Tax cuts- A simple lesson in economics

by **shockwave203** » Thu Mar 18, 2004 7:28 pm

Originally posted by Tommy Boy
don't even get me started about taxes and tax cuts...we Canadians get bent over in a big way when it comes to taxes...how does 40-50% of income (in some tax brackets) going to taxes sound to you?

we may pay a lot of tax, but it's worth it. I've yet to see a single canadian not go to a hospital because "they can't afford it"

by **Murgatroyd** » Thu Mar 18, 2004 7:53 pm

Originally posted by shockwave203
we may pay a lot of tax, but it's worth it. I've yet to see a single canadian not go to a hospital because "they can't afford it"

Well, if someone in america doesn't go to the hospital because they can't afford it, they're an idiot because they don't actually have to pay for it anyway, which is why people who have healthcare get screwed worse than those without.

by **igloo17** » Thu Mar 18, 2004 8:11 pm

Thanks RCglider, good post.

I too tried to explain that to a guy I work with, he basically gets all he paid in back, and gets WIC cause as he put it, he has 3 kids and his wife wont work.

So he tried to tell me he/we didnt get a tax cut cause there really was not one?

I've known him for a few years, but now not sure I want to.

by **RCglider** » Thu Mar 18, 2004 8:50 pm

I hear many whine about "corporate welfare".
My easy response is to say I've yet to get hired by a poor person. I fail to see the benefit to myself by having the satisfaction in knowing the government will confiscate more money from my employer. Whenever I hear politicians speak of repealing "taxcuts for the rich", I think of my next raise or even my employment.

Those that can remember, President Bush in 1990 went back on his no new taxes pledge and caved to the Democrats. One thing they did was impose a 10% luxury tax on things like boats, big cars etc. Well guess what happened. The "rich" stopped buying their expensive toys. Some say "serves them right". Hmmm. Now I'm no economic genius, but it seems to me someone has to build these products, so who feels the sting of this? That's right! Talk about trickle down...it works both ways.

America was built by rugged individualists as others have stated. If the standard of living is going down, it's because of high taxation and bloated government. We didn't become the richest nation on earth by relying on government to provide cradle-to-grave benefits.

by **RCglider** » Thu Mar 18, 2004 8:56 pm

Originally posted by shockwave203
we may pay a lot of tax, but it's worth it. I've yet to see a single canadian not go to a hospital because "they can't afford it"

I don't live in Canada, but if you can refute the following, I'm willing to listen.
http://www.angelfire.com/pa/sergeman/issues/healthcare/socialized.html#canada

I do know however, there are many Candadian patients coming to the U.S. for treatment because of either a long waiting list or lack of services.

I have good healthcare benefits because I've worked my tail off over the years to get to that point. Trouble is, we're creeping ever so slowly to a Fascist system.

Give me freedom over security ANY day.

by **JimmyTango** » Thu Mar 18, 2004 9:07 pm

Originally posted by RCglider
America was built by rugged individualists as others have stated. If the standard of living is going down, it's because of high taxation and bloated government. We didn't become the richest nation on earth by relying on government to provide cradle-to-grave benefits.

Actually, Social Security came after the great depression, which is when we became a super power not only by military standards, but also ecnomically.

The US lives and dies by the middle class and small business. Without the middle class spending, we hit a recession or worse. See present day and the past 3 years as an example.

Luckily we still have Greenspan overseeing the FED. Without him, this country would have been in much worse shape than now.

by **Murgatroyd** » Thu Mar 18, 2004 10:17 pm

Originally posted by JimmyTango
Actually, Social Security came after the great depression, which is when we became a super power not only by military standards, but also ecnomically.

The US lives and dies by the middle class and small business. Without the middle class spending, we hit a recession or worse. See present day and the past 3 years as an example.

Luckily we still have Greenspan overseeing the FED. Without him, this country would have been in much worse shape than now.

Amen to Greenspan. Also, unemployment benefits do help us in times of recession (even though we're not technically in a recession, a recession is three consecutive quarters of negative GDP growth, and we haven't had negative GDP growth in years), but welfare, and I mean chronic welfare, helps noone - it even hurts those on it - makes them unproductive, and they cannot possibly be happy.

by **PudriK** » Thu Mar 18, 2004 10:18 pm

On that note, Jimmy, while am no big fan of progressive taxation, one has to wonder what economic forces are causing income distribution to shift more and more towards the top 2%.

Check out census.gov sometime. It is fascintating to see how income, taxes, etc have changed through the years. For example, at the turn of the century almost half the federal income was from corporate taxes. Now it's more like a tenth. Also, to the guy who wanted a 95% marginal tax rate on $2M, in 1949 the marginal tax rate on $200K was 90%.

Like I said, I'm no fan of progressive taxation, but if we depend on middle class consumption to drive the economy, we should be very concerned about the shift in income distribution, since the rich save (invest) a larger fraction of their income than the middle class.

BUT, we need to figure out what market or government forces are causing this, and mitigate those. More progressive taxation will not solve it--in fact, I think you could argue it would exacerbate it, by forcing pre-tax incomes of the rich to rise further to match the driving economic force.

PS SavageParrot, in the interest of keeping an open mind, please inform me of one example of where an economic system based on that maxim has resulted in better welfare for its members.

by **FarginMofo** » Thu Mar 18, 2004 10:27 pm

Anyway you look at it, the middle class is the one getting squeezed from all sides.

by **Colonel Ingus** » Thu Mar 18, 2004 10:50 pm

Roger that Fargin!

I feel like an orange in the squeezer!

What is the rational behind taking away high paying American jobs and shifting them to what we would term as third world countries at a much cheaper wage? I don't understand this because I don't see anyojne in China, India, or Malaysia paying 200 bucks for an X-box or 200$ for nikes?

America is transforming itself from a mediam manufacturing job that brings in approximately 39,000 a year to a retail environment bringin in 19,000 a year. People who go from 40K to 20K are not going to be buying all the latest coolest gear and SUV's. They are going to go on the cheap and start eating ramen noodles and hot dogs.

It is the shortsightedness of the business community that is driving this because they aren't thinking more than 6 months into the future. They are driven by market forces to profit now and screw later. Well ladies and gentleman they are killing the goose so to speak. When America's middle class dissappears and no one is buying items that really are frivilous and unnecesary what then?

Hell this computer is 2 and a half years old and although I would cream my jeans to have a system like some of you other guys I can't afford it. It loooks like I won't be able to for the foreseeable future either. Any smart person knows you have to invest in a market to truly profit from it and when you try to work around the market and not put anything into it that you start running into problems.

Just ask a farmer about not fertilizing his fields and letting fields go fallow. He can explain it to you.

by **shockwave203** » Fri Mar 19, 2004 12:20 am

Originally posted by RCglider
I don't live in Canada, but if you can refute the following, I'm willing to listen.
http://www.angelfire.com/pa/sergeman/issues/healthcare/socialized.html#canada

I do know however, there are many Candadian patients coming to the U.S. for treatment because of either a long waiting list or lack of services.

how does that have anything to do with people not being able to afford healthcare? That was what I was talking about. anyway...

The US healthcare system is good, if you can afford it. everyone should be entitled to healthcare, not just those that can pay for it.

you go to the mall and see a short line at a pay to use washroom, and a long line at a free to use washroom. that's similiar to the situations in canada and the US about waiting lists. both healthcare systems have pro's and cons, but atleast people up here don't have to worry about paying for the bill while they're in the middle of a life threatening accident.

that's why I'm ok with paying more tax. Canada spent 35 billion on helathcare last year, i wouldn't want to see taxes go down which would lower that budget which would result in people not being able to recieve any treatment at all. Canada/US are among the best countries in the world to live. I don't mind paying a bit extra to live here.

by **PudriK** » Fri Mar 19, 2004 12:53 am

On that note, Ingus, I love how so many pundits were "surprised" that upscale reatil outlets did well last Christmas season. Of course... the people who buy there are still doing well.

But the problem is, tax cuts for the middle class will only result in a larger income disparity, because the reasons for the after-tax shift in distribution must be more fundamental.
And I'm worried that once more than 50% of the population receives more money than it pays out, we'll slide rapidly into socialism.

I have yet to read any good theories why this is happening. Any economists in the group? What are the fundamental factors which control income distribution?

Usually a low unemployment rate like 5.6% (yes, it is LOW, we were spoiled during the bubble) would mean increasing wages, as the labor market is tighter. Usually, the result of higher wages is inflation. In an effort to keep wages down, the fed is hold rates low, encouraging borrowing, which perhaps gets directed towards capital improvements before new hiring. But instead wages are staying level, at least.

It appears to be a supply problem, although there is a demand for jobs, they are all low-paying (which is why so many Americans "can't find a job" - it's just not one that pays them what they want). I always like to blame our poor education system for anything, but Americans still have one of the highest productivity per worker rates. So without blaming it on "greed" or other irrelevant emotional factors, why do you think there is no demand for higher paying jobs?

And here's another thing to chew on... in socialist European countries with their high unemplyment (~15%), massive redistribution programs, and high taxes, the income distribution is much flatter.

Is the price for a more equitable income distribution the burden of supporting 15% unemployment and massive social progams? I hope not.

Then again, I wonder, with all the normally inflationary pressures on the US economy that are not showing any effect, if it building up pressure which will be released in a rapid fall of the dollar?

One last thougt... I know I'm not spending a good portion of my extra pay because I'm saving it for later/retirement (Social Security, fat chance!). Could this be a factor among my generation?

by **Ralph Wiggum** » Fri Mar 19, 2004 12:55 am

Surely the Parrot is kidding about the healthcare issue, becaus the British NHS is a joke. (Just because something is "free" doesn't mean it is a good deal.) Also, I don't know what the Europeans and Canadians think is going on in the U.S., but I can assure you that the corpses of the uninsured aren't piling up in the streets.

Also, for those of you still in school, wait til you get out to tell me if you're ok with paying higher taxes.

by **CharlieDontSurf** » Fri Mar 19, 2004 2:22 am

When you rob Peter to pay Paul, you can always count on the support of Paul. The Democrats want more and more people released from the 'burden' of paying income taxes so they can use the class warfare scare to get more votes.

Here in Georgia years ago, they were introducing a state lottery and at first I was against it because addicts would spend money they didn't have on it. I then heard someone express an opinion that made sense to me. He views the lottery and cigarettes as taxes on the lower class that don't pay income tax. Typically, lower income people are the smokers of society (go figure) and also make up the majority of the people who spend money on the lottery. Just a thought.

Here's a link to a site that will show you just how good your retirement could be with your social security money.

http://www.ncpa.org/ba/ba215.html

by **SavageParrot** » Fri Mar 19, 2004 4:36 am

Originally posted by Ralph Wiggum
Surely the Parrot is kidding about the healthcare issue, becaus the British NHS is a joke.

Yeah but at least the infant mortality rate in London is lower than in Havana Cuba, which is more than you can say for Washington.

Tax cuts- A simple lesson in economics

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