GOP tax plan could raise GDP by 5% wages 7%

[Toddsterpatriot]

Yes, laughing and weep tears of frustration by todd.

Oh, I can say something positive about Trump.

He said the GOP in Congress were not going to touch the pre-tax of IRAs: period.

Good on that!

Lots of laughing. Pointing and laughing.

 

[Winston]

Big surprise. Your answer was not even close to adequate. They pay zero now, they pay zero under the new plan. There is no incentive to return that money to the US unless, as you did point out, they want to use the money here. But where is the demand going to come from? And I believe I previously pointed out to you that the highest corporate tax rate in the developed world is in the United Arab Emirates. It appears there is no shortage of businesses more than willing to invest in Dubai, and the police force there drives Lamborghinis.

Now I wondered how the hell those economists from Boston University could come up with such a figure considering what I know about the history of previous corporate tax cuts. So, unlike probably anyone else here, I found the study.

https://kotlikoff.net/sites/default/files/Simulating the Unified Framework Tax Reform Plan_0.pdf

Now, they got that growth in GDP by plugging the numbers into the Global Gaidar Model. I laughed out loud. The irony of touting a study based on a model designed by RUSSIAN economists can't be overlooked. But, there are some things we can take from the study. For instance,

Indeed, cuts in personal income tax rates in the GGM produce deficits, crowd out capital and lower long-run economic welfare.

Guess that tax cut for the wealthy should be pulled off the table. And then this,

This said, we share the TPC’s concern that the UF plan could disproportionately benefit the top 1 percent. This concern about fairness as well as the country’s massive long-term fiscal gap suggests modifying the UF plan to include, for example, the elimination of Social Security’s FICA tax ceiling, a tax on lifetime inheritances and gifts received above $5 million, or a progressive cash flow tax on consumption above $100,000

And there goes the elimination of the estate tax. Plus, I got to tell you, I love the idea of eliminating the ceiling on FICA taxes and implementing a cash flow tax on consumption above a hundred grand.

But the biggest problem with the study is the numbers plugged in. You know the saying, garbage in, garbage out. They plugged in a marginal EFFECTIVE tax rate of 34.6% and a new rate of 18.6%. The problem, the marginal EFFECTIVE corporate tax rate is no where close to 34.6%. Here is a study that pegs the EFFECTIVE corporate tax rate on new investments at 24%.

Actual U.S. Corporate Tax Rates Are in Line with Comparable Countries

So, in summary, the study in the OP assumes an extraordinary high effective marginal corporate tax rate that is not based on reality and ignores the additional components of Trump's tax plan like the personal income tax cut and the elimination of the estate tax. In fact, the study advocates maintaining the estate tax and a significant increase on taxes of the wealthy by eliminating the cap on FICA taxes.

They pay zero now, they pay zero under the new plan. There is no incentive to return that money to the US unless, as you did point out, they want to use the money here. But where is the demand going to come from?

From companies that want to buy more equipment here, or pay more dividends here, or buyback more stock here, or hire more employees here. Why do you want them to keep their earnings offshore?

And I believe I previously pointed out to you that the highest corporate tax rate in the developed world is in the United Arab Emirates. It appears there is no shortage of businesses more than willing to invest in Dubai, and the police force there drives Lamborghinis.

So what?

So what? Seriously? Well if companies are more than willingly to invest in the country with the highest corporate tax rate it would appear that tax rates don't have jack shit to do with rather a company chooses to invest. And it don't. A company chooses to invest where there is sufficient demand for the product or service they provide, tax rates be damned. No company is going to buy more equipment simply because the tax rate is cut. A company pays dividends when they don't have sufficient investment opportunities that meet their required IRR so they give it back to the shareholders. And stock buybacks are not conducive to a growing economy. Hell, prior to Ronald Reagan stock buybacks were ILLEGAL as they were considered manipulating of stock prices. Truth is, stock buybacks are just another form of rent seeking that is currently a huge drag on the economy.

So what? Seriously?

Yes, so what? What does a tiny, oil rich area have to do with our idiotically high corporate tax rate?

Well if companies are more than willingly to invest in the country with the highest corporate tax rate

Plenty of companies invest in the US. What they don't do is repatriate all their foreign earnings.

No company is going to buy more equipment simply because the tax rate is cut.

Really? If a new piece of equipment is projected to add $1 million in after tax profit under the old rate but $1.23 million after the new rate, the incentive to buy isn't higher?

A company pays dividends when they don't have sufficient investment opportunities that meet their required IRR so they give it back to the shareholders.

With all the extra money they'll have, I think they'll do both.

And stock buybacks are not conducive to a growing economy.

Why not?

Truth is, stock buybacks are just another form of rent seeking

Please post your definition of rent seeking.

that is currently a huge drag on the economy.

How does giving money back to share holders cause a drag on the economy?

First, a definition of rent seeking. Taking more of the pie that is already there instead of making more pie. Tell me, when a company uses it's profits to buy back stock what "pie" is created? And there is the problem. The money companies use to buyback stock could have been used to invest in research and development, purchase more modern equipment, or even raise employee salaries leading to increased demand. Instead, the money is used to buy back stock and artificially inflate the stock price, temporarily I might add, mostly to inflate executive compensation. It doesn't create more pie. In fact, the increase in price resulting takes pie away from other endeavors. Of course, I suppose you are one of the amateurs that believe buying stock is "investing".

Now I doubt you are reading any of the links I provide, like the one explaining the whole OP is based on a model created by Russian economists. LMAO. But here is one from the world's leading expert on stock buybacks and in the Harvard Business Review at that.

Profits Without Prosperity

First, a definition of rent seeking. Taking more of the pie that is already there instead of making more pie.

How is giving shareholders more of their pie.......rent seeking?

Tell me, when a company uses it's profits to buy back stock what "pie" is created?

What do the shareholders do with their slice of the pie?

The money companies use to buyback stock could have been used to invest in research and development, purchase more modern equipment,

You bet. Different companies will do different things with their own money. Freedom!

or even raise employee salaries leading to increased demand.

Or even raise shareholder capital gains, leading to increased demand

It doesn't create more pie.

High taxes don't create more pie.

Of course, I suppose you are one of the amateurs that believe buying stock is "investing"

Of course, I suppose you are one of the amateurs that believe taxing is "investing"

How is giving shareholders more of their pie.......rent seeking?

LMAO. It is not rent seeking to pay dividends. But buying back stock is rent seeking. I am laughing because of your question. Paying a dividend is not making more pie. You said it yourself, it is giving shareholders more of THE pie, But it is the same pie. Basically the company goes, "We don't want to make more pie with this money so here shareholder, maybe you will make some pie".

Or even raise shareholder capital gains, leading to increased demand

You are showing your ignorance. Capital gains do not lead to increased demand. Come on, if a stock price goes up that means more money, that could be out there pushing through the economy generating demand, is tied up in the stock market. The stock market does not make pie. Sure, one investor might take a profit and go out and buy a car, but another investor is now "saving" money in the stock market and that takes money out of the economy.

And no, buying stock is not INVESTING. No company gets money to invest when you buy a stock. You are simply purchasing a piece of paper that gives you some "ownership" of that company. You fully intend to sell that piece of paper at some point, so it is savings. See this,

• In national accounting terms, stocks, bonds, mutual funds, and other items whose value is risky, are NOT investments. They fall into the savings account, not the investment account.

Macroeconomics/Savings and Investment - Wikibooks, open books for an open world

Like the article points out, this is mere first year Macro. And I am pretty sure that I have already pointed out to you the Paradox of Thrift. Savings IS NOT conducive to a growing economy. Too much savings can drag an economy down.

 

[Winston]

Big surprise. Your answer was not even close to adequate. They pay zero now, they pay zero under the new plan. There is no incentive to return that money to the US unless, as you did point out, they want to use the money here. But where is the demand going to come from? And I believe I previously pointed out to you that the highest corporate tax rate in the developed world is in the United Arab Emirates. It appears there is no shortage of businesses more than willing to invest in Dubai, and the police force there drives Lamborghinis.

Now I wondered how the hell those economists from Boston University could come up with such a figure considering what I know about the history of previous corporate tax cuts. So, unlike probably anyone else here, I found the study.

https://kotlikoff.net/sites/default/files/Simulating the Unified Framework Tax Reform Plan_0.pdf

Now, they got that growth in GDP by plugging the numbers into the Global Gaidar Model. I laughed out loud. The irony of touting a study based on a model designed by RUSSIAN economists can't be overlooked. But, there are some things we can take from the study. For instance,

Indeed, cuts in personal income tax rates in the GGM produce deficits, crowd out capital and lower long-run economic welfare.

Guess that tax cut for the wealthy should be pulled off the table. And then this,

This said, we share the TPC’s concern that the UF plan could disproportionately benefit the top 1 percent. This concern about fairness as well as the country’s massive long-term fiscal gap suggests modifying the UF plan to include, for example, the elimination of Social Security’s FICA tax ceiling, a tax on lifetime inheritances and gifts received above $5 million, or a progressive cash flow tax on consumption above $100,000

And there goes the elimination of the estate tax. Plus, I got to tell you, I love the idea of eliminating the ceiling on FICA taxes and implementing a cash flow tax on consumption above a hundred grand.

But the biggest problem with the study is the numbers plugged in. You know the saying, garbage in, garbage out. They plugged in a marginal EFFECTIVE tax rate of 34.6% and a new rate of 18.6%. The problem, the marginal EFFECTIVE corporate tax rate is no where close to 34.6%. Here is a study that pegs the EFFECTIVE corporate tax rate on new investments at 24%.

Actual U.S. Corporate Tax Rates Are in Line with Comparable Countries

So, in summary, the study in the OP assumes an extraordinary high effective marginal corporate tax rate that is not based on reality and ignores the additional components of Trump's tax plan like the personal income tax cut and the elimination of the estate tax. In fact, the study advocates maintaining the estate tax and a significant increase on taxes of the wealthy by eliminating the cap on FICA taxes.

They pay zero now, they pay zero under the new plan. There is no incentive to return that money to the US unless, as you did point out, they want to use the money here. But where is the demand going to come from?

From companies that want to buy more equipment here, or pay more dividends here, or buyback more stock here, or hire more employees here. Why do you want them to keep their earnings offshore?

And I believe I previously pointed out to you that the highest corporate tax rate in the developed world is in the United Arab Emirates. It appears there is no shortage of businesses more than willing to invest in Dubai, and the police force there drives Lamborghinis.

So what?

So what? Seriously? Well if companies are more than willingly to invest in the country with the highest corporate tax rate it would appear that tax rates don't have jack shit to do with rather a company chooses to invest. And it don't. A company chooses to invest where there is sufficient demand for the product or service they provide, tax rates be damned. No company is going to buy more equipment simply because the tax rate is cut. A company pays dividends when they don't have sufficient investment opportunities that meet their required IRR so they give it back to the shareholders. And stock buybacks are not conducive to a growing economy. Hell, prior to Ronald Reagan stock buybacks were ILLEGAL as they were considered manipulating of stock prices. Truth is, stock buybacks are just another form of rent seeking that is currently a huge drag on the economy.

So what? Seriously?

Yes, so what? What does a tiny, oil rich area have to do with our idiotically high corporate tax rate?

Well if companies are more than willingly to invest in the country with the highest corporate tax rate

Plenty of companies invest in the US. What they don't do is repatriate all their foreign earnings.

No company is going to buy more equipment simply because the tax rate is cut.

Really? If a new piece of equipment is projected to add $1 million in after tax profit under the old rate but $1.23 million after the new rate, the incentive to buy isn't higher?

A company pays dividends when they don't have sufficient investment opportunities that meet their required IRR so they give it back to the shareholders.

With all the extra money they'll have, I think they'll do both.

And stock buybacks are not conducive to a growing economy.

Why not?

Truth is, stock buybacks are just another form of rent seeking

Please post your definition of rent seeking.

that is currently a huge drag on the economy.

How does giving money back to share holders cause a drag on the economy?

First, a definition of rent seeking. Taking more of the pie that is already there instead of making more pie. Tell me, when a company uses it's profits to buy back stock what "pie" is created? And there is the problem. The money companies use to buyback stock could have been used to invest in research and development, purchase more modern equipment, or even raise employee salaries leading to increased demand. Instead, the money is used to buy back stock and artificially inflate the stock price, temporarily I might add, mostly to inflate executive compensation. It doesn't create more pie. In fact, the increase in price resulting takes pie away from other endeavors. Of course, I suppose you are one of the amateurs that believe buying stock is "investing".

Now I doubt you are reading any of the links I provide, like the one explaining the whole OP is based on a model created by Russian economists. LMAO. But here is one from the world's leading expert on stock buybacks and in the Harvard Business Review at that.

Profits Without Prosperity

But here is one from the world's leading expert on stock buybacks and in the Harvard Business Review at that.

He's free to start his own company and never buy back any shares, or pay any dividends.

Roger Lowenstein

Stock buybacks are suddenly controversial, with critics arguing that they are hurting the American economy, killing jobs, and manipulating stock prices and therefore must be banned. Bernie Sanders, the Vermont senator running for president, has made slamming buybacks a theme of his campaign. And William Lazonick, an economics professor at UMass Lowell, has asserted that banning buybacks is key to reviving the middle class.

Is this ordinary corporate tactic really so bad? Actually, buybacks are both useful and benign — and in no way warrant restriction. Let’s start with the basics: stock buybacks are a converse operation to stock sales. Companies issue stock — that is, they sell slices of equity — to raise capital. They buy back stock to retire capital. These buybacks occur for two reasons.

Sometimes, a firm accumulates more capital than its business can profitably employ. Believe it or not, overcapitalization can be just as harmful as undercapitalization. Companies with an overabundance of capital tend to do stupid things. They become lazy about operating efficiently, or build a vanity headquarters, or make a foolish acquisition. Such pursuits may make the CEO feel important, but (often) they waste the shareholders’ capital. Retiring excess capital is smart business.

The other common reason for repurchasing shares is that executives believe their stock is cheap — and indeed, cheaper than possible alternatives. This is not “manipulating” the stock. As with an investment you make in your 401(k), buybacks will pay off if — and only if — the executives’ calculation about value is correct. Suppose you had a 50-50 partner in a private business worth $1 million; one day your partner, feeling gloomy, offers to sell his half for only $250,000. Buying him out would increase the value of your equity. In just that way, buybacks of inexpensive stock raise the value of the remaining shares.

In defense of stock buybacks - The Boston Globe

Seriously? You want to counter Lazonick with Lowenstein? Now that IS funny. A Cornell journalism degree against an MBA Econ from the London School of Economics and a Phd in Econ from Harvard. Try again. But I will take this quote from Lowenstein.

Sometimes, a firm accumulates more capital than its business can profitably employ.

There you have it. Companies buy back stock when they have more capital than they can profitably employ. So with companies spending the majority of their profits buying back stock do you really thing it is prudent to cut their taxes to give them even more profit? Hell, they are flat out telling you, they have more capital than they can profitably employ. It's like DU HUH.

 

[Toddsterpatriot]

They pay zero now, they pay zero under the new plan. There is no incentive to return that money to the US unless, as you did point out, they want to use the money here. But where is the demand going to come from?

From companies that want to buy more equipment here, or pay more dividends here, or buyback more stock here, or hire more employees here. Why do you want them to keep their earnings offshore?

And I believe I previously pointed out to you that the highest corporate tax rate in the developed world is in the United Arab Emirates. It appears there is no shortage of businesses more than willing to invest in Dubai, and the police force there drives Lamborghinis.

So what?

So what? Seriously? Well if companies are more than willingly to invest in the country with the highest corporate tax rate it would appear that tax rates don't have jack shit to do with rather a company chooses to invest. And it don't. A company chooses to invest where there is sufficient demand for the product or service they provide, tax rates be damned. No company is going to buy more equipment simply because the tax rate is cut. A company pays dividends when they don't have sufficient investment opportunities that meet their required IRR so they give it back to the shareholders. And stock buybacks are not conducive to a growing economy. Hell, prior to Ronald Reagan stock buybacks were ILLEGAL as they were considered manipulating of stock prices. Truth is, stock buybacks are just another form of rent seeking that is currently a huge drag on the economy.

So what? Seriously?

Yes, so what? What does a tiny, oil rich area have to do with our idiotically high corporate tax rate?

Well if companies are more than willingly to invest in the country with the highest corporate tax rate

Plenty of companies invest in the US. What they don't do is repatriate all their foreign earnings.

No company is going to buy more equipment simply because the tax rate is cut.

Really? If a new piece of equipment is projected to add $1 million in after tax profit under the old rate but $1.23 million after the new rate, the incentive to buy isn't higher?

A company pays dividends when they don't have sufficient investment opportunities that meet their required IRR so they give it back to the shareholders.

With all the extra money they'll have, I think they'll do both.

And stock buybacks are not conducive to a growing economy.

Why not?

Truth is, stock buybacks are just another form of rent seeking

Please post your definition of rent seeking.

that is currently a huge drag on the economy.

How does giving money back to share holders cause a drag on the economy?

First, a definition of rent seeking. Taking more of the pie that is already there instead of making more pie. Tell me, when a company uses it's profits to buy back stock what "pie" is created? And there is the problem. The money companies use to buyback stock could have been used to invest in research and development, purchase more modern equipment, or even raise employee salaries leading to increased demand. Instead, the money is used to buy back stock and artificially inflate the stock price, temporarily I might add, mostly to inflate executive compensation. It doesn't create more pie. In fact, the increase in price resulting takes pie away from other endeavors. Of course, I suppose you are one of the amateurs that believe buying stock is "investing".

Now I doubt you are reading any of the links I provide, like the one explaining the whole OP is based on a model created by Russian economists. LMAO. But here is one from the world's leading expert on stock buybacks and in the Harvard Business Review at that.

Profits Without Prosperity

First, a definition of rent seeking. Taking more of the pie that is already there instead of making more pie.

How is giving shareholders more of their pie.......rent seeking?

Tell me, when a company uses it's profits to buy back stock what "pie" is created?

What do the shareholders do with their slice of the pie?

The money companies use to buyback stock could have been used to invest in research and development, purchase more modern equipment,

You bet. Different companies will do different things with their own money. Freedom!

or even raise employee salaries leading to increased demand.

Or even raise shareholder capital gains, leading to increased demand

It doesn't create more pie.

High taxes don't create more pie.

Of course, I suppose you are one of the amateurs that believe buying stock is "investing"

Of course, I suppose you are one of the amateurs that believe taxing is "investing"

How is giving shareholders more of their pie.......rent seeking?

LMAO. It is not rent seeking to pay dividends. But buying back stock is rent seeking. I am laughing because of your question. Paying a dividend is not making more pie. You said it yourself, it is giving shareholders more of THE pie, But it is the same pie. Basically the company goes, "We don't want to make more pie with this money so here shareholder, maybe you will make some pie".

Or even raise shareholder capital gains, leading to increased demand

You are showing your ignorance. Capital gains do not lead to increased demand. Come on, if a stock price goes up that means more money, that could be out there pushing through the economy generating demand, is tied up in the stock market. The stock market does not make pie. Sure, one investor might take a profit and go out and buy a car, but another investor is now "saving" money in the stock market and that takes money out of the economy.

And no, buying stock is not INVESTING. No company gets money to invest when you buy a stock. You are simply purchasing a piece of paper that gives you some "ownership" of that company. You fully intend to sell that piece of paper at some point, so it is savings. See this,

• In national accounting terms, stocks, bonds, mutual funds, and other items whose value is risky, are NOT investments. They fall into the savings account, not the investment account.

Macroeconomics/Savings and Investment - Wikibooks, open books for an open world

Like the article points out, this is mere first year Macro. And I am pretty sure that I have already pointed out to you the Paradox of Thrift. Savings IS NOT conducive to a growing economy. Too much savings can drag an economy down.

LMAO. It is not rent seeking to pay dividends. But buying back stock is rent seeking.

What is 'Rent-Seeking'
Rent-seeking is the use of the resources of a company, an organization or an individual to obtain economic gain from others without reciprocating any benefits to society through wealth creation. An example of rent-seeking is when a company lobbies the government for loan subsidies, grants or tariff protection. These activities don't create any benefit for society; they just redistribute resources from the taxpayers to the company.

Basically the company goes, "We don't want to make more pie with this money so here shareholder, maybe you will make some pie".

Oh my! Giving the owners of the company some of the money the company earns, how awful!!

Capital gains do not lead to increased demand.

I buy stuff all the time with my capital gains. What do you do with yours?

Come on, if a stock price goes up that means more money, that could be out there pushing through the economy generating demand, is tied up in the stock market.

The company just bought back shares, how is that money "tied up in the stock market"?

In national accounting terms, stocks, bonds, mutual funds, and other items whose value is risky, are NOT investments. They fall into the savings account, not the investment account.

Share buy backs increase savings? Okay.

Savings IS NOT conducive to a growing economy. Too much savings can drag an economy down.

Yeah, America's problem is we have too much savings.

 

[Toddsterpatriot]

They pay zero now, they pay zero under the new plan. There is no incentive to return that money to the US unless, as you did point out, they want to use the money here. But where is the demand going to come from?

From companies that want to buy more equipment here, or pay more dividends here, or buyback more stock here, or hire more employees here. Why do you want them to keep their earnings offshore?

And I believe I previously pointed out to you that the highest corporate tax rate in the developed world is in the United Arab Emirates. It appears there is no shortage of businesses more than willing to invest in Dubai, and the police force there drives Lamborghinis.

So what?

So what? Seriously? Well if companies are more than willingly to invest in the country with the highest corporate tax rate it would appear that tax rates don't have jack shit to do with rather a company chooses to invest. And it don't. A company chooses to invest where there is sufficient demand for the product or service they provide, tax rates be damned. No company is going to buy more equipment simply because the tax rate is cut. A company pays dividends when they don't have sufficient investment opportunities that meet their required IRR so they give it back to the shareholders. And stock buybacks are not conducive to a growing economy. Hell, prior to Ronald Reagan stock buybacks were ILLEGAL as they were considered manipulating of stock prices. Truth is, stock buybacks are just another form of rent seeking that is currently a huge drag on the economy.

So what? Seriously?

Yes, so what? What does a tiny, oil rich area have to do with our idiotically high corporate tax rate?

Well if companies are more than willingly to invest in the country with the highest corporate tax rate

Plenty of companies invest in the US. What they don't do is repatriate all their foreign earnings.

No company is going to buy more equipment simply because the tax rate is cut.

Really? If a new piece of equipment is projected to add $1 million in after tax profit under the old rate but $1.23 million after the new rate, the incentive to buy isn't higher?

A company pays dividends when they don't have sufficient investment opportunities that meet their required IRR so they give it back to the shareholders.

With all the extra money they'll have, I think they'll do both.

And stock buybacks are not conducive to a growing economy.

Why not?

Truth is, stock buybacks are just another form of rent seeking

Please post your definition of rent seeking.

that is currently a huge drag on the economy.

How does giving money back to share holders cause a drag on the economy?

First, a definition of rent seeking. Taking more of the pie that is already there instead of making more pie. Tell me, when a company uses it's profits to buy back stock what "pie" is created? And there is the problem. The money companies use to buyback stock could have been used to invest in research and development, purchase more modern equipment, or even raise employee salaries leading to increased demand. Instead, the money is used to buy back stock and artificially inflate the stock price, temporarily I might add, mostly to inflate executive compensation. It doesn't create more pie. In fact, the increase in price resulting takes pie away from other endeavors. Of course, I suppose you are one of the amateurs that believe buying stock is "investing".

Now I doubt you are reading any of the links I provide, like the one explaining the whole OP is based on a model created by Russian economists. LMAO. But here is one from the world's leading expert on stock buybacks and in the Harvard Business Review at that.

Profits Without Prosperity

But here is one from the world's leading expert on stock buybacks and in the Harvard Business Review at that.

He's free to start his own company and never buy back any shares, or pay any dividends.

Roger Lowenstein

Stock buybacks are suddenly controversial, with critics arguing that they are hurting the American economy, killing jobs, and manipulating stock prices and therefore must be banned. Bernie Sanders, the Vermont senator running for president, has made slamming buybacks a theme of his campaign. And William Lazonick, an economics professor at UMass Lowell, has asserted that banning buybacks is key to reviving the middle class.

Is this ordinary corporate tactic really so bad? Actually, buybacks are both useful and benign — and in no way warrant restriction. Let’s start with the basics: stock buybacks are a converse operation to stock sales. Companies issue stock — that is, they sell slices of equity — to raise capital. They buy back stock to retire capital. These buybacks occur for two reasons.

Sometimes, a firm accumulates more capital than its business can profitably employ. Believe it or not, overcapitalization can be just as harmful as undercapitalization. Companies with an overabundance of capital tend to do stupid things. They become lazy about operating efficiently, or build a vanity headquarters, or make a foolish acquisition. Such pursuits may make the CEO feel important, but (often) they waste the shareholders’ capital. Retiring excess capital is smart business.

The other common reason for repurchasing shares is that executives believe their stock is cheap — and indeed, cheaper than possible alternatives. This is not “manipulating” the stock. As with an investment you make in your 401(k), buybacks will pay off if — and only if — the executives’ calculation about value is correct. Suppose you had a 50-50 partner in a private business worth $1 million; one day your partner, feeling gloomy, offers to sell his half for only $250,000. Buying him out would increase the value of your equity. In just that way, buybacks of inexpensive stock raise the value of the remaining shares.

In defense of stock buybacks - The Boston Globe

Seriously? You want to counter Lazonick with Lowenstein? Now that IS funny. A Cornell journalism degree against an MBA Econ from the London School of Economics and a Phd in Econ from Harvard. Try again. But I will take this quote from Lowenstein.

Sometimes, a firm accumulates more capital than its business can profitably employ.

There you have it. Companies buy back stock when they have more capital than they can profitably employ. So with companies spending the majority of their profits buying back stock do you really thing it is prudent to cut their taxes to give them even more profit? Hell, they are flat out telling you, they have more capital than they can profitably employ. It's like DU HUH.

Companies buy back stock when they have more capital than they can profitably employ.

And we all know that tax rates never impact profitability......

So with companies spending the majority of their profits buying back stock do you really thing it is prudent to cut their taxes to give them even more profit?

Wait, I guess they do, eh?

 

[JakeStarkey]

Yes, laughing and weep tears of frustration by todd.

Oh, I can say something positive about Trump.

He said the GOP in Congress were not going to touch the pre-tax of IRAs: period.

Good on that!

Lots of laughing. Pointing and laughing.

Indeed . . . at you. I am glad you accept that you have been accurately corrected. It's good to see Winston schooling you.

Do you agree with Orange Leader that the 401ks are off limits to Congress's tax plan?

I do.

 

[Toddsterpatriot]

Yes, laughing and weep tears of frustration by todd.

Oh, I can say something positive about Trump.

He said the GOP in Congress were not going to touch the pre-tax of IRAs: period.

Good on that!

Lots of laughing. Pointing and laughing.

Indeed . . . at you. I am glad you accept that you have been accurately corrected. It's good to see Winston schooling you.

Do you agree with Orange Leader that the 401ks are off limits to Congress's tax plan?

I do.

Yes, teaching me how to laugh.

 

[JakeStarkey]

Yes, laughing and weep tears of frustration by todd.

Oh, I can say something positive about Trump.

He said the GOP in Congress were not going to touch the pre-tax of IRAs: period.

Good on that!

Lots of laughing. Pointing and laughing.

Indeed . . . at you. I am glad you accept that you have been accurately corrected. It's good to see Winston schooling you.

Do you agree with Orange Leader that the 401ks are off limits to Congress's tax plan?

I do.

Yes, teaching me how to laugh.

Yes, at yourself and your mistake.

Do you agree with Orange Leader that the 401ks are off limits to Congress's tax plan?

 

[Toddsterpatriot]

Yes, laughing and weep tears of frustration by todd.

Oh, I can say something positive about Trump.

He said the GOP in Congress were not going to touch the pre-tax of IRAs: period.

Good on that!

Lots of laughing. Pointing and laughing.

Indeed . . . at you. I am glad you accept that you have been accurately corrected. It's good to see Winston schooling you.

Do you agree with Orange Leader that the 401ks are off limits to Congress's tax plan?

I do.

Yes, teaching me how to laugh.

Yes, at yourself and your mistake.

Do you agree with Orange Leader that the 401ks are off limits to Congress's tax plan?

Hey, did you know that tax rates don't influence investment decisions, at all?

LOL!

I agree that reducing 401K deductibility would be a mistake.
Politically and economically.

 

[JakeStarkey]

Silly deflections by those who poorly understand the conversation.

The GOP was flirting with reducing pre-tax IRAs from $18K to 2.4K per year in order to FREE UP money to be taxed to offset the cuts for the 1%.

 

[Toddsterpatriot]

Silly deflections by those who poorly understand the conversation.

The GOP was flirting with reducing pre-tax IRAs from $18K to 2.4K per year in order to FREE UP money to be taxed to offset the cuts for the 1%.

And that will never happen.

 

[JakeStarkey]

Silly deflections by those who poorly understand the conversation.

The GOP was flirting with reducing pre-tax IRAs from $18K to 2.4K per year in order to FREE UP money to be taxed to offset the cuts for the 1%.

And that will never happen.

Because for a moment the syphilis in Trumps' brain subsided and he said "no, **** no!"

I can certainly support Orange Leader on this.

1. Trump says no changes to 401k plans under tax ... - bloomberg.com
   
   www.bloomberg.com/news/articles/2017-10-23/trump...
   Oct 22, 2017 · President Donald Trump said there will not be changes to tax-deferred retirement savings plans under his proposed tax plan, shooting down reports that ...
   
   
2. Trump says 'no change' to 401(k) | Fox Business
   

 

[Winston]

So what? Seriously? Well if companies are more than willingly to invest in the country with the highest corporate tax rate it would appear that tax rates don't have jack shit to do with rather a company chooses to invest. And it don't. A company chooses to invest where there is sufficient demand for the product or service they provide, tax rates be damned. No company is going to buy more equipment simply because the tax rate is cut. A company pays dividends when they don't have sufficient investment opportunities that meet their required IRR so they give it back to the shareholders. And stock buybacks are not conducive to a growing economy. Hell, prior to Ronald Reagan stock buybacks were ILLEGAL as they were considered manipulating of stock prices. Truth is, stock buybacks are just another form of rent seeking that is currently a huge drag on the economy.

So what? Seriously?

Yes, so what? What does a tiny, oil rich area have to do with our idiotically high corporate tax rate?

Well if companies are more than willingly to invest in the country with the highest corporate tax rate

Plenty of companies invest in the US. What they don't do is repatriate all their foreign earnings.

No company is going to buy more equipment simply because the tax rate is cut.

Really? If a new piece of equipment is projected to add $1 million in after tax profit under the old rate but $1.23 million after the new rate, the incentive to buy isn't higher?

A company pays dividends when they don't have sufficient investment opportunities that meet their required IRR so they give it back to the shareholders.

With all the extra money they'll have, I think they'll do both.

And stock buybacks are not conducive to a growing economy.

Why not?

Truth is, stock buybacks are just another form of rent seeking

Please post your definition of rent seeking.

that is currently a huge drag on the economy.

How does giving money back to share holders cause a drag on the economy?

First, a definition of rent seeking. Taking more of the pie that is already there instead of making more pie. Tell me, when a company uses it's profits to buy back stock what "pie" is created? And there is the problem. The money companies use to buyback stock could have been used to invest in research and development, purchase more modern equipment, or even raise employee salaries leading to increased demand. Instead, the money is used to buy back stock and artificially inflate the stock price, temporarily I might add, mostly to inflate executive compensation. It doesn't create more pie. In fact, the increase in price resulting takes pie away from other endeavors. Of course, I suppose you are one of the amateurs that believe buying stock is "investing".

Now I doubt you are reading any of the links I provide, like the one explaining the whole OP is based on a model created by Russian economists. LMAO. But here is one from the world's leading expert on stock buybacks and in the Harvard Business Review at that.

Profits Without Prosperity

First, a definition of rent seeking. Taking more of the pie that is already there instead of making more pie.

How is giving shareholders more of their pie.......rent seeking?

Tell me, when a company uses it's profits to buy back stock what "pie" is created?

What do the shareholders do with their slice of the pie?

The money companies use to buyback stock could have been used to invest in research and development, purchase more modern equipment,

You bet. Different companies will do different things with their own money. Freedom!

or even raise employee salaries leading to increased demand.

Or even raise shareholder capital gains, leading to increased demand

It doesn't create more pie.

High taxes don't create more pie.

Of course, I suppose you are one of the amateurs that believe buying stock is "investing"

Of course, I suppose you are one of the amateurs that believe taxing is "investing"

How is giving shareholders more of their pie.......rent seeking?

LMAO. It is not rent seeking to pay dividends. But buying back stock is rent seeking. I am laughing because of your question. Paying a dividend is not making more pie. You said it yourself, it is giving shareholders more of THE pie, But it is the same pie. Basically the company goes, "We don't want to make more pie with this money so here shareholder, maybe you will make some pie".

Or even raise shareholder capital gains, leading to increased demand

You are showing your ignorance. Capital gains do not lead to increased demand. Come on, if a stock price goes up that means more money, that could be out there pushing through the economy generating demand, is tied up in the stock market. The stock market does not make pie. Sure, one investor might take a profit and go out and buy a car, but another investor is now "saving" money in the stock market and that takes money out of the economy.

And no, buying stock is not INVESTING. No company gets money to invest when you buy a stock. You are simply purchasing a piece of paper that gives you some "ownership" of that company. You fully intend to sell that piece of paper at some point, so it is savings. See this,

• In national accounting terms, stocks, bonds, mutual funds, and other items whose value is risky, are NOT investments. They fall into the savings account, not the investment account.

Macroeconomics/Savings and Investment - Wikibooks, open books for an open world

Like the article points out, this is mere first year Macro. And I am pretty sure that I have already pointed out to you the Paradox of Thrift. Savings IS NOT conducive to a growing economy. Too much savings can drag an economy down.

LMAO. It is not rent seeking to pay dividends. But buying back stock is rent seeking.

What is 'Rent-Seeking'
Rent-seeking is the use of the resources of a company, an organization or an individual to obtain economic gain from others without reciprocating any benefits to society through wealth creation. An example of rent-seeking is when a company lobbies the government for loan subsidies, grants or tariff protection. These activities don't create any benefit for society; they just redistribute resources from the taxpayers to the company.

Basically the company goes, "We don't want to make more pie with this money so here shareholder, maybe you will make some pie".

Oh my! Giving the owners of the company some of the money the company earns, how awful!!

Capital gains do not lead to increased demand.

I buy stuff all the time with my capital gains. What do you do with yours?

Come on, if a stock price goes up that means more money, that could be out there pushing through the economy generating demand, is tied up in the stock market.

The company just bought back shares, how is that money "tied up in the stock market"?

In national accounting terms, stocks, bonds, mutual funds, and other items whose value is risky, are NOT investments. They fall into the savings account, not the investment account.

Share buy backs increase savings? Okay.

Savings IS NOT conducive to a growing economy. Too much savings can drag an economy down.

Yeah, America's problem is we have too much savings.

Why are you providing a definition of rent seeking. I believe I explained it quite accurately. So, using even your definition, how is buying back stock creating any wealth? And yes, it is kind of "awful" when a company that you have entrusted your money in order to build more pie returns it because they don't want to build more pie.

Now did I say buying back stock took money out of the economy? No, I said when a stock price goes up it takes money out of the economy. Of course, the whole purpose behind buying back stock is to drive the price up, which is why it used to be illegal.

But finally, yes, you are correct, America's problem is too much savings.

Americans are savers now. It's a problem for the economy

Americans are saving more — and it's killing the economy

Americans Have Been Saving Too Much Money, And It’s a Big Problem

.

 

[Toddsterpatriot]

So what? Seriously?

Yes, so what? What does a tiny, oil rich area have to do with our idiotically high corporate tax rate?

Well if companies are more than willingly to invest in the country with the highest corporate tax rate

Plenty of companies invest in the US. What they don't do is repatriate all their foreign earnings.

No company is going to buy more equipment simply because the tax rate is cut.

Really? If a new piece of equipment is projected to add $1 million in after tax profit under the old rate but $1.23 million after the new rate, the incentive to buy isn't higher?

A company pays dividends when they don't have sufficient investment opportunities that meet their required IRR so they give it back to the shareholders.

With all the extra money they'll have, I think they'll do both.

And stock buybacks are not conducive to a growing economy.

Why not?

Truth is, stock buybacks are just another form of rent seeking

Please post your definition of rent seeking.

that is currently a huge drag on the economy.

How does giving money back to share holders cause a drag on the economy?

First, a definition of rent seeking. Taking more of the pie that is already there instead of making more pie. Tell me, when a company uses it's profits to buy back stock what "pie" is created? And there is the problem. The money companies use to buyback stock could have been used to invest in research and development, purchase more modern equipment, or even raise employee salaries leading to increased demand. Instead, the money is used to buy back stock and artificially inflate the stock price, temporarily I might add, mostly to inflate executive compensation. It doesn't create more pie. In fact, the increase in price resulting takes pie away from other endeavors. Of course, I suppose you are one of the amateurs that believe buying stock is "investing".

Now I doubt you are reading any of the links I provide, like the one explaining the whole OP is based on a model created by Russian economists. LMAO. But here is one from the world's leading expert on stock buybacks and in the Harvard Business Review at that.

Profits Without Prosperity

First, a definition of rent seeking. Taking more of the pie that is already there instead of making more pie.

How is giving shareholders more of their pie.......rent seeking?

Tell me, when a company uses it's profits to buy back stock what "pie" is created?

What do the shareholders do with their slice of the pie?

The money companies use to buyback stock could have been used to invest in research and development, purchase more modern equipment,

You bet. Different companies will do different things with their own money. Freedom!

or even raise employee salaries leading to increased demand.

Or even raise shareholder capital gains, leading to increased demand

It doesn't create more pie.

High taxes don't create more pie.

Of course, I suppose you are one of the amateurs that believe buying stock is "investing"

Of course, I suppose you are one of the amateurs that believe taxing is "investing"

How is giving shareholders more of their pie.......rent seeking?

LMAO. It is not rent seeking to pay dividends. But buying back stock is rent seeking. I am laughing because of your question. Paying a dividend is not making more pie. You said it yourself, it is giving shareholders more of THE pie, But it is the same pie. Basically the company goes, "We don't want to make more pie with this money so here shareholder, maybe you will make some pie".

Or even raise shareholder capital gains, leading to increased demand

You are showing your ignorance. Capital gains do not lead to increased demand. Come on, if a stock price goes up that means more money, that could be out there pushing through the economy generating demand, is tied up in the stock market. The stock market does not make pie. Sure, one investor might take a profit and go out and buy a car, but another investor is now "saving" money in the stock market and that takes money out of the economy.

And no, buying stock is not INVESTING. No company gets money to invest when you buy a stock. You are simply purchasing a piece of paper that gives you some "ownership" of that company. You fully intend to sell that piece of paper at some point, so it is savings. See this,

• In national accounting terms, stocks, bonds, mutual funds, and other items whose value is risky, are NOT investments. They fall into the savings account, not the investment account.

Macroeconomics/Savings and Investment - Wikibooks, open books for an open world

Like the article points out, this is mere first year Macro. And I am pretty sure that I have already pointed out to you the Paradox of Thrift. Savings IS NOT conducive to a growing economy. Too much savings can drag an economy down.

LMAO. It is not rent seeking to pay dividends. But buying back stock is rent seeking.

What is 'Rent-Seeking'
Rent-seeking is the use of the resources of a company, an organization or an individual to obtain economic gain from others without reciprocating any benefits to society through wealth creation. An example of rent-seeking is when a company lobbies the government for loan subsidies, grants or tariff protection. These activities don't create any benefit for society; they just redistribute resources from the taxpayers to the company.

Basically the company goes, "We don't want to make more pie with this money so here shareholder, maybe you will make some pie".

Oh my! Giving the owners of the company some of the money the company earns, how awful!!

Capital gains do not lead to increased demand.

I buy stuff all the time with my capital gains. What do you do with yours?

Come on, if a stock price goes up that means more money, that could be out there pushing through the economy generating demand, is tied up in the stock market.

The company just bought back shares, how is that money "tied up in the stock market"?

In national accounting terms, stocks, bonds, mutual funds, and other items whose value is risky, are NOT investments. They fall into the savings account, not the investment account.

Share buy backs increase savings? Okay.

Savings IS NOT conducive to a growing economy. Too much savings can drag an economy down.

Yeah, America's problem is we have too much savings.

Why are you providing a definition of rent seeking. I believe I explained it quite accurately. So, using even your definition, how is buying back stock creating any wealth? And yes, it is kind of "awful" when a company that you have entrusted your money in order to build more pie returns it because they don't want to build more pie.

Now did I say buying back stock took money out of the economy? No, I said when a stock price goes up it takes money out of the economy. Of course, the whole purpose behind buying back stock is to drive the price up, which is why it used to be illegal.

But finally, yes, you are correct, America's problem is too much savings.

Americans are savers now. It's a problem for the economy

Americans are saving more — and it's killing the economy

Americans Have Been Saving Too Much Money, And It’s a Big Problem

.

Why are you providing a definition of rent seeking

Because your definition was.....unique.

So, using even your definition, how is buying back stock creating any wealth?

How is it rent seeking?

And yes, it is kind of "awful" when a company that you have entrusted your money in order to build more pie returns it because they don't want to build more pie.

Not every company can profitably expand their share of the pie market.
Some companies should increase payouts to shareholders, instead of doing something stupid with their cash.

Now did I say buying back stock took money out of the economy? No, I said when a stock price goes up it takes money out of the economy.

Great, let's examine that claim.
MMM rose $13.10 today.
How much money did that price rise "take out of the economy"?
Please walk through the steps and show your math.

Thanks!!!

 

[Winston]

Because your definition was.....unique

Unique? You are showing your lack of economic knowledge. The "pie" definition is the norm.

Stanford

The view that some top incomes reflect rent-seeking—i.e., the pursuit of personal enrichment by extracting a slice of the existing economic pie rather than by increasing the size of that pie—has inspired calls for a more steeply progressive tax code

https://web.stanford.edu/~scheuer/rent_seeking.pdf

Nobel laureate Stiglitz provides an excellent explanation here,

From The Price of Inequality: Joseph Stiglitz on the 1 Percent Problem

How is it rent seeking?

The driving force behind stock buybacks is executive compensation tied to the stock price. The company uses funds to buyback stocks, the stock price increases, and the executive is richly rewarded. The executive gets more pie. Where did that pie come from? Was any additional pie made?

Not every company can profitably expand their share of the pie market.
Some companies should increase payouts to shareholders, instead of doing something stupid with their cash.

The reason you purchase a share of stock is because you believe the company can get a better return on their money than you can get on yours. When they pay that money out in the form of a dividend, or even if they buyback stock, they are essentially punting the money back to you. That's basic finance.

Great, let's examine that claim.
MMM rose $13.10 today.
How much money did that price rise "take out of the economy"?
Please walk through the steps and show your math.

Thanks!!!

Simple, multiply the number of shares outstanding times the increase in price. Note, now that much more pie is in the hands of stockholders. Where did that pie come from? Was any additional pie made?

Now, let's look at this idea that cutting corporate taxes will stimulate increased investment and growth. I will demonstrate how it will fail to achieve that objective and instead, result in even more rent seeking.

Let's say you own a grocery store in a small town. It is the only grocery store in that town. All the residents of that town purchase their groceries from you. You get a tax cut but that tax cut is financed by a tax increase on the residents of the town. Do you purchase more stock? Do you add on a new section of beer? Do you give your employees a raise? No, you don't purchase more stock or add a new section of anything because now, well your customers have less disposable income. You don't give out raises because now, well your employees are lucky to have a job and there is no competition from another grocery store in town to take those employees away. But, a new grocery store is looking at a location in town. So, you buy the land that grocery store was looking at, at an inflated price that grocery store is unwilling to pay. And you keep them from coming into your town eliminating your competition. You collect "rents" by being able to price your groceries higher than you otherwise would be able to charge if you had a competitor. You collect rents by being able to pay your employees less than you would pay them if they had a competing employer.

Now, I didn't pull that example out of my ass. I took it from the city of Asheville NC and Ingles Supermarket.

 

[Toddsterpatriot]

Because your definition was.....unique

Unique? You are showing your lack of economic knowledge. The "pie" definition is the norm.

Stanford

The view that some top incomes reflect rent-seeking—i.e., the pursuit of personal enrichment by extracting a slice of the existing economic pie rather than by increasing the size of that pie—has inspired calls for a more steeply progressive tax code

https://web.stanford.edu/~scheuer/rent_seeking.pdf

Nobel laureate Stiglitz provides an excellent explanation here,

From The Price of Inequality: Joseph Stiglitz on the 1 Percent Problem

How is it rent seeking?

The driving force behind stock buybacks is executive compensation tied to the stock price. The company uses funds to buyback stocks, the stock price increases, and the executive is richly rewarded. The executive gets more pie. Where did that pie come from? Was any additional pie made?

Not every company can profitably expand their share of the pie market.
Some companies should increase payouts to shareholders, instead of doing something stupid with their cash.

The reason you purchase a share of stock is because you believe the company can get a better return on their money than you can get on yours. When they pay that money out in the form of a dividend, or even if they buyback stock, they are essentially punting the money back to you. That's basic finance.

Great, let's examine that claim.
MMM rose $13.10 today.
How much money did that price rise "take out of the economy"?
Please walk through the steps and show your math.

Thanks!!!

Simple, multiply the number of shares outstanding times the increase in price. Note, now that much more pie is in the hands of stockholders. Where did that pie come from? Was any additional pie made?

Now, let's look at this idea that cutting corporate taxes will stimulate increased investment and growth. I will demonstrate how it will fail to achieve that objective and instead, result in even more rent seeking.

Let's say you own a grocery store in a small town. It is the only grocery store in that town. All the residents of that town purchase their groceries from you. You get a tax cut but that tax cut is financed by a tax increase on the residents of the town. Do you purchase more stock? Do you add on a new section of beer? Do you give your employees a raise? No, you don't purchase more stock or add a new section of anything because now, well your customers have less disposable income. You don't give out raises because now, well your employees are lucky to have a job and there is no competition from another grocery store in town to take those employees away. But, a new grocery store is looking at a location in town. So, you buy the land that grocery store was looking at, at an inflated price that grocery store is unwilling to pay. And you keep them from coming into your town eliminating your competition. You collect "rents" by being able to price your groceries higher than you otherwise would be able to charge if you had a competitor. You collect rents by being able to pay your employees less than you would pay them if they had a competing employer.

Now, I didn't pull that example out of my ass. I took it from the city of Asheville NC and Ingles Supermarket.

the pursuit of personal enrichment by extracting a slice of the existing economic pie rather than by increasing the size of that pie

If we were talking about the officers of the firm taking more from the firm, you might have a point.
Trying to use the term when you're talking about giving to the actual owners of the firm.......not so much.

The driving force behind stock buybacks is executive compensation tied to the stock price.

Or giving money back to the shareholders.
Of course compensation tied to stock price can be abused.....see Enron.

The reason you purchase a share of stock is because you believe the company can get a better return on their money than you can get on yours.

And the return I hope for is a combination of price appreciation and dividend payouts.

Simple, multiply the number of shares outstanding times the increase in price. Note, now that much more pie is in the hands of stockholders.

Cool story, but you said "when a stock price goes up it takes money out of the economy"
So simply explain how the $13.10 increase in the price of MMM took money out of the economy.

Did MMM somehow take money out of your pocket? How?
Did they take money from someone else? Who? How?

You get a tax cut but that tax cut is financed by a tax increase on the residents of the town.

Sounds awful!! What if I get a tax cut and they get a tax cut as well?

Now, I didn't pull that example out of my ass. I took it from the city of Asheville NC and Ingles Supermarket.

Thanks for the example. Who got the tax cut in NC? Who got their taxes hiked? Link?

You collect "rents" by being able to price your groceries higher than you otherwise would be able to charge if you had a competitor.

Did you pay off the local government to restrict competition? Because that would be rent seeking.

 

[ScienceRocks]

The only way this country could see such growth is with a major upgrade of our infrastructure and energy grid.

This is how China's doing it.

 

[Winston]

Because your definition was.....unique

Unique? You are showing your lack of economic knowledge. The "pie" definition is the norm.

Stanford

The view that some top incomes reflect rent-seeking—i.e., the pursuit of personal enrichment by extracting a slice of the existing economic pie rather than by increasing the size of that pie—has inspired calls for a more steeply progressive tax code

https://web.stanford.edu/~scheuer/rent_seeking.pdf

Nobel laureate Stiglitz provides an excellent explanation here,

From The Price of Inequality: Joseph Stiglitz on the 1 Percent Problem

How is it rent seeking?

The driving force behind stock buybacks is executive compensation tied to the stock price. The company uses funds to buyback stocks, the stock price increases, and the executive is richly rewarded. The executive gets more pie. Where did that pie come from? Was any additional pie made?

Not every company can profitably expand their share of the pie market.
Some companies should increase payouts to shareholders, instead of doing something stupid with their cash.

The reason you purchase a share of stock is because you believe the company can get a better return on their money than you can get on yours. When they pay that money out in the form of a dividend, or even if they buyback stock, they are essentially punting the money back to you. That's basic finance.

Great, let's examine that claim.
MMM rose $13.10 today.
How much money did that price rise "take out of the economy"?
Please walk through the steps and show your math.

Thanks!!!

Simple, multiply the number of shares outstanding times the increase in price. Note, now that much more pie is in the hands of stockholders. Where did that pie come from? Was any additional pie made?

Now, let's look at this idea that cutting corporate taxes will stimulate increased investment and growth. I will demonstrate how it will fail to achieve that objective and instead, result in even more rent seeking.

Let's say you own a grocery store in a small town. It is the only grocery store in that town. All the residents of that town purchase their groceries from you. You get a tax cut but that tax cut is financed by a tax increase on the residents of the town. Do you purchase more stock? Do you add on a new section of beer? Do you give your employees a raise? No, you don't purchase more stock or add a new section of anything because now, well your customers have less disposable income. You don't give out raises because now, well your employees are lucky to have a job and there is no competition from another grocery store in town to take those employees away. But, a new grocery store is looking at a location in town. So, you buy the land that grocery store was looking at, at an inflated price that grocery store is unwilling to pay. And you keep them from coming into your town eliminating your competition. You collect "rents" by being able to price your groceries higher than you otherwise would be able to charge if you had a competitor. You collect rents by being able to pay your employees less than you would pay them if they had a competing employer.

Now, I didn't pull that example out of my ass. I took it from the city of Asheville NC and Ingles Supermarket.

the pursuit of personal enrichment by extracting a slice of the existing economic pie rather than by increasing the size of that pie

If we were talking about the officers of the firm taking more from the firm, you might have a point.
Trying to use the term when you're talking about giving to the actual owners of the firm.......not so much.

The driving force behind stock buybacks is executive compensation tied to the stock price.

Or giving money back to the shareholders.
Of course compensation tied to stock price can be abused.....see Enron.

The reason you purchase a share of stock is because you believe the company can get a better return on their money than you can get on yours.

And the return I hope for is a combination of price appreciation and dividend payouts.

Simple, multiply the number of shares outstanding times the increase in price. Note, now that much more pie is in the hands of stockholders.

Cool story, but you said "when a stock price goes up it takes money out of the economy"
So simply explain how the $13.10 increase in the price of MMM took money out of the economy.

Did MMM somehow take money out of your pocket? How?
Did they take money from someone else? Who? How?

You get a tax cut but that tax cut is financed by a tax increase on the residents of the town.

Sounds awful!! What if I get a tax cut and they get a tax cut as well?

Now, I didn't pull that example out of my ass. I took it from the city of Asheville NC and Ingles Supermarket.

Thanks for the example. Who got the tax cut in NC? Who got their taxes hiked? Link?

You collect "rents" by being able to price your groceries higher than you otherwise would be able to charge if you had a competitor.

Did you pay off the local government to restrict competition? Because that would be rent seeking.

There are several things here they you are failing to understand.

First, dividends and what they mean. Let's try it like this. If you are investing for income, well dividends would be a good thing. But if you investing for growth you really don't want to see much in the form of dividends. You would prefer the company invest in growth instead of paying out a dividend. But regardless of rather you are investing for income or for growth, a large dividend payout ratio is usually considered a warning sign of a company declining.

Second, how increasing stock prices take money out of the economy. If you take a hundred dollars and purchase a stock did not your hundred dollars disappear? Can you spend it on dinner and a movie? Analyst measure this by dividing total market capitalization by GDP. Currently, well that measure is at historical highs, like scary high, running at close to 150% of GDP. That usually indicates a market crash and a recession.

Third, I don't think you have a grasp of rent seeking. Although government actions can be conducive to rent seeking activities they are not necessary. In my Ingles example there was no government action. The rent seeking behavior was the owner of Ingles buying up all the available sites that a competitor might use. And the "rent" he collects is the portion of the prices he charges that is over and above what it would be in a competitive market.

And that is the thing. If you learn nothing else, learn this. A "free market" is not a market free from government regulation. In fact, the government has an integral role to play in a real functioning "free market" When Adam Smith defined a "free market" he defined it as a market free from, wait for, RENT SEEKING. Here is a good read explaining what has happened.

Great Problems: An Epidemic of Rent-seeking

 

[Toddsterpatriot]

Because your definition was.....unique

Unique? You are showing your lack of economic knowledge. The "pie" definition is the norm.

Stanford

The view that some top incomes reflect rent-seeking—i.e., the pursuit of personal enrichment by extracting a slice of the existing economic pie rather than by increasing the size of that pie—has inspired calls for a more steeply progressive tax code

https://web.stanford.edu/~scheuer/rent_seeking.pdf

Nobel laureate Stiglitz provides an excellent explanation here,

From The Price of Inequality: Joseph Stiglitz on the 1 Percent Problem

How is it rent seeking?

The driving force behind stock buybacks is executive compensation tied to the stock price. The company uses funds to buyback stocks, the stock price increases, and the executive is richly rewarded. The executive gets more pie. Where did that pie come from? Was any additional pie made?

Not every company can profitably expand their share of the pie market.
Some companies should increase payouts to shareholders, instead of doing something stupid with their cash.

The reason you purchase a share of stock is because you believe the company can get a better return on their money than you can get on yours. When they pay that money out in the form of a dividend, or even if they buyback stock, they are essentially punting the money back to you. That's basic finance.

Great, let's examine that claim.
MMM rose $13.10 today.
How much money did that price rise "take out of the economy"?
Please walk through the steps and show your math.

Thanks!!!

Simple, multiply the number of shares outstanding times the increase in price. Note, now that much more pie is in the hands of stockholders. Where did that pie come from? Was any additional pie made?

Now, let's look at this idea that cutting corporate taxes will stimulate increased investment and growth. I will demonstrate how it will fail to achieve that objective and instead, result in even more rent seeking.

Let's say you own a grocery store in a small town. It is the only grocery store in that town. All the residents of that town purchase their groceries from you. You get a tax cut but that tax cut is financed by a tax increase on the residents of the town. Do you purchase more stock? Do you add on a new section of beer? Do you give your employees a raise? No, you don't purchase more stock or add a new section of anything because now, well your customers have less disposable income. You don't give out raises because now, well your employees are lucky to have a job and there is no competition from another grocery store in town to take those employees away. But, a new grocery store is looking at a location in town. So, you buy the land that grocery store was looking at, at an inflated price that grocery store is unwilling to pay. And you keep them from coming into your town eliminating your competition. You collect "rents" by being able to price your groceries higher than you otherwise would be able to charge if you had a competitor. You collect rents by being able to pay your employees less than you would pay them if they had a competing employer.

Now, I didn't pull that example out of my ass. I took it from the city of Asheville NC and Ingles Supermarket.

the pursuit of personal enrichment by extracting a slice of the existing economic pie rather than by increasing the size of that pie

If we were talking about the officers of the firm taking more from the firm, you might have a point.
Trying to use the term when you're talking about giving to the actual owners of the firm.......not so much.

The driving force behind stock buybacks is executive compensation tied to the stock price.

Or giving money back to the shareholders.
Of course compensation tied to stock price can be abused.....see Enron.

The reason you purchase a share of stock is because you believe the company can get a better return on their money than you can get on yours.

And the return I hope for is a combination of price appreciation and dividend payouts.

Simple, multiply the number of shares outstanding times the increase in price. Note, now that much more pie is in the hands of stockholders.

Cool story, but you said "when a stock price goes up it takes money out of the economy"
So simply explain how the $13.10 increase in the price of MMM took money out of the economy.

Did MMM somehow take money out of your pocket? How?
Did they take money from someone else? Who? How?

You get a tax cut but that tax cut is financed by a tax increase on the residents of the town.

Sounds awful!! What if I get a tax cut and they get a tax cut as well?

Now, I didn't pull that example out of my ass. I took it from the city of Asheville NC and Ingles Supermarket.

Thanks for the example. Who got the tax cut in NC? Who got their taxes hiked? Link?

You collect "rents" by being able to price your groceries higher than you otherwise would be able to charge if you had a competitor.

Did you pay off the local government to restrict competition? Because that would be rent seeking.

There are several things here they you are failing to understand.

First, dividends and what they mean. Let's try it like this. If you are investing for income, well dividends would be a good thing. But if you investing for growth you really don't want to see much in the form of dividends. You would prefer the company invest in growth instead of paying out a dividend. But regardless of rather you are investing for income or for growth, a large dividend payout ratio is usually considered a warning sign of a company declining.

Second, how increasing stock prices take money out of the economy. If you take a hundred dollars and purchase a stock did not your hundred dollars disappear? Can you spend it on dinner and a movie? Analyst measure this by dividing total market capitalization by GDP. Currently, well that measure is at historical highs, like scary high, running at close to 150% of GDP. That usually indicates a market crash and a recession.

Third, I don't think you have a grasp of rent seeking. Although government actions can be conducive to rent seeking activities they are not necessary. In my Ingles example there was no government action. The rent seeking behavior was the owner of Ingles buying up all the available sites that a competitor might use. And the "rent" he collects is the portion of the prices he charges that is over and above what it would be in a competitive market.

And that is the thing. If you learn nothing else, learn this. A "free market" is not a market free from government regulation. In fact, the government has an integral role to play in a real functioning "free market" When Adam Smith defined a "free market" he defined it as a market free from, wait for, RENT SEEKING. Here is a good read explaining what has happened.

Great Problems: An Epidemic of Rent-seeking

Second, how increasing stock prices take money out of the economy. If you take a hundred dollars and purchase a stock did not your hundred dollars disappear?

No, my hundred dollars does not disappear.
Now, back to the example, MMM went up $13.10 the other day.
How much money did that price rise "take out of the economy"? How?

Can you spend it on dinner and a movie?

No, I can't spend money I already spent on something else. So what?

That usually indicates a market crash and a recession.

You should sell all your stocks if you think that.

Although government actions can be conducive to rent seeking activities they are not necessary.

Rent seeking is usually considered paying politicians to restrict your competition or to pay you subsidies.

The rent seeking behavior was the owner of Ingles buying up all the available sites that a competitor might use.

All the sites over how large an area? Seems inefficient and expensive.

A "free market" is not a market free from government regulation.

Never said it was. Ever.