The Brookings institute on tax policy released a study on the Bush stimulus plan vs the Democratic stimulus plan, broken down by income.

Income Bracket (thousand dollars) | Bush Plan Savings | Dem Plan Savings
0-10 | $5 | $234
10-20 | $63 | $290
20-30 | $204 | $319
30-40 | $351 | $361
40-50 | $500 | $385
50-75 | $820 | $447
75-100 | $1776 | $510
100-200 | $2710 | $517
200-500 | $5527 | $521
500-1000 | $17605 | $516
1000+ | $88873 | $515

Average | $865 | $357

Based on this, I know which plan I like even though my particular bracket does not benefit as much. These are just averages of course, but they should give a decent idea of what you might save...

 

[QUOTE]Originally posted by WestSideBilly
[B]The Brookings institute on tax policy released a study on the Bush stimulus plan vs the Democratic stimulus plan,

 

Here is a different view of the impact. It is more favorable to the upper brackets but they still have a higher rate.

 

WestSide, not that long ago, all interest was deductible, and I don't recall that the economy was destroyed. I think there is still an incentive to pay off debt, even if deductible. If you pay a dollar interest and save 20 cents on your taxes, you are still out the other 80 cents. That's incentive.
Also, the unemployed generally pay little or no taxes, so why bring them into the equation? There are already several refundable credits in the tax law, meaning you get a refund, even if you haven't had any taxes withheld. I don't call that a tax break, I call it federal welfare.

 

Chris: You're right, I copied it straight out of the local paper (my source for the report), and the last couple groups did seem a bit high. The analysis you posted essentially says the same thing, although when viewed in percentages it's not quite as painful for the lower/middle brackets.

 

Morris - define "not that long ago". I don't recall that being the case in my (admittedly short) lifetime, and the only thing I can find digging is that prior to 1986, interest on personal loans and state & federal sales taxes were deductible. For various reasons, americans in general have a much higher personal debt load than they did even a few years ago (credit card debts have more than doubled since the mid 90's), and with the current low interest rates people are borrowing as much as they can. So, it is a factor of current conditions along with the loss of tax income and the reduced incentive to aggressively pay off debt that led to my conclusion.

The reason for bringing the unemployed into the equation? Quite simply, because the stimulus package does very little to create jobs. My comments really apply more to the underemployed, who are paying some taxes but due to economic circumstances are not making what they could be.

 

My main concern with the Bush plan is the fact that half of the $600 billion comes simply from tax cuts on stock dividends.

The effects being, IMO:

• The more money you have invested in stocks, the more this'll help you.
  
• More people will be likely to invest in stocks.

Now then, the first question to ask is - who has the most money in stocks? I'd be shocked if many lower-income people and families have much money in the stock market. Rent, food, clothing, car insurance and the like are more likely to be the overriding concerns, I'm imagine. Mulit million and billion dollar mutual funds have lots of money in stocks, of course - but I have no idea how dividends are handled there. Dividend income accounts for about 5% of the nation's total personal income. I have a suspicion that it's not evenly distributed accross the income levels.

Regarding getting more money into stocks in general - back when things were really really dark recently, and people were wondering where the Dow's fall would stop, I heard a lot of speculation about the number 5000. The reason being, that's where some people were saying the proper, sustainable price/earnings ratio lived. We're riding around in the middle to high 8000s right now, of course. So is bolstering stock prices necesarily a good thing, in and of just itself? Didn't we learn anything from the past couples years? Namely, that a stock price point doesn't actually have anything to say about a company's health and performance?

So we have some poeple, namely the wealthy who already have a good amount of stocks, who will have even more money. Plus we have companies getting more money invested in them. The former I can't see doing much for the country, and the latter won't accomplish much either without consumer demand.

If you look at the telecom industry, for example, they're laying off people left and right because they can't sell enough product. They banked on a huge growth in broadband access to homes (which didn't happen) and a huge growth in online everything-including-the-kitchen-sink (which didn't happen - remember pets.com?) I find it hard to imagine much of this $300 billion I'm discussing doing much to help them. Same with the airlines industry, another sector that's having lots of trouble.

Heh, I dunno, I'm just speculating.

 

First you have to consider that dividends as currently treated are double taxed. It is taxed as a corporate profit and then when distributed to the shareholder it is taxed again. This simply eliminates the double taxation which is not done in most countries that want to encourage investment.

Many people have stock assets. Most of the companies I ever worked for have savings and retirement plans that hold stocks and mutual funds. The taxation of dividends does impact you.

If you are trying to help industries an accepted way to do it is to spur investment. This plan should do that to a certain extent. Rather than direct subsidies that normally circumvent healthy market behavior and creates federal bureaucracies and the waste and errors that go with them.

 

I haven't read too much about it yet but according to WestSideBilly's chart, I'm in favor of Bush's plan for me personally.

 

I just read this morning that over half of Americans own stocks, whether directly, or in a 401K, savings plan, IRA etc. Some of those are tax exempt entities, so tax on dividends doesn't apply. But if it helps investments or the economy, then a lot of people would benefit.
WestSide, "not that many" is relative to age, I think. I have been preparing 100's of returns for 30 years, so your date of 1986 could be right. My point is that all interest used to be deductible. When the Reagan tax act was passed, they lowered the rates (top bracket used to be 28% remember?), but they took away a lot of deductible items. (remember sales tax was a big one) Then they started slowly raising the rates again, but did not give back any of the deductions they took away.
I voted for Bush, but big tax cuts plus funding a war could either raise debt, fire up inflation, or both.