It's the Economy, Stupid

[andyfox]

The country has 2.2 million fewer payroll jobs than when Bush took office in January 2001.

This could be Dubya's undoing, as it was for his father.

[Taxman]

Unless he convinces everyone that the "addition" of 1.6 million jobs by the end of this year means he's increased overall employment during his tenure (assuming 1.6 million jobs are even created at all).

[Wake up CALL]

Andy the great thing about America is that all the employed conservatives couldn't give a [censored] less about the unemployed liberals. As long as jobs are found for the unemployed conservatives the mighty Bush era will continue. After all the less liberals that have bus fare to reach the polls the better! /images/graemlins/smile.gif

Woe be to those who forget this: Be careful what you wish for, you just may get it. ,when voting for a democrat for the Whitehouse.

As far as facts go I suppose you like the 2.2 million figure so much you will not bother to research the true "total unemployment" figures which take into account small business and entrepreneurs.

[Taxman]

[ QUOTE ]
As far as facts go I suppose you like the 2.2 million figure so much you will not bother to research the true "total unemployment" figures which take into account small business and entrepreneurs.

[/ QUOTE ]

Does this mean you will? I eagerly await the results.

[adios]

Yep it sure could. People will vote against the incombent if things are bad enough IMO. Are things bad enough? I don't think so but time will tell. The ironic thing is that the Democrats have no viable plan for creating new jobs to replace the ones that were lost, most of which are in manufacturing. The manufacturing jobs lost are gone for good. I've already posted about Kerry's "plan" for creating jobs. It's nothing more than rhetoric and obfuscation. I went to the Edwards site today, same story as Kerry's.

[Taxman]

I think ultimately, nobody on either side really has a decent plan and thus we're forced to listen to politicians tread theoretical water while they attempt to wow us with complicated terms and vague promises. Of course, this tends to be standard fare anyway.

[MMMMMM]

...to an extent anyway.

A few reasons why:

1) It is good for business which is good for the economy which is good for the consumer

2) If you own a small business, you prefer a labor market that is not too tight so you have some choice of quality employees. See #1

3) If jobs are too easy to come by, service to consumers suffers as employees know if they get fired it's no big deal. Do you really want to be waited on by people who don't care if they keep their jobs or not. And do you really want to be hiring people who have little reason to care if they keep their jobs or not. And most importantly, do you really want to be dealt to by dealers who don't keep their own tokes and don't care if they get fired or not.

4) Unemployment encourages people to become more enterprising and maybe go out and paint a house or mow some lawns or become self-employed as a contract programmer or sell Tupperware or something, rather than just waiting for the next company to hire them. It helps people develop more self-reliant qualities (provided the unemploymemt benefits aren't extended for too long a period of time)

5) Unemployment helps teach people the value of saving for a rainy day in case it ever happens again. Hey maybe JimBob and Betty don't really need satellite TV and potato chips and cigarettes and beer to be happy. Easy 2-3K saved per year for lots of folks. Not to mention no more money for rap music and drugs when the younger set goes unemployed and their unemployment runs out: Oh the tragedy of it! (of course when it hits a family hard, though, that can be bad).

6) The world just runs better when everybody isn't fat, dumb and happy. A slight edge brings out the best in people and makes the whole world work better.

7) Tom Haley with his amazing knowledge of things economic could probably list more specific reasons why some unemployment is a good thing, but that's my quick and dirty take of it;-)

[Taxman]

I commented on this before and you're right that unemployment is a necessary part of a successful (capitalist) economy. Of course too much unemployment is not good. There is a medium level that must be maintained for optimal economic results. You're (self-admitedly limited) reasons why are not perfect (not that I know all of the true reasons), but in general, (some) unemployment really is a good thing. Of course your post still begs the question of whether the amount of unemployment we have currently, is good for the economy.

[Vehn]

I agree 100%. Obviously the smart solution is to kill the unemployed liberals and use their assets to fill the gaping federal deficit. Also there is the added bonus of the thousands of crematorium jobs will have created. Just think, "factories" going day and night.

[ThaSaltCracka]

IMO the main reason for unemployment is excess capacity in America spurned by the huge investment we saw in the laste 90's early 2000. This led to companys operating with poor productivity. Because of the massive amounts of investment, companies had little incentive to improve. Of course this "bubble" eventually burst, so many people were laid off because of that. Also this seems to be cyclical unemployment, basically people are laid off because of excess capacity, thus companies are trying to be more effecient with less, in an attempt to increase profits.

True some of theses jobs wont come back. American Manufacturers cannot remain competitive in America and abroad with the relativly expensive labor of American workers. A lot of tech jobs are gone, especially here in the pacific NW. 4 years ago, Joe Schome with a CS degree was making 50-60K a year here. Now it is ultra competitive, still pays good, but way harder to find.

I work at a law firm specializing in Foreclosures, Bankruptcy, and Evictions, and I can tell you we are very busy. The economy as we all have heard repeatedly is supposedly getting better. I really don't buy that.

I think Bush's tax cuts missed the right audience. The middle and lower class. I am not advocating that people who didn;t pay income tax should get a cut, quite the opposite. The middle and lower class pay so much in tax its ridiculous. Give the money back to them, after all they are the ones who spend, they are the ones who drive the economy, not ceo's who have huge bank accounts in Switzerland, and the Caymans.

One other point for those who disagree with me. My last paycheck, I worked 85 hours in two weeks. I had the equivalent of 2 days worth of work taken out of my paycheck. I worked 10 days and got paid for 8, now if that ain't [censored] up I don't know what is. Although it could be worse, I have talked to people from Europe who rountinely pay 40-50% of their paycheck in taxes.

[Taxman]

Or maybe we could take a page out of Jonathan Swift's book and sell/eat babies. MMMMM, babies.... (pun only sorta intended /images/graemlins/tongue.gif)

[Taxman]

I agree with you on most points here. On a completely unrelated note, how do you like your job? What is your job exactly, if you don't mind my asking? I am planning on attending law school in the near future and am trying to get a feel for the different areas in which I might eventually practice. Do you deal much with the litigation side of things? I think I'm more interested in the areas of the law that don't involve a court room (though I may change my mind). Any tidbits would be appreciated.

[ThaSaltCracka]

haha I too would like to go to law school. I am actually an eviction assistant, kinda morbid ain't it. I would advise you to go into law in a different area, there is a lot of paperwork, overall it doesn't look like fun. I think being a litigator would be fun though.
My godfather practices enviromental law for a large law firm in Seattle. his job seems fun, I guess if you wanted to be a lawyer, go into a field that really interest you.

[MMMMMM]

"Obviously the smart solution is to kill the unemployed liberals and use their assets to fill the gaping federal deficit."

No, you've got it backwards:

If the unemployed were to disappear and there were full employment, you the consumer would receive lousy service because there would be almost no competition for jobs. Service employees everywhere would serve you when they damn well pleased. Just think of the Post Office;-)

[adios]

Thanks for the complement,I don't think it's amazing but thanks. There is a concept referred to as the natural rate of unemployment. Even when we're at full employment there is a certain rate of unemployment due to many factors to lengthy to get into. When the Fed went through their last tightening in the 2000 time frame their concern was that the rate of unemployment was too low (record lows in unemployment) and that it was lower than the natural rate of unemployment. There's something called the Phillips Curve where the rate of unemployment is plotted against inflation and when the unemployment rate is too low, the rate of inflation becomes too high basically. There's a lot of debate among economists as to the validity of the Phillips Curve.

Getting back to the labor force, there's plenty of jobs in the US economy but it takes education and training to perform those jobs or the jobs require no special skills and they're low paying. I grew up in a city where the auto industry and steel industry were kings in the 60's. Finding a decent paying job doing manual labor and acquiring certain base skills was extremely easy. Those times are long gone because of productivity increases. Also the environment suffered greatly during the times when I grew up where I lived. It's clear to me that education and training are much more critical now in obtaining decent paying jobs from employers. In order to create more jobs business's have to make capital investments (some may disagree) and in order to make more capital investments businesses have to produce more profits.

[ThaSaltCracka]

In order to create more jobs business's have to make capital investments (some may disagree) and in order to make more capital investments businesses have to produce more profits.

I agree witht the first part, although the second is not neccesarily true. Low interets rates and an expectation of increased profits will also lead to more capital investments.

one thing many people may not realize is that unemployment has started to level off, now this is not neccesarilly because jobs are being created, part of this is because certain people are no longer being counted as unemployed. If someone without work becomes so discouraged by not being able to find a job, they will eventually stop looking. These people are no longer considered unemployed because they are not looking for work. They are longer considered part of the work force.

[CCass]

TSC said:

[ QUOTE ]
I think Bush's tax cuts missed the right audience. The middle and lower class. I am not advocating that people who didn;t pay income tax should get a cut, quite the opposite. The middle and lower class pay so much in tax its ridiculous. Give the money back to them, after all they are the ones who spend, they are the ones who drive the economy, not ceo's who have huge bank accounts in Switzerland, and the Caymans.

[/ QUOTE ]

TSC, I consider my wife and I to be Middle Class (family of 5, gross income less than $100,000 annually), and the Bush tax cuts have helped us a great deal. While I generally agree with you, I would argue that last years tax cuts did help the middle class (of course another tax cut would be nice /images/graemlins/grin.gif). My only complaint about Bush as it relates to the economy is the deficit. His lack of control on spending may cost him the election. Many hard line conservatives are upset with the deficit, and may stay home come election time. Both candidates need the full support of their respective bases to win in November.

[ThaSaltCracka]

family of 5, gross income less than $100,000 annually), and the Bush tax cuts have helped us a great deal
was it the child tax credit that helped?

[Cyrus]

"[Unemployment] is good for business which is good for the economy which is good for the consumer."

But who is this mythical "consumer"? Is he not working? What happens when he is unemployed? (Is unemployment "wonderful" for 'im?)

I guess we have to re-define the term as "working consumers"...

"If you own a small business, you prefer a labor market that is not too tight so you have some choice of quality employees."

I can't (for the life of me) recall a time when the labor market was too tight! For a few specialties, yes, and often, but overall?? When wazzat?

"If jobs are too easy to come by, service to consumers suffers as employees know if they get fired it's no big deal."

This is an imaginary situation, pure and simple. There has never been so much employment that workers wil slack and loaf because of that.

"Do you really want to be waited on by people who don't care if they keep their jobs or not?"

You're talking about civil servants now! Or people working in the Soviet Union! People who work in the private sector in the West care A LOT about being fired.

"Do you really want to be dealt to by dealers who don't keep their own tokes?"

No! I want 'em to keep their own tokes! How did you know? /images/graemlins/smile.gif

"Unemployment encourages people to become more enterprising and maybe go out and paint a house or mow some lawns or become self-employed as a contract programmer or sell Tupperware or something, rather than just waiting for the next company to hire them."

Studies of clinical psychology have shown that unemployment contributes to developing a lack of self-esteem, causes friction inside a family, brings stress (with the subsequent physical effects) and often depression. It is far from being the jolly time you make it out to be!


"Of course when [unemployment] hits a family hard, though, that can be bad."

No sheet... /images/graemlins/smile.gif

"The world just runs better when everybody isn't fat, dumb and happy. A slight edge brings out the best in people and makes the whole world work better."

When you are unemployed you have the worst of it! Where did you get that notion that unemployment causes some kind of "edge"?

--Cyrus

[adios]

[ QUOTE ]
I think Bush's tax cuts missed the right audience. The middle and lower class. I am not advocating that people who didn;t pay income tax should get a cut, quite the opposite. The middle and lower class pay so much in tax its ridiculous. Give the money back to them, after all they are the ones who spend, they are the ones who drive the economy, not ceo's who have huge bank accounts in Switzerland, and the Caymans.

[/ QUOTE ]

Where do you get your data from? Here's an article from the Wall Street Journal 06/03/03. Note the following excerpt:

More braodly, the critics want everyone to forget how steeply progressive the tax code already is. IRS data released lat year show that the top 1% of earners paid 37.4% of all federal incomes taxes in 2000. The top 5% paid 56.5% of federal taxes,and the top half of all earners paid 96.1%. In other words, even before President Bush started slashing taxes on the poor by increasing the child tax credit in 2001, the bottom 50% of filers had next to no federal income tax liability.

Given that the median income in the US is around $40,000 and the top 1% of households I know receive well in excess of $200,000 a year your statement is completely wrong it seems.

Even Luckier Duckies

The new tax bill exempts another theree million-plus low-income workers from any federal tax liability whatsoever, so be pleased. But instead we are all now being treated to their outrage becuase the law doesn't go further and "cut" income taxes for theose who don't pay them.

This is the essence of the uproar over the shape of the child-care tax crecit. The tax bill the President signed last week increases the per child federal income tax credit to $1,000, up from the partially refundable $600 credit passed in the 2001 tax bill. But Republican conferees decided that the increase will not be paid ou to those too poor to have any tax liability to begin with.

Most Americans probably don't realize that it is possible to cut taxes beyond zero. But then they don't live in Washington, where politicians regularly demand that tax credits be made "refundable," which means that the government writes a check to people whose income after deductions is too low to owe any taxes. In more honest precints, this might even be called "welfare."

But among tax cut oponents it is a political spninning opportunity, "Simply unconscionable," says Presidential hopeful John Kerry. The Democratic National Committee declare that "Bush tax scheme leaves millions of children out in the cold ... one out of every siz children under the age of 18, families and children pushed aside to make room for the massive tax cuts to the wealthy."

Senator Olympia Snowe, the media's favorite Republican now that John McCain isn't actively running for President, says she is "dismayed." "I don't know why they would cut that out of the bill." adds Senstor Blanceh Lincoln (D. Ark.). Those last two remarks take chutzpah, because if either woman had been willing to vote for the tax bill, a refundability provision would have been in it.

Senator Lincoln introduced the idea in the Senate Finance Committee, but then announced she wasn't going to vote for the bill anyway. Ms. Snowe was also one of those, along wiht Senator George Voinivich (R., Ohio), who insisted that the bill's total "cost"- in tax cuts and new spending-not exceed $350 billion. Something had to give in House-Senate conference to meet that dollar limit, and out went refundability. The bill passed by a single Senate vote, with Vice President Dick Cheney breaking the tie.

As it happens, the tax bill does a great deal for low-income families even without the refundable child credit additon. It expands the 10% income tax bracket, meaning that workers can earn more before leaping ito the 15% and 25% brackets. This is a far better way to provide a tax cut than is a refundable credit, because it lowers the high marginal-tax rate wall that these workers face as their credits phase out at higher income levels.

There's alos $10 billion in the bill earmarked for Medicaid, the state-federal health insurance program for the poor. And any family that actually has remaining tax liability benefits from the extra $400 child tax credit.

More braodly, the critics want everyone to forget how steeply progressive the tax code already is. IRS data released lat year show that the top 1% of earners paid 37.4% of all federal incomes taxes in 2000. The top 5% paid 56.5% of federal taxes,and the top half of all earners paid 96.1%. In other words, even before President Bush started slashing taxes on the poor by increasing the child tax credit in 2001, the bottom 50% of filers had next to no federal income tax liability.

But don't low-income workers have to cough up the payroll tax? They certainly do, but don't forget that the federal Earned Income Tax Credit was designed to offset payroll taxes and is also "refundable." In 2000, the EITC totaled $31.8 billion for 19.2 million Americans, for an average credit of $1,658. Some 86% of that went to workers who had little or no income tax liability.

Republicans who just voted for the tax cut might be less defensive and try to explain all of this. But instead too many of them are heading for the tall grass, with Senate Finane Chairman Chuck Grassley already promising to cave as early as this week on the child tax credit. This is the kind of political box Republicans walk into when they endorse tax credits that favor one group over another. Democrats are better at playing favorites.

We raised some hackles last year when we noted this growing trend that more and more Americans paid little or no tax. "Lucky duckies," we called this non-taxpaying class at the time. Notwithstanding liberal spinners, after this tax bill they're even luckier.

Another article about the steeply progressive nature of the US tax system:

The Non-Taxpaying Class (http://www.opinionjournal.com/extra/?id=110002937)

The Non-Taxpaying Class
Those lucky duckies!

Monday, January 20, 2003 12:01 a.m. EST

(Editor's note: This editorial originally appeared in The Wall Street Journal, Nov. 20, 2002. Click here to read today's editorial "Lucky Duckies Again.")

The stars look to be in perfect alignment for tax relief. With a GOP majority in both houses of Congress, the Bush Administration is making eager and energetic noises, and the economy is in what Fed Chairman Greenspan calls a soft spot.

But as the Republicans construct their tax plan, there is a large and under-appreciated fact they would do well to keep in mind. Over the past decade or so, fewer and fewer Americans have been paying income taxes and still fewer have been paying a significant percentage of income in taxes. While we would opt for a perfect world in which everybody paid far less in taxes, our increasingly two-tiered tax system is undermining the political consensus for cutting taxes at all.

Even the barest of glances at tax data reveal a system that is steeply progressive. Tax revenue has been increasingly squeezed out of top earners. According to the most recent data, from 1999, the richest--with income above half a million dollars--constituted 0.5% of taxpayers but accounted for 28% of total tax revenue. Simply put, a tiny group of people (553,380) were responsible for more than one-quarter of the income tax take of $877 billion.





Well, maybe you're saying--so what? They can afford it. Then take a look at those who aren't Richie Rich. The most recent data from the IRS, in 2000, show that the top 5% coughed up more than half of total tax revenue. Specifically, we are talking about folks with adjusted gross incomes of $128,336 and higher being responsible for 56% of the tax take. Eyebrows raised? There's more. The top 50% of taxpayers accounted for almost all income tax revenue--96% of the total take.
These numbers are more arresting when compared with the situation 14 years earlier. In 1986, the top 1% paid 26% of revenue, the top 5% was responsible for 42% and the top half contributed 93%. And what about the bottom half of taxpayers? They accounted for 7% of the total in 1986 but only 4% in 2000.

This skewed reality is the result of a growing number of absolutely legal escape hatches. Consider what happens to those in the lowest bracket. Say a person earns $12,000. After subtracting the personal exemption, the standard deduction and assuming no tax credits, then applying the 10% rate of the lowest bracket, the person ends up paying a little less than 4% of income in taxes. It ain't peanuts, but not enough to get his or her blood boiling with tax rage.

Of course, lower-income workers are on the hook for the payroll tax--but a sizable group slip free from even that net tax liability via the refundable earned income tax credit. ("Refundable" means that even if your net income tax liability is zero, the government still writes you a check.)

These numbers represent only people who have a positive adjusted gross income. In 1999, there were 127 million tax filers, 94.5 million of whom showed an income tax liability. That is, 26% had no liability at all. The actual number of people filing without paying comes to 16 million (after subtracting those getting earned income tax credits and thus, presumably, still somewhat sensitive to tax rates). So almost 13% of all workers have no tax liability and so are indifferent to income tax rates. And that doesn't include another 16.5 million who have some income but don't file at all.

Who are these lucky duckies? They are the beneficiaries of tax policies that have expanded the personal exemption and standard deduction and targeted certain voter groups by introducing a welter of tax credits for things like child care and education. When these escape hatches are figured against income, the result is either a zero liability or a liability that represents a tiny percentage of income. The 1986 tax reform, for example, with its giant increase in the personal exemption and standard deduction, took six to seven million people off the tax rolls.





This complicated system of progressivity and targeted rewards is creating a nation of two different tax-paying classes: those who pay a lot and those who pay very little. And as fewer and fewer people are responsible for paying more and more of all taxes, the constituency for tax cutting, much less for tax reform, is eroding. Workers who pay little or no taxes can hardly be expected to care about tax relief for everybody else. They are also that much more detached from recognizing the costs of government.
All of which suggests that the last thing the White House should do now is come up with more exemptions, deductions and credits that will shrink the tax-paying population even further.


and one more:

Lucky Duckies Again (http://www.opinionjournal.com/editorial/feature.html?id=110002938)

I would point out the following from the article as to the tax savings received:

Tax Cuts for the Poor
Lower earners would get a larger percentage income tax cut on average under the Bush plan.
Income Percentage reduction
0-$30,000 17.0%
30-40,000 20.1%
40-50,000 14.5%
50-75,000 11.4%
75-100,000 13%
100-200,000 11.4%
200,000-plus 11.2%
Total 12.3%

As you can see the lower and middle classes received the biggest tax break percentage wise. I'd also point out the Messrs Kerry and Edwards have gone on record as stating they want to keep these what they call "middle class" tax cuts.

Lucky Duckies Again
Look at who won't pay taxes under Bush's plan.

Monday, January 20, 2003 12:01 a.m. EST

As you may have noticed, the critics of President Bush's new tax cut package claim it is a sop to the rich. This charge makes us wonder if they've even read the plan. The truth is that the Bush proposals would make the tax code more progressive, not less. And this isn't altogether a good thing.

The soak-the-rich facts, if any journalists cared to look, are contained in the income distribution tables on the plan compiled by the Treasury Department. Looking at the impact for 2003, Treasury finds that the average reduction in income taxes is a touch more than 12%. But for those who make less than $30,000 the average reduction is about 17%, while for those who earn more than $100,000 it is 11.4% or less. (See the table below.)

There's even better news for modern Robin Hoods. Because the percentage reduction for families with incomes under $50,000 is greater under the Bush plan, those families would pay a smaller share of the total income tax than they do under current law.

Tax Cuts for the Poor
Lower earners would get a larger percentage income tax cut on average under the Bush plan.
Income Percentage reduction
0-$30,000 17.0%
30-40,000 20.1%
40-50,000 14.5%
50-75,000 11.4%
75-100,000 13%
100-200,000 11.4%
200,000-plus 11.2%
Total 12.3%
Families with incomes over $100,000 would end up paying a larger share of the total income tax. These families would pay 73% of all federal income taxes. Not to put too fine a point on this income redistribution, but taxpayers with incomes over $200,000 could expect on average to pay about $99,000 in taxes under Mr. Bush's plan.





How could this happen? Mr. Bush would relieve 3.8 million lower-income taxpayers from paying any income taxes. The chief tax remover comes from his proposal to accelerate the increase in the child credit to $1,000 from $600, bumping a touch more than three million taxpayers right off the rolls.
No doubt the Bush team proposed this tilt toward lower income taxpayers to mute the class-warrior critics, not that we've noticed any lower decibel level. But one certain consequence is that the plan exacerbates the growing problem of a bifurcated tax system.

We raised this issue several weeks ago, pointing out that the unceasing addition of exemptions, deductions and credits to the tax code was shrinking the tax-paying base. And, as more lower-income people saw tax liabilities fall to zero, more upper-income people shouldered a larger part of the tax burden. We did not, by the way, suggest that lower income people should pay higher taxes. We even went out of our way to flog our favorite horse that everybody should pay less in taxes.

We are merely pointing out the (apparently heretical) truth that the current tax system is very skewed against upper-income Americans. According to IRS data from 2000, the top 5% of tax filers paid more than 50% of total income tax revenue, and the top half of tax filers were responsible for almost all revenue--96% of the total take. This burden on the upper-income holds even when the payroll tax is included in overall distribution tables. (The payroll tax includes the regressive Social Security levy and the 1.45% Medicare tax that applies to every dollar of income.)

The Congressional Budget Office has looked at the distributive impact of various taxes for 1997. The income-tax share of the lowest-income family quintile (the bottom 20%) was negative 1.2% and the share of the highest family quintile was 73.3%. The difference in payroll-tax share was somewhat less dramatic at 3.9% for the lowest quintile and 40.6% for the highest. But when all federal taxes were thrown together, the share of the lowest quintile was 1.6%, while the share of the highest quintile was 60.2%. Karl Marx, call your office.





This super-progressivity comes from two sources: the system of higher marginal-rate brackets for higher income households, and the exclusion of lower income households from any income-tax liability. In 2000, of 129.4 million tax returns filed, about 32 million paid no taxes. Most of these lucky duckies, as we have called them (to some amusing consternation), benefit from tax exemptions, deductions and credits that violate the concept of horizontal tax equity--the notion that people with identical incomes should pay the same amount in taxes.
For instance, the folks at the Tax Foundation have looked at how two single moms--each earning $30,000 a year--would fare under the Bush plan. In 2003, the single mom with one child would pay income tax of $1,028; the mom with two children would not only pay no taxes, she'd also receive a check from the federal government, under the earned income tax credit, for $680. Compared to the single mom who must pay taxes, the single mom who does not is, well, a lucky ducky.

The broader point is that whatever Mr. Bush's tax proposal does for economic growth (and we think it'd do a lot), it gives more proportional benefit to lower-income households. The class warriors should be thrilled.

[ QUOTE ]
One other point for those who disagree with me. My last paycheck, I worked 85 hours in two weeks. I had the equivalent of 2 days worth of work taken out of my paycheck. I worked 10 days and got paid for 8, now if that ain't [censored] up I don't know what is.

[/ QUOTE ]

How does this prove your assertion from above?
I understand your frustration and I empathize with it. Understand many would want you to pay more taxes than you already do and many of them don't pay many taxes themselves.

[ThaSaltCracka]

I assume you can read, but it seems like selective reading. I am not advocating that people who didn't pay income tax should get a cut, quite the opposite

as well as The middle and lower class pay so much in tax its ridiculous. Give the money back to them, after all they are the ones who spend, they are the ones who drive the economy, not ceo's who have huge bank accounts in Switzerland, and the Caymans.
now if you want to diasgree with that I would love to see why.

now on to the rich who only pay 35% of the $200,000+ of their salary a year, you neglect to mention they potential millions they have in stocks, bonds, mutual funds, that they don't pay taxes on, unless the sell/cash out them.

How does this prove your assertion from above?
well lets see, I qualify for the low class tax bracket.... so the tax cuts have clearly helped me. I am so glad the tax cuts have allowed me to get paid for 4 out of the 5 days a week I work. Thank you George Bush!

[adios]

"now on to the rich who only pay 35% of the $200,000+ of their salary a year, you neglect to mention they potential millions they have in stocks, bonds, mutual funds, that they don't pay taxes on, unless the sell/cash out them."

Wrong about bonds, mutual funds and stock dividends for that matter. Except for tax exempt bonds like munis, the bond holders pay taxes on the coupon payments, even the implied paymenst of zero coupon bonds. Mutual funds for the most part have yearly distributions that are taxable. When you sell em for a gain you have a tax liability. When you sell a stock you have a tax liability that depends on your holding period. Also losses are only deductable to a certain amount per year. I don't know what else you'd do but cash them out. I heard a stat the other day where something like 84% of tax payers had some sort of investment in the financial markets. You missed the whole point of the articles, the wealthy pay a disproportionate amount of the total of Federal taxes paid.

[adios]

"Low interets rates and an expectation of increased profits will also lead to more capital investments."

In order to finance growth at low interest rates one normally needs to be profitable. In order to make capital investments a business entity needs either retained earnings from profits, cash raised from equity offerings, and/or debt financing (including preferred stock). I'll concede that a business entity can raise cash through equity offerings without being profitable.

[ThaSaltCracka]

You missed the whole point of the articles, the wealthy pay a disproportionate amount of the total of Federal taxes paid.
No offense, but posting a wall street journal op-ed, is not exactly the most balanced view.
I don't know what else you'd do but cash them out.
umm.... keep them so they gain in value...

anyways I will get back to my main point. Lowering taxes to boost the economy. now I see your argument that the rich have this terrible burden of paying so much, however giving them money back does little to help the economy. according to the article you cited 5% of Americans pay almost half the taxes. Now suppose you give back 15% of this to them, what do you think is likely to happen? They will save or possibly invest it. Now saving does some for the economy. Saving could lead to banks lending more because the will have excess deposits, well thats good. Also this wealthy 5% could invest it. Now really only one type of investment helps the economy and I am not talking about the stock market.
This 5% would have to invest in capital goods, such as new equipment, buildings, technology, etc... to help the economy. These investments could lead to an increase in profits, employment, productivity, yada yada yada, you catch my drift?
Now increased investments will lead to an increase in GDP, the true measure of the economy. However investments will not have the same effect as consumer spending, and how do you increase consumer spending? One way is to increase employment, another is to increase wages, and a third way is to increase disposable income, ie through tax cuts. Most economists would agree that the lower and middle class are terrible savers, they have very little in savings and checking accounts, however they have big credit card bills. Why? because they spend...... SO.... giving more money to those who spend and less to those who save does what? increases consumer spending!

no I may have gotten a little of my game when I said

"now on to the rich who only pay 35% of the $200,000+ of their salary a year, you neglect to mention they potential millions they have in stocks, bonds, mutual funds, that they don't pay taxes on, unless the sell/cash out them."

but the reason why I felt the tax cuts missed the wrong group is because of what I said above.

[ThaSaltCracka]

In order to finance growth at low interest rates one normally needs to be profitable
this isn't neccesarily true. A company will invest if they think they will become profitable, based partially upon their investment.

[Taxman]

Here we go again! I have recently made a similar argument here on this board, but I think I'll steer clear this time (midterms ain't over yet!) I do have one comment for adios however. The wealthy do pay a disproportionate amount of taxes, but they also make a disproportionate amount of money. If the top 1% are making 35% of the total GDP (I suspect this might be a low estimate) then it's not unfair that they are paying a larger $ amount of taxes. I mean, that almost goes without saying unless they had a significantly lower % tax. I think the number probably still is a little disproportionate (if you ignore the many many loopholes people exploit), but not so much as you indicate.

[CCass]

The child tax credit certainly helped, but our 2003 taxable income was higher than our 2002 taxable income, and our tax burden was less in 2003 (before the child tax credit). So our nominal rate was less with or without the children.

[adios]

I wrote:

In order to create more jobs business's have to make capital investments (some may disagree) and in order to make more capital investments businesses have to produce more profits.

You responded:

I agree witht the first part, although the second is not neccesarily true. Low interets rates and an expectation of increased profits will also lead to more capital investments.

To be clear to take advantage of low interest rates a company must borrow money at those rates. Therefore I responded:

In order to finance growth at low interest rates one normally needs to be profitable.

The lender at low interest rates will normally only lend to companies that are profitable. The company that borrows the money uses the money to finance growth.

To which you responded:

this isn't neccesarily true. A company will invest if they think they will become profitable, based partially upon their investment.

To which I now respond huh? A company has three sources to obtain money to invest:

1) Equity (stock)
2) Debt
3) Retained earnings.

Do you have another way that a company obtains money to invest? So what isn't necessarily true about what I wrote now.

[adios]

You wrote:

The middle and lower class pay so much in tax its ridiculous.

I made a long response to this basically pointing out statistics that the journal had gathered from the IRS showing how your statement is wrong.

You responded:

No offense, but posting a wall street journal op-ed, is not exactly the most balanced view.

Will here's another source basically corroborating what the WJS stated about the tax breakdown:

Summary of Federal Individual Income Tax Data, 2001 (http://www.taxfoundation.org/prtopincometable.html)

The top 50% of the wage earners paid over 96% of the total federal taxes paid in 2001 and the system has even gotten more progressive. Your statement is just plain wrong.


You further responded:

anyways I will get back to my main point. Lowering taxes to boost the economy. now I see your argument that the rich have this terrible burden of paying so much, however giving them money back does little to help the economy.

Nope I was only pointing out that your statement was erroneous. Remember your original statement to which I responded:

The middle and lower class pay so much in tax its ridiculous.

Your putting words in my mouth so to speak.

I appreciate your views on tax cuts. I was only pointing out an error that many people make IMO regarding who pays what in taxes. To let you know where I'm coming from and I get a little irritated when I read on this forum that the tax cuts were for the rich only. I realize now that your posts weren't restating that. I wish people would define "rich" when they make these statements and you can't cut taxes for those people who pay ZERO dollars in taxes to start with. Well I guess you can with the last go round about taxes /images/graemlins/smile.gif.

[adios]

"The wealthy do pay a disproportionate amount of taxes, but they also make a disproportionate amount of money."

I know what you mean and that's not what I had a problem with. In the statement I responded to the poster implied IMO that the tax system was more or less a lot more regressive than it really is. The bottom 50% of wage earners pay less than 4% of the taxes. I've stated in the past that income distribution has been skewed more towards the wealthier wage earners and it makes sense that they pay more in taxes. To say the tax system is regressive is just wrong IMO.

[Taxman]

Ok, I understand your point. My main comment is that the 49% between the bottom 50% and the top 1% are in the most need of relief (given that the bottom 50% really do pay relatively small amounts in taxes, unless they're poker players anyway /images/graemlins/smile.gif). I bet the top 1% probably pays a greater percentage (or at least close to the same) of the tax revenue than the 49% below them, but as my argument has always been, that 49% can do more for the economy with extra money given to them. This is a slight non sequitur, but I was reminded of this good old debate /images/graemlins/grin.gif

[jokerswild]

Bush's job training program involves teaching the millions how to flip burgers and shine the shoes of the aristocratic class. They also teach saying "thank you master for giving me some crums to eat."

[MMMMMM]

The federal government shouldn't be spending money on job training programs anyway. Also, people shouldn't be buying burgers from fast food joints but that's another topic.