Obama and the Bush Tax Cuts

[bald_eagle1]

[quote]Gambit_Lost wrote:
The economy has grown over the last 10 years. Yet incomes for the majority of americans have stagnated. Why has this happened? Is it acceptable? Should we try to spread growth over a society? Have trickle-down economics worked if most people aren’t better off when an economy is growing? [/quote]

If you look at income growth it has gone up kind of like a bouncing ball since 1982 when Reagan cut taxes. When they say income has not gone up since Bush took office they are leaving out something very important.

Incomes started falling in 2000 when the dot com bubble burst and fell until 2003. Of course we had to work through 9/11 also. How convenient of them.

What they do not tell you is that incomes started rising in 2003 when the tax cuts took effect and have been climbing back since then.

Nothing goes straight up forever without some leveling and dips along the way.

[rainjack]

[quote]Gambit_Lost wrote:
The economy has grown over the last 10 years. Yet incomes for the majority of americans have stagnated. Why has this happened? Is it acceptable? Should we try to spread growth over a society? Have trickle-down economics worked if most people aren’t better off when an economy is growing? [/quote]

The Bush tax cuts created a 20% increase in revenue to the Government, with the top 50% of wage earners paying 97% of the tax burden.

Simple math will tell you that the bottom half pays only 3% of the tax in this country.

10 years of economic growth, with near statistical full employment, and you are whining about a slow down in the increase in real wages?

Why?

And how can another tax increase on the top half possibly be a good thing for the bottom half?

[Bill_Roberts]

[quote]rainjack wrote:
And how can another tax increase on the top half possibly be a good thing for the bottom half?

[/quote]
Answer: In the immediate short-term, it looks like a benefit to the lower 50% of income earnersif the tax increase on the upper half of income users is then partially or entirely used to give “tax relief” in the form of cashable “tax credits” to themselves even when having paid either no income tax or much less income tax than the “credit.”

When some politicians say “tax relief,” their Newspeak meaning of it is paying out money to people that don’t pay taxes or paying them more than the taxes paid. Not reduced taxes for those that actually pay substantial taxes. That, in contrast, is a “give-away” and that would be bad.

In the long-term, if they are employed, no benefit as the money was taken from those that employ them, thus leaving less to pay employees; and if they buy groceries, food, clothes, or anything else, no benefit as the cost of producing these go up as the producers have to pay more taxes.

But it looks like a benefit and buys votes.

[rainjack]

[quote]Bill Roberts wrote:
rainjack wrote:
And how can another tax increase on the top half possibly be a good thing for the bottom half?

Answer: In the immediate short-term, if they are then given “tax relief” in the form of cashable “tax credits” even when having paid either no income tax or much less income tax than the “credit.”

In the long-term, if they are employed, no benefit as the money was taken from those that employ them; and if they buy groceries, food, clothes, or anything else, no benefit as the cost of producing these go up as the producers have to pay more taxes.

But it looks like a benefit and buys votes.
[/quote]

Is wealth redistribution ever a good thing? Short term handouts just feeds the hunger for more.

[Bill_Roberts]

It’s a good thing for the politicians that buy votes that way.

[Tiribulus]

[quote]Bill Roberts wrote:
<<< But it looks like a benefit and buys votes.
[/quote]

It not only buys votes, but manipulates votes by creating and fueling resentment toward people who have more than they do.

“They have screwed you and I will make them pay you back”

This is a pernicious practice that cultivates a self perpetuating pernicious cycle.

The only winners are the politicians who succeed in wresting yet more power into their own hands in the form of even more of other people’s money.

[Aragorn]

[quote]Beowolf wrote:
Wait… so he does something you agree with (to an extent) and you hate him for it?

Though I suppose if McCain suddenly decided to be for universal health care, the left would start calling bandwagoning all over the place.

Hmmm…

So, is it more important for a candidate to do what he believes is right, or for said candidate to stick to his previous word? How can we tell what’s genuine and what’s political?

Gah.[/quote]

That’s pretty much the problem. It’s not that he did something they agree with, it’s that he was previously very opposed to that idea and now, suddenly, likes it.

I have no idea how we tell what’s genuine and not most of the time, only that we have track records for a reason. In my opinion it is more importand for a candidate to stick to with what he believes. It may well be that he genuinely changed his mind, which is good. But he’s been so opposed to the idea for so long that one has to call BS.

[cremaster]

[quote]Bill Roberts wrote:

…There was a psychological study done a while back, in which people played a game in which they actually received some real money at the end according to how much they won in the game, and their behavior was studied…

The sad outcome was that a very high percentage of people, somewhere around half (I don’t recall) were found to be willing to spend quite a bit of their own money to make sure other players took home less…

A substantial percentage of the voting population will have this psychology.[/quote]

Bill, (and others)

I highly recommend reading ‘Making Democracy Work’ by Robert Putnam. It’s about 15 years old and should be still available in paperback.

He studied the differences in wealth between northern and southern Italy. Differences which have persisted for generations despite the Italian government taxing the wealthy north to ‘help’ the impoverished south.

His conclusion was that the northern Italians operated with a mind-set of plenty, and used virtuous circles to their shared benefit. While the southern Italians had a ‘screw your neighbour’ mind-set and were therefore trapped in a vicious cycle.

Sound familiar?

[Bill_Roberts]

That sounds like a good read. Thanks!

[ajcook99]

[quote]Bill Roberts wrote:
Now c’mon, everyone knows that if people get a government check for $600 this stimulates the economy, but taxing them extra thousands of dollars per year in no way slows the economy. Nor does cutting their taxes by $600 a year or more do anything to stimulate the economy.

[/quote]

This is actually more close to the truth than you might think. I know you’re being sarcastic, but there is a big difference between a retroactive stimulus package that is tax cut in arrears and a change in tax rates going forward. For one, the labor market has no chance to respond to a backwards stimulus so 100% of that $600 check is a gain to the taxpayer.

However, with a change in tax rates that would nominally result in a $600 benefit to the taxpayer, most of that benefit would be eaten up by the employment market (ie through lack of raises, increased compensation, etc…). The labor market adjusts for after-tax wages not pretax wages.

[Bill_Roberts]

I didn’t see it as sarcastic, but facetious. It was not to be taken in the literal sense, but it was hardly “flesh-cutting” in nature, intent, or style.

Yes, the big difference is that if businesses and employers know that next year, and on into the future, tax rates will be low then they can expand accordingly.

Whereas if they thought rates would be high and then, surprise surprise, there are “stimulus checks” next year, the benefits of appropriately planning ahead were not able to happen.

If taxes will be (for example) $600 lower for everyone next year, it’s better to know that in advance than to have investors and businesses budgeting less for investment and capital improvements because they’re expecting taxes to be higher than they in fact will be.

I agree that there’s a difference, but not in the direction that the difference is.

And on this:

However, with a change in tax rates that would nominally result in a $600 benefit to the taxpayer, most of that benefit would be eaten up by the employment market (ie through lack of raises, increased compensation, etc…). The labor market adjusts for after-tax wages not pretax wages.

I just don’t understand your point. Perhaps I am missing what you’re intending to communicate (entirely possible.)

Reading it the way that it seems to me that it’s saying, it seems to me you’re saying it’s different for say an employee to have to pay $600 less on April 15th because the percentage tax rate was lower, than it is for him to pay it (along with the rest of his taxes) on April 15th but get a $600 check in May. I do not see where your parts about after-tax wages and so forth change there being no difference, except a couple weeks’ time, in those two equal-dollar cases?

[dhickey]

[quote]ajcook99 wrote:
Bill Roberts wrote:
Now c’mon, everyone knows that if people get a government check for $600 this stimulates the economy, but taxing them extra thousands of dollars per year in no way slows the economy. Nor does cutting their taxes by $600 a year or more do anything to stimulate the economy.

This is actually more close to the truth than you might think. I know you’re being sarcastic, but there is a big difference between a retroactive stimulus package that is tax cut in arrears and a change in tax rates going forward. For one, the labor market has no chance to respond to a backwards stimulus so 100% of that $600 check is a gain to the taxpayer.

However, with a change in tax rates that would nominally result in a $600 benefit to the taxpayer, most of that benefit would be eaten up by the employment market (ie through lack of raises, increased compensation, etc…). The labor market adjusts for after-tax wages not pretax wages.

[/quote]

You’re going to have to explain this a bit more. How does the market adjust to after tax wages? How does the market adjust to wages at all?

[dhickey]

[quote]Bill Roberts wrote:
Yes, the big difference is that if businesses and employers know that next year, and on into the future, tax rates will be low then they can expand accordingly.

Whereas if they thought rates would be high and then, surprise surprise, there are “stimulus checks” next year, the benefits of appropriately planning ahead were not able to happen.

If taxes will be (for example) $600 lower for everyone next year, it’s better to know that in advance than to have investors and businesses budgeting less for investment and capital improvements because they’re expecting taxes to be higher than they in fact will be.

I agree that there’s a difference, but not in the direction that the difference is.[/quote]

Yep, this is reaction to corporate taxes not individual taxes. I look at this as a contraction of the market. Wages and employment are a symtom of market forces, not the other way around.

Wages are really no different than goods. If market contracts and companies have less to spend, they purchase less labor or can not pay as much for it. Wages effecting the market in an appreciable way is assuming consumer spending is a much larger part of the market than it is. Like the news media, most people don’t think about capital goods, which are not effected as a direct result of real wage rates unless there is a very significant change.

[Gambit_Lost]

[quote]dhickey wrote:
Gambit_Lost wrote:
The economy has grown over the last 10 years. Yet incomes for the majority of americans have stagnated. Why has this happened? Is it acceptable? Should we try to spread growth over a society? Have trickle-down economics worked if most people aren’t better off when an economy is growing?

This doesn’t seem right. Where did you see economic growth of the nation vs. average wage stats?[/quote]

I honestly don’t understand the question. Are you asking if the economy has grown in the last 10 years? Are you asking if wages have stagnated? Do you have access to wsj.com? Just type in a search.
Here’s a quickly found article that I posted earlier

The report, an annual snapshot of living standards, also showed that income in the typical U.S. household remained lower than in 2000, despite six years of economic expansion.

http://online.wsj.com/article/SB121976009555272857.html

[Bill_Roberts]

[quote]dhickey wrote:
Yep, this is reaction to corporate taxes not individual taxes. [/quote]

Also, with regard to personal income taxes and rebates on those, a very large number of people are employed by small-business owners who in fact pay income taxes, not corporate taxes in many such cases.

So yes, these businesses having inaccurate information on what taxes will be due for the year, due to it supposedly being “better” to tell them it’s one value and then surprise them with a rebate next May, is not better than their having accurate information in the first place, which would have let them know they COULD in say the middle of 2007 have afforded a $600 improvement to their business or whatever, rather than only finding out in May of 2008 that it’s a doable deal.

There’s just nothing better about not overcharging in the first place versus saying it’s going to be more and then rebating some.

[Gambit_Lost]

[quote]bald eagle wrote:
Gambit_Lost wrote:
The economy has grown over the last 10 years. Yet incomes for the majority of americans have stagnated. Why has this happened? Is it acceptable? Should we try to spread growth over a society? Have trickle-down economics worked if most people aren’t better off when an economy is growing?

If you look at income growth it has gone up kind of like a bouncing ball since 1982 when Reagan cut taxes. When they say income has not gone up since Bush took office they are leaving out something very important.

Incomes started falling in 2000 when the dot com bubble burst and fell until 2003. Of course we had to work through 9/11 also. How convenient of them.

What they do not tell you is that incomes started rising in 2003 when the tax cuts took effect and have been climbing back since then.

Nothing goes straight up forever without some leveling and dips along the way. [/quote]

Sure, but this ball you speak of is bouncing up a hill. In the US the business cycle isn’t stagnant or moving along a horizontal line. Think of those curves moving on a line which it self is at an angle. This angle changes, but in general it is increasing. US GDP has increased around, what, 2-3%/year for the last ten years or so with some dips and climbs.

Our economy is growing, but not everyone is experiencing the growth.

[Bill_Roberts]

Is it a reasonable expectation that in an economy of millions of people, everyone will experience growth?

How about those that are not improving their job skills and have chosen jobs that are in fields that are declining?

If they’re not making the choices to improve their job skills or become value-providing workers in some field that is now doing better, how do you propose that they experience growth too?

By taxing me more and giving it to them? Or exactly how, if they are not choosing themselves to get on the buses that are moving ahead? It’s not that in America people are locked into a job or caste they are born into.

[Gambit_Lost]

[quote]Bill Roberts wrote:
rainjack wrote:
And how can another tax increase on the top half possibly be a good thing for the bottom half?

Answer: In the immediate short-term, it looks like a benefit to the lower 50% of income earnersif the tax increase on the upper half of income users is then partially or entirely used to give “tax relief” in the form of cashable “tax credits” to themselves even when having paid either no income tax or much less income tax than the “credit.”

When some politicians say “tax relief,” their Newspeak meaning of it is paying out money to people that don’t pay taxes or paying them more than the taxes paid. Not reduced taxes for those that actually pay substantial taxes. That, in contrast, is a “give-away” and that would be bad.

In the long-term, if they are employed, no benefit as the money was taken from those that employ them, thus leaving less to pay employees; and if they buy groceries, food, clothes, or anything else, no benefit as the cost of producing these go up as the producers have to pay more taxes.

But it looks like a benefit and buys votes.
[/quote]

Really the first obligation of a government, in terms of the economy, is growth. If an economy isn’t growing, the country is in trouble. But once that threshold has been achieved, there are other options and other questions for a government to answer. This, I believe, is the key point in what you said Obama said earlier. Essentially obligation #1 is growth. If the economy isn’t growing, actions should be taken to make it grow. However, when an economy is growing we have other questions to ask.

For the last 10 years growth has been concentrated primarily in the hands of the very top of the economy. So a government, and in a democracy a people, must ask, should the government work to more evenly spread growth?

If you think the answer is “no” let an economy grow as it does regardless of if that growth is concentrated, then you wouldn’t talk about “fairness” and the like. Obama seems to believe that he will be able to “spread” the growth throughout the economy. So middle income people’s wealth will increase along with the higher levels of people.

Essentially trickle down economics believes that when the top grows, everyone grows. That hasn’t happened in the last 10 years. We have to ask “why?” “Should we try to change this?” and “how?”

[Gambit_Lost]

[quote]Bill Roberts wrote:
Is it a reasonable expectation that in an economy of millions of people, everyone will experience growth?

How about those that are not improving their job skills and have chosen jobs that are in fields that are declining?

If they’re not making the choices to improve their job skills or become value-providing workers in some field that is now doing better, how do you propose that they experience growth too?

By taxing me more and giving it to them? Or exactly how, if they are not choosing themselves to get on the buses that are moving ahead? It’s not that in America people are locked into a job or caste they are born into.[/quote]

These are good questions. Of course not everyone will experience growth, there are always winners and losers. But we live in a time when “most” don’t experience growth. Why did that happen and should we change it? Some believe the role of government is to smooth alone those changes that you’re speaking of. Now is this really the governments role? and Can the govt really help spread growth? These are good questions that need answering.

[rainjack]

[quote]Gambit_Lost wrote:
Bill Roberts wrote:
Is it a reasonable expectation that in an economy of millions of people, everyone will experience growth?

How about those that are not improving their job skills and have chosen jobs that are in fields that are declining?

If they’re not making the choices to improve their job skills or become value-providing workers in some field that is now doing better, how do you propose that they experience growth too?

By taxing me more and giving it to them? Or exactly how, if they are not choosing themselves to get on the buses that are moving ahead? It’s not that in America people are locked into a job or caste they are born into.

These are good questions. Of course not everyone will experience growth, there are always winners and losers. But we live in a time when “most” don’t experience growth. Why did that happen and should we change it? Some believe the role of government is to smooth alone those changes that you’re speaking of. Now is this really the governments role? and Can the govt really help spread growth? These are good questions that need answering. [/quote]

Who is this “most” you speak of? I went from making less than 18K per year in 2000 to being in the top tax bracket in 2007. I expect to triple my income tax liability for 2008.

I visited every tax bracket on my way up, so to say that it is concentrated at the top would be to suggest that no one can change economic class. I went from qualifying for welfare to the top 10% in wage earners, all under Bush.

Maybe the growth occured in the top 10% because that is where people are moving. At least those who actually earn their money, and don’t waste time on the government to give them a handout.

I don’t believe government can permanently affect growth. Everything greenspan did was a temp fix to stabilize the markets. had he left things alone, I would bet the markets would have righted themselves.

Just look at the subprime goat screw. Clinton’s boy started this shit so that everyone could own a home. Not a bad idea, but to offer homes to those who shouldn’t qualify, well - look at where that has gotten us: the crash of the real estates bubble, and the gov’t takeover of Freddie and Fannie.

People act as if inflation, or recession is a bad thing. last time I checked, they were both part of the normal economic cycle. But when you politicize the economy, this is where you wind up: giving money to people who didn’t earn it at the expense of people who did.