I know that this has been discussed previously, from doing a search of past threads, and it also comes up in debates about liberalism and conservatism.
But my dad, who is seventy-three years old, has an inkling about this message board from conversations with me, and I also printed out a few posts which might be interesting to him (he thinks it must sort of be like faxing). He is a flaming die-hard bleeding heart liberal (as am I; they say you learn your political views from your parents at a very young age). He is very worried that George Bush might win this election. He says that historically, the wealthy and well-to-do do fine no matter who controls the Presidency, House and Senate; but the low income and underpriveleged people invariably suffer when there is a Republican majority.
So my question for more politically aware and historically astute debaters than I am: if George Bush is elected, will the rich get richer and the poor get poorer?
Again, apologies if this has been done to death, but my dad asked me to bring it up and I am a dutiful daughter.
I don’t think any party that has policies that benefit the rich and well-to-do will make any friends among the poor. Generally, the poor never do have enough money to benefit.
Only two things I can see that might benefit everyone, reconsidering inhertance tax, and capital gains. If you inherit a farm that is estimated at $1million, you have to pay, what, $300k on it at once?
Capital gains is another. If you buy, remodel and sell a house, you pay for it. On a $40k transaction, you might clear $3k. Those numbers are old, but I think accurate.
I don’t see that the Democrats are any more “Poor Friendly” than the Republicans. After all, we’ve had a great economy under Clinton (Or really Greenspan, if you wanna be picky), but has it affected everyone? I pay more in tax than Microsoft and Cisco!
Poor people are the ones who can’t afford private schools, so if the public school in their district is bad, their kids are forced to get a bad education or nothing at all. Bush favors giving such parents vouchers if they’re locked into a bad school; Al Gore is for not doing so. (He says he’s for shutting down the school and re-opening it with different staff. But it’s still the same public school system that failed to put good people there in the first place.)
Regarding higher education, Gore is for adding $800 to the existing $2000 college tuition tax credit; Bush is for increasing the size of Pell grants by $2000.
On taxes, Bush is for cutting the tax rates in a way that there is a larger rate cut for the poor than for the rich. Yes, in the end, the rich save more in raw dollars, like Gore says…ignoring the fact that the rich pay more in raw dollars. On Gore’s plan, some people will get tax deductions or tax credits, dependent on certain things they do in their lives…a laundry list of conditions too long to list here.
I don’t know what Bush’s record in Texas is in regard to welfare, but Republican-passed welfare reform seems to be reaching people who were stuck in the welfare system under the old welfare system championed by the Democrats.
Will the rich get richer? Probably. Will the poor get poorer? No…they’ll probably get richer, but at a slower rate than the rich do. And don’t forget that the poverty line is inherently a relative measure. Whether the poor are better off or worse off due to that will most likely depend on the inflation rate.
Conclusion? I think the Republican Congress has addressed problems that the Democrats, in 40 years of control of the House and control of the Senate for a signifant portoin of that time, never bothered addressing. I think a Republican president, who’s more likely to pass bills from that Congress, will improve the lot of the poor.
"So my question for more politically aware and historically astute debaters than I am: if George Bush is elected, will the rich get richer and the poor get poorer? "
Yes, and sadly also if the Dems get in.
The problem is the “centrist” position of both parties is anti-poor.
Other countries have universal health care.
Other countries have living wages, the right to long notice before factory closings, and even Mexico has 4-week vacations.
We are dead last in the inustrialized world on all labor and poor issues. Dead last.
Clinton rented out the lincon bed for campaign funds. (thats alot more than your example:))
also annalamerino this country tries to have a good economy, which is why the labor is on the low side(though you would think getting paid like .05 an hour in a sweatshop would be worse?)
Also what does the labor have to do with the poor? Almost everybody works. As for health care most companys give health care benefits I think.
Dead wrong. The estate tax only applies to estates valued at something over $600,000 (don’t have the exact figure), with that figure slated to increase to $1 million over the next few years.
After the increased exemption goes into effect, your hypothetical family farm would have to pay exactly $0 in estate taxes. Clinton has proposed increasing the exemption further.
The best way to conceptualize the Estate Tax is as a sort of income tax on inheritance. If I leave $100 million to my son, shouldn’t he be taxed on that windfall? He didn’t earn it, I did. To him, it is income, and he didn’t even have to work for it.
To get back to the OP, Bush wants to eliminate the estate tax altogether, which would have the effect of making the rich (at least those inheriting their wealth) very much richer indeed. The ultimate effect would be to create a more or less permanent aristocracy, or even more of an aristocracy than we already have.
Runs counter to our ideal of egalitarianism, does it not? Why should Joe Scion get a head start on some equally smart and talented poor kid, just because Joe Scion’s Daddy made a lot of money?
On the other hand, why should the stuff Joe Scion’s daddy worked so hard for go to anyone but his heirs?
He already paid income taxes on the money in question…the government got its rightful cut of that created wealth. Why does the transfer after death mean that more of it belongs to the government?
Chaim, then why does a transfer of wealth before death, even if you already paid taxes on it, mean that more belongs to the government? Yet we have gift taxes that do just that. Wealth transfers, whether as gifts, purchases, payments, prizes, or whatever, are taxed throughout the economy. Why should inheritance at death automatically be different?
If Joe Scion’s daddy had lived and kept the money himself, he wouldn’t have had to pay the tax. But he couldn’t take it with him, so it had to be transferred to his heirs, and transfers of wealth (with numerous exceptions, of course) are taxable.
One reason why inheritance taxes are bad is because they punish people for doing what we want them to do, which is to save their money and be fiscally responsible.
Let’s say we had a 100% inheritance tax. Couple that with our Social Security system, which means the elderly won’t starve, and what do you think will happen?
I’ll tell you what will happen - people will have very little incentive to save for their retirement. They’d save exactly enough to give them the standard of living they want, and then they’d blow the rest. More people would take early retirement once they had a nest-egg big enough to comfortably see them through their retirement years and no more.
Having a lot of successful rich people retire early is NOT a desired result. These are the most productive people in our society. And if they stop earning money, there is no income to tax. If they retire early, we will lose their mentoring to younger workers, their experienced leadership, and the value of their collective experiences.
Of course, they’d figure out a way to get the money to their kids anyway, because we humans have a strong imperative to help our offspring. This would distort the economy and create a lot of waste, because the money is diverted from where it ‘wants’ to go for artificial reasons.
If your inheritance tax is not 100%, you’ll still get the same behaviour - just not to the same degree.
Then there are the moral issues - I’m a free person. I paid my taxes on my income. I now have X dollars, to do with as I please. If I am not allowed to leave that money to my children, you have taken away a very important part of my life. As you get older, you’re going to find yourself living less for yourself and more for your kids, because that’s what humans tend to do. Estate taxes are a serious infringement on our right to self-determination.
Oh, boy, thanks!..This thread is so short and already the misconceptions are hitting so fast and furious that I don’t know where to start.
Okay, first, the estate tax: as spoke- noted, this applies to estates only over a certain amount that is being pushed up over time. While there may still be some problems for farmers, that can be solved by making some changes to it, as Gore proposed in the final debate. To eliminate it entirely is just an incredible windfall for the very wealthy. And, even some of them think it is a bad idea because they realize that their kids will never learn the work ethic if they have millions of dollars thrown at them. (See http://responsiblewealth.org for an interesting take on this.) Besides which, charities will be hurt because one way that the wealthy avoid being hit by the tax now is to leave much of their estate to charity. All in all, eliminating the estate tax is about the most regressive and stupidist idea one could possibly come up with.
Chaim, as for your discussion of tax cuts, and your claim that under Bush’s plan “there is a larger rate cut for the poor than for the rich. Yes, in the end, the rich save more in raw dollars…” Okay, let’s get this in perspective! First, the rate crap is basically meaningless drivel from the Bush camp. If you take someone who just barely pays income tax and eliminate it, then that person’s rate goes down 100% but they may have only saved $10. The point is that the poor (actually, a reasonable-looking percentage of the population) pay more in payroll taxes than income taxes (not to mention sales taxes, etc.) so while you may reduce their income tax burden by an impressive percentage, it doesn’t amount to much of their total tax burden. Second, on the raw dollars thing, let’s put some numbers on this (courtesy of Citizens for Tax Justice, http://www.ctj.org …If you are in the lowest 20% of income, your average tax cut is $42. That’s enough to buy an extra candy bar each week. If you are in the top 1% (incomes above $320,000), your average cut is $46000. That’s enough to buy a new SUV each year…and a pretty nice one at that. Is this fair? You tell me!
By contrast, Gore’s tax cuts really are targetted toward the lower and middle class. Most of them phase out above a certain income. In fact, the phase-out is such that it looks like I am currently ineligible for almost all of them, which IMHO is the way it ought to be. I don’t need no freakin’ tax cut and those making way more than me need it way less than I do for Christ’s sake!!!
Some other points…As for Chaim’s claim that the poor won’t get poorer, they will just get richer at a slower rate than the rich do…Well, this seems like a pretty sorry state of affairs even if it were true. But, in fact, this ain’t so clear. Here’s a quote from a longer treatise on this subject at http://www.ufenet.org/press/shifting_fortunes_report.html
(Of course, the sad fact is that much of this happened under a Democratic administration! No guarantees that a Democratic administration will help the poor or middle class that much…But, at least you know they won’t be squandering as much of our money on give-aways to the rich!)
As for the education stuff…The vouchers Bush proposes are not large enough to allow a poor family to pay for the entire tuition to private school, so what they will do is allow some of the less-poorly off families to remove their kids from public schools, thus condemning the public schools to further problems for those who remain, besides creating possible constitutional problems with having the government funding religious schools and such (although it is unclear how the Supreme Court would rule on this).
Well, that’s enough for now. (So many fallacies, so little time!)
You just see proposal after proposal from the Republicans designed primarily for the benefit of the wealthy:[ul][li]Repeal of the estate tax[]Flat tax proposals[]Elimination of capital gains taxElimination of income tax in favor of national sales tax[/ul][/li]
All of those Republican proposals, when you do the math, are for the benefit of the wealthy.
When you see such proposals time and time again from Republicans, it becomes pretty clear that they are indeed the party of the rich. Point it out, though, and you’ll be accused of inciting “class warfare.” Neat trick.
Geez, I can’t post fast enough to keep up with this stuff. So, let’s see, let us suppose something totally counter-factual and ridiculous and then say that if we go back to the more realistic real-world case that things will be just about as bad! Great reasoning.
Yup, I am sure that the fact that the rich can’t leave all their money to their kids will make them lazy and slothful! Right! Why not propose it will make them work harder? Say you want to leave your kids a nice nest-egg of $4 million but the estate tax will take away a third of it, then you have to work harder to make a $6 million nest-egg! Pretty cool, aye?!? I knew we could get those sloths working again!
Better yet, since their kids will have a little less money to start out with in their lives, they may decide to work for a living rather than sluff off for their whole lives [or until their father becomes President and they can get into “business deals” because of their political influence! ;)]
However, our workers are not moving to Mexico to take advantage of their 4-week vacations, while Mexicans are moving here to work illegally for less than minimum wage. While other countries may do more for the poor, our poor seem to have it better overall than in many of those countries. I would consider that a “poor issue”.
As others have said, this is wrong. If you inherit a farm valued at $1 million from your spouse, you pay no tax. If you inherit a farm from a non-spouse, you pay tax on the $325,000 over the current $675,000 exemption, at a blended rate of about 40%, or about $130,000. You still get $870,000 - an effective tax rate of 13%.
Nope. If you are married, you do not pay tax on the first $500,000 of gain on the sale of a primary residence (which can be a second home). That’s half a million of gain, so if you bought a $1 million home, put $500,000 into it (so your basis is $1.5 million) and sold it for $2 million, your capital gains tax is $0. That’s right, $0.
If you’re single, you can still shelter $250,000. So our very wealthy single person who did the same thing would pay gains tax on $250,000, which at 20% is $50,000, for an effective tax rate of 10%.
(Of course, if you’re talking about a $40,000 transaction, there will never be capital gains tax payable, assuming that the home is your residence for a period of time and assuming that you don’t do this more often than once every two years. If you’re in the business of buying, remodeling and selling homes, or you’re trying to make some money doing so, I see nothing wrong with having to pay some tax, but your numbers are still way off - at worst, on $40,000 of gain on a house you’d pay $8,000.)
As far as the argument that the estate tax is a double tax, in large part that’s a misconception. Say you’ve earned $1 million over your lifetime, taxed at an effective rate of 35% (including state and local tax). You’ve got $650,000. (This assumes, of course, that your food, shelter, kids’ educations, etc. were costless to you.) With the current $675,000 exemption - NO TAX.
Now, assume that you’ve invested wisely and your assets have grown from $650,000 to $3 million. Between your and your spouse’s exemptions, you can, if you both died this year, shelter $1.35 million, so you pay tax on $1.65 million at a blended rate of about 50%. However, none of what was taxed at your deaths was previously taxed - it was all appreciation. Admittedly this is simplified. If you’ve earned $5 million after tax and managed not to spend more than $4.325 million, you may be taxed (there are ways to drastically reduce the bill), but I have trouble mustering any sympathy. Your heirs will still be starting with more money than something like 92% of the population in this country will ever see.
In addition to the issue of charitable donations, which are likely to be decimated if the estate tax is eliminated, the insurance industry is likely to mount a heavy offensive against any outright repeal.
Furthermore, an issue that no one has focused on is the effect on the states. The federal government gives every taxpaying decedent a credit for state estate tax paid. For the most part, states levy a tax that equals the state death tax credit. In effect, your estate tax bill is not increased, the federal government collects the tax and remits it to the states, and everyone is happy. (Please, I know, this is grossly oversimplified.)
If the estate tax is repealed, the states will lose hundreds of millions, if not billions, of dollars. The state estate taxes are a significantly larger percentage of state budgets than the federal estate tax is of the federal budget. Sure, states have the option of enacting their own estate taxes, but then you’re left with a hodge-podge of inconsistent laws between the sister states. Frankly, I think that’s a ridiculous result, and the alternatives are equally unattractive - reducing state spending substantially, for example on education, increasing taxes, etc.
Sorry, I know this really doesn’t have much to do with the OP. FWIW, I think that if Bush gets in the rate of the growth of the disparity will increase, but I think the rich will get richer and the poor poorer no matter who wins.
I notice that Bush and Cheyney are using “tax familes” to illustrate their tax plans out on the campaign trail. They haul out Joe and Jill Taxpayer for a photo op and a little speech: “Joe is a welder, and Jill is a part-time substitute teacher. Under my tax plan, they will save $300 a year!!!” [Partisan applause ensues…]
Here’s the “tax family” Bush doesn’t want you to see:
[Bush steps out of his campaign plane and down onto the tarmac, where the camera crews are waiting.Trailing him is an immaculately-dressed, patrician fellow…]
Bush speaks
I’d like you to meet Rutherford Gotbucks, a fraternity brother of mine.
Rutherford inherited $200 million from his father. Under my plan to eliminate estate taxes, he would not pay one penny of taxes on that inheritance!!!
[applause]
Since inheriting that money, Rutherford has placed his cash in the stock market, and in speculative real estate purchases. His investments are now worth $400 million. Under my plan for eliminating capital gains taxes, if Rutherford sold all of those assets tomorrow, he would not pay one penny of taxes on the $200 million profit!!!
[applause, and shouts of joy]
So in other words, Rutherford can live his entire life in luxury, without ever lifting a finger or doing a day’s work, and never pay one single penny of federal taxes!!!
[delirious cheering]
And when Rutherford and his fellow heirs and heiresses are freed from the shackles of taxation, we can achieve our dream of placing the entire tax burden of this great nation squarely on the shoulders of the middle class, where it belongs!!!
For your hypothetical case under the Gore plan. He inherits 200 mil and pays 100 mil in taxes. Instead of putting the money into the stock market or real estate he puts it into the bank and lives off of it the rest of his life. Because he did not put it into the markets companies can not use it to grow and people can not live in the real estate.
Gore can proclaim, because of my plan there are fewer homes for people to live in and fewer jobs for people to work at, but at least we screwed a rich guy.
Banks are profit-making enterprises; banks use your money to make their own money by loaning your money out. They may pay you interest on your money “sitting in the bank” but it is meager compared to the rates they charge on mortgages to folks purchasing homes or construction companies for business loans. Your theory is not correct. Sorry, you are wrong.
Side comment: excellent posts by jshore, Cantrip and spoke-.
