We're All Saps...

<h2><a href=http://www.washingtonpost.com/ac2/wp-dyn/A14515-2004Jan13?language=printer>Good for Investors, Bad for the Rest</a></h2>

By Harold Meyerson

Wednesday, January 14, 2004; Page A19

<i>If you work for a living in George W. Bush's America, you're a sap.

Take a quick look, or a long one, at the tax code as Bush has altered it during his three years as president, and you're compelled to conclude that work has become a distinctly inferior kind of income acquisition in the eyes of the law. Bush tax policy rewards investment and inheritance. Relying on work for your income, by contrast, turns you into a second-class citizen.

In his first round of tax cuts in 2001, Bush got Congress to phase out the estate tax by 2010. Last year, with Republicans in control on Capitol Hill, he reduced the top tax rate on dividends from 39.6 percent to 15 percent, and brought the capital gains tax rate down from 20 percent to 15 percent as well.

This year, his new budget proposes that families be allowed to shield as much as $30,000 yearly on their investment income, which will abolish all remaining taxes on such income. Meanwhile, the income tax cuts to most middle-class families don't exceed a couple of hundred dollars, and payroll taxes for employees remain untouched. In part, this devaluing of work is simply an expression of Bush family values. As Kevin Phillips points out in his new biography of the Bush dynasty, the Bushes don't do anything so vulgar as going into professions. Rather, the clan lives by its connections. For George W. and his brothers, work has meant riffling through Pappy's Rolodex. Theirs is the cronyest form of capitalism.</i>

This is how wealth concetrates in the hands of a few, and leads to the kind of feudalistic mentality and social stratification prevalent in Europe during the 18th and 19th centuries. Howdy, the rest of his clan and their inbred, blue blood fellow travelers are nothing but a bunch of royal wannabes. The rest of us can go to hell.

 

I'm not a sap.

 

speak for yourself Bulypulpet

 

You really should not put yourself down like that. Every one is important in their own way !

 

some more important then others.....

 

Personally, I'm glad that the stifling taxes on dividends and capital gains are going down. And who in the world could be in favor of the death tax - unless your ultimate goal is wealth redistribution, as it seems yours is, bullypulpit.
The middle class gains from these tax cuts, though certainly not in the same amount as upper class people. Middle class families invest in 401(k) and IRA plans, they invest in the market, and they will now be paying less in taxes to do so - which, by the way, is the same argument used when arguing for child tax credits or earned income credits for the poor.

 

This is the kind of screed used to fuel anti-capitalist communist uprisings, the leadership of which will institute a strict authoritarian, militaristic regime with no regards to individual liberty, the concept of the individual having just been debunked in the intellectual dishonesty and blazing class envy of the revolution itself.

 

Im not a sap. i work for myself. i dont feel like pay to work for someone else. besides i can argue all i want with the boss and not get into trouble.

 

Please try to understand the effect of lowering capital gains taxes. Bottom line is that every time they are lowered, revenue from capital gains taxes increases. Not terribly hard to understand because it allows people to keep their money in play instead of holding their investments to keep from being taxed. This move by President Bush may even fund some of the entitlements that I am sure you love. Please check out the following:




Note: since this originally appeared a Republican Congress reduced the capital gains tax rates and the U.S. government saw an enormous increase in Capital Gains revenues. So much so that both parties on Congress fell over each other trying to make plans to spend it during the 2000 election cycle. We'll be bringing you all the details when we update this page.

Congress, at least one run by liberals, apparently never learns its lesson. Despite continual evidence that hikes in capital gains tax rate reduce revenues and cuts in the rate increase revenues, congress still thinks it can increase revenues by increasing the rate. Thus the 1986 tax package (which included an 8% increase in the rate) soon met with disaster.

And as the Wall Street Journal confirmed:

The 1991 figures confirm clearly that a trend has built since 1986, when the capital-gains rate was raised to 28% from 20%.
...

From 1988 through 1991, inflation-adjusted taxable capital gains plummeted, remaining below the 1985 level every single year. In fact, inflation-adjusted taxable capital gains in 1991 were half what they were in 1985 and lower than they have been in any year since 1978.

The drop-off has been so dramatic that in 1991 the federal government took in 21% less revenue at 28% than it did in 1985 at the 20% rate.

...

A soon to be released study by the Republican members of the Joint Economic Committee yields this interesting scenario: Had capital gains rate remained at 20%, and had capital gains continued their 12% rate of growth from 1980 to 1985, the government would have netted $60 billion more in capital gains revenues in the years 1986-91.

...

Invariably since the late 1960's every time capital gains tax rates have risen, capital gains realizations have fallen; every time the rates have been cut, realizations have accelerated because of an unlocking affect.

...

The JCT (Joint Committee on Taxation) argued in a highly publicized 1989 study that 60% of the benefits of a capital gains tax cut would accrue Americans making more than $200,000 a year. This mantra of a "tax cut for the rich" was predicated on forecasts that taxable capital gains would accelerate even after rates were raised.

These predictions were spectacularly wrong. In Jan. 1990 the CBO (congressional budget office) extimated that taxable capital gains would be $269 billion in 1991; in 1987, JCT projected that they would be $285 billion in 1991. In reality, taxable capital gains totaled $108 billion.

...

A report by the Texas based Institute for Policy Innovation released in Feb. calculates that indexing capital gains to inflation would add $511 billion to gross domestic product by 1997, create 550,000 jobs and raise $111 billion in capital gains and other federal tax revenues as a result of the enhanced economic growth.

[Source: Monday April 5, 1993, editorial page.]
Capital Gains Tax Revenues
Year Revenue (millions) Notes
1965 $4,100
1966 $4,000
1967 $5,500
1968 $7,200
1969 $5,900 rate hike here
1970 $3,600
1971 $5,300
1972 $6,900
1973 $6,900
1974 $5,600
1975 $5,600
1976 NA figures not available
1977 $8,104
1978 $9,104 rate cut here (48% to 28%)
1979 $11,669
1980 $12,459
1981 $12,684 rate cut here (28% to 20%)
1982 $12,900
1983 $18,500
1984 $21,800
1985 $26,500
1986 $49,700 rate increase here (20% to 28%)
1987 $32,900 market crash here
1988 $38,963
1989 $35,769
1990 $27,829
1991 $24,505* estimate
*Estimate from American Council for Capital Formation
Source: US Dept. of the Treasury via FORBES 7/19/93 page 23.

And there you have it, Laffer laughs last (again).

 

Ah, the Laffer curve. Good post Remie.