Please Defend This!

[Mitch f]

And in my book, that means raising taxes.

I've said it before, and I'll say it again. When the country is going broke, YOU DON'T CUT TAXES.

That is the biggest lie from the left I have ever heard. "Cut taxes and the economy will get better." BS!

Reagan did it and the economy tanked along with the deficit increasing.

Bush did it and the economy tanked along with the deficit increasing.

Raise those taxes like Clinton did and watch the economy take off as the deficit is reduced.

Even a 1st grader can add better than some in Washington politics.

Just can't make myself agree with ya

[catman70]

Chief: Actually, it costs more to make ethanol than gasoline. Massive subsidies hide the true costs. Also, most ethanol generation processes require more oil-based fuel as an input than what is gained as an output in ethanol, not to mention the drain ethanol production has on water resources. There are a few fledgling techniques that show great promise to reduce this trend, but they are extremely new and relatively unproven on a mass-scale. What's more, most car engines cannot run on ethanol without burning out seals and other internal parts.

FlyTyer: I'm sorry but your statements are illogical. We find ourselves in a situation where the dollar could collapse or be removed as the reserve currency, resulting in high commodity prices and/or hyperinflation. Our tax system needs fixing – fair tax, flat tax, etc – where everyone pays in a bit and the government doesn't pick winners and loser by manipulating the tax code (e.g., GE). Simply raising taxes does nothing to address the long-term problem which is government spending. For example, the actuary of social security said that the system will become defunct in 20 years if nothing is done to revise the system. The problem is systemic and throwing more of other people's money at it is not the solution.

I also take issue with your statements about cutting taxes and the economy. I think all your examples had extenuating circumstances (e.g., cold war, prescription drugs, educational bills, etc.). FDR's economic advisors openly admitted in journals after the fact that government intervention in the free market didn't help fix the depression. In fact, they further increased the problem by stifling growth and investment by increasing government intervention, regulation and taxation. It was actually the deregulation and tax cutting after WWII that lead to the baby-boomer growth spurt. It's as simple as running a lemonade stand. If you have to pay less to operate your business (i.e., taxes and regulation) than you have more money to hire employees and expand operations. These sorts of investments and expansions lead to additional revenue generation which, multiplied by a fixed tax percentage, results in greater tax revenue.

[flytyer57]

...It's as simple as running a lemonade stand. If you have to pay less to operate your business (i.e., taxes and regulation) than you have more money to hire employees and expand operations. These sorts of investments and expansions lead to additional revenue generation which, multiplied by a fixed tax percentage, results in greater tax revenue.

But with the greedy rich people getting the lions share of said tax breaks and less regulation, they are not creating the jobs that are promised.

The top earners, the CEO's etc, have seen their salaries increase 400 times as much as the guy working his butt off out on the shop floor.

Exxon-Mobil is second on the list of companies earning the most money. Does giving them all the tax breaks they get and deregulation of the industry help the economy any? They are still posting $ billions in profits every 3 months yet people can't afford to drive to work. How is that suposed to get the economy going?

Yes, we need to cut spending. Cuts in SS and Medicare should only be done to erase the amount of fraud that goes on. Instead of cutting SS to make it last, keep the bastards in Washington from dipping into the SS trust fund to pay for their pork barrel spending. Getting rid of the cap on SS taxes will also make SS solvent into the next millenium.

We need to cut military spending. This country spends more on military than all the rest of the world combined, yet a bunch of poor ragheads in the desert are kicking our superior butts. For what? So this country can go broke and claim to be safe from the very terrorists we are losing to in the desert.

When you are going broke at home, you don't go to your boss and say; "Hey boss, I'm going broke and have to find ways to cut my budget, so I need you to cut my pay so I can owe more money to the foreign banks."

Cutting taxes in a time of fiscal crises is not the way to fix anything.

Even a 1st grader can figure out that math.

[Tim Smith]

Chief: Actually, it costs more to make ethanol than gasoline. Massive subsidies hide the true costs. Also, most ethanol generation processes require more oil-based fuel as an input than what is gained as an output in ethanol, not to mention the drain ethanol production has on water resources. There are a few fledgling techniques that show great promise to reduce this trend, but they are extremely new and relatively unproven on a mass-scale. What's more, most car engines cannot run on ethanol without burning out seals and other internal parts.

Fully agreed here. Ethanol's only benefit is that it isn't from somewhere else. It's a money and energy sink and biofuels will have to perform better than this to be a real solution in the alternative energy markets.

FlyTyer: I'm sorry but your statements are illogical. We find ourselves in a situation where the dollar could collapse or be removed as the reserve currency, resulting in high commodity prices and/or hyperinflation. Our tax system needs fixing – fair tax, flat tax, etc – where everyone pays in a bit and the government doesn't pick winners and loser by manipulating the tax code (e.g., GE). Simply raising taxes does nothing to address the long-term problem which is government spending. For example, the actuary of social security said that the system will become defunct in 20 years if nothing is done to revise the system. The problem is systemic and throwing more of other people's money at it is not the solution.

Fully disagree here. The flat tax is the worst idea every to be conceived by anyone anyhwhere. Surely there are "bad" tax incentives that can be removed, but much of the charitable giving that is done in the country comes from tax breaks. The country most certainly has an interest in picking winners when those winners benefit the nation as a whole (i.e. in conservation funding). Furthermore, there are huge ethical differences in taxing 10% from the income of a person who is struggling to feed their family vs. 10% from a person with unlimited disposable income. From those to whom much is given, much is expected.

Also dubious about the fundamentalist free market ideas that reducing tax rates produces more taxes. Smells pretty much the same as the "trickle down" theory that assumes benefits to the top will reach the bottom. Clearly what happens instead is that the benefits STAY at the top (and go overseas to cheap labor markets).

[catman70]

We have the highest corporate tax rate in the world. If you want to encourage business to move to the U.S. than the logical way to do so is to reduce the cost of doing business here. Also, the top 50% of wage earners pay about 90% of the taxes (http://www.taxfoundation.org/news/show/250.html). I agree that 10% means more to someone like me who pulled in $24K last year than it does to someone making $100K, but some day I hope to be making $100K and don't think working hard my whole life to get there should result in me making $50K after taxes. I got A's in my last two semesters of calculus, so I think I can do the math.

Actually, the progressive tax is the worst idea ever conceived since it is the foundation of instituting a communist government. At least that's what Marx said when he wrote the Communist Manifesto. That's why I personally like the Fair Tax (national sales tax) with federal budget limitations set as a percentage of GDP. I agree that the corruption has to be cut, as well as our military interventions overseas. However, the entitlement programs eat the majority of the budget with Defense coming in third (20%) behind Medicare/Medicaid (33%) and Social Security (21%).

I think the "trickle down" thing plays into the whole class warfare mentality which also is a cornerstone of implementing a communist-style government. The bottom line is this: What gives people the right to take 50% of someone's income away from them just because they work hard and are successful? The idea that they lied and/or cheated to make that income is, for the vast majority of instances, BS. To make the case let's apply our tax code globally, which is what the UN would like to do. If you live in the US and are on welfare you still fall in the richest 10% of the world's population. Therefore, implementing the progressive tax code on a global scale, those people would be taxed at 50% of their income so it can be given to people in Africa or Asia who eat a bowl of rice a day. Would this be fair? Did the people on welfare in the US cheat the people in Africa and, therefore, should surrender a large portion of income? That's essentially what you're arguing.

Furthermore, if the "Bush tax cuts" only helped rich people than why was there a big to-do about extending them only for the middle class at the end of last year? Trickle down does work because of the effect it has on small businesses. I encourage you to call your local SBA office and have them explain to you the tax structure of most small business and how the owners of those businesses appear to be "rich" when they are anything but the sort. Decreasing their taxes and their cost of doing business frees money for raises and new hires.

[catman70]

To better address the "not decreasing taxes during economic hardships" issue let's look at the example of a small business. If taxes are lowered on a small business which is having difficulty making payroll, and may be operating at a loss to do so, than perhaps that small business will not have to lay off employees or reduce wages. Therefore, "trickle down" has worked and the employees have benefited from tax breaks given to the small business whose owners may list their personal income as $200K because that's how most small businesses structure their taxes. I understand your thinking that less taxes means less welfare support, but lowering taxes may mean less people to support on welfare.

This brings me to another reason why I like the Fair Tax or a flat tax. If I'm out of work for a bit and rack up debt than I may have to work extra hard to repay that debt. The way our tax system is structured (even with the flat tax but to less of an extreme) I'm essentially punished for working harder and earning more money because 10% of $40K is twice that of 10% of $20 K. IMO the big lie out there is that our system taxes the rich. This isn't necessarily true. Our tax system taxes those aspiring to become rich.

[Tim Smith]

I agree that 10% means more to someone like me who pulled in $24K last year than it does to someone making $100K, but some day I hope to be making $100K and don't think working hard my whole life to get there should result in me making $50K after taxes. I got A's in my last two semesters of calculus, so I think I can do the math.

I'm glad you're ambitious and good at calculus. Unfortunately, the median income in the US is 36K and most people don't have any chance at 100K. The flat tax is horribly unjust to the average US citizen.

Actually, the progressive tax is the worst idea ever conceived since it is the foundation of instituting a communist government. At least that's what Marx said when he wrote the Communist Manifesto. That's why I personally like the Fair Tax (national sales tax) with federal budget limitations set as a percentage of GDP.

Interesting that Marx always gets whipped out during these conversations. The quote "To him whom much is given, much is expected." came from the Bible and was said by Jesus. Somehow that idealogical influence always gets passed over here.

That's about all I have to say about that except to point out that sales tax is the same as a flat tax as it is regressive and affects lower income families more.

You can take up the rest with Jesus.

I think the "trickle down" thing plays into the whole class warfare mentality which also is a cornerstone of implementing a communist-style government.

I like how any mention of fairness these days is immediately portrayed as class warfare and linked to Marx. Being fair or kind is an act of war? Interesting. Read your New Testament and try again.

The bottom line is this: What gives people the right to take 50% of someone's income away from them just because they work hard and are successful?

Higher income individuals who got more from the system owe more back to the system that helped them up the ladder, that's why. The "self-made" individual is an elitist myth. Individual capacity, drive and initiative are only one component of success and on their own are not sufficient. Everyone gets a hand up from somewhere and more than a little luck is involved in financial success.

I won't argue a specific tax rate here because those are in flux and for the purposes of this argument any number could be said to be too high or too low.

The idea that they lied and/or cheated to make that income is, for the vast majority of instances, BS. To make the case let's apply our tax code globally, which is what the UN would like to do. If you live in the US and are on welfare you still fall in the richest 10% of the world's population. Therefore, implementing the progressive tax code on a global scale, those people would be taxed at 50% of their income so it can be given to people in Africa or Asia who eat a bowl of rice a day. Would this be fair? Did the people on welfare in the US cheat the people in Africa and, therefore, should surrender a large portion of income? That's essentially what you're arguing.

Heh. Not going to respond much to a hypothetical "global tax code" or things I didn't say about lying and cheating being necessary to make income.

I will point out that your argument is naive about the cost of living and the standard of living in the places you mention. Costs of living in the US are vastly higher than those in developing nations and as a result, standards of living for low income individuals are often comparable to those in 3rd world countries.

A 20,000 US salary in Central America puts you solidly in the middle class with a high percentage of disposable income.

Furthermore, if the "Bush tax cuts" only helped rich people than why was there a big to-do about extending them only for the middle class at the end of last year? Trickle down does work because of the effect it has on small businesses. I encourage you to call your local SBA office and have them explain to you the tax structure of most small business and how the owners of those businesses appear to be "rich" when they are anything but the sort. Decreasing their taxes and their cost of doing business frees money for raises and new hires.

As a small business owner I can tell you that taxes are the least of my worries. My success is based on contracts won and if I spend any reasonable income at all reinvesting into my business or applying my normal deductions, my taxes are virtually non-existant. In fact, even large corporations are able to avoid paying any taxes at all this way. If you want to make the argument that less of those deductions should be applied, then you would have a point (in the current debt climate). Linking that to an argument against progressive taxes is a non-sequiter.

Focusing on the middle class also evades the argument. Tax relief for lower income brackets gets spent here (because they have to spend more of their money to meet day to day needs). Tax relief for upper income tax brackets has been going overseas.

...and with that I'll leave the argument to others. This has been civil and I don't think Phil would object to the content so far, but we're off topic for the forum and this is where things usually fall apart.

I'll leave my input there.

[Brian Sloss]

The "fair tax" is anything but fair. Lets say you earn a whooping $25,000 a year and have a family. You won't have the luxury of socking away a huge chunk of money to avoid spending it and therefore paying taxes. Being generous, You have to buy $20,000 worth of stuff to support your family. Your consumption tax rate of a "modest" 10 % means you pay $2000 in taxes.

Another guy earns $3000000 but can easily afford to support his family on $500,000 with lots of luxury items thrown in. So he pays $50k in taxes and earns interest on the 2.5 million and earns a modest 5% on that money netting him another 125,000. Sure the gov't got some money, but really he comes out ahead and is not sacrificing anything. The poor guy is the one really feeling it. Not to mention the rich guy will continue to say we should get rid of medicare. In other words, the name fair tax is misleading.

[Wayne SW/MO]

The "fair tax" is anything but fair. Lets say you earn a whooping $25,000 a year and have a family. You won't have the luxury of socking away a huge chunk of money to avoid spending it and therefore paying taxes. Being generous, You have to buy $20,000 worth of stuff to support your family. Your consumption tax rate of a "modest" 10 % means you pay $2000 in taxes.

Another guy earns $3000000 but can easily afford to support his family on $500,000 with lots of luxury items thrown in. So he pays $50k in taxes and earns interest on the 2.5 million and earns a modest 5% on that money netting him another 125,000. Sure the gov't got some money, but really he comes out ahead and is not sacrificing anything. The poor guy is the one really feeling it. Not to mention the rich guy will continue to say we should get rid of medicare. In other words, the name fair tax is misleading.

Exactly!!

The mere fact we can discuss a flat tax is because we don't have one. The reason we don't have one is because we tax the wealthy at a much higher rate, something that would have to be made up by those in the lower income brackets. It really simple math.

No one should confuse tax rates with deductibles. The only deductibles that have been adjusted are those affecting the lower income brackets.

[Mitch f]

Higher income individuals who got more from the system owe more back to the system that helped them up the ladder, that's why. The "self-made" individual is an elitist myth. Individual capacity, drive and initiative are only one component of success and on their own are not sufficient. Everyone gets a hand up from somewhere and more than a little luck is involved in financial success.

Elitist myth? You're taking away the incentive for the average person to be succesful in this country by taxing them at a higher rate.