patrick.net

Patrick/JustMe/GaryAnderson, et al: According to you all, if we just taxed the 1%ers more, and stopped the greedy speculation by the banks with the money given to them by Obama/Geithner, then we'd be on our way to prosperity. Back in the boom-decades the highest tax rates were so much higher and our middle-class did so much better. Is that just about your thesis?
Never mind that those highest tax rates were paid by almost no one, our manufacturing ramped up with american ingenuity and europe/japan infrastructure destruction by 1945, and never-mind that correlation does not imply causation. Would you argue the high marginal tax rates were responsible for the boom-decades? If so, I'd like to see some causation, because of course they weren't the cause.
All this whistling by the graveyard, of you guys thinking if we just did x and y we'd be in much better shape, is sad. Don't you read about the financial crumbling of CA, IL, Detroit, RI, NY.......these are 'blue' areas dominated by big-govt, and big-govt pay/bfts, and illegal immigration problems, high regulations on small businesses, etc, etc. And nationally, the debt we're accumulating will come back to haunt us and crush us (hopefully just temporarily)......but the HUGE pensions promised, and being paid to govt workers will be cut drastically unless the pension assets earn 8% returns the next 10 years, which they won't.
You all really should read more variety: pensiontsunami.com, market-ticker.org, globaleconomicanalysis.blogspot.com, instapundit.com.
We're in BIG trouble, and it's NOT because the 1%ers aren't taxed enough. Even one of Obama's idiot economic-advisors admitted to me in an email exchange a few weeks ago, that it would not be smart to raise taxes on ANYONE much less the high-income-earners, during a period of economic trouble such as we're in now.
BTW, FDR did it in 1933, and much more -- read about the NRA -- and all his policies made the Depression much worse and much more lengthy. Didn't end until he died and Truman announced that he'd improve the business regulatory environment and be a friend of American businesses -- that's a fact.
So start reading more variety, and maybe you'll bash the 1%ers and bankers a little less. Start with: www.theaffordablemortgagedepression.com
to see part of the problem you've might not been aware of. Cheers!

sbourg says

You all really should read more variety: pensiontsunami.com, market-ticker.org, globaleconomicanalysis.blogspot.com, instapundit.com.

I read two out of these four (BR and CR) every day. What makes you think you know what I read, in general? I can't speak for Barry Ritholtz and Calculated Risk with authority, but my distinct feeling is that neither one of them agrees with your thesis on taxes.

sbourg says

Would you argue the high marginal tax rates were responsible for the boom-decades?

Strawman argument. Nobody claimed that high taxes were "responsible" for the boom. What *I* implied was that high marginal tax rates did NOT HINDER the economy as a whole, and was a net positive.

sbourg says

We're in BIG trouble, and it's NOT because the 1%ers aren't taxed enough.

More strawmen. Nobody said it was ONLY because the 1% were not taxed enough. It was also because the 1%, including bankers, were speculating like crazy with OUR bank deposit money, after first having corrupted congress and the regulatory agencies.

Also please understand that 30 years of unfunded tax cuts for the 1% is one of the major causes of the public debt, along with the illegal wars we entered into at the behest of George W. Bush. These are both unproductive debt. Debt incurred to stop depression, OTOH, is productive.

sbourg says

FDR did it in 1933, and much more -- read about the NRA -- and all his policies made the Depression much worse and much more lengthy. Didn't end until he died and Truman announced that he'd improve the business regulatory environment and be a friend of American businesses -- that's a fact.

That's not a fact. The depression dragged on because there was not enough DEMAND, and stimulus was too low. Once again, if you read Krugman, you would know that what stopped the great depression was the ultimate stimulus and DEBT program: World War II.

http://krugman.blogs.nytimes.com/2011/08/15/oh-what-a-lovely-war/

And before you get in a tizzy about Krugman being a war monger, as if that was ever true, here is another one.

http://krugman.blogs.nytimes.com/2011/08/24/anti-keynesian-switcheroos/

sbourg says

So start reading more variety, and maybe you'll bash the 1%ers and bankers a little less. Start with: www.theaffordablemortgagedepression.com
to see part of the problem you've might not been aware of. Cheers!

That link is to a web site dedicated to the very wrong idea that the government was the cause of the housing bubble.

This BS is what Barry Ritholz (loc. cit) calls THE BIG LIE. You can read about it here

http://www.ritholtz.com/blog/2011/11/the-big-lie/

So sbourg, pretty much everything you said in that last post is wrong. I fully understand how difficult is to throw off the yoke of 30 years of right-wing lies and propaganda, but it is time to do so.

Folks, enough with all this back and forth about too much government or not enough government. It's not the government that is at fault here. The government can share in some of the fault for laying out the drug/easy credit and the Kool aid but the fault lies with the real purpetrator and that is the entire American public. Americans all thought that they could administrate and speculate themselves a living and paycheck. All Americans actually believed that they were better than real work. 70% of the 99% hasn't really worked/WORKED at their jobs in 3 decades. They shuffled among papers and computer screens between coffee breaks and actually thought they deserved an $80K a year salary for doing it. NOT! The American Middle Class have all become Fat, Dumb and Happy and are totally addicted to football, pornography and consumerism as so stated by Paul Craig Roberts. We have the government we deserve. In fact, we have earned much worse from our complacent and greedy/lazy attitude. Lastly, Americans haven't done shit to earn good government, a safe country, fair laws or their freedoms. They have lived and totally survived as cattle and don't act like people anymore. So how do you handle a herd of cattle? Exactly the way we are being led to the slaughter house right now.

Raven Stole My Potato says

but the fault lies with the real purpetrator and that is the entire American public.

Sort of. The american public in general has fallen prey to 30+ years of relentless right-wing propaganda.

Yes, the public has imitated the richest 1% in pursuit of rents and business freebies, and they have responsibility too, but most Americans did not participate directly in the housing bubble.

The American public has not truly had a real government BY the 99%, FOR the 99%, for the last 30 years. Even Clinton was so constrained by the Republican loonies in congress that he could not get it all done. He did a great job under the circumstances, but not nearly enough.

referenced by sbourg: http://www.youtube.com/embed/HEQ6L2QIMUo&list=UUBo6wgTHF-8vzTjZ3_lEe0g&index=4&feature=plcp

Zachary,

Oh please. This is the kind of tripe propaganda that the Republican party is fielding against Obama?

"Obama does not look at America like the rest of us do, like a shining city on a hill...." [this is a reference to a speech by Ronald Reagan].

Barf. What absolute drivel. Can these clowns not argue about the substance of policy, instead of making this emo-porn propaganda speeches? I guess not. They have no substance, so they resort to misleading the Republican sheep with this kind of drivel.

justme says

The american public in general has fallen prey to 30+ years of relentless right-wing propaganda.

The public sucks. F--k hope.

http://www.youtube.com/embed/xIraCchPDhk

(George Carlin) Funny and with more than a few grains of truth.

What Carlin does not say is that the it is the STRUCTURE of our political system that is fundamentally unsound.

With an unsound structure, you get unsound results.

sbourg says

BTW, FDR did it in 1933, and much more -- read about the NRA -- and all his policies made the Depression much worse and much more lengthy. Didn't end until he died and Truman announced that he'd improve the business regulatory environment and be a friend of American businesses -- that's a fact.

That is a statement of complete and utter bullshit.

oh really, tatupu70 ? That's the best you can do -- swearing/name-calling ? That's the rebuttal of someone who has no argument to defend your position.

Zachary : That's your 'take-away' ? You are utterly clueless to think that 1 second of John Drew's characterization of Obama is simplistic to a degree you think makes no sense. This short sentence happens to be proven by everything John Drew (who I went to school with at Occidental, and who knows something about marxism) -- this short sentence is proven by everything John and I know about Obama.
Zachary: What do you know about Obama to the contrary? Answer: Nothing.

You're a know-nothing, who slams other beliefs with no substance. Nice going. I hope your middle-school kids learn more about defending their beliefs. You're a simpleton, a 'mud-thrower'. Hope you're happy, again, with your vote for Obama this year.

Patrick, JustMe, GaryAnderson, Tatupu, Zachary and you other semi-socialists out there: will your extra 5% marginal taxes on the 'rich', and $100B/year LESS spending on the military doing whatever you disagree with.....and more regulations on the banks.......actually produce your utopian vision? Are those your answers? Will they add up to a more prosperous middle-class in the private sector?
Really ??? If you think that........and apparently you do....you're all semi-retarded, and that's being kind. See how that's going for Greece, Italy, France, England, Spain, Portugal. Oh, I know.......you think Norway is perfection......well they drill the living daylights out of their resources, and they don't have an underclass of illegals.......so they're not a fair comparison. We can't copy them. Sorry... can't.

Freedom is the answer........smaller govt, smaller taxes, more energy independence by permitting energy-production, getting rid of illegal immigrants permitting our own citizens to get jobs, getting the federal govt OUT of the private sector.......etc.

You SEMI-SOCIALISTS have NO ANSWERS THAT MAKE ANY SENSE.

Everytime I hear Reagonomics I remember this poster - Funnny

sbourg says

Patrick, JustMe, GaryAnderson, Tatupu, Zachary and you other semi-socialists out there: will your extra 5% marginal taxes on the 'rich', and $100B/year LESS spending on the military doing whatever you disagree with.....and more regulations on the banks.......actually produce your utopian vision?

Let me do the math for you.

Number of US Households 2012, 116 million:
http://www.census.gov/prod/1/pop/p25-1129.pdf

Average Income of the top 1%, $1,137,684
http://motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph

1% of 116 million is 1.16 million. The highest marginal tax bracket starts at $388,351. Lets leave that alone and only change the law saying if you have income in this bracket, you must pay 35% on capital gains as well.

$1,137,684 minus $388,351 is $749,333. $749,333 times (.35-.15) is $149,866. Multiply this times 1.16 million, and you get $174 billion more revenues each year.

FWIW, discretionary spending has increased $410 billion since 2007, with $168 billion of that being solely defense and the War on Terror (Homeland Security). Another 50 billion of the discretionary increase was in Veteran's benefits.

sbourg says

Patrick, JustMe, GaryAnderson, Tatupu, Zachary and you other semi-socialists out there: will your extra 5% marginal taxes on the 'rich', and $100B/year LESS spending on the military doing whatever you disagree with.....and more regulations on the banks.......actually produce your utopian vision?

Who said that the people who discuss here wanted a utopian vision?

That's not realizable at all. But with severe income disparity, the country is bound to get f--ked no matter what. This is a fact.

What we need is a sustainable economy.

sbourg says

Freedom is the answer........smaller govt, smaller taxes, more energy independence by permitting energy-production, getting rid of illegal immigrants permitting our own citizens to get jobs, getting the federal govt OUT of the private sector.......etc.

We should stop taxing the income, tax the non-productive assets and rent-seeking.

bgamall4 says

You need to tax accumulated wealth, because income is actually distorted. These folks likely make way more than what is reported. Tax the wealth. The wealthy have an even more disproportionate share of wealth than income!
And taxing wealth would stop a lot of speculation that is taking place in the world.

Wealth is accumulated "after tax income"... its already been taxed once before... so why tax it twice..

Gary: You mean by confiscating their property? This should and would start another revolution.

David1: You're assuming all that income by the 1%ers is cap gains -- no, alot or probably most, is sub-S and W-2 taxable at 35% right now.
Besides you're also assuming our federal govt does not have a spending problem.
You're also assuming the top 1% and perhaps top 5% aren't taxed enough now. In total, their fraction of taxes paid is much larger than their fraction of income. World-wide statistics show the top 1% and 10% of US earners are taxed more proportionally (to the total taxes paid in the country), compared with their fraction of income........worse than almost all other countries.
Besides, David, we have a serious spending problem, and even some of Obama's economists say we shouldn't raise taxes in a fragile economy with no job-creation like NOW.

thomas.wong1986 says

Wealth is accumulated "after tax income"... its already been taxed once before... so why tax it twice..

Personally, I think there should be no income tax on earned income, only a tax on income which was taken from other people as rent, interest, etc.

sbourg says

Gary: You mean by confiscating their property? This should and would start another revolution.

Property tax would start a revolution? We've had property tax for a long time.

Central banking has everything to do with financial bubbles. Control interest rates and watch the Mal-investment occur, every-time.

bgamall4 says

futuresmc says

iberertarianism didn't fail,

Of course it failed. Libertarians got what they wanted in the UK. You can continue to allow banks to be deregulated until the cows come home and you will get massive financial bubbles. You failed. Admit it. We have to put to death the idea that deregulation works. Regulation is sometimes overruled but Glass-Steagall worked for decades.

Gary Anderson strategicdefaultbooks.com

Yes we've had prop tax for a long time and it stinks........I guess it's Constitutional to the extent it's not an 'unreasonable seizure'........but it still stinks as a way to pay for services like schools, police & fire. The pymts should be more direct for those svcs -- if so, if it had been, taxpayers would've noticed a certain breaking point for getting ripped off -- now we're WAY beyond it -- the pay and lifetime bfts add up to $6M for the average NYCity cop age 22 to 82, for just a 20-yr wkg career.....I'm in the retmt plan business so I know. Govt ee pay&bfts have become unsustainable & the actual 'bubble' burst will be ugly.
By the way, you California Leftists never seem to think your govt's grown too large, cumbersome, intrusive, overpaid/bftd........etc, etc. You seem to wail agnst 'banks' and speculators, but the other 10 problems should not be ignored.

sbourg says

World-wide statistics show the top 1% and 10% of US earners are taxed more proportionally (to the total taxes paid in the country), compared with their fraction of income........worse than almost all other countries.

Of course they are. The rest of the country has no money.

This is not a tax issue, it's an income inequality issue.

sbourg says

Besides, David, we have a serious spending problem

We have a spending problem, a revenue problem, and an income inequality problem. All of them need to be fixed.

Why don't you fix it in California first? Before hoisting your sem-socialist tactics on the rest of the country? Answer: Because it doesn't work. But you still want to hoist it on the rest of the country.
You don't care that almost all economists believe it's NOT the right time to raise taxes on anyone. You don't care. You're like a 1-trick pony. You should be smarter, but can't figure out another trick.

sbourg says

David1: You're assuming all that income by the 1%ers is cap gains -- no, alot or probably most, is sub-S and W-2 taxable at 35% right now.
Besides you're also assuming our federal govt does not have a spending problem.

Doubtful, considering the average tax rate paid by the top 1%, according to this, is 23.3%.

http://mjperry.blogspot.com/2011/08/average-federal-income-tax-rates-by.html

This average rate would be impossible with an income of over $1 million given the current tax brackets unless a significantly high proportion of that income was taxed at 15%. In fact, we can figure it out. An income at the exact start of the top tax rate ($388,351), assuming no state income taxes paid, pays 27.1% in federal income taxes plus Medicare and SS of an additional 2.6%. $1,137,684 in AGI, if alll sub-s or w-2 income, would pay 367,328 (32.3%) in federal income taxes and 20,982 (1.8%) in ss and medicare.

Since they pay a combined 23.3% according to this chart, they pay a combined $265,080.37 in taxes based upon the average income of $1,137,684. Using excel, I have found the w-2 etc. income needed to pay an average rate of 23.3% is about $425,000.

Amending my calculation above, $1,137,684 minus $425,000 is $712,684. This mulitplied by .2 and 1.16 million HH is only $165 billion.

sbourg says

Besides, David, we have a serious spending problem

As I said, $410 billion increase in discretionary spending since 2007. $218 billion of that is on defense, war on terror, and homeland security, including veterens benefits. Less than $200 billion increase in discretionary spending on actual historical liberal "tax and spend" domestic programs. Less of an increase than on the Conservative "smaller government" defense policies and budget.

My point is, get your head out of your ass. Stop blaming Obama. He is not the culprit for the spending problem. There are no differences between Republicans and Democrats when it comes to spending. The only difference is Republicans don't want to pay for the most of the spending, and the little they do want to pay for they sure don't want those who benefit most from having the government pay for it.

sbourg says

even some of Obama's economists say we shouldn't raise taxes in a fragile economy with no job-creation like NOW.

Don't raise taxes on the super wealthy in a fragile economy? Who? Show me one.

Now show me one economist that recommends slashing government spending in a fragile economy. They tried austerity in 1932. How did that work out?

sbourg says

You're like a 1-trick pony. You should be smarter, but can't figure out another trick.

Now that's funny. I mention that spending is too high, revenue is too low, and our tax code is not progressive enough.

You, on the other hand, only mention spending being too high.

But, I'm the one trick pony?

thomasdt12 says

Central banking has everything to do with financial bubbles. Control interest rates and watch the Mal-investment occur, every-time.

I completely agree. But that's the system we got today. And we should see how to navigate through the mess with such a system. Drastic changes to the system will be undesirable for the entire society.

sbourg says

You don't care that almost all economists believe it's NOT the right time to raise taxes on anyone.

This is an insane claim. Do you even realize that the top 0.1% are financiers who have basically fleeced off the middle class sheeple?

Do you realize that the amount of money they spend on their monthly necessities is a tiny fraction of their overall hugely lopsided income? wtf did these CEO's do that merits a salary increase of about 250%? Oh that's right, they got all the sheeple deep into debt.

Why would you be against raising taxes on "finance industry" which doesn't do anything productive, just shuffles the money around and earns interest out of thin air?

uomo_senza_nome says

Do you realize that the amount of money they spend on their monthly necessities is a tiny fraction of their overall hugely lopsided income? wtf did these CEO's do that merits a salary increase of about 250%? Oh that's right, they got all the sheeple deep into debt.

If a company does not take bailout money they can pay their CEOs whatever they want. I agree that CEO and management pay has gotten out of control but that is because they get BAILED OUT time and time again by democratic and republican politics. Any company engaging in insane executive compensation and/or fraud will eventually go bust (via competition) or be shut down eventually (via prosecution), esp. if they produce nothing like the financial sector where salaries are highest. If we had let them all fail and made it clear they will NEVER get a bailout and be PROSECUTED for fraud we would already have gotten rid of most of those overpaid pigs and their companies.

uomo_senza_nome says

Obama versus Romney--the one percent versus the one percent.

Yup. It's IP Trolls versus Meat Packers. Just look at Emmanuel in Chicago.

For the first time in US history, the idea that low wages are a good thing is backed by both parties.

Our spending problem is wholly, utterly, and entirely from taxes that are too damn low, and military adventures that were not supported by tax increases, but in fact, tax cuts.

As illustrated here:
http://patrick.net/?p=1216266

So if Romney is elected, Sheldon Adelson stands to gain 2 BILLION in tax benefits.

http://www.huffingtonpost.com/2012/09/11/sheldon-adelson-2-billion-tax-cut-mitt-romney_n_1873683.html

You think Sheldon would use his tax savings to give his folk raises? Or would he plow it into a PAC to elect someone even more plutocrat than Romney next time?

I think I know the answer to this one.

you really mean deluge up economics, don't you? really?

sbourg says

World-wide statistics show the top 1% and 10% of US earners are taxed more proportionally (to the total taxes paid in the country), compared with their fraction of income........worse than almost all other countries.

Some documentation on that? World wide statistics or first world statistics? Hard to seriously compare some of the third world shitholes with the US.

How about an unearned wealth tax? Taxes on unearned wealth do not harm the economy in the slightest.

Land is obviously unearned. No one created it.

Inheritances are not earned by the receiver, duh.

Radio spectrum is not created by anyone.

Ultra-fast trading does not benefit anyone except some non-productive traders

There are probably a lot of other good unearned-wealth objects of taxation too. If we just taxed those things, we also could eliminate all income tax and sales tax and all the paperwork that goes with them. Everyone would be better off, except non-productive rich people.

Productive rich people would be far better off.

Vicente says

You think Sheldon would use his tax savings to give his folk raises? Or would he plow it into a PAC to elect someone even more plutocrat than Romney next time?

Oh come on now, don't be so pessimistic. He might use the money to create new slave-labor jobs in China.

How about an unearned wealth tax? Taxes on unearned wealth do not harm the economy in the slightest.

Land is obviously unearned. No one created it.

Inheritances are not earned by the receiver, duh.

Radio spectrum is not created by anyone.

Ultra-fast trading does not benefit anyone except some non-productive traders

There are probably a lot of other good unearned-wealth objects of taxation too. If we just taxed those things, we also could eliminate all income tax and sales tax and all the paperwork that goes with them. Everyone would be better off, except non-productive rich people.

Productive rich people would be far better off.

I think a land tax and a small HFT trading fee per transaction would be the best candidates. Inheritance was earned at some point.

There are probably a lot of other good unearned-wealth objects of taxation too. If we just taxed those things, we also could eliminate all income tax and sales tax and all the paperwork that goes with them.

Other than land ownership and inheritences, how much other truly "unearned" wealth is out there though? Would it be enough to eliminate the other taxes? I agree with you in principle but I'm not sure it would be enough to eliminate the other taxes completely.

Maybe just raise capital gains taxes and reduce income taxes. But of course the Republican far-right won't let that happen.

bgamall4 says

The reason is, Patrick, that they will say the UK will never allow it and we cannot compete if we allow it.

I don't quite understand the reasoning.

If the ultra-fast traders all want to move to England, good riddance. It's not like they produce anything.

The US will still have stock markets.

freak80 says

Other than land ownership and inheritences, how much other truly "unearned" wealth is out there though? Would it be enough to eliminate the other taxes? I agree with you in principle but I'm not sure it would be enough to eliminate the other taxes completely.

Maybe just raise capital gains taxes and reduce income taxes. But of course the Republican far-right won't let that happen.

Part of the beauty of a tax on unproductive rent-seeking is that all the tax mechanisms are already in place, so all you have to do is try it out by shifting the load a bit and watching the results.

I'm pretty sure land value taxes and inheritance taxes alone could each be enough to eliminate all other taxes. Combined, they would overdo it.

Consider that the vast majority of all wealth in America is inherited and not earned, as proven by Summers and Kotlikoff: http://www.republicansforobama.org/node/9596

Then consider the sum total of rents in the US, especially rents in the large cities where the (roads, water, police, etc) infrastructure is provided by taxpayers, but the benefits from that infrastructure are reaped by private landlords?

I'm pretty confident it would work, and there's no reason not to try.

Consider that the vast majority of all wealth in America is inherited and not earned, as proven by Summers and Kotlikoff: http://www.republicansforobama.org/node/9596

From that article:

In other words, the VAST majority of the wealthy in this country are wealthy because they INHERITED their wealth. The vast majority of the wealthy in America haven't "earned" their "success" by hard work. They've inherited it. That doesn't make them successful. It makes them LUCKY.

I would argue that the vast majority of the ancestors who left the wealth didn't earn that wealth but siphoned it from those who produced it. And that's the real tragedy.

If the ultra-fast traders all want to move to England, good riddance. It's not like they produce anything.

The ability to grow an economy is not dependent on capital as the more capital there is in a system, the proportionally it is worth less. Take all the capital out you want of an economy. Whatever capital remains represents 100% of the production of that economy.

It's not the number of currency units in the economy that makes it productive. It's the allocation of those currency units to production, capital goods, and infrastructure that makes an economy more productive. It's all about allocating a certain percentage of whatever capital there is to building robots rather than pizza.

We could burn 90% of the currency in our system. Eliminate literally 90% of all USA dollars. With the remaining 10%, if we allocated just a third of it to increasing productivity rather than consumer goods or playing zero sum games, we could grow our economy faster than it has grown since its inception.

The biggest drag on our economy is allocating wealth to the casinos of Wall Street and the banks. When wealth is allocated to zero-sum gains, the Second Law of Thermodynamics will cause a net decrease in wealth.

I would love to see a pie chart showing how much of our "net worth" is allocated to various things: stocks, bonds, commercial buildings, apartments, houses, highways, office equipment, farm equipment, food, clothing, etc. I suspect a good percentage of our net worth is attributed to zero-sum gambling and a good percentage of our money is chasing more money in zero-sum games. And it is precisely this allocation of wealth to non-productive and non-consumer uses that puts a drag on the economy and hinders both stability and the rate of improvement in the quality of life.