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Damned Either Way
It’s a pretty good bet that Congress and the Administration are going to
try to come up with a solution on what to do with the expiring Bush tax
cuts and the AMT (Alternative Minimum Tax) before the Thanksgiving
holiday. Time is running out and hard choices have to be made.
If we “do nothing” and let the taxes sunset our budget deficit profile
will improve significantly. On the flip side, if we raise taxes across
the board on Jan 1 the economy will hit a wall. We are damned if we do and we are damned if we don’t.
The Administration has said it wants all tax increases to be pushed into
the future for at least two years. Congress (I thought) was of a
similar mind. There is now some doubt as to what they are collectively
thinking. I believe that in the end, our legislators will roll over and
give Obama what he wants; two more years to kick the can down the road.
The Congressional Budget Office looks at the impact of any legislation.
Doug Elmendorf, the boss at the “non-partisan” CBO gave a speech on
Friday on the topic of what to do with taxes. It’s not a pretty picture.
Consider this slide that attempts to define the consequences on
employment of a variety of actions the government could take.
Two observations:
A) Reducing taxes in 2011 has the least ‘bang for the buck’ in
terms of creating long-term full employment. Given that this is the
least effective alternative you have to wonder why it is being
considered.
B) Except for reducing taxes none of the other options are
politically feasible for the foreseeable future. We have congressional
gridlock. There will no stimulus package in 2011 from our new
legislators. So extending the Bush tax cuts is the only option. And that
is why it will become law.
Of course nothing is free. If we don’t get our house in order and
eliminate what was promised to be temporary cuts by Bush, the deficit
will go up. By how much? According to the CBO it will double:
In summary, look forward to a patch on taxes that accomplishes very
little in terms of future growth, one that has the least efficacy in
addressing the underlying unemployment problem and the one that will
insure that a fiscal explosion is not so far off in our future. I think
Elmendorf sums it up pretty well:
Just a question: When do we address the question of the “Fundamental disconnect”?
We haven't done that at anytime in the past. We aren't going to do it
in the present. We will only do it in the future if there is a crisis
that forces us. The conclusion is that another crisis is inevitable
because what we are doing is unsustainable. I wonder if our
congressional leaders read the stuff from the CBO. If they are, they are
ignoring it.
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Shameful
The American Welding Society claimed they will be losing up to 100k Welders due to retirement.
Get your hands dirty. Get a real skill.
Making a computer application from the ground up doesn't count as a skill? Engineering isn't viable these days? It's still making something. You don't expect the unemployed masses to pick up a job they can learn on the job or with somewhat minimal education? Not to be snobbish but most guys aren't cut out for software dev, the burnout rate is incredible even among CS/CE grads. I know a lot of my work is about boosting productivity/cutting jobs/cutting costs, something I don't see going away. Sure I will face competition from the developing world, but guess what so will guys in the physical profession. And at least the bad rep of foreign IT guys works in my favor.
My old man told me growing up that I could make a living working with my head or my hands. I picked my head since he told me I'd make more money. And I'll point out my dad had no degree and has worked in the construction biz his whole life, one of my grandfathers was a carpenter, the other a machinist. So it's not me being snobbish about looking down on the blue collar working man. I just want to make some real money, and not break my body doing it.
If we find ourselves in a world without computers then yeah I'm totally hosed. However an event that would bring that about would basically destroy modern society, so the best job skill would be "Shoots gun well" at least in the short term.
Should the majority not be able to afford those applications you could be hosed as well. I personally am running a five year old FrankenMac, case and software from trashed units. Didn't learn any of it in school. Had a dad in programming since the fifties. Shoots well can be a good CV enhacement. Focus on cluster. Good luck to you and yours young sir.
I assure you it is...and lucrative at that. Better pay than welders, though that's a perfectly respectable and amply-compensated career as well.
I learned how to do both in high-school in a 3-part class with woodshop, metalshop, and drafting. The drafting class exposed me to computers and gave me a skill I put to use before I'd graduated at Nordskog Industries making aircraft-galley design and parts drawings with Autocad (back in the days of the EGA graphics card...s-l-o-w redraw).
I hear you on the tuition comment from above. I barely escaped before the inflection in the 90s when it really got out of hand and managed to pay off my Stafford loan (thanks goobers!) before I'd graduated by working full-time while taking 18-21 units per semester. I just helped the wife make her last payment on her UC Berkeley education a couple months ago; we graduated within a year of each other.
Don't laugh, but I've been considering going the other direction from you...from my MS CS to a law degree. So much of the software development world revolves around patents these days.
I worked like a dog in undergrad to keep from taking loans. Have them now, but to be honest I could clear my loans by hitting my portfolio pretty hard. I half expect some program down the line to take care of them since loads of people are 6 figures into student loans now and limited job options, so I'll pop a wait and see. After all I personally know people that are close in on 200k in student loans and not great job prospects out of law school. Goes to show what doing private undergrad and then law school on debt will get you.
Got people telling me I don't even need the CE/CS degree, but it's more I'll take it if it's available, most of the guys I know in the field don't have a degree in it. My mentor is a grizzled 10 year vet who is only now getting any degree, and only because his employer is paying for it. But I've quite frankly gotten used to holding down a full time job and going to school full time.
I took a class taught by the general counsel at MS about software law and I hit the roof. I kept having to explain how things will get copied, and if the guys are smart they will change the logic structure and even do it in a different language, but by definition still stolen. It's almost like they expect you to MiB them on the way out, and have to segment them off to make sure code is not "contaminated". It might be smarter to have a lot of connections and exp and then go in. I had some exp and most of my connections are guys my age to +10 years and not a lot of big guys. Though I did get unsolicited job offers when some of them heard I was back in the game, a lot of shops were hiring when I jumped back in. My only concern would be keeping the income coming in. Law school is retard expensive, I got a big scholarship and I'm still enraged at the costs, plus it's against the honor code to keep working more then 20 hours and they try the first year to make sure you can't work by making a dumb-ass schedule, which did stop me working that year. Even told us it's to encourage us to "focus" on our studies.
If you're a self-starter, then you probably don't need the CE degree...some of the best programmers I've ever worked with were too busy writing games in their teens to be bothered. I learned more in a paid internship with Teradyne (TER, chip-testing equipment manufacturer) than I did in my classes.
Guess you're gonna have to make those 20 hours really count! ;)
The degree was more to try to get by some HR departments, which is why will only do it if it's free to me (or nearly so). Having grinded through as much school as I have I've realized that I learn better on my own. Like economics, I just had the basic econ 101 and 102 at Party State. But get to talking about it and I run circles around people who got an econ degree from the Ivy Leagues. Had to explain what the carry trade was to a girl from Harvard :) So really the school is just to have the damn piece of paper.
I actually got started in IT as a self starter. Friend of mine heckled me into starting and went from there. Hell he was totally self taught too and he is the King of Kung Fu. Just changed jobs for more money, again, and he's already department MVP, because he willing to do any job and get it done on time.
Nah I work 40, it's just an honor code violation. I consider it a don't ask don't tell :) A few of my school friends suspect I'm working full time but I refuse to confirm it for them. The school is not going to investigate and I'm not making a fuss over it. And besides I plan on doing this since the legal profession is blasted hellscape. I think I'll stay in a field where I know there is still work out there and at good wages. And truth be told I like dev work. I'm not ashamed to say that working as a dev has been the funniest job I've ever had, even when it's me alone grappling with the code. Sure there are aggravations, like effectively being told I'm retarded by the compiler all day, but I get some real satisfaction from solving problems and implementing the demented user requests. Sure I want to strangle my project managers, but that has got to be common. I have 2 of them and I'm still the one that has to ferret out basic info on the projects. Even my boss doesn't know what they do all day...
This assumes that taxation is by default (heh) necessary for reducing the deficit. However, as pointed out by a NYFed chairman in 1946, taxes for revenue are obsolete.
http://hiwaay.net/~becraft/RUMLTAXES.html
Speaking of disconnects:
By Thanksgiving this Thursday?
How about after Thanksgiving recess if at all?
BTW it was the CBO that said 0Care was not a deficit tax increase and suggested 100% taxes would gather more revenues for government
Buffett on record looking for more tax credits to buy and claiming he does not pay enough taxes
He also thought the bailouts funded by taxpayers were a great thing
People can be very funny about money
http://www.bloomberg.com/news/2010-11-19/reid-pelosi-plan-votes-on-exten...
Congress supplies the CBO with wild-eyed optimistic input numbers and "promises" they don't intend to keep -- how then, is anyone supposed to believe anything the CBO comes up with?!
Yeah - the biggest problem is that a tax rate cut will give progressively more money to the wealthy - who are inclined to save it - which is deflationary right now.
The most stimulative tax cuts are the ones that result in real economic activity, such as a fair tax amount cut - such as a payroll tax holliday or a tax rate cut with a ceiling.
Why is it being considered?
The GOP on one side want Obama to fail, so they will do everything that is 'popular' but in fact inefficient (or outright harmful) economically. They are the skilled sabotuers - consequences be damned. President Palin will then fix the economy for real. They are also rich individuals - or sponsored by rich individuals, so tax cuts for the rich are high up on their personal or corporate agenda.
Democrats are being stupid and are being selfish: they are rich men too mostly, who have the most to win from tax cuts for the rich as well.
Obama is being just plain stupid. As an eternal 'balancer' he tries to balance truth against falsehoods by taking 50% truth and 50% conservative propaganda falsehoods. The outcome is obvious inconsistent nonsense.
Real economic activity, uneconomic growth... I am glad I no longer have to swim into this non sense.
Stuff is simple:
-resources are dwindling
-labour is a drain on resources
-people who have accumulated wealth are going to be given a boost over people who have to accumulate wealth.
Therefore tax cuts on the rich.
Wait for the rising taxes on poors, or more exactly people who have to work to live/survive, your pick.
It wont happen tomorrow in the US. Has to be done first at the exterior before switching to the US.
More Critical T...
You mean President Chris Christie.
Obama was tossed by TPTB as a Democrat bone. Plus they get the added advantage of saying "Gee look how bad the Black guy fucked up".
Agree with you to a point, but...
That Bush tax cut for the top 2% costs us 700 B dollars--and they are not investing the money in the US to create jobs. Quite the contrary.
For those in the $250,000 to $500,000 income range, the tax cut only gives them about $700, not enough to hire anybody if they are a small, really super small businessman.
I say put the Sunset threshold at $500,000, or hell I'm felling generous, 1M+
Pay up rich boyz and girlz.
To get a taste of just how beneficial this has been for the 1M+ crowd, look at this info from 2004.
The overall shares of the tax cuts that are going to different households also are illuminating. The TaxPolicyCenter data show that:
Now, all you pretend ZH millionare keyboard commandos tell me just how un-fucking fair it is to expect those in the top 0.2% of US housholds to pay their freaking share while they continue to loot this country.
Yeah, defend the pigs at Goldman Sachs and their ilk.
really, how hard is it...everyone that makes wages, working people, not dividend collectors, pays FICA....say if we must have a $700 billion tax cut to keep economy moving, then lets make it the most stimulative tax cut, and give everyone a payroll tax holiday that equates to $700 billion, and let tax cuts on rich expire. It would go a slight ways towards making the tax rate on wages a little closer to the low rate it is on non-wage earners....
I can think of $14Trillion reasons why tax cuts or lack thereof will make no difference: Increase taxes and watch businesses pass on the increase to the citizenry in the form of price increases, don't increase and watch prices increase due to higher commodity costs, either way, guess who's paying for FAILED GOVT policies!
"Now, all you pretend ZH millionare keyboard commandos tell me just how un-fucking fair it is to expect those in the top 0.2% of US housholds to pay their freaking share while they continue to loot this country."
You mean, apart from the fact that they are taxed at a higher rate than lower earners? Gee, I don't really have an answer for you except that THEY ALREADY PAY OVER HALF OF THE TOTAL FUCKING INCOME TAX BURDEN.
Sorry, I just remembered that Sacramento and Washington already get 40% of my slightly-higher-than-average salary, and it makes me a bit of a cranky-pants.
your country is being run by a foreign dominated criminal cabal who are stealing your wealth and destroying your sovereignty and you are only a cranky pants?
if you were blowing up the enemies assets and burning tires at critical intersections on saturday night just for fun i would call you a pussy.
if cranky pants is is the best that you can come up with then you are truly screwed.
nothing personal.
the rich have many ways to avoid tax. hedge fund managers get capital gains rates on what is clearly fee income. the whole concept of lower capital gains tax rates and lower dividend tax rates than wage tax rates tells you who writes the laws. municipal bonds are fed and state tax free (if in state issuing). capital gains in assets held to death are erased and new tax costs begun at date of death. stock options/buybacks. life insurance trusts (life insurance proceeds are not taxable to recipient). and on and on and on. only the high income strivers who make it by their own labor (not owned capital) like athletes, movie stars, etc. pay much at those top tax rates (remember ole warren noted his secretary pays a higher rate than he does).
"That Bush tax cut for the top 2% costs us 700 B dollars"
no one seems to be talking about the cost of "the Bush tax cut" for the other 98% -- any guesses what that total is?
hint:
4 trillion
Not so.
http://money.cnn.com/2010/09/15/news/economy/bush_tax_cuts_faqs/index.htm
>>>Treasury estimates the costs of making the tax cuts permanent for everyone is $3.7 trillion over 10 years.
Of that, $3 trillion accounts for the cost of extending them for the vast majority of Americans, as the president has proposed. The remaining $700 billion is the cost of extending them permanently for the high-income earners.<<<
You were off by 1T$.
so according to the article you referenced they state the following:
If what they are stating is accurate then the costs everyone are throwing around are for a ten year period e.g. it's $70b per year for the so called rich not $700b
I'm with ya!
It would be better not to have small businesses count as individuals. If I have a small business and my income is over a million a year, I would get hammered under those rules.
The two should be distinct entities and cut taxes on small businesses while raising taxes (like double...) on personal income of more than a million dollars.
FYI From a WaPo article--
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/30/AR201007...
2. Allowing the high-income tax cuts to expire would hurt small businesses.
One of the most common objections to letting the cuts expire for those in the highest tax brackets is that it would hurt small businesses. As Sen. Orrin Hatch (R-Utah) recently put it, allowing the cuts to lapse would amount to "a job-killing tax hike on small business during tough economic times."
This claim is misleading. If, as proposed, the Bush tax cuts are allowed to expire for the highest earners, the vast majority of small businesses will be unaffected. Less than 2 percent of tax returns reporting small-business income are filed by taxpayers in the top two income brackets -- individuals earning more than about $170,000 a year and families earning more than about $210,000 a year.
And just as most small businesses aren't owned by people in the top income brackets, most people in the top income brackets don't rely mainly on small-business income: According to the Tax Policy Center, such proceeds make up a majority of income for about 40 percent of households in the top income bracket and a third of households in the second-highest bracket. If the objective is to help small businesses, continuing the Bush tax cuts on high-income taxpayers isn't the way to go -- it would miss more than 98 percent of small-business owners and would primarily help people who don't make most of their money off those businesses.
Not to disbelieve you but it seems this Tax Policy Center may have some axe to grind in fudging the numbers. I suppose you can make them say anything you want...
Got different numbers? Post 'em.
The Tax Policy Center is often used by the financial press nationally and internationally because they actually bother to crunch the numbers (and not fabricate them).
I recently cross-checked a couple of top income data sources and they are in rough alignment - so yes, your analysis and your conclusions are very accurate IMO.
But I think the problem is that you are trying to argue with facts against those we are not interested in intellectual arguments: the anti-tax (mostly right-wing) fringe pretends to engage in arguments but they are controlled by fear and hate - two irrational motivators. It does not matter what you say, it will be countered either with truthiness or other forms of broken thinking or with "you lie!".
The US press is helping that process too btw., for several independent reasons:
That makes up for a strong mix.
I agree completely with your assessment.
First, I don't need another set of numbers that I can massage to say what I want them to to know that this government is ant-small business and is currently giving zero incentives for innovation and creation of jobs. That is plain as day.
It would behoove the government, if they were truly interested in getting people back to work, to give the money back to small businesses and investors. Here, keep the money, they should say. If small business is such a pittance, as I hear you describe it, flattrader, then why not shuck the whole thing and let businesses keep the money to expand and hire more workers?
How about we drastically reduce or even eliminate the capital gains tax? Retail investors and home-gamers have a lot more money to put to work than people realise. Give them the incentive to invest in the economy directly, which would put a floor under huge corrections in the markets. If it is such a pittance, why not allow the retail investor put the money right back into his TradeKing account?
There's three problems with that approach:
So there's not enough demand and there's over-capacity - and businesses, who have enough money to begin with, would not invest without seeing more demand.
So your scheme wont really work - businesses will be getting the funds, and they will have then 1.5 or 2 trillion in the bank, rising. (That is quite similar to what happened in Japan, when Japan was deflating.)
If your goal is to induce businesses to increase investments, then you first have to increase demand - or at minimum close the demand gap.
A fair argument can be made that if otherwise capacity, supply and demand is in equilibrium, investments will eventually lead to more demand and that this will create a positive feedback loop. But with a sizable demand gap that the US economy has right now, the lack of sales kills investments - and the positive feedback loop of increasing investments has little chance of starting. First a long and painful erosion of capacity and productivity will happen, with high unemployment - which will take years if not decades - then the economy might be in equilibrium again and the growth cycle can begin.
I started reading this fed drivel, but I got to this part, very close to the beginning,
"The business that is taxed is not a creature of flesh and blood, it is not a citizen. It has no voice in how it shall be governed --- nor should it."
Not any more. Then Ruml asks,
"How should business be taxed so that business will make its greatest contribution to the common good?"
This was enough for me to know whatever he says is no longer relevant.
Thank you, Catallaxative, for pointing out Beardsley Ruml’s speech.
Thank you, Hansel, for quoting two sentences.
Your “Not any more” comment is justified,
but why dismiss them as drivel?
The change between then and now makes the two sentences relevant.
Contrasting those two statements from the Chairman of the Federal Reserve Bank of New York with current reality shows vividly a change for the worse.
Politicians and pundits could use these statements as rallying cries: if America is to prosper we need to go back to expecting business to contribute to the common good.
Putin strengthened Russia by putting national interests ahead of the interests of the oligarchs, and China puts the strengthening of the nation ahead of the interests of its rich people.
Supreme Court decisions, laws, & regulations in America have legalized much of what other countries classify as illegal bribery. Those who give lots of money to politicians get a terrific return on their investment, but nation as a whole is suffering.
The CBO uses static analysis with no connection to the real world, in which higher taxes lower GDP and change behavior. Worthless, and should be abolished...that would lower the deficit, until Congress passed another subsidy.
Ending social security, medicare / medicaid, Fannie / Freddie and so on would improve the deficit picture that much faster than keeping stealing people's income via tax.