This is the term being bandied about concerning the Bush tax plan. Does this term mean that there is an actual 10 year limit built into the proposed tax cut, and that after 10 years the rates will revert back to the ones that are in place now? This does not seem too likely. Is it merely a convenient time period over which the total cost can be calculated, IOW we can predict that it is 1.6 trillion over the next 10 years and after that it’s harder to predict? If it is indeed an actual limit, what is the rationale, and how common are such limits? (I’m aware that there are sometimes laws passed - including some tax laws - that will expire after a set period with no further action by Congress, but thought it was only “experimental” type laws, and in any event I wonder how common it is).
Im sure there’s no expiration date on the cut. I think the calculation of what it will probably cost in ten years is just a case of ten years being a nice round number someone picked.
Hijack: I think it might be a good idea if more laws had expiration dates. Standard wording in, for example, laws passed by congress might me something like “this law expires in X years, unless renewed by congress during the six month period before the expiry date”. If a law proved to be a mistake, it could be quietly allowed to expire without anyone having to worry about looking “soft on (whatever)” by having to actaully VOTE to repeal it.
Back to the tax cut: I want a tax cut! I think if the govt has a surplus, at least part of it should be used for a tax cut. But I don’t want one that mainly benefits the richest 2% of Americans. I want a tax cut that benefits the poor more then the working class; the working class more then the middle class; the middle class more then the rich; and the superrich not at all. (Note: I’m using the word “class” in the sence of “income level” or “economic class”.)
I do not see how a tax cut for the superrich can “trickle down” to help the rest of the population. What is it that the very rich are expected to do with this money that would have this effect? They’re not going to buy more consumer goods or shell out for more entertainment. They already have enough money to buy anything they want in the way of goodies and entertainment. An increase in money is not going to spark any spending with these folks.
And they’re not going to stop working very hard to find and create loopholes to avoid paying taxes; that’s an unchangable mindset. No matter how much their tax rate is reduced, they’ll still look for ways to pay less. If they’re paying zero taxes, they’ll look for ways to get payments from the govt.
But giving a tax cut to people who are less then wealthy might actaully give the economy a boost, as that extra money would be spent on goods and services, which is suposed to help create jobs.
If I’m wrong about all this, someone please explain to me the flaw in my assumptions.
I believe the 1.6 trillion over ten years is not a timelimit but a forecast as to how much money the government will ‘lose’ if the tax cuts are implemented. Also realize that not all tax relief happens at once. Instead of applying all tax cuts in one shot they may get rid of the estate tax in 2001, the marriage penalty in 2002, the capital gains tax in 2003 and so on (BTW those are strictly examples and AFAIK in no way equate to the real tax cut proposal).
Your assumptions aren’t wrong at all. The argument is over how much real effect tax cuts will have and on that score people can go round and round forever and never agree. There are also compelling arguments that the government is using unrealistically rosy glasses thnking they can afford to lose 1.6 trillion over 10 years regardless of who the money goes to.
Trickle-down economics (give the rich more money) seems to have shown itself to sound good but not work in practice (during the Reagan era). Giving more money to poor or middle classes is tougher to predict. Certainly in the short run tax cuts would have an upward effect on the economy due to increased spending. The question really occurs in what will happen in the long run and that is certainly open to debate…there is not compelling evidence to suggest that a tax cut given to the poor (or anyone for that matter) would result in long term economic prosperity (it might but it might not).
The real scare is what happens if the economy turns down anyway? Now the government is collecting less money but has more people collecting government benefits. More welfare, more unemployment, etc. In addition you have fewer people paying taxes and less consumerism so there are less taxes being collected in the form of sales taxes and corporate taxes. Now the government finds it can’t support the huge drain on its resources and goes into deficit spending. In addition maintaining those welfare resources diminishes the amount of money that can be spent on programs needed to end the recession (government works projects, bank reform, writing off bad debts, etc.). If the government now raises taxes to support its costs it throws the economy into an even worse recession.
Frankly I believe the government should behave like a well run corporation or household. Both entities know that good times probably aren’t permanent. When good times are upon them they strengten themselves against the bad times by reducing their debt, making needed structural changes and so on. They can afford to do this now and if the bad times ever arrive (and lets face it…sooner or later things go bad for awhile) they will be better able to weather the storm.
I’m all for keeping more of my money but in this case I think it’d be prudent for the government to pay down the national debt and invest in infrastructure. If the economy ever goes bad the government will then be in a stronger position to deal with it. If good times last till the debt is gone, social security is stabilized and so on then start thinking about giving the money back.
The General Question here has been answered by both people – it is an estimate of the revenue the federal government will collect under the revenue it estimates it would have collected absent the proposed cuts.
Great Debates would be a good place to discuss the merits of such a plan.
[note: Great Debates comments deleted. -manhattan]
[Edited by manhattan on 02-28-2001 at 06:20 PM]
What if the money that the gov expected to come in for those years, doesn’t?
That’s the main concern with his tax cut.
Probably the same thing that happened the last time we tried this sort of scheme; Massive Federal Defecits.
I couldn’t let this go unanswered. And I guess my response is more suitable for GD, but oh well.
Moderator’s note: Yes, you could have. And in the future, you will. I do not pop into these threads to steer them back to General Questions for my health. “Oh, well?” Maybe I’ll just arrange for you to be a former member of this message board. “Oh, well.”
[note: Great Debates comments deleted. -manhattan]
[Edited by manhattan on 02-28-2001 at 06:23 PM]
[note: Great Debates comments deleted. -manhattan]
[Edited by manhattan on 02-28-2001 at 06:24 PM]
[note: Great Debates comments deleted. -manhattan]
[Edited by manhattan on 02-28-2001 at 06:25 PM]
[note: Great Debates comments deleted. -manhattan]
[Edited by manhattan on 02-28-2001 at 06:27 PM]
What is at least as important is the subliminable message in saying that his plan will take ten years to come to fruition:
2 years from now it will be too soon to judge the plan’s success.
4 years from now he’ll be able to say the plan hasn’t had enough time to realize its full potential, but if he could pretty please get re-elected into another term he promises he’ll keep working on it. Or at least keep his sleeves rolled up so that he looks like he’s working on it.
If, somehow, he manages to get re-elected into a 2nd term, he’ll still be able to fend off criticism by saying “it’ll take six more years!”
8 years from now, at which time it will have become clear that the plan was a flop, he will be out of office & won’t have to worry about it any more.
What I’d like to hear (from any president), is what he can accomplish in his current term. That way, he or she will be in a better position to answer for his or her blunders & take credit for the sucesses.
[note: Great Debates comments deleted. -manhattan]
[Edited by manhattan on 02-28-2001 at 06:28 PM]
[note: Great Debates comments deleted. -manhattan]
[Edited by manhattan on 02-28-2001 at 06:29 PM]
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[Edited by manhattan on 02-28-2001 at 06:30 PM]
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[Edited by manhattan on 02-28-2001 at 06:32 PM]
Moderator’s note:: Will those who have their comments edited please have a look at my comments in this thread.
Thank you.
Jesus, Mary Mother of God[sup]‡[/sup] & all creatures great and small, what the hell happened in here?!
Looks like an explosion at a firecracker factory.
‡[sub]Meant as a colorful explicative only. Any similarities to actual people or deities, whether real or imaginary, is purely coincidental & should in no way be taken as an indication that poster is andorsing or encouraging a debate with respect thereforeto.[/sub]
A writer in the weekly here (Folio) that has the good sense to run “TheSD” column suggests that the government cut a check to each citizen in the USofA in the amount of $6,400 - an amount arrived at by dividing the $1.6Trillion by the quarter-billion people in the US. Sounds good to me. Since dubya’s proposal is over ten years, as that is how long it takes to “accumulate” the $1.6T, maybe they’d have to send it out in $640 increments. That’s OK, too, but not as much WOW factor.
As has been said, the estimate is for the next ten years. One thing that seems to be forgotten by critics who insist that the economy is extraordinarily difficult to forecast ten years out (absolutely correct) is that the cost of the tax cut is equally difficult to forecast. If the economy doesn’t do as well as currently expected, guess what–the cost of the tax cut will be lower. Thus, a recession does not necessarily mean the tax cut will lead to a deficit.
By the way, the CBO’s forecasts revert to trend percentages of GDP about 18 months out–I believe this whole ten year thing is the result of politicians wanting to claim larger numbers (either expenditures (benefits) or tax cuts) than annual figures would indicate. The best numbers for comparisons’ sake are annual numbers (in current dollars, when fully phased in, if necessary)–but don’t count on ever seeing that. [sub]Politicians don’t like it when their plans can be seen through…[/sub]