:: Closing Time ::

:: Wednesday, May 21, 2003 ::

I hope to fucking God that C-Tone chooses to read this one. I'm sure his arrogant ass which "gets sick at some of the things I write" and "doesn't honestly believe that I believe what I'm saying" can learn something.

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First, from Reuters:

Two of America's Richest Assail Bush Tax Cut
Tue May 20, 5:23 PM ET Add Politics to My Yahoo!



NEW YORK (Reuters) - You would think two of the wealthiest Americans would have no problem with a tax cut that would put thousands, if not millions, of dollars in their pockets.



But billionaire investors Warren Buffett (news - web sites) and George Soros, Nos. 2 and 24 on Forbes Magazine's list of the 400 richest Americans, both railed on Tuesday against President Bush (news - web sites)'s plan to deepen income tax cuts and eliminate taxes on corporate dividends.


Bush, who has campaigned around the country touting the plan as a way of creating jobs and boosting stock prices, is pressing for final agreement this week as Congress wrangles to fit the package into a $350 billion limit set by the Senate.


In an opinion article in the Washington Post, Buffett, the chairman of holding company Berkshire Hathaway, said he already pays about the same income tax rate as his receptionist -- about 30 percent.


But Buffett said with the planned dividend tax cut, he conceivably could pay a mere 3 percent in income taxes. Recalling President John F. Kennedy's declaration that Americans should "pay any price, bear any burden" for the country, Buffett said a 3 percent income tax rate "seems a bit light."


"Supporters of making dividends tax free like to paint critics as promoters of class warfare. The fact is, however, their proposal promotes class welfare. For my class," wrote Buffett, whose wealth is estimated at $36 billion.


Soros, renowned for both his swashbuckling speculative bets on currencies as well as his philanthropic work, dismissed the tax cuts. He said they would not revive the U.S. economy in the short-term but were only aimed at helping the rich get richer.


"This move is designed not to have much impact now. It's designed to have an impact over an extended period and it's basically using the recession to redistribute income to the wealthy," Soros said in an interview with financial news network CNBC.


"I think that is really not a very effective way of using a deficit," said Soros, whose wealth is estimated at $6 billion.

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Now, my response. I admit it's probably not 100% accurate but the point is pretty damn clear, and the concepts are correct:

It's widely accepted that Bush's tax cuts are practicing something called Trickle Down economics.

Regan tried it, and put the country billions and billions of dollars in debt. Bush senior tried it and got us nowhere. Clinton abolished it and the country boomed for almost a decade.

Most real, unbiased economists understand fundamentally why trickle down can't work: study after study shows that people do not spend all the money they get. They usually spend anywhere from 3/5 - 4/5 of it, saving the rest for "hard times" or in an attempt to hold wealth and eventually produce more income. This is all natural and fine.

Here's where trickle down comes in: trickle down proposes that by putting money in the hands of corporations and the rich, they will spend more money, create more office/stores/jobs, and put that money in the hands of the common man.

Listen to the details though, and think about the realities: By putting money into a corporation, at most only 4/5 of that gets to the corporate employees - the rest is used in investment to make the corporation grow. Ignore for the moment that the rich are also the most paid of those corporations, and assume even then that the upper middle class employees in the corporation spend 4/5 of the money the corporation spends on them. (in reality, most coroporate workers will be paid 1/10 or less than what their supervisors, the already rich, will. So only like 2/5 of that money ever makes it into the next step) That 4/5 will then be spent at retails stores on retail goods. The store takes a cut and then spends 4/5 of that money or so to pay their employees more and FINALLY, create more jobs. Now let's do the math:

Of the original tax cut sum (for number's sake let's call it 1 Billion):

$200M goes to the corporation
$160M goes to the corporate workers (divide this and all subsequent numbers by two, realistically)
$128M goes to the retail stores

Finally, $512M go to the masses - except, at this level of branching, we're talking about hundreds of thousands of people, so you're only looking at a couple of hundred dollars a person.

Realize this is a contrived simulation: most real economic chains have more than 5 links, but the 3/5-4/5 figure is REAL, so every link it loses 20-40% of what's there. A six link chain here would have cost the people another $100M. This is also a fairly generous example - lots of places in the chain would very likely have spent closer to 3/5 than 4/5 of the additional income, most notably the upper links.

Even in this generous simulation, the people who actually need the money that's supposed to be stimulating the economy are only getting half of it. Realistically, that figure is more around 1/3.

Thus, an unrequested essay on Trickle Down economics and why, if you're not only a millionaire, President Bush is robbing you of your tax dollars and your fair share of protection in this country.

I hope I've taught somebody something.

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And now, a quick moral statement.

If you're already a millionaire yes, this will probably make you a lot of money. But some of you greedy fucks who'll feel this is a perfectly good reason to support it need to start having an ounce of moral concience and realize that some people simply aren't born into situations where they can make that kind of money. Nine out of ten of you are NOT entirely self made.

I've said enough.

:: Peter 5:44 AM [+] ::
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