Pitchforks coming?

[WATU2]

Another smart guy joins Warren Buffet and others in asking uncomfortable questions.

Another way of asking "Who is going to buy all this stuff?"

Message from the filthy rich

 

[lawpoke87]

Thanks for the article. Well written and a good read. Without getting inot the merits of a substantial raise of the minimum wage (I do think adults who have been at a job for a certain period of time should make considerable more than the current minimum wage btw) isn't his argument rather circlular?

Basically....people who make $10 an hour can't afford to buy the goods being produced by corporate America. (Agree). Pay them say $15 and as a bonus they aren't reliant upon food stamps and other government programs so welfare costs go down....OK. Issue...if those people making minimum wage are using food stamps and other government subsidies to buy goods and with a $5 an hour raise they wouldn't need to are we really increasing their net buying power? Is $10 an hour plus food stamps/gov't handouts > $15 an hour with no assistance and if so is it significant?

Like I said I would support adults earning a living wage after a training period at a job. I question whether we would see a substantial net increase in purchasing power due to gov't subsidies being removed from the equation. I would also like to see an emphasis on education and job training. $15 an hour on the west coast doesn't make one middle class. You're poor and struggling to get bye. We need workers with technology training. We need professionals. We need an educated and highly trained work force.

Rant over.

 

[rabidTU]

Thats a fairly reasonable stance and I think there's a legit argument both for and against a minimum wage if its done correctly with a lot of thought and no politics involved. But the minimum has got to be that - minimal.

We don't want a person in a job disrewarded for his work nor do we want a part time burger flipper making the same as a roofer. The work isn't similar. Should the guy standing on the corner holding a sign that reads "car wash $5" be paid minimum wage? He's doing the same thing as the guy who stands on another corner and wants a handout isn't he? Or should the security guard make the same as a city cop? Its somewhat similar.

And what about the hard working employee who does his best? Should he be paid the same as the guy that "hides" in the bathroom most of the day? Shouldn't the hard working worker just do less since the reward is the same?

What does this do to our society in the long run. We need to worry about what kind of country we are leaving to our kids and what kind of opportunities they'll have.

IMO

 

[noble cane]

Why do people always assume that raises in the minimum wage will occur in an economic vacuum?






This post was edited on 7/24 8:30 AM by noble cane

 

[aTUfan]

Not every job is worth $15.00/hr.
Not every employee is worth $15.00/hr.

 

[WATU2]

Poke,

The other part of the essay identified the pernicious effects of our current tax policy which is rapidly redistributing income from the poor to the wealthy. We've had the very wealthy point this out ranging from Warren Buffet to Hanauer. Recall Warren Buffet taking his peers to task for paying a lower tax rate than their secretaries? Economists from Stanford's ultra conservative Hoover Institute have lobbied against raises in California's tax rates because the total tax burden on teachers would exceed 50+% while ignoring that the Bay Area venture guys pay less than half of that.

Totally agree that education is huge (my son has just completed his PhD in computer science), but it's harder and harder for US students to stay in school without incurring huge amounts of debt. The idea of "working one's way through college" is a long faded memory.

Other countries who are gaining if not surpassing us are investing in research, education, infrastructure and developing (not shrinking) a strong middle class; all the things that the US had ignored for far too long in order to keep taxes low for the very top.

We need to do more than raise the minimum wage, but at least it's a start.

 

[lawpoke87]

I have no problem with current tax rates. My problem is with effective tax rates. The tax code is written by lobbyist and special interest. The rich hire CPA's to tax plan and pay a fraction of what the actual tax rate suggest. Tax code must be changed. I don't follow the argument that current tax policy shifts wealth from the poor to the wealthy. The poor pay very little if no income tax under the current code thanks to various deductions and tax credits like the earned income tax credits. They do pay sales tax, gasoline tax and as well as other local, state and federal tax but I don't see income tax as an issue.

In addition to the low effective tax rates the rich are paying they have also seen their wealth grown in recent years thanks to the stock market both here and abroad. The lower and dwindling middle class don't have this wealth stream and with stagnant wages are facing increasing tough financial times. As I said in the previous post, investment in education and technically training needs to be a priority.

Congrats to your son. Getting a PHD is an accomplishment he should be very proud of (I'm sure dad is). My oldest son just graduated with a BS in May. He was fortunate not only to find a job but one here in Tulsa.

 

[aTUfan]

Another problem with min wage and unions is, everyone gets the
same pay. The slacker makes the same as someone
who works hard.

 

[WATU2]

Originally posted by lawpoke87:
I have no problem with current tax rates. My problem is with effective tax rates. The tax code is written by lobbyist and special interest. The rich hire CPA's to tax plan and pay a fraction of what the actual tax rate suggest. Tax code must be changed. I don't follow the argument that current tax policy shifts wealth from the poor to the wealthy. The poor pay very little if no income tax under the current code thanks to various deductions and tax credits like the earned income tax credits. They do pay sales tax, gasoline tax and as well as other local, state and federal tax but I don't see income tax as an issue.
-----------------------------------------
The shrinking of the middle class, the stagnation of wages and consolidation of wealth in fewer hands started with Reagan and accelerated with the Bush tax cuts and expensive wars. Effective tax rates are a huge problem as you say that is what people pay. unfortunately the very wealthy and corporations have the muscle to invest in Jiggering those effective rates. They are also the reason our health system is doubly expensive.

Graduate business school courses in analyzing investment environments ( how to identify banana republics or likelihood of pitchforks) start with the consolidation of wealth in a few hands like we are seeing today as a key indicator of risk, both economic and political.

as for your not seeing how the tax burden has shifted wealth, well, have that out with Warren Buffet.

 

[lawpoke87]

I said I didn't understand how the tax burden of the poor (which is virtually non-existent) as far as federal income tax has contributed to the wealth gap. Since the poor pay little of any income tax how can paying virtually no federal taxes shift wealth from the poor to the rich? Agree that the code has greatly benefitted the rich and has contributed to the growth of their fortunes.

The wealth transfer began in earnest in 2004 (Dubya) and has accelerated under the Obama administration. American families have lost an average of 39% of its wealth (inflation adjusted) from 2004 to date. Wages have been stagnant for over a decade for the American worker. The stock markets have rebounded under Obama and while job creation is showing signs of life most of these jobs are lower paying and/or part time.

 

[aTUfan]

I don't understand how one can get a tax refund that is greater than
what he paid in.
This post was edited on 7/30 11:23 AM by aTUfan

 

[WATU2]

What do you attribute this shift in wealth to? Is your view that the tax code had nothing to do with it?

The Bush tax cuts are still with us. Heck 60% of Obama's stimulus consisted of tax cuts. You could add in Bush era incentives for US companies to send millions of jobs off shore and to hold those offshore earnings abroad tax free, and similar moves.

Regardless, it is still a redistribution of income. Of course, the irony is that we see the very people who back these pernicious policies whine about a 'redistribtion' of income away from the wealthy and corporate interests when the very opposite is in effect.

Originally posted by lawpoke87:
I said I didn't understand how the tax burden of the poor (which is virtually non-existent) as far as federal income tax has contributed to the wealth gap. Since the poor pay little of any income tax how can paying virtually no federal taxes shift wealth from the poor to the rich? Agree that the code has greatly benefitted the rich and has contributed to the growth of their fortunes.

The wealth transfer began in earnest in 2004 (Dubya) and has accelerated under the Obama administration. American families have lost an average of 39% of its wealth (inflation adjusted) from 2004 to date. Wages have been stagnant for over a decade for the American worker. The stock markets have rebounded under Obama and while job creation is showing signs of life most of these jobs are lower paying and/or part time.

 

[rabidTU]

Originally posted by WATU2:
What do you attribute this shift in wealth to? Is your view that the tax code had nothing to do with it?

The Bush tax cuts are still with us. Heck 60% of Obama's stimulus consisted of tax cuts. You could add in Bush era incentives for US companies to send millions of jobs off shore and to hold those offshore earnings abroad tax free, and similar moves.

Regardless, it is still a redistribution of income. Of course, the irony is that we see the very people who back these pernicious policies whine about a 'redistribtion' of income away from the wealthy and corporate interests when the very opposite is in effect.

Originally posted by lawpoke87:
I said I didn't understand how the tax burden of the poor (which is virtually non-existent) as far as federal income tax has contributed to the wealth gap. Since the poor pay little of any income tax how can paying virtually no federal taxes shift wealth from the poor to the rich? Agree that the code has greatly benefitted the rich and has contributed to the growth of their fortunes.

The wealth transfer began in earnest in 2004 (Dubya) and has accelerated under the Obama administration. American families have lost an average of 39% of its wealth (inflation adjusted) from 2004 to date. Wages have been stagnant for over a decade for the American worker. The stock markets have rebounded under Obama and while job creation is showing signs of life most of these jobs are lower paying and/or part time.

Reagan called this kind of economy (where the upper and middle classes are squeezed) a "distribution of scarcities". When we don't reward work (and thus grow the economy) and simply give away most of the profits of that work, the middle class always shrinks. Whats left then has to be distributed among the "survivors". This is why socialism cannot work since it doesn't incentivise workers to work. When the govt encentivises people to stay home and do nothing yet live a lower middle class lifestyle with EBT cards, food stamps and subsidized housing etc then everyone suffers and the economy either stagnates or shrinks.


This post was edited on 7/30 1:04 AM by rabidTU

 

[aTUfan]

What do you attribute this shift in wealth to?
------------

people expect $15.00/hr, untrained, and want 9-5 hours, no weekends, . . .

and when they dont get it they get

bigger wefare checks, more unimployment, food stamps, more gov programs , . . .
sit on their butt and collect money from the gov, is a lot easier than working for a living.

 

[lawpoke87]

I'm obviously doing a poor job in explaining my position on tax policy and it's contribution to the growing wealth gap. One more try:

The tax code has certainly assisted the wealthy in accumulating wealth as they take advantage of all the tax credits, shelters, etc... to bring their effective tax rate below that of many middle income taxpayers.

The poor pay little if any federal income tax. As such, it is impossible for there to be a shift in wealth from the poor due to tax policies as there is no federal income tax being paid thus none to shift. Basically 0 = 0.

No one has mentioned the Fed and the effects of it's zero interest rate printing endless money policy. Where has that money gone? To the poor and middle class..no. To investment banks and to the stock market...yep. Who benefits from a rising stock market....you got it. The growth in the market isn't based on economic fundementals. It's based on money funneling into the system. Money which has in part come from the Fed's policies. The rich benefit while the middle or lower class struggles with decreasing earning power and wealth.

As for the flow of corporations out of the country, I would blame our tax and trade policies. We have the highest corporate tax rate for capital investments in the industrial world. Add that to the fact that our tax code allows all income and capital investments earned outside of the U.S. to be taxed at the rate where a corporate headquarters is located and you have a mass exodus to more profitable environments. We are somewhat fortunate Mexico is such a political disaster full of corruption and violence as if it weren't you would see many more companies taking advantage of NAFTA and the $10 a day labor south of the border.

 

[aTUfan]

The tax code has certainly assisted the wealthy in accumulating wealth as they take advantage of all the tax credits, shelters, etc...
-------------------------------------------
The tax codes are written by Congress( well it used to be befroe BHO became the Exhalted leader ... ).
Congress is made up of Democrats and Republicans all doing their part to help themselves and their contributors.

There was an article in a Business magizine about a year ago about how many Congressmen become MILLIONAIRES after they get elected.

The majority were Dems; so why do the Rep get such a bad rap?
"MEDIA Coverage", Stereotype, mis-information, . . .

ie. I bet most people did not know that BP oil gave more than 4 time as much to the BHO camgaign than they gave to Mccain.

 

[lawpoke87]

Saw the following article this am. We can talk about tax codes and rates etc but isn't this the real reason? Income inequality starts with the wages of the American worker. Wages alone have dropped almost a quarter since 2008. It's fine to talk about the role the tax code does or doesn't pay but when the American worker is bringing home a quarter less today than six years ago I don't think we have to look much beyond that figure.



U.S. jobs pay an average 23% less today than they did before the 2008 recession, according to a new report released on Monday by the United States Conference of Mayors.

In total, the report found $93 billion in lost wages.

Jobs lost during the recession paid an average $61,637. As of 2014, jobs in the same sectors paid an average of $47,171 annually.

"Under a similar analysis conducted by the Conference of Mayors during the 2001-2002 recession, the wage gap was only 12% compared to the current 23%--meaning the wage gap has nearly doubled from one recession to the next," stated the Conference of Mayors in a statement.

 

[rabidTU]

My guess is that there are so many part time jobs with poor benefits due to Obamacare and other policies by his adm. that the idea people have a job, doesn't mean anything is really being produced by them. Socialism does this. The economy (GDP) declined in the first quarter by almost 3% which means there is something wrong with the recovery - if the fugures are correct.

Growth means goods and services are being produced and benefitting the buyer. Decline is the opposite.














This post was edited on 8/13 12:07 PM by rabidTU