Marc Faber Is Shocked By How Many Ferraris And Bentleys He Sees In Newport Beach During His Smoke Break

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Thu, 05/26/2011 - 19:32 | 1314871 FOC 1183
FOC 1183's picture

Never underestimate smoke breaks as a source of anecdotal research.

Thu, 05/26/2011 - 20:23 | 1315007 ??
??'s picture

take a look at Tiffany's multi year chart

says it all

http://www.google.com/finance?q=tiffany++

 

Thu, 05/26/2011 - 20:37 | 1315043 redpill
redpill's picture

Another reason replacing income tax with consumption tax is long overdue.

www.fairtax.org

Thu, 05/26/2011 - 20:50 | 1315072 IdioTsincracY
IdioTsincracY's picture

Of course ... since a consumption tax would hit the poorest the most ...

great idea ... bullish for Ferrari and Bentley

go ahead .. take the darn pill.

Thu, 05/26/2011 - 21:33 | 1315177 Dr. Engali
Dr. Engali's picture

How pray tell would it hit the poorest the most? If everybody pays the same flat rate it means more people have a stake in the game. If I consume $20,000 worth of goods a year and you consume $200,000 a year my tax bill will be $2,000 and yours will be $20,000. But more importantly it's fair to all involved and when it comes to voting I'm less likely to vote somebody in who is going to spend above our means. To many people in this country have no skin in the game so they don't care what Washington does. It doesn't impact them directly .

Thu, 05/26/2011 - 21:40 | 1315209 sharkbait
sharkbait's picture

Because the poor spend everything they make to survive so a consumption based tax is on 100% of their income.  The wealthy don't have to spend everything they make to survive so the tax is less of a burden.

The working class guy making $40k pa spends it all.  Let's say the consumption tax is 10%.  His tax rate is 10%.  The rich person makes 1$1mm per year and spends $750k.  So the tax is $75k.  The effective tax rate is 7.5%.  Not fair at all.  Hits the poor the hardest.

I am not a fan of progressive tax rates but I  despise regressive tax rates even more.

Thu, 05/26/2011 - 21:59 | 1315248 Dr. Engali
Dr. Engali's picture

I think the thing that people forget when they make your argument is that corporations pass in their taxes to the consumer. So there is an imbeded tax that the poor is already paying. They just don't see it. With a consumption tax there is no pass through because there are no tax breaks or loopholes. We all pay the same. And just for the record I'm a single father of three and I make around $50,000 a year. I have plenty if money to put away and save. I send my kids to a private school. I live a comfortable life I just choose to live inside my means.

Fri, 05/27/2011 - 00:21 | 1315539 nathan1234
nathan1234's picture

It's evident you dont live in the US.

Fri, 05/27/2011 - 06:24 | 1315769 Dr. Engali
Dr. Engali's picture

I most certainly do.

Fri, 05/27/2011 - 10:15 | 1316408 Thisson
Thisson's picture

How the hell do you put 3 kids through private school and save money making only $50k per year?  Where I live, preschool is $17k/year.  

 

Fri, 05/27/2011 - 10:28 | 1316466 aerojet
aerojet's picture

Wow, preschool?  WTF?  Ours was less than $150 a month and it was a really good one!  Maybe you live in the wrong part of the country?

 

BTW, I already pay a consumption tax here, it's just about 10% and it's called "sales tax."  Fuckers are robbing us blind.

Fri, 05/27/2011 - 09:31 | 1316135 RKDS
RKDS's picture

Come now, there are cardboard boxes and church shelters in the US.

Honest to God, I don't know where in the US you can raise 3 kids on $50K.  And I say this from a relatively rural area.  Just about the cheapest house I could find takes half of a $40K (pre-tax) salary!  I spent close to 8 months trying to move out, hard to do when the bank will loan $120K and even townhouses are starting at the low low price of $160K.

Out here, auto insurance is mandatory if you own a vehicle and not owning a vehicle means you move to a city with buses and pay through the nose on rent and city taxes (as if the annual 5% hike on school taxes in the country isn't bad enough).  Speaking of cars, I can't imagine this guy is driving a new one with a $400 montly payment (borrow $25K for 5 years)...is he living on borrowed time until his 1994 Pontiac blows a piston or transaxle?

As someone who is slowly sinking on two jobs with no prospects to improve that situation, I could probably climb out of this hole on $50K, but I'd never dream of supporting a spouse or a kid on it!

Fri, 05/27/2011 - 10:19 | 1316437 Thisson
Thisson's picture

Here in NYC, the cheapest livable apartment (i.e. clean, not above an "adult video shop", etc.) I could find in midtown was $2000 per month.  It's a 3rd floor, rickety walk-up. 

I'm a working professional making well into the 6 figures, I live frugally, and it's still very difficult to save money.  In fact, I'm considering getting a 2nd job so I can get ahead financially (although my first is already 60+ hours per week).

Basically, there is so much easy credit (and bonus cash) sloshing around NYC that the prices on everything are through the roof. 

Fri, 05/27/2011 - 10:31 | 1316482 aerojet
aerojet's picture

Seems like a real bs place to live to me.  I make almost six figs in the midwest, we have a 2900 sq. ft. house, a decent back yard for the kids, a couple of cars, a garage, a safe full of guns (yeah, fuck you NYC!) and I can still walk to some stores and restaurants. 

Fri, 05/27/2011 - 11:20 | 1316749 MachoMan
MachoMan's picture

Arkansas?  Easily?  Just take a list of the cheapest states to live in the U.S....  and get to it.

Yes, you might have to: clip coupons; buy food in bulk and freeze; not get to take vacations outside the immediate area; keep cars for 150k miles; do errands in batches to save gas; cook at least one meal a day; live in a 3/2 w/ 1400 sq. ft.; and not have every possible cable channel you can get...  but, you'll get by just fine and probably be able to do a suprisingly large amount of discretionary spending.

No sleepwalkers allowed.

Fri, 05/27/2011 - 00:32 | 1315554 jerry_theking_lawler
jerry_theking_lawler's picture

Bingo, correct, absolutley. Businesses and corporations do not absorb the TAXES. I learned that quite a few years back as a young manager in a small business. The business will pay the tax due on it products but will pass it along to the consumer up to and until the margins on its products are compressed so much that the business is non-competitive and fails. Then the tax revenue goes to 0. 

Fri, 05/27/2011 - 07:30 | 1315806 mophead
mophead's picture

"I think the thing that people forget when they make your argument is that corporations pass in their taxes to the consumer. So there is an imbeded tax that the poor is already paying."

100% correct. Not only corporate taxes, but costly regulations, etc. Everything, everything is passed down.

Fri, 05/27/2011 - 10:28 | 1316467 SilverBaron
SilverBaron's picture

I disagree.

There is what is called a supply and demand curve.  There is an optimal price and if you go above it you do not increase revenue.  Don't you think that if they could raise prices they would already be doing it?  When you raise prices, you lose customers, and if you lose too many customers, you lose economies of scale.  The prices are already as high as they can be without losing money.

Thu, 05/26/2011 - 22:12 | 1315287 redpill
redpill's picture

The wealthy also spend everything they make, it's only a matter of when. In the end, a consumption tax will cost them much more in the long run than our endlessly-gamed income tax system.

Fri, 05/27/2011 - 00:15 | 1315536 TruthInSunshine
TruthInSunshine's picture

Faber needs to dig a little deeper, because many in Cali & New York really are keeping up appearances.

HOUSE OF THE DAY: The Most Expensive Estate In Orange County Is About To Be Sold At A Foreclosure Auction
Leah Goldman | May 26, 5:26 PM 

It was originally listed at $57 million.

A June 20, 2011 foreclosure auction has been set for the $37 million Villa de Lago in Newport Beach, Calif. The mansion is the priciest listing in Orange County.The estate has a lot to offer with panoramic views of the canyon greenbelt, mountains, and Pacific. It also has an arcade, private lake, 17-car garage, and a wine cave.

 

Luxury home salesman, John McMonigle's McMonigle Group, built the home as a spec, hoping to sell it for $57 million. Failing to sell, McMonigle dropped the price down in July 2010, to $37 million, but soon stopped paying the monthly loans.

Read »

 

Remember that scene from 'Cinderella Man,' where Braddock's agent (played by Paul Giamatti) and his wife are living in a posh apartment, but they have sold off all their furniture, jewelry, art, silver utensils, and Braddock's wife drops in to complain, not knowing Giamatti is really broke?

 

Thu, 05/26/2011 - 22:41 | 1315352 kujo
kujo's picture

Yes but 4 grand is still 4 grand, and 75 grand is still 75 grand.

Fri, 05/27/2011 - 02:16 | 1315666 Hobbleknee
Hobbleknee's picture

This whole debate is meaningless without defining what percent the consumption tax would be.

Fri, 05/27/2011 - 09:03 | 1316050 NidStyles
NidStyles's picture

You realize they have so little because they are paying the majority of their check away before they even see the money. A person that has control over how much taxation they incur through spending alone would have more inclination to save more, rather than buying that fifth HDTV for the bathroom.

Thu, 05/26/2011 - 21:42 | 1315216 IdioTsincracY
IdioTsincracY's picture

Consumption taxes are the most regressive of all taxes. They hit the poorest the hardest, because poor people and the vast majority of middle class "consume" most of their earnings, with little or no money to save or invest.

Easy ... isn't it?!

Thu, 05/26/2011 - 22:05 | 1315269 redpill
redpill's picture

You have lots of misconceptions. The Fairtax provides a prebate such that no one pays tax on the basic necessities of life. At the poverty line the effective tax rate would be zero and it gets more progressive from there. Additionally, only new goods and retail services would be subject to the tax, the less fortunate would be able to avoid taxation by purchasing second hand goods. Less waste that way too.

However even without the prebate I challenge your notion that it would be more regressive than the income tax. Currently the very wealthy are the ones that can afford to exploit the system. They only get taxed on carefully massaged income that represents a small fraction of their wealth. The vast majority of Americans can't afford fancy tax structures, and most don't even itemize their deductions. Conversely, a consumption tax levied by the retailer levels the playing field for the lower and middle class.

Additionally, without an incentive for the rich to hide capital from income taxes offshore, there would be a flood of capital back into the US, which would provide real stimulus. The very wealthy would finally pay their fair share as they would pay tax on all their expensive cars, restaurant bills, private jet rides, etc.

Meanwhile those on a tight budget can decide to not make a purchase and avoid taxation. It's an incentive to save, which we DESPERATELY need to do as an economy and society.

The FairTax would also be transparent, and not imbedded in the price of goods like payroll and corporate taxes are.

All in all, it is a vastly superior alternative to what we have now. I would urge anyone who thinks this is a "regressive tax scheme" to rethink their reasoning and study how Americans toil under the tax system today.

Thu, 05/26/2011 - 22:42 | 1315355 Rynak
Rynak's picture

There is one thing which a "consumption tax" would not address.... it is precisely the thing which you consider an advantage: That it does not tax accumulation of wealth.

To explain why i consider this a problem, let's zoom out a bit. Why is it that in the current global hierachy, an amazingly small minority can control the rest? Well, obviously, it is that they have a lot of power (and slaves who are conditioned to accept this state of things). Wealth is one indirect form of power, because it can be used to "buy" power. Now, let me rephrase those considerations: We have this big power-inbalance, because some have much more power accumulated (and now, via central banking they even have this power guaranteed - they CANNOT lose it anymore via legal means).

In another thread, i explained that for a free market to be sustainable, there must be upper and lower limits.... without lower limits, agents may be prevented from entering the market. Without upper limits, agents can accumulate so much power that they cannot be made to leave the market anymore.

A consumption tax on it's own does not fix this at all (though, i agree that the current system also obviously does not fix it, so in this regard, your proposal is not worse - just not better).

I do consider a consumption tax an interesting and useful tool - but i do not consider it "the one tool to fix it all".

Thu, 05/26/2011 - 23:18 | 1315445 redpill
redpill's picture

I disagree, because today the vast majority of society is in the shackles of debt. A system that rewards saving instead of penalizing it helps address some of that imbalance. Obviously there are many non-tax factors as well that can't be fixed just by making the tax code vastly more efficient and fair, but it's still a worthwhile endeavor.

Thu, 05/26/2011 - 23:30 | 1315464 Rynak
Rynak's picture

That it would be efficient NOW, does not automatically mean that it will be efficient permanently. To put it simple: If you have an inbalance in one direction, a bias into the opposite direction will steer the system towards balance.... until it swings into the other direction.

Fri, 05/27/2011 - 09:18 | 1316104 NidStyles
NidStyles's picture

What a spurious argument. The realities of life do not change just because the date does.

Fri, 05/27/2011 - 10:27 | 1316460 Thisson
Thisson's picture

It's not a spurious argument at all.  Obviously, too much debt can be problematic.  Too much saving can be problematic as well.  There needs to be a proper balance, and the mechanism for determining that balance should be price discovery of interest rates and time preferences.

Thu, 05/26/2011 - 23:33 | 1315466 nufio
nufio's picture

i think there should be an inheritance tax. that solves the accumulation of dynastic wealth problem. I think people should be allowed to accumulate as much wealth as they want in their lifetimes.. but if they pass it on to somone that gift should be taxed.

Fri, 05/27/2011 - 07:43 | 1315818 mophead
mophead's picture

I'm sure you'll change your mind if/when you become wealthy and have children.

Fri, 05/27/2011 - 09:17 | 1316112 NidStyles
NidStyles's picture

That's a ridiculous class warfare idea. What's wrong with people wanting to leave something behind for their children? What about general estate, the only thing that doea is whittle down what a family can hand down through the generations. That's like saying I shouldn't be able to build up wealth to help my children and their's as well, because it's "immoral" to look out for my family.

Fri, 05/27/2011 - 08:58 | 1316027 Dr. Engali
Dr. Engali's picture

I disagree for a free market... a true free market.. to be sustainablewe have to have no government distortions. Which means that the rich have to be allowed to fail too if they make a bad bet. No bail outs for anybody. As long as there are bail outs the wealthy can make all the bad bets they want and accumulate wealth risk free. But if they are allowed to fail they will be more prudent with risk. There is no way that GM ,Chrysler, Goldman slacks , Bank of America.....the list goes on, should be around. They should have been allowed to fail and there wealth would have been destroyed.

Fri, 05/27/2011 - 00:43 | 1315572 Things that go bump
Things that go bump's picture

Save?  Save?  My parents saved all their lives only to see everything they sacrificed for and denied themselves for get eaten up by inflation, so that my elderly mother, who did everything right and so expected to have some comfort in her old age, now has to watch her pennies and deny herself her little pleasures.  The same thing happened to her parents, as well.  I converted my savings into tangibles and any saving I do will certainly not be done in fiat, because now I know that game.   

Fri, 05/27/2011 - 03:10 | 1315689 longorshort
longorshort's picture

Assets have bubbles too, and now is a time of asset bubbles.  This will end badly.

Fri, 05/27/2011 - 07:25 | 1315795 Crisismode
Crisismode's picture

Depends on what assets you are talking about.

Firearms, ammo, garden seeds, hand tools, water, food, arable land, energy-effieient housing . . . . these are all things that are true assets in difficult times and investing your capital in them is never a losing proposition.

Fri, 05/27/2011 - 10:13 | 1316395 gmrpeabody
gmrpeabody's picture

I am sure that the rich and uber rich would love a flat rate consumption tax. Shark is quite right, the working stiffs will be paying on all their income, while the wealthy pay on a small portion of theirs. Yet the wealthy will have mounds left over to earn even more tax free money, and the separation between them and the rest will widen dramaticallyy until the Feudal system is complete once again. The rich and really rich will truly have a cast system for their future clones that will give them greater and greater advantages as time goes on. If you are in their circles, then surely you think this kind of tax is fair.

Fri, 05/27/2011 - 10:29 | 1316473 Thisson
Thisson's picture

How is that different than what we have now?

Thu, 05/26/2011 - 21:28 | 1315173 Shredd the FED
Shredd the FED's picture

You just explained to me how the "Demand Destruction" (plans of the Bilderberg Group) will occur. Americans will start buying and consuming less, and less, so the demand for goods will be smaller and smaller... And of course the manufacturing, shipping, commodity consumption will be decreasing… And of course less jobs, less income, less tax revenue, more money printing, and eventually what…???

Thu, 05/26/2011 - 22:28 | 1315333 redpill
redpill's picture

We need less consumption in the short run, our savings rate is negative or zero, depending on what measure you want to use. In the long run, however, consumption would increase because it would be driven by savings that had been accruing interest (as opposed to debt that costs interest, which is what spending is fueled by today).

Fri, 05/27/2011 - 09:20 | 1316131 NidStyles
NidStyles's picture

Demand will not go down. The thing's that are needed in life will still be in great demand. Thing's like TV's are not conductive to creating prosperity.

Thu, 05/26/2011 - 22:17 | 1315305 MrBoompi
MrBoompi's picture

Fair Tax is 10 times more of a give away to the wealthy than any of the tax cuts we'vre seen over the past decade.

Thu, 05/26/2011 - 22:27 | 1315324 redpill
redpill's picture

How so? They'll wind up paying taxes on a dramatically higher percentage of their wealth than they now. You should think outside the box of declared income, because it does not equal wealth, for the wealthy.

Fri, 05/27/2011 - 04:39 | 1315724 BlackholeDivestment
BlackholeDivestment's picture

http://www.youtube.com/watch?v=aN5wDK-Z38o&feature=related

People that fear freedom are lost and delusional, they have no clue what equality and balance mean, they can't even imagine it because, they have never known anything but the current claim of dominion now upon this generation and they are still willing at this point to defend the failure. They don't come to the Fight Club but to seek and disrupt. They will kill you when you attempt to stop them from suicide. Commerce Tax only, don't even try to explain it to them, if they protest at this point, they are lost, that is a fact. Time is up for morons, they are dead and they want you to perish with them. Just ask the idiots ''is the Truth is a choice'' and ''what is the meaning of life''. Give them warning of their time limit, 3 seconds for each answer. If they don't answer ''no'' and ''love'' in 3 seconds, you know for sure they are out of time at this point, as far a among those that would offer protest against the commerce tax which sustains labor. By the time they might become deprogrammed by the Fight Club, their suicide will be completed.

Nice effort though. http://www.youtube.com/watch?v=bshZN8AQGM0&feature=related

Fri, 05/27/2011 - 11:03 | 1316651 Hamsterfist
Hamsterfist's picture

Besides just saying that, I want to see the projections and charts.  Compare what a family making $50,000 a year typically pays in taxes to what they would pay under a 10% consumption tax.  Next, show me what someone making $1 Mil pays in taxes now to what they would be projected to pay under a consumption tax.  Lastly do the same for someone making $10 Mil a year.  Instead of just basing all your assumptions on opinion, put your fucking fingers to work and show us the proof.  

I will admit that I have a misinformed opinion on this, but my guess is the rich will be paying significantly less then they currently do.  That is not to say the working class will pay much more, I don't see that either.  Overall it just seems like a nice little scam to further enrich the top 1%.  Like you though, I am basing all this on opinion and have yet to prove anything.  Show me, convince me, stop just spouting bullshit.  

Fri, 05/27/2011 - 13:40 | 1317445 redpill
redpill's picture

There are several books on the subject, they go through much of this in far greater detail than we can here.  Most of them are written in a clear way too, not thick econo-speak.  If you search for FairTax on Amazon you'll see a number of them.  Some for, some against.  IMHO the ones written by Boortz and Linder are the clearest and most straight forward, so I would start with those.  They include estimates for the numbers you are asking for.

Really the point we are discussing here is what is often referred to as the "tax gap" - in other words, how much income is made but not taxed, when it probably should have been if the tax system were fair.  The avoidance can either be legal or illegal, but the central point is that for the vast majority of Americans the tax gap is zero (or negative, actually, since if anything many Americans could have more write-offs than they do).  Where the tax gap gets huge is for the very wealthy, because they have all sorts of ways from sheltering their income from taxation (not showing it, having it deferred, offshoring through corporate entities, etc).  I don't blame them for doing that, it makes good sense to protect your earnings from taxation.  But the reality is that we wind up with a very skewed system wherein the ultra-wealthy get many tools and advantages when it comes to the tax code, the poor don't pay a whole lot in taxes anyway but certainly don't gain any advantage from it as it is currently written, and everyone in the middle gets pinched because they don't have the resources to exploit the system, but they still make enough to bear the full brunt of taxation.

If there were no income tax, there would no longer be a need for the wealthy to keep their money bottled up in tax shelters.  There would be no reason to keep it in the Bahamas or in Switzerland.  That single aspect alone would be a huge benefit for our economy, no longer would there be so much economic limitation on capital, no longer would capital gains taxes evaporate profit on risky ventures.  Instead of government pouring printed-liquidity into the economy in hopes activity becomes self-sustaining, we would have individual actors making calculated investments without concern for the tax consequences.  The billions of dollars wasted every year on tax compliance issues would be free to be put to productive use instead.  In reaping the benefits from a more efficient and productive economy, paying a retail consumption tax is going to be the least of peoples' concerns.  But it's also much harder to avoid than the income tax, and cannot be as easily exploited by the ultra-wealthy.  Since all wealth is designed to ultimately be spent, essentially a lifetime's worth of income from the wealthy will be subject to tax, regardless of how it was made and regardless of how they may have sheltered it in the past.

For reference the main economist championing the FairTax is Laurence Kotlikoff, whose musings have been featured on ZH on several occasions.  Point being, there is rigorous and credible study behind the plan, and it's worth serious consideration.

Mon, 05/30/2011 - 19:28 | 1323418 BlackholeDivestment
BlackholeDivestment's picture

http://www.youtube.com/watch?v=uOqP3wj2x14

There are friends that spend $50K to go fly to get a hot dog, and other friends that are homeless. I take it your friends work for the government or listen to NPR? Get off the Treadwheel of Punching Yourself, meet some people Hamsterfist, and figure it out for yourself. If you stay on the wheel too long you end up too punch drunk to figure it out on your own? Isn't the cage beyond rusted for you by now? http://www.youtube.com/watch?v=YXRH50fvHWA

Fri, 05/27/2011 - 04:35 | 1315722 Banjo
Banjo's picture

You need a capital tax and flat 10% consumption tax.

Anything up to a 1million capital is free. After that it's graded

There is a certain % of capital tax that is levied. So if you inherited 400mil like Paris Hilton you get to give back 0.5, 1.0, 1.5% each year. You continue to build value or end up at 1million in tax free capital.

It would be different and the system would adjust, there is no law of the universe that says things have to be this why where the top 1% of the global population owns > 50% of the worlds wealth.

It's vested interest. However I beleive things will have to get much worse before they get better.

 

Fri, 05/27/2011 - 06:03 | 1315757 I Am Ben
I Am Ben's picture

how bout taxing the fed instead?

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