Precisely the view I have tried to express though never as well as Norb Weckstein does. The simple logic and the FACT that it is proven economic theory with decades of growth and prosperity to back it up should convince anyone, except the most brain washed fools, that REAGANOMICS killed the American dream. We don't have to be living in a country that is economically weak, we don't have to be living through an economic nightmare for millions. It is not rocket science. WE look backwards to when our economy was last really doing well, which would be before Reagan's 3 trillion of debt, and put things back the way they were then. See what happens.
P.S. The right won't like it but we will see prosperity which they will HATE because it won't be the ideologically pure, Ayn Rand prosperity they believe is always around the corner but which never really seems to get here.

Been saying that for years.

Well, back then, they probably didn't mind it. It was a different kind of man back then... the morally responsible kind.

Now everyone's out for number one. It's sad.

I've always been surprised that shareholders continue to buy stock in corporations that are run like Ponzi schemes. If a huge chunk of a company's profits are being funneled into the pockets of the CEO and his cronies, the stock of that company should be worth almost nothing. But that isn't the case because there is no shortage of people willing to buy such stocks and most of the time they make money on them.

Then I realize that the stock market really isn't about the value of owning a piece of a company. Owning a piece of a company has no value if the profits are diverted to employees rather than owners. The stock market is basically a giant collectibles market. There is little actual value to what is being bought and sold. Prices stay high do to the perceived value on the part of collectors.

There is little actual value to what is being bought and sold.

I don't know when the "ordinary" investor will wake up to the fact that Wall St only takes care of the "preferred" investors or if they ever will.

But the realization that the "value" you are buying in a share of stock is based more on the magic crystal ball of analysts than actual results is a start.

The righties love to decry Social Security as a giant ponzi scheme while extolling the virtue of the Wall Street Ponzi scheme.

That was a good way of expressing your thoughts about the stock market Sully, I've tried (and failed) to say basicly the same thing several times but not as well or as clearly.

The righties love to decry Social Security as a giant ponzi scheme while extolling the virtue of the Wall Street Ponzi scheme.

The difference is I've made a lot of money in the so-called "Wall Street Ponzi scheme". I seriously doubt that I'll ever get my money back, in adjusted value dollars, from the government Social Security ponzi scheme.

The righties love to decry Social Security as a giant ponzi scheme while extolling the virtue of the Wall Street Ponzi scheme.

Excepting your premise, you still don't get it. SS is forced, and Wall Street is a choice. We should be free to make the choice on our own.

"Excepting your premise, you still don't get it. SS is forced, and Wall Street is a choice. We should be free to make the choice on our own.

#8 | Posted by freechoice"

Little fool. Education is forced. Driving licenses are forced. FDA regulations are forced. Many things are forced to protect society from the greedy and the stupid. SS was formed as a protection against the brutality of capitalism.

Idgits like you falsely beleive you can intelligently make you own choices in everything and be better off.

Well if you were so competent in choosing you would be quite wealthy by now and SS payments a trivial nuisance.

The simple logic and the FACT that it is proven economic theory with decades of growth and prosperity to back it up should convince anyone, except the most brain washed fools, that REAGANOMICS killed the American dream

The power of symbolism is awe-inspiring, isn't it? A lot of people call the US an "experiment". Well, what if the experiment involves convincing the better part of a quarter billion people to support a system that does not work for them? Seems to be succeeding so far.

Two Santa Clauses anyone?

"and SS payments a trivial nuisance."

He wouldn't be making SS payments because he would need to have a job. Just low capital gains taxes.

I wonder if taxing top athletes and entertainers would also make them perform better?

In order for the logic to be correct, that would also need to be the case.

Wouldn't it?

dok, that is his theory. You do know what that is, don't you?

"The power of symbolism is awe-inspiring, isn't it? A lot of people call the US an "experiment". Well, what if the experiment involves convincing the better part of a quarter billion people to support a system that does not work for them? Seems to be succeeding so far."

Built upon cheap resources and land. Both are ending. Capitalism is a great model for rapid expansion but a horrible model for sustainability. It will be interesting to see how the US matures in the next couple of decades now that cheap resources are a thing of the past.

For all intents and purposes democracy is also an experiment.

"I wonder if taxing top athletes and entertainers would also make them perform better?

In order for the logic to be correct, that would also need to be the case.

Wouldn't it?

#12 | Posted by BENDOR"

Money never kept Jim Thorpe, Jessy Owens or any pro-athlete before the 1980s from performing.

Conservatives really are short sighted idiots who ignore history in their dogmatic views of the world

Money never kept Jim Thorpe, Jessy Owens or any pro-athlete before the 1980s from performing.

Conservatives really are short sighted idiots who ignore history in their dogmatic views of the world

#15 | Posted by furio

Interesting...

...I didn't know they all paid 90% tax rates.

Forgive me.

And if you set that rate that high again, the execs will merely defer their compensation, as will business owners. Set up a Keogh or a similar plan, and plow a couple of hundred thousand dollars a year in, tax free. Couple that with an HSA, and other perks, and you've got yourself a whole lot of undeclared income.

Suits me fine either way.

BTW--you can't expense tool enhancement and research in the same way you do salaries. Doesn't really work that way. If you really want to keep business more competitive, cut the corporate income tax rates. By doing so, you'll increase the value of every dollar that ISN'T paid out in salary and stock options.

AP - WASHINGTON More than 15 million taxpayers may owe the government $250 or more because of how the IRS last spring set up President Barack Obama's tax break that was designed to help consumers spend the U.S. economy out of recession.

giving a tax break,getting the political mileage and then taking it back is good for the government business.

"If you really want to keep business more competitive, cut the corporate income tax rates."

Fine, but then offset it by raising the capital gains tax so that increased profits or dividends would be taxes just like regular earned income.
I somewhat agree with the argument that it is unfair to tax corporations because the owners are again taxed when they take their profits. So, tax them only once but no preferential treatment because they get their income from a dividend or a stock sale instead of a pay check.

If you "offset" it, you haven't really changed anything. You're back to punishing the same investors who are getting screwed by the big exec pay.

And if you set that rate that high again, the execs will merely defer their compensation, as will business owners. Set up a Keogh or a similar plan, and plow a couple of hundred thousand dollars a year in, tax free. Couple that with an HSA, and other perks, and you've got yourself a whole lot of undeclared income.

Until they change the deferred comp rule regarding top-hat employees - what's your next move?

Cross that bridge when I get there. As cunning as Congress thinks they might be, business owners are more so. That's obvious each and every time revenues come in a lot less than expected.

maryland put a 8% tax on all its millionaires and got 10% less tax money the next year.

"maryland put a 8% tax on all its millionaires and got 10% less tax money the next year."

Why? Did all the just-cut-my-taxes parasites leave the state?

Why? Did all the just-cut-my-taxes parasites leave the state?

no,the raise my taxes crowd had a change of heart when they figured out their taxes would go up to.

"maryland put a 8% tax on all its millionaires and got 10% less tax money the next year."

I just did a bit of research to see if I could find anything to support your statement and every site I looked at said your statement is not true. What is true is that Maryland revenue is down nearly 17% this year but that is completely attributed to the recession and their income tax collections are down 9% as compared to 18% national average, their total tax collections are down only 1% compared to a national average of 12%. The income tax actually revenue increased dramatically betwween 2007 and 2008 with 2007 being the year of the tax increase to 6.25% for incomes over $1,000,000.

So unless you have a link that would dispute about five I went to, including the Maryland State Government web site I'd have to conclude you are making stuff up.....again.

Danni,

Did your research say if the tax rate even increased?

It won't matter Semtex. Hell will freeze over before danni recognizes your link.

Republicans need to read Thomas Hobbes to understand human nature and the real role of government. I think they'd also complain less...

"Did your research say if the tax rate even increased?"

Yes, in 2007 they raised rates. Took effect Jan. 1, 2008.

Another of RisR's statements bothers me...it is...

"BTW--you can't expense tool enhancement and research in the same way you do salaries."

Research would be mostly salaries and tool enhancement would still be business expenses. I think he just posted a bunch of nonsense thinking no one would question it to divert attention away from the subject of the thread which, IMHO, is one of the most important topics ever put here in a thread as far as economics is concerned. IT is the key to undoing Reaganomics and beginning to restore our former middle class. The "greed is good" philosophy made popular in the 80's is finally being proven to be bull shit. Greed is only good for the people at the top, it sucks for everyone else. The greedy have had their day, it's time to CHANGE things so that now we can have ours and at the same time pay down the debt and make America economically sound once again.

Danni,

So...this must be why David Stockman, Reagan's Budget Director who coined the phrase, "trickle down theory", called Reagan's economic policy that reduced top tax rates a "trojan horse".

"So...this must be why David Stockman, Reagan's Budget Director who coined the phrase, "trickle down theory", called Reagan's economic policy that reduced top tax rates a "trojan horse"."

Makes sense.

Well now that capitalism is dead, the anti-capitalists should be pleased with the way the economy is deteriorating. Once the rich are gone, there'll be nobody left but the poor.

According to Danni's rants about Reagan, our current economic problems stem from Reagan's deficit spending. Keeping in mind that Reagan was president through the 80s, this Federal Reserve chart of budget deficits shows that every president before and after Reagan was addicted to deficit spending. Her hero, Obama, makes Reagan, and even Bush, look like misers. Don't be surprised if Obama's deficit for next year exceeds $4 trillion.

Well now that capitalism is dead, the anti-capitalists should be pleased with the way the economy is deteriorating. Once the rich are gone, there'll be nobody left but the poor.

#37 | Posted by Ray

That's the problem with socialism--you eventually run out of other people's money.

Now we get trickle up poverty from Obama.

So much of this is little more than a rehashed version of the, anti-bourgeois silliness that most intelligent people abandoned years ago. I wonder, if I chose to pay my housekeeper or gardener an inordinate income to take care of my property, would I see the same amount of outrage?

First of all, the US can not go back to the 1950s or 60s. For better or worse, globalization of the labor markets has resulted in enormous downward pressure on wages for low to unskilled laborers. Even if the government did pass laws restricting the import of products made using cheap overseas labor, the end result would be a huge increase in consumer costs, leading to an equally large decrease in standard of living. Yes, it would allow the unskilled labor class to earn salaries closer to those of the professional class, but the professionals would pay a significant price for it.

Another interesting phenomenon is the vitriol directed against president Reagan. An honest progressive would be forced to recognize that not only did the Reagan tax cuts increase total tax revenues, but they also shifted the income tax burden away from the lower half of income earners to the upper half. And while I can't say for sure why he is the object of so much abuse, I can only guess it's because these same measures also allowed the productive classes to become even more wealthy. In other words, the productive classes were rewarded for their contributions to society, as opposed to being punished for them. Society being free to allocate it's privately held assets of its own accord is something that the statistics will never be able to reconcile.

And greed. Is it really greedy to want to keep that wealth which you create? Am I being greedy by not opening up my home to those who don't have one? Am I being greedy by not feeding those that don't have any food? I would say no, because of my own actions I have not inflicted harm on anyone else. In the absence of "me," those people would still be in the same condition, so it's difficult to make the argument that the onus is me to correct the problem. Of course I do think it is slightly greedy to think that you have some inborn right to deprive someone else of their property for your own good.

Greed is good. It's because of greed that people spend their days doing what they can to provide the products and services society demands. It's only natural that those that provide the most value receive the biggest rewards. And if you try and undo that paradigm, the one that replaces it will be one where the most productive citizens elect not to reach their full potential because the gains are lower than the costs. If one can make as much as a GM factory worker as they would as a doctor, there is little incentive to put in the 10-12 years of training required to become a doctor, with a follow on career that promises 50% longer work weeks.

Until people stop blaming artificial bogeymen like corporations or the rich on economic problems, nothing will change. They first have to be honest with themselves and realize that, whatever the problem, they are the source. You take away the rich and the poor will still be poor. It's not like the absence of rich people is somehow going to make them more productive, or more valuable members of society. In fact, in all likelihood they will be worse off, since they would have to fund many of the services that are currently funded specifically by the upper half of income earners. I won't get into the fact that most of those eliminated would also be the entrepreneurs, professionals, and technicians that allow us the standard of living we currently enjoy. You can rest assured that health care would no longer exist outside of traditional folk remedies like chewing bark or leeching.

If we are going to succeed as a society, we are going to have to stop dumbing it down in order to accommodate the lowest common denominator. It must be understood that, above all else, it is productivity that will make us strong, and that means being able to adapt to ever changing markets. Yes, the demand for high paying unskilled labor positions has gone away, but guess what, the demand for very highly paid doctors and nurses just keeps going up and up. Ditto with engineers. And there's always a spot open for the next entrepreneur that's willing to develop the next ipod or wii or whatever.

Bottom line is that although it's easy to blame someone else for our problems, and equally easy for politicians to confirm our suspicions, we're really the only ones who can fix it. You could tax every dollar earned above $250k at 100% and it's not going to make anyone more productive. In fact, it would most likely cause those people in that tax bracket to become less productive. Does that really help anyone? Punishing the rich may bring some sort of sick satisfaction, but is it really worth the damage you cause to society in the process?

Republicans need to read Thomas Hobbes to understand human nature and the real role of government. I think they'd also complain less...

#31 | Posted by Sycophant

And Democrats need to read Ayn Rand to understand the destruction to human nature that can be caused by government. Or if Rand is to political, try reading Nietzsche.

"Interesting...

...I didn't know they all paid 90% tax rates.

Forgive me.

#16 | Posted by BENDOR"

No, you fucking moron. Many of them made no money at all. the professionals were far under the top tax rate.

People will perform for the desire of competition and the recognition.

"An honest progressive would be forced to recognize that not only did the Reagan tax cuts increase total tax revenues,"

No they didn't, inflation increased tax revenues.

" It must be understood that, above all else, it is productivity that will make us strong,"

We've have incredible increases in productivity since the 1980 without the accompanying rise in wages though the wealth has flowed copiously to the upper 1%.

"You could tax every dollar earned above $250k at 100% and it's not going to make anyone more productive."

Yeah, as if anyone is even remotely talking about something like that.

Your rant is basicly an attempt to reaffirm the philosophy, now ridiculed and reviled, of Voo Doo economics, trickle down economics, supply side economics, Reaganomics.

"But real revenues per capita grew only 19 percent over the same period better than the likely Bush performance, but still nothing exciting. In fact, it's less than revenue growth in the period 1972-1980 (24 percent) and much less than the amazing 41 percent gain from 1992 to 2000."

"Interesting...

...I didn't know they all paid 90% tax rates.

Forgive me.

#16 | Posted by BENDOR"

No, you fucking moron. Many of them made no money at all. the professionals were far under the top tax rate.

People will perform for the desire of competition and the recognition.

#44 | Posted by furio

Awesome! Next time you're in the mood to work for free (well, you can keep 10%)...

...I have a lot of yard work that needs doing.

I will make sure all of my neighbors see you working...

...I'm sure they will "recognize" you for your efforts!

We've have incredible increases in productivity since the 1980 without the accompanying rise in wages though the wealth has flowed copiously to the upper 1%.

"No they didn't, inflation increased tax revenues."

Negatory. If that were true than tax revenues under Jimmy Carter, who created levels of inflation not yet matched in the US, would have produced much, much higher tax revenues, especially considering that tax rates under Carter were so much higher. So your Maxim doesn't really hold true. Even with much higher tax rates, revenues under Carter were less than under Reagan. Do you have another explanation?

"We've have incredible increases in productivity since the 1980 without the accompanying rise in wages though the wealth has flowed copiously to the upper 1%."

And the reasons for both are relatively clear and simple. First, the changes in labor productivity were not due to a change in labor, but due to changes in capital that allowed firms to produce more with a given amount of labor. Robotics, automation, computers, etc. And those people that were providing these new services saw a big change in wages. In the mid 1970s, the wage difference between a college grad and a non-grad was about 5%. Now a college grad makes about double what a high school grad makes. Much of this is due to the change in labor demand that began under Reagan and continues to this day. A surplus of unskilled labor results in lower wages, while a scarcity of professional labor results in higher wages. Since labor has is unique amongst factors of production in it's ability to differentiate itself, the obvious answer is for the unskilled labor to become skilled.

"Yeah, as if anyone is even remotely talking about something like that."

Then what are you talking about? a 90% tax? 95% tax? Again, if the Maxim is that taxing high income earners fosters productivity, then wouldn't 100% be optimal? If not, what rate would be?

"Your rant is basicly an attempt to reaffirm the philosophy, now ridiculed and reviled, of Voo Doo economics, trickle down economics, supply side economics, Reaganomics."

Rant? Not really. This is what's taught in virtually every economics course in the country today. I have a BSBA and an MBA, and not once did I ever hear a professor suggest that high taxation was the road to increased productivity. I often heard the opposite, that taxation would serve as a disincetive to labor, or any other factor of production for that matter.

I think you may have misunderstod my position on Reagan as well. I'm not a huge fan, but I did feel compelled to point out the results of his tax policies. Reagan was a true keynesian, in that he successfully used public funds to stimulate economic growth. Most on the left have a very, very distorted view of Keynsian policy, often conflating it with a post-Marxist philosophy designed around strict government control of resources. Reagan used the issuance of dent to cover short-term reductions in tax reveunes that were a result of his tax cuts. Over time, they more than made up for themslves. Personally, I would have preferred to have seen him cut expenses along with taxes. Of course then we might still have the Soviet Union to deal with, since a lot of the expenses under Reagan involved countering the communists.

"But real revenues per capita grew only 19 percent over the same period better than the likely Bush performance, but still nothing exciting. In fact, it's less than revenue growth in the period 1972-1980 (24 percent) and much less than the amazing 41 percent gain from 1992 to 2000."

Between 1972 and 1980, inflation went from 3.2% to 13.5%. As you seem to have some understanding of, inflation will, um, inlfalte the value of tax revenues. You claimed it the case under Reagan. It's certainly the case here. 1992-2000 was for a different reason, primarily the creation of vast amounts of new wealth. Taken in the big picture, I'm not sure if the wealth creation that happened gduring that period had ever occurred before.

Another of RisR's statements bothers me...it is...

"BTW--you can't expense tool enhancement and research in the same way you do salaries."

Research would be mostly salaries and tool enhancement would still be business expenses. I think he just posted a bunch of nonsense thinking no one would question it to divert attention away from the subject of the thread which, IMHO, is one of the most important topics ever put here in a thread as far as economics is concerned. IT is the key to undoing Reaganomics and beginning to restore our former middle class. The "greed is good" philosophy made popular in the 80's is finally being proven to be bull shit. Greed is only good for the people at the top, it sucks for everyone else. The greedy have had their day, it's time to CHANGE things so that now we can have ours and at the same time pay down the debt and make America economically sound once again.

#34 | Posted by danni
* * * *

Actually you're wrong about that. R&D also includes salaries, tools and equipment, patents, and is capitalized, not expensed. Business has wanted to change that part of the tax code for years, but Congress has resisted, knowing what it would mean to tax collections.

It's funny to have libbies climb onto a thread and pretend that they care about business, and their owners. We know better.

People will perform for the desire of competition and the recognition.

#44 | Posted by furio at 2009-11-17 02:25 AM | Reply

Not the wing dings.

Not the wing dings.
#53 | Posted by 726

It would just overturn our current system. As it stands now, the lazy are considered those who refuse to work for next to nothing. Under this proposal the lazy will be those who refuse to work unless they make much more than all those around them.

Sounds okay by me.

"Negatory. If that were true than tax revenues under Jimmy Carter, who created levels of inflation not yet matched in the US, would have produced much, much higher tax revenues"

Read post no. 47

"Much of this is due to the change in labor demand that began under Reagan and continues to this day."

Or...illegal immigration and outsourcing. Houses still need skilled laborors to build them but today we just import cheap labor and pay them unskilled labor wages. Manufactured goods still need skilled labor to build them so we just outsource and pay Chinese slave labor wages. We artificially create a surplus of labor and then pretend it is accidental. The US Chamber of Commerce and other business groups have lobbied and bought Congress to allow the creation of the surplus of labor througn non-enforcement of labor and immigration laws and Free Trade a.k.a. outsourcing.

"Not really. This is what's taught in virtually every economics course in the country today."

Or was until the recent collapse of the economy caused by REaganomics or Supply Side Economics. Now it is rapidly being recognized for what it really is....class warfare.

"Reagan was a true keynesian, in that he successfully used public funds to stimulate economic growth."

Reagan's philosophy was not Keynsian, he was strongly on the side of Supply Side Economics, deficit spending is not Keynsian. Keynsian economics is not based on the concept of free money or that "deficits don't matter."
Reagan cut taxes and just created debt. Nearly tripled it in his term in office. A true Keynsian would have done as FDR and the Dems did, borrow and tax to pay off the debt.
The two charts at this link tell the story.

"It's funny to have libbies climb onto a thread and pretend that they care about business, and their owners. We know better."

Riiight. It isn't as if our wages are dependent upon businesses.

"Taken in the big picture, I'm not sure if the wealth creation that happened gduring that period had ever occurred before."

A great deal of that wealth was the result of the invention of the internet, our government developed it. A government program created huge opportunities for new wealth creation. You could call the developement of the internet infrastructure developement.

It's funny to have rtards climb onto a thread and pretend that they care about anything other than supporting BigBusiness with unquestioned corporate welfare, and increasing their owner's profits at everyone else's expense. We know better.

~Wrongiswrong.

FTFY.

Be Well.

"The costs of obtaining a patent, including attorneys' fees paid or incurred in making and perfecting a patent application, are research and experimental costs. However, costs paid or incurred to obtain another's patent are not research and experimental costs."

"When and how to elect. You make the election to deduct research and experimental costs by deducting them on your tax return for the year in which you first pay or incur research and experimental costs. If you do not make the election to deduct research and experimental costs in the first year in which you pay or incur the costs, you can deduct the costs in a later year only with approval from the IRS."

Nope. You can only deduct dollar-for-dollar research and experimental costs for projects with a duration of under a year. Otherwise, it's considered a capital project, and all salaries, utilities, legal bills--every associated cost you can think of--gets rolled into the project costs, and has to be capitalized.

I was the controller of a manufacturing company. Sometimes you might just want to take another person's word for it, rather than wandering off into the world of IRS links to prove my point for me.

I love your idea though--let us just expense all of it. You're right; that WOULD be a huge help to companies, and would put them on a real long-term focus. But on the other hand, it would rob the Treasury of hundred of billions of dollars. After all--why declare profits at all, when you can just roll the proceeds over into increased research and development for the future? You could put off taxes forever, and focus instead on innovation and R&D.

Which is why Congress says no.

You could call the developement of the internet infrastructure developement.

#57 | Posted by danni

You could, but most of that development was funded by the private telecom industry during the late 90's as they competed for those "nasty profits" and had nothing to do with governments. By trying to out do each other in the race to become the number one global telecom provider, they built extensive over capacity that allowed the global internet to become a reality.

I'm sure you know that when you access a site in Europe or Asia, that someone had to provide the international transport facilities. In fact, the construction of over capacity by private industry is what allowed the price competition that made international telecom essentially free, and allowed foreign call-centers to profitably compete with US call-centers.

If you don't believe me, even though I worked in international telecom for many years, read Thomas Sowell's "The World is Flat". He does a very nice analysis, even though I don't agree with all of his solutions.

I think I'll take the IRS's word for it.

REDMAN I understand the role that private industry had in developing the internet but my point was that the basic research and developement was done by the government. It could be viewed like government spending through the stimulus to develop the smart grid, etc. Of course, at some point private industry invests and takes over, that is the whole point.

"Sometimes you might just want to take another person's word for it, rather than wandering off into the world of IRS links to prove my point for me."

Proving your point by posting a link that disproved your point. Interesting.

REDMAN I understand the role that private industry had in developing the internet but my point was that the basic research and developement was done by the government. It could be viewed like government spending through the stimulus to develop the smart grid, etc. Of course, at some point private industry invests and takes over, that is the whole point.

#64 | Posted by danni

Agreed, as long as the government knows when to step out of the picture and allow for a profit motive that will cause private industry to invest, as was the case with the internet. I do have some concerns with the stimulus spending for things like the smart grid that the end game will be a government monopoly that's taxpayer funded.

I think a good model for this would be the nuclear power industry and the soon to be (I hope) "space" industry. Government research and appropriate government regulation, but over time, private for-profit ownership.

Your IRS link proved my point, Danni. Not yours. Not all "costs" can be expensed. Do you realize that?

But go ahead and call a CPA. Or a tax accountant. Or pick up a Cost Accounting book. In fact, just google what the term "cost accounting" means.

Businesses spend billions of dollars trying to develop new and better products, These outlays are referred to as research and development (R & D) costs. Accounting rule makers have struggled with how best to classify such expenditures. Should they be treated as expenses or assets? The classification of an outlay as an expense or an asset depends upon how long the firm will benefit from the outlay. If the benefit will be for more than one accounting period, it is classified as an asset. If the outlay provides economic benefit for less than a year it is generally classified as an expense.

"If you capitalize a cost, you may be able to recover it over a period of years through periodic deductions for amortization, depletion, or depreciation. When you capitalize a cost, you add it to the basis of property to which it relates."

If your income tax rate is low enough then there isn't much tax to avoid by using expenses or capitalization and thus less incentive to even do R & D. As tax rates increase the incentive to avoid those taxes does too.

#69 | Posted by danni

I've never worked for a company that did capitalized research as a way to avoid taxes. It's usually been to develop a new product; i.e. patent, or some competitive advantage.

In fact, the argument actually works the other way. Companies are forced to capitalize long-term investments so they don't get to deduct the expense of a long-term investment in the first year and completely avoid tax for that period. When the government wants to stimulate business investment, a common way is to accelerate the write-off for capital investment.

"I've never worked for a company that did capitalized research as a way to avoid taxes. It's usually been to develop a new product; i.e. patent, or some competitive advantage."

I've never been in R&D but I have worked for many companies who bought lots of new equipment every year specifically, as they put it, "to avoid giving the money to Uncle Sam. My boss where I work now just told me to order a new $3000.00 computer but he wants it done before the end of the year. They'll be getting their new trucks soon too.

You need to get back in the shallow end of the pool Danni. This is an age-old issue that business has been clamoring for for decades, and you're pretending that those of us whose job it is to grow businesses in compliance with a tax code that makes it onerous don't know what we're talking about.

I have worked for many companies who bought lots of new equipment every year specifically, as they put it, "to avoid giving the money to Uncle Sam.

Yeah, I have too. But doesn't that just add to the profits, and taxes paid, by the company that sold them the equipment?

I've never been in R&D but I have worked for many companies who bought lots of new equipment every year specifically, as they put it, "to avoid giving the money to Uncle Sam. My boss where I work now just told me to order a new $3000.00 computer but he wants it done before the end of the year. They'll be getting their new trucks soon too.

#71 | Posted by danni
* * * *

Again, you've managed to make our point for us. The IRS put on a one-time $200,000 new equipment rule, that allowed companies to accelerate all depreciation on $200,000 worth of capital equipment into the first year. In doing so, they hoped that business would spend a lot of money, including on things like Hummers, which drove the enviros crazy for not having an exclusion for those.

The Congress is great at fiddling with the tax code to favor their particular interests, in this case heavy equipment and car manufacturers after 9/11. It's less smart at figuring out long-term solutions to building America's long-term competitiveness. Forcing companies to capitalize their R&D as long-term assets is an example. May as well, then, pour money into executive compensation, especially if said executives can acquire foreign businesses and firms, export the jobs and the capital, and increase PPS in the short term.

I just read what the IRS has on their own web site.

"But doesn't that just add to the profits, and taxes paid, by the company that sold them the equipment?"

Of course but it also causes them to hire more employees to make the stuff or distribute it or whatever.

Some here just want to debate details of the tax code instead of deal with the overall basic premise that higher taxes actually encourage reinvestment into the businesses creating those profits. Higher wages can result from that and more people employed making higher wages creates demand which in turn creates more tax revenue. The end result of cutting taxes by Reagan and again by Bush was stagnant wages, short term profits but long term stagnation of the economy.

Doc pretends to be contributing to threads that are way over his head, in between teaching World Civ 101.

Thanks, Doc. This thread was going nowhere until you showed up.

The IRS put on a one-time $200,000 new equipment rule, that allowed companies to accelerate all depreciation on $200,000 worth of capital equipment into the first year

Um, the Section 179 expensing limit is $250,000 Mr. Tax Compliance.

Pssst... it is not just new equipment either.

Some here just want to debate details of the tax code instead of deal with the overall basic premise that higher taxes actually encourage reinvestment into the businesses creating those profits.
* * * *

Negative. It's the exact opposite. Besides the fact that higher taxes push capital investment dollars to places where taxes on lower, higher taxes also push capital projects into short-term, less-than-one-year ventures. It is there, see, that they can be expensed.

This is Accounting 101, actually. Very simple.

"This is Accounting 101, actually."

It would be hard to tell since you obviously flunked English 101. Your statement is unintelligible.

"Besides the fact that higher taxes push capital investment dollars to places where taxes on lower, higher taxes also push capital projects into short-term, less-than-one-year ventures. It is there, see, that they can be expensed."

"Negative. It's the exact opposite."

Nonsense. Comparatively speaking, lower corporate tax rates combined with lower tax rates for dividends and cap gains make it more advantageous to take money OUT of the business. Higher rates on corporations, dividends, and LTCG make it more advantageous to reinvest that money IN the business.

Should be "where taxes ARE lower". Have you ever stopped to wonder whether it's a coincidence, that the US has the second highest corporate tax rates in the world, and it is second in the world in outsourcing?

I'm sure it's a coincidence. We should just raise taxes even more, and we can all get rich.

Oh good. Danforth is here to help you out too.

Give you Dems credit. We're in the worst recession since the 1930's, and you want to keep raising taxes.

-US has the second highest corporate tax rates in the world

Rates, yes. Actual payment after breaks they wrote into law themselves? About average in the world last I checked.

"Have you ever stopped to wonder whether it's a coincidence, that the US has the second highest corporate tax rates in the world, and it is second in the world in outsourcing?"

Considering the amount of tax actually paid and the differences in labor costs, I considered it for about fifteen seconds then laughed at it.

Uh huh. Maybe New York and California haven't gotten your memo, that you can tax your way to prosperity. That if you raise taxes on businesses, they're too stupid to just sit there and take it, and not wonder whether they could keep more money by moving across the river.

It's a little stupid to suppose, too, that every other tax jurisdiction in the world has lower labor costs than the US does.

Still, you never change. The answer is always the same for the Danni's of the world: raise taxes on thee, but not on me.

Rates, yes. Actual payment after breaks they wrote into law themselves? About average in the world last I checked.

#85 | Posted by Corky
* * *

Check again.

"We're in the worst recession since the 1930's, and you want to keep raising taxes."

So let me see if I've got your point of view: If things are going well, we shouldn't raise taxes, because that might stop things from running well. If we're running deficit budgets, that's not a good time to raise taxes, but rather a good time to pretend we'll just spend less (despite the fact that hasn't happened in a generation), and if we're running monstrous deficits, we shouldn't even consider paying for our spending.

Do I have that about right?

-Check again.

OK

High Corporate Tax Rate Is Misleading

IF YOU SAY SOMETHING long enough and loud enough, there's every chance people will come to believe it's true, especially if your opponents tire of rebuttals.

This time-honored political strategy has been working overtime of late, as Republican presidential hopefuls romance the richer Florida retirees with appeals for cuts in corporate taxes.

You may have heard: U.S. corporations face one of the highest income tax rates in the world, though the mention of "rate" is often enough excised, so that what comes through is the assertion that corporations pay too much in taxes.

This is simply untrue if your basis for comparison is the developed world. The truth is that while the 35% corporate income tax rate is high indeed, the creativity and global reach of U.S. corporations make them among the most lightly levied.

Between 2000 and 2005, U.S. corporate taxes amounted to 2.2% of the GDP. The average for the 30 mostly rich member countries of the Organization for Economic Cooperation and Development was 3.4%.

Why the disparity given the high federal rate, which rises to 39% counting state taxes? Part of the answer is that big U.S. companies have become expert at hiding profits in tax havens overseas. And many of the smaller ones simply pass through their income to owners who then report it on their personal returns.

According to one analysis, if so much corporate income hadn't moved to the personal tax rolls over the last 20 years, U.S. corporate taxes would account for 3.2% of the GDP, still a bit below the OECD average. "Usage of pass-through forms of business organization can be viewed as a form of 'self-help' corporate tax integration," writes Peter R. Merrill, a partner at PricewaterhouseCoopers.

The income not squired away overseas or channeled to the personal returns still enjoys protection in the form of various tax breaks that depress the effective rate to 27%, according to the Treasury Department. Such breaks are expected to cost the Treasury $1.2 trillion over the next 10 years, reducing the corporate tax revenue by 25%.

more

"Read post no. 47"

I'm still not tracking. Both inflation and tax rates were much higher under Carter than Reagan. So why were aggregate tax reveunes under Carter? If your statement about inflation being responsible for the increase in tax revenues under Reagan were true, would it be doubly so under Carter when coupled with higher tax rates?

"Or...illegal immigration and outsourcing. Houses still need skilled laborors to build them but today we just import cheap labor and pay them unskilled labor wages."

They are paid market rate wages, which for any profession will be a function of supply relative to demand. but that's only half the issue. When it comes to unskilled or low skilled workers, that pool includes virtually every able bodied man, woman, and child in the world. So for someone in the US who is reliant on low or unskilled labor to earn a living, they are competing not only those in the US that are of a higher skill set, but those in the developing world with a comperable skill set. This competition puts enormous downward pressure on wages in that market.

"Manufactured goods still need skilled labor to build them so we just outsource and pay Chinese slave labor wages."

Slave Labor? really? The average wage in China is about $.57 per hour. That means that you could pay them almost ten times what an american would make earning mimimum wage. To put it in perspective, that would be like paying an american about $500,000 per year.

I don't know what the workers in China make working for american firms, but I do know that it is better than their next best alternative, and very likely far higher than average. In Indonesia, there were about 20 applicants for each available job, according to Friedmann ("The World is Flat")

"Or was until the recent collapse of the economy caused by REaganomics or Supply Side Economics. Now it is rapidly being recognized for what it really is....class warfare."

I guess you are unfamiliar with Fannie and Freddie, huh? Two government backed organizations devoted to extending enormous amounts of money to the otherwise uncreditworthy. remember barney Frank standing up and demanding that GWB not attempt to regulate those organizations, that such an attempt would amount to little more than "class warfare?" There are plenty of private orgnanizations out there that simply followed the government's lead, and they certainly shouldn't be absolved of thier role, but niether should Barney Frank, and any mention of the meltdown would be incomplete without him being included as a primary instigator.

"So why were aggregate tax reveunes under Carter?"

YOu remember "inflation" but forget about the other part...."stagflation."

"Slave Labor? really? The average wage in China is about $.57 per hour."

Thanks for making my point.

"I guess you are unfamiliar with Fannie and Freddie, huh? Two government backed organizations devoted to extending enormous amounts of money to the otherwise uncreditworthy."

Not going to bother arguing specifics in the housing bubble and subsequent bust but without the housing bubble the Bush economy would have been in recession since 2001. Virtually now wealth was created in the US since that time because of....supply side, trickle down, Voo Doo, Reaganomics.

" remember barney Frank standing up and demanding that GWB not attempt to regulate those organizations, that such an attempt would amount to little more than "class warfare?""

Um...yeah...I remember that. It was 2003, and Frank was a minority member of a Republican-controlled committee, while Republicans also controlled The House, The Senate, and The White House. So Frank's statement carried all the weight of a fart in a windstorm.

"any mention of the meltdown would be incomplete without him being included as a primary instigator."

What a steaming pile of bullshit. The belief that folks at the bottom of the housing rung were responsible for the 100-1 leveraging of bad paper against bad paper by the likes of Lehman Brothers is moronic.

"but niether should Barney Frank, and any mention of the meltdown would be incomplete without him being included as a primary instigator."

Sure, because as a member of the minority party adn a minority member of the House Financial Services committee he had the power to change policies while all the members of the majority party, at the time, are mysteriously not ever mentioned by talking point repeaters.

So let me see if I've got your point of view: If things are going well, we shouldn't raise taxes, because that might stop things from running well. If we're running deficit budgets, that's not a good time to raise taxes, but rather a good time to pretend we'll just spend less (despite the fact that hasn't happened in a generation), and if we're running monstrous deficits, we shouldn't even consider paying for our spending.
Do I have that about right?
#89 | Posted by Danforth

Experience should have taught by now that there is no amount of revenue which politicans can't overspend. Worse, the more they get, the more they spend. We're now seeing a direct correlation between how much they spend and how much the economy worsens. There is no chance the feds can reconcile its massive debts without default.

The socialists will have their way, but they won't escape paying for the consequences of their larcenious ideology, one way or another.

Some here just want to debate details of the tax code instead of deal with the overall basic premise that higher taxes actually encourage reinvestment into the businesses creating those profits. Higher wages can result from that...

no it won't. more employment??? perhpaps but, again, you fail to accept that labor is a commodity. tax rates won't raise wages for a particular employee.

What a steaming pile of bullshit.

"You talk prettier than a $20 whore"

-Slim Pickens "Blazing Saddles"

"Worse, the more they get, the more they spend."

Dubya proved the less they get, the more they spend.

"they won't escape paying for the consequences of their larcenious ideology, one way or another."

That's absolutely true. No one, including The Great USA, escapes the economic laws of gravity.

Why the disparity given the high federal rate, which rises to 39% counting state taxes? Part of the answer is that big U.S. companies have become expert at hiding profits in tax havens overseas. And many of the smaller ones simply pass through their income to owners who then report it on their personal returns.

Okay, you just made the argument that a high tax rate or the act of raising tax rates doesn't equate to an increase in revenue.

Where is the liberal outrage at this conservative blasphemy?? I have seen liberals slap down this theory that raising tax rates WILL raise revenues and that lowering the rates won't raise them.

"no it won't. more employment??? perhpaps but, again, you fail to accept that labor is a commodity. tax rates won't raise wages for a particular employee."

If you create more employment then you also will cause wages to rise because of, as you say, labor is a commodity, make it scarce it becomes worth more. Scarcity can be brought about in many ways, enforcement of immigration laws, penalizing the importation of manufactured goods, promoting earlier retirements, etc. Child labor laws increased the scarcity of labor and helped raise wages. 40 hour work week did too. As did SS by allowing old workers to retire.

"tax rates won't raise wages for a particular employee."

That wasn't the argument. It was it's more advantageous to take monies out of one's own business when rates are lower, and more advantageous to reinvest in the business when rates are higher, be that via employees or equipment or whatever.

Dubya proved the less they get, the more they spend.
#98 | Posted by Danforth

Actually the federal government is running a massive Ponzi Scheme. To keep it going, spending has to accelerate regardless of revenue. Obama's first year $1.4 trillion is a sign of worse deficits to come, at least double next year.

The chart I posted in #38 shows an exponential rise in bonded debt since Kennedy. Obama's debts have gone parabolic.

That wasn't the argument

it was to Danni and as you can see from #101, she goes on to deflect to child labor laws, immigration laws, SS, and penalizing the importation of manufactured goods.

Yes, all those things can make labor more scarce if they are successful in creating a scarcity of labor.

I wonder if my kids would work harder if...

...I gave then a $20 allowance and then...

...took $18 dollars right back?

hmmmmm......

well.....

according to the liberals, they would worker harder out of simple earnestness and desire to please...

naw....never mind.

Ray "Chicken Little" Hewitt is always calling for the demise of America. If we get rid of republicans America can be saved.

"according to the liberals, they would worker harder out of simple earnestness and desire to please..."

I think first you'll have to pay your kids a couple million a year. When you do that then we'll see how hard your kids work.

Jackass

I'm fascinated by how socialists like you are put off by the question, "where will the money come from?" You should be looking into buying your next home - a tent.

BTW, the price of gold is now above the S&P 500. Nasdaq is next.

Ray after the govt redistributes your wealth to me I'll buy a place on central park west.

Jackass

Your fantasies are a wonder to behold. I must be too rational to understand how you can imagine that the federal government has an infinite supply of income to tax.

Ray you make enough a couple of bucks a week would barely put a dent in your budget.

Jackass

I'm trying to have an intelligent dialogue and all you do is return stupid answers.

You remember "inflation" but forget about the other part...."stagflation."

I guess Cater should have just jacked up the tax rates on more people...surely that would have cured that problem.

"Thanks for making my point."

Are you implying that the average worker in China is earning sub-market rate wages? I also posted the wrong numbers. the average wage in China is $1.05 per hour. The other number was the minimum wage.

I think this is a case where you fail to make the distinction between local US income standards and those in other countries. To help put it in perspective, I'll give you another example from Friedmann. An accounting firm in the US can hire an accountant in India for $11k US per year. To hire the same person and pay them a comperable amount in the US would cost $80k.

"Not going to bother arguing specifics in the housing bubble and subsequent bust but without the housing bubble the Bush economy would have been in recession since 2001. Virtually now wealth was created in the US since that time because of....supply side, trickle down, Voo Doo, Reaganomics."

depending on what you want to use as a yardstick, no wealth was created, or at least the wealth that was created was offset by lossed elsewhere. But again, I'm not sure I'm following you, becuase the housing bubble was encouraged and perpetuated by FEDGOV programs. Barney Frank, along with other prominent left wing politicans pushed strongly for the government to encourage lending to low income borrowers. Not because they were looking to make a profit, but for ideological reasons. Although this was accomplished primarily through GSEs, there were other programs encouraging, and even requring lenders to offer loans to low income borrowers. These lenders happily jumped on board the money train, and just like the GSEs did very well for many years. In fact, even in 2007 when the bubble began to crash, it was only a small percentage of loans that were in default or at risk. It was enough, however, to spook investors into selling their stock or withdrawing their money. This in turn caused a run that exceeded those companies cash reserves.

I don't disagree with you that the lenders were part of the problem, but so were those members of the Federal Government that were trying to convince poor people to take loans in order to buy houses. There is also culpability on the part of those borrowers that knowingly exceeded their means. If I run up a credit card bill that I can't pay, is it the fault of the lender? Should they restrict the availability of credit to those that have the undeniable ability to repay it?

Wrong Ray. Taxes for the rich need to be above the 50% threshold. That means you Ray. Thom Hartmann said it last night. If you don't know who he is look him up. He is a genius.

I would expect you to think Thom Hartmann is a genius.

You keep evading my question. Where is all this money going to come from? A simple balance sheet analyses tells me that the federal government is insolvent beyond all means. They could tax every American at 100% and it wouldn't even make a dent. Why do socialists hate to talk about the revenue side of the balance sheet?

MADBOMBER Alan Greenspan is the primary culprit for the housing bubble not Barnie Frank. Of course there should be reasonable credit worthiness standards applied to loans and that is why Democrats want more banking regulations. By no stretch of the imagination could you pretend that the government program loans were the biggest portion of the financial industry crisis, it was a part, but there was much more in the rest of the financial system. If Greenspan would have raised interest rates earlier virtually the entire mess would have been avoided but it would have cost Bush the presidency and Republicans the majority because we would have been in recession in 2004. The housing bubble and the associated lending replaced a real economy and masked the recession which should have been apparent. When the bubble burst we went into deep recession, nearly depression and massive amounts of money were needed to prop things up until a new administration could take over and eventually begin to take the blame.
I believe it was planned, they just got the timing wrong, the collapse was suppled to happen after January 2009.

"The belief that folks at the bottom of the housing rung were responsible for the 100-1 leveraging of bad paper against bad paper by the likes of Lehman Brothers is moronic."

Really? So it wasn't the folks at the "bottom end of the housing rung" that were at risk of default? it wasn't those same people that were taking out loans that they couldn't afford? And it wasn't Mr. frank that was encouraging, even demand government participation in that scheme?

Oh, and BTW, Mr. Frank's opposition to reform of Fan and fred began long before 2003, and continues to this day.

Here's a nice quote from 2003 though...

"I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing."

But hey, why let a relatively small thing like the facts interfere with the faith you have in your chosen ideolgy. Holocaust deniers routinely do it. Many communists and socialists as well, as do the evangelicals.

Don't let the fact that you're not in particularly good company frighten you off...

In the meantime, here's a couple of good articles on Mr. Frank.

"Here's a nice quote from 2003 though..."

He couldn't even call a meeting of the committee at that time. Why do you not blame the majority members for what the committee failed to do???

"If you create more employment then you also will cause wages to rise because of, as you say, labor is a commodity, make it scarce it becomes worth more."

The jobs created have to be wealth-creating jobs, otherwise net gains will be less than the net costs. For example, if the government pays people to do something that a free society wouldn't willingly pay for, no wealth is being created and no value-added service is being provided. It would drive up wages, but again, it would not be of benefit to anyone except those few who are making higher wages. Taxpayers would see an increase in taxes, while consumers would pay more for the goods and services they provide.

of course when the jobs are value added, it's a different story, because theuir is wealth creation occurring. And that's what the government ought to be doing, is encouraging the creation of new value added goods and services. the problem is that nowadays, most of these require skilled labor, which already earns high incomes. God forbid that the lower income segments be asked to acquire the skills necessary to eanr higher incomes.

"Scarcity can be brought about in many ways, enforcement of immigration laws, penalizing the importation of manufactured goods, promoting earlier retirements, etc."

But in every case in would contradict what a free society would do on its own. Consumers choose illegal immigrants and overseas labor because it saves them money and increases their purchasing power. You place a limit on imports, and other countries just do the same back to you. Ever heard of the Smoot-Hawley act. That's basic economics right there. And only a small segment of mostly unskilled labor enjoys the 40 hour work week. Most professionals are salaried or self-employed. in fact, professional or high paid laborers work, on average, 25% longer hours per week than unskilled or low paid labor.

BTW Ray, I think Jackass is just messing with you. I think. playing the role of the typical economically ignorant leftist. He called Thom Hartmann a genius after all.

Madbomber

I've had a lot of experience with Jackass. I'm convinced he really is that stupid.

"You place a limit on imports, and other countries just do the same back to you."

Except that....they already do. For instance our stimulus bill...they took out the buy American clause, China's has a strong Buy ONLY Chinese clause in it. NOt even foreign owned companies doing business in China qualify.

"But in every case in would contradict what a free society would do on its own."

Baloney. The United States has used tariffs to protect industry since the beginnin of our country, we began lowering them and moving towards what is mislabeled "free trade" in the seventies and eighties with the corresponding destruction of our middle class. A free societ can and should determine what is best for that society not for transnational corporations.

Thom Hartmann really is smarter than Ray and Madbomber combined and both of them are reasonably intelligent. They will disagree with his philosophy but his knowledge is broad and deep and he could defeat either in a debate.

Danni

I don't care if Thom Hartmann has a 160 IQ. If he supports the systematic confiscation of wealth, otherwise known as socialism, he's either stupid or criminally insane. As for you, you're no better.

As I keep saying, the anticapitalists killed capitalism. Now they're running out of sources of money to confiscate. If you think 2009 was bad. You ain't seen nothing yet.

"I don't care if Thom Hartmann has a 160 IQ"

You were recommending Hartman's book on corporate personhood quite recently, Ray. Did that slight crack of open-mindedness seal up overnight?

Yes, Nulli. It was a very good book, well researched and written. So now we know how corporations came to be legally recognized as persons. That doesn't take away from what I said about his politics: socialism is an ideology of national self-destruction. It's the favored choice of ignorant, stupid, lazy people and psychopaths.

If Hartmann ever writes a book about how government became god, I'll reconsider.

That's depressing Ray but now here's a graph of our national debt as percentage of GDP and we see we've been in far worse shape before. Only difference was back then rich folks were patriotic and were willing to pay higher tax rates, in light of the national emergency, whithout WHINING!

"Thom Hartmann said it last night. If you don't know who he is look him up. He is a genius."

Genius? I have the utmost respect for Mr. Hartmann and his rationality, but he's hardly genius material as he's oft admitted.

It actually seems at times that Thom has a serious hard on for what Hannity and LimpBlow make, a little bank account envy, if you'd so indulge.

It is very evident that many of the Air America left leaning hosts have a dread of all things Reagan and that is what seems to be parrotted in this thread.

I am impressed that danni is now smarter than accountants and actuaries.

Confuse a liberal, use facts and logic.... ;)

Danni,

We've been moving away from tariffs since Grover Cleveland as a general trend. The one serious outlier was Smoot Hawley that jacked them up resulting in reactionary retaliation around the world and seems to be a big reason we are still gun shy about even modest ones.

In fact, Mr. Hartmann has also often noted that prior to the beginning of the progressive movement with T. Roosevelt and W. Wilson that tariffs were our primary source of government revenue, and not taxes (he usually follows this with a logical leap to supply side economics).

Regardless, due to the complexity of the economic system, to simplify the cause/effect to solely top income tax bracket is pretty base?

"My parents' generation would be disgusted"

I will find a God fearing sot to pray for them.

Confuse SHEEPLESHEPERD, use deficits that don't matter, start wars and pass tax cuts, outsource jobs and then notice the economy is tanking, then somehow turn it all around and blame a liberal.
Is it ignorance or dishonesty???
Both.

"I will find a God fearing sot to pray for them."

I'm quite sure they don't need your prayers but you may need thier forgiveness. They built a great country and passed it down to the boomers who through greed and arrogance fucked it up. I, for one, am certainly not proud to be a boomer. I look at the country we will be handing down to the next generation and I am ashamed. Low taxes bought many BMWs and second homes but didn't educate the next generation, left them in debt both publicly and privately. They are in debt just for trying to get an education with which they can compete for jobs that don't exist. Don't pray for my parents' generation, they are fine, pray that you might begin to understand their willingness to sacrifice and even pay taxes to build a great nation. I doubt you will ever understand. Too bad for you.

The visual economics link says $8.68 trillion when we know bonded debt is $12 trillion. Geithner has to ask Congress for an increase in the debt limit. That site is a fraud.

The second chart in Wiki equally makes no sense, when GDP is optimistically $13 trillion, almost 1:1 with government debt.

"Here's a chart that's not misleading. It shows all debt as over 350% of GDP."

There's no cross-country comparison there, Ray, unlike Danni's link. Ergo, that chart is worthless.

Who is the moron that put that chart together, Ray? Some gold-bug, no doubt. The greatest ratio of debt to GDP in the last century was during WWII.

Nulli - I don't think you have any concept of numbers. If the chart was credible, cross country comparisons is like comparing the descent rates of parachute jumpers. Most of the them are going broke, only at different rates.

As usual, you ignored what I said: "The visual economics link says $8.68 trillion when we know bonded debt is $12 trillion. Geithner has to ask Congress for an increase in the debt limit. That site is a fraud."

BTW, total US debt is upwards of $60 trillion in a $13 GDP economy. This country is a walking dead man.

The greatest ratio of debt to GDP in the last century was during WWII.

That chart shows all debt, not just federal debt.

"That chart shows all debt, not just federal debt."

Well Americans certainly took on too much personal debt. But that's what capitalists wanted, so what's your problem? Capitalists always want people to borrow and buy, borrow and buy.

What capitalists wanted? You wasted too much energy heckling Mises when you should have paid more attention.

Mises explained very carefully how bank credit expansion is responsible for the boom-bust cycle you blame on capitalism. Monetary expansion keeps interest rates low, encouraging debt and discouraging savings. Of course the same Federal Reserve gives the federal government the means to expand spending without raising taxes. That was the boom. Now we're in the bust stage.

"What capitalists wanted? "

Absolutely. Are you denying that capitalists don't want people to borrow money to buy their products?

Are you denying that capitalists don't want people to borrow money to buy their products?

No. But it's central banks that make over-borrowing desirable. You keep trying to divert away from the root cause of business cycles for obvious reasons.

Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.

~ William Shakespeare, "Hamlet", Act 1 scene 3

I love this quote. Author unknown.

"Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves."

A couple more.

""By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose."
John Maynard Keynes

The budget should be balanced, the treasury should be refilled,
Public debt should be reduced, the arrogance of officialdom should
Be tempered and controlled, and the assistance of foreign lands should
Be curtailed lest Rome become bankrupt.
-Cicero 55 BC

But it's central banks that make over-borrowing desirable. You keep trying to divert away from the root cause of business cycles for obvious reasons."

No, I'm trying to stick to the big picture. You're the reductionist who tries to blame every flaw of capitalism on some bogeyman called "The Fed", as if the boom bust cycles of capitalism didn't appear until the day the Fed opened.

The point is that capitalism cannot survive without consumers, which is why corporate capitalism spends billions trying to manipulate human consciousness in order to sell commodities. And it's very successful. You should praise the achievements of your heroes.

Bank credit expansion goes as far back as Medieval days. Depositors would stored their gold and silver in banks for safekeeping. Some bankers began to realize that they could make money collecting interest on deposited money by loaning it out. Depositors wouldn't notice until some event like war or a bad harvest would cause them all to want their money at the same time.

Capitalism is nothing but a system of accounting, where surplus is saved (capital) for the production of future goods. No savings; no capitalism. (Profits are merely a business term for savings.)

Central banking substitutes debt for savings, and consumption for production. It's actually a massive pyramid scheme that can't be sustained when then the debt load becomes too massive to maintain. Then it collapses as this economy is in the process of doing.

I've explained this to you many times, but you're too full of Marxist bullshit.

Today's abuse of debt is a serious problem.

We've grown an economy on a shaky foundation.

Capitalism was never intended to function so deeply in debt.

Supply and demand is FUBAR.

The value of everything is all screwed up.

#4 | Posted by Sully at 2009-11-16 01:57 PM | Reply | Flag:

#6 | Posted by danni at 2009-11-16 02:22 PM | Reply | Flag:

Always funny to read stupid people who don't invest, and don't understand it. But my fav is this golden nugget of ignorance:

But the realization that the "value" you are buying in a share of stock is based more on the magic crystal ball of analysts than actual results is a start.

#5 | Posted by 726 at 2009-11-16 02:21 PM | Reply | Flag:

Please continue. Your stupidity continues to create wealth for me and my family.

I wonder if we tax college professors at 90%, their institutions would improve?

#4 | Posted by Sully at 2009-11-16 01:57 PM | Reply | Flag:

#6 | Posted by danni at 2009-11-16 02:22 PM | Reply | Flag:

Always funny to read stupid people who don't invest, and don't understand it. But my fav is this golden nugget of ignorance:

But the realization that the "value" you are buying in a share of stock is based more on the magic crystal ball of analysts than actual results is a start.

#5 | Posted by 726 at 2009-11-16 02:21 PM | Reply | Flag:

Please continue. Your stupidity continues to create wealth for me and my family.

I suppose that learning how equities are valued is hard werk for the like of Danni, 726 and Sully.

So, it's easier to equate it with something they DO understand: lotteries and casinos.

Fact is, I make my best profits off fools like this.

Fact is, I make my best profits off fools like this.
#150 | Posted by vernon | Flag: Brags About His Religion, Too

Fact is, I make my best profits off fools like this.
#150 | Posted by vernon

Intellectual Darwinist?

ME! ME! LOOK AT ME!

attention whore

#27 | Posted by vernon

And 120 posts later.

Please continue. Your stupidity continues to create wealth for me and my family.

#147 | Posted by vernon

"found themselves shut out of an anti-immigration Tea Party protest at the Phoenix capitol. "

GOD DAMINIT!!!!

Why are you Liberals lying?

It was a rally to protest against the government allowing people to come across the border ILLEGALLY!!!

Liberals are so caught up in racism and political correctness that you lie to each other and lie to yourselves.

Do some G-D soul searching!!!

You lie so much that your credibility slips every day.

Actually Vern's earlier post prolly came from another thread. Doesn't matter. still applies.

"Except that....they already do. For instance our stimulus bill...they took out the buy American clause, China's has a strong Buy ONLY Chinese clause in it. NOt even foreign owned companies doing business in China qualify."

Yeah. It was kind of funny that during cash for clunkers, everyone went out and bought Toyota's...

Anyway, the effects of tarrifs were probably best demonstrated during the 1930s when Congress passed the Smoot-Hawley act, which was intended to drive up costs on foreign goods, driving people to buy america. This has several effects. First, if people weren't buying the more expensive american goods in the first place, what suggests they would do so in a post-tarriff market, especially with highly elastic goods or services. Second, you virtually eliminate those markets overseas that many domestic producers rely on. The US is the fourth largest exporter in the world, exporting $1.2 trillion dollars per year. Tha's slightly less than 10% of the total GDP. Could we really afford to give that up?

"Baloney. The United States has used tariffs to protect industry since the beginnin of our country, we began lowering them and moving towards what is mislabeled "free trade" in the seventies and eighties with the corresponding destruction of our middle class."

If what I said were truly baloney, people would already be voluntarily buying higher priced, US-made goods and services over those made overseas. The fact is that lower costs translate to increased purchasing power, and no oneis willing to give that up.

As for the destruction of the middle class...not so much. What has happened is a clearly defined split has emerged between the professional segment of the middle class, and those in the low to unskilled labor class that were prviously able to demand higher wages due to union influence, or simply because demand for that type of labor was much greater. The manufacturing segment of the economy accounts for less than one quater of the total, and since there are so many qualified unskilled laborers (the entire labor force), it is an incredibly competitive market. That is the bottom line on why these people so much less money. There's simply too many unskilled laborers in those markets, and consumers have no reason to willingly pay higher prices.

"Thom Hartmann really is smarter than Ray and Madbomber combined and both of them are reasonably intelligent."

He may be smart, but it's not particulalry evident is his nightly show. Like many on the left, his philosphies are based on limiting individual freedom for the good of the state. Very much a facist, or at least corporatist philosophy. I've never been a big fan of facism...

"That's depressing Ray but now here's a graph of our national debt as percentage of GDP and we see we've been in far worse shape before. Only difference was back then rich folks were patriotic and were willing to pay higher tax rates, in light of the national emergency, whithout WHINING!"

So what is the expectation of the patriotic poor folks? IS there any expectation, or are they just a vote than can be bought to ensure the ruling elites staty that way?

Danni,

You have lots of suggestions on how to correct these problems, but have you considered the side effects of the measures you suggest? Eliminating outsourcing, for instance. If you do that, then right off the bat labor costs increase immeasurably. What could be bought for $5 from overseas producers now costs domestic consumers $20. And that doesn't even take into account that these products would be completely uncomepttive in global markets, which would still have access to the cheaper products made in China. So, in one fell swoop, you have both eliminated foreign markets and decreased local domestic demand. So yes, for those folks that were fortunate enough to benefit from the higher wages it was a good deal. For everyone else, a very, very bade deal. It's also the government stepping in and restricting people from buying a product that they otherwise would have. I won't even touch on how the inluence of unions could further exacerbate this sitation.

And taxation. Let's say that the government implimented a 90% tax on everyone earning more than $250k a year. That's roughly $105 an hour assuming a normal 50 hour professional workweek. Right now the tax code means that someone making this money is going to get about $75 of that $105 per hour. At the new 90% tax rate, they would be getting about $10.50 an hour.

One could safely assume that $10.50 an hour is not enough of an incentive to convince these people tio continue working above 50 hours per week. The time could be better spent at home with friends or with family? And the problem becomes even more pronounced as incomes go beyond $250k. On average, doctors make between $130k and $360k per year. For thos at the upper end, how do you keep them from cutting their work hours? how do you keep them working? Will you recall the times when rich people were willing to work for free, without whining?

Oh, and this is not labor that is easily replaced either, so those lost man-hours are lost for good. Which in the case of doctors would further drive up the cost of medicine. of course that would mean higher incomes for doctors, and might bring more back into the pool of available labor.

A lot of people omn the left want to punish the wealthy, thinking that they somehow got that way on the backs of the less fortunate. That's not the case. The vast majority got rich by being particularly productive members of society, and society rewarded them for that. To punish them for their productivity would not only be a slap in the face to society, but a form of punishment as well. Society certainly won't benefit from punishing the rich.

"What could be bought for $5 from overseas producers now costs domestic consumers $20."

How do you come up with a figure like that. Labor costs are not going to quadruple the price of goods made in modern factories. The increase in labor cost would vary from product to product depending upon the amount of human labor involved. Then you would subtract the transportation costs.
So, yes there would PROBABLY be a cost increase but definitely not a quadrupling of the cost.

"And taxation. Let's say that the government implimented a 90% tax on everyone earning more than $250k a year."

No one has suggested that ever. Even back in the high taxation days after WWII the highest rates were only charged on income above $400,000 back in 1963 which would be equal to 2, 825,843.00 today.
And no one is suggesting anywhere near a 90% tax rate for anyone. You just make strawman arguments for yourself to refute.

"A lot of people omn the left want to punish the wealthy, thinking that they somehow got that way on the backs of the less fortunate."

No we don't, there are many millionaires on the left so that dog just won't hunt. Just another strawman.

Just another strawman.

#159 | Posted by danni at 2009-11-18 12:17 PM | Reply | Flag:

Story of your life.

Tired old arguments from the working mans perspective = DANNI drivel.

"How do you come up with a figure like that. Labor costs are not going to quadruple the price of goods made in modern factories."

The labor costs will at least quadruple. Consider if you are making a product in China, where the average worker makes $2200 a year. Now you are forced to make that product in the US, where minimum wage requirements mean you be paying $10,000 a year at the very least. More likely you'd have to pay at least something comperable to the average high-school dropout wage, which is about $18k a year.

Sure, transp costs would be much less, but unless a fimr is posting profit margins of 30%-40%, there is no way they would be able to pay four to five times as much in labor costs without raising prices. Do you think consumers want to pay more? I don't.

No one has suggested that ever. Even back in the high taxation days after WWII the highest rates were only charged on income above $400,000 back in 1963 which would be equal to 2, 825,843.00 today.

OK, so you think my example is extreme. I'm very, very glad to hear it. There are plenty of folks out there that think the tax rate above $250k should be 100%. So what is a good tax rate? what is a good cutoff? Given that you are even considering it, you must undersdtand that there would be an optimal point. I am convinced it is lower that what it currently is based on historical trend data (the Reagan tax cuts) presumably, you think it should be higher. I'm just curious what exactly that point is, and what justification you have to support it.

"No we don't, there are many millionaires on the left so that dog just won't hunt. Just another strawman."

So answer me this. If you could impliment measures that would increase aggregate tax revenues and shift the tax burden even further to the right, would you support it even if it meant that the rich would get even richer?

BTW, there are many on the left and the right that want government control of the resources specifically becuase it would allow them say as to who becaome successful. Instead of society choosing who they rewarded for hard work and innovation, they would. What better way to stop the possibility of some uppity, new money tech nerd taking your spot at the table of high society. The economic paradigm shift over the last 20 years has seen that very thing happen, where some hick family from Arkansas, along with the son of some welfare mom from Chicago have become the world's wealthiest men and women. It behooves the entrenched northeastern WASPs to put the kibosh on this thing as quickly as possible.

"The labor costs will at least quadruple. Consider if you are making a product in China, where the average worker makes $2200 a year. Now you are forced to make that product in the US, where minimum wage requirements mean you be paying $10,000 a year at the very least. More likely you'd have to pay at least something comperable to the average high-school dropout wage, which is about $18k a year."

Labor costs can quadruple but that doesn't mean the cost of the product will quadruple. You talk about dropouts and don't understand that???

Who are you kidding?

"BTW, there are many on the left and the right that want government control of the resources specifically becuase it would allow them say as to who becaome successful."

That is utter nonsense.

"Labor costs can quadruple but that doesn't mean the cost of the product will quadruple. You talk about dropouts and don't understand that???"

If the commodity you are purchasing is labor, and if you are in manufacturing that is probably going to be the case, then the difference in labor cost will be the difference between what you pay in the US and what you would pay elsewhere. Now that is different from the effect on the cost to the end user, which I was I included the piece about companies not posting 30% to 40% profit margins not being able to cover costs without jacking up prices. Consider Wal Mart. Their profit margins tend to hover around 3%. That means they can essentially accept a 3% increase in labor costs before they are no longer in the black. make sense?

"That is utter nonsense."

Yes. Of course it is. Has to be. There is no possible reason that anyone would ever want to have leverage over the lives of others, except for the perfectly benign and morally legitimate reasons of correcting the wrongs of society and preserving morality.

Any suggestion to the contrary would have to be nonsense...

Insert. head. in. sand.

Madbomber, you, in now way addressed the effect of labor costs on a manufactured product. I guess you really don't understand why labor costs are only one part of the equation. How about materials, transportation, infrastructure, etc. When you put all the other costs into a product labor is then just one part of the cost and it would vary from product to product depending on how labor intensive the manufacturing process is. Therefore, on most goods labor actually ends up being a fairly small part of the overall cost. In the end, costs do not determine selling price anyway, demand does, case in point Nike sneakers. Do you think it costs anywhere near what they charge to make a pair of them, labor is a tiny fraction of the wholesale price. Demand determines the price.

You end you idiotic posts with snarky comments that really just emphasize the lack of understanding you posess.