Tax Cuts Won't Work

This article has some of the facts, but then miss some of the results. If people spend it, the economy goese up and they say that that tax cuts are good. If they "save" or invest in the 401(k), that money also gets "spent"/loaned out. If everyone put a lot of their money into savings, the banks balance sheets would look great and that would free up credit to borrow out to companies who can then produce jobs, hire people, and create more people "saving"...and this will lead into spending not only by the business borrowing the money, but also the people employed. If everyone put it into their 401(k), stocks would rise and confidence rises...spending increases. Many companies also hold a fair amount of their stock and this increase would help their balance sheet, thus being able to borrow more money to grow, hire more, spend more, etc etc.

This is all great for the economy. On the other hand government only redirect money from one person to another, and does this inefficiently. There are not many government agencies that are known for their efficiencies.

Final note: As a business owner I know that any extra money I bring in I will use to reinvest. What ever side of the table you are on....If I am a "bad, evil, greedy" business owner, I know that if I build my business I can make more and more and more money. If I am a "good" business owner, I also know building my business employs more people, helps my community, and creates stability in my business as I have better buying power being larger and can provide better deals. Either way....more jobs created, less unemployed people needing assistance, thus less need for tax dollars, and the larger I grow the more I put into the system while reducing the number of people dependent on the system in my business area.

I believe no income tax on the middle class would generate spending, An income tax above the level where the average person can actually begin saving, say one hundred and fifty thousand a year,, but put a federal sales tax on all purchases. This way there would be no such thing as working under the table. Illegal aliens would pay their fair share as well as drug dealers and corporations buying perks for their execs.

Economics 101: WHO creates jobs? Answer: Businesses - whether 1 or 2 person enterprises or giant corporations? WHERE does the investment capital come from to create those jobs? Answer: It comes from whatever is left over after subtracting expenses and taxes from gross income. If you want to assure that there are no new jobs created, by all means raise taxes. With high enough tax rates the government can sustain a recession indefinitely! Anyone who believes that government creates jobs is delusional; the governemnt can only reallocate [at well less than 100% efficiency] monies taken from people and corporations to other people and organizations. The current drivel that, somehow now, there's a free lunch and that governments can better spend money than those actually earning the money is just that, drivel!

http://online.wsj.com/article/SB123423402552366409.html

How much will the stimulus package moving in Congress really stimulate the economy?

By GARY S. BECKER and KEVIN M. MURPHY
Mr. Becker, the 1992 Nobel economics laureate, is professor of economics at the University of Chicago and senior fellow at the Hoover Institution. Mr. Murphy, a MacArthur Fellow, is an economics professor at the University of Chicago and a senior fellow at the Hoover Institution.

"The increased federal debt caused by this stimulus package has to be paid for eventually by higher taxes on households and businesses. Higher income and business taxes generally discourage effort and investments, and result in a larger social burden than the actual level of the tax revenue needed to finance the greater debt. The burden from higher taxes down the road has to be deducted both from any short-term stimulus provided by the spending program, and from its long-run effects on the economy. . . .

Our own view is that the short-term stimulus from the legislation before Congress will be smaller per dollar spent than is expected by many others because the package tries to combine short-term stimulus with long-term benefits to the economy. Unfortunately, short-term and long-term gains are in considerable conflict with each other. Moreover, it is very hard to spend wisely large sums in short periods of time. Nor can one ever forget that spending is not free, and ultimately it has to be financed by higher taxes."

Tax cuts don't help the unemployed.

We will never, ever convince republicans that tax breaks are not the answer! They would rewind the clock and do exactly the same thing, with the same result. Could be selective amnesia, concerning the past eight years.

Frankly I thought the "well he's a Harvard prof with a stable income" was petty and offensive and is implicitly and an hominem dismissal of someone with real stature whose voice carries significant weight. I am trying to imagine Gross employing such a rhetorical tactic against an Ivy League academic who happens to be liberal and/or favors what the Obama Administration is trying to do. Can only economists who are unemployed or have unstable incomes have valid opinions? Gosh - I heard Robert Reich make an almost identical argument to what Gross offers here. Sauce for the goose? Greg Mankiw's reply was gracious and respectful even as it quite clearly refuted Gross' error.

Thank you, Daniel, for making this point clear and easy-to-read for the short-attention-spanned, catch-phrase-loving, sound-bite-educated, right-of-center voter/citizen. Yes, typical Sarah Palin-loving Republicans, I'm talking about YOU!

GOP adopted 2001 FAILED Bush tax-cut package $1.35 trillion for the special 1% and its where we now , Strange enough 28 democratic senators can be bipartisan,freedom of ideology by leaving party whips not like GOP Voting pattern of ZERO in house,maybe its our faults sending KIDS to be lawmakers as they're obviously being told how to vote before the first meeting and only 3 Rep decides to go what's best to the country for mere stimulus 789 Billion use for own country not to mention 2 wars that cost almost 2 Trillion and 5,000 young American lives perished,really a bunch of lunatics from GOP and McCain desire and intention to add Wars with Iran or maybe N.Korea.Gosh 4 wars at one go?How vulnerable and bankrupt can USA be with this KIDS IF that prevail now?

*Breaking News* UAW Shrugs Off GM
http://www.themarketguardian.com/

Scooter, actually this article is for the most part correct. unfortunately the author did not back it up with statistics but they are out there.

The ridiculousness of this article is that it is just a story. Do you have any data at all about how people would respond in this manner? Is there any data that shows the MAJORITY of America would automatically put the money in savings! Good grief. I thought a professional writer would give us a bit more cold hard data then a made up story of a woman who might put extra money in savings. And another thing, it is the small businesses that have made America, so cutting back taxes for the small business man and self employed would help a TON, so do not try to explain with a made up story that tax cuts won't work.
I am blown away that Newsweek even let this story get posted because all it is is a story, fabricated, and has no data to back it up, which is what I thought NEWS was about.

You're saying that the government should keep taking the taxes because the single mother who's working two jobs does not have the right to spend her money that she's earned. You're saying that politicians know how to spend her money better than she does. You're saying that the stimulus bill should go through and that the worker should be allowed to use some of that money that she's earned, but only if she uses it in the way that the government tells her to (that is, in a way that the stimulus bill stipulates the money is to be spent). She cannot invest it, for she is just a scared little girl (as you describe her) who has no ability to manage the money that she has worked for, and that it is the DUTY of those elected politicians to manage it for her.

So, what's wrong with saving for a rainy day? When the citizens allow the government to leave money earned by its citizens in the citizens hands, it is a good thing. The savings will go far to heal our wounded banking system. One active citizen can make a difference.

So what's wrong with saving for a rainy day?

"Friday night rant" this :30 youtube clip here says it alal. Dammm Governement
http://www.themarketguardian.com/2009/02/friday-night-rant/