Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

[FreshFish]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

If there's one thing I don't like, it's 401k / Traditional IRA rules. Not only is the government taking a big roll of the dice on people living until retirement age, but it's also very dangerous for the retiree when it comes to taxes. I would, quite frankly, get rid of the deferral rules, while grandfathering what is already paid in but no more, unless the retiree should decide to pay off a conversion fee to Roth. If you want a retirement account, do it Roth style. The government gets their money right away, and the retiree makes their money through wise investments in earnings. After all, compounding earnings and dividends is how you really make money.

Very very bad policy. There is a much simpler, and far better, idea afloat:
1. get rid of the 10% early withdrawal penalty. That only benefits financial institutions, not the ordinary person.
2. replace the income tax entirely with a far simpler system that provides incentives to save and invest.

> list all money that comes into the household, from any source.
> from it deduct depreciation (if applicable), all asset purchases, all deposits to savings and investment accounts, all insurance premiums, gifts, and charitable donations.
> pay tax on what's left.


Some people call that a "consumption" tax, which is a really noxious name. Right now we have a "consumption and savings" tax instead, as if that somehow is better?

 

[Rover]

Mookie at least figured it out. Most of my criticisms of the "progressives" come from the left, not from the right.

While you might think that anyone who criticizes something so noble as "the progressive" must automatically be from the "right" in this case you would be wrong.

There is a "practical" left and a "naively ideological" left. The latter thinks that it is sufficient merely to mean well (i.e., to have "good intentions"), while the former insists that the only thing that actually matters is whether you do well (i.e., "how do the policies actually affect the lives of real people"?)

I think that in a civil society, the most fortunate have a moral obligation to help those whose lives and efforts helped make that good fortune possible (i.e., while you did build that, you didn't build that on your own). I also notice that progressive government has resulted in more poor people, more unemployment, and more misery in the lives of people it purports to help; while economic growth and opportunity have helped more people out of poverty.

Karl Marx said it best (paraphrase): "Government is run by rich people in order to preserve their privileges. The people who work in government always have their own self-interest first." Applying Marx's insight, we notice that "progressive" programs are designed primarily to give lots of people government jobs, and if the programs actually did work as "intended" then all those people would be out of a job (suppose we actually "won" the "war on poverty" for example. That's a lot of bureaucrats who'd have nothing left to do, no??).

"Anti-poverty" programs depend upon the existence of plenty of poor people. Any government-run "anti-poverty" program perpetuates poverty, it does not address its root causes.

Either you believe in progressive ideals or you believe in progressive government, which is anti-thetical to progressive ideals.

Keep trying to comfort yourself by pretending that I'm "right-wing"; my scathing criticism actually comes from the left.

It is similar to why Thomas Sowell and Clarence Thomas provide such scathing criticisms of affirmative action: they see very clearly the "soft bigotry of low expectations" and are unstinting in their criticisms: programs that in theory are supposed to help people advance wind up in practice undermining the efforts of the very same people that are supposed to be helped. The results belie the intention.

The only thing mookie ever "figured out" was how to simultaneously watch porn on his TV, computer, and iPhone for hours at a time.

Anyway, I appreciate the Rovian strategy of "We're just here to help" but nobody's buying it, least of which is the American people.

Anti-poverty programs would only perpetuate poverty if its always the same people receiving the aid. That's stupid obviously as people cycle on and off (be it that they get jobs, pass away, marry money, etc). Having grown up poor as a youngster I can tell you few people would choose to stay in that situation. Getting them out of it is a complex matter, particularly if 1) they aren't very bright therefore educational opportunities won't help, 2) they're ill or are a caregiver, or 3) there aren't very many job opportunities to pull them out of poverty (say you live in KY or WVA for example).

The idea that these things help make the problem they're designed to solve worse is libertarian fantasyland thinking at its finest. It must be comforting to think that anybody on assistance either deserves to be there, is lazy, or is being held down by the gubmint and if only the money they use for frivilous stuff like food and housing can be taken away they'd then go on to be the CEO's they were really meant to be. Its all ridiculous, but hey, if it makes you feel better, vote Rand Paul for President I guess. I for one am looking forward to seeing these ideas debated during the next Presidential election. Conservative supply side Reaganomics got crushed in 2012. Might be time for loony libertarianism to suffer the same fate in 2016 so people will stop clinging to these absurd ideas.

 

[unofan]

First off, stop selectively editing what ive said by inserting, changing, or deleting words when quoting me. That's about 4 times in a row now that you've done that, and you're being an asshat by doing so. I'll stand by what I say, but have zero tolerance for people who intentionally misrepresent what I've said. So stop it, now.

As to the rest of your most recent posts, they're comical in your self-delusion. You parrot the murdoch empire's editorial pages daily, agree with justice thomas and sowell, and still say you're attacking from the left? Do you actually think anyone is buying that?

 

[FlagDUDE08]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

The idea that these things help make the problem they're designed to solve worse is libertarian fantasyland thinking at its finest. It must be comforting to think that anybody on assistance either deserves to be there, is lazy, or is being held down by the gubmint and if only the money they use for frivilous stuff like food and housing can be taken away they'd then go on to be the CEO's they were really meant to be. Its all ridiculous, but hey, if it makes you feel better, vote Rand Paul for President I guess. I for one am looking forward to seeing these ideas debated during the next Presidential election. Conservative supply side Reaganomics got crushed in 2012. Might be time for loony libertarianism to suffer the same fate in 2016 so people will stop clinging to these absurd ideas.

Someone missed the memo that the number of people exiting the work force has been steadily rising, and to your possible shock, it's not because of the retirement of baby boomers...

 

[FadeToBlack&Gold]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

But don't call him a rightwing troll, folks.

Nothing he said in the post that you quoted was inaccurate, other than the part about "progressives" being gullible. Anyone who thinks the super rich are paying an effective 39.6% is off their rocker. The tax code is riddled with little breaks and loopholes, and there are offshore accounts and investments where they can hide income.

Now, as for arguing "from the left", well that was swimming out past the buoy even for FF.

 

[FlagDUDE08]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

Nothing he said in the post that you quoted was inaccurate, other than the part about "progressives" being gullible. Anyone who thinks the super rich are paying an effective 39.6% is off their rocker. The tax code is riddled with little breaks and loopholes, and there are offshore accounts and investments where they can hide income.

Now, as for arguing "from the left", well that was swimming out past the buoy even for FF.

Actually, it's only the taxable income above $400,000 that is taxed at that amount. The rest is taxed at various bracket levels, and that's also assuming there aren't any additional differences from qualified dividends, capital gains, 28% gains, and a multitude of other things. The left used 25% as a scare tactic to make the public believe the person didn't receive any deductions, exemptions, or paid through the system available, but was somehow flat.

 

[FadeToBlack&Gold]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

Actually, it's only the taxable income above $400,000 that is taxed at that amount. The rest is taxed at various bracket levels, and that's also assuming there aren't any additional differences from qualified dividends, capital gains, 28% gains, and a multitude of other things.

Yes, I'm aware. That doesn't change the fact that tax loopholes of all kinds are used each year, and I shouldn't have even said 'super rich', because plenty of people get breaks, or got them in the past from programs such as 'Cash for Clunkers', hybrid vehicle tax credits, renewable energy tax credits, etc. Even having a kid gets you a break.

 

[FreshFish]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

Now, as for arguing "from the left", well that was swimming out past the buoy even for FF.

Hmm, so anyone who is critical of too much government involvement in our lives automatically must be from the right by definition these days?

So count Karl Marx and myself as right-wingers then!


hmm....actually, Marx was a "social conservative" in many ways: he trusted people who crafted things using the work of their hands and was suspicious of those who did not work themselves but derived their income from the fruits of other people's labor.....he had an ambiguous relationship with capitalism, for while as an economist he could appreciate that it was an "efficient" system, as a human being he detested it because it has no soul.

Marx became mainstream in the US (in history departments at least) when An Economic Interpretation of the Constitution by Charles Beard was published in 1913. Basically, everyone is motivated primarily by personal economic interest; and all of our institutions are then derived from economic relationships in order to justify them after the fact. It is an extremely useful analytical perspective!



In Marx's day, government overtly repressed working people; today, government covertly represses working people. Meet the New Boss, same as the Old Boss!

 

[FlagDUDE08]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

Yes, I'm aware. That doesn't change the fact that tax loopholes of all kinds are used each year, and I shouldn't have even said 'super rich', because plenty of people get breaks, or got them in the past from programs such as 'Cash for Clunkers', hybrid vehicle tax credits, renewable energy tax credits, etc. Even having a kid gets you a break.

One of my favorites (and one I have taken advantage of): Getting paid monthly distributions through oil/natgas royalties, and being able to claim it as a loss because of depletion.

 

[LynahFan]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

> list all money that comes into the household, from any source.
> from it deduct depreciation (if applicable), all asset purchases, all deposits to savings and investment accounts, all insurance premiums, gifts, and charitable donations.
> pay tax on what's left.

Wait, what? If you're allowed to deduct deposits to savings accounts, what gets taxed? Money that comes to you via paper paychecks that you cash right away and put in a mattress?

 

[St. Clown]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

Wait, what? If you're allowed to deduct deposits to savings accounts, what gets taxed? Money that comes to you via paper paychecks that you cash right away and put in a mattress?

Most people with direct deposit put their money into checking accounts. That's one of the reasons you see so many banks advertising special savings accounts now, doing monthly balance transfers of $X in order to get a special interest rate or cash "reward" after keeping it going for a specified length of time.

 

[FlagDUDE08]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

Most people with direct deposit put their money into checking accounts. That's one of the reasons you see so many banks advertising special savings accounts now, doing monthly balance transfers of $X in order to get a special interest rate or cash "reward" after keeping it going for a specified length of time.

At least in my area, instead of special interest rates or cash rewards, they just don't charge you a maintenance fee for your checking account.

 

[St. Clown]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

At least in my area, instead of special interest rates or cash rewards, they just don't charge you a maintenance fee for your checking account.

A large number of banks will waive their checking fees if you keep over $X in avg monthly balance or have over a certain amount direct deposited each month. The savings account bonuses are separate programs from those, since savings accounts have fewer withdrawals made from them during the year than checking accounts, thus the banks have, in theory, more money to lend with fewer liquidity worries.

 

[FlagDUDE08]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

A large number of banks will waive their checking fees if you keep over $X in avg monthly balance or have over a certain amount direct deposited each month. The savings account bonuses are separate programs from those, since savings accounts have fewer withdrawals made from them during the year than checking accounts, thus the banks have, in theory, more money to lend with fewer liquidity worries.

Actually, the fewer deposits for savings and money market accounts is by federal law (FRB Regulation D). You're not allowed to make more than six withdrawals a month. Used to be three with an additional three allowed intra-institution. But yes, the institutions will typically offer incentive, although that is usually higher interest rates.

 

[FreshFish]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

Wait, what? If you're allowed to deduct deposits to savings accounts, what gets taxed? Money that comes to you via paper paychecks that you cash right away and put in a mattress?

What gets taxed is money that gets spent. This idea very nearly became law in the early 1940s, Treasury Secretary Henry Morgenthau was a big proponent and he had the votes for it until at the last minute a few representatives from cotton-producing states switched and it was very narrowly defeated. <strike> Imagine that, a liberal Democrat who wanted to exempt all capital formation from income taxation!</strike> I guess he knew that he had a country that sorely needed savings and investment and wanted to encourage it.<strike> Back then, even liberal Democrats cared more about the well-being of the country more than they cared about ideological purity, I guess.</strike> There is a lot to be said in favor of learning from experience, I give great credit to Morgenthau and FDR for tacitly acknowledging their mistakes by changing their ways when it mattered most.

Anyway, you overlooked the consequences of the first step: you start with all money that comes in, which would include savings account withdrawals checking account withdrawals. You get a deduction for the savings deposit but then when you withdraw money from savings it becomes part of the total subject to tax.

EDIT: sorry about those intemperate words, now stricken. shouldn't have put them there to begin with in this thread, plenty of other places for political snark don't need it here too. Apologies.

 

[FlagDUDE08]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

What gets taxed is money that gets spent. This idea very nearly became law in the early 1940s, Treasury Secretary Henry Morgenthau was a big proponent and he had the votes for it until at the last minute a few representatives from cotton-producing states switched and it was very narrowly defeated. Imagine that, a liberal Democrat who wanted to exempt all capital formation from income taxation! I guess he knew that he had a country that sorely needed savings and investment and wanted to encourage it. Back then, even liberal Democrats cared more about the well-being of the country more than they cared about ideological purity, I guess. There is a lot to be said in favor of learning from experience, I give great credit to Morgenthau and FDR for tacitly acknowledging their mistakes by changing their ways when it mattered most.

Anyway, you overlooked the consequences of the first step: you start with all money that comes in, which would include savings account withdrawals checking account withdrawals. You get a deduction for the savings deposit but then when you withdraw money from savings it becomes part of the total subject to tax.

Probably because, back then, liberal democrats were closer to today's libertarians, and not the fascist model that FDR and other federalist republicans inspired and you see in everyone today.

 

[unofan]

What gets taxed is money that gets spent. This idea very nearly became law in the early 1940s, Treasury Secretary Henry Morgenthau was a big proponent and he had the votes for it until at the last minute a few representatives from cotton-producing states switched and it was very narrowly defeated. Imagine that, a liberal Democrat who wanted to exempt all capital formation from income taxation! I guess he knew that he had a country that sorely needed savings and investment and wanted to encourage it. Back then, even liberal Democrats cared more about the well-being of the country more than they cared about ideological purity, I guess. There is a lot to be said in favor of learning from experience, I give great credit to Morgenthau and FDR for tacitly acknowledging their mistakes by changing their ways when it mattered most.

Anyway, you overlooked the consequences of the first step: you start with all money that comes in, which would include savings account withdrawals checking account withdrawals. You get a deduction for the savings deposit but then when you withdraw money from savings it becomes part of the total subject to tax.

Back then, the republicans were liberal and the democrats were conservative. The parties didn't switch to their present day ideologies until the 60's; when southern democrats left in droves over civil rights legislation. (And more specifically, their opposition to it).

It's also amusing to hear you talk about ideological purity regarding the party that isn't the gop. While there are certainly instances of dems being primaried lately, they've got nothing compared to the purge currently taking place within the GOP.

 

[Rover]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

Fascinating about the deficit reduction that's already been achieved.

http://www.calculatedriskblog.com/2...mpaign=Feed:+CalculatedRisk+(Calculated+Risk)

Funny how you never hear about this stuff...

 

[FreshFish]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

What gets taxed is money that gets spent. This idea very nearly became law in the early 1940s, Treasury Secretary Henry Morgenthau was a big proponent and he had the votes for it until at the last minute a few representatives from cotton-producing states switched and it was very narrowly defeated. <strike>Imagine that, a liberal Democrat who wanted to exempt all capital formation from income taxation!</strike> I guess he knew that he had a country that sorely needed savings and investment and wanted to encourage it. <strike>Back then, even liberal Democrats cared more about the well-being of the country more than they cared about ideological purity, I guess.</strike> There is a lot to be said in favor of learning from experience, I give great credit to Morgenthau and FDR for tacitly acknowledging their mistakes by changing their ways when it mattered most.

Anyway, you overlooked the consequences of the first step: you start with all money that comes in, which would include savings account withdrawals checking account withdrawals. You get a deduction for the savings deposit but then when you withdraw money from savings it becomes part of the total subject to tax.

My apologies to all for the snark I have excised above. The post without those words now is what it should have been from the beginning, a factual observation on what was done along with some approving commentary. I had asked to have this be a thread more for academic discussion and big picture views and not distracted by the political feud du jour and then I myself go and flout that.

I am sorry and I won't do it again in this thread.



Ironically, it was a different invention of Morgenthau's Treasury, undertaken at that time as a desperation measure, that had the totally unexpected and unintended consequence of making big government possible on a mass scale for the first time. It is a fascinating tale, one I studied in detail in college (my undergraduate thesis).

 

[FlagDUDE08]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

Fascinating about the deficit reduction that's already been achieved.

http://www.calculatedriskblog.com/2...mpaign=Feed:+CalculatedRisk+(Calculated+Risk)

Funny how you never hear about this stuff...

Probably because at this point, people feel we're trying to use a band-aid to dam up a river. You're not going to find a laurel here; let's see if the same holds true next year.