June 30, 2007
The Bush Tax Cuts Benefit the Rich
because the 60,000,000 poor do not pay taxes. Under the Bush tax cuts, 15,000,000 "poor" taxpayers do not have to file tax returns. The next 45,000,000 taxpayers file but pay nothing in taxes. According to the non partisan Tax Foundation, the average low income household pays $1,684 in federal income and social security taxes ($22,013 in income) and receives $17,724 in federal transfer payments.
The so called, "rich" now shoulder virtually all the federal tax burden. They pay most of the taxes now. The top 1% of filers in 2004 paid 36.9% of all taxes, the top 5% paid 57.1%, in other words, more than the remaining 95%!
There is a faulty claim that the tax cuts cost the government revenues. Not true! Tax revenues are up to 18.5% of Gross Domestic Product this year, above the average of 18.2% since 1960. When tax rates were reduced in 2003 from 20% and 10% to 15% and 5% the Congressional Budget Office expected capital gains revenues to rise from $50 billion to $68 billion by 2006. The reality was far more substantial. Capital gains rose to $103 billion, a gain of 106% and $35 billion more than the CBO opined. Tax cuts created government revenues when Kennedy did it, when Reagan did it, and when George W did it. When will those propagandists ever learn?
The final lie is that the tax cuts did not create faster economic growth. Since the last tranche of Bush tax cuts in May, 2003, real GDP has grown 13%, a bit more than 3.2% per year. Before that, from President Clinton’s final year in office, growth averaged 1.5%. It basically doubled after the tax cuts.
It doesn’t get much better than this!
If tax cuts are allowed to lapse, it could be big trouble for the economy. A study by economists Tracy Fuertsch and Ralph Rector found scrapping Bush tax cuts would:
- Deprive GDP of $75 billion per year
- Cost 709,000 jobs annually
- Lower personal income by $200 billion Investors Business Daily 6/14/07 p.A10
All Democrat candidates favor scrapping the tax cuts!
I, for one, will be happy. It will make my job of saving you taxes easier. You will be paying more of them to start with!
Brokers Will Have to Report Basis
when securities are sold. The effective date will be delayed to allow brokers time to program their computers. The reporting rule will apply to securities bought after enactment, so it will not take effect until 2009. Congress will pass this requirement as a way to curb underreporting of gains.
The rule will apply to stocks, bonds, mutual funds, options and REITs. Those who change brokers will have to tell the new broker the basis of the transferred securities. Kiplinger Tax Letter 6/1/07
If you do not keep the basis of the securities you will have to pay your accountant a substantial fund to reconstruct it.
If you have questions about the foregoing or any other financial matters, please call us.
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