I am winging my way home from Canada, flying over Minnesota into Wisconsin. I am catching up with some reading, but I had to comment on all the  Sturm und Drang about the expiration of the Bush Tax “cuts.”

A few thoughts:

Temporary Stimulus: These tax cuts were passed as temporary tax cuts to stimulate an economy coming out of a recession. (At least, that was the sales pitch). As I have noted in these pages, that is appropriate government recession policy: Stimulate now, reduce deficit later. Of course, if these were really geared towards that purpose, they should have expired after 3 years or so.

Inherent Gimmick: When a sunset provision is used to obscure how much tax cuts actually cost, you have a marketing gimmick Now, because of that precise gimmick, they are about to go away. Lesson to future administrations: If you really want permanent tax cuts, well, then you should pass, um, permanent tax cuts. And if you cannot sell an expensive tax cut to the public, perhaps that might be telling you something…

Unfunded Tax Cuts: You will note that the I have the word “Cuts” in quotes. Why? To quote Milton Friedman, “When is a tax cut not a tax cut? When the so-called tax cut is accompanied by a larger rise in government spending than in prices.” In other words, all unfunded tax cuts — including these — are actually future tax increases on the next generation.

Offsetting Spending: Of course, if the tax argument wasn’t a debate between cowards on one side and liars on the other, we would actually be discussing, as per Friedman, what spending to cut: Entitlements, Military, Education, etc.  Don’t hold your breath waiting for that healthy debate to take place.

~~~

Any thoughts on this subject ? (Note that I have only discussed facts, not my opinion about whether this should stay or go . . . )

>

UPDATE: July 26, 2010 9:33pm

Since 43 of you have sent me the same chart . . .

Category: Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

86 Responses to “Some Thoughts on the Bush Tax “Cuts” Expiration”

  1. Please stay fact based.

    Keep your lizard brain at bay, avoid the silly partisanship I so detest

  2. Jack Damn says:

    Good points, Barry.

    f you really want permanent tax cuts, well, then you should pass, um, permanent tax cuts.

    In other words, all unfunded tax cuts — including these — are actually future tax increases on the next generation.

    Exactly.

  3. FrancoisT says:

    Barry,

    Please do me a favor (Yes! I already did it myself, but I’m just a Joe Nobody you know.)

    Send this post to John Mauldin; he’s been twisting himself in knots whining about how bad the economy will be if they let the Bush tax cuts expire. It is so bad that I stopped reading his letter, which I used to enjoy for years.

    Thank you Barry.

  4. Machiavelli999 says:

    “Note that I have only discussed facts, not my opinion about whether this should stay or go . . . ”

    There is your problem right there Barry. What you don’t get is that the conservative viewpoint is based on the following “fact”:

    - Tax cuts pay for themselves

    Now that has been proven wrong 100 times over, but just like with the “CRA caused the housing crisis” it doesn’t matter. People will believe what they want to believe. And they want to believe that tax cuts pay for themselves.

    The real question is why are people so reluctant to accept facts and so easily buy into the “conservative” point of view, especially recently? I have an opinion and I don’t expect anyone to agree with me here, but I think ultimately the racial divisions in our country still run deep and continue to affect policy in adverse way. Ultimately the majority of white Americans believe that most of the deficit is due to the government giving stuff away to lazy blacks. In fact, I’m certain that that’s the case.

    And from there, they find a sympathetic ear in the Republican party and hop on for whatever ride they take them.

  5. Mannwich says:

    Great post, BR.

  6. Mannwich says:

    @Machiavelli999: I don’t necessarily disagree with that. It’s an interesting theory, although I don’t believe it can be proven.

  7. tawm says:

    Thank you, BR, for specifically calling out the needed debate on cutting spending. When I read yoru first point “Stimulate now, reduce deficit later” I immediate got upset because “later” never comes. But the pols are on both sides are screwing the future.

  8. Gatsby says:

    When the future federal government (be it Democrat or Republican at the time) is forced to introduce a national consumption tax to fund its liabilities, I wonder what the perspective of the current dilema will be?

  9. FrancoisT says:

    “Any thoughts on this subject ?”

    The obvious first item in dire need of a cut is (not “should be”) the military. Consider this:

    http://theburningplatform.com/blog/2010/07/22/why-we-need-a-3rd-party-in-2012/

    When George Bush took office in 2000 the annual Defense (funny name) Budget was $380 billion. Since that date CPI has increased 25%. On an inflation adjusted basis, the Defense Budget should be $475 billion today.Essentially we are paying an additional $420 billion PER YEAR to fight the phantom WAR ON TERROR. This is nothing but a fraud perpetrated by the neo-cons and now the neo-liberals. My plan is to declare victory in the War on Terror. No one knows what victory means anyway. Withdraw ALL the troops from the Middle East, Germany, Japan and Korea. Let them blow themselves up if they want. Not our problem. Germany, Korea and Japan can pay for their own defense. Tell the Pentagon they have $475 billion to allocate and not a dime more for the next 10 years. SAVINGS = $420 billion

    It goes without saying that, since both parties have their dirty paws all over the military budget, it’ll take a sea change to do what this guy suggest. There are too many criminals, senators (gee! I’m repeating myself), profiteers (oops! I did it again!) and money at play.

    Think I’m exaggerating? Take a look at behaviors that gives moral depravity a bad name:

    http://www.huffingtonpost.com/winslow-t-wheeler/support-our-troops-the-se_b_314393.html

    Of course, the Nazional Sekurity Staten hacks will scream that all this money is needed, since we are “winning” the war.

    Do we, really?
    http://www.huffingtonpost.com/2010/07/25/afghanistan-war-logs-wikileaks_n_658660.html

    Again, have a look at the evidence (many more links at post) summarized by The Guardian:
    http://www.guardian.co.uk/world/2010/jul/25/afghanistan-war-logs-military-leaks

    The whole shebang can be found here:
    http://wikileaks.org/wiki/Afghan_War_Diary,_2004-2010

    But again, as the WaPo’s serie on the exponential growth of the national security state clearly expose, there is so much good ol’ taxpayer money to be stolen that neither political party shall show the necessary kahunas to stop this descent into madness.

  10. Robespierre says:

    Machiavelli999 Says:

    “but I think ultimately the racial divisions in our country still run deep and continue to affect policy in adverse way. Ultimately the majority of white Americans believe that most of the deficit is due to the government giving stuff away to lazy blacks. ”

    Interesting but I think something different is at play. Most Americans actually believe that this is the land of opportunity and anyone can become rich by working hard and honestly. Based on that premise Middle class American (regardless of color) will tend to identify themselves with the rich as they see themselves as rich in the making. To keep this fallacy going, encouragement is needed. It is no longer sufficient to have the masses believe that all can achieve immense success in their lifetime, they must also feel they are getting there. Easy credit for instance achieves that. The forever increase value of their “assets” (homes) and the continuous mantra of buy buy buy also comes into play as a wealth effect.

  11. philipat says:

    Ricardian equivalence notes that, especially beyong 80% Debt to GDP, further stimulus either makes no difference or is even a negative. The US took the Japanese routre with the Banking system and look where it got Japan, over 200% debt to GDP and still stimulating away. Oh to be in Vienna.

  12. whskyjack says:

    Well according to my econ 101 class I took mumblemumble years ago it doesn’t matter if it is a tax break or government spending when it comes to a stymulus. just as long as the money get in circulation.

    But our world has gotten wacky with it’s tax structure, when the construction side of my business is taxed at 30% and the rental side around 15 or even less.

    Jack

  13. withere says:

    The government has proven itself unwilling to cut spending in any area of significance. What other attitude towards tax hikes should john q public take besides being against higher taxes under any condition? Unlike you and Krugman, I see our government as the tax burden being placed on our children. Is there any other way to reduce the size of the beast besides reducing it’s cashflow?

  14. jeg3 says:

    Let the tax cuts expire. Certain groups always bring up that the Kennedy tax cuts did wonders for the economy, but I think the tax rates were at about 90%, so maybe first we have to raise them to that level.

    The CEPR Deficit Calculator
    http://www.cepr.net/calculators/calc_deficit.html
    How low can you go.

  15. SteveC says:

    Here’s a quote from 2003: “The Bush administration argues that a war against Iraq is destined to be short and relatively inexpensive, so there is no risk in cutting taxes. The new Treasury Secretary, John Snow, says the war will be small, that we can afford it and then put it behind us”. Draw your own conclusions.

  16. whskyjack says:

    I forgot to add the construction side will even hire people, the rental side doesn’t need to. Althought lately this is a one man business.

    Jack

  17. Graphite says:

    If we’re looking for spending to cut we could always start with the ongoing FIRE bailouts (GSE and corporate debt backstops, home vendor tax credits, etc).

  18. Marc P says:

    The thing that is curious to me about the “tax cuts” is that the government’s tax revenues didn’t go down. They went up every year of the past decade. I’ve always wondered who paid less, but it sure as hell wasn’t the American taxpayer as a whole.

  19. toddie.g says:

    I call bullshit on the Bush tax cuts actually having stimulated the economy and created a lot of jobs. I would bet that most of the job creation from 2002-2005 was due to the credit/housing bubble. Aside from that artificial job creation, is there any empirical proof that those tax cuts created much of any jobs? If that’s the case, then is it reasonable to assume the sunsetting of the tax cuts would cause job losses?

  20. franklin411 says:

    Ezra Klein has an awesome graphic showing what happens if the Bush Tax Cuts are made permanent. With the Bush Tax Cuts, the national debt will soar to nearly 225% of GDP by 2050. Without it, the debt will still be 100% of GDP. However, what Mr. Klein forgets is that debt incurred as a result of taking in less revenue is not really “debt,” in that it benefits the people who really count in America–the very rich.

    http://voices.washingtonpost.com/ezra-klein/2010/07/republicans_blame_democrats_fo.html

  21. Mannwich says:

    @f411: And many of these same folks who are literally begging to have these tax cuts extended have been literally screaming about the deficit for months now and how it’s such an enormous problem that needs to be addressed. What utter disengenuous hogwash on their part. It’s almost comical how dishonest some of these people can be.

  22. Mannwich says:

    And it’s obvious that’s why for the GOP, the deficit is not even OK, but almost a necessity if it’s there to fund two, maybe three, primary things: (1) Wall Street, corporate behemoths and the uber-rich, (2) the military industrial complex and any military adventure that makes them uber-wealthy at everyone else’s expense, (3) tax cuts for all of the above.

  23. super_trooper says:

    @franklin411, “With the Bush Tax Cuts, the national debt will soar to nearly 225% of GDP by 2050. Without it, the debt will still be 100% of GDP.” Oh really. Economists barely know how much the debt will in 5 years. Remember 10 years ago when Bush and Gore were discussing the projected TRILLIONS in surplus. Gore wanted it spent on Social Security “lock box” and Bush wanted tax cuts. So who cares about year 2050? Sadly most of the commenters here will be dead by then.

  24. mochoajr says:

    Three things:
    1. I don’t think letting the Bush Tax Cuts are going to cripple the economy. Is the top rate going from 36 to 39% going to derail it?

    2. Bigger question is how high will they have to go in the future or what new ones is the economy is going to be facing down the line.

    3. Spending cuts will be forced upon the government. Question is, what will be the straw that breaks the camel’s back.

  25. jeff in indy says:

    i believe super has touched on it. tax cuts, no tax cuts; spending cuts, no cuts; who’s trying to screw who with my money. as an average schmoe in middle america trying to make a modicum of sense of this, i’m of the opinion that the numbers have become so large, the dynamics so vast that no one really knows what to do.

    and a recent telling sign was on helo ben’s first day of market tanking testimony. he didn’t even need to make his “unusually uncertain” comment, it was written all over his face. i thought he was either about to break down and cry or stand-up and throw in the towel. then the markets found religion in some earnings the next day and kidded themselves that, once again, everything is hunky dory.

    and ya wonder why the populace bounces all over the map. .. where’d all the smart guys go?

  26. Cult of Reason says:

    I’m a republican who believes in personal responsibility, limited government, and low taxes.

    I do not mind for the Bush taxes to expire as long as the funds will be used to reduce the deficits, but I’m afraid that similar to the $787B so called “stimulus package” the funds will be used as the transfer payments to Obama supporting and taxpayer blood-sucking government unions.

    Yes, letting the Bush taxes to expire will slow growth, but it is the lesses evil than doing nothing about the gigantic deficits.

  27. @withere Says: July 25th, 2010 at 10:27 pm

    The government has proven itself unwilling to cut spending in any area of significance. What other attitude towards tax hikes should john q public take besides being against higher taxes under any condition?

    Yes! That was very well put

  28. alfred e says:

    @BR:

    “Offsetting Spending: Of course, if the tax argument wasn’t a debate between cowards on one side and liars on the other, we would actually be discussing, as per Friedman, what spending to cut: Entitlements, Military, Education, etc. Don’t hold your breath waiting for that healthy debate to take place. ”

    I call BS. Is that comment sirloin steak or maggots? Sounds like you’re interested in drawing lines in the sand: cowards and liars. Which side is which? OK, I get it. But cowards and liars are not mutually exclusive. I would say they are most likely one and the same.

    Interesting list of spending categories to cut.

    If you have the right definition for Entitlements I might agree. I met someone today that totally enlightened me. There are people in their twenties drawing social security for “depression”. Excuse me? When did we evolve to that?

    If your definition includes denying people benefits they payed for years in advance, I definitely disagree.

    So why exactly did Wall Street walk away with more fed subsidies than Social Security will ever see?

    Education spending at the Fed level has definitely been a waste for decades. No doubt.

    OK. I will apologize now. It’s been a very interesting day on the BR ranch.

    Guess we crystallized a very hot button. And maybe a few learned something.

    Steak or maggots?

  29. DL says:

    Cult of Reason @ 11:50

    Agree with everything you wrote. Couldn’t have put it better myself.

  30. DL says:

    More succinctly:

    Starve the Beast.

  31. dsawy says:

    None of the talk about tax cuts vs. deficits matters.

    Because the issue with our deficits is spending. The talk of tax cuts vs. deficits is more silly partisan nonsense.

    As we have seen, both the the 80′s and ’00′s, the tax cuts were not met with attending spending control. Tax revenues have not fallen off and been the reason for deficits exploding. Spending expansion has been the cause of deficits.

    Now we have a Congress that is perfectly happy to run $1.4+ trillion deficits.

    We now have a Congress that shows such reckless abandon that they won’t even pass a budget.

    In this environment, it doesn’t matter whether the tax cuts expire. Let’s assume they do and further assume (and it is only an assumption) that more tax revenue comes in, the Congress has shown that they’re perfectly content to spend more.

    Let’s push the analysis: Let’s say we could wave a magic wand and double tax revenues overnight. I’m not saying that there is any tax system in existence that could deliver this result, I’m just saying, for the sake of argument, that we could snap our fingers and double tax revenues in one year.

    Does anyone here honestly believe that at the end of the next year that we would not still be running a deficit? Does anyone here believe that the Congress would use the windfall in tax revenues to pay down existing debt?

    If you do, I have some beachfront property in Kansas to sell you.

  32. the Revenue question is disingenuous, only serves to Frame the ‘debate’ away from the more serious issue: Spending.

    Spending, of course, and the phony ‘Leadership’ we’ve been entreated..

    “House Democrats pass ‘budget enforcement resolution’ by 215-210
    By Walter Alarkon – 07/01/10 08:40 PM ET

    House Democrats passed a budget document Thursday that sets discretionary spending at levels below those proposed by President Barack Obama but doesn’t address how Congress should cut deficits…”
    http://thehill.com/homenews/house/106905-house-democrats-pass-budget-enforcement-resolution

    “…But unlike traditional budget resolutions, this year’s version doesn’t detail how Congress should reach that goal, leaving those tough decisions to Obama’s bipartisan fiscal commission.

    “While this resolution does not project the budget out over five years, it does look to the future by assuring that the House will have an opportunity to vote this year on longer-term budget proposals made by the president’s Fiscal Commission and approved by the Senate,” said House Budget Committee Chairman John Spratt (D-S.C.).

    The budget measure passed on a 215-210 vote as part of a rule setting debate on a supplemental spending bill for the Afghanistan and Iraq wars…”
    ~~~
    BR gets toward it, here “• Offsetting Spending: Of course, if the tax argument wasn’t a debate between cowards on one side and liars on the other, we would actually be discussing, as per Friedman, what spending to cut: Entitlements, Military, Education, etc. Don’t hold your breath waiting for that healthy debate to take place.”

    and, given the ‘leadership’ (“We’ll have to Pass it, to know what’s in it.”), this: “Don’t hold your breath waiting for that healthy debate to take place.”, is the safest bet.

    ~~
    Keep it Simple: “Defund to Defend.”

    http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=We%27ll+Have+to+Pass+it%2C+to+know+what%27s+in+it
    some of this stuff..you, just, can’t make up

  33. Darmah says:

    The tax “cuts” should expire. They were incredibly damaging to this country. They wiped out the surplus; did nothing toward job creation; and expanded the gap between the rich and the middle class.

    As for “Government is the problem,” and its corollary “Starve the beast,” these are nice rhetorical points. As a belief and a remedy, they are pretty weak. Especially if the counter is the “free market,” which has shown its true colors over the past 10 years.

    I’m all for limited government but most of the proposals for making government smaller that I hear are crap.

  34. arogersb says:

    Did you see this report?
    http://thenewelite.wordpress.com/
    The wealthiest 10% of the American population, accounts for half of all retail sales, 70% of all profit margins at retail and 80% of all non-retirement account assets.”
    What do you think a tax hike will do on consumer spending?

  35. Cult of Reason says:

    @ Darmah, Re: “Especially if the counter is the “free market,” which has shown its true colors over the past 10 years.”

    Who’s to blame for the mortgage mess and the economic crisis? Greenspan? “It’s all Bush’s fault”? Republicans? Democrats? Free markets? Or too much government intrusion into the private sector?

    Judge for yourself who is the problem (unfortunately the same guilty and corrupt ______ were given even more power)
    http://www.youtube.com/watch?v=_MGT_cSi7Rs
    (make sure you listen to Bill Clinton commenting on the financial crisis at the end)

    “In this present crisis, government is not the solution to our problem; government is the problem.”
    – Ronald Reagan addresses the nation.
    http://www.youtube.com/watch?v=RmUJY5EugcM

  36. BR,

    you had posted “Part I” of this, from Charles Hugh Smith, “The Con of the Decade, Part II”

    Part I http://www.oftwominds.com/blogjuly10/con-of-decade07-10.html

    Part II http://www.truthistreason.net/the-con-of-the-decade-part-2

    Summation: “…The last step of the con is to raise taxes on the productive peasantry to provide the revenues needed to pay the Plutocracy its interest on Treasuries. If the “Bush tax cuts” are repealed, the actual effective rates paid on unearned income will remain half (20%) of the rates on earned income (wages, salaries, profits earned from small business, etc.) which are roughly 40% at higher income levels.

    The financial Plutocracy will champion the need to rein in Federal debt, now that they have raised the debt via plundering the public coffers and extended ownership over that debt.

    Now the con boils down to insuring the peasantry pay enough taxes to pay the interest on the Federal debt–interest which is sure to rise considerably. The 1% T-Bill rates were just part of the con to convince the peasantry that trillions of dollars could be borrowed “with no consequences.” Those rates will steadily rise once the financial Power Elites own enough of the Treasury debt. Then the game plan will be to lock in handsome returns on long-term Treasuries, and command the toady politicos to support “austerity.”

    The austerity will not extend to the financial Elites, of course. That’s the whole purpose of the con. “Some are more equal than others,” indeed.”

  37. wunsacon says:

    MEH, I would like to cut spending. But, after doing nothing but deficit-spending the prior 8 years, the opposition must tell us exactly what they’ll cut before they get my vote. Unfortunately, all I hear from the opposition leaders is white noise.

    arogersb, replace the Bush tax cuts with tax cuts for the poor. The poor spend more of their income. So, every dollar “lost” from the spending by the wealthy will more than be made up by the increased spending by the poor. (Naturally, you agree with my idea. Right?)

  38. davecjohnson says:

    Barry, why do you call Democrats cowards for not cutting spending, unless you mean military. People WANT infrastructure, schools, courts, and programs that help the people. Republicans cut tazes on the rich and then started repeating “Now Dems have to do their part and cut services for working people.” WHY should anyone fall for that nonsense?

    Also, the Republican argument for months has been that stimulus doesn’t do anything for the economy, and that “the markets” want to see deficits cut. This is the fastest pivot I’ve seen in a long time.

    jeg3, the Kennedy tax cuts didn’t do anything for the economy — all they did was begin the train of deficits.

  39. Apinak says:

    Everyone should go back and read Krugman’s book “Fuzzy Math.” It is short and an easy read.

    He wrote it soon after Bush was elected and was promising that we could implement his tax cuts and still have a $1 trillion surplus. Krugman went through all the lies in this proposal and all the reasons this was going to blow a hole in the deficit. As with Iraq and the financial crisis, these huge deficits were predictable and predicted.

  40. Apinak says:

    I thought Bruce Bartlett’s interview in the Economist was right on the money on this issue and others.

    http://www.economist.com/blogs/democracyinamerica/2010/07/bruce_bartlett_deficit_economy_and_vat
    Some quotes-

    “I would add that I do disagree with the Republican fixation on taxation. Federal taxes as a share of GDP are at their lowest level in two or more generations—14.9% versus a postwar average of 18.2%. There is not one iota of evidence that the economy is suffering from excessive taxation and no evidence that the sorts of tax cuts favoured by Republicans—mainly tax cuts for the wealthy—would do any good given the nature of the economy’s problems. ”

    “The monumental hypocrisy of the Republican Party is something amazing to behold. And their dimwitted accomplices in the tea-party movement are not much better. They know that Republicans, far more than Democrats, are responsible for our fiscal mess, but they won’t say so. And they adamantly refuse to put on the table any meaningful programme that would actually reduce spending.”

  41. M says:

    Good grief. It’s all so easy. Given that tax cuts pay for themselves. Infinitesimally small taxes should provide infinite tax revenue. We can have a military empire, social security, a balanced budget and the rest but only if we have lower taxes. The math is simple, it’s the axioms that are tricky.

  42. Jojo says:

    Here is an interesting article on the subject:
    =======
    Political Calculations
    July 12, 2010
    Tax Gouging the Poor and the Middle Class

    In 2003, Congress enacted across-the-board cuts in the tax rates paid by all income earners in the U.S. that are set to expire at the end of 2010. Many have been expecting that the current Congress would act to keep tax rates where they were set for those at the lowest end of the income spectrum, while letting rates go back to their pre-2003 levels for those at the highest end.

    What if they’re wrong and the current Congress chooses not to act? After all, it’s not like they’re going to get around to passing a budget in 2010, so why not also take another pass on the opportunity to keep tax rates low?…

    That’s the possibility we’re looking at today in considering what the raw impact would be if, rather than reining in excessive spending, the 111th United States Congress instead opts to attempt to reduce the annual federal government budget deficit by doing nothing to stop all the 2003 tax rate cuts from expiring.

    What-If Tax Collections vs Household Adjusted Gross Income, Using 2005 U.S. Income Distribution, $0 to $500,000 Our first chart shows where the greatest impact will fall, assuming the tax rates for single taxpayers. Here, we find that individuals earning between $34,000 and $172,800 in 2010 U.S. dollars would collectively be compelled to pay the largest portion of the increase in tax collections that will result from the expiration of the 2003 tax cuts.

    http://politicalcalculations.blogspot.com/2010/07/tax-gouging-poor-and-middle-class.html

  43. Hey You says:

    Who cares about taxes?? Only stupid people work at jobs that put capital at risk or punish success with taxes… Get a government job so all the benefits accrue and there is 100 percent job security.

  44. dougc says:

    In order tp justify the Bush tax cuts they had to redefine a resession from”2 quarters of negative real GDP growth” down to an arbitrary “significant slowdown”. By this definition we are in a recession now.

    Republicans need to smarten up, imagime a political ad; corrupt financial CEOs sitting on piles of taxpayers money holdimg up their bonus checks with the caption “Republicans want a tax cut for them”

  45. peachin says:

    Of course anything that Bush/Cheney put across the table – was geared toward their friends, which if you remember the videos, he talked for the wealthy, worked for the wealthy and was their Bitch. What happens to an old bitch….? How the Estate Tax got a 1 year freebie is outrageous. There is nothing wrong with a 70% highest tax rate for earned (earned!) in excess of $1million – ties in nicely with the adjustment to corporate taxes for wages in excess of $1Million. Scratch a $1million wage earner and you’ll probably find a fully Made up Whore – let’s say a 70% rate as an excise tax for whores…

    While we add this insult to the american public – let’s just Tax GS out of business – and support the executives in one of our nicely appointed federal prisons.

    Got to get my 2nd cup of coffee – I’m already pissed off and it is 4am out here in the west.

  46. Patrick Neid says:

    Ahh, the fabled “sunset provisions”. The favorite tool of the New Deal.

    I say let the taxes expire just for shits and giggles. We are at that stage now.

  47. Mike in Nola says:

    Martin Wolf has an aptly timed article on the subject. His conclusion is that we are probably screwed either way.

    http://blogs.ft.com/martin-wolf-exchange/2010/07/25/the-political-genius-of-supply-side-economics/

  48. Bruman says:

    After 47 responses, all I’ll say is “thank you for saying this.” I so agree, and had to register my support.

  49. rwbil says:

    When I hear the discussion on tax cuts, I think it is a left brain vs. right brain thing. Some people argue if you cut taxes then you must raise taxes elsewhere (the fixed pie thinking). I think some people truly believe people work hard just for fun and if they are given more money they will just go to the beach more often. Maybe there are people out there like that, but that is not me and a lot of other business owners that I know. I run a business and like many business owners I work 24 hours 7 days a week. And if you are going to steal (via taxation) I am not going to expand and kill myself to have my money taken by the government to just hand out to other to get votes. This concept is what many people just do not get. Give me my money and I will kill myself working and expanding. And when I expand I hire more people that pay taxes and spend money. This is why countries that have high taxes are not growing. It is not a coincidence. Here is what I would do on the capital gains. First calling people who make $250K a year rich is ridiculous. Married professional people who live paycheck to paycheck paying for their home and kids education fall into this category. Is an engineer married to an account really rich? To be Warren Buffet is rich. $250K per year is upper middle income. You want to help people save and invest so they can become richer, then eliminate all capital gain and dividend tax on anybody making under $250K. Keep the 15% capital gains and dividend tax for folks making $250-$500K the Upper Middle Income Folks and increase the tax to 20% for folks making over $500K.
    The real problem to our debt is not that we pay to little taxes or spending on things like the bridge to nowhere. The real problem is the spending no politician wants to talk about. It is social security, Medicare, and these insane government pension plans. We lock away Madoff, but the government’s ponzi scheme makes Madoff look like an amateur. You have government workers retiring in their 50’s living to be 100 (40-50 years on the government dole). What insane people would promise such benefits. This is what is putting our county on the path to bankruptcy.

  50. curbyourrisk says:

    toddie.g said “I call bullshit on the Bush tax cuts actually having stimulated the economy and created a lot of jobs. I would bet that most of the job creation from 2002-2005 was due to the credit/housing bubble. Aside from that artificial job creation, is there any empirical proof that those tax cuts created much of any jobs? If that’s the case, then is it reasonable to assume the sunsetting of the tax cuts would cause job losses?”

    Fine….I call bullshit that the Clinton administration ever really balanced the budget. First off….COngress is responsible for the budget, so you would have to give newt Gingrich the credit. Also….as far as I am concerned the budget was never actually balanced, it was an accident due to the vast collections of taxes from investing gains. As for creating jobs, I guess you are also going to claim Clinton and Gore (Internet founder and massuese molester) created more of a job bubble with the internet push and bullshit Y2K fears which created an all out panic upgrade cycle and the ceration of thousands of new “Internet related companies and millions of new jobs” Yeah, very beneficial in getting what you want done in a short period of time. People working at ridiculous salaries and investment from both the private class and corporate class. Then BOOM…… No jobs, a stcok market crash and leadership looking for the next bubble to play the same game over and over again.

    Barry: As for not liking the lizard brains who bring partisan bullshit into things….I agree. Your former Economic blog used to be one of my to 3 reads every morning. With all the political thought and opinions you, yourself have installed on here I no longer look to it that quickly. I feel that any and all discussions on economics should be completely VOID of politics. Economics is about making HARD decisions, not party line partisan pandering. I no longer back any party. What ever side is willing to make the hard decisions is the party or persons (I don’t care if thery are from fighting parties) I will back. The hardest decisions are the ones that not necessarily are what is wanted by the voting public. Years down the line THOSE politiicans will be looked at as corageous and in the end will be found to have been our greatest leaders. Right now…….I am all for allowing the Bush tax cuts to continue. I completely understand the potential devestating effect alowing them to expire could have on our economy. If the “so-called” leadership wants to make the cuts their own they can simply determine the necessary cuts in government needed to make work. Oh, this administration is not interested in making cuts???? What a surprise….. If they expire, who wants to bet within 6 months, the ledership is taking about institutiong their own form of tax cuts for the American people, only it will be known a the Obama tax cuts. Now that is something they can get behind. Yeah…lots of hope and change their. We replace one boob with another. The American people need to understand one thing. Republicans and Democrats are cut from the same cloth. Politicians are all the same. One lies about what they are going to do to you, the other side tell you upfront about it and makes it seem like it is for your own good. Wither way, we just sit there and complain about things……never changing the system.

  51. JSchmid says:

    If the Bush Tax Cuts were no good and if they were part of the reason that we are in the situation we are in today, as the Democrats have been saying for the last 2 years, why are democrats turning hypocritical and starting to ask for an extension of the bush tax cuts? Do they really know that they have been spewing BS for the last two years?

  52. curbyourrisk says:

    Apinak: Anyone promoting Krugman has no clue what Economics is all about. If you want to read TRUE economic genious go read Von Mises and Hyack. Then comeback and talk smack.

  53. zebov says:

    I think you’ve hit on the issue entirely: nobody wants to discuss what to cut in a serious manner. This is why I don’t see a clean resolution of the social security problem. What politician in their right mind would be able to campaign with ideas on how/what aspects to cut from the social security program (something that truly does need discussed and resolved)? And it is for this precise reason that I don’t think the government will ever volutarily “decide” to make the large cuts necessary to become fiscally sound again (let’s say, after the recession is healed). It matters not though; reality is reality is reality and has a way of forcing folks to make difficult decisions. Whether we like it or not, eventually there will HAVE to be either massive cuts or massive tax increases or both.

  54. gman says:

    “I do not mind for the Bush taxes to expire as long as the funds will be used to reduce the deficits, but I’m afraid that similar to the $787B so called “stimulus package” the funds will be used as the transfer payments to Obama supporting and taxpayer blood-sucking government unions.”

    @cult of reason. You seem to see yourself as quite bright, but yet have NO IDEA where fed expenditures go!
    70+% goes to
    1 old people
    2 wars
    3 interest on past spending on above.

    But hey, dont let facts get in the way good rant about republican hobgoblins.

  55. “… This concept is what many people just do not get…”–rwbil, above

    rwbil,

    that’s where F.A. Hayek was coming from, in “Constitution of Liberty” –Chapter 8, “Employees are a threat to Liberty”.

    http://www.amazon.com/Constitution-Liberty-F-Hayek/dp/0226320847
    ~~~
    curyourrisk,

    this: “Wither way, we just sit there and complain about things……never changing the system.”

    if that Was a ‘typo-’, ’twas Inspired.

  56. curbyourrisk says:

    @Mark E Hoffer:

    Was supposed to read….”Either way, we just there and complain about things….never changing the system”.

  57. Rescission says:

    BR – Great post. Too bad your readers didn’t listen and went about the usual political, non factual comments.
    You nailed it with Milton Friedman. Unfunded tax cuts are not real tax cuts. Both sides are the same, whether its cowards or liars. Republicans give money to their friends (big corporations) and Dems give money to their friends (big unions). Who looks out for the small businessman, the backbone of job creation and economic growth? Nobody. One of your best posts, since it was really fact based.
    Bush failed in that he pushed through unfunded tax cuts. He spent money like a drunken sailor. Obama is carrying on the wonderful tradition.

  58. flipspiceland says:

    I don’t know how it EVER started, but the very notion of using the term, “unfunded tax cuts” is abhorrent to anyone who knows the difference between income and expenses.

    That should be ALL economists or financial bloggers, at the very least.

    Let’s get something straight: A tax is an expense. It is emphatically NOT ever to be confused with income. You either raise taxes or lower them. You don’t FUND them. Good grief.

    The use of the term “funding a tax CUT” or the like should be strickden from the language. This used to be only a term a rabid lefty would use to justify, obfuscate, and twist the common parlance into a pretzel to justify some expense that they want the people to absorb.

    You don’t fund a tax cut, CLEAR?

    Shame on BR for succumbing to the very partisanship he so abhors or being ignorant about a basic tenet of economics.

  59. inthewoods says:

    To all those calling for starving the beast, I would remind you that this has been the call since Reagan, and it has done nothing to control government spending. It has only caused large deficits. The only way that the US will ever do anything about the deficit is when we are forced to – meaning, when lenders go away or demand much higher interest payments for the risk.

  60. gordo365 says:

    @ SteveC July 25th, 2010 at 10:31 pm

    Don’t forget Paul Wolfowoitz. Neo-con Deputy Secretary of Defense and major architect of President Bush’s Iraq policy. He said that “Iraq could pay for it’s own reconstruction – and relatively sooon.”

    He was off by $1T+ and 10+ years.

    He is so good with numbers and figures — they made him president of the world bank!

  61. Darmah says:

    Thanks to @Apinak and @Mike in Nola for the Bartlett and Wolf posts. They encapsulate my thoughts well, much better than I did at one o’clock in the morning.

  62. Marc P says:

    Alright folks, step slowly away from the political guns, swords, and knives. Maybe we can get back to the facts and rationality?

    @Apinak Says at July 26th, 2010 at 2:44 am

    I thought Bruce Bartlett’s interview in the Economist was right on the money on this issue and others.

    “Federal taxes as a share of GDP are at their lowest level in two or more generations—14.9% versus a postwar average of 18.2%. There is not one iota of evidence that the economy is suffering from excessive taxation… ”

    Here’s one iota: The average household income in the U.S. is roughly $60,000. The government is currently spending about $35,000 per household. Stop and think about the ramifications of that fact for a while. Then remember that only people pay taxes. GDP doesn’t pay taxes.

  63. BDW says:

    Mike in Nola, you beat me to it by 2 hours. Doh!! Read Martin Wolf’s article.

    Tax cuts stimulate the economy at a return of less than a dollar. The most stimulant is infrastructure (long term investment) and unemployment, unfortunately unemployment insurance screws employers the hardest. Tax cuts never “pay for themselves”. Every non-partisan economic study says the wealthy benefit the most by a well-funded and designed society, not the poor, so why do the poor currently pay a higher % of their income to taxes and “fees”? (answer: the poor pay for the social safety net (FICA) and the rich do not).

    SS and Medicare are self-funding programs that are not suppose to be part of the national budget process, and are currently fully funded. What has fucked it up is that rules changed in the 80′s allowed FICA surpluses to be shifted to cover excess spending to make it look like the deficits were smaller and Bush’s Medicare part D drug company pay-off. This is where Gore’s lock box idea originates….keep your hands off, and the programs are fine.

    My solution is that the cap of 105,000 or so goes away for employees and stays for employers, which would balance the tax burden, make employers almost fine with it, and pays for the programs.

    Anyway, two charts of the day:
    http://www.businessinsider.com/chart-of-the-day-bush-policies-deficits-2010-6

    http://www.businessinsider.com/chart-of-the-day-federal-debt-held-by-the-public-2010-6

  64. litw3030 says:

    flipspiceland,

    thank you, thank you, thank you.

  65. curbyourrisk says:

    BDW: you said – “SS and Medicare are self-funding programs that are not suppose to be part of the national budget process, and are currently fully funded.”

    Fully funded???? I want that audited and proven. SS is full or IOU’s. Medicare???? I don;t even want to go near that one. Geez people, how can you say something like that without chiking on the very air you breath???

  66. BDW says:

    There is no structural deficit in either of those programs. Having govt bonds is not being “unfunded”. Get off your 5 second talking point mentality and actually do some research.

    “don;t even want to go near that one.” Yeah, because actually thinking is too hard, and anyone who thinks unlike you is biased or partisan, and couldn’t possibly be an economic Nobel Laureate.

  67. DeDude says:

    The basics of stimulus for a slacking economy are quite simple, yet remarkably few people seems to get it.

    In a country where consumption is 70% of the GDP the main way to stimulate the economy is by increasing consumption. The other factors (30% combined) are relatively to small to be good targets for an effect on the total GDP.

    This can be done by increasing government or consumer spending. Business spending can NOT be stimulated to any meaningful degree until the costumers (government & consumers) increase their spending.

    When the economy is heading down, any additional funds in the hands of the consumer class or businesses will be saved rather than spend. Therefore, the only way to stimulate the economy at that point is to increase government spending – preferably on things that are an investment in the future (infrastructure).

    When sentiment turns around and growth again take hold, then a tax-cut targeted to the consumer class can increase the speed of recovery because those cuts will be converted to increased consumption.

    Tax-cuts to the investor class (the rich) are usually a bad idea unless the economy is growing such that the increased available funds can be invested productively in growth of legitimate businesses. Otherwise the excess investment capital will be “invested” in assets whose true value cannot adsorb it – and you will create asset bobbles.

    As with most of what he/they did, the Bush (GOP/neoCon) tax-cuts were a huge F-up. In 2001 he did the wrong thing by cutting taxes when he should have increased investments in infrastructure. In 2003 he again did the wrong thing by targeting the tax-cut way too much toward the investor class, when it was the consumer class (with their stagnating wages) who needed a boost. As a result we got anemic growth (or stagnation, if you subtract the false GDP boost from MEW as Barry showed in his slides last week). Furthermore, we got a couple of huge and destructive asset bobbles (stocks, housing, commodities) as all this excess investment capital tried to find a place to stay. To top it all off he made these stupid mistakes as prolonged 10-year changes, when things like that are supposed to be temporary measures to create self-sustained growth (that can help pay down the increased debt they create).

    We need to get rid of all this destructive excess investment class wealth by letting the top tax rate go back to 39.6% (or even higher), next year. The next year (2012) we should be sufficiently recovered to allow the 33% rate to go back up to 36%. This will both help reduce the deficit and reduce the risk of destructive asset bobbles. Then the question of the remaining parts of the tax system has to be discussed in the context of income distribution and long-term deficit reductions. We cannot continue to compensate for a lack of income in the consumer class by reducing the tax rates on the lower income brackets. To ensure a continued growth in consumption (and the economy) we have to ensure that the benefits of increased productivity is distributed to everybody rather than harvested only by the top 10%. If that happens then we can also ask everybody to contribute a little extra in order to pay down the debt accumulated from all the GOPster neo-con mistakes.

  68. epupo says:

    “There is no structural deficit in either of those programs. Having govt bonds is not being “unfunded”.”

    Um what do you think pays for those bonds? Do you think those are fully funded by FICA taxes?

    Thats like saying a corporation is solvent because it has a lot of its own paper.

    ““I would add that I do disagree with the Republican fixation on taxation. Federal taxes as a share of GDP are at their lowest level in two or more generations—14.9% versus a postwar average of 18.2%. There is not one iota of evidence that the economy is suffering from excessive taxation ”

    Clearly Mr. Bartlett forgets himself and the strain of state and local taxes that are coming to a theatre near you. Cumulative state deficits are at 200 million and rising. And unlike the feds you cant print money to close that.

    The problem with looking at the Bush tax cuts in isolation is that increasing state and local taxes are not being factored into the thinking. Were property taxes like they are now back in 2001?

  69. DeDude says:

    “The government has proven itself unwilling to cut spending in any area of significance”

    Don’t forget that the government is “we the people”. It is us that refuse an adult conversation about spending. The same group of clowns that constantly talk about gobinment waste, refuse to get specific on exactly what and where they would cut those 500 billion to get started. When someone took a serious look at how to save a little money on Medicare those same clowns started yelling and crying about government death panels killing grandma. Everybody want to starve the beast until they realize that they are the beast, then its all “I worked hard ….I (in contrast to the other kind of people) deserve to get …” If you want the size of government to be reduced what will you personally sacrifice to get there? The final solution will be massive inflation (after massive tax-increases or massive spending cuts both have failed to materialize). That is the solution that comes and fixes things when “we the people” refuse make the hard choices.

  70. BDW says:

    “Um what do you think pays for those bonds? Do you think those are fully funded by FICA taxes?

    Thats like saying a corporation is solvent because it has a lot of its own paper.”

    This demonstrates ignorance on a whole new level of sound bite bullshit. SS is currently completely funded by FICA taxes. Just because fear mongering turd-blossoms tell you otherwise, doesn’t make it so. And do you honestly think the US Govt (as dedude says, we the people) will ever default on those bonds??? I swear people read only every other line of posts and completely miss the entire thing:

    “that rules changed in the 80’s allowed FICA surpluses to be shifted to cover excess spending to make it look like the deficits were smaller and Bush’s Medicare part D drug company pay-off. ” That isn’t a result of the programs being shitty, but of shitty politics throwing the social security insurance rug over their inability to see that tax cuts and run away military spending doesn’t work.

  71. lalaland says:

    Keep in mind that the deficits that the CBO projects INCLUDE the expiration of the Bush tax cuts – if they are extended the projections will be much worse. The CBO is hamstrung by literalism even when Congress has nothing of the sort in mind (as in this case).

  72. Jojo says:

    Excellent posts DeDude!

    Everyone is all for spending cuts, as long as the cuts come from someone else.

    Most everyone likes to post the same, tired old rants about excessive taxes, how taxes are demotivating, etc., but no one seems to be able to come up with a workable plan for spending cuts. As soon as he subject of spending cuts comes up, the lobbyists and industries affected start putting on a full court press.

    Let’s cut back on the military industrial complex. Oops, here comes the lobbyists and Congress with military business in their districts.

    How about cutting out the home mortgage deduction and capital gains exclusion on a sale? Nope, that would get the real estate lobbyists, agents and homeowners all worked up.

    Meaningful spending cuts are impossible to do in a world where there is a vested interest around every corner…

  73. DeDude says:

    epupo;

    You need to learn a little more about the basics of social security. Yes every penny worth of government bonds held in the social security trust fund (file cabinet) was fully purchased by FICA taxes.

    Social security is a mixture of a retirement program and mandatory poverty insurance -run by government rather than a private company. Like any other similar program in the private sector it takes in money and invest it. The large number of baby boomers have given us quite a lot of excess money (currently kept/invested in government bonds) that are supposed to be cashed out to pay the expenses when all those baby boomers retire. Unfortunately the fact that social security has been accounted for as part of the government means that all those years when social security took in more than it gave out, the government recorded that difference as an income. Now when these government bonds in the retirement/insurance trust fund are going to need to be cashed out to pay the retirement of baby boomers, that “false” income will be reversed and recorded as an expense. The late NY senator Daniel Patrick Moynihan was the most verbal opponent of this accounting scam that allowed the government to ignore a big part of its budget deficit, but All Gore should also be commended for promising to use the (false) projected government “surplus” in 2000 to offset some of the damage from that scam. Unfortunately someone with less integrity who was more than willing to perpetuate the social security accounting scam won the election and now we are in a much deeper hole than we otherwise would have been.

  74. Marc P says:

    @DeDude: great comment.

    @BDW: Do I “think the US Govt (as dedude says, we the people) will ever default on those bonds???”

    The operational side of the gov’t owes the SS “trust fund” approximately $3.5 trillion IIRC. The operational side of the gov’t can repay the SS trust fund one of two ways: it can print money or it can tax. I think it will more likely tax the public. Using current numbers, then in addition to taxing to fund the regular government operations at the current rate of roughly $35,000 per household per year, the gov’t will increase taxes to pay the bonds.

    What fun. With taxes going up, what will consumer consumption do? And how will that affect the economy?

    Government accounting is wonderful. The only entity that can borrow money from itself and call it revenues, and then have intelligent believe that the money can be paid back without consequences. But I’ll concede that I could be wrong. Maybe the gov’t simply going to print that $3.5 trillion and hope that action has no unintended consequences.

  75. curbyourrisk says:

    BDW: http://healthcare.change.org/blog/view/is_medicare_bankrupt

    Proves nothing.,…..is all conjecture.

    Medicare, Medicaid and SS are three of the biggest drags on Government budgeting. They have al been borrowed out of existance,and repaid with IOU’s. Please. I DO NOT WANT ANY NEW TAXES TO PAY FOR THESE JOKE PROGRAMS. I do not want the programsaround for me when I retire and I do not want to pay into their ponzi….any more.

  76. ZedLoch says:

    If Obama/Geithner are serious about this only only affecting people making “over $250k”, then does that mean they will be raising the income threshold for the 2nd highest bracket from $190,550 to $250,000? (for head of household)

    Would this not result in a NET tax CUT for anyone making around 250k in that you pay 28% on income between 190,550 and 250k, instead of 33%?

  77. curbyourrisk,

    re: typo-, I hear ya, was, just, making play with http://www.thefreedictionary.com/wither

    with·er (wr)
    v. with·ered, with·er·ing, with·ers
    v.intr.
    1. To dry up or shrivel from or as if from loss of moisture.
    2. To lose freshness; droop.
    v.tr.
    1. To cause to shrivel or fade.
    2. To render speechless or incapable of action; stun: The teacher withered the noisy student with a glance.

    ——————————————————————————–

    [Alteration of Middle English widderen, perhaps variant of wederen, to weather, from weder, weather; see weather.]

    The American Heritage® Dictionary of the English Language, Fourth Edition copyright ©2000 by Houghton Mifflin Company. Updated in 2009. Published by Houghton Mifflin Company. All rights reserved.
    ~~

    which, as you can tell, works, as well.~

  78. DeDude says:

    @Marc P, thanks. I actually think that the only politically viable way to deal with the debt is to print money to cover it. I don’t think the politicians have the illusion that it will have no unintended consequences. It’s just that in this idiocracy of ours implementing any other solution will have the consequence of losing at the next election. Look what happened when Bush promised “free lunch” tax-cuts and Gore said “now lets do the responsible thing”.

    The same idiots who are now screaming about “starving the Beast” will be screaming (and again blaming someone else, say illegal immigrants) when the result of the unfunded tax-cuts they demanded turns out to be that all their savings get “confiscated” by inflation.

  79. jpitt42 says:

    I’m late to the party here, and don’t have time to read all the posts…

    I completely agree that the following is 100% fact and not opinion: “debate between cowards on one side and liars on the other.”

  80. diogeron says:

    BR wrote about cuts to “Entitlements, Military, Education, etc”

    OK, two out of three ain’t bad, BR. Of course, “etc.” is a “big fucking deal” as the VP once said, so specificity would be helpful here and I’m sure we’re all filling in the blanks. I would start with a no-brainer: Obama’s pandering to the religious right by expanding and funding the “faith based” programs. Yeah, I know it’s a drop in the ol’ proverbial bucket, but since Barry left the “etc.” out there hanging on the corner of the plate, I’m taking a swing at it.

    While I think there are firm arguments for making public education more efficient (and making it easier to unload lousy teachers….sorry NEA), I don’t think cutting back on education $ is smart. It is impossible to rail against the lack of a “qualified work force” like everyone does in the short term while not educating, well, a “qualified work force” for the long run.

  81. philipat says:

    @flipspiceland

    …………………….in particlar because the concept of a “Balanced Budget” is no longer of any relevance? Balanced budget….ha, ha, ha, ha!

  82. Bennett says:

    The tax cust in question were passed using the budget reconciliation process, which means they escaped a filibuster and only required 51 votes. Reconciliation bills must sunset and be reauthorized.

    The bill was passed using reconciliation to avoid a fight with Democrats, who might have stopped it or scored points since the tax cuts were weighted towards high income earners. The public, in numerous polls over time, does not favor such cuts. The Republican base does.

    Note that most economists other than supply siders argue that the stimulative effects of such tax cuts are small – and inefficient as stimuli, compared to other policies.

    Of course, since supply-siders proposed this policy, they think the cuts pay for themselves, and don’t have to be offset!

  83. Smittyra1 says:

    Questions – I could really use somehelp understanding the following
    I have heard talking heads on TV say that 75% of the people in Americas making $250,000 a year or more are successful small businesses (people who file as individuals with SB income. (Normally I hear this to combat the proposed tax increase (repeal of tax cuts form 2001 and 2003)
    1) If this is true – my question is in order to pay the taxes on the over $250,000 portion, doesn’t that mean the taxable income is after all deductions and exemptions? Or otherwise the pure profit portion.
    2) Wouldn’t most small businesses deduct salaries and overhead for business operations, but still have to have a lot of sales after costs in order to get to that magic number.

  84. DeDude says:

    “The tax cust in question were passed using the budget reconciliation process, which means they escaped a filibuster and only required 51 votes. Reconciliation bills must sunset and be reauthorized”

    That is a very good point and something for the democrats to consider when they are deciding what to do about this. They could just stick the 10% and 15% brackets into the defense budget at reconcilation, and then take a fight on the rest. If the Republicans filibuster a bill fixing some of the rest, then there will be a lot of people in the 25% bracket that will be really pissed at them in November, most of the rest of the old cuts were for rich people and investor class people so they will have no real effect on the economy – and the GOP would really show their cards yelling and screaming for more breaks for the rich after refusing to give extension of unemployment benefits.

    @Smittyra1;

    Yes that $250K is the pure profit after all expenses, investments and special small business breaks have been deducted. This is the cream of the crop of “small” businesses – not your normal or typical small business. These are people who are making huge sums of money compared to the average person. Yes a lot of them have and continue to work hard, but even if you consider them as working 2 regular jobs they are still compensated much better than regular people (and those who work for them). Those people can easily afford to pay a little more back to the society that provided them with the opportunity to make that kind of money.

  85. Marc P says:

    DeDude Says:

    “[Successful entrepreneurs] can easily afford to pay a little more back to the society that provided them with the opportunity to make that kind of money.”

    Say what?!!! Try this. Find an entrepreneur, a real one, the type who has personally built a business that employs 100 people. That person is likely paying far more than $100k in personal federal taxes, plus a large amount to state and local gov’t. Walk up to that person and say, “ya know, I realize that you personally pay $100k+ in taxes but I don’t think you’re paying your fair share for the society that provided you with the opportunity to make that kind of money.” Do this to a dozen entrepreneurs, then report back on what they say in response.