Bush tax cut e-mail

[hay rick]

I received this e-mail from one of my Republican friends the other day. At the bottom of the letter I have added a few "inconvenient truths" that seem to have escaped the writer's notice.

> Can you handle The Truth of Taxation
>
> After watching a focus group of democrats that watched the democratic debate the other day in Vegas, I literally wanted to puke. For the most part, all of them bashed Bush over and over again on how he is out for his millionaire friends and the big oil companies and he has totally forgotten or disregarded the little guy. So being an ex-IRS employee, I decided to look back on the tax tables to see if there is any truth to what they said and the media keeps stating as fact, “Bush is only out for the rich in this country.
>
> Based on using the actual tax tables (see link below), here are some examples on what the taxes were/are on various amounts of income for both singles and married couples… so let’s see if the Bush tax cuts only helped the rich. http://www.taxfoundation.org/publications/show/151.html
>
> Taxes under Clinton 1999 Taxes under Bush 2008
> Single making 30K - tax $8,400 Single making 30K - tax $4,500
> Single making 50K - tax $14,000 Single making 50K - tax $12,500
> Single making 75K - tax $23,250 Single making 75K - tax $18,750
> Married making 60K - tax $16,800 Married making 60K - tax $9,000
> Married making 75K - tax $21,000 Married making 75K - tax $18,750
> Married making 125K - tax $38,750 Married making 125K - tax $31,250
>
> If you want to know just how effective the mainstream media is, it is amazing how many people that fall into the categories above think Bush is screwing them and Bill Clinton was the greatest President ever. If any democrat is elected, ALL of them say they will repeal the Bush tax cuts and a good portion of the people that fall into the categories above can’t wait for it to happen. This is like the movie the Sting with Paul Newman, you scam somebody out of some money and they don’t even know what happened. Now this is effective (maybe not honest) marketing or maybe a better word is brain washing.
>
> NOW, CAN YOU HANDLE THE TRUTH??

Inconvenient truth number 1.

Neither Obama or Clinton has advocated repealing tax cuts for people in the tax brackets that the author lists. They both speak of eliminating cuts for taxpayers earning in excess of $250,000 per year. In fact, both candidates speak of expanding tax cuts and/or tax credits for the middle class. Taxes that mainly impact the rich and which Democrats would like to see restored to former levels, or at least higher than current levels, are the capital gains, dividend, and inheritance taxes.

Inconvenient truth number 2.

The numbers he claims to get from the referenced tax tables are not the numbers you actually get if you apply the tax tables to the example incomes. I do the author's first example below. Try it yourself!

Married Filing Jointly 2008 Single 2008
Marginal Tax Brackets Marginal Tax Brackets
Tax Rate Over But Not Over Tax Rate Over But Not Over
10.0% $0 $16,050 10.0% $0 $8,025
15.0% $16,050 $65,100 15.0% $8,025 $32,550
25.0% $65,100 $131,450 25.0% $32,550 $78,850
28.0% $131,450 $200,300 28.0% $78,850 $164,550

Married Filing Jointly 1999 Single 1999
Marginal Tax Brackets Marginal Tax Brackets
Tax Rate Over But Not Over Tax Rate Over But Not Over
15.0% $0 $43,050 15.0% $0 $25,750
28.0% $43,050 $104,050 28.0% $25,750 $62,450
31.0% $104,050 $158,550 31.0% $62,450 $130,250

The author's numbers:
1999 (Clinton) Single making 30K - tax $8,400
2008 (Bush) Single making 30K - tax $4,500
claimed difference: $3,900

Actual numbers from tables:
1999 (Clinton) Single making 30K - tax $5,052
(0.15 x $25,750 = $3,862.50) + (0.28 x $4,250 = $1,190) = $5,052.50
2008 (Bush) Single making 30K - tax $4,099
(0.10 x $8,025 = $802.50) + (0.15 x $21,975 = $3,296.25) = $4,098.75 actual difference: $953

In this case, 76% of the claimed "tax cut" evaporates as soon as you actually do the math.

Inconvenient truth number 3.

Inflation breeds bracket creep. This phenomenon is simultaneously creating the Alternative Minimum Tax predicament. The author neglects to adjust incomes for inflation in his examples, thereby avoiding the effects of bracket creep. Let's correct that "oversight" for him. Here's an inflation calculator- http://www.westegg.com/inflation/
The calculator only goes up to 2007, so I will use 1998-2007 as a proxy for my example. The calculator says I need approximately $38,619.94 to maintain purchasing power equivalent to $30,000 in 1999. Going back to the tax tables, the tax on this equivalent income is $5,998. The Bush "tax cut" is now actually a tax increase. In fairness, the increase is in inflation-debased dollars and is offset by increased income. However, whatever is left of the "middle class" part of the Bush tax cuts is looking pretty trivial by now.
If only the story ended there.

Inconvenient truth number 4.

Deficit spending. Is a tax cut really a tax cut if it is accompanied by borrowing that exceeds the amount of the tax cut several times over? The borrowed money will have to be repaid with interest in the future, either by current tax payers or their descendants. Of course, it is impossible to know how much of the deficit will be repaid by current taxpayers and when. The total amounts, however, are well known. The total federal budget data for the chart below is taken from the non-partisan Congressional Budget Office. Draw your own conclusions. All figures are in billions.

Year Income Tax Receipts On-Budget Deficit* Total Deficit
2000 Clinton 1,004.5 86.4 (surplus) 236.2 (surplus)
2001 Bush 994.3 -32.4 128.2 (surplus)
2002 858.3 -317.4 -157.8
2003 793.7 -538.4 -377.6
2004 809.0 -568.0 -412.7
2005 927.2 -493.6 -318.3
2006 1,043.9 -434.5 -248.2
2007 1,163.5 -344.3 -162.8

*The on-budget deficit excludes the Social Security "surplus" which is borrowed by the Treasury to pay current expenses. That money is owed to retirees in the future. If it is not repaid in full, the Bush tax cuts will also turn out to be benefit cuts.

[Lasher]

1. I found this while doing a propaganda debunking search

Too bad it didn't get much attention. It's pretty good work. Think I'll cross-post in the propaganda debunking forum.

Lasher

[NMDemDist2]

2. where is the debunking forum?? n/t

[Lasher]

4. Click on the 'Lobby' icon at the top of where you are now.

Then scroll down to 'DU Groups'. It's not a forum as I said, but a group. There, under the heading, 'Politics, Issues & Media', you will find the 'Propaganda Debunking' group.

Or you can just hit this link:

http://www.democraticunderground.com/discuss/duboard.ph...

Lasher

[NMDemDist2]

5. thanks I added it to my forums and will help list things over there n/t

[Lasher]

6. Good on you, AZDem!

It's easy to debunk almost all these lies, they are so lame. But there are so many, one person alone will not be able to keep up with all the GOP liemails. That's one reason we need one another.

Lasher

[Lasher]

3. Oops

Edit: Posted reply in the wrong place. Duh.

[Narkos]

7. Go to their website...

they debunk the incorrectly calculated tax rates...We need to get on this one, because I've already had this forwarded by 3 different people. Need to be aggressive responding to these right wing forwards!
http://www.taxfoundation.org/blog/show/22958.html

[hay rick]

8. thanks for the link n/t

[B Calm]

9. Since this e-mail is making the rounds, KICK

[TaxUser]

10. Lets just enact the FairTax system

I hear from so many people that say lets just raise the taxes on Corporations to get them to pay our taxes. Sounds great doesn't it? Only one problem Corporations don't pay taxes, they just add any tax we impose on them into their products price. You can play the shell game all you want but in the end the individual consumer and wage earner pays all the taxes. So I say why play games and spread this tax out so everyone pays their fair share. Implement the FairTax. It eliminates all taxes except one at the register such that when you walk away from the register you would have paid 23% of the money you spent on federal taxes. The best part is the first $20,000 or so the taxes are rebated to you so you won't have taxes on the necessities of life. If you want to save for a house or car you can save and invest without taxes and you could even buy a used car or house that had the taxes already paid. Go to http://www.fairtax.org to find out more ... I would like to see the taxes embedded into the advertised price like gasoline the price you see is the price you pay. If congress wants to raise taxes then they will do it for everyone and everyone will get a bigger rebate check each month. In this tax system everyone pays their fair share even the drug dealers and rich people. Rich people spend more so they contribute more in taxes. Business will stop moving jobs out of the country it will be a tax haven for them there will be lots of jobs moving here.

The FairTax:

Enables workers to keep their entire paychecks
Enables retirees to keep their entire pensions
Refunds in advance the tax on purchases of basic necessities
Allows American products to compete fairly
Brings transparency and accountability to tax policy
Ensures Social Security and Medicare funding
Closes all loopholes and brings fairness to taxation
Abolishes the IRS

See more at: http://www.fairtax.org

[Narkos]

11. Fair Tax? We've heard the arguments from tax expert

Neal Boortz, a right wing radio guy. Here's what the adults say.
http://www.opinionjournal.com/extra/?id=110010523

And this
http://mediamatters.org/items/200605260004

Basicall,the Fair Tax as proposed is NOT revenue neutral, and actually will make things more complicated. Does the tax code need to be simplified and changed? Maybe. But you wingnuts need to realize is that there is NO FREE LUNCH! Get with the program.

[rjgarment]

12. I got this uninformed e-mail as well.

It boggles my mind that people actually believe this crap. I actually just did a little breakdown of it myself @ The Garment File

Check it out, let me know if it's accurate or if I'm missing the big picture.

Thanks!