Debate, and discuss, just dont Bore me.
Published on October 18, 2006 By Dr Guy In Politics

There are several great debates going on today, 3 by Brad (most of the posters are anonymous, but most are keeping it civil as well).  Then Moderateman has a good one going that is now starting to digress, and I did not want to drag that one farther off topic responding to one point made, but felt it should be addressed.  It would have been much better in one of Brad's Instapundit articles.

Sean Conners made this point:

but you are correct in knowing that no democrat has suggested that they want to balance the budget by raising taxes on anyone earning less than 200,000 dollars a year in their campaigns. in fact many have called for tax cuts for "the rest of us." and elimination of tax for more poor americans.

While I have not been paying attention to exactly what the democrats are saying, for I know they are not talking "raising" taxes, they don't have to do anything to raise them.  They just merely have to wait for the last tax cut to sunset, and viola!  The taxes are going up.  But I did not actually want to discuss even that here as that is a debate in itself.

Instead I want to concentrate on Sean's statement.  Let us for the sake of argument assume it is true and that democrats really do have a plan (that would be one).  So they eliminate taxes on all poor people.  OK, first we have to define what poor is, and then what we mean by eliminating taxes on them.

OK, for the sake here, lets say that poor is any family of 4 making less than $40k/year.

Now here starts the problems.  The first problem is that while today,  a person making $40k may be considered middle class, that was not so 50 years ago.  When the Income tax amendment was passed 100 years ago, it was only supposed to tax the wealthy, and then only 1%.  Well, any working American knows that is not true today.  So what happened?  Wages went up, but the tax stayed the same or went up in rate.  Not until Reagan did we get indexing for inflation, and then not totally.

So the democrats say they only want to soak the rich.  Rich being over $200k.  Today.  So we soak them.  In 20 years, $200k is going to be middle income, and then eventually poor, but the soaking will not stop.  There are 2 things certain in life - death and taxes, and to that you can add a third, a politician never has enough money to spend.  So tax cuts are rare, and not to be trifled with.

But the democrats will promise today to soak the rich and give to the poor (modern day Jesse James, aren't they?).  But they will not change that and in a few years, all of a sudden, they will be soaking the middle class, and wondering why couples need 2 incomes to merely stay even with the previous generation.

The second problem is that no democrat, OR republican can ELIMINATE taxes on any working person!  There are 2 reasons for that.  One is that they do not want to due to the most powerful lobby in America.  The second is that they cannot because they do not have the power.

The first reason, is the most regressive tax in existence, and one that will never go away, just get worse.  That is Social Security and the Medicare/Medicaid tax.  Both have cut offs that leave the richest Americans not paying it after a certain amount of time, but the poor never stop paying it.  And make no mistake, you can call it whatever you want to, but the truth is it is a tax.  That one will never be touched because it is the "third rail" of politics, and the most powerful lobby, AARP, will make any politician pay with their career if they do.  So forget about eliminating that tax.  It wont happen.

The second reason, is that the politicians do not have the power to do it.  What?  A tax they cannot touch? Yes, if you look at politicians as being either state, or federal.  Federal politicians cannot eliminate state income taxes, state sales taxes (the second most regressive tax in existence), personal property tax, real estate tax, and a host of other taxes levied by state and local governments.  They do not have the jurisdiction or the guts to tackle any of those.

So when you hear a politician saying they are going "to eliminate taxes on the poor", they are lying through their teeth, and they know it.  At best they can be honest in their intentions and ignorant of taxes (but I doubt they would get as far as they did being stupid) and at worse they are using sophistry to try to get votes, knowing they cannot.  And indeed, in the near future, that they will be taxing those same "poor" people again as wages and inflation push them out of the "poor" category and into the "rich" category.


Comments (Page 3)
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on Oct 19, 2006

The issue of taxes have two elements. The first requirement is that the tax revenues must be equal to the spending -Balanced Budget.

The second issue is what mix of taxes is acceptable to achieve the first requirement.

I am impressed!  An excellant response.  As for the second issue, that really is the nut that Congress seems unwilling to crack, if there is indeed even any acceptable mix for everyone (I think not).

on Oct 19, 2006

Logic would suggest that if the rate is increased (sunsetting the tax cuts), tax revenues collected will drop to lower levels.

As has happened in all of history.  There are ways to hide income, legally.  And only the rich can afford to avail themselves of those methods.  Increase taxes, and they will hide more income, and the burden will fall upon the middle income and poor people.  That is not opinion, that is demonstrable fact.

on Oct 19, 2006

This is an idea that is not predicated on any solid logic. If you look at where the money goes in the Federal Budget you see defense and homeland security.

No, it is predicated on logic.  Defense, which covers both of your categories, is only part of the federal spending.  Much more goes for social welfare.  And in that, there is huge fraud and waste.  Better to take half your taxes and give to charity where more of it is actually used to benefit the poor than to see it wasted by the feds.

on Oct 19, 2006

Everyone got a tax cut who pays taxes, true. I haven't seen where Dems argued that only the very rich got any sort of tax cut at all. But the vast majority of people saw their taxes cut by several hundred dollars, whereas the rich's taxes were cut by dozens of thousands of dollars. The overwhelming majority of the monies that were cut from tax revenues, were returned to the richest Americans. Who, coincidentally, needed it the least, and certainly didn't need it any more than our gov't and nation need it.

Ok, good to see you back on topic.  First, a tax cut does not GIVE anything to anyone.  It just confiscates less.  You cannot confiscate less than 0, then it becomes a hand out.  So while I may have only gotten $5k in benefits, that is because I was only paying in about $20k.  Whereas Bill gates had been paying in Billions, so he got to keep a few million more of his own money.

Second, you say "who needed it least".  Who decides that?  Is that not very communistic of you?  Should it not be I who decides what I need, and then provide what I need based upon what I chose to do to earn it?  Since when is it our government's job to decide how much of my money I "need"?  Never.

You state that the rich paid more taxes. But it wasn't because of the tax cuts; the rich pay more taxes because the percentage of our nations monies owned by the rich has risen significantly. This doesn't corrolate with the tax cuts, but with the cuts on Dividend taxes, which most certainly do not benefit all Americans equally.

Again a false assumption.  The rich pay more taxes, as a percent, because the tax cuts eliminated a large number of low income earners from the tax rolls.

Tax revenues collected are up, but in large part this is because Corporate profits are way up over the last 6 years.

Sorry, Corporations are not some ulta secret entity that hides in children's closets to scare us in the middle of the night.  They are basically comprised of 2 types of PEOPLE.  One is the worker, who benefits with a job and wage.  The other is an investor who has more money coming in, and then (besides paying taxes on already taxed money), can spend it to create more jobs which in turn creates more taxpayers. So whether you want to kill the rich, or corporations, without them, there would be no jobs, no wages, and no taxes.  You never got a job from a poor man, and that is a fact.

on Oct 19, 2006

The GOP have proven they are the party of CHARGE and SPEND. The GOP has out spent the Democrats and then added it to the National debt so every year we can pay more and more interest because of the increased debt the GOP Policies have created!

Your statement only holds up if you switch between presidents and congress depending upon who is controlling them.  The FACT is that the democrats controlled the spending arm of the government for 40 years until 1994.  And in that time, the deficit was always as high as it is now.  When republicans got control, they managed to eliminate the deficit for a couple of years in 4 years.  Now, it has gone up again, partially due to republicans acting as you said, and partially due to the dot com bust and the war.

on Oct 19, 2006

our nations monies


That is an interesting statement. It tends to suggest that you believe money is not owned by the individuals who earn it but rather a possesion of the collective (Government?). That would apply in a purely Communistic society perhaps but hardly seems appropriate to a Capitalistic Republic such as exists in the US.

That dovetails with his statement on need.  It seems the democrats want us to believe that only they and the federal government can determine need, and who the money belongs to.  As bad as the republicans are, democrats are worse again due to their arrogance and unwillingness to acknowledge that our money is ours, and not theirs.

on Oct 19, 2006

The problem is, there is a disconnect between your second and third sentence. Individual tax receipts haven't risen - corporate tax reciepts have risen. This isn't directly connected to tax cuts, but rather the massive profits made by corporations under the Republican administration over the last 5 years.

And you have numbers to back you up?  I think not, for it does connect with my statement.  When it is no longer profitable to hide money from taxes (legally), the rich stop doing it.  They pay more in taxes, but they actually save more for not putting their money where it would not be taxed, but not earn much in return.

on Oct 19, 2006

The "soak the rich" arguement was used to pass it in the first place.

You are quite right, and that arguement is used today to soak the poor and middle income as a side effect.  But they do not tell you that.

on Oct 19, 2006
Dr Guy

First, the federal budget was only in balance in 2000 without subtracting the Social Security and Medicare Surplus. The annual deficit is reported NET of the $200 Billion annual surplus in those two trust funds. Thus, the actual General fund deficit is about $200 Billion each year larger then is being reported.

If you look at #23, you will see that the major increase in the National Debt started with Reagan when he convinced the Democratically controlled Congress to drastically cut taxes and increase spending. Reagan convinced everyone that his fiscal policy would BALANCE the budget by 1985. As you can see from #23, that did not happen. What Reagan did is create a structural deficit that took until FY 2000 to reverse. In fact if the "Read My Lips" Bush 41 tax increase had not taken place and the drastic cut in military spending during both Bush 41 and Clinton had not occurred, we would not have had a balanced budget in 2000.

In 2001, Bush 43 did the same thing as Reagan. He curt taxes and increased spending with the very same result. The fiscal policies of Reagan and Bush 43 will be responsible for ADDING $9 Trillion dollars to the National debt by 2010 per the projections of Bush and OMB. The interest American taxpayers are obligated to par EVERY year has gone from $80 Billion in 1980 to $405 Billion in 2006 and heading to $500 Billion by 2010.[/B]

At the end of the Bush term he plans to hand the new president an ANNUAL Budget deficit, not subtracting the Social Security and Medicare Surplus of about $400 Billion for FY 2009. That is what Reaganomics I and II have done to the taxpayers of America. Our Children and Grandchildren will be paying the interest these two misguided presidents gave us. In 1981 the Democrats went along with the Reagan promise to balance the budget. In 2001 it was the GOP that made the same error even after they had the evidence that that plan did not work under Reagan. Now Bush wants to make the tax cuts permanent and add $2.4 Trillion more to the national debt according to a sturdy by the Brookings Institute. [B]Bush 41 was correct. It was Voodoo economics.
I can not believe that was part of what George was taught at Harvard.
on Oct 19, 2006
Dr Guy

I know the fiscal policies we are following are not what I was taught when I attended grad school for my MBA. I also know it is not what is used to successfully manage several large organizations during my 35 year career in business. I also know the policies we are following will create catastrophic financial crises as the impact of the Baby Boomers retirement becomes reality. The combination of the added debt, funding the promises for Social Security and Medicare, funding our national defense and homeland security are like multiple runaway trains all heading for the exact same location. The policies we are following are not trying to either slow these trains or change their path. If anything we are increasing the speed of the trains like adding the Prescription Drug Entitlement to Medicare without adding additional funding!


on Oct 19, 2006
i guess since this discussion has regressed into a debate about social security and it's solvency that guy has conceded that people aren't lying when talking about wanting to eliminate (federal income) taxes (that aren't pre-fixed and mandatory, and i'm not going into a laundry list to be nitpicked)for poor people has been settled.

i'll probably be writing about ss in a few weeks with my own thoughts on the subject, so i'll leave ya'll to your debate.

have a nice day:)
on Oct 19, 2006

i guess since this discussion has regressed into a debate about social security and it's solvency that guy has conceded that people aren't lying when talking about wanting to eliminate (federal income) taxes (that aren't pre-fixed and mandatory, and i'm not going into a laundry list to be nitpicked)for poor people has been settled.

Yes, and I am trying to leave that part alone.  I got sucked into it and then decided that was for another day.  However, I have not conceded that politicians are not lying when they talk about eliminating taxes for the poor, as the only concession I will make is they may be woefully ignorant at best.  Granting that they mean federal, and not state (again a deception, but I will allow that), it still leaves SS. 

on Oct 19, 2006

In 2001, Bush 43 did the same thing as Reagan. He curt taxes and increased spending with the very same result.

Again, I reject your premise.  He PROPOSED, Congress did the deed.  Reagan did not propose to increase spending, he tried to make it a zero sum game, and increase defense spending (while reducing other expenses).  Congress (in the words of Tip O'Neal - The Budget is DOA) did not go along with him there.

Again in the 90s, Clinton Proposed, Congress disposed.  In 2001, the tax cut was worth $40 billion and could hardly have been the cause of the deficit.  But even stretching the imagination and saying it was, the fact remains.  Bush PROPOSED, Congress enacted.

on Oct 19, 2006
Dr Guy

The Reagan and Bush 43 tax cuts as well as the increased spending were a joint effort between Congress and President Reagan and Bush 43. Congress passed the measures and the presidents signed the bills.

The net result of the Reagan and Bush policies was NOT A ZERO SUM GAME. They resulted in many Trillions of added debt. There is saying-- When you find yourself in a hole, STOP DIGGING. Nether Reagan or Bush 43 followed that advice. They both just kept digging the hole DEEPER AND DEEPER! We will all pay for those mistakes!
on Oct 19, 2006
Dr Guy

In addition to BOTH Presidents Reagan and Bush approving all the tax cuts and spending bills, it was at the insistence of Reagan and Bush that the tax cuts took place. The tax cuts DID NOT originate in Congress. Congress rubber stamped the tax cuts proposed by both Presidents!
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