Incomes and Politics

Discussion in 'Politics' started by carpro, Sep 2, 2006.

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  1. carpro

    carpro
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    http://www.opinionjournal.com/weekend/hottopic/?id=110008889

    Incomes and Politics
    Comparing the current decade to the sainted 1990s.

    Saturday, September 2, 2006 12:01 a.m. EDT

    EXCERPT

    One sure sign that the economy is doing well is when the left revives that old political warhorse, inequality. With GDP growth of nearly 4% for three years running and a jobless rate of 4.7%, it's their last economic resort in an election year. But when you look at the actual evidence, the inequality campaign also proves to be trumped up.

    The Treasury Department will soon release the latest IRS data on who paid how much in taxes in America through 2004. We've had an early look at the numbers, and anyone who reads the front pages of our leading dailies may be surprised to learn that the Bush years compare very well by tax and income equality to the sainted Clinton era.

    First, the new data show that the bottom 50% of Americans in income--U.S. households with an income below the median of $44,389--paid a smaller share of total income taxes in 2004 (3.3%) than in Bill Clinton's last year in office (3.9%). That 3.3% is the lowest share of total income taxes paid by the bottom half of earners in at least 30 years, and probably ever. The majority of American families with an income below $40,000 pay no income tax at all today, and many of them also get a welfare subsidy from the Earned Income Tax Credit that effectively offsets much of what they pay in payroll taxes.

    By contrast, Americans with an income in the top 1% paid 36.9% of all federal income taxes in 2004, down slightly from 37.4% at what was the height of the dot-com boom in 2000. But the top 5% and 10% of earners saw an increase in their tax share over that same period, with the top 5%'s share rising to 57.1% in 2004 from 56.5% in 2000. If this isn't the definition of a highly "progressive," a k a redistributionist, tax code, we don't know what is.

    Especially instructive is what has happened to tax shares since the tax rate on capital gains and dividends was cut to 15% in 2003. These investment tax cuts have corresponded with a huge spike in tax payments by the affluent. Between 2002 and 2004, the income tax share of the top 0.1% of earners rose to 17.4% from 15.4%. A reasonable conclusion is that much of this increase reflects tax payments on capital gains and dividends--which have soared by an astounding 79% and 35%, respectively, since the rate cuts.

    Democrats and their media pals dismiss all this by saying that the richest are paying more taxes because they're making out like bandits in the Bush years. Former Clinton economic adviser Gene Sperling grouses that the 1990s were "an era of shared prosperity," but that the Bush policies have produced "a disappointing decade on inequality."

    The new IRS report contradicts that fairy tale too...
     
  2. The Galatian

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    Recessions tend to do that. The poor get poorer, relative to the rich. If the bottom half is making less money, they pay less taxes. If the top half is doing better, they will pay more.

    What part of this is difficult to understand?

    Of course the poor paid more taxes under Clinton. They weren't out of work when he was president. That was the idea. Federal deficits were erased primarily by the poorer half of the nation working more and paying more taxes.

    This seems to outrage you. But I'm having a hard time understanding why.
     
  3. Hope of Glory

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    You might want to look at some numbers: The most recent recession began, according to economists, nine months before Bush took over. Much of it caused by the collapse of the dot.com bubble upon which Clinton built the illusion of economic prosperity. (That, and the refinancing of national debt on short-term notes that would come due at a higher rate under his successor; I'm sure Gore really appreciated that thought.)

    That recession affected most of the EU, although Canada managed to avoid it for the most part. Russia, which had not experienced the false prosperity of the 90s, did not seem affected.

    By the strictest definition, "a fall of the GDP in two or more successive quarters", we were not truly in a recession, but with negative growth in the 3rd quarter of 2000, the 1st of 2001, and the 3rd of 2001, the effect was more or less the same as a true recession. (Of course, much to the chagrin of the Bush haters, the first two were before Bush had any effect whatsoever.)

    Now, corporate scandals such as Worldcom and Enron contributed to the problems, and the Bush-haters like to say that his policies helped them flourish, but reality shows us that the problems began well before he entered office, and occured under the watchful eye of the all-powerful and highly-worshipped Bill Clinton.

    And, although the recession bear has not hibernated, most economists say that we were out of the woods in 2003.

    You really should try studying economics instead of Bush-hatred.
     
  4. carpro

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    The truth has no impact on Galation.
     
  5. Daisy

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    That really is NOT the definition of a highly progressive tax code. You could get the same distribution with a regressive tax code if the income disparities were wide enough (say 5% of $30,000,000 is alot more $$ than 30% of $50,000).

    A progressive tax rate means the higher the income, the higher the rate paid by the taxpayer; a highly progressive tax rate would mean that the ultra high earners would pay a much, much higher rate than the high earners who would pay a much higher rate than the middle earners who would pay a somewhat higher rate than the lower-middle. Under Bush, the tax rate has become progressively less progressive - which benefits the highest earners the most.
     
  6. carpro

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    The statistics quoted do not support your contention.

    Instead they point out that the poor are paying a lower percentage of the taxes than under Clinton and the rich are paying a higher percentage.

    It may not be to the extent you desire, but that's the facts.
     
    #6 carpro, Sep 2, 2006
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  7. Hope of Glory

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    Why should higher income earners be punished simply because they earn more money?

    How about a fair, flat rate?

    Or, better yet, how about a truly fair tax? Click the Link
     
  8. The Galatian

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    Already have. From the Statistical Abstract of the United States:



    You've been badly misled. The longest peacetime economic expansion in history followed the reduction in the deficit, caused by higher taxes and reduced spending. This is why even conservative economists praised Clinton.

    Just as the prosperity of the 1990s was driven by more intense competition, London argues that future prosperity will depend less on tax cuts and monetary policy than on having the political courage to maintain competition where it is strong and expand it in industries with still-rising costs, such as health care and education. Local monopolies dominate these two industries, making it hard to apply "the competition solution," but London suggests ways to promote competition in both.
    Paul A. London, Fellow, American Enterprise Institute.

    Productivity rose in the 90s, faster than profits and wages. And that drives prosperity. And the deficit fell, reducing the demand for investment money, making interest rates lower, and encouraging more investment.

    In fact, the pressure of having to pay them back early is a very good thing. Notice that the national debt continues to soar under Bush, because he has decided that future generations should pay for it. Better to pay it down now.

    Month for month, Bush's economic performance is very much inferior to Clinton's. This is why die hard Bushistas always take the "Clinton is to blame for everything" argument. It's all they have left.

    So I suggest you take your own adivce...

    You really should try studying economics. Start by reading up on personal income and GDP and learn how truly awful your guy's performance has been, in constant dollars.
     
  9. Hope of Glory

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    Although Bush's spending is out of control, eliminating our national debt would be disastrous to our economy. Does it need to be curtailed? Certainly. Particularly in areas of legalized extortion, such as welfare, food stamps, etc., and other programs that punish those who are successful and rewards those who choose paths of failure.

    Also, all unconstitutional (illegal) programs, of which the above are included, need to be eliminated.

    Let's see, we've had economic growth for quarter after quarter...

    No, thanks, I'd rather keep it that way than to to change and go into a downward spiral.

    How about, "I started by studying at George Mason when I lived in DC"; I would say that's pretty good "reading". While I'm no fan of Bush as a president, he's lightyears ahead of the alternatives that we were presented with in the past two presidential elections, as well as the two former presidents.
     
  10. Daisy

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    I didn't quote statistics - I pointed out that they defined "highly progressive" erroneously.

    Yes, they are paying a higher percentage of the taxes, but a lower percentage of their income. A lower percentage of their incomes equals a higher percentage of the taxes because the disparity between the very rich and the middle class has widened so much. They are making more after taxes than ever before.

    But presented in a way to appear what they are not.
     
  11. carpro

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    Widened? Starting at what date?

    Please support your contention.
     
  12. El_Guero

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    Because those that get the most beneifit of the country should carry their equal burden.

    I would be for a fair, flat rate if we had a draft . . . And all estates were taxed 50% death tax at the end of life . . .

    ;)


     
  13. El_Guero

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    Carpro

    The spread between the lower middle class and the very rich (upper 4% of the tax returns) has spread since 1980.

    How much and does it support Daisy's contention - I do not know.

    Wayne


     
  14. Daisy

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    From 2000 to 2003, the tax rates for the highest bracket dropped from 39.6% to 35%, the next highest from 36% to 33%, the next from 31% to 28%, the next from 28% to 25%, the next didn't actually drop, 15% to 15%, but a new sublow bracket was put in at 10%. Tax rates from 2003 to 2006 haven't changed but the base amounts have gone up. So the tax rate has fallen further for the rich than for all but the poorest of the working poor, yet money collected is greater.

    How do you collect more money from the top 5% at a lower rate? The article didn't claim to collect more from the highest bracket, in which case the answer could be that there are a greater percentage of people in the highest bracket, but more from the top 5%. Same percent of people, lower rate but a greater amount of the whole....
     
    #14 Daisy, Sep 2, 2006
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  15. The Galatian

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    Barbarian observes:
    In fact, the pressure of having to pay them back early is a very good thing. Notice that the national debt continues to soar under Bush, because he has decided that future generations should pay for it. Better to pay it down now.

    Bringing it down to the level where it permits prosperity wouldn't hurt, though.

    Too bad. Bill Clinton can't run again. He made the first true welfare reforms possible. And they worked. Fewer on welfare, and more of them working. Bush doesn't care.

    Sorry, until you can get rational people to sign on to that, you're out of luck.

    Barbarian observes:
    Month for month, Bush's economic performance is very much inferior to Clinton's. This is why die hard Bushistas always take the "Clinton is to blame for everything" argument. It's all they have left.


    Very anemic growth, except when it was in recession. The reason Clinton got accolades for his handling of the economy was that it worked. Bush gets hammered for his approach, because it doesn't work.


    Barbarian observes:
    You really should try studying economics. Start by reading up on personal income and GDP and learn how truly awful your guy's performance has been, in constant dollars.

    You're talking to the wrong guy if you expect me to be impressed by dropping names. If you don't know the material, living near smart people won't help you.

    Didn't care much for Kerry's economic ideas. But even those probably wouldn't be as bad as the mess we have now.
     
  16. Hope of Glory

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    And, as has been shown repeatecly, I know the material and you live in a fantasy world in which the successful are punished for being successful and somehow everyone benefits.
     
  17. Daisy

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    The rich should assume a greater portion of the burden because it is less burdensome to them. The middle class, the working class and the poor spend a progressively greater portion of their incomes on necessities like food, housing, utilities, clothing, etc. leaving them with progressively less income, if any, left over.

    Oxymoron.

    That particular scheme eliminates all income tax and replaces it with a national sales tax on new retail items. Resold items exempt from the tax and corporations are exempt from paying the tax.

    Should that become law, I envision a lot of families and individuals suddenly incorporating and providing furnishings, clothing, equipment, etc. to its officers and employees either free or at cost. I also see a humongous market for corporations reselling 'lightly used' goods. The corporation provides its officers and executives with a brand spanking new car for a week or a month (whatever the law necessitates), then sells it as used without a sales tax. That should be a huge business.

    I don't think that tax proposal is workable.
     
  18. Pastor Larry

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    Isn't it because less money given to the government is more money at work making money, thus enlarging the taxable income of an individual. Cutting capital gains also had this affect in that lower rates encouraged people to take gains, thus paying a lower tax on capital gains taken rather than paying nothing because the tax rate was a disincentive to taking the gain.
     
  19. Hope of Glory

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    Why is it unworkable? Here where I live, there is no state sales tax, but even in my borough, which has the second highest rate in the state, they cap sales tax at $500 of sales. So, the most sales tax I pay on any single purchase is $32.50. What an incentive to buy more consumer goods, eh? Need a washer? Buy the dryer, dishwasher, and oven at the same time and pay no extra sales tax. When I sell large ticket items, I often sell a second and third one because there's no additional sales tax.

    The economy booms, and so do tax revenues, even at lower rates. That's why the higher brackets pay more, even at a lower rate. They're not getting punished for being successful, so it's an incentive to spend (and therefore make) more instead of a disincentive.

    Oh, and amen to what pastor Larry said.
     
  20. carpro

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    The numbers you have provided defeat your own point that this is not a progressive tax system. It's just not progressive enough to suit you and it probably never will be. However your numbers do point out the fallacy of your thinking. The lower tax rate produced more tax revenue.

    I suspect that a total redistribution of income may be what it takes to make you happy. But America did not become as economically powerful as it is today by not rewarding initiative and risk taking.

    I do recall when there was a 50% tax bracket and I believe even a 70%. But there were all kinds of deductions that are no longer available.
     
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