Economic stimulus

[Oz]

Originally posted by Heretic
I've been thinking about what could be done to revive the economy and who's approach would be best. When I think about it considering the economy is such a black magic the democrats approach may work best one time and the republicans approach may work best another, sometimes neither may work or either may work. Picking which one would work I think would be darn impossible and its basically a crap shoot. Im not even sure we should do anything about it (directly).

Do you want the Democratic plan of the Government spending the money to stimulate the economy, or do you want the Republican plan of people spending their own money to stimulate the economy? It's not about which one will work, because technically, they both put money into the economy. It's about the philosophy of whether you want government spending on economic stimulus, or if you want to use your own discretion and spend your own $$$. I see it as purely philosophical.

 

[demsformd]

I don't see this as a philosophical debate, I see it as a debate between whether one is for the middle class and the poor or whether one is for the upper class. The more that I see of President Bush's plan, the more that I disagree with it. Instead of offering something like a reprive from paying payroll tax (which ALL workers have to pay), he has decided to target the rich through cutting the dividend tax, which only a fraction of America pays. More tax cuts are not the answer because the ones that he advocates place money in the hands of the very rich. This economic stimulus plan is merely a different form for his earlier tax cut. Even John McCain says that the plan will provide too much to the very wealthy.

There is a better way and we all know this. The people who keep this economy going are the forgotten middle class. They deserve the tax cuts; they need the tax cuts to keep us going. Discontinue the payroll tax for awhile, roll back the tax cuts that the rich receive, cut military funding. It worked for Clinton, it will work again.

 

[Oz]

DFM - Define RICH...???

 

[MGKrebs]

Well in this case...

perhaps "rich" would mean anybody who would significantly benefit from a dividend tax cut.

 

[demsformd]

The corporations like FOX and Procter and Gamble that make billions a year yet don't pay any taxes. The millionaires that are able to live away from the middle class folks. Those in the top two tax brackets are the rich if you ask me.

 

[MGKrebs]

At this point, I am inclined to agree with Pelosi's assessment- this is a "trojan horse". Everybody knows that conservatives think the upper income earners are bearing too much of the tax burden. This plan may or may not stimulate the economy, but they are using it as a lever to reduce upper income taxes. The question is, is this the right time for this kind of tax break? If it doesn't work, we will have problems digging out of the deficit later.

 

[Oz]

Originally posted by demsformd
The corporations like FOX and Procter and Gamble that make billions a year yet don't pay any taxes. The millionaires that are able to live away from the middle class folks. Those in the top two tax brackets are the rich if you ask me.

The Top Tax bracket being those who earn over $313,650 in the 38.6% bracket, and the second group who earns over $145,200 per year in the 35% bracket? A family of 4 at $145K probably isn't considered "rich" by most people. I will agree that the top tax bracket of over $313K is easily comfortable, and after a few years of fiscal responsibility, marginally rich. (Pay half to the government, and save 40% and in 5 years, you might have $200K in the bank.)

I am not in either of those two brackets (are you?) and I still consider myself middle class. I own a small amount of Pfizer stock, which pays dividends. Therefore, I as a middle class person would benefit from the dividend tax cut.

My dividend is extremely small (I might be able to buy a nice lunch with it,) but I would be inclined to re-invest it, and buy more stock if dividends are tax-free. I'm one little guy. Factor that throughout the country and the economy, and it's a big deal, and myself and the rest of the middle class has benefitted from this cut.

If I get a tax break, then maybe I build a deck, or finish my basement. Surely these projects will not only benefit me personally, and large companies/banks/mortgage companies, but also the workers who might be in the same or a lower tax bracket than me. So does government, with sales taxes, or increased property taxes. If I buy a new fridge, Sears Corporation benefits, but so does the salesman, and the local associate store owner, along with the delivery guys.

I'm just one guy, but if I can benefit the economy this much, I can only imagine what a tax cut can do for those who actually have enough money for security, with bucks left over to really spend, or invest.

BTW - that 38.6% guy, who then pays state taxes, sales tax, etc, etc, etc, pushing that rate over 50% --what is a fair rate for him/her to pay as a top rate?

 

[Tonio]

Oz, you're right that the income levels for the top brackets don't make any sense. Maryland is worse--the income for the top bracket is only $100,000.

Both the federal and the state plans could use at least two more upper brackets, something like $750,000 and $2,000,000. But the tax rates for these brackets shouldn't be more than 3 percent higher than the next lower bracket.

I'm still angry with George H.W. Bush for granting a tax "cut" that was in reality an advance on income tax refunds. What good did that do? It meant only $2.50 more a week for me, not enough to buy lunch at Subway. I miscalculated my exemptions that year, and ended up having to pay $150 to the IRS (after a small state refund).

As I said, I think an economic stimulus tax cut should involve increasing the personal exemption, enough to give every taxpayer at least $2,000.

While taxes overall are too high, I see the big problem as too many deductions. Too confusing for the average taxpayer. Only the wealthiest taxpayers can really take advantage of all the deductions, and for them $2,000 more a year doesn't matter that much. For the long term, I would favor a flat tax with only two deductions--the personal exemption and home mortgage interest.

 

[Makavide]

Flat tax

I agree, a flat tax would be the best way to go. Just because some one make more money then me, should not mean they have to pay a higher tax rate. We all benifit from what our taxes pay and it is only fair for every one to pay the same rate.

As for the dividend tax cut, stocks are not the only things that pay dividends. If you have an interest bearing checking acount or savings acount, then technically you will benifit from this tax cut.

 

[Bruzilla]

Dems... you really need to drop the Rich vs Poor crap already!!! Let me ask you one simple question. Where the heck do you think that all the money that you want to give to the poor and wretched "Democrats" is going to end up? Most all of it is going to end up in the pockets of the wealthy... Mr. Rich Credit Card, Mr. Rich Banker, Mr. Rich Store Owner, Mr. Rich Car Maker, etc. The "Rich" are going to make out whether you give them tax breaks or give some token money to the poor. That's why people other than Democrats strive to become rich rather than wallow in self pity at being poor!

There's nothing really new about any of this. The saying that "you can give a man a fish and feed him for the day or teach a man to fish and feed him for life" has been around for years, and it applies here. We can give out (at latest estimate) $300 to each tax payer and have an almost immeasureable blip on the economic scale, and the exact same problems in the future, or you can give back resources to those evil, "Rich", corporations, encourage them to expand and produce more product, employees, and tax revenues, and fix the problem over the long term.

 

[Oz]

Originally posted by Tonio
I'm still angry with George H.W. Bush for granting a tax "cut" that was in reality an advance on income tax refunds. What good did that do? It meant only $2.50 more a week for me, not enough to buy lunch at Subway.

Seems the Dems are promoting an immediate "refund" as an alternative to Bush's latest stimulus package. Weren't these the same folks who said that $300 refund checks wouldn't mean diddly to the folks a year ago, and Bush was stupid for doing so? Do the Dems think we forget?

You're right, it was an advance. But the tax rates were also reduced. I'm glad you had to pay that small amount. It means that you didn't make an interest-free loan to the Gov't. I wish I could calculate mine that close every year, and owe 'em a few bucks on April 15.

That's why people other than Democrats strive to become rich rather than wallow in self pity at being poor!

Nice one Bru!

 

[MGKrebs]

You are mistaken Oz. Bush's original plan did not include the rebate. Jeffords proposed it as a "deal maker'. The tax cut wasn't going to happen without it. The rebate was dem supported all the way. Bush reluctantly agreed.

 

[demsformd]

Originally posted by Bruzilla
Dems... you really need to drop the Rich vs Poor crap already!!! Let me ask you one simple question. Where the heck do you think that all the money that you want to give to the poor and wretched "Democrats" is going to end up? Most all of it is going to end up in the pockets of the wealthy... Mr. Rich Credit Card, Mr. Rich Banker, Mr. Rich Store Owner, Mr. Rich Car Maker, etc. The "Rich" are going to make out whether you give them tax breaks or give some token money to the poor. That's why people other than Democrats strive to become rich rather than wallow in self pity at being poor!

Well, I think that giving money to the poor to spend is much more efficient than giving it to the rich that will use it to invest in defense stocks, elitest trades, and oil in Iraq. Bru, you made my point here. The economy is more stimulated when the middle class, which makes up the vast majority of our nation, spends money. America grows together when the middle class gets a break. Under Reagan and Bush, the real wages only increased for the top tax bracket while everyone else declined. Bush II is repeating that pattern.

"The reason that everyone today is conservative is because Democrats did a good job of making them rich." Tip O'Neil.

 

[SmallTown]

For people who fuss about the plan only helping the rich.. Do something about yourself, your career... Put yourself in the "rich" category and quit whining

 

[Tonio]

Originally posted by Oz
You're right, it was an advance. But the tax rates were also reduced. I'm glad you had to pay that small amount. It means that you didn't make an interest-free loan to the Gov't. I wish I could calculate mine that close every year, and owe 'em a few bucks on April 15.

Thanks for the information. At the time I was still living in an apartment, earning something like $17,000 a year. The lower tax rate didn't do anything for me. I had no deductions to claim, and $150 was a fairly serious dent in my finances. I had to pay that amount because I wasn't having enough deducted from my paycheck.

You're right about 1040 refunds being an interest-free loan to the government. If I want to loan the government money, I'll buy savings bonds.

 

[demsformd]

Take a look at the breakdown of which income tax groups receive what in the Baltimore Sun today. Those who make under $10,000 get $5 in savings from President Bush while the Democratic plan gives them over $200. In the Bush plan, the top gets over $80,000 in savings. Is that fair? There are some problems with the Democratic counter-proposal but it is much more stimulative in effect due to its emphasis on middle-class tax cuts and aid to states, which do not occur in the Bush plan.

We cut taxes a couple of years ago, it did not work then, so why should we do it again? Bush is using old ideas, "Reaganomics", that failed miserably in the 80s and 1990s, yet we have decided to use them again. We need new, innovative solutions, and not the ideas of the past.

 

[Makavide]

Originally posted by demsformd
Take a look at the breakdown of which income tax groups receive what in the Baltimore Sun today. Those who make under $10,000 get $5 in savings from President Bush while the Democratic plan gives them over $200. In the Bush plan, the top gets over $80,000 in savings. Is that fair?

Did the Baltimore Sun also show how much those two groups actually pay in income tax to begin with. I believe those people earning less then $10,000 do not pay income tax - I know a few years ago while still in the mililtary, my pay was not large enough to pay income tax - I always got a full refund of what was paid in. But do to "penny pinching" at the time I was able to save on average of 30% of my income and invest it. So now that I have a higher paying job I am back to paying taxes on my job income as well as the dividends I get for my frugal years.

You say it is not fair for those making $10,000 to only get $5 back while those in the top get $80,000 back. Is it fair that those in the top pay over 35% for taxes while those in the lower pay what 18% if they make over the minimum on the scale.

If you want fair, then make the whole tax base equal.
Is it really fair that because I worked hard to get where I am I do not get any money from the government to subsidize my housing.
Is it really fair that I am not eligable for subsidized day care becuase I worked hard to get where I am at.

I am all for helping people out, but hey, they need to help too. It does not bother me that some people are eligable for services that I am not, it bothers me when I am told it is not fair...


If you really want fair, fine I will give up any tax break, but I want those recieving subisdies to give up something to - either the subsidies or time, start making them earn those subsidies. Either with community service, by cleaning the roads sides and such or something.

Just remember, no one ever said life was fair.

 

[Tonio]

Makavide, I like your point about fairness. That's why I favor a flat tax--everyone would be taxed at the same rate.

But are you sure about the $10,000? I earned less than that in my first job after college, and I still paid federal income taxes. That was 14 years ago.

 

[demsformd]

Ok I have seen a lot about a flat tax. The Republicans proposed this a couple of times during their "Revolution." It took away all tax credits and all left the rate at 17%. This meant that the amount for a family of 4 making $40,000 would pay an extra $2,000 in tax while a family of 4 making $160,000 would pay $20,000 less. So, we will shift the burden of the tax revenue to the middle class? Is that smart? Absolutely not.

 

[Frank]

Every form of the flat tax I've seen exempts all taxpayers below a given threshold. The tax rate begins with all moneys earned ABOVE that threshold. I still don't believe it would change much, but - there is no question that it is *fair*. Eliminating all tax credits also means, the rich would pay taxes that they presently avoid. I'm not convinced it would be enough.