Dubya-nomics---de-mystified

[Tripleshot]

:Q
The Voodoo of Dubya-nomics

So what is wrong with all this? In a nutshell, it doesn't make sense even in its own terms.

Start with the history. Can the weak economy be blamed on Bush's predecessor, on al-Qaeda, on Enron? A recession, as Bush says, "mean three quarters of negative growth." The economy grew through the end of 2000, then growth turned negative in the first three quarters of 2001, including three weeks of Clinton and more than eight months of Bush. That is what allows Bush to say he inherited a recession.

Bush creates a straw man: the critic who says his plan "only helps the rich." The actual criticism is that it mainly helps the rich. The much smaller tax breaks for lower-income people are vital too. They provide cover and act as a bribe. For a few hundred dollars, the government buys your support for a plan worth millions to those who already have millions.

That's just starters. Read the link.


Yes, It's an opinion, just like the one you have. So what?

 

[sMiLeYz]

Everyone knows that Bush's tax cut, like his war on Iraq, doesnt make sense.

 

[BaliBabyDoc]

Everyone knows that Bush's tax cut, like his war on Iraq, doesnt make sense.

I disagree. It is quite consistent. The producers (wealthy) are the soul of American economic might. Anything which benefits them is the pre-eminent concern of this administration. When the producers (risk takers) are more comfortable they are more likely to take greater risks. Ultimately, those risks will benefit everyone including the people on the bottom.

The industriousness of American aristocracy should be protected for perpetuity. Hence, top tax rates should be lower and estate taxes should be repealed.

 

[LunarRay]

Originally posted by: BaliBabyDoc

Everyone knows that Bush's tax cut, like his war on Iraq, doesnt make sense.

I disagree. It is quite consistent. The producers (wealthy) are the soul of American economic might. Anything which benefits them is the pre-eminent concern of this administration. When the producers (risk takers) are more comfortable they are more likely to take greater risks. Ultimately, those risks will benefit everyone including the people on the bottom.

The industriousness of American aristocracy should be protected for perpetuity. Hence, top tax rates should be lower and estate taxes should be repealed.

BabyDoc,
I don't think Bush is focused on a total Supply side stimuli. In fact, most of the 350b is earmarked to the vast majority (not poor) of mid class. a link might be interesting
which would indicate a demand side draw.

President Bush clearly has the Demand Side of the economy in mind with his plan. Of course, there are legitimate reasons for cutting taxes. But, by focusing on the wrong reasons, we fail to see the importance of cutting taxes, not only during recessions, but at any time. Quote from link

 

[burnedout]

Originally posted by: HJD1

Originally posted by: BaliBabyDoc

Everyone knows that Bush's tax cut, like his war on Iraq, doesnt make sense.

I disagree. It is quite consistent. The producers (wealthy) are the soul of American economic might. Anything which benefits them is the pre-eminent concern of this administration. When the producers (risk takers) are more comfortable they are more likely to take greater risks. Ultimately, those risks will benefit everyone including the people on the bottom.

The industriousness of American aristocracy should be protected for perpetuity. Hence, top tax rates should be lower and estate taxes should be repealed.

BabyDoc,
I don't think Bush is focused on a total Supply side stimuli. In fact, most of the 350b is earmarked to the vast majority (not poor) of mid class. a link might be interesting
which would indicate a demand side draw.

President Bush clearly has the Demand Side of the economy in mind with his plan. Of course, there are legitimate reasons for cutting taxes. But, by focusing on the wrong reasons, we fail to see the importance of cutting taxes, not only during recessions, but at any time. Quote from link

HJD1: You read Mises also? Good stuff!

 

[LunarRay]

Originally posted by: burnedout

Originally posted by: HJD1

Originally posted by: BaliBabyDoc

Everyone knows that Bush's tax cut, like his war on Iraq, doesnt make sense.

I disagree. It is quite consistent. The producers (wealthy) are the soul of American economic might. Anything which benefits them is the pre-eminent concern of this administration. When the producers (risk takers) are more comfortable they are more likely to take greater risks. Ultimately, those risks will benefit everyone including the people on the bottom.

The industriousness of American aristocracy should be protected for perpetuity. Hence, top tax rates should be lower and estate taxes should be repealed.

BabyDoc,
I don't think Bush is focused on a total Supply side stimuli. In fact, most of the 350b is earmarked to the vast majority (not poor) of mid class. a link might be interesting
which would indicate a demand side draw.

President Bush clearly has the Demand Side of the economy in mind with his plan. Of course, there are legitimate reasons for cutting taxes. But, by focusing on the wrong reasons, we fail to see the importance of cutting taxes, not only during recessions, but at any time. Quote from link

HJD1: You read Mises also? Good stuff!

My biggest issue is in trying to calculate just who is getting how much. From that mystery I can deduce or model the effect to which segments etc. Ludwig's inst. is a reasonably good source for such data. But as I sit here now I cannot tell you how much the real affect will be (the real tax cut figures) nor to which segments the likely benefits will flow... and I have been looking for weeks. I see numbers but the hard ones are not with in my scope at the moment. The tax roll data my be the best estimate but, for the dividend issue the companies not paying dividends may start and that data would interest me.

 

[BaliBabyDoc]

Very interesting link, thnx . . . but I think you are implying Bush's actual plan matches his words. The tax cut as written at $350B has elements which favor middle class . . . say the child credit. Of course, they've exempted 40-50 million Americans that make between 11K-26K. No one can predict the future but I doubt many will rally to repeal these cuts. The most likely intermediate term outcome is that Bush policy is indeed skewed towards producers (corporations, small business, high wage earners). Which is supply side . . . despite the fact that luxury goods producers will see a bump in sales.

 

[etech]

HJD1,

My biggest issue is in trying to calculate just who is getting how much.

Why not foucus on how much each group is getting to keep as a percentage of their income after the cuts?

 

[Hayabusa Rider]

Originally posted by: etech
HJD1,

My biggest issue is in trying to calculate just who is getting how much.

Why not foucus on how much each group is getting to keep as a percentage of their income after the cuts?

I believe he is saying that he cannot find hard numbers to use, and for this kind of analysis, specifics are needed.

 

[LunarRay]

Originally posted by: etech
HJD1,

My biggest issue is in trying to calculate just who is getting how much.

Why not foucus on how much each group is getting to keep as a percentage of their income after the cuts?

My modeling techniques look to the incremental. I suppose you could do an analysis to figure disposable change but, that figure would be (IMO) more accurate if derived from an acceptable model that already had all the factors of statistical probability built in. I'm sure they exist to do as you suggest but, I'd not have the confidence that I do in something I think I understand.

At the moment folks are using all sorts of figures to opine on the result of a tax cut. It is mere speculation to start with but they call it fact. If I could figure out how many in each catagory... and I'm working on Census data now... I could then predict, maybe, what the probable effect may be. The dividend one is tougher, I can't seem to find enough info on which companies intend to start paying out dividends and how much. I can determine current buy we is in a changing enviornment and I suspect a partial change from capital investment to a dividend use of cash and what affect that may have is not yet understood by folks.

 

[chowderhead]

The national deficit -upwards of 450 billion dollars ... well that's FUZZY math.
The national debt - 6.4 trillion dollars and growing ... well that's FUZZY math.
Repealing a tax decrease set to take effect sometime in the FUTURE - well that's a tax INCREASE.
When the economy is bad, well you cannot blame the president because he is not reponsible for such a large ecomony.
When Clinton was leaving office, the economy was already going bad. REPEAT as necessary.
When the economy is going good, the tax cut did it.
When the economy is going bad, the tax cut softened the blow.
When the deficit ballooned - it ain't the tax cut.
It's not my fault when it's bad but when it is going good, thank you very much.

 

[burnedout]

My biggest issue is in trying to calculate just who is getting how much. From that mystery I can deduce or model the effect to which segments etc. Ludwig's inst. is a reasonably good source for such data. But as I sit here now I cannot tell you how much the real affect will be (the real tax cut figures) nor to which segments the likely benefits will flow... and I have been looking for weeks. I see numbers but the hard ones are not with in my scope at the moment. The tax roll data my be the best estimate but, for the dividend issue the companies not paying dividends may start and that data would interest me.

My "unqualified" take on the dividend thingie:

Currently, there are 354 issues on the three major U.S. exchanges paying dividends at or above 5%. A few of these companies are in financial trouble and will obviously be unable to maintain a payout at that rate. Many are REITs, Trusts, closed-end funds and foreign equities traded here. Throw in a few utilities, a few banks, plus tobacco and GM, and there you basically have it.

'Big' (as in large capitalization - over $50B) companies currently not paying dividends, with comments: AOL (lost $9.88 per share last year), Amgen (never have, doubt they will), Comcast (dot.bomber), Dell (to my knowledge, they never have either), Oracle (dot.bomber), Viacom (as long as Redstone is around, I doubt they will). Microsoft pays a paltry 8 cents per share. MSFT also has $46 B in cash. Doubt MSFT will raise the payout. Recently split, so they keep shareholders happy. Berkshire-Hathaway pays 0. Warren Buffett doesn't believe in splits, options, complicated reports or dividends.

The mutual funds: Gets real, real interesting here. Open-ended funds (mainstream) aren't like regular equities for a couple of reasons. If an open-end fund requires more shares, they don't just split them. They issue new ones providing they have the assets to cover them. Although I may be mistaken on my next point, I believe either an open-end or closed-end mutual fund is the only investment vehicle that can take bond, GIC, commercial paper and CD interest income and redistribute that income as dividends.

So, again, in my unqualified opinion, I reason that there might be a bigger rush on higher yielding mutual funds rather than on traditional, exchange-traded equities by the masses. Of course corporate executives and large shareholders might not do the same.

Corporate-corporate dividend income: Many companies invest in the stock of other companies. There has been 70 and 80 percent tax exclusions in place for years relative to corporate-corporate dividend income. Therefore, I don't think corporations will benefit that much more. Some, yes, but not to the degree everyone wants to believe.

That leaves us with the much-despised, "filthy" rich folks. Who owns what? Again, this is interesting. Who knows for sure? IRS should know. At any rate, I believe Bill Gates owns about 142 million shares of MSFT. So, unless he raises dividend payout, his dividend income from 8 cents per share should be around $11.3 million. Whats he gonna do with that extra money? Spend it? Donate it? How much was sheltered anyway? And what will the rest of the rich folks do with their additional income? Spend or donate it too? Maybe reinvest it? In what?

Ross Perot supposedly had many of his millions tied up in municipal bonds at one time. I think there were years in which he paid little or no income taxes. Not saying all the rich folks invest their money in tax-exempt investments. Just saying that the rich folks stay rich for a number of reasons: political influence, tax-advantaged investments and good accountants, to name a few.

 

[Vadatajs]

Originally posted by: BaliBabyDoc

Everyone knows that Bush's tax cut, like his war on Iraq, doesnt make sense.

I disagree. It is quite consistent. The producers (wealthy) are the soul of American economic might. Anything which benefits them is the pre-eminent concern of this administration. When the producers (risk takers) are more comfortable they are more likely to take greater risks. Ultimately, those risks will benefit everyone including the people on the bottom.

The industriousness of American aristocracy should be protected for perpetuity. Hence, top tax rates should be lower and estate taxes should be repealed.

The fact that more and more of those people on the bottom are people overseas means this strategy no longer works.

 

[LunarRay]

Originally posted by: burnedout

My biggest issue is in trying to calculate just who is getting how much. From that mystery I can deduce or model the effect to which segments etc. Ludwig's inst. is a reasonably good source for such data. But as I sit here now I cannot tell you how much the real affect will be (the real tax cut figures) nor to which segments the likely benefits will flow... and I have been looking for weeks. I see numbers but the hard ones are not with in my scope at the moment. The tax roll data my be the best estimate but, for the dividend issue the companies not paying dividends may start and that data would interest me.

My "unqualified" take on the dividend thingie:

Currently, there are 354 issues on the three major U.S. exchanges paying dividends at or above 5%. A few of these companies are in financial trouble and will obviously be unable to maintain a payout at that rate. Many are REITs, Trusts, closed-end funds and foreign equities traded here. Throw in a few utilities, a few banks, plus tobacco and GM, and there you basically have it.

'Big' (as in large capitalization - over $50B) companies currently not paying dividends, with comments: AOL (lost $9.88 per share last year), Amgen (never have, doubt they will), Comcast (dot.bomber), Dell (to my knowledge, they never have either), Oracle (dot.bomber), Viacom (as long as Redstone is around, I doubt they will). Microsoft pays a paltry 8 cents per share. MSFT also has $46 B in cash. Doubt MSFT will raise the payout. Recently split, so they keep shareholders happy. Berkshire-Hathaway pays 0. Warren Buffett doesn't believe in splits, options, complicated reports or dividends.

The mutual funds: Gets real, real interesting here. Open-ended funds (mainstream) aren't like regular equities for a couple of reasons. If an open-end fund requires more shares, they don't just split them. They issue new ones providing they have the assets to cover them. Although I may be mistaken on my next point, I believe either an open-end or closed-end mutual fund is the only investment vehicle that can take bond, GIC, commercial paper and CD interest income and redistribute that income as dividends.

So, again, in my unqualified opinion, I reason that there might be a bigger rush on higher yielding mutual funds rather than on traditional, exchange-traded equities by the masses. Of course corporate executives and large shareholders might not do the same.

Corporate-corporate dividend income: Many companies invest in the stock of other companies. There has been 70 and 80 percent tax exclusions in place for years relative to corporate-corporate dividend income. Therefore, I don't think corporations will benefit that much more. Some, yes, but not to the degree everyone wants to believe.

That leaves us with the much-despised, "filthy" rich folks. Who owns what? Again, this is interesting. Who knows for sure? IRS should know. At any rate, I believe Bill Gates owns about 142 million shares of MSFT. So, unless he raises dividend payout, his dividend income from 8 cents per share should be around $11.3 million. Whats he gonna do with that extra money? Spend it? Donate it? How much was sheltered anyway? And what will the rest of the rich folks do with their additional income? Spend or donate it too? Maybe reinvest it? In what?

Ross Perot supposedly had many of his millions tied up in municipal bonds at one time. I think there were years in which he paid little or no income taxes. Not saying all the rich folks invest their money in tax-exempt investments. Just saying that the rich folks stay rich for a number of reasons: political influence, tax-advantaged investments and good accountants, to name a few.

I copied the entire message you posted because it was quite interesting.
I'm in the process of trying to see if SEC has any data on investment by any of the public corps. no luck yet. There are few places to find 401 K holdings of dividend stock and it gets moved a lot as folks go from place to place and instead of xferring in kind they zero out and re invest etc...
Some one must have a firmer number on the tax cut affect related to dividends.. I've email both committees, my rep, the omb, and mickey mouse... I expect a call from mickey any day now. I got a response back with 'will see what we can come up with' perhaps I'm a dummy and thought that to propose a tax cut and quantify it all involved would have the numbers or assumptions at their finger tips. Maybe I've yet to ask the question properly... we'll see.
I wonder what the single taxpayer making 30k is gonna do with his $50 tax cut.. probably buy a new truck.
I may be a buck or two off... sorry.

 

[etech]

HJD1,

I wonder what the single taxpayer making 30k is gonna do with his $50 tax cut.. probably buy a new truck.

You are about $300 off for a total of $350.

 

[burnedout]

I copied the entire message you posted because it was quite interesting.
I'm in the process of trying to see if SEC has any data on investment by any of the public corps. no luck yet. There are few places to find 401 K holdings of dividend stock and it gets moved a lot as folks go from place to place and instead of xferring in kind they zero out and re invest etc...
Some one must have a firmer number on the tax cut affect related to dividends.. I've email both committees, my rep, the omb, and mickey mouse... I expect a call from mickey any day now. I got a response back with 'will see what we can come up with' perhaps I'm a dummy and thought that to propose a tax cut and quantify it all involved would have the numbers or assumptions at their finger tips. Maybe I've yet to ask the question properly... we'll see.
I wonder what the single taxpayer making 30k is gonna do with his $50 tax cut.. probably buy a new truck.
I may be a buck or two off... sorry.

Here is another scenario that I forgot to account for during my last spate of rambling: special dividends.

Companies do indeed pay special dividends on occasion. I think if we see a greater occurance of such payout in the near future then the subject of dividends vis-a-vis tax cut becomes much more apparent. Even then, some companies will be unable to pay a special dividend because of financial condition. Others won't pay out because they usually plow their earnings back into either R&D, investment or new business. The special dividend scenario is intriguing though. Particularly for companies with lots of cash.

I'll comment further after the shock of the Monday morning nutroll subsides.

 

[LeadMagnet]

Scrap all 17,000 pages of the current tax code and close the doors of the IRS,
go to a national sales tax and the following tax free;

1: nessary food (caviar, $4.99++/lb meats , seafood , ect ... ,not included)
2: basic clothing ( $100 shoes , $500 suits ,etc.. not included)
3: low income housing rent
4: medication

 

[LunarRay]

Originally posted by: burnedout

I copied the entire message you posted because it was quite interesting.
I'm in the process of trying to see if SEC has any data on investment by any of the public corps. no luck yet. There are few places to find 401 K holdings of dividend stock and it gets moved a lot as folks go from place to place and instead of xferring in kind they zero out and re invest etc...
Some one must have a firmer number on the tax cut affect related to dividends.. I've email both committees, my rep, the omb, and mickey mouse... I expect a call from mickey any day now. I got a response back with 'will see what we can come up with' perhaps I'm a dummy and thought that to propose a tax cut and quantify it all involved would have the numbers or assumptions at their finger tips. Maybe I've yet to ask the question properly... we'll see.
I wonder what the single taxpayer making 30k is gonna do with his $50 tax cut.. probably buy a new truck.
I may be a buck or two off... sorry.

Here is another scenario that I forgot to account for during my last spate of rambling: special dividends.

Companies do indeed pay special dividends on occasion. I think if we see a greater occurance of such payout in the near future then the subject of dividends vis-a-vis tax cut becomes much more apparent. Even then, some companies will be unable to pay a special dividend because of financial condition. Others won't pay out because they usually plow their earnings back into either R&D, investment or new business. The special dividend scenario is intriguing though. Particularly for companies with lots of cash.

I'll comment further after the shock of the Monday morning nutroll subsides.

By the special dividend issue you're talking about dividend other than when the board historically declares them. But, of more importance to me is the notion that non "S" corps that are closely held may enable for owner worker the ability to escape total tax by diverting payroll to dividends or issue stock to effect that to normal mgmt ee's... think on that awhile.. I tried to find a provision to handle this but, alas....

 

[Vic]

I prefer GW's tax cuts to the Democrats' constant desire for tax increases.

 

Originally posted by: Vic
I prefer GW's tax cuts to the Democrats' constant desire for tax increases.

I'd prefer a strong national economy, with no as-yet unwon wars and taxes that actually pay for worthwhile government services to any tax cut, any day.

 

[BaliBabyDoc]

I prefer GW's tax cuts to the Democrats' constant desire for tax increases.

So who is going to pay down the debt . . . aliens?

 

[LunarRay]

Originally posted by: BaliBabyDoc

I prefer GW's tax cuts to the Democrats' constant desire for tax increases.

So who is going to pay down the debt . . . aliens?

Yes BBD, everyone caught in the US gets sold to pay down the debt... great idea!
It will also shift the medical/schooling/and other services from the taxpayer to the new owner.
Perhaps you were joshing and ment Moonbeam type aliens... in that case I'm certain they won't buy that.

 

[Hayabusa Rider]

I heard that Kerry (from MA) had suggested a "tax holiday" I believe rather than getting a tax refund, people would not pay tax for some period, or get a reduction of tax witheld according to income. Might be off on the particulars, but probably close enough. The benefit would be immediate tax relief.

What do 'yall think of that as an alternative?

 

[LunarRay]

Originally posted by: Hayabusarider
I heard that Kerry (from MA) had suggested a "tax holiday" I believe rather than getting a tax refund, people would not pay tax for some period, or get a reduction of tax witheld according to income. Might be off on the particulars, but probably close enough. The benefit would be immediate tax relief.

What do 'yall think of that as an alternative?

Not having tax withheld does not put much in the hand at once. I think government should refund based on the new tax law and the delta to the old one by individual and right now.

 

[BaliBabyDoc]

I am not a Keynesian but don't we have some basic problems which will not be solved by tax cuts? When I had a huge stock portfolio I spent well beyond my means. My spending supported economic activity at home and abroad. Now that my consumption is more rational doesn't that excess capacity create a drag on the economy? Isn't it more likely that I will spend extra income on reducing debt than more consumption?

Even though my creditors will enjoy payment aren't they less likely to liberally lend b/c of the explosion in unrecovered debts due to bankruptcy? Many institutions lived the high life in the late 90s as well. Why would they choose expenditure as opposed to paying off long term debt? Since money is cheap, they may refinance their debt but will savings go towards significant expansion during a period of reduced consumption?