Let em expire!

[Eagledad]

Beavs is left of center in most of his stuff on this forum. But I think his reference datum for conservative is skewed to the left in Minnesota compared to most rest of the country. To be honest, I wonder if this thread is just the typical emotional bias I see from beav and others on this forum. Its all the republican fault. Those mean republicans and concervatives. I have come to know those few bashers that have nothing good to say about Republicans, conservatives and Christians on this forum. Forums have allowed us to express in text what we wouldn't dare say to our faces. I dont consider this forum friendly by any means and I still wonder about some folks definition of friendly, courteous, kind.

 

History shows a drop in taxes increases government coffers, where as adding tax on the people has the opposite effect. In fact, the poor seem to get the worse of tax increases because their jobs go first and their places they shop tend to go out of business first. Bush got us out of a mess in the early 2000s with his tax cuts, but unfortunately the continued government spending increases the last few years out paced the benefits of the tax cuts and here are.

 

Again, talk to any CPA and you will learn of the huge burden that will be placed on all of us, but especially small businesses. My wife has several small business clients and they are not optimistic (very scared) of the future and are certainly not going to invest in new equipment or personel until they see the possibility of a return. They are in survival mode. The changes in the next few months are pretty dramatic and it will be a scary time for ALL of us. It really is a top down problem.

 

My son, the school teacher, manages a swimming pool service in the summer time for neighborhood pools. He has already been told that about a forth to half of the neighborhoods are considering closing their pools or not using his companies services because they are have less dues from a decrease of families in the neighborhoods. They took a big hit when minimum wage increased and now this could be the last straw for summer time swimming in neighborhoods. So my son is affected a lot and may not even have a summer job next year. Teachers dont make a lot as it is. He employs about 30 teenage lifeguards that may not have a job next summer. We will see, but the company says they see an increase of 25% at least from the changes coming next year.

 

You think the economy is rebounding? I dont get where you see that, call a friend in Florida for a dose of reality. And just wait a few months, its going to get worse, even in Minnesota.

 

Its as simple as no money to spend, no jobs. No jobs, not money to spend.

 

Or is it that you think the government will do a better job with the taxes than the companies. And you think that because the government has been so impressive the last few years.

 

Barry

 

[Rockford8070]

You people are hilarious. Arguing back and forth like this. HA!

 

You are all under the assumption that if the government got their hands on more money that they would actually use it for something useful. You know, because they've demonstrated so far that they know how to handle money. Chances are they'd whip up some legislation that happens to need a huge amount of money. POOF! There goes all that "extra" tax money.

 

Fools.

[Beavah]

Yah, hey, BrentAllen, right there with yeh. If anybody in congress, liberal or "conservative" was actually proposing substantial cuts of that sort, I'd be votin' for 'em. And yep, Rockford, I see your point, except that they already spent the money, eh? We owe on the Afghan and Iraqi wars and prescription meds for seniors. The time to stop 'em was back then, but we didn't. So we're stuck with the bill. I supported both those wars, and I believe in paying our debts for them rather than mortgaging the country to China.

 

Eagledad, I fully admit that I no longer meet the definition of modern "neo" conservative, eh? Definitely not the Palin wing of the Republican party. I just don't care for da emotional, anti-intellectual approach they embrace. That's OK, because they don't meet my definition of conservative either, eh? I consider the borrow-and-spend thing to be way left of center. I also don't buy the amusin' fiction that a few south-plains states are "most of the rest of the country".

 

History does not show that a drop in taxes increases government coffers. That's just poppycock. The tax increases of GHWB led to an increase in government revenues and budget surpluses. The tax cuts of GWB led to record-setting deficits even before the bailouts.

 

What is true is that intelligent tax policy can provide incentives for re-investment, and vice-versa. Taxes on luxury goods, for example, lead to less tax revenue overall, because people just stop buying luxury goods. Taxes on dividends can reduce re-investment and capital growth. But that's not true for all taxes. Taxes on gasoline, for example, lead to greater investment in automobile development and manufacturing, while reducing our trade deficit and therefore increasing domestic capital. In fact, da domestic auto industry has been begging for responsible gas taxes because it would help 'em predict the cost of oil and make more productive R&D and production decisions.

 

I do see CPA's and business folks all the time in my line of work and have an MBA myself. You're muddling a bunch of things up. People are scared right now because we're still in the throes of a credit crisis, eh? Narrowly missed a Greater Depression. A half-dozen European countries are functionally in national bankruptcy, and international banking and investment is interlocked. Yeh think lots of banking money is available to lend to help businesses grow when whole nations are in bankruptcy? But da U.S. domestic picture is brightening, eh? Home sales up in October, corporate earnings up, and the stock market (a leading indicator of the economy) rising healthily.

 

Yep, teachers like your son are still takin' their lumps. Government revenues and salaries for government employees like your son lag the economy. They and other state-level government employees were saved from more severe cuts and layoffs by the federal "stimulus" (which really didn't "stimulate" anything, it just kept state budgets afloat for two years). Now the stimulus has run out, so there will be another round of state budget cuts around da country. The state revenues won't come back up until after the economy rises. But that's what we want, eh? Cutting government waste now, while we can. Might even lead to more privatization of education with more choice, which would be a good thing.

 

And swimming pools? We're cryin' about private swimming pools? Yep, when as individuals and a nation we're in debt up to our hindparts, it's time to start layin' off on the luxuries like the private neighborhood swimming pool. Yep, that means fewer lifeguards. That's what we call "personal and fiscal responsibility." One of those things us old school conservatives still believe in. Besides, I'd lay odds that one of da things that's driving your swimming pool cuts is the aging population, eh? Fewer of the homeowners usin' a pool that much, so it's a reasonable thing to cut.

 

Now, I do share the belief that the proper way to fiscal responsibility is along the lines that the deficit commission is proposing, eh? 3 parts spending cuts to 1 part revenue increase. And, long-term, reducing the size of government back to a smaller fraction of GDP. But that means cutting or eliminating Social Security, Medicare, Defense Spending, Veterans' services, farm subsidies, etc. The things no "neo" conservative is talkin' about.

 

Beavah

(This message has been edited by Beavah)

[CalicoPenn]

The devil is in the details for the "Fair Tax". For instance, the proposed tax includes rental taxes for homes and apartments, but no tax for the purchase of a home (presumably, this would serve to keep intact the mortage interest deduction that would no longer be available). If you rent an apartment, you have to pay a tax on the rental rate. But if you buy a home, you don't have to pay a tax. Is that really fair?

 

And what about the bureaucracy? Do people really think the IRS will go away or get smaller? Not only will it not go away, it will get larger. Someone is going to have to ensure compliance - that the people who are supposed to collect the taxes are really collecting the taxes, and are turning them in. That's more than just enforcement - we'll still need people to collect and evaluate tax returns. And consider what it's going to take to make sure the guy who owns a second home and rents it out is collecting the sales tax on rentals? You think once a year returns are onerous? Just wait.

 

The bureaucracy will also get much bigger because we'll have to create another agency similar to the Social Security Administration because the plan to handle the proposed annual exemption amounts (a flat rate) is to send every US taxpayer a check every month for a 1/12th share of the exemption. Ask the Social Security Administration how much work it is to process the paper needed to add new beneficiaries and remove dead people from the roles every month. Now consider having to do that for 300+ million people.

 

And at the end of all of this expansion of government, most people will still pay, after exemptions, the same amount of taxes anyway. The only people the fair tax will benefit is the wealthy and the corporations. It will also make the cost of government even more expensive, with no additional revenue to cover the cost - so how much of the defense budget do you want to cut to pay for the bigger bureaucracy?

 

As for "tax and spend", any one with a lick of sense knows that "tax and spend" is far more sustainable than "borrow and spend", which the GOP just loves to do. We're facing these major deficits because we borrowed heavily to fund two wars while giving tax cuts to people. We didn't have to sacrifice during the aughts while those wars were being fought - but at some point, we're going to need to sacrifice to get things back under control.

 

Let them all expire

[Eagledad]

>>I do see CPA's and business folks all the time in my line of work and have an MBA myself. You're muddling a bunch of things up.

[Stosh]

Beavah, I'll agree that the government has done a lot in the area of R&D, but it has been the private sector that has produced the overall wealth. TV, and communications satellites outnumber the military necessary satellites by quite a bit. I don't disagree that the government should not be a consumer of wealth in order to protect the populace, but keep it in mind that wealth generates from non-consumer sources, i.e. "big business".

 

Tang, Velcro, etc. are a number of the more successful wealth producing private industries that have picked up on the government's R&D in the space program. There are a lot of others besides just these two. But the only benefit the government receives on these items is the tax revenue they demand, sales tax, income tax and whatever other kind of tax they can think of. None of which produces wealth.

 

Government contracts can't be considered wealth producing because the government only consumes these items, it does not produce them. Private industry under contract does. The workers in these industries get paid with government money just as much as they do from other sources, i.e. Goodyear Rubber company may have a contract to produce Jeep tires, but Goodyear also pays with money derived from the private sector general consumer for their cars and trucks.

 

It's a little like the difference between a sales department in a large corporation and the IT department. Sales directly influences the acquisition of customers to buy the products thus generating wealth for the company. The IT department does not and only consumes the resources of the company.

 

I'm also thinking that in the long run the GPS system implemented by the US government, contracted out the manufacturing of the satellites, and then provided the means to put it in orbit on a rocket manufactured by private industry and now makes no money off the process because I don't know as there are any people paying the government for use of the satellites. Here again, I see the government as a consumer of private industry's wealth producing capabilities and doesn't really generate wealth on it's own. The US Postal System is the closest thing I can think of that produces it's own wealth by offering postal service to the nation. Unfortunately in recent years they have been faltering along the wayside.

 

83Eagle: I don't see the government as taxing productivity in as much as they are appropriating wealth. If a farmer plants a 10-cent seed in the ground and it produces $1 worth of produce he has generated 90-cents worth of wealth that didn't exist anywhere before. Same for the manufacturer that takes basic raw materials and produces a product to be consumed by others. There are those who through other efforts produce wealth, i.e. the burger flipper at Micky D's who through his own efforts produces services for others to consume. Same may apply to the factory line-worker who puts parts together to produce a product. All of these people are "paid" for their efforts of self-generating wealth.

 

So then, what does the government do to produce wealth? It doesn't because it is a consumer of wealth. It takes the wealth of others from them and pays for it's "free" services it provides to the general public. To a certain degree this is a necessary thing, i.e. military, transportation, public education, etc. However, there has to be a balance so that the government does not take so much from the wealth producers that it can't sustain itself. There will come a time when the wealth producers can't make enough to sustain the demands of the government and then the government will collapse. This is why the socialist countries find it so hard to grow at the same rate as the free market systems. Take China for example. They saw how this worked, cut out the government interference in the market system and it exploded onto the world's scene overnight. We in the US are doing just the opposite and our economy is declining.

 

Stosh

[83Eagle]

83Eagle: I don't see the government as taxing productivity in as much as they are appropriating wealth. If a farmer plants a 10-cent seed in the ground and it produces $1 worth of produce he has generated 90-cents worth of wealth that didn't exist anywhere before. Same for the manufacturer that takes basic raw materials and produces a product to be consumed by others. There are those who through other efforts produce wealth, i.e. the burger flipper at Micky D's who through his own efforts produces services for others to consume. Same may apply to the factory line-worker who puts parts together to produce a product. All of these people are "paid" for their efforts of self-generating wealth.

 

I think you are actually arguing for my point.

 

Maybe it's how I define "wealth" which is basically the ammassing of money. So I might be very wealthy but have very little taxable income, because my wealth is sitting in a Swiss bank account somewhere. The government does not tax that wealth via the income tax, because there is no taxable income. Any comment I ever hear about "taxing the rich" rings hollow in light of this reality, and the facts about who actually pays income taxes as I outlined previously.

 

Now on the other hand, let's say I work very hard and create what you call "self-generating wealth." I call that productivity! The more productive and efficient I am, the more money I make.

 

This is directly relevant to my work as a contractor. The more clients I take on, the harder I work, the more productive I am, the more money I make. And...the more money I make, the more money government takes--not just more money, but a PROGRESSIVELY HIGHER PERCENTAGE of my money. And if I get to the point where I am really, really productive and hit that magical $250,000 mark, well now I am "the rich" and I deserve to be taxed up and out the wazoo.

 

Therefore, the government disincentivizes productivity. The income tax, which is by definition a progressive tax, is therefore a tax on productivity.(This message has been edited by 83eagle)

[Beavah]

Yah, which future, eh? The long-term future or da short-term future?

 

The short-term future is probably OK, as I mentioned. So long as we make a reasonable effort at reigning in our debt and so long as Europe is worse off than we are, we probably won't end up like Greece.

 

Long-term, we're sittin' on a demographic time bomb. Too many old folks on the dole, too few young folks being productive. That portends a significant shrinkage of the economy that will persist for at least a decade or two. As more baby-boomers start drawing on Medicare, Social Security, and retirement savings they will be an enormous drag on the economy. Depressing stock prices, reducing the capital available to invest, reducing demand for any products other than health care. Ever wonder why yeh see drug stores popping up on every corner?

 

If we go into that economic shrinkage already deeply mired in debt, and block immigration of young workers entering their productive years, there will be a dollar/debt crisis. And that will be the Greatest Depression and the end of American supremacy in the world.

 

So yah, the long term is kinda scary, eh? But everybody is so worried about their swimming pool in the short term that they are unwilling to do what it takes to be responsible and prepared for the longer term.

 

Beavah

 

[Beavah]

Nah, it's more complicated than all that, jblake.

 

If a private company's R&D department comes up with a new gizmo, what you'd claim is that they aren't producing wealth. Only when the gizmo is manufactured and sold. But in fact, it was the development of the new gizmo, and the investments in R&D, that led to the growth. No investment in R&D, no growth in wealth.

 

Think of the government as just a big private business that we all have stock in. When da government builds roads, those are our roads, eh? They add to our general wealth as Americans. They lead to future revenues through trade and business growth.

 

No different for government R&D, eh? Velcro, Tang, GPS, on and on... that government investment spurred development. Those are our innovations. When manufactured, they can be sold to us for a lot less because the R&D is already paid for, and for our tax investment in the R&D we get a bigger, more robust economy. Again, an addition to our general wealth as Americans.

 

That's the "provide for the general welfare", eh? We're investors in America, and we hold a lot of produced wealth, from roads to bridges to inventions to B-2 bombers, in common.

 

Our problem is that our investment is being badly managed, eh? Our overhead is way too high... stuff like Medicare and Social Security and Defense which by and large do not create wealth the way roads and telecommunications and inventions do. (Leastways, defense doesn't create wealth in most cases. It did in the first Iraq war because the Saudis and Kuwaitis paid in cheap oil for a decade. It did in WW2 because Europe & Japan had to buy from us to rebuild. It would if we were willing to "sack" a country we invaded. But it didn't in Vietnam, and it's not goin' to in Iraq and Afghanistan.)

 

So for our investment in America, only a small bit of it is producing wealth, eh? Those are the bits - research, infrastructure, education, etc. - that are worth investing in. The rest is in non-wealth producing support services (courts, police forces and regulators, defense, etc.) which should be pay-as-we-go. If crime goes up, we should pay more for police. If crime goes down, we should cut police. If we feel it's necessary to fight a war, we should pay for it as we go. If we don't feel we need as much defense, we should cut it and cut taxes to match. It's not an investment. Yeh only borrow money for investments.

 

Then we have entitlement Ponzi Schemes like Social Security and Medicare. I don't know what those are other than foolish. Every private corporate pension plan eventually goes bust, often draggin' the company down with 'em (like GM). Every state pension plan in da U.S. that I know of is so underfunded as to be essentially bankrupt. The coming bailout of those might be what sinks us. And the federal entitlements are similar.

 

It's a pretty sorry company, the U.S. government, mortgaging off its assets - its roads and bridges and research funding - just to pay its police and soldiers because we won't pay-as-we-go for those services. And its a completely foolish company, the U.S. government, that is saddling itself with debt just to pay current pension and health care costs, when we know those obligations will sink us just as they have every other pension Ponzi scheme.

 

You'd say, if you were runnin' the government as a business, that yeh have to cut or eliminate the entitlements for non-working people and then increase the charges to pay-as-we-go for running a high-tempo military operation, while allowing borrowing only to invest in infrastructure and research and the like which actually produce wealth for us in common.

 

And that's what we should do to be fiscally responsible.

 

Beavah

 

[Woapalanne]

My B-school professors all stated that only mining and manufacturing generate wealth. All other activities just move it around. (Actually, most of them said "mining, manufacturing and agriculture". But I submit that agriculture IS manufacturing by the classic definition.)

[Woapalanne]

"How many people really get hammered hard by the estate tax, anyway?"

 

LOTS of people. Many small businesses have been forced into bankruptcy by such, as it is based on assets, not income. The father/son garage half a block from a new mall, with $50k income but the land is worth $2 mil. The family farm with small income but a new sub-division on 3 sides can't be inherited because the heirs don't have the income to pay that tax.

 

I don't know the latest figures, but not long ago I remember that somewhere near 20% of America's millionaires had annual incomes of less than $50,000.

[packsaddle]

Calico, regarding the Fair Tax, if you look into the details of the proposal you'll understand better why that tax is applied to rent but not purchase of houses. The tax on the purchase of a house is built into the embedded taxes on the materials and labor going into the structure. The rental is a sort of service that is taxed differently. If you look at the Fair Tax as an embedded tax rather than a sales tax it makes more sense.

Because of the way it is applied, using existing business tax mechanisms, a huge part of the IRS would go away. Much of the process could be automated. The reason for this is that it simplifies the process overall.

 

Gern, basically all of the loopholes and exemptions and deductions do go away. It isn't quite that simple but it is a huge improvement over what we have now.

 

But Calico does have a point about the devil (myth that he is) being in the details. The actual implementation of the Fair Tax would be really difficult to do without practically a convulsion for people who are used to the present system. Moreover, there is no way that we could risk implementing it in an incremental manner. If we tried that approach, every increment would be an opportunity for special interests to get their special dispensations put into the law and we all understand by now that our representatives tend to go for the money, not the people. It has to be a complete upheaval, literally overnight. For this reason, I don't see even the Tea Party types fully embracing the idea in anything other than a superficial way.

[Stosh]

Sorry Beavah, R&D is a speculative venture which is a consumer department of any true company. Until their "research" is put into production and starts to generate wealth for the company it only consumes resources of the business. Actually the people referenced to by Woapalanne are correct, mining, manufacturing and agriculture are the only real wealth producing entities. All the rest either capitalize on it (middle-men) or consume it (general public and government), but they don't produce wealth itself.

 

And as far as the roads the government builds? No, they are contracted out to private industry to build. Tang may have been developed by the government, but private industry turned it into a money making operation. B2 bombers aren't build by the government, the are built buy private industry under contract and the government is merely a consumer of these items! The military is only a consumer of wealth under contract to private industry to provide what the government specs out by bid.

 

And the government cannot be compared to "big business" in any way shape or form. In order for "big business" to succeed it needs a means to produce actual wealth rather than just consuming it. It needs a balance of income to expense with more income than expense to survive (profit! Duh). The government's "income" is not a result of it's producing wealth in any way shape or form, it merely takes (taxes) it from the people. Then it consumes (expenses) itself as it sees fit. Governments cannot exist as business model. No government, by virtue of its definition, can produce wealth. It only takes wealth (taxes) from its citizens to provide for the safety and welfare of it's citizenry. To a degree this is a very good thing. Out of control, it's proven to be a disaster.

 

It's always been a semantic thingy when people tout the idea that the government produces things like bombers, satellites, roads, buildings, etc. when in reality all these things are contracted out by government bid to be built by private industry. Boeing may be a government contracted company that provides bombers to the government, but they are a true company that also produces airliners for the commercial market. Ever notice that the old C-47 military cargo plane of the mid-20th Century looks remarkably like the DC-10 flying civilians from city to city. Air Force One, except for the paint job, looks a lot like the planes the airlines have at commercial airports... Just like American Airlines writes off 747's as an asset expense, the government does as well through bid contracting paid for by the taxpayers. However, American Airlines produces wealth by providing service to the general population to pay for it's planes whereas the government merely taxes it from the people with nothing but "security and protection" in return.

 

Like I said, the only real "business model" in the US government might be defined as the US Postal Service, but the rest of the government is merely consumer. As far as I know, the USPO does not contract out to anyone except for maybe raw materials so it can make stamps, etc. And as everyone knows, the government run "business" isn't doing all that well, which speaks volumes as to how much the government knows about the true business models of capitalism.

 

Stosh

[scoutingagain]

"LOTS of people. Many small businesses have been forced into bankruptcy by such, as it is based on assets, not income. The father/son garage half a block from a new mall, with $50k income but the land is worth $2 mil."

 

If they're only earning 2.5% income and are headed to bankruptcy on assets of $2 million they need to talk to Barry's wife.

 

SA

[Woapalanne]

"If they're only earning 2.5% income and are headed to bankruptcy on assets of $2 million they need to talk to Barry's wife."

 

It's not 2.5% income, it's a comfortable living in a building that they paid for years ago. The book value is irrelevant to their business (except fot the property tax, which is a CODB). Yes, they need to talk to anyone who can help stop the reimposition of the death tax. They aren't headed for bankruptcy UNLESS the Feds decide to send them that way.