Quote :

"A most recent example is 2002-2003 after George Bush managed a tax cut for the top 1% from 38.6% to 35%. The net effect, however, was to increase the top 1%'s share of tax liabilities from 21.4% in 2002 to 22.6% in 2003."

I think we can all agree that we are not on the wrong side of the Laffer curve. The rich pay a higher percentage of tax revenues but that largely because tax revenues as a percent of GDP have taken a nose dive.

You might argue that companies are more willing to use cash as compensation with lower marginal tax rates but really I think that non-pecuniary compensation just got topped out at the end of the 1990s.

When I worked at Accenture for example our health care was free. You can't go any lower than free, so at some point you have to start giving people actual cash on which they are going to pay taxes.

I think Stein's point, with which I largely argee, is that it is reaching the point of ridiculousness and everybody knows it. We are not playing the sad sap liberal game of "hate the rich" but come on.

There is a deficit which is stiffling US tradables and we know it. There is severe undercompensation of public sector employees and we know it. There is a looming fiscal crisis in Medicare and to a lesser extent Social Security and we all know it.

We also know that returning to the tax rates of the 90s is not going to stop anyone from going in to work tomorrow morning. No one is talking about the insanity of the pre-Regan tax era but those who are doing well could stand to pitch in a little more and well all know it.

5/10/2006 4:54:39 PM

a million dollars ain't shit.

well, ok, it is, but having $1,000,000 doesn't make you rich or wealthy. I plan on having $1,000,000 by the time I'm 50.

you are in good shape financially if you have a million bucks, but you still have to work (well, you don't HAVE to, but you probably want to IOT maintain a high standard of living), and you can't just blow money on opulent things and it not matter.

[Edited on May 10, 2006 at 5:33 PM. Reason : ^no, the "rich" pay a SHIT TON in taxes. they pay enough. we need to trim the budget.]

5/10/2006 5:32:27 PM

if you look at who runs the banks, and who runs the government, this makes a lot of sense

5/10/2006 5:34:30 PM

Quote :

"We also know that returning to the tax rates of the 90s is not going to stop anyone from going in to work tomorrow morning."

kwsmith, we are NOT talking about people that have high paying jobs. We are talking about the independently wealthy that don't get jobs, they make their own jobs.

Economic Experiment:
You are a rich man, with bank accounts in excess of $100 Million. Due to an economic transition the demand for, and thus the price of, steel has increased. Your business and financial egg-heads come to you and lay out the situation: to build a new mini-mill to recycle wate-iron into steel will cost $10 million, you are expected to earn profit of $1 million a year on this investment (extremely simplified economy assumed). This is a return of 10% a year, rediculously high for most investments. After 10 years you sell the steel mill for $10 Million and do not re-invest it and do not deduct for depreciation.
Now, introduce the tax code:
At a 25% marginal tax rate, after 10 years is up you have increased your $10 million to $15 million, employed workers, fulfilled demand for steel, paid $5 million in taxes, everyone is better off
At a 50% marginal tax rate, your total tax bill would be $10 million, after 10 years is up you have exactly the money you started with, not a penny more, why did you make the investment if it wasn't going to get you anything in the end? The truth is, you wouldn't make the investment, just hold on to your money in the bank where the only tax you pay is on earned interest.

And this has wide ranging effects upon the economy. As tax rates increase it takes an ever higher annual return to just get your money back, much less turn a profit. As a result, demand/supply imbalances go on for longer as business owners wait for large enough returns to justify expansion. This means that surplus production is often rare and price spikes are frequent (check out the cheese industry), to the detriment of the greater economy through occasional shortages and price instability.

[Edited on May 10, 2006 at 6:41 PM. Reason : .,.]

5/10/2006 6:28:03 PM

Quote :

"do not deduct for depreciation"

why would one not depreciate? there is an entire science that goes into EBITDA calculations.

5/10/2006 7:16:51 PM

For simplicity. By deducting for depreciation the calculations become quite complex and I didn't feel like typing out an explanation for all the math necessary to include depreciation.

5/10/2006 7:48:46 PM

How come all of the graphs LoneSnark posts as evidence for his arguments are made in Excel and hosted by him?

btw, gov't bills need to be paid, and equal percentages =/= equal burden.

5/10/2006 8:07:57 PM

HEY LETS MAKE ANOTHER TAX THREAD WHERE EVERYONE POSTS IRRELEVANT STATISTICS AND ANECDOTES TO BACK UP YOUR OWN UNCHANGEABLE OPINIONS ON THE SUBJECT

5/10/2006 9:11:35 PM

I saw him talk about tis on the Factor last nite and it made a lot of sense.

It was for people who make $1 million ANNUALLY, it had nothing to do with networth.

It was only a 10% surcharge. I'm not sure exactly how surcharges work (feel free to correct me if im wrong) but wouldnt this mean that the first $1 million was only subject to the standard 33% tax bracket and anything after the first million would fit under the 36.3% tax bracket?

Perhaps all of their earnings would fit under the 36.3% bracket in which case it seems to unfairly penalize people who clear just over $1 million annually.


Think about who makes $1 million annually. These aren't accountants, psychatrists, or CFO's in local companies.

For the most part these are speculators, entertainers, and CEO's of large corporations.

These arent people making an honest living, these are people whoare just flat out overpaid. I'm sorry but no one needs a $400 million retirement package.

Before anyone calls me a liberal, just think about that for a minute. How much harder does that guy really work than your dad? Why is his retirement package infinitely greater?

The rich receive INFINITELY greater amounts of protection from police officers, district attorneys, prison guards, military, etc

If no one filled those roles, whose house would get broken into first.... yours or Jim Goodknights?

There is no reason they shouldnt have to pay more for these services. Think about how much cheaper it is to contribute tax money for these services than it would be to employ a small army to protect them.


I mean for gods sake, most doctors & lawyers don't make $1 million annually. This isn't some Socialist agenda at all.

[Edited on May 10, 2006 at 10:20 PM. Reason : a]

[Edited on May 10, 2006 at 10:21 PM. Reason : a]

5/10/2006 10:19:23 PM

Quote :

"When men get in the habit of helping themselves to the property of others, they cannot easily be cured of it." -- The New York Times, in a 1909 editorial opposing the very first income tax "

I'm afraid L-Snark is yelling into the howling wind of wealth envy.
Perhaps, to the pleasure of folks like Kris, our system is doomed. Politicians keep pushing the tax burden onto a smaller and smaller voting block. They get more and more people dependent on gov't. social programs. We will wake up one day and realize that we have traded our personal sovereignty for a promised but undeliverable life of gov't-provided security and happiness.

5/10/2006 10:21:22 PM

for earthdogg and lonesnark

http://www.apa.org/journals/features/psp7761121.pdf

5/10/2006 11:01:07 PM

From an article on the $70 billion tax cut extension:

Quote :

"Critics, including most Democrats, attacked the tax rate reductions on dividends and capital gains as being skewed in favor of the rich. They noted that it was the second half of a GOP budget package that began with $39 billion in deficit cuts over five years, many of which came from programs for the poor such as Medicaid. Democrats also cited a joint study by the Urban Institute and the Brookings Institution that shows taxpayers with incomes greater than $1 million per year winning tax cuts of $42,000 under the bill, while families with incomes of $50,000 a year would average a $46 tax cut. "The Republican Party ... is sending all the millionaires on an all-expenses-paid vacation — for $41,000 a year," said Rep. Jim McDermott (news, bio, voting record), D-Wash. "The rest of America is being forced to choose between filling the gas tank or stocking the refrigerator." Added Richard Neal, D-Mass: "You cut taxes for Wall Street at the expense of Main Street.""

[Edited on May 11, 2006 at 8:56 AM. Reason : .]

5/11/2006 8:55:34 AM

Quote :

"The rich receive INFINITELY greater amounts of protection from police officers, district attorneys, prison guards, military, etc"

No they don't. The rich build walls, gates, and hire security guards. When they call the police they do it only because they are required too.

Remember, we are NOT talking about high paid specialists, we are talking about the independently wealthy that don't get jobs but make their own.

boonedocks, good point, I forgot to cite/link my graph:
Two Sources: U.S. Department of Treasury, "Statistics of Income," annual 1920 to 1929
And: "FY2004 Budget of the U.S. Government. Historical Tables." annual 1930 to 1940
I made the graph because I like Excell ( ) and because I wanted to combine data-sets from different sources.

Quote :

"speculators, entertainers, and CEO's of large corporations. These arent people making an honest living, these are people whoare just flat out overpaid."

Right, a dishonest living. Whatever you want to call it, and like I said before:
"I would never argue that the traders on wall-street deserve their millions. But if you try to take away their millions then we risk them stoping what they're doing, to our own detriment. Taxes do more than just raise money for the government to spend, they change human behavior..."

The rich are already rich, there is nothing we can do about that (except wait for them to die). But they fullfill a major role in our society by starting and running businesses and engaging in the nation's commerce. They don't need to do these activities to be rich, many of them are already rich. But by taxing heavily these individuals will abandon their persuits to the detriment of society: markets become unstable, job growth slows, risks go untaken, and taxes go unpaid."

If you don't like living in a world where someone somewhere is earning $400 million dollars in 15 years then you should try living in a world with high unemployment, falling living standards, and unending shortages. This is not an argument in favor of the rich but an argument in favor of the middle-class. We need them, just like they need us.

5/11/2006 9:08:43 AM

Quote :

"At a 25% marginal tax rate, after 10 years is up you have increased your $10 million to $15 million, employed workers, fulfilled demand for steel, paid $5 million in taxes, everyone is better off At a 50% marginal tax rate, your total tax bill would be $10 million, after 10 years is up you have exactly the money you started with, not a penny more, why did you make the investment if it wasn't going to get you anything in the end? The truth is, you wouldn't make the investment, just hold on to your money in the bank where the only tax you pay is on earned interest."

First both Stein and I are talking about people who go in to work. The vast explosion in inequality is not because the return to physical capital has increased but because the return to human capital has in creased. There are now many people who are millionares because of the salary the command.

Second, your calculations are wrong. You only pay capital gains on the mill, which in this case is zero. In fact it would be negative but thats really besude the point.

The tax code is bad but its not that bad, ingnoring the awful loopholes for a second, an income/profits tax cannot distort physical resource allocation. This is because what maximizes profit also maximizes 50% of profit.

What it can distort is the balance of labor vs leisure, since it is simply impractical to tax leisure.

If losses are not properly calculated then it can also distort risk. That is, you pay taxes on risks you win but you cannot always deduct taxes on risks you lose. This is because tax liability cannot fall below zero in most cases. If you have offsetting wins its fine. However, this distorts the economy somewhat towards having large mult-irisk bearing firms.

5/11/2006 9:32:30 AM

Quote :

"For simplicity. By deducting for depreciation the calculations become quite complex and I didn't feel like typing out an explanation for all the math necessary to include depreciation."

then for simplicity lets just say that pigs fly, and i'll go suggest to my CFO that the team of analysts we have working on these calculations don't really matter.

in the real world, corporations dodge taxes like Bill Clinton dodges accusations of sexual misconduct. depreciation expense is a large part of it.

5/11/2006 10:21:00 AM

Getting back to Stein's article...

Quote :

"It is up to the government to redress this extraordinary difference in incomes of the rich and the nonrich, even at the margins."

Is he claiming that it is the govt's job is to make sure nobody makes a living that is "extraordinarily" more than anyone else? If so, this is remarkable. Nothing I can find in the Constitution gives this task to any branch of gov't.

Quote :

" they (the Rich) derive special benefits from life in the United States that the nonrich don't. For one thing, they can make the money in a safe environment,"

The protection our military provides isn't targeted for only one social class. Isn't it true that everyone can make money in a safe environment? What other laws are on the books that provide special benefits to only the rich and no one else?

Quote :

"This makes no sense in a world at war, in a nation with so many unmet social needs, in a nation with so many people without health care, in a nation running immense and endless deficits. "

Why do we have so many unmet social needs? Is It simply that we aren't collecting enough money to pay for them. Perhaps we are entertaining an erroneous mindset that the majority of our social problems should be the responsibility of the gov't. It is highly doubtful that the General Welfare clause was intended by the Framers to allow gov't to try and solve everyone's problems.

Quote :

"we cannot do that unless we feel that we are all in the same boat, pulling at the oars together. That includes the rich. "

The rich are already paying for most of our gov't. How much more does Stein want? What percent of income does he want before he will shut up? 50% 60% 70%?

Quote :

"It's time for them — us, because it includes me — to pay their (our) share. "

No one is stopping Ben Stein from writing a check out to the gov't so he can eat his swordfish guilt-free.

5/11/2006 11:02:31 AM

So does Forbes give you a reach around after he fucks you in the ass?

5/11/2006 12:28:50 PM

Quote :

"First both Stein and I are talking about people who go in to work."

My appologies, I assumed he was talking about the obseenly rich, not just the comfortably rich. The solution here is easy and would have minimal detrimental impacts upon the economy, to the best of my understanding. People that are not already filthy rich do not have the option to abandon work without suffering a collapse in living standards, so they are not likely to change their behavior beyond the margin (maybe work fewer hours).

Simply raise the other brackets until they match the top bracket of 35%. For example, starting at $30,000 for a single individual with no dependents, which is currently 25%, raise it up to 35%. This would raise a LOT more revenue and dramatically simplify the tax code.

For example, there would be exactly three tax brackets: 10% for less than $7,550, 15% for less than $30,650, and 35% for all higher incomes. This would raise a lot of revenue, easily enough to meet the social needs, provide health-care, eliminate the deficit, and win the war.
http://www.enterprisefunds.com/education/tax/brackets.asp

[Edited on May 11, 2006 at 1:30 PM. Reason : link]

5/11/2006 1:18:37 PM

obscenely

I guess they don't use that word in your Econ books.

5/11/2006 1:21:32 PM

^^ i dont think that would fly well with alot of people. and by people I mean most social conservatives

5/11/2006 1:26:40 PM

^^ Actually, they do. Most economists I read think the same way I do, they wish they could tax the rich without wrecking the economy, but they lament that it seems to be implausible. Now, the Anarcho-capitalists and Libertarians would argue that the wealth they earn is their own and confiscating it is theft, so whatever they earn can never be a "Bad thing" because whatever they earned was a benefit for mankind as a whole.

Most economists recognize the need for government and wish there was some way to fund the entire thing most efficiently, which means the fewest number of sources (people). We are only forced by circumstance to conceed that taxing everyone seems necessary.

^ of course not, raising taxes is always bad. I was merely commenting that doing what Stein evidently wants is neither hard nor destructive.

[Edited on May 11, 2006 at 1:29 PM. Reason : ,.,]

5/11/2006 1:28:22 PM

Quote :

"Most economists I read think the same way I do"

Haha, coincedence?

5/14/2006 12:56:48 AM

ok what about this

since like having a billion dollars means you are set for life what if they took everyone with more than a billion dollars and just left them with 1 billion dollars

i mean thats like what 45 million from bill gates alone

shit if we capped it at like 500 million i wonder how rich people could be

5/14/2006 3:10:47 AM

Then all the rich people with more money than "your cap" will flee the country, taking all their wealth with them. Ultimately, the U.S. economy collapses and you didn't even suceed in raising any money (there was no one left with more than "your cap").

When thinking up these scenarios, you should turn it around and think "what would I do if I were them" before proceeding any further.

5/14/2006 8:03:16 AM

^^ Problem is, Bill Gates channels more money to charitable causes more efficiently than the government could ever hope to do. Also remember that a lot of the "money" that people like Bill Gates has is not real cold hard cash but in things like stocks and various assets which would first have to be converted to cash to be useable.

5/14/2006 11:41:53 AM

^^are you that dumb?

5/14/2006 12:23:02 PM

^ are you dumb enough to think you can just take away someones money and they won't do anything about it?

Do you seriously think someone would not transfer their $100 billion to a bank in switzerland the day before such a law came into effect?

The rich are already rich, they don't need to stay here to remain rich. $100 billion goes a long way in the carribean, a place well known for strong banking secrecy laws.

[Edited on May 14, 2006 at 3:17 PM. Reason : .,.]

5/14/2006 3:16:26 PM

Quote :

"Ultimately, the U.S. economy collapses and you didn't even suceed in raising any money (there was no one left with more than "your cap"). "

seriously, this is the dumbest thing ever.

Also, unless these people change their citizenship, they won't be able to get out of paying the money.

5/14/2006 3:56:49 PM

Quote :

"HEY LETS MAKE ANOTHER TAX THREAD WHERE EVERYONE POSTS IRRELEVANT STATISTICS AND ANECDOTES TO BACK UP YOUR OWN UNCHANGEABLE OPINIONS ON THE SUBJECT"

Quote :

"HEY LETS MAKE ANOTHER TAX THREAD WHERE EVERYONE POSTS IRRELEVANT STATISTICS AND ANECDOTES TO BACK UP YOUR OWN UNCHANGEABLE OPINIONS ON THE SUBJECT"

Quote :

"HEY LETS MAKE ANOTHER TAX THREAD WHERE EVERYONE POSTS IRRELEVANT STATISTICS AND ANECDOTES TO BACK UP YOUR OWN UNCHANGEABLE OPINIONS ON THE SUBJECT"

Quote :

"HEY LETS MAKE ANOTHER TAX THREAD WHERE EVERYONE POSTS IRRELEVANT STATISTICS AND ANECDOTES TO BACK UP YOUR OWN UNCHANGEABLE OPINIONS ON THE SUBJECT"

Quote :

"HEY LETS MAKE ANOTHER TAX THREAD WHERE EVERYONE POSTS IRRELEVANT STATISTICS AND ANECDOTES TO BACK UP YOUR OWN UNCHANGEABLE OPINIONS ON THE SUBJECT"

Quote :

"HEY LETS MAKE ANOTHER TAX THREAD WHERE EVERYONE POSTS IRRELEVANT STATISTICS AND ANECDOTES TO BACK UP YOUR OWN UNCHANGEABLE OPINIONS ON THE SUBJECT"

Quote :

"HEY LETS MAKE ANOTHER TAX THREAD WHERE EVERYONE POSTS IRRELEVANT STATISTICS AND ANECDOTES TO BACK UP YOUR OWN UNCHANGEABLE OPINIONS ON THE SUBJECT"

5/14/2006 4:55:48 PM

the rich arent rich enough. its not like people die of starvation or anything.

5/15/2006 4:23:37 PM