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Thursday, February 12, 2009

The Stimulus' So Called Tax Cuts

The mammoth (1400 plus pages) stimulus agreement is out. Among several arguments for those supporting it is the idea that there is about 30% in tax cuts within the bill. Yet, a close examination of these so called tax cuts shows just how miniscule it all is.

1) The tax rebate.

It will be $400 per individual $800 per couple for anyone making $70,000 and less. It gets better though. They rebate will start happening in June. Starting in June each individual that is eligible will see a $13 reduction in their tax burden per week. This will continue until the end of the year when that reduction is $8 per week. That will continue until the $400 is paid out. For anyone to write this atrocity without laughter is itself a laugh. This so called tax cut is nothing more than window dressing to get the public to believe the Democrats are at all serious about tax cuts. Not only is this tax cut $400 but it is split over about six months and works out to $50 monthly.

Let's put this in perspective. President Obama has called this the worst crisis since the Great Depression. He has proclaimed that without swift action this will turn into a catastrophe. Then, he turns around and makes policy that everyone making less than $70,000 yearly receives an extra $13 weekly for a few months. Then, that $13 weekly turns into $8 weekly until it runs out. It runs out until all these folks receive a grand total of $400. Does the language match the Dollar amounts?

2) The AMT

This is in fact not even a tax cut at all. All it is, is a stop gap to make sure that millions of middle class tax payers aren't hit with the Alternative Minimum Tax. There is no tax cut here. All that's here is a measure to make sure that millions aren't whacked with a tax increase they don't expect.

3) The housing credit

This was supposed to be $15,000 for anyone purchasing a property this year. Instead, there is only a $8000 credit for first time homebuyers, and this credit goes away at the end of August.

4) The car credit.

For car buyers, they can deduct the sales tax on their income tax. In other words, the sales tax on cars this year is subsidized.

That, folks, is the sum total of the so called tax cuts in this bill.


Jim said...

How'd Bush's massive tax cuts work out for the economy???

The Supply Sider's answer to everything - tax cuts.

Tax cuts never stimulated the economy and never will. They're merely an illusion created by the loony right.

mike volpe said...

That is a terribly uneducated comment. When Bush got into office, we were at the beginning of a recession. That was perpetuated by 9/11, and made even worse by Enron et al. Then, we had the Bush tax cuts and within a year and a half the economy began creating jobs and that didn't stop until the beginning of 2007. You can blame Bush for the economic performance but supply side, that is unbelievably uneducated.

Anonymous said...

Tax cuts in the federal withholding are more successful than lump sums. Read up on it:

mike volpe said...

Maybe, though, in fact, tax cuts that are perpetual and permanent are the most successful. That said, if you think putting an extra $13 per week into someone's paycheck and doing it for six months will have anything more than a negligible effect on anything, you are economically braindead.

I am for perpetual tax cuts as well, however to be effective they have to be more than $13 per week for a few months.

Anonymous said...

this is a silly and disingenuous summary. here is a more exhaustive list of tax cuts.

mike volpe said...

That summary is of what the Senate passed. The final bill has many of those tax cuts removed.

rachel said...

I haven't heard anything about cutting any spending (WASTE) in this bill. If they would stop the wasteful spending, they could offer better tax cuts and incentives to stimulate the economy. But that's not really what this is all about, is it. It's about growing government's power... over all our lives.

Fascist pigs.

Anonymous said...

Unless you're in the 100% tax bracket, deducting car sales tax is not the same as no car sales tax.

Anonymous said...

Besides the amazingly unknown and probably unknowable contents of this bill, what really amazes me is the speed in which the bill was put together. Me thinks that the parts that make up the bill have been written for years and have been waiting for the perfect opportunity to move them. They got it.