politics. Obama hit on a very popular theme with the DNC folks. He wants
a tax increase on wealthy people. There is little doubt but that he
will get what he is asking for. The section that I thought was
important:
"If we
want to reduce our deficit, our sacrifice has to be shared. And that
means even as we're making spending cuts, we also have to end the tax
cuts to the wealthiest 2 percent of Americans in this country.
(Applause.) It's not because we want to punish success. It's because if
we're going to ask Americans to sacrifice a little bit, we can't tell millionaires and billionaires that they don't have to do a thing.”
How could one argue with this kind of talk? Millionaires and
billionaires are not carrying their share of the burden so we should tax
the hell out of them.
The audience that I write to doesn’t like Obama very much. They also
don’t like big government; they hate the financial institutions and the
fat cats with big bonuses. So I’m interested to hear what might be said
on this topic. Is Obama striking a chord with you? I understand if he
does. But you need to look where this is headed. If you are young, with
children, and have debt from education or a home and aspire for some
degree of success in your life; beware. What Obama is proposing is
headed your way.
When Obama talks of taxing millionaires and billionaires he is missing
the mark. He is pushing for a higher tax on income. What he doesn’t get
is that millionaires and billionaires actually don’t have that much
income. Yes they have wealth, but it is very easy to avoid paying taxes
on wealth. The people who will pay higher taxes are young people, not
the rich old fogies that have bundles in the bank. I got this note
from a young professional who works very hard and is far from wealthy.
He does make a decent income and that income will get squeezed by the
higher taxes that are coming.
I love
it when Obama talks about taxing the "wealthy" when he talks of high
taxable income. Since he targets people with high wage income, he's targeting young people without much wealth that have a lot of debt (student, home, etc). The wealthy are mostly older folks, many of whom have lots of their money in muni bonds and assets throwing off capital gains. The wealthy are also foreigners who
can invest in the US without US tax on their capital gains, and reduced
US tax on dividends if a treaty applies, and generally, no US tax on
interest income.If you want to hike taxes on engineers, doctors, lawyers, accountants, airline pilots, and others with householders in high-earning brackets, fine. But it takes balls to call them millionaires and billionaires.
In the President’s speech he had this to say:
I don't want a $200,000 tax cut that's paid for by asking 33 seniors each to pay more than $6,000 in extra Medicare costs. I don't want that. I don't want my tax cut paid for by cutting kids out of Head Start or doing away with health insurance for millions of people on Medicaid, seniors in nursing homes and poor children and middle-class families who are raising a child with a disability like autism. That's not a tradeoff I'm willing to make.
These sure sound like popular views. The President has defined the
debate here. This is about billionaires on the one hand and seniors,
Medicaid and Medicare recipients even kids with autism on the other
hand. But actually the proposal to increase income taxes will hurt a
different audience than those billionaires. Those that are going to get
hit, the young lawyers, doctors, airline pilots and business people of
all stripes are going to respond with their feet. They will not vote for leadership that puts the tax burden squarely on them.
The end result will be that the political pendulum will
shift to the extreme right. The House, Senate and the White House will
belong to conservatives. When that happens there will be a great
unwinding of the social programs that Obama champions. And all those who
think the solution is to tax wealth will be very disappointed with the
outcome.
People are willing to work at McDonalds. Just look at how many were turned away. The point is, if they are unlucky enough to only have a low paying job, for whatever reason, they are already paying enough taxes in FICA without having to pay income taxes so you would feel the burden was shared more fairly.
It goes like this:
1. B.O. pushes pupulist "we'll stick it to the rich!" tax hike
2. GOP is boiling with "righteous indignation"
3. Billionaires become wealthier, upper middle class/professionals/high-paid hired labor pay more in takex
4. middle and low income folks continue to stagnate due to lower income and higher inflation
I bet that it's a very well thought out tactics, and that
a) it was put through by the Billionaires themselves :)
b) GOP is fully aware of it and counting on upper-middle class voting for GOP in 1.5 years
c) Dems believe that the populism will pay off in the end
d) both parties get contributions from the Billionaires.
e) both parties are in the pocket of Kochs, Soroses, Goldmans, JPMadoffs, and warren buffets, so there's nobody who'd stand against 0.01% that controls 40% of all wealth
I fear this has more to with the neuroscience of politics than it does with any other reality. During my short stint in neuroresearch I became aware of the fatal flaw of democracy, the human mind is highly suggestible. We are hard wired to incorporate the things we experience into our perceptions and decision making at a subconscious level. This is the basis of marketing and marketing has become the basis of politics. Obama's consultants know that his words will move his ratings and influence how he is seen and he doesn't have to follow through one bit.
A family friend got his degree in Political Science some years ago and started his first job as an aide in the election campaign of some guy in Ohio. He described to me sitting in on the meeting where the political consultants outlined the candidate's strategy. They were down three points at the time. The candidate would say 'X' and that evening the opponent would say 'Y'. Then the next day the candidate would respond with 'Z' and by the end of the week he would be up by seven points. The script played out exactly and at the end of the week they were up by seven. My friend decided then he didn't want a career in politics because elections are bought by the one with the best consultants. If a politician can keep from being caught in the pants of a young girl scout he only needs to get contributions and hit the talking points. He/she will get re-elected. I my view this explains almost everything we are seeing today. Why is the deficit so high, why aren't any banksters going to jail, why is the dollar dying. Barring unforeseeable events like the tsunami you can predict where the country and world will likely go based on our neuro-suggestibility and the self interests of those who are manipulating us. That's why they put trolls on Zerohedge. No matter how asinine he is when you read MathMan saying silver will go to 10 it sticks in your mind and it influences your perceptions for a long time. You will not know you are being influenced but it is there anyway.
Your point is proved by the reelection of Barney Frank, Nancy Pelosi and Harry Reid. Three of the main people who presided over our current economic destruction.
>the human mind is highly suggestible
Agreed; young people are especially vulnerable. They are brainwashed in socialist concentration camps. Their minds fall victim to propaganda and statist euphemisms.
But knowledge that rings true, like praxeology, can displace childish ideas.
(Mis)Using his gift of rhetoric to an extended audience of average American Ovis aries (baaaah),the image of a billionaire luxuriating by the pool vs. a senior eating cat food is easy to understand.
Obama's speech is much more about creating an issue that can be easily communicated to and understood by the sheep than about taxes.
The basic question is should we widen the tax gap between a) those who make 20% of the income and pay 38% of the federal income taxes and b) those who make 47% of the income and pay zero federal income taxes??
BHO believes successful people / high income earners have "taken from this country" (his words) and hence it is his job, to get what was taken back for additional redistribution.
Apparently Huey Long is not dead. Hipoppalorum and Lopoppahirum.
And if he ever tried to make a run for office he probably would be; if not through the propaganda machine, then by the same methods that did him in the first time around. Or he would be forced to compromise his ideals in the name of political expediency.
Would those 47% include those lucky ones who were able to score those great McDonald's jobs recently? How about figuring out a way to create jobs that provide a living wage? Talking points like that one, based on cold statistics, don't take into account the gradual destruction of the middle class in this country.
How about everyone focus on creating a job for themselves - however that might be - start your own business, make yourself highly sought after employee, etc.
No one else should be responsible for creating you a job much less one that pays you what you think is a "living wage." And the government should get out of the way of making creating a job so difficult.
You do like to use the word "lucky" in your responses. Seems you think things happen just by chance -- which relieves many from personal responsibility.
Middle class needs to take care of itself - ain't nobody going to do it for them
Problem is there are only two parties, and both are firmly entrenched in crony capitalism. Looks like globalization will bring our standard of living down to the rest of the world's.
those who love tax breaks should be broken first than taxed second then sent to prison third. Imagine how good and virtuous the top 1% was in the USA when the marginal top bracket IT rate was > 80%! Now its 0% as its off shore mostly.
Tax breaks = 'WE" are gonna let you keep more of what you EARNED, for now
Gee, nice of 'THEM'
That's why I AVOID all taxes I can and always will. Catch me if you can
Current geopolitical events in Pakistan would kind of put that idea to a rest, wouldn't they?
ever heard of paraguay, colombia, angola, russia, chile, uruguay, all the islands of caribbean and indian ocean? Lots of places left if you forget the hot spots of the world 'clash of civilization' game...
well guess what? All my rich friends love living in countries with fascist regimes Why? 'Cos they benefit from the high protection that a police state provides and the low cost of good RE! Its a win win for an Oligarch! Much better than living in Sweden where they would pay high taxes to their fellow citizens! Now, what is this BS about people who say we love freedom/ free enterprise at home and who enjoy living in police states where the common man is an economic slave? And an Oligarch a welcome visitor!
Actually, I work for a Swedish company and they cut 50% of the Americans, took away a week of vacation, cut pay 5% or more if you were left, eliminated most the senior or top paid white collars, rehired new at half price, stopped all matching 401K contributions, made us buy our own electronic equipment for work and drove EBITA up from 30% to 40% in the middle of the great recession. I might have a different opinion of the Swedish than you. They practice the fascist flavor of statism very well. They will also get their tax money out of your ass just like anyone else anywhere else. They do not believe Americans are worthy of those long vacations and worker protections that exist in Sweden. I would guess they don't believe in them in Sweden, either but are forced to do it.
As usual, Krasting starts with something interesting and ends with mathematically challenged wishful thinking:
"Those that are going to get hit, the young lawyers, doctors, airline pilots and business people of all stripes are going to respond with their feet.They will not vote for leadership that puts the tax burden squarely on them.
The end result will be that the political pendulum will shift to the extreme right. The House, Senate and the White House will belong to conservatives. When that happens there will be a great unwinding of the social programs that Obama champions. And all those who think the solution is to tax wealth will be very disappointed with the outcome."
Uh, Bruce, these people are (a) not that numeroous; and (b) are probably already voting against Obama. I guess you are assuming they get to vote multiple times. Maybe need to go back to the drawing board with your predictive/math skills.
Oh, and you forgot the "Rah! Rah!" at the end.
You paint me with the wrong brush. See my comment to Spooz below. I want to tax wealth, not income.
Do you realize how close our elections are? The state of Ohio swings the oval office. There are not so many votes as you think that will swing the pendulum.
Wealth (capital) has a habit of going where it's welcome and staying where it's well treated too you know...
Not if it isn't forcibly and repeatedly repatriated. Globalization has a kind of a two-edged sword that way, for it removes any place to hide.
Still buy into the Republican = Bad, Democrat = Good theme, do ya?
Divide and conquer.
Divide and conquer.
So, Bruce, if you wanted to get us riled up, this was the bone to throw...
;)
_________
The math makes sense when one seriously considers "supply-side" economics. I know, I know...c'mon, tear me a new one.
As far as I am aware, this has never been seriously tried for any amount of time. Think about reducing taxes on businesses such that they can create more business and hire more workers who, in turn, become tax-payers. This makes sense.
In the one instance that this idea was purportedly tried, government regulators allowed private entities (read: billionaires...) to run amok over the tax code and the regulatory system, thereby allowing (Bush, Sr.) to enrich all of his buddies and sons at the hands of the American taxpayer (S&L...). We are seeing this again today, only ten-fold. The first time was a simple audition.
But...
What if it were to actually be tried whereby individual income was taxed and people who made real money had to pay their fair share? They could get a tax break if they pumped the money back into the business and gasp! hired people! If they took it home, it would be taxed.
How long are we going to allow Jeff Immelt and Larry Google to walk away with hundreds of millions of dollars and not pay a frickin' dime in taxes while they are laying off people making $30,000/yr.?
Want to seriously get the economy rolling? Get Stockman on the phone and he can describe how it was supposed to work.
:)
So only certain asset classes should get the wealth tax, like property taxes on real estate? How about a once-off tax on high net worth individuals like Trump proposed in 1999? (14.25% on individuals and trusts in excess of $10 million). That could go a long way towards taking care of the deficit problem.
"And all those who think the solution is to tax wealth will be very disappointed with the outcome."
Yes, this would work.The tax must be on wealth, not income. That is two very different things.
I have advocated a tax on wealth. I think there should be a means test on SS. If you have wealth over X(?) you don't get benefits.
This would solve the problem at SS. I think a similar approach to Medicare is the same answer.
But I maintain that taxing my harworking, 30 year old friend, is not the solution. He's the wrong target.
bk
Means testing turns SS into welfare. It also proves one of my favorite points of why you don't want the State running anything it doesn't have to. The State can and always does change the deal. If you bought a private annuity you have a contract that cannot be changed without your permission. Doing so is prosecuteable, but not with government. In fact, it is the norm with government.
Social security was a retirement contract, similar to an annuity. It didn't matter how much you made. You purchased the plan with a certain percentage of your income up to a cap. The cap was there because the benefits maxed out under the plan so you didn't pay any more. It wasn't a break for the rich.
Now, the dumbass democrats and extra dumbass Republicans will turn it into welfare by removing caps, changing the age for benefits and means testing. Don't fall for this stupidity unless you are willing to be honest about it and call it elderly welfare and admit that we will all become welfare recipients. Also, how will you call it a retirement plan when it will kick in many years after you have to retire? I cannot find anyone who will let you work till 65, much less 70 anymore unless you want to be a Walmart greeter.
Congratulations America on another outstanding achievement! Putting all citizens into the welfare system! I think I will go unfurl the flag out front and sing the national anthem. Makes me proud to be part of the collectivist dream!!!
IMO, social security should be thought of as insurance against old age poverty. Wealthy people should be happy if they never have to collect. I consider taxes to be part of the social contract we have with our government. If globalism and corporatism hadn't destroyed the employment situation in our country, we would not be forced to find ways to support the social contract. I am not saying there is not a lot of waste in our government, but most of it subsidizes powerful special interests.
Bruce,
A one-time graduated excise tax on retirement accounts starting with an X% rate on accounts over $Y. I'll leave the accountants to the numbers.
And mandatory government service for all entitlement receivers under retirement age.
And mandatory military service for all entitlement receivers under retirement age. There fixed it for you.
Better if they were employed fixing bridges here, rather than blowing them up, then rebuilding them elsewhere.
>That could go a long way towards taking care of the deficit problem.
Instead of stealing innocent people's wealth, I recommend that Treasury bonds be declared null and void.
Government bonds are basically a contract putting third parties and the unborn into slavery. They're slavery futures. There is no legitimate means for the government to repay these bonds. These contracts are illegitimate, immoral, and illegal.
"Instead of stealing innocent people's wealth" Okay, now we know who the troll is. Define "innocent" fucknut. The wealthy wall street insiders and the financial fucks who caused the collapse and continue to profit from taxpayer rape are "rich", are they not? Who will define the innocent? Oh pick me, please.
Actually, you jump too fast. Not all the wealthy are crony capitatist fascists. In fact, most are not. Using taxes is not the answer to the problem. The answer to your implied beef is to eliminate special favors, bailouts and subsidies to the politically connected...or anyone for that matter. The wealthy farmer who's had several record years and still gets money from the public is as guilty as the banksters who got money from the public to bail out their stupid decisions. Both get or stay rich at the expense of the taxpayer but they are not the entire class of the wealthy.
What all the posts I've seen so far miss is the screaming obvious fact that WE ALREADY HAVE ENOUGH TAXES, especially outside of the recession. The problem is spending which must absolutely be cut. Spending has outpaced the growth (sometimes rapid growth) of tax receipts for the last 50 years. There is already enough revenue! Stop the expansion of government and trim the tree.
Troll? Really? Ad Hominem much?
While I agree the money changers seem to have a stranglehold on the planet, you talk as if they are the only rich. How exactly do you drop a tax dragnet to catch the FEW fucktard banksters, and not catch the regular folk, many of whom are merely guilty of attempting to keep their wealth? Shall we have an "I'm not a Bankstah" Loophole?
There is no getting around the fact that we were stupid enough to allow CONgress to give in to the extortion and bail-out these asshats. Topping things off, the government solution to TBTF was merging TBTFs! Had we said "NO", these fuckers would BANK-FUCKING-RUPT, or hat in hand to some other dupe nation. We deserve exactly what we get here.
Also, no mention from you of the cornholing of GM bondholders by government itself. Nothing about subsidies to big oil, Big Ag, 2xMIC's (medical/military), PIC (prison), and now the Green Industrial Complex. Yes, paid for with debt issued by the banksters. Is our habit really the fault of the drug dealer?
Here's the rub. NONE of this bullshit takes place if we did not consent to the continual expropriation, and did not beg government to save us, time after time. PERIOD.
Barren Wuffet agrees - taxes are only for the little people.
One minor point to make regarding "...engineers, doctors, lawyers, accountants, airline pilots, and others with householders in high-earning brackets...".
Engineers typically make less than $100,000 / year - unless they're in management, where they typically still make less than $150,000 / year.
Accountants are generally paid less than engineers.
The top 25% have to pay the price if higher income taxes are to be the solution. Do you have a problem with that? The top 25% has a household income of $69,500. Where do you fit in on that? Where do expect to be in 5 years? That is not so much money for a family these days.
A question for you/(anyone). The top bracket is 34% today. How high would you raise it on the top 2% of income. How high would you raise it for the top 5% of earners?
If you give me some answers to this I will do the math and show you the results. I don't think you will like them.
bk
you don't just tax the super rich you tax as well their corporates who pay no taxes as they transfer price out of tax havens. The whole system is value destroying and should be brought down. By good governance. But I have a feeling that the nation state is already in its death bed and world governance run by the oligarchs is now inevitable.
In the 1960s the highest marginal tax bracket started at $1mm and was 90%. Adjust for inflation and make that, oh, $10mm now. Do the math for me. work the tax brackets up to that point in $1mm increments while you're at it. Raise the minimum income for paying any tax to about $50k.... that's the inflation adjusted 1960s level. Don't forget that we'll put in tax credits for investing in low income housing, job creation and other stuff, just like in the 1960s. I'd like to see the spreadsheet when you're done.
Nobody paid that 90% by the time we got done with loopholes. Don't forget, we were still benefitting from the destruction of the competition in WWII, while our industrial capacity remained intact.
We've had 90% tax brackets several times and no one pays them. However, it does make a point about the power of the state to take everything. It also makes the point of what a stupid idea it is. Do a flat 10% gross income with no deductions or a national sales tax on all goods and services, no exceptions, loopholes or breaks. You earn more, you pay more but you keep the same percentage.
Actually, it's not a minor point, it's a big hole in Bruce's argument. With the exception of lawyers and fancy specialty doctors, Few to no people actually practicing a profession make that kind of money. And few that do are highly unlikely to be young. They are partners or vice-presidents, or airline pilots in their 50s.
Whatever arguments there are against raising taxes on high incomes, a claim that it will affect non-banksters just starting out, is simply bogus.
>Whatever arguments there are against raising taxes on high incomes, a claim that it will affect non-banksters just starting out, is simply bogus.
Are you employeed by a poor person?
What happens when your boss's income takes a substantial hit, and he decides it's better to just liquidate the business?
Report any violation to the IRS, and watch them burn.
I am that man and you know what I do? I increase the outsourcing. According to the world NWO Oligarchy mantra IMPOSED on me I am obliged to increase the use of cheaper subs, (for export markets as first priority) outside the DCs. That's the rule if you want to stay in the rat race.
Conclusion : The nation state is DEAD! Long live the global Oligarchy! Love it or leave it. No other choice in the corporate/Small Business Kitchen!
when I was an engineer I used to get a bonus for taking out the shit from the distillation towers...during a turn around. Pity nobody will pay me to take the shit out of the bankstas during a WS turnaround, with my pressure hose. Watch those spiders fly when I'd play spider man. I'd have loved that.
If Obama wanted to tax millionaires and billionaires, why did he extend the Bush tax cuts? That the millionaires and billionaires already made they're money, I agree; this is taxing the future to pay for sins in the past. Also, there is no reason to believe Campaigner Obama isn't just lying.
OM
Exactly. He was against them, before he was for them, before he was against them.
This @$$hats flops around more than a fish on the end of a hook