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Saturday, March 23, 2019

One of the greatest fairy-tales of right-wing economics is the belief that tax cuts (especially for the rich) pay for themselves by stimulating economic growth. To make it sound less mythical and more plausible, Republicans call this no longer refer to this fairy-tale by its original name, the discredited “supply-side economics.” Instead it is now called “dynamic scoring.”

Even if cutting taxes for the rich does have a stimulative effect, its impact is far smaller than measures that directly assist working families, including food stamps and unemployment benefits. And the one time we engaged in so-called “base broadening” that lowered rates and removed deductions (in 1986), it “had little effect” on stimulating economic growth.

Yet Republicans are back to insisting that if we lower tax rates, it will ultimately increase taxes collected by stimulating growth.

The day after the election, House Speaker John Boehner said that he would be willing to increase revenues “as the byproduct of a growing economy, energized by a simpler, cleaner, fairer tax code.”

To Paul N. Van de Water, a Senior Fellow at the Center on Budget and Policy Priorities, this sounds as if Speaker Boehner is suggesting that the increases he favors would arise from “dynamic scoring” and not actual higher rates on the rich. This way, Republicans would not violate their sacred pledge to never, ever raise taxes (especially on the rich), ever.

The “dynamic scoring” budget-foolery allows Republicans to pretend that continuing tax cuts for the rich isn’t completely irresponsible at a time when the nation considers cutting essential safety net programs.

Van de Water opposes the use of dynamic scoring in any budget plans. As he told The National Memo,  there is no clear connection between marginal tax rates and economic growth. The deep uncertainty of the dynamic scoring projections damages the credibility of the budget process.

In fact, it’s reasonable to believe that tax increases on the rich are more likely than tax cuts to spur economic growth.

Since 1944, the United States has only raised taxes on the rich twice—in 1992 and 1994. What followed those tax increases was one of the greatest economic booms in American history. Though Clinton’s decision to raise the top rate didn’t build the World Wide Web or spark global trade, it certainly didn’t hurt the economy either — despite Republican predictions that hiking taxes on the wealthy would drive America into recession or worse.  Well before the end of the decade, tax revenues had increased sufficiently to transform the Reagan-Bush deficits into a surplus, and the Treasury was looking forward to paying off the national debt.

Then the Bush tax cuts drove the budget into unprecedented deficits and the national debt to stratospheric levels (along with the wars in Iraq and Afghanistan). Still, Republicans are promoting policies that echo George W. Bush’s belief that tax cuts can solve the nation’s fiscal problems — and they are ridiculing President Clinton’s strategy of asking the rich to pay more.

Former Reagan advisor Bruce Bartlett points out that people just don’t buy that argument. “Even without looking up government statistics, they know that the 1990s were a time when the economy boomed, while the 2000s were a period of economic stagnation,” he wrote.

So if Speaker Boehner is insisting that tax cuts will increase revenues, President Obama should be just as confident in insisting that carefully targeted tax increases will not only pay for themselves, they’ll make other spending cuts unnecessary.

At least he has the 1990s to back him up.

AP Photo/J. Scott Applewhite

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70 responses to “Why Not Use ‘Dynamic Scoring’ For Tax Increases On The Rich?”

  1. Mikey Sans says:

    It’s not possible to write a column that’s any more false than this one.

    • nobsartist says:

      I suggest that you read and listen to the garbage that is on fox entertainment.

      that is more your speed.

    • amarquez647 says:

      Mikey support your statement, otherwise it is meaningless.

    • Bettie says:

      Do your homework Mikey. I realize that facts don’t matter to most of the TPGOP but to rational people with an understanding of economics, they do. Want to keep your head in the sand? Keep on reading Breitbart, HotAir, Newsbusters, etc and watching Fox. They are doing a wonderful job of dumbing down the country.

      • MikeOverHere says:

        Do facts matter to the USSDemocrats? Clearly not. But hey, Bettie, keep your head in the sand and keep pinching yourself into believing the economy is just fine and dandy and Obama knows what he’s doing. Keep watching Huffington Post, Slate, Media Matter, etc and watching MSBNC and other moron-making propaganda engines. They are doing a wonderful job of keeping you stupid and unwilling to question those in power. You are a sheep who is blind to the truth.

    • Jim Lou says:

      Don’t just say something. Why don’t you explain why you say what you did?

    • danny king says:

      I agree, but the money to pay off this extraordinary amount of debt (inflicted on us by both the left AND right!) means higher taxation on those of us who have the most.

      Its disgusting, but thats how we pay for roads, sidewalks, bridges, guns and butter.

      The only alternative is emmigration to a nice tax haven in the south pacfic or europe.

      • eyebeam says:

        Why is paying for what you receive “disgusting?” Those who have the most, have benefited the most, and should pay to support the system that has allowed them to succeed.

      • seche says:

        Chow danny King don’t let the door hit you in the butt on the way out.

      • Have a nice trip, but take it from someone who emigrated long ago, there is no such a thing as Nirvana. If you want something, you better be prepared to pay for it. The problem with people like you is that you enjoy and benefit from our freedoms and the opportunities our country has to offer…but find paying for them “disgusting”.

    • Where are the facts to back up your assertion, sir?

    • wesvvv says:

      Stunning job of providing a counterpoint. I’m convinced.

  2. nobsartist says:

    republiCOns have no need for history, thats why they can never admit that the failed policies that they always support never work. Face the facts, republiCONs can neither run wars or create health care systems that work. They are fiscally irresponsible and actually quite incompetent.

    Those are the good points.

    Although it was not the middle class that were responsible for creating credit default swaps and giving tax cuts that are ridiculous to everyone making over 250,000 while declaring war on the “axis of evil” creating massive deficits, the middle class is responsible for paying for them.

    Even though those making over 250,000 are not responsible for the irresponsible actions of republiCONs, they have been the recipients of the incompetence. The only fair way to resolve this issue is a massive “windfall profits” tax on all corporations and individuals that have benefited from this incompetence.

    If corporations are sitting on 2.5 TRILLION in cash, afraid to spend it because they are afraid of how they are going to be taxed 5 years from now, the government should take 99% of it. They should also apply a retroactive tax on all earnings of 250,000 or more back to 2003 along with an additional 6% medicare and ss tax.

    It is sort of how the government deals with those that cheat the welfare system because after all, the way the bush tax cuts have turned out has been just a welfare plan for the rich and they did not do what bush said they would do with those tax cuts.

    Instead, they have used them to ruin our country. As responsible republiCONs say, actions have consequences.

  3. Trickle down economics did not work in the 80s, and it did not work when W was in office. Instead of promoting investment and job creation, it wiped out the budget surplus W inherited when he became President in one year, produced one of the worst job creation records in modern history, and helped create a real estate bubble that brought our financial institutions and our economy to its knees.
    The only measurable result of trickle down and irresponsible tax breaks involves record outsourcing, and investment in countries like China, India, Indonesia, Mexico and Bangladesh. Building sweat shops, and death traps, may be profitable, but it sure does not say much for who we are and how fr we are willing to go to make a buck.

    • Laughatyourignorance says:

      People see what they want to see. Every comment and even this article is opinion. There are no facts. Taxing the rich and increased economic growth are coincidence. What is your take on rapidly growing national debt, I’m sure that is not the liberal agenda at work, it must still be W.

      • You are right sir, people see what they want to see. If they don’t want to see the our economy was its strongest and best when Unions were strong and taxes on the Rich were extremely high (even though they didn’t pay for it do to the government incentives to invest in the country to get tax breaks), then they won’t see it.

        History has proven time and again that high taxes on upper income has worked. Now we have companies getting tax incentives to export jobs outside the U.S., does this seem like it will help our economy. Now we have Unions that have been dismantled and employees that have no where to work but places like Walmart, a company that pays it’s employees so little that 75-85% are eligible for government assistance (food stamps and the like). So now I have to pay for these employees insurance because an extrememly greedy company that makes more then enough money to pay their employees a living wage, refuses to.

        Then there are the companies that exploit every tax loophole that they lobbied to keep open. Our government no longer looks out for the majority, it looks out for the special interests groups.

        That being said, I will say that the Democrates are not as bad as the Republicans when it comes to destroying our economy and screwing the common man over.

        As for our current debt. After 9/11 the budget and spending skyrocketed under Bush JR. If you do your research you will find that only 14% of our national debt is actually a direct cause of the current administration. The rest are due to previous administrations and the policies they put in place. To get rid of our debt, what we need to do is lower the budget drastically and raise taxes on upper income. . .

        If you need an explination on how taxes work I will give you one. Most people don’t realize how they actually work.

        • lunibin says:

          “Unions have been dismantled,” where?

          Instead of blaming any administration for the economy, you should be blaming congress. The executive branch does not enact laws for a reason. When you outspend the household budget the first thing you do is make out a budget. Where’s the budget for Washington?

          Do you know what our projected liabilities are? If you do, then you also know that raising the tax on everyone to 100% does not even come close to solving the problem.

          Why would anyone trust the politician who wants more of your money because he spent all that you gave him already? Do you know where your SSI contributions are? Do you know how SSI was sold originally?

          It all boils down to politicians think you and I are idiots. This came out in the 3rd Democratic debate in 08, when speaking of healthcare, Clinton stated “you don’t know what’s best for you so we have to make those decisions for you.” This thinking was backed up by Sebelius at a townhall in Penn. in 2009.

          It isn’t about taxing the rich! It’s about your freedom and the size of government. You better look around because your freedom is disappearing fast and soon the state will be dictating everything you do!

        • Chuck Fox says:

          Unions are casuing the problem with state and local governement collapse from excessive benefits and retirement packages bankrupting us all. Our economy was strongest when taxes were low or non existant. Look up history. If you took every $ from every rich person and corporation in the country, EVERY $$$ we couldnt run this country for 10 months. and the vast majority of this expense is entitlements. Go look up facts before you speak nonsense

          • Chuck, the tax rates when Eisenhower and Reagan were in office were much higher than they are today. Our problem is caused by ridiculously low income tax rates, low capital gains and dividends tax rates, and so many loopholes and deductions that most wealthy people pay less than their secretaries do.
            Nobody expects the top 2% to cover the cost of SS and MEDICARE by themselves. We fund those programs with our FICA contributions, although MEDICARE does need some help to cover outlays. What is being proposed is a rate increase to revert back to the rate that was in place in the Clinton era for our highest earners. They did very well in those days, our economy flourished, 23 million jobs were created, and we ran a budget surplus for the first time in decades. Compare that to the disaster we endured since W’s trickle down approach was put in place. What is truly amazing is that there are still people, some of them middle class folks affected by W’s policies, who continue to insist on the retention of the tax policies and deregulation that almost caused the collapse of our financial institutions and the worst recession since the Great Depression.

          • RobertCHastings says:

            Amen, Dominick, Amen!

          • RobertCHastings says:

            Chuck, you are way out in left field, buddy! The amount of taxes we have lost due to the Bush era tax cuts for the wealthwould more than get us out of our current BUDGET deficit. As for the DEBT, that is a different question; but if you are one of those with income BELOW the 250k level, you need to look above you on the food chain to see why your salary is today pretty much what it was(in purchasing power) thirty years ago. Over that period we in the middle class have seen a huge REDISTRIBUTION of our wealth to the upper 2% – that is why the debt is where it is. And they have the chutzpah to complain about redistribution?

      • wesvvv says:

        Look at where the rich actually spend their money. That’s all you have to do. Take Romney for example. Where is that wealth he extracted as debt from failing companies? In Switzerland and the Cayman Islands. If it had remained payroll money for the middle class it would have been spent IN the US and would have built more businesses.

        Like it or not right wing, the economy IS the middle class and how much spending money they have. Aside from corporate welfare and the military industrial complex (paid for by the middle class and debt) there is no other economy. It’s all retail and services. Suck it up and believe that we can build an economy being pool boys and day laborers for the likes of Romney, but it’s a lie.

      • The main contributors for the recent increases in the national debt are: Bush’s TARP, Obama’s stimulus package, moving the cost of two wars to the general budget and national debt instead of hiding it and pretending there are no consequences to the decisions we make, increases in debt interest, and the liabilities associated with Social Security and MEDICARE. If you know of anything else, please share it with us. Bear in mind that the civil servant workforce is down by almost 1 million people compared to Reagan era levels, which makes the big government argument bogus.

      • RobertCHastings says:

        And you, apparently, see what YOU want to see. Take off the blinders, friend, and look at your paycheck and figure out what you can buy today compared with what you buy thirty years ago. Two years ago, the last year I worked before retirement, my buying power was less than what it was thirty years ago, although I was making about six times as much when I retired. I, at least, realize what heppened to my purchasing power, and it wasn’t Bill Clinton or Obama. The people primarily responsible over the past thirty yearsfor the reduction in the purchasing power of the middle class have been those folks who saw their incomes rise by300 to 500% while mine, based on current prices and inflation, has remained stagnant. It’s really pretty hard to miss that one. Thirty years ago my family and I went out to eat two to four times a week, went to moves about every weekend,could buy a new car every six to ten years, bought our electronics that were MADE IN THE USA. If you have the courage to look back, you (or your parents) had the same experience.

    • MikeOverHere says:

      Pssst! I think you meant to say DID work, yes? Because trickle down did work in the 1980s (go look at growth rates in the 1980s) and when Bush was in office (go look at the growth rates from 2002-2007). Oh. Oy. It seems every sentence in your adorable little rant is off. Never mind. Go back being stupid.

  4. This article is ridiculous. This is a classic case of correlation not being equal to causality. Any student who took basic economics can tell you that raising taxes is not beneficial to an economy. Hell its why even Obama doesn’t want to raise them if it wasn’t for the deficit.
    And you know what else happened during the clinton administration? The largest decline in federal government as a percentage of the economy since the 1950’s, another era which high tax liberals quote as the reason for prosperity. Deficits crush prosperity and bush did a horrible job with this, but the effective tax rate from the 90’s to 00’s was within a few percentage points, barely enough to make the difference of a balanced budget to the massive debt we’ve seen in the bush and obama administrations.

    Sure the tax code can be more fair and we all agree that mitt shouldn’t be paying less than us, but if you’re arguing that we’ll have a great economic boom if we just raise taxes, you need to go back and read any economics book ever written.

  5. shawn_von_socialist says:

    how higher taxes help middle-incomers… is just tranference when high-taxation happens..above 50 percent employers..tend to pay their workers more…. to lower their corpate net-tax.. its just transference from the corporate level to the indivudial…

    i am a real math wonk

  6. Avery45 says:

    Funny how the left tends to forget Clinton had a recession and Bush pulled the economy out. Also funny how they want to ignore Clinton lowering capital gains tax. And we won’t even bring up the tech bubble he rode for almost a decade. Plus he signed a welfare act that made recipients look for a job.

    Last but not least why do they always start with the 1940’s. It has been suggested that raising taxes contributed to the great depression.

    • fooledmeagain says:

      Not only that Clinton signed NAFTA that allowed off-shoring to happen to begin with …His foreign policy was atrocious-Somalia, Bosnia, USS Cole etc.. AND he allowed Credit Default swaps to circumvent regulation -see Lehman Bros. Do they ever talk about Bush creating tougher financial regulation with Sarbanes Oxley btw? Nope.

  7. robert washington says:

    When the hard left can tell a story WITHOUT invoking the Bush name I will be more ready to read with an open mind and heart, anything else is demagoguery and fear mongering!

  8. robert washington says:

    Can anyone tell me? just exactly how much money does the government need?

  9. fooledmeagain says:

    So tax hikes in the 90’s ? Not Reagan’s Tax cuts of the 80’s that spurred start-ups like Microsoft, Apple, and all the other mega-growth companies of the 90’s? Or ending the cold war, thus handing Clinton a huge budget surplus? ……Conversely during the 90’s the stage was set for the next decade- with the Market crash of 2000, 9/11 (as a result of poor foreign policy) , NAFTA, CRA, Credit default swaps exemption. … This article is tantamount to liberals crediting “The New Deal” with ushering an era of growth and ignoring the fact that the war left us as the only man standing with a manufacturing base..

    • johninPCFL says:

      Reagan ended the Ford inflation by creating a recession (tax cuts and spending cuts) and then solving that with a military-industrial spending spree, ending his tenure by adding $4T to the national debt.

  10. Post Hoc, Ergo Propter Hoc. Did the tax increases of 1992 and 1994 CAUSE one of the greatest booms in American history, or did the boom happen in SPITE of the tax increases? Would the boom have happened if the tax rate had stayed the same?

    • johninPCFL says:

      There is an arguement to be made that raising tax rates causes money safely held to the sidelines to be invested in growing enterprises to stabilize the magnitude of the underlying wealth.

  11. All they want to talk about is raising taxes. You can take every penny the rich make in a year and it wouldn’t reduce the yearly deficit by 25%. Spending and entitlement spending specifically is the elephant in the room that is not being addressed by the dems because they don’t want to enrage their base. Taxes on the rich is a red herring.

  12. montanabill says:

    Wait a minute. Didn’t the tax rates during the Clinton years include far more deductions than the code today? Wasn’t spending cut and work for welfare rules put into place? And a balanced budget? Let’s do go back to the tax code of the Clinton area, together with the GDP spending level along with the same entitlement and welfare levels. Of course, that means we have to get rid of all the meddling into healthcare of the last 12 years, but that might be a good thing and lead to good healthcare legislation.

    • johninPCFL says:

      Clinton’s budget was balanced because, like Reagan’s, it didn’t have military costs in it. Clinton’s last budget was a $20B deficit. GWBs last budget blew out a $1.8T hole.

      • montanabill says:

        You are right, it was not a balanced budget but so many on the left think it was that it is sometimes best to let sleeping dogs …. It was about a close as we have been. GWB’s last budget (Senate created) was spent under Obama.

        • johninPCFL says:

          You are correct. There are pieces of it that could have been changed, but the bulk of the spending was committed before GWB left office.

          • montanabill says:

            Do you recall the Obama campaign speeches that called the borrowing required for that budget, ‘unpatriotic’?

          • johninPCFL says:

            Yes. And Congress keeps on spending.

            My suspicion is that if he vetoed the $690B military authorization act, he’d be called ‘unpatriotic’ too, right?

          • montanabill says:

            Probably, since defense is specifically called for in the Constitution. But it is hardly the $690B that is the major cause of the deficits.

          • johninPCFL says:

            That was the rationalle that Reagan used to pull that spending from his budget proposals to Congress. It’s also how he added $4T to the national debt in eight years. It was his own, personal “stimulus” for the large military contractors, and helped end the recession that plagued his administration for the first several years. I worked for the DOE/weapons program during those years, and there was no project proposal that was too outlandish to fund and spend on. Star wars? Fantastic, go get ’em. Bradley? Toss a couple more $billion at it. ABM? Sure, we got money to burn. B1? Yeah, Carter cancelled it, but bring it back. No dock space for the new aircraft carriers and Seawolf submarines that the Pentagon says we don’t need? No problem, we’ll build more.

            Medicare spending is the major driver, and the drug benefit didn’t help. SS is paid for, but revenues are below expenditures right now, and will continue to be until the employment situation improves. Medicaid enrollment is determined by the states, and expenditures by the states are matched by federal money. ACA reduces Medicare expenditures by $716B over a decade by reducing payments to hospitals and consolidating overheads (Tricare, Medicare).

            The tax rates from Clinton funded the fedgov. Without the rate cuts (that were supposed to stimulate growth) and the two wars run off-budget, the $20B from Clinton would still be the norm (it was with Carter and Ford.) As it is now, we pay in interest the amount of debt Reagan inherited from Carter.

          • montanabill says:

            At the moment, Israel appreciates Star Wars. But I have to agree since I was working at a very large defense contractor in those days, that a lot of boondoogles were and, for that matter, still are funded. However, a few years in Washington clearly taught me that every other department and agency in Washington was hostage to the beltway bandits as well.

            SS is not paid for. SSI is sucking the life out of it and most of the recipients will take out far more than they ever paid in for SS. Even then, by the time most retirees get 7 years of SS, they will have exceeded the funds deposited by themselves and their employers.

            I agree that the tax code needs to be reformed. The current tinkering at the edges does nothing more than keep IRS agents and tax accountants employed. But first, the economy needs to be fixed so that jobs are created, generating a much larger tax paying citizenry. So far, the President has studiously avoided any positive measures in that direction.

          • johninPCFL says:

            The Patriot missile system did not grow out of SDI. It grew out of the illegal ABM program.

            SSI takes $25B out of an annual $1750B expenditure.

            Recipients today who are old enough to have started contributing in the 1940s take more out than they ever put in, all interest included. The latest report says that those beginning their careers in the 1970s will break even.

            Jobs are created when new opportunities arise (such as eBay) and when a company’s workforce can’t keep up with product demand. Until demand changes, companies will not hire. Artificially low wages eliminate disposable income, which stagnates buying, which stagnates hiring. Middle income tax rates are at the lowest they’ve been in decades, so disposable income should be high, but the tax cuts from 2001 and 2003 did little to spur purchasing, except for offshore products (they were more affordable.)

            The “stimulus” bill had $260B in further tax capture and rebate monies, in addition to the GWB tax cuts. The wealthy have already figured out how to avoid paying the top rates, so further increases or cuts will have little to no effect.

          • montanabill says:

            The missile defense system was originated as part of the Star Wars program.
            FYI. I have saved everyone of my W-2’s since I started getting them at age 17. I have totaled them. I started taking SS at age 65. I exceeded the amounts deposited from me and my employers at age 72 1/2. This is pretty much the same with everyone. Simply determine the average income for each year, determine the total SS contribution, get the projection for SS payments beginning as of 2015 and their forecast increases and see for yourself how long it takes to exhaust contributions.

            Your economics are pretty thin. Existing companies can and do create new products and expand marketing. Thousand of new start-up companies are created every single day, but venture capital people capable of funding larger start-ups are hesitant to jump into an uncertain economy. It is that same uncertain economy that is keeping existing companies holding their earnings. You may disagree all you want, but it this President and his policies that are stagnating the economy and his new budget proposal simply continues to give them very good reason to set on the sidelines.

            Another FYI. Not all of us have figured out how to shield earned income from the highest tax rates. If you want a fun exercise? Get TurboTax, give yourself a $2 m/year income and then see how many deductions you can find.

            You have probably also heard the story of England. They had 16,000 citizens who earned 1 m #’s per year. Then they raised the tax to 50% on them. Last year, they now had 6,000 who earned 1 m pounds. The other 10,000 did too, but they no longer live in England or pay British taxes.

          • johninPCFL says:

            I remember the ABM controversy and know that the Patriot system grew from that program. I don’t know whether it was a self-standing program, or was part of SDI.

            Here’s what I found on SS payments online: “* People with lower incomes receive higher ratios of benefits to taxes.[21] If a 23-year-old earned $30,000/year for the next 44 years, he would receive a yearly old-age benefit that is about 4.0 times the amount of the yearly taxes that he paid. If another individual earned $85,000 per year, his yearly benefit would be 2.6 times the yearly taxes that he paid.[22]

            * For workers who earned average wages and retired at the age of 65 in 1980, it took 2.8 years of receiving old-age benefits to recover the value of their payroll taxes. For workers who retired in 2003, it will take 17.4 years. For workers who will retire in 2020, it will take 21.6 years.[23] This assumes Social Security will have enough money to pay scheduled benefits for this entire period, which it is not projected to have.[24]” from justfactsDOTcom social security basics

            The plant doctor at the GE facility I worked in told retirees from the plant that their life expectancy in retirement would be about three years (1984.) Smoking was common then, as was untreated hypertension.

            The British tax system allows them to imposed taxes on whatever money can be located, wherever. That is why they chose to change citizenship, mostly to the US and Canada. They had already moved their money out, like the millionaires and billionaires here. Romney’s money isn’t located in the Caymans because they pay 0.00000000001% higher return., but because they are exempt from US banking reporting requirements.

            If you’re a business owner, then any business activity is a deductible expense, and retirement funds can be pre-tax. Romney has $21+ million in his SEP-IRA after a decade, so $2MM per year could go there, pre-tax. Then, like he did, shift the money overseas and take it out without penalty.

            If not, then your $2million goes home after your estimated income taxes (state and federal) and your SS contributions are withdrawn. So you could obsess over the $1million you paid in taxes, or be happy that you have a clear $2 millon in the bank and have roads to drive to your job on every day that are not patrolled by thugs looking for today’s bribe.

          • montanabill says:

            The Patriot system and Iron Dome grew out of technology from SDI.

            Just doing a quick and rough calculation, someone retiring in 2003 and getting SS for 17.4 years to break even would have to have averaged about $75,000/yr. for 45 years of working. Doesn’t seem realistic. That would be receiving an average of $24,000/yr SS over the 17.4 years. (not much adjustment for COLA) divided by 45 working years divided by 12.4%. At the moment, the deposit rate is 10.4%, not 12.4%.
            I used the same average of $24,000/yr SS over 21.6 years and our 2020 retiree has to have averaged $93,000/yr income for 45 years.
            Wonder how justfacts got their numbers?

            The basic point on high earners is that they will not stick around for higher taxes. That is being proved in California once again. Romney and others use offshore accounts for foreign investing. If the money is not returned to the U.S., it is not taxed here. It is one of the reasons why Republicans have pushed for an amnesty on returning money in foreign accounts here. It would add billions or trillions to our economy. Shifting of IRA money to a offshore bank to avoid paying taxes on it when it is taken out doesn’t sound right. I’m going to have to investigate that.

            So I should just be happy with whatever money that I earned the government lets me keep? Question: who do you think might do a better job of putting that money back into the economy, me or the government? I use profits to expand my businesses, buy stuff and investment in the American market. A certain percentage of government money is used for defense and infrastructure. Another percentage is sent to places like Egypt. Much goes to the beltway bandits. A bunch to welfare and nice meetings at fancy resorts. Some is just plain wasted.

          • johninPCFL says:

            Seems odd to me that the high earners stuck around in the 1940s and 1950s when top tax rates exceeded 75%. There’s still no place on earth to earn a higher return on invested effort than here. Once you’ve gotten your fill, I guess the urge to leave makes sense, but then your income is divorced from labor and the rate drops, so once again, the effort seems to pay little benefit.

            High earners from CA can move just over the Nevada border for tax relief. Not so the USA, at least if you want to travel easily and actually have access to your money.

            The wealthy got a tax amnesty in 2009, which is one reason Romney wouldn’t release more tax returns. It would add billions to local bank accounts, but probably wouldn’t change spending patterns. The offshore money is available to spend today, bringing it onshore wouldn’t have much effect, as evidenced by the 2009 amnesty.

            Beltway bandits spend the money in the US. Welfare money is spent in the US. Money spent in fancy US resorts is spent in the US. All of that is US economic activty. Foreign aid in 2010 was $52billion, and of that, $15billion was military aid. That’s about $17.35 per person.

            I have no doubt that you feel you would behave as a better steward of your money. So, each soldier costs $1million to train and equip. How many would you need for your personal protection? Each police officer costs $150k to train and equip. How many do you need for your personal use? Each mile of roadway costs $3million (acquire the land, grade it and surface it out). Where will your personal use roads lead?

          • montanabill says:

            Tax rates exceeded 75%. While top tax rates have, at times, exceeded 90%, the ‘effective’ rates were substantially less due to many deductions and loopholes.

            U.S. has highest return on invested effort. That would be news to many other places in the world. I doubt you can verify that statement. P.S. I did the research on the claim that Romney moved his IRA to the Caymans to avoid taxes. You should too.

            Re: Californa. But they did move, didn’t they? Just like the Brits.

            You are still trying to demonize Romney for not making tax returns from many years past public. He paid his legitimate taxes. The government has no beef. It is simply you and others like you who have a problem with people who are very successful and want to find some way to criticize them.

            The government spends significant money overseas in other than foreign aid.

            My comments indicated I have no problem with taxes going to pay for national defense, the general infrastructure or the management of the country. I also have no problem with local taxes for police, fire or local infrastructure maintenance. I do have a problem with ‘redistribution’ .

          • johninPCFL says:

            Yes, top rates are often offset by deductions. Just like now. So instead of a top rate of 39.6% being offset, the top rate of 35% is being offset. And your claim is that folks will leave the country if that 4.6% from the 1990s is restored. My point was that the 75% and 90% rates didn’t cause people to leave the country, so why would they when the top rates are now less than half that?

            Re: leave the country. Yes the Brits left and came here and to Canada. Where would you go from here? I hear there’s one place that has no government and no taxes. You can hire the security you want to pay for, use the roads you build yourself, grow your own food, and you don’t have to worry about any laws at all. Yep, Somalia sounds great doesn’t it? I’ll stay here and happily pay for the laws, military, roads, etc. If you want to stay, I just insist that you do too.

            Romney took advantage of the 2009 tax amnesty and kept his income low so he paid zero taxes for a decade leading up to the tax amnesty, then brought his overseas money home at no penalty and low taxes. He used all the rules to his advantage, so why not be proud of his accomplishement and show what he did?

            The total I found is what I quoted, $52.7B. There are probably expenditures for embassies and consulates not in that number. Should we close them? How about just cut the $15B we KNOW we send in military aid overseas and close our own overseas hangouts. That’d save about $200B PER YEAR.

            Federal money flows back into police, fire, and emergency agencies. Federal money flows back into education initiatives. Federal money flows back into major hiways and interstates. Federal money flows back into medicaid block payments to states. Rick Perry just plugged his state budget gap with federal money, as did Rick Scott, Nikki Haley, and Bobby Jindal. It seems, like most GOP, the only problem to each of them is that the feds spend money on OTHER states too. They universally hate spending anywhere but in THEIR garden.

            So, here’s a question. CA currently receives $0.85 back from fedgov for each dollar of federal taxes paid. TN, MS, AL, AR, MO, SC, OK, ME, HI, MT, VA, KY, SD, ND, WV, LA, AK, NM all received back between $1.30 and $2.02 per dollar paid. How about is we insist that they live on their $1 and get CA back to $1 so they can plug their budget holes too? All those redstate freeloaders (sorry to the few blue states) could then get a first-hand idea of what “live within your means” means, and you could get tax relief in CA.

          • montanabill says:

            Yes, my top rate of 35% is offset. It applies only to monies earned after I have passed through the other brackets. I do get deductions. The standard deduction and charity. Everything else that would have been a deduction in lower brackets is wiped out. My effective tax rate is a little over 33%.

            I suppose we should shut down our overseas military bases. It wouldn’t take any more time to get military support from the U.S. to Benghazi than it did from close bases.

            The red-blue state argument is a bit bogus. You have to take into account the minority populations, the amount of government owned land and the physical size.

          • johninPCFL says:

            Romney’s IRA: “Of course, not every deal Bain did worked out. But let’s say Romney was prescient and put into this hypothetical IRA only the stock of the buyout companies that did well, returning to investors a whopping 10 times their money. (This is very rare but conceivable.) Even so, that would turn Romney’s $450,000 into $4.5 million. If the money was also compounded and reinvested over the years and became, say, $10 million, that would still leave another $11 million to $92 million of unexplained value sitting in the presumptive Republican Party presidential nominee’s IRA. ”

            “The other possibility, Kleinbard suggested, was not dissimilar to what Maremont theorized: that Romney contributed limited-partnership interests in Bain’s buyouts to his IRA. What was “quite troubling” to Kleinbard is that he suspected Romney may have contributed these interests to his IRA at a fraction of their market value — “pennies on the dollar” — and well below what he might have charged you or me. When the buyouts became successful, Kleinbard proposed, the pennies on the dollar were suddenly worth real dollars. ” from Bloomberg Business News

            You are right, he did not move his IRA overseas – yet.

            So, did Romney cheat his partners (they surely paid Bain market value for the stock) and pad his IRA? Or is he a tax cheat that disobeyed the law and funneled more money than allowed into his IRA to avoid paying taxes on it?

            “The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the street and to steal bread.” – Anatole France

          • montanabill says:

            We can safely assume he is not a tax cheat. Obama most assuredly had the IRS check all of his tax returns.

            You used a key word, ‘theorized’. There are other possible ‘theories’. But his information is just a private as yours, so we will likely never know. Oh, and usually shareholders who feel cheated, sue.

  13. geewilly says:

    The GOP is clammoring for the 2% working class Payroll Tax Holiday to sunset yet they don’t want the temporary Bush tax cuts to sunset…. very selective in their support. Time to go back to the tax rates pre-Bush and get our debt paid. Our children and grandchildren do not deserve to be saddled with debt of warmongers.

  14. highpckts says:

    I just finished readng a list of some of the wealthiest congressmen! As much as $173 million per congressman net worth made between 2004 and 2009! So much for trickle down economics! Looks to me like, during the Bush years, that it all trickled up!!

  15. enzomedici says:

    I agree with Republicans that say taxing the rich more won’t bring in significant revenues. However, not taxing the rich more isn’t creating more jobs either. Both Democrats and Republicans need to realize that the US doesn’t have a revenue problem, it has a spending problem. Stop spending money we don’t have. We can easily cut the defense department’s budget by 1/4 to 1/3 and still have the most powerful military in the world. We need to stop playing world policemen. People are talking about bringing our troops home from Iraq and Afghanistan. How about bringing our troops home from our WW2 and Korean War involvement? We don’t need to protect Europe, Japan or South Korea. These nations have plenty of money to defend themselves and if they don’t, too bad.

  16. Canistercook says:

    Wonder how we came up with the premise that we have a ‘right’ to take half of what a man earns or grows in his fields to support those that don’t contribute anything even if they could?
    California today is getting very close to that 50% rate with all the different taxes imposed along with the Federal tax. Guess we feel taking a big chunk of his savings too when he dies is not stealing either. Seems like the answer is to ‘blow’ your income on Chinese imports and save nothing.

    • johninPCFL says:

      PAYGO. It costs money to defend the US. It costs money to build the roads, bridges, etc. that the businessman uses free of charge. When you board a train, you don’t expect to ride for free. Similarly, if you want access to markets, freedom from invasion, government protection of your intelectual property, etc. you agree that a portion of what your employees produce for you goes to pay for those amenities.

      • Canistercook says:

        Yes but those taxes started out at 10% of what a man made and in California are now up to 50%. Where does it end 99%? It’s easy to buy votes by giving away someone else’s money I guess. Start thinking if a man grows a field of corn in California today he must give up half of it to the guy next door who though able did not plant his field. I like to help the deserving needy but we have become a nation where many have learned to take advantage of entitlements and fail to support the children they beget. Businessmen in California pay dearly to ride the train and to use the roads and $6 to cross a bridge!

        • johninPCFL says:

          Yes, it costs $6 to travel across the Golden Gate bridge into SanFran. But, they let you out for free.

          The guy paying illegals in CA to harvest his corn is not giving anyhing to his next-door neighbor, who is doing the same thing. What they are paying for is the short-sightedness of avoiding mass-transit when it was affordable. In the LA basin, 30% of ALL land is currently devoted to cars.

          Yes, when GWB was busily adding $600B per year to the national debt, that was military-industrial vote buying on a massive scale, which ddn’t bother you a bit, right? And his last two ($1.3T and $1.8T) budget busters were OK as well, right?

  17. m8lsem says:

    When the top income tax bracket was 91%, the economy was booming. Such very high taxes are an incentive for making deductible expenditures, for 91% of such expenditures are returned to the spender in avoided taxes. The net marginal cost of the expenditure is 9% of the whole. If I can give Uncle $91 and pocket $9, or buy equipment that I need for $100 and give nothing to Uncle, that equipment just got mighty cheap.

    The supply siders have been telling us for decades that cutting taxes on the rich will improve the economy and create jobs … and they have tried it for much of the last thirty years, and it has NEVER worked. The ‘demand siders’ were proved correct in the 1930’s and 40’s and 50’s.

    And the notion that taxes aimed at the 1% will clobber ‘small business’ is ludicrous, unless the definition of ‘small’ includes Exxon.

  18. René Milan says:

    Correct assessment in my view. But why even engage in a discussion of the economic benefits or lack thereof of lowering taxes for the rich, when it’s so obviously a money grab exercise by most republicans and many democrats who are its beneficiaries themselves andor paid in thinly veiled ways by those beneficiaries ? That discussion in itself conveys a degree of legitimacy which is a slap in the face of truth.

  19. Chuck Fox says:

    You have to be kidding me. Reagan did it after Carters nightmare and revenues to the Governement soared. All the R&D done in the 80’s were realized in the 90’s. Clinton stepped on an economic bullet train when he got elected and rode it into the ground when he raised taxes in 96. Bush took over, in a recession, lowered rates again, and had a RECORD government tax revenue for 3 straight years, had a RECORD 52 straight months of strong economic growth, had a RECORD low unemployement level and drove oil prices down to under $30 a barrel. But this is a Democrat Party view of “the wrong policies”. Record gov. income, low unemployment strong growth and more people taking care of themselves. Keep up with the BS

  20. jstsyn says:

    All the same lame arguments from the right. America didn’t go for it and told them where to go.

  21. MikeOverHere says:

    Now how it is a right-wing fantasy? None other than those rabid conservative thinkers John F. Kennedy and Paul Krugman are on record as saying that tax cuts often lead to increased Treasury revenue.

  22. andrew v says:

    I hope every person that reads this realizes that while Obama represents the 99% the republicans make NO BONES that they represent the 1%. whom even as we speak are asking to lower the taxes the richest people pay. We have a 16 TRILLION DOLLAR DEFICET because starting with BUSH we lowered taxes and paid our bills by borrrowing YET notice essentially the republican party represents the 1% who own 49% of all the wealth in the U.S.

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