The money's got to come from somewhere

Vanadium 50

As many of you have read here, I regularly post statistics on taxes and taxation, mostly to counter wishful thinking with cold, hard facts. One theme is that there is large mismatch between federal spending and federal income tax revenues, a mismatch comparable to and often larger than these revenues. That means you won't solve the problem by raising taxes by 10 or 20% - taxes would have to double or more.

Bruce Ackerman and Anne Alstott argue in the LA Times that the solution to this dilemma is a wealth tax. They propose a 2% tax on households owning more than $7.2M in net assets, and claim it will generate $70B a year.

Pengwuino

I would hardly say what they said was an "argument". More like a delusional understanding of reality. They clearly don't have any business talking about remedies for our countries financial situation when they think $70B is going to fix anything. Does anyone really think it's anything more than more class warfare rhetoric?

If they ACTUALLY wanted to propose a solution, they'd get serious and say 10-20% to generate the revenue needed to make a difference. Of course, saying that makes the plan sound as stupid as it actually is.

This part made me laugh:

A wealth tax is the best way to reduce this classical danger to democracy, and it provides the primary motivation for our proposal — though we also believe that it's more than fair for the super-rich to be paying more as we confront our long-term fiscal problems.

Their long term solution is to propose a tax that by definition can't work long-term? That statement makes me think this article, like most LA Times op-eds, is trash.

Vanadium 50

OK, why not a higher number? That would also increase spending and stimulate the economy.

AlephZero

The Financial Times "Lex" analysis column today summed up the latest piece of exhortation pretty well IMO.

Criticising Washington for being irrational about tax and spending a year from a presidental election is about as pointless as admonishing a box full of frogs.

To summarize the rest of the FT's comments: In their opinion this is bad politics and bad ecomonics, but if it is a first step torwards sorting out the mess of the US tax code, that at least is a step in the right direction.

Greg Bernhardt

Quote by Vanadium 50

They propose a 2% tax on households owning more than $7.2M in net assets, and claim it will generate $70B a year.

Only means the next year they will spend $70B more. Since the 60s the gov has spent more than it's earned (except for a couple years). More taxes won't stop that. http://www.heritage.org/budgetchartb...ending-revenue

turbo

True, the money has got to come from somewhere, IF we are going to continue spending it. There is a lot of spending that is counter-productive and wasteful, though. Agriculture is a very profitable business, but our government subsidizes agriculture anyway. Why? Because Con Agra and ADM really, really need the money? Our government subsidizes energy companies, despite the fact that they are rolling in cash. It also mandates the use of ethanol in our gasoline and subsidizes the production of same. Why? These are "entitlements" targeted toward corporations. Many in Congress (both sides of the aisle) will be loathe to cut this corporate welfare because they enjoy the campaign money that the big companies and their lobbyists give them. Still, the US can't afford to keep squandering taxpayer money on such boondoggles. Winding down a couple of wars would help a lot, too.

Greg Bernhardt

Quote by turbo

Many in Congress (both sides of the aisle) will be loathe to cut this corporate welfare because they enjoy the campaign money that the big companies and their lobbyists give them. Still, the US can't afford to keep squandering taxpayer money on such boondoggles. Winding down a couple of wars would help a lot, too.

I think the corruption really is the biggest hurdle here. Gov waste is so obvious, everyone knows it, but there is no political will to stop it. I have to believe the US has relatively low corruption compared to most other countries (not that that is saying much), but it could still be high enough to massage our downfall.

About winding down wars. Over the past 100 years, what was the longest the US has been without fighting a fairly major war? I feel each decade there is a war. So, we wind one down and wind up the next.

*WhoWee*

Quote by Greg Bernhardt

I think the corruption really is the biggest hurdle here. Gov waste is so obvious, everyone knows it, but there is no political will to stop it. I have to believe the US has relatively low corruption compared to most other countries (not that that is saying much), but it could still be high enough to massage our downfall.

About winding down wars. Over the past 100 years, what was the longest the US has been without fighting a fairly major war? I feel each decade there is a war. So, we wind one down and wind up the next.

My bold.
The reason there is no political will is just as obvious - like them or not - the TEA Party has attempted to step up and look at what has happened to them.

Before anyone chooses to attack me or the TEA Party - please read Greg's post first.

russ_watters

That's not a reason, it's just a demonstration of the point. The "why" is a much tougher question -- I hope. The simple answer would be that politicians are motivated soley by their next re-election prospects.

*Proton Soup*

the wealth disparity is certainly a problem. you can moralize all you want about it, but the fact is that wealth trickles up because the wealthiest have the means to manipulate the system to their advantage. confiscation is one means, but it will be played as unfair. i suggest you just go about it from the bottom up. we tried quantitative easing from the top down and it did nothing, the guys at the top just hold onto their cash and nothing comes down. so rather, just quantitative ease from the bottom. but don't just give out cash, spend a couple of trillion in newly printed greenbacks on some pretty ambitious infrastructure projects. rebuild crumbling bridges and sewers with systems designed to last a century, but also connect the nation with high speed rail the way it is now connected with interstate highways. it will water down the wealth of the leisure class, preserve peoples' dignity, and invest in the long-term health of the nation.

or, do nothing and wait for the next french revolution.

*WhoWee*

Quote by Proton Soup

the wealth disparity is certainly a problem. you can moralize all you want about it, but the fact is that wealth trickles up because the wealthiest have the means to manipulate the system to their advantage. confiscation is one means, but it will be played as unfair. i suggest you just go about it from the bottom up. we tried quantitative easing from the top down and it did nothing, the guys at the top just hold onto their cash and nothing comes down. so rather, just quantitative ease from the bottom. but don't just give out cash, spend a couple of trillion in newly printed greenbacks on some pretty ambitious infrastructure projects. rebuild crumbling bridges and sewers with systems designed to last a century, but also connect the nation with high speed rail the way it is now connected with interstate highways. it will water down the wealth of the leisure class, preserve peoples' dignity, and invest in the long-term health of the nation.

or, do nothing and wait for the next french revolution.

Remember the Stimulus Bill?
http://www.huffingtonpost.com/2009/0..._n_167495.html

When President Obama signed the Bill he said this:
"Because we know we can't build our economic future on the transportation and information networks of the past, we are remaking the American landscape with the largest new investment in our nation's infrastructure since Eisenhower built an interstate highway system in the 1950s. Because of this investment, nearly 400,000 men and women will go to work rebuilding our crumbling roads and bridges, repairing our faulty dams and levees, bringing critical broadband connections to businesses and homes in nearly every community in America, upgrading mass transit, and building high-speed rail lines that will improve travel and commerce throughout the nation."

Type in your zip code and see where the money went in your area.
http://www.recovery.gov/Pages/default.aspx

*Proton Soup*

Quote by WhoWee

Remember the Stimulus Bill?
http://www.huffingtonpost.com/2009/0..._n_167495.html

When President Obama signed the Bill he said this:
"Because we know we can't build our economic future on the transportation and information networks of the past, we are remaking the American landscape with the largest new investment in our nation's infrastructure since Eisenhower built an interstate highway system in the 1950s. Because of this investment, nearly 400,000 men and women will go to work rebuilding our crumbling roads and bridges, repairing our faulty dams and levees, bringing critical broadband connections to businesses and homes in nearly every community in America, upgrading mass transit, and building high-speed rail lines that will improve travel and commerce throughout the nation."

Type in your zip code and see where the money went in your area.
http://www.recovery.gov/Pages/default.aspx

yeah, that's amazing. in my zip, 0 contracts, 2 grants totaling nearly 8 million and one job per million spent.

and not at all what i was proposing is it?

http://useconomy.about.com/od/candid...a_Stimulus.htm

this isn't stimulus, it's life support:

$288 billion in tax cuts.
$224 billion in extended unemployment benefits, education and health care.
$275 billion for job creation using federal contracts, grants and loans.

so the real amount on projects is something like $275B spread over a few years, and likely getting porked to death. while increasing the debt.

no, print the money straight out like you did for QE1 and QE2. print a few trillion if need be, and don't just go handing out money. heck, maybe just do one project: build the freaking next-generation rail system. run it as a government works project. the people constructing it can even be government employees. punish any white collar crime like fraud and embezzlement against it with 20-year sentences. don't hand out unemployment checks and patch potholes, actually plan out big projects, print the money, and go do them.

Vanadium 50

Quote by WhoWee

Type in your zip code and see where the money went in your area.
http://www.recovery.gov/Pages/default.aspx

Yipes. $1.6M and 0 jobs. The next Zip Code over is better - $37M and 17.5 jobs.

*Galron*

Quote by Proton Soup

the wealth disparity is certainly a problem. you can moralize all you want about it, but the fact is that wealth trickles up because the wealthiest have the means to manipulate the system to their advantage. confiscation is one means, but it will be played as unfair. i suggest you just go about it from the bottom up. we tried quantitative easing from the top down and it did nothing, the guys at the top just hold onto their cash and nothing comes down. so rather, just quantitative ease from the bottom. but don't just give out cash, spend a couple of trillion in newly printed greenbacks on some pretty ambitious infrastructure projects. rebuild crumbling bridges and sewers with systems designed to last a century, but also connect the nation with high speed rail the way it is now connected with interstate highways. it will water down the wealth of the leisure class, preserve peoples' dignity, and invest in the long-term health of the nation.

or, do nothing and wait for the next french revolution.

Indeed social mobility is a problem for most Western countries, although it seems particularly acute in the US, I suspect due to the way the system is set up.

Probably not an accident that in the war of independence, France were allies and sent ships and troops to repel us damned monarchist Brits! Although let's face it it wasn't all about liberté, equalité and Fraternité.

*WhoWee*

Quote by Proton Soup

no, print the money straight out like you did for QE1 and QE2. print a few trillion if need be, and don't just go handing out money. heck, maybe just do one project: build the freaking next-generation rail system. run it as a government works project. the people constructing it can even be government employees. punish any white collar crime like fraud and embezzlement against it with 20-year sentences. don't hand out unemployment checks and patch potholes, actually plan out big projects, print the money, and go do them.

Convince me you can use the highway system as a grid to capture static electric to either lower my electric bill or pay the deficit and I might agree.
http://www.sciencedaily.com/releases...0825185121.htm

*WhoWee*

Earlier today, Neil Cavuto and Orrin Hatch were discussing Solyndra. Hatch said Solyndra received more tax money (over $500 Million) than 35 of the States received for highway construction.

Btw - why would Solyndra Executives need to "take the 5th"?
http://latimesblogs.latimes.com/mone...ore-house.html

"Solyndra execs to take 5th, refuse to testify before House panel"

IMO - if they refuse to testify - the IRS and FBI need to make this investigation their number one priority!

Char. Limit

Quote by Vanadium 50

Yipes. $1.6M and 0 jobs. The next Zip Code over is better - $37M and 17.5 jobs.

I got 13.4 million and zero jobs... looks like all that money went to CVSD though.

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Vanadium 50 Mentor	OK, why not a higher number? That would also increase spending and stimulate the economy.

russ_watters Mentor	That's not a reason, it's just a demonstration of the point. The "why" is a much tougher question -- I hope. The simple answer would be that politicians are motivated soley by their next re-election prospects.