$700 Billion in Democratic Promises, 50% Tax Rates

How so? Growth is slower than it was in the 1990s and tax income hasn't grown very much at all in comparison to any historical levels. Of the 6 years that tax income actually went down since WW2, 3 of them have been during the Bush admininistration.

 

supply side econ doesnt always work...but as we constantly heard the "tax cuts were only for the rich", and they did get a lot, but that allows for them to have additional money for other investments which in theory creates more jobs as that investment trickles down. (thats the short and sweet idea).

If a company saves an extra 100 million in taxes and assuming they reinvest into their company, they create jobs and productivity, thus contributing to the econ.

 

Well, if we don't tax 50% to pay for the debt, one day the US$ will worth less than 10% now. Effectively, you will then be tax 90% on your whole wealth. Do you want that?

 

But which of these sounds more likely to work to you:

(1) Give more money to the rich, who will then invest it in expanding their business in the hopes that they'll have more customers (despite their middle class customers not having more money to spend on them).

OR

(2) Give more money to the middle class / poor, who'll spend it, thus making the businesses more money and increasing demand so the businesses will choose to use that money to expand?

The former assumes that people will choose to grow their business simply because they have more money. The latter assumes that people will grow their business because there is more demand for their product/service.

There's no doubt that lowering tax rates will make an economy grow - the question is where the diminishing returns are. The government borrowing $5 trillion and giving it to people will also grow the economy - that doesn't mean it's a good idea. It was easy during the 1970's to say we were on the far side of the laffer curve where lowering tax rates would cause more economic growth and increase total tax revenues. At some point, you end up on the other side of the curve where tax cuts don't help grow the economy enough to make up for the cuts. It's not as simple as "tax cuts = good".

 

no. you dont have to tax 50% to pay off debt.

that is answered by the the economists favorite words ..."it depends".

There is support, and critics, for both propositions.

Economics isnt called the dismal science for no reason. You will rarely get a "general right" answer

 

No link? This should be locked up.



D&D. Attempt Civility!

Impeach Bush.

 

It's probably an email from giddy. You know, one of those ones that's totally bogus and proven so but that we're meant to discuss the merits of anyway.

 

So who is "rich"? Are my wife and I rich because we both make good incomes while we try to climb our way up the socio economic ladder? At what point am I middle class and enjoy these tax cuts, and at what point am I rich and get punished for being successful?

We want to put more burden on the "rich" but lets make sure we agree on who is rich and who is not. At this point, I'm almost considered "rich" and will get nailed on tax increases and will have an impact on my lifestyle. I consider people that are rich at the point to where an increase in taxes will NOT affect their lifestyle.

I also think you have to be careful about "rich" when talking about all the small businesses out there trying to become successful. If we tax down the good ones, that's less of a chance for small businesses to become medium and large ones that generate jobs and growth.

Also, tax breaks for poor are really great in theory, especially since truly poor people in this country hardly pay any taxes at all anyways, so I guess if won't really affect the tax revenues that much.

 

Which is as questionable as Keynsian economics also. Both theories downplay the idea that deficits and debt matter which is the heart of the problem. You can't continue to pile on debt without people losing faith in the stability of the economy What makes the Bush Admin. very problematic is that they are both Keynsian and supply siders that they believe in increasing spending and in cutting taxes so you are piling on debt at both ends of the balance sheet.

 

Your post ignores a detail. The rich people investing money in their business means more jobs, higher wage pressure, more money in the pockets of middle class, fewer poor people, and more money to spend. While cutting taxes while running a deficit is irresponsible and shortsighted, it certainly has increased the standard of living of almost all Americans.

 

vote for Ron Paul

 

Not at the moment but that might be the case sometime. At the sametime though we can't dedicate all tax revenue to paying off the debt as there is still a government to run but again at the rate we are going there might be a time when we have to dedicate tax revenue to just paying off the interests on the debt.

You're right economics is the dismal science but we can draw some lessons from history. The great supply side cuts of the 1980's as Major rightly points out were needed given that we were so far on the other side regarding taxes. At the same time though the huge windfalls in tax revenue they were predicted to produce by the Laffer et al, weren't real either as the 1986 tax reform actually increased taxes so it is no surprise there was more tax revenue coming in after that. The Bush 43 tax cuts did provide some spur to the economy and to some increase in revenue but not nearly enough to match spending, not even if you leave out spending on the war. OTOH Bush 41 and Clinton both raised taxes and cut spending and we had a budget surplus by the late 90's as fiscal discipline restored confidence for the Feds to keep interest rates low and for capital to flow into the country. History shows that in general fiscal discipline of matching spending with income is the way to go as opposed to the ideas that you can either spend or choke off revenue to prosperity.

 

Hasn't real income for most Americans though been stagnant and falling?

 

it does seem to be both, but then again, this govt/country relies somewhat on keynes' principles...otherwise why is there a fed reserve?

I think a lot of the problems have been from overreliance on interest rate adjusting rather than tax policy. Of course, the int rate adjusments have kept some people out of trouble, but its also punished the wise investors. Sometimes people need to fail when they haev done something stupid...rather than be bailed out.

 

No. They fell from 2000-2003. They've grown significantly since.

 

I think both tax cuts and low debt help the economy.

The debt is getting so bad its time to bring up the taxes and bail out social security before we even think about starting any other medical plan crap.

 

Is that true? I thought mdian income(adjusted for inflation) hasn't really increased?

link

 

Even though your link truncates the 2006 data off, the graph shows exactly what I said.

 

You are right, it looks like they are increasing just not back to 2000 level yet.

 

interesting stuff guys..on both sides. some things to think about.

currently, the top 10% earners in the U.S. pay almost 70% of the income taxes the IRS collects.

The U.S. Department of Treasury has estimated that without the current tax cuts, the top 25% earners in the U.S. would be paying 82% of the taxes...However, Right now (with the tax cuts) the top 25% earners are currently paying a LARGER share of the taxes. (85%). thats because the tax cuts have allowed businesses to earn more, thus increasing tax revenue.

http://american.com/archive/2007/november-december-magazine-contents/guess-who-really-pays-the-taxes


Also, as the tax revenues continue to increase year-over-year, the deficit continues on its path to being eliminated. It did hit an all-time high in 2004, but a budget was already in the works to begin decreasing it, and it has gotten smaller every year since. The original plan was to eliminate the deficit by 2014, however we've been exceeding that original date, and are on track for a 2012 deadline. Considering all the spending thats been going on (I'm not a fan of all the spending), thats not too bad. I do believe the tax cuts were needed to halt the economic slow down that occured after the tech burst in the late 90's. Some people would like to blame that on Clinton..but that's as stupid as blaming Bush for Hurricane Katrina.

http://www.csmonitor.com/2007/0221/p01s03-usec.html