Please explain the justification for the Bush tax cuts

I am no expert on the economy and even less so on tax law but I really just do not understand some things here.

First I do not understand the concept of giving the rich more money will create jobs. When and where has this ever happened? Since when does anyone take on new employees simply because they have more money? Is there a company ou there doing this?

Second, I do not understand what is taking so long. How long have we been waiting for these tax cuts to translate into jobs now? It seems to me that we have been trying this out since Reagan and it has only really gone one way. When do these tax cuts start creating jobs?

How does taxing the rich de-incentivise them to become rich? Who on the planet would choose to have a net gain of say 20 grand a year over a million just because they were taxed more?

I am sure I have some more questions but as often as I see people try to say we need to extend the tax cuts for the most wealthy in America, I have yet to see an actual reason.

reply to post by Curiousisall


It can't be justified, it can only be explained. The explanation really boils down to one word and the word is "Greed."

The richer they get, the more power they have. The more power they have, the richer they get. See how that works?

I am no tax expert either and to me it seems obvious that demand creates jobs not giving more money to the rich. More demand=more products needing to be made=more jobs. Bring demand up for American goods and watch as the number of jobs rise. To think that giving multi-millionaires and billionaires more money will create jobs is ridiculous, most of them put it into other countries or if they do create some jobs with it they off-shore them.

The republican party is about big business and the rich always has been, that is why they are screaming from the roof tops that the cuts should not expire for those who are rich.

Bush's tax cuts were done years ago and after his cuts, our economy did improve and things in the US were better until the banking crisis put a halt to that.

Bush cut taxes for everyone, not just the rich but, to answer your question as to why cutting the taxes for the rich, or anyone, is expected to help the economy and provide jobs, look at it this way. If you suddenly see a 5% drop in your annual taxes, you should, in theory, have more money in the bank at the end of the year. This should translate into your spending more, since you now have more. If you went from getting no refund to suddenly getting back $5000, you might buy that tv you wanted or take a trip with your significant other. That spending boosts the economy.

In theory, if you cut the taxes of the top 5% earners in the country, they will get back more money and they are more likely to spend it than, say, the bottom 5%.

But, again, Bush cut everyone's taxes, not just the wealthy.

reply to post by Crakeur


Very true....for the middle class and upper middle class. History has shown that the rich will not spend it but put it into a bank account overseas or the like. They already had enough money to buy whatever they wanted. We are not talking about hey I got a $5,000 dollar check, I will buy that new TV. When the rich get it they are talking hey I got that $500,000 dollar check, I am gonna throw it into a bank and let it collect more interest along with my other $50,000,000.

reply to post by frimilden


I've read that as well but I think the reason behind that is that, when asked, they might say "put it in the bank" because, for them, they don't allocate the refund towards any specific spending. If you ask someone who isn't accustomed to having an extra 5K, they'll know what they're spending it on. Someone with a surplus of cash doesn't think "gee, an extra 100k, I'm buying a car" because they can buy the car regardless of the refund.

reply to post by Crakeur


Your logic is sound when it comes to broad spectrum tax cuts, or middle class tax cuts, but tax cuts for the rich by themselves do nothing. The rich already have expendible income/cash reserves. These cash reserves don't seem to do anything to convince them to spend.

The thing that gets me about the whole cut taxes for the rich thing is that the politicians seem to want us to think that the very wealthy use money in the same fashion that the middle class and poverty class does. This is not the case. The very wealthy reach a point where money is no longer an obsession. It loses it's mystique and becomes simply another tool in the toolbox. They do not go on spending sprees because they have more of it. What does matter to the very wealthy is power and influence.

This is what is really happening behind the scenes in politics... and it is not limited to the GOP or Democrats or Tea Partiers, etc. Everyone up there in D.C. that is in an elected position is trying to maintain influence and power by means of favors and trade-off with people that can give them that influence and power

The tax cuts are simply a "favor".. a palm greasing, so to speak.

reply to post by Crakeur


Which is exactly why it most likely will sit in the bank for years or if invested back into a business will most likely be jobs overseas. They want most bang for the buck and that sadly is overseas call centers and the like or sitting collecting interest in High Yield Savings Account or in an CD or something along that line.

reply to post by Curiousisall

First I do not understand the concept of giving the rich more money will create jobs

Well, its actually a simple concept.

The more money people have...the more money they spend.

If a man makes 500,000 a year from his business, and you come in and take away 200,000....he's not going to settle for 300,000 and he's going to "trim some fat" from his company to help compensate.

Business owners are in business to make money, not to create jobs. Job creation is a bonus.

Its the same thing where if you worked at a job that offered incentive bonuses. YOUR motivation is to work harder so that YOU get more money. The bonus side effect is that your EMPLOYER gets more money, which is all he's interested in.

He knows that if he dangles more money in your path, that you'll work harder and make more money for him.

Who gives a damn what the intentions are, if the outcomes are advantageous to both parties?

Originally posted by rogerstigers
Your logic is sound when it comes to broad spectrum tax cuts, or middle class tax cuts, but tax cuts for the rich by themselves do nothing. The rich already have expendible income/cash reserves. These cash reserves don't seem to do anything to convince them to spend.

I didn't say I agreed with it, I was merely trying to explain the rationale behind it.

Originally posted by rogerstigers
The tax cuts are simply a "favor".. a palm greasing, so to speak.

it's a thank you (or an exchange) for the donations and support. when it comes down to it, most people vote (or make decisions while were at it) with their wallets

The Bush Tax Cuts, significantly reduced my taxes..

Repealing them will be a MAJOR hardship on me..

I'm a COP..........

You do the math..

Those that say the Bush Tax Cuts are only for the wealthy have no idea what they are talking about..

Now THAT is a fact..

Semper

reply to post by frimilden


they bank it but they have enough money that they don't need to earmark it. the super rich aren't preparing budgets so, when the extra money rolls in, they add it to the kitty. it's not a matter of them saving it, it's a matter of them spending their money and not spending the refund - it's all part of their spending pool whereas the $30k a year family is going to have specific uses for everything they get. I have clients who must file their taxes by the 15th of April so they can get their refund in time to pay for their kid's camp. I have clients who have enough money in the bank so that they aren't pressed to get the refund early but, the camp bill is still the camp bill thus, they don't need to rely on that refund to pay for it. doesn't mean they aren't spending it, they simply don't need to allocate and earmark their income for spending purposes.

Originally posted by semperfortis
The Bush Tax Cuts, significantly reduced my taxes..

Repealing them will be a MAJOR hardship on me..

I'm a COP..........

You do the math..

Those that say the Bush Tax Cuts are only for the wealthy have no idea what they are talking about..

Now THAT is a fact..

Semper

From what I am told, it significantly reduced my taxes as well. I make almost, but not quite 6 figures...I live paycheck to paycheck, but I am getting betterrr as I get out of my debt and reduce spending. The timing, I think was the culprit in my case. I had 2 kids in the house at the time of the tax cuts and that year that they were enacted, my son turned 17 and was no longer a $1000 credit. So maybe I got an extra $900 tax break, but I got an additional $1000 tax liability at the same time.

Anyway, the main point of this discussion was how it affects the rich. It's pretty much a given on how it affects the provery and middle classes.

Originally posted by frimilden
I am no tax expert either and to me it seems obvious that demand creates jobs not giving more money to the rich. More demand=more products needing to be made=more jobs. Bring demand up for American goods and watch as the number of jobs rise.

(Another thread I have to disagree with from Dawn Wells face. Dang it my fantasies about her are going to be ruined forever!!!)

Ok. You are absolutely right; demand for products must go up to create jobs and save the USA. How would one do that? Perhaps lowering prices would help. Would tax cuts to companies lower prices, raise prices, or would they remain the same?

Using your argument that if we cut taxes the greedy CEOs would not hire more people because they are greedy is plausible on the surface but check this out:

If you raise taxes on the company, the CEO is NOT going to take the taxes out of his paycheck. Why? Because, as you said, they are greedy. Where will the money for the taxes come from? From raising the price of the products. This means that you and I will pay those taxes or we will just buy the competing product from China where it is cheaper.

The American company, realizing they need to keep their product price down to remain competitive with China's competition will move American jobs to China. Well folks, there you have it, if you raise taxes it will lead to higher prices and jobs moved out of the country. Is this really that hard to understand?

Ok, the corollary; the case in which taxes on big business are lowered: While your argument that the company isn’t suddenly going to hire people or suddenly lower the price of their products is a good one on the surface, it is a very immature and shallow argument.

Here's why: The company, by your standards, is greedy and wants to make money. They make a profit on every product or service sold. The more they sell the more they make. If they have more capital free to make more products to sell, and thus make more profits, they will. Which means that eventually they will want to hire more people to make more products, to make more money.

If they are greedy like you say then they WILL hire more people out of love of profits. How do you think they got to be a BIG company to begin with? By growing it! Why would they want to stop growing it? Because they are getting taxed out of business!!!! When that happens it will just encourage them to move their operations out of this country thus destroying more American jobs.

I'm sorry but I must say that these arguments require some depth to your thought processes. The points being made by the libs are so amazingly shallow that they remind me of trying to argue with a teenager. You have to think beyond the sound-bites and follow the story to its logical conclusion.

Why do we need an income tax system in the first place? The country went by fine without one until 1913. How about no income taxes at all and let the government adjust to that. There were roads, bridges, military funding, electrical lines, sewers, and other general infrastructure projects before 1913. Now it seems like we can't even afford that.

All this "tax cut for the rich" talk is stroking the financial penis envy. It is the justification of an income tax system in the first place and the results are that even the non-rich minimum wage worker gets hosed with taxes.

The question is why are you for more taxes? note this these tax incresses are for EVERYONE! not just the"rich"

do you not like having money?

reply to post by camaro68ss


The tax cuts to be renewed don't have to be for everyone.
The rich make more, they should pay more.
Wasn't the average refund on the order of $200.00? I'm pretty sure that's what I got and I',m in the 33%
rate. That didn't make any difference to me, though I guess the idea is the aggregate amount.
Why are people against taxes on principle? Of course it takes MORE money today than in 1796!
The founders rebelled against taxation without representation! Not taxes in general.
Sure I'd like to have more money, but I also believe in supporting my country, to the benefiet of all of it's citizens!

I'll probably regret posting to this thread, but what the hey.

Let me start by putting out my disclaimer, and my rather skimpy credentials for this topic:
Disclaimer: I'm not in favor of higher taxes for anyone at this point in time, which probably lends a certain bias to my opinion.
Credentials: University graduate, though not in Economics. I did take several Economics courses, and aced the lot, and I've studied the subject in my spare time. I warned you, my credentials were rather skimpy.

Now, to the topic at hand:

First, I'd like to address the notion that any given tax cut that isn't narrowly targeted "unfairly" benefits "the rich" more than it benefits "the middle class". Of course it does, and there's nothing unfair about it. If you pay more in taxes than I do, any cut in the tax rate will benefit you more than me. To use a non-tax example, Bill Gates and I walk into an audio shop. Mr, Gates wants to buy a $80,000 home theater rig for his spare bedroom, I'm there to buy a couple of replacement cables, and a bottle of CD cleaning solution, total cost, around $20. The store is having a "10% off everything" sale. Bill Gates saves $8,000. I save $2. Is that unfair? Not really..the numbers don't *look* fair, but the percentages are the same.

As for a rationale for the Bush tax cuts, it goes beyond "the rich" spending money on their yachts and fancy cars, and thus creating jobs in the boatyards and car dealerships (although that's a non-trivial aspect of it). Assuming that Generic Rich Guy is also Greedy Rich Guy, he's not just going to spend money when he has more....he's going to look for ways to make more money with the money he has. In plain terms, he's going to *invest* the 'extra' money that would have been paid as taxes into other ventures, which will then be able to do more business, and buy more equipment, and hire more people.

Let's step back to Mr. Gates and me for a moment. He and I both get a 25% tax cut (whether under Bush, Obama, Clinton, or U.S. Grant...it doesn't matter). We now both have more money under our control. What will I do with mine? More than likely, with the few thousand I'll get, I'll pay down my debt, get some long-needed medical work done, or get some long-term problems with my wife's car fixed. What will Bill Gates do with his few million extra dollars? More than likely, he'll invest them in companies (via the purchase of stock), or bankroll the start-up of a new business. His actions will thus be creating new jobs (and new taxpayers), and putting more products on the market (both of which will push economic growth). I may not *like* the fact that he will benefit more from these tax cuts than I will, but from an economic standpoint, lowering the taxes on the rich will have more benefit for the economy as a whole than similar tax cuts on the middle class.

reply to post by Curiousisall


Simple . Trickle Down Economics . Does it Work ? YOU Decide.......