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This room is for the discussion of current events,cultural issues and politics especially in relation to Catholic values.

Saint Thomas More was martyred during the Protestant Reformation for standing firm in the Faith and not recognizing the King of England as the Supreme Head of the Church.
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Dec 7th 2012 new

(Quote) Marianne-100218 said: John: I always wonder why taxes have to be raised anyway? The amount we pay in taxes s...
(Quote) Marianne-100218 said:



John: I always wonder why taxes have to be raised anyway? The amount we pay in taxes should be sufficient to
cover our needs. If the population increases, then the tax base should increase, hence, more taxes collected.

OK, give a little increase for inflation, but that is about it.

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The question to ask is why should we have inflation?

For far too long The Fed has operated on the assumption that a small amount of inflation is a good thing. It has even been automatically built into policies at both the Government level as well as in business. The latter mainly through cost of living (COLA) clauses in Union Contracts.

Milton Freedman demonstrated that, from the monetary side, as long as the money supply is kept in step with increases or decreases in economic activity there would be no inflation from that cause. Inflation could still arise from the shortage on the supply side or other causes. But those can correct themselves over time. Inflation caused by an overabundance of money becomes structural, even if a correction follows because of the distortions caused by COLA adjustments. COLAS never adjust downward.

Taxes themselves can be a source of inflation. Taxes are a cost not only to business but to individuals. As tax rates rise, business will raise their price to cover the increase and workers will demand higher wages and salary to make up for the taxes. Of course, once a stated level of revenue for a business or income for an individual is achieved there is a great reluctance to see it decrease if taxes should be lower.

The case gets even more complicated. Businesses don't pay taxes they collect them. By that I mean any tax is a cost of doing business so a business must include those costs in the price of their product whatever it may be. Otherwise it is not covering its costs and will eventually fail.

Now a single proprietorship, partnership and some forms of Corporations only have their earnings taxed once. For those individuals there will also be a tax on their accumulated wealth, which was already taxed as earned, at their death.

For regular corporations, their net income is taxed as earned. That same income is taxed again when it is paid out to itys owners in the form of dividends. and then taxed a third time at death. Roughly at today's rates,that is a total tax on those earnings of up to 70.375%.

Now for regular corporations which are successful, any earnings it retains to expand its business, all other things being equal, will eventually be reflected in its stock price. To the extent that is true, that portion of the capital gain in the value of the stock has already been taxed. Any monetary inflation that takes place over time will also be reflected in the stock price. Inflation is the cruelest tax of all because it has decreased the real value of wealth. Yet if an individual stock holder sells his stock at a price above his cost basis which is never adjusted for inflation that portion of his gain attributable to the retained earnings factor is taxed a second time and that portion of his gain attributable to inflation which in not a true increase in value also gets taxed. That portion of his gain attributable to the premium or increase in the value of stock aside from those two only gets taxed once. Of course any accumulated wealth that resulted from the owning of stock gets taxed again at death.

If you add in any state and local income taxes into the equation, the total tax take by governemnts at all levels comes close to consuming overf 90% olf the amount earned by the corporation in the first place.

Dec 7th 2012 new


"John: I always wonder why taxes have to be raised anyway? The amount we pay in taxes should be sufficient to
cover our needs. If the population increases, then the tax base should increase, hence, more taxes collected.

"OK, give a little increase for inflation, but that is about it."

Marianne: You make an outstanding point. Go back and look at that chart of the total revenues and expenditures over the decades. (I can email you the link - it's an .xls spreadsheet on the White House Web site).

As you will see, allowing for deviations, we have had a federal government that has lived within its means and either had a surplus or came close to a surplus in several of the Clinton and Bush years.

It goes back to the point of the poster on CM who accurately noted: we don't have a revenue problem in this country, we have a federal spending problem.

Dec 7th 2012 new

"Agreed. Keynesian economics is about timing and using the government to couteract business cycles. The Bush stimulus (tax cut) and the Obama stimulus (spending increase) were both about timing. The problem is, a permanent stimulus isn't a stimulus; it becomes a permanent part of government. When the business cycle comes back around to growth, the stimulus should disappear. The Bush tax cuts never disappeared."

Your comment feels like you're understanding the timing factor, so I'll give you credit there, but to call it Keynesian would be incorrect. Virtually every economic model relies on timing of some variety. Keynesian theory cannot hold an exclusive claim.

Dec 8th 2012 new

(Quote) John-727073 said: "John: I always wonder why taxes have to be raised anyway? The amount we pay in taxes sho...
(Quote) John-727073 said:


"John: I always wonder why taxes have to be raised anyway? The amount we pay in taxes should be sufficient to
cover our needs. If the population increases, then the tax base should increase, hence, more taxes collected.

"OK, give a little increase for inflation, but that is about it."

Marianne: You make an outstanding point. Go back and look at that chart of the total revenues and expenditures over the decades. (I can email you the link - it's an .xls spreadsheet on the White House Web site).

As you will see, allowing for deviations, we have had a federal government that has lived within its means and either had a surplus or came close to a surplus in several of the Clinton and Bush years.

It goes back to the point of the poster on CM who accurately noted: we don't have a revenue problem in this country, we have a federal spending problem.

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Can you post the reference to the chart?

Dec 8th 2012 new

(Quote) Marianne-100218 said: Can you post the reference to the chart?
(Quote) Marianne-100218 said:



Can you post the reference to the chart?

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Yes. It is .xls file 1.1 - at the top:

www.whitehouse.gov



Dec 8th 2012 new
"Tax the rich, feed the poor, 'til there are no rich no more....I'd love to change the world, but I don't know what to do, so I leave it up to you..." That about sums it up for me. Just trying to be funny. This thread needs a good laugh.
Dec 8th 2012 new

(Quote) John-746882 said: "Tax the rich, feed the poor, 'til there are no rich no more....I'd love to change the world...
(Quote) John-746882 said: "Tax the rich, feed the poor, 'til there are no rich no more....I'd love to change the world, but I don't know what to do, so I leave it up to you..." That about sums it up for me. Just trying to be funny. This thread needs a good laugh.
--hide--


Actually, John, getting the rich to feed the poor is a good idea. Getting the Government involved in feeding the poor
is where the problem lies.

Dec 8th 2012 new

(Quote) John-727073 said: Yes. It is .xls file 1.1 - at the top:www.whitehouse.gov.
(Quote) John-727073 said:



Yes. It is .xls file 1.1 - at the top:

www.whitehouse.gov



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John: That Whitehouse historical information is an excellent reference. It has so much information.

The file that you suggested, file 1.1, was very confusing to me.

I understood the first three columns, , but when it came to the "Budget" and "Off-Budget," the concepts
were not clear to me.

The first reason they were not clear is because Obama was not supposed to have a budget. So I wonder
why there are even any numbers under those columns for him.

Then I wonder where the money comes from under the "Off Budget" incomes. I can understand "Off Budget"
outlays, but not "Incomes."

Any thoughts?

Dec 10th 2012 new

If Obama gets his tax increase in the 2%, it will only fund the govt for less than 9 days. It is a stupid tax request and will only take more badly needed capital out of the productive sector, which will be wasted in the public (parasite) sector. Not one dime sill be used to reduce the deficit. As an employee of the public sector, I can assure you that every federal agency can, and should take a 10% haircut. Before the meat ax is applied. Obama has not proposed cutting one dime of federal spending. Meanwhile, his deficits are 5 times what Bush's were before the Democrats took congress in 2006 and started balooning spending.

Obama has no interest in solving the problem. Obama is the problem. And when the 2% tax doesn't solve the problem - he's coming after you and me and your retirement. Hope you like social security. Because that is all you'll have left after he taxes you to death

Dec 11th 2012 new

[quote]Tony-73158 said:

If Obama gets his tax increase in the 2%, it will only fund the govt for less than 9 days.

9 days = a 3% increase in federal revenue, which is a substantial amount of money.

I would immediately question the source of this citation because they dismissed it as a mere 9 days of funding (spin).


If you look at all the big inventions of the last 60 years, were they derived from the public sector, or the private sector?

Take something we all know: the internet. Developed in academia through federal grant funding. And its free, imagine that?

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