Bush Tax Cuts.

[Kushinator]

I don't know how it could possibly work in real life. What constitutes investment in job growth? Buying yachts and investing in the stock market both spur job growth, but I don't think that's what you had in mind.

Careful with this assumption.

Cage, 44, stands guard by the door as a partner, Randy Craft, walks onto the tarmac and approaches a shiny white turboprop. Craft quickly picks the lock on the door and ushers in the repo team's pilot, Dave Larson. The plane's propellers roar to life, and after clearance from the control tower, the $350,000 ride lifts off the runway and into the sky.

Cage and Craft climb back into their Ford pickup and tear out of the parking lot, just as the plane's owner pulls in.

"He's a minute late," says Cage, peering out the window. "Lucky for us."
Lifestyles of the rich and repossessed
Go to Wall Street Journal
Cage isn't your typical repo man. Rather than snatch cars from an overextended middle class, he takes back yachts, planes and other toys from the overleveraged rich.

Business is thriving, even as the economy begins to improve. His company, International Recovery Group, repossessed more than 700 boats, planes, helicopters and other property last year with a total value of more than $100 million. Business, he says, is up sixfold from 2007.

He has reclaimed everything from $18 million Gulfstream jets and Bell helicopters to 110-foot Broward yachts, $500,000 recreational vehicles and even a racehorse. Before the financial crisis, most of the luxury items he pulled in were valued at $30,000 to $50,000. Today, they are valued at $200,000 to $300,000 -- meaning defaults are hitting people at a much higher income level.

The rest of the article can be found here.

What you have stated only applies if it is not implemented with irrational exuberance.

 

[RightinNYC]

Yes, it's a relative term, but compared to most other developed countries, ours is pretty bad. Which does have negative consequences even for those in the top tiers. Look at South Africa. One of the most unequal countries in the world, which is directly correlated to their insane crime rate.

I don't think you can really prove that the level of economic inequality in our society is so high that it has substantial negative effects. Simply pointing to one place with inequality and crime doesn't prove anything about this country.

Actually, I'd be OK with that, as long as it could be demonstrated that buying those yachts and investing in the stock market created jobs. Also, if you include small (or medium or large, for that matter) businesses as among the top 2% of taxpayers, it would be exceedingly easy to track if they used their tax cuts to hire people, rather than simply give payouts to their shareholders.

But that's sort of my point - those shareholders are investors. How do you know how they're using that extra dividend? Are they reinvesting it in additional shares? Are they using it to hire a nanny? To buy a new car? It's impossible to track where the money goes and what it actually does.

Careful with this assumption.



The rest of the article can be found here.

What you have stated only applies if it is not implemented with irrational exuberance.

I'm sorry, but I'm not sure what you're getting at here.

 

[Kushinator]

I'm sorry, but I'm not sure what you're getting at here.

High end tax cuts combined with irrational exuberance can lead to job growth, but maybe not the type of jobs that signify a healthy economy.

 

[RightinNYC]

High end tax cuts combined with irrational exuberance can lead to job growth, but maybe not the type of jobs that signify a healthy economy.

I'm not saying it's an unmitigated positive, but buying a yacht inevitably involves the employment of yacht builders.

 

[TurtleDude]

BORN ON THIRD BASE: Sources of Wealth of 1997 Forbes 400 | United for a Fair Economy

Your turn.

so your belief is that the top 400 are the majority of the top 2% (ie those targeted for tax hikes)

http://indy-biz.com/danpdf/dlArt83.pdf

805 of the affluent are first generation affluent

 

[Deuce]

I'm not saying it's an unmitigated positive, but buying a yacht inevitably involves the employment of yacht builders.

Nobody's saying it's an unmitigated negative, either, but there seems to be a correlation between extreme wealth disparity and **** hitting the fan. The Great Depression started at a period of all-time high wealth disparity. We had another spike just prior to this latest recession. I don't have the economic knowledge to just out and say it causes economic problems, but it could easily be a contributing factor.

Nobody's saying we should be communists, what I think is that economic policy that too-greatly favors the wealthy leads to ever-increasing wealth disparity and shrinks the middle class' economic safety buffer. When things start to go bad, the middle and lower classes crash harder and faster which makes them stop buying things that the wealthy business owners are trying to sell to them.

Income distribution tends prove pretty definitively that our current tax structure is not at all crippling to those poor, persecuted rich people.

 

[Kushinator]

I'm not saying it's an unmitigated positive, but buying a yacht inevitably involves the employment of yacht builders.

In year one perhaps. But selling lots of yachts that end up repossessed negatively impacts the employment status of yacht builders in the immediate future. This applies to purchasing equities or residential real estate on the basis of irrational speculation, either in the form of future earning expectations or future asset valuation.

 

[Kushinator]

Nobody's saying it's an unmitigated negative, either, but there seems to be a correlation between extreme wealth disparity and **** hitting the fan.

Exactly!!!!

 

[WilliamJB]

I don't think you can really prove that the level of economic inequality in our society is so high that it has substantial negative effects. Simply pointing to one place with inequality and crime doesn't prove anything about this country.

SA is just an example. There's a TON of research demonstrating the relationship between inequality and crime.

MIT Press Journals - Review of Economics and Statistics - Abstract

JSTOR: An Error Occurred Setting Your User Cookie

http://www.ne.su.se/paper/wp04_03.pdf

JSTOR: An Error Occurred Setting Your User Cookie

ScienceDirect - Journal of Development Economics : Crime and local inequality in South Africa

I could go on, but you get the picture.

But that's sort of my point - those shareholders are investors. How do you know how they're using that extra dividend? Are they reinvesting it in additional shares? Are they using it to hire a nanny? To buy a new car? It's impossible to track where the money goes and what it actually does.

I still don't see why it would be that difficult to track where tax breaks went. If you're a business and you get a tax break, you need to demonstrate that you hired a certain number of people as well. This would simply be part of doing your taxes every year. If you're an individual, you can report investments, presonal hirings (gardeners, nannnies, whatever), etc. Admittedly, the investment part would be a bit harder to track for individuals, but I'm sure a list could be assembled of which investments were most likely to result in more hiring, and which wouldn't.

I'm sorry, but I'm not sure what you're getting at here.

 

[TurtleDude]

Nobody's saying it's an unmitigated negative, either, but there seems to be a correlation between extreme wealth disparity and **** hitting the fan. The Great Depression started at a period of all-time high wealth disparity. We had another spike just prior to this latest recession. I don't have the economic knowledge to just out and say it causes economic problems, but it could easily be a contributing factor.

Nobody's saying we should be communists, what I think is that economic policy that too-greatly favors the wealthy leads to ever-increasing wealth disparity and shrinks the middle class' economic safety buffer. When things start to go bad, the middle and lower classes crash harder and faster which makes them stop buying things that the wealthy business owners are trying to sell to them.

Income distribution tends prove pretty definitively that our current tax structure is not at all crippling to those poor, persecuted rich people.

did it ever occur to you that maybe the reason why the rich do so well is that they are best able to compete. I see lots of posts that suggest that the game is rigged in favor of the rich rather than the rich playing the game better, Its like saying the rules of tennis were created to favor Nadal or Federer-two men who in the last 6 years have won more major tounaments than the rest of the world combined. In reality they do that not because the rules but because they are the best-period.

So we have to ask if the purpose of the government should be to take from those who compete well to appease those who fail to compete well or don't even make an effort. a flat tax still does this but it doesn't lead to the untenable end game were the many keep voting up the taxes of the "rich" until the rich stop paying or leave which would cause those dependent on the rich some serious problems

none of those who whine that the rich don't pay enough as it is never want to deal with that very real possibility

 

[TurtleDude]

BTW the ultimate tax breaks are living in this country, getting government services and not paying into the federal income tax which pays for most of those services. so lets stop ranting about the rich getting breaks because with the current breaks the income tax became EVEN MORE PROGRESSIVE. the real breaks are all those people who get all sorts of benefits and representation without paying federal income taxes

 

[WilliamJB]

BTW the ultimate tax breaks are living in this country, getting government services and not paying into the federal income tax which pays for most of those services. so lets stop ranting about the rich getting breaks because with the current breaks the income tax became EVEN MORE PROGRESSIVE. the real breaks are all those people who get all sorts of benefits and representation without paying federal income taxes

You've certainly posted a lot in this thread without actually addressing my proposal. So... tax breaks for the rich with the proviso that they use them to hire and invest in job-creating businesses? Favor? Don't favor?

 

[TurtleDude]

You've certainly posted a lot in this thread without actually addressing my proposal. So... tax breaks for the rich with the proviso that they use them to hire and invest in job-creating businesses? Favor? Don't favor?

do you expect the same requirements be applied to all those you want to get tax cuts.

many people in the top 2% don't have that ability. a brand manager at PG or a line partner at a big wall street law firm has no say in hiring. same with a federal judge whose staff is limited by powers he cannot change.

Tax cuts for the rich are proper because the rich pay too much of the tax burden as it is and making them pay more will serve as an incentive for the rest of the voters to keep deficit spending going and going and going.

 

[RightinNYC]

SA is just an example. There's a TON of research demonstrating the relationship between inequality and crime.

MIT Press Journals - Review of Economics and Statistics - Abstract

JSTOR: An Error Occurred Setting Your User Cookie

http://www.ne.su.se/paper/wp04_03.pdf

JSTOR: An Error Occurred Setting Your User Cookie

ScienceDirect - Journal of Development Economics : Crime and local inequality in South Africa

I could go on, but you get the picture.

Setting aside the fact that some of those papers contradict each other (particularly on the relationship between inequality and property crime), that doesn't really prove much about causation in this country. We have a high rate of violent crime here for all sorts of reasons, many of which have little or nothing to do with inequality.

Moreover, my larger point stands - even if we were to assume that the level of inequality in our society is a contributing factor to the level of crime, that says nothing about whether that level of inequality has such negative effects that is substantially outweighs any positive effects. There are plenty of things that contribute to our crime rate that which we would be loath to get rid of, such as the availability of alcohol or our restrictions on police investigations.

Personally, I would much prefer to live in a society that rewarded hard work and intelligence than one where everyone shared the exact same level of success regardless of effort. The former might have more "inequality," but the latter sounds like a nightmare.

I still don't see why it would be that difficult to track where tax breaks went. If you're a business and you get a tax break, you need to demonstrate that you hired a certain number of people as well. This would simply be part of doing your taxes every year. If you're an individual, you can report investments, presonal hirings (gardeners, nannnies, whatever), etc. Admittedly, the investment part would be a bit harder to track for individuals, but I'm sure a list could be assembled of which investments were most likely to result in more hiring, and which wouldn't.

How on earth would you categorize whether an investment in a publicly traded company counted as "resulting in more hiring" or not. Moreover, how would you track which money was being used for what? If a rich person got a tax break and then hired a nanny, is he using his tax break money or his other money? If he got a tax break and then didn't fire his nanny, is that a "job saved"? If he got a tax break and then bought a new car, does it matter whether he was planning on buying that car in the first place?

It's one of those ideas that sounds good in theory, but seems entirely unworkable in practice.

 

[WilliamJB]

Setting aside the fact that some of those papers contradict each other (particularly on the relationship between inequality and property crime), that doesn't really prove much about causation in this country. We have a high rate of violent crime here for all sorts of reasons, many of which have little or nothing to do with inequality.

Moreover, my larger point stands - even if we were to assume that the level of inequality in our society is a contributing factor to the level of crime, that says nothing about whether that level of inequality has such negative effects that is substantially outweighs any positive effects. There are plenty of things that contribute to our crime rate that which we would be loath to get rid of, such as the availability of alcohol or our restrictions on police investigations.

Personally, I would much prefer to live in a society that rewarded hard work and intelligence than one where everyone shared the exact same level of success regardless of effort. The former might have more "inequality," but the latter sounds like a nightmare.

Someone's been spending some time with his Ayn Rand reader, I see. My question to you is, what are the benefits of the level of inequality that exists in the US that justify the (what I believe to be at least) clear relationship between that and crime? And the prohibition analogy is inaccurate since it resulted in more crime than it proported to stop.

Again, I don't think inequality in and of itself is necessarily bad. It's a question of degrees. When 400 people in this country have the same net worth as everyone else combined, that's too much. It's the same logic that led us to create antitrust laws in the first half of the 20th century.

How on earth would you categorize whether an investment in a publicly traded company counted as "resulting in more hiring" or not. Moreover, how would you track which money was being used for what? If a rich person got a tax break and then hired a nanny, is he using his tax break money or his other money? If he got a tax break and then didn't fire his nanny, is that a "job saved"? If he got a tax break and then bought a new car, does it matter whether he was planning on buying that car in the first place?

It's one of those ideas that sounds good in theory, but seems entirely unworkable in practice.

As always, you make some good points. It's academic since I'm positive that such a proposal would never even get suggested, but I think it gets at something important. The perpetual argument on the right is that tax breaks for the wealthy will somehow "trickle down" to those on the lower income scale, but I've yet to see any concrete empirical proof of this (I hate to keep going back to this, but with a top tax rate of 90% during the 1950s, the economy seemed to be humming along quite nicely).

It seems to me that all of the possible difficulties in assessing where tax break money goes sort of indirectly contradicts the "trickle down" theory on its own. As you pointed out, there's no way to know how tax breaks for the wealthy will be spent. They're just as likely to sock it away in a savings account as they are to invest it in anything and create any jobs. Giving the middle class a break, or, for that matter, increasing unemployment benefits will almost certainly stimulate the economy since those people have to spend that money.

Finally, in a likely fruitless attempt to save my idea, I concede that it's probably unworkable at the level of individual taxpayers, but I still maintain that there's no reason it couldn't be applied to corporate taxes.

 

[RightinNYC]

Someone's been spending some time with his Ayn Rand reader, I see.

FWIW, I don't think I've ever read so much as a word of Ayn Rand.

My question to you is, what are the benefits of the level of inequality that exists in the US that justify the (what I believe to be at least) clear relationship between that and crime?

The "benefit" of inequality is that it's an outgrowth of our relatively free society. The only way to eliminate said inequality would be to modify that structure.

And the prohibition analogy is inaccurate since it resulted in more crime than it proported to stop.

I wasn't referring to prohibition per se, but rather to the fact that widespread alcohol consumption (like limitations on police power or laws allowing access to guns) leads to additional crime. The fact that those things lead to additional crime does not automatically mean that society would be improved by eliminating or reducing them.

Again, I don't think inequality in and of itself is necessarily bad. It's a question of degrees. When 400 people in this country have the same net worth as everyone else combined, that's too much.

What are you basing this on?

It's the same logic that led us to create antitrust laws in the first half of the 20th century.

My understanding of antitrust is that its designed to prevent situations where one or two companies that completely control an economic sector collude to raise prices or otherwise harm competition. I don't see how that analogy works.

As always, you make some good points. It's academic since I'm positive that such a proposal would never even get suggested, but I think it gets at something important. The perpetual argument on the right is that tax breaks for the wealthy will somehow "trickle down" to those on the lower income scale, but I've yet to see any concrete empirical proof of this (I hate to keep going back to this, but with a top tax rate of 90% during the 1950s, the economy seemed to be humming along quite nicely).

In the 1950's, the top marginal tax rate applied to an infinitely smaller percentage of people than it does now.

It seems to me that all of the possible difficulties in assessing where tax break money goes sort of indirectly contradicts the "trickle down" theory on its own. As you pointed out, there's no way to know how tax breaks for the wealthy will be spent. They're just as likely to sock it away in a savings account as they are to invest it in anything and create any jobs. Giving the middle class a break, or, for that matter, increasing unemployment benefits will almost certainly stimulate the economy since those people have to spend that money.

I don't think anyone is disputing that giving money to low income people is the quickest way to ensure that it gets spent. I think the dispute is over whether that spending is the best way to create long term sustainable jobs. If that were really the best way to promote economic growth, why wouldn't we just give everyone a pre-loaded debit card with $50k on it that would expire in 3 months.

Finally, in a likely fruitless attempt to save my idea, I concede that it's probably unworkable at the level of individual taxpayers, but I still maintain that there's no reason it couldn't be applied to corporate taxes.

I don't see how it would be any more workable there. What's to stop a corporation from saying that but for that tax break, it would have laid off workers? Or but for that tax break, it wouldn't have hired those people (that it was actually planning on hiring anyway).

 

[ecofarm]

FWIW, I don't think I've ever read so much as a word of Ayn Rand.

"Anthem" is only ~100 pages and is a nice story.