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Taxing the rich won't solve the problem
Taxing the rich won't solve the problem and this is why.
http://www.huffingtonpost.com/peter..._b_1131020.html
Good laugh. Money is always doing something, at the zero bound?? Really?? Govt's that can print their own currency don't rely on debt markets to finance their expenditures!
These types of articles is an example of why free speech is a bad thing. If one wants to justify not taxing the rich, this garbage article was not the way to go.
Quote from Covertibility:
Good laugh. Money is always doing something, at the zero bound?? Really?? Govt's that can print their own currency don't rely on debt markets to finance their expenditures!
These types of articles is an example of why free speech is a bad thing. If one wants to justify not taxing the rich, this garbage article was not the way to go.
Quote from Covertibility:
If one wants to justify not taxing the rich, this garbage article was not the way to go.
Quote from Random.Capital:
I think you may have missed the point of the article. Seems to me its saying that because money is always doing something, you should make sure it does something more valuable in Plan B than it was doing in Plan A before switching plans.
The basic message seems to be "think about how you spend *first*".
Good grief.
No "once-off" anything is going to solve a chronic structural problem.
Quote from Random.Capital:
Good grief.
No "once-off" anything is going to solve a chronic structural problem.
Quote from Scataphagos:
True, but doesn't "tax the rich" have an appealing class-warfare kind of ring to it?
article has errors and contradiction
1) "Savings in banks provide investment into the economy, when banks lend the funds deposited. This lending enables businesses to borrow money to start up, pay staff and cover overheads. It also enables homebuyers to arrange mortgages and it works as short term credit"
This is not how banking works, one does not need to save for another to borrow. Banks create money when they loan it. Deposits are created by loans, loans are not created by deposits.
2) The next 3 points peter makes are contradictory taking money out of assets and reducing asset prices are bad for the economy, but apparently money held in cash is better left alone to keep asset prices down??? well which is it
The Conclusion claims that private money always leads to productive capital. Ignoring that all stock and housing bubbles are done through private capital creation. The last 30 years the financial sector which doesn't produce any wealth only financial claims on wealth has subverted the productive economy almost entirely, Brittan is even more advanced in it's financial parasitism.A heavy Tax on financial speculation and lowering the tax on production and consumption will force money from derivatives and other non productive finance to production.
"Even when not in crisis, the financial sector harms the real economy. First, it is vastly too large. The finance sector is an intermediary -- essentially a "middleman". Like all middlemen, it should be as small as possible, while still being capable of accomplishing its mission. Otherwise it is inherently parasitical. Unfortunately, it is now vastly larger than necessary, dwarfing the real economy it is supposed to serve. Forty years ago, our real economy grew better with a financial sector that received one-twentieth as large a percentage of total profits (2%) than does the current financial sector (40%). The minimum measure of how much damage the bloated, grossly over-compensated finance sector causes to the real economy is this massive increase in the share of total national income wasted through the finance sector's parasitism." Professor William Black
Since the vast majority of wealth was and still is gained in the financial sector it is at the expense of the productive economy and should be taxed into production.
But of course the real problem is compound interest which is not compatible with economic growth.
From antiquity to the Romans when a new ruler would come to power he would start with a debt jubilee. Not for the sake of a gift, but the realization that debt tends to grow faster than the means of payment. Compound interest accumulates at a geometric (as in 2,4,8,16)or exponential rate. Which means that economic growth must also occur at a geometric rate in order to generate enough wealth to avoid mass default (depression).But historically economies have usually grown at arithmetic (1,2,3,4) or a linear rate. The exceptions being advancements that revolutionized the economy, steam, electricity, etc. Trying to extract exponential wealth out of a system that averages linear growth isn't possible. The difference must be made up through inflation to avoid mass default. Inflexibility on part of the roman oligarchy to reset the debts brought about the dark ages.This is why austerity never works revenue goes down and interest keeps accumulating.
“The greatest shortcoming of the human race is our inability to understand the exponential function.”
Albert A. Bartlett, physicist
Interesting that all talk is on GOV debt when private sector debt is far worse. A real economist would address private debt and it's effect
The odd question, why is it when top tax rate was at 90% in the 1950s you had a burgeoning middle class, and one income families.
Quote from KINGOFSHORTS:
The odd question, why is it when top tax rate was at 90% in the 1950s you had a burgeoning middle class, and one income families.
Quote from morganist:
By taxing the rich there will be an impact on the poor. The money they have is not cash it is in investments, assets. If they were to sell them the value of them would fall. This would be devastating to the stock market and shares. Damaging pension income among other things. I wish it was this simple but it will not work.
Quote from antitrust:
article has errors and contradiction
1) "Savings in banks provide investment into the economy, when banks lend the funds deposited. This lending enables businesses to borrow money to start up, pay staff and cover overheads. It also enables homebuyers to arrange mortgages and it works as short term credit"
This is not how banking works, one does not need to save for another to borrow. Banks create money when they loan it. Deposits are created by loans, loans are not created by deposits.
2) The next 3 points peter makes are contradictory taking money out of assets and reducing asset prices are bad for the economy, but apparently money held in cash is better left alone to keep asset prices down??? well which is it
The Conclusion claims that private money always leads to productive capital. Ignoring that all stock and housing bubbles are done through private capital creation. The last 30 years the financial sector which doesn't produce any wealth only financial claims on wealth has subverted the productive economy almost entirely, Brittan is even more advanced in it's financial parasitism.A heavy Tax on financial speculation and lowering the tax on production and consumption will force money from derivatives and other non productive finance to production.
"Even when not in crisis, the financial sector harms the real economy. First, it is vastly too large. The finance sector is an intermediary -- essentially a "middleman". Like all middlemen, it should be as small as possible, while still being capable of accomplishing its mission. Otherwise it is inherently parasitical. Unfortunately, it is now vastly larger than necessary, dwarfing the real economy it is supposed to serve. Forty years ago, our real economy grew better with a financial sector that received one-twentieth as large a percentage of total profits (2%) than does the current financial sector (40%). The minimum measure of how much damage the bloated, grossly over-compensated finance sector causes to the real economy is this massive increase in the share of total national income wasted through the finance sector's parasitism." Professor William Black
Since the vast majority of wealth was and still is gained in the financial sector it is at the expense of the productive economy and should be taxed into production.
But of course the real problem is compound interest which is not compatible with economic growth.
From antiquity to the Romans when a new ruler would come to power he would start with a debt jubilee. Not for the sake of a gift, but the realization that debt tends to grow faster than the means of payment. Compound interest accumulates at a geometric (as in 2,4,8,16)or exponential rate. Which means that economic growth must also occur at a geometric rate in order to generate enough wealth to avoid mass default (depression).But historically economies have usually grown at arithmetic (1,2,3,4) or a linear rate. The exceptions being advancements that revolutionized the economy, steam, electricity, etc. Trying to extract exponential wealth out of a system that averages linear growth isn't possible. The difference must be made up through inflation to avoid mass default. Inflexibility on part of the roman oligarchy to reset the debts brought about the dark ages.This is why austerity never works revenue goes down and interest keeps accumulating.
“The greatest shortcoming of the human race is our inability to understand the exponential function.”
Albert A. Bartlett, physicist
Interesting that all talk is on GOV debt when private sector debt is far worse. A real economist would address private debt and it's effect
Quote from antitrust:
i didn't know poor people had pensions. Also a temporary drop in the stock market would be a small sacrifice for higher overall wages
Good job Peter Morgan..
-------------------------
The money they have in shares?
Share ownership is another investment favoured by the rich. They receive dividends and potential increases in share value as incentive to buy shares. Although a huge amount of money is invested in shares, making the rich sell their shares to pay tax will have a negative impact on the economy. If shares were sold at the magnitude that would be required to pay off public sector debt, the share price would plummet. By owning shares on a huge scale, the rich provide an artificial value to share prices. This would no longer exist if they were forced to sell them on the level needed to balance the national debt. This would have a catastrophic effect on private sector pensions, which are largely funded by share investment. It could push thousands, perhaps millions of pensioners into poverty.
-----------------------
Excellent point. As a matter of fact we don't even need the rich to sell shares, the boomers are selling out everyday Thank our lucky stars Helicopter Ben is propping up the market.
Quote from nutmeg:
Good job Peter Morgan..
-------------------------
The money they have in shares?
Share ownership is another investment favoured by the rich. They receive dividends and potential increases in share value as incentive to buy shares. Although a huge amount of money is invested in shares, making the rich sell their shares to pay tax will have a negative impact on the economy. If shares were sold at the magnitude that would be required to pay off public sector debt, the share price would plummet. By owning shares on a huge scale, the rich provide an artificial value to share prices. This would no longer exist if they were forced to sell them on the level needed to balance the national debt. This would have a catastrophic effect on private sector pensions, which are largely funded by share investment. It could push thousands, perhaps millions of pensioners into poverty.
-----------------------
Excellent point. As a matter of fact we don't even need the rich to sell shares, the boomers are selling out everyday Thank our lucky stars Helicopter Ben is propping up the market.
This article seems to be written for people who have very poor to no understanding of how economics and the markets actually work. The author's ideas and explanations are phrased in the most simple of terms but then tries to use those terms to answer a complex political question. While I tend to agree with the overall conclusion in that money is better served in the hands of private citizens versus the government, his way of explaining things makes me want to roll my eyes and not take him seriously. Does anyone actually believe that the stock market will crash because the "rich" have to sell shares in order to pay taxes? How would this actually work? An increase in most of the tax classes would not cause mass asset sales b/c
payroll taxes: the money would be deducted from their paycheck
capital gains taxes: the shares would have already been sold in the market in order to realize their gain
taxes on dividends: the investor already has the cash in hand via the dividend
Besides there is no self inflated prices for stocks due to rich people holding them. Savvy investors buy stocks based on valuations of the company, so if people dump shares and the price gets too low then other investors will snatch them up. As far as the other points, I highly doubt anyone would be selling their house or their car due to higher taxes.
Quote from PlinytheTrader:
Does anyone actually believe that the stock market will crash because the "rich" have to sell shares in order to pay taxes? How would this actually work? An increase in most of the tax classes would not cause mass asset sales b/c
Very true, I wrote that without reading the second article you linked to that was in favor of taxing the rich. That article was even more absurd but was written so the everyday person could understand so it would only make sense for Peter Morgan to respond in like manner. It just feels misleading to phrase things that are easy to understand for a reader but then cite specifics that actually aren't necessarily true. I really hope there aren't many people out there who read the article in support of taxing the rich who now think it is a good idea to start a new economy centered around "green and sustainable" living, with the only costs being a 20% haircut on the rich.
Quote from PlinytheTrader:
Very true, I wrote that without reading the second article you linked to that was in favor of taxing the rich. That article was even more absurd but was written so the everyday person could understand so it would only make sense for Peter Morgan to respond in like manner. It just feels misleading to phrase things that are easy to understand for a reader but then cite specifics that actually aren't necessarily true. I really hope there aren't many people out there who read the article in support of taxing the rich who now think it is a good idea to start a new economy centered around "green and sustainable" living, with the only costs being a 20% haircut on the rich.
Those who want "fairness" , do they think the Government is the best way to distribute capital.
Do not got to the Government if you want "fairness" distribution of capital.
Quote from morganist:
You do realise that it was a 20% tax on all their assets not just one years income?
This is why it was so absurd.
Quote from Covertibility:
Good laugh. Money is always doing something, at the zero bound?? Really?? Govt's that can print their own currency don't rely on debt markets to finance their expenditures!
These types of articles is an example of why free speech is a bad thing. If one wants to justify not taxing the rich, this garbage article was not the way to go.
Quote from Covertibility:
Good laugh. Money is always doing something, at the zero bound?? Really?? Govt's that can print their own currency don't rely on debt markets to finance their expenditures!
These types of articles is an example of why free speech is a bad thing. If one wants to justify not taxing the rich, this garbage article was not the way to go.
I hate to write but the responses here are hurrrible.
Let's start with banking.
The poster, antitrust, is correct in that banks don't create loans from deposits. Even the idea that an expansion in reserves will create a boom in lending is wrong. The response by the OP to "antitrust" with "you don't understand fractional reserve banking" illustrates that the OP doesn't understand how lending works.
The rich have in shares.
This makes absolutely no sense. The rich have made a bulk of their wealth from financial investments over time. Raising taxes on the rich would mean higher income taxes which would be independent of their current financial holdings. They're not going to sell assets to help pay the additional liability produced by a higher income tax. A higher tax rate would either mean they reduce spending or contribute less to savings but not liquidate assets. The idea of even entertaining the thought of the rich moving out of the one vehicle that got them to where they are is absurd. The marginal propensity to consume for the rich is quite low compared to the other participants in the economy. Even if their spending slowed considerably, it probably wouldn't even be noticed in the overall economy. The rich are not the backbone to consumer spending.
The money in cash.
I don't even understand this argument. If we call these past few years a period where "money is held in cash" and other periods a time when "money is not held in cash" then the following 2 charts should make something clear.
So if we're in cash, why is inflation roughly at the same level now as it has been for the past 15 years? If expectations changed and money were to leave the zero bound investments, you can bet the Fed will move to remove it pretty damn fast.
I'll have a conclusion later, even some comments for the West Afghanistanians.
Quote from Covertibility:
I hate to write but the responses here are hurrrible.
Let's start with banking.
The poster, antitrust, is correct in that banks don't create loans from deposits. Even the idea that an expansion in reserves will create a boom in lending is wrong. The response by the OP to "antitrust" with "you don't understand fractional reserve banking" illustrates that the OP doesn't understand how lending works.
The rich have in shares.
This makes absolutely no sense. The rich have made a bulk of their wealth from financial investments over time. Raising taxes on the rich would mean higher income taxes which would be independent of their current financial holdings. They're not going to sell assets to help pay the additional liability produced by a higher income tax. A higher tax rate would either mean they reduce spending or contribute less to savings but not liquidate assets. The idea of even entertaining the thought of the rich moving out of the one vehicle that got them to where they are is absurd. The marginal propensity to consume for the rich is quite low compared to the other participants in the economy. Even if their spending slowed considerably, it probably wouldn't even be noticed in the overall economy. The rich are not the backbone to consumer spending.
The money in cash.
I don't even understand this argument. If we call these past few years a period where "money is held in cash" and other periods a time when "money is not held in cash" then the following 2 charts should make something clear.
So if we're in cash, why is inflation roughly at the same level now as it has been for the past 15 years? If expectations changed and money were to leave the zero bound investments, you can bet the Fed will move to remove it pretty damn fast.
I'll have a conclusion later, even some comments for the West Afghanistanians.
Quote from PlinytheTrader:
Yes I do realize that the article suggests the one time 20% tax idea which is absurd to begin with, but most other pundits look to increased tax rates overall on the wealthy. They want to use people with money as a get out of jail free card. Of course if they actually did wipe away their debt then what is going to stop the government from racking it back up again? The answer, nothing.
The problem with using these official government charts is that changes over time have been obliterated by changing the methods used to calculate the various statistics. If you want to draw any conclusions from these relationships you have to use a constant method of computing the data used to make the charts Convertibility posted above. Below I have given a link to John Williams Web site where you can find the GDP, money supply and inflation charts versus time using a constant method of computation (The blue lines) versus the data produced by changing the method of computation at convenient points, as the government has done (the red line). I would suggest using only the blue lines when trying to draw conclusions using these charts. The SGS notation for the blue lines stands for "shadow government statistics" which is the terminology that Williams applies to statistics computed by a time invariant method of computation. In these charts he uses the method of computation used by the government in 1980.
Note that the United States is currently experiencing approximately double digit inflation, assuming you use food and energy, not the 2.5-5% figure the government would have you believe. The advantages to the Treasury of defining inflation away are self-evident.
http://www.shadowstats.com/alternate_data
I found this entire thread a bit strained in its arguments. What the government was recently taking about was a small change in the tax rate at the upper end of a few percent to take it back to the Clinton era rates. This would be a minor perturbation that would not have any discernible direct effect on "job creation" or assets of the wealthy, but would be helpful in reducing future inflation by a small amount, assuming spending is held in check. Nothing on balance is saved by minor reductions in the tax rate when their is a deficit, it is only a matter of do you want to pay now by direct taxation, or pay more later by indirect taxation spread over a longer time. I've noticed we usually select, or I should say, our politicians select on our behalf, the pay more later approach.
The real answer to deficits for the United states lies in bringing its military and medical spending into line with that of other developed nations while at the same time rebuilding a middle class with money in their pockets-- that of course implies that there will have to be some jobs and productivity in proportion to population going forward. I doubt if any of these things will happen in my lifetime.
And to add one more comment along the lines of tax policy: I am wondering why were social security payroll taxes decreased recently when the Trust actuaries have made it clear that a 2 % increase is needed to account for changing demographics going forward. This "payroll tax reduction" seems rather absurd, unless the goal is to steal indirectly from social security to support the discretionary budget -- read here, if you're so inclined, military industrial complex -- and move one step further toward Wall Street's ultimate goal of getting rid of social security altogether.
Quote from piezoe:
I found this entire thread a bit strained in its arguments. What the government was recently taking about was a small change in the tax rate at the upper end of a few percent to take it back to the Clinton era rates. This would be a minor perturbation that would not have any discernible direct effect on "job creation" or assets of the wealthy, but would be helpful in reducing future inflation by a small amount, assuming spending is held in check.
Quote from morganist:
One final time the original article discussed was a direct response to the below article. In which a flat tax of 20% on all assets was proposed in the UK. The US economy has nothing to do with it. Still the arguments still stand. Huge tax rises for anyone will have a detrimental consequence on the economy.
http://www.huffingtonpost.co.uk/pet..._b_1108497.html
Quote from Scataphagos:
What we NEED, for starters... 20% across the board SPENDING CUTS!!
Quote from morganist:
"... If you fund things through printing money or QE then you will see an equal devaluation from inflation later on. The government that gets funding from money creation is in terminal decline.
Quote from Scataphagos:
So, why are we doing EXACTLY THIS in the USA? Is it because the concept is so complicated that politicos don't grasp it?
NO! They know... but they also know (1) the "easy" rout is "QE, print money, inflation, and currency debasement", and (2) sticky consequences are postponed... hopefully until at least the next election. And as there is always a "next election around the corner", nothing ever gets done... until the collapse.
World financial history is rife with this story... ALWAYS ENDS UP THE SAME!!
Quote from morganist:
I guess the only way to economy stability is to have people in power that benefit from success like a dynasty. Royal families?
Quote from Scataphagos:
Well, no. Europeans fled to America to get away from "Royal Family Rule" in its various forms.
Unfortunately over the last 100 years, America has morphed into a de facto ruling oligarchy/police state ... not unlike in substance from what our forefathers fled.
For our economy to flourish once again, we need a MAJOR transformation.. which would include significantly reducing the influence and power of the ruling oligarchy... and of course, no ruler or king is going to give up power willingly... will only be accomplished by revolution or military coup.
Quote from morganist:
What about a theocracy?
Quote from Scataphagos:
Whoa Buckeroo! I can't answer that question. I'm an athiest. I'm in the camp of "ALL religion is artificial, phony and false"...
Quote from morganist:
Wow even Scientology?
Quote from Scataphagos:
L. Ron Hubbard and Tom Cruise can go pound sand, for all I care..
Quote from morganist:
I bet I could get you to belive in God.
Quote from Scataphagos:
I bet you couldn't.
Quote from morganist:
I bet I could!
Quote from morganist:
"...That is when you see the full ability of the human being and the depth to your own existence.
Quote from Scataphagos:
I believe the ONLY value to one's life is to perhaps pass on a beneficial mutation to offspring.
What does Thomas what's-his-name say about that?
Quote from morganist:
He would say what is it that created the need or the desire or the energy to create an environment when you need to pass on a beneficial mutation to offspring. It is called the the reason for efficient cause or the third way.
Quote from Scataphagos:
The Darwinist would say, "random chance"..
Quote from morganist:
No you have missed the point. Why do we even live in a environment where there is any purpose at all. You say there is purpose to pass on the beneficial mutations to a later generation. Why is there any purpose at all.
Quote from Scataphagos:
I never said anything about "purpose".. I said "value".. and even the "potential for value" is random chance. First, you have to have a mutation. (Few of us do.. we live out our lives of no consequence, then die.) Then, it needs to be beneficial. Then, it needs to be passed on and sustained to be spread to other generations and gain wide-spread adoption... a tall task... yet, a few make it.
There is absolutely no "purpose" at all to human life.
Quote from morganist:
Why do we even live in a environment where there is any purpose at all.
Quote from morganist:
What is it that enables appreciation of value. There has to be something in you that appreciates the concept of value what created that what made you capable of appreciating these things and what kick started the need for something to have value and to develop to something. That suggests a form of engineering a form of progression and refinement that indicates there is a purpose a need and a designer.
Quote from Random.Capital:
I didn't know that we did.
Quote from morganist:
What is it that enables appreciation of value. There has to be something in you that appreciates the concept of value what created that what made you capable of appreciating these things and what kick started the need for something to have value and to develop to something. That suggests a form of engineering a form of progression and refinement that indicates there is a purpose a need and a designer.
Quote from Scataphagos:
Value need not be "recognize"... it's something which IS... recognized or not.
Value is not up to me to "appreciate"...
"Engineering", "purpose", "designer"... all false.
Quote from Scataphagos:
Value need not be "recognize"... it's something which IS... recognized or not.
Value is not up to me to "appreciate"...
"Engineering", "purpose", "designer"... all false.
What IS real, at this time... I gotta go take a leak and feed my dogs...
Taxing the rich is a great idea. The only problem is ALL the members of the congress are part of the 1%.
Quote from morganist:
One final time the original article discussed was a direct response to the below article. In which a flat tax of 20% on all assets was proposed in the UK. The US economy has nothing to do with it. Still the arguments still stand. Huge tax rises for anyone will have a detrimental consequence on the economy.
http://www.huffingtonpost.co.uk/pet..._b_1108497.html
Quote from morganist:
If you reproduce to create a better gene pool that is a purpose.
Or why live at all.
Quote from piezoe:
Not only did I find the arguments in this thread a bit strained, but i found the arguments in both the Tatchell and Morgan articles in the Huffy Puffy Post to be a bit strained also. If the Morgan article was to be a response to Tatchell, might it have been better to begin it with a synopsis of Tatchell's, one-off, 20% tax proposal and then proceed to rebut the proposal bit by bit? Had this been done, the intended context would have been clear. In the context of the recent tax proposals in the U.S., however, the Morgan article seems to be nothing more than a poorly argued rant against raising taxes on the wealthy.
You've made it clear that the Morgan article is a response to Tatchell, and I assume by extension it is not to be considered a rebuke of recent U.S. proposals to up the tax rate on the rich. Very well then. I'm inclined to think it is not much better in the context of the Tatchell article either.
There is a silver lining here though: at least the rather bizarre, but innovative, Tatchell article was entertaining.
Quote from Random.Capital:
Towards what end?
That is exactly the question.
We can either accept God (or something God-like), or we can accept that there really is no purpose to existence (which many people do, and are comfortable with).
There are no other viable choices.
Quote from failed_trad3r:
Taxing the rich is a great idea. The only problem is ALL the members of the congress are part of the 1%.
Quote from morganist:
No I did note it originally in fact I wrote it as a direct response to the Tatchell article. The huff post gave me my own blog and decided to post it internationally instead of in the UK with out the link to the Tatchell paper. If there is a bias it is the huff post. The arguments are generic though. I have no agenda but have to point out there will be detrimental consequences of the tax increase on anyone.
Quote from Biog:
http://www.youtube.com/watch_popup?...be_gdata_player
Quote from antitrust:
Interesting that all talk is on GOV debt when private sector debt is far worse. A real economist would address private debt and it's effect
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