NeoCon-Artist Tax Cuts

Discussion in 'Current Events' started by unlawflcombatnt, Nov 10, 2005.

  1. unlawflcombatnt
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    unlawflcombatnt Guest

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    The rationale for the Neocon-Artist tax cuts has always been dubious. Though there's some theoretical basis for the tax cuts, the reality does not support their tax cuts.

    Tax cuts put more money back into the private sector of the economy. Part of the money goes back into the economy as either consumer spending or capital investment. (This is if imports and exports are excluded.) The part that goes into savings does not go back into the economy. Savings do not cause economic growth. In fact, increased savings shrinks the economy.

    Whether the tax-cut money goes into consumer spending, capital investment, or savings depends on what tax bracket receives the tax cuts. The more the tax cuts are slanted toward the affluent, the more that goes into capital investment and savings. The more the tax cuts go to the less affluent, the more that goes into consumer spending.

    Cutting taxes exclusively on the non-affluent would stimulate consumer spending mostly. Cutting taxes exclusively on the affluent would mostly increase capital investment or savings.

    If tax cuts were overly slanted toward the affluent, and consumer spending did not increase any, the tax cut money would go disproportionately more into savings than to capital investment. This is because consumer spending is necessary to create demand for capital investment. Consumer spending is necessary to create demand for the production that capital investment would facilitate.

    If high-income tax cuts cannot be productively invested, they "leak" out of the economy as savings. Thus, the degree of economic stimulation from tax cuts is determined by how much of it is recycled into the economy. The benefits of the tax cuts are greater if given to those who will spend it, rather than save it. (Again, this explanation excludes money "leaking" in or out of the economy through foreign trade.)

    The benefits of tax cuts on the wealthy is to create more capital to increase investment. The benefits are limited by investment opportunities. These investment opportunities are limited by anticipated returns on that investment. Anticipated returns are determined by anticipated demand for the production the investment facilitates. Demand for production is created by consumer spending, and to a lesser extent by demand for capital equipment. (However, demand for capital equipment is also limited by consumer demand for the production of that capital equipment.)

    The markets are currently "glutted with capital" according to the Wall Street Journal. Other sources maintain that the markets are "awash with cash." Earlier this year Warren Buffet stated there was a lack of investment "opportunities." All current indications are that there is abundant investment capital at present, but a lack of places to invest it. This argues against any further benefits to our economy by further tax reductions on the "investor" class. In contrast, it argues in favor of reducing the tax burden on consumers.



    The economy needs balance between the "means of production" & "means of consumption."
     
  2. 5stringJeff
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    5stringJeff Senior Member

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    Your theory would be fine, except for one thing: the lower income classes pay little, if any, income taxes. Therefore, there are no tax cuts to give them.

    It is also ethically wrong, IMO, to tax people at different percentages. All people, regardless of income level, should pay the same percentage of income taxes.
     
  3. Avatar4321
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    Avatar4321 Diamond Member Gold Supporting Member

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    Also, you forget that when people save money the banks they save money in now has extra money to loan out to people who need money to start businesses.

    There is nothing bad about saving ones own money. And the fact is every time a tax cut has been given the economy does grow and more revenue comes into government.
     
  4. Zhukov
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    Zhukov VIP Member

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    Savings in banks alows the banks to give people loans. People who take out loans typically spend money.

    Provided you aren't 'saving' your money under your matress, even saving contributes to the economy.
     
  5. Mr. P
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    Mr. P Senior Member

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    I think or new member is just trying to promote his web site, as he obviously doesn't have a clue about economics or finance.
     
  6. Hobbit
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    Hobbit Senior Member

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    It is obvious from your post that you have a complete lack of understanding concerning even the most basic of economic and financial concepts. You also have a weak argument, and you know it. As said by Neal Boortz, a man who knows more about income taxes than I ever want to, you have won an argument with somebody the moment he uses the word "Neocon," and not only is it in your subject line, it's in the form of a propagandist alteration designed to fool the weak-minded into lumping the other side into an undesirable faction.

    You, sir, are an idiot and your efforts would be better spent reading a book on basic finance and economics. I only took macro-econ 101 and have a dad who majored in finance and I still made you look like even more of an idiot than you did yourself in less than a paragraph. Get a life, an education, and a clue.
     
  7. unlawflcombatnt
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    unlawflcombatnt Guest

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    A classic example of an empty can making the most noise. Before I can even address your comments, I'd like to know how you "made me look like more of an idiot"? You've done nothing except call me a name and give your completely worthless "evaluation" of what I wrote. You haven't proven, or even implied anything, other than that you have no argument whatsoever against what I said. You haven't addressed any points, much less refuted any of them. Your "opinion" about whether I'm an "idiot" means nothing to anyone except yourself.

    My best guess is that I have considerably more "education" than you do, especially since you've done nothing here but call me names and make some bizarre claim that you've "made me look like an idiot."


    The economy needs balance between the "means of production" & "means of consumption."
     
  8. Annie
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    Annie Diamond Member

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    Seems you are intent on proving his point with the link again. You want to cross link or something, pm Jim. In the meantime, it seems you are advertising. So I'm deleting the links and leaving the rest of the thread 'as is.'
     
  9. Hobbit
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    Hobbit Senior Member

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    Thank you for proving my point. Now go take an econ class so you can figure out that all money goes somewhere.
     
  10. LuvRPgrl
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    LuvRPgrl Senior Member

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    Funny how you complain he didnt respond to any of your points with valid refutations, yet those who did before Hobbit posted, made some, yet you ignored them.

    Oh, and rich people generally dont keep much money in savings accounts. They didnt get rich by being stupid and making less on their return than inflation is.
     

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