ERICOPOLY

You live on $1.65 per day? ($50 per month) Is that like 32 cents on breakfast, 33 cents on lunch, and for dinner you pull out all the stops and spend $1? Do you find food scraps in dumpsters? Ate the neighbor's pets? Trapping raccoons? Stealing the neighbor's lemons off the tree? What is your secret? I bought two lemons yesterday and it cost me a dollar. That's 2/3 of your daily budget but you can't survive on 3 lemons a day. Hey! The best food staples are dirt cheap: rice, beans, corn etc. Throw in a few leftovers from mom's table, and you've probably got a diet better than nine out of ten Americans. :) I agree but I still don't think I could eat those staples combined with FRESH fruits and veggies for 55 cents a meal. You should see what an avocado costs in Seattle. So anyways I want to hear what he says. There is no need for meat in the diet though -- I think that can be eliminated to save money. It costs 10 calories of grains to produce 1 calorie of animal meat for the table. That's terrible economics (not to mention driving up the price of food/grains) yet people get upset about using corn for ethanol production. I'm not even counting the money saved on the heart bypass surgery you won't need.

You live on $1.65 per day? ($50 per month) Is that like 32 cents on breakfast, 33 cents on lunch, and for dinner you pull out all the stops and spend $1? Do you find food scraps in dumpsters? Ate the neighbor's pets? Trapping raccoons? Stealing the neighbor's lemons off the tree? What is your secret? I bought two lemons yesterday and it cost me a dollar. That's 2/3 of your daily budget but you can't survive on 3 lemons a day.

This is true. They should start more "Newman's Own" corporations where all the profits go to charity. Start a bank where all the profits go to charity, instead of bitching about banks. Have a rule in the corporation where the top executive is paid no more than 5x the lowest employee. Whatever. The products of such corporations may develop a cult following and loyalty. Anyways, that's always something that could be tried. Weet-bix is a very popular breakfast cereal in Australia. The company that produces it, Sanitarium, is a non-profit. Don't have a job? Start one of these companies -- the people out on the streets protesting will buy the product. You can call it "F* Wall Street" or something like that. Naturally it won't make you a billionaire, but you can make 5x the lowest employee and be famous -- maybe Poppy Harlow will still talk to you. Pay the guy at the bottom $70k and you'll take home $350k yourself. Employ your wife as another top executive and you've got $700k total household income. The Christmas parties will be fun because the rest of the employees won't despise you -- you can cut the bodyguards from your budget.

This is an awesome statistic: Australian Tax Office statistics from 2008-09, analysed by AAH, showed that after landlords took in $24 billion in rental income, they claimed $30 billion in losses, allowing them to write off about $6.5 billion in taxes. Read more: http://www.smh.com.au/business/housing-group-wants-tax-breaks-addressed-20111003-1l4sb.html#ixzz1b3JglADB

I don't think I can say it better than this so I'm leaving it at this now. Your last post had absolutely nothing to do with what I'm saying in any part. The point of my last post was to demonstrate that you are comparing apples to oranges. You can't conveniently pick what you want from the 19th century without bringing the context along with it. Perhaps you can, but I will cry foul. Look, that is the 19th century is totally inconsequential, that's just something I drew out of my arse to be reasonably sure that it corresponded with reality, but the fact that it does (?) doesn't matter. Reread my posts and maybe you see what I'm trying to say. The only thing I am saying is that the argument from history IS NOT VALID. It's not valid if you say something was this and that in the 19th century, in the Roman empire, in the stone age or 8 years ago and therefore should be so now. I'm NOT defending the policies of the 19th century by pointing that out. Now, if you in some way can show that it worked better (and this can be highly subjective, like that it was fairer), then it's an empirical argument, but merely pointing out that something was different x number of ago is not and will never be an argument. I think it would help to stop pretending that 2003 was an arbitrary point in time. The law is the law no matter how hard you try to make it just another point in history. Maybe if you are not a US national you don't realize how the tax cut was legislated. The reason why we are discussing 8 years ago vs any other time line is that in 2003 congress agreed to temporarily cut the capital gains tax, reverting back to the prior tax levels at the end of 2010. Since then, another short term extension was voted in favor of the cuts -- political bargaining. You aren't a resident of the US and I'm giving you a mulligan as I in turn know nothing about the Swedish tax provisions. But going on and on pretending like I'm pulling 2003 out of thin air is getting very tiresome if you truly understand that the law requires action in order to extend it. Status quo could be viewed as just to do nothing -- let it expire. Treat it for what it was legislated to be -- temporary. There are many people who don't think it brought the jobs it was promised to bring, and it's not hard to see their point. I think though the Reagan tax cuts were a big hit and I've heard many people claim that all tax cuts will bring more prosperity. However if one looks at the inflation adjusted tax rates immediately prior to the cuts, the people at the bottom (or nearer the middle where they actually have lots of money to spend after buying essentials) were being taxed very heavily. Something like a 35% tax rate on $80,000 (present dollars) of income. This came about because of the high inflation rates over the prior decade. The tax brackets hadn't been adjusted for inflation. Thus there was a lot of bracket creep. People who spend most of their income suddenly were paying very high tax rates. Thus they had reduced disposable income and we had anemic growth. The tax cuts that Reagan brought in not only cut taxes for the wealthy, but they also cut taxes dramatically at the bottom. Thus there was a very sudden broad based enormous boom in real disposable consumer income and the economy took off. Well, of course it did -- final demand took off! This of course set off a massive boom in both tax revenues and job growth. Now, compare that to the Bush tax cuts which didn't dramatically increase the disposable income for the people at the bottom. It doesn't surprise me that we never got the lasting boom in economic growth and tax receipts that were promised. The investor class pocketed the tax cut because there was little increase in final demand as a result of the tax cuts doing relatively little for the consumer class. Now, had there been a huge increase in final demand they certainly would have invested it as they did in the 1980s after the Reagan tax cuts. Others argue that in the 1980s the top tax brackets were too high to encourage investment. I think that's a half-truth. I believe they wouldn't have reinvested their tax cut if final demand had not increased along with the tax cut. As Buffett says, cutting his taxes won't make him build more factories and hire more workers if final demand isn't there.

I don't think I can say it better than this so I'm leaving it at this now. Your last post had absolutely nothing to do with what I'm saying in any part. The point of my last post was to demonstrate that you are comparing apples to oranges. You can't conveniently pick what you want from the 19th century without bringing the context along with it. Perhaps you can, but I will cry foul. You stated that in the 19th century all torture was prohibited. No it wasn't. It was just assigned to different variables. Instead of being assigned to the tax variable, it was assigned to the variables such as "no public highways, no labor laws, legalized insider trading, no national parks, vigilante justice"... etc.. etc... This is why I am saying your argument is deceptive. Over the past 111+ years many of the "torture" values previously assigned to other variables have been reassigned to the "tax" variable. Your argument makes sense if we don't think about these other variables to which torture was previously assigned. However I do think about them. Keeping out these variables you construct a straw man that you knock down. You develop an equation with a single variable, but the problem is multivariate.

No, it has nothing at all with the actual contents of the policies discussed to do. "Policy x was made into x/2 8 years ago" "In the 19th century x was prohibited" This is the form of the argument. Now x might be considered anything. For the sake of making the argument clear we might call x torture and x/2 flogging (half as bad as allowing all torture, humour me). Now where do we get? "Torture was repealed, but flogging kept legal 8 years ago" "In the 19th century all torture was prohibited" Do you see? And also we might call the 19th century 10 years ago, it doesn't matter one iota. You are pointing out that a long time ago in history there was no capital gains tax. Is that it? There were no labor laws either. No limits on hunting wildlife. No national parks. No FAA. No paved highways. No public libraries. There was vigilante justice in California. Insider trading was legal. Today taxes pay for these things. So you want to get rid of the barbarism or "torture"? I think taxes already did that. It's referred to by some as the "price of civilization". Let's get rid of the taxes but keep the amenities. I think we signed up for that under the tag line "deficits don't matter".

You've made a scale model of my argument that is 13x to 26x it's actual size and your new argument is effectively "hey, it's ridiculously large". You aren't saying that 8 years is ridiculous, you are saying that the 19th century is ridiculous.

It clearly showed nothing except that you have adopted a strategy of distortion. From my point of view when somebody does that they have stopped arguing facts -- instead they attempt to stretch the perception of the facts. The fact is that the tax cuts took place 8 years ago. This is too short a time frame for you, because it is too familiar for all of us. We can easily remember and imagine going back to 2003 -- thus it feels like it's within the bounds of returning to a status quo. So you attempt to kill that feeling by comparing it to a 111-211 year time frame. There, with a slight of hand you've attempted to get the reader to think of a really long time frame when the tax cut of 2003 is mentioned. Why would you do this? Of course, it's because 8 years is not long enough. You didn't compare it to something that happened in 2009. Why not? Well, because that would have the opposite effect on the reader. Your goal is not to make the reader think of a vastly shorter time frame, but rather a much longer one. Much much longer. The tax cuts took place in 2003 -- that's 8 years. Modern times. You compared this to the 19th century, anywhere from 111 to 211 years ago. Why, now it's as if I'm arguing about buggy whips. Clever! Simple but clever! In other words, the timescale was too small so in order to make your argument fit you had to stretch it from 13x to 26x. Take something reasonable in time frame, stretch it 13x to 26x until it becomes unreasonable, and then say "See how unreasonable it is! Hah, it is "silly and absurd"".

This one is a gem. We're done debating using logic now, we'll just call each other "silly" or "naughty poo poo head" now.

Nobody called you a Republican, but if you feel like you are taking similar stances then what is a Republican after all? I doubt anyone is 100% Republican. Strip out the moral/religious garbage and many of the tax arguments and they still have things I would stand for. So, it's a spectrum. I'm not registered to any party -- there are things I like from both. The minimum wage argument is supported by members of both parties, but I think it's a Republican stronghold. I wasn't referring to you -- over the years I've heard a billion times the minimum wage argument.

I found this documentary to be instructive in understanding how the comfortable and fortunate in society can disregard the unfortunate: National Geographic: Science of Evil http://movies.netflix.com/WiMovie/National_Geographic_Science_of_Evil/70146678?trkid=2361637 The documentary covers the experiment at the Stanford County Prison (a psych lab on the Stanford University campus) where they take a group of students and make them guards and another group and make them prisoners. The guards fall into their role and abuse the prisoners. Even the psychologist directing the study gets sucked into allowing abuses that shock his peers. My point is that the "let them eat cake" people can be completely normal people. They are not evil -- it's just that the situation brings it out of them. It's somewhat like an economic prison we're running here. We have the guards (the wealthy elite), and the prisoners (the working class). Unless some economic power is taken from the guards, I'm afraid they will continue to behave abusively.

A month or two ago I saw an article stating that Bay Area GDP grew in the mid-teens over the past year. So there isn't a recession for them -- they're growing faster than China.

So Myth what do you think is going on with Australia? They have a $15 minimum wage and an unemployment rate under 5%. Our Republican friends here in the USA think our much lower minimum wage is driving jobs away. What is keeping them from having the runaway unemployment that people say will happen here if minimum wages were raised? Does their no-double-taxation if the Australian corporation already paid tax -- does that keep jobs in Australia by making them more competitive against foreign labor? Is it the import tariffs? Their exported commodities aren't vulnerable to retaliatory tariffs. Do they just have everyone employed in government jobs picking up trash in the park, or what? What do you see in Melbourne? I understand mining is a job that can't get exported. Perhaps when demand for their resources cools off the party ends? Does a higher minimum wage only work for economies that export raw commodities in this period of globalized manufacturing?

It was top-down managing when it was cut to 15% in the first place. Did you say at that time "This kind of top-down managing is not something I believe in or have seen any evidence of working very well historically". No, I regard the status quo as 0%. Taxing is top-managing, cutting taxes is changing management from the top to the bottom. Regarding tax-cutting as subsidizing seems to me a very odd outlook on government's role in the economy. But this is another issue. It would be a net of 0% -- just putting back what was already there originally. Your handle is "always invert". I'm merely inverting it. It's a top-down management in one direction but not the other according to you -- yet it nets out to 0%. That becomes a logical imbalance actually. Inverting is not the same as calling things something they aren't. Cutting taxes is not central planning, it is diverting power to the citizenry at the expense of top-down management. The net result of cutting taxes is less power in the hands of government, no matter what the motives behind the cut is. If that is a good thing or not is another story and up for debate. If you are going to play the game of it being "a net of 0%" I can just point to the 19th century or whenever there was no capital gains tax in the US. Productive discussion, eh? So if I point out that the tax was cut less than 10 years ago to 15%, then you'll go back to the 19th century? No, this is not productive. The tax cut even had a sunset provision. It has been temporarily extended. Yes, by all means keep arguing that this is as good as going back to the 19th century. I'm nearly 40 years old. 10 years no longer seems like much. Maybe you are only 20 and 10 years is 1/2 of your life? If not, what's with the 19th century argument?

It was top-down managing when it was cut to 15% in the first place. Did you say at that time "This kind of top-down managing is not something I believe in or have seen any evidence of working very well historically". No, I regard the status quo as 0%. Taxing is top-managing, cutting taxes is changing management from the top to the bottom. Regarding tax-cutting as subsidizing seems to me a very odd outlook on government's role in the economy. But this is another issue. It would be a net of 0% -- just putting back what was already there originally. Your handle is "always invert". I'm merely inverting it. It's a top-down management in one direction but not the other according to you -- yet it nets out to 0%. That becomes a logical imbalance actually.

It was top-down managing when it was cut to 15% in the first place. Did you say at that time "This kind of top-down managing is not something I believe in or have seen any evidence of working very well historically".

The big "IF" though. "IF" it is taxed away in excess of reinvestment opportunities. Right now, it looks like the answer (at present capital gains rates) is NO. There is a lot of cash sloshing around earning close to zero. Thus, at present levels it is not too high of a tax. Thus it can be pushed higher until it reaches that point (but not more than that point). We can instead debate where that point is. Yes, I agree it exists. I just disagree that we're already at that point (evidenced by all the cash that's not being invested). Take a portion of that unused cash away, and there is still a lot of unused cash sitting there idle. No net loss of investment, no job destruction. The trick is in finding taxes that can be increased without discouraging the formation or expansion of operating companies. You've listed several that are not good candidates such as income taxes or corporate taxes. The capital gains tax however is uniquely focused largely on passive investors, not active investors.

We're pretty much in agreement. I was only talking about capital gains tax and shaking my head at the assertion it would lead to less investment in operating companies. Now, maybe somebody is trading financial assets within the operating companies. That very well may be so, however it doesn't create jobs and isn't innovative. A higher capital gains tax might get them to slow down their trading, but probably won't get them to fire the employees on the operating side of the business.

The capitalists who disagree with Buffett are essentially asking for a free handout from the government. Buffett differs from them in that he feels everyone should pay their share, and not take the free handout. The "free handout" is the basic welfare services that the government provides to keep the bench warm -- the people sitting on that bench are the laid-off workers. The companies need that bench to be kept warm so that when business demand returns these workers are clothed/fed/healthy and ready to go. The capitalists of course are happy to take this benefit but don't want to pay anything for the benefit. Thus, the capitalists ask for a "free handout". Ironic isn't it? These are the same people who claim the unemployed are getting the handouts! Buffett recently (in an interview) was asked if he would be interested in hiring more workers for the good of the country. He responded "No", that instead he would hire them only when business demand dictates it. He elaborated that it is the governments' role to provide food, medicine, clothes and shelter for them until that business demand returns. This is an interesting point he is making: 1) businesses should hire labor and keep them employed only when business conditions dictate it 2) they should hire them back (clothed, healthy, fed) in a "ready to work" state when the time comes So basically he doesn't want idle hands hanging around the factory, and is happy to pay the government to "outsource" their care until needed once again. I think most of the capitalists feel the same way (don't want idle hands on the payroll), except these other capitalists don't think they should be paying for the care of their idled workforce (through taxes) when not employed.

The conversation that you jumped into was about the capital gains tax. I had to provide an example based on sale of a business. People were suggesting that there would be no iPads were we to have a higher capital gains tax. No iPads? Well, okay. So long as we're talking about blockbuster products and capital gains, then logically the poster is worried about not being able to sell good ideas for high capital gains. Thus, I'd say selling out for $10m would be low-ball. Thus I provided a conservative example. It only strengthens my point if (as I believe) the small businesses largely pays it's taxes through the federal income tax return. That's sort of the whole point that I'm fighting here -- this idea that capital gains taxes are squashing the small businessmen is an argument that we can laugh at all day long. It's obvious to me that people are worried about their passive investment gains mostly, but are not standing up to say so. Instead, these fictitious arguments about the job creators.

I think the name of the game is to throw out something vague and attack the other side for fighting straw men. LOL.

Small businesses... how do the capital gains taxes impact them??? I thought if you owned a small business you largely pay corporate taxes and payroll taxes. Maybe you pay taxes on your dividends. But capital gains taxes???

Suppose you had one or more of these "game changer" business ideas right now... You might have $100k to your name, invest it in the business, and sell out for $10m. 35% capital gains rate means you walk away with roughly $6.5m, and at 15% capital gains rate you walk away with roughly $8.5m. So it's a 65x gain vs an 85x gain. The incentive is still there. Nobody is going to give up on the 65x return simply because it's not 85x. Would you rather hold onto your 100k instead of making a 65x return (refuse to invest at 35% rates) if you can't have 85x (invest only at 15% rates)?

How would a lower capital gains tax rate bring us more innovations like the iPad? For one thing, companies like Microsoft Apple and Google have enough cash to fund any such ideas, and their profits fall under the corporate tax rules rather than capital gains. You guys are throwing out great sounding ideas but you are not explaining how the capital gains tax is standing in the way. I see only strong assertions. Bill Gates decided to give up on Microsoft in the 1970s because the capital gains tax was too high?