Truth about American taxes.

[Superfreakie]

I just have a lot more distrust for politicians than I do rich people.

I see a problem here. I have worked with both for a large part of my life, and both are unscrupulous, ego driven, soul sucking vampires. The driving forth behind both is nearly indistinguishable. Yes, there are always some good ones but they are equally few and far between. Sleep with both eyes open. 

[UncleEbinezer]

I just have a lot more distrust for politicians than I do rich people.

I see a problem here. I have worked with both for a large part of my life, and both are unscrupulous, ego driven, soul sucking vampires. The driving forth behind both is nearly indistinguishable. Yes, there are always some good ones but they are equally few and far between. Sleep with both eyes open.

What is considered "rich?"  Over $100K, over $200K, $1 million?  I'm just asking here as I have never really felt like this "rich" tag has ever been clearly defined.  Some say over $1mill and say say as little as $150K household income. 

[kellerb]

I just have a lot more distrust for politicians than I do rich people.

Yeah, I trust a lot of the lower-middle-class politicians too

[gah]

I just have a lot more distrust for politicians than I do rich people.

I see a problem here. I have worked with both for a large part of my life, and both are unscrupulous, ego driven, soul sucking vampires. The driving forth behind both is nearly indistinguishable. Yes, there are always some good ones but they are equally few and far between. Sleep with both eyes open.

What is considered "rich?"  Over $100K, over $200K, $1 million?  I'm just asking here as I have never really felt like this "rich" tag has ever been clearly defined.  Some say over $1mill and say say as little as $150K household income.

I would highly recommend taking a few minutes to read this:

http://sociology.ucsc.edu/whorulesamerica/power/investment_manager.html

[runawayjimbo]

I just have a lot more distrust for politicians than I do rich people.

I see a problem here. I have worked with both for a large part of my life, and both are unscrupulous, ego driven, soul sucking vampires. The driving forth behind both is nearly indistinguishable. Yes, there are always some good ones but they are equally few and far between. Sleep with both eyes open.

That's a good point. I guess I should have said my faith in free markets is stronger than my faith in politics. It's true that greed and corruption is every bit as rampant in the private sector as it is in the public. The difference is that profit motivates private enterprise to allocate resources far more effectively than gov't ever could because it has no incentive to do so. If your company or small business or h3tty veggie burrito stand doesn't properly manage it's revenues and expenses, it will be forced to shut down. But when the gov't runs in the red, they can finance their overspending or print more money which only creates more unintended consequences of gov't meddling in the "free market".

And I'll preemptively counter the question about how the free market worked out last time (Hicks, I'm looking at you :wink:) by saying that we can't say the free market failed because it is a fallacy to pretend that it actually exists. We have a pseudo-free market system where gov't intervention in markets creates inefficiencies and improper incentives resulting in adverse allocations of capital. The risk/reward trade-off no longer applies because financial institutions have found a way to privatize profits and socialize losses. The current system is broken not because capitalism doesn't work but because risk has been taken out of the equation.

I just have a lot more distrust for politicians than I do rich people.

I see a problem here. I have worked with both for a large part of my life, and both are unscrupulous, ego driven, soul sucking vampires. The driving forth behind both is nearly indistinguishable. Yes, there are always some good ones but they are equally few and far between. Sleep with both eyes open.

What is considered "rich?"  Over $100K, over $200K, $1 million?  I'm just asking here as I have never really felt like this "rich" tag has ever been clearly defined.  Some say over $1mill and say say as little as $150K household income. 

Another good point. The common threshold used by the administration is $250k. But with regional differences in the cost of living $250k in some areas goes a lot further than it does in others. $250k for a family of four living in NY is a far cry from rich. Not only that, Eb, but who decides this threshold? What if you have extraordinary medical expenses in a given year due to an accident or over several years because of a prolonged illness to one of your children? Would the IRS be willing to take these into consideration and look at each circumstance on a case by case basis? Probably not. When we think of "rich", we are generally talking about a person's net worth but it's annual income that is taxed, not net worth. For the past 25 years, Buffett's salary from Berkshire has been $100k. He makes more from sitting on boards, speaking engagements, investment income and the like so his tax bill he mentioned above is much higher but if he was so inclined he could effectively limit his annual income to $100k. Does that mean he's not rich? The more you think about the defining characteristics of what makes a person rich and who dictates that the more ridiculous it becomes (IMO).

[Hicks]

The fact is though the government policies of 2000-2006 were as close as we will ever get (hopefully) to a true free market and the results were disastrous. 

If your household income is above 200K, I hate to break it to you but you are rich.  And in a lot of areas of the country I would say it's more like 150K. 

If your wife has to go back to work three months after your baby is born because the 1K/month, chump change for some, we end up with after day care is the difference between sink or swim (like me), you are not.

A simpler code with lower rates and a broader base would be more equitable for all while encouraging growth and innovation and removing the incentive for people to cheat the system.

Finally, I don't know if everyone else noticed, but dude is actually advocating higher taxes on low income people that pay no or little federal tax now when he uses the euphemism of a "broader tax base". 

[gah]

A simpler code with lower rates and a broader base would be more equitable for all while encouraging growth and innovation and removing the incentive for people to cheat the system.

Finally, I don't know if everyone else noticed, but dude is actually advocating higher taxes on low income people that pay no or little federal tax now when he uses the euphemism of a "broader tax base".

I definitely noticed that, it's what lead me to question his situation.

[UncleEbinezer]

I just have a lot more distrust for politicians than I do rich people.

I see a problem here. I have worked with both for a large part of my life, and both are unscrupulous, ego driven, soul sucking vampires. The driving forth behind both is nearly indistinguishable. Yes, there are always some good ones but they are equally few and far between. Sleep with both eyes open.

What is considered "rich?"  Over $100K, over $200K, $1 million?  I'm just asking here as I have never really felt like this "rich" tag has ever been clearly defined.  Some say over $1mill and say say as little as $150K household income.

I would highly recommend taking a few minutes to read this:

http://sociology.ucsc.edu/whorulesamerica/power/investment_manager.html

Thanks for the read!  Clearly I am not rich.   :hereitisyousentimentalbastard 

[twatts]

And I'll preemptively counter the question about how the free market worked out last time (Hicks, I'm looking at you :wink:) by saying that we can't say the free market failed because it is a fallacy to pretend that it actually exists. We have a pseudo-free market system where gov't intervention in markets creates inefficiencies and improper incentives resulting in adverse allocations of capital. The risk/reward trade-off no longer applies because financial institutions have found a way to privatize profits and socialize losses. The current system is broken not because capitalism doesn't work but because risk has been taken out of the equation.

Interesting thoughts, but I would counter that the current situation is caused by overabundance of risk.  When banks make crappy loans to people that have a high risk of default, it is risky.  When those institutional failures can cause even greater economic damage, it is risky for the Fed.  "socializing the loss" as you put it, saved us more money than we would've lost if the Fed hadn't acted.  The housing bubble wasn't caused by "more" regulation, it was caused by the easing of mortgage restrictions/rules. 

Terry

[twatts]

A simpler code with lower rates and a broader base would be more equitable for all while encouraging growth and innovation and removing the incentive for people to cheat the system.

Finally, I don't know if everyone else noticed, but dude is actually advocating higher taxes on low income people that pay no or little federal tax now when he uses the euphemism of a "broader tax base".

I definitely noticed that, it's what lead me to question his situation.

Its a neat trick, those Rich People have...   Get the Poor to advocate for the increase of their own taxes while advocating for the decrease in the taxes on the Rich, with expectations of "job growth"...

Now if only I could work that in some other angle involving my wife and more BJs...

Terry

[runawayjimbo]

The fact is though the government policies of 2000-2006 were as close as we will ever get (hopefully) to a true free market and the results were disastrous.

Hicks, I really enjoy debating with you and I hope you don't take this the wrong way but that is the most ill-informed statement I have ever heard you say. To pretend that the financial crisis materialized from 6 or 8 years of GOP policies is simply incorrect. The Gramm–Leach–Bliley Act signed under St. Clinton removed the regulations that allowed banks to increase their leverage ratios to astounding new heights and created proprietary trading which turned banks into sharks walking into casinos playing with house money. It was Democrats like Barney Frank who effectively forced lenders to increase home ownership rates for the lower and middle class through the explicit guarantee of Fannie Mae and Freddie Mac which resulted in the lax lending standards that created the mortgage fiasco. W did nothing to rein in the excessive greed running through Wall St., but please stop pretending that the financial crisis was a sole creation of GOP policies because I know you are more informed than that.

A simpler code with lower rates and a broader base would be more equitable for all while encouraging growth and innovation and removing the incentive for people to cheat the system.

Finally, I don't know if everyone else noticed, but dude is actually advocating higher taxes on low income people that pay no or little federal tax now when he uses the euphemism of a "broader tax base".

Funny because I was actually talking about increasing everyone's taxable base income by removing the deductions that unfairly benefit the well off, like the aforementioned mortgage interest and pre-tax healthcare deductions. You don't have to agree with what I'm saying, but if you think I'm just up here spouting GOP catch phrases you haven't been reading what I am saying.

And I'll preemptively counter the question about how the free market worked out last time (Hicks, I'm looking at you :wink:) by saying that we can't say the free market failed because it is a fallacy to pretend that it actually exists. We have a pseudo-free market system where gov't intervention in markets creates inefficiencies and improper incentives resulting in adverse allocations of capital. The risk/reward trade-off no longer applies because financial institutions have found a way to privatize profits and socialize losses. The current system is broken not because capitalism doesn't work but because risk has been taken out of the equation.

Interesting thoughts, but I would counter that the current situation is caused by overabundance of risk.  When banks make crappy loans to people that have a high risk of default, it is risky.  When those institutional failures can cause even greater economic damage, it is risky for the Fed.  "socializing the loss" as you put it, saved us more money than we would've lost if the Fed hadn't acted.  The housing bubble wasn't caused by "more" regulation, it was caused by the easing of mortgage restrictions/rules.

I agree that risky behavior is overabundant in the system. What I meant was that there was no risk on the owners because there was the understanding that the gov't would step in and save them. When Treasury orchestrated JP Morgan's absolute steal of Bear Stearns in March of 2008, it only verified what everyone on Wall St. already assumed to be true: we don't have to worry about the crap on our books because the gov't will take this over. At that point, the shit was already starting to hit the fan but there was no incentive for any of the major banks to do reduce their exposure because they could continue chasing the high yielding investments without worrying of any ramifications whatsoever. And as I stated to Hicks above, crappy loans and the housing bubble were perpetrated by both Dems and Reps and go back way before the W administration.

One thing I do disagree with is this notion that "things would have been a lot worse if they hadn't done anything". First of all, I think we can agree there's really no way to know if that is true. But one thing that is indisputable is TARP, stimulus, and the Fed's quantitative easing have been massive failures. We are almost 3 years after the credit crisis started when Lehman failed and we still have 9% unemployment, GDP growth of less than 1%, a severely weakened dollar, and more uncertainty than ever before. The recession may have been more severe in the short term without gov't action, but the climb out of the hole would have been much quicker and far less frustrating than our current path.

[kellerb]

One thing I do disagree with is this notion that "things would have been a lot worse if they hadn't done anything". First of all, I think we can agree there's really no way to know if that is true. But one thing that is indisputable is TARP, stimulus, and the Fed's quantitative easing have been massive failures.

Aren't these two statements the opposite of each other?

[jedifunk]

this raises a question i posted to the twitter universe just this morning.

is sustained, global economic growth even possible? 

i keep reading articles about how this country or that country's economy has stalled... that growth is only 0.2%... yada yada yada.

again, why would anyone ever thing that economic growth will just keep happening forever and ever? seems like a pretty stupid thought process to me.

at some point, all the growing will be done, and i mean that globally.  i think economic growth for many countries has already stopped, and there are few countries that have a "bright" future with regard to growth.... india, china, brazil to name a few.

[twatts]

One thing I do disagree with is this notion that "things would have been a lot worse if they hadn't done anything". First of all, I think we can agree there's really no way to know if that is true. But one thing that is indisputable is TARP, stimulus, and the Fed's quantitative easing have been massive failures. We are almost 3 years after the credit crisis started when Lehman failed and we still have 9% unemployment, GDP growth of less than 1%, a severely weakened dollar, and more uncertainty than ever before. The recession may have been more severe in the short term without gov't action, but the climb out of the hole would have been much quicker and far less frustrating than our current path.

That is a relative term, and I don't agree that they were "massive failures".  And you cannot presume the outcome if the stimulus had not taken place. 

I equate the stimulus to the flu shot.  The fact that you weren't going to get the flu isn't a failure of the flu shot, it is blind luck (and unforeseeable).  But not getting the flu shot, and then dying of influenza, is just plain stupid.  Should we go around during flu season praying/hoping we don't get the flu???  Or should we try to do something (that might be unnecessary) to prevent it???  I opt for the prevention... 

Terry

[rowjimmy]

Take away my mortgage interest deduction and I will take you out with a metal folding chair.