Photo: yachtfanIn 1990, we imposed a sales tax on yachts, which was quickly repealed. One argument made by business groups supporting repeal was that the tax hurt workers who manufacture yachts. That’s correct: assuming that the yacht industry is fairly competitive, the incidence of that tax was on buyers and on yacht sales, and thus indirectly on shipbuilding employment.
The altruism of yacht-buyers towards shipyard workers has now been surpassed by those arguing for an extension of the Bush tax cuts of 2001 for the very well-to-do (family income above $250,000, probably the top 2 percent of taxpayers), scheduled to expire on December 31. A recent objection is that, by reducing net incomes of the rich, failing to extend this tax cut would reduce job creation, placing a burden on working-class families. True, but if we are concerned about job creation, are tax cuts for the rich target-effective? A general rule should be: beware of spokespeople for business seeking help for the rich in order to help workers!
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How about we just scrap the current system altogether? Many people over the years have proposed a variant of a flat tax.
1. No deductions beyond an across the board personal deduction of $30,000. This means that those making $30,000 or less pay NO Federal income tax. It also means that the wealthier citizens that have the resources to find tax code loopholes are no longer able to hide money and even at a lower tax rate, would pay more.
2. Less complexity would make the tax code easier to enforce and would most likely increase self compliance.
@Jorge We had an unemployment rate of about 5% for longer than a decade. That’s pretty permanent. A couple of relevant facts about “tax cuts for the rich.” First, Bush’s tax cuts were across all income brackets. Second, you cant cut income taxes for people who don’t pay them and 98% of income taxes are paid by the top50% of wage earners. Third, the reason tax cuts for the “wealthy” create jobs is because small business are the job engine for the economy and because small business owners pay taxes on business income at personal income tax rates. Lower income tax rates therefore give the employers money to expand and hire.
Is it truly a tax “cut” when they are already paying more of every dollar they make to taxes?
Wouldn’t it be more effective to simply put a flat rate percentage across the board? Everyone pays the same amount per dollar into the system. Remove all tax shelters, credits, bylaws etc. Reducing the size of the IRS, and thus costing us less money. This would help on a small level to counteract our ever increasing budget, leaving more money in the hands of the people/consumers.
While it is not a given that tax cuts trickle down, it is known that tax hikes halt hiring…
Also, having some research linked to the article actually making the arguments for/against would be much more enlightening.
i agree with the general rule, but where is the argument that leads to this conclusion?
Jorge -
You mean like if the US had a much lower unemployment rate that the EU15 until the last year?
http://www.visualizingeconomics.com/2009/05/28/us-unemployment-verses-europe-march-2009/
Is it time once more to venerate the investment potentials of enriching the rich? Feels like 2003 all over again!
How about fair and equal taxation and stop pretending one group should be hit harder or given more preferential treatment under the law?
Where is the content? This article is not even a stub. Below standard, come on!