Wealth Inequality - again

Independent said:
I didn't intend to say we can't balance the budget by simply cutting expenses. I said we can't balance it by cutting federal employee costs - they make up just a small percent of the total budget. If we want to balance by cutting expenses, we need to go where the money is - and that includes SS and Medicare. AFAIK, cutting SS by 33% means making the average SS check 33% smaller.

You seem to think that the rich are getting poorer and the poor are getting richer. I've never seen any data to support that notion. Do you have a source? Each year we use some of the tax dollars collected from higher income people to support current consumption of very low income people, but that's not what you wrote.
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Here's one source, but it doesn't include table data for 2009

http://www.taxfoundation.org/news/show/250.html
 
Ronstar said:
I should have clarified that I believe that tax increases aren't the answer in the near term - trying to climb out of a recession in a period of high unemployment. The current administration took a look at tax increases and realized that we would be in danger of slipping back into the mess we just left if taxes were increased now. So they rightfully extended the Bush tax cuts. So no it's not a private prejudice of mine - the last two administrations agree.
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What's the rationale for small tax increases hurting the economy? I'm not an economist but it seems to me that if the money goes to the government they are going to spend it immediately resulting in a boost to the economy. On the other hand, if I pay less taxes, I'm just going to save and build my cash reserves or invest it in stocks. It's not clear to me how this would help the job situation or the economy as a whole.
 
photoguy said:
What's the rationale for small tax increases hurting the economy? I'm not an economist but it seems to me that if the money goes to the government they are going to spend it immediately resulting in a boost to the economy. On the other hand, if I pay less taxes, I'm just going to save and build my cash reserves or invest it in stocks. It's not clear to me how this would help the job situation or the economy as a whole.
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I'm going to have to dig out my letter from my Congressman Duncan D. Hunter. I asked about the whole stimulus thing coming to California. He was very proud that about 1/4 of the stimulus money actually went to trying to create jobs. 75% waste doesn't seem to boost an economy to me.
 
photoguy said:
What's the rationale for small tax increases hurting the economy? I'm not an economist but it seems to me that if the money goes to the government they are going to spend it immediately resulting in a boost to the economy. On the other hand, if I pay less taxes, I'm just going to save and build my cash reserves or invest it in stocks. It's not clear to me how this would help the job situation or the economy as a whole.
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I believe that people spending money would benefit the economy more than if gov't spent it.

And I'm like you - I put my tax refund in the bank. this will help the bottom line of the banks. It may be their best source of income given all the bad loans out there. Same thing stocks - investment in stocks helps the economy.

But I don't believe many people will invest the tax savings. Many can't afford to, and besides - there's a lot of flat screens and iPads out there to buy.
 
Westernskies said:
You've complained repeatedly being "attacked" whenever someone takes exception to something subjective you have posted; and that people aren't reading your posts completely before responding. Sorry, but you aren't and they have.

I'm not attacking you, I'm disagreeing with you.
You need to learn the difference. :cool:
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and yet still you wont discuss the historical facts i posted, you would rather make this about me.
 
Ronstar said:
I believe that people spending money would benefit the economy more than if gov't spent it.
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$20 million lost to trying to harness brain powers on government spending, or $20 million spent into an economy boost that economy by civilians boosts an economy better?

STAR GATE [Controlled Remote Viewing]

Ronstar said:
But I don't believe many people will invest the tax savings. Many can't afford to, and besides - there's a lot of flat screens and iPads out there to buy.
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I wonder if the IRS or economists have any numbers. A quick Google search has polls saying people are planning on spending less and saving more, but who knows if what they say is what they do.
 
Ronstar said:
I believe that people spending money would benefit the economy more than if gov't spent it.
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maybe, maybe not but that presupposes that the people will actually spend it, which from the following it appears you arent convinced they will.

Ronstar said:
And I'm like you - I put my tax refund in the bank. this will help the bottom line of the banks. It may be their best source of income given all the bad loans out there.
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the banks dont need anymore help, they are doing fine with the bail out and the artificially low interest rates. and those banks arent helping the economy with all the money they are making as they are still very tight with loans.

Ronstar said:
Same thing stocks - investment in stocks helps the economy.
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investing in stocks right now only inflates the price of stocks, how does that help the economy? seems to me it just makes for a more risky environment by pushing the P/E back up, thus creating an environment just begging for another correction/collapse.
 
jdw_fire said:
investing in stocks right now only inflates the price of stocks, how does that help the economy? seems to me it just makes for a more risky environment by pushing the P/E back up, thus creating an environment just begging for another correction/collapse.
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For every dollar that someone spends buying stocks, someone gets a dollar from selling stocks (with the intermediaries getting a cut and, if the seller has made a profit, possibly the tax collectors as well).

There is plenty of documentation about the wealth effect - if people feel wealthier, they are more likely to spend which will boost the economy.

There is also the fact that higher stock prices make it easier for companies to raise capital for new investment (or other purposes) which is also a good thing.
 
jdw_fire said:
maybe, maybe not but that presupposes that the people will actually spend it, which from the following it appears you arent convinced they will.
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But that presupposes the government will spend it well, which it doesn't have a rich and splendid history of doing either.
 
Hamlet said:
They aren't saying that it is impossible to cut expenses enough to balance the budget. They are saying it is impossible to do it in the way you described (which was backed up by your "gut feeling" that there was plenty of easy "waste" to trim).

You can balance the budget without raising taxes, but it involves some dramatic changes in what we expect to get from government. Our Defense budget would need to be slashed to what it would take to actually defend our country from attack, rather than the current "Undisputed Ruler of the World" budget we have now. We would need to reduce Social Security benefits. We would need to change Medicare/Medicaid so that they only pay for a much more basic set of health care benefits than they currently do. We would need to stop paying farm subsidies (Not a huge part of the budget, just my particular pet peeve).

Or we could do some of of the above and go back to the tax structure that we under Clinton. IMO, the best Republican president that we've had since Reagan :cool:

Contrary to the view that "business and upper income individuals are increasing shackled by gov't actions that are essentially redistributing wealth", we've been mostly cutting taxes for the wealthy for 30 years straight, with a couple of modest bumps up along the way.

The extremely wealthy in this country have never had a better deal than they currently do. They pay a 15% capital gains and dividend rate. Their marginal rate of 35% is actually lower than the self-employed guy making $100k/year (28% income plus 14% FICA).

Would it really be the end of the world to go back to a 20% rate on cap gains and dividends?

Is there a reason that we want the income earned from work to be taxed at a much higher rate than investment income?
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I agree with a lot of what you're saying. But my view of "business and upper income individuals" is not the "extremely wealthy" you refer to. I'm talking about the upper half of income earners.

I'll cite an example. A small business owner making less than 100k can't max out his or her 401k due to "compliance testing" where it is found that the lower paid employees do not benefit from the plan as much as the higher paid employees. The gov't solution? A safe harbor plan where the owner is forced to contribute an amount equal to 3% of each employee's earnings - even to employees that weren't in the plan. Then the owner can max out his or her own contribution, but it results in a personal loss because the cost of the "safe harbor" exceeds the owner's personal gain.

No - it wouldn't be the end of the world to increase the rate on cap gains and dividends. But it's like a parent giving a kid an allowance. Would you give the kid a bigger allowance if the kid spent it foolishly?
 
Don't worry about wealth inequality. In the end, this tends to be sorted out through reliable historical processes. >:D

The process of wealth condensation causes newly created wealth to become concentrated in the hands of those who are already wealthy under certain conditions. A small initial inequality is amplified over time from economic positive feedback.

Anyone who's observed a system governed by positive feedback knows that eventually the system is going to hit the rails. That's when things get interesting. Just ask the Czars, or the French Second Estate...
 
Westernskies said:
:greetings10: jdw, let me help you out.

These are opinions:



These are facts:

FDIC: Failed Bank List

FRB: Senior Loan Officer Opinion Survey: January 2011

FDIC: Bank Data Guide
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lol!! you help me out?? lol!!! and yet you still wont discuss the facts wrt bill gates. i think it is because you cant, so you pick on something else i said. well let me help you out, what you quoted from me in your post above i know is my opinion, at least i am man enough to admit it, whereas the same cant be said for you. you apparently get your jollies trolling people.
 
Westernskies said:
Yep, the folks who brought us Microsoft, Apple, Oracle, Ebay, et.al , were all just plain lucky, and never in the history of the world will all the planets align again to ever allow anyone to duplicate their success... except of course for the next crop of dot com zillionaires from Facebook, Google, Amazon, et.al... and undoubtedly many from the next generation will do equally well. Timing may have played a part (it always does) but to say that Bill Gates would be hacking code if he hadn't stumbled into MS is unprovable speculation, and a bit of a stretch, IMO
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I think you and a few others are reading his posts in a different way than I am...

Sure, Bill Gates will not be hacking code... I do not see him saying that... but he also probably would not be the richest man in the world (or is it #2 now).... he might just be someone who makes a few hundred mill... or even a billion or two.... not the same as he is now...

And guess what... he might not have done even that good... who knows... but thinking that he would make it as big as he did doing it a different way is a streach IMO....
 
jdw_fire said:
and yet still you wont discuss the historical facts i posted, you would rather make this about me.
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Why does WesternSkys have to put down 'facts'... sure, your facts were acurate... but does not mean that he has to come to the same conclusion as you on what those facts indicate...

He might think that Bill Gates CAN reproduce his success in some other way... just because he got help the first time does not mean he might not get help the second...
 
Some might have seen the oil company commercials, wherein, on split screen, an oil company employee and a non-employee talk about oil company "profits"; where they go, all the needs of society, and [-]how the oil companies should be taxed for their windfall[/-] how to reconcile those different views.

The oil company spiel about the profits going to "small business, vendors, blah blah blah" seems to mistake profits for "costs". But, that aside, without confiscatory taxes, the only way to share in those profits, or the profits of any company, is to be an owner.

Changing the mindsets of people from "employee" to "owner" seems challenging, if necessary, but it still doesn't solve the problem, as mentioned in the "31% think they can retire on $250k" thread, of how can one become an owner, if there's little/no excess cash flow in the budget. Of course, we can argue that those poor folks can get rid of their cellphone, cable, etc., but the point still stands that a lifetime of saving $50-100 month still doesn't amount to much... Folks with disposable income, however, have no excuse, except being stuck in the passive employee mode.
 
Ronstar said:
Here's one source, but it doesn't include table data for 2009

The Tax Foundation - Summary of Latest Federal Individual Income Tax Data
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I followed the link and got this
Each year from 2005 to 2007, the top 1 percent's constantly growing share of income earned and taxes paid set a record. That trend reversed in 2008. In fact, the income share for the top 1 percent of tax returns was lower in 2008 than in 2000, largely due to differences in capital gains.
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Your claim referenced "wealth" not "income". You were claiming a long term trend, not a one year blip in a long term trend. I think I can safely say that 2008 was an unusual year for capital gains income and the results for that year don't say anything about the trend line.

So I guess I'll have to be more specific, I don't know of any data that shows a long term trend in the rich getting poorer (as in having fewer assets) and the poor getting richer.
 
This is a more accurate analogy--

You tell the kid to buy his clothes, food, etc out of his allowance. You then cut his allowance and then get mad when he can't still purchase all of the same things he could before. In fact, you seem to expect him to actually start paying rent as well.

For the past 40 years, the cost of the federal government has bounced around 20% of GDP (its higher now due to the recession and stimulus spending, but I'm talking long term here). We have our taxes set currently so that they only bring in about 15% of GDP.

If you want to continue with a 15% GDP tax rate, you need to specify what government services you want to remove/reduce to get down to a 15% GDP cost structure. In order to get down to that cost level, you are going to need to make real cuts in Defense, SS, Medicare, or Medicaid. What serious cuts do you advocate making?


Ronstar said:
No - it wouldn't be the end of the world to increase the rate on cap gains and dividends. But it's like a parent giving a kid an allowance. Would you give the kid a bigger allowance if the kid spent it foolishly?
Click to expand...
 
Independent said:
You seem to miss the distinction between "necessary" and "sufficient" conditions. Sure, Gates worked hard and accomplished a lot. Somebody with the same opportunities who insisted on working 32 hour weeks would have failed.

But, he also had opportunities that are extremely rare. If he had to start over, and the planets didn't align as favorably for him, he'd be a successful software designer, but we wouldn't know his name.
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Only part way thru this thread..but just had to comment on this..

IMHO...what some of you might be missing in the Gates discussion.....is this: "Gates and others like him "make their own opportunities". No one GAVE them to him. Did IBM make a stupid mistake? Yes. Did they give him the opportunity. No. What THEY gave HIM was "a NO"!
GATES is the one that had the vision...that they refused to see.
 
Well, Gates got lucky in that he was a participant in the PC revolution quite early. Still, he had the vision to drop out of Harvard to take a more active role. He was quoted as saying that if he had waited to finish school, it would have been too late. Contrast that with Ken Olsen, founder and CEO of Digital Equipment Corp (DEC), who said in 1977 that "There is no reason for anyone to have a computer in his home". DEC had a great success with their 32-bit supermini VAX line to challenge IBM mainframes, but Olsen missed out on the next revolution.

Anyway, Gates is no hero of mine, and I have called him names and cursed Microsoft when I encountered nasty bugs on my PCs. Still, I would give Gates credit where credit is due.

But, but, but, what's all this have to do with wealth inequality again? Do we give an individual credit only if he could justify beyond any reasonable doubt that luck had nothing to do with his success? Else, we would strip him of all his money or what?
 
jdw_fire said:
and yet still you wont discuss the historical facts i posted, you would rather make this about me.
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Sorry jdw_fire...but have you considered the facts you are holding onto...might be a bit one sided? And do they really have any bearing whatsoever...on what Bill Gates was able to turn it into?? (gently asking...).

I mean....isn't that sort of like ...those that say "X person is wealthy because they were lucky or they inherited it?". When in fact, the person that was lucky or inherited had choices. They could "blow that wealth" to the point they have nothing...or they can choose to " use it to create more wealth".

Gates turned his opportunity into something for himself, for others and for the world. And I am grateful...because I really like my laptop. :)
 
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