Ultra-rich asking for a tax increase?

[sixthcutuan]

The US, UK and EU economies are screaming out for a DECENT stimulus package right now (Just did a 40 page presentation to the Bank of England today, tiring stuff).

As much as we love them I'm afraid tax cut's aren't going to be very useful with the problems right now. Savings ratio is high and is looking like its going to only get higher (Low consumer confidence, currently at a low of -33.1 on the GfK scale in the UK) and this means that if you pass a tax cut, a large amount of the money will be saved instead of consumed (Low multiplier effect). A stimulus package of improving infrastructure (aka building shit) and other investments in the country should help to improve the economic situation as well as improve future standings (Therefore debt could be paid off in the future by money from investments in infrastructure). I was really pleased when Obama got in to power because he was willing to put a stimulus in and wasn't going to just muddle through like Bush did. Unfortunately he did end up Muddling through and the stimulus package was not as effective as it could have been. I don't know as much about the US economy as the UK economy however I would definitely recommend another £75bn of quantitative easing in the UK.

- Taxes should not be raised because growth needs to be stimulated.
- Taxes should not be lowered because the revenue lost by the government could have been spent on infrastructure investments.

Let's wait till the economy is fixed and then decide on taxes.

 

[xmcp123]

The US, UK and EU economies are screaming out for a DECENT stimulus package right now (Just did a 40 page presentation to the Bank of England today, tiring stuff).

As much as we love them I'm afraid tax cut's aren't going to be very useful with the problems right now. Savings ratio is high and is looking like its going to only get higher (Low consumer confidence, currently at a low of -33.1 on the GfK scale in the UK) and this means that if you pass a tax cut, a large amount of the money will be saved instead of consumed (Low multiplier effect). A stimulus package of improving infrastructure (aka building shit) and other investments in the country should help to improve the economic situation as well as improve future standings (Therefore debt could be paid off in the future by money from investments in infrastructure). I was really pleased when Obama got in to power because he was willing to put a stimulus in and wasn't going to just muddle through like Bush did. Unfortunately he did end up Muddling through and the stimulus package was not as effective as it could have been. I don't know as much about the US economy as the UK economy however I would definitely recommend another £75bn of quantitative easing in the UK.

- Taxes should not be raised because growth needs to be stimulated.
- Taxes should not be lowered because the revenue lost by the government could have been spent on infrastructure investments.

Let's wait till the economy is fixed and then decide on taxes.

Ok. I've heard this so many times it makes me want to scream. You seem informed though, so I'm hoping for a fight. Don't let me down!

This is not the 1930s. We need to have some original thoughts and stop masturbating to the economic strategies of era that is dead and gone.

Back when the strategy you're discussing actually worked it worked because building a road meant 3,000 people standing alongside the road with shovels building the road by hand.
That is not how it is anymore. You're using machines(probably designed/manufactured elsewhere) and a handful of people.

Projects like infrastructure do not scale evenly. A large part of the cost is supplies and equipment. So the smaller the number of people required for each individual project, the more you need to multiply the expenses to get the same number of people employed in the 1930s. This means the amount you of money that goes into each worker's pocket is much lower than the average expense per worker, especially when compared with the large construction projects of the early 1900s.
Tax cuts aren't going to fix our economy, but infrastructure based "stimulus packages" are for the mathematically illiterate in my opinion. We have too many people and projects that require too few people at too high of an expense. You will not succeed in getting a serious number of people employed with what our government can afford.

 

[megatabbers]

A stimulus package of improving infrastructure (aka building shit) and other investments in the country should help to improve the economic situation as well as improve future standings (Therefore debt could be paid off in the future by money from investments in infrastructure).

While this seems like a good idea on the surface, it really isn't due to the broken window fallacy: The Broken Window Fallacy

Unless, that infrastructure was productive (i.e. threw off more money in future profits than it took to build; of course, the market is always better at predicting profitability than central planning).

Otherwise, you're just putting people to work. But work doesn't necessarily equal production (as defined above). Otherwise, we could hire half the country to dig holes and the other half to fill them up.

Everyone has a job, makes money, and gets taxed to provide "revenue" to the government. Obviously, that would lead us nowhere.

 

[sixthcutuan]

Ok. I've heard this so many times it makes me want to scream. You seem informed though, so I'm hoping for a fight. Don't let me down!

This is not the 1930s. We need to have some original thoughts and stop masturbating to the economic strategies of era that is dead and gone.

I would argue that every economic theory is flawed however just because a theory is incorrect does not mean it cannot be a general model for certain cases. For instance, many of James Clerk Maxwell's equations are now deemed incorrect however they were still used for the designing of phone radials using the cases (not a metal bit sticking out). Yes it was wrong but it gave an accurate enough representation and using Quantum mechanics it would have taken years. So my argument is you just have to be careful in economics because every theory is flawed in different ways.

Back when the strategy you're discussing actually worked it worked because building a road meant 3,000 people standing alongside the road with shovels building the road by hand.
That is not how it is anymore. You're using machines(probably designed/manufactured elsewhere) and a handful of people.

I can see what you mean however I personally believe it goes a stage further. For example, America builds a high speed train service (I'm not suggesting this however I did notice US trains are terrible).

- Government spends a lot of money on materials, technology (Unsure what the US is like however the UK has a very strong science sector. High-tech engineering often comes from more developed countries so I am sure there is at least a reasonable amount in the US) and on workers. You are correct in saying that with the new technology today, not as many workers are needed.
- Companies supplying materials experience growth, multiplier effect down their chain starts.
- Technology / science sector experiences growth, multiplier effect down their chain also starts.
- People get off the dole, start working and start consuming more.
- The higher consumption has a positive effect on the areas they are working in. Multiplier effect starts.

Most importantly:
- The US is now able to transport people and goods far faster. Mobility of labour is increased because of lower commuting time and therefore open jobs are filled and a more flexible pool of labour is available.
- The reduction in transportation costs also means that business opportunities open up.
- I'm sure you can think of plenty of other benefits.

It could also massively help consumer confidence and could get people spending again. I know over here (UK) the savings ratio is up 7% compared to Q2 2008.

An example over here shows how tax cuts and stimulus packages have effected the economy (One could argue it isn't ceteris paribus however it's still a useful comparison).

Labour party spends money and we get growth of over 1%.
Conservative party cuts public sector hugely and we dip back under despite tax cuts.

I'm not making a right wing vs left wing argument here because they are both wrong. I'm just pointing out that the best way to get the economy moving is with some kind of stimulus currently.

Projects like infrastructure do not scale evenly. A large part of the cost is supplies and equipment. So the smaller the number of people required for each individual project, the more you need to multiply the expenses to get the same number of people employed in the 1930s. This means the amount you of money that goes into each worker's pocket is much lower than the average expense per worker, especially when compared with the large construction projects of the early 1900s.
Tax cuts aren't going to fix our economy, but infrastructure based "stimulus packages" are for the mathematically illiterate in my opinion. We have too many people and projects that require too few people at too high of an expense. You will not succeed in getting a serious number of people employed with what our government can afford.

Governments could probably afford more if less money is wasted on useless tax cuts and useless stimulus packages (+war).

Out of interest, what is your view on the solution for the economy?

 

[sixthcutuan]

While this seems like a good idea on the surface, it really isn't due to the broken window fallacy: The Broken Window Fallacy

Unless, that infrastructure was productive (i.e. threw off more money in future profits than it took to build; of course, the market is always better at predicting profitability than central planning).

Otherwise, you're just putting people to work. But work doesn't necessarily equal production (as defined above). Otherwise, we could hire half the country to dig holes and the other half to fill them up.

Everyone has a job, makes money, and gets taxed to provide "revenue" to the government. Obviously, that would lead us nowhere.

Sorry, I did not make myself clear enough. I absolutely agree, the investment should be targeting future growth and in total, getting more money than the sum that was spent (obviously).

Your point about digging and filling up holes is exactly the point i'm making about many of the stimulus packages currently being put through in the US and other countries, they aren't investments, they are just a short-term attempt at fixing the economy and growing some consumer confidence (Which since they have failed, they have actually done the opposite).

 

[lschmidt]

To OP:

If one wealthy individual donates, that would do almost nothing. If a shitload of wealthy individuals donate, now you have something. How do you get a shitload of wealthy people to donate? You tax them.

 

[xmcp123]

I can see what you mean however I personally believe it goes a stage further. For example, America builds a high speed train service (I'm not suggesting this however I did notice US trains are terrible).

- Government spends a lot of money on materials, technology (Unsure what the US is like however the UK has a very strong science sector. High-tech engineering often comes from more developed countries so I am sure there is at least a reasonable amount in the US) and on workers. You are correct in saying that with the new technology today, not as many workers are needed.
- Companies supplying materials experience growth, multiplier effect down their chain starts.
- Technology / science sector experiences growth, multiplier effect down their chain also starts.
- People get off the dole, start working and start consuming more.
- The higher consumption has a positive effect on the areas they are working in. Multiplier effect starts.

Most importantly this is not "creating jobs". This is taking capital that was already at companies, already eligible to be used to create jobs taxing it away from them, then sending it back. It reduces potential jobs elsewhere and just moves them to another industry.

Secondly: What you're describing is nothing more than a corporate giveaway to those who are "in" with the government enough to get the contracts. I'm not sure how it is in the UK, but here in the US you can practically guarantee the bids will be astronomical compared to the actual cost, and the vast majority of it will not end up in the hands of the workers you're looking to get the money to.

Most importantly:
- The US is now able to transport people and goods far faster. Mobility of labour is increased because of lower commuting time and therefore open jobs are filled and a more flexible pool of labour is available.

Almost everyone here has cars and everywhere has freeways. The exception is people in urban areas that have busses and cabs. It would be a different way of transporting people, but I don't really see the potential for increase. Our population is very much mobile.

It could also massively help consumer confidence and could get people spending again. I know over here (UK) the savings ratio is up 7% compared to Q2 2008.

That seems like it would be very, very hard to ascribe to the trains. There are a lot of things that factor into consumer confidence and savings, and it's practically impossible to credit one variable.

I'm not making a right wing vs left wing argument here because they are both wrong.

I agree entirely.

Out of interest, what is your view on the solution for the economy?

I tend a bit to the Libertarian side, so interfering is not exactly "my thing". But if I had to design a system to replace a stimulus package, this would be it.

1. Increase job mobility(important one) - A lot of the jobs that have left aren't coming back. So we're left with a population that has experience in something that is useless now. We have of jobs that require expensive licenses and permits(taxi drivers, interior designer, mortuary work, florists, you name it). Though it would be difficult in the US, eliminating these licenses could allow those whose jobs are gone greater flexibility in the types of jobs they can apply to. This will also make all of the things in question cheaper: it's unforgivable that you can easily pay $50+ for a taxi in a country where almost everyone(including the unemployed) have cars.
2. Make registering a corporation easy/free - The tax revenue you can get from a single successful business dwarfs the the money you can get from things like corporation registrations. So eliminate them. Make it easy for someone to create a company. This also includes eliminating rules that force businesses to file things like "meeting minutes" and other arbitrary requirements.
   
3. Create an Immigration policy attractive to startups and entrepreneurs - If you graduate from college here(outside of Liberal Arts), you should have either a work visa or citizenship with your diploma. If you can employ citizens here, you should have your visa/citizenship in a week or two, not years. We already allow workers in if they can get employed here, why not do it the other way around?
   
4. Create a tiered Regulation system for big and small business - A lot of regulations that exist are supported by the industries they regulate because they kill competition and startups in the industry. So to combat this, make it so most regulations apply only businesses making over $xx,000,000 per year. The scope of the damage they can do is higher and their ability to stomach the costs associated with regulations is higher. Let smaller companies have the ability to innovate in a less restricted manner.
   
5. Create a Tiered Tax System for Businesses - The first couple years of a startup, reduce or eliminate taxes entirely. The amount of money the government can get in the long run if they are allowed to prosper is higher than they're going to get if the early taxes crush or weaken the business. Additionally, taxes on small business actually do cost jobs(due to more limited funds). Big business has the money in the bank, and taxes will rarely impact their ability to hire if needed.
   
6. Patent Reform - No software patents. The tech industry is renowned for building off of other technologies. It's layers on top of layers on top of layers of other people's technology and ideas. This is the nature of it. The patent system runs completely contrary to how software/tech evolves in the real world. I should not have to worry about whether or not my checkout has 1 click(Amazon patent) or if the method in which I render a sphere is patented.

...I could probably go on, but those are what I thought of off the top of my head.

 

[sraza]

“Discontent for money is just a trick of the rich to keep the poor without it.“ - Michael Corleone

 

[el toddler]

I think if you tax the 1% more they may be less likely to invest. Think about it in affiliate marketing terms. If you could get 50% ROI on all of your projects wouldn't you be pouring in more, stimulating a return for yourself, stimulating consumers to spend, creating more money, putting it in circulation. If you could only turn a 25% profit for instance from your projects your return and contributions would probably be a lot less. Affiliates stimulate just like investors stimulate.

When I think about this I think about all the pharma companies, tech companies, and what have yous that get backed by venture capital which do instantly start creating jobs. If venture capital was less available or came in slower many entrepreneurs and innovators may not be able to create their dream company.

I like the Peter Schiff videos on all of these topics - I think he makes good points: [ame=http://www.youtube.com/watch?v=Y28yFxLydzU]Peter Schiff nails Wall Street Protesters - YouTube[/ame]

The government already mismanages all of our money anyways... with more revenue from taxable income what exactly would they do?

I think the problems with the economy are:
- too much tax and interference from the government. It limits us on what we can spend on our businesses and how much we can invest
- our jobs going to third world countries. If we could get rid of the minimum wage maybe we could bring jobs back here. Would citizens be willing to work at lower wages? possibly.
- Giving away too much money in foreign aid
- Entitlement programs
- Cost of unnecessary wars
- The cost of oil as OPEC rapes us

 

[sixthcutuan]

Most importantly this is not "creating jobs". This is taking capital that was already at companies, already eligible to be used to create jobs taxing it away from them, then sending it back. It reduces potential jobs elsewhere and just moves them to another industry.

Secondly: What you're describing is nothing more than a corporate giveaway to those who are "in" with the government enough to get the contracts. I'm not sure how it is in the UK, but here in the US you can practically guarantee the bids will be astronomical compared to the actual cost, and the vast majority of it will not end up in the hands of the workers you're looking to get the money to.

Actually I do not want taxes to go up either. This would be funded through borrowing with the aim of getting more back from the benefits. It would be the equivalent of a company borrowing money to invest. I agree with what you are saying about the workers however this might be because we have a higher minimum wage in the uk and this benefits the workers. Maybe the government should work to their word and target SME's for controlling work on investments.

Almost everyone here has cars and everywhere has freeways. The exception is people in urban areas that have busses and cabs. It would be a different way of transporting people, but I don't really see the potential for increase. Our population is very much mobile.

This was just a general example however high speed trains similar to the maglevs in Japan would make a huge difference. They reach a maximum speed of 580 km/h which i'm sure you would agree, certainly affects mobility of labour (Which you state later as an important factor).

That seems like it would be very, very hard to ascribe to the trains. There are a lot of things that factor into consumer confidence and savings, and it's practically impossible to credit one variable.

What does correlate with consumer confidence and savings is growth. Give the country growth and a solid future plan with investments and the money will come streaming in.

I tend a bit to the Libertarian side, so interfering is not exactly "my thing". But if I had to design a system to replace a stimulus package, this would be it.

1. Increase job mobility(important one) - A lot of the jobs that have left aren't coming back. So we're left with a population that has experience in something that is useless now. We have of jobs that require expensive licenses and permits(taxi drivers, interior designer, mortuary work, florists, you name it). Though it would be difficult in the US, eliminating these licenses could allow those whose jobs are gone greater flexibility in the types of jobs they can apply to. This will also make all of the things in question cheaper: it's unforgivable that you can easily pay $50+ for a taxi in a country where almost everyone(including the unemployed) have cars.
2. Make registering a corporation easy/free - The tax revenue you can get from a single successful business dwarfs the the money you can get from things like corporation registrations. So eliminate them. Make it easy for someone to create a company. This also includes eliminating rules that force businesses to file things like "meeting minutes" and other arbitrary requirements.
   
3. Create an Immigration policy attractive to startups and entrepreneurs - If you graduate from college here(outside of Liberal Arts), you should have either a work visa or citizenship with your diploma. If you can employ citizens here, you should have your visa/citizenship in a week or two, not years. We already allow workers in if they can get employed here, why not do it the other way around?
   
4. Create a tiered Regulation system for big and small business - A lot of regulations that exist are supported by the industries they regulate because they kill competition and startups in the industry. So to combat this, make it so most regulations apply only businesses making over $xx,000,000 per year. The scope of the damage they can do is higher and their ability to stomach the costs associated with regulations is higher. Let smaller companies have the ability to innovate in a less restricted manner.
   
5. Create a Tiered Tax System for Businesses - The first couple years of a startup, reduce or eliminate taxes entirely. The amount of money the government can get in the long run if they are allowed to prosper is higher than they're going to get if the early taxes crush or weaken the business. Additionally, taxes on small business actually do cost jobs(due to more limited funds). Big business has the money in the bank, and taxes will rarely impact their ability to hire if needed.
   
6. Patent Reform - No software patents. The tech industry is renowned for building off of other technologies. It's layers on top of layers on top of layers of other people's technology and ideas. This is the nature of it. The patent system runs completely contrary to how software/tech evolves in the real world. I should not have to worry about whether or not my checkout has 1 click(Amazon patent) or if the method in which I render a sphere is patented.

...I could probably go on, but those are what I thought of off the top of my head.

Completely agree with 1 and 5 and partially with 2, 3 and 4. I believe there should be a very small fee on corporation registration ($1 or so) just to make sure at least the payment method checks out (deters a couple of criminals a year). I kind of agree with the tiered system, small companies SHOULD be taxed LESS. Perhaps I would go a step further and say corporation taxes should become more means tested. The main failure with the free market system and deregulation is monopolies, taxing these monopolies more and taxing competitors less will create more competition in the market and keep prices lower for the consumers. Patent reform I see as very unlikely however because very few software companies would develop software if it could be stolen easily.

 

[infoslob]

Buffet has pledged to donate like 90% of his wealth to charities.

Fuck him.

Obama blocks the oil pipeline (punts the decision til 2013) and Burlington-Northern (Warren Buffett) all of a sudden has more business than ever, to the direct detriment of every man, woman, and child in the United States.

Canada shrugs because they will be shipping the oil to China from Vancouver.

But at least we have Solyndra. I can't believe people still defend this president.

All he cares about is unions and Wall Street executives like Buffett (and Jon Corzine).

 

[Pb.com]

Everyone needs to ignored buffet. He just likes to stir shit up. Anyone with half of a standard IQ should be able to see he is an anomaly to just about every standard.

 

[. Jack .]

why don't these whiny ultra rich types just march over to the government and start donating.

in the mean time the poor need to pay their fair share as well. if they can't afford to, they can downgrade from a dumpy apartment / trailer park to a cardboard box.