Taxes, the Deficit/Debt, and the Fiscal Cliff

[Guest]

I would like to give the group of men that helped create our economic system the benefit of the doubt and assume they created this system to benefit the entire country and not just their own interest. That being said, they could have done a lot better job. Maybe they never imagined how big our economy would get?

Huh?

[AnimalMother]

i said interesting, not surprising.

I would like to give the group of men that helped create our economic system the benefit of the doubt and assume they created this system to benefit the entire country and not just their own interest. That being said, they could have done a lot better job. Maybe they never imagined how big our economy would get?

You are a more trusting person than me. But, in either case, at this point too many keys to the taxpayer funded piggy bank have been carelessly handed out.

[HeloDude]

The goal of progressive taxation is to reduce inequality. It's possible to have progressive taxes that actually aren't all that effective in reducing inequality, so I guess the bigger point is I want a system that does a better job at reducing inequality.

Honest question here--what is the foundation of your belief that 'reducing inequlaity' is the job a massive government which requires taking from people to give to someone else? I don't personally mind if you go into religion on this one, however, I will call you out on hypocrisy if is warranted.

Do you have a problem with people earning millions of dollars that you and I do not have? What about rich, wealthy people do you not like? Do you feel that taking wealth from someone else is 'righting' old wrongs from the past? Do you not believe that this country already goes above and beyond what is needed for someone to improve their social/fiscal status?

I had avoided asking you this, but since you have always seemed like an honest/straight-up kind of a guy, I will ask (your call whether to answer): If are you are truly against what you say is income/wealth inequality, do you donate all of your money, outside of what you live on, to charities that directly help people/reduce this inequality you speak of? Do you forego having nicer things for you and your family so that you can use all of that extra money to help others in need? Do you do 10-20 hours of charity outside of work?

The reason I ask is that I believe people when I see them in action--this is what inspires me. If you are legitimately against inequality, then in my book, you should be living your life as close to Mother Theresa as possible. Maybe you do? I know that I sure don't...then again, I'm not preaching how I believe reducing inequalities should be a high priority. It's easy to say that you support an organization doing something (ie a massive federal government that gives Trillions of dollars in welfare)...but what do you personally do? It's like hearing people over the last decade saying, "I support the Troops", and then when I asked what they personally did to 'support the troops', they just looked at me with a blank stare. This is when I explained to them that they could donate to the USO, send care packages, donate frequent flyer miles, etc.

So what is it that you do? Honestly...inspire me here.

[GoodSplash9]

The idea that rising inequality hampers sustainable growth and that smart government influence on properly-operating markets is the most effective way to reduce inequality.

Income redistribution therefore shouldn't be the only or even the main strategy, although I strongly believe social safety net program that give a defined benefit to all citizens provide a great deal of economic certainty and long-term stability that enhances growth.

I even think there can be some agreement among the more populist-leaning liberals or Third Wayers who want smarter and fairer government and the small-government libertarian-leaning conservatives who want smaller, simpler government.

A strong argument could be made that the "rising inequality" you are talking about is caused by a massive societal lack of personal accountability and reliance on government kool-aid rather than

ineffective government policies and wealthy individuals and corporations. Did I miss some of your bright and shining examples of "smart government influence on properly-operating markets"? That sure makes a great talking point...maybe you are talking about how congress supported sub-prime mortgages in the late 90s & early 2000s, some of smart investments it has made in failing corporations in the last 4 years, and the job it is doing increasing the number of people using some of the great "social safety nets" you mentioned. When I see "smart government influence" it makes me think about FEMA, the ineffective bureaucracy we deal with every day at work, and the fact that our political leadership can't even pass a yearly budget on time.

You really believe social safety net programs blah blah blah provide a great deal of economic certainty and long-term stability that enhances growth??? YGBFKM!!! I'm going to give some personal examples I have of why you are completely batshiit crazy & wrong rather than googling random blogs, articles, books, and wikipedia to support every paragraph I write. So my wifes grandma falls on one side of the social safety net....she divorced her military husband later in life, and neither of them saved or prepared for retirement. She lives off of social security, alimony, and medicare. She barely makes enough to pay for the dirty craphole trailer park trailer she rents or the fast/freezer food she lives on. When you include the cigarettes and booze she says she can't live without, she isn't able to pay all of her bills and credit cards. She ends up begging for help from my in laws. She has no personal accountability in my opinion, and she is contributing to the "rising inequality" you are talking about by relying on your social safety nets that are supposedly so crucial. They aren't even enough to enable her trailer park lifestyle.

My grandma was on the other side of the spectrum of the social safety net. She was very savy with retirement planning/saving and lived very well. She passed away recently, and we found out that she had about $4 million in IRAs, annuities, and savings accounts. I would say that she was very responsible & accountable in regards to preparing for retirement and blessing(yea....I'm a proud Christian and that defines the person I am in pretty much every way) her family financially when she passed away. She loved to knickel and dime social security, medicare/medicaid, disability, and any/all government entitlement programs she qualified for though. She also taught my cousin(her granddaughter) to do the same thing. My cousin basically arranged to be let go from her job so she could go back to school to get her masters. She collected full unemployment for 2 years, used a number of government programs to help pay for her masters degree, and my grandma paid the rest. I work my ass off for my wife and 2 daughters while paying taxes like you and most of us on baseops. It doesn't seem right that we pay for my grandma to use the social safety net when she has $4mil in the bank.....and my cousin voluntarily arranging to be let go from her job to receive unemployment while going to school doesn't scream fair or personally accountable to me.

Absolutely not on any of these questions. Everyone operates under the system we have, if you're working it to your own benefit and doing it right then I can say as long as it's done fairly, I would do exactly the same thing. I work hard every day to ensure my family is taken care of and that we can look forward to a prosperous future. What I want is a change in the system so that inequality is reduced and the opportunities to advance are more open to all regardless of where you start from.

Again, your cliche talking points sound great. How the hell does increasing taxes on people who are succeeding reduce inequality? My dad went from a poor college student to lower middle class to self made millionaire in about 15 years. He has worked a corporate engineering job since graduating college, but hes also been very succesful managing a small business and inventing & developing patents with a partner. Explain how taxing my dad at 50+% is going to allow the government to help move my wifes grandma out of the trailer park, reduce inequality, and increase opportunity? I'm not seeing it....all it does is reduce the incentive to succeed financially and decrease upward mobility.

We're certainly better than some places WRT upward social mobility but it's not a perfect system by any means so no, I don't think we're "going above and beyond what's necessary." Do you really think we have a perfect meritocracy and easy upward and downward social mobility in this country? Do you really think, on the macro level, if someone starts out rich but is a total loser at life that he won't still be rich and his kids won't end up rich too? Do you really think that, again at the macro level, some poor kid who grows up with nothing but is smart and hard working has the same opportunities to succeed as someone already well-placed due to birth? To me it's the same concept you see worldwide; the greatest blessing one can likely be born into is citizenship in the United States (or some other advanced nation). Taking that a step further, among those who receive that first blessing, there is nothing better than to be born into a well-off family, it greatly increases the odds of your own success all other factors being equal.

There won't ever be a perfect form of government because people are always going to corrupt or screw up some part of it, but the American system has created the largest amount of wealth, personal prosperity, and individual freedom that a country ever has in less than 200 years. Ever increasing taxes wasn't ever part of American success, and it won't lead to it today either despite what your boy in the Whitehouse wants everyone to think. You won't ever agree because your blind....but there are plenty of examples of the heirs of the ultra wealthy, actors, athletes, and more who have squanded away massive amounts of money because they are idiots who don't have any personal accountability or discipline. Reference what I said about my dad above...He isn't BIll Gates, but he was able to go from 50k in student loans with nothing to his name to having a couple million in the bank at 50.

Of course he doesn't give away his extra money or go do charity work. Its the Gov's job to take all of the extra money from the rich....thats the definition of charity, right?

/End Rant

[Guest one]

Huh?

I was talking about the book that was posted. In the book they talk about how Forbes and a few other very wealthy and powerful men had a secret meeting that ended up leading to the creation of the Federal Reserve.

[Cap-10]

While income is a big issue, how about spending?

When the Occupy yahoo's were talking about the 1% paying more money, I don't think there was too much math involved...from what I could tell, you could tax the 1%'ers at 100%, take every friggin cent they make and throw it into the federal income column, and we still would be paying out more than we are bringing in.

The government could tax everyone at 69% and I bet my paycheck they still couldn't balance the budget and start paying down the debt!

We are f@cked!!

Cheers,

Cap-10

[TreeA10]

We have spent Trillions since President Johnson declared the War on Poverty and levels of poverty have pretty much remained the same since 1973. In the meantime, the definition of poverty has changed: https://www.nypost.com/p/news/opinion/opedcolumnists/poverty_like_we_ve_never_seen_it_1Tm0h9YpmVsEc2gHYm6DaN. I'm debating whether to cancel my satellite TV to save money and 2/3's of those "In poverty" have that or cable. WTF? Trying to achieve equality of outcome is just not going to happen no matter how many more trillions we throw at it because some people are quite content with doing nothing if the free benefits return a level of comfort they are satisfied with.

[Prozac]

Hey, you guys know who else was a Socialist? Ronald Reagan. I mean jesus, the man raised taxes somewhere between 8 and 11 times depending on which sources you look at. Apparently that's now the threshold for calling someone a socialist. So there you have it folks; Reagan was secretly in cahoots with the Soviets all that time....whoda thunk?

[otsap]

I think this is partially what is being referenced when people discuss government (dis)incentives as it relates to personal responsibility.

[Guest]

That presentation is worth looking at.

https://www.aei.org/files/2012/07/11/-alexander-presentation_10063532278.pdf

[Guest one]

It is an interesting presentation. I think it is a little misleading that they include child care. I know the scenario is based on a 1 and 4 year old but childcare benefits are not always used because there are often better avenues available for single moms in this situation. Childcare is not always needed and is more expensive than all of the other benefits. If you take away childcare that chart looks much more reasonable.

Edited November 28, 2012 by one

[Fuzz]

https://www.telegraph.co.uk/news/politics/9707029/Two-thirds-of-millionaires-left-Britain-to-avoid-50p-tax-rate.html

"In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs. This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election."

NsPlyr, let me ask you a question on the subject of inequality. Wouldn't raising taxes on the very rich actually create more inequality? I mean the wealthy will leave or hire an army of CPAs to find the loopholes in the new tax system, and they already have considerable wealth amassed so yes their future incomes will shrink but in the big picture how hurt will their lifestyles actually change? They will continue to be very wealthy. Now for someone like you and me who maybe one day get out of the AF and start a successful company, that company will only grow so big before is gets pummeled with all the taxes, and people will also invest less if they know the taxes are going to be exorbitant. So wouldn't that really create more inequality, the rich stay rich and the middle class and poor never be able to reach that level?

[GoodSplash9]

And on the "blind" thing...not this sh*t again. Seriously guys, we can disagree on policy but let's baseline assume other people aren't idiots. If you're willing to put any shred of thought into this type of argument in the first place, you're batting above average to start with. Neither side is "blind," although you're really making it hard for me to believe you when you so brazenly reject data and research to back your points, there are just disagreements on values, worldview, etc.

I'm not baseline assuming your an idiot. It's a factual judgement based on the data and research I've gathered on pretty much every baseops thread you've posted in(I bet I can find some others who agree, but you won't acknowledge that data will you?).

You are a pretty typical lib(not above the batting average). My argument was based on personal experience on the micro economic level rather than "data and research" you googled to support what you obviously think is superior knowledge on the macro economic scale. Only hard data and research approved by you has any real merit though apparently. Your a self proclaimed expert on everything, right? You didn't acknowledge a single question I asked you, instead you changed the topic and explained to me why I don't have any credibility.

I am curious though, tell me about your favorite successful public policy?

[Fuzz]

I am curious though, tell me about your favorite successful public policy?

The post office

[GoodSplash9]

I prefer Fedex. Reference below data:

https://www.huffingtonpost.com/2012/09/27/postal-service-default_n_1918945.html

https://www.reuters.com/article/2012/02/14/us-usa-postal-decline-idUSTRE81D0OO20120214

[nsplayr]

I am curious though, tell me about your favorite successful public policy?

Start here. How about the 13th Amendment, The Civil Rights Act, the Interstate Highway System, the GI Bill, ending polio, the Marshall Plan, or putting a Those are all pretty good.

Edited December 18, 2012 by nsplayr

[Fuzz]

Why do you believe investment behavior will change significantly due to relative small changes in the tax rates on investment income? What is your definition of "exorbitant" taxes?

I say anything more than what the taxes are now is exorbitant.

Poster child for higher taxes and a hypocrite:

https://www.weeklystandard.com/blogs/watch-what-warren-buffett-does-not-what-he-says_664022.html?page=2

"Early in his career, Buffett invested heavily—almost one third of his early fund's capital—in Sanborn Map, a company that mapped utility lines and such. But he soon grew frustrated with the company's leadership, which "operated more like a club than a business," and which refused to return greater dividends to investors. So Buffett amassed more and more stock, and with control of the company finally in hand he pressed the board of directors to split the company in two (one for the mapping business, and one to hold the company's other outsized investments).

Finally, the board capitulated. But with victory finally at hand, Buffett nearly scuttled the deal because of ... taxes. As Schroeder recounts, quoting Buffett, one director proposed that the company just cleanly break the company, despite the tax consequences—"let's just swallow the tax," he suggested.

To which Buffett replied (as he recounted to Schroeder):

And I said, 'Wait a minute. Let's -- "Let's" is a contraction. It means "let us." But who is this us? If everyone around the table wants to do it per capita, that's fine, but if you want to do it in a ratio of shares owned, and you get ten shares' worth of tax and I get twenty-four thousand shares' worth, forget it.'

Buffett was willing to walk away from a deal because the taxes would have taken too much of a bite out of it. Fortunately for him, the board gave in and allowed him to structure the deal that he liked, saving him from his own Norquistian response."

[Fuzz]

Nsplyr, please spin this for me as good thing, I'm very interested, because I thought the democrats wanted to reduce inequality through government programs???

https://www.examiner.com/article/college-students-learn-of-obama-s-secret-pell-grant-cuts

"Sorry, college students. President Obama has cut your access to Pell Grants by 33%; he just forgot to mention it before Election Day. During the recent campaign, President Obama claimed credit for increasing funding to the Pell Grant program, which provides college funds, free from repayment, to millions of students. However, an email sent out Tuesday to some Dallas college students is revealing a detail the President forgot to mention: the time a student can receive a Pell Grant has been cut, by as much as three years. With Pell Grants for the fall semester now dispersed, colleges are informing students of their options, bringing the cuts to light."

[Vertigo]

I prefer Fedex. Reference below data:

https://www.huffingto..._n_1918945.html

https://www.reuters.c...E81D0OO20120214

So you're problem with the Post Office isn't the Post Office but rather Congress.

"Congress, in a 2006 law, required the Postal Service to make annual payments to fund 75 years' worth of future retiree health benefits in 10 years."

Try sending a card top your mom with Fed Ex... see if you can get that done for under $5.

Nsplyr, please spin this for me as good thing, I'm very interested, because I thought the democrats wanted to reduce inequality through government programs???

https://www.examiner....pell-grant-cuts

"Sorry, college students. President Obama has cut your access to Pell Grants by 33%; he just forgot to mention it before Election Day. During the recent campaign, President Obama claimed credit for increasing funding to the Pell Grant program, which provides college funds, free from repayment, to millions of students. However, an email sent out Tuesday to some Dallas college students is revealing a detail the President forgot to mention: the time a student can receive a Pell Grant has been cut, by as much as three years. With Pell Grants for the fall semester now dispersed, colleges are informing students of their options, bringing the cuts to light."

Notices were sent by most schools to the students prior to the election.

Edited November 29, 2012 by Vertigo

[Fuzz]

Notices were sent by most schools to the students prior to the election.

Still doesn't answer my question? What happened to the inequality and making things fair, what about the working mom going to school at night or going back for their masters?

[Guest]

How does an increase equivalent 09 stimulus become part of the baseline budget?

Why are we running a $1.1 TRILLION annual deficit when revenues are within $100bn of the 07 record year?

Why is this buried on page 16 of the WSJ when it should be on the front page of every paper in the country until people either get smart or it gets fixed by people who are smart?

[Guest]

It is an interesting presentation. I think it is a little misleading that they include child care. I know the scenario is based on a 1 and 4 year old but childcare benefits are not always used because there are often better avenues available for single moms in this situation. Childcare is not always needed and is more expensive than all of the other benefits. If you take away childcare that chart looks much more reasonable.

Wrong.

Hey, you guys know who else was a Socialist? Ronald Reagan. I mean jesus, the man raised taxes somewhere between 8 and 11 times depending on which sources you look at. Apparently that's now the threshold for calling someone a socialist. So there you have it folks; Reagan was secretly in cahoots with the Soviets all that time....whoda thunk?

Great point. That's super helpful. Problem solved.

The invitation to accept your award is forthcoming.

[Guest]

"When Beltway politicians claim they want a "balanced" approach to reducing the deficit, what they really mean is raising taxes to finance this new higher spending level," is explicitly what I want

I know you do.

But that's a problem...by more than $1,000,000,000,000 dollars so far this year.

It is unsustainable. We will become insolvent. That is worse than bad.

The rest of the article is premised around, "But if growth is slower as a result of the higher tax rates, then the revenue will be lower too," which is debatable

Man, you missed the point.

[Prozac]

Great point. That's super helpful. Problem solved.

The invitation to accept your award is forthcoming.

Thanks for including me in such nice company. My point was that rhetoric is not helpful in situations like the one we're in and often times is misleading at best. There are lots of people who are very smart when it comes to the economy and good arguments have been raised on both sides of the issue. It's kind of hard to evaluate them when you're confronted with more bullshit and hot air than facts both in the mainstream media, and in casual discussion.

[Fuzz]

So wait, are your criticizing the President for signing these cuts into law (and Congress for passing the law), or what? Figured you'd be supportive of cuts of this type, maybe I'm reading your positions wrong. Or is this just, "Haha, Obama did something potentially bad, EXPLAIN IT!?!"

I'm fine with the change; 18 full-time semesters is 6 years of benefits. If you're going to school part-time, which I imagine your working mom would be doing, you get to partially count your part-time semesters until you reach what is now 12 full semesters worth of credits (vice 18 full semesters previously).

My point was the democrats are trying to "help the poor" as you have argued many times how does this help them? I'm not against it, I just remember the president saying that we shouldn't be cutting spending on education, yet what it this?