Open thread Sept. 14, 2021 Dan Crawford | September 14, 2021 6:23 am Comments (46) | Digg Facebook Twitter |
I wonder if you could make a living providing research for all the people who say they are “doing research on the vaccine before I make my decision”?
My sister-in-law had an interesting first staff meeting with a short discussion of upcoming vaccine “mandates”. Guess was that 30% to 40% is not vaccinated. Ability to do without people in productions operations department is actually zero…they want to hire 15 to 20 more people and are having a lot of trouble. They don’t anticipate being able to do anything other than test for those not wanting to vaccinate. At this point in the discussion a manager spoke and said that if they are going to test, then she wanted to be tested even though she is vaccinated because she has young children and testing would sort of be an employee benefit in her view.
just another Ida oil spill update:
this afternoon’s update on Gulf production from the BSEE:
offhand, that’s about a half million barrels of crude still missing each day; i can’t put a number on the gas shortfall right now…
Can America Afford to Become a Major Social Welfare State?
NY Times – N. Gregory Mankiw – Sep 15
Mankiw quoting the Committee for a Responsible Federal Budget is two wrongs that don’t make a right.
I am proud to be able to say I agree with you entirely about this.
Faced with a choice between barely, or less than, adequate, and a reasonable job paying a real living wage, or a fair wage with enough over bare “cost of living” to buy a few things that make life pleasant, most people will take the job.
On the other hand, if the poor rich man will refuse to sign the contract because he will only make a million dollars instead of two million, fine. Let him retire from his arduous labors and let someone who can get by with only a million (after taxes) take his place.
Recently I posted a piece that said what
we have to do is put up a federal VAT
AND institute wealth taxation.
I have never been a VAT fan, but
it seems like doing both could raise
a lot of much-needed revenue, with
a strong dose of ‘political fairness’ to boot.
More recently, it seems the Dems
have decided to do neither.
How goofy is that?
You need to change your information sources. The Dems are doing everything they can to raise taxes on the rich and corps.
Not exactly ‘everything’.
Courting moderates, House Democrats stop short of proposing the most aggressive plans to tax the rich
NY Times – Sep 13
(So, not pursuing wealth taxation any more, apparently.)
I think the realpolitik aspects of this are
that VAT taxes (on consumption of goods)
are inevitably regressive, and wealth taxes are
inherently progressive. Therefore, some political
balance is obtained by implementing both together.
Alternatively, implement neither and leave things
as they are. What to do? What to do?
Liberals chasing a wealth tax is a lot like a dog chasing a pickup truck. If if they catch it, then they will never be able to hold onto it. Yet more likely that it will run them over and kill them.
let’s be clear about this. a “wealth tax” is not a ” tax on the rich”. I don’t like the idea of a wearlth tax because it looks like confiscation. A person can pay an income tax and know beforehand that his income will depend on “after tax”. A person ought to be able to rest after paying income tax, or “value added” tax, or any tax that involves a money transaction, without having to worry for the rest of his life that the government is going to come in and take away his “wealth” after he no longer has the means to earn wealth for his old age or to leave to his kids or whatever reason he wants to pursue wealth.
so, by all means, put a tax on his income or on what he buys..but do not tax “wealth” after the fact. I don’t want the IRS coming into my home to count my silverware, or, since I don’t have any, search my house for where i am hiding it.
as for VAX…. well that could be “progressive” but the income tax is the best place to put in a “progressive” schedule. as for a VAT..if you call it a sales tax and don’t tax groceries or other essential needs, it can be as progressive as you like.
but if you go nuts over “progressive, progressive” or “regressive, regressive, awl! awk!” you will end up on the bandwagon of those who call Social Security a “regressive tax” because they are stupid, just as the people who call it a “jobs killing tax” are stupid. [SS is not really a “tax” anyway. it is a mandatory savings and insurance contribution that you get back with interest when you need it most. to the extent it “looks like” a tax..it is highly progressive in that the payout is much higher for the poor than it is for the rich (in terms of percent of contribution).]
calling it a progressive tax is like the blind man feeling the elephants tail and saying the elephant is very like a rope.
as for the dems not wanting to tax the rich…you may be right, or it may be that the “moderates” are not moderate at all, but fifth columnists who are dems exactly for the purpose of voting for the rich in close votes. David Broder, a famous “moderate” was one of the first “serious people” who called for Social Security cuts forty years ago to save us all from certain death at the hands of the “looming crisis.”… which at that time could have been solved forever with about a twenty cents per week per year for a few years increase in the payroll tax.
we still have “liberals” crying “tax the rich” “a dollar a week is an unfair burden on the poor.”
stupid. stupid. stupid. [with apologies to all who say I should not say that word.]
Apology accepted – totally. That is another problem with calling the fools on the Right out for being stupid. We don’t have to look that far to find stupid. Stupid is everywhere. We have no political party capable of winning any elections without votes from stupid people. Only about 10% of US citizens might even be considered smart if only that over half of them were not so foolish. When narrowed down to smart and wise, then only about 1% is left, but that 1% of smart and wise should not be construed to be the same as the 1% of top earners. Wisdom dictates that money beyond that needed for a secure and comfortable life for one and their family is rarely worth the additional compromise of one’s morals, ethics, and freedom of time and association that would be required to acquire greater wealth. Of all our freedoms in the US, then freedom from intelligence seems to be the most broadly cherished.
i could not agree with you more whole heartedly.
[but even smart people can be stupid at times.]
Really. The targets may be those who are Bezos-grade
rich people, especially those with quite modest salaries,
and therefore (?) are not ‘rich’. It looks like the Dems
would raise tax brackets on those earning over $400K
(or is it $500K), which is a start. The logic behind not
taxing those with multi-million dollar non-salary ‘incomes’
(borrowing money, or spending saved money is not income)
is (arguably) that there aren’t enough of them to matter. Really?
This would be ‘confiscatory’? Get over that, will ya.
confiscatory is confiscatory whether you are taking away a poor man’s bread or a rich man’s bauble.
But a “wealth tax” is a slippery slope from one to the other.
By the way, the very rich do indeed already pay enough taxes to “matter.” I don’t know about individual cases like Bezos, but the last time I looked half the income taxes in the US are paid by the top ten percent of earners. I do not weep for them. but we ought to at least know what we are talking about. And envy has always been a sin…not because god hates it, but because it eats away your soul..which you have even if you don’t believe it is immortal.
Progressive taxes are absolutely essential to pay for our country’s needs. But we don’t have to be stupid about it.
On the other hand, if what you are worried about is people like Bezos not “realizing” their capital gains, but instead “living on” money borrowed at a rate less than the rate of growth of their “capital,” we ought to be able to find a way to tax that without opening ourselves up to all the evils of a “wealth” tax. at some point in there, there is a transaction that could be reasonably tax in a way that both parties are able to calculate the tax as part of the cost (0r price) of the transaction.
the problem with Bsos et al is not so much that thyey are rich, but that they are rich enough to unilaterally determine what the government does. that’s dangerous. I think that’s what Andrew Jackson had against the National Bank.
It was in 1954 that Ike with Republican majorities in both chambers of Congress repealed the dividends tax credit for the final time. It had been repealed under Democratic Party control in 1936 and then reinstated in 1939. It was a piece of the original equipment from the permanent income tax initiated in 1913, the same year as our Federal Reserve Bank. Both liberal and conservative economists have great faith in the wisdom of markets, including capital markets. Also, all kinds of economists have great faith in economies of scale, more than they have for competition. Simple wisdom tells us that markets cannot be trusted unless they are competitive, but economist are not simple. Without the dividends tax credit, then resulting capital gains tax preference stimulates both horizontal and vertical market firm consolidation via M&A including LBO and even hostile takeovers.
Dividends should be taxed, but the dividends tax credit gave shareholders reason to not lobby against corporate taxes which with that credit were the offset for taxes that they would otherwise have to pay on their dividends. More importantly, then without the dividends tax credit then dividends are rarely paid at all deferring to holding capital, funding M&A, or stock buybacks. Capital gains taxes should be higher and graduated by time shares are held and the dividends tax credit reinstated to mediate consolidation incentives.
Ron, I can’t follow you here. not because I think you are wrong, but because i just don’t know as much as you do.
as for “both liberal and conservative economists have great faith in markets,” of course they do, they have spent ten or more years swimming in “market” propaganda. even I have faith in “markets” as a fair approxiation of what happens in a middle easter bazaar. as a description of what happens in any complicate economy it falls short. it’s a force, but not much of a force compared to power, politics, and tradition.
which is not so bad…once you recognize government as inevitable as gravity it’s just another cost of doing business.
No matter because what I suggest does not have a snowball’s chance in hell of coming to pass in any foreseeable future. Joe Schumpeter accomplished with his hat tip to socialism in his book Capitalism, Socialism, and Democracy accomplished all that Hayek and Von Mises had aspired. Together these Austrian economists buried the ideas of capital controls and competitive production markets in the dust bin of economic history. Such is creative destruction when it means that capital is free to burn down competition and labor unions in the name of economies of scale regardless of the diseconomies of scale. Joe made capital king just by blowing in the socialists’ ear.
welcome to the Snowballs Chance cafe in a warming world. I was hoping you would explain it all to me, but I imagine you think it would take the equivalent of four years in college. And then I would know too much to learn anything.
but i think i get the idea. In the words of “Egger” [“Men in Black,1”], “It figures.”
My modeling expertise is limited to operations research formulas for large computer system service times and queuing delays. Most of my economics thinking is simple going back to my senior year in high school. So I can explain in simple terms.
The capital gains preference relative to dividends is mostly a matter of net income potential. Capital gains are only realized and taxed when an asset is sold. When an asset is sold then it may not realize any gain at all and therefore have no taxable income. However, the incentive to hold assets for future income is a matter of faith that assets will gain value at a rate higher than the rate of inflation. OTOH, the incentive to sell an asset to realize the capital gains and pay the tax on that income is created by windfall gains (gains at a rate not normal nor expected in the foreseeable future) such as those from a major new product announcement or a merger or buyout. Tax rates on capital gains have historically been low, but way back the gain was discounted by years of holding time and more recently there has been a slightly higher rate for assets held less than six months. Matter of fact the tax rates on capital gains are so low and expectation of future gains so high that many firms feel no need to pay dividends at all (e.g., Berkshire Hathaway).
The dividends tax credit was provided to encourage holding equities (usually common stock) for income. The old people that got income from dividends in retirement were mocked, called coupon clippers. The faith in capital markets was such that it was deemed inefficient to encourage people to hold shares to collect dividends. The dividends tax credit was an tax exemption on the shareholders’ dividend payments for the amount of taxes paid by the issuing firm on the dividends paid as reported by the firm with its issue of dividends. Those that collected dividends were not supportive of corporate tax dodges in the manner that those that realized capital gains were. The coupon clippers were also not for spending profits on share buybacks. Worst of all though was that coupon clippers were less likely to make proxy votes for mergers that would buy them out. The desire to have future income from shares instead of selling out was high among older shareholders, especially retirees. Everyone hopes that they will live long enough to exhaust their savings and be forced to live off of their income since the alternative is to for early death. So that dividends tax credit was rescinded to increase the relative capital gains preference in 1954. The first two LBOs in the US happened in 1955. In recent years a modest amount of dividends has been taxed at the lower capital gains rate, but not enough to dampen the enthusiasm for capital gains and games.
Yesterday was hot, humid, and sunny here until I got the pool skimmed. It began to rain before I hooked up the pool vacuum hose. The nearby (2.3 miles by road) airport got 1.65 inches of rain from 3 PM until 5 PM and the city (10 miles by road) got over 3 inches and flooding in the streets. I doubt we got over 1/2 inch here. So, today it is cloudy and dreary and I am off the hook for the pool. That gives me a lot more discretionary time to use as I see fit. If you have any questions then ask away as I have already paid the month’s EBills this morning and archived the audit trails.
In any case have a nice day. Tomorrow I service my mower, wind in the water hoses to pool and shrubs and mow almost 4 acres.
typo alert: some there, but none that should make anything hard to understand.
‘Regressive’, ‘progressive’, etc – that’s just semantics.
Flat-rate taxes cost lower income people a lot. Higher-income
(or just flat-out ‘wealthy’) people are hurt much less.
(OK, this is mitigated by not taxing the first $30K of
annual income – or whatever the amount currently is.
Recognizing that this is why 50% of the population
pay no income taxes – those slackers!)
(But they do pay FICA, which is highly regressive, but
this is eminently okay because they’ll get it all
back if they live long enuf.)
Graduated tax rates make higher income people pay more
tax, which they can more easily afford. The higher the
income, the higher the rate. The rates are marginal
of course, so a 75% tax (or even 90%) is going to
cost you only on the last few hundred thousand
you earn in any given year.
This has to be done to alleviate income inequality.
‘Wealth’ taxes are absolutely necessary.
semantics makes a difference, a huge difference. there is no “just semantics” unless you and the other guy agree that you have been arguing, after all, about “just semantics.
in the case of regressive taxes vs progressive taxes there is a reality that is different, and not “just semantics.”
In the case of “Social Security is a regressive tax” the difference is huge. in the first place SS is not a tax..it is a contribution to your own savings and insurance costs of future food and housing and insurance in case of some kinds of “accidents” including the accident of not making enough money in a lifetime to save enough for retirement. this is not money that goes into a black hole of “government expenses,” unless of course you try to make it a progressive tax, in which case it takes the “rich” guys money and throws it into the government hole you may call Social Security but have turned into welfare as we knew it.
so if you want to call SS a “regressie tax” you are ignorig reality as well as commiting a “semantics” blunder. sure, words mean different things to different people, but I can’t call a choo choo train a horse, or a Ferrari a “tax vehicle” and be making any sense, except metaphorically or humorously. But calling SS a regressive tax is not funny, and far too dangerous a “metaphor”. Kind of like calling three hundred million people “Uncle Sam” and then laughing at them because they try to borrow from and lend to each other as if Uncle Sam was borrowing fron one pocket to lend to another, stuffing his pockets with “worthless iou’s” another metaphor for “money”…that is, legally binding promises to pay.
yeah, i suppose flat rate taxes cost poor people more than they cost rich people.. or did you mean that the other way? if i pay a flat 10% rate on a million dollars I pay a hundred thousand dollars. if I pay a flat 10% rate on a thousand dollars, I pay a hundred dollars. Are you telling me that a hundred dollars is more than a hundred thousand dollars?
or are you just ignoring the fact that poor people get more back from Social Secrity as a percent of what they paid in than rich people do?
“Doctor, doctor, my friend was just shot.” “looks okay to me.” “what about the bullet hole in his back?” “Well, on the front he is okay. Next patient please.”
And “wealth taxes are absolutely necessary” follows from no logic you have advanced here.
Do you mean “graduated taxes”? or “wealth” taxes?
And eliminating inequality is not the point of graduated taxes… paying for the country’s needs is the point… something that cannot be done with a flat tax.
“levelling” people has not succeeded in the about five hundred years it has been tried. for some reason the “rich” resist it. and even the sane poor can see that it wouldn’t work.
calling for “wealth taxes” or “making the rich pay” for Social Security are the best ways I can think of to kill Social Security entirely, and make “the rich” do whatever they can to protect theselves from the greedy poor, even if it means destroying democracy by turning the poor against each other.
So, Jeff Bezos is worth $200B. That’s wealth. He pays no taxes on that.
Unless he sells off some of it. Then it’s 20% on the gain.
He cashes in billions annually to fund his space adventures.
But this is not ordinary income, so he doesn’t pay ordinary income tax.
His salary is about $80K. But he lives like a king.
Or at least he could.
I guess you would say this is not
income inequality, because he has hardly any income.
He probably pays about $15K in ‘ordinary’ income taxes, if that.
Dobbs…no. i would not say that was not income inequality. I would say a “wealth tax” is not the way to deal with it. I am sure the IRS would be able to call it an illegal tax dodge and the courts would agree with them.
this is hard for me. i can see that you will never see the point of what I am saying, but I hate to let you get away with it.
I think an ordinary small business pays taxes on “income” less allowed expenses. I don’t see why a corporation, or Bezos, can’t be taxed the same way,
How about taxing capital gains just
like ordinary income? (CA does that.)
At an extreme marginal rate (75-90%).
Either that or a proper wealth tax, i.e.
even if you don’t sell assets. Just like
investment advisors charge (1%).
What’s yer preference?
those might be good ideas to start with, but i don’t like the words “wealth tax.” and if you pay that to your invetment advisor you know whether or not youare getting your money’ worth. a wealth tax to pay for Social Security would not be the same sort of deal at all. i think i am all right with capital gains as ordinary income. you’ll get some squawking about inflation and “killing investments” but i don’t think those will hold up to honest scrutiny, you’ll figure the tax into your investment decisions and get on with it. i don’t mind a securities “transfer tax” either. but most of all i favor laws against predatory business practices rigidly enforced.
The average financial advisor fee is 1%…
Social Security payments are anomalous, as you know.
Skipping the semantics, whatever is payed in, returns
(usually/often) in the form of benefits, even to Jeff Bezos,
so all of his will taxable one presumes. So, it would be
‘generous’ to make him pay FICA on his wealth somehow,
but that (traditionally) means he should expect benefit
payments on all those contributions. But, still, they
would be taxable, so, maybe this would be ok.
Instead of ‘wealth tax’, it will be called
the ‘Robin Hood Tax System’
i don’t think an exteme marginal rate would work except in a war or “extreme emergency” like a national debt growing faster than GDP. too easy for the rich to hide their income, as we have discussed.
don’t mind if the states do it. they can always pick up and leave if they don’t like it. leaving the country is another matter, but a killing tarrif ought to stop that. and no, the lessons of smoot hawley do not apply.
I thin it should be called the Patriotic Deficit Emergency Surtax…about 10% on incomes currently above the FICA cap, applied to general (non-FICA) expenditures and debt reduction.
Or just a simple repeal of the Trump tax cut. or a simple increase in the top marginal rates, corporate tax rate, and/or capital gains rate.
We definitely do not want a “Robin Hood Tax,” whih would certainly be called a “robbing hood tax,” and inspire the rich to any means of fighting “socialism” they could think of. Any.
And they would be supported by 80 million voters who would think it was all about freedom.
I certainly do not know what you mean by “anomalous.” Different from real taxes?
I can’t see how making Bezos pay millions of dollars for my retirement would by generous to him. I don’t see how taxing him 35% of 85% of his $30,000 SS benefit would change anything. I think you may not understand much about how Social Security works or why it was designed the way it is. The benefit rate is figured…among other things.. at about 15% of the amount of income below the cap, above about 2500 per month, which would work out to about a SS benefit of 30,000 per year from a tax that amounted to about 15,000 per year. The tax collected over about 40 years, the benefit expected to last about 20 years. Making BEzos pay tx on his income above 140,000 per year (billions as you say) would be seen by him as theft because he would get no benefit from it, not even the ordinary benefit every citizen gets from general government spending. and if you paid him a benefit based on what he paid in…there would be no gain to FICA finances…or anyway not enough to make a difference. 200 million ordinary tax payers would have to contribute about five dollars each to increase the income to SS by a billion dollars.
Historically, FICA payments were called ‘taxes’ because
that was believed to be the only way the guv’mint could
collect them. That is pure semantics, but that makes
them ‘anomalous’ taxes.
your 1% fee to your financial advisor is not a tax. you think you are getting your money’s worth or you don’t pay it and go somewhere else.
FICA is not really a tax either becuse you get your own money back with interest, but it looks like a tax because it is not voluntary .
If you use “semantics” as a buzz word to mean “it does not matter,” you don’t understand what semantics means, or what matters. you seem to think any excuse you can come up with to “tax the rich” is self-proving. Life is much more complicated than that.
And just to be clear (ha ha), I am all in favor of taxing the rich. Just not for Social Security…which I am very much in favor of… and not in the spirit of “getting even” with them for having more money than I do. They need to pay their way. they need to stop robbing people (not all of them are) and they need to pay more of their money than the poor pay, because they have more more money after basic needs and can afford it, and the government needs the money to keep on doing good things for them as well as us.
a few typos, only one that might matter… i said making him pay taxes… i should have said making him pay FICA. I think it should have been obvious what i meant, but i am learning that people in argument will exploit any crack to “win” the argument without addressing the issue.
enjoy your day/weekend. we have first rain in two months expected tomorrow. i love the rain and god knows we need it. but a lot of things that should have been done in the sunshine remain undone.
I have too much to learn, and learn too slow, to bother you with questions. except as they come up from time to time and can be answered in 25 words or less.
well , here’s a question.
i pay my routine bills by automatic bank transfer. but i got a scare when i gave my card number to MarketWatch to be allowed to post comments to a SS thread. It was meant as a one time only one dollar fee. they told me they would automatically bill my card 19.99 a month for my “subscription.” which i most certainly did not want. then it occured to me that with my card number out there anyone could bill me any amount and the bank would pay, and i would have no recourse.
don’t want to go back to mailing a check. does “EBill” offer a solution?
My EBill accounts with VISA, Verizon, Traveler’s Insurance, and our power company send me an Email notification when my bill is ready to be paid. The Email includes only the amount, but I log onto my password secured online ID at each of the relevant providers and download my bill which I archive to cloud storage as well as forward Email to myself attached to their bill notification Email they sent me. Then I take the Emails that I sent myself and move them to my Outlook archive. That gives me two copies of each bill that are not dependent upon my laptop, but rather just my MS Outlook account which is portable via my Outlook logonid and password. To actually pay the bills then I use my bank’s online bill pay function to transfer funds from my checking account to the vendor account that I seek to pay. My bank has built in routing to all major insurers and utility companies and many retailers (which I do not use – my retail is all paid at purchase). My propane vendor, Amazon Prime, Express Scripts, and a couple of renewable tech services did rope me into providing my VISA though because they demanded full automatic payment of bills to subscribe, either for all service or for some more desirable service. If one must go automatic payment, then credit cards are safer than debit cards or deposit account numbers. Credit card payments can be litigated for fraud before you lose the money. Best thing though is to go with (ugh) a big bank that provides credit fraud monitoring, which may mean a charge is denied when you travel if you do not tell them where and when you are going.
The threat of showers is not consistently being estimated by our local NBC, NWS, and Weather Channel, so I am going to give the pool a shot after all.
I did know about the SC saying they needed to be “taxes” to pass Constitutional muster. I’ll let you call it callit “pure semantics” if you want because that is only semantics. But “regressive tax” is not pure semantics. It is a misuse of “regressive” unless of course “regressive tax” is an explicitly defined technical word among economists to mean “only” taxes that are a higher percent of wages of people who make less money than they are on the wages of people making more money.” But this would be a misuse of technical laguage to mislead people. It would be as if I accused you of not working all day, because you did not move anything any distance against any force. (more or less the definition of “work” among physicists.
Social Security taken as a whole is a highly progressive program to prevent poverty due to old age, disability, or death-with-dependents. Calling it a “regressive tax” is ignoring that it is the most progressive “tax” that workers pay. Misleading, and — I can’t think of a better word — stupid when used by people who should know better to turn Social Security into welfare…exactly what it was designed not t be, and exactly why it has worked for 80 years to drastically reduce poverty in old age. If ther are people whose Social Security benefits are inadequate, there are welfare programs (including SSI) to help them out. If you want the rich to pay more taxes, fine with me. But there are taxes..including taxes for welfare programs…they couldpay more for without destroying Social Security in all but name.
Save “Social Security,” put the people on welfare.
Enact a “wealth tax”: watch the wealthy destroy democracy. It’s only semantics.