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Investing in infrastructure
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wsurfer



Joined: 17 Aug 2000
Posts: 1259

PostPosted: Fri Apr 09, 2021 10:17 pm    Post subject: Reply with quote

David Brooks:

This could be the Chinese century, with their dynamism and our decay. The unexpected combination of raw capitalism, authoritarianism and state direction of the economy could make China the dominant model around the globe. President Biden, Dunn said, believes that democracy needs to remind the world that it, too, can solve big problems. Democracy needs to stand up and show that we are still the future.

Sometimes you take a risk to shoot forward. The Chinese are convinced they own the future. Itís worth taking this shot to prove them wrong.

https://www.nytimes.com/2021/04/08/opinion/biden-economic-plan.html
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wsurfer



Joined: 17 Aug 2000
Posts: 1259

PostPosted: Fri Apr 09, 2021 10:35 pm    Post subject: Reply with quote

swchandler wrote:
What disappoints and worries me greatly is that Republicans in Congress are going to do whatever they can to kill it, or at best, whittle it down so much that it will be virtually valueless and ineffective. They have no real vision or credible goals to speak of. Their biggest achievement over the last 4 years, if you can call it that, was foolish irresponsible tax cuts for corporations and the folks that didn't really need it. Greed is king in their world, and they serve it religiously.

In my view, one thing that needs to be said is that all Americans taxpayers need to help pay for the infrastructure plan, to include other important investments we need into our future. The increases should be progressive in nature starting out maybe as low as 2.5-1%. Essentially, until the vast bulk of the American middle class starts contributing a bit more in taxes, our deficit and debt will continue to grow in untoward ways and haunt us, ultimately drawing us down as a nation. Frankly, we need more than tax increases on corporations and the wealthiest Americans to pay for what we need to do. In believe that thoughtful folks know that.

And, just for the record, I think that President Obama was wrong in making the Bush tax cuts permanent. That was a mistake.


"until the vast bulk of the American middle class starts contributing a bit more in taxes, our deficit and debt will continue to grow in untoward ways and haunt us, ultimately drawing us down as a nation."

This may be true to reduce the debt but the implication is that the "bulk" have not been doing enough. Historically corporate America has not been doing enough and the middle class should not be taxed more based on that.

Bush tax cuts were extensive.I thought Obama extended the Bush tax cuts for two years except for a provision for high income earners?
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swchandler



Joined: 08 Nov 1993
Posts: 10038

PostPosted: Sat Apr 10, 2021 1:38 am    Post subject: Reply with quote

Just to be clear, I'm not against President Biden's plan to raise taxes on corporations and the wealthy. In fact, I support it, but I think everyone needs skin in the game.

Moreover, to highlight another important issue to help pay down our deficit and debt, I think that the tax rate on capital gains should be increased to be parallel with the taxes of those earning W2 income. Why should they deserve a special discounted tax rate on their income from the market?

When I withdraw funds from my IRA, it's all taxed the same as W2 income. Sure the money deposited in an IRA is pre-tax money, but why should my investment gains be taxed entirely as W2 income. Why is it that the little guy always gets the short end of the stick?

Regarding President Obama's actions on the Bush tax cuts, it's my understanding that he made the lower rates permanent for lower and middle class taxpayers. As I recollect, high income earners weren't so lucky.
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boggsman1



Joined: 24 Jun 2002
Posts: 8591
Location: at a computer

PostPosted: Sat Apr 10, 2021 9:21 am    Post subject: Reply with quote

Fair view Chandler .. However if we treat all cap gains as ordinary income , it will decrease the value of all risk assets that are held long term .. Stocks and real estate will feel the pain ó Iím not sure the US is ready for that ..
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swchandler



Joined: 08 Nov 1993
Posts: 10038

PostPosted: Sat Apr 10, 2021 10:44 am    Post subject: Reply with quote

boggsman,

No doubt, you know far more about the market and many of the contributing forces that drive it, but we have to remember that folks with boatloads of money need somewhere to benefit from it.

If the tax rate on capital gains was increased to be commensurate with W2 income, where would investors go to make their money work for them? While real estate might work to some degree, it's not so easy to do things quickly, and it has its own limitations, downside and risks.
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mac



Joined: 07 Mar 1999
Posts: 16264
Location: Berkeley, California

PostPosted: Sat Apr 10, 2021 1:26 pm    Post subject: Reply with quote

I think both corporations and the rich should pay more taxes--although not as much as in the Kennedy era. With that said, the inconvenient fact is that the middle class pays less in tax than they extract in benefits. I just filed my taxes last year, and I'm pretty well off. My Federal tax burden, even with the changes that don't allow me to itemize my charitable donations and state/local taxes, is pretty small.

From the WAPO:

Quote:

By 2016, the most recent year for which data is available, the middle 60 percent paid just 31 percent of taxes and got a lot more of the benefits ó including 49 percent of those distributed on a means-tested basis, meaning recipients needed to demonstrate financial need to qualify for them. Dec 10, 2020


Since I went to high school in conservative Southern California, and learned in civics that the publicly funded higher education system then in California paid a dividend on subsidizing college, I've considered higher education to be infrastructure. The money spent educating students at Santa Clara, Stanford, and Cal, has more than paid for itself with the higher taxes from the tech industry employees.
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boggsman1



Joined: 24 Jun 2002
Posts: 8591
Location: at a computer

PostPosted: Sat Apr 10, 2021 4:06 pm    Post subject: Reply with quote

There are dozens of tax laws that benefit the wealthy in an insane way that could be changed.. One is carried interest .. That is a long term interest in a private investment fund gets treated as a special dividend and is taxed at 15%. Hedge Funders make 2% of assets in income and 20% of profits ó which gets carried interest taxation , in spite of the fact that most gains are short term ..
Another is stepped up basis inheritance of stocks or real estate . Old folks simply pass off low basis stock and real estate to their heirs .. Itís a big tax strategy , just die and then give junior your $2 Apple shares ...
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mac



Joined: 07 Mar 1999
Posts: 16264
Location: Berkeley, California

PostPosted: Sat Apr 10, 2021 4:53 pm    Post subject: Reply with quote

Boggs--I'm okay with taxing long term investments--in US companies that actually employ people--at a lower rate. You're absolutely correct that the corporate state has carved out special tax provisions that mean we end up subsidizing them. Didn't fat Donny say that he knew all of these tax dodges and only he could fix them? Did you notice that the real estate and oil tax dodges remained intact or got fatter?

Some of the same corporations--the hospitality and meat packing industries, fat Donny's favorites--also employ undocumented workers without fear of punishment. That keeps the supply of low income workers who are afraid to organize coming. Blame it on the borders, not the unscrupulous employers. Worked for Matty and Techno.

My earlier point was that the middle class demands certain benefits--health care, the military, and social security are the three that account for the lion's share of the Federal budget--that they don't really pay for. I can't think of a single politician in the last twenty years that has been willing to level with the public about that. I think that infrastructure, if done well, is a different matter. Unlike the entitlement programs, infrastructure creates wealth. We did it with railroads, interstate highways, airports and seaports, and with the space program that gave us the electronic and computer age. China learned the lesson, we forgot it.

The problem with deficit spending, is that it creates an invisible and inequitable tax--inflation. While we haven't seen a lot of it, or in particular an acceleration over the past decade, it just pecks away at us. The Federal Reserve Bank of Minnesota publishes an index. In 1950 it was 24.1. In 2019 it was 255.7. So overall that is an order of magnitude. But in some sectors it diverges wildly. Car prices and electronic device prices have gone down, if adjusted for inflation. (Although my first car only cost $200 and ran.) Real estate is the other extreme. I bought a house in Berkeley in 1975 for $30,000. The median price of a house in Berkeley today is $1,368,500--nearly two orders of magnitude in a little more than half the time. I used to joke that it wasn't real money, it was just diminished purchasing power. But the impact on those in the service economy is huge.

Tell me, you don't subscribe to the theory that deficits don't matter and don't contribute to inflation do you?
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swchandler



Joined: 08 Nov 1993
Posts: 10038

PostPosted: Sat Apr 10, 2021 6:03 pm    Post subject: Reply with quote

Talking about individuals as tax payers, I think that if the tax rate for capital gains was raised to the level with W2 income, most will just knuckle down and pay it. I don't think that most folks are that saavy about everything to play the game in a noteworthy way. Let's be honest, most folks that profit regularly from yearly capital gains income can afford it. Folks that hold long term, just cash in when Republicans again champion tax cuts for the rich again, right?

I can honestly say that I would just pay the higher tax at the same rate of W2 income, just as I do now withdrawing from my IRA.
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wsurfer



Joined: 17 Aug 2000
Posts: 1259

PostPosted: Sat Apr 10, 2021 11:07 pm    Post subject: Reply with quote

MAC, I find it hard to believe that you call out the middle class for not paying their fair share.
I worked for 40 years paying my own healthcare, contributing to SSI, and yet managed to pay more in income tax than the most wealthiest of corporations. They have loopholes and departments of tax attorneys that work to reduce their tax burden.
I'm okay to say lower middle class but really the middle to upper middle class pay more than their fair share.

The same loopholes apply to 1% ers, or those than can afford the "tax advice" to reduce their income.

The richest 1% pay an effective federal income tax rate of 24.7%. That is a little more than the 19.3% rate paid by someone making an average of $75,000. And 1 out of 5 millionaires pays a lower rate than someone making $50,000 to $100,000.
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