How taxes on the rich destroy jobs

[shahinc]

I'm gone end this argument once and for all. Let's increase the taxes for the wealthy but have an entrepreneurship tax break. As long as you show that you started a business or hired more employees from the prior year your taxes won't increase and will in fact drop. Both sides win. Will the wealthy not support this? Or they gone come up with another excuse.

What is your definition of Wealthy ? What would the ceiling of Taxes ? Up to 50% ?

I am also curious to know that people who are asking for increase tax on the wealthy people, How many tax exemption did they use in their own tax filing this year ?
Also, for the European friends here, How much taxes are you guys paying ? Lets say on an income of 100K a year ?

 

[Mahdi]

Amoo Mahdi gol, the problem with the government spending in US is the inefficiency associated with anything that the government gets its hands on. As an example, and using your own reference, the department of education on the federal level is absolutely meaningless, cumbersome, out-of-touch, and overall a big waste. Let the states and local governments be in charge of their own programs and get rid of it on the federal level. The same goes with the DOE, and many other Federal agencies such as EPA. Here in California, we have CAL-EPA, and every major city has its own environmental office on the county and city levels that oversees their own laws and regulations. Now, how does the federal EPA contribute anything to that equation? Almost every local environmental laws are more restricted than the ones from the federal side, so by default, the federal rules and regulations are nothing but irrelevant.

I understand the fact that government can and should have certain involvement providing certain services, but I promise you that even a drastic cut in the spending, let's say a 30% cut, wouldn't change a bit in the way those services are rendered in terms of quality.

ghorbanet..

that's I guess the problem with the role of the DoE and what should be whose role. I agree and support your view that the government in the US wastes a lot of money and the school system might just be the least efficient one in the world, but the problem to me is with the power and role the DoE has to play in the US, not necessarily that it exists.

 

[Zob Ahan]

I study Law and I studied economic electives. Generally I've studied economics as a hobby. That shouldn't deter you from discussing things with me though, I am probably as knowledgeable or even moreso than people I've encountered who did it as a degree. Depends on what area I guess. Emotions? Not really, I don't see economics as something to tie in with emotions.




Who said they haven't created inflationary problems? The US's method for measuring CPI/inflation is butchered to look like nothing has gone up in price. I don't think the ordinary person sees it that way - well, the ones I have talked to. How can you print billions of dollars with no inflation? If you go by the Austrian understanding it is a definitive act: print more money and it is devalued in relation to the goods/services you used to buy. I think it is a bit ludicrous to bring about some of the biggest expansions in history in the money supply and believe prices have only gone up 1-2%. I remember a Paul video citing a free market group which calculated the inflation at 30+% 9+% per year using older methods. The AIER produced an Everyday Price Index (EPI) which says inflation is about 8% - whereas the CPI-U measured 3% around the same time. I'd say a similar disparity in theoretical and real world prices are similar here in Australia as well. This is a decent read.

EDIT/ADD:
[video=youtube;3yCSOQgUEYM]http://www.youtube.com/watch?v=3yCSOQgUEYM[/video]

Your second question is very vague, which problem are you referring to?

As for your third, you want to say it was caused by the private sector and the government intervention stopped it right? The war too? Here:

[video=youtube;dgyQsIGLt_w]http://www.youtube.com/watch?v=dgyQsIGLt_w[/video]

Friedman is wrong though, the Fed, well Bernanke, later did admit that the Fed was at fault for the Great Depression.

Let's just say like Friedman and the Austrian's I don't think it was some New Deal shindig.
http://mises.org/freemarket_detail.aspx?control=515

Even though all this money printing by all these different countries is inflationary but it is like filling a bathtub while the plug is out because all the money that is printed is going to pay off existing debts plus interest and I am not talking about just the middle class consumers debts. I am talking about the cycle of the lending process. The money is being borrowed by central banks with interest from the large private banking institutions. The Central banks are then loaning it to smaller banks and governments who are then paying back the large banking institutions the money that they have just been leant while also having to pay back the central banking loans as well which came from the large banking institutions. Plus other than food and energy everything else has gone down in price such as clothing and footwear and services due to competition.

 

[Mehran(ISP)]

What is your definition of Wealthy ? What would the ceiling of Taxes ? Up to 50% ?

I am also curious to know that people who are asking for increase tax on the wealthy people, How many tax exemption did they use in their own tax filing this year ?
Also, for the European friends here, How much taxes are you guys paying ? Lets say on an income of 100K a year ?

Same criteria they're talking about now. Raise taxes for anyone above $250k unless they show they're hiring people and are entrepreneurs. Obama should of never extended the Bush tax cuts since it never worked (was supposed to pay for itself by so called entrepreneurs). He gave into politics and I didn't like the move at all. The whole argument is about "job creators" not deserving a higher tax which really means they be paying the same tax rate as the middle class which is 28-33%. Most people above that level pay 15-20% because of exemptions and capital gains just because they're considered "job creators". So let's hold them to it; if they create jobs they get tax credits.

 

[IPride]

Measuring the CPI is a tricky business, as you should know and inflation itself lends itself to varying definitions. So yes, manipulation is quite easy to do considering how and what is tracked and the proportion it is given to whole expenditure. I have already linked you to the AIER site and they go through their process of calculation and the page even had a PP conversion method that date back to 1920. The other link has gone into specifics of the change in how inflation has been calculated and changed. If you are too lazy to click the link and read then I'd be wasting my time continuously answering the rest of your questions which are digressing further and further from the topic. Especially since I am in the middle of exams. Most logical people question the inflation numbers, let alone logical investors. That is why gold/silver have gone up so much because people are hedging against what has been happening. Some things may have inflated between 1-2% but the rest, overall? Although we are getting into the realms of finance, Bond yields aren't reliable. WWII led to prices increasing dramatically but the bond rates remained low. During the 80s the bond yields were high when inflation was low.

http://mises.org/freemarket_detail.aspx?control=396

On the US gov hiding inflation from people - You need to realize that rational investors, not talking about you and yours truly but massive institutions that pour billions in the bond market, can see through a lot of things. I work on Wall St. and I know very well that the mutual funds and the hedge funds read through all the various definitions and as a whole agree on something that's REAL whether it's the nokhod loobia index that AEIR follows or the CPI core or something else. So when they're willing to lend money to the US government for 10 years at a rate of 2% they have a pretty good reason to believe that inflation won't be a problem. This is not to say that the market always gets it right (albeit Milton Friedman would most probably disagree) but I'm just saying they probably have the resources to know where inflation is going better you and I do.

As for gold prices indicating inflation - they've been going up since early 2000s, even during Greenspan's years of tight monetary policy. Gold being a hedge for inflation is one of several reasons why people like to hold on to gold. Other reasons are world's dwindling supply and China and India's increasing demand for the actual metal for use in jewelry and industry.

Now back to why low interest rate policies in the US and many other large economies have not caused inflation (as defined by the market not anyone in particular) - the reason is because the demand for capital remains low. In order for monetary policy to kick start things we would have to reduce rates further but we continue to be in a liquidity trap - it's not possible to lower rates below 0% - this is why the US continues to suffer from low growth. Fiscal policy is the solution and republicans are against it. They keep pointing to Obama's stimulus as being ineffective totally ignoring the fact that while Obama's government was spending at the federal level a lot of the states were cutting back on spending reducing the impact of his fiscal stimulus.

If you're really into these things I suggest you read the book "lords of finance" which is the best depiction of the events that led to the great depression and the events that followed. It really opens you're eyes.

 

[Kaz]

I'm gone end this argument once and for all. Let's increase the taxes for the wealthy but have an entrepreneurship tax break. As long as you show that you started a business or hired more employees from the prior year your taxes won't increase and will in fact drop. Both sides win. Will the wealthy not support this? Or they gone come up with another excuse.

How about we just take all their money and start businesses? LOL

There a lot of considerations to take into account, and I think the above, while well intentioned, is full of loop holes and is hard to justify on the basis of economic liberty. Why should a person be compelled to start a business at all?

 

[Kaz]

On the US gov hiding inflation from people - You need to realize that rational investors, not talking about you and yours truly but massive institutions that pour billions in the bond market, can see through a lot of things. I work on Wall St. and I know very well that the mutual funds and the hedge funds read through all the various definitions and as a whole agree on something that's REAL whether it's the nokhod loobia index that AEIR follows or the CPI core or something else. So when they're willing to lend money to the US government for 10 years at a rate of 2% they have a pretty good reason to believe that inflation won't be a problem. This is not to say that the market always gets it right (albeit Milton Friedman would most probably disagree) but I'm just saying they probably have the resources to know where inflation is going better you and I do.

You've gone from arguing that there is no inflation problem to arguing that because the bond market is strong there that should indicate that there is no inflation problem. Moreover, it seems a bit silly to suggest that the confidence big investment entities might have in certain instruments translates that the ordinary person is not paying for more of his daily expenditures. This topic was about helping everyone but the top income class, wasn't it? Furthermore, it doesn't matter that big entities with large amounts of capital are pouring money into something. We've had two big bubbles within 10 years where sure bets were anything but.

As for gold prices indicating inflation - they've been going up since early 2000s, even during Greenspan's years of tight monetary policy. Gold being a hedge for inflation is one of several reasons why people like to hold on to gold. Other reasons are world's dwindling supply and China and India's increasing demand for the actual metal for use in jewelry and industry.

Sure, but traditionally, gold is a hedge against inflation. The way it has gone up in the last 10 years is more of a panic than a sudden urge to supply the market with jewelry IMO.

Now back to why low interest rate policies in the US and many other large economies have not caused inflation (as defined by the market not anyone in particular) - the reason is because the demand for capital remains low. In order for monetary policy to kick start things we would have to reduce rates further but we continue to be in a liquidity trap - it's not possible to lower rates below 0% - this is why the US continues to suffer from low growth. Fiscal policy is the solution and republicans are against it. They keep pointing to Obama's stimulus as being ineffective totally ignoring the fact that while Obama's government was spending at the federal level a lot of the states were cutting back on spending reducing the impact of his fiscal stimulus.

If you're really into these things I suggest you read the book "lords of finance" which is the best depiction of the events that led to the great depression and the events that followed. It really opens you're eyes.

After exams I'll look into reading it, thanks.

 

[IPride]

You've gone from arguing that there is no inflation problem to arguing that because the bond market is strong there that should indicate that there is no inflation problem. Moreover, it seems a bit silly to suggest that the confidence big investment entities might have in certain instruments translates that the ordinary person is not paying for more of his daily expenditures. This topic was about helping everyone but the top income class, wasn't it? Furthermore, it doesn't matter that big entities with large amounts of capital are pouring money into something. We've had two big bubbles within 10 years where sure bets were anything but.

From the very start I've argued that there is no inflation based on economic theory and the best methods out there to examine inflation.

As to your second point - you do realize that the most active institutions in the bond market are the pension funds and the insurance companies that ultimately have to pay their funds out to ordinary citizens right?

 

[Mehran(ISP)]

How about we just take all their money and start businesses? LOL

Ha?? I think you're missing the point. The rich received a tax cut in a U.S economy in middle of two wars with a budget shortfall not matched in any history by Bush just because the bill was intended to pay for itself with these so called "job creators" creating jobs and put people back to work. It's very simple; if they don't want to give back the tax credit let them show that they're creating jobs. The ones that don't or haven't will see an increase to what they were paying before. If every well intended theory goes away because its too hard to implement than why we even having discussions about it?

 

[Kaz]

From the very start I've argued that there is no inflation based on economic theory and the best methods out there to examine inflation.

As to your second point - you do realize that the most active institutions in the bond market are the pension funds and the insurance companies that ultimately have to pay their funds out to ordinary citizens right?

No inflation? Which method shows no inflation? The government's own method shows inflation. Economic theory? Which economic theory? Austrian theory states that there has been definitive inflation.

I wonder why SS has a multibillion dollar shortfall year after year. Even in the private realm; again, two bubbles in the last 10 years. We've already seen huge banks and insurance firms go under these last few years. You aren't actually addressing the inflation issue; you are saying you have confidence in other entities to make money despite them or despite my argument. In effect, it is an argument based on correlation rather than looking at causation. It's not that difficult; look at the AIER where they look at the prices of everyday things. Ask your neighbour, are things just as cheap as they were a few years ago?

Around WWII despite the fact that inflation was going through the roof, people were committing themselves to a 2.5% return on their money in the bond market. The problem is the bond market is somewhat guesswork; the people back then thought, having gone through the great depression, that the bonds would be more secure. The same government bond that sold for $101 in 1946 was worth only $17 in 1981 - investors had lost 83 cents for every dollar they invested.

You also do know that the Fed can heavily influence the bond market, right?

Ha?? I think you're missing the point. The rich received a tax cut in a U.S economy in middle of two wars with a budget shortfall not matched in any history by Bush just because the bill was intended to pay for itself with these so called "job creators" creating jobs and put people back to work. It's very simple; if they don't want to give back the tax credit let them show that they're creating jobs. The ones that don't or haven't will see an increase to what they were paying before. If every well intended theory goes away because its too hard to implement than why we even having discussions about it?

This is a rather modern interpretation. That government allows you to keep money and in that instance you have benefitted from their benevolence. Rather than seeing it the other way - that the government has been used to take from theirs what they've rightfully gotten. Who says they owe anyone anything? They get their wealth by satisfying the needs and wants of people. If they didn't do their part, they wouldn't be rich.

It is not about good intentions being bad. I am alluding to the left's constant tirade about helping the average man and always setting up road blocks which are ineffective and generally are more trouble than they're worth. The above is a classic case of this. This whole debate in a wider sense is whether interventionist methods by the government are worthwhile. Proponents argue for them, and others argue against them citing more problems caused than solved. I am more on the free market side. The way I see it, interventionism is like a body builder using steroids. In theory you can get bigger than what you could naturally, but you also put forth much bigger risk to your body using it. In the end, you have to face the music; in the real world there are consequences for your actions. You can't run away from them by printing more money.

 

[Mehran(ISP)]

This is a rather modern interpretation. That government allows you to keep money and in that instance you have benefitted from their benevolence. Rather than seeing it the other way - that the government has been used to take from theirs what they've rightfully gotten. Who says they owe anyone anything? They get their wealth by satisfying the needs and wants of people. If they didn't do their part, they wouldn't be rich.

It is not about good intentions being bad. I am alluding to the left's constant tirade about helping the average man and always setting up road blocks which are ineffective and generally are more trouble than they're worth. The above is a classic case of this. This whole debate in a wider sense is whether interventionist methods by the government are worthwhile. Proponents argue for them, and others argue against them citing more problems caused than solved. I am more on the free market side. The way I see it, interventionism is like a body builder using steroids. In theory you can get bigger than what you could naturally, but you also put forth much bigger risk to your body using it. In the end, you have to face the music; in the real world there are consequences for your actions. You can't run away from them by printing more money.

I think that's the difference; the rich in the U.S pay lower taxes than the middle class. No-one is asking to pay more, but they're receiving tax credits to create jobs. It's simple as that. No need to make it any more difficult. I believe that the federal income tax should be wiped away and they are economics that can tell you how that can be achieved where the budget still gets paid and you don't pay income taxes. But for now, everyone should pull their own weight.

 

[Flint]

I think that's the difference; the rich in the U.S pay lower taxes than the middle class.

How do I know I am rich?

 

[Mehran(ISP)]

How do I know I am rich?

I don't think you're rich nor do I care; how did you conclude that assumption from my statement?

 

[Fole_Penalt]

My view is that it is not just about the taxes. Taxes make the blood pressure of nearly everyone to rise and rightly so. This is because someone is taking your hard earned money away, a lot of it. So anyone who wants to get attention, and of course this is what politics is all about, will talk about taxes endlessly. While proportionally lower taxes on the rich are in part responsible for the undeniably great increase in the gap between the very top and everyone else, the real reasons, well over 95% are other factors. Taxes are not the reason. Even if you did the math you could figure this out.

The single biggest factor is changes in laws that have shielded certain few from competition of free markets AND in most cases have even channeled government money to them, i.e. welfare money, to allow them to make money that they never could possibly make. This issue is more complicated and takes more thinking so very few, except those who are benefiting from it, have the will or the discipline to understand the issue let alone make changes to it. So you will not hear anyone talking about this issue.

The real fix is to change these laws to allow free market competition. Then everyone will benefit much, much, much more than raising taxes on the rich. For example, when Bush AND the Republican congress passed the prescription drug program, the biggest welfare program of the past 60 years, they wrote into law that government would buy tens of billions of prescription drugs a year but it will not have the ability to bargain on price with Pharma companies. Say what? Fixing laws that protect pharma from competition will result prescription drug prices in the US to be something like 1/10th the current rate. This will benefit ordinary Americans many, many, many folds more than an increase of tax rate of say 15% on corporate earnings.