patrick.net

marcus says

When nearly all the wealth is held by a teeeeny tiny percentage who do little or nothing to earn that wealth then yes it is. Also:

Robert Reich.. OH Please.... it would be great that auto, steel, and other workers were making more while our competition from Asia was undercutting market prices on goods they were flooding the market with to take market share away from us. How long would that have lasted..

http://www.forbes.com/sites/paulroderickgregory/2013/09/12/sorry-mr-reich-your-economics-grade-is-still-f-reply-to-robert-reich-2/

Sorry, Mr. Reich: Your Economics Grade Is Still F (Reply to Robert Reich)

Third, Official U.S. data from 1964 to present reject Reich’s claim that declining employee compensation and rising corporate profits (measured absolutely or as shares of national income) cause economic downturns. Corporate profits fall (often dramatically) during economic downturns, while compensation of employees better holds its own. The employee compensation share of national income rises immediately preceding and during recessions. Reich makes claims about economic relationships with little or no regard to facts.

Fourth, I conclude that Reich does not understand wage formation in labor markets, although he was Secretary of Labor under President Clinton. Apparently such knowledge is not necessary for such a position. He seems to think that stingy corporations could pay their workers much more. He does not realize they most businesses operate in a competitive environment. If they pay more than the competitive wage, they cannot remain competitive themselves.

bgamall4 says

Wong, the people who need to be taxed are the top .1 percent, who have trillions of dollars offshore. Most companies get around high taxes in the USA and offshore profits are a problem there too.

you know little of overseas operations.. the profits overseas have already been taxed by foreign governments and are already taxed by the IRS. The amount due is the difference between the US Rates Less Foreign tax Credit.

http://en.wikipedia.org/wiki/Foreign_tax_credit

Since when do you tax the same dollar twice ? There is no trillions in Profits DUE TO THE IRS.

bgamall4 says

Wong, the guy's chart above doesn't lie. Why don't you give up.

Competition from overseas ... no it doesnt lie..

So I ask you again.. increasing pay will do what to the US industries as the Overseas

competition cuts the market prices of goods they have flooded the international markets. ?

Homeboy says

I know Rush told you it does, but he's wrong.

Ever read the National Review.. its been around for a very very long time..

If you like you can dispute Bill Clinton himself.. of Course even Patrick Moynihan

Higher taxes is just promises the Democrats cannot deliver on ...

thomaswong.1986 says

Yet, in the 1994 elections, the Democratic Party suffered historic losses.

D's tend to lose mid-term elections due to poor voter turn out. Also most people haven't got a clue what the capital gains tax rate is, only the rich care about it.

It was not a voter issue back then. Particularly on state level congressional votes which are most always about local politics.

thomaswong.1986 says

Robert Reich.. OH Please....

Posting an opinion piece is not proof. Especially one who is Tea Bagger:
http://www.forbes.com/sites/paulroderickgregory/2013/10/17/the-tea-party-victory/

That idiot thinks Obamacare is a European-style welfare program when it is anything but!

Also all those charts are actual data, not opinions on what happened and when, and only 1 of them is sourced from Reich.

tts says

D's tend to lose mid-term elections due to poor voter turn out. Also most people haven't got a clue what the capital gains tax rate is, only the rich care about it.

It was not a voter issue back then. Particularly on state level congressional votes which are most always about local politics.

They lost because they screwed up and Clinton knew it.

Everyone knows about Capital Gains and everyone uses it.
Certainly the 60% of the homeowners do...and others who have mutual funds.
There is no 1% here as some would like to claim.

tts says

Also all those charts are actual data, not opinions on what happened and when, and only 1 of them is sourced from Reich.

the criticism against Reith is a fair one. many liberals talk of unfair or declining wages yet make

no comments regarding domestic and foreign competition.

you want charts ? ... here is one ...

All I hear is a bunch of socialist nonsense in this thread.

thomaswong.1986 says

the criticism against Reith is a fair one. many liberals talk of unfair or
declining wages yet make

no comments regarding domestic and foreign competition.

Thomas--

Come on--you're smarter than this. There's another thread on here talking about how the difference between the top executive's pay and the median worker is larger than ever. And corporate profits are at record levels. Obviously foreign competition is not holding down profits or keeping executive pay down.

That explanation is BS.

tatupu70 says

Come on--you're smarter than this. There's another thread on here talking about how the difference between the top executive's pay and the median worker is larger than ever. And corporate profits are at record levels. Obviously foreign competition is not holding down profits or keeping executive pay down.

top executives are paid ALOT..yes this is true.. were the orginal founders ... no they made far far less but kept a large share in equity. Somewhere there is an offset when outsiders are hired.

you want more pay for workers.. talk to HR people about that..

the answer over foreign competition is even more obvious answer ...

how many times have you heard of a Japanese Car Maker going into Bankruptcy

due to lower sales and higher expenses ?

thomaswong.1986 says

you want more pay for workers.. talk to HR people about that..

lol. How would that conversation go. "I think the CEO making $20MM in pay/bonus/options is too much especially when you consider that he's paying the rank and file workers slightly over minimum wage."

I'm sure the HR manager would call the chairman up and recommend that the CEO salary be reduced immediately.

thomaswong.1986 says

how many times have you heard of a Japanese Car Maker going into Bankruptcy

due to lower sales and higher expenses ?

How much do Japanese car maker's CEOs make?

tatupu70 says

How much do Japanese car maker's CEOs make?

i have no idea how much they make its not an issue..

the issue is how do we selling more cars than the Japanese competition and making Toyota/Nissan less profitable. That is what the focus should be.. everything is a distraction and smoke screen from the real issue.

You make US products dominate the world markets then of course you have pricing power and room to grow costs.

thomaswong.1986 says

the issue is how do we selling more cars than the Japanese competition and
making Toyota/Nissan less profitable. That is what the focus should be..
everything is a distraction and smoke screen from the real issue.

Actually, that's not the issue at all. You initially stated that US companies can't increase pay to the rank and file because foreign competition was too fierce. Do you agree that with record profitability and CEO pay, there actually is room?

thomaswong.1986 says

The tax increases in first term did nothing to promote business activity. Perhaps you have forgotten how Capital Gains tax was cut after 1997 by Clinton which provided much needed capital to hire many workers.. "In 1997, Clinton signed a reduction in the (audible liberal gasp) capital gains tax rate to 20% from 28%." . It was after the 1997 tax cut did the

economy boom and capital spending skyrocketed.

Bullshit.

tatupu70 says

Actually, that's not the issue at all. You initially stated that US companies can't increase pay to the rank and file because foreign competition was too fierce. Do you agree that with record profitability and CEO pay, there actually is room?

My opinion is unimportant... You should find several Liberal Leaning CEOs from a publicly traded company that will agree with you and will implement lower salaries for those at the top. Perhaps they will also implement mandatory salary/wage cuts across the board when things dont reach quota.. or how about firing all if revenues/profits are not met. When things go bad only a few usually at the top get paddled.

Back in Clinton's era, Congress disqualified the expense deduction of CEOs and Officers salary above $1M. so what ever results were you seeking back than didnt change.

Today, you want to impose greater government control over the private sector pay... all for the sake of fairness. Good luck with that ?

bgamall4 says

That is a lie. Did you know that back in the 90's, 50 percent of the people lived paycheck to paycheck and now it is up to 76 percent? How high can it go before the society disintegrates, Wong?

and where did the house bubble start..Home prices only go up and up.. buy now or be priced forever.

Homeboy says

Bullshit.

so there was no cut in capital gains in 1997 ?

how do you explain the rush with over $150 Billion in Venture Capital flooding the start ups ?

https://www.pwcmoneytree.com/MTPublic/ns/nav.jsp?page=historical

thomaswong.1986 says

Today, you want to impose greater government control over the private sector
pay... all for the sake of fairness. Good luck with that ?

Nope--I'd like to see boards of directors actually become independent and their members grow a pair so they can do their job and represent the shareholders rather than the company's management.

thomaswong.1986 says

Back in Clinton's era, Congress disqualified the expense deduction of CEOs
and Officers salary above $1M. so what ever results were you seeking back than
didnt change.

Let's raise capital gains up to where they belong. That's a start.

tatupu70 says

Let's raise capital gains up to where they belong. That's a start.

why is your number better than another.. where do you peg it "belongs"? Not going to happen...

"Probably there are people in this room still mad at me at that budget because you think I raised your taxes too much. It might surprise you to know that I think I raised them too much, too."

- Bill Clinton 1995

tatupu70 says

thomaswong.1986 says

Back in Clinton's era, Congress disqualified the expense deduction of CEOs

and Officers salary above $1M. so what ever results were you seeking back than

didnt change.

Let's raise capital gains up to where they belong. That's a start.

The right number for that will always be in debate. However there is a difference between stock options (while you work at the company) and stocks bought on the open market. The stock options have no risk associated with them as you don't have to exercise them, so these gains behave more like regular income as compared to gains from regular stock purchases. Furthermore no raise of capital tax rates without eliminating all deductions and loopholes, such as mortgage interest deductions and capital gains exemption from house sales after 2 years.

mell says

Furthermore no raise of capital tax rates without eliminating all deductions and loopholes, such as mortgage interest deductions and capital gains exemption from house sales after 2 years.

LOL! Why do you hate home ownership and the American dream ?

.
.
(Psst... I do agree)

thomaswong.1986 says

mell says

Furthermore no raise of capital tax rates without eliminating all deductions and loopholes, such as mortgage interest deductions and capital gains exemption from house sales after 2 years.

LOL! Why do you hate home ownership and the American dream ?

.

.

(Psst... I do agree)

Ever since I realized the best times were those hacking years back then at Sun Microsystems when we slept in the labs, medical rooms or in our cars and weren't missing much ;)

thomaswong.1986 says

so there was no cut in capital gains in 1997 ?

Did I say that?

how do you explain the rush with over $150 Billion in Venture Capital flooding the start ups ?

Um, we were talking about JOBS. Unemployment went UP starting in 2000. Where was the job-creating effect of that cut in capital gains rate? I'm not denying that a flurry of stock market investing follows cuts in the capital gains rate; in fact I specifically mentioned that it helps the investor class. But we were talking about whether it helps the WORKING class, and no, it does not.

You seem to be having an imaginary argument with someone other than me. Did I say tax increases promote business activity? No, I simply said cutting the capital gains rate does NOT promote business activity. You are committing the fallacy of denying the antecedent. The reason to tax capital gains as ordinary income would be to balance the budget by ending preferential tax treatment for the investor class. The problem could be solved without people going hungry or dying from lack of medical care.

What happened when Clinton slightly cut the capital gains rate? The long trend of declining unemployment reversed, and people started losing jobs again for the first time in 8 years. Unemployment declined throughout Clinton's first term yet you inexplicably claim that there were no economic effects during the Clinton era until 1997. Cherry pick data much?

What happened when Bush further cut the capital gains rate? Overleveraging in the financial sector, housing bubble, Wall Street coup, and the destruction of the US economy, which has resulted in one of the worst wealth disparity situations in the world.

Trickle. Down. Doesn't. Work.

mell says

The right number for that will always be in debate. However there is a difference between stock options (while you work at the company) and stocks bought on the open market. The stock options have no risk associated with them as you don't have to exercise them, so these gains behave more like regular income as compared to gains from regular stock purchases. Furthermore no raise of capital tax rates without eliminating all deductions and loopholes, such as mortgage interest deductions and capital gains exemption from house sales after 2 years.

Or we could just tax capital gains as ordinary income. Period.

Homeboy says

Or we could just tax capital gains as ordinary income. Period.

COMMUNIST!!!

Homeboy says

You seem to be having an imaginary argument with someone other than me.

Mell does that a lot. It takes some getting used to.

Homeboy says

Or we could just tax capital gains as ordinary income. Period.

Could be a possibility if income taxes come down. But taking a risk or doing a job where you could lose all your money instead of making money is very different form a guaranteed paycheck. Furthermore stock losses would need to be able to be completely written off at once, not asymmetrical like it is now, i.e you get taxed instantly for the full amount of the gain, but you can only write off a tiny amount of losses per year. In any case I am opposed to any raises as long as there are loopholes and deductions for other types of gains and/or debt. Btw. if the market would have been allowed to correct itself in 2008 there would not be that much calls for a capital gains debate as the money possibly collected from those gains would not matter much amidst a sea of losses.

thomaswong.1986 says

many liberals talk of unfair or declining wages yet make no comments regarding domestic and foreign competition.

The Left view on this subject is that capital has too much freedom and power in and between nations and too often gets to set or even dictate its own rules to labor. Global wage arbitrage was not an issue for instance until the 70's/80's when corporations were allowed to move jobs and factories en mass to foreign nations. This was essentially a trade of long term prosperity for short term cheap goods and it has done us no good.

I have no clue what you think your chart shows but whatever you're thinking is probably incorrect. It clearly shows employment being higher until the recession hit. That jobs have not recovered since then is due to businesses taking advantage of Labor's lack of bargaining power by having less people do more. This is why productivity keeps going up even though wages have stagnated or fallen.

thomaswong.1986 says

you want more pay for workers.. talk to HR people about that..

HR takes their marching orders from the VIP's, not the other way around.

The only thing that will break the trend of people being paid less to more is for Labor to organize and demand their fair share of the pie.

The alternative is to watch America develop a massive and permanent underclass of people who are essentially viewed as disposable by the monied interests. Or in other words a return to a late 1800's/early 1900's style economy and society.

IMO were probably already about half way there.

thomaswong.1986 says

how many times have you heard of a Japanese Car Maker going into Bankruptcy

You know the Japanese mega corps get tons of assistance from the Japanese govt. right? The pretty much run the show over there, not unlike the Korean Chaebol's:
https://en.wikipedia.org/wiki/Keiretsu

They don't go to bankruptcy because they have what amounts to Too Big To Fail status, not because they're ran so well.

thomaswong.1986 says

They lost because they screwed up and Clinton knew it.

Screwed up where and on what? Clinton hadn't done a huge amount by that point, the biggest thing then was Hillarycare, which had tons of bad press by R's but never even got implemented.

thomaswong.1986 says

Everyone knows about Capital Gains and everyone uses it.

Most people don't even know how tax brackets work but you're going to claim, with no proof again, that everyone knows about capital gains taxes? Also only about half of Americans own some sort of stock, so no everyone doesn't use it.
thomaswong.1986 says

There is no 1% here as some would like to claim.

I love it when people post stuff like this. Totally discredits anything else they say for-ever.

tts says

I love it when people post stuff like this. Totally discredits anything else they say for-ever.

Agree. I try to tune-out the Foxbots and Rushbots. It's the same B.S. over and over.

Homeboy says

Um, we were talking about JOBS. Unemployment went UP starting in 2000.

That was at least partially the result of the end of the Y2K scare employment bubble. You know, when people for some reason thought that anything that used electricity would stop working on Jan 01, 2000.

tatupu70 says

Come on--you're smarter than this.

Ha! He's not called "WrongWong" for nothing.

mell says

But taking a risk or doing a job where you could lose all your money instead of making money is very different form a guaranteed paycheck

Capital gains are taxes on profits not principal. If someone is losing their shirt/house/car due to a bad stock call it won't be due to capital gains taxes. It'll most likely be due to them making a bad call and using debt to finance it.

mell says

In any case I am opposed to any raises as long as there are loopholes and deductions for other types of gains and/or debt.

There will always be loopholes and ways to abuse any tax law, particularly for the very rich, so this is at best poor reasoning.

mell says

Btw. if the market would have been allowed to correct itself in 2008 there would not be that much calls for a capital gains debate as the money possibly collected from those gains would not matter much amidst a sea of losses.

Unfortunately if the market had been allowed to correct itself back then there would be no market and the modern economy does need the market. IMO it should have been done in a better manner, by putting the bad banks in receivership and manage the bad debt over time. I know the banks/regulators claim it wasn't possible but they said the same thing to William Black back in the S&L days and it worked just fine.

More importantly though if capital gains taxes had been higher there may not have been such a bubble to begin (less money for the banks to mal-invest) with and if there had anyways it would've been smaller in magnitude and the govt. could've been redistributing the money throughout the rest of the country. Which would've allowed the US to weather a major recession in a much better fashion.

mell says

But taking a risk or doing a job where you could lose all your money instead of
making money is very different form a guaranteed paycheck.

Yes, in one case you have to sacrifice your time and energy and in the other you just sit back and make money while sipping umbrella drinks in the Caribbean.

You think money earned by sweat should be taxed MORE than money made doing nothing?

tts says

More importantly though if capital gains taxes had been higher there may not have been such a bubble to begin (less money for the banks to mal-invest) with

Why? It would have taken them just a tad bit longer, but without tail-risk nothing will change.

tts says

Unfortunately if the market had been allowed to correct itself back then there would be no market and the modern economy does need the market.

No it doesn't - DOW 6000 is also market, but one where people speculate far less, no matter what the capital gains tax is.

tatupu70 says

Yes, in one case you have to sacrifice your time and energy and in the other you just sit back and make money while sipping umbrella drinks in the Caribbean.

You think money earned by sweat should be taxed MORE than money made doing nothing?

You take money that you already earned from your sweat job and that has been already taxed to invest and you bear the full brunt of the risk. This imagery of siting in the Carribean while watching your accounts multiply is mostly just fantasy, esp. in a real market with all the tail-risk. What's next, paying and taxing people by how much you think they are sweating/thinking/working at their job? Most full-time traders I know work more than the average person and often have a second "normal" job.

That being said, I consider short-term investments and flips less productive than long-term investment that give corporations necessary capital to develop (e.g. development stage biotech), so maybe the distinction we currently have in taxing short vs. long term investments is not all that bad.

However the problem is not the capital gains tax, it's removing the tail-risk for some insiders and sectors that can blow assets bubbles that pop when retail finally gets on board, and while retail bears the full brunt of their losses, the few TBTFs caught in this as well will be bailed out by the same retail middle-class citizens - double-whammy!

mell says

You take money that you already earned from your sweat job and that has been
already taxed to invest and you bear the full brunt of the risk

Yes, and expect commensurate return for the risk. What's your point? Please give me one reason why capital gains should be taxed LESS than labor. Just one.

mell says

However the problem is not the capital gains tax, it's removing the tail-risk
for some insiders and sectors that can blow assets bubbles that pop when retail
finally gets on board, and while retail bears the full brunt of their losses,
the few TBTFs caught in this as well will be bailed out by the same retail
middle-class citizens - double-whammy!

Well, we have many problems, but capital gains tax rate is a big one. Moral hazard is way down the list, IMO. But, break up the TBTF immediately, if that's what you're worried about. I'm all for it!

tatupu70 says

You think money earned by sweat should be taxed MORE than money made doing nothing?

Absolutely. People who earn their money from labor are ASSHOLES!