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It's the Economy, Stupid

MC.no.spin

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I was reminded today how much economic issues will be deciding this election, when I saw in the USATODAY poll that along with McCain's meteoric rise in the polls (17 points) over the last week, accompanying that was an identical surge in the polls asking which candidate would best handle the economy (16 points, now only trailing by 3.)

Poll: Convention lifts McCain over Obama - USATODAY.com

The RNC did an excellent job exposing holes in Obama's plan for the economy. Fred Thompson's speech was probably the most effective, which I have provided here.

YouTube - Fred Thompson Bashes Dems in RNC Speech

So, let's hear from posters on why their candidate has the best answers for the country on the economy, with good sources/links demonstrating their point.

The Democrats say they won't tax middle-income families, but listen to Fred Thompson 3 minutes in. That spells out the real truth - inflation and increased corporate taxation is the hidden tax in Obama's plan. Your paycheck and what one pays at the store will change for the worse.

People appear to have listened to the economic lessons at the RNC about liberalism.
 
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Do you have any report from a credible source? Listening to economics from washed up candidates who don't have solid economic background is hardly a good foundation for why a candidate is good or bad. That goes for both of the two major parties.

As someone with accounting and finance training along with economics, I know better then to trust politicians as I can actually do the math myself. :2wave:

And the only poll that matters is the poll taken on election day.
 

http://www.taxpolicycenter.org/UploadedPDF/411750_updated_candidates_summary.pdf

Obama doesn't state what he plans to do with corporations that I can find, but McCain's plan is to cut them from the current 35 % to 25 %.

Obama wants to raise capital gains taxes which will indirectly raise taxes on corporations who are often invested in such securities.

"For purposes of fairness" :doh

YouTube - Obama - Taxes, Capital Gains

Dan Clifton over at Strategas Research thinks the Dems may be disappointed by the ROT—return on taxes—from higher cap-gains rates. After reviewing the connections between changing cap-gains rates and government revenue during the past five decades, he concludes that higher cap gains could well be a revenue loser for Uncle Sam.

He examined the impact of capital-gains tax rates on investors realizing their gains. As the tax rate increases, investors hold their gains to avoid paying the higher tax. Conversely, lowering the capital-gains tax rate spurs realizations. Interestingly, the 1986 Tax Reform Act increased the capital-gains tax rate from 20 to 28 percent, but investors were given roughly three months before the tax increase was enacted into law. In turn, investors rushed to realize their gains before the higher tax rate kicked in, and capital-gains realizations remained depressed for nearly a decade thereafter with the higher tax rate in place.... Therefore, proposals to raise tax revenue from capital-gains tax increases will be scored as a net revenue gain to pay for new spending, but in reality, the tax revenue may not materialize, which will force tax increases elsewhere to pay for spending.

Tax expectations may speed stock sales - USATODAY.com

And the only poll that matters is the poll taken on election day.
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Thanks for the clarification.
 
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MC.no.spin said:
http://www.taxpolicycenter.org/UploadedPDF/411750_updated_candidates_summary.pdf
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Much better then washed up economics lightweight former presidential candidates.


What other factors did he include? Furthermore, if Obama isn't relying upon CGT as a serious money maker, the main other benefit is that is creates incentives for long term holding. That is genuinely a good thing. Granted people should be doing this on their own.

We examined the impact of capital-gains tax rates on investors realizing their gains. As the tax rate increases, investors hold their gains to avoid paying the higher tax. Conversely, lowering the capital-gains tax rate spurs realizations.
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I'm not sure I believe this. People are not stupid enough to hold on to stocks that they believe are going to tank just because of the taxes.


Fair enough. How large of a role was potential CGT revenue going to play in Obama's budget?

Thanks for the clarification.
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Few people here seem to understand this.
 
obvious Child said:
What other factors did he include?
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"The deck appears to be stacked against investors on the tax front," notes Dan Clifton, head of policy research at Strategas Research Partners. Higher taxes on investments, he says, could result in lower stock prices and less demand for stocks as folks seek out more tax-friendly assets, such as municipal bonds.

An analysis by Strategas suggests that stocks will have a more difficult time moving higher in the face of rising tax burdens. In general, higher taxes make stock investing less profitable.

If the current 15% tax rate on both capital gains and dividends, which has been in force since President Bush pushed them through in 2003, are made permanent beyond the 2010 expiration date, the estimated fair value of the Standard & Poor's 500-stock index would be 1523, nearly 9% higher than Friday's close of 1398, says Strategas. In contrast, if Democrat Barack Obama wins and boosts the capital gains tax rate to 28% and dividends to pre-Bush levels of 39.6%, the fair value dips to 1375, or 1.6% below the market's current level.

(source: same article)


As covered in the article, the investment mantra, "buy low, sell high" may soon give way to "buy low and sell before taxes on capital gains and dividends rise."

Another aspect not covered in the article is how millions of 401 K portfolios would get dinged with lower stock values, further complicating the retirement picture and rising Social Security demands.

Fair enough. How large of a role was potential CGT revenue going to play in Obama's budget?
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A key platform to pay attention to with Obama is his PAYGO strategy. Ie. he won't increase spending without raising tax revenue to pay for it. That is good, HOWEVER, he wants to drastically increase spending in health care and other social programs. Where will the money come from? His plan according to the tax policy center will not balance with his spending proposals.

http://www.taxpolicycenter.org/UploadedPDF/411750_updated_candidates_summary.pdf

He will have to raise taxes even more according to his PAYGO principles therefore.

Few people here seem to understand this.
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Actually I was making a joke. Look, in case you haven't noticed, this is a politics forum. We are closely following the election and like to keep up with the latest polls and talk about them.
 
Wow, got your degree in economics?
 
How come the tax cuts aren't working?

How long do we have to wait for them to work?

How will McCain get the tax cuts passed?
 
independent_thinker2002 said:
How come the tax cuts aren't working?

How long do we have to wait for them to work?

How will McCain get the tax cuts passed?
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As far as I know they did work, because the economy could have been worse. All the economic turmoil and the unemployment only jumped 1%. You don't think that's good?
 
American said:
As far as I know they did work, because the economy could have been worse. All the economic turmoil and the unemployment only jumped 1%. You don't think that's good?
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I don't think the wealth gap not being this great since the Great Depression, record home foreclosures, and drastically slowed job growth is a good thing. Have we ever cut taxes in a time of war? How is that putting the country first?
 
Should we raise taxes in a time of war? Some think that FDR's policies actually extended the recovery of the US and the war.
 

It is absolutely unfair that hedge fund managers make billions and pay a max 15% rate while working people pay tax rates up to 35%, not including FICA taxes.

:doh


Cap gains revenues have, from the data I've seen, never come close the the level they were at in 2000, before the tax cuts, much less increase revenues.

EXPERTS AGREE THAT CAPITAL GAINS TAX CUTS LOSE REVENUE

The non-partisan Congressional Budget Office (CBO) and the Joint Committee on Taxation have estimated that extending the capital gains tax cut enacted in 2003 would cost $100 billion over the next decade. The Administration’s Office of Management and Budget included a similar estimate in the President’s budget.

The Bush Administration Treasury Department examined the economic effects of extending the capital gains and dividend tax cuts. Even under the Treasury’s most optimistic scenario about the economic effects of these tax cuts, the tax cuts would not generate anywhere close to enough added economic growth to pay for themselves — and would thus lose money.

One reason is that preferential tax rates for capital gains encourage tax sheltering, by creating incentives for taxpayers to take often-convoluted steps to reclassify ordinary income as capital gains. This is economically unproductive and wastes resources. The Urban-Brookings Tax Policy Center’s director Leonard Burman, one of the nation’s leading tax experts, has explained, “shelter investments are invariably lousy, unproductive ventures that would never exist but for tax benefits.” Burman has concluded that, “capital gains tax cuts are as likely to depress the economy as to stimulate it.”

Experts Agree That Capital Gains Tax Cuts Lose Revenue Experts Agree That Capital Gains Tax Cuts Lose Revenue
 
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American said:
Should we raise taxes in a time of war? Some think that FDR's policies actually extended the recovery of the US and the war.
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Should we load the Govt with a crippling level of debt in times of war?

After WWII the top tax rate was 91%, necessary to pay down the WWII debt.

That is what we, the pass the buck generation, are bequeathing to future generations.
 
American said:
As far as I know they did work, because the economy could have been worse. All the economic turmoil and the unemployment only jumped 1%. You don't think that's good?
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Tax cuts were passed with the promise that the economy would grow stronger, and that this stronger economic growth would generate additional revenues and make up for those revenues lost from lower tax rates.

Instead economic growth in the 00s has been putrid, far lower than in the 90s, and with the result of trillions more debt.
 
independent_thinker2002 said:
How come the tax cuts aren't working?

How long do we have to wait for them to work?

How will McCain get the tax cuts passed?
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Tax cuts were supposed to make the economy grow stronger. Instead its been putrid.

Cap gain taxs were supposed to spur investment and stock market performance. Instead its been abysmal.

Tax cuts in general were supposed to grow revenues. Instead they are hundreds of billions behind putrid economic growth.

When you come right down to it, conservative arguments about tax cuts and economic performance are nothing more than propoganda designed to cut the tax burden on the wealthy, promulgated by the conservative financial media that caters to them, and used by conservative politicians to justify tax favoritism for the richest, like the 15% max tax on investment income.
 
Okay well if Clinton's economic policies were so great, why did we have a recession as he was leaving?
 
American said:
Okay well if Clinton's economic policies were so great, why did we have a recession as he was leaving?
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Correction of over speculation in the stock markets.

If you want to hold to the theory that lowering cap gains taxes leads to greater investment in stock markets, then you'd have to conclude that lowering the cap gains taxes from 28% to 20% in the 1997 and the tax incentives that resulted fueled the over-investment in the markets which caused the inevitable correction.

Without this artificial incentive, investors might not have pumped so much money in and the resulting correction would have been more mild.

As it was, the "recession" of '01 was the mildest "recession" on record. In FY '01, the economy actual grew by a real 0.7%.
 
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American said:
Should we raise taxes in a time of war? Some think that FDR's policies actually extended the recovery of the US and the war.
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Some think 9/11 was an inside job too.

You need better sources.
 
American said:
Hmmm, here's where you kill the messenger because you can't address the discussion.
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"Some say" isn't a messenger. No we shouldn't increase the debt and further devalue our currency in a time of war. FDR steered us out of a very trying economically time.
 
Devalue our currency under a fiat economic system.
 
American said:
Devalue our currency under a fiat economic system.
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Yes, we can claim on paper that our money is worth something until it comes time to pay the promissory note.
 
American said:
Devalue our currency under a fiat economic system.
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LOL -- what is that, the Republican economic plan? Destroy whatever value remains of the US dollar?

It'll be great when US companies have to buy euros to trade in the international markets, eh?
 

STEPHANOPOULOS: Actually, the Tax Policy Institute says that it’s 81 percent of the American people. It’s 95 percent families with children.

But they also say you raise revenue by $600 billion over the next 10 years; he cuts revenue by $600 billion over the next 10 years.

If we are either in a recession or approaching one, is it wise to raise revenues in any way?

OBAMA: Well, I think that it is wise if you’ve got a half-a- trillion-dollar deficit. I think it makes sense for us to make sure that we’re paying for what we’re purchasing.

If we’re continuing to spend $10 billion a month in Iraq, we can’t keep on borrowing that on a credit card from the Chinese.

CQ Politics | Democratic Presidential Nominee Barack Obama Is Interviewed on ABC’s “This Week with George Stephanopoulous�

HALLELUJAH!

At least one of the candidate "gets it".
 
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Iriemon said:
Tax cuts were supposed to make the economy grow stronger. Instead its been putrid.
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3.3% last quarter, nuff said.

washingtonpost.com - nation, world, technology and Washington area news and headlines

Iriemon said:
Cap gain taxs were supposed to spur investment and stock market performance. Instead its been abysmal.
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The market has grown from 7k to 11k since 2001.

Richard Russell now says stock market's long term trend now down - MarketWatch

Iriemon said:
Tax cuts in general were supposed to grow revenues. Instead they are hundreds of billions behind putrid economic growth.
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Tax cuts aren't the problem, spending is.

Raising Taxes is Not the Solution to the Entitlement Spending Tsunami
 
Considering John McCain said that economics "is not something I've understood as well as I should."

I think if the economy is important, it's pretty clear that voters should steer clear of a candidate who said that, but just or more importantly, to steer away from the party that helped put the economy in the trash.

I mean, if that's what you're basing your voting on.

-Mach
 
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