1/07/2003
Understanding the Tax Cuts
Bush's tax cut proposal:
The White House said the plan will give 92 million taxpayers an average tax cut of $1,083 this year.Here's how to understand how "you" are going to come out ahead from the Bush tax cut proposals: If you have 1,000 people, and one of them gets $1 million, and the rest get nothing, these people will get an average of $1,000.
Hooray for P.L.A.
P.L.A. points out that during the campaign Bush claimed that it is "ingenuity and hard work and entrepreneurship" that "create jobs," not government policies. But NOW Bush is claiming that HIS plan will "create jobs."
They Haven't Thought it Through
Ted Barlow is writing about what will happen to tax-free municipal bonds - and the ability of towns, counties and states to raise money - if dividends are no longer taxed. The incentive to buy these bonds goes away! Is this part of the plan to gut our government, or have they not thought this through?
I'm wondering what happens to stocks that are purchased because the value of the stock might go up? These are typically companies that reinvest their profits into their business, and start-ups. These types of companies will no longer be attractive, because you'll have to pay a capital gains tax when you sell them, and the only way to get your gain is to sell them - where investing in an established, profitable company paying a dividend means you will pay NO taxes.
What does this do to the reason we have a stock market - to provide a source of investment capital for new companies, and companies that want raise money to innovate? Why would you want to purchase a stock that might go UP when instead you can purchase a stock that does not go up, but pays dividends? The implications are enormous!
Update - Thinking more about this... Imagine the pressure there will be from stockholders wanting companies to cancel R&D projects and instead increase dividends!
Here's a good one - this is an incentive for companies to borrow huge amounts of money and pay it out as dividends. Which brings to mind this scenario - a company's stock sinks to $1 per share. So they borrow enough to pay a $1 per share dividend and declare bankruptcy! This "no tax on dividends" scam opens up so MANY wonderful doors! And this is with just a few minutes of thinking about it. IMAGINE what kinds of scams and market distortions we'll see if they pass this!
I'm wondering what happens to stocks that are purchased because the value of the stock might go up? These are typically companies that reinvest their profits into their business, and start-ups. These types of companies will no longer be attractive, because you'll have to pay a capital gains tax when you sell them, and the only way to get your gain is to sell them - where investing in an established, profitable company paying a dividend means you will pay NO taxes.
What does this do to the reason we have a stock market - to provide a source of investment capital for new companies, and companies that want raise money to innovate? Why would you want to purchase a stock that might go UP when instead you can purchase a stock that does not go up, but pays dividends? The implications are enormous!
Update - Thinking more about this... Imagine the pressure there will be from stockholders wanting companies to cancel R&D projects and instead increase dividends!
Here's a good one - this is an incentive for companies to borrow huge amounts of money and pay it out as dividends. Which brings to mind this scenario - a company's stock sinks to $1 per share. So they borrow enough to pay a $1 per share dividend and declare bankruptcy! This "no tax on dividends" scam opens up so MANY wonderful doors! And this is with just a few minutes of thinking about it. IMAGINE what kinds of scams and market distortions we'll see if they pass this!
Taxing Businesses
Businesses are taxed on their profits. Businesses that do not have profits do not pay taxes. Therefore cutting taxes will not help a company become profitable. Taxes are not a "cost." The costs of doing business (salaries, cost of goods, other costs of doing business) are deducted before profits are determined. That's what a profit is. Taxes are calculated as a percentage of profits. (This discussion leaves out any property taxes, and tax breaks that some companies purchase with campaign contributions, hiring a politician's son or other relative, or other bribes, or otherwise obtain by doing things like opening a Post Office box in Bermuda or moving patents overseas...)
Well-run companies hire and fire based on their need for employees. If a drop in business leaves little for employees to do the business will lay off employees, retaining just enough to do the work necessary to meet the demand for the products or services offered. If there is an increase in business the company will hire enough employees to meet the demand.
Handing a bunch of cash to employers will not cause companies to hire employees if there is no demand for their products or services. It might, however, cause them to increase campaign contributions or payments to politicians' Swiss bank accounts. Or, it might be a reward for previous contributions or payments. (I would rather not not be sidetracked by a discussion of the merits of pre-paying your bribes or waiting until after the tax break is received.)
Giving tax breaks to companies or to rich people does nothing to increase employment.
Another implication from businesses being taxed on their profits is that businesses do not "just pass on taxes to the customer."
A well-run business charges the most it can get for its product or service. If the business has competitors it has to price its product or service in some relationship to competing products or services. Were a business to add to to prices to cover taxes this would increase the price above what had been determined to be the optimal price! Perhaps a competitor is not as profitable, and therefore doesn't pay as much in taxes. That means the competitor will have a pricing advantage. If a company were to raise prices to cover taxes the it would mean the company was previously negligent in not pricing as high as the market would bear. Finally, increasing prices to cover taxes would increase profits, which would increase taxes, which would require an additional price increase, which would increase profits which would increase taxes.
Companies do not pass on taxes to their customers.
Well-run companies hire and fire based on their need for employees. If a drop in business leaves little for employees to do the business will lay off employees, retaining just enough to do the work necessary to meet the demand for the products or services offered. If there is an increase in business the company will hire enough employees to meet the demand.
Handing a bunch of cash to employers will not cause companies to hire employees if there is no demand for their products or services. It might, however, cause them to increase campaign contributions or payments to politicians' Swiss bank accounts. Or, it might be a reward for previous contributions or payments. (I would rather not not be sidetracked by a discussion of the merits of pre-paying your bribes or waiting until after the tax break is received.)
Giving tax breaks to companies or to rich people does nothing to increase employment.
Another implication from businesses being taxed on their profits is that businesses do not "just pass on taxes to the customer."
A well-run business charges the most it can get for its product or service. If the business has competitors it has to price its product or service in some relationship to competing products or services. Were a business to add to to prices to cover taxes this would increase the price above what had been determined to be the optimal price! Perhaps a competitor is not as profitable, and therefore doesn't pay as much in taxes. That means the competitor will have a pricing advantage. If a company were to raise prices to cover taxes the it would mean the company was previously negligent in not pricing as high as the market would bear. Finally, increasing prices to cover taxes would increase profits, which would increase taxes, which would require an additional price increase, which would increase profits which would increase taxes.
Companies do not pass on taxes to their customers.
1/06/2003
Skippy is launching a campaign to syndicate radio talk-show host Randi Rhodes.
friends, we are sure you are familiar by now with the plight of randi rhodes, a fine lefty on the radio in miami, who cannot get her bosses, clear channel, to syndicate her show because, according to her own testimony, rush limbaugh threatened to leave clear channel if they syndicate randi.Go help.
Bush's Real Agenda
Don't be fooled for a minute by anything you hear claiming that Bush's tax cuts are about stimulating the economy or anything else. That's crap. It's bullshit. It is a smokescreen for what Bush is doing. Tax cuts are about gutting our ability (yes, OUR - that's who the gubmint IS, we the people, all that stuff from civics class...) to provide for our people.
New York Times, August 25, 2001:
I previously wrote about this here.
New York Times, August 25, 2001:
President Bush said today that there was a benefit to the government's fast-dwindling surplus, declaring that it will create "a fiscal straitjacket for Congress." He said that was "incredibly positive news" because it would halt the growth of the federal government.He said this in one of those unguarded moments when he goes off script. Well, the government is having an incredible amount of "growth" right now in military spending, so he didn't mean spending. "Growth of government" is more Republican code words. He's talking about medical care, pensions, policing corporate crime, cleaning up the environment - the things that our government does for US.
I previously wrote about this here.
Fascinating Blog
So I've been exploring the Wealth Bondage blog, and came across Self Esteem for Judas:
"Having betrayed Christ, and founded the Market, Judas -- this was before Prozac -- hung himself in a horse collar. Today, he would be elected President."It's a very ... interesting ... weblog.
Rats
Remember the Bush "rats" campaign ad? Thomas Leavitt approaches rat stories from his unique perspective.
Wealth Bondage
Wealth Bondage approaches the right-wing's creation of conventional wisdom from their unique perspective.
Democrats Not Invited
Read this article in today's NY Times. More Democrats Not Invited, by Mr. "I'm a Uniter not a Divider."
Ed Gillespie, one of the best-connected Republican lobbyists, recalls returning to work right after the election. He was greeted in his office by a hard-charging young Democratic member of his lobbying firm.
"If you need me this morning," the young man said to Mr. Gillespie, "I'll be in the garage washing your car. Would you like me to do the hubcaps?"
1/05/2003
Paying For the War, Military, Etc.
The word "taxes" has been the subject of intense, well-funded, well-crafted, right-wing messaging directed at the public for 30 years. So now there is a negative connotation associated with the word - almost as bad as the dreaded 'L' word, "liberal." So instead of using the 'T' word, let's try a different approach. Think of taxes as paying for the Iraq war and increased military and government services. Who will pay for these things?
The new Bush proposal will ask that people who receive dividends not be asked to pay anything for the war or other government services. (Keep this in mind - they say that this will benefit most Americans because most Americans own stocks. But this is crap - regular people have stocks in a 401K or IRA, and don't pay taxes on dividends NOW, because you don't pay taxes on gains in a 401K or IRA. And if the stocks are in a pension plan you also don't pay taxes on dividends.)
Here's what WILL be taxed:
-Money made from working at a job in an office or at a factory or as a janitor, etc.
-Money made from savings interest.
-Money made if you are a plumber, etc. (even though you are paid by people who already paid taxes on their income, so it will be "taxed twice," which is the justification for no dividend taxation. But that sort of nonsense justification only applies to money made by the really, really rich. Wink, wink, nod, nod.)
-Money you receive as unemployment benefits.
-A big chunk of your income from your job will go into Social Security - but only the first 85,000 is taxed - if you make more than that the tax stops. This is the largest tax most Americans pay. This money is currently going back out to the rich as tax cuts, because the deficit resulting from these tax cuts is also using up the Social Security surplus.
In other words - the money that YOU make.
Here's money that WILL NOT be taxed:
-Money made from inheriting huge fortunes.
-Money made from selling stocks. (Taxed at a much lower rate.) (This benefits primarily the top few % of wealthy.)
-Money made from receiving dividends. (This benefits primarily the top few % of wealthy.)
-Money made from selling a company. (Taxed at a much lower rate.) (Needless to day - this benefits primarily the top few % of wealthy.)
-Money made from stock options received for being an executive at the company that laid you off. (This benefits the top few % of wealthy.)
-Money made by corporations that move intellectual property offshore, then license it back to their U.S. branch. Example, a patent on a drug is "owned" by the Bermuda branch and licensed to the U.S. pharmaceutical company for the entire amount of their U.S. profits, so they pay no U.S. taxes on those profits.
-Money made by corporations who have moved their mailing address offshore. (But these corporations WILL be allowed to continue to receive lucrative government contracts.)
-Money and services received by executives as "expenses."
-Income after the first $85,000 is not taxed for Social Security.
In other words - the money that THE REALLY RICH make.
Remember, your Social Security retirement money was given away to the really rich in the 1980's, through tax cuts. Now the money you currently pay into the Social Security system is also being handed to the rich through even more huge tax cuts. And the portion of the tax money that you pay that goes out as interest on the debt is also being given to the rich in the form of debt interest payments. A lot of the military budget is handed to wealthy corporations. The pension money that you would have received if you worked at a corporation was handed out to the rich in the 1980's in the form of increased stock price when pensions were stopped, and you were instead told to save your own money through an IRA or a 401K account.
You pay. They get. And it's just getting worse.
Update - a few words from No More Mister Nice Blog
The new Bush proposal will ask that people who receive dividends not be asked to pay anything for the war or other government services. (Keep this in mind - they say that this will benefit most Americans because most Americans own stocks. But this is crap - regular people have stocks in a 401K or IRA, and don't pay taxes on dividends NOW, because you don't pay taxes on gains in a 401K or IRA. And if the stocks are in a pension plan you also don't pay taxes on dividends.)
Here's what WILL be taxed:
-Money made from working at a job in an office or at a factory or as a janitor, etc.
-Money made from savings interest.
-Money made if you are a plumber, etc. (even though you are paid by people who already paid taxes on their income, so it will be "taxed twice," which is the justification for no dividend taxation. But that sort of nonsense justification only applies to money made by the really, really rich. Wink, wink, nod, nod.)
-Money you receive as unemployment benefits.
-A big chunk of your income from your job will go into Social Security - but only the first 85,000 is taxed - if you make more than that the tax stops. This is the largest tax most Americans pay. This money is currently going back out to the rich as tax cuts, because the deficit resulting from these tax cuts is also using up the Social Security surplus.
In other words - the money that YOU make.
Here's money that WILL NOT be taxed:
-Money made from inheriting huge fortunes.
-Money made from selling stocks. (Taxed at a much lower rate.) (This benefits primarily the top few % of wealthy.)
-Money made from receiving dividends. (This benefits primarily the top few % of wealthy.)
-Money made from selling a company. (Taxed at a much lower rate.) (Needless to day - this benefits primarily the top few % of wealthy.)
-Money made from stock options received for being an executive at the company that laid you off. (This benefits the top few % of wealthy.)
-Money made by corporations that move intellectual property offshore, then license it back to their U.S. branch. Example, a patent on a drug is "owned" by the Bermuda branch and licensed to the U.S. pharmaceutical company for the entire amount of their U.S. profits, so they pay no U.S. taxes on those profits.
-Money made by corporations who have moved their mailing address offshore. (But these corporations WILL be allowed to continue to receive lucrative government contracts.)
-Money and services received by executives as "expenses."
-Income after the first $85,000 is not taxed for Social Security.
In other words - the money that THE REALLY RICH make.
Remember, your Social Security retirement money was given away to the really rich in the 1980's, through tax cuts. Now the money you currently pay into the Social Security system is also being handed to the rich through even more huge tax cuts. And the portion of the tax money that you pay that goes out as interest on the debt is also being given to the rich in the form of debt interest payments. A lot of the military budget is handed to wealthy corporations. The pension money that you would have received if you worked at a corporation was handed out to the rich in the 1980's in the form of increased stock price when pensions were stopped, and you were instead told to save your own money through an IRA or a 401K account.
You pay. They get. And it's just getting worse.
Update - a few words from No More Mister Nice Blog
1/04/2003
Hullabaloo Needs Comments
Digby's new Hullabalo weblog needs to get set up so people can leave comments.
Lawlessness on the Right
InstaPundit is complaining because Maryland police are planning to use tips obtained during the sniper hunt to crack down on gun law violators. (Warning, the article referenced is in the Moonie "Believe It Or Not" Times so it's going to have a far-right propaganda slant!) From the article:
"Our goal is to reduce illegal firearm possessions and violent crimes," said Capt. Nancy Demme, spokeswoman for the Montgomery County Police Department.and
"Gun advocates portray the crackdown as evidence of continuing hostility toward gun owners by county officials."From InstaPundit:
"This is sure to produce less cooperation in the future. And it explains why so many gun owners don't trust the authorities: They've seen things used as excuses for anti-gun sweeps in the past."I thought the right-wing line is there are enough existing gun laws, and the government should do more to enforce the laws already on the books, instead of passing new ones. But here we see that when the government DOES that, it's met with complaints. I guess we were supposed to see the wink and nod and understand that "enforce the laws already on the books" was just a "talking point" to use to block effective gun control, and they didn't really MEAN it.
Stimulate This
This CalPundit piece about Bush's so-called "Stimulus Plan" is good. Go check it out.
Bush is saying, "I understand the politics of economic stimulus -- that some would like to turn this into class warfare. That's not how I think." It made me remember this from August, with one of my favorite quotes,
Bush is saying, "I understand the politics of economic stimulus -- that some would like to turn this into class warfare. That's not how I think." It made me remember this from August, with one of my favorite quotes,
A friend of mine says, "Republicans know how to fight a class war. And then they say you're the class warrior, and usually you even don't know what's happening to you."Remember their tactic - when they accuse you of something, it means they're actually doing what they're accusing you of.
1/03/2003
Arguing with right-wingers.
I got in a spat with some right-wingers over in the comments section of this message at TalkLeft. I violated my first law - arguing with right-wingers will only make you crazy; they argue the forest - right-wing smokescreens - instead of the trees - details, history, facts. They're online but seem surprisingly uninformed about things like Bush's service record! Also, TalkLeft opposes reinstating the draft for honorable reasons. I've commented on it here (we need a draft) and here (if the Iraqis REALLY have weapons of mass destruction we need a draft). What do you think?
1/01/2003
Figure it Out - It's About Your Job
Thanks to Thomas Leavitt for pointing me to this column in Fortune, "Finally a Productivity Payoff from IT?" It explains that your job will be lost to "business process outsourcing."
Without regulations in place to control this, your company must do this or go out of business, because its competitors surely won't hesitate. The honest, sincere, management-from-the-heart people currently running your company won't have any choice, because the laws of economics applied without consideration for the human consequences necessitate this conclusion. Repeat: Without regulations to level the playing field they will not have a choice in the matter. This is what "free trade" means without controls in place to protect working people. It's the law of supply and demand. In a world with free movement of jobs and a surplus of labor, wages must fall to the lowest level necessary for subsistence - and the rest will starve.
So the question to ask is, "Who is our economy for?" How soon will you be joining the servant class - assuming you're lucky enough to find even a servant job?
There are QUITE a few former "Internet libertarians" in Silicon Valley spending their newfound idle time in coffee shops (or writing weblogs), collecting unemployment checks and reconsidering their politics.
Einstein explains it here.
"While it’s not something we immediately associate with computing and networks, it’s only after companies are automated and connected by a commonly accessible network (the Internet) that they can easily create links between themselves and their suppliers. Work can be passed seamlessly from worker to worker regardless of location."Does he mean we will all get to telecommute? Not exactly.
"But the cost-savings grow really huge when companies exploit the big discrepancies in labor rates between the U.S. and still-developing countries like India, and outsource entire business processes to operators far away. International business process outsourcing, or BPO, started a few years ago with call centers, and it’s spreading to a wider variety of jobs. It may enable a quantum leap downward in labor costs."AH! Now we're beginning to get to the point.
"For instance, an Indian national software association estimates that what it calls "IT-enabled services" provided in India for customers elsewhere will rise from $1.46 billion annually to about $17 billion in five years. By then over a million Indians could be engaged in these businesses. High growth rates are also expected in Eastern Europe and Latin America and the Caribbean. Countries with the biggest near-term opportunity are those with large English-speaking populations, such as Jamaica, Malaysia, the Philippines, and Singapore."So what does this mean for YOUR job?
"The potential extent of this kind of work migration is vast. I’ve heard of new operations in India set up to read mammograms from U.S. hospitals. Architects in Sydney, Australia subcontract some of their work to lower-priced architects in Singapore."Your job eventually WILL be sent to people who will work for much less, where the environmental standards are lower, where there are no worker health and safety laws. And then their jobs will be sent where people will work for even lower pay, with even lower environmental standards, etc.
Without regulations in place to control this, your company must do this or go out of business, because its competitors surely won't hesitate. The honest, sincere, management-from-the-heart people currently running your company won't have any choice, because the laws of economics applied without consideration for the human consequences necessitate this conclusion. Repeat: Without regulations to level the playing field they will not have a choice in the matter. This is what "free trade" means without controls in place to protect working people. It's the law of supply and demand. In a world with free movement of jobs and a surplus of labor, wages must fall to the lowest level necessary for subsistence - and the rest will starve.
So the question to ask is, "Who is our economy for?" How soon will you be joining the servant class - assuming you're lucky enough to find even a servant job?
There are QUITE a few former "Internet libertarians" in Silicon Valley spending their newfound idle time in coffee shops (or writing weblogs), collecting unemployment checks and reconsidering their politics.
Einstein explains it here.
"Insofar as the labor contract is "free," what the worker receives is determined not by the real value of the goods he produces, but by his minimum needs and by the capitalists' requirements for labor power in relation to the number of workers competing for jobs. It is important to understand that even in theory the payment of the worker is not determined by the value of his product."Follow the link for more.
We Need a Heritage Foundation of the Left
Today's NY Times has this story, Outflanked Democrats Wonder How to Catch Up in Media Wars. The article discusses attempts to build moderate/progressive voices similar to the web of right-wing organizations and media outlets anchored by the right-wing Heritage Foundation. From the article,
"The [Heritage] foundation is part of a circuit of influential conservative groups that are credited with helping to hone a singular message, bolstered each Wednesday at back-to-back meetings held by Grover Norquist, the head of Americans for Tax Reform, and the conservative activist Paul Weyrich. Those meetings are monitored and at times attended by some conservative commentators, columnists and Internet writers.If you agree with the article, go give some money to the Commonweal Institute. It's important for our voices to be heard as well!
Democrats have long claimed that the circuit has corralled conservative thinkers, and more important, conservative media, into a disciplined message of the week that gets repeated attention from Web sites like the Drudge Report, Mr. Limbaugh's radio show, Fox News's prime-time talk shows and the editorial pages of The Washington Times and The Wall Street Journal."
Subscribe to:
Posts (Atom)