Next – What does "tax cut" mean?

5 thoughts on “Next – What does "tax cut" mean?”

1. In theory I know what a tax cut is, but now a days they seem to have complicated the definition unnecessarily. I’ve never made enough in my life to ever pay taxes though asides from the ones that get taken no matter what, so this sort of thing really doesn’t matter in the grand scope of things for my life. I look forward to a day when I am actually employable without discrimination so I can pay taxes! I’m not seeing it happen under either of these guys though.

2. And they say love makes you crazy, but politics….. wow!
   Brill and Viard from the American Enterprise Institute, their article on which the WSJ one is based is in this PDF:
   http://www.aei.org/docLib/20080910_BrillViardTaxNotes.pdf
   That may not work, if so, try the link on this page which introduces the article at the AEI:
   http://www.aei.org/publications/pubID.28596,filter.all/pub_detail.asp
   Dang, I can’t find their tax diagram anywhere in that article. Must have been something they produced exclusively for the WSJ. Effective tax rates are not real tax rates. It’s the same as my mother whining about the any money she makes, having to pay the taxes on it… as if it all goes for taxes.
   What can anyone say, we don’t have the figures concerning the Obama tax credits on hand. Brill and Viard seem to say they do, yet I don’t necessarily believe them or give any credit to an “effective marginal tax rate.” But I’ll have to read their article. The idea is easily understood, a tax credit based on one’s earnings sequesters income from taxation and effectively lowers the tax break. Refundable tax credits effectively lower a marginal tax rate causing one to pay mo…. no wait! How does a tax credit get taxed? I don’t get these guys…..
   The TPC’s Conclusions are:

   The tax proposals of both presidential candidates would alter effective marginal tax rates in complicated ways. Senator McCain’s plan would—among other things—reduce statutory rates, increase the dependent exemption, and raise the AMT exemption level. In addition to also changing statutory rates and raising the AMT exemption, Senator Obama would modify existing deductions and tax credits and introduce several new ones. The numerous phase-ins and phaseouts that these credits entail would affect marginal rates, lowering them for some taxpayers and raising them for others.
   Overall, the Obama plan would lower effective marginal tax rates for the majority of households. In 2009, only about 1 in 7 households would see an increase in their marginal rate. Only at the top of the income distribution—households making at least $500,000 a year—would a majority of taxpayers face higher rates. Obama’s plan would leave the average marginal rate on wages and salaries for the economy as a whole unchanged at 24 percent in 2009. In that same year, close to 80 percent of the population would see no change in their marginal rates under Senator McCain’s plan and most other tax units would face lower rates; only about 1 percent of households would experience a marginal rate increase under the fully phased in McCain plan. Overall, Senator McCain’s plan would reduce the average marginal tax rate on wages and salaries by about 1 percentage point, to 23 percent in 2009.
   Senator Obama’s proposal would result in an average marginal tax rate of 25 percent on wages and salaries in 2012, lower than under current law but higher than if the tax cuts are extended. Because Obama would leave the top two statutory rates at 36 and 39.6 percent and reinstate PEP and Pease, taxpayers with more than $1 million in income would face an average marginal rate of 40 percent, 6 percentage points higher than under the McCain plan. Overall, because it would extend all of the individual income tax components of the 2001–06 cuts and increase the dependent exemption, the McCain plan would lower the average EMTR for all households slightly relative to a tax cuts extended baseline and significantly compared with current law.

3. We are living in what might turn out to be an inflationary recession. Our president will be a Liberal Democrat and we’ll have a strong Democrat majority in both the House and Senate.
   A few thousand dollars worth of wealth redistribution will be the least of our problems. Nationalized healthcare, massive unionization of the workforce, amnesty for illegal aliens which will spark a larger wave of illegals. Don’t forget a return of the Fairness Doctrine and a gang of Obama supporters who will physically threaten anyone who opposes him.
   Michael Barone: The Coming Obama Thugocracy
   The economy will eventually get back to normal but the longterm structural damage that’s about to happen might not be repairable.

4. Hmmm. Getting kinda burned out on all the poltical stories. i look forward to getting back to the fun topics — like what “causes” gayness and how to “fix” it. Those were the days…
   By the way, I have been drinking soy milk lately and I do believe it has made me more gay. I find myself watching more home decorating shows, dressiong better, digging out my Broadway cast albums and spending more time trying to figure out how to destroy the American family and all of Western Civilization. They shoud put a warning label on the stuff. Buyer beware.

5. The short answer is that the media has been reporting on the details of the two tax plans – since at least June. It’s an old story.
   The slightly longer answer is that most people who aren’t policy wonks or strong proponents of smaller government only care about this, and only the latter of those two groups would probably uniformly see Obama’s plan as bad, meaning focusing on tax policy is a loser for McCain for most anybody but his base. Meanwhile, the non-partisan Tax Policy Center seems to have a slightly different take on how Obama’s tax plan will affect effective marginal tax rate than the conservative American Enterprise Institute which was cited for the WSJ chart, if I’m understanding both correctly.

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