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You also have to look at the the level of debt relative to annual income. It may be that while Americans are earning more on average the credit requirements of reaching those earning thresholds is much higher than previous. I imagine that, if true, this would mostly apply to urban areas where income is closely associated with education.

What do you think the best indicator would be? Would it be disposable income? If so per person or per household. As I figure disposable income really encompasses the effects of everything. Either way its way down.

The only problem I have with disposable income, is that today there are so many more expenses that really are necessities. Internet, computers and cellphones are pretty mandatory now, no such animal existed in 1979.

Cars are not mandatory, they would however be less of a necessity if the rich auto executives didn't see fit to eviscerate public transportation in the 60's.

Andrew1975 wrote:
What do you think the best indicator would be? Would it be disposable income? If so per person or per household. As I figure disposable income really encompasses the effects of everything. Either way its way down.

Disposable income works well, and that's what CPI is designed to get at, though I still think debt ratios are important. People don't necessarily take loans out of necessity, but why the loan was drawn isn't really important, its merely important to note that it affects the prosperity of the debtor.

Per household is probably a better measure as families tend to have less disposable income as the number of children increases. Though you also have to be careful that your definition of "household" doesn't group housemates with families, as that will artificially distort any data. Really, no one measure is going to be perfect though, so its best to use a collection of measures over time.

Andrew1975 wrote:
The only problem I have with disposable income, is that today there are so many more expenses that really are necessities. Internet, computers and cellphones are pretty mandatory now, no such animal existed in 1979.

Yeah, that's always going to be a criticism with any metric based on need. Hell, its why there are several different baskets used to calculate CPI.

Looking forward to the social changes that I am sure republicans will try to bake in with raising the debt ceiling, should be epic!

LordofHats wrote:

Hawkward wrote:

LordofHats wrote:The sweet irony of the US rich v poor debate. 5% of the world's population controls 80% of its wealth and resources. Many Americans are in that 5%.

How is that ironic? Our poor people aren't as poor as other people's poor people?

I do not think that word means what you think it means.

A situation where people talk about not being rich when they control the vast majority of the planets financial and material wealth, and by a world standard are among the wealthiest human beings? Seems ironic to me, admitting it is a gross simplification of the matter. But that seems to fit the definition of irony.

But that's also the problem, America is a wealthy country, but it's wealth is horded by just a few. Your average American does not control vast majorities of anything, even collectively.

The problem is not that the wealthy view the impoverished with malice. The problem is that the wealthy view the impoverished with contempt.

I think the problem is that they don't view them at all. I don't honestly think the rich intend to screw the poor, anymore than I intend to kill bugs when I drive. I don't think the crinkle their hands and say "excellent". I'm sure some do. I think though it's just that they have little regard for anyone else at all. Their goal is to amass wealth and power, and in their drive they forget about the real harm they are causing even unto themselves. They really are in danger of creating such a top heavy economy that it cannot sustain itself. If they can not find a way to spread the wealth around better, their social burden will only grow bigger.

I don't hate the rich, I think they are just short sighted in many cases. Vampires can't suck everyone dry or there is nobody left to feed on.

I don't even think there is a problem with amassing wealth, the problem is not finding a way to circulate it with better practices. The rich need to find ways to get money into people hands so they can sell them more stuff and services. Simplified it's like cellphones. Lose money on the phone, make a more constant and regular income stream from the services.


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dogma wrote:

Andrew1975 wrote:
What do you think the best indicator would be? Would it be disposable income? If so per person or per household. As I figure disposable income really encompasses the effects of everything. Either way its way down.

Disposable income works well, and that's what CPI is designed to get at, though I still think debt ratios are important. People don't necessarily take loans out of necessity, but why the loan was drawn isn't really important, its merely important to note that it affects the prosperity of the debtor.

Per household is probably a better measure as families tend to have less disposable income as the number of children increases. Though you also have to be careful that your definition of "household" doesn't group housemates with families, as that will artificially distort any data. Really, no one measure is going to be perfect though, so its best to use a collection of measures over time.

Andrew1975 wrote:
The only problem I have with disposable income, is that today there are so many more expenses that really are necessities. Internet, computers and cellphones are pretty mandatory now, no such animal existed in 1979.

Yeah, that's always going to be a criticism with any metric based on need. Hell, its why there are several different baskets used to calculate CPI.

My problem with household is that we have changed so much from single income families to dual income families that to take household really skews the relationship. At one time if two people worked it was a real advantage, now it has become a necessity.

"Debt Jumped $54.1 Billion in 8 Days Preceding Boehner-Obama Deal to Cut $38.5 Billion for Rest of Year "

"Since the beginning of the fiscal year on Oct. 1, 2010, the national debt has increased by $653.4 billion."

http://www.cnsnews.com/news/article/debt-jumped-54-billion-8-days-preceding#

Anyone else feel like this was all a dog and pony show?

thedude wrote:"Debt Jumped $54.1 Billion in 8 Days Preceding Boehner-Obama Deal to Cut $38.5 Billion for Rest of Year "

"Since the beginning of the fiscal year on Oct. 1, 2010, the national debt has increased by $653.4 billion."

http://www.cnsnews.com/news/article/debt-jumped-54-billion-8-days-preceding#

Anyone else feel like this was all a dog and pony show?

You mean a round of rousing cuts that don't touch entitlements, medicare, social security, or the military is just a bunch of grand standing idiocy over nothing to quell a fanatical and ignorant populace? SHOCK

VoidAngel wrote:You are really good at both the straw man and the ad hominem - but that doesn't make you right. I didn't say no increase. I didn't say no taxes. Nowhere did I mention 2-3%.

You said "taxing the rich isn't the answer". I could have taken it completely literally and assumed you meant it is wrong to tax the rich at all. But I didn't, instead I took it as you believing that increasing taxes on the rich was not the answer.

Meanwhile, 2-3% is the tax rate needed across the board to move the US budget to sustainability, long term. I must have assume you knew that. Sorry.

What studies? By whom?

I'm thinking of a study in the Economist in 2009 or 2010. There are others.

Also, did you fail to catch the word "illegal"? Can't claim many services? Come down to my local hospital tonight and sit in the emergency room for 15 minutes.

No, I didn't miss the word illegal. The word illegal is the whole point, because it allows you to keep one group of people seperate to the rest of society, pay them less and deny them services available to the rest of society. This by definition will improve living standards among the rest of society.

And of course there's going to be lots of illegal aliens at the emergency clinic. They're denied access to other medical attention.

No, you didn't. You claim that now, but in a thread just a few months back I am pretty sure I remember you calling me crazy for thinking that this was the plan when I mentioned it. Now that it's coming true it's obvious I guess. Convenient. Also, it's not failing - at all. It's been rough, and still is - but it's not failing.

Umm, you're terribly mistaken, either in who you were talking to at that time, or the content of my argument. I've been aware that the democratic domino was the primary cause for the invasion well before the actual invasion. I've argued it many, many times on this forum.

It's just that unlike you, I recognise that trying to reform a region through foreign invasion is stupid and doomed to failure.

The dominoes need a push in order to start to fall. They won't do it by themselves.

Unless it's Libya. Then we're just mucking it up by getting involved. Internal consistency is for the weak, yeah?

Except that I never argued that.

"Taxing the rich isn't the answer."

Precisely. And we should not allow our Europhile Democrat brethren get us there.

No-one in Europe is near the rate. No Democrat proposal is even close to the rate. Your argument above exists entirely in a bottle, protected on all sides by absolute ignorance of the actual situation.

"You shouldn't tax the rich so heavily that they become resistant to invest and grow the economy further" is completely true, but utterly irrelevant in the real world where the rate of tax on the rich, and any seriously proposed new rate, is nowhere near that point.


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VoidAngel wrote:OK, now define "fair".

Citizen A makes $80,000 a year and pays 34% income tax (making up numbers here for the sake of discussion). That's $28,000

Citizen B makes 8,000,000 a year and pays 17% income tax. That's $1,360,000

So I ask you, define fair. The evil rich guy just contributed 48 times more than the noble middleclassman. Is that fair enough for you? No?

Are you actually arguing for regressive tax rates? That the more you earn, the less your marginal tax rate?

That's pretty fething out there, you know.


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VoidAngel wrote:What other conceivable assumption is right?!

Call me a traditionalist, but taking something not yours is...there's a word for it....gimme a sec...'theft'? Yeah, that's it.

They have it. Why shall I assume they 'stole' it? What contortion of logic and morality should I apply to entitle myself to any portion of it?

I sense (hope) that you are asking from a philosophical perspective, so feel free to attempt to demonstrate that people do not deserve what they have honestly (or, at least legally) acquired.

The rules that allow any person to fit into the economy and peform a service and charge for it are rules written by government, on behalf of society. The contract laws, property laws and employment laws that we have written are just as much a part of that system as any tax laws we have written.

The rule that says "John is deemed to own this land any house upon it and can deny anyone else its use" involves exactly as much theft as the rule that says "John will pay no tax on the first $10,000 he earns, and 25% tax on any earnings above that". That is to say, there's no theft involved in either.


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ShumaGorath wrote:They finished grandstanding and passed the meaningless hyper political budget that cuts nothing meaningful and fixes nothing.

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VoidAngel wrote:http://blog.pappastax.com/index.php/2010/07/11/case-rested-trickle-down-policies-work/

Read it and stop weeping.

That blog entry is utterly terrible. Is that really the standard of economic debate you're content with? Really?


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VoidAngel wrote:It's simple. It shows, as the author notes, that as the rich get richer - so does everyone else. It's a direct refutation of the "But trickle-down economics has been PROVEN not to work!" cry from earlier in this discussion.

Umm, actually, it demonstrates that as the economy grows, which it is inclined to do regardless of the distribution of wealth, that each class will get richer. Which is less of an observation and more of a truism.

The chart doesn't in anyway link any of that growth to trickle down economics principles. It is, in fact, completely devoid of any economic analysis at all.

It's absolute rubbish, and you should feel bad for having tried to present it here as evidence.

Think about it: when's the last time you got a job from a poor person? Right. Never. If I have money and I start a business, and hire people...is my wealth not trickling down to them? Yes, they are making me more money than I had (assuming business is good and I run mine properly) - but so what? Why ELSE would I invest my wealth in them?

Say you own a restaurant, every day about fifty customers come through the doors. One day there's a change in government, and it's noted that the poor don't deserve the tax breaks and social support they've been getting, and it's taken away, returned to the rich man who'd previously been paying high taxes to support all those people. A lot less people can afford to eat at your restaurant now, you only get 25 people through the doors each day.

Good news though! The rich man eats at your restaurant everyday, and now that he's keeping even more of his money he's free to eat there even more. Except he doesn't actualy get any hungrier, so he still only turns up once a day.

But trickle down economics is ready to kick in, yeah? Because the rich man is keeping more of his money, so it's there to invest in new businesses. Except he looks for opportunities and there aren't any. All he sees is business like yours that used to do so much better business.

Point is, the poor and middle classes drive consumer demand. The rich provide investment funds. To think that you need one group only and not the other is a big mistake. It's the first mistake of trickle down economics.

The second mistake is that you actually need to make trickle down economics happen, that it depends on a high level of income inequality.

Like the author, most of what I read here is indignation that some people are richer than others.

This is the result of you reading selectively, beceause that is not a reasonable summary of people desiring a more equitable distribution of income.

Of course. That must be it. And you would obviously know more than a professional who's livelihood depends on a deep and accurate knowledge of the subject, right? All you've done is point out why he could be expected to have some expertise.

Having worked as a tax accountant myself, I think it's adorable than you assume we require a deep and accurate knowledge of economics. What we actually need to know is tax law. Nothing more, nothing less.

The actual impact of tax law is nothing do with us.


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biccat wrote:Did you happen to miss the "(in 2007 dollars)" part of the chart? The lowest quintile in 1979 earned $15,300 (in 2007 dollars). In 2007, they earned $17,700.

That looks like an increase to me.

Which is an annualised increase of less than a half of one percent.

At which point you're claiming "look! trickle down economics works because the poorest 20% experienced an average increase in income of less than half of one percent per annum!"

Which is, of course, a ridiculous thing to claim.


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dogma wrote:Then you have wonder if that trend really is the result of trickle down policies, or simply lower tax rates across the board, which is something that you would need more than a two point analysis to determine.

You could simply compare it to average growth rates across the world during the same period, and see if the bottom 20% in the US did better than people elsewhere.

Given no country in the developed world experienced average growth rates anywhere near the half of one percent increase experienced by the poorest 20% in the US, it seems a pretty accurate conclusion to say that trickle down economics have proven a dismal failure for the bottom 20%.

So what do you guys think the answer is? I think getting rid of the payroll tax cap is a good start. Any other ideas?

Andrew1975 wrote:So what do you guys think the answer is? I think getting rid of the payroll tax cap is a good start. Any other ideas?

I wouldn't have payroll tax.

Mind you, I wouldn't have any tax but a sales tax, nationally levied at 10%, and a progressively levied income tax that brought the overall tax burden to around 30%. Well, there'd also be a capital gains tax, but this would ultimately form part of income tax, as any capital gains realised during the year would be added to your yearly income tax and charged accordingly (with an option to offset the spike by annualising the gain over the last five years).

Simple. It means two people who earn the same amount in a year will pay the same in tax, regardless of their income levels.

VoidAngel wrote:
Now that it's coming true it's obvious I guess. Convenient. Also, it's not failing - at all. It's been rough, and still is - but it's not failing.

Are you arguing that the invasion of Iraq caused the wave of revolts in the Middle East? And further arguing that said revolts are all either about democracy, or going to end in democracy? Because the first claim is dubious in the extreme, the second is going to be difficult to prove until much later, and the third is statistically very unlikely.

VoidAngel wrote:
The dominoes need a push in order to start to fall. They won't do it by themselves.

That's presuming the argument from "democratic protests are dominoes" has any merit, which is fairly preposterous considering that the number of successful occupations that have lead to democracy is 2. And in both of those cases no dominoe effect of any sort was seen.

VoidAngel wrote:
They risked everything to give birth to a different kind of system - one that stripped them of their aristocracy. They were midwives to the birth of new nation and could hardly step aside and bid the infant 'run!'... Many served as 'politicians' perforce, and not from preference. Most also had primary occupations that paid the bills. You should maybe read the Federalist Papers.

It doesn't really matter. If you're trying to argue that career politicians are a bad thing, and you then subsequently act as a career politician you're doing something very wrong. At least if, at the end of all that, you really think that career politicians are something that can be avoided.

As for paying bills: do you really believe that career politicians derive their primary income from the state? Because if you do, that is a huge misconception that you need to address.

sebster wrote:

Andrew1975 wrote:So what do you guys think the answer is? I think getting rid of the payroll tax cap is a good start. Any other ideas?

I wouldn't have payroll tax.

Mind you, I wouldn't have any tax but a sales tax, nationally levied at 10%, and a progressively levied income tax that brought the overall tax burden to around 30%. Well, there'd also be a capital gains tax, but this would ultimately form part of income tax, as any capital gains realised during the year would be added to your yearly income tax and charged accordingly (with an option to offset the spike by annualising the gain over the last five years).

Simple. It means two people who earn the same amount in a year will pay the same in tax, regardless of their income levels.

Would that be enough to cover social security? Sales tax is actually more of a local tax, so the fed doesn't have much control of that. It would be good to get everyone on the same page and allow sales tax to be collected on internet purchases.

As for paying bills: do you really believe that career politicians derive their primary income from the state? Because if you do, that is a huge misconception that you need to address.

What? Are you saying the president of the most powerful nation in the world isn't working for that whopping $400,000 a year?

Andrew1975 wrote:
Would that be enough to cover social security? Sales tax is actually more of a local tax, so the fed doesn't have much control of that. It would be good to get everyone on the same page and allow sales tax to be collected on internet purchases.

He's basically proposing a national VAT.

dogma wrote:

Andrew1975 wrote:
Would that be enough to cover social security? Sales tax is actually more of a local tax, so the fed doesn't have much control of that. It would be good to get everyone on the same page and allow sales tax to be collected on internet purchases.

He's basically proposing a national VAT.

So a VAT tax and sales tax? I'm not following. Does the Vat replace sales tax. How do states get money? Maybe I'm reading federal when you say national? It just seams that last time I looked, when all taxes are added, the average person is paying around 40%. So a 30% tax plus a 10% Vat tax wouldn't really add up would it? I'm probably missing something, again I'm not a true economist.

sebster wrote:

Andrew1975 wrote:So what do you guys think the answer is? I think getting rid of the payroll tax cap is a good start. Any other ideas?

I wouldn't have payroll tax.

Mind you, I wouldn't have any tax but a sales tax, nationally levied at 10%, and a progressively levied income tax that brought the overall tax burden to around 30%. Well, there'd also be a capital gains tax, but this would ultimately form part of income tax, as any capital gains realised during the year would be added to your yearly income tax and charged accordingly (with an option to offset the spike by annualising the gain over the last five years).

Simple. It means two people who earn the same amount in a year will pay the same in tax, regardless of their income levels.

You just called Voidangel out for proposing regressive taxation, and then turn around and push sales taxes? Sales taxes are horribly regressive. The poor are stuck in one area, and have to spend a significant portion of their income just to survive. The wealthy can either go elsewhere, where the sales taxes aren't so high, or simply see the increased price for high-end luxuries as an extra value on it, since many high-end "luxuries" derive no small part of their value from simply having a higher price tag (and mid-range goods, too, for that matter; brand-names versus generics, with both having been made identically, in the same factories). Far better for there to simply be a progressive income tax that takes nothing from anyone below the poverty line, and a property tax on higher-valued property (with no tax on objects on the lower end of their respective category, like a car worth a couple of thousand dollars, or a small house on largely worthless land (which would still be in the tens of thousands in value, but quite low compared to the average house).

Sir Pseudonymous wrote:

sebster wrote:

Andrew1975 wrote:So what do you guys think the answer is? I think getting rid of the payroll tax cap is a good start. Any other ideas?

I wouldn't have payroll tax.

Mind you, I wouldn't have any tax but a sales tax, nationally levied at 10%, and a progressively levied income tax that brought the overall tax burden to around 30%. Well, there'd also be a capital gains tax, but this would ultimately form part of income tax, as any capital gains realised during the year would be added to your yearly income tax and charged accordingly (with an option to offset the spike by annualising the gain over the last five years).

Simple. It means two people who earn the same amount in a year will pay the same in tax, regardless of their income levels.

You just called Voidangel out for proposing regressive taxation, and then turn around and push sales taxes? Sales taxes are horribly regressive. The poor are stuck in one area, and have to spend a significant portion of their income just to survive. The wealthy can either go elsewhere, where the sales taxes aren't so high, or simply see the increased price for high-end luxuries as an extra value on it, since many high-end "luxuries" derive no small part of their value from simply having a higher price tag (and mid-range goods, too, for that matter; brand-names versus generics, with both having been made identically, in the same factories). Far better for there to simply be a progressive income tax that takes nothing from anyone below the poverty line, and a property tax on higher-valued property (with no tax on objects on the lower end of their respective category, like a car worth a couple of thousand dollars, or a small house on largely worthless land (which would still be in the tens of thousands in value, but quite low compared to the average house).

I've never been a fan of sales tax as it seams strange to tax income when it comes in and when it goes out. I'm sure there it is a logical mechanism, and I'd appreciate an explanation, but I don't understand it. It seams to penalize purchasing, which would be against capitalism. It does allow the taxation on people that don't earn, but spend (trustfund). I've attempted to look it up but I haven't found a good reason to include a sales tax instead of increasing income tax. Could someone help?

As far as it being regressive (as in poor people pay a higher percentage of tax per income on an item than a rich person), doesn't it even out, because the rich buy more and higher price tag things?

There is also logistics, that is some massive change! Wouldn't cutting the cap on payroll tax effectively accomplish the goal of raising tax revenue without rewriting the whole system? It would obviously be hard to get those affected to sign off on it (anyone than earns more than $102,000 a year), but should be easier than starting from scratch? No?

Andrew1975 wrote:Would that be enough to cover social security?

Most countries with complete pensions have tax rates starting from 30%. You'd have to seriously cut back military expenditure and continue to reform healthcare, but given the fairly crappy nature of US social security it'd be doable.

But on that note, I wouldn't have social security either. Instead I'd have a superannuation scheme, where a portion of each pay cheque was taken, tax free, and put into a savings account, for the employee to invest as he sees fit. He could add more to this if he wanted, tax free up to a limit, and it could all be accessed once he reached retirement age.

This has two benefits - the money is really there, so the employee knows he will have it when he retires it, and it provides a savings pool to drive new investment.

Sales tax is actually more of a local tax, so the fed doesn't have much control of that. It would be good to get everyone on the same page and allow sales tax to be collected on internet purchases.

It's economically inefficient to have sales tax varying from state to state, both because of the increased admin, and because of the cost of market interference (why should the state dictate a different price because I bought a table and chairs in Vermont instead of Maine?)

So yeah, one national sales tax is the way to go.

The states would then be funded through this money, through a national grants scheme that used a formula considering population, infrastructure requirements, social disability factors and the like.

Local government would be similarly funded, as I wouldn't have land rates either. Well, they'd still have fee for service arrangements for picking up household bins and the like, but the general pool of money now raised through land rates would instead be part of the allocation coming from the central collection of funds.


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Sir Pseudonymous wrote:You just called Voidangel out for proposing regressive taxation, and then turn around and push sales taxes? Sales taxes are horribly regressive.

It is a mistake to look at a single part of a tax system in isolation. While an individual element might be regressive, it can be countered by other factors. In this case a progressive income tax could more than make up for the regressive impact of the sales tax.

Far better for there to simply be a progressive income tax that takes nothing from anyone below the poverty line, and a property tax on higher-valued property (with no tax on objects on the lower end of their respective category, like a car worth a couple of thousand dollars, or a small house on largely worthless land (which would still be in the tens of thousands in value, but quite low compared to the average house).

But a sales tax guarantees tax revenue coming in from grey market money. The amount of undeclared small business income is vast, and with income tax only it remains untaxed. With a sales tax you at least catch them for 10%.

Andrew1975 wrote:
So a VAT tax and sales tax? I'm not following. Does the Vat replace sales tax. How do states get money?

The VAT would be a federal sales tax, in effect. States could presumably further apply their own sales taxes

Andrew1975 wrote:
Maybe I'm reading federal when you say national? It just seams that last time I looked, when all taxes are added, the average person is paying around 40%. So a 30% tax plus a 10% Vat tax wouldn't really add up would it? I'm probably missing something, again I'm not a true economist.

You're adding the tax rates together without adjusting for their actual effect on overall burden. As far as income taxes are concerned they can generally just be amalgamated through addition, but when you're talking about a VAT, sales tax, or payroll tax you have to account for the fact that they don't apply to the same class of transactions.

Instead I'd have a superannuation scheme, where a portion of each pay cheque was taken, tax free, and put into a savings account, for the employee to invest as he sees fit. He could add more to this if he wanted, tax free up to a limit, and it could all be accessed once he reached retirement age.

Where does that leave current social security recipients? Their benefits are paid for by the current work force? If they are in charge of the investments, what happens if they invest poorly? That's always been my issue with these self investment ideas. It sounds good, but I've seen people loose their shirts. At least with the current system (granted, if done correctly) they are guaranteed to have something to live on.

The VAT would be a federal sales tax, in effect. States could presumably further apply their own sales taxes

So if the current sales tax is 7% we would add a further 10% on there for a total 17% sales tax. Wow, I really see that hurting spending, which is not good in capitalism. We want to increase the flow of money not make people hoard it. I think I would rather see a higher income tax, if you never have the money you tend to not miss it. Am I wrong here?

Andrew1975 wrote:I've never been a fan of sales tax as it seams strange to tax income when it comes in and when it goes out. I'm sure there it is a logical mechanism, and I'd appreciate an explanation, but I don't understand it. It seams to penalize purchasing, which would be against capitalism.

The point is to catch grey market earnings. We all know businessmen take discounts for taking jobs cash in hand, but not many understand the scope of these ultimately undeclared earnings. The national sales tax in Australia generated tens of billions in additional income, and our economy is around 1/15 the size of yours.

It does allow the taxation on people that don't earn, but spend (trustfund).

Profits generated by trust fund then distributed to beneficiaries are taxed, actually.

As far as it being regressive (as in poor people pay a higher percentage of tax per income on an item than a rich person), doesn't it even out, because the rich buy more and higher price tag things?

It's regressive in that the rich save and invest a greater portion of their income, and these activities don't generate a sales tax. So if the poor guy earns $10,000 and spends $10,000, he pays $9,09 in sales tax. But a rich guy might earn $300,000 but only spend $100,000, paying only $9,090 in sales tax.

The point is that you can offset that effect with a progressive income tax.

There is also logistics, that is some massive change!

Immense. It would have to be part of a 15 to 20 year plan. That's more or less how long it took in Australia

Wouldn't cutting the cap on payroll tax effectively accomplish the goal of raising tax revenue without rewriting the whole system?

It's inefficient and has a negative market effect to tax on the micro level. YOu end up discouraging specific actions for reason other than they're convenient places to place a tax.

sebster wrote:It's regressive in that the rich save and invest a greater portion of their income, and these activities don't generate a sales tax. So if the poor guy earns $10,000 and spends $10,000, he pays $9,09 in sales tax. But a rich guy might earn $300,000 but only spend $100,000, paying only $9,090 in sales tax.

The point is that you can offset that effect with a progressive income tax.

I'd at least argue against sales taxes on necessities. And the removal or reduction of vice taxes, which are even more regressive...

sebster wrote:

biccat wrote:Did you happen to miss the "(in 2007 dollars)" part of the chart? The lowest quintile in 1979 earned $15,300 (in 2007 dollars). In 2007, they earned $17,700.

That looks like an increase to me.

Which is an annualised increase of less than a half of one percent.

At which point you're claiming "look! trickle down economics works because the poorest 20% experienced an average increase in income of less than half of one percent per annum!"

Which is, of course, a ridiculous thing to claim.

If you're interested in responding to one of my posts, please respond to the actual content, and not what you think I wrote. And take your petty insults elsewhere.

Ugh. Just got back to this. I was working, so I can pay my underwater mortgage.

Yeah, I know all about it - trust me.

Biccat ninjaed me - thanks B.

@Dogma - "Given the nature of scarcity, that's simply not true. " Er, yeah - that works when you are talking about antelopes and hunter-gatherers. It's ridiculous when you're talking about iPads and Oreos. Oh, darn....that bajillionaire just bought the last Bugatti Veyron in the showroom! Oh, wait - I couldn't afford one anyway. I'll just mope on back to my sucky new Nissan...*grumble*. Give me a break.

VoidAngel wrote:
@Dogma - "Given the nature of scarcity, that's simply not true. " Er, yeah - that works when you are talking about antelopes and hunter-gatherers. It's ridiculous when you're talking about iPads and Oreos. Oh, darn....that bajillionaire just bought the last Bugatti Veyron in the showroom! Oh, wait - I couldn't afford one anyway. I'll just mope on back to my sucky new Nissan...*grumble*. Give me a break.

No, it works in all systems predicated on limited resources, which is not only every economic system that exists, but the actual reason for the existence of economics. If you cannot except that fundamental principle, then there isn't really much point in trying to discuss this with you, but I'll try one more time anyway. Put simply, comparing basic resources (food) to the products derived from basic resources (Cars) is utter nonsense. My point was that any significant collection of wealth naturally denies wealth to other people, this does injury to others by the very nature of inhibiting their ability to access that pool of wealth; regardless of whether or not that wealth was originally acquired by means thought of as legitimate.

Additionally, your differentiation between Bugattis and Nissans is nonsense given the scope of the arguments being made in this thread, and the fact that you're making such microcosmic differentiations is preventing you from seeing the core of the issue. Namely that the amalgamation of wealth discussed above is explicitly what prevents non-wealthy individuals from purchasing luxury goods. Or, more broadly, what prevents impoverished nations from developing economically in the short-run.

Of course, there is no good way to sidestep this process, but arguing that it doesn't cause harm is just childish.

dogma wrote:If you cannot except that fundamental principle, then there isn't really much point in trying to discuss this with you

If I understand your post correctly, he did except the 'fundamental principle' you suggested.

Yes, regardless of your position on the topic, the fact still remains that resources are scarce-- that is, they are in limited quantities, not unlimited. We don't live in a magical world where we have infinite resources. Metals are limited, oil is limited, water is limited, even air is limited in quantity (it is a large quantity, but still not unlimited).

This is why cornucopians tend to be rather wrong about most things

Regardless of that, the argument is more about the proper distribution of said resources than the amount that's present.

Jesus - there's a whole other page...

Sebster wrote (in reverse order)


"The point is to catch grey market earnings. We all know businessmen take discounts for taking jobs cash in hand, but not many understand the scope of these ultimately undeclared earnings."

Yeah, but guess who those "businessmen" are in America? Mostly blue collar types - i.e., the poor! And with unions in the mix...that's a misnomer. The rest of it is pure criminal activity. Find a way to tax that.

"I'm thinking of a study in the Economist in 2009 or 2010. There are others."

Let me go look that right up. Where did I leave that stack of two year old magazines...?


"No, I didn't miss the word illegal. The word illegal is the whole point, because it allows you to keep one group of people seperate to the rest of society, pay them less and deny them services available to the rest of society. This by definition will improve living standards among the rest of society.

And of course there's going to be lots of illegal aliens at the emergency clinic. They're denied access to other medical attention."

Ah, right - the secret plan to import a workforce and help them sneak across the border so we can have cheap labor...riiiight. Forgot. Nice job completely ingoring and excusing the main problem - illegal and consuming services.

(Re: war dominoes) "Umm, you're terribly mistaken, either in who you were talking to at that time, or the content of my argument. I've been aware that the democratic domino was the primary cause for the invasion well before the actual invasion. I've argued it many, many times on this forum.

It's just that unlike you, I recognise that trying to reform a region through foreign invasion is stupid and doomed to failure."

Possible. Alot of people on here have puppy avatars for some reason. I'll let history demonstrate to you who is stupid and what is doomed to failure.

"No-one in Europe is near the rate. No Democrat proposal is even close to the rate. Your argument above exists entirely in a bottle, protected on all sides by absolute ignorance of the actual situation."

Really? How about all the Scandanavian countries? All of 'em. If the bottle is big enough to include Sweden, Finland, Norway, Denmark...then I guess you are right.

"Are you actually arguing for regressive tax rates? That the more you earn, the less your marginal tax rate?

That's pretty fething out there, you know."

Read the whole thread - I was demonstrating to Andrew(?) what was wrong with the idea and asking what he thought the definition of fair was. Is it giving your share? Is your "share" a dollar amount? Is it a percentage? Is it every damn penny that can be wrung out of you and still let you go to work? What is it? I wasn't advocating anything.

"Good news though! The rich man eats at your restaurant everyday, and now that he's keeping even more of his money he's free to eat there even more. Except he doesn't actualy get any hungrier, so he still only turns up once a day."

Not a bad illustration, but overly simplified to make your point. That guy comes in a orders a $40 steak and $70 bottle of wine. I just made more off of him than 4 or 5 other customers. Maybe he buys the place a round. Who knows - you could get silly with how far you can extend this to make it work in either direction. Any way you look at it, raising sales tax decreases spending. It may be adorable, but I'd think a professional in the tax industry would understand that.



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@Dogma and Melissa

Exceptions aside, I accept the 'fundamental principle' of scarcity - but you both fail to reckon with some "fundamental principles" of justice and reality.

We live in a place blessed with abundant natural resources. We pay farmers NOT to grow food. Now, please argue scarcity and how it applies further. That someone lives in a fething desert and therefore has little to eat is not CAUSED by me living in a place where food is plentiful! It's a natural consequence.

If citizen A makes enough to buy an iPad a week comfortably, he's still not likely to do so in some malignant effort to make sure that citizen B - who had to save up for a year to get one - can't.

Actually, not growing food in a field is good for that field's fertility compared to growing crops all the time. That's not really comparable... Though it is true that they are paid to do so for reasons other than that, it DOES benefit the farmers to not wear their fields down to nothingness.

VoidAngel wrote:http://blog.pappastax.com/index.php/2010/07/11/case-rested-trickle-down-policies-work/

Read it and stop weeping.

This chart does not take into account GDP growth, which usually runs faster than inflation.

US GDP growth averaged 3.6% between 1979 and 2007. If all salaries had grown at the same rate as GDP, the result would have been

Lowest Fifth====41,187
Second Fifth====83,451
Middle Fifth====118,716
Fourth Fifth====155,327
Top Fifth======273,775
Top 1%======933,043

Nobody is saying "trickle down is the complete answer". But several were saying that it's complete bull$h!t - which is not true.

Look, if I didn't give a rat's posterior about the poor I would not donate frequently and generously (which I do). The folks I don't give the aforementioned vermin parts about are the ones who feel I *owe* them something or *took*something from them. I worked hard for everything I have. I've been poor. I'm not sitting on a gigantic retirement fund. I will likely have to work my ass off for the foreseeable future - like most other people.

But you know what? I wasn't satisfied with my lot in life, so I changed it. And I did it without sticking my hand out. Punishing me now because I managed to succeed is unfair. Why should I bear more than my share? You know who's entitled to what I have? Me.

It's inefficient and has a negative market effect to tax on the micro level. YOu end up discouraging specific actions for reason other than they're convenient places to place a tax.

could you explain this more? I've thought about it and it seams that the payroll tax cap it a massively recessive tax, in that after $102K you are not longer charged any more. A CEO that is making 800 times his employees is still only paying for one worth of payroll tax. Granted corporations pay a percentage of each employees pay roll tax.

My thought is that it really has no effect on those salaries under $102K, it may slow down hiring above that, but inversely maybe companies employ more lower level management. I think it would certainly cut down on the mass escalation of salaries, as with this change those mutl million dollar salaries and bonuses cost corporations even more.

I'm an American so I like the fast, easy, solution. I see social security as being the biggest drain on the budget so that is really my target. There is regressive nature of the tax is directly connected to social security. It seams logical.

The problem with a massive overhaul of an entire system that could take 20 years is that you really have to have faith in the political system. I don't. Anytime the masses put forward political change they are in effect haggling with a bunch of Rich people. But its the kind of haggling where they seam to raise the price every time you present a new figure.
"It says $8 I'll give you $6",
"Well now it's $9, ask me again and it will be $10",
"What?".

Every reform always includes loopholes that are usually exploited by the rich. Since the make the rules, its very hard to change this system. Anyone you elect is going to be rich, they have to be just to be elected!

The point is to catch grey market earnings. We all know businessmen take discounts for taking jobs cash in hand, but not many understand the scope of these ultimately undeclared earnings. The national sales tax in Australia generated tens of billions in additional income, and our economy is around 1/15 the size of yours.

Yeah, but you are also double taxing a vast amount of people to get it. Again not an expert on economic theory, but it seams in a capitalist system you would not want to tax 17% on purchases. It would seam smarter to figure out a way to tax savings, as a mechanic to get money to flow faster! (that may be the stupidest thing ever in economic terms and cause a real problem with the banking system, i'm just saying theoretically if it could be done)

Ugh. Just got back to this. I was working, so I can pay my underwater mortgage.

Hey you bought the house, and believed it was worth it at the time or you would not have bought it. Does it provide shelter? If so, then live there and be happy that you have a roof over your head. Is your problem that you may not be able to quickly flip it and make a handsome return? Well that's part of the mechanic that caused your situation in the first place. You were trying to ride the bubble!

I'm sure you blame the housing collapse on the poor for not paying their mortgages. Truth is they probably never should have had those mortgages in the first place because they don't get paid enough by the rich to afford homes. You should blame the Rich bank CEO's that over-leveraged their companies in order to make that ginormous bonus, which you seam to believe they earned.

But you know what? I wasn't satisfied with my lot in life, so I changed it. And I did it without sticking my hand out. Punishing me now because I managed to succeed is unfair. Why should I bear more than my share? You know who's entitled to what I have? Me.

You know what? If this is true, than you are probably not the person that should be getting bent out of shape! If I'm understanding you, you are hardly rich, much less the uber rich, and I can't understand why you are defending them? The fact is, you sound like more a victim of the system they impose than anything else. You sound more like upper middle class, which gets pissed on from both ends, specifically because the rich don't do their share.

If citizen A makes enough to buy an iPad a week comfortably, he's still not likely to do so in some malignant effort to make sure that citizen B - who had to save up for a year to get one - can't.

He might though, knowing that he can make a nice profit off of them. I don't think that is necessarily evil though. Now if he does this and uses some bizarre tax loophole to not pay anytaxes, or used a government grant of some kind to purchase said I-pads, well then I'm pissed.