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Peeking up the economy's skirts

One of the biggest issues in any election year is the economy. According to Kerry, it's bad and gonna be worse if we dump Bush. According to Bush, it's good and getting better, but if we elect Kerry we're going down the toilet.

I'm no economist (I think I took one class on it in high school, back around Reagan's second term), but I am expert on one particular economy: mine. So, armed with my tax returns from 2000 and 2003, my most recent pay stub, and a pay stub from about the same time in 2000, I figured I'd see must how well off I am now compared to then.

I think I'll make a pretty good model. In that time I have not changed employers (although I did relocate), residence, marital status, or parental status. (Dear God, I've stagnated. But that's a topic for another time.) There have been a few changes in my life, but I'll skip those for the purposes of this piece.

Adjusted gross income: 2000 - $16,734; 2003 - $21,506.
That's not too shabby. I've done pretty well at my job, and been rewarded accordingly.

Taxable income: 2000 - $9,534; 2003 - $13,706.
Again, a little better. I managed to shave off $600 more from my taxable income than before, decreasing my tax burden.

Total tax: 2000 - $1,429; 2003 - $1,624.
Yes, I'm paying almost $200 more in taxes. But Iím making a LOT more than I did then.

Effective tax rate: 2000 - 14.99%; 2003 - 7.55%.
THIS is the key one. My tax rate has been cut almost exactly in half. I'm paying a bit more than then, but I'm KEEPING a hell of a lot more.
(Correction: apparently TurboTax Online changed it's basis for "effective tax" at some point between 2000 and 2003, and I didn't notice. Based on "Adjusted Gross," I went from 14.99% to 11.85%; based on "Taxable income," I went from 8.5% to 7.6%. This diminishes the point somewhat, but doesn't compromise the basic premise. Thanks for the catch, Bruce.)

Now, let's look at expenses. My rent has increased about 20% in that time, but that's actually understandable. My apartment was grossly underpriced at the time, and the building's been sold since. The rent is still somewhat below average, and the new owner did some major improvements to the place.

As far as my medical insurance... I have essentially a similar HMO plan as I have then - details have changed, but not too substantially. According to my pay stubs, in 2000 I was paying $45.97 every two weeks. This year, itís $63.04 - almost a 40% increase. Meanwhile, my co-pays have gone up from a third to doubling, across the board. I'm getting seriously boned in this area.

Now, let's turn to the parts of my pay stub that reflect the general economy. My company works in the "Business Support" field - most of our business comes from other businesses, and the better they're doing, the more business they toss our way. Our income is directly linked to the economy of our area.

My company also offers a profit sharing plan that is tied to our particular area. It's very involved and complicated, but the gist of it is the harder and better I and my immediate colleagues work, the more money we make for the company, the more money they send back to us in our paychecks. In 2000, by August 6, I had received $141.83 to date in profit sharing. As of August 6 of this year, I had received $394.92. Further, we all received an award for exceeding goals for 2002's 4th quarter worth almost another $120.00.

So, am I better off than I was four years ago? I'd have to say, in ways I can attribute to the government, not just "yes," but "HELL, YES!" The only area I'm doing worse in is in regards to my health insurance, and that I squarely blame on John Edwards and his ilk.

I know it sounds selfish, but there's an old saying that "all politics is personal." I have done better under the Bush administration, and Kerry has picked a running mate who exemplifies the one part of my personal finances where I'm getting screwed. And looking at how my employer is doing and extrapolating what I can from that, I hope for the general health of the economy that Bush is re-elected.



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Comments (11)

Why is the title of this po... (Below threshold)

Why is the title of this post disturbing? Could it be that for so many years "the economy" has tended to be personified in many people's minds by Alan Greenspan?

The worst part is that he's... (Below threshold)

The worst part is that he's a thong kinda guy...

Excellent post, Jay.

Yes, excellent post, J.... (Below threshold)

Yes, excellent post, J.

"The economy" IS ONLY understandable to most all of us as it relates to any one of us being able to live our lives, pay our bills, provide for ourselves and our families and help others. The generalized concepts only apply to those whose work or professions are in financials, investments and in my experience, there are as many theories of economy as there are moments in time.

The RNC needs to get the message "about the economy" more pervasively throughout our society and counter the Left's reliance on capitalizing on people's worst fears (which is what they do). Even among us Catholics, for example, the Left can still make an impact because they frighten people quite dishonestly with the "a vote for Bush means that people will go hungry" -- which is rubbish, completely, but people get upset at the thought that the "needy" and vulnerable won't be attended to.

All the while the Demos actually diminish delivery of dollars to the "needy" but manage to fully fund large government -- Bush is the only President who has been brave and determined enough to see that local churches and groups can access federal dollars inorder to actually HELP the needy, but you'd never know that if you listen to what the Demos have to say.

"The economy" is still reduced to an emotional issue to nearly everyone: will I survive, will I have enough to live on, can I pay my bills, will my children be able to receive a quality education, will the needy and ill be able to access care, will I be able to afford my retirement...

These are the "emotional" issues that the Demos rely on to fan the flames of dishonesty about politics but the Bush Administration has actually done something (that is, has actually worked) to counter the fears, but hasn't fully publicized what it's accomplished (but needs to).

Very Good!~C... (Below threshold)

Very Good!

I'm no math wiz, I almost f... (Below threshold)

I'm no math wiz, I almost flunked calc II in college, but I can only get your math to work out if I use taxable income for the first equation and adjusted gross for the second.

first, adjusted income: (apples)

1,429 / 16,734 = 8.5% 2000
1,624 / 21,506 = 7.5% 2003

now taxable income: (oranges)

1,429 / 9,534 = 14.98% 2000
1,624 / 13,706 = 11.85% 2003

(assuming you reported your numbers correctly of course)

So, by my numbers you saw either a 1% or 3% drop in your taxes, not the generous 50%. In real terms you looking at about a 300-400 dollar savings. Is that real money in your posket, yes.

But consider that in the last three years the public debt has increased by 500% over the previous three years prior. Giving you that 300-400 dollars doesn't mean that they still didn't spend it and scrawled out an IOU with your name on it.

<a href="http://www.publicd... (Below threshold)
Hmm... Bruce, you're right.... (Below threshold)
Jay Tea:

Hmm... Bruce, you're right. I'd done my taxes online, and I simply took their numbers at face value. It also passed my casual sniff - test: my income had risen almost 50% while my taxes stayed relatively stable, so a 50% reduction made sense. In retrospect, that should have tipped me off; it should have worked out to about a third, not a half.
Nice catch. TurboTax must've changed their definition of "effective tax rate" between 2000 and 2003, and I didn't notice.

Bruce and JT, I'm not sure,... (Below threshold)

Bruce and JT, I'm not sure, but there is something not right with Bruce's figures. If I have time, I'll look at them.
All I know is that with the tax cut this year, we had enough for a new car payment, and I was able to purchase a new car for the first time in 12 years.
And since I bought an American made car, I helped our economy.

And, JT - you need a better job!

Beth, I don't doubt what yo... (Below threshold)

Beth, I don't doubt what you got, if you looked over the tax cut there was a nice sweet spot that was an intentional "selling point" where Bush could stand up and say "family of four with two kids and a house would get" something like $4000 or some such. When graphed it was a pronounced "notch" for that reason. So there was a sweet spot to be with the tax cuts, but it was not indicative of the cuts "across the board". They, despite the rhetoric to the contrary, were targeted, not accidently to a core Bush constituency.

My beef with the tax cuts aren't so much returning money to people, but not accounting for where that money is coming from. If you look closely you'll see that unless you reduce spending your tax cuts amount to nothing more than borrowed money. The government (aka the taxpayers) are responsible for that government debt. So you might want to think of it more as a "cash advance" than a tax cut.

The gamble that the Bush admin is playing is that A) they can get reelected before debt becomes an issue and B) that once re-elected they can count on the up-down business cycle to turn their way and a growing economy will be enough to offset the current ballooning debt.

I'm old school, I don't think you should spend more money than you have this year and just expect a raise next year to pay for it all.

Of course each party will just blame the other it all melts down.

Bruce,I would have g... (Below threshold)

I would have gotten a much larger tax cut if the marriage penalty did not exist.
It is terribly unfair.
And, again, I will have to do some research before I take your words as Gospel truth, as I am sure you will understand.

Never claimed to be Jesus. ... (Below threshold)

Never claimed to be Jesus. Just a man with a calculator and an uncanny ability to enter phrases into a google search box.

Its like a modern day Oracle.

As for the the "marriage penalty", we should do away with taxes based on marital status because no matter how you go; rewarding people to marry or trying to help single parents, one side will always feel sleighted. We should get out of the business of punishing or rewarding people for choosing their style of life. The MP was a result of the government trying to help single parents deal with the lack of security that comes from not having two incomes. Well meaning, yes, but why?

Whether you get married, stay married or not should be completely independent of tax penalties or rewards. We've see the negative consequences of basing government assitence on marital/child status. No matter what you do there is unintended consequences.






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