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the payroll tax cut is another form of trickle down Reaganomics

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hfojvt Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 02:16 PM
Original message
the payroll tax cut is another form of trickle down Reaganomics
Here's an analysis from Citizens for Tax Justice http://www.ctj.org/pdf/taxcompromise2010.p ...

12.1% of the payroll tax cut goes to those in the bottom 40%
26.7% of the payroll tax cut goes to those in the top 10%

27.1% goes to those in the bottom 60%
46.4% goes to those in the top 20%


The top 10% get twice as much of the tax cut as the bottom 40%.

We'd probably complain if such a proposal came from Bush. But now there seems to be cheering having it come from Obama. And then to hear Obama make the same arguments that Bush did for the efficacy of trickle down economics - unbelievable.

"I look forward to signing the economic recovery bill soon. The principle of the bill is pretty simple, that we believe the more money people have in their pockets, the more likely it is somebody is going to be able to find work in America. In other words, the more money somebody has, it means somebody is more likely to demand a good or a service, which means somebody will produce a good or a service, which means somebody is likely to find work." George W. Bush May 22, 2003

"In my judgment, and the judgment of a lot of economists -- and the truth of the matter is, it's now become kind of the common wisdom in Washington, D.C. -- the best way to create growth is to let people keep more of their own money." (Applause.) George W. Bush May 2, 2003

Obama - "We need to begin by extending tax cuts for middle-class families so that you have more money in your paychecks next year. If youve got more money in your paycheck, youre more likely to spend it. And that means small businesses and medium-sized businesses and large businesses will all have more customers. That means theyll be in a better position to hire."


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sad sally Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 03:04 PM
Response to Original message
1. This whole payroll tax holiday makes about as much sense as
saying "I'm going to stop contributing to my kids college fund, but it will have no affect on my ability to pay for college later." How can anybody believe that by reducing, or as some have suggested eliminating for a year or so, contributions to Social Security now will not mean that the system will completely disappear, or at the least drastically reduce both current and future retirees benefits? I'm not the brightest bulb, but even I know this is an out and out lie.

And if anybody really believes that if employers are afforded this same generous reduction in their contribution to the SS payroll tax they will magically create and employ 5 million people (these are numbers being thrown out), this is another out and out lie. Right now, today, employers can offer low paying jobs and people will take them because they have to work, but low paying jobs means weak sales so there's little demand for new employees. The circle keeps going around...

Why does the President keep pushing the idea of $1,000 but fails to mention that those in the top income brackets - those people who are just aching to pay more taxes - get the most benefit from this so-called tax holiday?

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sad sally Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 03:24 PM
Response to Original message
2. Added to my previous outrage over this tax holiday, here's what
Axlerod said today on CNN's State of the Union:

AXELROD: Well, first of all, let me say, these are not all new ideas. Some will be new, some we already talked about. There are things he has been asking congress to do for some time, and some of them -- for example, extending the unemployment -- the payroll tax cut that was passed in January for another year. That's something that is absolutely critical to do.

How do you let 150 million people -- working people in America get $1,000 tax increase on the payroll tax in the middle of these economic challenges we have but you won't touch a penny of corporate tax loopholes, you won't touch tax cuts for the wealthy? It doesn't make sense.


No mention of the benefit those in the top income category get - those well off folks who are begging to pay more taxes - how can they stand the idea of an extended tax benefit?

No mention of why the President thinks this critical tax cut won't further erode the SS system.

Why not just send everybody who makes under $106,800 (the SS payroll tax cap) a check for $1,000? Wouldn't that be a short term boost to the economy? Crazy idea? Yeah, well this whole payroll tax holiday deal is crazy.
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hfojvt Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 03:54 PM
Response to Reply #2
3. this is what many on DU said
Edited on Sun Aug-21-11 03:55 PM by hfojvt
the payroll tax cut will become permanent because politicians will claim that letting it expire is a tax increase.

Where I missed was that I thought Republicans would be the ones arguing to keep it - not SOME "Democrats".

$1,000 for everybody would not be as bad as what they are doing though. What they are doing is, if somebody makes over $100,000, they get $2,000. If somebody makes minimum wage, they get $300.

Just like George W. Bush though, Axelrod is talking about the average tax cut, and ignoring the distribution of tax cuts. Ignoring that the top 10% get more than twice as much as the bottom 40%.

AGAIN, the Obama administration echoes George W. Bush.

"This is my approach: tax relief for everybody, in every bracket, averaging $1,600 per family, while still reducing our national debt and funding important priorities." Feb 5, 2001

"The tax relief is for everyone who pays income taxes -- and it will help our economy immediately: 92 million Americans will keep, this year, an average of almost $1,000 more of their own money. A family of four with an income of $40,000 would see their federal income taxes fall from $1,178 to $45 per year. (Applause.) Our plan will improve the bottom line for more than 23 million small businesses." Jan. 28, 2003

Average this Axelrod

The average tax cut by quintile

bottom 20% - $145
next 20% - $320
middle 20% - $579
4th quintile - $1,013
next 10% - $1,516
next 4% - $2,317
top 1% - $2,328

http://www.ctj.org/pdf/taxcompromise2010.pdf page 3

edit; tanjed dsyeliax
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TheKentuckian Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 04:01 PM
Response to Original message
4. People will support their own destruction as long as someone they like does it
with soothing rhetoric.

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hfojvt Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 08:52 PM
Response to Reply #4
17. one of the memes of the rightwing media
was that those of us who protested Bush were not really, sincerely upset about his policies, we just hated Bush.

In some ways that seems to have been proven true.

It some ways, many of us just get played by various writers and sources. They write and publish things that say "you should be upset at Bush" and people read them and react.
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Yo_Mama Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 04:09 PM
Response to Original message
5. Thank you for posting this
I have a lot of high earners in my extended family. None of them thought this was good public policy. Why should those earning 100K in a bad recession get a $2,000 tax cut while other people are struggling to get food stamps?

This was always a give-away to the haves. Cutting FICA rates greatly favors those who are doing well. I don't think they should be punished for their success, but frankly, Democrats should never have gone along with this in the first place, and it has a lot to do with our current slide back into recession.

At the end of 2010, the MWP tax credit was removed and the 2% payroll tax cut was substituted. This RAISED federal taxes for persons earning less than 20K a year. The MWP was phased out for higher earners, so people who were doing very well didn't get the $400 tax credit. So this year, thank you very much Mr. President, the haves got a huge benefit and the have-littles got kicked in the ass.

This is the REVERSE of Keynesian policy, and progressives should be against it.

This also hurts the future retirement prospects of those who will rely on SS, because it endangers the ability of SS to redeem their payment rights when they will need to do so in the future to pay benefits to workers.
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hfojvt Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 05:08 PM
Response to Reply #5
6. thanks for paying attention
I was complaining about this in real time http://journals.democraticunderground.com/hfojvt/135

to a collective yawn on DU, although it got much more attention a day or so later when Think Progress picked up the story.

Just to compare my estimates with Bob's (Bob Mcintyre of Citizen's for Tax Justice)


"Less than $5.97 billion will go to the 22 million households making less than $20,000, on the other side of the coin AT LEAST $22 billion will go to the 7.8 million households who make more than $100,000. With another $15 billion plus going to households who make between $80,000 and $100,000 (9.3 million households).

So of the $120 billion this is said to cost, the bottom 20% gets less than 5% of it and the richest 10% get more than 18% of it, and the richest 20% will get more than 31% of it."


I said the bottom 20% get less than 5% and CTJ said they get 3.8%. I said the richest 10% get more than 18%, CTJ said 26.7%. I said the top 20% got more than 31% and CTJ said 46.4%. I'd say I did pretty good for rough estimates - owwww.

Ach, I just threw out my shoulder patting myself on the back. I hate when that happens.

You are correct too, the reverse of Keynes is Reaganomics.
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SoCalDem Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 05:12 PM
Response to Reply #6
7. and for the millions of unemployed who get NO paycheck at all
nada-zilch-zippo-bupkus.
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hfojvt Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 07:04 PM
Response to Reply #7
14. but it trickles down
Edited on Sun Aug-21-11 07:05 PM by hfojvt
First you give rich people big tax cuts and they buy big screen TVs and that creates some jobs at Best Buy.

To be fair, Obama is proposing yet more unemployment extension.

Which probably still will not include the 99ers.
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Yo_Mama Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 10:20 PM
Response to Reply #6
19. Well, when a Democratic president is advocating it, it's not Reaganomics
I don't know what to call it except "stupid". Reagan is dead and buried; we've got a new wave of idiocrats doing just fine on their own.

I wrote what I thought about this on DU at the time also, and people didn't want to hear it.

And I predicted recession. You just can't add up the Fed policy of boosting financial asset prices at the cost of dropping real incomes for the working class, a tax INCREASE for about 40% of the wage earners in this country, and a huge tax cut for those who are doing very well, and not get a recession.

And as for cutting off the 99rs without a public jobs program, that was asking for another recession, not to mention extremely bad public policy. Also merciless and heartless, but hey, I guess we're just supposed to sacrifice people to the public good now, huh? And I guess the "public good" is now defined as "the good of all those good people who are highly successful" now, rather than the good of, well, the public.

Forget all the economic theory - even common sense will tell you that you can't get jobs on Main Street until more of the down-sized and right-sized economic casualties can find work and spend money. Until businesses have people walking in the door able to pay for goods or services, they can't hire.

And people earning 80K or 100K are not the ones who had to cut back on spending so severely - even common sense will tell you that if you want to boost money circulating through the economy, you have to find a way to get it to those who don't have jobs or only have very low-income, part-time work.

How did the Democratic party come to this pass? After all these months, I am still astounded.
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kentuck Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 05:12 PM
Response to Original message
8. No problem..
The FICA tax break is going to be taken out of general revenue and added to the SS fund. That taxbreak is not taken from the fund. Just ask all the knowledgeable people here on DU. The SS fund continues to grow even if we don't put any money into it. Soon, it will be solvent up to 2012.
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hfojvt Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 08:39 PM
Response to Reply #8
16. I am less concerned about where it is coming from
than who it is going to. It's trickle down Reaganomics no matter where it comes from.
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Modern_Matthew Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 05:18 PM
Response to Original message
9. These people should be paying less in taxes...it's just that
Those in the higher brackets aren't paying more to offset it.

I'm not going to kick and scream about a few extra dollars on my check. That can make a big difference in the shitty life of someone like me.
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hfojvt Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 07:31 PM
Response to Reply #9
15. to quote the Ancient Enemy
"I thought you were my Matthew, but you were my Judas" Phantoms p. 399

I am not sure what you are talking about. Which people should be paying less in taxes?

Not only are the rich not paying more to offset your $400, they are getting much larger tax breaks than you.

This is what I am complaining about

The average tax cut by quintile

bottom 20% - $145
next 20% - $320
middle 20% - $579
4th quintile - $1,013
next 10% - $1,516
next 4% - $2,317
top 1% - $2,328

http://www.ctj.org/pdf/taxcompromise2010.pdf page 3

Not my own $260, but the $2,300 going to the average CEO.
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johnaries Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 05:37 PM
Response to Original message
10. If you actually READ the paper, it compares Obama's PROPOSED
plan to the Republican proposal and then to the compromise in 2010. Your numbers don't match, and neither does your rhetoric.
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hfojvt Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 06:42 PM
Response to Reply #10
12. My numbers are from the table on page 3
the table about the FICA tax cut of 2% comparing it to the Making Work Pay credit that Obama campaigned on.

Obama's proposal originally WAS much better than the "compromise" but he eventually came up with and started pushing for his "compromise".

As for my rhetoric, I quoted George W. Bush promoting his tax cuts, and compared that to an Obama quote promoting his "jobs plan".

I think the two are disgustingly similar. I have spent much of my adult life disputing and debunking and refudiating Reaganomics and it makes me kinda sick when Democratic politicians embrace and promote it instead of doing the right thing. To me, that puts them on the wrong side of the class struggle.
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Lasher Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 05:41 PM
Response to Original message
11. And that's just the tip of the iceberg.
Social Security disability is on the verge of insolvency

New congressional estimates say the trust fund that supports Social Security disability will run out of money by 2017, leaving the program unable to pay full benefits, unless Congress acts. About two decades later, Social Security's much larger retirement fund is projected to run dry as well.

Much of the focus in Washington has been on fixing Social Security's retirement system. Proposals range from raising the retirement age to means-testing benefits for wealthy retirees. But the disability system is in much worse shape and its problems defy easy solutions.

The trustees who oversee Social Security are urging Congress to shore up the disability system by reallocating money from the retirement program, just as lawmakers did in 1994. That would provide only short-term relief at the expense of weakening the retirement program.

http://news.yahoo.com/social-security-disability-verge-...

The disabled will be helped by everyone who actually works for a living, and therefore contributes payroll taxes - with a cutoff at $106,800 of earned income and no contribution whatsoever from those who have unearned income (which is where rich folks get most of their money).

Widows, orphans, and the disabled must be helped. But why is it that those earning minimum wage are contributing to their welfare and people like Bill Gates are not?
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hfojvt Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 06:46 PM
Response to Reply #11
13. yeah, they should be shoring it up with the general fund
which comes from progressive taxes, not from the Social Security fund that comes from Regressive payroll taxes on working people.

But when I read that article earlier today I did not notice the date. 1994. Who was the President who signed off on it? My old buddy Bill Clinton.
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Lasher Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-22-11 12:10 AM
Response to Reply #13
20. This is the reason I oppose raising the Social Security tax cap.
The Trust Fund bonds need to be redeemed with progressive tax dollars before we do anything else with Social Security.
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tpsbmam Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-21-11 09:03 PM
Response to Original message
18. Link isn't working for me & I'm not finding it via a quick search
of course being bleary-eyed from fatigue & halfway through a gin & tonic could have something to do with it.

:rofl:


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Make7 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-22-11 01:00 AM
Response to Reply #18
21. The end got cut off. Try this:
Edited on Mon Aug-22-11 01:00 AM by Make7
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hfojvt Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-22-11 10:51 AM
Response to Reply #18
22. 8 responses before somebody finally checks the link
although Joe seems to have found it.

My bad though, that's what happens when you copy a copy.
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