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June 1, 2003 4:52 PM   Subscribe

Second study finds gaps in Bush tax cut. A new study has found that 8 million mostly low-income taxpayers will not receive any benefit from the tax law that Republicans have said for weeks was designed to benefit all those who pay income taxes. This in addition to the child tax credit already absent within the law.
posted by The Jesse Helms (36 comments total)

 
You just don't get it, The Jesse.

The rich getting even richer is best for everyone. The rich accumulating even more cash is the only way to expand job opportunities. The wealthy know best what to do with money in order to help us all out. They're experts, and their hearts bleed for the common person.

Just ask any rich person....and/or their many sycophants.
posted by fold_and_mutilate at 5:17 PM on June 1, 2003


8 million mostly low-income taxpayers will not receive any benefit from the tax law

[sarcasm]

Gasp! OMG. Really!?!

[/sarcasm]

Maybe the small percentage of this population that votes will remember this in 2004. Somehow, I doubt they will, although I am sure they will remember the wars.
posted by moonbiter at 5:35 PM on June 1, 2003


Ironically, these Rush Limbaugh lunchbox-carrying working stiffs--who have developed CTS from such strenuous flag-waving--are getting kicked in the teeth by the very same gleaming Pierre Cardins that they have been slobbering over. More ironically, they'll vote Republican again in 2004. Maybe they're still in the shock and awe phase of class warfare.
posted by squirrel at 5:38 PM on June 1, 2003


Also, this just in: Rumsfeld warns working class to stop harboring Al Qaeda; Powell reveals "smoking gun" linking labor unions to WMD.
posted by squirrel at 5:42 PM on June 1, 2003


Yup, it's well known that to make the rich work harder you have to pay them more, whereas to make the poor work harder you have to pay them less.
posted by carter at 5:47 PM on June 1, 2003


The only way to make the poor rich is to reward them for accumulating wealth. The above commentators seem to believe that you can motivate the poor to become richer by punishing people who actually do become rich.

oh and.. die NPR die. loathsome socialist propaganda organ.
posted by paleocon at 6:44 PM on June 1, 2003


Why don't the poor people just become rich? Then they won't have to pay taxes. I think it must be a cultural thing or somethin'.
posted by Ignatius J. Reilly at 6:44 PM on June 1, 2003


This article clarifies "Dividend Voodoo".
posted by sadie01221975 at 7:01 PM on June 1, 2003


he only way to make the poor rich is to reward them for accumulating wealth.

yes! becoming rich in the united states is one punishment after another! those luckie duckies don't know how good they have it being poor.
posted by lescour at 7:02 PM on June 1, 2003


well they're poor because they're lazy. duh.
posted by rhyax at 7:04 PM on June 1, 2003


The only reason people are poor is they aren't hardworking enough to be born into a rich family. Just look at the President....
posted by elwoodwiles at 7:11 PM on June 1, 2003


All right, some people will be rich, most people will be poor. The socialist utopian ideal is not going to happen.

But still, to screw the working poor in this manner, under the banner of compassionate conservatism...this is really bad.
posted by kozad at 7:17 PM on June 1, 2003


Oh, and I wish I had time to look into this deeper (gotta go drinking) I wonder if anyone is studying the effects on all taxes by the latest rounds of tax cuts. Many states are going to have to raise their taxes and many cities are already upping property taxes and fees to cover costs incurred by Homeland Security, loss of grant money from the Federal level to fund social programs and etc. Is it possible that if we counted all the taxes the average wage earner pays, will that average wage earner be paying more in taxes after the cuts? Just a thought I'll have to come back to later.

So when are we going to stop double taxation in the form of payroll taxes? Or in sales taxes, etc. Many forms of taxation, just like dividend taxes, come from pools of money that have already been taxed. Any relief there?

*Goes drinking*
posted by elwoodwiles at 7:21 PM on June 1, 2003


oh and.. die NPR die. loathsome socialist propaganda organ.

Yeah, if Terry Gross tells me to seize the instruments of production one more time I'm sending back the tote bag.
posted by Ignatius J. Reilly at 7:27 PM on June 1, 2003


[sarcasm]

Gasp! OMG. Really!?!

[/sarcasm]


I second that metadata.

The only way to make the poor rich is to reward them for accumulating wealth.

Paleocon is kidding right? That comment needs rhetorical force tags, too. Do we really believe that what keeps people poor is the thought that they had better not work because they my move up into a higher tax bracket and have to itemize? [injoke]I for one welcome our new acephalic overlords[/injoke].
posted by hairyeyeball at 8:32 PM on June 1, 2003


8 million people is only 2% of the population. Notice how the articles dance around the subject of how few people in that group actually pay income taxes? "Up to" is a convenient way of not mentioning the vanishingly small percentage of low-income workers who actually could benefit from a tax reduction - the average is already a little under -5% so we're otherwise talking about "increased handouts" as opposed to tax cuts. If we really wanted to improve their tax situation we'd work to lower the social insurance tax load instead - they're paying 7-8% there.
posted by adamsc at 8:38 PM on June 1, 2003


Yeah, if Terry Gross tells me to seize the instruments of production one more time I'm sending back the tote bag.

This is very funny.

"Up to" is a convenient way of not mentioning the vanishingly small percentage of low-income workers
who actually could benefit from a tax reduction - the average is already a little under -5%


Do only 5% of "low-income" workers pay taxes?
posted by four panels at 8:49 PM on June 1, 2003


adamsc:
When you speak of people who "don't pay taxes" do you mean simply that they do not pay at the end of the year (i.e. get a refund)? Everyone pays income taxes, even many undocumented foreign nationals, in the form of withholding. When I made minimum wage earlier in life I distinctly remember taxes being withheld.
posted by Ignatius J. Reilly at 8:55 PM on June 1, 2003


He's clearing referring to those that don't pay taxes: ie, their deductions exceed their income. Between things like the standard deduction, and various other deductions (some of which are refundable deductions), there are certainly a number of people that don't pay federal income tax. Not sure how many, and it's definitely low income people, but there are people that fall into this category. Somewhere the irs has undoubtably compiled info on this number, so those that are real curious can probably find it.(As a matter of fact, it's the same category of people that the democrats were complaining weren't getting checks in the "rebate" mailing a couple years ago. They didn't get checks for exactly one reason: they didn't have any federal taxable income. This was apparently a hard fact for people to grasp back then too based on the amount of whining that occurred (to me it seemed pretty simple, if you didn't pay taxes, you didn't get anything back).) (Oh, and note that it's entirely possible that taxes may have been withheld during the year for these people, but in the end, their refund would have equaled or exceeded the amount they paid).

Personally, I'm looking forward to the apx $1800 more I'll have this year.
posted by piper28 at 9:15 PM on June 1, 2003


Most of the more intelligent wealthy people I know aren't in favor of random tax cuts, and most of them support social reforms. After all, educated people are needed to work in businesses, so increasing the general level of education helps the rich. Middle-class people are needed in order to consume goods and services beyond food and rent.

It's the wannabe wealthy who celebrate every time they get an extra $100 in their paycheck. The rich understand that it's better to find a way to ensure long-term prosperity than to have 2% more money instantaneously.
posted by mosch at 9:56 PM on June 1, 2003


Re: poor people paying little or no tax, or actually getting money from the IRS - do some research on the "Earned Income Credit".

EIC info I found via Google...

"Eligible workers can get a check from the IRS. Ms. Berger has two children in college and earned $19,000 in 2002. Her federal income tax for the year was $310, all of which was withheld from her pay. She is eligible for an EIC of $2,986. The EIC pays her back the $310 she paid in income tax and gives her an additional cash refund of $2,676."
posted by Schnauzer at 10:13 PM on June 1, 2003


I'm surprised that the Democrats are finding a voice here -- it seems to have Daschle positively exercised (and he's approximately as modulated as SNL's NPR-parody 'Delicious Dish' sketch, so this is significant). One can also see why it's pissing off Washington Republicans, because it was indeed the Democrats who tried to cap the overall size of the tax cut. If they do manage to make hay with this beyond the pages of loyal media outlets I'll be surprised, though, because most people who pay taxes will indeed see some relief. Keep in mind that the working families with children that are being brought up regarding the Child Tax Credit, as I pointed out in that thread, are mostly eligible for things like the Earned Income Tax Credit, which means that instead of paying taxes they either get them credited to zero and in many cases get money already. (This is a reverse tax, which is thought to encourage people to work.) It's pretty clear that if you don't have other kinds of income, and you don't have kids, these tax cuts weren't going to change the picture much for you (note: I fit into this category myself). But then, most of these people pay very little taxes anyway.

The basic problem is that an after-tax credit like the Child Tax Credit is orthogonal to whether or not you pay taxes -- it has no real bearing one way or the other. Conservatives want to be very careful how it's phased in at the lowest income level, because if those people pay no taxes at all, then what's happening is that just for having a kid Mary gets money from the government that Paul paid in. (This is why the Child and EI tax credits limit the number of children who "count".) Reverse taxes for working at least serve a clear purpose. A better approach for reducing the taxes of those who pay taxes in this income range would be to create a lower-than-10% bracket, or perhaps just lower the entire bracket to (say) 8%. This will create other orthogonal collisions such that some people end up losing credits and actually paying more, as well as completely eliminating taxes for others. With so many overlapping classes of people, income, deductions, and so forth, no plan is going to perfectly and fairly reduce taxes for everyone.

The problem that I have with these tax cuts isn't some trumped-up "unfairness", but the overall complexity and ridiculous jiggering of future tax-cut expirations that Congress can then come in and heroically save us all from. The next several years -- through 2009 anyway -- are going to be incredibly complex to navigate for anyone who wants to do any kind of tax planning. If you have an income / deduction situation that's changing dramatically during this period, you may as well give up on trying to time your way through it. The reductions are, of course, welcome to many people, but the way they've been structured is unbelievably bizarre. I suppose that should mean I could make a little more money on the side doing taxes for folks (it was half my income this spring), but it seems like Congress has completely chucked any concept of making taxes simpler and easier for people.
posted by dhartung at 10:27 PM on June 1, 2003


Oh, and I wish I had time to look into this deeper (gotta go drinking)

And therein lies the principle problem with American politics.
posted by Yelling At Nothing at 11:06 PM on June 1, 2003


I heard something interesting the other day about the fact that the total tax burder (payroll, property, sales, etc.) is the highest for the lowest income people, because of the payroll taxes for medicare and social security, etc. Can anyone let me know more about this? I was listening in to a conversation on the metro and one guy was saying that to really stimulate the economy through consumer spending, you would cut payroll taxes, but these taxcuts are designed to stimulate the economy from the top down, so the gears of industry start turning because of increased investment. So... is that true? Keep in mind I was pretty hammered when I heard this...
posted by chaz at 11:31 PM on June 1, 2003


We really should get past the Republican talking point that low income people don't pay taxes so they shouldn't get a tax cut. Every US worker pays a very regressive 7.65% payroll tax right off the top of their wages with no deductions. Payroll taxes for wages above $87,000 are only 1.45%. Claims that low income workers don't deserve a break because they don't pay taxes are just plain dishonest.

And the Republican argument that, because of the cap on the size of the tax cut package, they just couldn't find $3.5 billion (less than 1% of the total) to extend the benefits to poor people is a cruel joke and cowardly excuse.
posted by JackFlash at 11:32 PM on June 1, 2003


More misleading averages from Bush administration (5/31) (spinsanity.org)

when you decide to use mean rather than median as a means to distort the figures released to the public

'fuzzy math' i guess.
posted by 11235813 at 11:33 PM on June 1, 2003


The only way to make the poor rich is to reward them for accumulating wealth.

Heh. Yeah. How about: reward them with an education that would allow them to get a better job? Nope, can't have that, gotta have tax cuts.

How about: reward them with reduced expenses for healthcare, or actual healthcare insurance they don't have to panic over with every job change? No, can't have that either, gotta have that stock dividend tax cut.

How about: paleocon is a nasty, single-minded, "I got mine, you can go fuck yourself" troll? Yeah, that's right on the money.
posted by Cerebus at 5:47 AM on June 2, 2003


Um, I just want to point out that the article makes it very clear that the 8 million households do pay taxes, and therefore aren't necessarily the EITC devils that Republicans are making them out to be.

Also, according to the article, the percentage of households receiving no benefit from the tax bill is about 36%, a little more than 1/3 the US population.
posted by dogmatic at 7:21 AM on June 2, 2003


How about: reward them with reduced expenses for healthcare, or actual healthcare insurance they don't have to panic over with every job change? No, can't have that either, gotta have that stock dividend tax cut.

good call. since giving people more money to spend is supposed to stimulate the economy, why not provide these people with free health care? the money they don't spend on insurance magically becomes pocket money.

it also takes the heat off of businesses that have to provide insurance to their employees, which can then be "trickled down" in the form of automobiles and donations to the republican party.
posted by mcsweetie at 8:09 AM on June 2, 2003


Heh. Yeah. How about: reward them with an education that would allow them to get a better job? Nope, can't have that, gotta have tax cuts.

i thought that the arguement was also that our higher education schools are overfilled as it is... how many more psychologists do we need? how many deliciously useless degrees will it take?
i thought that half the people there were there out of a sense of form anyway. they don't try. why will giving someone education make them more likely to try?
it's a choice to go into debt for school. really.
posted by kid_twist at 2:54 PM on June 2, 2003


JackFlash: If this issue does gain political traction (and the Democrats aren't timing things well if they hope so, but you never know), the Republicans probably did shoot themselves in the foot. I suspect they were correct in calculating that it won't and they didn't, but you never know how the electorate will react a year from now (ask Bush 41).

JackFlash (and chaz): In any case, you're correct that FICA is regressive, and when FICA is included (not to mention property and sales taxes) the entire tax burden averages out regressive. But nobody's going to de-fund Social Security at this point, and the latter taxes fund schools and state/local government, respectively (and are federally deductible in various ways, lessening their regressivity).

dogmatic (and JackFlash): But the point is that there is no uniformity among these taxpayers. Some of them pay taxes; others do not. I am quite sure of this because I have done taxes for a wide range of people, almost all of them in this wage bracket. Since their income tax and tax credit levels are orthogonal, giving the credit to the entire class means that some will get tax relief while others will get a reverse tax windfall. Hence the phase-out. As I stated the more direct way to give income tax relief to this class would be to reduce the income tax rate itself, which would then phase itself out and give proportionate relief in direct relation to taxes paid. Using the Child Tax Credit to do this is a pretty indirect and error-prone way to do it, like giving everybody the same size bowling shoes. The Earned Income Tax Credit at least has the goal of encouraging employment; what public goal would be served by giving out a reverse tax for having kids? Democrats need to be clueful on this question, at least to having a reasonable answer. Most of them, such as Daschle, certainly know better and are thus engaging in politically advantageous (?) disingenuity. They'd do much better focusing on returning the tax system to pre-1986 progressivity -- say, a nice brain-friendly seven brackets -- rather than playing incentive games with credits which, as I've pointed out, are orthogonal and hand out deserved relief and somewhat-less-deserved reward in equal measure, unless they're all as well thought out as the EITC. That isn't my impression of the CTC. The fact that these credits phase in and out and up and down like a pogo stick in a transporter just makes things worse.
posted by dhartung at 5:08 PM on June 2, 2003


How about: paleocon is a nasty, single-minded, "I got mine, you can go fuck yourself" troll? Yeah, that's right on the money.

Cerebus, thank you for providing yet another example of how liberals treat those with whom they philosophically disagree.
posted by paleocon at 6:30 PM on June 2, 2003


Come off that high horse before you fall and break your neck, paleo. I've tried the "reasoned argument" approach with you here more times than I care to count, and it's like spitting into the ocean. Forgive me for calling it as I see it.

Take heart, however-- I hold you in higher esteen than hama7.
posted by Cerebus at 7:08 PM on June 2, 2003


Pah. You can't trust the poor with money. That should be completely self-evident: if they could be trusted with money, they would have some already.

Me, I'm thinking of giving my untold hundreds of dollars to Jimmy Patterson. He's a rich man. He'd know what to do with it.
posted by five fresh fish at 10:53 PM on June 2, 2003


The only way to make the poor rich is to reward them for accumulating wealth.

Translation: The only way to make the poor rich is to give money to people who already have it.

I was thinking a the phrase the Right loves to use-- "A rising tide lifts all boats." Usually this is understood as meaning that if the rich do well everyone will do well.

That interpretation is a false analogy, however. If the boats are our individual fortunes, then the ocean is the fortunes of the mass of people taken as a whole-- not the fortunes of the wealthy alone. The only way to lift all the boats is to increase the fortunes of everyone, together. In other words, "Everyone does better when everyone does better."
posted by Cerebus at 5:08 AM on June 3, 2003


Spoken like a poor person, Cerebus! Can't be trusted, I tell you. Give up your money now, for the benefit of us all!
posted by five fresh fish at 8:50 AM on June 3, 2003


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