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  1. gatorray's Avatar
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    #81  
    Treosensei, I admire your passion. I truly do. You share your passion with thoughtful responses and make this discussion worthwhile, even though we disagree. In a perfect world, that person with 50, 60, 70+ million in disposable income would sit down and say, "I don't need this much to live. Let me figure out a way to make my country stronger/better." But, like I said before, I just can't blame others for my financial situation. I drive a 5 year old truck and will be in the market to replace it next year. Nothing wrong with the truck I have, low mileage and runs great. I will not feel guilty when buying the truck. Conversely, I will not justify my purchase by telling myself that I am helping the economy by purchasing the truck. Now replace my income with multiple millions (please!) and swap out a new truck with a new helicopter. Its all relative. I give $1000 or so yearly to various charities. The super-rich, I assume, give a relative amount also.

    I do believe that blaming the rich is based in some jealousy. I cringe when I drive to work looking at some huge McMansions sprouting in my neighborhood and think about how it would be to have a 3 car garage, play rooms galore and a huge pool out back. Jealous...sure, but I don't blame that person for being able to live there because I can't afford something similar.

    Now, when we talk about corrupt CEOs, etc...that's a different story. Look at someone like Mark Cuban who sells a business and becomes super rich. Do we tax him at a higher rate because of the corruption of other super rich? We need more self-responsibility. Blaming others for what you perceive as unfair treatment just gives that other party the power to control your life. I can't let that happen to me.
  2. #82  
    I am going to touch it, the infamous "third rail," social security.

    Of course, it is really not a "tax," it is just an "insurance premium." However, the coercive power of government is used to collect it. That looks like a tax to me. The rate of the premium and the size of the benefits are set by government. That looks like a tax to me.

    The program began with the best of intentions. The size of the premium was tiny, a lot of people paid, and it was collected only on a small portion of one's wages (unless one's wages were small). The benefits were small, paid only to a few, and only for a short program. Sixty-five people paid for every one who received benefits and most of those who received benefits received for only a few months. Most people died before they became eligible for benefits.

    Last year I paid more in social security tax than in the first 35 years I paid the tax. I paid more than I earned in gross income for many years. I had been working for a quarter century before I had any income that was not subject to the tax.

    Like many government programs, this one created its own constituency. In three generations, it has grown from a tiny program to one that threatens to bankrupt the economy in two more generations. It has become a means of transferring wealth from the young, who cannot afford it, to the old who do not need it. It transfers wealth from the poor to the wealthy. It traps the non-working poor in their poverty and taxes the working poor at a confiscatory rate. It makes our labor uncompetitive with labor in the rest of the world and with capital here at home.

    For most people, it is far and away the largest tax that they pay. The portion of their wages subject to the tax now includes almost all of the wages of most payers.

    Originally, it was a tax only on wages, not paid by the self-employed. Today, partly for the purpose of equity, but mostly to produce revenue, those of us who are self-employed pay a tax for the privilege of being so employed. Yes, they really call it the "self-employment" tax.

    In spite of all this, social security is the most popular program in government. It is popular with the beneficiaries, as one might expect, but also with the payers, with the rich and the poor, the old and the young. At least as the questions are posed, polls tell us that most Americans favor no change to the law and oppose any changes.
    Up the next election, my citizens; always the next election.
  3. #83  
    Quote Originally Posted by whmurray View Post
    It makes our labor uncompetitive with labor in the rest of the world and with capital here at home.
    Interesting post. Are you referring to the rate, or the system itself?
    Iago

    "Good name in man and woman, dear my lord, Is the immediate jewel of their souls: Who steals my purse steals trash . . . But he that filches from me my good name Robs me of that which not enriches him
    And makes me poor indeed."


    Criminal: A person with predatory instincts who has not sufficient capital to form a corporation.
    - Howard Scott
  4.    #84  
    "Then penalize those who actually did something wrong here. Blanket generalizations about the rich doesn't work here"

    -gojeda


    I did. I specifically say we have to force the ceos and higher ups within all mortgage houses to pay the highest taxes as a consequence for their roles in this deal. If you reread my recent posts, you'll see that is exactly what I said.

    However I still think we should raise taxes on other multimillionaires - not quite as high as the penalty taxes on these corrupt lender ceos, but higher nonetheless.
  5. #85  
    Quote Originally Posted by Iago View Post
    Interesting post. Are you referring to the rate, or the system itself?
    I am talking about a high payroll tax on the first dollar of labor. The system is upside down.

    For a decade or so I have been against payroll taxes in general. It is not where the money is. We are no longer an economy driven by cheap labor. The oceans no longer protect our labor from foreign competition.

    However, the present rate of almost 15% on the first dollar of labor is craziness. Put yourself in the position of the CEO of IBM, GM, JNJ, or GE. You can create the next job anyplace in the world you like with equal ease. Do you really put it in the US where you pay this rate on the first dollar? Not very likely.

    Let's exempt the first $50K from the payroll tax, and tax everything else only at the rate required to pay this year's benefits. I do not have the resources to do the math but I bet that rate is a lot lower than 15%.
    Up the next election, my citizens; always the next election.
  6. #86  
    Quote Originally Posted by treosensei View Post
    "Then penalize those who actually did something wrong here. Blanket generalizations about the rich doesn't work here"

    -gojeda


    I did. I specifically say we have to force the ceos and higher ups within all mortgage houses to pay the highest taxes as a consequence for their roles in this deal. If you reread my recent posts, you'll see that is exactly what I said.

    However I still think we should raise taxes on other multimillionaires - not quite as high as the penalty taxes on these corrupt lender ceos, but higher nonetheless.
    Punish wrong doers, not classes. Use any system that you like except the tax system. Do not distort the tax system to achieve your personal idea of justice. We call that the rule of men. It breeds inefficiency and corruption.
    Up the next election, my citizens; always the next election.
  7. #87  
    Do not assume the old do not need Social Security benefits, perhaps the wealthy old don't. There are plenty of seniors who are homeless or living in squalor. You probably don't see them in the suburbs but they are plentiful in inner cities.
  8. #88  
    Quote Originally Posted by whmurray View Post
    Do not distort the tax system to achieve your personal idea of justice. We call that the rule of men. It breeds inefficiency and corruption.
    But isn't this exactly what those CEO'S you mention a couple of posts ago, are doing? Why use a carrot? They would only look for another way to subvert the system to their greedy advantage. Id rather put myself in the position of the president and use the stick.
    Iago

    "Good name in man and woman, dear my lord, Is the immediate jewel of their souls: Who steals my purse steals trash . . . But he that filches from me my good name Robs me of that which not enriches him
    And makes me poor indeed."


    Criminal: A person with predatory instincts who has not sufficient capital to form a corporation.
    - Howard Scott
  9. gojeda's Avatar
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    #89  
    Those in the middle class have been known to have their taxes professionally, either by lawyer or done if not for no other reason to reduce their tax liability. I do not think the wealthy necessarily has a monopoly on greed.
  10. #90  
    Quote Originally Posted by detective View Post
    Do not assume the old do not need Social Security benefits, perhaps the wealthy old don't. There are plenty of seniors who are homeless or living in squalor. You probably don't see them in the suburbs but they are plentiful in inner cities.
    Ah! Need!! I do not assume that there are no old people who need SS. However, benefits are not based upon need. They are not based upon contribution. They are based upon participation and income. That is right. I get a larger benefit (here in the burbs) than do inner city poor. Why? Because I made more, much of it exempt from the tax. Did you get that? Not because I need more, not because I contributed more, but because I made more. What kind of equity is that?

    I will not assert that SS does not add to my life-style. In fact, I still pay enough SS tax to cover about half of my benefit. The point is that I do not need it in the sense that the poor need it. That portion of the benefit that I myself did not pay, goes to my beneficiaries. Admittedly, if I did not receive it, I would have to spend more from savings but that is what the savings are there for.

    (This is November. In Novermber, my social security lady writes to me. She says something like, "Mr. Murray, we notice that you are still working and still paying into the system. Therefore, we are going to pay you $50 per month more from now on. Next month, December, we will increase your benefit by enough to make that increase retroactive to the first of the year. This increase is in addition to any cost of living adjustment to which you may be entitled. You will get a separate letter in December about COLA." (She does not mention the other letter that tells me that the increase in what I must pay for Medicare will wipe out these increases.) I s--t you not. That is what the letter will say. I have been getting it for ten years. She really is a very nice lady, don't you agree?)

    We really need to rethink the benefits in the context of what we want the system to be. For now, they are no more rational than the premiums.
    Up the next election, my citizens; always the next election.
  11. #91  
    Quote Originally Posted by gojeda View Post
    Those in the middle class have been known to have their taxes professionally, either by lawyer or done if not for no other reason to reduce their tax liability. I do not think the wealthy necessarily has a monopoly on greed.
    I am middle class and I have my returns done by a professional, not because it reduces my taxes but because he does for hundred of dollars what I could not do for thousands of dollars of my own time.

    (Keep in mind that most Americans, whatever their income, think of themselves as "middle class.")
    Last edited by whmurray; 11/08/2007 at 07:34 PM.
    Up the next election, my citizens; always the next election.
  12. #92  
    Quote Originally Posted by gojeda View Post
    Those in the middle class have been known to have their taxes professionally, either by lawyer or done if not for no other reason to reduce their tax liability. I do not think the wealthy necessarily has a monopoly on greed.
    You’re right, the wealthy just have more of a motive. The average joe doesn’t have shareholders to appease like that CEO.
    Iago

    "Good name in man and woman, dear my lord, Is the immediate jewel of their souls: Who steals my purse steals trash . . . But he that filches from me my good name Robs me of that which not enriches him
    And makes me poor indeed."


    Criminal: A person with predatory instincts who has not sufficient capital to form a corporation.
    - Howard Scott
  13. #93  
    Quote Originally Posted by Iago View Post
    But isn't this exactly what those CEO'S you mention a couple of posts ago, are doing? Why use a carrot? They would only look for another way to subvert the system to their greedy advantage. Id rather put myself in the position of the president and use the stick.
    (I do not accept the premise that CEOs as a class are any more greedy or rapacious than any other class. )

    The CEOs are not in government. While they may exert political influence on the code, they did not write it. They do not coerce. Indeed, they behave the way the system coerces them to behave, however otherwise irrational that behaviour may be.

    (To the extent that they lobby the politicians and bureaucrats that write and admiinister the code, they mostly lobby for the status quo. They generally prefer the code they know, and to which they have adapted, to any alternative.)
    Up the next election, my citizens; always the next election.
  14. #94  
    Quote Originally Posted by whmurray View Post
    I am going to touch it, the infamous "third rail," social security.
    If you REALLY want to get scared, look at Medicare. That is projected to be in much worse financial shape, with no solution in sight (given the medical cost inflation and rising number of old boomers). SS can be fixed with a few relatively minor tweaks. Medicare problems will change our society.

    I am assuming, of course, that the government will honor the "special" bonds that it gives to SSA/Medicare (and then takes the surplus and spends it). Just to pay back these trust funds will require a big increase in tax revenues. In any case, entitlements are our biggest problems. Pork-barrel waste pales in comparison to this coming tsunami.

    Which brings the discussion to a full circle:

    Buffet thinks that it is wrong for someone like him, with the tax structures currently in place, to pay lower rate than his wage-earning office workers.

    Let's face it, the net tax revenues must increase (I don't see any alternative, other than scrapping SS and Medicare, which won't happen). To do this, will you go after more taxes from middle class, or the few (in number) who earn a lot (of total wealth)?

    Like Bonnie and Clyde (or was it some other bank robber?) said: That's where the money is.

    To those who have a Pavlovian response against higher taxes: What's your solution to reducing entitlements? Smaller Government is a pipe dream. You had Republican President and Congress for 6 years and only made the problem worse.

    Here is why you cannot end the entitlements:

    SS: In an ideal world, Govt should have no role in saving for peoples' retirement. But that doesn't happen in real life. Scrap SS and you will increase poverty in the older population. Unless it becomes OK to let Grandpa die on the streets, the society will not accept it.

    Medicare: Unlike SS, which could, under utopian conditions, be phased out as we all start saving more, old people will never be able to get medical care in the marketplace. As soon as they get diabetes or that heart attack, they become money-losers to ANY insurance. Any private plan will have to be forced to not drop the old, or to not raise their rates .. then it might as well be something like Medicare. No amount of savings over a lifetime can pay for one or two hospitalizations or care for chronic diseases like heart disease or cancer.

    Bottom line: If you hate taxes, you haven't seen anything yet. Entitlements, specially Medicare, will get bigger and bigger. We'll have to find some way to pay for it (China will lend us only so much I'd rather that increased tax burden be shifted to those who can afford it.
    --
    Aloke
    Cingular GSM
    Software:Treo650-1.17-CNG
    Firmware:01.51 Hardware:A
  15. #95  
    Quote Originally Posted by whmurray View Post
    (I do not accept the premise that CEOs as a class are any more greedy or rapacious than any other class. )

    The CEOs are not in government. While they may exert political influence on the code, they did not write it. They do not coerce. Indeed, they behave the way the system coerces them to behave, however otherwise irrational that behaviour may be.

    (To the extent that they lobby the politicians and bureaucrats that write and admiinister the code, they mostly lobby for the status quo. They generally prefer the code they know, and to which they have adapted, to any alternative.)
    So the system coerces them to outsource jobs, then makes them take the tax break for doing so? I gotta tell you, with influence like that who needs to write? Writing it is the menial work left for a lackey congress.
    Iago

    "Good name in man and woman, dear my lord, Is the immediate jewel of their souls: Who steals my purse steals trash . . . But he that filches from me my good name Robs me of that which not enriches him
    And makes me poor indeed."


    Criminal: A person with predatory instincts who has not sufficient capital to form a corporation.
    - Howard Scott
  16. gojeda's Avatar
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    #96  
    Quote Originally Posted by Iago View Post
    Youre right, the wealthy just have more of a motive.
    I think a persuasive argument can be made that $1000 means more to Mrs. Smith in Peoria than $1,000,000 means to someone like, for example, ARod.

    The average joe doesnt have shareholders to appease like that CEO.
    But the average joe does have their wallets, mortgages, and hungry mouths to appease - all without the luxuxy of a golden parachute to cushion the fall.
  17. gojeda's Avatar
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    #97  
    Quote Originally Posted by Iago View Post
    So the system coerces them to outsource jobs,
    I'd say its market forces...

    then makes them take the tax break for doing so?
    Let us not forget, companies that outsource still do create wealth in this country (e.g. shareholders).
  18. gatorray's Avatar
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    #98  
    Quote Originally Posted by gojeda View Post
    Let us not forget, companies that outsource still do create wealth in this country (e.g. shareholders).
    In my don't know nuthin' bout no bizness stuff mind, this is what scares me. Shareholder value is only on paper. When the wind shifts direction, the stock market can move up or down taking "money" from one and giving it to another. One's value, or worth, can go poof just like that.

    Got worse when everyone decided they were a day trader and started incorporating words like "shorting" in their vocabulary.
  19. gojeda's Avatar
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    #99  
    Quote Originally Posted by gatorray View Post
    In my don't know nuthin' bout no bizness stuff mind, this is what scares me. Shareholder value is only on paper. When the wind shifts direction, the stock market can move up or down taking "money" from one and giving it to another. One's value, or worth, can go poof just like that.

    Got worse when everyone decided they were a day trader and started incorporating words like "shorting" in their vocabulary.
    You are right. When someone owns stock, any profit (and losses) are not realzed until the stock is sold. Then again, profits and losses are not realized regarding most things people own - until they are sold again.
  20. #100  
    Quote Originally Posted by gatorray View Post
    In my don't know nuthin' bout no bizness stuff mind, this is what scares me. Shareholder value is only on paper. When the wind shifts direction, the stock market can move up or down taking "money" from one and giving it to another. One's value, or worth, can go poof just like that.

    Got worse when everyone decided they were a day trader and started incorporating words like "shorting" in their vocabulary.
    Let me see if I can alay your fear. Fear is your enemy and time is your friend.

    I Do not know where you live but I live in New York City. I can see and touch "shareholder value." It is in the form of all the businesses, buildings, and infrastructure in the city. All of it was built with the savings and investment of home owners, insurance policy holders, pension plan participants, bond purchasers, bank depositers, and yes, those of us who invest in stocks. Those are real assets, they produce income, and short of a disaster that neither of us wants to survive, they will always be there.

    The "market" exists to make those assets liquid, that is, to insure that on any given day of your choice, at some price, you can sell your share. What goes up and down is not the real value of the asset but the market price at which one can convert it to cash today.

    The fear mongers will tell you that the asset disappears with a drop in price. Not true. No matter what happens in the market, the sewer is still there. It is still producing value. The bond holders/savers/investors are still being paid their interest.

    The fear mongers say do not put your retirement savings in the stock market. It could be down when you have to retire. Again not true. What is true is that the market value of my stocks is down 1% on the day, 5% for the week, but up 10% ytd. I am retired today but I do not need all the money today. I will withdraw the money the same way that I invested it, a little bit at a time over what I hope will be another twenty-five years. My plan is to spend it or give it away before I die. So far, no matter what I do it, it keeps growing faster than I am taking it out.

    Let me give you two examples. CocaCola stock pays a dividend of $1.36 per share per year. I am willing to sell you a share of that stock at the same price anyone else will pay me, about $61.50. At that price your dividend yield would be about 2.2%, less than the bank but more than Starbucks. I bought that stock in 1995 for $35- a share. My yield on my price is 3.8%. They have been paying it to me for 22 years. In addition, my stock is worth $30 more than I paid for it. It gets better. I have already taken my money off the table. That is, as the price of CocaCola has gone up, I have sold enough to recover my initial investment. But CocaCola has been paying dividends regularly for a hundred years. They are very likely to continue to pay me that dividend for the next twenty five years. The dividend may double in that time and the price of the stock may also double. Now you know why Warren Buffett is in CocaCola. But CocaCola is a "value" stock, low risk but steady income.

    I have Apple stock that I bought for $12 in 2004 and which is selling at the moment for $170.00. Of course, last week it sold for $190 but in August for $140-. Apple is a "growth" stock. It pays no dividend and its price is very volatile. More fun than CocaCola but not as sure.

    What I am trying to demonsttrate is that if you save and invest for twenty five years and withdraw over the same period, it is a no-brainer. You will have ups and downs in the short run but over the long run, you would have to work at it to lose.

    In 1986, I retired from IBM. IBM had sponsored a 401K program a few years before I retired. When I retired, I had invested $17,700 and IBM had put in an additional $3200, say it was worth $20K. YTD the account has earned $15K and the balance is $190K. It does go up and down but if I withdraw it all smoothly over the next twenty five years I will have gotten more than $400K for my $20K of principal. Time is on my side.
    Up the next election, my citizens; always the next election.
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