Wednesday, September 21, 2011

Fact-Checking Buffett: His Math Doesn't Add Up

The Washington Poat did some fact-checking on the claim made by Buffett and Obama that rich CEOs are routinely taxed at lower rates than their secretaries and here's what they found:

"President Barack Obama says he wants to make sure millionaires are taxed at higher rates than their secretaries. The data say they already are. 

"Warren Buffett's secretary shouldn't pay a higher tax rate than Warren Buffett. There is no justification for it," Obama said as he announced his deficit-reduction plan this week. "It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million."

On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.

The 10 percent of households with the highest incomes pay more than half of all federal taxes. They pay more than 70 percent of federal income taxes, according to the Congressional Budget Office.

This year, households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes, including income taxes, payroll taxes and other taxes, according to the Tax Policy Center, a Washington think tank.

Households making between $50,000 and $75,000 will pay an average of 15 percent of their income in federal taxes.  Lower-income households will pay less. For example, households making between $40,000 and $50,000 will pay an average of 12.5 percent of their income in federal taxes. Households making between $20,000 and $30,000 will pay 5.7 percent."

Read more here at my post today on The Enterprise Blog.

66 Comments:

At 9/21/2011 1:04 PM, Blogger Marko said...

Is the problem here that we are saying the average millionaire (I assume based on gross income of over a million a year, rather than on total assets?) has a higher total federal tax rate than the average secretary, but is it possible that some millionaires have a lower rate than some secretaries? So if there is a millionaire that derives almost all of their income from capital gains, could they have a lower effective rate than a secretary that for whatever reasons has few deductions and therefore a pretty high AGI?

So it might be that Buffet could be right about a specific situation, but still be wrong on average. I am not trying to defend Buffet, but I am trying to figure out what is going on here.

So based on sometimes maybe millionaires have mostly capital gains and lots of deductions and therefore pay a lowish tax rate, I guess the Prez is suggesting we have a minimum rate millionaires have to pay. Don't we already have an AMT? Corporations do too, so how can GM pay no taxes? I am confused.

Simple solution - flat taxes for everyone!!

 
At 9/21/2011 1:07 PM, Blogger Marko said...

Forgot - flat taxes for everyone on just income, no taxes on capital gains. Everyone on board with that?

Another quick thought - does anyone else remember Obummer saying during the debates that he wanted to raise Capital Gaines taxes even if it raised no revenue because it would be more "fair"? Surprised the repubs are not trotting that out - maybe they are saving it.

 
At 9/21/2011 1:15 PM, Blogger Benjamin said...

I just cry myself to sleep when I consider the plight of rich people in the USA today.

 
At 9/21/2011 1:25 PM, Blogger Marko said...

Benji, I remember seeing interviews with people during the Great Depression. In the beginning, lower income people were happy the rich bankers were finally getting theirs - I guess it was a mixture of shadenfreude and class envy. Well after about a year, those people that were pleased that the rich were hurt lost their jobs too. Then it was not so "rich".

Don't raise my bosses taxes - I want to keep my job!!

 
At 9/21/2011 1:28 PM, Blogger Marko said...

Benji, I wonder if you even read the articles in this blog, you certainly don't seem to be absorbing them. Don't recall all the posts about mobility between income quintiles? The idea that there is a permanent class of "rich" people is just wrong - leftover marxist rubbish.

 
At 9/21/2011 1:41 PM, Blogger morganovich said...

marko-

capital gains taxes are 15% and getting ready to jump to 22.5%.

secretaries are paying 12.5%.

it's tough to see how they pay more even then, unless they are making 100k or so and are very bad at minimizing tax liability.

 
At 9/21/2011 1:51 PM, Blogger morganovich said...

bunny-

"I just cry myself to sleep when I consider the plight of rich people in the USA today."

and i cry myself to sleep at night for America, knowing we are at the mercy of voters like you.

 
At 9/21/2011 1:52 PM, Blogger marmico said...

In 2008, 243 of the 400 highest adjusted gross income taxpayers paid less than a 20% effective federal income tax rate.

IRS Top 400.

I think that it's taxpayers of this and similar note that Buffett is referencing.

 
At 9/21/2011 2:16 PM, Blogger morganovich said...

marmico-

that's still well above what a secretary pays.

also note, capital gains are almost always double taxed.

the company tends to appreciate due to earnings. those earnings are taxed at 35%.

add in 15% cap gains, and you get quite a robust tax rate there.

also note, the at the US taxes global income. if those 400 lived in europe, they might well pay zero. they'd invest here and pay no taxes at home. (i know lots of people who do this) this is true of pretty much every other country save north korea.

they are also paying WAY more in absolute dollars for the same government.

if you and i walk into burger king and get whoppers, we expect to pay the same. we call that fair. we don't look at it as a % of income. that would be absurd and make additional income worthless in real terms.

so why fixate on %'s?

18% of larry elison's income for a year is more than 1000X the dollars of the average taxpayer.

why should he pay so much more. even a flat tax is nothing at all like flat. if you earn $200k and i earn $100k, why should you pay twice what i do.

you get nothing additional for it.

in fact, you get less. you are less likely to need unemployment or medicaid or dozens of other programs.

you get the same cops, the same FAA, the same military.

what's the justification that you should pay twice as much?

that you have been successful?

that's absurd in any other sphere.

if mario battali and i go to the grocery store and buy the same ingredients which he turns into a superb dinner worth $100 and i turn into a mediocre mess worth $5, should he pay 20X what i do for ingredients just because he's better at using them?

we have been indoctrinated to think of "buying" federal government as a % of income, but that does not make it a particularly valid notion. nothing else works that way.

why fixate on 18% vs 12.5% instead of $7 million vs $7 thousand?

 
At 9/21/2011 2:33 PM, Blogger marmico said...

We are fact-checking Buffett's math, not your trip to Arby's with Emiril.

131 of the 400 (33%) largest adjusted gross income taxpayers in the U.S. paid an effective federal income tax rate of 15% or less.

 
At 9/21/2011 2:49 PM, Blogger Moniker said...

The question isn't what should each of us pay, but what can we pay. The government has already spent the money, and it's like we all woke up to find ourselves at a fancy restaurant, staring at the bill. No one wants to pay it, some of us can't pay it, so those of us who can will have to, or we all wash dishes. We have joint and several liability for our government's debts.

I agree that it isn't "fair" to foist more of the burden on those who are successful, but the reality is that much of the rest of the population can't pay. The poverty level is around $22k for a family of 4 (ridiculous). By that definition, more than 15% of the US population lives in poverty. I don't know whether these figures include the incarcerated and disabled, but you get the idea, there are strictures on the ability of a large portion of the population to contribute meaingfully to the tax pool and still eat.

If we raise taxes on the middle and lower classes to compensate for reduces contributions at the top, won't that drive up wages? I'm not an economist, but I would think the ultimate result is inflation.

 
At 9/21/2011 2:53 PM, Blogger Seth said...

"131 of the 400 (33%) largest adjusted gross income taxpayers in the U.S. paid an effective federal income tax rate of 15% or less."

Which does not include the double-taxation of capital gains and dividends, does it?

 
At 9/21/2011 2:58 PM, Blogger Emil Perhinschi said...

29.5%, 15%, 5.7% ... oh, it's not in Europe ... here we start from 45%, and go up

 
At 9/21/2011 3:15 PM, Blogger Benjamin said...

This comment has been removed by the author.

 
At 9/21/2011 3:16 PM, Blogger Benjamin said...

Marko, et al--

Actually, I am very much a free marketeer.

There are a lot issues that are worth raising--taxes on dividends, or whether we should have consumption taxes vs. income taxes (I favor consumption taxes).

Mandated ethanol? At 10 percent of gasoline volume?

The USA military is perhaps several times as expensive as it should be, and the $1 trillion Defense-VA-Homeland Security complex sucks $3,333 from every man, woman and child in the USA. Every year. That's $13k from an average family of four. Every year.

If you pay federal income taxes, you are putting about $6k annually into the Defense boondoggle-a-rama.

The home mortgage tax deduction results in heavy over-investment in housing.

So there are large issues on the plate--large issues religiously ignored by what passes for the right-wing today.

What do we get from our right-wing? Sniveling about the too-high minimum wage and how tough life is on people with million-dollar incomes.

And my tax-deductible corporate jet has cracked leather seats.

Oh, boo-hoo-hoo.

 
At 9/21/2011 3:16 PM, Blogger morganovich said...

marmico-

"We are fact-checking Buffett's math, not your trip to Arby's with Emiril."

i am questioning the assumptions that the math is relevant at all.

sounds to me like you have no response to that and are just trying to obscure the fact that you cannot support the reason to frame the discussion in percentage terms.

 
At 9/21/2011 3:20 PM, Blogger morganovich said...

moniker-

"The question isn't what should each of us pay, but what can we pay."

that sounds awfully close to marxism to me.

i can afford to pay more for dinner than most. does that mean i should?

if you are looking at can rather than should, then i think you are looking at it the wrong way.

besides, surely the 51% of americans paying no net federal income tax "could" pay more.


they did 10 years ago.

 
At 9/21/2011 3:21 PM, Blogger morganovich said...

bunny-

you are about as free market as hugo chavez.

 
At 9/21/2011 3:26 PM, Blogger PeakTrader said...

Moniker, the government needs to eat less, go on a diet, and get some exercise.

 
At 9/21/2011 3:36 PM, Blogger Paul said...

Benji,

"Actually, I am very much a free marketeer. "

Just a couple days ago your strategy for the wealthy was to "to tax it all away" to pay off the national debt so we can "start fresh."

Your words. Douchebag.

 
At 9/21/2011 3:38 PM, OpenID Sprewell said...

morganovich, I'll tell you why degenerates like marmico keep focusing on the framing device of rates, because all they want to do is redistribute income, take more from the rich and hand it to the middle class. I could care less if the rich have 30% of their income or 40%, as I know it's not going to make a big difference in their lives, but what I do care about is that those taxes are simply thrown away year after year by our worthless federal govt, rather than Jeff Bezos keeping that money to invest in businesses we actually need. That makes all of us poorer over the years, as progress goes that much slower. So even according to the goals of the idiot redistributionists, making the "poor" and middle class better off, they are failing. The problem is that the rich haven't been fighting back at this nonsense. At what point do they fight back, when the top 1% pay 20% of all taxes, 30%, 40%? All those thresholds have been passed, but at least some are starting to learn.

marmico, those tables that you link to include capital gains, ie returns from investments, which accounted to 60-70% of income for the top 400 in most years. We tax long-term capital gains, those investments held for more than a year (short-term is taxed the same as salaries), at 15%, one of the highest rates in the world. The reason it's lower than income taxes is because every country wants to encourage investors who risk their money in job-producing investments. That is not steady salary income, it is money risked in investments that may never pay off. Buffett is one of the best in the world at such investments, so he pays less than everybody else in overall taxes. What we should be focusing on instead is why Buffett had to pay $7 million in taxes when he lives a decidedly middle-class lifestyle in Omaha, just like many of the middle-class people in that town. The reason he had to pay so much is that ignorants like you keep trying to steal more and more money from him so that you can fund the latest bridge to nowhere or SS ponzi scheme or military base in the middle of nowhere.

 
At 9/21/2011 3:39 PM, Blogger Paul said...

The question I have for Buffet is why he would want to give more $ to our Investor-in-Chief to piss away on more enterprises like Solyndra. What would he do with a money manager at Berkshire Hathaway that had Obama's record? Would he give him a corner office, or pack his stuff and call security to escort him out of the building?

 
At 9/21/2011 3:46 PM, Blogger marmico said...

Which does not include the double-taxation of capital gains and dividends, does it?

True. Cap gains and dividends represented 57% and 7% of adjusted gross income.

The fact that cap gains and dividends are not (more closely) integrated at the corporate and individual level does not make the math any less factual.

 
At 9/21/2011 3:51 PM, Blogger Moniker said...

morganovich -
My point is that the debt is already accrued and the creditors are calling. It's no longer a question of whether you should pay or they should pay, but we probably all have to pay at maximumum tolerable levels. Just servicing the interest on our national debt with our tax revenues will become challenging soon if massive annual deficits remain the norm.

Tolerable levels fall short of extinguishing so much buying power at the middle and lower income levels that the economy stalls out. And levels that won't cause a mass exodus of wealth at the top.

Again, I'm not saying that you should pay more because it's fair. I'm saying you do because it's exigent.

And yes, I have some admittedly socialist leanings (marxist is a bit terse), so I do think that money begets money. It's easier to be successful if you have diversified assets, family money, a safety net, access to top notch schools, social connections, etc. So perhaps, yes, not all of your achievement is attributable to the sweat from your brow and it doesn't irk me quite so much that you're taxed more than the average joe in absolute terms.

 
At 9/21/2011 4:07 PM, Blogger PeakTrader said...

The way much of government entitlements are structured, they have been a lead weight or anchor that slows or stops many, if not most, of the poor from being successful.

So, of course, there's greater income inequality.

 
At 9/21/2011 4:22 PM, Blogger morganovich said...

m-

"Again, I'm not saying that you should pay more because it's fair. I'm saying you do because it's exigent"

lots of thinks contrary to freedom and rights are "exigent".

that does not excuse them.

you cannot tax your way to prosperity.

hausers law shows us that even much higher tax rates for the rich did not move federal income as a % of gdp at all.

they do slow the economy though.

i think you have it all backwards.

it's all the taxes and interventionist government that kills investment. that kills jobs and growth.

upping taxes to promote growth has never, ever worked. it's contrary to all basic economics.

regarding the marxist epithet, ""The question isn't what should each of us pay, but what can we pay."

sounds an awful lot like the front half of "from each according to his abilities and to each according to his needs" which is straight out of das kapital.

calling it exigence does not change that.

what we need is less spending and less federal meddling, not more taxes, more redistribution, and more uncertainty.

taxing dollars that would have been invested to fund consumption (while losing value in the transfer, government is not free) cannot create net growth.

 
At 9/21/2011 4:31 PM, Blogger morganovich said...

"So perhaps, yes, not all of your achievement is attributable to the sweat from your brow and it doesn't irk me quite so much that you're taxed more than the average joe in absolute terms."

so you propose to play arbiter on who is entitled to what and what was a leg up and what wasn't?

that sounds worryingly fascist.

i made all my own money and have paid off every cent spent on my schooling. does that mean i can be excused from these taxes of yours? do i pass the purity test for not being advantaged? my parents were 2 broke hippies with $100 when they got married. they lived in a really dangerous part of NYC.

so am i OK to be wealthy? who are you to render such judgment?

making a government such an arbiter is to allow it into every social sphere.

you cannot mandate that we all start equal.

what next, like the twisted world in harrison bergeron (vonneguts wonderful short story) shall i have to wear weights if i am stronger? a clown nose if i am better looking? wavy glasses to impair my vision down to yours? an ear piece to make jarring noises to keep me from concentrating if i am smarter?

do me need a federal handicapper general to render such judgments?

why would any sane person submit to that?

the only route to the kind of "fairness" you propose is totalitarianism.

forcing everyone to be equal and penalizing success is the road to ruin, not prosperity.

 
At 9/21/2011 4:42 PM, Blogger Jon said...

AP corrects an argument Obama didn't make. FAIR covers it well here. Krugman also addresses after the repeated straw man offered by AP and echoed by Mark.

 
At 9/21/2011 4:43 PM, Blogger Jon said...

The word "after" should have been deleted.

 
At 9/21/2011 4:54 PM, Blogger Moniker said...

morganovich-
Did you leave out Nazi on purpose, or was that an oversight?

Ok, so no, I don't advocate government as the great equalizer of all things. You take my point to an absurd extreme.

The wealthy segment of the population has more discretionary income. I advocate tapping into those amounts before amounts that would otherwise have been used to replace a refrigerator or an airconditioner. I'm not saying bring the upper class to its knees. I'm saying, try not to undermine consumer spending.

I have no doubt you've earned every cent, but so has the guy who digs in the coal mines, the short order cook in the hot kitchen, etc. We can argue all day about what's more "fair" - but ultimately, that's not what's at the heart of the debate in my eyes.

The fact is that we have to both optimize tax revenues and decrease government spending to get out of this economic hole.

I'm all ears if you have a better suggestion. Do you think decreased spending alone will do the trick? Or do we magically inflate out of the problem?

 
At 9/21/2011 4:55 PM, Blogger PeakTrader said...

An entitlement society tends to make the poor complacent.

It's 90% half mental (to paraphrase Yogi Berra) :)

 
At 9/21/2011 5:01 PM, Blogger marmico said...

so am i OK to be wealthy? who are you to render such judgment?

Go back to your hobbit hole, you fairy.

A GSE conforming mortgage of $417 thousand in Utah, huh. Able to borrow for 30 years for a rate less than the U.S. Treasury, huh. Wealthy, my ass.

Take it easy morganovich. You aren't in Buffett's cites, sights and sites.

132 of the 400 richest Americans as measured by AGI have a lower marginal federal income rate than Debbie Bosanek.

 
At 9/21/2011 5:14 PM, OpenID Sprewell said...

Moniker, we have a fundamental disagreement on the value of govt spending. You apparently think that some majority of it is worthwhile, whereas I think almost all of it is wasted. We could balance our budget tomorrow, simply by cutting the layers and layers of waste and dumb programs in our federal govt. Run those surpluses over the coming decades and we could run the public debt down, as we did in the postwar years, without ever raising taxes. What's coming up in 2012 is a massive argument about whether we're better off funding what we are funding now, by further raising taxes, or cutting all the crap out of our bloated federal budget. Hate to break it to you, but all those pushing your side of the argument are losing, as class warfare just doesn't play with most voters anymore.

 
At 9/21/2011 5:26 PM, Blogger Benjamin said...

Farmers give GOP candidate from Detroit area standing ovation for ethanol answer

JENNIFER JACOBS 5:44 PM, Aug 27, 2011

Farmers at the Iowa Corn Growers Association meeting said they liked the answer a presidential candidate from the Detroit area gave better than that of Texas’s Rick Perry, a former agriculture secretary.

Michigan Congressman Thaddeus McCotter told the farmers at their meeting in West Des Moines today that he supports the ethanol mandate in the renewable fuel standard – and the audience gave him a standing ovation.

In a separate speech today, Texas Congressman Ron Paul said he doesn’t support mandated fuel use, calling that “overregulating.” But, Paul added, he favors extending ethanol tax credits to encourage the industry.

 
At 9/21/2011 5:53 PM, Blogger Paul said...

Benji,

What is it about ethanol that makes you inject the issue into every thread? Did a farmer touch your pee-pee when you were a wee lad?

 
At 9/21/2011 5:58 PM, Blogger Methinks said...

The question I have for Buffet is why he would want to give more $ to our Investor-in-Chief to piss away on more enterprises like Solyndra.

Well, Paul, he wouldn't. He gave all his money away to the Gates Foundation. This is just the usual rent seeking on Warren Buffoon's part. You see, he thinks the peasants won't notice.

 
At 9/21/2011 6:10 PM, Blogger Methinks said...

The wealthy segment of the population has more discretionary income. I advocate tapping into those amounts before amounts that would otherwise have been used to replace a refrigerator or an airconditioner.

If you "tap into" that amount, then these people will have less to spend as they want. So, they'll seek to do a couple of things - shelter their income from your "tapping in" and reduce the amount they work.

See, that group you're dying to steal from has the most options in how it takes its income and how much it works. Why work for more when you're not going to keep it? Work less and have less to tax away. Why take more risks in investing for a higher taxable reward when you can take a lower risk for a slightly lower tax exempt reward?

You see, the rich did not become rich by being too stupid to avoid having their pockets picked by punters like you. Raise taxes and get less revenue.

Now, one thing that's missing from your otherwise weak analysis is how the very wealthy spend their money. They happen to shower charities with cash. Would you really rather (assuming it's possible) have that money confiscated by the idiots in government rather than having it go to help people in need? Even Warren Buffoon wouldn't - as evidenced by his own actions.

Who would you rather have your money? The clowns in Washington or a charitable organization you know to be running a tight ship and actually helping people in need?

 
At 9/21/2011 6:59 PM, Blogger Sean said...

Here's one where I think Krugman's data is illustrative:
http://krugman.blogs.nytimes.com/2011/09/21/millionaires-the-middle-class-and-taxes-actual-numbers/

Not that I agree with his conclusions, but I don't think Buffet is just making things up, either.

 
At 9/21/2011 7:07 PM, Blogger marmico said...

They happen to shower charities with cash.

Well, I guess the top 400 tithe. $8.9 billion (of a total of $173 billion) of contributions on $108.2 billion of AGI, a tithe rate of 8.2%. That's real good. You see, itemized contributions work at the marginal income tax rate of 35% for the top 400. Poor Debbie Bozanek can only deduct at 25%. The tax system is inequitable to 99% of those that tithe. A dollar of contribution for someone who makes $25000 should be worth as much as a dollar for someone who makes $2500000.

I wonder if Mark J. Perry tithes at 8.2%?

The hobbit hole fairy morganovich does not tithe at an 8.2% rate on his phony immense income?

 
At 9/21/2011 7:49 PM, OpenID Sprewell said...

Sean, Krugman and the data he cites include capital gains tax and payroll taxes, that go towards benefits for the person paying them, alongside regular income taxes that go to govt public services. Even if you were to raise the capital gains tax from 15 to 20%, as Obama proposes, he's banking on the vast majority of his tax hikes to come from regular income taxes, so it's a classic bait and switch: complain that Buffett is paying too little, then don't raise taxes much on Buffett but on everybody else.

Interesting that Mark pulls in $100-120k at a small public institution like UM-Flint. While I'm sure Mark is worth it- in fact, I bet he's slumming it and could be making a lot more in the private sector- I bet most of those rest could never make that much anywhere else. As online learning takes off in the coming years, I bet most of them will be jobless soon.

 
At 9/21/2011 7:59 PM, Blogger marmico said...

I bet he's slumming it and could be making a lot more in the private sector

Perry wouldn't last a day on Wall Street, maybe a week calling hard red spring wheat on the MGEX.

After all, they booted him out of Mercatus.

 
At 9/21/2011 8:14 PM, Blogger Methinks said...

Well, I guess the top 400 tithe.

No, idiot. The wealthy reach into their own pockets to help their fellow man in need. Not all of it is deductible.

By contrast, you're dying to use government to rob people just because you're painfully jealous of their accomplishments. Didn't your mama teach you stealing is wrong?

132 of the 400 richest Americans as measured by AGI have a lower marginal federal income rate than Debbie Bosanek.

You're a moron. The Buffet tax is not on 132 people. It's on everyone making a million or more and already paying the highest percentage of their income to the clowns in Washington. You're never going to touch the wealth of the top 132 because they're not stupid enough to let a chimp like you near it. You will, however, decrease the tax revenue and force tax increases on the sainted middle class, which cannot shelter its income.

That's what happens to dumb thieves - they cut off their noses to spite their faces. Crime doesn't pay - not even crime laundered through government.

As for Morganovich, you've exhibited the intellectual capacity of gnat and the morality of a common criminal. You aren't fit to be his doormat

 
At 9/21/2011 8:38 PM, Blogger marmico said...

Methinks1776 that you should return to your lair at Cafe Hayek. Boudreaux booted Perry, his research toy boy. Or are sticking up for the clan on the frontier?

If Perry wants to fact check Buffett and shit on Biden for his (lack of) contributions, Perry should put up or shut up. Joe ain't a bright guy. A glad-handler, yes. The Oracle is bright and a consummate politician.

Did you tithe 8.2% Perry or are you waiting until you reach the 35% (soon to be the 3x%) tax bracket?

Perry is the gnat squished on the doormat.

 
At 9/21/2011 11:28 PM, Blogger juandos said...

"Forgot - flat taxes for everyone on just income, no taxes on capital gains. Everyone on board with that?"...

Personally no marko I'm not...

Why should any particular person pay one more penny in taxes than any other person?

 
At 9/21/2011 11:52 PM, Blogger Benjamin said...

Juandos:

Okay, we all pay the same amount in federal income taxes.

This may work--for one, we would have to bring back citizen militias (and completely defund our military), close down the USDA, Commerce, Interior, HUD and NASA. So far, so good.

Social Security, oddly enough is financed through payroll taxes, so it would probably survive, although the retirement age would have to be bumped up and benefits trimmed. Medicare will have to cover only to age 80, and then you are on your own.

I figure we each could kick in about $2k a year to the feds.

I would prefer consumption taxes, but I will go for a $2k per adult head tax, and no other taxes.

As Department of Defense, USDA, Commerce, Interior, VA and Homeland Security eat up 70 percent of income taxes after debt payments, those are the agencies that will take the biggest whacks.

We may to renege on the debt, but I see no problem with this as we won;t be able to borrow anymore anyway.

 
At 9/21/2011 11:53 PM, Blogger juandos said...

"Methinks1776 that you should return to your lair at Cafe Hayek. Boudreaux booted Perry, his research toy boy. Or are sticking up for the clan on the frontier?"...

You lefties are truly amazing marmico...

When the facts don't agree with your preconceived concepts you start running with the baseless insults and churning up 'facts' out of what passes for your imagination...

Does this sound like Don Boudreaux has little respect for Mark Perry?

From a 9-11 blog posting at Hayek: the indispensable Mark Perry – captures very concisely much of what Russ and I (and Mark, and Doug Irwin, and many other economists) have said in one venue or another over the years...

 
At 9/22/2011 2:25 AM, Blogger PeakTrader said...

Middle class working households will suffer the most, not because the rich pay too little in taxes, but because government is too big.

 
At 9/22/2011 7:16 AM, Blogger Sean said...

Sprewell,

Sean, Krugman and the data he cites include capital gains tax and payroll taxes, that go towards benefits for the person paying them
You you're not in the "SS is a Ponzi scheme" camp?


Even if you were to raise the capital gains tax from 15 to 20%, as Obama proposes, he's banking on the vast majority of his tax hikes to come from regular income taxes, so it's a classic bait and switch
Excellent point.

 
At 9/22/2011 7:18 AM, Blogger Hydra said...

It adds up for some millionaires, not all.

 
At 9/22/2011 7:20 AM, Blogger Hydra said...

Flat tax is a dumb idea that has nothing to do with equality or fairness.

 
At 9/22/2011 7:30 AM, Blogger Hydra said...

Mobility between income classed has nothing to do with the fact that a relative few people control most of the income and the wealth.

If you are claiming those wont be mostly the same people next year anyway, then you cannot blame taxes for their economic demise.

The fact they may be in a different quintile next year says nothing about what they " should" pay this year.

 
At 9/22/2011 7:36 AM, Blogger Hydra said...

and i cry myself to sleep at night for America, knowing we are at the mercy of voters like you.

-----------//-----------
It isn't about what kind of voters, it is about what arguments they find believable.

If you concede the other side has more power, you admit that your ideas are not selling.

You need better ideas or a better sales pitch for the bad ones.

 
At 9/22/2011 7:39 AM, Blogger Hydra said...

Middle class working households will suffer the most, not because the rich pay too little in taxes, but because government is too big.

----------------

Yes, but those ideas are not dependent. The rich may still pay too little.

Nice try, though.

 
At 9/22/2011 7:46 AM, Blogger Hydra said...

Why should any particular person pay one more penny in taxes than any other person?

--------------------------

Because the value and service they receive from government is much higher.

If such a condition were true, would you agree it is a valid reason to pay more?

 
At 9/22/2011 7:51 AM, Blogger Hydra said...

I see Perry is backpedalling on social security now. Saying benefits for current and near retirees are a solemn promise that must be protected.

With that condition, what transitions are necessary?

What transitions are possible?

Do we accept mandatory contributions as a basic requirement for any new system?

 
At 9/22/2011 8:09 AM, Blogger Hydra said...

This comment has been removed by the author.

 
At 9/22/2011 9:31 AM, Blogger morganovich said...

hydra-

"Flat tax is a dumb idea that has nothing to do with equality or fairness."

your right. a flat tax is still massively unfair to the wealthy.

if you make 200k and i make 100k, why should you pay twice as much?

you're getting the same thing.

not other good or service works that way.

fair is paying the same for the same things.

 
At 9/22/2011 9:35 AM, Blogger Moniker said...

Sprewell-
I'm not sure that we have a fundamental disagreement about the value of government. I agree that there are lots of programs that should be cut, but the big ticket items will remain. Social Security, for example. The reserves have been plundered and need to be replenished. How about defense? I'm ok with cutting that one, but most people probably are not.

The other big ticket item in the budget is debt service. That's the one I'm most concerned about. That is why I argue that we should have a two pronged approach of both more revenue and less spending.

The debt is staggering and leaves the country vulnerable. I think we will have inflation if we can't get control of this mess.

 
At 9/22/2011 9:46 AM, Blogger morganovich said...

marmico-

"Go back to your hobbit hole, you fairy.

A GSE conforming mortgage of $417 thousand in Utah, huh. Able to borrow for 30 years for a rate less than the U.S. Treasury, huh. Wealthy, my ass.

Take it easy morganovich. You aren't in Buffett's cites, sights and sites."

wow, you sure do get hostile when you have no factual response.

guys like you should stay home and yell at the ricky lake show instead of embarrassing yourselves by trying to interact with the intelligent and educated.

and, FYI, i am precisely in buffets gunsights. i am the exact guy they are coming after.

almost all my income is capital gains, and it's well over the thresholds he and obama are talking about.

and what on earth would you know about it anyway?

you just demonstrate what an ignorant blowhard buffoon you are when you pretend to have knowledge you could not possibly have.

seems to be par for the course for you.

go sit in the corner until you have something useful to contribute as opposed to your senseless personal attacks.

 
At 9/22/2011 9:53 AM, Blogger morganovich said...

"GSE conforming mortgage of $417 thousand in Utah, huh. Able to borrow for 30 years for a rate less than the U.S. Treasury, huh. Wealthy, my ass."

FWIW, park city is expensive. it's full of VERY wealthy people. you'd know that if you had the cash to travel to nice places. i bought an 8600 square foot house for cash, they took out out a loan in a conforming amount because rates were so low. when you are looking at 20% loan to assessed value, yes, you can get rates in the 2's and 3's.

you would know this if you had even rudimentary financial knowledge, but it's clear you don't.

i don't know what you consider wealthy, but i sure meet the obama/buffet definition.

i probably pay more in taxes than you earn.

i made my fist million at 27.

you really want to start this?

you're going to wind up looking very, very stupid. (well, stupider than you already do)

 
At 9/22/2011 11:55 AM, Blogger Marko said...

Juandos -

Actually, I think a truly flat tax would be fine - everyone pays 2000 dollars, end of story. Government can budget from that. They can make up the rest if they want to spend more with leases and bake sales.

Do you think a consumption tax is "fairer", whatever that means?

 
At 9/22/2011 12:13 PM, Blogger Moniker said...

Marko-
Where does the figure $2000 come from? There are about 310 m people in the US. The 2011 budget was a bloated 3.83 trillion with a deficit of 1.5 trillion. Assume we live within our means and keep tax revenues constant, then we need 2.33 trillion.

That's $7,516 for every man woman and child. Admittedly, that doesn't account for revenues from corporate taxpayers. But, I also haven't excluded the disabled, incarcerated, children and others who can't pay.

Nevertheless, it seems the bill will be more than $2k per individual taxpayer.

 
At 9/22/2011 1:45 PM, Blogger juandos said...

"Do you think a consumption tax is "fairer", whatever that means?"...

That's always the 'good' question...

Personally I never could quite grasp why taxing during the production of a good or service made much sense to me...

I mean why drive up the price during the production phawe?

 
At 9/22/2011 4:01 PM, OpenID Sprewell said...

Sean, I've made clear that SS is a ponzi scheme, even earlier in this thread. But people do put money into it, that they expect to get out. The problem with SS is that it's partly a weird pension, as people put money in and expect that returned, even if they're legally not guaranteed anything back and the returns are pretty low; it's part giant redistributory scheme, as those who paid in more have their SS money funneled to those who put in less; and part ponzi scheme, as the slush fund is raided every year and later entrants are made to pay it back. So everyone looks at the part they care about and focuses on that, to the exclusion of the other giant flaws.

The gaping hole in the logic of anyone saying that they simply want people to save through SS is that you could do that by simply requiring saving of some minimum yearly amount in 401ks. The fact that the SS supporters never go for privatization, even as an option for those who opt out, shows that they don't really care about saving, they care about stealing that money from SS. However, if you tell people they will get the money they already paid in back, they're fine with cutting SS and most favor letting those who want to opt out get out.

Moniker, since I'm an anarcho-capitalist who thinks we should get rid of govt altogether and you seem to prefer simply balancing the budget, I suspect we do disagree at some level. ;) SS should be privatized, as it has just become a way for politicians to buy off voters and a giant slush fund. I'd get rid of the military altogether, but the balanced budget link I gave above proposes cutting it by two-thirds: we could start there. ;) As for debt service, it has been proven repeatedly that more revenue only leads to increased spending, not any debt service. Even in the Clinton "surplus" years, national debt went up every year. Increasing revenue now is only necessary if you think a balanced or surplus budget would cut too much, I certainly don't think that.

I don't think inflation is a reasonable concern unless we truly get banana republic officials elected. Bernanke's not going to repeat the mistake of the 70's: you could argue he's making new ones but I rate the possibility of inflating away our debt as practically nil, particularly since liabilities like TIPS or SS are inflation-indexed and couldn't be wiped away that way anyway. We will have massive spending cuts and maybe tax hikes at some point, but it is important to do the former first or it will never happen. The other possibility is default and a banana republic, which could happen too but I would still rate as low-probability.

 
At 9/22/2011 7:12 PM, Blogger PeakTrader said...

Hydra, so, the problem isn't that government is too big, it's the rich pay too little in taxes.

 
At 9/23/2011 3:33 AM, Blogger PeakTrader said...

According to Hydra, when the oil light in your car goes on, stop immediately and check if there's too much or too little windshield wiper fluid.

If there's too much windshield wiper fluid, then drain more transmission fluid.

 

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