John Kerry's Economy!!!

[cnredd]

Note to younger ones who have not taken a good course in economics yet: work at minimum wage jobs as necessary to get experience, learn a trade, develop a work ethic, and establish a track record and otherwise don't do drugs, don't get pregnant, stay in school, get an education, and be ready to support a family. The minimum wage was always intended as a training threshhold and was never intended to support a family.

Otherwise, will anybody point me to a guy who is making $10K a year who offers jobs to other people? Who buys high ticket items that need other people to make them, repair them, service them? Who invests his money to help other businesses grow or saves his money so that banks have the cash to loan to others who need it? Bill Gates is fantastically rich, yes. He also has created an industry that provides well paying jobs to thousands upon thousands of others. It might make us feel righteous relieving more loot from Mr. Gates, but the guy somewhere down the line who takes a pay cut or gets laid off would probably just as soon Mr. Gates be allowed to keep more of what he earns.

John Kennedy understood it. Ronald Reagan understood it. And George W. Bush understands that any attempt to soak the rich with more taxes diminishes the ability or alters the behavior of the rich with a direct corresponding negative consequence to the economy and the unrich.

I have nothing to add...it was all said beautifully...

 

[gordontravels]

I have nothing to add...it was all said beautifully...

I add my thanks for a good post. :duel

 

[Iriemon]

John Kennedy understood it. Ronald Reagan understood it. And George W. Bush understands that any attempt to soak the rich with more taxes diminishes the ability or alters the behavior of the rich with a direct corresponding negative consequence to the economy and the unrich.

Continued note to younger readers, etc. etc.

I did not learn in my econ class that John Kennedy, Ronald Reagan, or even George Bush attempted to enact a "flat" income tax where everyone pays the same percent of their income regardless of income. Or even proposed, much less supported, such a measure.

But, as Mr. AlbqOwl states, perhaps I did not take a good economics class. So would the learned Mr. AlbqOwl please give us some citations to statements by these gentlemen indicating their support for a flat tax rate.

 

[cnredd]

But, as Mr. AlbqOwl states, perhaps I did not take a good economics class. So would the learned Mr. AlbqOwl please give us some citations to statements by these gentlemen indicating their support for a flat tax rate.

If I may jump in...

No one mentioned "flat-tax" except you, and you only did it through the "25%"
scenario...the "Southwest Beaked One" was referring to those who believe that taxing the rich more sounds like a good thing to the non-rich, but in the long run, it will hurt many more in the middle/poor class...

Currently, there is no "flat-tax", but Bush did cut taxes across the board, corrctly believing that this would stimulate the economy.

 

[AlbqOwl]

Continued note to younger readers, etc. etc.

I did not learn in my econ class that John Kennedy, Ronald Reagan, or even George Bush attempted to enact a "flat" income tax where everyone pays the same percent of their income regardless of income. Or even proposed, much less supported, such a measure.

But, as Mr. AlbqOwl states, perhaps I did not take a good economics class. So would the learned Mr. AlbqOwl please give us some citations to statements by these gentlemen indicating their support for a flat tax rate.

Nor did I say that any of them proposed a flat tax though I know at least the some in the Reagan administration looked at that concept. All I did was attempt to rebut your inference that the rich should pay a substantially higher rate than the less fortunate.

I don't make a federal case out of a two or three-tier system, but it is galling to get a raise and find that you're in a higher tax bracket that will consume a huge chunk of it. And that extra money the government confiscates is not available to me to spend or save or invest so that it helps grow the economy.

To CNRedd and GT, thanks for the backup. I used to be in Iriemon's camp, but life has a way of educating us if we just pay attention.

 

[Iriemon]

If I may jump in...

No one mentioned "flat-tax" except you, and you only did it through the "25%"
scenario...the "Southwest Beaked One" was referring to those who believe that taxing the rich more sounds like a good thing to the non-rich, but in the long run, it will hurt many more in the middle/poor class...

Currently, there is no "flat-tax", but Bush did cut taxes across the board, corrctly believing that this would stimulate the economy.

Did you miss the first day of economics class, Mr. Cnredd?

Quote: AlbqOwl
Note to the younger ones who haven't taken a good economics class yet: in my opinion, there is no way to tax the rich substantially more without hurting the poor. The only fair taxation is across the board with everybody paying the same percentage except for a few truly poor who should be able to opt out.

http://debatepolitics.com/showpost.php?p=64430&postcount=19

With the exception of a few truly poor who get to opt out; isn't that the definition of a flat tax -- "everybody paying the same percentage"?

 

[cnredd]

If you make $100 and get just $10 back through Bush's tax cuts, then someone making $10000 should get $1000. Perfectly fair...

Kerry's idea was that the guy making $10000 should also get $10 back...

So the guy making $100 gets 10% back, and the guy making $10000 would get .1%...perfectly unfair...

Can anyone say "taxation without equal representation"?

 

[cnredd]

Did you miss the first day of economics class, Mr. Cnredd?



http://debatepolitics.com/showpost.php?p=64430&postcount=19

With the exception of a few truly poor who get to opt out; isn't that the definition of a flat tax -- "everybody paying the same percentage"?

We're even...I DID miss that post!:smile:

But if the Owl said it, that means he is FOR it...BUT, he may still like the ideas of the Presidents he mentioned...He didn't say that these Presidents agreed with HIM.

 

[Iriemon]

Nor did I say that any of them proposed a flat tax though I know at least the some in the Reagan administration looked at that concept. All I did was attempt to rebut your inference that the rich should pay a substantially higher rate than the less fortunate.

I don't make a federal case out of a two or three-tier system, but it is galling to get a raise and find that you're in a higher tax bracket that will consume a huge chunk of it. And that extra money the government confiscates is not available to me to spend or save or invest so that it helps grow the economy.

To CNRedd and GT, thanks for the backup. I used to be in Iriemon's camp, but life has a way of educating us if we just pay attention.

You proposed a flat tax ("The only fair taxation is across the board with everybody paying the same percentage..." ) -- I objected to your instruction to our younger readers that a flat tax is the only "fair" system of taxation, and you took me to school, citing Kennedy, Reagan, and Bush. Now you admit none of them supported your flat tax proposition as the only "fair" tax system. So actually, I guess you could say Kennedy, Reagan and Bush don't support your view of a "fair" tax system at all; they supported me in that they all, even with their tax reforms, maintained a progressive tax system.

 

[AlbqOwl]

Iriemon writes

With the exception of a few truly poor who get to opt out; isn't that the definition of a flat tax -- "everybody paying the same percentage"?

Well it's how I interpret the flat tax. I in fact am a strong advocate for a flat tax. I didn't however say that Kennedy, Reagan, or Bush proposed one. :smile: I did say they all understood that letting people--that's all people--keep more of what they earned had a positive effect on the economy and GNP with a corresponding increase in government revenues.

 

[Iriemon]

If you make $100 and get just $10 back through Bush's tax cuts, then someone making $10000 should get $1000. Perfectly fair...

Kerry's idea was that the guy making $10000 should also get $10 back...

So the guy making $100 gets 10% back, and the guy making $10000 would get .1%...perfectly unfair...

Can anyone say "taxation without equal representation"?

That might be a fair analogy, except it supposes that all taxpayers shared equally in Mr. Bush's tax cuts, which is not true. The wealthier had a much bigger percentage of their tax burden slashed. Millions of workers do not pay federal income tax because of deductions and exemptions, but still pay an effective 15.5% SS/medicare tax on their incomes, and received no tax cut at all from Mr. Bush.

 

[Iriemon]

Iriemon writes


Well it's how I interpret the flat tax. I in fact am a strong advocate for a flat tax. I didn't however say that Kennedy, Reagan, or Bush proposed one. :smile: I did say they all understood that letting people--that's all people--keep more of what they earned had a positive effect on the economy and GNP with a corresponding increase in government revenues.

And I never disagreed with the proposition that letting people keep more of what they earn has a positive effect on the economy, nor indicated nor implied that. I disputed the contention that a flat tax rate is the only fair tax system.

While we are in economics class, in your good econ class did they teach you that a tax cut will always result in an increase in government revenues? Are you contending that the Bush tax cuts led to a corresponding increase in government revenues?

 

[AlbqOwl]

You proposed a flat tax ("The only fair taxation is across the board with everybody paying the same percentage..." ) -- I objected to your instruction to our younger readers that a flat tax is the only "fair" system of taxation, and you took me to school, citing Kennedy, Reagan, and Bush. Now you admit none of them supported your flat tax proposition as the only "fair" tax system. So actually, I guess you could say Kennedy, Reagan and Bush don't support your view of a "fair" tax system at all; they supported me in that they all, even with their tax reforms, maintained a progressive tax system.

But the discussion came with your assertion that Bill Gates should pay a whole lot more percentagewise than you or I should have to pay, yes? It was to that I responded. And I used Kennedy, Reagan, and Bush as backup that my point of view on this has legs. I wasn't debating the merits pro or con of a flat tax at that point. I would be happy to do so however.

 

[Iriemon]

But the discussion came with your assertion that Bill Gates should pay a whole lot more percentagewise than you or I should have to pay, yes? It was to that I responded. And I used Kennedy, Reagan, and Bush as backup that my point of view on this has legs. I wasn't debating the merits pro or con of a flat tax at that point. I would be happy to do so however.

I did not, in my response, say I thought Gates should pay "a whole lot more" percentage-wise, and for that matter, I didn't say anything how how much more percentage Gates should pay than the guy making minimum wage; just that I thought Gates ought to pay a greater percentage. I agree with you that "truly poor" (whatever that means) ought not have to pay any tax; it is tough to survive on the minimum wage, and I personally am just thrilled that those folks are working instead of being a burden on society.

I know that Kennedy lowered taxes, as did Reagan or Bush. I'm not familiar enough with the Kennedy and Reagan tax cuts to argue whether they made the tax structure more or less progressive; tho' I think the Bush tax cuts, at least if you include SS/medicare taxes in the picture, did make the taxes "flatter" in that the rich now pay less percent of their income relative to the poorer/middle class.

I think there is a flat tax thread in the econ form if you want to debate the issue there, I'll try to do so effectively despite my lack of a good economics course.

 

[gordontravels]

If I may jump in...

No one mentioned "flat-tax" except you, and you only did it through the "25%"
scenario...the "Southwest Beaked One" was referring to those who believe that taxing the rich more sounds like a good thing to the non-rich, but in the long run, it will hurt many more in the middle/poor class...

Currently, there is no "flat-tax", but Bush did cut taxes across the board, corrctly believing that this would stimulate the economy.

Which is also what Reagan and JFK did. It appears that JFK was the last Democrat that saw the value of cutting taxes. More money in the pocket of the poor (raising the bar for those who have to pay tax) and more money for the entrepeneur and corporations to start up or expand which is the only way you provide jobs that help support the economy.

Sure, the government can tax and create new jobs but those jobs only contribute to spending and not products for the consumer. They are consuming jobs. Just ask California who saw government jobs increase by 50,000 under Governor Davis. Out he went. :duel

 

[Hoot]

For the last time...Reagan DID NOT cut taxes.

Anyone listening out there?

Reagan DID NOT cut taxes.

Saying Reagan cut taxes is typical right wing spin and deception.

Here's a history lesson...available in any decent set of encyclopedias.

Feb, 1981...Reagan proposed an economic plan that combined tax cuts with wide reductions in welfare and unemployment programs and included a large increase in defense spending. By August, Congress had approved nearly all of Reagan's proposed tax and spending cuts. This start of "Reagonomics" was called the 'Economic Recovery Act of 1981." It reduced individual and corporate income taxes by about 33 billion for fiscal year 1982.

However, after the recession of 1981 thousands of companies went bankrupt and unemployment soared...this decline with the increase in defense spending helped produce a growing federal deficit.

To reduce the deficit, Reagan, and yes, Congress, ( I'm not holding them blameless) signed and passed a bill that raised taxes by about 91 billion in 1982...this was the Largest TAX INCREASE in U.S. history at this time.

Please take a moment to subtract a tax cut of 33 billion from a tax increase of 91 billion and tell me Reagan cut taxes....and try to keep a straight face while you do the math.

In Reagan's second term slow economic growth led to a record deficit exceeding 200 billion...the largest deficit ever at that time.

In 1986, Congress followed up on Reagan's request to create a new, simplified tax system that included lower tax rates on idividual and corporate income taxes, BUT....a U.S. Stock Market crash on Oct, 19, 1987 forced Reagan to RAISE TAXES again for fiscal year 1988. (Gee..the Stock Market had a lot of faith in Reagonomics, didn't they?)

Anyone who declares that Reagan lowered taxes is not telling you the whole truth, but a version of "right-wing spin."

 

[AlbqOwl]

Gee Iriemon. If I miscontrued either your statement or your intent, I sincerely apologize. And so far as your economic education goes, yours probably surpasses mine. At any rate, it has been a great discussion and kudos to you. I'll hunt up that other thread and see who I can confuse there.

 

[Iriemon]

Which is also what Reagan and JFK did. It appears that JFK was the last Democrat that saw the value of cutting taxes. More money in the pocket of the poor (raising the bar for those who have to pay tax) and more money for the entrepeneur and corporations to start up or expand which is the only way you provide jobs that help support the economy.

Unfortunately, we can't look at taxes in a vaccum, or we'd all agree just to do away with them.

In 1962 (I don't have older data) the deficit was 5.9 billion and revenues were 99.7 billion -- the deficit was 6% of revenues. Kennedy could afford to cut taxes even if the deficit went up a bit.

Same with Reagan - in 1979 the deficit was 38.7 billion compared to 463 billion in revenues, or 8.3%.

Same with Bush I -- he actually inherited a surplus from Clinton (remember those days?)

In 1992, the year before Clinton came to office, the deficit was $340 billion compared to 1,154 billion in revenues -- or 29%. Faced with those huge deficits he inherited from Bush I, Clinton obviously did not have the flexibility to cut taxes the way Kennedy, Reagan or even Bush did.

Neither will our next president.

As of 2004, the deficit was 567 billion compared to 1,881 billion in revenues --back up to 30%.

Sure, the government can tax and create new jobs but those jobs only contribute to spending and not products for the consumer. They are consuming jobs. Just ask California who saw government jobs increase by 50,000 under Governor Davis. Out he went. :duel

I agree that taxing and "creating jobs" is not an efficient means of improving the economy. I agree that lower tax rates result in better economic performance as a general proposition.

However, again, you cannot look at taxes in isolation. Fiscally responsibility demands the Govt not spend more than it takes in thru taxes, or vice versa, not tax less than it spends. The Bush Admin has funded its tax cuts on the backs of the next generation (which will have enough to deal with the Boomers' retirement and health care) by borrowing $2.2 trillion (so far), a big chunk of which has come stealing from the SS trust fund. That is wrong; it is immoral. And it is entirely inconsistent with this noble proposition:

This country has many challenges. We will not deny, we will not ignore, we will not pass along our problems to other Congresses, to other presidents, and other generations. We will confront them with focus and clarity and courage. Pres. Bush Jan 28 2003
http://www.whitehouse.gov/news/releases/2003/01/20030128-19.html

In fact, that is exactly what this "pass-the-buck" president is doing.

I will agree, however, that tax cuts and increased spending is politically popular. Most folks seem to either be unaware (where is our "liberal" media when we need it?) or don't care we are funding our tax cuts and wars by massive borrowing. That explains in large part why the Republicans are in power. Pandering works.

It takes guts to stand up and cut spending or raise taxes to balance the budget. Unfortunatley, I haven't seen much of that from the gutless pass the buck wonders running our government over the last 4 years.

 

[cnredd]

Is it just me?

Or does "surplus" mean "government took money from the taxpayers than they needed"?

 

[Iriemon]

Gee Iriemon. If I miscontrued either your statement or your intent, I sincerely apologize. And so far as your economic education goes, yours probably surpasses mine. At any rate, it has been a great discussion and kudos to you. I'll hunt up that other thread and see who I can confuse there.

Thank you, accepted, that was a very polite and mature thing to say, and I apologize for being too cynical and smarmy myself, hanging around political debate forums a little too long, I suppose.

 

[AlbqOwl]

Okay, Hoot, here is a rebuttal history and effects of the Reagan tax cuts:

Lots of good stuff here:
http://www.house.gov/jec/fiscal/tx-grwth/reagtxct/reagtxct.htm

Excerpt

Given the current interest in tax reform and tax relief, a review of the effects of the Reagan tax cuts on taxpayer behavior and tax burden provides useful information. During the 1980s ERTA had reduced personal tax rates by about 25 percent, while the Tax Reform Act of 1986 chopped them yet again.

Tax Rates and Tax Revenues

High marginal tax rates discourage work effort, saving, and investment, and promote tax avoidance and tax evasion. A reduction in high marginal tax rates would boost long term economic growth, and reduce the attractiveness of tax shelters and other forms of tax avoidance. The economic benefits of ERTA were summarized by President Clinton's Council of Economic Advisers in 1994: "It is undeniable that the sharp reduction in taxes in the early 1980s was a strong impetus to economic growth." Unfortunately, the Council could not bring itself to acknowledge the counterproductive effects high marginal tax rates can have upon taxpayer behavior and tax avoidance activities.

Since 1984 the JEC has provided factual information about the impact of the tax cuts of the 1980s. For example, for many years the JEC has published IRS data on federal tax payments of the top 1 percent, top 5 percent, top 10 percent, and other taxpayers. These data show that after the high marginal tax rates of 1981 were cut, tax payments and the share of the tax burden borne by the top 1 percent climbed sharply. For example, in 1981 the top 1 percent paid 17.6 percent of all personal income taxes, but by 1988 their share had jumped to 27.5 percent, a 10 percentage point increase. The graph below illustrates changes in the tax burden during this period.

 

[Iriemon]

For the last time...Reagan DID NOT cut taxes.

Anyone listening out there?

Reagan DID NOT cut taxes.

Saying Reagan cut taxes is typical right wing spin and deception.

Here's a history lesson...available in any decent set of encyclopedias.

Feb, 1981...Reagan proposed an economic plan that combined tax cuts with wide reductions in welfare and unemployment programs and included a large increase in defense spending. By August, Congress had approved nearly all of Reagan's proposed tax and spending cuts. This start of "Reagonomics" was called the 'Economic Recovery Act of 1981." It reduced individual and corporate income taxes by about 33 billion for fiscal year 1982.

However, after the recession of 1981 thousands of companies went bankrupt and unemployment soared...this decline with the increase in defense spending helped produce a growing federal deficit.

To reduce the deficit, Reagan, and yes, Congress, ( I'm not holding them blameless) signed and passed a bill that raised taxes by about 91 billion in 1982...this was the Largest TAX INCREASE in U.S. history at this time.

Please take a moment to subtract a tax cut of 33 billion from a tax increase of 91 billion and tell me Reagan cut taxes....and try to keep a straight face while you do the math.

In Reagan's second term slow economic growth led to a record deficit exceeding 200 billion...the largest deficit ever at that time.

In 1986, Congress followed up on Reagan's request to create a new, simplified tax system that included lower tax rates on idividual and corporate income taxes, BUT....a U.S. Stock Market crash on Oct, 19, 1987 forced Reagan to RAISE TAXES again for fiscal year 1988. (Gee..the Stock Market had a lot of faith in Reagonomics, didn't they?)

Anyone who declares that Reagan lowered taxes is not telling you the whole truth, but a version of "right-wing spin."

Hoot, you said this before, and I have done a little research on this, and you are right, tax increases were passed a couple times during the Reagan Admin, and taxes were certainly restructured. (Reagan was much more pragmatic than the cons give him credit for.) They went from a high (50-70%) tax rate but with tons of exemptions (ie student loans, credit card debt and all kinds of other things you could write off) to a much lower rate but without all the write-offs.

I am not sure overall that it is fair to say that taxes were increased over all during Reagan's term. Certainly by the end his term the top rates were much lower than they were in 1979. And it is true that after a dip in 83, federal revenues increased.

If you look at the data, (govt revenues from the CBO)

1980 517.1
1981 599.3
1982 617.8
1983 600.6
1984 666.5
1985 734.1
1986 769.2
1987 854.4
1988 909.3

revenues declined in 83, but went up 66 billion in 84, not 91 billion so maybe that was the long term expectation.

Maybe the best way to look at it is by looking at revenues as a % of GDP:

1979 18.1%
1980 18.5%
1981 19.2%
1982 19.0%
1983 17.0%
1984 16.9%
1985 17.4%
1986 17.2%
1987 18.0%
1988 17.8%

This data does seem to support your proposition that tax rates overall did not decline significantly during Reagans term.

By comparison, here's the percentages during Bush II's first term:

2000 20.6%
2001 19.7%
2002 17.7%
2003 16.2%
2004 16.0%

Here you see some big time tax cuts.

Of course, we got the corresponding deficits (with some help of increased spending, too).

This is the deficit as a % of federal tax revenues:

2000 4.3%
2001 -1.7%
2002 -17.1%
2003 -30.1%
2004 -30.2%

source of data: CBO.gov

 

[Iriemon]

Is it just me?

Or does "surplus" mean "government took money from the taxpayers than they needed"?

Depends on what you mean by "needed." Surplus means the government took more money from taxpayers than need (for expenditures) for a given year.

However, if you have accumulated a huge debt (Govt debt now $7.9 trillion), then you need the surpluses to pay down the debt.

I have encountered many people who believe because we had surpluses in the late 90s, that there was no debt. Not true at all, the surpluses had only put the smallest dent in the debt. They were expected to pay down the debt (Bush said his tax cutting policies would pay down the debt by $2 trillion over 10 years), but the tax cuts and spending have instead increased the debt $2.2 trillion since 2000.

To put it in perspective, according to the CBO, the surpluse was 86 billion in 2000. At that highest level of surplus ever achieved; it would take 92 years to pay off the current federal total debt ($7.9 trillion).

 

[Iriemon]

Okay, Hoot, here is a rebuttal history and effects of the Reagan tax cuts:

Lots of good stuff here:
http://www.house.gov/jec/fiscal/tx-grwth/reagtxct/reagtxct.htm

Excerpt

I certainly agreed that the tax system needed reform in 1980; I voted for Reagan in part because of that.

As noted in an ealier post, just looking at the rates is a little misleading, because while the top rates were much higher in 1979, there were lots of write-offs that made the rates effective a lot lower.

I was all for the 86 tax reform -- IMO exemptions and write-offs should be a very minimal amount, if any. I'd personall take them all away - no IRAs, 401ks, no mortgage deduction. Take money you received, from whatever source, pay x%. "x" would be a lot smaller that way.

Finally, IMO, looking at data like this is a little misleading because it does not consider SS and medicare taxes. Total revenue in 2004 from SS/medicare was 733 billion compared to income tax revenue of 809 billion, so these taxes contributed almost as much to total revenues as income tax revenues.

The wealthy don't effectively pay SS tax. So when you look at a chart just showing income tax that suggests that the top 10% pay 50% of the tax, that is not quite realistic. Maybe they paid 50% of the income tax.

 

[Hoot]

Thanks for all the additional info everyone...very interesting.

I suppose many won't believe this in this forum, since I'm no fan of Bush, but I, too, voted for Reagan....and he was my Commander-in-Chief, so I had to obey him! LOL I had no choice!