The Fed studies the Kama Sutra

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The Fed studies the Kama Sutra

 Oh goody, now the fed is reaching into the past to find a new way to fuck with us. They realized Americans are getting a little tired of being fucked in the missionary position and so now that idiot Bernanke is introducing the "twist". The geniuses that make up the federal reserve are going to sell short term treasuries and purchase long term treasuries (to the tune of $400 billion). The theory is that this move will lower long term interest rates while keeping sort term rates low as well. Most likely, it will work to some extent and long term rates will fall a little. But is that desirable?

 

Who benefits? That idiot is saying it will lead to lower mortgage rates so more people can refinance their homes and it will increase demand in the housing market. I think this is extremely doubtful. Mortgage rates are already at extreme lows, if you wanted to refinance or purchase a new home you would have by now. The interest rate isn't what is preventing you from doing so. There might be a handful of people who are in a situation where the rates will get low enough to justify paying the financing fees but hardly enough to make a difference. Most people who have not refinanced or purchased a house either can't because they have income problems, or don't want to. When housing prices are at an all time low and interest rates are at all time lows, the housing market is absolutely a buyers market. People are not buying for other reasons. Lowering the interest rate a little isn't going to make any more of a difference than a rain drop in the ocean.

 

Large banks will benefit because small banks are going to be put under extreme pressure. Banks borrow money short and lend long making a profit from the difference in interest rates. Flattening the curve and making long term rates lower will decrease the profits made from lending. Large banks that have diversified income streams will fare better while small banks will have problems making up for that lost income. No doubt the larger banks are salivating at the opportunity to purchase small banks when they run low on cash reserves. This will lead to even further constriction of the banking community especially since small banks are already reeling from the regulation of the Frank-Dodd Act and the sub-prime housing fiasco. Those of us who hate using mega-banks are going to find our options even more limited.

 

Another aspect of this that has been overlooked is life insurance companies. Life insurance companies invest in long term bonds to secure their long term promises. Their products generally offer a guaranteed payout regardless of interest rates. They have already been struggling with low interest rates and even lower interest rates will make meeting their obligations harder. You can expect that products like annuities will offer even lower rates of return which will really suck if you were planning on retiring any time soon.

 

The corporate and municipal bond markets should see more demand as treasuries become virtually worthless and the interest rates you receive will most likely be below the inflation rate- meaning that if you invest $1000 in a long term bond your money will have less than $1000 worth of purchasing power when it matures. You will actually lose money when inflation is factored in. Investors will look to alternatives that can provide similar security as long term treasuries but also provide a better return. Increased demand for corporate and municipal bonds should in turn lower the rates for those. That means it should become cheaper for municipalities and corporations to borrow money.

 

For the overall economy I don't see a lot of benefit and the move reeks of pure desperation. It isn't going to do a thing to encourage new investment in the economy, create jobs or solve any of the core problems we currently have. It will cause a bunch of shuffling money around on Wall Street and some people will make money while others lose money. A few more small banks will probably fail but they have been failing all over the place since 2009 and people either haven't noticed or don't care. The largest danger I see is if life insurance companies start going belly up, but for the most part life insurance companies are financially sound. They will change their product offerings, lay off some people, pay lower commissions and be able to weather the low interest rates. If I am wrong on this, the results will be devastating.

 

I suspect the real result of the "twist" will be a fizzle. Nothing dramatic is going to happen but inflation and unemployment will persist. Those with cash are going to continue to hang on to it and new investment will remain limited. Our GDP growth will remain anemic and we will most likely find ourselves "back" into recession. I maintain we have been in recession all along and the "growth" that technically meant we were out of recession was not real and simply an illustration of the faulty way we calculate GDP. 

 

We simply have to admit that low interest rates at all costs is not a good thing. Sooner or later you can't lower them more and sooner or later you have to pay back the debt you accrue. Our government is obsessed with borrowing and is trying to encourage us to continue borrowing to keep the economy "growing". But when you are growing your economy with borrowed money, it isn't really growing. The more we try to push the economy today by using debt the more we are harming our economy down the road when those obligations are due. It is time for us to allow interest rates to rise and reduce the incentive to borrow- increase the incentive to save and bring our debt (both public and private) down to manageable levels. Until we do so all these acrobatics the fed is going through will only produce temporary boosts to the economy at best. 

 

 

If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X


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 Agree. It is also time to

 Agree. It is also time to raise taxes on those with record salaries and profits who aren't investing because they simply don't want to.

"I do this real moron thing, and it's called thinking. And apparently I'm not a very good American because I like to form my own opinions."
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jcgadfly wrote: Agree. It

jcgadfly wrote:

 Agree. It is also time to raise taxes on those with record salaries and profits who aren't investing because they simply don't want to.

Especially since the long-running informal experiment of having the top earners pay less and less tax on a proportional basis has been accompanied by a consistent rise in unemployment rates, it is time to at least seriously question certain monotonously repeated claims...

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How very Keynesian of them. Why is it not clear that that does not work past short term? As much as I hate to say it, the protestant work ethic is where real wealth comes from but then it is a label for what really matters. People getting involved in the general community causes much good to happen.

 

Also, as far as bank size goes, I dislike mega banks because they are vulnerable to/are the cause of much of the shit that we are dealing with.

 

Past that, yes those who use small banks are headed for major suck. My brother is just short of two years into a mortgage with a bank that has only two store fronts. If this deal goes through, he will get shafted one way or another.

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BobSpence1 wrote:jcgadfly

BobSpence1 wrote:

jcgadfly wrote:

 Agree. It is also time to raise taxes on those with record salaries and profits who aren't investing because they simply don't want to.

Especially since the long-running informal experiment of having the top earners pay less and less tax on a proportional basis has been accompanied by a consistent rise in unemployment rates, it is time to at least seriously question certain monotonously repeated claims...

 

Here in the US the top earners have been paying more and more of the total income tax burden. In 1984 the top 1% paid 21.12% of the total tax burden,the top 5% paid 37.98%, in 94 the top 1% paid 28.86% and the top 5% 47.52%, in 2008 the top 1% paid 38.02% the top 5% paid 58.72%. How is this an "experiment of having the top earners pay less and less tax on a proportional basis" when in reality they have paid a higher and higher proportion of the total tax burden? Is it different in Australia? If so I would be interested to see the data.

 

It is time to at least seriously question certain monotonously repeated claims.

 

http://www.taxfoundation.org/news/show/250.html#Data

If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X


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What the hell is wrong with

What the hell is wrong with a flat tax anyway? I know only enough of the US tax system to know that it's a hell of a lot more complicated than the Canadian equivalent. We both use progressive tax systems (differing rates for differing incomes), which I've never been much of a fan for. The only part of it that makes sense to me is dismissal of taxes for anyone below the poverty line.
However, comments from Buffet suggest that there are significant problems with the tax system in the US. As far as I'm aware it is quite impossible to pay a higher rate of taxes in Canada than someone who makes more than you do. But he claims to pay less tax% on income than his secretary does. Now, I can understand the progressive tax system even if I don't agree with it entirely, but I cannot fathom why the middle class would be required to pay more % than the upper class. At least the upper class actually has the money to afford higher taxes (good or bad). But putting the burden on less wealthy people is ridiculous.

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Vastet, that has to do with how we manage our laws. Rarely is a law removed but often is a law added. At times, new laws collide with old laws and for tax laws, that provides a way to avoid obligations to society but only for those who can afford to hire an accountant who can work the system that way.

 

Since we do impose higher taxes on rich people, there is a large incentive to game the system.

 

You mention warren Buffet. That is a prime example. For all the corporations he is involved with, he commands the hefty salary of $1 per year. So he actually has no taxable income. His money comes from his investments and that can be gamed as well. A losing investment can be counted against a winning investment for taxation. So he knows what he feels like spending and he invests in loosing deals often enough to offset his profitable investments.

 

Regular people get screwed on that deal all the time. When my mother died, her estate was worth just over the level that would have incurred a 50% tax. We were able to get an exception on that but only just barely. However, she provided that we had to house my old drunken step father until he kicked off. Over the years, her estate doubled in value and as a result, when I finally got the money, I had to pay around $15,000 for the investments that were forced upon me.

 

Had I known that that was going to happen, I would have cashed out right away and gamed the system myself. Shit but I would have doubled my income by doing things that way.

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Vastet wrote:What the hell

Vastet wrote:
What the hell is wrong with a flat tax anyway? I know only enough of the US tax system to know that it's a hell of a lot more complicated than the Canadian equivalent. We both use progressive tax systems (differing rates for differing incomes), which I've never been much of a fan for. The only part of it that makes sense to me is dismissal of taxes for anyone below the poverty line. However, comments from Buffet suggest that there are significant problems with the tax system in the US. As far as I'm aware it is quite impossible to pay a higher rate of taxes in Canada than someone who makes more than you do. But he claims to pay less tax% on income than his secretary does. Now, I can understand the progressive tax system even if I don't agree with it entirely, but I cannot fathom why the middle class would be required to pay more % than the upper class. At least the upper class actually has the money to afford higher taxes (good or bad). But putting the burden on less wealthy people is ridiculous.

 

Buffet lies and equivocates. When he says he pays a lower percentage than his secretary he is not comparing apples to apples. He is comparing the money he makes through capital gains to income. Capital gains is the tax placed on the profit made from an investment. The capital gains rate is lower than the income tax for everyone regardless of how much money you make. It is the same in Canada where the capital gains tax rate is 50% of your regular tax rate. It is pretty standard that capital gains are taxed less than income.

 

In the US the capital gains tax rate is 15% unless you are in the bottom two brackets in which case the tax rate is 0%. So since the top tax bracket in Canada is currently 29%, your capital gains tax on the wealthiest is slightly lower than ours and is substantially lower for the middle class but higher for the poor.

 

When Buffet is making his claims he is ignoring the corporate taxes that are applied to the funds because he chooses to leave it in the company. The company pays a corporate tax rate and then the money is dispersed as dividends. Buffet claims he paid an effective tax rate of 17.4% which is a higher tax rate than average for anyone who makes under $160k even before you factor in any corporate taxes those funds may have been hit with. I suspect that Buffets secretary makes more than $160k (if she doesn't Buffet is a cheap SOB) and is one of those in the top 5% evil rich people who in fact will be hit by higher taxes in Bama's latest scheme. Most likely she is going to see her tax rate increase 3-4.6%.

 

Of course, I wonder if it were true, why do we automatically assume taxes have to be raised on Buffet? Why don't we assume that taxes ought to be lowered on his secretary. Taxing Buffet more isn't going to help her, cutting her taxes would.

 

But your main point that the US tax code is absurdly complex is right on. It is theoretically possible that a reasonably high paid employee pays a higher effective tax rate than a billionaire but it is hardly the norm- in general there is a really strong correlation between your income and the percentage you pay in taxes. And historically, attempts to target certain wealthy individuals for higher taxes have resulted in extreme unintended tax burdens on upper middle class families (look up the Alternative Minimum Tax which had basically the same goal) Obama hasn't released the exact language of his idea yet. So whether or not it will have its claimed effect I can't say. I am skeptical.

 

I do believe that a flat tax or consumption tax would be the most fair system and far less susceptible to corruption and loopholes our current tax system has. But that would require politicians to give up their largest power, the ability to make exceptions in the tax code to benefit friends. It isn't going to happen.

 

If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X


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 So, according to you,

 So, according to you, Buffett doesn't know really know how much he pays in taxes?

http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html

Not that it would matter to Buffett, et al. anyway

http://www.thedailybeast.com/newsweek/2011/05/01/an-empty-offer-from-the-super-rich.html 

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Hmm. Question via

Hmm. Question via comparison. In Canada, many refundable credits are directly tied to income. ie, you can't claim any medical expenses if you make a certain amount of money more than you paid in expense. If I remember correctly it was 30%. So if you made 100k, and had anything less than 30k in expenses, you weren't entitled to claim the credit (my figures may be a bit off due to time since I was doing taxes, but the general principle is sound). Does the American system similarly cut refundable credits based on income?

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Beyond Saving wrote:

Beyond Saving wrote:

BobSpence1 wrote:

jcgadfly wrote:

 Agree. It is also time to raise taxes on those with record salaries and profits who aren't investing because they simply don't want to.

Especially since the long-running informal experiment of having the top earners pay less and less tax on a proportional basis has been accompanied by a consistent rise in unemployment rates, it is time to at least seriously question certain monotonously repeated claims...

 

Here in the US the top earners have been paying more and more of the total income tax burden. In 1984 the top 1% paid 21.12% of the total tax burden,the top 5% paid 37.98%, in 94 the top 1% paid 28.86% and the top 5% 47.52%, in 2008 the top 1% paid 38.02% the top 5% paid 58.72%. How is this an "experiment of having the top earners pay less and less tax on a proportional basis" when in reality they have paid a higher and higher proportion of the total tax burden? Is it different in Australia? If so I would be interested to see the data.

 

It is time to at least seriously question certain monotonously repeated claims.

 

http://www.taxfoundation.org/news/show/250.html#Data

I was not referring to the share of the total income tax burden of people at a give income level.

I was referring to the Tax Rate for each person.

From elsa.berkeley.edu/~saez/piketty-saezJEP07taxprog.pdf

This is not inconsistent with your claim, which, together with these figures, suggests that there are more people getting into the high income categories.

Which could well be a direct effect of reducing the rates for the higher brackets.

But the employment stats suggest that this is NOT helping create more jobs for the mass of the population. Looks like lowering tax rates on the top brackets only creates jobs at the higher pay levels, or maybe only allows people already employed to move up the scale more readily.

It apparently doesn't lead to more jobs at the lower end of the scale, where most people are having problems getting and keeping jobs. Which is the issue.

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Vastet wrote:Hmm. Question

Vastet wrote:
Hmm. Question via comparison. In Canada, many refundable credits are directly tied to income. ie, you can't claim any medical expenses if you make a certain amount of money more than you paid in expense. If I remember correctly it was 30%. So if you made 100k, and had anything less than 30k in expenses, you weren't entitled to claim the credit (my figures may be a bit off due to time since I was doing taxes, but the general principle is sound). Does the American system similarly cut refundable credits based on income?

 

Yes, although for medical expenses it isn't a credit, it is a deduction. You can only claim medical expenses that are in excess of 7.5% of your adjusted gross income. Anything less than 7.5% of your AGI is not deductible. Other credits like the earned income credit and certain education credits are also tied directly to income.

If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X


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BobSpence1 wrote:I was not

BobSpence1 wrote:

I was not referring to the share of the total income tax burden of people at a give income level.

I was referring to the Tax Rate for each person.

From elsa.berkeley.edu/~saez/piketty-saezJEP07taxprog.pdf

This is not inconsistent with your claim, which, together with these figures, suggests that there are more people getting into the high income categories.

Which could well be a direct effect of reducing the rates for the higher brackets.

But the employment stats suggest that this is NOT helping create more jobs for the mass of the population. Looks like lowering tax rates on the top brackets only creates jobs at the higher pay levels, or maybe only allows people already employed to move up the scale more readily.

It apparently doesn't lead to more jobs at the lower end of the scale, where most people are having problems getting and keeping jobs. Which is the issue.

 

Comparing tax rates between 1960 and today is virtually meaningless because in 1960 there were far more tax shelters and legal techniques to avoid paying taxes. In 1960 the top marginal tax rate was 89%, but no one actually paid 89% of their income in taxes. If you want to say my tax rate is 100% but 99% of my income is not considered taxable, I'm cool with that. 

 

It seems absurd to blame tax policy on our current unemployment problem given that there hasn't been a major change in our tax rates (unemployment didn't go up until 2008 shortly before the tax cuts were set to expire). From 2003 (when the Bush tax cuts were implemented) to 2008 the unemployment rate went down. But I think it is faulty to give the tax cuts the primary credit for that. They might have helped but I suspect it would have been similar without the tax cuts as the unemployment rate was similar throughout the Clinton administration.

 

If you want to know why the unemployment rate is so high, look at why companies are not expanding. All you have to do is ask, we will tell you. Many companies do have cash that could be used to expand but are choosing not to for a variety of reasons. If companies were itching to invest but were short on cash, a tax cut would help. Since companies in general have cash on hand, they are choosing not to expand for other reasons. Right now the largest cause of investors holding back is the sheer amount of uncertainty. Obamacare, massive amounts of new regulations, a burgeoning government debt and the outright hostility towards business causes investors to be more cautious and keep funds liquid so we can deal with whatever surprises emerge without losing the businesses we already have. 

 

I have said it before and I will say it again, if the government develops a comprehensive plan to deal with our deficit problem and all the regulations that come with Bamacare are published you will see an increase in hiring, even if the plan includes tax hikes and the regulations add expense to most businesses. As long as we know the rules of the game we can plan for it and figure out how to make money despite the government. Right now, we don't know the rules and no one in Washington seems the least bit serious. Obamas latest plan only creates an estimated (and imaginary) $4 trillion in deficit reduction over 12 years. Compared to the deficits we are projected to run, lowering it by $4 trillion over 12 years is insignificant. In all fairness, no one on the republican side has offered a serious option either. 

 

If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X


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Did you really mean to say I

Did you really mean to say I was trying to "blame tax policy on our current unemployment problem"?

I was saying, at most, that your unemployment problem is not helped, maybe contributed to, by tax policy, IOW the opposite way round to the way your phrase suggests.

The point I take away from such figures and related data is that when corporations or wealthy individuals are allowed or given access to more resources, there is no particular incentive to invest in projects which help generate jobs for the bulk of the unemployed. Or contribute to education/training of such people, which might also be necessary to make them more employable. Everything points to more pro-active policy being what is needed to address this level of unemployment, and cutting tax rates to higher level earners simply reduces the resources available to those with a genuine, positive desire to address it, such as governments.

And the data from the last 10 years or so is all pretty consistent in supporting this. I suspected you would find a way to dismiss the figures the way you did. I did not have to search for something specifically to support my point, just for a something actually giving a comparison of tax burden at two reasonably appropriate periods, as a minimum. I have seen and heard plenty of corroborating reports, but I figured I should include at least one actual example of real data.

I find it a little bizarre the way the tax vs employment facts are so persistently ignored by your idiot republicans despite all the data to the contrary.

BTW, I didn't see you acknowledge the problem I pointed to in your original post in referring to the tax share of a whole category of income level rather that the effect on individual persons or companies, which is what would be relevant to incentive/disincentive.

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jcgadfly wrote: Agree. It

jcgadfly wrote:

 Agree. It is also time to raise taxes on those with record salaries and profits who aren't investing because they simply don't want to.

YOU FUCKING COMMIE, I AM REVOKING YOUR RIGHT TO READ THAT POEM FOR AUDITIONS. (inside joke folks) Oh, as an aside, what were the reactions to it? And which one was it? I forgot. That was you who asked to read my poem at an audition, right?

You're lack of sucking up to the idea of "let them eat cake" is disturbing. I really thought I knew you. You hate America.

YOU PINKO COMMIE SWINE SCUM..........BLADDAH BLADDAH BLADDAH BLATHER

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BobSpence1 wrote:Did you

BobSpence1 wrote:

Did you really mean to say I was trying to "blame tax policy on our current unemployment problem"?

I was saying, at most, that your unemployment problem is not helped, maybe contributed to, by tax policy, IOW the opposite way round to the way your phrase suggests.

The point I take away from such figures and related data is that when corporations or wealthy individuals are allowed or given access to more resources, there is no particular incentive to invest in projects which help generate jobs for the bulk of the unemployed. Or contribute to education/training of such people, which might also be necessary to make them more employable. Everything points to more pro-active policy being what is needed to address this level of unemployment, and cutting tax rates to higher level earners simply reduces the resources available to those with a genuine, positive desire to address it, such as governments.

And the data from the last 10 years or so is all pretty consistent in supporting this. I suspected you would find a way to dismiss the figures the way you did. I did not have to search for something specifically to support my point, just for a something actually giving a comparison of tax burden at two reasonably appropriate periods, as a minimum. I have seen and heard plenty of corroborating reports, but I figured I should include at least one actual example of real data.

I find it a little bizarre the way the tax vs employment facts are so persistently ignored by your idiot republicans despite all the data to the contrary.

BTW, I didn't see you acknowledge the problem I pointed to in your original post in referring to the tax share of a whole category of income level rather that the effect on individual persons or companies, which is what would be relevant to incentive/disincentive.

YOU FUCKING COMMIE. WHY DON'T YOU MOVE TO CHINA SINCE YOU LOVE BIG SPENDING BY GOVERNMENT!

Damn man, you were my best friend up until this post.

Don't you realize that my boss has to maintain his two houses, one which he bought recently WHILE cutting back my hours, and I am doing my part by starving to death because he needs to make his Audi payment.

YOU MAKE ME SICK!

YOU HATE AMERICA! And I am not surprised considering all your fucked up animals? Pouches? REALY? Oh yea, your bears are soooooo frightening.

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Brian37 wrote:jcgadfly

Brian37 wrote:

jcgadfly wrote:

 Agree. It is also time to raise taxes on those with record salaries and profits who aren't investing because they simply don't want to.

YOU FUCKING COMMIE, I AM REVOKING YOUR RIGHT TO READ THAT POEM FOR AUDITIONS. (inside joke folks) Oh, as an aside, what were the reactions to it? And which one was it? I forgot. That was you who asked to read my poem at an audition, right?

You're lack of sucking up to the idea of "let them eat cake" is disturbing. I really thought I knew you. You hate America.

YOU PINKO COMMIE SWINE SCUM..........BLADDAH BLADDAH BLADDAH BLATHER

(Note to self: Did I think this or type it? Whatever you do, don't hit Post Comment)

 

 

yeah that was me . while the work got a good reaction I didn't get the part.

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BobSpence1 wrote:Did you

BobSpence1 wrote:

Did you really mean to say I was trying to "blame tax policy on our current unemployment problem"?
 


I was saying, at most, that your unemployment problem is not helped, maybe contributed to, by tax policy, IOW the opposite way round to the way your phrase suggests.
 


 


No that was just a dyslexic moment for me.
 
 
 

BobSpence1 wrote:

 
The point I take away from such figures and related data is that when corporations or wealthy individuals are allowed or given access to more resources, there is no particular incentive to invest in projects which help generate jobs for the bulk of the unemployed. Or contribute to education/training of such people, which might also be necessary to make them more employable. Everything points to more pro-active policy being what is needed to address this level of unemployment, and cutting tax rates to higher level earners simply reduces the resources available to those with a genuine, positive desire to address it, such as governments.
 
And the data from the last 10 years or so is all pretty consistent in supporting this. I suspected you would find a way to dismiss the figures the way you did. I did not have to search for something specifically to support my point, just for a something actually giving a comparison of tax burden at two reasonably appropriate periods, as a minimum. I have seen and heard plenty of corroborating reports, but I figured I should include at least one actual example of real data.
 

 
 
 


Really? The data from the last 10 years shows that after the tax cuts, unemployment went down- that doesn't seem to support your argument. Of course it also went up towards the end of that ten years, which simply proves that tax policy is not the primary determinate of unemployment. Which is precisely what I have said here and in other posts. If you just want to talk data from the last ten years it also demonstrates a much stronger correlation between government spending and unemployment. The more the government spends, the more people are unemployed. Again, a major oversimplification but if you want to focus on a small period of time and draw broad conclusions, that conclusion has far more evidence.
 


Also, your comment is assuming that a higher tax rate on the wealthy means more spending on what you would consider beneficial government program. That might be a legitimate argument in a country that has a reasonably close to balanced budget. Here in the US we spend on all those programs even though taxes aren't and could never be high enough to pay for it. So increased taxes is not going to contribute to educating or training anyone since our government is already spending that money.

 

BobSpence1 wrote:

 
I find it a little bizarre the way the tax vs employement facts are so persistently pushed by your idiot republicans despite all the data to the contrary.
 

 
Because campaigns are ran by soundbites, not economic theory and taxes is a very easy issue for both sides to appeal to emotion without worrying about details.

 
 
 

 

BobSpence1 wrote:

 
BTW, I didn't see you acknowledge the problem I pointed to in your original post in referring to the tax share of a whole category of income level rather that the effect on individual persons or companies, which is what would be relevant to incentive/disincentive.
 

 
 
 
My whole point in criticizing your stats from the 60's was that it was not an accurate representation of the actual tax burden experienced by the individual because our tax code has changed so dramatically since then. It isn't an accurate representation of how much after tax income was held by the wealthy. The high tax rates in the 50's and 60's were the main drivers behind massive tax shelters, company benefits like health insurance, cars, stock options, padded pensions etc. were all techniques companies used to offer certain employees multi-million dollar lifestyles while minimizing the tax burden. You said the wealthy are paying proportionately less than they did in the past and that is false. They pay a higher percentage of the total tax burden than they did and while their effective tax rate is lower, everyones effective tax rate is lower than it was in the 60's but the taxes on the wealthy in terms of real effective taxes has fallen slower in proportion to everyone else. 
 

 

 

The effect on individuals is real simple- the more money I have the more likely I am to invest in a new company. If I don't have the money, I can't invest even if I want to. Therefore, if the tax rates are higher on me, I will not invest as often or as much because I physically can't. Of course, simply having the money isn't enough, there has to be a reasonable expectation I will make a profit, a desire to deal with whatever obligations will come with that investment etc. Money is a necessary resource but their are many other factors that play a role in making an investment decision. I made a post recently on this very topic listing a number of reasons why I and other business investors are hesitant to invest in a startup today.  http://www.rationalresponders.com/forum/29899 Business investors are not being secretive about why they are moving towards liquidity and avoiding long term commitments, we are screaming it from the rooftops. Of course, what do successful investors know about investing.   

 

 

On the larger scale, someone like Warren Buffet that essentially has unlimited funds to invest,  is going to invest where he believes he will make the most profit. If investing in a Canadian company has lower tax rates but a similar ROI, he will be more likely to invest in a Canadian company if the difference is large enough to make up for the added inconvenience of international transactions. Buffet likes to talk about how guilty he feels about not paying enough taxes, but hires a bunch of people who's sole job is to minimize the amount he pays in taxes and he takes their advice. Go figure. So it has an effect, although I will concede the size of said effect is often overstated in the right wing.      

 

 

The current proposed Bama law will raise my taxes 4.6% now if an opportunity arises for me to invest, that kind of tax increase is likely to only slow me down. I will have to wait for an extra month or so to get the necessary cash to make up that 4.6%. I'll bitch about it but from an macro economic standpoint there isn't significant change, that is essentially what Clinton did when he raised taxes. If you were to say raise my taxes to 89%, I would simply quit and probably many others like me, that would have a major impact on the economy.       

 

 

My main concern with Bama's Buffet tax is how it is going to affect small business owners. I don't really care about Buffet, I do have a tendency to be against taxing people a higher percentage just because they make more money. I will never put in the effort to be as wealthy as Buffet, he deserves all the money he has legitimately earned (but he is a fucking thief for the billions he has made by abusing his political connections and stealing taxpayer dollars by getting the government to bail out obviously failing companies he bought for pennies and ought to have his corrupt ass thrown in jail /tangent) Someone who has earned money by investing wisely should keep that money and pay the same rate everyone else who invests does on their profits.       

 

 

Now despite crap media coverage, the Buffet tax does NOT just tax the uber-wealthy. It taxes anyone with an income of $1 million or more but pays primarily capital gains tax on it. This would affect someone who owns a small business for 40 years and sells it for over $1 million, which really isn't that much for a moderately sized successful business. Suddenly, that person has an income of over $1 mil, it will be for one year and that million is probably their entire retirement that they plan to live on for the rest of their lives. Now we are going to tax them as if they made $1 million every year? That doesn't make sense and imo is not fair in the slightest. Having $1 mil when you retire is not anywhere close to "rich", if you put that money into an annuity at age 65 your going to get a monthly income of around $6000. A comfortable income, but well inside middle class and since your income would be fixed inflation would be eating at the purchasing power if you had the audacity to survive a long time (a problem that will be solved by Bamacare).      

 

 

Seriously, if you retire today without at least $1 million you are unprepared and most likely going to rely on the government to take care of you at some point. If you are still working age, I would definitely aim to retire with at least $2 million in liquefiable assets. If you don't, you have failed to take care of yourself and put yourself at the mercy of charity and government. And so what do we do? We punish those evil business owners who dare to actually take care of themselves and provide for themselves (and probably others) by doubling their tax. I don't think that is fair or desirable.        

 

 

And could someone please explain to me why it is fair to tax someone who makes more money a higher percentage than someone who makes less? The only argument I have heard is that they are somehow benefiting more from government resources, which is a questionable assertion, but even if true 20% of $1 million is $200,000 20% of $50,000 is $10,000- the rich person is still paying far more in taxes, why is it "fair" for them to pay even more by taxing every dollar at a higher percentage?      

 

How is it "fair" that our tax code is actively used to encourage people to marry, have kids, invest in green energy, or a dozen other lifestyle choices where those who live their lives the government approved way pay a lower rate than everyone else? The American tax code is the clusterfuck of all clusterfucks and really needs to be completely replaced. The new proposed law simply makes it more complicated, favors certain groups over others and does nothing to deal with the real problems of our deficit, debt and quickly approaching liabilities of SS and Medicare. Like I said, I would be willing to entertain supporting a tax increase if it was part of an overhaul of our federal governments current fiscal insanity but no one in Washington has proposed a sane budget. Until they do, I don't think any of us should support giving them extra money from anywhere.  

 
 
 
 
 

 

If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X


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I may not have participated

I may not have participated much, but I've been keeping up with it.
It seems that AIGS was quite correct when he said the problem was in constant updates to the code without ever removing outdated elements. He said it in the context of the codes complexity, so I'm not going to put words in his mouth, but it looks like that is the core flaw in the code overall. That combined with some illogical and/or outdated concepts.

I think that a flat tax based on all income regardless of the source, combined with reasonable minimum and maximum wages, and amnesty to those below the poverty line, could help. And by maximum wages, I mean maximum net income. Anything earned beyond a certain amount should be free to invest, or donate to government coffers, or go to a locked and guaranteed retirement/emergency package, but not to claim.
Like it or not, the disparity between the top and the bottom of the corporate food chain has already grown too far. It will be corrected one way or another.

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Of course, in order to

Of course, in order to justify such a maximum wages' excess being donated to government coffers, you would first need a government you could trust to effectively spend it, and not waste it away like it does currently...

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Vastet wrote:Of course, in

Vastet wrote:
Of course, in order to justify such a maximum wages' excess being donated to government coffers, you would first need a government you could trust to effectively spend it, and not waste it away like it does currently...

I agree, we wasted it on two wars we didn't need. We wasted it on bailing out banks which ARE going right back to doing the same shit that got us into this mess. Or at least, looking to scheme their way around what watered down rigged relgulations put in place.

I agree, we have in the bottom two classes have been funding the tax cuts for the top two percent and what do we get for it? At best, crappy jobs. At worst no jobs, cut jobs, and stagnant wages and exploding profits.

Yea, BOTH sides should agree that government is wasteful. What I won't do is allow the right to claim that social security, medicare and medicade are a bane on society when the above I mentioned have done the real damage BECAUSE of our corporate bought government.

Goverment IS wasteful because it has been the coffers for the real welfare queens.

 

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 Government is wasteful

 Government is wasteful because it is ran by committee. Committees are stupid regardless of whether or not they are government or private. If efficiency is your goal then a single person running things is the way to go. Dictatorships are capable of being wonderfully efficient. Since I am not willing to trust any single person with the power of the government, I agree with the founders that it is better to have a committee. It would just be nice if the committee was at least smart enough to stay out of things it will inevitably fuck up. 

If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X


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The qualifications for being

The qualifications for being on the committee should be refined.

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