Cantrip, it is good to have another supply-sider in the debate but if 20% is good why isn’t 15% better. The revenue lost if these two taxes were eleminated would not be enough to close the government in fact the economic growth generated by this would more than make up for the loss.
puddleglum wrote:
A few questions, puddleglum:[ul]
[li]In what way is my hypothetical Mr. Gotbucks “productive?” What exactly is he “producing?”[/li][li]Is it possible to “build a middle class” while at the same time expecting that middle class to carry the entire tax burden of the nation?[/li][li]In what way is a public works project like the mass transit system I described a “transfer of wealth from the productive to the unproductive?”[/li][li]Do you consider wage earners to be “unproductive?”[/li][li](Following up on Kimstu’s comment…) Do you consider the terms “wealthy” and “productive” to mean the same thing?[/ul][/li]
Just curious…
Puddleglum, what makes you think I’m a supply-sider? I agree with Guinastasia - supply-side economics has been debunked thoroughly. A 15% cap gains rate would be better for the people making the money, but frankly I think the 5% marginal benefit is more than offset by the fact that the government is much more likely to redistribute that wealth to the poor than are the capital gainers. Same for the estate tax. I have no problem with the government redistributing those assets, and I don’t think that the 55% marginal rate is inhibiting anyone’s investments.
If Mr. Gotbucks invested the money he inherited he would be productive.
The most of the people who pay capital gains taxes are middle class. However Bush’s plan lowers the tax burden on them as well. If the upper and middle class both had the same tax rate the upper would still pay more because they have more to tax.
A transit system is a transfer from those who pay the taxes to those who ride the transit system.
Wealthy and productive do not mean the same thing but since wealth is created by productivity the usually go together.
When I said Catnip was a supply-sider I was being facetious. Supply-side economics debunked or not has worked and will continue to work. That is why so many governments are trying it around the world.
Another observation, puddleglum: although the lost revenue would not “close the government”, it is likely that discretionary government spending (non-Medicaid, Medicare, Social Security) would have to be cut. Presumably the cuts would not come substantially from defense spending, which means that the bulk of the cuts would come from the remaining discretionary budget, which is, IIRC, less than 15% of total government spending. If the capital gains tax to be cut and estate tax make up, say, 5% of the government’s budget, then the effective cut for discretionary spending is 33%.
And unless you can show me economic data to prove that “the economic growth generated by this would more than make up for the loss”, I do not believe that this is the case. First of all, this was disproved during the Reagan administration. Second, while the country as a whole might be better off, I doubt that the poorest 10% of the country would get any benefit whatsoever. That is where government comes in, and that’s why I’m voting for Gore.
Cantrip, When rates were cut in the 80’s revenue went up. Just as predicted.
What do you mean by “invested”? If he bought stocks, or invested in a hedge fund (not a VC fund), how is that productive? He’s not buying lemons and sugar and making lemonade - he’s buying part of the lemonade company (or part of lots of lemonade companies).
This is specious. Of course most of the people who pay the tax are middle-class – there are far more middle-class people than wealthy people. I believe that the top quintile of wealth-holders pays far more capital gains taxes in dollars than the next three quintiles combined. (Anyone got a cite?)
The capital gains rate is the same for all taxpayers. If you’re talking about income tax rates, even W is not talking about a flat tax.
[quote]
**A transit system is a transfer from those who pay the taxes to those who ride the transit system.
[quote]
**
A highway is a transfer from those who pay taxes to those who drive. A dam is a transfer from those who pay taxes to those who choose to live in a desert (read: Western U.S.). Hellooo - this is sort of the whole idea behind federal taxes - the federal government is in the best position to determine where national resources should be redirected. While I don’t agree with all of its decisions, I support the principal. Am I to understand that you do not?
Thank goodness. 
No - it has been debunked. It did not work. The disparity in wealth between the wealthiest 20% of the population and the poorest 20% increased quicker during Reagan’s presidency than before. There was no trickle-down. Remember, it was George H.W. Bush who called it “voodoo economics”, and history has borne out that description.
Aarrgh - must preview…
The Republicans are the party of the rich.
The Democrats of the middle class.
No one represents the poor.
puddleglum,
“predicted” isn’t the correct word. According to the yesterday’s WS Journal, Reagan was the 3rd administration to cut taxes in order to raise revenue. The others were Harding and that lover-of-the-rich, Kennedy. Kennedy cut the top marginal tax from 90% to 70%.
I was never entirely certain what “trickle down economics” meant (I was in elementary school when reagan was elected the first time). This is not an example of it. At some point, it becomes cheaper for the wealthy just ot pay taxes, than it does for the wealthy to try to find tax shelters. Ideally, you want taxes to be 1/2 a percent lower than the cost of a tax shelter, assuming you can’t convince people of the moral value of paying taxes. This isn’t voodoo economics; its pretty much econ 101.
I am (unfortunately) not a good enough arm-chair economist to tell if the top tax brackets should be cut or not. Clinton, dispite his faults, has probably got the top tax bracket about right; maybe a little high. But, to be honest, I’m guessing.
Sorry for the hijack. Reagan did lots of bad things. Cutting marginal rates was not one of them.
All the back-and-forth about tax rates almost misses the point. Republicans in Congress have said that they want to eliminate the capital gains tax altogether. Republicans in Congress have said they want to eliminate the estate tax altogether.
Mr. Gotbucks must surely be rejoicing, because if Bush gets elected there’s no one with veto power standing between the Republicans in Congress and the realization of their dream.
The sad part is that so many members of the middle class have bought into Republican rhetoric, when they’re the ones who will ultimately bear the burden of replacing the lost revenue.
What was Lincoln’s line about fooling people?
“You can fool all of the people some of the time.
You can fool some of the people all of the time.
But you can’t fool all of the people all of the time.”
Was that it?
That’s the one, Guin.
Either that or the very poor will lose part of their safety net, as the GOP is not enamored of spending money for such programs and may cut spending rather than replace revenue.
As I recall, someone posted data on this site at one point trying to show that…And, technically speaking, they may have gone up each year in unadjusted dollars…But, it basically goes up every year. And, if you looked at the general trend, the fact was that in the early 80s the revenues went up only very slowly relative to other times.
I think one of the best questions one can ask to sort this out is how Reagan’s budget predictions did against budget realities. The fact is that the projections were such a joke that after a while noone believed them…And, of course, I don’t need to remind you how much the debt grew over Reagan’s tenure. I believe the projections were that the budgets would come into balance!
As for “trickle down” economics working in other ways, I already provided some links in previous posts where you can see how median incomes and those of the poor have fared over the past 30 years in general (and there were some studies during the Reagan years in particular). It ain’t pretty. You, puddleglum, say “If tax laws get passed that create prosperity for the whole country I could care less how much some rich guy is paying.” Well, prosperity wasn’t created for the whole country…Yes, the mean incomes went up because the ones at the top did, but median incomes have been a very different story.
As for your comment that “A transit system is a transfer from those who pay the taxes to those who ride the transit
system,” I hope this is being said by someone who commutes on a bicycle because if you use your car, it is being subsidized to high-freaking-heaven! I don’t want to sound like a broken record on this, but just look at the estimates of the subsidies in each gallon of gasoline. Check out http://www.sierraclub.org/sprawl/transportation/subsidies.asp The estimates come from a variety of sources including the Congress’ Office for Technology Assessment.
And, as for supply side economics being tried around the world, well, there are clearly different balances being tried by different countries in terms of tax rates / welfare states and the like and at any one time, things may be moving in one direction or another. (I will admit that the Laffer curve is not complete nonsense…I just don’t believe that we are anywhere close to where it turns over [and, it is an oversimplification because you can tax in so many different ways and it is just a 1-d plot].) But, if you are trying to say that our country should try more to emulate Sweden, or Denmark, or France, or Germany, or Canada, or … in striking the balance, I’m all with you!
Sidenote to kiffa…Thanks for the kind words. Practice makes perfect and I certainly feel like I am getting well-practiced discussing this topic on SDMB!!!
Another thing that kills me is the notion that people who earn money through investments shouldn’t be taxed on that income because they are “adding value.” Excuse me, but isn’t the guy working for hourly wages “adding value” too?
Funny that no Republicans have come forth to explain to us why income earned by working should be taxed, but income from investment or from inheritance should not.
Any takers? Still waiting…
There is no way to rationally explain why the middle class should shoulder the entire tax burden and let the rich find or legislate loopholes.
This is probably a highjack, but here goes:
I heard on the network news [Peter Jennings] that stock market investors are hoping that one party takes the White House and the other party takes Congress. The result would be more or less the same interference on fiscal policies and Federal budgeting with less impact on the economy. I assume that this would be continued balanced budget, little risk of drug pricing controls, no huge tax rebates. The biggest scare is loosing Alan Greenspan…
I agree with the stock market investors. Let’s not make any changes that could disrupt the economy. Things are going pretty well right now. I’m in favor of letting it ride for a few more years. I don’t feel over taxed (I pay about 30%). The economy seems to be fine. The employment rate is unbelieveably good. Why mess with it? Also, I believe that Greenspan is more personally responsible for the great economy we’ve been enjoying than any other individual. We’ll miss him when he retires.
Where oh where was I when this thread was in full swing???
Regarding the OP, both major parties are run by their affluent. And yes, both parties do have quite a number of millionaires. I’ll skip the cites, but the percentage of wealthy Republicans in federal office is approximately the same as wealthy Democrats. The difference is in how the two parties attempt to legislate.
The Republicans don’t care who gets rich. They promote an environment that’s business friendly. If you’ve got the ambition to become wealthy and can do the things necessary to succeed, the GOP welcomes you into this country’s wealthy with open arms.
The Democrats don’t want any more rich in this country. The rules that they support make it fine for the current rich to stay rich, but dilutes this wealth when it’s inherited with estate taxes. They also promote a capital gains tax and an income tax structure that makes it tough to become rich.
Now, onto the topic that has dominated this discussion.
There have been a number of good posts in this thread. On both sides of the argument. But no post has adressed the issue at the macro level.
The U.S. economy may be the primary driving force in the world’s economy, but it is no longer the force. By reducing the ability for people and businesses in this country to be among the world’s richest we reduce their ability to compete.
A good analogy is your local bank. Ask any officer how they determine their rates from day to day. The odds are he’ll tell you that he checks the rate used by Chase, Citibank, or one of the other behemoths and follows suit. The small bank can’t afford the staff of analysts that the giants possess, so it’s forced to do business by following someone else’s lead.
The same holds true in the international arena. The largest banks in the world are Japanese. In only 50 years, this tiny nation has gone from a beaten nation with a bankrupt economy to one of the strongest and largest economies in the world. They certainly didn’t get that way by stamping out PEZ dispensers and selling them on the street corner. They did it with money invested from other economies.
As the world attempts to establish and build economies in the less developed nations, smart investing will see money from the new economies moving to the United States.
The money invested in the new countries MUST come from the wealthy. And it will be the businesses controlled by the wealthy that make these investments.
Personally, I’d hope that it’s an American company run by a rich American that finds a way to become wealthier by investing in new economies or businesses than a Japanese bank.
:: And I can’t resist this one ::
You can fool all of the people some of the time,
And you can fool some of the people all of the time,
But you can’t fool Mom!
Let me get this straight:
We need more super-rich Americans, so they can invest in developing countries and become even more super rich???
And since the Republicans would not be taxing capital gains, none of this new wealth would be taxed. Meaning no benefit to Uncle Sam.
And since any new jobs created would be in other nations, no benefit to Joe Citizen here in the U.S.
And we’re supposed to root for these super-rich Americans to dominate world markets why? Simply because they’re Americans? Yay team?
How, exactly, is this supposed to help your average American, pray tell?
I don’t follow your logic.
(And by the way, you might want to re-think using Japan as a shining example of world dominance, given their recent economic struggles.)