Smart person needed to counter this RW e-mail re:Taxes

[Sannum]

received this E mail (in black) from a friend today-and I thought I would check out the actual numbers. What the writer says is apparently true-

I thought this was interesting and I ran these numbers through my tax software for both 1999 and 2007 (2008 isn't over yet-so that year would not be appropriate). It appears that the numbers listed in both categories are incorrect as the actual taxes were lower than represented in every single case. However, the point is well made-that in every case, taxes under the Bush Tax Cuts are significantly lower than they were in 1999 before he was elected. For a hypothetical taxpayer, I used the exact amounts of income shown (as wages) and took the standard deduction and the available exemptions (either single or married-as appropriate) with no other income or deductions. . I have shown the correct taxes in red-right alongside the numbers that were shown in the original E mail.


I do not know if the following is true but thought someone on the list would chime in:

I am sure some will attempt to discredit this. You decide.. Your vote does count..!!!

Their best system is to argue the minutiae until you stop caring.


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. www.taxfoundation.org/publications/show/151.html

Taxes under Clinton 1999 Taxes under Bush 2008 Should be 2007

Single making 30K - tax $8,400 $3,446 Single making 30K - tax $4,500 $2,800

Single making 50K - tax $14,000 $8,686 Single making 50K - tax $12,500 $6,743

Single making 75K - tax $23,250 $15,851 Single making 75K - tax $18,750 $12,993

Married making 60K - tax $16,800 $7,665 Married making 60K- tax $9,000 $7,846

Married making 75K - tax $21,000 $11,855 Married making 75K - tax $18,750 $19,723

Married making 125K - tax $38,750 $26,095 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.

[Selatius]

1. It's a bit more complicated than that, I'm afraid.

You see, even if you cut taxes at the lower income ends, that may be cancelled out if there is less federal government outlays to things such as infrastructure, education, and health care expenditures. With the penny pinching and the money spent on the so-called "war on terror," spending in those important categories have either been cut or frozen.

As a result, individual states have had to raise sales taxes, which is inherently more regressive than a progressive income tax, as well as other taxes in order to make up the shortfalls. If you made 20,000 and got a tax cut under Bush, there's a fair chance that by now you ended up with nothing because the state legislature raised taxes to compensate for less funds from the government.

To the people at the bottom, the message is "tough luck."

That's not saying that taxes at the lower end should be raised; in fact, they shouldn't, but if one does believe in progressive taxation, the only tax cuts to take away would be on the top 1 percent of income earners, or even perhaps the top 10 percent. Removing cuts on capital gains alone would likely produce an enormous windfall, as well as ending the war in Iraq and cutting out pork from the Pentagon.

[Sannum]

3. Thanks!

I also found this article debunking the whole thing. Of course I sent it to the person and the list. Let the pissing contest begin!

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.

[mrcheerful]

5. Also the numb nuts that believe they got lower taxes under whats his face

never see past whats on their pay check. I had one chuckle head tell me he didn't see higher taxes on his pay check, then turned around and blamed Granholm for his property taxes raising. He couldn't grasp the concept that when pukes lower income tax and cut funding for schools, roads, fire dept, police that the state had to find ways to make up for the loss of fed funding. It's that boxed thinking of most people, everything is stored in nice little boxes and anything that doesn't fit their box system is thrown out as non sense. Like the freedom concept, in order to be free you have to allow others the same freedoms you want, left, right doesn't matter. Everyone is guilty of wanting restrictions on anothers freedom. When I hear someone say "there ought to be a law" my mind goes right into oh great just what we need less freedom because some nit wit is afraid.

[NMDemDist2]

2. i have seen this debunked twice in the last week

but a search isn't pulling it up

:banghead:

[zbdent]

4. married but inheriting their wealth

$0 taxes on capital gains (meaning money making money via interest and no labor involved) ... at least, the way that Republicans want it ...

[mrcheerful]

6. Or marrying a businessman then claiming they are self made women or men.

After all its hard work being a gold digger, what with the time and energy it takes to put on make up, the breast enlargment surgery and nips or tucks, so hubby doesn't get a new piece of eye candy. But damn it they worked hard to screw their way to the top and how dare the government take anything away from them. Republican women at their best me mine give me.

[zbdent]

8. and Bush is a prime example of being born on third and thinking he hit a triple

Grampy Senator, Daddy VP/Pres, and he fails at every business venture he touches, and gets bailed out because someone didn't have a condom handy ...

[NMDemDist2]

7. found it!

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x34392

[Sannum]

9. Waaaa!!! I was attacked by a right-winger!

This morning, I received a 'rebuttal'-probably from one of your E mail correspondents stating that my numbers were incorrect. She wrote:

"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!" (and if you do try it using the correct calculations, you will find out that she is wrong. She doesn't know how to calculate the tax correctly).


AND

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 (This is incorrect -as these tables are being applied to the gross income as if it were the taxable income)

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

When you actually do the math, you will find out that she is not correct; her arithmetic may be correct, but her reasoning and methodology is not !

Unfortunately, she either is being blatantly misleading or is ignorant of the way the taxes are computed-or didn't even bother to read my preface which stated that I took the income figures as gross income and then subtracted the standard deduction and the exemption amount to get at taxable income-before computing the actual tax.. These tables represent taxable income-not gross income. She herself said that the example is for a single person 'making' $30,000. 'Making' means gross income-not taxable-yet she applied the tables using $30,000 as taxable income.

This is the way it should be:
1999 2007

Gross income (making $30,000) $30,000 $30,000

Less: Standard Deduction -4,300 -5,350
Personal Exemption -2,750 -3,400

Taxable Income 22,950 21,250

Tax on this 'taxable income' 3,446 2,800

So you see, when the numbers are computed correctly (without a political agenda in mind), this same individual making $30,000 per year is indeed, paying less taxes than he would have paid back in 1999 on the same $30,000 of income. She made the same mistake that the original author of this E mail made. She applied the tax rates to the gross income w/o bothering to calculate the actual taxable income-to which the tables apply.

Like a typical "Bush Hater', she changes the subject by getting into Social Security, inheritance taxes, etc, which have nothing to do with the comparison.

She said that this was given to her by her 'assistant'; well, in the future, she should verify the information and methodology given to her-before she broadcasts it over the internet.

That's what I did, when I got the original E mail-which is why I put the correct figures down (in red) next to the figures provided by the original author. That person made the same mistake she did-and she didn't bother to verify the accuracy of the calculations.

I will assume that she didn't deliberately try to mislead-but that she just wasn't aware of the proper method of calculating the taxes and didn't bother to find out.