tater, You can keep repeating "tax cuts for the very rich" like James Carville but that doesn't change the facts. The "rich" that are the target of this class warfare start at about 70,000 a year, which puts one in the top 20% or so. In fact, the BUsh plan offers substantial tax savings for middle class wage earners. Some analysts fault the plan for offering too much relief there and not enough in areas that would actually improve the economy. To say that dividend tax relief will go to only a small percentage misses the whole point of the exercise. The idea is to make it attractive to hold dividend paying stocks. If dividends are tax friendly, many more people will invest in solid companies that pay dividends. Create an incentive and thereby change behavior. Don't you think it's better for the economy for companies to be encouraged to pay dividends and attract a stable shareholder base than to do what they do now, which is to retain earnings and piss them away on ill-considered acquisitions and the like , all to avoid the double tax? I agree with you that there are way too many hidden taxes that in fact do hit lower earners disproportionately. My phone bill is 40% taxes. I don't see the Democrats working to cut these taxes however. Rather, they are constantly trying to increase them, tobacco taxes for example. Bu that is another issue.
I think there are three answers. One, double taxation is wrong and creates economic distortion. The burden of persuasion should be on those wanting to retain it. We want companies making decisions on investments versus dividen payouts for economic reasons, not to avoid double taxation. Creating incentives to buy and hold stock is a huge benefit for the economy. Two, there are other elements in the President's plan that address investment, such as expanded writeoffs for cap investments. Three, putting "money into the hands of those most likely to spend it" does nothing for the crucial element of the economy, which is incentives. It might bump up Walmart's sales for a month, at enormous cost, but we would still be stuck with a tax code that punishes savings and investment.
Let me address a couple of your points, AAA. 1) [/i]Creating incentives to buy and hold stock is a huge benefit for the economy.[/i] I'm not so sure that it is. Not in every case. At the very least, I think a distinction ought to be made between incentives to buy and hold stock of new companies (IPOs) and stock in the secondary market, as the two have quite different effects. I would agree that it would be good for the economy to have the public willing to invest in entrepreuneurial ventures; provided, of course, that there is economic 'substance', ie, a solid business case, for starting the venture -- in other words, no "pet.com"s. While there are certain benefits in runaway markets like 1995-2000, in that consumers feeling "wealthy" (even though the stock market "wealth" is so transitory), the negative effects on the opposite side of the slope are equal, or perhaps even greater (as in the case of a bubble), in magnitude; thus, it could well be argued, accentuating the natural boom/bust cycle. So, to the extent that stock market "wealth" is such a nebulous concept, I think the jury is very much out on whether incentives to own stock are really a "huge benefit" to the economy; especially if we take "the economy" to include the general population, not just a specific portion of it (guess who I have in mind.) 2) I don't have any comment on that. 3) [/i]Three, putting "money into the hands of those most likely to spend it" does nothing for the crucial element of the economy, which is incentives.[/i] It hardly "does nothing". Since, ultimately, the entire economy depends on consumers spending money, putting money into the hands of those who are most likely to spend it most certainly provides a boost to the economy; increased spending is the very definition of economic growth. And it does provide for "the crucial element", incentives. The money spent doesn't just disappear, it goes into the hands of business, and since business is ultimately owned by individuals, those individuals have more income, which they too spend a portion of, and the cycle keeps thus repeating. Obviously with more spending, businesses are more likely to increase output to meet the increased demand -- ie, they have an incentive to. And the reason that these people are "most likely to spend it" is because their consumption falls either within or is very close to their level of 'autonomous consumption'; ie, consumption that would take place even if they had NO income. This is accomplished by dipping into savings or, in the most dire straits, scavenging or stealing.
AAA - The only ones waging class-warfare are those at the top. I always find it amusing - these transparent Bush tactics to paint the opposition with the very brush they use to whitewash the truth - like disgracefully labeling all those who oppose their dubious arguments for war as "unpatriotic" and those actually fought for the homeland defense bill as "unconcerned with the security of the country: because they dared to oppose Bush's attempts to thwart it at first ( ironic as it is now a much promoted cornerstone of the very short list of Bush's accomplishments -though it remains largely unfunded). I am constantly amazed how this administration is able to mask it's true intention in such feeble disguise and NOT be called on it by the so-called "liberal media"?? REmember all those "made in China" boxes suddenly labeled over with phony "made in America stickers" or more recently - Bush requesting at a recent tax cut stump speech in Indiana that those standing behind him (in view of the TV cameras) remove their neck-ties and pocket squares to appear more working class (all hat, no cattle !). But I digress..... Let's examine the deception: "92 million Americans will keep an average of $1,083 more of their own money when this tax plan goes through..." This statement is misleading because the average is skewed upward by the very large tax cuts that would go to a small number of high-income taxpayers. For an example of how averages can be deceptive, consider a group of five individuals - four of whom each receive $100 tax cuts and one who receives a $4,600 tax cut. The average tax cut for the group is $1,000, but four of the five receive far less than this amount. The Administration's use of averages suffers from a similar distortion. Data from the Urban Institute-Brookings Institution Tax Policy Center show that 80 percent of tax filers would receive less than the $1,083 "average" amount, while about half of tax filers would receive $100 or less. The White House produced the $1,083 average figure by averaging together high-income people who would get massive tax cuts - the average tax cut would be $90,000 for people who make more than $1 million per year - with the much larger number of Americans who would get small tax cuts. Thus, while $1,083 may be the average tax cut amount, it does not accurately reflect what an "average" American would receive. The Tax Policy Center data show that the average tax cut for those in the middle fifth of the income spectrum would be $256. (Fair Taxes For All) So here's a few more for you - source credited: The 226,000 Americans with an Adjusted Gross Income of over $1,000,000 would get an average tax cut of almost $90,000 from the Bush growth package alone --- while the middle 20% of the population would get a tax cut of only $256. (Urban-Brookings Tax Policy Center). One half of the tax cuts derived from the Administration's proposal to eliminate the tax on dividends and reduce capital gains would go to the top 1% of taxpayers-three fourths to the top 5%. (Citizens for Tax Justice) 31% of the nation's taxpayers would get no benefit from the Bush Tax Cuts and almost half (48%) would receive less than $100 in tax cuts. (Citizens for Tax Justice). Under the Bush proposal to cut dividend taxes, Bill Gates will receive $38 million per year in dividends tax-free. (Toronto Star, 2/9/03) Tax cuts are a GREAT thing for the economy and for tax payers as a hard and fast rule. However in a time of dire economic uncertainty, massive trade and budget deficits, and the incredible financial burden of war, tax cuts are a decidedly different proposition! If they are to be introduced they MUST be precision guided to targets of maximum opportunity. In the current economic theatre - that means 2 things - Creating Jobs, and Stimulating Demand. We are working off a state of massive Over-Capacity in our economy! Adding more money to the top is no way of solving the problems we face - in fact it is just as likely to exacerbate the problem. Companies - even ones in decimated industries like fibre-optics have cash on hand (JDSU has 12 years of cash on hand at it's current burn rate!) yet it's earnings are zilch it's stock in the toilet. It does not need more cash - or more incentive to pay-out dividends - it needs CUSTOMERS - it needs DEMAND. It needs real economic growth - from the bottom UP. While I agree that dividend payments are a good thing as a barometer of corporate health (as is free cash flow) and the taxation of dividends a net negative - overall the price of a total abolition of dividend taxes at this time is highly suspect as economic stimulus - and almost absurd as a tool for job creation. Bonus question - what revenue stream through a company to it's shareholders or employees is NOT double taxed - or even triple taxed? The point being - double taxation is not unique to dividend payments - nor is it as you suggest creating any aberration in the economy. It is a long standing and ubiquitous component of the tax code.
You claim Bush skews the numbers, and you turn around and do exactly the same thing. Quoting absoute numbers is totally meaningless. The rich pay a disproportionate amount of taxes, and when there is a tax cut, they are going to save a disproporionate amount as well. It's only fair. This clearly shows your twisted logic. The fact is, the rich pay FAR more in taxes, so any tax cut is going to help them the most. There is no way around this. You seem to want more of the same. Tax cuts ONLY for the lower income earners would only INCREASE the disproportionate taxes that we have today. This is exactly what im arguing against. Extreme redistribution of wealth is basically a communistic idea. I'm a capitalist. I guess we just disagree philosophically. You seem to want even MORE wealth redistribution. Alfonso seems the most communistic of the bunch. Would you say you guys lean more towards a communistic system or a capitalistic system? If capitalistic, prove it, keeping in mind that wealth distribution which is what we have today, is a communistic idea. peace axeman
If you guys really dont think 60-70% tax rates for the rich is fair, YOU can pay the difference. Put up or shut up. Next tax season I want to see you turn in 80-90% of your gross income so you are not fricken hypocrites peace axeman
If the point of the tax cuts is to stimulate the economy, shouldn't the taxes be cut that do so? The real question is, and I don't have the answer, how do we know the money saved via a reduction in taxes is going to be immediately spent in a manner that benefits everyone in the economy? If a very wealthy man simply puts his tax savings into T-Bills, how does that stimulate the economy? My assumption is that the middle class needs the tax cut the most, as they are most likely to immediately spend the money. If the money saved is intended to go into business, then let it be structured that it goes into expansion, and not CEO bonuses.
Axeman: Taking over half your money isnt sucking an individual dry? How about 60%? How about 70%? Crazy. Alfonso: "Are the efforts rewarded? Are you still able to improve -- significantly improve -- the condition of your life? Is there still a surplus of value left for you? Obviously yes. See, I don't consider it "your" money until the taxes are paid. I just don't see it that way." The communists would agree with you. Tell us, are you really a Marxist? How would you describe your political philosophy? This is not an attack, you truly sound like a communist/marxist by definition, so please set the record set. The fact is, it *IS*legally my money, even before taxes. Your standing on zero ground here. Taxes are paid AFTER the fact to support infrastructure, etc. I'll give you the analogy one more time, so you MIGHT get it this time. You are basically saying it's OK to nearly beat someone to death, as long as you don't actually kill them. Let's follow your logic to it's conclusion. Your logic is basically saying that we should tax someone "right up to the point" where he is still able to "improve" his situation. So let's apply this to Bill Gates when he was worth 40 billion. The government should take 39.99 billion from him in taxes because what is left over is still a HUGE improvement (especially over the average individual. ) Correct? Yeah - we disagree. I believe in America the land of the free. Where the pursuit of happiness is a RIGHT. This is not America, land of the taxed to death, land of the "you only get enough to improve", land of the "whats yours is mine", land of the "we take what you are capable of contributing". These are all communistic concepts, and have no place in our country. peace axeman
No. I explain the numbers that Bush distorts. If you can't recognize the difference between explanation and distortion you're in the wrong business. Or you should be working in finance for WCOM or TYCO. Instead of making your leaps of logic and throwing around polarizing labels like "communist" why don't you take the time to read the tax plan, (either the original Bush proposition, the Senate ratified version or the current House version) and explain in specific and convincing terms why I, and those that oppose it are incorrect. Thus far you've shown no ability to counter any point made, with anything more than inflammatory rhetoric. It might work on The Factor, but you're dealing with a more sophisticated audience here. Step up. Or, step off.
The bush tax plan was not what I was debating specifically. I'm debating high taxes in general, which you seem to support. The communist label is not at all rhetoric. It seems to apply quite well. Wealth distrubtion of this scale IS communistic. If the label fits...wear it. In terms of communistic ideas, this was directed more at alfonso. I think i've countered the points quite well. You simply ignored it. You used aboslute numbers as if they mean anything. You don't see the simple logic that any tax cut will benefit the rich more than the poor because they already pay a disproportionately greater percentage of taxes than the poor. So running around yelling this benefits the top x% is a pretty meaningless statement. It's simply NOT possible to come up with a fair tax cut that doesn't benefit the rich more in absolute terms. I'm sure you will ignore the meat of my post again, so there is no point in arguing. I see lot's of arguments for expanding the unfair chasm between upper tax payers and lower tax payers. Any tax which doesn't save the rich more money in absolute terms, will only make the unfair difference worse. Tell us how YOU would propose a tax cut that would benefit the lower class withour raping the wealthy even more, and without increasing the chasm. peace axeman