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Interesting Perspective on the United States

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If you'd simply go back and reread my earlier posts (here and here), you'd find that our spending is up on welfare programs simply because of the economic downturn. The spending program will fix itself as the economy begins to recover and people get back to work, but you can't cut social programs now or it'd result in further recession, more unemployed, more people depending on social programs.

By your line of thinking its perfectly ok to strangle my kids, grandkids and great grandkids with a debt burden that is unsustainable, as long as it doesn't affect vulnerable folks immediately or short term.

That's quite the sob story, but again, the debt will reduce itself as the economy recovers. By the way, do you think it's perfectly ok to strangle me, my kids, grandkids and great grandkids by reducing education spending, healthcare spending, unemployment insurance spending, and more social programs that ALSO affect vulnerable folks immediately in the short term? But I digress; it's better to borrow to make investments in infrastructure now while interest rates are extremely low so that when the economy picks up and interest rates rise, we won't have to pay more to make these infrastructure improvements. In short, this "think of the children argument" is complete bull when investments are exactly what our children need.

 

I've got no problem rolling back pre-Bush tax rates on individual income tax for earners in the highest income bracket - but I'll never agree that a single person earning $200,000 or a couple earning $250,000 makes them "rich". That threshold is too low. I'm all for fixing the loopholes in corporate tax rates and eliminating abuse of the tax system by the uber-wealthy too. I'm all for keeping middle income and low income tax rates where they are. Deduction caps for high earners, scaled social benefits for high earners and other tax code revisions that further the goal of making the tax system in the US fair for all the citizens should also be on the table.

I get the feeling that this is all we'll agree on. But nobody says that $200,000 and $250,000 earners are "rich," that's just our top income bracket. Should there be another bracket for millionaires? Maybe, maybe not. The effective tax rate of someone making $250,000 is much closer to that of the previous tax bracket anyways, whereas a millionaire will certainly be closer to paying an effective tax rate of 35%.

 

Carbon taxes and VAT.........? Are you really from Texas because I didn't know that there was anyone that liberal living in the state. Tax increases MUST be accompanied by enough debt reduction to produce a budget that yields more revenue than what is spent. It doesn't matter how bad the short term impact is.

Yes well, if one removes the toilet paper roll from around his eye and gets a much larger, more objective view of the world (something most Texans fail to do), then it becomes apparent why VAT and carbon taxes should be considered. And again, the spending will reduce itself as the social safety net is used less and less when the economy picks up. But since you really failed to bring up any argument against the carbon tax and VAT, other than "big gubment bad," I'm going to just assume that you really don't have an argument against them.

 

How long could you continue to balance your personal budget by borrowing what you needed to spend on a daily, monthly or yearly basis. And, then at what point have you given up complete control of your own destiny because you are so deeply indebted to your debtors?

This is completely irrelevant. Personal budgets and government budgets can hardly be compared. Governments are responsible for numerous programs that affect millions of people -- education, national security, health, transportation, energy -- all of which are INVESTMENTS to gain money back in the future. My personal spending consists of my college debt and bonbons (or whatever unnecessary goods you want to include here). But if I wanted to prove a point, I could rack up substantial amounts of college loans and investors will still have confidence that I will pay them back because it's an INVESTMENT. As long as I don't default on these loans (and the US government has never defaulted on theirs) then investors have little reason to worry because I'm not just taking loans and burning the money, I'm putting it into my education so that I can get a better paying job.

 

I would even go along with a proposal (written into law) that all new tax revenues (regardless of source) are earmarked towards balancing the budget and deficit reduction. But you know the problem with that???? It will never happen, because the parties in power will always find a way to spend and overspend the existing revenue AND the new revenue.

rolleyes.gif

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My primary argument against the VAT tax is that the end user ALWAYS ends up paying the full burden of this tax. Every entity upstream of the end consumer can deduct dollar for dollar the VAT paid by the entity that previously "value added" somewhere along the supply or production chain. So again, the only class that ends up bearing the full cost of the VAT is the retail consumer. The VAT ends up being as regressive for the poor or under-privileged as a direct sales tax at the register. I'd also like to point out to everyone monitoring our friendly banter that you reside in one of (what five or six states) that doesn't have a state income tax. So any proposal that you would make for a tax that hits every single manufacturer, business, supplier and consumer is unfairly skewed by the fact that you already pay 6 - 10% less total taxes every year because you don't pay state income tax (I'm assuming you have income).

 

The VAT isn't anything other than a Federal Sales Tax hidden by a fancy name and semantics that many people don't understand or care to understand. The even greater thing about the VAT is that it doesn't usually show up as a line item on your sales receipt - so it's hard to get mad when you can't actually see how much you're paying for it. I don't care how many other countries in the world have found a "solution" to their federal funding problems through the VAT. I'll never favor it here.

 

 

 

 

 

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Well Texas doesn't have a state income tax, but we do have a gross margins tax on businesses, which cuts into individual incomes. While the median income level in Texas may not be too bad compared to other southern states, if you compare it to some of the high-tax blue states it doesn't necessarily look too good either.

082211krugman1-blog480.jpg

 

You can see more of the issues of low taxation and low wages in Texas in my Texas secession rant last month. Upon doing even a bit of research into the awful statistics in nearly every social issue in Texas, it should be no wonder why I'm so liberal.

 

But back to the issue, as I said many countries have used the VAT to raise revenues that go towards cutting low income taxes to offset the increase that poor consumers end up paying. Additionally, it has cut the end-result cost of consumer products. I just don't think Congress should completely take it off the table without putting in any time to debate it.

 

As for the carbon tax, I still don't know why we don't have implementation of this in the US -- perhaps because we have so many climate skeptics. But this should be a non-issue at this point. Hell, I'd even support cap and trade if it was on the table, but conservative groups who used to support that won't even talk about it now. Taxing things that harm society should be a no-brainer.

 

For the sake of argument, Wev, since we both seem to agree that the accumulation of capital at the top is a concern, what would you say about a maximum wage? I'm certainly not advocating for it (not yet anyways), and it sounds horribly communistic, but if the accumulation of wealth at the top continues to accelerate I think it may be something worth debating. The problem seems to be this -- we can't raise the minimum wage without harming small business owners, but the wealthiest companies have no incentives to increase their employees' wages because nobody is making this an issue. So the end result is that wealthy CEOs continue to pocket more and more each year. Would it be realistic to cap their incomes at something like $10 million? Any income they try to take over that could be taxed 100%, which will result in CEOs instead choosing to take the $10 million and use the remainder of the money to increase other employee wages or invest in other areas of their business.

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I hope you're not serious... Nobody should really WANT to go over the cliff.

Anything else would be neglecting the problem at hand. Sure negative economic growth may not be a "good thing" but neither is spending money we don't have.

 

Let's just raise the debt ceiling over and over until there's no more money available from other countries to lend to us...THEN let's go over the cliff anyway.

 

Short term will suck sure, but it's a necessary evil.

 

Our government can't just keep pretending we have infinite money, maybe some other countries who are giving us loaning us money will have more to spend into their own country and the world as a whole can start recovering.

 

Spending cut number 1: M.Effin Military

 

I'm also in favor of tax increases on the wealthy but we really need a wake up call that what we provide needs to be in a reasonable limit of our OWN wealth...

 

I'm not really definitively Democrat or Republican because how much doesn't get done in the country due to their nonsensical bickering. (Though i voted Obama twice knowing full well more favorable independent candidates of mine wouldn't have a fighting chance in this corrupt country, and the fact that the republican offerings were laughable.)

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Your whole view is so narrow minded and uninformed. I can't even believe I'm going to bother responding to this.

Anything else would be neglecting the problem at hand. Sure negative economic growth may not be a "good thing" but neither is spending money we don't have.

First of all, economic growth IS the problem. Spending money we don't have is what every country in the world does. That's how government spending works. You spend the money on INVESTMENTS to be paid back later. I don't know how many times I've explained that in this thread. Right now is actually the best time for the government to spend to repair our crumbling infrastructures while interest rates are low and to spur economic growth. We're not trying to wipe out the deficit in one month; that would have severe consequences.

Let's just raise the debt ceiling over and over until there's no more money available from other countries to lend to us...THEN let's go over the cliff anyway.

First off, the debt ceiling is always going to be constantly raised. The question is how much it should be raised, not whether or not it should be done. Second, the vast majority of US debt is owned by US investors. All foreign countries combined actually own less than a third of our debt. And the money to be lent from investors isn't just going to "run out," because they're still getting their money back. The US has never defaulted on a loan.

Short term will suck sure, but it's a necessary evil.

These are people's jobs and lives we're talking about here -- not just some number on a piece of paper. "Sucks" is an understatement, especially when this whole thing is avoidable, and we can even get short term and long term economic growth out of it.

Our government can't just keep pretending we have infinite money, maybe some other countries who are giving us loaning us money will have more to spend into their own country and the world as a whole can start recovering.

It's not like countries are just buying up US bonds and neglecting their own countries. And again, Investors aren't running for the hills just because the US has a lot of debt. The US is still the safest country in the world to invest money in right now.

Spending cut number 1: M.Effin Military

Agreed.

I'm also in favor of tax increases on the wealthy but we really need a wake up call that what we provide needs to be in a reasonable limit of our OWN wealth...

And those limits will go back to reasonable levels as the economy grows at a higher rate, which will cause employment to rise, tax revenues to increase from a broadened base, and welfare spending to drop off.

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You're whole view is so narrow minded and uninformed. I can't even believe I'm going to bother responding to this.

 

First of all, economic growth IS the problem. Spending money we don't have is what every country in the world does. That's how government spending works. You spend the money on INVESTMENTS to be paid back later. I don't know how many times I've explained that in this thread. Right now is actually the best time for the government to spend to repair our crumbling infrastructures while interest rates are low and to spur economic growth. We're not trying to wipe out the deficit in one month; that would have severe consequences.

 

First off, the debt ceiling is always going to be constantly raised. The question is how much it should be raised, not whether or not it should be done. Second, the vast majority of US debt is owned by US investors. All foreign countries combined actually own less than a third of our debt. And the money to be lent from investors isn't just going to "run out," because they're still getting their money back. The US has never defaulted on a loan.

 

These are people's jobs and lives we're talking about here -- not just some number on a piece of paper. "Sucks" is an understatement, especially when this whole thing is avoidable, and we can even get short term and long term economic growth out of it.

 

It's not like countries are just buying up US bonds and neglecting their own countries. And again, Investors aren't running for the hills just because the US has a lot of debt. The US is still the safest country in the world to invest money in right now.

 

Agreed.

 

And those limits will go back to reasonable levels as the economy grows at a higher rate, which will cause employment to rise, tax revenues to increase from a broadened base, and welfare spending to drop off.

Fair points, (and thanks for teaching me things I honestly didn't know, like the domestic investors being the primary loan source) I just feel that the cliff has potential of really waking up the government into working as one collective body instead of two rival gangs of children in a sandbox with all any toys they want thrown in by their hopeful parents. Maybe I'm just optimistically narrowminded in the matter :blush:

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My job (and BP's) rely on the government not totally collapsing in 2013. Cliff...please be more of a speedbump. :lol:

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My job (and BP's) rely on the government not totally collapsing in 2013. Cliff...please be more of a speedbump. :lol:

You can just find out where the congress men and women's bank is and then go Bonnie and Clyde on it :woot: for not just coming to a logical agreement

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Fair points, (and thanks for teaching me things I honestly didn't know, like the domestic investors being the primary loan source) I just feel that the cliff has potential of really waking up the government into working as one collective body instead of two rival gangs of children in a sandbox with all any toys they want thrown in by their hopeful parents. Maybe I'm just optimistically narrowminded in the matter :blush:

No problem. I apologize to everyone in this thread if I've come across as condescending (which I know I do most of the time lol2.gif) but I'm fairly enthusiastic about politics, even though it drives me insane most of the time. I can certainly sympathize with people that want to reduce spending, but I just don't see that as a feasible solution right now. Before this recession I was against a lot of the spending we were doing, and as soon as economic growth gets back to what we'd consider normal levels, I'll probably go back to being a deficit hawk, but many of the services that people want to cut would have serious economic consequences if we did it now.

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All friendly debate aside, here are the "top ten" non-US investors (courtesy of the Washington Post - as of October 2012)

 

1. China = 1.2 Trillion

2. Japan = 1.1 Trillion

3. Oil cartel (exporters) = 263 Billion

4. Caribbean Banking Institutions = 257 Billion

5. Brazil = 254 Billion

6. Switzerland 202.2 Billion

7. Taiwan = 198 Billion

8. UK 156.3 Billion

9. Russia 153.3 Billion

10. Belgium 142.6 Billion

 

Assuming those numbers are correct, non-US investors own 3.9 Trillion dollars of US Debt. Guess that means that US investors own the other 12.4 Trillion. Guess who really "owns" that debt though? The US taxpayer.

 

Mal - Max earning cap is an interesting idea and not one I've ever considered. Maybe taxing everything above 10 million at 90% - I don't know that I could ever bring myself to admit that taxing some part of anyone's earnings (regardless of total income) is a fair thing to do. And I think the proposed 200/250 threshold should be revised to somewhere in the neighborhood of 300/350 or maybe even a little higher.

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