How are we going to pay for all this shit?

[Texas Contrarian]

Originally Posted by adav8s28

I am okay with the capital gaines tax rate percentage of 23.8 when capital gaines, dividends etc is not your primary source of income. If you don't get a salary or fee income and capital gaines is your primary source of income I feel it should be taxed according to the percentages in the tax table. Right now the 7th or highest bracket it's 37%

Seriously? You think it's appropriate to hike the capital gains tax to levels that would be virtually certain to actually reduce revenue from the tax, as has been demonstrated by many decades of fluctuations in the tax rate on capital gains?

I assume you are well aware that it's generally believed by economists and analysts across the ideological spectrum that sky-high capital gains tax rates disincentivize realizations and thus are likely to decrease revenue as well as imposing deadweight loss on the economy by impeding the flow of capital to its highest and best uses.

During the Barack-Hillary debate sixteen years ago, Charlie Gibson (certainly no conservative!) noted the following:

https://taxfoundation.org/blog/obama...-tax-exchange/

Anyone remember that? It was (or at least should have been!) quite an eye-opener for a number of progressives who seem to be constantly complaining about this "unjustified giveaway to the wealthy," as a few of them put it.

It's with good reason that so many students of this issue have estimated that the revenue-maximizing capital gains tax rate is no higher than 28%, at the highest, and may be nearer to the present 23.8% rate.

I suppose the basic problem is that many people seem to assume that revenue from the capital gains tax is a simple elementary school-style linear function of the rate. Nothing could be further from the truth. (The "line" on the graph would look pretty much like a somewhat deformed parabola.)

[Texas Contrarian]

Originally Posted by adav8s28

In 2016 Obama's last year in office the deficit was 586 billion. By 2019 the deficit was over 900 billion. What changed? Trump put in his tax cuts.

Actually, what changed much more was the large increase in federal government spending during the period, as tax revenues remained approximately constant. Donald and congressional Republicans during the period were, unfortunately, pretty big spenders. During the Obama years, Paul Ryan was always talking about how we faced an impending debt crisis and needed to cut spending. (I suppose he wanted people to forget about that, so it's no wonder that he got the hell out of there at the end of 2018!)

Originally Posted by adav8s28

I would make two changes. I would change the tax rate percentages in brackets 6 & 7 to be 37% and 39% from 35% and 37%. I would change the corporate tax rate to go up to 25%. It's just too low for the spending that government does. It does not matter which political party the president is from.

So you think raising the income tax rate by a couple of percentage points on only the top few percentage points of the income distribution is going to actually make much of a dent in the deficit? (It obviously wouldn't.)

And you think raising the corporate income tax rate would help anything in a material way? Now the rate is at approximately the OECD average. Do you really think we should take steps toward rendering American companies less competitive in the global arena?

Unless we drastically cut spending (which we obviously are not going to do), we are either going to run humongous permanent structural deficits, or we are going to stomach very large tax increases, and not just on the wealthy and high income earners.

Such as with a European-style VAT, for instance, as well as much higher income tax rates on the middle class.

(Or I suppose we could just go all-in on Stephanie Kelton-style MMT and hope for the best!)

[TechPapi]

Tax churches and religious groups. Biggest grift going and would have a positive impact on the tax base.

[Tiny]

Originally Posted by adav8s28

On the taxes link i see there were 100 million tax returns. How did you get 3.5 trillion of taxable income for the highest paid 1 million returns?

I interpolated. The top 1,600,000 taxpayers represent 1% of 160 million taxpayers total. A total of 875,000 taxpayers made over $1,000,000 in adjusted gross income. Another 725,000 in the $500,000 to $1,000,000 bracket constitute the top 1%. Sum taxable income for everyone making over $1,000,000 per year and a bit under half of people in the $500,000 to $1,000,000 AGI bracket and you'll get about $3.5 trillion.

Originally Posted by adav8s28

I like group health insurance thru the employer (for those who work for an employer that offers it) over any single payer system that tries cover 330 million people.The Singapore system does not have to cover 300 million people. So, i doubt that the cost for USA would be less than what we have now.

OK, Then we could switch to the Chinese system. Chinese on average live 2 years longer than we do. China pays around 5.5% of GDP for health care, compared to 17% in the USA.

Just kidding, about switching to the Chinese system. But bare bones, reviled systems like the National Health Service in the UK, and China's system, far outperform us in terms of cost and outcomes. As you know I believe socialism sucks. But even socialist health care beats what we've got in the USA.

I like Singapore because the first $30,000 or so of expenditure is paid out of a savings account funded by employer and employee contributions. Because the money comes out of their pockets (or more accurately savings accounts), people shop around. Health care providers compete for the consumers' business based on cost and quality. The market system can work.

You may like your health care but it cost out the gazoo. Imagine getting a raise of 10%, assuming your employer passed on savings to you from lower medical/insurance costs. And getting better health care than what you have now. That's very achievable.

Originally Posted by adav8s28

In a real ponzi scheme the manager is taking money off the top for himself. And two,the funds that are taken from investors may not be invested in anything. So when people stop signing up it ultimately fails (like with Italian businessman George Ponzi)

Social security has lasted 70 plus years. This is with the original formula that was used when it was first implemented. Yes, the mechanics of how it works is what you described. However, investors in this case anyone who gets paid with W2 has to wait until age 62 before they can receive benefit. With Madoff's scheme you could withdraw your at any time. Social security is well funded. The problems are congress has taken money out of it for other things. The birth rate has decreased while a ton of baby boomers have started to retire. Thus it is projected to run of money by 2035 unless the formula changes.

Agreed, they have to change the formula, and up contributions, or the Ponzi scheme will run out of money.

The manager of the Ponzi scheme doesn't have to take money off the top for himself. Bernie Madoff didn't take much, for example.

[Tiny]

Originally Posted by adav8s28

I would change the tax rate percentages in brackets 6 & 7 to be 37% and 39% from 35% and 37%. I would change the corporate tax rate to go up to 25%. It's just too low for the spending that government does.

Texas Contrarian and LustyLad, Our hard work is paying off! Now we may not agree with him that brackets 6 & 7 and the corporate tax rate should go up, but Adav8s28 is starting to sound downright reasonable. Like a Joe Manchin or Kyrsten Sinema, instead of an Elizabeth Warren or Bernie Sanders.

Thanks for the help. I may be about to get my first Democratic Party convert to the Free Markets Church of Tiny. That would be kind of like a Southern Baptist converting someone who's Jewish. A real feather in my cap!

[Texas Contrarian]

Originally Posted by Tiny

Texas Contrarian and LustyLad, Our hard work is paying off! Now we may not agree with him that brackets 6 & 7 and the corporate tax rate should go up, but Adav8s28 is starting to sound downright reasonable. Like a Joe Manchin or Kyrsten Sinema, instead of an Elizabeth Warren or Bernie Sanders.

By golly, I do believe you are correct! Adav8s28 does not seem to be on board for large-scale asset seizures of the fashion supported by AOC, E-War, and Bernie. Just a couple of (relatively) modest income tax increases. Of course, this wouldn't cover more than about a nickel on the deficit dollar, but who cares? (Tanking the economy isn't really a great way to win elections, is it?)

By the way -- speaking of the deficit, how about a little dose of reality concerning what our level of deficit spending actually is, not what it's reported to be by media outlets?

Note that the US federal debt held by the public on 2/28/24 was $27.290 trillion. One month earlier, on 1/29/24, it was $27.031 trillion. And just over one year ago (on 2/28/23) the debt was $24.609 trillion. (Those are the numbers reported on the US Treasury website.)

So, as you can see, the debt-accumulation run rate (or actual fiscal deficit) over the twelve months ending 2/29/24 wasn't really 7-8% of GDP as is commonly reported, but close to 10%.

The federal government gets to do all kinds of stuff that you and I would never be able to get away with, like large amounts of "off-the-books" spending.

I highly recommend that you do not try to craft operating statements using this sort of phony-baloney, sleight-of-hand accounting and present them to your lenders. You could get your ass into serious trouble overnight!

[Why_Yes_I_Do]

I'm trying to stay optimistic on surviving the year fiscally. But others have a darker thought process and frankly, it's a bit chilling when they use un-fuzzy language like "guaranteed". It would be one thing if it was an anon poster here, but it ain't.

A hard-landing recession is guaranteed in the future after the full impact of Fed rate hikes hit the economy, Morgan Stanley's chief economist says
Jennifer Sor
Updated Thu, February 29, 2024 at 8:07 PM GM

• A hard landing is guaranteed for the US, Morgan Stanley's chief US economist has said.
• She said the full impacts of the Federal Reserve's tightening hadn't been fully felt in the economy.
• It could take 18 months after the last rate hike to feel the full weight of higher rates.

A hard-landing recession is certain to come for the economy, and high rates are to blame even as markets start positioning for the Federal Reserve to loosen monetary policy this year, says Ellen Zentner, Morgan Stanley's chief US economist.

Speaking to CNBC on Monday, Zentner responded to Jamie Dimon's recent comments on the economy, in which the JPMorgan boss warned that the chance of a soft landing was about half of the 70% to 80% odds other forecasters were predicting. He said that was because of several risks still facing the US, including the Fed's tightening campaign, geopolitical conflict, and interest rates, which central bankers have said could remain higher for longer.

Zentner said she was expecting the US to avoid a recession this year as there was no data to support a soon-to-come downturn. But she warned that a hard landing was unavoidable.

"We will have a hard landing at some point. I guarantee you that. We're all wondering: When does that come?" she said. "The point that Dimon makes is that there are these cumulative impacts that build over time, and we are in the camp that we haven't yet seen all of the tightening impacts from monetary policy," she added, referring to the impact of Fed rate hikes.

Fed officials raised interest rates a whopping 525 basis points in 18 months to tame inflation, a move that's taken borrowing costs in the economy to their highest level since 2001.

Economists have warned that high interest rates could spark a recession as financial conditions become restrictive and that the full impact of rate hikes probably hasn't been felt, as they typically take about 18 months to fully work their way through the economy...

[eyecu2]

Just like a broken clock, Morgan Stanley will be right at some point.... All economies go into recession at some point when there has been turbulence. Any senior analyst that says I guarantee it, without putting in a date is just blowing smoke. We'll see if an 18 months this economy's and the shit house, or another bull run. Statements like "we're going to have a hard landing - I guarantee it," it's just fodder for making news headlines

Remember before 2008 how many of these supposed Wall Street experts were out there making predictions and investing in mortgage-backed securities - and now they're no longer even the namesake - they were absorbed by other more healthy entities. Seems to me that these people get paid just in order to put their name on a buy line somewhere, but the reality is that most of them are wrong, most of the time.

[Why_Yes_I_Do]

Saw this on the Discern Report, originally from Zero Hedge. It's mainly about baby boomers retiring in droves and investing heavily into the stock markets. But a couple comparative charts, comparing then versus now trends (bubbles), in the markets were kinda eerie.

Fed Bubble Ignites “Great Retirement” Wave as Baby Boomers Party Like It 1999








YMMV or not

[eyecu2]

So by the chart above, we should all short NVDA and CSCO, and the stock market is heading to 50% lower. Will there also be bread lines, work lines and doom and gloom?

I think chart reading is like Tarrot card reading. Some will signal times to get in and out of something- but rarely will they predict the levels of outcome. If you looked at NVDA 3 or 4 months ago, it's was sub 500, and close to 400. The fact that there was NO one predicting them to be at 900 dollars or close to at that time, tells you all you need to know about stock predictions and reading the future. There is the possibility to be right about guessing an outcome, or 100% wrong. Look at Enron, or GE, or Westinghouse-...all were wallstreet darlings at one time, but they were ALL Wrong also.

I'd put just as much faith in those stock charts as being able to predict the outcomes; better to look into the financials and understand the forcast and income statements etc.

Imagine all the money in mutual funds that have ppl looking at this daily- which is why there is safety in the fund operations vs. singular investors with cash but no investment knowledge.

[Why_Yes_I_Do]

Originally Posted by eyecu2

So by the chart above, we should all short NVDA and CSCO, and the stock market is heading to 50% lower. ..

Seriously?!? You are looking for investing advise from an anonymous person on the internets?!? So be it! Tape a bunch of $100 bills between the pages of a magazine and send them to me in Zimbabwe and I'll guarantee you an abundant and satisfying sex life and riches. Stat! And if you act now, you can still vote for F Joe O'Biden!

[eccieuser9500]

True? Or not? Then? Not now?

Has the law changed? I recently came across this on a 'tube rabbit hole venture. Just asking.

[Texas Contrarian]

Well, Joey is at it again! Did you happen to read the transcript of his State of the Union address last week? Or see coverage of his ramblings on the campaign trail over the last few days?

If so, you may have noticed his continual claim that the very wealthy pay an effective tax rate of 8%. As others in this forum have mentioned, that's flatly incorrect. How do they get that 8% number? Well, mostly by counting unrealized capital gains as income!

How about a quick mention of "criminally fuzzy tax math?"

https://issuesinsights.com/2024/03/1...uzzy-tax-math/

There are good reasons why even Europe's biggest-spending social democracies do not tax unrealized capital gains. It's an epically terrible idea.

[Texas Contrarian]

Here's a new article on why raising the corporate income tax isn't a very swift idea:

https://reason.com/2024/03/14/bidens...rage-american/

[Texas Contrarian]

Note: When I took a glance a few minutes ago at the below opinion piece by the excellent Daniel Henninger, I almost started a thread titled something along the lines of: "The Fiscal Follies Continue Unabated" -- but as I was just about to pull the trigger on the thread kickoff, it occurred to me that there's an already existing thread covering all the shit that no one's going to even make a pretense of paying for, so why not just post a reply to the already-existing thread? Besides, we've already discussed the ridiculousness of the proposed tax hikes which won't even cover much of the previous shit, let alone new rounds of vote-buying!

$7.3 trillion!! Try this on for a thought experiment. In FY 2000, federal government spending was about $1.8 trillion. Suppose we had passed "debt brake" legislation like the Swiss did in 2001, and (for example) had restricted the growth in federal spending to the rate of inflation plus population growth. A quick back-of-the envelope estimate then gets you to approximately the $4 trillion mark. Okay, the population is aging, so it's fair to assume that you'd need to throw in some extra to cover increased health care costs for the elderly. Let's be generous and add 10%, bringing the spending level to about $4.4 trillion. But now the proposal is that we spend $7.3 trillion, or 66% more than justified by population growth and inflation!

Does anyone seriously believe that's warranted?

Without further ado, here's the WSJ's Henninger:

Opinion | Biden’s Budget: $7.3 Trillion!!!
Daniel Henninger
5–7 minutes

After three years of this presidency, much of the public is either nodding off or checked out. But there may be a method in Joe Biden’s distracting madness. Passing quietly in and out of the news last week was Mr. Biden’s proposal that in fiscal 2025 the federal government would spend $7.3 trillion.

Seven point three trillion??!! Try to wrap your head around such a fantastic number.

Annual federal spending broke the $4 trillion barrier in the final years of Barack Obama’s presidency. In 2020 under Donald Trump, bipartisan spending rocketed to $6.8 trillion, driven by what were supposed to be one-off outlays for the Covid-19 “emergency.”

During the primaries, Nikki Haley repeatedly pointed out Mr. Trump’s role in expanding the federal chunk. Her questions about Mr. Trump’s spending plans for a second term remain largely unanswered. An implicit question raised by Gov. Haley’s complaint is whether most voters care that the federal debt held by the public is more than $27 trillion, about 98% of gross domestic product, or if mainly what they feel is helplessness. The Biden Democrats are betting the nation is numb to public spending.

One can argue in hindsight about the need for the pandemic’s $2 trillion injection, but with the release of this $7 trillion budget, it’s clear the political operatives in the Biden administration recognized Covid as a crisis opportunity for the ages. Mr. Biden is pocketing the emergency spending level and hoping to jack it higher permanently. Think $10 trillion by 2033, the level the Biden budget forecasts. Did his dad tell him to do this?

The budget is being described as a campaign document—in other words, an election-year effort to buy votes. Implicit in this strategy is the Democratic assumption that voters can be bought and are happy to stay bought.

Among the reasons Mr. Biden won’t drop out of the race despite doom-laden poll numbers is that he thinks—or so said Sen. Bernie Sanders—that he can be the most progressive president since Franklin D. Roosevelt. That ambition is important to an understanding of his $7.3 trillion whopper.

FDR’s New Deal program dates to 1933. They say times change, but not if you’re a Biden Democrat. What Mr. Biden is proposing as the U.S. heads deeper into a century defined by artificial intelligence is policy that is 90 years old. It somehow seems appropriate.

If there is one word associated with FDR’s New Deal agenda it is “projects.” Everything—housing, airports, hospitals, schools—became a project paid for with federal spending. Back then the thing common to most of the projects was cement. Today, it’s climate. The 2022 Inflation Reduction Act—accurately described by the progressive Economic Policy Institute as “essentially a climate-change bill”—spends nearly $400 billion on renewable-energy projects. The new budget proposes tens of billions more “to support clean energy workforce and infrastructure projects across the nation.”

Housing is a party perennial, so the Biden budget would spend an astounding $258 billion to subsidize it.

Despite the voguish Democratic habit of invoking Roosevelt’s memory—how this appeals to younger, history-free voters is anyone’s guess—the party’s recall of FDR ends in the 1930s.

With war spreading in Europe in 1939, Roosevelt led a big U.S. defense buildup. He repeatedly gave the American public his reasons for the commitment in speeches and statements that are stirring to this day. His 1940 message to Congress for defense appropriations warned of “disturbances abroad, and the need of putting our own house in order in the face of storm signals from across the seas.”

The Biden budget proposes to increase defense spending next fiscal year by 1%, a cut after inflation. It would decline in future years. China has just announced a 7.2% increase in its defense spending.

The Biden Democrats, overwhelmingly dedicated to domestic spending only, have set a low, unbreakable ceiling on budget support for national security. That explains in part why Mr. Biden slow-walked arms support for Ukraine and is now going wobbly on Israel. America’s national security is hostage to Mr. Biden’s antidefense vote in six swing states.

Since the mid-1970s, a rough political consensus has kept federal spending at about 21% of GDP and taxes at just over 17%. Mr. Biden wants spending to consume 24.8% of GDP and over a decade would “pay for” this increase by pushing taxes to more than 20% of national output. By 2030, the national debt would be bigger than GDP—as in Italy or Greece.

For nearly a century, the Democrats’ policy of tax-and-spend has worked for them. But one wonders if, like their leader, this strategy has arrived at a point of exhaustion with the U.S. public. An intriguing side story to this election is figuring out what’s on the minds of Gen Z, or younger voters. They are down on Mr. Biden and bleak about their economic prospects. The Biden bet is that promising to push public spending past an incomprehensible $7 trillion will make them feel better about the president and his party. Overstuffing Uncle Sam, however, may be doing exactly the opposite.

Write henninger@wsj.com.

Copyright ©2024 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cde b8

Appeared in the March 21, 2024, print edition as 'Biden’s Budget: $7.3 Trillion!!!'.

See @ https://www.wsj.com/articles/bidens-...ecentauth_pos1