We have a day before the debates, so let's try a new discussion.
"This notion that government owns all income and then allows each of us to have some of it back is just wildly offensive." J Ewing
J and I definitely believe that what we own and earn is our personal property, and that it is right to pay some amount of it to society to pay for our membership and the benefits it offers. Hiram and Laurie seem to believe that everything belongs to Society and that we should be thankful for what we are allowed to keep...
Is this correct or am I putting words in your mouths? Thoughts?
This seems to be a key point that shows up often in our discussions and with respect to what is "FAIR".
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"This notion that government owns all income and then allows each of us to have some of it back is just wildly offensive."
Just because an idea offends people, even wildly, doesn't mean it isn't untrue or without value. In any event, what Mitt Romney wants to do, in these terms, is allow us to keep less income so he is allowed to keep more. I find that pretty wildly offensive, but I just am not sure why my delicate sensibilities on the issue should matter much to anyone besides myself.
--Hiram
Hiram and Laurie seem to believe that everything belongs to Society and that we should be thankful for what we are allowed to keep...
There are at least two ways you can go here. You can see government as the owner, of both liabilities and assets, or the people as the owner of both liabilities and assets. Either way is logically consistent but you can't mix the two. Republicans very often want to say that the assets belong to them, but that the liabilities belong to someone else. You can't do that in terms of household economics and you can't really do that successfully as part of a national economic policy.
How does this work out in practice? Mitt Romney believes that he should be able to keep more of his money. So where does this money come from? What he wants you to think is that the money comes out of thin air, or the government perhaps. But when you understand that both assets and liabilities belong to the people, it follows that there is no government capable of assuming the liabilities necessary to pay for his tax cuts to the wealthy. They must be paid for by someone else, that is, us.
--Hiram
So I prefer 39% to 35% for a top tax bracket and you conclude that I believe that everything belongs to Society and that we should be thankful for what we are allowed to keep...
This is one of your dumber posts in a while.
You just argued it was fair that the government take wealth from the estates of the wealthy when they died. Like this is a right of the people just because they were wealthy.
Seems you think we have a rightful claim on that personal wealth.
Or any of the government controlled wealth transfer methods that you support for that mtter.
All seize personnel property and give it to others.
Govt does many things in addition to providing a safety net and a retirement program for seniors.
I think as the wealthy have done extraordinarily well over the past 50 years they should pay a significant amount in taxes.
Do you think CEO's earn such extremely high compensation? Are they that much smarter and harder working than their counterparts from 50 years ago?
"Using a measure of CEO compensation that includes the value of stock options granted to an executive, the CEO-to-worker compensation ratio was 18.3-to-1 in 1965, peaked at 411.3-to-1 in 2000, and sits at 209.4-to-1 in 2011."
CEO pay and the top 1%
The wealthy (top 20%) are paying the majority of our country's bills, do you want them to pay all of them? Is it FAIR that they pay most of them just because they have the most money? When you go out to eat with 10 couples, do you have the richest 2 couples pick up the bill?
As for CEO's, the reality is that someone freely paid them this wealth. Be it the board of directors, the customers, or someone else. And whether it was a good deal for that company or not. In my reality that money and wealth now belongs to that person.
Whether someone paid them too much now or too little back then has nothing to do with who the wealth belongs to by my perception of reality. It is their personal wealth, just like the money in your savings account is yours.
Taking a much much larger sum of money from the wealthy may be practical and effective since they have money to take, but I don't think it should ever be considered FAIR.
Now if you want to have a straight percentage based on income, that is nearing being FAIR. Then everyone would be playing off the same rules. Not this we will charge them a higher percentage because their family and themselves were successful.
Now back to who's money is it anyway? If it is personal wealth, then Liberals should be ecstatic and thankful that the successful folks are making a lot of money and are paying so many of our bills from their wallet.
Usually I hear Liberals like Hiram stating the sucessful owe the money to society. This would imply he thinks we have a claim on the property. Like... How dare the wealthy hold so much of our money and not want to give it back !!!
What would you think if society decided that the Union Teachers had been paid too much over the last 30 years. They argued that the USA has fallen behind other countries, so we were paying too much.
Therefore society agreed we should tax them at a higher rate because they had been over compensated. Should the Government/Society be able to take more of that Teacher's wealth? Or is their wealth actually the Government's piggy bank and open to withdrawl at will?
Hiram,
Your comments seem to be what I would have expected.
"both assets and liabilities belong to the people"
I guess you don't believe in Private property...
I myself see the Government having it's assets and liabilities (ie wealth), and people having their own personal assets and liabilities.(ie wealth) If this is not the case, we somehow slipped over to being communistic while I wasn't paying attention.
Now the government can tax the people to raise funds. However when these funds are transferred, the money is being paid from the personnel wealth of free people. And it results in a reduction of their personnel wealth. It is taking money from them however you want to justify its fairness or rationalize the amount.
It is not a case of the government moving money between the social security trust fund and the general fund...
The CEO from united health care makes a billion $ partially from denying health care and your counter example is overpaid teachers. You have a very strange sense of fairness.
This weekend I spent over $100 buying books for my classroom as my school does not have a library. Out of a $50,000 salary this is a lot of $ to me and I will need to skip some meals eating out after long hard weeks of work.
btw, I will be taking a break from commenting on your aggravating blog, though I might check back to see how you and J are taking it when Obama wins reelection.
The point was that the $1 billion is his money, just like the Teacher's money is the Teacher's money. Taking more of the CEO's money or taking the Teacher's money just because you disagree with how it was made, how much it is or whether they earned it from your perspective is not the purpose of the tax code in my opinion...
I have been frustrated with United Healthcare's compensation policy before. Then I figured out that they do a pretty great job of managing benefits, controlling costs, stopping fraud, etc and are being rewarded for it by their many many customers and the market. Remember that the CEO you mentioned made almost all of his compensation by increasing the company's value. If he had not achieved that goal, his compensation would have been far far far less. No different than Bill Gates, Warren Buffett, Steven Jobs, etc.
It sounds like you want society to judge individuals and take away their wealth based on whether they "earned" it in the proper manner and how much there is. I think that is why we have laws, not taxes... (ie stop illegal acts) And what would give the government the right to seize private property in this manner. Or is it actually the government's property from your view?
It might be truer to say I don't believ in public property. Lots of republicans believ in Enron economics, that is the assets are mine, the liabilities are someone else's.
Mitt wants to keep more of his money, an pd that means you keep less of yyours. I just don't see how that's iny interests although I can certainly see how it's in mitt's.
I don't necessarily think a teacher should get a better deal than the private equity manager just because the teacher does something more valuable. But should the teacher's deal be worse?
--hiram
I do wonder why earned income is taxed at a higher rate than unearned income. But that's a different issue. Mitt benefits enormously from that disparity.
--Hiram
Hiram,
Do you have any links / sources to support your opinions?
Most people want to promote saving and investing, it helps start companies, provide jobs, helps people make it through the rainy days, etc... I could see how lower dividend and capital gains rates would confuse you though given your views. (ie gov't does that stuff, not people)
Do you have any links / sources to support your opinions?
Sure. Capital gains are taxed at 15%. Earned income is taxed at a rate as high as 35%.
If you wanted to promote savings, then maybe you would tax interest at the capital gains rate, not the ordinary income rate, but we don't. Companies are far more dependent on money they borrow than they are on funds raised in the stock market. Bear in mind that companies receive no direct benefit from the trading in their stocks, the trading that generates that preferred tax treatment.
In any way, savings is nice, but I don't see why we prefer it over working. And I certainly don't see why we should prefer speculation in stocks over working.
--Hiram
I meant a source for your continuing Republican and Romney accusations.
As for your opinions on Dividends and Gains, I think these folks disagree.
Tax Foundation Gains and Dividends
EY Dividend and Gains
Reminder: you have to own the item for at least one year to get the lower capital gains rate. It is only beneficial to investors, it does not help speculators or day traders.
As for the benefit of on going stock market trading, it benefits companies hugely by keeping the Management focused. If the company starts to slip, the stock price and book value will drop. Therefore the Managers lose compensation and the Company loses it's equity and ability to borrow. Finally if the Managers screw up badly enough, the company is taken over and hopefully improved or scuttled.
The problem is that those guys don't really understand what's going on. Ordinary income is subject to inflation also, and it's also the product of a long economic process as well. These are more rationalizations than they are explanations for why the income generated by a couple of calls to a stockbroker is favored over income earned by providing a valuable service to society in the form of labor. And it's so important to remember that companies don't benefit from the trading of their stock. They do benefit from the employment of workers. That's what the system should favor.
In terms of management focus, show me a company that makes management decisions based on price movements in the stock market, and I will show you an excellent short. For myself, I can't ever recall sitting in on any meeting during my working life during which the stock price of the company was even mentioned.
--Hiram
Seems to me the simple solution is to either make taxes completely voluntary-- we all pay for what we think government is worth-- or to send us an itemized bill every year, with a total, and let us adjust the individual program budgets up or down within that total. You would find out quickly that government vastly overvalues itself. We're arguing about what is a "fair share" of what will be stolen from one person and given to another. Just because Robin Hood stole from the rich and gave to the poor didn't make him any less a thief. If you do not own the "fruits of your labor" (I want to know where that phrase came from, someday) then you are a slave. Right now, America is a 40% slave state, because of government.
J. Ewing
Back in the day, I used to wonder why we should as a matter of national policy, encourage investment, particularly investment in the stock market. Among other things, I wondered why stocks got favored treatment over bonds. After all, business expansion is much more likely to be financed by borrowing than it is by issuing stock. In practical terms, even, the stock market provides a means of disinvestment rather than in investment as with the case with the recent facebook IPO which basically allowed folks who had actually invested in the company to get out, dumping their shares on an unsuspecting public.
Here are some of the things I concluded. There are basically two kinds of investments in this world. There are good investments and there are bad investments. Statistically, there are more of the latter than the former, but the potential of the former is greater than the latter. That being the case, why should we either encourage or discourage investment? Shouldn't the policy be to encourage good investments and discourage bad investments, rather than to encourage all investments? But how is this possible when the ordinary investor is matched up against the Mitt Romney's of the world who, because of the privileged position in the deal, are guaranteed a much greater return on their investment, at a much smaller risk, something that must come out of the ordinary investor's hide?
Take a look at those successful Mitt Romney deals, the ones that are hailed as turning around troubled companies and so forth. Five or ten years out, who was it who made money? The stockholders? The investors in the funds? The actual employees of the company who for some reason we all view now as a drag on economic performance? Or is it the managers of the funds? Who serve not the interests of those to whom they owe a fiduciary relationship, but to themselves?
--Hiram
Hopefully the companies do not obsess over their stock price, that can lead to bad decisions.
But if they ignore their stock price that can lead to a hostile take over or a bankruptcy...
Calling the stock broker is just one part of the process. The ivestor also has to be willing to become a part owner in the companies that they invest in.
Imagine if no one wanted to take the risk of owning companies... I wonder who we would work for? The government????
Personally, most of my net worth is invested in many American companies that employee people. I am willing to take this risk in order to make money and help America thrive.
But if they ignore their stock price that can lead to a hostile take over or a bankruptcy..
When is the last you have heard of a hostile takeover? And the stock price has no bearing at all in whether a company goes bankrupt. Or at least it shouldn't. Enron, for example, actually did link the fortunes of it's firm to the stock price, which inevitably result in it's bankruptcy as investors shorted the company into oblivion. Hopefully, that's a lesson we all learned.
Your stock ownership has no bearing at all on the business operations of the company. And it shouldn't. Your ownership of its stock, is a matter of indifference to the company. They lost their interest long, long ago, when they sold the shares into the market.
==Hiram
Hiram,
We'll have to agree to disagree.
J,
You are forgetting that it can only be stolen if we truly own it. I am still thinking that many think the government and other citizens actually have rights to our personal wealth.
I wonder if I can move into Bill Gate's house if everything is community property. Or I am sure that United Healthcare guy has some cool stuff... And he made it questionably according to Laurie.
I am still thinking that many think the government and other citizens actually have rights to our personal wealth.
If they don't, how do you explain taxes? If government doesn't have a right to your wealth, aren't taxes theft? Shouldn't you be able to call the cops to have an IRS guy arrested on April 15th? Why doesn't that happen?
--Hiram
I do agree that the government does have the authority to bill the citizens based on the laws of the time. Yet I do believe that property is owned by citizens until the bill is paid.
Yet your argument that the USA's a wealthy country and should therefore pay large entitlements goes one step further. It seems to imply that our Private property is forfeit whenever the government wants it, and any amount they want.
I am betting many disagree with that view.
"Yet your argument that the USA's a wealthy country and should therefore pay large entitlements goes one step further."
The thing about entitlements is that we are entitled to them. Providing access to what people are entitled to is the opposite of theft.
"It seems to imply that our Private property is forfeit whenever the government wants it, and any amount they want."
Isn't that what taxes are? But it certainly a lot worse when you insert pejorative like "forfeit", and slippery slope rhetoric like, "whenever the government wants it, and any amount they want" into the sentence.
--Hiram
The word "entitlement" is misused in this context. It implies the UNEARNED rights of one person to the property of another and there is no such natural right. Through government and the power of taxation through force (the same 'unjust power' Robin Hood stole from), though, we must pay regardless.
My point was that government supposedly provides us with services that we cannot, supposedly, provide for ourselves through the free market. If this is true, as it should be, then we should willingly pay what those services are worth. But by the threat of force, we are coerced into paying arbitrary high prices for things that we may not want at all. At the minimum, it's inefficient resource allocation and, in principle, it's outright theft.
J. Ewing
To play the Devil's advocate to myself for a moment... I once was being told that I should own more land because it has steady value and more security.
I of course being difficult told the person that if the USA goes defunct, so go all the property rights since they are granted and enforced by the Government. Meaning the new government or anarchy could take your land and other holdings.
Better keep gold, diamonds, food stores and some automatic assault weapons ready just in case... How does this work into our discussion?
The word "entitlement" is misused in this context. It implies the UNEARNED rights of one person to the property of another and there is no such natural right.
It's a euphemism for Social Security and Medicare, both of which have been mostly earned and mostly paid for. Hence the need for the euphemism employed by those who wish to cut them.
"I of course being difficult told the person that if the USA goes defunct, so go all the property rights since they are granted and enforced by the Government."
In legal terms, this isn't correct. Property rights are independent of any particular government. Should this government fail, you would still own your land, but the way you make and enforce your claims might be different. We don't think of this too much because our government hasn't failed recently.
--Hiram
"It's a euphemism for Social Security and Medicare, both of which have been mostly earned and mostly paid for. Hence the need for the euphemism employed by those who wish to cut them."
Well, not a euphemism, exactly, since by your statement these two huge government tax-and-spend systems ARE largely "earned," or supposedly so. If these two-- almost 70% of our "unfunded liabilities"-- were what they were supposed to be, 'retirement investments' or 'old age medical insurance' our federal budget could be in balance. I sure wish somebody would reform these programs and put them on the path to elimination.
J. Ewing
They are what they are supposed to be. And more generally, life is an unfunded liability. Yet we do get by.
--Hiram
Apparently neither was adequately paid for if the trust funds are scheduled to run out of money. Seems we should reduce the benefits to match what was paid for...
We either reduce the daily allocation of water and extend the well's life, or we run out and go thirsty...
Or we could increase the payroll tax to match the desired benefit... Maybe the 7.5% / 7.5% contribution is too small, we could raise it to 10%/10%....
This would be far better than reducing it by 2% for 2 yrs and taking the lost premiums out of the general fund...($105 BILLION) Talking about Progressive tax rate foolishness, if the folks are really earning and paying for this benefit it shouldn't be subsidized through income taxes.
Apparently neither was adequately paid for if the trust funds are scheduled to run out of money.
Neither has a trust fund out of which money is paid. Both are paid out of the general fund of the federal government. And let's keep in mind how the Republican effort to sabotage the economy for political gain worked. They didn't cut spending, because of course, they don't have a problem with spending. As has been shown time and again Republicans don't have a problem with spending. They do have a problem with accounting that describes that spending accurately. That's why they chose to conduct a series of wars off the books. That's why they refer to nonexistent trust funds. What they do have a problem with is paying for the spending they.
--Hiram
Oh don't start that again. Yes they both have trust funds. The funds invested their assets in US Savings bonds. That is the only reason the General Fund is involved...
The general fund pays as the bonds are redeemed...
The general fund pays as the bonds are redeemed..
No. For much of recent history, Social Security payments were made while no bonds were redeemed. And while bonds may be redeemed now, their redemption has no linkage at all to payment of Social Security. If those bonds didn't exist at all, the government would be making the same payments.
People have in mind a model whereby SS is paid out of some sort of trust fund, and if that trust fund were emptied, Social Security would cease making payments. That isn't the case, because Social Security isn't paid out of that fund. So in terms of payments, it doesn't matter whether or not that fund exists, or what it has in it.
--Hiram
That is the only reason the General Fund is involved...
The reason the general fund is involved is because Social Security payments are made out of it. It would be making those payments whether or not the social security trust fund exists or not. Just like just about every other obligation of the federal government.
--Hiram
Do you have any sources that support you incorrect description?
I knew we covered this in detail before... It was just hiding somewhere funny.
G2A Obama Promises to Spend More
Oh, the barstool economics issue again; always one of my favorites. Actually, you can turn the tables quite easily.
In 2001, we borrowed money in order to pay for the Bush era tax cuts which largely went to the wealthy. In other words, as with the analogy, we gave a benefit to a group of people who had done nothing to deserve it, but who over time, came to feel entitled to it. Now the issue on the table is whether to withdraw, in whole or in part, the benefit which some have come to regard as something they had a right to. We hear some, like the fifth customer, say they would be treated unfairly if we return to the status quo ante. From others, we hear threats as with the recent spate of letters from billionaire CEO's who say that they will fire workers and close down businesses if there tax advantages are taken away.
Meanwhile, no one seems to ask what the benefit we received from the investment we as a nation made in our wealthiest citizens, the self proclaimed job creators whose wealth, we were assured would trickle down to the rest of us. Turns out, they didn't use the money we borrowed and gave to them to invest in jobs at all. Instead, they sunk it in the stock and real estate markets where it simply disappeared, in some magical Ponzi Scheme.
Never fear. To think about that, to ask ourselves what actually happened in the last ten years, is a playing of the "blame game", and we all know how Ponzi scheme operators hate it when people play the game. Let's start again they tell us, let's pretend that 2009 is year zero, and let's repeat the same mistakes that nearly bankrupted us once before. For them, right now, I just have one question. Isn't it strange that those, like Mitt Romney in his heyday, who tell to borrow money and take on risk, always, and by that I mean always, take their profits out off the top?
--Hiram
I for one am a fan of letting all the cuts go away. Why does Obama want to let everyone keep dri king cheap beer at the extra expense of those that are already paying the majority of the tab?
Seems wrong. All of us can chip in more for the tab we all have rung up...
By the way, I am not sure I would call collecting a slightly less tax... giving a benefit... It was there money they got to keep.
Now that I have a real keyboard again, I can clarify my thought.
Hiram's last comment is very appropriate to this post and telling regarding his views. He believes that letting people keep more of their money / property, is too give them a benefit. (worse yet: not deserved)
Kind of like the thief that takes your money but gives you back $5 for a cab ride home. It was sure kind of the thief...
Definitely not valuing personal property rights.
Why does Obama want to let everyone keep dri king cheap beer at the extra expense of those that are already paying the majority of the tab?
For one of the reasons, Mitt Romney's plan to fund tax cuts for the rich paid for by the poor is problematic. Mitt's plan is regressive, it in fact benefits the rich more than the poor, but the benefits to the poor under the current tax system are more needed. Poor people have a more difficult time paying taxes than the rich.
In terms of letting people keep more of their money, I think the issue is neutral. Let's keep in mind that Mitt's plan is that you keep less of your money so he can keep more of his. The reason is that he can use it more wisely; that he has learned his lesson, that he won't take your money to the casino, or Wall Street, or put it in the kind of investment schemes he wouldn't dream of investing in himself. He tells us he will be good this time, and not ship off your dollars that are shifted to him off to the Cayman Islands.
Do you really believe him?
==Hiram
Kind of like the thief that takes your money but gives you back $5 for a cab ride home. It was sure kind of the thief...
If taxes are theft (and they certainly are not) they are theft from everyone. They were theft in 2001 when George Bush, on your behalf borrowed money, and gave the bulk of it to America's wealthiest people. Debts Mitt Romney thinks should be paid by the poor, not by himself, and his wealthy friends. Ah, yes, the entitlement of the fifth drinker.
--Hiram
More allegations about Romney's desire to rob from us and give to the rich with no sources... Come now...
Here's the link:
http://www.taxpolicycenter.org/
There are a number of papers here, but I believe the Tax policy Center's analysis of Romney's plan was dated August 1.
But this is intuitive as well. Let's return to the barstool economics example, which quite clearly shows that tax cuts benefit the rich more than the poor.
--Hiram
Thanks. I'll look at it when I get more time. Here are some other related links.
TPC Tax Analysis
Romney Tax Page
American TPC Tax Analysis Critique
US news Romney Plan Pros/Cons
Tax cuts without without deduction changes would benefit the wealthy more in absolute dollars by letting them keep more of their money. Yet that is not what Romney has proposed.
He has proposed tax cuts for everyone with a reduction in deductions for the wealthy. If this works as he intends, you personally pay the same or less and the wealth pay the same or more.
I am not sure it will help our deficit problem, but it sure will help the working class.
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