Could it be true that tax cuts DO spur economic growth? - Page 5 - Mercedes-Benz Forum

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post #41 of 76 (permalink) Old 02-13-2007, 12:48 PM
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When I get to be Exalted, Dread Ruler of planet Earth, I'm going to do away with all individual income tax, all corporate taxes and all deductions. I would shift the burden entirely to consumption -- you buy something (goods or services) you pay taxes. You're a miserly bastard starving Bob Cratchet & Tiny Tim? No taxes.

B
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post #42 of 76 (permalink) Old 02-13-2007, 12:50 PM
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Originally Posted by mcbear
The thing with Corporate profits is that they spread the costs [taxes] over only those who buy [much like a sales tax] but they also bring in overseas monies from profits realized by foreign divisions and groups. This is one element that keeps trade deficits from getting further out of control.

So when Deathrattle buys a printer from Lexmark or HP, we get a bit of the money back, albeit, a "trickle down" as it were.
Only if Lexmark doesn't have a European division. For companies of a size significant enough to make even the slightest dent in the economy, overseas sales don't result in American tax revenues.
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post #43 of 76 (permalink) Old 02-13-2007, 12:50 PM
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Originally Posted by Botnst
When I get to be Exalted, Dread Ruler of planet Earth, I'm going to do away with all individual income tax, all corporate taxes and all deductions. I would shift the burden entirely to consumption -- you buy something (goods or services) you pay taxes. You're a miserly bastard starving Bob Cratchet & Tiny Tim? No taxes.

B
Why do you hate poor Americans? What did they do to you?
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post #44 of 76 (permalink) Old 02-13-2007, 12:53 PM
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Originally Posted by QBNCGAR
Only if Lexmark doesn't have a European division. For companies of a size significant enough to make even the slightest dent in the economy, overseas sales don't result in American tax revenues.
True, It matters some [hence my "little bit"] but it mainly accounts for the medium sized guys that are big enough to play overseas but small enough to have to pay all US taxes. When I did a contract for BBC in 95-97 US Treasury got all my, and the company's tax money and that of my little team.

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post #45 of 76 (permalink) Old 02-15-2007, 03:45 PM
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I think this counts as one of those indicators thingies:

Housing Sales Drop in 40 States

Feb 15 3:44 PM US/Eastern


By MARTIN CRUTSINGER
AP Economics Writer


WASHINGTON (AP) -- The slump in housing deepened in the final three months of last year with sales falling in 40 states and median home prices dropping in nearly half the metropolitan areas surveyed.
Formerly red-hot areas were among the hardest hit as the five-year housing boom cooled considerably in 2006.

While some economists said they believed the worst may be over for housing, others predicted more price declines to come until near- record levels of unsold homes are reduced.

The National Association of Realtors said the states with the biggest declines in sales from October through December compared with the same period in 2005 were: Nevada, down 36.1 percent; Florida, down 30.8 percent; Arizona, down 26.9 percent; and California, down 21.3 percent.

In all, the Realtors said sales declined in 40 states, six states showed gains and one state, Utah, had no change in activity in the final three months of last year. There was not enough information from Idaho, New Hampshire and Vermont to make a comparison.

Nationally, sales declined by 10.1 percent in the fourth quarter compared with the same period a year ago. The national median price _ the point where half sell for more and half sell for less _ fell to $219,300, down 2.7 percent from the fourth quarter of 2005.

In all, median home prices fell in 49 percent of the 149 metropolitan areas surveyed, the largest percentage of areas showing price declines in the 27-year history of the Realtors' price survey.

A total of 73 metro areas had price declines from a year ago while 71 areas had increases. Five metro areas reported no change.

The price declines were led by an 18 percent decline in the Sarasota- Bradenton-Venice area of Florida. The city with the biggest price gain was Atlantic City, N.J., where the median home price was up 25.9 percent in the fourth quarter.

David Lereah, chief economist for the Realtors, said he believed the report would represent the low-point in the current housing slowdown.

"When we get the figures for the spring, I expect to see a discernible improvement in both sales and prices," he said.

But Mark Zandi, chief economist for Moody's Economy.com, predicted that home prices in many parts of the country would continue to be under pressure for the rest of this year as the market works through still large inventories of unsold homes.

He said this process will be made more difficult with banks raising lending standards because of concerns about rising mortgage default rates.

"The price declines we are seeing are extraordinarily broad-based and just symbolize how significant a price correction we are in," Zandi said.

"We are seeing the declines concentrated in the industrial Midwest, where the job market is a mess due to the layoffs in the auto industry, and in markets such as Florida and California" where a heavy influx of speculators had bid up prices, Zandi said.

Before 2006, housing enjoyed a lengthy boom with sales of both new and existing homes setting records for five straight years. Buyers were attracted by the lowest mortgage rates in more than four decades.

But big declines in sales and construction last year turned housing from one of the economy's stars to a major drag, which subtracted more than a percentage point from overall growth in both the third and fourth quarters.

The Realtors' survey showed that sales were down in every region in the fourth quarter while prices fell everywhere except the West.

The fourth quarter decline in prices was led by a 4.2 percent drop in the Midwest, followed by a 3.7 percent decline in the South and a 2.5 percent fall in the Northeast. Prices were up by 0.4 percent in the West.

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post #46 of 76 (permalink) Old 02-15-2007, 03:54 PM
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This might be considered another one:

Manufacturing: Biggest drop in 16 months
Output sinks 0.5 percent on weakness in autos in largest decrease since September 2005.
February 15 2007: 12:17 PM EST


WASHINGTON (Reuters) -- Industrial output unexpectedly plunged 0.5 percent in January as a big drop in manufacturing, particularly vehicles and parts, more than offset a rebound in utilities, a government report said Thursday.

"Output in the manufacturing sector declined 0.7 percent in January; about one-half of the decrease was a result of a drop of 6.0 percent in motor vehicles and parts," the Federal Reserve said in its monthly report.



This was the biggest drop in overall output in more than five quarters, or since a 1.6 percent decline in September 2005.

The drop in production pushed capacity use of factories, mines and utilities down to 81.2 percent, its lowest level in nearly a year.

Analysts polled by Reuters had predicted industrial output would be flat in January as manufacturers worked down inventories. They also predicted a smaller decline in capacity use to 81.7 percent from an unrevised 81.8 percent the prior month.

Utility output grew 2.3 percent in January as temperatures returned to more normal levels, after a 2.7 percent drop in December, the Fed noted.

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post #47 of 76 (permalink) Old 02-16-2007, 09:05 AM
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CLEAR EXPLANATION OF TAX CUTS

Sometimes politicians, journalists and others exclaim; "It's just a tax
cut for the rich!" and it is just accepted to be fact, without
questioning it. But what does that really mean? Here's a simple example
------------------------------------------------------------------------

Let's put tax cuts in terms everyone can understand. Suppose that
every day, ten men go out for beer and the bill for all ten comes to
$100.

If they paid their bill the way we pay our taxes, it would go something
like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the
arrangement, until on day, the owner threw them a curve.

"Since you are all such good customers," he said, "I'm going to reduce
the cost of your daily beer by $20."Drinks for the ten now cost just
$80.

The group still wanted to pay their bill the way we pay our taxes so
the first four men were unaffected. They would still drink for free.
But what about the other six men; the paying customers? How could they
divide the $20 windfall so that everyone would get his 'fair share?'
They realized that $20 divided by six is $3.33. But if they subtracted
that from everybody's share, then the fifth man and the sixth man would
each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's
bill by roughly the same amount, and he proceeded to work out the
amounts each should pay.

And so:

The first four men (the poorest) would still pay nothing.
The fifth man, like the first four, now paid nothing (100% savings). The
sixth now paid $2 instead of $3 (33%savings). The seventh now pay $5
instead of $7 (28%savings). The eighth now paid $9 instead of $12 (25%
savings). The ninth now paid $14 instead of $18 (22% savings). The tenth
now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four
continued to drink for free. But once outside the restaurant, the men
began to compare their savings. "I only got a dollar out of the
$20,"declared the sixth man. He pointed to the tenth man," but he got
$10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar,
too. It's unfair that he got ten times more than I!"

"That's true!!" shouted the seventh man. "Why should he get $10 back
when I got only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get
anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up. The next night the
tenth man didn't show up for drinks, so the nine sat down and had beers
without him.
But when it came time to pay the bill, they discovered something
important. They didn't have enough money between all of them for even
half of the bill!

And that, boys and girls, journalists and college professors, is how
our tax system works. The people who pay the highest taxes get the most
benefit from a tax reduction. Tax them too much, attack them for being
wealthy, and they just may not show up anymore. In fact, they might
start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, PhD
Professor of Economics
University of Georgia
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post #48 of 76 (permalink) Old 02-16-2007, 10:25 AM
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Look, I don't oppose tax cuts as a rule, for the rich or anyone else, because I keep climbing up the tax brackets as I get older. That said, this article oversimplifies a topic that doesn't even start off being all that complex.

There is a minimum, fixed cost of living in this country. The bare-minimum necessities for a person who isn't impoverished consume a far higher percentage of their income than do the costs of living for the rich. Beyond that, both the relative and absolute amounts of 'discressionary income' that remain after paying one's cost of living are far less for the "first four men" in the oft posted but rarely disputed text from Dr. Kamerschen.

When you're in the richest 10% of the American Population, $59 is a pittance. $590 is a pittance. Money simply isn't an object - these are people who shop places where if you have to ask how much it is, you can't afford it. I know such people. Believe me - they do everything the government allows to reduce the amount of taxes they pay.

Personally, while I'm firmly in the 28% bracket, my effective federal tax rate for the past 6 years has been just above or below 10%...I have one child; my home and a rental property are both mortgaged (for the tax benefits). That's it. There are literally hundreds of investments and legal, IRS-approved, federally developed shelter mechanisms that allow people of means to keep vast amounts of what they earn. Ideally, you get to a point where your tax liability is 0% - many do.

Tax cuts "for the rich" are about as meaningful an activity for our congress as is hiking the minimum wage. It amounts to little more than pandering to one's base. It's symbolic, nothing more.

Fortunately, a significant mechanism the "rich" use to reduce their tax liability is by making charitable donations...lots of them. Frankly, it's probably more efficient for private citizens to fund charities and take the tax breaks as it is for the government to collect taxes and put them into overlapping public programs.

Either way, all the taxes paid by all the people in the country only amount to about 1/3rd of the federal budget. The other 2/3rds come from "corporate taxes", which is to say, money corporations collect from you in the form of higher prices & miscellaneous fees, then pass along straight to Uncle Sam. Any tax cuts we as individuals get is akin to putting a band-aid on a sucking chest wound.
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post #49 of 76 (permalink) Old 02-16-2007, 10:44 AM
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Quote:
Originally Posted by QBNCGAR
Tax cuts "for the rich" are about as meaningful an activity for our congress as is hiking the minimum wage. It amounts to little more than pandering to one's base. It's symbolic, nothing more.

Fortunately, a significant mechanism the "rich" use to reduce their tax liability is by making charitable donations...lots of them. Frankly, it's probably more efficient for private citizens to fund charities and take the tax breaks as it is for the government to collect taxes and put them into overlapping public programs.
Amen!
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post #50 of 76 (permalink) Old 02-16-2007, 12:42 PM
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Quote:
Originally Posted by Botnst
When I get to be Exalted, Dread Ruler of planet Earth, I'm going to do away with all individual income tax, all corporate taxes and all deductions. I would shift the burden entirely to consumption -- you buy something (goods or services) you pay taxes. You're a miserly bastard starving Bob Cratchet & Tiny Tim? No taxes.

B
When the election for Plantetary Poobah takes place, you will have my vote.

Or at least I will willingly submit to your treachery.
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