# Why let tax cuts for the wealthy expire? **URL:** \ **Category:** Great Debates\ **Created:** [July 26, 2012, 5:31pm UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470 "2012-07-26T17:31:04Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Great\_Antibob](https://avatars.discourse-cdn.com/v4/letter/g/e47c2d/32.png) [@Great\_Antibob](https://boards.straightdope.com/u/Great_Antibob)\ **Post date:** [July 26, 2012, 9:44pm UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/21 "2012-07-26T21:44:14Z")
> [@yorick73](#): > > The super rich can avoid taxes but, in doing so, end up putting their money in places that are not as productive. Meanwhile, the small business owners who get hit may not be able to hire as many new employees. Neither of these is a big factor. The super rich make a good portion of their money on investments, which wouldn’t be covered so much by this. And if their regular salary is so high that the tax cut expiration affects them, they’re either already trying to minimize their taxes by transferring overseas or don’t much care. It’s doesn’t stand to reason they’d suddenly effect a mass exodus of cash because of it. As for small business owners and Heritage, Heritage is using a wonky definition of “small business”, as you yourself quoted. Their definition certainly doesn’t match the American concept of a mom-and-pop business on Main Street. Basically, it’s not what most people think when you say “small business” and it’s telling that they have to use some tortured definitions and reasoning to buttress their argument. ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [July 26, 2012, 10:06pm UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/22 "2012-07-26T22:06:56Z")
> [@Great\_Antibob](#): > > Neither of these is a big factor. > > The super rich make a good portion of their money on investments, which wouldn’t be covered so much by this. And if their regular salary is so high that the tax cut expiration affects them, they’re either already trying to minimize their taxes by transferring overseas or don’t much care. It’s doesn’t stand to reason they’d suddenly effect a mass exodus of cash because of it. You’re making my point for me. The super rich aren’t really going to pay much more in taxes. They just may have to move their money around in ways that are less productive to avoid a hit. > [@Great\_Antibob](#): > > As for small business owners and Heritage, Heritage is using a wonky definition of “small business”, as you yourself quoted. Their definition certainly doesn’t match the American concept of a mom-and-pop business on Main Street. Basically, it’s not what most people think when you say “small business” and it’s telling that they have to use some tortured definitions and reasoning to buttress their argument. By “wonky” do you mean “employs people”? But that’s beside the point. These businesses are responsible for 65% of new jobs created. A tax increase on over a quarter of these small businesses could have a detrimental effect on employment and the economy in general ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [July 26, 2012, 10:12pm UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/23 "2012-07-26T22:12:56Z")
> [@yorick73](#): > > You’re making my point for me. The super rich aren’t really going to pay much more in taxes. They just may have to move their money around in ways that are less productive to avoid a hit. Does this theory work in reverse? That when taxes for the rich are cut, they actually don’t pay any less in taxes, because they are already hiding all their income? ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [July 26, 2012, 10:46pm UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/24 "2012-07-26T22:46:16Z")
> [@Ravenman](#): > > Does this theory work in reverse? That when taxes for the rich are cut, they actually don’t pay any less in taxes, because they are already hiding all their income? Probably for the super wealthy. Many of these people will move their money into more productive assets that may result in additional taxes being paid at the lower rate. ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [July 26, 2012, 11:24pm UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/25 "2012-07-26T23:24:26Z")
Remember in 2008 when Charles Gibson confronted Obama with the fact there is not necessarily a correlation between tax increases and revenue increases? Obama admitted as much but stated that he favored increasing taxes on the rich out of fairness. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [July 27, 2012, 1:04am UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/26 "2012-07-27T01:04:54Z")
Tax increases increase revenue, but they usually increase revenue less than expected. ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [July 27, 2012, 1:21am UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/27 "2012-07-27T01:21:56Z")
> [@adaher](#): > > Tax increases increase revenue, but they usually increase revenue less than expected. That’s not necessarily true for the wealthiest people. [Andrew Mellon](http://en.wikipedia.org/wiki/Andrew_W._Mellon) figured that out in the 1920’s. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [July 27, 2012, 1:47am UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/28 "2012-07-27T01:47:24Z")
> [@adaher](#): > > Tax increases increase revenue, but they usually increase revenue less than expected. And you’re using this as an argument for smaller increases? I agree with what others have said. I sense a lot of bullshit behind these predictions. We’re being told that if we rescind the Bush tax cuts it will destroy the economy and ruin the country and end all life. But at the same time we’re told there’s no point in rescinding the tax cuts because it wouldn’t raise any significant amount of money. If Mark Twain were alive today he’d be telling us about lies, damned lies, statistics, and the stuff you hear on FOX. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [July 27, 2012, 4:09am UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/29 "2012-07-27T04:09:41Z")
Like I said earlier, I don’t oppose eliminating the Bush tax cuts, I just recognize that it doesn’t actually solve anything. We have a spending problem. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [July 27, 2012, 4:22am UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/30 "2012-07-27T04:22:48Z")
> [@yorick73](#): > > WTF are you talking about? Common sense dictates that a sum of money may be huge for an individual small business owner but next to nothing for the federal government. So, again, WTF are you talking about? > > Yes, I am aware of the marginal tax rates but thanks for pointing out the obvious. Of course they can afford to pay more than those at the bottom. They do pay more than those at the bottom. What’s your point? The question is whether the small amount raised is justified in light of the potential harm to small business owners and the economy. Perhaps innumeracy was the correct charge. Comparing apples with apples requires that you look at the whole on both sides of the equation, or look at the part on both sides. To ask a millionaire to contribute only a few thousand dollars so the country can reduce its deficit by the better part of a Trillion dollars (a “small amount” 😃 ) doesn’t seem unwise. (Yes, I’m now comparing one apple with a bag of oranges – that’s your error in reverse.) As to what’s obvious, that the tax affecting incomes over $250k has very little effect on $300k earners is consistently misrepresented. And tax rates on the rich have never been lower; supply-sidism has been disproved, at least to anyone with an open mind. The claim that taxes on the rich must be lowered regardless of how low they already is just … silly. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [July 27, 2012, 6:27am UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/31 "2012-07-27T06:27:48Z")
> [@adaher](#): > > Like I said earlier, I don’t oppose eliminating the Bush tax cuts, I just recognize that it doesn’t actually solve anything. We have a spending problem. I agree we have a spending problem. But that has nothing to do with the deficit. That’s money that we already spent and we can’t unspend it at this point. We have to pay that back the hard way just like any other debt. If you knew somebody who was $100,000 in debt and they came to you asking for advice, would you tell them to ask their boss to cut their salary? Of course not, because that’s insane. When you’re in debt you need to increase your earnings not decrease them. That’s so obvious a ten-year-old could figure it out. But somehow it eludes a bunch of people who claim to know what they’re talking about. The government is fifteen trillion dollars in debt and _they’re proposing a tax cut_? The only thing useful about tax cut proposals are they show whose opinions we should be ignoring. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [July 27, 2012, 6:32am UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/32 "2012-07-27T06:32:42Z")
The problem is that unlike individuals, when the government spends $1000 on program A, they start off believing that next year’s spending on program A should be $1050. If they only spend $1025, then that’s a cut. And that’s why they have a problem. Also, unlike an individual, the government can decree an increase in their income. People can’t do that. If someone is running a deficit, they generally solve it by cutting spending. The most important thing about individual budgets is that there is little relation between how much money someone makes and their financial health. A person can make $25,000, and if they spend $24,000, they are in wonderful shape. If someone makes $10,000,000 and spends $11,000,000, and pretty soon something happens to them which they call “bad luck”. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [July 27, 2012, 6:39am UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/33 "2012-07-27T06:39:35Z")
> [@adaher](#): > > Also, unlike an individual, the government can decree an increase in their income. People can’t do that. If someone is running a deficit, they generally solve it by cutting spending. Not when your debt is bigger than your income. When that’s the case, you can cut your spending to zero and your debt will still be there. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [July 27, 2012, 6:57am UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/34 "2012-07-27T06:57:58Z")
But you cannot increase your income, so if you can’t pay back your debts, bankruptcy is the only option. While the government can increase it’s income from the current 15% base, it will never be able to raise enough to cover spending at 25% of GDP. ---
**Author:** ![Johnny\_L.A](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnny_l.a/32/1084_2.png) [@Johnny\_L.A](https://boards.straightdope.com/u/Johnny_L.A)\ **Post date:** [July 27, 2012, 1:55pm UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/35 "2012-07-27T13:55:36Z")
> [@yorick73](#): > > I don’t know if cutting spending would hurt the economy more or less than raising taxes. If cutting spending resulted in more money in the pockets of private citizens then I would not think that cutting spending would have an adverse effect of the economy. Cutting spending results in _less_ money in the pockets of private citizens, because A) the people who benefit from government programs such as senior citizens will get less money or will have to pay more of the money they have to cover expenses that are no longer covered; and B) there will be fewer jobs through which people can make money because the tasks will not be funded. Not only that, but reducing spending _costs_ more. For example, we all use freeways. Where I live, freeways are heavily used by trucks. Trucks damage the freeway, resulting in deep ruts and such. If the freeway isn’t repaired, it results in an unsafe situation and there are more accidents. Accidents not only cost the people involved in them, but they also cause thousands of people to be stuck in traffic. Truck drivers waiting in traffic drive fewer miles than ones who aren’t, so their productivity is adversely affected. People trying to get to work lose productivity. There’s even the odd person who is one tardiness away from losing his job. How about bridge collapses? They happen. First, it’s more expensive to build a new bridge than to maintain an existing one. Second, you have the loss of productivity while the new bridge is being built. And then you have the people who are killed, who are no longer working at all; plus the expenses of their families who have to dispose of their remains. Oh, and there are the inevitable lawsuits. Isn’t it better, even in a weak economy – _especially_ in a weak economy – for the government to spend money? Infrastructure construction and maintenance need do be done. Doing them employs people. Employed people have money in their pockets. Health costs are lower when people are treated earlier, so spending money on Medicare results in savings. Job programs put people to work, and people who go through them are better prepared to take jobs in the private sector. Benjamin Franklin would have called cutting taxes being penny wise and pound foolish. Sure, cutting taxes allows people to keep more of the money they make – if they have a job. If you have a job, then you can afford to pay higher prices for your groceries when the infrastructure disintegrates and results in higher prices for consumer goods. And hey, I’m telecommuting today. What do I care if the roads are unsafe? I’m not the one who’s driving on them! A patriot thinks of the country; not himself. ---
**Author:** ![Kearsen](https://avatars.discourse-cdn.com/v4/letter/k/82dd89/32.png) [@Kearsen](https://boards.straightdope.com/u/Kearsen)\ **Post date:** [July 27, 2012, 2:16pm UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/36 "2012-07-27T14:16:13Z")
> [@Little\_Nemo](#): > > Not when your debt is bigger than your income. When that’s the case, you can cut your spending to zero and your debt will still be there. Which is why you cut spending enough to make payments on the debt you owe… This is getting silly. ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [July 27, 2012, 3:37pm UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/37 "2012-07-27T15:37:15Z")
> [@septimus](#): > > Perhaps innumeracy was the correct charge. Comparing apples with apples requires that you look at the whole on both sides of the equation, or look at the part on both sides. To ask a millionaire to contribute only a few thousand dollars so the country can reduce its deficit by the better part of a Trillion dollars (a “small amount” 😃 ) doesn’t seem unwise. (Yes, I’m now comparing one apple with a bag of oranges – that’s your error in reverse.) There was no error in my statement. The error was in your original statement. This is a bit more coherent but still, I think, incorrect. The question is whether the tax will hit small businesses (maybe resulting in lower employment) and drive the money of the wealthy into less productive investments. The cure may be worse than the disease. > [@septimus](#): > > As to what’s obvious, that the tax affecting incomes over $250k has very little effect on $300k earners is consistently misrepresented. Not misrepresented by me or many on this board. But thanks for making the point nonetheless. > [@septimus](#): > > And tax rates on the rich have never been lower; supply-sidism has been disproved, at least to anyone with an open mind. The claim that taxes on the rich must be lowered regardless of how low they already is just … silly. We are not talking about lowering taxes on the rich. The question is whether this is the best time tor raise taxes on the rich. Like I stated above, Obama admitted that there is not necessarily a correlation between tax rates and revenue but thought tax rates should be higher for the rich out of fairness. ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [July 27, 2012, 3:53pm UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/38 "2012-07-27T15:53:39Z")
> [@Johnny\_L.A](#): > > Cutting spending results in _less_ money in the pockets of private citizens, because A) the people who benefit from government programs such as senior citizens will get less money or will have to pay more of the money they have to cover expenses that are no longer covered; and B) there will be fewer jobs through which people can make money because the tasks will not be funded. So, using your logic, increasing government spending will put more money in the pockets of private citizens. Do you know where that money comes from? Judging from your response I’m guessing you don’t. The government cannot create wealth…only transfer it from one person to another. And, yes, that’s true even if the government turns on the printing press or borrows from China. > [@Johnny\_L.A](#): > > Not only that, but reducing spending _costs_ more. For example, we all use freeways. Where I live, freeways are heavily used by trucks. Trucks damage the freeway, resulting in deep ruts and such. If the freeway isn’t repaired, it results in an unsafe situation and there are more accidents. Accidents not only cost the people involved in them, but they also cause thousands of people to be stuck in traffic. Truck drivers waiting in traffic drive fewer miles than ones who aren’t, so their productivity is adversely affected. People trying to get to work lose productivity. There’s even the odd person who is one tardiness away from losing his job. > > How about bridge collapses? They happen. First, it’s more expensive to build a new bridge than to maintain an existing one. Second, you have the loss of productivity while the new bridge is being built. And then you have the people who are killed, who are no longer working at all; plus the expenses of their families who have to dispose of their remains. Oh, and there are the inevitable lawsuits. Well, you’ve made the case for not cutting money for infrastructure upgrades. I didn’t realize we were arguing that point… > [@Johnny\_L.A](#): > > Isn’t it better, even in a weak economy – _especially_ in a weak economy – for the government to spend money? Infrastructure construction and maintenance need do be done. Doing them employs people. Employed people have money in their pockets. Health costs are lower when people are treated earlier, so spending money on Medicare results in savings. Job programs put people to work, and people who go through them are better prepared to take jobs in the private sector. If the government had a big pile of money to spend I would agree with you. But all of the extra money being spent is being printed or borrowed. You seem to think the economy would be better off if the government hired half of all Americans to dig holes and the other half to fill them back in. > [@Johnny\_L.A](#): > > Benjamin Franklin would have called cutting taxes being penny wise and pound foolish. He might have said that about raising taxes. Also, it would make more sense. The government may collect more revenue but may damage the economic engine in the process. That is penny wise and pound foolish. > [@Johnny\_L.A](#): > > A patriot thinks of the country; not himself. So anyone who disagrees with you is unpatriotic? That’s 3rd grade reasoning. I think that increasing taxes that affect small businesses would slow economic growth and lower employment. I think that the wealthy can use their money more productively than government…which would benefit the economy. I am neither a small business owner nor wealthy. I believe this is putting country before self. Am I unpatriotic? I think you are wrong and misled but that you firmly believe that taxing the wealthy more will help the country. I don’t think you are unpatriotic…just wrong. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [July 27, 2012, 3:56pm UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/39 "2012-07-27T15:56:56Z")
> [@yorick73](#): > > Probably for the super wealthy. Many of these people will move their money into more productive assets that may result in additional taxes being paid at the lower rate. (Regarding whether changes in tax rates actually effect the super-wealthy): [See page 9.](http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/98xx/doc9884/12-23-effectivetaxrates_letter.pdf) The taxes actually paid by the top 1% clearly track with the Reagan tax cuts, then the 1986 tax increases, then the Clinton tax increases, and the Bush tax cuts. Your theory that the super-wealthy as a class are not effected by changes in the tax rate seems to be unfounded. ---
**Author:** ![Beware\_of\_Doug](https://avatars.discourse-cdn.com/v4/letter/b/278dde/32.png) [@Beware\_of\_Doug](https://boards.straightdope.com/u/Beware_of_Doug)\ **Post date:** [July 27, 2012, 4:06pm UTC](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470/40 "2012-07-27T16:06:02Z")
> [@Johnny\_L.A](#): > > Benjamin Franklin would have called cutting taxes being penny wise and pound foolish. > > Sure, cutting taxes allows people to keep more of the money they make – if they have a job. If you have a job, then you can afford to pay higher prices for your groceries when the infrastructure disintegrates and results in higher prices for consumer goods. And hey, I’m telecommuting today. What do I care if the roads are unsafe? I’m not the one who’s driving on them! > > A patriot thinks of the country; not himself. A patriot today thinks of his tribe - people who are _like_ himself. They are his country. Anyone else is unpatriotic. [Previous page](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470.md?page=1) [Next page](https://boards.straightdope.com/t/why-let-tax-cuts-for-the-wealthy-expire/629470.md?page=3)