[mikemike]

Or we could stop spending.

O BTW 1 year after Bush cut taxes the income to the us Treasury increased by 25%.
The same happened when Reagan did it. Now what happened to all that money.

Go ahead take all the money from the top 5% in the U.S. (they dont need it caint spend it, we have a right to take there property any way). put it up to run the goverment. you will be broke again in less than a week.

Correlation does not equal causality. Tax cuts were enacted in a recession year, increased revenues came in a recovery year. I wouldn't be surprised to see a 25% increase in income tax revenue for 2010 due to stock market gains without any change to marginal tax rates.

If you look at the federal budget, there is no way that tax revenue could be increased enough or spending cut enough to close the deficit. It is going to take both. I read somewhere that americans have been paying 80 cents on the dollar for the government services we have experienced for the past 40 years. At some point the music is going to stop and that generation (my generation or my daughter's) is going to be left holding the bag paying higher taxes and getting fewer services.

[jeffkrol]

daughter's) is going to be left holding the bag paying higher taxes and getting fewer services.

That seems to be the Repubs goals.........'
Clinton Says Democrats Must Stop 'Mealy Mouthing' in Campaign - BusinessWeek

Clinton said Republicans also want to "repeal the financial oversight bill" that Obama signed into law July 21 in response to the financial crisis that began in 2008. Rolling back the new protections would "let banks go back to gambling," he said. "And that's a mistake."

"They want everybody else to pay more for less government," Clinton said. "And none of it has anything to do with our competitive position."

The Republican plan calls for extending all the tax cuts passed under President George W. Bush in 2001 and 2003 and which expire at the end of this year. Obama has proposed keeping the lower tax rates for most taxpayers, while letting the cuts expire for individuals who earn more than $200,000 or couples earning more than $250,000.

"They want to give 117 percent of all the tax benefits to the top 5 percent," Clinton said.

[GeneV]

Correlation does not equal causality. Tax cuts were enacted in a recession year, increased revenues came in a recovery year. I wouldn't be surprised to see a 25% increase in income tax revenue for 2010 due to stock market gains without any change to marginal tax rates.

You are spot on, Mike. If you look at the chart I linked, there is an increase in 2010. However, I don't know where the 25% increase in revenue the year after a tax cut comes from. The only increase like that is from 2005 to 2006.

[Phil1]

Just deprive the gov't of as much of your cash as possible. Anything they get will likely be wasted. Those that choose to donate to them be my guest. Africa needs another million dollar Dick washing program.

[Nesster]

Here's another - long - examination of the tax cuts and their effects by someone who seems to be a realist.
tax.com: So How Did the Bush Tax Cuts Work Out for the Economy?

The 2008 income tax data are now in, so we can assess the fulfillment of the Republican promise that tax cuts would produce widespread prosperity by looking at all the years of the George W. Bush presidency.

Just as they did in 2000, the Republicans are running this year on an economic platform of tax cuts, especially making the tax cuts permanent for the richest among us. So how did the tax cuts work out? My analysis of the new data, with all figures in 2008 dollars:

Total income was $2.74 trillion less during the eight Bush years than if incomes had stayed at 2000 levels.

That much additional income would have more than made up for the lack of demand that keeps us mired in the Great Recession. That would mean no need for a stimulus, although it would not have affected the last administration's interfering with market capitalism by bailing out irresponsible Wall Streeters instead of letting the market determine their fortunes.

In only two years was total income up, but even when those years are combined they exceed the declines in only one of the other six years.

Even if we limit the analysis by starting in 2003, when the dividend and capital gains tax cuts began, through the peak year of 2007, the result is still less income than at the 2000 level. Total income was down $951 billion during those four years.

Average incomes fell. Average taxpayer income was down $3,512, or 5.7 percent, in 2008 compared with 2000, President Bush's own benchmark year for his promises of prosperity through tax cuts.

Had incomes stayed at 2000 levels, the average taxpayer would have earned almost $21,000 more over those eight years. That's almost $50 per week.
..
In only two of the eight Bush years, 2006 and 2007, were average incomes higher than in 2000, but the gains were highly concentrated at the top. Of the total increase in income in 2007 over that in 2005, nearly 30 percent went to taxpayers who made $1 million or more.

He's talking about our incomes, not the government's, and testing the hypothesis that tax cuts result in higher incomes and therefore government revenues also go up.

Now let's look at wages, the source of most people's income. In 2008 the average taxpayer made $58,000. That was $5,100 less than in 2007, a decline of 8.1 percent.

The number of taxpayers reporting any wages in 2008 was 1.26 million fewer than in 2007, a scary figure when you consider that most people do not expect to be out of work for an entire year and that the population grew by more than a percentage point. In August 42 percent of the unemployed -- 6.2 million people -- had been out of work for 27 weeks or more, the Bureau of Labor Statistics said. The average for all jobless workers was 33.6 weeks of unemployment, the equivalent of going from New Year's Day through August 23 without a paycheck.

The number of taxpayers with incomes below $100,000 with any wage income fell in 2008 by 1.8 million. Because married couples file many tax returns, this means more than 2 million people who worked in 2007 earned no wages in 2008.

Total wages in 2008 fell by nearly 4 percent, compared with a year earlier, for the 87 percent of Americans whose total income was less than $100,000. Since 2000, population grew more than wages.

...

The number of people reporting incomes of $200,000 or more but legally paying no federal income taxes skyrocketed in the second Bush term. A decade ago it was fewer than 1,500 taxpayers; in 2000 it was about 2,300. This high-income, tax-free group jumped to more than 11,000 in 2007 and then doubled in 2008 to more than 22,000.

In 2008 nearly 1 in every 200 high-income taxpayers paid no federal income tax, up from about 1 in 1,500 in 1998.

The share of high incomes that were untaxed increased more than sevenfold to one dollar of every $166.

The Statistics of Income data on tax-free, high incomes severely understate economic reality because they exclude deferral accounts, including those of hedge fund managers with billion-dollar incomes who can legally report no current income and borrow against their untaxed gains to live tax free.

...

The one bright spot in the SOI data at Table 1.4 was that the number of people making $100,000 to $200,000 grew significantly between 2007 and 2008. Their ranks increased by 393,465, or 3 percent, to more than 13.8 million taxpayers.
This truly is good news, because most of the increase had to be people who worked their way up into six-figure incomes from 2007 to 2008.

We know this because fewer than 160,000 taxpayers fell out of the $200,000-and-up income groups. Even if we assume that every one of them fell into the $100,000-$200,000 class, that still leaves 233,000 taxpayers who joined this income group. These 233,000 taxpayers must be people who increased their incomes enough to get them above the $100,000 line. And we know that they did it mostly through becoming more valuable workers, because this group relies on paychecks for more than 77 percent of its income.

But despite that one sliver of good news about low six-figure incomes, the data show overwhelmingly that the Republican-sponsored tax cuts damaged our nation.

Examining performance against the promises, what do we find? Overwhelming evidence that the tax cuts of 2001 and 2003 made us much worse off.

Ignore the cynics who say the Republican leaders on Capitol Hill, in Wasilla, and on the airwaves care only about the rich. I don't believe that. I think they are captive to economic theories few of them understand and that are simplistic in the extreme. I take them at their word, that they truly believe their policies will produce broad benefits for all, but accepting that does not diminish the fact that the policies these Republicans promote also produce massive tax savings for the superrich who finance their campaigns.

The question to ask is whether their policies worked as promised. Have they even come close? Where is the prosperity -- and where was it in the Bush years, when massive increases in both military and discretionary spending provided a chronic stimulus to the economy?

The hard, empirical facts:
The tax cuts did not spur investment. Job growth in the George W. Bush years was one-seventh that of the Clinton years. Nixon and Ford did better than Bush on jobs. Wages fell during the last administration. Average incomes fell. The number of Americans in poverty, as officially measured, hit a 16-year high last year of 43.6 million, though a National Academy of Sciences study says that the real poverty figure is closer to 51 million. Food banks are swamped. Foreclosure signs are everywhere. Americans and their governments are drowning in debt. And at the nexus of tax and healthcare, Republican ideas perpetuate a cruel and immoral system that rations healthcare -- while consuming every sixth dollar in the economy and making businesses, especially small businesses, less efficient and less profitable.

This is economic madness. It is policy divorced from empirical evidence. It is insanity because the policies are illusory and delusional. The evidence is in, and it shows beyond a shadow of a reasonable doubt that the 2001 and 2003 tax cuts failed to achieve the promised goals.

QED


As a matter of fact, I'll take a page out of the conservative book and say: The Bush tax cuts were counter productive in that they removed any incentive for businesses to increase wages. The government was taking care of that - and now the government has to keep subsidizing the American tax payer - permanent tax welfare - because the structural damage was done. Because of the stagnating income of Americans, no true business growth was possible; rather, financial engineering and large increases in debt financed the appearance of prosperity. The results were inevitable and we are dealing with the bill now.

Tax cuts hurt the economy, remove jobs, and, if slanted towards the very wealthy, hollow out the entire economy over time. Taxpayer welfare reduces innovation and the conditions for organic growth, and creates a permanently dependent class of workers - the very workers that should be the engine of the American economy.

[troglodyte]

Phil has a very valid point. If it's true that forces outside taxes are causing revenues for the government to rise to fall, then why pay taxes? Obviously they have no effect. If thing are made more efficient, nothing changes. Like he said, if we have

---------- Post added 09-27-10 at 11:21 AM ----------

'extra' funds, it'll go to some other hand job program in another. I know I'd love getting one from some hot new med student. Why can't america's controlling elite give to america for a change?

[Phil1]

""Obama has never promised a box of silver bullets, and it has been his nature to be very guarded in his promises--so much so that the main complaint is that people don't know what is plan is.""

Here is the fart joke, get ready.........

No family making less than $250,000 a year will see any form of tax increase.
Obama 9/12/08.

[jeffkrol]

Talking out of both sides of one's mouth..........
First:

The bill creates a $30 billion government fund to help encourage lending to small businesses, many of which have been having difficulty securing bank loans and credit. The fund will be available to community banks, which could use the money to leverage billions more in loans.

The legislation also includes about $12 billion in tax breaks for small business — eight separate tax cuts that take effect Monday. One such provision increases to $500,000 the amount of investments that businesses would be allowed to write off this year and next.

The measure also gives a boost to some Small Business Administration loan programs.

The new law follows earlier administration efforts to help small businesses, including eight different tax cuts as well as a temporary payroll tax holiday for companies that hire people off the unemployment lines.

"This bill will do two big things," Obama said before signing the bill. "It's going to cut taxes and it's going to make more loans available for small businesses. It's a great victory for America's entrepreneurs."

Several business owners who stood with Obama for the signing echoed his sentiments afterward.

Prachee Devada, founder of Synergy Enterprises, Inc., an information technology company in Silver Spring, Md., told reporters that she'll be hiring at least 20 people as a result of the new law. She said she hired about 20 people under contracts funded by the economic stimulus.

"Obviously this bill is making a huge difference to me as a small business," Devada said.

The Associated Press: Obama signs $30B small business lending bill
Now Boerner...............

Moments after President Obama signed a jobs bill for small businesses, House Minority Leader John Boehner accused him of “turning his back” on the country.

“If the President really wants to help small businesses, he should insist that Congress not leave town without cutting spending and stopping his tax hike to help create jobs – particularly small business jobs,” Boehner said in a statement. “By failing to act, the President is turning his back on American families and small businesses.”

McConnell for emphasis:

Senate Minority Leader Mitch McConnell offered this: “Like small businesses and families across the country, I was disappointed to hear the President insist on raising taxes on hundreds of thousands of small businesses and families across the country. The President spent a lot of time blaming others and talking about more government spending. But Americans want to know that Washington is going to stop the reckless spending and debt, the burdensome red-tape and job-killing taxes. They’re speaking up. They want to know that Washington is finally listening.”

Boehner revives spending concerns | POLITICO 44
GOOD examples.........
http://online.wsj.com/article/SB10001424052748703860104575508333443385658.html

[Nesster]

...it's all fiddling at the margins...

The value of financial assets held in retirement systems and accounts is
derived from the expected future income generated by labor and capital. Thus,
a slowing growth rate of the labor force can make the value of assets – and the
luxury of a retirement itself – less likely. In fact, theory suggests rates of return
on capital fall faster than labor income when the available labor supply slows.
 The CBO notes that a slower-growing working age population should lower
potential asset returns, but this might be made up for by greater deficit
spending which would generate higher real interest rates. Higher interest rates
generated this way appear inconsistent with fully comparable rising returns for
risk assets (while also implying a drop in market prices).
 Even at low interest rates, the growth of age-triggered entitlement spending
implies a crowding out of private investment, lowering potential growth.
 In the current context, an unsustainable long-term fiscal course might make
desirable short-run countercyclical policies less possible.
 While there is still substantial room for reform, policies that imply and support
an ever larger share of life in retirement might even threaten broader financial
stability. In the end, there is little recourse but “more work” for many, if not
most, even if our political process fails to acknowledge this now.

This from a Citibank economic forecast paper. Maybe it will turn out that oil once again forces our politicians to do the responsible thing, but the other grenade in the room is health care cost. Whoever does end up doing the responsible things will be punished by the electorate (as it seems Obama is now). Whichever way you look at it, the demographics seem to be saying: we'll work longer for less money, our investments will do worse than we thought, and our taxes will go up and much government spending will go way down.

[jeffkrol]

and the beat (ing) goes on........

U.S. Senate Republicans blocked a Democratic bill on Tuesday to end tax deductions enjoyed by companies that close their U.S. plants and move overseas.

With a largely party-line vote of 53-45, Democrats failed to muster the 60 votes needed to clear a Republican procedural hurdle against the measure, which would also give employers a tax break to hire new U.S. workers............. The bill also takes on a hot tax topic known as "deferral," the ability of companies to defer taxes on income earned abroad.

President Barack Obama's budget aims to sharply curtail that practice. The bill would repeal deferral for companies that close or cut a business in the U.S. and start or expand overseas with the intention of importing goods for sale in the United States. .

UPDATE 1-Republicans block ending offshore jobs US tax breaks | Reuters
http://www.politico.com/news/stories/0910/42820.html

“We’re all on the same page until the polls close Nov. 2,” conservative activist Richard Viguerie said. And after the election? “Then a massive, almost historic battle for the heart and soul of the Republican Party begins,” Viguerie said.

Read more: http://www.politico.com/news/stories/0910/42820.html#ixzz10qvRdr2k

[Nesster]

Oh jeez, what a bunch of putzes.

Republicans and business groups dismissed the bill as a political stunt that would increase taxes on companies and undermine job growth.

The parties are fighting to prove they are making the best effort to create jobs. Nearly 15 million Americans are out of work and unemployment has been stuck near 10 percent for more than a year.

"The companies this bill targets, by and large, aren't opening overseas subsidiaries to make products for Americans," Senate Republican Leader Mitch McConnell said. "They're moving overseas to serve foreign markets, in addition to the markets they already have in place here, and that creates jobs here in the United States."

So let me understand - the companies are getting tax CREDITS for moving jobs overseas, and they should because doing so help them serve foreign markets in addition to domestic markets? And that creates jobs in the USA?

Eliminate US jobs, eliminate US export, gain a tax credit, and that's a GOOD thing?

When would this be a BAD thing, one that doesn't require additional SOCIAL ENGINEERING via tax expenditures because doing this is already ECONOMICALLY SUPPORTED (i.e. doing so is already increasing the corporate profit?)

[mikemike]

Oh jeez, what a bunch of putzes.


So let me understand - the companies are getting tax CREDITS for moving jobs overseas, and they should because doing so help them serve foreign markets in addition to domestic markets? And that creates jobs in the USA?

Eliminate US jobs, eliminate US export, gain a tax credit, and that's a GOOD thing?

When would this be a BAD thing, one that doesn't require additional SOCIAL ENGINEERING via tax expenditures because doing this is already ECONOMICALLY SUPPORTED (i.e. doing so is already increasing the corporate profit?)

Actually a couple of major issues in international business are exchange rate risk (ask Pentax how they like the 85 yen exchange rate), political risk (like getting barred from importing products if the local government decides to raise trade barriers), and repatriation of profits (many countries limit how much money can be drawn out by foreign firms in a given year).

The most effective way to mitigate the first two risks, if a market is large enough, is to operate domestic production facilities to serve that market, like Toyota and Honda have done here. Having local offices also helps keep your company's finger on the local political pulse and minimizes the impacts of anti-foreign sentiment since you are seen as an important employer and good citizen of the country, rather than just a mercantilist.

Taking the multinational approach however, exposes you to the third risk. Because the revenues you collect over there cannot be used for anything except for domestic reinvestment. Often you can't send more than a small percentage of profit back to the parent company in the home country or else you will be kicked entirely out of the country. This means that if the company's were to pay taxes on the profits they made overseas where they are operating plants and offices, they would have to pay that tax bill out of US accounts because the profits that are being taxed are essentially being held hostage. Paying those taxes would really limit the company's ability to expand in the US. Does that make sense?

The sound byte media doesn't do this issue justice, but the Mitch McConnell is actually right on this occasion. The way to fix the problem is to try and make it easier for money to flow back here through treaties and trade pacts and then it can be taxed without hurting the US economy.

---------- Post added 09-28-10 at 02:52 PM ----------

Actually a very effective way to stimulate the economy would be to have a profit repatriation tax holiday. Tell companies that if they submit a business plans to invest repatriated profits in the US over and above their existing plans in the next year or two they can bring them back without paying any US taxes.

Often the hold up is double taxation and penalties for repatriation. If the incentive was juicy enough, their could be a flood of corporate money coming back to the US, probably greater than the ARRA.

[jeffkrol]

Analysts point out that the issue of tax breaks may not have a direct impact on the Indian outsourcing business as corporate tax rates are higher here than they are in the US, but populist protectionism can cast a long shadow over Obama's visit, his first. He is also visiting India earlier in his presidency than any US leader before, a move intended to be symbolic of the new US-India relationship.

However, sources in India's Ministry of External Affairs point out that there's more to it than meets the eye. The US, they say, has been displeased over the final contours of the just-approved nuclear liability bill and New Delhi's refusal to re-formulate the legislation to accommodate American companies eager to sell components for India's burgeoning nuclear power industry.

The US under the previous administration of President George W. Bush provided the major impetus India's inclusion in the global nuclear club, ending a three-decade old global ban on nuclear sales to the country. .............But the fact is that despite 9.75 per cent unemployment in the US, there has been little action against outsourcing since 2005. Ohio's protective penalties may have little impact on the Indian IT sector, which is increasingly looking to other global markets. However, they are far more likely to disturb the Indo-US political equilibrium in the short term. Obama may face a tough time on his maiden visit to India.

Nearly 60 per cent of India's software revenue comes from outsourcing, and a large chunk of it from the US. Analysts don't think there's any real cause for worry. The US companies, they point out, are shifting jobs to India for lower labor costs and operational efficiency and the tax issue will not be enough of a detriment to discourage them from continuing to do it.

Asia Sentinel - Obama Slows Outsourcing to India
To add a bit:

Sen. Bernie Sanders (I-Vt.) on Tuesday blasted the U.S. Chamber of Commerce and the National Association of Manufacturers (NAM) for opposing legislation that attempts to in-source jobs by granting companies a payroll tax holiday that shift overseas jobs to the U.S. and limits the use of tax deferral.

"Of course they are [opposed]," Sanders told reporters. "They much prefer paying people in Vietnam 20 cents an hour than American workers a living wage." ..............."It is to their advantage, in many cases, to shut down plants here and pay people a fraction of the wages that American workers lose by going to China," Sanders said. "What's the surprise about that?"

http://thehill.com/blogs/on-the-money/domestic-taxes/121271-sanders-slams-ch...tsourcing-bill

[Nesster]

One problem is that of scale. I know an income of $6mill per year - common enough - is very difficult for me to imagine. But $6mill per year is $500,000 per month, or approx $125K per week. That's easier to understand. A $6million dollar man is done with their FICA well inside the first week of January.

"About 315,000 households report adjusted gross income of $1 million or more. "
http://www.nytimes.com/2010/08/11/us/politics/11tax.html

That's adjusted gross income. For easy math, take someone with AGI of $1.2 mill per year. To make this tangible, that's $100K per month.

Just on Wall St, in 2009:
Wall Street's $1 Million-Plus Bonus Club - NYTimes.com

Bank of America: 172

Bank of New York Mellon: 74

Citigroup: 738

Goldman Sachs: 953

JPMorgan Chase: 1,144*

Merrill Lynch: 696

Morgan Stanley: 428

State Street: 44

Wells Fargo: 62

That's 4,594 in a bad year, and counting bonuses only (i.e. not base salary).

And these Wall St folks look enviously at the hedge fund managers who make really big money, tax advantaged.



It is difficult to see how someone clearing $100K or more per month - mainly for being good at corporate politics and asset shuffling, for example - 'creates jobs' by spending that money in job creating ways. Mainly, I for one would be looking to squirrel the money where the tax man doesn't reach, or engaging in asset shuffles of my own (aka investing in hedge funds etc)... unfortunately, true, that is what I'd end up doing with all that money pouring in. No way would I be spending it in ways that create consumer demand, say, as a person making $100K per year over 12 years (to equal my one year's haul) - and the $100K guy would be paying more taxes along the way to boot. It's ridiculous to argue these folks need more tax breaks... or create economic value in proportion to their income.