Author Topic: Honesty about how much we gain from the $T tax break for millionaires  (Read 4501 times)

Greg Davidson

  • Members
    • View Profile
Every so often we should take a step back and look at what has actually been done in the real world that relates to these policy arguments that we have. The largest (only) legislative accomplishment of Trump and the Republicans is the passage of a massive change in tax law that they wrote up during a lunch and passed the next day. ~$1T of this tax break went to America's ~10 million millionaires - that averages $100,000 of benefit per millionaire household. Is that how it has affected us here in the real world?

My wife and I met for our annual session with our financial planner on Friday (from one of the major companies that do financial planning).  He explained the portion of our financial gain on assets due to the Trump/Republican tax cut. Suprisingly, the tax cut has the least effect on large-cap companies, because they already are multi-national and shuffle most of their profits to low tax places like Ireland. The effect on stock prices for mid-sized companies is about 8% and for small cap it's 12% (smaller companies are less likely to have ways to shuffle profits offshore). Tax cuts benefit those who own shares of companies for the pretty straightforward reason that if you own stock because a company is profitable, and suddenly its taxes go down by 1/3rd, as a capitalist you get more profits. 

Well, my wife and I have $1.4M in our 401(k)s and another 200K of investments in a fund - that makes us some of the millionaires that this tax law was designed to help.  Based on our distributions between large cap, small cap, bonds, etc., that's ~$80K of wealth transfer to us just from increased asset values. And in addition, my guess is that we will save ~$13K in federal income taxes next year (although living in California constrains that - people with our income in many other states will get much more money).

Yes, I benefit from this, but it still strikes me as obscene. How crazy did the Republican Party have to be when looking at income distribution in the United States in December 2017 and decide that the most important problem was that millionaires did not have enough money? And this was a Republican Party that was shutting down government under Obama because they said they feared the deficit was too high - well, they increased the annual deficit by $300B/year in order to provide this massive give-away to those who need it the least.

So all of you Trump voters - how much is this helping you? More than half of all Americans have no stocks or 401(k)s https://money.cnn.com/2015/04/10/investing/investing-52-percent-americans-have-no-money-in-stocks/index.html.  You loved this plan in the abstract, how happy are you with the reality of who gets what?

PS: I am investing most of my anticipated income tax savings in donations to Democratic candidates


Seriati

  • Members
    • View Profile
Greg,

Premature for most of us to figure it out.  Living in a Blue state I expect it will hurt, and at best be break even.  Of course, the Blue state's have a scam to try to recover the SALT deduction for their richest citizens, they set up "charities" that pay for state services, and give 100% tax credits on state taxes for the contribution amount.  The argument being that the charitable deduction is not subject to SALT limits. The IRS is very likely to disagree, and I don't intend to participate in the scam.

Of course, something like over 80% of the country is getting an increased tax refund, and even more are essentially breaking even.  The tax rates have always been the most unfair to people with high wages  (well wages period, but especially high ones), they've always been completely favorable to people with assets and income generated off assets (thus Warren Buffet paying less than his secretary as a percentage). 

What I do see, is someone well off complaining about a tax break that's going to give real benefits to a heck of a lot of people that are not well off.  About a tax break that's already driven increased investment in this country, created jobs and is starting to have a real impact on wages.  Seems kind of petty to focus on the jealousy part to try and convince people to act against their own interests.

Greg Davidson

  • Members
    • View Profile
What you see is someone well-off who is disgusted that this is designed to give the vast majority of the reward to those who need it the least.  10 million households get almost all of the benefit, and they were already sitting on top of the most stilted wealth distribution in this country since the 1920's. If you are going to add another $1.5T in deficits, target the tax breaks more evenly to the other 112 million households in the country.  The Obama tax cuts as part of the stimulus package we almost entirely aimed at the middle and working class (reduced the FICA contribution for several years - that benefited everyone earning income equally).

TheDrake

  • Members
    • View Profile
It's interesting that you're choosing to back political candidates rather than providing funds to private programs that take up the slack from government ones. Education, anti poverty, affordable housing, and other admirable goals don't have to be fulfilled by government. Ask Bill gates.

Seriati

  • Members
    • View Profile
What you see is someone well-off who is disgusted that this is designed to give the vast majority of the reward to those who need it the least.  10 million households get almost all of the benefit, and they were already sitting on top of the most stilted wealth distribution in this country since the 1920's.

So you're doubling down on Pelosi's crumbs concept.  A $1000 is big money to an awful lot of people in this country.  Try moving out of California for a while, you're losing perspective.

10 million households, out of about 125 million households get the "vast majority"?  What a shock, those same 10 million households pay more taxes than the other 115 million (roughly, the top 10% do).  Here's a chart for you.  https://www.taxpolicycenter.org/statistics/shares-federal-tax-liabilities-all-households

You can see for yourself the tax share of the top quintile has been increasing for decades, and that of every other quinitle has been reducing.  Your tax policies have done little to stop income inequality. 

The fact that "tax relief" is shared with over 80% of the population is the result of a massive manipulation.  But not the one you are implying, but rather a deliberate warping of the system to give more relief proportionately to those who paid the least.

Quote
If you are going to add another $1.5T in deficits,

You don't care about deficits so don't bring them up.  If you are serious, the President would be happy to speak with you about spending cuts.

Quote
...target the tax breaks more evenly to the other 112 million households in the country.

This law was - in fact - deliberately gamed to bring tax breaks to the 112 million households in the country at a greater rate than their tax burdens justified.  I've worked through the math many times, any one who pays taxes outside of the top 10% is very likely getting a tax break, many of which will be material in their lives.

Quote
The Obama tax cuts as part of the stimulus package we almost entirely aimed at the middle and working class (reduced the FICA contribution for several years - that benefited everyone earning income equally).

Obama's tax cuts were entirely aimed at buying votes.  Nothing more or less.  Nothing he did was designed as anything but buying votes.

They were designed to be handouts labeled as tax cuts for marketing purposes.

Greg Davidson

  • Members
    • View Profile
 
Quote
Obama's tax cuts were entirely aimed at buying votes.  Nothing more or less.  Nothing he did was designed as anything but buying votes. They were designed to be handouts labeled as tax cuts for marketing purposes.

It is interesting how you make stuff up with no evidence and then believe it as fact. There was considerable contemporary discussion by Republican politicians that the Trump-Ryan-McConnell tax cut was explicitly political, required by their donors in return for financial support in the 2018 midterm. Here is one example, and there are others:

Quote
“My donors are basically saying, ‘Get it done or don’t ever call me again,’ ” Collins replied.
  http://thehill.com/homenews/house/359110-gop-lawmaker-donors-are-pushing-me-to-get-tax-reform-done

The Obama's tax cuts occurred right after an election, and the contemporaneous discussion by legislators was all about the fact that the US economy was in the biggest collapse in 80 years. 

I also believe that deficit spending has its place - very important when the economy is in collapse, an inefficient use of stimulus when the economy has already gotten close to full employment. But what makes your counterarguments remarkable is that you apparently don't seem to care that the wealthy donors have taken our collective credit card to order themselves some pizzas, while all that most people get is a few bits of the corn meal from the bottom of a breadstick.

Seriati

  • Members
    • View Profile
Quote
Obama's tax cuts were entirely aimed at buying votes.  Nothing more or less.  Nothing he did was designed as anything but buying votes. They were designed to be handouts labeled as tax cuts for marketing purposes.

It is interesting how you make stuff up with no evidence and then believe it as fact.

What was made up?  That Obama focused on payments of "tax cuts" to people that didn't pay taxes?  That's not a tax cut, that's a handout labelled as a tax cut.

That Obama targeted providing handouts for political purposes?  Only a child would believe otherwise.  No matter which party you support you should understand that very little they do is purely principled. 

Democrats knew there was zero chance of approving a UBT or a universal handout, they would have been destroyed politically.  However, doing the same thing and calling it a tax cut?  Steals the Republican's arguments and high ground, since the Republicans are big tax cut advocates.

Quote
There was considerable contemporary discussion by Republican politicians that the Trump-Ryan-McConnell tax cut was explicitly political, required by their donors in return for financial support in the 2018 midterm. Here is one example, and there are others:

And?  I did my own analysis of the results.  You always want to over weight random side bar comments (and completely ignore the random and express ones you don't like - like the Obama care architect's omission they lied about what was in Obamacare to get the simpleton's to support it).

Tax relief is in fact a major concern of the Republican donors and voters.  So yes, getting it done was a major priority.  Dems want tax relief too, they just want it done through special interest benefits (your beloved CA gives, for example, massive tax relief to the billionaires at Google and the millionaires in Hollywood), that the politically connected get while sticking to the other guy.  What do you think the whole SALT work around is about?  That's expressly and specifically targetted at giving relief to the 1%'ers and its completely owned by the Dems - where's your outrage about that direct betrayal that puts the lie to your arguments about what the Dems are really trying to do? 

Not to mention getting a competitive tax rate and regulatory relief to US corporations was absolutely vital to reestablish our global competitiveness, something Obama's policies were deliberately harming and suppressing.

So heck yeah, Republicans demanded tax relief.  It was in the best interests of the country and the populace ALL THE WAY DOWN to the poorest in America.

Quote
The Obama's tax cuts occurred right after an election, and the contemporaneous discussion by legislators was all about the fact that the US economy was in the biggest collapse in 80 years.

Duh.  Obama's tax relief was welfare.  Of course that was the conversation.  It's part and parcel of the failed belief that only the government can save people.

Quote
I also believe that deficit spending has its place - very important when the economy is in collapse, an inefficient use of stimulus when the economy has already gotten close to full employment.

The fact that you see not stealing people's income as "stimulus" is a big part of the problem.  You have a technical argument, as stealing less and giving some back both have the same result of putting more money in the victim's pocket, but your moral position is grossly suspect.  The entire central planning mentality with all economics flowing from government is just a recipe for increased corruption and graft.  It does not result in good economic decisions or results, it just maximizes rent seekers.  But since the Blue team has professionalized rent seeking you like it better than a fair system.

Quote
But what makes your counterarguments remarkable is that you apparently don't seem to care that the wealthy donors have taken our collective credit card to order themselves some pizzas, while all that most people get is a few bits of the corn meal from the bottom of a breadstick.

Doubling down on the crumbs?  I mean breadsticks.  Lol.

What makes my arguments remarkable is that they are based on the proven fact that free markets (with reasonable regulation) generate massive wealth for everyone involved in the economy, and that socialist and redistributive policies just generate misery, dependence and lack of opportunity.  Yet you keep pushing them while trying to cloak yourself in a white cloak. 

Wealthy "donors" win more when the Democrats implement sweet heart deals - which they always do - and no one else wins in that circumstance.  Broad based tax relief, which is what we got, benefits everyone, including yes the wealthy people who generate virtually all the jobs in this country.  And what have we got?  Massive reductions in unemployment and indications of real wage growth.

Take a look back at that fed funds rate chart.  Obama had 8 years at near zero because his policies were such an economic drag.  That line under Trump is now back to levels last seen in the Bush admin and seems to be going higher.

Greg Davidson

  • Members
    • View Profile
Seriati,

Is part of the freedom that you are always talking about the freedom to make up facts and then live in your own fantasy world? The largest focus of the Obama tax cuts were on people who actually worked for a living. The second focus was on tax cuts to businesses. The all-too-often focus of Republican tax cuts is on people whose trust funds come from their parents - and then Republicans generally try to cover their tracks by inciting some racism towards all those poor people who are getting too much from the government. That's your guys.

Then you claim that your sad right-wing fantasies have to be true, and that only a child would believe otherwise. I am not a child and I believe otherwise, QED.

And then you assert  this bogus argument
Quote
What makes my arguments remarkable is that they are based on the proven fact that free markets (with reasonable regulation) generate massive wealth for everyone involved in the economy, and that socialist and redistributive policies just generate misery, dependence and lack of opportunity.

The US enjoyed a significantly higher level of economic growth, and a much lower level of wealth inequality, in the 1950's and 1960's than the US has done under the less "socialist and distributive policies" since the 1980's.Your assertion that massive wealth is generated for everyone is false. Looking just at income since 1980:

Quote
Adjusted for inflation, the top 10 percent of earners in the United States made, on average, $144,418 in 1979 and $254,449 in 2012. That’s about 76 percent growth.

The bottom 90 percent of earners, on the other hand, made $33,526 in 1979 and $30,438 in 2012. That’s a decrease of about 9 percent.
http://www.politifact.com/truth-o-meter/statements/2015/jan/13/elizabeth-warren/warren-average-family-bottom-90-percent-made-more-/

Even when you make all the adjustments that politifact could find, including adding in the effect of increased government benefits, the gap is still vast:
Quote
the bottom 80 percent of earners (measured by households rather than tax units) saw income increases of about 16 percent between 1979 and 2011. The top 81-99 percent, on the other hand, saw increases of about 56 percent over the period. And the top 1 percent alone saw their household income grow 174 percent.




Crunch

  • Members
    • View Profile
Seriati,

Is part of the freedom that you are always talking about the freedom to make up facts and then live in your own fantasy world? The largest focus of the Obama tax cuts were on people who actually worked for a living. The second focus was on tax cuts to businesses. The all-too-often focus of Republican tax cuts is on people whose trust funds come from their parents - and then Republicans generally try to cover their tracks by inciting some racism towards all those poor people who are getting too much from the government. That's your guys.

Then you claim that your sad right-wing fantasies have to be true, and that only a child would believe otherwise. I am not a child and I believe otherwise, QED.

And then you assert  this bogus argument
Quote
What makes my arguments remarkable is that they are based on the proven fact that free markets (with reasonable regulation) generate massive wealth for everyone involved in the economy, and that socialist and redistributive policies just generate misery, dependence and lack of opportunity.

The US enjoyed a significantly higher level of economic growth, and a much lower level of wealth inequality, in the 1950's and 1960's than the US has done under the less "socialist and distributive policies" since the 1980's.Your assertion that massive wealth is generated for everyone is false. Looking just at income since 1980:

Quote
Adjusted for inflation, the top 10 percent of earners in the United States made, on average, $144,418 in 1979 and $254,449 in 2012. That’s about 76 percent growth.

The bottom 90 percent of earners, on the other hand, made $33,526 in 1979 and $30,438 in 2012. That’s a decrease of about 9 percent.
http://www.politifact.com/truth-o-meter/statements/2015/jan/13/elizabeth-warren/warren-average-family-bottom-90-percent-made-more-/

Even when you make all the adjustments that politifact could find, including adding in the effect of increased government benefits, the gap is still vast:
Quote
the bottom 80 percent of earners (measured by households rather than tax units) saw income increases of about 16 percent between 1979 and 2011. The top 81-99 percent, on the other hand, saw increases of about 56 percent over the period. And the top 1 percent alone saw their household income grow 174 percent.

Politifact. Right. Talk about making up facts in a fantasy world. Maybe you guys should just stick to name calling and the occasional threat of violence, it's a much better shtick.

Wayward Son

  • Members
    • View Profile
Maybe you, Crunch, should come up with a better response to long and well-sourced critiques than "Don't listen to facts, man!  They ain't true."  :P

velcro

  • Members
    • View Profile
Re: Honesty about how much we gain from the $T tax break for millionaires
« Reply #10 on: July 21, 2018, 05:35:01 PM »
Quote
Obama's tax cuts were entirely aimed at buying votes.  Nothing more or less.  Nothing he did was designed as anything but buying votes.

Greg:
Proverbs 26:4.  It will save you a lot of wasted energy.  Thinking, honest people know total BS when they see it.   Intelligent people who argue in bad faith will not admit when arguments and facts prove them wrong.

Make the case, and point out the distractions and distortions.  But once the case is made, you don't have to re-prove it just because someone makes false, misleading, or just made up arguments against it.

I don't always follow that advice, but I should.

Greg Davidson

  • Members
    • View Profile
Re: Honesty about how much we gain from the $T tax break for millionaires
« Reply #11 on: July 22, 2018, 01:23:10 AM »
Thanks, velcro, for the good advice

TheDrake

  • Members
    • View Profile
Re: Honesty about how much we gain from the $T tax break for millionaires
« Reply #12 on: July 23, 2018, 12:35:36 PM »
The most blatant tax related vote grab was under the Bush admin. Mail everyone a check in the middle of the year.

Fenring

  • Members
    • View Profile
Re: Honesty about how much we gain from the $T tax break for millionaires
« Reply #13 on: July 23, 2018, 01:01:43 PM »
What makes my arguments remarkable is that they are based on the proven fact that free markets (with reasonable regulation) generate massive wealth for everyone involved in the economy, and that socialist and redistributive policies just generate misery, dependence and lack of opportunity.  Yet you keep pushing them while trying to cloak yourself in a white cloak. 

I'll avoid commenting on the other points you and Greg make as honestly I don't know what the answer is. However this point seems to be a recurring one in economic conversations here and routinely devolves into each party concluding that the other is delusional. Maybe someone really is delusional between you and Greg...but maybe not. There is always the possibility that each of you observes something true and that you aren't exactly talking about the same thing. In fact, an economic system is so complex that it strikes me as very unlikely that without formal categorization of its elements two people should happen to end up speaking about exactly the same thing.

It is possible, for instance, to define success along various lines that are incompatible with each other. One person could define economic success as being highest GDP and growth, while another could define it as the highest baseline lifestyle for the poor of the country. Perhaps another could define it as a balance between the highest GDP with the lowest income inequality. There are many standards that could be used. Maybe it's possible that a tax cut (or having no taxes at all) would lead to the largest GDP and growth possible, absolutely speaking. And maybe the society that would result would be horrendous. So it might be right for one person to suppose that a tax break is invariably a positive measure for aggregate growth, while simultaneously allowing for another person to be right that taxing people and redistributing income the society is made better by the criterion of least inequality between the rich and the poor.

It seems to be a no-brainer, for instance, that if businesses weren't taxed at all they'd be able to do better business. Duh. But despite this abstraction being true it doesn't follow that therefore any tax break is a good tax break since it verges towards that scenario; that conclusion would require looking at the entire system, rather than just the health of that one company.

But the real wrinkle is in your qualification "with reasonable regulation". That's really the trick, isn't it? What's reasonable, and towards what end? Someone could posit that a benevolent dictatorship is the ideal form of government, for instance, and applaud economic moves that verge a system towards a concentration of economic power; whereas someone else might view it as inherently dangerous when most power is in the hands of few or one, and any regulation that would prevent this is desirable. In the case of tax breaks in particular this isn't precisely the issue at hand, but when evaluating the break itself there is really no way to judge it except by weighing it against the goals of the entire system. And I think the "delusion" that can be perceived in these discussions is that there's probably a fundamental disagreement about what these goals should even be.

velcro

  • Members
    • View Profile
Re: Honesty about how much we gain from the $T tax break for millionaires
« Reply #14 on: July 23, 2018, 01:14:19 PM »
Quote
the proven fact that free markets (with reasonable regulation) generate massive wealth for everyone involved in the economy, and that socialist and redistributive policies just generate misery, dependence and lack of opportunity

Please provide an example of a free market with "reasonable regulation".  If I can find someone in that market with a job that is not massively wealthy, then your "proven fact" is a falsehood.  Unless of course, by "proven fact" you mean "my opinion", and by "everyone involved in the economy" you mean only those with massive wealth.  Then you are all set.

And please explain how the "happiest countries" are usually socialist and redistributive.  Unless you define misery as happiness.  They you are all set.


D.W.

  • Members
    • View Profile
Re: Honesty about how much we gain from the $T tax break for millionaires
« Reply #15 on: July 23, 2018, 01:30:34 PM »
But are they happy because they are socialist, or socialist because they are happy friendly people looking out for each other?  :P

I can all but guarantee that in the short term, even much of the poor here in the US would be mighty unhappy the closer we got to socialism. 

DonaldD

  • Members
    • View Profile
Re: Honesty about how much we gain from the $T tax break for millionaires
« Reply #16 on: July 23, 2018, 01:50:18 PM »
I can't be 100% sure, but I get the feeling that "socialist" as used by velcro is not synonymous with "socialism" as used by D.W....

Fenring

  • Members
    • View Profile
Re: Honesty about how much we gain from the $T tax break for millionaires
« Reply #17 on: July 23, 2018, 01:53:51 PM »
I can't be 100% sure, but I get the feeling that "socialist" as used by velcro is not synonymous with "socialism" as used by D.W....

Nor as "socialist and redistributive" as used by Seriati. If I tried I probably wouldn't be able to name a country in history that wasn't redistributive, as in, collected taxes from the people. And yet I suspect the implied meaning here was Russia/China.

DonaldD

  • Members
    • View Profile
Re: Honesty about how much we gain from the $T tax break for millionaires
« Reply #18 on: July 23, 2018, 06:04:02 PM »
Ah yes, the not a true socialist country, argument...

velcro

  • Members
    • View Profile
Re: Honesty about how much we gain from the $T tax break for millionaires
« Reply #19 on: July 26, 2018, 05:09:11 PM »
Ah yes, the not a true socialist country, argument...

Link

DJQuag

  • Members
    • View Profile
Re: Honesty about how much we gain from the $T tax break for millionaires
« Reply #20 on: July 28, 2018, 02:29:55 PM »
There are quite a few countries in Europe who have things such as government healthcare, free advanced education, and publically owned utilities that are doing very, very well in almost any metric that you care to name.

Anyone wanting these things in the US would be called a socialist.

So, yes, there is absolutely a Venezuelan "socialism" and a European "socialism" and they are very different things.

Conservatives like to point to the failures whilst employing the True Scotsman against the successes. Liberals tend to do the same, just in the opposite direction, discounting Venezuela as an example of how it can go wrong.

Socialism can work. It already has. It can also fail. When it works, the entire populace benefits massively. Perhaps we should spend more time on asking why it might not work in the US and thinking of ways to get around those issues.

Greg Davidson

  • Members
    • View Profile
Re: Honesty about how much we gain from the $T tax break for millionaires
« Reply #21 on: July 28, 2018, 06:25:06 PM »
Quote
Conservatives like to point to the failures whilst employing the True Scotsman against the successes. Liberals tend to do the same, just in the opposite direction, discounting Venezuela as an example of how it can go wrong.

Except we don't. Maybe socialists do that, but liberals in the modern age tend to be more pragmatic than conservatives. You will find very few liberals in real life who believe that every government program is good - even dumb liberals who hate every corporation also tend to be skeptical of government institutions as well.

For me, I don't believe in the fantasy that everyone running a corporation is good and that everyone running a union is bad, or the reverse. The same goes for Democrats and Republicans, men and women, Christians/Muslims/Jews, etc. You will have good and bad people in most groups. That's not to say that there are good terrorists and bad terrorists - people are morally responsible for their actions. But when examining groups with a generally valid purpose, it takes extraordinary evidence to substantiate the extraordinary claim that some groups are composed by people who are all good or all bad.

The primary goal of a corporation is the maximize the financial returns to the investors who have contributed the financing to the corporation (and they could and do have secondary goals of being good to their customers, their workers, and to social causes such as the environment). The primary goal of a union is to maximize the compensation paid for the labor contributions to sales of the corporations they work for (with secondary goals including aspects of employee well-being that include promoting employee safety, protection from abuses from individual managers, etc.).

There are good and bad people both on the Corporate and Union side. As a liberal, I am concerned about balance, and I believe that conservative forces have dramatically shifted the balance towards Corporations and the wealthy in my lifetime