On Sat, May 31, 2003 at 02:50:46PM -0500, Julia Thompson wrote:
> So, instead of making the tax cut package *quite* as big, increase > EIC payments, if that's not being done already. (Anyone have stats > regarding that?) Or increase some other benefits that these folks > with little enough income to have no tax liability can use.
Yes, that would make more sense for stimulating the economy.
> I agree that helping out the folks making $15-25K somehow so that > *they* can inject a little more into the economy will do something to > help, but giving a "tax cut" to people not paying any taxes to *be* > cut is not *necessarily* the way to do it. Sending out a check to > *everyone* with a kid, regardless of income, and not saying anything > about "tax cuts" in the process would be more constructive and less > divisive (except to the people who don't have kids and might resent it > -- but a kid costs more per year to raise than the government is going > to hand anyone just on account of their having a kid.)
I don't have kids and it wouldn't bother me. Kids consume a great deal, so if you want to stimulate the economy, sending money to parents with kids is not a bad way to do it.
Erik Reuter
Wow, well it does bother me. Not saying kids don't consume, but you are making a non-special class of people even more special than they are already and I doubt you'd really stimulate the economy (more on this*). I don't know where I read or saw this, two doctor's talking about dividend taxation. The one person said, 'Design a tax system that is completely blind to the individual being taxed.' Which I took to mean: it doesn't matter if the person is born poor or rich, is poor or rich during his life, or even comes into or out of the system like an immigrant; the rules apply the same to everyone. They didn't mean a flat tax either, but in my book that should be the number one system reform that we shoot for. So question one is: can a tax system be blind? In a pure socialist sense it could be, but what about a non-socialist solution?
*A lot of people engage in feel good economics and ignore reality. Of course it would be an instant good if the poor or middle class or parents had more money, but would it really do any good long term? If just the economically dis-advantage got more money, all it would fuel is short term inflation. Prices for the things they need go up, they gain no real benefit and the extra money is quickly absorbed into the system...in fact ending up in the pockets of 'rich' business owners. Not enough for them to hire more workers, there isn't an increase in goods purchased, so at best they pay a little bit more taxes, maybe they give raises to a few workers but nothing with real impact.
Business owners aren't dumb. Anyone with half a brain can use price cuts and increases to maximize his profit. Big ticket items go on sale from mid February to May, when people are getting their tax refund checks. Two weeks before a summer holiday, soda is at the regular price, but the week after it's on sale. So after the first of the month, when government checks go out, food stores may have higher priced items on sale, like delmonico steaks, but the cheaper meats are at the normal price. Near the end of a month flank steaks are on sale, the company is just trying to sell more of an item that is going to be selling anyway. I'm not trying to focus on the very poor, just trying to point out trends that could be found from fixed income retirees up to yacht buyers. So if a tax rebate was somehow focused on the lower tax payers (and that would be a good thing, for them at least) it would not have a positive impact on the economy as a whole.
Now the other side, like Bob Zim pointed out. Does Bob or his accountant having more money in his savings account or some other money storage vehicle..even stocks...really help? Even if it's just his savings account, he pays taxes on interest on that so some will go directly back to the government. Not the greatest return on investment to be sure, but it's a start. Banks have more liquidity with the extra money, maybe they make a few more loans. Maybe he does invest in some stocks and a company or two decides to hire a few more workers, or do more R&D, or add an extra product line. I'm grasping at straws here (where I am tired) but Bob Zim isn't going to buy a hundred more delmonicos for the hundred times less taxes he's paying. There won't be a sudden upswing in BWM orders. It will be the little things that his money, concentrated with others who can invest their money instead of just quickly spending it, that will help the economy.
My governor Ed "it's only fourteen cents" Rendell engages in class warfare, yet he hates people talking about winners and loser with his tax reform. One reform will benefit property owners, but not renters. He actually said, "Well, they only make 30% of the state population." So it's okay to screw them, since they are in the minority? (Of course you could also say that more of renters are minority). He refers to new taxes as investments. His main point is adding video gambling to racetracks and it's in serious jeopardy.
Sorry, local rant there.
Before I continue, I would say that I'd agree with Fool's forwarded pieces about Clear Channel and corporate radio. Some of it anyway. There is a local PSA that started around February. The message starts good: "Hey, it's okay to be worried but seriously there's no reason to go into mass panic over some bad news. Bad things happen, it's how we react that shows our true nature." So far so good. "Continue to live your lives. Go to work, go to school." Still okay. Then the next four sentences are consumer driven. Buy this, buy that, eat out, take a trip. I'd almost say there is a death spiral we are in. We need to consume consume consume for our economy to stay strong and it can't do it forever. Or more importantly for the next 70 years, my lifespan.
Now a tangent. Along the same lines, I don't like people saying 'it takes two incomes to do X'. Again it's feel good economics. Maybe this has been studied and proven wrong or even right, but I've never heard either way. Before I hang myself, the disclaimer: "I'm not saying there is anything wrong with women working, pursuing every and any goal that they can achieve." There must be some point where women working outside the home became more than a small number, and that it trended up for many years before leveling off. If it could be studied on a local level there'd be a direct correlation between the inflation rate and more women working. At the worst, the real estate market would show the upswing. More disposable income in a family putting upward pressure on prices. And the problem is now that everyone thinks needs, when they mean wants. They need cable TV, a cell phone, two or more cars, a maid, a nanny, a day care center.
DSL internet...
Kevin T. - VRWC Enough for now
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