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| Jim Blair |
 Posted: Mon Dec 12, 2005 3:26 pm |
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Guest
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"tonyp" <tonyp@world.std.com> wrote in message
news:cuadnRYn5cxdRAreRVn-tA@rcn.net...
[quote:81be0b167b]
"Jim Blair" <jeb@wisc.edu> wrote
I say the higher your income the harder it is
to save 5% of it.
You have an interesting definition of "hard" there, Jim.
[/quote:81be0b167b]
Hi,
Yes, based on my own experience.
When my income increased by X%, my wifes spending increased by (X+e)% and my
saving rate declined by e% ;-(
[quote:81be0b167b]
Sure some investments do better than others. I claim that if people
stick
to broad based mutual funds, they are almost certain to do better than
Social Security during the next 20, 30, 40 or 50 years.
How "broad based"? If some fund is based on anything narrower than the
whole US economy, it _may_ be one of those which do better than "the
economy" -- but it's just as likely to be one of those which do worse.
[/quote:81be0b167b]
Sure, some broad mutual funds do better than others. But all of them are
likely to do better than money
"invested" in Social Security.
[quote:81be0b167b]Yeah, yeah, your hypothetical fund can be based on the "world economy".
But
if you want to collect your returns from an investment in Pakistan, say,
you
need either:
1) the good will of the Pakistanis to live up to their contractual
commitments for the next "20 - 50 years"; or
2) a world government, with a court system you can sue in and a police
agency that can enforce its judgements internationally; or
3) a scarier military than we now possess.
I give Pakistan as the example because I don't imagine you're talking
about
your "world" investments going into, say, France.
[/quote:81be0b167b]
Mutual funds have an "international" sector. I haven't checked just which
countries mine are investing in, but China, Russia and India seem likely.
We could check the web pages of some big ones like TIAA/CREF, Fidelity, etc.
[quote:81be0b167b]
So why keep the FICA?
Why indeed? I would happily endorse a system wherein _all_ income gets
taxed, at rates which are progressive all the way up (say, to a top
marginal
rate of 95% kicking in at about $100M/yr), and retirement benefits are
means-tested -- and paid out of general revenues. Are you with me?
[/quote:81be0b167b]
You would be denounced as wanting to kill Social Security and put the
elderly poor on welfare.
But I am with you except for that 95% tax on incomes. I say those with
high incomes should be paying the income tax rather than looking for ways to
avoid it.
[quote:81be0b167b]
The CBO is hardly likely to "score" such a system for lil'ole us, but I
bet
it would end up "revenue neutral" with considerably lower overall tax
rates
for most people.
[/quote:81be0b167b]
And that 95% rate would be a jobs program for tax lawyers and accountants.
[quote:81be0b167b]
Because more people would be putting money into investments
instead of into the US treasury. (If we privatize SS.)
Jim, we both know that "putting money into investments" means, in real
terms, buying things and hiring people. The US government buys things and
hires people. But putting money into it is apparently _not_ an
investment,
in your vocabulary.
Well, I can agree with you to some extent: buying anti-anti-missile
missiles and hiring people to man them does seem like a frivolous waste
rather than an investment. But I can't agree with you all the way.
Buying, say, college and graduate educations for young people, or
pharmaceuticals and medical care for working people, can actually be a
very
good investment, given that you get to tax their future earnings.
We will never have a government wise enough to make _only_ good
investments.
But we will never have mutual funds that can do so, either.
-- TP
[/quote:81be0b167b]
This gets to the core of our different views. I see private companies as
(overall) making better investments than the federal government.
Sure Ford built some Edsels. But when they didn't sell, they stopped
building them. When the Agriculture Dept paid farmers to grow huge
surpluses of grains during the 1950-60's, they built sheds to store the
extra, creating a "free lunch" program for rats and mice.
I agree the government does make some good investments (like the military
 , but they also make a lot of bad ones.
When a company makes a bad decision, the incentives are to correct it. When
a government makes a bad decision it was usually in response to a special
interest that is then strengthed, and the incentive for elected officials is
then to add more to it. I bet that if the Edsel had been a government
project, when they didn't sell, they would have built garages all over the
country to store the surplus cars. By then both the factory workers making
them and construction companies making the garages would become lobbies to
continue the production of Edsels.
,,,,,,,
_______________ooo___(_O O_)___ooo_______________
(_)
jim blair (jeblair@wisc.edu) Madison Wisconsin USA.
This message was brought to you using biodegradable
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| tonyp |
| Posted: Mon Dec 12, 2005 6:07 pm |
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Guest
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"Jim Blair" <jeb@wisc.edu> wrote
[quote:1e35a2615c]Typically that idiot is careful to say that IRS data shows
the top 1% of incomes pay X% of the total income tax collected.
[/quote:1e35a2615c]
Not typical in _my_ experience. And even when they are as careful as you
say, they are careful in the same sense as the Bushies were careful when
they talked about "mushroom clouds". Their strict wording is accurate; the
impression they create is intentionally misleading. But why argue? I take
it I can count on you to denounce those rare, exceptional,
once-in-a-blue-moon instances when they do occur :-)
[quote:1e35a2615c]As Grinch pointed out years ago, the US now has
approximately a "flat tax" if FICA and IRS taxes are taken together.
He posted this information when so many were denouncing the
Steve Forbes plan for a SIMPLE flat tax on all
incomes.
[/quote:1e35a2615c]
Just remind me, would you: did Steve Forbes propose to eliminate FICA as a
separate tax, or was _he_ only talking about "income tax"?
-- TP |
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| Jim Blair |
| Posted: Tue Dec 13, 2005 10:43 am |
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Guest
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"tonyp" <tonyp@world.std.com> wrote in message
news:g4GdndDrV93FnwPeRVn-sA@rcn.net...
[quote:006b2ad72c]
"Jim Blair" <jeb@wisc.edu> wrote
Typically that idiot is careful to say that IRS data shows
the top 1% of incomes pay X% of the total income tax collected.
Not typical in _my_ experience. And even when they are as careful as you
say, they are careful in the same sense as the Bushies were careful when
they talked about "mushroom clouds". Their strict wording is accurate;
the
impression they create is intentionally misleading. But why argue? I
take
it I can count on you to denounce those rare, exceptional,
once-in-a-blue-moon instances when they do occur 
[/quote:006b2ad72c]
Hi,
I try to point out mis-statements where ever I find them.
[quote:006b2ad72c]
As Grinch pointed out years ago, the US now has
approximately a "flat tax" if FICA and IRS taxes are taken together.
He posted this information when so many were denouncing the
Steve Forbes plan for a SIMPLE flat tax on all
incomes.
Just remind me, would you: did Steve Forbes propose to eliminate FICA as
a
separate tax, or was _he_ only talking about "income tax"?
-- TP
As I recall, that was one reason he was blown out of the water. He was[/quote:006b2ad72c]
accused of wanting to "end Social Security" by dropping the FICA as a
separate tax from his simple flat tax. He touched that 3rd Rail. That and
ending the home morgage interest deduction.
,,,,,,,
_______________ooo___(_O O_)___ooo_______________
(_)
jim blair (jeblair@wisc.edu) Madison Wisconsin USA.
This message was brought to you using biodegradable
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time call: http://www.geocities.com/capitolhill/4834
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| Jim Blair |
| Posted: Thu Dec 15, 2005 3:50 pm |
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"Jim Blair" <jeb@wisc.edu> wrote in message
news:dnmsr6$5q$1@news.doit.wisc.edu...
[quote:c7cc61b4d4]
Mutual funds have an "international" sector.
I haven't checked just which countries mine are investing in,
but China, Russia and India seem likely.
Hi,[/quote:c7cc61b4d4]
I looked at the TIAA/CREF holdings, and there is less in the 3rd World than
I had thought.
I used that one because that is the largest single source of my retirement
funds.
The numbers:
USA = 49.2%
Continental Europe = 22.9% (including France I assume
Japan = 11%
UK = 8.8%
Far East (excluding Japan) = 4.2% (and that must include China and
Indonesia)
Canada = 3.0%
Others = 0.5%
[quote:c7cc61b4d4]
,,,,,,,
_______________ooo___(_O O_)___ooo_______________
(_)
jim blair (jeblair@wisc.edu) Madison Wisconsin USA.
This message was brought to you using biodegradable
binary bits, and 100% recycled bandwidth. For a good
time call: http://www.geocities.com/capitolhill/4834
No animals were harmed in making this post
[/quote:c7cc61b4d4] |
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| tonyp |
| Posted: Fri Dec 16, 2005 12:31 am |
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"Jim Blair" <jeb@wisc.edu> wrote
[quote:58e95cd27f]You are claiming that if the Global Economy does well
it means the wages of US workers
who earn under the FICA cap
will do equally well?
[/quote:58e95cd27f]
Not necessarily. But neither am I insisting that SS benefits can only ever
be paid out of FICA collections. For one thing, the trust fund earns
interest from the Treasury. The interest is paid out of general taxes.
Now, the "interest rate" paid to the "trust fund" is an intra-government
bookkeeping number. If we vote, tomorrow, to make that number 10% or more,
what (besides Republicans dying of apoplexy) would be so terrible?
[quote:58e95cd27f]... So far the workers are content to have the wages, and the
governments to have the taxes, that the jobs provide.
[/quote:58e95cd27f]
So far :-)
[quote:58e95cd27f]While there is not a sharp cutoff, the higher the marginal rate,
the greater the incentive to avoid having your compensation
in the form of taxable income.
[/quote:58e95cd27f]
As you know, Jim, I think a fair tax system would be one in which your
"income" is the same whether you're talking to the taxman or to your
brother-in-law. I'm not sure how to approach such a system under Republican
government. Do you have any ideas?
[quote:58e95cd27f]When the top rate was over 90% it collected almost no money.
When the top rate was reduced to the 28-38% range
it collected a lot more money. Laffer Curve.
[/quote:58e95cd27f]
Just for yucks, Jim: where's the peak of the Laffer Curve? If the top rate
were 15%, would "it" collect even more money?
Addressing a different point of yours: each of us, liberal or conservative,
rich or poor, can _always_ think of something better to do with his money
than "give it to the government", because none of us gets absolute say about
what the government will use "his" money for. So, can we flush that
particular red herring down the toilet, finally?
-- TP |
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| tonyp |
| Posted: Fri Dec 16, 2005 1:15 pm |
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Guest
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"Jim Blair" <jeb@wisc.edu> wrote
[quote:e54aaca010]It isn't clear who wrote that, but I hope it wasn't Steve Forbes.
It is so unclear as to be nearly meaningless.
[/quote:e54aaca010]
Well, you have the right to _hope_
And "unclear" may be simply a polite way of saying "misleading".
[quote:e54aaca010]??? Does that mean income below $36,000 would be subject
to FICA tax if the income was in the form of wages?
[/quote:e54aaca010]
I never heard Steve Forbes say otherwise.
[quote:e54aaca010]Are capital gaines considered to be "income"?
[/quote:e54aaca010]
Forbes was explicit: cap gains were _not_ "income" in his plan.
[quote:e54aaca010]I had thought the Forbes plan was no tax (either IRS or FICA)
on any income under 36,000 CPI corrected constant dollars,
and 17% on any income over that limit,
no matter the source of income. No deductions or exceptions.
[/quote:e54aaca010]
The plan you _think_ you remember is a lot more reasonable than the plan
Forbes was actually pushing, but your confusion is not surprising.
Misleading otherwise sensible people is what Republicans _do_. At one time,
more than half of Americans thought Saddam was behind 9-11. It was not
Democrats who fed them that notion.
-- TP |
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| Jim Blair |
| Posted: Fri Dec 16, 2005 4:41 pm |
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Guest
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"tonyp" <tonyp@world.std.com> wrote in message
news:i4WdnaHxibkjnj7eRVn-qQ@rcn.net...
[quote:d5bc589638]
"Jim Blair" <jeb@wisc.edu> wrote
It isn't clear who wrote that, but I hope it wasn't Steve Forbes.
It is so unclear as to be nearly meaningless.
Hi,[/quote:d5bc589638]
Look at:
http://www.ctj.org/html/flatsum.htm
Only the Kemp Commission mentions FICA. FICA provided by the employer would
not be taxed, and the employee "contribution" would be deducted from taxable
income.
Maybe then the employer would pay both ends? Otherwise only those with
wages over $11,000 (or $14,000 if single parent) would benefit from that
exemption.
I do remember Forbes being accused of wanting to "end Social Security" with
his flat tax, but maybe those critics didn't understand his plan either.
My interpretation of the Forbes Flat Tax WOULD end Social Security as we
know it, as would your idea of funding the benefits from general revenue.
,,,,,,,
_______________ooo___(_O O_)___ooo_______________
(_)
jim blair (jeblair@wisc.edu) Madison Wisconsin USA.
This message was brought to you using biodegradable
binary bits, and 100% recycled bandwidth. For a good
time call: http://www.geocities.com/capitolhill/4834 |
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| Jim Blair |
| Posted: Mon Dec 19, 2005 11:29 am |
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"tonyp" <tonyp@world.std.com> wrote in message
news:KrydnT0cS7pQzT_eRVn-jg@rcn.net...
[quote:ad42c8f542]
"Jim Blair" <jeb@wisc.edu> wrote
You are claiming that if the Global Economy does well
it means the wages of US workers
who earn under the FICA cap
will do equally well?
Not necessarily. But neither am I insisting that SS benefits can only
ever
be paid out of FICA collections. For one thing, the trust fund earns
interest from the Treasury. The interest is paid out of general taxes.
Now, the "interest rate" paid to the "trust fund" is an intra-government
bookkeeping number. If we vote, tomorrow, to make that number 10% or
more,
what (besides Republicans dying of apoplexy) would be so terrible?
[/quote:ad42c8f542]
Hi,
Either a higher than market interest rate for SS bonds or your direct from
general revenue is to fund SS benefits from other than FICA collections.
Note that the Bush "privatization/individual investments" plan would also
partially fund SS benefits from general revenue, and that had Democrats
"dying of apoplexy". Anything that breaks the FICA => SS benefits will be
denounced as "destroying Social Security". Because when general revenue is
used, Congress will look at who gets they money and why. And that will mean
a "means test" of some sort.
On foreign investments:
[quote:ad42c8f542]... So far the workers are content to have the wages, and the
governments to have the taxes, that the jobs provide.
So far
[/quote:ad42c8f542]
Yes. In Europe and Japan and UK and Canada, as in the US.
We do have a movement here (so far fringe) that wants to keep all spending
on only "local" products. A recent letter in the paper explained how it is
subversive for Wisconsinites to be sending their money out of state.
(I bet the author and his group drink coffee, drive gasoline powered cars,
heat their houses with natural gas, eat banannas and oranges etc. ;-)
[quote:ad42c8f542]
While there is not a sharp cutoff, the higher the marginal rate,
the greater the incentive to avoid having your compensation
in the form of taxable income.
As you know, Jim, I think a fair tax system would be one in which your
"income" is the same whether you're talking to the taxman or to your
brother-in-law.
[/quote:ad42c8f542]
The problem is "compensation" vs "taxable income". Aside from various
"loopholes" (Support Your Local Loophole , compensation can be given to
workers in forms other than as taxable income. And the higher the income
tax rate the greater the incentive to find ways to do that.
[quote:ad42c8f542]....I'm not sure how to approach such a system under Republican
government. Do you have any ideas?
[/quote:ad42c8f542]
Marginal tax rate low enough that avoiding paying the tax is not worth the
cost.
[quote:ad42c8f542]
When the top rate was over 90% it collected almost no money.
When the top rate was reduced to the 28-38% range
it collected a lot more money. Laffer Curve.
Just for yucks, Jim: where's the peak of the Laffer Curve?
[/quote:ad42c8f542]
Good question, and no one knows for sure. Not only do different economists
use historic data to argue for different numbers, but there is probably no
single answer: I say it depends on the particular society at a particular
time.
http://www.geocities.com/capitolhill/4834/lafmax.txt
[quote:ad42c8f542].....If the top rate
were 15%, would "it" collect even more money?
[/quote:ad42c8f542]
Who knows? Let's try it and see ;-)
[quote:ad42c8f542]
Addressing a different point of yours: each of us, liberal or
conservative,
rich or poor, can _always_ think of something better to do with his money
than "give it to the government", because none of us gets absolute say
about
what the government will use "his" money for. So, can we flush that
particular red herring down the toilet, finally?
-- TP
[/quote:ad42c8f542]
??? "Red Herring"? I am not talking about using the money for MY OWN
benefit. Then, sure giving it to the US treasury is not likely to be best
for ME.
But I mean people using the money that would otherwise go to the treasury
for doing what they think is GOOD. They all selected some other use for it.
Sure some people have given money to the treasury or left it in their will
to Uncle Sam, but that is rare, and I read of none of the "rich" tax cut
protestors doing that.
Maybe you can't see the irony of sending your "unfair tax cut gains" to some
worthy cause OTHER THAN the US treasury as a way of protesting being given
the opportunity to do that. But I can.
Maybe if you look at this from another angle. If I had a very large income
and wanted to make a point about my income tax cut, I would send Bush a
letter thanking him for the tax cut, and telling him that I sent my tax
saving to Planned Parenthood and to a foundation for human embryonic
research. Because I know that the US government will not fund these worthy
causes. And I agree with him that individuals know better how to spend their
money than the government does.
,,,,,,,
_______________ooo___(_O O_)___ooo_______________
(_)
jim blair (jeblair@wisc.edu) Madison Wisconsin USA.
This message was brought to you using biodegradable
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time call: http://www.geocities.com/capitolhill/4834 |
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| Chas |
| Posted: Sat Dec 31, 2005 2:22 am |
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Guest
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"Jim Blair" <jeb@wisc.edu> wrote in message
news:dmi2gm$75f$1@news.doit.wisc.edu...
[quote:6ec154f26f]Hi,
Oops, I said that wrong. High income people pay both FICA and income (IRS)
taxes.
[/quote:6ec154f26f]
Not necesarily true. Living off of unearned income, a wealthy person would
not have to pay FICA, and, of course, FICA is a regressive tax, even if the
wealthy are working.
[quote:6ec154f26f]
Bush wanted to give low income people the same break that higher incomes
now
have.
[/quote:6ec154f26f]
The last thing Bush would want to do is give low income people a break. Bush
worships at the Church of Cheap Labor, always has, always will. |
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| Jim Blair |
| Posted: Tue Jan 03, 2006 3:42 pm |
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"Chas" <chasna2@earthlink.net> wrote in message
news:Skqtf.2582$M%4.39@newsread3.news.atl.earthlink.net...
[quote:253715feb3]
"Jim Blair" <jeb@wisc.edu> wrote in message
news:dmi2gm$75f$1@news.doit.wisc.edu...
Hi,
Oops, I said that wrong. High income people pay both FICA and income
(IRS)
taxes.
Not necesarily true. Living off of unearned income, a wealthy person would
not have to pay FICA, and, of course, FICA is a regressive tax, even if
the
wealthy are working.
[/quote:253715feb3]
Hi,
Yes, People with no wage income don't pay FICA. But how can you have a
high income and still not pay the IRS?
The income tax applies to rent, interest, dividend, Socila Security and
pension income, and even capital gains, as well as to wages.
[quote:253715feb3]
Bush wanted to give low income people the same break that higher
incomes
now
have.
The last thing Bush would want to do is give low income people a break.
[/quote:253715feb3]
??? You don't think having less deducted from their FICA is giving low
income workers a tax break?
Why not?
Because they must put that money into a retirement account instead of into
their pocket? So do you think the IRS deduction from taxable income of
money put into an IRA, is a tax break? Why are these two not similar
(except the IRA deduction does not help those who don't pay income taxes)?
[quote:253715feb3]Bush
worships at the Church of Cheap Labor, always has, always will.
[/quote:253715feb3]
What does that have to do with the question of Bush's Social Security
reform?
,,,,,,,
_______________ooo___(_O O_)___ooo_______________
(_)
jim blair (jeblair@wisc.edu) Madison Wisconsin USA.
This message was brought to you using biodegradable
binary bits, and 100% recycled bandwidth. For a good
time call: http://www.geocities.com/capitolhill/4834 |
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| tonyp |
| Posted: Wed Jan 04, 2006 4:07 pm |
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Guest
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"Jim Blair" <jeb@wisc.edu> wrote
[quote:f04e5f1ffd]... But how can you have a
high income and still not pay the IRS?
[/quote:f04e5f1ffd]
Aside from outright cheating, a popular way is to "defer" your tax liability
far into the future by structuring your income so that it doesn't appear
like you got paid this year. This strategy is not readily available to most
people: they need to "realize" their income right away because they need it
to live on. A big-company CEO who already owns 3 mansions, has enough cash
in the bank to live on forever, and gets to pick the people who structure
his compensation ... well, he's another story.
[quote:f04e5f1ffd]The income tax applies to rent, interest, dividend, Socila Security and
pension income, and even capital gains, as well as to wages.
[/quote:f04e5f1ffd]
"The" income tax? You mean "an" income tax. If I hand you a dollar, can
you tell whether it came from "rent, interest ... capital gains"? Dollars
are dollars. Why shouldn't your marginal dollar pay the _same_ income tax
regardless of its source?
[quote:f04e5f1ffd]??? You don't think having less deducted from their FICA is giving low
income workers a tax break?
[/quote:f04e5f1ffd]
Say your insurance broker gives you a "price break": he cuts your "premium"
in exchange for you parking the savings in a "personal insurance account".
If he does that _without_reducing_your_policy_limits_, then he's doing you a
favor. If not, not.
-- TP |
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