FighterHayabusa

Boy I'm glad you said you weren't labeling or I'd think you were calling me a Socialist.

jungle

You have failed to understand two things. Effective rates and who has actually paid the bills. Fantasy is fine, but all of this is not powered by unicorns and rainbows.

Winged Wheeler

Wow,

3 pages in one night on the money talk forum--that's got to be a record.

I don't want to intervene in a very good back-and-forth, but I wanted to throw something in as an aside:

In the 1980s legislation did make marginal tax rates lower. The problem has come from the inbility of the government to spend within its means. Lowering the marginal income tax rate can increase revenues or decrease them, depending where you are on the Laffer curve. But that doesn't matter if the government spends more money than you have.

I agree that we are collapsing, but I'd say that it is government spending that is the problem.

WW

jungle

Of course you are correct, and they can raise taxes 100% and they will still be far, far behind:


"To understand the predicament, numbers are necessary. The federal debt, approximately $12.5 trillion, represents funded debt. The unfunded promises associated with Social Security, Medicare, and Medicaid represent an additional liability of $106 trillion, according to trustee estimates.

A $106 trillion cash infusion is required today to make these programs solvent. But the entire net worth of the entire country is only about $55 trillion. If the U.S. government confiscated every single asset in this country, these programs would still be insolvent. And so would every citizen and corporation in the country. Quite simply, these programs promise twice what the country is worth!

In my post “Spiraling to Bankruptcy,” various methodologies were used to illustrate federal insolvency. Because large numbers are incomprehensible, they were translated into everyday examples. One example used the analogy of a family:

The federal government collects about $2.5 trillion in total revenues a year. That is from all sources of taxes and fees. Think of that as an individual’s annual gross salary. The debt owed by the government can be looked at as a great big mortgage. Thus, we have a family that has a mortgage 44.8 times greater than gross salary. That would be the equivalent of a man earning $50,000 gross salary having a mortgage of $2,240,000! An interest-only mortgage at 6% would require the family to pay annual interest of $134,000 per year. A conventional mortgage would be much higher. The example becomes even more ludicrous when one recognizes that taxes, food, clothing, savings, etc. all have to be subtracted from gross pay to determine what is left for debt service.

When we shift back to the federal government, the family analogy becomes even more absurd. The federal government has nothing left from their “gross pay.” Their “living expenses” actually exceeded their gross pay by $1.2 trillion last fiscal year. That is, they spent almost 50% more than they made. Comparable behavior is budgeted for the next ten years."

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I thought our gentle readers might enjoy this little nugget of wisdom during the season:

The complexity of the U.S. income tax laws
Even venerable legal scholars like Judge Learned Hand have expressed amazement and frustration with the complexity of the U.S. income tax laws. In the article, Thomas Walter Swan, 57 Yale Law Journal No. 2, 167, 169 (December 1947), Judge Hand wrote:

In my own case the words of such an act as the Income Tax… merely dance before my eyes in a meaningless procession: cross-reference to cross-reference, exception upon exception — couched in abstract terms that offer [me] no handle to seize hold of [and that] leave in my mind only a confused sense of some vitally important, but successfully concealed, purport, which it is my duty to extract, but which is within my power, if at all, only after the most inordinate expenditure of time. I know that these monsters are the result of fabulous industry and ingenuity, plugging up this hole and casting out that net, against all possible evasion; yet at times I cannot help recalling a saying of William James about certain passages of Hegel: that they were no doubt written with a passion of rationality; but that one cannot help wondering whether to the reader they have any significance save that the words are strung together with syntactical correctness.

Complexity is a separate issue from flatness of rate structures. In the United States, income tax codes are often legislatures' favored policy instrument for encouraging numerous undertakings deemed socially useful — including the buying of life insurance, the funding of employee health care and pensions, the raising of children, home ownership, development of alternative energy sources and increased investment in conventional energy. Special tax rebates granted for any purpose increase complexity, irrespective of the system's flatness or lack thereof.
wiki

jungle

If you had actually studied the subject you might be familiar with this:

Hauser's Law is a theory that states that in the United States, federal tax revenues will always be equal to approximately 19.5% of GDP, regardless of what the top marginal tax rate is. The theory was first suggested in 1993 by Kurt Hauser, a San Francisco investment economist, who wrote at the time, "No matter what the tax rates have been, in postwar America tax revenues have remained at about 19.5% of GDP." In a May 20, 2008 editorial in the Wall St. Journal, David Ranson published a graph showing that even though the top marginal tax rate of federal income tax had varied between a low of 28% to a high of 91% between 1950 and 2007, federal tax revenues had indeed constantly remained at about 19.5% of GDP.[24] Critics of Hauser's Law, such as Zubin Jelveh in a Wall St. Journal editorial, point out that tax revenues have fallen as top income rates declined if you don't include Social Security revenues.[25] Similarly, other changes in tax rates and the income threshold for paying those rates are expected to impact tax revenues and should be considered when analyzing the relationship between tax-rates and tax revenues. wiki
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Rates have had little effect on revenue for many reasons. You may also want to look at the Laffer curve.

jungle

Perhaps far off track and worthy of another thread.
Keynes was an interesting figure among many economists. He is perhaps best remembered as an "apologist for statists".

He was popular with many politicos, for his mistaken beliefs that government could synthesize an economy with debt and a printing press gave them the freedom to venture in to the realm of the popular and unaffordable.

The last 17+ years in Japan is a perfect example of such thinking as was the prolonging of the Great Depression under FDR.

The most vibrant economies, if you look around, are the ones with the lowest level of state intervention.

A little more about Keynes and the validity of various theories in the tough world of reality.
Austin news, sports, weather, Longhorns, business | Statesman.com

You seem to admire Keynes, but personally I find his theories a bit dusty and moldy. Time moves on and anyone who holds up a bit of theory or technology and states: "this is the ultimate and always will be..." is surely destined for failure.

I tend to favor Friedman and a few others who seem to have gotten it right, in contrast to the multiple very public, costly and mostly ignored failures of Keynes.
Anyone or any state or entity that seeks to limit your individual or economic freedom is a vivid warning of bad things to come.

http://en.wikipedia.org/wiki/Milton_Friedman

Sadly, the political acceptance or rejection of economic theory is frequently just an expedient to move forward with the politicos' own very distorted world view. We have all suffered and will suffer when our freedom to choose is withdrawn.

I don't wish to tell anyone what to do, and only ask the same of them.

jungle

Parsing is fun, but it often leads to a lack of context. Now that we know what you really want to talk about, why not PM me with a few facts about how your unload and reload program is proceeding?

jungle

I think it will become increasingly clear that the Falcon is no longer responding to the call of the Falconer. Control is less and less centralized in so many areas. Careful central planning will fail, just as it has so many times before.

jungle

Oh, you want detailed predictions by experts?----------------------------------------------------------------------------------------------------

The Propaganda Machine in 2007-2008 meltdown
BusinessWeek, Kiplinger's and USA Today reported on the false predictions made before the 2008 subprime credit meltdown spread rapidly across America and the world:

•Bernanke: "I don't anticipate any serious [failures] among large internationally active banks."

•Ken Fisher: "This year will end in the plus column ... so keep buying."

•"Mad Money" Jim Cramer: "Bye-bye bear market, say hello to the bull."

•Goldman Sachs' Abby Joseph Cohen: "The fear priced into stocks is likely to abate as recession fears fade."

•Barney Frank: "Freddie Mac and Fannie Mae are fundamentally sound."

•Barron's: "Home prices about to bottom."

•Worth magazine: "Emerging markets are the global investors' safe haven."

•Kiplinger's: "Stock investors should beat the rush to the banks."

•Irving Fisher, Yale Ph.D. in economics: "Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months." (Oct. 17, 1929)

•Goodbody market-letter in New York Times: "We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices." (Oct. 25, 1929)

•Business Week: "The Wall Street crash doesn't mean that there will be any general or serious business depression ... For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game... Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before." (Nov. 2, 1929)

•Harvard Economic Society: "A serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall." (Nov. 10, 1929)

•Treasury Secretary Andrew W. Mellon: "I see nothing in the present situation that is either menacing or warrants pessimism ... I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress." (Dec. 31, 1929)

•President Herbert Hoover: "The depression is over." (June 1930)