Gokul43201 said:
I'm going to do this a bit at a time, whenever I get a chance:
That's partly meaningless and the rest of it is just wrong.
0. Tax revenues have historically seen generally positive growth since the great depression - there's nothing special about that.
That's because the economy and the population have consistently grown has grown since the Great Depression.
2. During the Clinton years, tax revenues fell 0 times and grew at an annualized rate of 6.8%. During the Bush years (2001 through 2005, CBO numbers) tax revenues fell thrice and declined overall at an annualized rate of 1.3%[1]. I think if you include 2006, 2007, this decline goes to almost exactly 0%. These are inflation adjusted numbers. The number you quote is not adjusted for inflation.
Perhaps, but I would think the main reason for the sudden increase in tax revenues during the Clinton years was because of the Dot Com bubble.
3. It is silly to say that tax revenues (unadjusted) "were their highest ever" value. That was true every single year of the two Clinton terms, and it was also true if you adjusted for inflation or looked at the fraction of the GDP. Not so for the 2007 revenue, which is still only at about the 1993 level as a fraction of GDP and almost exactly at 2000 level when adjusted for inflation.[1]
Interesting point, but I do not think if taxes as a percentage of GDP go down, that this matters a whole lot, but rather taxes as a percentage of government spending. This would seem to mean that the economy is growing in size while people are allowed to keep more of their money. I understand government must increase in size with the economy and it's the size of the government as a percentage of GDP that we want to limit.
4. As a fraction of GDP, the revenues increased monotonically during the Clinton years, from 17.5% in 1992 to 20.9% in 2000. They have since been much lower, hitting a low of 16.3% in 2004 and climbing back up to about 17.6%.[1]
Again, I attribute this to the 1990s Dot Com bubble.
5. The CBO estimates that revenues from individual income taxes (as a percentage of GDP) would actually be about 2% higher, if not for the Bush tax cuts[2].
One thing I am confused about though: if the Bush tax cuts decreased revenues, as a percentage of GDP and adjusted for inflation, yet Bush has increased spending, then how has the deficit managed to shrink itself in the latter years of the Bush administration? If Bush and the Republican Congress hadn't been such spendthrifts, it might have turned to a surplus, or become a really small deficit.
Or it is a term that reflects the social philosophy of the politician.
Then he needs to clarify that to his audience. "Fair" is one of the most mis-understood terms in economics and politics.
That is neither surprising nor indicative of the tax structure - it might simply be a reflection of income trends. After all, the top 2% also enjoy a historically high share of the income[1].
Maybe, but historically, when the top income tax rate was 70%, capital gains taxes at 50%, etc...the middle-class were paying a larger share of the total tax revenue and the wealthy a smaller portion; after Reagan enacted his tax cuts, which aside from a few adjustments up or down here and there, this reversed itself.
You are entitled to your own arbitration of fairness. If, for instance, you think it is fair to tax a person more than s/he earns, that's your choice. If you think that the amount of taxes paid (not the tax rate) should be independent of income, (i.e., the tax rate is inversely proportional to income) that's your choice. There probably isn't a single economist in the world that will agree with you on its economic value, and I doubt that even 1% of all people will find this "fair".
That was just an example; I do not agree with it at all. I was just pointing out the danger of when a politician talks about "fairness" or "equality" without explaining exactly what they mean.
Like I said, you are entitled to it. But just because you have provided no philosophical basis for your judgment of fairness doesn't mean others don't have one.
Again, then, they need to explain their basis. A lot of people do not understand said basis. I believe in equality of opportunity, not equality of outcome. Me personally, I would prefer a flat tax. For example, 20% of someone earning $500,000 is a lot more than 20% of someone earning $50,000 (not saying I favor a tax rate at 20%, just using an example there).
Faulty premise. Nevertheless, there are good arguments for cutting taxes on low-income groups, particularly during weak economic cycles - we have discussed these in other threads here.
Yes, but the Bush tax cuts already cut taxes on these groups; they were higher under Clinton. I do not see the rational to raise them back up for high-earners. When you combine the current 35% Federal income tax for highest-earners, with state, county, town/city, etc...taxes, you can easily end up paying over 50% to the government in taxes. I do not see why these people should see their taxes raised.
What Senator Obama's plan essentially is saying is he is going ot increase taxes on those who got educated and worked their butts off (and in certain states high incomes like $250K and up are nothing) to earn more, meanwhile he will lower taxes on those who chose professions that pay little and did not work hard to rise up higher in income.
I will look for some of these arguments though.
So what is your point? First of all, it looks like you are doing an about-turn in your philosophy. While sole proprietors make up a majority of businesses, they take in a small fraction of business receipts. Just like the poor and the middle-class, who make up an overwhelming majority of the population, but not of incomes. Why is it that you have suddenly begun to care about the majority group rather than the majority contributor?
Secondly, the overwhelming majority of these owners earn less than $250,000, and will see a tax-cut, according to the Obama plan.[2]
It isn't that I do not care about the majority, it's that I do not want to unfairly tax the minority.
Many doctors, psychologists, engineers, etc...are high-earners who are sole proprietorships. Nevertheless though, that's a good point. I focus on the majority here because these businesses employ the majority of the workforce, and we do not want to burden them in ways that will end up harming everyone with lower wages or being fired...like you say, for ones that make under $250,000, they will see a tax cut, however, Obama is intending to raise the minimum wage, which will cost them more.
At $250,000, you make over 5 times the median income, and belong in the top 2% of households.[3] While the upper-class is typically defined as the top 1%[4], the rich are typically defined as the top 5%[5]. If you make $250,000 or more, you are most definitely rich.
Mmm...maybe the technical definition, but these days days, if you want to live the "hollywood" lifestyle, you need at least $5 million in liquid assets and more around $250,000 per month in disposable income.