From: jwh@citi.umich.edu (Jim Howe)
Subject: Re: Ignorance - Was Re: VOTE, BABY, VOTE!
Date: Wed, 18 Nov 92 10:47:40 EST
Organization: IFS Project, University of Michigan
Reply-To: jwh@citi.umich.edu

In article <Bxuur8.7zs@slipknot.rain.com>, robert@slipknot.rain.com (Robert Reed) writes:
|> In article <f+F=XA=@engin.umich.edu> jwh@citi.umich.edu writes:
|> ||>The potential for catastrophe had not lessened in the 70's but the value
|> ||>of money used to measure someone's net worth had.
|> |
|> |I disagree that the potential for catastrophe had lessened in the 70's.  For
|> |one thing, there were many more savings opportunities available that were
|> |not in existance [sic] in the 30's.  Second, we weren't in a depression, the
|> |level of confidence in the banking system was not particularly low.  The
|> |best thing the legislators could have done was simply leave the limit
|> |where it was and let inflation erode it away.  Private insurance should
|> |have been encouraged to take up the slack.
|> 
|> Your first sentence is convoluted, but I think I understand what you mean.
|> We seem to be arguing apples and oranges here.  The question was whether
|> deposit insurance is STUPID.  I said no, but that federal funding of it in
|> light of federal bank deregulation is.  Now you, as a counter to my argument,
|> suggest replacement insurance, which is what I've already suggested two or
|> three times.  Which side are you on?
|> 

My position is that deposit insurance should not be required, and where
it exists it should be provided by private firms.  If there is a market
for 'safe' investments, a bank will purchase the appropriate level of
insurance to meet their customers demands.  The insurance company will
certainly demand that the bank meet certain criteria or else the insurer
will raise prices or cancel coverage.  From your posts I had assumed that
you felt that government deposit insurance should be continued and that
raising the limit in the 70's was a good idea.

|> |||Corporate taxes should be abolished, therefore tax breaks would be pointless.
|> ||
|> ||So that we can all incorporate as individuals and thus avoid paying any
|> ||taxes?  Dream on!
|> ||
|> |||Even if you incorporated, you would still have to draw a salary or
|> |||take a dividend if you wanted to spend money on non-business items.
|> || 
|> ||Why?  If my corporation owns my house and car, and my corporation has to pay
|> ||no taxes, then I don't have to justify corporate spending for business
|> ||expenses, because I don't have to worry about deductions, or profits,
|> ||because regardless of what the balance sheet looks like, my corporation has 
|> ||to pay no taxes.  I can pay myself a modest salary (low enough to avoid 
|> ||paying income taxes), and then charge my living expenses to the corporation,
|> ||because the corporation doesn't have to justify it.  It pays no taxes.
|> |
|> |The IRS could easily pass regulations regarding what it consider to be
|> |'de facto' compensatation [sic].  Corporations could be required to file
|> |information about compensation based on IRS rules.  The corporation
|> |could pay your living expenses but the IRS may require the corporation
|> |to declare that expenditure.  If you didn't report it on your personal
|> |form, you would be guilty of tax evasion.  If the corporation didn't
|> |report it, it could be guilty of fraud and it's officers (you) fined
|> |or imprisoned.
|> 
|> Yes, the IRS could do that, but if you think we have big government now,
|> wait'll you see what enforcement bureaucracy and big brother attitudes
|> administration of those rules would entail.

These rules would be no different than what we already have.  There
would, however, be fewer overall rules concerning corporations if
they were not subject to tax.


James W. Howe                  internet: jwh@citi.umich.edu
University of Michigan             uucp: uunet!mailrus!citi.umich.edu!jwh
Ann Arbor, MI   48103-4943         
Newsgroups: or.politics,alt.rush-limbaugh