The Rich Get Richer

Taxes have no effect on the deficit.

The money collected by the IRS goes towards paying bankers the interest the government owes on the debt.

The government is run by borrowing money not income tax revenues.

Since we borrow all our money anyway, lets just do away with the income tax and stop paying the bankers interest on the debt. I know all the wealthy elitist bankers will scream and cry.

In fact why don't we just coin 7 trillion dollar coins this year and pay off a large percentage of the national debt. I especially don't care if the international bankers lose all their debt. That would be a legal way of writing off our debt (though it would be unfair to the bankers) and then our economy would be on solid ground.

Just say no to debt, taxes and the international banking mafia.

 

That is only half the story. Taxes pay the interest on the debt, because the govt. didn't make enough money in the first place. That gets worse every gop administration as of late, and it gets worse with tax cuts that benefit the wealthy. Taxes are one way for the govt. to borrow less money.

As far as writing off our debt by making coins and paying it off in one fell swoop, that would do many things, but putting us our enconomy on 'solid ground' wouldn't be one of them.

 

Printing that much money would cause hyperinflation, devalue the dollar dramatically, and have massive negative repercussions.

We need a system of taxation that pays for all government expenditures and pays some of the principal on the debt so that the interest payments can be reduced over time. I believe a consumption tax would be the best way to accomplish this, particularly if the tax rate was based on actual expenditures. That way, if politicians go on a spending binge one year, we feel the effect in our consumption tax rate and there would be more reason for people to elect representatives who actually have some fiscal discipline.

 

One thing we must not forget is that "rich" and "poor" are not static classes. There are plenty of "poor" people who leave the ranks of the poor all the time and, I'm sure, some "rich" people who become poor.

So, when the rich are getting richer, it's not just a handful of privileged people. There are plenty of people who are out there creating wealth for themselves (or losing it). Estate taxes can hurt families who's parents have pulled themselves up and gained a little wealth.

Whenever you deal with tax cuts, the people who actually pay taxes will generally benifit the most. Certainly very wealthy people will benifit, however, many middle-class people stand to benifit as well.

 

That has never happened to my knowledge.
Nor will it ever happen.

Again from what I've read federal taxes collected pay interest on the debt.

Borrowing money is how we run federal government.

The only way to reduce debt is to stop borrowing and spend less. Isn't that how it works in your family? Much less, much, much less and then pay back the 7-12 trillion we owe.

Depending on whose numbers you use. If the debt right now never grew any larger (meaning we cut the size of the federal government down well below the size of tax revenues leaving a fairly large portion of tax revenues available to pay down the debt) then we could start using taxes for debt reduction. If we split the difference of the various group's analysis of the debt at say 9 trillion then that would be $45,000.00 for every man woman child and baby in America (approx.). Boy I can't wait to pay my fair share I have a family of 6 and that is over and above the cost fund whatever level of federal spending we end up with.

Now when did we ever spend less in a year than the year prior?
In our history?

I am paying off credit card debt right now. What I am learning is that you have to live within your means (stop borrowing) and have enough left over to pay off your previous debts.

More taxes can never pay off a debt that increases every day at the rate of a couple of billion dollars and pay off the interest which is even growing larger than that.

I am all for higher taxes on the rich. Bring it on.

But I don't feel any better about the debt unless we could tax the rich about several trillion dollars and then stop federal spending.

Let's roll back the federal budget to 1980 levels and then force the size of the government programs to meet the budget.

I will gladly give back anything I am receiving from Washington.

 

Please provide your explanation of how the federal budget was balanced during the Clinton Administration in the mid 1990s.

 

There have been years of surplus as recent as the 90's. I agree that we need to bring spending down. One way to do that is to pay off our debt. The interest we pay is either number 2 or number 3 expenditure of our govt. after defense spending. Paying that off is money that doesn't go to tax cuts, social programs or anything. We get no benefit from that money being spent.

You are correct that when you pay off debts you need to live within your means. One thing that can help that is to also bring in more money. If we could bring in more money and put forth a concentrated effort to paying down the principle on our debt, the govt. would spend a lot less money.

 

It is so funny the congress thought the country would pay off too much of the national debt during the Clinton years. They projected the growth would continue indefinately. What a bunch of fools. They should have paid off much more of the debt while they had the surplus. Cann't believe they are running the country.

The golden rule of the government:

Never believe what they say when they start projecting about future.

 

Rocket man Tex- Read the following and then do the research. Also the supposed balanced budget never takes into account the trillions of old debt owed. Balancing the budget would mean we could pay all our bills.

Isn't that how your house works?

Balanced Budget? Not Really


by Fred E. Foldvary, Senior Editor
A budget is really and truly balanced when its income equals all its current and expected expenses. If you get $100 in income and expect to receive a bill for $100 which you have to pay, but spend the money now because the bill has not arrived, is your budget balanced? No, it is not, because the $100 you owe is a liability that has to be offset with income if your budget is truly balanced.

This principle applies to the federal budget too. President Clinton says that the budget of the federal government will be balanced and in surplus during the next few years. The deficit this year is project at only $5 billion. But the future surplus is a bookkeeping fiction, the result of how the government does its accounting. The operating budget is balanced because revenue from trust funds such as social security is included in the total, and social security now has a big surplus. Next year, the trust-fund surpluses are projected to total $184 billion. These funds will go to the $1.7 trillion general budget, but since these are not operating tax monies, the federal government is really borrowing this money. So the real deficit is $184 billion. With this realistic accounting, there will be no real budget surpluses.

Each $100 in social security surplus funds coming in today is money owed to recipients in the future. Likewise, surplus funds from the highway trust fund are offset by liabilities, namely the highway repairs and improvements that the money should be spent for in the future. In proper accounting, these revenues are not positive but neutral: the assets are offset by liabilities. Even though it is one government agency borrowing from another, because of the unfunded liabilities, the operating budget of the U.S. government will continue to be in deficit.

President Clinton at least recognizes that the so-called "surplus" should be used to finance the social security system (that the social security system is unstable in the long run and should be reformed is a another issue). What would really happen in that case is that in borrowing money from the social security administration but not spending it, the government would be reducing its debt. It would be buying back its treasury bonds, or equivalently, issuing fewer as they renew. That's why debt reduction should be the prime policy for the fictitious budget surplus.

This does not mean that tax reform should be abandoned. Not at all. Changing the tax system is a separate issue, and should be pursued as well, for the sake of the economy and for justice. For example, the marriage penalty should be eliminated. It is hypocritical for politicians to make pompous exclamations about family values while they punish people for being married by making them pay more taxes than single people with the same income.

Of course the best long-run reform for the budget and for taxes is to shift from taxing productive action to obtaining revenue from the rental value of land. If that were done, then there would be little difference between taxation and government borrowing, since future liabilities would become present-day obligations of landowners, and there would be tremendous political opposition to future liabilities that, when added to current spending, exceed the rent. The public collection of rent would be the greatest budget balancer ever. But until that glorious day comes, could we at least try to get some honest accounting in the federal budget?

 

Sorry forgot the link, there are many others.

http://www.progress.org/fold24.htm

 

Not in this case. As was mentioned in the article, as it stands the estate tax affects a whopping 2% of estates and if we upped the limit to $3.5 million, that would drop to three tenths of one percent of estates. This tax cut will ONLY help the wealthy and will not cut taxes on the "middle class" a whit.

 

The rich get richer and the "poor" (bottom 95%) take a pay cut ...

Falling Fortunes of Wage Earners
By STEVEN GREENHOUSE
Published: April 12, 2005

Beginning in the mid-1990's, pay increases for most workers slowly but steadily outpaced the rate of inflation, improving the living standards for nearly all Americans. But an unexpected reversal last year in those gains has set off a vigorous debate among economists over whether the decline is just a temporary dip or portends a deeper shift that may cause the pay of average Americans to lag for years to come.

Even though the economy added 2.2 million jobs in 2004 and produced strong growth in corporate profits, wages for the average worker fell for the year, after adjusting for inflation - the first such drop in nearly a decade.

"Pay increases are not rebounding, even though the factors normally associated with higher pay have rebounded," said Peter LeBlanc of Sibson Consulting, a division of Segal, a human resources consulting firm.

The problem is not with the jobs themselves. Most economists dismiss as overblown the widespread fear that the number of jobs will shrink in the United States because of foreign competition from China, India and other developing nations. But at the same time many of these economists argue that the increasing exposure of the American economy to globalization, along with other forces - including soaring health insurance costs that leave less money for raises - is putting pressure on wages that could leave millions of workers worse off.

"We're in for a long period where inflation-adjusted wages will be under acute pressure," said Stephen S. Roach of Morgan Stanley. "That's a most unusual development in a period of high productivity growth. Normally, real wages track productivity."

But some economists are more optimistic, saying that the wage sluggishness is temporary and that real wages have slipped only because a sudden spike in oil prices has briefly left workers behind the curve. These economists assert that wage stagnation will end soon, as normal growth brings a tighter labor market.

"What we're seeing now is not atypical; employers can't pay the wage bill to keep up with the oil price increase," said Allan H. Meltzer, an economist at Carnegie Mellon University. "I think the long-term trend will be that wages will right themselves and look like productivity growth on average."

The most commonly used yardstick of wages - the Bureau of Labor Statistics' measure of nonsupervisory private-sector workers, covering 80 percent of the labor force - fell 0.5 percent last year, after inflation. Real wages for these workers are now lower, on average, than two years ago. A broader measure, the employment cost index, which includes supervisors, managers and most government workers, dropped 0.9 percent.

At a Sprint call center in North Carolina, 180 customer service representatives are well aware of how such forces are squeezing them. Their jobs have not migrated overseas, but the employees just concluded their most bruising battle ever over wages.

The Sprint workers in Fayetteville emerged from negotiations that lasted months with a contract that left them with a pay freeze for last year and no definite increase for 2005. While the best performers are promised 2 percent merit raises, even those are likely to lag inflation.

"It's like their wages are in a severe coma," said Rocky Barnes, president of the union local. "Sprint said they had to restrain wages because the company's performance wasn't so good, but we think a lot of it has to do with offshoring."

Sandra J. Price, a Sprint vice president, took issue with union leaders. She said Sprint sought the freeze not because of low-wage competition overseas, but because benefit costs were soaring and the company felt the call center's compensation was generous for the area.

Whatever the explanation for Sprint's action, many economists, liberal and conservative, are perplexed by two unusual trends. Wage growth has trailed far behind productivity growth over the last four years, and the share of national income going to employee compensation is low by historic standards.

Mr. Roach of Morgan Stanley said wages were being held down by foreign competition; corporations that are moving jobs offshore; the uncertainty of businesses over demand; and management's ability to substitute computers and other devices to replace workers.

"These factors aren't going to go away," he said. "The competitive pressures for companies to hold the line on labor costs are intense, and the alternatives they have - technological substitution and offshoring labor - are growing."

The overall wage figures hide a split, with an elite group getting relatively large gains. In a study of census data, the Economic Policy Institute, a liberal research group, found that for the bottom 95 percent of workers, after-inflation wages were flat or down in 2004, but for the top 5 percent, wages rose by an average of 1 percent, with some gaining much more.

The upper-income group enjoyed strong pay increases largely because of bonuses, stock options and other inducements and because of robust demand in certain fields, like law and investment banking.

J. Bradford DeLong, an economist at the University of California, Berkeley, said that current wage patterns, while perhaps only temporary, did not conform to traditional economic explanations.

"You'd think that with the unemployment rate near 5 percent and productivity growth so strong, employers would be anxious to raise payrolls and would have plenty of headroom to raise wages," he said. "But they're not."

Since 2001, when the recovery began, productivity growth has averaged 4.1 percent a year; overall compensation - wages and benefits - has risen about one-third as fast, by 1.5 percent a year on average. By contrast, over the previous seven business cycles, productivity rose by 2.5 percent a year on average while compensation rose roughly three-fourths as fast, by 1.8 percent a year.

"The question is not whether corporations are seeking higher profits; the question is how come they're getting them to such a degree at the expense of compensation," said Jared Bernstein, an economist with the Economic Policy Institute. "I'm struck at how successful they've been at restraining labor costs."

Labor unions' declining bargaining power has given corporations a stronger hand to hold down wages, he argued, but more recent trends, including the emergence of Wal-Mart Stores as a central force in the economy, now play crucial roles, too.

Laurie Piazza, a Safeway cashier in Santa Clara, Calif., said she reluctantly voted to approve a pay freeze in the first two years of her union's three-year contract because Safeway insisted that it needed to hold down costs to compete with Wal-Mart. Her take-home pay will fall $20 a week because the contract reduces the premium for working on Sundays to 33 percent of regular pay, from 50 percent.

"We tried to get weekly pay increases, but the company wouldn't do it," said Ms. Piazza, who earns $19 an hour after 18 years on the job. "I think Wal-Mart has a lot to do with this. They're setting the model."

With Wal-Mart moving aggressively into California with supercenters, Safeway officials say they need to clamp down on what they consider high labor costs to meet the challenge.

Last year's double-digit rise in health costs helped squeeze wages as well; many companies also required employees to cover more of the premiums out of their own pay.

"Benefit costs are rising fairly substantially, and that may explain the tendency to hold down wages," said Sylvester J. Schieber of Watson Wyatt, a human resources consulting firm. "If you throw an extra 10 percent into your health plan, that can suck 1 percent out of your budget for compensation."

Many executives say they are offering raises that do not exceed inflation. Pitney Bowes, which provides mail and document-management systems, plans to offer merit raises averaging 3 percent this year, about equal to the expected inflation rate, compared with recent merit raises, also in line with inflation, averaging 2 percent to 2.5 percent.

"The past couple of years we've maintained a moderation of our wages," said Johnna G. Torsone, the company's chief human resources officer, who noted that the company has had to greatly increase spending on health and pensions.

While agreeing that these factors are important, Richard B. Freeman, a Harvard economist, predicted that new competition in the form of millions of skilled Chinese, Indian and other Asian workers entering the global labor market will increasingly pull down American wages.

"Globalization is going to make it harder for American workers to have the wage increases and the benefits that we might have expected," he said.

Facing intense foreign competition, Delphi, the auto parts manufacturer, has decided against any merit raises this year for its salaried workers. And at its air bag and door panel factory in Vandalia, Ohio, it persuaded unionized workers to accept a three-year pay freeze, warning that the plant would be closed otherwise.

"The majority of workers felt they had to agree to this," said Earl Shepard of the United Steelworkers local in Vandalia. "People here say the big problem is competition from Asia."

Lindsey C. Williams, a Delphi spokesman, said the company was seeking to keep the Vandalia factory "viable" and was working with the union.

Many economists say the nation may be returning to a period like 1973 to 1996, when inflation-adjusted wages stagnated or rose glacially. That era was a reversal from the golden years of 1947 to 1973, when wages marched steadily upward.

From 1996 to 2001, wages grew strongly again because of an unusually low jobless rate, caused in part by the high-technology boom. In the late 1990's, the tight labor market pressured companies to give sizable raises to attract and retain workers even as a surge in productivity helped business afford them without substantially cutting into profits.

Thomas A. Kochan, an economist at the Massachusetts Institute of Technology, said wages could once again rise, but only if there was especially robust economic growth.

"To produce real wage gains now, it takes sustaining a very tight labor market," he said. "Without that, we're going to continue to see what we're seeing now: abysmal growth in real wages."

 

Not necessarily true. While the tax cut itself may only affect the upper class, the residuals could trickle down to other classes. If an "upper class" person dies and leaves part of his estate to a "middle class" person, then the benefit will, essentially, extend to the middle class.

For the sake of argument, let's assume I am in the middle-class but I have a wealthy relative who is in the upper-class. If he has more money to leave me (or his other relatives that are in the middle-class) then this would benefit those as well.

Now all I have to do is locate that wealthy relative!

 

Here is the problem I have with the estate tax. For argument's sake, let's assume that $5,000,000 is exempt from the estate tax and that I have $10,000,000. Today, I decide to be generous and give my entire estate away $10,000 at a time. I can give $10,000 to 1000 people. If I die before that happens, the government takes some away (let's assume 20%) and now my estate can only give $10,000 to 900 people. Why is that fair? The only thing that changed was that I died.

 

I believe that if you give away $10,000 the govt. won't take away any. If you give away more than $1,000,000 to a person the govt. will take away some.

I could be wrong, but I believe that is the way it works.

 

Trickle down economics is where the government helps to maximize the profits for the rich, who in turn piss all over the rest of us.

 

The estate tax takes away money BEFORE you give it away. You are correct that today, I could give a gift of $10,000 without any taxes, however, once I die, if my estate is "over the limit" it gets taxed before it is bequeathed.

 

I hate the estate tax folks were already taxed on the income once and instead of pi$$ing it away they did something odd and invested it (or at least spent it on somethign that would continue to hold it's value). Why punish them for saving/investing?

One other thing to keep in mind. Many of us have been told to not plan on having social security around when we retire (wheter that is reality is a different story). Problem is if you are planning on not having Social Security I hope someone starts looking at what many of us in our 30's are planning on having saved for retirement. $1M in savings doesn't cut it when you hit 55 (remember to factor in inflation, and use whatever you want to for life expectancy and life expectancy of your family to cover future expenses).
Suddenly if some of us die at an age right before retirement (before we can start taking money out of our retirment accounts) we're going to run into the estate tax.

So come on now someone tell me what it is. Is social security going to be there so I can stop saving 15% into my 401K, or will I be taxed for actually planning and (unfortunately) not living to use most of my savings?

 

Do you really believe that the rich "p$#s all over the rest of us"? Wouldn't you agree that the wealthy provide a great deal of support to charitable orgainzations?