Decoupling of the tax cuts based on income is a good compromise

[BootinUp]

If all the tax cuts are allowed to expire it is NOT good for the economy.

If all the tax cuts are extended for an equal period of time it is NOT good since the political football is just kicked down the field and who knows when the tax policy is ever adjusted in a sane manner.

discuss.

[Fresh_Start]

1. I also think with the abandonment of cap and trade

all business tax cuts should be tied to either new US jobs, purchase of US goods, or addition of green energy (solar, wind, ....)

[BootinUp]

3. Agreed. Tax credits for investment in US

and close loopholes that allow companies to offshore their profits to avoid US taxes.

[Warpy]

2. Consider that 40% of the stimulus went to tax cuts for the lower 95%

and nobody seemed to notice them. That's always been the problem with tax cuts at the bottom. When taxes go up, people in the lower 3 quintiles are unlikely to notice, although it will hit people with children harder than singles. Allowing all the cuts to expire won't have that big an effect on the economy. It will allow an increased revenue stream to fund things in the future like a decent program to create public works jobs, which is what will be needed to start to lift us out of recession.

The best thing in the world is to let the cuts expire, and I say this as someone who will pay $800 more next year without them. I'm now in the upper quintile, but only by the skin on my teeth.

Tax cuts did relatively little for the bottom 60% of earners in this country, and that is the vast majority of us. Putting taxes back where they were under Clinton will not do them that much damage, nor will it affect the consumer economy as a whole.

[Fresh_Start]

4. Don't expect them to notice, tell them and remind them

I know I was annoyed about the Bush era letter than told me by tax rebate was coming months before the money was released.
But I noticed the letter and I still remember however many years later. I was annoyed at the millions of dollars of waste that letter implied, but it worked.

I might have gotten a tax cut from Obama...but I sure don't remember it....I do however remember my husband being unemployed for 18 months.

[Warpy]

11. I'll bet you didn't notice that you had to repay it when you did your

taxes the next year. It wasn't a rebate, it was a loan. Most people remember the check they got because it was a letter followed by an actual check they could hold in their hands and cash for real money. They don't remember that their refund was smaller the following spring because of that check.

That's why tax cuts at the bottom don't work. That's why putting them back where they were in 2000 won't kill the economy.

[Fresh_Start]

12. I do the taxes in the household

so I knew exactly what the check was and wasn't.

[hfojvt]

22. nobody had to repay it

that was just a dumb M$M story because some people could not understand the math.

The rebate check was based on the new 10% rate on the first $6,000 of income. The rate used to be 15% and the Bush tax cuts lowered it to 15% Except for the first year they sent people $300 checks or couples $600 checks. But then some people were like, "but hey the rate is still 15% so you just pay that money back". But that is just ridiculous.

15% of $6,000 is $900
10% of $6,000 is $600

people got a $300 check in May and then in the following February they paid $900 on their first $6,000 of income. What was the NET? It was $600. $900 paid - $300 rebate = $600. That is the same amount that people would have paid in February if the tax cut had not been advanced. The $300 never had to be paid back. In fact people who didn't get a check could take it as a credit.

[BootinUp]

6. Can't agree with you for this reason

The biggest problem with tax cuts in this environment is that some percentage of it is just going to pay off debt or just being held and not spent and we need to stimulate this economy. But we are still talking about a significant amount of money from those cuts that does get spent when looked at on the whole.

The fact that individuals do not have a wad of money as a result is not as important as the stimulative effect overall that it has helping to change the mood about the economy so people that do have disposable income are more inclined to spend it.

[MadHound]

14. Again, tax cuts are the least effective form of stimulus,

If you look at the money multiplier effect for tax cuts, you put a dollar out there in tax cuts and you're going to get a $1.06 come out the other end due to the low money multiplier effect of tax cuts. A jobs creation program is exactly the opposite. You put a dollar out for a job creation program, you're going to get something like $1.87 back due to the money multiplier effect.

Why do you want to continue to drive us deeper in debt by supporting the least effective form of economic stimulus going?

[BootinUp]

17. Why do YOU want to drive us deeper in debt by prolonging

this crappy economy??

[MadHound]

18. I want a jobs creation program,

Something that will get us the most bang for our buck. You on the other hand want the least effective form of economic stimulus going. Why is that?

[BootinUp]

20. You want a sideshow, that will result in no action

because that is the end result of the proposal you are suggesting.

[MadHound]

21. Then if that doesn't work, we go to the next most effective form of economic stimulus

Government spending, which is, despite 'Pug howling to the contrary, a bipartisan hobby. But if that doesn't fly, we go to the next, and the next, on down the line. What we don't do is be stupid and start with the least effective form of stimulus first and foremost, especially when that will drop another four trillion on our debt burden.

But contrary to your pessimism, I don't think that a jobs creation program is out of the question. 'Pugs were elected, in part, to do something about the economy and the lack of jobs. They might just jump on a job creation program.

[MadHound]

5. Actually, not adding almost four trillion to the debt is probably the best thing we can do

Yes, that few extra bucks at the end of the year is nice, but the fact of the matter is we simply can't afford these tax cuts. The math is real simple, we're thirteen trillion dollars in debt and climbing. Such a large debt has a negative impact on our economy, our government and our country. Adding four trillion more to that over the next ten years is stupid, pure and simple.

We should let the tax cuts, all the tax cuts, expire. Take one trillion of that savings we realize from the expired tax cuts and implement a true WPA style jobs creation program. That would do our country and our economy a world of good, a hell of a lot better stimulus than tax cuts would be.

[BootinUp]

7. Austerity is good!

not in this economic environment.

[MadHound]

9. I'm not talking austerity,

Where are you seeing that? I'm not asking for programs to be cut.

Just let the tax cuts expire. Tax cuts and tax credits are the most ineffective form of economic stimulus going, while a jobs creation program is the most effective economic stimulus going. In this time of economic need don't you think that we should get the biggest bang for our buck rather than piddling around with the worst?

[BootinUp]

10. I ignored the jobs program part because

with the loss of the house and insufficient votes in the Senate, it is a non-sequitor, when that was subtracted from your post all that was left was austerity. The only options we have to stimulate right now is with creative tax policy that will of course be less than optimal after reaching some kind of compromise.

[MadHound]

13. So we essentially continue to add to the debt to fund the least effective form of economic stimulus

No thanks. It was, after all, tax cuts that helped get us into this mess, what are you smoking that makes you think they will get us out of this mess?

As far as a jobs program goes, I wouldn't be so quick to write that off. One of the reason 'Pugs were elected is that people were unhappy with what is being done to pull us out of this economic mess we're in. The 'Pugs might just go for a jobs program.

And again, the definition of austerity programs is that you're cutting back on programs, in party or completely. This is not a cut, the tax cuts were set to expire. What an extension of them would be is actually a spending program, something that we simply can't afford right now. Especially on tax cuts, which like I said before, are the least effective form of stimulus.

Why do you want to continue to add to our mountain of debt? Our debt to GDP ratio is at 94%, a huge number. Why do you want to make it worse?

[BootinUp]

15. You're anlaysis is faulty

The Bush tax cuts while not wise policy, had little to do with creating the economic recession, or low growth we are in. There is no inflation, there is no lack of money in the system to spend/invest. There has never been a factual case made, that I have seen, that the US deficit or national debt contributed to the severe downturn.

Deficit spending is needed now and will pay off in the future. See Krugman, Brad DeLong, and a host of other economists that have been right for the past 10 years while the others (fresh water Chicago school) have been utterly wrong.

[MadHound]

19. Didn't say the tax cuts had anything to do with creating the recession,

But they are certainly not helping us get out of it. The created a huge amount of more debt, debt which limits what the government can do to get us out of this recession, you know, constructive things like a jobs creation program. When you are as deep in debt as we are, you don't have much wiggle room to maneuver.

Yes, deficit spending is needed now, but even Krugman, et al. would agree that you've got to get the most bang out of your stimulus buck. Again, jobs creation is the most powerful of economic tools, while tax cuts are the very least powerful forms of economic stimulus. If we're going to go into debt, don't you think that it would be wise to get the most bang for our buck? So why are you constantly pushing the least effective form of stimulus as the only path to follow? George, is that you?

[lumberjack_jeff]

8. Does the economy need stimulus? Yes.

Will continuing the tax cuts for people under $100,000 stimulate the economy? Yes.
Will continuing it for people under $250,000? Debatable.
... over 250,000? Not very much.

The cost for #1 is minimal. The cost for #2 is a lot more. The cost for #3 is huge.

#1 is a no brainer. Pass it, then debate #2 and #3.

[NoNothing]

16. Check the figures

The costs for #1 and #2 are huge too. The dollars per capita are a lot smaller, but the numbers of individuals are way larger.