News Can the market alone fix the economy?

[mheslep]

During his speech before the Congress, Obama said he was increasing taxes to the top 2% of earners...the next day his spokesperson said the top 5%...families earning over $250,000.

This whole idea of "taxing the rich" makes me crazy. A "rich" couple with investment income of $20,000, primary earner wages $150,000 and spouse wages $80,000 = $250,000 gross income.

A 39.6% federal rate = ($99,000) in federal taxes = $151,000 net BEFORE state, local, Social Security and property taxes...maybe another 8% (?) = ($20,000) = $131,000 net.

Does anyone really think $131,000 is "RICH"?

A lot of government jobs pay $131,000 to $150,000 ...maybe the "rich" government workers should ALL get 50% pay cuts...this would save money.

If it makes you feel any better, the administration's budget clearly shows it proposes to increase taxes on everyone to one degree or another, no exceptions, though the wealth(ier) do get hit the hardest. The President's 'I repeat: not one single dime' statement in Tuesday's speech was disingenuous.

 

[WhoWee]

Today on Wolf Blitzer's show, on CNN, Bill Bennett was surprisingly positive about Obama's plans so far. While he acknowledges that Obama's goals and actions will be the subject of debate for the next eight years, he praised Obama for having "big ideas". He even likened Obama to Reagan [one of Bennett’s heroes], who did big things very early in his administration.

I am a big Obama fan who expected action, but wow! He is trying to move heaven and earth. Risky, yes, and this will all surely play down over time, but it takes risk and big ideas in order to make big things happen. I couldn’t be more impressed! There is no doubt in my mind that [so far] we have the A-Team running the show.

Relating to a number of interviews over the last few days, including one with Geitner: The notion of a ten-year plan is excellent. They are implementing a long-term strategy that balances the current needs against the long-term GDP and national debt. While they acknowledge that the current bailouts will significantly increase debt, to do less, they argue, would result in a higher debt to GDP ratio by suppressing the GDP for up to a decade in a so-called L-shaped recovery. We can only hope they get it right, but these guys are aces.

Not real surprising...

http://www.huffingtonpost.com/2009/01/26/bennett-limbaugh-wrong-to_n_160825.html

He's at odds with Limbaugh.

 

[WhoWee]

If it makes you feel any better, the administration's budget clearly shows it proposes to increase taxes on everyone to one degree or another, no exceptions, though the wealthy do get hit the hardest. The President's 'I repeat: not one single dime' statement in Tuesday's speech was disingenuous.

It was a big mistake...remember "READ my lips"...it cost him re-election.

I think Obama's bigger mistake is denying the presence of earmarks...about 9,000 in the budget...explained away as "old business".

Obama even had one... http://voices.washingtonpost.com/sleuth/2009/02/obama_catches_grief_for_spendi.html?hpid=topnews

 

[Astronuc]

During his speech before the Congress, Obama said he was increasing taxes to the top 2% of earners...the next day his spokesperson said the top 5%...families earning over $250,000.

This whole idea of "taxing the rich" makes me crazy. A "rich" couple with investment income of $20,000, primary earner wages $150,000 and spouse wages $80,000 = $250,000 gross income.

A 39.6% federal rate = ($99,000) in federal taxes = $151,000 net BEFORE state, local, Social Security and property taxes...maybe another 8% (?) = ($20,000) = $131,000 net.

Does anyone really think $131,000 is "RICH"?

A lot of government jobs pay $131,000 to $150,000 ...maybe the "rich" government workers should ALL get 50% pay cuts...this would save money.

Isn't the tax on adjusted (net) income?

The discontinuities in tax rates do bother me, among other things.

 

[Ivan Seeking]

During his speech before the Congress, Obama said he was increasing taxes to the top 2% of earners...the next day his spokesperson said the top 5%...families earning over $250,000.

This whole idea of "taxing the rich" makes me crazy. A "rich" couple with investment income of $20,000, primary earner wages $150,000 and spouse wages $80,000 = $250,000 gross income.

A 39.6% federal rate = ($99,000) in federal taxes = $151,000 net BEFORE state, local, Social Security and property taxes...maybe another 8% (?) = ($20,000) = $131,000 net.

Does anyone really think $131,000 is "RICH"?

A lot of government jobs pay $131,000 to $150,000 ...maybe the "rich" government workers should ALL get 50% pay cuts...this would save money.

Um, two people making $250K have no deductions? It doesn't work that way. You have to look at taxable income.

If I do things right, I can have a 200K year and only pay taxes on half of that, or less.

 

[mheslep]

Isn't the tax on adjusted (net) income?

The discontinuities in tax rates do bother me, among other things.

The actual tax bracket starts at $208k net (adjusted gross after deductions).

 

[WhoWee]

The 39.6 is nearly 42% with the deduction changes.

http://online.wsj.com/article/SB123561551065378405.html

As for the "tax cut for 95% of all American families"...the "Cap-and-Trade" is intended to pay for it...but as one congressperson happily explained yesterday...we can use our $800 per year per household to offset the higher electric costs the utilities will need to pass on (because of "Cap-and-Trade")...Obama giveth - Obama taketh away?

 

[mheslep]

The 39.6 is nearly 42% with the deduction changes.

Yep, equivalent rate.

http://online.wsj.com/article/SB123561551065378405.html

As for the "tax cut for 95% of all American families"...the "Cap-and-Trade" is intended to pay for it...but as one congressperson happily explained yesterday...we can use our $800 per year per household to offset the higher electric costs the utilities will need to pass on (because of "Cap-and-Trade")...Obama giveth - Obama taketh away?

Specifically the budget calls for collecting additional tax revenues of $80B/yr through carbon taxes. Everybody that takes trains, planes, and automobiles will pay that tax regardless of income.

 

[WhoWee]

Isn't the tax on adjusted (net) income?

Did that on purpose...to pay for all of the spending...elimination of (even more) deductions and applying the federal rate to gross is the only way I can determine his projections will work.

 

[WhoWee]

Yep, equivalent rate.

Specifically the budget calls for collecting additional tax revenues of $80B/yr through carbon taxes. Everybody that takes trains, planes, and automobiles will pay that tax regardless of income.

This is not a conventional/accepted news link...read at your own risk...
http://www.openmarket.org/2009/02/26/the-energy-tax-budget/

 

[Alfi]

Energy companies will have to pay the government for permits for each ton of carbon dioxide or equivalent they emit in the generation of power. They will pass on these costs to the consumer,

awwwww those poor poor energy companies.

is this a 'You're slowly poisoning my planet and you should PAY attention to the problem' tax?

Good! Don't pass it on to the consumer. Adapt! or die. ( adapt or kill us all ? )

 

[OmCheeto]

This whole idea of "taxing the rich" makes me crazy. .

The whole idea of feeling sorry for the rich makes me crazy.

Does anyone really think $131,000 is "RICH"?

Poor people like I do.

Your poor little rich person over 30 years compared to me:

poor little rich person
$131,000: post tax income
$25,000: annual expenses
$106,000: excess put in bank
$3,180,000: saved in 30 years
127: years poor little rich person can live off savings

poor little me
$30,000: post tax income
$25,000: annual expenses
$5,000: excess put in bank
$150,000: saved in 30 years
6: years I can live off savings​

Oh look! After saving for 30 years I now have more in the bank than the poor little rich person took home in a year! I'm feeling richer already.

But I should get back to the subject rather than just being snitty.

How does tax rearrangement rhetoric fix the economy?
Attitude.
The middle class is the backbone of this country, and without them, there would be no poor little rich people.
The middle class wants some scapegoats. They want those scapegoats to pay. When they are satisfied that they have payed, then things will get back to normal.

Simple as that. The economy will be fixed.

Btw, did you know I'm thinking of starting my own $250,000/yr business?
With an extra $100,000 per year of disposable income, I can do lots of things I can now only dream about. Not to mention the government will pay for my new $50,000 SUV. :!)





Now let's whistle a song. There's not enough music in this thread.

https://www.youtube.com/watch?v=<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/1loyjm4SOa0&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/1loyjm4SOa0&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>

 

[WhoWee]

The whole idea of feeling sorry for the rich makes me crazy.


Poor people like I do.

Your poor little rich person over 30 years compared to me:

poor little rich person
$131,000: post tax income
$25,000: annual expenses
$106,000: excess put in bank
$3,180,000: saved in 30 years
127: years poor little rich person can live off savings

poor little me
$30,000: post tax income
$25,000: annual expenses
$5,000: excess put in bank
$150,000: saved in 30 years
6: years I can live off savings​

Oh look! After saving for 30 years I now have more in the bank than the poor little rich person took home in a year! I'm feeling richer already.

But I should get back to the subject rather than just being snitty.

How does tax rearrangement rhetoric fix the economy?
Attitude.
The middle class is the backbone of this country, and without them, there would be no poor little rich people.
The middle class wants some scapegoats. They want those scapegoats to pay. When they are satisfied that they have payed, then things will get back to normal.

Simple as that. The economy will be fixed.

Btw, did you know I'm thinking of starting my own $250,000/yr business?
With an extra $100,000 per year of disposable income, I can do lots of things I can now only dream about. Not to mention the government will pay for my new $50,000 SUV. :!)





Now let's whistle a song. There's not enough music in this thread.

https://www.youtube.com/watch?v=<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/1loyjm4SOa0&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/1loyjm4SOa0&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>

I'm sure those poor rich people have expenses above $25,000...(the mortgage alone may exceed $30,000) plus student loans, utilities, food, insurance, (stock market losses), new car payments, clothes, family vacations, college funds, etc.

Nonetheless, let's take a further look at your situation...not considering any reinvestment rates...you are correct...you've only managed to save enough for 6 years of retirement:

$30,000 at 8% (estimated high) = $2,400 per year contributed x 30 years = $72,000.

$72,000 / ($1,000 per month x 12 months) =$12,000 = 6 years of benefits.

After 6 years WE HAVE TO PAY to supplement YOUR retirement.


It sound like starting that business is a good idea.

 

[OmCheeto]

I'm sure those poor rich people have expenses above $25,000...(the mortgage alone may exceed $30,000) plus student loans, utilities, food, insurance, (stock market losses), new car payments, clothes, family vacations, college funds, etc.

I have an acquaintance with over a million$ in various assets and investments. She lives as frugally as I do. Though she spends 6 months of the year traveling to different spots on the planet.

After 6 years WE HAVE TO PAY to supplement YOUR retirement.

Not to worry. I'd have saved more if I didn't have a good retirement plan.

It sound like starting that business is a good idea.

Actually, it doesn't matter how much I make, I just want the free SUV.

 

[WhoWee]

But I should get back to the subject rather than just being snitty.

How does tax rearrangement rhetoric fix the economy?
Attitude.
The middle class is the backbone of this country, and without them, there would be no poor little rich people.
The middle class wants some scapegoats. They want those scapegoats to pay. When they are satisfied that they have payed, then things will get back to normal.

Simple as that. The economy will be fixed.

I'm not sure what your definition of middle class is...$250,000 for 2 college educated people with some type of investment income is not "rich".

Thousands of government workers are paid in excess of $100,000 per year and auto workers aren't far behind...many nurses make over $50,000 per year. The middle class isn't $30,000...that's closer to the poverty line for a family.

 

[Astronuc]

Warren Buffett still optimistic after rough 2008
http://news.yahoo.com/s/ap/20090228/ap_on_bi_ge/buffett_letter

OMAHA, Neb. – Warren Buffett says the economic turmoil that contributed to a 62 percent profit drop last year at the holding company he controls is certain to continue in 2009, but the revered investor remains optimistic.

Buffett released his annual letter to Berkshire Hathaway Inc. shareholders Saturday morning, and detailed the worst of his 44 years leading the Omaha-based company. But in between the news of Berkshire's sharply lower profit and its nearly $7.5 billion investment and derivative losses, Buffett offered a hopeful view of the nation's future.

He said America has faced bigger economic challenges in the past, including two World Wars and the Great Depression.

"Though the path has not been smooth, our economic system has worked extraordinarily well over time," Buffett wrote. "It has unleashed human potential as no other system has, and it will continue to do so. America's best days lie ahead."

. . . .

Keep your eyes on Warren.

http://www.berkshirehathaway.com/letters/2008ltr.pdf

 

[Ivan Seeking]

The actual tax bracket starts at $208k net (adjusted gross after deductions).

So we could easily be talking about people who gross 300K or more. After they deduct their million dollar home, the 35-foot sailboat used for customers, the business trips to Hawaii, the new car used for business... then we start to tax their income.

 

[Ivan Seeking]

I'm not sure what your definition of middle class is...$250,000 for 2 college educated people with some type of investment income is not "rich".

Couples who gross 250k likely wouldn't be effected by the expiration of the Bush tax cuts.

Note that Obama's plan takes rates back to what they were under Clinton, when we had a budget surplus and a robust economy.

 

[OmCheeto]

I'm not sure what your definition of middle class is...$250,000 for 2 college educated people with some type of investment income is not "rich".

I would define the middle class as those who live above poverty level and below the lower level of the 5th quintile of household income: ~$30k - $90k.

Given that only 1.9%http://pubdb3.census.gov/macro/032007/hhinc/new06_000.htm" of households make more than $250,000 a year, I'd say 98.1% of the people in America would disagree with you about who's rich. I think it was Joe the Plumber that popularized the myth that people making that much are really just plain old poor folk.

But I really don't see how arguing over who specifically to call "rich" is going to solve any problems.

If you look at the http://www.forbes.com/global/2008/0407/060_2.html" , you'll see that Americans pay some of the lowest taxes on the planet.

Might be about time the wealthiest aggregate group of people on the planet picked up a bit more of the tab.

I say hooray for Barack's tax hike.

 

[Astronuc]

Hopefully the Obama administration will fix the SEC.

The Inside Story on the Breakdown at the SEC
http://www.time.com/time/magazine/article/0,9171,1881989,00.html

 

[jal]

The title
Re: How to fix the economy

Answer:
1. When 60% of the homeowners can afford to get a mortgage that is not over 3X their gross income for the area that they live.
2. When 60% of wage earners can save 10% of their gross income.
jal

 

[OmCheeto]

Hopefully the Obama administration will fix the SEC.

The Inside Story on the Breakdown at the SEC
http://www.time.com/time/magazine/article/0,9171,1881989,00.html

Holy poop. I'm only on page 2 and I've already said WTF six times.

Cox took charge in August 2005 after 17 years of representing Orange County, California. A Harvard-trained lawyer, he was a key leader of Newt Gingrich's Republican revolution, helping enact a provision of the GOP's Contract with America that restricted investor lawsuits against companies accused of securities fraud.

Just the kind of guy you want watching over wall street. I'm at a loss for expletives.

 

[Astronuc]

Perspectives on the economy -

I Bought an Expensive House. My Bad, Not Yours or
http://www.time.com/time/nation/article/0,8599,1881581,00.html

Why It's Taking So Long To Fix the Economy
http://www.usnews.com/blogs/flowchart/2009/2/27/why-its-taking-so-long-to-fix-the-economy.html

 

[mheslep]

...Note that Obama's plan takes rates back to what they were under Clinton,

That is true only for the income tax rate on the top brackets. The amount of overall taxes paid will go up beyond Clinton in many other ways: decreased deductions, increased capital gains, carbon taxes, additional business taxes.

when we had a budget surplus and a robust economy.

and a dot com bubble.

 

[DrClapeyron]

The title
Re: How to fix the economy

Answer:
1. When 60% of the homeowners can afford to get a mortgage that is not over 3X their gross income for the area that they live.
2. When 60% of wage earners can save 10% of their gross income.
jal

The people who have lost out are not only those buying houses 3X the size of their gross annual income. It is those people who have purchased houses soley as an investment to make money who lose the most, and they may be the same people. Houses are meant for dwelling purposes to provide a place to eat, sleep and raise a family.

Banks love rising home prices to collect higher fees on mortgages. The mortgages themselves are purchased on behalf of the bank and soon-to-be homeowner by the Federal Home Loans Bank, packaged into a tranche by the bank and sold to mutual funds. The only thing keeping high arbitrary prices high is the banks greed and their ability to be bailed out by purchasing US Treasuries with interest and selling them to the Federal Reserve.

How to fix the economy has passed. US Treasuries secondary rate on s 3-month note is less than half a percent. If you haven't been bailed out yet it's too late.

 

[OmCheeto]

Perspectives on the economy -

I Bought an Expensive House. My Bad, Not Yours or
http://www.time.com/time/nation/article/0,8599,1881581,00.html

That guy is hilarious. And I believe he is correct.

By Joel Stein Wednesday, Feb. 25, 2009

I don't like populists. First of all, they seem a lot more popular than I am. Second, they derive their popularity from exploiting our base fears — Joe McCarthy's fear of communist takeover, George Wallace's fear of black people, Lou Dobbs' fear of other cultures, Joe the Plumber's fear of working. Whereas I derive my popularity from ending paragraphs with middling jokes.
...

Much as it pains me, housing prices need to come down a lot more for the sake of the country. It's not that the housing market has suddenly gotten sick and needs medicine. It was sick, and it's getting better. Just like $4 gas, Pets.com and Jim Carrey's career, we are undergoing a needed correction.

The following guy I didn't find so amusing.

Why It's Taking So Long To Fix the Economy
http://www.usnews.com/blogs/flowchart/2009/2/27/why-its-taking-so-long-to-fix-the-economy.html

I suppose the title is a somewhat amusing parroting of a valley girl type question: Why is it taking so long?

I liked the second readers commentary the best:

There was no timetable to create the problems and there is no instant fix.

 

[BoomBoom]

During his speech before the Congress, Obama said he was increasing taxes to the top 2% of earners...the next day his spokesperson said the top 5%...families earning over $250,000.

This whole idea of "taxing the rich" makes me crazy.

You make it sound like he pulled a fast one or something. Obama clearly stated throughout his campaign that he would raise taxes on those making over $250k.

We are in a crisis and we need to do what is necessary to get out of it. I am by no means rich, but I would happily pay higher taxes if it could help get us out of this mess. Why all the whining for the rich? It's not like they are going to struggle in the slightest. It's just all about greed I guess.

 

[turbo]

We are in a crisis and we need to do what is necessary to get out of it. I am by no means rich, but I would happily pay higher taxes if it could help get us out of this mess. Why all the whining for the rich? It's not like they are going to struggle in the slightest. It's just all about greed I guess.

Really! "Geeze, honey, we are going to have to cut back and only get antique Persian carpets for the first floor of the main house. The other floors and the guest house will have to wait a few months." What a travesty!

The wealth never trickled down during the Reagan years and it is not going to do so today. The people making the most money from our financial systems should pay the most in taxes to support that system, and not put it on the backs of the workers who make it viable. Warren Buffett has said this on many occasions, and he is not a complete dummy.

 

[BoomBoom]

The wealth never trickled down during the Reagan years and it is not going to do so today.

Yeah, I wonder how many years this philosophy needs to prove itself as flawed before people start realizing it.

I hear all the time that "tax cuts to business create jobs". Really? Do they? Where is the evidence for this? That is somewhat counter-intuitive to how business operates. Business is in the business of maximizing profit, so why in the world would a business hire people it doesn't need just because it's taxes were lowered? That's ridiculous...they will simply make more profit and not hire anyone. The only reason a business will hire people is when they are needed, and this only happens when they have more demand for their product.

I can see it now, a company gets a tax break:
CEO: "Hey we just got a tax break, so let's hire some people."
Manager: "ummm, but sir, we don't have anything for new hires to do."
CEO: "So what, we have extra money now...give them a cubicle!"

 

[mheslep]

...That is somewhat counter-intuitive to how business operates. Business is in the business of maximizing profit, so why in the world would a business hire people it doesn't need just because it's taxes were lowered? That's ridiculous...they will simply make more profit and not hire anyone. The only reason a business will hire people is when they are needed, and this only happens when they have more demand for their product.

I can see it now, a company gets a tax break:
CEO: "Hey we just got a tax break, so let's hire some people."
Manager: "ummm, but sir, we don't have anything for new hires to do."
CEO: "So what, we have extra money now...give them a cubicle!"

How would you possibly have any idea about the actions of a CEO, or anybody building any kind of business at all?