Monday, February 27, 2006

A triple tax whammy!

The Bushies crow about the unemployment rate as proof that their "trickle-down" tax cuts are fueling the economy (there's that word again -- fuel). But they don't count people who are unemployed for longer than six months. Contrast the U.S. Department of Labor rate of 4.9 percent to the rate estimated by economists able to decipher government press releases -- more than 8 percent.

Despite his promises, Bush's tax cuts in 2001 and 2002 did not create jobs. So he cut taxes again in 2003. He now claims 4 million jobs created since 2003, but 2.8 million of those jobs resulted directly from government spending. If this puny job growth is due to his tax cuts, then why the 18 million new jobs created in Clinton's first six years with a tax increase?

Since 2001, 70 percent of U.S. income growth has gone to corporate profits despite worker productivity increasing three times faster than wages. In the seven preceding business cycles, 77 percent of the income growth went to wages.

Updated Bureau of Labor Statistics job data from 2001 through 2006 analyzed by MBG Information Services shows:

We are more than 7 million jobs short of keeping up with population growth alone.

A loss of 2.9 million manufacturing jobs, close to 17 percent of this entire work force. Examples: communications equipment, down 43 percent; computers and electronics, down 30 percent; textile mills, down 43 percent; clothing manufacturing, down 50 percent.

All job growth has been in service-related areas -- credit, social assistance, waitresses, state and local government, etc.

But we are an "ownership society," remember? And you own lots more than you used to, thanks to housing values. It is a shame that many have had to borrow on this increase just to afford basics. Try to keep your greater wealth in mind while pumping black gold into your tank.

Of great interest, especially with obscene oil company profits, is the following from Daily Kos:

"New projections, buried in the Interior Department's just-published budget plan, anticipate that the government will let companies pump about $65 billion worth of oil and natural gas from federal territory over the next five years without paying any royalties to the government ... the government will give up more than $7 billion in payments between now and 2011 ... even though the administration assumes that oil prices will remain above $50 a barrel."



Tax-cut criticisms ignore the real prosperity

In answer to Adam Metcalf's letter of Feb. 18, I would like to refute some of his misguided liberal letter. It is merely a re-hash of the same whining we have heard for the last five years.

In the first place, many of the so-called "tax cuts" were timed and only kicked in over several years. And even at the beginning, the tax cuts were supposed to be "revenue neutral." All this meant was that the IRS took from one and gave to another. Actually, however, I recently read that in 2005, the government collected more tax revenue than in any other year in history. So much for "tax cuts"!

Actually, the one tax cut that was unnoticed at first and one that has spurred one of the greatest economic boons in history was the little-noticed one that said that if you had lived in your home for more than two years and sold it for a gain, that gain was not taxable. At first, it was good only for a lifetime limit of $250,000 per person but later, this limitation was removed.

This tax cut has spurred that greatest boom that has reverberated throughout America. The couple that bought a home in California in 1975 for, say, $75,000, found that they could sell it for $500,000 and pay no tax. So they sold the place, came to Idaho perhaps, and found that they could buy or build a new place (maybe even larger than the old one) for $200,000 with $20,000 or less down. So they buy the new place and retire -- no tax.

There is only one way to treat taxes, and that is to expand the tax base and lower the rate. Also, get away from the Communist Manifesto-recommended income tax and put our system on a basis of spending rather than on income. There is no problem of definition when you spend something, but income can vary tremendously, depending on who is doing the definition.


Twin Falls

Duard Lawley’s defense of the “boom” produced by gain from sale of your home only tells half of the story. Those windfalls exist because all Americans are paying significantly more for basic housing. And face it, Duard, whether you or the talking heads want to blame the uproar on liberals, more and more conservatives of conscience are adding to the noise.

Most readers have already received the majority of their cuts from the 2001 legislation. However, 80 percent of the windfall for the wealthy is scheduled to come from tax changes that phase in after 2005. If the Bush tax reductions are still in place by 2010, we will see 52 percent of the cuts go to the richest one percent.

Lawley’s statement that “in 2005, the government collected more tax revenue than in any other year in much for tax cuts!” inspires a hoot of derision. This increased tax revenue wasn’t enough to make up for the shortfalls which have developed since 2000.

The Center on Budget and Policy Priorities reports “much of the recent growth of (tax) revenues has occurred because of a boom in corporate tax receipts rather than in taxes on wages and salaries. This is consistent with the notion of increased income inequality, and is consistent with revenues exceeding expectations at the same time that overall economic growth has not.” Fifty billion dollars of that 2005 revenue came from expiration of a business tax at the end of 2004.

Former chairman of the President’s Council of Economic Advisers, N. Gregory Mankiw, author of an introductory economics text book, wrote that any economist who claims that tax cuts pay for themselves is a “snake oil salesman who is trying to sell a miracle cure.” But Rattlesnake George recently said, “...this tax relief not only has helped our economy, but it’s helped the federal budget...You cut taxes and the tax revenues increase.”

For several years now, consumer spending and the real estate market have helped maintain the economy. Unfortunately, most of this outlay came via new consumer debt; not because your average American is better off. Consumer debt is already unbearable and the real estate boom is slowing; what will take their place?

Mr. Lawley writes “income can vary tremendously, depending on who is doing the definition.” So can information on the economy “vary tremendously, depending on who is doing the definition.”

Sharon Metcalf

No comments: