I agree somewhat. I think it is a good baseline, but as you pointed out it depends on the particular issue. It was the best I could do in 5 minutes at 11 PM on a Friday night.

Easiest way to do that is to lay off people and in corporate speak "Do more with less."

Not true. It takes a balance of investors/workers to make things work most efficiently.


If you look at all taxes collected by all the different levels of government we're already close to a flat tax. Having a flat tax on income and a sales tax would equal a regressive total tax burden.

In some cases that will happen, but in other cases it won't. Let's see some proof that backs up your original claim.

Just to expand on this a bit. From my experience, it is not the rank and file worker who drives the economy, it is the upper class. When I worked at a golf course in college, Michael Jordan came out with three of his teammates from the Birmingham Barons. In 20 minutes, he spent more money in the golf shop than the other customers spent in a work week (Mon. - Fri.).

The rich can afford to take more vacations, travel, dine out, etc., etc. They can also afford to buy luxury items. Finally, they can take their money and use it to finance a start up company. This provides jobs for the other classes.

In MOST cases that is what happens. You can only squeeze so many pennies in tightening the belt as far as expenses like supplies and things like that go.

Again, employee salaries are the biggest operating expense for most businesses.

It's not that simple. Where does Jordan get his money? It doesn't just show up out of the blue. He needs people to buy tickets, apparel, things he's advertising, etc. for him to get his money.(I completely understand this is rather simplistic!) That takes a broad base of people with enough money to purchase goods and services. If wealth is concentrated in too few hands things will break down. There needs to be a wealthy class and more importantly upward mobility, but there also needs to be a broad base of folks with enough money to keep money flowing. It's all about balance.

Not necessarily. My footprint on the economy is tiny compared to what an NFL player or a Paris Hilton adds to it.


To my prior point in the post, who determines what a "fair" tax is? Just because someone can afford to pay more does not mean that it is the most "fair" thing.


Yes, this is being a little melodramatic, but our tax codes and laws and our distribution system of those funds go together with that quote too well for my liking.

I could spend an hour preparing a carefully written thesis on the subject, with links to sources, and be rewarded with a "That's crap," reply from you. No thank you.

I've been around long enough to know that people are going to believe what they want to believe.

so if you make enough money warhammer then the fire department should just be able to let your house burn down? cool

Prove it. You said,


and I'll guarantee that you can't prove that to be an accurate statement.

Let me put it this way: When was the last time a middle-class or poor person offered you a job? The rich, either directly or indirectly (through investing, financing, ownership, spending, ect.) create jobs, products, and finally income/salaries.

:lol:

JPhillips' point is that even the greatest economists in the world can't show that trickle-down economics works - so for you to claim that "oh I could do it but you wouldn't believe me so it's a waste of time" is total BS.

and if there were no workers there'd be no one to enable them to become wealthy in the first place

I can tell you who isn't going to his games. Those that aren't making that much money. To use the Jordan example, the people that pay the majority of his salary are not the 10,000 people sitting in the nosebleeds paying $10 a seat. Its the 100 people sitting courtside that are paying $1500 a game, plus seat license fees, etc., etc.

Your model is good for the majority of commodities. Items that have very low profit margins and operate on volume. Milk, gas, water, food, etc., are all examples of these goods. But you don't see many average workers going out and buying a $10 million yacht, or vacationing down in Miami and staying in the penthouse. Those are the type of expenditures that make the difference between a company breaking even and making huge profits.

Exactly. To claim the rich just get their money by themselves is dreadfully naive. They rely on others in order to gain their wealth in the first place.

Without the middle class or poor there is no rich. You won't see the rich out in the fields, getting all the crop with their own bare hands.

You're right there. Just because the wealthy need workers does not mean that it is the workers that drive the boat. The workers need the wealthy more than the wealthy need the workers.

But there's a hell of a lot more of you and I's than NFL players. But even that isn't terribly important. Without the masses consuming their products the NFL players and Paris Hilton types wouldn't continue to spend. Again, the key is balance.


That's a wholly separate issue where I doubt we'd agree. Initially you were calling for a flat tax.

That's where we'll disagree. I think they need each other equally. Too much wealth in too few hands isn't good for the economy in the long term.

Good work, collect your Nobel on the way out.

Was I ever claiming taxes increases would never lead to layoffs? You set the bar at all tax increases. That still requires some proof. Of course you could be sensible and admit you made a statement you can't back up.

Thanks, I've cleared some space on the mantle. :)

I guess it comes down to what's fair. Should person A be taxed more (either a set dollar amount or a set %) than person B?

At least we agree on something.

Ahhh... OK I see a disconnect between what you guys are saying and what I am saying...

OK, you have a guy that figured out how to make a better...cotton gin. He pays the going rate for the cotton to the farmer, and processes the cotton. But, since he is more efficient than they next gin manager, he earns an extra $2 per bale of cotton. He gets rich because that $2 he saves per bale goes straight to his bottom line.

Now, he gins 10,000 bales per year. The manager down the street does the same and earns $5 for each bale. This guy earns $8 per bale. They each have household expenses that run $40,000 a year. So the guy that earns $8 per bale over time has more disposeable income. They both spend $10,000 on pleasure over the course of a year. The guy that earns $8 a bale can now either use that money to improve his company (paying for new equipment, more workers, building expansion, etc.) or he can spend it on something else (vacation, car, etc.). In either case, the one that earns $ per bale has a larger effect on the economy than the guy earning $5. Not only that, but he has almost twice (probably more considering the velocity of money) the impact on the economy.

I guess my point is that at one time, someone made their money creating something new. That is how they earned their money. That, or they just worked harder than the next guy. In any case, most wealth can be traced to someone that was just a guy in a factory somewhere.

:eek:

Again, a different argument where we won't agree. I believe in a progressive income tax as I feel the wealthy benefit from a stable, balanced society. I'm sure you see things differently. I'd like to at least come to an agreement that a healthy society needs both an investor class and a working class.

I agree with you there, but the wealthy can get along fine with or without the workers. Obviously, it works out better with the workers, but there is a limit to what the wealthy will bear.

Actually, I only gave three or four distinct ways a company could react to tax increases, one of which was layoffs. My list was in no way to be considered exhaustive.

In most cases, I'm sure companies would combine multiple strategies to preserve profit margins in the face of higher taxes.

While true, one must also remember that society allowed him to do so. If the society decided intellectual property wasn't worth protecting, the guy who created something new perhaps doesn't get the worth of what he created.

Basically, individuals don't exist in a vacuum. The society is instrumental in their creation of wealth, from the workers who help him create the wealth, to the rules of society that protect his innovations from theft by others.

Again, not that simple. Where does the money come from? Somebody is buying that cotton and where does that money come from? For markets to work efficiently the key is the flow of capitol. What happens when the guy charging 8$ has no buyers? Economics is far more difficult to quantify than you're making it. In your world you should have zero taxes on the wealthy(btw-where does that begin?) and then everything would work at maximum efficiency.

I'm not denying the need for an investor class and I'm not claiming there isn't a point at which taxation becomes punitive and damages the economy. What I'm arguing is that the balance for maximum efficiency is far more difficult to find than saying the rich drive the economy.

I'll take this one step further, a healthy society needs upper, middle, and lower classes.

I could (probably get killed for it, but that is another matter) make an argument that we have moved too much towards the middle class than what would be good for us. I have found that in my industry, people that have the education and work ethic would prefer to do things other than weld or construction. Companies that require this skilled labor have increased wages, but they cannot find workers skilled enough to do the work. Essentially, the college grads don't want to work in construction, while the ones that didn't go to college don't have either the work ethic or the skills to become good employees.

The wealthy won't be fine without workers for very long. Of course there's a limit, but where that limit is at is the problem.

Actually small business employs the majority of people in this country. Most of the owners of these businesses are hard working and would probably laugh in your face if you tried to tell them they comprised the "rich."

However, the way a lot of them file their taxes for their businesses (sole proprieterships, S corps, etc.) would put them in that "rich" category.

Without getting into too much detail we probably agree, although I'm setting the bar for poor much lower than you are.

No, you said,


and you can't come close to proving it. It's okay to admit that.

I see where you are going and agree with it, but I think that is a different debate. We're moving from economics into more of the social/ethical/moral values when we start talking about intellectual property, societal laws that provide for innovation, etc., etc.

They would just invest their money in other countries.

No problem for them. They'll just outsource to China.

All of that's tied up into economics. There are few wealthy musicians without intellectual property laws. Same goes for drug and software companies. The society has agree that individuals making those contributions should be able to amass wealth if possible. Given the importance of patents to industry you can probably trace a huge percentage of wealth to patent and intellectual property law.

I agree and realize that. I also realize that most small businesses fail. Not due to lack of work ethic, but due to a lack of working capital. I just switched industries 3 months ago due to this. Sales grew 100%, but the company was tapped out of capital. I'm still owed money by them.

Why, then, hasn't every company moved to China? Perhaps there are some advantages to being closer to the consumer base in general or in the United States in particular?

Well, we've been talking social/ethical/moral for a while now ;). Economically speaking, the rich should bear more of the tax burden because A) they can afford it far more easily and B) the poor have a higher marginal propensity to consume. By lowering taxes on the middle class and poor and raising them on the rich, you get higher consumption. You can argue that the rich will invest their extra money, but a lot of that investment money can very easily go overseas (and does). Furthermore, it has been shown, economically, that the more progressive the tax code, recessions and economic downturns become easier to deal with (for obvious reasons). Though you obviously don't want to tax the rich tooo much because they'll run overseas with it. But a few more percentage points won't do it because, well, anywhere else they'd go will have higher tax rates on the top end.

Okay, you're right, big companies will grin and pay their taxes without complaint. In fact, they'll probably demand to be given even more tax increases because I'm sure the leadership will feel they still aren't paying their fair share. And so what if their profit margins disappear (who the hell goes into business to make a profit anyway? pffft!), and their stock value plummets and the board and shareholders are demanding the head of the CEO. I'm sure that CEO would much rather lose his job than sacrifice any of his employees to save costs or raise the cost of his product to pass it on to the consumer.

Black. White.



FIN

No doubt about that, it is a part of the debate, but I think we're getting further and further away from what the original debate was about.

During Roman times people made fortunes and you had classes and it was not due to patent and intellectual property laws. Those laws are much more important to modern societies than they were four centuries ago.

If you look at just about any manufactured item in this country, you're likely to see a "Made In China" sticker on it. Most companies are based in the U.S., but subcontract production to foreign countries were labor is cheaper. They likely haven't moved physically to China because the standard of living in this country is the highest in the world and...well, let's face it, Chinese is a bitch of a language to learn. Plus there are like, what, 2,000 dialects across the country. Sheesh.

I'd be interested to see where this came from. Many of my economics texts argued the opposite. The one thing I agree with is that the economic downturns are easier to deal with because when the low end are paying little to no taxes anyway, any loss there is negligible. Also you are right that the rich will go overseas to avoid taxes, which is why I advocate lower taxes there. If you can keep the money here, you can make up for what you don't tax in money velocity.

That and their intellectual property laws are laughable and are not enforced.

Intellectual property is Capitalist Think...for shame.