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Spread The Wealth Fear

Discussion in 'Politics & Religion' started by GeorgeB., Oct 16, 2008.

  1. #1
    Are you afraid of bottom up economics?

    Explain why.

    I'm most interested in those who are NOT at the top and somehow believe that tax cuts for those at the top are good for you now. Because after all you're voting for the president now and who you choose now will affect whether or not you even have the ability to get rich so that you can complain about taxes.
    SEMrush
     
    GeorgeB., Oct 16, 2008 IP
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    SEMrush
  2. earlpearl

    earlpearl Well-Known Member

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    #2
    Great question. I look forward to answers.

    Its funny. I had my max earning years during the 1990's and before the Bush tax cuts. I was a commercial real estate broker in a hot market with lots of experience. The effective marginal tax rate was 50% for myself and high earners: Just under 40% for federal taxes and roughly 10% for state taxes.

    Couple of things; the job gave anyone in it an opportunity to earn tremendous money. There were somewhat minimal barriers to entry. I came out of a middle class background with zero contacts. I worked my butt off to learn and get good at the business. Some of it was luck, some of it was hard work, some of it was persistance.

    I worked with about 1,000 peers in the marketplace some earning more, most earning less.

    During that period, and the run up to it when I was maxing income (that I think might have put me in the top 1% in the US), I NEVER met a single person in the industry who thought the 50% tax bracket was a disincentive to earn more. NOT ONE.

    The theory that people put out that higher taxes is a disincentive to earn more is theory proposed either by people who have never approached that level....or its because everyone wants more money in their pockets.

    But I never met a broker who was successful who ever once claimed that they weren't going to work that hard because of higher tax brackets.

    Its a bogus theory. Now in earlier years there were, I believe 70% marginal tax rates on very very high earners. It was before my time. Maybe that would be disincentive. But in knowing either well or somewhat, about 1,000 people in the business that could earn big money, and dealing with a lot of high earners in other related businesses and clients, I never heard of one that was claiming the 50% marginal tax rates were a disincentive to earning more.

    But I too would like to hear from folks on what they believe.
     
    earlpearl, Oct 16, 2008 IP
  3. homebizseo

    homebizseo Peon

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    #3
    The real question should be. How is a bottom up economic plan going to work? Increasing taxes on business owners and the rich will drive the cost of goods and services up on those you are trying to help.
     
    homebizseo, Oct 16, 2008 IP
  4. ncz_nate

    ncz_nate Well-Known Member

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    #4
    I look forward to hearing answers from all of you. :)
     
    ncz_nate, Oct 16, 2008 IP
  5. Divisive Cottonwood

    Divisive Cottonwood Peon

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    #5
    Or alternatively they take less profits and become slightly less rich
     
    Divisive Cottonwood, Oct 17, 2008 IP
  6. homebizseo

    homebizseo Peon

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    #6
    They may take less profits,however the cost of all goods will rise. That is economics 101. Obama is just talking to get votes. He can change the plan or not do anything with the economy. The same also goes for McCain.
     
    homebizseo, Oct 17, 2008 IP
  7. ncz_nate

    ncz_nate Well-Known Member

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    #7
    You must be a textbook neoliberal because this kind of response clearly shows you do not understand how incentives influence people and decisions. When was the last time a business took less profits from higher taxes rather than raising the prices?

    You people live in a bubble, an imaginary fairy tale land where "everybody makes their decisions for the benefit of everybody else", when both history and common sense both show that this is NEVER the case. Unless you are a monk, or some other very spiritual person, you're going to take care of yourself first before you take care of others. That's how things work.

    Here's an exercise I want you liberals to practice, I do this alllll the time. Come up with or think of a preexisting system whatever it is where people and finances are involved. For instance gambling systems, whatever, just think about how it works and how each person has INCENTIVES to further THEMSELVES not everyone else. And then your goal is to modify the system to allow these individuals to reach their goals, while at the same time find a way to benefit the system. For example in gambling, the "juice" on bets or the rake system on a poker table that the house profits from, an analogy is the US government. You want to make it so people can achieve their goals but at the same time, pay for their opportunity to play. (by the way, we're not giving the middle class much of an "opportunistic playing field" now are we? so much for interference economics) Where neo-libs have gone wrong is they're raking TOO much money from the pot and putting TOO much juice on those sports bets, reducing profit potential and ultimately losing customers because noone likes your f#$kin system, cause it sucks!

    Now with that said, I understand most neoliberals have good intentions and that's why they think that somehow people like working more for less money so that.. the government can have more..

    But you people really need to wake up, it's an immature outlook on how things really function and this very outlook helped us on our way into this shitty situation we're in economically. Don't play stupid.
     
    ncz_nate, Oct 17, 2008 IP
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  8. ROAR

    ROAR Well-Known Member Affiliate Manager

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    #8
    mmm--- interesting take on gambling.
     
    ROAR, Oct 17, 2008 IP
  9. northpointaiki

    northpointaiki Guest

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    #9
    That is true - it is economics 101, drawn from a "standard" supply and demand set of curves. And one of the problems with depending on such an analysis is the dependence of the model on ceteris paribus, "all other things being equal." In other words, increase the marginal tax rate on, in this instance, the wealthiest entities and individuals, let's say, and you will realize a concomitant raise on COGS, higher prices to end users, and at the same time, less investment (due to lower return on investment), lower employment, lower productivity, lower wages. A poisonous stew.

    The problem is that the world does not operate by a standard of ceteris paribus. Raising one variable does not take place in a vacuum, with all other economic variables remaining fixed in place, so that the nifty little curves we learned in Econ 101 don't so neatly apply. This kind of simple postulate ignores real-world elasticities - sensitivities to changes in the economic picture - that take place across all kinds of econnomic relationships. It ignores exogenous actors - factors outside the model, or happenstance changes - that may adversely impact on the simple universe posed in a simple supply an demand curve.

    An interesting historical look, provided by Jonathan Weisman of the Washington Post:

    Another, by William Gale, of the Brookings Institution:

    Obama is banking on a healthy middle class to be an engine of economic recovery. McCain is relying on trickle-down economics to do the same.

    The notions discussed above are partly why I agree with Obama's general approach - to use a scalpel, as he said, in lieu of a hatchet, when approaching economic problems. It's also why I support his notions on foreign policy. The mistake of the last 8 years has been to assume the world operates in simplistic models, and that a definitive, ossified worldview will adequately respond to a world that is, in fact, anything but simple, or existing in stasis.
     
    northpointaiki, Oct 17, 2008 IP
  10. PHPGator

    PHPGator Moderator Staff

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    #10
    I will be voting for McCain this year, but I don't think Obama's economic policy of taxing the rich is a bad thing as long as it is done with care.
     
    PHPGator, Oct 17, 2008 IP
  11. northpointaiki

    northpointaiki Guest

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    #11
    PHP, what I have bolded in your post above concisely hits what I'm getting to. Nicely said.
     
    northpointaiki, Oct 17, 2008 IP
  12. Bernard

    Bernard Well-Known Member

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    #12
    Please define the term as you understand it.
     
    Bernard, Oct 17, 2008 IP
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  13. GeorgeB.

    GeorgeB. Notable Member

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    #13
    mmm tasty, I'll bite!! :D

    And that my friend is EXACTLY why trickle down economics doesn't work. You just said it yourself. Businesses, especially large ones are there to make a profit any way they can. If the government provides tax breaks deregulates them they will pocket that windfall for a rainy day or they will think of strategic ways to use that money for their OWN future gains not the public's. Make no mistake about it ncz, in corporate board meetings lowering prices is the LAST option on the table when the company is looking at record profits.

    Want an example so you don't think it is just me being a neoliberal? CERTAINLY: How about those gas prices you enjoy? Remember how the oil companies were making RECORD PROFITS? It was hilarious to watch them blame everyone else for stuffing money into their pockets. :D It's a really simple equation. How do oil companies gain record profits? By selling a product. When they realized record profits did they lower the price point at which they sell those products? No.

    No, we live in the aftermath of 8 years of the Bush administration. Business deregulation and tax cuts for rich people who didn't even ask for them. Yay! :D

    Which is exactly why trickle down economics doesn't work.

    Ok now try explaining that in grown up speak. Because it sounded like teen angst with no facts to back it up.

    Don't be coy. Come on, tell us what policies liberals propose that support this :D
     
    GeorgeB., Oct 17, 2008 IP
  14. ncz_nate

    ncz_nate Well-Known Member

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    #14
    You say trickle down economics doesn't work, but your argument is kind of an hypocritical. "Bottom up" economics ultimately has a "trickle down" effect, so unless the government was actually fair with the way they rob us and gave us a flat rate across the board, it's all trickle down economics.

    It's so funny how people want to punish corporations and in doing so they punish the average joe. Just like with the bailout, and all this stimulus check bullshit.. you people think wealth is created out of thin air JUST FOR YOU, YAYYY. Right?

    Well idk your stance on that but after this cash from the bailout is injected and the dollar inflates, guess what that hurts everybody, the cost of goods will go up and life's just gonna keep getting more and more shitty. People are looking for someone to blame and most have been right with the few polls out, IT'S THE GOVERNMENT. It's also us cause we haven't put'em in jail yet.
     
    ncz_nate, Oct 17, 2008 IP
  15. homebizseo

    homebizseo Peon

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    #15
    Explain how "Bottom up" economics work GeorgeB and NPT. How will bottom up economics create jobs? Why should the class of citizens that sit at home and leech of of taxpayers be given more money? Why do taxpayers have to pay for women that can not keep their legs closed or remember "who the babies daddy" are? Why must the lower income levels be giving free housing?
     
    homebizseo, Oct 18, 2008 IP
  16. northpointaiki

    northpointaiki Guest

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    #16
    I've already said that Obama's plan is not, in my book, a "bottom's up plan," but a plan based in the contention that a vital middle class is key to a healthy economy. Now, maybe in your world, those under $250,000 is the threshold for Maxim Gorky's Summerfolk, the "underworld, the forgotten, the desperate masses at the bottom of the tidal pool," but I don't consider that reality.

    Other than that, I've already posted some of the historical record, for review, and others (e.g., Earl - who has the stones, lived this world, isn't talking from theory; George, whose assessment on oil producer elasticity is correct, as well, from my read of the source data) have posted information from their real world experience. Sticking to talking points means nothing.
     
    northpointaiki, Oct 18, 2008 IP
  17. earlpearl

    earlpearl Well-Known Member

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    #17
    "So called bottom up economic" how does it work.

    Real simple. Put a little more money in the vast majority of American's and they'll probably spend it. More demand for more goods and services.

    In fact, there were small surges in aggregate retail sales during the months when the tax rebates hit the public. None of that rebate money went to higher earning individuals.

    Alternatively, in a recessionary economy as we have now....people are spending less money. Businesses are seeing reductions in income.

    No business owner is going to spend more money on investing when he/she expects sales to drop.

    In this economy it makes perfect sense.
     
    earlpearl, Oct 18, 2008 IP
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  18. ncz_nate

    ncz_nate Well-Known Member

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    #18
    What about the cost of the stimulus packages you suggest, like the inflation?

    Great, more people will spend money and sales will go up, but now prices will go up for everybody and thus sharper declines in growth. More free checks maybe?
     
    ncz_nate, Oct 18, 2008 IP
  19. homebizseo

    homebizseo Peon

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    #19
    It's a never ending cycle and it can not work. Obama has created socialist economic plan and the inflation if the plan is implemented will be astronomical.

    Oh I forgot, its just talk and obama is not a man of action.

     
    homebizseo, Oct 18, 2008 IP
  20. LogicFlux

    LogicFlux Peon

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    #20
    Volcker is advising Obama. And if anyone knows inflation, it's Volcker.
     
    LogicFlux, Oct 18, 2008 IP