Author Topic: Re: Klarman worried about political divide  (Read 14453 times)

LC

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Re: Klarman worried about political divide
« Reply #60 on: January 22, 2019, 10:02:54 PM »
What was incorrect about what I posted, Greg?
"Lethargy bordering on sloth remains the cornerstone of our investment style."
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LC

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Re: Klarman worried about political divide
« Reply #61 on: January 22, 2019, 10:46:44 PM »
  If you study the issue, the "deficit" on the revenue side is not due to taxing the rich less.  It is due to taxing the poor and lower middle class less.  That is the result of Republican policies.       

...

Sadly people do not realize that it is a myth that the rich are not paying taxes.  Buffett paid way more than his secretary too.   

Take a look how the gap changes post-WW2 to present, between the bottom 50% and the top 1%.
The lower deciles are being taxed to make up for top decile tax breaks.

Effective tax rates on 1 percenters may not have fallen by half, as some on the left might be tempted to imagine. But they are down by about 6 percentage points at a time when the wealthy earn a vastly larger share of the national income. That drop represents a lot of money. Moreover, as Greenberg admits, tax rates on top 0.1 percent have fallen by about one-fifth since their 1950s heights. That rather severely undercuts the idea that taxes on the wealthy haven’t fallen “much.”


There are a few obvious reasons why the taxes the rich actually paid in the 1950s were so much lower than the confiscatory top rates that sat on the books. For one, the max tax rates on investment income were far lower than on wages and salaries, which gave a lot of wealthy individuals some relief. Tax avoidance may have also been a big problem. Moreover, there simply weren’t that many extraordinarily rich households. Those fabled 90 percent tax rates only bit at incomes over $200,000, the equivalent of more than $2 million in today’s dollars. As Greenberg notes, the tax may have only applied to 10,000 families.


You'll note the approximation of ~10K families would encompass 0.000208% of US families in the mid 1950s.
The rest of the 1% and the 0.1% could breathe easy.
« Last Edit: January 22, 2019, 11:38:56 PM by LC »
"Lethargy bordering on sloth remains the cornerstone of our investment style."
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stahleyp

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Re: Klarman worried about political divide
« Reply #62 on: January 23, 2019, 06:18:37 AM »
Do you guys think that there would be so many billionaires if the government didn't have these huge deficits? How many billionaires would be around now if the government didn't act in 2008? 
Paul

MarkS

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Re: Klarman worried about political divide
« Reply #63 on: January 23, 2019, 06:41:52 AM »
Interesting clip from:  https://www.marketwatch.com/

"Wage growth has risen to a 9-year high. Unemployment remains at an 18-year low. Jobless claims haven’t been this low since 1969. And nearly half of Americans don’t owe a dime of federal income tax.

Approximately 76.4 million or 44.4% of Americans won’t pay any federal income tax in 2018, up from 72.6 million people or 43.2% in 2016 before President Trump’s Tax Cuts and Jobs Act, according to data released Thursday by the Tax Policy Center, a nonprofit joint venture by the Urban Institute and Brookings Institution, which are both Washington, D.C.-based think tanks. That’s below the 50% peak during the Great Recession. They still obviously pay sales tax, property taxes and other taxes."

Cardboard

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Re: Klarman worried about political divide
« Reply #64 on: January 23, 2019, 06:43:15 AM »
"Do you guys think that there would be so many billionaires if the government didn't have these huge deficits? How many billionaires would be around now if the government didn't act in 2008? "

So Japan and Italy must have the greatest share of billionaires per capita per your logic.

If the government had not acted in 2008, the crisis would have been different but, would have passed like every crisis. However, if you think that it would have caused a depression, it is obvious to me that the little guy would have suffered a lot more than the big buy.

By the way LC, do you have a chart on that claim:

But they are down by about 6 percentage points at a time when the wealthy earn a vastly larger share of the national income.

Cardboard


stahleyp

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Re: Klarman worried about political divide
« Reply #65 on: January 23, 2019, 07:00:33 AM »
Cardboard,

I wasn't comparing countries. The market forces here are different than Italy and Japan (along with birth rates and other social norms) and you know this.

But I'll say that yes, if the US (and various governments) didn't bail out the the economy then, yes, the number of billionaires per capita would have been very close. ;)

Paul

Tim Eriksen

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Re: Klarman worried about political divide
« Reply #66 on: January 23, 2019, 08:45:19 AM »
  If you study the issue, the "deficit" on the revenue side is not due to taxing the rich less.  It is due to taxing the poor and lower middle class less.  That is the result of Republican policies.       

...

Sadly people do not realize that it is a myth that the rich are not paying taxes.  Buffett paid way more than his secretary too.   

Take a look how the gap changes post-WW2 to present, between the bottom 50% and the top 1%.
The lower deciles are being taxed to make up for top decile tax breaks.

Effective tax rates on 1 percenters may not have fallen by half, as some on the left might be tempted to imagine. But they are down by about 6 percentage points at a time when the wealthy earn a vastly larger share of the national income. That drop represents a lot of money. Moreover, as Greenberg admits, tax rates on top 0.1 percent have fallen by about one-fifth since their 1950s heights. That rather severely undercuts the idea that taxes on the wealthy haven’t fallen “much.”


There are a few obvious reasons why the taxes the rich actually paid in the 1950s were so much lower than the confiscatory top rates that sat on the books. For one, the max tax rates on investment income were far lower than on wages and salaries, which gave a lot of wealthy individuals some relief. Tax avoidance may have also been a big problem. Moreover, there simply weren’t that many extraordinarily rich households. Those fabled 90 percent tax rates only bit at incomes over $200,000, the equivalent of more than $2 million in today’s dollars. As Greenberg notes, the tax may have only applied to 10,000 families.


You'll note the approximation of ~10K families would encompass 0.000208% of US families in the mid 1950s.
The rest of the 1% and the 0.1% could breathe easy.

I found the article you were sourcing from.  It includes payroll taxes.  Should it?  I would argue only if you then count social security and medicare as negative taxes.
Should it attribute the employer paid portion to the employee or employer??  It looks like they chose employee.  I would choose employer. 

The bottom 50% in 2014 would be those under approx. $40,000 of income.  Total AGI was 1.44 trillion total income tax paid was 45 billion.  Just over 3%. 
« Last Edit: January 23, 2019, 08:57:23 AM by Tim Eriksen »

LC

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Re: Klarman worried about political divide
« Reply #67 on: January 23, 2019, 09:37:26 AM »

By the way LC, do you have a chart on that claim:

But they are down by about 6 percentage points at a time when the wealthy earn a vastly larger share of the national income.

Cardboard

There are many.







https://inequality.org/facts/income-inequality/
https://fas.org/sgp/crs/misc/R44705.pdf
https://www.cbpp.org/research/poverty-and-inequality/a-guide-to-statistics-on-historical-trends-in-income-inequality
"Lethargy bordering on sloth remains the cornerstone of our investment style."
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LC

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Re: Klarman worried about political divide
« Reply #68 on: January 23, 2019, 09:44:09 AM »

I found the article you were sourcing from.  It includes payroll taxes.  Should it?  I would argue only if you then count social security and medicare as negative taxes.
Should it attribute the employer paid portion to the employee or employer??  It looks like they chose employee.  I would choose employer. 

The bottom 50% in 2014 would be those under approx. $40,000 of income.  Total AGI was 1.44 trillion total income tax paid was 45 billion.  Just over 3%.
The article I quoted uses the same source as the reference which you posted:

https://taxfoundation.org/taxes-rich-1950-not-high/
Quote
The graph below shows the average tax rate that the top 1 percent of Americans have faced over the last century. The data comes from a recent paper by Thomas Piketty, Emmanuel Saez, and Gabriel Zucman that attempts to account for all federal, state, and local taxes paid by different groups of Americans over the last 100 years.[2]


https://slate.com/business/2017/08/the-history-of-tax-rates-for-the-rich.html
Quote
Greenberg is not pulling his numbers out of thin air. Rather, he’s drawing them directly from a recent paper by Thomas Piketty, Emmanuel Saez, and Gabriel Zucman in which the three economists—all well-loved by progressives—estimate the average tax rates Americans at different income levels have actually paid over time. Their historical measure includes federal, state, and local levies—including corporate, property, income, estate, sales, and payroll taxes. And lest you think Greenberg is misrepresenting anything, here’s Piketty & co.’s own graph (rates on rich folks are shown in green).

The source is Piketty's paper (http://gabriel-zucman.eu/files/PSZ2017.pdf) which is the longest time series we have on income and taxation.

Quote
This paper combines tax, survey, and national accounts data to estimate the distribution
of national income in the United States since 1913. Our distributional national accounts
capture 100% of national income, allowing us to compute growth rates for each quantile of
the income distribution consistent with macroeconomic growth. We estimate the distribution
of both pre-tax and post-tax income, making it possible to provide a comprehensive
view of how government redistribution affects inequality. Average pre-tax real national
income per adult has increased 60% since 1980, but we find that it has stagnated for the
bottom 50% of the distribution at about $16,000 a year. The pre-tax income of the middle
class—adults between the median and the 90th percentile—has grown 40% since 1980,
faster than what tax and survey data suggest, due in particular to the rise of tax-exempt
fringe benefits. Income has boomed at the top. The upsurge of top incomes was first a
labor income phenomenon but has mostly been a capital income phenomenon since 2000.
The government has offset only a small fraction of the increase in inequality
. The reduction
of the gender gap in earnings has mitigated the increase in inequality among adults,
but the share of women falls steeply as one moves up the labor income distribution, and
is only 11% in the top 0.1% in 2014
"Lethargy bordering on sloth remains the cornerstone of our investment style."
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JSArbitrage

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Re: Klarman worried about political divide
« Reply #69 on: January 23, 2019, 09:58:46 AM »
Quote
This socialist crap taking a hold on the world more and more is scary as hell. Yes, let's make it less desirable to go through the difficulties and years of hard work to be successful by allowing those that succeed to keep less and less of it. And oh wait, here's the kicker, let's allow politicians, the least ethical of all humans, to decide how it is redistributed. I'm sure they won't take advantage of their position cause that never happened in history ever.

Quote

Would you risk capital in a business enterprise if you were already rich if you could lose your investment and the upside is only 15 or 20% of the pre-tax profit?  If no, what impact would that have on job creation? 

This is the main issue and something that just doesn't resonate with the pee ons because it is so farfetched to even imagine being in that position. They can't conceive it. Much easier to think "gee, doesn't come out of my pocket, and might go into my pocket. GREAT RISK/REWARD!"...

The top bracket tax rate was 70+% during the following decades:
1950s
1960s
1970s
A portion of the 1980s

These were the golden age of socialism in the USA, right watchwoord?

And nobody ever invested during those years, right Greg? Imagine! We almost missed out on Warren Buffett because he was playing the ukulele during those high-tax years.

Let's be honest here - the right wing has created a fact-free bubble around themselves and their only response is exaggerated talking points.  It doesn't matter that (a) the USA had this tax structure during boom years, (b) most countries in the Western world do this now and are very successful and (c) there isn't a single credible economist that believes the rich are over-taxed in the USA.  Facts don't matter.  What only matters is saying, "They are jealous of rich people.  The economy will crater.   It's evil socialism.  Blah, blah."