else’s arguments. I really don’t think we are too far off of agreement either. I get a general sentiment from the forum that most people truly believe that when a politician, any politician, says “I’ll lower your taxes” that it is really going to mean absolutley nothing to them individually. Am I wrong?

[Bill_Roberts]

I think it depends on the case.

I and a whole lot of others – doesn’t take a huge income for this to be true – would be paying way more taxes if not for the Bush tax cuts. Those were real tax cuts for vast numbers of people: pretty much everyone that was owing substantial income tax.

The Reagan tax cuts were very real.

However, so far as I know, when Obama says “middle class tax relief” and when quite a lot of other politicians say it, what they mean is, no tax cut for those that actually pay much income tax (by which I mean, thousands of dollars or more) but instead, checks being mailed out to those that don’t pay income tax or pay hardly any. So no, I don’t see it as being a “cut” that means anything to me individually. In fact, I don’t see how sending a check to people who don’t owe income tax in the first place is a “tax cut” or “tax relief” at all. I view it as absolutely fraudulent Newspeak.

[Gambit_Lost]

[quote]rainjack wrote:
Gambit_Lost wrote:
Bill Roberts wrote:
Is it a reasonable expectation that in an economy of millions of people, everyone will experience growth?

How about those that are not improving their job skills and have chosen jobs that are in fields that are declining?

If they’re not making the choices to improve their job skills or become value-providing workers in some field that is now doing better, how do you propose that they experience growth too?

By taxing me more and giving it to them? Or exactly how, if they are not choosing themselves to get on the buses that are moving ahead? It’s not that in America people are locked into a job or caste they are born into.

These are good questions. Of course not everyone will experience growth, there are always winners and losers. But we live in a time when “most” don’t experience growth. Why did that happen and should we change it? Some believe the role of government is to smooth alone those changes that you’re speaking of. Now is this really the governments role? and Can the govt really help spread growth? These are good questions that need answering.

Who is this “most” you speak of? I went from making less than 18K per year in 2000 to being in the top tax bracket in 2007. I expect to triple my income tax liability for 2008.
[/quote]
You can use the word “most” or “typical” or whatever you’d like. Growth has been concentrated over the last ten years.

I visited every tax bracket on my way up, so to say that it is concentrated at the top would be to suggest that no one can change economic class. I went from qualifying for welfare to the top 10% in wage earners, all under Bush.

Good work. But “concentrated at the top” has little or nothing to do with personal success stories. We all love Horatio Alger, but I’m talking about aggregate figures. Also, I doubt it’s the top 10%, more like the top 5% with most of that in the top 1%.

[quote]
Maybe the growth occured in the top 10% because that is where people are moving. At least those who actually earn their money, and don’t waste time on the government to give them a handout. [/quote]

Wages have stagnated. I’m simply reporting.

[quote]
I don’t believe government can permanently affect growth. Everything greenspan did was a temp fix to stabilize the markets. had he left things alone, I would bet the markets would have righted themselves. [/quote]

You’ve hit on one of the greatest achievements of modern economics: the ability to guide the business cycle. Look at the recessions and “peaks” for the last 20 or so years and compare them to those over history. We’ve been able to guide the cycle to avoid the extreme peaks and valleys. Can the market fix itself? Certainly, but more will suffer and the peaks and valleys move further away from the center.

[quote]
Just look at the subprime goat screw. Clinton’s boy started this shit so that everyone could own a home. Not a bad idea, but to offer homes to those who shouldn’t qualify, well - look at where that has gotten us: the crash of the real estates bubble, and the gov’t takeover of Freddie and Fannie. [/quote] Clinton started it and it got absurd under Bush, there’s a good amount of blame to go around.

People act as if inflation, or recession is a bad thing. last time I checked, they were both part of the normal economic cycle. But when you politicize the economy, this is where you wind up: giving money to people who didn’t earn it at the expense of people who did.

I don’t think anyone is arguing against the business cycle, whats being argued is that growth has not been experienced throughout the economy despite economic expansion.

[The_Mage]

Interesting some of what is being discussed here.

I find it funny that people are making statements that are kind of illogical when you think about it.

Like the idea that the improving economy does not affect the poor. (Yes, heavily paraphrased.) Wait a second, if it helps them, they ain’t po no mo.

Take a guy making 20k a year, get him up to $120k, and suddenly he is upper class.

So yes it is only benefiting the upper class. The point is that they weren’t upper class before this.

From 2006 to 2007 the number of millionaires rose by 9%.

In 2005 the jump was 21%.

But it must be pointed out that the reason it helps the rich is because they are doing something to make themselves rich.

Somebody didn’t get that raise this year? Maybe they didn’t deserve it.

Money is like muscle. You need to work at it, not sit on your ass doing nothing.

Also everyone needs to understand that just because somebody is rich now, it doesn’t mean they were rich before.

Plus we are adding people to the economy. New low paid employees who have no experience are being added to the economy, and these raw numbers never takes this into account. These “classes” are not the same people they were before.

[Gambit_Lost]

[quote]dhickey wrote:

Should you pile up debt to grow the economy? What are the long term effects of this?[/quote] No. But no one suggested increasing debt would improve the economy. What are you talking about?

[quote]
I just watched a story on CBS comparing Obama’s tax plan to McCain’s against real families. One family made $33k and paid no taxes. Under McCain they would continue to pay no tax. Under Barry they would get a check for $2200. Upper income tax rates would go from 33/36% to 36/39%. How is that not redistribution of wealth? Is that what you concider “spreading growth”.[/quote] No, that’s not what I would consider spreading growth, I would prefer if that money were used in other ways. Got a link to the video by chance? If I’ve a min tomorrow I’ll try to see what it’s about.

Although, thinking about it. Most economists disagree with me. Most that I know do recommend simply giving money out. They feel that when programs are created more money is lost.

[quote]
Should people that do nothing to improve their situation share in the growth? I work 60hrs a week and am away from my familiy at least 3 days a week. I make these sacrifices and pay more while other that choose not to make these sacrifices get a check. Great solution.[/quote]

You live in MN, right? Look around. There are a hell of a lot of hard workers out there. These types have never stopped working hard. But recently they’ve found themselves worse off than they were 10 years ago. Even McCain admitted this in that commercial of his. Should those who are lazy make more money? no. Are the millions of hard working mothers and fathers of this country share in the countries economic expansion? Yes.

[Gambit_Lost]

[quote]dhickey wrote:
Gambit_Lost wrote:

I honestly don’t understand the question. Are you asking if the economy has grown in the last 10 years? Are you asking if wages have stagnated? Do you have access to wsj.com? Just type in a search.
Here’s a quickly found article that I posted earlier

The report, an annual snapshot of living standards, also showed that income in the typical U.S. household remained lower than in 2000, despite six years of economic expansion.

Ranks of Uninsured Fell in '07, Census Says

My question is how the economy can grow without matching average income growth. Were does the money go? The article refenses the “typical familiy”. I don’t know what a typical family is or where all this missing money is going.[/quote]

This is the exact point. This is the “concentration” that I’m talking about. The money is mostly going to the wealthiest 1-2%.

PS There was an IMF study put out at the beginning of the summer that looked at this, if you run a search on their webpage you might be able to find it.

[Gambit_Lost]

[quote]thunderbolt23 wrote:
Gambit_Lost wrote:

If you honestly don’t know the answer to this question, you might want to look it up.

Negative - I know the answer.

Do you have an argument as to why we should keep taxes low during the dangers of a recession on the theory that the growth is good, but why taxes should be raised outside of those dangers?

[/quote]

If you knew the answer, you wouldn’t ask the next question. I’ve written a bit about it on this thread.

[Gambit_Lost]

[quote]Bill Roberts wrote:
Gambit_Lost wrote:
If you think… then you wouldn’t talk about “fairness” and the like.

I must not have been clear enough, I was using the term as some others do, that supposedly (for example) raising capital gains taxes to 30% even granting that it will reduce revenues to the government is, because it takes money away from “the rich,” “more fair.”

I was not referring to whether I view such as “fair.” I was stating only that, for example, Obama calls that “fair.”
[/quote] I really don’t believe that is what he was arguing. If you have a link to the video, I’ll try to watch. I tried to explain what I’m guessing he said, based on what you wrote, above.

As to your other points, IMO you are mistaken to believe that the government causes economic growth. Government can impede economic growth, and lessening the interference represents relative improvement, but government does not cause economic growth. It can’t: it has no means to do so. It cannot cause, for example, productivity increases, though it can cause decreases.

I certainly don’t believe that the government can “cause” growth. It can, however, direct it. Look at India and IT, for example. Or look at McCain and Obama talking about “creating jobs that won’t leave the country.” Look at South Korea’s rise. Look at the defense industry, for example.

I feel like this is perhaps unclear, but I’m half asleep as I type this.

[The_Mage]

The average millionaire works 60 - 80 hours a week. The average person works less then 40.

The one factor people do not seem to understand is that people need to take charge of their lives.

Too many people just get a job, then spend everything they earn, expecting their company, or the government to take care of them.

If a person works for 10 year, and has nothing, what happened to all that money? Why didn’t they put any away for the proverbial rainy day?

Oh yeah, they can’t afford it. They can afford that $400 a month car payment on that brand new car. (Oooh,shiny.) They can afford to eat out every week. Fill their ipod, keep their cable up, and buy that new flat screen HDTV, but put away money? Nah.

[rainjack]

[quote]Gambit_Lost wrote:

I really don’t believe that is what he was arguing. If you have a link to the video, I’ll try to watch. I tried to explain what I’m guessing he said, based on what you wrote, above.[/quote]

Then maybe you should go find the link and watch the interview. He Opie states point blank that it is only fair that the wealthy help out the others with their money.

He wants income redistribution, and that is just wrong. It is not my fault that others are not as ambitious, and entrepreneurial as I am. Why should I be punished, and have guilt placed on me because I am successful?

Obama is trying to turn our society into a youth soccer match.

There are no losers, and everyone gets a trophy at the end of the season.

[rainjack]

[quote]The Mage wrote:
The average millionaire works 60 - 80 hours a week. The average person works less then 40.

The one factor people do not seem to understand is that people need to take charge of their lives.

Too many people just get a job, then spend everything they earn, expecting their company, or the government to take care of them.

If a person works for 10 year, and has nothing, what happened to all that money? Why didn’t they put any away for the proverbial rainy day?

Oh yeah, they can’t afford it. They can afford that $400 a month car payment on that brand new car. (Oooh,shiny.) They can afford to eat out every week. Fill their ipod, keep their cable up, and buy that new flat screen HDTV, but put away money? Nah.[/quote]

Screw saving. If they would just get out of debt, the lower classes would have more cash than they would know what to do with.

But that’s not their thinking. They want to spend all of their money, and have fuckwads like Obama, and Bush give them mine.