A simple explanation of Democratic and GOP tax concepts

As you can tell from the graph, the rise of he 1 per cent started with Ronald Reagan who slashed taxes below 30 per cent for top earning Americans. This trend continued when George HW bush was president.

When George W. Bush was president, he not only gave the one per cent a $64,000 a year tax cut. He also cut the short term capital gains tax to 15 per cent and suspended the estate tax.


The estate tax is an old tax established by Theodore. Roosevelt, a Republican president.


So three Republican presidents undid the tax reforms of FDR that weakened the middle calls. Many middle class teachers, firemen and police have lost heir jobs because the tax base was reduced.

In addition, the economy has suffered because the middle calls is the consumer class and when the middle class is weakened, businesses lose customers. 

Supply side economic might be a workable economic if it was oriented toward the middle calls. Giving the most affluent Americans huge tax breaks is counter-intuitive and simply doesn't work.

This is because the wealthy person may bank rather than spend the tax rebate or purchase gold and put it in a safe deposit box. The affluent could purchase stocks and bonds but this is an indirect way of stimulating the economy.

A direct grant or payment like food stamps or unemployment compensation gets more bang for the Federal tax buck and has a multiplier effect of the federal dollars because the recipient spends the money and rolls it back into the economy.

The following paragraph is verbatim form Wikipedia:

In congressional testimony given in July 2008, Mark Zandi, chief economist for Moody's Economy.com, provided estimates of the one-year multiplier effect for several fiscal policy options. 


The multipliers showed that any form of increased government spending would have more of a multiplier effect than any form of tax cuts. 


The most effective policy, a temporary increase in food stamps, had an estimated multiplier of 1.73. 


The lowest multiplier for a spending increase was general aid to state  governments, 1.36. 


Among tax cuts, multipliers ranged from 1.29 for a payroll tax holiday down to 0.27 for accelerated depreciation. 


Making the Bush tax cuts permanent had the second-lowest multiplier, 0.29. Refundable lump-sum tax rebates, the policy used in the Economic Stimulus Act of 2008, had the second-largest multiplier for a tax cut, 1.26.


Obama's tax policies are based upon Keynesian economics and Mark Zandi's testimony. 

Republican tax policies are based on GOP ideology and unproven economic assumptions. 

source: http://en.wikipedia.org/wiki/Fiscal_multiplier

graphic: http://gulzar05.blogspot.com/2010/09/fiscal-multipliers-for-tax-cuts-and.html

Subscribe to the Rightardia feed: http://feeds.feedburner.com/blogspot/UFPYA




Rightardia by Rightard Whitey of Rightardia is licensed under a Creative Commons Attribution 3.0 Unported License.

Permissions beyond the scope of this license may be available at rightardia@gmail.com.

Democratic Think Tanks need hard factual studies on tax cuts

The Democrats need to conduct some objective studies on tax cuts. Some of the questions that need to be asked:

1. Are tax cuts for the top tax brackets stimulative?  How does this stimulation mechanism work?
2. Are tax incentives to businesses to hire workers more stimulative than tax cuts? 
3. Which government programs that use tax stims work and which don't work?
4. Advantages and disadvantages of a progressive tax system. 

The Democrats could build on the work of Mark Zandi form Moodys Analytics. We have published this table many times:

Permanent tax cuts do not appear to be stimulative at all. The Obama administration has used the payroll tax holidays for FICA payroll tax and provided refundable lump sum tax rebates.

However, the GOP approach with the Bush tax cuts and cutting corporate taxes is not effective according to Moodys. . 

The Democrats should use empirical data to attack the bad tax ideas of the GOP. Taxes are a numbers game.

Some of the work could be done by both the office of Management and Budget (OMB) and the General Accounting Office (GAO).  A Joint Report on tax effectiveness from the GAO and OMB would be interesting and tough for either political party to refute.

The GOP uses a lot of fuzzy math when they talk about taxes.

Show America the numbers!

graphic courtesy of: http://www.newsrealblog.com/

Subscribe to the Rightardia feed: http://feeds.feedburner.com/blogspot/UFPYA  

 


Rightardia by Rightard Whitey of Rightardia is licensed under a Creative Commons Attribution 3.0 Unported License.

Permissions beyond the scope of this license may be available at rightardia@gmail.com.

Mittens: Distribution of wealth is about envy

Mittens was asked if questions of the distribution of wealth and power were a matter of jealousy or fairness, Mittens stated:

You know, I think it’s about envy. I think it’s about class warfare. When you have a president encouraging the idea of dividing America based on 99 percent versus one percent, and those people who have been most successful will be in the one percent, you have opened up a wave of approach in this country which is entirely inconsistent with the concept of one nation under God. The American people, I believe in the final analysis, will reject it.

And asked if there is any legitimate question one can ask concerning the discrepancy of wealth in America, Mitt Richey  said this:

I think it’s fine to talk about those things in quiet rooms and discussions about tax policy and the like.


source: Mario Piperni

Subscribe to the Rightardia feed: http://feeds.feedburner.com/blogspot/UFPYA  


Rightardia by Rightard Whitey of Rightardia is licensed under a Creative Commons Attribution 3.0 Unported License.

Permissions beyond the scope of this license may be available at rightardia@gmail.com.