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J. KARL MILLER: Taxing the rich is not the solution

Monday, September 26, 2011 | 7:57 p.m. CDT; updated 9:17 p.m. CDT, Tuesday, September 27, 2011

If any of my readers truly believe the president's mouthpiece, Press Secretary Jay Carney, in professing the administration’s intent to raise taxes on the wealthy as anything other than an undisguised attempt to curry favor for votes by inciting class envy, I have some Arizona waterfront property for sale.  

Despite President Barack Obama’s chastisement of the rich for failing to pay their "fair share," George Bernard Shaw’s timeless observation — "A government which robs Peter to pay Paul can always depend on the support of Paul" — is the key.

Consequently, when that government courts Paul by a 99-1 ratio over the targeted Peter — the top 1 percent of taxpayers — it is nothing less than a blatant example of class warfare.   

And, when one realizes that approximately half the Pauls pay no income tax at all, the Democrats see a lucrative opportunity in trolling for votes inasmuch as the non-paying members of society are viewed as ready recruits to the "Robin Hood" philosophy of taking from the rich to benefit the poor.

The president employed cleverly worded phrasing: "If we're not willing to ask those who've done extraordinarily well to help America close the deficit … then the logic, the math, says everybody else has to do a whole lot more: We've got to put the entire burden on the middle class and the poor."

That ignores the salient facts of who actually pays the costs of government.  

As an example, the richest 1 percent earn 19 percent of the nation’s income but pay nearly 40 percent of the income tax. When just 10 percent of the taxpayers generate 70 percent of income tax revenue, just who is not paying their fair share?

Another deceptive ruse is the gimmicky "Buffett Rule," named for multimillionaire Warren Buffett.

Buffett earned the president's enduring gratitude for his unequivocal declaration that the super rich should pay far more in taxes, along with his observation that his secretary paid a higher rate of income tax than his 17.4 percent of his taxable income.  

Obama is using Buffett as the centerpiece of his argument for raising taxes on millionaires and billionaires. In reality, however, the facts expose subterfuge in the "Buffett Rule."

In the matter of the multimillionaire paying taxes at a lower rate than his employees: Those earnings are largely derived from capital gains, which are taxed at 15 percent, far below the wage income of his well-compensated subordinates, whose tax rate averages 36 percent. 

The president has long advocated raising the capital gains rate in the spirit of "fairness." This, however, would in turn raise the taxes of nearly half of the middle class who also invest in the market and depend upon capital gains and interest income for retirement.

While a few millionaires and billionaires might be taxed at lower rates than the middle-class worker, the wealthiest Americans pay far more in taxes than the middle class and are taxed at a much higher rate.  

Individuals and families earning $1 million-plus can expect to pay a little more than 24 percent of their income in income tax, while those making between $100,000 and $125,000 will see 9.9 percent of their income go to federal income tax.

If Buffett, whose federal tax bill at 17.4 percent totaled $6,938,744, believes he is undertaxed, he is in no way prohibited from anteing additional funds in the form of a check to the U.S. Treasury.

It is interesting to note that the 2010 Forbes list of the 400 richest Americans had total assets of nearly $1.4 trillion, which, if taken by the government, would not cover this administration's average annual deficit of $1.5 trillion.  

Moreover, those 400 households would be exempt from next year’s tax rolls because the government had appropriated and liquidated their assets.  

Contrary to popular belief, the rich do not exist in sufficient numbers or possess the wealth to make up for government spending excesses.

A far more equitable and effective way to initiate growth and increase revenue is comprehensive tax reform, which actually appeals to those on the right and the left.

Reforming the tax code by removing noxious loopholes while also lowering marginal tax rates promotes economic efficiency by removing tax dodges that distort the flow of capital, thereby reducing productivity.  

Soaking the rich is no substitute for fixing a corrupted tax code that provides unfair advantage to the wealthy and their lobbyists and lawyers.

The act of raising taxes on individual tax payers in lieu of fixing an out-of-whack and destructive tax policy is doomed to failure for the simple reason that treating the symptoms instead of the malady is a no-win solution.

Demonizing the rich and the "fat cat" bankers might or might not be a viable campaign strategy — whether the poor and the middle class can be induced to class hatred of the "greedy" wealthy class is yet to be known.

Nevertheless, if it should be successful, stand by for a lowering of the standard for classifying the rich — if $250,000 is the barometer today and there is no evidence of economic growth, how about $100,000 identifying the "rich" household in 2016? Overtaxing the rich is but a futile stopgap measure for campaign purpose — from whom does the government find revenue when we run out of the wealthy? We can do better than employ populist themes to further divide the country.


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Comments

Gregg Bush September 26, 2011 | 9:15 p.m.

If "pathetic" were
Seventeen syllables -
A fitting haiku.

(Report Comment)
Gregg Bush September 26, 2011 | 9:18 p.m.

But since it's not then,
Sixteen syllables is all
Required for rebuff.

(Report Comment)
Gregg Bush September 26, 2011 | 9:27 p.m.

When someone paid from
Taxes, rails against taxes -
Too much irony.

And "400 richest Americans had total assets of nearly $1.4 trillion..."

Top four hundred wealth
Is equal to the bottom
Two-fifths. Scandalous.

(Report Comment)
Gregg Bush September 26, 2011 | 9:30 p.m.

Is it nice to not
Know what Nobel Prize winners
See as class warfare?

http://www.vanityfair.com/society/featur...

(Report Comment)
Gregg Bush September 26, 2011 | 9:56 p.m.

I can sum up your "article" in an haiku.

Sharing the burden
Is only for the poor since
The rich has got theirs.

(Report Comment)
Jimmy Bearfield September 26, 2011 | 10:06 p.m.

"Nevertheless, if it should be successful, stand by for a lowering of the standard for classifying the rich — if $250,000 is the barometer today and there is no evidence of economic growth, how about $100,000 identifying the 'rich' household in 2016?"

Right. The AMT illustrates how that scenario will play out. Congress created the AMT to target a couple hundred of the highest earners, but by 2008, 27% of households paying the AMT had AGIs of $200K or less.

Why didn't -- and why won't -- Congress index the AMT to inflation to prevent this bracket creep? Because doing so would "cost" more than $100 million this year. Maybe Warren Buffett could just write a check each year to cover the shortfall and assuage his guilt in the process.

(Report Comment)
Corey Parks September 26, 2011 | 10:55 p.m.

Because Warren Buffett can't even write a check to cover his own taxes. How can you expect him to subsidize others....

(Report Comment)
Derrick Fogle September 27, 2011 | 1:05 a.m.

How should I debunk thee? Let me count the ways...

1) http://www.cbpp.org/cms/index.cfm?fa=vie...
2) http://www.taxfoundation.org/news/show/2...
3) http://www.irs.gov/
4) http://www.nytimes.com/2010/11/07/opinio...
5) http://www.lcurve.org/

Miller is cherry-picking data from specific points in time to maximize his case. He's also using the classic, time-honored deceit of talking only about general federal income tax, not all federal income taxes.

I'm not sure where the 19% figure comes from, either. According to the IRS the figure was at a full 20% of Adjusted Gross Income in 2008, and most other sources put it at nearly 24% on non-adjusted gross in 2007. Considering how much the market has rebounded in the last 2 years, while median income has fallen, I suspect the AGI figure is well above 20% again today. Karl also glibly interchanges net wealth and annual income, claiming that taxing the the top 1%'s *wealth* won't pay the federal deficit. Only income is taxed, not wealth.

The corollary to the notion that taxing the wealthiest 1% at 100% rate would not balance the federal budget is this: taxing the bottom 50% at 100% wouldn't either. In fact, it would yield far less.

For the record, I'm not a big fan of "soaking the fat boys" although that is, quite frankly, where all the discretionary 'spare' income is. But we should at least stop giving them more money. That's why I'm OK with slashing discretionary federal spending, and some non-discretionary spending as well. About the only thing I'm not OK with slashing is Social Security transfers. It's the wealthiest 1% who capture 20-25% of all income that will see the biggest decline in their incomes and fortunes if federal spending is slashed. Turning the Pentagon into a triangle will knock these guys off their feet. Stopping Bernake's printing presses will absolutely kill them.

If we can't soak 'em, let's hammer 'em instead.

(Report Comment)
Mark Foecking September 27, 2011 | 8:11 a.m.

Derrick, this is where Col. Miller's numbers likely came from:

http://www.google.com/hostednews/ap/arti...

I think it's evident that taxes will have to go up, and for everyone. The rich, of course, can afford to pay more, but we should be careful in raising taxes on investment income. Perhaps returns from domestic investment could be taxed at a lower rate then foreign investment (perhaps we do that now to an extent? Have to look it up). However, raising taxes too much will lead the rich to shelter their income and reduce total revenues.

@Gregg (and Derrick), countries that actively discouratge wealth accumulation are never rich countries. They're countries like Cuba, North Korea, Bolivia, and the former Soviet Union. Encouraging what amounts to a financial war on the rich is not in anyone's best interest. Zimbabwe comes to mind.

DK

(Report Comment)
frank christian September 27, 2011 | 8:44 a.m.

As usual in conversation about how to pay for the cash ravenous monster we call our government, with most of this bunch, only more taxation is studied to death. Not one word about CUTTING SPENDING!

(Report Comment)
frank christian September 27, 2011 | 8:58 a.m.

Obama's new call for everyone to "pay their fair share", is not new. Clinton, Rob't Reisch & Co. railed on everyone paying their fair share (fair share being whatever was required by those "leaders"). This went on for two years until Republicans cleaned out Congress and balanced the budget while Cutting taxes.

(Report Comment)
Paul Allaire September 27, 2011 | 9:04 a.m.

There is nothing amoral about taxes on income. Taxes on investment become trickier because someone has given the federal reserve permission to print all the money it wants, calling any "profits" into serious question.

(Report Comment)
Mark Foecking September 27, 2011 | 9:10 a.m.

frank christian wrote:

"Not one word about CUTTING SPENDING!"

That's because there are fewer practical ways of cutting spending than raising taxes. A bitter partisan battle, lasting months, only came up with cuts that amounted to a few percent of the deficit.

From Derrick's taxfoundation(dot)org link, the total adjusted gross income of the top 50% was a bit over $7 trillion, while the AGI of the lowest 50% is right at $1 trillion. This indicates there is much more revenue to be had by an incremental increase on the top 50% than on the bottom. What this number does not break out is the sources of that income, and what the economic consequences of raising these taxes would be. If most of that $7 trillion comes from investments that generate jobs and other income, raising taxes on that by a lot may have greater negative consequences in the long term. And not raising them a lot will not balance the budget.

There is absolutely no good way to do this. We have lived past our means for far too long, and the readjustment will be very painful for everyone. But one thing I think we can all agree on is that the most unproductive use of tax monies is payment of interest on the national debt.

DK

(Report Comment)
Jimmy Bearfield September 27, 2011 | 9:33 a.m.

"I think it's evident that taxes will have to go up, and for everyone."

Everyone? Including for the nearly 50% who currently pay no federal income tax? If so, it's about time. How much would the increase be for the remaining ~52% if the freeloaders were forced to pay their fair share for the services they use? Is it possible that the other ~52% would actually have to pay less because they're no longer shouldering most of the load? (Yes, the freeloaders pay other types of taxes, but as Christopher Foote noted a while back, those other taxes are only about 36% of federal revenue.)

If the freeloaders won't have to start carrying their weight, then I'll just keep reducing my workload and thus tax liability. If you can't beat 'em, join 'em.

(Report Comment)
Paul Allaire September 27, 2011 | 9:50 a.m.

Could someone please tell me if there is a forum where people speak honestly and have intelligent things to say?

(Report Comment)
Mark Foecking September 27, 2011 | 10:41 a.m.

Jimmy Bearfield wrote:

"How much would the increase be for the remaining ~52% if the freeloaders were forced to pay their fair share..."

Well, if we look at the AGI numbers again, (Table I in the taxfoundation link above), even if the bottom 50% were taxed at 100% of their AGI, it would only close about 2/3 of the deficit.

If the bottom 50% were taxed at the same effective rate the top 50% is (13.65%), that would raise an additional $120 billion, or roughly 8% of the deficit.

Increasing taxes on the top 50% by a similar increment (13.65 - 2.59% or about an additional 11% rate), would raise $770 billion, or about half the deficit. This would never make it through Congress, however, and could have some real negative consequences down the road. However, we have to do something.

"then I'll just keep reducing my workload and thus tax liability."

(AGI table again) Say you decrease your income from $114,000 to $67,000 (the breakpoints of the top 10% and top 25% respectively). This will decrease the percentage of average tax paid from 18% to 15%. You've saved 0.18(114,000) - 0.15(67,000) = $10,500 in taxes, but you've lost $47,000 in income. So on average, that's not a rational thing to do. Of course, everyone is different, but I'm just sayin'...

This is why most corporate execs find it worthwhile to be paid in stock for much of their compensation. Dividend and capital gains income is taxed at a good bit lower rate than salary.

DK

(Report Comment)
frank christian September 27, 2011 | 11:12 a.m.

Mark Foeckng, the scientist, in political discussions seems to always leave out the supreme beings in his "computations", Democrats. His rhetoric leans much toward, Government just "is" and all resources must be directed to It's well being and political parties have no bearing. His only reference, that I have read, to the 4 years of balanced budgets, achieved only after R's removed D' from majorities in Congress. The debt reductions "were insignificant" (590B$).

"A bitter partisan battle, lasting months, only came up with cuts that amounted to a few percent of the deficit."

Another avoidance of the identification of the culprits in a Budget situation, Democrats! He seems to be operating on the assumption that Democrats only want to raise enough taxes to "reduce our deficits". Another false premise.

There are many among us whom claim the need to get our financial house in order (their positive proclamations always include the word "but", as in but "not on the backs of the poor". These, in my opinion are "pretenders", and are content with the theft of our tax monies.

(Report Comment)
Paul Allaire September 27, 2011 | 11:38 a.m.

After giving this a little more thought I determined that it is indeed in the best interest of the top earners to continue as has been until the government defaults.

(Report Comment)
Jimmy Bearfield September 27, 2011 | 12:08 p.m.

"Say you decrease your income from $114,000 to $67,000 (the breakpoints of the top 10% and top 25% respectively). This will decrease the percentage of average tax paid from 18% to 15%. You've saved 0.18(114,000) - 0.15(67,000) = $10,500 in taxes, but you've lost $47,000 in income. So on average, that's not a rational thing to do."

But the deeper the reduction in income, the more tax credits and benefits one qualifies for. Lots of people deliberately reduce their income in order to get or keep credits and benefits, such as single parents who won't work more hours because they don't want to have their food stamps reduced.

Keep in mind that the cutoffs often are based on income rather than assets. So a person who had a $100K+ income until his/her 40s could cut back to $30K or $20K for the next 25 years in order to qualify for more credits and benefits -- not mention enjoy the freedom of working only a day or two a week. It's easy to do that kind of coasting if you've paid off your house and vehicles and socked away as much as possible in retirement accounts.

(Report Comment)
Greg Allen September 27, 2011 | 12:29 p.m.

"Class warfare."

Is Obama waging it, or joining it?

(Report Comment)
Mark Foecking September 27, 2011 | 12:42 p.m.

frank christian wrote:

"The debt reductions "were insignificant" (590B$)."

The difference between $14.4 trillion and $15 trillion is insignificant. What's significant is the $14 trillion.

I don't see a lot of difference between Republicans and Democrats on this issue at a practical level. Sure, the ideology tends to be very different, but neither party seems to have the slighest inkling of the magnitude of what needs to be done to balance the budget. Last spring the difference between the two parties was one wanted to cut $61 billion and the other wanted to cut $33 billion. Faced with a $1.5 trillion deficit, there's no practical difference between the two.

"but "not on the backs of the poor"."

The budget cannot be balanced on the backs of the poor - see my post responding to Jimmy above. Neither can it be balanced by spending cuts.

http://en.wikipedia.org/wiki/File:U.S._F...

You'll see that there is only about $660 billion of discretionary spending that could be cut. We'd have to cut military spending by 50% (including ending the two wars) and Medicare and SS by 25% to even approach balancing the budget by cuts alone. No one, Republican, Democrat, or independent, would vote for anything like that. It would be political suicide.

So there we are. Neither party even starts to solve these problems. They just waste time shouting at each other.

DK

(Report Comment)
Gregg Bush September 27, 2011 | 12:51 p.m.

Taxes are not a
Method to discourage wealth
Accumulation.

Taxes pay for the
Commons. Saipan's perverse free
Market poverty.

(Report Comment)
Mark Foecking September 27, 2011 | 1:05 p.m.

Jimmy Bearfield wrote:

"But the deeper the reduction in income, the more tax credits and benefits one qualifies for."

Sure. It would be up to you whether the added income is worth the loss of a credit or benefit.

I agree that the fairest tax would be one that everyone pays some fixed percentage of their income, but also know that once everyone in Congress got through with it, it would probably not be that much different than the system we have now.

I understand about saving for the future and being able to coast into retirement - I've done much the same thing and am in a position to work because I choose to, not because I have to. However, consumerism and immediate gratification has been the scourge of the middle class for decades now, so these values are lost on a whole lot of people. And too often, they blame everyone else but themselves.

DK

(Report Comment)
Jimmy Bearfield September 27, 2011 | 1:54 p.m.

"Neither party even starts to solve these problems. They just waste time shouting at each other."

"I agree that the fairest tax would be one that everyone pays some fixed percentage of their income, but also know that once everyone in Congress got through with it, it would probably not be that much different than the system we have now."

"consumerism and immediate gratification has been the scourge of the middle class for decades now, so these values are lost on a whole lot of people. And too often, they blame everyone else but themselves."

Yup!

(Report Comment)
Derrick Fogle September 27, 2011 | 2:37 p.m.

For the record, I actually DID talk about cutting spending in my first post. Last multisentace paragraph:

"...I'm OK with slashing discretionary federal spending, and some non-discretionary spending as well."

Also, for the record, the reductions Mark indicated - 50% for military, 25% for other big programs - is roughly in line with what current legislation calls for if the debt panel fails. Deadline less than 2 months away.

I've laid out the math before: we simply cannot balance the federal budget without significant cuts to the military, or, raising taxes. Even if the military were first in line for ALL discretionary tax dollars (and why shouldn't it, it's the only federal program explicitly authorized by the constitution), it would still take a cut.

The deficit panel, of course, is stocked with the biggest military spending beneficiaries we have, with a couple of anti-tax loons thrown in.

This is gonna get interesting, to say the least.

(Report Comment)
Paul Allaire September 27, 2011 | 3:02 p.m.

So how do we feel about cutting military spending?

(Report Comment)
Mark Foecking September 27, 2011 | 3:02 p.m.

Gregg Bush wrote:

"Taxes pay for the
Commons. Saipan's perverse free
Market poverty."

The commons exist for
Everyone, so all who use
Them should contribute.

DK

(Report Comment)
Don Milsop September 27, 2011 | 3:06 p.m.

There are only two fair taxes. One where everybody pays the same amount, or one where everybody pays the same percent. And Mr. Fogle, if you think people don't pay taxes on wealth, I suggest you research the inheritance tax.

If you are going to say who has the advantage, right now the poor get far more out of federal and state tax dollars than do the rich. So if you decide to include income versus benefit from tax dollars, as a percentage, the poor get much more bang for their tax dollar than do the rich - particularly when the poor often times pays nothing into those monies they receive.

(Report Comment)
Don Milsop September 27, 2011 | 3:28 p.m.

We could cut military spending a great deal by drafting people like Paul. It would cut down recruiting costs. We could pay draftee's one half the amount of volunteers. We could not give draftee's any post military benefits. Dang Paul, great idea.

(Report Comment)
Don Milsop September 27, 2011 | 3:29 p.m.

WW1 draft Wilson Dem.
WW2 draft FDR Dem.
Korea draft Truman Dem.
Vietnam draft LBJ Dem.

GOP hasn't STARTED a draft during war since Lincoln, AND THAT WAS TO FIGHT SLAVE OWNING DEMS!!!

(Report Comment)
Paul Allaire September 27, 2011 | 3:36 p.m.

Jimmy,instead of fixating on the disparity you might consider doing what many people are doing and moving a portion of your income into things that aren't taxed. Tax free municipal bonds is one idea that comes to mind. You might also consider bottom fishing for stocks that have good value but recently emerged from financial trouble and are not paying dividends. Then all the money you "earn" when you sell is considered a capital gain and taxed at a very low rate. There are also companies that traditionally pay very small dividends no matter how much profit they earn. If that isn't good enough, you can trade in commodities or other things that pay no dividend yet are considered capital gains. Those are just a few suggestions. When you couple that with the deduction that you can apply to a loan on your home and to your contribution to your retirement I think that you can wind up paying a much smaller percentage than the average person who's income is less than yours. Perhaps some of the reason that income tax is such a burden is because so many have been taking advantage of these and other breaks. We could discuss whether these breaks should exist or whether inflation should be factored into any profit, but that would be another can of worms to open. Most of the people you consider to not be paying there "fair share" don't even have the money to make the investments that I just described, so I find it mind boggling that you can't see how good you have it.

(Report Comment)
Paul Allaire September 27, 2011 | 3:41 p.m.

Oh, EXCUSE ME. I once again read a Don Milsop post and thought it was a Jimmy Bearfield post. No matter. The same above suggestion applies.

So Don, How are the cats?

And you need to remember that there isn't much possibility of my being drafted because I'm a retired veteran, much like you, as much as it hurts me to say it.

And if you don't like my post you can go straight the hell to IRAQ!!!

So how do we feel about cutting military spending?

(Report Comment)
Jimmy Bearfield September 27, 2011 | 3:46 p.m.

"Tax free municipal bonds is one idea that comes to mind."

Two drawbacks. First, Obama's deficit-reduction proposal would limit this exemption for incomes above $200K. Second, considering how many municipalities -- including Columbia -- have unfunded liabilities, and how many defaults there have been so far, I would steer clear of this type of investment.

"Most of the people you consider to not be paying there 'fair share' don't even have the money to make the investments that I just described, so I find it mind boggling that you can't see how good you have it."

I have it good because I've lived responsibly, saved as much as possible and worked hard. But it seems silly for me to continue to put in the same amount of effort when I can just coast from now on.

(Report Comment)
Gregg Bush September 27, 2011 | 3:50 p.m.

I love it! (The meter is 5-7-5, however. I still hit publish too soon sometimes.)

Those who own more use
More of the commons, therefore
More tax from more wealth.

(Report Comment)
Don Milsop September 27, 2011 | 4:13 p.m.

Maxine Waters already invited all conservatives to go to hades, and she offered to help them get there. Why she is inviting conservatives to her house though, puzzles me.

(Report Comment)
Jimmy Bearfield September 27, 2011 | 4:15 p.m.

"Those who own more use
More of the commons, therefore
More tax from more wealth."

False. See figures 4, 5 and 6 in the PDF at www.taxfoundation.org/news/show/2286.htm.... As page 10 notes: "When all government spending is included, households in the lowest quintile received about $8.21 in spending for every dollar of taxes paid. Households in the middle quintile received $1.30, and households in the top quintile received $0.41."

(Report Comment)
Don Milsop September 27, 2011 | 4:17 p.m.

Paul, didn't realize you were a retired veteran. Were you wounded by a flying pepperoni? Or was it something more serious like bread stick fragmentation? If I had known pizza delivery was part of the armed forces, I would have chose that over the Marines.

(Report Comment)
frank christian September 27, 2011 | 4:28 p.m.

Mark&Derrick - When determining how to balance our Federal Budget, how much revenue from "Growth" do you include when you "lay out the math"?

My guess is None since the progressive liberal has no use for Growth, except that created by government for the benefit of government, or those the government wishes to benefit.

I am next to certain that if R's are ever again given the chance to balance our budget, (D's only interest is to "reduce the deficit occasionally to show they care and are trying.) Growth due to tax cuts (reform) will play a major role.

(Report Comment)
frank christian September 27, 2011 | 5:28 p.m.

D. Milsop - A few nights ago we (my son and wife) were remembering my father-in-law in Ayr and his passion for raising Greyhounds for racing. My son was there for sometime and went with him to races Ayr and Kilmarnock and it seems he was in Kilmarnock often with his dog of the moment. Are dog races still in style there? Auld Rob Dunlop at one time had a dog that may have been considered the fastest in Scotland. One problem,when he lead the other hounds by lengths, he would stop and wait for others to catch up. They said he came in second every time. Just another story from an old one.

(Report Comment)
frank christian September 27, 2011 | 5:33 p.m.

Sorry, D. Fogle, I somehow missed your "word" about cutting spending.

(Report Comment)
Michael Williams September 27, 2011 | 6:14 p.m.

Mark F: "However, consumerism and immediate gratification has been the scourge of the middle class for decades now, so these values are lost on a whole lot of people."
________________________

Derrick and a few others state that the growth of wealth of the rich has far outstripped that of the middle class....ino, there is a greater disparity today than in yesteryear.

I agree.

However, I disagree on the reason....which you have touched upon in your statement above.

I maintain that the middle class has lost ground because it adopted consumerism and immediate gratification. The middle class did NOT purchase assets...an asset is something that makes you money. Plasma TVs, a car you look good in, your home, leisure purchases, etc., are decidedly NOT assets. The middle class would have been so much better off if it had purchased assets...so much so that I maintain that if it HAD purchased true assets, the disparity would not exist.

But, the middle class did not purchase assets. And now the piper is being paid.

I admit I'm unsympathetic.

(Report Comment)
Tony Robertson September 27, 2011 | 6:18 p.m.

Simple-mindedness,
Re-distributive envy
Distilled to haiku

From each according
To his abilities, but
Marx don't haiku well

(Report Comment)
Michael Williams September 27, 2011 | 6:33 p.m.

Tony: Yeah, upon my return to these pages after vacation, I note Gregg has discovered haiku. And discovered it...and discovered it...and discovered it........

But hey....it scrolls short.

PS: I try to find a positive in everything.

(Report Comment)
Tony Robertson September 27, 2011 | 6:45 p.m.

"It's all Bush's fault"
I think they are mistaken
I don't blame you, Gregg

(Report Comment)
Don Milsop September 27, 2011 | 7:08 p.m.

Frank, I didn't live in Ayr. Just visiting. I guess the kin folks don't think much of the tracks because they never mentioned it, and I don't remember seeing any either. In Houston I worked for years close to a Class I horse track, but nobody in the office even talked about it. I drove next to it to and from work. Just wasn't a factor. Could be though I ignored it because Al Gore invented horse racing.

(Report Comment)
frank christian September 27, 2011 | 7:50 p.m.

Japanese haiku? I bet Japanese wish their chronic recession experienced since Trilateral Commission, Carter, HW Bush, Clinton got hold, of them in 70's could be so short.

I, with honest economists maintain that "middle class" (a state of mind) has not lost ground, but gained since Reagan Presidency. Any loss to liberal favorite, "middle class" has been due to those moving to "wealthy", not to "poor".

(Report Comment)
Paul Allaire September 27, 2011 | 7:57 p.m.

"Were you wounded by a flying pepperoni?"

Don, while I have tolerated your disrespect in the past I feel that by attempting to insult my religious beliefs you have crossed a serious line.

http://uncyclopedia.wikia.com/wiki/Refor...

May he have mercy on your soul.

(Report Comment)
Gregg Bush September 27, 2011 | 8:38 p.m.

No one comments on
The failure of Saipan's ways.
You think you know me.

(Report Comment)
Gregg Bush September 27, 2011 | 8:42 p.m.

Middle class that bought
Assets like homes, equities -
Saw wealth disappear.

(Report Comment)
Gregg Bush September 27, 2011 | 8:46 p.m.

Gamblers at tables
Look for the next sucker to
Cheat and swindle good.

(Report Comment)
Corey Parks September 27, 2011 | 8:58 p.m.

Milsop: GOP hasn't STARTED a draft during war since Lincoln, AND THAT WAS TO FIGHT SLAVE OWNING DEMS!!!+

I am not going to say anything about who initiated drafts and who didn't but I will say something about you spreading the mis truth about the Civil War coming about was because of slavery.

Paramount Object in this Struggle
"My paramount object in this struggle is to save the Union, and is not either to save or to destroy slavery. If I could save the Union without freeing any slave I would do it, and if I could save it by freeing all the slaves I would do it; and if I could save it by freeing some and leaving others alone I would also do that. What I do about slavery, and the colored race, I do because I believe it helps to save the Union; and what I forbear, I forbear because I do not believe it would help to save the Union. I shall do less whenever I shall believe what I am doing hurts the cause, and I shall do more whenever I shall believe doing more will help the cause." Abraham Lincoln

(Report Comment)
frank christian September 27, 2011 | 9:01 p.m.

Gregg Bush
Give
us
a brake,
as in stop it!

(Report Comment)
James Terry September 27, 2011 | 9:12 p.m.

"... his disingenuous observation that his secretary paid a higher rate of income tax than his 17.4 percent of his taxable income."
"Disingenuous" means lacking in candor or sincerity. Buffett's statement is a simple statement of fact--and it's true! For the author to characterize it as "disingenuous" is, well, disingenuous. I've noticed that the Missourian doesn't fact-check Col. Miller's opinion pieces, and doesn't correct errors when they are pointed out. It should.

(Report Comment)
John Schultz September 27, 2011 | 9:16 p.m.

Homes are for living
Houses aren't an investment
Don't confuse the two

(Report Comment)
John Schultz September 27, 2011 | 9:44 p.m.

I heard the President on the news this afternoon saying millionaires should pay the same tax rate that plumbers pay. Is he calling for a flat tax? Is he going to have it apply to those who pay no income taxes? By golly, those who make less than a plumber should be taxed the same rate as a plumber by his logic.

(Report Comment)
Tony Robertson September 27, 2011 | 9:54 p.m.

"The other pernicious consequence of the separate corporate and personal income taxes has been a field day for demagogues and the misguided to claim that the rich are not paying their "fair share." Warren Buffett recently claimed that he had paid only $6.9 million in taxes last year. But Berkshire Hathaway, of which Mr. Buffett owns 30%, paid $5.6 billion in corporate income taxes. Were Berkshire Hathaway a Subchapter S corporation and exempt from corporate income taxes, Mr. Buffett's personal tax bill would have been 231 times higher, at $1.6 billion."

http://online.wsj.com/article/SB10001424...

(Report Comment)
Paul Allaire September 27, 2011 | 10:04 p.m.

What rate was Berkshire Hathaway taxed at?

(Report Comment)
Tony Robertson September 27, 2011 | 10:17 p.m.

If Mr. Buffett is so distraught over unfairness, he can probably google US Treasury and find the address to send them bigger checks. Or, re-route the charitable contributions, which reduced his taxable income, to the bureaucratic behemoth run by the HopeyChangey guy. Progressivism may appreciate his benevolence more than his demagoguery on their behalf. Naw, probably not.

(Report Comment)
Paul Allaire September 27, 2011 | 10:33 p.m.

Does that mean you aren't going to say what rate the company was taxed at?

How do you feel about cutting defense spending?

(Report Comment)
Gregg Bush September 27, 2011 | 10:34 p.m.

Well done, John. I love it! As for others....

I won't be bullied.
You don't have to play along.
Free to stop reading.

(Report Comment)
Tony Robertson September 27, 2011 | 10:52 p.m.

Gregg- I'm a bit disappointed you didn't give my haikus props, as well.

Admittedly, limericks are my stronger suit. Perhaps a cultural, ancestral memory thing.

(Report Comment)
Derrick Fogle September 27, 2011 | 11:27 p.m.

Income and wealth inequality are, to a certain extent, a lot like the unintended pregnancy and abortion issue. And drug use. Their existence is an absolute; it can't really be eliminated. Forcing a positive outcome is nearly impossible.

I'm not against wealth accumulation. Even though I've chosen to have a lot of expenses (family) I still accumulate wealth. A certain amount of inequality is what makes the world go 'round. I'm only against letting it get so excessive that it becomes a drag on the entire economy. IMHO, I think we're there. Krugman calls it a Liquidity Trap; I call it a black hole of wealth, with so much financial gravity that it sucks up all the wealth around it and never lets anything back out.

Regardless, it's unsustainable. Whether you put it in unsustainable debt language, revolutionary innuendo, the ramifications of peak oil, some complex macroeconomic calculation, or the parable of the goose that laid the golden egg, this too shall pass. What comes after is unlikely to be very pleasant or provide much security, financial or otherwise, for anyone. You either produce for yourself+, or you die.

It's an ugly picture, but the only other real alternative is to truly work together instead.

(Report Comment)
Derrick Fogle September 27, 2011 | 11:43 p.m.

I think corporate taxes should be half the ratio of the bottom 95% of their domestic payroll over gross income. No loopholes, no deductions, no breaks, no refunds. A company with a lot of domestic payrollees would pay very low rates. A company with less domestic payollees would pay more. It's self-adjusting, so simple the entire corporate tax law could be written on a single page, and figured on the back of an envelope.

(Report Comment)
Michael Williams September 28, 2011 | 7:35 a.m.

Derrick says, "I think corporate taxes should be half the ratio of the bottom 95% of their domestic payroll over gross income."
_______________________

I'm assuming you are discussing C-corps. I like the way you are thinking about this, but I also think your rate is still too high. The average ratio of payroll to gross income for corporations is ~45% (+/-). Half that is 22.5%, which sounds reasonable until you realize two things: (1) That 22.5% going to the gov't is not staying within the company for growth and the concomitant hiring, and (2) when dividends are declared, those moneys are taxed again at a much higher rate. In the later case, the overall tax rate for a dividend can near or exceed 50%!

I'm curious what you think should be the S-corp tax rate. For now, it's whatever the individual's personal tax rate is. Should investment income from an S-corp be taxed at the personal rate, or should owner(s) be "stimulated" to grow by giving them a risk premium...i.e., a tax break for taking a huge personal risk?

(Report Comment)
Michael Williams September 28, 2011 | 7:56 a.m.

Mark Foecking (September 27, 2011 | 10:41 a.m.) says, "Say you decrease your income from $114,000 to $67,000 (the breakpoints of the top 10% and top 25% respectively). This will decrease the percentage of average tax paid from 18% to 15%. You've saved 0.18(114,000) - 0.15(67,000) = $10,500 in taxes, but you've lost $47,000 in income. So on average, that's not a rational thing to do.
____________________________

It's irrational if money is the only factor.

This sentiment is a common mistake by liberals (not saying you are one, Mark) who think the motivating factor for business folks is...and always remains...greed.

For some, yes. For most, no.

Why?

Because Mazlow's pyramid works for business folks, too.

Deliberately slowing down can be an entirely rational thing to do when money is not the only factor.

(Report Comment)
Don Milsop September 28, 2011 | 10:58 a.m.

Okay, I'll take the bait for two of you.

Paul, how did I insult your religion?

Corey, from my comment, how did you get that I said the Civil War was about slavery?

(Report Comment)
Michael Williams September 28, 2011 | 11:19 a.m.

Don,

Your two questions for Paul and Corey were not in the form of a haiku.

Go sit in the corner until we say you can come out. :^)

PS: Perhaps that should pertain only to Gregg, who has some sort of new fixation.

(Report Comment)
Derrick Fogle September 28, 2011 | 11:21 a.m.

@Frank: None. I'm talking present tense only; no projections about future economic conditions, at all. If we want to balance the federal budget today (actually, for the next fiscal year), those numbers are valid.

Future predictions are little more than a platform to argue ideology.

BTW, the closest I could come (in the first 2 pages of Google search returns) to a match on my un-atributed quote was: The Zurich Axioms: Investment Secrets of the Swiss Bankers (Paperback)
by Max Gunther (Author) ISBN-10: 0451158393.
http://www.itulip.com/forums/archive/ind...

(Report Comment)
Greg Allen September 28, 2011 | 11:33 a.m.

No takers on whether Obama is waging class warfare or joining it?

Paul: in order to cut defense spending we'd have to make a shift in cultural beliefs. If the military provides us with a sense of security, then the issue is insecurity. If insecurity is going to be addressed in another way (not forceful, and low cost) how would we do that?

But I'm tired of paying so much for insecurity. There's got to be a cheaper way.

(Report Comment)
Ray Shapiro September 28, 2011 | 11:53 a.m.

@Gregg:
While it doesn't come across as being too classy, class warfare is just another campaign tool for Obama to emotionally get the poorist blacks, upcoming students, leftist progressives and sympathetic independents to come out and vote for him again.
Personally, I believe that buyers' remorse will keep many from doing that.

(Report Comment)
Brian Wallstin September 28, 2011 | 12:10 p.m.

You know a comment thread has jumped the shark when some of its most insistent posters begin to make statements like "The Civil War was not about slavery."

(Report Comment)
Greg Allen September 28, 2011 | 12:38 p.m.

I was thinking more about the anti-Obama crowd alleging class warfare. If Obama is waging war, the issue didn't exist in the first place so it's a boondogle on Obama's part. If he's joining it, then there was another side already existing, as in 'the wealthy get rich on the labor of the poor'. Reading comments throughout human history, it appears that the latter has always been with us. If this is so, then focusing on Obama playing class warfare is a diversion from those who have already been playing the other side. Should the wealthy get away with this tactic?

(Report Comment)
Greg Allen September 28, 2011 | 1:36 p.m.

P.S. I've had fun over the years with people who ask if my name is spelled with one G or two; I tell them it's two, one at the beginning and one at the end. However, you might want to avoid calling me Gregg as Mr. Bush might take exception to being compared with me. Even though I've written my share of haiku.

(Report Comment)
Ray Shapiro September 28, 2011 | 3:12 p.m.

@Greg:
I did notice that, but it was too late.
Sorry. I have a stuttering index finger.

(Report Comment)
Greg Allen September 28, 2011 | 4:01 p.m.

:)

(Report Comment)
frank christian September 28, 2011 | 5:12 p.m.

D.Fogel - "If we want to balance the federal budget today (actually, for the next fiscal year), those numbers are valid."

Our government plans 10 years ahead, but your calculations will be invalid Christmas 2012? Wow!

(Report Comment)
Derrick Fogle September 28, 2011 | 5:35 p.m.

@Frank: Your turn to kick the can down the road?

(Report Comment)
Derrick Fogle September 28, 2011 | 5:48 p.m.

@Mike: Those numbers are at odds with the assertion that the vast majority of a business's costs are payroll. I don't doubt your figures; rather, I call into question the assertion that labor costs are the vast majority of a company's expenses. I also may be making a 'rookie' mistake of calling for gross income instead of net, or whatever figure takes out the hard dollar cost of inventory purchases. But of course that starts down the slippery slope of being able to warp the system by defining what is or isn't inventory, or capital costs, and the like. It would be nice to keep it simple and use just the gross, top-level figure.

I'm not hung up on the "half" part; whatever percentage works out to be reasonable and (IMHO) generate a *little* more corporate tax revenue than we're getting now is OK. The goal is to "incentivize" (pardon the buzzword) domestic payroll. Whatever that percentage might be would define the upper bound of tax liability; even if a company were pure profit and zero domestic payroll, the maximum tax would be that percentage. OTOH, if a company actually loses money one year, the rate doesn't go negative, it merely stops at zero. We don't want to reward failure.

I'll have to consider your question regarding the different types of corporations. My first inclination is to say that businesses are businesses, regardless of incorporation, and the tax structure should be able to apply to just about any of them. But the 95% part is gonna be hard to apply to any business with less than 20 people on the payroll. I feel it's safe to state that the laws about corporate taxes are way too complex as-is.

My idea would pretty much scrap all that and boil the mess down to 2 types of taxpayers: businesses that employ people and have a payroll, and individuals that are employed by businesses and are on the payroll. For the single-person businesses, they will need to choose and declare which set of rules they will be taxed under. Ideally, it probably shouldn't make a huge difference either way.

I've also got ideas for individual taxes, but... that's a whole 'nother can of worms. Let's vet this corporate tax idea a bit first before we move on to that.

(Report Comment)
frank christian September 28, 2011 | 6:13 p.m.

Derrick - "Your turn to kick the can down the road?"

Yes! All the way to January 2013.

(Report Comment)
Paul Allaire September 28, 2011 | 6:28 p.m.

"Okay, I'll take the bait for two of you."
"Paul, how did I insult your religion?"

You're too funny. It was a joke. You should have discerned that right away, but if not you really should have had you looked at the link.

So how are the cats?

(Report Comment)
Derrick Fogle September 28, 2011 | 8:04 p.m.

@Frank: OK, we're kicking the can another 15 months down the road. That'll be another ~$1.5T on the aggregate federal debt. Total debt will be about $15.5T.

What do you expect the annual federal deficit to look like at that point?

(Report Comment)
frank christian September 28, 2011 | 9:44 p.m.

D.F. - "What do you expect the annual federal deficit to look like at that point?" Nothing else to say? That's not my job. It is your hobby. If you were sincere you would agree that the annual federal deficit will be as much higher as prez O and his remaining D's can possibly raise it. If you were sincere you would agree that this is what the "hated" tea party and the finally upset American people are interested in changing, the theft of our taxes and the attempt to destroy our way of life. Our laws require us to do it legally, that takes another 15 months. I do trust your numbers, sometimes.

(Report Comment)
Mark Foecking September 29, 2011 | 2:40 a.m.

frank christian wrote:

"If you were sincere you would agree that the annual federal deficit will be as much higher as prez O and his remaining D's can possibly raise it."

If you were sincere you'd admit that there's quite a bit less than a rat's ass of difference between the two parties on spending and taxation. All these guys are interested in is another term, from the president on down. The numbers say we need to take far more drastic action than in being proposed anywhere in government. But we still have our collective credit card, so why do anything ballsy?

BTW, no one is opposed to growth. The problem is getting that to happen without simply blowing another credit bubble. Tax cuts won't do it - the following is one of the better papers I've seen on the subject. It was prepared by a professor at the Texas Tech business school (probably for a class).

http://rricketts.ba.ttu.edu/Tax%20Rates%...

DK

(Report Comment)
Michael Williams September 29, 2011 | 7:51 a.m.

Derrick: 45% is a reasonable average for payroll/benefits as a percent of gross revenues. For specific business types, this value swings widely depending upon what the business does....for the labor intensives, the percentage goes up and vice versa. If you said 40% to 50% as a range, you'd get the bulk of them.

Historically, C-corps were given a lower tax rate so more money can be kept internally for growth. The idea was that, if a dividend was declared, that dividend would be taxed at the personal level and the "total" tax would be about equivalent to that collected if the corporate tax was higher and the dividends were not taxed. But, the idea was to encourage and enable corporate growth by keeping capital available within the company.

No such provision is given for S-corp shareholders. If an S-corp has...say...5 shareholders, and the corp makes $100 grand in a year, then each shareholder must pay tax on $20 grand at their total tax rate. Most often, the shareholders must take a distribution (not a dividend) from the company to pay their taxes. The advantage, of course, is that shareholders have immediate access to any remaining corporate profits after taxes have been paid.

You may already know all this. I was just curious what you thought the tax differences should be.

(Report Comment)
frank christian September 29, 2011 | 8:20 a.m.

Mark F.- Am trying to hang on to the belief that you are not this shallow in thinking. The "it doesn't matter because they All do it" whines have been the liberal, when they are losing, mantra for many years. No need to mention the '94 R's because you won't accept their accomplishments then or their attempts to stop the present rape of our treasury, now.

Your TT prof., tells the story of tax cuts then claims they are a "myth" and provides his "adjusted" graph. He relates "all" of the pertinent tax legislation during the period.

Something happened '97-2000 to cause surpluses, but your prof. made no attempt to explain or identify the "Taxpayers Relief Act,or Balanced Budget Act of 1997. Neither did he mention that Reagan's signature on the Acts causing tax increases were supposed to be accompanied by far more spending cuts. As Reagan said we got the tax increases, but have yet to see a "dimes" worth of spending cuts. Democrats, not both, Democrats lied to their President. If this Professor and his graph are your best shot, I'd say you don't have a leg to "stand on" in this discussion.

One more time - tax revenue to gov't 1980, Carter 517B$
tax revenue to gov't 1988, Reagan 909B$
Office of Management and Budget

(Report Comment)
Derrick Fogle September 29, 2011 | 8:23 a.m.

@Frank: I agree. The federal deficit will look about the same as it does now. The democrats will be toast.

So, come 2013 when your party is finally 100% in charge, the problem will be the same. The numbers will still be the same.

The only difference is your team will be in charge, and finally have a chance to actually balance the federal budget. How will they do it? How long will it take? Remember we've both agreed that the financial parameters will be the same as they are now:

~$1.2T annual deficit
Military budget almost 60% of that amount; still larger than discretionary revenue pool

I wish your team well in thier efforts to balance the federal budget.

(Report Comment)
frank christian September 29, 2011 | 9:00 a.m.

D.F. - This becomes tiresome. I am not trying to show anyone my prowess with the workings of Gov't. I only want the theft of our monies (N. Pelosi's bro-in-law to receive over 700M$ for a "green" project) and destruction of our way of life to stop!

"Remember we've both agreed that the financial parameters will be the same as they are now:" You will not accept growth of the Economy as a tool and no one on the left has mentioned "sale of assets". M. Thatcher and A. Laffer straightened UK economy i.e., sale of the "council houses" to the tenants, etc. Btw, you might ask Art about the Budget. He professes to know exactly what needs to be done.

"I wish your team well in thier efforts to balance the federal budget." Thank you for that. I would be overwhelmingly grateful to read that you and yours have acknowledged that that the Budget has been balanced "recently". Does not Mark's TT professor's dance around this fact concern you in some way?

(Report Comment)
Mark Foecking September 29, 2011 | 1:11 p.m.

frank christian wrote:

"Something happened '97-2000 to cause surpluses, but your prof. made no attempt to explain or identify the "Taxpayers Relief Act,or Balanced Budget Act of 1997."

Yes. It was called the "tech bubble".

You'll notice in the TT graph that outlays, as a percentage of GDP, drops to the lowest level on the graph in 2000, and had been dropping since about 1992. This indicates a rapidly growing GDP, because spending was not significantly cut. Following the Budget Reconciliation bill in 1993 (which added two higher percentage brackets for high income people), federal revenues rose until 2000, and the slope of that line hardly changes in 1997. This indicates that revenue enhancement began much earlier than 1997, and continued on its upward trek regardless of 1997 tax and spending act, or the composition of Congress.

The tech bubble, plus the higher marginal rates passed in 1993, are responsible for the budget surplus. Nothing else.

Here's some more reading about the Taxpayer Relief and Balanced Budget legislation that you might like:

http://bancroft.berkeley.edu/ROHO/projec...

Tax cuts will only make our deficit problems worse, especially since our dysfunctional Congress fought bitterly last spring, for months, over whether we should cut spending by a measly 4%, or 2% of the deficit. The economy is controlled by a lot more than federal tax and spending legislation, and we have to try our best to not run up more debt.

DK

(Report Comment)
frank christian September 29, 2011 | 2:29 p.m.

Mark - The first sentence from Bancroft whomever: "The Balanced Budget Act of 1997 (a spending bill) and the Taxpayer Relief Act of 1997 (a tax bill) legislated the elimination of the annual budget deficit by 2002."

"even as the legislators and the President sought to produce the first balanced federal budget since 1969" Democrat legislators and B. Clinton had no thought of a balanced budget until R's came on the scene. Clinton's plan was what Democrats always propose "Deficit Reduction". His Budgets showed $200B$ deficits to infinity.

In the end, tax revenues were increasing at such a rate that the federal budget went into surplus several years ahead of schedule in FY 1998 and continued in surplus in 1999, 2000, and 2001. How lucky can we get!

Your description of the "dysfunctional Congress" is also a concern. You give us "we have to try our best to not run up more debt." then cannot discern which Party is trying to accomplish that end and which Party they are fighting to curb the debt with only a majority of one branch of Gov't to even make themselves heard I think as I have previously stated, the time has come to "just wait and see".

(Report Comment)
Mark Foecking September 29, 2011 | 2:50 p.m.

feank christian wrote:

"Democrat legislators and B. Clinton had no thought of a balanced budget until R's came on the scene."

That's not what these guys seem to think:

http://bancroft.berkeley.edu/ROHO/projec...

This Bancroft site is a library at UC Berkeley. I've read most of the summaries on the left side of their page. They seem very non-partisan - just history, like you'd expect from a library. However, to someone as partisan as yourself, I guess anything is liberal if you disagree with it.

DK

(Report Comment)
frank christian September 29, 2011 | 3:52 p.m.

Mark - "The Omnibus Budget Reconciliation Act of 1993, better known as the *Deficit Reduction Act* of 1993, was President Bill Clinton’s first budget."

"Many credit this bill with helping set the stage for the large budget surpluses of the late 1990s because the increased marginal tax rates generated billions of dollars in revenue for the federal government. Some, however, attribute the Democratic losses in the midterm elections of 1994 to the tax increases included in this bill." Many credit this bill..? Some attribute D' losses...? Using folksy general terms there, right? What does Bancroft say (your own thoughts, as well) about the billions generated by Clinton's increased marginal tax rates signed into law August '93 then Rescinded by Republican tax Cuts? Should not this prosperity (only for gov't) have immediately ceased? You call me partisan but you are wont to ignore basic truths to convince us that only Democrat efforts are good for us. Then, as we know,proclaim, there is no difference in the two Parties!

(Report Comment)
Derrick Fogle September 29, 2011 | 4:29 p.m.

Once in 30+ years, Frank; During the tech bubble. It was the last financial bubble where investor money went into business ventures that created domestic US employment, in what then were very good paying computer and programming industries. There weren't huge overseas military operations during that time either. There was "off budget spending" then, too.

The fundamental problem is still there, and still needs to be solved. How? Cut spending, cut taxes, cut regulations, watch the economy grow, and watch tax revenues increase as the economy grows. I understand the theory.

The problem is, there are a couple degrees of separation between the actions, and the expected results. In fact, it will take years of strong GDP growth to overcome a nearly 40% budget shortfall.

That's why theory includes cutting spending, now, to eliminate the budget shortfall. Completely disbanding every single regulatory agency, including the DEA and the FDA, won't balance the budget. Eliminating *everything* except military spending, still won't balance the budget.

How do you feel about cutting military spending?

(Report Comment)
frank christian September 29, 2011 | 9:06 p.m.

Derrick - I have honestly been trying to construct an answer agreeing with your further injection of "tech bubble". Were we of the nineties, the beneficiaries of the miracle of capitalism? Barring that, could some supreme being have allowed us the good fortune that provided us with a balanced Federal Budget? It seems anything will work except the concepts of conservative Republicans. Those being smaller, less intrusive government, less punitive regulations for "business", and unnecessary taxes and fees harmful to expansion of "business". Before the tirade starts, "business" is the "heart of America", not government! Now - GO!

The only other thing I might say to you, D., is our economy and the dire problems we now share are not a paper shuffling, mathematical, thought problem. You may content yourself with your thoughtful solutions (more often non-solutions), but, the American people will solve these "insurmountable" problems when they finally realize from where the problems are spewed, the Federal Government.

I have long ago thought, Democrats can continue to steal from the American people forever, if they just do not make it too expensive for too many Americans. B. Obama and his current bunch, I believe, have crossed that line.

Defense? Most serious folks know that everything must be cut! Defense, of course! Of course, not the B. Wickersham elimination of the Dept. Still haven't thought of a good answer to your post.

(Report Comment)
Mark Foecking September 30, 2011 | 5:50 a.m.

Frank wrote:

""business" is the "heart of America", not government!"

It still is. Government accounts for a little more than 20% of GDP. That percentage grows in bad economic times and shrinks in good. It's an indicator of economic health, not a driver.

"the billions generated by Clinton's increased marginal tax rates signed into law August '93 then Rescinded by Republican tax Cuts?"

The cuts you're talking about were the Bush cuts (39.5% top rate back to 36%) that we're current grappling with. They happened after the bottom fell out of the tech boom. Revenues rose steadily (the slope of the line is what's important here) from about 1992 to 2000, when the bubble burst. Tax and spend legislation in that time period didn't have much effect.

Our economy has changed significantly even from the Carter-Reagan era. The reason we have increasing accumulation of wealth at the top is that our economy is increasingly geared toward money as a product, rather than real goods. When someone can profitably invest in domestic labor-intensive manufacturing, facrories get built and relatively high wage jobs get created. Now, it's a better investment to build the factories overseas, and invest in stuff like hedge funds and derivatives, which can create lerge sums of money, but don't do much for jobs, or the production of real goods. And those without money are less able to take advantage of these investments.

DK

(Report Comment)
Corey Parks September 30, 2011 | 6:50 a.m.

frank christian wrote:

"Something happened '97-2000 to cause surpluses, but your prof. made no attempt to explain or identify the "Taxpayers Relief Act,or Balanced Budget Act of 1997."

Was it also because they were not including the deficit of Social Security. When you move all the money from that and then delete it from the "debt" section it makes your budget look a heck of a lot better. And yes I know Clinton was not the first to use money from it. Just the first to not include it to make it appear that the US had a Surplus.

As far and cutting Military Spending. I am all for it as are most of my Military brothers. Problem is the people in DC are the ones that would be cutting it. They are so far removed from actual military duties and lifestyles that they would not know what to do. Ask someone that is actually in the "trenches" what should be cut and you would have higher cuts and do a lot more good without sacrificing much at all.

(Report Comment)
Ellis Smith September 30, 2011 | 7:49 a.m.

"At some dim beginning, man created the institution of government as a convenience for himself. Ever since that time, government has been doing its best to become an inconvenience." - Ronald Reagan (1972)

(Report Comment)
frank christian September 30, 2011 | 8:11 a.m.

Mark - "The Taxpayer Relief Act of 1997 (Public Law 105-34) reduced several federal taxes in the United States.

Subject to certain phase-in rules, the top capital gains rate fell from 28% to 20%. The 15% bracket was lowered to 10%.

Starting in 1998, a $400 tax credit for each child under age 17 was introduced, which was increased to $500 in 1999. This credit was phased out for high income families."

Bush was elected in 2000 and instituted his own "cuts".

You hit the "investment problem" on the head, but then ignore the cause. Stifling regulation! No one is investing here now because no one can assert what the next Governmental regulation or taxation will be. Worse, these people know exactly what they are doing. Their investment of our tax money is the only investment they want. The honest liberal, you may have noted, never calls for investment to create jobs, only a "demand".

btw have you noted that you all, thru your links and writings, have admitted and agreed that increased financial activity does cause additional revenue to flow to government. You just cannot admit that Tax Cuts can create that increase. Too bad.

(Report Comment)
Mark Foecking September 30, 2011 | 8:29 a.m.

Frank wrote:

"You just cannot admit that Tax Cuts can create that increase."

I've never said they can't increase economic activity and therefore revenue. They just never increase economic activity enough to pay for themselves, therefore increasing deficits.

Ir's been estimated that permanent tax cuts geberate 30 cents for every dollar of lost revenue. Looking at the history of the economy since Reagan, I'd say that number wasn't too far off the mark.

DK

(Report Comment)
Brian Wallstin September 30, 2011 | 8:49 a.m.

"Large segments of the G.O.P. reject climate science and even the theory of evolution, so why expect evidence to matter for the party’s economic views?"

http://www.nytimes.com/2011/09/30/opinio...

(Report Comment)
frank christian September 30, 2011 | 9:39 a.m.

Mark - "They just never increase economic activity enough to pay for themselves, therefore increasing deficits." But "tech bubbles" do! Have you ever devoted one sentence to the possibility that Congress might control or reduce spending to prevent a deficit? 1980's- uncontrolled D' Congressional spending = deficits. 1990's- controlled R' spending = surpluses.

(Report Comment)
frank christian September 30, 2011 | 10:22 a.m.

Corey P - Hard (for me) to find, but did find out that the Nat'l Debt is divided (by gov't) into two categories:
"Money that it owes to federal entities such as the Social Security program.

Money that it owes to non-federal entities such as individuals who have purchased U.S. Savings Bonds."

The writer showed the amount of both the above as the total Nat'l Debt for the year 2000.

I do know that Clinton withheld funds from gas tax (much needed for highway projects across the country) until the money could be included in accounting as "cash on hand" thereby used to show "deficit reduction". I'm sure Gingrich R's promised to stay out of SS funds and apparently did so until I read in a news paper their announcement that because of the Iraq War they would have to break that pledge. Huff Post said that Paul Ryan's 14T$ debt figure included SS debt.

(Report Comment)
Derrick Fogle September 30, 2011 | 10:51 a.m.

The arguments are amusing. The real problem, not so much.

Greg Allen probably scored the most important point here:
"But I'm tired of paying so much for insecurity. There's got to be a cheaper way."

(Report Comment)
Jimmy Bearfield September 30, 2011 | 12:06 p.m.

"How do you feel about cutting military spending?"

Fine by me. But I don't want to hear any whining from:

1) MU when the DoD and defense contractors slash research funding.

2) STL when Boeing lays off thousands.

3) Columbians when gas prices skyrocket after some Middle East despot seizes a big portion of the world's oil supply.

(Report Comment)
Michael Williams September 30, 2011 | 1:40 p.m.

Jimmy:

Don't forget #4:

No whining when Ft. Leonard Wood is closed.

(Report Comment)
Michael Williams September 30, 2011 | 1:41 p.m.

or Whiteman AFB

(Report Comment)
Richard Saunders September 30, 2011 | 2:57 p.m.

Another part of Buffett's ruse is the fact that he only earns $100k per year in income. So while he talks about not paying much in taxes, his solution has no effect on him personally, as it is an income tax on the rich he is proposing.

It's all a part of his serving the beast in DC in order to grease the skids for the upcoming bailout Wells Fargo will need (they are neck-deep in the mortgage-backed securities scam).

(Report Comment)
Brian Wallstin September 30, 2011 | 3:49 p.m.

"So while he talks about not paying much in taxes, his solution has no effect on him personally, as it is an income tax on the rich he is proposing."

False. He's talking about investment income.

(Report Comment)
Paul Allaire September 30, 2011 | 3:55 p.m.

"No whining when Ft. Leonard Wood is closed.
(Report Comment)
Michael Williams September 30, 2011 | 1:41 p.m.
or Whiteman AFB"

Send them to IRAQ!!!

(Report Comment)
frank christian September 30, 2011 | 7:25 p.m.

B. Walstein - Buffett is talking about Taxable income,"including, of course, dividends and capital gains."

(Report Comment)
John Bliss October 2, 2011 | 11:36 a.m.

Colonel, first-off, let me WELCOME you home. Hope you both had a great time. I'm not sure if I agree with you on the Buffet thing, as I didn't understand your case. For a minute, forget the 1% of richest, and aim at something bigger: Exxon-Moble stated ONE Quarters, over a quarter of a TRILLON dollars! Yet the US Govt PAYS them subsides??? Gas out here (Ca) is closer to $4 a gallon, and they need Subsides??? What about the Billons that Barry gave Wall St and the other banks? THEN, out of taxpayers money, these morons that screwed up, pay huge Bonus' to "keep good help" they should have fired the smucks!!!
Nice to see you again Sir! Semper Fi! John

(Report Comment)

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