Garrett Gruener is the founder of Ask.com, chief executive of Nanomix, the co-founder and director of the venture capital firm Alta Partners and a member of the advisory board at NDN, a center-left think tank in Washington. He wrote this for the Los Angeles Times.
“Almost a decade ago, President George W. Bush and his Republican colleagues in Congress pushed through a massive reduction in marginal tax rates, a reduction that benefitted the wealthy far more than other taxpayers.”
For nearly the last decade, I’ve paid income taxes at the lowest rates of my professional career. Before that, I paid at higher rates. And if you want the simple, honest truth, from my perspective as an entrepreneur, the fluctuation didn’t affect what I did with my money. None of my investments has ever been motivated by the rate at which I would have to pay personal income tax.
The supply-side, trickle-down economic policies of the last decade benefitted people like me, but the wealth didn’t trickle down. So while we did quite well, people who live from paycheck to paycheck didn’t
For more click http://www.southcoasttoday.com…
jasiu says
This is worth a read. A few snippets to entice you to click the link
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joets says
That website is still around?
demolisher says
why people who feel undertaxed don’t check the little box on their tax forms volunteering to pay more, and then do so.
ray-m says
IF tax cuts create jobs, where are they? We are currently operating under Bush Tax Cuts which were supposed to create jobs…yet unemployment is still around 10% , job creation is trickling in, but profits are soaring…that means the corporations are KEEPING their money rather than investing.
demolisher says
(of new taxes and regulations) is making them wait (to create new jobs)
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p>Face it, we are looking at a giant, garganutan tax increase in January unless the hapless Dem congress acts to extend the Bush tax cuts. But liberals love taxes and hate tax cuts so much that they are like deer in headlights right now – frozen.
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p>Add to that Obamacare and myriad new fees and regulations – I’ll tell you one thing, I would not hire right now! Extend the Bush tax cuts and kill Obama care and I’m all about growth.
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ray-m says
FOR TEN YEARS?
demolisher says
10 years out everyone assumes the problem will get solved. 2 years out they still do but they start talking about it. Right now we’re 4 months out, that’s well within budgetary decision making range for companies and individuals at all levels.
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p>Look, right now we all know that entitlements will completely bankrupt America within a generation. But is it influencing our actions? Are we doing anything about it? Only the most far sighted politicians are taking significant action while most of the rest either duck and cover, pretend there is no problem, or attack the people trying to solve it.
ray-m says
The arguement regarding tax cuts will create jobs is null and void if you look at the history.
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p>Under the Bush tax cuts there has been little job growth, the wages for the middle class(which is the backbone of our econoy) has remained stanant.
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p>When taxes are higher, corporations are more likely to invest in their business to “avoid” paying taxes on their entire profit.
somervilletom says
You wrote:
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p>This “giant, garganutan (sic) tax increase in January” was the tax policy your REPUBLICAN President Bush passed with a REPUBLICAN House and Senate. The experiment was tried and it didn’t work. The tax increase is YOURS, not ours.
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p>The Democrats propose to exempt nearly everybody in the extension they’ve already attempted to pass, multiple times. YOUR TEAM continues to hold 95% of the country hostage because YOUR TEAM wants to give more wealth to the already wealthy.
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p>So … a garganutan tax hike put into law by YOUR TEAM is about to take effect, because YOUR TEAM has blocked every effort to pass it because YOUR TEAM insists on giving even more wealth to the already wealthy — and YOUR TEAM loudly tries to blame all this on the Democrats.
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p>Go pound sand.
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p>Don’t like the “garganutan tax increase”? Then pass the bill as offered.
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p>The GOP ran this country for eight years, enacted massive tax cuts for the wealthy, and did just what they said they’d wanted to do since the Reagan era. This was going to “stimulate the economy”, “create jobs”, “improve the business climate”, etc., etc., etc.
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p>The result was the near-total collapse of the economy, avoided only by heroic efforts on the part of President Obama and his team — and fought every inch of the way by the same people who created the problem.
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p>Now, the “logic” is that the tax cuts didn’t work because they were “only” in effect ten years.
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p>This is the same-old same old. Let me reprise a summary of Republican economic theory that I posted here some time ago:
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p>When times are good (and deficits low), taxes should be cut and government spending slashed because “the government doesn’t need it.”
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p>When times are bad (and deficits high), taxes should be cut and government spending slashed because “the government can’t afford it.”
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p>Heads — the wealthy win; Tails — everybody else loses.
demolisher says
So, you claim to be on the side of logic and then you immediately say this:
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p>Nope.
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p>Democrats control the House, Senate and the Presidency.
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p>Republicans want to extend or make permanent the tax cuts.
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p>Democrats won’t do that unless they can screw over small business owners and other high earners, but even then they still won’t bring up a bill.
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p>Here is what is going to happen: Democrats are going to get destroyed in a bloodbath in November, and then the survivors can either extend the tax cuts during lame duck hour, or wait for the Republicans to do it in January.
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p>And then Obama can try to veto it.
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p>Then even you will see who is on the side of tax cuts, and who is on the side of tax increases.
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p>As if that were ever in doubt, hah!
somervilletom says
The tax increase that you so passionately object to was put into law by President Bush and a Republican House and Senate.
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p>President Obama and a Democratic House and Senate have put forward a bill that extends the tax cuts for all but the top 5% (some say 1%) of the population (by income, not wealth).
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p>The Republicans are holding the nation hostage, demanding yet another giveaway for the nation’s highest income earners as their ransom.
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p>At the moment, the reason that middle-class taxpayers are looking at a significant increase in January is that the Republicans have blocked every effort to avoid their own poison-pill from taking effect.
bigdog says
it was his continued push for everyone, regardless of ability and means to own a home, he repeatedly insisted that FNMA and FHMLC were sound and didn’t need reform, despite the calls for their reform as they posed a systemic risk to our economy if they failed.
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p>No amount of tax cuts could have overcome the devastating disaster created by and Barney Frank’s policies.
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p>Raising taxes, will not help to shorten the recovery however…
ray-m says
worldwide. How can you blame Barney for the housing bubble around the world?
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p>http://www.csmonitor.com/Busin…
demolisher says
…
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p>but seriously, Fannie and Freddie created the market for crappy loans in the US, which kicked off the whole deal. no way banks would have made junk loans if F&F weren’t salivating to buy them (under escalating pressure and quotas since the early Clinton years and always supported by Frank)
centralmassdad says
Yes, this sure played a role. But surely so did the vast amount of capital available to lend, and, to a MUCH, MUCH greater extent, the ability to obtain insurance against default by someone who didn’t even own the loan.
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p>That last is something like you being able to buy insurance on your neighbor’s house. You aren’t protecting your investment, and you have no incentive to protect the insured property. Indeed your incentive is to sneakily store oily rags under his porch.
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p>The problem is that this last issue can’t easily be blamed 100% on the other political party, and so it is ignored in favor of these other, minor things (Bush policies!) that are more suited to political lies myth-making.
centralmassdad says
I agree that entitlement spending is a time bomb. But that isn’t just because there are “entitlements” per se. It is because they are a form of government debt, of which there is simply too much.
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p>If only there were a party that acted as if this were so.
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p>In reality, taxes should go up. And spending on everything, including entitlements (and defense!) should be reduced. Period.
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p>Republicans dont give a toot about government debt. If they are returned to power, they won’t cut entitlement spending: last time, they increased entitlement spending MASSIVELY with medicare Part D. Ooh, maybe they’ll cut the entitlements to some people, like unemployment benefits, to free up some dough so the libertarians keep their generous Medicare benefits.
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p>They won’t cut defense spending. There’s a war on, we can’t cut defense spending! We need a weapons system that is of no use whatsoever in the wars we have been fighting for a decade! God bless America and the flag! And Jesus!
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p>They will reduce revenues, through this and other new tax cuts. Pretending that tax cuts increase revenues is patent ideological nonsense and nothing more.
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p>So while you’re right, it sure looks like you should be supporting some other party.
demolisher says
the wave of incumbents and establishment candidates on the GOP side going down in flames this season.
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p>Its the right party, right platform, just have to shake out the bad apples.
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p>The democratic system is full of bad incentives for politicians and I think it has yet to be proven that government will not expand infinitely. Maybe Europe will show us the way.
centralmassdad says
But I don’t see anyone with a lick of sense. They’re opposed to all kinds of junk that makes me suspect that they think there is a problem, but don’t really know what it is, like: the Federal Reserve, because we should be on the gold standard (gulp); TARP, because I guess we’d be more free, or something, without a financial system.
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p>The “anti-establishment” candidate in Delaware attacked her establishment opponent for wanting to cut Medicare!
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p>Meanwhile the national leadership of the party natters on about increasing defense spending and invading Iran, in addition to the two wars we presently have on the old front burner.
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p>I’m not really seeing much in the way of fiscal sanity. I’m seeing the same old Cut Taxes! and Vote for Spending, but Complain First GOP.
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p>Again, what is needed is that taxes need to RISE. The Bush cut should expire. It was lunacy to enact the cut in the midst of war anyway. Then defense spending has to be cut. Then entitlement spending needs to be cut: increased retirement age for Social Security by 2-5 years, for starters.
somervilletom says
I’m astonished! As much as you and I have sparred in the past, I enthusiastically agree with everything you’ve written here.
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p>We may take different routes, but it looks to me as though we arrive at the same destination:
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centralmassdad says
An apt description as any as my general relationship with liberalism, and why I vote Democrat more often (not 100%) than GOP.
mizjones says
SS is under attack by the oligarchs who can’t stand our nation’s most popular and successful social program.
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p>Cutting benefits now so that they do not need to be cut by equivalent amounts later is not the solution. They should not be cut, period. It is especially offensive that cuts are being proposed by the same group of people who drove the economy into a ditch.
somervilletom says
In 1935, when Social Security was implemented, the average life expectancy was 67 years. Today, it is 77. That greatly increases the actuarial cost of Social Security retirement benefits. The retirement age for men was reduced to 62 in 1961 — adding to the increased benefits cost.
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p>Many men and women today work productively well into their 70s — Matthew Carter just received a $500K MacArthur Fellowship at age 72.
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p>I think that two changes will solve the Social Security funding problem: (1) add 2-5 years to the retirement age, and (2) remove the limit on the payroll tax.
bigdog says
so the program was based on actuarial figures which insured that the majority of people who paid into the insurance fund as it was originally intended, would not be collecting, but for those who were indeed around, they would not be destitute for the short time they collected. Along the line, the program has morphed into a pension fund, which was never the intent and the program is not sustainable as the population ages and as the number of workers supporting the people collecting decreases.
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p>The bottom line, the program never kept pace with the changes in life expectancy and no one has the guts to be honest with people and make the necessary changes before it bankrupts our country.
stomv says
and floating out that 63 demonstrates just that.
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p>The shorter life expectancy in 1935 was due to infant mortality, childhood disease, and war loss — kids under 22 getting shot. You’ll note that none of those three groups would be expected to contribute to SSI — they didn’t make any money (or very much for very long).
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p>The key question is: what is the life expectancy for those who reach 18? 25? 45? It turns out that those numbers have not changed substantially in the past 70 years. They’ve edged upward, sure, but not by very much.
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p>The issue isn’t life expectancy. That hasn’t changed by enough to make a major impact, given that SSI retirement age has been pushed back in tweaks over the years.
bigdog says
regardless of the factors that contributed to life expectancy, the system was designed to have payers paying premiums, similar to workers comp, who would pay into the system with the understanding that they may never collect. The premiums were low, and it was designed to give a safety net to people that happened to live beyond the average life expectancy and who had retired.
Somewhere along the lines in the 50s, the system turned into a pension fund, and now we are paying for people to retire at 65 (not adjusted with the changes in society) and collect until they die (based on the new life expectancy). It is an actuary recipe for disaster and no one who wants to get re-elected has the guts to address.
mizjones says
The relevant figure is the life expectancy of a person once s/he reaches retirement age. As explained by Paul Krugman:
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p>Most people who do work past their mid-60s have comfortable desk jobs. What about policemen, firefighters, nurses, miners, and construction workers? From the same post,
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p>A payout that is delayed, with no compensation for the delay, is indeed a cut in benefits for the affected individual.
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p>Your second suggestion, to remove the payroll tax limit, would make the first suggestion unnecessary.
ray-m says
didn’t create jobs, with all your GOP tax cuts we shouldn’t be in a recession, we should have record low unemployment or even better FULL employment.
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p>Obama and the Democrats want to keep the tax cuts for those making a QUARTER MILLION and less. That equals to more than 4 THOUSAND a WEEK.
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p>BUT the GOP are holding working families hostage because they want to extend the tax cuts for the 1% of earners. WHY? To create jobs? Why will it create jobs…it hasn’t yet.
demolisher says
but you fail to support it with any data. In previous threads I’ve already addressed this, do I have to go do your research for you too?
ray-m says
That the Bush tax cuts haven’t created any jobs? Well are we in a recession? According to your ideology we should be climbing out of this recession faster than at any other point in our history.
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demolisher says
(Technically, we are no longer in a recession. Barney Frank says the economy is “poised to take off”!)
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p>Jobs that come from tax cuts will be seen as an upward swing some point after tax cuts occur and take effect. If you look at both Bush tax cuts (and all others) you can clearly see the economic benefit both in terms of jobs and GDP.
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p>Pending tax increases have the opposite effect. This is the case now.
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p>All that aside, once the effects of tax cuts or tax increases settles in, then the economy achieves some kind of balance that rolls in consideration of the current tax code. Tax cuts do not endlessly stimulate the economy at an increasing rate, any more than tax increases in general endlessly destroy it. But in the shortish term, both can have dramatic effects.
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p>All that aside, when taxes are stable (say, 2 years after the tax code changes and things have been baked in) then the absence of further changes to the tax code will impact the economy relatively less than the million other inputs large and small that effect the global economy.
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p>Even you should know that this latest recession came from the housing / banking crisis, which had nothing to do with taxes.
ray-m says
http://www.tax.com/taxcom/taxb…
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demolisher says
So often you guys have the facts exactly backwards.
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p>What was unemployment under Bush? What was it under Nixon and Ford?
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p>Would you call your quote box reality-based? You gotta challenge this stuff Ray.
ray-m says
not unemployment…did they or didn’t they GROW the economy? GDP growth
centralmassdad says
That is precisely correct. The recession came from a financial crisis. That is MUCH harder to recover from than a recession that results from fiscal or monetary policy.
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p>The reality is that there isn’t much government can do to get things back to “good” again. Stimulus spending doesn’t work because it is too damn slow, subject to endless bureaucratic machinations, and gets spent for political rather than economic reasons. Nonetheless, some, even much, of the stimulus money gets “spent” as intended. But rather than coursing through the economy “multiplying” it is getting spent paying down debt. Tax cuts, even tax rebates, don’t work for exactly the same reason. An extra payment to the Visa card, or on the 2nd mortgage has zero “stimulative” effect.
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p>In truth, it is probably going to take a long while– well into the next Presidential administration, be it Obama’s second or otherwise– for individual and businesses to work off the debt overhang, and thus for things to improve in any noticeable way.
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p>In the meantime, the government can take steps to prevent a bad situation from getting worse, and to take palliative measures. To this end, TARP, as well as simple things like temporary extensions of unemployment benefits are useful. Other government actions of late, including the stimulus and the automotive bailout, strike me as expensive failures.
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p>The stimulus was ineffective, as will be the GOP tax cut, if one comes. All these things do is worsen the government’s balance sheet, which itself threatens future economic heath.
nopolitician says
It’s simple — taxes only work when everyone is in it together — everyone pulling in unison. If only those who supported higher taxes paid them, those who didn’t support them would be free-riding.
demolisher says
if those supporting higher taxes only supported higher taxes on others?
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p>would those people be free riding?
stomv says
just as soon as all the folks who are pro-war enlist, and bring all of their own supplies to the battlefield.
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p>We are a nation, a commonwealth. For common good, we must all act. That means we go to war as a nation, and we pay taxes as a nation.
christopher says
Don’t argue taxes with “demolisher”; it’s not worth your time or sanity. He must think money grows on trees or is an anarchist. He definitely comes across as selfish.
demolisher says
“He must think money grows on trees”
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p>Frickin liberals.