Taxing those who make money

[Care4all]

Projected demand is not the same thing as actual demand.
The failure of Iridium should make that clear.

Yes, people do MAKE MISTAKES....it is sink or swim,

and learning how to float during the bad times.

My point is that consumer confidence, consumer demand or projected demand is key, to anyone investing in a business or new business.

Even in the news it spoke of all retailers having much less SUPPLY or inventory this year than last year coming in to Christmas....they did NOT have the inventory levels that they had December of 08 when sales hit the wall and they were stuck with their inventory, and forced to liquidate it at unprofitable levels....the following year they reduced their SUPPLY (inventory)and came in to Christmas 09 with alot less in inventory(supply) to meet the projected, lesser, demand.

There has to be a consumer(demand)...you just can't supply your crap in a hit or miss fashion, and the consumer will be there... crapola.....

your business would be a business no longer, in just a short time, if you did such.

Consumer confidence rising is an indication of when most should start investing in a new business or more supply. I say most, because there is always a fluke...something that people will buy, even if they are lacking in confidence....they have to buy gasoline to get to work, they have to buy food...and occasionally there is a widget of some sort that they just have to have, no matter what is going on in their lives....but this is rare.

Not taxing the consumer...giving tax breaks to the middle class, would help the situation much more than giving some business a tax break for hiring a new employee.

 

[MIPS]

Compared to WHAT? Bulgaria? Americans enjoy some of the lowest tax rates in the industrialized world, you're full of crap.

Depends on where you live, U.S./NY City (i.e. if you live in NYC) ranks #21, U.S./Illinois #35, #44 U.S/Texas (if you live in Texas) and #48 Overall out of 65 countries for tax burden (i.e. "Misery Index") based on rankings derived from Forbes Data for 2009...

Tax Burden by Country - Country Ranks 2009

48 out of 65. We are not a high tax nation.

That of course is a matter of opinion..... and requires one ignore all the cumulative operating deficits and unfunded liabilities (totaling out at around $113 TRILLION last time I looked) which must inevitably paid in the form of taxation (and that it includes taking the form of inflation).

 

[uscitizen]

113 trillion?

 

[The Rabbi]

Not taxing the consumer...giving tax breaks to the middle class, would help the situation much more than giving some business a tax break for hiring a new employee.

You have managed to add two plus two and get 22.
Tax breaks to the middle class will not change their spending behavior at all,not when the middle class is looking at getting downsized.
You are right that a "tax break" for new hires is bad policy. It is bad policy because it is short lived. The last time we saw this, under Carter, the only businesses that benefitted were those that were going to hire anyway. (check this AM's WSJ for an editorial on the subject)
Tax cuts need to be across the board. And they need to be permanent or close to it. Lowering the payroll tax across the board would do far more good as it lowers the cost to hire new workers.
But this administration loves targeted tax breaks, which it uses as goodies to buy off the middle class, the unemployed, the greens, etc etc ad nauseam.

 

[Care4all]

Demand is created by advertising.
I mean how many can make it without a sleeved Snuggie now?

How many thing are out there and we buy that we have no real NEED at all for?
And often find after buying them that we really don't even want them?

Perhaps we have been morphed by advertising to where the act of buying is the thing?

Advertising isn't a billion dollar business for nothing.

It works.

Look at all those costly PHARMA ads....

We had to project HIGHER DEMAND if we planned to advertise an item....and thus project higher supply.

 

[MIPS]

113 trillion?

Actually more like $114.1 Trillion

U.S. National Debt Clock : Real Time

Enjoy watching the country go down the financial tubes in real time.

 

[uscitizen]

The debt clock shows the national debt at 12 trillion and change.

 

[toomuchtime_]

Still persistent I see , let me continue to prove you wrong then:

Buying a washing machine will provide profit for the company you buy it from, many people buying washing machines will generate a lot of profits for companies. These profits can be used to expand the companies that sell & produce them (more jobs). And when a washing machine wears out, you need to buy a new one or get it fixed (this will increase the prosperity of companies that provide services for washing machines or sell/produce them).

A washing machine on itself is also a very economically good product: it increases effeciency (people who buy washing machines have more time to do other things: f.e. working), people with washing machines will be able to work longer (because they spend less time washing clothes) => working longer at a factory will create more products for the company that produce & sell them and the worker will also earn more money to spend (possibly on another washing machine ).


Not all rich are economically unproductive (just like not all workers are unproductive), many rich people have invested their money in companies (or also run them) that provide services/consumergoods and jobs. So no, I don't have a hate for the rich and do not want the rich to be punished. But this doesn't mean that when you re forced to make a choice between the rich, the middle class and the poor that it will be in the best intrest for the economy to choose for the rich.

About #3: what if he owns 10 billion US $, will he still be statistically insignificant?

Congratulations. You have put the cart before the horse. People need jobs before they have the disposable income to buy washing machines. Those jobs need to have some kind of promise of being there tomorrow (see, today's economy) for people to feel confident enough to spend big money. Jobs come from investment, not consumption.

If what you say were true then both Carter's and Bush's "rebate" checks would have boosted the economy. Please post an economist or study that says such a thing.
Here is a left wing economist who maintains that the rebates failed:
Tax cut approach has already been tried and failed as stimulus

And there is no mattress big enough to store $10B cash. The question is absurd.

WHY would someone invest in opening a new business without the consumers they know they need to buy their widgets?

You obviously are a supply sider.... and I am a Demand sider...

As a buyer for over 20 years, not a dime of the corporation's money that I spent was on a whim, a wish, and a hope....I had to gather evidence through market analysis, that I had a customer out there that WOULD BUY from me, the product I was going to buy before they gave me the money to spend for them...I had to have projected DEMAND before I SUPPLIED the product....so please forgive me if I just don't cop in to your "build it, and they will come" theory.

It makes no sense to talk about demand in such broad terms. Demand for an item at what price? As a shopper you know there are items you will pass up a one price but will buy if the price drops, meaning demand for that item is elastic. Business owners/investors understand this but they must maintain a certain profit margin, return on investment, to make producing that item or investing in that business worthwhile. Lower interest rates or cuts in income taxes or payroll taxes will lower the business' costs and allow it to maintain the same profit margin and lower prices at the same time, thus accessing latent demand for the product, and this will create more jobs which will further increase demand.

Conversely, raising income or payroll taxes or interest rates or requiring increased expenditures for workers' benefits will require business owners/investors to raise prices in order to maintain an acceptable return on investment and this will reduce demand because, as your inner shopper knows, demand is elastic with respect to price, and reduced demand will mean fewer jobs which will further reduce demand.

 

[MIPS]

The debt clock shows the national debt at 12 trillion and change.

Try looking at the UNFUNDED LIABILITIES that isn't just going to pay for itself unless of the government wants to renege on all it's entitlement promises? You're just looking at CUMULATIVE OPERATING DEFICITS.

I was incorrect on my earlier post though .... the total Cumulative Operating Deficits + Unfunded Liabilities isn't $114.1 Trillion, It's over $119.6 Trillion, no biggie, a trillion here a trillion there, it's all pocket change, right?

 

[Care4all]

Not taxing the consumer...giving tax breaks to the middle class, would help the situation much more than giving some business a tax break for hiring a new employee.

You have managed to add two plus two and get 22.
Tax breaks to the middle class will not change their spending behavior at all,not when the middle class is looking at getting downsized.
You are right that a "tax break" for new hires is bad policy. It is bad policy because it is short lived. The last time we saw this, under Carter, the only businesses that benefitted were those that were going to hire anyway. (check this AM's WSJ for an editorial on the subject)
Tax cuts need to be across the board. And they need to be permanent or close to it. Lowering the payroll tax across the board would do far more good as it lowers the cost to hire new workers.
But this administration loves targeted tax breaks, which it uses as goodies to buy off the middle class, the unemployed, the greens, etc etc ad nauseam.

Well, I agree with the SS tax cut across the board as a stimulator in more ways than one....at least to the tune of what SS is bringing in surplus each year....I'd rather those who pay in to SS get the money instead of our government using it to pay for what income taxes should be paying for.... and this has to be for at least a year or maybe 2, so that confidence can rise by consistently having more income for the consumer in their hands....

But this also leads to a discussion on paying the upper echelon of corporations hundreds of millions in salary while NOT increasing their worker's pay who is producing more....some of the increased sales or profits should be shared with the workers....this keeps the workers, the consumers, in a position to keep the economy going...putting all of this money in to the hands of a few while the workers are struggling to make ends meet, is just piss poor policy and shortsighted.

 

[The Rabbi]

Not taxing the consumer...giving tax breaks to the middle class, would help the situation much more than giving some business a tax break for hiring a new employee.

You have managed to add two plus two and get 22.
Tax breaks to the middle class will not change their spending behavior at all,not when the middle class is looking at getting downsized.
You are right that a "tax break" for new hires is bad policy. It is bad policy because it is short lived. The last time we saw this, under Carter, the only businesses that benefitted were those that were going to hire anyway. (check this AM's WSJ for an editorial on the subject)
Tax cuts need to be across the board. And they need to be permanent or close to it. Lowering the payroll tax across the board would do far more good as it lowers the cost to hire new workers.
But this administration loves targeted tax breaks, which it uses as goodies to buy off the middle class, the unemployed, the greens, etc etc ad nauseam.

Well, I agree with the SS tax cut across the board as a stimulator in more ways than one....at least to the tune of what SS is bringing in surplus each year....I'd rather those who pay in to SS get the money instead of our government using it to pay for what income taxes should be paying for.... and this has to be for at least a year or maybe 2, so that confidence can rise by consistently having more income for the consumer in their hands....

But this also leads to a discussion on paying the upper echelon of corporations hundreds of millions in salary while NOT increasing their worker's pay who is producing more....some of the increased sales or profits should be shared with the workers....this keeps the workers, the consumers, in a position to keep the economy going...putting all of this money in to the hands of a few while the workers are struggling to make ends meet, is just piss poor policy and shortsighted.

I was speaking about payroll tax, which is not the same thing as SS.
Are you a communist?
Because only a communist would talk about what corporations "should" and shouldn't pay their workers. And I thought upper management was also composed of workers.

 

[Care4all]

You have managed to add two plus two and get 22.
Tax breaks to the middle class will not change their spending behavior at all,not when the middle class is looking at getting downsized.
You are right that a "tax break" for new hires is bad policy. It is bad policy because it is short lived. The last time we saw this, under Carter, the only businesses that benefitted were those that were going to hire anyway. (check this AM's WSJ for an editorial on the subject)
Tax cuts need to be across the board. And they need to be permanent or close to it. Lowering the payroll tax across the board would do far more good as it lowers the cost to hire new workers.
But this administration loves targeted tax breaks, which it uses as goodies to buy off the middle class, the unemployed, the greens, etc etc ad nauseam.

Well, I agree with the SS tax cut across the board as a stimulator in more ways than one....at least to the tune of what SS is bringing in surplus each year....I'd rather those who pay in to SS get the money instead of our government using it to pay for what income taxes should be paying for.... and this has to be for at least a year or maybe 2, so that confidence can rise by consistently having more income for the consumer in their hands....

But this also leads to a discussion on paying the upper echelon of corporations hundreds of millions in salary while NOT increasing their worker's pay who is producing more....some of the increased sales or profits should be shared with the workers....this keeps the workers, the consumers, in a position to keep the economy going...putting all of this money in to the hands of a few while the workers are struggling to make ends meet, is just piss poor policy and shortsighted.

I was speaking about payroll tax, which is not the same thing as SS.
Are you a communist?

Because only a communist would talk about what corporations "should" and shouldn't pay their workers. And I thought upper management was also composed of workers.

you are one special, nasty person Rabbi an Ebenezer Scrooge ....I meant to tell ya that earlier but forgot...

As far as your communist comment....stop being silly.

It is a discussion on policy of corporations that is worth having....and being a part of corporations and their decision making policies for over a couple of decades, I feel that I can more than participate in such discussions.

GROW UP old man...

 

[Care4all]

You have managed to add two plus two and get 22.
Tax breaks to the middle class will not change their spending behavior at all,not when the middle class is looking at getting downsized.
You are right that a "tax break" for new hires is bad policy. It is bad policy because it is short lived. The last time we saw this, under Carter, the only businesses that benefitted were those that were going to hire anyway. (check this AM's WSJ for an editorial on the subject)
Tax cuts need to be across the board. And they need to be permanent or close to it. Lowering the payroll tax across the board would do far more good as it lowers the cost to hire new workers.
But this administration loves targeted tax breaks, which it uses as goodies to buy off the middle class, the unemployed, the greens, etc etc ad nauseam.

Well, I agree with the SS tax cut across the board as a stimulator in more ways than one....at least to the tune of what SS is bringing in surplus each year....I'd rather those who pay in to SS get the money instead of our government using it to pay for what income taxes should be paying for.... and this has to be for at least a year or maybe 2, so that confidence can rise by consistently having more income for the consumer in their hands....

But this also leads to a discussion on paying the upper echelon of corporations hundreds of millions in salary while NOT increasing their worker's pay who is producing more....some of the increased sales or profits should be shared with the workers....this keeps the workers, the consumers, in a position to keep the economy going...putting all of this money in to the hands of a few while the workers are struggling to make ends meet, is just piss poor policy and shortsighted.

I was speaking about payroll tax, which is not the same thing as SS.
Are you a communist?
Because only a communist would talk about what corporations "should" and shouldn't pay their workers. And I thought upper management was also composed of workers.

also...idiot, SS is the primary Payroll tax, medicare the other.

 

[uscitizen]

The poor and lower middle class spoend a far higher percentage of their income back into the economy thus growing it than high incomes ones do.

Yet another dumbshit who thinks the economy grows by consumer spending. Newsflash: It doesnt.

This was debunked right after WW2 by Hazlett in Economics in One Lesson. I'd recommend looking at the book before you post again.
He presents the case of two brothers. Their father dies and leaves each one a huge amount of money.
Brother #1 goes on a spending spree. He takes lavish vacations, buys expensive cars every two years, gives big tips everywhere he goes.
Brother #2 is frugal. He invests his money. He buys real estate. He lives not like a pauper but frugally enough.
So which one is responsible for stimulating the economy? Brother #1, right? Wrong.
After 20 years Brother #1 is bankrupt. All his tipping and new cars are gone.
Brother #2 continues with his investments, hiring people to manage them, hiring people to maintain his properties, etc.
So Brother #2 is the one stimulating the economy. Brother #1 is stimulating nothing in the long run.

Nice to see somebody that has read Hazlett, great book.

However I think you're wasting time your Rabbi, these progressive drones are economic illiterates that will never understand that real economic growth comes from savings and not consumption no matter how succinct the explanation.

Ahh now if we were talking about a real sustainable economy and not the economy built over that last couple of decades on on excessive spending and consumption you would be correct.

 

[uscitizen]

Rabbi, Upper managements is composed mostly of parasitic drones.

 

[MIPS]

Yet another dumbshit who thinks the economy grows by consumer spending. Newsflash: It doesnt.

This was debunked right after WW2 by Hazlett in Economics in One Lesson. I'd recommend looking at the book before you post again.
He presents the case of two brothers. Their father dies and leaves each one a huge amount of money.
Brother #1 goes on a spending spree. He takes lavish vacations, buys expensive cars every two years, gives big tips everywhere he goes.
Brother #2 is frugal. He invests his money. He buys real estate. He lives not like a pauper but frugally enough.
So which one is responsible for stimulating the economy? Brother #1, right? Wrong.
After 20 years Brother #1 is bankrupt. All his tipping and new cars are gone.
Brother #2 continues with his investments, hiring people to manage them, hiring people to maintain his properties, etc.
So Brother #2 is the one stimulating the economy. Brother #1 is stimulating nothing in the long run.

Nice to see somebody that has read Hazlett, great book.

However I think you're wasting time your Rabbi, these progressive drones are economic illiterates that will never understand that real economic growth comes from savings and not consumption no matter how succinct the explanation.

Ahh now if we were talking about a real sustainable economy and not the economy built over that last couple of decades on on excessive spending and consumption you would be correct.

Are you being obtuse by accident or are you doing it on purpose?

 

[uscitizen]

Nice to see somebody that has read Hazlett, great book.

However I think you're wasting time your Rabbi, these progressive drones are economic illiterates that will never understand that real economic growth comes from savings and not consumption no matter how succinct the explanation.

Ahh now if we were talking about a real sustainable economy and not the economy built over that last couple of decades on on excessive spending and consumption you would be correct.

Are you being obtuse by accident or are you doing it on purpose?

I apparently understand our situation better than you do.
Our current economy was built by excessive and debt based spending. with excessive waste figured in.
I always predicted that model would fail.
An economy that is based 70% on consumer spending with a massive world trade defecit is not sustainable.

 

[MIPS]

Ahh now if we were talking about a real sustainable economy and not the economy built over that last couple of decades on on excessive spending and consumption you would be correct.

Are you being obtuse by accident or are you doing it on purpose?

I apparently understand our situation better than you do.
Our current economy was built by excessive and debt based spending. with excessive waste figured in.
I always predicted that model would fail.
An economy that is based 70% on consumer spending with a massive world trade defecit is not sustainable.

No you apparently don't, you might want to try reading the post you replied to then take a stab at understanding that our current economic mess is a result of attempting to foster economic growth via consumption and monetary inflation instead of savings.

Your previous statement to the effect that " not the economy built over that last couple of decades on on excessive spending and consumption you would be correct." Is asinine in the extreme since the current circumstances support my original assertion, an assertion which is correct always. Your assertion only makes sense if one advocates intentionally creating bubble & bust cycles in the economy with ever increasing downside severity as a good thing.

Once again, reality demonstrates that Keynesian Economics is still and always has been a pile of rubbish.

 

[The Rabbi]

Well, I agree with the SS tax cut across the board as a stimulator in more ways than one....at least to the tune of what SS is bringing in surplus each year....I'd rather those who pay in to SS get the money instead of our government using it to pay for what income taxes should be paying for.... and this has to be for at least a year or maybe 2, so that confidence can rise by consistently having more income for the consumer in their hands....

But this also leads to a discussion on paying the upper echelon of corporations hundreds of millions in salary while NOT increasing their worker's pay who is producing more....some of the increased sales or profits should be shared with the workers....this keeps the workers, the consumers, in a position to keep the economy going...putting all of this money in to the hands of a few while the workers are struggling to make ends meet, is just piss poor policy and shortsighted.

I was speaking about payroll tax, which is not the same thing as SS.
Are you a communist?

Because only a communist would talk about what corporations "should" and shouldn't pay their workers. And I thought upper management was also composed of workers.

you are one special, nasty person Rabbi an Ebenezer Scrooge ....I meant to tell ya that earlier but forgot...

As far as your communist comment....stop being silly.

It is a discussion on policy of corporations that is worth having....and being a part of corporations and their decision making policies for over a couple of decades, I feel that I can more than participate in such discussions.

GROW UP old man...

So you have to call names when shown to be wrong. OK.

You are obviously a communist. Only a communist would talk about "upper management" and "workers" in terms that are mutually exclusive, or that posit that workers contribute more than upper management.
That is clearly false.

FWIW, we'll go through this again:
Workers get paid based on their worth to the company and the difficulty in hiring someone else of comparable skills. "Worth" is defined as how much they add to the top or bottom line. So an ace salesman will command more money than a poor salesman. Similarly a manager who can get workers to be more productive is worth more than one who cannot.
On the other side, there aren't that many ace salesmen in any field. So replacing one can be difficult and expensive. Similarly a customer service rep who also speaks Spanish fluently is worth more than one who doesn't, when the customer base includes spanish-speakers.
So every employer of spanish-speaking CSR's competes with every other employer to get the best spanish-speaking CSR at the lowest cost. Since the pool of Spanish speaking CSRs is smaller than the pool of non-spanish speaking CSRs, the Spanish speakers will command more money.
At upper levels, it requries a tremendous amount of skill to run a company. The bigger the company, the more the responsibility, the more opportunities for success and failure. The number of people with appropriate skills for this kind of work (keeping in mind the 80+ hour weeks required and often extensive travel) is very limited. All companies compete to hire top level CEOs, and the difference between a good one and a bad one amounts to literally billions of dollars of wealth for workers and stockholders alike. So they get paid a lot. Are there excesses? Yes. But not nearly as much as people would imagine.
So the market largely sets wages at all levels. And since communists don't believe in the market as an appropriate instrument for setting wages, and you (Care4all) don't believe in the market as an appropriate instrument, then you must be a communist.

 

[Munin]

A washing machine on itself is also a very economically good product: it increases effeciency (people who buy washing machines have more time to do other things: f.e. working), people with washing machines will be able to work longer (because they spend less time washing clothes) => working longer at a factory will create more products for the company that produce & sell them and the worker will also earn more money to spend (possibly on another washing machine ). Conclusion this investment does not generate money directly, but it does provide you with the means to create make that extra money: time. And as an economist you can say "time = money" (at least if you re a guy who likes to work for his money).

So your contention is that consumers purchase labor saving devices like washing machines so that they can WORK more? In the world I live in end consumers purchase labor saving devices so that they have more leisure time and thus a higher quality of life.

WoW, if so, you've just come up with a fallacious argument that belongs right up there with the broken window fallacy in the annals of inaccurate assumptions about economics.

Let's try a little hypothetical experiment shall we?

You try to make a million dollars by spending and I'll try to make a million dollars by investing and we'll:

*see which one of us gets there first
*see which one of us ends up creating more net economic output

K?

Srry, you misunderstood me: in this case I used "working" as an example (f.e. = for example), I didn't say that people would only work in the time they saved by using this washing machine. But it is true that the combination of all labor saving devices has allowed us to work more, in the past it was impossible for a couple to both have jobs: now this has changed because of labor saving devices! It has effectively doubled the workforce of almost all western countries!

And another thing you overlooked: spending = investing

there is no difference: wether you say that you "spend" your money on stocks or you "spend" it on buying a washing maching OR you say you "invest" your money in stocks or "invest" it in a washing machine is saying the same thing.


Again you make the mistake of only viewing at an individual case (a company) and then generalising it for the whole economy. If there is one thing we should ve learned from the recent economical crisis then it is that an economy depends on consumers! no consumers = no companies, yet you refuse to accept reality ...

housing crisis = consumers went broke (because of the policies of certain companies) -> result: companies that rely on them crash down