Frayed Ends: Business, Economics, and Tax Policy 3.0

[FlagDUDE08]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Could either of those really maintain the deficit at current levels? To say nothing of balancing the budget....

I don't see where it gives the numbers Joe cited, but let's assume they're true because it is a possibility...

If this is a flat tax rate without exemptions or crazy things like that, it could work. Obviously, Joe is including a deductible which still creates a cliff that people will try to avoid, assuming it isn't a sawtooth sort of thing. A straight flat tax would actually be raising taxes on the lowest earners (which would actually beef up the coffers quite a bit, but it does buy you votes for the other dude). The biggest point in budget balancing is the cutting of spending. If Rand's reputation is anything like his father's, we'll see a decrease in defence spending and spy programs.

There's actually a pretty large savings you could do, and it's with contractors. In case you've never heard of the "cost-plus contract", this is typically used when contractors begin to develop some sort of product for the government, and there is an allowance to account for going beyond the limits, which are typically abused by the contractors in the form of requirements changes and defect rework so they can get more cash for the investors. We've seen it with the F-35, the VH-71, the PPACA website, the Littoral Combat Ship, and so on and so forth.

 

[St. Clown]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Could either of those really maintain the deficit at current levels? To say nothing of balancing the budget....

Government has traditionally spent between 19-20% of GDP between the end of WWII and 2000. I don't know what the figure has been since then, but it's not likely to have gone down.

 

[FlagDUDE08]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Government has traditionally spent between 19-20% of GDP between the end of WWII and 2000. I don't know what the figure has been since then, but it's not likely to have gone down.

If anything, it's gone up, especially if you include liabilities such as Social Security, Medicare, and other generational gap welfare programs where they only account for the present year's payouts.

 

[Rover]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

I am not an advisor to the Rand Paul for President campaign, but it sure looks like he stole my income tax plan.

Rand: https://randpaul.com/issue/taxes (14.5% tax rate for individuals and corporate)

Me: 15% tax rate after deducting $45,000 for individuals and $1 million for corporations.

Screw that and screw Rand Paul. I'm not paying more taxes so the 1% can get a massive tax cut. No offense joe, but you have the same disease a lot of older conservatives have, which is an inability to realize its not 1982 anymore. In no way, shape, form, or function will raising taxes and/or massively cutting benefits for the poor to give Mitt Romney and the Koch brothers even more money pay for itself. Its a fantasyland proposal that I wholeheartedly welcome the GOP nominee whoever it is adopting for the upcoming campaign

 

[ScoobyDoo]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

I am not an advisor to the Rand Paul for President campaign, but it sure looks like he stole my income tax plan.

Rand: https://randpaul.com/issue/taxes (14.5% tax rate for individuals and corporate)

Me: 15% tax rate after deducting $45,000 for individuals and $1 million for corporations.

It doesn't work if the payroll taxes stay the same.

 

[FlagDUDE08]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

It doesn't work if the payroll taxes stay the same.

In the internet age, it is much easier for people to set up retirement accounts. Why not just take the hit and start transferring from the SS trust fund to IRAs, continue to fund what has been promised either by direct payout at the appropriate age or direct conversion to IRA, and to appease the lefties, a mandatory minimum in government bonds, whether federal, state, or local? Only slightly dip the payroll taxes to continue to be able to pay for Medicare, but transition it to the hybrid health system that Vermont uses.

 

[Kepler]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

It doesn't work if the payroll taxes stay the same.

It doesn't work even then. It's just another huge upwards redistribution of wealth, at a time when we're seeing the gradual immiseration of all but a tiny feudal ruling class:

While the wealth of the rich is growing at a breakneck pace, there is a stratification of growth within the super wealthy, skewed towards the very top.

In 2014, those with over $100 million in private wealth saw their wealth increase 11 percent in one year alone. Collectively, these households owned $10 trillion in 2014, 6 percent of the world’s private wealth. According to the report, “This top segment is expected to be the fastest growing, in both the number of households and total wealth.” They are expected to see 12 percent compound growth on their wealth in the next five years.

Those families with wealth between $20 and $100 million also rose substantially in 2014—seeing a 34 percent increase in their wealth in twelve short months. They now own $9 trillion. In five years they will surpass $14 trillion according to the report.

Coming in last in the “high net worth” population are those with between $1 million and $20 million in private wealth. These households are expected to see their wealth grow by 7.2 percent each year, going from $49 trillion to $70.1 trillion dollars, several percentage points below the highest bracket’s 12 percent growth rate.

The gains in private wealth of the ultra-rich stand in sharp contrast to the experience of billions of people around the globe. While wealth accumulation has sharply sped up for the ultra-wealthy, the vast majority of people have not even begun to recover from the past recession.

An Oxfam report from January, for example, shows that the bottom 99 percent of the world’s population went from having about 56 percent of the world’s wealth in 2010 to having 52 percent of it in 2014. Meanwhile the top 1 percent saw its wealth rise from 44 to 48 percent of the world’s wealth.

 

[LynahFan]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

There's actually a pretty large savings you could do, and it's with contractors. In case you've never heard of the "cost-plus contract", this is typically used when contractors begin to develop some sort of product for the government, and there is an allowance to account for going beyond the limits, which are typically abused by the contractors in the form of requirements changes and defect rework so they can get more cash for the investors. We've seen it with the F-35, the VH-71, the PPACA website, the Littoral Combat Ship, and so on and so forth.

The actual term is "cost plus fixed fee" (CPFF), where "fixed fee" means that the number of dollars of profit is fixed - the government pays the contractor for their (variable) expenses, plus a fixed amount of profit. So, if a company wins a $1M contract with a fixed fee of 80,000%, their profit will be 8%. However, if the contractor overruns the expenses and the effort ends up costing $2M, the government pays them the $2M cost plus the $80k fixed fee, so the company's profit is now only 4%. From the investors' point of view, therefore, it's actually better if the company *doesn't* overrun the cost - the profit (dollars) is the same in either case, but the profitability (percentage) is lower as the costs go up. Additionally, contracts that overrun generally either do so because they take longer than planned or require more labor than planned - both of those cause the company to invest more capital (for office space, etc) than was planned, and those expenses cannot be charged to the contract. So the overall financial position of the company is most definitely worse if they overrun, not better.

The actual causes of cost overruns in my mind are:

1) Government caused requirements creep. The military being what it is, program managers tend to rotate in and out every couple of years, and each one allows his pet "bells and whistles" to be added to the contract - but nobody ever removes the last guy's "desirements."
2) Government tacit collusion in underbidding. Even if the military thinks it will cost a billion, they let the contractor get away with bidding 500M, because they know Congress won't give them the billion up front.

 

[ScoobyDoo]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

It doesn't work even then. It's just another huge upwards redistribution of wealth, at a time when we're seeing the gradual immiseration of all but a tiny feudal ruling class:

It works if they find the right exemption number and eliminate the payroll tax. May have to tier it at the top. Maybe 2 or 3. But, it would eliminate many accounting jobs so it won't happen.

 

[Kepler]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

It works if they find the right exemption number and eliminate the payroll tax.

I'm not sure a flat tax of 15% on all income is enough revenue to meet all expenditures, unless the exemption was zero. A flat tax of 33% on all income, with an exemption of $75,000 might work.

A commensurate reduction of corporate welfare might bring the numbers into line, but as onerous as it is military spending (the most egregious form of corporate welfare) is also a huge jobs program, and cutting the war machine back to a reasonable level (say, a 75% across-the-board cut) would destroy the economy. That's the whole point of managing programs that way -- to allow them to take the economy hostage.

 

[ScoobyDoo]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

I'm not sure a flat tax of 15% on all income is enough revenue to meet all expenditures, unless the exemption was zero. A flat tax of 33% on all income, with an exemption of $75,000 might work.

A commensurate reduction of corporate welfare might bring the numbers into line, but as onerous as it is military spending (the most egregious form of corporate welfare) is also a huge jobs program, and cutting the war machine back to a reasonable level (say, a 75% across-the-board cut) would destroy the economy. That's the whole point of managing programs that way -- to allow them to take the economy hostage.

No, and I don't think 15 is the right number either. Cause I don't know. BUT, if you exempt X, and pick the right number Y the formula can work. And like I just posted maybe you tier it 2 or 3 times.

 

[FlagDUDE08]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

The actual term is "cost plus fixed fee" (CPFF), where "fixed fee" means that the number of dollars of profit is fixed - the government pays the contractor for their (variable) expenses, plus a fixed amount of profit. So, if a company wins a $1M contract with a fixed fee of 80,000%, their profit will be 8%. However, if the contractor overruns the expenses and the effort ends up costing $2M, the government pays them the $2M cost plus the $80k fixed fee, so the company's profit is now only 4%. From the investors' point of view, therefore, it's actually better if the company *doesn't* overrun the cost - the profit (dollars) is the same in either case, but the profitability (percentage) is lower as the costs go up. Additionally, contracts that overrun generally either do so because they take longer than planned or require more labor than planned - both of those cause the company to invest more capital (for office space, etc) than was planned, and those expenses cannot be charged to the contract. So the overall financial position of the company is most definitely worse if they overrun, not better.

The actual causes of cost overruns in my mind are:

1) Government caused requirements creep. The military being what it is, program managers tend to rotate in and out every couple of years, and each one allows his pet "bells and whistles" to be added to the contract - but nobody ever removes the last guy's "desirements."
2) Government tacit collusion in underbidding. Even if the military thinks it will cost a billion, they let the contractor get away with bidding 500M, because they know Congress won't give them the billion up front.

Having worked in the military industrial complex for a few years, I'm well aware of requirements changes and lack of clarity, and sometimes they come out of a once-in-a-million occurrence. Most of the delays I've seen have also been in the rework process, but that's not limited to government contracts.

One other thing that hurts the bottom line is that the collusion will also result in subcontracting between two or more complexes, further increasing the overhead to ensure things between the two companies are kosher. I've even seen contractors subcontract themselves in some cases (divisions within the company cause that).

 

[joecct]

Screw that and screw Rand Paul. I'm not paying more taxes so the 1% can get a massive tax cut. No offense joe, but you have the same disease a lot of older conservatives have, which is an inability to realize its not 1982 anymore. In no way, shape, form, or function will raising taxes and/or massively cutting benefits for the poor to give Mitt Romney and the Koch brothers even more money pay for itself. Its a fantasyland proposal that I wholeheartedly welcome the GOP nominee whoever it is adopting for the upcoming campaign

What are you getting taxed at now? Effective & marginal.

And you forgot the Clintons and Steyer in the above. In case you missed it, they're filthy rich, too.

 

[Kepler]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

No, and I don't think 15 is the right number either. Cause I don't know. BUT, if you exempt X, and pick the right number Y the formula can work. And like I just posted maybe you tier it 2 or 3 times.

Oh, sure, I've been saying that for years. I forget what my numbers were, but my suggestion was a balanced budget amendment that mandated projected revenue must equal the previous year's expenditures times say 1.05, where the tax code is two numbers: exemption x and rate r. Then let the Democrats propose high r high x to move the burden onto to the rich and the Republicans propose low r low x to move the burden onto the middle class, and let the political process determine who wins.

For obvious reasons this will never be adopted. Republicans would hate it because it would expose the shell game they've been playing since Reagan. And all Members would hate it because it would take away their ability to earn greater bribes by exempting particular bribers.

 

[FlagDUDE08]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

No, and I don't think 15 is the right number either. Cause I don't know. BUT, if you exempt X, and pick the right number Y the formula can work. And like I just posted maybe you tier it 2 or 3 times.

The point of simplifying the code is to eliminate these tiers. And obviously, they've been using the tax code to drive where income generation should take place; simplifying that would also help.

And you should have seen Schumer's whining about the Southern Tier of NY (for those who think NY consists of nine counties, look up the 607 area code) when Obummer said he wanted to cancel VH-71.

 

[ScoobyDoo]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

The point of simplifying the code is to eliminate these tiers. And obviously, they've been using the tax code to drive where income generation should take place; simplifying that would also help.

And you should have seen Schumer's whining about the Southern Tier of NY (for those who think NY consists of nine counties, look up the 607 area code) when Obummer said he wanted to cancel VH-71.

Yes, for Republitards simplifying the code is for eliminating tiers and screwing the poor. For people like me that's not the point of it.

 

[joecct]

Yes, for Republitards simplifying the code is for eliminating tiers and screwing the poor. For people like me that's not the point of it.

If the poor do not pay income tax, is that a bad thing?

The trouble may be taxing the underground (cash & barter) economy that is currently slipping under the tax man's radar. Money from there slips into the taxed economy to buy goods and services. Taxing the underground economy may dry up the well and hurt both economies.

 

[ScoobyDoo]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

If the poor do not pay income tax, is that a bad thing?

The trouble may be taxing the underground (cash & barter) economy that is currently slipping under the tax man's radar. Money from there slips into the taxed economy to buy goods and services. Taxing the underground economy may dry up the well and hurt both economies.

You forget that were a Republic. They'll pay plenty of taxes at the State level. You want to add a 1% federal sales tax to the formula just so they have some skin in the game, fine.

 

[joecct]

You forget that were a Republic. They'll pay plenty of taxes at the State level. You want to add a 1% federal sales tax to the formula just so they have some skin in the game, fine.

You fix my car and charge me $100 + parts. I give you my credit card to pay for it. You have to report it and maybe keep 50% .

If I give you cash, it does not get reported and you keep it all.

Would you rather deal in cash or plastic?

 

[ScoobyDoo]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

You fix my car and charge me $100 + parts. I give you my credit card to pay for it. You have to report it and maybe keep 50% .

If I give you cash, it does not get reported and you keep it all.

Would you rather deal in cash or plastic?

What, you don't think that's already happening today? What's your point?