Results 1 to 8 of 8

Thread: likely effects of the US tax 'hike'

  1. #1
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default likely effects of the US tax 'hike'

    For those who are unfamiliar, the new US congress has (so far) allowed significant tax increases to take effect by their failure to extend the time limits of existing 'tax relief' laws. This is projected to result in huge tax increases next year. However, the effect won't be evenly distributed !!!



    "Democratic Voters Will Be Hit Hardest by Tax Hike
    by Mike Franc (More by this author)
    Posted: 05/11/2007

    A certain irony surrounds the scheduled explosion of tax liability under the Alternative Minimum Tax. Namely, this is a “Blue State tax,” with the heaviest concentrations of affected taxpayers living in states that voted for John Kerry in the 2004 presidential election, including New York, California, Illinois, Connecticut, New Jersey and Maryland.

    But they’ve got more than the AMT to worry about. A new Heritage Foundation study examines the economic effects of allowing the 2001 and 2003 rounds of tax relief to expire, and it turns out this other imminent increase in the nation’s tax burden also hits Blue State taxpayers the hardest.

    Within weeks, lawmakers will likely approve a 2008 budget blueprint that stacks the deck in favor of a massive $900 billion-plus tax increase over the next decade. The new budget rule known as PAY-GO requires supermajorities of lawmakers to approve even simple extensions of current tax law, a near impossibility in the current environment. If lawmakers seek to extend some of Bush’s most politically popular tax breaks, such as the children’s tax credit and marriage penalty relief, PAY-GO requires offsetting tax hikes on other taxpayers, dollar for dollar.

    Either way, an unprecedented increase in the average taxpayer’s tax burden is coming.
    Democratic political operatives may want to scrutinize the Heritage analysis closely given that this increase in the tax burden will impose the greatest pain on their own constituents.
    Twelve of the 15 states where taxpayers face the largest increase -- from $3,000 per taxpaying household per year in Delaware to more than $4,300 in Connecticut -- are Blue States. Voters in these states not only voted for Kerry, but also sent overwhelmingly Democratic delegations to Congress. In the Senate, the margin is 21 Democrats (plus Independent Joe Lieberman of Connecticut) to only eight Republicans; in the House, Democrats from these states outnumber Republicans, 124-87. Should these increases occur, lawmakers in these states and districts should expect to hear from some angry constituents.

    By contrast, 14 of the 15 least affected states -- where the projected increase in the tax burden ranges between $2,261 per household in Mississippi to just under $2,700 in North Carolina -- are Red States. Taxpayers in these states, on average, are far less likely to report capital gains realizations or dividends on their tax returns. Because they earn less, they’re also far less likely to fall into the highest marginal tax brackets. It may surprise some to learn that these poor states tend to elect Republicans. In the Senate, 19 Republicans and only 11 Democrats represent these states; in the House, Republicans outnumber Democrats 35 to 28.

    In the House, the taxpayers who face the most gruesome tax increases live, almost without exception, in the inner suburbs surrounding some of our largest metropolitan areas, including New York City, Chicago, Los Angeles, Washington, San Francisco, Denver, Atlanta, St. Louis and Philadelphia. They face increases ranging from $4,400 per household per year in Rep. Elton Gallegly’s (R-Calif.) Ventura County district to more than $5,000 per household per year in a dozen unfortunate districts. Leading the hit parade are the Nassau County constituents of Rep. Peter King (R-N.Y.). They will be asked to shoulder an increase in their tax burdens of an astounding $5,740 per year.

    The study uncovered another dynamic -- an unexpected economic relationship between Red and Blue States. The investor class lives and works in the affluent, Blue State suburbs, where wages are higher and investment portfolios more common. The jobs their investments create, however, tend to be located in high-growth, Red State areas. A higher tax burden leaves the investor class with fewer after-tax dollars to invest -- hurting firms in high-growth regions and causing workers to lose jobs.

    Consider how job losses would be distributed. Only four of the 25 districts hit hardest with the increased tax burden also rank among the 25 with the heaviest job losses. But 18 of the 25 with the greatest job losses are in Red States -- including communities that anchor rapidly growing regional economies in metropolitan areas, such as Las Vegas, Dallas-Fort Worth, Atlanta, Salt Lake City and Mesa, Ariz.

    This prompts a question: If the Republican Party is the “party of the rich,” why do so many of the wealthiest Americans live in Democratic-controlled states and districts? "

    ~
    Last edited by Melonie; 05-13-2007 at 05:22 AM.

  2. #2
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: likely effects of the US tax 'hike'

    and some historical perspective from ...

    "The Coming Tax Rebellion
    by Mike Franc (More by this author)
    Posted: 05/09/2007

    Since World War II, one of the most powerful “third rails” in American politics has been the taxpayer revolt that occurs whenever the federal tax burden nears 19-20% of Gross Domestic Product (GDP).

    As the tax burden rises, so does the number of taxpayers who believe their taxes are “too high” The accompanying chart shows a stunningly close relationship between the overall federal tax burden (measured as a percentage of GDP) and the percentage of Americans who feel their tax burden is “too high.” When the tax burden reaches an intolerable level -- approximately 19% of GDP -- the political pressure to lower taxes rises accordingly. Eventually it reaches a boiling point, forcing lawmakers to respond.

    Since World War II, the tax burden has generally meandered between 16% and 18% of GDP. But four times Uncle Sam tried to pocket more than 19% of GDP (the early ‘50s, the late 60’s, 1979-82, and during Bill Clinton’s second term). Each time the percentage of Americans who thought their tax bill was “too high” skyrocketed to between 60% and 70%. And all four times their political frustration reaped dividends. Twice, Congress responded by cutting taxes; the other two times the American people elected presidents who made tax relief a cornerstone of their campaigns.

    Lest the difference between 16% and 19% of GDP appear trivial, bear in mind that each percentage point of GDP amounts to approximately $140 billion per year.



    Indeed, contrary to liberal allegations that President Bush’s tax relief led to an unprecedented drain on federal revenues, the 2003 tax cuts merely brought the nation’s tax bill back down to earth. In fact, the tax burden in 2006 was 18.4% of GDP, almost exactly the post-war average.

    Now, once again liberals on Capitol Hill are poised to test whether that third rail has any juice left in it. Each of the budget blueprints recently adopted by the House and Senate envisions the tax burden rising, not just to the historical tripwire of 19% of GDP, but well above it. From 18.6% of GDP this year, the House and Senate budgets anticipate revenues devouring a steadily greater share of the private economy each and every year -- to 19% next year, 20% by 2016, 21% by 2026, 22% by 2033 and so on.

    There is no precedent in U.S. history for imposing such a large tax burden on Americans over such a sustained period of time.



    At the root of this economically suffocating trend is the scheduled expiration of the 2003 Bush tax relief and the more imminent explosion of the Alternative Minimum Tax. Proponents of this higher tax burden hide behind arcane Washington budget fiction whereby tax windfalls that accrue to Uncle Sam when tax cuts expire are viewed as the exclusive property of Uncle Sam. Simply extending these breaks thus becomes a tax “cut.” As Senate Budget Committee Chairman Kent Conrad (D-N.D.) explained: “You can extend the expiring tax cuts,” but only if “you pay for them” with offsetting tax increases.

    As airtight as this logic may appear to liberal lawmakers, it nevertheless caused some heartburn among those charged with defending it. “Our [Republican] colleagues argue that this budget represents the largest tax increase in history,” a defensive Rep. Timothy Bishop (D-N.Y.) acknowledged, but “nothing could be further from the truth” because “this budget … simply extends current law.”

    Rep. Bishop is right to feel skittish. According to a new Heritage Foundation analysis, the House budget resolution that supposedly does not increase taxes will nevertheless add $5,376 to the average annual tax bill of Bishop’s Long Island constituents. Nationally, the average taxpayer faces an increased tax bill of more than $3,000.

    If the last half century offers any guidance, no amount of budget double-talk will convince taxpayers that all is well if their tax burden is rising. The current level of dissatisfaction with taxes (53%) will inevitably rise until it reaches another political boiling point and ushers in the next tax rebellion. "

    ~
    Last edited by Melonie; 05-13-2007 at 05:23 AM.

  3. #3
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: likely effects of the US tax 'hike'

    If you'd like to see how this tax increase and its associated job losses are likely to affect your own area of the USA (as well as your club customers), here is the Heritage Foundation study they're talking about ! Just scroll down to find your state, and then your US congressional district.

  4. #4
    Veteran Member
    Joined
    Jul 2004
    Posts
    521
    Thanks
    1
    Thanked 0 Times in 0 Posts

    Default Re: likely effects of the US tax 'hike'

    Quote Originally Posted by Melonie View Post
    If you'd like to see how this tax increase and its associated job losses are likely to affect your own area of the USA...
    In my district, it's going to be between $3,000 to $4,000.

    But since the president, along with much of both houses of Congress, are so insanely anxious to trot out and pass an amnesty bill, I'm willing to compromise with them. They can have their amnesty bill providing the middle class receives just a little tiny something in return.

    That little tiny something being the permanent replacement of the income tax with a consumption tax, and the permanent abolishment of the IRS. Of course, since politicians from any party will lie through their teeth to get what they want, vs. what their constituents want, there will have to be a provision of a jail term for anyone in Congress who should ever again attempt to impose an income tax, rather than sticking with the new consumption tax. Sounds FAIR to me (pun intended).

  5. #5
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: likely effects of the US tax 'hike'

    ^^^ wishful dreaming aside, I'd like to ask a serious question.

    When your income taxes increase by $3-4,000 next year, how is that likely to affect your strip club visits / spending levels versus your spending levels for other things ?

  6. #6
    God/dess
    Joined
    Jan 2003
    Location
    Arizona
    Posts
    2,993
    Thanks
    39
    Thanked 12 Times in 11 Posts

    Default Re: likely effects of the US tax 'hike'

    It amuses me at how easy it is for the far right ideologues to convince some people into thinking that this issue has to do with anything other than preserving the tax cuts to upper 2% of the population. Neither Dems or Republicans will allow all of the temporary tax fixes to expire without extending them, that would be political suicide for either party. Talk about the politics of fear.
    Last edited by Richard_Head; 05-13-2007 at 04:47 PM.

  7. #7
    Veteran Member
    Joined
    Jul 2004
    Posts
    521
    Thanks
    1
    Thanked 0 Times in 0 Posts

    Default Re: likely effects of the US tax 'hike'

    Quote Originally Posted by Melonie View Post
    ^^^ wishful dreaming aside, I'd like to ask a serious question.

    When your income taxes increase by $3-4,000 next year, how is that likely to affect your strip club visits / spending levels versus your spending levels for other things ?
    Not much. I'm cutting back on pretty much everything now, due to taking a different job about 1 1/2 years ago. 86ed a vacation of two-three days to LV two years in a row now, in addition to one planned trip to Canada. And the most I personally will go to an SC anyway is about once a year, if that. And ironically, only when I go on vacation. The trips were not canceled for economic reasons though, but rather because I need some elective surgery, even though I have a tough time tolerating docs. So the canceled trips are my own responsibility.


    Quote Originally Posted by Richard_Head View Post
    It amuses me at how easy it is for the far right ideologues to convince some people into thinking that this issue has to do with anything other than preserving the tax cuts to upper 2% of the population. Neither Dems or Republicans will allow all of the temporary tax fixes to expire without extending them, that would be political suicide for either party. Talk about the politics of fear.
    Personally, I'd be about 98% less disdainful of income taxes as they exist in the U.S., if the current tax code as of 2003 were not 54,846 pages long, per Commerce Clearing House. In my not so humble opinion, that's about 54,836 pages too long! In fact, before the U.S. government is allowed to collect one dime of income tax, all of the Congressional Reps, Senators, the President and the Cabinet, plus all nine Supreme Court Justices, should have to read and fully comprehend the tax code. Then after these officials show, by example, how simple it is to fill out their own income tax forms by doing exactly that after reading every single page of the tax code...then and only then will I withdraw my complaint as to its complexity.
    Last edited by PhaedrusZ; 05-13-2007 at 09:24 PM. Reason: added material

  8. #8
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: likely effects of the US tax 'hike'

    ^^^ well, for a fact, both political parties have assured that whatever the 'published' income tax rate is supposed to be for the very richest 2% of Americans, that there are still plenty of investment tax credits and/or tax free muni bonds and/or trusts available to make sure that the very richest 2% of Americans don't actually pay anywhere near the 'published' tax rate. This is the reason that John and Theresa Kerry only paid a 12% tax rate on their $5 million dollars in earnings (per campaign disclosure), while you and I probably paid twice that rate !!! This is also probably the reason that all of the presidential hopefuls this year are refusing to disclose their financial information !!!

    Thus in reality the expiration of GWB's tax relief laws really won't affect the very richest 2% of Americans very much. The group of Americans that WILL be affected significantly are 'upper' middle class Americans earning $75k-$100k-$150k per year - which includes most full time dancers as well as most upscale club customers !

Similar Threads

  1. Replies: 0
    Last Post: 12-18-2010, 12:32 AM
  2. 32% tuition hike in California schools
    By Deogol in forum Dollar Den
    Replies: 7
    Last Post: 11-22-2009, 07:24 PM
  3. Replies: 2
    Last Post: 11-06-2008, 04:00 PM
  4. 5 Nobel Prize Winners Back Minimum Wage Hike
    By Fan_Dancer in forum Dollar Den
    Replies: 44
    Last Post: 10-29-2006, 01:46 AM
  5. Replies: 0
    Last Post: 04-14-2006, 11:24 AM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •