2009-02-18

Overlooked in the Stimulus - Tax Cuts

This point hasn't been widely picked up, but the tax cuts in Obama's Stimulus Plan are arguably the largest in American history - targeting those tax cuts to the bottom ~80% instead of the top 5% like Bush.  So the GOP just voted against the largest tax cut in history, for people that will spend it back into the economy.

How's the Club for Growth going to feel about that?  Oh, right.  Tax cuts only count if they're tax cuts for the rich.

7 comments:

Jim Ga said...

So the rich don't pay their fair share, is that it?

"Who Pays America's Tax Burden, and Who Gets the Most Government Spending?

While the U.S. tax system is progressive, the distribution of government spending makes the overall fiscal system more progressive than is apparent from tax distributions alone. Using a microdata model we estimate the distribution of federal, state and local taxes and spending between 1991 and 2004. We find households in the lowest quintile of income received roughly $8.21 in federal, state and local government spending for every dollar of taxes paid in 2004, while households in the middle quintile received $1.30, and households in the top quintile received $0.41. Overall, tax payments exceeded government spending received for the top two quintiles of income, resulting in a net fiscal transfer of between $1.031 trillion and $1.527 trillion between quintiles. Both taxes and spending appear to have large distributional effects on households, and these effects have grown since 1991. The results suggest tax distributions alone are an inadequate measure of progressivity, and policymakers should examine both tax and spending distributions when judging the overall fairness of policy toward income groups"

This based on the study found at:
http://www.taxfoundation.org/files/wp1.pdf

Jim Ga said...

Percentage of Federal Personal Income Tax Paid

Top 1%
39.89

Top 5%
60.14

Top 10%
70.79

Top 25%
86.27

Top 50%
97.01

Bottom 50%
2.99


Source: Internal Revenue Service

Jim Ga said...

Gonna keep this last post simple:

"the IRS says that nearly 46 million tax filers - one-third of all filers - had no tax liability in 2006"

how do you get a "tax cut" when you pay no taxes?

http://www.washingtontimes.com/news/2008/oct/13/obama-tax-cut-refunds-those-who-dont-pay/

Kepler said...

Remember, the top 1% wealthiest Americans, who pay 34% of total income tax revenue, got 52% of Bush's tax cuts. These tax cuts were financed with deficit spending, increasing the debt burden of every American citizen. Bush's tax cuts were therefore a redistribution of wealth, just in the other direction. This is just another data point proving that if there is a class war, the wealthy are winning decisively.

Furthermore, the top 1% earn nearly 27% of the income made in this country. That's not including capital gains on investment - that's just income! It is in fact fair for them to pay more of the tax burden as a result of their fantastic success in America. You see, in a community, we have responsibilities that go beyond making and keeping an unlimited amount of individual wealth.

Jim Ga said...

I'm sorry. Did i say we shouldn't have taxes and we don't have responsabilities to pay for? Did i say we shouldn't have a progressive tax? Wow, I missed that. My point is we already have a highly progessive tax system in this country.

"when we compare the figures for 2006, it is clear that the percentage of federal income taxes paid by the top earners was considerably higher than the percentage of AGI they received. For the top 1 percent, the difference was almost 18 percentage points. For both the top 5 percent and the top 10 percent, the difference was nearly 23.5 percentage points. For each of these groups, the difference between percentage of federal income taxes paid and percentage of AGI earned grew significantly larger between 1980 and 2006"

For the full article, which explains it very well:

http://www.american.com/archive/2008/october-10-08/america-has-a-highly-progressive-tax-system


In 2004, 32.4% of Americans paid NO taxes. Zip. Nil. Nada.

The tax burden on the middle quintile has been shrinking (http://www.house.gov/jec/press/2004/08-17-04.pdf)

Why is it the the liberals want to demonize the rich? Because when you rob Peter to pay Paul you can always count on Paul's support.

so....there.

Kepler said...

When only the very top have seen any growth under Republican policies, then it is only ethical to increase the burden on the very top. If the broad middle stagnates, and you increase their tax burden, then you destroy the middle class. Where there is growth, the burden can be beared. This is simple.

When you argue against this simple conclusion, you are either arguing for increased debt (which is fiscally irresponsible), or you argue for a diminished middle class (decreased progressivity). So don't going acting all surprised re: "Did i say we shouldn't have a progressive tax?" You just said we should have a less progressive income tax, on the backs of the great middle.

Jim Ga said...

Gee wiz, whats a guy got to do. I show that the wealthy are a pay higher percentage of taxes vs the income they represent, that government is transfering trillions already from the wealthy to the lower classes, that a third of americans pay no tax at all, and that the tax burden, from an income tax point of view, was lowered for everyone with bushes tax cuts. These are all irs and house figures.

The reason most of bushes tax cuts went to the top 1% is because they were paying the highest amount of tax to begin with (once again, we're talking about income tax). After all you can't give a tax cut to the lowest third because they aren't paying taxes to begin with. Last i looked, you can't reduce taxes to more than zero. Anything less than that is a welfare payment.

Where the middle class is getting hit is in other regressive taxes, like energy, cigarettes, alcohol, ect. State taxes don't help either. The 10 states with the highest state taxes all voted for Obama, btw.

The kicker is the Social Security tax, which really isn't as much a tax as it is an investment towards retirement (though a horrible one at that)This 'taxes' most workers at 15% while the wealthiest pay a far lesser amount.
This is not to say the government should raise the ceiling cap for SS or have means testing for benefits. I just think that the program should be handled in the private sector. Instead this money is spent to momment it gets to washington and not invested for the beneficiaries. (and plz feel free to remark on the present state of investments, i got an answer for that all lined up)SS is such a bad investment that it would be illegal for any public institution to sell it as a pension programs. Instead its more like the current Madoff scandal. You see, he had what was called a 'ponzi' scheme. Thats where you take money from current investers to pay off past investers. This is not to be minstaken for SS, which takes money from current investers to pay off past investers.


But i digress. There are reasons that the middle class didn't do as well as the upper, and they are not because of income tax. Do you really think that reducing the overall top tax rate 3% would result in over 3 times that much growth? I think not.

Another factor hurting the middle class is high corprate taxes, which are either passed on to the consumer or reduces the pay for workers.

As for fiscal irresponsiblity, I contend that the problem is not what the goverment collects in taxes nearly as much as what it wastes them on.

As a last note. Yes, the middle class is shrinking (down 3.9% over two decades). The lower class has also decreased in size (down 3.5%). So where are all those people going? Thats right! to the upper class which grew over 7%!

http://en.wikipedia.org/wiki/American_middle_class

Power to the people!