Another Way to Look at Our Fiscal Policies

[jwoodie]

Instead of arguing about taxes and spending, why don't we take a step back and consider our ultimate economic objective: Isn't our theoretical goal to have everyone become self-supporting individuals who are not in need of government assistance? Recognition of this goal leads us to the inescapable conclusion that we should be doing everything we can to increase (private sector) employment opportunities for all Americans. If everyone was gainfully employed, then there would be little or no need to increase taxes or spending.

Unfortunately, this imperative is almost completely ignored in the ongoing budget debates. Simply pumping more taxed or borrowed money into our economy may raise demand for goods and services, but it does little to encourage additional private sector employment. Instead, we should be focusing on how to make the hiring new employees more attractive to employers. One way this could be done is by removing disincentives such as front-loaded taxes and health care costs by basing them on total payroll rather than number of employees. Another way would be to provide financial incentives such as employer tax holidays for new employees.

Why aren't we talking about real solutions to our economic problems instead of nickle-and-dime arguments about taxes and spending cuts?

 

[PaulS1950]

It might be that politicians are looking for short term ways to make people feel good without letting them see the long term effects. It's a little like getting someone hooked on drugs. A little at first makes them feel good and then as the effects wear off a bit more, and a bit more until the amount becomes lethal. The dealer just wants to keep selling his crap and the addict just wants to feel better. Neither one thinks about the day that the dosage is deadly.

I'd say we are approaching that dosage.

 

[Underhill]

Instead of arguing about taxes and spending, why don't we take a step back and consider our ultimate economic objective: Isn't our theoretical goal to have everyone become self-supporting individuals who are not in need of government assistance? Recognition of this goal leads us to the inescapable conclusion that we should be doing everything we can to increase (private sector) employment opportunities for all Americans. If everyone was gainfully employed, then there would be little or no need to increase taxes or spending.

Unfortunately, this imperative is almost completely ignored in the ongoing budget debates. Simply pumping more taxed or borrowed money into our economy may raise demand for goods and services, but it does little to encourage additional private sector employment. Instead, we should be focusing on how to make the hiring new employees more attractive to employers. One way this could be done is by removing disincentives such as front-loaded taxes and health care costs by basing them on total payroll rather than number of employees. Another way would be to provide financial incentives such as employer tax holidays for new employees.

Why aren't we talking about real solutions to our economic problems instead of nickle-and-dime arguments about taxes and spending cuts?

Because congress has trouble doing anything new. From what I have seen they effectively want solutions that have been tried before. Whether republican or democrat, both sides consist of mostly old men who want nothing more than to continue defending and proposing the same old tired ideas.

The lack of term limits in congress is the #1 failure of the founding fathers and some of them knew it at the time.

 

[editec]

Instead of arguing about taxes and spending, why don't we take a step back and consider our ultimate economic objective: Isn't our theoretical goal to have everyone become self-supporting individuals who are not in need of government assistance? Recognition of this goal leads us to the inescapable conclusion that we should be doing everything we can to increase (private sector) employment opportunities for all Americans. If everyone was gainfully employed, then there would be little or no need to increase taxes or spending.

Unfortunately, this imperative is almost completely ignored in the ongoing budget debates. Simply pumping more taxed or borrowed money into our economy may raise demand for goods and services, but it does little to encourage additional private sector employment. Instead, we should be focusing on how to make the hiring new employees more attractive to employers. One way this could be done is by removing disincentives such as front-loaded taxes and health care costs by basing them on total payroll rather than number of employees. Another way would be to provide financial incentives such as employer tax holidays for new employees.

Why aren't we talking about real solutions to our economic problems instead of nickle-and-dime arguments about taxes and spending cuts?

Excellent question, Jwoodie.

The root cause of the fibrilating economy can be found in this graph.

You'll note that when income inequity gets too strained our economy falters?


And when it falters note also that for a while, the incomes of the very wealthy ALSO decline?

Now there's ways to fix that but neither partry is truly interested in taking those steps.

 

[Underhill]

Instead of arguing about taxes and spending, why don't we take a step back and consider our ultimate economic objective: Isn't our theoretical goal to have everyone become self-supporting individuals who are not in need of government assistance? Recognition of this goal leads us to the inescapable conclusion that we should be doing everything we can to increase (private sector) employment opportunities for all Americans. If everyone was gainfully employed, then there would be little or no need to increase taxes or spending.

Unfortunately, this imperative is almost completely ignored in the ongoing budget debates. Simply pumping more taxed or borrowed money into our economy may raise demand for goods and services, but it does little to encourage additional private sector employment. Instead, we should be focusing on how to make the hiring new employees more attractive to employers. One way this could be done is by removing disincentives such as front-loaded taxes and health care costs by basing them on total payroll rather than number of employees. Another way would be to provide financial incentives such as employer tax holidays for new employees.

Why aren't we talking about real solutions to our economic problems instead of nickle-and-dime arguments about taxes and spending cuts?

Excellent question, Jwoodie.

The root cause of the fibrilating economy can be found in this graph.

You'll note that when income inequity gets too strained our economy falters?


And when it falters note also that for a while, the incomes of the very wealthy ALSO decline?

Now there's ways to fix that but neither partry is truly interested in taking those steps.

I see that as a symptom more than the problem. Of course it is a symptom that was intentionally manufactured by those in that 1% bracket...

The root cause is the destruction of manufacturing. It only makes sense when you think about it. Manufacturing is essentially taking raw materials and adding value using labor. The highest cost of the manufacturing process is the labor.

Traditionally that labor makes companies a lot of money. And people who worked in those sectors back in the 50 and 60's made a good middle income wage.

But by moving that labor to wherever it is cheapest it does two fundamental things. Lowers the cost, making companies more money. And get's rid of the jobs that were our countries bread and butter.

Those jobs have been replaced but with service jobs which add no value. You are simply passing existing wealth around. Of course you still have to buy the manufactured goods, but a large percentage of our wealth is eaten away by those manufacturing cost going overseas.

So in short, a service economy is a dwindling economy. And that is the source of our countries problems.

 

[Wiseacre]

Keep it clean fellas. Don't get personal.

 

[ReallyMeow]

Im glad to see that things have already taken a tilt towards taxing the rich in this thread, It really is as simple as that. a flat tax rate stuns growth and saps demand from the economy; push the tax brackets upwards to give the half of Americans making 30k a year some breathing room, remove the social security cap so we can lower the overall ss tax rate- taxes should be on profits, a slice of the pie, not a hurdle to exacerbate startup costs and make the loan payment bigger.

 

[oldernwiser]

Im glad to see that things have already taken a tilt towards taxing the rich in this thread, It really is as simple as that. a flat tax rate stuns growth and saps demand from the economy; push the tax brackets upwards to give the half of Americans making 30k a year some breathing room, remove the social security cap so we can lower the overall ss tax rate- taxes should be on profits, a slice of the pie, not a hurdle to exacerbate startup costs and make the loan payment bigger.

I've been giving this a lot of thought lately. Boosting taxes on the rich isn't a new idea - FDR had proposed it in order to stop the more affluent from hording cash (which is about where we are right now), it was quickly removed though.

But, I'm becoming more and more convinced that there is a more insidious problem that simply isn't being addressed with any zeal. The issue that I see is that the top 10% of the wealth is centered around multinational businesses. These companies begin operations here in the US where our business tax rate is about 35%, they then shift operations to countries like Ireland where the business tax is 12% (since 2011, most companies like Google and Facebook who were based in Ireland have begun to shift towar Poland for even better tax rates). Without changing anything but the their location, they have increased profits by 13%. In shifting operations, they can then "sell" patent rights to their new European counterpart (which is an operating loss in Europe resulting in less than 12%) and pay out royalties to the US corporation - except that cash never comes ashore. The US company then operates at a loss at least as far as the IRS is concerned, and so pays no taxes in the US.

This was a problem during Bush 43's first term. He allowed a 1 year tax amnesty program he called the American Jobs Act where he asked multinational corporations to repatriate their funds in the US and charged them a 1 time flat tax of 5% (lower than Ireland's 12%). They responded by bringing all their cash home, buying up huge blocks of their own stock (which caused the market to soar to new heights), and then laid off thousands of workers here. Nothing was ever done to restrict these businesses from going right back to what worked for them before.

So - now we have a zooming stock market, and employment tanking. We have a growing number of poor people and 1400 billionaires listed in Forbes today. If you follow the video (I'll provide the link in a minute), and if it's basically true, you can see for yourself what our current tax policy is doing to destroy the middle class and make life VERY good for the top 1%.

[ame=http://youtu.be/QPKKQnijnsM]Wealth Inequality in America - YouTube[/ame]

 

[Circe]

So - now we have a zooming stock market, and employment tanking. We have a growing number of poor people and 1400 billionaires listed in Forbes today.

The stock market hit another high water mark today. Closed at Dow 14,253. Well, there has to be an explanation for this that doesn't take in the dubious European situation, our large and rising deficit, the supposed threat of the feared Sequester or the possible government shutdown at the end of March.

I'm thinking it's the cheap money. Bernanke keeps spinning out the money and people keep chunking it into equities, and the stock market goes up, up, up.

Am I right?

 

[PaulS1950]

The stock market reacts to the trust of its investors. If people trust that they have good investments and the companies that they invest in make money then the investors make money. If a large number of people lose faith in a company or the markey in general, sell their stocks then the market goes down because there are not enough people to buy the stock being sold so the prices drop - regardless of the viability of the company. A company that uses the shareholders money for operating funds can go belly up in a surprise sell-off.

 

[realinvestment]

<<< Isn't our theoretical goal to have everyone become self-supporting individuals who are not in need of government assistance?>>>

That's not realistic. What about all the seniors with Alzheimers? And the young who need to be trained.? Even the 20-60 crowd has some that can't contribute much.

But it still seems most adults want a job, and want to be self sufficient. IMO, a minimal amount of public support to the disadvantaged does not derail incentive for the majority.

 

[oldernwiser]

The stock market reacts to the trust of its investors. If people trust that they have good investments and the companies that they invest in make money then the investors make money. If a large number of people lose faith in a company or the markey in general, sell their stocks then the market goes down because there are not enough people to buy the stock being sold so the prices drop - regardless of the viability of the company. A company that uses the shareholders money for operating funds can go belly up in a surprise sell-off.

That's only true to a point. If a company buffers itself against sell offs by buying it's own stock, then it has a lot less to lose in short term down turns. This is something the multinationals did en masse when Bush granted the 1 year tax amnesty program. Even though the economy itself has been slowing down, stocks continue to do well.

We can also attribute this phenomemon to robo-trading to a certain degree. This holds the market volume unnaturally high and belies overall investor confidence. And, since the dollar is strong against the Euro (with all it's current uncertainty), we're also seeing a lot of foreign investments.

One thing for sure that we AREN'T seeing in the market these days: middle class America.