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September 2, 2014

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Letter to the editor:

Tax cuts argument is inconsistent

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Would some Democrat enlighten me on a few things? The vast majority of the “Bush tax cuts” went to the middle and lower classes — if you don’t believe me, look it up. If the tax cuts for the “rich” didn’t stimulate the economy, would it be safe to say the tax cuts for the middle class and the poor didn’t either? If those tax cuts were responsible for the majority of our debt, as some say, why not let all of them expire?

Democrats also tell us we are the only Western democracy without universal health care. I’ll give you that, but we also have the most progressive tax system of them all — again, look it up. Not one of the enlightened socialist democracies of Europe allows 47 percent of its citizens to go without paying income taxes. I know the Democratic argument: the poor still pay payroll taxes. Again I’ll give you that, but all payroll taxes except Medicaid are insurance policies for the aged; they don’t pay for our military, infrastructure, education, foreign aid, unemployment compensation, the GM and Chrysler bailouts, the bank bailouts, government salaries or any of the other things the federal government spends our money on.

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  1. "If the tax cuts for the "rich" didn't stimulate the economy, would it be safe to say the tax cuts for the middle class and the poor didn't either?"

    This isn't rocket science, Robert. When the middle class and poor have more cash to spend, they tend to spend it. They buy groceries, clothes, school supplies, gasoline, etc.

    Consumer spending is a huge part of our annual GDP, Robert. Just look at what the CEA found:

    "Allowing the middle-class tax rates to rise and failing to patch the Alternative Minimum Tax (AMT) could cut the growth of real consumer spending by 1.7 percentage points in 2013. This sharp rise in middle-class taxes and the resulting decline in consumption could slow the growth of real GDP by 1.4 percentage points, which is consistent with recently published estimates from the Congressional Budget Office."

    "Faced with these tax hikes, the CEA estimates that consumers could spend nearly $200 billion less than they otherwise would have in 2013 just because of higher taxes."

    "If those tax cuts were responsible for the majority of our debt, as some say, why not let all of them expire?"

    In the midst of a fragile recovery from the greatest recession the United States has seen since the Great Depression... you want to raise taxes on the engine of economic growth? Surely you aren't this daft?

    And then you raise the 47% red herring. These people pay no taxes? That's absurd on it's face.

    Of course, paying income taxes isn't the only way government is funded, Robert. Hopefully you know this.

    In FY2010, 40% of federal tax revenue was collected as payroll taxes. 9% were collected as business income tax. 6% was excise taxes.

    The evil 47% pays payroll taxes, and indirectly pays business income taxes and excise taxes, as they pay for products and services from companies which are then taxed on that revenue.

    Meanwhile, Robert, a few things you may want to consider:

    "There are 78,000 tax filers with incomes of $211,000 to $533,000 who will pay no federal income taxes this year. Even more amazingly, there are 24,000 households with incomes of $533,000 to $2.2 million with zero income tax liability, and 3,000 tax filers with incomes above $2.2 million with the same federal income tax liability as most of those with incomes barely above the poverty level."

  2. Meanwhile, Robert will continue to vote for the GOP, who worked feverishly for more than three decades to ENABLE the 47% he so despises:

    "When Ronald Reagan signed into law the Tax Reform Act of 1986, he boasted, "Millions of the working poor will be dropped from the tax rolls altogether, and families will get a long-overdue break with lower rates and an almost doubled personal exemption."

    "Both the initial Reagan tax cuts of 1981 and indexing income taxes to inflation in 1985 had a similar effect."

    "In the 1990s, the Republican-controlled Gingrich Congress passed a $500 per child tax credit that also wiped out the income tax liability of many low- to moderate-income households."

    "George W. Bush expanded the child tax credit as president and also signed into law tax cuts that reduced the bottom marginal income tax rate from 15 percent to 10 percent. Both moves increased the percentage of people not paying income tax."
    http://dailycaller.com/2012/09/17/the-re...

    Talk about inconsistent! You party gave us the tax policy you hate so much, Robert. GOP patron saint Ronald Reagan crowed about giving them tax cuts!

    How do you explain your party's inconsistency, Robert?

  3. Mr.Gardner's post is exceptional in the sense that almost every single factual statement is baloney. I had hoped these Karl Rove talking points would get a rest after the election, but I guess they are now deemed to be gospel by some.
    Happily my ire was soothed by another early riser, Mr. Sandoval (not related are you?). He has countered most of the b.s. with facts, except one... the blatant political pary lie that US citizens may the most progressive tax in the western world. OMG who invented that?

    You said "look it up" so I couldn't resist.
    Wikipedia has an excellent series of condensed tax codes by country. I chose Denmark because one of my business contacts from there once told me that the very rich could end up in a 90% bracket. Well, apparantly they have gotten less progressive in recent years. Now a Mitt Romney or Warren Buffet would only have to pay a bit over half of his income in taxes. Look it up Robert.

  4. We have an impasse on the budget. Surprise surprise. Same old people, same old problems, same old solutions. Do we really expect a grand bargain now after they failed miserably in the past? Even with the Super Committee and the automatic sequestrations?

    Here's the solution. GOP, under the tutelage of Speaker Boehner, proposes that the president and the Dems allow the Bush2 payroll tax cuts to be extended after January 1, 2013. The time length can be negotiated. Perhaps based on US GDP percenatges. These cuts help the middle and working class Americans, which is President Obama's number one concern concern. Right! Then deal with the big issues like tax reforms, increased tax revenues, and spending cuts later in the year after the new Congress settles in.

    CarmineD

  5. No tax argument can ignore the payroll tax. Accounting for nearly a trillion dollars in revenue, it's hardly chump change.

    The payroll tax is normally 7.65% paid by the worker and matched by the employer. If you happen to be self-employed you pay 15.3%, a higher rate than Mitt Romney (who I assume has been and remains unemployed). There are no deductions for the payroll tax. You pay it on the first dollar earned and it is a flat tax on the first $110,000 earned. No progressive tax system here.

    It's ludicrous to maintain that these revenues don't pay for "things the federal government spends our money on". The Government pays for Social Security and Medicare benefits which are major elements of the Federal Budget.

    Ignoring payroll taxes is as silly as saying 75% of us are evading tobacco excise taxes because we refuse to smoke.

  6. This letter is just another in a long list of people who are doing their damndest to point fingers here, point them there, complain about this, complain about that spending, just deflect the conversation away from what the core of the problem is.

    And that is, before President Obama took over, the Presidential administration before him formulated policies that clearly showed they didn't care about deficits, they spent like drunken Sailors and that they were basically and collectively incompetent when it came to leadership and governing American finances.

    One thing that is a simple fact is this: The Former President George W. Bush Jr. Tax Cuts For The Rich, The Filthy Rich, And The Obscenely Filthy Rich are gone as of January 1, 2013. Period.

    We can't sustain this.

    No country in the history of the world can conduct war, not on one, but two fronts, and not collect taxes. The Bush policies were fiscal idiocy that only runs America broke.

    The rich need to step up to the plate and pay their fair share.

    After those tax cuts are gone, we're going to reform the tax policy and get rid of loopholes, job outsourcing, tax havens, tax subsidies, and other crap that gets America nowhere.

    Go ahead and call it "class warfare," use those tired old terms like "job creators," call it unfair, call it jealousy, call it whatever you want. What I call it is to hell with the rich. No longer are we bending backwards so they can do this vampire thing on the middle class. Because it doesn't work due to greed and selfishness and their craving more and more and more and more and yet even more.

    The good thing is over with. We got a country to fix. A middle class to support and strengthen.

    The rich no longer fit into the equation. They never have. For going on 30 years of being told the rich are the best thing to happen to America. And it has been proven to be nothing but a lie.

    The American people want a level playing field.

    The Tea/Republican Party, in its neverending quest for purity and the constant craving for more neo-conservativeness, combined with their running interference for the rich all the time, is confirmed now it's not the way to go.

    We just had an election and the people are sick and tired of the silly games that only benefit a chosen select few people in America.

    We're no longer in that playground anymore. We are moving on. American people are tired of living in a lie. That's why President Obama was resoundingly re-elected.

    Get onboard, Tea/Republicans. Or face irrelevance. Or should I say irrelephants.

  7. We need to decide as a nation the 'priorities' for government spending. That is 'impossible' as long as Americans are not asked to 'fully pay' for what the government spends. Under that scenario, we will decide to cut 'nothing' of cnsequence, which is what is happening now.

    President Obama is at least asking for 'some' Americans to pay higher taxes, but the wealthy will absorb the tax hit and just keep on going, and we still won't address 'spending priorities'.

    Until the rest of us are asked to pay higher taxes, no momentum will exist to set government spending priorities.

    Higher taxes on the middle class are on their way. They will either be imposed by the government (which is what should happen) or we will just kick the fiscal can down the road until inflation (the hidden tax) arrives because we never got our fiscal house in order.

    Michael

  8. "No tax argument can ignore the payroll tax." @JWeber

    Here's more:

    "Federal social insurance taxes are imposed on employers and employees, ordinarily consisting of a tax of 6.2% of wages up to an annual wage maximum ($110,100 in 2012) for Social Security and a tax of 1.45% of all wages for Medicare. For the years 2011 and 2012, the employee's contribution has been temporarily reduced to 4.2%, while the employer's portion remained at 6.2%. To the extent an employee's portion of the 6.2% tax exceeded the maximum by reason of multiple employers, the employee is entitled to a refundable tax credit upon filing an income tax return for the year."

    The payroll tax cuts, if extended on january 1, 2013, require only mutual agreement by House and Senate and President Obama's signature. It can be done lickety split. Payroll systems were already modified for 2011 and 2012 and don't need any changes, UNLESS the tax cuts are not extended.

    Win, win for workers and the economy. More take home pay for goods and services. With two-thirds of GDP being consumer spending, if people do so, economy expands.

    Downside is less revenues less revenues in Social Security and Medicare Funds for payouts to retirees. More need to reform these programs [Social Security and Medicare] for now and in the future.

    CarmineD

  9. Tax cuts enacted under Reagan and Bush 43 drove the percentage of non-payers to 32% (t was only 25% during the Clinton years). The Great Recession push it to 41%. The real tax/wealth inequity problem over the past 30 years is that middle class income has continued to decline relative to cost of living/inflation so more folks were push into being non-payers. Every income bracket pays a lower percentage in income taxes than they did in the 1980's. The difference being that the high income, high net worth taxpayers not only prospered they got to keep far more of their total income that ever. Hence the applicable phrase "the rich get richer and the poor get poorer." What neither party has addressed is how do we right the revenue ship? Tax breaks only go so far. Education and competiveness is essential to refloating the sinking middle class boat. Where are all the big ideas? The two major parties are still trying to rearrange the deck chairs on the Titanic when we all need more lifeboats.

  10. Robert... Let's be realistic! With 78 million people retiring and two wars that are going to cost us for the next hundred years everyone needs to pay some tax. Keep in mind the last Civil War veteran died in 1956 in the last Civil War widow in 2004. This at a time when life expectancies were nowhere near what they are today.

    We have universal healthcare in the United States. That's why there were 123 million emergency room visits last year and millions resulted in no payment.

    United States has what is known as a for-profit universal health care system.

    We share this system with Mexico. That should tell you something right there. People get financially raped and end up in bankruptcy court every time they get seriously ill or injured.

  11. Many years ago I put together some of the nation's first ERISA medical trusts. I belonged to the International Foundation Of Employee Benefit Plans. Healthcare costs started going up double digits in the 1980s. Medical inflation is the cause of nearly all of our budgetary problems today, both on the federal and state level. Without containing medical inflation you cannot bring sanity back into the budgetary system. The $200 trillion that were going to be paying for medical care over the next 40 years is can is going to suck the blood out of the entire nation.

    Individuals cannot afford to pay for it. The states cannot afford to pay their share. The federal government is going to get stuck with the lions share. And the lions share of $200 trillion is one hell of a lot of money.

  12. If you look at the thousand wealthiest taxpayers in the United States and examine the taxes that they pay you will find that their tax payments were in the teens when tax rates were 92% and they're paying in the teens now. There are too many loopholes and tax dodges to get much money out of the superrich. You could make the argument that if the superrich paid substantial taxes they could never be superrich.

    The tax code needs to be thrown into the ocean and replaced with something more equitable. There also needs to be an onerous death tax. When Sam Walton died he left his family billions and billions of dollars in wealth and very little taxes were paid. In terms of financial assets a few million people in this country have it all.

    The wealth inequality in the United States is so ludicrous that were running neck and neck with Turkey and Chile. We are competing with Third World countries to see who has the worst wealth inequality.

    Never ending violence and crime are a result. Walmart alone will lose close to $4 billion this year to theft. Much of it from employees. Sam Walton was asked many years ago what he believed was the worst threat to retailing. His response.... theft.

  13. ...arrrrgghhhhhhhhhh!!!...

  14. It's not that liberals don't agree with spending cuts. The people who are going to have their benefits cut don't agree with spending cuts. Considering there are about 147 million people getting some type of assistance that's a substantial voting block.

  15. Social Security is not a budget item. It is not part of the debt, nor deficit. It is a trust fund.

    Adjustments to Social Security won't decrease the debt.

    It can be made stronger and last longer with adjustments to the system that will help future retirees.

    That includes options like, raising the retirement age, lifting the income gap on deductions, increasing the FICA deduction, which currently is decreased due to the payroll tax cut, means testing, and, but not least of all, halt all surpluses from going into the General Fund for Congress to spend on discretionary items for their home states.

    Keep in mind that some seniors can't make it to age 65, 66, 67 or 70 due to health problems that make it impossible to continue working, by their choice or the employer's action. They have to take cuts in their benefits for going on SS early. These can be significant.

    Republicans are suggesting increasing the retirement age to 67, raising the income cap, and getting rid of COLA, or reducing the amount.

    That last one really gets me. It is an old goal of the GOP.

    So many seniors are at poverty level with Social Security, and the idea of not giving a cost of living adjustment is ridiculous, and an injustice, unless they are trying to make them go hungry, go without needed medication, or become homeless.

    Keep in mind that increasing utilities, rent or property taxes, food, repairs, gasoline, insurance costs don't go on hold. They keep increasing.

    Many widows and widowers are alone, and unable to work, and their SS check is small.

    So why are they talking about hitting the seniors on an item that isn't part of the budget or debt?

    Sounds like they are cutting the spending? No, they are not! It is a sham!

    Social Security should be off the table since it doesn't have anything to do with the budget or debt. Again, it is a trust fund for which workers and employers pay a contribution via taxes.

    By the way, Medicare is a trust fund as well, but it is likely to be cut short faster due to the out of control costs.

    The only real solution is a single payer universal health plan.

    Spending cuts must come from budget items, but the idea of cutting Medicaid is a cool target until you understand just who will suffer, primarily children and bed ridden and demented seniors, some of whom receive some pretty bad care.

    The quality of care for both young and old needs real attention. We need to increase jobs, so Medicaid recipients could be retrained when possible for sustainable incomes. We also need to help with educational needs for the same reason. It is the children that are the focus and helping parents be able to earn a living to support them.

    We need to look elsewhere for cuts, and we need to increase revenue from tax increases.

  16. In time, the ACA may decrease some dependence on Medicaid because it won't be necessary for people to become destitute in order to get health insurance for themselves or family members in need.

    They could still work, and pay for their living needs and have healthcare through the ACA.

    Another reason for a single payer universal healthcare system.

  17. peacelily.. You need to do a little bit more research on the above. The Social Security and Medicare trust funds are part of what is known as intergovernmental debt. Intergovernmental debt makes up 40% of our national debt. These programs absolutely contribute to our debt problem but who gives a damn. Millions rely on these programs just to eat.

    Every country in the developed world is generating massive debt. People don't want to pay taxes yet they lineup for government assistance by the millions. Governments are providing the assistance people want and people are living longer than they ever have in the history of mankind. It's all just a game. If we were the only country generating substantial debt it might be a problem. The fact that everyone is doing it puts us all in the same boat.

  18. Social Security - Contrary to popular opinion, the trust fund still exists! It just happens to be in non-negotiable Federal securities - IOUs, if you will. Those IOUs are part of the debt in the sense that they have to be repaid. Where that cash will come from will have to be determined by the same group that took it in the first place - the US Congress. While a part of the national debt, these IOUs are NOT part of the current deficit. (Debt - money owed for past transactions. Deficit - the amount that current expenditures exceed current revenues.)

    To comment directly on one of Robert's original points: the argument that the poor don't pay federal taxes - well, maybe payroll taxes... but NOT other taxes... 30% of the Federal revenue for 2011 was from (all) income taxes. The balance was mostly in general taxes that get rolled into the price of everything we buy. Example - buy gasoline? You pay a federal gas tax. Use a phone? Read your bill. Buy a product made in China? The price includes tariffs. For that matter buy products from US corporations? The price includes corporate income taxes (with a few exceptions - like GE...) Looks like my 30% figure above may just be wrong - too high! And I see no possible way for the poor to avoid other federal taxes, most of which they don't even know exist.

  19. "Remove the cap for Social Security, or make it raise by a 10 factor.."

    This is the traditional typical straight line democratic party approach. But realistically it is a tax increase of 6.2 percent on every dollar above $110,100 [the 2012 limit]. On top of the Obamacare payroll tax surcharge of .9 percent and 3.85 investment income tax [both taxes to pay for Obamacare] the top marginal rate for wage earners would rise to about 50 percent IF Obama gets the 35 percent tax rate increased to Clinton's 39 percent rate or higher. Republicans should oppose any payroll tax increases.

    CarmineD