Tax Cuts for the Middle Class and Poor STIMULATE The Economy, But Tax Cuts for the Wealthy HURT The Economy

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Thu, 07/28/2011 - 10:24 | 1500985 r101958
r101958's picture

How about we go back to this rate. Guess what year?

1.0% $0 $20,000

2.0% $20,000 $50,000

3.0% $50,000 $75,000

4.0% $75,000 $100,000

5.0% $100,000 $250,000

6.0% $250,000 $500,000

7.0% $500,000 -

The year is 1913 (ring any bells?)

Tax Foundation
www.taxfoundation.org

 

Thu, 07/28/2011 - 10:46 | 1501102 i-dog
i-dog's picture

I liked 1912 better:

0%  $0 - 500,000+

Worked well for the 300 years from first settlement, while all the railroads and city infrastructures were being built. Since then, nothing but wars and depressions.

Thu, 07/28/2011 - 09:44 | 1500822 El Viejo
El Viejo's picture

All these ideological whiners! Pahleeze. This is not about ideology. This is about making the economy work again and that requires practical solutions. It requires targeted responses like Tagamet for ulcers. It was hailed as a miracle drug. This article tells it like it is: Two intractable ideological extremes.

This economy needs consumers. The consumers are in debt and arn't buying. They were driven in debt by most of the tax breaks going to Bushes rich buddies. Tax breaks for the rich indeed do favor producers. The one thing we don't need is capital for producers. We have far more productive capacity now than we need. This situation is the opposite of the 70s. In the seventies we had way more demand than we had productive capacity so we had inflation. We now have corporations with hoards of cash and plants running at half capacity. Sure profits are up - they layed off workers. The economy has reset to a lower energy level. The unemployed are just surviving. They are not buying anything. The get the GDP back up there we need growth. To get growth we need demand. So George Washington is exactly correct. We need tax breaks for the consumers. The Rich don't consume anywhere near like the middle class and they do not create jobs. They invest in hedge funds. Too much money in the markets creates instability just like LTCM did in the 90s. (pure Minsky economics 101) And when they failed what happend? 50 hedge funds sprang up in their place. We are flushed with capital now and not constrained. What happens when there is too much capital to be loaned out? Well interest rates drop. When will you Darwinian right wingers be happy? When interest rates are negative? The small businesses and innovative self employed create jobs when they incorporate and HIRE. The self employed are the most taxed group in the country. (remember the software guy that flew his plane into the IRS building in Austin?) You can thank Ronald Reagan for that. He was responding to the complaint from corporations back then about being hamstrung with corporate taxes(see inflation a few sentences back) Now we need those consumers of the 70s again. With rehiring there will be less unemployment that means smaller deficits. GDP will also improve.

All this political ideological whining just makes me want to puke. Its just idol worship. The rich got there Bush tax cut extensions. Obama caved. Now its time they coughed up or the next leg down will take the rich peoples money anyway and we will have nothing to show for it - just like when Clinton didn't use the surplus on our country's infrastructure and now we will not see it for some time to come. This country is going down and you can blame it squarely on the rich.

Chart of top 1% income:
http://www.cbpp.org/cms/index.cfm?fa=archivePage&id=3-29-07inc.htm

Cap Gains Tax Rates:
http://www.ctj.org/pdf/regcg.pdf

Thu, 07/28/2011 - 11:19 | 1500759 JW n FL
JW n FL's picture

All of these Republicans Bitching about the Tax Code.. that George was quoting..

George didnt write the Tax Code..

Call Your Senators with your complaints about $250k or $150k to $380k is a bracket misrepresented within the Tax Code based on market or sub market.. see if they will re-write the book until you are happy.

George! in case you had forgotten how stupid these ignorant fucks are.. please, let this be a reminder.

Thu, 07/28/2011 - 09:31 | 1500753 midtowng
midtowng's picture

It's amazing how many people here actually think they are rich.

Thu, 07/28/2011 - 09:33 | 1500770 Vashta Nerada
Vashta Nerada's picture

What's amazing is that some people here think they have the right to other people's money.

Thu, 07/28/2011 - 09:26 | 1500727 LRC Fan
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Stimulating the economy is probably the most loaded phrase used in politics/economics today.  It can mean anything to anyone.  QE was supposed to stimulate the economy and it made things worse.  If you ask Republicans, tax cuts stimulate the economy.  Democrats simply want to spend tons of money we don't have to stimulate the economy.  As usual, all sides are completely wrong.

Cut taxes to 0.  For everyone.  Geithner, Obama, GE, the poor lady down the road, Bill Gates, me, you, and my local barber.  Cut cut cut cut cut taxes and don't just talk about it. 

Thu, 07/28/2011 - 09:25 | 1500724 tree_of_liberty_1791
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Think the most important part is being over looked. It is your money, not the governments, and the marginal income tax should be replaced by consumption tax. It is the most equitable form of taxation and would do away with cap gains, estate, and of course no income tax.

So rather then argue about who got what it should be realized were all getting screwed when the government steals your property at the gun point. At least the consumption tax is a voluntary tax and gets the people away from giving the gov a fixed % of their labor.

Thu, 07/28/2011 - 09:30 | 1500751 Vashta Nerada
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I heartily agree.  Consumption taxes are much less intrusive than having an IRS pore through your income data.  Also, unless the rich suddenly start enjoying eating rice and beans, living in hovels, and driving ten year old Fords, they will still be paying more in taxes. 

A consumption tax also has the benefit of getting revenue from those that currently earn their income on the black market and pay no income tax.

Thu, 07/28/2011 - 09:15 | 1500704 Vashta Nerada
Vashta Nerada's picture

duplicate deleted

Thu, 07/28/2011 - 09:14 | 1500702 Vashta Nerada
Vashta Nerada's picture

This argument is ridiculous on its face.  The tax cuts of the past 20 years accrued to the wealthy because they are the ones that actually pay taxes.  When half of the popluation pays no taxes but have a vote to determine how much the other half pays in taxes (which gets doled out to the bottom half) you have a recipe for disaster.  We don't have a taxation problem, we have a spending problem.  As has been noted, if we had not increased government spending by over 50% in the past decade (30% in the past two years), we would not be having a debt ceiling discussion today. 

Thu, 07/28/2011 - 09:11 | 1500696 Akrunner907
Akrunner907's picture

I am so glad GW is letting his socialist persona come out.  Taxes are a redistribution of wealth, and there is about 50 percent of the population that don't pay taxes at all.  The premise is utter BS, and painfully sad at the stupidity of GW.  Damn, I wish some people would grow the fuck up and start realizing that the entire tax code is so f-ed up that it has nothing to do with JOB stimulus. 

Thu, 07/28/2011 - 09:01 | 1500679 Analysis-Paralysis
Analysis-Paralysis's picture

This article is right on.  I understand concerns of right; I don't like taxes or big government either.   But the arguments and data presented here are solid.  The past 10 years have seen historically low taxes on the highest income earners, which have absolutely resulted in destructive speculative bubbles along with the widening income gap between rich and poor, higher crime rates, etc ad nauseum.   And when we bailed out the banks we essentially robbed our medicare and social security systems to help out our richest aunts, biggest investors, and bankster pensions.  I pay six figure taxes but the only thing I begrudge is the corruption and inequities in taxation at the top.  Americans need desperately to wake up and fight for our middle class.  OUr greatness depends on the integrity of our people and institutions.  Bill Gross has the right idea in his July letter (Pimco).

Thu, 07/28/2011 - 09:27 | 1500740 mayhem_korner
mayhem_korner's picture

Thank you, Senator Reid.

Bubbles are more a function of negative real interest rates than of tax structures.  Bailing out the banks was the second tier of the malfeasance...the first was the fractional reserve banking system coupled with central policies that enabled a boatload of ill-advised loans.

Thu, 07/28/2011 - 09:20 | 1500716 Vashta Nerada
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No, we did not rob medicare and social security to bail out the banks.  Medicare and social security funds have not existed since the 1960's, when they began taking the excess funds out annually to hide the deficit.

Thu, 07/28/2011 - 09:03 | 1500678 tip e. canoe
tip e. canoe's picture

Gdub, with all due respect, if you really want to explore solutions to this issue from a progressive POV and not just ignite class divisions like the puppeteers want you to do, you really need to start venturing outside the pyramid.  i would suggest Henry George for a start.  fwiw.

Thu, 07/28/2011 - 08:57 | 1500672 mayhem_korner
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Bush is outta office, yet we still get stats that extend into 2011.

Let's eliminate all income and property taxes and go for only consumption taxes.  That way, the central planners can no longer give away the "tax cuts." 

Thu, 07/28/2011 - 08:54 | 1500668 High Plains Drifter
High Plains Drifter's picture

http://www.dailymail.co.uk/news/article-2019633/LA-riot-police-rubber-bu...

rubber bullets fired at americans. i am not sure if i have ever heard of police firing rubber bullets at americans before. interesting no?

Thu, 07/28/2011 - 08:44 | 1500653 Hedgetard55
Hedgetard55's picture

This post gets the award for most inane idea of the month.

Thu, 07/28/2011 - 08:32 | 1500631 El Viejo
El Viejo's picture

The rich don't create jobs they invest in hedge funds and that destabilizes markets just like LTCM did in the 90s(pure Minsky economics). The self employed and small business create jobs and self employed are one of the highest taxed groups in the country. (You can thank Reagan for that)

Thu, 07/28/2011 - 08:27 | 1500617 gwar5
gwar5's picture

.

 

The bottom 50% already don't pay taxes..... let that sink in first. OK, so let's stimulate by making it 60% so unemployment will be an even 20%? 

Carter's top rate was 70% and the top earners only paid 19% of total revenues. After tax rates were lowered, they paid 39% of total revenues, about where it is today. 

Tax rates and tax revenues are two different things.  The government has enough revenue, they just don't have enough spending restraint with other people's money.

In 2006, the debt ceiling was $8.2 Trillion when the donkeys took over congress. Today we're talking about more than doubling it to $16.7 Trillion in just 5 years.

If we just froze government spending, no cuts, the CBO would score it today as $9.5 Trillion in savings. This is due to automatic spending increases from the new baseline spending levels now built into our spending.

The US government has already confiscated 13% of everything in the last 2 years, not just their income, through inflation theft.  Now they want more?

Businesses aren't stupid and know that today's US debt and deficits = higher government taxes tomorrow = no US jobs = more jobs overseas, greener pastures.

Demonization and scapegoating along class, race, and intergenerational themes are all symptoms of overspending by politicians who take our money, skim off the top, and then make the electorate fight each other over how the scraps are re-allocated.

 

Tom and Bob were discussing their employers over lunch. Tom's boss was a real prick. But Bob explained that his boss had given him health insurance, paid vacations, time off for family crises, flexible work hours, and performance bonuses. As they were talking, a one-legged waiter came over and refilled their coffee. Tom whispered that it was remarkable the waiter managed so well hopping on just one leg.

Bob said, "Be sure to leave him a big tip, that's my boss, working a second job to make ends meet now that Obama is president."

Tom, "So what's up with the missing leg?" 

Bob said, "Oh, well, a boss like that you just don't eat all at once."

 

 

 

Thu, 07/28/2011 - 09:25 | 1500723 LowProfile
LowProfile's picture

LOL!

When you include all the various little taxes (e.g. fuel, communications, property, FICA, unemployment, energy, sewer, water, etc.) and other ways they take your money (fees, surcharges, petty fines, etc.), and INFLATION, the poor and middle class pay far more in taxes.

Nice try though!

Thu, 07/28/2011 - 09:36 | 1500790 Vashta Nerada
Vashta Nerada's picture

Not even close.

Thu, 07/28/2011 - 09:26 | 1500721 LowProfile
LowProfile's picture

.

Thu, 07/28/2011 - 08:51 | 1500667 tip e. canoe
tip e. canoe's picture

Demonization and scapegoating along class, race, and intergenerational themes are all symptoms of overspending by politicians who take our money, skim off the top, and then make the electorate fight each other over how the scraps are re-allocated.

well said gwar.   another nutshell for us plebes.

Thu, 07/28/2011 - 08:09 | 1500609 ncdirtdigger
ncdirtdigger's picture

I frankly don't care about the effects of taxes on anyone but me. I earned the money, it belongs to me first and foremost. I am smart enough to earn it, I am smart enough to invest it. if you want to fund the poor or middle class, go ahead and start your charity up and you write the first check. Leave me out of it. 

Thu, 07/28/2011 - 09:09 | 1500690 Analysis-Paralysis
Analysis-Paralysis's picture

But unless you have a "fair system" where people can "make it" honestly through hard work; you'll have to build walls and hire body guards to keep your riches.   .... I'd rather not live in Columbia....

 

Thu, 07/28/2011 - 09:27 | 1500738 sumo
sumo's picture

Naughty naughty. By insisting on "honest" hard work, you distort the market by discriminating against clever violent psychopaths,

thereby introducing inefficiencies in the free flow of capital (drugs, guns, money). The fully efficient narco-economy, in

progress in Mexico, but not yet at full potential, will show us how free markets really work when rugged individuals are allowed

to do what they do best.

 

Thu, 07/28/2011 - 08:01 | 1500600 Upswaller
Upswaller's picture

Um, SPENDING????????

This liberal tripe, backed up by selective statistics, just doesn't fly.

Thu, 07/28/2011 - 07:47 | 1500589 Widgeon
Widgeon's picture

Your premise is BS.

 

Who defines rich---you?

 

 Is a husband and wife making 250,000 togehter living in New York, with 2 kids in college rich?

How about someone with a growing business, requiring capital input, with 2 kids in college..........

Stop it with the BS. Statistics can say just about anything you bend them to say.

Our natural rights, which should be protected by common law, are what made this, and any other nation which follow this system, successful. This would demand a tax be applied equally to all.

 

 

   

Thu, 07/28/2011 - 08:05 | 1500604 oldmanagain
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A tax applied equally would mean that after taxes what is left to the tax payer would be equal.

A multi billionaire can invest, compound this wealth, eventually dwarfing the system.  The system will try to compensate, partly by inflation, but the power of compounding of the few eventually wreck the system.

Thu, 07/28/2011 - 08:30 | 1500628 Dangertime
Dangertime's picture

Inherently wrong.

You are suggesting that when one makes money, they are denying it from another.  That is not the case at all.

Thu, 07/28/2011 - 07:58 | 1500598 hardcleareye
hardcleareye's picture

So who defines "equal", you????

Is equal, everyone pays the same amount? Perhaps equal is everyone pays the same percentage?  But then some would argue that is not "equal"....  etc etc...

Thu, 07/28/2011 - 08:09 | 1500608 falak pema
falak pema's picture

The correct notion is not equal, but equitable. That's what the consesus should be about. What is equitable? It has to be some sort of sliding scale based on revenues/incomes correlated to tax rates. How we do this is the role of congress/government dialogue to reach consensus. This dailogue does not currently exist. That is not acceptable. Period.

Thu, 07/28/2011 - 07:33 | 1500571 darteaus
darteaus's picture

You can't give a tax cut to someone who doesn't pay taxes.

The bottom 50% of wage earners pay 4% of the collected income tax.

Just another hyperpartisan article aiming to stimulate class envy warfare.

Thu, 07/28/2011 - 08:47 | 1500662 wherewasi
wherewasi's picture

Serious question...

Do you or anyone else have access to the income data?  For example, I keep hearing about the lower 50%.  I'm curious to know what the pool of money is that is represented by these 50%.  (Or any anlysis that shows total income by range of income)

Thanks.

Thu, 07/28/2011 - 09:26 | 1500728 1911A1
1911A1's picture

The data that I have seen comes directly from the IRS:

http://www.irs.gov/taxstats/indtaxstats/article/0,,id=133521,00.html

The available data only goes through 2008.

Thu, 07/28/2011 - 07:57 | 1500597 oldmanagain
oldmanagain's picture

It is not about tax cuts, but avoiding a collapse of purchasing power.  It cannot be a monopoly game where the King is crowned and everyone else eventually is out of the game.  Or put in prison.

Wage earners do pay(roll) taxes, on almost everything.  Right now, without help of some sort, a worker cannot handle health costs as one example in our current setup.  

Thu, 07/28/2011 - 08:07 | 1500607 TaxSlave
TaxSlave's picture

Did  you sorta miss the fact that the decline in purchasing power is fueled by creating money out of thin air, and that this hidden tax hurts the poor the most?

Did you sorta miss the fact that the air-money is created as debt, which is now unpayable but chains us into perpetual servitude to pay it back?

Did you sorta miss the effects of driving capital offshore, gutting our manufacturing capacity?

THAT is what caused the concentration.  They sucked the value out of the economy, like marrow from our bones.

And now we read this tripe calling for more punitive taxes, which enrich bureaucrats and guarantee serfdom for all but the super-rich.

Capital is surplus, savings from previous production.  Go ahead, make those with savings stop investing and transfer their wealth out of the reach of your grubby little hands.  See how well that works. 

Thu, 07/28/2011 - 08:33 | 1500634 Steve Evets
Steve Evets's picture

Well said

Thu, 07/28/2011 - 07:26 | 1500562 Dangertime
Dangertime's picture

This article is full of shit.

Consumers stimulate the economy???  Are you telling me that investments do not?

The rich received 38% of the tax cuts?  You mean to say that the rich had 38% less of their money stolen from them by the point of a Government gun!

I have seen the definition of "Poor" lately, have you?  Check the link below and you will find that being poor means you still have a 55" flat screen tv and the latest gaming system.

http://www.nationalreview.com/corner/272081/modern-poverty-includes-ac-and-xbox-ken-mcintyre

Take your "Poor" and shove it up your ass.

 

Thu, 07/28/2011 - 07:10 | 1500558 centurain
centurain's picture

This article is yet another smoke screen or half truth.  Since this country has 1 tax bracket for everyone making $180K-$380K and only 1 bracket for $380K and above this liberal (rich don't pay their fair share) argument is garbage.  Is middle class the median income +20%?  Or is it a small business that could easily fall into the highest tax bracket?  I live in D.C. and although my wife and I make $250K a year we are middle class here, if I still lived in Iowa where I grew up I would be living high on the hog.  Not to attack you personally but there is no substance or context to the articles you write, reminding me everytime I read one of a wanna be Paul Krugman...

Thu, 07/28/2011 - 07:36 | 1500574 oldmanagain
oldmanagain's picture

You miss the point centurian.  A system that eventually concentrates, like feudalism, topples mathematically.  Now with headwinds of resource depletion and work as we know it becoming obsolete we are not adapting. Krugman is much more correct than Laffer. The report card is unfolding and requires adaptation.

Thu, 07/28/2011 - 07:20 | 1500564 weinerdog43
weinerdog43's picture

Please.

Learn what the word "marginal" means when we speak of taxes.

Thu, 07/28/2011 - 07:12 | 1500556 New_Meat
New_Meat's picture

GW, you missed a histogram--do the same scales and quintiles for the proportion of income taxes PAID.

- Ned

{and when S-Corporations are considered, the concept of "rich" takes on a new meaning.  But that would not fit your class-warfare bias.}

Thu, 07/28/2011 - 11:24 | 1501201 RockyRacoon
RockyRacoon's picture

Don't fall for the old fable about S-Corps being small business owners.   Many very large companies use the S-Corp form to remove money from the Corp structure.   I used to have list of some very well known companies that were structured as S-Corps.

Most corporations have annual revenues of less than $5 million per year. And, many corporate owners remove substantial profits from their companies. For these companies, the S-corporation structure works well

Thu, 07/28/2011 - 06:56 | 1500552 pupton
pupton's picture

-1 to your entire bullshit thesis GW! Taking money out of the economy does not strengthen it.

Thu, 07/28/2011 - 06:52 | 1500550 BigDuke6
BigDuke6's picture

I'm sure you've seen ths GW.

Some interesting/depressing stats.

http://www.zcommunications.org/plutocracy-and-the-debt-ceiling-debate-by...

 

Thu, 07/28/2011 - 05:26 | 1500510 i-dog
i-dog's picture

Tax cuts for the poor fuel consumption.

Tax cuts for the wealthy fuel the means of production.

Consumption without production fuels inflation.

Get rid of taxes altogether and the central planners can't fuck with the economy!

Thu, 07/28/2011 - 04:39 | 1500492 Squid-puppets a...
Squid-puppets a-go-go's picture

"tax cuts for the middle class and poor stimulate the economy, but tax cuts for the wealthy hurt the economy"

C'mon Georgieboy. Let's not be so reductionist.

That might be true in a consumption based economy. But let's say your economy is emerging from decades of communist rule and excessive regulation. Tax cuts for the rich would be good at that historical junction. Let's say you have a modern western economy that has collapsing infrastructure as a result of historically low middle/poor taxes. You may not be able to improve the infrastructure (that can facilitate trade and the social stability needed for it to flourish) without raising taxes.

all things in balance. 'all axioms have their failings - even this one'

 

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