Honest Political Question

[Que]

This administration is more concerned with "Fairness" than they are with bringing in revenue. When taxes are used in a punitive manner they help cripple our economy.

Okay, I can see your point. I read the interview with Warren Buffett that President Obama referenced, when he said his secretary pays more taxes that he. Using Buffett as an example, would you say it's fair for him to pay nothing in taxes because he is able to take a salary of $1? I don't want to see anyone punished for their success, but is there a way for him to contribute just like the small business owner? There are many small business owners who pay taxes for their businesses and then again for their income. This is not right, but Buffett doesn't have to do it. So, in my opinion, this is not fair.

If the very rich can take $1 salaries, then their savings should be taxed. If the middle-income business owner pays one tax, he should be exempt from the other, just like Buffett.

You may not know the in's-and-out's of my question and I'm only asking, based on very limited knowledge of Mr. Buffett's financial situation and others like him.

 

[BloodEclipse]

Okay, I can see your point. I read the interview with Warren Buffett that President Obama referenced, when he said his secretary pays more taxes that he. Using Buffett as an example, would you say it's fair for him to pay nothing in taxes because he is able to take a salary of $1? I don't want to see anyone punished for their success, but is there a way for him to contribute just like the small business owner? There are many small business owners who pay taxes for their businesses and then again for their income. This is not right, but Buffett doesn't have to do it. So, in my opinion, this is not fair.

If the very rich can take $1 salaries, then their savings should be taxed. If the middle-income business owner pays one tax, he should be exempt from the other, just like Buffett.

You may not know the in's-and-out's of my question and I'm only asking, based on very limited knowledge of Mr. Buffett's financial situation and others like him.

What does Buffet do with his money? He invests it. Those investments are capital that create taxpaying jobs and products. If he didn't invest that money how many people would be out of work?
What is not fair is to tax success. Success should be rewarded.
How hard are you going to try to improve your situation if everything is handed to you? Welfare pays too much. Everyone I know receiving aid has cable, cell phones and they don't go hungry. They also manage to buy cigarettes and alcohol.
You want a better system? Make welfare suck so bad no one wants to be on it. Reward hard work and success. Give people an incentive to do for themselves. Punishing success is not fair.

 

[Que]

What does Buffet do with his money? He invests it. Those investments are capital that create taxpaying jobs and products. If he didn't invest that money how many people would be out of work?
What is not fair is to tax success. Success should be rewarded.
How hard are you going to try to improve your situation if everything is handed to you? Welfare pays too much. Everyone I know receiving aid has cable, cell phones and they don't go hungry. They also manage to buy cigarettes and alcohol.
You want a better system? Make welfare suck so bad no one wants to be on it. Reward hard work and success. Give people an incentive to do for themselves. Punishing success is not fair.

I guess you didn't read my post entirely, but i agree with you. I have no desire to see success punished. However, I'm not all that concerned about the billionaires, but those who own local businesses and are double and even triple-taxed. They are the job creators I'm worried about. How can they grow if they don't have money to invest. Buffett isn't being taxed like these job-creators. His $1 a year salary isn't paying anything and his capital gains are protected, so what is HE contributing? Maybe I'm just ignorant, so educate me.

I want the gun shop owner to have the same ability to pay one tax or make all businesses and their owners pay the same. There are plenty of large companies that don't pay taxes at all; their corporate officers receive stock option and their salaries are pennies compared to their protected money.

By the way, how do you know what Buffett's money pays for? What products does his companies make?

 

[tuoder]

Kind of like the Paygo law they passsed in Feb? How is that working for you?

Obama signs debt limit-paygo bill into law

Fri, Feb 12 2010
WASHINGTON (Reuters) - President Barack Obama signed a law on Friday lifting the U.S. government's borrowing authority to $14.3 trillion and installing a pay-as-you-go rule to curb spending, the White House said.
The U.S. House of Representatives passed the debt limit bill last week, giving it final congressional approval and sending it to the White House for Obama's signature.
The U.S. Treasury was expected within weeks to exceed the current $12.4 trillion government debt limit set in December. Failure to raise the limit would roil financial markets.
The bill also contained 'pay-as-you-go' legislation that requires new spending to be offset with cuts elsewhere.
Democrats, who control the U.S. Congress, crafted the "paygo" language to deflect voter anger over soaring spending and to show they are serious about fiscal responsibility. They say paygo rules helped the country turn budget deficits into surpluses in the 1990s.
Obama has proposed a record $1.56 trillion deficit for fiscal 2010 as he tries to boost growth and jobs, equivalent to 10.6 percent of gross domestic product, but projects this funding gap to have halved as a share of the economy by 2013.

Not exactly. Paygo can be reversed at any time. I'm advocating permanently requiring that all tax cuts will be paid for with spending cuts, and that all spending programs require tax increases.

Obama is proposing deficit spending based on Keynesian economic theory. It state that the government should spend during recessions to offset them, and then to save during good times. The problem I see with this is that nobody wants to save in the good times.

 

[Fletch]

By the way, how do you know what Buffett's money pays for? What products does his companies make?

From Wikipedia:

Berkshire Hathaway (NYSE: BRKA and NYSE: BRKB) is a conglomerate holding company headquartered in Omaha, Nebraska, United States, that oversees and manages a number of subsidiary companies. The company averaged an annual growth in book value of 20.3% to its shareholders for the last 44 years, while employing large amounts of capital, and minimal debt.[1] Berkshire Hathaway stock produced a total return of 76% from 2000-2010 versus a negative 11.3% return for the S&P 500[3].

Warren Buffett is the company's chairman and CEO. Buffett has used the "float" provided by Berkshire Hathaway's insurance operations (a policyholder's money which it holds temporarily until claims are paid out) to finance his investments. In the early part of his career at Berkshire, he focused on long-term investments in publicly quoted stocks, but more recently he has turned to buying whole companies. Berkshire now owns a diverse range of businesses including railroads, candy production, retail, home furnishings, encyclopedias, vacuum cleaners, jewelry sales; newspaper publishing; manufacture and distribution of uniforms; as well as several regional electric and gas utilities.

 

[Que]

From Wikipedia:

Thanks, Fletch. Now, with all of that, should his secretary pay more in taxes than him? Should a local business owner pay more in taxes than he does? Again, I don't want him punished, but I CERTAINLY want to see some of these small company owners who are struggling to hire people, have the same benefits.

 

[Fletch]

Thanks, Fletch. Now, with all of that, should his secretary pay more in taxes than him? Should a local business owner pay more in taxes than he does?

If you're going to talk about "more" and "less", you need to define your unit of measure.

 

[BloodEclipse]

Not exactly. Paygo can be reversed at any time. I'm advocating permanently requiring that all tax cuts will be paid for with spending cuts, and that all spending programs require tax increases.

Obama is proposing deficit spending based on Keynesian economic theory. It state that the government should spend during recessions to offset them, and then to save during good times. The problem I see with this is that nobody wants to save in the good times.

So when tax cuts have shown historically to increase revenue, you want spending cuts and then you want tax increases with new spending programs?
I want tax cuts and spending cuts and no new spending until the debt is paid off.

 

[tuoder]

So when tax cuts have shown historically to increase revenue, you want spending cuts and then you want tax increases with new spending programs?
I want tax cuts and spending cuts and no new spending until the debt is paid off.

I'm familiar with the Austrian interpretation. I find the evidence Keynesian approach more persuasive. I'm a bit pessimistic on Mr. Keynes' prescriptions, but his descriptions look pretty good to me.

 

[Fletch]

I'm familiar with the Austrian interpretation. I find the evidence Keynesian approach more persuasive. I'm a bit pessimistic on Mr. Keynes' prescriptions, but his descriptions look pretty good to me.

What about Keynes do you find persuasive vs. what you find unpersuasive about Austrianism?

 

[tuoder]

What about Keynes do you find persuasive vs. what you find unpersuasive about Austrianism?

Well Austrian economics isn't really terribly scientific and rigorous. I'd like to see some specific theories and predictions that can be proved or disproved. It strikes me more as an economic philosophy that springs from an ideology, while criticizing others for doing the same.

Keynesianism is constantly being revised and updated based on new evidence. Specif predictions are made, and when the facts disprove the hypothesis, the hypothesis is revised.

 

[Fletch]

Well Austrian economics isn't really terribly scientific and rigorous. I'd like to see some specific theories and predictions that can be proved or disproved.

So in other words you have no idea what Austrian economics is all about, and haven't bothered to learn much beyond the name and perhaps a Wikipedia blurb.

 

[tuoder]

So in other words you have no idea what Austrian economics is all about, and haven't bothered to learn much beyond the name and perhaps a Wikipedia blurb.

This discussion just went south.

 

[Fletch]

Let's start with the fact that Ludwig von Mises correctly predicted the crash of 1929, while John Maynard Keynes lost his shirt during it:

Wall Street Journal

...Sadly, poor Ludwig was very nearly alone in warning of the collapse to come from this credit expansion. In mid-1929, he stubbornly turned down a lucrative job offer from the Viennese bank Kreditanstalt, much to the annoyance of his fiancée, proclaiming "A great crash is coming, and I don't want my name in any way connected with it."

We all know what happened next. Pretty much right out of Mises's script, overleveraged banks (including Kreditanstalt) collapsed, businesses collapsed, employment collapsed...

...

...But then, just Mises's bad luck, along came John Maynard Keynes's tome "The General Theory of Employment, Interest and Money" in 1936. Keynes was dapper, fresh and sophisticated. He even wrote in English! And the guy had chutzpah, fearlessly fighting the battle against unemployment by running the currency printing press and draining the government's coffers.

He was the anti-Mises. So what if Keynes had lost his shirt in the stock-market crash. His book was peppered with fancy math (even Greek letters) and that meant rigor, modernity. To add insult to injury, Mises wasn't even refuted by Keynes and his ilk. He was ignored.

Fast forward 70-some years, during which we saw Keynesianism's repeated disappointments, the end of the gold standard, persistent inflation with intermittent inflationary recessions and banking crises, culminating in Alan Greenspan's "Great Moderation" and a subsequent catastrophic collapse in housing and banking. Where do we find ourselves? At a point of profound insight gained through economic logic, trial and error, and objective empiricism? Or right back where we started?

With interest rates at zero, monetary engines humming as never before, and a self-proclaimed Keynesian government, we are back again embracing the brave new era of government-sponsored prosperity and debt. And, more than ever, the system is piling uncertainties on top of uncertainties, turning an otherwise resilient economy into a brittle one.

How curious it is that the guy who wrote the script depicting our never ending story of government-induced credit expansion, inflation and collapse has remained so persistently forgotten. Must we sit through yet another performance of this tragic tale?

Or should I dig up the various Austrians who correctly predicted the stock market crash at the end of the Clinton administration? Or the housing bubble? Or the present crisis? Shall I rub your nose in the various Keynesians such as Greenspan, Bernanke, and the jabbering monkeys in Congress who all said, all along the way, that "everything's fine"?

That's some "science" you got there. Too bad it ignores the most basic form of science in its rush to be fancy and marketable.

 

[jsgolfman]

Have you actually read The General Theory? Keynes entire theory rests on two "faults" of the classical economic model.
1. Failure to provide full employment
2. Unequal distribution of wealth and income

The fact that this country's economic philosophy is based on this socialist model and yet promotes its' devotion to the "free market" astounds me. How anyone can defend Keynes theory, based on pillage and plunder, with a straight face is beyond me.

Edit: Fletch, this post was not in reponse to you but rather the economic student above you.

 

[tuoder]

Let's start with the fact that Ludwig von Mises correctly predicted the crash of 1929, while John Maynard Keynes lost his shirt during it:

Wall Street Journal



Or should I dig up the various Austrians who correctly predicted the stock market crash at the end of the Clinton administration? Or the housing bubble? Or the present crisis? Shall I rub your nose in the various Keynesians such as Greenspan, Bernanke, and the jabbering monkeys in Congress who all said, all along the way, that "everything's fine"?

That's some "science" you got there. Too bad it ignores the most basic form of science in its rush to be fancy and marketable.

Hold on there. I'm not in love with these ideas, I just regard them as true. You can't offend me by criticizing my ideas.

Firstly, Greenspan is a student of the Austrian school and an Objectivist. The guy hung out with Ayn Rand herself in the 50s. He has observed errors in the ideology since his tenure as Fed chairman.

Bernanke is a student of Friedman's monetarism. He agrees with you on the Fed's role in precipitating the Great Depression.

Congress is much more amateurish in it's handling of economics. Ron Paul is the only one I'm aware of that knows the first thing about the academic discipline at all.

Keynisian policies are what brought us out of the Great Depression, and the gold standard, leading to a fixed money supply was one of the major factors in making it possible.

 

[tuoder]

Have you actually read The General Theory? Keynes entire theory rests on two "faults" of the classical economic model.
1. Failure to provide full employment
2. Unequal distribution of wealth and income

The fact that this country's economic philosophy is based on this socialist model and yet promotes its' devotion to the "free market" astounds me. How anyone can defend Keynes theory, based on pillage and plunder, with a straight face is beyond me.

Edit: Fletch, this post was not in reponse to you but rather the economic student above you.

Marxist economics is a whole different set of ridiculousness. The few that cling to that failed idea are nuts. Keynesian economics isn't the same thing.

 

[SemperFiUSMC]

Keynisian policies are what brought us out of the Great Depression, and the gold standard, leading to a fixed money supply was one of the major factors in making it possible.

Wrong. Lend Lease and WWII brought us out of the GD.

 

[tuoder]

Wrong. Lend Lease and WWII brought us out of the GD.

Also true. Hitler had as much to do with getting us out as FDR did.

 

[Fletch]

Firstly, Greenspan is a student of the Austrian school and an Objectivist. The guy hung out with Ayn Rand herself in the 50s. He has observed errors in the ideology since his tenure as Fed chairman.

Keynes' great contribution to economics was to give government an excuse to do whatever it wanted. Keynesianism became the religion of government economics immediately, because it gave them an "expert opinion" that they could point to and not have to accept any responsibility for themselves. Greenspan started off with the right ideas, until he got hired by the Fed. Greenspan "went native". He sold out the truth that he knew for the expediency of power. It's no more complicated than that.

Bernanke is a student of Friedman's monetarism. He agrees with you on the Fed's role in precipitating the Great Depression.

Bernanke is even worse than Greenspan. If he agreed with me on the Fed's role in precipitating the Great Depression, he would not be steering it to the same disastrous ends today.

Keynisian policies are what brought us out of the Great Depression, and the gold standard, leading to a fixed money supply was one of the major factors in making it possible.

No. Keynesian policy did no such thing. World War II did no such thing. What brought us out of the Great Depression was that, at the end of the war, FDR was mercifully dead and the size and weight of government shrank by an unprecedented TWO THIRDS of its Depression/wartime size.

Try this some day: carry around 150 pounds in a pack for a week. At the beginning of the next week, set down 100 pounds and carry the remaining 50. I can't be sure, but it seems to me that you'll be able to get a lot more done the second week than the first.