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Date:         Mon, 9 Nov 1992 19:49:55 -0400
From:         The Integral Differential <DEMON@DESIRE.WRIGHT.EDU>
Subject:      Re: More paint remover for Brett's primer
Comments: To: POLITICS@OHSTVMA.ACS.OHIO-STATE.EDU

...Andy: (or was it otherAnday?  That'll teach me to delete the header first :)
>>       A nice bit of misrepresentation.  I see you followed Clinton closely.
>>Nowhere are "tax cuts for the rich" advocated or even mentioned.  Tax cuts
>>should be across the board.  (Nor are loopholes advocated.)
>
>OK how would you like it worded? How many folks who flip burgers or sell
>shoes for a living are going to directly profit from a capital gains tax
>reduction ?

	Once again you are not being consistent.  An income tax cut is not the
same thing as a capital gains tax cut.  Although both would be beneficial to
the economy (in different ways, of course).  Capital gains cuts are good for
those with income to invest, businesses (especially small ones), pension funds,
etc.
	On the other hand, income tax cuts get more disposable income into the
hands of the individual, who is a lot more efficient at allocating resources
than the government.
	Both of the above help the economy.  Which creates jobs, higher wages,
etc.  In turn, the government gets more tax revenues because more people are
making (better) money.

>>       I wouldn't place any regulations on corporations.  Let them live/die by
>>the market.
>
>These {suggestions that I posted previously and deleted to save space}
>are not "regulations" on corporations, merely an alteration of what
>is considered deductible from income. I don't feel that it is a "regulation"
>(in the sense that regulation is usually taken) to say that Chrysler can't
>write off of income a chateau in the Alps for use by their executives.

	But as GM is now demonstrating, companies that abuse capital writeoffs
and fail to downsize at the start of bad times will eventually either go out of
business or be forced into rapid downsizing.

>This doesn't mean that they can't have a chateau anywhere they want (I might
>even have some suggestions B)) or pay their CEO a salary that is computed
>by a million astrophysicists with typewriters; it just means that they can't
>write it off as an expense.
>
	Part of the reason there are hundreds of tax exceptions and loopholes
is because the taxes are currently too high for the market to sustain.
	The alternative to letting tens of thousands of businesses fold was a
slew of schedules, exceptions, etc.

>As far as living/dying by the market; there are some businesses that
>are just a bit more equal than others... (does the name Chrysler ring
>a bell?) that are so large that they are protected from such an end.

	Chrysler was bailed out but finds itself it much the same position
today.  If the LH cars do not sell well, Chrysler will need another bailout.
So the government guaranteed a couple of hundred million in loans, and did OK
as Chrysler paid it back.
	So what is preventing businesses from borrowing a couple of hundred
million to retrain its workforce and retool?
	Perhaps the knowledge that it doesn't have to pay the higher interest
rate when government will eventually come along and give them a lower one.

	Tens of thousands of jobs jost (if Chrysler is allowed to sink) plus
the fallout in the cottage industries would be bad, but there are ways to
alieviate that also.  (Retraining programs, allowing people to borrow interest
free from retirement funds to attend college, etc.

	Government can be used to temper downturns in business, but you have to
realize that that also tends to mean that government tempers upturns.

...
>>       Capital gains are actually a second tax.  You are first taxed on the
>>income that you use to invest, then again when you reap any gains.  At the
 very
>>least, they need indexing for inflation.  At best, no tax at all.
>
>Boy, nobody whines as well (or as effectively) as the wealthy! When
>Average Working Joe and Josephine don't get a salary increase for
>a few years running and inflation eats at their incomes (buying power)
>nobody starts talking about indexing their incomes to inflation for
>tax purposes... or for that matter when J&J obtain some piddling
>interest income on their bank accounts that doesn't get indexed
>either, does it?

	Joe and Josephine should be negotiating with their employer.

	Good economic times are usually accompanied by low inflation.

	Taxes are already indexed for inflation.

	Capital gains affects everyone who has stock, a pension plan, or is
counting on the government to fund their retiremen (gov. pensions or SS).

...
>>>propose is a transaction tax on the sale of stocks, bonds and
>>>other securities. The tax would not apply to first issues or stocks/
>>>bonds/securities that have been held in excess of 10 years.
>
>>       We already have those.  (Commissions :).  I think the federal
>>government should stay away from any kind of transaction fee.  They would be
>>meddling in a market to no apparent gain.  (They would take in revenue, but
>>there would be no benefit to the market.)
>
>The gain would be in encouraging long term investment, much like the way
>that common folks pay a "substantial penalty for early withdrawl" on their
>higher yield bank accounts, cds, etc.

	If you want to encourage long term investment, then index the capital
gains tax for inflation.  Inflation is what eats up gains made in securities
that are held for the long term.

>>       I'm at the top income bracket.  (Hello down there :).  If the top
>>bracket is returned to past levels (50%, 97%, etc.) I will not take future
>>raises as salary, but instead as stock options, pre-tax benefits, etc.  I will
>>not lose 1/2 to 9/10 of my money by taking the raise as ordinary income.
>
>Well, I have tilted my keyboard further upwards so that you can "hear" me
>better! B)
>
>I am certainly happy for you that you have these options that most people
>do not. What you neglect to mention is that while tax rates may have been
>50 or 70%, no wealthy person or corporation ever really paid that much.

	No, it's only on that part of the income that exceeds the top bracket
($50k?).  However, if you are already in the top bracket, each additional raise
of one dollar is taxes at the top rate.  If you can take better retirement,
stock options, etc, you gain whatever that top tax rate is.

>(OK more accurately, they may have paid that percentage on some tiny
>portion of their income that they couldn't squirrel away or find some
>loophole for)
>
>What it is more reasonable to look at is the real portion of income that
>is paid in taxes, not just income taxes but also sales taxes, property
>taxes, etc. The vast majority of workers spend virtually all of their
>incomes and hence pay more taxes as a percentage of income than those
>who make enough to "recycle" their money in profit making ventures.

	True, but the solution (IMO) is to lower their taxes AND make it easier
for them to earn more money.

>> [stuff deleted] This is not a rich vs.
>>poor argument.  The poor are not that way becuase others are rich.
>
>'Scuse me but I just have to indulge here... Why are the poor, poor if
>it is not due to a system of distribution that reinforces the fact that
>some must be poor in order that others may have far more than they need?

	Differences in education, training, luck (Mr. Gates is a perfect
example, as are lottery winners), family (both inheritance and guidance),
spending habits, intelligence, ...

	There are people I work with who make just as much as I do, if not
more, who haven't saved a dime in ten years.  Yet I have saved about $50k in
three years (with a little help from the stock market).
	Now I'm supposed to hand over some to those who never saved?  I don't
think so.
	The grasshopper and the ant story comes to mind.

>How could excess exist as a concept without its opposite?

	Economics is not a zero-sum game.

>>>Government may not be perceived by many as a good
>>>or efficient provider of such, but it is more trusted than the private
>>>sector.
>
>>       Again I have to disagree.  The private sector is not some evil entity.
>>There are good companies and bad, and it is up to the consumer to make an
>>informed choice.
>
>The private sector may not be "evil" but it has only one concern, profit.
>In most cases short term profit.

	What about Ben & Jerry's?  UL?  NOW?  Companies with zero debt?  Etc.
Profit is merely a measure of financial health.  Those that focus on short term
profit (like GM) end up in bad shape eventually.  Those that focus on the long
term survive.

>While (trust me on this one) I have no love of big government (or most
>little ones for that matter) It does have a charter to look out for the
>interests of people moreso than big business. I can vote to replace my
>congressman, I can't vote to replace the CEO and board of some megalithic
>corporation.

	You can if you own stock.

>>       Reagan created the largest peacetime expansion ever.
>
>Not to mention the largest peacetime debt too.

	Yes, but so did Carter and Bush and Congress.  Debt is more of an
institutionalized denail process than the fault of Reagan.

>As one pundit put it; "I could make it look like prosperity was occurring
>if I had a few hundred billion dollars for walking around money, too."

	He would make a better president then Carter or Bush then.

	Will he run in 96? :)

>>18 million new jobs,
>
>Steadily declining real wages, caused by a loss of high wage jobs in the
>industrial sector...

	Declining real wages are a result of increased global competition.  Did
anyone here in the US really think the third world was going to lie on it's
back for another 50 years?

>>falling unemployment,
>
>As I recall one of the main reasons that unemployment "fell" was that
>Reagan redesigned the criteria by which a worker was considered
>unemployed. (I could be wrong on this one but as I remember it, if
>a worker has passed his benefit period then he is no longer considered
>unemployed. Considering this and that a significant number of the
>unemployed do not receive benefits this would result in a large
>underreporting in unemployment figures.)

	The changes made in the early 80s would result in a shift of today's
unemployement rate by 0.5% (one half of one percent).  Or from 7.4% to 7.45%.
	Including the military is legitimate, and not including people who
arene't looking for a job is also, IMO.  Unemployment is simply a measure (not
even a very good one) of the number of people looking for work, as opposed to
the currently available work pool.

>>  When did "rolling recessions" occur
>
>This is a term that I first heard on a Frontline program to describe the
>effects of Reagan era recessions that targetted certain industries.

	This is a fairly complex issue.  I can talk about it in another post.
But basically the computer revolution of the 1980s was bound to cause such
transfers of power from the manufacturing sector to the service sector.
Manufacturing here in the US is an old man propped up by the cain of government
protection and the wheelchair of third-world under-development.

>>       The middle class gained the most during the 1980s (35% or there abouts,
>>compared to 26% for upper and 29% for lower, numbers are from memory via
>>Forbes, but I will post the actuals this weekend).
>
>Well, geez, did somebody hold up the stagecoach that was delivering the
>prosperity checks to my town?

	I don't know.  You did get your tax cut, didn't you?  Did you
contribute to an IRA?  Invest in stocks?  Real estate?
	You can't gain much if you don't risk anything.

>>       The rich, in quantity, gained more.  But like Ross said, doubling a
>>penny isn't that much.  Doubling a million looks like a lot more when you say
>>"gained a million".  Both are still 100% improvements.
>
>Well I guess so, but doubling a penny doesn't do much good if it takes
>fifty cents to buy a cup of coffee...
>
>In a society where everybody is at a decent level already then making
>adjustments that affect everyone equally makes sense, but when this is
>clearly not the case the logic of your argument fails because it is
>contradicted by reality.

	How so?  Does the fact that government is currently trapping people in
the welfare system invalidate tax cuts and spending cuts?  That everyone gained
in the 1980s invalidate doing it again in the 90s because some gained more?
	If you are arguing for everyone being paid the same wage, you've lost
me.

>Before Reagan, my neighborhood was a safer place. Before Reagan when I
>went downtown I would see a few (very few and infrequently) homeless
>individuals, now there are homeless people in abundance downtown and
>in my neighborhood as well. There is just no denying that under
>Reagan (and his supply-side philosophy) poverty increased and became
>more profound and unemployment increased significantly, not just
>among factory workers either, I know engineers and scientists, highly
>skilled people who are either unemployed or underemployed.

	I disagree.  Some numbers?

>>       I'd be more than glad to give up the extra cars and TVs if it means
>>Mexican workers are earning enough to buy GM cars and Zenith TVs.
>
>Being in the upper tax bracket you would likely not be called upon to make
>that sacrifice, at least not until hundreds of thousands of other people
>were asked to give up little comforts like food, clothing and shelter.

	I fail to see how you arrive at such a statement.  People would not
lack for those things in a thriving economy.

>>       Supply side did not bring us those things.  It brought jobs, decreasing
>>deficits (as a % of GNP), etc.  The only social stratification I have seen is
>>by those promoting class warfare (ie, progressive income taxes).
>
>Well feel free to pop by sometime, I can arrange a tour for you...B)
>
>About this "warfare" thing, I am not interested in penalizing the wealthy,
>only in having them carry their fair share of the load.

	Okay, define "fair".


Brett'
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