AMERICAN CONSERVATISM IN 2008 AND BEYOND

Myth #1: Tax revenues remain low.
Fact: Tax revenues are above the historical average, even after the tax cuts.

Myth #2: The Bush tax cuts substantially reduced 2006 revenues and expanded the budget deficit.
Fact: Nearly all of the 2006 budget deficit resulted from additional spending above the baseline.

Myth #3: Supply-side economics assumes that all tax cuts immediately pay for themselves.
Fact: It assumes replenishment of some but not necessarily all lost revenues.

Myth #4: Capital gains tax cuts do not pay for themselves.
Fact: Capital gains tax revenues doubled following the 2003 tax cut.

Myth #5: The Bush tax cuts are to blame for the projected long-term budget deficits.
Fact: Projections show that entitlement costs will dwarf the projected large revenue increases.

Myth #6: Raising tax rates is the best way to raise revenue.
Fact: Tax revenues correlate with economic growth, not tax rates.

Myth #7: Reversing the upper-income tax cuts would raise substantial revenues.
Fact: The low-income tax cuts reduced revenues the most.

Myth #8: Tax cuts help the economy by "putting money in people's pockets."
Fact: Pro-growth tax cuts support incentives for productive behavior.

Myth #9: The Bush tax cuts have not helped the economy.
Fact: The economy responded strongly to the 2003 tax cuts.

Myth #10: The Bush tax cuts were tilted toward the rich.
Fact: The rich are now shouldering even more of the income tax burden.
http://www.heritage.org/research/taxes/bg2001.cfm

In 2000, the top 60 percent of taxpayers paid 100 percent of all income taxes. The bottom 40 percent collectively paid no income taxes. Lawmakers writing the 2001 tax cuts faced quite a challenge in giving the bulk of the income tax savings to a population that was already paying no income taxes.

Rather than exclude these Americans, lawmak­ers used the tax code to subsidize them. (Some economists would say this made that group's col­lective tax burden negative.)First, lawmakers low­ered the initial tax brackets from 15 percent to 10 percent and then expanded the refundable child tax credit, which, along with the refundable earned income tax credit (EITC), reduced the typical low-income tax burden to well below zero. As a result, the U.S. Treasury now mails tax "refunds" to a large proportion of these Americans that exceed the amounts of tax that they actually paid. All in all, the number of tax filers with zero or negative income tax liability rose from 30 million to 40 million, or about 30 percent of all tax filers.[17] The remaining 70 percent of tax filers received lower income tax rates, lower investment taxes, and lower estate taxes from the 2001 legislation.

Consequently, from 2000 to 2004, the share of all individual income taxes paid by the bottom 40 per­cent dropped from zero percent to -4 percent, mean­ing that the average family in those quintiles received a subsidy from the IRS. (See Chart 6.) By contrast, the share paid by the top quintile of households (by income) increased from 81 percent to 85 percent.

Expanding the data to include all federal taxes, the share paid by the top quintile edged up from 66.6 percent in 2000 to 67.1 percent in 2004, while the bottom 40 percent's share dipped from 5.9 per­cent to 5.4 percent. Clearly, the tax cuts have led to the rich shouldering more of the income tax burden and the poor shouldering less.[18]
http://www.heritage.org/research/taxes/bg2001.cfm

Foxfyre, it is reaching the point where the bottom 50% of incomes pay little or no income tax, in fact a large percentage receive more than ever paid in. I am all in favor of helping the lower incomes, but one negative aspect of that scenario is that a larger and larger percentage of people have no vested interest in the government controlling spending, because they are not contributing via the income tax. Most people like alot of things if they are not required to pay for them.

The above is one reason I like the retail sales tax because everyone would be able to see the money every time they buy something as it is confiscated for their government to redistribute into whatever endeavor their beloved representatives deem worthwhile.

There is one surefire way to get taxes lowered and never raised.

For one year there should be a complete moratorium on taxes.
Nobody would have ANY state, federal or local taxes deducted from their paychecks.
There would be no SS tax deducted, no FICA, no medicare tax, nothing.
You would get paid every penny you earned.

Then on the first of the year, you would get a bill from the govt for ALL of the taxes you owe, taxes that are normally deducted from your check.
You would have till April 15 to pay that bill.
There would be no extensions for any reason.

I am willing to bet that if that was done every person in this country would be demanding a tax cut.

okie wrote:

I would certainly entertain a good debate to compare merits of a sales tax vs an income tax. At first blush I see a sales tax as in fact being far more regressive in its effects on the poor unless perhaps some kind of low income ID card could be presented to exempt somebody from the tax, but then you have an enormous accounting head ache for the business owner. My other concern is the ease with which a quarter percent here and a quarter percent there is so easy to impose and is barely noticeable on day to day purchases but slowly confiscates more and more of individual assets.

That frog started out in lukewarm water and gradually heated up until it boils to death analogy and all. . .

At least on the local level we usually get to vote on those quarter cent increases even though many are virtually invisible within the language of a really great looking bond issue or something. At the federal level we wouldn't. Congress could just tack on another quarter cent any time they chose to do that. But they can raise our income taxes at will too--they just get more negative publicity when they do that.

Thanks for the listing of taxes.

I will preface this by saying I am no expert on this and I am not totally informed enough to say I would support the sales tax at this point, but we need to study this in much more detail in a serious way, and seriously consider enacting it, after determining the necessary tax rates and exact structure of the tax in terms of what to exculde, etc.
The reason I like the retail sales tax, but only if the income tax is totally eliminated, would be:

Ease and efficiency of collection and lowering the cost of collection. We already collect state and local sales tax. Fear of an underground economy is one concern in regard to bartering or noncollection, however merchandise is so mass produced and sold by large outlets, I think only a small percentage of sales tax would be avoided and probably would be much smaller than current non-compliance to the income tax.

Visibility of tax is a good thing. Every time anyone buys anything, they see how much the government is costing them.

To address the regressive aspects of the tax, it can be excluded for shelter (rent and home purchase up to a certain threshold) and for food. Also for used clothing, such as Goodwill, Salvation Army, etc. Food is already excluded in some states. This is not a problem through the bar code system. Also, the low income wage earners could apply for a rebate at the end of the year, and unfortunately this aspect may require a small portion of the income tax bureaucracy to survive, not only for this, but also to administer Social Security and Medicare. However, we should also look at converting SS and Medicare to a sales tax system as well. Also, rich people buy more expensive items, such as more expensive cars, and they buy more stuff, so they are still going to pay most of the tax. Through the rebate system for low wage earners, they will still pay little or no tax, or perhaps come out ahead, depending on structure of the system.

The underground economy of drug dealers, etc. etc. would pay tax anytime they buy something.

By eliminating the income tax, we get rid of all the special interests that have their finger in this mess, and it also frees up Congress from all of this mess.

Most importantly, the elimination of income tax on businesses reduces cost of production here in this country, thus placing all products sold here on an equal footing, no matter where manufactured or produced. This one thing could help our domestic economy in an unbelievably positive way. Every product here is penalized as it works its way up the system, from the myriad of companies, from mining ore, to processing, to manufacturing, to trucking and transportation, to wages, etc. etc.

Yes, we could pay more for products, possibly, but we have more money to spend, and the product price should be lower before tax because of elimination of all the taxes included in the price before it hits the shelf in a store.

The tax could also encourage saving vs spending. One of the benefits of this could be increasing the amount of money available for capital investment, such as into new equipment, technology and development.

These are just a few of the positive aspects of the sales tax.

Bottom line you can't expect to fincance wars; run a government all the while having tax cuts which have only benefited a few and have run the deficit up. Sooner or later something has to got to give.

powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people

This should be the quote of the year:

real life wrote:

revel wrote:

Bottom line you can't expect to fincance wars; run a government all the while having tax cuts which have only benefited a few and have run the deficit up. Sooner or later something has to got to give.

OK.

How 'bout if we measure each federal program against the 10th Amendment?

Quote:

powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people

If it is a program that specifically qualifies as being the federal government's responsibility under the Constitution -- fund it.

If it is NOT a program that specifically qualifies as being the federal government's responsibility under the Constitution -- eliminate it.

Fair?

According to the data published by the Heritage Foundation up there, should we actually inforce the 10th Amendment, RL, we would eliminate the deficit overnight and be running a HUGE surplus even with the funding for the overseas military efforts everywhere.

The problem is, many conservatives were educated in schools run by liberals and their idea of limited government is a government that grows at a slower pace than liberals want it to.

Most--mostly on the leftish side--seem to be calling for a boycott of the opening ceremony but not the Olympics themselves.

Conservatives warm to Bush boycott of Beijing Olympics

Quote:

Conservatives warm to Bush boycott of Beijing Olympics

By Ralph Z. Hallow
April 10, 2008

Conservatives are beginning to coalesce ,,, around the idea ... that President Bush should not attend.

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