Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.2 9/18/84; site loral.UUCP Path: utzoo!watmath!clyde!bonnie!akgua!sdcsvax!sdcc6!loral!simard From: simard@loral.UUCP (Ray Simard) Newsgroups: net.politics Subject: Re: The WSJ on Reaganomics Message-ID: <652@loral.UUCP> Date: Thu, 15-Nov-84 21:54:55 EST Article-I.D.: loral.652 Posted: Thu Nov 15 21:54:55 1984 Date-Received: Sat, 17-Nov-84 03:51:10 EST References: <421@hogpd.UUCP> <333@whuxl.UUCP> Reply-To: simard@loral.UUCP (Ray Simard) Organization: Loral Instrumentation, San Diego, CA Lines: 78 Summary: In article <333@whuxl.UUCP> orb@whuxl.UUCP (SEVENER) writes: >>(Wall St. Journal quote showing increased share of tax revenues >> coming from wealthier taxpayers and lowered share from lower-income) >This is an impressive statistic. However I also find it more impressive >that for the first time in 40 years there has been a major shift in the >income distribution from the middle class and poor to the rich. >... When the majority of people making under $20,000 are facing a decline >in purchasing power or in their share of income relative to the wealthy >then they are going to pay less income taxes. The whole point of the discussion is that the belief that the Reagan tax cuts coddle the rich while savaging the poor is just so much crock. The WSJ figures prove that. Liberal have been saying that the rich were getting richer from the cuts while the poor were paying more. The WSJ figures categorically refute that position. The article above seems to concede that while trying (rather inconvincingly) to explain it away. The claim that income distribution has shifted from the poor and middle classes to the rich is a bit shaky. The middle income groups encompassing the overwhelming majority of citizens has benefitted largely in lower taxes, lower inflation preserving their savings and investments, and lower actual interest rates (and indications are that real interest rates are about to decline). The elderly on fixed incomes have also benefitted hugely by the drop in inflation. And programs for the poor, as I and others have said here before, are as high as they have ever been. Why does it bother some people when people who are "rich" continue to prosper? When they do, they employ, they invest, they consume, and they pay taxes, all of which benefit everyone, including the poor. It is provably false to continue to assert that the prosperity of middle and upper income groups subtracts from the poor, in fact, quite the opposite is true. > ...budget deficits have come down >from previous estimates that they would be even higher than they now are >due to economic expansion. But we are still facing enormous deficits greater >than any in our history. ...increases in interest payments >were larger than all the >cuts in social spending over Reagan's first four years. All true. The question remains, what approach works? Back to basic economic truth: the cost to the citizenry of government is the total it SPENDS (plus some), not what it taxes or borrows. Consequently, raising taxes to reduce deficits accomplishes only one thing: shifts the intolerable burden of government from the credit market to the taxpayer directly. Whether taxes are high or deficits are high, the result is the same - pain and cost for the middle American. The point is, reducuing spending is much more likely under pressure from lowered revenues than by waiting for politicians to see the light. > ..., we should recognize (tax deductions) are actually a form of tax >expenditure--a form of tax expenditure that heavily favors the rich since >they are only ones with the extra money to be able to afford many of the >things which gain tax deductions. >Tim Sevener whuxl!orb Some (not all) are just that. And why are they there? Because intolerably high marginal tax rates drove many wealthy people to persuade the government to grant them relief. So what do you have? Tax rates unfair to the rich, coupled with an array of dubious deductions that unfairly benefit them. Hard to say who wins that tug-of-war, but you can bet the middle and lower income groups are the losers. Funny how conservatives have tried to get tax rates lowered to get the rich to pay more and shelter less - and the actual figures which the WSJ printed which testify to the efficacy of that approach (and which prompted the article to which I am responding) prove that it's working exactly that way. -- [ I am not a stranger, but a friend you haven't met yet ] Ray Simard Loral Instrumentation, San Diego {ucbvax, ittvax!dcdwest}!sdcsvax!sdcc6!loral!simard ...Though we may sometimes disagree, You are still a friend to me!