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Tax Facts

Bruce Krasting's picture





 

 

I took a look at the history of taxes in the USA. A few interesting (to me) factoids. The data comes from the Tax Policy Center (Link); the graphs are mine.

 

I’ve never been convinced that comparisons of the Depression, to today’s economic conditions, are valid. It was a different economy back then, with a much smaller government. Consider the following that plots taxation as a percent of GDP during the 1930s and 2008-12.

 

 

It took a world war to end the Depression, and that period was marked with very low taxes. People argue that taxes are too low today, maybe, but they are already 6Xs what they were the last time the SHTF.

 

 

I think the “modern economy” started around 1950. By then, the distortions from the Depression and WWII were unwinding. In addition, Social Security taxation became a meaningful percent of total individual taxation. The following charts look at the components of taxation from 1950 – 2012; the information is presented by President, the tax rates are the average for the respective tenure:

 

 

 

 

Some observations looking at this:

 

- I’ve read the arguments that tax rates in the 50’s were very high and the economy did just fine. Not true at all.

 

- The Clinton years are also pointed to as a period where income tax rates were high, and the economy did very well. This is appears to be correct. Marginal tax rates were higher; this contributed to the increase in total tax revenues. In addition, the capital gains that were generated in the late stages of the DotCom boom supported revenues. The bump in income taxes in 2000 was attributable to a hot stock market.

 

 

 

- The Obama years are marked with low tax receipts as a percent of GDP. The reasons for the drop include: (1) The recession and the drop in payrolls. (2) Losses from investments (houses and stocks) (3) The 2% reduction in Payroll taxes.

 

Corporate tax rates are at historically low levels today. The persistent argument from corporate America is that tax rates are a too high, and must be lowered if America is to compete in the global economy. There is some truth to this argument. The statutory corporate rate is 35%, but very few companies pay this rate.

 

 

 

Federal excise taxes, as a percent of the economy, are at historical low levels today. This is, primarily, the gas tax.

 

 

I don’t “like” any taxes, but some tax revenue is necessary. I particularly hate all income taxes. I favor taxes on consumption, not wages. If the excise taxes the government collects were doubled to equal 1% of GDP, it would generate $1T+ over the next ten-years. Much more than either of the Bush tax cuts that are now up for discussion.

After looking at these charts I conclude:

 

- Social Security taxes impose a very heavy burden on the economy.

- Income tax revenues are low today because of the economy, not the marginal tax rates. Consider the fall off during the past four years versus the Bush era. Marginal tax rates were the same, but tax revenue, as a percent of the economy, fell. It's the economy, not the tax rates that are the problem. D.C. is focused on the wrong issue.

- It's well past time that a redo of corporate taxation is made. The system is busted. The end result should be a much lower marginal tax rate to insure competitiveness, but also a minimum tax rate that also insures some fairness, and higher net tax receipts.

- Excise taxes have to go up. Sorry.

 

 

 

 


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Wed, 11/21/2012 - 06:13 | Link to Comment NoClueSneaker
NoClueSneaker's picture

.... have a question : I red it here. Is it true or not a true:

Benny & The Inkjets are taxing Amerikkans with 6c on every fuckin' dollar ever made - in paper or in skynet.

Me dumb, have to ask. ( Like S. Keen's "acceleration of debt" component  - somehow obvious. Krugmans ignore the bankstas, howcome ? )

Wed, 11/21/2012 - 04:43 | Link to Comment Coldfire
Coldfire's picture

The US tax (ie., theft) system is - thankfully - beyond saving. But by all means be pragmatic and discuss the ins and outs of tax policy deckchair rearrangement. Jeez, Bruce, talk about normalcy bias. This shit - and by "this shit" I mean US fedgov finances - is fucked. Dr. Lawrence Kotlikoff credibly estimated the NPV of the US's unfunded liabilities at $222 trilllion. How is a greying America going to dig themselves out of that hole? Impossible. From here on in, either by popular vote or more likely default, it's going to tend towards dog food, bandaids and government cheese for taxeaters. And not just in Fourth World cesspools like Cleveland, Detroit and Newark but Anytown, USA. To those not wanting to go down with the ship I would recommend a nice bolthole like Switzerland or another productive, peaceful place (there are one or two left). Fedgov in its current unconstitutional and profligate form is unsustainable and will not last. Hopefully. Fingers crossed.

Wed, 11/21/2012 - 00:02 | Link to Comment kayl
kayl's picture

My favorite saying a few years ago: There is no money, there is no debt. There is only debt notes, and the discharge of debt.

Now my new favorite saying: Love your enslavement and go with the fiat monetary system.

Steps to discharge tax debt in a fiat currency system:

1. Tell the IRS that you will gladly discharge any debt legally owed.

2. Accept and return for value any and all instruments from the IRS, properly endorsed, to the US Treasury. These happily become negotiable instruments. Accept and return for value, properly endorsed, every single sheet of paper sent to you in the IRS envelope. You must accept and return.

3. The US Treasury sells off the debt and discharges your account at the US Treasury level.

4. Remember the hand has no idea on what the head is doing. The IRS will keep hounding you, but the Memphis TN branch of the IRS will send you an account statement, a product with real IRS data, reflecting all debt sold off by US Treasury if you write and ask for it.

5. Send your account statement with the discharge to Zero balance to the IRS that is hounding you. Inform them that a discrepancy has occurred, and you are ready to inform the General Inspector of the IRS of mismanagement and inefficient handling of your account.

6. Make the hand "recognize the landmarks of your inheritance" defined by the head, the Secretary of the US Treasury.

 

My letters are polite almost like 19th century prose. I throw in a few subtle wordings from masonic writings and philosophy to gain IRS cooperation.

All criminal charges are dropped for not filing, not sending information on time, etc. They still want fines and interest, which is OK because it can be discharged on paper.

Stay out of controversy. Stay out of court. Acquire evidence that all taxes are discharged in full!

 

Wed, 11/21/2012 - 00:12 | Link to Comment FleaMarketPete
FleaMarketPete's picture

What?  If you cannot afford your debts, then default and let the "hand" correct your exuberance.  I will not discharge any debt I legally own, because I do not invest.  I LEND DEBT MONKEY.

Wed, 11/21/2012 - 01:43 | Link to Comment putaipan
putaipan's picture

odious monkey debt spew ?

Wed, 11/21/2012 - 00:05 | Link to Comment FleaMarketPete
FleaMarketPete's picture

 

#1  "I favor taxes on consumption, not wages."

BK is a realist AND a genius.  Why aren't more economists touting this?  This is the most progressive tax system I can think of.  Liberals should LOVE it.

 

#2  Liberals that tout that Clinton tax rates caused the ONCE IN A LIFE TIME technology revolution should be killed or expelled from the country immediately.  If you think higher tax rates led to the internet, please kill yourself now.

 

#3  You maximize taxes in times of growth and minimize spending in times of need.  Of course the large numbers of minorities and special interest groups that were in line with me on November 4th were not concerned with economics.  They love themselves; not the country.  They will kill the host, patriotic millionaires being first and I will join them, and move on.  Fuck taxes, I want a pound of Buffett.

 

Wed, 11/21/2012 - 01:49 | Link to Comment putaipan
putaipan's picture

as i remember (and i don't) didn't miliken et all and all get beyond incredible tax breaks/deferments to build the "information super-highway" (which they didn't) which is when and and why our infrastucture started to lag behind the rest of the world?

Wed, 11/21/2012 - 07:48 | Link to Comment Bruce Krasting
Bruce Krasting's picture

No. Milken was way before the information highway. Milken built Vegas.

Tue, 11/20/2012 - 22:31 | Link to Comment Mediocritas
Mediocritas's picture

Ellen Brown posted an interesting article recently in which she points out that 35-40% of GDP ends up being directed to the service of interest on debt. In effect, we're already paying a 40% consumption tax to the private sector. Even if you have no debt yourself, you are paying this tax added to the prices of goods and services.

http://webofdebt.wordpress.com/2012/11/08/its-the-interest-stupid-why-ba...

Add myriad government taxes on top of the 40% bank tax, on top of another private sector tax (inflation) and it's pretty hard to actually save anything.

An obvious solution is to nationalize banks and replace tax income with interest income. In effect, that's a consumption tax replacing income tax with an effective decrease in net taxation perceived by individuals. It used to be this way around the OECD but the financial sector managed to hoodwink sovereigns into selling off their Golden Geese. (For example, here in Australia, the Commonwealth Bank used to be government owned, with over 90% of citizens holding accounts. In 1991 it was privatized and, surprise surprise, a goods and services tax (GST) was proposed in the same year (although not implemented for another 9 years). Since then, Australia has converged on the US financial model, the destruction hidden only by the mining boom...for now). 

Personally, I support an income tax provided that it's actually enforced (ie, I reject it in it's current form). When the highest income earners (and corporations) are able to pay less tax (net) than middle-income earners, through numerous legal loopholes, then the result is the opposite of what an income tax originally sets out to achieve (power reallocation).

What we have now is the worst possible situation. The highest income earners dodge taxation while lower income earners cannot. Lack of enforcement therefore increases concentration of power, achieving the exact opposite of what it is supposed to achieve. Without enforcement, we'd probably be better off with no income tax at all.

Because money can buy politicians, judges, mates, land, resources and favors, concentration of money means concentration of power. As the financial sector gets richer, it acquires the government and wields government policy as a weapon to suppress all potential challengers and ensure continued profitability. Just like any concentration of power, Wall St dominance erodes civilized society.

All concentration of power should be challenged. Be it government or private.

Tue, 11/20/2012 - 22:54 | Link to Comment Orly
Orly's picture

It is nice to see you again.  :)  Always thoughtful...

The idea of "tax-bracket disparity" you alluded to and the idea I mentioned above that there is a growing insulation between the people who have power and money and those who don't is a growing global phenomenon.  It is the old haves and have-nots argument, only it is getting quite out-of-hand.

I don't know what it will take to get the people in power to realise that they are indeed killing the Golden Geese with this train of thought but it is obvious that they will only end up feeding upon themselves while they rain destruction down on everyone else.  Their schemes are already fraying at the edges.

There is not even a semblance of fairness any more when the president of the United States pays less a percentage of his taxes than his secretary.  And they don't seem to think that's a problem!  Well, it is a problem and is, in fact, the problem: insular power and the stratified carriage of law will only encourage a further divide, which will eventually implode of its own corruption.

But in the meantime, it is going to be ugly and difficult.  The fix is going to be very painful indeed.

Nationalise the banks!  Pay ourselves the interest!  This is what they should have done in the first place.  It may turn out to be their last resort.

:D

_____

Addo: For instance what is happening now in Brussels.  Greece will not survive this impasse unless a lot of people are willing to take a nice haircut on the government debt.  No one is willing to do it.  They would rather the entire Eurozone experiment go down in flames than lose any money at all.  They don't care how many people they are going to hurt in this instance or the fact that it may just bring down the entire global banking system!

They've been at discussions for twelve hours already!

They made the bets.  They lost.  Force them to take the loss!  How simple can it be?

Wed, 11/21/2012 - 21:00 | Link to Comment Mediocritas
Mediocritas's picture

Our brains are hard-wired to detect injustice and deceit. We're also hard-wired to remember negative events much more powerfully than positive events, the evolutionary logic being that failure to remember (and hence failure to avoid) threats ensures death, whereas failure to remember good things has little selective impact. 

So when injustice starts to take hold in society and people perceive it, they dwell on it, magnify it, begin to mirror it, and civilized society falls apart. You're right, the simplest and easiest summary of what ails the USA (and most of the world), is rising injustice. We don't need new laws, we simply need to enforce what already exists, that would be a major step forward. Wall St would become a prison block.

Nationalization is always a thorny issue, but I believe that when a business requires bad events to happen in order to be profitable, then that business should never be privatized. Conversely, if profitability leads to neutral or good outcomes (such as microprocessor development), then the business should never be publicly run. Fire, military, police must be publicly controlled. Manufacturing, mining, farming, etc, private. Healthcare delivery should be public or you end up with "sick-care", but healthcare technology should be private. Education is a gray area and can be both. Banking is also something of a gray area, but at this moment is excessively privatized. I'm inclined to lean towards privatized investment banking and public commercial banking.

 

---

 

The Europeans need to take a strategic lesson from Rommel. He was a master of the fighting retreat and counter-attack. He knew that few battles are concluded in the first assault and that if you could force an enemy to over-extend then the enemy could be hammered in the counter-attack. This is something that all good traders understand (having experienced the tactic from both sides at some time), although few have the deep pockets and robot army required to be generals.

We all know that Greece needs to go, it never should have been included in the first place. Unfortunately, retreat isn't a tactic the eurocrats seem to understand, so they'll stand and fight, grinding their forces into oblivion until the euro project is lost. Good riddance. A shame though that they'll risk war in the process in pursuit of their dogma, but hey, that's the "true believers" for you.

Wed, 11/21/2012 - 01:56 | Link to Comment putaipan
putaipan's picture

how simple ? "They would rather the entire experiment go down in flames than lose any money at all." economicic eschatology inna nutshell- whose jubalee is gonna be anyway ?

Tue, 11/20/2012 - 21:44 | Link to Comment miker
miker's picture

Does anyone seriously believe that any kind of tax reform will ever happen?  Look at the special interests that make up the tax code.  All this talk on the fiscal cliff about putting off 6 months while Congress revamps the tax code.......what a total load of shit.  There is no way in hell they'll get that done. 

It's probably a bigger problem than the spending side of the house.  Nothing will happen until the crisis hits.

Tue, 11/20/2012 - 22:10 | Link to Comment Zero Govt
Zero Govt's picture

Yes we can all sit here like turkeys waiting for Govt to hit the brick wall or we can bring the brick wall forward because the sooner Govt reaches its 100% guaranteed fate, the sewer, the better (less damage done and faster we recover). Bring on the (fiscal) brick wall..

Stop Paying Tax ...slaughter the suckers

Tue, 11/20/2012 - 21:37 | Link to Comment New_Meat
New_Meat's picture

Bruce:

"It took a world war to end the Depression,..."

Au contraie, mon ami, It took the '46 congress, the subsequent recession/aka readjustment to actual ecomomic realities.

Killing the central planned economy, well, that actually  unscrambled the situation.  And, yes, rather terrible disruption ensued.  What would you expect?

What do you expect in this current situation?

- Ned

Wed, 11/21/2012 - 07:23 | Link to Comment ConfederateH
ConfederateH's picture

I would say that it took the death of Roosevelt to convince those "evil capitalists" that the Progressives and Democrats weren't going to steal any wealth they created.  Something similar would probably happen today if Obama died between the buttocks of his gay lover.

Tue, 11/20/2012 - 21:36 | Link to Comment Divine Wind
Divine Wind's picture

 

 

I lived in Taiwan for several years. They had/have a brilliant system for collecting consumption taxes.

 

Every merchant register is tied to a GOV computer.

Sales receipts have a lottery number printed across the top of the receipt at the time of purchase.

Once per month lottery numbers are drawn and published in the papers.

Consumers demand a receipt for a purchase, which are then saved for the day the lottery numbers are published.

This pressures the merchants to properly pay taxes in order to participate in the system.

Yes, there are workarounds and scams, but the system generates piles of cash for the government.

Wed, 11/21/2012 - 08:05 | Link to Comment Implicit simplicit
Implicit simplicit's picture

There must be a lot of of cash exchanges with merchants offerring discounts for non-receipt transactions. Considering most people realize the odds of winning a goverment sponsored lottery through merchant taxes have a much lower probability of beating the money saved on cash transaction discounts. Why not win every transaction by paying cash or barter?

Tue, 11/20/2012 - 22:05 | Link to Comment Zero Govt
Zero Govt's picture

why are unproductive parasites in Govt "collecting piles of cash" from productive peoples pockets a good idea?

Tue, 11/20/2012 - 21:25 | Link to Comment Zero Govt
Zero Govt's picture

I don’t “like” any taxes, but some tax revenue is necessary.

For what Brucie? ...found something Govt does better than a free market or free society??

I particularly hate all income taxes. I favor taxes on consumption, not wages.

We have consumption taxes in Europe, all the way to 400% on cigarettes, wanna know how much that's helping anything?

Ans. Fuck All

Wake up Brucie, this (life) is not a rehearsel ...Tax is Theft, you like criminal behaviour?

Tue, 11/20/2012 - 21:48 | Link to Comment Divine Wind
Divine Wind's picture

 

 

There is simply no way for a nation to survive without some form of revenue going into the gov coffer.

I am thinking along the lines of water, sewage treatment, garbage collection, NATIONAL DEFENSE, etc...

I agree, taxation in the current form is a big problem, but I just can not see how a tax-free system would work.

 

Tue, 11/20/2012 - 22:13 | Link to Comment Zero Govt
Zero Govt's picture

why do you think water and sewage would not be massively better managed by a free market?

If you understand the huge differences between how a commercial brain works and how a monopolists (Govt or a public-private scam) peanut works you'd never again argue in your life you'd want a peanut running something ...anything.

Similarly defence. What do you need defence for? ...oh, Govt.

Take away Govt and war is as rare as hens teeth.

Then ask yourself how peasant farmers (Vietkong in Vietnam and Taliban in Afghanistan) manages to defeat the greatest miliatry (the US) everytime. All the evidence points toward not needing a defence, the private sector will organise one if and when needed rather than pissing $1 Trillion of societies money away every year on nothing/0.00 security risks

so even defence is massively better and more cost effectively managed by a free society

Govt is beyond a sick stinking miserable joke at everything it does.

Let's leave it to freedom 

Tue, 11/20/2012 - 21:21 | Link to Comment Marge N Call
Marge N Call's picture

OK, I admit I didn't quite understand why some folks called BK a total idiot. I read his stuff and some of it made sense.

Now I undertand why people call him an idiot: because he is truly an idiot.

Are you serious??? Have you ever read a history book Bruce? Especially regarding the offcial "tax rate"; so many loopholes you could pay nothing while earning an income in the "%90" tax bracket?

You are now officially on full auto ignore.

Wed, 11/21/2012 - 08:07 | Link to Comment Implicit simplicit
Implicit simplicit's picture

You did not find the charts insightful, and the due diligence admirable, Regardless of BK's resolution opinions?

Tue, 11/20/2012 - 20:38 | Link to Comment piceridu
piceridu's picture

 

I really like BK and look forward to his posts. But I take issue with a few of his statements. First, his statement: "It took a world war to end the Depression..." this is not true but a Keynesian meme propagated by the likes of the Krugman kool-aid drinkers brigade.

Secondly, BK says we need more taxes...for what?

So they can create another Federal, State, Local bureaucratic, groping quagmire of jackbooted thugs to, “protect and serve” us? ...to continue to brutalize, wage war and dominate every country of the world? ...to maintain the status quo of indoctrination, herding and limiting liberty and freedom? ...to keep this Ponzi scheme going for a few more years or decades? 

We simply need to withdraw our consent and the paper tiger that holds us all in bondage will crumble and arrive at its inevitable demise sooner rather than later.

 

Tue, 11/20/2012 - 23:15 | Link to Comment Bruce Krasting
Bruce Krasting's picture

I do think WWII pulled the US out of the Depression. The economy started to grow with Lend Lease. That was an early form of QE. The US accepted questionable IOUs from Britain and used the "Reserves" to print money in the US. I don't think this is Keynesian mumbo jumbo. I think it is history. It's okay if you disagree.

 

I do take issue with your saying I called for "more taxes" in this piece. I did not use the word "more" at all.

I say to you that there has to be some level of taxes. We can talk about home much, and what it is used for and who should pay. But the answer is that "Zero" is the wrong number.

You disagree with that?

b

Tue, 11/20/2012 - 23:44 | Link to Comment nmewn
nmewn's picture

What's the matter with a flat consumption tax?

And no income tax.

It captures all income (black market/off the books) at point of sale. It also builds a real capital base instead of out of thin air printing.

This presumes of course you believe one who labors for their wage has an inherent right to spend it or keep it as they see fit, unconstrained by the bleatings to spend more by authorities.

Tue, 11/20/2012 - 20:33 | Link to Comment Fishhawk
Fishhawk's picture

All taxes are collected on labor; corporate taxes are taken from the workers, since management will always find a way to pay themselves (at 400 times the rate they pay labor), and investors (sic) are definitely hind tit (where are your dividends?).  So what we see happening since the boom times of the '50's and '60's is that labor's share of corporate profits has fallen steadily, while government's share of total spending has increased steadily, mostly with transfer payments to workers who can no longer survive on the salaries that are available, due to the diminishing requirements for labor to add value.  Meanwhile, corporations have paid less and less taxes through credits and writeoffs that do nothing to increase GDP.  Thus government spending increases, and government revenues decrease, and thus government debt increases, and inflation becomes the largest tax.  Our economy cannot improve while the majority of labor is involved in the 'service industry,' which pays minimum wage.  Manufacturing has steadily decreased as a percent of GDP since WWII, and the available high paying jobs have followed that decrease.  Current Fed policy does not address this post-industrial structure, since it still hopes to extract the tax burden from the 'workers.'  With the advent of robotics, manufacturing will be done on a large scale, and labor will be replaced with automation.  Soon the 'workers' will all be living on welfare, and the tax base will disappear.  According to Cloward-Piven, this will provide the excuse to dismantle the welfare state, but if the workers are all unemployed, and not receiving welfare, they will disappear from the 'consumer society,' and then the mega-corporations will all go bankrupt.  So we need a tax strategy rethink; if 40% of GDP is now 'financial engineering,' then this should be a major tax target.  Since the 1% are all beneficiaries of financial engineering (rent seeking, through wealth transfer through inflation and currency devaluation), this redirection of the tax burden to finance will be the last alternative considered.  The current strategy will reduce the living standards in the US to levels now seen in the emerging economies within 10 years.  That seems to be the plan, so do not look for any real change in tax strategy until the system/currency crash.  

Fishhawk

Tue, 11/20/2012 - 21:39 | Link to Comment New_Meat
New_Meat's picture

"All taxes are collected on labor;"

Well, in a nutshell, there it is.

- Ned

Tue, 11/20/2012 - 23:33 | Link to Comment nmewn
nmewn's picture

Socialists have always been consumed with the idea of taxation of labor...other peoples labor.

Tue, 11/20/2012 - 20:46 | Link to Comment Orly
Orly's picture

"The current strategy will reduce the living standards in the US to levels now seen in the emerging economies within 10 years.  That seems to be the plan..."

That's been the plan since 1913.

Wed, 11/21/2012 - 02:44 | Link to Comment Dr. Sandi
Dr. Sandi's picture

I don't believe there's a conspiracy to reduce the living standards in the U.S. There is, however, a conspiracy to steal every last bit of wealth from the people, structures and the land itself.

The resulting living standard is merely a result to being robbed, and not a goal or even a concern of the thieves backing up a truck to the loading bay of the USA.

Too often we think scum sucking bastards want to make us feel pain, when in fact, they only want to take all of our stuff, and they don't waste time with thoughts of the consequences to us of their thieving.

It's nothing personal, it's just business. No emotion involved other than greed.

Tue, 11/20/2012 - 20:24 | Link to Comment PGR88
PGR88's picture

I like taxes.  Pays for my foodstamps.

Tue, 11/20/2012 - 20:20 | Link to Comment odatruf
odatruf's picture

Sigh.

Dwight David Eisenhower was nicknamed "Ike". But his initials on your chart should be "DDE" and not "DDI".

 

Tue, 11/20/2012 - 20:40 | Link to Comment Bruce Krasting
Bruce Krasting's picture

Normally, I would say I would fix something like this. But this is a slide that would have to be re-made and then inserted into an existing article, three different times. Pain in the ass, and it's way past six....So fuck it.

Is it I before E except after D? I get them confused....

 

Tue, 11/20/2012 - 22:01 | Link to Comment odatruf
odatruf's picture

Well thanks for responding and accepting the criticism.

For what it is worth. I agree with the above poster that the spend side and not the tax side is our problem. And I disagree that we should let everything but DoD and the entitlements slide. Even if the dollar amounts are low, we must unplug the DC-fix-all mindset.

Tue, 11/20/2012 - 23:54 | Link to Comment Bruce Krasting
Bruce Krasting's picture

Just to be clear, I do accept the criticism, I do not accept the responsibility.

I blame this entirely on my new assistant, Valentina. She's in charge of copy editing these days.

"Val" is Estonian, speaks little English, has no clue who Eisenhower is (much less "Ike"). Dark hair, long legs, a size two, just passing through....

Who cares about grammar anyway?

b

Wed, 11/21/2012 - 13:24 | Link to Comment odatruf
odatruf's picture

In college, I knew a Visilka from Estonia. If they are at all similar, I'd be pleased to review Valentina's colon usage.

 

Wed, 11/21/2012 - 05:58 | Link to Comment falak pema
falak pema's picture

just passing thru where? 

Oh, from comma to dot, or from bought to sold? 

Sounds very long legged. I hope she knows how to pull yours. Doesn't need grammar to do that, I'm sure! 

Tue, 11/20/2012 - 23:21 | Link to Comment El Yunque
El Yunque's picture

How?

Tue, 11/20/2012 - 21:31 | Link to Comment Seasmoke
Seasmoke's picture

yes D-I-E , just like this post should !!!

Tue, 11/20/2012 - 20:12 | Link to Comment nmewn
nmewn's picture

- Excise taxes have to go up. Sorry.

Fine, we can start with Hollywood, writers, production...all of it, they can afford it ;-)

And what is never pointed out is "historically" high rates of taxation were offset by the ability to write off just about every nickel of interest...credit card interest was a write off, for example.

Tue, 11/20/2012 - 21:21 | Link to Comment NeedleDickTheBu...
NeedleDickTheBugFucker's picture

+1.  A large number of deductions have been eliminated over time in return for lower statutory rates (1986 Tax Reform).

Any historical analysis of taxes (corporate or individual) based on statutory tax rates is a meaningless excercise.  It only makes sense to use effective tax rates.  Maybe such data is unavailable because everyone always seems to focus on statutory rates.

Tue, 11/20/2012 - 21:56 | Link to Comment nmewn
nmewn's picture

"Any historical analysis of taxes (corporate or individual) based on statutory tax rates is a meaningless excercise. It only makes sense to use effective tax rates."

Its rather like a blind man feeling the tail of an elephant and thinking its a hairy snake isn't it? ;-)

Tue, 11/20/2012 - 19:43 | Link to Comment laughnow
laughnow's picture

You never talk about spending. Always taxes, never government spending cuts. The land of the free lunch riding on a million dollar missile needs to stop.

Tue, 11/20/2012 - 20:44 | Link to Comment lasvegaspersona
lasvegaspersona's picture

Stop it will...only when the first prisoner decides to break for the door and all the other central bankers follow. In the panic there won't even be time for the dollar to crash...it will just be over...reset time..on a Tuesday, who knows.?!

Tue, 11/20/2012 - 20:34 | Link to Comment Bruce Krasting
Bruce Krasting's picture

You're right.

Spending is tough. Forget about all the small stuff, the only things that matter are the military, Social Security, Medicare/Medicaid.

I write about SS all the time. I want to see big cuts in benefits (means test). Medicare/Medicaid is Obamacare. I hate that. It won't work, but can't be changed for years to come because of the last election.

That leaves the military. Not sure what to do with this. I do know there a lot of "bad guys" out there. So I'm not in favor of gutting the military.

Me? I can't see how the necessary cuts can be made without a very big blow-back.

 

Wed, 11/21/2012 - 01:03 | Link to Comment AGuy
AGuy's picture

"I write about SS all the time. I want to see big cuts in benefits (means test). Medicare/Medicaid is Obamacare."

Absolutely no way to cut entitlements without commiting politcal suicide. Old People vote and often as possible. They will not accept cuts, especially when they have no significant savings to fall back on. The only course of action WDC will follow is Print, Print and Print. They have no alternative. The bottom line the system is hopelessly broken, and it will limp along until it can't anymore.

Means testing won't work because they would need to cut out 70 to 80% of the boomers to make it work. Most of those people are counting on SS+Medicare even if they made 100K+ in income. They spent all of their money on bigger homes, vacations, College education for the kids, etc. Only the top 5% can afford health insurance without Gov't entitlements. An average couple 60+ years needs to pay $1600 mo in Health Insurance without entitlements. and the costs go up the older you get. So if they expect to live 20 years in retirment they will need to have set aside between $400K and $500K just for medical insurance premiums and out-of-pocket medical expenses.

I think they (WDC) will simply ride on the dollar wave until it collapses. Then either a new central gov't (aka dictatorship\plutocracy) assumes control, or the country breaks up as states are forced to print their own currencies when FRNs become worthless. I rather see a breakup than a police state. The other wildcard in the deck is a third world war. When the currency is undermined, there will be a powershift, as industrial powers muscle in control of the world's dwindling natural resources, or some sort of false flag event to get the people focused away from the collapsing dollar. WW1 and later WW2 were the result of failing European monetary policies. I also don't want to see another World War, but I have no say in the matter.

I wouldn't bother fantasizing on a way out of the problem and focus on the most likely outcomes. Assume nothing is fixed (nothing has ever gotten fixed in 70+ years and without a war). Lets not also forget that the worlds supply of cheap oil is gone. Higher energy costs are going to make any real recovery impossible. The econony is a state of collapse resonance, where problems of debt, over population, energy crises, systemic corruption and water shortages are all re-inforcing economic problems. Stopping looking for a way to climb out the same way we got into this mess. The only option it to accept the inevitable, and move out of the way so you don't get crushed when it does collapse. What options are available when nothing gets fixed?

Tue, 11/20/2012 - 23:30 | Link to Comment Oldwood
Oldwood's picture

You do realize that means testing ss makes it into a welfare program. They might as well end it and fund the whole thing from general revenues. It is just another redistribution scheme like everything else they do.

Tue, 11/20/2012 - 20:46 | Link to Comment brettd
brettd's picture

Ask anyone in the military if it's efficient.

$30/gal for biodiesel to run a ship?  

(and I'm long LMT and other "defense" stocks....)

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