CBO report confirms wealthy is already paying MORE than their 'fair share'

[Widdekind]

The housing collapse had absolutely, positively, NOTHING to do with investing (sepculation, hedging, or anything else). It was the direct result of liberal Socialism (as usual).

The housing market collapsed because of Bill Clinton's "Community Reinvestment Act" which ensured that people who didn't previously qualify for home loans received them (because the idiot liberal - in true Communist/Marxist/Socialist fashion believes everyone should own a home, whther they can afford it or not).

Inexpertly, risky loans were a small part of the problem. House mortgages were divided up into "shares" (mortgage backed securities (MBS)), like stock "shares" of companies. The risky loan "shares" were then "salted" into portfolios of other (seemingly) sound mortgage shares, distributing (and obfuscating) the risk. Bad loans were made, to risky borrowers, for over-priced houses. Then, when they defaulted, their bankruptcies "polluted" or "corrupted" the entire mortgage market, since their loan "shares" had been bundled together, with everybody else's. Mortgage credit evaporated. Demand-with-money(-or-credit) for houses evaporated. Prices plummeted, from debt-fueled & credit-inflated high levels; down to historic trend levels, representing the demand-with-money, for houses, of people who could actually afford houses, without the previously easy credit. Defaults on bad loans "scared away" previously easy credit; demand-with-money fell (to historic trend levels); prices fell (to historic trend levels); wealth on paper fell; debts to banks did not.

 

[expat_panama]

...House prices nearly doubled, however, during the bubble, as observed by economist Robert Shiller...

Bob Schiller's fine for mining market numbers to push politics, but understanding market trends as needed to run a business is a lot easier with other more reliable sources, including Census Br., Federal Home Loan Mortgage Corporation, etc. Here's the Fed's take:

Sure we can say nominal home prices more than doubled since the previous trough 15 years earlier, and that's pretty subdued compared to pre-war market swings--

Being able to see how markets flow over the long term puts a new light on 'crisis talk'--

...The 2006 housing bubble collapse was caused by rampant speculation (risking for reward, and losing), not by hedging (playing it safe, foregoing possible profit, to avoid loss)...

--which is why not many of those at work in open markets would be easily swept into that emotion.

 

[Widdekind]

not many of those at work in open markets would be easily swept into that emotion.

avoiding speculative frenzy would avoid losing lots of money. Seemingly, millions of Americans were not well advised, and were exploited, in their ignorance.

 

[Moonglow]

with the top 1% paying 38% of all federal taxes and the bottom 45% paying nothing its hard to imagine that the bottom 45% are paying their fair share!

Its seems class war has become the liberal's stock in trade whether it is purely idiotic or not!!

the 45% that pay no taxes is from the Bush era tax structure. I got back more in my refund under Bush than Obama

That makes no difference, it has to do with what the total earnings was, how much in taxes you paid in, what your deductions are and on and on, so you have no clue, like many, on how this system works.

I am self employed and do my own taxes and have for 30 years after dropping out of law school to join the Army.

I am well aware of tax structure. Th Bush era tax guidelines are still in use now as they were when enacted under Bush. The exception is that Bush had a higher child tax credit.
The damn taxes on minimal income is still the same.
Obama had making money work? This last year I believe.
Don't worry town drunk, your constant personal attacks against me does not deminish anything in your favor.

 

[Moonglow]

not many of those at work in open markets would be easily swept into that emotion.

avoiding speculative frenzy would avoid losing lots of money. Seemingly, millions of Americans were not well advised, and were exploited, in their ignorance.

gotta love the gambler.

 

[ItsjustmeIthink]

I'm not sure I get this thread, do some people not understand the concept of progressive taxes?

 

[Papageorgio]

the 45% that pay no taxes is from the Bush era tax structure. I got back more in my refund under Bush than Obama

That makes no difference, it has to do with what the total earnings was, how much in taxes you paid in, what your deductions are and on and on, so you have no clue, like many, on how this system works.

I am self employed and do my own taxes and have for 30 years after dropping out of law school to join the Army.

I am well aware of tax structure. Th Bush era tax guidelines are still in use now as they were when enacted under Bush. The exception is that Bush had a higher child tax credit.
The damn taxes on minimal income is still the same.
Obama had making money work? This last year I believe.
Don't worry town drunk, your constant personal attacks against me does not deminish anything in your favor.

Constant personal attacks! Touchy aren't you. But you sure like to hand them out yourself.

Town drunks don't worry, we are happy.

Bush and Obama should have cut spending, not worried about cutting taxes. We have to much inefficiency in government. Taxes wouldn't be an issue if the deficit was kept in check. Obama has told us for four years he'd appeal the Bush tax cuts, there is one reason why he didn't, he likes it as a wedge issue between the rich and the rest of America. He cares nothing of anyone, only the power.

 

[EdwardBaiamonte]

I'm not sure I get this thread, do some people not understand the concept of progressive taxes?

the bottom 50% pay nothing and the top 1% pay 40% of all federal taxes?? We have the most progressive system in the world and of course it is very destructive because it takes money away from our most productive citizens.

The poor should pay the bulk of taxes since they don't contribute to society but rather leech off it.

 

[Rshermr]

I'm not sure I get this thread, do some people not understand the concept of progressive taxes?

the bottom 50% pay nothing and the top 1% pay 40% of all federal taxes?? We have the most progressive system in the world and of course it is very destructive because it takes money away from our most productive citizens.

The poor should pay the bulk of taxes since they don't contribute to society but rather leech off it.

Your post is, as usual, pure bs. Any proof for any of your claims??The top 1% pay 36.7% of taxes but make about 17% of income. The bottom 50% make only 13.5% of income, but pay 2.3% of income taxes. However, ed, me boy, the upper 1% pay a low percentage of unemployment insurance, whereas the lower 50 percent pay about 8.5 percent.

So, if I understand your argument, you would like the folks who make 13.5% of all income pay 100% of the taxes. That lets the wealthy off the hook, corporations are free to go. Really, ed, you should run for congress on this idea.

 

[expat_panama]

...The 2006 housing bubble collapse was caused by rampant speculation...

...House prices nearly doubled, however, during the bubble...

...we can say nominal home prices more than doubled since the previous trough 15 years earlier, and that's pretty subdued compared to pre-war market swings--

...

not many of those at work in open markets would be easily swept into that emotion.

avoiding speculative frenzy would avoid losing lots of money. Seemingly, millions of Americans were not well advised, and were exploited, in their ignorance.

The label "rampant speculation" still does not match with actual price history that only shows '06 trading was 'more' than that of one or two years before or after. The record also shows that '06 price swing volatility was on par with previous decades and much less than that of previous generations.

Markets are good because people usually do well. The fact that some people sometimes behave poorly should not be used to disparage markets in general.

 

[expat_panama]

not many of those at work in open markets would be easily swept into that emotion.

...avoiding speculative frenzy would avoid losing lots of money. Seemingly, millions of Americans were not well advised, and were exploited, in their ignorance.

gotta love the gambler.

Bingo! We've just nailed the source of the confusion here.

It's the problem that many here do not understand that markets are where adults work creating wealth by buying and selling things. Some here take the childlike approach of perceiving 'gambling' when in fact they're looking at 'hard work' --something foreign to personal experience.

 

[Widdekind]

The label "rampant speculation" still does not match with actual price history

factually wrong -- during the 2006 housing price "bubble", housing prices inflated far above historic trend levels, as observed by economist Robert Shiller. Prices reflect demand (willingness to pay) with money (ability to pay). Easy credit poured (borrowed) money onto the housing market, inflating (short-term) ability to pay, and so inflating money demand for houses, so inflating their prices. Then, when easy credit was withdrawn, ability to pay deflated, deflating money demand for houses, so deflating their prices, back down towards historic trend levels.

Credit markets inflated, and then deflated, the housing market. Speculation was involved, because easy credit inflated prices, making houses look profitable, drawing in more "borrower buyers", who "gambled" on prices continuing to rise. That is textbook speculation.

Markets are good because people usually do well. The fact that some people sometimes behave poorly should not be used to disparage markets in general.

who is disparaging markets, man? Evidently, you can "drive over me", in an "armored tank", not constructed of civility, facts, logic, numbers, statistics, or reason. Or that is my personal perception, at least.

Markets are not the problem. Speculation was the problem (in 2006). Americans are "uncompassionately" advised, to speculate (on stocks, on real-estate; i.e. on US businesses, and land), without being "mercifully" warned, that true profits are only produced, from productive investments (machines, factories, "that actually do things"), and never actually from speculation (swapping pieces of paper, "trading baseball cards with corporate logos on them"). Speculation can only redistribute already-existing wealth, from "suckers" to "Mr. Ponzis".

Markets allow productivity to profit. Speculation exploits markets, by exploiting the ignorance, of market-goers. Speculation has no ultimate future -- zero humans will "speculate" themselves to "mars or the stars" (as it were). Meanwhile, some humans may speculate themselves to "the bahamas", by swindling already-existing money, from other people. There, "in the bahamas", they will produce nothing new, and will make zero contributions, to the growth & development, of any economy, anywhere.

Separately, perhaps no (other) humans on earth care.

 

[expat_panama]

... Evidently, you can "drive over me", in an "armored tank", not constructed of civility, facts, logic, numbers, statistics, or reason...

Somehow we jumped from an alliance together fighting economic puzzles to us fighting against each other. You and I are both a couple of tough cookies so I think we'd probably find it a lot less work joining back up fighting puzzles together.

The label "rampant speculation" still does not match with actual price history

factually wrong -- during the 2006 housing price "bubble", housing prices inflated far above historic trend levels, as observed by economist Robert Shiller...

Instead of doing it themselves, most people prefer to sit and watch hired athletes play football for them. Same goes for sex and economic studies. I like to do my own sports, sex, and econ and while I realize that my antics are not nearly as impressive to other people as that of the pros, my doing things myself leaves me better off. Let's each look on our own at how 'rampant speculation describes' real estate in '06 in comparison to everything else. Here the historic totals for all privately owned real estate along with totals for all private assets:

In '09 total real estate had fallen by $6T. If 'rampant speculation' applies to that price change then it applies more to the other assets that fell $10T. The fall in real estate values was less extraordinary than that of other assets. The thing that's extraordinary here is not the buying in '06 but rather the lack of buying since '09. Real estate markets may not have shown 'rampant speculation' but what we do see is 'rampant inactivity'.

...Speculation exploits markets, by exploiting the ignorance, of market-goers...

We're hearing a lot of exploitation theory lately, probably because it's the foundation of Marxism which is also on the ascendancy. Value judgements aside, the proof of extraordinary levels of non-reciprocal real estate transactions requires numbers, not words. It would be believable only if we saw the number of land-owners falling far more than total land market values. Without the numbers the screed is nothing more than a continuation of America's loony left-wing 'rampant frenzy'.

 

[Widdekind]

So, during the 2008 recession, total household assets decreased about -$10T, of which -$6T was decreased real-estate values. Household holdings of corporate equity (stock shares) decreased in value by about -$5T; of money market mutual funds by about -$1T. Meanwhile, household savings rates sky-rocketed; and households have paid down over $1T in mortgage debt:

Evidently, in 2008, prices of housing & stock markets plummeted (the S&P decreased from nearly 1600 to under 700), wiping out $10T in on-paper market value. The housing-market bubble co-occurred with a "second dot-com" stock-market bubble. Interest-rates are the "price" of credit, reflecting the ratio of demand-to-supply of (bank) loans. During both the "dot-com" bubble of the 1990s, and the housing bubble of the 2000s, bank interest rates increased about +3%, evidently due to increasing demand for (bank) loans, for speculating on stock-markets. Then, in 2008, people switched from borrowing-and-spending to saving. Without that artificial, debt-fueled "speculation demand", housing prices & stock prices both co-collapsed.

Americans borrowing from banks, to buy corporate stock ("baseball cards with business logos"), does not increase US real GDP; does not modernize US capital or infrastructure; does not put humans on our moon or mars; does not accomplish any productive (or, hence, long-term profitable) purpose.

S&P 500 Index (1960 - Present Weekly) - Charting Tools - StockCharts.com

http://research.stlouisfed.org/fredgraph.png?g=8Z6​

 

[expat_panama]

In '09 total real estate had fallen by $6T. If 'rampant speculation' applies to that price change then it applies more to the other assets that fell $10T. The fall in real estate values was less extraordinary than that of other assets...

So, during the 2008 recession, total household assets decreased about -$10T, of which -$6T was decreased real-estate values. Household holdings of corporate equity (stock shares) decreased in value by about -$5T; of money market mutual funds by about -$1T...

No, total assets values including real estate dropped $16T, of which the $6T drop in real estate was less than the $10T drop in everything else. Here are the totals from the Fed's Flow of Funds Report:

As said above, it's not the jump in home prices that's remarkable, it's the fact that real estate hasn't recovered with everything else. Any way we look at it the description 'rampant speculation' applies less to real estate than to other assets.

...to buy corporate stock ("baseball cards with business logos"), does not increase US real GDP...

For one thing, total US market capitalization at over $20T is in a 'different league' than baseball cards. Another thing is while stock and bond sales --along with all other savings-- aren't directly counted in the GDP, corporate activity is and it's the majority of the GDP's component totals. Without stock and bond sales, corporate activity would stop and most of the GDP would disappear.

 

[onecut39]

Odd that the lefties around here have no comment. But then a little thing like facts and data
don't mean anything unless it supports their ideology. Consider this:


snippet:

New Congressional Budget Office (CBO) figures show that the top 1% paid 21.3% of all federal taxes from 1993 to 2000, when Clinton was president, but they paid 25.1% from 2003 to 2008, after the Bush tax cuts. If 21.3% was a fair share in the Clinton years, then the top 1% has been paying much more than its fair share since 2003.
.
.

Similarly, the CBO finds that after-tax median household income rose by 48.8 percent from 1980 to 2009, after properly adjusting for shrinking household size (more singles, fewer children). The table below, constructed from CBO data, shows what happened when.

Changes in Real Median Household Income
Adjusted for Household Size
Before taxes After taxes
1979-1983 0 0
1983-1989 13.5 12.8
1989-1992 0 0
1992-2000 17.3 18.1
2000-2007 10.3 13.9
2007-2009 -4.7 -1.2

In the CBO’s after-tax estimates, real median income rose 18.1% from 1992 to 2000 (thanks to the Internet and cellphone revolutions), but median income also grew by another 13.9 percent from 2000 to 2007. Comparing pretax and after-tax estimates shows the Bush tax cuts and refundable credits helped quite a lot, particularly in the crash from 2007 to 2009.

The CBO’s Gini coefficient (a broad measure of inequality) was 0.426 in 2009 – essentially unchanged from 0.424 in 1988. Like the strong 1992-2007 increase in real median income, the absence of any sustained upward trend in such broad measures of inequality is unlikely to be treated as newsworthy during an election year.

In late 2011, by contrast, the CBO grabbed a lot of media attention with a supposedly new report saying, “The share of income received by the top 1% grew . . . to over 17% in 2007.” In a Wall Street Journal article last December, I asked why the report stopped with the frothy cyclical peak of 2007, since I could easily calculate from IRS data that “the share of after-tax income of the top 1% by my estimate fell to 11.3% in 2009.” Now that the CBO has finally gotten around to releasing estimates for 2008 and 2009, it turns out that my estimate was almost exactly on the mark: the top 1 percent’s share of after-tax income fell to 11.5% in 2009.

The CBO on Falling Incomes and Rising Tax Shares of the Top 1% | Cato @ Liberty

All those figures really show is what an unimaginable portion of the national income has been transferred (redistributed) to the t.op 20%.

Median household income, almost universally now meaning more than one income, has been reduced to the point where it is just above the poverty level for a family of four.

How much taxes do you expect these people to pay?

 

[KissMy]

Adam Smith did say that since the top 1% have 43% of the nations wealth that they should pay over 43% of the taxes. Adam Smith wrote, "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion" ... "The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. The expense of government to the individuals of a great nation is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation."

Romney paid less than 13.5%. Lower & Middle class income has been on the decline for the past 13 years. So has their wealth & ability to pay taxes.

 

[EdwardBaiamonte]

Adam Smith did say that since the top 1% have 43% of the nations wealth that they should pay over 43% of the taxes.

1) if so I'll pay you $10,000. Bet??

2) all agree taxes are based on income, not wealth

3) since the bottom 50% pay no tax and make no contribution toward their fair share why not conscript them?

4) the bottom 50% have no accumulated wealth because the liberals take it to pay welfare entitlements. They gets trillions each year so they don't have to accumulate wealth. In fact let them keep just their Social Security and they'd retire rich!

 

[KissMy]

4) the bottom 50% have no accumulated wealth because the liberals take it to pay welfare entitlements. They gets trillions each year so they don't have to accumulate wealth. In fact let them keep just their Social Security and they'd retire rich!

Social Security has been running a surplus that was stolen. Medicare, Medicaid, Prescription Drugs, Tax Cut/Loopholes for the wealthy and Excessive Military & Homeland Security Spending are what is blowing holes in the budget.

 

[EdwardBaiamonte]

4) the bottom 50% have no accumulated wealth because the liberals take it to pay welfare entitlements. They gets trillions each year so they don't have to accumulate wealth. In fact let them keep just their Social Security and they'd retire rich!

Social Security has been running a surplus that was stolen. Medicare, Medicaid, Prescription Drugs, Tax Cut/Loopholes for the wealthy and Excessive Military Spending are what is blowing holes in the budget.

so you agree that the bottom has no wealth because the liberals steal it all away to pay for big liberal government??