Senate GOP

[bushwacked]

http://tpmdc.talkingpointsmemo.com/2010/12...initiatives.php

[redrumjuice]

Class warfare! It's all you have left.

[driveby]

I can't access the link but I'm assuming you're saying that extending existing tax rates is giving rich people a tax cut?

[Duchess Jack]

I can't access the link but I'm assuming you're saying that extending existing tax rates is giving rich people a tax cut?

McConnell more or less said that the senate wouldn't let anything go through until the Bush Tax cuts are addressed. And in saying that - you have to believe that he means unless they are addressed, voted upon and the vote goes the way he wants.

[driveby]

McConnell more or less said that the senate wouldn't let anything go through until the Bush Tax cuts are addressed. And in saying that - you have to believe that he means unless they are addressed, voted upon and the vote goes the way he wants.

Got it. So McConnell wants to extend the current tax rates and policy and wanker is calling that a tax cut for the rich?

[bushwacked]

Class warfare! It's all you have left.

 

You're apparently confused on who is instigating the class warfare and unwillingness to work together in a bipartisan fashion, in this particular circumstance.

[driveby]

bipartisan

This makes me laugh every time.

[driveby]

Demagoguery Unanswered

 

Do Republicans understand that “demagoguery beats data”?

 

 

Guess who said the following: “It is incredible that a system of taxation which permits a man with an income of $1,000,000 a year to pay not one cent to his Government should remain unaltered.”

 

Franklin D. Roosevelt? Ted Kennedy? Nancy Pelosi?

 

Not even close. It was Andrew Mellon, secretary of the Treasury under conservative Republican president Calvin Coolidge.

 

What was Mellon’s point? That high tax rates do not necessarily result in high tax revenues to the government. “It is time to face the facts,” he said. Merely having high tax rates on large incomes will not bring in more tax revenues to the Treasury, because of “the flight of capital away from taxable investments.”

 

This was all said in 1924, in Mellon’s book, Taxation: The People’s Business. Yet here we are, more than 80 years later, still not facing those facts.

 

It is not just a question of what Andrew Mellon said. It is a question of hard facts, easily checked in official documents available to all — and ignored all these years.

 

Internal Revenue Service data show that there were 206 people who reported annual incomes of one million dollars or more in 1916. But, as the tax rate on high incomes skyrocketed under the Woodrow Wilson administration, that number plummeted to just 21 people reporting a million dollars a year in income five years later.

 

What happened to all those millionaires? Did they flee the country? Were they stricken with fatal diseases? Did they meet with foul play?

 

Not to worry. Right after Congress enacted the cuts in tax rates that Mellon had been urging, there were suddenly 207 people reporting taxable incomes of a million dollars or more in 1925. As Casey Stengel used to say, “You could look it up.” It is on page 21 of an Internal Revenue publication titled “Statistics of Income from Returns of Net Income for 1925.”

 

Where had all the income of those millionaires been hiding? In tax-exempt securities like state and local bonds, among other places. Mellon had urged Congress to end tax exemptions for such securities, even before he got them to cut tax rates. But he succeeded only with the latter, and only after a political struggle with those who made the same kinds of arguments that are still being made today by those who cry out against “tax cuts for the rich.”

 

Still, one out of two is not bad, when it comes to getting Congress to do something that makes sense economically, rather than something that looks good politically.

 

The government, which collected less than $50 million in taxes on capital gains in 1924, suddenly collected well over $100 million in capital gains taxes in 1925. At lower tax rates, it no longer made sense to keep so much invested in tax-exempt securities, when more money could be made by investing in the economy.

 

As for “the rich” — who really were rich in those days, when $100,000 was worth more than a million dollars is worth today — those in the highest income brackets paid 30 percent of all taxes in 1920 and 65 percent of all taxes by 1929, after “tax cuts for the rich.”

 

How can that be? Because high tax rates on paper — which many people avoid — often do not bring in as much tax revenue as lower tax rates, which more people actually pay, because it is safe to come out of tax shelters and earn higher rates of taxable income.

 

The investors do this because it makes them better off, on net balance, even after they pay more money in taxes on incomes that have gone up. More important, the economy benefits when there is more investment in things that create more jobs and greater output.

 

None of this was unique to the 1920s. The same scenario played out again in later years, during the Kennedy, Reagan, and Bush 43 administrations.

 

But economic success is not the same as political success. As former House majority leader Dick Armey put it, “Demagoguery beats data.”

 

As long as the voters keep buying the “tax cuts for the rich” demagoguery, politicians will keep selling it. And it will keep selling as long as it goes unanswered. The question is whether today’s Republicans understand that as well as Andrew Mellon did back in the 1920s.

 

— Thomas Sowell is a senior fellow at the Hoover Institution. © 2010 Creators Syndicate, Inc.

[bpwallace49]

Got it. So McConnell wants to extend the current tax rates and policy and wanker is calling that a tax cut for the rich?

 

The current tax rates were forced through by reconciliation, and were fiscally untenable past ten years. which is why they have an ending date in the first place.

 

You are acting like it was supposed to be a permanent measure, when it clearly was never intended as such.

 

"Having a temporary tax credit expire at the end of its legislated time period" is vastly different than "GMOZ! Job killng tax increases!!"

[gbpfan1231]

The current tax rates were forced through by reconciliation, and were fiscally untenable past ten years. which is why they have an ending date in the first place.

 

You are acting like it was supposed to be a permanent measure, when it clearly was never intended as such.

 

"Having a temporary tax credit expire at the end of its legislated time period" is vastly different than "GMOZ! Job killng tax increases!!"

So are you saying that they should then expire for ALL of us?

[polksalet]

What is rich?

[driveby]

The current tax rates were forced through by reconciliation, and were fiscally untenable past ten years. which is why they have an ending date in the first place.

 

You are acting like it was supposed to be a permanent measure, when it clearly was never intended as such.

 

"Having a temporary tax credit expire at the end of its legislated time period" is vastly different than "GMOZ! Job killng tax increases!!"

If taxes stay the same, have they been cut?

[Perchoutofwater]

I think it is a chicken chit move personally. Having said that I do think that addressing what is going on with taxes prior to the first of the year should be the senate's number one priority, as until then it makes it harder for businesses to plan for the the short and medium term future. Regardless of the outcome, something needs to be resolved. I'll avoid calling anyone names, and try to stay on topic.

[Azazello1313]

You're apparently confused on who is instigating the class warfare and unwillingness to work together in a bipartisan fashion, in this particular circumstance.

 

wasn't peter orszag (until recently, the president's budget director) recently advocating extending all of the tax cuts until the economy is on surer footing? I can point you to several other center-left economists saying the same thing. sounds pretty bipartisan to me.

 

and, to my mind, a bit more palateable than the "bipartisan" coalition of 8 republican senators and 48 democrats who unified yesterday in support of earmarks.

[Perchoutofwater]

The current tax rates were forced through by reconciliation, and were fiscally untenable past ten years. which is why they have an ending date in the first place.

 

You are acting like it was supposed to be a permanent measure, when it clearly was never intended as such.

 

"Having a temporary tax credit expire at the end of its legislated time period" is vastly different than "GMOZ! Job killng tax increases!!"

 

I agree, but if we are going to let them expire, we need to let them expire on everyone rather than just those that employ most Americans. The biggest issue I see right now is we just need to resolve what the taxes are going to be for next year, particularly the higher brackets as these are the people employing most people and need to know this so that they can make prudent business decisions.

 

Example, if I were actually going to make money next year (unfortunately I'm going to lose a pretty good sum) I would try to take all the profits I could this year at the lower rates rather than deferring them to next year.

[redrumjuice]

Great news! http://www.cnbc.com/id/40454469

[Ursa Majoris]

So are you saying that they should then expire for ALL of us?

Extending them for everyone ad infinitum will add 4 trillion dollars to the deficit over the next 10 years, IIRC. How does that square with the Republican "desire" to balance the budget?

 

And let's remember, the end of this decade-long tax holiday will merely revert MOST (not all) taxes to the levels that were extant under Bill Clinton. As I recall, those Clinton years were economically rather good, were they not? In contrast, the 2000 decade (c/w reduced taxes) was economically horrendous.

 

So, tell me one more time why it is so critically important to have these cuts extended and why the right thinks tax rates have such a big economic impact when the evidence seems to indicate they do not?

[gbpfan1231]

Extending them for everyone ad infinitum will add 4 trillion dollars to the deficit over the next 10 years, IIRC. How does that square with the Republican "desire" to balance the budget?

 

And let's remember, the end of this decade-long tax holiday will merely revert MOST (not all) taxes to the levels that were extant under Bill Clinton. As I recall, those Clinton years were economically rather good, were they not? In contrast, the 2000 decade (c/w reduced taxes) was economically horrendous.

 

So, tell me one more time why it is so critically important to have these cuts extended and why the right thinks tax rates have such a big economic impact when the evidence seems to indicate they do not?

All I am saying is that I am not a fan of having one class of wealth treated different than the rest - extend them for all or do not extend them for all.

 

I just don't like the argument of "well they can afford it".

[bushwacked]

Extending them for everyone ad infinitum will add 4 trillion dollars to the deficit over the next 10 years, IIRC. How does that square with the Republican "desire" to balance the budget?

 

It doesn't.

[Duchess Jack]

And let's remember, the end of this decade-long tax holiday will merely revert MOST (not all) taxes to the levels that were extant under Bill Clinton.

yeah, but that would have been w/o the tax cuts for all income brackets, right?

[wildcat2334]

Extending them for everyone ad infinitum will add 4 trillion dollars to the deficit over the next 10 years, IIRC. How does that square with the Republican "desire" to balance the budget?

 

And let's remember, the end of this decade-long tax holiday will merely revert MOST (not all) taxes to the levels that were extant under Bill Clinton. As I recall, those Clinton years were economically rather good, were they not? In contrast, the 2000 decade (c/w reduced taxes) was economically horrendous.

 

So, tell me one more time why it is so critically important to have these cuts extended and why the right thinks tax rates have such a big economic impact when the evidence seems to indicate they do not?

 

 

thank you for throwing some common sense into the mix.

 

I am still waiting on a reasonable answer to that question - which is priority #1.............

[bpwallace49]

I agree, but if we are going to let them expire, we need to let them expire on everyone rather than just those that employ most Americans. The biggest issue I see right now is we just need to resolve what the taxes are going to be for next year, particularly the higher brackets as these are the people employing most people and need to know this so that they can make prudent business decisions.

 

Example, if I were actually going to make money next year (unfortunately I'm going to lose a pretty good sum) I would try to take all the profits I could this year at the lower rates rather than deferring them to next year.

 

Your "employ most Americans" argumnet is nonsense, and you know it Perch.

 

http://www.irs.gov/taxstats/indtaxstats/ar...51,00.html#_pt1

 

Under this chart from the IRS, look at how many S corporations and partnerships (like law firms and accounting firms) take up a % of all the high income filers once you get over 500K. If you are talking about how the rich consume more or buy more stocks, then you may have a point. But if you are talking about how this affects small businesses (as the right has been trumpeting) that just doesnt hold water.

The Bush Tax Cuts: How are small businesses and entrepreneurs affected?

Once the financing of the 2001-03 tax cuts is taken into account in plausible ways, a majority of households that report small business income will end up worse off than they would have been without the tax cuts. Small businesses are also hurt in two other ways. First, their cost of capital for new investment will rise as higher budget deficits raise interest rates. Second, some of the tax cuts seek to reduce a bias in the tax code that used to favor small businesses over corporations. The net result is that many small businesses and entrepreneurs are negatively affected by the Bush tax cuts.

 

■Capital invested in the corporate sector typically faces a higher tax rate than capital invested in the noncorporate sector, which includes most small businesses. The reason is that capital invested in the corporate sector can be taxed twice: once at the level of the corporation, and again when the corporation distributes income to shareholders in the form of dividends or capital gains. The 2003 tax cut provisions that reduce taxes on dividends reduce this bias in the allocation of capital, which should shift investment funds away from noncorporate businesses, which are disproportionately owned by entrepreneurs, and toward corporations.

■While the 2001-2003 tax cuts were described as "pro-entrepreneur," a recent study found that the majority of taxpayers would see their tax burden rise, once the eventual financing of the cuts was taken into account. Specifically, the study found that 72 percent of taxpayers with business income would be worse off if the tax cuts were eventually paid for by proportional financing, and that 58 percent of filers with business income would be worse off if the cuts were eventually paid for with equal-dollar financing.

■Since the Bush tax cuts are not offset by either reduced spending or higher taxes elsewhere, they lead to higher budget deficits. Higher deficits, in turn, typically drive up interest rates, thus increasing the cost of new investment and reducing the amount of investment undertaken. Several studies have determined that the eventual result of the Bush tax cuts is higher interest rates, leading to decreased new investment.

See Also

The Bush Tax Cuts: Were they well designed to strengthen long-term economic growth?

 

The Bush Tax Cuts: What are the indirect effects on economic growth?

 

The Bush Tax Cuts: What is their impact on government borrowing and interest payments?

 

Further Reading

Desai, Mihir A., and Austan D. Goolsbee, "Investment, Overhang, and Tax Policy," Brookings Papers on Economic Activity no. 2 (2004): 275-328.

 

Gale, William G., and Peter R. Orszag, "Deficits, Interest Rates, and the User Cost of Capital: A Reconsideration of the Effects of Tax Policy on Investment," Tax Policy Center Discussion Paper 27 (Washington: Urban-Brookings Tax Policy Center, August 2005).

 

_________, "Bush Administration Tax Policy: Introduction and Background," Tax Notes 104, no. 12 (September 2004).

 

_________, "Bush Administration Tax Policy: Effects on Long-Term Growth," Tax Notes 105, no. 3 (October 2004).

 

House, Christopher, and Matthew D. Shapiro, "Temporary Investment Tax Incentives: Theory with Evidence from Bonus Depreciation," NBER Working Paper 12514 (Cambridge, Mass.: National Bureau of Economic Research, September 2006).

 

Authors: William Gale and Benjamin Harris

Last Updated: January 23, 2008

 

As the last quoted area points out, that the Bush tax cuts will drastically hurt everyone over time, as they never have been offset with spending cuts or other revenue replacement.

[bpwallace49]

thank you for throwing some common sense into the mix.

 

I am still waiting on a reasonable answer to that question - which is priority #1.............

 

It doesnt at all . . but that is where all the excitable people keep harping on the earmarks issue while failing to adequately address the massive issue of the unfunded tax cuts.

 

Bait and switch . . . keep the masses fired up over earmarks and presenting bills to that effect to work the press, but they nevr ever ever address how to pay for those tax cuts besides an empty campaign pledge to "eliminate waste" in Washington . . . . just like every politician before them has done for decades . . .

[driveby]

I assume everyone here in favor of ending the Bush tax cuts has been sending the IRS more than they owe for as long as they have been in effect.

[CaP'N GRuNGe]

We're having the wrong argument here. Bush tax cuts or no Bush tax cuts. Revamp the whole tax code. Let's stop fighting the wars of the past 10 years and move forward with a new vision. Implement the entire debt commission proposal. Screw the politicians. Pain for everybody and let's get on with fixing our perpetual mess.