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Chibibar
but the rich provide "jobs" you can hire people to clean your home. (yea that was a cheap shot)
2011 Jobs Bill
- Thread starter Necronic
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Don't forget about penthouses.
What do you consider giant? 3000 square feet? 4000? 10000?
What? It's nothing personal. I just think that rich people (the top 1%) are obligated to return money back us working slobs? Why? Because they own about 50% of the total wealth of the damn country, that's why. How can you know see how fucked in the head that is? I have nothing against hard-working middle and upper middle class folks, but dude, there is a point where you have to say to yourself, "I'm satisfied with I have, and I can contribute what I don't need to my fellow man." Nobody needs or has the right to the kind of insane wealth that these people have.
Financially, my state is fairing fine, if not better than other states in the country. I don't know what you're reaching for with that one. The American Dream is a farce to keep the working slobs working by the rich.
I don't understand. Are you saying that we should legislate a cap on people's assets and income? No one can be richer than X dollars, just because, what, it's immorally wrong to be fabulously wealthy? In what ways would I be damaging society if I were a billionaire, in ways that are significant enough that I should be dinged for the damage? Why does "freedom" stop once your definition of "sufficient" is met?
What you're saying just rubs me the wrong way. Why should we limit one's freedom to generate wealth?
The whole, "You have more than you need, so you have to give it to society" is counter to capitalism - are you proposing that the government should legislate something other than capitalism, and if so, what?
I'm not proposing answers to anything, I'm just stating what's wrong with the current system.
And no, America is not a capitalist society.
Oh good, I just want to make sure no one is going to stand in the way of me becoming fabulously wealthy.
But if you aren't splitting hairs, what is America's economic model, if it isn't capitalism?
It's certainly far from a "pure" capitalist system. I'm not convinced that it's closer to any other economic model than it is to capitalism, and I don't think that moving to another model is going to solve any of the problems being discussed in this thread.
But if you aren't splitting hairs, what is America's economic model, if it isn't capitalism?
That's the rub, isn't it? As a Republic, our society isn't required to be one type of economic model over another. What should be a strength (a fluid economic model which can change with the times and move toward capitalism or socialism as needed) has shifted further toward a pure capitalism. The demonization of the word socialism and of government in general has led us to the point where people advocate destroying all parts of government instead of excising the corruption on finding a solution.
The wealthy want a capitalist society where their companies can be bailed out if things go bad, and they got it. The rest of us would much rather have a marriage of capitalism and socialism for an economic model. It's why things like social security and medicare are such popular programs.
Bad example since baseball suffers from a lack of salary cap.
Darn straight!
GasBandit
Staff member
So what we get from this is that when the rich get to keep more of what they make, they work harder at making more. In fact, those figures blatantly state the following:
In 1996, people who paid capital gains taxes earned 221.4 billion through capital gains.
In 1999, the capital gainers earned 545 billion through capital gains (more than 2x as much!).
I would submit instead that there were other factors at work which allowed the capital gainers to increase their income. For instance 1995 was the first year of the creation of so-called "private label" mortgage-backed securities. You might remember these things. They were kinda popular, and they were very good at attracting a lot of investors. Seriously, all these things did was make money (via capital gains) for the people who held them...until 2008.
All those quoted figures really say is that the income of the rich went up enough for the revenue generated by the capital gains tax to offset the decreased tax percentage. The JTC's estimates were flawed because they expected income to continue at precedented levels, rather than the unprecedented cash explosion that happened (such as the current gold bubble, which is another thing taxed as capital gains). I find it highly unlikely that this increase in taxable income was a direct result of the lowering of capital gains taxes. Otherwise, lowering the capital gains tax rate to 0% would generate the highest revenue of all, right? Those numbers say that all the government has done over the past decade+ is hamstring their revenue in an attempt to make/keep rich people happy. And nowthey're we're paying for it.
tl;dr: Correlation is not causation.
--Patrick
In 1996, people who paid capital gains taxes earned 221.4 billion through capital gains.
In 1999, the capital gainers earned 545 billion through capital gains (more than 2x as much!).
I would submit instead that there were other factors at work which allowed the capital gainers to increase their income. For instance 1995 was the first year of the creation of so-called "private label" mortgage-backed securities. You might remember these things. They were kinda popular, and they were very good at attracting a lot of investors. Seriously, all these things did was make money (via capital gains) for the people who held them...until 2008.
All those quoted figures really say is that the income of the rich went up enough for the revenue generated by the capital gains tax to offset the decreased tax percentage. The JTC's estimates were flawed because they expected income to continue at precedented levels, rather than the unprecedented cash explosion that happened (such as the current gold bubble, which is another thing taxed as capital gains). I find it highly unlikely that this increase in taxable income was a direct result of the lowering of capital gains taxes. Otherwise, lowering the capital gains tax rate to 0% would generate the highest revenue of all, right? Those numbers say that all the government has done over the past decade+ is hamstring their revenue in an attempt to make/keep rich people happy. And now
tl;dr: Correlation is not causation.
--Patrick
GasBandit
Staff member
The 0% infinite profit thing is a fallacy, but it does illustrate that there's really a "sweet spot."
I don't think that all the investment income made since 1997 can be dismissed as a simple mixture of subprime mortgages and gold. There was a lot of stuff going on during that time.
I don't think that all the investment income made since 1997 can be dismissed as a simple mixture of subprime mortgages and gold. There was a lot of stuff going on during that time.
I don't think it's all due to that mixture, either. All I'm saying is that the increase in capital gains revenue was not the result of the decrease in the rate. The rich were going to try to increase their income regardless of the tax rate, they have just been more successful at doing so than the 'experts' predicted.
Capital gains income is generated by buying into something (securities, gold, cars, collectibles, whatever), holding onto it, and then selling it for more, later. The only 'work' needed is in the warehousing of the thing (real or virtual) until the time comes to sell. If you want to create jobs, you raise the capital gains tax rate higher than the income/payroll tax rate, thereby encouraging people to shift their investment into things that generate income (ie, jobs, franchise, expansion) instead of capital gains (jewelry, real estate, futures).
--Patrick
Capital gains income is generated by buying into something (securities, gold, cars, collectibles, whatever), holding onto it, and then selling it for more, later. The only 'work' needed is in the warehousing of the thing (real or virtual) until the time comes to sell. If you want to create jobs, you raise the capital gains tax rate higher than the income/payroll tax rate, thereby encouraging people to shift their investment into things that generate income (ie, jobs, franchise, expansion) instead of capital gains (jewelry, real estate, futures).
--Patrick
I'm a technology nerd, not an economist (in fact, I came very close to failing college econ), but it does seem rather logical that making it more expensive to hoard (valuable) stuff would encourage a bit more spending and consumption. The other possibility I see is that the hoarders will just hold onto everything as long as they can, hoping the rate will go back down again. In that case, it makes sense for the rate to go up and down periodically so that people will dump their holdings now and again.
I did a little research regarding capital gains. The last time the government raised capital gains (in 1986-87, from 20% to 28%), revenue plummeted to half, and it stayed low for a decade. Of course, this was also the year of the big stock market crash. No idea whether the two were related, but the effects of that event (especially as it affected capital gains) persisted for a while. Capital gains revenue since has never fallen below 1984 levels (when rates were at 20%) regardless of whether the rate has been 28%, 15%, or anywhere between.
--Patrick
I did a little research regarding capital gains. The last time the government raised capital gains (in 1986-87, from 20% to 28%), revenue plummeted to half, and it stayed low for a decade. Of course, this was also the year of the big stock market crash. No idea whether the two were related, but the effects of that event (especially as it affected capital gains) persisted for a while. Capital gains revenue since has never fallen below 1984 levels (when rates were at 20%) regardless of whether the rate has been 28%, 15%, or anywhere between.
--Patrick
Consumption doesn't need to be encouraged, quite the opposite.
Perhaps you mean "is a contributing factor..."
Right. We don't necessarily need the middle class to go out there and spend 105% of their income like many of them did 5 years ago, but it would be nice if the folks sitting on big piles of money would see fit to return a sizeable portion of it to circulation. The economy needs money flowing through it in order to work. Reducing that flow to a dribble because someone upstream dammed the river makes it hard for the people downstream to make their living. Trickle-down economics, indeed.
--Patrick
--Patrick
Does being invested not count as "in circulation?" I rather doubt the nation's wealthy are sitting on piles of cash like Scrooge McDuck. Even if the money is in a CD in a bank somewhere, it seems to me that the bank would then have more capital to loan, which would count as "returning it to circulation."
But then again, I'm no economics expert, nor am I as well read in the matter as I'm sure the majority of you folks who comment here are.
I don't know about anyone else, but I just make stuff up and post it. In the dark of the night when I'm all alone, I can only claim I'm a troll, or, thinking more positively, a "devil's advocate".
Speaking of BSing, the "rampant consumerism" is largely held up by credit debt. People wouldn't be spending so much money - even money they have - if they didn't know that should something go wrong they can instantly access thousands of dollars of credit to get them past difficult times.
Unfortunately even that "safety net" is damaged by long-term recession, so people are more careful with their "real" money, and are cutting back on use of credit.
Consumer credit is one of many things that made the USA such an economic powerhouse - few other countries embraced it as strongly as we have.
It's also one of the many things that makes recessions hurt more and take longer to recover from.
Money wouldn't flow so freely through the system without this form of debt, and as PatrThom points out, money has to move for the system to work. When a logjam occurs and banks stop lending to businesses, the whole system locks up.
In an ideal system, short term credit acts as a sort of buffer to prevent periods of no flow, and to prevent periods of excess flow. Both situations cause problems, and the risk of damage during those periods is large enough that people and companies would be much more careful with their spending if they couldn't rely on their short term credit lines.
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Chibibar
that would be true if they are investing in company/business that MAKE jobs. Investing money in Stock trading, money market account, and stuff like that doesn't really put money "into circulation" it just get swish around in wall street and end up in someone else pocket.
GasBandit
Staff member
So maybe there should be higher taxes on capital gains from purchasing preowned stock, and lower taxes for buying at, say, an IPO? That way, the kind of investment that lets business get money to expand is encouraged.
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Chibibar
I don't know. This is where my limited economic knowledge stop short.
I know that people WITH money are "hoarding it" heck, even banks who get government help are hoarding it. It is NOT being circulated (as the government hope) to private sector. The people with money are just trading stocks (which the money doesn't go to the company BTW after initial BPO) so the money just get slush around back and forth and not really "doing" anything.
It is not being use to buy stuff. Even community college level (here in Texas) we are cutting back BUYING stuff, even much needed equipment which would promote economy.
That's why there is a difference in the rates between short- and long-term capital gains. The rate on short-term gains is higher in order to discourage people from "flipping" assets at every available opportunity. Securities/investment is supposed to be long-term to allow the company/bank to know they will have that money long enough to be able to make a profit.
The trouble lately is that the investments (whether from bailout or private sector) are plumping up the companies just fine, but that is where it is stopping. The banks aren't lending* and corporate expansion is heading overseas. The money is coming from the public, but it is not returning to the public. If you've ever seen any diagrams of the water cycle, you can see how interrupting/diverting it will break the system. Credit is supposed to get people through the dry spells (or purchase things they would not normally be able to afford all at once, such as houses and cars), but irresponsible use of credit (by either borrower OR lender) just makes things worse.
--Patrick
*And there are memos from banks basically saying they are going to take the bailouts and sit on them "...to be better able to pursue any strategic opportunities." (ie, to buy up any banks that fail rather than lend to consumers)
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Chibibar
This is what I'm seeing. This is why I think bailout from the government level is bad. In this capitalistic world, other company will buy them up. It will happen, nothing will go "away" (we could all wish our mortgage will disappear but that is not gonna happen without consequences) Money is being "pump in" but it is going out overseas (This I agree) more and more jobs are going overseas because it is cost effective.
Between the Internet and long distant phones, it is sad that you can get tech support CHEAPER across the world with long distant call than hiring locally in the states
GasBandit
Staff member
Also, the whole thing with the "the banks are not lending!"... I seem to recall there were polls saying that there were also not businesses applying for loans as much as previously. One thing's for certain when it comes to jobs... you don't take out a loan just to hire more people... you take out a loan to make capital investments (IE, equipment, facilities, etc)... and with the current hostile-to-business environment in Washington, it doesn't surprise me that businesses are more focused on battoning down the hatches to weather the storm. Increased regulation, increased taxes, and heck... the onset of obamacare... it's entirely understandable why we are where we are.
Ok, that's a crock of crap. This is the worst Fox News talking point I've ever seen you spew, man. Bad. Very bad and wrong. You're better than this.
C
Chibibar
I think the current hostile-to-business enviroment would be.
MUST have insurance for worker in business (cost more money)
higher tax for business (cost more money. I think this is right. I get confuse with all the propose changes now)
Lending institution not lending money as much (not government related but a problem)
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