The best editorial piece I’ve read in a day or so [Archive]

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Chuck Bao

7/23/2008, 07:02 AM

I’ve been thumbing my nose at all the right-wingers around here talking about Obama and socialism.

Then, I read this piece at marketwatch.com and I’m like…well, yeah.

There is nothing new in this article. It just puts it in perspective, at least it does for me.

Face it folks. Things are not working out as we had hoped. I am not going to use that cha…cha…cha…ummmm…“c” word so many of you are making fun of.

But, can’t we agree that something else needs to be tried?

Like a new conservative agenda?

I’d vote for that*.

*if it didn’t have the religious right and their nanny state, holier-than-thou doctrine included.

Otherwise, I’m voting for Obama.

http://www.marketwatch.com/news/story/eleven-reasons-america-new-top/story.aspx?guid=D23E1901-728E-4A3C-99D1-7E80F74C3AE3&dist=SecMostRead

11 reasons America's a new socialist economy

How free market ideology backfired, sabotaging capitalistic democracy

By Paul B. Farrell, MarketWatch

Last update: 11:47 a.m. EDT July 22, 2008

Welcome to the conservative's worst nightmare: The law of unintended consequences. Why? Nobody wants to admit it, folks, but the conservatives' grand ideology is backfiring, actually turning the world's greatest capitalistic democracy into the world's newest socialist economy.

A little history: The core principles of conservative economic ideology are grounded in Nobel economist Milton Friedman's 1962 classic "Capitalism and Freedom." Too late to stop President Lyndon Johnson's Great Society, those principles became the battle cries energizing conservatives since Reagan: Unrestricted free markets, free enterprise and free trade; deregulation, privatization and globalization; trickle-down economics and trickle-up wealth to an elite plutocracy destined to rule the new American capitalist utopia.

So what happened? Are you guys nuts? Hey, I'm talking to all you blind Beltway politicians (in both parties) ... plus the Old Boys Club running Wall Street (into the ground) ... plus all you fat-cat CEOs (with megamillion parachutes) ... and all your buddies scamming everybody else to get on the Forbes 400. You are proof of Lord Acton's warning: "Power corrupts and absolute power corrupts absolutely."

It's backfiring! You folks turned our America from a great capitalistic democracy into a meddling socialist economy. Still you don't get it. You're acting like teen addicts tripping on an overdose of "greed-is-good" testosterone while your caricature of conservative economics would at best make a one-line joke on Jay Leno.

Here are 11 reasons your manipulations are sabotaging the great principles of leaders like Friedman and Reagan:

1. Dumber than a fifth grader with cognitive dissonance

Kids know what it means. They know most adults today can't see past the end of their noses. Liberals tune out candidate McBush for being lost in the past. Conservatives can't hear Obama without seeing that turban.

Cognitive dissonance simply means most brains cannot see past their own narrow ideologies. They dismiss any data that contradicts their old ideologies. Whether you're a conservative Republican or liberal Democrat, you only hear what you already know is "true." All else is tuned out.

2. Where did all the leaders go with their moral character?

Friedman's economics requires leaders of moral character. Did it run into Lord Acton's warning: "Power corrupts, absolute power corrupts absolutely?" Former Ford and Chrysler CEO Lee Iacocca said yes in "Where Have All the Leaders Gone?"

Friedman's great conservative principles have been commandeered by myopic ideologues whose idea of leadership is balancing the demands of self-interest lobbyists with the need for campaign donations. Unfortunately, a new "change" president won't be enough; there are 537 elected officials in Washington controlled by 42,000 special interest lobbyists.

3. Fed and U.S. Treasury adopted Enron accounting tricks

Bad news: Enron failed several years ago because of its off-balance-sheet accounting scam. The Fed's doing the same thing: Dumping Bear's $30 billion liabilities onto the taxpayer's "balance sheet." Next Treasury proposes adding $5.3 trillion more from Fannie Mae and Freddie Mac.

Unfortunately clever accounting tricks by Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke aren't going to fool foreign lenders analyzing America's creditworthiness. Worse-case scenario: U.S. Treasury bills with less than a triple-A rating.
With 90 banks on the brink and already too many bail-outs, our so-called leaders are running out of magic bullets. So now the taxpayer's "balance sheet" has become the all-purpose "dumping ground" and it's overcrowding fast as our leaders raise the white flag of socialism.

4. Deregulation creating new socialist housing system

Back in 1999 a Democratic president and Republican Congress were in love with a fantasy called the "new economics." Enthusiastic lobbyists invented the brilliant idea of dismantling the wall between commercial and investment banking: They killed the Glass-Steagall Act that was keeping the sleazy hands of short-term hustlers out of the pockets of long-term lenders.

Flash forward: We lost 85-year-old Bear Sterns and $32 billion IndyMac. Lehman's iffy. And 90 banks. With the virtual takeover of Freddie and Fanny, Wall Street's grand experiment with free-market ideology is backfiring, having socialized the housing market. They have nobody to blame but their self-centered greed.

5. Trade deficits outsourced more of America's wealth than jobs

One look at Forbes lists of fat cats and you know the 21st Century doesn't just belong to Asia, it belongs to everyone but America. Why? Once again, remember Warren Buffett's famous "Farmer's Story" in Fortune: "We were taught in Economics 101 that countries could not for long sustain large, ever-growing trade deficits ... our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4% more than they produce -- that's the trade deficit -- we have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own."

Friedman was right: Congressional spending is the biggest cause of inflation, and, wow, those conservatives sure did love blank-check deficit spending the past eight years!

6. Banking system in meltdown, minting penny stocks

The Friedman conservatives apparently understand Joseph Schumpeter's "creative destruction." Yet, our free-market ideologues can't seem to accept that America is now on the "destructive" downside leg of the cycle, in the economy, markets, trade, politics and, yes, sadly, even with their conservative ideology.

You don't have to be smarter than a fifth grader to figure out that our leaders are clueless about the reality of our crumbling banking system, with many banks trading as penny stocks, while the Fed still panders to conservative pre-election politics rather than getting serious about inflation.

7. Ideologues preach savings, but still push spending

A core principle of conservatism is frugality, saving for the future. Grandparents raised me, struggled during the Depression, passed on strong ideals.

Somewhere over the past generation conservatives forget frugality. This distortion peaked in 2003 when consumers were told to spend, not sacrifice, and fuel the economy even as government spent excessively on war. That was a clear breach of every conservative leader's position in earlier wars.

As a result, in one brief generation, as the power of conservative ideologues grew, America's savings rate dropped precipitously from 11% in 1980 to less than zero today.

8. Warning, the market's under 2000 peak, losing money

Imagine you're on Jeff Foxworthy's fabulous show competing to see if you really are smarter than a fifth grader. Question: "If you put $10,000 in the market in March of 2000 when the Dow peaked at 11,722, how much money would you have today if the market's 10% under 11,722?" So you guess $9,000.

But then two fifth graders raise their hands: One asks if the CPI inflation rate should be considered? If so, maybe $5,000 is closer to the right answer. The other kid wants to know if you're buying stuff in Chicago or Singapore.

The truth is, the best answer for most adults is: "You've lost a hell of a lot of money in the market under the grand conservative ideology the past eight years."

9. Inflation and dollars: Is Zimbabwe the new model for the U.S.?

The Los Angeles Times ran a photo of a Zimbabwe $500 million bank note, worth $20 at noon, less at dinner. Why? Inflation's there is running 32 million (yes million!) percent annually. The German company printing their banknotes finally cut them off.

Things may be worse in America, psychologically. Our ideological obsession with "growth" is not working because there is too much collateral damage, namely inflation. Our dollar has lost substantial value to the euro because our dysfunctional leaders are convinced that a trade policy funded by debt makes sense.

Now we owe China $1.3 trillion, sovereign funds want equity not cheap dollar IOUs, and still our clueless Treasury and the Fed continue debasing our currency, printing money like Zimbabwe.

10. Free-market health care failing 47,000,000 Americans

Big Pharma loves free-market conservatism and no-compete Medicare drug programs. Nobody else is happy. Taxpayers get stuck with the bill.

"The Coming Generational Storm" tells us that without massive reforms and big lifestyle changes for taxpayers (especially retirees), within a couple short decades America's entitlement programs will eat up the entire federal budget. Medicare is the biggest cost item in your future, over $50 trillion in unfunded liabilities.

Conservative ideologues naively believe the answer is more pay-out-of-pocket insurance plans, even with 47 million already uninsured because they can't pay. Here as in so many areas of our economy, free-market junkies really are suffering a severe case of cognitive dissonance, as blind to the facts about the uninsured as they are to their outdated free-market fantasies.

11. Conservative free-market policies inflated oil 300%!

Yep, oil inflated 300% in eight short years under the "leadership of two oil men." But, you can't blame them. We put the foxes in the henhouse, knowing full well "real" oil men love digging holes on the supply side, supporting ethanol subsidies and blaming speculators -- it's in their genes! Talk about cognitive dissonance; real oil men thrive on cowboy images of Marlboro Men in Hummers, Navigators and F-150 trucks.

Net result? Another perfect example of "creative destruction" in action as conservative ideology meets "law of unintended consequences," driving GM, the symbol of America capitalism, closer to bankruptcy ... while turning America into a socialist economy.

sooner n houston

7/23/2008, 07:49 AM

What a bunch of hog wash! BS

Chuck Bao

7/23/2008, 08:32 AM

What a bunch of hog wash! BS

Alright, SNH, it could be that.

What do you think, then?

tommieharris91

7/23/2008, 09:17 AM

It's not hogwash. The huge deficits weaken the dollar and cause inflation, pure and simple. Unfortunately, I'm not sure either candidate understands how to address this.

StoopTroup

7/23/2008, 09:25 AM

What a bunch of hog wash! BS

Is this an example of cognitive dissonance?

StoopTroup

7/23/2008, 09:28 AM

I don't think this is "Hogwash".

I believe it's right on the money.

Unfortunately, a new "change" president won't be enough; there are 537 elected officials in Washington controlled by 42,000 special interest lobbyists.

StoopTroup

7/23/2008, 09:31 AM

Wanna stimulate the economy?

Allow folks access to their 401k accounts without penalty or taxes and stop taxing the retired over 60 in this Country.

Chuck Bao

7/23/2008, 09:35 AM

picasso

7/23/2008, 09:37 AM

Chuck Bao

7/23/2008, 09:41 AM

Wanna stimulate the economy?

Allow folks access to their 401k accounts without penalty or taxes and stop taxing the retired over 60 in this Country.

I hear that. AND stop rewarding people to spend and start rewarding them to save.

End capital gains tax NOW!

Chuck Bao

7/23/2008, 09:50 AM

socialism has been such a monstrous success everywhere it's been tried. yeah let's do it!

Hey, I'm a poor artist because I choose to be. but, there's still that chance I could make it big and make as much money as the Obama's!

screw wealth distribution.

Whether you like wealth distribution or not, you are gonna be rich and famous some day. I just hope I have one of your artworks before then. I also hope, but with much less optimism, that you eventually realize that golf is pure evil and will lead to the destruction of all mankind. ;)

StoopTroup

7/23/2008, 10:07 AM

I hear that. AND stop rewarding people to spend and start rewarding them to save.

End capital gains tax NOW!

Agreed.

I've got folks I work with, that for the last ten years they have not put one dollar into a 401K account as they don't trust it. They look at all the rules and regulations and they just don't do it. Others have done it but only because they were scared into it.

My Wife and I have had one for 20 years now. It's a nice little nest egg.

We have even borrowed from it from time to time, (I know that's a NO-NO but you do what you have to do). :O

Hopefully in the next 10-15 years our kids will be grown up and we will have the 401K, Roth and other investments to live comfortably.

I just hope our Economy gets back on track and the folks who have amassed fortunes via Golden Parachutes...well...I hope they choke on it.

picasso

7/23/2008, 10:13 AM

Whether you like wealth distribution or not, you are gonna be rich and famous some day. I just hope I have one of your artworks before then. I also hope, but with much less optimism, that you eventually realize that golf is pure evil and will lead to the destruction of all mankind. ;)

hey I'm all for getting rid of the Fed and the IRS. Some of the other stuff kinda scares me though.

StoopTroup

7/23/2008, 10:19 AM

hey I'm all for getting rid of the Fed and the IRS. Some of the other stuff kinda scares me though.

Normal people should be scared.

Changing any of it and the reprecussions they might cause...boggles my mind.

TMcGee86

7/23/2008, 10:31 AM

trickle-down economics and trickle-up wealth to an elite plutocracy destined to rule the new American capitalist utopia.

Pfft. Well obviously that didn't work out. Pluto's not even a planet any more. :rolleyes:

SoonerBBall

7/23/2008, 10:32 AM

I hear that. AND stop rewarding people to spend and start rewarding them to save.

End capital gains tax NOW!

FairTax.

StoopTroup

7/23/2008, 10:35 AM

FairTax.

That old chestnut? ;)

NormanPride

7/23/2008, 11:10 AM

royalfan5

7/23/2008, 11:16 AM

Are the rising oil prices really our fault? I thought it was demand from other nations. Otherwise... it's a lot of huffing and puffing without really getting into any detail. It "makes sense" like Obama "makes sense"... if I say that Healthcare is broke because lots of people can't afford it... well, duh. :)
Demand for oil was rising here too until recently. And we are the biggest piece of the pie, and tend to have more ineffiecent users than other countries. Draw from that what you will.

SoonerBBall

7/23/2008, 11:21 AM

That old chestnut? ;)

Indeed, especially because no one has provided a better solution than the FairTax.

achiro

7/23/2008, 11:26 AM

What is Homey normally going on and on about? candy mountain rock?...candy rock mountain?...mountain rock candy?

Anyway, the whole "let's give the rich a break" through additional tax cuts doesn't seem to be rocking the candy or the mountain.

Has anyone been saying the rich should get ADDITIONAL tax cuts?:confused:
My understanding is that they think that the "rich" (and I hate that term because sad to say, $250,000 really doesn't go that far today) just shouldn't pay any more than they already do. I think it's sick for anyone to have to pay over half of their earnings to the government.

Chuck Bao

7/23/2008, 12:08 PM

achiro

7/23/2008, 12:17 PM

I hadn't realized that.

Would federal plus Oklahoma taxes on a salary of US$250,000 be as high as 50%?

Well then, I agree with you. That is too much!
Thats fed stuff only. State adds on to that.

Frozen Sooner

7/23/2008, 12:19 PM

Thats fed stuff only. State adds on to that.

Considering that the top marginal federal rate is less than 50%, that's mathematically impossible.

Neither candidate has proposed making the top marginal rate more than 50%.

SoonerBBall

7/23/2008, 12:31 PM

Considering that the top marginal federal rate is less than 50%, that's mathematically impossible.

Neither candidate has proposed making the top marginal rate more than 50%.

Obama hasn't said it outright, but he certainly has strongly implied that he believes the rich need to pay more than they are paying. I don't think he'll advocate taxes be pushed to 50% or more, but he definitely wants to increase the burden on the wealthy.

r5TPsooner

7/23/2008, 01:14 PM

Has anyone been saying the rich should get ADDITIONAL tax cuts?:confused:
My understanding is that they think that the "rich" (and I hate that term because sad to say, $250,000 really doesn't go that far today) just shouldn't pay any more than they already do. I think it's sick for anyone to have to pay over half of their earnings to the government.

I agree! 40% is even to high and that's where we're at as a family right now. IMHO, 25% should be the max.

Regarding 401k's... we are not allowed to borrow ANYTHING from our 401k even if we quit our job.

People 60 and over should have to pay there fair share of taxes just like the rest of us.

The Capital Gains Tax has really crippled us this year. We used money from stocks and bonds as a down payment for our new house and now we have to take out another loan just to pay them for cashing in on our own money to purchase a home, which I was led to believe is supposed to stimulate the economy in more way than one. The Capitol Gains Tax is just another way to keep middle class American's in the middle instead of the next step up in the food chain.

The only thing dumber than the Capital Gains Tax in the Convenience Tax.

As a country, we are taxed to death, especially if you have a decent job.

jkjsooner

7/23/2008, 01:16 PM

Wanna stimulate the economy?

Allow folks access to their 401k accounts without penalty or taxes and stop taxing the retired over 60 in this Country.

I understand "without penalty" part but without taxes? Um, you never paid a cent of taxes on that money.

So I can put an extra $1000 in my 401k, immediately withdraw it, and avoid paying any taxes on it? Quit a nice loophole you opened up there.

r5TPsooner

7/23/2008, 01:17 PM

I understand "without penalty" part but without taxes? Um, you never paid a cent of taxes on that money.

So I can put an extra $1000 in my 401k, immediately withdraw it, and avoid paying any taxes on it? Quit a nice loophole you opened up there.

The IRS has loopholes to take our money, why shouldn't the tax payer have one to keep more of there's?

StoopTroup

7/23/2008, 01:27 PM

I understand "without penalty" part but without taxes? Um, you never paid a cent of taxes on that money.

So I can put an extra $1000 in my 401k, immediately withdraw it, and avoid paying any taxes on it? Quit a nice loophole you opened up there.

I never said withdraw it...

I said access it.

If you have a Non-Corporate (personal) 401K...it's my understanding that if you were to access any of it...it's considered a disbursement and subject to fees and penalties and yes...taxes.

jkjsooner

7/23/2008, 01:29 PM

I never said withdraw it...

I said access it.

If you have a Non-Corporate (personal) 401K...it's my understanding that if you were to access any of it...it's considered a disbursement and subject to fees and penalties and yes...taxes.

I understand. I didn't know you couldn't borrow against non-corporate 401k plans.

Sooner_Havok

7/23/2008, 01:34 PM

People 60 and over should have to pay there fair share of taxes just like the rest of us.

So let me get this straight. People over 60, drawing social security, that they paid into with their tax dollars throughout their working lives, should have the money they are receiving as compensation for paying this ridiculous tax taxed?

That makes about as much sense as the government taxing my tax refund.

tommieharris91

7/23/2008, 01:36 PM

I hear that. AND stop rewarding people to spend and start rewarding them to save.

End capital gains tax NOW!

We're already trying to reward people to spend by giving taxpayers money to spend and offering interest rates that don't beat inflation. I hate any idea that makes it tougher to get ahead by putting away a small percentage of your paycheck for savings/investing. This is, by far, my biggest problem with Obama. Both candidates are on record as saying they will raise the capital gains tax, but Obama wants to double it.

We got into our deep debt problem through willy-nilly spending from both the private and public sectors. In order to keep our GDP up, we (people and the government) need to start saving our money. I think there are a lot of penalties to saving money in the US. I think cutting the capital gains tax just might be what decreases the severity of this recession. I really can't stand the idea that it will become tougher and tougher to save because I don't want to pay for ineffective leadership and wasteful programs, and raising capital gains taxes will do that.

Chuck Bao

7/23/2008, 01:39 PM

Havok, you know you could retire in Thailand and not pay US taxes on like on the first US$70,000 of income.

The beaches are good and the women are cute and...well...did I mention the sea? Retire in Thailand.

Sooner_Havok

7/23/2008, 01:40 PM

We're already trying to reward people to spend by giving taxpayers money to spend and offering interest rates that don't beat inflation. I hate any idea that makes it tougher to get ahead by putting away a small percentage of your paycheck for savings/investing. This is, by far, my biggest problem with Obama. Both candidates are on record as saying they will raise the capital gains tax, but Obama wants to double it.

We got into our deep debt problem through willy-nilly spending from both the private and public sectors. In order to keep our GDP up, we (people and the government) need to start saving our money. I think there are a lot of penalties to saving money in the US. I think cutting the capital gains tax just might be what decreases the severity of this recession. I really can't stand the idea that it will become tougher and tougher to save because I don't want to pay for ineffective leadership and wasteful programs, and raising capital gains taxes will do that.

I don't get this country's aversion to saving. I make about $1200 a month, pay $500 a month in loan repayments, and still find a way to put some money back into savings. It ain't much mind you, and I can't put as much as I would like into savings every month, but I have got a nice little sum of money in my account now from a year of scrimping and saving.

Sooner_Havok

7/23/2008, 01:41 PM

Frozen Sooner

7/23/2008, 01:42 PM

Obama hasn't said it outright, but he certainly has strongly implied that he believes the rich need to pay more than they are paying. I don't think he'll advocate taxes be pushed to 50% or more, but he definitely wants to increase the burden on the wealthy.

He has said that he wants to let the tax cuts for people in the top bracket that were passed earlier this decade to expire. That would bring the top rate back to what it was in 2000-which is still less than 50% as a marginal rate.

Even if the top marginal rate were 50%, it would be mathematically impossible for your effective federal tax rate to be 50%.

tommieharris91

7/23/2008, 01:45 PM

Indeed, especially because no one has provided a better solution than the FairTax.

Seriously? FairTax is one of the worst ideas around. Yes, taxes need to be simplified, but fairtax oversimplifies taxes.

r5TPsooner

7/23/2008, 02:00 PM

Sooner_Havok

7/23/2008, 02:05 PM

Allow folks access to their 401k accounts without penalty or taxes and stop taxing the retired over 60 in this Country.

So, everyone over 60 is drawing SS now? Hmmn, my FIL is still working and not drawing a cent of SS and he's 63.

re·tired /rɪˈtaɪərd/ [ri-tahyuhrd]
–adjective
1. withdrawn from or no longer occupied with one's business or profession: a retired banker.
2. due or given a retired person: retired pay.
3. secluded or sequestered: a retired little village.

You only make $1200/month? Now I see why you're always so damned negative in your posts.

I'd be pissed off making that type of coin too.

**** off

r5TPsooner

7/23/2008, 02:08 PM

[QUOTE=Sooner_Havok;2344587]re·tired /rɪˈtaɪərd/ [ri-tahyuhrd]
–adjective
1. withdrawn from or no longer occupied with one's business or profession: a retired banker.
2. due or given a retired person: retired pay.
3. secluded or sequestered: a retired little village.

Wow, reading comprehension really is a gift. Where in my original post did I ever say retired and over 60?

You're correct, I didn't!

Sooner_Havok

7/23/2008, 02:13 PM

Wow, reading comprehension really is a gift. Where in my original post did I ever say retired and over 60?

You're correct, I didn't!

Your right, so said:

People 60 and over should have to pay there fair share of taxes just like the rest of us.

Now see, when you said "People over 60" that means all people over 60. If you wanted to exclude taxing the retired, you should have said:

Non retired people 60 and over should have to pay there fair share of taxes just like the rest of us.

But you didn't. Sorry man.

r5TPsooner

7/23/2008, 02:15 PM

Your right, so said:

Now see, when you said "People over 60" that means all people over 60. If you wanted to exclude taxing the retired, you should have said:

But you didn't. Sorry man.

Then you should have also said those retired and who are 60.

Geez, get it right.

Read damnit!

Frozen Sooner

7/23/2008, 02:17 PM

I think the people over 60 need to start paying more than their fair share.

**** 'em. They'll be dead soon anyhow.

r5TPsooner

7/23/2008, 02:19 PM

I think the people over 60 need to start paying more than their fair share.

**** 'em. They'll be dead soon anyhow.

Thatta boy. My point exactly but I should have put it into writing:D

Sooner_Havok

7/23/2008, 02:19 PM

Then you should have also said those retired and who are 60.

Geez, get it right.

Read damnit!

But you already pointed out that you FIL who is 63 and still works, doesn't draw SS. Plus, I said why should SS benefits be taxed, not earned income. But whatever. I am going to start a new nacho thread, you in?

Frozen Sooner

7/23/2008, 02:23 PM

Thatta boy. My point exactly but I should have put it into writing:D

How awesome would that be if the next President just said:

"Attention Baby Boomer scum: you thought you were going to retire and make all of your kids and grandkids work hard to support you in your old age because you didn't reproduce enough to keep money flowing into Social Security. Joke's on you, hippy! All marginal tax rates for those over 60 are hereby doubled.

"Oh, yeah, and your Social Secuity is going to be taxed, as well. Plus, when you hit 90? You're a renewable energy source."

r5TPsooner

7/23/2008, 02:31 PM

jkjsooner

7/23/2008, 03:18 PM

So let me get this straight. People over 60, drawing social security, that they paid into with their tax dollars throughout their working lives, should have the money they are receiving as compensation for paying this ridiculous tax taxed?

That makes about as much sense as the government taxing my tax refund.

Actually, the government only taxes your state refund and only if you itemized the previous year.

If you itemized the previous year and you put xxx as a deduction due to state taxes and you later got a refund it means you actually paid less than xxx and do not deserve the entire deduction.

It makes logical sense to me.

Otherwise, one could put every penny withheld into state taxes, get a huge state tax refund the next year, and never pay federal taxes on any of that money.

swardboy

7/23/2008, 04:10 PM

Repeal capital gains...In the name of all that is holy
Repeal the death tax...this thing is unholy
Institute Fair Tax...I'm tired of being taxed coming and going...how 'bout just going
Drill Anwar....every 1% increase in supply drives oil price down 10%...he11, just the threat of it by Bush did that (why the he11 did we buy Alaska in the first place? A national zoo? I don't think so.

There, I've fixed everything :D

Frozen Sooner

7/23/2008, 04:18 PM

Actually, the government only taxes your state refund and only if you itemized the previous year.

If you itemized the previous year and you put xxx as a deduction due to state taxes and you later got a refund it means you actually paid less than xxx and do not deserve the entire deduction.

It makes logical sense to me.

Otherwise, one could put every penny withheld into state taxes, get a huge state tax refund the next year, and never pay federal taxes on any of that money.

I think only Oklahoma and Iowa tax your federal refund, as both allow you to deduct federal tax paid. I'm not sure, but I think other states don't allow you to do that, so your refund isn't taxed.

I dunno. The only two states where I've had taxable income and had to pay state income taxes are Oklahoma and Iowa.

achiro

7/23/2008, 04:28 PM

He has said that he wants to let the tax cuts for people in the top bracket that were passed earlier this decade to expire. That would bring the top rate back to what it was in 2000-which is still less than 50% as a marginal rate.

Even if the top marginal rate were 50%, it would be mathematically impossible for your effective federal tax rate to be 50%.
You do realize there are more taxes than just the "income tax" particularly for business owners? I'm nt going to get into all the specifics but if someone really doesn't think it will affect employment rates for the small business, they are an idiot. It will hurt bad.

"Currently, S corporations face a top tax rate of 35 percent, while sole proprietors and general partners face a tax rate of 37.9 percent (since they’re responsible for paying both income tax and the Medicare component of the payroll tax).

Under Obama’s plan to let the scheduled 2011 tax rate hikes occur, and his plan to raise the self-employment tax on those making more than $250,000, the S corporation rate would rise from 35 percent to 39.6 percent. The sole proprietor and partner rate would rise from 37.9 percent all the way up to a staggering 50.3 percent."

Vaevictis

7/23/2008, 04:49 PM

Somehow, I just don't find myself all that sympathetic about higher tax rates of folks who deliberately choose business organization structures with higher tax rates when they could have just as easily organized as one with a lower tax rate.

Echoes

7/23/2008, 04:50 PM

It's not hogwash. The huge deficits weaken the dollar and cause inflation, pure and simple. Unfortunately, I'm not sure either candidate understands how to address this.

This plays a bigger part in the situation then I think alot of people realize. We borrow money, literally as fast as we can. So fast. I know we always have, but go and check some numbers on the governments website in the past terms. These recent years have been startling.

I hate to sound like a pessimest with everything, but dang. We need to start to cut into this debt and work towards getting our economy on track. It's a hard job, for sure. If we don't and our spending keeps spiraling out of control like it is now, I foresee some huge problems in the future.

Frozen Sooner

7/23/2008, 04:51 PM

Mind sourcing that quote?

And even that seems to indicate that the top marginal rate for Schedule C income would be 50.3%-you'd still be having to make well above the bottom of the top bracket to be anywhere near 50% of your income.

Curly Bill

7/23/2008, 04:56 PM

you'd still be having to make well above the bottom of the top bracket to be anywhere near 50% of your income.

No one, not even bazillionaires should have to give half their income to the government.

Frozen Sooner

7/23/2008, 05:04 PM

No one, not even bazillionaires should have to give half their income the government.

Being a bazillionaire has more to do with the wealth you've already accumulated than it does the income you've earned in a particular year.

However, even those who make the extreme top end of the income scale aren't paying half of their income. Or they have an accountant that needs a horse-whippin'.

achiro

7/23/2008, 05:09 PM

Until the guberment decides to stop pissing away money on stupid **** that doesn't matter I don't give a rats *** if it's 50% or 35%, it's to damn much. Obama is gonna raise it on folks that pay the salaries, thats stupid economics. It's like wipin before you poop, it don't make no sense. ;)

Curly Bill

7/23/2008, 05:13 PM

mdklatt

7/23/2008, 05:32 PM

because sad to say, $250,000 really doesn't go that far today

You're being facetious, right?

Curly Bill

7/23/2008, 05:35 PM

You're being facetious, right?

You think $250,000 is some astronomical sum?

...course I wish I made that.

mdklatt

7/23/2008, 05:36 PM

You think $250,000 is some astronomical sum?

Every year? I wouldn't even know how to begin to spend all of that. If people earning that much are having trouble making ends meet, I suggest that it's not the government's fault.

Curly Bill

7/23/2008, 05:39 PM

Every year? I wouldn't even know how to begin to spend all of that. If people earning that much are having trouble making ends meet, I suggest that it's not the government's fault.

They should not be having trouble making ends meet, but neither should they have to give a majority of it to the government to waste.

achiro

7/23/2008, 05:39 PM

You're being facetious, right?
Absolutly not. I am not saying that it is chump change either.
A couple making $125,000 each? Not that much in todays business world.

mdklatt

7/23/2008, 05:43 PM

A couple making $125,000 each? Not that much in todays business world.

That puts you well into the top 5% (http://en.wikipedia.org/wiki/Household_income_in_the_United_States) of household incomes. I know everybody on here is richer than Bruce and all, but that's a lot of damn money.

mdklatt

7/23/2008, 05:45 PM

They should not be having trouble making ends meet, but neither should they have to give a majority of it to the government to waste.

The problem is that nobody is willing to give up their own slice of the pie, and most people have no idea how large their slice is in the first place.

Curly Bill

7/23/2008, 05:48 PM

The problem is that nobody is willing to give up their own slice of the pie, and most people have no idea how large their slice is in the first place.

I know that people should be able to keep most of their slice, after all they're the ones that earned it.

mdklatt

7/23/2008, 05:49 PM

I know that people should be able to keep most of their slice, after all they're the ones that earned it.

Nobody earns money in a vacuum.

Curly Bill

7/23/2008, 05:50 PM

Nobody earns money in a vacuum.

There are peeps working inside vacuums? :confused:

Harry Beanbag

7/23/2008, 05:58 PM

The top 50% of wage earners pay 97% of the income tax collected in this country.

Curly Bill

7/23/2008, 06:01 PM

The top 50% of wage earners pay 97% of the income tax collected in this country.

They gotta give more, give till it hurts, Bracks got plans for that money, that money's gonna bring about change. :rolleyes:

Frozen Sooner

7/23/2008, 06:02 PM

The top 50% of wage earners pay 97% of the income tax collected in this country.

Which speaks more to the disparity of wages between the top of the scale and bottom of the scale than it does to some supposedly onerous tax burden.

mdklatt

7/23/2008, 06:03 PM

The top 50% of wage earners pay 97% of the income tax collected in this country.

What percentage of the income do they earn?

Harry Beanbag

7/23/2008, 06:10 PM

Which speaks more to the disparity of wages between the top of the scale and bottom of the scale than it does to some supposedly onerous tax burden.

Of course it does. 32% don't pay any taxes at all. Do the "rich" have to pay 100% of income tax to make everyone happy? By the way, from klatt's link above, the median household income is $44,389. We do better than that, but I hardly consider us to be "rich".

Harry Beanbag

7/23/2008, 06:11 PM

What percentage of the income do they earn?

I have no idea, but I'm guessing they generate close to 100% of all income earned.

Frozen Sooner

7/23/2008, 06:25 PM

Of course it does. 32% don't pay any taxes at all. Do the "rich" have to pay 100% of income tax to make everyone happy? By the way, from klatt's link above, the median household income is $44,389. We do better than that, but I hardly consider us to be "rich".
32% of who? Wage earners? Or of the overall population?

Who said that anyone above median household income was rich? I neither said such a thing nor did I imply it.

What I DID say is that there's a pretty sizable disparity between the top wage earners and the bottom wage earners in our country. I'll also say that that gap has grown exponentially wider over the last 20 years. So no, it's no surprise that the people who make the most money pay the majority of income taxes.

r5TPsooner

7/23/2008, 06:26 PM

BTW, what does one have to make for the government/IRS to consider a family rich or not?

Frozen Sooner

7/23/2008, 06:27 PM

BTW, what does one have to make for the government/IRS to consider a family rich or not?

A baby with me.

Curly Bill

7/23/2008, 06:27 PM

BTW, what does one have to make for the government/IRS to consider a family rich or not?

I think you just have to have a job.

r5TPsooner

7/23/2008, 06:30 PM

I think you just have to have a job.

That sounds about right. I was looking at our taxes and it seemed like $187k was the magic number before you get into the "need Astroglide" before the IRS gets done with ya.

Curly Bill

7/23/2008, 06:32 PM

Well you know: $187,000 is an astronomically huge pile of money that no one should be entitled to. :rolleyes:

r5TPsooner

7/23/2008, 06:35 PM

Well you know: $187,000 is an astronomically huge pile of money that no one should be entitled to. :rolleyes:

Yeah, I was looking at the different "stages" of income and I was thinking why not just round the damned number up to $190k. That's a nice amount of coin, but if you have a big family in today's economy, that'll go pretty fast after the tax man hits your wallet.

Curly Bill

7/23/2008, 06:37 PM

Yeah, I was looking at the different "stages" of income and I was thinking why not just round the damned number up to $190k. That's a nice amount of coin, but if you have a big family in today's economy, that'll go pretty fast after BHO hits your wallet.

FIXED

achiro

7/23/2008, 06:57 PM

Which speaks more to the disparity of wages between the top of the scale and bottom of the scale than it does to some supposedly onerous tax burden.

You are starting to sound an awful lot like a socialist.;) :D

SoonerKnight

7/24/2008, 02:13 AM

I hadn't realized that.

Would federal plus Oklahoma taxes on a salary of US$250,000 be as high as 50%?

Well then, I agree with you. That is too much!

Ask Warren Buffet about paying too much taxes! He pays less on 46 million a year than someone making $60,000!

Heres the link: http://www.washingtonpost.com/wp-dyn/content/article/2007/06/27/AR2007062700097.html

This is from the richest man in the world!

Link: http://www.reuters.com/article/businessNews/idUSN0564885820080305

50% my ***. This is a bunch of propaganda from the Republicans and it is hogwash! Warren Buffet actually complained that he is taxed less because he makes so much. Fair tax let's see where that goes our rates will go up not down! Sheesh!!!!

Curly Bill

7/24/2008, 05:35 AM

Ask Warren Buffet about paying too much taxes! He pays less on 46 million a year than someone making $60,000!

Heres the link: http://www.washingtonpost.com/wp-dyn/content/article/2007/06/27/AR2007062700097.html

This is from the richest man in the world!

Link: http://www.reuters.com/article/businessNews/idUSN0564885820080305

50% my ***. This is a bunch of propaganda from the Republicans and it is hogwash! Warren Buffet actually complained that he is taxed less because he makes so much. Fair tax let's see where that goes our rates will go up not down! Sheesh!!!!

Being rich doesn't mean Warren Buffett can't be a left-leaning, even Socialist jack-***. Sheesh!!!

http://archive.newsmax.com/archives/articles/2003/8/18/155747.shtml

Curly Bill

7/24/2008, 05:47 AM

http://www.rootforamerica.com/blog/index.php?entry=entry071031-081448

Another nice piece on the great Warren Buffett

SoonerBBall

7/24/2008, 12:50 PM

Seriously? FairTax is one of the worst ideas around. Yes, taxes need to be simplified, but fairtax oversimplifies taxes.

That is the worst garbage I've ever read. Oversimplifies taxes? There is no such thing. Every single person with a highschool diploma should be able to accurately project EXACTLY how much money they are paying in taxes in less than 30 minutes. If you think the FairTax is one of the worst ideas around than you obviously don't know very much about it. Would you care to explain how and why it oversimplifies taxes?

SoonerBBall

7/24/2008, 01:03 PM

Ask Warren Buffet about paying too much taxes! He pays less on 46 million a year than someone making $60,000!

Heres the link: http://www.washingtonpost.com/wp-dyn/content/article/2007/06/27/AR2007062700097.html

This is from the richest man in the world!

Link: http://www.reuters.com/article/businessNews/idUSN0564885820080305

50% my ***. This is a bunch of propaganda from the Republicans and it is hogwash! Warren Buffet actually complained that he is taxed less because he makes so much. Fair tax let's see where that goes our rates will go up not down! Sheesh!!!!

This happens because of a ridiculously complex and pretty much idiotic income tax system. The FairTax addresses these issues pretty well.

tommieharris91

7/24/2008, 01:37 PM

tommieharris91

7/24/2008, 01:43 PM

This happens because of a ridiculously complex and pretty much idiotic income tax system. The FairTax addresses these issues pretty well.

Those links that SoonerKnight provided are very misleading. In percentages, yes, Buffett pays less on taxes than those working way under him. In dollars, Buffett will likely pay 20x more than a high-level manager under him.

Frozen Sooner

7/24/2008, 01:51 PM

tommieharris91

7/24/2008, 01:56 PM

Careful there. You're sounding mighty Keynesian there-I think they revoke your GOP membership for that.

I dunno, I'm hangin pretty close to the center these days.

NormanPride

7/24/2008, 02:18 PM

Taxes are always too high.

jkjsooner

7/24/2008, 02:29 PM

That is the worst garbage I've ever read. Oversimplifies taxes? There is no such thing. Every single person with a highschool diploma should be able to accurately project EXACTLY how much money they are paying in taxes in less than 30 minutes. If you think the FairTax is one of the worst ideas around than you obviously don't know very much about it. Would you care to explain how and why it oversimplifies taxes?

I won't speak for FairTax but I'll use the example from earlier to explain why taxes are complicated.

We allow you to itemize your deductions. Feds allow you to deduct your state taxes paid. One poster complained about having to pay taxes on a state income tax refund. Well, duh, you deducted it the year before and since you really didn't pay that money you should reduce that deduction.

That's a simple case but it's not hard to see how to prevent loopholes things get complicated quickly.

Maybe that right there is an argument for FairTax. I don't know enough about it to make a statement on it.

jkjsooner

7/24/2008, 02:36 PM

Those links that SoonerKnight provided are very misleading. In percentages, yes, Buffett pays less on taxes than those working way under him. In dollars, Buffett will likely pay 20x more than a high-level manager under him.

Buffett believes that the only way he has become rich is because this society allows him to do so. He has a unique talent that is no more beneficial to society than the guy fixing your plumbing; it is just more rewarded by society. Had he grown up in a tribal area of Africa he most surely would not have gained the riches he has in this society. With those in mind he does believe that he owes society a great deal.

Bill Gates has made similar statement if not quite as humble and more along the lines of charity rather than taxes.

I agree with both, but....

Both of these guys are wealthy beyond imagination. The taxes they pay really have no tangible effect on their lifestyles. They have more than they could ever possibly spend.

But let's say they had $10 million instead of tens of billions. Now having to worry about preserving capital would they still look at it the same way?

soonerscuba

7/24/2008, 02:36 PM

The take home pay for someone making $250,000 is ~13k a month, not counting investments and capital gains. If you can't make ends meet on that, even with a large family, you probably shouldn't be making 250k.

Also, FairTax is hilarious.

SoonerBBall

7/24/2008, 03:26 PM

Yes, there is such a thing as oversimplifying taxes. A simple "Pay 23% on what you buy" will force people to buy less. Forcing people to buy less, even though they get their entire paycheck, will force US consumption of everything lower because people will obviously have to pay higher. This type of slowdown will cause a fall in GDP and GDP growth rates and cause a rise in the natural rate of unemployment due to loss of aggregate demand.

This just reinforces that you haven't studied the FairTax very well. It doesn't increase the cost of everything by 23% on top of what they already pay. In fact it wouldn't change prices much at all. Regardless, how exactly would this "force" people to buy less? They would have MORE purchasing power than before because they would be taking home more money. Also, where do you get that prices will be "obviously" higher? It is not obvious at all, and in fact has been specifically disputed by economists who have studied the FairTax.

Even worse, adding the fairtax would actually mean taxing investments/savings. Adding the fairtax would mean paying taxes on rent and houses, things considered investments. It also would tax interest on mortgages. Lastly, there would be no tax deductions on expenses for running a business. The FairTax web site says nothing about how there are already incentives in place for small businesses.

Wow, this is just ridiculous. Have you even read the FairTax? How is investment and savings taxed? The FairTax does away with all taxes on the federal level, so investments and saving would specifically not be subjected to any taxes like the captial gains tax because it wouldn't exist anymore. Rent is taxed? Where do you get that, because it isn't in the FairTax. Purchasing a new house would be taxed, but only a new house. Buying a used house would not result in any tax burden. Again, I don't know where you are getting that interest on mortages is taxed, because that isn't in any version of the FairTax that I've ever seen. Finally, as far as incentives for small businesses, leave that up to the state government. That would give the states the ability to make themselves more or less appealing for small business on their own instead of relying on the federal government to set rules across the board.

Vaevictis

7/24/2008, 03:32 PM

This just reinforces that you haven't studied the FairTax very well.

Why would you bother? They claim that everyone's tax burden will decrease, but the plan is revenue neutral for the government.

It doesn't take a genius to figure out that that isn't possible.

SoonerBBall

7/24/2008, 03:40 PM

I won't speak for FairTax but I'll use the example from earlier to explain why taxes are complicated.

We allow you to itemize your deductions. Feds allow you to deduct your state taxes paid. One poster complained about having to pay taxes on a state income tax refund. Well, duh, you deducted it the year before and since you really didn't pay that money you should reduce that deduction.

That's a simple case but it's not hard to see how to prevent loopholes things get complicated quickly.

Maybe that right there is an argument for FairTax. I don't know enough about it to make a statement on it.

Yeah, that statement is a ringing endorsement for the FairTax. Should it really be that hard to do your taxes? Should it really be that much of a question as to how much your taxes will be? Should you constantly live in fear of being audited and not knowing if you every single line item is correct on your taxes?

True statistic: As of a 2005 test, the IRS help line only answered 66 percent (http://www.treas.gov/tigta/auditreports/2005reports/200540146fr.html) of questions submitted to its Tax help line correctly. That's right, the IRS itself can't even get the tax code right every time. hell they are only right 2/3 of the time. That is probably because the current US tax code was 16,854 pages long as of 2006.

SoonerBBall

7/24/2008, 03:43 PM

Why would you bother? They claim that everyone's tax burden will decrease, but the plan is revenue neutral for the government.

It doesn't take a genius to figure out that that isn't possible.

You would bother because the FairTax says no such thing. In fact, if you read the FairTax book, they specifcally say that the idea of the FairTax is not to save everyone money in taxes, but to change the underlying way taxes are collected to be more in line with the principals the country was founded on. It also allows those who want to save to do so without being punished for it and also makes the US the most attractive market for business in the industrialized world.

Vaevictis

7/24/2008, 03:58 PM

You would bother because the FairTax says no such thing.

Try reading the literature that Americans for Fair Taxation -- you know, the guys lobbying for the Fair Tax bill that keeps getting put before Congress. And the guys who wrote the bill.

They do actually make claims along those lines -- lower taxation for everyone and revenue neutrality!@#

I'm all for simplifying the tax code, but your Fair Tax pipe dream has been hijacked by chartalans. Sorry to give you the bad news.

Vaevictis

7/24/2008, 03:59 PM

It also allows those who want to save to do so without being punished for it and also makes the US the most attractive market for business in the industrialized world.

... and actually, you can save without being punished. You just have to structure it so that you can defer the income, which, really, is no different than deferring your expenditures which is what you'd be doing under the Fair Tax system.

soonerscuba

7/24/2008, 04:06 PM

FairTax is not to save everyone money in taxes, but to change the underlying way taxes are collected to be more in line with the principals the country was founded on.
The barely stable, monetarily 3rd world, slave dependent, agricultural based country that didn't become a superpower until we gutted the founder's idea of government system? No thanks.

The FairTax folks always forget the secondary nature of deductions, which to flow money to organizations and investments that are socially beneficial, which FairTax fails to do. Also, it's really 30%, and would require repealing the 16th amendment. Good luck with that. You say the founders would like FairTax, I say Jesus prefers a progressive system, let's try to prove who's right. :rolleyes:

Frozen Sooner

7/24/2008, 04:06 PM

My life mission is to now punish anyone who saves.

You come in and want to open a money market account?

That's a floggin'.

SoonerBBall

7/24/2008, 04:24 PM

The barely stable, monetarily 3rd world, slave dependent, agricultural based country that didn't become a superpower until we gutted the founder's idea of government system? No thanks.

You make all sorts of claims without actually backing anything up. Care to back up the fact that we weren't headed towards prosperity because of our basis in freedom and liberty and limited govenment intervention as opposed to whatever the hell you are arguing?

The FairTax folks always forget the secondary nature of deductions, which to flow money to organizations and investments that are socially beneficial, which FairTax fails to do. Also, it's really 30%, and would require repealing the 16th amendment. Good luck with that. You say the founders would like FairTax, I say Jesus prefers a progressive system, let's try to prove who's right. :rolleyes:

So you somehow think that we would stop giving to charities at all if it wasn't to erase our tax burden? Did you somehow forget Warren Buffett and Bill Gates making truly astronomical donations to charity that went far beyond what they could ever claim in tax benefits? Americans give to charity because they want to, not just because it helps the bottom line and if they took home more money, it stands to reason that they would be even more charitable. Hey, sometimes being a crazy Christian country has its advantages.

As far as your "gotcha" of the tax being 30%, well too bad every single knowledgeable FairTax supporter will gladly admit that 23% is the best way to look at it. 23% is the rate that is given when factoring in taxes inclusively. This means that out of $1.00, $.23 goes to tax. If you look at it as an exclusive tax instead, it would say that the item costs $.77 and the taxes are $.23, so the exclusive tax rate would be 29.8%. Regardless, it is the same amount of taxation, just two different ways of looking at it.

To counter your remark, did you know that your income tax is calculated inclusively? That is right, if you calculated your income tax the same way you are trying to vilify the FairTax, you would get a truly horrifying number. One last quick fact, sales taxes are the only taxes we pay that are calculated on an exclusive basis. Every other tax is calculated inclusively to make it look smaller.

SoonerBBall

7/24/2008, 04:28 PM

Try reading the literature that Americans for Fair Taxation -- you know, the guys lobbying for the Fair Tax bill that keeps getting put before Congress. And the guys who wrote the bill.

They do actually make claims along those lines -- lower taxation for everyone and revenue neutrality!@#

I'm all for simplifying the tax code, but your Fair Tax pipe dream has been hijacked by chartalans. Sorry to give you the bad news.

I don't disagree that there are plenty of people, both for and against the FairTax, who don't have the first clue about what it actually is, but that just means there are plenty of people to educated about the reality of the situation.

I wish they would market the FairTax for what it is, a simple, intelligent, more fair, and overall better way to collect federal taxes and not just a gimick to lower everyone's tax burden. In fact, one of the greatest parts of the FairTax is that you can choose the amount of taxation you want by increasing or limiting your consumption past the necessities, but everyone just wants to say "lower taxes or nothing!".

SoonerBBall

7/24/2008, 04:32 PM

... and actually, you can save without being punished. You just have to structure it so that you can defer the income, which, really, is no different than deferring your expenditures which is what you'd be doing under the Fair Tax system.

But shouldn't it be easier? Shouldn't we have more choices than the few tax deferred vehicles openly available now?

I understand what you are saying, but shouldn't it be up to us where and when we invest our money? Under the current system there are only limited options for lower and middle class investors when it comes to deferring taxes on investments.

mdklatt

7/24/2008, 04:41 PM

As far as your "gotcha" of the tax being 30%, well too bad every single knowledgeable FairTax supporter will gladly admit that 23% is the best way to look at it. 23% is the rate that is given when factoring in taxes inclusively.

Well no kidding, because it hides the true cost. Citing the inclusive rate is misleading if not downright dishonest. What currently costs $1.00 will cost $1.30 under Fair Tax ($.30/$1.30 = 23%). That is a 30% increase, not 23%.

soonerscuba

7/24/2008, 04:43 PM

You make all sorts of claims without actually backing anything up. Care to back up the fact that we weren't headed towards prosperity because of our basis in freedom and liberty and limited govenment intervention as opposed to whatever the hell you are arguing?

So you somehow think that we would stop giving to charities at all if it wasn't to erase our tax burden? Did you somehow forget Warren Buffett and Bill Gates making truly astronomical donations to charity that went far beyond what they could ever claim in tax benefits? Americans give to charity because they want to, not just because it helps the bottom line and if they took home more money, it stands to reason that they would be even more charitable. Hey, sometimes being a crazy Christian country has its advantages.
Really? See America 1776-1933. Then look at America 1933-Present, the sole reason we are an economic and cultural superpower is the ability to gov't fund a military and civilian complex that could coerce or bomb any opponent into what's what. This simply couldn't be done on tariffs and FairTax, and to say so is truly naive. Plus, rewarding consumerism is generally bad long-term policy. Lastly, the depreciation system (which disappears under FairTax) allows for pinpointed investment to aid certain markets, to get rid of this is to get rid of this, to me, is stupid fiscal policy.

As far as your "gotcha" of the tax being 30%, well too bad every single knowledgeable FairTax supporter will gladly admit that 23% is the best way to look at it. 23% is the rate that is given when factoring in taxes inclusively. This means that out of $1.00, $.23 goes to tax. If you look at it as an exclusive tax instead, it would say that the item costs $.77 and the taxes are $.23, so the exclusive tax rate would be 29.8%. Regardless, it is the same amount of taxation, just two different ways of looking at it.

To counter your remark, did you know that your income tax is calculated inclusively? That is right, if you calculated your income tax the same way you are trying to vilify the FairTax, you would get a truly horrifying number. One last quick fact, sales taxes are the only taxes we pay that are calculated on an exclusive basis. Every other tax is calculated inclusively to make it look smaller.
I don't need to vilify silly and impossible to pass fantasy legislation. I don't hate FairTax, but I do think it's a distraction. Hell, I think people with kids and the elderly should pay more in taxes, but that doesn't mean I will champion it, because it will never, ever happen.

mdklatt

7/24/2008, 04:43 PM

In fact, one of the greatest parts of the FairTax is that you can choose the amount of taxation you want by increasing or limiting your consumption past the necessities

What about people whose entire consumption is necessities? They'll basically be paying a 30% income tax.

Vaevictis

7/24/2008, 04:45 PM

But shouldn't it be easier? Shouldn't we have more choices than the few tax deferred vehicles openly available now?

I have no problem with the principle of simplifying the tax code. I have a problem with how some folks propose to do it, and with the promises they make in order to try to get their proposals adopted.

I understand what you are saying, but shouldn't it be up to us where and when we invest our money? Under the current system there are only limited options for lower and middle class investors when it comes to deferring taxes on investments.

It is up to you where and when you invest your money. Some options are just more expensive than others.

Hell, I seriously doubt that FairTax can even handle investments in the way it intends to.

For example, what do you do about gold? It's both a consumer good and a commodity. If you tax it, boom, suddenly you've got an investment class which is taxed. If you don't, well, you've got a nice big loop hole for people to ride an elephant through.

Or you can patch the hole, and suddenly, Fair Tax isn't so simple anymore, is it?

mdklatt

7/24/2008, 04:45 PM

rewarding consumerism is generally bad long-term policy

Wouldn't the Fair Tax discourage consumerism?

SoonerBBall

7/24/2008, 04:45 PM

Well no kidding, because it hides the true cost. Citing the inclusive rate is misleading if not downright dishonest. What currently costs $1.00 will cost $1.30 under Fair Tax ($.30/$1.30 = 23%). That is a 30% increase, not 23%.

How can you call it downright dishonest and in the next sentence claim that prices across the board will automatically increase by 30%? You speak of hiding the true cost without also acknowledging that part of the true cost of a good is made up of taxes paid to produce the good that will be eliminated with the adoption of the FairTax, thus bringing down prices by, well what do you know, 30% (exclusively). That is why the percentage was set at 30% (exclusively), to explicitly offset the inherent tax costs included in the price of goods.

Talk about dishonesty.

Hamhock

7/24/2008, 04:46 PM

What about people whose entire consumption is necessities? They'll basically be paying a 30% income tax.

i thought the book i read said there is an exemption for necessities so those people are effectively paying 0%?

SoonerBBall

7/24/2008, 04:49 PM

What about people whose entire consumption is necessities? They'll basically be paying a 30% income tax.

It is called the prebate. It repays every head of household in America their entire tax burden (all 30%) up to the poverty level.

Read all about it here. (http://en.wikipedia.org/wiki/FairTax#Monthly_tax_rebate)

Research is fun!

SoonerBBall

7/24/2008, 04:51 PM

Wouldn't the Fair Tax discourage consumerism?

Letting people take home their entire paycheck would discourage consumerism? Especially in the consumption happy US of A? You really believe that?

Vaevictis

7/24/2008, 04:52 PM

You speak of hiding the true cost without also acknowledging that part of the true cost of a good is made up of taxes paid to produce the good that will be eliminated with the adoption of the FairTax, thus bringing down prices by, well what do you know, 30% (exclusively).

It's quite a leap of faith to assume that just because a supplier's costs go down that they will automatically lower their prices by like amount :)

mdklatt

7/24/2008, 04:52 PM

That is why the percentage was set at 30% (exclusively), to explicitly offset the inherent tax costs included in the price of goods.

Won't businesses have to pay consumption tax? If not, what constitutes a business? I see all kinds of room for abuse, just like with the "commercial vehicle" tags here in Oklahoma.

soonerscuba

7/24/2008, 04:54 PM

Wouldn't the Fair Tax discourage consumerism?
Who the hell knows, from what I have read they operate under the false impression that input cost to production determines output price. When Acme Widget gets a "23%" discount on cost per unit production of widgets, they being the charitable folks they are, will naturally pass a "23%" discount on to their customers instead of keeping the extra profit themselves. So with the extra money people have they will buy more stuff, it's confusing, but all I hear is pitchmen promising all this extra money, and used stuff is tax free!!!!!

mdklatt

7/24/2008, 04:56 PM

It is called the prebate. It repays every head of household in America their entire tax burden (all 30%) up to the poverty level.

So now the IRS would be sending out checks to every household every month? And this is less convoluted than the income tax?

soonerscuba

7/24/2008, 04:56 PM

It's quite a leap of faith to assume that just because a supplier's costs go down that they will automatically lower their prices by like amount :)
Beat me to it, I hate when that happens.

SoonerBBall

7/24/2008, 04:59 PM

It's quite a leap of faith to assume that just because a supplier's costs go down that they will automatically lower their prices by like amount :)

I'm sure prices wouldn't drop same-day, but you don't think Walmart would push prices as low as possible? This is the same Walmart that makes pennies in margin on most of its products and sells in bulk to make money. It seems to me that capitalism dictates that everyone else would have to play ball when even one business starts lowering prices.

Vaevictis

7/24/2008, 05:02 PM

mdklatt

7/24/2008, 05:06 PM

I'm sure prices wouldn't drop same-day, but you don't think Walmart would push prices as low as possible? This is the same Walmart that makes pennies in margin on most of its products and sells in bulk to make money. It seems to me that capitalism dictates that everyone else would have to play ball when even one business starts lowering prices.

There's also the assumption that your income would automatically jump by the same amount as the income/FICA tax reductions. Maybe it would as soon as the law changed, but over time employers would figure out that they could pay less money for the same effect. Sooner or later, prices and incomes will to stabilize to a new equilibrium that leaves you no more purchasing power than you have now. You can't get something for nothing.

SoonerBBall

7/24/2008, 05:07 PM

Won't businesses have to pay consumption tax? If not, what constitutes a business? I see all kinds of room for abuse, just like with the "commercial vehicle" tags here in Oklahoma.

There is a good explanation of personal vs. business purchases right here. (http://en.wikipedia.org/wiki/FairTax#Personal_versus_business_purchases)

Look, I'm not saying it is perfect and without flaw. I'm saying it is better than what we have now, and much easier to deal with then the 60,00 page tax code (I was wrong earlier when I said 16,854). It is also harder to game the system as it requires both buyer and seller to be complicit in tax fraud to see any real benefit. This also means that instead of having to look at every single household for compliance, you just have to look at businesses instead.

Sooner_Havok

7/24/2008, 05:12 PM

There is a good explanation of personal vs. business purchases right here. (http://en.wikipedia.org/wiki/FairTax#Personal_versus_business_purchases)

Look, I'm not saying it is perfect and without flaw. I'm saying it is better than what we have now, and much easier to deal with then the 60,00 page tax code (I was wrong earlier when I said 16,854). It is also harder to game the system as it requires both buyer and seller to be complicit in tax fraud to see any real benefit. This also means that instead of having to look at every single household for compliance, you just have to look at businesses instead.

And we all know businesses' always keep correct and accurate books, and never try to conceal anything shady or "cook th books" :rolleyes:

SoonerBBall

7/24/2008, 05:12 PM

There's also the assumption that your income would automatically jump by the same amount as the income/FICA tax reductions. Maybe it would as soon as the law changed, but over time employers would figure out that they could pay less money for the same effect. Sooner or later, prices and incomes will to stabilize to a new equilibrium that leaves you no more purchasing power than you have now. You can't get something for nothing.

The point is that it stabalizes under a new, better way to collect taxes. Again, this is not to save everyone from paying taxes, it is to fundamentally change the tax system to something better and more sustainable. The current income tax system is inherently broken and is sinking under its own weight. When the IRS itself can only answer questions about its own tax code at a 66% clip, how can they possibly expect the rest of the population to be able to do it.

Animal Mother

7/24/2008, 05:16 PM

Just bring Mike Stoops back to OU. He'll fix it all baby!

Sorry. I read all these posts and you guys wore me out. You should be on Squawkbox on CNBC. I'm serious. You guys know some sh!t.

MR2-Sooner86

7/24/2008, 05:20 PM

I got tired reading over all the fighting.

Lets just bring in a flat tax and get it all over with.

mdklatt

7/24/2008, 05:27 PM

The point is that it stabalizes under a new, better way to collect taxes. Again, this is not to save everyone from paying taxes, it is to fundamentally change the tax system to something better and more sustainable. The current income tax system is inherently broken and is sinking under its own weight. When the IRS itself can only answer questions about its own tax code at a 66% clip, how can they possibly expect the rest of the population to be able to do it.

I think we're better off simplifying the income tax code, then. A GST makes you want to buy less stuff, which seems to be bad for the economy (and government revenue). However, I've never heard of anybody saying "no thanks" to making more money just because it would increase their income taxes. The gift tax doesn't stop people from buying lottery tickets.

SoonerBBall

7/24/2008, 05:28 PM

I got tired reading over all the fighting.

Lets just bring in a flat tax and get it all over with.

The flat tax places a ridiculous tax burden on the lower, lower-middle, and middle-class. It is just a bad idea. You should research the FairTax. ;)

MR2-Sooner86

7/24/2008, 05:33 PM

The flat tax places a ridiculous tax burden on the lower, lower-middle, and middle-class. It is just a bad idea.

Nah if the flat tax is set at...oh 50% then we all get screwed equally!

SoonerBBall

7/24/2008, 05:33 PM

I think we're better off simplifying the income tax code, then. A GST makes you want to buy less stuff, which seems to be bad for the economy (and government revenue). However, I've never heard of anybody saying "no thanks" to making more money just because it would increase their income taxes. The gift tax doesn't stop people from buying lottery tickets.

We've simplified the tax code twice in the past 30 years (I think it is twice). Each time it is simplified, subsequent years bring on thousands of pages worth of revisions until it is once again tens of thousands of pages in length. How could we simplify the income tax to bring it to the simplicity of the FairTax? I'm genuinely interested in an answer. I support the FairTax because I see it as the best solution. I am absolutely open to even better solutions.

soonerscuba

7/24/2008, 05:37 PM

Nah if the flat tax is set at...oh 50% then we all get screwed equally!
A flat tax never screws people equally.

mdklatt

7/24/2008, 05:44 PM

How could we simplify the income tax to bring it to the simplicity of the FairTax?

No more deductions for kids! You want 'em, you pay for 'em! :D

I was looking that the "prebate" information. There is apparently one poverty level for the entire continental US (Alaska and Hawaii have their own poverty level). What a crock. At the very least, it should be calculated on a state-by-state basis. But the poverty level can change dramatically even within a state. Is the prebate indexed to inflation and the CPI? And now you have a bunch of businesses (law firms come to mind) who never had to worry about sales tax before suddenly having to deal with it. I don't see much of a net gain in simplicity here, and an enforcement mess not much better than the current system. Perhaps even worse because you're dealing with trillions of transactions that have to be monitored.

SoonerBBall

7/24/2008, 09:19 PM

And we all know businesses' always keep correct and accurate books, and never try to conceal anything shady or "cook th books" :rolleyes:

It is still easier to track a known number of businesses that must register with the state they reside in then to attempt to track every single taxpayer in the entire country. The system is not perfect, but it is miles better than the one we have now.

SoonerBBall

7/24/2008, 09:23 PM

No more deductions for kids! You want 'em, you pay for 'em! :D

I agree!!!!

Actually your prebate amount is tied to number of dependents in the household if I remember correctly.

I was looking that the "prebate" information. There is apparently one poverty level for the entire continental US (Alaska and Hawaii have their own poverty level). What a crock. At the very least, it should be calculated on a state-by-state basis. But the poverty level can change dramatically even within a state. Is the prebate indexed to inflation and the CPI? And now you have a bunch of businesses (law firms come to mind) who never had to worry about sales tax before suddenly having to deal with it.

I don't disagree, but now you are not arguing against the plan, just its implementation, and I am more than happy to find new and better ways to implement the ideas and principles behind the FairTax.

I don't see much of a net gain in simplicity here, and an enforcement mess not much better than the current system. Perhaps even worse because you're dealing with trillions of transactions that have to be monitored.

Some things aren't going to change. Enforcement will be a mess under any tax system. In this system, the idea is to vastly limit the number of places that fraud can take place.

As far as trillions of transactions are concerned, most businesses are already set up to track sales taxes, so it wouldn't be a big change in their business practices to track sales tax for the federal government as well.

SCOUT

7/24/2008, 09:58 PM

A flat tax never screws people equally.
There is a good chance that I reading too much in to your one sentence, but I will ask anyway because it is a sentiment that I have seen sincerely expressed here before. How is every person paying the same percentage unequal?

Further, how is it considered fair (or equal) to make people who earn more money pay a higher percent of those earnings? I understand if you want "rich" people to bear a bigger burden, but don't say it is done in the name of fairness. Call it what it is. It is punitive taxation.

Curly Bill

7/24/2008, 10:02 PM

SoonerBBall

7/24/2008, 10:09 PM

There is a good chance that I reading too much in to your one sentence, but I will ask anyway because it is a sentiment that I have seen sincerely expressed here before. How is every person paying the same percentage unequal?

Further, how is it considered fair (or equal) to make people who earn more money pay a higher percent of those earnings? I understand if you want "rich" people to bear a bigger burden, but don't say it is done in the name of fairness. Call it what it is. It is punitive taxation.

Trust me, I understand what you are saying. I think making the "rich" pay their "fair share" is a bunch of bullsh*t. That being said, the flat tax is just bad. The percentage would have to be set fairly high to make the flat tax revenue neutral when compared with today's income tax. So if the tax was something like 40%, that would be extremely prohibitive to lower, lower-middle, and middle class families. To the upper-middle class and rich it would hurt, but it would only hurt thier disposable income spending. For the rest, it would directly affect their ability to buy the necessities of life.

This problem is why I advocate the FairTax. Every person, regardless of income or social class, can choose exactly how much they pay in taxes by consuming more or less. This is especially true because every single families spending is tax-free to the poverty level due to the prebate. Each family spends as much or as little as they like in taxes and has more control over their spending then in any other point in history, at least since the income tax was first implemented.

mdklatt

7/24/2008, 10:23 PM

How is every person paying the same percentage unequal?

What's so fair about paying the same percentage? You're confusing fair with arbitrary. What makes you think that one's benefit from society is exactly proportional to their income? You wouldn't think it was fair if McDonald's charged you more for a Big Mac than somebody who made less money, would you? Of course not. So obviously there's nothing inherently "fair" about paying an equal percentage of your income for something. What's fair is paying for what you get...no more, no less.

Further, how is it considered fair (or equal) to make people who earn more money pay a higher percent of those earnings? I understand if you want "rich" people to bear a bigger burden, but don't say it is done in the name of fairness.

Who has the most to gain from protecting "society"? Imagine if there was a Communist revolution, and all wealth was to be redistributed evenly. Say the new equilibrium level was $50,000. How much would you be willing to pay to prevent that from happening? Whatever would leave you at least $50,001 right? If your net worth is $100,000, it's worth $49,999 (50%) to you to protect the status quo. If your net worth is $1,000,000, it's worth $949,999 (95%) to you protect the status quo.

texas bandman

7/24/2008, 10:25 PM

How awesome would that be if the next President just said:

"Attention Baby Boomer scum: you thought you were going to retire and make all of your kids and grandkids work hard to support you in your old age because you didn't reproduce enough to keep money flowing into Social Security. Joke's on you, hippy! All marginal tax rates for those over 60 are hereby doubled.

"Oh, yeah, and your Social Secuity is going to be taxed, as well. Plus, when you hit 90? You're a renewable energy source."

What Social Security?!?... Since I have a pension through the Teacher's Retirement System of Texas, I am subject to the social security offset . Although I paid in enough quarters to qualify for SS, I get zilch, nada, nothing. This really sucks because if I had a private pension I wouldn't be subject to the offset. I guess that's what I get for becoming a teacher. Either make the offset applicable to everyone or no one. Hmm....making all retirement benefits subject to the offset might help SS's solvency. Dang, I should run for Congress.

SCOUT

7/24/2008, 10:32 PM

What's so fair about paying the same percentage? You're confusing fair with arbitrary. What makes you think that one's benefit from society is exactly proportional to their income? You wouldn't think it was fair if McDonald's charged you more for a Big Mac than somebody who made less money, would you? Of course not. So obviously there's nothing inherently "fair" about paying an equal percentage of your income for something. What's fair is paying for what you get...no more, no less.
One's benefit from society isn't exactly proportional to their income. It also isn't scaled the way you seem to portray it. The roads a rich person uses are the same as poor one. In fact, most federal services are the same. Also, in our current system there is a significant percent of the population who pay nothing at all. A portion of those "rich" folks foot their share of the bill too.

Who has the most to gain from protecting "society"? Imagine if there was a Communist revolution, and all wealth was to be redistributed evenly. Say the new equilibrium level was $50,000. How much would you be willing to pay to prevent that from happening? Whatever would leave you at least $50,001 right? If your net worth is $100,000, it's worth $49,999 (50%) to you to protect the status quo. If your net worth is $1,000,000, it's worth $949,999 (95%) to you protect the status quo.
I don't agree with your scenario. A communist revolution would have a much greater impact than just net worth. Along those same lines, taxes pay for much more than the protection of an individuals personal wealth.

texas bandman

7/24/2008, 10:36 PM

Those links that SoonerKnight provided are very misleading. In percentages, yes, Buffett pays less on taxes than those working way under him. In dollars, Buffett will likely pay 20x more than a high-level manager under him.

But he's probably not having to worry about health care or how he's going to buy his next tank of gas...I think what he means is that he can afford to be taxed more without affecting his quality of life.

mdklatt

7/24/2008, 10:45 PM

The roads a rich person uses are the same as poor one.

If the rich person wants to fix the potholes he better be willing to pay up, because the poor person isn't going to. That's the bottom line: If the rich people want to get stuff done they're going to have to pay for it, because the poor people can't. You say it's wrong to impose "punitive" tax rates on the rich, but is it okay to punish the poor instead?

I don't agree with your scenario. A communist revolution would have a much greater impact than just net worth. Along those same lines, taxes pay for much more than the protection of an individuals personal wealth.

That was obviously a simplified scenario. I was just giving a philosophical explanation for a progressive tax.

SCOUT

7/24/2008, 11:11 PM

If the rich person wants to fix the potholes he better be willing to pay up, because the poor person isn't going to. That's the bottom line: If the rich people want to get stuff done they're going to have to pay for it, because the poor people can't. You say it's wrong to impose "punitive" tax rates on the rich, but is it okay to punish the poor instead?
I didn't say it was wrong to have punitive taxes, I said it was wrong to call it fair. In your above quote you admit as much. If you go back to the post that I originally quoted it used the word "equal." A progressive tax is neither equal or fair. Also, your last sentence says "instead" which is incorrect. Use the word too in place of instead.

I use the word punitive because it seems that the more successful a person becomes the more they are punished by their tax rate. I still think that is the current reality.

tommieharris91

7/25/2008, 03:12 AM

Just bring Mike Stoops back to OU. He'll fix it all baby!

Sorry. I read all these posts and you guys wore me out. You should be on Squawkbox on CNBC. I'm serious. You guys know some sh!t.

Damn this is true, from all sides. Factual points and understanding galore here. Carry on folks.

I'll have to come back tomorrow when my wits are about me again (tell Phil I'm posting drunk ;)).

mdklatt

7/25/2008, 09:01 AM

I use the word punitive because it seems that the more successful a person becomes the more they are punished by their tax rate.

Only if you think they become more successful in a vacuum. Or look at it like this. Instead of paying more for crap at Wal-Mart, you've got to pay higher taxes to help support Wal-Mart employees. It all evens out one way or another.

soonerscuba

7/25/2008, 10:32 AM

Hamhock

7/25/2008, 10:35 AM

The reason why it's regressive is because it assumes that income tax is the only tax you pay. Let's say you make 100,000/y and I make 20,000/y and we both go to buy a gallon of milk which is taxed at 7% by the state sales tax. The person who makes 20,000/y pays a higher percentage of total of income as tax than the person who makes 100,000/y which I don't think would fly among the masses. Unless your position is that the poor should pay more in tax or abolish the idea of state funded government I doubt it would work.

under the fair tax plan, someone making $20k per year would effectively pay no tax.

yes or no?

soonerscuba

7/25/2008, 11:19 AM

under the fair tax plan, someone making $20k per year would effectively pay no tax.

yes or no?
I was referring to why a flat tax is regressive.

I don't really bother or care about FairTax in that the only way it could ever be passed is in a post-revolutionary United States in which the current Constitution has been replaced. At this point, I'm fairly certain FairTax is a scam to sell books.

SoonerBBall

7/25/2008, 12:04 PM

under the fair tax plan, someone making $20k per year would effectively pay no tax.

yes or no?

Close, but not quite. They would be tax free up to the poverty level adjusted by number of people in the household. This is not to say that they wouldn't pay taxes, they would just be reimbursed for the full amount up to the poverty level.

Taking the poverty level statistics for 2008:

2008 HHS Poverty Guidelines

Persons
in Family or Household 48 Contiguous States
1 $10,400
2 $14,000
3 $17,600
4 $21,200
5 $24,800

For each additional person, add 3,600
SOURCE: Federal Register, Vol. 73, No. 15, January 23, 2008, pp. 3971–3972

So every single person household, regardless of income level, would receive all the money they paid in taxes up to the poverty level back. The calculations for this would be:

$10,400 * .23 = $2,392

or

$10,400 * .23 = $2,392

$10,400 - $2,392 = $8,008

$2,392/$8,008 = .298 or ~ 30%

So the total prebate over the entire year would be $2,392 or $199.33 a month.

This means that a person living at the poverty level income of $10,400 a year would not pay any taxes on their purchase that year unless their purchases exceeded their total income. Even then, they would only pay the difference as they would still be tax-free to their income level.

SoonerBBall

7/25/2008, 12:15 PM

I was referring to why a flat tax is regressive.

I don't really bother or care about FairTax in that the only way it could ever be passed is in a post-revolutionary United States in which the current Constitution has been replaced. At this point, I'm fairly certain FairTax is a scam to sell books.

How exactly is repealing the 16th amendment a revolutionary idea? I figure it is less revolutionary then its adoption, seeing as the federal income tax was sold to the American people as a temporary measure to fund a world war.

Vaevictis

7/25/2008, 12:27 PM

How exactly is repealing the 16th amendment a revolutionary idea? I figure it is less revolutionary then its adoption, seeing as the federal income tax was sold to the American people as a temporary measure to fund a world war.

Given that the 16th amendment was ratified in 1913, and Archduke Ferdinand wasn't assassinated until 1914, I don't get the causality there.

SoonerBBall

7/25/2008, 01:53 PM

Given that the 16th amendment was ratified in 1913, and Archduke Ferdinand wasn't assassinated until 1914, I don't get the causality there.

You're right, that was my bad. I was reading about a different tax and thought I was reading about the 16th amendment.