News Should the Bush tax cuts be extended?

[OmCheeto]

Edit: Nothing against OmCheeto, who rocks, but a clarification:


Hmm. I think the assumption is unwarranted and misleading. While a quick Google search did not give me the numbers, I've seen statistics on numbers of hours worked by quintile (both by household and individually) and it's pretty extreme. On one hand, most of the bottom quintile doesn't work (this is a "we should feel sorry for them" sort of thing, not a "they are lazy" thing), even when the country is not in a recession. On the other, the top quintile works a lot -- 55 or 60 hours a week, maybe? So while assuming 2000 hours per week is reasonable for the middle and fourth quintiles, it's not for the second quintile (which has trouble finding full-time work) and top quintile (which work long hours on average), and it's extremely inaccurate for the bottom quintile (most of whom don't have work).

Of course this may not change conclusions if $60 per hour is considered "high" in the same way $85 per hour is. (I've rounded to the nearest $5 per hour; I'm not comfortable giving more precise numbers without actual data!)

I think you would go crazy if you tried to analyze all the numbers. That's why I just displayed them without the 3 pages of explanation that the CBO listed for how they got the numbers.

I added the monthly and hourly rates because the annual rates are a bit intangible at the top end.(At least to us who have spent our lives in the bottom 2 quintiles) Can you imagine sitting in your office and having your secretary come in every hour and handing you a $500 bill, announcing "Pay hour!". And then imagine thinking to yourself; "Geez! If I were being taxed at a flat rate, she'd be handing me an extra $200 an hour. I hate these high taxes. How am I supposed to run a household and send kids to college on only $4000 a day?"*

*numbers are rounded as I'm getting tired of all this math.

 

[Al68]

Can you imagine sitting in your office and having your secretary come in every hour and handing you a $500 bill, announcing "Pay hour!".

Sure! I imagine it would totally rock.

And then imagine thinking to yourself; "Geez! If I were being taxed at a flat rate, she'd be handing me an extra $200 an hour.

Why? Is the $200 part of my income either way? Why would I ever use the word "extra" to describe it? Because Democrats wanted it but didn't get it? Is that the definition of "extra"? I must be misunderstanding your post.

I hate these high taxes.

Sure do!

How am I supposed to run a household and send kids to college on only $4000 a day?"*

Why am I "supposed" to do anything, and why would that be a problem, or relevant?

 

[OmCheeto]

And then imagine thinking to yourself; "Geez! If I were being taxed at a flat rate, she'd be handing me an extra $200 an hour.

Why? Is the $200 part of my income either way? Why would I ever use the word "extra" to describe it? Because Democrats wanted it but didn't get it? Is that the definition of "extra"?

Gads. Someone needs to invent poly-dimensional hypertext formatting.

Why?

Why what? Imagine?

Is the $200 part of my income either way?

Yes?

Why would I ever use the word "extra" to describe it?

Because when you get $500, and then you get another $200, the 'another' $200 is called extra. It's like extra sprinkles on your ice cream.

Because Democrats wanted it but didn't get it?

I don't really see any evidence that either party wants your money. They are just trying to keep the country running. Except in that post office holding board position at the bank, or $$ for the election.

Is that the definition of "extra"?

No. Extra, like I said above, is like extra sprinkles on your ice cream. ie, something more than you expected. Kind of like a tax cut. Only extra, should mean you don't have to pay it back later. ie. We should figure out a way to balance the budget. Not every year. But Overall. And keep government expenses at a minimum, while keeping a non-perpetuating safety net for our poor folk, so they don't revolt and kill everyone like the Bolsheviks supposedly did way back when. I say supposedly, because I wasn't there.
I'll ask my friends on Monday.

 

[Al68]

...ps. I did determine the effective tax rates for all of the quintiles and percents. Seems quite progressive to me.

Stop talking sense, Om. You'll get banned from P&WA

Does that mean you will retract your repeated (unsubstantiated and absurd) assertions that the rich don't even pay proportionally higher taxes than the poor and working people? And retract your repeated assertions that Republicans have ever advocated such a thing?

 

[Al68]

No. Extra, like I said above, is like extra sprinkles on your ice cream. ie, something more than you expected.

An accurate analogy would be an ice cream that I bought with sprinkles that someone else later wanted to take but didn't. I would never use the word "extra" to refer to the sprinkles the ice cream had when I got it, and still has, just because I expected that someone might take the sprinkles.

But the important thing is that your characterization falsely implies that I received the $200 from government. That's not where the $200 came from. (Unless you're referring to a government job or contract).

And while I know you didn't specifically say that, Democrats often use words like "give to" to describe tax cuts. That's like saying that if I bought an ice cream with sprinkles, then my girlfriend wanted to take my sprinkles but failed to, she would then claim she "gave me" the sprinkles.

I don't really see any evidence that either party wants your money.

LOL. I don't know what to make of that. Did you think I meant they wanted to take it for their own personal use?

 

[OmCheeto]

Does that mean you will retract your repeated (unsubstantiated and absurd) assertions that the rich don't even pay proportionally higher taxes than the poor and working people? And retract your repeated assertions that Republicans have ever advocated such a thing?

I'm sorry. I'm old. I have Alzheimers. I can only remember once where I quoted Warren Buffet stating that it was unfair that he paid a higher rate of taxes than his secretary.

Or is "don't even pay proportionally higher taxes than the poor" some kind of word play?

Russ has a word for similar bouts of linguistic spaghetti in the physics sections. Though I can never keep it in my head.

 

[OmCheeto]

An accurate analogy would be an ice cream that I bought with sprinkles that someone else later wanted to take but didn't. I would never use the word "extra" to refer to the sprinkles the ice cream had when I got it, and still has, just because I expected that someone might take the sprinkles.

But the important thing is that your characterization falsely implies that I received the $200 from government. That's not where the $200 came from. (Unless you're referring to a government job or contract).

And while I know you didn't specifically say that, Democrats often use words like "give to" to describe tax cuts. That's like saying that if I bought an ice cream with sprinkles, then my girlfriend wanted to take my sprinkles but failed to, she would then claim she "gave me" the sprinkles.LOL. I don't know what to make of that. Did you think I meant they wanted to take it for their own personal use?

Do you hide your whereabouts because of incarceration? That's ok if it is. It would explain a lot.

And I really admire your spirit, and hope you do really well when you get out. But if and when you get out, I would recommend this time paying your taxes, unless of course you like it there.

 

[Al68]

I'm sorry. I'm old. I have Alzheimers. I can only remember once where I quoted Warren Buffet stating that it was unfair that he paid a higher rate of taxes than his secretary.

Or is "don't even pay proportionally higher taxes than the poor" some kind of word play?

Russ has a word for similar bouts of linguistic spaghetti in the physics sections. Though I can never keep it in my head.

I was asking turbo-1 to retract those assertions he made previously, not you. Sorry that was unclear. I only quoted your post before his because you correctly characterized US effective tax rates as "quite progressive", and he seemed to agree with your post.

Do you hide your whereabouts because of incarceration? That's ok if it is. It would explain a lot.

And I really admire your spirit, and hope you do really well when you get out. But if and when you get out, I would recommend this time paying your taxes, unless of course you like it there.

LOL. Now that's funny!

..It really doesn't matter that you and I understand that Marxist and Socialist are simply political terms... So when you use it as a careless joke, we take it as you so jokingly intended it, as an insult.

From the other thread, but I never used the term as a "careless joke" or as an insult. That was my point. The objection was to my using it as an adjective to describe an ideology and propaganda method, not as a noun to refer to a person. But apparently the word has been banned altogether, now, anyway.

BTW, where are you from? 6 years on the forum, and still hiding your whereabouts? Where's that Assange guy when you need him?

LOL. I use a laptop with a Verizon wireless card. Apparently it hides my location. I currently live (un-incarcerated) in my hometown of Kingsport, TN. My current location (un-incarcerated) is Eaton, OH. I have no reason to hide my approximate location, but I'm not saying which specific strip club or brothel I'm in.

Edit: I see in your profile you're an ex-Navy nuke. Small world, I am too. But I served on an aircraft carrier, not a sub. Figured having water on all 4 sides and underneath was enough for me.

 

[CRGreathouse]

I'm sorry. I'm old. I have Alzheimers. I can only remember once where I quoted Warren Buffet stating that it was unfair that he paid a higher rate of taxes than his secretary.

I remember going over those numbers and finding them inaccurate -- that Buffet does pay higher taxes even counting FICA for the secretary. (I'm never quite sure how I should count that -- if it was a normal retirement plan it certainly wouldn't count as taxes. But since there's a real possibility it won't pay out for some [beyond just the chance that you don't live long enough] I suppose there's basis for thinking of it as a tax.)

 

[WhoWee]

This is more chatty than chat.

But anyways, my point seems to have been appropriately expanded upon by others, so I'll throw something new out, which is derived from the http://www.cbo.gov/ftpdocs/88xx/doc8885/EffectiveTaxRates.shtml" provided earlier. And I do this because the numbers jumped out at me in one of those "OMG" kind of ways.


2005 Post Tax Wages (assuming a 2000 hour work year)

______________________yearly_____monthly___hourly
Lowest Quintile _____$15,300 _____$1,275 ______$7.65
Second Quintile _____$33,700 _____$2,808 _____$16.85
Middle Quintile _____$50,200 _____$4,183 _____$25.10
Fourth Quintile _____$70,300 _____$5,858 _____$35.15
Highest Quintile ___$172,200 ____$14,350 _____$86.10

All Quintiles _______$67,400 _____$5,617 _____$33.70

Top 10% ____________$246,300 ____$20,525 ____$123.15
Top 5% _____________$369,800 ____$30,817 ____$184.90
Top 1% ___________$1,071,500 ____$89,292 ____$535.75


Three questions:
1. How do 23.6 million households survive on $15,300 a year?
2. Am I really supposed to feel sorry for someone making $535.75 an hour take home?
3. Does asking the above two questions confirm that I'm a Marxist?

ps. I did determine the effective tax rates for all of the quintiles and percents. Seems quite progressive to me. Just needs a bit of tweaking in my opinion. Maybe a 1/3 of 1% annual increase over the next 10 years. To balance the budget of course.

Lowest Quintile _______4%
Second Quintile ______11%
Middle Quintile ______17%
Fourth Quintile ______21%
Highest Quintile _____34%

All Quintiles ________26%

Top 10% ______________38%
Top 5% _______________41%
Top 1% _______________45%

Are these numbers based on tax returns filed - or are people not required to file a return also included? Also, is the EITC included in this presentation?
The question of how someone might survive on minimum wage is valid. However, the valid response will be situational.

 

[nismaratwork]

Are these numbers based on tax returns filed - or are people not required to file a return also included? Also, is the EITC included in this presentation?
The question of how someone might survive on minimum wage is valid. However, the valid response will be situational.

...Because any of that would make up for a $100K gap for post tax in the highest quintiles in general, and from a gap of $176,000 up to a $1,000,000 gap in the top between the top 10% -> 1%...?

 

[WhoWee]

...Because any of that would make up for a $100K gap for post tax in the highest quintiles in general, and from a gap of $176,000 up to a $1,000,000 gap in the top between the top 10% -> 1%...?

I would like to pose a question to everyone content to engage in the demonization of "rich people" rhetoric. How much money first needs to be invested in order to achieve earning of $1.0 million/year? Moving forward, what is the incentive for anyone to risk capital if larger and larger shares of earnings will be re-distributed to other people?

Something else, given the economy, why does anyone believe the taxable income levels of recent years will be available moving forward? Personally, I'm a business owner and not on anyone else's payroll and, my earning are down significantly from last year and down about 75 percent fron 3 years ago. If you double or even triple my tax rate - I'll still pay less than in previous years. I would also not risk any additional capital.

 

[nismaratwork]

I would like to pose a question to everyone content to engage in the demonization of "rich people" rhetoric. How much money first needs to be invested in order to achieve earning of $1.0 million/year? Moving forward, what is the incentive for anyone to risk capital if larger and larger shares of earnings will be re-distributed to other people?

Something else, given the economy, why does anyone believe the taxable income levels of recent years will be available moving forward? Personally, I'm a business owner and not on anyone else's payroll and, my earning are down significantly from last year and down about 75 percent fron 3 years ago. If you double or even triple my tax rate - I'll still pay less than in previous years. I would also not risk any additional capital.

So... was that a yes or a no?

 

[WhoWee]

So... was that a yes or a no?

Yes or no to what specific question?

 

[OmCheeto]

I would like to pose a question to everyone content to engage in the demonization of "rich people" rhetoric.

I hope you're not talking about me. I have many rich friends. And I would love to someday be a rich person. I'm sure everyone would.

How much money first needs to be invested in order to achieve earning of $1.0 million/year?

That depends on the year, ones "perception", and luck. But based on my knowledge accumulated over the last two years of investing, my best guess would be $17,000,000.

Moving forward, what is the incentive for anyone to risk capital if larger and larger shares of earnings will be re-distributed to other people?

Depends. If one has way more the $17,000,000 to invest, a lower return still nets you a healthy income.

Something else, given the economy, why does anyone believe the taxable income levels of recent years will be available moving forward?

Depends on if you are talking about people who are employed, or people who make their money investing. It's all very complicated. But those who invest their wealth for income, and have the best perception, will do very. As for employed people here in the States, it is a bit more complicated. I would expand more, but it would take many hours/days to explain my thoughts.

Personally, I'm a business owner and not on anyone else's payroll and, my earning are down significantly from last year and down about 75 percent fron 3 years ago. If you double or even triple my tax rate - I'll still pay less than in previous years. I would also not risk any additional capital.

bolding mine...

Is there a proposal by anyone to double or triple anyone's tax rate? As I said earlier, based on the CBO numbers, the tax rates appear to be where they should be. We just need to bump them slowly up, for everyone.

With the possible exception of those po' folk at the bottom.

 

[WhoWee]

Is there a proposal by anyone to double or triple anyone's tax rate? As I said earlier, based on the CBO numbers, the tax rates appear to be where they should be. We just need to bump them slowly up, for everyone.

With the possible exception of those po' folk at the bottom.

My point is that we're in a Recession and (other than large corporations and perhaps medical) profits and earnings are typically lower for small business owners. I'm not sure if doubling or tripling the tax rate on business owners would accomplish anything - except to de-moralize the group.

IMO -the tax increases proposed are not going to solve the deficit problems unless the economy picks up.

 

[nismaratwork]

Yes or no to what specific question?

https://www.physicsforums.com/showpost.php?p=3033475&postcount=493

 

[WhoWee]

So... was that a yes or a no?

No? I'm not sure we're in agreemeent with the premise of your question.

Again, regardless of the percentage imposed on the "rich" - until the economy rebounds - collections will continue to be less than adequate. Last month the shortfall was roughly $150 Billion.

 

[nismaratwork]

No? I'm not sure we're in agreemeent with the premise of your question.

Again, regardless of the percentage imposed on the "rich" - until the economy rebounds - collections will continue to be less than adequate. Last month the shortfall was roughly $150 Billion.

The direction of my question is that, when deciding what to cut or massage in the budget, maybe items that have a large effect on the deficit are better than more ideologically palatable ones which don't. I was wondering if you thought that the items you listed in that post I responded to would make a significant difference, not if it would erase the shortfall.

We obviously agree that things need to be cut, so that part of the premise we agree on...

 

[Al68]

...Because any of that would make up for a $100K gap for post tax in the highest quintiles in general, and from a gap of $176,000 up to a $1,000,000 gap in the top between the top 10% -> 1%...?

Who said anything about "making up for" that gap? That gap is in post-tax income.

 

[mheslep]

So now that most of the details are out on so called 'Tax Deal', I'd have to say I oppose this this deal, if not all the concepts. In addition to the legislation that keeps federal income taxes where they are for just two years and holds the estate tax to an increase of 35%, the 'Deal' also includes:

• Unemployment benefits, now at two years, extended for another 13 months: $57B
• Social Security tax break, i.e. payroll tax decrease of 2% (for one year?): $117B
• Individual tax credits, such as college costs, child credit, also two years: $8.3B
• Business tax breaks. Some 40 different special tax breaks, e.g. solar and wind: $69B

http://money.cnn.com/2010/12/07/news/economy/tax_cut_deal_obama/index.htm

I have several problems with this deal. First there are absolutely no spending cuts accompanying the new spending (i.e. unemployment benefits) or the new tax cuts (SS, business), making the deficit problem worse. Second, temporary tax breaks are known to be http://en.wikipedia.org/wiki/Permanent_income_hypothesis" Third, issues like income taxes deserve a simple stand alone vote, without all of the buy offs with the likes of energy and college credit.

Instead I prefer a simple up or down vote on all the income tax brackets at once; to be made permanent, that is, no built in expiration date. Nothing else. It may be that such a deal is not politically possible at the moment, forcing an increase on all income taxes in three weeks. So be it. A couple weeks after that the new House can and would bring such a vote to the floor and pass it, making it extremely difficult for the President or the Senate to oppose.

 

[WhoWee]

So now that most of the details are out on so called 'Tax Deal', I'd have to say I oppose this this deal, if not all the concepts. In addition to the legislation that keeps federal income taxes where they are for just two years and holds the estate tax to an increase of 35%, the 'Deal' also includes:

• Unemployment benefits, now at two years, extended for another 13 months: $57B
• Social Security tax break, i.e. payroll tax decrease of 2% (for one year?): $117B
• Individual tax credits, such as college costs, child credit, also two years: $8.3B
• Business tax breaks. Some 40 different special tax breaks, e.g. solar and wind: $69B

http://money.cnn.com/2010/12/07/news/economy/tax_cut_deal_obama/index.htm

I have several problems with this deal. First there are absolutely no spending cuts accompanying the new spending (i.e. unemployment benefits) or the new tax cuts (SS, business), making the deficit problem worse. Second, temporary tax breaks are known to be http://en.wikipedia.org/wiki/Permanent_income_hypothesis" Third, issues like income taxes deserve a simple stand alone vote, without all of the buy offs with the likes of energy and college credit.

Instead I prefer a simple up or down vote on all the income tax brackets at once; to be made permanent, that is, no built in expiration date. Nothing else. It may be that such a deal is not politically possible at the moment, forcing an increase on all income taxes in three weeks. So be it. A couple weeks after that the new House can and would bring such a vote to the floor and pass it, making it extremely difficult for the President or the Senate to oppose.

I agree, there is too much on the table - AGAIN.

I didn't realize the unemployment extension was for another 13 months (?)- what does that tell us about recovery?

 

[CAC1001]

I'm actually okay with extending unemployment as I think that while it may keep the unemployment rate higher than it otherwise would be a bit longer, there just aren't jobs out there right now. If the unemployment rate was clearly coming down, then yeah, end unemployment ,or else it'll stall the recovery, but as for now, the unemployment rate is up there. The people receiving benefits are not just lazy bums milking the system, a lot are people who need the money to get by at the moment.

 

[WhoWee]

I'm actually okay with extending unemployment as I think that while it may keep the unemployment rate higher than it otherwise would be a bit longer, there just aren't jobs out there right now. If the unemployment rate was clearly coming down, then yeah, end unemployment ,or else it'll stall the recovery, but as for now, the unemployment rate is up there. The people receiving benefits are not just lazy bums milking the system, a lot are people who need the money to get by at the moment.

I'm just looking at the time of the extension - 13 months - the original nbenefit was only for 6 or 9 months (can't recall - just know 13 mos is longer). This is not an optimistic time projection.

 

[mheslep]

I'm actually okay with extending unemployment as I think that while it may keep the unemployment rate higher than it otherwise would be a bit longer, there just aren't jobs out there right now. If the unemployment rate was clearly coming down, then yeah, end unemployment ,or else it'll stall the recovery, but as for now, the unemployment rate is up there. The people receiving benefits are not just lazy bums milking the system, a lot are people who need the money to get by at the moment.

Yet the data shows i) unemployment insurance inevitably correlates with about 1% of the unemployment, ii) most people on unemployment seem to find a job near the end of their unemployment insurance period.

Besides, none of the 'why' argument changes the fact that the deficit is at $1.3T and is made worse by more spending.

 

[CAC1001]

Yet the data shows i) unemployment insurance inevitably correlates with about 1% of the unemployment, ii) most people on unemployment seem to find a job near the end of their unemployment insurance period.

But isn't that usually with more standard recessions? ("recession" loosely used to refer to a crappy economy here as I know the economy isn't technically in a recession anymore). This is an unusually bad economy because of a very bad financial crises that occurred. While normally most of the people might find jobs when unemployment is ended, right now couldn't a lot of them end up with nothing?

Besides, none of the 'why' argument changes the fact that the deficit is at $1.3T and is made worse by more spending.

True.

 

[mheslep]

But isn't that usually with more standard recessions? ("recession" loosely used to refer to a crappy economy here as I know the economy isn't technically in a recession anymore). This is an unusually bad economy because of a very bad financial crises that occurred. While normally most of the people might find jobs when unemployment is ended, right now couldn't a lot of them end up with nothing?

Perhaps, that's counter to the history though. Anyway, I don't buy it. Working for someone else is not the only option. Especially in this country, one can start up some business, or write Iphone apps selling for a nickel rather than spending time online while collecting unemployment. Parts of the US are hiring now, especially Texas and the Dakotas which also have the benefit of being relatively cheap places to live with little or no state income tax. If somebody has used the full 99 weeks and had no luck, then sorry time to pack up and move to Texas, take the job you can get rather than the one you want until things get better. The act of doing that will make things better.

 

[Al68]

Well, it's a done deal. Now we need to permanently reduce the rates further, and eliminate the insidious estate tax.

And of course control spending. What are the chances Republicans will actually do that instead of betraying those of us who voted for them?

They have no excuses come January. They will have the "purse strings" and will be responsible for every dollar appropriated.

 

[mheslep]

So now that most of the details are out on so called 'Tax Deal',[STRIKE] I'd have to say I oppose this this deal, if not all the concepts. [/STRIKE] In addition to the legislation that keeps federal income taxes where they are for just two years and holds the estate tax to an increase of 35%, the 'Deal' also includes:
.

Upon consideration I'm retracting this. Approve the tax deal (they did) with the spending, and take out the spending next month when Pelosi gives up the gavel.

 

[WhoWee]

Shouldn't we rename this thread the "Obama tax cuts"?