Silent majority fed up with Washington

[Biggs3535]

Relevance? To correct the mistake in your post above.

...lolz...

Thanks for nothing, slugger.

[Biggs3535]

Reality is, the Americans want to increase taxes across the board

Reality is, those Americans only want to increase the taxes of other people.  When it comes to themselves paying more taxes, they start to change their tune.

[spartan]

Not all the more educated Americans. Some educated Americans realize that raising taxes on the rich actually helps create jobs more than cutting them does. History has certainly shown that higher taxes on the rich coincides with a stronger job market and recent history certainly shows that cuts for the rich hasn't lead to any substantive job growth.

Please explain this one to me. Not being facetious I would like to hear your reasoning, and just as importantly, what jobs would it create?

[Morgan]

Read this.

http://www.bloomberg.com/news/2011-06-02/raising-taxes-isn-t-a-kiss-of-death-for-employment-growth-history-shows.html

"The clear-cut evidence is that, despite the rhetoric, a tax increase that reduced the deficit would actually improve economic growth,” said Martin Sullivan, an economist and contributing editor with Tax Analysts, a nonprofit organization in Falls Church, Virginia.

[John Galt?]

Unfortunately, Obama's approval ratings have climbed the last few days, so I am not sure I agree.  Liberals are infuriated with Obama's supposed concessions, while Tea Baggers are not willing to compromise.  So much so, it makes Bill O'Reilly look sane with his interview with Bachman recently.

Reality is, the Americans want to increase taxes across the board and restructure Medicare to save billions on this entitlement to avoid a debt default.

Obama's gang wants to "increase taxes on the rich" and all the more educated Americans know that is just lip service and that it won't help because it is too small a drop in the bucket.

Not all the more educated Americans. Some educated Americans realize that raising taxes on the rich actually helps create jobs more than cutting them does.

Huh? Must be the same educated Americans that think things on youtube videos are true and it is all a vast conspiracy by Freemasons, the Catholic Church and the Rothschilds.

Seriously, how can "raising taxes on the rich" possibly help create jobs? I know of no rational, logical economic principle or theory that would back that up on its own. I could see an argument for Federal projects PAID by raising taxes on the rich, but not raising taxes on the rich by itself. And I'm pretty sure that the vast majority realize that JUST raising taxes slows the economy unless there is an offsetting increase in spending. That is in opposition to BOTH Keynesian and Monetarist theory.

History has certainly shown that higher taxes on the rich coincides with a stronger job market

Chicken vs egg. Were taxes raised because the strength of the economy allowed it? Correlation<>causation. Part of the flaw of Keynesian economic is it doesn't account for the time lag between legislation (raising spending/increasing taxes) and actual implementation. By the time spending programs and tax increases take effect (usually 6-18 months), the economy has often already changed.

and recent history certainly shows that cuts for the rich hasn't lead to any substantive job growth.

It all depends on two things:

1. how you define "the rich"- If you define "the rich" as our Glorious Leader has as anyone making over $200k I disagree, because MOST of the tax payers earning over $200k are small business owners, and the less you tax them the more likely they will reinvest some, if not most of that back into their business which means jobs growth. But if you define "the Rich" as income over 7 figures and/or net worth over $10 million, then I'd agree. Whether Bill Gates or Larry Ellison are taxed at 40% or 60% won't have one bit of effect on hiring at MSFT or ORCL. Taxing some corp exec at Goldman Sachs an extra 10% or 20% really doesn't effect jobs at all, but taxing my Dentist, who is thinking about hiring another Dental Hygienist certainly does,

2. what type of taxes are cut- the Bush tax cuts were mostly in Capital Gains and most Cap Gains are on publicly traded securities, so the tax rate on those has little effect on job creation. The effect that there is is very indirect and of a long term nature that is hard to measure and easily overshadowed by other factors. Now if Congress were to give all non-widely owned employers (sub-s corps, LLCs with 10 or fewer owners, LPs with 10 or fewer partners, etc.) a tax credit (say $2000) for each net-new person employed (that is total # of employees must increase) that would certainly create quite a few jobs and it would be budget neutral (1 new employee making just $500/wk=$26K/year will result in $3952 in just FICA revenues). A Cap gains cut on ONLY PP&E does help create jobs, a cap gains cuts on securities doesn't.

[John Galt?]

Read this.

http://www.bloomberg.com/news/2011-06-02/raising-taxes-isn-t-a-kiss-of-death-for-employment-growth-history-shows.html

"The clear-cut evidence is that, despite the rhetoric, a tax increase that reduced the deficit would actually improve economic growth,” said Martin Sullivan, an economist and contributing editor with Tax Analysts, a nonprofit organization in Falls Church, Virginia.

Very good article and as expected, morgan completely misunderstood it.

Pinpointing the impact of tax policy is hard, economists say. For one thing, it’s impossible to know how the economy would have performed in the absence of the change. Perhaps the Internet-fueled growth of the 1990s would have produced even more jobs if taxes hadn’t been raised. Perhaps the Bush tax cuts kept a bad economy from getting even worse.

Economic growth also is affected by elements other than taxes, including interest-rate policy, the price of oil and other commodities, and the business cycle itself.

Paring public debt, however, eventually reduces the government’s need to borrow, bringing down long-term interest rates and freeing capital for private investment, the study said.

It here is the critical part of the article (which went over morgan's head like 747)

Washington’s political dialogue over tax increases obscures a distinction being drawn by a growing number of Republicans: Raising tax rates chills growth. Raising revenue by collecting taxes on income that’s now off limits to the taxman doesn’t.

“There’s a difference between taxes and tax rates,” said John Cochrane, a University of Chicago finance professor. “What matters for growth is tax rates. What matters for government solvency is taxes.”

Eliminating the cap on Capital Gains for securities would raise tax revenues and have little to no effect on the economy (just like lowering it had no effect) but would increase revenues and cut some of the deficit. Capping mortgage deductions (say at $20k/yr or interest in the first year on a $500k mortgage) would also raise revs with little harm. Eliminating all those incredibly stupid ethanol subsidies would increase tax revenue, and LOWER FOOD COSTS. There are thousands of stupid and outdated subsidies that could be eliminated and would help the debt situation without raising tax rates. Another idea would be to tax/tariff imported luxury items like yachts, jewelry, TVs over a certain size, etc.

I wish I had read this before I responded to CBWx2, lot of supporting stuff in there and I would have worded my post differently.

[CBWx2]

Please explain this one to me. Not being facetious I would like to hear your reasoning, and just as importantly, what jobs would it create?

I will try to answer this and respond to JG? at the same time, spartan.

Not all the more educated Americans. Some educated Americans realize that raising taxes on the rich actually helps create jobs more than cutting them does.

Huh? Must be the same educated Americans that think things on youtube videos are true and it is all a vast conspiracy by Freemasons, the Catholic Church and the Rothschilds.

Seriously, how can "raising taxes on the rich" possibly help create jobs? I know of no rational, logical economic principle or theory that would back that up on its own. I could see an argument for Federal projects PAID by raising taxes on the rich, but not raising taxes on the rich by itself. And I'm pretty sure that the vast majority realize that JUST raising taxes slows the economy unless there is an offsetting increase in spending. That is in opposition to BOTH Keynesian and Monetarist theory.

To answer your question, the higher the rate is on taxable income for the wealthy, the less likely the wealthy are to claim corporate profits as taxable income. It takes away the incentive to reward CEO's and other executives with astronomical pay, because they aren't going to be able to keep it anyway.  If the option is not there to simply distribute profits as income to be pocketed, businesses often opt to re-invest profits in their companies rather than take the money out of the company and have a huge chunk of it going to Uncle Sam. This leads to higher salaries and better benefits for existing employees. It also leads to less layoffs and more hiring, which creates a better job market. Higher salaries and employment levels for the working/consumer class means more capital being infused into the economy, and more revenues for the government.

History has certainly shown that higher taxes on the rich coincides with a stronger job market

Chicken vs egg. Were taxes raised because the strength of the economy allowed it? Correlation<>causation. Part of the flaw of Keynesian economic is it doesn't account for the time lag between legislation (raising spending/increasing taxes) and actual implementation. By the time spending programs and tax increases take effect (usually 6-18 months), the economy has often already changed.

The top end tax rate increased under G.H.W. Bush from the Reagan levels and was increased again under Bill Clinton, and neither of those increases lead to an economic downturn. They were decreased by G.W. Bush and have stayed at those levels under Barack Obama, and they have not lead to economic growth. Both of these examples have spanned periods far longer than 6-18 months.

By virtue of this, even if it's not apparent to you that tax increases create jobs, it should be apparent that they don't stunt growth. I think everyone on this message board, conservative or liberal, would kill to have the economy that we had in the 90's again.

and recent history certainly shows that cuts for the rich hasn't lead to any substantive job growth.

It all depends on two things:

1. how you define "the rich"- If you define "the rich" as our Glorious Leader has as anyone making over $200k I disagree, because MOST of the tax payers earning over $200k are small business owners, and the less you tax them the more likely they will reinvest some, if not most of that back into their business which means jobs growth. But if you define "the Rich" as income over 7 figures and/or net worth over $10 million, then I'd agree. Whether Bill Gates or Larry Ellison are taxed at 40% or 60% won't have one bit of effect on hiring at MSFT or ORCL. Taxing some corp exec at Goldman Sachs an extra 10% or 20% really doesn't effect jobs at all, but taxing my Dentist, who is thinking about hiring another Dental Hygienist certainly does,

I agree with this to a degree, and to the best of my knowledge, there was some discussion last year about raising the floor on the income levels where taxes would be increased. It never went anywhere because Obama ended up folding on the issue and extending the Bush rates across the board.

2. what type of taxes are cut- the Bush tax cuts were mostly in Capital Gains and most Cap Gains are on publicly traded securities, so the tax rate on those has little effect on job creation. The effect that there is is very indirect and of a long term nature that is hard to measure and easily overshadowed by other factors. Now if Congress were to give all non-widely owned employers (sub-s corps, LLCs with 10 or fewer owners, LPs with 10 or fewer partners, etc.) a tax credit (say $2000) for each net-new person employed (that is total # of employees must increase) that would certainly create quite a few jobs and it would be budget neutral (1 new employee making just $500/wk=$26K/year will result in $3952 in just FICA revenues). A Cap gains cut on ONLY PP&E does help create jobs, a cap gains cuts on securities doesn't.

I agree with this as well, but the discussion is about eliminating the Bush tax cuts. This is what's being argued as having some kind of impact on job creation, and that would be catastrophic to the job market if they were eliminated. Anyone paying attention knows that is a crock.

[John Galt?]

Please explain this one to me. Not being facetious I would like to hear your reasoning, and just as importantly, what jobs would it create?

I will try to answer this and respond to JG? at the same time, spartan.

Not all the more educated Americans. Some educated Americans realize that raising taxes on the rich actually helps create jobs more than cutting them does.

Huh? Must be the same educated Americans that think things on youtube videos are true and it is all a vast conspiracy by Freemasons, the Catholic Church and the Rothschilds.

Seriously, how can "raising taxes on the rich" possibly help create jobs? I know of no rational, logical economic principle or theory that would back that up on its own. I could see an argument for Federal projects PAID by raising taxes on the rich, but not raising taxes on the rich by itself. And I'm pretty sure that the vast majority realize that JUST raising taxes slows the economy unless there is an offsetting increase in spending. That is in opposition to BOTH Keynesian and Monetarist theory.

To answer your question, the higher the rate is on taxable income for the wealthy, the less likely the wealthy are to claim corporate profits as taxable income. It takes away the incentive to reward CEO's and other executives with astronomical pay, because they aren't going to be able to keep it anyway.  If the option is not there to simply distribute profits as income to be pocketed, businesses often opt to re-invest profits in their companies rather than take the money out of the company and have a huge chunk of it going to Uncle Sam. This leads to higher salaries and better benefits for existing employees. It also leads to less layoffs and more hiring, which creates a better job market. Higher salaries and employment levels for the working/consumer class means more capital being infused into the economy, and more revenues for the government.

But that generalizes that "the rich" are just Execs at publicly traded corps. The fact is most of the +$200k/yr earners are smaller business owners that invest in their business as demand dictates. Doesn't make sense to hire more and expand if business is flat regardless of the tax rate. What you are saying is if a restaurateur's tables are only ever 70% full, he will hire more cooks and waiters and add more tables if his taxes go from 35% to 70%?? Sorry doesn't fly.

History has certainly shown that higher taxes on the rich coincides with a stronger job market

Chicken vs egg. Were taxes raised because the strength of the economy allowed it? Correlation<>causation. Part of the flaw of Keynesian economic is it doesn't account for the time lag between legislation (raising spending/increasing taxes) and actual implementation. By the time spending programs and tax increases take effect (usually 6-18 months), the economy has often already changed.

The top end tax rate increased under G.H.W. Bush from the Reagan levels and was increased again under Bill Clinton, and neither of those increases lead to an economic downturn.

That proves little. There were other factors that caused an economic boom that were much more significant than the tax changes. Technology advancements led to a substantial increase in consumer demand for new products while increasing worker productivity. Also, the Cold War ended freeing up resources while creating new markets (China) for US products.

They were decreased by G.W. Bush and have stayed at those levels under Barack Obama, and they have not lead to economic growth. Both of these examples have spanned periods far longer than 6-18 months.

Again, other far more significant events were involved. After the dot.com meltdown and 9/11 how do we know that without the Bush cuts there wouldn't have been a severe recession instead of just flat growth? And everything since BHO took office is really hard to judge given the severity of the housing collapse. It is like judging a fan that is outside in a hurricane.

By virtue of this, even if it's not apparent to you that tax increases create jobs, it should be apparent that they don't stunt growth.

I disagree with the over-generalization of that. I'd say some types of tax increases don't stunt growth but others can. If the matching portion of FICA was raised so that employers had to match 150% instead of the current 100%, I can predict with GREAT certainty this would KILL job growth. But raising the Cap. Gains rate on securities would have almost zero effect.

and recent history certainly shows that cuts for the rich hasn't lead to any substantive job growth.

It all depends on two things:

1. how you define "the rich"- If you define "the rich" as our Glorious Leader has as anyone making over $200k I disagree, because MOST of the tax payers earning over $200k are small business owners, and the less you tax them the more likely they will reinvest some, if not most of that back into their business which means jobs growth. But if you define "the Rich" as income over 7 figures and/or net worth over $10 million, then I'd agree. Whether Bill Gates or Larry Ellison are taxed at 40% or 60% won't have one bit of effect on hiring at MSFT or ORCL. Taxing some corp exec at Goldman Sachs an extra 10% or 20% really doesn't effect jobs at all, but taxing my Dentist, who is thinking about hiring another Dental Hygienist certainly does,

I agree with this to a degree, and to the best of my knowledge, there was some discussion last year about raising the floor on the income levels where taxes would be increased. It never went anywhere because Obama ended up folding on the issue and extending the Bush rates across the board.

2. what type of taxes are cut- the Bush tax cuts were mostly in Capital Gains and most Cap Gains are on publicly traded securities, so the tax rate on those has little effect on job creation. The effect that there is is very indirect and of a long term nature that is hard to measure and easily overshadowed by other factors. Now if Congress were to give all non-widely owned employers (sub-s corps, LLCs with 10 or fewer owners, LPs with 10 or fewer partners, etc.) a tax credit (say $2000) for each net-new person employed (that is total # of employees must increase) that would certainly create quite a few jobs and it would be budget neutral (1 new employee making just $500/wk=$26K/year will result in $3952 in just FICA revenues). A Cap gains cut on ONLY PP&E does help create jobs, a cap gains cuts on securities doesn't.

I agree with this as well, but the discussion is about eliminating the Bush tax cuts.

No it's not. The discussion is about an article I posted about frustration with the Debt Ceiling Debate. The tax increases/cuts in that discussion are different.

[CBWx2]

To answer your question, the higher the rate is on taxable income for the wealthy, the less likely the wealthy are to claim corporate profits as taxable income. It takes away the incentive to reward CEO's and other executives with astronomical pay, because they aren't going to be able to keep it anyway.  If the option is not there to simply distribute profits as income to be pocketed, businesses often opt to re-invest profits in their companies rather than take the money out of the company and have a huge chunk of it going to Uncle Sam. This leads to higher salaries and better benefits for existing employees. It also leads to less layoffs and more hiring, which creates a better job market. Higher salaries and employment levels for the working/consumer class means more capital being infused into the economy, and more revenues for the government.

But that generalizes that "the rich" are just Execs at publicly traded corps. The fact is most of the +$200k/yr earners are smaller business owners that invest in their business as demand dictates. Doesn't make sense to hire more and expand if business is flat regardless of the tax rate. What you are saying is if a restaurateur's tables are only ever 70% full, he will hire more cooks and waiters and add more tables if his taxes go from 35% to 70%?? Sorry doesn't fly.

If the restaurateur's income increases while his business does not, where is that increased income coming from? What that means is that he's taking money out of his restaurant, either by decreasing the salaries of his employees, the quality of his product, or by firing someone.

While I agree with the idea that $200,000 is not really "rich" anymore (which is why I'm not totally opposed to modestly raising the floor), that's not particularly poignant to the point.

Let's use your example of the dentist to illustrate. The average salary for a dental hygienist is approximately $60,000 a year. If you were to raise taxes on your dentist's take home income (presumably the money he takes home from the profits of his practice after his overhead is met), and those increases were close to $60,000, he's probably going to be more inclined to pay for an additional hygienist with that money rather than claiming it as income and turning it over to the IRS. After all, why wouldn't he? He's not going to be keeping it anyway, so he might as well spend it rather than fork it over to Uncle Sam.

But if he has the choice of simply keeping that money, he'll probably be more inclined to make it work with the one hygienist for as long as it's humanly possible for that one hygienist  to do the job. Why would he choose to pull money out of his personal account to hire an additional hygienist if he could be pulling it out to take his wife to Paris, or add an addition on to his house? And once he does get to the point of needing another hygienist, what's stopping him from opting to cut salaries and benefits to his employees so that his pocket is less affected by the hire?

What a high top income tax rate achieves is what trickle down economics claims to achieve, but doesn't. It prompts employers to actually invest in their companies by not giving them the option to simply pocket the profits, thus infusing capital into the "real" economy.

[CBWx2]

No it's not. The discussion is about an article I posted about frustration with the Debt Ceiling Debate. The tax increases/cuts in that discussion are different.

My bad. I was framing my position to the tax cuts that are being proposed in congress. Looking back, I can see that you were as well, to a degree.

[Biggs3535]

But that generalizes that "the rich" are just Execs at publicly traded corps. The fact is most of the +$200k/yr earners are smaller business owners that invest in their business as demand dictates. Doesn't make sense to hire more and expand if business is flat regardless of the tax rate. What you are saying is if a restaurateur's tables are only ever 70% full, he will hire more cooks and waiters and add more tables if his taxes go from 35% to 70%?? Sorry doesn't fly.

If the restaurateur's income increases while his business does not, where is that increased income coming from? What that means is that he's taking money out of his restaurant, either by decreasing the salaries of his employees, the quality of his product, or by firing someone.

What real-life example do you have for this scenario?

[CBWx2]

But that generalizes that "the rich" are just Execs at publicly traded corps. The fact is most of the +$200k/yr earners are smaller business owners that invest in their business as demand dictates. Doesn't make sense to hire more and expand if business is flat regardless of the tax rate. What you are saying is if a restaurateur's tables are only ever 70% full, he will hire more cooks and waiters and add more tables if his taxes go from 35% to 70%?? Sorry doesn't fly.

If the restaurateur's income increases while his business does not, where is that increased income coming from? What that means is that he's taking money out of his restaurant, either by decreasing the salaries of his employees, the quality of his product, or by firing someone.

What real-life example do you have for this scenario?

None. I don't work in the restaurant business. But I know there are only two ways that I can think of for any business to increase profitability without an increase in sales. Either you raise prices, or you decrease overhead, and raising prices makes little sense if you aren't getting business.

[Biggs3535]

But that generalizes that "the rich" are just Execs at publicly traded corps. The fact is most of the +$200k/yr earners are smaller business owners that invest in their business as demand dictates. Doesn't make sense to hire more and expand if business is flat regardless of the tax rate. What you are saying is if a restaurateur's tables are only ever 70% full, he will hire more cooks and waiters and add more tables if his taxes go from 35% to 70%?? Sorry doesn't fly.

If the restaurateur's income increases while his business does not, where is that increased income coming from? What that means is that he's taking money out of his restaurant, either by decreasing the salaries of his employees, the quality of his product, or by firing someone.

What real-life example do you have for this scenario?

None. I don't work in the restaurant business. But I know there are only two ways that I can think of for any business to increase profitability without an increase in sales. Either you raise prices, or you take it out of your business, and raising prices makes little sense if you aren't getting business.

I suppose I wasn't clear enough.  Your notion that a restaurateur's income increases while his business does not really doesn't happen in the real world, or at least it doesn't happen for very long.

[CBWx2]

But that generalizes that "the rich" are just Execs at publicly traded corps. The fact is most of the +$200k/yr earners are smaller business owners that invest in their business as demand dictates. Doesn't make sense to hire more and expand if business is flat regardless of the tax rate. What you are saying is if a restaurateur's tables are only ever 70% full, he will hire more cooks and waiters and add more tables if his taxes go from 35% to 70%?? Sorry doesn't fly.

If the restaurateur's income increases while his business does not, where is that increased income coming from? What that means is that he's taking money out of his restaurant, either by decreasing the salaries of his employees, the quality of his product, or by firing someone.

What real-life example do you have for this scenario?

None. I don't work in the restaurant business. But I know there are only two ways that I can think of for any business to increase profitability without an increase in sales. Either you raise prices, or you take it out of your business, and raising prices makes little sense if you aren't getting business.

I suppose I wasn't clear enough.  Your notion that a restaurateur's income increases while his business does not really doesn't happen in the real world, or at least it doesn't happen for very long.

Ah, I see what you mean. I misunderstood the point that JG? was making with the restaurant example, but I do think I answered it in my previous post. but just to be more clear, i will reword it.

Doesn't make sense to hire more and expand if business is flat regardless of the tax rate. What you are saying is if a restaurateur's tables are only ever 70% full, he will hire more cooks and waiters and add more tables if his taxes go from 35% to 70%??

It may not make sense for him to hire more, but it would make sense for him to lower his tax bracket by taking home less and use the additional revenue that creates to improve his restaurant and to increase pay or benefits to his existing employees. These things are beneficial to the "real" economy, and they are what conservatives say a lower tax rate is supposed to achieve anyway. That's the whole premise of trickle down economics, but with trickle down economics, the money never actually trickles down. A high top income tax rate pretty much guarantees that it does.

[Biggs3535]

Doesn't make sense to hire more and expand if business is flat regardless of the tax rate. What you are saying is if a restaurateur's tables are only ever 70% full, he will hire more cooks and waiters and add more tables if his taxes go from 35% to 70%??

It may not make sense for him to hire more, but it would make sense for him to lower his tax bracket by taking home less and use the additional revenue that creates to improve his restaurant and to increase pay or benefits to his existing employees.

In the above scenario, business is flat.  His tax bracket already is lowering, so there is no additional revenue to improve his restaurant or pay his employees more wages or benefits.