Bush to annonce $600 Bn Tax Cut

[Zkribbler]

Originally posted by Static23
... Given that we've never paid back a dime Reagan borrowed,

Not quite true. Clinton finally managed to balance the budget and to begin paying off the debt that Reagan ran up.

Unfortunately, the borrow-and-spend Republicans got back into office and economic responsibility was thrown out the window to make room for more tax cuts for the weathiest Americans.

[Dinner]

According to the people at the economist magaizine the economy is going to pull ahead by 2nd quarter of this year, with or with out Bush's 2nd millionair give away, and any effects of further tax cuts won't kick in for around one year from now plus they won't add up to much. Though the deficit created by this and previous Bush mismanagement will most definitely have an effect.

This is a conservative publication and they are adimately opposed to Bush's scheme.

[Lawrence of Arabia]

Yeah I get the economist. Except this one cuz theres some mixup with my subsciption.

[Static Universe]

Originally posted by Zkribbler

Not quite true. Clinton finally managed to balance the budget and to begin paying off the debt that Reagan ran up.

, well, he got a start on the interest anyway!

Unfortunately, the borrow-and-spend Republicans got back into office and economic responsibility was thrown out the window to make room for more tax cuts for the weathiest Americans.

Thanks god the adults are back in charge.

[Static Universe]

Originally posted by Oerdin
According to the people at the economist magaizine the economy is going to pull ahead by 2nd quarter of this year, with or with out Bush's 2nd millionair give away, and any effects of further tax cuts won't kick in for around one year from now plus they won't add up to much. Though the deficit created by this and previous Bush mismanagement will most definitely have an effect.

This is a conservative publication and they are adimately opposed to Bush's scheme.

It will be interesting to see how this plays out with the possible war in Iraq. The Economist usually has pretty could predictions, though.

[Lawrence of Arabia]

btw whats an earned income tax credit?

[Dinner]

It's a tax credit (not a rebate but a deduction) which people get to count against the income they made that year. The benifet is that if you are borderline the tax credit may place you in a lower tax bracket and thus you might pay less in taxes.

I don't know about you but that sounds like a lot of ifs and maybes.

[Static Universe]

Originally posted by Lawrence of Arabia
btw whats an earned income tax credit?

If you make less than a certain amount and depending on your number of dependants, you get a tax credit for working. If you pay less tax than the credit, you get the remainder as a refund. It's basically for people at the poverty level who might figure they would be better off on welfare

From the IRS website:

The Earned Income Tax Credit (EITC), sometimes called the Earned Income Credit (EIC), is a refundable Federal income tax credit for low-income working individuals and families. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. The credit reduces the amount of Federal tax owed and can result in a refund check. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

Income and family size determine the amount of the EITC. To qualify for the credit, both the earned income and the adjusted gross income for 2002 must be less than $29,201 for a taxpayer with one qualifying child ($30,201 for married filing jointly), $33,178 for a taxpayer with more than one qualifying child ($34,178 for married filing jointly), and $11,060 for a taxpayer with no qualifying children ($12,060 for married filing jointly).

[Lawrence of Arabia]

Its only credit, not real cash then, right? So if you increas that (like what Adam Smith said) then you increase the number of people who dont have to pay higher taxes, and thus are giving them a tax break. I wonder if there is any data on this.

[Static Universe]

Originally posted by Lawrence of Arabia
Its only credit, not real cash then, right? So if you increas that (like what Adam Smith said) then you increase the number of people who dont have to pay higher taxes, and thus are giving them a tax break. I wonder if there is any data on this.

It can be cash, depending on how much you pay in taxes. The point is that some of these people are at the welfare level, and they don't want them dropping out of the job market.

Increasing this is good stimulus, because these people will go out and spend the money, whereas at the higher income tax levels, these people spend what they will spend, and cutting their taxes may or may not result in higher spending. Right now they're just as likely to let it sit because interest rates are so low and the stock market so shaky.

[Ned]

NEW YORK (Reuters) - Stocks surged on Monday, bolstered by hopes the Bush administration's $600 billion economic stimulus plan can jump-start U.S. growth and help cure the market after a 3-year hangover.

President Bush is expected to announce the details of a $600 billion economic stimulus package on Tuesday that will include proposals to eliminate taxes on dividends, speed up reductions in income tax rates and allow companies to quickly write off more of their investments.

"We're seeing very constructive signs of lower tax rates and stimulus in the economy, which should help spur growth and, more importantly, spur some capital investment," said Michael Vogelzang, president of Boston Advisors, Inc."

[Static Universe]

Originally posted by Ned
NEW YORK (Reuters) - Stocks surged on Monday, bolstered by hopes the Bush administration's $600 billion economic stimulus plan can jump-start U.S. growth and help cure the market after a 3-year hangover.

I hate when they call it a "hangover."

President Bush is expected to announce the details of a $600 billion economic stimulus package on Tuesday that will include proposals to eliminate taxes on dividends, speed up reductions in income tax rates and allow companies to quickly write off more of their investments.

I have no problems with the first two, but the third is an accounting trick to show a profit by depreciating the investment faster than actual use. Since companies aren't investing in capital infrstructure now, they can manage the books better by not investing now and taking the write-off. With business to business prices falling, there's even more of an incentive to do this.

A tax rebate on new capital investment would be a better way to go, IMO.

[orange]

Originally posted by Ned
NEW YORK (Reuters) - Stocks surged on Monday, bolstered by hopes the Bush administration's $600 billion economic stimulus plan can jump-start U.S. growth and help cure the market after a 3-year hangover.

Yeah, right!

[orange]

"hmmm...buy...sell...i don't know Jon what do you think about this?"

"Well, normally I'd say sell. But you know Bush is planning to announce something about a 600 billion economic stimulus plan, so I guess I'm inclined to say buy."

"He is?!? Well no **** I'm buying! Give me a thousand shares!"

[Adam Smith]

Originally posted by Static23
The point is that some of these people are at the welfare level, and they don't want them dropping out of the job market.

That is exactly the point. Increasing the minimum wage crowds workers out of the labor market. Increasing the earned income tax credit is in effect a subsidy for working, which draws workers into the labor market.

Originally posted by Static23
but the third is an accounting trick to show a profit by depreciating the investment faster than actual use.

Depreciation is an expense, which reduces profits. Accelerated depreciation decreases profits and hence taxes now, and increases them in the future. The total amount of tax paid remains the same, but until the future taxes are due, the company has the money in hand to do with as it pleases. For example, it could invest the money, instead of paying it to the government. This amounts to a subsidy for capital investment.