US FIscal Policy

dteowner said:

This is why I talk about "overly entitled". Fair is bullshit. There is no fair, never has been, never will be. Arguably, there shouldn't be, but that's a rather philosophical discussion. But let's just go with "fair", whatever that is. By what right do you take from the rich that which they've earned (or their ancestors earned)? How can taking something from somebody that isn't yours be "fair"? Because you can? How does merely having the power to do something make it "fair"? Because you think they should? Because you want your pound of flesh and you want to use tax code to deliver your vengence? You're punishing an entire group of US citizens over the legal (albeit incredibly stupid, but still legal) actions of a very small few, and that's "fair"? It's highway robbery, plain and simple. The idea is to take something that isn't yours. There's simply no way to call that "fair", so it's pretty pointless to even bring that utterly subjective utopian hooey into the discussion, let alone use it as some sort of justification. Ultimately, you seem to think you're entitled to take something that isn't yours. Thus, my comment...

...I'd largely agree with the theory (that "obviously bear the burden" stuff is subjective and entitled, but the rest sounds pretty good) , but philosophically it's insane to think the American government, as representatives of American society, can manage this. We've got an overly-entitled society—people think the world owes them something and that it should be free for them to have it. Bull, but that's how people think. Nobody wants to earn anything and they do their damnedest to pull down anyone that actually gets off their ass and earns something.

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Why would it be "fair" to collect taxes from them for any reason whatsoever? The majority of the money spent by the government is for programs that the wealthy don't need, so why tax them at all? Education, healthcare, and the military, to name a few examples off the top of my head. Rich people don't need to worry about any of these things, because they can afford whatever health care they need, they can go to the best private schools, and only the poor die on the battlefield. You call increasing taxation on the rich "highway robbery," and I ask you: In what way? Is a modest tax increase on those who have enough disposable income to buy shit like this really equivalent to cleaning out their bank deposit boxes, stealing their wives' pearl necklaces, and pistol whipping them for their watch? I understand that you engage in hyperbole to prove a point, but there's a big difference between getting the money that this country needs from the most obvious places, and killing the Tsar and his kids. Furthermore, you say that it's not "fair" to punish those who have legally and ethically earned their wealth for the misdeeds of a few, and then you go on to paint every person who uses some form of public assistance as an envious, lazy, mooch. How is your view of the "entitled" any more reasonable than my view of the "elite?" This constant "Pull Yourself Up By Your Bootstraps" argument totally ignores almost 100 years of social work and sociological research, and while we all get a warm and fuzzy hearing about someone who rose above his disadvantages and shortcomings and "done good" this kind of anecdotal evidence is wholly unrepresentative of reality. Without any direct evidence in front of me, I'm willing to bet dollars to doughnuts that the vast majority of people who utilize public assistance (or "entitlement" if you so prefer) programs are hard workers, are as self-reliant as they can possibly be, and are doing everything that they can to improve their station in a society as alienating as our own. I'm willing to accept that the vast majority of the wealthiest Americans have earned their riches through the sweat of their (or their granddaddy's) brow, if you're willing to accept that not everyone in an unemployment line or welfare office is a lazy, pot-smoking, reprobate with an angle on the system.

Yes, government bloat, mismanagement, and corruption definitely needs to be dealt with, as does the deficit and our flagging economy. However, as shitty and worthless as some of these government programs are, they are currently the only protections that the poor and disadvantaged have. If we're going to cause harm and distress to people by cutting funding to programs that they very well may need to survive, then I think it's only appropriate that we cause at least minor discomfort to people who are largely free from worry.

May or may not be useful to your discussion…

http://www.zerohedge.com/article/only-two-charts-matter-us-and-qa-fiscal-debate-goldman-sachs

http://www.zerohedge.com/article/guest-post-2020-interest-payments-will-be-greater-budget-deficit

Michael Ellis said:

May or may not be useful to your discussion…

http://www.zerohedge.com/article/only-two-charts-matter-us-and-qa-fiscal-debate-goldman-sachs

http://www.zerohedge.com/article/guest-post-2020-interest-payments-will-be-greater-budget-deficit

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Excellent, clear, and non-partisan information. Thanks.

Exactly what I said : http://finance.yahoo.com/news/Super-rich-see-federal-taxes-apf-3022452208.html?x=0

Plenty of different ways to look at the same information, though. From your reference:

More than half of the nation's tax revenue came from the top 10 percent of earners in 2007. More than 44 percent came from the top 5 percent.

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Doesn't sound very fair, does it?

The vast majority of those who escape federal income taxes have low and medium incomes, and most of them pay other taxes, including Social Security and Medicare taxes, property taxes and retail sales taxes.

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And here I thought it was just those evil rich folks that weren't doing their part...

dteowner said:

Doesn't sound very fair, does it?
And here I thought it was just those evil rich folks that weren't doing their part…

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The creative use of mathematics doesn't imply fairness. The fact that most of the tax dollars come from the upper 10 percent of the nation just shows where the money is, not that they're somehow pulling more weight than anyone else.

The second paragraph doesn't necessarily imply that low and middle income wage earners are "dodging" their taxes either. Is it not possible that maybe they avoid paying income taxes because they're close to the poverty level? Man, those jerks! They went ahead and decided to be poor, just so that they wouldn't have to pay taxes!

I'd like to similar percentage numbers for income, like we have here for taxes.

What does "More than half of the nation's tax revenue came from the top 10 percent of earners in 2007" mean? It's omparing apples and oranges.

Did they earn more than half of the total revenue for taxpayeres? If so, it seems reasonable.

Thrasher said:

I'd like to similar percentage numbers for income, like we have here for taxes.

What does "More than half of the nation's tax revenue came from the top 10 percent of earners in 2007" mean? It's omparing apples and oranges.

Did they earn more than half of the total revenue for taxpayeres? If so, it seems reasonable.

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Think bigger...

Hmm, actually it looks like the top 10% in those charts earn about 31% of the total income (assuming linear interperlation between 5% and 20%).

But those numbers are seven years old. I think the % of total income has become a lot more concentrated in the top 10%, especially since the recession.

dteowner said:

Plenty of different ways to look at the same information, though. From your reference:
Doesn't sound very fair, does it?

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It is when you think that the top 10% make about 80-90% of the income of the country.

And here I thought it was just those evil rich folks that weren't doing their part…

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That would be because there are more middle and low income people, 90% of people are middle or low income, so of course there would me a majority of them ...

Thrasher said:

Hmm, actually it looks like the top 10% in those charts earn about 31% of the total income (assuming linear interperlation between 5% and 20%).

But those numbers are seven years old. I think the % of total income has become a lot more concentrated in the top 10%, especially since the recession.

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It's going to be difficult to find reliable economic data from just a couple of years ago, especially if you're looking for something that's based on an actual study, and not just someone's opinion. Professor Domhoff from UCSC's Sociology department cites sources from 2004 for his original article here, and updates the article with a study performed by Norton and Ariely in 2010.

*Edit*

You're also reading the chart wrong. The top 1% possess 34% of the wealth. The top 10% have over 70%, at the time of the first article's writing.

Captain Buzzkill said:

You're also reading the chart wrong. The top 1% possess 34% of the wealth. The top 10% have over 70%, at the time of the first article's writing.

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No, actually you are looking at wealth. Taxes are on income not wealth. That's why I bolded income. Whether that is equitable, is another point.

Captain Buzzkill said:

The second paragraph doesn't necessarily imply that low and middle income wage earners are "dodging" their taxes either. Is it not possible that maybe they avoid paying income taxes because they're close to the poverty level? Man, those jerks! They went ahead and decided to be poor, just so that they wouldn't have to pay taxes!

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A very nice tug on the heartstrings. Unfortunately, since the article itself say low and middle income, I doubt the entire group in question is three pennies away from destitution.

Thrasher said:

No, actually you are looking at wealth. Taxes are on income not wealth. That's why I bolded income. Whether that is equitable, is another point.

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There's lots of different ways to look at income taxation, though. The US Census Bureau breaks down average income into 5 separate percentiles, with the 6th column the top 5% of incomes in the nation. Their data for 2009 is as follows:

Year
2009 (1) 11,552; (2) 29,257; (3) 49,534; (4) 78,694; (5) 170,844; (Top 5%) 295,388

At first glance, the top 5%, while earning much, much more than 1-4 combined, doesn't seem to be as offensively out of balance as you may anticipate. However, you're not taking into account that this data is only taxable income. The super rich have the time and resources to hire teams of people who scour the tax code (70,000 pages, last I heard) looking for ways to manipulate the tax code in order to consolidate their income into untaxable assets, and those are just the ones with taxable incomes. The data is further skewed because of how much the wealthy make. Making so much money, some don't feel the pressure to work as much as they might if money was tight. They're in upper-echelon management positions, and that's if they have to hold a position at all. Most of them retire much earlier than the middle and lower class, so they don't record traditional incomes at all. They get taxed on what they draw from their wealth, which is even easier to avoid taxation on; again, if you've got people looking for ways to manipulate the tax code for you.

dteowner said:

A very nice tug on the heartstrings. Unfortunately, since the article itself say low and middle income, I doubt the entire group in question is three pennies away from destitution.

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No, you're right. However, how many of those middle class are retired, and drawing from social security, or their retirement? How many of them are middle class families with 2 or 3 kids in college, so they get credit for education? It doesn't mean they're "dodging" the system. Furthermore, low and middle class families are a lot more vulnerable than you might think. I know this for a fact, because my wife works in the ICU at one of the local hospitals. You know how much emergency surgery to repair a cerebral hemorrhage, with a 15 day ICU stay is? You can go from middle class to no class awfully quick.

Captain Buzzkill said:

No, you're right. However, how many of those middle class are retired, and drawing from social security, or their retirement? How many of them are middle class families with 2 or 3 kids in college, so they get credit for education? It doesn't mean they're "dodging" the system. Furthermore, low and middle class families are a lot more vulnerable than you might think. I know this for a fact, because my wife works in the ICU at one of the local hospitals. You know how much emergency surgery to repair a cerebral hemorrhage, with a 15 day ICU stay is? You can go from middle class to no class awfully quick.

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I think we both might be letting the standard political scripts run us away from the point since we're both jamming hyperbole into the other's mouth. Honestly, I don't see where any of these people, rich, poor, or anywhere in betwen, are "dodging" their obligations. Everyone (aside from the genuine criminals) is simply following the rules, such as they are. Some are more adept at "gaming the system" or more financially fluid to take advantage of the various games to be played (basically the rich get richer), but that in itself isn't a dodge per se, but just using your resources wisely--which is a good thing. If the rules have gaping loopholes, that's not really the fault of the people but rather the fault of the system. That's where tax reform comes into play.

You've got to attack the loopholes. One solution to one aspect of the problem that PJ threw out long ago was taxing stock transactions, which I actually like quite a bit. Makes Uncle Sam more than a few bucks, will generally hit the people that can most afford it but gives those people the option (pay to play, if you will, rather than robbery by tax code), and as a side benefit might reduce the influence of stock price manipulation on large businesses (where the CEOs make far more by artificially jacking up the stock price than actually growing the business) by both the corporate boardroom and the financial jackals whose only production is moving "paper money" around all day.

On the subject of fiscal policy, I came across this interesting video called The Secret of Oz.
http://www.youtube.com/watch?v=swkq2E8mswI
I found it very interesting and thought provoking, but am curious what others think. It's a bit long, but worth it, in my view.

Captain Buzzkill said:

No, you're right. However, how many of those middle class are retired, and drawing from social security, or their retirement? How many of them are middle class families with 2 or 3 kids in college, so they get credit for education? It doesn't mean they're "dodging" the system. Furthermore, low and middle class families are a lot more vulnerable than you might think. I know this for a fact, because my wife works in the ICU at one of the local hospitals. You know how much emergency surgery to repair a cerebral hemorrhage, with a 15 day ICU stay is? You can go from middle class to no class awfully quick.

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Not sure if I already posted this but here's an interesting video on the subject. Worth seeing for everyone who hasn't seen it.

Übereil

Well, this is perhaps not completely related to the FIscal Policy.

But it is worth to note anyhow. Lots of countries have a living standard for people which are higher than they can afford. No matter how we distribute taxes… tax the poor tax the rich tax whoever, the equation is not going to work out IMHO.

Imagine the US credit rating going down because of its huge debt. Meaning higher interests….. which means things look even worse for the US budget. IMHO this is the path it'll keep going if US keep borrowing money.

Now imagine lowering taxes to try to stimulate the economy. I can't see this resulting in the government getting more money. Perhaps more companies and lower unemployment. But I don't think the effect is going to be big enough for the government to get in more money than they are now… and short term it is sure to give them less money.

Now imagine raising taxes, this would probably short term give the government more money, but it could also increase unemployment and lower investments. So in the end the government would probably not end up with more money this way either.

The US gov no matter democratic or republic has been acting like an ostrich and hiding their head in the sand. Pretending they can keep borrowing money to solve the problems. I think it is well past time to think of a solution which means reducing the debt instead of increasing it.

But I really don't know how? I don't think anything suggested so far in this thread is going to solve anything either.

Another strange thing is the debt is mostly in US $'s. So lowering the value of the US dollar is actually going to keep the debt at the same level but increasing US competitiveness in the world. Perhaps this is actually what is needed? But there is a huge problem with that also. It is going to decrease the US import. US imports is what is floating a lot of other countries economy including china. So it is going to hurt other economies which means they'll import less from the US too. Leading to a down-going spiral…..

Actually perhaps the ostrich hasn't been hiding its head in the sand…. but instead it realized that the current wheel of lending money from china and other countries… and keep the debt increasing wheel, is the best it can do? As long as china's and other countries economies are based on the US importing from them… they are going to keep lending out money? so why not keep going?

Gothic: Good point on the nasty side-effect of devaluations.

Ubereil said:

You want an argument that isn't based on fairness? They can spare the money. Really.

And why do you spend your energy on defending the rich anyway? It's not like they are the ones with the biggest problems. Even if we raise their taxes back to 90 % (I mean, if they don't like it they can always give away all their money and live on the same income as middle (or why not lower) class pepole. You know, if paying those taxes really sucks that much).

Übereil

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Surprisingly enough US taxes are already among the most progressive (which means that the rich pay a greater share) in the developed world, moreso than European welfare states. The US budget problems dont come from the rich underpaying, it comes from gross inefficiency in government programmes such as public healthcare that costs as much as universal coverage in other countries, and political deadlock due to partisan bickering...

The one tax that the US probably could raise would be some sort of VAT, but that would be regressive.

90% taxes is just silly. Removing wage differentials and killing consumption would be a sure way of creating either mass unemployment or an east german "we pretend to work, the state pretends to pay" situation. Utterly idiotic and also pretty darn offensive, I dont understand how even socialists could advocate that kind of confiscation of the fruits of one's labour