2006-01-10
Philly boom from... tax cuts? (And for the rich!)
So here we have Phillidelphia rebounding from 40 years of losing residents. Why are so many people moving into Philly? PROPERTY TAX CUTS! Who saves the most? Those evil rich people. But how many non-rich people now make more money selling goods and services to those evil rich people? And how many non-rich people are becoming rich in this process? Should Philly politicians increase those tax rates, in order to get those evil rich people to pay more money?
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12 comments:
Kwame and Gov'r Granholm ought to read this article.
I agree. Detroit is overtaxing the poorest city in the nation. You can't get blood from a condemned building.
I talked to a guy yesterday who works for the city and just moved to the suburbs primarily because he will save on taxes. He moved to Redford which is essentially across the street from the Detroit city limits.
Nadir: But this is the exact argument used by the wicked free marketeers who claim that they stimulated the post-911 economy by cutting various income taxes. The Detroit city managers have rejected this basic tennent of economics. Even the ailing Big 3 automakers cut their prices in order to attract back customers. Would you rather have the tax income of an abandoned building taxed at 10%, or a thriving, bustling building taxed at 5%? Let's see, 10%xZero = Zero, versus 5% x $100,000 = $5,000.
The same goes for Detroit's income tax: get rid of it! It makes sense if you have too many people cramming into your city. But when people are fleeing, you must ask: Would I rather have zero income tax dollers, but lots of tax dollars from property taxes and sales taxes? These seem like easy math choices to me.
What worries me is that now Nadir might see that if "the rich" get their tax rates brought down to levels equal with everybody else, they will have more money to purchase things like Distorted Soul iTunes downloads, T-shirts, and beer mugs... or to purchase a car, produced by a bunch of guys who will have money for Distorited Soul concert tickets.
We already agree on ending corporate welfare. What's next, school vouchers?
At some point, Paul, someone told you that you were a comedian. They lied.
I certainly believe that the tax system should be reformed. We've discussed this before. I endorse a tax code similar to Japan's graduated scale. They put a heavier burden on the rich and the lower working class and poor pay no taxes at all.
I believe Bush's tax cuts were detrimental to the U.S. economy. You believe they were good because they helped you remodel your home. It was beneficial to you because of your income bracket, but for those in the lower rungs, there will be no pink living room walls in the near future.
Taxes should be used to help the people and build infrastructure like Canada does or Venezuela does or Japan does or France does.
Nadir: We agree on some important points here. I agree with you that taxes should be used to build infrastructure. An area where we might disagree is that I think that tax spending should be confined to such things. We might also disagree on the definition of "infrastructure". Perhaps we should try to define this term. Here is my first stab at it:
Infrastructure =
1. Roads (leased by owners of private vehicles via annual license fees and tolls).
2. Rail system (leased by private rail lines).
3. Government buildings (city hall, police station, jails).
4. Armed forces.
5. Airports (leased by private owners or airlines)
6. K-12 School buildings (I'm uncertain about this, but will accept it)
7. Welfare (I recommend more reforms)
Infrastructure does/should *NOT* include:
1. Sports stadiums.
2. Concert halls.
3. Fitness/recreation centers.
4. Subsidies to farmers.
Nadir: Here's where I think that Six and I (freemarketeers) differ from you and Tommy (godless commies) on the benefits of tax cuts / flat taxes. You guys think that I remodelled my house with money that I got from reduced tax rates. But I did not save $10,000 in taxes, even if you add the tax savings for all the years of the Bush tax cuts. Instead, I have $10,000 more to spend on remodelling my house because:
1) Although the part of the economy in which I reside is doing so poorly that I have not received a raise during this time, my segment of the economy is doing well enough that I have not yet been laid off.
2) The economy as a whole is doing so well that people are buying lots of homes, which has caused my home equity to increase, and interest rates to be very low.
Thus the "tax cuts for the rich" which directly gave Bill Gates perhaps a billion dollars and me only about $3,000, has indirectly given me many times more than $3,000. And consider the $10,000 portion of this money that I spent on my house: it paid workers at GE for my refrigerator, workers at Jen-Air for my stove, workers at Home Despot for my paint and brushes, etc. Your friend Jay got about $400 cash from me for fixing and painting my walls, and Andrew's illegal Mexican worker, Jesus (the Mexican nickname for is "Chuy") got $200 for painting walls and repairing some tiles. ETC.
Let's consider Jesus, who we can assume as an illegal worker got ZERO tax savings, because he works for cash and reports no income. If I am correct that Bush's tax cuts are responsible for me having this extra money (or even if you are correct that all the money that I spent on re-doing my house came from my direct tax cut benefits), Chuy got at least $200 that we know of from *MY* tax benefit. If you are correct that many other even richer people than me got bigger tax savings that they used to hire Jesus, we must give him thousands of dollars in benefits from the "tax cuts for the rich."
This is amazing how economics work. That $200 that I got directly from Bush's "tax cuts for the rich" has now provided $400 of benefits: painted walls and new tiling for me, and $200 for Jesus. But what did Jesus do with that $200? Perhaps he purchased $200 worth of cloths from a seamstress, Mary. Now we have 3x$200=$600 of benefits:
1. Paul: painted walls and new tiles.
2. Jesus: cloths for his kids.
3. Mary: $200.
But what does Marry do with her $200? Maybe she purchases tickets to a Distorted Soul concert, and some DS CDs/iTunes downloads. Now we have 4x$200 = $800 in benefits from "tax cuts for the wealthy!
1. Paul: painted walls and new tiles.
2. Jesus: cloths for his kids.
3. Mary: Distorted Soul concert experiance, and music files.
4. Nadir: $200
This goes on and on. What if that $200 instead had gone to the US Treasury? Now instead of a private citizen deciding where that $200 should go (rewarding Jesus for his painting and tiling skills), we have a centralized, distant, and currupt committe of politicians, who can use it for such things as corn subsidies or arresting some productive citizen for consuming cocaine. Yes, there is also a multiplying effect here. Thus we confront the question: which stimulates the economy more, spending choices made by a committee of government officials, or those made by private citizens?
Certainly you and Tommy fail to understand that a tax savings of $10 million for Puff Daddy represents many times more than $10 million into the hands of non-wealthy people. Six and I realize this, and also believe that more people beneift, and do so in better ways, when Puff Daddy decides how to spend that money than when Ted Kennedy and George Bush do.
You and Tommy are "Kenseyans", and perhaps realize that when Ted Kennedy and George Bush take $10 million from Puff Daddy, that the resulting govt spending choice will create the same sort of multiplying effect that Jesus, Mary, and Nadir experianced with my $200 payment to him. After all, Ted and George might have hired Jesus to paint the walls at the new, stupid Homeland Security office.
Six and I are "Free Marketeers", who believe that the multiplying effect is greater if initiated by a private citizen rather than by a committee. So I hope that from now on you and Tommy will stop discussing the tax cut benefits as being confined to the first stage of the money transfer, as if the money were chocolate bars or beer, that get consumed and enjoyed only by one person. What you and Tommy object to is not that Puff Daddy's $10 million dollar tax saving represents merely 10 million chocolate bars for Puff Daddy. What you and Tommy object to is Puff Daddy deciding how and where to plant those 10 million magic beans, rather than Ted Kennedy and George Bush.
Well, it would be nice if the theory that you and George Bush advance about these tax cuts was reality. It isn't, unfortunately.
Corporations took the tax savings and ran. They did not pass the revenue on to workers. Instead they are firing workers and are taking to additional savings (now from tax cuts and elimination of salaries) into "emerging markets" where they can pay workers $5.00 a day.
So you have more U.S. workers without jobs, which means they are not contributing ANY taxes to the government though YOUR president chooses to increase spending on a war of conquest in another country.
Puffy's tax savings has provided no benefit to the U.S. economy as a whole because he chose to outsource manufacturing of Sean John clothes to Chinese workers. He then markets them to the children of those unemployed U.S. workers.
The $3000 tax savings that you got made you feel like you could afford to take out a loan on your home's equity, and low interest rates helped you. The housing market is finally on the downswing because developers are finally realizing that fewer people can afford a new home when jobs are disappearing.
God forbid you get laid off from your job at Ford when you have added this loan payment to your monthly bills. They already eliminated a direct hire employee to hire you as a contractor because they receive the savings in benefits. What makes you think they won't eliminate your position and give it to an imported contractor from India who will work for even less money?
Trickle-down economics doesn't work. It never trickles down far enough.
Excellent point from Stephen Colbert last night: poverty rates increased in 2005 even though the stock market was up. Imagine that. The rich are getting richer and the poor are getting poorer.
===Nadir==
Puffy's tax savings has provided no benefit to the U.S. economy as a whole because he chose to outsource manufacturing of Sean John clothes to Chinese workers.
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Benefit to US citizens:
1) Less money spent on cloths.
2) More money into pockets of Chinese people.
3) Thus US citizens and Chinese have more moeny to purchase iPods and Distorted Soul iTunes downloads.
=====Nadir====
Excellent point from Stephen Colbert last night: poverty rates increased in 2005 even though the stock market was up. Imagine that. The rich are getting richer and the poor are getting poorer.
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Stephen Colbert is incorrect. Average US incomes are up, unemployment is down. "Poverty rates" include very poor people who immigrate here as well as newly minted 18-year-olds from the swelling newest generation. This population is indeed growing faster than the population as a whole. Those who trouble themselves to work hard and earn a skill or useful education have a very terrible future prospect... except in comparassion to every where else on earth! A growing economy provides little help for idle hands.
---Nadir
God forbid you get laid off from your job at Ford when you have added this loan payment to your monthly bills. They already eliminated a direct hire employee to hire you as a contractor because they receive the savings in benefits. What makes you think they won't eliminate your position and give it to an imported contractor from India who will work for even less money?
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Sadly I chose one of the few bad parts of the economy, and nation, to work and live. The US auto industry has made terrible choices over the years. The auto industry as a whole is booming, but not in Michigan, and not at Ford, GM, or Chrysler.
Are you aware of all the Boeing Airplanes that the Chinese are purchasing? Somehow, their $5/day residents will be purchasing a lot of tickets.
And Boeing employees will be purchasing Naidir iTunes downloads.
If liberals in Philly can learn that tax cuts are good, just maybe the ultra libs here in Baltimore might figure it out too. lol
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