The Big Republican Lie

[affrayer]

Most of you don't know this but it's all simple math.

Suppose we had a "tax" rate of 25%...10% income tax plus 15% social security tax.

Now we hire a person to sweep the floors in Congress for $50,000 a year.

That means right away we spend $50,000 but we get back $12,500 in taxes for a net cost of $37,500.

Now the "sweeper" takes his $37,500 and spends it on food, rent, clothing, medical, car, and so forth. Each one a taxable transaction that generates income for someone. That's another 25% in tax revenue or $9,375. This gives us $21,875 in total tax revenue and the money has only changed hands twice in the economy. Let's say that on average money changes hands 4 times. That would add in taxable transactions $7,031 and $5,274 in tax revenue. Which means of the original $50,000 spent, $34,180 is returned in tax revenue.

So if you cut spending by one billion dollars you also lose tax revenue of $643,600,000

If the tax rate is higher or if the velocity of money is greater than four, it is even worse.

BTW: Now you know why Reagan and Bush Jr increased government spending by massive amounts. That increased spending is what generated the increase in tax revenue, not the tax cuts.

One question, nothing I've just shown you even approaches the sophistication of rocket science. Yet I dare you to find anyone in the media who has done a report of this...

[Scruffy1]

1. Strange math-but the idea is right

Generally income taxes are paid on income not on gross receipts. This means a business such as a landlord or grocery store would only pay taxes on the profits, if any, after deducting all expenses including depreciation. So the actual number would be much smaller, but the leveraging effect probably larger in the long, long travels of the dollar.

[affrayer]

3. Those are nothing more than accounting concepts.

Generally income taxes are paid on income not on gross receipts.

When an economic transaction is broken down there is only gross receipts. Why? Because there are only two costs. the first is labor and the second is ownership of raw materials. Clearly labor is an issue of gross receipts for the individual but even if you throw in costs like "gloves" or transportation each one of those breaks down into "raw materials" and labor. So yes, a business has "expenses" but each one of those expenses breaks down into basic costs that eventually ends up with paying someone because they "own" the raw materials or paying someone for their labor.

Look at it this way. You buy a can of soda. In that one transaction the following smaller transactions took place. The manufacturing of the can. The cost of the flavoring. The labor to mix the flavoring. And so on and so forth. Eventually you end up with gross receipts where no expenses are deducted.

So the landlord pays on his "net rent" after costs but he pays the maintenance person to fix the pipes, the electrical company to provide electricity, the gas company to provide gas, the city to clean the streets and so forth and so on. And each of those expenses generate taxable transactions.

Just go to the store and try and figure out how many people benefit from a single purchase you make there? The warehouse man, the manufacturing labor, the advertising exec, the boss and you'll see it's more than you thought.

[FormerDittoHead]

2. You'd have to go to (gasp!) college and study Econ 101, and that's beyond what the media can do.

I went to my community college, and after I transfered to 4 year, I had to take econ 101 again.

So it's esp irritating to me how the media goes on pretending that the basic lessons of economics haven't been learned again and again, and that "to be fair" we have to address some faith-based school of economics like the libertarians subscribe to.

PS: the media also fails to teach another econ-101 basic term: "economies of scale" because to do so is to acknowledge that yes, indeed, larger companies and rich people enjoy a built-in advantage in the "free" market...

[affrayer]

4. Still...

Out of the millions of hours of so called media a year, one hour of telling the truth is apparently asking for too much...

We have morons running around believing that Reaganomics worked...the horror, the horror. It's like we have come to live on one gigantic monkey island and the national sport is flinging poop at each other.

But you do understand by joining in with the politicians in maintaining the lies and misinformation, the vaunted press is helping to kill this country.

[JuniperLea]

5. They use the same lies for healthcare...

Not taking into account the fact that if we had single payer, our taxes would go up, but our medical costs would all but disappear. I've had this discussion with European friends who have good healthcare. They pay LESS in taxes than I do, and I pay for the health insurance on top of taxes.

People tend not to think in larger pictures. Pity, that.

[affrayer]

9. I think...

People tend not to think in larger pictures.

People don't think...at least not the ones voting for republicans.

[DCKit]

6. Communist. nt

:sarcasm:

[affrayer]

10. Tell me something...

:sarcasm:

Why do fascist call everyone else communists?

[lame54]

7. They didn't spend it - they laundered and stole it

[jimlup]

8. Economists understand this well...

But the business press doesn't report this to the "general public" in political discourse. They'd rather not have people notice this stuff since it doesn't help the right people.

The economists who advocate republican policy honestly don't care if the economy goes to hell as long as the bottom line of the corporation who sponsors them goes higher.

Honestly, anyone educated even a little bit in economics understands this. The republican talking points are such horse shit is is actually shocking. The tax-cut, austerity preaching idiots care less than nothing about the people who the supposedly represent. It is probably the biggest scam in the history of civilization - seriously!

[affrayer]

11. What's interesting is...

We just had a collection of secret "political directives" by Murdock telling the broadcast personalities at FAUX News how to spin the news to favor the right wingers and no one cared. How much more egregious will their behavior have to get before it interests the sleeping voters?

The republican talking points are such horse shit is is actually shocking.

That they say it is indeed shocking that they endlessly repeat it unchallenged is alarming...

[jimlup]

12. Yes, I completely agree...

While it is true that we are a heavily indoctrinated society, our indoctrination has been forced further and further right by an unquestioning complicit media. Orwell understood indoctrination and he would be amazed.

[affrayer]

13. Maybe...

Orwell understood indoctrination and he would be amazed.

Or he would be trying to collect on a bet...