Lowering taxes on the wealthy make them more wealth, and little else.

[steross]

I still do not think you understand stock options.

* “Gains of options are taxed as capital gains rates”.
Of course, they are. But that occurs after the ordinary income generated by stock options have already been taxed. There is ZERO difference if you bought $1k of stock from money from your paycheck. If the stock grows to $1.5k and you sell, you pay cap gains on $500, not the entire $1.5k. Stock options work exactly the same.

* ”If they were simply regular income they would not exist”.
True, but not because of what you imply. They are used to offer potential large sums of money AND to retain employees. Remember they are only beneficial if they stock price increases and it has increased after a specific vesting date. The vesting date is a key because it helps to retain. Tax advantages of capital gains are generally not an advantage.

* “Acting like it is all just the same is disingenuous and wrong”
The leads me to believe you still don’t understand stock options and tax impact. As stated above, stock options and bonuses are used to incent and retain employees. Stock options are taxed “just the same” as regular pay in your paycheck. The major difference has nothing to do with taxes...it is risk and the significant fact you may never see the money from the stock options because the stock price might be underwater.

And I also do not think you understand them or don't want to admit the truth either so we will end it at that. I am often amazed at the way you think about even simple, straightforward subjects. This one isn't simple and there are differences depending on the type of option. You are going to argue about what fits your point while ignoring the other. I appreciate the info about the $100K cap. But, there is simply no point in going any further down this rabbit hole with you, especially given that it is barely an accessory to the primary point of the thread, which you continue to ignore.

 

[cableok]

And I also do not think you understand them or don't want to admit the truth.
But, there is simply no point in going any further down this rabbit hole with you, especially given that it is barely an accessory to the primary point of the thread, which you continue to ignore.

What is the truth that I don’t understand or don’t want to admit?

Your original post was about a study that showed tax cuts do not generate significant increases in economic growth and GDP. I responded that the study also showed that the original higher taxes were not resulting in higher economic growth and GDP. As such, as someone that values personal freedoms and fairness, why not allow wage earners to keep the wages they earn.

 

[StillwaterTownie]

As such, as someone that values personal freedoms and fairness, why not allow wage earners to keep the wages they earn.

In other words, you only want private, voluntarily funded corporate government. You only get as much out of it that you are willing to put into it. If you're too tight or poor to subscribe to a fire protective service, you hope your water hose will put out a fire.

 

[cableok]

In other words, you only want private, voluntarily funded corporate government. You only get as much out of it that you are willing to put into it. If you're too tight or poor to subscribe to a fire protective service, you hope your water hose will put out a fire.

No, not at all. I want a smaller, more efficient government. We need to fund fire departments, police, and improve streets and bridges. And I am certain we can have a workable efficient government that provides for citizens without soaking wage earners. And definitely of the opinion that high earners already pay their “fair share.”

 

[LS1 Z28]

No, not at all. I want a smaller, more efficient government. We need to fund fire departments, police, and improve streets and bridges. And I am certain we can have a workable efficient government that provides for citizens without soaking wage earners. And definitely of the opinion that high earners already pay their “fair share.”

You hit the nail on the head. Our last balanced budget was in 2001. Since that point:
1. Inflation is up 47%.
2. Federal tax collections are up 74%.
3. Federal government spending (pre-pandemic) is up an astounding 139%!

Tax collections have outpaced inflation for decades, but our government gets more bloated and inefficient every year. We don't have a tax collection problem, we have a spending problem, and both sides of the aisle are responsible for it.

We need to find a way to make our government more efficient instead of increasing taxes so that we can throw more money at it. We need to stop treating the symptoms and start treating the disease.

 

[drbwh]

Your rationale is backwards.

If the economic gains always go to the wealthy, then they will always be the savers because they have excess income over their needs. You cannot save when your costs of basic subsistence match or exceed your income.

And, of course, taxes matter.
I've spent part of my adult life in a country with more equality and higher taxation. If taxes didn't matter, their chart would look like ours, not like this:
View attachment 87935

If what you were saying were true that would be universal. It isn't. It is policy.

And, I will need to see the proof of causation about Trump's tax cuts as the fact that it happened is a correlation, not causation. We were already in a time of increasing economy tied to inordinately massive government spending and a very accommodative Fed. Saying that the tax cut "led to" any of the things that you mentioned needs explanation when there are many other factors at play that were already doing it before and after the tax cut.

The consumption mindset in our country definitely isn't universal throughout the world. 63% of households in the U.S. don't have $500 in savings for emergency expenses. It isn't because they don't have the means to save $500, it's because they would rather take on debt to buy the things they want than delay gratification by saving for it. The vast majority of people in our country would rather live at or above their means than live below their means and save. This mindset varies greatly from country to country. Many other countries save at a much higher level than ours.

I'm not familiar with the country of Australia like you. Some quick research shows that their income & corporate tax rates have been falling for decades, and they don't really seem to correlate to the U-shaped income inequality chart you posted. I would have to study their economic history more closely to come up with an informed opinion on this subject.

The economy is a reflection of just about everything going on in the world, so you can't really prove that tax reform caused anything. But all of those things occurred in the year following the tax cuts, so draw your own conclusions. It seems pretty apparent to me that the tax cuts at least contributed to these positive outcomes.

Merry Christmas. I hope you and yours have a good holiday.

Get out of here with the logic? A 65 inch flat screen, ps5, $100 tennis shoes or a smartphone aren’t a right?


Sent from my iPhone using Tapatalk

 

[Cody51]

As I have said several times, the problem we have as a country is how to get people with nothing to something. If you have a bit of wealth, making more is doable. If you have nothing, it is incredibly difficult to break out of poverty. That is why I favor UBI. Would be a much better use of funds than military spending and corporate subsidies.

 

[LS1 Z28]

As I have said several times, the problem we have as a country is how to get people with nothing to something. If you have a bit of wealth, making more is doable. If you have nothing, it is incredibly difficult to break out of poverty. That is why I favor UBI. Would be a much better use of funds than military spending and corporate subsidies.

An individual's income is determined by how much demand there is for the skillset they possess. Their skillset is determined by the education & experience they've obtained in life. UBI could help narrow the gap initially, but inflation would quickly take us back to where we started. The only true pathway to change is through education.

Despite the pandemic and an unemployment rate of 6.7%, there are currently 6.65 million open jobs in our country. Many of these openings are good jobs that employers struggle to fill because they can't find enough qualified candidates to fill them. So the opportunity is definitely out there, but only for people willing to put the work in to obtain the skillset required to take advantage of it.

 

[cableok]

An individual's income is determined by how much demand there is for the skillset they possess. Their skillset is determined by the education & experience they've obtained in life. UBI could help narrow the gap initially, but inflation would quickly take us back to where we started. The only true pathway to change is through education.

This ^

 

[steross]

An individual's income is determined by how much demand there is for the skillset they possess. Their skillset is determined by the education & experience they've obtained in life. UBI could help narrow the gap initially, but inflation would quickly take us back to where we started. The only true pathway to change is through education.

Despite the pandemic and an unemployment rate of 6.7%, there are currently 6.65 million open jobs in our country. Many of these openings are good jobs that employers struggle to fill because they can't find enough qualified candidates to fill them. So the opportunity is definitely out there, but only for people willing to put the work in to obtain the skillset required to take advantage of it.

Why would we have inflation if we have the same amount of money and a likely expanding economy as more people have access to at least some cash? Unless we increased the money supply ( and even though we have been doing that like crazy we STILL don't have much inflation).

And, regarding your second concept that the poor people just decided to be poor instead of deciding to put in the work, here is another data driven idea about that. Educating someone stressed by lack of money might just be cart before the horse:

 

[LS1 Z28]

Why would we have inflation if we have the same amount of money and a likely expanding economy as more people have access to at least some cash? Unless we increased the money supply ( and even though we have been doing that like crazy we STILL don't have much inflation).

And, regarding your second concept that the poor people just decided to be poor instead of deciding to put in the work, here is another data driven idea about that. Educating someone stressed by lack of money might just be cart before the horse:

Apple charges $800 for a new Iphone. That isn't a random figure. It's the price their research shows will generate the maximum amount of profit. If a VAT was enacted to fund a UBI, their business model would change significantly. They would have to factor in the added cost of the VAT, and the added demand since everyone would have an extra $12K per year to spend. The cost of new Iphone would go up significantly. This wouldn't be an isolated phenomenon. You would see it everywhere. Everything would cost more from large items like homes & cars all the way down to small items like groceries & household goods. Markets would adjust to the new conditions and the benefits from UBI would be nullified through inflation.

The video is interesting. I would be interested in hearing more about how $175B per year could lift everyone out of poverty. That seems like a much more feasible goal than a $3T per year UBI for everyone. He also cited a study from Dauphin Canada in 1974. I looked up the details, and it's quite interesting. They gave impoverished families $16K CAD per year as basic income. This is the equivalent of $62K USD when adjusted for inflation. They found that life improved for everyone while they received the BI, but they quickly went back to poverty when the program ended. So it didn't actually allow anyone to climb out of poverty. It just subsidized their lives until the program ran out of money.

The outcome of our lives is largely determined by the choices we make. It's more difficult to make the right choices when you're born into an impoverished broken home, but that doesn't change the fact that you have to make the right choices. I didn't agree with Andrew Yang on much, but I absolutely agree with him that we should be instilling the value of education and financial literacy in our children at a young age. We need to help them to understand the importance of making the right decisions in life.

 

[steross]

Apple charges $800 for a new Iphone. That isn't a random figure. It's the price their research shows will generate the maximum amount of profit. If a VAT was enacted to fund a UBI, their business model would change significantly. They would have to factor in the added cost of the VAT, and the added demand since everyone would have an extra $12K per year to spend. The cost of new Iphone would go up significantly. This wouldn't be an isolated phenomenon. You would see it everywhere. Everything would cost more from large items like homes & cars all the way down to small items like groceries & household goods. Markets would adjust to the new conditions and the benefits from UBI would be nullified through inflation.

No, everyone would not have an extra $12K per year to spend. People like myself of higher incomes would have less to spend. The amount of the UBI is the same. The amount that each person gets is the same. The mechanisms to fund it would not hit each person the same. So, I would probably buy myself an iPhone whether I have the UBI or not. But, there is something at some point that I would choose not to buy as I have less purchasing power than I had before the UBI. Maybe a trip to Dallas instead of New York. Or, maybe I buy an iPhone 8 instead of a 12 and Apple has less ability to raise prices therefore has smaller profits.

Everyone is not spending more. Some will spend more, some will spend less. Now, there will be some inflation of some goods that would be popular with people that have new money. You probably hit on one with phones and cars. But, that would have to be met with less spending on something else as it is the same amount of money (assuming no increase in money supply). Realistically, as the wealthy tend to save/invest not just spend there would be increases in demand for goods and therefore economic expansion, but that does not always mean inflation. And, we have never avoided expansion in order to avoid inflation.

 

[steross]

The video is interesting. I would be interested in hearing more about how $175B per year could lift everyone out of poverty. That seems like a much more feasible goal than a $3T per year UBI for everyone. He also cited a study from Dauphin Canada in 1974. I looked up the details, and it's quite interesting. They gave impoverished families $16K CAD per year as basic income. This is the equivalent of $62K USD when adjusted for inflation. They found that life improved for everyone while they received the BI, but they quickly went back to poverty when the program ended. So it didn't actually allow anyone to climb out of poverty. It just subsidized their lives until the program ran out of money.

The outcome of our lives is largely determined by the choices we make. It's more difficult to make the right choices when you're born into an impoverished broken home, but that doesn't change the fact that you have to make the right choices. I didn't agree with Andrew Yang on much, but I absolutely agree with him that we should be instilling the value of education and financial literacy in our children at a young age. We need to help them to understand the importance of making the right decisions in life.

The Dauphin experiment was ended during the 1979 oil issues when local unemployment went so high that they had more people applying for the program than funding allowed. So, the lesson isn't that they fall back into poverty because that is how they are. The lesson is if you take away a bunch of people's income during a recession, they become poor no by choice. Also, they saw decreased hospitalizations, improved mental health, and 100% completion of high school in the town during the experiment, a huge improvement in education. Which, if what you are saying is true and the simply decided to be poor again despite better education, your claim that education is what matters appears to be false. I don't believe that, I'm just saying it to show you that you took the wrong conclusion. UBI fosters education is multiple studies, and I agree with you that education is critical. When they find people working less due to UBI, it is almost always because they go to school.

 

[StillwaterTownie]

No, not at all. I want a smaller, more efficient government. We need to fund fire departments, police, and improve streets and bridges. And I am certain we can have a workable efficient government that provides for citizens without soaking wage earners. And definitely of the opinion that high earners already pay their “fair share.”

I don't think so. If a millionaire has a "poor" year and only makes $50,000 and is taxed 20% for it, he or she is still a millionaire. Meanwhile, if a person with hardly any assets makes $15,000 is taxed 20%, that person is taxed to poverty. That proves how having a fair tax by making it the same rate for everybody can't be fair. We need a progressive income tax policy, if we want to keep the income tax. Too bad Oklahoma's isn't progressive.

If you want to do something about reducing income inequality, then many thousands of millionaires and billionaires ought to hold a big convention and agree to pool as much as 100% of their yearly income to fund basic income for everybody needing it. Every adult would have at least $25,000 in income. Adults making less than from their jobs would be entitled to get whatever is needed to make up for it. That person who made only $15,000 would be granted $10,000. Far from everybody would be eligible, thereby, hopefully, not doing much to inflation. The homeless could be housed. As a result, government welfare could be abolished. The money from that could be redirected to rebuilding or maintaining the infrastructure, meaning more jobs. Crime, overall, would go down. Conservatives might like the plan, since government doesn't have to fund any of it though taxation.

The only question would be are there enough rich people willing to make it possible? Why not, since some portion of their money given would likely be redirected back to their vast store chains?

According to a Fast Company article, the collective wealth of U.S. billionaires has now grown by $1 trillion since the pandemic began. That's enough, a new report says, to cover sending a $3,000 check to all 330 million-plus Americans, while leaving the billionaires wealthier than they were before the pandemic. So there very well may be enough money out there to just give to adults making under $25,000 a year. That figure may need adjusted upward for people living in some states where the cost of living is much higher.

 

[LS1 Z28]

No, everyone would not have an extra $12K per year to spend. People like myself of higher incomes would have less to spend. The amount of the UBI is the same. The amount that each person gets is the same. The mechanisms to fund it would not hit each person the same. So, I would probably buy myself an iPhone whether I have the UBI or not. But, there is something at some point that I would choose not to buy as I have less purchasing power than I had before the UBI. Maybe a trip to Dallas instead of New York. Or, maybe I buy an iPhone 8 instead of a 12 and Apple has less ability to raise prices therefore has smaller profits.

Everyone is not spending more. Some will spend more, some will spend less. Now, there will be some inflation of some goods that would be popular with people that have new money. You probably hit on one with phones and cars. But, that would have to be met with less spending on something else as it is the same amount of money (assuming no increase in money supply). Realistically, as the wealthy tend to save/invest not just spend there would be increases in demand for goods and therefore economic expansion, but that does not always mean inflation. And, we have never avoided expansion in order to avoid inflation.

Salaries at the lower & middle class have been indexed to inflation for decades. Salaries at the upper class have exceeded inflation for decades. If a VAT funded UBI create significant inflation, salaries will increase as well. Medical professionals will demand higher salaries to account for inflation, and the cost of healthcare will increase. You would have more to spend, because your salary would increase.

The upper class is extremely efficient at separating the middle & lower class from their money. That won't change with a VAT funded UBI. It may take 5-10 years for markets to adjust, but I see this resulting in a zero sum endgame. The overall pie of wealth & income will still be divided the way it is now, but the value of the USD will be lower.

 

[LS1 Z28]

Which, if what you are saying is true and the simply decided to be poor again despite better education, your claim that education is what matters appears to be false.

My stance on this issue is more complex than that. I believe that an individual has to obtain a skillset through education that will allow them to make a living wage. This can be as simple as a technical degree from a trade school, or as complex as an advanced degree from an Ivy League school. Regardless of what path someone chooses, they have to obtain a skillset that will allow them to have success in life. I don't think obtaining a high school degree from a rural Canadian town fits that criteria.

One of the results from the study is definitely of note. It said that more young men chose to stay in school and graduate as opposed to leaving school early to start working. We have to find a way to help more young people make this decision. I'm sure the draw to leave school early and start making money is strong when you're in poverty, but too many people make the wrong decision in this situation. Things like hard work, discipline, & delayed gratification aren't easy when you're young, but they're necessary to have success in life.

BTW, the TED talk you posted earlier said that we can lift everyone out of poverty with $175B per year. He didn't really provide details, but I assume that's the cost on top of existing welfare programs to bring everyone above the poverty line. I think that's a great idea, because it would help children to stay in school longer and it wouldn't increase inflation significantly. IMO, targeting those in need would provide a better outcome than providing a UBI to everyone. It wouldn't lower inequality across the board, but it would provide a better pathway out of poverty for people at the bottom.

 

[Party of common sense]

Why not just make the minimum wage $50/hour? Easy fix. Everyone makes over $100,000/yr. imagine how comfortable and prosperous the whole country will be.

 

[Party of common sense]

I don't think so. If a millionaire has a "poor" year and only makes $50,000 and is taxed 20% for it, he or she is still a millionaire. Meanwhile, if a person with hardly any assets makes $15,000 is taxed 20%, that person is taxed to poverty. That proves how having a fair tax by making it the same rate for everybody can't be fair. We need a progressive income tax policy, if we want to keep the income tax. Too bad Oklahoma's isn't progressive.

If you want to do something about reducing income inequality, then many thousands of millionaires and billionaires ought to hold a big convention and agree to pool as much as 100% of their yearly income to fund basic income for everybody needing it. Every adult would have at least $25,000 in income. Adults making less than from their jobs would be entitled to get whatever is needed to make up for it. That person who made only $15,000 would be granted $10,000. Far from everybody would be eligible, thereby, hopefully, not doing much to inflation. The homeless could be housed. As a result, government welfare could be abolished. The money from that could be redirected to rebuilding or maintaining the infrastructure, meaning more jobs. Crime, overall, would go down. Conservatives might like the plan, since government doesn't have to fund any of it though taxation.

The only question would be are there enough rich people willing to make it possible? Why not, since some portion of their money given would likely be redirected back to their vast store chains?

According to a Fast Company article, the collective wealth of U.S. billionaires has now grown by $1 trillion since the pandemic began. That's enough, a new report says, to cover sending a $3,000 check to all 330 million-plus Americans, while leaving the billionaires wealthier than they were before the pandemic. So there very well may be enough money out there to just give to adults making under $25,000 a year. That figure may need adjusted upward for people living in some states where the cost of living is much higher.

Interesting concept. Which wealthy politician constantly complaining about income inequality do you think will be the first to sign on to it? Should we take bets?

Bernie
Warren
Feinstein
Pelosi
Kennedy family
Clinton’s

Since Biden is now the president for all people maybe he would be the first.

All Bernie would have to do is sell one of his three homes. How many homes does one guy need?

 

[steross]

Why not just make the minimum wage $50/hour? Easy fix. Everyone makes over $100,000/yr. imagine how comfortable and prosperous the whole country will be.

This isn't even a discussion of minimum wage.

I know it is really hard, but try to keep up.

 

[steross]

Salaries at the lower & middle class have been indexed to inflation for decades. Salaries at the upper class have exceeded inflation for decades. If a VAT funded UBI create significant inflation, salaries will increase as well. Medical professionals will demand higher salaries to account for inflation, and the cost of healthcare will increase. You would have more to spend, because your salary would increase.

The upper class is extremely efficient at separating the middle & lower class from their money. That won't change with a VAT funded UBI. It may take 5-10 years for markets to adjust, but I see this resulting in a zero sum endgame. The overall pie of wealth & income will still be divided the way it is now, but the value of the USD will be lower.

ER doc salaries are falling dramatically despite the increases in health care. I'm seeing rates below what I got when moonlighting on top of my Air Force job in 1999.
How awesome would life be if I could just say to my employer, "Hey, my costs are rising so even though you aren't making any more (due to VAT, no change in money supply, and decreased health utilization with UBI) you have to give me more money. That isn't gonna happen. And, if it somehow did, then it would cut into profits, as the Fed would not increase money supply for that reason.
This is far from a zero-sum game. There are way too many inputs. If you look at other nations their wealthy are not able to do what you are saying. The reason that it is that way now in the US is that we allow the wealthy to control government policy. This would be the antithesis of that (which is why it won't happen). We have made changes in our history to fight the false inevitability that you are saying is true (trustbusting, etc).