Cut away

In Letters to the Editor

Dear Editor,

First, to eliminate any question, I have been fortunate enough to
parlay my 1976 business degree into membership in the
“wealthy minority.”

I have two technical issues with Mr. Rogers’
opinion. 

Reference is made to “disproportionate” tax cuts for
the wealthy.  My guess is that Mr. Rogers really has no
interest in a proportionate tax cut, considering the portion paid
by the so-called wealthy minority. 

Let’s consider three families: one with a taxable income of
$50,000, one at $200,000 and a really lucky one at
$500,000. 

The first family would pay $6800 in federal income taxes or 13.6
percent.  The second family pays $47,446 or 23.7
percent.  

The second family makes four times as much, but pays seven times
the taxes. The really lucky family pays $150,206 or 30 percent
of their income in federal income taxes. 

The third family makes 10 times the wages but pays 22 times the
tax.  By any definition, a reduction in taxes is going to
provide a greater benefit to the group that pays the most taxes.
The only way to make taxes proportional is a “flat” tax
in which everyone pays the same rate regardless of
income. 

I doubt this is what Mr. Rogers has in mind.

I also take exception to “Greenspan’s low rates
encourage Americans to borrow, which in turn has ballooned personal
debt loads and lowered household net worth.”  Interest
rates are a function of the supply and demand for available
capital. Low interest rates do not cause me to borrow more,
undisciplined spending does. 

There is no requirement to borrow additional cash.  Many of us
took advantage of the low rates to refinance 30 year mortgages over
15 years and significantly increased personal net worth. The Bush
administration has provided an extremely valuable tool in the form
of low interest and tax rates.

David Schultz,
CSUF Class of 1976

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