U.S. House Democratic leader Nancy Pelosi, with hopes of taking control in November’s election, has unveiled her plan for the first 100 hours (a play on Franklin D. Roosevelt’s agenda for his first 100 days).
The agenda includes legislation on lobbying, raising the minimum wage, pharmaceuticals, and stem cell research. But of course class warfare and raising taxes aren’t forgotten:
All the days after [the first 100 hours]: “Pay as you go,” meaning no increasing the deficit, whether the issue is middle class tax relief, health care or some other priority.
To do that, she said, Bush-era tax cuts would have to be rolled back for those above “a certain level.” She mentioned annual incomes of $250,000 or $300,000 a year and higher, and said tax rates for those individuals might revert to those of the Clinton era. Details will have to be worked out, she emphasized.
“We believe in the marketplace,” Pelosi said of Democrats, then drew a contrast with Republicans. “They have only rewarded wealth, not work.”
“We must share the benefits of our wealth” beyond the privileged few, she added.
Some people refuse to learn:
In each of the last three cuts in marginal tax rates, revenues received by the U.S. Treasury have increased. Coolidge cut tax rates in the 1920s, Kennedy cut marginal tax rates in the 1960s, and Reagan cut them in the 1980s.
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In each case, the personal income taxes paid by “the rich” increased when their tax rates were cut. The top 10 percent of earners in the Reagan years paid 48% of the income tax burden between 1981 and 1988.
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Martin Feldstien, professor of economics at Harvard, estimates that the U.S. Treasury would have collected two-thirds more revenue during the first three years of the Clinton presidency had his administration NOT raised taxes. It should be stressed, however, that the economy of the 1990s has grown moderately, in spite of tax increases, not because of them.
The reason that much of this data is ignored in debates is politics, pure politics. It pays to engage in class warfare if you are a politician because it divides voters against each other. When the perception is that only the “rich” will profit from a tax cut, such policies become difficult to sell because those labeled as “rich” tend to be in the minority.
The tax cuts by Bush 43 are no different:
Most press reports on the Mid-Session Review of the federal budget, released by the Bush administration a couple of weeks ago, focused on the good news about expanding tax revenues and the shrinking budget deficit. But for tax-policy geeks, the most intriguing part of the report was an easily overlooked box on page 3: “A Dynamic Analysis of Permanent Extension of the President’s Tax Relief.” Over the past six months, the Treasury Department staff has been studying the dynamic effects of tax cuts on the economy. The results of this analysis, previewed in this box, were released yesterday in more complete form (available at http://www.treas.gov/offices/tax-policy/).
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The Treasury report describes what will happen to the economy if the tax relief of the past few years is made permanent, compared to the alternative scenario of reverting back to the tax code as it was in 2000. Specifically, the report analyzes the effects of lower taxes on dividends and capital gains, the effects of lower taxes on ordinary income, and the extension of other tax cuts, including the new 10% bracket, the expanded child credit and marriage-penalty relief. Here are three main lessons.
Lesson No. 1: Lower tax rates lead to a more prosperous economy.
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Lesson No 2: Not all taxes are created equal for purposes of promoting growth.
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Lesson No 3: How tax relief is financed is crucial for its economic impact.
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The Treasury’s main analysis assumes that lower tax revenue will over time be accompanied by reduced spending on government consumption. But the report also shows what happens if spending cuts are not forthcoming. In this alternative scenario, a permanent extension of recent tax relief is assumed to lead to an eventual increase in income taxes.
These Treasury results are sure to spark debate and further research. While the Treasury report is not the last word on dynamic analysis, it is a big step toward a more realistic view of tax policy.
I highly recommend you read the text of the three ‘lessons,’ they are brief and informative.
We need to cut spending - and not raise taxes.
GODDAMN, aint those some sexy lips. What about those lovely boney cheeks. Haven’t seen a women look that hot since Mama Clinton was first lady.
WRONG, WRONG, WRONG! Low income tax does NOT reward wealth, high income tax does. What do I mean? Let me reproduce what I wrote in response to a similar Kerry-Edwards tax plan:
I note that Pelosi herself is one of the “already rich” (her family is worth over $25 million). It wouldn’t bother her one bit that young professionals and small business owners, with little pre-existing networth, will be prevented from building wealth, all because of her mechanism of high income taxes. She is already wealthy, and her wealth won’t be subject much to taxes on wages.
The godfather of modern liberal fiscal policies, John Maynard Keynes argued under his aggregate demand theory that there is no difference between government spending and private sector spending in affecting aggregate demand. However, even he acknowledged a point of diminishing returns where tax rates peak in their effectiveness. Past 20-25% he said and you risk capping government revenue while stifling private sector growth. Supply side economists would place that rate far lower. With the current rates we have now one can see just how far to the left we have been led since the 1930s. One wonders what our economy?s potential would have been under lower tax rates and have much good could have been accomplished by private citizens and businesses not hampered by government?s tyranny. The only purpose for government is the protection of private property. When they no longer acknowledge the citizenry?s sovereignty over that there is no longer a need for that government.
Every vote for moderate democrats is a vote for the socialist policies of Nancy Pelosi.
The Republicans in the House are the ones that are coming unhinged. It’s shameful how several of them have abused their positions in scandals involving DeLay, Abramoff, and the pages. They deserve to lose their majority status.
Pelosi will be a better Speaker of the House than Tom DeLay or Dennis Hastert.
Considering how the budget deficit is at a record high, there has to be some sort of a tax raise, in addition to budget cuts.
You missed the entire message of the post.
Mi-Hwa ALWAYS does. At least she is consistant!
Mi-Hwa,
you really don’t know what you’re saying. Tom Delay was never Speaker of the House.
And the Democrats are not pursuing the Abramoff scandel because they found out that he had plenty of ties to them too. Both parties have their share of scandles, not just the Republicans. That’s politics, Mi-Wha.
If you want people to take you seriously, you need to substantiate your facts and at least TRY to be objective.
Of course, you can get all the attention and reactions you want by making foolish comments.
Mi-Hwa, ever hear of Teddy Kennedy driving off a bridge drunk, and leaving a young woman in his car to Die? Just wondering. Why is he still in the game?