Tax cuts for the wealthy? Is this a bad thing?

Nezdragon · 08-31-05, 08:32 PM

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 · 09-01-05, 11:39 AM

Quote:

Originally Posted by Nez Dragon

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 · 09-01-05, 11:45 AM

Quote:

Originally Posted by Iriemon

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.

galenrox · 09-01-05, 01:47 PM

Quote:

Originally Posted by Nez Dragon

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.

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.

Kelzie · 09-01-05, 06:09 PM

Quote:

Originally Posted by galenrox

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.

Diogenes · 09-01-05, 06:15 PM

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 · 09-01-05, 06:18 PM

Quote:

Originally Posted by galenrox

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 · 09-01-05, 06:19 PM

Quote:

Originally Posted by 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.

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 · 09-01-05, 06:21 PM

Quote:

Originally Posted by Nez Dragon

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 · 09-01-05, 06:47 PM

Quote:

Originally Posted by Kelzie

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?

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...