Bush Tax Cuts

There’s been much talk about the Republican tax cuts “for the rich”. What is that exactly?

In the United States there are about 140 million taxpayers. The top 1% would be 1.4 million people. The average annual income of those 1.4 million wealthiest taxpayers is $1.5 million and the reduction in taxes they received averaged $85,000 each. Or multiplying that out, the top richest 1% of taxpayers got a total of about $119 billion dollars in tax reduction.

Using 2002 data from Centers for Medicare & Medicaid Services website I see that there were 40.4 million Medicare recipients in the US with a per capita expenditure from the Medicare program of $6,677.

If the tax cut that went to those millionaires were used for health care, we could provide health care at the same level we provide for Medicare recipients for an additional 17.8 million Americans who do not have health insurance.

So which is better: giving someone with a million dollar annual income an $85,000 tax break, or providing health care for the 17.8 million poorest Americans?

The President and the Republican Congress seem to think health care is not the most urgent priority.

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Just an old guy with opinions that I like to bounce off other people.
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2 Responses to Bush Tax Cuts

  1. Kevin says:

    Analogy? I didn’t see an analogy; perhaps you mean example.

    There are several things that I would take issue with in anonymous’s comments. First, if 40% of Americans don’t pay any taxes at all, I would consider that a bad thing–either they are too poor, or they are evading their fair share. I’d like for everyone to be able to pay taxes.

    I don’t know where the idea that an income of $35,000 is considered “wealthy” comes from. I would consider that barely scraping by. Federal Poverty guidelines for 2004 put the poverty level at $18,850 for a family of 4. So if you went into most public health clinics with an income of $35,000 for a family of 4, you would be under 200% of poverty and you would get services at a slight discount because of your low income. You would have to hit $37,700 to pay full fee.

    I think that some folks think that taxes are higher than they are. I earned a good income in 2003 but I paid under 11% of my Adjusted Gross income in Federal Income tax. People with low-wage jobs can’t afford to put money away in 401-K plans, and shelter their health insurance as pre-tax dollars. They probably aren’t enjoying the cap on long-term capital gains, or investing in tax-free municipal bonds. I’ll take a $1,500 deduction this year because I bought a low-emissions vehicle that cost what a person earning $35,000 couldn’t afford. And then there is Social Security. Money you make “investing” is Social Security tax free. Only wages count, and even with wages after you earn $80-something thousand dollars, you don’t have to pay any more. Or to use the Congressional Budget Office figures the people in the lowest quartile of wage earners pay an effective “Social Insurance” Tax (Social Security and Medicare) of 8.3%, while the top 1% of wage earners pays only 2.3% (and if they live on investments, zero).

    I really think that argument that if taxes go up too high that people would stop working is really funny. In 1950, the year I was born, the top marginal tax rate was 84.36% on income over $400,000for a married taxpayer. The the top rate was never under 50% until 1987. Today it’s 35% for income over $311,950, but only 20% on long-term gains from the stock market and 0% on those municipal bonds. So in comparison, today’s taxes on the wealthy are just a fraction of what they used to be, but I seem to recall people working hard in the 50’s.

    I don’t know who the rich are, and how they spend their money. But I know that the poor spend all they get, and that spending is consumption, and consumption creates jobs. Anonymous can try to make the argument that economic activity of the rich creates more jobs or helps the economy more than the economic activity of the poor on a per-dollar basis, but I doubt it will succeed.

    Last time I checked, we had a fairly large amount of forced charity in this country. Look at the Federal budget. Can you spell “MEDICAID” or “CHIP”?

    Over the last 10 years, I’ve paid out over $300,000 in Federal Income Tax. So I think no one can accuse me of letting someone else do it. I would be quite content if by paying more taxes personally I could achieve some important social goals, such as national health insurance, and no child going to be hungry. I would think that people who earn 15 times as much as me should be even happier to share some.

  2. anonymous says:

    I disagree with your tax analogy. Did you know that 40% of Americans don’t pay ANY taxes at all. And, that
    to be considered “wealthy” in the U.S. you need to make only 35,000 dollars a year. So, Dave, where do you sit?
    Also, the top 1% of the “Rich” are getting that “large” amount of tax money back, because they make so much. A person making only $20,000 a year, would actually get a larger percentage of their taxes dollars back based on their smaller earnings. And the last time I checked, people making 20 grand a year are not the big investers in companies, the entrepenours, and or the mass creators of jobs in this country. If everyone would just pay a flat tax rate based on their earnings, you and others would still be crying and wanting to steal from the rich, and give to the poor. The last time I checked, we do not have forced “charity” in this country. I’m sure you would like that, except don’t take any of your hard earned cash, right? If everyone was a liberal, (a.k.a.Socialist), all the programs for healthcare or for the poor would go bankrupt, because people would stop working hard to get higher wages, because you liberals would just take more of it. So, nobody would be left to pay for anything, since everyone is looking for someone else to pay the bill.

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