The Evidence is In: Tax Cuts for the Rich Destroy the Economy !
Trebor
It's amazing listening to all the lies and spin of the bush-Delay
tax-cut junta, as they seek to add insult to injury with yet another
tax bonanza for the rich. The tax cuts for the rich of the Reagan
era eventually resulted in exploding deficits and the deep recession
of the Bush years. Whereas it was only after Bill Clinton raised
taxes on the rich that the economy exploded in an unprecedented period
of eight years of unbroken prosperity. But bush has given the rich
yet another massive tax cut, and here we are right back in the same
recessionary hole as before. It's deja-vu all over again. How could
the empirical evidence be any clearer? Do we really need a deep
depression before we learn our lesson? Though initially
counterintuitive, the empirical evidence is easily explained:
Greed and laziness are basically two sides of the same coin. The
reason greedy rich people want so much extra money is so they won't
have to work. Rich people are basically lazy slugs who would like to
do as little work as humanly possible. The trick is to get them to
work a little for it. That's why simply giving them more money
through tax cuts only makes them even more lazy and complacent and
shiftless. Whereas taking away some of their money through higher
taxes actually compels them to finally move off their worthless butts
and work to try to make money through honest investments. The rich
are greedy beyond human comprehension, and that's why taking away some
of their riches actually stimulates them and forces them to leave
their usual unproductive stupor to try and make up for it. That's why
the Clinton tax increase on the rich sparked the investments in
technology that ultimately fueled the Clinton prosperity, and why
Bush's tax cut for the rich has only made them lazier and more
cautious than ever.
Let's look at it another way: If I'm a greedy/lazy rich person, my
object is to make as much money as I can doing the least amount of
work and with the least amount of risk. So if I can give crooked
Republican politicians a campaign bribe, knowing I'm going to get a
big tax cut in return, I am certainly going to put more of my money
into bribing Republican politicians rather than into more risky
legitimate investments which don't return as much money and also may
require some work. For this reason, it should be obvious to everyone
that more tax cuts for the rich actually takes money out of legitimate
investments and in order for them to invest in the "crooked
Republicans" industry, since Republicans are now offering a much
higher and safer rate of return. So far from encouraging legitimate
investments, tax cuts for the rich actually shrinks the total amount
being invested legitimately, while swelling the pockets of crooked
Republican politicians. This of course may help Republicans, which is
why they are always so anxious to vote for more tax cuts for the rich,
but it definitely harms the economy as a whole, and it explains the
abundance of empirical evidence we see today.
I predict that if Republicans push through another round of tax
giveaways for the rich, our nation will sink into the deepest
recession/depression since the great depression of the 1930's.
cheers,
Trebor
quasar
Trebor <tre...@my-deja.com> wrote in message
news:3be5be1d...@news.earthlink.net...
<blah, blah, blah>
Harrison NumbNUTTS
over 8 years. NOT Losing Tax revenues.
Mike Burr
> tax-cut junta, as they seek to add insult to injury with yet another
> tax bonanza for the rich. The tax cuts for the rich of the Reagan
Less skewed: Only 1.9 times rather than 2 times the tax rates of others. How
unfair! What a giveaway!
> era eventually resulted in exploding deficits and the deep recession
> of the Bush years. Whereas it was only after Bill Clinton raised
> taxes on the rich that the economy exploded in an unprecedented period
> of eight years of unbroken prosperity. But bush has given the rich
Whereas it was only after X that the economy exploded in an unprecedented
period of eight years of unbroken prosperity.
...where X is any one of
"Vanilla Ice sold his first album"
"the Internet became accessible to retailers"
"Viagra hit the market"
"Superman is paralyzed for life"
"Trebby, in 1992, fails to find 'Post hoc,
ergo propter hoc' in his copy of Webster's Children's Dictionary"
> yet another massive tax cut, and here we are right back in the same
> recessionary hole as before. It's deja-vu all over again. How could
> the empirical evidence be any clearer? Do we really need a deep
> depression before we learn our lesson? Though initially
> counterintuitive, the empirical evidence is easily explained:
>
> Greed and laziness are basically two sides of the same coin. The
> reason greedy rich people want so much extra money is so they won't
> have to work. Rich people are basically lazy slugs who would like to
> do as little work as humanly possible. The trick is to get them to
> work a little for it. That's why simply giving them more money
> through tax cuts only makes them even more lazy and complacent and
> shiftless. Whereas taking away some of their money through higher
> taxes actually compels them to finally move off their worthless butts
More Latin: "Reducto Absurdum"
> and work to try to make money through honest investments. The rich
> are greedy beyond human comprehension, and that's why taking away some
> of their riches actually stimulates them and forces them to leave
> their usual unproductive stupor to try and make up for it. That's why
> the Clinton tax increase on the rich sparked the investments in
> technology that ultimately fueled the Clinton prosperity, and why
> Bush's tax cut for the rich has only made them lazier and more
> cautious than ever.
>
Ask any Economist, lazyness is the path to wealth.
> Let's look at it another way: If I'm a greedy/lazy rich person, my
> object is to make as much money as I can doing the least amount of
> work and with the least amount of risk. So if I can give crooked
> Republican politicians a campaign bribe, knowing I'm going to get a
> big tax cut in return, I am certainly going to put more of my money
> into bribing Republican politicians rather than into more risky
> legitimate investments which don't return as much money and also may
> require some work. For this reason, it should be obvious to everyone
> that more tax cuts for the rich actually takes money out of legitimate
> investments and in order for them to invest in the "crooked
> Republicans" industry, since Republicans are now offering a much
> higher and safer rate of return. So far from encouraging legitimate
> investments, tax cuts for the rich actually shrinks the total amount
> being invested legitimately, while swelling the pockets of crooked
> Republican politicians. This of course may help Republicans, which is
> why they are always so anxious to vote for more tax cuts for the rich,
> but it definitely harms the economy as a whole, and it explains the
> abundance of empirical evidence we see today.
>
> I predict that if Republicans push through another round of tax
> giveaways for the rich, our nation will sink into the deepest
> recession/depression since the great depression of the 1930's.
>
> cheers,
> Trebor
>
Trebor, may your Government grant your wish of wealth through targeted
economic punishment of those more successful than you with the efficiency of
the U.S. Post Office, the success and uplifting spirit of the Department of
Housing and Urban Development and the love and attention to individual
rights of the Internal Revenue Service.
-Mike
Jeffrey Davis
Harrison NumbNUTTS wrote:
> Tax Cuts in trhe 80's led to DOUBLING the TAX Revenues to the Treasury
> over 8 years. NOT Losing Tax revenues.
Taxes as a % of GDP stayed virtually constant in the 80s.
Bill Bonde
Trippin' Trebor the Twunk wrote:
>
> It's amazing listening to all the lies and spin of the bush-Delay
> tax-cut junta, as they seek to add insult to injury with yet another
> tax bonanza for the rich.
>
What are your suggestions? Don't have any? I figured.
The Lost Dog
"Jeffrey Davis" <res0...@verizon.net> wrote in message
news:3BE5ECC6...@verizon.net...
Well DUUUH!! That's what happens when the economy is expanding. Thinking
is not your strong point, I take it.
>
The Lost Dog
"Mike Burr" <mb...@triad.rr.n0-spam.com> wrote in message
news:M7lF7.53211$jq6.16...@typhoon.southeast.rr.com...
I have never killfiled Trebby because he is a constant source of
amusement, and he never fails to leave me stunned. Reading one of his posts
can be likened to doing an Amy popper right before you go over the top at
the beginning of a roller coaster ride.
>
>
Jeffrey Davis
The Lost Dog wrote:
Think for a second: taxes are a rate.
If the rate stays the same, the taxes have stayed the same. All they did was
move the names of the taxes around.
--
Jeffrey Davis <res0...@verizon.net> E Pluribus unum
Fox Americana
> It's amazing listening to all the lies and spin of the bush-Delay
> tax-cut junta,
Don't you get bored?
The Lost Dog
Huh? Reagan cut taxes dramatically, and yet revenues doubled by the end of
his second term. What are you trying to say? That Reagan didn't lead us out
of a major recession and that the economy didn't expand? That's a tough
position to hold when the evidence is right there in black and white. Were
you alive when Carter was president?
Jeffrey Davis
The Lost Dog wrote:
> "Jeffrey Davis" <res0...@verizon.net> wrote in message
> news:3BE69297...@verizon.net...
> >
> >
> > The Lost Dog wrote:
> >
> > > "Jeffrey Davis" <res0...@verizon.net> wrote in message
> > > news:3BE5ECC6...@verizon.net...
> > > >
> > > >
> > > > Harrison NumbNUTTS wrote:
> > > >
> > > > > Tax Cuts in trhe 80's led to DOUBLING the TAX Revenues to the
> Treasury
> > > > > over 8 years. NOT Losing Tax revenues.
> > > >
> > > > Taxes as a % of GDP stayed virtually constant in the 80s.
> > >
> > > Well DUUUH!! That's what happens when the economy is expanding.
> Thinking
> > > is not your strong point, I take it.
> >
> > Think for a second: taxes are a rate.
> >
> > If the rate stays the same, the taxes have stayed the same. All they did
> was
> > move the names of the taxes around.
>
> Huh? Reagan cut taxes dramatically, and yet revenues doubled by the end of
> his second term. What are you trying to say? That Reagan didn't lead us out
> of a major recession and that the economy didn't expand? That's a tough
> position to hold when the evidence is right there in black and white. Were
> you alive when Carter was president?
I'm not "trying"to say anything. I am saying: if the % of the GDP devoted to
taxes stays the same, the tax rate hasn't changed.
Reagan and Congress cut income tax rates. Then, they INCREASED other tax rates.
The result: the % of the GDP given to the government stayed the same. Did the
income tax decrease? Yes. Did other taxes increase? Yes. But did taxes as a
whole go down? No. Now, you might believe that if it isn't the income tax that
it isn't a real tax. In that case, vaya con omigosh.
Josh Rosenbluth
1) Tax revenues a % of GDP dropped after the Reagan tax cut. In 1981
they were 19.6% of GDP, the average from 1982-89 was 18.0%.
2) The expectation is that tax revenue, without policy changes,
tracks GDP. More growth means more jobs which means proportionally
more tax revenue. Lawrence Lindsey, economic adviser to both Reagan
and G. W. Bush, detailed in his book "The Growth Experiment", that the
Reagan tax cut did indeed reduce revenues (relative to no tax cut)
relying precisely on observed decreases in revenue as a % of GDP.
Josh Rosenbluth
Jeffrey Davis
Josh Rosenbluth wrote:
Do your numbers reflect all jurisdictions or only the federal government. My memory is
that the % of money going to all taxes (all jurisdictions) has stayed pretty much the same
since the end of WW2.
Paul A Sand
>> > > > Taxes as a % of GDP stayed virtually constant in the 80s.
At least at the Federal level, this isn't true. Consulting
(http://www.whitehouse.gov/omb/budget/fy2002/hist.pdf, table 1.2)
total receipts (on-budget+off-budget) 1980-89:
1980 18.9%
81 19.6%
82 19.1%
83 17.5%
84 17.4%
85 17.7%
86 17.5%
87 18.4%
88 18.1%
89 18.3%
A two-percent swing in this number isn't "vitually constant".
(Unfortunately, it didn't *stay* down.)
--
-- Paul A. Sand |
-- University of New Hampshire |
-- p...@unh.edu |
-- http://pubpages.unh.edu/~pas |
Got My Mind Right, Boss..
and more than doubling and growth of the GNP?
If you are a right wing simpleton, why, of course!
Seems strange, however, that after the Evil Clinton singlehandedly
created the "largest tax increase in history", that we had no opposite
effect. In fact, in spite of the Noble Rich having to pay a few more
taxes, the economy grew at a record rate!
If there is a simple correlation between tax rates and economic
growth and prosperity, why didn't it work in reverse? Hmmmm??
Could it be that simplistic simpleton right wing dumb shits like
you are simply FULL OF SHIT?
Got My Mind Right, Boss..
why didn't the tax rate DECREASE?
Dumb ass.
Got My Mind Right, Boss..
wing brain..
Dumb ass.
Got My Mind Right, Boss..
to pay ANY taxes! After all, taxes are for the "little people",
the middle class.
The Noble Rich are doing their part by simply spending money!
We in the middle class should kiss their asses every day and
thank them for permitting us to work for them and serve them..
Right, Josh?
Martin McPhillips
>
> So, can we be simplistic and assume cause/effect on tax cuts
> and more than doubling and growth of the GNP?
>
> If you are a right wing simpleton, why, of course!
>
> Seems strange, however, that after the Evil Clinton singlehandedly
> created the "largest tax increase in history", that we had no opposite
> effect. In fact, in spite of the Noble Rich having to pay a few more
> taxes, the economy grew at a record rate!
>
> If there is a simple correlation between tax rates and economic
> growth and prosperity, why didn't it work in reverse? Hmmmm??
>
> Could it be that simplistic simpleton right wing dumb shits like
> you are simply FULL OF SHIT?
No, the luck of the draw for the so-called Clinton era involved
profound increases in productivity. Those increase were the result
of high-technology developments first spurred in the 1980s that
continued to develop at a nearly exponential rate in the '90s,
including the internet.
But it should also be noted that lots of the later Clinton
era growth came after capital gains tax cuts. The growth
rate before that was steady but not great.
Earlier, in the Reagan era, which saw a reversal in earlier
poor productivity growth, the recovery was fueled by investment
fueled by tax cuts.
It's never a good idea to aggressively tax capital. It just goes
somewhere else. Or it rests somewhere, waiting for government to
loosen its grip, or it gets more motivated to get into bed with government.
Right now, you have all sorts of cross winds blowing through
the American economy, with strong entrepreneurial energy blowing
one way and entrenched corporate energies blowing the other. The
latter benefit from energies generated by the former.
The best position for government to take in all this is to provide many
fewer structured favors and more direct tax relief across all sectors,
and spend less.
The two big dogs in all of this are Social Security and Medicare,
both of which should be more or less privatized for the benefit
of the beneficiaries. A real private and heritable retirement system
and a real paid-for-by the beneficiaries senior medical care insurance
system go hand-in-hand. Both can be insured by the government against
blow-outs.
This is the only direction that's going to work.
The big open question in all of this is the "global economy,"
or, just how far the U.S. can go with free trade ideology. On one
side you have the late Jimmy Goldsmith and Pat Buchanan and even
Nader arguing against free trade, with basically the entire establishment
arguing for free trade.
This current war is going to inform a lot of opinions on these
very same issues of globalism. Seemingly, the rush towards globalism
is unstoppable, but the actual outcome, factoring in the extent
to which the current war overwhelms world markets, is yet to be
known. That's the way the future always is. Twelve weeks ago no
one was thinking war.
Martin McPhillips
>
> and more than doubling and growth of the GNP?
>
> If you are a right wing simpleton, why, of course!
>
> Seems strange, however, that after the Evil Clinton singlehandedly
> created the "largest tax increase in history", that we had no opposite
> effect. In fact, in spite of the Noble Rich having to pay a few more
> taxes, the economy grew at a record rate!
>
> If there is a simple correlation between tax rates and economic
> growth and prosperity, why didn't it work in reverse? Hmmmm??
>
> Could it be that simplistic simpleton right wing dumb shits like
> you are simply FULL OF SHIT?
No, the luck of the draw for the so-called Clinton era involved
>
Josh Rosenbluth
> Huh? Reagan cut taxes dramatically, and yet revenues doubled by the end of
> his second term. What are you trying to say?
Let's try this again.
Federal taxes as a % of GDP dropped from 19.6% in 1981 to an average
of 18.0% of GDP in 1982-89. Even in 1989, the level was only 18.3% of
GDP. Without any tax law changes, revenues would have stayed at 19.6%
of GDP.
The point is that the Reagan tax cut reduced monies flowing into the
Treasury, thereby increasing the deficit and accelerating the growth
in the debt.
Josh Rosenbluth
Paul A Sand
Simplistic and misleading. You use 1981 as your baseline, but this year
was neither an ideal situation, nor historically normal. It ignores
the actual state of the economy in 1981, which was dreadful. Years of
double-digit inflation had pushed normal taxpayers into tax brackets
previously thought of as reserved for "the rich".
In FY1981, Federal individual income taxes were 9.3% of GDP. This was
a peacetime record, and higher than any previous year except 1944.
The "Reagan tax cut" brought this down, sure enough, but this number
never went below 7.8% in the 1980s, and remained comparable to previous
historical levels. It was the 1979-1982 timeframe that was out of
whack, not the remaining years of the 80s.
So *at worst* the individual income tax rate cuts "increasing the deficit"
was a 1.5% of GDP effect, and that was only one year. In comparison, the
deficit was running between 4-6% of GDP in the early 80's post taxcut.
Even assuming (dubiously) that the 9.3% fraction of GDP number was
maintainable and the rate cuts had *no* beneficial effect on the economy,
it wouldn't have been enough to zero the deficit.
(Numbers from http://www.whitehouse.gov/omb/budget/fy2002/hist.pdf, tables
1.2 and 2.3)
--
-- Paul A. Sand | That'll teach me to grep from the FAQ...
-- University of New Hampshire | (Paul Southworth, comp.unix.osf.osf1)
DCRounds
> deep recession
>of the Bush years.
Deep recession? What was it, slight contraction for two quarters?
>How could
>the empirical evidence be any clearer?
How about the empirical evidence of the 1981 and 1962 tax cuts?
>The
>reason greedy rich people want so much extra money is so they won't
>have to work
I will be you wish you were one of them, but are too lazy to put into the
effort, and would prefer the government to take care of you.
> That's why simply giving them more money
>through tax cuts
Giving back their own money.
Harry Hopeless
than 50 % drop. As the efconomy grew , more revenue was collected in State and
Fedral sales taxes and by more payroll taxes as more people had jobs. See its
really not hard to understand.
M. Simon
Corporations don't pay taxes. Their customers do.
Do you favor drug prohibition because it finances criminals or do you favor it because it finances terrorists?
http://sites.netscape.net/constitutionkids/homepage
rightw...@enemy.com
a right wing nut;
>
>>tre...@my-deja.com (Trebor) wrote in message news:<3be5be1d...@news.earthlink.net>...
>>> It's amazing listening to all the lies and spin of the bush-Delay
>>> tax-cut junta,
>>
>>It's amazing you're still beating that same tired "class envy" horse.
>>
>>Don't you get bored?
>
>Corporations don't pay taxes. Their customers do.
Yes, but isn't that the problem?
If you actually made corporations pay their share, you could lower
taxpayers share to compensate for what the corporations charged.
------------------------------------------------------
"The Afghan Mujahadeens are the moral equivalent of the Founding
Fathers of America."
-Ronald Reagan
Josh Rosenbluth
Your basic arguments are that 1) revenue as a % of GDP would have gone
down anyway without Reagan's tax cut, 2) the economy would not have
grown as much without the tax cut, and 3) even assuming that both of
those previous points are incorrect, most of the deficit isn't due to
the tax cut.
I'll first handle the last point, since that is based on nothing more
than straight-forward crunching of the numbers. In summary, I have
only been estimating that the tax cut played a substantial role in the
*increase* in the deficit, not the total deficit. In 1981, the sum of
individual *and* corporate income taxes was 11.3% of GDP. For
1982-89, it averaged 9.8% of GDP. That's a difference of 1.5%-points.
The deficit in 1981 was 2.6% of GDP. From 1982-89 this increased to
an average of 4.3% of GDP. That difference of 1.7%-points is awfully
close to the lost revenue of 1.5%-points. In light of the increase in
military spending, that subjectively appears to be putting too much
blame on the tax cut.
Which brings us to your first two points. My basic answer is "could
be". I'm open to research and references that lead to a
*quantitative* estimate. Merely remarking that 1981 revenue levels
were at a peacetime historical high doesn't tell me what they would
have been without the tax cut, especially since revenue levels have
been maintained at or above that level since 1997.
The bottom line of this discussion is the degree to which the Reagan
tax cut contributed to the increase in the deficit and thus
acceleration in the debt. Was it the overwhelming reason as the
simple calculation above suggests? Probably not. Was it completely
blameless because revenues increased after the cut? Clearly, that is
garbage. Given the inaccuracies inherent in any model, I'd say the
correct answer is likely around half. Heck, even Lindsey said it was
25% of the cause! Do you have a better answer?
Josh Rosenbluth
Josh Rosenbluth
> I think we should simply excuse the Noble Rich of having
> to pay ANY taxes! After all, taxes are for the "little people",
> the middle class.
>
> The Noble Rich are doing their part by simply spending money!
> We in the middle class should kiss their asses every day and
> thank them for permitting us to work for them and serve them..
>
> Right, Josh?
What did I say that ignited this non-sequiter?
Josh Rosenbluth
Hewpiedawg
> tax bonanza for the rich. The tax cuts for the rich of the Reagan
> era eventually resulted in exploding deficits and the deep recession
> of the Bush years. Whereas it was only after Bill Clinton raised
> taxes on the rich that the economy exploded in an unprecedented period
> of eight years of unbroken prosperity. But bush has given the rich
> yet another massive tax cut, and here we are right back in the same
> recessionary hole as before. It's deja-vu all over again. How could
> the empirical evidence be any clearer? Do we really need a deep
> depression before we learn our lesson? Though initially
> counterintuitive, the empirical evidence is easily explained:
There is one very deep problem with your argument:
the recession started before Bush became president.
The layoffs where I work (and it is doubtful there will
be more) came after the long slide during the interminable
election, and certainly long before the tax cuts were
implemented. So how can you argue that an effect is
a cause? No wonder you have deja vu; you have come
loose from the time stream.
> Greed and laziness are basically two sides of the same coin. The
> reason greedy rich people want so much extra money is so they won't
> have to work. Rich people are basically lazy slugs who would like to
> do as little work as humanly possible. The trick is to get them to
> work a little for it. That's why simply giving them more money
> through tax cuts only makes them even more lazy and complacent and
> shiftless. Whereas taking away some of their money through higher
> taxes actually compels them to finally move off their worthless butts
> and work to try to make money through honest investments.
The last time I checked capital wasn't taxed, merely income.
> The rich
> are greedy beyond human comprehension, and that's why taking away some
> of their riches actually stimulates them and forces them to leave
> their usual unproductive stupor to try and make up for it. That's why
> the Clinton tax increase on the rich sparked the investments in
> technology that ultimately fueled the Clinton prosperity, and why
> Bush's tax cut for the rich has only made them lazier and more
> cautious than ever.
Why didn't the same thing happen in 1994, after the contract
with America tax cut?
> Let's look at it another way: If I'm a greedy/lazy rich person, my
> object is to make as much money as I can doing the least amount of
> work and with the least amount of risk. So if I can give crooked
> Republican politicians a campaign bribe, knowing I'm going to get a
> big tax cut in return, I am certainly going to put more of my money
> into bribing Republican politicians rather than into more risky
> legitimate investments which don't return as much money and also may
> require some work.
You make it sound as if tax cuts were for sale, like
presidential pardons.
> For this reason, it should be obvious to everyone
> that more tax cuts for the rich actually takes money out of legitimate
> investments and in order for them to invest in the "crooked
> Republicans" industry, since Republicans are now offering a much
> higher and safer rate of return.
The problem is that Government subsidies are a bigger
factor. One lobbies the government hoping to suck
on its enormous teat, even if one is a corporate lobbyist.
> So far from encouraging legitimate
> investments, tax cuts for the rich actually shrinks the total amount
> being invested legitimately, while swelling the pockets of crooked
> Republican politicians. This of course may help Republicans, which is
> why they are always so anxious to vote for more tax cuts for the rich,
> but it definitely harms the economy as a whole, and it explains the
> abundance of empirical evidence we see today.
What a crock. The capital gains tax cut actually
precipitated an increase in capital gains revenue.
How do you explain this?
> I predict that if Republicans push through another round of tax
> giveaways for the rich, our nation will sink into the deepest
> recession/depression since the great depression of the 1930's.
Keep dreaming. Maybe your party won't just become "GOP,
the Junior Edition", if your wishes for depression come true.
Failing that, the fate of the Democrats is set in stone. "Me too!
Me too! Me too!" You can always join the Greens.
Ledru
In an editorial cartoon by Pulitzer-Prize winner Ben Sargent, a barrel
overflowing with the glop and stench of corporate tax breaks is being
decorated by Martha Stewart. She's shown painting it with the
red-white-and-blue design of America's flag. As she applies the stars
and stripes, she says to the reader: "See? There's nothing so ugly or
appalling you can't disguise it with this pattern."
So disgustingly true, as Washington has demonstrated again and again
since September 11. Already, Bush, the congress, and a gang of
Gucci-clad corporate lobbyists have wrapped the flag around such
legislative dreck as "Star Wars" and "Fast Track," declaring it a matter
of high patriotism to pass both. Then there are star-spangled
multibillion-dollar bailouts that richly reward CEOs and big investors
but leave hundreds of thousands of unemployed workers out in the cold.
But the most rancid of all, so far, is the sickening "economic stimulus
package" that the Republican leadership recently muscled through the
house. This is raw garbage, which will stimulate nothing but more
campaign contributions from the corporations and speculators who get all
the money. In addition to a special capital gains tax break that will
put 80 percent of the money into the pockets of the wealthiest two
percent of Americans, this package includes a retroactive elimination of
the "corporate minimum alternative tax." Under this greasy giveaway, $25
billion will be given to a handful of profitable corporations as a full
refund of taxes they've paid for the past 15 years!
Among these wartime welfare mooches are Enron, getting $254 million in
refunds, GE getting $671 million, and Ford getting about $2 billion.
This isn't partriotism...it's war profiteering. To stop it, call the
Campaign for America's Future: 202-955-5665.
HARD TIMES FOR THE LUXURY CLASS
Let's take another peek [Lifestyles Theme] into "The Lifestyles of the
Rich...and Cranky."
Being rich means never having to say, "How much?" This is why there's
currently a lot of crankiness out there among those who had been made
rich by the spectacular rise in dot-com stock prices during the last
decade, but then have been made suddenly unrich by this year's dot-com
meltdown. Now, instead of buying a pair of Gucci's on impulse, they're
shopping for no-name shoes and asking, "How much?"
The crimp in spending by these nouveau luxury buyers is so tight that
the New York Times tells tales of empty stores and lonely sales clerks
in such previously hot shops as Tiffany, Prada, Dior, Chanel, and Gucci.
These toney stores are hurting, yet because they are purveyors of
prestige, they can't simply whack prices in half or hold a tacky
two-for-one sale. This would cheapen their own upscale image. As one
marketing expert put it, if they "cut prices too much, then people
think, well, it wasn't worth that much after all."
Luckily for the sellers of hoity-toity goods, there are still some rich
shoppers like Gary Markle of Colorado Springs, Colorado. Featured in the
Times story, this high-tech exec is continuing to spend on luxury goods
despite plummeting stock prices, local layoffs, and the general economic
downturn affecting so many others. He's building a $1.5 million house in
a gated compound, he sports around town in a shiny Mercedes, and he just
bought a brand new SUV for his wife, explaining: "She wanted a new car,
her car was two or three years old, and we said, well, sure."
In the world of the rich, a downturn means having to switch from fois
gras to caviar. As Markle told the Times, "I think people are saying to
themselves, well, I had $3 million and now I only have $2 million. But
$2 million is still a lot of money."
Sure, that's what all the people I know are saying.
RESERVING TAX BREAKS FOR THE RICH
Time for another Gooberhead Award [Beanie-cap breakdown] presented
periodically to people in the news whose tongues are going 100 miles per
hour...but who forgot to put their brains in gear.
Today's Goober is a fellow who, like a bad tamale, just keeps coming
back on us. He's Dick Armey, the house majority leader, and this time he
repeats as our awardee because of his remarkable stance on the $100
billion economic stimulus package that recently zipped through the
house. Armey declared that the package was too rich.
Well, he certainly was right about that. This thing is larded with
outrageous giveaways to the rich an assortment of elitist goodies that
has nothing to do with the millions of Americans who have been flattened
by the economic bust since September 11, nor will it do anything to
rebuild our economy. Among other things, the $100-billion package
gratuitously gives a special capital-gains tax break to the wealthiest
two-percent of Americans, and it also allows enormously profitable
corporations to get $25 billion in tax rebates.
But our boy Dick had no gripe with the rich making a killing. It was the
little dab going to low-income workers that got his knickers in a knot.
These low-wage families have been devastated by the job losses at
airports, hotels, and other places where business has plummeted, so the
stimulus package allowed small rebates on a portion of their payroll
taxes. Armey got on his hind legs to complain about allowing such folks
to get maybe a hundred bucks or so in rebate, claiming that this would
"not really have a growth impact on the economy."
What a Goober! In fact, spreading smaller sums of money to millions of
workers is exactly the way to stimulate the economy, since these folks
won't hoard it as the rich do, but instead will spend it immediately on
groceries and other basic needs for their families. Armey's all for tax
breaks...as long as they go to his campaign contributors.
Sanity Injections
By Jim Hightower
Trebor
wrote:
The feeling you describe is the feeling of waking up from a deep
sleep. Llike most Americans, you've been thorroughly brainwashed by a
corporate media designed to protect the interests of their wealthy
masters. Thus you have been fed the image of rich people as
hardworking, patriotic, selfless individuals whose only interest is in
creating jobs and building up the economy. Nothing could be further
from the truth. You've swallowed the aristocratic myth hook, line and
sinker. You should have realized that when the rich 'patriotically'
fled the market when it reopened after the 9/11 bombings. The truth
is, most rich people were born rich, they earn most of their money
from capital gains and inheritance (ie sitting on their butts), and
what scares them most is the idea of having to work for a living.
They may have hated Clinton for raising their taxes, but what they
hated more was the prospect of a 9-5 job, and that's why they started
taking money out of their offshore accounts and tax dodges to make
those investments that 'helped' produce an unprecendeted period of
prosperity. They are not sitting around today looking for ways to
create jobs, they are sitting around looking for the best way to
ensure that they will never have to do an honest days work in their
entire life.
Let me put it to you from a still different angle: Why would rich
people want to stop Republicans transferring wealth into their own
pocket through deeper and deeper tax cuts and corporate subsidies? As
long as the economy continues to tank, republicans are going to use it
as an excuse to keep transferring more wealth from the poor and middle
class into their own pocket. This has the added benefit of not only
increasing their bottom line today, but if/when the economy recovers,
they will have an even larger share of pie than they ever have in the
past. If this country falls into a deep depression, Republicans will
be auctioning off the Lincoln memorial, the Capital dome and the
Statue of Liberty to stuff more cash into the pockets of the very
rich. So why would any sane rich person want to throw the hard-won
spoils of Republican class warfare into the garbage, in favor of
making very risky investments during a recession? Because they like
to 'earn' their money the hard and risky way? Because they care about
all those people losing their jobs? Because their patriotic goal is
to build up this country?
Go back to sleep. I've kept you up way past your bedtime.
cheers,
Trebor
robx...@nowhere.com
>On Wed, 07 Nov 2001 10:40:31 GMT, msi...@rsa.com (M. Simon) wrote like
>a right wing nut;
>>On 5 Nov 2001 06:02:41 -0800, ner...@aol.com (Fox Americana) wrote:
>>
>>>tre...@my-deja.com (Trebor) wrote in message news:<3be5be1d...@news.earthlink.net>...
>>>> It's amazing listening to all the lies and spin of the bush-Delay
>>>> tax-cut junta,
>>>
>>>It's amazing you're still beating that same tired "class envy" horse.
>>>
>>>Don't you get bored?
>>
>>Corporations don't pay taxes. Their customers do.
>
>Yes, but isn't that the problem?
>
>If you actually made corporations pay their share, you could lower
>taxpayers share to compensate for what the corporations charged.
I think you are missing the point. No matter how much corporations
are required to pay in taxes, they will merely pass this cost along to
the consumer in the cost of their goods. After all, where do you
think thier money comes from?
>
Billy Beck
jrose...@att.com (Josh Rosenbluth) wrote:
>"The Lost Dog" <libs@reboneheads> wrote...
>> Huh? Reagan cut taxes dramatically, and yet revenues doubled by the end of
>> his second term. What are you trying to say?
>
>Let's try this again.
>
>Federal taxes as a % of GDP dropped from 19.6% in 1981 to an average
>of 18.0% of GDP in 1982-89. Even in 1989, the level was only 18.3% of
>GDP. Without any tax law changes, revenues would have stayed at 19.6%
>of GDP.
>
>The point is that the Reagan tax cut reduced monies flowing into the
>Treasury, thereby increasing the deficit and accelerating the growth
>in the debt.
Here's an example of wholesale overthrow of reality. Observe
that the rate of taxation is offered as cause of effect here, and not
spending. Spending is taken as the unquestionable given, and thereby
excused its causation for debt. And then, because the law of
causality simply cannot be repealed, debt is blamed on the cause of
"reduced monies flowing into the Treasury".
Is it *possible* to reason with attitudes like this?
Billy
VRWC Fronteer
http://www.mindspring.com/~wjb3/free/
Paul A Sand
>Your basic arguments are that 1) revenue as a % of GDP would have gone
>down anyway without Reagan's tax cut, 2) the economy would not have
>grown as much without the tax cut, and 3) even assuming that both of
>those previous points are incorrect, most of the deficit isn't due to
>the tax cut.
Actually with respect to point (1): it's more arguable that
individual-income-tax-revenue-as-percent-of-GDP would have continued to
go up in the absence of tax rate cuts. Inflation would have continued
to enact unlegislated tax increases, pushing people into higher
brackets. (Remember that inflation-indexing the brackets was also a
part of the package that passed, although I think it was added in by
Congress, not part of Reagan's proposal.) It's hard to know what would
have happened to the inflation rate in the cuts' absence though. It came
down amazingly fast.
As long as we're guessing about what-would-have-happened-if, though:
it's hard to see that individual-income-tax-revenue-as-percent-of-GDP
would have been politically or economically sustainable at the 9-10%
level. If not the Reagan cuts (mirroed currently by the Dubya cuts),
it's a good bet that something else would have passed to bring that
number down to near its peacetime average. Those taxation levels are
just not something Americans are willing or easily able to bear. It's
arguable that the high fraction of GDP grabbed by taxes is one of the
things that helped put the economy in the dumper, both then and now.
>The bottom line of this discussion is the degree to which the Reagan
>tax cut contributed to the increase in the deficit and thus
>acceleration in the debt. Was it the overwhelming reason as the
>simple calculation above suggests? Probably not. Was it completely
>blameless because revenues increased after the cut? Clearly, that is
>garbage. Given the inaccuracies inherent in any model, I'd say the
>correct answer is likely around half. Heck, even Lindsey said it was
>25% of the cause! Do you have a better answer?
No, I don't have any reason to argue with Lindsay. The main problem (as
stated previously) is making 1981 the "baseline" for comparison when it
was such an unusual and economically-bad time. Lindsay's book, as you
probably know, is very good at describing how unhealthy the economy and
tax system were in the late 70s and early 80s.
I concentrate on the individual income tax numbers, btw, not because
other things weren't going on, but that's what people think of (and argue
about) when they talk about the Reagan tax cuts. Democrats still cry
"giveaway to the rich" while Republicans point to "letting people keep
their own money."
The other stuff (corporate income tax changes, Social Security "reform",
spending increases for this and that, etc.) tends to get a lot less
examination because those things are more difficult for politicians
to make partisan points from. The games played with Social Security in
the 80s, for example, probably had at least as large an effect on the
long-term fiscal situation as did the rate cuts. But since the changes
had "broad bipartisan support", they don't make it into the debate arena.
Similarly, since both Republicans and Democrats like to toss out
tax-related goodies to their corporate constituents. Since neither
party can convincingly cast the other as villain, it's off the
mainstream-debate radar.
--
-- Paul A. Sand | I'd heard that this group existed, but it
-- University of New Hampshire | me a while to find it -- I thought it was
-- p...@unh.edu | "alt.recovery.fonics".
-- http://pubpages.unh.edu/~pas | (Carolyn Capps, alt.recovery.phonics)
Josh Rosenbluth
Total spending as a % of GDP was 22.2% in 1981. Spending averaged
22.3% of GDP from 1982-89, virtually the same inspite of increases in
military spending (from 5.2% to 6.0% of GDP) and increases in interest
payments on the debt (from 2.3% to 2.9% of GDP).
At first blush it appears that net spending increases played almost no
role in the increased deficit. Subjectively, I find that hard to
believe. I suspect, but cannot quantify, that economic growth was
larger than it would have been without the tax cut due to increased
consumer spending. The result would have been less blame on reduced
revenues and more on increased spending. I invite anyone to estimate
how the economy would have grown without the tax cut.
Regarding my "sin" in concluding "that the rate of taxation is offered
as cause of effect here, and not spending", I go where the data lead
me. Moreover, as explained above, I believe it is likely that
spending played a role as well.
For sure, you can reason with me, and my attitude. I invite you to
offer alternate interpretations of the same data or to introduce your
own. I am always open to evidence.
Josh Rosenbluth
Trebor
The only thing the tax cuts for the rich in the 80's led to was a
massive redistribution of wealth as the poor and middle class began
shouldering much more of the tax burden and the rich much less.
Whatever boost in the economy there was came from massive govenment
deficit spending, but the bill for that spending spree came due with
the bush recession.
On Mon, 05 Nov 2001 00:32:49 GMT, Harrison NumbNUTTS
<numb...@myhouse.com> wrote:
>Tax Cuts in trhe 80's led to DOUBLING the TAX Revenues to the Treasury
>over 8 years. NOT Losing Tax revenues.
>
>Trebor wrote:
>
>> It's amazing listening to all the lies and spin of the bush-Delay
>> tax-cut junta, as they seek to add insult to injury with yet another
>> tax bonanza for the rich. The tax cuts for the rich of the Reagan
>> era eventually resulted in exploding deficits and the deep recession
>> of the Bush years. Whereas it was only after Bill Clinton raised
>> taxes on the rich that the economy exploded in an unprecedented period
>> of eight years of unbroken prosperity. But bush has given the rich
>> yet another massive tax cut, and here we are right back in the same
>> recessionary hole as before. It's deja-vu all over again. How could
>> the empirical evidence be any clearer? Do we really need a deep
>> depression before we learn our lesson? Though initially
>> counterintuitive, the empirical evidence is easily explained:
>>
>> Greed and laziness are basically two sides of the same coin. The
>> reason greedy rich people want so much extra money is so they won't
>> have to work. Rich people are basically lazy slugs who would like to
>> do as little work as humanly possible. The trick is to get them to
>> work a little for it. That's why simply giving them more money
>> through tax cuts only makes them even more lazy and complacent and
>> shiftless. Whereas taking away some of their money through higher
>> taxes actually compels them to finally move off their worthless butts
>> and work to try to make money through honest investments. The rich
>> are greedy beyond human comprehension, and that's why taking away some
>> of their riches actually stimulates them and forces them to leave
>> their usual unproductive stupor to try and make up for it. That's why
>> the Clinton tax increase on the rich sparked the investments in
>> technology that ultimately fueled the Clinton prosperity, and why
>> Bush's tax cut for the rich has only made them lazier and more
>> cautious than ever.
>>
Billy Beck
<ah...@no-spam-to-world.std.com> wrote:
>>>>>> Billy Beck writes:
>
> Billy> jrose...@att.com (Josh Rosenbluth) wrote:
>
> >> "The Lost Dog" <libs@reboneheads> wrote...
>
> >>> Huh? Reagan cut taxes dramatically, and yet revenues doubled by the end of
> >>> his second term. What are you trying to say?
> >>
> >> Let's try this again.
> >>
> >> Federal taxes as a % of GDP dropped from 19.6% in 1981 to an average
> >> of 18.0% of GDP in 1982-89. Even in 1989, the level was only 18.3% of
> >> GDP. Without any tax law changes, revenues would have stayed at 19.6%
> >> of GDP.
> >>
> >> The point is that the Reagan tax cut reduced monies flowing into the
> >> Treasury, thereby increasing the deficit and accelerating the growth
> >> in the debt.
>
> Billy> Here's an example of wholesale overthrow of reality. Observe
> Billy> that the rate of taxation is offered as cause of effect here, and not
> Billy> spending. Spending is taken as the unquestionable given, and thereby
> Billy> excused its causation for debt. And then, because the law of
> Billy> causality simply cannot be repealed, debt is blamed on the cause of
> Billy> "reduced monies flowing into the Treasury".
>
> Billy> Is it *possible* to reason with attitudes like this?
>
>Any honest analysis of the debt problem points to spending. Net taxes
>were not cut much, while there were steep cuts in the Income Tax rates,
>other taxes were sharply hiked. Spending was the main culprit, and,
>of course, both parties were in it up to their ears.
>
>That said, I am getting well into "Triumph and Tragedy", I would like to
>continue reading about WWII, do you have any other good recommendations?
>I am dreading finishing this, as it has been so much fun.
Churchill is a nearly impossible act for any writer to follow on
nearly any subject. It's a lot more than simply knowing the material
as well as he does: in his case, it's also coupled with a style of
precious rarity.
However, as for WW II studies, I always recommend Alan Clark's
"Barbarossa" for the best look at the Eastern front. I've also read
Werth's "Russia At Was 1941-1945", which was pretty good, but Clark
bears a better focus on the military details. For a comprehensive
look at a special case on the Eastern front, see Salisbury's "The 900
Days: The Siege of Leningrad". It's an horrific episode.
Coming up on the end of Churchill, however, and as you are, I
would recommend Thomas Fleming's recent "The New Dealers' War" to put
some things into a perspective for you that I think you might be able
to appreciate.
Paul A Sand
>
>The only thing the tax cuts for the rich in the 80's led to was a
>massive redistribution of wealth as the poor and middle class began
>shouldering much more of the tax burden and the rich much less.
>Whatever boost in the economy there was came from massive govenment
>deficit spending, but the bill for that spending spree came due with
>the bush recession.
>
Nice story, unencumbered by any facts whatsoever. But if (for example)
you grab ftp://ftp.cbo.gov/30xx/doc3089/EffectiveTaxRate.pdf and skip
up to Table G-1b on page 74, you'll find (for example) that the top 20%
of households had a 56.4% share of total Federal tax liabilities in
1981. By 1989, this share had increased to 59.0%. No other quintile saw
its share of total Federal tax liability increase during this period.
If the top quintile of households isn't exclusive enough to be considered
"the rich" for you, the table also shows numbers for the top 10% (their
share went from 39.6% to 43.0%); the top 5% (their share went from 28.0%
to 31.6%); and the top 1% (their share went from 13.1% to 16.5%).
Fearless prediction: these facts won't change Trebor's theology
about what the icky "tax cuts for the rich" did.
--
-- Paul A. Sand | I'm not smart enough to be happy
-- University of New Hampshire | about thinking that hard.
-- p...@unh.edu | (Larry Wall, comp.lang.perl)
-- http://pubpages.unh.edu/~pas |
DCRounds
>The truth
>is, most rich people were born rich, they earn most of their money
>from capital gains and inheritance (ie sitting on their butts), and
>what scares them most is the idea of having to work for a living.
Have you ever known a rich person? I will guess that you hang around only
people like yourself that are afraid to take personal responsibility. How many
jobs and charity donations do poor people create?
>Statue of Liberty
I will bet you despise this. Part of liberty is economic freedom - letting
people keep what they earn.
Billy Beck
<ah...@no-spam-to-world.std.com> wrote:
<book recommendations>
>I just ordered all three. The Fleming sounds interesting, I am about 100
>pages into Vol 6, and am beginning to wonder about FDR and the slowdown
>in Italy. Churchill certainly makes his case strong for Alexander to
>go on to Austria. It would be interesting to get the counterpoint.
It's occurred to me to read Eisenhower to see what he has to say
about it.
My general conclusion is that, in the West in general, there
simply was not sufficient moral courage to point out what the Soviets
really were, there was therefore no ethical principle on which to
stand against them at every turn.
Churchill was foolish about Stalin early on, but he started
getting over it. Roosevelt never did.
I don't think it's too much to say that the years 1939-1945
represent the most important turning point in the structure of world
relations in all of history, with necessary implications on the
relationship between an American and the United States government.
It's the period in which the general drift away from liberty was set
as a course into the future, right down to the present day.
And I believe that's what Roosevelt wanted.
Josh Rosenbluth
Unfortunately, I cannot read the complete post from Mr. Hall. I only
saw this excerpt in a response by Billy Beck (which commented on WWII
books rather than this topic). For whatever reasons, 1) Google
doesn't show Mr. Hall's posts, and 2) my news server doesn't show
anything in this entire thread.
Can someone else re-post Mr. Hall's argument? Or maybe he can in a
different manner that Google picks up. I'd like to know what honest
analysis he uses to get to his conclusion and where the following,
which points towards revenues, is wrong:
Year Revenues (% of GDP) Spending (% of GDP)
1981 19.6% 22.2%
1982-89 (avg) 18.0% 22.3%
These are total *Net* Federal revenues inclusive of of Income, Estate,
Payroll, Excise and other taxes.
Josh Rosenbluth
Eagle Eye
Rosenbluth <jrose...@att.com> wrote: [snip]
>Unfortunately, I cannot read the complete post from Mr. Hall. I
>only saw this excerpt in a response by Billy Beck (which commented
>on WWII books rather than this topic). For whatever reasons, 1)
>Google doesn't show Mr. Hall's posts, and 2) my news server
>doesn't show anything in this entire thread.
>
>Can someone else re-post Mr. Hall's argument?
In article <sodu1w6...@world.std.com>
<ah...@no-spam-to-world.std.com> wrote:
>>>>>> Billy Beck writes:
>
> Billy> jrose...@att.com (Josh Rosenbluth) wrote:
>
> >> "The Lost Dog" <libs@reboneheads> wrote...
>
> >>> Huh? Reagan cut taxes dramatically, and yet revenues
> >>> doubled by the end of his second term. What are you
> >>> trying to say?
> >>
> >> Let's try this again.
> >>
> >> Federal taxes as a % of GDP dropped from 19.6% in 1981 to
> >> an average of 18.0% of GDP in 1982-89. Even in 1989, the
> >> level was only 18.3% of GDP. Without any tax law changes,
> >> revenues would have stayed at 19.6% of GDP.
> >>
> >> The point is that the Reagan tax cut reduced monies
> >> flowing into the Treasury, thereby increasing the deficit
> >> and accelerating the growth in the debt.
>
> Billy> Here's an example of wholesale overthrow of
> Billy> reality. Observe that the rate of taxation is
> Billy> offered as cause of effect here, and not spending.
> Billy> Spending is taken as the unquestionable given, and
> Billy> thereby excused its causation for debt. And then,
> Billy> because the law of causality simply cannot be
> Billy> repealed, debt is blamed on the cause of "reduced
> Billy> monies flowing into the Treasury".
>
> Billy> Is it *possible* to reason with attitudes like
> Billy> this?
>
>Any honest analysis of the debt problem points to spending. Net
>taxes were not cut much, while there were steep cuts in the
>Income Tax rates, other taxes were sharply hiked. Spending was
>the main culprit, and, of course, both parties were in it up to
>their ears.
>
>That said, I am getting well into "Triumph and Tragedy", I would
>like to continue reading about WWII, do you have any other good
>recommendations? I am dreading finishing this, as it has been
>so much fun.
=====
EE
Honorato libertam et ruat coelum.
Josh Rosenbluth
> The main problem (as
> stated previously) is making 1981 the "baseline" for comparison when it
> was such an unusual and economically-bad time.
Why shouldn't (the straight-forward choice of) 1981 be the baseline?
One of your arguments has been that the lagging economy distorted the
revenue level. If so, you should be able to quantify that distortion
and we can correct for it.
You also have argued inevitability. That somehow the 1981 levels are
so unusual (unstable if you will, like some isotopes) that under any
President (Carter or even a liberal), something would have happened to
force them back to prior levels. Yet, it does not logically follow
that merely because something is new or unusual, that it is unstable
and therefore not appropriate as a baseline (similarly, it does not
logically follow that something that was common in the past, but is no
more, is the natural baseline). Carter's last budget called for
further increases in revenues which is in direct conflict with the
notion they would have come down had he stayed on.
Reading between the lines, I suspect you really aren't arguing
inevitability but rather that the "proper" or "correct" level of
(individual) taxation is somewhere around 8% of GDP. This is a
philosophical argument about the size and scope of government. If
this is your true meaning, then not only should you admit that
Reagan's tax cut reduced revenue, but you celebrate that reduction.
And you blame the growth in the deficit on the fact that spending was
held constant.
I can understand that argument. However, what started this thread was
a claim that the tax cut doubled revenues. You here that garbage all
the time on this forum. Tax cuts pay for themselves so we don't have
to worry about their impact on deficits.
The fact is Reagan's tax cuts reduced revenue. Whether or not they
reduced revenues to the "correct" level is not a question of fact, but
rather a question of political philosophy. The choice of any baseline
other than the reality of the current situation is an expression of
political philosophy (which is fine by me so long as it is explicitly
stated).
When the reality of the situation as it was in 1981 is chosen as the
baseline, it is undeniable that tax cuts played a major role in the
increased deficits.
Josh Rosenbluth
qwerty
<robx...@nowhere.com> wrote in message
news:3be98924...@news1.rdc2.pa.home.com...
In a market driven economy, prices rise & fall based on demand. Which means
those corporations should already be charging the maximum they can get for
those goods, so they cannot just pass on those costs to the consumer.
Josh Rosenbluth
> On Thu, 08 Nov 2001 02:31:24 GMT, Trebor <tre...@my-deja.com> wrote:
> >
> >The only thing the tax cuts for the rich in the 80's led to was a
> >massive redistribution of wealth as the poor and middle class began
> >shouldering much more of the tax burden and the rich much less.
> >Whatever boost in the economy there was came from massive govenment
> >deficit spending, but the bill for that spending spree came due with
> >the bush recession.
> >
>
> Nice story, unencumbered by any facts whatsoever. But if (for example)
> you grab ftp://ftp.cbo.gov/30xx/doc3089/EffectiveTaxRate.pdf and skip
> up to Table G-1b on page 74, you'll find (for example) that the top 20%
> of households had a 56.4% share of total Federal tax liabilities in
> 1981. By 1989, this share had increased to 59.0%. No other quintile saw
> its share of total Federal tax liability increase during this period.
>
> If the top quintile of households isn't exclusive enough to be considered
> "the rich" for you, the table also shows numbers for the top 10% (their
> share went from 39.6% to 43.0%); the top 5% (their share went from 28.0%
> to 31.6%); and the top 1% (their share went from 13.1% to 16.5%).
>
> Fearless prediction: these facts won't change Trebor's theology
> about what the icky "tax cuts for the rich" did.
You left out Table G-1a, the total effective tax rate (total taxes
divided by total income):
Top 20% went from 27.1% to 25.1% (a cut of 7%)
Top 10% from 28.4% to 26.2% (a cut of 8%)
Top 5% from 29.6% to 27.0% (a cut of 9%)
Top 1% from 31.8% to 28.2% (a cut of 11%)
Bottom 20% from 8.3% to 8.5% (an increase of 2%)
Next 20% from 14.2% to 14.3% (an increase of 1%)
and Table G-1c (pre-tax income):
Top 20% from 107K to 138K (up 29%)
Top 10% from 139.1K to 190.4K (up 37%)
Top 5% from 183.7K to 267.1K (up 45%)
Top 1% from 389.6K to 694K (up 78%)
Bottom 20% from 11.1K to 11.7K (up 5%)
Next 20% from 25.5K to 27.3K (up 7%)
The economic expansion was barely felt by the poor while it was a
windfall for the rich. The tax burden, as a percentage of income, was
shifted away from the rich towards the poor.
I make 1 million dollars in 1981. In 1989 I make 2 million (inflation
adjusted). My taxes go from 300K (30%) to 400K (20%). All of the
rest of America has their income and taxes stay exactly the same.
Now, has my tax burden increased or decreased? It is crystal clear, I
got a hefty break!
Josh Rosenbluth
Billy Beck
<ah...@no-spam-to-world.std.com> wrote:
>>>>>> Billy Beck writes:
> >> book recommendations>
>
> >> I just ordered all three. The Fleming sounds interesting, I am about 100
> >> pages into Vol 6, and am beginning to wonder about FDR and the slowdown
> >> in Italy. Churchill certainly makes his case strong for Alexander to
> >> go on to Austria. It would be interesting to get the counterpoint.
>
> Billy> It's occurred to me to read Eisenhower to see what he has to say
> Billy> about it.
>
> Billy> My general conclusion is that, in the West in general, there
> Billy> simply was not sufficient moral courage to point out what the Soviets
> Billy> really were, there was therefore no ethical principle on which to
> Billy> stand against them at every turn.
>
> Billy> Churchill was foolish about Stalin early on, but he started
> Billy> getting over it. Roosevelt never did.
>
>He seemed to be aware of Stalin's ugliness from the beginning, I remember
>him justifying his aid to Parliament. I remember the ugly tone of Stalin's
>telegraphs. And he seemed suspicious of post war intent early on. What
>do you think was foolish?
Indulging that rat bastard in any way.
That's what.
>I need to learn more of Roosevelt, as I said. Reading between the lines
>on Italy -vs- Anvil, I get the idea that Churchill is saying something bad
>about Roosevelt, after lavish praise for most of the first 3k odd pages.
>
>He does go on and on about it.
>
> Billy> I don't think it's too much to say that the years 1939-1945
> Billy> represent the most important turning point in the structure of world
> Billy> relations in all of history, with necessary implications on the
> Billy> relationship between an American and the United States government.
> Billy> It's the period in which the general drift away from liberty was set
> Billy> as a course into the future, right down to the present day.
>
>Wouldn't the Magna Carta and the US Revolution be important turning points
>in the opposite direction?
Well, because they're superceded by what I'm talking about, they
don't count.
> Billy> And I believe that's what Roosevelt wanted.
>
>Why do you believe that? Clearly he lowered economic freedom, but do you
>mean more than that?
(This is *so* fucking boring.)
Freedom is freedom, Andrew. It is what it is, and it doesn't
require that kind of sophistry.
>Do you think he knew something of Stalin's plans and
>willingly went along with them?
I think he was sympathetic of the Great Experiment, and there was
nothing he would do to hurt it.
Harry
> Tax Cuts in trhe 80's led to DOUBLING the TAX Revenues to the Treasury
> over 8 years. NOT Losing Tax revenues.
>
Only if you measure from the depths of the Reagan recession. Of
course, measuring from November, 1929, November 1933 looks pretty good
(in fact, it's the depths of the depression).
Also, you neglected to point out that real average wages, the only
statistic of any value in determining working class economic health,
went down over the period. Which is to say, the rich did very well
under Reagan.
Arne Langsetmo
> >
> >The only thing the tax cuts for the rich in the 80's led to was a
> >massive redistribution of wealth as the poor and middle class began
> >shouldering much more of the tax burden and the rich much less.
> >Whatever boost in the economy there was came from massive govenment
> >deficit spending, but the bill for that spending spree came due with
> >the bush recession.
>
> Nice story, unencumbered by any facts whatsoever. But if (for example)
> you grab ftp://ftp.cbo.gov/30xx/doc3089/EffectiveTaxRate.pdf and skip
> up to Table G-1b on page 74, you'll find (for example) that the top 20%
> of households had a 56.4% share of total Federal tax liabilities in
> 1981. By 1989, this share had increased to 59.0%. No other quintile saw
> its share of total Federal tax liability increase during this period.
>
> If the top quintile of households isn't exclusive enough to be considered
> "the rich" for you, the table also shows numbers for the top 10% (their
> share went from 39.6% to 43.0%); the top 5% (their share went from 28.0%
> to 31.6%); and the top 1% (their share went from 13.1% to 16.5%).
Are you taking into account any changes in the total _income_ of these
various groups? IIRC, income disparity grew quite a bit in this
time as well, with the top end in particular showing marked gains
in total income while the lower end remained fairly static.
[snip]
Cheers,
-- Arne Langsetmo
robx...@nowhere.com
If you increase taxes on all corporations, the prices for the goods
will likely be increased by the same percentage. Again, where do you
think the corporations would get the tax money from?
>
>
>
>
>
Eelder
defeat "communism." The caused the biggest deficit in U.S. history and
led to a recession in the Bush administration. Reagen set the stage for
the election of Bill Clinton.
Don't forget to that the gulf War was a popular war which ended with a
big U.S. victory. That wasn't enough to counter the effects of the
recession. Bush became a one term President. History can repeat.
qwerty
<robx...@nowhere.com> wrote in message
news:3beb37af...@news1.rdc2.pa.home.com...
> On Thu, 08 Nov 2001 23:17:08 GMT, "qwerty" <nos...@all.com> wrote:
>
> >
> ><robx...@nowhere.com> wrote in message
> >news:3be98924...@news1.rdc2.pa.home.com...
> >> are required to pay in taxes, they will merely pass this cost along to
> >> the consumer in the cost of their goods. After all, where do you
> >> think thier money comes from?
> >
> >In a market driven economy, prices rise & fall based on demand. Which
means
> >those corporations should already be charging the maximum they can get
for
> >those goods, so they cannot just pass on those costs to the consumer.
>
> If you increase taxes on all corporations, the prices for the goods
> will likely be increased by the same percentage. Again, where do you
> think the corporations would get the tax money from?
No, in a free market the price of goods are independent of their respective
cost. The prices will rise & fall based on demand. If the corporations
could sell their products at this increased price they would already be
doing so. Why would they sell them for less than people are willing to pay
for them? Do you think these corporations would do that out of the
"goodness of their hearts"? Wouldn't that be shortchanging their stock
holders? The price of these goods are already at their maximum. The
corporations would get the tax money from their profits and merely be
another cost of goods.
ShrikeBack
Ever hear of the Labor Theory of Value?
robx...@nowhere.com
Do you seriously believe that a company will lose money in order to
pay more taxes? If a uniform tax is levied on all goods, the price
will rise. The consumer will have no alternative source to get the
product and will pay the new price. You haven't noticed that the
price of gas works this way when the federal or state taxes are raised
on it? They immediately hike the price and the consumer pays because
they have little choice.
>
>
>
>
>
>
>
Paul A Sand
>p...@granite.unh.edu (Paul A Sand) wrote ...
>> The main problem (as
>> stated previously) is making 1981 the "baseline" for comparison when it
>> was such an unusual and economically-bad time.
>Why shouldn't (the straight-forward choice of) 1981 be the baseline?
Well, not to repeat myself, but the term "baseline" strongly implies
some sort of historically-normal level. If your doctor wants a baseline
white blood cell count, it would be a mistake to determine it while
you're fighting off a raging infection. Analogous reasons argue against
using figures for 1981 as a fiscal baseline: 1979, 1980, and 1981 were
all years of double-digit inflation; real GDP declined in 1980 and 1982
it was postitive-but-puny in 1979 and 1981; the unemployment rate went
over 7% in May of 1980 and remained (stubbornly) above that until 1986.
Lindsay's book is good on what this meant for taxes paid by ordinary
joes and josephines. One example is a (mythical) median-income family of
four: in 1965, they paid income taxes at a 19% marginal rate; as late as
1975 they paid at a 22% marginal rate; in 1980, this had gone to a 28%
marginal rate, flirting closely with the 32% rate. This kind of tax
increase was massive and unlegislated.
(For anyone who doesn't know: "Lindsay's book" is _The Growth
Experiment: How the New Tax Policy Is Transforming the U.S. Economy_,
http://www.amazon.com/exec/obidos/ASIN/0465027504, unfortunately out
of print. You might be able to find it in a decent library.)
>One of your arguments has been that the lagging economy distorted the
>revenue level. If so, you should be able to quantify that distortion
>and we can correct for it.
I haven't really considered it an "argument"; there's no question that
recessions depress government receipts and this fact is partially
responsibile for the post-1981 drop, independent of the tax rate
cuts. I'll leave quantification for the professionals (like Lindsay),
but I'll make the add-on observation that the recession would almost
certainly have been longer and deeper in the absence of the tax cuts.
>You also have argued inevitability. That somehow the 1981 levels are
>so unusual (unstable if you will, like some isotopes) that under any
>President (Carter or even a liberal), something would have happened to
>force them back to prior levels. Yet, it does not logically follow
>that merely because something is new or unusual, that it is unstable
>and therefore not appropriate as a baseline (similarly, it does not
>logically follow that something that was common in the past, but is no
>more, is the natural baseline). Carter's last budget called for
>further increases in revenues which is in direct conflict with the
>notion they would have come down had he stayed on.
I think the above is a good nutshell argument that the early-80's
level of taxation were economically unsustainable. What happened to
Jimmy Carter (and Mondale, and Dukakis) is a good indication they
were politically unsustainable as well. Nobody (save a few remaining
eat-the-rich Democrats) wanted to go back to a 1981-style tax system,
and we haven't. (Notably, the most recent tax debate was not centered
around whether there *should* be a cut, it was *where and when* to cut.)
>Reading between the lines, I suspect you really aren't arguing
>inevitability but rather that the "proper" or "correct" level of
>(individual) taxation is somewhere around 8% of GDP. This is a
>philosophical argument about the size and scope of government. If
>this is your true meaning, then not only should you admit that
>Reagan's tax cut reduced revenue, but you celebrate that reduction.
>And you blame the growth in the deficit on the fact that spending was
>held constant.
Not that it matters, but I think the "proper" level of overall taxation
is around 10% of the current level. That's just a ballpark, and totally
unachievable politically in the near term, but I'm prepared to give at
least two cheers for anything that takes us in the right direction.
And even one cheer for anything that slows movement in the opposite
direction.
My personal ideology is independent from objecting to the 1981-as-baseline
data, however. I think that reasonable people can agree that arguments
based on that convenient assumption are largely bogus. Similarly your
assertion that "spending was held constant" is only vaguely true by
fortuitous choice of what you think the "constant" level was. Even if we
buy into the (debatable) assumption that spending-as-percent-of-GDP is
a correct measure, we can observe that between 1947 and 1974 that figure
only went over 20% in two years, 1953 and 1968, both war years. Even as
late as 1979, the Feds were "only" spending 20.1% of GDP.
So let's make an (equally bogus) argument that "shows" that the 80's
deficit weas almost all a spending problem: the "worst" year deficit-wise
was FY1983, when it was 6% of GDP, a post-1946 record. Compare 1983 with
1979 for receipts, expenditures, and deficit:
Receipts Expenditures Deficit
1979 18.5% 20.1% 1.6%
1983 17.5% 23.5% 6.0%
This "proves" the deficit increase (4.4%-of-GDP) was caused by a
1.0%-of-GDP drop in taxation and a 3.4%-of-GDP increase in spending.
(Which I actually think is closer to the truth :-), but the argument
remains bogus.)
>I can understand that argument. However, what started this thread was
>a claim that the tax cut doubled revenues. You here that garbage all
>the time on this forum. Tax cuts pay for themselves so we don't have
>to worry about their impact on deficits.
>The fact is Reagan's tax cuts reduced revenue. Whether or not they
>reduced revenues to the "correct" level is not a question of fact, but
>rather a question of political philosophy. The choice of any baseline
>other than the reality of the current situation is an expression of
>political philosophy (which is fine by me so long as it is explicitly
>stated).
>When the reality of the situation as it was in 1981 is chosen as the
>baseline, it is undeniable that tax cuts played a major role in the
>increased deficits.
I agree with your overall point that people tend to confuse questions
of fact with questions of ideology (which is why--what the hell--I made
my ideology explicit above). But (really) when you remove the dubious
choice of baseline, there's a lot to be said for the Reagan tax cuts
largely returning individual income taxes to a more normal and saner
level; I think that argument can be made without resort to ideology.
--
-- Paul A. Sand | It is as useless to argue with those who have
-- University of New Hampshire | renounced the use and authority of reason as
-- p...@unh.edu | as to administer medication to the dead.
-- http://pubpages.unh.edu/~pas | (Thomas Jefferson)
Paul A Sand
>p...@granite.unh.edu (Paul A Sand) wrote in message news:<slrn9ukgu...@granite.unh.edu>...
>> On Thu, 08 Nov 2001 02:31:24 GMT, Trebor <tre...@my-deja.com> wrote:
>> >
>> >The only thing the tax cuts for the rich in the 80's led to was a
>> >massive redistribution of wealth as the poor and middle class began
>> >shouldering much more of the tax burden and the rich much less.
>> >Whatever boost in the economy there was came from massive govenment
>> >deficit spending, but the bill for that spending spree came due with
>> >the bush recession.
>> Nice story, unencumbered by any facts whatsoever. But if (for example)
>> you grab ftp://ftp.cbo.gov/30xx/doc3089/EffectiveTaxRate.pdf and skip
>> up to Table G-1b on page 74, you'll find (for example) that the top 20%
>> of households had a 56.4% share of total Federal tax liabilities in
>> 1981. By 1989, this share had increased to 59.0%. No other quintile saw
>> its share of total Federal tax liability increase during this period.
>> If the top quintile of households isn't exclusive enough to be considered
>> "the rich" for you, the table also shows numbers for the top 10% (their
>> share went from 39.6% to 43.0%); the top 5% (their share went from 28.0%
>> to 31.6%); and the top 1% (their share went from 13.1% to 16.5%).
>You left out Table G-1a, the total effective tax rate (total taxes
>divided by total income):
[shows that "effective" tax rates went down for "the rich" in the period]
>and Table G-1c (pre-tax income):
[shows that pre-tax income increased for "the rich" in the period]
>The economic expansion was barely felt by the poor while it was a
>windfall for the rich. The tax burden, as a percentage of income, was
>shifted away from the rich towards the poor.
Um, sorry, forgot who I was talking to. When Trebor states: "the
poor and middle class began shouldering much more of the tax burden
and the rich much less" I admit to thinking of "the tax burden" as
roughly synonymous with "taxes paid." Silly me.
Clearly "the rich" paid more of that burden as the 80s progressed,
because their effective rates didn't decrease enough to make up for
their increased income--increased taxable income, anyhow. (A separate
issue is how much of the increased taxable income was caused by the
decreased rates, but that would be too relevant to the subject line to
discuss here.)
Eat-the-rich class warriors, however, tend to interpret "tax burden" in
terms of ... well ... eat-the-rich class warfare. The question for them
is not: "are the rich paying a larger or smaller share of the total?" but
"how much are we milking them?" The implication is always that more
milk is better than less. And if you can't make the argument that they're
paying more in *absolute* terms (as you can't in this case), well, it's
still bad unless they're paying more in *relative* terms. For example:
>I make 1 million dollars in 1981. In 1989 I make 2 million (inflation
>adjusted). My taxes go from 300K (30%) to 400K (20%). All of the
>rest of America has their income and taxes stay exactly the same.
>Now, has my tax burden increased or decreased? It is crystal clear, I
>got a hefty break!
You mean this as an example of "the tax burden shifting away from the
rich" [presumably you, in this case], even though your share of overall
taxes paid has increased, the Feds are getting 100K more from you than
previously, and (by your assumptions) nobody else is any worse off. Hm.
The real problem with this scenario is what then? That you're too
successful, and therefore the just target of envy and resentment?
--
Paul A Sand
As Josh has pointed out, the (1) increased tax burden on "the
rich" was (roughly) accompanied by (2) a decrease in "effective" tax
rates and (3) an increase in reported taxable income. Effect (3) was
greater than effect (2), resulting in effect (1). How outraged
people are at these various things differs.
--
Josh Rosenbluth
> On 8 Nov 2001 14:01:50 -0800, Josh Rosenbluth <jrose...@att.com> wrote:
> >p...@granite.unh.edu (Paul A Sand) wrote ...
> >> The main problem (as
> >> stated previously) is making 1981 the "baseline" for comparison when it
> >> was such an unusual and economically-bad time.
>
> >Why shouldn't (the straight-forward choice of) 1981 be the baseline?
>
> Well, not to repeat myself, but the term "baseline" strongly implies
> some sort of historically-normal level. If your doctor wants a baseline
> white blood cell count, it would be a mistake to determine it while
> you're fighting off a raging infection. Analogous reasons argue against
> using figures for 1981 as a fiscal baseline: 1979, 1980, and 1981 were
> all years of double-digit inflation; real GDP declined in 1980 and 1982
> it was postitive-but-puny in 1979 and 1981; the unemployment rate went
> over 7% in May of 1980 and remained (stubbornly) above that until 1986.
Baseline does not imply using an historically-typical level of the
baselined variable. I agree that it does imply factoring out unusual
and temporary circumstances (high inflation and a slow economy), that
distort the level of the variable. But in no way is an historical
value of the variable the appropriate baseline just because it was
common in the past, but is no more.
In your blood cell count analogy, I agree we cannot baseline while a
raging infection is going on. On the other hand, I wouldn't accept a
baseline from 5 years ago when I was healthy. I've changed my diet
and exercise habits since then.
A modified 1981 baseline that *quantifies* how the atypical, temporary
conditions of the economy distorted revenues and outlays (as well as
possibly modifying some of the early Reagan years for the same
reasons) is appropriate. Lacking that calculation, I am going to
continue to use the as-is 1981 baseline.
> So let's make an (equally bogus) argument that "shows" that the 80's
> deficit weas almost all a spending problem: the "worst" year deficit-wise
> was FY1983, when it was 6% of GDP, a post-1946 record. Compare 1983 with
> 1979 for receipts, expenditures, and deficit:
>
> Receipts Expenditures Deficit
> 1979 18.5% 20.1% 1.6%
> 1983 17.5% 23.5% 6.0%
>
> This "proves" the deficit increase (4.4%-of-GDP) was caused by a
> 1.0%-of-GDP drop in taxation and a 3.4%-of-GDP increase in spending.
> (Which I actually think is closer to the truth :-), but the argument
> remains bogus.)
If Reagan's policies were enacted in 1979, effective in 1980, that
wouldn't be a bogus argument (of course we would also have to see what
happened in 1980 through 1982).
> there's a lot to be said for the Reagan tax cuts
> largely returning individual income taxes to a more normal and saner
> level; I think that argument can be made without resort to ideology.
Reagan's tax cuts returned tax revenues to historically typical
levels. Attributing "normalcy" or "sanity" to that is strictly
ideological. You are hung up on using the historical levels as the
baseline because they are, in your view, "normal" (as opposed to
abnormal). That's am ideological argument. Using them as a baseline
because they were (in the past) typical (a non-ideological argument),
makes no sense.
Josh Rosenbluth
Adrian
That's silly. Corporations can just as well charge as little as they
can get away with to undercut the competition. It goes both ways and
one thing is for sure: a corporation is not going to charge less than
it costs to produce a good if for no other reason than because they
would go out of business otherwise. If taxes are raised, that goes
directly in the production costs and so raises the price if for no
other reason than it comes straight out of their bottom line.
How could you possibly think that the price of goods is independent of
their cost of production? That is just about the most ridiculous thng
I have ever heard, especially in this day and age. Have you EVER
stopped to think about how that would work?!?
Josh Rosenbluth
> On 8 Nov 2001 15:37:34 -0800, Josh Rosenbluth <jrose...@att.com> wrote:
> >p...@granite.unh.edu (Paul A Sand) wrote in message news:<slrn9ukgu...@granite.unh.edu>...
> >> On Thu, 08 Nov 2001 02:31:24 GMT, Trebor <tre...@my-deja.com> wrote:
> >> >
> >> >The only thing the tax cuts for the rich in the 80's led to was a
> >> >massive redistribution of wealth as the poor and middle class began
> >> >shouldering much more of the tax burden and the rich much less.
>
> >> you grab ftp://ftp.cbo.gov/30xx/doc3089/EffectiveTaxRate.pdf and skip
> >>
> >> [total taxes paid by the "rich" divided by total taxes paid by everyone went up during Reagan's administration]
>
> >You left out Table G-1a, the total effective tax rate (total taxes
> >divided by total income):
>
> [shows that "effective" tax rates went down for "the rich" in the period]
>
> >and Table G-1c (pre-tax income):
>
> [shows that pre-tax income increased for "the rich" in the period]
>
>
> >The economic expansion was barely felt by the poor while it was a
> >windfall for the rich. The tax burden, as a percentage of income, was
> >shifted away from the rich towards the poor.
>
> Um, sorry, forgot who I was talking to. When Trebor states: "the
> poor and middle class began shouldering much more of the tax burden
> and the rich much less" I admit to thinking of "the tax burden" as
> roughly synonymous with "taxes paid." Silly me.
I agree with Trebor. The tax burden was shifted from the rich to the
poor and middle class. I think of my tax burden as the taxes I pay as
a percent of my income.
> >I make 1 million dollars in 1981. In 1989 I make 2 million (inflation
> >adjusted). My taxes go from 300K (30%) to 400K (20%). All of the
> >rest of America has their income and taxes stay exactly the same.
> >Now, has my tax burden increased or decreased? It is crystal clear, I
> >got a hefty break!
>
> You mean this as an example of "the tax burden shifting away from the
> rich" [presumably you, in this case], even though your share of overall
> taxes paid has increased, the Feds are getting 100K more from you than
> previously, and (by your assumptions) nobody else is any worse off.
Yes, this the key example. It is clear to me my tax burden has gone
down. From your post, I take it you believe my tax burden has
increased.
Let's say instead I have made 3 million and my tax burden is $400,100.
You argue that my burden is even higher than it was (although just
barely higher) than when I made 2 million and paid $400K. That
doesn't make sense to me. I think my burden has gone *way* down.
Josh Rosenbluth
Paul A Sand
>A modified 1981 baseline that *quantifies* how the atypical, temporary
>conditions of the economy distorted revenues and outlays (as well as
>possibly modifying some of the early Reagan years for the same
>reasons) is appropriate. Lacking that calculation, I am going to
>continue to use the as-is 1981 baseline.
So, in short, your argument is based on a number you *know* is atypically
high, but you're going to keep using it anyway. Fine. Can't stop you.
>Reagan's tax cuts returned tax revenues to historically typical
>levels. Attributing "normalcy" or "sanity" to that is strictly
>ideological. You are hung up on using the historical levels as the
>baseline because they are, in your view, "normal" (as opposed to
>abnormal). That's am ideological argument. Using them as a baseline
>because they were (in the past) typical (a non-ideological argument),
>makes no sense.
Even though total-receipts-as-percent-of-GDP were higher in 1981 than
any year between 1970 and 1997, you think that it would be "strictly
ideological" to call that level abnormally high. I guess we'll have to
agree to disagree on that.
I agree that using the term "sanity" is a little more opinion-laden,
but it's based on the well-documented observation (and, sorry, one
I apparently need to repeat) that inflation at this time was pushing
middle-class taxpayers into marginal brackets previously aimed at "the
rich", in the midst of a stagnant economy. You think that you have to
be "strictly ideological" to think that a tax system that does that is
nutty? I disagree here as well.
--
-- Paul A. Sand | Don't get brainwashed by your
-- University of New Hampshire | education into thinking that all the
-- p...@unh.edu | answers have to come from teachers.
-- http://pubpages.unh.edu/~pas | (Larry Wall)
Paul A Sand
>p...@granite.unh.edu (Paul A Sand) wrote ...
>> Um, sorry, forgot who I was talking to. When Trebor states: "the
>> poor and middle class began shouldering much more of the tax burden
>> and the rich much less" I admit to thinking of "the tax burden" as
>> roughly synonymous with "taxes paid." Silly me.
>I agree with Trebor. The tax burden was shifted from the rich to the
>poor and middle class. I think of my tax burden as the taxes I pay as
>a percent of my income.
I think you and Trebor would have a lot easier time being understood
if you said "effective tax rate" rather than "tax burden," then.
But then (oops!) you and Trebor would still
be wrong. From the same document quoted earlier
(ftp://ftp.cbo.gov/30xx/doc3089/EffectiveTaxRate.pdf, table G-1a): the
total effective federal tax rate for the lowest income quintile went up
(barely) from 8.3% to 8.5% between 1981 and 1989 (and was down to 7.9% in
1991). The second-lowest quintile's effective tax rate went up even less:
14.2% to 14.3% (and back down to 14.2% in 1991). All other quintiles'
effective tax rates went down.
And (from the same table) it's easy to see this was not a result of
Trebor's despised "tax cuts for the rich in the 80's"; this was a result
of "Social Insurance" tax increases. Effective individual income tax
rates, considered by themselves, went down for *all* quintiles between
1981 and 1989.
This (to put it mildly) is not consonant with the the assertion that the
"poor and middle class began shouldering much more of the tax burden",
even if we accept your belated equivalence of "tax burden" with effective
total tax rate. The worst you can say is effective rates for the lowest
40% were up a smidgen; and in that case, intellectual honesty should
compel you to lay the blame for this where it belongs: for example,
on the "broad bipartisan coalition" that passed the Social Security tax
increases in 1983.
--
qwerty
"Adrian" <adri...@hotmail.com> wrote in message
news:f35e0baf.01111...@posting.google.com...
Yes, that's called the Free Market.
> one thing is for sure: a corporation is not going to charge less than
> it costs to produce a good if for no other reason than because they
> would go out of business otherwise.
Not necessarily, there are such things a cost leaders, i.e. give one product
away so as to make a profit on another. However, I never said that a
corporation would necessarily sell a product for less than it's cost.
>If taxes are raised, that goes
> directly in the production costs and so raises the price if for no
> other reason than it comes straight out of their bottom line.
Sure it raises the production cost. So? As long as there's a profit
there's no problem.
> How could you possibly think that the price of goods is independent of
> their cost of production? That is just about the most ridiculous thng
> I have ever heard, especially in this day and age. Have you EVER
> stopped to think about how that would work?!?
If a free market the price of the product IS independent of the production
cost. If the production cost exceeds the price that can be obtained on the
market then it's a loser. I'm sure there are plenty of fine products out
there that the cost to produce outstrips the price such products will bear
in a free market. Have YOU every thought to think about how a free market
works? A corporation will get the maximum price they can for a product,
regardless of the production cost. If they could get the
additional price for those goods then they'd be charging that already.
qwerty
<robx...@nowhere.com> wrote in message
news:3bee021f...@news1.rdc2.pa.home.com...
Do you seriously believe a company will not get the maximum price for a
product if they can? That a company will seriously shortchange their
profits? In a free market raising the price of a good will decrease demand.
Have you ever noticed how the price of gasoline changes,
sometimes quite dramatically, depending on what neighborhood it's sold in?
Is the cost to deliver that gasoline so much higher to just go another few
blocks down the road? That price differential has nothing to do with
product costs but how much the stations can get away with charging. The
more affluent the neighborhood, the higher the gasoline prices. The closer
the station is to the interstate the higher the prices. The more stations
in the neighborhood the lower the price. Do all consumers still buy the
same amount of gasoline when the prices go up? No, not necessarily, higher
gasoline prices result in lower overall consumption. People car-pool, take
transit, use more fuel efficient vehicles, etc..
Josh Rosenbluth
> On 11 Nov 2001 20:01:36 -0800, Josh Rosenbluth <jrose...@att.com> wrote:
> >p...@granite.unh.edu (Paul A Sand) wrote ...
>
> >> Um, sorry, forgot who I was talking to. When Trebor states: "the
> >> poor and middle class began shouldering much more of the tax burden
> >> and the rich much less" I admit to thinking of "the tax burden" as
> >> roughly synonymous with "taxes paid." Silly me.
>
> >I agree with Trebor. The tax burden was shifted from the rich to the
> >poor and middle class. I think of my tax burden as the taxes I pay as
> >a percent of my income.
>
> I think you and Trebor would have a lot easier time being understood
> if you said "effective tax rate" rather than "tax burden," then.
Fair enough. From now on I will explicitly define what I mean as "tax
burden", although I will continue to use the example (going from 1
million to 2 million dollars in income but only $300K to $400K in
taxes) as to why I believe my definition is correct. That being said,
I ackowledge that the phrase "tax burden" can reasonably be
interpreted in multiple ways.
However, I'd like you to do something as well. What pissed me off
about your response to Trebor was the following smugness:
Trebor: The only thing the tax cuts for the rich in the 80's led
to was a massive redistribution of wealth as the poor and middle class
began shouldering much more of the tax burden and the rich much less.
Paul: Nice story, unencumbered by any facts whatsoever.
This tone is not uncommon whenever "Reaganomics" is attacked for
providing benefits mostly for the rich (see for example, Limbaugh's "I
Told You So"). What I hear is, "look, you stupid-ass, ignoramus
liberal. Just look at the data (or are you too dumb to understand).
Not only aren't the benefits being skewed towards the rich, the poor
are getting the *bigger* tax breaks."
And then you see Table G-1b with no mention of Table G-1c nor Table
G-1a (is this deliberate deception?). The fair-minded,
non-ideological reader, has no choice but to conclude that Reagnomics'
defenders are correct (boy, those liberals really are stupid
ignoramuses).
So, my request is to let the fair-minded reader make up his/her own
mind what "tax burden" means and whether Trebor's claims are
"unencumbered by any facts whatsoever" by actually presenting all of
the facts.
> But then (oops!) you and Trebor would still
> be wrong.
> it's easy to see this was not a result of
> Trebor's despised "tax cuts for the rich in the 80's"; this was a result
> of "Social Insurance" tax increases. Effective individual income tax
> rates, considered by themselves, went down for *all* quintiles between
> 1981 and 1989.
The following table summarizes what the tax rates (taken from Table
G-1a) in 1981, 1985 and 1989 would have been had the Social Insurance,
Corporate Income and Excise taxes been held to their 1981 values while
the Individual Income Tax rates changed as observed:
Group 1981 1985 1989
--------------------------------------------
Lowest 5th 8.3 8.3 6.9
Next 5th 14.2 13.6 13.2
Middle 5th 18.7 17.2 16.8
Highest 5th 27.1 24.2 24.8
Top 1% 31.8 28.3 29.3
Thus the effective tax cuts from individual income tax rates alone
were (a negative number is a tax increase):
Group 1981-89 1981-85 1985-89
--------------------------------------------
Lowest 5th 17% 0% 17%
Next 5th 7% 4% 3%
Middle 5th 8% 10% 2%
Highest 5th 8% 11% -2%
Top 1% 8% 11% -4%
So, the partisan Economic Recovery and Tax Cut of 1981, which is the
cornerstone of Reagan's plan, helped those in the middle on up roughly
equally from 1981 through 1985, with little or nothing for those at
the bottom.
Then, the bi-partisan Tax Reform Act of 1986, championed by Bill
Bradley, had the opposite effect between 1985 and 1989 by 1)
increasing the Earned Income Tax Credit, 2) eliminating or limiting
many exemptions and deductions used more often by the wealthy, and 3)
making capital gains ordinary income and thus taxing them at a higher
rate.
Josh Rosenbluth
Josh Rosenbluth
> On 11 Nov 2001 12:09:23 -0800, Josh Rosenbluth <jrose...@att.com> wrote:
> >A modified 1981 baseline that *quantifies* how the atypical, temporary
> >conditions of the economy distorted revenues and outlays (as well as
> >possibly modifying some of the early Reagan years for the same
> >reasons) is appropriate. Lacking that calculation, I am going to
> >continue to use the as-is 1981 baseline.
>
> So, in short, your argument is based on a number you *know* is atypically
> high, but you're going to keep using it anyway. Fine. Can't stop you.
Actually, I can't be certain of the direction of the adjustment.
Maybe the slow economy suppressed revenues (as a % of GDP) more than
bracket creep from high inflation increased them. Maybe not. Maybe
the effect of bracket creep is negligible on total revenue. Maybe not
(I will double check "The Growth Experiment" tonight to see what
Lindsey says about the baseline issue).
Until I at least get the magnitude of the adjustments correct to "half
a significant figure", I don't see any other choice but the as-is
number.
> Even though total-receipts-as-percent-of-GDP were higher in 1981 than
> any year between 1970 and 1997, you think that it would be "strictly
> ideological" to call that level abnormally high. I guess we'll have to
> agree to disagree on that.
When you equate "abnormal" with "bad" and therefore "incorrect" for
baselining, then yes we disagree. If you equate "abnormal" with
"atypical" and therefore having no relevance to baselining, I agree.
Josh Rosenbluth
robx...@nowhere.com
Your point is correct but does not take into account taxes at all. A
tax levied upon all businesses would be passed on to the consumer
because the consumer would have nowhere else to get the product any
cheaper.
Paul A Sand
You are easily pissed off, apparently. Trebor's rant was (indeed)
fact-free, and false (by either my interpretation of "tax burden" or
yours). Detection of smugness is taking place inside your own head.
>This tone is not uncommon whenever "Reaganomics" is attacked for
>providing benefits mostly for the rich (see for example, Limbaugh's "I
>Told You So"). What I hear is, "look, you stupid-ass, ignoramus
>liberal. Just look at the data (or are you too dumb to understand).
>Not only aren't the benefits being skewed towards the rich, the poor
>are getting the *bigger* tax breaks."
My only suggestion would be to try to avoid "hearing" things that
just aren't there. Deal with the argument as it appears on the screen.
>And then you see Table G-1b with no mention of Table G-1c nor Table
>G-1a (is this deliberate deception?). The fair-minded,
>non-ideological reader, has no choice but to conclude that Reagnomics'
>defenders are correct (boy, those liberals really are stupid
>ignoramuses).
I always enjoy being semi-accused of "deliberate deception" because I've
posted easily-verified sources and actual numbers. You've just said that
"tax burden" can be interpreted in many ways, and I was perfectly clear
about what my interpretation was. When you made clear what *you* meant by
"tax burden", I took you seriously, and evaluated Trebor's claim on the
basis you said you wanted to use instead. (And it was still false.) So
please feel free to take your cute rhetorical question about "deliberate
deception" and put it back in the dark and smelly place you found it.
>So, my request is to let the fair-minded reader make up his/her own
>mind what "tax burden" means and whether Trebor's claims are
>"unencumbered by any facts whatsoever" by actually presenting all of
>the facts.
Fair-minded readers do not need my permission or yours to make up
their minds about what things mean.
>The following table summarizes what the tax rates (taken from Table
>G-1a) in 1981, 1985 and 1989 would have been had the Social Insurance,
>Corporate Income and Excise taxes been held to their 1981 values while
>the Individual Income Tax rates changed as observed:
>Group 1981 1985 1989
>--------------------------------------------
>Lowest 5th 8.3 8.3 6.9
>Next 5th 14.2 13.6 13.2
>Middle 5th 18.7 17.2 16.8
>Highest 5th 27.1 24.2 24.8
>Top 1% 31.8 28.3 29.3
Might as well stop here. The fair-minded reader has (I hope) noticed that
you are posting fictional numbers about a made-up scenario that didn't
actually happen. This is "actually presenting all of the facts"? Don't
think so. Will it prove anything about the real world? No.
I will point the fair-minded reader (once again) to the actual
document (with actual numbers about actual taxpayers paying actual taxes)
at ftp://ftp.cbo.gov/30xx/doc3089/EffectiveTaxRate.pdf.
--
-- Paul A. Sand | The great prince issues commands,
-- University of New Hampshire | Founds states, vests families with fiefs.
-- p...@unh.edu | Inferior people should not be employed.
-- http://pubpages.unh.edu/~pas |
Josh Rosenbluth
> On 13 Nov 2001 13:38:31 -0800, Josh Rosenbluth <jrose...@att.com> wrote:
>
> >The following table summarizes what the tax rates (taken from Table
> >G-1a) in 1981, 1985 and 1989 would have been had the Social Insurance,
> >Corporate Income and Excise taxes been held to their 1981 values while
> >the Individual Income Tax rates changed as observed:
>
>
> Might as well stop here. The fair-minded reader has (I hope) noticed that
> you are posting fictional numbers about a made-up scenario that didn't
> actually happen. This is "actually presenting all of the facts"? Don't
> think so. Will it prove anything about the real world? No.
>
> I will point the fair-minded reader (once again) to the actual
> document (with actual numbers about actual taxpayers paying actual taxes)
> at ftp://ftp.cbo.gov/30xx/doc3089/EffectiveTaxRate.pdf.
My numbers are hypothetical, not fictional. Is the hypothetical
scenario a valid model for answering the question at hand? I beleive
so, and discuss that in detail near the end of this post.
But first, a quick review:
1) The question is whether or not "Reaganomics" moved more of the "tax
burden" (as defined as taxes paid as a percent of income) from rich to
poor.
2) I first posted that it did, taking numbers directly from the above
reference, Table G-1a. The total effective tax rate dropped for the
middle of the income scale on up to the richest, while it increased
for the lower 40% for 1989 versus 1981.
3) You agreed with the numbers, but not the conclusion concerning
Reaganomics because you said the cause was bi-partisan increases in
Social Insurance Taxes. Further, you said if you look at Individual
Income Taxes by themselves, you see no such effect.
4) I countered with the hypothetical scenario designed to isolate the
effect of Individual Income Taxes. I held the taxation rate for all
other taxes constant at their 1981 levels, while allowing Individual
Income Tax Rates to vary as they actually did in both 1985 and 1989.
I added 1985 in to the mix to highlight that the effect of
"Reaganomics" was due to the Economic Recovery Tax Act of 1981 (ERTA),
and not the bi-partisan Tax Reform Act of 1986 (TRA-86). I concluded
that ERTA cut effective tax rates for those from the middle on up,
leaving behind the bottom 40%, while TRA-86 reversed that trend.
Close to the same conclusion can be drawn by looking directly at the
Individual Income Taxes from Table G-1a as you suggest:
Group 1981 1985 1989
--------------------------------------
Lowest 5th 0.3 0.3 -1.1
Next 5th 4.5 3.9 3.5
Middle 5th 8.0 6.5 6.1
Highest 5th 19.7 16.4 17.4
Top 1% 22.0 18.5 19.5
The effective tax cuts were:
Group 1981-89 1981-85 1985-89
-------------------------------------------
Lowest 5th 467% 0% 467%
Next 5th 22% 13% 10%
Middle 5th 24% 19% 6%
Highest 5th 14% 17% -4%
Top 1% 11% 16% -5%
From these numbers alone, we would conclude that ERTA left the lowest
5th behind (instead of the lowest 40% as was the case in the
hypothetical) while everybody else got a decent cut. TRA-86, as in
the hypothetical, increased progessivity.
I believe that my hypothetical is a better model for addressing the
question.
Consider a person who makes $20,000 and in 1981 paid $1600 in Social
Insurance and other federal taxes except for Income Taxes. Say they
also paid $60 in Income Taxes for a total of $1660. In 1989, their
salary is still at $20K (inflation adjusted) but they now pay $1920 in
other-than-Income taxes and get a rebate of $220 from the Earned
Income Tax Credit for a total of $1700, virtually unchanged from 1981.
That was my analysis in 2) above and you are correct when you say it
was increases in Social Insurance Taxes, and not "Reaganomics" that
was the cause.
But, if we look only at Income Taxes, our person will have gone from a
$60 payment to a rebate of $220, which is nice, but has little to do
with the reality of the taxes they pay. So, I devised the
hypothetical in which the person, in 1989, still pays $1600 in other
taxes (as they did in 1981). Together with the $220 rebate brings the
total to $1380, a nice cut from the $1660 in 1981. The differentials
in both cases are the same ($280 saved). But, The hypothetical
difference from $1660 to $1380 better reflects the reality that this
person experiences than a savings from $60 to -$220.
And once again, that hypothetical shows that ERTA moved the "tax
burden" down to the lowest 40% in income.
Josh Rosenbluth
Paul A Sand
>p...@granite.unh.edu (Paul A Sand) wrote in message news:<slrn9v3jp...@granite.unh.edu>...
>> On 13 Nov 2001 13:38:31 -0800, Josh Rosenbluth <jrose...@att.com> wrote:
>>
>> >The following table summarizes what the tax rates (taken from Table
>> >G-1a) in 1981, 1985 and 1989 would have been had the Social Insurance,
>> >Corporate Income and Excise taxes been held to their 1981 values while
>> >the Individual Income Tax rates changed as observed:
>>
>> > [a table of hypothetical tax rates deleted to save on space]
>>
>> Might as well stop here. The fair-minded reader has (I hope) noticed that
>> you are posting fictional numbers about a made-up scenario that didn't
>> actually happen. This is "actually presenting all of the facts"? Don't
>> think so. Will it prove anything about the real world? No.
>>
>> I will point the fair-minded reader (once again) to the actual
>> document (with actual numbers about actual taxpayers paying actual taxes)
>> at ftp://ftp.cbo.gov/30xx/doc3089/EffectiveTaxRate.pdf.
>My numbers are hypothetical, not fictional. Is the hypothetical
>scenario a valid model for answering the question at hand? I beleive
>so, and discuss that in detail near the end of this post.
The Fair-Minded Reader will notice you're attempting to defend an
assertion about what *actually* happened by generating "hypothetical"
numbers, when the *actual* numbers are easily available.
>But first, a quick review:
>1) The question is whether or not "Reaganomics" moved more of the "tax
>burden" (as defined as taxes paid as a percent of income) from rich to
>poor.
I will provide the original assertion for the Fair-Minded Reader:
The only thing the tax cuts for the rich in the 80's led to was a
massive redistribution of wealth as the poor and middle class began
shouldering much more of the tax burden and the rich much less.
Did the rich shoulder "much less" of the tax burden in the 80's?
Did the poor and middle class shoulder "much more"? Whether you define
"tax burden" as "share of total taxes paid" or "effective tax rate",
the answer is clearly no.
>2) I first posted that it did, taking numbers directly from the above
>reference, Table G-1a. The total effective tax rate dropped for the
>middle of the income scale on up to the richest, while it increased
>for the lower 40% for 1989 versus 1981.
The Fair-Minded Reader will note that you shy away from providing the
actual numbers. The effective total tax rate for the lowest quintile
went from 8.3% to 8.5% between 1981 and 1989. For the second quintile,
the rate went from 14.2% to 14.3%. Is this shouldering "much more"
of the tax burden? No. Is it due to "tax cuts for the rich"? No.
>3) You agreed with the numbers, but not the conclusion concerning
>Reaganomics because you said the cause was bi-partisan increases in
>Social Insurance Taxes. Further, you said if you look at Individual
>Income Taxes by themselves, you see no such effect.
I will (again) provide the actual numbers for the Fair-Minded Reader.
Looking at individual income tax effective tax rates by themselves,
the lowest quintile went from 0.3% to -1.1% between 1981 and 1989;
the second quintile went from 4.5% to 3.5%.
>4) I countered with the hypothetical scenario designed to isolate the
>effect of Individual Income Taxes. I held the taxation rate for all
>other taxes constant at their 1981 levels, while allowing Individual
>Income Tax Rates to vary as they actually did in both 1985 and 1989.
>I added 1985 in to the mix to highlight that the effect of
>"Reaganomics" was due to the Economic Recovery Tax Act of 1981 (ERTA),
>and not the bi-partisan Tax Reform Act of 1986 (TRA-86). I concluded
>that ERTA cut effective tax rates for those from the middle on up,
>leaving behind the bottom 40%, while TRA-86 reversed that trend.
The Fair-Minded Reader will observe that if you want to "isolate the
effect of Individual Income Taxes" you can just read the numbers off
the table in the CBO report. You don't have to assume counterfactual
numbers.
>Close to the same conclusion can be drawn by looking directly at the
>Individual Income Taxes from Table G-1a as you suggest:
>
>Group 1981 1985 1989
>--------------------------------------
>Lowest 5th 0.3 0.3 -1.1
>Next 5th 4.5 3.9 3.5
>Middle 5th 8.0 6.5 6.1
>Highest 5th 19.7 16.4 17.4
>Top 1% 22.0 18.5 19.5
>
>The effective tax cuts were:
>
>Group 1981-89 1981-85 1985-89
>-------------------------------------------
>Lowest 5th 467% 0% 467%
>Next 5th 22% 13% 10%
>Middle 5th 24% 19% 6%
>Highest 5th 14% 17% -4%
>Top 1% 11% 16% -5%
The huge numbers in the first row should have alerted you that you are
committing mathematical nonsense here. In fact the effective tax rates
for the lowest quintile changed very little; you only get the big numbers
because you happen to be dividing by a number that's very close to zero
and not very precise. The results mean nothing.
>From these numbers alone, we would conclude that ERTA left the lowest
>5th behind (instead of the lowest 40% as was the case in the
>hypothetical) while everybody else got a decent cut. TRA-86, as in
>the hypothetical, increased progessivity.
"From these numbers alone", the Fair-Minded Reader can conclude that
Trebor's assertion that ''the poor and middle class began shouldering
much more of the tax burden'' as a result of the tax cuts is fact-free
nonsense.
>I believe that my hypothetical is a better model for addressing the
>question.
>Consider a person who makes $20,000 and in 1981 paid $1600 in Social
>Insurance and other federal taxes except for Income Taxes. Say they
>also paid $60 in Income Taxes for a total of $1660. In 1989, their
>salary is still at $20K (inflation adjusted) but they now pay $1920 in
>other-than-Income taxes and get a rebate of $220 from the Earned
>Income Tax Credit for a total of $1700, virtually unchanged from 1981.
> That was my analysis in 2) above and you are correct when you say it
>was increases in Social Insurance Taxes, and not "Reaganomics" that
>was the cause.
>But, if we look only at Income Taxes, our person will have gone from a
>$60 payment to a rebate of $220, which is nice, but has little to do
>with the reality of the taxes they pay. So, I devised the
>hypothetical in which the person, in 1989, still pays $1600 in other
>taxes (as they did in 1981). Together with the $220 rebate brings the
>total to $1380, a nice cut from the $1660 in 1981. The differentials
>in both cases are the same ($280 saved). But, The hypothetical
>difference from $1660 to $1380 better reflects the reality that this
>person experiences than a savings from $60 to -$220.
>And once again, that hypothetical shows that ERTA moved the "tax
>burden" down to the lowest 40% in income.
I will again point out for the Fair-Minded Reader that you claim (a)
to want to reflect "the reality of the taxes they pay", but (b) you're
selectively playing make-believe with some of the actual tax rates. (c)
You previously equated "tax burden" with "effective tax rate"; but (d)
you're not actually managing to calculate an effective tax rate even for
your "hypothetical" case (let alone the actual case) before (e) blithely
drawing your non-sequitur conclusion. Fair-Minded Readers will have to
decide how impressed they are with such an argument. I'm not, obviously.
Just for chuckles, I've plotted the data in Table G1-a of the CBO report
as a series of graphs:
http://pubpages.unh.edu/~pas/eff_tot.png -- Total Effective Federal
Tax Rate by Income Quintile 1979-1997. (Roughly equivalent to Figure
1-2 in the CBO report)
http://pubpages.unh.edu/~pas/eff_iit.png -- Effective Individual Income
Tax rate by income quintile 1979-1997. (Roughly equivalent to Figure
1-8).
http://pubpages.unh.edu/~pas/eff_sit.png -- Effective Social Insurance
Tax rate by income quintile 1979-1997. (Like the CBO's Figure 1-10)
http://pubpages.unh.edu/~pas/eff_crp.png -- Effective Corporate Income
Tax rate by income quintile 1979-1997. (No CBO equivalent.)
http://pubpages.unh.edu/~pas/eff_exc.png -- Effective Federal Excise
Tax rate by income quintile 1979-1997. (No CBO equivalent.)
Not that it matters, but Fair-Minded Readers might enjoy seeing how
the reality matches up with the "hypothetical".
--
-- Paul A. Sand |
-- University of New Hampshire | Beware of Geeks bearing GIFs.
-- p...@unh.edu |
-- http://pubpages.unh.edu/~pas |
Josh Rosenbluth
> On 14 Nov 2001 14:19:54 -0800, Josh Rosenbluth <jrose...@att.com> wrote:
> >p...@granite.unh.edu (Paul A Sand) wrote in message news:<slrn9v3jp...@granite.unh.edu>...
> >> On 13 Nov 2001 13:38:31 -0800, Josh Rosenbluth <jrose...@att.com> wrote:
>
> >1) The question is whether or not "Reaganomics" moved more of the "tax
> >burden" (as defined as taxes paid as a percent of income) from rich to
> >poor.
>
> I will provide the original assertion for the Fair-Minded Reader:
>
> The only thing the tax cuts for the rich in the 80's led to was a
> massive redistribution of wealth as the poor and middle class began
> shouldering much more of the tax burden and the rich much less.
>
> Did the rich shoulder "much less" of the tax burden in the 80's?
> Did the poor and middle class shoulder "much more"? Whether you define
> "tax burden" as "share of total taxes paid" or "effective tax rate",
> the answer is clearly no.
The original assertion was Trebor's. At one point I said:
"I agree with Trebor. The tax burden was shifted from the rich
to the poor and middle class. I think of my tax burden as the taxes I
pay as a percent of my income."
Ooops. I didn't mean to imply I agree with, or endorse, his use of
the word "much". If we are arguing about whether or not the "tax
burden" was shifted "much" more to the poor and middle class, the we
should stop (and you can save yourself the hassle of reading the rest
of this post). Afterall, there isn't an objective standard for
"much".
On the other hand if you don't agree with me that the "tax burden"
(effective tax rate) shifted from the rich to the poor (and can be
quantified), then let's keep at it.
> >2) I first posted that it did, taking numbers directly from the above
> >reference, Table G-1a. The total effective tax rate dropped for the
> >middle of the income scale on up to the richest, while it increased
> >for the lower 40% for 1989 versus 1981.
>
> The Fair-Minded Reader will note that you shy away from providing the
> actual numbers. The effective total tax rate for the lowest quintile
> went from 8.3% to 8.5% between 1981 and 1989. For the second quintile,
> the rate went from 14.2% to 14.3%. Is this shouldering "much more"
> of the tax burden? No. Is it due to "tax cuts for the rich"? No.
OK, the actual numbers (and from now on I will label the Tables for
clarity):
Table 1: Effective Tax Rates and Tax Cuts by Income Group, 1981 and
1989.
Group 1981 1989 Tax Cut
----------------------------------------
Bottom 5th 8.3% 8.5% -2%
Next 5th 14.2% 14.3% -1%
Middle 5th 18.7% 16.8% 6%
Top 5th 27.1% 25.1% 7%
Top 1% 31.8% 28.2% 11%
The last column does not come from the CBO. It is calculated as the
difference between the 1989 and 1981 rate, divided by the 1981 rate.
The overall effective tax rate went up slightly for the bottom 40%
while it went down for the rest. That is a shift of the "tax burden"
(effective tax rate). Was that a result of "tax cuts for the rich"?
We can't tell based on those numbers because the increases in Social
Insurance taxes confounds the issue.
> >3) You agreed with the numbers, but not the conclusion concerning
> >Reaganomics because you said the cause was bi-partisan increases in
> >Social Insurance Taxes. Further, you said if you look at Individual
> >Income Taxes by themselves, you see no such effect.
>
> I will (again) provide the actual numbers for the Fair-Minded Reader.
> Looking at individual income tax effective tax rates by themselves,
> the lowest quintile went from 0.3% to -1.1% between 1981 and 1989;
> the second quintile went from 4.5% to 3.5%.
I also provided these actual numbers in my post (see Table 3A below).
> >4) I countered with the hypothetical scenario designed to isolate the
> >effect of Individual Income Taxes. I held the taxation rate for all
> >other taxes constant at their 1981 levels, while allowing Individual
> >Income Tax Rates to vary as they actually did in both 1985 and 1989.
> >I added 1985 in to the mix to highlight that the effect of
> >"Reaganomics" was due to the Economic Recovery Tax Act of 1981 (ERTA),
> >and not the bi-partisan Tax Reform Act of 1986 (TRA-86). I concluded
> >that ERTA cut effective tax rates for those from the middle on up,
> >leaving behind the bottom 40%, while TRA-86 reversed that trend.
>
> The Fair-Minded Reader will observe that if you want to "isolate the
> effect of Individual Income Taxes" you can just read the numbers off
> the table in the CBO report. You don't have to assume counterfactual
> numbers.
I do not agree. Here is an alternate, but equivalent, way of looking
at the counterfactual that I hope makes my point. All numbers are
taken directly from the CBO report.
Table 2: Effective Tax Rates for the second quintile
Case 1981 1985
-------------------------------------------
Total Taxes 14.2 14.5
Individual Income Taxes 4.5 3.9
Total taxes went up 0.3%-points or an increase of 2% (.3/14.2). I
think we both agree this is not fair in assessing "tax cuts for the
rich" because it includes the increases in Social Insurance and Other
Taxes.
You say we can isolate the effect of Individual Income Taxes by
reading the numbers right off this chart. Namely, a savings of
0.6%-points or 13% (.6/4.5). I agree with 0.6%-points, but I have a
problem with the 13% calculation. It assumes that the base is 4.5. I
claim the correct base is 14.2 (the total tax rate in 1981). ERTA
saved this quintile 0.6%-points from what was their burden of 14.2%.
The tax cut amounts to 4% (.6/14.2) and it is this number that should
be used when comparing to other quintiles. Using 14.2 instead of 4.5
as the base is exactly equivalent to my counterfactual.
To make the point even clearer, assume there is at least one person
out there who had their entire Individual Income Taxes cut by ERTA.
Such a person doesn't make a lot of money. They pay most of their
taxes in Social Insurance and Other taxes. If we look just at their
Individual Income Taxes, we will conclude they got a 100% cut (maybe
their Individual Income tax rate dropped from 0.2% to 0.0% from 1981
to 1985). But in 1981, they might have had a total effective tax rate
of 6%. I argue that their tax cut from ERTA was .2/6, or 3%.
This analysis is critical to my conclusions. If you do not believe
that someone who 1) makes $10K, 2) paid $20 in Individual Income Taxes
in 1981 (0.2%), 3) paid $600 in Total Taxes in 1981 (6%), and 4) got a
cut of $20 from ERTA, received only a 3% cut from ERTA, then we have a
major disconnect that first must be resolved.
> >Close to the same conclusion can be drawn by looking directly at the
> >Individual Income Taxes from Table G-1a as you suggest:
Table 3A: Effective Individual Income Tax Rates by Quintile, 1981,
1985, 1989
> >Group 1981 1985 1989
> >--------------------------------------
> >Lowest 5th 0.3 0.3 -1.1
> >Next 5th 4.5 3.9 3.5
> >Middle 5th 8.0 6.5 6.1
> >Highest 5th 19.7 16.4 17.4
> >Top 1% 22.0 18.5 19.5
> >
> >The effective tax cuts were:
Table 3B: Effective Tax Cuts in Individual Income Tax Rates by
Quintile using Individual Income Tax Rates as the Denominator
> >Group 1981-89 1981-85 1985-89
> >-------------------------------------------
> >Lowest 5th 467% 0% 467%
> >Next 5th 22% 13% 10%
> >Middle 5th 24% 19% 6%
> >Highest 5th 14% 17% -4%
> >Top 1% 11% 16% -5%
>
> The huge numbers in the first row should have alerted you that you are
> committing mathematical nonsense here. In fact the effective tax rates
> for the lowest quintile changed very little; you only get the big numbers
> because you happen to be dividing by a number that's very close to zero
> and not very precise. The results mean nothing.
Now, I think we are getting somewhere. Table 3A are the Individual
Income Tax Rates taken from the CBO. Table 3B is the effective tax
cut when using base-year Individual Income Tax Rates as the
denominator. The crazy 467% figure is calculated as (-1.1 - 0.3)/0.3.
And, I agree that is nonsense. The correct calculation is to take
the same difference in the numerator (1.4%-points) and divide by the
total tax rate in 1981 (8.3%) for a cut of 17%. That is exactly
equivalent to the counterfactual.
Also notice that the tax cut for second quintile from 1981-85 is 13%,
which I had earlier calculated in my example (just below Table 2).
The correct figure, using total taxes in 1981 as the base, is 4%.
The tax rates for my example:
Case 1981 1989 Tax Cut
-----------------------------------------------------------------
Actual Individual $60 (0.3%) -$220 (-1.1%) $280 (467%)
Income Tax Only
Actual Total Taxes $1660 (8.3%) $1700 (8.5%) -$40 (-2%)
These cases match the CBO tax rates exactly (the first case is
repeated in Tables 3A and 3B as the lowest quintile, the second case
is repeated in Table 1 as the lowest quintile). This was no accident,
I chose this example to match the CBO rates.
The counterfactual argues that the tax cut isn't 467%=$280/$60=1.4/.3,
but rather 17%=$280/$1660=1.4/8.3. Thus, my example here is just a
repitition of the argument I made just below Table 3B in reference to
why the 467% figure is wrong.
Now, how did I draw the conclusion about ERTA moving the "tax burden"
down to the bottom 40%?
Go back to Table 3A. These are the Individual Income Tax rates from
the CBO. Table 3B converted these into tax cut percentages by taking
the differences, across years, in Table 3A and dividing them by the
base-year Individual Income Tax Rates. If instead we divide the same
differences by the base-year Total Tax Rates we get (also from an
earlier post):
Table 4: Effective Tax Cuts in Individual Income Tax Rates by
Quintile using Total Tax Rates as the Denominator
Group 1981-89 1981-85 1985-89
--------------------------------------------
Lowest 5th 17% 0% 17%
Next 5th 7% 4% 3%
Middle 5th 8% 10% 2%
Highest 5th 8% 11% -2%
Top 1% 8% 11% -4%
Notice that the 467% is now 17%, and the 13% figure in 1981-85 for the
second quintile is now 4%.
Now, the effect of ERTA (1981-85) clearly favored the middle on up,
providing a much smaller cut for the second quintile, and nothing for
the lowest quintile.
--------------------------------------------------------------------------
Boy, that was a lot of data and I need to get out the swamp for a
moment with some, what I hope, are self-evident statements about ERTA.
In light of the following facts:
1) In 1981, the lowest quintile paid only 4% of their taxes in
Individual Income Taxes,
2) In 1981, the second quintile paid 32% of their taxes in Individual
Income Taxes,
3) In 1981, the highest quintile paid 62% of their taxes in
Individual Income Taxes,
4) ERTA cut Individual Income Tax Rates,
5) ERTA did not cut Social Insurance Tax Rates,
6) ERTA did not expand the Earned Income Tax Credit (as TRA-86 did),
7) ERTA did not eliminate or limit most deductions and exemptions
used disproportionately by the rich (as TRA-86 did),
isn't obvious that ERTA should have lowered the effective tax rates
for the wealthy more than the lowest 2 quintiles, and in fact provide
no assistance to the lowest quintile at all?
Josh Rosenbluth