[Sangetsu]

Originally Posted by MMM

I am not sure what you are responding to or what I said.

Being a homeowner in America doesn't mean you pay very little income tax.

The argument is, and Reagan tried to make it, too, is that if you tax the rich and corporations less, they will turn around and put that money back into America...basically the situation you described. It's called "trickle-down economics" and the reality is that it didn't trickle down that far.

The Bush tax breaks are living proof of it. McCain supports them, and look at the state of the American economy now.

But the essential key is beyond the tax hikes or cuts, and is how the money is allocated and used. Done responsibly, of course a tax increase on those making a lot of money ($225,000 or more, I believe) can be beneficial to the country as a whole. Done irresponsibly, it could lead to more havoc in the economy.

And this is a quote from Honda's President and CEO, Takeo Fukui:

“Contrary to what some executives are saying, there is more content from U.S. based suppliers in some of our vehicles than there is in many of the vehicles from Detroit.”

Mr Takui doesn't mention that "some" means the few models which are produced in America. These represent less than 5% of Honda's line up, and that the "many" models from Detroit are not actually from Detroit, but imports from Holden, Mazda, and Toyota to which are renamed as Ford, Chevrolet, or Pontiac vehicles.

What happened after the Reagan tax cuts? Revenue increased. The only reason that the deficit also increased was Reagan's massive military spending. At the time, the cold war was still being "fought". The Soviet Union had invaded Afghanistan, and was at work with it's puppets in the middle east, as well as central and south America. "Trickledown economics" has earned an ill-deserved reputation, despite the fact that they worked, and that tax revenues increased after they were enacted. Chrysler re-emerged from bankruptcy and became profitable, as did Harley Davidson. Ford and GM recovered from the billions of dollars in debt which they had incurred during the 70's. The standard of living in America increased, and unemployment decreased. Tell me again that "trickledown" economics don't work.

Why is the state of the economy bad at the moment? I'll give you a list. First, the collapse of the real estate markets. In order to stimulate investment and keep growth strong, Alan Greenspan and the treasury kept interest rates at a low level. Low interest rates lowered the cost of mortgages, making homes less expensive to finance. As a result, more people began to buy homes. Real estate began to appreciate at a rapid rate. Because of the rapid appreciation, banks loosened their lending standards, the logic being that if the borrower couldn't pay there would be no risk, since the value of the property would have likely appreciated to a level above the amount of the loan. Widepsread speculation in real estate began, which quickly raised the prices to an unsustainable level.

My own house escalated in value from $80k to $250k, which I knew to be ludicrous, given the area's median income. All of the houses in my area were reassesed at higher levels, my property tax more than doubled. Then hurricances Katrina, Rita, and Wilma hit. My property insurance quadrupled. All the sudden, my insurance and tax were now costing me more per month than my mortgage. It was ridiculous. But my mortgage was only $800 a month. The people next door to me had just bought their home for $240k on an adjustable rate mortgage, and even with the low 1% intro rate, their payments were $1200 a month. When the rate readjusted to 5.9 percent, ther payments increased to $2500 per month. And they still had to pay tax and insurance above this amount. Is it any wonder that the foreclosure rate in Florida is the highest in the nation?

Increases in the price of real estate resulted in increases in property taxes throughout America. In places like Texas, the increase was not a big deal, but in places like New York City where taxes were already astronomical, it was quite painful.

Next, Katrina. The cost of that disaster to the federal treasury was enough to buy every household in the affected areas 2 new homes and 2 new cars. Never mind that since the government handled the disbursement of the money almost all of it was squandered.

Next, the price of oil increased. Demand from India and China began to increase. Never mind that production was also increasing to meet that demand. Those who were no longer making money in the real estate market needed a place to park their money. The energy markets were just the place. Speculation tripled the price of oil for no justifiable reason. The federal government was not able to regulate the speculators as oil is sold on the world market. Increases in the price of oil led to increasing prices in other commodities, increasing inflation, and devaluing the dollar.

Next, the fighting of 2 simultaneous wars. The total cost over the last 5 years has been almost $500 billion dollars. Arguing whether these wars were necessary or not at the moment is irrelevant. They are being fought, and war is an expensive enterprise.

Given the events which have occured over the last 8 years, it's amazing to me that the economy isn't worse than it is. It has endured incredible difficulty. Unprecedented attacks against our country, costly natural disasters, ridiculous increases in the price of energy, the collapse of banks. One cannot expect any economy to do well under such circumstances, but, as bad as it has been, it could far too easily have been much worse. If you said that the tax cuts were partly responsible, you would be right, they are responsible for the economy not being worse.

My uncle earns about $300k per year. He owns a small business which employs about 20 people. With his income he had a house built. He used his money to buy the property, so the property owners benefitted. He hired an achictect to design the house, the architectural firm benefitted. He hired contractors to build the house, the crew of 20 workers earned a good income during the months it took to build the house. He had to furnish the house, so he bought furniture from the local furniture outlet. The outlet made some money, as did the makers of the furniture.

For all this, he still invests most of his money in his business. The purchasing of machines, materiels, trucks, advertising, and the hiring of people. Times weren't always easy for him, for a few years he and his family lived in a trailer behind his business. He had only 5 employees and 3 trucks, through hard work and perseverence, he has become successful, and it is people like him that make America's economy strong.

How, exactly, would increasing his taxes help the economy? The money he earns is returned to the economy in a productive way. He buys goods and services which Americans provide. The people he employs in his company also buy goods and services.

He's not voting for Obama.