The Debt ceiling

[Devils731]

This has already probably been posted on the board before but it fits into the broad parts of this discussion

http://usdebtclock.org/

[devilsadvoc8]

Can't have it both ways, if you are saying the government shouldn't be taxing corporations because the costs get baked into the end product, we shouldn't be subsidizing them either. I agree that is a pretty simple view, but it's consistent.

I'm not trying to demonize the rich, we have had this debate before. I encourage you to look at the tax returns from the IRS that they publish online. I also would like to point out that the bottom 50% of the county doesn't pay federal income tax, but they do pay lots of other taxes. It's an important distinction. They pay social security, unemployment, disability, state, local and most importantly sales tax which funds a lot of those benefits you think they don't pay for.

The 18% Buffet tax thing came out a few years ago, I thought it was widely known. Anyway the reason he is able to lower his tax burdern so much is because he makes most of his money in the market being taxed at 15% (as Point noted).

The rich don't get as much out as they put in, but it's not nearly as lopsided as you present. Everyone gets social security and medicare, no matter how rich they are. The rich get a proportional share of the defense budget, Then theirs medicaid, the bulk of that money goes to children and nursing homes, so yes we do channel a lot of money from the rich to poor kids and old people "unfairly". After that there is debt, which is basically just the cost of those other components listed before over the years that we had to borrow to pay. The rest of the budget is a drop of water in the bucket. You could slice out discretionary spending all together and it wouldn't really change anything.

And yet that guy was only arrested because he made the mistake of telling the police himself. So really, what is all our defense spending really doing? It's not just about 9/11, Whats to stop some loon from getting a gun and shooting a congresswoman, or running around Norway shooting up a small camp, or shooting up fellow military members at a staging center? I would argue if you truly think we are safer from random isolate attacks by having such a large defense blue print, invading 2 or 3 countries, or the TSA having us remove our shoes before getting on the plane, you are the naive one.

I don't feel like playing the snip a quote game with you squishy but:

1) Someone advocated upping corporate tax, I pointed out what happens to prices when you do that. I know you love to argue but sheesh, what is your point? Are you for or against increasing corporate taxes. If you are for it, are you in favor of raising prices on every good and service in our economy? If you are against it, WTF if your point?

2) Not sure what the point of looking at any tax returns on-line does. Your mantra has consistently been to increase the tax burden of the rich. I disagree. I think the solution lies on the expenditure side. Again we'll disagree fundamentally on this one. The buffet thing is a red herring. On an absolute basis he pays way more. Other than regulation by the SEC how does income earned by WB in the stock market have any drain on government resources when compared to lets say GM. Please help me understand how the trading of stocks deserves a higher income tax rate? Or are you just looking for a money grab? Any idea what the impact to the markets would be if you instituted higher tax rates there or should we ignore that? Like my comment in #1 above, Are you in favor of depressing financial markets substantially by instituting higher tax rates?

3) How did I present anything as being lopsided? I presented a fact which you can look up yourself regarding the proportion the upper levels of income pay in income tax. Was I lopsided when I stated that approximately half the country doesn't pay income tax?

4) If you think the threats facing our country lie solely in the hands of a lone gunman or a group of fanatics (we can save for another thread whether Islam fits this definition or not) I argue back that you are naive. When any dip with access to materials could poison NYC's drinking water or cause a melt down in the apartment, think of what a semi-organized terror group like Iran can do to us? North Korea at least understands what mutually assured destruction means, others in the world I am not so sure of. I for one don't feel like losing my life b/c some group of morons with 14th century attitudes decide to read a book of fairy tales literally.

[Guest]

I don't feel like playing the snip a quote game with you squishy but:

1) Someone advocated upping corporate tax, I pointed out what happens to prices when you do that. I know you love to argue but sheesh, what is your point? Are you for or against increasing corporate taxes. If you are for it, are you in favor of raising prices on every good and service in our economy? If you are against it, WTF if your point?

2) Not sure what the point of looking at any tax returns on-line does. Your mantra has consistently been to increase the tax burden of the rich. I disagree. I think the solution lies on the expenditure side. Again we'll disagree fundamentally on this one. The buffet thing is a red herring. On an absolute basis he pays way more. Other than regulation by the SEC how does income earned by WB in the stock market have any drain on government resources when compared to lets say GM. Please help me understand how the trading of stocks deserves a higher income tax rate? Or are you just looking for a money grab? Any idea what the impact to the markets would be if you instituted higher tax rates there or should we ignore that? Like my comment in #1 above, Are you in favor of depressing financial markets substantially by instituting higher tax rates?

3) How did I present anything as being lopsided? I presented a fact which you can look up yourself regarding the proportion the upper levels of income pay in income tax. Was I lopsided when I stated that approximately half the country doesn't pay income tax?

4) If you think the threats facing our country lie solely in the hands of a lone gunman or a group of fanatics (we can save for another thread whether Islam fits this definition or not) I argue back that you are naive. When any dip with access to materials could poison NYC's drinking water or cause a melt down in the apartment, think of what a semi-organized terror group like Iran can do to us? North Korea at least understands what mutually assured destruction means, others in the world I am not so sure of. I for one don't feel like losing my life b/c some group of morons with 14th century attitudes decide to read a book of fairy tales literally.

+1

[squishyx]

1) Someone advocated upping corporate tax, I pointed out what happens to prices when you do that. I know you love to argue but sheesh, what is your point? Are you for or against increasing corporate taxes. If you are for it, are you in favor of raising prices on every good and service in our economy? If you are against it, WTF if your point?

I asked you a question, that was my point. If you are in favor of lowering corporate taxes are you or are you not for ending special tax subsidies? It wasn't even an argument but w/e build your narrative however you'd like. Since you asked, I am against raising corporate taxes but for ending tax loop holes (so that might be a yes depending on how you define 'raising' taxes). I also would support lowering corporate tax rates if it was combined with a higher person tax hike and an end to corporate subsidies.

2) Not sure what the point of looking at any tax returns on-line does. Your mantra has consistently been to increase the tax burden of the rich. I disagree. I think the solution lies on the expenditure side. Again we'll disagree fundamentally on this one. The buffet thing is a red herring. On an absolute basis he pays way more. Other than regulation by the SEC how does income earned by WB in the stock market have any drain on government resources when compared to lets say GM. Please help me understand how the trading of stocks deserves a higher income tax rate? Or are you just looking for a money grab? Any idea what the impact to the markets would be if you instituted higher tax rates there or should we ignore that? Like my comment in #1 above, Are you in favor of depressing financial markets substantially by instituting higher tax rates?

It's a red herring to cite an example of how some of the ultra rich don't even pay anywhere near the 36% tax bracket when the discussion is about taxes and what people should actually pay?

I don't think stocks deserve to be taxed at higher income rates, on the contrary I think they should be taxed at their respective income tax rates which they currently are not. Rather then give special breaks to people making money in markets, income should be pooled into a single source, taxed at the correct bracket, and then the ranges adjusted accordingly.

Also, to the myth that higher taxes on stocks will depress the financial market: link

3) How did I present anything as being lopsided? I presented a fact which you can look up yourself regarding the proportion the upper levels of income pay in income tax. Was I lopsided when I stated that approximately half the country doesn't pay income tax?

You are the first person I have ever heard that argues we should be looking at the fixed amount of collected taxes and not a relative amount when trying to draw comparisons of what is "fair" or not. If that's your stance then yes we have a very serious fundamental difference of opinion and good luck finding a country that shares your views because for as long as we've had income taxes, they have always been percent based.

4) If you think the threats facing our country lie solely in the hands of a lone gunman or a group of fanatics (we can save for another thread whether Islam fits this definition or not) I argue back that you are naive. When any dip with access to materials could poison NYC's drinking water or cause a melt down in the apartment, think of what a semi-organized terror group like Iran can do to us? North Korea at least understands what mutually assured destruction means, others in the world I am not so sure of. I for one don't feel like losing my life b/c some group of morons with 14th century attitudes decide to read a book of fairy tales literally.

Ok fine, we both think each other is naive. it's settled.

Edited August 15, 2011 by squishyx

[Devils731]

I don't think stocks deserve to be taxed at higher income rates, on the contrary I think they should be taxed at their respective income tax rates which they currently are not. Rather then give special breaks to people making money in markets, income should be pooled into a single source, taxed at the correct bracket, and then the ranges adjusted accordingly.

That money has already been taxed though, that's one reason not to tax it as regular income. It's been taxed at the corporate rate and then an additional 15% on top of it. If you tax it at corporate rates and then at personal rates then you've taken away incentive and increased the risk of starting a company, possibly significantly at some levels.

A possible solution to that problem is to eliminate corporate income taxes. Then you can throw dividends into the regular income tax pot without an issue. This would also be coupled with higher personal rates, in general.

[squishyx]

That money has already been taxed though, that's one reason not to tax it as regular income. It's been taxed at the corporate rate and then an additional 15% on top of it. If you tax it at corporate rates and then at personal rates then you've taken away incentive and increased the risk of starting a company, possibly significantly at some levels.

Isn't that only true for personal investments? What about hedge fund managers who get paid based on ROI? Wiki has a good article about it http://en.wikipedia.org/wiki/Carried_interest#United_States

I also disagree that higher taxes will correlate to less incentive, we had astronomic taxes in the last hundred years and it didn't stifle innovation or growth.

A possible solution to that problem is to eliminate corporate income taxes. Then you can throw dividends into the regular income tax pot without an issue. This would also be coupled with higher personal rates, in general.

I think that's a reasonable proposal.

[Devils731]

Isn't that only true for personal investments? What about hedge fund managers who get paid based on ROI? Wiki has a good article about it http://en.wikipedia.org/wiki/Carried_interest#United_States

I don't see this as a big problem on a national scale but also don't have a problem with people wanting it changed.

I also disagree that higher taxes will correlate to less incentive, we had astronomic taxes in the last hundred years and it didn't stifle innovation or growth.

It's less incentive to start a business. It definitely affects incentive if you're telling someone they'll earn less money for taking on the same amount of risk. People are more likely to take a risk if their possible return is greater. As a family member of a family with a business these tax thoughts weigh greatly for us.

[devilsadvoc8]

Is the "Buffett Rule" a bunch of bullsh!t based on faulty analysis? Could be:

According to this article: AP Factcheck article

This year, households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes, including income taxes, payroll taxes and other taxes, according to the Tax Policy Center, a Washington think tank.

Households making between $50,000 and $75,000 will pay an average of 15 percent of their income in federal taxes.

Lower-income households will pay less. For example, households making between $40,000 and $50,000 will pay an average of 12.5 percent of their income in federal taxes. Households making between $20,000 and $30,000 will pay 5.7 percent.

[mddevsfan]

It would be helpful if they included a larger range of incomes in that article. There's a pretty big gap between $75,000 and $1 million, and that's likely where the real inequity lies. Households making $150,000-$200,000 probably have much less investment income than the millionares, and are being the taxed on a much larger portion of their income than the $75,000 household.

[Devils Dose]

I believe in what they are discussing, the Buffet Rule does not raise taxes on millionaires who already pay over 25% on their total income. So that would be those who make more money on their salaries (their businesses) than on investments. The folks that make their millions on dividends and capital gains would end up with higher income tax. If I'm not mistaken though, this is just an idea right now, and tax ideas usually go from nice and simple sounding to contrived and convoluted by the time they hit paper. All of the deductions and loopholes in the tax code are what make this analysis difficult to perform in the first place.

Theoretically, since they're going to be taxed the same, the investing-type millionaires would move money from their investments to their own businesses (why not put that money in something that you control, right?). This sounds nice because hopefully jobs would be created. I'm not sure what effect would be on the stock market though.

[Devils731]

The Buffet rule sounds a lot like what the Alternative Minimum Tax was supposed to be, and that got royally screwed up.

Theoretically, since they're going to be taxed the same, the investing-type millionaires would move money from their investments to their own businesses (why not put that money in something that you control, right?). This sounds nice because hopefully jobs would be created. I'm not sure what effect would be on the stock market though.

I don't think that's how it would happen. The risk/reward on starting a new business venture or expanding your current business would change. The reward is less(since more of your money is taxed, leaving less money in it for you) so the risk needs to be less for you to decide to invest in the business. So, on a whole, there will be less new business or expanding business because less business opportunities will exceed the newer and higher risk/reward threshold.

[Devils Dose]

I don't think that's how it would happen. The risk/reward on starting a new business venture or expanding your current business would change. The reward is less(since more of your money is taxed, leaving less money in it for you) so the risk needs to be less for you to decide to invest in the business. So, on a whole, there will be less new business or expanding business because less business opportunities will exceed the newer and higher risk/reward threshold.

Are you saying that the Buffet Rule would make starting a new business riskier? Because I haven't heard anyone say that yet. Or were you saying that starting a business is riskier than buying stock in a bank that pays a 4% dividend (in which case you're obviously right)?

I'll try to clarify my thinking with an example. If I'm pulling $1mill a year, all from dividends and capital gains, I've been paying $150k in taxes. Under the new Rule, I would have to pay $250k if I stick to investments. If I start my own business, and reapportion my money so now I make $750k on investments and $250k as president & CEO of my company:

.15 * 750000 + .35*250000 = 200k which is less than 250k (25% of all my income), thus my tax bill comes out to 250k anyway.

I'm not pretending that it's as easy as "I'm going to start/reinvest in my own company" and BAM! you easily make your new salary goal. But as I said before, you own and control that business. With that high dividend bank stock, you're just a spectator.

[Devils731]

Are you saying that the Buffet Rule would make starting a new business riskier? Because I haven't heard anyone say that yet. Or were you saying that starting a business is riskier than buying stock in a bank that pays a 4% dividend (in which case you're obviously right)?

I'll try to clarify my thinking with an example. If I'm pulling $1mill a year, all from dividends and capital gains, I've been paying $150k in taxes. Under the new Rule, I would have to pay $250k if I stick to investments. If I start my own business, and reapportion my money so now I make $750k on investments and $250k as president & CEO of my company:

.15 * 750000 + .35*250000 = 200k which is less than 250k (25% of all my income), thus my tax bill comes out to 250k anyway.

I'm not pretending that it's as easy as "I'm going to start/reinvest in my own company" and BAM! you easily make your new salary goal. But as I said before, you own and control that business. With that high dividend bank stock, you're just a spectator.

I think we're pretty much on the same page.

Starting a new business isn't riskier, but you've made the reward for having a successful business lower. So if the reward is lower then people are more likely to stick with safer investments.

As you agree, starting your own business is riskier than owning a stock. If I'm expected to take home the same amount of money by owning a stock or starting my own business, then owning the stock is where the money is most likely to be put. It's the same money, but I'm more likely to see that money, since the risk and volatility are less.