Sorry guys, just to clear up the tax cut thing. Cutting taxes only helps if it revives an economy. For example you currently take £100 in taxes. You cut tax by 10% giving a revenue of £90. Now you're gambling on whether or not that extra £10 leads to growth of 11.1%. If it does then you're back to where you're started, if your country doesn't grow as a result then you've lost 10% of your tax revenues. (using small numbers to make it clearer)

Tell me if I'm wrong with this thinking, but cutting taxes seems like a gamble to me.

As for taxing the poor. The fact that poor people make up such a small percentage of income tax revenue is a good indicator of exactly how big the gap is between rich and poor in the US. The thing is, cutting 1% of tax for poor people, and 2% of tax for rich people seems unfair to me. Is that the way these tax cuts will work? (as I said before, haven't studied them, don't know)

In this country poor people end up paying a higher percentage of their income as tax because their cigarette's cost the same amount as rich people cigarette's, poor people are more likely to smoke, petrol expenditure is a higher percentage of their income because they drive the same distance as rich people. Council tax hits people quite unfairly adding to the inequality. In the end a poor person ends up paying about 20% more tax than a rich person (as a proportion of their wage). And to someone on half the average income, that extra £2000 is worth a lot more than £2000 to a rich guy with an income >£60K.

Anyway, I guess what I'm trying to say is, just because poor people don't earn as much as rich people, that does't justify taxing them more to make up for it (as happens in the UK, and presumably the US). And cutting taxes to generate growth is a gamble, even if the odds are good.

Originally posted by dom
Sorry guys, just to clear up the tax cut thing. Cutting taxes only helps if it revives an economy. For example you currently take £100 in taxes. You cut tax by 10% giving a revenue of £90. Now you're gambling on whether or not that extra £10 leads to growth of 11.1%. If it does then you're back to where you're started, if your country doesn't grow as a result then you've lost 10% of your tax revenues. (using small numbers to make it clearer)

Tell me if I'm wrong with this thinking, but cutting taxes seems like a gamble to me.

As for taxing the poor. The fact that poor people make up such a small percentage of income tax revenue is a good indicator of exactly how big the gap is between rich and poor in the US. The thing is, cutting 1% of tax for poor people, and 2% of tax for rich people seems unfair to me. Is that the way these tax cuts will work? (as I said before, haven't studied them, don't know)

In this country poor people end up paying a higher percentage of their income as tax because their cigarette's cost the same amount as rich people cigarette's, poor people are more likely to smoke, petrol expenditure is a higher percentage of their income because they drive the same distance as rich people. Council tax hits people quite unfairly adding to the inequality. In the end a poor person ends up paying about 20% more tax than a rich person (as a proportion of their wage). And to someone on half the average income, that extra £2000 is worth a lot more than £2000 to a rich guy with an income >£60K.

Anyway, I guess what I'm trying to say is, just because poor people don't earn as much as rich people, that does't justify taxing them more to make up for it (as happens in the UK, and presumably the US). And cutting taxes to generate growth is a gamble, even if the odds are good.

Dom , well I'd say you may not understand the tax structure here but thats okay. Everyone doesn't pay the same % of taxes. The tax break will give the bottom 50% and higher % tax cut but even though the top 50% will get a lower % of the cut , its still amounts to more money as it may be a smaller % but of a larger whole. Plus, this tax cut will mean that people in the bottom 50% will actually end up paying no taxes at all. I think thats a good thing. But we aren't really talking about who gets what % because thats just smoke and mirrors. The big theme is power leaving government and going back to the people. With the socialist take-over them going on over here, thats the danger. More power to the people means less "control" for the government. BTW, I'm against all the new invasions of privacy by Homeland security too. I look at facts not political sides.

Its not a gamble at all. You know what is a gamble? Raising taxes to implement a new social program in which most of the cost are eaten up by politicians administrating them. No one is after stopping programs that benefit less fortunate people, we just want the waste at the top cut out so more gets to them while taking less to run the entire program. Its called efficiency and its truly lacking at the government level.

The idea that cutting taxes "cost" is ridiculous. Tax increases cost. I don't really have too much to add on how our tax structure is broken up. You may not have read the IRS data I posted above before posting. I can't add to that explaination any more than that about what % of taxes rich and poor pay.

As for all the little taxes thrown in, I'm with you on that. Do away with all of them. Send every household a bill for the total taxes once a year, have them due on April 15th and then have election day on April 16th. I think we'd see some shocked people if they truly knew how much they pay all together.

I did actually read the IRS stuff. All it really proves is that rich people in the US are VERY rich, while poor people are VERY poor. I'd be far more interested in seeing a percentage for how much of a families income ends up going on tax.

Tax cuts cost in terms of costing the government money. 10% less tax, means 10% less income for the government. The only way to balance the books in that case is to cut back 10% of the governments expenditure. That would be easy to do of course, just by downscaling the US military a bit, but that's not what Bush is doing. He's increasing his spending, gambling on the idea that the tax cut will lead to enough growth in the economy to pay for this increased spending.

Tax cuts certainly aren't a gamble if you also reduce expenditure.

As for petrol tax, that was maybe a bad example for me to use. Personally I think it's a pretty good idea to make cars as expensive as possible, but only as long as sensible alternatives are provided. i.e. in London we have lots of Buses and Tubes. Cars just clog up the roads and make the buses travel slower. If you compare the length of a bus (70 passengers, ~60 foot?) to a car (1 passenger, 18 foot), then you can see that as far as congestion goes, buses are much much better. So yeah, perhaps petrol tax is a good idea, but the poorer members of society should be getting vastly reduced taxes in other areas to make up for this.

Dom, I wouldn't disagree that there may be a shrinking middle class, poor get poorer, rich get richer - despite plenty of oppurtunity. Personally, and since schools were mentioned, I think we should be laying some blame there. TC points out how a lot how the free market system isn't taught - to which I agree - kids are taught to become worker bees. You won't hear too many kids say they want to be entrepreneurs when they grow up. Yet, our 'left' here in the US won't loosen their reigns on public schools (or any government program for that matter) and support the school vouchers allowing poorer parents to send their children to private schools.

Making cars as expensive as possible? Wha? That might be great for London – but consider the suburbs and rural areas where there are no buses.

[Edited on 15-5-2003 by Bob88]

London is a bit of an exception, so the Congestion charges that have just been introduced are probably the best way of "fining" people for using their cars. Personally I'd prefer a complete ban on cars inside the congestion area (except residents and tradesmen).

And petrol taxes generally can discourage the use of cars, which are one of the biggest sources of CO2 etc... You don't have to buy a car that does 15 mpg, it's easy to get cars which manage 60+ in Europe now. I think the average American car is 21 at the moment (SUV's push it down). Anyway, this could get back to the global warming debate, so I'll just leave it by saying that the UK is trying to hit it's Kyoto target, which means higher petrol taxes are benficial for that right now.

As you say, ways need to be found to pull people up from under-priveleged backgrounds, in this country we used to have assisted places. The school I went to had 50% of it's students on assisted places where the government covered the majority of the cost of sending someone to the school. In fact, it was cheaper for the education system than sending the pupil to one of the local state schools. Anyway, Labour got rid of it, which meant that all of those kids who could have got to the Grammar, now end up at the local comprehensive where they've got far less chance of truly excelling. I never understood why it's the right that like this idea, and the left who hate it...

I think you're over my head at this point.. I have no understanding of the system in which you are refering so I will accept your assessment.

Originally posted by Byrd
Tax cuts won't help. SPENDING cuts would help.

Would you care to clarify who needs to cut spending because its seems as far as the government is concerned the two distinct theories are, decrease spending and lower taxes or increase spending and raise taxes?

Did you mean that the general public needs to cut it's spending to give the government more?

My only point is that if every private household has to budget itself monthly, weekly, daily or whatever... why can we not expect our government to do the same? The consitution limited the role government was to play very explicitly and it was never meant to be the giant pool of waste is has become.

It never meant to encourage lifelong politicians because holding power over a long period of time breeds corruption. I see this on both sides of the major parties..ie, Thurmon, Dole, Byrd, Gore, Hollings. Public service was meant to take it's leader from the private sector, or state government, have them serve one or two terms and then return to being productive members of society. Thomas Jefferson went back to farming after being president. Some of these guys went from college to the senate and will never know what its like to make their own way in the world. Talk about being detached from the common man.

Originally posted by dom


As you say, ways need to be found to pull people up from under-priveleged backgrounds, in this country we used to have assisted places. The school I went to had 50% of it's students on assisted places where the government covered the majority of the cost of sending someone to the school. In fact, it was cheaper for the education system than sending the pupil to one of the local state schools. Anyway, Labour got rid of it, which meant that all of those kids who could have got to the Grammar, now end up at the local comprehensive where they've got far less chance of truly excelling. I never understood why it's the right that like this idea, and the left who hate it...

Yep. Labour - the political party in the UK which directly compares to the US Democrat party is the one which has been raising our taxes sky high and pushing those people from less wealthy backgrounds away from recieving a better education. But you state that the right wing is the advocate for this. Get real. This was a Socialist Labour proposition. The right of the Labour party tried for as long as possible to hang onto the grammar schools but the dreamers on the left want to create their unfeasible utopian society and have been targetting the grammar schools for 20 odd years now because they see them as having conservative, right wing value. The right wing had to dispose of the grammar school system to keep the powerful left element in their party quiet. To say otherwise is either devious or misinformed.

You can't have it both ways.


Tax cuts have a huge beneficial difference. Just ask anyone who owns a business or works for themselves. Percentage-wise the wealthiest (in the UK anyway) pay far more of their gross income in taxes than those who are less well off.
To say tax cuts are not a good thing for an economy is bs. Capitalist societies thrive on free moving income. The more money people have of their income to spend, the more that money circulates and generates wealth. It goes back into the pockets of independent business and is spent much more efficiently than any government could manage.
You only have to look at socialist systems (take Sweden for an example, they're taxed to the hilt) to see that more government control of a country's wealth leads to a deflating economy. Sure the trains run on time and you get good healthcare, but for how long? Nearly all those countries who tax thier citizens at higher rates are also suffering with tremendous economic problems. Those with lower taxes have thriving economies. All governments are notoriously bad at spending their population's money. Freeing it up and returning it to the market place where it will be used better economically is the wisest thing to do.
An independent business can make a dollar do more work than any government can using the same dollar. I run my own business. I've noticed that under a government that hits me with more taxes I'm worse off. And because I'm worse off, my employees are worse off. Because they are worse off anyone who they would have spent money with before is worse off. Domino effect to the nth.
And all the while the Labour government gathers more taxes and wastes huge amounts of that money on bureaucracy and failed industry. Give the money back to the people - they are the ones who know how to spend it wisest.

[Edited on 15-5-2003 by Leveller]

[Edited on 15-5-2003 by Leveller]

Originally posted by Leveller
I've noticed that under a government that hits me with more taxes I'm worse off. And because I'm worse off, my employees are worse off. Because they are worse off anyone who they would have spent money with before is worse off.

....and as everything runs its course, the governments who would have collected a % of this as tax are worse off as they chose to keep the 1 dollar instead of letting it grow to 10 dollars and then collecting 3.50. No one said they were brilliant. But it goes back to the power struggle between the people and government.

Originally posted by dom


"Legendary currency speculator and philanthropist George Soros, whose wealth is estimated at $6bn, also dismissed the tax cuts.

I'm glad he's not making the decisions. I guess when you're rich like that, you can put politics ahead of the whole countries well-being but the ones who depend on the everyday economic strength can't afford anymore government spending increases as much as we need business to fire back up again. I fail to see how a rich government and poor business community solves this. If our government were efficient and really lacked proper funding, I'd be on your side of this but how can you defend an entity whos waste is 73% of every dollar in administrative cost and corruption?

Dom, you argue so hard against the US government on every other thread and how we need to fix things. Money is power and we give it enough and more. You understand that the US budget for 10 years is 128 trillion dollars? the tax cut at its most is 750 billion but it looks more like 350 billion now. This cut will totally relieve the poor in the US of any tax burden whatsoever and yes it will let a lot of wealthy people keep their money too. If you give a tax cut, it has to, by definition, apply to tax-payers. If this is unacceptable then I really have only one question. How much is enough? I need a number. How much do we have to take from those who earn it? Just name it because I would like to know. Do we lose half? 60%, 90%? How long to we realize that if its not worth it to work or start a business, there will be no source of income and thus no source of tax?

Answer me this, if my family can run on a budget, and use some credit when a little unforseen crisis comes up and then repay it when things get better, why can't I ask my government to set itself on a budget too? If they are so worried about the economy, why has their spending increased even passed the purposed budget? If taxing and giving to the poor really helps them , then why after 50 years of this do we still have poor? Because only 27cents of everydollar slated for them gets to them. Hell, most charities have a 75% delivery rate to the poor, so why can't the government? No one wants the poor out on the street, we want the people responsible for mis-using funds meant for them out on the street. We want an end to corruption and (for old Fritz Hollings) it's exasserbation.

Efficiency is the key. Businesses do it or they fail but for some reason our government is allowed to run willy-nilly through 1 billion dollars every 8.2 hours without any accountability and when we threaten to do something they start their scare tactics about taking away social security and medicare when all they really could do is cut down on ice and booze for Ted and let them bring their own. Wonder what that would save on the budget?

In a capitalistic society, only a good supply/demand ratio can create a robust economy. Thats highschool level economics over here. This issue isn't foggy at all. We know how it works and responds to stimulus and tradgedy. We've got hundreds of years of history on it and two great examples in the last 50 years. So Mr. Soros need worry not, the economy will and is already recovering. We did get a 40 billion dollar cut last year and look how the economy has used it? We'll get this old mule pulling again, she just needs the feedbag strapped on for a while.

This quote was one that worried me more, I should have really put it in my message...

"Mr Buffett, listed by Forbes as America's second-richest man, said he already pays about the same income tax rate as his receptionist - about 30%.

But with the planned dividend tax cut, he could end up paying a mere 3% in income taxes, which he said "seems a bit light". "

I only argue against the idea of having a tax cut to help out rich people. That just seems a little unnecessary to be totally honest.

The wasted money through administration and corruption seems ridiculous to me. Why don't any of the governments run on a campaign policy of sorting out administration and corruption costs?

As for reviving the economy, economies go up and down, I'm not sure how much this tax cut is going to affect things, I'm not an economist. However, it seems that two fairly worldy business men are saying that this won't immediately revive the economy but will have an effect in the long term. But at what cost? Why reduce the tax bills of rich investors from 30% to 3%? I just think that sounds a bit like Dubya helping out his mates.

Dom give it up.

America is great.

America will be trashed by the rest of the world.

America will be destroyed and the rest of the world become slaves.

You'll have your way, but when you get it you will wish you didn't.

As for can Bush relate to everday living...CAN YOU FARM?

CAN YOU BUILD SKYSCRAPERS?

Why should you compare Bush any different.

CAN YOU SPEAK IN FRONT OF HALF THE WORLD?

No.

You can't even feed yourselves if there weren't a super market.

Stop bi.tching about Bush being too "pampered" we're all too pampered.

You're right you know, from now on I won't question any of the US governments actions. I'll just assume that because the US was created by God, anything it does is right. Pah. I don't want to see the US destroyed, I just want to see it practice what it preaches with an ethical foreign policy.

It might also be nice if domestically, the US didn't just increase the gap between rich and poor year on year. But I guess you prefer it that way... whatever. It doesn't really affect me, and I really don't have any right whatsoever to discuss US internal affairs I suppose, so I'll stick my nose out of it from now on.

Actually Dom, I am attacking our government on this issue. Its too big and too controlling and too intrusive. Mr. Soros and I have obviously heard different takes on the tax cut. I agree that 3% is too light while some pay 15%, 27%, 33% that make less than 100,000 a year if what he says is true. However, its a fact that most rich , and I mean over a million a year, find numerous loopholes to avoid taxation in the first place. Thats what we need to stop.

From what I've seen the people from the poverty level to about 40,000 a year will get the largest % cut. Now, like I said, even a smaller % of a million a year is more than a larger % of 40,000 (simple math) but small businesses are the ones hurting. It may look like a fortune for one to make 250,000 a year but then you add in capital, overhead, insurance, worker's benefits plus a whole slew of other things that come out of that and the owner might get away with 50,000 a year. Now, his business has to pay tax on the gross amount and the he has to pay it again on the take-home part of it and his employees have to pay again on what they make. See how many times the same dollar was taxed? Then, everything we buy gets taxed again then we pay tax on property and vehicles. When its all said and done, for all his late nights and stress the government ultimatly ends up with the larger % of his efforts and the efforts of his employees and I think this is one area that Pres. Bush has been weak in. He needs to really help the small businessman.

As for the long/short term argument, doing nothing won't have an effect either way so if we get a good study long term growth and not a huge explosion, economically thats more sound. Huge economic explosions almost always end with the harder fall, ie the 90s dotcom explosion and then the reallity check we are in now. I really doubt that there is an honest way to spur an explosive growth. It usually happens from false earnings reports..ie..Enron from '95 to 2000. That lie multiplied every year from the time the "prepay" which was really a loan was made by Citi-corp. A lot of people don't put much stock in Alan Greenspan but when he began talking about this in 1997, I became alarmed because I knew he was right and no one else would listen.

Looking back I'm sure his accuracy is no consolation to him and he would have rather seen it back off slowly rather than hit the wall at full speed. I was a die hard democrat then and even I began to question what we were doing economically. We kept adding all the gains and it was just too big no other way to say it. My wife and I argued a lot about our spending in those days. She would never believe that it would happen because she hadn't seen it in her career. She didn't remember the late 70s and I really barely do. She wouldn't believe we could be attacked by terrorist either and I'm sorry to say I was proved right about that in less time than I thought.

The only thing I was wrong about in that discussion was my prediction that if it happened, that would be it for the old USA. I expected total financial breakdown even as I watched the towers fall. Thats why I'm so optimistic about this country now. I never expected to see my fellow Americans take it in stride and keep going. I was under the media influence which I've now seen to be false.

The economy usually tracks in a havesine wave form when you plot it long term. We see the high end spikes reflected just a pronounced in the low end so the more slowly and study the economy rises, the less harsh the decline and trough. The idea is to straighten the curve as much as possible. I have a minor in business and econ and put a lot of time in trying to grasp this concept along with labor economics which is a nightmare in itself.

When looked at through a scientific view, which I try to do, we get a baseline of what affects the economy. Now, last night I hear Alan Combs on Fox New's Hannity and Combs ( Combs is the liberal view) talking about the Dems also have a tax cut plan so really, both sides and everyone sees what is needed. The only people I really here against it are the super-wealthy who find loop-holes for their money so taxation isn't really an issue in the same light as it is for the family trying to juggle both parents working and educating their children.

Ok, I didn't realise I was being bated by an banned member of ATS, so I'll just briefly comment.

Yeah, if you can afford an accountant you'll get off pretty lightly. I think it's the same for any bueracracy heavy system of taxation. But those loopholes could (and should) be shut.

Sounds like you know a lot of what you're talking about astro, but I'd still assume that you'd prefer for Bush to be reducing spending on the military etc. rather than ploughing ahead with a huge budget deficit?

Yeah, they have been ranting on that since a tax cut to spur the economy has been proposed. Its merely scare tactics and when researched has no basis in fact. Their playbook is an old one with really no new plays. They preach class envy and scare old people to death. Its in their best interest to keep us all divided.

The wording of the bill itself counters all their allegations. Taxpayers will get the tax cut. If non-taxpayers got the money, it would be welfare no would it not? We already fund that to the hilt and we have healthy people who could earn their own way (who make a personal decision to remain un-educated and lazy ) who make a career out of waiting for money someone else had made. No one in this country is held down. For some, they just aren't willing to put in the work it takes to be self sufficient. They want to either start at the top or not start at all. The mistake is the ideology that being born makes us somehow entitled to a preconceived standard of living. Poeple like this in the US are spoiled, I will admit. Its a great number of us too. But, the economy doesn't benefit from these people it actually suffers from them.

I'm all for not letting anyone starve even if it is by their own choice, but when our goal is to spur economic growth, we have to put it in the most logical place to do that. Again, we are back to the principles of basic economics. Its all about cause and effect.

I realize that people who make over 500, 000 a year don't really hurt financially the way someone who makes less than 100, 000 or at least thats my perception but if they are towing the most of the tax burden then by defenition, a tax cut would almost have to affect them too.

Look at it like this; if 10 people eat dinner at a restaurant, the bill comes. Its 100 dollars

The first 4 people pay nothing. They eat for free.
The next 2 only pay a 5 dollars each.
The next 2 pay 10 dollars each.
The next person pays 20 dollars.
The last person pays the remaining 50 dollars.

Now the next time they eat, the bill comes but since they have been such good paying customers, the owner only charges them 80 dollars.

The first four still eat for free.

The next 2 only now pay 4 dollars each.

The next two pay only 8 dollars each.

The next person pays 15 dollars.

And the last person pays the remaining 41 dollars.

The person that paid 15 dollars is mad because he only saved 5 dollars while the person who had paid 50 dollars saved 9 dollars. The two below him are mad at both of them because they only saved 2 dollars each and conversly the two below them are ticked at everybody ahead of them because they only saved a buck each. The bottom four cry the most foul because as non-payers, they got no savings from the discount yet still ate the same. As a result, all 9 take it out on the tenth who, being a bit put out just doesn't show up the next night. Guess what's missing when the bill comes? Yeah, his 41 dollars which now has to be absorbed by the remaining 9.

I hope I got that right. I formatted my drive for a new OS yesterday and had to do it from memory. Don't get me wrong, I'm one of those who pays the 5 dollars but I want the 50 dollar guy to keep coming to dinner.