The Rich Pay More

[Dr. Shane]

Surprising Jump in Tax Revenues Is Curbing Deficit

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An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year, even though spending has climbed sharply because of the war in Iraq and the cost of hurricane relief.

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The main reason is a big spike in corporate tax receipts, which have nearly tripled since 2003, as well as what appears to be a big rise in individual taxes on stock market profits and executive bonuses.

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Republicans are already arguing that the revenue jump proves that their tax cuts, especially the 2003 tax cut on stock dividends, would spur the economy and ultimately increase revenues.

"The tax relief we delivered has helped unleash the entrepreneurial spirit of America and kept our economy the envy of the world," President Bush said in his weekly radio address on Saturday.

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Corporate tax payments are expected to exceed $300 billion, up from $131 billion three years ago. The other big increase is an extraordinary jump in individual taxes that were not withheld from paychecks, usually a reflection of taxes on investment income and executive bonuses.

The jump in receipts is providing Mr. Bush and Republicans in Congress with a new opportunity to assert that tax cuts of 2001 and 2003 are working and that Congress should make them permanent.

Pat Toomey, president of the Club for Growth, a conservative political fund-raising group, said: "The supply-siders were absolutely right. All the major sources of revenue have grown, especially in areas where we said they would."

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What is the Democrat's response to this good news?

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Despite almost five years of economic growth, individual income taxes — the biggest component of federal tax revenues — have yet to reach the levels of 2000. Even with surging payments for investment profits and business income, individual tax payments in 2005 were only $972 billion — below the $1 trillion reached in 2000, even without adjusting for inflation.

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The problem I have with honking the 1990s horn too load is a lot was based on the dot-com boom, overvalued stocks and an inflated market. A lot of money was made in the market in the 1990s and that resulted in an economic boom which resulted a growth in revenues.

Then the market corrected itself and lots of people lost millions. Then the country was attacked by terrorists, the market fell again and more millions were lost. Then corperate scandels started coming to life, the market fell agian and thousands lost their jobs.

So a lot happened economically and we still haven't got back to the high we were at before. But then economies run in cycles. When we do get back to that high, we will be closer to a correction too.

[Gerr]

The rich need to pay more. Even the conservative U.S. News & World Report considers the tax cuts as disproportionately favoring the rich. And the tax cuts without reduction in gov't spending has ballooned the national debt to mind-boggling heights. When it reaches a critical mass and the interest reaches a critical point, we will then find too late what spending beyond our means does.

Gerry

[Dr. Shane]

The biggest reason for tax cuts is to spur economic growth. This has worked for President Kennedy, President Reagon and now for President GW Bush. Since the rich pay the greatest share of taxes, it only follows that any fair tax cut will favor the rich.

Imagine that I go out to eat with a friend every morning for breakfast. He always spends between $12 - $15 for breakfast while I normally only spend between $3 - $5. When the resturaunt lowers its prices he is bound to save more money on his breakfast than I am on mine. That is only fair because he pays more. So it is with taxes. Those that pay more benifit more when taxes are lowered. However the flip side is also true. When taxes are raised, the rich carry the larger portion of the burden.

Spending is an issue. Congress is the biggest part of the problem because Congress is addicted to pork barrel projects. They use these projects to boost their popularity back home and get re-elected. However, when compared to the GDP, our deficit is not alarming large. Yet I favor much more budget restraint. I would like to see the line-item veto as is now being discussed in Congress.