Best Political Party for Hobbists?

[Jimboob]

Rich people don't create jobs, people who want to become rich create jobs.
And if their ideas are good and their business plan is sucessful then they will become rich people.
Then they can pay higher taxes too.
Like they are supposed to do.

[Texas Contrarian]

Originally Posted by TexTushHog

Well one of the two parties has engaged in the past 29 years in an unprecedented upward redistribution of wealth (primarily through the tax code)...

That's completely false.

The tax code manifestly has nothing to do with rapidly rising income and wealth inequality. If we had allowed the factors that actually have caused rising inequality over the last 35 years or so and kept the tax code of the late 1970s in place, inequality would now be much greater.

Note the discussion in this thread from a few months ago:

http://www.eccie.net/showthread.php?t=76626

Look at posts 2, 15, 18, and 22. I explained the issue and noted several of the reasons for rising inequality, which over the past three decades occurred in spite of, not because of tax rate changes. In fact, it was recently reported that a record 47% of U.S. households report no net federal income tax at all. In that thread, I also listed a few of the factors that actually did cause rapidly rising income and wealth inequality.

At the top end, the 70% tax bracket of the 1970s wasn't nearly as good at getting revenue from the wealthy as most people seem to think. It was easy for investors to shelter most of their income with things like accelerated depreciation on commercial real estate. Many partnerships were structured to do just that, since most people aren't too interested in paying 70% of each additional dollar earned to the government. The Tax Reform Act of 1986 dramatically lowered the top rate but struck down the ability to shelter anything other than "passive income" with previously allowed tax breaks.

One of the biggest downsides of the 1970s tax code, and one that's gone largely unappreciated, is that it shoved a lot of capital into malinvestment. Many shelters made little sense other than that they offered big tax savings for their investors. When so much capital fails to flow to its highest and best use, no one benefits (except, of course, the promoters and investors).

That's why there's some interest in the Bowles-Simpson and similar proposals. They would flatten the rate structure and broaden the base, getting rid of a number of exclusions and "tax expenditures", resulting in a simpler and more efficient code.

[TexTushHog]

Originally Posted by Eklutna

The class warfare routine is so out of vogue. We don't have a tax problem. We have a spending problem.

The statistic show that your argument is not true. The effective total tax burden in the U.S. is around 28%. This is about ten percentage points lower than almost every comparable industrialized democracy. See the chart below, taking special note of the position of Germany, Great Britain, and France.



In point of face, we have a tax problem, not a spending problem. We drastically under-invest in infrastructure and education while over investing in defense technology and personnel. If we would raise our total tax revenues around 5 percent -- and close about half the gap between us and the rest of the world -- we could place our governments on a firmer financial footing, improve our failing education system, and fix our crumbling infrastructure. The idea that we spend too much is simply a myth that is not borne out by any relevant statistics. A lie that is believed only because 1) the Republicans repeat it often enough and 2) it comports with the daily experience of the middle class who a) now bears the burdens of the failing education system and the infrastructure and and b) bear an increased burden of taxation to pay for my tax cuts and those of other wealthy individuals.

[DFW5Traveler]

If anyone has the guts to look it up for themselves or just follow the money, it will show how mistaken you are, TTH. The majority of the countries above and below the US are now failing and/or asking for bailouts, i.e., redistribution of wealth. Socialism, has failed time and time again. The EU's social redistribution is destroying industrialized countries and creating megalithic empires of men, not countries. Power corrupts and absolute power corrupts absolutely.

[TexTushHog]

Originally Posted by DFW5Traveler

If anyone has the guts to look it up for themselves or just follow the money, it will show how mistaken you are, TTH. The majority of the countries above and below the US are now failing and/or asking for bailouts, i.e., redistribution of wealth. Socialism, has failed time and time again. The EU's social redistribution is destroying industrialized countries and creating megalithic empires of men, not countries. Power corrupts and absolute power corrupts absolutely.

All you link shows is what country's banks allegedly held the sovereign debt of Greece in April of this year. It shows nothing about effective tax burden as a percent of GDP. And very few

European economies are not "failing." And to the extent that they are, their problems are tied to having a single currency so that devaluation and growth through increasing exports isn't a viable option for ridding themselves of debt. Once the European nations get over the double dip recession that will be caused by prematurely cutting stimulus spending, I suspect that in the long term, we'll see them pass us in relatively short order (something on the order of 10 to 15 years).

And frankly, European bank stocks haven't done too bad, lately, although Deutch Bank has been beaten up fairly good:

http://finance.yahoo.com/echarts?s=U...urce=undefined

[Gonzo DFW]

All of which begs questions about whether we want to live in America or in Europe, whether we desire more government involvement in our lives, etc? IMHO, big government, like big business or big labor doesn't work in the individual's best interests, nor does it solve the most nettlesome of society's ills. Government is vital: just let the sewers back up to determine how vital. But all these government programs simply don't work. We've got a myriad of financial oversight bodies, yet corruption remains rampant. Smaller government where decisions are made closer to the individual is optimum. We have a dysfunctional tax code because of government, not in spite of it. And it's dangerous when the primary focus of any business plan is how to profit from a productive relationship with government rather than its customers. I'll give you an example: I recently got a fender-bender on my car fixed. Am I the body shop's customer or is the insurance company their customer--who do they get the most business from? A similar analogy could be made for all the dysfunctional health care systems in developed countries, and it's why patients are desperately seeking open market reforms. Just my dos pesos. Ahem, but it's also why I hobby--tortuous reasoning, I know, but there it is.

[Texas Contrarian]

Originally Posted by TexTushHog

...Once the European nations get over the double dip recession that will be caused by prematurely cutting stimulus spending...

No European nation "prematurely cut" any "stimulus" spending. To the extent that any cutting is taking place, it involves virtually forced measures to prevent far worse fiscal train wrecks. The Germans, for instance, wisely decided to get ahead of the game by passing a constitutional amendment setting a 5-year glideslope toward budget balance, even though their deficit problem was nowhere near as bad as ours. Now they can face the future with much more equanimity than most other European nations.

Originally Posted by TexTushHog

The idea that we spend too much is simply a myth that is not borne out by any relevant statistics...

It's not a "myth." Opposition to that notion is your opinion, apparently based on the belief that we should travel a long way down the road toward becoming a European-style social welfare state.

We spend (in nominal dollars) about twice what we did 10 years ago. Even adjusting for inflation, we've increased spending by almost 60%. What have we gotten for our money? I agree with you that we need to do a markedly better job in the areas of education and infrastructure. Instead we've spent trillions on political payoffs, entitlement expansions, phony "stimulus" packages, pork-festooned defense budgets, wars, etc. We need to spend money more wisely, not just more liberally.

Originally Posted by TexTushHog

...If we would raise our total tax revenues around 5 percent -- and close about half the gap between us and the rest of the world -- we could place our governments on a firmer financial footing, improve our failing education system, and fix our crumbling infrastructure...

I assume you are suggesting that we should raise our tax revenues by 5% of GDP (not just 5% in absolute terms) -- since that's the metric by which most of these discussions take place. But that's a really big chunk of revenue -- around $700 billion (and even that would only eliminate about half of our existing fiscal deficit, let alone allow for any new spending).

From whom do you suggest we collect all that tax revenue? Restoring the top bracket rate (now 35%) to the pre-tax cut rate of 39.6% would raise no more than about one-third of 1% of GDP, if even that.

So you would have to stick it to the middle class and the poor. France, for instance, largely relies on the VAT to extract huge revenues from the non-affluent. Additionally, a French worker with a very modest income of around $45-50K/yr. is in the 30% tax bracket, while an American has to make an income of about three times that much to land in an equivalent tax bracket.

Of course, a typical European country like France taxes the affluent somewhat more than the U.S. -- but taxes the non-affluent more by a far higher percentage. The regressivity of the French tax system is actually quite striking.

This graph pretty much says it all:

[Jimboob]

OK, who IS going to pay the piper? If we keep the lower tax rates and spending evenstays the same how will we pay the interest on our debt? !0 years ago we didn't have airport screeners, or two wars to pay for. I didn't agree with W.s reasoning for the tax cut when he come into office but I understood the reasoning. When he started the wars but didn't want to pay for them I lost all faith in him and his party. So, like I said, who IS going to pay?

[Lust4xxxLife]

Instead of raising taxes as the first step, how about if we take a close look at cutting some enormous tax subsidies? Do the oil companies really need tax subsidies? Why? We've been using the carrot with them for the past decade or two, maybe it's time to use the stick for a while. Maybe it's time to leverage the fact that America is their biggest CUSTOMER. No, America is NOT going to give you subsidies to run your business Exxon, and YES, Exxon, you are going to spend some of your record earnings on continuing to explore for new reserves, etc., if you want to continue to have access to this market.

Also, why can't Joe Consumer pay market prices at the pump? People in other countries do. It's expensive, but that's why they don't drive as much and when they do, they drive more sensible vehicles. I'm all for protecting transportation based businesses if it helps protect jobs and our economy, but the rest of us need to adjust to the real world. It's overdue.

[Lust4xxxLife]

Originally Posted by Jimboob

... So, like I said, who IS going to pay?

China is bankrolling a good chunk of our economy right now. You know, that country we love to criticize so much.

Right now, China and the US need each other – a lot. We have market and they have money. But at the rate they're going, pretty soon they'll have market AND money... like the America of yesterday.