The White House will soon make golf/country clubs extinct if

[David_Tepper]

Pat Mucci -

I made no comments whatsoever regarding tax rates/brackets for 2011.

Regarding 2009 and 2010, here is what appears in the Atlantic:

The Obama administration has cut taxes by more than $240 billion in the last two years, including rebate checks worth up to $800 for almost all families.  

I have no reason to believe that statement (and the information in the SF Chronicle article I have also linked) to be in error.

Regarding, the almost currently $1 trillion in cash sitting on corporate balance sheets, that is also a fact.

A new House of Representatives gets elected every 2 years, A new president gets elected every 4 years. Senators get elected every 6 years. There is always change and uncertainty. There is always risk. The "rules of the game" are always changing.

Here is another fact to consider. Obama's current approval rating is almost exactly where Reagan's and Clinton's were at the same point in their first terms.  

DT

[David_Tepper]

Pat Mucci -

As Rob Bice has quoted above:

5.  Home ownership in the US is roughly the same as it is in Canada, Australia and England where mortgage interest is not deductible

Perhaps what got us into the this mess in the first place is that too many people starting thinking of their homes as "business" and not just a place to live. The fact is that, up until the past 15-20 years, the prices of residential real estate (in the country as a whole) barely kept up with inflation and owning a home was a mediocre investment at best.

DT

[A.G._Crockett]

"the declining marginal utility of income." 

Which is just another way of saying "the increasing confiscatory appetite of government."

No, it isn't.  THE critical function of the progressive marginal income tax is NOT to fund govt. programs; ANY tax structure could adequately do that.  It IS to act as a powerful counter-cyclical automatic stabilizer that pulls money out of the economy in boom times, and leaves money in the economy in down times without elected officials having to take action.  A flat tax or a national sales tax would do that much, much less effectively, especially given the knee-jerk reaction of Americans like yourself to any sort of tax increase.

I do like the comparison to the "pigment tax", though.  It is SO silly that it tops any of your previous efforts at tortured analogies, and that's saying something.

 

[A.G._Crockett]

Pat Mucci -

I made no comments whatsoever regarding tax rates/brackets for 2011.

Regarding 2009 and 2010, here is what appears in the Atlantic:

The Obama administration has cut taxes by more than $240 billion in the last two years, including rebate checks worth up to $800 for almost all families.  

I have no reason to believe that statement (and the information in the SF Chronicle article I have also linked) to be in error.

Regarding, the almost currently $1 trillion in cash sitting on corporate balance sheets, that is also a fact.

A new House of Representatives gets elected every 2 years, A new president gets elected every 4 years. Senators get elected every 6 years. There is always change and uncertainty. There is always risk. The "rules of the game" are always changing.

Here is another fact to consider. Obama's current approval rating is almost exactly where Reagan's and Clinton's were at the same point in their first terms.  

DT

I'd add two things.  First, Obama's approval ratings (which are very normal for this point in his first term) look even better when compared to Congress, which has ratings hovering in the low 20's.  That gap is one of the biggest ever seen, and reflects a very cynical political climate in general.  Obama's ratings actually look reasonably good if viewed that way.

Secondly, Reagan and Clinton are the only two term presidents in the last 50 yrs. to leave office with approval ratings above 50%.  This has become the nature of American politics; presidents are most popular immediately following election, then consistently fall throughout their first term, have an upswing while they run for reelection (probably because they are facing a flesh and blood opponent rather than an unreachable standard of some sort), then decline through their second term IF there is one. 

It has become a very nasty business.

[Patrick_Mucci]

Pat Mucci -

As Rob Bice has quoted above:

5.  Home ownership in the US is roughly the same as it is in Canada, Australia and England where mortgage interest is not deductible

You can't compare just one element in four different tax systems ?

Perhaps what got us into the this mess in the first place is that too many people starting thinking of their homes as "business" and not just a place to live. The fact is that, up until the past 15-20 years, the prices of residential real estate (in the country as a whole) barely kept up with inflation and owning a home was a mediocre investment at best.

David,

What helped get us into the "home" problem was no money down, low rates and banks lending to people who couldn't repay the bank

[Patrick_Mucci]

A.G.

Which begs the question, why would anybody want to run for office ?

Especially with the media just dying to find something to embarrass the candidates.

The other trend I don't like is when the moderators start taking the place of the candidates in the debates.

The ONLY popularity opinion that counts, resides within the tally of the votes.

I'm not particularly inspired by the choice of candidates, but again, who wants to run for office ?

[Dan Herrmann]

Our best citizens typically don't run.  We all know why.

Personally, I think the problem is that candidates are spending $10,000,000 and up for a congressional seat that pays about 150K per year.

Obviously pay to play reigns in both parties.  We have some great folks but a lot of crooks and cooks in office.  What a shame.

I loved the Oregon way.  Their legislature was in session for 6 months every two years.  My friend's father-in-law was the Senate majority leader, but his "real" job was optometry  State Senator one week, fitting me for glasses the next - a true citizen legislator.

Patrick - we all hate taxes, but we need to pay down our debt incurred in the last 12 years and added to by both parties.  Plenty of fault to go around - we now need solutions.   Only the future can be changed.

[David_Tepper]

Pat -

I firmly believe believe the notion that Dodd & Frank "strong-armed" the banks into making no money down loans is, at best, a half-truth. Look where many of the defaulted, foreclosed homes are. They are in Nevada and Arizona, hardly states with urban, inner-city neighborhoods.

Banks, S&L's, mortgage brokers etc. lenders were strongly motivated to make these and every other mortgage loan for the upfront fees they could earn. They could then sell the mortgages off to someone else and not have to worry about if they ever got repaid. The gross incompetence of Standard & Poor's and Moody's in giving these mortgage-backed securities investment-grade ratings borders on criminal negligence.

Regarding the estate tax, I think the limit should be raised to $3 or $5 million. Don't forget that, under the past and likely future estate tax, beneficiaries receive a huge tax perk in that they get a stepped-up basis on the assets they inherit.

If entrepreneur/businessman Joe Blow dies with a million shares of stock in his company that has a cost basis of $5 a share and is worth $100 at the time of death, the new cost basis for the beneficiaries is $100. Paying capital gains tax on the appreciation from $5 to $100 per share is avoided entirely.

If the estate tax would be eliminated permanently, the stepped up basis option will be eliminated as well.  The people who inherit shares worth $100 would also inherit them with a cost basis of $5 and would have to pay a sizable capital gains tax if they ever sold those shares in the future.

In any case, we are talking about a tax that applies to well under 5% of the population.

As far as why anyone should want to run for office, Meg Whitman is now spending over $100,000,00 of her own money to run for the governorship of California. You should call her up and ask her why!

I have enjoyed exchanging facts, opinions and witty repartee with you, Shivas and others on this topic. At this point, there is nothing further I can add. My fingertips are blistered from typing!

Best to all!

DT              

[A.G._Crockett]

Our best citizens typically don't run.  We all know why.

Personally, I think the problem is that candidates are spending $10,000,000 and up for a congressional seat that pays about 150K per year.

Dan,
A slight edit: Special interests are spending $10m and up for a congressional seat.  McCain-Feingold took a shot at fixing some of this, but the Supremes have basically killed that with the artificial person-free speech ruling on corporate contributions.  (Which by the way, I don't really disagree with.)

I'm not sure what the fix for this is, but there needs to be one.  This is, I think, at or near the heart of our problems.

[A.G._Crockett]

A.G.

Which begs the question, why would anybody want to run for office ?

Especially with the media just dying to find something to embarrass the candidates.

The other trend I don't like is when the moderators start taking the place of the candidates in the debates.

The ONLY popularity opinion that counts, resides within the tally of the votes.

I'm not particularly inspired by the choice of candidates, but again, who wants to run for office ?

I don't know why anybody would want to run for office; ambitions drive us all, but in that arena there seem to be so many negatives.  The presidency has become a monstrosity, especially; too big of a job, too high of a set of expectations, a cannibalistic media, a disloyal opposition party (whichever one it happens to be) and a public too distracted and apathetic to seek and digest information in longer than 30 sec. sound bites. 

[Patrick_Mucci]

Pat -

I firmly believe believe the notion that Dodd & Frank "strong-armed" the banks into making no money down loans is, at best, a half-truth. Look where many of the defaulted, foreclosed homes are. They are in Nevada and Arizona, hardly states with urban, inner-city neighborhoods.

David, it was systemic

Banks, S&L's, mortgage brokers etc. lenders were strongly motivated to make these and every other mortgage loan for the upfront fees they could earn. They could then sell the mortgages off to someone else and not have to worry about if they ever got repaid. The gross incompetence of Standard & Poor's and Moody's in giving these mortgage-backed securities investment-grade ratings borders on criminal negligence.

There were many mistakes made by many people, including the mortgagee.

Regarding the estate tax, I think the limit should be raised to $3 or $5 million. Don't forget that, under the past and likely future estate tax, beneficiaries receive a huge tax perk in that they get a stepped-up basis on the assets they inherit.

If entrepreneur/businessman Joe Blow dies with a million shares of stock in his company that has a cost basis of $5 a share and is worth $100 at the time of death, the new cost basis for the beneficiaries is $100. Paying capital gains tax on the appreciation from $5 to $100 per share is avoided entirely.

I'm afraid your in error on this.
That Buesinessman's estate would have to pay $ 55,000,000 in estate taxes.
I'd hardly call that getting off free.

But, what you don't understand is the following, and it's worse.
With the stock tied up in a closely held company, where is the estate going to get $ 55,000,000 ?

And, they only have nine (9) months to get it.

This thriving business, that employs hundreds of people, that was the product of that man's efforts  is going to have to be liquidated in order to raise the cash to pay those estate taxes, effectively putting all of those employees out of work and killing a vibrant business that generates substantial individual and corporate tax revenue.

If the estate tax would be eliminated permanently, the stepped up basis option will be eliminated as well.  The people who inherit shares worth $100 would also inherit them with a cost basis of $5 and would have to pay a sizable capital gains tax if they ever sold those shares in the future.

That's also not true.
If the estate tax were repealed they were going to eliminate the step up in basis provisions

In any case, we are talking about a tax that applies to well under 5% of the population.

The most productive 5 %

The estate tax is A tax that kills businesses and puts people out of work, a tax that's a double tax.
That man worked hard, built up a successful business and paid income taxes every year, and now, you want to confiscate his efforts, his wealth and destroy a business.  WHY ?  To punish those who worked hard all of their lives and were successful ?

As far as why anyone should want to run for office, Meg Whitman is now spending over $100,000,00 of her own money to run for the governorship of California. You should call her up and ask her why!

I did, and she told me to ak you

I have enjoyed exchanging facts, opinions and witty repartee with you, Shivas and others on this topic. At this point, there is nothing further I can add. My fingertips are blistered from typing!

Best to all!

DT              

[Noel Freeman]

Here is what gets me.. I'm so sick of people talking about the Wall St. Bailout.  Outside of Citibank which the government has to IPO off its holdings or sell somehow, the govt is free of its stakes in the large Wall St. banks and it made a profit! Hello, a profit!

[Adam Clayman]

Come on Pat, and others, Let us in on your ideas for fixing any, or all, of this mess?

[Jud_T]

NF,

Thank you! Someone out there gets it!  I also get sick of hearing how Wall Street caused the financial crisis.  Wall Street did what it does best, made money within the letter of the law.  The Government had plenty of regulatory power pre-fin reg and dropped the ball by not being on top of the situation and doing their job frankly.  Your tax dollars at work.  For all those over the age of 35 who wonder why we all cringe at the thought of bigger taxes and more government, it's more than simple greed.  It's because government is the least efficient use of capital....

[Bill_McBride]

NF,

Thank you! Someone out there gets it!  I also get sick of hearing how Wall Street caused the financial crisis.  Wall Street did what it does best, made money within the letter of the law.  The Government had plenty of regulatory power pre-fin reg and dropped the ball by not being on top of the situation and doing their job frankly.  Your tax dollars at work.  For all those over the age of 35 who wonder why we all cringe at the thought of bigger taxes and more government, it's more than simple greed.  It's because government is the least efficient use of capital....

And yet you would have them regulate Wall Street?

[Mike Sweeney]

Here is what gets me.. I'm so sick of people talking about the Wall St. Bailout.  Outside of Citibank which the government has to IPO off its holdings or sell somehow, the govt is free of its stakes in the large Wall St. banks and it made a profit! Hello, a profit!

Noel,

The Federal Reserve rushed to the assistance of the banking sector by guaranteeing banks' debt, intervening in capital markets, and slashing banks interest rates to zero. In essence, the government altered the banking environment (Goldman Sachs switched to a bank in something like 3 days time during the crisis) so that it would be astonishingly easy for the banks to profit and thus earn their way out of trouble.

I am glad The Fed did it and Bernanke has done a great job, but for those of us that pay interest on a loan at market rates and had credit lines pulled during the crisis by the banks that got free money, it does not look like genius to us.

The capital and credit markets for small companies are still backed up, and it was not "Wall Street" that did it, it was your institution (which my brother also works for, so don't take it personally) and about 10-12 others that did this. The growth of this economy. specifically jobs, has been and will continue to be the small business and Obama does not seem to get that.

[Tim Martin]

NF,

Thank you! Someone out there gets it!  I also get sick of hearing how Wall Street caused the financial crisis.  Wall Street did what it does best, made money within the letter of the law.  The Government had plenty of regulatory power pre-fin reg and dropped the ball by not being on top of the situation and doing their job frankly.  Your tax dollars at work.  For all those over the age of 35 who wonder why we all cringe at the thought of bigger taxes and more government, it's more than simple greed.  It's because government is the least efficient use of capital....

Tell that to Lehman Bros. and Bear Stearns.

[PThomas]

did anyone just watch "60 Minutes"?  they had a segment including David Stockman which talked about one of my points, how the "anti-tax" train of thought has almost become a mantra for both parties

we have to pay for things folks..I still have not seen anyone on this thread, i dont think, discuss how we can meaningful gov cuts without taking on the military, Soc Sec, etc...

they talked to the Gov of Washington who said she cannot cut state spending anymore, which is why there is a voter initiative to tax highest incomes more there

the gap between the wealthiest and the rest of us in this country is at its largest point ever, I believe....maybe it is time that those individuals start paying more..

[Jud_T]

Paul,

I saw the segment.  I agree that we do need to take on Social Security and Military spending to make a real dent in the budget.  Taxing the wealthy is fine until they and/or their assets and businesses either leave the country for good or simply aren't wealthy anymore.  I think the UK had a top tax bracket of something like 90% at one point.  Everyone simply left the country and now they're in worse shape than ever...

[PThomas]

i'm not saying go back to 90% Jud, just somewhat more than what they currently do

[Jud_T]

Ah, but it's a slippery slope.  What exactly is the right amount?

[PThomas]

Ah, but it's a slippery slope.  What exactly is the right amount?

i dont know Jud....what was that thing Stockman discussed, a one time 15% tax on the welathy to cut the debt in half he thinks??

i

[A.G._Crockett]

Paul,

I saw the segment.  I agree that we do need to take on Social Security and Military spending to make a real dent in the budget.  Taxing the wealthy is fine until they and/or their assets and businesses either leave the country for good or simply aren't wealthy anymore.  I think the UK had a top tax bracket of something like 90% at one point.  Everyone simply left the country and now they're in worse shape than ever...

Curious as to why you say "take on Social Security".  The issue with SS is the long-term viability of the trust fund; SS is NOT paid out of annual budget tax revenues.  Defense is another matter; we now spend more on the military than ALL other countries in the world combined, I believe, or close to it. 

It is interesting that Stockman would say this, given that he in many respects is at least partly responsible for the start of the anti-tax mantra in this country.  He later disavowed the Laffer Curve for the U.S. because our marginal rates were already so low, but too little too late. 

As to raising rates, you can already hear the howling as we consider simply going back to what we did prior to Dubya, with the top rate at 39.6 instead of 35.  Don't know if that would move the margins back as well; the Bush cuts raised the margin on the top bracket by about $60k in addition to the rate drop, which was a massive windfall in the top brackets.

[Bill_McBride]

Here is what gets me.. I'm so sick of people talking about the Wall St. Bailout.  Outside of Citibank which the government has to IPO off its holdings or sell somehow, the govt is free of its stakes in the large Wall St. banks and it made a profit! Hello, a profit!

Noel,

The Federal Reserve rushed to the assistance of the banking sector by guaranteeing banks' debt, intervening in capital markets, and slashing banks interest rates to zero. In essence, the government altered the banking environment (Goldman Sachs switched to a bank in something like 3 days time during the crisis) so that it would be astonishingly easy for the banks to profit and thus earn their way out of trouble.

I am glad The Fed did it and Bernanke has done a great job, but for those of us that pay interest on a loan at market rates and had credit lines pulled during the crisis by the banks that got free money, it does not look like genius to us.

The capital and credit markets for small companies are still backed up, and it was not "Wall Street" that did it, it was your institution (which my brother also works for, so don't take it personally) and about 10-12 others that did this. The growth of this economy. specifically jobs, has been and will continue to be the small business and Obama does not seem to get that.

Why should banks take any risk when they can borrow from the Fed at close to 0% and use that money to buy Treasury notes?  No risk and a decent margin.  This continues to stifle small business growth and commercial development and construction.  (You don't want to know how I know).  There should have been some more productive strings attached to those TARP loans in my opinion.

[RJ_Daley]

Pat, I'm a little disappointed in you that you used a slight of hand in your post 287 regarding your littany of all the tax increases you attribute to Obama/Reid/Pelosi.  That is just a tactic that I suppose the internet trolls employed as teahadist sort of skew to not accept the real story on the 2011 return to tax rates prior to the sunset provisions enacted.

Effective in 2011, Obama/Reid/Pelosi have increased the taxes and the tax rates as follows

1 - The lowest bracket for the personal income tax is going to increase from 10 percent to 15 percent.

I think you know better and how and why the sunset provisions were placed in the 2001 and 2003 tax bill.  The bill was recognised from its inception as "significantly adding to the federal deficit" over 10 years, which was the restriction of the Byrd rule or PAYGO.  They had to sunset it to meet the PAYGO rule.  Obama, Reid, Pelosi did not cause the taxes to go up in 2011, the congress of 2001 did, and signed by Bush!  And, the theory was to risk the hit to the deficit because the tax savings, particularly the wealthy "captians of industry" would re-invest in America.  So, they decided to lower the tax burden to even lesser earners down to 12K earnings, with a lower 10& from 15% lowest bracket.  They got more working poor to have a tax obligation, and all other brackets got 3% lower, except the most wealthy, who got 4.5%!!!


Now it is widely understood that Obama is proposing to allow only the wealthy brackets tax cut temporary benefit scheduled to sunset, to actually expire, and allow the lower, more in-need of the tax relief middle and lower income brackets to keep those 3% savings.