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The "Buffett Rule" In Perspective

Tyler Durden's picture





 

We have extensively discussed the Buffett Rule before (which incidentally will achieve nothing to fix America's gaping deficit problem, but will certainly succeed in driving many wealthy people away from this country). We thought this issue was closed. Apparently it wasn't, and Obama is once again warming up the class divide wagon - remember: the number one rule in politics when electioneering is keep everyone as divided as possible - under the guise of tax reform. So here is a reminder on same simple issues of perspective, courtesy of Rick Santelli.

As a reminder, as we pointed out yesterday, the US just posted the largest ever March budget deficit in history of nearly $200 billion, which followed the single largest monthly budget deficit on record of $232 billion. Keep those numbers in mind, because they frame, in a very, very, very aggressive case, the bottom and top range of what the entire Buffett Rule would offset in terms of gained revenue. As rick explains, assuming one taxes an upper estimate of those eligible for the Buffett Rule (indicatively 225,000 people but realistically far less) an incremental $1 million, the offset would be $225 billion over the proposal's life. Which is not enough to even plug one month of US deficit. And that is what all the posturing is about.

Now don't get us wrong: America has a record deficit problem, and it will require both revenue and spending decisions to fix it, but in isolation, neither will make a dent, and with the government as bloated as it is, far more spending cuts will be required to match any revenue increases.

Finally, since the Treasury already funds over half of US funding needs, and the Fed is among the biggest monetizers, pardon holders, of US paper, why not just go ahead and print the money America needs? Surely all modern economic theories will agree that the once greatest country in the world can print itself into prosperity...

From Rick Santelli:

And while Rick's example is hyperbolic to the upside (in terms of benefit), here is a different more realistic perspective on things, via the Joint Committee on Taxation, courtesy of TaxProf.

Seriously, this may work... If America taxes everyone at about 1500%.

(which incidentally is not too far off: once again we remind people of the ominous reality that the BCG study predicted last September: take our word for it - a one time tax on all assets is coming).

 


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Thu, 04/12/2012 - 17:00 | Link to Comment redpill
redpill's picture

that chart should really be about 2 pagelengths tall to appreciate the scale of absurdity

Thu, 04/12/2012 - 17:03 | Link to Comment hooligan2009
hooligan2009's picture

i agree...the 31 billion gives it an optic of being a block rather than a flat line lying on the x axis

Thu, 04/12/2012 - 17:12 | Link to Comment MillionDollarBonus_
MillionDollarBonus_'s picture

Rick Santelli is overexaggerating as usual. The debt is not that large, and Obama has managed to get the budget under control. This doomer fear mongering is getting tiring. What is it the doomers are so angry about?? We have a strong recovery, low inflation and firm fundamentals for economic growth, but you will never get a doomer redneck to admit this. Why don’t you morons learn economics and stop whining.

 

Thu, 04/12/2012 - 17:16 | Link to Comment TWSceptic
TWSceptic's picture

Why not make it obvious if you want to be sarcastic.

Thu, 04/12/2012 - 17:25 | Link to Comment Temporalist
Temporalist's picture

Because then nobody would care. I am voting MDB for president...of Syria.

Thu, 04/12/2012 - 18:09 | Link to Comment Rahm
Rahm's picture

You just want him to yell out "INCOMING!"

Thu, 04/12/2012 - 18:25 | Link to Comment AldousHuxley
AldousHuxley's picture

Buffett Rule is not to pay for the deficit.

Buffett Rule is there to equalize opportunities between income earners versus lottery winners earning more than $1,000,000/year.

Because if you don't give that smart but poor kid an opportunity, dumb but rich kid like George Bush gets elected and makes deficits even bigger by spending money on wars rather than fixing anything. Wasting American middle class potential will increase the deficit.

 

People who earn $1,000,000/year don't give a shit about the deficit. Rich have enough money to abandon America and they will. It is the poor who will be stuck.

 

Don't listen to Rick Santelli. He doesn't add anything to society except making gambling look legit. Time for him to get a real job and not shilling for CNBC = GE = bailed out shysters.

 

You and your children will never get ahead when:

capital gains tax (THE RICH) < income tax (YOU)

Thu, 04/12/2012 - 18:30 | Link to Comment Spigot
Spigot's picture

The whole "equalize opportunity" line is BS, pure and simple. It is ment to obfuscate the real issues and misdirect the passions of the electorate.

Thu, 04/12/2012 - 19:24 | Link to Comment tahoebumsmith
tahoebumsmith's picture

MBD, just goes to show how clueless you are when you make the statement "Obama's got the budget under control." FYI Million Dollar Douche, They haven't passed a budget in 1084 days! The last time they passed a budget was on April 29, 2009 and since then we have gone an additional 3.5 Trillion dollars in debt! So for those wondering about future QE? Of course there will be more because without the FED monetizing our debt through QE and POMO PONZI, we would have defaulted by now and probably actually would have done something!!!

Thu, 04/12/2012 - 20:50 | Link to Comment economics9698
economics9698's picture

The politicians always blame capitalist and speculators.  Nothing new.

Thu, 04/12/2012 - 23:29 | Link to Comment rcintc
rcintc's picture

MDB hasn't gone food shopping lately....no inflation my arse!

Thu, 04/12/2012 - 19:17 | Link to Comment Bob Sacamano
Bob Sacamano's picture

Go ahead.  Double the capital gains tax.  I know what I will be buying for that scenario. 

But BHO will not do it -- he just wants to talk about things he can't or won't do.

Thu, 04/12/2012 - 19:24 | Link to Comment sun tzu
sun tzu's picture

Is that you Barry?

 

The fact is that raising the already high taxes on the successful will do nothing to help anybody.

My solution is to cut spending and raise tax rates back to the levels of when Bill Clinton was in office. We allegedly had a balanced budget then. Stop the bailouts. Problem solved.

Thu, 04/12/2012 - 21:49 | Link to Comment sof_hannibal
sof_hannibal's picture

The Buffett rule is merly a distraction. The wealthiest need to pay more both in capital gains and income; but who gives a fuck right now... it's like dropping a cup of water on an inferno... don't waste your time debating Obama policy... you might as well call AM radio and bitch about the NAFTA super highway.

Since the dawn of time, the game remains the same throught history-- it has always been and will always be about a few people collecting and hoarding power at the top-- chieftons, pharos, kings, queens, industrialists, the rentier class, and more recently the cast of the jersey shore, etc... this goes on until the system topples itself... Rome, Napolean, Great Britian, the 3rd Reich... this time it's central planning, zombie banks, liquidity traps, paper money, facebook IPO's, and chipolte away...

And Now/ currently is no different then any other time from the past, that is-- eventually the debt will collapse and we start over. I say tax the rich until they bleed, but it won't happen... Buffett rule is nothing more then sheeple/ muppet/ puppet opiates and CNBC fodder, right next to "Stand your ground,"race wars" type distraction(s)...

Thu, 04/12/2012 - 21:02 | Link to Comment maximin thrax
maximin thrax's picture

So, what opportunities do you think government will purchase for my kids with that fresh wealth confiscation? Road construction? Pushing paper at the unemployment benifits office? Hauling millions in custom-made furnishings to the dump from failed companies like Solyndra?

Federal government income-to-debt ratio is about 1 to 7. I think all we get from each new dollar in tax is seven new dollars in debt. What kind of opportunity does that portend for my children?

Thu, 04/12/2012 - 21:45 | Link to Comment sof_hannibal
sof_hannibal's picture

Concur

Thu, 04/12/2012 - 17:30 | Link to Comment Koffieshop
Koffieshop's picture

Yeah at this point is is better to go deeper into debt. If the debt would be in the quadrillions, less people would talk about it as it would be beyond the reach of any sane conversation.

Thu, 04/12/2012 - 17:49 | Link to Comment Its_the_economy...
Its_the_economy_stupid's picture

It already is.

Thu, 04/12/2012 - 18:30 | Link to Comment AldousHuxley
AldousHuxley's picture

China and Russia are unhappy because US is getting into debt with extra low interest rates.

China and Russia are not your friends. They want US not be able to borrow so that they can buy US assets cheap and own your ass.

 

Stop printing and see Great Depression 2 in minutes. Or Bernanke says in "15 minutes"

 

Fight about how the money gets used, but don't argue that when Uncle Sam gets laid off, he shouldn't use credit cards to buy food to keep on living and applying for jobs especially when the interest rate is lower than inflation.

Thu, 04/12/2012 - 18:27 | Link to Comment Spigot
Spigot's picture

Because he's not being sarcastic, he is really that stooopid.

The scale of deficit spending by governments is beyond the ability of taxation to heal. Why deficits work (somewhat and in the short term) is that the various Central Banks are printing the money to fund sovereign debt purchases to keep interest rates below reality, enabling these States to attempt to keep their economies from imploding outright.

Santelli's point both that the scale of ongoing deficits and the growth of cumulative deficits will indeed destroy the future. Numbers do not lie and their resutls can not be avoided.

Thu, 04/12/2012 - 18:38 | Link to Comment MillionDollarBonus_
MillionDollarBonus_'s picture

"to keep interest rates below reality"

No. Interest rates ARE low. This is the reality. The ten year is at 2% despite the constant whining about how deficits are too large. The fact that interest rates are at all time lows refutes this proposition entirely. 

To quote Neetzsche:

"Sometimes people don't want to hear the truth because they don't want the illusions destroyed"

Thu, 04/12/2012 - 19:24 | Link to Comment Seer
Seer's picture

Who the hell is "Neetzsche?"

Anyway... Interest rates are low because growth has died.  Kind of hard to be cheerful when one is accustomed to an ENTIRE system that's predicated on growth.  And THAT is the Truth!

Thu, 04/12/2012 - 19:53 | Link to Comment knukles
knukles's picture

Neetzsche is Keen-O's brother. 

Thu, 04/12/2012 - 19:59 | Link to Comment knukles
knukles's picture

Oh, and they have a sister, Peachy.

They're the Neetzsche Peachy Keen-O family of Dubuqe, the largest growers of Yellow Zonker Teriaki Parakeet Meat Treats in Iowa.  

Thu, 04/12/2012 - 23:39 | Link to Comment rcintc
rcintc's picture

MDB -

If there is so much demand for our Bond Auctions, how come the FED is purchasing bonds?

If there is so much demand for our Bond Auctions, the FED doesn't need to purchase bonds.

The FED is making these purchases in order to keep the Interest Rates artificially low or else our debt service will explode.

Who in their right mind would lend our government money @ 2% for 10 years?

The Bernak's in a Box

Thu, 04/12/2012 - 19:29 | Link to Comment Barometer
Barometer's picture

It's spelt "Neitzsche" you condescending fuck. And quoting him is gay.

Thu, 04/12/2012 - 20:08 | Link to Comment Acorn10012
Acorn10012's picture

Nietzsche

Thu, 04/12/2012 - 23:35 | Link to Comment Better_late_tha...
Better_late_than_never's picture

Fuck, I can't figure out who's trolling who with all these spelling errors.

Thu, 04/12/2012 - 19:46 | Link to Comment narnia
narnia's picture

If the Fed contracted its balance sheet by about $3 trillion tomorrow & the 10 year remained at 2%, you may have a point.  

The price of money is not a living organism.  It is a statue.  If you knew anything about the interest rate swap market, you'd understand why the price of money has to be gamed.  

Thu, 04/12/2012 - 20:32 | Link to Comment dougngen
dougngen's picture

interest rates are low because the fed buys 60% of the treasury bonds!!

Fri, 04/13/2012 - 03:00 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

Somehow it's just not MDB's style :D Someone mentioned "Poe's Law" ...

thanks for subscribing (youtube)

Thu, 04/12/2012 - 17:27 | Link to Comment besnook
besnook's picture

you are so right. the debt is only 100% of income. the interest rate is zero and we only have to pay the interest.  a lot of people with 3-400% debt to income rastio do fine. we have a long way to go before there is trouble

Thu, 04/12/2012 - 18:17 | Link to Comment Matt
Matt's picture

The DEFICIT is only just over 100 percent of income.

The DEBT of ~$15.6 Trillion is nearly 800 percent of the ~$2.2 Trillion tax revenues.

Interest-only payments with a current average of 3 percent equals ~21 percent of Income.

Imagine if you were making $60,000 per year and making $12,000 per year in interest-only payments. That's $1000 each month, out of a $5000 income, going to interest only.

Now imagine that you are spending $130,000 per year, borrowing the extra $70,000. How long could you keep this up? Now imagine your interest rate could double or triple in the future.

Thu, 04/12/2012 - 19:24 | Link to Comment Seer
Seer's picture

"Now imagine your interest rate could double or triple in the future."  AND also imagine loosing your job!

Thu, 04/12/2012 - 17:29 | Link to Comment john39
john39's picture

thanks, that one actually made me laugh.  i needed it.

Thu, 04/12/2012 - 17:58 | Link to Comment Tsunami Wave
Tsunami Wave's picture

Rick looks like if he keeps up with that attitude, he'll be fired by CNBS.

Thu, 04/12/2012 - 18:28 | Link to Comment NotApplicable
NotApplicable's picture

He's the last draw they've got. Can him and the last six viewers will leave!

Thu, 04/12/2012 - 17:31 | Link to Comment chunkylover42
chunkylover42's picture

MDB, you are running out of material if that's the best you can do.

I will say you have been one of the more entertaining trolls around (although I think ZH'ers had more fun with Harry Wanger and Leo Koli-whatshisname)

Thu, 04/12/2012 - 17:37 | Link to Comment withnmeans
withnmeans's picture

As a matter of fact I did learn ECONOMICS "both Macro and Micro"... Oh, and I ACE'd Banking too, thank God I didn't go into that field...

MDB, I don't care about you education, religion, or anybody else's for that matter. Yes, we are all entitle to our opinions "we all hope it stays that way".

I think I could speak for the majority on here anyway, we love our country and we don't want to see it go down the crapper so to speak. I have traveled to several other countries, I still like knowing we still have it somewhat good here, saying "somewhat", because we have lost some of what used to make us shine.

 

In closing, one day we all hope you will crawl out from beneath that rock you call home !

Thu, 04/12/2012 - 17:57 | Link to Comment MillionDollarBonus_
MillionDollarBonus_'s picture

"I ACE'd Banking too, thank God I didn't go into that field"

Why not? Investment Banking professionals are in high demand at the moment. I believe the top tier investment banks had a record intake of top graduates last year. Crazy smart, these guys - almost all Ivy League educated.

Thu, 04/12/2012 - 18:08 | Link to Comment Widowmaker
Widowmaker's picture

"all Ivy League educated [bag-holders]."

Thu, 04/12/2012 - 18:20 | Link to Comment The Alarmist
The Alarmist's picture

You've presumed admission to an Ivy requires intelligence. You've presumed the same about banking. You clearly don't have much experience with either.

Thu, 04/12/2012 - 18:29 | Link to Comment NotApplicable
NotApplicable's picture

You've presumed MDB is serious. You clearly don't have much experience with MDB.

Thu, 04/12/2012 - 20:07 | Link to Comment withnmeans
withnmeans's picture

MDB, greed is not the answer, and sometimes the good guy does win!

Like my "handle", I live withnmeans, love my family, love life. I may not have everything, I do have what I need "not want".

When MSM figures out there is more to life then a SH%TTY fiat currency, they too will find peace.

Good luck, P.S. I do find your writings a bit amusing, bordering on the psychotic side, but amusing just the same.

Thu, 04/12/2012 - 20:36 | Link to Comment WonderDawg
WonderDawg's picture

About 20 years ago I had a girlfriend whose motto was "If I want it, I need it." We dated for a couple of years, but she was high maintenance and I was struggling through graduate school and couldn't afford her, so she moved on. I saw her a couple of times over the years, and she later got married and had a couple of kids. I met her husband at my best friend's funeral. She was there because when we dated, she'd been friends with my buddy's wife, and they'd remained friends after we broke up. Anyway, a few years went by without any contact, and I ran into her about a year ago. She was divorced, and she and her husband had lost their home. They'd done the same thing millions of others had done. Upgraded to a home they couldn't afford during the height of the real estate mania. Her husband's business was struggling in the recession and they filed BK.

She'd maintained that same philosophy over the years, and it ended up bankrupting her and her family. The thing is, I think it became a commonplace attitude in our society, that if you want it, you need it, and if you can't afford it, you borrow the money so you can have it now, rather than save and buy it when you can afford it. It became the zeitgeist of the 90's and 00's. And now we see the consequences.

Thu, 04/12/2012 - 21:19 | Link to Comment Hulk
Hulk's picture

Correction O WonderDawg, we are starting to see the consequences. What we witness today is just the beginning...

Thu, 04/12/2012 - 21:34 | Link to Comment WonderDawg
WonderDawg's picture

Agreed, Hulkster. Just the beginning.

How you doing? I hope life is treating you well, my brotha.

Thu, 04/12/2012 - 22:04 | Link to Comment Hulk
Hulk's picture

Going good WD, one of these days, this devil is going to have to get down to Georgia...

Thu, 04/12/2012 - 23:01 | Link to Comment WonderDawg
WonderDawg's picture

Come on down. The weather is pretty close to ideal right now. The pollen is pretty much gone, temps in the 70's, low humidity, and the bugs haven't come to life yet. Perfect.

Thu, 04/12/2012 - 23:25 | Link to Comment Havana White
Havana White's picture

Funeral part was riveting.

Fri, 04/13/2012 - 02:53 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

Ya... there's some real high demand out there.

But... it's conditional. People are demanding to see bankers with one of these:

Sokkomb

Thu, 04/12/2012 - 17:51 | Link to Comment Wannabee
Wannabee's picture

@mdb

"The debt is not that large,"

C'mon man, you're losing your mojo...

Thu, 04/12/2012 - 18:20 | Link to Comment Troncom
Troncom's picture

sd

Thu, 04/12/2012 - 18:15 | Link to Comment Troncom
Troncom's picture

" The debt is not that large "

I've heard it is

Thu, 04/12/2012 - 18:54 | Link to Comment Conchy Joe
Conchy Joe's picture

You deserve a billion dollar bonus!

The Obama Budgets are the modern Wonders of the World  - we are indeed blessed that they have saved this country.

Sure it was more expensive, but we're worth it!

Thu, 04/12/2012 - 20:22 | Link to Comment BeetleBailey
BeetleBailey's picture

YOU are getting tiring. Your grasp of economic fundamentals is staggeringly stupid. Your Obamazombie-esqe droning on and on about things that are wildly wrong is stunning. In short, you are an imbecile.

Strong recovery? On what planet? Mars?

Low inflation? Where? The food stamp line?

Firm fundamentals? Scarlett Johansson's boobage maybe?

YOU should learn economics - but then again, it's impossible to teach imbeciles, so stop having your Mom type these treatises of shite out, and go back to the kiddie pool.

Moron? That is you.

 

Thu, 04/12/2012 - 23:30 | Link to Comment Havana White
Havana White's picture

Would a laughtrack help you?

Fri, 04/13/2012 - 01:19 | Link to Comment Dixie Rect
Dixie Rect's picture

MajorDoucheBag, you're a fucking riot! You need to go on the road with that comedy act!

Fri, 04/13/2012 - 03:02 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

-100 !! Now that's what I'm talkin' bout

"Obama has managed to get the budget under control. This doomer fear mongering is getting tiring."

CLASSIC. So silly of me to think I had out-done you. Mind you it's fun to get to an article before you do.

Fri, 04/13/2012 - 13:05 | Link to Comment BooMushroom
BooMushroom's picture

Not sure if this is the original MDB with a much more super awesome avatar, or a new troll doing a good job filling some big shoes.

Welcome back, and enjoy the red arrows, which you will receive until you change your avatar to be a giant /sarc tag.

Sat, 04/14/2012 - 20:03 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

no, if it's milliondollarbonus_ with the underscore that's the original.

I'm one of the mock-personators but just for shits 'n' giggles. I actually do otherwise contribute useful information from time to time but it's fun to feed the trolls.

Thu, 04/12/2012 - 17:12 | Link to Comment SAT 800
SAT 800's picture

It's really pointless to vent about; all the politically astute people in Washington agree, it's impossible to pass as legislation; our dear leader knows this very well; it's merely political posturing; it sounds good to the ignorant white trash who voted for him.

Thu, 04/12/2012 - 17:22 | Link to Comment citta vritti
citta vritti's picture

"dear leader" - now that has a scary ring to it

Thu, 04/12/2012 - 17:45 | Link to Comment The Alarmist
The Alarmist's picture

Big O will always be "Maximum Leader" to me.

Thu, 04/12/2012 - 18:12 | Link to Comment Kali
Thu, 04/12/2012 - 20:45 | Link to Comment philipat
philipat's picture

The bottom 50% pay NO Federal Income taxes. And why would they vote to change that? Just a few more Obama bucks sprinkled strategically to bring that to OVER 50% and we're looking at a lifetime of socialism. Unless the remaining few paying ALL the taxes decide enough is enough and surrender citizenship whilst moving to Switzerland.

Thu, 04/12/2012 - 23:51 | Link to Comment Havana White
Havana White's picture

61% of the families paying no fed tax (they pay plenty of other taxes, including those for social security and medicare) earn less than 20K/yr.  The bottom 20% of earners pay more than 16% of their income in taxes.

But enough is enough?  Idiot.

Fri, 04/13/2012 - 13:08 | Link to Comment BooMushroom
BooMushroom's picture

Solution: flat tax with an annual pre-bate. No loopholes, bitches!

Thu, 04/12/2012 - 17:03 | Link to Comment Death and Gravity
Death and Gravity's picture

The true inequality in the "goodies" in the US is not in the incomes, but in the assets. An income tax hike just won't solve the problem. It's merely a sweet drop for the left-leaning crowd.

Thu, 04/12/2012 - 17:10 | Link to Comment Sockeye
Sockeye's picture

Time to replace income tax with a land value tax.

Thu, 04/12/2012 - 17:17 | Link to Comment max2205
max2205's picture

Duh how's about these 551 criminals cut spending.

This is too retarded to discuss anymore

Thu, 04/12/2012 - 17:41 | Link to Comment Death and Gravity
Death and Gravity's picture

On the contrary, it is direly necessary, as the landed privilege underlies some of the most egrerious inequalities in the US.

Besides, a tax reform does in no way preclude spending cuts. For starters, we could cease all military adventurism and cut the yearly military expenditure to 1/4th. (Of course, that would end the American Empire, so it's utopian...)

Thu, 04/12/2012 - 18:10 | Link to Comment Crash N. Burn
Crash N. Burn's picture

Need to abolish "income" tax. Why?

"We supposedly have a “progressive” tax system. What this means is that the higher you rank in the “economic pyramid”, the greater your tax burden. In reality, we don't have a “progressive” tax system. While taxation is skewed, it is skewed in a patently unfair, inequitable manner.

 

To understand why this is the case requires only a little simple analysis. As one's wealth-level increases, the incremental wealth increase each year is based less and less on (taxed) income, and more and more on (untaxed) appreciation of assets, or wealth. For most of those at the very top, income is only a tiny component of their increased wealth." 

Income Taxation is a Failed System
Thu, 04/12/2012 - 18:31 | Link to Comment NotApplicable
NotApplicable's picture

Failed? I doubt the Rockefellers, et al. share your view.

Thu, 04/12/2012 - 19:07 | Link to Comment Crash N. Burn
Crash N. Burn's picture

That is exactly the point! From the same article:

 

"a progressive tax system is extremely punitive to all those in the middle. This large segment of society derives most of its increased wealth through income. If they manage to increase their income through working more hours (or more jobs), or obtaining a better job, they are rewarded by having most of their gains clawed back through income taxation.

 

It is therefore impossible for any income taxation system to ever produce tax equity. What our supposedly “progressive” tax system actually does is to take a little too much from those at the bottom, much too much from those in the middle-class, and far too little from those at the top – with the very wealthiest obtaining a virtual free-ride from our tax system."

 

 It was designed to remove wealth from the poor, middle class, and small businesses and funnel it to the uberwealthy and large corporations. Quite the racket.

Thu, 04/12/2012 - 20:46 | Link to Comment WonderDawg
WonderDawg's picture

FairTax, bitchez. It's so fucking obvious, why aren't more people screaming for it? It would solve many problems we're staring at right now. It would tax the shadow economy that pays NO taxes, the rich would be taxed in accordance with their lifestyle, as we all would. Those who chose to live frugally would be rewarded, and their savings would be the basis for capital formation. Eliminating corporate income tax would create a tidal wave of capital flooding back to the states and revive manufacturing, creating millions of jobs. It's so obvious, but you barely hear a peep.

You know why? I think I do. It would eliminate the need for the IRS, or at least drastically reduce it, and it would eliminate a ton of special interest lobbying, thus removing millions of corrupt dollars from the pockets of our "elected" leaders. Think that might have something to do with it?

Thu, 04/12/2012 - 20:56 | Link to Comment Crash N. Burn
Crash N. Burn's picture

Wealth tax is the answer - " In a world with a wealth tax, all other forms of taxation would be eliminated – as being redundant. Furthermore, across the Western world, $10’s of trillions in wealth would be exposed to taxation for the first time. The obvious advantage of such a tax system (apart from the enormous improvements in economic efficiency) is that with all wealth subject to taxation, the tax rate paid by everyone would decline."

 

The Solution to Sovereign Insolvency, Part III: Taxation Salvation
Thu, 04/12/2012 - 21:31 | Link to Comment Paul Atreides
Paul Atreides's picture

"Those who chose to live frugally would be rewarded, and their savings would be the basis for capital formation. Eliminating corporate income tax would create a tidal wave of capital flooding back to the states and revive manufacturing, creating millions of jobs." - I agree

Thu, 04/12/2012 - 17:45 | Link to Comment Doubleguns
Doubleguns's picture

Consumption tax nd a noose for every politician if they dont balance the budget.

Thu, 04/12/2012 - 17:46 | Link to Comment Death and Gravity
Death and Gravity's picture

That would certainly be an improvement on the general income tax, but it still does not adress the problem of privately seizure of publicly created values, ie. the land rents.

Thu, 04/12/2012 - 21:10 | Link to Comment Rollerball
Rollerball's picture

Inflation is a consumption tax paid to the usurers (who print inflation).

Thu, 04/12/2012 - 22:55 | Link to Comment Milestones
Milestones's picture

Shades of Henry George's "Progress or Poverty"              Milestones

Thu, 04/12/2012 - 17:11 | Link to Comment mrdenis
mrdenis's picture

If you own property your already taxed on that asset every fuc*in' year !

Thu, 04/12/2012 - 17:13 | Link to Comment Death and Gravity
Death and Gravity's picture

How many percent, compared to the 10-35% of your income?

Thu, 04/12/2012 - 17:29 | Link to Comment john39
john39's picture

capital gains taxes set to rise sharply on real estate in the U.S....  starting next year I believe, 28%?

Thu, 04/12/2012 - 17:49 | Link to Comment Death and Gravity
Death and Gravity's picture

Yes; with a quarter of a million exemption for a single person, half of a million exemption for a married couple.

Thu, 04/12/2012 - 20:17 | Link to Comment chunkylover42
chunkylover42's picture

exemptions only apply to sale of a primary residence.

Thu, 04/12/2012 - 17:34 | Link to Comment chunkylover42
chunkylover42's picture

The amount relative to income is not the point.  We are supposed to have property rights in this country but we don't when it comes to real estate.  If you don't believe me, see what happens if you miss a real estate tax payment.

Thu, 04/12/2012 - 17:37 | Link to Comment Death and Gravity
Death and Gravity's picture

So, a "property right" is absolutely infringed even with a 0.1% tax on its value?

What happens if your income tax statement is missing or not in order? You're aware how utterly fucked you are if you're subject to an IRS audit, right?

Thu, 04/12/2012 - 17:50 | Link to Comment Paul Atreides
Paul Atreides's picture

Notice how he does not argue the previous post on property rights but instead answers with three rhetorical questions. This is a straw tactic.

Thu, 04/12/2012 - 17:51 | Link to Comment Death and Gravity
Death and Gravity's picture

Notice how P.A. apparently can't read English, as he cannot recognise a challenge to a proposition.

Thu, 04/12/2012 - 19:41 | Link to Comment Saro
Saro's picture

"So, a "property right" is absolutely infringed even with a 0.1% tax on its value?"

If a man in a dark alley with a gun demands only a portion of the cash in your wallet, have you still been mugged?

Thu, 04/12/2012 - 23:10 | Link to Comment GoinFawr
GoinFawr's picture

That depends on how much you owed him in the first place; were you slinking down dark alleys to avoid your responsibilities?

Thu, 04/12/2012 - 20:15 | Link to Comment chunkylover42
chunkylover42's picture

Property is either encumbered or it's not.  If .gov can take your property or enforce a lein on it because you fail to pay a tax they told you to pay, then the size of the tax is irrelevant - the question becomes: who really owns the property.

I'm not a lawyer, but Wikipedia sez: an owner of property has the right to consume, sell, rent, mortgage, transfer, exchange or destroy it, or to exclude others from doing these things.

Essentially, paying property taxes is renting your own property from the government, and if you try to exclude them from collecting their rent, you can ultimately lose the property itself.  So I submit: who really owns that property?

Moreover, Wiki sez: The "Takings" clause requires that the government (whether state or federal—for the 14th Amendment's due process clause imposes the 5th Amendment's takings clause on state governments) may take private property only for a public purpose, after exercising due process of law, and upon making "just compensation."

So if I fail to pay my taxes and the government takes my property from me, are they going to give me fair value for it?  Fat chance.  Once again I submit: who really owns that property?  I've shown two instances where it isn't me.

There's clearly an interpretation of Congress' power to tax and regulate, and local governments have different powers than the federal government, I just have yet to hear a satisfactory explanation.

 

Thu, 04/12/2012 - 23:48 | Link to Comment maximin thrax
maximin thrax's picture

I get where you're coming from. However, some folks here in Tennessee found out that by not paying their assesments there was nobody willing to put out the fire at their residences. So they are homeless. There is something to organizing people into putting their money together for public services. 

Also, what's wrong with anyone, government or individual, friend or foe, collecting money owed them by you from you? Nothing, really. So if all you have is a home then it should be sold to pay down the debt you owe, right? But due to an artificial construct of law, your house can usually be kept by declaring bankruptcy, thereby screwing over your creditors.

So government can take your home to sell for back taxes, while at the same time it can keep others from collecting their propers through the sale of said home through bankruptcy law, denying them their "property". And it can roast marshmallows on your burning home if you don't pay your fire protection assessment, or it can to put out the fire in order to preserve something for the tax sale to collect those fees - in which case you lose it either way.  

 

Fri, 04/13/2012 - 00:02 | Link to Comment Saro
Saro's picture

"However, some folks here in Tennessee found out that by not paying their assesments there was nobody willing to put out the fire at their residences."

They made their choice and they endured the consequences of it. I see nothing wrong with that. Waving a gun in someone's face and telling him that he has to pay the fire department or else, that I have a problem with.

Additionally, in the absence of state coercion, mortgage lenders would require you to pay for fire insurance before they'd give you the money for the house (just like auto lenders require comprehensive coverage on a new car until it's paid off).  This is also fine, since you are free to choose.

Thu, 04/12/2012 - 17:36 | Link to Comment ElvisDog
ElvisDog's picture

Property tax is typically about 1-1.5% of the assessed value of your home. I'm guessing a typical number would be your home is worth 3-4 times your income, so property tax is maybe 5% when compared to your income. One difference is that if you lose your job, your income tax goes to zero but your property tax stays the same.

Thu, 04/12/2012 - 23:10 | Link to Comment Bob Sacamano
Bob Sacamano's picture

And the money used to buy the property has already been taxed as income.   A wealth tax is just another tax, a perpetual one no less, on top of the income tax you paid you already paid.  Stop government spending -- they do not need more revenue. 

Fri, 04/13/2012 - 00:09 | Link to Comment Havana White
Havana White's picture

At issue is the capital gain on property; that is, its value minus what you paid for it.

Fri, 04/13/2012 - 05:55 | Link to Comment Diplodicus Rex
Diplodicus Rex's picture

So what is the 'value' of a property? Is it the 'price' denominated in FRN's? If so, then it's value is controlled by the deliberate debasement of FRN's which 'appears' as an appreciation in 'value' and is therefore taxed as such. You are therefore taxed twice, once by the inflation tax and second by the capital gains tax.

Thu, 04/12/2012 - 19:32 | Link to Comment Seer
Seer's picture

All the better to make your property do SOMETHING, generate income.  I think that if not for property taxes the rich would own all property.

Thu, 04/12/2012 - 17:22 | Link to Comment TMT
TMT's picture

The essence of capitalism is that there will be those who succeed (and consequently acquire assets) and those who fail.  If you don't want to be part of the latter, then work harder.  If you don't like those two choices, then move to Cuba.

Thu, 04/12/2012 - 17:31 | Link to Comment Death and Gravity
Death and Gravity's picture

Thats a false dichotomy; you fail to distinguish between legitimately/honestly/morally acquired assets, and those that are gotten from "befriending TPTB".

Thu, 04/12/2012 - 17:36 | Link to Comment TMT
TMT's picture

I'm all for the former and hate the latter.  But as you would have it, in order to punish the latter, you would lump in the former to make yourself feel better.

Thu, 04/12/2012 - 17:38 | Link to Comment Death and Gravity
Death and Gravity's picture

"But as you would have it,"

How would you know what I would have?

Besides I'm not for punishing anyone whatsoever.

Thu, 04/12/2012 - 18:41 | Link to Comment LowProfile
LowProfile's picture

 

I'm all for the former and hate the latter.  But as you would have it, in order to punish the latter, you would lump in the former to make yourself feel better.

False premise...

TROLOLOLOLO!

Thu, 04/12/2012 - 17:44 | Link to Comment Benjamin Glutton
Benjamin Glutton's picture

wake me up when we return to capitalism.

Thu, 04/12/2012 - 19:32 | Link to Comment Seer
Seer's picture

Return?

And, would this "return" state function on zero/negative growth?

Thu, 04/12/2012 - 17:31 | Link to Comment Paul Atreides
Paul Atreides's picture

Notice the drop of the Left Right paradigm this one uses? 40 posts on one thread defending the governments position on 9/11?

They're fucking everywhere...

Thu, 04/12/2012 - 17:34 | Link to Comment Death and Gravity
Death and Gravity's picture

You're still smarting from getting your botty twacked, eh?

Thu, 04/12/2012 - 17:40 | Link to Comment Paul Atreides
Paul Atreides's picture

Obvious troll is obvious.

Thu, 04/12/2012 - 17:43 | Link to Comment Death and Gravity
Death and Gravity's picture

You still can't argue your way out of a wet paper bag. Same as most conspiracy nutters i've ever come across.

Thu, 04/12/2012 - 17:56 | Link to Comment Paul Atreides
Paul Atreides's picture

Why would I argue with someone who criticizes a distorted, exaggerated or otherwise misrepresented version of the argument and then claims to have refuted the original argument? It's pointless and paints you as a deceptive and arrogant person.

Thu, 04/12/2012 - 18:00 | Link to Comment Death and Gravity
Death and Gravity's picture

"Why would I argue"

Why ask? You've hardly made even *an attempt* at argument/debate recently on ZH.

"It's pointless and paints you as a deceptive and arrogant person."

Be careful that you don't slip off that high horse of yours, it's a long fall down, your own previous behavior considered.

Or has that been forgotten already?

Thu, 04/12/2012 - 18:11 | Link to Comment Paul Atreides
Paul Atreides's picture

That last post was ad hominem. Again you did not refute the fact that you distort, exaggerate or otherwise misrepresent arguments. You resorted to a personal attack.

P.S. I'm just here for the free popcorn.

Thu, 04/12/2012 - 17:06 | Link to Comment The Alarmist
The Alarmist's picture

BTW, the Buffet Tax is an income tax ... will Warren really end up paying more taxes on his largely dividend-based income?

Thu, 04/12/2012 - 17:20 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

Exactly.  Warren has always prided himself on how little Berkshire pays him, and the modest home he still lives in in Omaha.

Income tax is not wealth tax.  The wealthy would never allow it.  Income tax is a work tax...a tax on workers.

Now the estate tax (minus all the trust fund loopholes) could be a different story.  Say, why isn't it a story?

Thu, 04/12/2012 - 17:25 | Link to Comment LetThemEatRand
LetThemEatRand's picture

If we called the 400 richest who control more wealth than almost half of every other American combined Lords and Kings and Dukes, people may start to get it.   Instead, most are lured into this ridiculous debate as you point out about tax on "income," which only serves to convince more sheep that the problem is not wealth concentration when clearly it is.  Our country is run by a few hundred super rich who are the modern day royalty without formal titles.

Thu, 04/12/2012 - 17:16 | Link to Comment centerline
centerline's picture

The big difference that everyone dances around like idiots is between income tax and capital gains.  I agree that going after the rich does nothing to solve the macro problems.  But, the current tax code is a joke as well.  Two different subjects here.

Just for shits and giggles, on the other side of the argument we hear people bitch about how there are so many people who dont pay any "taxes" when what they are referring to are "income taxes."  In reality, we all pay taxes on almost everything we do.  Then there are fees, fees and more fees these days - which are just... wait for it... taxes!  In fact, the less wealthy get hurt more because the taxes on goods and services, fees, etc. are a larger percentage of income.

 

Thu, 04/12/2012 - 17:41 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

We all pay the inflation tax, but too few know it.

 

"Anyone truly concerned about the middle class suffering from falling real wages, under-employment, a rising cost of living, and a decreasing standard of living should pay a lot more attention to monetary policy. Federal spending, deficits, and Federal Reserve mischief hurt the poor while transferring wealth to the already rich. This is the real problem, and raising taxes on those who produce wealth will only make conditions worse."

  

-Congressman Ron Paul, MD

http://www.lewrockwell.com/paul/paul334.html

Thu, 04/12/2012 - 17:48 | Link to Comment Goldilocks
Goldilocks's picture

"Ron Paul" — A BLR Soundbite
http://www.youtube.com/watch?v=igQlbesF0zA (2:45)

Thu, 04/12/2012 - 17:59 | Link to Comment penexpers
penexpers's picture

"A pretty a pretty a pretty goose for you..."

Cracked me up so hard.

Thu, 04/12/2012 - 18:03 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Precisely, I wonder how the rich would feel if infaltion was as "fair" as taxes.  I certainly wouldn't like paying 30% or more of my salary on food and another 40% on fuel.  That would piss me off.

Thu, 04/12/2012 - 17:29 | Link to Comment Thamesford
Thamesford's picture

Warren will transfer a portion of his holdings to Treasuries and pay not tax on that!

Thu, 04/12/2012 - 17:36 | Link to Comment chunkylover42
chunkylover42's picture

Warren already gave most of his assets to the one guy richer than him, Bill Gates (well the Gates Foundation, but the point is valid).

Thu, 04/12/2012 - 17:07 | Link to Comment l1b3rty
Thu, 04/12/2012 - 17:31 | Link to Comment john39
john39's picture

communism is theory, invented to control the masses... by the same people that invented "capitalism"....     its all mind control.  i don't give a shit what you call it.  when the same people are always in control at the top, what difference does it make?

Thu, 04/12/2012 - 17:43 | Link to Comment blunderdog
blunderdog's picture

Communism is eggplant.

Thu, 04/12/2012 - 17:55 | Link to Comment GoinFawr
GoinFawr's picture

Therefore Eggplants rule Warren Buffet.

Did I do that right?

 

Thu, 04/12/2012 - 17:57 | Link to Comment blunderdog
blunderdog's picture

I'm inclined to agree.

Thu, 04/12/2012 - 17:15 | Link to Comment LowProfile
LowProfile's picture

 

(which incidentally is not too far off: once again we remind people of the ominous reality that the BCG study predicted last September: take our word for it - a one time tax on all assets is coming).

(which incidentally is not too far off: once again we remind people of the ominous reality that the BCG study predicted last September: take our word for it - a one time tax on all assets that they know about is coming).

 

Fixed it.  Plan accordingly. 

...And besides which, wouldn't they have to have CASH to pay this hypothetical 30% tax on assets?  Which means somebody needs to BUY them?  Where's THAT cash coming from?!

Seems like that might be a problem.

I've said it before, and I'll say it again:  THE FED WILL BE FORCED TO PRINT CASH TO BUY EVERY LAST SCRAP OF DEBT IN ORDER TO "SAVE" THE SYSTEM.

Thu, 04/12/2012 - 17:28 | Link to Comment The Alarmist
The Alarmist's picture

So how will they get around the Constitutional questions that would seemingly bar a wealth tax? They can tax it if it changes hands or otherwise passes in the course of commerce ... are they going to simply mandate it like they plan to do with the Obamacare "must purchase" mandate?

Thu, 04/12/2012 - 18:31 | Link to Comment LowProfile
LowProfile's picture

Even if they do manage to trample the Constitution and push through this "wealth tax", the problem is, WEALTH is not LEGAL TENDER.

The TAX has to be paid in LEGAL TENDER.  Which means the ASSETS that compose said wealth need to be SOLD.

So again, 30% of assets need to be sold for cash, but where does that cash come from?  Someone has to bid on it!  And since there's a dearth of capital, this would be a major deflationary event.

And besides which:  Which assets are sold?  Stocks?  Bonds?  Real estate?  Commodities?  Art?  Baseball card collections?

There are far to many problems with this "plan" to implement it.

 

I've said it before, and I'll say it again:  THE FED WILL BE FORCED TO PRINT CASH TO BUY EVERY LAST SCRAP OF DEBT IN ORDER TO "SAVE" THE SYSTEM.

Thu, 04/12/2012 - 17:11 | Link to Comment TWSceptic
TWSceptic's picture

I think we should tax charity so liars like Buffet would pay more taxes.

Thu, 04/12/2012 - 17:14 | Link to Comment Sudden Debt
Sudden Debt's picture

A penny saved....

Still means your a trillion short...

Thu, 04/12/2012 - 17:14 | Link to Comment taniquetil
taniquetil's picture

Who does Obama think he's kidding. He could literally seize all income earned this year by all people of the United States as tax (which would of course be paid to Berkshire Hathaway's government contractors) and STILL not have enough money to cover the national deficit (total income was $13T in 2011 vs $15T deficits)

Thu, 04/12/2012 - 17:50 | Link to Comment ghengis86
ghengis86's picture

Total national debt is $15.7 trillion give or take
Current annual budget deficit is $1.3 trillion or so

Used to be an important difference debt vs deficit, but the more you think about it, none of this shut matters when BS Bernanke can just print to infinity.

Thu, 04/12/2012 - 17:15 | Link to Comment Goldilocks
Thu, 04/12/2012 - 17:30 | Link to Comment GoinFawr
GoinFawr's picture

That cartoon has some decent writers, they must read ZH

Thu, 04/12/2012 - 17:15 | Link to Comment MrBoompi
MrBoompi's picture

Come on, rich people didn't flee the country when the top tax rate was over 70%, and they aren't going to flee if they pass this law.  Where would they go?  And if they do flee, good riddance.  I hope they find everything in Costa Rica or Panama or UAE to be up to their lofty standards.

Thu, 04/12/2012 - 17:22 | Link to Comment max2205
max2205's picture

Take a look at how many (75%) fewer millionaires left Maryland when those boneheads thought it would be a great idea to throw a few percent surcharge tax on them a couple years ago.
That worked so well now they want to place higher taxes on those making $100k. Maryland, home of burger flippers

Thu, 04/12/2012 - 17:26 | Link to Comment TMT
TMT's picture

-1

Just another troll who hates those who are more successful than him.  Get a job, work hard, and stop feeling sorry for yourself.

Thu, 04/12/2012 - 17:31 | Link to Comment The Alarmist
The Alarmist's picture

Yeah, you tell him about the good old days when wages were taxed at 70%!

You can fool most of the people often enough.

Thu, 04/12/2012 - 17:17 | Link to Comment besnook
besnook's picture

in the old days people used to pick pennies up when they found them on the ground because something could be bought with a penny. now, only kids and i pick pennies up from the ground. in the not too distant future one dollar will be the new penny and people will start picking them up again because they will be able to buy a piece of bazooka bubble gum with it so i will have competition.

Thu, 04/12/2012 - 17:18 | Link to Comment dirtbagger
dirtbagger's picture

".....but will certainly succeed in driving many wealthy people away from this country."  

Breaks my heart to see so many wealthy people being forced to leave the US because they might have to pay a few more $$ in taxes.  I mean, it's not like their companies and the companies they invest in use the intellectual and physical infrastructure funded primarily by taxpayers.  Can you imagine, when they leave, they might even take their money with them to invest in offshore factories or WTI oil futures.  How could us serfs that remain behind possibly survive?

Thu, 04/12/2012 - 17:25 | Link to Comment TWSceptic
TWSceptic's picture

"intellectual and physical infrastructure"

lol? You mean the worthless public schools and outdated infrastructure? And by the way the majority of taxes are paid by the richest people already. In the US more than anywhere in the world.

 

More taxes =/ more state income. More taxes = smaller pie.

Thu, 04/12/2012 - 17:55 | Link to Comment Death and Gravity
Death and Gravity's picture

Not all taxes are created equal.

Yes, the majority of taxes are paid by "the rich"; incidentally, the same rich that by far reap the most rewards of government-grant privilege; specific legal protections, economies of scale irt. large corporations; corporate personhood/immunity of shareholders, relative benefit from infrastructure investments; rights to resource extractions; patent privilege; airwaves privilege, and of course, the good 'ol reacharound with the peopel in power.

Thu, 04/12/2012 - 18:05 | Link to Comment 11b40
11b40's picture

Think what you like, but this country started falling apart when Reagn came to office by running against government and preaching about lower tax rates on the wealthy. 

From 1980 forward, you can pick just about anything you want to measure, draw a trend line, and what should be up is down and what should be down is up.  The whole idea of "trickle-down" econ has been a total joke - a big yellow shower for the middle class.  Trickle down and "free trade" (another totally stupid concept), and crony capitalism, and a bunch of right-wing idealouges packed on the Supreme Court have conspired to throw open the doors of the Treasury to upper-crust looters who have robbed us blind.

We could fix this over time with political will, but it won't happen.  There are too many mental midgets with big mouths spewing their ignorance, too many who have bought into the 'greed is good' claptrap spawned in the '80's.  That we have a corporate raider in contention for the Presidency speaks volumes about the horrid level our collective intelligence has reached.

Yes, bring back highly progressive tax rates and FORCE the "job creators" to plow profits back into new factories, products, equipment, and jobs....and start creating wealth in this country again.  Do the same with corporations who thinks it is fine to ship the jobs to foreign lands, and then try to blackmail us into allowing the profits to go untaxed.  Tax them anyway, UNLESS those dollars are brought home as investments in building wealth right here in the good old USA.  That should be the only way foreign profits escape taxation.  Those who make their money by skimming other people's assests (the financial industry) would be taxed the heaviest, as they are not capital or labor intensive, hence little to re-invest earnings in.....and this is as it should be.  The finacial industry of 1980 was about 15% of the economy.  When the bubble popped in 2008, it had grown like a huge cancer to be almost 40% of the economy.  And they create nothing.

Want to leave?  Fine.  If you are an individual, good luck and have a happy life in bum fuck Egypt, or wherever else you decide paradise may be.  If you are a corporation, good luck too, because the next thing that needs to be fixed are the trade laws.  American industry should never have to compete with foreign governments - and that means China, primarily, and we should have common sense tariffs to off-set the costs American companies incur doing business here.  The system we have now is dumb.  Don't think so?  Then you are dumb, too.  In the imortal words of Forest Gump - "stupid is as stupid does".

 

Thu, 04/12/2012 - 18:29 | Link to Comment The Alarmist
The Alarmist's picture

Yeah, right ... force me to reinvest.

Maybe I don't need to earn another marginal million dollars, so I start knocking off early. Without the extra million, I don't buy a boat. Good, you say, except for the poor average joes who work in boat building. I also cut back on servants ... good, you say, except for the average joes who might have had jobs as servants. The work I would have done if I had worked a few more hours might have involved restructuring a company or two ... good, you say, for the 300 people I would have laid off; not so good for the 3,000 who get laid off a year down the road when the companies fail.

Thu, 04/12/2012 - 18:52 | Link to Comment 11b40
11b40's picture

Well, pardon me for not especially wanting to become a part of your servants class.

Maybe you would like to explain why so American companies have failed?  Could it be due to unfair foreign competition?  Could it be due to gutting and over-leveraging by corporate raiders?  Or is it all about dumb management?  Did your toes get stepped on?

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