X-Envelope-to: politics@ohstvma.BITNET
X-VMS-To: IN%"politics@ohstvma"
MIME-version: 1.0
Content-type: TEXT/PLAIN; CHARSET=US-ASCII
Content-transfer-encoding: 7BIT
Newsgroups: bit.listserv.politics
Date:         Thu, 12 Nov 1992 16:34:32 -0500
From:         ZIMMERJ@WABASH.BITNET
Subject:      Re: buffing ... part I

>From: Andrew Allen <E7L8ALL@TOWSONVX.BITNET>

>the sort of across the board tax cuts that I have
>seen advocated by conservatives (note that there was no specific proposal
>in the materials that you posted) favor the wealthy also in sheer amount of
>benefit.

Yes, an across the board tax cut would favor the wealthy in that it would
improve their current position relative to the "non-wealthy."  However, when
you put these changes into a tax code that already favors the poor and
middle-class (on a federal income level, at least), the net result is to make
the system more egalitarian.

Of course, the federal income tax is not the only component of the tax code.
The estimates of the entire tax burden I've seen show that no one really knows
for sure who wins and who loses under the total tax system.  If I remember
right, it depends on your assumption of how firms treat the corporate income
tax.  Anyway, these studies are incredibly dated, so any new info would be nice.

>I would also argue that a tax cut that only puts a couple of
>hundred dollars in the hands of the average taxpayer is not going to
>stimulate much consumption-fueled growth.

You could argue that, but you would be wrong.  When you sum a few hundred
dollars over a few million taxpayers, the ammount adds up pretty quick.  I
agree, though, that such a tax cut probably wouldn't do much to improve the
economies long-run situation.

>The spending patterns of the wealthy are not driving the economy, so for the
economy's sake they do not need a tax cut.

Actually, it would be *far* easier to make the argument that the wealthy *do*
drive the economy.  The wealthy are, by definition, those that can afford to
save and thereby add to the capital stock, which increases long-run economic
performance.  The poor, by definition, have to spend almost all their income on
consumption, which may be nice in the short run, but not in the long run.  I
guess it really depends on the time frame you're concerned about.

>The spending patterns of the middle
>and lower classes *do* drive the economy, it would be profitable to give
>them a tax cut.

This is a non sequitor.  Aside from that, the above arguments apply.

>>       Part of the reason there are hundreds of tax exceptions and loopholes
>>is because the taxes are currently too high for the market to sustain.

>Another part of it is sheer greed and arrogance.

On the part of the government, maybe.  Most of the loopholes of which I'm aware
involve the government trying to "encourage" a taxpayer to undertake a
particular activity.

In any case, I agree with you that we ought to eliminate loopholes, but
probably for different reasons.

>When I throw a party I
>can't write it off as a business expense - Malcolm Forbes could and did,
>as do a lot of other wealthy individuals. I guess the greed part is
>obvious; the arrogance part is that this schmuck thought that he was
>doing something useful by wining and dining assorted wealthy schlumps
>on his private yacht.

Actually, most of these "business" deductions do, in fact, involve business.
That's still no reason for the loopholes to exist though.

You sure do show a lot of hostility toward those with a greater income than
yours.  Term like "schmuck" and "sclumps" imply more jealosy than intellectual
disagreement.

>I think you miss my point, my point is that the "free market" does not
>exist and if we were to somehow create it overnight it would devastate
>our economy,

Please explain/defend this statement.

> further, that large corporations are receiving benefits
>from government (ie., a form of insurance against market forces among other
>things) that they are not paying for.

Well, they DO pay corporate taxes, so they are actually paying for some of
these government services.

Do you agree or disagree with the gov't providing such insurance.  Given your
previous discussion of how its really the newly-unemployed people who get hurt
when a firm like GM goes under, I thought you would have supported this
insurance.  (For the record, I personally oppose it -- it just seems that
you're being inconsistent).

>Joe and Josephine have been trying to but Reagan's tacit policy of breaking
>the unions (we don't have to debate this do we?) wherever possible
>has severely diminished the capacity of J&J to do this.

Actually, Reagan merely tried to reduce the government's involvement in unions.
You might remember that unions derive most of their power from the fact that
the government has intervened on their behalf.  Making unions stand on their
own two feet in no way constitutes "breaking" a union, any more than a failure
to subsidize GM would constitute "breaking" GM.

>During inflationary times workers wages generally rise (though somewhat
>behind the curve of inflation) in response;

So their real income (purchasing power) falls.

>at the same time the workers
>who have invested in a home or anything bought on credit generally
>benefit by a net reduction in the original price of their purchase.

To the extent that they are debtors, they benefit from the real value of their
loan decreasing, yes.  However, inflation really kills the poor who earn the
minimum wage or are on fixed incomes (like retirees).  Do you advocate this?

>-other Andy

Jason
Comments: Gated by NETNEWS@AUVM.AMERICAN.EDU