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Old 01-14-2004, 07:23 AM   #1 (permalink)
Dubya
 
Location: VA
If you work for a living in George W. Bush's America, you're a sap.

From the article Good for Investors, Bad for the Rest

Quote:

Take a quick look, or a long one, at the tax code as Bush has altered it during his three years as president, and you're compelled to conclude that work has become a distinctly inferior kind of income acquisition in the eyes of the law. Bush tax policy rewards investment and inheritance. Relying on work for your income, by contrast, turns you into a second-class citizen.

In his first round of tax cuts in 2001, Bush got Congress to phase out the estate tax by 2010. Last year, with Republicans in control on Capitol Hill, he reduced the top tax rate on dividends from 39.6 percent to 15 percent, and brought the capital gains tax rate down from 20 percent to 15 percent as well.

This year, his new budget proposes that families be allowed to shield as much as $30,000 yearly on their investment income, which will abolish all remaining taxes on such income. Meanwhile, the income tax cuts to most middle-class families don't exceed a couple of hundred dollars, and payroll taxes for employees remain untouched. In part, this devaluing of work is simply an expression of Bush family values. As Kevin Phillips points out in his new biography of the Bush dynasty, the Bushes don't do anything so vulgar as going into professions. Rather, the clan lives by its connections. For George W. and his brothers, work has meant riffling through Pappy's Rolodex. Theirs is the cronyest form of capitalism.

But a broader theory is at work here, too. It says that investment, rather than labor, powers economic growth, so rewarding investment is merely the most direct way to help the economy. As Ernest S. Christian, a former Treasury official in the Reagan administration, recently told The Post's Jonathan Weisman, the tax reform proposals advanced by the Democratic presidential candidates -- most of which restore some of the taxes on investment and cut the tax rates for work-derived income -- won't do the economy any good. "Tax reform is supposed to mean removing barriers to economic growth," Christian said.

A lovely theory, but if anyone thinks the Bush tax cuts have spurred economic growth, I have a low-tax investment in a bridge to Brooklyn. To be sure, investment income and corporate profits are high. But just 278,000 new jobs have been generated since June, which means the recovery is about 7.5 million jobs shy of the norm for post-World War II recoveries. Bush's Council of Economic Advisers had predicted job growth of 510,000 from the 2003 tax cuts, plus another 1,335,000 new jobs, during the second half of last year.

To say that reality is lagging behind the theory of investment-led growth, then, is to understate. The problem is that to invest today in stocks or mutual funds doesn't mean you're investing in job creation in the United States.

Outsourcing has turned the phrase "investment-led growth" into the grimmest of oxymorons. It means that Bush's tax policy subsidizes job growth in India and China rather than the United States. And in failing to create more employment here at home, the tax cuts have also helped depress wages. Real wages in the United States actually fell 0.7 percent in the fourth quarter of last year.

To all this, the Democratic presidential candidates have proposed a reversal of the Bush tax priorities. John Edwards is the most explicit, calling for an increase in taxes on most forms of investment income while lowering the taxes on employment. Wesley Clark has proposed eliminating income taxes for more than half the households in the United States, and Howard Dean is reportedly mulling over a plan to cut payroll taxes.

All that is good in itself, but doesn't really grapple with the conundrum of job creation in a globalized economy. This afternoon a broad array of unions, environmental groups and Democratic politicos will unveil a proposal to do just that. Treming itself a new Apollo Project, this Teamster-Turtle coalition calls for using tax credits and public investment, totaling $300 billion over a 10-year period, to promote energy independence by investing in clean energy sources and in energy-efficient public and private transportation systems, office buildings, factories and homes. They calculate this will create 3.3 million jobs, which is a good deal more than President Bush's own neo-Apollo Project, sending men to the moon and to Mars, could possibly create (not to mention the benefits to national security that would accrue from reducing our dependence on Middle Eastern oil).

The notion of job creation through public investment rather than private is anathema to conservatives, of course. But the burden of proof is on those on the right to demonstrate how private investment in a global economy creates jobs here at home. And why the hell our tax policy should boost income in Bangalore, not Baltimore.
I've read several times that this economic recovery doesn't resemble any other recovery we've had since World War II. What it does resemble is a pre-New Deal recovery, with a huge tilt toward capital growth, with a corresponding shortchange of labor growth. This is a fundamental imbalance, coupled with our rising deficit, that will need to be corrected, sooner rather than later.
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Old 01-14-2004, 08:36 AM   #2 (permalink)
Junkie
 
Location: NJ
So, shall we cut back on productivity gains to make the recovery more similar to other more recent ones? Because that's what is keeping employment from growing, it's not because all the jobs are in India as this idiot seems to think.

Families are encouraged to save money for retirement so they don't have to rely solely on social security and then when they cash in those investments (or they die) the government takes a nice big chunk of it. Yeah, that's sound reasoning. The policies say that SPENDING powers the economy not investment. Investment is a savings tool that allows people to spend.
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Old 01-14-2004, 08:53 AM   #3 (permalink)
Dubya
 
Location: VA
Quote:
Originally posted by onetime2
So, shall we cut back on productivity gains to make the recovery more similar to other more recent ones? Because that's what is keeping employment from growing, it's not because all the jobs are in India as this idiot seems to think.

Families are encouraged to save money for retirement so they don't have to rely solely on social security and then when they cash in those investments (or they die) the government takes a nice big chunk of it. Yeah, that's sound reasoning. The policies say that SPENDING powers the economy not investment. Investment is a savings tool that allows people to spend.
First you start out with an ad hominem attack, then you mischaracterize the estate and capital gains tax. Bravo.

Most families save through tax-deferred savings plans, so when they 'cash out' the government is taking a chunk of it, yes. And when they die, they are taxed on a percentage of their estate if it is worth a ridiculous amount of money (and that no longer makes them most families, or even 'a lot' of families - more like 'tiny minority' of families), yes.

The policies may say that spending powers the economy, and that will eventually trickle down into benefits to the consumer, but the average consumer isn't seeing it. Like the author said, the fourth quarter '03 saw real wages drop 0.7 percent.
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"In Iraq, no doubt about it, it's tough. It's hard work. It's incredibly hard. It's - and it's hard work. I understand how hard it is. I get the casualty reports every day. I see on the TV screens how hard it is. But it's necessary work. We're making progress. It is hard work."
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Old 01-14-2004, 10:53 AM   #4 (permalink)
Junkie
 
Location: NJ
Quote:
Originally posted by Sparhawk
First you start out with an ad hominem attack, then you mischaracterize the estate and capital gains tax. Bravo.

Most families save through tax-deferred savings plans, so when they 'cash out' the government is taking a chunk of it, yes. And when they die, they are taxed on a percentage of their estate if it is worth a ridiculous amount of money (and that no longer makes them most families, or even 'a lot' of families - more like 'tiny minority' of families), yes.

The policies may say that spending powers the economy, and that will eventually trickle down into benefits to the consumer, but the average consumer isn't seeing it. Like the author said, the fourth quarter '03 saw real wages drop 0.7 percent.
I will absolutely point out the idiocy of an article/writer that attempts to describe the current economic climate and completely ignores perhaps the most important economic fact since WWII. We have seen unreal levels of productivity increases but you ignore that fact as well, so I guess it's no surprise that you hold this article in such high regard.

Real wages dropped by .07 percent, more productivity means fewer hours needed to produce an equal amount of goods. When productivity reaches a certain point it means, not only are fewer hours needed, but fewer workers are needed.

Where did the money for investment come from? How about the money that's in these estates? They came from income. Income that was already taxed when either you or the deceased earned it and put it away with the hope that it would fund your retirement or your family's futures. You complain that the budget deficit is robbing America's children of their futures, what do you think taking 30%+ from the estates of their dead parents is doing?

Capital gains taxes and estate taxes are not to recoup the taxes delayed in tax deferred savings programs. Quite a substantial amount of personal savings is a home's value. The limits on gains for homes is far from a "ridiculous amount of money".
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Old 01-14-2004, 11:00 AM   #5 (permalink)
Cracking the Whip
 
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Location: Sexymama's arms...
Too much sarcasm going on in this thread.

It stops NOW.

Keep it on topic in the future.

Closed.
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