Speaker looking for way to pay for tax cuts for middle-class

[Jeffrey]

By John Heilprin
ASSOCIATED PRESS

9:20 a.m. January 7, 2007

WASHINGTON – Democrats are not ruling out raising taxes for the wealthiest people to help pay for tax cuts for middle-income families, House Speaker Nancy Pelosi said.

She spoke of pursuing an estimated $300 billion that people owe in back taxes, eliminating deficit spending and reducing wasteful federal spending.

San Diego Union-Tribune: Local News, Sports and Things to Do

signonsandiego.com/news/politics/20070107-0920-democrats-agenda.html

 

[Karin]

I say just tax everyone a flat 10-15%

 

[jc-servant]

I cannot believe that we are still hearing about possible “tax cuts” for anyone when we are into major deficit spending. The 2 billion reportedly going into Iraq each month has been kept out of the regular budget, but eventually we will have to pay the bills. In the meantime we still have no federal budget and 2007 has already started. There is still the possibility of furloughs of federal employees because of the domestic budget cuts, so how can anyone be talking “tax cut” for this year?

 

[hoosiertoo]

I’ll take one!

Yours too, if you don’t want it.

 

[steveandersen]

I’m certainly glad that they are trying to find out how to fund these things. Say what you want about “tax and spend” but it is far superior to “borrow and spend”.

I say just tax everyone a flat 10-15%

Sounds good at first glance but it’s regressive and eliminates one of the few ways the government has to encourage certain behaviors such as charitable giving, home ownership, marriage, etc.

 

[AELondon]

I’ve always found it interesting how Democrats speak of “paying” for tax cuts. As if it was their money to begin with.

 

[Al_Masetti]

One way of “paying for tax cuts” is to grow the economy.

Higher taxes cause economic growth to falter, primarily by removing money that gets invested in productive assets.

Higher taxes also punish people who have sacrificed during their working lives and who, as a result, have collected some savings and invested them. When those savers and investers need money for living expenses, the higher taxes serve to punish those who made the sacrifices. Those punishments then tend to cause people to avoid saving and investing for the future because the reward for saving and investing has been diminshed.

We also need to define what we mean by “middle-class” as well as “wealthy” or “rich”.

 

[hoosiertoo]

I love it when stuff lands in my inbox. Sometimes. This is one of those times.

**Taxing the People **

Sometimes politicians, journalists and the liberal left exclaim; “It’s just a tax cut for the rich!” and it is just accepted to be fact.

But what does that really mean?

Just in case you are not completely clear on this issue, I hope the following will help. Please read it carefully.

Let’s put tax cuts in terms everyone can understand.

Suppose that every day, ten men go out for dinner and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1
The sixth would pay $3
The seventh would pay $7
The eighth would pay $12
The ninth would pay $18
The tenth man (the richest) would pay $59

So, that’s what they decided to do.

The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.

“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily meal by $20.” Dinner for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still eat for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his “fair share?”

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to eat their meal.

So, the restaurant owner suggested:

The fifth man, like the first four, now paid nothing (100% savings)
The sixth now paid $2 instead of $3 (33% savings)
The seventh now paid $5 instead of $7 (28% savings)
The eighth now paid $9 instead of $12 (25% savings)
The ninth now paid $14 instead of $18 (22% savings)
The tenth now paid $49 instead of $59 (16% savings… the least proportionate savings)

Each of the six was better off than before. And the first four continued to eat for free. But once outside the restaurant, the men began to compare their savings:

“I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth man," but he got $10!"

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than me!”

“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”

The first nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start eating overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D
Professor of Economics
University of Georgia

Of course, with e-mail one never knows if the citation is correct, but that’s how it arrived.

 

[Thekla]

Whatever justification needs to be made to emerse the wealthiest American in taxes, I’m all for it. Say it’s to help the middle class or say it’s to pay for the Invasion of Iraq. Say it’s to pay for schools or say it’s to pay for universal health care.

I will not think that the wealthiest Americans have paid enough in taxes until I hear them wailing like banshees. Currently I hear them cackling with delight over their tax status and laughing at the concern they get from the folks in the lower tax brackets.

 

[hoosiertoo]

Whatever justification needs to be made to immerse (Thekla) in taxes, I’m all for it. Say it’s to help the middle class or say it’s to pay for the day care. Say it’s to pay for schools or say it’s to pay for universal health care.

I will not think that Thekla has paid enough in taxes until I hear (her?) wailing like a banshee - maybe not even then. Currently I hear Thekla cackling with delight over (his?) tax status and laughing at the concern they get from the folks in the lower tax brackets.

 

[steveandersen]

I’ve always found it interesting how Democrats speak of “paying” for tax cuts. As if it was their money to begin with.

IIRC the 2001 tax cut was retroactive so that instead of just being a decrease in future revenues, checks had to be mailed so “paying” for it was pretty accurate it that case.

Although “finding what to cut” might be a better description.

 

[Dandelion_Wine]

Suppose that every day, ten men go out for dinner and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

I love stuff like this.

First off, whoever came up with this delightful little fable doesn’t know how to add. The 10 men are now paying $79 instead of $80.

Next the richest who has the 16% savings actually has a 16.95% savings but he looks more generous if we round 0.95 down.

Let’s put some “numbers” to the numbers. Arbitrarily and straight from the nether-regions, I put 4 zeroes behind each of the original paid values and made this their salary. So the guy who paid $3 for the meal makes $30,000/year. Since the poor didn’t pay anything, I put them at $4,999/year {If you took each earning then and divided them by 10000 and rounded, you’d get what they each paid for lunch).

I calculated what it would cost if they got together for every meal (3 meals/day 365 days/yr).

By this tax cut, where mr rich is “saving the least”, he’s getting an extra $10,950 back each year, which happens to be more than men 1-5 started with.

Oversimplified. Probably. But no worse than the justification for how one group of people can desire NECESSITIES while another somehow “deserves” to have the LUXURIES.

Just my two cents.

 

[hoosiertoo]

Our charitable duty to our neighbor is personal and cannot be satisfied through the taxation system. There is therefore no general Christian duty to vote for tax-funded welfare. - Richard Teather

---

Since I wasn’t working a math problem, I wasn’t too worried about the rounding.

The “extra” $10,950 was his to begin with. The larger point, that the rich man would be perfectly justified - and rational - to take his money elsewhere stands.

I wonder if Joe Baker and his employees at Pan de Overpriced would feel ill-used if Daddy Warbucks were to stop buying their expensive baked goods?

One way we could “pay for the tax cuts” would be to save the expense of the IRS by simply giving the poor a weapon and telling them to extract their needs directly from the rich.

Of course, we already do that. We’d simply be cutting out the middleman.

Addendum: I suppose I should add that I don’t care, at least in the short run, as I intend to drop out of the workforce and live on public assistance and education grants while I go back to school. Since I plan on becoming a teacher, any largesse you could talk the panderers in Congress into throwing at education would be most appreciated. Thanks guys!

 

[tamccrackine]

I’ll believe it all is fair when I see Paris Hilton and Brittney Spears actually pay taxes worthy of their carefree lifestyle instead of getting $4000 just to show up for 15 minutes at a club or when our politicians pay taxes WITHOUT a generous pay hike.

So let’s start with the Speakers’ pay first!!! Will she be the first one out of the gates to be taxed?

 

[hoosiertoo]

I’ll believe it all is fair when I see Paris Hilton and Brittney Spears actually pay taxes worthy of their carefree lifestyle

Life isn’t fair.

 

[tamccrackine]

Life isn’t fair.

ya thunk? what gave you that idea?

 

[hoosiertoo]

ya thunk? what gave you that idea?

When I was born good lookin’ instead of rich.

 

[Thekla]

Whatever justification needs to be made to immerse (Thekla) in taxes, I’m all for it. Say it’s to help the middle class or say it’s to pay for the day care. Say it’s to pay for schools or say it’s to pay for universal health care.

I will not think that Thekla has paid enough in taxes until I hear (her?) wailing like a banshee - maybe not even then. Currently I hear Thekla cackling with delight over (his?) tax status and laughing at the concern they get from the folks in the lower tax brackets.

You are so right. I spelled “immerse” wrong. I’m really sorry about that; I do not like to make spelling errors.

FYI - When you lift my stuff it goes straight to my head and makes me cackle with delight.:yup:

Oh. And Thekla is a woman’s name because I am a woman. It’s a German name. and the “h” is not pronounced.

 

[hoosiertoo]

You are so right. I spelled “immerse” wrong. I’m really sorry about that; I do not like to make spelling errors.

FYI - When you lift my stuff it goes straight to my head and makes me cackle with delight.:yup:

Oh. And Thekla is a woman’s name because I am a woman. It’s a German name. and the “h” is not pronounced.

It was not my intent to point out your spelling errors. It was my intent to put you in the shoes of the “rich” guy who you seemed to be so eager to relieve of excess property.

 

[Tom317]

Why would it not be fair to simply have one flat tax?