the tax cut - the rich get richer

[Docta]

Two of America's Richest Assail Bush Tax Cut
Tue May 20, 4:56 PM ET

NEW YORK (Reuters) - You would think two of the wealthiest Americans would have no problem with a tax cut that would put thousands, if not millions, of dollars in their pockets.

But billionaire investors Warren Buffett (news - web sites) and George Soros, Nos. 2 and 24 on Forbes Magazine's list of the 400 richest Americans, both railed on Tuesday against President Bush (news - web sites)'s plan to deepen income tax cuts and eliminate taxes on corporate dividends.

Bush, who has campaigned around the country touting the plan as a way of creating jobs and boosting stock prices, is pressing for final agreement this week as Congress wrangles to fit the package into a $350 billion limit set by the Senate.

In an opinion article in the Washington Post, Buffett, the chairman of holding company Berkshire Hathaway, said he already pays about the same income tax rate as his receptionist -- about 30 percent.

But Buffett said with the planned dividend tax cut, he conceivably could pay a mere 3 percent in income taxes. Recalling President John F. Kennedy's declaration that Americans should "pay any price, bear any burden" for the country, Buffett said a 3 percent income tax rate "seems a bit light."

"Supporters of making dividends tax free like to paint critics as promoters of class warfare. The fact is, however, their proposal promotes class welfare. For my class," wrote Buffett, whose wealth is estimated at $36 billion.

Soros, renowned for both his swashbuckling speculative bets on currencies as well as his philanthropic work, dismissed the tax cuts. He said they would not revive the U.S. economy in the short-term but were only aimed at helping the rich get richer.

"This move is designed not to have much impact now. It's designed to have an impact over an extended period and it's basically using the recession to redistribute income to the wealthy," Soros said in an interview with financial news network CNBC.

"I think that is really not a very effective way of using a deficit," said Soros, whose wealth is estimated at $6 billion.

[postfeminist]

wow...impressive article...thanks for sharing it!

[monkey neck]

I agree with the principle of this tax issue, but I just don't see it positively affecting Joe Blow. I've been behind Mr. Boosh on alot of issues, but I just don't see this doing much except making deep pockets deeper.

How about eliminating the B.S. 40-50% tax on bonuses and (correct me if I'm wrong) overtime in people's paychecks? That could get the ol' economy rolling, huh?

Seems pretty simple to me, but I guess that's why I'm Joe Blow.

[DudeMan]

I respect both Warren Buffett's and George Soros' business acumen, but politically they're both liberals.

Plus, they are already wealthy, so to them a tax cut isn't nearly as beneficial as it would be to the person who is currently going to school, taking a risk on a new business, etc. ie, the person who is striving to be rich someday. Once you've made your first billion, it probably doesn't matter what the marginal tax rate is, as you're already set. So, their opinion on this has no special meaning to me.

And finally, George Soros was convicted by a French court for insider trading this year. I guess he's one of those guys who likes to set rules for everyone else but doesn't think they apply to him.

[dcXhc]

Originally posted by DudeMan
And finally, George Soros was convicted by a French court for insider trading this year. I guess he's one of those guys who likes to set rules for everyone else but doesn't think they apply to him.

Yes, Soros is the man that railed against the dangers of capitalism after he made $1.2 billion on short selling Pound Sterling.

Buffett's argument about only paying 3% in taxes assumes that after the dividend tax cut was passed, Berkshire Hathaway would instantly declare a $1 billion dividend (they currently don't pay a dividend). That is hardly a foregone conclusion, since Buffett, who is Berkshire Hathaway, believes that the company and its shareholders would be better served if the company continued to reinvest profits back into the firm rather than pay them out. Moreover, as Buffett points out in his editorial, he could already be paying far less in taxes than he is, but chooses not to. So his argument that his tax rate would fall from 30% to 3% merely by virtue of this tax cut passing, is misleading.

Also, the dividend tax-cut, while it would certainly benefit those who own more stock, is proportionately greater for those in lower tax brackets.

"It would reduce the top tax rate on capital gains and dividends to 15 percent through 2009, with lower-income taxpayers paying as little as 5 percent. In 2009, dividend and capital gains taxes would be eliminated for taxpayers in the lower income brackets."

http://quote.bloomberg.com/apps/news?pid=10000103&sid=alM4PlJXe8jc&refer=us

[Docta]

it doesn't matter how you spin this guys, those who have the most money will benefit far more than anyone else by these tax cuts.

will a handful of upper-middle class folks see some benefit, yes, but dollar wise it is a drop in the bucket. the loss in tax revenue from this will send our deficit into the toilet that just a few years ago was nil.

[solomon]

Recalling President John F. Kennedy's declaration that Americans should "pay any price, bear any burden" for the country

Yeah...I wonder...when did this country stop being about the people. I won't pay any price, or bear any burden at all for a government.

Buffett said a 3 percent income tax rate "seems a bit light."

Sounds just about right to me! 8]

to redistribute income to the wealthy

This seems totally backwards. The method of income redistribution from the sources the market dictates is TAXES, not tax cuts.

He said they would not revive the U.S. economy in the short-term

I kind of doubt they will too. It seems more of a political ploy to me. If bush was a true believer in small government he wouldn't be spending as much money as he is.

the loss in tax revenue from this will send our deficit into the toilet that just a few years ago was nil.

You know, they could always cut spending too, but I guess that's nearly impossible.

Sol

[Danosaur]

If Bush wants to pass a tax cut great, but he must stop spending money. You don't cut taxes and start spending more money. What the hell? I thought bush was all about giving power back to the people. He campaigned on that position and now we are under more federal control than the whole of the Clinton administration. What happened to the Republican Party? States rights anyone? Alaska just passed non-partisan legislation to promote state authorities to NOT cooperate with the federal gov't in its attempt to ignore rights to privacy and collect data on Alaskan citizens. Republican or not we must fight for our civil liberties. George W. Bush needs to start acting like he said he would and start giving people more control over their lives. A tax cut doesn’t give me anymore control over my life while my civil liberties are being taken away.

[dcXhc]

Originally posted by Docta
the loss in tax revenue from this will send our deficit into the toilet that just a few years ago was nil.

How was the deficit eliminated? Tax cuts combined with pro-business policies that stimulated corporate growth which, in turn, increased net tax revenues.

Will the cut in the dividend tax have a substantial effect on the bottom line? Probably not substantial, but it will provide incentives for increased investment by individuals, which will lead to business expansion, which will lead to growth, etc....

Cuts in spending commensurate with the tax cuts would be good to see. But I don't see this tax cut as a bad thing at all.

[dcXhc]

Originally posted by Danosaur
What happened to the Republican Party?

Clinton and the New Dems stole many of their good ideas and captured the moderate center-right voters. Rather than fighting to get that ground back, the Republicans decided to simply move more to the right.

Bush has fumblingly tried to make some lame overtures to the center (AIDS package for Africa, increased aid to developing nations), but honestly, he's wasting his time. He's the poster-boy for the Neo Conservative Republican party.

[shivui]

sometimes i can't tell if it just means for the government. they seem to do whatever's in their best interest anyway.
i and the people like don't really change, we feed. maybe it's a hopelessness.

i guess i would argue about the rich getting richer but what's the point. anyone with any interest in living a peaceful lifestyle doesn't need a billion dollars to do so. i get by more than fine on a little bit more than 20 grand. i would get riled when i hear the little people are being repressed, but i'll tell ya. if i do get riled, it'll just be because i'm too jealous. my want/need to be that rich is the only thing that would make me upset if i heard someone was trying to prevent it. i think that's a big problem in society today. there's too much emphasis put on being rich. what are you worth? i can't tell at what point being greedy stopped being a bad thing. sure everyone can be in some aspect of their lives, but in moderation. am i the only one here that believes their worth is determined in dollar amount?
people please, lend me your pesos!
-the polytical machine

[RichmondVA]

Originally posted by dcXhc
How was the deficit eliminated? Tax cuts combined with pro-business policies that stimulated corporate growth which, in turn, increased net tax revenues.

I can agree that cutting taxes might stimulate the economy. It MIGHT even generate more net tax revenue. But I've yet to see a Republican candicate attempt to show within what paramters this happens. If you cut taxes to .0001%, you'd grow the economy, but it would never grow enough to generate more tax revenue than the government currently receives.

More importantly, the deficit really has very little to do with the tax rate. The deficit was eliminated by the government not spending more than it took in. You can cut or raise taxes and generate as little or as much revenue as you want. The bottom line is having your spending match your revenue.

This is the major reason I find the GOP's fiscal views repugnant. Maybe Democrats are taking too much in taxes, but the Republicans are the ones responsible for running a deficit. There's simply no denying this. I find the idea of running up a huge debt far scarier than the loss of efficiency a high tax rate causes.

[tobedawg]

What the hell? I thought bush was all about giving power back to the people.

Oh he is about giving power back to the people. The oil companies, the CEO's embezzling money, the corporations that want to destroy our enviornment and our livelihoods. There's no doubt about it. Bush is about giving POWER back to the PEOPLE!

[Docta]

ok, it would have been either this or support for states that goes huh? not extending the sunset for dividend taxes or not sunsetting them at all.....

----------
Tax Law Omits Child Credit in Low-Income Brackets
By DAVID FIRESTONE
nytimes


WASHINGTON, May 28 ? A last-minute revision by House and Senate leaders in the tax bill that President Bush signed today will prevent millions of minimum-wage families from receiving the increased child credit that is in the measure, say Congressional officials and outside groups.

Most taxpayers will receive a $400-a-child check in the mail this summer as a result of the law, which raises the child tax credit, to $1,000 from $600. It had been clear from the beginning that the wealthiest families would not receive the credit, which is intended to phase out at high incomes.

But after studying the bill approved on Friday, liberal and child advocacy groups discovered that a different group of families would also not benefit from the $400 increase ? families who make just above the minimum wage.

Because of the formula for calculating the credit, most families with incomes from $10,500 to $26,625 will not benefit. The Center on Budget and Policy Priorities, a liberal group, says those families include 11.9 million children, or one of every six children under 17.

"I don't know why they would cut that out of the bill," said Senator Blanche Lincoln, the Arkansas Democrat who persuaded the full Senate to send the credit to many more low income families before the provision was dropped in conference. "These are the people who need it the most and who will spend it the most. These are the people who buy the blue jeans and the detergent and who will stimulate the economy with their spending."

Ms. Lincoln noted that nearly half of all taxpayers in her state had adjusted gross incomes that were less than $20,000.

Families with incomes lower than $10,500 will also not receive the refund checks. But under the 2001 tax revision, they would not have been eligible for either the $600 or the $1,000 credits because they do not pay federal taxes. Proposals to give them the credits failed on the House and Senate floors on party-line votes.

The Senate provision that did pass was intended to help those families making $10,500 to $26,625 who do pay federal taxes and could have taken all or part of the $600 credit. The provision, which would have cost $3.5 billion, would have allowed those families to receive some or all of the extra $400 in the new law.

Most families with children who make about $30,000 or less are also eligible for the earned income credit, which the law does not not change. In addition, the law has a few other benefits for low income earners, like expanding the lowest tax bracket and a temporary reduction in the penalty on two-income couples.

Several centrist senators worked hard to make the child credit fully refundable for all low income families, and the full Senate voted this month to include a provision that would have included the minimum-wage families. But the provision was dropped in the House-Senate conference, where tax writers spent days trying to cram many tax cuts ? most prominently, cuts in the taxes on stock dividends and capital gains ? into a bill that the Senate said could not be larger than $350 billion.

House Republicans, who acknowledged the gap on the child credit, blamed the Senate for insisting on its $350 billion cap, saying the low-income families could have been covered had the Senate been more flexible.

A spokeswoman for the Republicans on the House Ways and Means Committee, Christin Tinsworth, noted that the provision was included in an agreement reached last week by Representative Bill Thomas, Republican of California, the committee chairman, and Senator Charles E. Grassley, Republican of Iowa, chairman of the Senate Finance Committee.

That agreement would have cost $380 billion, but it fell apart when an important swing senator, George V. Voinovich, Republican of Ohio, said he could not approve any bill that exceeded $350 billion. To satisfy him and the Senate, Ms. Tinsworth said, the child credit provision was dropped, along with other costs.

"The Senate preferred to have $20 billion in state aid," she said. "But when we had to squeeze it all to $350 billion, they weren't talking about the child credits. This bill does a lot to help people who need help. But its primary purpose was to generate jobs. Apparently, whatever we do is not going to be enough for some segments of the population."

But Democrats and children's advocacy groups said the Republican demand for large cuts in the dividend tax, which they said benefits primarily wealthy taxpayers, pushed away the credit from low income families.

"If we were going to have a tax cut to give $1,000 to all these other kids, there's no reason not to include these kids, too," said David Harris, president of the Children's Research and Education Institute. "Their families are working and playing by the rules and are left out, though it would not have cost too much to include them."

A spokeswoman for Mr. Voinovich said the senator would have been happy to extend the child credits, but believed that the entire package should not pass $350 billion. The tax writers were free to reduce the dividend tax cut, noted the spokeswoman, Marcie Ridgway.

The gap in the number of families who receive the child credit occurs because of how the formula was arranged in 2001. Congress decided then to give refunds of the credit to low income families, but just to a maximum of 10 percent of the amount they made over $10,000, or a refund of $600, whichever was lower. The $10,000 amount was indexed to inflation and is now $10,500.

When the credit was raised to $1,000, many families could not qualify for the extra amount, because the 10 percent maximum still limited them. Ms. Lincoln proposed raising the formula to 15 percent, which would have covered the increase in the credit for most of those families. Her proposal made it through the Senate Finance Committee, but later she voted against the full cut.

Because her vote and those of other supporters were not necessary for final passage, Republicans knew they could drop the provision without hurting the bill's chances in the Senate.

"I guess this shows us what our priorities are," Ms. Lincoln said. "I think this tax bill is very irresponsible in the way it treats families."

[Kittymld]

let me get this right. my kid is worth $600 but my neighbor's kid is worth $1000?? doesn't make sense to me.

[BigSugar]

c'mon, have you seen the neighbor kid!?? straight A's, well dressed, future Junior Achievement president, scholarship to space camp....that's a $1000 kid if i ever saw one!!! and their lawn is impeccable! :)

[Kittymld]

That's because they make more money than me!!

[Danosaur]

The Poor:

Register to vote at a smaller rate then the middle and upper classes

Show up to vote at an even smaller rate then the middle and upper classes

Get involved at a smaller rate in civic activities that support local communities then the middle and upper classes.

The economy:

Is less reliant on the poor than the middle class, which spends far more money (understandably) supporting the U.S. economy.

Is reliant on the middle class as the workhorse of the American economy

Summation:

With all that is against the poor community they must vote and get involved civically at the same rates as the middle and upper classes if they expect to ever receive a fair shake.

So, blame who you want, but don’t expect anything to change until the poor vote and get involved at the same levels as those in the middle and upper classes.

[cuddlyevil]

But, it's difficult to get the poor involved when the poor don't understand the process b/c they either lack the education or the motivation to attain that understanding. It's true, many folks could be in better situations (ie: pay a bill instead of getting that new fubu jacket or new pair of nikes) but just as many don't have the skills to get those better situations. As an admin. assistant I make more than some of the folks helping the disadvantaged. The current spending cuts and tax cuts will impact the programs which would help get the disadvantaged become more self-sufficient as well as potentially increase their activity in the process of government. Already, energy programs are being hit, head start programs may be next, my agency has already asked us to contribute money from our own paychecks back into our paychecks due to the fears of lessened funding.

Oh well, I've stopped asking why the government does things the way it does b/c I always end up more upset or confused than when I started.

[Danosaur]

The poor may be uniformed, but the middle and upper classes are not using their noggins. How we can justify a tax cut without cutting our overall spending is beyond me. On top of that we are putting our money in defense and cutting our education and welfare to work infrastructure. I work in an adult ed. center that is reliant on Workforce Investment Act funds to support our center (specially since Adult Basic Ed funds were cut in half in 1997). Now the feds along with the state of Alaska (where I live) are cutting back Workforce Investment funds 53%. This center which is crucial to the small community I work in (with the highest drop out rate in the state, and little job opportunity) is going to close its doors soon. I believe we spend vastly too much on Gov't and we need to scale back, but we are not doing it, government is still growing and in the wrong direction. It is killing its most important programs. WIA has been working very well at getting people off the public dole and into paying jobs. We are cutting a program that is going to cause us to spend more in the end. Stop the stupid war on drugs and use those law enforcement resources to fight terrorism, and then revive our education and welfare to work programs. Education and Welfare to work are investments in our future that pays off with more citizens contributing to the economy and lowered crime rates.

[shivui]

don't know if this is state or federal, but the lane public library system just recently had their funding cutback.

[cuddlyevil]

Originally posted by Danosaur
It is killing its most important programs. WIA has been working very well at getting people off the public dole and into paying jobs. We are cutting a program that is going to cause us to spend more in the end. Stop the stupid war on drugs and use those law enforcement resources to fight terrorism, and then revive our education and welfare to work programs. Education and Welfare to work are investments in our future that pays off with more citizens contributing to the economy and lowered crime rates.

Here's the problem though: the government doesn't think that way because they don't work within the system like you and I do. Many (not all) of their constiuents also suscribe to the NIMBY perspective and don't want to hear about the poor in this country. They'd rather hear about what the government's going to give them. I'm sure there were other ways to reorganize the federal spending limits, but now it seems we're trapped in what will become a mire of competition for funds/jobs and the very people that need the help will suffer. But, since when has the government shown more than a superficial concern for the plight of the poor on its own shores?

[Sovrana]

Originally posted by cuddlyevil
I'm sure there were other ways to reorganize the federal spending limits, but now it seems we're trapped in what will become a mire of competition for funds/jobs and the very people that need the help will suffer.

check this out:


http://www.salon.com/news/feature/2003/05/29/tax_cuts/index.html

though I guess giving money to the wealthiest was easier than having to weigh all of this out....too much thinking involved.

[solomon]

They'd rather hear about what the government's going to give them.

This is all the poor want to hear about too. It's pretty much all anyone wants to hear about. "what's the government going to give ME that I didn't earn?"

But, since when has the government shown more than a superficial concern for the plight of the poor on its own shores?

When did the poor start having anything to do with government? poor/rich/economy and government have nothing to do with each other. Oil and water.

Sol

[monkey neck]

Originally posted by solomon
Oil and water.

How many times do we have to tell you it's not about the oil!

Oh, sorry, wrong thread. Hi, I'm your lame attempt at comic relief. I'll be here all week.

[solomon]

Actually I thought that was really funny :)

[monkey neck]

Thanks. You're encouraging me. That's bad.;)

But I digress...

[yoshomon]

The working class creates wealth.

[BigSugar]

umm....technically, even the biggest CEO is still the "working class" since you know....it's a job....and he/she works....and creates wealth. or did you mean that only janitors and garbage men and teachers and middle managers are "working class". do the retired count, since technically, they don't work anymore?

i love out dated ideas such as socialism and communism. they're so quaint. Lords and vassals...Bourgeoisie and aristocracy....calgon, take me away!

[Danosaur]

Are you saying you don't specifically use the term "working class" to classify janitors, garbage persons, factory workers, and teachers? It is still common nomenclature; I find it hard to believe you would mean to refer to all working people if you used the term working class.

But whatever.

[Duemellon]

yeah, "working class" is an extremely ambigious term...

let's try:
It's really not the big-company-owners, multi-tri/bi/millionaires, or govn't, that keeps our economy going. It's Yu-Gi-Oh Monster cards and McDonald's.

hmmm... i'll have to think about that...

I think its hard for the upper class & supa-dupa wealthy to spend enough money to keep a trillion dollar economy growing. Yet, I couldn't fathom all the pooerest of the poor being able to do that either. Someone help me redifine 'working class' how's about Blue collar, u'kno, the name they were given a long time ago before people started trying to dismiss common terminology in an attempt to embarass or minimize people

[RichmondVA]

Originally posted by Duemellon

how's about Blue collar, u'kno, the name they were given a long time ago before people started trying to dismiss common terminology in an attempt to embarass or minimize people

Yeah but they stopped wearing blue shirts, so that term is antiquated in the same way working class is.

[yoshomon]

I define working class as not being in the position to hire or fire.

[solomon]

I think its hard for the upper class & supa-dupa wealthy to spend enough money to keep a trillion dollar economy growing.

Growth is about savings, not spending. Wealth is created by pulling more resources into use, or finding a better way of using them. This is accomplished by entrepreneurs and your minimum wage worker. More capital goods leads to more consumption and higher standards of living.

Sol

[shivui]

i've heard the arguments and i'm fresh out.

anyone got any ideas for possible solutions?

every man/women for himself/herself sounds appropriate.