Saturday, May 20, 2006


Feeling Relieved Now?


This past Wednesday, President Bush signed into a law a series of tax cuts totalling 70 billion dollars. The signing took place on the South Lawn at a table - there was a small banner on the table which read "Tax Relief For All Americans."

It seems as though the Bush Administration hasn't learned it's lesson from the disastrous "Mission Accomplished" banner they hung in critical error.

"Tax Relief For All Americans." Let's take a closer look at this, shall we? Since 2001, President Bush has cut taxes to the tune of $929 billion dollars. At the same time, the defense budget alone has increased to $493 billion dollars. Meanwhile, the US Deficit has swelled to an inconceivable $8.4 TRILLION dollars.

Now swing back to the economy that Bush inherited - an estimated $5.6 TRILLION dollar SURPLUS.

Any time you hear a Republican purporting to be a "fiscal conservative," you have my permission to laugh hysterically in their face before tapping them gently on the head with a sledgehammer.

Let's not even get into the argument of how well the money we've spent in Iraq has served us. Let's just stipulate, for the sake of argument, that the Iraq war was the most jusitfied war this country has ever fought (and you Apologists can explain THAT one to the parents and loved ones of the 2,450 US soldiers who have died in Iraq this far).

Why isn't the country being asked to sacrifice equally for the expenses of this country? President Bush has not vetoed a single bill that involved spending money. The budget has ballooned under Bush, let alone all of the pork tucked neatly away in the midst of all the "Emergency Appropriations Bills." In the midst of all this spending, Bush has determined that it's best for none of us to pitch in and help to pay for all of this, right?

Wrong. He's actually suggested that it's not appropriate for the RICHEST in this country to pay for his mistakes, and to saddle the burden on the middle and lower classes, in addition to strapping our future generations with a lifetime of slow growth and debilitating debt.

Let's look at who "benefits" under this "Tax Relief For ALL Americans":
Under the just passed Republican tax deal ...

If you make less than $10,000/year, you will save $0 in taxes annually.
If you make $10,000-20,000/year, you will save $3 in taxes annually.
If you make $20,000-30,000/year, you will save $10 in taxes annually.
If you make $30,000-$40,000/year, you will save $17 in taxes annually.
If you make $40,000-50,000/year, you will save $47 in taxes annually.
If you make $50,000-75,000/year, you will save $112 in taxes annually.
If you make $75,000-100,000/year, you will save $406 in taxes annually.
If you make $100,000-200,000/year, you will save $1,395 in taxes annually.
If you make $200,000-500,000/year, you will save $4,527 in taxes annually.
If you make $500,000-1 million/year, you will save $5,656 in taxes annually.
If you make more than $1million/year, you will save $42,766 in taxes annually.


Less than 3.5 percent of U.S. taxpayers fall into the category of making $200,000 a year or more.
These figures, of course, come from the Tax Policy Center.

Someone looking at these figures superficially might simply think, "Well, of course. The more you make, the bigger your relief will be, right?" Wrong.

Do some simple math. Divide the relief by the income, and you come up with the REAL story. In the $40,000-50,000 range, as an example, the tax relief is approximately .0012% of the income. If you're in the $75,000-100,000 range, it jumps up to .0055% of your income. $200,000-$500,000 gets about .023% of their income. Those earning over a million get .043% of their income.

Don't let anyone fool you into thinking that there is ANYTHING "equitable" about ANY tax relief that comes from the Republicans.

Just to add fuel to the fire, Republican House Speaker Dennis Hastert said on the floor of Congress that if you make $40,000 a year, you don't pay any taxes. Don't believe me? Listen to him speak the words for yourself.

Anyone out there making $40,000 who wants to refute that point and clear up Hastert's misconception?

So, even though President Bush vowed to veto any bill that raised taxes, you've got to wonder how he can make this happen, right?

Well, as it turns out, the bill he signed this week actually DOES raise taxes on a segment of the American population... teenagers. An enterprising teen putting money away in various investments for college tuition will now be taxed at the same rate as their parents, rather than at their own rate. In most cases, the legislation raising taxes will more than TRIPLE taxes on those teens.

So, that seems fair. The multimillionaire gets a $43,000 tax cut. The average American will save enough to buy a half a tank of gas. If you make $40,000 a year, you're not even paying taxes, so what should YOU care? And the teenager saving for college has their taxes tripled.

"Tax Relief For All Americans." Mission Accomplished.

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Posted by FleshPresser at 9:20 PM /

3 Comments

  • Blogger The Professor posted at 4:17 PM  
    You do understand the misleading nature of your analysis, right?

    For instance, you write:
    "Do some simple math. Divide the relief by the income, and you come up with the REAL story. In the $40,000-50,000 range, as an example, the tax relief is approximately .0012% of the income. If you're in the $75,000-100,000 range, it jumps up to .0055% of your income. $200,000-$500,000 gets about .023% of their income. Those earning over a million get .043% of their income."

    That is an interesting statistic, but simply meaningless. Let me explain. Your analysis looks at the total income, and the dollars that the taxpayer will receive in return. Of course, you are including a certain amount of initial income that isn't taxed at all. Depending on your status (single, married, family, etc) you have a certain amount of income that is simply not taxed.

    For example, if your income is that of most Americans (read about 50%) the vast majority of your income is not taxed. So let's say, for example, that families with exemptions aren't taxed until they earn 40K, thus, a (hypothetical) 5% rebate in your taxes on, say, 10K of your 50K income will be 500 dollars, or 1% of your TOTAL income. On the other hand, if you earn 500K, then a 5% rebate will be based on $460K, and thus would be much closer to the actual 5%, since the 5% is assessed across a much larger portion of the income. This hasn't taken into account the (still) progressive nature of the tax system, which increases the percentage taken by the government of your money earned, the more of it you happen to earn.

    Admittedly, this has been a hypothetical example, to make the math easier--I recommend you check the real numbers and run the math on that as well. I think you will find the math, and logic, still hold up.

    Perhaps the best way to resolve all this is to eliminate the progressive tax structure all together. Make everyone pay taxes starting with the first dollar earned. Eliminate any Earned Income Tax Credit. Ensure that every voter is a "tax paying voter."

    let me know what you think of that idea.

    I actually wrote about an analysis that was conducted (and mis-represented by the Dems at the time) by the CBO. My blog, and a link to the actual CBO report, can be found at "http://theprofessornotes.blogspot.com/2004/08/dems-distort-cbo-report-to-trash-bush.html"

  • Blogger FleshPresser posted at 2:33 AM  
    I bet you think I had forgotten about you, or I was going to let you slide on your comments, right? noooooo.... :)

    Let's skip thorugh the heavier number crunching here and cut to the chase... so as to avoid less-than-stimulating reading (though it may be too late for that at this point).

    Regardless of how you twist the percentages of income, the refund amounts are provided by the Tax Policy Center, and are taken from government agencies directly.

    More importantly, however, are the premises behind our current system of taxation.

    You WOULD agree that people with lesser incomes generally take standardized deductions, while those with larger incomes tend to itemize. I'm not sure what your background or occupation is, but I have accountancy experience, and I can tell you that this is true.

    It's the whole "you've got to have money to make money" argument, in a sense. The more money an individual makes, the more loopholes in the tax code are generally available to that individual, in the form of shelters and the like.

    It is well-established that while individuals with larger incomes pay more tax as a pure dollar amount, they tend to pay less as an overall percentage of their income - a generalization, I know, but percentages will bear it out.

    At the risk of jeopardizing my family's business, I would actually advocate for a flat tax, or do away with "tax returns" completely and establish a National Sales Tax instead.

    The problem with deductions and itemized taxes is that it gives the government the ability to incentivize certain behaviors or expenditures. This, of course, opens the door wide to politicians. A lot of tax incentives happen to be ones I fully support. Others, however, are ludicrous (Bush's incentives for purchase of fleet SUVs and ultra-large SUVs comes to mind).

    Best to create a simplified tax code with a base flat rate, and perhaps a few remaining deductions available to everyone on an equal basis (mortgage interest deductions, etc.)

  • Blogger The Professor posted at 11:36 AM  
    Why thank you for remembering me :)

    Let me tackle these one by one, if you don't mind. I am sorry that the math became a bit arcane but as I was trying to point out, when you do "simple math" it is usually too simple, and thus wrong. By your own admission, there are many many loopholes and rules, so simple math won't apply.

    Now, on to the specifics. I am not challening the numbers from the Tax Policy Center--just your simple math that is used to analyze it. For instance, you identify that those earning less than 10K get nothing back. Correct--they received 100% back on all they contributed, since they contributed nothing. Of course, that one little bit is an aberration in the math.

    After that, the math gets more complicated as the progressive nature of the tax structure kicks in. The more you earn, the greater the percentage of your income is taxed--and the greater the percentage.

    So you write:

    "You WOULD agree that people with lesser incomes generally take standardized deductions, while those with larger incomes tend to itemize."

    True. But those with the least income pay no taxes, and those with moderate (30-50K) incomes also pay relatively little given that most of their income is not taxed at all (at least not as an "income tax.") And don't forget AMT! (Oh wait, I think you did--see next quote from you...)

    Again, you write:
    "The more money an individual makes, the more loopholes in the tax code are generally available to that individual, in the form of shelters and the like."

    Now see, in the words of Ronald Reagan "there you go again." The AMT is designed to ensure that one pays their taxes, and cannot (mis)use loopholes. The tax is actually a misnomer, given that it is the "alternative minimum tax" but in reality one pays the "maximum" of that or the taxes computed using the traditional itemized deductions. Of course, Congress in their wisdom passed that a number of years ago, and put an absolute dollar figure on it, so as inflation and income creeps up, more and more "regular joes" are getting caught in this stealthy tax-increase.

    And finally, you write:

    "It is well-established that while individuals with larger incomes pay more tax as a pure dollar amount, they tend to pay less as an overall percentage of their income - a generalization, I know, but percentages will bear it out."

    I recommend you go read that CBO report. It actually disagrees with you. The lowest income levels pay NO taxes (and with the EIC actually get money FROM the government--reverse taxation of sorts.) And when you get to the highest levels, the progressive nature of the tax system, combined with the AMT, has ensured that the richest pay the most--both in pure dollar figures and in percentage of income earned.

    Seriously, go read the link I provided, and then go read the CBO report for yourself!

    Laters!

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