Something more terrifying than Jews, Muslims, or the Gays

[Strike For The South]

http://www.ips-dc.org/reports/unnece...nment_shutdown

• 15,753: The number of households in 1961 with $1 million in taxable income (adjusted for inflation).
• 361,000: The number of households in 2011 estimated to have $1 million in taxable income.
• 43.1: Percent of total reported income that Americans earning $1 million paid in taxes in 1961 (adjusted for 2011 dollars)
• 23.1: Percent of total reported income that Americans earning $1 million are likely to pay in taxes in 2011, estimated from latest IRS data.
• 47.4: Percent of profits corporations paid in taxes in 1961.
• 11.1: Percent of profits corporations paid in taxes in 2011.

However if one were to even broach these numbers in congress he would get shouted down as a socialist. It is absolute insanity that the tax rate is this low. No other devolped country is like this, I assume that's because the adults are in control

This is indicative of a larger trend in American society mind you. Of course simply raising the rate on these people won't solve all our ills but it is part of the larger problem of Americas seeming need to cater to the "job creators" LOLZ.

Personally, I blame the American dream. Everyone thinks that one day they will be awash in cash, tits, and blow (2/3 aint bad) so they see these kind of measures as protecting themselves when they finally make that 1st million.

Chances are though, that won't happen so why vote against your own interest

[Louis VI the Fat]

Aye. This cuts righ to the chase,. America does not have a socialist spending problem. It has a plunder capitalist tax morale problem. There is no reason for your enslavement by China other than to let the political donation paying class have two generations of partying while the ship sinks.

[Kagemusha]

With enough of creed anything can be destroyed.

[PanzerJaeger]

I'm not sure those stats actually reinforce the point you're trying to make.

Lowering the tax burden on people and businesses increases retained wealth as there is more money left to invest in wealth creating ventures, which in turn broadens the tax base, compounded each year. (Obviously this has limits at the margins.)

Let's take your numbers and assume all millionaires earn only $1,000,000.

1961: (15,753 * $1,000,000)*.43 = $6,773,790,000

2011: (361,000 * $1,000,000)*.23 = $83,030,000,000

Thus, lower taxes on more people yields higher revenues, as can be seen in the chart below.



US tax policy from Kennedy to Bush II generally pushed rates down while revenues rose. Even after the much belied Bush tax cuts, the compounding effect was already starting to increase revenues dramatically (over the Clinton years) before the financial crisis.

[rory_20_uk]

Is that adjusted for inflation?

If not this is abysmal, considering the double-digit inflation in the 1970's and onwards.

[a completely inoffensive name]

I'm not sure those stats actually reinforce the point you're trying to make.

Lowering the tax burden on people and businesses increases retained wealth, which in turn broadens the tax base, compounded each year. (Obviously this has limits at the margins.)

Let's take your numbers and assume all millionaires earn only $1,000,000.

1961: (15,753 * 1,000,000)*.43 = 6,773,790,000

2011: (361,000 * 1,000,000)*.23 = 83,030,000,000

Thus, lower taxes on more people yields higher revenues, as can be seen in the chart below.



US tax policy from Kennedy to Bush II generally pushed rates down while revenues rose. Even after the much belied Bush tax cuts, the compounding effect was already starting to increase revenues dramatically (over the Clinton years) before the financial crisis.

Two problems:

1. Back in 1961, the world economy was not anywhere near as globalized or "free" as it is today. The amount of money a business man could get in the 1960s was largely restricted to solely the North American money supply, and even NAFTA was many decades away. Nowadays a business man now has the ability to attain money from across the entire world in any market that wishes to buy his goods/services, and save money by operating anywhere in the world. The difference basically is the amount of money that could be grabbed by ambitious business men, which is separate from the issue of taxes.

2. The Laffer curve is as it says in the name, a curve. In the 1950s and 1960s the tax rate was in the upper 80s and lower 90s which I think any sane person can recognize as being on one extreme of the Laffer curve. But by lowering it over five decades to 20 something percent we have probably reached the other side of the Laffer curve now. Your chart is flawed because since 1980 the US population jumped up 1.36 times the 1980 population. Which means a lot more people are paying taxes period. Also, as I said in my first point the amount of free trade that has opened up since 1980 has simply allowed for all the worlds money to come into american business hands which of course will be taxed.

So by pointing at a chart and saying, see in the 1980s we had this many dollars coming in and now we have this many dollars coming in and it must be because our taxes are so low is just riddled with errors.

[PanzerJaeger]

Is that adjusted for inflation?

If not this is abysmal, considering the double-digit inflation in the 1970's and onwards.

Good catch. Here is an inflation adjusted chart. Same story, though, rising revenues despite lower rates.

The Laffer curve is as it says in the name, a curve. In the 1950s and 1960s the tax rate was in the upper 80s and lower 90s which I think any sane person can recognize as being on one extreme of the Laffer curve. But by lowering it over five decades to 20 something percent we have probably reached the other side of the Laffer curve now.

I agree. I'm not advocating for lower taxes. They are fine where they are and could probably be raised back to Clinton levels for a time to deal with the debt issue without sacrificing very much in future revenues.

So by pointing at a chart and saying, see in the 1980s we had this many dollars coming in and now we have this many dollars coming in and it must be because our taxes are so low is just riddled with errors.

I also agree. I only used the chart to support my point, not as absolute evidence of its accuracy. Obviously there are many factors that effect revenues besides rates. My only point is that Strike's 'terrifying' stats do not paint the full picture - lowering rates over the years has not impeded revenue growth, and most economists would argue that it has contributed to it.

[Strike For The South]

It would stand to reason the gummint takes more in as the economy gets bigger

In others news JP Morgan profits while screwing over the middle class

“US labor compensation is now at a 50-year low relative to both company sales and US GDP.” Cembalest continues to explain why corporate profits are so strong while the rest of the working class are feeling the pinch, “reductions in wages and benefits explain the majority of the net improvement in margins.” 75% of the increase in profit margins directly correlate with the reduction in workers’ wages.

The script practicaly writes itself.

In the 19th century it was the cross of gold, in the 21st it's the cross of delusion, either way the robber barons get rich and the middle class suffers.

As peoples 401Ks vanish before there eyes and there SS and medicare wither away to nothing, we will have no one to blame but ourselves. The backbreaking yoke of feudalism is ever tightening around our necks, yet half of us are actively cheering it on while the other half are to gutless to call a spade a spade

[Xiahou]

The people are able to keep more of what they earn, while the government continues to take in a consistent (or higher) level of revenue... and Strike is angry about it. I guess everybody needs something to get mad about.

[a completely inoffensive name]

The people are able to keep more of what they earn, while the government continues to take in a consistent (or higher) level of revenue... and Strike is angry about it. I guess everybody needs something to get mad about.

Lol, nice scarecrow.

[aimlesswanderer]

http://www.ips-dc.org/reports/unnece...nment_shutdown



However if one were to even broach these numbers in congress he would get shouted down as a socialist. It is absolute insanity that the tax rate is this low. No other devolped country is like this, I assume that's because the adults are in control

This is indicative of a larger trend in American society mind you. Of course simply raising the rate on these people won't solve all our ills but it is part of the larger problem of Americas seeming need to cater to the "job creators" LOLZ.

Personally, I blame the American dream. Everyone thinks that one day they will be awash in cash, tits, and blow (2/3 aint bad) so they see these kind of measures as protecting themselves when they finally make that 1st million.

Chances are though, that won't happen so why vote against your own interest

And Americans wonder why most non Americans think the Tea Party (and the Republicans in general, though the Democrats aren't always much better) are crazy?

Ronald Reagan was sensible enough to raise taxes when needed, though, now he has been practically deified as someone who never raised taxes, that gets conveniently ignored

It is mysterious how repealing the Bush era tax cuts which massively benefit the wealthiest don't even seem to be discussed as on of the solutions to the current deficit. Are the wealthiest Americans paying their fair share of tax? The statistics say definitely not. The top 1% own around 35% of the total wealth in the country, so I have doubts that they are over taxed, especially given the trust and other loopholes they can take advantage of.

See the impressively large wealth gap

Or this exhaustive report on just how unequal wealth and income are.

[PanzerJaeger]

And Americans wonder why most non Americans think the Tea Party (and the Republicans in general, though the Democrats aren't always much better) are crazy?

Ronald Reagan was sensible enough to raise taxes when needed, though, now he has been practically deified as someone who never raised taxes, that gets conveniently ignored

It is mysterious how repealing the Bush era tax cuts which massively benefit the wealthiest don't even seem to be discussed as one of the solutions to the current deficit. Are the wealthiest Americans paying their fair share of tax? The statistics say definitely not. The top 1% own around 35% of the total wealth in the country, so I have doubts that they are over taxed, especially given the trust and other loopholes they can take advantage of.

See the impressively large wealth gap

Or this exhaustive report on just how unequal wealth and income are.

The wealth gap is constantly cited as a reason to raise rates despite the fact that lowered rates had little to do with the gap's growth and little explanation is given as to how raising them would fix the underlying factors that have caused the situation.

The wealth gap is an unfortunate side effect of America's transition to a post industrial economy. Put simply, manual labor is virtually worthless. Millions of Americans were conditioned over generations to believe that they could get a job at the local factory right out of high school and enjoy a decent livelihood without any further self improvement. In a relatively short period, that reality ceased to exist do to global, technological, and political macro-economic shifts and those millions of Americans were left behind. Meanwhile, those same shifts - outsourcing labor, robotic manufacturing, and free trade - meant that wealthy and/or educated Americans could wring more profit out of their investments. Thus, the gap.

The real question is: How will raising rates fix this situation? Sure, you can tax the wealthy until their income is much closer to the underclass, but that will do little to address the real problem and will actually hurt the poor even more as there will be little capital left in the economy for new ventures.

How exactly is the revenue generated by taxing the rich going to help the poor? Direct payments? Government work? We already have a tax system that pays the poor and have millions on the federal payroll. How much more should the government hand out before it becomes prohibitive to economic growth?

The wealth gap will (hopefully) naturally correct itself as time progresses. Most American kids these days have a greater understanding of the value of education and work specialization. Whether it does or it doesn't, raising taxes on the rich will do little to effect the underlying economic issues that created it.

[a completely inoffensive name]

The wealth gap is constantly cited as a reason to raise rates despite the fact that lowered rates had little to do with the gap's growth and little explanation is given as to how raising them would fix the underlying factors that have caused the situation.

I will take a shot at it.

The wealth gap is an unfortunate side effect of America's transition to a post industrial economy. Put simply, manual labor is virtually worthless. Millions of Americans were conditioned over generations to believe that they could get a job at the local factory right out of high school and enjoy a decent livelihood without any further self improvement. In a relatively short period, that reality ceased to exist do to global, technological, and political macro-economic shifts and those millions of Americans were left behind. Meanwhile, those same shifts - outsourcing labor, robotic manufacturing, and free trade - meant that wealthy and/or educated Americans could wring more profit out of their investments. Thus, the gap.

This is correct.

The real question is: How will raising rates fix this situation? Sure, you can tax the wealthy until their income is much closer to the underclass, but that will do little to address the real problem and will actually hurt the poor even more as there will be little capital left in the economy for new ventures.

Not really. Many statements you give operate from the assumption that all money that the top 1% have is reinvested and put to good use. As I have already said, we are at the other end of the laffer curve, which means we are at a point where taxes are too low and the Bush tax cuts are a clear example of having taxes cut and yet the typical Reaganomics logic of a now supercharged economy did not come to pass. The rich have extra money they are not reinvesting. We can end the Bush era tax cuts for the rich and even go higher than that. My personal estimate for the sweet spot on the laffer curve for the top 1% is around 45-48%.

How exactly is the revenue generated by taxing the rich going to help the poor? Direct payments? Government work? We already have a tax system that pays the poor and have millions on the federal payroll. How much more should the government hand out before it becomes prohibitive to economic growth?

Those on the federal payroll are already for the most guaranteed a middle class income for their job, which is great imo. A government should provide an adequate lifestyle for those that work for it.

I have said this in other threads, yes, government work can help. What this country needs is to complete the transition from an industrial economy to a post industrial economy by spurring demand for jobs that need education and by providing the education for workers.

We need new roads, new bridges, an entirely new power line infrastructure, a new high speed rail system so that amtrak doesn't have to piggyback on the freight car lines. All of this work will need to be done by many workers and will take years to build it all. Which will provide many of those that are unemployed jobs for the time being. After all this infrastructure is built, legions of new workers will be need to maintain and operate. These jobs will require engineers and tradesmen of all kinds to keep the new systems running and if the government provides the money for people to go through a trade school or a 4 year uni to get an engineering degree in return for a commitment from said worker for an x amount of years after their education is done, we can start to rebuild and strengthen our middle class again.

The wealth gap will (hopefully) naturally correct itself as time progresses. Most American kids these days have a greater understanding of the value of education and work specialization. Whether it does or it doesn't, raising taxes on the rich will do little to effect the underlying economic issues that created it.

Completely disagree. It is a fallacy to assume that the markets will always self correct and that we have no tools at our disposal. We do have the tools, we just have to make sure that the unused capital we are taxing is actively being used to create things that have value.

[Samurai Waki]

Watched both the speeches tonight; It's adorable that Boehner thinks he's President, too much drinking of the mouthwash can induce dementia.

[Major Robert Dump]

Strike, ACIN, here's what gets me about your argument. This may not actually be your agrument, maybe I am reading into it:

Okay, 360,000 rich people going from 23% to 43% tax rate is not going to fix the ecconomy.

How about we also raise taxes to that level on the other 299 million+ people. Still an attractive endeavor? I actually approve of that, along with eliminating various credits that reward people for breeding, for being poor, etc. I know everyone hates middle class taxes, and raising the taxes on poor people is the sacred goat itself. But poor people use the most social services, I would think they would be more than willing to do their civic duty and pay extra taxes in order to support the children they cannot support themselves.

I approve of higher taxes. For everyone. But only if it is coupled with more government oversight and accountability, which is at pretty much zero right now despite the interweb and wolf blitzer.

Corporate taxes need to be higher. Thats what could fix the economy.

I personally fell the idea of having corporations pay lower taxes so they can "invest" and "hire more people" is an absolute farce. It's partially a face regarding private individuals as well because it completely fails to take into account all the various positive things you can do with your extra money that does not "stimulate" the job market etc, like savings account, paying off a debt, etc

[a completely inoffensive name]

Strike, ACIN, here's what gets me about your argument. This may not actually be your agrument, maybe I am reading into it:

Okay, 360,000 rich people going from 23% to 43% tax rate is not going to fix the ecconomy.

How about we also raise taxes to that level on the other 299 million+ people. Still an attractive endeavor? I actually approve of that, along with various credits that reward people for breeding, for being poor, etc. I know everyone hates middle class taxes, and raising the taxes on poor people is the sacred goat itself. But poor people use the most social services, I would think they would be more than willing to do their civic duty and pay extra taxes in order to support the children they cannot support themselves.

I approve of higher taxes. For everyone. But only if it is coupled with more government oversight and accountability, which is at pretty much zero right now despite the interweb and wolf blitzer.

Well, your post came two minutes after mine, so I don't know if you read my last post which gives an outline of my plan of why higher taxes on the rich would help. I will wait until your next post before I respond, just in case I have already answered some of your questions with my last post.

[Papewaio]

It's not just the money coming in, it's where the money is going out.

Also a more telling issue, is not the tax rate. It's the ratio of income for the business leaders (C-level) to the average worker. The benefits at the top have skyrocketed out of all proportion to inflation, company performance or their individual performance.

Part of this is lack of transparency and accountability. Part of it is funds management. Lots of people who's wealth is added together and put into a fund, that is then controlled by a 25 year old looking as far ahead as this quarter. Tiny blips and they can make millions. Do they look at the long term? Do they care how much the C-levels make? Or do they just want a basis point raise to make their target?

I don't see as many problems were the owners have more involvement in the day to day affairs, or there are a few that have enough clout so that the board has teeth. Those that have too much fund management seem to lack clout other then reacting to share price movements... which is about as good for government as governing by polls.

[Strike For The South]

The people are able to keep more of what they earn, while the government continues to take in a consistent (or higher) level of revenue... and Strike is angry about it. I guess everybody needs something to get mad about.

Incorrect, I'm angry about the crucifiction of the middle class in order to cater to the needs of the 1%

I'm angry about coropartions donating infinty monies

I'm angry there is not a suit on the hill that will fight for me

I'm angry the suits would rather damn us 99% to hell, pensions and all

I'm angry JP Morgan got a bailout and now continues to marginlize the American worker, they are only one of many

@MRD I say tax us all higher with the majority of the onus being on Corps and the top 1%, make the necesary cuts, streamline everything in meidcare and medicaid into single payer. Which lets be honest no matter how you view governments role would be cheaper than the partial birth debacle we have now and then we can all go have a pint

HELLAUJAH

[Strike For The South]

I'm also more than willing to take a buzz saw to certain entitlement programs. I don'tm want to tax just to tax or spend just to spend

[Ironside]

Good catch. Here is an inflation adjusted chart. Same story, though, rising revenues despite lower rates.

So what went wrong 2000 and continues to mess up the goverment income?

[a completely inoffensive name]

So what went wrong 2000 and continues to mess up the goverment income?

Possibly the dot com bubble burst? The second decline is obviously the great recession.

[Kagemusha]

The same problem can be seen as the US economy as any economy these days. Namely this:

http://en.wikipedia.org/wiki/Foreign_exchange_market

In the global market.This is the most lucrative way of making profit. As of now the daily turnover in foreign exchance market is estimated at $3.98 trillion.

And the problem? The problem is that this whole institution is a machine created to make money out from money, without the investment ever having any kind of positive impact on the target of the investment, because the capital investment has already moved elsewhere when the original investments purpose has been filled, in other words the target has risen enough points at the market, so the marginal is large enough to be sold.

I think if we want to save our form of economy.We need to rethink this machine.

[Papewaio]

The FX market is to the economy what the ATP cycle is to the body. It is the metabolic pathway that allows money to flow between nations, companies and of course speculators.

The problem with most of it is the idea the companies (and countries like Greece) are too big to fail and must have intervention to prop them up. That those responsible can walk away or worse use the bail out money for bonuses.

[Kagemusha]

The FX market is to the economy what the ATP cycle is to the body. It is the metabolic pathway that allows money to flow between nations, companies and of course speculators.

The problem with most of it is the idea the companies (and countries like Greece) are too big to fail and must have intervention to prop them up. That those responsible can walk away or worse use the bail out money for bonuses.

It is very poetically put, Pape, but can you tell me whom does the FX market benefit and how?

[gaelic cowboy]

The same problem can be seen as the US economy as any economy these days. Namely this:

http://en.wikipedia.org/wiki/Foreign_exchange_market

In the global market.This is the most lucrative way of making profit. As of now the daily turnover in foreign exchance market is estimated at $3.98 trillion.

And the problem? The problem is that this whole institution is a machine created to make money out from money, without the investment ever having any kind of positive impact on the target of the investment, because the capital investment has already moved elsewhere when the original investments purpose has been filled, in other words the target has risen enough points at the market, so the marginal is large enough to be sold.

I think if we want to save our form of economy.We need to rethink this machine.

Holders of shares and bonds are important but unfortunately we have elevated them above other stakeholders in companies or countries etc etc, the reality is they are the most mobile of stakeholder and therefore hold the least risk in downturn unlike the owners, worker or citizen.

Jack Welch himself the pinup guy for shareholder value has recently said it's a dum idea.

There is a need for FX markets an share or Bonds but there primacy needs looking at in the current climate.

[Major Robert Dump]

Possibly the dot com bubble burst? The second decline is obviously the great recession.

Don't forget the property bubble burst, which was brought on largely by mortgage fraud.

[Kagemusha]

Holders of shares and bonds are important but unfortunately we have elevated them above other stakeholders in companies or countries etc etc, the reality is they are the most mobile of stakeholder and therefore hold the least risk in downturn unlike the owners, worker or citizen.

Jack Welch himself the pinup guy for shareholder value has recently said it's a dum idea.

There is a need for FX markets an share or Bonds but there primacy needs looking at in the current climate.

I bet you are talking about stock exchance, which to me was and is a very good idea still, with some quite major downsides like you explained in your post.

Now on the other hand FX market deals only with currency. The explanation for it´s existence is that it allows businesses to convert one currency to another currency. Now if we get back at the figure of daily turn out of almost mind boggling 4 trillion USD, from it actual currency swaps are about 43 billion, so in other words drop in the Sea. All the rest of it is more or less currency speculation, thus investing one currency to another currency in order to make profit.

[Papewaio]

It is very poetically put, Pape, but can you tell me whom does the FX market benefit and how?

Really it should be there for ease of commerce between nations and companies. Unfortunately or fortunately depending on how it is used it has became the game itself. Rather then trading trade, we trade the currency to trade even more so... the catch being that that actually makes it a better/more efficient way to help trade actual things as the currency flows. What is bad is that speculators can massage the currency flows into horrible ways that really don't reflect the fundamentals of a company or even a countries economy. Too much, way too much of the stock market is emotionally charged day trading. And that the speculators can damage and maim, yet walk away scot free.

I think one of the indicators that things have been rotten for quite a time when the likes of Madoff can so easily hide within the system for so long.

[Kagemusha]

Really it should be there for ease of commerce between nations and companies. Unfortunately or fortunately depending on how it is used it has became the game itself. Rather then trading trade, we trade the currency to trade even more so... the catch being that that actually makes it a better/more efficient way to help trade actual things as the currency flows. What is bad is that speculators can massage the currency flows into horrible ways that really don't reflect the fundamentals of a company or even a countries economy. Too much, way too much of the stock market is emotionally charged day trading. And that the speculators can damage and maim, yet walk away scot free.

I think one of the indicators that things have been rotten for quite a time when the likes of Madoff can so easily hide within the system for so long.

I agree completely. The idea of itself is a benefiting one, but the thing itself has turned into something we could not have dreamt off and the pace it is growing is telling. Between 2007 and 2010 the size of the daily turnout has grown over 20%. Now someone might say, 20% that is not so much, but when you compare the percentage to the actual figure of the daily turnout and for example compare that number to the global GDP. The amount of money used to make profit with currency that only recycles back to making more money with currency is something i do not have a word for. As comparative estimate the total annual GDP of the planet is somewhere under 80 trillion. So if we produce 80 trillion a year "new" value for capital, the turnout of the FX market will meet that number in about 20 working days.

[drone]

So what went wrong 2000 and continues to mess up the goverment income?

2000 was the dot-com bust, with 9/11 piling on. The second dip was the housing bubble bust. They were connected, it was all a game of 3-card monty with the risky low-interest credit/loans, after the housing crash they could no longer hide the bad investments and it all went to pot.