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The 7 - Current Events & Politics - More on "Tax Cuts For The Rich" Register and log in to post!
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Michrome
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#1 Posted on 8.5.03 0024.32
Reposted on: 8.5.10 0029.01
This is a column from Thomas Sowell, a researcher up at Stanford. He brings up some really important facts that ought to be considered before you deem Bush's tax cuts unfair. If you read this with an open mind, you might come away learning something.

Work pays

Thomas Sowell

     Those for whom indignation is a way of life often inform us of the fact that families or households in the top 10 or 20 percent in income make far more money than people in the bottom 10 or 20 percent in income. What they almost never inform us of are how much money they are talking about and how many people in these different brackets actually work.
     These omissions are neither incidental nor accidental. If the full facts were brought out, those facts would completely undermine the picture presented by the envy zealots or, as they prefer to be called, advocates of "social justice."
     Despite the looseness with which the term "rich" is thrown around — as in "tax cuts for the rich" — most people to whom that term is sweepingly applied are far from being rich. First of all, whether you are rich or not depends on your wealth, not your income, but the statistics used by the envy zealots are almost always income statistics.
     These are also usually statistics about family income or household income, which can be very misleading, because families and households differ substantially in size — and where there are more people making money, they usually make more money.
     While there are more than 19 million people working in households with incomes in the top 20 percent, there are fewer than 8 million people working in households in the bottom 20 percent. How much of an injustice is it that people who work get more money than people who don't work?
     If you are talking about working full-time, 50 or more weeks a year, then there are more people doing that in the top 5 percent of households than in the bottom 20 percent. As Casey Stengel used to say, you can look it up. These are Census data, available on-line from the Current Population Survey, Table HINC-06.
     It may not be a breakthrough on the frontiers of economics to say that work pays, but it does. Among households in the bottom 20 percent in income, there are more than 13 million people who do not work at all and fewer than 8 million who do work, counting both full-time and part-time workers.
     How do people live without working? Millions in the bottom 20 percent live on the money earned by other people who do work and whose income gets taxed to pay for the non-workers. In addition, more than 4 million families in the bottom fifth in income live on property income and nearly 6 million live on various forms of retirement income, including Social Security. (Table FINC-06, for those who demand proof only from those they disagree with.)
     What about those "rich" people we hear so much about? Studies that follow the same individuals over time have found that those in the top 20 percent and those in the bottom 20 percent are mostly the same people at different stages of their lives. Not only does work pay, when you have worked a longer time, it usually pays more.
     High-income people are typically people who have reached their peak earning years in middle age. What does it take to reach the top 20 percent in income? In 2001, it took a little less than $85,000 — for a whole household. (This is a different Census publication: "Current Population Reports," P60-218.)
     How many yachts these people are going to buy, even if they get those "tax cuts for the rich" we hear about, is another story.
     To reach the top 5 percent, you need an income of about $150,000 — again, for a whole household. A middle-aged couple who have worked their way up in middle-class jobs, over a period of decades, can reach this peak — and have much of it taxed away.
     These publicly available numbers may be surprising news to some because neither in the media nor in academia do the envy zealots like to talk about actual dollars and cents. Or about work, one of the few four-letter words that remains taboo.
     They prefer to talk about percentage shares going to some people versus others. But people do not live on percentages. They live on money and on the things that money can buy, which is to say, their real income.
     Despite all the hand-wringing about the fact that the bottom 20 percent get a smaller share than in times past, the real income of the bottom 20 percent has gone up by thousands of dollars. Moreover, the people who were in that bottom 20 percent in the past have also gone up into higher brackets.
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Jaguar
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#2 Posted on 8.5.03 0308.58
Reposted on: 8.5.10 0311.05
I'm not going to dispute anything said in there,but here are a few thoughts, off the top of my head at 3:47 am.

1) So who are we counting as workers? Some families have two or more adults who work, and others do not. I'd kind of like to know this breakdown.

2) He says right in there that 6 million of those 'non-working' bottom 20% people are living off social security or other retirement plan. So if the point of this was that there were more non-working bottom 20%er's then the retired people should be grouped with the 8 million workers, because the 6 million used to work at one time. So that gives you 7 million in the bottom 20% that don't work, and 14 million who do.

3) The last two sentences are crap.

Despite all the hand-wringing about the fact that the bottom 20 percent get a smaller share than in times past, the real income of the bottom 20 percent has gone up by thousands of dollars

Now, he doesn't specificly state that the bottom 20 percent aren't getting a smaller share than in times past (I have no idea if this is true or not, mind you). Instead he just states that poor people are making more money today than they used to. Well, duh. Hooray for inflation! The fact that he doesn't actually state that their share is no smaller leads me to believe that it actually is.

Moreover, the people who were in that bottom 20 percent in the past have also gone up into higher brackets.

First off, he doesn't bother to say how many people. Secondly, it's just the way America works. We're a rich country. Unless you lose a large majority of your money (gambling, say) over time your family should get better educated and get better paying jobs through each generation. This is why the American economy cannot exist without a steady influx of immigration. We'll always need a lower working class to keep the class pyramid stable. At least, in our current economic form.

-Jag

It's 4am now. If I make no sense, I can only blame faulty neurons.
MoeGates
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#3 Posted on 8.5.03 1019.34
Reposted on: 8.5.10 1020.24
A very good article that leads me to two points:

#1 - Having the base of your tax system being earned income is wrong. I've always been an advocate of lowering taxes on income people earn, and raising it on income people don't earn. I think this encouraged hard work and American Values. I agree it's not right for someone working hard at an upper-middle class job to pay so much in income taxes, while someone who lives of inheritance and dividends to get away scott free.

#2 We need a different, 50's style curve in terms of the progressive taxation brackets. They need to spread out more among lower brackets, and condenced and raised at the higher brackets. Having a new bracket at 80%, 95%, 99%, 99.9%, and 99.99% (I'm talking about top % of earners, not tax rate here people) is a lot better than having brackets like they are now, which is like, 60%, 80%, 90% or so. I agree people shouldn't be taxed because they're working hard and moving up. But once you get to a certain point, it's not valid anymore. Someone making 10 million a year is NOT working harder than someone making 1 million a year, or ever 100,000 a year. Encouraging mobility to the upper-middle class and living the American Dream is great (which not only needs lower taxes for the middle-class, but better and more affordable education, health care, and housing as well). Encouraging modern day robber-baron profiteers, lazy rich inheritees who've never worked a day in their life, and white coller con-men who'll destroy people's lives for a few bucks without even thinking about it is another. The GOP would like you to think they're advocates for the first, when in reality they're bought and paid for by the second.

(edited by MoeGates on 8.5.03 1121)
Grimis
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#4 Posted on 8.5.03 1231.48
Reposted on: 8.5.10 1232.03

    Originally posted by MoeGates
    I agree it's not right for someone working hard at an upper-middle class job to pay so much in income taxes, while someone who lives of inheritance and dividends to get away scott free.

Who says that living off of dividends is scott-free? Hell, I don't know if many people live solely off of dividends. Remember, a lot of people who are affected by the double-taxation on dividends are middle-class investors trying to create a nest-egg. Hell, that's why even John Kerry supports eliminating the double taxation on dividends


    Originally posted by MoeGates
    Someone making 10 million a year is NOT working harder than someone making 1 million a year, or ever 100,000 a year.

Says who? That's an awfully broad generalization.


    Originally posted by MoeGates
    The GOP would like you to think they're advocates for the first, when in reality they're bought and paid for by the second
My check must be in the mail, because I'm the middle class, not bought off by anybody, working to make life better for the middle and working classes regardless.
drjayphd
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#5 Posted on 10.5.03 2320.29
Reposted on: 10.5.10 2323.40
Grimis: Why do I get the feeling that if they do eliminate double taxation, it'll be on the corporate side? Even though I'm sure it's impossible...

Anyway, MoeGates, good points, but does anyone think we'll see anyone in office that'll actually DO any of that?
Pool-Boy
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#6 Posted on 12.5.03 1650.45
Reposted on: 12.5.10 1654.01
This is the sort of dispute that makes me all for a flat tax. But breaking up income into brackets, you are setting up the argument that will follow each and every time that tax raises or cuts are brought up.

We SHOULD have a flat tax. Everyone, regardless of income, pays the exact same percentage. How is this anything but fair? Taxes get cut- everyone gets a proportionate benefit.

Out tax system is just another example, to me, of how overly complicated our government bureaucracy has gotten.

As far as double taxation on dividends- it is more than obvious it is. In fact that is the very definition of double-taxation. Of course, Democrats-at-large will never agree that is the case, because then they would have to support the elimination of the dividend tax. And we all know there is no way in hell they are going to want that-
Scott Summets
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#7 Posted on 15.5.03 1025.35
Reposted on: 15.5.10 1029.04

    Originally posted by MoeGates
    A very good article that leads me to two points:

    #1 - Having the base of your tax system being earned income is wrong. I've always been an advocate of lowering taxes on income people earn, and raising it on income people don't earn. I think this encouraged hard work and American Values. I agree it's not right for someone working hard at an upper-middle class job to pay so much in income taxes, while someone who lives of inheritance and dividends to get away scott free.

    #2 We need a different, 50's style curve in terms of the progressive taxation brackets. They need to spread out more among lower brackets, and condenced and raised at the higher brackets. Having a new bracket at 80%, 95%, 99%, 99.9%, and 99.99% (I'm talking about top % of earners, not tax rate here people) is a lot better than having brackets like they are now, which is like, 60%, 80%, 90% or so. I agree people shouldn't be taxed because they're working hard and moving up. But once you get to a certain point, it's not valid anymore. Someone making 10 million a year is NOT working harder than someone making 1 million a year, or ever 100,000 a year. Encouraging mobility to the upper-middle class and living the American Dream is great (which not only needs lower taxes for the middle-class, but better and more affordable education, health care, and housing as well). Encouraging modern day robber-baron profiteers, lazy rich inheritees who've never worked a day in their life, and white coller con-men who'll destroy people's lives for a few bucks without even thinking about it is another. The GOP would like you to think they're advocates for the first, when in reality they're bought and paid for by the second.

    (edited by MoeGates on 8.5.03 1121)



Good post, but the one comment I have is that someone making 10 million a year may be working harder than someone making 1 million a year, or someone making 20000 a year. Just because someone is rich or makes a TON, doesn't take away from the work they do. In the public's eye, we look at a CEO who works 70 hours a week as doing a lot less work and worker less hard than a janitor working 40 hours a week. The CEO may go home to a mansion, but he's still busting his ass, his wealth doesn't cancel out his hard work just as poverty doesn't equal hard work. (Well, I would aruge that most CEO's are honest, hard-working people and that Enron's are the exception and not the rule... at least I hope so)
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