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  Bush Says Tax Cuts Should Be Permanent
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ContributorGerald Farinas 
Last EditedGerald Farinas  Apr 15, 2004 09:14pm
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MediaNews Service - Associated Press
News DateThursday, April 15, 2004 08:00:00 AM UTC0:0
DescriptionBush Says Tax Cuts Should Be Permanent
The Honolulu Advertiser

On Tax Day 2004, President Bush told voters in the heartland that his policies are fattening their wallets and that tax cuts he pushed through Congress should be made permanent to fuel the economy. Among the tax cuts set to expire at year's end are an increase in the child tax credit, reductions for some married couples who would pay less if they filed as individuals, and an expansion of the bottom 10 percent tax bracket. In his remarks, Bush also highlighted positive trends in the U.S. economy and noted the 308,000 jobs added in March. But just before he spoke, the Labor Department reported that the number of Americans filing new claims for unemployment benefits shot up last week by the largest amount since 2002. The new report dealt a setback to hopes that the economy is finally beginning to produce a sustained recovery in jobs.

Kerry, who likes to remind voters about the net 1.84 million jobs lost under Bush, accused the president Thursday of misleading the public about the tax policies. "George Bush has made a big deal out of trying to convince America that he's lowered taxes for all Americans and that I'm going to come along and somehow raise taxes on Americans," Kerry told students at Howard University in Washington. "Under my plan for America, my economic plan, I'm going to provide $225 billion more in tax cuts to the middle class than George Bush ever dreamed of."
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PRG:1083Hungy ( 0.0000 points)
Mon, April 19, 2004 12:16:26 AM UTC0:00
That seems to be a reasonable percentage.

 
NPA:662... ( 295.7570 points)
Mon, April 19, 2004 12:17:41 AM UTC0:00
Handing over 40% of a person's income is outrageous, anyway one looks at it.

 
R:737737 ( 263.0322 points)
Mon, April 19, 2004 12:19:49 AM UTC0:00
And I suppose it's also frustrating to have an army, an SEC, a police force, a USDA, an FDA, a fire department, public sewers, public education, and all the other things taxes pay for, right? -Ripsaw

This country got along just fine and was able to provide appropriate services for more than 120 years without an income tax, save the period with a temporary income tax to finance the Civil War.

What are deemed appropriate and necessary services for the Federal government to provide expands in proportion to its ability to swell its coffers. And proportionatly expands its power and control over the citizenry.

 
G:888Guy ( 260.3596 points)
Mon, April 19, 2004 12:21:03 AM UTC0:00
What should be the maximum percentage of income an individual should pay in taxes.

The top federal income tax bracket should be 40%.

 
R:549kal ( -57.2262 points)
Mon, April 19, 2004 01:12:02 AM UTC0:00
OK weather Guy lets go with your number since it was the highest of the 2. My question was "What should be the maximum percentage of income an individual should pay in taxes."

My wife and make about 55K/year so we are not rich by any means. I'm in the 15% bracket. I calculated my 2003 total taxes paid in Federal Income taxes, State Income taxes, local propery tax, sales tax, miscellaneous state fees (like license plate fees & the fee for my nurses licese) and my actual tax burden came out to almost 34%. I'm sure the those in the higher brackets have a total tax burden of 50% or greater. My calculation did not include hidden taxes that I pay on utilities and through busiesses like the taxes and fees on my phone and electric bill so my actual tax burden is probably closer to 40% of my income.

 
D:64James in Sacramento ( 633.9631 points)
Mon, April 19, 2004 02:09:39 AM UTC0:00
Kal El

It's been proven that the rich pay less in terms of percentage of income on total taxes than the poor or middle class. Imagine a person who makes $250,000 a year versus someone who makes $50,000. The rich person doesn't smoke or drink 5 times as much, or consume 5 times as much gasoline (though they try in their SUVs) or pay 5 times the user fees for things like fishing and hunting licenses or park and museum fees. Their Social Security tax burden ends at $88,000, which since I am an independant contactor (Realtor), I pay 15.3% of my income in that tax alone. My daughter is a full time student at UCLA and has a part time job that paid her $3700 this last year. She paid 7.65% SS tax on all that income, and paid sales taxes and user fees on an amount much more than her income.

 
R:737737 ( 263.0322 points)
Mon, April 19, 2004 02:30:56 AM UTC0:00
Imagine a person who makes $250,000 a year versus someone who makes $50,000.

Let's imagine that. The $250K year is as likely as not to spend 5 times as much on drink because of what the drink more likely is...finer wines and spirits vs. perhaps beer. Smoking? I won't get into how a poor person can afford to smoke anyway, so will give you that one.

5 times the gas? Very likely. In the form of more vacations affordable by car and taxes built in to fuel burned by airplanes for which tickets are purchased.

Hunting and fishing licenses? Peanuts. And the higher income person may pay taxes through charter fishing. There's that fuel tax built in again, by the way.

The social security burden does not end, although only part of it continues, it continues with no ceiling. That would be 2.9% for self-employed like you.

The $250K person has more disposable income, so a much higher ratio of dollars is spend on items not normally exempt from sales tax because they are necessities. This certainly varies by state.

What percentage of total income of the $250K person is not subject to income tax to begin with? It's about 1/6 for the $50,000 person. It's about a stated 1/32 for the $250K person, but it approaches zero in practice because of phase-outs. And then there are the "targeted" tax preferences not available to the $250K person.

You could have picked a number to make that point. In real life $250K vs. $50K doesn't it. $250K is not all that high an income in this country anymore. In the last 24 hours, someone on this site said his parents made less than $50K, and in context not likely much less than 50K, and called them poor.

 
D:64James in Sacramento ( 633.9631 points)
Mon, April 19, 2004 03:50:24 AM UTC0:00
The only taxes rich were paying at a higher rate (progressive tax code) than middle or lower wage classes were income tax and estate tax, and to a lessor extent capital gains which are taxed at a lower rate than wages. Guess which ones were targeted by Bush and the Republicans? Only those. Which ones have had to be raised to compensate? User fees and cuts to essential programs used by the poor and middle class.

 
R:737737 ( 263.0322 points)
Mon, April 19, 2004 04:16:32 AM UTC0:00
It remains that a $250K earner does not pay less than a $50K earner, as a percentage of income. You really need to get to a much wider differential to make that argument, perhaps a $750K earner vs. a $50K earner. And even then I don't think the numbers might work for you. It may well be seven figures plus.

By the way, it's extremely difficult to lower income taxes on someone who is not paying them to begin with. The media gives a false impression with their cherry-picked scenarios. The social security tax burden, which is absurd to begin with but is another discussion, is offset by design with the Earned Income Tax Credit for the lesser earners. There is a huge number for people who receive an income tax "refund" far exceeding anything they ever paid in, if indeed they paid in anything at all.

If you want to discuss the tax rate cuts, compare the percentage of the rate cuts as opposed to the points of rate cut. A 2 point reduction to someone in the 15% bracket is a greater rate cut than a 3 point rate cut to someone in the 36% bracket. Do the math. The estate tax break most benefitted small business owners and farmers measured in gross relief and the capital gains tax break most benefitted the so-called middle class, the overwhelming bearer of the burden of income tax because they live on income, not wealth.

I believe your definition of the "rich" may be off. A high income earner may not be wealthy, and a wealthy person may not be a high income earner. Income taxes can only have an impact on those with income, high or otherwise, regardless of wealth.

 
D:64James in Sacramento ( 633.9631 points)
Mon, April 19, 2004 04:37:10 AM UTC0:00
The Republican's focus is income tax. Of course any discussion regarding THAT tax that remains progressive (if less so) can be used to make a point that rich were being taken. But the overall burden in taxes has been shifted to the poor and middle class. [Link]

 
R:737737 ( 263.0322 points)
Mon, April 19, 2004 05:00:16 AM UTC0:00
It's always the middle class that will bear the largest burden. They are the only ones who can be "soaked" because of less flexibility due to fewer options.

And that's why I said your definition of "rich" may be off. Your own link put the $250K earner squarely in the group that will end up paying a greater share and also stated that low income taxpayers will enjoy a disproportionately lower tax burden. (The adjective "refundable" attached to a tax cut is key here.) Hence, my statement you needed to select a much wider differential than $50K vs. $250K to make the argument you were advancing. You can do it, but not with the numbers you used.

 
R:737737 ( 263.0322 points)
Mon, April 19, 2004 05:10:57 AM UTC0:00
By the way, you need to really read and digest the article you linked, and read it beyond paying attention to only the points you are trying to support. I may be mistaken in that it takes a greater depth of knowledge to understand what they are saying, but I hope not, because it really is a good primer of reality. But it may that be more or broader background knowledge is required to recognize it. It's a very good article.

Note the article speaks only to Federal taxes. Your orginal post also included state taxes, such as additional tobacco and alcohol taxes, hunting/fishing licenses, sales taxes and others over which the Federal government has no jurisdiction. I don't think the state and local Republicans in California focus only on Federal income tax. I rather suspect in Sacramento, they focus on state taxes, and not limited to income taxes.

 
B Mse:742Ripzaw ( 597.2102 points)
Mon, April 19, 2004 05:28:04 AM UTC0:00
Kal El - I don't think that question has a universal answer. Even if it did, I would need far more data than I have to answer it. I think you might be asking this as a moral question, i.e. what percentage of one's income does the government have a right to. The answer to that is whatever percentage we agree to give it, in whatever manner we agree to organize taxation, in order to give the government the resources to do whatever we want it to do. I take questions about the effects of taxes very seriously, but questions of what anyone "should have to pay" much less so.

 
R:737737 ( 263.0322 points)
Mon, April 19, 2004 05:40:14 AM UTC0:00
But it may that be more or broader background knowledge is required to recognize it. It's a very good article. -Me

You know, it might take a broader background. Because what I can read, but is not written is why the things they say are true, because of the phase-outs I keep harping on, AMT, exclusion of deductibility for some but not all, etc., etc., etc. Perhaps others can't read it, certainly understandable since it not actually written, but do try to understand why and educate yourself where you don't know, yet think you might. Tax rates aren't the reason. They are just the most widely known thing about our tax structure, but not really the most important.




 
D:64James in Sacramento ( 633.9631 points)
Mon, April 19, 2004 06:01:17 AM UTC0:00
I used the disparity in incomes to illustrate that spending on taxable area items is not proportional to income. The article makes the point that this tax savings is solely in income taxes. Here's another state tax analysis of who pays [Link]


 
R:737737 ( 263.0322 points)
Mon, April 19, 2004 06:29:06 AM UTC0:00
And now you are linking about only state taxes. Combine that and federal taxes, and I promise you that your argument cannot be supported for a differential of $50K vs. $250K because of patterns of spending. $250K people don't just buy five times the amount of the same items $50K do, for the very reason you pointed out: some things cannot practically be consumed in five times the amount. But you must include items subjected to taxation that the $50K person does not consume at all, much less at a proportional 20% of the rate of the $250K person. I'm telling you that you are wrong. Taxes ARE proportional to income in the range you cited when including all taxes, whether consumption or income. Not only proportional, but progressive.

As to your state income tax standing alone, the very article you link says the state has a HIGH tax threshold meaning "low to moderate income families in California receive minimal or low benefit from the state's various credit, deductions and other tax benefits since they have little or no tax liability to offset." [emphasis mine] What more do you want beyond NO income taxes for low to moderate income households?

The article also says small businesses pay a small percentage of the corporate tax and the corporations with taxable income in excess of $1 million paid 80% of the corporate tax. Just what is it you want and what would possibly make you happy?

Please don't tell me you suffer from the too-common affliction of thinking that anyone making more than you is the definition of rich and THEY should bear more of the tax burden than now. You've said before you make around $100,000 a year. You have no idea how many people think *your* level of income is the "idle rich". I think it as laughable as you probably do, but it's all relative. For all but those at the very top, wealth or rich is the next level up, not the one they are current at. And when they get to that next level, all of a sudden it's the next level after that which defines wealth or being rich.

 
D:64James in Sacramento ( 633.9631 points)
Mon, April 19, 2004 07:53:58 AM UTC0:00
I'll take the rates and tax laws in place when Bill Clinton was President and we didn't run these deficits.

I state again, what taxes have the Republicans focused on in their tax cuts, the answer is three: income tax, estate tax, capital gains tax. These are the highest taxes for the rich and lowest for the middle and lower income groups, there is no disputing this fact. SS tax is 7.65% of all income for working people for those making over $400 up to $88,000, even before deductions, yet is 0% for anything over that $88,000. Sales tax is not that significant in terms of income, even if someone spent 25% of their income on taxable items in an 8% sales tax state, that is only 2% of income.

The article talks about the shift to taxing work over capital. The regular guy has his income from his job taxed at a higher rate than the current 15% capital gains rate (and no SS) from the class that has money to invest, so the chances that the higher income earner has a higher chance of a substantial portion of their income from this lower taxed source.

The typical driver uses 800 gallons of gasoline a year, I don't want rich people to waste gasoline just because they can afford it, but even though we as a country tax it much less than other countries, the approximately $400 in taxes doesn't change much regardless of what income bracket you are in and is going to be a bigger percentage chunk for the lower income earner. I know you are going to say that rich people travel more, but working people have longer commutes.

 
R:737737 ( 263.0322 points)
Mon, April 19, 2004 09:36:34 AM UTC0:00
I'll take the rates and tax laws in place when Bill Clinton was President and we didn't run these deficits.

Do that. I just did it for your scenario using the rates in place for 2003. Apply your Clinton year numbers to my 2003 calculations. Under neither scenario will you prove your statement that a $50K earner pays a greater proportion of his income in taxes than does a $250K earner.

I state again, what taxes have the Republicans focused on in their tax cuts, the answer is three: income tax, estate tax, capital gains tax.

And what are the big taxes at the federal level? The income tax, the estate tax (not really, but people like to think it matters), and the capital gains tax, which is actually part of the income tax. The other is the social security tax, which I believe should not exist anyway and should be rolled into the income tax. It's nothing but a gross payroll tax.

SS tax is 7.65% of all income for working people for those making over $400 up to $88,000, even before deductions, yet is 0% for anything over that $88,000.

That is flat wrong. The 7.65% is comprised of two parts. Only the first part, 6.2% is subject to a ceiling, which was $87,000 in 2003. The remaining 1.45% has no ceiling. The worst part of it you don't even mention and that is that it comes off the top and you STILL have to pay income tax on those dollars. At the very least is should be allowed as a deduction against taxable income. You should like that suggestion.

Sales tax is not that significant in terms of income.

Are you kidding? It's a significant part of a calculation of ratio of income to total taxes. A vastly disproportional part of a lower income earner's spending is on items exempted from sales tax because a higher proportion of their income must be spend on necessities such as food, health care and housing. A $50K earner and $250K earner will not each have 2% of their earnings go to sales tax. No way. Back when the Federal law allowed a deduction for state and local sales taxes, there was a table that could be used based on income level. It was based on statistical numbers and it was definately not straight line. I remember using it...adding up the tax on my receipts and comparing it to the table to see which was higher.

The article talks about the shift to taxing work over capital. ... so the chances that the higher income earner has a higher chance of a substantial portion of their income from this lower taxed source.

I higher chance, yes. But not a substanial portion at the $250K level. I suppose you would have to define what you mean by substantial. In any event, it will not be large enough in reality to force true your contention a $50K person pays more as a proportion than a $250K person.

I know you are going to say that rich people travel more, but working people have longer commutes.

Which leads me to wonder, do you think a $250K person doesn't work for it. It may surprise you, but a $250K income comes far more from earned income than it does from investment income except for the over 65 group. But people who make $25K a year believe that about people who make $100K a year too. When John Kerry, or those before him, talk about "working families", he is not talking about you at $100K, the $250K guy, me or any number of income levels where the earner damned sure does work and work very hard.

Anyway...a few numbers: For the sake of simplicity, use earned income. Because you believe the $250K guy must have a portion of income taxed as capital gains, we won't attach any of the penalties of phase-out and limitations to the $250K guy. Both take standard deduction and exemption and both get them all. Not real life, but it favors your position the $50K pays more as a proportion and at least offsets the amount a $250K earner might have taxed at a favored capital gain rate.

Single, no dependents. Again, hits the $250K harder. Total Federal tax, income and social security, for the $250K is $76,450. Total Federal tax for the $50K is $11,191. Or 30.6% and 22.4%, respectively. Not precise, but your state tax would be about $21,000 and $2200 I think, without taking into account available credits. Now lets use your $400 in gas tax. Both pay the same. I think it is false, but let's use it. Total tax for the $250K person is now $97,850 and for the $50K person is now $13,791. 39.14% vs. 27.58%

For the $50K person to get to 39.14%, he would have to spend an amount that would incur $5,779 more in taxes paid. He only has $36,209 left after income and gas taxes. He still has to pay for necessities. What number do you want to use for that? Half? Whatever is left, he has to incur $5,779 to get to 39.14% in taxes. And he will get there and then some. He will still pay sales tax, property taxes directly or through rent, and many other taxes.

But the $250K earner is incurring more tax too in the form of sales and use taxes, property taxes and the like. While the $250K will also spend money on tax exempt items, he is also most likely spending at least an amount equal to the $36,209 the $50K has left and at a rate at least the same, on items not exempt from sales and use tax. The $50K person will not catch the proportion of the $250K person because he has a limit: his income. The $250K person has a substantial proportion of his income spent each year compared to a $1 million+ earner. And the $250K will incur taxes on that spending. This is why your use of $50K to $250K is a differential that will not support your statement.






 
R:1056PASteve ( 53.9284 points)
Tue, April 20, 2004 07:01:17 PM UTC0:00
All this is why we need a flat tax

 
FWP:1121CBlock941 ( 742.4005 points)
Tue, April 20, 2004 08:40:33 PM UTC0:00
Exactly. In my opinion, a flat tax will happen, but probably not for another 12-18 years once Social Security tanks.

 
D:64James in Sacramento ( 633.9631 points)
Tue, April 20, 2004 10:32:55 PM UTC0:00
I'll go for a flat tax when SS and Capital Gains are included. The biggest pushes for tax reduction have focused on non-wage related income.

 
Reg:16None Entered ( 1178.9144 points)
Wed, April 21, 2004 12:22:48 AM UTC0:00
The rich person doesn't smoke or drink 5 times as much, or consume 5 times as much gasoline (though they try in their SUVs) or pay 5 times the user fees for things like fishing and hunting licenses or park and museum fees.

Good for him. I don't believe in overtaxing him for not being a chain smoker.

 
D:1RP ( 3311.3784 points)
Wed, April 21, 2004 03:00:09 AM UTC0:00
"The other is the social security tax, which I believe should not exist anyway and should be rolled into the income tax. It's nothing but a gross payroll tax." - FLVoter

I'm continually surprised at GOP support for this idea. The Social Security thing was justified as a semi-savings-account thing primarily and less of as a social safety net. You essentially get back out of it when you retire a bit more than you put into it - assuming you live to the average age. I'm just worried that it's an excuse to turn it into a social safety net program and then attack it from that standpoint.

"The worst part of it you don't even mention and that is that it comes off the top and you STILL have to pay income tax on those dollars. At the very least is should be allowed as a deduction against taxable income. You should like that suggestion." - FLVoter

Sounds all righteous and "fair", but it's just a money game. A way of hiding the tax behind lower numbers. Sure, allow it as a write-off, but then have to raise other taxes to make up for the shortfall. Plus, if it's a write-off, it just makes doing your taxes even harder. If you wanted that, then companies should take it out before calculating income.

"All this is why we need a flat tax" - PASteve

"All this" being what? One of the main arguments everyone uses for a flat tax is simplicity, but there is no inherit simplicity in a flat tax over a progressive one. The complexity comes from special deductions and tax breaks that have been enshrined into law to benefit one group or another. People aren't going to give up their homeowners deduction or child deductions or tax-shelters for a flat tax.... Really, when you do your taxes, is looking up what you owe in the tables the hard part (which is the progressive part of the system) or is it going through all of which items are taxable, which aren't, what gives you a tax break, what doesn't?

If instead, your argument is against the "unfairness" of a progressive system, then you have to answer yes to something that nobody ever has - "Do you think a Feudalistic Economy is what we should be striving for?"

Capitalism is the dynamic center balance point between Feudalism, where the weath inequality is maximized, and Communism, where the wealth inequality is minimized. To preserve the maximum overall wealth creation, the system must be prevented from drifting too far to one of these extremes or the other. What tools do we have to do this? The progressive tax system is one.

"I'll go for a flat tax when SS and Capital Gains are included. The biggest pushes for tax reduction have focused on non-wage related income." - James in Sacramento

Exactly. SS, Capital Gains, the Estate Tax are all examples of tax breaks that are given to people. People don't want to give up those tax breaks...

 
R:737737 ( 263.0322 points)
Wed, April 21, 2004 07:16:52 AM UTC0:00
I'm continually surprised at GOP support for this idea. The Social Security thing was justified as a semi-savings-account thing primarily and less of as a social safety net. You essentially get back out of it when you retire a bit more than you put into it - assuming you live to the average age. I'm just worried that it's an excuse to turn it into a social safety net program and then attack it from that standpoint. -RParker

"Was" is a key word here. In many ways, it already is a social safety net program. Think SSI, for example. And what is wrong with that anyway? But if it is going to be one, call it was it is and pay from general revenue. Which it is. You don't really think there was, is or ever will be a "lock box", do you? I disagree with a general statement that one gets back more than one puts in. Not when time value of money and opportunity costs are factored in. This would be something true in one case and not true in another. It certainly does not appear it will be true for me. And yes, I think benefits should be means tested. Definately a safety net program then. A more liberal point of view should love to advance my position. After all, it's about the most regressive non-voluntary tax and it discriminates against minorities because they have a shorter life expectancy.

Sounds all righteous and "fair", but it's just a money game. A way of hiding the tax behind lower numbers. Sure, allow it as a write-off, but then have to raise other taxes to make up for the shortfall. Plus, if it's a write-off, it just makes doing your taxes even harder. If you wanted that, then companies should take it out before calculating income.

Righteous? I don't have a righteous bone in my body. It's quite an abberation in that you pay a direct Federal tax on a direct Federal tax. Bet you can't cite many of those. Just because something is not taxed does not make it a "write-off". Do you consider health insurance a write off for you? You don't even think about it because it is not subject to social security or income taxation on your end. To not subject social security taxes to income taxation would make taxes no more complicated than dealing with health insurance or anything that is a non-taxable benefit already. A very simple way to do it is not even show it on the employee's payroll numbers. Just assess the employer 15.3% of gross payroll costs. It's closer to the truth of what is happening now anyway.

People aren't going to give up their homeowners deduction or child deductions or tax-shelters for a flat tax....

And that is why we will never have a flat tax. Peronally, I prefer a consuption tax instead, i.e. a national sales tax. We have the collection points in place in all but 5 states through their sales tax collections, necessities of life can be exempted, and taxes would be collected on things like drug monies and others that now go unreported. Of course, there will then become a big lobby for this, that and the other exemption from that tax too. But as long as our government has a big appetite for money, this will always be the case.

Really, when you do your taxes, is looking up what you owe in the tables the hard part (which is the progressive part of the system) or is it going through all of which items are taxable, which aren't, what gives you a tax break, what doesn't?

The latter is much more complicated than you can imagine for a great many people. Guess you'd have to live it to believe it. Have something other than a W2 and perhaps some interest income and see if you feel the same way. Take a look at the tax calc worksheet for unrecaptured depreciation on 1251 gain through a Schedule D for an idea. Don't think this is an unusual transaction. It's not.

If instead, your argument is against the "unfairness" of a progressive system,

All flat tax proposals have always included a standard exemption, as in one where the first $40,000 would not be taxed for a family of four. Every flat proposal has included a hefty exemption. So it is still quite progessive.

Exactly. SS, Capital Gains, the Estate Tax are all examples of tax breaks

Please explain to me why you think social security and estate taxes are tax breaks? Capital gains treatment is a tax preference, not really a break. That is not semantics, but I can understand in context why you called it a tax break. The other two I can't figure out.

 
REFS:83-- ( 1800.0782 points)
Wed, April 21, 2004 07:36:46 AM UTC0:00
I wonder if the Bush Administration will push for spending cuts to coincide with those tax cuts?

Naaaaah. Defucit 5p3nd1ng roXxor5!!!!!!11111oneoneoneone