More on Tax Cuts (or not for some) OR Just Gifts for Rich

So my last posting had to do with the proposed tax cuts (or not). Personally, I think calling them tax hikes provides the wrong message.

I want to refer to the current plan as tax stasis -- stopping the bleeding of the money from the middle class to the upper class as I outlined in my previous post. We all know that the current economic distress is not affecting everyone equally. The rich got richer and everyone else got poorer.

I’ve heard the following arguments about the current tax proposals:

1. Let the tax cuts stay for everyone
2. Let the tax cuts expire for everyone
3. Let the tax cuts expire only for the rich

I find myself voting for item number 3, and I’ll let you know why AFTER I share why I don’t agree with the first two options.

1. The first option doesn’t make sense to me because the Bush tax cuts have cost $2.1 trillion and with the taxes on that, it actually comes to $2.5 trillion. That tax cut along with the cost of two wars has led us to move from a surplus of $236 billion to where we were at the end of 2009, which is the debt incurred by the passage of the TARP fund.

This just doesn’t make sense for me either because we have to somehow get out of debt, right? So, how are we to get out of debt (as a nation) if there is not an increase in revenue?

I realize that spending cuts are an answer, but not one person in government is actually going to do that. No one wants to cut military spending, which by the way is a very, very big expense. No one dares touch Social Security or Medicare, even those who are against “socialized medicine” (yes Tea Partiers and many Republicans, I’m talking to you). They are just platitudes -- efforts to get re-elected. I’m not saying that Democrats are innocent either. They are wanting to get re-elected as well. (As an aside, I don’t see how Rangel can even contemplate running for re-election -- jerk.)

2. Simply put, it’s a combination of 1 and 3, so read on (please?).

3. Okay, I have many reasons for this one, so many in fact that I had to make a checklist.

        ❑        First of all, they don’t create as many jobs with their surplus money as many would like to argue. In fact, they are more likely to hang on to their money -- to invest it in the markets. If you don’t believe me, then think about what caused the current crisis. It was (partly) a result of people speculating with money to make more money; they didn’t create more jobs with that money. In fact, we can look at what happened during the crisis to see that they (the 2% of the rich, I mean here) did. The government gave them money to help the economy recover. And what did they do? They fired people and subsequently made more money! WTF?!?

                They got richer!

        ❑        Okay, okay.... so here’s another ditty. Some argue that the rich will use that extra tax break to create more jobs. (Did I just list that above? Oh, I must be trying to make a point here.) Even though I’ve partly shown that they don’t do that, here is something to get you thinking: did you know that someone who makes $500,000 -- and when I say that they make this, I am talking about taxable income, not gross income -- will pay about $10,000 more in taxes if the cuts expire? How many people does that employ fulltime? None? Oh, okay. Just checkin’. If you want to plug in your numbers, go here: http://www.mytaxburden.org/. You can check my math as well. If you take into consideration tax write-offs, etc. you can see that someone who clears $500,000 is making some change there. And this bears repeating: they don’t save enough in taxes to create but one part-time job.
        
                So to tell me that they will create new jobs is absolute bunk.

        ❑        I’ve heard some say, “Well, it’s not fair to punish them. Shouldn’t they be able to keep their money to make more?”

                What kind of logic is that? Let me recap for just a bit before I continue: they got rich off of us! It’s that simple.

        ❑        There’s more. Here is part of how they got rich: they took their cash overseas! Got that? In an economy where they have “Bush tax cuts” they are taking their money out of the U.S. They aren’t reinvesting that money in our economy, they aren’t creating jobs with it, and they aren’t paying more in taxes.

        ❑        So let’s continue with why I vote for number 3. We find out that about anywhere from 21% to 30% of people who make around $100,000 / year are living paycheck to paycheck (depending upon which source you consult). The proposal currently being floated is to let the current rates expire for those who make (those who clear) $250,000, and that is 2% of the population. That is the population that most likely benefitted from the crisis, that is the population that least needs the tax break, that is the population that is sending our money overseas. Those who make less than $250,000 could use that extra money, just to make it to the next paycheck.


Any questions about why I think we should let the Bush tax gift for the rich expire and keep it for everyone else?

I didn’t think so.

Comments welcome below.