Posted on 05/24/2003 4:31:10 PM PDT by NYC Republican
Tax Cut Analysis
The US Senate has approved a conference report with the House on a $350 billion economic recovery package. Unless the president is struck by lightning, he will sign the legislation immediately. If the president is struck by lightning, Dick Cheney will sign the legislation immediately.
Even the liberal LA Times concedes that most people would benefit from this bill.
I've refrained from commenting on this process so far; but here are some of the things that stand out. First, the good things:
1. Democrats did not come along. As you can see from the roll call, the vote was 50-50, with the vice president breaking the tie. Three Republicans voted against the package, while two Democrats voted for it. As I've noted, Democrats, blinded by their hatred of the president, have lost all sense of political perspective. This vote will come back to haunt the nine Democratic senators who will be running for re-election in Bush states in 2004. Imagine the attack ads: "Blanche Lincoln voted against increasing the child tax credit. She voted against eliminating the Marriage Penalty. Blanche Lincoln wants higher taxes on your family. Vote for Mike Huckabee in 2004."
2. The package's official "cost" over ten years is $350 billion, allowing Republican Senator George Voinovich to vote for it. However, the cost was achieved by "sunsetting" popular provisions quickly, while leaving the less popular ones in place for several years. Thus the dividend tax cut will sunset in 2008, while the child tax credit increase will sunset in 2004. This will leave congress in the position of letting popular tax cuts lapse in an election year, or renewing them. Congress is unlikely to commit political suicide; so the provisions that sunset next year will likely be renewed, putting the real "cost" of the tax cut above the $726 billion that the president wanted. Remember last December, when the president was supposed to want a $300 billion tax cut and the conventional wisdom was that he'd get about half that?
3. The "sunsetting" of popular tax cut provisions in 2004 is designed to provide Republicans a political cudgel against Democrats in 2004. All the Democratic presidential candidates (except mealy-mouthed John Kerry; as usual, no can figure out what he thinks) have come out for a repeal of the 2001 tax cuts and opposed the 2003 tax cuts. They're going to find these positions highly unpopular in 2004, when popular tax cuts are sunsetting and the Democratic presidential nominee will have to say he wants to let them expire and raise taxes on the American people. Will Americans vote for a candidate who says he'll raise their taxes? Just ask Walter Mondale.
4. Income tax rates will be lowered immediately. Working people will reap the rewards in the form of fatter paychecks starting in July. Families with children will receive checks to cover the increase in the child tax credit.
5. The tax on dividends wasn't completely eliminated; but the president got over a 60% reduction in the dividend tax and a 25% reduction in capital gains taxes. This is far more than anyone expected a few months ago and the cut in capital gains wasn't even on anyone's radar a month ago.
6. The real "cost" of the tax cut is, of course, nowhere near $350 billion. This tax package will help the economy recover, resulting in a net increase in revenues, like the Reagan tax cuts achieved in the eighties.
Now, for the few bad things about this package: 1. There's $20 billion in aid to the states. This was necessary to get Democratic Senator Ben Nelson's vote; but the thought of rewarding the profligacy of state governments by bailing them out is repulsive.
2. The idea of "sunsets" is valuable as a political tool to keep the official "cost" of the package low. The "sunsets" are also carefully designed to provide political ammo against Democrats in election years. However, good tax policy should keep tax rates predictable, which "sunsets" don't do.
So there you have it. Another virtuoso performance by the president in pushing for this package. Another reason for Democratic party leaders to go into convulsions of rage every time someone mentions the president's name.
Somewhat funny to me...my mother-in-law was Presbyterian, lived on a farm and had 17 children (no multiple births)...after I married and would tell people that my husband had 10 brothers and 6 sisters, they always asked, "Are they Catholic?" :^)
Don't forget revise the percentages when un-doing the tax cut. The reversal of a 60% decrease and a 25% decrease actually amounts to a 150% increase and a 33% increase respectively, in order to restore the gross dollar amounts to their initial levels!
These larger percentages basically mean even more re-electiontion-time ouchie-ness for taxthirsty libs. Gotta love it.
I still don't see whats wrong with me getting a refund, so they gave me back my money, basically they collected it, said, we are going to let you keep more, and here's some of YOUR money back to you. hence the name "refund".
On the other hand, if the government does in fact seize your money you should get a refund.
Do you see my rationale here? Don't pay taxes and get a refund-bad. Pay taxes and get a refund-good.
Don't compliment them too quickly. This is strictly because of GWB's utter, incomparable ability to play showdown poker. As soon as he is out of office, the Stupid Party will go back to their usual goofy way of stumbling into an occasional good thing. (Note to self: Never EVER play poker with GWB!!!)
Bullcrap spin.
The sunset provision merely provides for an automatic tax increase without politicians having to vote on it in an election year.
Just a minor correction, but one that I think you'll appreciate... Reversing all of Bush's tax-cuts (or voting against the sunset) will have a much more dramatic headline: the effect on the dividend taxation will be as high as a 160% INCREASE in the tax rate (from 15% up to 39%); the capital gains rate will increase 33% (from 15% to 20%), and for many people in the lower brackets, any reversing of those changes will be much greater than 100% (from virtually $0 tax) -- that establishes a potentially HUGE marginal tax effect on lower income folks, something I hope Republicans take advantage of.
By the way: have you noticed that nobody in the media is doing the appropriate "multiplication" when it comes to Demo healthcare plans? Dick Gephardt's bill is estimated to cost $220 billion (that's $2.2 trillion over 10 years and everyone knows he's underestimating! But there won't be any bureaucracy! Bawahaha!!!)... Lieberman's bill is $800 Billion! Dennis The Menace is proposing a $880 billion plan!
I see you've gotten no answers... please inform us!
What we have NOW is a VAT!!!!!!!!!!!
Going to a national RETAIL sales tax would eliminate the VAT until the people allowed pols to change back. BTW once we get away from the VAT, the IRS, and withholding it will be VEWY VEWY (elmer fudd) difficult to go back.
I know that if I got my entire paycheck free of any federal deductions whatsoever, it would be awfully tough to make me agree to give it up again.
You mean what we have now is not confiscatory????
BTW prices would not change under a national retail sales tax. They'd stay the same.
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