Why shouldn't capitalism be better regulated? (1 Viewer)

[jmotivator]

Capitalism should be regulated by the government and the government should be responsible to the electorate and not to powerful networks of capital. Such regulation should be both from the ground up and the top down within companies and from the top down in societies and states as a whole. More will follow as time permits.

Cheers.
Evilroddy.

It's not so simple as all of that. Power has a price no matter who is wielding. Government power is susceptible to corruption the more power you give it just as monopolies are susceptible to corruption. The primary regulatory power, then, is to best limit the monopolization of power in government AND private sector. Deregulation for the purpose of deregulation and regulation for the sake of regulation are just opposing forces on the same pendulum.

The greatest threat, from Government or Private sector, in a free society is the loss of options.

 

[AmNat]

So.. I as a corporate owner.. are going to decide.. "gee.. I could take 300,000 more in profit.. and pay effective tax of 90% (which is not true at all. Effective rates were never ever ever.. that high)… so now I get 30,000 dollars more.

OR.. I could decide to pay my workers more. Why? Why... would I pay my workers more? What if the next year.. I make less profit.. and now have to reduce their salaries? Why would I simply pay them more? Just to be nice? Sorry.. it didn't work that way back then. A company pays more.. because they need to attract workers... or retain workers.. they do not do it simply to be nice.

If a corporation is paying a marginal rate of 50% (the highest maximum corporate rate we've had), it makes bonuses / higher wages / etc. a more attractive investment, since the government is effectively matching every dollar they spend.

Raising wages will almost always benefit a company (by attracting better workers), the question is just whether the benefits are worth the money. High maximum rates can tip the scales in favor of raising wages.

 

[jaeger19]

Politicians are spending addicts," because most Americans want the government to help them get through life. Because that is the way things are the government should hammer the rich with high taxes.

If they do not like it, they can move to a third world country with low taxes. That country will also have dirt roads, dangerous drinking water, high crime rates, and corrupt criminal justice systems. I will help them pack. They should only be allowed to take with them two suit cases with toilet articles and two changes of clothing. Everything else they own should be sold. The money should go to the U.S. Treasury to pay off the national debt that has grown since the inauguration of Reagan.

I am rich. And if you want to hammer me with taxes.. fine. when you tax me so much..it doesn't make sense to keep my businesses running. I will simply close them up. And guess what? I'll still be rich. And you sir.. will be looking for a job. I can live just fine without much income. Can you?


Think about it.

 

[Bullseye]

Sorry, Reagan reduced the top tax rate from 70% to 28%. No, I do not think he made up for the decline by plugging up the tax loop holes.

Yes he did. along with others. The end result was that the upper brackets assumed more of the overall tax bill.

"Politicians are spending addicts," because most Americans want the government to help them get through life. Because that is the way things are the government should hammer the rich with high taxes.

And yet repeatedly lowering taxes on high income has generated more income.

If they do not like it, they can move to a third world country with low taxes. That country will also have dirt roads, dangerous drinking water, high crime rates, and corrupt criminal justice systems. I will help them pack. They should only be allowed to take with them two suit cases with toilet articles and two changes of clothing. Everything else they own should be sold. The money should go to the U.S. Treasury to pay off the national debt that has grown since the inauguration of Reagan.

And when the golden geese fly away and there's no more golden eggs to pay for all those things people want?

 

[jaeger19]

If a corporation is paying a marginal rate of 50% (the highest maximum corporate rate we've had), it makes bonuses / higher wages / etc. a more attractive investment, since the government is effectively matching every dollar they spend.

Raising wages will almost always benefit a company (by attracting better workers), the question is just whether the benefits are worth the money. High maximum rates can tip the scales in favor of raising wages.

No.. not at all. First.. a corporation only pays taxes AFTER its paid its employees and bonuses. So it doesn't make paying its employees more..more of an investment.

And raising wages does not almost always benefit a company. That's why companies don't just willy nilly raise wages. You said it.. its whether the benefits are worth the money. And if they are..wages go up. If they are not..then wages stay where they are.

High maximum rates definitely won't tip the scales in favor of raising wages. Corporations and individuals do not set wages based on income tax rates.

 

[Fenton]

Sorry, Reagan reduced the top tax rate from 70% to 28%. No, I do not think he made up for the decline by plugging up the tax loop holes.

"Politicians are spending addicts," because most Americans want the government to help them get through life. Because that is the way things are the government should hammer the rich with high taxes.

If they do not like it, they can move to a third world country with low taxes. That country will also have dirt roads, dangerous drinking water, high crime rates, and corrupt criminal justice systems. I will help them pack. They should only be allowed to take with them two suit cases with toilet articles and two changes of clothing. Everything else they own should be sold. The money should go to the U.S. Treasury to pay off the national debt that has grown since the inauguration of Reagan.

This is what happens in a modern economy when social justice narratives and plattitudes become the driving force for the implementation of tax policy

Hollande's 75% 'Supertax' Failure A Blow To Piketty's Economics

Hollande's 75% 'Supertax' Failure A Blow To Piketty's Economics

 

[iguanaman]

the rest of the world was in turmoil after a war....rebuilding

there was no competition...of course we cleaned their clock

it was easier then....there is no such advantage now

you start taxing high earners at high rates and they leave....be it individuals or companies

they take their money or their business and they go elsewhere...and we have seen over the last few decades

i have zero issue with them doing this....but i have heard nothing but yelling on WHY the unions are losings jobs left and right

same for people with money....look at some of the blue states with high tax rates....lots of people leaving

why pay those rates when you DONT HAVE TO

LOL That fallacy has been debunked long ago. Europe was not responsible for our phenomenal GDP growth, like you said they were broke. It was the growth of wages for the 90% that fueled the boom. It is amazing what you can do when the money goes to those that spend it in the economy. Since Reagan all that has changed and we need to look at what Reagan did that changed it. I do not want to start taxing high earners, I want them to share more with their workers and very high rates for very high incomes is the encouragement that they need. This chart compares pre-Reagan and post Reagan economies and sows clearly what our problem is.

The Impact of Reagan: Good for the Rich, Bad for Most | An Economic Sense

 

[iguanaman]

This is what happens in a modern economy when social justice narratives and plattitudes become the driving force for the implementation of tax policy

Hollande's 75% 'Supertax' Failure A Blow To Piketty's Economics

Hollande's 75% 'Supertax' Failure A Blow To Piketty's Economics

So France has gone back to their 45% rate on top earners. I'm glad you see that as a good thing. Now we need to do the same here. A 45% rate on ALL income over 1$ million would go a long way to reversing this troubling trend.

 

[SmartCat]

Actually go take a look at what the US effective tax rate as a percentage of gdp has been sinc e. Which is basically this is the country's effective tax rate. You will find that it tends to average about 18%. That's despite huge fluctuations in marginal rates. In fact.. if you were to look at Reagans period.. there are some of the highest US effective tax rates. In 1982 the effective tax rate as a percentage of gdp.. (what we collected vs the nations income).. was about 18.4% of gdp.

In 1950.that rate was about 14% of gdp.


Yet in the 1950's.. the highest marginal tax rate was 70% or higher.

While by 1982.. the highest tax rate had fell to 50%.


Yet... more money as a percentage of gdp was being collected in 1982.

From the last year of World War II to the last year of Jimmy Carter's administration the national debt as a percentage of gross domestic product (GDP) declined from 114% to 32%. It had declined during the wars in Korea and Vietnam because the top tax rate never declined below 70%, and was usually higher. By 1984 national debt as a percentage of GDP had grown to 34%. By the end of Bush II's term it had grown to 62%.

https://www.irs.gov/pub/irs-soi/02inpetr.pdf

National Debt by Year: Compared to GDP and Major Events

 

[jaeger19]

From the last year of World War II to the last year of Jimmy Carter's administration the national debt as a percentage of gross domestic product (GDP) declined from 114% to 32%. It had declined during the wars in Korea and Vietnam because the top tax rate never declined below 70%, and was usually higher. By 1984 national debt as a percentage of GDP had grown to 34%. By the end of Bush II's term it had grown to 62%.

https://www.irs.gov/pub/irs-soi/02inpetr.pdf

National Debt by Year: Compared to GDP and Major Events

yep... and during that time.. the revenue as a percentage of GDP also declined to settle around 18% of gdp. In other words.. the revenue as a percentage of gdp remained stable..or was actually in some periods lower than it has been. Despite the top rate being 70%.

Federal Receipts as Percent of Gross Domestic Product | FRED | St. Louis Fed


The facts point to the fact.. that its been largely spending that has grown the deficit... except for some years during Obama administration when the percentage of revenue per gdp dropped to about 14%... and that's still higher than it was in 1950.

Sorry dude but the evidence is clear that your premise is wrong.

I provided the information.. you just have to believe the facts.

 

[AmNat]

No.. not at all. First.. a corporation only pays taxes AFTER its paid its employees and bonuses. So it doesn't make paying its employees more..more of an investment.

And raising wages does not almost always benefit a company. That's why companies don't just willy nilly raise wages. You said it.. its whether the benefits are worth the money. And if they are..wages go up. If they are not..then wages stay where they are.

High maximum rates definitely won't tip the scales in favor of raising wages. Corporations and individuals do not set wages based on income tax rates.

Raising wages will always yield benefits (better workers) and always have costs (the direct cost of the raise). Raises happen when the benefits outweigh the costs.

Wages and bonuses are tax deductible. If a corporation’s marginal tax rate is 50%, then a $1 raise (for example) has an effective cost of only 50 cents. By reducing the *cost* of a raise or bonus, a high tax rate can often tip the cost-benefit analysis in favor of granting it.

 

[jaeger19]

Raising wages will always yield benefits (better workers) and always have costs (the direct cost of the raise). Raises happen when the benefits outweigh the costs.

.

Yep..so? There is a point where the benefits of the raises don't equal to the cost. Because there IS NO benefit. If I get the workers that do the job excellently at 10 dollar an hour. PAying them 12 dollars an hour.. is not going to gain me anything more. Income taxes don't have anything to do with that. Either way by the way … so the argument that lower income taxes will result in higher wages.. is just as without merit that higher income taxes will result in higher wages.

Wages and bonuses are tax deductible. If a corporation’s marginal tax rate is 50%, then a $1 raise (for example) has an effective cost of only 50 cents. By reducing the *cost* of a raise or bonus, a high tax rate can often tip the cost-benefit analysis in favor of granting it.

Yeah no. It simply doesn't work that way. First..that 1 dollar raise..actually costs more than one dollar.. since now your have to pay another roughly 7.5% on top of that for wage tax. Not to mention extra for unemployment.. and extra for workers comp.

Plus you have an increase in things like disability insurance...since its based on payroll.

So a raise of 1 dollar has a lot more cost than just a dollar. and it doesn't work out that "gee it has a cost of 50cents". Because its money that you have already decided is not going to gain you anything from giving it in a raise.


If a raise.. was going to be of benefit..then you would do it..regardless of the income tax. If its not necessary... then it only adds to cost.

And if the reward after taxes to the corporate stock holders.. is to low to justify the risk..then the corporation will close. There is no sense in owning a company.. if the reward is to little to justify the risk.

 

[SmartCat]

yep... and during that time.. the revenue as a percentage of GDP also declined to settle around 18% of gdp. In other words.. the revenue as a percentage of gdp remained stable..or was actually in some periods lower than it has been. Despite the top rate being 70%.

Federal Receipts as Percent of Gross Domestic Product | FRED | St. Louis Fed


The facts point to the fact.. that its been largely spending that has grown the deficit... except for some years during Obama administration when the percentage of revenue per gdp dropped to about 14%... and that's still higher than it was in 1950.

Sorry dude but the evidence is clear that your premise is wrong.

I provided the information.. you just have to believe the facts.

What I see from your website is that during President Carter's last year in office Federal Receipts as percent of Gross Domestic Product were 18.09788. during Reagan's last year of office these had declined to 17.36367.

Meanwhile military spending and the national debt rose.

 

[jaeger19]

What I see from your website is that during President Carter's last year in office Federal Receipts as percent of Gross Domestic Product were 18.09788. during Reagan's last year of office these had declined to 17.36367.

Meanwhile military spending and the national debt rose.

Bingo... so while their was a HUGE change in the marginal tax rate.. it hardly made a blip on revenue as a percentage of gdp. In fact.. if you were to check in 1978 When carter was president. ... the revenue was 16.99... LESS than Reagans last year.

However.. meanwhile..spending rose.

So yes.. for the most part.. our issue when it comes to deficits have been spending.. and not the marginal tax rate on the highest wage earners.

 

[AmNat]

Yep..so? There is a point where the benefits of the raises don't equal to the cost. Because there IS NO benefit. If I get the workers that do the job excellently at 10 dollar an hour. PAying them 12 dollars an hour.. is not going to gain me anything more. Income taxes don't have anything to do with that. Either way by the way … so the argument that lower income taxes will result in higher wages.. is just as without merit that higher income taxes will result in higher wages.



Yeah no. It simply doesn't work that way. First..that 1 dollar raise..actually costs more than one dollar.. since now your have to pay another roughly 7.5% on top of that for wage tax. Not to mention extra for unemployment.. and extra for workers comp.

Plus you have an increase in things like disability insurance...since its based on payroll.

So a raise of 1 dollar has a lot more cost than just a dollar. and it doesn't work out that "gee it has a cost of 50cents". Because its money that you have already decided is not going to gain you anything from giving it in a raise.


If a raise.. was going to be of benefit..then you would do it..regardless of the income tax. If its not necessary... then it only adds to cost.

And if the reward after taxes to the corporate stock holders.. is to low to justify the risk..then the corporation will close. There is no sense in owning a company.. if the reward is to little to justify the risk.

All of those costs are tax deductible for the business.

So the point, that high marginal rates reduce the effective cost of raises, remains.

 

[gdgyva]

LOL That fallacy has been debunked long ago. Europe was not responsible for our phenomenal GDP growth, like you said they were broke. It was the growth of wages for the 90% that fueled the boom. It is amazing what you can do when the money goes to those that spend it in the economy. Since Reagan all that has changed and we need to look at what Reagan did that changed it. I do not want to start taxing high earners, I want them to share more with their workers and very high rates for very high incomes is the encouragement that they need. This chart compares pre-Reagan and post Reagan economies and sows clearly what our problem is.

The Impact of Reagan: Good for the Rich, Bad for Most | An Economic Sense

dude Reagan didnt change ****.....

Reagan was just in charge when it happened

it would have happened whether a D or an R was president....

it was the computer revolution and the world changed overnight

maybe you dont remember, or arent old enough to be aware....i was in the middle of it

using 17 column ledge pads for accounting...old systems...and needing for that office 22-23 women to run it

two years later....we had lotus 123 spreadsheets and desktop computers and 11 or 12 people in the office

staff was cut in half....and the half that remained all made more money....but the company made boatloads more money

the computer revolution started....automation and technology made jobs easier...faster...and companies invested a LOT of money in training and hardware

and people were downsized because automation took care of a number of slots....and it happened EVERYWHERE

and the owners and managers made tons more money....

that is what happened....not the twisted story you think happened

 

[Checkerboard Strangler]

This is perhaps one of the worst understandings of history I have seen on this forum.

Yes, as long as one ignores the past forty years where NOTHING anyone has tried has ever come close to the standard of living we enjoyed then. Sorry you were born too late and missed it.

 

[SmartCat]

Bingo... so while their was a HUGE change in the marginal tax rate.. it hardly made a blip on revenue as a percentage of gdp. In fact.. if you were to check in 1978 When carter was president. ... the revenue was 16.99... LESS than Reagans last year.

However.. meanwhile..spending rose.

So yes.. for the most part.. our issue when it comes to deficits have been spending.. and not the marginal tax rate on the highest wage earners.

I guess you are opposed to Reagan's increases in the military budget then.

 

[Evilroddy]

I think we're conflating business, generally, with capitalism. There are important distinctions. Some policies, like minimum wages, affect all businesses, but most do not. As noted earlier, taxes don't regulate businesses, they are simply part of the environment in which the business operates - like roads, power, labor market, supply sources and competition. Minimum wages are like that, too. Not all regulation is "of capitalism". Is it "commerce" that is being regulated, or merely the environment in which the commerce is operating that is being regulated?

(Strictly speaking, mom-and-pop businesses and self-employed entrepreneurs are not "capitalists". Capitalism implies a corporate form, where labor and ownership are segregated. In some respects, once a business is large enough to hire labor, it becomes "capitalistic", because that labor is no longer connected to the capital of the business. But, I think it is important to define terms, rather than splitting hairs.)

When government regulates an activity, say oil drilling, it creates rules that are specific to that activity. The more that activity has external impacts unrelated to the actual activity (extracting oil), the more regulation, indeed need for regulation, exists. There are very few regulations that apply to normal business transactions (I sell you a widget for x dollars, price negotiable). There may, however, be a lot of regulations that apply to other business activities.

More, later, I have life activities to attend to.

NWRatCon:

I disagree with your argument that taxes don't regulate businesses/capitalism. Taxes are often used successfully to incentivise some behaviours and to deter other behaviours. Raise capital gains taxes and offer businesses tax breaks for reinvesting declared and undeclared earnings back into new productive capacity and you are regulating capitalism to become more productive and less speculative in its nature. Tax technology used by businesses to displace human labour from labour markets and you regulate capitalism towards labour intensive production and away from capital intensive automation. Tax earned income at lower rates and speculative income at higher rates and you shape capitalism into a more productive direction and away from a more parasitic speculative direction.

Business is the metabolism of capitalism and by smart and well considered state regulation through taxation and other means the state can alter the metabolic pathways of capitalism in order to maximise the benefits to a society, while minimising the harms which come from a market economy system preoccupied with economic efficiency but blind to human and social/societal welfare.

Capitalism is all about wants and greed/enlightened self-interest but needs must sometimes take priority over wants or social upheaval will result.

Cheers.
Evilroddy.

 

[Evilroddy]

as far as corporations, they have shareholders they are beholden to....not their employees

the employees dont have to work there....they can work elsewhere....no one is forcing a gun to the persons head making them accept their wage

it is a decision that the employee makes....and if you think you can run a business better, by all means get in the game....get your friends together and start competing

you will see it isnt as easy as you think it is.....

gdgyva:

Make the employees into shareholders in publicly traded companies and then the problem becomes more solvable. As part of each employee's compensation package mandate that 1-2% of their pay come to them in stock fund shares. Those stocks sit in a stock fund which each employee is a shareholder in. Should an employee quit, be fired, change jobs, etc. they cash out their share in the stock holding fund (not the actual stocks) so that the employees will always have a growing share of the publicly traded company at which they work. Older workers will have a greater share by virtue of their longer time to accumulate shares and heir higher contribution to thevstock fund. Eventually the company will be beholden to the employees, first as minority shareholders and eventually as majority shareholders.

Cheers.
Evilroddy.

 

[gdgyva]

gdgyva:

Make the employees into shareholders in publicly traded companies and then the problem becomes more solvable. As part of each employee's compensation package mandate that 1-2% of their pay come to them in stock fund shares. Those stocks sit in a stock fund which each employee is a shareholder in. Should an employee quit, be fired, change jobs, etc. they cash out their share in the stock holding fund (not the actual stocks) so that the employees will always have a growing share of the publicly traded company at which they work. Older workers will have a greater share by virtue of their longer time to accumulate shares and heir higher contribution to thevstock fund. Eventually the company will be beholden to the employees, first as minority shareholders and eventually as majority shareholders.

Cheers.
Evilroddy.

i love the idea

but like the ENron case, when employees put money into their company and it fails, then that becomes an issue also

i like everyone having a piece of the action...even if it is a minute piece...

employees that can reap some of the profits is a GOOD thing....but are you going to FORCE participation?

i offered a 75% match on a 401k up to 6% and still only had 24% take advantage of that opportunity

you can lead a horse to water....you cant make it drink

 

[jaeger19]

I guess you are opposed to Reagan's increases in the military budget then.

Nice try at a strawman.

 

[NWRatCon]

NWRatCon:

I disagree with your argument that taxes don't regulate businesses/capitalism. Taxes are often used successfully to incentivise some behaviours and to deter other behaviours. Raise capital gains taxes and offer businesses tax breaks for reinvesting declared and undeclared earnings back into new productive capacity and you are regulating capitalism to become more productive and less speculative in its nature. Tax technology used by businesses to displace human labour from labour markets and you regulate capitalism towards labour intensive production and away from capital intensive automation. Tax earned income at lower rates and speculative income at higher rates and you shape capitalism into a more productive direction and away from a more parasitic speculative direction.

Business is the metabolism of capitalism and by smart and well considered state regulation through taxation and other means the state can alter the metabolic pathways of capitalism in order to maximise the benefits to a society, while minimising the harms which come from a market economy system preoccupied with economic efficiency but blind to human and social/societal welfare.

Capitalism is all about wants and greed/enlightened self-interest but needs must sometimes take priority over wants or social upheaval will result.

Cheers.
Evilroddy.

Initially, I'll concede that tax policy can be, and is extensively, used to modify behavior. My previous post was fired off too quickly (irons in the fire, and all that). My point was intended to be that the primary purpose of taxes is to raise revenue, not modify behavior; and second, that base taxes (i.e., those that apply to all business, rather than incentives/disincentives that are given for certain activities) don't/shouldn't factor in to business decisions - they are just the cost of doing business in that particular environment. I admit, my statement was somewhat colored by philosophical viewpoint rather than strict adherence to applicability (and was internally inconsistent to boot). Much of the distortion of the tax code is the result of manipulation to achieve ancillary ends rather than the primary purpose of raising revenue. My PREFERENCE is that taxes be more closely aligned with their primary purpose.

My larger concerns are, I think, like yours. Business activities should be regulated as necessary to achieve societal ends. Taxes are a tool for that purpose (e.g., a carbon tax). In this regard, many businesses aren't regulated enough. Now, before all my capitalist friends start whinging and whining about how "overburdened" businesses are, I call a preemptive "Bull****." You know why? Because business is still operating. Hasn't stopped, in good times or bad, depression or boom, high taxes or low. Business is business - profits will be made.

THIS thread is about efficient regulation. "Less" is usually not "better". The balance should be between societal interests and private interests. Unfortunately, too often, government plays on the same side as the capitalists, so regulation is neither sufficient nor effective. That's what should stop.

 

[jaeger19]

All of those costs are tax deductible for the business.

So the point, that high marginal rates reduce the effective cost of raises, remains.

No it doesn't.

Just because a business cost is tax deductible.. does not mean that it reduces the "effective cost".

Just because a 300,000 dollar combine is tax deductible to my farm.. doesn't mean it doesn't cost 300,000 dollars. If buying that 300,000 dollar combine.. doesn't make me more money than its cost.....then there is no reason to do it... regardless if its tax deductible.

The same with wages. If there is no benefit because I am already paying wages that are high enough to get the employees that I need... then there is no benefit. Period.

If taxes are 50% on my profits. Well then.. by paying my employees more (above what I need to pay to get the employees I need) .. I am getting no benefit..and all I am doing is taking money away from myself. And worse.. I may be setting myself up for problems down the road.. by paying my employees that extra money out of profit (for no reason), and then the next year.. for whatever reason..not having the money available. So then I have to reduce their pay and that causes more problems.

And by taxing my profits at 50%? Well then the reward for all my risk and efforts, may be too low. to continue to be in business...and thus I will close my business. . .

 

[Evilroddy]

Much of the distortion of the tax code is the result of manipulation to achieve ancillary ends rather than the primary purpose of raising revenue. My PREFERENCE is that taxes be more closely aligned with their primary purpose.

My larger concerns are, I think, like yours. Business activities should be regulated as necessary to achieve societal ends. Taxes are a tool for that purpose (e.g., a carbon tax). In this regard, many businesses aren't regulated enough. Now, before all my capitalist friends start whinging and whining about how "overburdened" businesses are, I call a preemptive "Bull****." You know why? Because business is still operating. Hasn't stopped, in good times or bad, depression or boom, high taxes or low. Business is business - profits will be made.

NWRatCon:

I agree with the first point quoted above. Taxing for the purpose of social engineering is too often abused or mishandled.

I also agree with your second point but would just add the notion that taxes should be a "tool of last resort" for achieving societal or social change when no other strategy can be designed or when all other strategies have failed.

Cheers.
Evilroddy.