The spending and tax proposals of the Gang of 6

Boygabriel said:

Also, if the new way of being is $4,000,000,000,000 in cuts and no raise in revenue, whether through loopholes, taxes, the super-wealthy, or estate taxes, then yeah, I might choose our unsustainable (according to you) path.

FWIW, capital gains tax has been held low for a while and rates are due for a hike back to reality either next year or in 2013

I just saw an article in the WSJ about Obama vs Boehner's plans... admittedly Boehner's plans are pretty weak and vague, but on the flip side the only biggie Obama seems willing to touch is the military, which really should be scaling back anyway. Both their current plans are good for about $1.5 trillion in savings, but if they combined them they'd add up to close to $5 trillion. For whatever reason, BOTH sides are unwilling to make concessions that to anyone who doesn't have a lobbyist's gun to their back makes sense.

Boygabriel said:

Your belief presumes we're all contributing equally already, as opposed to fixing an unequal system.

Therein lies our philosophical differences.

Can u explain mathematically how the poor & middle class are contributing more than their fair share than the rich? The net federal income tax rate for the top 50% is about 14%. The net tax rate for the bottom 50% is about 3%. Even if somehow the bottom 50% were spending 100% of their income on items that prompted sales tax, their tax rate would still only be about 12%. And the tax rates get more progressive the higher up you go. Top 1% tax rate was about 23%. The next 4 percentiles was about 18%. Etc. I'm sure at a certain point on the other side tax rates are negative. Are they not negative enough?

And then contribution wise, the top 50% put in 87% vs the bottom 50%'s 13%. This doesn't even consider where the income is coming from, which for the bottom 50% might be from entitlement programs. So where are you getting this information?

INCOME-wise, yes, we have a problem. But you can't tax that problem away. It's a fundamental issue of how collectively equipped we are to grow productively. And that will take time & thinking to fix. I do think there are a lot of problems with the tax code. But the curve or people "not paying hteir fair share" is not one of them.

CTK, a lot more goes into what society pays for than income tax.

Perhaps that's why we never see eye to eye.

The rich have gotten very good at paying very little tax on their wealth. Focusing solely on income tax (and that's giving the benefit of the doubt on loopholes) is a very narrow way to look at things.

A tax on wealth?

So if you have a savings account just sitting somewhere, it should get taxed, even if you're not investing or spending it? Who would the tax apply to? I imagine that would only exacerbate the poor's inability to accumulate, and beyond pure spite I can't imagine why such a tax would only be levied on people able to save. I don't understand what you mean by that..

You earn money at a job, you pay income tax, your employer pays payroll tax. You take that money, invest it and generate a return, you pay capital gains tax. You buy goods, you pay sales tax. Unless I'm mistaken, when you die, God forbid you have anything to leave behind, as you will pay tax on whatever you leave to anyone as well. If money moves, it gets taxed. Even with all the loopholes and Bush tax cuts, the more money you make, the higher your overall tax rate. So from any tax perspective your stance is wrong.

What do we need to do as a country? IMO, we need to get our gov't spending under control, which we should do by focusing on spending cuts, as the govt has grown at a rate far higher than our economy. We need to solve the income distribution problem, which is not a consequence of the rich having "too much wealth" or whatever- it's a consequence of the population becoming less and less competitive, both internally and compared to the rest of the world. We need to get healthcare costs under control. The obsessions of the left/right with the rich/poor respectively are unproductive smokescreens holding us back from REAL progress, which is all I really want. Trust me BG, I have friends who are your ideological mirror images and I'm no less hard on the rich. People need to stop making scapegoats and start looking at what is actually going on.

So from any tax perspective your stance is wrong.

Lol. I love it man.

Why don't you ask questions before you fill in a whole bunch of assumptions, eh?

The strawmen are indeed quite easy to dispatch.

Our debt/spending/revenue issues are not simply a matter of the federal tax code.

No, you put everything in terms of income tax rates.

That is not the sole lens by which I make statements like:

I don't think the rich contribute enough to society and I do not think that dealing with debt should involve much cutting of social services.

Worker productivity has steadily increased for decades, as has CEO and corporate pay, and things like the financial services industry.

For a vast majority of Americans pay has increased very very slowly.

America is still competitive, but the money is being paid to the CEOs and stockholders.

Boygabriel said:

Worker productivity has steadily increased for decades, as has CEO and corporate pay, and things like the financial services industry.

For a vast majority of Americans pay has increased very very slowly.

America is still competitive, but the money is being paid to the CEOs and stockholders.

I agree that there is an income distribution problem- but nothing is stopping anybody from owning public stock. Hence the name- "public" stock. Really just nitpicking but still a valid point IMO.

And much of the productivity has come from technology and process innovation- not really the average worker just becoming more inherently efficient. You look at nearly any leap in productivity, there was some kind of process or tool that was created that enabled people to do more. So that's where the money goes.

People are working longer hours, which is also a problem. And our spending power continues to decline, which is also a problem. But the first problem is somewhat cultural for a few reasons. And the second problem is more tied to shit monetary policy.

Cool The Kid said:

What do you feel the rich should be contributing to society that they aren't? And what does that have to do with our fiscal issues?

More taxes.

Fewer loopholes.

More reasonable salaries for CEOs and financial services.

A better distribution of profit than primarily to shareholders.

Undo the perverted incentive system where business decisions are made to appease the stock market, rather than employees and the community.

Better regulation finance industries.

Universal health care.

More funding for public transit and less funding for private automobiles.

More funding for public housing and less tax breaks for gigantic developments.

Punish companies who outsource their labor yet receive US tax breaks, or worse, pay taxes in off-shore tax havens.

I have lots and lots of ideas for what we all agree is a very big problem.

Should we disable families from passing wealth down from generation to generation? How do you propose we solve this?

Estate taxes should be very high. There are philosophical and practical reasons for this, which I'm happy to expand upon.

It is an issue of competitiveness. Some of it is by choice. American students have been shying away from lucrative fields for decades now (maths, sciences, technology etc.). We shy away from any fields that demand any kind of work, generally.

I think this is misguided. Since the 1980s we've seen an explosion in financial services industries, and that is now where a majority of America's best and brightest choose to work (and most of them work very hard, TOO hard).

This creates a talent vacuum in other industries (namely medical and science). Combined with falling and underfunding educational standards, it has created a seriously perverted incentive structure that creates far more personal wealth than a combination of income AND benefit to the society/nation.

whynot_31 said:

We can not simply demand that employees be paid more without losing ground to places that can produce the same produce or service for cheaper.

When one participates in the global market, you do control your own country unless you control the world.

I recognize your belief in the immovable forces of globalization.

We disagree on how it should dictate American business policies and incentives.

Boygabriel said:

I don't follow.

You keep saying not enough of profits are shared with employees. I am saying, shareholders are not just "given" stocks. They take money they earn and buy them, and then get the profits from the company. Nothing is stopping employees from doing the same.

And much of the productivity has come from technology and process innovation- not really the average worker just becoming more inherently efficient. You look at nearly any leap in productivity, there was some kind of process or tool that was created that enabled people to do more. So that's where the money goes.

I don't follow, the money goes where?

I believe it goes to the shareholders, and not enough is given to the employees.

You are not even sure where the money is going, so how do you know not enough is being given to the employees?

A lot of the gains in productivity come from tools that enable work to be done more quickly. For example, how much of the productivity increases over the last few decades do you think are the result of the computer? The automobile? Airplanes? Refrigeration? What about the American worker has changed in the past 50 years, beyond our adaptation to the new tools we have to do our jobs?

If only free-market capitalism were that simple and neat.

Cool The Kid said:

Just for the rich? If so, why, given that tax rates increase proportionally with income- both from payroll and capital gains?

The more money you have and the more diverse your sources of income, the more loopholes there are.

That's why Warren Buffet always uses the anecdote about how he pays a lower tax rate than his secretary. Or how there's a loophole "that lets hedge-fund managers count their income as capital gains and pay a 15 percent marginal tax rate".

Who and how will it be decided what is reasonable?

Good questions. They don't refute my argument tho. We're an industrious nation. I bet we can figure it out.

One common proposal is tying CEO salaries to the lowest paid workers or staffers or what have you.

Shareholders are the ones investing in the company. Why should employees be given equity?

You don't have to give them equity per se, but it is in the realm of possibility to have more equal claims on profits.

What is stopping employees from investing in the companies they work for?

For most Americans? Enough income to do things like invest. Something like 85-90% of the stock market is held by hedge funds and other such entities. The stock options are not really viable for a huge percentage of Americans.

America has been designed around the automobile. Most places in the US are just not ripe for public transportation systems. Plus what funding are you talking about exactly? I don't agree with the bailouts of the auto industry. But that was like a once in a lifetime thing. What regular investments is the gov't making into the private car?

Transportation policy is a huge topic that maybe I should start a separate thread on.

But federal and state govts have myriad policies that encourage or subsidize individual automobile use over mass transit.

A big reason places aren't ripe for public transit is b/c we have a history of not investing much in public transit. It's self-perpetuating.

Public as in free? What do you mean by public exactly?

low income, unemployed, underemployed, in poverty.

Please expand on this.

Well, on the more simple side of things, the current rate is just too low. I guess that's just a personal preference.

On the more philosophical side of things: Warren Buffet has argued philosophically he doesn't see a strong argument for what off-spring have done to deserve an estate of $250,000,000 or whatever one's lucky amount is.

Obviously I recognize the argument in favor of it: a guy makes his money, his family should get it.

But in terms of societal obligations and collective debt/opportunities, the claim becomes murkier.

People get extremely wealthy b/c of the functional society around them. When wealth gets accrued into estates, it tends to sit in estates. Some goes towards investment, but a lot doesn't. It can't be mostly tied up in a family's generational bank account. It needs to help benefit the society it came from.

I agree that brain drain is a problem. But I don't think there is a glut of talent in medicine. It's become a lot harder to become a doctor. And people aren't going into science because "its too hard". Plus I don't know how we can fix this, without the government mandating pay structures. I don't know that that is a responsibility I want to hand them.

The financial industry has mushroomed exponentially over the past three decades. Tighter regulation, better taxation, more responsible banking practices could tip the scales back into balance, so that finance service industries are no longer so wildly excessively lucrative compared to other industries.

I think you unrealistically discount the effect of globalization on where the US is today. For example the fact that you think we can mandate wage structures to no ill effect is idealistic at best. You make a law mandating a factory worker's pay be doubled, you just outsourced their labor. I'm curious to see how actually think we could achieve such a goal fairly.

I don't mandate some kind of socialist wage cap. I understand what I'm saying is radical, but there are/can be very creative ways to achieve a healthier society.

I think many of our problems can be traced to our wildly out of control disparity of wealth. This is from whence many of my philosophies come.

We have taken anti-govt and anti-regulation mania way too far.

Cute & witty.