Tax the Rich: Fix Jobs and Deficits

[Toro]

The "rich" are monolithic in the sense much of their wealth comes from stock market gains.
Stock markets gain because of rising short-term profit.
Profit is enhanced by busting unions, outsourcing jobs and dodging taxes.

For three decades after WWII wages rose with productivity, and American workers earned enough money to buy what they produced. That ended in the 1970s. Since '79 US productivity has surged 55% yet workers' wages have essentially flatlined.

While the "richest" 1% of Americans have seen their share of national income grow from less than 10% in 1979 to over 20% today.

How much more money are the "rich" entitled to, in your opinion?

Most of the rich's wealth comes not from gains in the stock market but from owning and controlling businesses. That is different than stock market investment or speculation.

 

[FiscalSanity]

George,

By the bond market, I'm refering to the government debts portion of the bonds market. I don't play in that market, so my terminology isn't always as exact is it should be. The way i understand it those bonds are issued to the Fed by the treasury in exchange for dollars, and the Fed then turns around and sells them on the bond market to anyone thats willing to buy. I could be a little off in my understanding, but as far as i can tell that's the simple version of how it works.

As for having an economy without a bond market, we managed to do it throughout a large portion of human history. However, it wasn't until we started developing things like bonds, stock, etc that the world really started to take off economically. There are problems with the system, but it's still proven better then any other at moving money that's just sitting around to someplace where it can be put to useful work. The biggest problem with the system is human nature-neither buyers or sellers act rationally all the time, and they do a lot of things that really aren't in their own self interest.

I really don't know enough of the details about how The bank of North Dakota is run to have a solid opinion. It all depends on just how much control over it the state government has, and whether a change in the governments ideological makeup will result in the banks policies changing.

 

[FiscalSanity]

George,

How do you define rich? To me there are the rich, and then there are the wealthy. The rich make some money on the market, but most of them work running a company or providing some other service for the wealthy. As one comedian put it- Shaq is rich. The guy who signs his check is WEALTHY.

 

[Toddsterpatriot]

I highly doubt compliance is over 10% of the economy. I'm sure there is a dead weight loss, but that sounds like a gross exaggeration.

This site claims it's $338 billion.

Tax Compliance Costs US $338 Billion a Year

That's closer to 2%.

That may be.

Closer to 2.5% of GDP. That's about 12.5% of historical tax collection.

 

[editec]

People keep talking about North Dakota's fiscal good fortune as though the mere existence of a state bank was the cause.

It's not. NOT REMOTELY the source of ND's good fortune.

THIS is

BISMARCK, N.D. -- A new forecast of North Dakota's tax collections predicts a $1 billion budget surplus in July, continuing a robust financial trend that has defied a national recession and budget deficits in most states.

Oil prices, a key contributor to the state's wealth, are expected to average $70 a barrel for the next two years, the forecast finds.
Revenues are expected to rise almost 10 percent during the same period. An even higher spike is expected in sales tax collections, which provide the biggest share of the budget for North Dakota government.
"I think it's good news, but it's not unexpected," Lt. Gov. Jack Dalrymple said Tuesday. "It shows the economy in North Dakota is still in good shape."
North Dakota's current two-year budget is $8.84 billion, a figure that includes federal aid to the state.


Read more: With oil revenues rolling in, North Dakota predicts $1 billion budget surplus​

​

 

[Toddsterpatriot]

Todd & Steel,

Setting the correct tax rate isn't a science, it's an art. Set it too low and your bond holders get nervous about the countries ability to raise enough revenue to meet all it's obligations, even if everyone else loves it. Set it too high and you stifle economic growth, which in turn leads to falling tax revenues and bond holders getting nervous. Problem is, we're dealing with human perception here on all sides of the issue, and those change constantly.

Right now cutting taxes very far is going to make our deficit situation even worse, and our bond holders are already getting jittery. However, raising the income tax rates themselves is just as bad an idea. About the only thing you can do with the tax code to boost revenues right now is to eliminate loopholes and start treating capital gains as ordinary income. Anything else is too likely to result in the bond market hitting us with higher interest rates, which would in turn make our ability to repay our debts even more in doubt. Like it or not, we're only a financial mistep or two from being in Greece's position, so we can't afford to make many more mistakes.

Keep the bondholders from getting nervous by cutting spending and reforming entitlements.
If you think raising taxes on capital gains will boost revenues, you should look at historical rates and historical revenues. People actually do modify their behavior when rates change.
When that was mentioned to Obama he said, "I would look at raising the capital gains tax, for purposes of fairness"


[ame=http://www.youtube.com/watch?v=c4iy2OfScQE]YouTube - ‪Obama's Capital Gains Tax "Fairness"‬‏[/ame]
LOL!

 

[Toddsterpatriot]

Todd & Steel,

Setting the correct tax rate isn't a science, it's an art. Set it too low and your bond holders get nervous about the countries ability to raise enough revenue to meet all it's obligations, even if everyone else loves it. Set it too high and you stifle economic growth, which in turn leads to falling tax revenues and bond holders getting nervous. Problem is, we're dealing with human perception here on all sides of the issue, and those change constantly.

Right now cutting taxes very far is going to make our deficit situation even worse, and our bond holders are already getting jittery. However, raising the income tax rates themselves is just as bad an idea. About the only thing you can do with the tax code to boost revenues right now is to eliminate loopholes and start treating capital gains as ordinary income. Anything else is too likely to result in the bond market hitting us with higher interest rates, which would in turn make our ability to repay our debts even more in doubt. Like it or not, we're only a financial mistep or two from being in Greece's position, so we can't afford to make many more mistakes.

I'm assuming when you use the term bond market you're referring to a private bond market.
Am I wrong?

Is there a way of constructing an economy without private bond markets?

What is your impression of the state of North Dakota doing business as the State Bank of North Dakota?

“The Bank of North Dakota: A Model for Massachusetts and Other States?” — Response to the May 2011 Report by the Federal Reserve Bank of Boston « WEB OF DEBT BLOG

Ellen Brown is a far left wing lawyer with serious math issues.
If you think giving state treasurers a slush fund to make politically motivated loans is a good idea, you should ask how well that worked out with Fannie and Freddie.

 

[Steelplate]

I find it amusing that when someone posts something that is in conflict with their line of thinking.. then all of a sudden the source gets slammed. Both sides do it... I do it... but it is amusing.

 

[georgephillip]

George,

How do you define rich? To me there are the rich, and then there are the wealthy. The rich make some money on the market, but most of them work running a company or providing some other service for the wealthy. As one comedian put it- Shaq is rich. The guy who signs his check is WEALTHY.

This article from Phil'sStockWorld is where my current definition of rich (or wealthy) comes from:

"This country isn’t old and it isn’t sick but it has been drugged and it has been beaten down and robbed and I am going to tell you that I not only saw it happen, but I think I got a pretty good look at the 10,000 guys who did it. It was the top 0.01%! Who are the top 0,01%?

"They are the top 10,000 income earners in the United States of America.

"If you THINK you are in the top 0.01%, you are not.

"People in the top 10,000 know only KNOW they are in the top 0.01% but they know where they rank as well.

"The median ANNUAL income of a person in the top 0.01% is $50,000,0000. They have $350,000,000 in assets and, since 1978, that is an increase of 550% – how have you done the past 30 years?

America is 234 Years Old Today – Is It Finished? | Phil

 

[georgephillip]

Todd & Steel,

Setting the correct tax rate isn't a science, it's an art. Set it too low and your bond holders get nervous about the countries ability to raise enough revenue to meet all it's obligations, even if everyone else loves it. Set it too high and you stifle economic growth, which in turn leads to falling tax revenues and bond holders getting nervous. Problem is, we're dealing with human perception here on all sides of the issue, and those change constantly.

Right now cutting taxes very far is going to make our deficit situation even worse, and our bond holders are already getting jittery. However, raising the income tax rates themselves is just as bad an idea. About the only thing you can do with the tax code to boost revenues right now is to eliminate loopholes and start treating capital gains as ordinary income. Anything else is too likely to result in the bond market hitting us with higher interest rates, which would in turn make our ability to repay our debts even more in doubt. Like it or not, we're only a financial mistep or two from being in Greece's position, so we can't afford to make many more mistakes.

I'm assuming when you use the term bond market you're referring to a private bond market.
Am I wrong?

Is there a way of constructing an economy without private bond markets?

What is your impression of the state of North Dakota doing business as the State Bank of North Dakota?

“The Bank of North Dakota: A Model for Massachusetts and Other States?” — Response to the May 2011 Report by the Federal Reserve Bank of Boston « WEB OF DEBT BLOG

Ellen Brown is a far left wing lawyer with serious math issues.
If you think giving state treasurers a slush fund to make politically motivated loans is a good idea, you should ask how well that worked out with Fannie and Freddie.

You should direct that question to Hank Paulson and Barney Frank.

 

[Toddsterpatriot]

I'm assuming when you use the term bond market you're referring to a private bond market.
Am I wrong?

Is there a way of constructing an economy without private bond markets?

What is your impression of the state of North Dakota doing business as the State Bank of North Dakota?

“The Bank of North Dakota: A Model for Massachusetts and Other States?” — Response to the May 2011 Report by the Federal Reserve Bank of Boston « WEB OF DEBT BLOG

Ellen Brown is a far left wing lawyer with serious math issues.
If you think giving state treasurers a slush fund to make politically motivated loans is a good idea, you should ask how well that worked out with Fannie and Freddie.

You should direct that question to Hank Paulson and Barney Frank.

Barney would probably support state banks, more places to employ his boyfriends.
Paulson would probably be against state banks, because he understands markets.

 

[georgephillip]

People keep talking about North Dakota's fiscal good fortune as though the mere existence of a state bank was the cause.

It's not. NOT REMOTELY the source of ND's good fortune.

THIS is

BISMARCK, N.D. -- A new forecast of North Dakota's tax collections predicts a $1 billion budget surplus in July, continuing a robust financial trend that has defied a national recession and budget deficits in most states.

Oil prices, a key contributor to the state's wealth, are expected to average $70 a barrel for the next two years, the forecast finds.
Revenues are expected to rise almost 10 percent during the same period. An even higher spike is expected in sales tax collections, which provide the biggest share of the budget for North Dakota government.
"I think it's good news, but it's not unexpected," Lt. Gov. Jack Dalrymple said Tuesday. "It shows the economy in North Dakota is still in good shape."
North Dakota's current two-year budget is $8.84 billion, a figure that includes federal aid to the state.


Read more: With oil revenues rolling in, North Dakota predicts $1 billion budget surplus​

​

Think this guy is a conservative?

"'Certainly one should not be running around saying, 'We've got a billion dollars, therefore we can spend it,' because there are a lot of things we need to do,' Holmberg said.'"

With oil revenues rolling in, North Dakota predicts $1 billion budget surplus

Many states have far more oil than North Dakota.

State banks, even one as conservative as North Dakota's, keep a lot of their citizens' money within state borders as opposed to flying off to Wall Street where the money is used for speculation and bonuses.

 

[georgephillip]

Ellen Brown is a far left wing lawyer with serious math issues.
If you think giving state treasurers a slush fund to make politically motivated loans is a good idea, you should ask how well that worked out with Fannie and Freddie.

You should direct that question to Hank Paulson and Barney Frank.

Barney would probably support state banks, more places to employ his boyfriends.
Paulson would probably be against state banks, because he understands markets.

That's rich.

Paulson understands how to socialize risk and privatize profit.

As head of Goldman Sachs while the credit bubble inflated and then as head of government's "rescue team" when his bubble popped, he's a far right wing banker with ethical deficiency syndrome.

 

[Toddsterpatriot]

People keep talking about North Dakota's fiscal good fortune as though the mere existence of a state bank was the cause.

It's not. NOT REMOTELY the source of ND's good fortune.

THIS is

BISMARCK, N.D. -- A new forecast of North Dakota's tax collections predicts a $1 billion budget surplus in July, continuing a robust financial trend that has defied a national recession and budget deficits in most states.

Oil prices, a key contributor to the state's wealth, are expected to average $70 a barrel for the next two years, the forecast finds.
Revenues are expected to rise almost 10 percent during the same period. An even higher spike is expected in sales tax collections, which provide the biggest share of the budget for North Dakota government.
"I think it's good news, but it's not unexpected," Lt. Gov. Jack Dalrymple said Tuesday. "It shows the economy in North Dakota is still in good shape."
North Dakota's current two-year budget is $8.84 billion, a figure that includes federal aid to the state.


Read more: With oil revenues rolling in, North Dakota predicts $1 billion budget surplus​

​

Think this guy is a conservative?

"'Certainly one should not be running around saying, 'We've got a billion dollars, therefore we can spend it,' because there are a lot of things we need to do,' Holmberg said.'"

With oil revenues rolling in, North Dakota predicts $1 billion budget surplus

Many states have far more oil than North Dakota.

State banks, even one as conservative as North Dakota's, keep a lot of their citizens' money within state borders as opposed to flying off to Wall Street where the money is used for speculation and bonuses.

Please explain how the state bank does that.

 

[Toddsterpatriot]

You should direct that question to Hank Paulson and Barney Frank.

Barney would probably support state banks, more places to employ his boyfriends.
Paulson would probably be against state banks, because he understands markets.

That's rich.

Paulson understands how to socialize risk and privatize profit.

As head of Goldman Sachs while the credit bubble inflated and then as head of government's "rescue team" when his bubble popped, he's a far right wing banker with ethical deficiency syndrome.

Yeah, no chance for corrupt politicians to socialize risk and privatize profit with a state bank at their disposal. LOL!

 

[georgephillip]

Only one state in this union has a budget surplus and more jobs than job seekers.
It's also the only state with its own bank.
Coincidence.

 

[Toddsterpatriot]

Only one state in this union has a budget surplus and more jobs than job seekers.
It's also the only state with its own bank.
Coincidence.

Yes, coincidence.
If every state had governments as conservative as ND, they could all have a surplus.
Instead, too many are as liberal as Illinois and California.
How are their budgets lately?

 

[FiscalSanity]

Todd,

We aren't going to agree about capital gains. As far as I am concerned income from any source is income, period. It should be treated just like any other income and taxed accordingly. For gods sake, if the IRS can insist that waiters tip money is taxable at the normal rate then why should capital gains be special?

As for your comment about collecting it- I get where you're coming from, but since I jumped into this thread I've argued that you can't fix the tax system without first cutting out all the loopholes and exemptions that allow people to hide their income. Accountants are usually pretty smart, but they don't walk on water, and they can't find you a loophole where none exists.

 

[FiscalSanity]

George,

Ok, You're talking about what i think of as the wealthy. These are the people who have so much that they couldnt' spend it all if they tried. I once read an article that did the math on that kind of money, and they earn so much off interest and other types of returns on their investments that they can spend pretty much however much they want without ever coming close to touching their principle balance.

Frankly, once you've got that kind of money the chances that you (or your descendants) will ever be anything but wealthy are pretty slight. About the only things that can wipe you out are war or a change of government that leads to the destruction/confiscation of your assets. Even then the chances are that you haven't put all your eggs in one basket and still have plenty of untouched assets someplace else.

 

[Toddsterpatriot]

Todd,

We aren't going to agree about capital gains. As far as I am concerned income from any source is income, period. It should be treated just like any other income and taxed accordingly. For gods sake, if the IRS can insist that waiters tip money is taxable at the normal rate then why should capital gains be special?

As for your comment about collecting it- I get where you're coming from, but since I jumped into this thread I've argued that you can't fix the tax system without first cutting out all the loopholes and exemptions that allow people to hide their income. Accountants are usually pretty smart, but they don't walk on water, and they can't find you a loophole where none exists.

Sorry FS, but most people can't change their income in reaction to a change in rates.
Capital gains, on the other hand, are voluntary. If the rates are too high, no one will sell.
You can be a hard ass and raise the rate to 90% and you'll collect almost no tax.
So what do you want, tax collection or punishment of capital gains?