Economics 101 for the Dimocraps who don't seem to understand

[Drbio]

Economics 101.


Tax, tax cuts and how it all works...

Sometimes Politicians can exclaim; "It's just a tax cut for the rich!", and
it is just accepted to be fact. But what does that really mean? Just in case
you are not completely clear on this issue, we hope the following will
help.

Tax Cuts - A Simple Lesson In Economics

This is how the cookie crumbles. Please read it carefully.

Let's put tax cuts in terms everyone can understand. Suppose that every day,
ten men go out for dinner. The bill for all ten comes to $100. If they paid
their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh $7.
The eighth $12.
The ninth $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do.

The ten men ate dinner in the restaurant every day and seemed quite happy
with the arrangement, until one day, the owner threw them a curve.

"Since you are all such good customers," he said, "I'm going to reduce the
cost of your daily meal by $20."

So, now dinner for the ten only cost $80. The group still wanted to pay their
bill the way we pay our taxes.

So, the first four men were unaffected. They would still eat for free. But
what about the other six, the paying customers? How could they divvy up
the $20 windfall so that everyone would get his 'fair share'?

The six men realized that $20 divided by six is $3.33. But if they subtracted
that from everybody's share, then the fifth man and the sixth man would each
end up being 'PAID' to eat their meal.

So, the restaurant owner suggested that it would be fair to reduce each man's
bill by roughly the same amount, and he proceeded to work out the amounts
each should pay.

And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33% savings).
The seventh now paid $5 instead of $7 (28% savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to eat for
free. But once outside the restaurant, the men began to compare their savings.

"I only got a dollar out of the $20," declared the sixth man. He pointed to the
tenth man "but he got $10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too.
It's unfair that he got ten times more than me!"

"That's true!!" shouted the seventh man. "Why should he get $10 back when I
got only $2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get anything at all.
The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for dinner, so the nine sat down
and ate without him. But when it came time to pay the bill, they discovered
something important. They didn't have enough money between all of them for
even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may
not show up at the table anymore. There are lots of good restaurants in Europe and the Caribbean.

[reeds]

"There are lots of good restaurants in Europe and the Caribbean. " HAHAAHAA..what a bunch of BS your little lesson is... NO WAY NO how they will move out of this country..they will continue to cry that they are paying too much in TAXES- thats it..funny thing is, the rich can afford the tax hit- THAT IS THE SIMPLE PART of it all..but the rich continue to belly ache and cry that they are treated unfairly- while millions of Americans must work 2 jobs to make ends meet...but do the rich care? NO..they live in the BEST country in the WORLD- PERIOD..but its never good enough is it??? They still belly ache over paying taxes...waaa waaa waaa...

Another point about your economics 101 BS...the example is terrible...most poor people DONT GO TO DINNER...they eat what they can afford, or skip meals so they can heat their home/apt..but you republicans dont beleive that is possible in this country..YES-it is...millions of americans are considered working poor...homeless all over this country..but the F___king rich will still cry about paying too much in taxes.....I hope they all mover to EUROPE....they belong there

[EricaLubarsky]

I dont know if Im just a "dimocrat"....

[reeds]

Not to mention DRBIO- where in the hell do you think the taxes are less in Europe??? and you have the guts to say my posts have no substance????

[kg_veteran]

Excellent post, Doc.

Originally posted by: reeds
"There are lots of good restaurants in Europe and the Caribbean. " HAHAAHAA..what a bunch of BS your little lesson is...

Actually, it was a great illustration of how inconsistent Democratic rhetoric on the issue really is.

NO WAY NO how they will move out of this country..

How do you know what the rich will do?

they will continue to cry that they are paying too much in TAXES- thats it..funny thing is, the rich can afford the tax hit- THAT IS THE SIMPLE PART of it all..

You pretty much missed the point. It's not about whether they can "afford the tax hit." It's about whether the rich ought to be treated the same way on tax cuts that they are regarding actual tax paid.

but the rich continue to belly ache and cry that they are treated unfairly- while millions of Americans must work 2 jobs to make ends meet...but do the rich care?

If they get taxed at a higher rate but don't get a greater tax cut when cuts are given, then they are right, as Doc's illustration amply demonstrates. It's just too bad you couldn't figure that out.

As for millions of Americans who work two jobs to make ends meet, what in the world does that have to do with whether the rich are entitled to a proportionate tax cut? Absolutely nothing.

NO..they live in the BEST country in the WORLD- PERIOD..but its never good enough is it??? They still belly ache over paying taxes...waaa waaa waaa...

How old are you, man? Ten? "Waaa waaa waaa"? Grow up.

Doc is spot on with a great, logical post. You're the one bellyaching with your class envy diatribe.

Another point about your economics 101 BS...the example is terrible...most poor people DONT GO TO DINNER...they eat what they can afford, or skip meals so they can heat their home/apt..but you republicans dont beleive that is possible in this country..YES-it is...millions of americans are considered working poor...homeless all over this country..but the F___king rich will still cry about paying too much in taxes.....I hope they all mover to EUROPE....they belong there

You really don't get it, do you? The example wasn't LITERALLY about going out to dinner. Nor was it about paying too much in taxes. Save the soapbox demagoguery for the right thread.

[Usually Lurkin]

Dear Reeds You facist bully-boy,

Please send me more money.

May the fruit of your loins grow in the belly of your woman.
Your friend,
Usually Lurkin

[dude1394]

Great post Doc.. I've seen this analysis somewhere before. Of course the class-warfare, socialist clowns don't get it and spout smart-aleck restaurant jokes when you are trying to engage them intellectually ( a tough job I understand).

Turn this to the job market, investment and new capital creation. What happens is that the rich guy decides why take a risk with my money. Even if I risk, invest, work harder and make 100 more dollars I only get to keep 41 of those 100 dollars I just earned. So ultimately I decide to take less risk, invest less and create less new jobs, capital, etc. for the economy. Of course the dimocrats (read kerry, kennedy, etc.) decide that 41 is too much to so the rich guy should only get 30 cents on every dollar further stifiliing new market,job,capital creation.

Same old stupid liberalism.

[dalmations202]

As much as I dislike agreeing with Doc, his "story" is dead on for the truth. Of course it is a simplistic version of the truth, but the truth never the less.

As far as understanding the "There are lots of good restaurants in Europe and the Caribbean" comment, I have a friend who did just that. Bought a house in the Puerto Rico, moved his base company there, gained citizenship. Then paid no income taxes here. Saved him about 300K a year.

[Chiwas]

Even when the system works in the way it is pointed in the metaphor of the restaurant, there are 2 things that seems to be left:

- Most or all of the persons who paid less than the 10th man, work for him. They help him to make him wealthy. It is not bad or wrong, but it's something to take into account.

- Some or several persons can't get the "restaurant", above all in the poor contries.

The taxing system is not inadequate, what is wrong comes before the collecting of them, which is not the topic of this thread.

Btw, many of the 10th's men actually invest their money in China, India and other countries cause they pay less taxes -or none- and the raw materials and labor are cheaper. They get more wealthy cutting jobs and not raising salaries in the original country, not letting the other "eaters" to be able to pay more of the "bill" and provoking more persons to not get the "restaurant".

The problem is the insatiable and uncontrollable Free Market, not the taxing system, I think.

[Mavdog]

It's only equitable to return the taxes to those who paid them, and do so in proportion to how much was paid.

What is interesting tho is the tax rates that upper income (>$300K) are at some of the lowest in decades.

It is a fallacy to think that upper income earners won't invest or work if they have to pay 30 cents of every dollar earned to the government in taxes. They are smart enough to realize they keep 70 cents when it's all said and done.

A better question is the initiative to not tax stock dividends. This is income to the recipient and IMHO should be taxable. It is fair to say that the more wealthy taxpayers are the ONLY ones who benefit from not taxing dividends. Taxing dividends is NOT going to influence investment decisions, as the stocks who have either started paying dividends as well as the cos. that have increased their dividends have not experienced any signifigant upswing in their stock prices relative to the overall mkt. This is an inequitable situation and should be reversed.

A better question than who should get the tax refunds is who is going to pay for the massive deficits over the next 5 years. Economics 101 says that the increase in government borrowing will increase the costs of debt, increasing the costs of doing business/personal finance and placing inflationary pressure on the overall economy. Notwithstanding the fact that the government is due to pay higher SS benefits that aren't there in the SS fund to pay, putting even more pressure on the federal budget that unfortunately can't absorb the higher expenses.

[thebac]

The example provided has little to do with Economics. It might be "Rushian" Economics as taught by El Rushbo, but like most of his "teachings", it has little to do with reality, or in this case, the social science we know as Economics.

In addition, the example is highly flawed. While it is true that the rich pay a disproportionate share of the federal income tax, which is quite progressive, it is less true at the state and local level, where the maximum combined marginal tax rate does not exceed 11% (and only one state has a state income tax rate in the double digits). As taxes are cut at the federal level, and the federal government sends less in aid to state government, what happens to states, who unlike Bush, have to balance their budgets. Yep, they raise taxes.

Furthermore, one part conveniently forgotten is the payroll tax, which is regressive (technically the tax rate is flat until it shaply declines at a certain threshold), especially at higher income levels. Some don't really view the payroll tax as a tax because you're getting Social Security, Medicare, and other benefits from it, but only if you live long enough. If you die young, you won't get back what you put in. Who is affected? Again, the poor, who tend to die younger and already face a regressive tax system. On a related note, Bush seems rather unconcerned about the issue of double taxation of the payroll tax.

Suggesting that not extending the tax cuts for the super-high-income people would drive them out of the country also suggests that more would come to the US after the tax cuts were passed. I can't really say that didn't happen, because if it did, we're talking about sucha a small segment of the population that any change would be hard to detect (the top marginal tax rate affects only couples making well more than $300,000 in TAXABLE income (i.e., after deductions and exemptions)).

Of course, we've just covered the federal income tax so far. Don't even get me started on the estate tax.

[reeds]

WHY is it only the Republicans on this board fire back??? But in PM land I am getting pms telling me to "keep it up", "good work", "you tell em" , "they are way off base"...blah blah blah... how can you democrats on this board be so afraid of these people? Are they that threatning? HAHAHA...NO

"How do you know what the rich will do?"..its simple really? Are they all heading out of this country now???NO...its the best place in the world to live..so they stay..but they continue to cry that they are paying more than their fair share..

"If they get taxed at a higher rate but don't get a greater tax cut when cuts are given, then they are right, as Doc's illustration amply demonstrates. It's just too bad you couldn't figure that out." I figured that out..but the point still stands...Do they need the greater tax cuts when cuts are given? Do they need that vacation home? A new Benz? That third trip to Europe this year? While in the mean time people all over this country are without work, food, homes...work two jobs, not even able to tuck their kids in at night because they are working to provide for them... I dont care how the rich got rich, if it was new money or old, the fact remains..if anyone should get hit on taxes, its them...

[Psychedelic Fuzz]

Reeds, I'm not going to fault you for liberal poiny of views. Some of my political opinions are left-leaning, but others aren't.
Likewise, I'm not going to fault anyone else for supporting you on some of these things. Some very good friends here are professed liberals.

but you, friend, are a sheep
buying into leftist propaganda and "my club is better than your club" politics. You come here only to instigate, not to discuss individual issues seperate from left/right or rep/dem I'm right, you're wrong p*ssing contests.

If you were to show up and post in other threads, or talk about anything else (I dunno, basketball for starters) people might be a little more receptive to a civil political debate. You come here looking for arguments, and you find them.

Political views aside (because they aren't the issue) you deserve what you get.

[Usually Lurkin]

Reeds,

really, I don't have enough money for lunch right now.
Please send some cash. If you'd like, you can send twice as much to D-M.com, where they can send me my portion after taking their own cut.

UL.

[Usually Lurkin]

Originally posted by: thebac
Some don't really view the payroll tax as a tax because you're getting Social Security, Medicare, and other benefits from it, but only if you live long enough. If you die young, you won't get back what you put in. Who is affected? Again, the poor, who tend to die younger and already face a regressive tax system. On a related note, Bush seems rather unconcerned about the issue of double taxation of the payroll tax.

Absolutely!!!!
SS and Medicare screws the poor because they don't live long enough to get anything out of it.
SS and Medicare screws the rich because they know how to invest better than SS.
SS and Medicare screws the middle class because they shoulder the payload and have had choice removed from such a large part of their own budgets.

[Dooby]

I stay out of these arguments, because I had my fill when I was younger and in a different profession (some here know about my former career). Generally, I just let both sides go about their business. But when some body says something that is just undefensible, I have to respond.

Under <u>NO</u> definition, does the USA have a regressive tax system. Not economics, not socio-political; not geo-political.

This statement is not based in fact.

[thebac]

Dooby,

if your post is in response to mine, the federal payroll tax is, in fact, regressive. If it were simply a flat tax (which one component (Medicare) of it is), it would be neither progressive nor regressive. However, you pay a flat rate up to $87,900 for Social Security in 2004, and up to $7,000 for FUTA, at which point the marginal rate drops to ZERO. Therefore, the federal payroll tax, which is the sum of the three, IS, in fact, regressive.

I'm not too familiar with state payroll taxes, so I can't comment on those.

(I never claimed that the federal income tax or the state or local income tax systems are regressive, because they're NOT. My argument is just that the tax system in the US is not nearly as progressive as one might conclude by simply looking at the federal income tax.)

[mary]

Dooby, I don't think thebac was referring to the U.S. income tax system as regressive. Rather he was pointing out specific taxes that are regressive. The FICA tax is regressive simply because there is an annual limit. Therefore as your income exceeds the annual limit, the percentage you paid in FICA that year, represents a smaller and smaller portion of your income. The property tax is considered regressive for an entirely different reason. For low-income families, their home usually represents 100% of their total wealth. For higher income families, the home usually represents only a small portion of total wealth (because higher income families will hold other assets). As a percentage of total wealth, low-income families pay a higher percentage in property taxes - therefore it is also regarded as a regressive tax (and always has been).

[Dooby]

Originally posted by: thebac
Dooby,

if your post is in response to mine, the federal payroll tax is, in fact, regressive. If it were simply a flat tax (which one component (Medicare) of it is), it would be neither progressive nor regressive. However, you pay a flat rate up to $87,900 for Social Security in 2004, and up to $7,000 for FUTA, at which point the marginal rate drops to ZERO. Therefore, the federal payroll tax, which is the sum of the three, IS, in fact, regressive.

I'm not too familiar with state payroll taxes, so I can't comment on those.

(I never claimed that the federal income tax or the state or local income tax systems are regressive, because they're NOT. My argument is just that the tax system in the US is not nearly as progressive as one might conclude by simply looking at the federal income tax.)

Again, I have really grown weary of these conversations over the years, but anyway...

Al Gore says we need a "lock box" to protect moneys paid into SS. Therefore, payroll taxes are not "taxes" on workers, they are only taxes on employers who receive no benefits therefrom. Of course, Gore benefitted from such a system during his entire political career, because without factoring social security revenues, the budget was never balanced under Clinton (who deserved about 1% of the credit he received for it) and the deficit was substantially larger during his career as a senator and a congressman. But I digress.

The presumption that payroll taxes are regressive is a little misleading. The vast majority of payroll taxes in this country are paid by employers who receive no SS benefits ever and who, generally, are not poor. If you want to argue about an employee "receiving" the total cost of employment, you walk into an argument made by Republicans for 30 years. Plus your benefits discussion fails to mention such benefits as SSI and federal disability. At the end of the day the Govt. loses money on SS benefits on an individual basis and that cannot be denied.

And cutting payroll taxes does nothing to increase job growth as the democrats discuss it as the total cost to employ a worker will not be reduced because the cut is only on the employee end. Besides, very soon, SS will be running a deficit. Do you really think cutting revenue is a good idea? No. So, the Dems intend to jack it up on the employer side, raising the cost to employ a worker. This, quite frankly, is genius (sarcasm).

Cutting payroll taxes (version 2001-2004) is the Democratic Party's answer to the Republican Party's "retroactive" tax cut (versions 2001, 2003), which was the answer to Clinton's tax credits. At the end of the day, it is about cutting checks to the middle class in exchange for votes. Neither do much to stimulate the economy at the end of the day.

Republican House members (and democrats, too) have stacks of policy papers from the CRS on payroll taxes. For whatever reason, the Dems are enjoying using Page 1 in their issue papers these days. I guess it is only fair, because Republcans have only been reading page 2 (about the cost to employ a worker in this country) for years.

[LRB]

Mary under the same definition as property tax, speeding tickets, parking tickets, sales tax, licensing charges, passport fees, etc. could all be considered regressive taxes. If any charges by government which aren't at least proportional to an individuals net wealth would be regressive. But the funny thing is that if the rich person lost most of their wealth, they would still pay the same property tax as if they were rich. The tax is based on an item and not a person. As some taxes and fees are based on events. I'm OK with that definition. And I don't see anything wrong with a regressive tax system under that definition. However in the US the total taxes and government fees paid by individuals is not regressive, and in fact is progressive as a general rule. I'm sure there might possibly be a few exceptions somewhere.

But to return to Doc's origninal example, what would be the fairest way to distribute the food bill for the 10 mean. Each paying an equal share of the bill would probably be fairer than the system that they had. But the fairest would be for each person to pay for the food that they consumed. If one man ate only $5 worth of food he should pay $5. If another ate $20 worth of food, he should pay only $20. I think most people would agree with this.

However this example of fairness doesn't translate well to many of the services that our government provides. For example how much of our military forces would you say one individual uses versus another individual. Obviously paying for what you use would totally eliminate government welfare. How would you pay for prisons since the prisoners couldn't work. But is a progressive income the fairest way to pay for government? That's debatable.

[mary]

Mary under the same definition as property tax, speeding tickets, parking tickets, sales tax, licensing charges, passport fees, etc. could all be considered regressive taxes. If any charges by government which aren't at least proportional to an individuals net wealth would be regressive. . As some taxes and fees are based on events. I'm OK with that definition. And I don't see anything wrong with a regressive tax system under that definition. However in the US the total taxes and government fees paid by individuals is not regressive, and in fact is progressive as a general rule. I'm sure there might possibly be a few exceptions somewhere

LRB, the only reason I cited personal wealth, is because a property tax is taxing a person's wealth. That certainly doesn't mean it should be the yardstick to determine if other taxes are regressive or not. I'm just talking about how the tax is structured. The sales tax is not regressive at all since all qualified sales are taxed at a flat rate.

Speeding and parking tickets are not taxes, but fines for breaking the law.

But the funny thing is that if the rich person lost most of their wealth, they would still pay the same property tax as if they were rich. The tax is based on an item and not a person

True, and if the rich person lost most of their wealth, they would then be paying a larger portion of their wealth in property taxes. That's all I'm saying.

I wasn't trying to make any normative judgement about the fairness of the tax system. And again, I don't think there ever was any debate that most tax revenue is collected on a progressive basis. I was just pointing out that there are exceptions.

[mary]

Is there a double post tax?

[southern_sweets]

I generally avoid political threads, but will add to this if only to clarify what many may not know about tax rates.

Heres a link to the 2003 tax rate schedule. Keep in mind that these rates are based on income after your standard or itemized dedcution and personal exemptions. Also, they are marginal. In other words, someone earning over $311,951 in 2003 would not pay 35% of that in taxes, only 35% of the amount over $311,951, 33% of the amount between $143,501 and $311,951 and so forth.

In the political arena proposals have been made by republicans to eliminate the 33% and 35% rates. I recall George W. stating something like, "No American should have to pay a third of their income to taxes." If the rates stay the same except for capping at 28% that is clearly a benefit to those who earn over $143,500 per year (single) and $174,700 (married, filing jointly). If that meets your definition of "rich" then it's a tax cut for the "rich."

Furthermore, I doubt George W. actually knows at what point an American would have to pay one third of his/her income in taxes. (not that many other politicians of any party would either) Any takers for this homework problem? [img]i/expressions/face-icon-small-smile.gif[/img]

By the way, I have a degree in economics.

[reeds]

"If you were to show up and post in other threads, or talk about anything else (I dunno, basketball for starters) people might be a little more receptive to a civil political debate. You come here looking for arguments, and you find them"...I have over 900 posts- they are NOT ALL ON POLITICS...in fact, id say about 20% of my posts are not sports related...do the research if you want- Im sure u will find that statement to be true....so again...your wrong.

"In the political arena proposals have been made by republicans to eliminate the 33% and 35% rates. I recall George W. stating something like, "No American should have to pay a third of their income to taxes." If the rates stay the same except for capping at 28% that is clearly a benefit to those who earn over $143,500 per year (single) and $174,700 (married, filing jointly). If that meets your definition of "rich" then it's a tax cut for the "rich."... OK- I WILL admit I use the word "rich" a bit too much..but i WOULD call143k and 174k RICH in terms I am referring to in my posts...Rich in comparison to the majority of Americans..Any single person making 142k is more than Comfortable...174k for a family is well over the norm...both can afford to pay more in taxes to help those that cant

[MavKikiNYC]

What I've been wondering here is:

How did the restaurauteur decide that he could afford a 20% reduction in price?

Did he reduce the number of selections and/or the quality of selections on the menu?
Did he buy cheaper ingreidents from an out-of-town supply company?
Did he reduce insurance coverage for his employees (with or without prescription drug benefits and/or contraceptives)?
Did he lay off a couple of bus-boys, one of whom was a full-time student but now can't afford to pay tuition, and the other of whose father was one of the 10 weekly patrons, but now poor old Dad can't afford bus fare to the restaurant?


Is the restaurant about to go to a Mr.Gatti's-style All-you-care-to-eat pizza and salad lunch buffet for $3.99 (plus tax and drink) from 11AM-5:30PM, where the effective cost for the 10 diners will be about $55, such that he's now about to turn a tidy $25 profit, even after the $20 price break?

[Mavdog]

The restauranteur found the cost savings by outsourcing his prep work to a lower wage country.

[thebac]

Dooby,

what are you talking about?

What's this diversion tactic with Clinton/Gore and a balanced budget? Of course what you said is true, but if you included the entitlement shortfall in the 2004 budget, the deficit would also worsen dramatically (as bad as it already is). What's your point (except to take another cheap shot at Democrats)?

How are payroll taxes not taxes on workers? They might get some of it back, but they have to pay (it is NOT voluntary insurance).

And I'm sure you know enough about Economics to know that it doesn't matter if the employer pays it or the employee (whether the employee pays 6.2% and the employer chips in 6.2% or whether the employer pays the full 12.4% obviously doesn't matter). So saying that the employers are paying a large share of the payroll tax doesn't really matter to the argument at hand. And how do SSI and Disability Benefits change the gist of the argument here?

As for the other cheap shot about Democrats wanting to reduce the payroll tax, of course that's a bad idea if there are no offsetting increases in the tax rates at higher levels or reduced benefits, but how is that so different from Bush pushing for his tax cuts when the federal government is already running a huge deficit even after the current SS surplus is included? A propos the tax cuts, do you think the Bush cuts did much to stimulate the economy?

At the end of the day, it's more about priorities than anything else, and mine (and I also believe those of the overwhelming majority of Americans if they understood the issue) are not in line with Bush's. Not quite aligned with Clinton/Gore or Kerry for that matter, either. But much closer.

Of course, we probably differ philosophically on this issue--I believe that the government should keep its citizens from falling into poverty in old age. I believe in a safety net--for the old, the young, the disabled, the disadvantaged--and not a net they have to pay for themselves. The government currently finances said safety net through a regressive tax. You most likely don't think that the government should provide a safety net, and as such, this is merely a forced insurance program, where everyone pays their fair share. In that case, there's not much more to debate on.

[jacktruth]

Originally posted by: reeds
"If you were to show up and post in other threads, or talk about anything else (I dunno, basketball for starters) people might be a little more receptive to a civil political debate. You come here looking for arguments, and you find them"...I have over 900 posts- they are NOT ALL ON POLITICS...in fact, id say about 20% of my posts are not sports related...do the research if you want- Im sure u will find that statement to be true....so again...your wrong.

"In the political arena proposals have been made by republicans to eliminate the 33% and 35% rates. I recall George W. stating something like, "No American should have to pay a third of their income to taxes." If the rates stay the same except for capping at 28% that is clearly a benefit to those who earn over $143,500 per year (single) and $174,700 (married, filing jointly). If that meets your definition of "rich" then it's a tax cut for the "rich."... OK- I WILL admit I use the word "rich" a bit too much..but i WOULD call143k and 174k RICH in terms I am referring to in my posts...Rich in comparison to the majority of Americans..Any single person making 142k is more than Comfortable...174k for a family is well over the norm...both can afford to pay more in taxes to help those that cant

What I never understand about this kind of argument is that I don't make near this amount of money. Yet, I benefitted dramatically from Bush's tax cuts. Yet Kerry and the democrats say that the Bush tax cut was a tax cut for the rich. I'm not rich. Not remotely.

Now, Kerry is trying to convince me that he would increase my tax cuts. But I know darn well that if given a million years to solve our fiscal crisis, he would have never came up with the idea to cut taxes. No democrat would cut taxes. It's the republican leadership of this country that came up with the idea for the tax cut, and it's the republican controlled congress that passed the tax cut. (Voting for a tax cut isn't the same as generating the idea for one). Kerry is trying to buy my vote by partially claiming credit for the BUsh tax cuts.

Someday, maybe I will own my own business that generates $200,000+ per year in income. But the truth is that if I have to set aside half of that to give to the government, I'm much less likely to start that business.

[Mavdog]

The first modern era president to use a tax cut to spur the economy was (drum roll please).....John Kennedy, a democrat.

I see the Kerry tax cut plan as a deft political maneuver. The plan stops any traction for the label of a "raise your taxes" candidate that the Bush campaign was attempting to hang on Kerry, and even the so called negative ads which the Bush campaign started using this week became outdated because they focused on that angle of the tax issue, without this new tax cut plan by Kerry taken into account.

BTW if you did earn $200K from that business you would be apying about an effective 28% tax rate, not "half of that", if my memory is correct...

[jacktruth]

Originally posted by: Mavdog
The first modern era president to use a tax cut to spur the economy was (drum roll please).....John Kennedy, a democrat.

I see the Kerry tax cut plan as a deft political maneuver. The plan stops any traction for the label of a "raise your taxes" candidate that the Bush campaign was attempting to hang on Kerry, and even the so called negative ads which the Bush campaign started using this week became outdated because they focused on that angle of the tax issue, without this new tax cut plan by Kerry taken into account.

BTW if you did earn $200K from that business you would be apying about an effective 28% tax rate, not "half of that", if my memory is correct...

That would be my tax if I made a salary of $200K. Business owners generally set aside 1/2 of thier pretax income for taxes.

Kennedy was also pro-life. The democratic party has changed quite a bit since then.

[Mavdog]

The top Marginal Tax Rate is only 35%, the business owner who had $200K in income was at a tax rate of 33%.

That's the Marginal, not the Effective, which will be even lower.




Fed inc tax rates for 2003

[Drbio]

"only" 33-35% Is that all?

[img]i/expressions/rolleye.gif[/img]

[Mavdog]

At one point the highest tax rate was 90%.

There are a lot fewer income brackets these days.

[dude1394]

It is a deft "political move by kerry". He can continue to decry taxes while trying to raise them.

What would be interesting however is if the main-stream media would look at
1. The taxes he expects to raise versus
2. The tax receipts he expects to spend.

I think I've already seen that it far exceeds the revenue.

I also think this is bad policy anyway. In many respects I think it is bad policy for the income-tax to be so regressive that x amount (I don't know the number, but I thought it was close to 25% at least) pay no taxes. It's a system begging for implosion. As politicians like kerry (and bush to some extent to get it passed) have to continue to raise the level of folks not paying any taxes to get elected.

Bad not to be invested in your country.