Bush's tax cuts geared towards wealthy

[onnihs]

Heard an interesting piece on NPR this morning. Commentator Robert Reisch, who was the Labor Secretary during the Clinton administration, had an intriguing take on the White House's tax breaks.

Before Bush's tax cuts, a simple system of refilling the nation's deficit (now purportedly at a whopping $7 Trillion, from $5 trillion just 4 years before) was done by personal income taxes, among other things - the wealthy, who reside in a higher tax bracket, paid more taxes, thereby significantly contributing to the repayment of our deficit. The less wealthy paid less, but helped nontheless. This is called progressive tax cuts.. however, we know now that Bush's tax cuts favor the wealthy, and even more so if one resides in the top 1% annual income. The notion of progressive tax cuts no longer exists for our nation's enormously wealthy.

To compensate, the wealthy is now giving out loans to the U.S. treasury, straight from their savings accounts, in the forms of bonds and other junk. But here's the catch: obviously, loans must be paid back, and further, with interest. So the wealthy not only get their contributions in helping the deficit back (which were initially payed through their income taxes), but now get an additional X% interest accrued from the government.

And guess where those interest payments come from? That's right, you, me, the bulk of Americans.

In essence, the rich are making money off of our income taxes! Furthermore, the White House has proposed in February to allow Americans to pay less taxes on their savings. Interestingly, the average citizen doesn't even have any savings, and are in serious debt. But who has huge amounts of savings? The wealthy! It appears Bush is pushing for even MORE tax cuts for the super rich.

You tell me.

[VV o n g B a]

that's definitely an interesting perspective. but if i'm not mistaken, gov't bonds aren't doing well right now (specifically b/c of the deficit and weak dollar) and if the rich really wanted to put their money in something, its unlikely they'd put a lot of money in bonds. it's countries that have an interest in exporting to the US to create/maintain jobs that buy the overwhelming majority of bonds... and that's east asian nations.

[Mr.Lum]

I wish I was superrich. Fuck rich people.

[onnihs]

^ well, i don't think it's fair that we get mad at rich people, just VOTE BUSH OUT OF OFFICE!!!

[AliBabaIncorporated]

Interestingly, the average citizen doesn't even have any savings, and are in serious debt.
In that case, they should stop borrowing against their home equity to fund shopping sprees. (A big source of credit expansion in recent years). It's not rich people's fault that the average guy wants to spend beyond his means on a bunch of useless shit.

Also, as VVongba pointed out, the rich aren't exactly big purchasers of T-bills. In fact, most are held by banks and mutual funds -- that same old "average guy" by proxy.

[onnihs]

In that case, they should stop borrowing against their home equity to fund shopping sprees. (A big source of credit expansion in recent years). It's not rich people's fault that the average guy wants to spend beyond his means on a bunch of useless shit.

Also, as VVongba pointed out, the rich aren't exactly big purchasers of T-bills. In fact, most are held by banks and mutual funds -- that same old "average guy" by proxy.

I'm not blaming the rich. I'm blaming Bush's tax cut policies. But whatever the average joe decides to do with their home equity or what not is their prerogative, as well as their pejorative. And what exactly constitutes "useless shit?" Are they not living the American dream still, in persuit of happiness??

And fine, maybe banks and mutual funds are the biggest purchasers of bonds - but still, in our particular perspective, those bonds are issued as loans from the gov't that STILL accrue interest. Our income taxes pays for that interest. It's not particularly the rich who is screwing us over - it's the White House's tax policies.

[AliBabaIncorporated]

The tax policy didn't turn surplus to deficit on it's own. Maybe needlessly invading foreign countries has something to do with it?

Anyway, long-term government bonds aren't just or even primarily a way for the government to finance deficit spending. 10 and 30 year issues are pretty much the only liquid instruments out there to ensure a really long-term cash flow at a fixed rate. Life insurance companies especially love them. Maybe this is a financial service that would better be provided by the market (haven't been any new issues of 30-years for a while, but I don't see the market stepping in). But anyway, the point is, t-bills aren't just some kind of unmitigated financial evil. (Would be interesting to see how the Fed would control the money supply without them).

[onnihs]

never mind, my point, as usual, is being completely missed.

[Yeahman]

^ Because your "point" is a myth.

$7 trillion is the national debt. Not the federal deficit. The deficit for 2004 will be something like $500 billion. 4 years ago we had a surplus.

Income tax is more progressive today than it was before Bush. The top income bracket pre-Bush was 39.6% and the lowest was 15%. Today, the top is 38.6% and the bottom is 10%. Once fully implemented by 2007? it can be slightly less progressive depending on how you look at it. The top tax brackets will decrease slightly more than the middle tax brackets. EVERYONE'S taxes are lower today than they were pre-Bush. Personally I would like to see just 2 income tax brackets; 0% and 25%. Progressive income tax is just unjust.

I was opposed to the tax cuts but the anti-Bush camp really should educate themselves on the reforms. There's just a lot of myths going around, on both sides.

The "tax cuts for the wealthy" is not really the income tax cut but the dividend and capital gains tax cut. The extremely wealthy do not actually pay 38.6% of their income in taxes because they don't usually get paid by salary. They have investments. Dividends and capital gains tax rates are much lower than income tax rates. So while the bulk of the middle and low-income class tax is paid in the form of income tax, the bulk of the tax paid by the wealth are dividend and capital gains tax. This is a huge advantage for the rich.

Kerry said (though ambiguously) that he would roll back the dividend and capital gains taxes. I support this as well as his plan to reduce the corporate income tax (though it needs to be reduced even more drastically than he proposes). He also said he would have supported a cut in the dividend tax on the corporate side instead of the investor side which I would fully support. But unfortunately that is absent from his most recent reform plan. What I don't agree with is his plan to roll back the top personal income tax brackets. He wants to make it more progressive than it was even prior to Bush.

[onnihs]

^ Because your "point" is a myth.

$7 trillion is the national debt. Not the federal deficit. The deficit for 2004 will be something like $500 billion. 4 years ago we had a surplus.

Income tax is more progressive today than it was before Bush. The top income bracket pre-Bush was 39.6% and the lowest was 15%. Today, the top is 38.6% and the bottom is 10%. Once fully implemented by 2007? it can be slightly less progressive depending on how you look at it. The top tax brackets will decrease slightly more than the middle tax brackets. EVERYONE'S taxes are lower today than they were pre-Bush. Personally I would like to see just 2 income tax brackets; 0% and 25%. Progressive income tax is just unjust.

I was opposed to the tax cuts but the anti-Bush camp really should educate themselves on the reforms. There's just a lot of myths going around, on both sides.

The "tax cuts for the wealthy" is not really the income tax cut but the dividend and capital gains tax cut. The extremely wealthy do not actually pay 38.6% of their income in taxes because they don't usually get paid by salary. They have investments. Dividends and capital gains tax rates are much lower than income tax rates. So while the bulk of the middle and low-income class tax is paid in the form of income tax, the bulk of the tax paid by the wealth are dividend and capital gains tax. This is a huge advantage for the rich.

Kerry said (though ambiguously) that he would roll back the dividend and capital gains taxes. I support this as well as his plan to reduce the corporate income tax (though it needs to be reduced even more drastically than he proposes). He also said he would have supported a cut in the dividend tax on the corporate side instead of the investor side which I would fully support. But unfortunately that is absent from his most recent reform plan. What I don't agree with is his plan to roll back the top personal income tax brackets. He wants to make it more progressive than it was even prior to Bush.

i hardly think a report filed by Robert Reisch can be considered a "myth".

[John0101]

http://www.epinet.org/

For a liberal, but respected slant on economic issues.

[Yeahman]

i hardly think a report filed by Robert Reisch can be considered a "myth".
I don't know what he said. But you said...
Before Bush's tax cuts, a simple system of refilling the nation's deficit (now purportedly at a whopping $7 Trillion, from $5 trillion just 4 years before) was done by personal income taxes, among other things - the wealthy, who reside in a higher tax bracket, paid more taxes, thereby significantly contributing to the repayment of our deficit. The less wealthy paid less, but helped nontheless.
Before Bush? It's STILL the case! You think a 5 point drop for the poor and a 1 point drop for the wealthy somehow killed the progressive nature of our income tax system?