Poor iddle rich folks, eh, being picked on by Buffett.

rickyp wrote:b

It's a proven encomonic fact that 'rich soaking does not generate more revenue to the treasury, so one has to assume that your motives have nothing to do with economics, and only to do with growing government.

So you think that moving the tax rates back to 2000 would not generate more revenue? really? Please provide a source for this "proven econmoic fact".
What I will point to is the revenues that were accruing to the treasury before 2001 tax cuts. A surplus was created...Investment was robust, unemployment was low.
Based on your faulty reasoning, retruning to those taxation levels could not produce the very effects that existed in 2000. Was that all an illusion?
According to the CBO 2/3 of the deficit is due the Bush Tax cuts. Thats a perhaps inconvenient fact.

Where have I ever stated this? I am used to your poor grammar and spelling, But I think it was someone else who said this.

Just to help:
My avatar looks like a fat Russian bearded general. If this picture is next to words, they probably are mine. I just pile this on the rubble of poor facts from RickyP.

I know it is hard since English is your second language, coming from Canada and all.

r

I dont, and I'm not going to to post a specific link to cover every single arguement made. When President Kennedy, President Reagan, both Presidents Bush, and even a reluctant President Obama stand infront of the American people ans say that lowering taxes in a saggin economy will generate more treasury revunes I don't need a link to buy the idea.

Oh, I understand how your thought process works. If someone says it, it must be true. See I wouldn't beleive what a politician says, just becasue I liked what I heard. I'd need actual facts.
So looking at actual tax rvenues the year after a tax cut is a way of looking at the ablity of tax cuts to generate more revenue. A few did (kennedy 62, a lot didn't Reagan 81, Bush 2001)
It depends on the nature of the tax cut and the growth in the economic activity.
By the way, reagan raised taxes (a lot) after his huge tax cuts. Specifically because revenues fell out of bed. (And the economy didn't roar ahead to compensate as it did with kennedy)

r

Your entire Buffet spiel, which nearly everyone here and in the outside world *has* refuted no matter how many times you say that it has not been, is a concept that boosting taxes on the "rich" will not deter investing and yield more tax revenue

Actually no one has refuted it. Oh, perhaps with rhetoric and repetions of unsubstantiated claims. But no one, in anything anybody has linked, actually looked at economic activity in the periods of higher tax and found lower investment activity. The fact is that it never happened.
Investment activity was higher in periods when capital gains tax were much higher. That isn't Buffetts opionion its financial record. Which is why no one has refuted his claims. They can't.
Please provide a reference to actual data not opinion. Buffett supported his claims with actual economic data R....
You can't just make counter claims without evidence and expect to be taken seriously.

Steve:
We've been through the analysis by the CBO before... They aren't great prognosticators..Who is? (Well, Krugmans been right a lot. Put that in your pipe and smoke it) .
But it isn't prognostication you are taking umbrage with...its analysis of results. Actual financial records.
Here's a link to a pretty good analysis with a lot of links. the actual CBO report is available through this story as well. You'd be right to check on Samnuelsons' references to the CBO since it is an "opinion piece". But the links to support the CBO conclusions are there. (There's a better story but I've run out of time to search for it)

[url]

http://www.washingtonpost.com/business/economy/running-in-the-red-how-the-us-on-the-road-to-surplus-detoured-to-massive-debt/2011/04/28/AFFU7rNF_story_2.html

[/url]

The debt was accumulated from 2001 mostly from lowered revenues. Some through two untaxed for, wars. And at the end of the period about 15% through stimulus spending. But most accumulated because rvenues were reduced from the tax cuts. Cuts which really did nothing to spur investment. Or do much in the way of job creation. At the end of his term, after 8 years of cuts, employment was lower for Bush than before the tax cuts took effect.

rickyp wrote:The debt was accumulated from 2001 mostly from lowered revenues. Some through two untaxed for, wars. And at the end of the period about 15% through stimulus spending. But most accumulated because rvenues were reduced from the tax cuts. Cuts which really did nothing to spur investment. Or do much in the way of job creation. At the end of his term, after 8 years of cuts, employment was lower for Bush than before the tax cuts took effect.

Can you do math?

If raising taxes on the rich would net (allegedly) $50B a year, then multiply that times 11 (2001-2011--eleven fiscal years). How much is that?

Without a calculator, that's a bit more than half a trillion. So, where did the other $9.5T in debt (taking $5T as a starting point)? Yet, you wrote:

According to the CBO 2/3 of the deficit is due the Bush Tax cuts. Thats a perhaps inconvenient fact.

So, either the CBO is full of it OR you misread the report. The only way your statement is accurate is if raising the taxes would yield a bit less than a Trillion per year. Not even Buffett claims that.

bbauska wrote:RickyP,
We are getting nowhere, and RJ wants to get this back on topic.

You dance around like a cat on a hot tin roof...

Well said.

17. Allow AT&T to acquire T-Mobile. They've promised to bring jobs back to the US (T-Mobile is owned by a German company). They also want to update their network which will both create jobs and give us more broadband for video.

I just completed an analysis for work (on a related topic) that notes that the US has the lowest mobile telecom pricing in the developed world.

18. Auction off more wireless spectrum. It's been over 3 years. This will do far more for competition than blocking the AT&T - T-Mobile merger. It will also bring in revenue for the government, both from the auction, and the economic effects of the accompanying build out. Not to mention a few jobs.

Just on the brouhaha about Buffet, I'm comfortable with his proposal to increase taxes on those making $1,000,000.

Fundamentally though, I think the important point is that this is not about demand, which is the Keynesian and Democratic party focus. To fix the economy you have to worry about productivity. Many of us have listed a number of ideas that would increase productivity which will help our economy long term. Whatever your political leanings, don't you have to fault Obama for not providing at least some of these win-win solutions?

RUFFHAUS 8 wrote:

Ray Jay wrote:Just on the brouhaha about Buffet, I'm comfortable with his proposal to increase taxes on those making $1,000,000.

Monte, I'm curious why a rational person feels this way. I know why a socialist does. Their goal is to have the government grab as much money and power as they ca. But why do you think that progressive tax rates are fair? What’s wrong with a flat rate? A person making $1,000,000 a year taxes at 27% pays $270,000. A person making $100,000 a year pays $27,000. And a person making $10,000 pays $2,700. How is this unfair? I’ll never make $1,000,000 a year, but I might make $100,000. $27,000 is a lot of money. That’s just income tax. It doesn’t account for social security, state taxes, sales taxes, property taxes, personal property taxes, gasoline taxes, utilities taxes, airport taxes, hotel taxes, licenses, user fees, tolls, alcohol taxes, and on and on and on. All of that easily adds up to more than 50% of a person’s income. How is that fair?

What’s worse is that the tax raises never stop with the rich. They start out in concept as targeting only the rich, but then the definition of rich gets murky and it quickly morphs into an across the board hike. I think that you need to be careful about setting a limit at $1,000,000 too. Certainly anyone who’s income is that much is doing very well (i.e. rich). However, for a business, $1,000,000 really isn’t all that wealthy, because we’re not talking profits here, but gross revenues. The owner of many business grossing $1,000,000 would be lucky to pay themselves 10% of that. When you keep in mind that the business pays even more taxes than individuals do, and actually has to acquire materials and produce a product that costs them money, that $1,000,000 gets carved up very fast.
This debt issue is not one of not raising enough revenue. It’s a spending problem. Raising taxes is a band aid approach, and it’s never a one-time solution. Once you give in to irresponsible and compulsive spenders who exceed their budget, they will be back again next year to ask for another tax raise. Where does it stop?

I do understand your arguments, but I think we have to be pragmatic about this too. We have a huge debt problem, and solving it entirely with spending cuts will cause a lot of pain. Yes, we can cut a lot of fat, but there will be muscle in there too. What's wrong with a 10:1 ratio of spending cuts to tax increases? I can be convinced to do 5:1 in a political compromise. We have to do something about the debt overhang.

For most businesses, it is the uncertainty and the regulatory environment that is the problem, not a few points of income tax. It's the moral hazard, and the political class picking winners and losers based on its ideology and connections.

Just on one technical point regarding businesses, we are not talking about taxing gross receipts. Rather, we are talking about taxing net income, which is after all those expenses. The tax on income of over $1 million would be on net income. If you are spending the money building your business, you wouldn't incur this tax.

This is a great country, and there is amazing opportunity. For some people who have the drive, and capability, hard work, and some luck, they can make millions. The nature of the information age is winner takes all, resulting in great disparities of wealth. I think that capitalism is great, but we do have to round out the edges a bit. If you are making over $1 million a year, you are living a pretty good life. If you pay $350,000 in tax instead of $300,000, it's fine. You'll can still pretty much buy anything a human really needs.

The people who I know who have that level of income aren't in it for the money anyway. It's about the challenge and the accomplishment. I do agree with Buffet in that the 4% of income tax that we are talking about is not going to drive their decisions.

Well, Randy, I think a rational person could make an argument that a progressive tax rate is fairer than a flat rate system. lets take your example of someone making a million dollars and another making a hundred thousand. If there was a 27% flat rate the millionaire would pay $270,000 in taxes and the person making $100,000 would pay $27,000 in taxes. What if you decided to raise the rate to 35%? Who do you imagine would have more difficulty dealing with the tax hike?At lower levels of income each dollar is more important than when you get to higher lefvels of income. If you tax someone at 27% and they are making $25K you might be causing them to not be able to pay rent, or provide food for their families. The progressive tax system is based on the premise that once your basic needs for food, housing, and other basic necessities are met then you can afford to pay a higher rate on your income

I find this description of government as an enitity that does things or want more taxes to be a strange concept. There is no such thing. Of course, there are special interest groups that want to keep getting money from the government and that is why the size of government keeps getting larger. Republicans in power do not want to reduce the size of government--they want of all that government money to go to their business supporters. But of course they cut taxes too,, which is completely irresponsible.

As for Buffett's suggesgtion about the rich paying higher taxes--of course they should. They should do so for their own benefit. Middle-class American has been taking it on the chin while U.S> businesses have been taking huge profits, Wall Street has been making large amounts of omoney, and banks were not only bailed out but did no what we needed them to do, whhich is to lend to small businesses.The middle-cllass is being squeezed at every turn. Their wages are flat, their hours are longer, their benefits are being cut, they are paying for entitlement programs they may never benefit from, they are afraid they are going to lose their jobs, and their kids are finding it increasingly unaffordable to go to colllege.

Whichever party listens to the complaints of the middle-class wins in 2012. The middle-class wants jobs, they want entitlement reform, and they want the rich to contribute a little bit. I don't know how any rational person who could be worried about some taxes for the rich when the middle-class is getting clobberred. Keep catering to the top 2% and see how far it gets you. It is not about hoew how much it will reduce the defiicit, it is about shared sacrifice. The rich have been complete hogs over the past 30 years, essentially taking all of the increase (after inflicatoin) produced by our economy. They have also done quite well since the financial meltdown. And now if we ask them to contribute just a little bit, they won't do it?

Ray Jay wrote:I do understand your arguments, but I think we have to be pragmatic about this too. We have a huge debt problem, and solving it entirely with spending cuts will cause a lot of pain. Yes, we can cut a lot of fat, but there will be muscle in there too. What's wrong with a 10:1 ratio of spending cuts to tax increases? I can be convinced to do 5:1 in a political compromise. We have to do something about the debt overhang.

I think what you've missed is that the budget of the government has doubled in 10 years. Doubled.

How many people can say their salaries have doubled?

There is a major problem: we spend too much money and have escalated that over the past 10+ years. If raising taxes is the cure, then what will be the end result of this "cure?"

We already see what this President wants: more "investments." Simply put, when the government is hungry there is no such thing as a "high enough" tax rate. There is no limit on it. They take it, they spend it, and they leverage it by borrowing more.

The problem isn't revenues. The problem isn't even the size of government. It is the belief held by some that government is able to solve nearly every problem of life.

Think I'm exaggerating? Then, explain the "obesity epidemic" and the government champing at the bit to restrict food choices. Explain the reflex of the government to "solve" the housing crisis, to "create" jobs, to promote "fairness." The government is not the answer to every problem.

We had an energy crisis in the 70's. The solution? The Department of Energy.

Why does the Department of Education exist? As far as I can tell, it is to take money from States, skim some off the top, and place restrictions on what it chooses to give back.

Government creep is all around us. That, not religion and not racial bigotry (the current media/Democrat meme) is the core of the TEA Party movement.

For most businesses, it is the uncertainty and the regulatory environment that is the problem, not a few points of income tax. It's the moral hazard, and the political class picking winners and losers based on its ideology and connections.

Right, which gets back to the intrusiveness of government. Anyone who will actually reduce the things you list will also reduce taxes, or at least keep them in stasis.

This is a great country, and there is amazing opportunity. For some people who have the drive, and capability, hard work, and some luck, they can make millions.

Absolutely! The question before us is whether the government should seize that money (or part of it) and give it to those who have no drive and won't work. There are hundreds of thousands of Americans (and non-Americans) who are satisfied with existing with the government's help.

The nature of the information age is winner takes all, resulting in great disparities of wealth. I think that capitalism is great, but we do have to round out the edges a bit. If you are making over $1 million a year, you are living a pretty good life. If you pay $350,000 in tax instead of $300,000, it's fine. You'll can still pretty much buy anything a human really needs.

True, but what impact would that have on the debt? Almost none. Furthermore, until government spending is brought in line with government income taxing the rich will be a consistent theme of the Left. Soon, $350,000 will not be their "fair share" anymore. Why not $400K? $500K? And, on and on it goes. And, raising those taxes are an illusion. They simply cannot come close to closing the budget gap significantly. There just aren't enough rich people to make a big difference.

The people who I know who have that level of income aren't in it for the money anyway. It's about the challenge and the accomplishment. I do agree with Buffet in that the 4% of income tax that we are talking about is not going to drive their decisions.

The problem with Buffett is that his plan does not address the problem. He's talking about zits and the country has cancer.

I like the way that Freeman and Dr. Fate frame this debate. You really do see the 2 ideologies in conflict in our country, without the nastiness that confuses the debate. For all the political gamesmanship that we will see over the next 15 months (and beyond), this is essentially what the election is about.

Freeman:

I find this description of government as an enitity that does things or want more taxes to be a strange concept.

I find it is helpful to look at things from different perspectives. We can describe a human as a biosphere for bacteria, since most of our cells are just that. Or perhaps a human is just a mechanism developed by DNA to replicates itself. Some describe the earth as a living entity, or as a spaceship hurling through the galaxy..

I'm not saying that you have to ultimately agree that this is the best way to look at it, but I think it is worth understanding government as a system just like we can understand Corporations as systems, or families as systems.

I figured this place would be teeming with activity before I got back. So here's a thought experiment. What if you can describe the government as a system. Like many systems, its basic instinct is to grow. Like people, and cancer, and corporations, and ant colonies, and sharks, it can't just keep steady.

Under that perspective, what are the limits to its growth? For a corporation it is money, and for a shark it is food. For people it is adulthood, and for cancer it is the death of the host. What limits a government's growth?

The government always defines its mission as valuable, and can always contemplate additional mission. Let's build more roads or make the air even cleaner, or provide more medical services to more people. There's always somebody in the government bureaucracy who feels like it could do more and do better.

And with any organization, there's a scarcity of resources. Man A doesn't want to work any harder so he calls for Man B to get the job done. He wants his pension to be higher, and his retirement to be sooner. This is the nature of things. It happens in the private sector as well. It is also very much the nature of government employees, especially after they've been in the system for 10 years and have either 10 or 20 years to go (depending on their job function) for retirement and a lifetime pension. They realize they can't change the system, and they can't or it doesn't make personal sense to go anywhere else. So they hang out till pension day.

So, getting back to my question of the 2nd paragraph, what limits a government's growth.? If there were a natural process, we wouldn't still be subsidizing mohair. (It's a type of wool that was worn by US soldiers in WWII to keep warm -- I hear that it is of limited use in Afghanistan and Iraq.) Well, for most of the developing world it is a function of cash. They can't collect anymore from their people, and the IMF and World Bank won't lend them any more money because their debt levels are too high. For a more developed country such as Greece or Portugal, it is a function of German and French resistance to even more loans. But what limits the US government's desire to grow? It can always print more cash, and other countries are willing to lend, until they aren't.

I think that's the point that Randy and Steve are making. How do you tame the beast?

What limits a government's growth?

It should be the electorates inability to accept higher levels of taxation tied directly to their willingness to accept lower levels of service.(Or vice versa). Compromise by the electorate. It happened in the 90s in other countres.
But it isn't really. Because in the 1980s deficits stopped mattering politically. Whereas deficit spending after WWII was anathema, after 1981 the public became willing to accept that their government go into deficit year after year and there was no political pay back.
People become used to a level of service or entitlement, and a corresponding level of taxation. There was a detachment between the requirement to pay for the services and entitlements. Its a decades long conditioning that culminated in the lousy Bush budgets.
There still exists this disconnect. Medicare, Medicaid, Social Security and Defence account for 60% of the 210 budget (UI another 16.3%).
http://upload.wikimedia.org/wikipedia/e ... tegory.jpg

All the polls suggest that changes to the benefits are politically uacceptable. (There does appear to be a little more acceptance of lower defence spending) . And yet, tax increases are also difficult to imposible to implement in the current poitical system. even those aimed at the small percentage of people who havn't seen their living standards affected. Indeed have thrived.
Somehow the political system has to arrive at an unsticking. Where there is acceptance that both things have to happen ... taxes have to go back to where they were when things were better, and expenditures have to be pared. When there is a stubborn reluctance to commit to both things, there will continue to be the disfunctional mess that exists.
That the mess exists, and creates enormous uncertainty as a result, delays any recovery. Which in the end is essential to grow out of the deficits.
You think any republican candidates will suggest raising the age of qualification for Medicare in the debate? Or will that be avoided as losing policy? (It its only expenditures than the 75% from entitlements have to be specifically addressed.) If one of them had the sense to admit that cutting spending isn't the only answer, and that they can't magically make gas $2 a gallon, they'd bury Obama.
But none of them are all that rationale. (well, maybe Huntsman...amnd he ain't getting elected)

Based upon what RickyP is saying, the political problem is people voting for representatives who will give them the most "stuff". (Please correct me if I do not retain the meaning you are trying to display).

How to correct this?... First, I think we need to limit the size of the monies provided to the government. This can be done by legislating the total amount that the government can take from the people to 15%.

Secondly, we need to limit the structure that the government can use to spend beyond it's means. This can be done with a Balanced Budget Amendment to the US Constitution. The government cannot go beyond it's income.

Lastly, we need to change the mentality of the electorate that is expecting to be given freebies. This can be achieved be having no deductions allowed. The electorate will see that the money that is taken from them is directly funding the government. The electorate will have an epiphany about the large budget chunk from their income. Then the decisions will be made. Do we need to provide monies for the National parks? Welfare? The electorate will find the level of support they want to provide.

In conclusion, RJ asked how we limit government, not how we have not limited government in the past. This is a repetitive problem with the current administration that RickyP have demonstrated.

bbauska

Based upon what RickyP is saying, the political problem is people voting for representatives who will give them the most "stuff". (Please correct me if I do not retain the meaning you are trying to display).

Pretty close. But more like, the same stuff but at less cost. Cutting taxes and telling people nothing is going to change about the services or entitlements they receive. (Usually when new services are brought in there is a discussion about taxation or ways to pay for them. Not always, but usually.)
That may seem subtly different but its a key distinction.
We recently saw a mayor elected in Toronto who got in by talking about "ending the gravy train". He was going to balance the cities books, not raise property taxes for fees, but it wasn't going to affect a single program. Guess what? There really wasn't the waste . Now people are debating whether having a 1,000 fewer police and 1,000 fewer firemen makes sense in order to keep taxes exactly the same. And the discussion isn't going that well for the tax cutters. Still, its a discussion worth having since it does mean that there is a reappraissal of priorities.)

The problem with a balanced budget amendment is that, when a real emergency occurs that depends upon a defict (a war or an economic bailout of fundamental importance like 2008 -9) you've handicapped your government. The stupid debate over the debt ceiling points that out clearly.)
You guys all like to howl about keynes as a problem. Keynes wasn't followed in your nation from 81 on. If he had been, you'd have run surpluses for most of the 80's and 90s and early 2000. When the shit hit the fan, there wouldn't have been much debt. If any,
You can't look at getting out of thirty years of mismanagement, exacerbated by the enormity of the financial meltdown (caused by the basic idea that regulation on financial transactions should be limited) and expect that you can get out of it quickly. This has to be sold into the US as a 2 decades solution the way paying off the WWII debt was sold. Unfortunately that should mean both higher taxes and lower expectations but on one side you have a group ideologically oppossed to any reasonable level of taxation, and on the other you have a group that can't organize its priorities, even amongst itself. That, and you only seem to have 2 sides in any debate. And no real room for compromise.

Its also a question of values. Americans share with most Westerners a desire that the least among you should be treated reasonably well. But at the same time you have an innate worry that someone is going to get something they don't deserve.(miilionares and billionare wall street bankers excepted) So you often saddle the ways you have of ensuring a safety net with a beauracracy that makes the delivery of the "safety net" horribly inefficient.. An example is the idea that no one can be turned away from the emergency room. Meaning universal healthcare ends up being delivered by the most costly means possible. (I simplify to make the point. But you get the drift.) The Swedes have a "lavish" unemployment insurance system. But it helped them immediately, and automatically, respond to the recession, and they climbed out of it faster than almost anyone. With a lower over all cost. Why? Because no large group was overly affected so the domestic economy didn't deflate when they ended their spending completely. . Waiting too long, or spending too cheaply in the initial stages means that other western nations saw a downward cycle begin before their actions managed to have an impact.)

So how do you balance the desire for a fairly equitable society, with the concept of the rugged self sustained individual thriving in competition. Seems to mean that there can't exist both. That there must be compromise. Politically right now ... at least one side thinks it doesn't have to compromise but that in doing so the quality of society won't be degraded. It would be worth everyone taking a history lesson on life for the average person in the 1880s and 1890s before you repeal the 20th century.

As 9/11 comes around, its worth considering the horrible decisions that were made after the event. From an article by Slate that talks about misplaced priorities and the idea that lower taxes are an end in themselves... In response to the 9/11 the GWOT meant,

And we spent, according to one estimate, $3 trillion. ..... Finally, we stopped investing in our own infrastructure—think what $3 trillion could have done for roads, research, education, or even private investment, if a part of that sum had just been left in taxpayers' pockets—and we missed the chance to rethink our national energy policy. After 9/11, the president could have gone to the nation, declared an emergency, explained that wars would have to be fought and would have to be paid for—perhaps, appropriately, through a gasoline tax. He would have had enormous support. It's hard to remember now, but I could just about fill the tank of my car for $20 back in 2001. At the time, I'd have been happy to make it $21 if it helped the marines in Afghanistan. Instead, the president cut taxes and increased defense spending. We are only now paying the price.

http://www.slate.com/id/2302754/