dc_dux

I would never say, and have never said, that anyone's vote doesnt count. I encourage people vote for the candidate of their choice...but not to "cancel out" a vote for the other candidate because in most states, thats just not the case.

I also hope that future voters of the country will be open to the facts on the candidates' proposed policies before making sweeping exaggerations.
-----Added 29/10/2008 at 06 : 27 : 38-----
They will pay what they paid before Bush's 01 and 03 tax cuts.....the tax cuts that McCain called "fiscally irresponsible" at the time and which have contributed significantly to the increase in the US debt from $5 trillion to $10 trillion.

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aceventura3

The question that Obama people won't answer - Why do they think a person making $2.87 million or more is going to pay an additional $700,000 in taxes without taking action to minimize that amount? Again, we are talking an addition $700,000, that is 24% of $2.87 million, that is a big motivator to defer income or to restructure income so that it is non-taxable. If they do pay it, that amount equates to a large number of people they won't employ, a large amount they won't reinvest in business growth.

This is the point McCain is trying to make about not raising taxes in a recession. Obama people don't get it and ignore anyone making an attempt to point out the problem or they understand it and lie about it.

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Derwood

Because Obama doesn't believe trickle-down economics works (and there is a pile of data supporting his case), thus the cries of "taxing the rich will kill the economy" ring false for him

aceventura3

Why not answer the question?

Do you think a person making $2.87 million or more is going to just pay an additional $700,000 in taxes?

If they don't what happens to his plan?

Would the person making $18,891 rather have a $567 refundable tax credit or a job?

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roachboy

well, ace, why don't you lay out your thinking rather than try to box your interlocutor into a strange place without having the courtesy to reveal your actual argument? are you saying that this hypothetical millionaire would rather shift assets offshore than pay additional taxes? are you saying the your hypothetical millionaire thinks in the way that you do about taxation, as an affliction that serves only to punish rather than thinking about taxation as a sane person would?

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Baraka_Guru

What's with the leading questions?

First, a person making exactly $2.87 million will likely donate some of his or her money, or do some other tax technique, to avoid that higher tax rate.

Also, you're assuming that taxing the wealthy at higher rates automatically means jobs will be lost. What about the jobs created by the middle class' having more disposable income?

Don't you know that the typical millionaire doesn't tend to spend money so much as save it?

Give the middle class more of their money and they tend to spend it.

That's good for the economy.

Again, though, what's with the leading questions? Economics isn't that simple--either/or.

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Poppinjay

If I had $2.87 million, I'd be happy to pay 24%.

As it is, we barely breach 6 figures and have been paying 36%.

McCain's trickle down plan is ridiculous. Here Mr. 18k, have a dollar, and Mr. Millionaire, you can have back $269,000.

So the poor guy gets a hamburger and the rich guy gets another home.

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aceventura3

This is not new. There are many threads where my views on "supply side" or "trickle down" economics have been detailed. My point here simply highlights my on-going frustration regarding the issue. I think anyone who honestly answers the questions will see that Obama's rhetoric is not as simple as it appears. Class warfare and "spreading the wealth around" is going to be a failed strategy for economic growth or increasing the average standard of living of Americans. Economic policy is not implemented in a vacuum, for every action there will be reactions - some planed and others not planed. Good economic policy takes into account the "unplanned" consequences.
-----Added 30/10/2008 at 11 : 58 : 35-----
I like to lead people to a conclusion.

True, but they will also do other things. But the next question is what happens to Obama's plan when they do things to reduce the increased burden? I think Obama will need to increase taxes a lower income levels or cut taxes for the people in the highest brackets.

There will be a combination of results, I think the net result will be a loss of jobs all other things being equal.

Most "rich" people invest, they put capital to work. This is how progress is made - "rich" people investing in the future or taking some risks. Take T Boone Pickens as an example, even as an old billionaire he is not invested in CD's, is he. He is betting on alternative energy, and is putting his money on the line. His plan will create jobs.

True, but we also need is money to be invested in economic growth.

I keep it simple because of the fact that very few here will even acknowledge the fact that supply side economics will have an impact even if marginal tax rates are at 100% and then cut.

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Derwood

no one is spreading any wealth around. I don't expect a check to come in the mail that contains money taken from a wealthy person.

dc_dux

ace...I acknowldege that supply side economics has an impact.

It contribututes to the nation's debt in record amounts...first in the 80s, when we experienced the greatest debt increase in the nation's history (the debt increase in the Reagan years surpassed the total debt increase of all prior presidents combined) ...

....only to be surpassed by the second supply side experiment over the last eight years where the debt has increased from $5 trillion to $10 trillion and anywhere from 1/4 to 1/3 attributed to the impact of the Bush tax cuts

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aceventura3

Me too, but that is not the point. The point is if you had $2.87 million and an easy opportunity to pay less than 24%, would you?

I think our tax code is screwed up and needs major change. I would not tax income, savings and investment, I would tax consumption.

Again, I think the point is for the $18k guy, have an opportunity to make more. If the $2.87 million guy builds a house and is willing to pay the $18k guy $60k to be a carpenter on his new house, everyone wins. the $18k guy makes real money, gets additional marketable job experience and maybe able to buy his own home. The $500 credit does nothing, but buys a few weeks of food. I am not saying the money is not meaningful, but I think in the long-term making more money is a better way to go.
-----Added 30/10/2008 at 12 : 07 : 51-----
Where do you think the money will come from?
-----Added 30/10/2008 at 12 : 12 : 01-----
Obama's plan shows a bottom line net cut (-$160, adding to the deficit/debt), isn't that a form of supply side economics? Isn't the real difference just in terms of who is getting the tax cut? What happened to pay as you go?

And, what is going to happen to the Obama plan when "rich" people do things to reduce the increased tax burden?

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"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

Poppinjay

Rich people already do those things. Heck, we do that.

What will happen if they put more compensation in tax free plans? Those plans will hopefully make more money in an economy not headed up by chimpy the president. People will or should always defer as much income as possible, but one way or another, the money makes it to the market.

Taxing consumption has always been a theory, one that doesn't show signs of being able to pay for our country. At any rate, consumption is already taxed in most places. DC residents are heavily taxed, and yet have no representation.

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Halx

I think what we're arguing are hypothetical ideas when we can't really prove either way until we see what happens. Its almost pointless to argue, but informative to discuss.

In my opinion, I see about half the "rich" taking the tax hike in stride. I see the other half avoiding it. However, their avoiding is not bad. When a rich person puts money into assets to avoid taxation, that money then circulates through the economy. A rich person has the choice of either giving their money directly to the government or using their money to increase their own wealth while putting it back into the economy.

Also, as stated before, the middle class with more money to spend, will spend it.

I think ace's argument is focusing mainly on personal income tax as the government's only form of income. I personally feel like diversifying the sources of income for the government (by releasing a hold on the income tax) is a good thing.

I think the Democrats have a better grasp on republicanism than the Republicans do.

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Derwood

No one is giving me anybody's wealth. I'm keeping more of my income. These things are different. Obama's plan is about income, not wealth. If some rich person has $10billion in savings account somewhere, nobody is touching it. Either way, wealth isn't being redistributed.

roachboy

i dont think there's any way for someone who views things economic from ace's viewpoint to get his or her head around the ongoing situation. one aspect of what i take obama to be proposing is a series of new-dealish programs geared at getting folk to work in decent paying situations on infrastructure projects. this would require a redirecting of resources. there are a host of arguments as to why this redirect would be a good and desirable thing--but all of them assume that you can think about taxation as a mechanism for moving money from one area of the social system to another in order to accomplish political and/or economic and/or social system goals. it seems that from the supply-sider viewpoint, there is no social system--remember margaret thatcher's fanous quip "when i look around me i do not see society, i see individuals"....

this is the differend (the point of talking-past each other) that inevitably turns up in this sort of discussion--ace does not EVER relativize his position enough to entertain the possibility that his way of thinking is PARTICULAR, but expects others to relativize their positions enough to engage with his. this is why he cannot outline his own premises--it's almost like there are not premises because there are not arguments because this is how things *are* for him.

i do not find discussion in good faith to be possible under these rules of engagement.

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aceventura3

This is not entirely correct. In order for the economy to grow, money needs to be put to productive use. The reason Warren Buffet is a billionaire is because he is a master at allocating capital in a manner that is most productive and maximizes the return.

Moving away from theory, and using a personal experience. I know a very wealthy man who helped a person he knew start a business from scratch. The wealthy man invested money (capital) and the other person had the idea and was willing to invest labor. The wealthy man had the opportunity to invest in low yielding fixed income investments or anything else. We do know that even investing in low yeilding fixed investments as compared to more productive uses, will eventually have a positive impact on the economy, but the impact will be made smaller due to a number of factors including the fact that most financial institution will not loan out 100% of the money the have available and in some cases it would be illegal for them to do that. We also know, based on our current crisis, that financial institutions may not always lend money to people who have the ability to use the money properly and pay it back - meaning the money gets wasted.

So, this business that is started initially employs one person, and overtime employs more people. This business provides a valuable service, pays taxes, buys supplies, rents office space, opens bank accounts, buys insurance, etc,etc,etc. The business establishes a track record and has value. Value that is created based on the investment of capital and labor. The person who started the business passed away, and his surviving spouse puts the business up for sale, and I buy it.

In order to buy the business, I basically invest my life savings, and was able to negotiate a note from the wealthy guy because he did not need the cash right away. The widow of the guy who sold the business will live comfortably the rest of her life because her husband started something from nothing with the help of the wealthy guy.

So if you are still with me - the wealthy guy by putting his capital to work in a productive maner, created a large number of jobs, paid much more in taxes through the bussiness than if he had purchased a few tax free municipal bonds, caused an increase in money circulating through the business' operating expenses, and he helped create wealth for the family of the person who started the business and some others.

So now I own the business and I leave my corporate job (creating employment for another), my wife leaves her corporate job and our goal is to grow the business, to employ even more, to pay more taxes, to have higher operating expenses, etc., again thanks to the wealthy guy.

The first year I own the business, we make no money, we reinvest in the business and actually incur more debt. In the years after, we start to realize some of our growth goals, payoff most of the debt and start to make a profit. However, if I divide what I have taken out of the business by my time, my wife and I have been making less than minimum wage. At the end of many years we have had a few laughs over the fact that some of the people we employed actually made more than we did. At some point that will change, and after all the work, all we have done, all the taxes, etc, I personally find it offensive to hear from a person who never had to meet a payroll talk about "spreading the wealth around". But our goal is to be in the position of the person who helps us, the person who helped get the business started, the "rich" guy. So, again, if I realize my goal, I will help others realize theirs - again all thanks to the "rich" guy and perhaps there was a "rich" guy who help him. Again we are talking about creating wealth, real wealth, employing real people, paying real taxes. It is not a shell game, trickle down economics works, I live it.

So, the "rich" can invest in corporate bonds and create virtually no new jobs and do nothing for economic growth or they can use their capital to directly create new wealth. Government does not do this, big business does not do this, and poor people do not do this. I say let "rich" people use the judgment that got them rich to help others. People in Washington, Trust Fund Babies, big corporate employees, academic types, generally don't know what they are talking about on this subject.
-----Added 30/10/2008 at 02 : 51 : 15-----
I don't determine the "rules". I post what I post, and other respond (or ignore) based on what they want. Your premise that I some how define the "rules" is absurd on its face. If your point expresses a frustration with interacting with me, that is different. Like I have said many times before, I know it is not easy. I look to those up to the challenge to challenge me. I often post things for my own benefit because I know what types of responses will follow.

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

Baraka_Guru

Interesting analysis, ace. But you're missing pieces out of the picture--namely the role of the middle class and their financial security and spending habits. They are dependent on one another.

The middle class is struggling because of things like health care and other expenses. Expenses that would be alleviated by reducing their taxes. Expenses that could be better shouldered by those with the resources to shoulder them.

And it's interesting you should mention Warren Buffett:


He's referring to Clinton and Obama in this clip.

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—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
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aceventura3

I simply suggest we have a fair tax system. A tax system designed to address the intended role of government as defined in our Constitution. There are many reasons why people struggle, in many cases government makes the struggle harder. Health care is example of that, there are many threads on health care so I won't go into that here. The differences are clear between Democrats and Republicans, even if leaders of both parties have a tendency to think the answer to our problems will come from Washington, Democrats are much more extreme and Obama has never discussed a problem that did not have a big government solution.

I respect Buffet as a business person and as a person who will use his wealth for good after he dies. Other than that he is a ruthless business man who does and says what is in his interest. Some of the recent deals he has made clearly illustrates that. He is a person that will not pay a dime more in taxes than he chooses to pay, and in the end his wealth will not go to government, he has carefully selected the charities he wants his wealth to go to. If he really had faith in big government he would leave his money to the IRS, he is not doing that.

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

Derwood

the problem is no one will ever agree what is "fair". i've done a lot of research on the "Fair Tax" system recently and don't like it at all. other people swear by it.

YaWhateva

As a matter of fact he has. He says all the time that people need to take responsibility for their own lives and 'tighten their belts' financially and be more fiscally responsible. He has said that the government is just there to basically be a helping hand in taking control of our own lives.

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Baraka_Guru

Buffett himself thinks he pays too little tax, and he blames the system:

Buffett blasts system that lets him pay less tax than secretary

Ace, can you expand on your thoughts on the fair tax system? How do your thoughts on tax compare to Buffett's?

Why is a guy as wealthy as Buffett so keen on having more money in the pockets of the poor, even if it is at his expense? Simple: he knows it's good for the economy.

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Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
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Jozrael

As a response to ace (this may have been said already): It is not an additional 24%. It is an additional 11%. You're taking the average increase of the entire top .1% income (which is 2.87 AND HIGHER) and saying its applied to the bottom. Not true. Someone at that line will take approximately $315,000 more in taxes (an 11% increase).

aceventura3

We been through this in more details in another thread. But as Buffett blasts our tax system, he takes full advantage of it. In 2007 his net worth increased somewhere in the neighborhood of $10 billion (using round numbers). He paid no tax on that increase in his wealth. He pays himself a modest salary, which is taxed like the rest of us. The rest of his income most likely comes from sources outside of his company and is immaterial relative to his wealth. His company pays no dividends and never has, no taxes paid. He does not sell any shares in his company and never has, no capital gains taxes. He is going to leave his billions to charity when he dies - no death taxes. However, he can live whatever lifestyle he chooses, he owns a private jet rental company, all travel is company paid. He is like a rock star and can get whatever freebies he wants in exchange for appearances - generally not taxed. He owns Dairy Queen - life time supply of soft-serve ice cream, etc., etc., etc., if he wanted to pay more taxes he could.

I am not a specific advocate of any particular plan at this point. I just think taxing a persons labor, savings and investments is wrong and that the right thing to tax is consumption or the usage of certain government services. If a person lives like a billionaire let them be taxed like one. I think in a consumption based tax system it can be set up to minimize the impact on the consumption of basic needs like food, heat, medical, etc. But on the other hand if a person is going to spend $80,000 for an SUV with money from some un-taxed spource (i.e. - illegal activities) perhaps they should pay accordingly.

People who are already "rich", generally want to stay "rich". Aggressive business people generally want to limit competition. Policies designed to help "rich" people stay "rich" and restrict competition in the market are not good for people who want to become "rich". Buffett can take the position of enjoying his wealth and take populist positions while not risking anything. If he really believes what he says, he can write the IRS a check anytime he wants. In fact taking populist positions is good for his businesses - he wants people to buy more Coke, he doesn't want them to make competing bids for GE preferred stock.

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Baraka_Guru

Thanks for the response, ace.

Buffett is certainly taking advantage of the system, but that's the kind of thinking that got him rich in the first place. But that isn't stopping him from wanting to change the system for the benefit of others apparently.

I doubt there are many other rich people (certainly not nearly as rich as him, even) who will donate their entire estate to charity upon their death. Buffett doesn't want change for this own case; he wants it for America. If he's donating his wealth to charity, he's leading by example, not necessarily for the prime purpose "exploiting" the tax system.

But that would only be a one-off. He wants to change the system for everyone. He wants it to work even after his death. He's giving his money to charity, remember? Why write a cheque to the IRS? The problem isn't with him; it's with others. One man's wealth isn't going to help America's poorest in the long run.

Buffett is a smart man in more ways than one.

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Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
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aceventura3

If we want to be precise we can look at the current top marginal rate compared to the top marginal rate under Obama. the tax Foundation did a review of this.



The Tax Foundation - How Do the Presidential Candidates’ Tax Plans Affect Taxpayers’ Marginal Tax Rates?

My question remains - Why do you think a person with cost effective options to avoid additional taxes going to pay them? People in the top .1% hirer high powered people to advise them on legally minimizing tax obligations. The Obama plan is based on an assumption people will pay the higher taxes without taking actions to minimize the increased burden. When "rich" people do things to minimize the increased burden, what is Obama going to do?

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

Baraka_Guru

Do you think Obama and his team haven't already thought of that? Maybe they're banking on the idea that people will reduce their taxable income by investing into the economy. Maybe that's a part of his plan to bolster the economy: more money in the hands of the middle class and more investment in the national economy by the wealthy avoiding increased taxes.

It's all about incentives.

I dunno. I just thought of that.

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Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
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aceventura3

I actually like Buffett, I want to be just like him. After I make my first billion I will become an advocate for higher taxes, until then...
-----Added 31/10/2008 at 11 : 37 : 25-----
I don't know, but it would have been nice if someone asked the question so he could have addressed it. If he has I am not aware of his answer.

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"If you live among wolves you have to act like one."
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djtestudo

You know, my knowledge of real economic issues and theories is nothing compared to many around here, let alone in the world at-large. However, isn't assuming that the wealthy will invest their money in the economy the definition of trickle-down economics, which so many seem to disagree with?

Obviously I could be misunderstanding this, so if I am, please be kind

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edwhit

HEHE

So much for consumer confidence on day one?

Ourcrazymodern?

He looks older already.

I retain hope.

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dc_dux

Trickle down economics doesnt create jobs...it never has.

It only lines the pockets of the top taxpayers and adds to the national debt.

The latest unemployment figures after eight years of Bush trickles- 6.5 percent and expected to grow to about 8%...the highest since Reagan, the last time trickle down was the policy.
-----Added 8/11/2008 at 09 : 14 : 00-----
I dont think we will see the consumer confidence rise much until Obama takes office. He is in the difficult position of not being too critical of the Bush policy.

We did see the general outline of his economic plan in his press conference.....to create jobs...and you dont accomplish that, at least in the short term, through tax policy.

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Mojo_PeiPei

Numbers are in from after election, looks like the business world was really pleased with the election of Barry.

Bloomberg.com: Worldwide

Hopefully things improve quickly.

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filtherton

I think the business world is still displeased with Bush.

Though if the market did plunge immediately following the election of someone who isn't going to be in power for ~2 months, well, that kind of puts another few bullet holes in the carcass of the notion that the marketplace is rational.

Incidentally, I think Obama is a little indulgent when it comes to all the seals. Did I see correctly when I saw that he has one for the office of the president elect?

dc_dux

Do you think the latest one day drop in the Dow (not the first in the last few months) might be more a reaction to the announcement of new unemployment figures that day....the worst in 14 years?

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ratbastid

Or note that the market was way UP on election day--and it's been attributed to "early celebration of an Obama victory"?

This is what the next four years will be like, hunh? I completely admit that we were sore losers like this in 2004. Were we this bad in 2000?

Mojo_PeiPei

The figures could have contributed. It's not that big of a stretch, pretty much everybody knew it would happen if Barry was elected.

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dc_dux

250,000 people lost their job in Oct..and over 1 million for the year...because Obama was elected?

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roachboy

so wait---gm and ford post numbers that indicate their each about a quarter away from disappearing, the unemployment figures are the worst in years, there's sales data showing such a marked slowdown in consumer indulgence that there's fears of deflation---and the stock market downturn on wednesday (which was erased in the subsequent 2 days) is a function of obama, not because there's any reason to make that link, but because the link is a foregone conclusion because "everybody knew" on sunday afterward that the previous wednesday the market tank would happen and would know why....

this is such a goofy argument, i don't know why i bothered to transcribe it.

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dc_dux

Rush is calling it the "Obama recession"....so it must be true.

Obama Recession in Full Swing

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smooth

what makes you think this problem is based on "confidence"?
Even assuming that a president being elected, who hasn't even taken office yet, has some sort of power relation to the economy, or even granting that the president in office has a direct effect on the economy, none of this fixes the problem of consumers lacking liquid assets to spend and producers lacking ready markets to capture.


I'm not sure of Ace's point regarding the Picket Plan. It's not "betting" on renewable energy at all. Natural gas is the centerpiece of the plan, it's not renewable at all and it's a commodity Pickens intends to sell. The plan may or may not be a good plan, but it's not a risky venture. If it was capitalism as Ace envisions it, then why doesn't someone, Pickens himself ideally, convert a fleet of vehicles, build the infrastructure for natural gas fueling stations, and then sell off the technology?

No, instead he writes a plan and asks the people to push the government to fund it. WTF? How is that anything like capitalism that rewards the good ideas and penalizes the failed ones? If it works, the billionaire who sponsors it and sells his commodity, if it fails the public subsidizes the loss.


And what's this about job creation and the tax rate? An economic sector can only grow so large. Taco Bell can only sell so many tacos, and that's what determines how many employees they hire, not whether their tax rate is 1% or 75%. Anything <100% of their profit is gain, so even if some people become unhappy about not making as much, no sane person would up and leave or stop producing because they make less profit than they did before so long as there is profit to be made at all.

The argument seems to shift to the idea that companies that are still employing people in the US are doing so because of the Bush tax rates? That just seems preposterous on its face, but I could see why the wealthy make the argument...I just don't understand how others believe it.

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