Uncivil Rights

A BLOG rife with wit, sarcasm, and the endless joy which comes from taunting the socialistic and unpatriotic liberal left. Logical thoughts and musings ONLY need reply...unless you're really, really funny. You have the Uncivil Right to be an IDIOT. "Give me LIBERTY, or give me DEATH!"

Friday, October 22, 2004

Follow-up to Tax Breaks

Making Choices: Exploring The Tax Issue from the Cato Institute.

A few highlights for those (liberals) that learned to read in government schools:(

Bush's 2001 tax cut reduced income tax rates to stimulate greater working investment and entrepreneurship. As Bush has pointed out in debates with Sen. John Kerry, the cuts in the top rates were particularly important because of the heavy concentration of small businesses in those brackets. The substantial size of the tax cut at $1.35 trillion made fiscal sense because projections in 2001 showed that there was a huge $5.6 trillion budget surplus to work with.

In March 2002, Bush's enacted his next tax cut, which was designed to spur business investment in the wake of 9/11 and the lingering recession. Bush continued his focus on pro-growth tax cuts with the dividend and capital gains tax cuts of 2003.

Cutting dividend taxes helped solve a number of problems. U.S. corporations had relied too much on debt instead of equity financing because the tax code gave an advantage to interest over dividends. The 2003 tax law reduced this distortion to make the corporate sector more stable and efficient. High dividend taxes also caused companies to excessively retain earnings, which led to unproductive investments and was a contributing factor to recent corporate scandals.

The economy responded strongly to the dividend tax cut. The stock market soared after the tax cut's passage, and a recent Cato Institute study found that dividend payouts by Standard and Poor's 500 companies rose about 20 percent in the year following the cut.
Earlier this year, Bush signed into law an extension of some of his prior individual tax cuts. And he will sign a corporate tax bill passed by Congress this month. The bill has been criticized for the many special interest breaks it contains, but it also includes reforms to help U.S. firms compete in foreign markets.

While Bush's spending policies have been irresponsible, Kerry is promising more of the same with about $2 trillion in new spending. Kerry says that he would reverse some of Bush's tax cuts, but that would only pay for a fraction of his promised spending. Kerry is right to criticize Bush's big deficits, but his own promises undermine his claim to be the more fiscally responsible candidate. On spending, voters have little choice since both candidates embrace Big Government.

On taxes, the candidates have different philosophies, but they would find themselves dealing the same problems in the years ahead. For one thing, the next president will need to deal with concerns about America's tax competitiveness. Global markets are creating pressure for major reforms to the U.S. corporate tax, which has the second highest rate in the industrial world.

An excellent read.
totalkaosdave, 8:13 PM