CNN: 90+% of Americans would pay less in taxes under Obama's plan

[Hubbs]

Here's a quick economic lesson for ya...

Economic growth, regardless of when or where, comes from Capital Formation. (There are four types of capital: Physical Capital (roads, buildings, power lines), Human Capital (Labor, Education), Natural Resources, and Technological Know-how (slightly different than Human Capital, referring to the society as a whole).)

Capital comes from good investments. (Not all investments are created equally)

Good Investments require two things: Money to invest, and knowledge of what to invest in.

Money comes from savings/under-consumption. (No savings, no investment, no capital formation, no growth)

Knowledge comes from information. The most efficient way to communicate information is through the price system, with prices set by a market of voluntary exchange. Trying to gather information in other ways is often cumbersome and terribly inefficient (Just ask the Soviets).

Here's a quicker one: The growth or shrinkage of a nation's economy eerily mimics the overall percentage of wealth that the middle class possesses in the nation. When the middle class's percentage of wealth is increasing vis a vis the top 1%, the nation's economy is almost always growing at a much faster pace than when that percentage is decreasing, and the correlation between a shrinking economy and a decreasing ratio of middle class wealth is even stronger.

But, by all means, put more tax burden on the middle class to free up a few more dolla-dolla bills on top.

[JohnLockesGhost]

Here's a quicker one: The growth or shrinkage of a nation's economy eerily mimics the overall percentage of wealth that the middle class possesses in the nation. When the middle class's percentage of wealth is increasing vis a vis the top 1%, the nation's economy is almost always growing at a much faster pace than when that percentage is decreasing, and the correlation between a shrinking economy and a decreasing ratio of middle class wealth is even stronger.

But, by all means, put more tax burden on the middle class to free up a few more dolla-dolla bills on top.

Assuming you're right, all you are doing is pointing out a correlation. All you said is that if the economy is going good, the middle class is doing good. If the economy is going bad, the middle class is doing bad. But correlation doesn't mean causation.

I'm still curious as to the economic mechanism or cause that supports your claim that the middle class "drives" economic growth.

[Larry]

you should probably read my statement the whole way... i did say "MAY" i didn't generalize and say that all people that didn't make a lot of money were lazy... just to clear that up.

That being said. tough luck on those that don't make it, sometimes that is how the cookies crumble. I feel for them, but I still don't see why someone who did make it, gets punished.

Allow me to point out that in order to be a member of your "punished class", a person would have to have earned:

Gross income - tax deductions > $350K.

(That's what it takes to be in the IRS's top tax bracket.)

And if that person fits into that class, then his "punishment" will be:

Take-home pay > $250K + tax deductions.

If we assume that your hypothetical "person who's being punished" has $100K in deductions, then you're describing, at minimum, a person who earned $450K, and paid $101K in taxes. (Which means that at a minimum, your poor, downtrodden victim of the government's punishment had an income after taxes of $350K.) (And paid an effective tax of 22% of his income.)

Which, I'll agree, isn't Bill Gates.

But it isn't poverty, either. Nor is it cruel or unusual punishment.

[Hubbs]

Assuming you're right, all you are doing is pointing out a correlation. All you said is that if the economy is going good, the middle class is doing good. If the economy is going bad, the middle class is doing bad. But correlation doesn't mean causation.

I'm still curious as to the economic mechanism or cause that supports your claim that the middle class "drives" economic growth.

Not exactly. It's about the dispersion of wealth. If an economy is doing well, naturally the middle class ofthat economy will also be doing well 99% of the time. It's not that the middle class consistently "does well" in growing economies around the world, and "does poorly" in bad economies. It's that the middle class' overall control of wealth increases and the upper-upper class' control of wealth decreases in growing economies, and the opposite in shrinking economies. Yes, that's still only a correlation. I just wanted to clarify it.

As for causation, most of the economic literature I've read about this pattern has described it being a very symbiotic relationship. Economic growth causes the percentage of middle class wealth to expand, and that expansion causes economic growth. You could argue for either one being more important. What you cannot argue, however, is that it would be a good idea to try to actively disperse more wealth in an economy towards the top 1%. That is what those who claim that progressive taxation hurts the economy are saying. They are wrong.

And before anyone tries the inevitable "take an argument to a ridiculous extreme and then prove the extreme wrong" tactic, no, this branch of economic thought does not advocate dumping all taxes for everything upon the top 1%, or claim that any depression can be fixed by just increasing taxes on the rich more and more, or other equally stupid ideas. It still works within a set of norms, and taxing can only have so much of an effect on an economy. The basic principle is that it is virtually always best to follow policies that favor an overall increase of the middle class' percentage of a nation's wealth.

[Tulane Skins Fan]

Knowing the facts helps

http://www.realclearpolitics.com/articles/2008/06/tax_relief_for_the_middle_clas.html

Tax Relief for the Middle Class

Barack Obama

I just had the pleasure of sitting down with Ryan and Jenny Micke, and hearing about some of the challenges that they're facing in these tough economic times. We're going to continue our dialogue in a few moments, but I want to start by talking a little bit about my plan to provide meaningful tax relief for working people.

Americans work longer and harder than the people of any other wealthy nation. We've built the largest economy that the world has ever known, and the biggest middle class in history. But for the last eight years, we've failed to keep the fundamental promise that if you work hard you can live your own version of the American dream. Instead, folks are working harder for less. The cost of everything from gas, to groceries to tuition is skyrocketing. It's harder to save, and harder to retire. At kitchen tables like Ryan and Jenny's, it's easy to feel like that dream of opportunity that should be the right of all Americans is slipping away.

* * * *

We both favor tax cuts. The difference is that Senator McCain wants to continue a Bush tax code that rewards wealth; I want to reform our tax code so that it rewards work. That's why the typical middle-class family will get three times more from my tax cut than the one John McCain has proposed, while nearly a quarter of his tax cuts go to households making over $2.8 million every year. That's right - $2.8 million. That's where John McCain wants to focus his tax relief in this struggling economy.

[DGreenistheBest]

I'm gonna tell you a secret, a secret not many people wanna hear because they don't want to believe it's true.

Ready?

There are just as many people who bust their ass their whole life and never make it past average income as there are who actually do reap the rewards and wind up having it good. The notion that everyone who's poor must be lazy is laughably absurd.

Don't tell the children, though. It'll make them cry.

You honestly cannot make some people understand this. It's like in kindergarden when you're out on the playground and you get in an argument and the other kid stuffs his fingers in his ears and says, "lalalalalala!" You could seriously hit them over the head with it and they just won't understand.

[Special K]

That has nothing to do with what you previously said, which was this:

As for your "medical bias" if you honestly believe that your relatives, who are bringing in 2-3-4 hundred thousand a year before being brutally and unjustly forced to pay more taxes on that money than some guy with a GED who makes nine bucks an hour, have nearly as much financial strain as those who make 1/4 as much as they do, you have no grasp on reality. Your relatives are stressed out because they might not be able to own a second car. The guy who cleans their offices at night is stressed out because he can't afford to make an appointment with your relatives to get his kid's pneumonia treated.

I'm sorry, but claiming I have no grasp on reality by saying I think it's unfair that people who work their asses off goingto school for undergrad. for 4+ years, then medical school for 4+ years (or any professional school for that matter), then residency for 3-6+ years then get the holy hell taxed out of them is ridiculous.

I understand that a lot of people think it's acceptable to tax the "rich" more b/c the "rich" live in nice houses and drive nice cars to pay for social programs for others, I simply don't. The sense of entitlement around here is unbelievable.

P.S. Anyone that "cleans my dad's and other relatives offices" don't have to make appointments for their sick kids or their their sick families. They get seen, no appointment, no charge.

[Special K]

Additionally, Obama supporters claiming lower taxes for everyone have yet to mention how Obama is going to lower taxes AND provide his form of universal health care coverage AND protect this country.

[Tulane Skins Fan]

I'm sorry, but claiming I have no grasp on reality by saying I think it's unfair that people who work their asses off goingto school for undergrad. for 4+ years, then medical school for 4+ years (or any professional school for that matter), then residency for 3-6+ years then get the holy hell taxed out of them is ridiculous.

I understand that a lot of people think it's acceptable to tax the "rich" more b/c the "rich" live in nice houses and drive nice cars to pay for social programs for others, I simply don't. The sense of entitlement around here is unbelievable.

P.S. Anyone that "cleans my dad's and other relatives offices" don't have to make appointments for their sick kids or their their sick families. They get seen, no appointment, no charge.

I think we are seeing something called the "bleeding heart conservative."

[Tulane Skins Fan]

Additionally, Obama supporters claiming lower taxes for everyone have yet to mention how Obama is going to lower taxes AND provide his form of universal health care coverage AND protect this country.

by raising taxes on corporations and the rich.

[SkinsHokieFan]

Additionally, Obama supporters claiming lower taxes for everyone have yet to mention how Obama is going to lower taxes AND provide his form of universal health care coverage AND protect this country.

Its a nice election year ploy. Clinton promised a "middle class tax cut" in 1992

Never happened. This won't happen either

[Larry]

Additionally, Obama supporters claiming lower taxes for everyone have yet to mention how Obama is going to lower taxes AND provide his form of universal health care coverage AND protect this country.

Sounds like a great idea for a thread.

People can point out what's wrong with all three of your assumptions.

[GibbsFactor]

Its a nice election year ploy. Clinton promised a "middle class tax cut" in 1992

Never happened. This won't happen either

Wait, so Obama is lying or just hopeful for change?

[SkinsHokieFan]

Wait, so Obama is lying or just hopeful for change?

He is a very gifted politician :laugh:

[Special K]

I think we are seeing something called the "bleeding heart conservative"

???

You don't think the vast majority of teachers, nurses, dentists, physicians and others who spend their lives serving others don't do pro bono work throughout their lives?

by raising taxes on corporations and the rich.

Of course. Because other Americans are entitled to their profits.

[Tulane Skins Fan]

???

You don't think the vast majority of teachers, nurses, dentists, physicians and others who spend their lives serving others don't do pro bono work throughout their lives?

Of course. Because other Americans are entitled to their profits.

Teachers and nurses are in the wealthiest class of individuals in America now?

You STATED that no Obama supporter could explain how he would pay for universal healthcare. There's your answer.

Now, do you want to concede that point and move onto a debate about whether Americans are getting corporates profits somehow?

[Special K]

Its a nice election year ploy. Clinton promised a 'middle class tax cut" in 1992

Never happened. This won't happen either

Of course it's not going to happen.

[Larry]

Of course it's not going to happen.

Then quit complaining about how unfair it will be when it doesn't happen.

[Special K]

Teachers and nurses are in the wealthiest class of individuals in America now?

You STATED that no Obama supporter could explain how he would pay for universal healthcare. There's your answer.

Now, do you want to concede that point and move onto a debate about whether Americans are getting corporates profits somehow?

You missed my point. My point was that a LOT of people in the service industries do a lot of free work to help those in need, b/c that's the kind and good thing to do for your fellow humans.

I just have a problem with people villifying the "rich" and feeling entitled to their money.

Furthermore, no Obama supporter had outright said that's how Obama planned to pay for his universal health care plan but thank-you: entitlement taxes on the rich and corporations. As per the liberal usual

[Tulane Skins Fan]

You missed my point. My point was that a LOT of people in the service industries do a lot of free work to help those in need, b/c that's the kind and good thing to do for your fellow humans.

I just have a problem with people villifying the "rich" and feeling entitled to their money.

Furthermore, no Obama supporter had outright said that's how Obama planned to pay for his universal health care plan but thank-you: entitlement taxes on the rich and corporations. As per the liberal usual

No one has villified the rich.

I think I regular miss your points because they are usually either non-existent or covered in venomous insults like "the liberal usual."

[Special K]

Then quit complaining about how unfair it will be when it doesn't happen.

I'm saying middle class tax cuts won't happen.

That's different from what I'm talking about. I don't think the middle class tax cuts will happen, but I certainly believe the increased taxes on the "rich" and evil corporations will happen.

[JohnLockesGhost]

As for causation, most of the economic literature I've read about this pattern has described it being a very symbiotic relationship. Economic growth causes the percentage of middle class wealth to expand, and that expansion causes economic growth. You could argue for either one being more important. What you cannot argue, however, is that it would be a good idea to try to actively disperse more wealth in an economy towards the top 1%. That is what those who claim that progressive taxation hurts the economy are saying. They are wrong.

Well, I dare say your argument is a bit circular. To quote you: Economic growth causes the percentage of middle class wealth to expand, and that expansion causes economic growth.

I think you should just adjust your argument to be, we want middle-class wealth to expand so we should give them tax breaks. That makes the dispersion of wealth an end unto itself, not the means to the end of economic growth, which a much tougher argument to make.

[Hubbs]

Keeastman, no one here has "vilified" the rich, at least as far as I can remember (and, admittedly, there's no way I can remember every post in this thread). Rather, what's been "vilified" is the notion that the CEO who works hard for his $20 million a year somehow deserves to be taxed at the exact same rate as the single mom who works just as hard for her 11 bucks an hour. What's been "vilified" is the argument that when we as a society decide the we're going to build highways, or we're going to build up the military, or we're going to make education available to every single kid within our borders, the people who have two cars shouldn't pay more for those projects than the people who have to take the bus to work every day. What's been "vilified" is your relatives getting a bit less financial stress so we can give more to people who have gone through all of the school that they have, yet only make 1/4 the money.

It's an unfortunate fact of our bloated federal government that all the money we spend has to come from somewhere. Now, if your solution is "less spending," hey, I'm all for it. Our budget flabbergasts me. But until that happens, we have to get the same amount of money we got last year - more, in fact, given the deficit - from somewhere. And what those who sound like yourself seem to fail to realize is that the taxes are higher on the higher income brackets not because the poorer groups are "jealous" or "feel entitled to their money" or "taking it for themselves," but because if those higher levels aren't taxed at their higher rates, the government has to get a lot more money out of those who have a lot less. And when the choice is getting X amount of dollars from people who live in a house or people who live in a cramped apartment, more is gonna come from the house.

Of course your relatives have worked hard. Most people in their position have. But the next time you're writing out a list enumerating all the ways in which they have successfully not sat on their asses all day, bear in mind that most people in every tax bracket below them could come up with just as intimidating a list.

[Hubbs]

Well, I dare say your argument is a bit circular. To quote you: Economic growth causes the percentage of middle class wealth to expand, and that expansion causes economic growth.

I think you should just adjust your argument to be, we want middle-class wealth to expand so we should give them tax breaks. That makes the dispersion of wealth an end unto itself, not the means to the end of economic growth, which a much tougher argument to make.

That would be how a symbiotic relationship works, wouldn't it? Quite circular.

I don't think my argument needs much adjusting. It's quite simple, really: There is a very strong correlation between a strong economy and the expansion of the middle class' percentage of that economy's wealth vis a vis the top 1%, and an even stronger correlation between the opposite. Some in this thread have said, "Hey, we should build our tax system to make the latter situation more likely to happen, because it's better for the economy." My argument is that that is a very, very stupid position.