War on the Rich? BS.

Discussion in 'Economy' started by sealybobo, Mar 12, 2009.

  1. sealybobo
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    sealybobo Diamond Member

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    On Tuesday, Washington Post columnist (and former Bush speechwriter) Michael Gersonargued in an op-ed that "Obama chose a time of recession to propose a massive increase in progressivity—a 10-year, trillion-dollar haul from the rich, already being punished by the stock market collapse and the housing market decline." CNBC's Larry Kudlowwrote that "Obama is declaring war on investors, entrepreneurs, small businesses, large corporations, and private-equity and venture-capital funds." Other segments on the financial news network warn of a tax on the rich. One story quotes a dentist who is contemplating reducing "her income from her current $320,000 to under $250,000 by having her dental hygienist work fewer days and by treating fewer patients. [That way, she] would avoid paying higher taxes on the $70,000 that would be subject to increased taxation if Obama's proposal is signed into law."

    It's hard to overstate how absurd these claims are. First, let's talk about the "massive increase in progressivity" that Gerson deplores. It consists largely (but not exclusively) of returning marginal tax rates to their levels of 2001, before Gerson and the epically incompetent Bush administration of which he was a part got their hands on the reins of power. Obama wants to let marginal rates for families with taxable income (not total income, but taxable income) of more than $250,000 revert from 33 percent to 36 percent, and to let the top rate—currently 35 percent on family income above $357,000—revert to 39 percent. (Here are the current tax tables.) There's also talk of capping—not eliminating, but capping—deductions on charitable giving and mortgage interest.

    Obama's proposals don't mean the government would steal every penny you make above the $250,000 threshold, or that making more than $250,000 would somehow subject all of your income to higher taxes. Rather, you'd pay 36 cents to the government in income taxes on every dollar over the threshold, rather than 33 cents.

    Second, this return to 2001's tax rates was actually part of the Bush tax plan. The Republicans who controlled the White House and the Republicans who controlled the Congress earlier this decade decreed that all the tax cuts they passed would sunset in 2010. They put in this sunset provision to hide the long-term fiscal costs of the cuts. The Bush team and congressional supporters had seven years to manage fiscal affairs in such a way that they would be able to extend the tax cuts in 2010. But they screwed it up. Instead of controlling spending and aligning tax revenues with outlays, the Bush administration and its congressional allies ramped up spending massively—on two wars, on a prescription drug benefit for Medicare, on earmarks, etc. Oh, and along the way, they so miserably mismanaged oversight of Wall Street and the financial sector that it required the passage of a hugely expensive bailout. Even before the passage of the TARP, the prospect of extending all the Bush tax cuts was a nonstarter. Once Bush signed the $700 billion bailout measure into law, extending tax cuts was really a nonstarter. The national debt nearly doubled during the Bush years. So if you want to blame someone for raising taxes back to where they were in 2001, don't blame Obama. Blame Bush, his feckless Office of Management and Budget directors, his economic advisers, and congressional appropriators like Trent Lott and Tom DeLay.

    Third, we know from recent experience that marginal tax rates of 36 percent and 39 percent aren't wealth killers. I was around in the 1990s, when tax rates were at that level, and when capital gains and dividend taxes were significantly higher than they are today. And I seem to remember that we had a stock market boom, a broad rise in incomes (with the wealthy benefitting handily), and strong economic growth.

    Fourth, we also know from recent experience that lower marginal rates on income taxes, and lower rates on capital gains and dividends, aren't necessarily wealth producers. The Bush years, which had lower marginal rates and capital gains taxes, were a fiasco. In fact, if you tally up the vast destruction of wealth in the late Bush years—caused by foolish hedge funds, investment banks, and other financial services companies, it seems like the wealthy have in fact been waging war on one another.

    Finally, there has been a near total absence of discussion of what higher rates will mean in the real world. Say you're a CNBC anchor, or a Washington Post columnist with a seat at the Council on Foreign Relations, or a dentist, and you managed to cobble together $350,000 a year in income. You're doing quite well. If you subtract deductions for state and property taxes, mortgage interest and charitable deductions, and other deductions, the amount on which tax rates are calculated might total $300,000. What would happen if the marginal rate on the portion of your income above $250,000 were to rise from 33 percent to 36 percent? Under the old regime, you'd pay $16,500 in federal taxes on that amount. Under the new one, you'd pay $18,000. The difference is $1,500 per year, or $4.10 per day. Obviously, the numbers rise as you make more. But is $4.10 a day bleeding the rich, a war on the wealthy, a killer of innovation and enterprise? That dentist eager to slash her income from $320,000 to $250,000 would avoid the pain of paying an extra $2,100 in federal taxes. But she'd also deprive herself of an additional $70,000 in income!

    Can she, or we, really be that stupid?


    Is Obama Declaring War on the Wealthy? | Newsweek Voices - Daniel Gross | Newsweek.com
     
  2. Old Rocks
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    Old Rocks Diamond Member

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    Yes, if she is a Limpbaugh Republican, she surely can be that stupid.
     
  3. driveby
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    driveby Gold Member

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    The rich (or anyone else) paying a penny more in taxes is BS, cut spending, but that can't happen. Government can't be massively expanded if spending is cut, oh the fucking horror !
     
  4. Old Rocks
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    Old Rocks Diamond Member

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    Oh the fucking horror if we slide into the Second Great Republican Depression. Whether Obama is doing exactly the right thing can be debated. Standing out in right field and doing the "neener, neener" thing as the Republican Party is doing at present will result in that party becoming irrelevant. Even David Brooks realizes this.
     
  5. sealybobo
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    sealybobo Diamond Member

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    It is a fact that we can't get out of this mess with spending cuts alone. And remember, the GOP pork in 2004-2006 was record breaking. Plus, they like to spend more on defense than every other country combined.

    So stop talking bullshit Driveby. You aren't talking reality. You live in a fairytale.

    War on the Rich my ass. Its war on the middle class.

    Great story to illustrate my point. Fed Ex is asking employees to take a pay cut.

    This is horrible for the economy. If 90% of us are taking a step back, how will the economy recover? They need us spending. 2/3rd of GDP is consumer spending.

    With the recession eating into profits, many employers are trying to cut costs however they can. At FedEx, pay cuts are prompting employees to consider the benefits of unionizing.

    FedEx Pay Cuts Spark Union Talk : NPR

    "When I first started 13 years ago, FedEx had a philosophy they called 'PSP' — people, service, profit — whereby you took care of the people, provided good service, the profit would come," Selph says. "They've given up on the people portion. The morale's pretty bad there now."

    "We no longer feel that it's our company," he says. "At one time — or especially when I hired on — everybody felt a part of FedEx, and that feeling's just no longer there. It's just become a job and a paycheck to most people, and we never know what's just around the next corner."

    Selph is an hourly worker, so he didn't take a pay cut during the last round. He says he's feeling the financial pinch in other ways.

    "Overtime is cut back to zero now," he says. "Paid lunches, those sort of things, we no longer get."

    "Health insurance, pension is where we probably took our biggest hit. Me personally, I took a cut of $20,000 a year after retirement. That's where we took our biggest hit for sure."

    FedEx workers like Selph don't yet have a union, though the Teamsters are trying to create one.

    The Union's Case Against Wage Cuts

    Union leaders find themselves in a bind when it comes to the debate over cutting jobs or cutting wages and benefits.

    Chris Chafe, head of the labor federation Change to Win, thinks that these cost-cutting strategies could be disastrous down the road.

    "Look at what happened in Japan during the 1990s," he says. "They never pulled themselves out of recession there because they did not feed the most valuable drivers of consumer purchasing, which is workers."

    "So what we see happening in the layoffs and the wage cuts, we believe is actually just following the worst possible model," he says. "If we continue to cut jobs in this country, if we continue to cut wages, we're actually taking money out of the pockets of the people who are going to spend that money and help drive our recovery."

    Of course, this isn't the easiest time to tell companies that they ought to be raising wages. Even so, Chafe says, layoffs and wage cuts will only dig a deeper hole for the economy.

    On the other hand, companies argue that wage cuts, while painful, save jobs by spreading the loss. Chafe says that if both the company and its employees agree that's the right idea, then that should be their prerogative. But the general trend of wage cuts, he says, is "actually worsening the spiral into an even greater depression."

    "We believe that there are probably other pools of funds that could be looked at across the board," he says. "All these factors should be put on the table, not simply workers' pay. That's often the first thing that gets put on the table."

    Chafe says the 20 percent salary cut that FedEx CEO Fred Smith took is a rare case of executives taking the same medicine that they advocate for their workers.
     
  6. driveby
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    driveby Gold Member

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    As usual, what you're saying is completely ass backwards. Republicans have proposals, Dems don't wanna hear them "we won, get over it". :eusa_whistle:
     
  7. driveby
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    driveby Gold Member

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    Right, they need US spending, not Obama, Pelosi and Reid. Why don't you just give them all of your income, they know what to do with it better than you, right ?
     
  8. sealybobo
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    sealybobo Diamond Member

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    Republicans suggest tax cuts, which have less of a stimulative effect than spending. So why would Obama give in to the GOP and make his plan less effective, just to make the minority party and you happy?

    You had it your way for 8 years, it didn't work, now it is the time for you and your party to shut the fuck up. You didn't just lose, you are losers.
     
  9. editec
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    editec Mr. Forgot-it-All

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    If the USA is conducting a war on the rich our generals conducting this war against the rich truly suck at it.
     
  10. driveby
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    driveby Gold Member

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    My party ? :lol: I'm not a partisan hack like the Obamabots. Take my suggestion, if you're that committed, give them all your money, they'll find a sooper dooper project to use it on ......
     

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