do these people who are protesting realize that Obama has not put in his new tax code yet? they are fighting against Bush's tax code which is still in place.
Taxes are going to go up. The deficit can't continue for so many years without some tax increases. Lots of this spending also goes to consituents and plenty of earmarks are included. Of course Obama feels it's okay to have earmarks for government because it "trickles down" as opposed to earmarks for companies. Why not pay even more to the government to have more trickling down? To me paying the government more is more like trickling up than down. Though I would agree that Bush should be included in these protests. His lowering taxes while increasing spending = debt.
Here is a letter that was sent to me from a friend, it makes some good points:
I am honestly disgusted. This whole “tax protest” that has been going on is filled with people who are uneducated and who are buying in to mindless republican propaganda. No one likes taxes, but they are necessary. And if taxes are used correctly, they can actually HELP the economy and capitalism. People are also complaining of socialism and saying that Obama will raise taxes on the wealthy too much. These people do not realize that Obama’s tax policy still brings the wealthy to a tax rate lower than under Clinton, and a tax rate that is 10% lower than the one we had under Regan.
Reagan was inheriting a 70% marginal tax rate from Carter. Those tax cuts paid for themselves despite runaway spending. If the deficits continue for years to come taxes will have to increase much more than what Obama is proposing. Unless he wants to cut spending at some point.
In the rest of this article, I will cover why the republican argument protesting higher taxes and socialism is flawed beyond belief and is actually stopping the progression of capitalism instead of helping it.
Capitalism is about saving money and achieving financial independence for as many people as possible. What we've been seeing for 20 years is consumerism egged on by government loose monetary policies. People save less when they have to eat inflation. The reason the credit markets are locked up is precisely because of subprime loans that the government forced on banks (especially via ACORN) and that actually means the government wants investors to invest in risky assets at low interest rates. No investor in their right mind would do that unless they were promised that they were safe. Investment bankers just lied and packaged investments with a little bit of safe investments to get a fake AAA rating to sucker investors. I wish the private sector stood up to the government but they didn't. Government usually has moral suasion to influence markets. Bankers should only lend out to people who are less risk because most investors will not want to take on that risk themselves. That's why I'm more disgusted by protestors that saying "Capitalism is not working".
Our economic system, as the most successful ones are, is a mixture of capitalism and socialism. We have socialized programs like social security, medicaid, public schools, postal service, firefighters, policeman, and more. We are already partially socialist whether anyone realizes it or not. I wonder if these people at the tax tea party protests would ever tear up their social security check in protest, or turn away firefighters who have come to rescue them from their burning house, or send back a Medicaid check? Imagine if we did not have to pay as much taxes, but instead have to pay for all these services. In fact, if the police department was privatized the prices would be extremely high as the demand for protection is humongous. In fact, we are technically saving money by paying taxes for these services.
I agree with some of this and that many people applaud social spending but complain when the tax man comes. This is an eternal problem. There's no free lunch and some don't get it. Yet we know there is waste in government and that is the main reason to keep it lean.
Now of course there are those who say that they earned all of that money and they do not owe any of it to the government. This is a flawed statement. Because of the free market system that the government protects, that person was able to make a lot of money. That person therefore owes money to the American system which allowed them to get wealthy in the first place.
Assuming that the government actually spends this money wisely. Big assumption. I would agree that those who use tax shelters are hypocritical because they benefit from the military protection paid by others.
In fact, believe it or not, higher taxes on the rich can actually help the rich get more money, and help for more innovation, education, and competition in a free market society. Here are some important statistics:
The rich just increase prices or higher less or fire more. That's why Sweden has lowered their corporate tax rates to lower than the U.S. otherwise there would be no reason to start corporations there. Don't assume that the rich will stand still. Tax rates have to be competitive with other countries or they will move to more tax favorable countries.
95% of all people are employed by small businesses
90% of small businesses make $250,000 or less a year.
So, contrary to what most republicans believe, it is not the rich who provide the most jobs, but actually the middle class.
Here is another important statistic: when most people spend money, they usually spend it by buying products from large corporations.
95% of all people are employed by small businesses? What about the government? That statistic can't be right:
A 125-Year Picture of the Federal Government's Share of the Economy, 1950 to 2075
What about people who work for corporations that pay a different tax rate?
Read those statistics again.
Now, if we substantially cut taxes for the middle class, 95% of employers will have more money to expand their business, employ more people, and pay their employees more. Now once those people get paid their salary, statistics show that they will most likely spend it by buying products from the large corporations. So in this way, the large corporations get more money as well.
Obama is actually not reducing taxes for 95% of employees since many do not earn enough to pay taxes. That is why he wants to refund via a tax credits for those who already don't pay taxes. Yet these tax credits come at the expense of social security which already has underfunded promises.
What I have detailed above is the best tax system. While it does tax the rich more, it conversely cuts taxes on most employers and eventually ends up helping the rich corporations. A rising tide lifts all boats. If the middle class is doing better, most likely the rich will be doing better. There is no free lunch- the middle class depends on the wealthy, and the wealthy depends on the middle class.
What creates a middle class is the middle class saving more money and joining the investor class. Investment in capital creates new jobs and capital creates more products and services so most people will see an increase in purchasing power. Also when the middle class invests they compete with the rich in ownership so the ownership spreads out across the population. If we spend all we have then all we have is our labor. If we get sick or hurt then we don't even have that. At minimum working people should be saving for an emergency fund and then paying off a mortgage. When they are middle aged and have a mortgage paid off they only have a decade or two to save for retirement. If social security gets watered down because of the aging population then the public will need those savings to reduce hardship.
The republican alternative does not cut taxes on the middle class, but substantially lowers taxes on the top 5% of income earners. This does not give the most money to most employers and only helps to create a bigger gap between the rich and the poor, essentially shrinking the middle class and providing less opportunities for the average person to achieve the American dream (creating a business and making money)
Taxes shouldn't be cut but spending. Borrowing money from foreigners to fund a tax cut is useless. Both Republicans and Democrats need to get that into their thick skulls.
Here is another interesting piece of information that should be obvious to most people: The better education a person gets, the more successful he or she will probably be. It is clear we need to invest more in our education system. If taxes helped put more money into our education system, more people would get a better education, and there would ultimately be more competition and more innovation in the economy. A better education system helps to progress the free market. Most republicans do not believe in investing more money into our education system, yet they complain that too many people are on welfare. Perhaps if some of those people got a better education and had more opportunities, they would not need to be on welfare.
Spending more money on education doesn't necessarily mean better workers. Many students go into psychology and sociology and have little use in the market place. What we need is more technical jobs and also a corporate tax regime that competes with other countries so new companies are started and foreign investors have a motivation to invest. Many students have the same problem as the tea party protestors. They want free education but hate the taxes when they graduate and get a job (if they get a job if education was "free").
Even though nobody likes paying taxes, it is still clear that higher taxes on the rich with lower taxes on the middle class is the best possible alternative that ultimately tries to help everyone in the economy in the best way (as outlined above). Another alternative that many people will suggest is to simply lower taxes on everybody. This is clearly not realistic. If we had lower taxes we would probably have to end up paying more money in other ways. Taxes pay for roads, government services, education, environmental investments, and more...
There's no leeway in cutting taxes as the deficit is in the trillions. Stop spending.
It is not a matter of bigger or smaller government, it is a matter of better government. Government is run by the people for the people. The whole republican argument of smaller government is flawed, because no candidate ever runs on a platform of saying they wont ever do anything because they do not believe in government. Every candidate runs on a platform of using the government to do things, hopefully things that benefit society. Government should use the liberal tax system and should invest more money into education- both of these things will bring capitalism into the future and will keep the American dream alive.
Taxes can only go so high before they sap the will of the public to produce more. I recommend looking at these videos on the limits of tax increases to solving budget problems:
YouTube - The Laffer Curve, Part I: Understanding the Theory
YouTube - The Laffer Curve, Part II: Reviewing the Evidence
YouTube - The Laffer Curve, Part III: Dynamic Scoring (Corrected)
There is some wiggle room for Obama to raise taxes but I doubt it will be enough to narrow the gap for years. I really hope there isn't a run on the dollar. The U.S. is lucky in someways in that the world is in recession at the same time so the investing public still look to the U.S. as like a gold standard. If that reputation disappears investors will go elsewhere.
