Newt misses the point.

These tax credits will do little or nothing to promote economic growth because they do not reduce marginal tax rates

Obama's not interested in economic growth. He's interested in "social justice". He has already publicly stated that he wants to increase the Capital Gains tax EVEN IF IT CAUSES A NET DROP IN REVENUE.

BECAUSE OF THE FAIRNESS!

Can Newt run? Welfare, how I despise thee. Obama, same sentiment.

"unless, of course, they're one of those people who'll be getting a handout without paying anything in" - Amy for the win!

Ima going to guess great numbers of these people voted Obama in, and are his most ardent supporters. And? It's in their best interest to have these givebacks, why should they not want them?

"Welfare, how I despise thee. " And financial Aid is what again? A very low interest loans would have the same effect as welfare. Wish I'd qualified for that in school but sadly no.

I'd also like to point out that the only time it's not in ones interest to earn more is if the are on the edge of a tax bracket. Also once you cross the 35% bracket you have all the incentive in the world to keep making more money. It's no different than lateral moves in the corporate world. A Senior Engineer makes more than most mid level managers but for Engineering the salary caps are much lower than management/execs. So if you want the real high pay you will likely have to take a small to moderate mid career pay cut. Then you can climb into the mid six figures and above.

The argument that it will dissuade people from being more successful makes no scene. While your jumping tax brackets you dump significant amounts of money into charity till you get high enough up in your tax bracket to make it worth while.

Newt maybe as a VP but not as the president. Had it been McCain Gingrich I'd have cast my vote very differently.

Capital Gains is usually applied to appreciated assets during sale so it would dissuade selling companies before they mature past a certain point. Keep VCs in check as far as small business raiding. They won't bother taking out small businesses until they mature into small corporations.

As far as free money for that bottom 40%, we all know they are going to spend it usually on shit they don't actually need. Remember Catrina and all those Coach bags? So when this goes through figure out what luxury items are sought after by the bottom bracket and invest. I'm guessing 35"-40" plasma TVs, PS3, XBox 360 and gangsta gear will all be hot items in the north east. Prada and Coach should be hot stocks too.

As far as it being wrong or right well one side wants to help the poor unfortunates that make kids like cookies and the other side wants to bail out those that shot themselves in the foot and can't figure out why it hurts. Tax payer are fucked either. Might as well enjoy the ride and fix things where you can.

Vlad, it's fairly obvious you've never worked for a startup. 80 hour weeks suck, and no amount of money can compensate for burning out.

You also have an inordinate amount of trust that Obama's not full of shit.

When he's done prevaricating, you'll find that anyone with income over about 40 grand is going to see a $2,000-3,000 increase in their net tax payments.

Oh, and student loans are not welfare unless you don't pay them back.

"Vlad, it's fairly obvious you've never worked for a startup. 80 hour weeks suck, and no amount of money can compensate for burning out." Yeah I did, I'm not sure how that applies. Also grad school required about 80 hours with NO compensation. Your correct nothing can really compensate you for a burn out. So how does this relate to tax policy?

No I'm pretty sure some of his pontification is crap. I don't trust Obama any more than McCain and I trust that dip shit Palin less than either of them. I have yet to see a president that did not back off on huge parts of his campaign promises.

McCain's policy would have boosted my taxes by 5k due to medical benifits paid by my employer. Which he made a point of presenting.

Student loans at .5%-1% with differment are a lot easier to pay out then 8% loan obtained through a bank. The interest of lack there of is the welfare.

Vlad,

Would you work 90 hours a week and put all your capital at risk if the government were to take 50% of it away on the off-chance (less than 10%) that you will be successful?

We need to encourage entrepreneurship. That will create jobs for the middle-class and poor; hence everyone will be better off. Look at the evidence. Countries with flat taxes have done incredibly well. Those with progressive taxes have done poorly.

Vlad - that's like saying that FHA loans with 3% down are welfare. They simply aren't. The government is acting as a cosigner for a promotional loan.

Welfare is given with no strings attached. The loan rate on student loans is predicated on the idea that you will pay them back.

How the fuck much is your employer paying for health insurance that your TAXES on it would be 5 large? What the fuck do you need a $4,000 a month insurance package for?

Oh, and Obama's nationalized healthcare scheme will raise your taxes by AT LEAST 5 grand. What, you thought that your employer was just going to give you that 3 grand a year they pay for your benefits TAX FREE? Hells no. The government will get their 5 grand out of your gross to cover the cost of health care FOR JUST YOU. Dependents? I feel sorry for you man. That six-figure income isn't gonna be enough to scrape by after taxes.

"What the fuck do you need a $4,000 a month insurance package for?" No but that added to my income pushes us into the next bracket. I support a flat tax rate and no freebies, neither candidate did.

Wasn't the AIG bailout a loan as opposed to welfare then.

Where are you getting Obama's nationalized healthcare? That was Hillary Clinton, nothing in Obama's plan sounds like nationalized healthcare.

"3 grand a year they pay for your benefits " 250 bucks a month for a PPO family plan your joking?

"Would you work 90 hours a week and put all your capital at risk" Are we talking income tax or capital gains tax. You'd lose 50% of you salary to the government. Capital gains tax is at 15%. So it would encourage you to take a minimum salary and reinvest more of the profits in the company.

Vald, You're recycling a lie. McCain would have given everybody a tax credit toward the first part of their health insurance.

As it stands now, my employer pays some amount and I pay some toward one of two choices I have. That employer paid amount is part of my compensation, as is the amount I pay. Thanks to the politicians of NY, and my wife's union, I can't participate in a no-frills catastrophic coverage plan and pay the rest out-of-pocket which would be my best scenario hands down.

You'd think by now that the distortions caused by government interference would be obvious to everyone. Yes, the performance of my 401K sucks, but all that extra tax money that I paid into Social Security is gone. By all means, lets have the government fix some more of our problems. Maybe they can turn my cold into cancer.

Flat tax or fair tax, I don't care. Get the government out of deciding who to reward with my money.

Vlad,

I'm talking income taxes. You can only give yourself a minimum salary for so long ... eventually you're going to want to be able to live the high life.

Again, go look at countries that have lowered income taxes for the rich and middle class. Look at the results. The evidence speaks for itself.

Vlad -

Barack Obama intends to raise the cap gains tax as well as the top marginal rate (and probably most of the other rates).

So, working harder and investing is also a losing proposition.

As far as the AIG thing goes, it was sold as a loan, but I suspect the probability of repayment is close enough to zero as makes no odds. Which makes it neither a loan nor welfare. It makes it an inflationary act through the destruction of capital.

See The Tax Cut You May Have to Send Back for a discussion and a nice graph of the marginal rates implied by Obama's policies.

Marginal tax rates are the largest disincentive to producing more. It is hard to give back 34% of every extra dollar earned.

Also, the money taken from the "rich" causes a deadweight loss to productivity, as they attempt to avoid tax by taking fewer chances and spending on tax-avoidance rather than more productive investments.

Martin Feldstein has estimated the loss as $2 in decreased production (jobs) for every $1 raised in extra tax. Higher taxes kills jobs, regardless of the "spending" that the stimulus packages are supposed to produce.

Every dollar of stimulus would have been invested and spent anyway, so there isn't any stimulus, just a forced removal of savings to buy more consumer goods. And, of course, a gift to buy votes until the economy declines som more.

"Student loans at .5%-1% with differment are a lot easier to pay out then 8% loan obtained through a bank. The interest of lack there of is the welfare." vlad...

er, you ever have one of these? Mine from the late 80's were 8%+ and only deferred when in school 12+ hrs. per semester... and my mom who made the mid-life career change to teaching are in the 8% range too. So... where you getting your figure from?

People with edumacashuns drive the economy as much as people who start businesses. The groups often overlap.

"er, you ever have one of these?" No my wife does. Her family made much less than mine did thus she got the super low interest loan. I'm stuck with 8% and one emergency 10.5% from grad school.

"People with edumacashuns drive the economy as much as people who start businesses. The groups often overlap. " I like that one.

As far as capital gains vs income tax. These are (as far as I know) completely separate. Using Warren Buffet as an example he pay 28% on his 100k salary. He's paying nothing as long as he does not sell an appreciated asset other wise. So capital gains keeps rapid buy and sell based fluctuations down.

While I get that as you go up the tax brackets you pay more I disagree that this is a bad thing or that it discourages climbing the ranks. Yes at that top bracket your giving up 35% to the feds but you still get to keep that $0.65 per dollar earned. If you just want to climb a little bit then yeah its a disincentive. If your at the cusp of a tax bracket and you want to go a little higher then it's counter productive. After 350K there's really no disincentive to stop climbing.

I can see the logic for some hick living out in the back woods of up state NH (btw if your reading this I'm not talking about you) who has no utilities, hunts and fishes for food etc. They get no benefit from the system so I'm not sure if they should pay tax. If you own any company and/or make 200K+ per year the system in some form or another helped you get there or keep you there, almost always there are exception to anything.

I can also see the logic in that someone who is wallowing in their own misery and choosing not to climb out of the hole of poverty and ignorance shouldn't be rewarded for it either. But hungry people are the most dangerous and unpredictable.

"After 350K there's really no disincentive to stop climbing. " Sorry should say there is no disincentive to climbing higher.

I pay 3.5% on my school loans. I am paying it back. And there for a few years post 9-11 I was paying above market rate, because you can only consolidate once. Now, I may be paying below market price. Either way, I am PAYING it back, a concept unseen with welfare of any kind, as they citizen pays nothing back, ever, since they typically stay on it for life and are never productive.

A hand UP, loaning for education,I can see. A hand OUT, which is our current system, makes no sense at all. Other than creating a permanent underclass to vote for you, that is. I am even ok with subsidizing child care for people who do want to go to some training program. Just so long as there is a payoff of some kind to society. Dorm-style housing, sure! We can keep a roof on people's heads, and keep them from starving. We go so far past that though, it's truly pathetic. Many on welfare live better than I do, what with the off-the-books earnings and their payoffs and freebies.

Vlad, yeah I know everyone has piled up on you, but listen: from your first post on this, I think you've got the whole income tax bracket thing wrong. Have you ever done your taxes yourself? It might be a good idea, because you would then understand:

You don't jump from the 25 % bracket to the 35 % one on all your money after earning above a certain level. That would suck even worse than our present system - hard to believe anything could, but this would. In reality, if the 35 % bracket starts at $80,000, just for example, then a taxpayer would pay 35 % of the income over $80,000, not 35 % of all the $80,000, hence the important term "marginal". The 35 % is on the "margin" above $80,000.

BTW, of course, above, I'm not going into deductions, exemptions, normal cheating that we all do, etc.

Really, Vlad, I'm not writing this to get on your case as much as to illustrate why you wrote what you wrote in your first post. Everything you wrote makes sense if you assume the wrong thing.
I thought that's how it worked back when I was a kid, maybe through college, before I ever got a really decent sized paycheck (I, mean, "decent before taxes", of course).

This is a reason people should do their own taxes at least once to understand how it works, but, for me, it would burn me up to pay someone even more money (even it's a really decent accountant friend) just to tell Nanny Samantha just how much money I owe her. BTW, I don't spend more than 1/2 hour on it at the bar, no matter how much stuff I put on deductions. If it's the 25 min. mark, I just start rounding, finish the math on a drink napkin, seal it up, and call it a night. Really.

If you really want to illustrate to working people what the deal is, we should encourage no withholding until April 15, then assessment of the damages could occur, along with some righteous riots too.

"Many on welfare live better than I do, what with the off-the-books earnings and their payoffs and freebies. " Depends on where and how honest they are, but yes I agree. Seeing someone pop out of a benz with a fur coat and pay with food stamps pisses me off too. I'm all for reforming the shit our of the system and making it a short term option rather than a life long free ride. The dems want to extend welfare (which sucks) the republican want to cut the program completely. I'm still waiting for a middle ground. Keeping the lazy masses fed keeps them docile and less dangerous. As far as student loans, until they reformed the bankruptcy laws most student (who I went to school with) were planning on declaring bankruptcy right after college to clear their debt. As far as I know that would not have actually worked but that was their plan.

Dave: Fair enough didn't realize that. So then there is no reason not to jump tax brackets. You pay a higher percentage of your money that your earn over 350 but still you get to keep 65% of all the money over 350K. I'm seeing even less disincentive to keep climbing.

"So then there is no reason not to jump tax brackets." RIGHT.

"but still you get to keep 65% of all the money over 350K." Very, very, WRONG

uh, you forgot about 8 % of your first 100 grand or so (fixin to go up) for SS. Then medicare, state income tax, varying from 0 to 8 % (anyone know higher than 8 ? just guessing on that number), etc. Really, you'd be lucky to get 45 % of the money you earn over $78,000 (or whatever).

BTW, vlad, do you realize that 35 % was reduced by Bush + Congress from 39 % and before Reagan came in, the top rate was in the 70 - 90 % range!!! Did you know that? There were more brackets back then, and I don't know what all the changeover points were, due to being young and only making $5 to mow each 1/2 acre yard, so the IRS and I were not in communication in those days.

I think you may be young yourself, which would explain why you reasonably could not be expected to know how bad income tax is for an economy. (and the new tax credit welfare is much worse, as Amy says.) Then again, as someone says, if you are young and not a liberal, you have no heart. If you are a grown-up and not a conservative, you have no brain.

Good luck being a zombie in this day and age, especially around San Fransisco. I could see a zombie starving to death, moaning, "where's my bailout, dude?".

Dave is obviously not self-employed.

It's 15.3 per cent of your first 99 and change thousand for social security.

It's two per cent of every dollar for medicare.

For the 'employee', you only see half of that deducted from your paycheck, as your employer is obligated to pay the other half off-book.

Then, and only then, do you get to start deducting things like health insurance and 401(k) contributions.

And then you pay your income tax.

By the time its all said and done, someone who makes right at the SS cutoff loses better than 50% of their income just to the federal government. Add to that the stuff I lose to the state, and property taxes, gas taxes, sales taxes...

All of a sudden, the marginal impact of the next dollar is about 40 cents.

If you charge a fixed rate for your work, the more hours you work, the less those hours have in real value.

Which is why the incentive diminishes.

Not at the moment, Brian. I understand the way SS works - I don't know if you're trying to explain this to me, or just adding to what I told vlad. I have been self-employed before, but I have gotten away with cash dealings. "Cash is King", my friends, that is my advice to anyone. Another time it was really cool - I was getting paid as a consultant, but the company went out of business before the end of the year. 1099 forms? I think not. IRS, kiss my ass!

Yes, and I wasn't including the other taxes taken away before your money is made (corporate, in which the money could have come to you in a higher salary), and then sales, property, just-being-alive-tax, etc. I left this stuff out to keep my point simple, Brian

BTW, I agree about 95 % with your past posts, Brian - nice job in setting some people straight.

Yeah, I was piling on.

Oh, and whats with this sudden wave of people agreeing with me? If it keeps up, I'm likely to be accused of sockpuppeting!

That would explain a great may things. What with the news lately, I've been drinking a bit more too.

At least the whisky makers are getting a bit of stimulus!

"They've all been drinking." No, that was April 15th, is what I said, not today. ;-)

yet.