Interestring scenario of how tax cuts really work

[msm859]

MSM a few more things for you (and all) to consider - the top MARGINAL fed income tax rate under Eisenhower was 91%!!!! Yet the economy thrived. The top tax rate was well into the 60's 70'% range into the 1980's...not what you and I pay mind you.

Regarding education - amazing isn't it, that schools are the ones that are always cut first...hmm....one wonders why...

I know about the Eisenhower rates, although one might argue there were more deductions allowed back then. However, I would be all for higher marginal income rates. I would not allow any public corporation to be able to deduct any compensation package over $1 million. I would specifically add a 10% surtax on all income over $1 million (from any source including capital gains) anytime we are involved in a military conflict. Speaking of Eisenhower, his farewell address and warning about the military industrial complex should be required viewing at the beginning of each new session of Congress.

Again as to education I seem to recall seeing a lot of graphs showing a pretty solid correlation between being a blue state and having more college graduates. So the Republicans want to destroy unions and make it more difficult for the commoners to go to college.. does one need to wonder why?

[chrisdfw]

The middle class has been screwed by the surgical removal of regulators where they mattered the most.

We agree about the problem, we just disagree about the cause and the solution.

Regulation is a barrier for people who are not already rich to compete against those that are. It harms the small business and favors the large businesses on wall street. The more we regulate the large and richer big bankers on wall street become. I agree that wealth concentration is not a good thing, however government regulation encourages it, not discourages it.

Much of the wealth that has been gained has been a result of excessive risk taking where the wealthy benefitted from the risk taking without facing any downside. Bank of America, Goldman Sachs, and the rest of the crew made enormous amounts of money while the government covered any losses. Why was this possible? Because of government interference in the markets. Investors and depositors are shielded from any responsibility to make reasonable decisions about where to deposit their money. Again we decouple the upside from the downside. this encourages excesssive "risk" taking and accelerates the concentration of wealth.

Large utilities and oil companies are also the norm. it is rare that anyone can compete, because of all the regulatory hurdles that new competitors can't afford to deal with. Product liability suits and the like also discourage new innovation and competition against the established elites. Does anyone here think they can invent a new wonder drug and compete against the large laboratories? you can't afford it, so pfizer gets to keep making monopoly profits.

More regulation and more concentration in wealth is the result of the type of regulation we pursue. We need to pursue more regulation to ensure fair competition and less barriers to entry. And we need to better protect property rights.

To that end I have to agree in some respects with someone who will likely be shocked. msm859

Left in charge I would levy a surcharge on any corporation that paid an executive more than a fixed limit without express positive approval of shareholders. And I don't mean these proxy elections. I mean if an executive wants to make more than a couple million a year they need to get 51% or more of the shareholders (not just the ones that vote, but 51% of all of them) to vote. Shares held by mutual funds and pensions will need to consult their beneficiaries and get their votes. Too much money that properly belongs to shareholders is being paid out to executives running companies.

The other thing I would do to limit the concentration of wealth is to require companies to pay out at least 50% of profits as dividends. If they need more money to expand, they will have to issue stock or bonds and convince someone to buy them. Now they just hang on to money that belongs to stockholders and expand endlessly, to build their empires. They would cry that they can't compete or grow. Well if they had an idea worthy of doing they could find an investor. Companies might end up smaller... good.

We need regulation, but we need regulation to return us more towards free markets. Not the oligarchy of big corporations and big government. Smaller government and smaller companies, that is the answer to the problem of concentration of wealth, not more of the same. As government got bigger through the 60s to the 90s regulation increased massively, and coincidently so did the size of companies and the concentration of wealth. When there are significant government imposed barriers to competition the natural result will be concentration of wealth.

I don't think more taxes for the sake of more taxes are the answer. The government spends a historic portion of national income. Much of it non-productively. Every dollar taken from me that I would spend and given to someone else who is not working is a net loss of national wealth. If I spend it, i get something in return and the person I spend it with is better off. And they spend it, and down the line. If you take it from me, I get nothing in return, it still gets spend, but I have loss whatever benefit I would have gained, it is lost to the economy. Additionally, every dollar we give to someone to encourage them not to work results in the loss of the productivity associated with their labor.

The government spends too much. Too great a portion of our economy consists of government largesse. We defend the whole world. Let japan defend themselves or pay us if we are going to do it. Let Europe do the same, either defend themselves or pay for it. A lot of our taxes go to pay to defend other countries and meddle in their affairs. If someone attackes us fine, firebomb their ass to the stone age, otherwise we need to defend out country and let them defend theirs, we can't afford to do it.

We spend too much on healthcare. (disease care really). We over treat people. We do things to the elderly that we wouldn't do to animals because we have a misplaced sense of compassion. Its not compassionate to keep people alive, in misery and pain, that are wetting and messing themselves. We do it for ourselves, because as a society we don't handle death well. Guess what, we can't afford to spend far more than half of our healthcare dollars during the last few miserable weeks of our lives. We all die. surprised? We can simply be more rational about this and save a ton of money.

finally, sorry seniors, we need to make a few small tweaks to social security. It spends more than it takes in, and we need to balance the budget. Raise the retirement age a little, probably, reduce increases, probably. Reduce benefits, more for those further from retirement and more for those with higher benefits, but we need to trim a little. Actually social security is a small part of the problem, small changes are enough. Medicare and medicaid are really the big problems.

There is no way the government needs more money, its a spending issue. 100%. Too much money spend on medical care, welfare, social security, and defense (everything else is like arguing over the change in the couch).

As for regulation, we need DIFFERENT regulation, not more of the same.


For IamOld - Why are schools cut first? three reasons,
One is that school kids don't vote and old people do. How many old people are lining up to take a social security or medicare cut to save the schools?
Two - for state and local governments schools are a large part of the discretionary expenditures. Much of states funds are controlled by the federal government and mandated to be spend to get federal matching dollars. Such as medicaid. States may want to cut medicaid first, but in some ways they are limited.
Third - Federal education funding is largely spent on things that encourage schools to act in ways that conservatives do not find appealing. Education is being used as indoctrination in this country, look no further than the teachers in wisconsin abusing students by taking them out of class and forcing them to protest at the capitol, using them as political pawns. Its disgusting and many conservatives feel that the federal government is interfering with local control of schools. Encouraging the promotion of the homosexual agenda as one small example.

[chrisdfw]

So the Republicans want to destroy unions ...

Why would republicans want to destroy unions?

Is it because the unions promote and contribute to the election of candidates opposed to republicans? I blame the unions for inserting themselves into politics. Rather than sticking with organizing and bargaining for better wages, unions have made themselves political, so if they are political targets, they have asked for it.

But I don't see right to work as anti-union. if a company wants to hire me, and I want to accept the job, why should I be forced to pay union dues. Union dues ought to be voluntary. that way I could refuse to pay if union bosses took a political stance I didn't like. As it stands now, workers are forced to pay, whether they agree with the politics of the unions or not, if they want to keep their job.

Right to work is freedom. I can choose to join the union or not, but it should not affect my right to work for whomever I choose.

The right of freedom of association needs to be protected. I should be free to join a union, or not. Unions should be free to strike if they choose. If they are valuable and they strike, the company will be hurt and may give in to their demands. However, the company should be free to hire someone else. That is the other side of freedom. It works both ways, freedom for the union, freedom for the employer.

Going back to regulation, if regulation had not created such large employers and government, this would not be an issue. If you didn't like it at one employer there would be more choices, but instead power has been concentrated in the hands of big corporations and big government, each financed by the other and protected by the other. Bought and paid for.

[IamOld]

Great discussion here guys! I would disagree with chris inasmuch as unions are not ENOUGH involved with politics - if they were more involved, we wouldn't have the robber barons in charge; I also think that regulation CAN help the little guy, if it does, for example, break up the massive monopolies that we have today. Regulation, actually can protect us from the "too big to fail" syndrome we have today - we simply need the anti-trust laws really enforced!

Finally, in WI - students didn't have to be forced to protest - most students - believe it or not -understand what their teachers are going through - take a look at the employee parking at the school of your choice...older cheaper cars abound!

[chrisdfw]

I seriously doubt the second graders pulled from their class wanted to support the unions in their fight for collective bargaining.

WE agree on something, regulation can help the little guy. Breaking up monopolies is a joke, big government creates monopolies.

What we disagree on is the purpose and type of regulations. I want to restore free markets and take them back from the CEOs and large corporations. But in doing so, the profits of the corporations need to be returned to the rightful owners, which is the stockholders, not government coffers or the employees. It needs to get distributed to stockholders who can then decide whether to re-invest.. When dividends stopped it enabled companies to get larger and larger by retaining and growing. We had regulations that were never enforced on excess retained earnings.

I want a return to true free markets, not the facism thrust on us by the republicans and democrats. State control is the only thing worse I can think of than the raping of the public by the large companies. I'll take my chance getting screwed over by exxon and walmart over the government. That is the piss poor choice the current crop of politicians give us. At least I voluntarily choose to buy gasonline at exxon. The government takes over half my pay and I don't really have a choice. Between property taxes, sales taxes, payroll taxes, income taxes federal, income taxes state, even a middle class person is giving over too much to the government, for too little. Too much of the government is spent on giveaways to poor people and rich corporations (which isn't even given to the stockholders but rather skimmed off by CEOs who fill the boards with their cronies and steal from the shareholders) The middle always gets screwed, and more government makes it worse. Unions can't help if they support big government, they are just helping to flush us down the shitter.

We do need anti-trust to be enforces, but that is fixing the problem after the facts, we need enforcement of property rights to make sure the monopolies never form. Force corporations to pay out the dividends to the shareholders so they don't grow too big. Force CEOs to get REAL APPROVAL of the thier pay (they never will if the shareholders really had a voice). Get government out of the game of creating reams and reams of paperwork so we have meaningful competition. It costs a small fortune to crash test a new vehicle, so how is a start up carmaker going to compete? They can't and GM, Ford, toyota, honda and the like have control of the market. It costs a larger fortune to test a new drug. I can't create a new drug in my garage and afford to test it, how can I compete with Pfizer. I can't. all the regulation serves to suppress competition and create monopolies. The government is even cracking down on Amish farmers selling raw milk because it isn't FDA approved. Guess what, the buyer knows what they are buying, let the free market decide. I'll take my chances with raw amish milk over the genetically engineered shit pushed on us by Monsanto. Big corporations and big government go together. Unions want to oppose one and favor the other, but the economics facts are the facts.

I completely agree that we need regulation, just different regulation. Pro-free market regulations, and I don't mean the shit that politicians have been putting in place the last 50 years.

[GWBcasualty]

<<Regulation is a barrier for people who are not already rich to compete against those that are. It harms the small business and favors the large businesses on wall street.>>

Sorry.


Completely, absolutely, totally, 100% disagree.

As a small business owner for 25 years. I reaped benefits from the protection that regulations gave me and I have been raped by big business when regulations were taken away.

This is what THEY want you to believe.

Lack of regulation favors those that have the resources to exploit the void.

Best of luck to you.

[IamOld]

Humbly I agree with GWB - remember guys, before 1996 - when telecoms were deregulated, (I forget the exact number) one owner could only own dozen or so radio stations - afterwards - unlimited - so we wound up with ClearChannel owning around 1300!!!! So here, the gov't regs actually created competition!!!!

Anyway...perhaps off topic - you know in the last few months as my own Bk case evolved, etc., I have seen so much kindness on this board, so much knowledge and so much in common with folks here - only somewhat tongue in cheek, maybe one of you guys would start a movement/party - The Party of the Broken but not Defeated!!! or some such thing. And you know what - I'm serious.

By the way...in Finland where there is VERY VERY generous welfare, there is a union for those who are unemployed :-)

[shark66]

Humbly I agree with GWB - remember guys, before 1996 - when telecoms were deregulated, (I forget the exact number) one owner could only own dozen or so radio stations - afterwards - unlimited - so we wound up with ClearChannel owning around 1300!!!! So here, the gov't regs actually created competition!!!!

Hmmm...no... all government ever created was an ILLUSION of competition...just like the divestiture of Bell system...

It regulated one part of the industry very severely, while leaving the other completely unregulated.

The result of which is that the companies which were regulated are moving into technologies and services that are not regulated...

But most of the money is still in the hands of good old boys, and the customers are the ones that are suffering...

Good luck to us all.

[IamOld]

Hello Shark - well, the thing with the old "Ma Bell" was that it was a state controlled!! monopoly - I am old :-) I remember when local calls and phone service was practically free...

[shark66]

I understand Ma Bell better than most people since I've done an in-depth study on it as a part of my thesis a few years ago...a very unique system that one was.

That was a single - as well as singular - monopoly. A few years from now, there will be two - AT&T and Verizon. No one else will be able to stay afloat.

Great accomplishment, at the expense of the entire customer base...

Good luck to us all.

[debtprison]

They will go overseas already and they have been doing so for some time. That is a big reason for us having near 10% unemployment.

I'm all for reduced taxes. I am inclined to think that the government wastes a lot of money and we could cut there. However between the poor paying the taxes and the rich doing so, I'm going to go with the rich paying. Somebody has to pay. Increasingly some states are adding on what are effectively regressive taxes. Florida for example has a "new wheels" tax of $225 on any new (used or new) vehicle added within the state in addition to their already high registration and title fees(but you can do transfers of plates from your vehicles to avoid the fee). The thing is that a person who makes $600 a month still must pay this same fee. Likewise if a person makes $50,000 a month, they still only pay the $225. But for the poor guy paying that $225 (almost 50% of his monthly income) this fee is a HUGE burden. Such fees are becoming very popular now and as I have explained they are hitting the poor and middle class the hardest.

[chrisdfw]

They will go overseas already and they have been doing so for some time. That is a big reason for us having near 10% unemployment.

I'm all for reduced taxes. I am inclined to think that the government wastes a lot of money and we could cut there. However between the poor paying the taxes and the rich doing so, I'm going to go with the rich paying. Somebody has to pay. Increasingly some states are adding on what are effectively regressive taxes. Florida for example has a "new wheels" tax of $225 on any new (used or new) vehicle added within the state in addition to their already high registration and title fees(but you can do transfers of plates from your vehicles to avoid the fee). The thing is that a person who makes $600 a month still must pay this same fee. Likewise if a person makes $50,000 a month, they still only pay the $225. But for the poor guy paying that $225 (almost 50% of his monthly income) this fee is a HUGE burden. Such fees are becoming very popular now and as I have explained they are hitting the poor and middle class the hardest.

That is true,. but from the other side of the coin, it costs the same amount for the state to register a vehicle regardless of the income of the person registering a car. likewise, if you choose to ride the bus it costs the same to provide the bus regardless of the income of the rider, the same applies to a lot of government services.

That alternative viewpoint for fees is that people who use the services should bear the cost. That doesn't work for things like welfare (which we need to get rid of in my opinion) but it promotes efficient use of services.

[chrisdfw]

Completely, absolutely, totally, 100% disagree.

As a small business owner for 25 years. I reaped benefits from the protection that regulations gave me and I have been raped by big business when regulations were taken away.
...
Lack of regulation favors those that have the resources to exploit the void.

I'd love to see an example, I do not disagree that in some circumstances small businesses can be favored by regulation. Regulation should be as neutral as possible. It should not encourage or discourage anyone, just maintain a fair set of rules for everyone.

When the rules are such that only GM, Ford, and toyota can afford to crash test vehicles, that is not fair. when only monsanto and con-agra can deal with the FDA for food testing and only pfizer can afford a new drug tests, the rules are not fair to small business. The more regulation in general, the more the deck gets stacked in favor of the rich who can afford to deal with it.

I'm sorry that your experience doesn't agree. I'd love to hear about it and determine for myself whether this was a case of de-regulation run amok (I believe in some cases we have removed regulations that are of the type that do help create fair and efficient markets)

None of this really deals with the fact that too many people want to take the income of others to provide for themselves using the tax system. Why does a poor person have the right to some of my income? Why should I have to pay for their healthcare, housing, food, or anything else? Its not a legitimate role of government.

I don't want to hear about the greater good crap either. If the greater good is the criteria, why not kill one healthy person and take their organs to provide transplants for 5 people that need organs, greater good right? Why stop at taking property from me? Why steal only the fruit of my labor? If the majority votes to take organs does that make it proper? We used to be a country that attempted to operate by constitutional principles, now we are a country where everyone wants the government to steal something from someone else to give to them. As long as you can get more votes, lets take stuff from others and have it for ourselves... why not? Because we have no morals. The vast majority of the public doesn't mind stealing from others as long as they can get 51% of the vote.

[jacko]

But you have or will have when you pulled the BK lever to discharge your debts. The cost of your BK and from millions of others gets passed onto those who pay their bills. I'm in favor of burning the tax code to end subsidies for all, including to farmers/ranchers, mortgage interest etc. No more deducting medical expenses since others will have to pay. In order for the hospital to stay open they will cost shift to those who can pay.

"Why does a poor person have the right to some of my income? Why should I have to pay for their healthcare, housing, food, or anything else? Its not a legitimate role of government." Of course it is. Its way cheaper than prison. As in a functioning society free of chaos, you will contribute one way or the other.

Why should a urban dweller pay for a four-8 lane highway to ones doorstop in the suburb for daily commute to the city?

I'd love to see an example, I do not disagree that in some circumstances small businesses can be favored by regulation. Regulation should be as neutral as possible. It should not encourage or discourage anyone, just maintain a fair set of rules for everyone.

When the rules are such that only GM, Ford, and toyota can afford to crash test vehicles, that is not fair. when only monsanto and con-agra can deal with the FDA for food testing and only pfizer can afford a new drug tests, the rules are not fair to small business. The more regulation in general, the more the deck gets stacked in favor of the rich who can afford to deal with it.

I'm sorry that your experience doesn't agree. I'd love to hear about it and determine for myself whether this was a case of de-regulation run amok (I believe in some cases we have removed regulations that are of the type that do help create fair and efficient markets)

None of this really deals with the fact that too many people want to take the income of others to provide for themselves using the tax system. Why does a poor person have the right to some of my income? Why should I have to pay for their healthcare, housing, food, or anything else? Its not a legitimate role of government.

I don't want to hear about the greater good crap either. If the greater good is the criteria, why not kill one healthy person and take their organs to provide transplants for 5 people that need organs, greater good right? Why stop at taking property from me? Why steal only the fruit of my labor? If the majority votes to take organs does that make it proper? We used to be a country that attempted to operate by constitutional principles, now we are a country where everyone wants the government to steal something from someone else to give to them. As long as you can get more votes, lets take stuff from others and have it for ourselves... why not? Because we have no morals. The vast majority of the public doesn't mind stealing from others as long as they can get 51% of the vote.

[chrisdfw]

Why should a urban dweller pay for a four-8 lane highway to ones doorstop in the suburb for daily commute to the city?

I agree, that is why we need to dedicate the revenue from the motor vehicle fuels tax to pay for roads. That way those who use the roads the most pay the most. That is the exact result
that would be the best economically as it would not create market distortions. If you drive more, you should pay more, otherwise we subsidize driving and encourage too much of it.

Great idea.

As for welfare, we are subsidizing poverty, therefore we encourage more of it. And lets face it, if I showed a picture of a family in poverty in the US today to someone in poverty in Africa, they would think the person is wealthy. If I showed the picture of someone in poverty in America today, to someone who was wealthy 200 years ago, they probably would also not equate the situation with poverty. Why in the world would we ever want to pay someone NOT to work (this included those horrible farm subsidies and certain corporate tax credits). We lose the value of their labor and we have to take money from someone who is productive to do so. It makes no economic sense to take from those who make money to give to those who do not, and even less sense to take my money and give it to wealthy bankers and finaciers through oppressive regulation and bailouts, and really makes me mad when they take my money and give it to other countries in the form of foreign aid! I don't care how little of the budget it is, I want to decide how to spend my money, perhaps on private charity, maybe on a hawaii vacation, maybe just for an extra 6 pack of beer. but I should get to drink the beer, not some foreign dictator, welfare pig, or wall street banker.

We have too much government, not too little tax revenue.