Tag Archives: Tax

Debunking Supply-Side Economics

PORTLAND | April 15, 2011

For the past thirty years with a special emphasis on the last ten, author David Cay Johnston a columnist for tax.com who teaches the tax, property and regulatory law of the ancient world at Syracuse University College of Law and Whitman School of Management, in a report entitled 9 Things The Rich Don’t Want You To Know About Taxes states the following:

1. Before Reaganomics, 90% of Americans saw their incomes grow faster than the top 1%. After the 1980’s, when Reagan took office, almost all income gains have been at the top.

Contrary to popular belief, poor Americans do pay taxes. In a report entitled The Wealthy Need To Pay More In Taxes, it is discussed that 20% have salaries highly in excess of the $49,000 per capita average while 80% much less, and author Johnston corroborates this fact to a degree. According to Mr. Johnston, data from the Tax Foundation show that in 2008, the average income for the bottom half of taxpayers was $15,300.

2. Wealthy Americans do not carry the tax burden.

3. The wage gap widens and the wealthy are paying less taxes.

4. Many of the wealthiest Americans pay no federal tax at all.

5. Only wealthy Americans have gained significant income.

6. Corporations are in a similar position with less taxes

7. Some corporate tax breaks actually destoy jobs.

8. Average incomes fell during the Bush years and Republicans actually like taxes too!

9. Other countries can do it better, like Germany, who has a smarter tax system.

To read the entire article, please visit: 9 Things The Rich Don’t Want You To Know About Taxes

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The Wealthy Need To Pay More Taxes

WASHINGTON, D.C. | April 15, 2011

On Wednesday at a major speech at George Washington University, President Barack Obama stated: "If you are rich, you should be paying more in taxes." Obama also reiterated his desire not to renew the Bush-era tax cuts as he seeks to reduce the nation’s budget deficit for the wealthiest Americans, or those Americans making $250,000 a year or more.

"I say that at a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more," Obama said. "I don’t need another tax cut. Warren Buffett doesn’t need another tax cut."

CNN in response to the President’s speech asked people that fall into that income category what they thought about paying more taxes and published their findings in thisreport.

"It kinda feels like it’s my job to kind of spread around what I got. I just think as a whole, our society is in a much better place when we have the money to spend on the social stuff that needs to get spent," said Eric, owner of several restaurants in the State of New York who earns $1m a year. Eric claims his businesses will not be hurt of Obama does raise taxes. The only effect on his life would be the amount of money he puts into savings which could be reduced.

Craig, a New York City venture capitalist, said he makes well over $250,000 and is "torn because part of me says yes the higher paid people should pay their fair share… So I understand that. However, my issue is that $250,000 isn’t the same amount that it was 10 years ago."

"There’s a huge difference between someone making $250,000 and someone making a million," Craig noted.

There is an even larger divide between someone making $25,000 per year and $250,000 per year.

The CNN report continues with interviews of people that make more than $250,000, many of whom feel that the wealthy designation should begin at $500,000 to $1m claiming that $250,000 is not really that much when you have a small child or student loans.

Does anyone have a violin?

Also, the argument is raised that location plays a big factor because $250,000 in New York City is really nothing exciting whereas the same amount in somewhere like Indiana is a relative goldmine.

There is no question that locale is an important role in terms of salary retention. The more expensive a locale, the less salary is retained due to higher rent obligations. However, in areas where locale is not at high-end market rates, typically, salaries are adjusted downward or don’t qualify for "geographic differentials."

The Patriotic Millionaires for Fiscal Strength back the President’s plan and group members renewed their pledge in a letter to Obama:

"For the fiscal health of our nation and the well-being of our fellow citizens, we ask that you increase taxes on incomes over $1,000,000," the group wrote in a recent letter to the President and congressional leaders. "We make this request as loyal citizens who now or in the past earned incomes of $1,000,000 per year or more."

President Obama has asked Congress numerous times to roll back the tax cuts during last year’s lame-duck Congress. The request for a roll-back was tossed due to bipartisan compromise where the tax cuts were extended for two more years.

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Stimulus Likely To Fail

President Barack Obama has announced plans to help the American economy with a $50 billion dollar infrastructure project and an additional $200 billion dollars in tax cuts for companies’ investments in research and development. However, many are speculative that this next round of stimulus will actually create jobs in a country where the unemployment rate stands at a high 9.6% and economists predict that rate will remain high for some time due to the fact that more than eight million people lost their jobs here in the U.S. due to the global recession. Austan Goolsbee, recently appointed White House Council of Economic Advisers, stated that “this recession is the deepest in our lifetimes, the deepest since 1929.”

A purported defense for the $200 billion dollars in tax cuts is that the government isn’t actually spending money – they’re giving tax cuts to businesses to invest in this country. Yet, if the American economy after the American Recovery and Reinvestment Act (“ARRA”) which authorized $787 billion dollars through various programs continues to stagger, it is not prudent to think that a mere $50 billion dollar infrastructure project with $200 billion dollars in tax cuts for companies will create jobs and strengthen the economy to pre-recession levels.

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