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State Of The Union


righturnonred

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IMO, the highest earners are getting too many benefits from this while average earners are seeing things get worse and worse.

When Reagan reduced taxes in the 1980's, clearly the rich recieved the most benefit in terms of dollars, but obviously because they paid the greatest amount in.

However, as the top tax rate was reduced to 28% in 1988 from the high rate of 70% in 1980, the total tax burden for the rich increased dramatically while the tax burdern for lower incomes shrunk an equaly impressive amount.

Taxpayers earning over $200,000:

                               

                                  1980          1988

Tax rate                      70%          28%

Number of returns    117,000      725,000

Dollars paid              $19.5 b      $100.3 b

Percent of income        7.5%        25.3%

Total taxes              $250.3 b      $412.9 b

            Percent paid by groups:

                                  1980          1988

0-20K                        19.5%          7.0%

20-50K                      49.4%          30.4%

50-200K                    23.6%          38.3%

200K+                        7.5%          24.3%

Source: Internal Revenue Statistics published in Arkansas Democrat Gazette, Oct 12, 1992.

Taxes rates were reduced, along with the elimination of shelters and the result was increased government revenues, increased burden on the rich, and decreased burden on lower income earners.

The Bush tax cut works under the same principle.

Tax rates by 2001 taxable income:

          Clinton Rates             

0-27,050                  15%

27,050-65,550          28%

65,550-136,750        31%

136,750-297,350      36% 

297,350+                39.6%

              Bush Plan

0-6,000                    10%

6,000-27,050            15%

27,050-136,750        25%

136,750+                  33%

--whitehouse.gov

I don't see the tax cut as being unfair or inequitable. Claiming "tax cuts for the rich" is misleading. They did it to Reagan and they're doing it to Bush.

Is the end goal 0 taxes ? Certainly we can't expect all users to pay for defense, healthcare, infrastructures and education.

Certainly not, but the only way to curb growth in government is to restrict tax revenue to reduce waste and to finance only what is needed. There is a happy medium and taxing the life out of people is not it.

I don't expect to see another round of tax cuts.

On the tax cut issue, is it correct to help someone in need, or someone not in need?

Your question suggests you lack understanding of how tax cuts benefit society at large.

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First of all, my compliments, RTOR, for using hard numbers that check out.

Let's discuss them:

When Reagan reduced taxes in the 1980's, clearly the rich recieved the most benefit in terms of dollars, but obviously because they paid the greatest amount in.

While this is true, it's not just because they paid the greatest amount in.

If the rich and poor had been given the same percentage tax cut, the rich would receive the most benefit because they paid the most - but the rich got a BIGGER tax cut percentage wise.

However, as the top tax rate was reduced to 28% in 1988 from the high rate of 70% in 1980, the total tax burden for the rich increased dramatically while the tax burdern for lower incomes shrunk an equaly impressive amount.

Maybe, but your table only shows the top marginal tax rate so we can't deduce that from the figures.

Taxpayers earning over $200,000

1980 1988

Tax rate 70% 28%

Number of returns 117,000 725,000

Dollars paid $19.5 billion $100.3 billion

Percent of income 7.5% 25.3%

Total taxes $250.3 billion $412.9 billion

See, the problem with using a hard figure like $200K is that someone making $200K in 1980 is not in the same class as someone making $200K in 1988, due to inflation. But I'll play along.

I don't know what the percent of income figure represents, so I'll leave that be.

Let's take the number of returns over $200K, and how much tax they paid.

In 1980, you had 117,000 returns producing $19.5 B in revenue or roughly $167K per individual return.

In 1988, you had 725,000 returns producing $ 100.3 B in revenue or roughly $ 138K per individual return.

Although you still don't see the right picture without seeing it on a curve, you can see that the rich are paying less.

Maybe this is happening because the rich were paying too much prior to Reaganomics. Fair enough. The question I ask, then, is "what is a fair amount of tax for the rich to pay ?". We've been cutting taxes for over twenty years now. Taxes are now at their lowest levels since 1931 (except for the tenure of George Bush Sr. )

We've had recessions, booms and busts. We had a 3% GDP growth from 1979 to 1989 (Reagan) and 3.3% GDP grown from 1991 to 2001 (Clinton).

Have the tax cuts helped ? If so, how much ? Where do tax savings go ? Back into the economy ? Overseas investment ? Savings accounts ?

I don't know. But I ask again:

"What is a fair amount of tax for the rich to pay ?".

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I don't see the tax cut as being unfair or inequitable. Claiming "tax cuts for the rich" is misleading. They did it to Reagan and they're doing it to Bush.

Well, as I said in the previous post, it's misleading to look at the entire tax burden paid by those earning over $200K, eight years apart. I suggest you look at the tax paid by the top 1% of earners in any period.

Certainly not, but the only way to curb growth in government is to restrict tax revenue to reduce waste and to finance only what is needed. There is a happy medium and taxing the life out of people is not it.

Fine. Then what is the happy medium ? As I stated above, we're back to 1931 in terms of tax rates for the richest members of society.

If we started on an exercise to identify what is needed then maybe your statement would make sense but instead what happens is an outcry for tax cuts in good times and bad.

The programmes aren't examined to see whether they are efficient or worthwhile, they are simply cut for political expediency.

Your question suggests you lack understanding of how tax cuts benefit society at large.

That was Bushmustgo's comment, not mine.

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That was Bushmustgo's comment, not mine.

I know. ;)

I suggest you look at the tax paid by the top 1% of earners in any period.

As I understand it, the top 1% of income earners pay about 10% of total federal income taxes. Likewise, the top 10% pay about 50% of the total incomes taxes. I'm not saying whether thats appropriate, but it's certainly not unfair to those in the lower tax brackets.

Well, of course. They make more. Are you suggesting everyone pay the same amount ?

No, thats ridiculous of course, but I might suggest that everyone pay the same percentage of their incomes respectively. I don't think thats likely to happen though.

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As I understand it, the top 1% of income earners pay about 10% of total federal income taxes. Likewise, the top 10% pay about 50% of the total incomes taxes. I'm not saying whether thats appropriate, but it's certainly not unfair to those in the lower tax brackets.

But, what about relative to 20, 30, 40 years ago ?

Large economic forces such as globalization, and the pressure to lower taxes for the richest members of society are making life easier and easier for the rich.

Perhaps others will say, as you have, that we shouldn't expect any more tax cuts in the forseeable future.

No, thats ridiculous of course, but I might suggest that everyone pay the same percentage of their incomes respectively. I don't think thats likely to happen though.

We're practically there, but not quite.

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But, what about relative to 20, 30, 40 years ago ?
The tax code, over time, has placed a larger tax burden on the most wealthy while reducing the burden on lower incomes. The data clearly shows this.

The tax rates for the rich may have declined but they end up paying a larger proportion of total federal income taxes. This is exactly how is should work, everybody wins.

We're practically there, but not quite

I disagree, the tax code remains solidly progressive, but that's alright as long as individual higher income earners are not taxed to the point in which investment is stiffled and instead shelters are sought after.

where all of the jobs it was suppose to create?

BMG, you're right, there needs to be much more job creation than is currently occuring. But as I said, you need to have patients as explosive job growth doesn't happen overnight. Job are a lagging indicator remember?

Here's what Greespan says:

WASHINGTON – Federal Reserve Chairman Alan Greenspan said Wednesday that "impressive gains" in the U.S. economy since last summer should lead to improvements in the lagging jobs market, but warned that soaring budget deficits posed a risk to longer-term business prospects.

Testifying before the House Financial Services Committee, Greenspan delivered a generally upbeat outlook saying the economy's prospects had "brightened" since his last monetary report in July. He said conditions had been helped by a reduction in geopolitical tensions, strengthened consumer and business confidence and a sharp rebound in economic growth as measured by the gross domestic product.

"Overall, the economy has made impressive gains in output and real incomes. However, progress in creating jobs has been limited," Greenspan told the committee.

But he held out hopes for an improvement in coming months as continued strong GDP growth makes businesses more confident about hiring back laid-off workers.

"As managers become more confident in the durability of the expansion, firms will surely once again add to their payrolls," Greenspan said.

It's clear, BMG, that you want the economy to do poorly because you don't like bush and instead want a Democrat elected. The Democrat's motivation for attacking Bush is purely political for the most part, they want power and they'd trash Mother Teresa to get it.

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The tax code, over time, has placed a larger tax burden on the most wealthy while reducing the burden on lower incomes. The data clearly shows this.

No it doesn't clearly show this.

The top marginal rate has been steadily decreasing. The wealthy are paying less. You can't draw a line at, say, 200K, and say because a larger proportion of taxes is being paid by people who make over this amount therefore the most wealth have a larger burden.

As I have explained, it's misleading because any line that you pick will be eroded by inflation.

The tax rates for the rich may have declined but they end up paying a larger proportion of total federal income taxes. This is exactly how is should work, everybody wins.

Let's see a graph showing the proportion of tax paid by the top 1%. I have an article here that says they pay 22.9 % of federal (US) tax revenue.

Let's get something to compare it with.

Search article for 'top 1'

I disagree, the tax code remains solidly progressive, but that's alright as long as individual higher income earners are not taxed to the point in which investment is stiffled and instead shelters are sought after.

Investment is driven by psychological factors among others. At some point, if the zeitgeist starts to push no taxes, then the current tax rate will seem punitive in comparison.

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Patience???

I won't be patient with this administration just as they were impatient with the U.N.'s search for WMDs. That was $180,000,000,000.00 and 500+ troops lives ago.

It didn't cost us for the U.N. to search for WMD, that came from the Iraqi Oil for Food Program.

You preach impatience abroad than we shall practice it at home!

Again, the credibility of this administration is no longer there for me...done!

-WMD

-Iminent Threat

-Saddam link to 9-11

-Purchase of Yellow Cake and Al. tubes from Niger

-Serious Health Care miscalculations

-Record deficit after inheriting largest surpluss

-Halliburton/ Cheney

-Sr. Adm. official leaking CIA info

-Tax cuts for top 1% just to turn around and write a $1,000 check to Bush's campaign.

-Making Gay marriage of big issue as if there were not some other serious matters to be handling.

-Possible AWOL

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Ok, RTOR. I found this as well:

In 1948, the median family's effective federal tax rate was 5.3%; the richest 1% paid 77%.

Open Politics Article

What we've seen since 1948 is a reduction in the number of brackets so that someone making over $400K was in the top bracket. In 2003, it was $300K.

But taking inflation into account, the 1948 rate would equate to several million today.

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