Friday, February 1, 2008, 11:43 PM -
EconomyPosted by Administrator
Is it possible, that nanny-state advocates have never considered the basic notion that government has no money of its own; that government only has what it takes from hard working Americans, and that the amount it takes from the rich, the middle class and the upper middle class, i.e. the "final net amount" keeps going up as a percentage of the total burden paid.
The amount being expropriated and redistributed in dangerously large amounts, seriously curtails wealth creation for the general good, while rewarding among other things, long-term dependency.
EXAMINING THE DATA ON REBATES VS. TAX CUTS
Since government has no money of its own, these rebates can only come from what it has already collected. Because a budget deficit already exists, the rebates sent back must be borrowed with a resulting increase to the deficit. That action does nothing to create wealth or jobs. It recirculates money, but does not create wealth.
In fairness, a certain portion of the rebate money will go to those who have paid. Unfortunately Democrats will almost certainly get their way and give plenty to those who pay no income taxes, also wipe out all their payroll taxes.
This means, they pay no income taxes for the current expense of running the country, and beyond that do not pay for the social security check they will receive at retirement, despite the fact that that fund will soon go into deficit.
They also do not pay for the enormous cost of Medicare they will eventually use.
Millions who receive the largesse of this massive welfare program get a huge cash rebate beyond that, through the Earned Income Tax Credit. Now with the stimulus package, those recipients are going to get even more of other workers' hard earned dollars.
This Marxist practice, already out of control, just piles it on.
There will be a further unfair element by not returning anything to those who pay the highest dollar amount and the highest percentage amount of all taxes.
Depending on action by the Senate, those earning $75,000 and up will see their rebate diminished, as income rises. Those above that, who really pay through the nose get nothing.
The nanny-state exacts its pound of flesh at collection time, but reneges when its time to repay those who do the heavy lifting.
TAX CUTS DO NOT GIVE ANYTHING TO TAXPAYERS, THEY REDUCE FUTURE PAYMENTS
In the first phase of the 2001 tax cuts, mid to late year rebate checks of $600 were sent out. Spending did go up. The 4th quarter saw a yearly spending rate of 7% but the growth rate (annualized was a sluggish 1.6%) while investment spending dropped 23%.
The economy was sluggish during all of 2002.
In 2003, tax cuts came on individual rates, capital gains and dividends. This simply meant that more of what we earn in the private sector stays there for investment and job creation.
Nanny-state advocates present these reduced tax "payments" as if they were something given to taxpayers, rather than what they are, a reduction of a future payment.
If a merchant sells you a loaf of bread on Monday for $1.50 and that same product goes on sale for $1.25 on Tuesday, does he "give" the purchaser $.25? No, he charges less. Tax cuts are no different.
In the six quarters before these reduced payments, GDP grew at a rate of 1.7%; after the tax cuts, GDP grew 4.1%. Before the tax cuts, investment declined for 13 consecutive quarters; after the cuts, investment expanded for 13 consecutive quarters.
In the six quarters before the tax cuts, the S&P fell 18%, after the cuts, the next six quarters saw an increase of 32%.
JOB CREATION
In the six quarters before the cuts, job losses were 267,000. In the six quarters after the cuts 307,000 new jobs were created. As the effects gathered steam, job increases soared to more than 8 million at last count and are now in their 51st consecutive month, one of the longest consecutive job creation periods in U.S. history.
Ups and downs in job growth, economic factors and the business cycle happen with or without government action. However the sluggishness and negatives we had after the rebates but before the tax cuts, compared to the investment and job growth that followed the tax cuts, seem to remove any doubt over what truly stimulates growth and jobs.
This same pattern took place from the Kennedy tax cuts, the largest in the nation's history, and the Reagan tax cuts. Kennedy's cuts gave us the longest peacetime expansion in history until Reagan's cuts surpassed those of Kennedy.
Had George Bush and the Republican congress controlled spending as congress did very stringently in the 1990"s, we would be enjoying sizable surpluses right now.
Redistribution of the earnings of the middle class and those slightly above and below is out of hand. We must stop electing those who live by the religion of victimhood and elect those who insist on persistence and productivity and the rewards of one's own work, not the rewards of the work of others.
By: Mick McNesby
Mick McNesby is a former tax advisor, consultant and negotiator. He was a frequent guest on political talk shows in Atlantic City, N.J., discussing the benefits of the lower cost of government.
He is the author of the Ebook REAL WORLD ECONOMICS: For High School Seniors, College Students and Early Entrants To The Workforce, which can be downloaded FREE at his site:
http://conservative-politics-infofind.com.