Do tax cuts really help the economy? Or just let those who have wealth grow and keep more?

[rjain]

djNickb: Why does the government need to plan the finances of every person? Let them use their money as they see fit. Taxes are for stuff that is shared by everyone and can't really be paid for by every person using it or can save much more money if it's done once and only once, such as roads, power, and communication. For power and communication, it's feasible to charge based on usage to fund maintainance and service, so just the infrastructure can be (partly) subsidized. The government shouldn't be telling me to give them unnecessary amounts of the money I worked for so that they can waste it willy-nilly on people who have political influence such as the willfully poor.

 

[dirtboy]

Originally posted by: djNickb

CAD you obviously fail to see the larger picture that I was trying to paint. I challenge you to conduct a survey of family households and find out how many spent their refund from the tax break as opposed to those who invested it in some way shape or form. If you do this and can show me that those who spent the money right away have benefited more financially than those who invested then I will surrender my argument and point that I was trying to make.

Everyone that I know that has got it said they spent it.

edit: If you think you are so right, why don't you conduct a survey yourself.

 

[rjain]

I really don't see how you can know that the people spent or invested their money "correctly". That's why capitalism works. People don't decide how to spend other peoples' money, they decide themselves. In the end, the errors tend to correct themselves.

 

[DT4K]

Originally posted by: djNickb
CAD you obviously fail to see the larger picture that I was trying to paint. I challenge you to conduct a survey of family households and find out how many spent their refund from the tax break as opposed to those who invested it in some way shape or form. If you do this and can show me that those who spent the money right away have benefited more financially than those who invested then I will surrender my argument and point that I was trying to make.

No, it is you who fail to see the bigger picture. You say the family who got that 2200 was likely to go spend it rather than saving it or investing it. So what. The whole point is for them to spend it. That is how the economy is stimulated. If they use that money to buy something they wouldn't have been able to buy, then the company who manufactures and sells that product makes more money, has to produce more of that product, has to hire more people to make those products. That is how jobs are created. Increased demand, increased supply, increased employment.

The fact that many of you don't seem to understand is that tax cuts can only be given to those who pay taxes. And virtually everyone who pays taxes benefitted from the Bush tax cut. If you give tax cuts to those who don't pay taxes, it's not a tax cut, it's a welfare payment. Oh, I see, that is what you want. Keep taxes high for those who work hard and make money and give that extra money as a gift to those who don't work. Wow, great idea.

 

[djNickb]

Originally posted by: rjain
djNickb: Why does the government need to plan the finances of every person? Let them use their money as they see fit. Taxes are for stuff that is shared by everyone and can't really be paid for by every person using it or can save much more money if it's done once and only once, such as roads, power, and communication. For power and communication, it's feasible to charge based on usage to fund maintainance and service, so just the infrastructure can be (partly) subsidized. The government shouldn't be telling me to give them unnecessary amounts of the money I worked for so that they can waste it willy-nilly on people who have political influence such as the willfully poor.

rjain, where did I say that the government needs to plan the finances of every person? What I said is that if the government gives you something back (the tax cut - they didnt have to give this to the people) you can use it however you choose to. The point I'm trying to make is that if the government did not provide this tax cut you would not have seen the money. What you choose to do with the money IS ENTIRELY UP TO YOU. Personally, understanding how money works I would have chosen to take this gift from the government and put it to work for me. Sure you can spend it if you want that choice is yours. I would prefer to have this money working for me rather than buy something that I would not ordinarily have bought if there never was a tax cut.

 

[DT4K]

Originally posted by: djNickb

Originally posted by: rjain
djNickb: Why does the government need to plan the finances of every person? Let them use their money as they see fit. Taxes are for stuff that is shared by everyone and can't really be paid for by every person using it or can save much more money if it's done once and only once, such as roads, power, and communication. For power and communication, it's feasible to charge based on usage to fund maintainance and service, so just the infrastructure can be (partly) subsidized. The government shouldn't be telling me to give them unnecessary amounts of the money I worked for so that they can waste it willy-nilly on people who have political influence such as the willfully poor.

rjain, where did I say that the government needs to plan the finances of every person? What I said is that if the government gives you something back (the tax cut - they didnt have to give this to the people) you can use it however you choose to. The point I'm trying to make is that if the government did not provide this tax cut you would not have seen the money. What you choose to do with the money IS ENTIRELY UP TO YOU. Personally, understanding how money works I would have chosen to take this gift from the government and put it to work for me. Sure you can spend it if you want that choice is yours. I would prefer to have this money working for me rather than buy something that I would not ordinarily have bought if there never was a tax cut.

OMG, would you get a clue.
The government isn't giving us anything.
They aren't providing it for us.
It is not "a gift"

IT IS OUR MONEY. A TAX CUT MEANS THEY TAKE LESS OF OUR MONEY, THEY DONT GIVE US ANYTHING.

Well, unless you get EIC, in which case the government is taking my money and giving it to you for some reason.

 

[CADsortaGUY]

Originally posted by: Shanti
The government isn't giving us anything.
They aren't providing it for us.
It is not "a gift"

IT IS OUR MONEY. A TAX CUT MEANS THEY TAKE LESS OF OUR MONEY, THEY DONT GIVE US ANYTHING.

Well, unless you get EIC, in which case the government is taking my money and giving it to you for some reason.

Exactly - well said. That was my point - it doesn't matter how well people spent and will spend their own money - the fact is that they can now decided how they are going to spend more of their money.

:beer::beer:

CkG

 

[djNickb]

Originally posted by: Shanti

Originally posted by: djNickb

Originally posted by: rjain
djNickb: Why does the government need to plan the finances of every person? Let them use their money as they see fit. Taxes are for stuff that is shared by everyone and can't really be paid for by every person using it or can save much more money if it's done once and only once, such as roads, power, and communication. For power and communication, it's feasible to charge based on usage to fund maintainance and service, so just the infrastructure can be (partly) subsidized. The government shouldn't be telling me to give them unnecessary amounts of the money I worked for so that they can waste it willy-nilly on people who have political influence such as the willfully poor.

rjain, where did I say that the government needs to plan the finances of every person? What I said is that if the government gives you something back (the tax cut - they didnt have to give this to the people) you can use it however you choose to. The point I'm trying to make is that if the government did not provide this tax cut you would not have seen the money. What you choose to do with the money IS ENTIRELY UP TO YOU. Personally, understanding how money works I would have chosen to take this gift from the government and put it to work for me. Sure you can spend it if you want that choice is yours. I would prefer to have this money working for me rather than buy something that I would not ordinarily have bought if there never was a tax cut.

OMG, would you get a clue.
The government isn't giving us anything.
They aren't providing it for us.
It is not "a gift"

IT IS OUR MONEY. A TAX CUT MEANS THEY TAKE LESS OF OUR MONEY, THEY DONT GIVE US ANYTHING.

Well, unless you get EIC, in which case the government is taking my money and giving it to you for some reason.

The government can choose to levy taxes in whatever amount they see fit. All I am saying is that by the gov't taking less YOU KEEP MORE as opposed to the gov't not changing anything and you paying the same amount in taxes. You can call this whatever you want, I chose to call it a gift. Again restating what I said before what you do with the extra you keep IS UP TO YOU. I won't bother trying to explain the other concept as it has obviously fallen on deaf ears.

You can tell me that I'm full of sh!t - it doesn't matter to me at all - Just take a look at earned vs. unearned income and tell me which you would prefer.

Earned vs. Unearned Income

 

[dirtboy]

Originally posted by: djNickb


The government can choose to levy taxes in whatever amount they see fit. All I am saying is that by the gov't taking less YOU KEEP MORE as opposed to the gov't not changing anything and you paying the same amount in taxes. You can call this whatever you want, I chose to call it a gift. Again restating what I said before what you do with the extra you keep IS UP TO YOU. I won't bother trying to explain the other concept as it has obviously fallen on deaf ears.

It's not that it has fallen on deaf ears, it is that your view on this situation is incorrect.

 

[djNickb]

Originally posted by: dirtboy

Originally posted by: djNickb


The government can choose to levy taxes in whatever amount they see fit. All I am saying is that by the gov't taking less YOU KEEP MORE as opposed to the gov't not changing anything and you paying the same amount in taxes. You can call this whatever you want, I chose to call it a gift. Again restating what I said before what you do with the extra you keep IS UP TO YOU. I won't bother trying to explain the other concept as it has obviously fallen on deaf ears.

It's not that it has fallen on deaf ears, it is that your view on this situation is incorrect.

Can you please explain how my view is incorrect - I'm not tryin to incite more arguing, I just want to see the facts that you can present that disprove my statement.

 

[CADsortaGUY]

Originally posted by: djNickb
The government can choose to levy taxes in whatever amount they see fit. All I am saying is that by the gov't taking less YOU KEEP MORE as opposed to the gov't not changing anything and you paying the same amount in taxes. You can call this whatever you want, I chose to call it a gift. Again restating what I said before what you do with the extra you keep IS UP TO YOU. I won't bother trying to explain the other concept as it has obviously fallen on deaf ears.

No - I know what you are trying to say - but it's not relevant to wether or not the tax-cuts help the economy or just help the rich. Yes, people could take the extra money they "get to keep"(you know- the gift) and invest it to make it work for them...but they could also do that with the money they "got to keep" before, no? Your continued "point" is still elitist nannyism, who cares how they spent it...it was theirs to begin with and they choose to spend it wisely or foolishly - it's what makes the world go round.
And no it's not a "gift" - it's actually letting people KEEP their money instead of taking it away. It's kind of like instead of beating someone to a pulp...you only kneecap them - do you consider the fact that they got to keep 3 out of 4 limbs functioning instead of none - a "gift"?

CkG

 

[CADsortaGUY]

Originally posted by: djNickb
Can you please explain how my view is incorrect - I'm not tryin to incite more arguing, I just want to see the facts that you can present that disprove my statement.

What is your "statement"? What is your "point"?

I'm sure I know what you are trying to say, but you best specifically lay it out - so we can show you why it's wrong and/or irrelevant.

CkG

 

[LunarRay]

Sure, tax cuts and increase government spending (sorta the same thing cept we don't buy $40 pencils) help the economy if it is directed to the folks who'll do the spending.. the middle class.. the lower class get CADDY FREE... (No pay refunds).

But,!!! here is a link (click on the graph) that (so you can read it ) shows by income level who got what.. Look at that big blue bar to the right... hmmmmm

 

[djNickb]

Originally posted by: CADkindaGUY

Originally posted by: djNickb
Can you please explain how my view is incorrect - I'm not tryin to incite more arguing, I just want to see the facts that you can present that disprove my statement.

What is your "statement"? What is your "point"?

I'm sure I know what you are trying to say, but you best specifically lay it out - so we can show you why it's wrong and/or irrelevant.

CkG

I'll see if I can make it as simple as possible:

Most people work for money -- as a result they pay income taxes

Rich people have money work for them -- as a result they realize greater returns as you do not pay income taxes on unearned income --unearned income provides far more flexibility as the money is not taxed before you have it thus you can take the money that the government would have taken directly out of your paycheck that you never see and also make it 'work for you'

The details behind everything are not worth posting as this is the basic principle -- If you can understand this then you see the point -- If you cannot than I can almost safely assume that you will work for money your entire life.

 

[rjain]

Originally posted by: djNickb
I would prefer to have this money working for me rather than buy something that I would not ordinarily have bought if there never was a tax cut.

A new car works for you if it reduces your maintainence costs. A new dishwasher works for you if it gives you more free time to relax so that you're more productive at work or simply more time to work. Eating out works for all of us because it causes the people who work at the restaurant to make more money (and if enough people do it, more restaurants are opened and more people are employed) and that money gets spent or saved again by those people. It's called the multiplier effect.

 

[dirtboy]

Originally posted by: djNickb

Originally posted by: dirtboy

Originally posted by: djNickb


The government can choose to levy taxes in whatever amount they see fit. All I am saying is that by the gov't taking less YOU KEEP MORE as opposed to the gov't not changing anything and you paying the same amount in taxes. You can call this whatever you want, I chose to call it a gift. Again restating what I said before what you do with the extra you keep IS UP TO YOU. I won't bother trying to explain the other concept as it has obviously fallen on deaf ears.

It's not that it has fallen on deaf ears, it is that your view on this situation is incorrect.

Can you please explain how my view is incorrect - I'm not tryin to incite more arguing, I just want to see the facts that you can present that disprove my statement.

Simple. When I go to work I trade my time for money. Therefore, I work to earn money. Notice that the government is not anywhere in this picture, unless I am employed by the government, then in which I trade my time to the government for money. Keep in mind that the government did nothing to help me earn this money or was part of the contract that I had with my employer to trade my time for money.

When I get my money, note MY money, the government takes a percentage of this.

Let's recap because I know this is confusing:

I trade time for money.
Government takes a percentage of my money.

Now if the government enacts a tax cut, that effectively reduces the percentage of money they take. Read that carefully! Rather than take 27% of my income, they are now taking 25%, because taxes have been reduced by 2%.

That means that the government is taking a smaller percentage.

Now if I have overpaid my taxes, which is entirely possible given our tax system, the government owes me money. When they owe me money, it is not that they are giving me a gift. The difference between a gift and debt is that a gift is something unexpected and debt is something that can be specifically calulated to determine to the exact penny of what I have overpaid and am due by the goverment.

If tax refunds or cuts were a gift, as you say, then the goverment would only give money back to the citizens it likes. Perhaps the President at the time would give "gifts" back to the people who voted for him or her.

But in the case of a tax cut, everyone who has overpaid gets an amount back that is unique to exactly the amount they overpaid. For example, if I grossly overpaid, I may get a larger amount back than you.

Now before you reply saying a tax cut is still a gift in your mind, be sure to explain how this gift applies to people who have underpaid their taxes throughout the year and owe money.

I hope this makes sense for you.

 

[djNickb]

Originally posted by: rjain

Originally posted by: djNickb
I would prefer to have this money working for me rather than buy something that I would not ordinarily have bought if there never was a tax cut.

A new car works for you if it reduces your maintainence costs. A new dishwasher works for you if it gives you more free time to relax so that you're more productive at work or simply more time to work. Eating out works for all of us because it causes the people who work at the restaurant to make more money (and if enough people do it, more restaurants are opened and more people are employed) and that money gets spent or saved again by those people. It's called the multiplier effect.

You are getting close to getting my point -- I'm familiar with the multiplier effect -- So look at it this way if you spend money at a restauraunt it trickles its way up to the top -- the waitress/waiter gets paid, managers and so on up to the owner. You create wealth for the owners by spending your money - BUT -- when you invest money the multiplier effect is much more pronounced and the benefits come directly back to you, not the owner of the business -- Can you see what I am getting at?

 

[rjain]

Originally posted by: djNickb

I'll see if I can make it as simple as possible:

Most people work for money -- as a result they pay income taxes

Rich people have money work for them -- as a result they realize greater returns as you do not pay income taxes on unearned income

Right, you pay capital gains taxes on it. And you don't get an earned income credit.

--unearned income provides far more flexibility as the money is not taxed before you have it

So this money just appeared magically without being earned (either as income or capital gains)? Is it counterfeit money or something?

thus you can take the money that the government would have taken directly out of your paycheck that you never see and also make it 'work for you'

Eh... ok....

The details behind everything are not worth posting as this is the basic principle -- If you can understand this then you see the point -- If you cannot than I can almost safely assume that you will work for money your entire life.

I can safely assume that you've never had money work for you your entire life.

 

[rjain]

Originally posted by: djNickb

You are getting close to getting my point -- I'm familiar with the multiplier effect -- So look at it this way if you spend money at a restauraunt it trickles its way up to the top -- the waitress/waiter gets paid, managers and so on up to the owner. You create wealth for the owners by spending your money - BUT -- when you invest money the multiplier effect is much more pronounced and the benefits come directly back to you, not the owner of the business -- Can you see what I am getting at?

Uh, yes. But I have no clue what that has to do with this discussion except to show how foolish Mr. A. Weblog is. The money trickles down, in any case. The owner gets the money and pays his managers and staff. You're just explaining the difference between capital gains and income. What's your point?

 

[dirtboy]

Originally posted by: djNickb
--unearned income provides far more flexibility as the money is not taxed before you have it thus you can take the money that the government would have taken directly out of your paycheck that you never see and also make it 'work for you'

Please explain the flexibility the equity in my house gives me. I can't spend it. I can't use it. I can brag about it, but if I sell my house in less than two years I get taxed on it. And if I sell my house I suddenly don't have a place to live. I really don't see any flexibility there.

 

[CADsortaGUY]

Originally posted by: djNickb

Originally posted by: CADkindaGUY

Originally posted by: djNickb
Can you please explain how my view is incorrect - I'm not tryin to incite more arguing, I just want to see the facts that you can present that disprove my statement.

What is your "statement"? What is your "point"?

I'm sure I know what you are trying to say, but you best specifically lay it out - so we can show you why it's wrong and/or irrelevant.

CkG

I'll see if I can make it as simple as possible:

Most people work for money -- as a result they pay income taxes

Rich people have money work for them -- as a result they realize greater returns as you do not pay income taxes on unearned income --unearned income provides far more flexibility as the money is not taxed before you have it thus you can take the money that the government would have taken directly out of your paycheck that you never see and also make it 'work for you'

The details behind everything are not worth posting as this is the basic principle -- If you can understand this then you see the point -- If you cannot than I can almost safely assume that you will work for money your entire life.

Yeah...but is there a point to why you think this matters in this tax-cut scenario? The concept you "simplified" for us "serfs" is very understood...although it was presented in an elitist tone.

My point is that it doesn't matter to this tax-cut scenario because if these people can't/won't make their money work for them before the tax-cut then why should you assume that they can/should/would do it because of the tax-cut?

CkG

 

[CADsortaGUY]

Originally posted by: LunarRay
Sure, tax cuts and increase government spending (sorta the same thing cept we don't buy $40 pencils) help the economy if it is directed to the folks who'll do the spending.. the middle class.. the lower class get CADDY FREE... (No pay refunds).

But,!!! here is a link (click on the graph) that (so you can read it ) shows by income level who got what.. Look at that big blue bar to the right... hmmmmm

Nice try Luny...would you like to post a similar graph about which income groups pay the most income taxes and other taxes that are affected by these tax-cuts? Hmm....didn't think so

CkG

 

[LunarRay]

Originally posted by: CADkindaGUY

Originally posted by: LunarRay
Sure, tax cuts and increase government spending (sorta the same thing cept we don't buy $40 pencils) help the economy if it is directed to the folks who'll do the spending.. the middle class.. the lower class get CADDY FREE... (No pay refunds).

But,!!! here is a link (click on the graph) that (so you can read it ) shows by income level who got what.. Look at that big blue bar to the right... hmmmmm

Nice try Luny...would you like to post a similar graph about which income groups pay the most income taxes and other taxes that are affected by these tax-cuts? Hmm....didn't think so

CkG

Are you hearing things Caddy?
Of course the folks who make more pay more, at least last time I looked. In fact, as you know, many of the tax deductions are phased out for the rich folks. I don't disagree with pure math..
BUT!!!! The interesting thing about the graph is that the middle class get so little individually and all I kept hearing is 'what will you do with your tax cut' not much in it for them.. (you).
MY issue is and always has been the 'multiplyer'. I believe the dollars given to the folks making over... say 200K$ will not create the same multiplyer as you might. For that reason the tax cut (refund) may could have been better directed. (May coulda)! I've been wasting my pencil lead trying to figure out the 'real' affect and not the talking head version on TV or running for office and I think I might amend my thinking to a more favorable or less misdirected but somewhat misdirected tax cut. Not got all my 'i's dotted yet.. but, it is looking that way.

 

[djNickb]

Originally posted by: CADkindaGUY

Originally posted by: djNickb

Originally posted by: CADkindaGUY

Originally posted by: djNickb
Can you please explain how my view is incorrect - I'm not tryin to incite more arguing, I just want to see the facts that you can present that disprove my statement.

What is your "statement"? What is your "point"?

I'm sure I know what you are trying to say, but you best specifically lay it out - so we can show you why it's wrong and/or irrelevant.

CkG

I'll see if I can make it as simple as possible:

Most people work for money -- as a result they pay income taxes

Rich people have money work for them -- as a result they realize greater returns as you do not pay income taxes on unearned income --unearned income provides far more flexibility as the money is not taxed before you have it thus you can take the money that the government would have taken directly out of your paycheck that you never see and also make it 'work for you'

The details behind everything are not worth posting as this is the basic principle -- If you can understand this then you see the point -- If you cannot than I can almost safely assume that you will work for money your entire life.

Yeah...but is there a point to why you think this matters in this tax-cut scenario? The concept you "simplified" for us "serfs" is very understood...although it was presented in an elitist tone.

My point is that it doesn't matter to this tax-cut scenario because if these people can't/won't make their money work for them before the tax-cut then why should you assume that they can/should/would do it because of the tax-cut?

CkG

You just made my point right there -- If you do not choose to make your money work for you then the greater potential benfit of the tax cut is lost. I'm sorry if I came across with an elitist tone it was not my intention - I am not rich but I would like to be financially independent therefore the biggest step towards this goal for me is understanding how money really works. The majority of people aren't financially educated they are raised to believe that if you get a good education you can get a good job and if you work hard you can get a better paying job with a company that will take care of you. Don't get me wrong, there is nothing wrong with this if you also are financially aware and while you are working for money you are also making your money work for you. But today it is all too common that people who may be highly educated for their careers are lost in the wind to corporate downsizing and have no other cash generatign assets to fall back on. Ultimately it comes down to education and if you choose to educate yourself on money. The schools do not teach this even though this is one of the most important lessons in life.

 

[CADsortaGUY]

Originally posted by: djNickb
You just made my point right there -- If you do not choose to make your money work for you then the greater potential benfit of the tax cut is lost. I'm sorry if I came across with an elitist tone it was not my intention - I am not rich but I would like to be financially independent therefore the biggest step towards this goal for me is understanding how money really works. The majority of people aren't financially educated they are raised to believe that if you get a good education you can get a good job and if you work hard you can get a better paying job with a company that will take care of you. Don't get me wrong, there is nothing wrong with this if you also are financially aware and while you are working for money you are also making your money work for you. But today it is all too common that people who may be highly educated for their careers are lost in the wind to corporate downsizing and have no other cash generatign assets to fall back on. Ultimately it comes down to education and if you choose to educate yourself on money. The schools do not teach this even though this is one of the most important lessons in life.

Individual potential is lost - sure, but this is about the tax-cuts and the economy which will see that money no matter what. Money spent/invested/etc all goes into the economy somehow and it's better it get there directly by the people than through the gov't beauracracy. We're talking about tax-cuts...not what people do with their income. I still don't see why you felt the need to bring up how they spent it...wether "frivilously" or "wisely" it still got spent/invested in one fashion of another(unless people plan on filling their mattress). Is there some tax-cut correlation here...or is it just the fact that people keep more of their money now and should learn to use it better(which is the case no matter what happens with tax-cuts).

Got it yet?

CkG