How are we going to pay for all this shit?

[rexdutchman]

We are living in a twisted political world

[Texas Contrarian]

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Originally Posted by Tiny

What do you think will happen with capital gains taxes? Biden's proposals would result in the U.S. having the highest capital gains tax in the developed world,

https://www.cnbc.com/2021/06/21/bide...-in-world.html

I've read, in unbiased sources, that the CBO historically has considered 28% to be rate at which government revenues are maximized from the capital gains tax. Raise it higher and enough people hang onto assets instead of selling, so that tax revenues actually fall. Which is not a good thing IMHO, as it hinders efficient allocation of capital.

Manchin has thrown out 28% as being a reasonable level for the capital gains tax. That's probably before the 3.8% net investment income tax and state income taxes. Warner and Tester believe Biden's proposed rate is too high too.

I'd think that Congress would have enough sense not pass a tax increase that would actually reduce government revenues. The kicker though is that Biden has also proposed to eliminate stepped up cost basis when taxpayers die. Instead, when someone dies, his estate would have to pay a capital gains tax on his property. This probably would result in Biden's capital gains tax changes raising some nominal amount of additional revenues. People won't be as motivated to hang onto assets until they die, to avoid the capital gains tax, if they have to pay it after they're dead, so to speak.

However, would it be fair? In addition to the capital gains tax, larger estates would also have to pay an estate tax of 40%. If you had very little cost basis in a business or investments, because you bought them many years ago, your estate would potentially be looking at having to fork over 80% to the government. This definitely won't fly with Tester, the Democratic Montana Senator and farmer, who would be exactly in this position personally when he passes away. But he and other farm state members may try to get an exemption for farms and ranches, instead of voting against the bill.

We're in for an interesting few months.

We sure are in for an interesting few months!

It's nice to try to find a silver lining in every cloud, difficult though as it may now seem given our current political landscape.

If there's any hope of finding a silver lining in the depressing cloud that answers to the name of the Afghan withdrawal fiasco, it's that progressives may find it harder to cram through their ruinous proposed agenda amid the fallout from Biden's latest catastrophe.

Hopefully, that means that it will be difficult for them to shove through any increase in the cap gains tax rate, let alone a clearly revenue-losing and economy-impeding one that takes the rate all the way up to 43.4%. (It's difficult enough for me to pull the trigger on a sale now, in view of the current 23.8% levy.)

Further, although it may be that the revenue-maximizing rate is at or near 28% (that's the view of a lot of people who've written papers, theses, and dissertations on the topic), I believe that the optimal rate is at least a few percentage points lower than that.

That's because of something called the "lock-in effect," meaning that when investors are disincentivized to sell, capital is inhibited from flowing to its highest and best uses, and thus the economy cannot operate at maximum efficiency. This is a form of "deadweight loss," a concept mentioned earlier either in this long thread or another covering a similar topic.

In any event, it seems that partisan Democrats learned nothing from the capital gains tax rate experiences of the 1970s. (Including, of course, Joe Biden -- who at that time was sleepwalking through a Senate term.)

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[eccieuser9500]

Originally Posted by CaptainMidnight

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We sure are in for an interesting few months!

It's nice to try to find a silver lining in every cloud, difficult though as it may now seem given our current political landscape.

If there's any hope of finding a silver lining in the depressing cloud that answers to the name of the Afghan withdrawal fiasco, it's that progressives may find it harder to cram through their ruinous proposed agenda amid the fallout from Biden's latest catastrophe.

Hopefully, that means that it will be difficult for them to shove through any increase in the cap gains tax rate, let alone a clearly revenue-losing and economy-impeding one that takes the rate all the way up to 43.4%. (It's difficult enough for me to pull the trigger on a sale now, in view of the current 23.8% levy.)

Further, although it may be that the revenue-maximizing rate is at or near 28% (that's the view of a lot of people who've written papers, theses, and dissertations on the topic), I believe that the optimal rate is at least a few percentage points lower than that.

That's because of something called the "lock-in effect," meaning that when investors are disincentivized to sell, capital is inhibited from flowing to its highest and best uses, and thus the economy cannot operate at maximum efficiency. This is a form of "deadweight loss," a concept mentioned earlier either in this long thread or another covering a similar topic.

In any event, it seems that partisan Democrats learned nothing from the capital gains tax rate experiences of the 1970s. (Including, of course, Joe Biden -- who at that time was sleepwalking through a Senate term.)

.

I'm not into money and finance, but I just wanted to interject with a little dig.


Biden Says He'll Take on Corporations Trying to Squash His Tax Hikes


https://www.businessinsider.com/bide...thy-2021-9?amp

While he's since expressed willingness to come down from 28%, he has remained adamant that a corporate-tax hike, and raising individual income taxes on the wealthy, are vital to lifting the middle class.

"The superwealthy are still going to be able to have their three homes," he said.

[bambino]

Originally Posted by eccieuser9500

I'm not into money and finance, but I just wanted to interject with a little dig.


Biden Says He'll Take on Corporations Trying to Squash His Tax Hikes


https://www.businessinsider.com/bide...thy-2021-9?amp

Biden’s not taking on anyone. The people who are calling the shots are coming after everyone. Including you.

[eccieuser9500]

Originally Posted by bambino

Biden’s not taking on anyone. The people who are calling the shots are coming after everyone. Including you.

Who are calling the shots? Why are they coming after me? If I'm on their side, they might be coming to me for advice.

[Tiny]

Originally Posted by eccieuser9500

I'm not into money and finance, but I just wanted to interject with a little dig.


Biden Says He'll Take on Corporations Trying to Squash His Tax Hikes


https://www.businessinsider.com/bide...thy-2021-9?amp

About this quote, "While he's since expressed willingness to come down from 28%, he has remained adamant that a corporate-tax hike, and raising individual income taxes on the wealthy, are vital to lifting the middle class."

Biden like Obama appears to believe that this is a zero sum game. The corporations and wealthy entrepreneurs benefit at the expense of the poor and the middle class. Nothing could be farther from the truth. Look at the biggest companies and the wealthiest Americans. We've benefited greatly from them -- the jobs and services and goods they've provided. Think about it - Bill Gates and Microsoft. Jeff Bezos and Amazon. American heroes David and Charles Koch and Koch Industries. Zuckerberg and Facebook.

Speaking of which, I have decided I am going to treat you like Zuckerberg treated Trump and censor out all photos that glorify smoking from my replies to your posts. Starting with this one. You may post photos of Che and Fidel, but please photoshop out the cigars. There are sensitive younger posters like Strokey McDingDong who may take up a lifelong bad habit as a result of your influence.

[eccieuser9500]

Originally Posted by Tiny

About this quote, "While he's since expressed willingness to come down from 28%, he has remained adamant that a corporate-tax hike, and raising individual income taxes on the wealthy, are vital to lifting the middle class."

Biden like Obama appears to believe that this is a zero sum game. The corporations and wealthy entrepreneurs benefit at the expense of the poor and the middle class. Nothing could be farther from the truth. Look at the biggest companies and the wealthiest Americans. We've benefited greatly from them -- the jobs and services and goods they've provided. Think about it - Bill Gates and Microsoft. Jeff Bezos and Amazon. American heroes David and Charles Koch and Koch Industries. Zuckerberg and Facebook.

Speaking of which, I have decided I am going to treat you like Zuckerberg treated Trump and censor out all photos that glorify smoking from my replies to your posts. Starting with this one. You may post photos of Che and Fidel, but please photoshop out the cigars. There are sensitive younger posters like Strokey McDingDong who may take up a lifelong bad habit as a result of your influence.

Jeff Bezos criticised by Amazon workers and customers after thanking them for funding space launch


https://www.independent.co.uk/news/w...87944.html?amp

It is though[sic] that the cost of Blue Origin was in the region of $28 million (£25 million), and paid for by Mr Bezos selling off billions of dollars of Amazon shares. On Tuesday he became the wealthiest man to enter space.

The tribute to Amazon’s workers apparently fell on deaf ears, with Democrat congresswoman Alexandria Ocasio-Cortez accusing the Amazon founder of exploiting staff to pay for his sub-orbital space flight.

When's your next trip to the moon? You were saying . . . ?

[Tiny]

Originally Posted by eccieuser9500

That's better!

[eccieuser9500]

Originally Posted by Tiny

That's better!

[Tiny]

Btw, if the political and economic landscape is changed so that the wealthiest entrepreneur in America can’t scrape scrape together $28 million for a space flight that promotes his space business, this country will be truly screwed. You don’t build great businesses when the government takes away most of your capital, as Bernie proposed with his 8% annual wealth tax on billionaires.

[1blackman1]

Tiny still believes in trickle down. That’s quaint. We know that experiment failed ending in recessions that made the rich richer and poor poorer. Nevertheless, we need less spending and higher taxes. Unfortunately we won’t get both. We will get either more spending on the promise of growing into revenue to pay down debt or we will get lower taxes on the promise of economic growth that’ll pay for the loss of revenue.

Sadly neither will end up being true. Both times that we’ve actually reduce our debt and deficit have been when we’ve cut spending and raised taxes. And that makes all the sense in the world since that’s how it works for every one of our wallets as well.

[Tiny]

Originally Posted by 1blackman1

Tiny still believes in trickle down. That’s quaint. We know that experiment failed ending in recessions that made the rich richer and poor poorer. Nevertheless, we need less spending and higher taxes. Unfortunately we won’t get both. We will get either more spending on the promise of growing into revenue to pay down debt or we will get lower taxes on the promise of economic growth that’ll pay for the loss of revenue.

Sadly neither will end up being true. Both times that we’ve actually reduce our debt and deficit have been when we’ve cut spending and raised taxes. And that makes all the sense in the world since that’s how it works for every one of our wallets as well.

We can't start with the most progressive tax system in the developed world, where 45% of households pay no income tax and a couple making $200,000 a year pays at a rate of 18%. And then, just by increasing rates on people who make over $400,000 per year and on corporations, reduce the deficit, and also pay for $1.1 trillion in infrastructure spending, $5.7 trillion in COVID relief, and $3.5 trillion for a Democratic Party wish list. Apparently you partly recognize that, as you say you favor reducing spending.

So what do you do? Jack up taxes on everyone? I don't think that's necessarily the solution. When you filter out the tiny countries and petrostates, the countries with the highest per capita GDP are Hong Kong, Ireland, Singapore, Switzerland and the United States. Those also happen to be the five countries in the developed world, again filtering out tiny countries and petrostates, with the lowest taxation and government spending as a % of GDP. Smaller government and lower taxes, and a larger private sector with more money to invest, equate with economic growth.

More efficient government, closer to the people, is what I'd favor. And yes, cut out loopholes in the tax system. What does the federal government do for you anyway? It does diddly squat for me, except pay too much to maintain a large military for my defense from mostly imaginary enemies, and distribute money to the states. Money that would be better raised at the state and local level, closest to the people and locally elected politicians who oversee the spending that actually benefits my neighbors and me.

Your belief that tax cuts caused the recessions is wrong. The 2020 recession was caused by COVID. The 2008/2009 recession was caused by inadequate regulation of the mortgage and other financial markets. The 2000/2001 and 1990/1991 recessions were mild and had nothing to do with tax policy. You can chalk them up in part to the dot com bubble, the 9/11 attack, and the oil price shock as a result of the Iraqi invasion of Kuwait.

Finally you place far too much weight on tax increases as the reason we balanced our budget in the late 1990's. We actually cut the capital gains tax during that period. Here's an admittedly somewhat slanted explanation written in 1998, that mentions cyclical strength in the economy and lower military expenditures and fiscal discipline imposed by Republican Congressmen as reasons.

https://www.cato.org/commentary/no-b...balance-budget

[1blackman1]

So if we spend less and stop cutting taxes we will lower our federal debts and deficits. Makes sense. If we spend less and raise taxes we can get there faster. Seems to make more sense.

I do agree that states should be more responsible for raising their own revenue. Unfortunately states like Louisiana and other mostly red states would end up in abject poverty and likely resemble 3 world nations. While other states, mainly blue states would be comparatively palatial (or be brought down by immense social spending (which too is possible). Unfortunately that cat is out of the bag and won’t ever go back in. .

[bambino]

Originally Posted by 1blackman1

So if we spend less and stop cutting taxes we will lower our federal debts and deficits. Makes sense. If we spend less and raise taxes we can get there faster. Seems to make more sense.

I do agree that states should be more responsible for raising their own revenue. Unfortunately states like Louisiana and other mostly red states would end up in abject poverty and likely resemble 3 world nations. While other states, mainly blue states would be comparatively palatial (or be brought down by immense social spending (which too is possible). Unfortunately that cat is out of the bag and won’t ever go back in. .

Los Angeles and San Francisco resemble 3rd world nations. Chicago, NYC, Baltimore and Portland are war zones.

[1blackman1]

Originally Posted by bambino

Los Angeles and San Francisco resemble 3rd world nations. Chicago, NYC, Baltimore and Portland are war zones.

You’ve no clue what you’re talking about.