patrick.net

control point says

Then you would be paying too little, ie zero.

That's why this "central planning" doesn't work. Politicians sit in a room and decide what is too much or too little based on socioeconomic class, and take favors to make such decisions in order to get reelected. Make what people pay based on consumption, and the guesswork and politics is taken out of it...problem solved.

jazz music says

And of of course that must be why the lower and middle classes are thriving, prospering, affording so many luxuries nowadays, yachts, cars, vacations, and not just disappearing into financial irrelevance ... uhhh how about housing? education? healthcare? retirement? nutrition?

That has nothing to do with taxes and mostly due to poor choices like having too many kids, buying nice cars, getting iphones and tablets, and saving up for that Coach bag. If the poor and middle class are suffering, it's because they're spending too much and/or making good job/career choices. If folks spent less and saved more, prices would come down to make life more affordable, and more of them could invest money in stocks, bonds or real estate.

Don't blame the tax system for the demise of the country's poor and middle class...blame our consumerism society and lack of fiscal discipline. I even think a consumption-based tax system would help drive people to earn more, save more, and spend less.

However, a purely based consumption tax will be too oppressive if we don't drastically cut the size of gov't including military, entitlements, etc. But, making transformational cuts to the size of gov't and gov't spending is something we have to do anyway.

debyne says

If the poor and middle class are suffering, it's because they're spending too much. If folks spent less and saved more, prices would come down to make life more affordable, and more of them could invest money in stocks, bonds or real estate.

Don't blame the tax system for the demise of the country's poor and middle class...blame our consumerism society and lack of fiscal discipline.

That is not entirely true, and perfunctory understanding of the situation.

indigenous says

That is not entirely true

At least you admit it's mostly true. I'm talking in generalities here. Of course there are people suffering due to job loss, healthcare crises, etc.., and those are separate, structural issues that need to be dealt with, but the tax system will NOT fix them. For example, I'm a fan of the individual mandate for healthcare and much of what Obamacare has to offer...the implementation has just sucked.

debyne says

At least you admit it's mostly true.

I do, but the overarching problem is not caused just by taxes.

The biggest problem affecting the middle class is inflation. This is what has created inequality, but more importantly a lower standard of living in the middle class.

Secondly the money that has been parked at the upper quintile is not invested in nascent business which is the engine for jobs.

It is true jobs have been off shored but part of the culprit has been the Chinese devaluing their currency and the US allowing them to do it. This is because of Milton Friedman's brainchild the floating exchange rate that is allowed to run with out being monitored and with a built in inflation target of 3%. No matter what jobs were going to be off shored but they would have not disappeared nearly as fast if the dollar had been monitored.

4th the corruption of the country by cronyism. Since the 17th amendment the country has been subject to the tyranny of democracy. This has resulted in the banking industry being bailed out, an explosion in the DOD, endless subsidies, the government getting into the healthcare business, the higher education business, etc etc. Canada has far fewer of these type problems at least in banking because these laws are voted on by a senate that is not elected by the citizens but rather appointed. Similar to this country before the 17th amendment.

5th the government has no business in healthcare.

6th borrowing money because of the reserve currency status that has allowed the fed to not have to worry about financing the non stop wars for the past what 12 years and how many trillion?

debyne says

If folks spent less and saved more, prices would come down to make life more
affordable, and more of them could invest money in stocks, bonds or real estate.

Except you forgot that people would get laid off, unemployement would rise, and you'd create a whole bunch more people with no job and no money who can't afford anything. You don't think production would stay the same as you reduce demand, do you? And lower production = fewer jobs.

debyne says

I even think a consumption-based tax system would help drive people to earn
more, save more, and spend less.

You haven't thought that scenario all the way through yet.

indigenous says

The biggest problem affecting the middle class is inflation.

I definitely agree. Monetary inflation accentuates the the disparity between the rich and the poor.

jazz music says

You've been listening to radio talk show host microphone bullies and Foxbots.

Your post was too long. I don't listen to talk shows and watch Faux News. I never said we shouldn't help the poor with any sort of social safety net, I'm just talking about how the tax system should be structured.

tatupu70 says

You don't think production would stay the same as you reduce demand, do you?

I don't think the answer is to spend beyond our means and buy crap we don't need instead of investing it. We're a global economy, so the idea is to get other countries to consume our production...that's how we get a trade surplus and make our country richer, not by consuming our own stuff.

debyne says

I don't think the answer is to spend beyond our means and buy crap we don't
need instead of investing it. We're a global economy, so the idea is to get
other countries to consume our production...that's how we get a trade surplus
and make our country richer, not by consuming our own stuff.

OK--how does having Americans save more lead to other countries buying our stuff?

tatupu70 says

You haven't thought that scenario all the way through yet.

Don't you think that if our income top line increased but so do our variable costs (with consumption based taxes), people would save more and buy more of the things that they need? This is how the rich would get hit because they gotta have their stuff...but they can afford it.

debyne says

I definitely agree. Monetary inflation accentuates the the disparity between
the rich and the poor.

My lord. You guys live in an alternate universe. Inflation is too low. The biggest problem affecting the middle class is lack of wage increases.

And it's caused because labor has no leverage right now--corporations pay as little as possible. What you end up with is all time high corporate profits and large percentage of the population earning minimum wage.

The best part is folks like you complaining because the minimum wage earners aren't paying enough in taxes. It's really laughable except that there are so many clueless folks like you out there.

debyne says

Don't you think that if our income top line increased but so do our variable
costs (with consumption based taxes), people would save more and buy more of the
things that they need?

People wouldn't buy more of things they need. If it's a need, people purchase to satisfy that need regardless of income.

If people save more, they are buying less. By definition.

So, buying less = less demand = fewer jobs = higher unemployment.

tatupu70 says

Inflation is too low. The biggest problem affecting the middle class is lack of wage increases.

Real inflation is closer to 6% right now...don't believe the crap from our "trustworthy" gov't. I actually don't disagree with raising the minimum wage...it'll make people work harder for fewer better-paying jobs, and it'll drive low-labor-providing companies to innovate better ways to automate tasks currently performed by humans.

tatupu70 says

If it's a need, people purchase to satisfy that need regardless of income.

What I'm saying is that they'll be driven to ONLY buy more of the things that they need, and less of the crap that society tells them they need. That way they'll have more money left to invest and build their wealth. That's what I meant.

debyne says

Real inflation is closer to 6% right now

Ah--another shadowstats guru? I should have known.

debyne says

What I'm saying is that they'll be driven to ONLY buy more of the things that
they need, and less of the crap that society tells them they need. That way
they'll have more money left to invest and build their wealth. That's what I
meant.

Fine. Then you agree that if people do that, it will lead to many more people unemployed? And it's very hard to build wealth without a job.

tatupu70 says

Ah--another shadowstats guru? I should have known.

By that you must mean "truth seeker" :)

tatupu70 says

debyne says

What I'm saying is that they'll be driven to ONLY buy more of the things that

they need, and less of the crap that society tells them they need. That way

they'll have more money left to invest and build their wealth. That's what I

meant.

Fine. Then you agree that if people do that, it will lead to many more people unemployed? And it's very hard to build wealth without a job.

You're probably right in the short term, but capitalistic economies are pretty adaptable and I think it would serve us better in the long run. I do agree that job losses would likely happen in the short term though.

Shadowstats shows inflation probably averaging 7-8% in 2008/09, when:

Housing crashed ~20%
Rents weakened to flat
Oil crashed from $140 to $40
Cash for clunkers
down brand electronics gained market share
food prices decreased

wtf???

control point says

Shadowstats shows inflation probably averaging 7-8% in 2008/09, when:

According to my calculations and research it is around 3%-5%, similar to the EPI. Even 3% is breaking the middle-classes neck, because their wages do not appreciate 3% yearly. What are we going to do now, raise the minimum wage by 3% per year? Inflation caused by QE and ZIRP has benefited the wealthy and (slowly) bankrupted the middle-class.

mell says

Inflation caused by QE and ZIRP has benefited the wealthy and (slowly)
bankrupted the middle-class.

That's just BS. The problem isn't 3% inflation--the problem is the lack of wage increases. Inflation is a distraction. If we get real wage growth, who cares what the inflation rate is--it's just a meaningless number. If wages grow faster, all is well.

mell says

According to my calculations and research it is around 3%-5%, similar to the EPI.

Right, because housing and cars, for example, are expenditures where price changes don't matter.

Of course gas prices matter more than housing prices, since most spend at least 20% on gas compared to housing.

FFS, the CPI is accurate.

tatupu70 says

The problem isn't 3% inflation--the problem is the lack of wage increases.

Aggregate income (for workers, wage) growth IS inflation.

The problem is the allocation of income growth. This is reflected in falling real MEDIAN wages, as capital has been favored to labor, and non-specialized labor has been commoditized.

Labor in an ever more global economy is powerless without leverage. Wage arbitrage sure is an easy game to play as the world shrinks.

tatupu70 says

If we get real wage growth, who cares what the inflation rate is--it's just a meaningless number.

Isn't the definition of "real" wage growth calculated as nominal wage growth against inflation? If yes, inflation is VERY relevant in calculating "real" wage growth.

mell says

What are we going to do now, raise the minimum wage by 3% per year?

It's a good question to ask. If we just raise wages, won't that contribute to more price inflation? The key here is "real" wage growth, which I believe is primarily achieved through innovation that allows us to produce more with less effort thereby (hopefully) reducing prices.

debyne says

It's a good question to ask. If we just raise wages, won't that contribute to more price inflation? The key here is "real" wage growth, which I believe is primarily achieved through innovation that allows us to produce more with less effort thereby (hopefully) reducing prices.

Gov't actions have unintended consequences, in this case fewer workers hired.

debyne says

Isn't the definition of "real" wage growth calculated as nominal wage growth
against inflation? If yes, inflation is VERY relevant in calculating "real" wage
growth.

Of course. My point is that you are focusing on the wrong part of that equation. Instead of trying to reduce inflation (which has some bad side effects), you should be worrying about how to increase median wages.

Control point is correct too--the issues is distribution, not aggregate wage growth. Find a way to redistribute and all the problems go away.

debyne says

It's a good question to ask. If we just raise wages, won't that contribute to
more price inflation? The key here is "real" wage growth, which I believe is
primarily achieved through innovation that allows us to produce more with less
effort thereby (hopefully) reducing prices.

I think you're refering to productivity gains which have been very strong. The problem is that the fruit of those gains only goes to the owners and not to the workers, leading to inequality and stagnant median wages.

The problem isn't lack of productivity. It's a distribution problem.

tatupu70 says

The problem isn't lack of productivity. It's a distribution problem.

shows per-worker GDP has gone up 8X since 1970 while wages have risen 6X.

now, GDP has become increasingly cooked perhaps, adding in imputed rents and stuff that probably don't belong

jazz music says

No no no, those hopes have never been realized

Of course they have, manufacturing items in unsupported sectors (such as tech) have gotten cheaper and cheaper, that's why they try to maximize profit with contracts attached to devices. They haven't been realized in the subsidized (and often essential) sectors, which is no surprise. If you subsidize section 8 housing to the tune of $2K+/month in the bay area, what incentives are there for landlords to charge $2000 or less, even though they may still come out with a profit?

jazz music says

No no no, those hopes have never been realized and that is why I judged you as brainwashed by the radical right-wing which stands for everything goes to the owners and then we get to HOPE. This is the nuvo-liberal ideology, the cancerous lie that has already crucified our country, and HOPE FOR the TRICKLE.

There is definitely the issue of eventually running out of enough "lower-level" jobs to produce what we need for this country as a result of automation and technological advancement. That means we'll have more strategic jobs to drive all this, but what do we do with all the people left? Do we force people to have less kids so that we don't have this excess labor demand?

tatupu70 says

Of course. My point is that you are focusing on the wrong part of that equation. Instead of trying to reduce inflation (which has some bad side effects), you should be worrying about how to increase median wages.

Control point is correct too--the issues is distribution, not aggregate wage growth. Find a way to redistribute and all the problems go away.

I hear you, which is why I do support a minimum wage...I didn't used to, but I've come around on that issue and it makes sense to me. I also believe in having affordable healthcare so that people performing "lower level" jobs can at least live and have the basics.

Regarding distribution, I just have a hard time taking from one class and giving to another so blatantly. I think it creates a bad culture of class warfare, and it violates equal rights among individual citizens. Plus, I hate the income tax structure today because of all the deductions, loopholes, etc that make it so complicated and require a massive gov't division (IRS) to manage and audit it.

debyne says

There is definitely the issue of eventually running out of enough "lower-level" jobs to produce what we need for this country as a result of automation and technological advancement. That means we'll have more strategic jobs to drive all this, but what do we do with all the people left? Do we force people to have less kids so that we don't have this excess labor demand?

Bullshit, 100 years ago 95% of Americans were farmers today it is less than 5%. Where is the unemployment from that?

indigenous says

Bullshit, 100 years ago 95% of Americans were farmers today it is less than 5%. Where is the unemployment from that?

That's true...the problem I stated may be something that starts to occur after our lifetimes, but I have to imagine that automation and AI will eventually get us to that point.

Bellingham Bill says

shows per-worker GDP has gone up 8X since 1970 while wages have risen 6X.

now, GDP has become increasingly cooked perhaps, adding in imputed rents and stuff that probably don't belong

Besides, total productivity increases partly becasue of technology that is from capital investment. It's understandable that the plutocrats can argue that workers aren't doing more.

The thing is, under this new reality (automation and robots) we are going to have to learn that compensation isn't always going to be for productivity that leads directly to $$ profits. People do need to be productively engaged, sometimes in ways that don't increase GDP ($$), and they need a decent share of the $$ that does come from productive profitable enterprise so that they can contribute to the demand side of the economy.

In other words we are outgrowing much of our current economic thinking.

indigenous says

Bullshit, 100 years ago 95% of Americans were farmers today it is less than 5%. Where is the unemployment from that?

Farming share of GDP was about 20% in 1914. It fell to about 10% by 1929 and remained flat until the end of WW2.

Gradually fell from there to about 1% today.

Seriously, where do you get your facts?

http://faculty.apec.umn.edu/ppardey/documents/9781441906571-c1.pdf

Figure 2-1.

This decline, by the way, is not due to falling real farm income or productivity, but rather the growth of the US economy is other areas at a much greater rate.

Figure 2-4 shows farm share of population around 30% in 1914, falling to under 1% today. Aggregate farm population peaked prior to WW2, after which automation increased productivity greatly and eliminated farm jobs.

Luckily, plenty of other industrial demand for jobs afterwards (the war effort and all) picked up the slack.

control point says

Seriously, where do you get your facts?

Seriously how does that negate my point? 1% instead of 5%, who gives a fuck, the point is that new jobs were created that employed the farmers.

marcus says

In other words we are outgrowing much of our current economic thinking.

somebody disliked you, LOL, but this video was pretty good:

https://www.youtube.com/watch?v=7Pq-S557XQU