AlphaDog.. Paving the roads, picking up the garbage, providing police and armed forces, and regulating commerce, takes money which the government gets from taxation. Then there are the individual states who collect their own taxes for the same thing. But what happens when the people who pay those taxes are being squeezed to a breaking point like what is happening right now. People out of jobs because the manufacturing base is leaving for Asia for cheap labor and lower taxes. Greed is a big problem and these corporations know how to get it.
This is the part that I don't know enough about. Who is to blame; How can it be fixed?
Bee, have you ever taken any kind of finance coursework. You’re posts scream of the typical kind of economic ignorance that a large number of Americans share. I think more so among your demographic – the young (college-aged). Here, let me help you.
That's fine but everyone can't cross the gap for obvious reasons. However, some people are perfectly happy picking coconuts for coconut wages while others need to be executives which gets them executive coconuts. Everone is happy and each lives within their means.
Debatable. Some would argue that Americans insistence at trying to live beyond their means (high debt levels, excessive credit card usage, etc.) is part of the reason that we have some of the economic issues we have today.
The problem is when the executives get greedy making it harder and harder for the little guy to live on the smaller coconuts he now gets. He's hurting and to make matters worse the government needs more coconuts so places higher coconut taxes on the little guy while allowing the executive to keep most of his.
a) Bee,
everybody wants more money.
b) Do you know what a tax bracket is?
http://en.wikipedia.org/wiki/Tax_bracket
The “little guy”’s, employees at lower salary levels, are already paying lower taxes than the “rich (greedy) executives”
http://www.iht.com/articles/2007/07/16/business/tax.php
Recent calculations by the Congressional Budget Office of U.S. tax rates show a highly progressive system. (The numbers are based on 2004 data, but the tax code has not changed much since then.) The poorest fifth of the population, with average annual income of $15,400, pays only 4.5 percent of its income in federal taxes. The middle fifth, with income of $56,200, pays 13.9 percent. And the top fifth, with income of $207,200, pays 25.1 percent.
At the very top of the income distribution, the CBO reports even higher tax rates. The richest 1 percent has average income of $1,259,700 and forks over 31.1 percent of its income to the federal government.
One might wonder how Buffett gets away with a tax rate of only 17.7 percent, while a typical millionaire is paying so much more. Most likely, part of the answer is that Buffett's income is made up largely of dividends and capital gains, which are taxed at only 15 percent. By contrast, many other top earners pay the maximum ordinary income tax rate of 35 percent on their salaries, bonuses and business income.
The distinction is crucial for understanding how much the rich pay. Indeed, the share of top incomes coming from capital is much lower now than it has been historically. According to Emmanuel Saez, an economist at the University of California, Berkeley, for the richest Americans - those in the top 0.01 percent of the distribution - the percentage of income derived from capital fell to 25 percent in 2004 from 70 percent in 1929.
If your image of the typical rich person is someone who collects interest and dividend checks and spends long afternoons relaxing on his yacht, you are decades out of date. The leisure class has been replaced by the working rich.
Another piece of the puzzle is that Buffett's tax burden is larger than it first appears, because he is a major shareholder in Berkshire Hathaway.
When the CBO studies the tax burden, it includes all federal taxes, including individual income taxes, payroll taxes and corporate income taxes. In its analysis, payroll taxes are borne by workers and corporate taxes by the owners of capital. For the richest 1 percent of the population, 9.3 percentage points of their 31.1 percent tax rate comes from the taxes that corporations have paid on their behalf. The corporate tax would undoubtedly loom large if the CBO were to calculate Buffett's effective tax rate.
None of these calculations, however, say whether the rich are paying their fair share in the United States. Fairness is not an economic concept. If you want to talk fairness, you have to leave the department of economics and head over to philosophy.
And,
here’s a nice little question and answer dialog that puts some recent numbers into perspective.
Here’s
some more viewpoint.
I’m not going to defend executive compensation packages; clearly there have been abuses. Corporate boards are supposed to provide the governance and oversight on this issue, within the current rule of law. Both law and board oversight probably need to be improved.
Worse still is when the executive lays off the coconut picker because the asian market is cheaper....but the government still chokes him.
We’re living in a world economy. Recent reports are that since the Christmas seasonal demand from the US is low, they’ve had to close about half the toy factories in southern China.
Supply and demand – that’s how market economies work. Indeed, the boom in China’s economy is slowly leading to the fact that they will no longer be to cheapest source of labor, and some jobs will go elsewhere.
But you keep coming back to government being part of the problem. That’s good. Hold that thought.
I don't mind Obama taking more of those coconuts from the executive and taxing him for defecting overseas. The bottom line, as I see it, is that the little guy is broken from making the executive rich in the first place so I think it's payback time.
See the links above; you are sorely underinformed by whatever has led you to this conclusion. Not to mention the fact that the government could offer
incentives to make it more attractive for companies to keep their activities here. But, according to you, it’s better if Obama just beats them with a stick instead. Yeah, that’ll make ‘em feel better about it.
Obama wants to raise capital gains tax rates – he should have a chat with Bill Clinton, who lowered them.
Gosh, OK, let’s take a look at oil company profits.
Bee, I don’t know what the heck you are reading that you would cause you to bring this up at this point, but let me point you to one of the places I like to go for some
informed, level-headed opinion – the
R-Squared Energy Blog
I just did a search on Robert’s blog with the terms “exxon record profits”, and got this result -
http://i-r-squared.blogspot.com/search? ... rd+profits
Although I highly recommend that you read ALL of the blog postings there (you won’t regret it, and you will in short order become more knowledgeable on energy issues than both Nancy Pelosi and Harry Reid, and all of their Oil Watchdog friends), scroll about halfway down this long page to the June 28, 2007 posting titled “Energy Policy Insanity”. Please, please, please, read this post and any accompanying links. In particular,
Professor Perry then points out that private oil companies actually don't own much in the way of worldwide oil reserves:
In fact, more than three-quarters of the world's oil reserves are owned by national oil companies from such problematic and potentially unfriendly countries as Saudi Arabia, Venezuela, Russia and Iran.
Only 6 percent of the world's oil reserves are held by private, investor-owned oil companies like ConocoPhillips and ExxonMobil.
But of course we can always sue OPEC. I mean, have you ever heard of a more idiotic idea? The OPEC countries are not depleting their natural resources fast enough to suit our insatiable demand, so we are going to sue them. Can you imagine if the Japanese passed laws allowing them to sue U.S. timber suppliers, because we aren't giving them the amount they want at the price they want? How about if Africa sues U.S. corn growers because ethanol demand has driven up corn prices? After all, they are no longer getting corn at the prices they were accustomed to.
It doesn't make economic sense that our own American privately owned oil companies are so vilified and viewed so differently from other industries. In 2006, the average profits for all manufacturing industries were 8.2 cents per dollar of sales, whereas the average oil-industry earnings were 9.5 cents on each dollar of sales, a penny higher.
More to the point: Oil companies reinvest profits in energy development to support the American economy and make huge capital investments regardless of whether profits are high or low. Between 1992 and 2006, U.S. oil companies invested more than $1 trillion in long-term energy projects.
Those arguments fall on deaf ears. I never understood, if the majority of the public thinks oil companies are making a killing, why more people don't just invest in oil company stocks. (I guess one reason is that the U.S. savings rate is abysmal). Of course one must wonder, if these companies are really printing money, why they trade at 8 or 10 times earnings.
The bottom line is that companies that are investing hundreds of billions to trillions on their business have to make multi-billion profits to justify those investments.
.
So if Nancy and Harry and their acolytes want to continue to their blissfully ignorant and pandering ways, I would encourage you not to. Profits are not evil. If your business does not make a profit, then you do not have the money to expand it, hire more workers, update your infrastructure, pay for improve pollution controls, comply with other new government mandates, etc. Not to mention that, if you are a publicly traded company, that you have a responsibility to make money for your investors . That is why investors give you money – they anticipate that you operating your business, providing whatever goods and/or services you do, will also provide them with their investment portion of the profit you make.
And this, from here
Well, the reason why we don't penalize companies just because they make a lot of money is because that would be insane. As the Journal notes, it's hard to make the case that Exxon's profitability is excessive. In 2007, its profit margins were 10%, in-line with the industry average. The oil company's margins were worse than firms in the chemicals industry, pharmaceuticals, beverages and tobacco, the paper said.
Bee wrote: I don't know what to say. I only know what I read because I don't have any real work experience yet. What you say Spidey was true in the industrial age but it's different now. Everything has changed from the industrial times I read in school and what I see now. What are the true costs that your generation is inflicting on mine or my future children.
Bee, in the heat of an election, politicians (of ALL parties) will say a lot of things; some are true, some are false, and a lot are half-truths. Pandering to emotional issues is epidemic. The only cure is to educate yourself as much as possible. And remember, if something sounds to good to be true, it very often is. Be especially concerned when some politician is really, really excited about some new policy of theirs being THE answer to your problem du jour. That’s a tip that you need to do some extra homework to check the veracity of their claims.
And thanks for the links, btw.
The third link you gave me... \"The American\", and it's internet site wreaks of bias because it's owned and operated by republican lobbyist James K. Glassman. I was getting turned off.