In real time......
I'm listening to President Obama tell us how he is going to balance the budget. As we know, part of his plan is to raise taxes. But in his dishonesty, he can't even call it raising taxes. It's called "cutting spending in the tax code".
He says we are going to reduce the cost of health care spending (with Obamacare).
"We're here to help you reduce the cost of overhead spending."
And of course, we will find savings in defense spending. Yeah, just like Carter and Clinton before him found lots of savings in defense spending.
What .....
The very idea that increasing the amount of taxes, by whatever means, and taking money out of the hands of the citizens and giving it to the government (to spend as it sees fit), reflects the underlying notion that the government owns the money and that the citizens keep it from them in one way or another. Only dyed in the wool statists believe this.
ReplyDeleteThey care about social equality outcomes (not opportunities) more than tax revenue.
"The fact that higher tax rates have often brought in less revenue than before is simply ignored."
Read Prof. Thomas Sowell article
http://townhall.com/columnists/thomassowell/2011/04/13/taxes_and_politics
Further, there aren't enough rich people and corporate taxes in existence that would pay for the government spending. Read Walter Williams, another Economics Professor's article "Eat the Rich" at http://townhall.com/columnists/walterewilliams/2011/04/13/eat_the_rich
Every businessman, entrepreneur, conscientious employee, wakes up every morning trying to figure out how he can do better, what new product, service, innovation, can he/she do to make more profits. Millions of them. They create more jobs, among other things. The best thing government can do is to get out of their way and stop the burdensome taxes, regulations, decrees, that flow out from the government statehouses. There would be a more robust economy and more cash dollars actually flowing into the treasury as a consequence. There isn't a finite amount of money in the country. The economy can expand. The idea that government can do that tax and allocate job better with all its panels, bureaus, and regulations is more nonsense that statists believe. Ask the former Soviet Union how well central planning worked out for them.
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Miggie,
ReplyDeleteIt just seems so obvious doesn't it?
I suppose it is not obvious to all those who think that all you have to do is raise taxes (on someone else) and the government will pay for all these new entitlements which became "rights."
ReplyDeleteWilliams points out that the the left seems to hold "... a view that government can impose a tax and people will behave after the tax just as they behaved before the tax, and the only change is more government revenue."
They don't and, with higher taxes, prospects for good projects become mediocre ones, mediocre ones get shelved. There is less expansion, less business, fewer jobs, and less tax revenue to the government. Basic economics - the prospects for a new project are worse when the projected net profit becomes goes lower. The project gets shelved along with the jobs associated with it and the revenue to suppliers, transporters, etc. (and taxes on the project ) disappears.
I've gone back to refresh some of my education by reading two pretty extensive books, first on the Ratification of the Constitution about the debates they had about the governance of the country they were setting up and Applied Economics about how and why so many things are as they are. I took several courses in these subjects in college but the country has strayed so far from basic principles that I wanted to delve deeper into all the aspects of those principles.
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This is a practice run -- Google seems to lose the first comment at time of log-in, every time.
ReplyDeleteGary, you are indulging in sophistry of the worst order. Most Republican proposals to "simplify" the tax code also rely on closing all kinds of loopholes in order to balance a reduction in the tax rate. There is nothing unique to Obama except for exactly where he wants the balance to fall.
ReplyDeleteFurther, anyone who expresses concern over (a) deficits, or, (b) national debt, without acknowledging that some tax revenue will be necessary to close either gap is either delusional or a bold face liar. How do you think we are going to pay $13 trillion off? With wooden nickels?
The entire debate about whether taxes should be "raised," or "reduced," or "kept the same" is absurd.
Any sane political budgeting process would run like this:
1) What do we want our government to do?
2) How much will it cost?
3) Given the cost, how much of this do we REALLY want our government to do, and how much would we rather give up to reduce the overall costs?
4) Whatever remains on the list, taxes MUST raise the amount of money necessary to cover it. (Or we decide to borrow it, for good and sufficient reason, like, its too important to put off but we can't afford to pay for it all now, we will accept the future tax burden over the next X years).
5) How do we want to distribute the tax burden?
We can argue point 5 -- and we do. But to effect an answer to (5) by pretending 2, 3, and 4 can be skipped is lying of the first order.
Let's be real, simplify the tax code AND raise rates on the upper brackets, while exemption the first $20,000 from taxation. EVERYONE, including Bill Gates, Warren Buffett, and each of the Koch brothers, gets the first $20,000 tax free. After that, no exemptions, no credits. no loopholes, and ANY of us (even me should I be so lucky someday) pays 50% of the amount OVER $1,000,000. (We ALL pay SMALLER percentage of the amount UNDER that level).
Siarlys,
ReplyDeleteUnder your tax plan, we will never have another millionaire.
"This is a practice run -- Google seems to lose the first comment at time of log-in, every time."
At least you made sense here.
Who has the RIGHT to say how much anyone else should make or should be taxed? The more you take from productive high income people and give to non-productive low income people, the fewer productive high income people you will have and the more unproductive low income you'll end up with.
ReplyDeleteWhat happened to property rights? What about Liberty?
The problem is that politicians are generous with tax payer money so they will get elected. Now, at last, the party is over! We can't afford it any longer. The top 1 or 2 percent taxpayers already pay the bulk of the taxes. The lower 50% pay about 3%. That class warfare card is getting pretty well worn.
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We will have lots of millionaires Gary.
ReplyDeleteFirst, anyone who makes $2 million in a year will keep 60-70 percent of the first million, and half of the second million, leaving them over a million, after tax.
Second, if they make $3 million in a year, they keep 60-70 percent of the first million, and another million on top of that. They will NOT be suffering. Nobody ever passed up a chance to make another million dollars because they would only get to keep half of it.
Third, if a man starts a company from scratch, builds it up to a multi-million dollar enterprise, then sells it and retires, even if he lacks a skilled accountant to help him shelter most of the sale price, it will mostly be capital gains. Even I would not tax 90% of the amount over $10 million.
I do, however, admire the man who sold such a business fifteen years or so ago, and paid each employee (I presume those with some longevity, not those hired last week) enough of the proceeds to have $1 million AFTER paying taxes. He had a number of millions left for himself, which I do not object to, but that was doing the right thing, in style.
The man who started and guided the business deserves a big payout, but he didn't do it alone. This man recognized that. It should be the standard way of doing things.
I just re-read Miggie's comment about "productive high income people." In many instances, that is an ideological mirage. However, in other discussions, I have supported a measure exempting from taxation entirely any portion of any year's income that is invested in NEW capital. That is, buying shares of stock already in circulation doesn't count, because that does NOTHING for the community in general, the economy, or job creation. But, an investment that results in construction of new facilities, hiring new workers, producing new or additional products, providing purchase orders to suppliers for production that wouldn't have happened without the new investment... sure, I'd allow a tax break for that, and when it was sold, assess capital gains tax on the increase.
ReplyDeleteLefties always presume there is a finite amount of cash and that there must be a struggle over who gets what share of it. The fact is that GDP and cash in the economy goes up and down. The more you punish business and high income productive individuals with taxes and regulations, the fewer you will have of them. The more business friendly you are the more businesses expand (and hire) and the more taxes the government gets. This has been demonstrated many times. The mirror image of course is that the more welfare and unemployment benefits you enact, the more welfare and unemployment recipients you will get.
ReplyDeletePenalties, inducements, motivations all matter.
Next, it is absolutely ludicrous to assert that buying existing stock doesn't do anything for the community. It is precisely because investors know that any investment in a new venture can be sold in the aftermarket... the stock market ... at most any time and for any reason they choose.
"Income" from investing in NEW capital share purchases only comes about when you SELL it in the market. That is current tax law whether you bought an initial issue or an existing one. What about dividends? Only tax those that derive from new issue purchases? Another bureaucratic nightmare than only someone who has no education or experience in economics could propound.
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As usual Miggie, your ideological preoccupation blinds you to a very simple proposal, and you render it complex by your own cognitive contortions.
ReplyDeleteTo exempt from taxation income from any given year, which is invested that year in productive new capital, is a simple matter to administrate.
Nothing about that need be tracked in the future. Whenever the investment may be sold, appreciation will be taxed as capital gains in the ordinary manner.
There is some limited merit in your mention that the ability to sell stock in the future is a necessary component of the motivation to buy stock in the present. However, the act of buying old stock does not have the general benefit for society of creating new jobs. I propose to exempt from taxation income that is immediately invested in a manner that DOES have such substantial benefit for the entire community. People remain free to buy old stock for the current motivation, of hoping it will rise, or expecting it to produce dividends -- both of which benefits will also accrue, in the usual way, to those who IN ADDITION got an income tax exemption for a particularly productive investment as far as the rest of us are concerned. (New investment can also be riskier -- building plant and warehouses, buying fleets, for something new and untried, n'est ce pas?)
Moving on to your indignant question, "Who has the RIGHT to say how much anyone else should make or should be taxed?"
If we are to have any government at all, then someone will have to pay some taxes. The alternative is that, e.g., the armed forces should run businesses to sustain themselves. Examples from China and Myanmar are not encouraging.
If someone has to pay some taxes, then laws inevitably will specify who pays how much on what basis. That is inherent in the unavoidably necessary power to tax at all.
As to the somewhat distinct question, who has the right to say that someone is making "too much" money... perhaps you are aware that sports fans complain ticket prices are too high because the players are making hundreds of millions of dollars. That grousing is not the whole story. Players demanded higher salaries in part because until circa 1960 they were paid a paltry pittance, truly disgracefully law salaries, and, because owners were making substantial fortunes, although some franchises do in some years lose money.
There is a legitimate give and take there, and in many other fields. I don't expect a 90% tax bracket to be adopted in the foreseeable future. I mention that as a bench mark for my own thinking. I have a better idea. We need to amend the minimum wage laws.
In addition to providing a flat, rock-bottom minimum, the least any human being should be expected to work for in a given economy constrained by whatever is the current price structure, we should provide by law that in any corporation or enterprise, the lowest-paid worker should total compensation (including benefits) equal in value to 1/30 of the compensation for the highest paid executive (including stock options).
Yes, as a citizen, as a human being, as a student of both the Sefer Tanach and the Gospels and Epistles (I refrain from insulting your Jewish heritage be reference to the "Old Testament" and the "New Testament"), I darn well do think I have the right to propose that nobody should make more than 30 times what the least of those among us working for a living receive. (NB: No reference to welfare - which should be basic subsistence, where available, but WORK should be MORE than basic subsistence).
Lenin said government officials should be paid no more than twice the wages of a good worker. I have left much more flexibility than that. However, to the extent that government has to pay high salaries to compete with the private sector for top talent, this proposal would relieve upward pressure on government salaries, saving taxpayers money, while improving the responsiveness of the civil service by making it less reliant on mediocrities to fill necessary positions.
Siarlys,
ReplyDeleteI am not going to take on the task of educating you on basic or applied economics. I will direct you to some arguments that should be helpful to you. The first has to do with "fairness" in compensation levels.
http://jewishworldreview.com/cols/sowell051810.php3
Next, you are imprecise in your terms... once you wrote about giving a tax exemption for investing in shares of new companies as opposed to investing in "productive new capital". As you must know, new capital expenditures for companies in purchases of equipment and so forth can be depreciated over a period of time and deducted from taxes due. The proposal would be to allow the entire expenditure, within going concerns, to be depreciated (deducted) in the first year.
That is entirely different than a deduction for purchase of shares in a new company. I think you confused the two.
What would be the TAX BASIS for future sale of the stock if, say, a million dollars was invested in the shares of a new company when the million dollars or the taxes on a million dollars have been exempted for the entire amount when you bought the stock? If the shares are sold for a million and a half what would be the taxable gain? What if the shares were sold for a half a million? Should you be taxed on the portion you lost and give back half the taxes you already got on the purchase? As you must also know, there is no taxable event when you buy shares in new or old companies now so there is, in effect, an "exemption" on the purchase.
The hundreds of thousands of people who work in the securities exchange industry would be amazed to learn that somehow their work and their industry was "non-productive." The liquidity they provide is crucial for the world of commerce. In a society where the "workers" own all the capital, they would be superfluous.
Once again, your minimum wage argument works about as well as the rest of your Marxist theories. When businesses are forced by the government to pay employees more than their economic worth, they just don't hire them. More low wage earners lose jobs (and go on welfare).
People in a lot of industries make what looks to you to be inordinate or unfair amounts compared to what you make or made or even in the abstract but the fact of the matter is that they are worth it to the people who pay them. They are the ones putting up the money because, in their judgement, some person is a rain maker or the competition will get him. They are worth it, or they appear to be worth the money to those with the responsibility of deciding. If they are wrong both the rainmaker and the decision maker are typically shown the door out. So there is a lot of pressure to make the right decision.
I agree that there has to be taxes for the government to run. The question is on how to raise that revenue and what the government should pay for. Briefly, more revenue comes into the treasury when taxes are low and business friendly because there is more commerce and the GDP grows. That is a mathematical fact of life. Insofar as what the government should do with that revenue, I believe in a strong military. I believe in smaller government and for the government to give us our liberty and stay out of our lives and stop telling us what is good for us. All these nanny state entitlements morph into "rights" which are financially unsustainable.
I don't want to get too far afield discussing all these notions and want to concentrate on one topic at a time. You choose one.
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Miggie, when I want expertise on economics, I do not seek it from religious publications, whether Jewish, Roman Catholic, or Amish. Nor do I seek "education" from ideologues with tunnel vision such as yourself.
ReplyDeleteDon't talk about three different issues then ask me to limit myself to one. Whatever you comment on is fair game for a response -- we're all adults here. I can't make you act like it, but I can act as if you too, are an adult.
Once again, you are kicking up an incredible cloud of dust to avoid the fact that I made a rational proposal that goes a long way toward meeting the substantive kernel of one of your more common objections.
An INDIVIDUAL buying STOCK in a company is one financial transaction. The COMPANY depreciating its capital stock on its books for purposes of company value and taxation is quite another. Any accountant could explain the difference to you. I think you KNOW the difference. You hope that I, and most readers, would not know, so you could score a few brownie points.
Capital gains are the difference between the PURCHASE PRICE of the capital concerned, and the SALE PRICE when the previous purchaser divests themselves of ownership. Whether the income an individual made use of to make the purchase was exempt from taxation makes NO DIFFERENCE in the purchase price. I was not talking about a tax CREDIT to FUND the purchase. I was merely talking about the individual paying NO TAX on the income, as income.
The people who work in the securities industry are rewarded for the productivity of their work in the form of salaries. However, the person who purchases stock from a previous owner does not fund one new job. That is one of the prime fallacies of capitalism. Retained earnings invested in new construction and expansion does, just as new money invested in stock to fund new construction and expansion does. If I buy 100 shares of General Electric from a current owner, that does not provide one red cent to General Electric to build a new factory in Hackensack. I just own a share of what the company ALREADY had built.
Many of the higher-end salaries we are grappling about are indeed the result of "some other company will offer more and grab them." Precisely the point where limited government intervention is needed to insure a LEVEL PLAYING FIELD that makes more sense. Some of those who feel impelled to offer tens of millions of dollars in compensation may even be RELIEVED that they don't have to waste so much, since the competition won't be offering outlandish sums any more either.
Companies will not stop hiring people who are essential to the operation of the company. They will not even do without janitors -- everyone wants their bathrooms and cafeterias clean by God, and when they can't pay people less than $X, they will pay $X. That is even more true of production workers.
I expect one effect of such a law would be to sharply reduce executive pay. You can pay your executive $1,000,000 a year and your janitor $33,300 a year. Or, you can pay your executive $5,000,000 a year, and your janitor $166,600 a year. Someone might even make a case for the relevant fraction to be 1/60th or 1/100th. I would stick with 1/30, but if $10 million for the CEO triggers $100,000 for the janitor, I'd settle for that as a big step forward.
Such an emotional subject.
ReplyDeleteFirst of all, Siarlys, you are an ignoramus. Thomas Sowell is a Professor of Economics at Stanford. He has published many books on economics. The fact that his article came via a Jewish website has nothing to do with what he wrote.
ReplyDeleteThat you dismissed it because of the source, which could have come through many other sources just demonstrates your bias.
Next, it happens that I was a CPA early in my career and did a lot of tax work. I also was in the securities industry for several years early on. I became a Mensan while in univerrsity.
Your pronouncements on subjects you are ignorant about reflects the understanding of these topics from the view and musings of a bus driver which you indicated somewhere here was your background.
As a blanket statement covering 99% of what you write here is convoluted, ignorant nonsense, with a few inappropriate three syllable words or obscure references weaved in now and then.
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Miggie, Miggie, Miggie. Gary gets his hackles up when I refer to other commenters as juvenile, but the first response your comment deserves is "Sticks and stones may break my bones, but words will never hurt me." You toss epithets around like a five year old on a school yard playground, without ever establishing your own bona fides, or documenting the ignorance you impute to others by providing better factual reference.
ReplyDeleteI am familiar with Thomas Sowell. He is an ideologue who cherry-picks his facts, then distorts even those, to conform to his own ideological preconceptions. He is a classic ivory tower pointy-headed intellectual, except he happens to be YOUR kind of ivory tower intellectual. I don't have a lot of use for ANY intellectual who hasn't also done some real work.
I could probably qualify for Mensa, but the entire motion disgusts me. I know that different people excel at different skills, and it is all to the good that those who can achieve excellence do so. But IQ tests are garbage. A high score is not an achievement.
If you worked as a CPA once upon a time, you ought to know better. If there is anything inaccurate about what I said, you ought to be able to explain how and why. You haven't. You just stand there shouting "I am rubber you are glue..." over and over again. Saying it a hundred times doesn't make it so.
Siarlys,
ReplyDeleteIt is just too tedious to try to explain anything to you. You switch your stories and attempt to diminish and discounts education, specific knowledge, first hand experience, and all other accomplishments you don't have. First you tried to discredit Thomas Sowell because his article came from a Jewish organization link. Then you, who probably never read a book on economics, much less ever took a college course in it, presume to dismiss a distinguished economics professor at one of the leading universities in the world and who is the author of many books. What stupidity!
You simply don't have the intellectual capacity, have too many weird theories, and are not worth it. .
Once again Miggie, I must decline to argue further with a fool, because people might not be able to tell the difference. Your furious expostulation has reduced itself entirely to ad hominem characterizations, rather than evidence of factual error, or coherent presentation of alternative significance of agreed facts.
ReplyDelete