Author Topic: Re: Klarman worried about political divide  (Read 14488 times)

wachtwoord

  • Hero Member
  • *****
  • Posts: 1404
Re: Klarman worried about political divide
« Reply #90 on: January 23, 2019, 06:41:39 PM »
Can someone please explain to me why higher wages are taxed at a higher percentage. A static percentage of a higher amount already is more. Making higher incomes pay more is sort of acceptable but why does it have to be exponential rather than linear? Why is that considered "normal" these days?

Practically? Because society runs more smoothly without a starving class.

Philosophically? Because IMO on average, higher income individuals get more marginal utility from public goods. I'm not sure I can prove this though - but it makes intuitive sense to me. Reliable transportation generates more revenue to Walmart Co., than Joe the Walmart employee.

No comment on the VAT as I don't really understand the nuances. Wouldn't Buffett, for example (insane wealth, frugal lifestyle) have a minimal VAT liability? How does it deal with dynastic wealth?


Also I think I keep mixing up this thread with the other active thread on income inequality. Although one could argue that politicial divisiveness and income inequality are related, frankly I am more concerned about a plutocracy.

Thanks for the clear answer. Do you think it makes philosophical sense to you because you have been brought up with the notion?

I don't think this is the only way to avoid a large starving underclass however (through a smaller government and less regulation causing less parasitic business types).

I would (philosophically) prefer there to be generally larger wealth inequality between the bottom of society and the middle class (at least in north west Europe). I think the wealth levels of these two classes lie too close which unfair considering what the middle class adds to society.
« Last Edit: January 23, 2019, 06:46:35 PM by wachtwoord »
"Beware of he who would deny you access to information, for in his heart he dreams himself your master"


LC

  • Hero Member
  • *****
  • Posts: 3801
Re: Klarman worried about political divide
« Reply #91 on: January 23, 2019, 07:15:53 PM »
Thanks for the clear answer. Do you think it makes philosophical sense to you because you have been brought up with the notion?

I don't think this is the only way to avoid a large starving underclass however (through a smaller government and less regulation causing less parasitic business types).

I would (philosophically) prefer there to be generally larger wealth inequality between the bottom of society and the middle class (at least in north west Europe). I think the wealth levels of these two classes lie too close which unfair considering what the middle class adds to society.
On the first part, no I think it is actually due to my involvement in business valuation, investment research, whatever you call it. US corporations, the uber-wealthy, are the indirect beneficiaries of many "free" social components. Rule of law, for example. A strong education system, a gov't supported 8hr workday (which has become a social norm) is another...there are many more. I'm not sure if there's a word for it, but call it the opposite of "externalities".  In both cases, (positive and negative externalities), these are just really difficult to quantify.

On the second point, I don't know. Maybe there are other ways. In general I try to abide by the "rising tide lifts all ships" notion. But the last 20 years or so, it seems the "rising tide" is only lifting some of the ships. The question is why, and how to "fix" it. Generally I think the answer lies in providing equal opportunity. The concentration of resources in a select few seems to be counterproductive to that end.

On the third, I agree. Makes sense to me. Essentially I think a strong middle class is a better scenario than a society with peaks in the wealthy and poverty areas of the graph.
« Last Edit: January 23, 2019, 07:47:03 PM by LC »
"Lethargy bordering on sloth remains the cornerstone of our investment style."
----------------------------------------------------------------------------------------
ads | brk.b | irm | mmm | mo | nlsn | pm | pypl | v | wm

LC

  • Hero Member
  • *****
  • Posts: 3801
Re: Klarman worried about political divide
« Reply #92 on: January 23, 2019, 07:32:21 PM »
Tim that simply does not convince me. To me it is a tax on 120K of income for benefits that almost all citizens receive. I think the benefit should be counted as income in any analysis, but I don't see how the paper we are referencing did not do so. Additionally, the study used IRS tax receipts which would have counted such benefits in most cases. Whether it is counted as income or a negative tax is inconsequential. Your other contentions may be true but still does not change the fact that it is a tax. Or do you propose we itemize every public benefit and only count the ones which the wealthy receive "adequate" utility, and attribute a portion of their tax bill towards those items?
« Last Edit: January 23, 2019, 07:34:24 PM by LC »
"Lethargy bordering on sloth remains the cornerstone of our investment style."
----------------------------------------------------------------------------------------
ads | brk.b | irm | mmm | mo | nlsn | pm | pypl | v | wm

LC

  • Hero Member
  • *****
  • Posts: 3801
Re: Klarman worried about political divide
« Reply #93 on: January 23, 2019, 08:05:52 PM »
Payroll taxes are used to fund individual benefits..not things for the common good.

This is not quite true. Can I withdraw from payroll taxes? No- it is forced saving to ease a future societal burden of caring for the daily needs and health costs of older generations.

If we had universal healthcare, would we consider a certain percent of our tax burden "not really a tax?"
"Lethargy bordering on sloth remains the cornerstone of our investment style."
----------------------------------------------------------------------------------------
ads | brk.b | irm | mmm | mo | nlsn | pm | pypl | v | wm

JSArbitrage

  • Lifetime Member
  • Full Member
  • *****
  • Posts: 236
Re: Klarman worried about political divide
« Reply #94 on: January 24, 2019, 04:50:33 AM »
"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.""

If you have ideas on how to solve this, why don't you explain them to us?

Cardboard

My best approach?  If it's not your wheel house, leave it to the experts.  That's not to say everyone can't have a viewpoint and discuss it (it's a very fun source of recreation.)  But when it comes to actually implementing policies in real life, understand we have no idea what we are talking about (relative to the experts.)  Let's treat our votes the same way we treat our body - find the experts and follow their advice.  (Think of it as indexing for politics - understand you probably can't beat the market and act accordingly.)

If you wanted to know about medicine, I assume you'd ask a doctor.  I also assume you'd want to ask a doctor that was educated at an elite medical school (all things being equal).  Just do the same for every other field.

Bill O'Reilly nor Sean Hannity are economists.  Neither is Donald Trump.  Nor is Larry Kudlow.  Why don't we listen to Krugman, Stiglitz, Bernanke, Rogoff, Summers?  All elite trained economists.  Even Bernanke, a staunch Republican economist, came out and said income inequality is a big problem.   Why?  Because the data is blatantly obvious. 

I mean - there is literally someone in this thread bragging that they don't listen to Ivy League economists.  In what other field is this not a completely laughable thing to say?  "I don't listen to no Ivy League doctors!"  "I don't listen to no Ivy League mathematicians!" "I don't listen to no Ivy League Computer Science professors!"  That's where the problem arises. 


Cigarbutt

  • Hero Member
  • *****
  • Posts: 1898
Re: Klarman worried about political divide
« Reply #95 on: January 24, 2019, 05:45:01 AM »
^Delegation of authority and decision-making is a risk-reward decision.
IMHO, listening to "experts" can lead one on the wrong path.
Perhaps useful to listen to experts and also to the average Joe who lost his job due to technology and globalization and to focus on a fact-based analysis.

1-On the shifting tax "share" and on experts
https://taxfoundation.org/top-1-percent-pays-more-taxes-bottom-90-percent/

The Tax Foundation are experts with a bias. It does not mean they should not be listened to.
They show a convincing tax share shift to the top earners and focus on tax credits. They conveniently forget though to include social insurance taxes. When one adjusts for that omission, the shift still persists but is less significant.

2-On the composition of federal revenue and distribution of the tax burden
https://fas.org/sgp/crs/misc/R45145.pdf
Figures 5, 6 and 7 are useful.
Corporate tax has come down and, to "compensate", "social" taxes and individual income tax have increased but the proportion between the two taxes has not changed much.

3-On the topic of social taxes, progressive or regressive?
The link above in 2- (like many tax-related work out there) indicates that social taxes are regressive (true from the mathematical standpoint). But, when one analyzes this tax within a greater perspective, these "programs" are progressive in nature.
https://www.cbpp.org/research/federal-tax/policy-basics-federal-payroll-taxes


Cardboard

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 3306
Re: Klarman worried about political divide
« Reply #96 on: January 24, 2019, 05:53:37 AM »
"My best approach?  If it's not your wheel house, leave it to the experts. "

So basically leave the decision to somebody because they have the solution but, the solution is unknown.

Seriously, you think that Ocasio-Cortez is an expert and has the solution? Or is she just using her gut feel like Donald Trump and in turn proposing something that makes her popular with the unprivileged?

I am trying to have an intelligent discussion and I think that the group of people here, if they leave some of their political bias aside, can figure out a lot of things. At least, we should obtain an intelligent assessment as to when some "expert" propose a solution that they are on the right track or not?

We have a progressive tax system so if it is really biased at the top, it should be addressed. I think that most of us can agree on that.

Maybe that capital gains need to be taxed like regular income passed a certain level of wealth/income? We all know that executives of large companies receive most of their income via restricted shares and the like. 

We still haven't addressed at all a case like Buffett. Basically almost none of his wealth will ever be taxed as it is being given away and it is mostly all going outside the U.S.

Buffett has amassed great wealth in America, has used the "free" social components described by LC and then he gives it away to Africa and other poor places.

I am not saying it is not a great thing for the world and keep in mind that Buffett is far from being alone giving to philantropy that will end up far away from U.S. people. With these 50% pledge, it must be getting into the trillion $.

So truly this wealth inequality that we are talking about goes quite far. And we should really talk about wealth inequality since otherwise this whole thread and the other one are pure waste of intellectual time.

Cardboard

wachtwoord

  • Hero Member
  • *****
  • Posts: 1404
Re: Klarman worried about political divide
« Reply #97 on: January 24, 2019, 06:14:14 AM »

I mean - there is literally someone in this thread bragging that they don't listen to Ivy League economists.  In what other field is this not a completely laughable thing to say?  "I don't listen to no Ivy League doctors!"  "I don't listen to no Ivy League mathematicians!" "I don't listen to no Ivy League Computer Science professors!"  That's where the problem arises.

Wow great call to authority.

Anyway your argument is easily refuted: economics (as the term is used today) is highly political. On the other hand, computer science, mathematics and (to a lower degree) medical doctors are generally not (heavily) influenced by politics. That's also why the whole branch of climate change academia cannot be trusted (they lie and manipulate).

Remember none of this is new. In centuries hence doctors in astronomy could not be trusted either as conclusions conflicting with the beliefs of the catholic church resulted in heavy punishments (plus the church had a lot of influence in deciding who was even allowed to fill positions in academia).

Humanity will (probably) get over this but perhaps not in my lifetime.
"Beware of he who would deny you access to information, for in his heart he dreams himself your master"

tombgrt

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1944
Re: Re: Klarman worried about political divide
« Reply #98 on: January 24, 2019, 06:17:46 AM »
@Cardboard: Good points. But oddly enough, somehow I believe giving $100b to Africa and putting it into sensible projects does more for the US economy in the (very) long term than simply giving it to the US government. Getting as much people as possible into at least a somewhat decent consumer life and kick-starting these economies will do much more for everyone's wealth than just pumping more money into a debt black hole that no seems to be willing to fix. Sure, some sectors get fat checks but average Joe is getting screwed over in his taxes.

Edit: Just want to make clear I'm making this point specifically for Africa considering they will be with 4 billion at some point and could become a decent economic force. At some point the return of your pledges will obviously drop as those economies grow.
« Last Edit: January 24, 2019, 06:21:44 AM by tombgrt »

MarkS

  • Guest
Re: Klarman worried about political divide
« Reply #99 on: January 24, 2019, 06:26:27 AM »
LC 

The chart that you rely on - in addition to payroll taxes - also includes state and local taxes including sales taxes.  Since about one half of taxpayers pay no federal income taxes and only pay the 7.5% payroll taxes, it seems to me that most of the problem is a result of high state and local taxes - not federal.

JSArbitrage

BTW - Larry Kudlow is an economist.
« Last Edit: January 24, 2019, 07:09:30 AM by MarkS »