TheHill.com: Boehner: *Mr President, help stop automatic cuts to Defense Spending*

[SnyderShrugged]

I also cannot disprove the assertion that debt cannot exist if debt is illegal.

That doesn't mean that the fact that debt is legal is the only reason debt exists. Or that the only way debt can possibly be reduced us to make debt illegal.

The only way for debt to exist is to spend money one does not have.

[Larry]

I'll just disagree. I think its very relevant, (but not worth arguing about at this point since we just see it differently I guess)

I think we should raise the top income bracket to 70%.

After all, the last time the top rate was 70%, the economy was OK.

This conclusively proves that raising the top tax rate to 70%, tomorrow, would not harm the economy in any way. Right?

[SnyderShrugged]

I think we should raise the top income bracket to 70%.

After all, the last time the top rate was 70%, the economy was OK.

This conclusively proves that raising the top tax rate to 70%, tomorrow, would not harm the economy in any way. Right?

\

wow, off the deep end man. This is no way relates to a multiple year spending reduction plan, not even a little. But enjoy your weird game, I'm not gonna play it with you.

[Larry]

The only way for debt to exist is to spend money one does not have.

Actually, that's untrue.

Debt exists because you borrow money. Whether you spend the money or not is irrelevant.

And, once you borrow the money, then you are spending money that you DO have. The prison who loaned it to you doesn't have it, any more.

[SnyderShrugged]

Actually, that's untrue.

Debt exists because you borrow money. Whether you spend the money or not is irrelevant.

And, once you borrow the money, then you are spending money that you DO have. The prison who loaned it to you doesn't have it, any more.

And of course logic would dictate that there are numerous realistic scenarios where people borrow money and hold onto it. Everyone would most likely prefer to pay interest for no reason whatsoever. Makes perfect sense man

[Predicto]

\

wow, off the deep end man. This is no way relates to a multiple year spending reduction plan, not even a little. But enjoy your weird game, I'm not gonna play it with you.

How come his weird one sided statements are off the deep end, but yours aren't? For 2 pages now you have refused to acknowledge the simple fact that there are two elements that create a deficit: "spending" and "revenue". You have also dismissed, out of hand, a basic economic principle presented to you by a PhD economist by saying "I'll just disagree." Lots of games being played here.

[SnyderShrugged]

How come his weird one sided statements are off the deep end, but yours aren't? For 2 pages now you have refused to acknowledge the simple fact that there are two elements that create a deficit: "spending" and "revenue". You have also dismissed, out of hand, a basic economic principle presented to you by a PhD economist by saying "I'll just disagree." Lots of games being played here.

First off, the discussion on spendings impact on deficit was not what the deep end reference came from, it was the odd analogy on 70% tax brackets that did it.

Second, is there a deficit if spending is not increased? (lets use this decade for a baseline). So pretend we are at even in the year 2000, if no spending increases and taxes stay the same, is there a deficit?

I'm not debating that the calculation of a deficit doesnt include revenue, I'm debating that in this chicken and egg discussion, the spending is the root cause since the tax changes amount to much less than the spending in terms of growth.

[mcsluggo]

I'll just disagree. I think its very relevant, (but not worth arguing about at this point since we just see it differently I guess)

point 1: deficits automatically get worse during a slump--- revenue generating capacity decreases while spending needs increase. Its why we talk about a "full epmloyment budget deficit" (the budget deficit that WOULD exist IF we were at full employment). in 2006 we were rapidly expanding the budget deficit when we were already at full employment. that was bad.

point 2: you talk about spending level like there is a magical level of equilibrium. there isn't. equilibrium comes from spending = reveues (AT FULL EMPLOYMENT). this can be reached with revenues and spending both equal to 2% of gdp or with with revenues and spending both equal to 60% of gdp. the math is indifferent to the two choices (or many others). you COULD argue that PRODUCTIVITY is maximized at some level of government spending (greater than zero less than 100%), but while that would affect the growth rate, it would not affect equilibrium unemployment level (full employment).

point 3: the CURRENT impact on unemployment comes from the delta in fiscal policy--- if you CHANGE taxes or spending, then there is a "keynesian effect" (in teh way people usually use/misuse the term).

tighten fiscal policy ----- leads to a temporary reduction in growth and an increase in unemployment

loosen fiscal policy ----- leads to a temporary increase in growth and a decrease in unemployment

right now the deficit is where it is (high) and the unemployment rate is where it is (high) ---- reduce the deficit will lead to higher unemployment (short to medium run) which will increase the deficit (short to medium run). it is the clasic definition of a fiscal liquidity trap.

on the other hand point 2 still holds, the economy can settle to equilibrium (full employment) with high spending, or low spending --- it is not the driver of the long run uneplloyment equilibrium. This isn't partisan, it is straight mathematical identities.

[Hubbs]

Actually, that's untrue.

Debt exists because you borrow money. Whether you spend the money or not is irrelevant.

And, once you borrow the money, then you are spending money that you DO have. The prison who loaned it to you doesn't have it, any more.

First of all, did you just accidentally write "prison" instead of "person"? Not a jab at your intelligence, we all accidentally mis-write things all the time, this just seems to be a particularly unusual case.

Second of all, I felt like jumping in here because perhaps the most widely-unknown secret about the modern financial system is that most of the time, the truth is that when you borrow money, it is not the case that the entity you borrowed from is deprived of that same amount of money. In fact, when you borrow money, the entity you borrowed from simply conjured the money into existence. No, I'm not talking about the Fed. I'm talking about private banks. The Fed has actually acknowledged that this phenomenon exists (but so far has not actually applied the phenomenon to its economic models, a very major mistake). I wanted to jump in about this issue because it's so important when it comes to understanding the economy as a whole, and I'm working on a post for another thread that will explain why much more thoroughly.

Third of all, damnit, you two need to stop squabbling about semantics. Yes, SS, you'll only go into debt if you want to spend (or to acknowledge Larry's technical point, have) more money that you take in. And yes, Larry, knowing that you're spending more than you take in involves knowing how much you take in. Yes, SS, we're spending way more than we should, and we have spent much more than we should, and it's extremely unlikely that we would even be able to take in enough taxes to match our spending unless WWIII started (because capital won't just leave the country in response to huge tax hikes if the world is at war). And yes, Larry, increasing tax revenue in some manner is probably going to be necessary to get things under control, even though it probably wouldn't be if I were king for a day, because I'd be cutting a helluvalot of spending. But politics will likely require some increased revenues.

I think that (nearly) all of us can agree that going to war and cutting taxes at the same time should not be done, and doing so is a major reason why we're in a bind today. Good so far?

[Larry]

First of all, did you just accidentally write "prison" instead of "person"? Not a jab at your intelligence, we all accidentally mis-write things all the time, this just seems to be a particularly unusual case.

Don't know if it was me, or the auto-correct on the iPad. (Which does some really strange things, from time to time.) (But I certainly seem to have a higher rate of typos, lately.)

[Predicto]

First off, the discussion on spendings impact on deficit was not what the deep end reference came from, it was the odd analogy on 70% tax brackets that did it.

Second, is there a deficit if spending is not increased? (lets use this decade for a baseline). So pretend we are at even in the year 2000, if no spending increases and taxes stay the same, is there a deficit?

If you go into a recession and your actual tax revenue drops like a stone, then yes. You still have a deficit.

That is what is happening right now. The great increase in the deficit in the past few years is not because of overwhelming increases in spending. It is because of tremendous reductions in revenue. Tax revenue dropped almost half a trillion dollars between 2007 and 2009 without any significant change in the tax rates.

I'm not debating that the calculation of a deficit doesnt include revenue, I'm debating that in this chicken and egg discussion, the spending is the root cause since the tax changes amount to much less than the spending in terms of growth.

Just because you believe this does not make it true. In reality, we paying less taxes, as a percentage of GDP, than we have in almost a century. It is a huge part of the balancing equation. So is spending, of course. But you think only one of them matters. :whoknows:

And,

[Hubbs]

Just because you believe this does not make it true. In reality, we paying less taxes, as a percentage of GDP, than we have in almost a century. It is a huge part of the balancing equation. So is spending, of course. But you think only one of them matters. :whoknows:

And,

If we changed the wording from "only one of them matters" to "we'd still be running a deficit if spending was in line with historical norms, but spending is way beyond those norms, therefore spending is a much more obvious and serious problem," would you disagree?

[Larry]

If we changed the wording from "only one of them matters" to "we'd still be running a deficit if spending was in line with historical norms, but spending is way beyond those norms, therefore spending is a much more obvious and serious problem," would you disagree?

Way beyond those norms?

Total federal government spending, as a % of GDP, 1950 - 2012:

Total federal revenue, same criteria, same period:

Note that NEITHER CHART STARTS THE VERTICAL SCALE AT ZERO. (This makes fluctuations look considerably larger than they actually are.) (I don't know why it insists on not starting the scales at zero. I don't think I've seen it do that before. But if there's an option to change it, I don't see it.)

Now, from 1950 to 2006 (which I figure is the last year prior to the economy tanking), spending averaged 19.5% of GDP, and revenue averaged 17.8% of GDP. I chose to call this "historical averages".

In FY 2010, spending, which historically was 19.5% of GDP, was 25.4%

And revenues, which historically were 17.8%, were 14.8%.

Looks to me like both numbers are rather significantly different from historical.

And yet, some people seem to want desperately to pretend that only one number has changed, and that only one number should be adjusted.

Including you.

----------

Want some more detail? Here's some parts of the federal government's revenue, historical % of GDP, and % GDP in 2010.

Personal Income Taxes: 7.9%, 6.2%

Corporate Income Taxes: 2.8%, 1.3%

Kind of curious. Personal income in 2010 was, I think we'd agree, sucky, compared to normal, but revenue from personal income taxes didn't change much. Whereas the impression I get is that corporate profits have been setting records in this economy, but the amount collected from corporate income taxes is less than half of historical.

And yet, the impression I get is that there are two kinds or Republicans running for President, right now:

1) Those that want to cut corporate taxes by 1/3 or more.

2) Those that want to eliminate them entirely.

[AsburySkinsFan]

Interesting charts and if I'm reading them right it looks as if when the spending went up the tax revenue went down, so it is almost like what the GOP demanded in tax cuts added just as much to the debt as the increase in spending. So the compromise that the GOP gave was to allow the increase in spending in order to drive up the debt so they could blame the Dems for it later when they were just as responsible.

[Hubbs]

Way beyond those norms?

Total federal government spending, as a % of GDP, 1950 - 2012:

Total federal revenue, same criteria, same period:

Note that NEITHER CHART STARTS THE VERTICAL SCALE AT ZERO. (This makes fluctuations look considerably larger than they actually are.) (I don't know why it insists on not starting the scales at zero. I don't think I've seen it do that before. But if there's an option to change it, I don't see it.)

Now, from 1950 to 2006 (which I figure is the last year prior to the economy tanking), spending averaged 19.5% of GDP, and revenue averaged 17.8% of GDP. I chose to call this "historical averages".

In FY 2010, spending, which historically was 19.5% of GDP, was 25.4%

And revenues, which historically were 17.8%, were 14.8%.

Looks to me like both numbers are rather significantly different from historical.

And yet, some people seem to want desperately to pretend that only one number has changed, and that only one number should be adjusted.

Including you.

----------

Want some more detail? Here's some parts of the federal government's revenue, historical % of GDP, and % GDP in 2010.

Personal Income Taxes: 7.9%, 6.2%

Corporate Income Taxes: 2.8%, 1.3%

Kind of curious. Personal income in 2010 was, I think we'd agree, sucky, compared to normal, but revenue from personal income taxes didn't change much. Whereas the impression I get is that corporate profits have been setting records in this economy, but the amount collected from corporate income taxes is less than half of historical.

And yet, the impression I get is that there are two kinds or Republicans running for President, right now:

1) Those that want to cut corporate taxes by 1/3 or more.

2) Those that want to eliminate them entirely.

Perhaps I wasn't clear enough, because your charge of "including you" is incorrect. I wasn't trying to say that only spending was out of line with historical norms. I was trying to say that if tax revenue was in line with historical norms, we'd still be running a huge deficit. I'll certainly acknowledge that tax revenue is historically low as well.

As far as Republicans and taxes go, I think you're somewhat correct, but I also think that the Republican candidates do a terrible job of framing the argument. If I were running for president, I would offer up a very simple tax trade-off: I'd cut corporate taxes to zero and raise taxes on the upper brackets, including capital gains taxes, especially short-term capital gains taxes. My reasoning would be:

1) Short-term capital gains are, in general, a product of "flipping" rather than sound, long-term investment decisions. And unfortunately, the "flipping" has been taken to an absurd level thanks to the advent of computerized algorithmic trading, otherwise known as "high-frequency trading." In a nutshell, this is the phenomenon of financial institutions empowering computers to not just execute trades, but actually make investment decisions. This has resulted in computers buying and selling countless stocks within the same second, as well as a practice known as "quote-stuffing," which is when a computer will overload the "other" computers operated by a particular exchange and throw out bid/ask numbers that are intentionally fake in order to push the real bid/ask spread in a certain direction for milliseconds and then take advantage of the difference between the fake spread and reality in order to profit. This is supposed to be illegal, but the SEC doesn't enforce jack or **** these days, so trades aren't cancelled and nobody goes to jail. Between day trading and high-frequency trading, the average stock is held for around 20 seconds. This has absolutely nothing to do with the business of companies going public to raise legitimate capital while savers invest in companies that they expect to do well. Our markets are a joke, and I feel like it's important to note that as a libertarian, I believe it would be absolutely correct to move towards restoring the sound fundamentals of our markets by banning high-frequency trading and taxing the hell of human "flippers."

2) Taxing businesses is one of the dumbest ideas tolerated by modern politics. A business is nothing more than a legal mechanism by which a group of people can strive to provide a good or service to the public. Every dollar taken from a business is a dollar that would have otherwise gone towards capital investment, the hiring of employees, or shareholder dividends. The first two we should encourage, and the latter is already taxed. The government needs revenue, yes, but the truth is that ultimately, all taxes are paid by people, no matter if it's a tax dollar taken directly out of your paycheck or a tax dollar you didn't receive because you work for a company that supplies Ford with staplers, and your holiday bonus would have been bigger if the government didn't take X% of your company's profits. Creating inherent extra costs within all businesses for the sake of tax revenue is like gouging out your eyes because your brain reacts to blindness by making your hearing sharper.

3) The government obviously needs revenue to function. This revenue could theoretically be provided via mechanisms such as tariffs. I wouldn't necessarily oppose such a policy, as I believe that free trade is a great idea but must only be pursued among nations with comparable labor, environmental, and regulatory standards, and thus I would support tariffs on, say, Chinese goods. But if I believed that government needed to provide more services than tariffs would allow, I'd say that a very progressive tax code with the upper brackets paying for the majority of government would make the most sense.

[Larry]

Interesting charts and if I'm reading them right it looks as if when the spending went up the tax revenue went down, so it is almost like what the GOP demanded in tax cuts added just as much to the debt as the increase in spending. So the compromise that the GOP gave was to allow the increase in spending in order to drive up the debt so they could blame the Dems for it later when they were just as responsible.

Yes, the spending went up and the revenues down at the same time.

But neither happened because of any tax cuts.

The changes to revenues, and to spending, were both due to the economy going down the toilet.

Many on he Right want to try to blame Obama for he spending increase, but they're wrong.

And blaming tax cuts is just as wrong.

PART of the revenue drop is due to tax cuts. But only part. And not even the biggest part.

Just like PART of the spending increase is due to Obama, but not the biggest part.

[Thiebear]

The Teaparty types fought to the 'brink' to get the 1.2trillion dollar default knowing the committee would never come up with the promises.

So who didn't think the establishment Republican shills would ask for this, McCain didn't even wait for the committee to fail when he states this tripe.

Spineless ****s can't find 300 billion in the easy stuff and cut back a bit like the rest of us each year in the worst recession in 100years.

Easy stuff like counting the end of Iraq/Afghan and SK would be 200billion?

If the Dems have to take cuts in SS, Medicaid, Medicare then there has to be concessions on the repub side.. they both got us here.

[PeterMP]

You know, I guess I just don't get it. That's not a shocker, there are a great many things I don't get. This entire pain point over paying for increases in spending I don't get. The Left seems to get angry over this concept and I do not understand why. It was Democratic Legislation that basically passed law that said any new spending would have to be paid for with cuts in other areas. Why would you pass that law if you didn't actually want that as a standard?

Doesn't matter. What will happen will happen.

Here is an article that outlines 800 Billion in new spending revenue. I don't know if it's entirely factual as the committee never actually published anything or even discussed much of anything other then political points they wanted to get out and into the press.

http://www.boston.com/Boston/politicalintelligence/2011/11/boehner-open-revenue-increases-but-calls-for-significant-entitlement-reforms-part-debt-plan/9EYSB65zcsU7qwZFeYlHGM/index.html

When this became public this summer, Boehner was VERY QUICK this summer to point out that REVENUE (NOT tax) increases didn't mean raising taxes. They could include things like selling off federal land. Read your link carefully.

http://www.dailykos.com/story/2011/11/03/1032945/-Boehner:-Deficit-deal-could-include-revenue,-but-not-tax-increases

(Might not be the best link, but its the first I found, and it matches my memory.)

[Larry]

Perhaps I wasn't clear enough, because your charge of "including you" is incorrect. I wasn't trying to say that only spending was out of line with historical norms. I was trying to say that if tax revenue was in line with historical norms, we'd still be running a huge deficit. I'll certainly acknowledge that tax revenue is historically low as well.

As far as Republicans and taxes go, I think you're somewhat correct, but I also think that the Republican candidates do a terrible job of framing the argument. If I were running for president, I would offer up a very simple tax trade-off: I'd cut corporate taxes to zero and raise taxes on the upper brackets, including capital gains taxes, especially short-term capital gains taxes. My reasoning would be:

1) Short-term capital gains are, in general, a product of "flipping" rather than sound, long-term investment decisions. And unfortunately, the "flipping" has been taken to an absurd level thanks to the advent of computerized algorithmic trading, otherwise known as "high-frequency trading." In a nutshell, this is the phenomenon of financial institutions empowering computers to not just execute trades, but actually make investment decisions. This has resulted in computers buying and selling countless stocks within the same second, as well as a practice known as "quote-stuffing," which is when a computer will overload the "other" computers operated by a particular exchange and throw out bid/ask numbers that are intentionally fake in order to push the real bid/ask spread in a certain direction for milliseconds and then take advantage of the difference between the fake spread and reality in order to profit. This is supposed to be illegal, but the SEC doesn't enforce jack or **** these days, so trades aren't cancelled and nobody goes to jail. Between day trading and high-frequency trading, the average stock is held for around 20 seconds. This has absolutely nothing to do with the business of companies going public to raise legitimate capital while savers invest in companies that they expect to do well. Our markets are a joke, and I feel like it's important to note that as a libertarian, I believe it would be absolutely correct to move towards restoring the sound fundamentals of our markets by banning high-frequency trading and taxing the hell of human "flippers."

2) Taxing businesses is one of the dumbest ideas tolerated by modern politics. A business is nothing more than a legal mechanism by which a group of people can strive to provide a good or service to the public. Every dollar taken from a business is a dollar that would have otherwise gone towards capital investment, the hiring of employees, or shareholder dividends. The first two we should encourage, and the latter is already taxed. The government needs revenue, yes, but the truth is that ultimately, all taxes are paid by people, no matter if it's a tax dollar taken directly out of your paycheck or a tax dollar you didn't receive because you work for a company that supplies Ford with staplers, and your holiday bonus would have been bigger if the government didn't take X% of your company's profits. Creating inherent extra costs within all businesses for the sake of tax revenue is like gouging out your eyes because your brain reacts to blindness by making your hearing sharper.

3) The government obviously needs revenue to function. This revenue could theoretically be provided via mechanisms such as tariffs. I wouldn't necessarily oppose such a policy, as I believe that free trade is a great idea but must only be pursued among nations with comparable labor, environmental, and regulatory standards, and thus I would support tariffs on, say, Chinese goods. But if I believed that government needed to provide more services than tariffs would allow, I'd say that a very progressive tax code with the upper brackets paying for the majority of government would make the most sense.

I think I've seen proposal 1 before, I assume from you, and I've said similar things, myself. I've observed that a lot of wht's called "investing" is really "speculating". (Inluding myself. I own a lot of stock in Disney, for example. Well, a lot for me, not a lot for Disney. But I didn't give my money to Disney, I gave it to somebody else who was selling it. And I don't gt to decide whether they make another Pirates movie, or even get a discount when I go there. I'm not running the company. I'm placing a bet on how much the stock will be worth, down he road.).

Frankly, I wonder if maybe one year is too short a time to qualify for the long term CG rate.

Now, as to #2, I've seen it before, and I have some problems with it.

One problem is with the philosophy of "if you tax corporations, then you're really just taxing somebody else". My problem is that if I have that attitude, then I can simply announce that all income taxes in the world are actually paid by me, and everybody else simply passes heir taxes along to me.

Another problems was one I'd read in an article somewhere. I think it was Krugman. He asserted that HIGHER tax rates actually encouraged businesses to plow their profits back into the company, because corporate profits get taxed, paying the money to the Rich Owner gets taxed a lot, but if the company spends their profit on expansion or new trucks or whatever, there's no tax.

He asserted that the current trend towards lower tax rates has led to he current environment where, when a company makes a profit, the company immediately gives the money to the owner or the CEO. Because there isn't much tax when they do that.

So, I think we kind of agree. Our current tax structure encourages businesses to pay the owner, rather than to grow the business.

[twa]

Just because you believe this does not make it true. In reality, we paying less taxes, as a percentage of GDP, than we have in almost a century. It is a huge part of the balancing equation. So is spending, of course. But you think only one of them matters. :whoknows:

And,

I suppose you are overlooking the stimulus spending effect inflating GDP, while glossing over the jobs crash?

It is certainly true Obama has cut taxes AND tax receipts are down.

Are you endorsing Bachmans tax on those not presently paying them? (Strange Days)

[Larry]

I suppose you are overlooking the stimulus spending effect inflating GDP, while glossing over the jobs crash?

Uh, GDP went down between FY 08 and 09.

It is certainly true Obama has cut taxes AND tax receipts are down.

As is usual with the spin machine, you seem to be ignoring little details like dates and actions.

Tax revenues went down, six months before Obama took office.

The Democrats passed a tax cut for calender year 2011.

And gee, I thought it was a claim of the spin machine, for the last 30 years, that tax cuts always lead to revenue growth.

[Hubbs]

I think I've seen proposal 1 before, I assume from you, and I've said similar things, myself. I've observed that a lot of wht's called "investing" is really "speculating". (Inluding myself. I own a lot of stock in Disney, for example. Well, a lot for me, not a lot for Disney. But I didn't give my money to Disney, I gave it to somebody else who was selling it. And I don't gt to decide whether they make another Pirates movie, or even get a discount when I go there. I'm not running the company. I'm placing a bet on how much the stock will be worth, down he road.).

Frankly, I wonder if maybe one year is too short a time to qualify for the long term CG rate.

Now, as to #2, I've seen it before, and I have some problems with it.

One problem is with the philosophy of "if you tax corporations, then you're really just taxing somebody else". My problem is that if I have that attitude, then I can simply announce that all income taxes in the world are actually paid by me, and everybody else simply passes heir taxes along to me.

Another problems was one I'd read in an article somewhere. I think it was Krugman. He asserted that HIGHER tax rates actually encouraged businesses to plow their profits back into the company, because corporate profits get taxed, paying the money to the Rich Owner gets taxed a lot, but if the company spends their profit on expansion or new trucks or whatever, there's no tax.

He asserted that the current trend towards lower tax rates has led to he current environment where, when a company makes a profit, the company immediately gives the money to the owner or the CEO. Because there isn't much tax when they do that.

So, I think we kind of agree. Our current tax structure encourages businesses to pay the owner, rather than to grow the business.

On the first point, yes, you could theoretically put together an argument which states that all taxes are paid by you. My counter would be this: All taxes are ultimately paid by somebody. The fairest way to determine who that "somebody" is is to focus all taxes on personal income (while taking into consideration capital gains).

On the second point, I already said that if we determined that the government needed more revenue than what would be provided by the personal income tax, raising the capital gains tax would be an option, although I'd have to examine what the likely effects of raising that tax would be in relation to raising tariffs.

[Madison Redskin]

1) Short-term capital gains are, in general, a product of "flipping" rather than sound, long-term investment decisions. And unfortunately, the "flipping" has been taken to an absurd level thanks to the advent of computerized algorithmic trading, otherwise known as "high-frequency trading." In a nutshell, this is the phenomenon of financial institutions empowering computers to not just execute trades, but actually make investment decisions. This has resulted in computers buying and selling countless stocks within the same second, as well as a practice known as "quote-stuffing," which is when a computer will overload the "other" computers operated by a particular exchange and throw out bid/ask numbers that are intentionally fake in order to push the real bid/ask spread in a certain direction for milliseconds and then take advantage of the difference between the fake spread and reality in order to profit. This is supposed to be illegal, but the SEC doesn't enforce jack or **** these days, so trades aren't cancelled and nobody goes to jail. Between day trading and high-frequency trading, the average stock is held for around 20 seconds. This has absolutely nothing to do with the business of companies going public to raise legitimate capital while savers invest in companies that they expect to do well. Our markets are a joke, and I feel like it's important to note that as a libertarian, I believe it would be absolutely correct to move towards restoring the sound fundamentals of our markets by banning high-frequency trading and taxing the hell of human "flippers."

I agree with this 100%.

For those who haven't heard of high frequency trading, check this out.

2) Taxing businesses is one of the dumbest ideas tolerated by modern politics. A business is nothing more than a legal mechanism by which a group of people can strive to provide a good or service to the public. Every dollar taken from a business is a dollar that would have otherwise gone towards capital investment, the hiring of employees, or shareholder dividends.

Are you sure about that?

[Hubbs]

Are you sure about that?

Well, if you're going to bring up something like, say, corporate jets, I would say three things:

1) Not all corporate jets are frivolous luxuries. There are some good reasons for the people running a company to not spend hours in an airport, especially if they need to travel a lot.

2) Even if there's obvious frivolity involved, we're talking about something that can only be used so long as a person is with the company. Moreover, we're talking about a shareholder issue. If shareholders don't like how their company is spending money, they should be more active about trying to change that. Right now, we have a complacent shareholder culture that I believe is the product of a 30-year asset boom (much of which I believe is artificial and will eventually crash down on us in a horrible way, but that's another topic for another thread). The solution to that is not to tax all companies as some sort of "justified" response to the fact that a few might not be spending their money as wisely as we would like.

3) Finally and most importantly, executive perks are a form of compensation in the same way that employer-provided health insurance is a form of compensation. So, yes, this still falls under the categories I described. But, again, this type of compensation is different from a salary or bonus because of argument #2: You only have access to the corporate jet so long as you're with the company, unless the next guy decides to let you keep using the jet, and then it's his (or her, of course, I just needed to pick a pronoun) decision made at his company's cost and not the government's business.

Now, will there be a few companies that wind up being unprofitable, thereby demonstrating that they weren't actually providing all that much value to society, but while they were in existence they wasted money on too many executive perks? Of course. But this is going to be true of any type of common human endeavor—some efforts will fail, and in retrospect there will be decisions that look stupid. That's not a reason to tax all businesses. And I also suppose that you might be thinking of companies that have built up large amounts of cash-on-hand, but that's merely an issue of timing, not an issue of how the money will eventually be spent. It would seem to me to be the height of lunacy to justify punishment-through-taxation with the fact that some companies provide goods or services that are so very popular that they can't find enough ways to spend money as fast as it's coming in. "Apple's sitting on billions because the iPod and iPad were awesome! Take their money, I say!"

(Oh, and one more thing, if you were thinking of political donations, those are certainly a form of investment. But I would ban them. Corporations and unions are not people, and the notion that they should be able to give money to politicians or PACs is, in my opinion, a very bad idea.)

[Larry]

On the first point, yes, you could theoretically put together an argument which states that all taxes are paid by you. My counter would be this: All taxes are ultimately paid by somebody. The fairest way to determine who that "somebody" is is to focus all taxes on personal income (while taking into consideration capital gains).

On the second point, I already said that if we determined that the government needed more revenue than what would be provided by the personal income tax, raising the capital gains tax would be an option, although I'd have to examine what the likely effects of raising that tax would be in relation to raising tariffs.

I think that we strongly disagree on your second point.

Far as I'm concerned, the only reason why capital gains income (or dividends, or any other form of income) is taxed any differently from any other income, is class warfare.

---------- Post added December-3rd-2011 at 12:29 PM ----------

2) Even if there's obvious frivolity involved, we're talking about something that can only be used so long as a person is with the company. Moreover, we're talking about a shareholder issue. If shareholders don't like how their company is spending money, they should be more active about trying to change that. Right now, we have a complacent shareholder culture that I believe is the product of a 30-year asset boom (much of which I believe is artificial and will eventually crash down on us in a horrible way, but that's another topic for another thread). The solution to that is not to tax all companies as some sort of "justified" response to the fact that a few might not be spending their money as wisely as we would like.

Just observing that, as far as I'm aware, the argument about taxation on corporate jets is about whether the tax code should encourage them. What the D proposal would have done was to treat them like other corporate assets.