46 replies to this topic

[dasein]

No prize - The USA has a distinction of being the one country that levies income tax on citizens no matter where they live, so a mass exodus would not reduce tax income. However, tax breaks written into the tax code for specific groups and at times specific individuals (Philadelphia Enquirer showed the Federal tax code under Reagan exempted specific individuals from cap gains) allows tax exemption for any well-connected group whatever the law says in general. In the 1960s the USA had a progressive tax that was nearly 90% at the top bracket - at the same time, the US economy was at its most vibrant and had its highest real growth rate, higher than anything since. What a high progressive tax rate does is make marginal gains less rewarding, and is therefore an automatic constraint on fraud and manipulation to achieve huge ST gains. Contrary to what we have been taught, productive people produce not because of economic incentives, but because they prefer to be productive. Inventors invent because they have new ideas, regardless any economic carrot. We have just experienced a period of unprecedented misallocation of capital because the free market has not been allowed to work, instead it has been perverted by ST incentives, byzantine tax breaks and governmental risk insurance and rescues constructed by politicians in service to those who have the financial means to pay enough to get them elected and then reward them the most for their vote - this country is no longer a democracy or a free market. The best solution for the immediate term is Bernie Sanders one time wealth tax - the people who have profited most from the past twenty years of reduced taxes and skewed markets would be taxed the most. You may argue it is not fair that some investors who earned their two million honestly would be taxed the same as those who earned it fraudulently, however, in all cases, it would help recoup taxes that should have been paid over the past 30 years (which were not paid and instead turned into debt that has been rolled to the future), and, as per our founding fathers, it is fair to ask the very rich to part with a small amount of their capital to save the country that allowed them to become wealthy - after all, that is why entrepreneurs come to the USA, and as patriots, like our founding fathers, the most well-off citizens should be prepared to lose some or at least part of their wealth to help the nation. I also think we should go back to the founding fathers and insist that our political representatives have a small salary - at our inception, politicians had no salary - a salary capped at the average wage for their state, and that campaign funds are also capped. Politicians should be prohibited from advertising on TV, as in England, but may only engage in debates on TV. We also need to bring back the multiparty system, as in a Parliamentary democracy, since two parties is an oligopoly. "In the 1960's when the Brits raised their top tax rate to 90%, if memory serves, there was a mass exodus of hyper-wealthy individuals from England, including various members of The Beatles and Rolling Stones. If enough wealthy individuals change national residency for tax purposes a lower high net worth tax base would have the effect of shrinking tax receipts and therefore...the economy along with the govt. itself. Do I win a prize?"

Edited by dasein, 19 January 2009 - 09:19 AM.

[Rogerdodger]

The best solution for the immediate term is Bernie Sanders one time wealth tax - the people who have profited most from the past twenty years of reduced taxes and skewed markets would be taxed the most.

They are already doing that here.
Gangs break into your home and take your stuff because you have more than they do.
I like the idea.
I'm looking down the street now at my neighbor's new car.
That would look swell at my house.

Sure it's immoral theft, but hey, you just said the government should do it, more than they do already,
forcefully if necessary, with guns and the threat of imprisonment.

So much for individual property rights.
Let's pass out the stuff!

Oh wait! Now there's somebody banging on MY door.

[IndexTrader]

In the 1960s the USA had a progressive tax that was nearly 90% at the top bracket - at the same time, the US economy was at its most vibrant and had its highest real growth rate, higher than anything since. What a high progressive tax rate does is make marginal gains less rewarding, and is therefore an automatic constraint on fraud and manipulation to achieve huge ST gains. Contrary to what we have been taught, productive people produce not because of economic incentives, but because they prefer to be productive. Inventors invent because they have new ideas, regardless any economic carrot.
We have just experienced a period of unprecedented misallocation of capital because the free market has not been allowed to work, instead it has been perverted by ST incentives, byzantine tax breaks and governmental risk insurance and rescues constructed by politicians in service to those who have the financial means to pay enough to get them elected and then reward them the most for their vote - this country is no longer a democracy or a free market.


"In the 1960's when the Brits raised their top tax rate to 90%, if memory serves, there was a mass exodus of hyper-wealthy individuals from England, including various members of The Beatles and Rolling Stones. If enough wealthy individuals change national residency for tax purposes a lower high net worth tax base would have the effect of shrinking tax receipts and therefore...the economy along with the govt. itself. Do I win a prize?"

Just to correct your misconception. In the '60s the tax code was a completely different animal than it is today. In fact, it only started to change in 1986 with a tax act passed then. But no one in the so-called 90% bracket paid that type of tax because there were many, many loopholes in the code to reduce and/or eliminate taxes. Many of these loopholes were closed in 1986.

Let me give you an example: gains on commodity/futures were obviously short term at that time. But toward the end of the year you could do "tax straddles". Enter into a long position in one month, a short position in another of the same commodity/future. You held this until the last day, at which time you took your loss on one of the contracts, and either offset your position with another month until the following year, or simply closed the offsetting contract in the new year. This had the effect of wiping out some portion, or perhaps all of your income in that particular year. Tax straddles were later outlawed, but were replaced with the current law where 60% of your gain is long term.

There were all kinds of loopholes. All you needed was a knowledgeable tax accountant or lawyer. Accelerated depreciation made leveraged real estate deals popular. Depletion allowances made oil deals popular. In short, the 90% tax rate was there in name only. In fact, government meddling simply diverted assets into tax diversion rather than more productive areas.

High tax rates, if they aren't avoidable as they were in the US, create things like the "brain drain" which took place in Great Britain, with there best and brightest leaving the country.

But the central idea of your post seems to be that the productive produce because they love what they do...they like being productive. That's quite an idea to count on. But rest assured, a transaction tax of .25% would end active trading. I like to trade, but that type of tax would be onerous. The market as we know it would end. Likewise, spreads would widen so anyone still making any type of trade would not only pay the transaction tax, but would also have higher transaction costs to contend with. But further, as you drive the short term traders out of business all of the low cost commissions that we all enjoy right now will evaporate, because the brokers won't have enough volume to justify them. Costs go up all along the line, the market changes, and no one, not you nor the guy who wrote the article at the link above, or johngeorge has given any thought to the consequences of a change in our markets.

Ayn Rand must be turning over in her grave. After all, one of the central thoughts in the book had to do with whether productive people would continue to be productive under any condition. The metaphor, atlas shrugging as he carried the weight of the world on his shoulders became the title of the book, the impetus for Galt's Gulch.

IT

[OEXCHAOS]

One wonders how much MORE "the wealthy" would have made and produced if government hadn't been taxing and regulating them so much... I love it when folks ASSUME that the wealthy benefited from this country and thus somehow owe the less productive a hand out. Seems to me that the country got a better deal out of the "wealthy", otherwise they wouldn't have freely paid them for the product of their minds and hard work. Virtually every non-criminal millionaire made others far better off than himself, otherwise folks would have done something different with their money. It's axiomatic. So, if you excessively tax them, then you are deterring the most beneficial people from doing what they seem to do better than everyone else.

[James Quillian]

One wonders how much MORE "the wealthy" would have made and produced if government hadn't been taxing and regulating them so much...

I love it when folks ASSUME that the wealthy benefited from this country and thus somehow owe the less productive a hand out. Seems to me that the country got a better deal out of the "wealthy", otherwise they wouldn't have freely paid them for the product of their minds and hard work.

Virtually every non-criminal millionaire made others far better off than himself, otherwise folks would have done something different with their money. It's axiomatic.

So, if you excessively tax them, then you are deterring the most beneficial people from doing what they seem to do better than everyone else.

Mark
Mark, you know better than that. What you are saying has nothing to do with the point that is being argued.
The point is that Democracy is being used as a means to make a profit and is rapidly replacing the free market (price) as the primary means by which resources are allocated in this country. That is destroying our free market system and is potentially as dangerous as as using a planned economy as a means of deciding who gets what.
All I am suggesting is a way to take away the incentive to grow government. There is simply no way to reduce the size of government without penalizing the sector that is promoting its growth.
No one has suggested that a handout is owed to anyone. This is about damage control. I would be just as worried if the poor were using the government to their economic advantage and the rich were getting soaked. The poor using the government as a means to an economic end used to be a considerable worry.
Now roles have been reversed. There was a time when we did "freely pay the rich for the "product of their mind and hard work." If we were still in that time period, I would not be suggesting taxing them at a higher level.

James

[Rogerdodger]

There were all kinds of loopholes.

James there always will be.
AND it will be the wealthy who can pay to find the loopholes OR pay "somebody" to create them.
Remember that our "lawmakers" seldom read the bills they sign.



Do you remember the laws passed in the last few years to get the money out of politics?
That worked well.

2008 Presidential Race Tops $1B: Barack Obama Sets Fundraising ...
Sep 21, 2008 ... Candidates in the 2008 presidential campaign have already raised more than $1 billion, an all-time record, and will keep raising money up to ...

Edited by Rogerdodger, 19 January 2009 - 05:49 PM.

[OEXCHAOS]

One wonders how much MORE "the wealthy" would have made and produced if government hadn't been taxing and regulating them so much...

I love it when folks ASSUME that the wealthy benefited from this country and thus somehow owe the less productive a hand out. Seems to me that the country got a better deal out of the "wealthy", otherwise they wouldn't have freely paid them for the product of their minds and hard work.

Virtually every non-criminal millionaire made others far better off than himself, otherwise folks would have done something different with their money. It's axiomatic.

So, if you excessively tax them, then you are deterring the most beneficial people from doing what they seem to do better than everyone else.

Mark
Mark, you know better than that. What you are saying has nothing to do with the point that is being argued.
The point is that Democracy is being used as a means to make a profit and is rapidly replacing the free market (price) as the primary means by which resources are allocated in this country. That is destroying our free market system and is potentially as dangerous as as using a planned economy as a means of deciding who gets what.
All I am suggesting is a way to take away the incentive to grow government. There is simply no way to reduce the size of government without penalizing the sector that is promoting its growth.
No one has suggested that a handout is owed to anyone. This is about damage control. I would be just as worried if the poor were using the government to their economic advantage and the rich were getting soaked. The poor using the government as a means to an economic end used to be a considerable worry.
Now roles have been reversed. There was a time when we did "freely pay the rich for the "product of their mind and hard work." If we were still in that time period, I would not be suggesting taxing them at a higher level.

James

James, I didn't take the time to respond to your post as I couldn't spare the mental energy. I was just tangentially doing a drive by as a pallative to my anti-collectivist urge.

Sorry.

I'll just say this, there are a lot of wealthy folks who live very meager lives, spending very carefully and reinvesting in their businesses and the markets. A lot. Not every multi-millionaire was at GS, yanno.

Mark

[James Quillian]

There were all kinds of loopholes.

James there always will be.
AND it will be the wealthy who can pay to find the loopholes OR pay "somebody" to create them.
Remember that our "lawmakers" seldom read the bills they sign.



Do you remember the laws passed in the last few years to get the money out of politics?
That worked well.

2008 Presidential Race Tops $1B: Barack Obama Sets Fundraising ...
Sep 21, 2008 ... Candidates in the 2008 presidential campaign have already raised more than $1 billion, an all-time record, and will keep raising money up to ...

Just for the record, it was someone else who brought up loop holes.
I am trying to stick to my point. If something is not done soon to reverse the process of democracy replacing price as the chief engine for allocating resources, it is going to be a disaster. This is not a moral issue. This situation is completely new in the world economic arena.
In the past we have had a free market economy and given enough time there was a virtual guarantee that any recession would evntually work itself out.
That advantage has been removed. As it stands today, the biggest players in the economy compete in the market place only to the degree that they cannot gain an advantage through influencing government. Don't expect that kind of an advantage to be relinquished voluntarily. If this condition continues we can expect to fall into a depression and remain their permanently. Conservative economic logic had turned into hypnotic dogma. Reality has shifted and what was conservative just a few years ago is now fueling the growth of big government. Liberal economists, socialist and others are not right. They are just relatively harmless at the moment.

James

Edited by James Quillian, 19 January 2009 - 06:28 PM.

[James Quillian]

One wonders how much MORE "the wealthy" would have made and produced if government hadn't been taxing and regulating them so much...

I love it when folks ASSUME that the wealthy benefited from this country and thus somehow owe the less productive a hand out. Seems to me that the country got a better deal out of the "wealthy", otherwise they wouldn't have freely paid them for the product of their minds and hard work.

Virtually every non-criminal millionaire made others far better off than himself, otherwise folks would have done something different with their money. It's axiomatic.

So, if you excessively tax them, then you are deterring the most beneficial people from doing what they seem to do better than everyone else.

Mark
Mark, you know better than that. What you are saying has nothing to do with the point that is being argued.
The point is that Democracy is being used as a means to make a profit and is rapidly replacing the free market (price) as the primary means by which resources are allocated in this country. That is destroying our free market system and is potentially as dangerous as as using a planned economy as a means of deciding who gets what.
All I am suggesting is a way to take away the incentive to grow government. There is simply no way to reduce the size of government without penalizing the sector that is promoting its growth.
No one has suggested that a handout is owed to anyone. This is about damage control. I would be just as worried if the poor were using the government to their economic advantage and the rich were getting soaked. The poor using the government as a means to an economic end used to be a considerable worry.
Now roles have been reversed. There was a time when we did "freely pay the rich for the "product of their mind and hard work." If we were still in that time period, I would not be suggesting taxing them at a higher level.

James

James, I didn't take the time to respond to your post as I couldn't spare the mental energy. I was just tangentially doing a drive by as a pallative to my anti-collectivist urge.

Sorry.

I'll just say this, there are a lot of wealthy folks who live very meager lives, spending very carefully and reinvesting in their businesses and the markets. A lot. Not every multi-millionaire was at GS, yanno.

Mark

Mark
No offense, but anyone can dismiss an argument without considering its essence. That is a technique that the collectivists honed into an art form.
I am not so concerned that you didn't take time to respond to my post. I am a little concerned that you didn't read it.

James

Edited by James Quillian, 19 January 2009 - 06:34 PM.

[U.F.O.]

James, I understand your point here on democracy and the markets. My question is how can we use this situation to our advantage? Every negative economic period has some who emerge as winners, even in the midst of wholesale price destruction. Do you see the DOW going to 2,500? Do you see entire industries in utter collapse? Do you see unemployment at 20%. Defining an economic problem is just the 1st step in using it to your advantage. Project for me here and show how we can reverse engineer a winning speculative hand out of what appears to be this garbage we're being dealt. U.F.O.