GOP scam Tax plan cuts for rich and hurts everyone else

If you really think we can return to the policies of the 1940s then I guess this discussion is over. Different time, different situation, different country, different world. In today's world we have strong markets all around the world, and if we aren't competitive then our economy is not going to thrive. You can yearn for the good old days of string unions and 90% tax rates on the rich, fantasize all you want. But those policies will not work today, and anyone who thinks that is a fool. Money goes to where it makes the best return, and higher tax rates are not conducive to a better ROI.


You realize do you not, that those charts and graphs by Piketty and Saez do not reflect taxes, nor do they include gov't transfers. IOW, it's inaccurate. There's no doubt that incomes for the top income earners grew a quite a bit, while the folks at the lower half saw little or no increase at all, but not to the extent they say it did. I realize that you will never accept this, but the truth is that the income for the people on the lower half has nothing to do with the income of those at the top end. Cuz it's fiat money, whether a CEO gets one million or ten million doesn't matter at all for the people making minimum wage. They're still going to get the mwage regardless; IT' S NOT ZERO SUM. You might not like it, but that's the way it is.

 

Business as usual for the right.

 

We didn't see ridiculous salaries back then because we weren't creating the massive amounts of money we are creating now. Plus we didn't have such a progressive tax code as we have now.

Please explain to me what you think would happen if we taxed executives at 3+million in salary is going to help the middle and lower income groups.

 

At least we'll all be on a level playing field.

 

I assume you mean taxing them at 91%, yeah I'd like to hear that answer too.

 

I did. Thanks for clarifying. That was a pretty sloppy post on my part.

 

The problem with using infliation is which inflation index you want to use or how many. For ppor and middle class, food, transportation, and housing inflation indexes are the most accurate, but inflation does not affect overall tax policy or revenue generation. In fact, by using such policy, it is more lilely that upper income and rich will have far more advantages using inflation indexes to government revenue, than the poor and milled class.

that is why we use percentage of real GDP to revenue colleciotn.

Still, the flat tax and the FAIRtax will affect the poor and middle class far more than any other income group given rational choice behavior.

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No matter what tax system is out there, the rich will not be hurt at all. The question is how to effectively collect revenue with the minimum amount of expected tax discrepancy.

 

No it does not. A flat tax is regressive because it hits harder on the lower incomes. What you are ignoring is the choices that differntt income groups have. WIth lower incomes, the choice to use transport, food, and housing is the same but differentiated by substitutes to the overall choice. And if one has to pay taxes the same using the same rate, their additional dollar and purchasing power is reduced far greater at the lower level than at higher levels. That is the regressive aspect of both the Fair Tax and the flat tax.

 

But income is a expenditure and it will be taxed.

 

I was challenging the claim that tax revenues were at some type of historic low. They are not.

The core inflation (based on CPI) rate is an appropriate measure to use for this.

I hear you re GDP. But I think it is important to look at both. GDP has well outpaced inflation over time. So even if government revenues as a percent of GDP remains the same, government is bigger.

None of you other considerations are relevant to what was being discussed.

 

The reason for the high compensation is not because of the tax rates of the 1950's to the 1970's, but because compensation has been transformed into remuneration.. The reason for this is that companies and executive compensation are now tied to performance measures with include largely on financial and, if public, market ratios. As such, such bonuses are simply made by stock grants if the company does well. Those grants have limitations and those limitations are to the benefit of the company, not to the senior executive staff.

 

What I am doing is trying to get folks to use the correct definition of regressive taxes. You are not using it. A flat tax is neither regressive nor progressive.

I understand the argument that a flat tax leaves less money in the pockets of some than in the pockets of others. Make that argument if you think it is important. But don't make the false claim that a flat tax is regressive.

FairTax is progressive, not regressive--assuming that the wealthy will continue to purchase more taxable goods than the not-wealthy purchase. But under FairTax, a wealthy person could choose to live at a poverty level of consumption and therefore pay the same tax as not wealthy person who spends the same amount.

I have already stated that I favor having a tax code with some progressivity. I am not in favor of engineering equalized outcomes to the extent it seems some want them engineered.

 

This makes no sense to me.

If you are talking about FairTax......it does not tax income. Period. That you might be spending your income and then paying sales tax on that expenditure still does not make it an income tax. In fact, one of the prerequisites for instituting FairTax is a repeal of the 16th amendment.

 

Someone made the statement that tax revenues were at an all time high, not low.

Using CPI has benefits, but it has drawbacks. The drawback is that the CPI takes a weighted average of most expenditure categories with that weighted average changing from time to time. But the weighted average does not help when dealing with revenues or revenue collection. Since revenue is based on income and some incomes are taxed at net value rather than nominal value, it is an imperfect system on how effective or not effective revenue collection is.

 

The benefits of stock grants to the corporation is that they give the executives the incentive to stay with the company. Because the grants carry a vesting period and the exec does not fully own them (can't take them if they resign their job, can't sell them) for that period of time.

The executive benefits from the monetary value of the grants, minus the taxes paid on them. These grants are taxed as ordinary income---they are NOT taxed as capital gains income. And they are taxed as of the date they are granted, not the later date when the vesting period is over. Once the exec actually has ownership of the stock, and is able to sell it, THEN the capital gains taxation kicks in. If the stock has increased in value, then the cap gains taxation is applied to that increased value. And since that rate has now been upped, it will likely be in the top income bracket as well.

So.....when an exec gets a ridiculously high stock grant, the government gets just under 40% of it. Does this help you understand why the government likes to keep these high levels of comp in play?

You are correct that these grants form a greater part of executive compensation than cash salaries typically do.

 

I pointed out that the CBO says that tax revenues will be at the historic norm (as a percent of GDP) by the end of next year.

And I pointed out that GDP has outpaced inflation.

Government is much bigger than it used to be.

This is important to know when listening to politicians who erroneously claim that we need higher taxes. We do not need higher taxes.

The real argument they are making is that we need bigger government. But that argument does not resonate well with the American people, most of whom say government is already too big. So the politicians hedge/spin and try to make the situation out to be other than it really is.

 

The total amount of income is not a zero sum game.

When someone gets a bigger piece of the pie it is.

 

We saw ridiculous CEO salaries before the Fed started creating massive amounts of money. Why would that make a difference.

It was more progressive. Top rates up to 91%

You can cut their FICA taxes, giving them more incentive to work. Put people to work on the nation's infrastructure. And pay down the deficit.

But it's not just taxes that has created the inequality, I agree.

 

It is not the government that wants to keep it that way, it is the major corporations that want it that way, along with AICPA.

That being said, the point I was simply making is that remuneration, which is actual cash compensation plus all those benefits including the various stock grants, is how we are being taxed, both senor executives and ordinary workers.

 

With respect, that makes no sense. This is what I said:

" the truth is that the income for the people on the lower half has nothing to do with the income of those at the top end. Cuz it's fiat money, whether a CEO gets one million or ten million doesn't matter at all for the people making minimum wage. They're still going to get the mwage regardless; IT' S NOT ZERO SUM. "


Tell me why/how this is wrong.

 

Government is not bigger than it used to be. In fact, government has shrunk over the past few years than it has expanded. And the greatest expansion came under Bush jr.

http://www.opm.gov/policy-data-oversight/data-analysis-documentation/federal-employment-reports/historical-tables/total-government-employment-since-1962/

 

I think there's more to this than the number of employees; the amount of money and the increase in the regulatory state and the greater intervention into the private sector is seen by many as bigger gov't.

 

Because in a given year the economy produces x amount of income. When you increase the share going to the top 10% from 35% to 50%, mathematically it means that the bottom 90% is getting 50% instead of 65%.

Tell me why/how that is wrong.

 

It looks like to me it expanded more under Reagan.

In the Reagan recovery 1981-1985, the number of federal employees grew by a whopping 275,000, from 4,982K to 5,256K.

In contrast, under Obama, the number of federal employees fell by over 100,000 in the three years from 4,430K to 4,312K in 2009-2012

Maybe we should be doing it more like Reagan.

The greatest expansion in modern history was 1965-1969, from 5,220k to 6,639k in 1968. About 1.4m additional fed govt employees.

 

We need more revenue than the historic norm. The "historic norm" has left the Govt with $16 trillion more debt.