Socialism vs. Democracy?

cassandra

Thu, Oct 30 2008, 7:45 pm

That isn't his main target, it's one target. The reason capital gains are lower is because economies function better when their stock market is healthy. And stock markets are only healthy when people who have money invest their money in the stock market. And the stupidest thing to do in an ailing market is penalize people for investing. Obama said as much himself recently when he said he would delay a capital gains tax increase in two years.

I don't understand why people think a country without wealthy people is Valhalla. Try to imagine living in a country with a perpetually sick market where the majority of citizens never have any hope for self-sufficiency because a situation was created where the government supports them and they can never get out of it. Why is this paradise? Because in the short term they can buy a new car or get a free throat culture?

chavamom

Thu, Oct 30 2008, 7:52 pm

No one wants to eliminate the wealth of the wealthy. Countries that encourage investment by decreasing capital gains taxes see a widening gap between the wealthy and the poor and an elimination of the middle class - for a microcosmic view, look at what has happened since Israel followed our lead and pursued such policies. The country's wealth becomes increasingly concentrated in the hands of the top 1% of wealthy individuals, the poor become poorer and the gap between the two widens. Israel followed the US down this same bad path. For every year since the institution of such "trickle down" policies, an increasing percent of the GDP has been concentrated in the hands of the top 1% while the middle class fares worse each year.

Yeah, I'm sure we want to continue the plunge down that road.

mugsisme

Thu, Oct 30 2008, 9:13 pm

OK, so another quick question here. Say a person makes $200,000 a year. Let's say they are taxed at 30%. (I am just making up these numbers because I am not good at math and these ones are easier for me to deal with than the actual numbers, OK?) So Person A pays $60,000 tax a year. But we raise the tax they owe to 40%. They are now paying $80,000 a year in tax. Meanwhile, Person B makes $50,000 a year, and they taxed at 10%. They pay $5,000 a year in taxes. There is a tremendous difference in the amount of money generated by the taxes Person A pays vs the amount Person B pays, right? Even with the first plan, they were paying the same amount that 12 persons B's pay. Raising the tax, and giving the extra money generated to Person B just doesn't seem fair to me. Where is the incentive to make more money? Why should Person A try to make $200,000 this year, if they are just going to pay more taxes. In fact, if they work less hours, and only makes $180,000, they are going to be taxed at the lower rate, pay less taxes, and keep more of their own money. At least, that is what it seems like to me.

Now, I have a friend who owns a children's clothing company. It is a small business with only a few employees. This year her husband made her LLC because she hadn't done that yet. She told me that 50% of her profits went to taxes after she incorporated. She was really upset, because if she raised her prices, she still wouldn't make more money really. Because 50% of whatever she makes goes to pay taxes. One of the things that has been mentioned is that small businesses will see an increase in their taxes. (I read it my local paper two weeks ago, so I don't have a link.) Rather than pay more taxes, she may end up letting go one of her employees. This is what she has told me. So now, this guy is going to get $500 or $1000 from the new tax system, but he will be out of a job. So how long until that money is eaten up?? Is it worth it for him? I don't think so. I am hearing it a lot. Businesses are leary, because they worry about getting hit with higher taxes.

The really wealthy people in this country are being taxed at what? 32% right now? The middle classes are taxed much lower. And as was pointed out, the revenues generated by that upper class is paying more than all of the middle and lower class combined.

I think that it penalizes people for doing well. I believe that I have also read in some books that in Russia, people often think, I can go to work and actually work and get paid X amount of money. Or I can go to work and goof off, and still make my money. It seems like there is no incentive to succeed.

~Leah

Chani

Thu, Oct 30 2008, 9:19 pm

We definitely need to lower the corporate tax rate, and here's why:

A high (and the U.S. currently has the second highest corporate tax rate in the world) corporate tax rate discourages investment. Let's face it - it is a global economy. By imposing a high corporate tax rate, you're forcing American companies to compete with one hand tied behind them, so to speak. In fact, other countries recognize this, and the general trend internationally is to lower corporate tax rates. In fact, by reducing the tax rate, but stimulating business, we might find ourselves in the position of actually INCREASING the overall revenues to the government. This isn't a pipe dream - this has been the actual result in several countries who've taken this action.

High corporate tax rate = loss of American jobs and wealth.

BinahYeteirah

Thu, Oct 30 2008, 10:17 pm

mugsisme wrote:

Now, I have a friend who owns a children's clothing company. It is a small business with only a few employees. This year her husband made her LLC because she hadn't done that yet. She told me that 50% of her profits went to taxes after she incorporated. She was really upset, because if she raised her prices, she still wouldn't make more money really. Because 50% of whatever she makes goes to pay taxes. One of the things that has been mentioned is that small businesses will see an increase in their taxes. (I read it my local paper two weeks ago, so I don't have a link.) Rather than pay more taxes, she may end up letting go one of her employees. This is what she has told me. So now, this guy is going to get $500 or $1000 from the new tax system, but he will be out of a job. So how long until that money is eaten up?? Is it worth it for him? I don't think so. I am hearing it a lot. Businesses are leary, because they worry about getting hit with higher taxes.

Now, maybe there are things I just don't understand about corporate taxation, but I don't get this example. How will letting go of employees help a person's business long term? The taxes are only taken out of the PROFIT that business makes, right? So if a person lets an employee go, thus "saving" that employee's salary, then that "extra" money becomes profit and will be taxed. So how does that help? The employee's salary and benefits are costs of running the business that will be subtracted from the revenue before the profits are calculated. In addition, presumably, the more employees a business has that it can use helps the business make more money. Also, can't your friend (or "Joe the Plumber") pay herself a salary. Then she will be taxed at the income tax rate for income at that level. Yes? No?

mugsisme wrote:

I think that it penalizes people for doing well. I believe that I have also read in some books that in Russia, people often think, I can go to work and actually work and get paid X amount of money. Or I can go to work and goof off, and still make my money. It seems like there is no incentive to succeed.

This is where I think the argument gets a little silly. Just changing a couple tax codes and instituting socialized medicine is not going to turn this country into the USSR. All a person has to do is say the word "Socialism" and Americans start thinking "Communism". Don't forget, America does not have a purely capitalist economic system. It is what is called a "mixed economy", that is an economy with both socialist and capitalist elements. Adding one or two more socialist elements is not going to transform us into a bunch of Reds. We already have a number of socialist programs in place and many people are still managing quite well to make the big bucks.

I personally feel that a reasonable level of social assistance programs actually helps people to succeed. Having a national healthcare plan may mean, for example, that a serious illness or accident , CV"S, will not be a financially ruining event for the thousands of uninsured Americans. Having national education programs may mean that people who had no chance to get an education will. Etc. Etc.

Higher taxes and more social programs do not stop Australians from having the drive to succeed. In fact, I would say that the overall standard of living is higher here that in the US.

Last edited by BinahYeteirah on Thu, Oct 30 2008, 10:25 pm; edited 1 time in total

Chani

Thu, Oct 30 2008, 10:19 pm

I missed you too, Clarissa! Smile

Quote:

A mediocre country like the USA of the 50's and 60's when the rich were rich and the middle class got ahead.

Hmmm...I'm not so sure that you want to pick the 1950's. How about that 6% unemployment in 1954? 7.5% in 1957? BTW, in the prosperous 1960's, guess what Kennedy did to jump start that prosperity? You guessed it - he reduced the tax burden on businesses. Specifically, he enabled businesses to get a bigger break on the depreciation of physical assets (e.g. factories) and gave businesses a 7% investment tax credit.

In general, I think the people of today (even given the last month's events) are far better off than the average citizen at anytime in the 1950's or 1960's. I'd suggest looking at the GDP (gross domestic product) per capita and you'll see a steady decrease over time in the percentage of the average unskilled laborer's wages which has to go to necessities. We just don't seem to feel it, because yesterday's "wants" are today's "needs". Houses are bigger, families have more than a single car, people take vacations to Europe, eat out in restaurants rather than cooking in, etc etc at a pace that far far surpasses what was done in the 1950's. The average person today lives like the rich person of yesteryear.

Anyhow, the oven's buzzing, so must run...

cassandra

Thu, Oct 30 2008, 10:31 pm

Chani wrote:

McCain made this exact point in the first debate but nobody heard it because they were too busy gawking at Obama's composure. So instead McCain jumped the shark and stopped making intelligent arguments altogether, even though there are many to be made.

McCain had to win this race with one arm tied behind his back too, which is probably especially hard for him considering the Vietnamese broke his shoulders and all. Welcome back Chani, I need your knowledge and intellect here. I've only been winging it.

cassandra

Thu, Oct 30 2008, 10:45 pm

Clarissa wrote:

cassandra wrote:

McCain made this exact point in the first debate but nobody heard it because they were too busy gawking at Obama's composure.

Please, please give people credit for something beyond appreciating his composure. You have to stop calling everybody stupid, even if you don't use the word stupid, Cassandra.

Read the New York Time's endorsement of Obama: "Mr. Obama has met challenge after challenge, growing as a leader and putting real flesh on his early promises of hope and change. He has shown a cool head and sound judgment." Christopher Buckley endorsing Obama: "He has a first class intellect and a first class temperament."
Read the New Yorker's endorsement of Obama. Time Magazine's cover story two weeks ago asked to what extent composure is important in a presidency (Shocking answer: they said very).

Clarissa

Thu, Oct 30 2008, 10:47 pm

cassandra wrote:

Clarissa wrote:

cassandra wrote:

McCain made this exact point in the first debate but nobody heard it because they were too busy gawking at Obama's composure.

Please, please give people credit for something beyond appreciating his composure. You have to stop calling everybody stupid, even if you don't use the word stupid, Cassandra.

Read the transcript of Colin Powell's endorsement. Will you dismiss him, as well?