POLITICS - Bush's Tax Cuts? Trying to understand it?

[Blackhawk]

Since the 2001 and 2003 tax has everything been better?

Does this new tax cut help in the long run?

For Bush.
http://www.heritage.org/Research/Taxes/wm956.cfm

Against Bush.
http://www.cbpp.org/4-14-04tax-sum.htm

Where can one draw a line on which will be true?

And please no arguing. I'm trying to understand if in the long run these "tax breaks" or going to be worth it. Or are my children gonna suffer for it?

Johnny

[Ysabel Kid]

Didn't check the links - in an airport with a slow connection. From just a matter of principle though:

Tax cuts are ALWAYS good - letting people keep more of what they earn is always more moral than taking more from them;

Tax cuts have always helped the economy (see JKF and Reagan's examples)

Tax cuts should be accompanied by reductions in spending, but that has about as much chance of happening in Washington as pigs flying!!!

[Scott64A]

I agree with Ysabel.

If theycut tax and don't staunch the bleed, then it might come back to haunt us all.

Actually, I'm in favor of a fairtax.
Those that don't pay income tax will, and the incentive would be to SAVE money rather than spend it, which is a good thing to promote.

[FALPhil]

Your children are going to suffer regardless, but not because of tax cuts. They are going to suffer because of deficit spending. You see, there are two sides of the equation: revenue and expenditure. If congress would be prohibited from deficit spending, there would be no federal debt. But congress does not run its finances like responsible households do.

Here is better information than the two links you posted:
http://www.cbo.gov/ftpdoc.cfm?index=3856

In general, federal revenues rise when tax rates are lowered. Why? Because the people who benefit most from tax cuts use the extra cash to generate more wealth by investing it, which heats up the economy, providing more jobs and creating more wealth. The people who benefit less from tax cuts use the extra cash to treat themselves to consumer goods they wouldn't normally buy, which heats up the economy because it increases demands for consumer goods, which industry responds to by creating more jobs which creates more wealth.

But increased revenues is a blessing and a curse. If congress used the increased revenues to retire debt, that would be one thing, but instead, they use it to buy votes, in the form of transfer payments (welfare), earmarks, public works, foreign military bases and foreign aid, etc, etc.

Now, if tax cuts result in increased federal revenues is the converse true, that tax hikes result in decreased revenues, and in fact, when you map the revenues to the passage of tax increases, you see that federal revenues grow less rapidly, and in a few cases actually decline. But guess what? Congress still spends like drunken sailors!

The other thing that bothers me about our current tax policy is that income tax is basically immoral. The federal government basically holds a gun to your head and takes your money. This is either theft or slavery, I have not decided which. Morally, you have a right to your work product. If someone takes away your right to the disposition of your work product, that is wrong. In the beginning of this country's history, the federal government was funded by what amounted to duties and excise taxes. No one stripped you of your work product, and taxes were paid on goods and services when they traded hands. One of the fantastic benefits of such a tax system was that the size of government was kept small enough that it was not intrusive.

It's never bad when your taxes are reduced. It is never bad when you get to keep more of your money. It is bad when the government wastes your money on stuff it has no business being involved in, like footing the bill for the military defense of Canada and Western Europe, or bombing Serbo-Croatians who are not a threat to the security of the USA, or propping up governments that have no business being propped up.

I'll get off my soapbox now...

[Leverdude]

Its all mumbo jumbo to me but tax cuts always sound better than they feel.
Cant see how it could be possible right now to cut anything the way we're spending money. But, reality doesnt have much effect when a politician is useing tax payers money for propaganda.

[J Miller]

You gotta qualify to to get them. They are related to how much taxes you paid last year.
I consider it a feel good political ploy for the republicans.
We didn't see a dime of the one they had in 2001, and I doubt we will see anything now.

A real tax cut, and I mean a solid verifiable tax CUT for all tax payers would benefit all of us. But that won't happen.


http://www.foxnews.com/story/0,2933,325847,00.html

WASHINGTON — Most taxpayers could expect a rebate of up to $600 starting in mid-May under the economic aid plan set to go through Congress within weeks.

Couples could get twice as much, with even more for most families with children. All that, however, depends on smooth sailing at the Internal Revenue Service, and the agency already is up to its eyeballs in filings and refunds.

The Treasury Department says that despite the strains of tax filing season, the IRS will be able to begin delivering the payments within 60 days after President Bush signs the plan into law, and complete the process in approximately 10 weeks, possibly sooner. The payments would come separately from regular tax refunds.

"The IRS has already begun trying to prepare for this," said Andrew DeSouza, a Treasury spokesman. "They'll be ready to go."

But figuring out if you qualify — and for how much — can be complicated, thanks to confusing rules designed to get the money to middle-income workers and ensure it also benefits low-income people who are most likely to spend the cash.

"Almost everyone who earns income will receive some benefit," said Douglas W. Elmendorf, an analyst at the Brookings Institution. "The idea is to target the money on the people who will spend a large share of it, and to target it on people who are likely to be hurt by an economic downturn."

People who do not make enough to pay taxes but had at least $3,000 in earned income would get $300. Those earning less than that would be disqualified, as would the wealthiest. Older people living solely off Social Security checks would not get the rebate.

Individuals with adjusted gross incomes of more than $75,000 and couples with income exceeding $150,000 would get smaller checks. Contributions to individual retirement accounts, 401(k) retirement accounts and health savings accounts would not count toward the limits.

About three-quarters of those eligible for the checks are working people. About one-quarter would qualify solely through pension or interest income, such as retirees or people who are unemployed. Eligible people would get at least $300.

For middle-class people, the rebates are fairly straightforward. Most individuals would get a $600 rebate, couples would get $1,200, and those amounts would rise with the size of their families. High- and low-income people, however, would get only a partial benefit.

People with income less than $75,000 would get a rebate equal to the taxes they paid in 2007, up to $600. Couples with income less than $150,000 could get up to $1,200. Those who earned more than $3,000 but owed little or no taxes would get a flat $300, or $600 per couple.

So a low-income family of four — with $35,000 in income and virtually no tax liability — would get $1,200. That includes the flat $600 per couple and $300 for each child.

A single person earning minimum wage would receive the lower rebate, $300.

A single parent of two with income of $38,000 and a tax bill of $433 would get $1,033 — a $433 tax rebate plus $300 per child.

To focus the payments on middle-class people, the plan includes rules that reduce the rebates for those with higher incomes. For each $1,000 over the limit, the payment goes down by $50.

That means that while a family of four with income of $95,000 would get $1,800 — $1,200 for the couple and $300 for each child — a family of four with income of $160,000 would get less, and the same family making $200,000 would get nothing.

Income of $160,000 would put a family $10,000 above the income threshold, reducing the benefit by $500 for a rebate of $1,300. The wealthier family, which falls $50,000 above the threshold, would see its rebate vanish under the formula.

Similarly, a single person with no children who had $16,000 in income would get $600, while the same person making $85,000 — $10,000 above the limit — would get just $100.

People would not have to work to receive a rebate. A retired couple owing $4,000 in taxes would get the full $1,200; if they owed no taxes, they would receive only half that. If the couple earned less than $3,000, however, they would be ineligible. That includes 20 million older people whose only income is their Social Security checks.

The plan would allow people who do not qualify for a rebate this year to get one in the spring of 2009 if they become eligible based on their income level or tax liability in 2008. That has been a standard feature of past rebates, although it does nothing to stimulate the economy.

Some 40 million people who file their tax returns online could start getting payments by direct deposit in May. Congressional tax analysts say the government can send out up to 9 million paper checks a week. The IRS will have to reprogram its computers to calculate who gets the rebate and how much they will receive.

"They sort of learned how to do this last time," said Jason Furman, a Brookings economist, referring to the last round of rebates in 2001.

"It's definitely complicated if you're trying to understand it, but it's not actually going to be complicated for people because they're going to get a check from the IRS without having to fill out a single form."

Still, the agency is already working overtime processing tax returns, and rebates will have to take a back seat come April, when it will be overwhelmed in the run-up to Tax Day.

"The two final weeks of tax filing season are very, very high-traffic weeks for the IRS," DeSouza said. "We'll just have to see what capacity they can handle."

It's a twisted convoluted scam for the most part.

No argument, just my opinion based on past experiences.

Joe

[Thunder50]

Seems to me to be a way of using taxpayers money to bribe the voters to vote for them.

[Kansas Ed]

I can't gripe about the federal rebates...I will just use them to offset the ever rising State and Local tax scams.

Ed

[Slick]

I'll be using my "tax refund" to pay a portion of this year's real estate taxes.

[CowboyTutt]

Phil, I think you brought up some interesting points. Joe reminded me of something though. Phil, I think your overlooking the "distribution of wealth" of your Republican "trickle down" theory. Mainly, the rich do indeed get richer, and the poor get poorer. When I was in college (circa '91), fully 1 percent of the population controlled 90% of the wealth. And I agree with Joe, that these "tax cuts" are skewed towards the more wealthy to begin with.

Don't get me wrong, I don't think a "wealthy" man, like my best friend, should pay a larger percentage of his income just because he has been successful.

The only fair solution, is a flat tax. People will complain, but no one will have a leg to stand on. If the flat tax rate is calculated correctly, there will be no loss of revenue to the federal goverment.

Then we just need to put a cap on welfare programs, and how long you can "bum off" the system (unless you are TRULY disabled). Spend the money retraining them to "fish for themselves" instead of teaching them to be professional victims.

So, that's MY rant.

-Tutt

[Nate Kiowa Jones]

On a side note somewhat related, there is a segment of our society that want the big companies to taxed at a higher rate than they are. The problem with that mindset is big business doesn’t pay tax. You and I pay it for them in the form of price increases for the goods and services they provide. I doesn’t matter what you call it, a tax, a permit, a fine or a license to do business, that expense is passed on to the consumer along with a profit margin percentage tacked on to it as well. That’s how trickle down economics work. Higher taxes hurt as all just like tax breaks help us all.

[Ysabel Kid]

On a side note somewhat related, there is a segment of our society that want the big companies to taxed at a higher rate than they are. The problem with that mindset is big business doesn’t pay tax. You and I pay it for them in the form of price increases for the goods and services they provide. I doesn’t matter what you call it, a tax, a permit, a fine or a license to do business, that expense is passed on to the consumer along with a profit margin percentage tacked on to it as well. That’s how trickle down economics work. Higher taxes hurt as all just like tax breaks help us all.

Spot on. Further, this is NOT big business being evil or greedy. They are in business to provide a good or service that enables them to make a profit. For publicly-held companies, they answer to the shareholders - you and I often - and we want our investments to do well. For privately-held companies, it is their money and livlihood they are trying to protect. So any smart company will pass along as many costs as the consumer will bear. If the consumer will not bear them, they will trim costs internally to offset the increased costs - in this case taxes - typically by reducing quality and headcount. That is bad for the economy (lost jobs) and bad for the public (poor quality goods).

Business employs people - many times more than government. Hurt business and you hurt everyone - employed or not, as employed people's social security "contributions" (theft by Big Brother) currently pay for retirees, and a whole host of other government benefits.

[FALPhil]

Mainly, the rich do indeed get richer, and the poor get poorer. When I was in college (circa '91), fully 1 percent of the population controlled 90% of the wealth. And I agree with Joe, that these "tax cuts" are skewed towards the more wealthy to begin with.

Tutt, I don't know where you are getting your information from, unless you were hanqing out with the ACP in college, but verifiable research does not bear your statement out.

Economy in the USA is very fluid. Money changes hands quickly and people climb the economic ladder by creating additional wealth. If you look at individual tax returns over time, you find that the turnover rate in the bottom 20 percentile of income is incredible. The important thing to remember is that the US economy is not a zero-sum game. If you look at the Forbes "richest" list, you will see that the greater majority did not inherit their wealth.

My mother's family is a prime example. My mother was the last of 12 children born in a log cabin with dirt floors in Appalachia. Only the last 5 children made it all the way through high school and only my mother and one other sister had any college at all. Two of the children died before adulthood. But the real story is that 3 of the older brothers became multi-millionaires, 3 would be considered upper middle class, and the rest are solidly middle class. The US economic history is littered with such stories.

So, the fact is that the rich are getting richer and the middle class are getting richer and the poor are getting richer. I don't know what "trickle down" means. I think it is a class-warfare term that is designed to take away the hope of those that are starting to get economic traction. Want to help the poor even more? Simplify the tax system and lower the taxes. More jobs are created and more opportunity exists.

If you can't make it in America, you can't make it. I have spent a good deal of time in Third World countries. Looking at the big picture, there are no institutional poor in the US, except for isolated statistical anomalies, and many of those struggle with mental/emotional deficiencies. If you have to be poor, you want to be poor in the US.

As far as tax cuts being skewed, well, doh! In a progressive tax scheme like the US income tax, poor people don't pay taxes. Besides, when was the last time you got a job from a poor man? You give the incentives to the people who create jobs so that you can take in more taxes from the people who take those new jobs. You tax the rich too much and they move themselves and their money to friendlier climates. Look at all the European ex-pats living in the US if you don't believe me.

[BenT]

If you're middle class you don't benefit from goverment programs. So I would rather see my money come back to me so I can see how it is spent. Washington seldom acts responseable in thier spending. The goverment doen't create jobs. They help enable job creation by freeing up money for investment in job creation, i.e. lower taxes , low interest rates.

[k8bor]

Politicians are "purchased" by the people with the most money. That's why the drug and oil companies run the government however they want.

The 2001 "tax reduction" amounted to me getting a check for $ 486.00 once, and not a single reduction in anything. Look how many times in the last eight years even the liberal 6:00 news programs have interviewed people that have said, these are great times for anyone that makes more than $ 1,000,000.00 a year!!

For us middle class, Nafta has given away the jobs, we now have donut holes in our middle class medicare retirement, and we're losing jobs like crazy. The government has completely ignored the middle class since Reagan was done.

Now finally (at least 5 years too late) their saying "My goodness look at all the sadness in the middle class." They better figure out where they're going to get their money from over the next 10 years, because they've sucked their source dry. They've been flying high on completely irresponsible banking practices for a long time now, and the eagle's just coming to roost.

My $.02 rant. I think all the politicians stink, and this election isn't going to do a thing to change it. I had some hopes for awhile with Ron Paul, but, well maybe next time.

[Blackhawk]

Thank you gentlemen for your comments and information links. I must have read 15 different sources yesterday about all this, some for it and some against. I can see how tax breaks have helped, like the removal of the marriage penalty, death tax, 15% rate, and taxes on capital gain. On the capital gain issue, my nephew just join the Army and I am looking to see if he can use his bonus money in way where it wouldn't be taxed as much, if that's possible. Only solution I can see is the "Fair/Flat Tax" for the economy and a doing away with IRS as Ron Paul has stated. I'm leaning more towards his ideas as the election gets closer.

Johnny

[Texican]

As far as tax cuts being skewed, well, doh! In a progressive tax scheme like the US income tax, poor people don't pay taxes. Besides, when was the last time you got a job from a poor man? You give the incentives to the people who create jobs so that you can take in more taxes from the people who take those new jobs. You tax the rich too much and they move themselves and their money to friendlier climates. Look at all the European ex-pats living in the US if you don't believe me.

Amen, Brother! Let's also remember that the progressive tax as mentioned in Das Kapital is one of the 10 tenets of Communism [look 'em up]. It's very useful to de-incentivize success and to redistribute wealth. Does it inspire class warfare (economic and ethnic)? Absolutely; why would anyone in a position of power want you angry at them when you could be angry with each other?

And I say this as a guy looking for work; but I'd much rather look for work in the USA than anywhere else. At least here, I have a chance and can change my future. Hell, our poor have cell phones, color TV's and rebates on taxes they didn't even pay!

[klhill]

Excellent comments FALPhil & Texican! "the rich are getting richer and the poor are getting poorer" has been a well used mantra of the liberals for many years. A "poor" person in the US would be considered wealthy in many countries. The top 10% of wage earners in the US are paying 67% of the taxes.

[stretch]

Yesirree! I'm gonna take my $1200 rebate and pull that US
economy right back up by it's bootstraps.

What a load of manure....... more feel-good crubs from
the Fed to distract us from the the fact that the last two
administrations have been taking our rights away from us
one tiny piece at a time. It's an election year, so everybody's
trying to do something nice so that we'll forget what a complete
mess our government has made of things.

Rant, rant, rant...... (sorry guys)...

[FALPhil]

Ya know, I get on gun boards to read about guns, and I really hate it when I get embroiled in political discussions which are not about guns. Next time I do it, someone please slap me down!

[J Miller]

Ya know, I get on gun boards to read about guns, and I really hate it when I get embroiled in political discussions which are not about guns. Next time I do it, someone please slap me down!

Phil, I understand how you feel. But if you don't want to read or contribute to these political threads, you just have to say no and go to another thread.

The thing is this, all these political threads affect us as gun owners. Lack of major spending money will prevent us from buying new guns. Or it will affect our purchasing of ammo.
So in some small way, this does relate to our topic.

"IF" my wife and I should maybe by some freak chance get that 1200 bucks, I plan on getting a brand new Ruger NM BH I've been trying to buy for five years. What my wife will do with her share she hasn't said.

BUT, I do not believe we will get one thin dime from the feds. So I'll rest my case until May.

Joe

[bunklocoempire]

J Miller wrote:

The thing is this, all these political threads affect us as gun owners. Lack of major spending money will prevent us from buying new guns. Or it will affect our purchasing of ammo.
So in some small way, this does relate to our topic.

Bingo! Don't get discouraged, get wise and spread the word. There are many points of view here and the fact we are discussing them is a good thing. There is more "reporting" here than on any of the major news shows. We've got it good, we're still at the point where we can comfortably discuss things and find solutions, it's not like we're trudging around in snow fighting off the Brits!

Bunkloco

[FWiedner]

By definition, a rebate is a return of part of an original payment that was made.

How can people who don't make enough to even pay taxes get a "rebate" while those who pay more taxes than anyone get nothing?

It is outright folly to believe that those who earn the least can move the economy.

$600 or $1000 isn't enough to make a real difference in any middle-income household that I am familiar with. Gas money maybe?

[J Miller]

By definition, a rebate is a return of part of an original payment that was made.

How can people who don't make enough to even pay taxes get a "rebate" while those who pay more taxes than anyone get nothing?

It is outright folly to believe that those who earn the least can move the economy.

$600 or $1000 isn't enough to make a real difference in any middle-income household that I am familiar with. Gas money maybe?

You are totally correct. I told my wife the other day that if every body got 600 bucks that it wouldn't help counteract the super high taxes we pay on each and every purchase we make.

As for the term rebate, it would be more appropriate to call it bribery.

Joe

[jd45]

Joe, you hit the nail on the head when you mentioned the month of May. If we need quick help, how will these things coming in May help? jd45

[BruceB]

$1200 buys a goot bit of ammunition.

[tman]

it's the old political shell game. party a cuts taxes, creates deficates, that party b have to raise taxes to make up the short falls created by parties' a tax cut, which benifet's the wealthy, at the expense of the middle class. taxes cut at the federal level, have to made up at the state and local level. knock the price of a gallon of gas down to .99 cents. watch the economy take off like a super nova. no , instead, our tax dollars, will subsidised the oil industry. is it wellfare when when it goes to the rich? we'll blame te environmental wacko's, when in reality, refineries were bought up and shut down to create the situation we are in now. i'll take a refinerey or a nuke plant in my back yard. i'm willing to bet the majority or the working class would. i refuse to buy into the political brainwashing by both parties. someone needs to step up AND BE A LEADER,before our economies so broke that it can't be fixxed.

[timkelley]

OK, let's all buy new guns with our rebates.

[Blackhawk]

OK, let's all buy new guns with our rebates.

That's what I'm going to try and do.

I figure if it needs put back in the econmy might as well send a message to the government and let them know where my money is going.

Johnny

[Idahoser]

[cubrock]

Interesting take on the tax "rebates."

I made all of $550 last year due to starting my own business. I was actually thrilled to have turned a profit. But, my low taxable income will likely keep me from getting a rebate - I will be treated like someone sitting on their butt milking welfare.

No matter how they slice it, it won't please everybody. I'd be much happier if they cut deficit spending rather than giving people a one-time rebate. In the long run, it would do much more for our economy. We are in the fix we are in because of decades of runaway spending and we, the voters, have not only allowed it, we have encouraged it.

[Blackhawk]

Maybe Congress will get another pay raise this year, that'll help even everything for everyone.

http://www.fortbendnow.com/opinion/1305 ... lf-a-raise

[Blackhawk]

Missed this one.

Looks like they already got their pay raise this year.

http://www.usatoday.com/news/washington ... e-me_N.htm

[El Chivo]

I agree that it's for the election, but it's about time.

If they get the checks out now, in November there will be good economic news rather than bad. So I think that's the motive, more than just a flat out bribe.

"Trickle Down" is more like "Flow Down" and you won't be able to get a parking spot at the mall once these checks go out.