Tax: No Child Care Credit Increase for $10-26K families

Originally posted by DraconisRex: quote: Originally posted by Attalus: Oh, yes, I agree that massive spending cuts are necessary, but the Bushies did the best thing to stimulate the economy, IMHO, and after 2004, go after deep cuts. A big victory for the Administration.

Based on what? Reagan's tax cuts of the 80's? Because Bush's tax cuts haven't done a damn thing but help the rich get richer so far... They certainly haven't stimulated the economy as is attested by the 6% unemployment rate.[/QUOTE]
Nice rhetoric but devoid of fact. 1st off Reagans and Kennedys tax cuts...and now Bush's tax cuts. While it has not caused a turnaround like the former cuts that is in part becuase of its reletively puny scope compared to previous cuts.
Bush's tax cuts did do more than help the rich get richer...me not being rich and still doing better is one proof, the fact that economists tell us that the economy is growing (slowly but still growing) is another, because prior to the cuts we were in recession. As for 6% unemployment oooo scare me. remember the 1970's with 10% and 12% unemployments? Do you realize that it is estimated that fully 3% of all people in the US are unemployable anyway so we are looking at roughly a real 3% unemployment.

But I do like how it has increased my business as a tax accountant. I get a lot of my clients are all calling me about what this will do for them = billable hours. I tell them that they're (despite 19% of americans thinking so) not in the top 1%, virtually the only ones this tax cut will materially help. I explain to them that just because they're making good money doesn't mean this tax cut will help. This tax cut is aimed primarily at the wealthy, not the high-earners. The real benifits go to those that have millions of dollars invested in the stock market

Remind me to PM you my accoutnant's number..the two of you should talk..one of you is full of ....something. Only an ass would tell his clinets to go away because they get nothing back..sheesh...this cut will give anyone who makes enough money to pay taxes more in their pocket and I think it would be bordering on irresponsible to tell your clients theres nothing you can do with that.....How do you manage to make a living peddeling doom and gloom?


Now, my retirees argue with me: Then they say, but my SEP-IRA/Keogh... Which I reply "are all ready tax free while in the retirement trust" and are "ordinary income" when withdrawn. So, that doesn't help you at all.

Now, when my very rich clients call, they are very happy. That's another 30K+ (or more) income they won't pay taxes on... Not that they'll actually spend it, mind you. It all goes back into the stock market via DRIPs and creates paper wealth.


See, the difference between the rhetoric spewed and the reality of the law. I deal with this rhetoric all the time. But when the returns are prepared and i tell people the impact, I tell them the truth:

Unless you're a multi-millionaire heavily invested in dividend paying stocks, you won't materially benifit from this. Further, it is unlikely it will stimulate the economy (sorry about that luxury service providers) as advertised because most dividends are reinvested. [/QB][/QUOTE]


Im sorry I just cannot believe you are actually a financial advisor...you don't sound like any I have ever heard. But hey, m not one either so what does it matter?

Edit: just FYI if a couple makes $97,000 a year its considered to be in the top 10% or "rich" according to the Dems and the IRS. $97k a year = 1 NYC teacher + 1 NYC Fireman....hardly rich in reality or in NY.

[ 05-30-2003, 02:44 PM: Message edited by: MagiK ]

Originally posted by Timber Loftis: Another point I want to make now: Sunset Provisions: The new changes sunset, or end, in 2006. There has never been a sunset provision in the tax code before. Thus, if Congress does not reauthorize these changes in 2006, the tax code reverts to how it read day before yesterday.

T.L. The sunset provisions I think are a really good idea...if things work out then it would be suicide for the dems to not renew or make them permanent..this will give the repugs a plank to ampaign on..if however things go poorly, then the repugs can say, ok, we tried that and it didn't work, now we have to try something else....kind of a win win thing.

[Timber Loftis]

Originally posted by DraconisRex: There are quite a few sunset provisions in the tax code. Some of them have been in effect for over 20 years now, like the 0.8% FUTA tax enacted in the 1970's.

This is fair enough. I have been wrong before, and I promise I will be wrong again at some point in the future. This, however:

Obviously you're not a tax accountant and you, like a vast majority of the americans supporting this tax cut, are spouting off about things for which you know nothing.

is simply plain rude. For someone so knowledgeable, you sure lack class buddy.

Besides, you have yet to answer the questions which I put to you. While going to great lengths to explain the rudimentary distinction between Total Income, TI, and AGI, as well as marginal tax, you've given everyone here that didn't know a good lesson on the most basic of income tax concepts, yet you've ignored my repeated questions about some specific provisions that are lauded as beneficial to the middle class. I expect you you either (a) have no response or (b) have been so busy in your flurry of Tax101 postings that you can't be bothered to read the posts cropping up in between your lessons.

[edit] And, oh, I am not supporting the tax cut. I querried you on 3 or 4 things that have been cited by others as "good points" and I want to know if there are flaws to them. In fact I do not support the tax cut. But, despite the rubber-sharp wit with which you can insult, you apparently have not been observant enough to notice that.

[ 05-30-2003, 02:51 PM: Message edited by: Timber Loftis ]

[ElricMorlockin]

Originally posted by Timber Loftis: [QB] Elric, you misunderstand. If your tax burden decreases but spending doesn't, you may keep the $$ in your pocket this year but Uncle Sam has taken out a loan in your name and you will pay more $$ in a future year. Thus, you really were not allowed to keep the money at all. Don't buy the illusion proferred by the gov-mint.

TL, the beauty of any tax rollback, is that it keeps people aware of the tax system in the first place. Increasing taxes is a dirty word in politics at this point, with the general public. However, spending is not yet to the same level. I fully understand the point conveyed here, but question the ability of any politician to sell us all on a bill of goods where we need huge tax increases.
I also understand the rob Peter to pay Paul mentality. Hell, people our age are pretty much "effed" when the question of funding Social Security for the Baby Boomers is seriously looked at. I hold no illusions about what our say is going to be, when they will outnumber us in the polling booths to such an extent. If there is anything left by the time the Baby Boom generation is finished, I will personally be astonished.

Someone who makes $20 K does pay taxes, probably about $3K worth. Now that $3K means much more to them than $5K does to someone making $50K. Moreover, the real unfairness is evident when you look at the following scenario: Family A: Makes $27K/yr, has 2 kids, gets $2K back in taxes. Family B: Makes $26K/yr, has 2 kids, gets $1200 back in taxes. You have given the family that makes $1K more $800 more dollars. Since that family only paid $150 more in taxes, you've given them an unfair windfall. I'm not all for taxes, but I am all for a fair tax system if you are going to have taxes in the first instance.

I agree the "cut-off" levels are rather interesting to say the least. How they reached the individual scales is anyones guess. This is precisely the type of bug-a-boo that occurs though, when people, in their divine wisdom, added income taxes to the fricking bill of rights. Yet another reason to not tinker with the initial premises IMO (from the other thread).

Moreover, I can't morally live with myself if I allow you guys to berate those who likely work just as hard as we do and just sadly happen to be less fortunate monetarily.

TIME OUT! Berate? Hardly! I am not berating anyone for what they do or what they earn. IMO, that is entirely up to the individual and the choices/repurcussions *of* their choices. Whether they are fantastically successful or dismal failures.

While they may not pay as much tax as me, I'm not going to adopts some superiority complex. Especially since on a % per dollar basis, they will miss the money much more.

Good on you then , that you have no superiority complex. Join the club!

[DraconisRex]

Originally posted by ElricMorlockin: You also mentioned, "well unemployment is at 6%, so the last one didnt do diddly-squat" Being in the line of work you are, you have to understand how long it takes an economic motor to get churning. Its like a weighted freight train to get the momentum and inertia going. [/QB]

In your post you assume many things. Unfortuneately, it's not particulary true in the real world. Investing in companies by buying stock is an arguement I've always gotten a laugh out of...

First, most of these companies purchase stock to disguise or re-classify the taxable income characteristics of compensation for highly compensated employees. Or they buy stock to drive up the prices for shareholders. They seldom issue new stock or treasury stock at a "profit."

Second, stock transactions are negative-sum games between investors. Cash goes OUT of one pocket INTO another pocket. However, since the government takes a cut of any gains, there is a net "destruction" of "private worth" as some of the proceeds are redistributed to the government.

It's only in the IPO does this hold true. And then, it's often limited because most IPOs have a vic behind them, who may very well be japanese or european or arab and will take the profits over-seas.

As far as the cuts benefiting the economy, the first set of cuts were pretty marginal. The Congressional Budget Office was clear they wouldn't have any real effect. (Except reducing taxes on the rich.) And by gosh, they haven't.

Now, the arguement for the "tax-cuts = growth" comes from the Kennedy-era (A rising tide lifts all boats), via Regan era. Under Kennedy, the top rate dropped from 96 (or so) percent to something like 69 or 76 percent... Under Reagan the tax-rate bracket cuts were huge! We went from brackets in the 70+% range to a max of 39.6. However, something not talked about by the "political tax cutters" was that TRA '86 was a net-zero-effect tax-law change.

That is, while the brackets went down in some areas, they went up in others (like long-term capital gains). Plus, Reagan closed a TON of loopholes (one of which caused the real-estate debacle in the late 1980's), limited or removed many tax credits, removed deductions, repealed the General Utilities doctrine, added passive loss rules (Sec. 469), closed tax shelter provisions (Oil & Gas especially causing that exploration sub-industry to collapse as investment dried to a trickle) etc.

All-in-all, there was no net change in total taxation and as capital gains rates were increased for LTCG (long-term capital gains) it is unlikely that "increased" investment due to "lower rates" was the empitus of the econmies growth.

So, what really caused the outcome that tax revenues increased by 8% per year? The tax cuts? Not likely. They were net-zero-effect. The huge deficits and spending billions of dollars with defense contractors and social welfare programs? You remember those deficits (paid off during the Clinton years) run up by the Federal goverment which went on a spending ramapage as the hawks and doves lay down together?

Or was it productivity gains because of the technology upheaval? That's what Allen Greenspan thinks.

For example, when Regan came in, personal computers were non-existent. Computerized machinery was unheard of except by geeks in the basement of MIT. By the time Regan left office, I had a 33MHz 386 with 4 whole MB of RAM and a 65MB HD! (WooHoo!) My productivity as an accountant shot through the roof. My friends who are architects or engineers have had the same gains.

So, what I'm saying is that while tax cuts may be popular with the rich, there isn't any solid historical evidence to prove that a tax cut to the rich can stimulate an economic recovery. There is a lot of evidence that major changes in techonology, leading to productivty gains can stimulate economic recovery and growth. We've had it with railroads, steam ships, electricity, computers, plastics, internal combustion vehicles and a host of other products and technologies.

[DraconisRex]

Originally posted by Timber Loftis: [QB] Wonderful wonderful post Draconis Rex. [img]graemlins/thumbsup.gif[/img] I'm glad someone in the trenches can confirm what is widely suspected. I have a question: I know a pensioner who argues that the dividend cut will benefit them greatly, as they get monthly dividend checks and the % rate will drop. True or False?? Thanks for any reply.

A pensioner? Pensions are ordinary income. Therefore, it will not help them at all. If they are a pensioner who also supports themselves with non-retirement-trust dividends and gains, then yes. But only to the extent that it will make a real reduction in their taxes or provide them an opportunity to aviod convernting equities into cash.

[edit] Other things lauded as helping middle income earners are: 1. Marriage penalty reduction 2. 2% decrease in payroll taxes 3. The already-discussed $400/child credit increase What about these?

1. The marriage penalty is a bit of a misnomer and only applies when you have two working spouses. Second, the greatest effect is on high-net-income DINKs where both spouses have high incomes. A man who makes 100K and has a wife who works part-time at Restoration Hardware (6K) to get the employee discounts is hardly suffering from the "marriage penalty."

Also, the true marriage penalty is the difference between the taxes if each person filed as "single." Only if there isn't a large gap between the relative incomes is there any real penalty.

OTOH, if you've got a stay-at-home spouse, you have a "marriage benefit." A lower tax bracket on the same income and a higher standard deduction.

So, there is not a real "penalty" per se. Some benefit, some don't.


2. A reduction in payroll taxes is stupid. There is a projected 44 TRILLION deficit in future obligations to retirees. To cover this, a 66% increase in the payroll taxes is needed to build up the surplus required for Social Security to function.

3. It's been discussed. The fastest way to stimuate an economic recovery through a tax break is to funnell the money to the less-advantaged. This money will be spent on consumer goods.

If you give it to the rich, they have a tendency to save the money, reducing the effect. At least if anything they taught in economics over the last 30 years is true.

Sorry to be so detailed, but if I can get an expert on the hook to edu-ma-cate me, I will.

And you call-out others rude? :rollseyes: The word is hypocrite.

[harleyquinn]

Originally posted by DraconisRex: quote: Originally posted by Timber Loftis: [QB] Sorry to be so detailed, but if I can get an expert on the hook to edu-ma-cate me, I will. And you call-out others rude? :rollseyes: The word is hypocrite.

I don't see anything rude in this statement made by TL. He was making a joke about the fact that he was derailing the thread somewhat to ask for free info from you.

Thanks guys for all this info (Magik, TL, Drac), I'm learning a whole lot (seriously)

[DraconisRex]

Originally posted by Timber Loftis: is simply plain rude. For someone so knowledgeable, you sure lack class buddy. Besides, you have yet to answer the questions which I put to you. While going to great lengths to explain the rudimentary distinction between Total Income, TI, and AGI, as well as marginal tax, you've given everyone here that didn't know a good lesson on the most basic of income tax concepts, yet you've ignored my repeated questions about some specific provisions that are lauded as beneficial to the middle class. I expect you you either (a) have no response or (b) have been so busy in your flurry of Tax101 postings that you can't be bothered to read the posts cropping up in between your lessons. [edit] And, oh, I am not supporting the tax cut. I querried you on 3 or 4 things that have been cited by others as "good points" and I want to know if there are flaws to them. In fact I do not support the tax cut. But, despite the rubber-sharp wit with which you can insult, you apparently have not been observant enough to notice that. [/QB]

Repeated posts baiting and antagonizing because you didn't like having to wait for gratification. That, coupled with your history of smugly-superior and smarmy put-downs of myself and others, who know as much or far, far more than you; added to your typcial american distain for any intellectual process or debate that doesn't end up in a "poopy contest" pretty much tells me everything I care to know about you. In short, with your rudeness and intolerence as well as your childish demands for instant gratification, I think you succeeded quite well in demonstrating what needed to be demonstrated.

Ciao, baby.

[Timber Loftis]

Well, I guess I'm speechless. For a change. I didn't mean to bait you, I didn't mean to smarm, and I certainly may be dumber than you. Guess I'll just go put my nose in the circle on the blackboard for a while.

[DraconisRex]

Originally posted by harleyquinn: I don't see anything rude in this statement made by TL. He was making a joke about the fact that he was derailing the thread somewhat to ask for free info from you.

You don't. I do. Timberloftis decided I was rude. Whereas, I considered myself to be brusqe and matter-of-fact.

Therefore, rudeness is subjective not objective. From my perspective, Timberloftis made an erroneous subjective judgement on a non-specifically addressed comment and made a direct personal attack, making him doubly wrong.

See my point? Or are you going to argue it? Because it *is* subjective.