Tax Cuts Work Everytime

Discussion in 'Economy' started by red states rule, Mar 13, 2007.

  1. red states rule
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    red states rule Senior Member

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    Any Hedgehogs Running for President?
    Why the silence from McCain, Romney, and Giuliani on the clear success of the Reagan-Bush tax-cut model?

    By Larry Kudlow

    Another impressive jobs report was released by the U.S. Department of Labor last Friday, but you didn’t hear anything about it from the big-three Republican candidates for president. They claim to support President Bush’s supply-side tax cuts, and say they will fight repeal should they be elected to the Oval Office. Yet neither Sen. McCain, nor former-Gov. Romney, nor former-Mayor Giuliani talks about the continued economic benefits of the sweeping tax cuts of 2003.

    This is puzzling. It’s easy to understand why the leading Democratic candidates are silent on the matter. Sen. Clinton., Sen. Obama, and former-Sen Edwards intend to overturn President Bush’s supply-side program, and would do so with the usual liberal mantra of taxing the rich. But Republican silence is baffling in the real-world laboratory where evidence shows the tax cuts have worked. In particular, taxing capital less has unlocked new investment and unleashed record liquidity to fund business and the stock market, even in the face of money-tightening actions by the Federal Reserve.

    Just look at the evidence. Wall Street economist Michael Darda points out that real wages from increased job creation have climbed at twice the speed during this business cycle than in the first 66 months of the previous cycle. Boosted by service-sector job creation, nonfarm payrolls grew by 97,000 in February, with a net upward revision of 55,000 for the December and January reports. The median length, or duration, of unemployment fell 8 percentage points in the last year, while non-management wages increased 4.1 percent, almost twice the inflation rate.

    The U.S. job-creating machine is firing on all cylinders. Significant GDP-slowing inventory corrections in housing and manufacturing couldn’t stop it, nor could unusually bad February weather. Get this: According to Wall Streeter Joe LaVorgna, 505,000 people couldn’t get to work because of bad weather last month, the highest number in ten years and twice the normal seasonal weather effect of the past five Februarys. Yet jobs still rose substantially, and next month’s report will likely include another positive payback revision.

    It’s also a quality jobs boom: Americans with a high-school diploma registered a 4.3 percent unemployment rate (slightly less than the national average), those with some college education had a 3.6 rate, and those with a bachelor’s degree or higher had a rock-bottom 1.9 percent rate.

    The biggest dilemma in the jobs stats is the 7.1 percent unemployment rate for people with less than a high-school diploma. But taxing the rich will not solve this. Education reform, such as parental school choice and merit pay for teachers, will.

    But why the silence from McCain, Romney, and Giuliani on all the good news? Despite the headwinds of war and recession six years ago, the Reagan-Bush tax-cut model has again spurred a long-lasting, job-creating economic expansion. Even Bill Richardson, the Democratic governor of New Mexico who is a card-carrying member of the nearly extinct tax-cutting school launched by JFK, has been silent on all this.

    If these presidential contenders truly believe in the tax-cutting model, they should be saying so. The positives are simply too positive to go unspoken. U.S. employment is now a record 146 million, and 9.5 million higher since the expansion started in December 2001, according to Bear Stearns economist David Malpass. The Federal Reserve reports a record $55.6 trillion in household net worth (up 7.4 percent from a year ago) and a record $1.7 trillion in corporate profits (up 20 percent). All this should be shouted from the mountaintops.

    And then there’s the just-released Forbes list of worldwide billionaires. This list registered a staggering $3.5 trillion in wealth and a record 946 members, up 150 from last year for a 35 percent gain. Almost half the list is comprised of Americans, with significant representation from emerging countries like China, Hong Kong, Mexico, Russia, and Spain.

    “This is the richest year in human history,” said editor-and-chief Steve Forbes. The list “is a mere reflection of a dynamic global economy. More people are better off on this earth than ever before.”

    What’s going on here is plain to see: It’s the global spread of free-market capitalism. The American model of “cowboy capitalism” — of low tax rates, deregulation, contained inflation, and free trade — is producing unheard of wealth that is turning the have-nots into haves.

    Many years ago British diplomat and political philosopher Isaiah Berlin taught us that while the fox knows many small things, the hedgehog knows one big thing — and that it’s the one big thing that always wins the race. Today, the successful worldwide spread of free-market capitalism is the one big idea that puts me solidly in the hedgehog camp. But are there any hedgehogs running for president?


    — Larry Kudlow, NRO’s Economics Editor, is host of CNBC’s Kudlow & Company and author of the daily web blog, Kudlow’s Money Politic$.



    http://article.nationalreview.com/?q=MDdiOTg5NDk3OWQ2NzE5YTUzYTMxZjEyZTBjYzJmZTc=
     
  2. red states rule
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    red states rule Senior Member

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    The liberal media will always hightlight the negative and downplay the positive

    Deficit Headline Writing, a Quick MSM How-to
    Posted by Jason Smith on March 12, 2007 - 16:26.
    Here are the facts: The federal deficit is "down sharply"...


    WASHINGTON - The deficit for the first five months of the budget year is down sharply from a year ago as the growth in government tax collections continues to outpace growth in spending.
    ...and "down sharply" means more than 25 percent over last year.

    The Treasury Department reported that the deficit from October through February totaled $162.2 billion, down 25.5 percent from the same period last year.
    The federal deficit was up 0.6 percent to $120 billion in February...

    That improvement came even though the deficit in February hit $120 billion, up 0.6 percent from last February's deficit of $119.2 billion.
    ...but that's normal for this time of year as the numbers get skewed up because the government is sending out more money in the form of tax refunds to earlier tax filers.

    One factor that contributes to higher deficits in February are the refund payments the Internal Revenue Service is mailing out during the month to people who have filed early tax returns. The February 2006 imbalance was the largest monthly deficit for that year.
    ...add this little tidbit to the story:

    The $248.2 billion deficit for 2006 was the smallest deficit in four years and down significantly from the all-time high...
    And you end up with an article that suggests that the federal deficit is down more than 25% from last year, and is around the smallest number in 4 years, despite seeing a slight increase that is standard for this time of year due to IRS refund disbursements. So how does MSM choose to headline the story?

    "Deficit grows to $120B in February"

    Focus on the negative, ignore the positive, and hope most people won't read past the headline. It's a tried and true formula... and they're obviously sticking to it.

    http://newsbusters.org/node/11368
     
  3. boedicca
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    boedicca Uppity Water Nymph Supporting Member

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    I am reminded of the famous tax parable:

    I was having lunch with one of my favorite clients last week and the conversation turned to the government's recent round of tax cuts. "I'm opposed to those tax cuts," the retired college instructor declared, "because they benefit the rich. The rich get much more money back than ordinary taxpayers like you and I and that's not fair."

    "But the rich pay more in the first place," I argued, "so it stands to reason that they'd get more money back." I could tell that my friend was unimpressed by this meager argument. Even college instructors are a prisoner of the myth that the "rich" somehow get a free ride.. Nothing could be further from the truth. Let's put tax cuts in terms everyone can understand.

    Suppose that everyday 10 men go to dinner. The bill for all ten comes to $100. If it was paid the way we pay our taxes, the first four men would pay nothing; the fifth would pay $1; the sixth would pay $3; the seventh $7; the eighth $12; the ninth $18. The tenth man (the richest) would pay $59.

    The 10 men ate dinner in the restaurant every day and seemed quite happy with the arrangement until the owner threw them a curve. Since you are all such good customers, he said, I'm going to reduce the cost of your daily meal by $20. Now dinner for the 10 only costs $80.

    The first four are unaffected. They still eat for free. Can you figure out how to divvy up the $20 savings among the remaining six so that everyone gets his fair share? The men realize that $20 divided by 6 is $3.33, but if they subtract that from everybody's share, then the fifth man and the sixth man would end up being paid to eat their meal.

    The restaurant owner suggested that it would be fair to reduce each man's bill by roughly the same amount and he proceeded to work out the amounts each should pay.

    And so the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of $59. Outside the restaurant, the men began to compare their savings. "I only got a dollar out the $20," declared the sixth man pointing to the tenth, "and he got $7!" "Yeah, that's right," exclaimed the fifth man. I only saved a dollar, too. It's unfair that he got seven times more than me! "That's true," shouted the seventh man. "Why should he get $7 back when I got only $2? The wealthy get all the breaks." "Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor."

    The nine men surrounded the tenth and beat him up. The next night he didn't show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important They were $52 short.

    And that, boys and girls and college instructors, is how the tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.


    http://www.freerepublic.com/focus/news/727828/posts
     
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  4. Hamiltonian
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    Could you provide some linked sources for those statistics you gave on the last page. I want only government sources for tax collections. I would also like to see the calculations that compare the tax code to the price each pays for dinner.

    To provide the first original thought in this thread, I'll go ahead and say that anybody who decides not to become rich because they'll have a higher tax burden probably wouldn't have become rich anyway.
     
  5. red states rule
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    red states rule Senior Member

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  6. Hamiltonian
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    Hamiltonian Member

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    And the bottom 40% pay 0% of taxes? This source doesn't seem to say that.
     
  7. red states rule
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    red states rule Senior Member

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    the bottom 50% pay about 4% of all federal income taxes

    since a small minority pay a huge majority of income taxes - how much more do you want them to pay?

    BTW, logic dictates when tax cuts are passed those who pay the taxes get the cut
     
  8. Hamiltonian
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    Hamiltonian Member

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    Ok, I was just trying to figure out the rounding on that lower bracket there.

    As for how much people should pay, people should be responsible for paying taxes in equal proportion to the amount they benefit from society. It is quite illogical to decide not to benefit from society in order not to pay taxes.

    I agree with your latter statement, it is logical for those who pay the most taxes to receive the most benefit from cutting taxes. Likewise, if there is a tax increase it should affect mainly the rich, and not the middle class.
     
  9. red states rule
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    red states rule Senior Member

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    Is it fair that people who use government services the least should pay the most in taxes?

    Is is fair that those who use government services the most, pay the least in taxes?

    There are many producres who pay over 60% of thier income in taxes. That is obscene
     
  10. Hamiltonian
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    Those who benefit most from our social contract and national market are effectively using government services the most, since the government regulates both. Therefore it is expected for the wealthiest to pay the most in taxes.
     

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