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Bush's tax plans

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posted on Jan, 25 2007 @ 04:22 PM
Bush's tax plan was incredible - eliminating tax the same as a "dependent" up to 7,500 per person to 15,000 per family.

This is an incredible proposition because it is one that solves the problem without INCREASING US DEBT!

posted on Jan, 27 2007 @ 06:46 PM
How will it not increase US debt? If you're going to take in less tax revenue from the working class (and God knows I think that's a good idea) you've got to get that money back from somewhere. Any failure of GDP to rise in response to a tax cut to achieve revenue neutrality has to be addressed with a tax increase in some area which can bear it.

Meanwhile, the "balanced budget" he's calling for has begun by cutting our budget allowance for payment of interest on the national debt significantly, underfunding it by over 200 billion. Even without a deficit, underfunding of interest payments will cause the debt to continue to grow.

Unfortunately, Bush will never truly have the luxury of being a lame duck, because right now he's fighting for all he's worth to make sure that he doesn't come in below Hoover and Harding on the presidential rating lists of the future. What we're seeing now is a reflection of that aim being executed in a short-sighted, simple-minded way. He wants to be all things to all people in an attempt to buy popularity, when what he should be doing is making real adjustments to his policies.

This is THE neoconservative administration: probably the only one that there ever will be the way it looks right now. Bush should be making adjustments to try to vindicate himself and his beliefs, backing up to 1992 and 2003 respectively and asking what the hell went wrong for his party and how he can make the party do what the voters want it to again.

That's not happening though, and it looks like the next two years will be a lot like the previous 6, just with more hell to pay from congress and consequently even more tugging at the constitutional reigns from the executive, which means I wouldn't expect the promises of the state of the union to materialize as a budget correction or any strong domestic agenda. It is the Bush family curse to become a slave to foreign policy.

posted on Jan, 27 2007 @ 08:34 PM
I have no time for a proper response so my basic response is that I have believed for years now the US needs to cut back its Welfare expenditure tremendously (which this allows in part) it currently is about 600Billion USD of the expenses. It's almost 3/2 that of the Defense Budget.

posted on Jan, 28 2007 @ 02:14 AM
I agree with the sentiment which I believe I see underlying your response.

A liberal would phrase it as "the government should support the ultimate end of our economy: the procurement of necessities for all participants, by facilitating the things that a individual consumers cannot achieve on their own in the market".
A conservative would phrase it as "the government has no business doing poorly what the people could do well for themselves".
I agree with both.

For that reason, I believe that a tax cut intended to improve access to things such as healthcare needs to be meticulously researched and planned in such a way that it comprehensively stands in for and outperforms any government programs it is designed to reduce dependence upon, so that a spending cut is an integral component of the policy along with the tax cut. This reduces (though not necessarily completely eliminates) the need to pay for the tax cut with a tax increase in another area.

This of course means that only some of our "welfare" expenditure can be eliminated in the near time.

In the case of the Bush plan to put up a standard deduction for health care, we see a policy that fails several of the criteria I'm mentioning to a small degree, so while it will not implode the universe or anything like that, it won't be a net positive thing.

If you're single and earning the median income (about $23,500) and taking the standard deduction, you have 18,400 in taxable income, and you pay 2382 in taxes. With your new deduction, your taxable income will be 10,900 dollars, and you'll pay 1257 in taxes. That gives you $1,125 more with which to buy insurance. The problem is that the average individual premium was $2,268 2 years ago, and premiums have been growing at an average rate of 11% annually over the last 5 years link.

In so many words, this plan can't get people healthcare. Those who most desperately need help with healthcare is helped by this plan, which means that there won't be any spending cuts (well, Bush might make cuts, but he hasn't done anything to make that fair for the people being cut).

For the removal of taxes from 7,500 dollars of your income to equal the average premium for health insurance, you would have to be making 81,500+ dollars annually (thus removing exactly 7500 dollars of your income from the 28% tax bracket, saving you 2,100 dollars).

Families pay an average of 4,400, so their income would also have to be at least 15,000 dollars into the 28% bracket to cover the average cost. That's 138,000 dollars for married filing jointly.

Of course if you're making that kind of money, there's a pretty fair chance that you've got benefits unless you're just a workaholic with three jobs and a moderate meth-amphetamine problem, so odds are that they are actually staring down the barrel of a nominal tax increase. In the case of a union guy getting 4.90 into the health and welfare fund hourly on top of his 32 dollar an hour wage, working 40 hours x 52 weeks, thats an extra 10,000 dollars - 7,500 deduction, for 2,500 dollars more taxable income at 25%, costing him 625 dollars a year- in my experience that won't quite wipe out your refund check, so not a huge deal- guys from the union I'm talking about would probably have spent that money on bait, beer, and gasoline on an Easter trip to Havasu, which bothers me not a bit because I hate that place and really don't care if their tourism slips a little, but I digress.

The big question, for which I don't pretend to have the numbers on hand to find an answer, is whether enough people will get nickel and dimed for employer paid premiums to make up for the 750 to 1,100 dollars going out to just about everybody. If I had to shoot from the hip I'd say that it's unlikely, unless the upper crust are paying premiums in the neighborhood of 50,000. Maybe I can work that out by looking at quintiles to see how many people we're talking about at which averages, but I really don't want to unless you're extremely curious because contrary to what this post might suggest, I hate math (I do however love typing, as you could probably guess).

So to wrap up, it seems to me like Bush may have either gotten some bum advice, or might have decided to try sneak a tax cut through the Democratic congress disguised as a break for insurance.

What he probably should have done was allowed full tax refunding in the amount of recipts for premiums filed with taxes for people making up to 200% of the poverty line, with a limit slightly below the average premium, in a bid to stimulate competition over that money and paid for it with a windfall profits tax on the medical industry calculated on a profit-per-covered individual basis and assessed at a level below present but which companies could be reasonably expected to get themselves below while still achieving a net profit increase if they covered more individuals or expanded benefits a little.

The hope there is that you can decrease demands for increases in coverage by welfare programs by getting the people who are close to qualifying but don't yet served in the market so that the liberal side of the principle I started this post with doesn't kick into action.

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