Do we thank Washington D.C. for the years of debt spending or the impartial (hopefully!) decision of S&P to downgrade the U.S. debt rating because they cannot control their debt spending?
The Dow Jones industrial average finished the day down 634.76 points Monday after a full-day sell-off accelerated in the final hour of trading as investors struggled to absorb Standard & Poor's decision to downgrade the United States' credit rating.
[Updated, 1:34 p.m. Aug. 8: This post has been updated to reflect the final closing numbers of the Dow Jones industrial average.]
Investors piled out of stocks and into a few "safe havens," such as gold and Treasury bonds. The appetite for Treasury bonds suggests that the Standard & Poor's downgrade has not shaken investors' faith in U.S. bonds.
Market experts said the Monday sell-off was sparked by the S&P announcement but was motivated more by growing concerns about the weakness of the global economy.
"It’s really all about economics," said Mike Norman, the chief financial strategist at John Thomas Financial.
The Dow ended the day down 634.76 points, or 5.5%, to 10,809.85. The broader Standard & Poor's 500 index fell even more sharply, finishing the day down 79.83 points, or 6.6%, to 1,119.55.
"It's been harried," said Sal Arnuk, head of Themis Trading, which has its trading floor in Chatham, N.J.
The concern about the U.S. credit rating was amplified when Standard & Poor's announced Monday morning that it was also downgrading the debt of mortgage giants Fannie Mae and Freddie Mac, which rely on U.S. government guarantees. But traders said much of the pessimism Monday resulted from broader concerns about the economy.
"I don’t think the S&P announcement is the lead director of the day -- I just think it is the icing on the cake," said Jonathan Corpina, a trader on the New York Stock Exchange for Meridian Equity Partners.
Markets have fallen nearly every day for the last two weeks and are now down to levels last reached in September of last year.
With the United States' credit rating cut by Standard & Poor's, Treasury bonds might have been expected to lose some of their luster. But investors still appear to be using Treasuries as a haven amid global economic turmoil. The 10-year Treasury bond was trading at a 2.34% yield, down from 2.56% on Friday, indicating that there was heavy demand for the bonds.
Gold, another haven, saw its value rise nearly 3.9% on Monday.
I don't think you can point your finger at any one person/group/party for this. It didn't happen overnight. Course I am sure people will point anyways.
Melchiour wrote:I don't think you can point your finger at any one person/group/party for this. It didn't happen overnight. Course I am sure people will point anyways.
Everything I've been reading says that the downgrade had little to do with it, especially since the rate of T-bills has actually gone down due to demand!
Unemployment is still up, growth is anemic, consumer spending hasn't budged in four years, and there are genuine debt crises in Europe. The S&P downgrade is a brushback pitch, meant to tell Washington to not mess around with the economy, but it's just a trigger for a lot of investor worries.
Massive correction. The market returned to pre-crash levels without major economic improvement gliding purely on the back of corporate profits and hope (and china). The market wasn't reacting with great losses to the euro crisis and it didn't really care about japan or weak jobs reports.
Is there a particular aspect of the US government's actions that has led to S&P and just S&P alone to downgrade the debt? It seems bold of S&P especially when the other two major credit rating institutions reaffirmed their top tier ranking of US debt.
WarOne wrote:Is there a particular aspect of the US government's actions that has led to S&P and just S&P alone to downgrade the debt? It seems bold of S&P especially when the other two major credit rating institutions reaffirmed their top tier ranking of US debt.
Also, there's worse economies out there that still top tier ranking, such as Spain. I think it might relate to the having just gone to the wire debating how they were going to continue paying their debt, never any question that they'd be able to, just debating 'if'. Also a whole lot of politics, from S&P wanting to look like it was 'doing something' in the wake of the housing scandal, to just jumping on the bandwagon over the freak out over US debt.
sebster wrote:Also a whole lot of politics, from S&P wanting to look like it was 'doing something' in the wake of the housing scandal, to just jumping on the bandwagon over the freak out over US debt.
Somewhat relative to the boldface statement (looks like an op/ed piece):
Standard & Poor’s decision to downgrade the United States has drawn a lot of criticism. The White House called its performance, which included a miscalculation of about $2 trillion, “amateur hour.” Rep. Barney Frank was even less sparing. “These are some of the people who have the worst records of incompetence and irresponsibility around,” he told Rachel Maddow. They are trying to “justify their reputation.”
All of this is true. But it doesn’t make Standard & Poor’s wrong. In fact, this downgrade is arguably serving two important functions: It’s drawing attention to the failures in the American political system, as well as the failures in Standard & Poor’s.
Let’s begin with the country. “The downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges,” Standard & Poor’s said in the statement accompanying Friday’s decision.
After Republicans in Congress spent three months weighing whether or not to default on our debt and Senate Minority Leader Mitch McConnell said that paying our bills would never again be a foregone conclusion, can anyone really argue with that? After every Republican presidential candidate save Jon Huntsman either remained silent on, or flatly opposed, the deal to raise the debt ceiling, can anyone really say that U.S. debt is completely riskless? That there’s no chance of a political miscalculation, and if there is such a chance, that they can perfectly predict the outcome of the ensuing chaos?
In Washington, it’s almost trite to say that the political system is broken. It’s been clear for some time that things really are different, that norms and procedures that once kept fractious congresses functioning have eroded with terrifying speed. If anything, S&P is, as usual, noticing the deterioration too late. But that doesn’t mean the deterioration is not real, or that it should be ignored.
That said, S&P’s report is a joke. The problem isn’t the agency’s $2 trillion mistake. It’s possible for the agency to have made that mistake without harming its underlying point about the weakness and unpredictability of American political institutions. But S&P hasn’t confined its argument to our political institutions. The original draft of its report included a section in the executive summary laying out the deficit math for the next decade. When that math proved wrong, S&P simply deleted the section. But that’s inconsistent with the calculations S&P left in the final report.
In both versions, Standard & Poor’s says it would upgrade our outlook from “negative” to “stable” if the Bush tax cuts for income over $250,000 expire. That would net Treasury about $900 billion over 10 years. So according to S&P, $900 billion is a big deal. And it’s a big deal because of how much it would reduce the deficit. So let’s look at that.
The original report says that $900 billion in fresh revenues would mean net public debt drops from an estimated 93 percent of gross domestic product in 2021 to 87 percent of GDP. The second version of the report — the one written after they discovered a $2 trillion mistake — revises its estimate for America’s baseline debt path down to “74 percent of GDP by the end of 2011 to 79 percent in 2015 and 85 percent by 2021.” In other words, S&P’s technical correction improved our deficit outlook by more than letting the high-end tax cuts expire, which S&P had said would raise enough money to stabilize our rating. If the numbers mattered, then by S&P’s own logic, that should have changed the agency’s opinion of our finances.
Similarly, the firm has previously explained that while a $4 trillion deal could have saved the U.S. credit rating, a $2.4 trillion deal — which is what we got — was insufficient to stabilize the debt. But because their original calculations misplaced $2 trillion, the deal and the correction should have added $2.4 trillion plus $2 trillion to our bottom line. That, again, is more than $4 trillion.
I spoke with Standard & Poor’s about these concerns. The response wasn’t particularly compelling.
“The point we were making on the numbers is that nobody we know is claiming this deal, however you do it, will halt the rise in the debt burden,” said David Beers, an analyst responsible for sovereign debt.
That’s true, but $4 trillion is $4 trillion is $4 trillion. The debt burden doesn’t care whether our fiscal picture improves because of a deal or the combination of a deal and a technical correction.
My hunch is that S&P was making a political argument and felt the need to cast it as deficit arithmetic. Then, when its arithmetic proved wrong, it was left looking foolish. As it stands, you cannot coherently merge the first and second versions of S&P’s explanation of the downgrade. That should tell you something about how rigorous its framework is, even if it doesn’t obviate the still-legitimate points it made about our political system.
Melchiour wrote:I don't think you can point your finger at any one person/group/party for this. It didn't happen overnight. Course I am sure people will point anyways.
Wheres Marilyn Manson when ya need em
I thought he wasn't born with enough middle fingers. Better get Chuck Norris, since he's got that fist under his beard.
As to the Dow, I'm not fussed. I've got plenty of water and shotgun shells. I'll ride out the impending societal collapse in style and comfort.
warpcrafter wrote:And that's your tax money at work, folks.
Because everything was just fine till President Obama was sworn in.
I look wistfully back at December 2008, when the deficit was zero, the budget was balanced, and protesters were still described as traitors and un-american.
I think S&P is a perfect demonstration of The Magic Of The Market failing miserably. A ratings agency that gives 'perfectly safe' ratings to absurdly shaky securities based around mortgages that you expect defaults on even if the real estate market never sagged should be completely trashed and out of business once it's terrible ratings cause the economy to crash. Instead, they're still around, still taken completely seriously, and still allowed to screw up bits of the economy with their voodoo ratings.
warpcrafter wrote:And that's your tax money at work, folks.
Because everything was just fine till President Obama was sworn in.
This what makes me laugh as well, its the same in the UK. The Labour party were in charge for 13 YEARS, the market crashed in 2007, the outgoing chancellor left a note on the incoming guys desk saying "THERES NO MONEY LEFT, LOLZ!" and now its the current guys fault were skint?
Im stunned by this logic fail.
Obama has been in charge for what, 2 years? How the feth can people blame all this gak on him?!
I mean, I don't even like Obama, but its obvious when people are just being sickeningly partisan.
Can people not bring themselves to possibly accept any blame? Im not particularly well versed in US politics being an Englishman, but BC had a surplus right? And Bush was running up epic debts pretty much the entire time he was in office! How then, can something like this be Obama's fault when he is a relative newcomer? You cant feth an economy up over night!
warpcrafter wrote:But Obama campaigned on a platform of change. Where is the change? Oh yeah, it's been change alright, for the worse.
Yeah, he could have campaigned on a platform of continuing the outright theft and incompetence that marked Bush's two terms. The problems we're facing now started back in Clinton's term (the fall of the housing markets is tied to the changes in lending practices that occurred under his watch), but are mostly due to the tax cuts Bush offered. The problem isn't that Obama changed things for the worse, it's that he didn't change things very much at all.
Running on a platform of change, we got:
A crappy healthcare bill passed for the political expediency of being able to say that a healthcare bill was passed. A poorly worded and thought-out healthcare bill that did very little and, I believe, was repealed already. (Maybe I'm wrong, but I think that was one of the first things the GOP did once they got control on congress back).
No real change in our overseas military commitment. No bringing the troops home. It should be mentioned, however, that although the greater overall strategy hasn't changed, we have been more successful in this area under Obama than under Bush, including finally getting Bin Laden.
No real change in our financial policies. Bush's tax cuts are still out there, and they're still screwing us. Of course, because of the housing collapse and auto collapse we funded bailouts that we probably shouldn't have, having public dollars prop up failing private institutions is ridiculous, and has allowed the poor practices in those industries to continue. Basically, we spent way more than we had to bail out the banks and auto makers, who turned around and rewarded their already-rich investors and employees with money taxed from the rest of us. And, not just taxed from the rest of us, borrowed from our children and grandchildren.
Obama's biggest failing isn't that he changed anything, it's that he said he would change things, and didn't. It's that he said he was bigger than the special-interest groups and lobbyists that actually run Washington, that he built up all sorts of unreasonable expectations about what he'd be able to do, and it turns out, he's not that special, he's not that guy who can break how the system works (for the better), and he's just another politician doing time.
mattyrm wrote:Obama has been in charge for what, 2 years? How the feth can people blame all this gak on him?!
At what point does he bear responsibility for what's going on? Unemployment was 7.2% when he entered office. Now it's 9.1%.
The national deficit was $482 billion for FY 2009. The current deficit is around 1.5 trilliion.
Does Bush deserve some of the blame for this? Of course! He should have reduced spending, not passed Medicare Part D, used the '02-08 boom years to reduce the federal debt, and pushed harder on his Social Security plan.
Blaming Obama for the current mess is a little like blaming a reliever for giving up runs when he came into the game with the bases loaded. He's made mistakes, but he also inherited a pretty bad situation.
He's also faced the most rabidly polarized environment since at least Ford. Meaning, it's hard to tell the policy disagreements apart from the vitriol. The old joke that the right would oppose Obama's announcment that he cured cancer is becoming less funny, as policy becomes subordinate to beating him.
biccat wrote:
Does Bush deserve some of the blame for this? Of course! He should have reduced spending, not passed Medicare Part D, used the '02-08 boom years to reduce the federal debt, and pushed harder on his Social Security plan.
I think you forgot a couple of unfunded wars and tax breaks....
I'm also not sure what, exactly, the government can do to reduce unemployment.
And don't say "cut taxes." Companies are profitable, so it's not like they can't hire more staff. The money is there.
Unemployment is up because consumer spending is way down. Many of the jobs lost (and not regained) where in retail, construction, and other consumer driven industries. Companies can be profitable by being more effecient, and exporting thanks to a weakened dollar.
Part of this is simply time. Much like their government, most households are limited in their spending due to past debts. I can't buy a new car because I have to pay off student loans. People ran up massive debt pre-crisis, which means there will be a retrenching period for even the employed middle classes.
So, while it seems like simple class warfare to say "tax the rich," it's actually the only place to get money that won't further hurt the economy. Cutting social safety net spending (unemployment, disability, etc) seems appealing, but those dollars are all pumped into local economies, buying goods and services which employ people. Ending Bush-era tax cuts would not hurt hiring (whcih is anemic anyway), as the people making the real decisions aren't paying income tax, their paying capital gains tax!
S&P have a job to do and blameing them for the market problems is like blaiming your doctor for your illness. They tell investors what they think the risk is and investors use that as part of a big bunch of data. The fact remains that the US government came painfully close to defaulting on debt. Now people don't trust them not to go over the edge for nothing more than an ideology.
alarmingrick wrote:I think you forgot a couple of unfunded wars and tax breaks....
I'm not sold on the wars in Iraq and Afghanistan being a bad idea. Bad in execution perhaps (there's no reason we should have troops there for so long), but not bad in the inception. But the wars weren't the cause of our current economic mess.
As for tax breaks, they aren't part of the spending problem. Heck, government revenue increased after the Bush tax cuts went into effect.
The government could offer incentives to hire people. They could create disincentives to off-shoring jobs.
The Republicans, on behalf of their corporate allies are pushing for a corporate tax holiday. They believe that corporations are leaving a lot of their money overseas. The corps claim this is because the tax rate here is too high, and that if they could have a tax holiday, where they pay a lower rate for a short time, they'd use it to bring profits back home.
I don't think corporations should be let off the hook that easily, because they won't use that money to make jobs, they'll return it to their investors.
But, there's an opportunity there. The Government could say, as a quick example, that if you create new jobs, you get a tax break of a proportionate amount to the jobs you create. (A 100 person company that creates 1 new job gets a 1% reduction in their tax rate for that year, A 10,000 person company that creates 20 new jobs gets a .2% tax break, and so on).
Corps want lower taxes. Government wants corps to hire people. There's opportunity there.
The other concept goes against a lot of what people think about globalization, but it's essentially tariffs. Why should an American company hire American workers to do unskilled labour at $7.25/hour (with OSHA oversights and the like), when they can hire someone in Indonesia to do the exact same job for $.72/hour, and without the overhead. Shoes imported from Indonesia will sell for the same amount as shoes made in the USA.
Well, that's the problem, isn't it. The solution is to reinstate import tariffs. If those shoes made overseas have to pay a $7 tariff upon entering the country, now the US worker is competing on even ground with the Indonesian worker. The incentive for the company to make the shoes overseas is gone.
But tariffs are kind of a no-go for some reason. We (Americans) like our stuff cheap, and that means we want to pay the guy who makes it $.72 instead of $7.25. When faced with the real costs of manufacturing things in the US, most consumers choose cheap and imported over Made in the USA and priced accordingly.
Well, that's why the US doesn't make things anymore, and if you're not making things, there aren't that many jobs.
I think it's a good start. Historically, real change only ever comes when the common man can no longer afford to buy a loaf of bread. Perhaps that's what Obama was referring to.
(Disclaimer: I don't like republicans OR democrats. I honestly cannot for the life of me tell the difference. Corporation-run oligarchy annoys me.)
Polonius wrote:I'm also not sure what, exactly, the government can do to reduce unemployment.
My opinion, nothing. My feeling is that the federal government can, generally, do nothing to affect unemployment in specific and the economy in general. I think the government can make the economy worse via bad policies and needless regulation*, but they cannot improve it directly: only indirectly by providing a fair playing field, breaking monopolies, that sort of thing.
*not that I'm a proponent of dergulation in general. I'm speaking in generalities.
biccat wrote:I'm not sold on the wars in Iraq and Afghanistan being a bad idea. Bad in execution perhaps (there's no reason we should have troops there for so long), but not bad in the inception. But the wars weren't the cause of our current economic mess.
A.) Did the wars cost an enormous amount of money?
B.) Did we fund these wars (via either revenue gains via tax increases, or via commensurate spending cuts elsewhere)?
Maybe they're not the whole problem, but the thinking behind them is exactly what caused our current economic mess.
Switching gears for a sec, I don't blame Obama for the economy, in general. He walked in onto the table on turn 5, with only 400 points of Orks left vs an untouched 2K Grey Knights army. I do blame him for choosing to assault the GK terminators with his Lootas. He told Eric Cantor not to call his bluff, and Eric Cantor turned out to be the wiser on that one. Not only has he not improved the situation, he's sort of made it worse by buckling to extremism.
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Redbeard wrote:But tariffs are kind of a no-go for some reason. We (Americans) like our stuff cheap, and that means we want to pay the guy who makes it $.72 instead of $7.25. When faced with the real costs of manufacturing things in the US, most consumers choose cheap and imported over Made in the USA and priced accordingly.
Well said. Americans want products produced by workers for a fair wage in a safe, clean workplace by employees with access to fair pay, good benefits, clean air and water, and safe food, and we're absolutely unwilling to pay even a fraction of the cost of goods produced in such an environment.
The problem isn't just outsourcing. I mean, that's the straw the broke the camels back, but the reality is that American manufacturing doesn't need nearly as much labor as it used to. US manufacturing output has gone up, even as the number of jobs (Absolute and relative) plummet.
If that sounds familar, it's because it's exactly what happened to farming. less than 5% of American's grow food for sale, but nobody says we dont' grow anything in the US.
Besides, tarrifs (like nearly all taxes on goods) are highly regressive, which wouldn't hurt the core problem: lack of consumer spending.
Ouze wrote:He told Eric Cantor not to call his bluff, and Eric Cantor turned out to be the wiser on that one. Not only has he not improved the situation, he's sort of made it worse by buckling to extremism.
Not to derail the thread too much...but was this not the stupidest thing said in the whole "debt limit deal"? You can say "Don't call me on this" or "I'm not bluffing here," but when you admit you're bluffing and then ask the other side not to call you on it...what the hell? Imagine someone saying that in a game of poker, they'd get laughed off the table.
Polonius wrote:The problem isn't just outsourcing. I mean, that's the straw the broke the camels back, but the reality is that American manufacturing doesn't need nearly as much labor as it used to. US manufacturing output has gone up, even as the number of jobs (Absolute and relative) plummet.
But consumption has gone up too. It doesn't take as many people to make a toaster anymore, but now we also want an xbox and a microwave and an ipad and so on. A lot of the goods made offshore aren't made solely by machines, they're made by cheap labourers.
What's more, it's not just manufacturing jobs that are off-shored. Call any company's tech support line and odds are you're routed to India.
Besides, tarrifs (like nearly all taxes on goods) are highly regressive, which wouldn't hurt the core problem: lack of consumer spending.
Because unemployment isn't highly regressive? Because unemployment doesn't impact consumer spending?
Paul wrote:S&P have a job to do and blameing them for the market problems is like blaiming your doctor for your illness.
If my doctor examined me and told me that I was perfectly healthy, and kept rating me as perfectly healthy for a few years, then one day my leg fell off, and it turned out that a first year medical student could have told there was a problem with my leg from the tests, I'd damn well blame my doctor for the illness. S&P (and the others) rating extremely risky investments as safe was a huge contributor to the financial problems.
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biccat wrote:As for tax breaks, they aren't part of the spending problem.
Yeah, that bad ol obama, getting us in expensive wars in Afghanistan and Iraq...
Georgia employers are almost certainly going to pay higher unemployment insurance taxes next year and jobless workers may see a cut in benefits.
That’s because the state owes $721 million to the federal government — money it borrowed to pay its share of unemployment benefits. Only the first interest payment — $22 million due next month — has been accounted for.
I sat down with state Labor Commissioner Mark Butler to see how he plans to repay the principal and make future interest payments. Butler has assembled a task force in his department to come up with a long-term game plan. The task force, which has been meeting since May, plans to offer its recommendations to Butler later this month. After he decides on a course of action, the ball will be passed to the governor and state Legislature, which will have to act when it convenes in January.
But before we get into what the task force is considering, here’s a little background.
Georgia, like most other states, started borrowing during the Great Recession so it could continue to pay benefits to laid-off workers. We’re not talking about extended federal benefits here, which give some jobless workers as many as 73 weeks of additional coverage after the state’s payments are exhausted. We’re talking about the state’s responsibility, which is the first 26 weeks of benefits.
To cover those 26 weeks, Georgia employers pay unemployment insurance taxes into a special fund. Annual payments average $187 per employee. But, with our abnormally high unemployment rate, the fund started running out of money in December 2009. That’s when the first borrowing occurred, and the tab is now $721,080,472.
To repay the money, the task force has been considering many options. Not all will be recommended, but more than one option will be needed to cover the debt. Ideas include:
– Raising employer taxes, which Butler said he will try to limit as much as possible so job creation is not stifled. Companies pay two unemployment insurance taxes. Because of the outstanding loan, the federal portion of the tax will rise next year by $21 per employee, officials said. The state’s portion of the tax, which increased 35 percent this year, could rise again. Butler already is empowered to increase the tax rate by another 15 percent, but he’s leaning against doing that.
– Cutting weekly jobless benefits, which average $260 now.
– Reducing the number of weeks — now 26 — that state benefits are paid.
– Revamping the current system. For example, employers only pay taxes on a worker’s first $8,500 of annual income. That could be raised under one proposal being considered.
– Borrowing money to repay the entire loan. But there are legal complications, including the likelihood that a constitutional amendment would be required to do that.
There is a sliver of good news amid these depressing options. For the past three months, the state has not needed to borrow more money, largely because initial claims have declined.
“We should have enough money to pay unemployment benefits [without borrowing] for the rest of the year,” Butler said.
WarOne wrote:The unemployment rate too, isn't that relative to people who want jobs but cannot get them?
Does it account for those who do not want to work (as Limbaugh claims the number jumps from the national average of 9%-ish to over 20%-ish)?
Citing Limbaugh?
The unemployment figure is misleading. It doesn't include everyone, but saying that 'they don't want to work' is misleading. For many, it is that their benefits have expired, or that they are working, but are underemployed (not enough hours, or not what their skills indicate they should be doing), or that they have stopped looking because the answer hasn't changed. While I'm sure that there are people who don't want to work (and really, who wouldn't like to retire early), that's not a trait I'd ascribed to 10% of the population.
Paul wrote: S&P have a job to do and blameing them for the market problems is like blaiming your doctor for your illness. They tell investors what they think the risk is and investors use that as part of a big bunch of data. The fact remains that the US government came painfully close to defaulting on debt. Now people don't trust them not to go over the edge for nothing more than an ideology.
Thank you. Ratings are about confidence, and S&P is saying they have less now. And realistically...wouldn't anyone?
mattyrm wrote: Can people not bring themselves to possibly accept any blame?
Nope. Apparently now S&P's to blame. It's just astounding.
(Man, the Brits on this board are nailing it.)
Redbeard wrote:The government could offer incentives to hire people. They could create disincentives to off-shoring jobs.
It'd take some bipartisanship and creativity, but we appear to be fresh out of those. I mean, I'm with you...but do you see it happening?
And while "it's all Obama's fault" is an astonishingly dumb opinion, I think it's accurate to say he hasn't shown the leadership this country needs right now. This Congress is an aimless, feckless disaster...which IMO puts pressure on the executive branch to seize the reins a little. And Obama hasn't shown that he's able to do that. He just isn't effective in his dealings with Congress.
Wow, so you counter a chart showing government revenue increasing with an editorial from the NYT?
What your editorial showed is that government revenue as a percentage of GDP decreased, but actual revenue increased after the Bush tax cuts. Which means that the economy was outgrowing the government. That's not necessarily a bad thing.
BearersOfSalvation wrote:Yeah, that bad ol obama, getting us in expensive wars in Afghanistan and Iraq...
Seriously, how can you blame Bush for starting the wars and not pass at least some of the blame onto Obama for continuing them?
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Redbeard wrote:
WarOne wrote:The unemployment rate too, isn't that relative to people who want jobs but cannot get them?
Does it account for those who do not want to work (as Limbaugh claims the number jumps from the national average of 9%-ish to over 20%-ish)?
Citing Limbaugh?
The unemployment figure is misleading. It doesn't include everyone, but saying that 'they don't want to work' is misleading. For many, it is that their benefits have expired, or that they are working, but are underemployed (not enough hours, or not what their skills indicate they should be doing), or that they have stopped looking because the answer hasn't changed. While I'm sure that there are people who don't want to work (and really, who wouldn't like to retire early), that's not a trait I'd ascribed to 10% of the population.
biccat wrote:
Seriously, how can you blame Bush for starting the wars and not pass at least some of the blame onto Obama for continuing them?
It's actually pretty simple.
Once a war has begun, the options and their relative values change.
Buying a house in 2006 was most likley a bad decision, but continuing to make payments on it despite it being underwater might still be the best option for a household.
Likewise, invading Iraq may have been a bad decision in 2003. Staying in Iraq in 2011 might still be a good decision.
So the relative rate we could best count is the percentage who are actually working rather than saying unemployed, which could be a vague term depending how you spin it?
well, you need to look at a lot of factors. The second article also introduced the "dependency ratio" which is essentially the percentage of the population dependent on the labor of others. It's going up, and is going up due to retirees rather than children, so there is going to be some organic increase in the e-pop.
Virtually every unemployment report for four years has alluded to huge numbers of people that aren't working but don't count. It's hard to really peg down the "would work if they could find a job" rate, but you can hint around it with more measures.
There's an underlying assumption to some conservative policies that, regardless of the economic situation, social welfare spending (unemployment, disability, relief) simply allows people to not work, and the unemployment rate would drop if you cut those programs, as people would be forced to work.
The underlying assumption to liberal policy is that people want to work, but can't, and should be supported to keep the economy going and prevent suffering.
The truth is probably in the middle. The consevative position is essentially supply side economics for labor, in whcih if there is enough supply demand will form. The problem is that a lot of the labor is really, well, worthless. Or not what anybody would want.
biccat wrote:Alternatively, a source that properly describes the government revenue.
If you massage the data the way he does, you can make the numbers say what you like. For example, using your source, compare the president's budget vs the ryan plan budget. You're going to need to find a link from one of his other sides, as the way-more-reliable-the-the-NYT source you provided throws a 404 for the link. ok, I won't make you dig. Notice anything? Despite the fact they are describing literally the same things, they do so in different ways with different numbers. The president's plan includes the word "taxes" 3 times, and shows deficit and the debt as the bottom line. The "Ryan plan" doesn't include the word taxes once, prominently displays "The president's health care law" despite the fact it's zero'd out, and omits the debt and the deficit both... the reason for this, I suspect, is that the Ryan plan actually increases the debt more then the Obama's.
Not that I'm bagging on either Ryan or the Ryan plan, mind you. I think his plan is wrong, but he took the time actually put together a plan, and had the grapes to actually hang it out there. No one else can make a similar boast. I respect him, although I disagree with him.
Would that I could say the same about the deceptive partisan hack, the shill, the snake-oil salesman you sourced.
Polonius wrote:well, you need to look at a lot of factors. The second article also introduced the "dependency ratio" which is essentially the percentage of the population dependent on the labor of others. It's going up, and is going up due to retirees rather than children, so there is going to be some organic increase in the e-pop.
Virtually every unemployment report for four years has alluded to huge numbers of people that aren't working but don't count. It's hard to really peg down the "would work if they could find a job" rate, but you can hint around it with more measures.
There's an underlying assumption to some conservative policies that, regardless of the economic situation, social welfare spending (unemployment, disability, relief) simply allows people to not work, and the unemployment rate would drop if you cut those programs, as people would be forced to work.
The underlying assumption to liberal policy is that people want to work, but can't, and should be supported to keep the economy going and prevent suffering.
The truth is probably in the middle. The consevative position is essentially supply side economics for labor, in whcih if there is enough supply demand will form. The problem is that a lot of the labor is really, well, worthless. Or not what anybody would want.
So could a balanced solution to the debt issue and employment in general be tied to a package of laws/initiatives/incentives that reduces federal spending in entitlements while also adding benefits to people who are seeking to hire, coupled with probably a whole host of things that while being anathema to both ends of the political spectrum has to be made reality in order to build confidence back in the market and the U.S. gov't?
Part of the right wing strategy for the last decade, and it's worked remarkably well, is to pretend that there are no degrees of severity, particularly with bias.
So, when people accuse a source of being biased, they simply respond with "well, so is yours."
And from a naval gazing, philisophical sense, objectivity is impossible.
There are two approaches to this: try to discern what is the most objective and put more weight in that, or try to zero it out and go with what supports your position/looks better/is easier to sell.
This debate is a classic micocosm. A partisan blogger is almost assuredly a more biased source than the New York Times. Now, the content might be incorrectly applied (date v. op-ed), but resting on the "I know you are but what am I" defense is common, because it's so damned effective.
WarOne wrote:So could a balanced solution to the debt issue and employment in general be tied to a package of laws/initiatives/incentives that reduces federal spending in entitlements while also adding benefits to people who are seeking to hire, coupled with probably a whole host of things that while being anathema to both ends of the political spectrum has to be made reality in order to build confidence back in the market and the U.S. gov't?
It depends. If you put Reagan in the title of the proposed law (like "The Reagan Plan to Punch Every American In the Junk Plan"), at evidence suggests a large percentage of the population will lobby strongly for it regardless of what it does.
Ouze wrote:Would that I could say the same about the deceptive partisan hack, the shill, the snake-oil salesman you sourced.
So are you simply deriding him because of his personal politics, or do you have a dispute with the numbers that were involved in the graph that I linked to?
Honestly, I have no idea who the hell the guy is, he just showed up as a result from a google search. I wasn't citing his site for it's analysis of the Obama versus Ryan plans. If you have some dispute with the site's numbers for government revenue from '00 through '10, then I am willing to reconsider my reliance on them. But since you haven't shown any reason to question those numbers (and the only 'source' you cited agrees with them), I see no reason to distrust the information.
I would also note that Bruce Bartlett lives in Ann Arbor, and therefore should be considered completely untrustworthy.
Polonius wrote:This debate is a classic micocosm. A partisan blogger is almost assuredly a more biased source than the New York Times. Now, the content might be incorrectly applied (date v. op-ed), but resting on the "I know you are but what am I" defense is common, because it's so damned effective.
There's more to bias than simply the source. You also need to consider the information presented.
I would trust the HuffingtonPost claiming that the sun rose at 7:15 AM this morning over a Wall Street Journal editorial claiming "it's been dark all morning."
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Ouze wrote:My previous post, which you clearly read because you quoted a small section of it, clearly indicates my rationale for considering him a partisan hack.
So you don't care about accuracy, merely making a political point?
Polonius wrote:This debate is a classic micocosm. A partisan blogger is almost assuredly a more biased source than the New York Times. Now, the content might be incorrectly applied (date v. op-ed), but resting on the "I know you are but what am I" defense is common, because it's so damned effective.
There's more to bias than simply the source. You also need to consider the information presented.
You are the same guy who, when I posted why I thought you were wrong, immediately argued not against what he said, but the venue from which he said it, yes?
WarOne wrote:So could a balanced solution to the debt issue and employment in general be tied to a package of laws/initiatives/incentives that reduces federal spending in entitlements while also adding benefits to people who are seeking to hire, coupled with probably a whole host of things that while being anathema to both ends of the political spectrum has to be made reality in order to build confidence back in the market and the U.S. gov't?
Well, the debt issue and unemployment are only tangentially related, in that both are symptoms of long term problems.
The solution to the debt issue is a broad based compromise, including cutting entitlements, raising the retirement age, ending the Bush era tax cuts, slashing discretionary as well as military spending, etc.
It'll be incredibly unpopular and almost never happen.
Unemployment will correct itself over time, but I dont' think there is much the government can do. Focused programs that teach job skills would help, but those have spotty track records. There are some jobs that can't be filled, even now. The global and national economies are only slowly growing, so it's hard to really increase the flow of money.
Economic growth comes from small companies. After a recession, large companies that survive are about as big as they're going to get. Small companies that grow into new markets and segments fuel the overall recovery. There are, in my limited knowledge, three impediments to start ups today:
1) Small business sell primarily to other small and medium sized businesses and consumers. Consumer spending is down, and likley to stay down as people pay off debt. That's hard to change.
2) Capital is hard to come by, as banks don't lend money, even though rates are low. You can't borrow, you can't grow.
3) The tax code broadly favors large businesses. It's more nuanced than that, of course, but the low effective "corporate rate" is mostly enjoyed by those businesses and industries that lobby. Modern oragnizations like LLCs get around that to an extent, but the tax code could be used to aid smaller business. This is where the real hiring could come from.
Polonius wrote:This debate is a classic micocosm. A partisan blogger is almost assuredly a more biased source than the New York Times. Now, the content might be incorrectly applied (date v. op-ed), but resting on the "I know you are but what am I" defense is common, because it's so damned effective.
There's more to bias than simply the source. You also need to consider the information presented.
You are the same guy who, when I posted why I thought you were wrong, immediately argued not against what he said, but the venue from which he said it, yes?
Ah, I believe I see the problem. You're responding to another poster. I've noticed that this happens often. Instead of replying to what I've actually posted, you're responding to what you think I've posted. Unfortunately, it's very difficult to respond to such a comment. If you want to continue in this manner, please post what you think I've posted so that I can defend that statement. Otherwise, we'll have to call it off.
And to respond briefly, I actually didn't argue against what he said based on the venue, I presented a comparison between the argument (my link) and response (your link). In short (I'm skipping the second paragraph where I expound on this difference and explain how your source doesn't dispute my point, nor does it support yours).
so you counter a chart showing government revenue increasing with an editorial from the NYT?
Polonius wrote:This debate is a classic micocosm. A partisan blogger is almost assuredly a more biased source than the New York Times. Now, the content might be incorrectly applied (date v. op-ed), but resting on the "I know you are but what am I" defense is common, because it's so damned effective.
There's more to bias than simply the source. You also need to consider the information presented.
I would trust the HuffingtonPost claiming that the sun rose at 7:15 AM this morning over a Wall Street Journal editorial claiming "it's been dark all morning."
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Ouze wrote:My previous post, which you clearly read because you quoted a small section of it, clearly indicates my rationale for considering him a partisan hack.
So you don't care about accuracy, merely making a political point?
It's good to know where you stand.
To be fair, your response to him that the source was biased was not to confirm it's reliability, but to attack the credibilty of his source based on bias.
Eventually the value of the information came out, but the first response was to do as I described.
On the merits, as I pointed out in an earlier post, both point out the stunningly obvious fact that "tax revenues are often more tied to the economy than rates" and "when spending outstrips intakes, problems can occur."
Your original point was that the tax cuts aren't part of the spending problem, which I suppose is true in the sense that you can always spend less. It's a reframing of the issue to a tautology, but like all tautologies, it's not very useful. It also pre-supposes the idea that the goverment spends too much money, and that spending, in and of itself, is a problem. For most people spending more than you take in, rather than spending on it's own, is the problem. If I'm in debt because I never reduced my spending after taking a pay cut, than I suppose it's my fault for not reducing spending.
From the "why exactly am I in debt" standpoint, all that matters is that I'm spending more than I'm making. There's no real benefit to cutting spending vs. increasing intake.
biccat wrote:So are you simply deriding him because of his personal politics, or do you have a dispute with the numbers that were involved in the graph that I linked to?
I repeat, I have posted why I find his methodology dishonest. You're welcome to scroll up if you'd like to read it.
biccat wrote:Honestly, I have no idea who the hell the guy is, he just showed up as a result from a google search. I wasn't citing his site for it's analysis of the Obama versus Ryan plans.
I'm aware of that. You raised the issue of bias, and so that "comparison" then became relevant.
biccat wrote:If you have some dispute with the site's numbers for government revenue from '00 through '10, then I am willing to reconsider my reliance on them. But since you haven't shown any reason to question those numbers (and the only 'source' you cited agrees with them), I see no reason to distrust the information.
It's your assertion, the onus is on you to prove the numbers are accurate. I'm not playing the "well, you show me another source so I can claim it's biased" game with you.
biccat wrote:I would also note that Bruce Bartlett lives in Ann Arbor, and therefore should be considered completely untrustworthy.
Polonius wrote:
Well, the debt issue and unemployment are only tangentially related, in that both are symptoms of long term problems.
The solution to the debt issue is a broad based compromise, including cutting entitlements, raising the retirement age, ending the Bush era tax cuts, slashing discretionary as well as military spending, etc.
It'll be incredibly unpopular and almost never happen.
That depends on how it is addressed, and not everything can be compromised. Retirement age cannot just be pushed back, people can only age so much. Telling someone who is 65 that they need to work another five years is cruel to say the least.
Entitlements are philosophically more than just giving someone something for nothing. There's nothing that says people have to abide by the existing rules. When you have a stratified class structure, those at the top clearly benefit more from the society than those at the bottom. As a result, those at the top should be expected to contribute more, while those at the bottom need to be given an incentive to remain in this stratified system. One incentive is the threat of jail - you follow the rules, or you go to jail. But, as incentives go, if its a question of starving outside of jail or eating inside jail, that's not much of one. Entitlements are what the wealthy offer to the poor as incentives not to riot, rebel, or overthrow the system. It's all too easy to criticize entitlement programs and welfare mentalities, but they serve a valuable purpose. Any society is only as secure as it's worst off members. I think that's something a lot of people forget. The wealth distribution in this country is horribly screwed, and it would only take something stupid, like taking away food stamps, to encourage those who aren't doing well to seek alternative means to bettering their station.
At the same time, we have so many infrastructure problems that don't require a lot of skilled labor to address. Rather than take away entitlements, why doesn't the government require some community service as a condition of receiving them? You get a welfare check, if you're able bodied, sign up for some task. Helping paint a bridge, picking trash up off the streets, working a couple hours at a food kitchen. The government could easily draw some benefit from the money they're paying out for entitlements and the society as a whole would benefit. Not only that, but the welfare mentality would be addressed, people would get the feeling that they're working for their food again, and that has value.
biccat wrote:If you have some dispute with the site's numbers for government revenue from '00 through '10, then I am willing to reconsider my reliance on them. But since you haven't shown any reason to question those numbers (and the only 'source' you cited agrees with them), I see no reason to distrust the information.
It's your assertion, the onus is on you to prove the numbers are accurate. I'm not playing the "well, you show me another source so I can claim it's biased" game with you.
I'm not playing a game here, I've satisfied the burden of production on the issue by showing a source that provides the information requested. Your burden then is to show why the information provided is inaccurate, either due to bias or by showing contrary data. You haven't done either.
Your attack of bias wasn't based on the information presented, but on other links. The only data you provided (assuming you intended to provide data by citing to the op-ed) confirmed the data I provided. At this point, you're simply disagreeing because you don't like the facts.
And to be generous, here's the source data. If there are errors in the information (that is, federal revenues didn't increase after 2003) then it should be in there.
Ouze wrote:
biccat wrote:I would also note that Bruce Bartlett lives in Ann Arbor, and therefore should be considered completely untrustworthy.
.... what??
Anyone from Ann Arbor should not be trusted. A wretched hive of scum and villany. I'm sure Polonius would agree.
Redbeard wrote:At the same time, we have so many infrastructure problems that don't require a lot of skilled labor to address. Rather than take away entitlements, why doesn't the government require some community service as a condition of receiving them? You get a welfare check, if you're able bodied, sign up for some task. Helping paint a bridge, picking trash up off the streets, working a couple hours at a food kitchen. The government could easily draw some benefit from the money they're paying out for entitlements and the society as a whole would benefit. Not only that, but the welfare mentality would be addressed, people would get the feeling that they're working for their food again, and that has value.
biccat wrote:I'm not playing a game here, I've satisfied the burden of production on the issue by showing a source that provides the information requested. Your burden then is to show why the information provided is inaccurate, either due to bias or by showing contrary data.
So, your feeling is that an acceptable way to debate is to posit an idea, gathered via (your words here) "i have no idea who the hell the guy is, he just showed up as a result from a google search", and then the onus is on someone else to do your research on why it's not true?
Fair enough; challenge accepted. I submit that your original statement, "revenue increased because of the Bush tax cuts", is untrue. I have a source clearly disproving it here.
I've proved my case! Now, you must attempt to disprove it, while I argue against the bias of every single source you now provide!
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Edit: If I can briefly go back On-T again, the market has staged a fair sized rally, 200+ points. Now I have a quandary. I've been beating myself up about not selling Apple when it was right around $400, especially when it was briefly $343. Now that's it's back at $360 wondering if I should pull the trigger or not.
biccat wrote:I'm not playing a game here, I've satisfied the burden of production on the issue by showing a source that provides the information requested. Your burden then is to show why the information provided is inaccurate, either due to bias or by showing contrary data.
So, your feeling is that an acceptable way to debate is to posit an idea, gathered via (your words here) "i have no idea who the hell the guy is, he just showed up as a result from a google search", and then the onus is on someone else to do your research on why it's not true?
No, actually you're wrong.
I know that the Bush tax cuts increased revenue to the government, because that's what tax cuts do, based on historical trends. There is a temporary drop in revenue to the government as the economy slightly lags, then there's a surge in revenue as the money that would normally be collected as taxes is passed through the economy to create more income, and therefore more tax revenue.
However, I fully accepted that some people would dispute this, or claim I was making s**t up. So I googled "US Government revenue" and found that guy's site. I looked at it, made sure that it wasn't just some SWAGs and properly sourced, and included the link in my comment.
I never would have thought a simple graph showing government revenues from one year to the next could be so contentious.
Ouze wrote:Edit: If I can briefly go back On-T again, the market has staged a fair sized rally, 200+ points. Now I have a quandary. I've been beating myself up about not selling Apple when it was right around $400, especially when it was briefly $343. Now that's it's back at $360 wondering if I should pull the trigger or not.
You can't go day to day with this sort of thing.
I imagine that in the long term Apple will continue to trend upward. If I was going to sell it I'd do it on one of those post-huge-release spikes.
I don't know that I'd use contentious, per se, as that would indicate one or both of us was getting heated. I'm not heated, I just disagree with you. Here's more sources for my stance that you're incorrect, by the way (though less reliable them Time Cube, I fear).
On other things, like the video game thing, I agree with you. /eh
biccat wrote:Seriously, how can you blame Bush for starting the wars and not pass at least some of the blame onto Obama for continuing them?
"How can you blame Fred for setting the house on fire and not pass at least some of the blame onto Joe for not putting them out yet?". I think I'm being trolled here, I have a hard time believing someone seriously asked that.
Ouze wrote:Edit: If I can briefly go back On-T again, the market has staged a fair sized rally, 200+ points. Now I have a quandary. I've been beating myself up about not selling Apple when it was right around $400, especially when it was briefly $343. Now that's it's back at $360 wondering if I should pull the trigger or not.
You can't go day to day with this sort of thing.
I imagine that in the long term Apple will continue to trend upward. If I was going to sell it I'd do it on one of those post-huge-release spikes.
Yeah, but I really need the money - my basement is flooding daily, and I don't know why, and because of the high humidity, the igniter in my dryer cracked, and so on. Also, maybe I should have mention this, but I bought it at the base of the recession - $80 a share. Since they pay no dividends, maybe it's time?
Ouze wrote:Yeah, but I really need the money - my basement is flooding daily, and I don't know why, and because of the high humidity, the igniter in my dryer cracked, and so on. Also, maybe I should have mention this, but I bought it at the base of the recession - $80 a share. Since they pay no dividends, maybe it's time?
No dividends and you've quadrupled your money? Why on earth would you even ask?
Also, there are plenty of better long-term growth positions you can take that would be a lot less riskier. Personally, I don't invest in consumer goods, simply because their markets are a lot more fickle.
Since I can't really dispute the Time Cube defense, I suppose we'll have to agree to disagree.
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BearersOfSalvation wrote:
biccat wrote:Seriously, how can you blame Bush for starting the wars and not pass at least some of the blame onto Obama for continuing them?
"How can you blame Fred for setting the house on fire and not pass at least some of the blame onto Joe for not putting them out yet?". I think I'm being trolled here, I have a hard time believing someone seriously asked that.
I can when Joe is the head of the Fire Department and rushed in screaming "stay back everyone, I'll take care of the fire!" Especially when he liberally sprays gasoline around the neighborhood while cackling maniacally.
When Joe takes an affirmative duty to correct a wrong and thereby precludes others from taking steps to correct that wrong, then Joe bears some responsibility for failing to act.
Ouze wrote: Now that's it's back at $360 wondering if I should pull the trigger or not.
Do we have a finanical expert on tap here at Dakka OT Consulting here for Ouze the investor?
Frazzled recommends everyone invest in canned goods and shotguns.
Here's what Obama should have announced yesterday as he had three days to do this. Flanked by Reid and Boener they should have jointly announced:
Budget:
*The members of the bipartisan commission on debt reduction.
*Announce that, as executive officer, he was unilaterally freezing all spending to current budgetary levels until such time as the budget balances. If there is no actual budget, then spending would be capped at actual 2010 levels.
*Announce that, as executive officer, he was unilaterally ordering that all future budgets be done on a zeroline basis.
Economics:
* A suspension on all new rules until such time as the GDP is growing faster than 2.5%. All government rules put in place since Jan. 1 are now rescinded. Going forward, all new regulations would have to have an economic impact assessment done prior to implementation.
* A new, jointly agreed upon commission tasked to put forth a simplified tax structure designed to promote domestic investment and put corporate taxes at no higher level than the lowest 20% of the world. The commission would have a three month timeline and all three would announce a bill to be voted on in two days that would make this a binding up or down vote.
* New energy development would be put on fast track, including all deepwater areas of under US control.
* Not rescind the no pass/no play school regulation program.
Indeed, American companies such as GE and Google are being killed by our high corporate taxes! When will this yoke be lifted from their weary necks, and they can innovate under the freedom of a 20% tax bracket?
biccat wrote:Seriously, how can you blame Bush for starting the wars and not pass at least some of the blame onto Obama for continuing them?
"How can you blame Fred for setting the house on fire and not pass at least some of the blame onto Joe for not putting them out yet?". I think I'm being trolled here, I have a hard time believing someone seriously asked that.
I can when Joe is the head of the Fire Department and rushed in screaming "stay back everyone, I'll take care of the fire!" Especially when he liberally sprays gasoline around the neighborhood while cackling maniacally.
When Joe takes an affirmative duty to correct a wrong and thereby precludes others from taking steps to correct that wrong, then Joe bears some responsibility for failing to act.
So, are you alleging that Obama made the situation in Iraq and Afghanistan? Because that's what your analogy suggests.
Frazzled wrote:US Presidents typically propose legislation via a member of the same party submitting the legislation officially.
Kilkrazy wrote:Is the president allowed to order budgets? I thought he proposed them and they had to be passed by Congress.
He doesn't have to spend the entire budget.
How do you acknowledge that the President doesn't actually make the budget and then immediately turn around and put the impetus right back on him? Wouldn't it be the Congress doesn't have to spend the entire budget?
Ouze wrote:Indeed, American companies such as GE and Google are being killed by our high corporate taxes! When will this yoke be lifted from their weary necks, and they can innovate under the freedom of a 20% tax bracket?
Cut out all loopholes except accelerated depreciation methods for domestic capital investment. Come on people this isn't hat hard.
Ouze wrote:Indeed, American companies such as GE and Google are being killed by our high corporate taxes! When will this yoke be lifted from their weary necks, and they can innovate under the freedom of a 20% tax bracket?
I mentioned this in an earlier post, but there's an argument to be made that comprehensive tax reform could lower the statutory rates, eliminate complexity, and increase revenue.
Essentially, rather than have a 35% tax with enough credits to zero it out, you apply a lower tax rate, but eliminate nearly all credits.
It's one way to actually encourage smaller companies, which are the engines of economic growth.
But it won't happen, because while theoretically a tax (rate) cut, it'll be an increase in the tax actually paid.
The opposite happened this taax year, when the "Making Work Pay" credit lapsed, but OASDI taxes went down 2%. It's a tax "cut", but only for those making over $40k (for married couples), those under that actually pay higher taxes now than before.
Frazzled wrote:US Presidents typically propose legislation via a member of the same party submitting the legislation officially.
Kilkrazy wrote:Is the president allowed to order budgets? I thought he proposed them and they had to be passed by Congress.
He doesn't have to spend the entire budget.
How do you acknowledge that the President doesn't actually make the budget and then immediately turn around and put the impetus right back on him? Wouldn't it be the Congress doesn't have to spend the entire budget?
He is the executive officer. CEO. He directs the actual agencies to do or not do. This is time honored tradition at the state level and occurs at the federal as well.
Congress may say "your budget is 20MM duccats" but there's no law requiring him to spend 20MM duccats. Indeed, even if there was one, what is Congress going to do?
Besides Congress would love it. Its plausible deniability. They like that, and it balances the budget.
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Polonius wrote:
Ouze wrote:Indeed, American companies such as GE and Google are being killed by our high corporate taxes! When will this yoke be lifted from their weary necks, and they can innovate under the freedom of a 20% tax bracket?
I mentioned this in an earlier post, but there's an argument to be made that comprehensive tax reform could lower the statutory rates, eliminate complexity, and increase revenue.
Essentially, rather than have a 35% tax with enough credits to zero it out, you apply a lower tax rate, but eliminate nearly all credits.
It's one way to actually encourage smaller companies, which are the engines of economic growth.
But it won't happen, because while theoretically a tax (rate) cut, it'll be an increase in the tax actually paid.
The opposite happened this taax year, when the "Making Work Pay" credit lapsed, but OASDI taxes went down 2%. It's a tax "cut", but only for those making over $40k (for married couples), those under that actually pay higher taxes now than before.
Redbeard wrote:At the same time, we have so many infrastructure problems that don't require a lot of skilled labor to address. Rather than take away entitlements, why doesn't the government require some community service as a condition of receiving them? You get a welfare check, if you're able bodied, sign up for some task. Helping paint a bridge, picking trash up off the streets, working a couple hours at a food kitchen. The government could easily draw some benefit from the money they're paying out for entitlements and the society as a whole would benefit. Not only that, but the welfare mentality would be addressed, people would get the feeling that they're working for their food again, and that has value.
That's a good idea.
It's actually not as good an idea as you think, for a lot of reasons.
First, few able bodied people really collect welfare. Most adults that do are single mothers, and are getting the money generally to care for their children.
Unemployment is different, because people pay into the system, and are in theory looking for work.
Second, you now have to hire people to supervise these projects, buy supplies, etc. The potential for graft is enormous.
Third, you run into problems with contractors as well as public employee unions, who are wondering why people making less than minimum wage are doing jobs they should be doing.
By the time you paid enough to actually try to get some labor out, you'll probably spend more than the labor is worth.
Polonius wrote:So, are you alleging that Obama made the situation in Iraq and Afghanistan? Because that's what your analogy suggests.
It's unquestionable that he increased spending in Afghanistan. Whether this made the situation worse (I assume is the missing word there) depends on which side of the fence you're standing on. However, taking the idea that all war spending is bad, then Obama certainly made the situation worse in Afghanistan.
Polonius wrote:So, are you alleging that Obama made the situation in Iraq and Afghanistan? Because that's what your analogy suggests.
It's unquestionable that he increased spending in Afghanistan. Whether this made the situation worse (I assume is the missing word there) depends on which side of the fence you're standing on. However, taking the idea that all war spending is bad, then Obama certainly made the situation worse in Afghanistan.
True, while bringing Iraq spending way down, and at least slowing the growth of overall spending on the two wars.
To continue the fire analogy, you're still madder at the guy who started one fire, began to put it out, only to start a second fire, than you are at the guy who helped put out the second fire and then diverted the resources to fight the first.
There's something to be said for just buggering out of there, and I'm sure the defense hawks on the right will say it if it's even attempted.
Polonius wrote:True, while bringing Iraq spending way down, and at least slowing the growth of overall spending on the two wars.
If he wanted to end the wars, he could have. As Commander in Chief of the Armed Forces, Obama has the power to withdraw troops to the U.S. He could have negotiated a peace treaty with Afghanistan and Iraq. By failing to do these things, he has perpetuated the war in both Iraq and Afghanistan. If your position is that these are both bad things, then their continuation is equally wrong.
I note with some amusement the sudden disappearance of the anti-war left.
Polonius wrote:To continue the fire analogy, you're still madder at the guy who started one fire, began to put it out, only to start a second fire, than you are at the guy who helped put out the second fire and then diverted the resources to fight the first.
I'm not entirely convinced that starting the wars in Iraq and Afghanistan were necessarily bad policy. I think that the continuation of the wars is inappropriate, and that it was poorly conducted, but that wasn't my call.
Redbeard wrote:At the same time, we have so many infrastructure problems that don't require a lot of skilled labor to address. Rather than take away entitlements, why doesn't the government require some community service as a condition of receiving them? You get a welfare check, if you're able bodied, sign up for some task. Helping paint a bridge, picking trash up off the streets, working a couple hours at a food kitchen. The government could easily draw some benefit from the money they're paying out for entitlements and the society as a whole would benefit. Not only that, but the welfare mentality would be addressed, people would get the feeling that they're working for their food again, and that has value.
That's a good idea.
One could argue that Americorps and Teach for America are exactly this sort of thing. Essentially the federal government pays people to do work for charities and private enterprises or, in the case of VISTA public works.
biccat wrote:I note with some amusement the sudden disappearance of the anti-war left.
I'm not sure how much time you spend on left-wing news sites (My guess, not much) but they haven't "gone" anyway. The wars are still extremely unpopular. Go to any left-wing news aggregator and do a search.
The Huffington Post takes Obama to task for the wars on a near-daily basis. Here's a featured piece from yesterday asking why we're even in Afghanistan. here's one bemoaning the lack of media coverage for war protests. Here's a major protest event piece from dailykos yesterday, planning a giant 9/12 style rally in October whose stated #2 goal is to end our wars.
biccat wrote:
I'm not entirely convinced that starting the wars in Iraq and Afghanistan were necessarily bad policy. I think that the continuation of the wars is inappropriate, and that it was poorly conducted, but that wasn't my call.
I think that when considering the continuation of any conflict one has to acknowledge to the way the initiation of a conflict defines it. For example, the nature of forces initially committed to engagement necessarily determines how quickly they can be removed, redeployed, or alternatively supported.
As both Iraq and Afghanistan have shown, it is relatively easy to enter a conflict, but very difficult to change the course of one.
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Ouze wrote:
biccat wrote:I note with some amusement the sudden disappearance of the anti-war left.
I'm not sure how much time you spend on left-wing news sites (My guess, not much) but they haven't "gone" anyway. The wars are still extremely unpopular. Go to any left-wing news aggregator and do a search.
The Huffington Post takes Obama to task for the wars on a near-daily basis. Here's a featured piece from yesterday asking why we're even in Afghanistan. here's one bemoaning the lack of media coverage for war protests. Here's a major protest event piece from dailykos yesterday, planning a giant 9/12 style rally in October whose stated #2 goal is to end our wars.
Indeed. Words like "betrayed" are common in many liberal opinion pieces regarding the war.
Ouze wrote:here's one bemoaning the lack of media coverage for war protests.
Then maybe I should have said "visible anti-war left." Gone are the massive protests and the breathless reporting of ten or fifteen "anti-war protestors" on a street corner.
It's almost like the media had a political agenda (that is, "political party" political, not "supporting a cause" political). Crazy, I know.
biccat wrote:
I know that the Bush tax cuts increased revenue to the government, because that's what tax cuts do, based on historical trends.
Its been shown that tax cuts affect behavior by placing additional money in the hands of consumers and investors, which goes on to create additional jobs. However, it has not been shown that this necessarily increases state revenue. It is true that tax cuts "pay for themselves" to some extent, but it is rare for the revenue so generate to cover the entire cost of the rate deductions.
biccat wrote:
There is a temporary drop in revenue to the government as the economy slightly lags, then there's a surge in revenue as the money that would normally be collected as taxes is passed through the economy to create more income, and therefore more tax revenue.
But not necessarily more tax revenue than would have been generated by higher tax rates.
Polonius wrote:True, while bringing Iraq spending way down, and at least slowing the growth of overall spending on the two wars.
If he wanted to end the wars, he could have. As Commander in Chief of the Armed Forces, Obama has the power to withdraw troops to the U.S. He could have negotiated a peace treaty with Afghanistan and Iraq. By failing to do these things, he has perpetuated the war in both Iraq and Afghanistan. If your position is that these are both bad things, then their continuation is equally wrong.
I'm not an expert on security policy. I'm not arguing the merits of the war, then or now. I'm merely saying that it's not logically inconsistent to hold that entering a war was bad policy, but continuing it is good (or the best) policy.
I note with some amusement the sudden disappearance of the anti-war left.
They're simply wherever all the deficit hawk rightwingers were for 8 years. Partisans are, well, partisan!
Though you can make the argument that the Iraq War was the bigger problem for more of the protestors, and the situation in Iraq has gotten better by nearly any measure.
Polonius wrote:To continue the fire analogy, you're still madder at the guy who started one fire, began to put it out, only to start a second fire, than you are at the guy who helped put out the second fire and then diverted the resources to fight the first.
I'm not entirely convinced that starting the wars in Iraq and Afghanistan were necessarily bad policy. I think that the continuation of the wars is inappropriate, and that it was poorly conducted, but that wasn't my call.
Neither am I. It's likely more a matter of timing, but Obama's stategy seems to be more productive, in that the Iraq draw down has been pretty successful, and Bin Laden was captured. I've yet to read too many serious strategists or policy wonks that felt that diverting resources from Afghanistan wasn't some form of blunder.
I haven't seen any real analysis on why we simply can't leave either or both. If anybody has any to recommend, I'd appreciate it.
Polonius wrote:
Though you can make the argument that the Iraq War was the bigger problem for more of the protestors, and the situation in Iraq has gotten better by nearly any measure.
Quick question for clarification, are you saying that the situation in Iraq has gotten better so that's why there is less protest about it? I'm not arguing, just trying to figure out what you mean.
Polonius wrote:
Though you can make the argument that the Iraq War was the bigger problem for more of the protestors, and the situation in Iraq has gotten better by nearly any measure.
Quick question for clarification, are you saying that the situation in Iraq has gotten better so that's why there is less protest about it? I'm not arguing, just trying to figure out what you mean.
Yeah, at least from a money spent/troops deployed/deaths standpoint.
I think you're correct in that the main reason the protests ended was because they were more against Bush than the war, but there is at least some progress in Iraq.
There's also still quite a large number of protests. There was a 15,000 man one in New York a few months ago, one outside the White House in early July, and one in California in March, I believe.
The protests still exist, they just aren't being covered.
But yes, many of the anti-war protests were anti-Bush protests with anti-war signs in the mix.
Polonius wrote:
Though you can make the argument that the Iraq War was the bigger problem for more of the protestors, and the situation in Iraq has gotten better by nearly any measure.
Quick question for clarification, are you saying that the situation in Iraq has gotten better so that's why there is less protest about it? I'm not arguing, just trying to figure out what you mean.
Yeah, at least from a money spent/troops deployed/deaths standpoint.
I think you're correct in that the main reason the protests ended was because they were more against Bush than the war, but there is at least some progress in Iraq.
Just making sure you didn't have a typo or anything.
warpcrafter wrote:And that's your tax money at work, folks.
Because everything was just fine till President Obama was sworn in.
This what makes me laugh as well, its the same in the UK. The Labour party were in charge for 13 YEARS, the market crashed in 2007, the outgoing chancellor left a note on the incoming guys desk saying "THERES NO MONEY LEFT, LOLZ!" and now its the current guys fault were skint?
Im stunned by this logic fail.
Obama has been in charge for what, 2 years? How the feth can people blame all this gak on him?!
I mean, I don't even like Obama, but its obvious when people are just being sickeningly partisan.
Can people not bring themselves to possibly accept any blame? Im not particularly well versed in US politics being an Englishman, but BC had a surplus right? And Bush was running up epic debts pretty much the entire time he was in office! How then, can something like this be Obama's fault when he is a relative newcomer? You cant feth an economy up over night!
Clinton and the Republican Congress had a decent budget surplus (around $200 billion) that was eaten up in spending after 9/11. His projected surpluses over 10 years from the OMB and CBO were going into the downright silly towards the end. ($5.6 Trillion in surpluses over 10 years? Only in everyone's dreams)
It's not just Obama's policies that have made the markets shaky, it's his words. He has yet to say he'll take tax increases of the table, he hasn't said that he'll lower or leave alone the corporate income and the capital gains tax, he hasn't said that he will stop spending at a level unseen in human history. All of this is uncertainty and it makes investors extremely nervous. Obamacare is going to be a compliance nightmare for larger corporations and will lead to much higher costs of doing business.
The only reason that the bottom hasn't fallen through is that there's no where else to take the money. Japan is an economic mess, China is having inflationary issues and their commodities futures have been poor and the Eurozone will be on the hook for the PIGS' ludicrous debt bombs. We're damn lucky that we haven't collapsed.
Stormrider wrote:He has yet to say he'll take tax increases of the table, he hasn't said that he'll lower or leave alone the corporate income and the capital gains tax, he hasn't said that he will stop spending at a level unseen in human history. All of this is uncertainty and it makes investors extremely nervous.
And he won't do any of those things, nor should he given that the political situation will likely require him to renege on such a promise. The elder Bush ably demonstrated what making such pronouncements is apt to cause.
Stormrider wrote:
Obamacare is going to be a compliance nightmare for larger corporations and will lead to much higher costs of doing business.
That depends on how many corporations keep their health plans.
Stormrider wrote:
The only reason that the bottom hasn't fallen through is that there's no where else to take the money. Japan is an economic mess, China is having inflationary issues and their commodities futures have been poor and the Eurozone will be on the hook for the PIGS' ludicrous debt bombs. We're damn lucky that we haven't collapsed.
Not really. Anything regarding global economics that you realize is likely something that politicians also realize, and took into account in their decision-making. Contrary to popular belief, there are very few incompetent politicians at the national level because those offices are not easy to secure, and they generally have a large array of support staff keeping them informed.
The last thing I want is for Obama to say tax increases are off the table. Having a worthwhile society to live in costs money, and living on debt is just not smart.
Those who have benefited the most from the rules that our society has are those who should pay the most towards sustaining it. I don't mind paying my share, but I resent seeing those who have clearly gained more from the system paying less than me. I suspect I am not alone in this.
Redbeard wrote:The last thing I want is for Obama to say tax increases are off the table. Having a worthwhile society to live in costs money, and living on debt is just not smart.
Those who have benefited the most from the rules that our society has are those who should pay the most towards sustaining it. I don't mind paying my share, but I resent seeing those who have clearly gained more from the system paying less than me. I suspect I am not alone in this.
How far does that go? If the government spends money wastefully, should we just shrug, dig a little deeper, and pay up? Or do the taxpayers (those who pay taxes) have some say in how much is taken from them and for what purpose?
I also resent seeing those who have clearly gained more from the system paying less. Like social security, medicare, medicaid, welfare, farm subsidies, green energy subsidies, and pretty much every other type of direct fund transfer from the government to individuals. I suspect I am not alone in this.
Stormrider wrote:It's not just Obama's policies that have made the markets shaky, it's his words. He has yet to say he'll take tax increases of the table, he hasn't said that he'll lower or leave alone the corporate income and the capital gains tax,
That's because it'd be utterly irresponsible. And I doubt the ratings agencies would like it.
Personally, I think a lot could be accomplished with a simpler tax code. Which would technically represent a tax hike in some areas, but would raise revenue and have other benefits. I think it'd even have some bilateral support if Congress could stop acting like children...which they can't.
Why do people believe that the govt spends money wastefully? For as little as the American people are Taxed, our government sure does a lot. Most people are confused I think in relating money given to the government as lost wages. Americans want to improve their take home pay by decreasing their tax burden. Instead, doesn't it make sense to just aim to improve your gross pay? This is what befuddles me, too many people feel out of control of their source of income. Get a better job, suffer to improve your skill set, or be happy w/ the lot you have. The gov't helps most people in this country, and saves them from pure corporate Capitalists. Capitalism has become corrupted in a race to the bottom line and is gonna shoot itself in the foot. It's a shame.
biccat wrote:I'm not entirely convinced that starting the wars in Iraq and Afghanistan were necessarily bad policy. I think that the continuation of the wars is inappropriate, and that it was poorly conducted, but that wasn't my call.
I give you a 9.6 as the mental gymnastics judge. Placing the blame on Obama for not ending the wars quickly because they've been going on under him for half as long as they did under Bush, and not on Bush for, you know, starting them in the first place with no plan to actually finish them is just amazing.
That's a really poor argument to make. Fraud is crime. You can no more say that the government is spending money wastefully when they (or, perhaps we) are the victims of fraud, than you can say that a bank spends money poorly when it is robbed, or that a rape victim is bad at family planning.
Rather than saying that the government's policy of helping those members of society who most need help is wrong, you should be arguing that better systems should be in place to prevent fraud in the execution of the policy. Which I'd agree with.
That's because it is. When the government takes money from me by threat of force, I have less money to spend on things that I want or need.
Now you're arguing for the abolishment of all taxes? When you have to build all the roads that you use, you'll have a lot less money to spend on other things.
biccat wrote:
How far does that go? If the government spends money wastefully, should we just shrug, dig a little deeper, and pay up? Or do the taxpayers (those who pay taxes) have some say in how much is taken from them and for what purpose?
Last time I checked, you did have some say in that. Isn't that why you elect representatives? I don't disagree that we're living beyond our means at the moment, and that we need to cut our spending as part of a smarter fiscal policy. However, additional taxes are also part of the solution. And they should be focused on those who have benefited the most from the society we all share. If you're making over a million a year, yes, you should be paying more than you are now. And if that doesn't give you enough to spend on all the things you want, well, you'll have to save a little. If you're not in that category, you have zero reason why you should be opposed to increased taxes on the wealthy.
That's a really poor argument to make. Fraud is crime. You can no more say that the government is spending money wastefully when they (or, perhaps we) are the victims of fraud, than you can say that a bank spends money poorly when it is robbed, or that a rape victim is bad at family planning.
Wow, way to completely distort the issue.
Fraud against a government agency is different than fraud against any private actor because the government has very little interest in preventing it. I have an incentive to avoid fraud because fraud reduces my buying power. The government doesn't have that incentive, because they can just tax, borrow, or print more money to make up the difference.
Redbeard wrote:Rather than saying that the government's policy of helping those members of society who most need help is wrong, you should be arguing that better systems should be in place to prevent fraud in the execution of the policy. Which I'd agree with.
Why should I argue that? It's your point. I don't think that I bear any personal obligation to "help[] those members of society who most need help." (I do give to charitable causes but none of them threaten to send me to prison if I choose not to give)
Redbeard wrote:Now you're arguing for the abolishment of all taxes? When you have to build all the roads that you use, you'll have a lot less money to spend on other things.
First, I'm not arguing for the abolishment of all taxes. But taxes are a necessary evil, not a universal good.
Second, I do think that the "government" can provide roads. But (a) it should be a function of state/local governments; (b) it's a very minor portion of the federal budget; and (c) this is the best place to address wasteful spending.
Redbeard wrote:However, additional taxes are also part of the solution.
Why? In 1999 the Federal Budget was $1.7 trilliion (assuming that this accounted for all of the spending that year, which it didn't, but since it's used as an example of responsible government, lets go with it). Revenue was at 19% of GDP.
In 2011 dollars, that $1.7 trillion is $2.3 trillion. Our GDP is $14.7 trillion (2010). At 18% taxation (1% less than in 1999), that would be $2.6 trillion in revenue. That leaves $300 billion for the wars in Iraq, Afghanistan, and Libya.
So, what essential services do we have now that absolutely cannot be cut that were not present in 1999? (edit: note that Medicare Part D was only $68 billion in '10)
Redbeard wrote:And they should be focused on those who have benefited the most from the society we all share. If you're making over a million a year, yes, you should be paying more than you are now. And if that doesn't give you enough to spend on all the things you want, well, you'll have to save a little. If you're not in that category, you have zero reason why you should be opposed to increased taxes on the wealthy.
Your moral grandstanding is impressive, if not necessarily admirable. Suffice to say that there are plenty of reasons to oppose increased taxes on the wealthy. Here's one: legal equality.
Redbeard wrote:The last thing I want is for Obama to say tax increases are off the table. Having a worthwhile society to live in costs money, and living on debt is just not smart.
Those who have benefited the most from the rules that our society has are those who should pay the most towards sustaining it. I don't mind paying my share, but I resent seeing those who have clearly gained more from the system paying less than me. I suspect I am not alone in this.
Indeed, tax cuts for the wealthy are simply ludicrous.
biccat wrote: Fraud against a government agency is different than fraud against any private actor because the government has very little interest in preventing it. I have an incentive to avoid fraud because fraud reduces my buying power. The government doesn't have that incentive, because they can just tax, borrow, or print more money to make up the difference.
I disagree that the government has little interest in preventing it. I do think that preventing it can be a monumental task at times, but that's not the same as not having an incentive.
I agree with you, those are some good examples of bad government spending. But earmark spending is not the same issue as entitlements. Don't confuse the two. What's more, if you look at why there are earmarks, you'll find that they do serve some purpose. I don't like the way that they're used, but they are, in essence, a form of governmental compromise. If you want to pass a bill that hurts one group of people, but helps a lot of others, those who get hurt can be given a replacement for what they are losing. That's what's going on with programs like the above. Some bill is going to impact those in Alaska. Rather than just hurt them, they create jobs - building a bridge to no where. I think it's a bad way to create those jobs, but that's why that happens.
Why should I argue that? It's your point. I don't think that I bear any personal obligation to "help[] those members of society who most need help."
That's been an accepted point of economic theory since Adam Smith addressed it in Wealth of Nations. If you can't see it, then there is no further point discussing this with you.
"What improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable."
What's more, no society can be more secure than its least fortunate members. The riots in London are a good example of this sort of thing starting to happen. Highly stratified societies aren't good. Those at the bottom have little incentive to play by the rules, as jail is often a preferable alternative to hunger. Whether you acknowledge your role in society or not, you do personally benefit from entitlement programs, in that when those at the bottom are fed, they're less likely to steal your stuff. I don't care one way or the other about the morals of letting people starve, I care about the pragmatic effect that starving people have on the rest of us.
And as for your 'legal equality' thing - whatever. I pay a higher percentage of my income than people who make far more than I do, because I don't have the loopholes that they do. You complain about how fraudulent claims cost the government. Well, the loopholes in the tax code cost us just as much, only they're legalized by special interest groups and lobbyists.
Redbeard wrote:I agree with you, those are some good examples of bad government spending. But earmark spending is not the same issue as entitlements. Don't confuse the two.
I'm not confusing the two, I was responding to the poster who asked why people think the government is inefficient.
The short answer is: because government doesn't have to compete for scarce resources. But examples tend to be easier to grasp.
Redbeard wrote:What's more, if you look at why there are earmarks, you'll find that they do serve some purpose. I don't like the way that they're used, but they are, in essence, a form of governmental compromise. If you want to pass a bill that hurts one group of people, but helps a lot of others, those who get hurt can be given a replacement for what they are losing. That's what's going on with programs like the above. Some bill is going to impact those in Alaska. Rather than just hurt them, they create jobs - building a bridge to no where. I think it's a bad way to create those jobs, but that's why that happens.
That's uh...wow.
So it's good to build a bridge to nowhere because it creates jobs. Why not give the money to Alaska and let them build a bridge wherever they want? Or, how about not spending the money and letting it be put to a more efficient use.
Redbeard wrote:That's been an accepted point of economic theory since Adam Smith addressed it in Wealth of Nations. If you can't see it, then there is no further point discussing this with you.
I honestly can't see how I owe any obligation to someone who consumers the resources that I produce. What have I done that requires me to give them money? What have they done that entitles them to my money?
Am I simply supposed to pay them off so they don't riot? Is government welfare simply an elaborate extortion scheme to keep the impovershed from threatening the livelihood of the wealthy? If that's the case, then I would redouble my calls to abolish the welfare state, because that description of welfare is tantamount to slavery or an oligarchy where the 'upper class' keep the poorer class suppressed so that they can maintain their standards of living. I'm not interested in living in such a society.
I'd rather prefer the society where people are free to earn whatever livelihood that they want by expending their labor in exchange for wages. And if some people choose to give to charitable organisations to help those who need it, good for them.
I'm still curious as to why we need to raise taxes. What programs do we have now that didn't exist in 1999 and we absolutely, positively cannot possibly cut from the budget?
biccat wrote:
Fraud against a government agency is different than fraud against any private actor because the government has very little interest in preventing it. I have an incentive to avoid fraud because fraud reduces my buying power. The government doesn't have that incentive, because they can just tax, borrow, or print more money to make up the difference.
There are strong political reasons to prevent it, just as there are strong political reasons to avoid preventing it. In fact, you're demonstrating the former right now.
The trouble is that, in terms of medicare at least, much of the fraud comes as a result of the exclusions for critical diseases which circumvent many of the bureaucratic checks in order to prevent people from dying before they receive Medicare coverage. Keep in mind this latter condition is both a political and fiscal problem. A person that dies before receiving Medicare becomes a political liability for many people, mostly House members. A person that is suffering from a critical disease, but is forced to pay for expenses out of pocket is actually an even bigger problem, because they are a political liability, and are likely to be an additional burden on Medicare due to the financial impact that comes with taking on medical debt, and possibly entering bankruptcy.
biccat wrote:
First, I'm not arguing for the abolishment of all taxes. But taxes are a necessary evil, not a universal good.
I don't think anyone called them universal goods, though if you already see them as "evil" I can see how it might be difficult to discuss them in relatively neutral terms.
biccat wrote:
Why? In 1999 the Federal Budget was $1.7 trilliion (assuming that this accounted for all of the spending that year, which it didn't, but since it's used as an example of responsible government, lets go with it). Revenue was at 19% of GDP.
In 2011 dollars, that $1.7 trillion is $2.3 trillion. Our GDP is $14.7 trillion (2010). At 18% taxation (1% less than in 1999), that would be $2.6 trillion in revenue. That leaves $300 billion for the wars in Iraq, Afghanistan, and Libya.
So, what essential services do we have now that absolutely cannot be cut that were not present in 1999? (edit: note that Medicare Part D was only $68 billion in '10)
The issue isn't what is essential, it is what is politically feasible. Prior to the bailout and stimulus bills it would have been feasible to address the 2009 deficit with restrictions on discretionary spending. At this point the likely reality is that additional taxes will be necessary, even pending the Supreme Court ruling on healthcare.
biccat wrote:
Depending on how "wealthy" is defined increasing taxes on the wealthy can very well be consistent with legal equality, at least if we're considering "raising taxes" to be in line with "raising the effective tax rate" which seems sensible considering that any particular increase in any given tax is not necessarily material to what people actually pay.
dogma wrote:The issue isn't what is essential, it is what is politically feasible.
And I'm questioning the political reasoning as to why tax cuts are necessary.
dogma wrote:Depending on how "wealthy" is defined increasing taxes on the wealthy can very well be consistent with legal equality, at least if we're considering "raising taxes" to be in line with "raising the effective tax rate" which seems sensible considering that any particular increase in any given tax is not necessarily material to what people actually pay.
Legal equality means that people are treated equally before the law regardless of their relative standings. A progressive tax is simply the inverse of Anatole France's quote:
"The law, in its majestic equality, forbids the rich and the poor alike to sleep under bridges, to beg in the streets, and to steal bread."
biccat wrote: What have I done that requires me to give them money? What have they done that entitles them to my money?
You live in a society predicated on the rule of law and order, which is enforced by a government that represents a nation that has historically decided that entitlements are useful means of maintains the "order" part of "law and order". That doesn't mean you have to like this particular means of maintaining order, but it does mean you are doing something (living in the United States) which requires you to give them money. Of course, the United State has democratic participation and freedom of speech, so you are free to voice your discontent and vote in a way which is consistent with a desire to change things.
biccat wrote:
Am I simply supposed to pay them off so they don't riot? Is government welfare simply an elaborate extortion scheme to keep the impovershed from threatening the livelihood of the wealthy? If that's the case, then I would redouble my calls to abolish the welfare state, because that description of welfare is tantamount to slavery or an oligarchy where the 'upper class' keep the poorer class suppressed so that they can maintain their standards of living. I'm not interested in living in such a society.
In some sense, yes. People who have a vested interest in the existence of the state tend to be unlikely to oppose the state. This, generally, means the poor (which, in the US, basically means the lower-middle class, and in other countries is the "peasant class" or lower class) and the wealthy (generally, this means the capitalist class, which is relatively large in the US). The middle class (minus US exclusions) tends to have a mixed appraisal of the state according to their particular situation, but generally is the most likely to oppose the state (Marx was, at the very least, right about the whole petite bourgeoisie thing).
However, keep in mind this not so much a system of slavery as it is another tool to fuel social mobility, as displayed in numerous countries to an admittedly much greater extent than in the US. It would be tantamount to slavery if there were legal restrictions on leaving the welfare rolls, or somehow suppressive. The only sense in which it is akin to slavery is the same sense in which Marxists discuss "wage-slavery".
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biccat wrote:
And I'm questioning the political reasoning as to why tax cuts are necessary.
I assume you meant tax increases.
It seems more like you're questioning the fiscal reasoning. The political reasoning for a lot of these programs has very little to do with national politics, except in the sense they relate to discretionary spending as a whole, which is why they're difficult to really hack away at. Everyone wants the discretionary spending of other people's representative reigned in, but relatively few people want the discretionary spending of all representatives reigned in.
Its like when terrible journalists look at an approval poll of Nancy Pelosi taken in Texas, and subsequently conclude that Nancy Pelosi is wildly unpopular, and will lose her next bid for reelection. Only Nancy Pelosi doesn't care, because Nancy Pelosi doesn't have to worry about Texas voters, she has to worry about voters in the California 8th. These voters might support discretionary spending reform, but they probably support the continuation of otherwise wasteful programs that happen in their district even more.
biccat wrote:
Legal equality means that people are treated equally before the law regardless of their relative standings. A progressive tax is simply the inverse of Anatole France's quote:
"The law, in its majestic equality, forbids the rich and the poor alike to sleep under bridges, to beg in the streets, and to steal bread."
Yes, and if the effective tax rate of the wealthy is significantly lower than the effective tax rate of the middle class (and there are arguments to that effect) then raising taxes on the wealthy works towards legal equality, presuming we're determining legal equality via the effective tax rate; which is certainly not the only measure of equality in this case. This is particularly true of we're using France's quote, in which case all are equal before the law in being required to pay a tax on income, though in many cases this tax may later be refunded.
biccat wrote:I also resent seeing those who have clearly gained more from the system paying less. Like social security, medicare, medicaid, welfare, farm subsidies, green energy subsidies, and pretty much every other type of direct fund transfer from the government to individuals. I suspect I am not alone in this.
Which only makes sense if one defines the system beginning and ending with tax and social security, and makes no damn sense if you understand that those are just part of a greater system that allows us all to earn money in the first place.
Here's the thing, all those innovative, incredibly brilliant businessmen who've made personal fortunes in the millions and billions and who pride themselves on being self made men... if there was no society that enforced their contracts and allowed their businesses, that supported their corporate structures, that under-wrote the research their businesses rely on, that provided education to give them a steady supply of skilled labour, they wouldn't be able to generate billions in wealth. They would, at best, have a sturdy log cabin and enough meat to last them through the winter.
When you talk about the people who've gotten the most from the system, you should be talking about the very richest people in society. You should be annoyed that the people who have gotten the most from society are complaining about how much they have to pay, you should be scoffing at the crazy schemes to have them pay as little as anyone else. But you aren't, because you don't understand what the system actually is.
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biccat wrote:Fraud against a government agency is different than fraud against any private actor because the government has very little interest in preventing it. I have an incentive to avoid fraud because fraud reduces my buying power. The government doesn't have that incentive, because they can just tax, borrow, or print more money to make up the difference.
When a politician comes out and says 'we've identified wasteful expenditure and saved you all millions of dollars' this is responded to very well by voters, and that politician's chances of returning to office are excellent. On the other hand, announcing a tax hike or a big deficit budget is very unpopular, and will hurt with voters.
This is plain and obvious common sense, and should be obvious to anyone that governmental waste still happens because like waste in any large organisation, it is very hard to stop. We probably need to spend a half dozen or more posts examining how your far right dogma caused you to miss that very obvious point, and invent a very silly claim instead.
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biccat wrote:Legal equality means that people are treated equally before the law regardless of their relative standings. A progressive tax is simply the inverse of Anatole France's quote:
"The law, in its majestic equality, forbids the rich and the poor alike to sleep under bridges, to beg in the streets, and to steal bread."
You need to do more reading, because I think you've really misunderstood the irony France intended with that quote. The point you see, is that to assume both men are treated equally is to fail to understand how the law really operates as part of society. We might have the same punishment for anyone who sleeps under bridges, but society only requires it of the poor man, while the rich man sleeps in his mansion.
France eventually became a communist by the way, in large part because of the way the way the law protected the status of the bourgeouis. He was a tremendous fan of irony, so I suspect he'd probably be quite delighted at the way you've misused his quote there.
biccat wrote:Legal equality means that people are treated equally before the law regardless of their relative standings. A progressive tax is simply the inverse of Anatole France's quote:
"The law, in its majestic equality, forbids the rich and the poor alike to sleep under bridges, to beg in the streets, and to steal bread."
You need to do more reading, because I think you've really misunderstood the irony France intended with that quote. The point you see, is that to assume both men are treated equally is to fail to understand how the law really operates as part of society. We might have the same punishment for anyone who sleeps under bridges, but society only requires it of the poor man, while the rich man sleeps in his mansion.
France eventually became a communist by the way, in large part because of the way the way the law protected the status of the bourgeouis. He was a tremendous fan of irony, so I suspect he'd probably be quite delighted at the way you've misused his quote there.
I'm not sure why you think I've misused the quote. Especially since I said that progressive taxation is the inverse of his quote:
"The law, in its majestic equality, punishes the rich and poor alike for earning over $1 million per year"
You may think, as many on the illogical left do, that progressive taxation is fair, but it's not. Punishing the rich for earning money stems exactly from the same logic as punishing the poor for sleeping under bridges.
To use another poster's language, "I've thought a few times that we must finally have reached the bottom of intellectual incoherence in the US leftwing, that surely now they'd start to man up, get honest, and get back to being the party of Kennedy. I've been wrong everytime before, but maybe just maybe this is as bad as it's going to get, and from now on we might see some improvement."
biccat wrote:
I'm not sure why you think I've misused the quote. Especially since I said that progressive taxation is the inverse of his quote:
"The law, in its majestic equality, punishes the rich and poor alike for earning over $1 million per year"
You may think, as many on the illogical left do, that progressive taxation is fair, but it's not. Punishing the rich for earning money stems exactly from the same logic as punishing the poor for sleeping under bridges.
You're making invalid assumptions. The first is that being taxed is a punishment. Taxes are not a punishment, they're a cost. Society provides infrastructure. It is this infrastructure that allows certain people to make their million dollars a year, while others make less than $10k. There is not one person you can point to and say, "this person made his money all by himself". Not one. Without the resources that taxes provide, and the protections that government supplies, no one can be rich.
A rich man benefits from having a fire department, a homeless man does not. A rich man benefits from a society that has rules to protect the right of an individual to own property, and a police force that enforces these rules. A poor man has little property to own, and none worth stealing. A rich man benefits from an established transportation network that allows him to get his goods to market. A poor man can walk on grass as easy as he can walk on a road. If you cannot see how the wealthy benefit more from every aspect of the society we live in, you are truly blind and brainwashed by right-wing talk radio hosts.
To say that it is unfair that the rich are expected to shoulder a greater proportion of the structure of society is asinine. The only way that this can be considered unfair is if it is also recognized that it is unfair that the rich have benefited more from what society has provided them.
Redbeard wrote:You're making invalid assumptions. The first is that being taxed is a punishment. Taxes are not a punishment, they're a cost.
Taxes are a limitation on someone's purchasing power. While you may not want to call it a punishment, the fact is that you're creating a detriment to success by taking money from those who earn it by threat of force.
Progressive taxation decreases the value of additional labor expended by a person which leads them to work less. If I can make $100/hour for every hour I work and that's more than I value my time spent doing other things, I will work as much as I can to maximize my income. However, when you introduce a progressive tax, the amount I receive for each hour of work decreases, and I'm eventually going to prefer to spend more time doing something else (playing with my daughter perhaps).
So at $100/hour, I might work 80 hours a week. That would produce $8,000 worth of value to the economy. If you're going to tax everything over $6,000/week at 95%, then those extra 20 hours I worked are only worth $5/hour. I'm not willing to work another 20 hours for only $5 per hour, so the taxation system has actually destroyed $2,000 worth of economic output.
Redbeard wrote:Society provides infrastructure. It is this infrastructure that allows certain people to make their million dollars a year, while others make less than $10k. There is not one person you can point to and say, "this person made his money all by himself". Not one. Without the resources that taxes provide, and the protections that government supplies, no one can be rich.
Even if this is true, what is the benefit provided by welfare? What benefit is provided by social security? How does having a non-producing recipient improve the ability of the producer to make money?
You're taking the basic construct of society (providing infrastructure and legal processes) and using it to defend everything that the government does. As I said before, I'm not advocating against some taxation, I'm arguing against progressive taxation and, more importantly, increased taxation to provide for benefits that haven't been shown to actually provide any value.
biccat wrote:
Progressive taxation decreases the value of additional labor expended by a person which leads them to work less. If I can make $100/hour for every hour I work and that's more than I value my time spent doing other things, I will work as much as I can to maximize my income. However, when you introduce a progressive tax, the amount I receive for each hour of work decreases, and I'm eventually going to prefer to spend more time doing something else (playing with my daughter perhaps).
You say this as though it is a bad thing; your daughter might think differently. Plenty of successful (AAA-rated, even ) countries don't have the work over all else mentality that some in the US do.
So at $100/hour, I might work 80 hours a week. That would produce $8,000 worth of value to the economy. If you're going to tax everything over $6,000/week at 95%, then those extra 20 hours I worked are only worth $5/hour. I'm not willing to work another 20 hours for only $5 per hour, so the taxation system has actually destroyed $2,000 worth of economic output.
The numbers you're using to demonstrate this are incorrect. Taxes don't suddenly kick up to 95% at a given point. It's more like, the first 40 hours are taxed at 35%, the next five at 36%, the next five at 37%, and so on. No one is suggesting 95% at any point, nor a sudden escalator, because that does exactly what you say. What's more, the economic output has not been destroyed, it's been redistributed. We are facing roughly 10% unemployment. If you're suddenly not going to work those 20 hours, someone else will step in and work them, probably happily. In this way, you working less is actually beneficial to the economy, as it gives someone else a chance to work at all. You get to spend more time with your daughter, someone else gets a job, and the overall economy is improved as there's someone else now earning a wage, no longer dependent on welfare.
Even if this is true, what is the benefit provided by welfare? What benefit is provided by social security? How does having a non-producing recipient improve the ability of the producer to make money?
You're taking the basic construct of society (providing infrastructure and legal processes) and using it to defend everything that the government does. As I said before, I'm not advocating against some taxation, I'm arguing against progressive taxation and, more importantly, increased taxation to provide for benefits that haven't been shown to actually provide any value.
We've already covered this. The benefits that welfare and social security provide are security and order. No society can be considered secure if there is a large class of people in it with nothing. They have no incentive to obey the law. They have no incentive not to steal your stuff, or to riot and destroy your economic value. Have you not seen what has happened in just the last year, in countries that have a disaffected lower class? I'd rather see a system where the government demanded some level of community service in return for the welfare checks they hand out, but even without it, the fact that I don't have to worry about my house being ransacked by looters and rioters who didn't even have the money for food makes it worth it.
Redbeard wrote:The numbers you're using to demonstrate this are incorrect. Taxes don't suddenly kick up to 95% at a given point. It's more like, the first 40 hours are taxed at 35%, the next five at 36%, the next five at 37%, and so on.
They're meant to be exemplary.
I might think that 25% taxation is appropriate, but 28% is too high to justify a return on my labor.
Redbeard wrote:What's more, the economic output has not been destroyed, it's been redistributed. We are facing roughly 10% unemployment. If you're suddenly not going to work those 20 hours, someone else will step in and work them, probably happily.
No, that's not necessarily true. First, economic output isn't fixed. There isn't suddenly a hole of 20 man-hours that need to be filled, if I don't work more, more work doesn't get done.
Second, an employer will only hire someone when it makes financial sense - they get more than they pay out. If my overhead is $2,000/week (health insurance, workspace, etc.) and I produce $150 of value for my employer for each hour I work, it's not a bad idea to keep me on at 60 hours per week.
But when I'm working 80 hours a week, he pays me an extra $2,000 for 20 hours, but gets $3,000 from my labor.
If he wanted to make up that extra 20 hours by hiring someone else (assuming the same overhead, $2,000, and production, $150/hr), he would have to pay them less than $50 per hour (20hr * $50/hr + 2000 = $3,000).
At those numbers it doesn't sound so bad. But when you cut back the margin of income and base rate, many employers wouldn't be able to pay the minimum wage and make a profit from hiring someone to pick up the extra work.
Redbeard wrote:Have you not seen what has happened in just the last year, in countries that have a disaffected lower class?
Yes, I have, and a valuable lesson should be learned from this. The concept of social welfare create a dependent class who will never be satisfied with what they're given. They will always demand more, because there's no risk to them for doing so. They've also developed an entitlement mentality that not only are they given their living expenses, but somehow they're entitled to them. Not only that, but they've got voting power and can elect representatives who promise them more of a share from other people's labor.
"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money."
My tax policy professor pointed out that no matter how high the tax rate is, people still work to get more money. Wealth, after all, is relative.
I mean, few people choose to work low paying part time jobs to take advantag of the EITC solely because of the taxes.
And given that right now, the problem is generally a labor surplus, having people bow out will simply cause the market to add labor from another source.
biccat wrote:
Yes, I have, and a valuable lesson should be learned from this. The concept of social welfare create a dependent class who will never be satisfied with what they're given. They will always demand more, because there's no risk to them for doing so. They've also developed an entitlement mentality that not only are they given their living expenses, but somehow they're entitled to them. Not only that, but they've got voting power and can elect representatives who promise them more of a share from other people's labor.
Somehow, I don't think so. And, what would you have the alternative be? There aren't enough jobs available, that's obvious. Some people will not have jobs, they will not be working. Should they be imprisoned for owing, ala debtors prisons? Should they be forced to work in Victorian-era work houses? (and, at what jobs?) Should they be jailed for stealing their daily bread? Should they be forced to live on the streets eating what scraps they find in the trash in the name of allowing you to pay less taxes?
In a vacuum, your comments sound great. People should work. People should not expect to have things given to them. But they're just that, they're sound bites. They ignore the reality of the world we live in.
Remember, the tax burden being discussed is on the rich, not the middle class. Your theoretical $8k/week is still not even half-a-million a year. It's a lot of money, but not even close to the amount that would place you in the realm of the ultra-rich. What, exactly, has Paris Hilton done that deserves a tax break?
Redbeard wrote:Somehow, I don't think so. And, what would you have the alternative be? There aren't enough jobs available, that's obvious. Some people will not have jobs, they will not be working.
Says you. I think that we can achieve full employment in this country. In fact, it wasn't too long ao that we essentially had full employment.
However, for those who are physically incapable of working, I see no problem with welfare. However, the bar should be high. You must be incapable of performing work, you must not have wealth stashed away, etc. If you can't meet that, go seek out private charities. Americans are generous and give a tremendous amount to religious-based charities. They are always willing to take people who need help and give it to them.
Redbeard wrote:In a vacuum, your comments sound great. People should work. People should not expect to have things given to them. But they're just that, they're sound bites. They ignore the reality of the world we live in.
No, they ignore the reality that you believe in. If we cut the expensive regulatory burdens for new businesses, more people will create businesses and therefore more jobs. When more jobs are available, there is greater demand for workers, and that raises the standard of living.
Redbeard wrote:Remember, the tax burden being discussed is on the rich, not the middle class. Your theoretical $8k/week is still not even half-a-million a year. It's a lot of money, but not even close to the amount that would place you in the realm of the ultra-rich. What, exactly, has Paris Hilton done that deserves a tax break?
That's also twice what Obama considers rich, and above the top 1% threshhold (roughly $350,000). What has Paris Hilton done? Obviously quite a lot, because her services are very much in demand and people are willing to pay for them. So she's delivering some value to someone, somewhere.
You should be asking instead "what has unemployed mook X done to deserve part of Paris Hilton's money." Not rioting is a pretty easy thing to do. I didn't riot today, but I didn't get a check from the government.
Ouze wrote:I look wistfully back at December 2008, when the deficit was zero, the budget was balanced, and protesters were still described as traitors and un-american.
I tought 2008 deficit was 455 Billion Dollar. (the amount may change according to how you calculate it, but still, it's far from zero.)
biccat wrote:I'm not sure why you think I've misused the quote. Especially since I said that progressive taxation is the inverse of his quote:
"The law, in its majestic equality, punishes the rich and poor alike for earning over $1 million per year"
You may think, as many on the illogical left do, that progressive taxation is fair, but it's not. Punishing the rich for earning money stems exactly from the same logic as punishing the poor for sleeping under bridges.
To use another poster's language, "I've thought a few times that we must finally have reached the bottom of intellectual incoherence in the US leftwing, that surely now they'd start to man up, get honest, and get back to being the party of Kennedy. I've been wrong everytime before, but maybe just maybe this is as bad as it's going to get, and from now on we might see some improvement."
You misused the quote because you are arguing for legal equality, where legal equality is defined as two parties being treated the same when we take a ridiculously narrow, blinkered look at their actions and the circumstances surrounding them.
France is making fun of the idea of looking solely at the act of sleeping under the bridge, and ignoring which parts of society do that and why. You're doing the same thing, by looking purely at taxation, and not considering who's earned the most money any way.
You ignored the part of my post where I explained to you that tax is just one part of a greater system, and looking at it alone is foolish. Don't ignore that part, go back, read it, and start to realise that tax that the system that allows a gifted lawyer to earn $300,000 in a year is the same system that says he should pay more in tax than the guy who earns $30,000 doing the gardens at his office.
Left to his own devices, removed from society and it's laws, the lawyer would, at best, have a nice log cabin and enough meat to last the winter. He certainly wouldn't have his great house and his mercedes. So, when that guy looks at the tax code and the tax code alone, and declares that the system has taken lots of his money, while happily ignoring the fact that he'd have nowhere near that level of income in the first place if it wasn't for the system, he's really missing the point.
sebster wrote:You misused the quote because you are arguing for legal equality, where legal equality is defined as two parties being treated the same when we take a ridiculously narrow, blinkered look at their actions and the circumstances surrounding them.
France is making fun of the idea of looking solely at the act of sleeping under the bridge, and ignoring which parts of society do that and why. You're doing the same thing, by looking purely at taxation, and not considering who's earned the most money any way.
France's quote shows that when two people are differently situated, the law, despite being facially neutral, actually has a disparate impact on them. Therefore, there is no legal equality because the application of the law to one person (the wealthy man) renders it a nullity while the application of law to the other (the poor) causes substantial harm.
sebster wrote:You ignored the part of my post where I explained to you that tax is just one part of a greater system, and looking at it alone is foolish. Don't ignore that part, go back, read it, and start to realise that tax that the system that allows a gifted lawyer to earn $300,000 in a year is the same system that says he should pay more in tax than the guy who earns $30,000 doing the gardens at his office.
OK, so lets assume you're correct, that the lawyer (A) earning $300k/year should pay more than the gardener (B) who earns $30k/year.
How much more should he owe? I think that if A makes ten times the earnings of B, it is fair to require him to pay ten times the amount of taxes that B pays.
Progressive taxation says that A should pay more than ten times the amount of taxes that B pays. That doesn't make any sense, especially given the marginal utility of money. When A makes ten times the amount of B, he doesn't get ten times the utility from his money. So why should A pay not just his fair share, but more than his fair share?
The reason is actually pretty simple. It's the same reason Willie Sutton robbed banks: "it's where the money is."
A flat tax that raised even as much revenue as is currently raised would eliminate nearly all incentive for the working poor to work, and it would cripple the middle class.
Progressive taxation is basically the only way to make a tax code actually work.
It also balances out the highly regressive nature of much of the remaining taxes. Rich people don't burn more gas or smoke more cigarettes, so excise taxes hit the poor the hardest. Even property taxes are mildly regressive. Sales tax is strongly regressive.
biccat wrote:France's quote shows that when two people are differently situated, the law, despite being facially neutral, actually has a disparate impact on them. Therefore, there is no legal equality because the application of the law to one person (the wealthy man) renders it a nullity while the application of law to the other (the poor) causes substantial harm.
Except you're still looking at one piece of law in isolation, and still doing your absolute level best to ignore the plain and simple fact that the rich person has more because of his place in society.
France's quote is mocking the idea that justice begins and ends with equal legal treatment, regardless of social justice.
OK, so lets assume you're correct, that the lawyer (A) earning $300k/year should pay more than the gardener (B) who earns $30k/year.
Lets assume what? That the lawyer, if left to his own devices, couldn't go ahead and build his own condo, or build his own mercedes? Yeah, we're going to go ahead and assume those things. At which point, we're going to conclude that the lawyer's wealth comes from being part of society, and benefitting from its rules and processes.
Lets go ahead and make another assumption. Lets assume $300k is a bigger number than $30k. Even after tax, we can conclude that $200k is more than $28k. Once we've made that assumption, we can see that the lawyer is benefitting a lot more from being part of society than the gardener, even after taxes.
At which point, it makes no goddamn sense at all to complain about taxes in isolation, as if the rich were somehow the losers of society's rules, and the poor were somehow the winners.
sebster wrote:At which point, it makes no goddamn sense at all to complain about taxes in isolation, as if the rich were somehow the losers of society's rules, and the poor were somehow the winners.
So, essentially, you're saying soak the rich, damn the consequences?
I suppose that's a political theory. Not particularly intellectually rigorous, but it is certainly in vogue right now. And despite all of it's other failings, populism is great at getting you elected.
I think Sebster's point is that since the rich are only rich because of a combination of their own effort (or their ancestors) and the effort of the entire body politic to produce a system in which a person can get rich, the body politic gets to take some of it back.
The reason the rich don't pack up and go someplace they won't be overtaxed ala Atlas Shrugged is because the only way you become as rich as they are is to have access to workers and consumers.
Also, good luck finding a country that is nicer to the rich than the US. Even if the tax breaks were closed up, it's still where I'd want to live if I was super-rich.
I think the downgrade was more politically driven more than anything, like a slap in the face for congress to stop deadlocking things for months on end. Good decision to say "Hey stop messing around, here's a downgrade for being dumbasses." Don't get me wrong, Democracy is great but is being exploited at the moment.
Polonius wrote:I think Sebster's point is that since the rich are only rich because of a combination of their own effort (or their ancestors) and the effort of the entire body politic to produce a system in which a person can get rich, the body politic gets to take some of it back.
And my point is: how much of their success is attributable to their own efforts and how much is attributable to government benefits? Given that government treats all people equally, whether they are super rich or not, it's hard to say that person A who makes $300k per year is getting more of a benefit than person B who makes $30k per year. They are both afforded the same access to courts, the same police protection, access to the same roads, the same defense against foreign threats, etc.
The difference in protection may be measured by the amount that each person has to lose. At worst, person A has 10 times more at stake than person B. But the actual value of A's earnings is less than ten times the actual value of B's earnings. B values an extra $1000 a lot more than A values an extra $1000. So the actual advantage conveyed to A by society is less than his 10x advantage in earnings over B.
Taxing A at 10x times the amount of B is the best-case scenario. Anything beyond that is punitive.
Polonius wrote:I think Sebster's point is that since the rich are only rich because of a combination of their own effort (or their ancestors) and the effort of the entire body politic to produce a system in which a person can get rich, the body politic gets to take some of it back.
And my point is: how much of their success is attributable to their own efforts and how much is attributable to government benefits? Given that government treats all people equally, whether they are super rich or not, it's hard to say that person A who makes $300k per year is getting more of a benefit than person B who makes $30k per year. They are both afforded the same access to courts, the same police protection, access to the same roads, the same defense against foreign threats, etc.
But the government doesn't treat them both the same. While both may theoretically have the same access to courts, in reality, the fact that the are fees associated with the courts put them out of the reach of the poor. Legal costs do as well. While both may theoretically get the same police protection, try calling 911 in the inner city as compared to an affluent suburb and compare response times. Starting at birth, those growing up wealthy benefit more from what society (not just the government) has created. They have better healthcare, better nutrition, better schools, more opportunities for growth outside of schools.
Your view, which seems pretty much based around 'trickle-down' simply doesn't work in the real world. You stated earlier that if taxes were lowered, more jobs would be created, and we could get rid of unemployment. The Bush tax cuts didn't do that. Taxes were cut, and rather than spur job creation, the wealthy simply took more for themselves. Even under Obama's bailouts, rather than create jobs, corporations are hanging on to their money. They've learned that they can function without hiring new people, and the jobs lost in the 2008 crash haven't returned. Those with the ability to hire new people are doing so overseas, where the labor is cheap and the oversight minimal. And, into this, you want to cut unemployment benefits and hope that faith-based charities pick up the slack?
You asked what benefit Social Security provides too. Social Security, unfortunately, takes the place of actually saving for retirement for most Americans. People actually pay into the social security system. Is this the best solution? Probably not, but time and again, most Americans have proven incapable of responsibly planning for their own futures. An article on CNN earlier this week showed that less than a third of Americans could even count on $1000 in savings in case of an emergency expense, instead having to rely on borrowing or bankruptcy to cover such a cost. Having the Government require some minimal retirement savings, in the form of Social Security, really isn't a horrible alternative to having a society where we work our seniors to the day that they die.
Polonius wrote:I think Sebster's point is that since the rich are only rich because of a combination of their own effort (or their ancestors) and the effort of the entire body politic to produce a system in which a person can get rich, the body politic gets to take some of it back.
And my point is: how much of their success is attributable to their own efforts and how much is attributable to government benefits? Given that government treats all people equally, whether they are super rich or not, it's hard to say that person A who makes $300k per year is getting more of a benefit than person B who makes $30k per year. They are both afforded the same access to courts, the same police protection, access to the same roads, the same defense against foreign threats, etc.
The difference in protection may be measured by the amount that each person has to lose. At worst, person A has 10 times more at stake than person B. But the actual value of A's earnings is less than ten times the actual value of B's earnings. B values an extra $1000 a lot more than A values an extra $1000. So the actual advantage conveyed to A by society is less than his 10x advantage in earnings over B.
Taxing A at 10x times the amount of B is the best-case scenario. Anything beyond that is punitive.
Until you realize that society is more than government, there's little sense in continuing this conversation.
Government is part of the society, a big part, but my argument is that it's not just government that makes people super wealthy, but all of society. Those that are super wealthy are lucky, either in terms of talent or inheritence, but they only have their wealth because a large interlocked society exists.
In the state of nature, or the wild, the most talented person might have a slighty warmer hut, and a little more meat on the table. In a modern post industrial state, the most talented have exponentiall more money. That's because of all the peons. So, it's not punitive. It's realizing that they alone didn't create their productivity. They get to keep most of it, but they have to pay for the society that made them as wealthy as they are.
Hell, many talented members of society are actually not making all that much. A physicist has more useful talent than an NFL superstar, but makes far less...
Polonius wrote:Until you realize that society is more than government, there's little sense in continuing this conversation.
The question is: how to apportion taxes. So government is the relevant consideration here.
The part I don't understand is how do you explain people earning money in the first place? Plenty of wealthy people started with nothing, are they simply products of random luck, or are they more talented, harder workers, or have rarer talents than those who don't earn as much? Shouldn't someone who works hard, is better at their job, or more in demand earn more money?
Melissia wrote:Hell, many talented members of society are actually not making all that much. A physicist has more useful talent than an NFL superstar, but makes far less...
Says you. But a lot more people are willing to pay to see an NFL superstar at work than a physicist.
The physicist is provably more useful than the steroid-abusing gakhead.
The garbage man is more useful. Without him, you'd die of disease from your own filth. The chemist working at the water sanitation plant is more useful. Without her, you'd die of poisoning from bad water. A thousand other lower paying jobs are more useful, provably so.
I think the physicist is provably more useful than the steroid-abusing gakhead.
The garbage man is more useful. Without him, you'd die of disease from your own filth. The chemist working at the water sanitation plant is more useful. Without her, you'd die of poisoning from bad water. A thousand other lower paying jobs are more useful, provably so.
Maybe the physicist and garbage man are more useful in providing services, but the NFL superstar is far more valuable.
Without the NFL player a lot of advertisers wouldn't be able to sell their products as well. NFL franchises wouldn't exist. People wouldn't look forward to Sunday Football.
People place a great deal of value on sports games. Look at the outrageous ticket prices people are willing to pay in order to get a mere two hours of enjoyment.
There are millions of people who can empty garbage cans. How many can play football at a professional level?
Yes, I'm using real value to society due to them usefully contributing to the well-being of society, like garbagemen or chemists, rather than leeching off of everyone else's efforts without putting forth any societal contribution, like sports stars.
No clue what weird definition Biccat is using.
biccat wrote:There are millions of people who can empty garbage cans. How many can play football at a professional level?
Millions of people can carry and throw an oblong leather ball. In fact, I would go so far as to say billions of people could do this ultimately useless and pointless task.
This is (in part, the other parts being a mix of tradition and political reasons) why officers and specialists in military organizations are generally paid more than grunts. Anyone can hold and fire a weapon or throw a grenade. It takes far more skill to be a sniper, or a commander.
But you're claiming that entertainment has no value, when clearly it does.
Sure, entertainment is further up he hierarchy of needs than shelter or food, but once you've got a house and a sandwich, you pretty much need something on TV.
The entertainer (of which athletes are just one type) has been a part of human society for hundreds, if not thousands of years. When it comes to the specialization of labor, once you have enough farmers, making more food isn't worth all that much.
I don't hold a grudge against pro athletes, nor against musicians, painters, sculptors or actors (or game designers), all of whom do not contribute to the lower tiers of the hierarchy of needs. But, I am in complete agreement with Polonius, in that these individuals would be unable to make their money if it were not for other people addressing the more fundamental needs of society first.
Polonius wrote:Until you realize that society is more than government, there's little sense in continuing this conversation.
The question is: how to apportion taxes. So government is the relevant consideration here.
The part I don't understand is how do you explain people earning money in the first place? Plenty of wealthy people started with nothing, are they simply products of random luck, or are they more talented, harder workers, or have rarer talents than those who don't earn as much? Shouldn't someone who works hard, is better at their job, or more in demand earn more money?
government is a relevant consideration, but in a moral argument for progressivity, you can include all the benefits and costs of wealth.
People earn money for a lot of reasons. There are wealthy people that start with nothing. They worked hard, and used their talents, and now earn large incomes. They did so in a society that allows, and even encourages such a rise. And the society gives a benefit (being able to earn ludicrous wealth without bloodshed, and retain it without bloodshed), and extracts a cost.
How hard a person works really should have no direct relation to their pay. The value of their output should. There is often a correlation, but most professionals know the guy that goofs off half the day but outproduces the guy working late. Labor is worth what people will pay.
And of course people that can demand higher wages should enjoy them. And they do. But the rich need the poor more than the poor need the rich.
Entertainment has its uses, but entertainers are still of less value to society than the emergency personnel, the scientist, the doctor, the sanitation personnel, the soldier. Entertainment is an afterthought-- a highly overpaid afterthought.
Much of the time it's actually used as a distraction, so people entertain themselves instead of solving problems, causing their lives-- and society in general to only get worse through their procrastination. Like alcohol, in a sense, only it's purely psychological rather than also being chemical.
Redbeard wrote:But, I am in complete agreement with Polonius, in that these individuals would be unable to make their money if it were not for other people addressing the more fundamental needs of society first.
Well, the very idea of wealth, and the specialiization of labor, depends on there being a steady source of food. Which is why, prostitution aside, farming is the first occuption, with soldier (defending the food) is a close second.
Absolute wealth (as opposed to relative wealth) is not a zero sum game. I'm "wealthier" than a Roman Emperor in many ways. He had slaves and servants, but I have antibiotics, air conditioning, clean water, and near absolute security and legal stability.
Anyways, everybody's wealth depends on the contributions of, if not all of society, pretty big chunks. Biccat at one point asked if social welfare is what kept rioters from tearing into rich people's homes, and while crude, that's not a terrible way to view it. Because most people's labor is worth very little, and some is worth nothing at all.
Polonius wrote:How hard a person works really should have no direct relation to their pay. The value of their output should. There is often a correlation, but most professionals know the guy that goofs off half the day but outproduces the guy working late. Labor is worth what people will pay.
I agree completely.
But almost all economists will agree that the advantage gained by wealth is not proportionate to the amount of wealth gained. Like I said before, person A who makes $300k per year doesn't get 10x the benefit of that wealth as person B who earns $30k per year. Cutting 1% of person A's income would hardly impact him. Cutting 1% of person B's income would hurt him severely. Therefore, the benefit A receives from each dollar of his money is less than the benefit B receives.
If the marginal value A receives is less than B, why should he be expected to pay more for the same benefit?
Polonius wrote:But the rich need the poor more than the poor need the rich.
This is completely wrong, of course. Especially in a welfare state, the poor need the rich much more than the rich need the poor. I guarantee that without 10,000 of the poorest people, Warren Buffet's life wouldn't change. Eliminate Warren Buffet, and at least 10,000 poor people will see their lives change.
Melissia wrote:Entertainment has its uses, but entertainers are still of less value to society than the emergency personnel, the scientist, the doctor, the sanitation personnel, the soldier. Entertainment is an afterthought-- a highly overpaid afterthought.
Much of the time it's actually used as a distraction, so people entertain themselves instead of solving problems, causing their lives-- and society in general to only get worse through their procrastination. Like alcohol, in a sense, only it's purely psychological rather than also being chemical.
Entertainment might be of less value to you, but not to society. That's the beautiful thing about market value: it's by definitiion accurate.
deffskulla wrote:Don't get me wrong, Democracy is great but is being exploited at the moment.
I'm not sure what you're trying to say here. Everytime there's a problem in DC, people wring their hands about the nature of democracy.
It's hard to admit, but one of the problems with choosing leaders is that it's harder to blame them for all of our problems.
I'm saying there are Elephants in the room that Congress is ignoring and is one of the chief reasons why we were downgraded. Good news is DOW bounced back a little today, one step in the right direction.
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Polonius wrote:
Melissia wrote:Entertainment has its uses, but entertainers are still of less value to society than the emergency personnel, the scientist, the doctor, the sanitation personnel, the soldier. Entertainment is an afterthought-- a highly overpaid afterthought.
Much of the time it's actually used as a distraction, so people entertain themselves instead of solving problems, causing their lives-- and society in general to only get worse through their procrastination. Like alcohol, in a sense, only it's purely psychological rather than also being chemical.
Entertainment might be of less value to you, but not to society. That's the beautiful thing about market value: it's by definitiion accurate.
There's actually an argument to be made from a psychological standpoint that entertainment is psycholgoically essential to humans. It certainly makes sense, given how aggressively we pursue it.
Given that we evolved pretty powerful brains to hunt, gather, evade predators, talk, socailize, etc. and find ourselves needing less and less of that... it makes sense we crave stimulation.
biccat wrote:
But almost all economists will agree that the advantage gained by wealth is not proportionate to the amount of wealth gained. Like I said before, person A who makes $300k per year doesn't get 10x the benefit of that wealth as person B who earns $30k per year. Cutting 1% of person A's income would hardly impact him. Cutting 1% of person B's income would hurt him severely. Therefore, the benefit A receives from each dollar of his money is less than the benefit B receives.
If the marginal value A receives is less than B, why should he be expected to pay more for the same benefit?
If the marginal value of his money is less, then he isn't paying more, because his money means less.
By way of your example, if person A pays 1% in taxes, it's nearly meaningless to him. If person B pays 1% in taxes, he feels it at the grocery store. Therefore, to be closer to equal, person A has to pay more than 1% in tax.
biccat wrote:
But almost all economists will agree that the advantage gained by wealth is not proportionate to the amount of wealth gained. Like I said before, person A who makes $300k per year doesn't get 10x the benefit of that wealth as person B who earns $30k per year. Cutting 1% of person A's income would hardly impact him. Cutting 1% of person B's income would hurt him severely. Therefore, the benefit A receives from each dollar of his money is less than the benefit B receives.
So you're basically saying that A can afford to pay more taxes than B ? It is good to see you are finally understanding it.
Polonius wrote:What is something worth? What somebody will pay for it.
What someone will pay for it is a range, not a specific number. And it is something that is easily manipulated, especially in a world with imperfect information.
What would you pay for hamburger A, B, C, or D? Well, what if you knew that hamburger A was tofu? What if you knew hamburger B was high quality steak? And hamburger C was actually breaded chicken breast disguised as a hamburger? And that hamburger D was a few painted pieces of wood?
What if the person left the impression or even outright lied and said that they were all the same, and you had to order only knowing what they told you? Advertising is essentially an art form based off of lies and misleading in ways such as this. Companies lie and cheat and hide the details of their products unless it is absolutely crucial for them to reveal them, or if it's in their benefit.
Just look at the pharmaceutical industry. They're some of the best liars in the country, and that's coming from someone who worked in the industry.
The product being paid for isn't necessarily a physical good, and goods themselves are not necessarily limited to individual things. For example, when you buy coffee at Starbucks you are buying not only their coffee, but the image associated with the coffee by branding. This isn't a distortion of market price per se, though it is an active attempt to manipulate it the same sense as any other attempt to produce a superior product.
biccat wrote:
You may think, as many on the illogical left do, that progressive taxation is fair, but it's not.
Fair doesn't mean equivalent, they aren't even synonyms, which leads one to wonder why so many people believe they are. Fair relates to accordance with rules, codes of conduct, or social standards. If the law, prevailing social climate, or informal codes of conduct denote progressive taxation as legitimate, then it can logically be called fair.
If you're going to refer to a group of people as illogical, then you should probably do your level best to behave in a logical manner yourself, lest you appear to be calling kettles black.
biccat wrote: They will always demand more, because there's no risk to them for doing so.
There's no risk involved in demanding anything unless the act of demanding that thing is not in accordance with the rules governing demands. For example, a group of people demanding a set of benefits might either protest peacefully, or riot. If they protest peacefully, then they have no, or minimal (protests often produce a degree of negative backlash against the protesting group), risk. If they riot, then they have a great deal of risk. The barrier between peaceful protest and riot, at least in this country, is set by law; law being a particular type of rule
biccat wrote:
Given that government treats all people equally, whether they are super rich or not...
That's an awful, awful assumption.
biccat wrote:
This is completely wrong, of course. Especially in a welfare state, the poor need the rich much more than the rich need the poor. I guarantee that without 10,000 of the poorest people, Warren Buffet's life wouldn't change. Eliminate Warren Buffet, and at least 10,000 poor people will see their lives change.
Warren Buffet is irrelevant. Eliminating him does not eliminate the things over which he has property claims. It does eliminate his ability to do labor, just as eliminating 10,000 poor people eliminates their ability to do labor. If we control for relative importance, as defined by the number of property claims said labor affects, the comparison is obviously in favor of Polonius' example.
Of course, that matters little, as you've clearly missed the point. The rich are only rich because they denied the poor property which they could have otherwise acquired. The rich need the poor to remain poor in order to remain rich, but the poor do not need the rich to remain rich in order to remain poor.
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Redbeard wrote: The first is that being taxed is a punishment.
Oh noes, I'm being taxed more heavily than the poor, however will I cope with this punishment. Ah, yes, I'll go enjoy the company of my children, all of whom are well educated, fit, and disciplined!
Or I'll go drive my Lotus really fast, and pay the speeding ticket in cash.
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biccat wrote: Not rioting is a pretty easy thing to do. I didn't riot today, but I didn't get a check from the government.
You also made, and ate, breakfast using food that was stored in your refrigerator; or so I imagine.
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Redbeard wrote:] Probably not, but time and again, most Americans have proven incapable of responsibly planning for their own futures.
This is something that often goes unsaid, except in the sense of "Liberals think you are incompetent!"
No one likes being called incompetent, of course, but the truth is that most of us are incompetent at most things, and planning for the future, even your own future, is a "thing". Because people that do not plan for their future are a liability, and because people seem to have an aversion to allowing those that do not do so to die, we take it upon ourselves to develop social programs which counteract this reality. Are these social programs the most efficient way of contending with the issue at hand? Maybe not, but it should always be noted that most people who criticize things from efficiency do not accept human behavioral tendencies as a given variable.
Well, I was taught in tax that a good working definition of fair market value is: "what a willing buyer would pay to a willing seller, with neither being under a compulsion to buy or sell, and both having knowledge and appreciation of all material facts."
If you have a fundamental problem with free market economics, that's fine. But market price is as close to the "true" value of a good or service as you can hope.
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biccat wrote:
Polonius wrote:But the rich need the poor more than the poor need the rich.
This is completely wrong, of course. Especially in a welfare state, the poor need the rich much more than the rich need the poor. I guarantee that without 10,000 of the poorest people, Warren Buffet's life wouldn't change. Eliminate Warren Buffet, and at least 10,000 poor people will see their lives change.
You're shifting the goal posts. Sure, you can wipe out the homeless and the upper 1% wont' care.
But the rich wouldn't be rich without the bottom 80%, which are by any relative measure, simply poor compared to the upper 1%.
Which is my point. Warren Buffet can only make money if people are making products, buying products, shipping products, etc. You could wipe out the top 10% of income earners in this country, and a few quick hiccups aside (primarily in health care), we'll be back in business in no time.
You still seem fixated on the idea that individuals create wealth. That Buffet, simply by working hard and being talented, is creating his wealth as if from the forehead of zues. I don't even he'd agree with that statement. Some individuals are better than others, and drive and talent (and luck) determine which people make wealth, but I'd argue that in a system that allows for free enterprise, wealth will be created by somebody.
biccat wrote:So, essentially, you're saying soak the rich, damn the consequences?
No, I didn't suggest anything of the sort, that's a cheap, crappy debate technique you've followed - "when you can't actually debate the substance of someone's argument, invent a wild, fantastical conclusion".
Once we realise that tax is just another part of the system, just as integral as, say, property laws, then the question becomes 'what is the best system of taxation?'. Adam Smith's great treatise on classical economics (you know, the kind the right wing pretends to follow) laid out four basic canons that are needed to form a good tax system, and first among them was the Canon of Equity.
Smith stated the system should provide economic and social justice, that is, people should pay according to their ability to pay. He observed that the rich should pay higher taxes to the government because it is due to government (through property laws, contracts laws and so on) they have been able to build their wealth. He then went on to argue that taxes should be measured by income alone.
Nothing there stated that society should 'soak the rich', just that the rich should pay proportionately more. Exactly how much more is a function of the need to cover the spending of the state, and the relative levels of income through society.
In case you're wondering, the other canons are transperancy/certainty, ease of payment (timing payments to match income), and economy (low cost of administration).
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biccat wrote:And my point is: how much of their success is attributable to their own efforts and how much is attributable to government benefits?
Your point is nonsense. The two are inseperable. This is obvious, because as I've pointed out to you many, many times now, the rich man could not actually build his own Mercedes, no matter how smart and hard working he might be. It'd be like asking how much of a rich man's success is due to property laws, and how much is due to his own moxie.
Instead you just need to stop looking at tax as being seperate to the whole rest of the economic system. Your term there 'government benefits' just shows how much you really just do not fething get it, and belies how little effort you've spent in trying to get it.
It isn't about 'government benefits'. It's about property laws, enforcement of contracts, enforcement of labour laws, and all the rest of the system. Without government there is no capitalist system, there is in fact, no system at all. To pick one piece of the system, even though it was built by the same government, and enforced through the same mechanisms as every other part of the system, and then act like it alone and distinct to all the rest is completely wrong.
Given that government treats all people equally, whether they are super rich or not, it's hard to say that person A who makes $300k per year is getting more of a benefit than person B who makes $30k per year. They are both afforded the same access to courts, the same police protection, access to the same roads, the same defense against foreign threats, etc.
But there you are, not getting it again. It isn't about one person 'earning' $300k off his own bat, completely in isolation of the rest of the system, and seeing that $300k as a measure of his talent and hard work and nothing else, while another person's talent and hard work 'earned' them $30k, and then acting like the very first time government has come into the system is when it taxed them.
It is from being part of the system that the first guy was capable of earning $300k, just as it was from being part of the system that the second guy was capable of earning $30k. You just look at the last part, how much they're taxed, and see it entirely in terms of someone being punished for 'earning' more money. Instead, allow yourself to actually think about this, and begin to consider that the system is actually giving one guy $200k for being a lawyer, and another guy $28k for being a gardener.
The only thing that actually matters is net salary. If the net salary is enough to justify the hard work of highly gifted people to become lawyers, then society is operating just fine - whether we have a system that pays $220k and taxes $20k, or whether the system pays $300k and taxes $100k.
Taxing A at 10x times the amount of B is the best-case scenario. Anything beyond that is punitive.
Only if we think the person generated $300k in wealth because of their own personal attributes, entirely unrelated to the system. Which we don't, because that's stupid.
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biccat wrote:The part I don't understand is how do you explain people earning money in the first place? Plenty of wealthy people started with nothing, are they simply products of random luck, or are they more talented, harder workers, or have rarer talents than those who don't earn as much? Shouldn't someone who works hard, is better at their job, or more in demand earn more money?
No-one is saying that no personal attributes play a part in generating income. Obviously, intelligence, hard work and all kinds of other features play an important part. The point, simply, is that there alone do not determine your income, the rules and conditions of society play an enormous part.
Otherwise, every smart, hardworking Somalian would be making their first million as quick as every smart, hardworking American.
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biccat wrote:Like I said before, person A who makes $300k per year doesn't get 10x the benefit of that wealth as person B who earns $30k per year.
Yes, he does. Without the system, he'd have, at best, a log cabin and enough food to last the winter. With the system, he has $300k worth of whatever material goods he likes. So without a system, he'd be $300k - log cabin - hunting meat worse off, or just about $300k worse off.
His benefit from the system is pretty much bang on 10x as great as the guy earning $30k. Because without the system, that guy would be $30k - log cabin - hunting meat worse off, or just about $30k worse off.
Once again, you really, really need to stop looking at tax as some imposed, alien mechanic, because the rest of the system is just as much an invention of government.
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Polonius wrote:No, it's not precise. It's accurate as hell.
What is something worth? What somebody will pay for it.
Sort of. I mean, it certainly gives an answer, and it gives that answer in the fastest form, and the best form we have for allocating resources (ie giving incentive to people to enter one job over another).
But to call it the most accurate is remove all possible value judgements we can make.
It is possible to argue that the nurse getting half the pay of the sales rep is actually a problem in the market, even though there's not much we can, or should, do about it.
Polonius wrote:Well, I was taught in tax that a good working definition of fair market value is: "what a willing buyer would pay to a willing seller, with neither being under a compulsion to buy or sell, and both having knowledge and appreciation of all material facts."
If you have a fundamental problem with free market economics, that's fine. But market price is as close to the "true" value of a good or service as you can hope.
The market mechanism is great, and along with modern science is basically the cornerstone of wealth creation in the modern world.
But it is mistake to confuse efficiency with fairness or accuracy.
For instance, there is a noted discount for moral jobs, and a noted premium for immoral jobs. That is, if take a base line of necessary skills and amount of hard word needed for a job, you get a pretty good predictor of how much a certain job will pay. Ie a job requiring three years of tertiary education will typically pay so much, a job requiring three years of tertiary education that is also physically demanding will pay that much more.
You can plot all these out, and then look at what they actually pay, and start to notice some really interesting variations. Two really interesting variations are jobs that pay less because they are directly helping people, and jobs that pay more because they're morally dubious. That is, nurses are paid notably less than a job requiring that level of education and that amount of hard work, than would otherwise be the case. Meanwhile, collections agents are paid more, because it's a miserable line of work, so there must be a premium to get them to do it.
Now, the market for labour has far too many benefits for us to chuck it out, but I'm certainly not willing to call a system that penalises people for wanting to a job that helps people, but rewards others for taking anti-social jobs.
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Polonius wrote:Hmm, good point. I should say that market price is the most accurate way to ascertain the financial value of something.
Yes, definitely. Sorry, I wrote a longer answer after your post, that went into a lot of probably unecessary detail, but it was fun to remember my uni readings if nothing else
Polonius wrote:Well, I was taught in tax that a good working definition of fair market value is: "what a willing buyer would pay to a willing seller, with neither being under a compulsion to buy or sell, and both having knowledge and appreciation of all material facts."
The other catch here being the "both having knowledge and appreciation of all material facts" part, a point the importance of which we've recently had some rather brutal demonstrations. For example, in the housing loan market, with people getting in way over their heads out of ignorance and trust toward sales and lending organizations who abused that trust. Or in organizations like Standard and Poors rating certain incredibly dubious securities AAA, to the near-ruin of half the world's economy.
I removed the impolite and trolling comments from your post. Hope you don't mind.
sebster wrote:Smith stated the system should provide economic and social justice, that is, people should pay according to their ability to pay. He observed that the rich should pay higher taxes to the government because it is due to government (through property laws, contracts laws and so on) they have been able to build their wealth. He then went on to argue that taxes should be measured by income alone.
The quote that I believe you're looking for is the following:
The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state
(emphasis added) Taxation in proportion to revenue is not progressive taxation, it's proportional taxation.
There's no reason for the "rich" to pay a higher percentage of their earnings than the poor. The argument here seems to be simply "they can afford to pay more, so they should." That's not a defense of fairness, it's actually an argument in favor of unfairness. Further, there's no limit on how much a "richer" should be forced to pay in taxes if the argument is "he can afford it." The wealthy will always be able to afford to pay more in taxes, because they, not surprisingly, will always have more money.
sebster wrote:Nothing there stated that society should 'soak the rich', just that the rich should pay proportionately more. Exactly how much more is a function of the need to cover the spending of the state, and the relative levels of income through society.
Except you're missing a very fundamental and important step: who determines the size of the state and the expense? The wealthy will by definition always be less numerous than the non-wealthy, and so the non-wealthy will always demand more concessions from the wealthy, even to the point of insolvency.
So, again, your defense of progressive taxation boils down to "soak the rich."
sebster wrote:Your point is nonsense. The two are inseperable. This is obvious, because as I've pointed out to you many, many times now, the rich man could not actually build his own Mercedes, no matter how smart and hard working he might be. It'd be like asking how much of a rich man's success is due to property laws, and how much is due to his own moxie.
I think that's a very good question. As you said, a person can't build his own Mercedes, but without Karl Benz, there wouldn't be any Mercedes on the road. Therefore, we should ask the question: to what extent is the production of a Mercedes automobile the product of Mr. Benz's innovation and to what extent is it due to society making it possible for Mr. Benz to produce automobiles?
You seem to be of the opinion that production (and presumably consumption) happens in a vacuum and the rich are there simply to soak up the profits and screw the working man. As if the people at the head of these companies, or the capitalists who make them able to continue to produce vehicles, add no value whatsoever to the economy.
At this point, it becomes difficult to separate the personal insults and trolling from your actual arguments, so I'll cut out the rest. Ta.
biccat wrote:
There's no reason for the "rich" to pay a higher percentage of their earnings than the poor. The argument here seems to be simply "they can afford to pay more, so they should." That's not a defense of fairness, it's actually an argument in favor of unfairness. Further, there's no limit on how much a "richer" should be forced to pay in taxes if the argument is "he can afford it." The wealthy will always be able to afford to pay more in taxes, because they, not surprisingly, will always have more money.
Don't confuse "no reason you find compelling" for "no reason." I can't think of any compelling reason to pierce my lip, but people clearly seem to have them.
Basically the best minds have more or less agreed that the moral and philisophical reasons for progressive taxation essentiall wash out. What doesn't is that it is, without hyperbole, the only way to run a modern tax code. (any flat tax will have an exemption, making it at least somewhat progressive).
As for fairness? I thought the underlying understanding of life as seen by the right is "life isn't fair." It's not fair to tax rich people at a higher rate. It's also not fair that some people are born with borderline intelligence and can never be productive.
Except you're missing a very fundamental and important step: who determines the size of the state and the expense? The wealthy will by definition always be less numerous than the non-wealthy, and so the non-wealthy will always demand more concessions from the wealthy, even to the point of insolvency.
Anytime you start painting the wealthy as a persecuted class, your arguments start breaking down. The wealthy have influence outside their numbers. If the average American voted for a tax code that benefitted them, the personal exemptoin would be about $60,000 and the upper 1% would pay 50% in taxes.
Luckily for the wealthy, they guys writing the laws are, well, wealthy.
So, again, your defense of progressive taxation boils down to "soak the rich."
Saying that is roughly equivilent to summing up the flat tax by saying it boils down to "taking food out of the mouths of the poor."
I think that's a very good question. As you said, a person can't build his own Mercedes, but without Karl Benz, there wouldn't be any Mercedes on the road. Therefore, we should ask the question: to what extent is the production of a Mercedes automobile the product of Mr. Benz's innovation and to what extent is it due to society making it possible for Mr. Benz to produce automobiles?
Far less than you think. The automobile was independently developed in multiple places, and while Benz was slightly better than the others, if died in childhood, there would still be luxury cars on the road.
You seem to be of the opinion that production (and presumably consumption) happens in a vacuum and the rich are there simply to soak up the profits and screw the working man. As if the people at the head of these companies, or the capitalists who make them able to continue to produce vehicles, add no value whatsoever to the economy.
I doubt that is his opinion. Of course CEOs and engineers add value to the economy. It's why they are paid well. They are not, however, unique talents. People will always move up into higher roles, and often succeed reasonably well, as long as the process is meritocratic.
But these guys aren't demi-gods, strolling the face of the earth and reshaping it with will and brawn. They're marginally more talented guys that are maybe 5% better than the guys they beat for the job.
biccat wrote:I removed the impolite and trolling comments from your post. Hope you don't mind.
At no point have I trolled you. I've certainly been impolite, though, because it is not polite to tell someone directly how poorly they're doing in something. It is, however necessary, because you continue to fail to read my posts, and instead respond to strawmen arguments.
Failing to read people's posts and arguing with the strawmen you wish they'd claimed is also impolite, by the way.
The quote that I believe you're looking for is the following:
The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state
(emphasis added) Taxation in proportion to revenue is not progressive taxation, it's proportional taxation.
You've assumed the word 'direct' into Smith's quote. Spoken of in such a general sense, you cannot assume proportion means directly so, but merely with one in regards to the other. Especially when you're only reading Smith's summary in the middle of an internet debate, and never actually bothered to read the book.
If you'd ever bothered to read the whole of the text, then you'd see how inappropriate your assumption above is. Smith's thoughts on taxation of income have little in common with yours. He doesn't actually consider it right to charge income tax on the wages of the ordinary working man at all, and that income tax should only be levied on particularly large incomes- Smith calls them incomes of "some public envy" or something similar.
Seriously, you need to read the book.
There's no reason for the "rich" to pay a higher percentage of their earnings than the poor. The argument here seems to be simply "they can afford to pay more, so they should."
This is ridiculous. I've explained my argument to you four or five times now, and you still haven't even realised it exists, and are still pretending I'm making some kind of claim about "rich people should pay more".
All I'm trying to explain to you here, is that a person's income is a product of being part of the system. As such, their income, whether high or low, should be considered a benefit of being part of the system, just as their tax payments should be . From there we can discuss exactly what the rates should be (and their are times when the impact of the top marginal rate on incomes is too great, as in Australia in the mid-90s) but we can never just look at tax in isolation.
That's it. Just read that argument, and if you want to debate it, debate the actual argument presented, and stop trying to debate this bizarre liberal strawman thing in your head that just wants to tax the rich more.
Except you're missing a very fundamental and important step: who determines the size of the state and the expense? The wealthy will by definition always be less numerous than the non-wealthy, and so the non-wealthy will always demand more concessions from the wealthy, even to the point of insolvency.
So, again, your defense of progressive taxation boils down to "soak the rich."
If the wealthy were truly the victims of cruel and greedy middle and working classes, then they wouldn't be maintaining so much wealth. Your argument, by definition, is utter nonsense.
"Oh, I am such a victim of society that my take home after tax income is just $832,914!"
I think that's a very good question. As you said, a person can't build his own Mercedes, but without Karl Benz, there wouldn't be any Mercedes on the road. Therefore, we should ask the question: to what extent is the production of a Mercedes automobile the product of Mr. Benz's innovation and to what extent is it due to society making it possible for Mr. Benz to produce automobiles?
Even Mr Benz, in and of himself, needed society to get his factory up and running. He needed a banking sector to fund him. He needed corporations law to provide limited liability so that people were willing to invest. He needed a mining sector to extract raw materials to build his plant, and to build his cars. And, of course, he needed labour to build and operate his factory.
You seem to be of the opinion that production (and presumably consumption) happens in a vacuum
That's a simply an absurd conclusion. My point, which I've repeated to you so many times in this thread, is that production doesn't happen in a vacuum. Production comes about from interaction of all of society. You cannot pick out one part of that society, such as income tax, and treat it as standing outside all of the rest, an unfair impost with no relation to any other part of that society.
and the rich are there simply to soak up the profits and screw the working man. As if the people at the head of these companies, or the capitalists who make them able to continue to produce vehicles, add no value whatsoever to the economy.
They most certainly have a value. They have great value, and the people who manage to bring a product to market and sell it at profit deserve substantial reward, because it is a hard and risky thing to do. My point is simply that it's silly to assume that their pay is their inherent, absolute, completely fair income, to which any income tax is an intervention, somehow the first and only place government involves itself in the process.
At this point, it becomes difficult to separate the personal insults and trolling from your actual arguments, so I'll cut out the rest. Ta.
Here's the thing, I've spoken at length, quite often, about the real failings of state planned economies (either what happened to the USSR or what will happen to China) being the lack of innovation from the absence of a capital market. I've spoken, very often, about the strength of the US economy and how much of that strength draws from the value of its venture capital system. You can't read those things, and plenty of other stuff that I've written, actually take the time to consider them, and then turn around in another thread and act like I don't place any value on company management.
You've been in these threads, and generally been arguing against me, and it's becoming increasingly clear you have as little idea of my views now as when you came to this forum. You're still just making the same crude assumptions about what I must believe now, as you were. Has it been a year that you've been here? Have we been arguing stuff for a year, and in all that time you've not absorbed even one little thing about how I see the world?
It's incredible, really. All that time you've spent posting, but you've read nothing and thought about it even less.
biccat wrote:
The argument here seems to be simply "they can afford to pay more, so they should." That's not a defense of fairness, it's actually an argument in favor of unfairness.
No, actually that is an argument from fairness, as all arguments from propriety are. Perhaps you meant to use the concept "equal" instead of the concept "fair".
biccat wrote:
Except you're missing a very fundamental and important step: who determines the size of the state and the expense? The wealthy will by definition always be less numerous than the non-wealthy, and so the non-wealthy will always demand more concessions from the wealthy, even to the point of insolvency.
So, again, your defense of progressive taxation boils down to "soak the rich."
So...much..equivocation...
Anyway, sorry, but you've not made an argument which indicates that the less wealthy will have universally superior influence to the more wealthy. Honestly, you didn't even explain why the less wealthy will always demand more from the wealthy than the wealthy demand from the less wealthy.
biccat wrote:
At this point, it becomes difficult to separate the personal insults and trolling from your actual arguments, so I'll cut out the rest. Ta.
A comment which is, in and of itself, trolling.
To sum up the rest of biccat's posts in this thread:
It's written by Warren Buffet - one of the richest men on the planet - and he's pointing out exactly how he, being the richest person in his office, actually pays the lowest taxes, percent-wise of the people there.
It's one thing to argue against taxing the rich more than everyone else, but could you at least agree that perhaps we should tax them as much?
Buffet, one of the smartest financial guys on the planet, says:
But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.
It's written by Warren Buffet - one of the richest men on the planet - and he's pointing out exactly how he, being the richest person in his office, actually pays the lowest taxes, percent-wise of the people there.
It's one thing to argue against taxing the rich more than everyone else, but could you at least agree that perhaps we should tax them as much?
Sounds fair. Will you argue that we should tax them as much?
Also, if Mr. Buffet is so concerned about his tax burden compared to other people in his office, the question we should be asking is not how he manages such a low rate of taxation, but why he continues to pay such a low rate and, more importantly, why he wants to increase taxes.
The fact is, Mr. Buffett doesn't want to pay more taxes, he wants other people to pay more taxes. He loves high government spending because it makes him money. Of course he's going to support "increased revenue" over "reduced spending," because otherwise, his business won't be as successful.
Oh, and if you increased Mr. Buffett's tax burden from 17% to 40%, that would be an extra $10 million. Take that from the 400 highest earners and you've got an extra $4 billion. Or approximately 0.3% of the 2010 budget deficit. Where do you propose getting the other 99.7%?
Mr. Buffett has some handy suggestions:
But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.
So lets take $1 million from those 236,883 households making over $1 million, that's another $236 billion. And $10 million each from the 8,274 making over $10 million. That's another $80 billion.
Now we're up to some real numbers, about $323 billion (counting the $10 million from each of the top 400, we'll tax them twice, what the hell). That pays for...23% of the 2010 budget deficit.
Even if you agree that soaking the rich is a sound plan, it doesn't pay for much.
Although, if you took all of the income earned by the top 1% of Americans, you could pay off the deficit for 2010. I'm sure that taxing people at 100% (absolute, not marginal rate) won't have any impact on their decision to work next year.
You know, you're obviously much smarter than everyone else in the room, and everyone with actual economic experience. Clearly your understanding of this issue so far exceeds anyone else's that we're just not getting it. Further discussion with you on this topic seems like a waste of time.
Polonius wrote:Well, I was taught in tax that a good working definition of fair market value is: "what a willing buyer would pay to a willing seller, with neither being under a compulsion to buy or sell, and both having knowledge and appreciation of all material facts."
The problem is, rarely are all these requirements actually met.
biccat wrote:Oh, and if you increased Mr. Buffett's tax burden from 17% to 40%, that would be an extra $10 million. Take that from the 400 highest earners and you've got an extra $4 billion. Or approximately 0.3% of the 2010 budget deficit. Where do you propose getting the other 99.7%?
This is what's known as a Nirvana fallacy. There are many different measures to reduce the deficit, and none of them are invalid simply due to their inability to eliminate it entirely in one fell swoop.
biccat wrote:Even if you agree that soaking the rich is a sound plan, it doesn't pay for much.
Although, if you took all of the income earned by the top 1% of Americans, you could pay off the deficit for 2010. I'm sure that taxing people at 100% (absolute, not marginal rate) won't have any impact on their decision to work next year.
This is what's known as a Straw-man fallacy. You're arguing against the merits of a position no one has adopted, to whit, no one suggested raising taxes on the wealthy (or anyone else) to 100%, so arguments as to why that is unworkable is irrelevant at best.
Yeah bic, Ive been pretty much just reading with amusement the many long back and forths between you seb,dogma,rb et al without chirping much in. But its getting annoying that you strawman constantly. I mean, I do it sometimes as well, but its just getting ridiculous when every post is filled with them.
You should try and stop because its getting confusing.
............
So don't say that I demanded that you stop forever because Im always confused about everything.
No, I was demonstrating that even if you took everything the "rich" earn (top 1% is around $400k/year), you would still only just cover the deficit. And would barely touch the rest of the budget.
Our national budget is huge. Almost incomprehensibly huge.
"Taxing the rich" won't begin to cover the deficit problem, despite those who think otherwise. If you want to keep spending at the rate we are, taxes must be increased (at least) on the middle class.
Ouze wrote:This is what's known as a Nirvana fallacy. There are many different measures to reduce the deficit, and none of them are invalid simply due to their inability to eliminate it entirely in one fell swoop.
I'm not saying that "taxing the rich" is invalid simply because it can't eliminate it entirely. I'm saying that "taxing the rich", unless it's done at a confiscatory level, is largely irrelevant. And it's a waste of time.
Can we reduce the federal deficit by replacing forks and spoons in the Congressional Cafeteria with sporks? Yes. Does it make sense to address a $1 trillion problem by looking at ways to save $5 thousand? No.
So you know what, I'm going to go ahead and jump on the "hang the richers" bandwagon. What the hell, lets substantially increase their tax burden and reduce the deficit by 1%. But please stop pretending that there won't be economic consequences to doing so.
Ouze wrote:This is what's known as a Straw-man fallacy. You're arguing against the merits of a position no one has adopted, to whit, no one suggested raising taxes on the wealthy (or anyone else) to 100%, so arguments as to why that is unworkable is irrelevant at best.
Damn, you mean Warren Buffet didn't make the argument that "taxing the rich" would save money in the article linked above? I guess I totally misread it.
The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.
biccat wrote: I'm saying that "taxing the rich", unless it's done at a confiscatory level, is largely irrelevant. And it's a waste of time.
Financially, or politically? Financially it might be a waste of time, though, as many conservatives remind me, "every dollar counts". But politically? If the plebes want a thing and that thing can be served up silver-platter-style it probably should be.
biccat wrote:
Can we reduce the federal deficit by replacing forks and spoons in the Congressional Cafeteria with sporks? Yes. Does it make sense to address a $1 trillion problem by looking at ways to save $5 thousand? No.
Says the guy dropping bombs about bridges to nowhere.
biccat wrote:
So you know what, I'm going to go ahead and jump on the "hang the richers" bandwagon. What the hell, lets substantially increase their tax burden and reduce the deficit by 1%. But please stop pretending that there won't be economic consequences to doing so.
Yes, jump on the bandwagon you created, its the free market way.
How can one claim that the richest control so little of the wealth in our society that taxing them more heavily will not significantly redress the budget deficit and at the same time claim that taxing the richest more heavily will have a significant negative effect on our economic recovery? Which is it: do the richest control significant wealth or not?
Manchu wrote:How can one claim that the richest control so little of the wealth in our society that taxing them more heavily will not significantly redress the budget deficit and at the same time claim that taxing the richest more heavily will have a significant negative effect on our economic recovery? Which is it: do the richest control significant wealth or not?
The difference is that despite having a large amount of wealth, their proportion of income is small compared to the rest of the economy. However, because they have a lot of wealth, their economic activities have a substantial effect on the economy.
For example, if an investor has a million dollars and can get a 4% gain by investing in a small business or a 3% gain by purchasing municipal bonds, he will generally try to invest in the small business since it has a higher yield (assume that 4% gain accounts for the investment risk as well). But if you tax his income at more than 25%, it becomes better for him to invest in municipal bonds (which are exempt from federal income taxes) to gain a higher return.
The economic consequences of investing in government versus a private business should at least be reasonably apparent.
biccat wrote:The difference is that despite having a large amount of wealth, their proportion of income is small compared to the rest of the economy. However, because they have a lot of wealth, their economic activities have a substantial effect on the economy.
So what you're saying is, is that it's the incompetence, corruption, and stupidity of rich people that has caused our current economic slump?
biccat wrote:The difference is that despite having a large amount of wealth, their proportion of income is small compared to the rest of the economy. However, because they have a lot of wealth, their economic activities have a substantial effect on the economy.
So what you're saying is, is that it's the incompetence, corruption, and stupidity of rich people that has caused our current economic slump?
Exactly.
Assuming that by "rich people" you mean politicians.
biccat wrote:The difference is that despite having a large amount of wealth, their proportion of income is small compared to the rest of the economy. However, because they have a lot of wealth, their economic activities have a substantial effect on the economy.
So what you're saying is, is that it's the incompetence, corruption, and stupidity of rich people that has caused our current economic slump?
Exactly.
Assuming that by "rich people" you mean politicians.
No, I meant the people who control the majority of wealth in this country. The top one percent in terms of wealth in this country has, in your own words, a substantial effect on the economy.
And they fethed up. Does not great responsibility come with great power, or is that only for poor people?
The difference is that despite having a large amount of wealth, their proportion of income is small compared to the rest of the economy. However, because they have a lot of wealth, their economic activities have a substantial effect on the economy.
That's a sensible sounding answer but try applying the same spin ... er, logic to the middle class. If, as a group, the taxable income of the middle class is significant against the context of the larger economy then surely their investment decisions (which will also be affected by their tax burden) will also be significant to the health of the economy. And, since they are a much larger and more significant pool according to your analysis, then they ought to be less fettered by tax burdens. The middle class should be taxed less and the richest should make up for the slack, seeing as how their ability to contribute in either sense is less than that of the middle class. By constraining them with taxes we shouldn't really lose anything that couldn't be gained by lowering taxes on the middle class, right?
biccat wrote:
The difference is that despite having a large amount of wealth, their proportion of income is small compared to the rest of the economy. However, because they have a lot of wealth, their economic activities have a substantial effect on the economy.
Yes, when income is defined by law and not colloquium.
biccat wrote:
For example, if an investor has a million dollars and can get a 4% gain by investing in a small business or a 3% gain by purchasing municipal bonds, he will generally try to invest in the small business since it has a higher yield (assume that 4% gain accounts for the investment risk as well). But if you tax his income at more than 25%, it becomes better for him to invest in municipal bonds (which are exempt from federal income taxes) to gain a higher return.
Yes, and?
biccat wrote:
The economic consequences of investing in government versus a private business should at least be reasonably apparent.
Melissia wrote:No, I meant the people who control the majority of wealth in this country. The top one percent in terms of wealth in this country has, in your own words, a substantial effect on the economy.
That would be politicians. The US government controls a great amount of wealth, roughly 45% of California alone is held by the Federal Government. 69% of Alaska is owned by the feds, a lot of it containing valuable oil and mineral reserves.
Melissia wrote:And they fethed up. Does not great responsibility come with great power, or is that only for poor people?
I'm not sure what you think "the rich" fethed up. People will act in their own self interest when given the opportunity. Wealthy Americans may have invested in toxic funds, but it's the Feds who enabled and supported those funds, and then propped up the richers at the expense of the rest of us.
Manchu wrote:That's a sensible sounding answer but try applying the same spin ... er, logic to the middle class. If, as a group, the taxable income of the middle class is significant against the context of the larger economy then surely their investment decisions (which will also be affected by their tax burden) will also be significant to the health of the economy.
Not necessarily, there's a vast difference between wealth and income. Wealth is what enables capitalists to invest in companies. Most middle class people don't control a lot of wealth. Further, when multiple people act in their own independent interests they have a more diffuse effect than a single person acting in his own interest.
Manchu wrote:And, since they are a much larger and more significant pool according to your analysis, then they ought to be less fettered by tax burdens. The middle class should be taxed less and the richest should make up for the slack, seeing as how their ability to contribute in either sense is less than that of the middle class. By constraining them with taxes we shouldn't really lose anything that could be gained by lowering taxes on the middle class, right?
Are you suggesting a wealth tax as opposed to an income tax?
As I pointed out upthread, taxing all of the income of the top 1% will only cover the deficit, not any tax breaks for the middle class. If you want to cover the deficit without cutting spending (which, I'll point out again, none of the plans, even those pushed by Republicans, actually do) you need to raise taxes across the board.
Melissia wrote:No, I meant the people who control the majority of wealth in this country. The top one percent in terms of wealth in this country has, in your own words, a substantial effect on the economy.
That would be politicians.
So in your eyes, the top 1% of are all politicians?
You keep shifting your position and opinions every time anyone says anything.
biccat wrote:
I'm not sure what you think "the rich" fethed up. People will act in their own self interest when given the opportunity. Wealthy Americans may have invested in toxic funds, but it's the Feds who enabled and supported those funds, and then propped up the richers at the expense of the rest of us.
As though "wealthy Americans" and the "Feds" were distinct.
biccat wrote:
Not necessarily, there's a vast difference between wealth and income. Wealth is what enables capitalists to invest in companies.
Melissia wrote:No, I meant the people who control the majority of wealth in this country. The top one percent in terms of wealth in this country has, in your own words, a substantial effect on the economy.
That would be politicians.
So in your eyes, the top 1% of are all politicians?
The majority of privately held wealth is owned (which includes control) by very few people.
However, if you include publicly held wealth, the United States (as an owner) dwarfs that. This wealth is controlled by politicians.
Wealth is what enables capitalists to invest in companies. Most middle class people don't control a lot of wealth.
I'm glad you mentioned the distinction. Of course, the real distinction is that wealth is whatever remains after liabilities are subtracted from income. In this case, we see that almost no one in the middle class owns any wealth and yet they are still taxed more heavily, even without regard to proportion, than the richest. There are already taxes on wealth but they are only infrequently collected (at inheritance) and even then they constitute a pittance. Furthermore, whether we talk about wealth or income as a source of revenue, this discussion doesn't seem to account for fictional persons (corporations).
If you want to cover the deficit without cutting spending (which, I'll point out again, none of the plans, even those pushed by Republicans, actually do) you need to raise taxes across the board.
I'm okay with that, when it is actually "across the board."
Wealth is what enables capitalists to invest in companies. Most middle class people don't control a lot of wealth.
I'm glad you mentioned the distinction. Of course, the real distinction is that wealth is whatever remains after liabilities are subtracted from income. In this case, we see that almost no one in the middle class owns any wealth and yet they are still taxed more heavily, even without regard to proportion, than the richest.
There are a myriad of problems with a wealth-based tax system. We currently have an income-based tax system, and it works reasonably well.
Manchu wrote:Furthermore, whether we talk about wealth or income as a source of revenue, this discussion doesn't seem to account for fictional persons (corporations).
Of course it doesn't account for corpoate taxes, otherwise Warren Buffett would have admitted that in addition to his $6 million personal tax bill, he also paid a large share of $3 billion in corporate taxes.
Manchu wrote:
If you want to cover the deficit without cutting spending (which, I'll point out again, none of the plans, even those pushed by Republicans, actually do) you need to raise taxes across the board.
I'm okay with that, when it is actually "across the board."
biccat wrote:For example, if an investor has a million dollars and can get a 4% gain by investing in a small business or a 3% gain by purchasing municipal bonds, he will generally try to invest in the small business since it has a higher yield (assume that 4% gain accounts for the investment risk as well). But if you tax his income at more than 25%, it becomes better for him to invest in municipal bonds (which are exempt from federal income taxes) to gain a higher return.
The economic consequences of investing in government versus a private business should at least be reasonably apparent.
If you are considering investing in a small business that expects returns of 4% pa you are basically the worst businessman ever. Venture capital typically requires in the realm of 30-40% for start up businesses. Established business are typically valued with a return on capital of 8 to 15%, dependant on the level of risk. The long term return on stocks, from the 1920s to 2000, was over 10%.
On of two things is possible here. You either have no idea about returns the market demands and just picked out a random number. Or you invented whatever numbers were needed to fit your example, and didn't actually care that real returns are nothing like that, and so your example of direct trade-off couldn't actually work in the real world.
Whichever is true, I think all of us, yourself included, really need to be asking how much insight into tax policy you could possibly have.
Also, you didn't answer my earlier post. Did you run out of strawmen, and weren't willing to accept that people don't create wealth without the input of greater society?
biccat wrote:Exactly.
Assuming that by "rich people" you mean politicians.
Collateralised debt obligations were invented by politicians, were they?
Automatically Appended Next Post:
biccat wrote:
Manchu wrote:
There are a myriad of problems with a wealth-based tax system. We currently have an income-based tax system, and it works reasonably well.
Not if you believe that most of our government spending is necessary to fostering a society in which wealth can actually be produced.
Fortunately, I don't believe any such thing.
Oh, absolutely. It's undeniable. All you have to do is look at the weak governments of Africa, then note how wealthy their people are. Then consider the strong governments of Europe and America, and note how poor their people are.
Melchiour wrote:I don't think you can point your finger at any one person/group/party for this. It didn't happen overnight. Course I am sure people will point anyways.
Oh yes you can point. Same is happening in Europe.
We "outsource" everything because it is the fraction of a cent cheaper. Where do our harvest helpers from Ukraine and Poland spend their pay? Not whwere they work.
Keep reducing peoples income (working class) and voila, your domestic market breaks down. THATS whats happening, nothing else.
The answer however is NOT to tax the rich, no it is to take away their opportunities to screw the public.
Who should pay for redundancies? - Not the taxpayer but the companies that outsource, net the profits and evade taxes.
It can be simple as that but governments are too busy in helping their own wallets and have no time to do their jobs properly.
sebster wrote:Oh, absolutely. It's undeniable. All you have to do is look at the weak governments of Africa, then note how wealthy their people are. Then consider the strong governments of Europe and America, and note how poor their people are.
Could you explain what you mean by this? I'm not clear what your meaning is.
sebster wrote:On of two things is possible here. You either have no idea about returns the market demands and just picked out a random number. Or you invented whatever numbers were needed to fit your example, and didn't actually care that real returns are nothing like that, and so your example of direct trade-off couldn't actually work in the real world.
How about option 3: I was using different rates as an illustrative example to show how changing tax policy causes large investors to change their investment strategies?
sebster wrote:Whichever is true, I think all of us, yourself included, really need to be asking how much insight into tax policy you could possibly have.
Ah, I know the answer to this one. This is essentially an argument from authority. I'm quite frankly surprised no one has pointed it out yet, as quick as some are to jump up and shout "FALLCY!"
sebster wrote:Also, you didn't answer my earlier post. Did you run out of strawmen, and weren't willing to accept that people don't create wealth without the input of greater society?
Quite possible that I ran out of strawmen. An alternative is that I simply didn't respond to your post, or that the question was buried in some of your standard unpleasantries and I missed it.
I agree that people don't generally create wealth without the input of other members of society, but what I dispute is that their individual contributions are not indicative of the money they earn. Bill Gates and I live in the same "greater society," yet he makes substantially more money than I do. The only explanation for this is that he offers (or offered) a service or product that people value more than the service I offer. His wealth is not earned by society, it's earned by his individual talent and contribution.
sebster wrote:Collateralised debt obligations were invented by politicians, were they?
The problem with collateralized debt obligations isn't inherent in their form, the problem arose due to the underlying assets that the CDOs guaranteed. And these 'toxic assets' were strengthened by government action.
sebster wrote:
biccat wrote:
Manchu wrote:Not if you believe that most of our government spending is necessary to fostering a society in which wealth can actually be produced.
Fortunately, I don't believe any such thing.
Oh, absolutely. It's undeniable. All you have to do is look at the weak governments of Africa, then note how wealthy their people are. Then consider the strong governments of Europe and America, and note how poor their people are.
I'm pretty sure that Manchu would agree, if pressed, that most of our government spending is not necessary to fostering a society for producing wealth. The experience of previous decades and lower budgets should be sufficient to dissuade anyone of this notion.
HudsonD wrote:Er, Biccat, do you mind if I print and frame that last post of yours, and show it to friends ?
It's not often one sees something so... pure.
You are more than welcome to, however I would note that I charge a reasonably high royalty rate. Please PM me for prices.
Note that I do happen to know more than a few attorneys who specialize in copyright infringement.
I think they would possibly tell you that a third party displaying your post in order to offer criticism of it falls under 'fair use' as long as you are credited as the author.
biccat wrote:Ah, I know the answer to this one. This is essentially an argument from authority. I'm quite frankly surprised no one has pointed it out yet, as quick as some are to jump up and shout "FALLCY!"
I give people a pass the first dozen or so times they do it in a given thread, what can I say?
I'm pretty sure that Manchu would agree, if pressed, that most of our government spending is not necessary to fostering a society for producing wealth. The experience of previous decades and lower budgets should be sufficient to dissuade anyone of this notion.
Well, you have me there to the extent that I forgot to qualify my position with words like "responsibly" and "sustainable." Government spending on social programs is certainly unnecessary if you want to create wealth at any cost in the short term. And I think that pretty much squares your second sentence there.
Ouze wrote:Could you explain what you mean by this? I'm not clear what your meaning is.
Biccat claimed most of our government spending isn't necessary for producing a wealthy society. I thought this was funny, when you compare a society like ours, to the much weaker governments of developing countries. We are, fairly obviously, much richer, and the ones with the society to aspire to. To just ignore the role of government in building a stable, prosperous nation is kind of ridiculous.
biccat wrote:How about option 3: I was using different rates as an illustrative example to show how changing tax policy causes large investors to change their investment strategies?
But the example only worked when you have nonsense rates of return. Had you chosen a more sensible rate of return for the small business, even assuming it was an established business, then you'd be looking at a return somewhere closer to 10%. At which point your 25% discount would still leave the small business generating 7.5% after tax, more than twice the return of the municipal bond.
When your example only works because you've got nonsense numbers in there, we have to question your ability to illustrate the impact of tax on investment decisions.
Ah, I know the answer to this one. This is essentially an argument from authority. I'm quite frankly surprised no one has pointed it out yet, as quick as some are to jump up and shout "FALLCY!"
No, it really isn't.
Look, it'd be like if we were arguing about baseball, and you claimed that hitting a homerun was all about speed around the bases, and not how far the batter hit the ball. To prove this, you stated that the fastest an object can move is at the speed of light, which is about 300 million metres per second, so if a player could go just half that speed, he could get around the bases in 0.00000073 of a second, and he wouldn't have to hit it very far at all to give himself that much time. The argument only works because the figures are ridiculous, so ridiculous we would have to question if the person in involved had ever seen a game of baseball in their life.
In other words, any example that requires a business commitment based on a an expected return of 4% is also ridiculous, and really needs us to question whether the person involved had any idea about the business investment at all.
Quite possible that I ran out of strawmen. An alternative is that I simply didn't respond to your post, or that the question was buried in some of your standard unpleasantries and I missed it.
True, I understand you're getting dogpiled a bit in this thread, and so it becomes possible to miss one of the people arguing against you. Still, you're welcome to retrace your steps and go see my response to you now.
I agree that people don't generally create wealth without the input of other members of society, but what I dispute is that their individual contributions are not indicative of the money they earn. Bill Gates and I live in the same "greater society," yet he makes substantially more money than I do. The only explanation for this is that he offers (or offered) a service or product that people value more than the service I offer. His wealth is not earned by society, it's earned by his individual talent and contribution.
He certainly did offer a service that lots of people wanted, and he made loads of money out of it and good luck to him for it. This is the great strength of capitalism, to innovate new products and create new markets, and we should reward the people who create those goods handsomely.
But we shouldn't pretend that invention happened in a vacuum. There's a reason that innovation came out of the US and not out of Zimbabwe. Because the US has a powerful, effective system in place for developing new tech, putting that tech into marketable products, then manufacturing and distributing that product.
A guy in Zimbabwe, no matter how smart and hard working he is, just isn't going to start the next Microsoft. A guy in the US who does manage to make the next Microsoft deserves plenty of financial reward for his effort, but it simply doesn't follow that he can declare whatever he earns as his profit by absolute rights, and that the tax system is the first time greater society has played any role in his success.
The problem with collateralized debt obligations isn't inherent in their form, the problem arose due to the underlying assets that the CDOs guaranteed. And these 'toxic assets' were strengthened by government action.
Except that isn't true at all. They were toxic because a new model of profit came to dominate banking, loan to whoever, roll it up in a CDO and push it out into the bond market, and return to the first step. There was little regard for safe stewardship of the shareholder's funding, it was all motivated by reaching incentive targets set for various managers.
In the wake of financial crisis Alan Greenspan, the great stalwart of the free market, admitted he'd made a terrible error in assuming that left to their own devices firms would properly consider their shareholders just through basic self interest. Alan fething Greenspan realised the mistake, so why do you think you're in a better place to properly assess it was actually all about bad old government?
I'm pretty sure that Manchu would agree, if pressed, that most of our government spending is not necessary to fostering a society for producing wealth.
Oh, definitely. But ultimately, who are you, who is anyone, to pick one part like income taxes and declare that one part alien and seperate to all the rest? Can a communist just as freely pick out property laws as part of that system that is alien and immoral?
Or do you have to accept that every part of that system, the parts that advantage the wealthy, and the parts that advantage the poor, as all part of a one big system? Which doesn't mean the system as a whole, or any individual part, is immune to criticism, but it does limit the types of criticism that are reasonable, and the types that make no sense.
In this case, the method of criticism you've attempted, where you pick out one part of the system and pretend all other parts are inherent and indisputable, is the kind of criticism that makes no sense.
sebster wrote:True, I understand you're getting dogpiled a bit in this thread, and so it becomes possible to miss one of the people arguing against you. Still, you're welcome to retrace your steps and go see my response to you now.
Welcome to, but not interested in doing so. Look, I'm sure you think differently, but you're not entitled to a response to some offhand question, especially when you're fundamentally misunderstanding and misrepresenting what I've said in this thread.
I'm really not sure on what basis you're attacking my "ability to illustrate the impact of tax on investment decisions." You appear to be taking the position that tax policy has no bearing on financial decisions. That kind of thinking is absurd to even high-school level economics. If you make something more expensive, you get less of it. It's a simple and fundamental concept of economic thought.
Either you're unable or unwilling to concede such a simple point, or you're arguing from such an outlying starting position that your arguments are nonsensical given the standards of basic economics. Perhaps you should endeavor to explain yourself better, rather than attacking those who disagree with you.
Sebster, it's getting on shaky and potentially rude ground to question another poster's ability to do a given thing. Kindly be careful.
Biccat, you appear to be making an argument on a false pretence in your last post. I don't see anything in Sebster's post which says or implies that tax policy has "no bearing" on financial decisions.
biccat wrote:Welcome to, but not interested in doing so. Look, I'm sure you think differently, but you're not entitled to a response to some offhand question, especially when you're fundamentally misunderstanding and misrepresenting what I've said in this thread.
You had been responding, then stopped, while continuing to respond to others, and you then responded to other posts I'd made afterwards. While I certainly can't demand you respond, you also can't demand people don't draw conclusions from you suddenly giving up on an issue.
I figured it was likely given the number of people arguing with you that you simply missed that one post, but given you've once again failed to respond to my point on the individual's success being due to him being part of society, in order to focus in on return on investment side debate, it appears more likely that you're just prone to giving up on the issue when it becomes clear that you're wrong.
I'm really not sure on what basis you're attacking my "ability to illustrate the impact of tax on investment decisions." You appear to be taking the position that tax policy has no bearing on financial decisions. That kind of thinking is absurd to even high-school level economics. If you make something more expensive, you get less of it. It's a simple and fundamental concept of economic thought.
Uh, actually discounted future expected cashflow to price business is first year university. While a highschool economics class might tell you that 'tax affects decision making' that's a horribly simplistic point, and of itself gives us no insight into the level of the effect, or it's type. If you did this in highschool then stopped, it goes a long way to explaining why you simply don't get how much of this issue is beyond your present knowledge base.
As a guy who's worked on determining expected returns on investment, I can tell you I know more than enough about accounting for the effects of tax on future cash flows. But more than that, I can tell you that if I ever walked into a senior's office and said 'well this investment would have got us 4% ROI, but with the tax we'd have to pay we'd only get 3% and so it isn't worthwhile' I'd be met with stunned silence, followed by a request to clear out my desk. Christ, government demands 6% or higher.
If we go back and look at your figures again, we have to compare 3% against 10% at an absolute minimum, if it's a start up business we're looking at three times that number.
Once we start looking at rates of return in the ranges we actually see them in the real world, we realise how much things like opportunity, economic growth and risk matter a whole lot more than tax policy. Once you accept that the real return on investment is at least 10%, the company tax rate simply cannot drive a decision to invest in a 3% municipal bond. What would drive that decision would be the existance of projects with the required level of return, the level of risk, and the necessary liquidity of the funds.
The impact of tax policy is more in the distortions between different types of investment. As you increase tax rates you begin to skew investments towards those with beneficial tax structures and towards investments where most of the return is in the appreciation of assets, as capital gains is always taxed less (so towards land based investments, and away from factories and the like). This is a problem because the more tax effective businesses typically tend to be asset heavy, employment low.
Those are the kinds of arguments you could have made, if you knew what you were talking about. God, I don't even like corporate tax, because it represents double taxation, and believe people should just be taxed on dividends when they're received, not taxed on corporate profits then taxed again when it's received as income.
But you didn't go for those arguments. You went for one where a guy was going to invest in a business expected to make 4%, but didn't because the tax was too high.
Either you're unable or unwilling to concede such a simple point, or you're arguing from such an outlying starting position that your arguments are nonsensical given the standards of basic economics. Perhaps you should endeavor to explain yourself better, rather than attacking those who disagree with you.
I've explained myself just fine. As has happened a few times in this thread, let alone elsewhere, you didn't want to hear it.
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Mannahnin wrote:Sebster, it's getting on shaky and potentially rude ground to question another poster's ability to do a given thing. Kindly be careful.
I don't really get this complaint. I mean, if someone is making an argument that shows they really don't understand the field in question, what are we supposed to do? What step is available other than 'you don't understand this, here is how it actually works, please accept this and we can get on with discussing how this thing actually works'?
There's a difference between saying someone doesn't understand a concept, and saying they're incapable of understanding that concept/lack the ability to do so. The latter is often going to be rude.
sebster wrote:While a highschool economics class might tell you that 'tax affects decision making' that's a horribly simplistic point, and of itself gives us no insight into the level of the effect, or it's type.
So now you're willing to discuss the level and type of effect taxation has on someone? Previously you were arguing that society can demand what it wants from high income earners because they allowed the person to obtain that income. When I asked how to differentiate personal contribution to wealth from societal contribution to wealth, you dismissed the point. If you take the position that income is due to societal input, then you need to have some metric for measuring the extent of that contribution in order to determine a fair (or effective) tax rate. So which is it, does taxation have an effect on someone's decision making or not?
Then again, now that I think about it, such a requirement is only necessary if you start from a position of private ownership and personal freedom. I suppose if you think that all of a person's labor (and the proceeds therefrom) is owned by the State and it's the State's job to decide how much you can keep it, your position makes sense. Fortunately we have historical evidence that this type of system doesn't work.
sebster wrote:Whichever is true, I think all of us, yourself included, really need to be asking how much insight into tax policy you could possibly have.
Ah, I know the answer to this one. This is essentially an argument from authority. I'm quite frankly surprised no one has pointed it out yet, as quick as some are to jump up and shout "FALLCY!"
Two things:
1: Not all appeals to authority are fallacious, hence the distinction made in the second sentence of your source.
2: You can only appeal to your own authority by explicit reference, otherwise all statements would be appeals to authority.
Sebster did not reference himself as an authority, and even if he had it would not have been fallacious if we accept his educational claims. Your criticism is off base.
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biccat wrote:Previously you were arguing that society can demand what it wants from high income earners because they allowed the person to obtain that income.
That's a strawman, no such thing was implied.
Though, in reality, society can do exactly what you describe, because society has more people (and therefore guns/knives/fists/feet) than the individual; by definition.
biccat wrote:
If you take the position that income is due to societal input, then you need to have some metric for measuring the extent of that contribution in order to determine a fair (or effective) tax rate.
No you don't. A tax can be fair and effective while also being unequal. In fact, history is filled with examples of this.
biccat wrote:
So which is it, does taxation have an effect on someone's decision making or not?
Did you not read the part where he said that it does?
biccat wrote:
Then again, now that I think about it, such a requirement is only necessary if you start from a position of private ownership and personal freedom. I suppose if you think that all of a person's labor (and the proceeds therefrom) is owned by the State and it's the State's job to decide how much you can keep it, your position makes sense. Fortunately we have historical evidence that this type of system doesn't work.
biccat wrote:So now you're willing to discuss the level and type of effect taxation has on someone? Previously you were arguing that society can demand what it wants from high income earners because they allowed the person to obtain that income. When I asked how to differentiate personal contribution to wealth from societal contribution to wealth, you dismissed the point. If you take the position that income is due to societal input, then you need to have some metric for measuring the extent of that contribution in order to determine a fair (or effective) tax rate. So which is it, does taxation have an effect on someone's decision making or not?
Of course tax impacts decision making. Of course society can build a tax system that taxes the rich more than the poor, it can even build a system that taxes the rich 99% of every dollar they earn over the minimum wage. These are both plain and obvious points, as long as you don't assume that just because society is within it's rights to tax, it necessarily should. Obviously, society needs to consider the negative consequences of tax policy, and ensure that there remains sufficient personal incentive for individuals to continue to strive to increase their income.
The point is to move past the silliness of 'tax is theft' and into the productive and useful grounds of 'what tax policy is the best tax policy'. Once we accept that, we can have a conversation about what level of spending is needed, and how we might raise that money while balancing the considerations of fairness and personal incentive.
Then again, now that I think about it, such a requirement is only necessary if you start from a position of private ownership and personal freedom. I suppose if you think that all of a person's labor (and the proceeds therefrom) is owned by the State and it's the State's job to decide how much you can keep it, your position makes sense. Fortunately we have historical evidence that this type of system doesn't work.
I don't start from the position that it's owned by anyone. It simply is a product of personal endeavours, in the context of a system built everybody else's personal endeavours and the system put in place by the state. As such, it is a complete nonsense to pick out one single part of the system put in place by government and declare that part alone uniquely alien to the rest of the system. You are continuing to pretend that person walks into a job, signs up for $60k before tax, knowing full well that as part of the system that sees the corporation he is to work for exist in the first place, his after tax income will be $48,000, he is able to yell 'theft' as though that tax element came out of something totally alien to all the rest.
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) countries don't have the work over all else mentality that some in the US do.
