Another help for those mortgages underwater.

[WTF]

Originally Posted by Rudyard K

In other words, you don't know WTF it means.

No , it means I had already discussed my mistake.

Originally Posted by WTF

Ok, I knew that was coming. I read that a couple of years ago and did not reread it before posting. Then you boys (charles, I can say boys , can't I?) made me go post the link!

It still is revelant.

Originally Posted by Rudyard K

But we'll forgive you. It had about as much validity as the rest of your musings.

[/quote]

Musing...damn you sound like a chick with a blog!

[WTF]

Originally Posted by atlcomedy

What are you saying? he only "marginally" gets laid? or does he actually get a POA?

Way to go atl....I knew you could turn this into a pussy thread!

[TexTushHog]

I disagree that the only way to raise adequate money it to have a VAT tax. You can get there with a carbon tax and by raising marginal rates on those making $360k or more per year to around 40 % and those making $1M or more to 50%. Plus a payroll tax is we finally get single payer health care.

And for prospects for cutting spending, check out this chart from Mother Jones:

http://motherjones.com/kevin-drum/20...utting-deficit

Not even 1/3 of the people can agree on a area to cut spending except foreign aid, which is less than 1/2 of 1% of our spending. Lots of luck getting support for spending cuts and balancing the budget with numbers like that.

[atlcomedy]

I'm not even looking at crap from Mo Jo as an authority.....

but in one or two sentences explain how you implement and enforce a carbon tax

[EmilyHemingway]

Originally Posted by CaptainMidnight

Emily, with all due respect (and I sincerely mean that, as I have strongly agreed with your other posts in this forum) that's just not an objective site. It's run by an advocacy group. Nothing wrong with that per se, but the "cost of government day" analysis counts total government spending (including all this massive deficit spending) -- not just taxes -- and a calculation of the "regulatory burden", among other things.

We're talking about taxes -- and there's no way an average family pulling down $50K in the U.S. pays $20K/yr. in taxes. My point was that the tax burden on American families of modest means is actually quite light compared with that on their European counterparts, who probably do pay well over 40% in actual taxes. (Also note that the "regulatory burden" is quite high in most European countries as well -- probably higher than here.)

With an equal amount of sincere due respect, that's akin to saying stimulus checks are free money. I think we might actually be saying the same thing though, just from different angles. To wit: there's no way to cover this free-for-all romp through the taxpayer wallet without the bill coming due eventually.

I can't recall who quoted me and asked where I'd cut spending, but here's my answer. Across the board. TARP was insanity. Iraq and Afghanistan are boondoggles. Social Security should have been reformed a decade ago. Unfunded mandates are killing states' budgets (and the state politicians can do that very well on their own, thanks). Massive stimulus programs that aren't stimulating a damned thing.

The VAT isn't the scariest thing on the horizon. That would be the debt auctions.

[Texas Contrarian]

Originally Posted by TexTushHog

I disagree that the only way to raise adequate money it to have a VAT tax. You can get there with a carbon tax and by raising marginal rates on those making $360k or more per year to around 40 % and those making $1M or more to 50%.

I think a carbon tax that would raise enough money to significantly reduce the deficit would be even harder to sell to the American public than a VAT. No one in the world has such a tax with draconian enough rates to make a difference. At least with a VAT, politicians can say, "Look over there! Everbody else is doing it. We have to get in the game!"

And the guys who don't live in the real world and cluelessly apply static analysis always grossly overestimate how much you can collect from the affluent by jacking up tax rates to confiscatory levels. A 50% federal bracket would mean that some taxpayers in states that impose a state income tax would be in the 60% or higher marginal tax bracket. Don't you think many of them would start doing something in the way of tax avoidance?

Sure, some people with very high incomes but not so much wealth (entertainers, sports stars, etc.) might not be able to avoid much of the increased tax, but those of us who earn their income from ownership of businesses and investments will. For instance, many business owners choose a sub S structure, since the top personal tax rate and the corporate rate are the same (35%). When that changes,they will be advised by their CPAs and tax lawyers to do things a little differently. They're not just going to sit there and be shorn like sheep, although that seems to be what many of you guys on the left think.

Look what happened in the 1970s, when the marginal tax rate was 70%. The tax code shoved hundreds of billions of dollars into malinvestment such as tax shelters that made no real economic sense other than to reduce the tax burden on its investors. Is the act of diverting capital from its most productive uses good for anybody? (And the extremely high tax rate didn't really raise all that much money. Hardly anyone actually paid it.) When you start jacking up rates on the taxable income of high earners, you'll be surprised how quickly some of it pulls a disappearing act, one way or another.

Some of you guys seem never to give up on the idea that you can pay for a lot of this out-of-control spending by taxing the "rich." It isn't going to work. You might collect an additional $50-100 billion per year, but even that's going to be difficult. And it will impose further costs on a struggling economy. It's no wonder the unemployment rate remains high. Business owners want to see the final score before committing resources. We're obviously seeing an anti-growth agenda, but we want to see just how anti-growth it's going to get!

Part of the problem today is that a lot of capital has gone on vacation. If we persist by stacking up even more bad economic policies, some of that capital might simply choose to extend its vacation.

Originally Posted by EmilyHemingway

With an equal amount of sincere due respect, that's akin to saying stimulus checks are free money. I think we might actually be saying the same thing though, just from different angles. To wit: there's no way to cover this free-for-all romp through the taxpayer wallet without the bill coming due eventually.

Emily, I think we actually are trying to say the same thing. It's just that the website link, while I generally agree with its conclusion, comes at the issue from what will sound to readers like something of an obtuse manner. I simply prefer a little more straightforwardness! Your point as I understand it is that even though taxes on those in the lower income ranges haven't been imposed as yet, they're coming one way or another. People in that part of the income strata will eventually be taxed as highly as those in typical European social democracies.

And I agree with most of the rest of your post.

Particularly this:

Originally Posted by EmilyHemingway

The VAT isn't the scariest thing on the horizon. That would be the debt auctions.

People seem blissfully unaware of this issue. A VAT will obviously create headwinds for the economy that will last for many years. It's going to be a painful adjustment. But doing nothing at all and just letting the deficit crisis fester would be manifestly worse. The first time a Treasury auction didn't go well could cause a level of panic that would make the late 2008 financial near-meltdown pale in comparison.

No one is going to materially cut spending. That's a pipe dream. The debate over a VAT is going to be exceedingly contentious, but I don't see any way we avoid going there over the long run.

The political left wants a European-style social democracy. I believe they'll get their wish.

It's just that the American middle class doesn't yet understand what that means. They've been promised that the "rich" are going to pay for it all.

Ain't gonna happen.

[pjorourke]

Originally Posted by WTF

Read this PJ and tell me what it means!
http://people.bu.edu/kotlikoff/Does%...r%209,2006.pdf

Well if you even bothered to read the introduction to that 73 page paper, you would understand that in calculating "marginal" tax rates they are including benefits that people lose -- which aren't actually taxes. Let me see if I can cook up an example that you can get your simple head around.

Lets say we have a very simple flat income tax of 20% of all income above $20,000 a year. And we have a low income program that gives you $2,000 a year in cash if your income is less than $10,000, but you have to give up 20 cents of those benefits for every dollar you earn above $10,000 -- it goes away entirely if you make more than 20K.

Fred makes $10,000 a year and pays no taxes -- an average tax rate of 0% (although some economists might say he has an average tax rate of -20% for his 2,000 in income support divided by his $10,000 in income).

If Fred goes and gets a second job where he earns an extra $5,000, he won't pay any income tax on his additional income so his average rate is still 0%, but his marginal tax (using this articles methodology) is 20% because he is giving up 20 cents in benefits for each $1 he earns. At $15,000 in income, he pays 0 taxes but now gets only $1,000 in benefits -- an average rate of 0% or -6.7% depending on your perspective.

Lets say that Fred now goes finishes college (which in his case is the reason that he is "poor") and lands a job with TTH righting wrongs and doing good stuff. Because TTH is such a fine employer, he pays him 50K in cash plus another 10K in non taxable benefits. His income has jumped from $15K to $60,000 -- an increase of $45K. He has now lost his $1K low income benefit and actually pays cash taxes of $6K (20% of the excess of 50K over $20K). His marginal tax is $7K/45K = 15.5%, but his average tax is now $6k/$60K or 10%.

If Fred now makes partner in TTH's firm and starts earning a bazillion a year like TTH does, he will pay a marginal tax rate and an average tax rate that are both about 20% -- as income approaches infinity, the two rates converge at the marginal. Unless that is, TTH successfully lobbies his Congress people to raise the marginal rate on all income above half a bazillion to 40%., then the rate would be higher.

[Marcus Aurelius]

Let's not kid ourselves. VAT and carbon tax is all political. To put down the deficit it will take raising the interest rate. We lose but it is what the government will need to pay back.

[pjorourke]

Originally Posted by EmilyHemingway

TARP was insanity.

Not all of it. It doesn't look like the original TARP is going to cost a nickel to the public -- at least the bank and AIG part thereof. Call that Bush TARP. The money flushed on government motors and homeowner/speculator bailouts is another issue. Call that Obama TARP.

Lets first understand what Bush TARP was -- specifically it was not government spending. What happened was that the credit markets were freezing up -- people were panicking after Bear and Lehman went down. Rather than have a run on the banks, the government stepped in and calmed the waters by shoring up the banks capital. This calmed the panic be creating enough liquidity in the market from all that extra cash to begin unwinding the mess. It was an investment that is being repaid with a nice return to the government. We may lose money on a few banks, just like we do through the FDIC in every economic downturn -- its part of the cost of doing business and paid for by FDIC premiums paid by the banks (read bank customers). AIG looked pretty dicey for a while, but now I'm thinking even that might be a moderate winner. Any loses the banks realized on those bad loans are being borne by the shareholders of those institutions -- not by the government. Same with all those bajillion in banker bonuses. Stupid or not (and I vote stupid) those bonuses are paid by shareholders, not the public. The Pay Czar just gets to micro manage the numbers even though the Feds dont really have any skin in the game.

That is all Bush Tarp (except the Pay Czar). Some time when I have a few hours to spend and a need for self flagelation, I'll opine at length on Obama TARP.

[WTF]

Originally Posted by pjorourke

Not all of it. It doesn't look like the original TARP is going to cost a nickel to the public -- at least the bank and AIG part thereof. Call that Bush TARP. The money flushed on government motors and homeowner/speculator bailouts is another issue. Call that Obama TARP.

.

Now folks if you want to believe PJ's defense of Bush go ahead. If you want the truth click on the link. There really is no difference between Bush and Obama btw.




http://www.youtube.com/watch?v=YgoFnO532Sk

[WTF]

Originally Posted by pjorourke

Well if you even bothered to read the introduction to that 73 page paper, you would understand that in calculating "marginal" tax rates they are including benefits that people lose -- which aren't actually taxes. Let me see if I can cook up an example that you can get your simple head around.

Lets say we have a very simple flat income tax of 20% of all income above $20,000 a year. And we have a low income program that gives you $2,000 a year in cash if your income is less than $10,000, but you have to give up 20 cents of those benefits for every dollar you earn above $10,000 -- it goes away entirely if you make more than 20K.

Fred makes $10,000 a year and pays no taxes -- an average tax rate of 0% (although some economists might say he has an average tax rate of -20% for his 2,000 in income support divided by his $10,000 in income).

If Fred goes and gets a second job where he earns an extra $5,000, he won't pay any income tax on his additional income so his average rate is still 0%, but his marginal tax (using this articles methodology) is 20% because he is giving up 20 cents in benefits for each $1 he earns. At $15,000 in income, he pays 0 taxes but now gets only $1,000 in benefits -- an average rate of 0% or -6.7% depending on your perspective.

Lets say that Fred now goes finishes college (which in his case is the reason that he is "poor") and lands a job with TTH righting wrongs and doing good stuff. Because TTH is such a fine employer, he pays him 50K in cash plus another 10K in non taxable benefits. His income has jumped from $15K to $60,000 -- an increase of $45K. He has now lost his $1K low income benefit and actually pays cash taxes of $6K (20% of the excess of 50K over $20K). His marginal tax is $7K/45K = 15.5%, but his average tax is now $6k/$60K or 10%.

If Fred now makes partner in TTH's firm and starts earning a bazillion a year like TTH does, he will pay a marginal tax rate and an average tax rate that are both about 20% -- as income approaches infinity, the two rates converge at the marginal. Unless that is, TTH successfully lobbies his Congress people to raise the marginal rate on all income above half a bazillion to 40%., then the rate would be higher.

Very well stated.

Now would you guys quit making out like half the country does not pay taxes. They may not pay FEDERAL income tax but they do pay taxes. While it is not an out and out lie it is a deception that fires up people that do not understand the complexties of how our tax system is built. People hear that crap and think poor and lower middle income people are not paying anything. That they are just taking. Nothing is further from the truth.

Like I said why don't you argue that your driver license fee or your car inspection fee should be tied to % of income. The wealthy do not care about regressive taxes on the poor....why should the poor care about high marginal tax rates on the rich?

[pjorourke]

Originally Posted by WTF

Now would you guys quit making out like half the country does not pay taxes. They may not pay FEDERAL income tax but they do pay taxes.

And most federal taxes are income taxes. So it is fair to say that they don't pay any meaningful Federal taxes -- which is the subject we were discussing. Local taxes are a different matter entirely -- they aren't a monopoly. If you don't like local taxes you can easily move.

Like I said why don't you argue that your driver license fee or your car inspection fee should be tied to % of income.

Because it makes as little sense as tying the price of a loaf of bread to a percentage of your income.

[Texas Contrarian]

Originally Posted by WTF

Now would you guys quit making out like half the country does not pay taxes. They may not pay FEDERAL income tax but they do pay taxes. While it is not an out and out lie it is a deception that fires up people that do not understand the complexties of how our tax system is built. People hear that crap and think poor and lower middle income people are not paying anything. That they are just taking. Nothing is further from the truth.

You can try to spin this any way you want, but my earlier point was that the non-affluent in this country pay far less in taxes than those with equivalent incomes in countries like the U.K., France and Germany. European taxpayers already land in pretty high income tax brackets even if their incomes are $50K or less. Plus they pay a VAT, usually at a 15-20% rate. Plus they pay gasoline taxes of somewhere around $4/gal. or more. Plus they pay all the little taxes and fees like we do for registrations, licenses, etc.

You may see some big changes, though -- especially if we enact a VAT. Big-spending politicians are going to have to go after all those not-so-wealthy people. I'm not saying that's just or right or fair; I'm just telling you that that's the way it is. You'll have trouble covering more than a nickel of every deficit dollar by taxing only the affluent.

The political class is eventually going to have to come up with a way to pay the bills for all this largesse. Where do you think they're going to look?

[pjorourke]

Originally Posted by WTF

http://www.youtube.com/watch?v=YgoFnO532Sk

MSNBC? Why didn't you just link the Democratic Party website.

[WTF]

Originally Posted by pjorourke

And most federal taxes are income taxes. So it is fair to say that they don't pay and meaningful Federal taxes -- which is the subject we were discussing.

Yes and when you only discuss FEDERAL taxes it is disingenuous . Which was the subject I was discussing as a counterpoint to the disingenuous subject ya'll were discussing. It is like griping about a high business tax rate and not discussing all the loop holes that effectively lower that rate making the original discussion pointless. Unless of course you are practicing deception.

Originally Posted by pjorourke

Local taxes are a different matter entirely -- they aren't a monopoly. If you don't like local taxes you can easily move.

Yes and if you do not like Federal taxes, I guess you can move to another country. I know of no localities where one does not pay taxes and there are jobs. Come on that is a red herring. Poor people pay taxes...that was my point.

Originally Posted by pjorourke

Because it makes as little sense as tying the price of a loaf of bread to a percentage of your income.

It is not a loaf of bread. It is a tax on owning a car. A regressive tax....unless of course you want to have people pay that tax based on a % of their income. That is my point....we selective chose just what tax we gripe about. We do not take into account just how the poor are taxed.