Tax cuts for the wealthy? Is this a bad thing? (1 Viewer)

[Nezdragon]

I hear a lot of flak from the left about how Bush's economic solutions are to cut taxes on the highest bracket (most of the elite left benefit from these tax cuts, why are they complaining?).

Let's have a lesson on economics:

A lot of small businesses list their income as personal income rather than corporate, putting the owner(s) in the highest bracket. These tax cuts allow businesses to keep that much more of the money they earn. With this additional money, they can expand their business (a store, for example, can buy more goods etc.). They can hire more workers to fill job slots that may have become availible. These workers work, then get a paycheck. The workers then spend money on necessities, such as groceries, clothes, etc.
The more money a small business has, the more they can offer to customers. This increases their revenue, which increases the amount of money they have. They can then spend money on expanding further. With less taxes, they can expand more due to the extra money. With the revenue increasing (and the amount people are spending), it creates more money flowing around the system, which means more taxes.

So, at the same time that the small businesses (who are the INTENDED recipients of the cut, not the 'wealthy') are growing, people are spending more money because of it, more jobs are opened, and the economy thrives. This also increases the government revenue from income taxes, sales taxes etc. This is a good thing.

Please respond with facts. Rants will be ignored.

 

[Iriemon]

I hear a lot of flak from the left about how Bush's economic solutions are to cut taxes on the highest bracket (most of the elite left benefit from these tax cuts, why are they complaining?).

Let's have a lesson on economics:

A lot of small businesses list their income as personal income rather than corporate, putting the owner(s) in the highest bracket. These tax cuts allow businesses to keep that much more of the money they earn. With this additional money, they can expand their business (a store, for example, can buy more goods etc.). They can hire more workers to fill job slots that may have become availible. These workers work, then get a paycheck. The workers then spend money on necessities, such as groceries, clothes, etc.
The more money a small business has, the more they can offer to customers. This increases their revenue, which increases the amount of money they have. They can then spend money on expanding further. With less taxes, they can expand more due to the extra money. With the revenue increasing (and the amount people are spending), it creates more money flowing around the system, which means more taxes.

So, at the same time that the small businesses (who are the INTENDED recipients of the cut, not the 'wealthy') are growing, people are spending more money because of it, more jobs are opened, and the economy thrives. This also increases the government revenue from income taxes, sales taxes etc. This is a good thing.

Please respond with facts. Rants will be ignored.

Cuts for the wealthy -- a good or bad thing for whom?

Your basic argument is that tax cuts create increased economic activity. That is hard to say in isolation of any context. The economy has grown in inflation adjusted terms at a little over 3% during the 70s, 80s, and 90s, regardless of the varying tax policies that have been tried. (The rate of growth has been about 2.5% in the 00s). The best period of growth was when Clinton was president, when tax rates were higher than in the 80s and 00s.

So I don't buy the argument that the poorer should pay the taxes and the richer given a bye because this somehow helps the economy. Nor is such a proposition fair, IMO.

 

[Nezdragon]

Cuts for the wealthy -- a good or bad thing for whom?

Your basic argument is that tax cuts create increased economic activity. That is hard to say in isolation of any context. The economy has grown in inflation adjusted terms at a little over 3% during the 70s, 80s, and 90s, regardless of the varying tax policies that have been tried. (The rate of growth has been about 2.5% in the 00s). The best period of growth was when Clinton was president, when tax rates were higher than in the 80s and 00s.

So I don't buy the argument that the poorer should pay the taxes and the richer given a bye because this somehow helps the economy. Nor is such a proposition fair, IMO.

BTW, the tax cuts also applied to the poor and middle class.

 

[Kelzie]

Actually, since it seems you haven't studied economics any further than watching Fox News, let me catch you up to speed.
For one, there are three different types of business, the sole proprietorship, the partnership, and the corporation. I won't belittle your intelligence in explaining the obvious differences between these three, but there are more differences in taxation status and liabilities. the main advantage of having a sole propietorship is that you are only taxed once, and that's your personal income tax, when in a corporation you are taxed a corporate tax, and then you have your personal income tax, so even with small business owners placed in the top tax bracket, they still pay less in taxes.
And just in case you haven't noticed, supply side economics doesn't work, and the trickle down effect doesn't work in the current state of the economy because of outsourcing. The money never makes it our lower classes, but instead it goes into the pockets of the rich, and into the pockets of the Chinese.

Which is why I never debate economics when Galenrox is around. :lol:

 

[Diogenes]

I never got hired by a poor man. It is the wealthy ones who provide jobs for the rest of us, and one of the (many) great mistakes by the Clinton administration was to put a luxury tax on yachts - suddenly many jobs in the shipyards along the east coast vanished. The problem with those who promote equal distribution of the wealth is that they ignore the real source of social progress, the creation of wealth.

A free market rewards contribution. If you want to get rich, figure out a way to contribute to society.

 

[Nezdragon]

Actually, since it seems you haven't studied economics any further than watching Fox News, let me catch you up to speed.
For one, there are three different types of business, the sole proprietorship, the partnership, and the corporation. I won't belittle your intelligence in explaining the obvious differences between these three, but there are more differences in taxation status and liabilities. the main advantage of having a sole propietorship is that you are only taxed once, and that's your personal income tax, when in a corporation you are taxed a corporate tax, and then you have your personal income tax, so even with small business owners placed in the top tax bracket, they still pay less in taxes.
And just in case you haven't noticed, supply side economics doesn't work, and the trickle down effect doesn't work in the current state of the economy because of outsourcing. The money never makes it our lower classes, but instead it goes into the pockets of the rich, and into the pockets of the Chinese.

Actually I don't watch Fox news.
And the trickle down effect doesn't work because of high minimum wages. The higher the wage, the fewer jobs the business can afford to have. I would prefer a job at $5.15 an hour than no job at $7.25 (the 2.10 dollar raise is being advocated by, guess who, Ted Kennedy). Teen unemployment is at 16%. According to the Journal of Economic Literature, the rule of thumb is that a 10% hike in the minimum wage leads to a 2% hike in teen unemployment. In the 90's New Jersey raised its minimum wage and suffered a 4.6% loss in jobs in the fast food industry.
An Employment Policies Institute (EPI) study estimates that the new $7.25 minimum wage would add $18.3 billion of costs on small and local businesses with thin profit margins, such as restaurants, hotels, and retail shops. Only 13% of that money would go to poor families.

And by the way, 2005's tax season saw an economic boom.

 

[Kelzie]

I never got hired by a poor man. It is the wealthy ones who provide jobs for the rest of us, and one of the (many) great mistakes by the Clinton administration was to put a luxury tax on yachts - suddenly many jobs in the shipyards along the east coast vanished. The problem with those who promote equal distribution of the wealth is that they ignore the real source of social progress, the creation of wealth.

A free market rewards contribution. If you want to get rich, figure out a way to contribute to society.

Wait you mean like becoming a teacher and teaching the future? Or a nurse and aiding the sick? No, no...I'm pretty sure that contributing to society isn't high on the capitalist list...

 

[Kelzie]

Actually I don't watch Fox news.
And the trickle down effect doesn't work because of high minimum wages. The higher the wage, the fewer jobs the business can afford to have. I would prefer a job at $5.15 an hour than no job at $7.25 (the 2.10 dollar raise is being advocated by, guess who, Ted Kennedy). Teen unemployment is at 16%. According to the Journal of Economic Literature, the rule of thumb is that a 10% hike in the minimum wage leads to a 2% hike in teen unemployment. In the 90's New Jersey raised its minimum wage and suffered a 4.6% loss in jobs in the fast food industry.
An Employment Policies Institute (EPI) study estimates that the new $7.25 minimum wage would add $18.3 billion of costs on small and local businesses with thin profit margins, such as restaurants, hotels, and retail shops. Only 13% of that money would go to poor families.

And by the way, 2005's tax season saw an economic boom.

Teen unemployment? Boo freakin hoo. Howbout raising it so people who need it, like those with two kids to support, can afford to live.

 

[Nezdragon]

Teen unemployment? Boo freakin hoo. Howbout raising it so people who need it, like those with two kids to support, can afford to live.

I presume you are speaking about the minimum wage?

Like I said, if we raise the minimum wage it will reduce the amount of jobs availible.

And boo freakin hoo? :bs

If you have a college education, you should be able to get a job to support the kids. My parents have had no problem supporting me and my sister.
I, however, need the money I can get from a job to go to college, where I can learn the skills I need to get a better job, make my contribution to society, and make a living for myself.

Hell yes do teachers and nurses make a contribution to society. If they were useless, why would people be in those jobs? Obviously you don't know much about capitalism...

 

[Kelzie]

I presume you are speaking about the minimum wage?

Like I said, if we raise the minimum wage it will reduce the amount of jobs availible.

And boo freakin hoo? :bs

If you have a college education, you should be able to get a job to support the kids. My parents have had no problem supporting me and my sister.
I, however, need the money I can get from a job to go to college, where I can learn the skills I need to get a better job, make my contribution to society, and make a living for myself.

Hell yes do teachers and nurses make a contribution to society. If they were useless, why would people be in those jobs? Obviously you don't know much about capitalism...

And is there a reason that the starting salary for teachers is 20,000? Barely more than minimum wage? I know plenty about capitalism. I know that what you contribute to a society often means very little. Social workers, teachers, nurses, the list goes on. Capitalism does not reward the people that contribute to society. It rewards the peope that contribute to the economy.

And college education is out of reach to many people for many reasons. So they are forced to take a low paying job that can't support their family.

 

[Iriemon]

I never got hired by a poor man. It is the wealthy ones who provide jobs for the rest of us, and one of the (many) great mistakes by the Clinton administration was to put a luxury tax on yachts - suddenly many jobs in the shipyards along the east coast vanished. The problem with those who promote equal distribution of the wealth is that they ignore the real source of social progress, the creation of wealth.

A free market rewards contribution. If you want to get rich, figure out a way to contribute to society.

The "luxury tax" was part of a 1990 tax package passed by Bush. It was repealed while Clinton was president.

 

[Iriemon]

Actually I don't watch Fox news.
And the trickle down effect doesn't work because of high minimum wages. The higher the wage, the fewer jobs the business can afford to have. I would prefer a job at $5.15 an hour than no job at $7.25 (the 2.10 dollar raise is being advocated by, guess who, Ted Kennedy). Teen unemployment is at 16%. According to the Journal of Economic Literature, the rule of thumb is that a 10% hike in the minimum wage leads to a 2% hike in teen unemployment. In the 90's New Jersey raised its minimum wage and suffered a 4.6% loss in jobs in the fast food industry.
An Employment Policies Institute (EPI) study estimates that the new $7.25 minimum wage would add $18.3 billion of costs on small and local businesses with thin profit margins, such as restaurants, hotels, and retail shops. Only 13% of that money would go to poor families.

And by the way, 2005's tax season saw an economic boom.

If I was your employer, I'd prefer you to work for $2.15 an hour.

 

[Kelzie]

If I was your employer, I'd prefer you to work for $2.15 an hour.

Hey. I work for 2.13 an hour. Can I work for you?

 

[Nezdragon]

And is there a reason that the starting salary for teachers is 20,000? Barely more than minimum wage?

Unions.

And college education is out of reach to many people for many reasons. So they are forced to take a low paying job that can't support their family.

How is it out of reach? Please tell, I'm interested.

 

[Nezdragon]

If I was your employer, I'd prefer you to work for $2.15 an hour.

But you aren't my employer. So there.

 

[Nezdragon]

Sorry, I'm afraid I just made an ass out of us.
That is indeed true, minimum wages, if they are higher then the current labor equilibrium in any market cause the removal of current jobs and ceasing to create new jobs, very good, I certainly didn't know that when I was 16.
Unfortunately your assumption that high minimum wages makes the trickle down effect not work is 100% wrong. That's right, 100%.
The current minimum wage may have had that effect when it was put into place, but I cannot imagine a market in the United States that the equilibrium price for 1 hour of labor is less than $5.15. The reason that the trickle down effect doesn't work is because of the unfair practices of the world trade organizations. Keep in mind when I say this that I am a free market capitalist.
The world trade organization is just like everyone else who doesn't seem to make the connections to address the actual problems at hand, which is to treat labor as any other commodity. They protect free trade with everything else, but they allow anti-competitive actions on labor, which they stay unaffiliated, and as we all know from the black outs in California under that moron Gray Davis, you can't only partiallly privatize industry. In countries that don't allow the formation of labor unions, some of whom aren't even capitalist at all (China, I'm looking at you) this creates an unfair labor market with nations taking anti-free trade actions without any action on behalf of the United States (with a president who actually offers tax breaks to companies for outsourcing), or the WTO.
So yeah, you're wrong. But don't take that as an insult, I'm assuming you're new to the whole economics thing, but you obviously have a mind for it, and I'm quite certain that if economics if the field you're interested in studying you'd be great at it.

Well I have to sound like I'm for the poor on something or the PC (Politically Correct) Police will make me disappear...

I think the economy is too complex to explain an issue like trickle-down in one post... I'll have to look more into the issue.

 

[Kelzie]

Unions.

Say what? Teacher unions are keeping the wages at 20,000?!?! Are you mad? We underfund education, so schools can't pay more. The unions are what fight for more funding and higher salaries.

How is it out of reach? Please tell, I'm interested.

Try juggling two kids, rent, electric, phone, insurance, and a slew of other bills on 5.15 an hour, and STILL manage to pay for college.

 

[Nezdragon]

Say what? Teacher unions are keeping the wages at 20,000?!?! Are you mad? We underfund education, so schools can't pay more. The unions are what fight for more funding and higher salaries.

That's what they say they do. I never said they are keeping it down.

I don't see how education is underfunded. In fact, it may be receiving more than enough funding. The problem with education is that oftentimes the money does not go to the right places.

For example, lets say a grade school is performing poorly. The education establishment says it's underfunded. The problem is the same school having money poured into it, and yet still performs poorly.
I will be a-looking for horror stories on this.

 

[Nezdragon]

That doesn't make any sense. The government is not there for the rich or the poor, or at least ideally, idealy they should represent everyone equally, since they are equally every American's government.

And my issues with your statements were not political in nature, since I am extremely conservative when it comes to fiscal issues, but instead in the actual economics. If you learn one thing while you're here, learn this: if you think you're hot ****, you're not. The sign of a great man is that he knows that he knows just about nothing.
There are some liberals who won't listen to you, and take what you have to say seriously because of where you're coming from, but that person isn't me, so don't act like a smart ass. If the argument is strictly about economics, I will debate strictly economics, and speaking strictly economically, your argument was wrong, it's as simple as that. Your argument rested on a coorilation that did not in fact exist.

You're a christian though, right?
If so, then yes, you do have to be for the poor. If you really look into the Gospels, you'll see that Jesus was for all practical purposes a socialist. All for gospels are filled with messages that the way we treat the poor or the weak or the wretched is how we are viewed in God's eyes, so if you don't give a **** about the poor, God takes that as you not giving a **** about him, since his message on the subject is VERY clear.

:doh
I was joking. I have a great many opinions about poverty, which I do not have the time to post at the moment. I am in no way against the genuinely poor people.

Sorry if I came across in a bad way. 5-6 hours of sleep a day 5 days in a row does that kind of thing to me. Don't know how PC police come into an economic discussion. They probably crashed the party... Excuse me :2brickwal

 

[Kelzie]

That's what they say they do. I never said they are keeping it down.

I don't see how education is underfunded. In fact, it may be receiving more than enough funding. The problem with education is that oftentimes the money does not go to the right places.

For example, lets say a grade school is performing poorly. The education establishment says it's underfunded. The problem is the same school having money poured into it, and yet still performs poorly.
I will be a-looking for horror stories on this.

This is something I feel very strongly on, because my best friend is almost done with getting her teaching certificate. I really don't care what the reason is for. The fact that we pay the people that educate our children, arguable one of the most important jobs in the world, a little more than someone flipping burgers is shameful.

 

[Nezdragon]

This is something I feel very strongly on, because my best friend is almost done with getting her teaching certificate. I really don't care what the reason is for. The fact that we pay the people that educate our children, arguable one of the most important jobs in the world, a little more than someone flipping burgers is shameful.

That's starting salary though. It gets better later on.

 

[Kelzie]

That's starting salary though. It gets better later on.

Not by much. Especially if you stay in the public schools, and don't go on to private, or to teach college.

 

[Nezdragon]

Not by much. Especially if you stay in the public schools, and don't go on to private, or to teach college.

The teachers I know (and I know a lot of teachers) have no problem with it.

 

[Kelzie]

The teachers I know (and I know a lot of teachers) have no problem with it.

They have no problem with the fact that they can't qualify for house loan unless they have a spouse that is making a decent income? I doubt it.

 

[Nezdragon]

They have no problem with the fact that they can't qualify for house loan unless they have a spouse that is making a decent income? I doubt it.

Doubt doesn't change facts. I, personally, never asked what their salaries are. But I know single teachers who got by in life anyway.