Questioning Obamanomics 61 comments
-
Font Size:
-
Print
- TweetThis
Barack Obama gave a fine speech at the Democratic National Convention on Thursday. But I'm troubled by what I see as its underlying economic philosophy.
As I listened to the speech by Barack Obama accepting the nomination of the Democratic Party for the U.S. presidency, I felt I was listening to a very gifted orator. I also thought I heard a cash register go ca-ching every time he finished a sentence:
I will eliminate capital gains taxes for the small businesses and the start-ups that will create the high-wage, high-tech jobs of tomorrow.
I will cut taxes-- cut taxes-- for 95% of all working families. Because in an economy like this, the last thing we should do is raise taxes on the middle-class....
I'll help our auto companies re-tool, so that the fuel-efficient cars of the future are built right here in America.
I'll make it easier for the American people to afford these new cars.
And I'll invest 150 billion dollars over the next decade in affordable, renewable sources of energy-- wind power and solar power and the next generation of biofuels....
I'll invest in early childhood education.
I'll recruit an army of new teachers, and pay them higher salaries and give them more support....
Now is the time to finally keep the promise of affordable, accessible health care for every single American. If you have health care, my plan will lower your premiums. If you don't, you'll be able to get the same kind of coverage that members of Congress give themselves....
Now is the time to help families with paid sick days and better family leave....
As the list of things Obama promised to do grew ever longer, I found myself increasingly wondering, What is the underlying understanding of how the economy works that would motivate such a list? All these steps require a commitment of resources. If we are to have more of these things, we must be planning to divert the resources to pay for them from somewhere else. Evidently there is a notion of some kind of existing inefficiency or misallocation of resources -- money is currently being spent on things it shouldn't be, and should instead be devoted to objectives on the above list. But how is the bill for all these nice things supposed to be paid?
Fortunately, in his speech Obama anticipated this natural question, and provided the following answer:
Now, many of these plans will cost money, which is why I've laid out how I'll pay for every dime-- by closing corporate loopholes and tax havens that don't help America grow. But I will also go through the federal budget, line by line, eliminating programs that no longer work and making the ones we do need work better and cost less-- because we cannot meet twenty-first century challenges with a twentieth century bureaucracy.
I'll discuss that second point about government waste in a moment. But here's my understanding of Obama's central thesis -- if funds could be diverted from corporate profits into the above wish list, then America would be better off.
According to Table F.102 in the Federal Reserve's Flow of Funds Accounts, domestic nonfarm, nonfinancial corporate profits amounted to $1,037 billion in 2007. A third of that ($310 billion) is currently being paid as corporate profits taxes, and $487 billion is devoted to dividends, which are taxed directly as income of the shareholders. But doesn't that leave $240 billion sitting around doing nothing worthwhile?
Not exactly. Those same institutions also spent $460 billion on net fixed investment in 2007 ($1045 in gross investment minus $585 billion capital consumption allowance), which was financed by a combination of the $240 billion in retained earnings and corporate borrowing. If after-tax corporate profits were lower, the only way to have the same level of investment is with greater corporate borrowing. Recalling Menzie's recent picture on the empirical relation between the growth rates of corporate profits and investment, it seems unlikely that investment spending would remain the same if corporate profits were lower. And if it somehow did happen, I doubt that increased corporate indebtedness is a wise outcome to insist upon.
I raise this issue because I regard nonresidential fixed investment as the single most important economic variable that will influence America's future prosperity.
As for the second part of the paragraph above indicating Obama's plans to pay for his proposals, I agree with the senator that there is some waste in the federal budget. However, I'd caution against overstating the magnitude of what we should expect to achieve, and I would urge that any dollars saved be used to reduce the deficit before beginning any new programs.
At the top of my personal list of current expenditures that could be cut would be ethanol and agricultural subsidies.
What's on your list, senator?
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most activeSee all
Instabloggers.
Top Instabloggers » -
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 61 comments:
He will take from the ambitious and give to the lazy which is what socialism is.
That's a "deep" blow, I assume McCain is your candidate. A A did very little and a dying policy.
Obama reminds of Chauncy Gardner as played by Peter Sellers in the 60's film "Being There" the fool Gardner makes his way into the upper reaches of power by merely showing up at the right place at the right time, and of couse, in Obama's case by contually playing the race card. "Hi, I'm Obama, I'm black and I'm here, Fo you have a need for me?"
Also anyone who is interested should read his wife's Princeton Thesis, you can get it off the internet. REally scary communist/socialist and racist nonsense.
The Dimlibs are trying to create a liberal perversion of the truth by claiming the VP nominee Sarah Palin, has no experience, and so is not qualified to be a VP who might have to replace the President.
When in fact Palin has more executive experience than the Obamanation who has ABSOLUTELY no executive experience - or work experience - or political experience to speak of - and it the Dimlibd presidential candidate.
God help us if OBama wins the election, then I am out of the market -immediately and totally. He will bankrupt this nation.
I would cut foreign aid = $100B + totally unnecessary
also domestic welfare programs, food stamps, earned income tax credit = another $100B
Also eliminate Congressional " earmarks" the private process by which Obama earmarked some $5 million to his wife's hospital, about the time she got a big promotion and a $300,000 raise.
This would save another $200B in wasteful spending.
Finally I would revise the personal income tax structure so ALL Americans who have earned income, PAY SOMETHING in personal income taxes. (Over 65% of Americans PAY NOTHING in personal income taxes) In a Constitutional Republic ALL residents should pay something on their earned income, Then we would see how many people remain in favore of an enlarged, swollen, bloated federal government. Currently the "hated rich" the top 3% of income earners pay well over 50% of the personal income taxes = IRS statistic.
Ethanol is a scam. I wish I could purchase gasoline without ethanol as it would be cheaper and the car gets more mileage. A lot of farmers are getting subsidies to plant corn and then make a lot of money.
The plank of the upcoming communism in this country.
www.libertyzone.com/Co...
Education: Obama's record of his marxist school experiment is well known to the well read. It cost over $100 million and produced ZERO discernible results. We spend, between fed state and local MORE on education than we do on our defense budget and for my money, the defense dollar is better spent. (99% of the military has at least a high school diploma as opposed to 70% roughly in the civilian population.)
So for education, hand out vouchers to all children and let the competition begin and institute merit pay for teachers that produce results as opposed to illiterates and future burdens on the state and federal budgets.
For those who think people pay nothing in taxes, at the lowest levels, they do - social security and medicare. So we seem to be slowly lurching our way to a flat tax at under $50K level anyway.
Now, what I'm suggesting is exactly NOT what
Because you certainly consume resources provided by the "socialist gummint". You probably use public water and sewage, your food is inspected according to gummint safety regulations, your banks are insured by a gummint agency, and you were (poorly) educated at a state-supported school. The air you breathe and water you drink are protected by the socialist gummint regulations, else you would be inhaling something akin to the Chinese smog and drinking waste water from manufacturing plants (as is all too often also the case in China).
An alternative view to the binary dependent on no one / everyone dependent on each other, is to see things as they really are, a continuum of realities between those never-reached extremes. Responsible individuals work to ensure that the lazy (the ones who act to impede the effectiveness of government, either actively or passively) are minimalized, and that our "socialism" works at the most effective and efficient level.
This is a real and dangerous world. One young idealist is not going to make much of a dent in the larger forces at play. It will take time, and huge partisan wrangling to get anything done; in the meantime, the markets will be more panicky, as described above. In particular, the dollar may lose value ( already too low for us old timers who remember when a home could be bought for $18K ! Can we agree that the dollar is worth about a tenth of its former worth based on housing costs alone? ) Market forces can abandon the dollar if they decide another currency is stronger. This can shipwreck any idealist plan of egalitarian economics-namely by way of the sovereign funds of Kuwait , e.g., wind up owning GE , Ford, and Boeing, owing to the exacerbated decline in value which may be brought on by all this "I have a dream" mentality.... In short, not to be too much of a dash of a bucket of ice water here, but Obama makes me think of the Fairy Godmother in the Disney version of Cinderella...where he will , by the wave of his wand, transform our 1989 station wagon into a pearlescent Cadillac CTS with moonroof, and take us all to the resplendent ball where we get all kinds of free stuff- stuff that churls like us don't ordinarily have access too, like those "war mongering , right wing religious republicans do"....."yeah...dat's da ticket"...In other words, this is about "Winning"...which is something lawyers do as wind up dolls..."presenting the case for my being President'...it IS a popularity contest, vis Paris Hilton, where you tell the disaffected everything the disenfranchised like hearing...and vadda boom, vadda bing...you da president!
.... This is a real and dangerous world....I personally dread an Obama presidency. If I turn out to be wrong, well save this comment, and rub my face in it 6 years from now; and I will humbly apologize. But for now, I am going with someone who has earned his stripes, and possesses a vastly wider experience and wisdom regarding the big picture.
The initial tax-free amounts would allow the tax impact to be felt slowly -- a single taxpayer earning $50K would pay 24% of (50K-20K) = $6K, or a net rate of 14.4%. If they expanded their income to 100K, they would be paying an effective rate of 19.2%, and if they were fortunate enough and capable enough to earn a million bucks, they would be paying an effective rate of 23.5%.
Add a balanced budget amendment, phased in over the next 4 years, with taxes being raised to cover 25% of the overrun in the 1st year, 50% of the overrun in the 2nd year, etc.
Finally, I would amend the constitution to block repeated election to government office, limiting all elected positions to single terms. We have ample talent in this nation, and the rise of professional politicians is a cancer on our democracy.
Also, I would ban election to office by those within a single generation of anyone who has held elected office. We have too many political dynasties, in both parties.
But both of these last two items do not need constitutional changes to implement. I enforce them at every primary and election, never voting for a son/daughter/nephew/ni... of anyone who has previously held elected office, and I never vote for an incumbent.
These changes would restore stability and strength to our nation.
Alas, none of them will ever happen.
The Republicans aren't so good at this second phase - they keep cutting taxes and put us deeper into debt.
That being said, Obama's economic advisors are economists from the University of Chicago and one ex-U of Chicago residing at Harvard. John McCain's economic chief economic advisor is Doug Holtz-Eakin, a former head of the Congressional Budget office, but his two other advisors are Carly Fiorinia (formerly of Hewlett-Packard) and Meg Whittman (formerly of Ebay). Put another way, intellectually, Obama's team is the American League and McCain's team is the National League. You can stubbornly refuse to keep a Designated Hitter on the team, and have a pitcher step up to the plate three times a game, but usually, those are easy outs. Its another reason why the National League statistically gets creamed in the All-Star Game and the World Series.
Both candidates are pretty weak on economic issues. Both candidates will have to rely on their economic policy teams to temper a Democratic Congress which could run amok with deficit spending and earmarks.
It's business, not personal, but if I had a choice of who I would bring to the war room, I'd go with the Chicago boys any day.
GWB's 8 years in office has destroyed my party much in the same way the 1968 Democratic Convention divided their party. My hope is that after four or eight years, enough of the Old Guard will have passed on to the Happy Hunting Grounds to allow a new generation of conservatives in the vein of William F. Buckley to rid themselves of the stain of Iraq, Halliburton, Katrina and the disastrous economic policies of this bandit administration.
We experienced eight years of a blank slate president who leaned heavily on his team of experts, and we are worse off because of it. Whoever is elected will lean heavily on their team of experts. Strictly business, nothing personal, but McCain's patriotism, service to our country and beauty queen VP is not the answer.
One caveat, I would increase the term of election in all positions, then allow only one term.
But, you're right, it will never happen, because everyone has their hand out to Uncle Sugar and will not let go, until we are broke.
Who would get elected by talking about little things like the pension crisis or cutting social benefits?
I will, I will, I will....easy to say. We need a president who will actually do what needs to be done.
themanhattanprojectof2...
@BCNCV - he'll probably make good on the tax cut promise. We're taking a one-two punch, first this housing crash, then the war debt. There's no way to raise taxes when people are experiencing increasing unemployment and the economy is soft. I suspect Obama's divergence from the traditional Democratic Party policy will be that government money will be funneled more into this energy project, to "make jobs," rather than to pay for social services (he said nothing at all about protecting welfare, but raised infrastructure and energy issues). I wouldn't be surprised if the conditions for receiving this workfare were even harsher than what we're used to -- he may require that people travel for these jobs, put up with low pay, and even do actual labor.
Davidlentz: I'm pretty sure your flat tax would require either greater government borrowing or large spending cuts. A large portion of American taxes are paid by those in the tax brackets over 30%, and you're talking about giving them a big tax cut. To the extent that you balance this cut, you do so by raising taxes on the middle class. Good luck convincing a majority of Americans to vote for that plan (although it's concievable that they really are that stupid). Also, term limits sound like a great idea to people until you realize how much more incompetent your politicians could be. Go watch a state legislature in action and tell me that you'd be comfortable with all these people rotating through the US Congress and the few competent members of state legislature leadership being replaced by people like the first-termers.
petyaczar: Your statistic is completely made up. There is no way that 65% of Americans don't pay personal income taxes. First of all, everyone pays taxes somehow (property, sales, SS, etc.), but you specified personal income so we'll talk about that. Sure there are 300 million people in America, but some people don't have earned income: homeless people,sick or disabled people, children, students, stay-at-home parents, and the plain lazy folks. We can't charge income taxes to these people. About 90 million tax returns pay tax each year in the US. You can't just divide 90/300 and say that the rest pay no tax, because the 90 includes married couples, dependents, etc. There are about 45 million tax returns that pay no income tax, but it's a bit of a stretch to say that these constitute tax evasion: a large portion of them are probably from kids with summer jobs, single moms with 3 kids and low income, retirees living on a small fixed income, etc. If you really want to try to gather support to raise taxes on these groups, feel free. I would start with the single moms because you can probably get the sexist, racist and Christianist voters behind you. Try to find a single mom driving a Cadillac and use her as your poster child. Those welfare queens just won't let our hedge fund managers live in peace!
Technically neither Social Security nor Medicare (FICA) etal are taxes.
Because the money paid in is all recovered as benefits during retirement.
That is why there is a cap on annual S.S. contributions, because benefits are also capped. In effect SS and medicare are FORCED annuities. Privatizing SS would save the system and continue to provide a safety net for those who are at the bottom of the income ladder but otherwise qualify for SS because they acheive the minimum required work credits.
Also, lets make it a Capital Offense for ANYONE -including politicians - to take money from or otherwise divert funds from the Social Security trust fund. We have to stop the politicians from stealing from the SS trust fund. A few executions, public hangings, electric chairs, gas chambers televised on c-Span would probably result in most politicians getting the message and they would stop stealing our trust funds.
And so that is why I say that over 60% of the U.S. population does not pay PERSONAL INCOME TAXES. Everyone should pay some personal income tax, a minimum of $100 let's say if you made enough income to require filing a tax return.
How about it, I'm getting tired of half the people not even bothering to row the Fxxxxxxging boat and then these same people call me all sorts of names and scapegoat me for being one of the productive "rowers"
1. George W. Bush was elected to expectations that the U.S. would reduce the national debt and not engage in "nation building".
2. Bill Clinton was elected among fears of increased government spending and inceased deficits.
3. George H.W. Bush was elected with "read my lips".
4. Ronald Reagan was elected with expectations of stabilizing or reducing the national debt.
5. Jimmy Carter was elected with expectations that new ethical and moral performance would lead to an improved economy and renewed world leadership.
6. Richard Nixon was elected with expectations of renewed stability for the presidency.
7. Lyndon Johnson was elected with expectations of avoiding involvement in a major war.
The expectations for our recent presidents have not been met. In most cases the expectations have been undershot. How can one think that we can presume to know the predominant legacy of any president before he is elected? It is quite likely that the major positive expectations for either McCain or Obama will not be realized. It is also quite likely that the feared downsides will also not be realized.
What are the odds that this time it is different? I think pretty low.
And I think it's a pretty good bet that GWB has mucked things up so bad with his economy on a credit card philosophy that things will stay bad for an extended time.
So, stay optimistic, in 4 years we should still be reeling from the GWB legacy and can blame Obama!
Everyone especially the "have not" wants something for nothing. More Obama promises, more debt we'll be passing on to our children.
We need to start accepting personal responsibility and consequences of lack thereof. Throwing money we don't have at education, health care, welfare will do nothing but increase debt, make us less competitive, make the lazy more lazy.
Now, if we could just THROW OUT EVERY INCUMBENT in Congress, and start over, and get a President by picking using the Lottery system, we will be far better off. (I wonder how many Congressmen would bow out of that #1 job???)
Our financial system is in ruin. We need to close ranks...including our borders, throw out ANYBODY that is here without authority, and lets start cleaning house!
Not my statistics, but rather IRS statistics, point out that 65% of the population DOES NOT pay ANY personal income taxes. In other words they do not file ANY tax returns, AND/OR those who do file do not result in ANY PERSONAL INCOME TAXES BEING OWED.
These statistics are broken up into quintiles and identify the total number of personal tax returns filed and taxes paid by quintile.
The IRS summary numbers are derived from a bottoms up, not a top down statistical analysis. You want to argue the validity of their numbers -go ahead, but argue with them, not with me.
Just because the facts of the matter do not support you personal biases does not mean you should impugne the facts or the communicator of same, perhaps instead you should examine your personal biases and bring those into question.
ALSO I said "do not pay personal income taxes" my comment have nothing to do with real estate taxes, sales taxes, cigarette taxes,booze taxes, DMV fees, or various license fees or any of the other myriad ways this bloated government has figured out to enslave the free people of this great country.
PS social security and medicare are not "taxes" per se as they are considered to be repaid as annuities with stated benefits.
You don't mention that Mr. Obama also wants to roll individual tax rates back to Clinton-era levels, which is tolerable and would provide funds for many of his proposals. It would come at the expense of what you'd call "residential" savings, a troubling result given our already-low national savings rate. Whether this is a net economic win depends on the extent to which the money flows into "investment" versus yet more "consumption" - if the money goes back out in the form of stimulus checks and transfer programs, it will ultimately reduce savings and boost consumption - we might as well just send the money directly to the Chinese and OPEC countries. If, on the other hand, it goes into beefing up our aging infrastructure, it could be a net positive. Given the line about a big pay raise for teachers, I'm not optimistic - we're already spending double per child of most other industrial nations, and getting a poorer result, from the existing public education monopoly.
The proposal that really scares me is the proposed enormous increase in social security taxes, a payroll tax that will fall not on billionaires like Buffett, nor on Hollywood stars, but on the so-called "working rich", e.g. educated professionals like doctors, small business owners, etc. The tax is punitive enough that many will decide simply not to work once they've reached the government-defined maximum allowable salary. The effect of that can't be good, and I'm hoping that if Obama is the next president, he backs off this idea, or that his majority in the senate is not sufficient to stop a filibuster. A more reasonable measure might be to bump the medicare tax by half a percent. Everyone already pays that one anyway, and a glance at the unfunded future liabilities shows clearly that medicare, not social security, is the biggest looming budget problem.
Certainly rings true under the BUSH dynasty. Bail out the rich(Bear), cut taxes on the rich, and spread the remaining payments for the damage to the people that pay taxes. Then make successive generations of the unborn pay for the $53 trillion in entitlements and unfunded programs.
Others have called this "privatizing the profits and socializing the losses" which is exactly what is happening in this country on a grand scale.
I'm a capitalist to the core, but will be voting for Obama as the lesser of two evils.
We need to fear fascism in this country, and the socialism of the rich, not the communism of Mao, or Stalin.
Under Bush, the nations MBA president, and Oil businessman we've lost control of both our nations fiscal future, and of our nations energy security.
Sorta the opposite of what one might expect? Ironic isn't it?
In answer to your question I believe it was that rotten commie Saul Alinksy who Aug 31 06:33 PMWho said that " In America, the only socialism acceptable is the socialism of the rich".
The same socialist idiot who loves Satan as he dedicated his book "Rules for Revoltionairies to Lucifer/Satan as the ultimate and first reolutionary. Current acolytes of this Satanic socialist include Michelle and Barack Obama, and Hillary Clinton.
Now a few economic facts for you to consider:
The Laffer curve is a reality.
If you want less of something, tax it more, If you want more of something tax it less.
The top 3% of income earners pay over 50% of all personal income tax revenues. The bottom half (50%) of income earners pay ZERO % of personal income tax revenues
Transfer of wealth from the most productive members of society to the least productive members of society creates a "lose lose" for the entire society.
The government is merely overhead, it lives off of, and spends tax REVENUES NOT tax RATES. Within a broad range >0 and < 30% Raise marginal rates, you reduce revenues, lower rates and you increase revenues. Proven time and again over and over from JFK to today.
Personally I'm tired of rowing the frigging boat while half the other "citizens" in the boat sit around and merely bitch and moan that I'm rowing "too slow" while they won't even bother to pick up a friggin oar.
Communism/socialism DOES NOT work, proven time and again regardless of what the Obamanation thinks.
have a nice day
In answer to your question I believe it was that rotten commie Saul Alinksy who Aug 31 06:33 PMWho said that " In America, the only socialism acceptable is the socialism of the rich".
The same socialist idiot who loves Satan as he dedicated his book "Rules for Revoltionairies to Lucifer/Satan as the ultimate and first reolutionary. Current acolytes of this Satanic socialist include Michelle and Barack Obama, and Hillary Clinton.
Now a few economic facts for you to consider:
The Laffer curve is a reality.
If you want less of something, tax it more, If you want more of something tax it less.
The top 3% of income earners pay over 50% of all personal income tax revenues. The bottom half (50%) of income earners pay ZERO % of personal income tax revenues
Transfer of wealth from the most productive members of society to the least productive members of society creates a "lose lose" for the entire society.
The government is merely overhead, it lives off of, and spends tax REVENUES NOT tax RATES. Within a broad range >0 and < 30% Raise marginal rates, you reduce revenues, lower rates and you increase revenues. Proven time and again over and over from JFK to today.
Personally I'm tired of rowing the frigging boat while half the other "citizens" in the boat sit around and merely bitch and moan that I'm rowing "too slow" while they won't even bother to pick up a friggin oar.
Communism/socialism DOES NOT work, proven time and again regardless of what the Obamanation thinks.
have a nice day
Right now, the top three categories of government spending are:
1. The military
2. Social programs (Medicare/Medicaid and other programs, including welfare)
3. Interest on the national debt.
These three items pretty much exceed the tax revenue of this country.
Right now the US has a virtual world empire with hundreds of bases in many countries. You could, right now, at this moment, close every single one of those bases, bring everyone home, AND KEEP THEM ALL EMPLOYED while simultaneously cutting a half trillion dollars of the budget.
That would be my choice over kicking grandma and grandpa Jones out into the street. But that's just me.
We have three options to stop our fiscal insanity. Cut spending. Increase taxes. Or do both. I'd like to cut taxes and cut spending, but there are far too many who profit from the way things are to get on that train. Neither Obama nor McCain will change much in this regard, though apparently Obama's "plan" won't hurt quite as much as McCain's.
~X~
Why isn't "Hang the fractional reserve bankers" part of the solution? They are the ones who got us in this mess.
You apparently are ignorant of the Congressional standard for measuring costs and savings = its over 10 years. = that's the way they do it.
now you know.
How did Ben Franklin know about Obama?
Only Obama has an ego so expansive that it couldn't be contained in a convention center. He had to have a stadium instead!
Our intellectuals think they have it all figured out. I predict a great fall.
Just let us leave the union. But then who would fight in your stupid wars?
Everyone pays FICA taxes, and that's no longer a retirement plan since FICA taxes go into the general fund. Your facts may be correct on personal income tax, but they're skewed greatly by ignorning FICA payroll taxes.
Once you account for the FICA taxes paid by the employee and employer (which is fair since that's really the employee's money), it's clear that the working poor pay roughly the same taxes (as a percent) as the wealthy.
In essence, we have a flat tax.
The real answer is the Fair Tax.
Your comments er FICA being a tax, By LAW = legislation =SS act.
FICA trust funds may only be used as I described, Starting with LBJ - he needed $$$ for Vietnam and didn't want to "wreck" the budget (sic) and continuing pretty much unabated,, the theiving politicians have been stealing from SS in violation of the SS ACT.
Your claim that now FICA payments are taxes because the pols have violated the rules and have been stealing FICA trust funds appears based on false logic as it is based onsomeone else breaking the rules of the trust fund.
FICA payments are not personal income taxes, they are an individuals contribution into that individuals deffered annuity - not into a general fund.
So the fact remans that the majority of Americans pay ZERO PERSONAL INCOME TAXES.
FICA Payments by employers are really the employees money? I don't believe that for a minute = more falso logic on your part. That money never "belonged" to the employee, the employee has no ownership rights to that employer contribution, it does not show up on the employees gross income, nor is the employee taxed on that portion.
Your are stretching the truth far beyond the reasonable bounds of logic, one might call your claim merely a "Liberal Perversion of the Truth".
We do not have a flat tax, the top 3% of personal income tax payers provide over 50% of all personal income tax revenues paid into the system. This can never be under a flat tax system.
PS IMO the so called "Fair Tax" is neither flat nor fair. It is merely another scheme to scam fools into paying on income once, and then having to pay on all savings,income and assets again. Don't think for one minute the Government doesn't have their eye on that huge mountain of assets owned by those over 50.
Think about this. Using marginal analysis - ie effect on the next dollar of inome and assets - not average tax rates which are pretty much meaningless in economic terms as the average has no bearing on the economic consequences of the next economic act.
currently top marginal personal income tax rate (Federal,State,Local)
= nominally 50% = without any of your specious FICA nonsense.
After 2010 the top death tax marginal rate will pop back up to where it was before we killed this unconscionable death tax = nominally 55% = but call it 50% to make the math more straightforward.
If I continued working and made another $1, then the Govt immediately steals 50% of it in income taxes, leaving me 50 cents. Then when I die , the govt steals another 50% oin death taxes, leaving my family only 25 cents of the original dollar I EARNED.
Being economically rational I choose not to work for 25 cent "dollars"
So I close my company, good luck to my ex employees.
However if instead of working, I start consuming and investing = "spending" Well a $1 spent currently has 0% personal income taxes on it, AND I avoid giving the Govt 50% in death taxes on that $1.
SOOO the net economic cost to my family on the dollar spent is merely 50cents.
So being economically rational, I choose to stop working for 25 cent dollars and of course I stop "employing people". Instead I focus on spending 50 cent dollars. Who loses, the economy and the Govt loses revenues.
Make every sinlge person in the "boat" row the Frriggin Boat, Every single person with enough earned income to trigger the filing of a personal tax return should be required to pay some tax. A token sum woul be fine =$100? per person. and let it go up from there. Tax all income only once, recognize the need for capital formation,= no captl gains taxes, and eliminate for all time the GD Death tax. Death should not be a taxable event.
Now that would be a fair tax system. IMO
Go argue with the IRS. .
Obamanomics basic principles are
1)The Govt controls more and more
2)The Govt transfers wealth from the economically productive sectors of the economy to the less productive sectors of the economy
3)The Govt does to the corporate world what they've been doing to the Social Security trust fund = the Govt LOOTS IT.
4)The Govt figures out a way to LOOT assets accumulated by Seniors
5)The Govt dictates who gets what based on who supports the DIMLIB principles of the Socialist DIMocRATic party
6)The market will crash,unemployment rates will soar, the $Dollar will become even more worthless than it is now.
7)Americans need to "buy" everything from overseas will result in inflation soaring while the economy is crumbling
A Great Depression may follow.
Americans effectively become economic "Serfs" to a bloated and inefficient Govt.
This will suit OBAMA just fine as Facism will follow.
If the A/O Obama actually gets elected, IMO I will immediately sell off all my stocks and financial assets, get out of $dollar denominated accounts, get the $$$ into other "hard currencies" outside of this country.
IMO
Command economies do not work.
I am having trouble following your logic:
1. "FICA Payments by employers are really the employees money? I don't believe that for a minute = more falso logic on your part. That money never "belonged" to the employee, the employee has no ownership rights to that employer contribution..."
2. "FICA payments are not personal income taxes, they are an individuals contribution into that individuals deffered annuity - not into a general fund."
FICA taxes and employer payments are both credited to the individual account. Either (a) both are taxes or (b) both are not taxes. I can accept the proposition that both are taxes because they are manditory payments even though they MAY be returned in the future (an annuity) with returns well below that of a diversified investment portfolio. Or I can accept that both are not taxes by the arguement that both constitute premiums to a government operated insurance system.
The problem with either definition of FICA is that the "premiums" or "taxes" paid may not provide the "annuity" payment according to "plan" because the "insurance company"/government has not maintained the accounts in a fiscally responsible manner. The trust fund has been invested with a minimal (or even negative) ROI transforming the "annuities" into a future taxpayer obligation.
Finally, a rhetorical question: Would you rather live in the U.S. and get to keep 25% of $100,000 very year or live somewhere else in the world with no taxes and get to keep 100% of a few hundred dollars a year?
Actually, some people in the second group may live quite happy lives. But still, my answer is the same as most Americans. I can always chose to live the simple life if I have the money, but I can not chose to live the more complicated life if I am in the impoverished part of the world.
2. "FICA payments are not personal income taxes, they are an individuals contribution into that individuals deffered annuity - not into a general fund."
Well, you're right that's what it is on paper, but the fact of the matter is that when governmental accountability is such that they can change the terms its no longer an annuity. An annuity is a contract. Change the terms and you have no contract. We have experienced numerous changes over the decades, many positive for those that have been withdrawing much more than they put in. The 1982 reform was not. Raising the ages for full social security benefits is a significant change in terms that will result in negative returns for younger generations to come. Essentially, the proceeds of our payroll taxes have gone into the general fund. There is no lockbox. There is no investment. Only a computer entry that can be deleted and or altered as often as the government chooses. Basically, if it looks like a duck, and sounds like a duck, it isn't a horse. Its a welfare plan for older generations and an income tax for younger generations.
1)Employer contributions to Fica = IF NOT PAID by employer, the employer is on the hool, not the individual.
2)taxes are levied by government on entities AND individuals te tax revenues subsequently go into a general fund, or a subset of a gerneral fund to be spent by govt on ALL individuals -not just you - or a subset of individuals -maybe not even you
3)Fica contributions (read SS ACT 1934? set up as a forced savings account that provides specific levels of benefits in a modified single annuity beginning at a specified age.
The reason there is a cap on SS payments into the system is precisely because there is a cap on individual SS benefits OUT OF the system. And back in the 30's the Govt was setting up a retirement system based on individual contributions, not a tax system for more revenues. AND SO fica contributions are not considered taxes ecause what you pay in you get back, not some stranger down the street.
PS Did you know that the original SS ACT prohibeted the use of the SSNumber for Anything but administration of the Social security system
You see in those days, when Americans were still actually a freedom loving independent bunch, the Politicians understood that NO ONE would abide a federal system that essentially required a National I.D. Number. Obviously this has restriction has gone bye bye, My SS card -gotten in 1965 still states "SS # may not be used for identification, SS # may only be used for administrative purposes of SS"
That's long gone -they had to sneak in a rider on an unrelated bill to get rid of that prohibition. Now the SS number is in fact a national I.D. number. Next ten years or so, someone will suggest all U.S. residents shouold have it tatooe'd onto their arm as proof of identity, or better yet injected into your body at birth along with a copy of your personal DNA. Sad thing is, most Americans will merely say, so what? ho hum, how come we no longer hear about the U.S. Constitution.? or some such.
And so it goes, create class warfare, scapegoat the "hated rich" who pay for most of the cost of the system, Parse words, keep dumbing down the educational system thru support of the teachers union and the "Road to Serfdom" is not that far away
My anwser to your which country question is. The marginal tax rate is in excess of 50% , not 25% as you claim. AND it depends on which country, and what happens in this country in the mean time.
Push comes to shove, the country of ALASKA - separated fomr the continental U.S. - would probably be a pretty good place to live. Free thinking people, lots of energy,good food, not too bad a climate, you could always fly to Spain in the winter time. etc.
Don't get me wrong, I love this country, that's why I speak out against the D/A socialist DIMLIB politicians and the ever growing American cultural tendency to be a "Nation of Sheep" As a people we are growing ever dumber and ever more docile. IMO and if it doesn't stop, eventually we will be a socialist basket case and evntually broken up -balkanized - by ethnicities, and geographies. That will be too bad.
good luck to you,
It is either a type you are for or a type you are against. If you are relatively well off, these people (statistically) are more likely to vote for the Republican version of socialism that rewards the corporations and wealthy.
Many (65%) of corporations pay no taxes, and many of the wealthy pay far less (after all taxes are considered including FICA and Medicare) as a proportion of their income than the so called middle class. This is a fact that is easily verified.
Buffet has said as much, that he pays less, as a percent of his income in taxes than his secretary. Many other have made the same observation.
We are a long way from Soviet style socialism, and very deep in American style socialism.
American Style socialism is that we resent the poor and admire the rich, and set up taxes to preferentially treat those we admire. It wasn't always this way in America, but it is today.
Fannie and Freddie and BEAR STERNS, and countless real estate speculators have (or will be) bailed out of their bad bets,,,at the expense of everyone else. The business of America is business right?
Many of the Obama bashers who are against his commie satanic grand scheme to bankrupt this greatest of all nations--The UNITED STATES OF AMERICA--were for the socialism and military/corporate autocracy of the Shrub before they were against the socialism of Obama.
Be consistent. Oh, and not hypocritical.
If bankrupting the nation is evil, and loss of liberties is evil, and socialism is evil, and trampling the constitution is evil and satanic---then surely you didn't vote for BUSH/CHeney......right...
Socialism has come to Wall Street, borne on the back of an elephant. Nouriel Roubini writes:
“Tenth and final point, so what is left as the only solution is the outright formal or informal nationalization of the U.S. financial system. That effective and creeping nationalization is already underway with the variety of actions that the Fed and the U.S. Treasury have taken and that we described above. So this is the paradox of this U.S. administration: it was so rabidly and ideologically free-markets oriented and averse to any sensible regulation and supervision of the financial system that its policies of being asleep at the wheel caused the biggest asset bubble and credit bubble (not just in mortgages) in U.S. history. And now the unavoidable bust of this bubble is going to force an effective nationalization of a good chunk of the U.S. financial system as no one else but the government can do the job.
This is what the free-market ideologues at the Fed, Treasury and White House have now become – especially after the bailout of Fannie and Freddie’s shareholders, management and bondholders – Comrade Paulson, Comrade Bernanke and the Bolshevik Great Leader Bush. But then their whole approach and ideology has always been not one of free market capitalism but rather one of privatizing gains and socializing the losses; or socialism for Wall Street, the rich and the well connected. So they will now get what they deserve and worked so hard to achieve: a nationalization and bailout of the U.S. financial system.”
The Laffer-curve is central to supply side economics, as it provides an argument for why lowering taxation may actually increase tax revenues. Many economists have questioned the utility of the Laffer Curve in public discourse, as current tax rates are usually below the revenue maximizing rate. According to Nobel prize laureate James Tobin, "[t]he 'Laffer Curve' idea that tax cuts would actually increase revenues turned out to deserve the ridicule with which sober economists had greeted it in 1981."[2]
Wikipedia.
What you said may sound harsh to the democrats/socialists, but it's the cold hard truth!
I truly believe that It is me, not the government , who can spend my hard earned dollars most effectively. Just an example: I would not invest in a bridge to nowhere in Alaska. And the senator who supported that bill would not vote for it if the money was from his own pocket.
To me, it comes down to this question:
How do we reward those that work in the capital-rich realm of upper-eschelon corporate management, where success is measured in the hundreds-of-thousands of dollars per year salary and high-level responsibility, while simultaneously rewarding those that work in the capital-poor "blue-collar" industries, where success is measured by being able to support your family and have some left over for yourself when you retire?
The attitude of the upper-eschelon folk seems to be "well I just directed $100 million worth of my company's money and produced a 10% profit on the transaction... I must deserve rewards of at least a good chunk of that!" Whereas a guy in a lower-paying job in the same company may work the same hours and manage a 50K project with 30K resources. Who's the hero? What if the answer is both? Who deserves the 200K/year salary plus options, benefits, and potential 1-2x salary bonuses? Who deserves 60K/year plus limited health and retirement? What if the first guy had increased the company value by slashing the second guy's health and retirement?
Obama is pointing out that relying on corporate regulation of its own practices is folly. The market messes up. The benefit of a "socialist" safety net is there to ensure to those hard working folks who make little money that there is ALWAYS going to be something in it for them in the long term.
We, the people, need a government that can tell the difference between corporate benevolence and plundering, not one that assumes that anything deriving from the marketplace is automatically good for the country. Obama's absolute math might need adjusting, but his notion that the working class need a powerful incentive to keep working their lower-paying jobs is spot-on. To conclude that anyone who believes so is un-American is cowardice.
(PS I'm a CPA.) You're really making a distinction without a difference.
najdorf: No actually they're not educated by the "same system" they're educated by the military system. When these individuals enlist, they are then REQUIRED to do the things that their school system couldn't get them to do, study and graduate. Their real education comes with their service and other military training in electronics, logistics, etc. And the military does not take "only" high school graduates, have you served? I did - Navy ROTC and two masters degrees, and all.