Author Topic: Re: Klarman worried about political divide  (Read 14454 times)

LC

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Re: Klarman worried about political divide
« Reply #120 on: January 24, 2019, 12:36:42 PM »

Please explain how the tax burden has shifted from the rich to the bottom 50% when the bottom 50% pays no income tax.


Well, I'm still looking for a distribution of tax receipts over time. But here;s this:
 
https://www.nytimes.com/2012/11/30/us/most-americans-face-lower-tax-burden-than-in-the-80s.html

Quote
Public debate over taxes has typically focused on the federal income tax, but that now accounts for less than a third of the total tax revenues collected by federal, state and local governments. To analyze the total burden, The Times created a model, in consultation with experts, which estimated total tax bills for each taxpayer in each year from 1980, when the election of President Ronald Reagan opened an era of tax cutting, up to 2010, the most recent year for which relevant data is available.

The analysis shows that the overall burden of taxation declined as a share of income in the 1980s, rose to a new peak in the 1990s and fell again in the 2000s. Tax rates at most income levels were lower in 2010 than at any point during the 1980s.

Governments still collected the same share of total income in 2010 as in 1980 31 cents from every dollar because people with higher incomes pay taxes at higher rates, and household incomes rose over the last three decades, particularly at the top.

There are now many more millionaires, in other words, paying more than they did in 1980, but they are paying less than they would have if tax laws had remained unchanged. And while they still pay a larger share of income in taxes than the rest of the population, the difference has narrowed significantly.

The trend can be seen by comparing three examples:

A household making $350,000 in 2010, roughly the cutoff for the top 1 percent, on average paid 42.1 percent of its income in taxes, compared with 49 percent for a household with the same inflation-adjusted income in 1980 a savings of about $24,100.

A household making $52,000 in 2010, roughly the median income, on average paid 27.7 percent of its income in taxes, compared with 30.5 percent in 1980, saving $1,500.

A household making $22,000 in 2010 roughly the federal poverty line for a family of four on average paid 19.4 percent in taxes, compared with 20.2 percent, saving $200.

Quote
1) some of it is refunded as credits which the paper incorrectly treats as income so as to avoid negative tax rates.  2) the bottom 50% get a much higher return than the middle class or the rich due to decreasing credit for higher incomes (roughly 90% credit for the first $1,000 of monthly average income, 32% for the next $4,000 and only 15% for the final $5,000) and 3) it is basically a retirement plan technically termed a tax and should be excluded from tax burden calculation. 4) Social Security is technically off-budget nothing paid in is used for anything else.

1) Perhaps? I don't really see the economic difference so I have not really researched this to form an opinion.
2) Doesn't this scheme apply to all recipients? Do the wealthy not receive these credits?
3) It is a state sponsored retirement plan. Were SSA removed, the gov't would be spending tax money to solve the same problem: care for the elderly. It should be included in a tax burden calculation.
4) I thought proceeds (i.e. interest) earned on SSA financial instruments can be used by the gov't for any spending item?
« Last Edit: January 24, 2019, 12:43:54 PM by LC »
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Gregmal

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Re: Klarman worried about political divide
« Reply #121 on: January 24, 2019, 12:46:55 PM »
Capping pay will just favor a specific few in terms of attracting talent. This is seen first hand in NBA and NHL where they have salary caps. Players who can get max contracts or field multiple offers in the same range pretty much always end up going to the most desirable places. Look at Labron. South Beach, back to his hometown, and LA. If you are a CEO and you have identical offers from similar companies but one is in South Florida, whereas the other is in Oklahoma, who is at a disadvantage? Not fair to shareholders either. If executive pay is capped, that excess money should go back to the owners of the company. Not wasted on low end talent.

Is this how the NY Knicks, one of the most valuable and desirable franchises in the NBA, has consistently underperformed the San Antonio Spurs, who rarely makes max offers and is in an entirely undesirable location?

LOL There you go again. "Oh the exception to the rule!". Always reliable. Although your example is awful. You are on a role in this thread LC!

If you knew anything about the situation you'd know the Knicks are one of the least desirable teams in the league because of terrible management. And the Spurs don't draw free agents.... Try again.

Going over to hockey though, yes, the Rangers regularly have first dibs on whatever free agent they want, should they have cap space.

Cardboard

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Re: Klarman worried about political divide
« Reply #122 on: January 24, 2019, 12:48:08 PM »
"Capping senior management pay would be one, or in general, incentive realignment. Much stronger punishments for environmental destruction, employee hiring collusion, market manipulation and fraud, etc. would other. There are many aspects of tax reform, legal reform, healthcare reform, I don't even know where to start. In other words, change the structure to limit the abuse of externalities, severely punish those who do as an actual deterrent, and fairly tax the ones you cannot limit."

Sorry LC but, I cannot understand how this would prevent the top 26 worldwide to still own 1/2 of what is owned by the poorest half as reported by Oxfam.

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LC

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Re: Klarman worried about political divide
« Reply #123 on: January 24, 2019, 01:03:11 PM »
LOL There you go again. "Oh the exception to the rule!". Always reliable. Although your example is awful. You are on a role in this thread LC!

If you knew anything about the situation you'd know the Knicks are one of the least desirable teams in the league because of terrible management. And the Spurs don't draw free agents.... Try again.

Going over to hockey though, yes, the Rangers regularly have first dibs on whatever free agent they want, should they have cap space.
You're using professional sports as "one exception to the rule" despite wage limits in other industries with no discernible effect.

As usual Greg you have played yourself, as your own example betrays you: If the Knicks are undesirable because of non-salary reasons, why wouldn't this factor also relate to companies? Maybe a great CEO wants to work in Oklahoma because the company there is in a preferred line of business versus one located in NYC.
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Gregmal

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Re: Klarman worried about political divide
« Reply #124 on: January 24, 2019, 01:11:39 PM »
LOL There you go again. "Oh the exception to the rule!". Always reliable. Although your example is awful. You are on a role in this thread LC!

If you knew anything about the situation you'd know the Knicks are one of the least desirable teams in the league because of terrible management. And the Spurs don't draw free agents.... Try again.

Going over to hockey though, yes, the Rangers regularly have first dibs on whatever free agent they want, should they have cap space.
You're using professional sports as "one exception to the rule" despite wage limits in other industries with no discernible effect.

As usual Greg you have played yourself, as your own example betrays you: If the Knicks are undesirable because of non-salary reasons, why wouldn't this factor also relate to companies? Maybe a great CEO wants to work in Oklahoma because the company there is in a preferred line of business versus one located in NYC.

The Knicks disqualify themselves. If their management was not an outlier, they would be the first choice for free agents. Lebron even mentioned it as a reason he didn't go there. Its crazy you are arguing that capping pay, doesn't inevitably leads to an advantage for certain select few, for reasons the majority can't compete with. In fact your argument is essentially "I can think of a case or two where that isn't true" LOL. I can see why you want to shift this, after getting your you know what pushed in by Tim and Mark in your last liberal spiel, but this one is no different. Shareholders/companies should be able to pay whatever they are capable to attract candidates they feel are best for the job. Period.

Tim Eriksen

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Re: Klarman worried about political divide
« Reply #125 on: January 24, 2019, 01:32:35 PM »

Please explain how the tax burden has shifted from the rich to the bottom 50% when the bottom 50% pays no income tax.


Well, I'm still looking for a distribution of tax receipts over time. But here;s this:
 
https://www.nytimes.com/2012/11/30/us/most-americans-face-lower-tax-burden-than-in-the-80s.html

Quote
Public debate over taxes has typically focused on the federal income tax, but that now accounts for less than a third of the total tax revenues collected by federal, state and local governments. To analyze the total burden, The Times created a model, in consultation with experts, which estimated total tax bills for each taxpayer in each year from 1980, when the election of President Ronald Reagan opened an era of tax cutting, up to 2010, the most recent year for which relevant data is available.

The analysis shows that the overall burden of taxation declined as a share of income in the 1980s, rose to a new peak in the 1990s and fell again in the 2000s. Tax rates at most income levels were lower in 2010 than at any point during the 1980s.

Governments still collected the same share of total income in 2010 as in 1980 31 cents from every dollar because people with higher incomes pay taxes at higher rates, and household incomes rose over the last three decades, particularly at the top.

There are now many more millionaires, in other words, paying more than they did in 1980, but they are paying less than they would have if tax laws had remained unchanged. And while they still pay a larger share of income in taxes than the rest of the population, the difference has narrowed significantly.

The trend can be seen by comparing three examples:

A household making $350,000 in 2010, roughly the cutoff for the top 1 percent, on average paid 42.1 percent of its income in taxes, compared with 49 percent for a household with the same inflation-adjusted income in 1980 a savings of about $24,100.

A household making $52,000 in 2010, roughly the median income, on average paid 27.7 percent of its income in taxes, compared with 30.5 percent in 1980, saving $1,500.

A household making $22,000 in 2010 roughly the federal poverty line for a family of four on average paid 19.4 percent in taxes, compared with 20.2 percent, saving $200.

Quote
1) some of it is refunded as credits which the paper incorrectly treats as income so as to avoid negative tax rates.  2) the bottom 50% get a much higher return than the middle class or the rich due to decreasing credit for higher incomes (roughly 90% credit for the first $1,000 of monthly average income, 32% for the next $4,000 and only 15% for the final $5,000) and 3) it is basically a retirement plan technically termed a tax and should be excluded from tax burden calculation. 4) Social Security is technically off-budget nothing paid in is used for anything else.

1) Perhaps? I don't really see the economic difference so I have not really researched this to form an opinion.
2) Doesn't this scheme apply to all recipients? Do the wealthy not receive these credits?
3) It is a state sponsored retirement plan. Were SSA removed, the gov't would be spending tax money to solve the same problem: care for the elderly. It should be included in a tax burden calculation.
4) I thought proceeds (i.e. interest) earned on SSA financial instruments can be used by the gov't for any spending item?

If you actually read what I posted you would have seen that I linked to a site that showed effective tax rates by income quintiles over time since 1979. 

The NY Times examples are beyond stupid.  The last one family of four on $22,000 in 2010 would have paid zero federal tax and received a earned income tax credit for $3,862.  They would have paid about $1400 in payroll taxes.  (Is the Times counting the employer paid portion?)  So they would have have received back $2400, a negative 12% tax rate.  Yet received full credit for contributing to SS even though they didn't.  The NY Times somehow come up with 19% whatever.  How you think this person could be funding government when the two kids alone would cost taxpayers $20k ($10k each) annually to educate is beyond me.  They are massively subsidized by the caring rich.
 
The second to last one, a family on $52,000 would have paid federal tax of $1,066 in 2010, or 2%.  They would have paid payroll tax of about 7.5%, all of which they would get back at retirement. 

Once again - how the authors calculate matters.  You are fixated on the conclusion (of two left leaning publications).   Are they allocating corporate income taxes to individuals?  Are they allocating employer paid payroll tax to the employee?  Are they including employee paid payroll tax?  How are they treating SS benefits?  How did they allocate sales tax?  How did they allocate property tax for renters?   

One final try here - you want to treat SS as a tax when paid but income when received.  Why?  Is that consistent?  Why not tax when paid and tax refund when received?  Or why not excluded since it gets paid back upon retirement.  Is a 401k contribution a tax?  Of course not.  Is a mandatory union retirement plan contribution a tax?  Of course not.  Then why is a mandatory SS contribution???????  Because including it skews the result to make it look like the poor and middle class pay higher taxes when they actually don't.

Clearly, there is no point in continuing this discussion.   



LC

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Re: Klarman worried about political divide
« Reply #126 on: January 24, 2019, 01:53:43 PM »
Well Tim as I've said the difficulty is finding total tax receipts by income bracket over time. You haven't provided this either.

Tax rates per bracket do not do enough - you need to combine this with aggregate income to determine tax paid, and to uncover the underlying reasons behind changes in overall tax payments.

I have tried to do this by showing national income share over time per income bracket, combined with average tax rate per income bracket.

But you argue about the calculation of average tax rate. Frankly I disagree with your arguments.

The IRS considers SSA benefits as income, some as non-taxable income, some as taxable income.
I consider SSA taxes as eligible for a few reasons. (1) they are mandatory (2) they are universal (3) they are designed to provide a societal service, essentially the young are taxed to pay for the old.

We obviously disagree on this, but I think the main item of discussion (income inequality) has not been disproven.
« Last Edit: January 24, 2019, 01:59:34 PM by LC »
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LC

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Re: Klarman worried about political divide
« Reply #127 on: January 24, 2019, 02:05:02 PM »
The Knicks disqualify themselves. If their management was not an outlier, they would be the first choice for free agents. Lebron even mentioned it as a reason he didn't go there. Its crazy you are arguing that capping pay, doesn't inevitably leads to an advantage for certain select few, for reasons the majority can't compete with. In fact your argument is essentially "I can think of a case or two where that isn't true" LOL. I can see why you want to shift this, after getting your you know what pushed in by Tim and Mark in your last liberal spiel, but this one is no different. Shareholders/companies should be able to pay whatever they are capable to attract candidates they feel are best for the job. Period.

Right. So salary caps are limiting - except when they're not. Thanks for that.

I'm not shifting any argument, as far as I know I've addressed every point raised, even your absurd ones. This cannot be said for Mark or Tim - who for example still have not addressed the fact that (1) SSA benefits would essentially be a gov't cost if they were not taxed on the young (2) SSA financial instruments provide income for other gov't spending (3) reduction in tax rates is only half of the equation when calculating tax paid per income bracket.
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Cardboard

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Re: Klarman worried about political divide
« Reply #128 on: January 24, 2019, 02:16:35 PM »
Sorry LC but, I cannot understand how this would prevent the top 26 worldwide to still own 1/2 of what is owned by the poorest half as reported by Oxfam.

At least make an effort!

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Re: Klarman worried about political divide
« Reply #129 on: January 24, 2019, 02:44:42 PM »
The Knicks disqualify themselves. If their management was not an outlier, they would be the first choice for free agents. Lebron even mentioned it as a reason he didn't go there. Its crazy you are arguing that capping pay, doesn't inevitably leads to an advantage for certain select few, for reasons the majority can't compete with. In fact your argument is essentially "I can think of a case or two where that isn't true" LOL. I can see why you want to shift this, after getting your you know what pushed in by Tim and Mark in your last liberal spiel, but this one is no different. Shareholders/companies should be able to pay whatever they are capable to attract candidates they feel are best for the job. Period.

Right. So salary caps are limiting - except when they're not. Thanks for that.

I'm not shifting any argument, as far as I know I've addressed every point raised, even your absurd ones. This cannot be said for Mark or Tim - who for example still have not addressed the fact that (1) SSA benefits would essentially be a gov't cost if they were not taxed on the young (2) SSA financial instruments provide income for other gov't spending (3) reduction in tax rates is only half of the equation when calculating tax paid per income bracket.


When Social Security was designed in the mid 1930s it was designed primarily as a retirement fund.   The program had attractive attributes at first.  First the number of people expected to live longer than 65 years of age was relatively small. Also for the first few decades the number of workers needed to support retirees greatly exceeded the number of retirees. https://www.ssa.gov/history/ratios.html   (As I understand the system you need about 3 workers for every retiree for a stable system, which we haven't had for years.  In fact I've seen several studies predicting that in the near future the ratio will fall below 2 workers for every retiree.)  As a result the program built up a massive amount of unspent cash.   This cash hoard was routinely raided by Congress who left essentially an IOU for every "loan."  Fast forward to 2019 -  my guess is that the amount of IOUs are nearing 3 trillion just when the baby boomers are retiring in force and the money is needed most.

So LC I would respectfully disagree with all of your characterizations concerning social security.  I believe that the program has been mismanaged by the government for decades.