On March 20 1999 Sandra and I will begin our next cruise along the East Coast and into the Caribbean.  As we go along I will publish my replies to comments by Tom Jackson on some of the subjects that Raphael brought up about the Planet Utopia.  We will also cover some contemporary subjects.  Check this site occasionally to follow our correspondence.

2/24/99

Dear Tom,

In reply to your comments about the need for tax cuts to return some of the surplus to the people who know what to do with it, I want to comment on the unfairness of the current tax law and in particular the capital gains tax that was reintroduced a couple of years ago.  I do not know the exact numbers, so I may be in error, but my argument goes something like this.

With this law the very rich are able to reduce the percent of their income that goes to taxes to less than the hard working individuals of the middle class.  For example, the CEO of Disney cashed in $500,000,000 in stock options.  I assume that he would not have done this if the new capital gains tax breaks were not applicable.  If they weren't he surely would have waited until the law was applicable.   So at the former tax rate of  35% he would have paid $175.000,000 in taxes, but with capital gains rate of 20% his tax is only $100,000,000, and he saves $75,000,000 which is better than winning the lottery.  Are you surprised that the tycoons of industry give large sums to the Republicans and some Democrats to pay them for passing  just this type of tax law.  I think that large campaign contributions are only legal bribery, not free speech.  Does the statement or implication that, "I will give you $100,000 to push this law through." constitute free speech or bribery?

How about the individual who is making $75,000, and gets a bonus of  $5,000?  His tax rate stays at 32.5% for income tax, Social Security, and Medicare, and he has to give back $1,625 to the IRS with no breaks of any kind.  I don't know the brackets, but I think he has to be well below $12,000  a year before he can get a better rate than the Disney CEO because the poor pay 22.5% for their combined federal taxes.

To get to the tax cut.  The executive probably makes millions in straight salary, but to make it easy let's say he has a taxable income of $1,000,000.  Ignoring the Social Security and tax brackets let's say his taxes are  $350,000, and the tax cut saves him $35,000.  The working man at $80,000 salary and bonus probably pays $15,000 after deductions and will save $1,500 in taxes.  The individual with a taxable income of $8,000 like most of the real working people will have an income tax of $1200, and the tax cut will save him $120.

If we could forget about tax cuts, which benefit the people who really work for their money very little, and use any surplus to lower the Reagon-Bush national debt which costs the nation and our decedents nearly $250,000,000,000 a year, maybe those descendants would not have to pay for the fabulous 80s that their ancestors enjoyed by not paying as they went.  Is that a sentence?  Anyway, Tom, that are some of my thoughts on tax breaks and the negative deficit.

Regards,

Jack