Wednesday, November 10, 2004
Tax Policy
So I'm sitting here studying for my Tax Law class, and I've begun to notice some of the specific provisions of Bush's 2001 tax reforms that have garnered so much attention. The Democrats decry these tax reforms as "tax breaks for the rich!" And indeed they are. For example, I just read about how under current law, the amount you can claim as itemized deductions decreases as your income increases (that means the richer you are, the more taxes you pay). Bush's changes, however, are going to eliminate that limit between 2005 and 2009, so that by 2010, you can take the full value of your itemized deductions, no matter what your income level.
The thing that perplexes me about those who don't like "tax cuts for the rich!" is that I don't hear them crying out for tax cuts for the poor. If forced to choose, I would rather have a world where the poor get taxed a lot and the rich get taxed a lot, rather than a world where the poor get taxed a lot and the rich get taxed a heck of a lot. I don't know if that made sense. My point is that higher taxes for the rich does not necessarily mean lower taxes for the poor. As long as we're not changing the tax status of the poor, they're not going to be better off. Therefore, I don't have a problem with relieving unequal tax burdens on the rich (which is what I'm learning Bush's tax "cuts" are doing), because they don't affect the poor at all. And until I hear people saying "Let's do tax cuts for the poor!" I'm not going to listen very hard to them.
The thing that perplexes me about those who don't like "tax cuts for the rich!" is that I don't hear them crying out for tax cuts for the poor. If forced to choose, I would rather have a world where the poor get taxed a lot and the rich get taxed a lot, rather than a world where the poor get taxed a lot and the rich get taxed a heck of a lot. I don't know if that made sense. My point is that higher taxes for the rich does not necessarily mean lower taxes for the poor. As long as we're not changing the tax status of the poor, they're not going to be better off. Therefore, I don't have a problem with relieving unequal tax burdens on the rich (which is what I'm learning Bush's tax "cuts" are doing), because they don't affect the poor at all. And until I hear people saying "Let's do tax cuts for the poor!" I'm not going to listen very hard to them.
Comments:
The problem is that the poor don't pay taxes. There is a certain threshold where the poor escape taxation. The main tax they get hit with is sales tax. You can cut a tax that doesn't exist.
correction: you can NOT cut a tax that doesn't exist
Note: This is in theory the tax laws can defy all norms.
Note: This is in theory the tax laws can defy all norms.
Well, yeah, the very very poor don't pay income tax. But there are plenty of people who do pay income tax who are below the poverty line. And decreasing the sales tax is certainly an option if you want to help out the people who are too poor to reach the threshold level of income tax. My point, though, is that I don't understand why we're so seemingly obsessed with the tax status of the rich, when it's the tax status of the poor that makes a whole lot more difference in their lives.
actually people below the poverty line don't pay income taxes at all. for instance, poverty line for 2003 for family of 4 is 18,400, and the same family would get 21,700 in exemptions and deductions, so would owe no tax.
I think people gang up on the rich because 1) they can afford it, and 2) there are a lot less of them, which makes them an easier target to attack. And there is a tradeoff. Eliminating the progressive tax would lead to a large decrease in revenue, which the gvt would either absorb (ie bush plan, deficits, etc), or the middle class would be forced to pick up the tab for. It's a zero sum game, in a sense. You are right though, in that if you are cutting taxes and losing the revenue, tax cuts for rich do not really affect poor per se, other than they feel they are getting screwed.
Nice blog, btw. entertaining.
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I think people gang up on the rich because 1) they can afford it, and 2) there are a lot less of them, which makes them an easier target to attack. And there is a tradeoff. Eliminating the progressive tax would lead to a large decrease in revenue, which the gvt would either absorb (ie bush plan, deficits, etc), or the middle class would be forced to pick up the tab for. It's a zero sum game, in a sense. You are right though, in that if you are cutting taxes and losing the revenue, tax cuts for rich do not really affect poor per se, other than they feel they are getting screwed.
Nice blog, btw. entertaining.
