Taxes and the deficit
This morning in his Monday column Paul Krugman discussed the need to raise taxes to
deal with the long run structural federal deficit.
You can read the column at Economist’s view without worrying about the Times’ pay wall.
http://economistsview.typepad.com/economistsview/.
Every time any one proposes higher taxes Larry Kudlow and the right wing noise machine shouts to the rooftops that it is a tax the rich scam and that there are not enough wealthy people to raise the necessary revenues.
But as usual with these claims maybe we should actually look at the data before we accept this meme. Since 1980 the top 5% of family’s share of national income has increased from 15% to 21% — the percent is derived from the five year moving average centered on 1980 and 2007. The last year that this data is available is 2009
Source: Bureau of the Census/Haver Analytics
If we taxed away half of this increased share of national income it would generate a sum roughly equal to 3% of GDP, or about the CBO estimate of the long run structural deficit.
Moreover, it would still leave the top 5% of families with some 15% of national income, a larger share than was ever recorded before 1993.
Please make this clear:
are you saying if we taxed “away” half of the 6% of national income increase in
in the income of the rich, that would be a tax increase of 3% of national income or about 14% of the income of the rich. added to what i think is their current average effective tax of 17%, that would raise their average effective tax to about 31%.
is that what you are saying?
it’s a bit higher than what i was recommending… an increase in the taxes on income over 100k of 3%. but my tax would have been on a broader base.
i think a case can be made for the higher tax… even your higher higher tax… as a “national debt emergency” surtax. but i don’t think it’s good for us to follow a “tax someone else” psychology.
it would be good if we could get this into the realm of real political discussion and action.
and not just academic moral and jaw exercise.
Based on my number crunching using Saez’s data, 15% is the critical point for the top 1%. At this point or below, the 99% can stay ahead of personal consumption. At this point and above, they go under.
This crossing has happened in 1941 when the top went below 15%. It happened again in 1996 when the top crossed above 15%. It was above 15% when the economy dove in 1938 and we know it was above 15% when the depression hit staying that way until 1941.
But but but but but…..
how will the uberman continue to perform so magnificently!
“…but i don’t think it’s good for us to follow a “tax someone else” psychology.” coberly
I don’t think it’s good, or smart, for us to follow a “make their case” approach to tax issues. Increasing the higher marginal rates is not so much a “tax someone else” approach as it is a “make them pay their fair share” approach. If so much income is goiong to one small group of tax payers there is no alternative, but to tax those fortunate few a higher rate. They benefit to a far greater extent from our economic structure. The government assures the continuation of that economy and protects that structure. How is it that paying a share of tax which is commensurate to the share of the income pie that one is provided is in any way inappropriate or unfair. Let the rich make their own case. They have plenty of retainers to assist them in so doing and they have had their way for a very long time now. how else would the economy have become so disproportionately bifurcated?
You cannot simply say that the claim that there are too few rich, to get enough ADDITIONAL tax from, to make a difference, is false. You can debate what a “difference” might need to be, but just visualizing an incom/tax chart makes it clear.
Plot a graph where ‘X’ is the population percentile, and ‘Y’ is the income… draw the income line.. draw the current tax under that line… pick you marginal rate increase and then plot that line between the two.. calculate area made up between the ‘old’ and ‘new’ tax lines..
Even with marginal rates raised to 50% … you net aprox. $90B additional revenue. Which would align with estimates that the Bush tax-cuts cost** between $700B and $1T over a decade.
**(I still have a problem with the idea that all money is the government’s, and what we end up keeping is a cost to the government)
What is $90B in the face of a $1,600B deficit ? Less than 6% of it. And that doesn’t even allow for any negative effect on the economy. So yes.. there are too few rich. By definition of being 2% of the population, they’re not much more than 2,000,000 households. A tax increase of any meaning, is gonna have to be a tax increase on everyone.. including doing away with the earned income credits.
But even THAT would only dent the deficit, let alone get into the debt. The real pain will still have to come from massive spending cuts. After the 50% marginal rate, we’re still looking at a spending-cut/tax-increase ratio of 18:1, in order to balance the budget.. and THAT relies on a perilous notion that NONE of the new taxes will end up spent (don’t hold your breath).. or that none of the massive cutting will open new spending avenues (don’t even think about holding your breath).
Lots of odd assumtions, Jack.. Starting with assuming that rich people are just rich by fortunate circumstances… as if they didn’t earn their way there.
And even if we use this thread’s author’s assertion (no reason not to) that the top 5% garner 21% of all income, you surely know that that 21% of all income pays 50% of all federal income tax. I’d suggest that that IS their fair share.
As for “bifurcated“, I’d ask what is BOUND to happen, when high productivity is taxed, and low productivity is subsidized, how you end up with anything OTHER than fewer at the top and more at the bottom.. ?
Q: Why do these studies always focus on 1980 (or why it’s comparing apples and oranges):
A: Tax shelters
Tax shelters in the 1970s put the entire U.S. tax system at risk. The wealthiest families used specific loopholes to move/delay money from reportable income into vehicles designed just for tax avoidance. By removing the loopholes and lowering individual rates in the 80s, incentives to create these structures were largely removed.
My D.C. friends are telling me that the next great individual tax shelter boom is about to begin. Lobbyists have pretty much guaranteed that certain exploitable gaps in the IRS code will remain no matter what happens with the tax rates in the next few years.
http://www.taxhistory.org/thp/readings.nsf/ArtWeb/CC7054D5ADE17F64852571A20068ED13?OpenDocument
Of course it is 50% of INCOME taxes, not total taxes, and income taxes have been too low. They have been subsidized by the payroll tax to the tune of hundreds of billions per year, resulting in the $2.5+ Trillion SS trust fund.A trust fund that the righht now tells us is nothing but “worrthless IOUs”.
An analysis that is based on only one type of tax is deeply flawed. I can honestly state that practicing Mormons pay no taxes (the only taxes I’m considering are excize taxes on booze and smokes). Logically how is that any different from the “poor rich they pay sooo much of the income taxes” argument?
Agree 95% … I appreciate and understand progressive taxation. The more you earn, not only the more you pay, but the more you pay as a percentage. I’m ahard-right conservative who frimly supports progressive taxation..I just think that it’s already more than progressive enough.
But to your point.. it’s the regressive taxation that hits low-incomers the hardest.. like gas-tax, sales tax, sin taxes, etc. A rich guy doesn’t care if his 1986 Australian Cabernet doubles in cost via taxation.. but the family guy struggling along get’s whalloped by alchohol/beer tax.. same for expensive cigars vs a pack of smokes..
But it’s really the gas/energy taxation that needs re-doing..
Payroll taxes are kind moot.. they’ve been mutated into general taxation.
Jack
I am all for taxing the rich their fair share… and more… a share that represents something like the marginal value of money when you have more of it than you can spend on anything other than buying congressmen.
what i am not for is the middle class saying “poor us” don’t tax US.
and i am not for taxing the rich to pay for Social Security. I don’t want to live in my old age on handouts from the rich.
and jack,
you don’t actually end up taxing the rich by yelling for tax increases on the rich. all you do is get nonsense from the likes of Rwe about how the rich are what make the economy work.
get rid of the idea of taxes as instruments of social justice or fine tuning the economy, and just talk about paying for the things we decide we need government to do, and then finding the money to pay for it.
it’s not a question of making the rich’s case for them. it’s a question of reframing the “debate” so you have a chance of actually accomplishing what you need to accomplish.
“I am all for taxing the rich their fair share… and more… a share that represents something like the marginal value of money when you have more of it than you can spend on anything other than buying congressmen“
There’s a reasonable, critcal-thinking logic to this idea.. but geez, what would constitute more than one can spend ? Would a rich person have be careful about how much their residence is worth, so that they area “allowed” to have a vacation home ?
Do you have to sell a car or two, before being “allowed” to buy a boat or airplane?.. else face a special levy next April 15th ?
That’s a mighty big gray area.. and it’s creepy to think a representative government would have that level of control over the citizens.
“and i am not for taxing the rich to pay for Social Security. I don’t want to live in my old age on handouts from the rich.”
Agreed, even though I could see doing away with payroll tax, and replacing it with higher, overall income-tax rates.. But yeah.. that takes SS off it’s moral, per-person insurance status high-ground, right into the vulnerable arena of welfare.
“you don’t actually end up taxing the rich by yelling for tax increases on the rich. all you do is get nonsense from the likes of Rwe about how the rich are what make the economy work.”
I’ve never said any such thing.. I HAVE said that outside of actual socialism, you HAVE to have accumulated wealth for business/manufacturing to exist.
This main post skips right over the point that Krugman apparently endorsed the the “People’s Budget” from the Congressional Progressive Caucus.
Krugman, Thoma, and spencer failed to identify the recommended taxation rates proposed by the Congressional Progressive Caucus.
What’s so difficult about providing the recommended taxation rates? Or identifying other taxation rates if that is what spencer is recommending?
This main post skips right over the point that Krugman apparently endorsed the “People’s Budget” from the Congressional Progressive Caucus.
Krugman, Thoma, and spencer failed to identify the recommended taxation rates proposed by the Congressional Progressive Caucus.
What’s so difficult about providing the recommended taxation rates? Or identifying other taxation rates if that is what spencer is recommending?
I have not worked out the numbers, but there are other ways of effectively raiing taxes on the top end without raising marginal tax rates. The simplest and most effective way would be to but a cap on the major tax deductions like mortgage interest, employer health insurance, state & local taxes and charity.
Personally, the way I would like to go is to eliminate the corporate tax and treat all income the same. That means sharply raising the tax rate on capital gains and dividends.
First, you guys seem to have no idea of what rich is all about. How much do you earn? Does it meet your daily needs in a decent manner? If its $100,000 and you’re living a comfortable life, now imagine what five or ten times that income adds to that level of comfort. The ppoint is that when one talks about higher marginal rates on really big income one is not talking about depriving someone of life’s luxuries. What a wealthy individual spends his/her money on is not the point. That’s where the income is. There is no other place to look for additional tax revenue. Social security revenue has nothing to do with the need to increase tax revenue in order to meet the demands of the general budget. Whether it is to pay debt service on T-Bills held by China, the Trust Fund or individuals or to pay for defense spending, highways and road maintenance, space shuttles, or what ever, the government is running out of sources. Tax the income that is there to be taxed and allow the truly rich to revel in their patriotic duty to support their government, the government that supports them so well.
Cross posted from open thread: Please explain why people who get income from renting money (in whatever form we call it capital gains) should pay less taxes on that income than people who rent their hands and minds.
Income is income. I have never understood why people lucky enough to get theirs without what the rest of us call labor should get a break from the tax man.
Okay full disclosure I probably won’t ever understand that. But it might be entertaining if somebody tried.
Another odd assumption.. as if the level of income that makes one “truly rich“, just “happens“, and is somehow subject to near arbitrary, situational taxation.
Forget about how much of it comes from genuine abilty and hard work (and why anyoyne would exert those efforts if put’s them into this strange, new tax bracket).. ponder how much might have come from aggressive investing.. investing that will no longer happen when the upside risk of such investing is taxed well beyong risking the downside ? .. or even what would happen to ANY of that wealth-creation, if one cannot keep enough of this “truly rich” income, to build up a cash buffer that enables the investing, or even the dumping of one’s life-work into a new business.
If you’re going say that I “have no idea about what being rich is all about” (odd again, because I am) .. I’m going to say that you have no idea of what becoming (and staying) “rich” entails, from the potential “rich” guy.
As for the “government that supports me so well“, the best you got there is a chicken/egg argument about who supports whom via infra-structure and civil structure. I’d say that those in the infamous top 2% take on the support of government role, and that those in the bottom 50% are supported by the government. As the OP states himself.. we pay more than twice as much per dollar earned, than the rest of the population… and an infinately larger percent than the 40% of the population paying no federal income tax (or even negative income tax ala earned income credit)..
I have no beef with the guy who chooses to just enough to get by, and to some extent, no problem with picking up his tax-burden slack. But I do have a beef with class-envy gobbly-goop.
I referenced that above.. but you’re doing some odd assuming too. The money that’s used for investment income, DID come from mental/physical labor. If you apply progressive taxation to income borne of risk-taking.. the upside outweighs the downside, and the investing just won’t happen.
oops.. I meant.. the downside outweighs the upside..
That sounds like an opinion to me. The taxman doesn’t have any way to figure out whether the original investment came from savings on rental of labor or the lotto. Or the womb lotto. Isn’t the downside covered by legal deductions allowed on losses against other gains?
You still haven’t explained why that income deserves special cheaper treatment. If anything you’ve only exposed how the investment came from people who managed to rent their labor for more than they needed to live (or consume).
Swing and a miss!
“The taxman doesn’t have any way to figure out whether the original investment came from savings on rental of labor or the lotto.”
Ummm.. yeah he does.. all of it is well documented via the library of tax-laws. Your W2s, or 1099s, and the like, spell out specically, to the penny, where the money comes from (strike one).
“You still haven’t explained why that income deserves special cheaper treatment. If anything you’ve only exposed how the investment came from people who managed to rent their labor for more than they needed to live (or consume)”.
That’s redundant.. there’s no expose’ .. that one person collects more for their rented labor, than another person is a given, if one accumulates enough wealth, for income-bearing investment. (strike two).
Goona go for strike three ?
I’ll try to type it slower. Why is that income subject to favorable treatment? Income is income.
You have not made the case. I suspect (still) there isn’t one to be made.
” Isn’t the downside covered by legal deductions allowed on losses against other gains?”
Sorry.. I overlooked that statement..
Yes, for the sake of a blog discussion.. a capital loss can offset a capital gain; but thats irrelevant when your talking about upside/downside of investing. If you have numerous investments, you’ll be taxed on the net between the winner/losers.
If the net is a loss, it can be a deduction on your “normal” taxable income, but not a tax credit for the whole amount of the loss.
The case is: capital gains taxed as progressively as “normal income”, would lower the upside gain against the downside loss… making the investment foolish.
In other words (also typing slowly)… if the up/down of an investment, is a symetrical; +10% / -10%; and you “win” hitting well into the upside netting 5% .. Your 5% on say, $100,000 = $5,000.
The difference between taxing that at 15%, or a marginal rate of 28% is $650.. taking a good bit of 1% away from the upside.
Throw in that 5% returns are considered excellent these days, and that up/down scales re rarely symetrical, and add a zero or two to the numbers.. you get to where putting money at risk as opposed to insured, cash accounts.. becomes foolhardy
Nice numbers. Let’s see what the really mean.
In 2009 the top 5% paid $625b. Now you want to add 3% of GDP to that ($450b). So the tax on the top 5% would come to about 1.2b in 2011 dollars under your plan.
Now a question for you. What is the expected total revenue from all personal income taxes? The answer is about 1.2T. So under your plan the top 5% will pay about 100% of all taxes. That would be up from the 58% they currently pay.
Want to kill every liberal agenda outthere including SS and Medicare? Make the top 5% pay 100% of the taxes. You folks seem to forget that with taxes also comes power.
Not buying it. Sounds to me like you want the guy lucky enough to rent his money for bigger profit to get an additional lucky break from the US treasury. If he wants low risk he gets lousy returns. Anybody earning more than 1% on cash these days is probably thinking himself a genius.
krasting
or just add the new taxes on top of the old. i have no problem with the poorish paying their fair share.
i do have a problem with “arithmetic” that makes assumptions it is not aware of.
Rwe
glad you understand the need for SS to be a per person premium and not just a share of a general tax.
as for the other point, i think you took a figure of speech and imagined i was making a specific policy recommendation. trust me, when I am dictator no means tester will arrive at your residence to determine how much you can possibly spend.
Rwe
you illustrate what is wrong with “tax the rich” as a moral crusade.
i at least only propose to tax the rich enough to pay for what they want the government to buy for them.
i hope that is not too tricky a concept.
I have done the numbers, but there are other ways to raise tax receipts without raising rates. For example the major deductions–mortgage interest, state & local taxes, charity, health insurance–could be capped so that the deductions drop off sharply after a certain level.
My own personal preference is to eliminate the corporate tax and quit treating dividend and capital gains different from other forms of income.
The lower bound of the 5% of family income is about $200,000 or about double the $100,00 figure you are using.
maybe this is not actually clear enough.
suppose after deciding to pay for the army, and enough “social welfare” to keep future soldiers and workers alive if we can’t think of an industrial and educational policy that will find useful work for them to do.. we arrive at, say, a trillion dollar “budget.”
then the problem is do we pay for it by dividing the trillion dollars by a hundred million people, and tax everyone ten thousand dollars? or do we try a “flat” tax… that is the same percent on all income… about 15% of 7 Trillion Dollars… or do we say hmmm, the rich guy has a million dollars left after taxes and this poor guy has only ten thousand left after taxes, maybe we could graduate the tax a little so the little guy gets to keep 12 thousand after taxes and the rich guy has to struggle on 900,000 after taxes?
or do we play a game and tax the little guy 10% and the rich guy 20% but write loopholes into the law so that the rich guy pays nothing if he has a smart enough tax lawyer, and the rest of us make up the difference.
i’m not recommending any solution here, but i am suggesting there is a sane way to think about it, and a way that keeps everyone shouting at each other about what is “fair.”
Rwe
apparently believes that entrepreneurs just won’t bother themselves if some of the income that comes from fifteen minutes of talking turkey over a power lunch gets taxed away.
Yeah I’d love to test that theory heh.
spencer
if that was a reply to me, you didn’t understand what i was saying.
i was asking if i had got your figures right.
as for the 100k in my “plan” i picked that number for a reason, not because it was the lower bound of some group i wanted to tax. specifically it was the money that was NOT taxed for social security so it seemed “reasonable” to me in a poetic sort of way to tax that to pay back the money borrowed FROM social security. and that makes it a much bigger tax base than the one you were talking about, so the money needed to pay down the deficit comes in from more people at a lower rate. 3% on lots of people instead of 14% on the richest people.
i suspect that does not satisfy your moral need to tax only the richest. but it does satisfy my need to pay down the deficit without all the bellyaching “don’t tax me, tax that other guy over there.”
“quit treating dividend and capital gains different from other forms of income. “
I’m with ya there. Not saying it puts you in good company heh. And full disclosure I actually do have (teensy) dividend and cap gains income. I don’t see why it should get taxed at the lower rate – I consider myself lucky enough to have the money to invest.
More disclosure – for the pitiful amount of dividend and cap gains income I get I’d be happy just to simplify my tax returns. Call it all income and be done with it.
To answer the capital gains point, the current regime is a very flawed attempt to correct for inflation. If there were no relief one would pay tax on inflation in value of stocks, plus the real gain. Now if you want to move to a much longer time to go to 15% that solves the problem, i.e. the standard rate for 2 years then something like a 10% cut in the rate for 5 years until the rate is 1/2 the rate charged on other income. Just for Example I have some stocks that carry a 1972 basis, in their current value there is a good bit of inflation. Given that we fixed the tax rates to avoid taxing inflation should not we do that for capital gains?
Of course if you use software the complexity of the system is not a problem, just enter the data and the program does the work, including putting it in the right bucket. If one either does not use a software program or a paid advisor its a problem. (For simple returns some tax programs do it for free).
i do have a problem with “arithmetic” that makes assumptions it is not aware of.
What do you mean by that?
The proposal here is for an increase in taxes by 70% for the top 5%. What planet are you from? Nothing like has a remote chance of happening.
But say it did, what would be the consequence? Your death tax would lower the deficit from 1.6T to 1.15 T.
You can’t fill this bucket with taxes. You folks know that.
Not when inflation is non existent. We’ve been in a fairly low inflation regime for a longish time now. The rentier classes have had their party now it’s time to pay the bills. They appear to be the ones all wringing their hands over the deficit after all.
My whine over simplifying the tax return shouldn’t affect the actual fairness argument. I don’t think it’s fair my income from renting my money is half what I pay to rent my hands and brain. I don’t think that’s fair for anybody else either.
Income is income!
sorry meant tax on my income above. Not income obviously.
Oh God….
Let’s all marvel at the value added by investment banking.
Lyle
without thinking about it too hard, i would guess that if capital gains were taxes as ordinary income, the “profits” would adjust themselves to the new “net income” reality.
Lets say, for example, I bought a house for twenty thousand and wanted to sell it ten years later and asked forty thousand. if i had to pay the tax on the twenty thousand gain … say three thousand.. i might just ask for forty three thousand. and if the inflation rate was 7%, i’d come out about even… that is no gain, no loss, even after taxes.
now if i can’t get forty three thousand, well that’s the risk you take with “investment.”
what rwe will tell you is that in that case no one will buy a house.
somehow this seems unlikely to me.
What caused the jump in the early ’90s?
krasting
i have to say i did not follow your last example of speculative arithmetic.
the assumption you made in your first example was that taxes on the lower 95% would be canceled because the tax raise on the upper 5% made up the difference in revenues. you did not consider that the taxes on the lower 95% would be held constant and the extra revenue from the tax increase on the upper 5% would be used to, say, pay down the deficit and calm the bond market.
generally it is not worth trying to follow your arithmetic, because you are always leaving important things out and inventing imaginary ones to take their place.
btw
i don’t know if you know you are playing games of if you just like to juice yourself.
that 100% of the tax sure sounded scary. and now you are raising the tax of the rich by 70%.. which i guess is what happens when you raise it by say, 7% from 10%, but that doesn’t sound so scary.
Rwe:
“(no reason not to) that the top 5% garner 21% of all income, you surely know that that 21% of all income pays 50% of all federal income tax.”
Hmmm, no they do not pay 50% of the federal income tax. Lets try ~40% according to the Tax Policy Center under “Effective Tax Rates under Current Law, By Cash Income Percentile.” The return to taxing those making >$212,000 household income was never meant to recoup all the bennies bestowed upon them from the 2001/2003 tax breaks.
You are correct that allowing the federal income tax breaks to expire for for the 5% will not have as large an impact as needed to reduce the deficit or stimulate GDP. To achieve such a goal many of the other tax breaks included in the 2001/2003 acts would have to be changed also to achieve a substanial revenue increase.
While those making greater than $212,000 would see a substantial tax increase, they would see an even greater tax increase if all of the middle class tax breaks were also eliminated. The 10% tax bracket did not just benefit those making less than $25,000; it also benefited those making greater than $212,000. http://www.cbpp.org/cms/index.cfm?fa=view&id=3263 Letting the tax breaks sunset for the upper crud. the floaters if one can imagins such, was never meant to resolve the deficit issue today. Perhaos better use of the money in other venues could stimulate greater job creation which would indeed increase tax revenues. The current stance of favoring a few with the greater portion of the 2001/2003 tax breaks in the hope job creation would perchance occur was a miserable failure on the part of Boy-George Bush.
I find your points disingenuous and untruthful for the most part.
Coberly:
“what i am not for is the middle class saying “poor us” don’t tax US.
and i am not for taxing the rich to pay for Social Security. I don’t want to live in my old age on handouts from the rich.”
Is it your stance then that the middle class should pay a greater portion of their income to federal taxes than the wealthy? Perhaps Coberly, our payments into SS allowed the gov to keep the federal income tax low for those making greater than $212,000? Why shouldn’t they repay what they absconded with since 1983? Mind you, I am in favor of the cap being where it is; but, the SS funds collected were misused.
Rwe:
Not entirely. It is only recently the Federal Gov. changed the tax and investment laws forcing investment firms to maintain what the original purchase price of the stock was.
I think the Ryan plan has unhinged a number of conservatives.
Now, we hear many of the emboldened rich asserting that taxing the rich can’t balance the budget, we must also tax the middle class. See, for example, the Barrons back page Op Ed last week, or David Stockman’s NY Times op-ed Saturday.
Many recognize that the Ryan Plan has left the GOP exposed and truly vunerable to a class war. They started it! Instead of wanting to play that hand out – even knowing that Obama will negotiate his way away from a sweeping victory – many conservatives are looking for a way out. But they’re at a dead end, politically; they can’t propose taxes. So the logical negotiating stance – Stockman’s ‘let the tax cuts expire, AND slash Medicare and Social Security” – isn’t an operable GOP platform – much less a desirable end point for Democrats.
So, we have a wounded animal, and need to be wary of where it is going to lash out.
Of course I considered that. The defict today is $1.6t. If there were a new tax of $450b that would still leave a hole of 1.15T.
The marginal rate on the top 5% is 34%. To generate an additional $450b it has to go to 55%. You think that is a good plan? You and six or seven other guys off in a corner maybe. That is simply not going to happen.
If we taxed away half of this increased share of national income it would generate a sum roughly equal to 3% of GDP
I don’t know what this equates to in terms of a marginal tax rate. If we are to assume, like bkrasting, it is on the order of 70% we will probably see a very small percentage of the presumed increase in tax payments. At a 15% marginal tax rate on capital gains, there is very little incentive to engage in complex tax avoidance schemes, they just pay the tax. However at a 70% tax rate there is tremendous incentive.
“Mr. Gotbucks, if we structure the sale of your business this way_________ you can spread out your gain over this many years, which puts you in a much lower tax bracket…..then you can buy a large single premium life insurance policy, which we will pledge as shares into this Limited Partnership which invests in railcars…the ACRS provision that applies to railcars will offset the capital gain, yada, yada, yada.”
Net result little to increase in tax revenues, and bollixed up, costly, investment strategies.
“Not buying it. “
You’d have to understand how a downside can end up as 1/2 your quarterly income, before understanding this enough to “buy it”.
And since you consider it “lucky” to get yourself to that level of investing.. I’ll just leave it at that… else it’s like trying to expalin football stragtegy, to someone who has never even seen a game played… probably lamenting that people get paid run around on a field with a ball.
It’s a alien world to you.. again best left at that.
Man.. talk about leaving out (or making up) data.. sheesh..
For one, if it’s your primary residence, you’pay NO capital gains if you rolled it into a new, primary residence.. and that makes sense, because there really isn’t a gain there.. you can only buy a comparable house with that money..
And you are allowed a one-time exemption on that personal residence, to shelter that equity when you retire. (see how logical it is to apply reasonable protection to investment income.. even for the non-rich ?)
And then try to make a point, you assert that you’ll just ask for more money, as if the exisitng market didn’t apply to you..
Now in the spirit of full-disclosure.. I’d have to ask my accountant how investment property works there.. From what I remember; you won’t take a hit on capital gain, if you you use that money as capital expense when you by another investment property… I’m out of my element in being a landlord.. so if I’m wrong, I appologize..
Actually we need to tobin tax. Given that a lot of what is happening in the derivatives market is really gambling and does nothing to help the economy, put a transaction tax of say .1% on financial transactions on wall street. Of course the powers that be oppose it because it would mean less money for them and after all they are the only ones that matter. Given all the high frequency trading that imho is really just gambling, tax it. Then I agree end the corp tax, and replace with a VAT. If we want to go further do a carbon tax not cap and pay Llyod Blankfein which is what cap and trade will be, just another scheme to make wall street rich.
run
please, how does your view of my “stance” follow from what i said? i am for a graduated progressive tax. but i am not for those people in the hundred thousand dollar range saying “raise taxes on the rich but don’t raise taxes on me.” i think you ought to be able to see the difference.
your payments into SS paid for your SS. make sure the government pays back the money they borrowed from SS and everything is working the way it’s supposed to.
even if the government found a way to moot the SS debt, you would still get your SS tax money’s worth in the form of retirement checks, so don’t get too carried away with feeling sorry for yourself.
i bet we could sort this out if we could talk about it slowly.
Rwe
i should give up making up examples to try to explain a point to you. you grab at all the ifs and ans in the real world and lose the point of the example. Substitute “XYZ stock” for “house” in my example and see if it works any better for you.
the “market” is supposed to adapt to reality. taxes are part of reality.
i guarantee you’d have a better chance of resetting your prices to reflect the new tax regime, than there is that all entrepreneurs will just wilt if their taxes go up a few percent.
krasting,
i am not paying a lot of attention. you are saying that reducing the deficit by one third is not reducing the deficit?
or do you think the government can’t possibly spend that money in a way that stimulates the economy better than the casino-bankers?
and try to separate in your mind what is “simply not going to happen” from what “maybe ought to happen.”
sammy
“if we assume, like krasting..” you would be making the mistake that krasting made. a 70% increase in the tax is not a tax of 70%. and, of course, neither is a marginal rate of 70% an effective rate of 70%. your side throws numbers around for their scare value, not because they actually know what they are saying.
now,me, i’m trying to find a way to structure the tax code so us little start up businesses can keep most of our profits for tiding us over the lean years… but then again, maybe i don’t want to be part of that game.
btw, my modest suggestion of a 3% increase in the effective tax over 100k would be about a 3/17 or about a 17% increase (the two 17’s are just coincidental).
if i were in one of those top brackets i’d not be happy with that. on the other hand, i wouldn’t be staggered by the burden either. and in a spirit of patriotism i’d be glad to do what i could for the country during this deficit emergency. sure beats getting my ass shot off in afghanistan.
“i should give up making up examples to try to explain a point to you.”
You sholud give up making up examples period, until you understand what it is you’re trying to make a point about.
OF COURSE a market adapts to taxation, both the consuming market, and the investing market. But you just can’t raise prices to match a tax increase, nor can you expect investment activity to stay constant, as the upside/downside gets tinkered with by social engineers. You wil end up with a different set of markets.
If you take away a percentage point on the upside, where a downside can be horrific.. you WILL reduce the pool of willing investors. Where it finally settles will be the new ‘norm’ by default, but mean-time investments will suffer. Not always a good idea, and certainly not in this economy.
It’s this cavalier attitude toward OTHER people’s money that worries me… especially that you referenced making up your own risk..ala asking above market prices makes up the risk.. it’s just, well.. odd.
I have no idea why anyone would take the nonsense you just posted seriously.
I’m just curious. I have a question for the rich-worshipping animal.
Labor is taxes at a higher rate than Capital.
Why aren’t people “incentized” to work less because of high, much higher counting social security, taxes on Labor?
Why don’t all your rambling babble about how rich people won’t take ten minutes to “invest” if the investment is taced higher apply to engineers who may very well have to work hundreds of hours for the same “return”.
Is it because the rich worshipper is a shameless liar and whore? I think so.
So. The justification for giving money renters a tax break comes down to: 1> Renting money is riskier than renting one’s actual time alive because it has a downside, even though the loss of money due to risk is deducted from any other gains and 2> People who don’t understand the downside are morons.
Ok then!
Federal taxes are to fund the federal government for specifically enumerated purposes clearly defined in the Constitution. Redistributing wealth is NOT a Constitutionally defined purpose. Once the firewalls of the Constituition are breached, what are the limits? What level of taxation is enough and for what purposes? Why should future generations abide by the new laws we create right now if we don’t abide by the Constitution? Don’t you see the slippery slope when you move away from the original purpose of the Constitution?
And don’t give me the “living, breathing” argument,…the Constituition was designed to be amended, so if you want to amend it do so the proper way.
The Constitution is a social contract that ties past, current and future generations to a set of conditions and rules of behavior that allow people to plan for their, and their childrens, safety and security by clearly defining the rules of how Government and the People interact.
Is your mortgage contract living and breathing? Are you able to adjust the terms of it to suit changing circumstances?
PT,
Why aren’t people “incentized” to work less because of high, much higher counting social security, taxes on Labor?
They are. But the size of this response is dependent on the level of taxation. For example, at a 100% marginal tax rate, very few people would work and at a 1% tax rate very few would be dissuaded from working. In between these two points you can plot the decline in the supply of labor with the increase in marginal tax rates.
……people won’t take ten minutes to “invest” if the investment is taxed higher
It’s not a time constaint, it is a risk/return constraint. If you lower investment returns by taxation, you increase the risk relative to the return on investment, and therefore you get less investment (and more consumption).
‘ i am for a graduated progressive tax. but i am not for those people in the hundred thousand dollar range saying “raise taxes on the rich but don’t raise taxes on me.” ‘
Sanity! Praise the lord! Just let the Bush tax cuts expire. Everything else is pandering. Everything else. This is the empirical approach. We have done the experiment. We have tried many different tax rates. Some truly crazy. The one that will result with this simple action has prove to be capable of resulting in a balanced budget. It will generate sufficient revenue if we trim defense to a resonable level without chocking off private sector investment. We have the data.
“So. The justification for giving money renters a tax break comes down to: 1> Renting money is riskier than renting one’s actual time alive because it has a downside, even though the loss of money due to risk is deducted from any other gains and 2> People who don’t understand the downside are morons.
Ok then!
Well.. at least your starting to see a LITTLE bit of the light. I’ll try to clarify further, in simple terms.
RENTING money, would be equivalent to a cash accout earning interst.. it’s not really a purchase.. (though CDs are treated as temporary purchase, with a carved-in-stone buy-back.. for the purpose of locking that money up.. but you have really bought anything, like a share of stock).. and interest income IS taxed “normally”.
Investment income taxed as capital gain, involves an actual purchase, like a stock or piece of land.
Kinda in between would be bonds. You actually purchase them, and the rate of return is proportional to their risk (rating). It’s diiferent than a stock purchase, in that you’d come first in line if the seller goes under. .. before people owning stock**, because they, thechnically sold you the bond.
**(unless, of course Obama changes the rules, and takes the money owed you, and gives it, in the form of stock ownership, to a union)
“So. The justification for giving money renters a tax break comes down to: 1> Renting money is riskier than renting one’s actual time alive because it has a downside, even though the loss of money due to risk is deducted from any other gains and 2> People who don’t understand the downside are morons.
Ok then!
Well.. at least your starting to see a LITTLE bit of the light. I’ll try to clarify further, in simple terms.
RENTING money, would be equivalent to a cash accout earning interst.. it’s not really a purchase.. (though CDs are treated as temporary purchase, with a carved-in-stone buy-back.. for the purpose of locking that money up.. but you have really bought anything, like a share of stock).. and interest income IS taxed “normally”.
Investment income taxed as capital gain, involves an actual purchase, like a stock or piece of land.
Kinda in between would be bonds. You actually purchase them, and the rate of return is proportional to their risk (rating). It’s diiferent than a stock purchase, in that you’d come first in line if the seller goes under. .. before people owning stock**, because they, thechnically sold you the bond.
**(unless, of course Obama changes the rules, and takes the money owed you, and gives it, in the form of stock ownership, to a union)
Barnum
the software at AB makes it hard to tell which comment you are referring to unless you help us out a bit.
Rwe
you are stuck thinking the differences that are important to you are important to, say, me. i don’t really care where your “investment” income comes from. or what your risks are. those are your problem. all i care about is that you get money and we need to tax some of it.
i really really really cannot take seriously the big brave investors claim that he needs special tax treatment because he “takes risks.” What the hell do you think the rest of us are doing every day?
Yout gonna have to better than that.. the childish, panicky-insult-reaction to things you don’t like hearing, has no effect on the discussion.
Rwe
sad to say, I understand what I am talking about. I despair of ever getting you to understand it.
Rwe
are you shouting at yourself in a mirror again?
Sammy
the time was not exactly the point of Barnum’s and my argument. “risk” is the problem of the investor, not of the government. the government has no reason to subsidize your risk. if you don’t like the risk – return, find another investment. or sit on your cash. not my problem.
i guarantee the market will find a way to factor in a higher tax rate. no we are not talking 100% rates…
and, just to scare you, there was a time… say for the two milion years prior to the invention of capitalism… that the “tax” rate was 100%. the hunters and gatherers brought back what they found to eat and shared it with the whole tribe. it was a system that worked well.
and even after the invention of capitalism there is no reason not to tax returns from capital… simply to encourage LESS risky investment. I may want to encourage railroad building… and oddly that was not done with tax cuts, but with “tax” in the form of government give aways to the railroad companies… but i have no interest in subsidizing on line pet food scam…er schemes.
what you are rwe are arguing is … i make my money playing with money. i am special. don’t tax me or i’ll take my specialness and go home. And have to get a real job?
what is tragic here is that you believe your own rationalizations. and there are enough of you to convince the government that it needs to subsidize the rich. the last time this happened in a big way was 18th century france. it came to a bad end.
“you are stuck thinking the differences that are important to you are important to, say, me. i don’t really care where your “investment” income comes from. or what your risks are. those are your problem. all i care about is that you get money and we need to tax some of it.
i really really really cannot take seriously the big brave investors claim that he needs special tax treatment because he “takes risks.” What the hell do you think the rest of us are doing every day?”
I understand what you mean in this post.. and we all know that in-depth analysis/explanations are impossible in a blog-post.
That you don’t care how and why investors invest (or don’t invest), is because its all like a convenient black box, to the uninitiated. Like I’ve said many times, outside of actual socialism, you HAVE to have a healthy investment arena for ANY company/corporation/factory to exist at all.
That there ARE corporations, and the jobs they need done, and that supermarket shelves and automobile dealerships that are always stocked with goods; is something east to take for granted.
If people weren’t happy and willing to dump loads of cash into investments like; Dell, Microsoft, AT&T, and on, and on…. in a competitve, free-market.. would the average person be able to own a veritable super-computer, and have cheap access to hi-speed internet ?. That might be relative, as we only truly know stuff like that, after the fact. But it’s a relatively safe assumption.
Which brings to mind the ultimate, 21st Century irony… people railing against capitalism from affordable computers, and smart-phones, over an easily, affordably accessed internet.
So, whether you realize it or not.. you do care about maintaining a thriving, healthy, investment climate.
And yes, we all take risks.. some take bigger risks than others. Obvioulsy we won’t ever know what the staus of the markets we take for granted would be, if we had a historically different tax-system… but there are plenty of historical examples to take into consideration
I’m just promising you, two-times-twice.. if captitol gains taxes go up meaningfully.. I’ll be taking much fewer risks.. as will many others. If you wanna try that experiment, have at it.. I can estimate what will happen to overall company worth (stock prices), when the pool of investors shrinks.. you probably won’t like it, whether you cared, or not…
“It is very difficult to get a man to understand something if his income depends on him not understanding it…” -Upton Sinclair (Writer, professional socialist)
Example:
Twenty some years ago, a telecom company named ‘AG’ comes up with the idea that economies of scale can yield diverse and profitable market, selling Internet Access. After much research, they decide it’s worth the risk to dive in.
Ever-alert investors notice that AG is using up it cash holdings, and selling bonds.. trying to build a huge, internt customer base. Of course the price needed to attract/build this customer base has them operating at a loss.. but several investors see the huge upside, down the road..
As the investors try to hitch a ride, buying up stock in AG; the holders of AG stock (including AG itself) start placing their sell orders for higher, and higher prices… and the stock goes up and up.
This not only improves AG’s net worth, making their ability to leverage their own investments higher, it also makes its bonds more attractive. With all this new “elbow room” to push faster and further with this project.. and it pans out.
Internet access available to few, due high prices, becomes internat access for nearly everyone, affordable enough that AG can count on that revenue, even through a recession.
Now of course many of these plans don’t work out ideally, and a good chunk of the money at risk, evaporates..
I won’t profess to know where ideal, capital gain taxation lies.. and there isn’t a constant ideal over any stretch of time… But there are very predicable results via substancial tinkering… and a lot has been learned over the decades.. the treatment of capital gains isn’t just some stab in the dark to make rich people smile.
So…. it doesn’t mater whether or not you care about what goes on in the big, black box.. all you need to know, is that when hi-speed access hit $39.95, you became part of that customer-base.
As surely as a Lafffer-Curve has a peak (regardless of where a debates sees that peak), there IS point of capital-gain taxation that would hve stopped the plan before it left the planning stage.
Rwe
says, “As the OP states himself.. we pay more than twice as much per dollar earned, than the rest of the population…”
Rwe, consider a population in which the top two percent of earners earn a hundred million dollars a year, and the bottom 98% of earners earn just enough to buy groceries from, and pay rent to, the top 2% of earners.
Now what exactly would be unfair about the top 2% paying twice as much per dollar earned as the bottom 98%. And since this is only an example, where would you draw the line in the real world?
coberly,
if you don’t like the risk – return, find another investment. or sit on your cash. not my problem
Yes, I know. Not your problem. You are retired and getting Social Security. But for people who need the jobs that come from investment, or depend on the economic growth that investment creates, it is their problem.
Rwe
hate to tell you this, but I am an investor too. I just don’t believe it is the government’s business to take the risk out of investing. There are better ways to encourage productive investment than by underwriting what amounts to casino gambling.
amateur
i met Uppie once. wish i could say i knew him.
sammy
i am retired, but my social security money is all invested. took the trouble to invest my money while i was working so i don’t have to depend on social security. does that surprise you?
i know, hard to believe that someone who didn’t “need” social security would think it was such a good idea. hard to believe that someone who invests “his own” money would see the importance of not letting half the population fall into destitution.
if the tax rate is important to your “investment” you are not an investor, you are a gambler.
look around you at the real world. investment is not constrained by taxes. it is constrained by the folly of the big bankers.
ceebee
not quite. the constitution was, and is, an attempt to define government procedures that would limit the power of “factions.” and limit the power of government to tyrannize the people. redistribution of wealth… not as big a part of the government as you seem to think… might be a legitimate purpose of government if the government (that is “us”) see that some people are going to die needlessly waiting for “the free market” to meet their needs. you see, it is the nature of the free market for the businessman to attempt to maximize his own income. he cannot be counted on to see the big picture. that is the business of the government (“us”).
the constitution simply does not say what you…or various Supreme Courts… think it means.
an argument that jumps to “what if we carried this out to ridiculous extremes” is not an argument against any specific policy or act of government, limited by the power of the people to change that policy or stop that action, the next time they vote.
Don’t hate saying anything : )
And I know you don’t believe certain things.. If we all believed the same, there’d be no blog debates ..
But again, you blow it off as something as simple as casino gambling.. that goes a bit past belief, right into being ill-informed, and flat-out wrong. Serious investing is much more work, than luck..It’s OK to not understand it all.. very few really do. The black box results satisfy them (even as they complain about it).
I agree with you in a way.. that there’s no way to know where we’d be now, if there were no special tax-stati (is the plural for status?)… and there’d probably be little, long-term harm in a GRADUAL phasing out. You wouldn’t get much of an argument from me, for that.
…. if for NO other reason than I could quit paying someone to do my taxes.. FOUR time a year.. lol
Curses.. that would add to unemployment.. damn this complicated stuff..
Fair enough..
That wasn’t aimed at you, Coberly.. this format dove-tails conversations.. it was aimed at the person who thinks calling people lying whores is good debate fodder..
Wouldn’t that apply to mutual funds, or mixed funds, as far as an individual is concerned ? .. as opposed to a guy who buys stocks discretely ?
You can invest in mixed funds that report your income purely in 1099 form.. even if they buy/sell several capital assets.
Somewhere in the mixed-up thread.. you’ll find a post where I whole-heartedly endorse progrsesive taxation.. and twice the share per dollar earned isn’t outrageous.
If I were to draw the line.. it would probaly leave the top 2% paying a greater share per dollar, than now, because it would also get rid of the destructive situation allowing a majority of the population to vot for taxes they won’t end up paying.. ie.. EVERYbody pays SOMETHING.
Rwe
glad you agree. not always easy to tell from your arguments.
rwe
trouble is your argument goes to a reductio ad absurdam, but there is no reason to suppose an increased tax on capital gains will go to absurd heights. nor is there any reason to suppose the rest of us gain anything by subsidizing your more risky investments.
Rwe 9:34 (hard to read the time on my computer. something like that).
well, we might agree there too. and no, it’s not ALL casino gambling. and yes, even casino gambling takes work if you believe in a “system.” hell, it might even be profitable to you. i just can’t see any reason to subsidize it.
rwe
re alien world:
can’t leave it at that if you are asking us to subsidize it.
Rwe
thanks. but you need to examine your own comments for unhelpful snark. since i indulge in it myself i try to avoid sounding holier than thou about it. until of course i meet someone else trying to sound holier than me or the next guy.
“trouble is your argument goes to a reductio ad absurdam, but there is no reason to suppose an increased tax on capital gains will go to absurd heights. nor is there any reason to suppose the rest of us gain anything by subsidizing your more risky investments.”
This is stuff.. that we’ll just have to respectfully agree, to disagree on..
Be assured.. I look first, for something that makes sense to me in one of your posts, before just posting an argumentative response.
I didn’t assert, or assess the absurd.. changes in tax rates, even at minute levels, do have cascading effects. It’s more a matter of what’s acceptable, than needing aburdity to drive a point home.
For humorous perspective.. when I meet a new broker, or advisor.. first thing I say, is that the whole stock market gives me the creeps. By it’s very definition, it entails someone saying, “this stock is such a good thing to own, that I’m willing to sell it to you, at a price where you can profit from it.”
That always catches them off-guard.
Best response I ever got was.. Think of it like horse racing. You can do enough research to minize risks.. but you’re still playing by someone else’s rules. If (more when) a fix is in.. you gotta know when to be at a ticket window.. or be reasonably sure about enough horses.. to include them in your trifecta.
So.. I’m not some blind worshiper of Wall Street.. it is what it is, and I try to take advantage, when I’m able.
I’m not asking you to do what’s already being done, and has been done for decades..
“thanks. but you need to examine your own comments for unhelpful snark. since i indulge in it myself i try to avoid sounding holier than thou about it. until of course i meet someone else trying to sound holier than me or the next guy.”
Agreed.. but accusing someone of whore-ish lying, is a differnt thing.
So now capital losses don’t exist.
Fascinating. I’ve been doing my taxes wrong 🙂
I sure hope the IRS doesn’t audit me for deducting losing investments from my income!
OH NO!
Agreed.. but accusing someone of whore-ish lying, is a differnt thing.
That’s right buddy, cause you can’t derail a discussion with insane rambling unless the other person RESPECTS your right to be a lunantic lying whore.
Like for example the person who doesn’t know that capital losses can be deducted from capital income!
Oh wait, he does know that!
He is just being, wait for it, a lying whore!
Federal taxes are to fund the federal government for specifically enumerated purposes clearly defined in the Constitution. Redistributing wealth is NOT a Constitutionally defined purpose. Once the firewalls of the Constituition are breached, what are the limits? What level of taxation is enough and for what purposes? Why should future generations abide by the new laws we create right now if we don’t abide by the Constitution? Don’t you see the slippery slope when you move away from the original purpose of the Constitution?
Since the Republican Party and the Democratic Party completely ignore the Constitution whenever they feel like it, I’m kinda wondering why this is matter?
How about you give me the right to not have my property declared “blighted” and stolen by a PRIVATE company under “eminient domain” and then we can talk about the “Constitution”.
PT Barnum,
What does the limited deductiblity of investment losses have to do with anything?
Seriously, are you serious? I mean really, ARE YOU SERIOUS?
Risk/reward effect of “taxes”:
Gain:$100-$29 in taxes=71 dollars gained
Loss=$100-$29 dollars in taxes NOT PAID=71 dollars lost
The only time this doesn’t apply is if ALL your investments go south at once. This should never happen with the “super rich” we are talking about unless they are behaving in a very poor manner. In which case, the problem is that they HAVE money. And in any case, the super-rich only take sure things.
Rwe
i’m glad you can see that.
one thing that just struck me is that none of the folks on your side… “the poor rich can’t create jobs if we tax them so hard they cannont stand”… notices that the argument here begins with “they now have a greater share of GDP than they ever had before” when apparently they were able to create jobs.
no. as noted above. the “rich” now have more than they ever had before when they were somehow able to manage to invest anyway. and they don’t seem to be investing now.
try to let go of your pre shrunk conclusions and see what it is actually happening.
Rwe
i think you don’t quite understand supply – demand. at “the” price, all that you know is that enough people were willing to buy at that price to clear the market of what people were willing to supply at that price. some people would have been willing to pay a higher price.
if i want 43 thousand for my house instead of 40 thousand, i may have to wait a little longer for the right buyer, but it is not “asking above market prices” and entering a strange fantasy land.
moreover, my whole point was that when people have to look at a different tax regime, the market will adjust to that. and after a while no will ever even notice. except of course the people who keep muttering about how rich they would be if there were no taxes.
and no roads, and no other people who thought they had a stake in government.
PT,
That is not the risk/reward effect of taxes that anybody is talking about, even remotely. In any conversation.
The way that taxes influence the risk/reward ratio is that they change the return. Say you invest $1M and start a company that earns a pretax return over time of $2.0M. At a 25% tax rate your after tax return is $1.5M, or 50%. However, at a 50% tax rate your after tax return is $1.0M or 0%, making it unlikely that you would make the investment.
You know, I’ve had just that happen to me. The IRS refused to consider the purchase price of some shares I sold short. Claimed I made a profit of around 26 thousand dollars!
Of course, that isn’t the way things actually work, and they stopped making the claim after I sent them a letter. If you are having that problem, maybe you should pay for a tax accountant. Obviously you can’t handle the simplest thing yourself.
The word, by the way, is BASIS.
With all due respect (no snark), if you wanna glimpse at what’s REALLY happening (more, what will happen).. watch Bernanke’s address.. and then watch what the markets do..
In a nutshell.. QE2 is running out; and there aint enough buyers to keep the debt serviced..
All the drama we try to interject while blogging on hold… We in serious trouble.
this thread has run its course… read what I said in my last post… interresting things going on..
He aint too bright…
“Like for example the person who doesn’t know that capital losses can be deducted from capital income! “
Here, “buddy” : A quote of mine from earlier in the thread…
“a capital loss can offset a capital gain; but thats irrelevant when your talking about upside/downside of investing. If you have numerous investments, you’ll be taxed on the net between the winner/losers. “
Rwe
you may have to talk to me slow here:
if there aren’t enough buyers… of Bonds?… does that mean the interest on Bonds is not high enough to attract money that is being spend on something else… consumption? other investments?
or that “investors” just don’t have any spare money (partial overlap with the above. difference i had in mind was in sentence one that the money was being spent because people preferred consumption. in sentence two the money was not being spent because there just wasn’t enough of it.)
or if “there are not enough buyers” refers to money being spent in the economy in general (not on government bonds) is that because taxes are too high? or incomes are too low?
and if interest is too low to attract money, or dividends / stock profits (which i think for most people act more like interest than like any “investment”… gotta be careful here. those who know more than i do will insist that the difference between interest and investment is clear… and refer me to the dictionary… but i’m trying to make another point…
but if interest is too low, can you make a reasonable case that it’s high taxes, or government borrowing that is “crowding out” investment?
it has seemed to me since i first heard “savings are too low” as an economic argument for political policy… that if “savings” are too low, its because the “interest” on savings is too low to attract the money. and that is a market doing what a market is supposed to do. not a failure of the political system.
sorry to run on. but there are questions here you may know the answer to… or may not have thought about.
i frankly don’t see the connection.. how you get from thought A to thought X. i need all those B,C,D…’s.
no. maybe you are tired of it. but you sure haven’t answered the arguments. don’t know if you will read this… but i modestly suggest you need to learn to keep on thinking.
More productive discussion would be possible if you just didn’t comment at all.