Can someone explain the difference?

[Chef Jim]

Obama wants to give us more money to stimulate the economy, but when President wants to raise taxes. It's late, I'm tired, but I'm confused.

 

Obama in his speech criticized his Republican rival, John McCain, for proposing to extend all of President Bush's 2001 and 2003 tax cuts.

 

What's the difference? Oh, that's right. Bush's tax cuts were only for the rich.

[Adam]

Obama wants to give us more money to stimulate the economy, but when President wants to raise taxes. It's late, I'm tired, but I'm confused.

 

 

 

What's the difference? Oh, that's right. Bush's tax cuts were only for the rich.

Both candidates want to stimulate the economy- but taxes is just a small part of both plans. There is a lot more to it than just that.

[Chef Jim]

Both candidates want to stimulate the economy- but taxes is just a small part of both plans. There is a lot more to it than just that.

 

I understand that. But the dems never admit that lower taxes (keeping more money in the hands of the people) stimulates the economy. But out of the other side of their mouths they want to give us money to stimulate the economy. Can't have it both ways.

[Adam]

I understand that. But the dems never admit that lower taxes (keeping more money in the hands of the people) stimulates the economy. But out of the other side of their mouths they want to give us money to stimulate the economy. Can't have it both ways.

It all depends on where that money goes, I guess. If the health care they supply is as good as what I get now, my guess is that I will probably pay in taxes approximately what I am paying now, so it really won't make that much of a difference.

 

I think solving Iraq and the energy shortage will have a much bigger impact on the dead economy than anything else, and I really think nuclear power needs to be the solution (to energy, not Iraq!)

[Wacka]

I understand that. But the dems never admit that lower taxes (keeping more money in the hands of the people) stimulates the economy. But out of the other side of their mouths they want to give us money to stimulate the economy. Can't have it both ways.

 

They have to get their cut for their special interest groups first.

[TPS]

I understand that. But the dems never admit that lower taxes (keeping more money in the hands of the people) stimulates the economy. But out of the other side of their mouths they want to give us money to stimulate the economy. Can't have it both ways.

I don't think Dems have ever said that lower taxes don't impact the economy (if so, please find me a quote).

 

You allude to the difference, and it's pretty straight-forward. The top 20% of income earners spend about 75-80% of their income (20-25% savings rate); the bottom 60% spend more than their incomes; and the other 20% spend all of their income (0 savings rate). If your philosophy is that demand drives the economy, then you need to cut taxes on those who spend the most--it makes perfect sense.

 

If you believe in supply-side stimulus, then cutting taxes for the top makes more sense. That's why I've always argued for cutting the payroll (SS) tax.

[PastaJoe]

The basic difference is that in general Republicans want to give tax breaks to the wealthy and corporations, under the assumption that they will invest the money in businesses that will stimulate the U.S. economy and create jobs. The problem with that is that they are not obligated to invest in businesses in the U.S., and can invest that money in another country for more profit, or take the tax cut and still move their manufacturing overseas. While it's their right to invest their money where they want, the gov't shouldn't be giving them a tax break to do it. I'm all for tax incentives if it goes directly to creating more U.S. jobs.

 

In general Democrats prefer to stimulate the economy by giving tax breaks to the middle class and investing in public work projects like infrastructure that will directly create more jobs and demand for supplies, which then creates more jobs, especially if there is a preference given to domestic suppliers.

[TPS]

The basic difference is that in general Republicans want to give tax breaks to the wealthy and corporations, under the assumption that they will invest the money in businesses that will stimulate the U.S. economy and create jobs. The problem with that is that they are not obligated to invest in businesses in the U.S., and can invest that money in another country for more profit, or take the tax cut and still move their manufacturing overseas. While it's their right to invest their money where they want, the gov't shouldn't be giving them a tax break to do it. I'm all for tax incentives if it goes directly to creating more U.S. jobs.

Unless you own your own business and can directly use savings to expand, there is no direct connection between the "savings of the rich" and investment by corporations; it's indirect. The rich "financially invest" in stocks, bonds, real estate, art, precious metals, and various liquid accounts. increased stock prices make it more attractive to raise new equity, and increased bond prices lower interest rates, but the investment decision by corporations is driven by profit expectations (being able to sell the increase in products or services). Then, even if they do decide to "invest," there's the question you raise about "where" they locate...

[Kevbeau]

In general Democrats prefer to stimulate the economy by giving tax breaks to the middle class

 

It's their definition of "middle class" that I have a problem with.

[Adam]

It's their definition of "middle class" that I have a problem with.

Ok, whats their definition and whats yours?

[Chef Jim]

Ok, whats their definition and whats yours?

 

Can't be defined. It's regionally specific.

[/dev/null]

Can't be defined. It's regionally specific.

 

Very good point

 

Case in point, some Googling found the following stats:

 

The Median salary in Arlington, VA is $60k. Median household income is $80k

The Median salary in Virginia Beach, VA is $38k. Median household income is $58k

 

There's another town in VA but I forget it's name. One of the guys I work with is from there and we looked up the median income there once and it was like $28k

 

I make > $38k and < $60k. So by moving within the same state with my salary, I could be "upper" middle class (VA Beach), "lower" middle class (Arlington), or rich like Rick James b*tch! (rural VA)

[finknottle]

I don't think Dems have ever said that lower taxes don't impact the economy (if so, please find me a quote).

 

You allude to the difference, and it's pretty straight-forward. The top 20% of income earners spend about 75-80% of their income (20-25% savings rate); the bottom 60% spend more than their incomes; and the other 20% spend all of their income (0 savings rate). If your philosophy is that demand drives the economy, then you need to cut taxes on those who spend the most--it makes perfect sense.

 

If you believe in supply-side stimulus, then cutting taxes for the top makes more sense. That's why I've always argued for cutting the payroll (SS) tax.

 

I'm not sure whether I agree or disagree.

 

The problem is that the bottom 60% essentially pays no taxes now. The bottom 50% of those households who filed with a positive adjusted gross income (66 million households) had an average federal tax rate of 2.98% in 2005. There's not much to cut there, despite Obama's promises, and you are not going to stimulate spending or saving by reducing it.

 

But I do agree with the perscription - cutting the payroll tax. That's a flat tax that impacts job creation.

 

http://www.taxfoundation.org/news/show/250.html