Robot Payroll Taxes

[charby]

I think you mean segue

Chris

  yep

[KD5NRH]

Even in 1990 very few people could have foreseen careers that would exist twenty years later.

Oh, folks were predicting the rise of the Professional Able Bodied Welfare Leech.

[cordex]

I think our golden age for individual economic success was post WWII-1970. For the most part most people with a high school education (and a decent worth ethic) you could land a job that in a few years supported a single income middle class household.

I'd wager a hard working person with a high school diploma, decent work ethic AND willing to live at a 1960s standard of living could probably do okay today.

Also it appears that being an entrepreneur from a rags to riches is harder now a days then in the past, or at least there is fewer opportunities. Sometimes due to regulations, market is already cornered by a much bigger player or people just won't pay a price for a good or service that can create a livable profit for the entrepreneur. Someone is already doing it cheaper, faster or in volume with low wage employees.

Rags to riches stories have always been outliers and are often driven by developers and early adopters of new technologies.  And the flip side of the "it is too cheap to make a living selling [something]!" is that people with lower income can afford more [something].

This is a segway, but is the movement to strip benefits and reduce wages from public sector employees a start to emulate that in the private sector, basically remove competition of losing employees for something slightly better in benefits or even wages?

I think the issues people have with government employee compensation is the unsustainable nature of employees retiring after 20 years of public service and drawing pensions and insurance for the next thirty to fifty years.  That is equivalent to being given taxpayer provided multi-million dollar severance packages at the age of 45.  Or, put another way, it's like paying folks an extra $100,000 - $300,000 every single year on top of their regular salary and benefits. 

I don't think a movement to reduce those benefits is an evil corporate scheme, just a recognition of very bad math and a rejection of the idea of healthy, capable people perceived as living as parasites on the public dime.

[charby]

I'd wager a hard working person with a high school diploma, decent work ethic AND willing to live at a 1960s standard of living could probably do okay today.

I want to be able to live in the 1960s standard of living. College educated in the 1960s in a science field, you'd be making bank.

I think the issues people have with government employee compensation is the unsustainable nature of employees retiring after 20 years of public service and drawing pensions and insurance for the next thirty to fifty years.  That is equivalent to being given taxpayer provided multi-million dollar severance packages at the age of 45.  Or, put another way, it's like paying folks an extra $100,000 - $300,000 every single year on top of their regular salary and benefits.  

I don't think a movement to reduce those benefits is an evil corporate scheme, just a recognition of very bad math and a rejection of the idea of healthy, capable people perceived as living as parasites on the public dime.

Corporate pensions went away because they became victim of hostile takeovers, investment groups looks at companies with a large pension account as a place to get free money for more investment. 401K was designed as additional retirement savings, not to be the only retirement option outside of social security.

Also what freaking state does what you mentioned above? I want to go work there.

I work for the State of Iowa and we don't even come close to that. Our pension plan is you pay 6.5% in, state pays 6.5%, takes 7 years to be vested and it's not portable. You can't draw from it unless your years of service and age match 88, 20 years and 60 years of age or legal retirement age. Each year in it is 2% of your best five year salary average up to 60% (30 years of service). We don't get free health insurance when you retire or become disabled. Vacation accrues by years of service 1-5 years (2 weeks) 5-12 years (3 weeks) 12-19 years (4 weeks) 19-25 years (4.5 weeks) 25 years (5 weeks). We have insurance, but the cheapest is an HMO and you have to play by the HMO rules, I have that one because I figured it out 14 years ago.

Private sector I can make $20-30K per year over the top of the pay scale for my state job, I was going to go that route but I'd probably be traveling 50% of the time vs I stay out maybe 25 nights a year. Best way to describe my job is pesticide risk management and regulation compliance. Big Ag Chem (like Bayer or DuPont) and insurance companies is who I'd work for in the private sector, I do get an occasional email asking to apply for position with their company.

[Ben]

Also what freaking state does what you mentioned above? I want to go work there.

CA, NY, NJ to name a few. I have a buddy who retired from a CalPers special district at 50 with an 80% pension and full medical. These states beat the hell out of federal retirement, and even federal employment. I always had to cover 1/3 of my federal health insurance while working. State employees do (or at least did) get 100% coverage.

These plans generally end up being unsustainable given the (usually) liberal leaning states that do them have higher than average numbers per capita of state, regional, and local employees that all fully take advantage of the programs. Add to that all the SJW activist employees and public unions constantly fight to have state gov divest from "unacceptable" holdings in the retirement portfolios (which also happen to be profitable stock holdings), and you've got too many people trying to pull from an ever shrinking pot of money.

[Scout26]

and Illinois.

[sumpnz]

Charby - your pension beats the pants off any private sector pension I've encountered since graduating from college in 2001.  The only 2 companies that I've worked for that still had active pension plans were about half as good as what you get.  With that pension, even if you didn't save a dime on your own in IRA's (or employer sponsored equivalents), and if you assume SS will still be there, you'll likely be making 80-90% of your pre-retirement income.  

In general, given the choice between a pension and a 401k with a match I'd rather have the 401k.  It's nice that my current employer provides both, but that's unusual.  The nice thing about the 401k is that you can take it with you if you leave to go elsewhere, and if you invest it reasonably wisely that benefit will continue to grow over time.  Whereas a pension is locked to a fixed benefit (if you even stayed long enough to vest) that can never go up.  If you were to work at a succession of employers just long enough to vest in the pension you'd wind up in the end with a lot less retirement income than if you'd taken an equivalent sum as the company put into the pension fund for you and dumped it into a 401k and rolled that over as you jumped from employer to employer.

Anyway, thus far every major technological disruption has in the long run resulted in more and better paying employment opportunities.  I see no reason at this point to doubt that will happen again.

[cordex]

I want to be able to live in the 1960s standard of living.

... says charby on the internet.

I'm pretty sure you don't, actually.

Corporate pensions went away because they became victim of hostile takeovers, investment groups looks at companies with a large pension account as a place to get free money for more investment.

That's not quite the whole story.  Sure, that sort of thing happened, but even well run pension plans suffered from increased recipient lifespans and dealing with distributions during rocky financial periods.  Plus, increasingly mobile workers received less value from a pension plan.

Now, if you want to talk about greedy pension theft, governments have done more than corporations ever have.  The difference is governments can just stick it to the taxpayer.

Also what freaking state does what you mentioned above? I want to go work there.

New York was what I had in mind.

I work for the State of Iowa and we don't even come close to that. Our pension plan is you pay 6.5% in, state pays 6.5%, takes 7 years to be vested and it's not portable. You can't draw from it unless your years of service and age match 88, 20 years and 60 years of age or legal retirement age. Each year in it is 2% of your best five year salary average up to 60% (30 years of service). We don't get free health insurance when you retire or become disabled. Vacation accrues by years of service 1-5 years (2 weeks) 5-12 years (3 weeks) 12-19 years (4 weeks) 19-25 years (4.5 weeks) 25 years (5 weeks). We have insurance, but the cheapest is an HMO and you have to play by the HMO rules, I have that one because I figured it out 14 years ago.

Making some quick assumptions of a 30 year career with an average of $50,000 per year and a highest 5 year salary of $70,000 would result in a retirement benefit of $42,000 a year for a total investment of about $100,000 on your part.  If the pension fund is actually collecting the money and investing it, and the stock market is doing well that's likely a pretty healthy pension.  

If you live to be 85 then over 25 years you'd draw $1,050,000.  If the funds aren't invested, then the taxpayer is funding an extra $35,000 per year or so.

[charby]

... says charby on the internet.

I'm pretty sure you don't, actually.
That's not quite the whole story.  Sure, that sort of thing happened, but even well run pension plans suffered from increased recipient lifespans and dealing with distributions during rocky financial periods.  Plus, increasingly mobile workers received less value from a pension plan.

Now, if you want to talk about greedy pension theft, governments have done more than corporations ever have.  The difference is governments can just stick it to the taxpayer.
New York was what I had in mind.
Making some quick assumptions of a 30 year career with an average of $50,000 per year and a highest 5 year salary of $70,000 would result in a retirement benefit of $42,000 a year for a total investment of about $100,000 on your part.  If the pension fund is actually collecting the money and investing it, and the stock market is doing well that's likely a pretty healthy pension.  

If you live to be 85 then over 25 years you'd draw $1,050,000.  If the funds aren't invested, then the taxpayer is funding an extra $35,000 per year or so.

It's invested, separate account, state politicians try to steal from it but always get slapped by the courts.

I worked at Iowa State University before the state, we had a 403b, which is portable after being vested for 4 years.

[charby]

... says charby on the internet.

I'm pretty sure you don't, actually.

I was an adult before the Internet as we know it was available. I'd be fine with returning to those times.

I'm talking more about wages and your spending power.

[Perd Hapley]

Wasn't a lot of that post-war economic boom a consequence of other manufacturing nations being wrecked by world war?

[MechAg94]

Wasn't a lot of that post-war economic boom a consequence of other manufacturing nations being wrecked by world war?

I would say yes in part.  It is also good to note that in the late 60's, we started welfare via LBJ's Great Society stuff.  In the 70's we started OSHA and EPA started somewhere in there. 

[MechAg94]

1. The government taxes companies who use robotic production
2. The government gives a portion of that tax money to folks who no longer work
3. Those folks buy the products produced by the taxed companies  

In essence, companies would be funding the purchase of their own products through taxes?  Assuming no waste or inefficiency, does the math work out?

Just wanted to make a point on this.  Paying taxes has a cost in accountants and tax preparation.  Collecting taxes has a cost in accountants and auditors and enforcement.  Even if you assume very high govt efficiency, there will be a percentage leeched off just paying and collecting taxes.  So even without waste and inefficiency included, the math doesn't work.  Add to that the waste and general inefficiency of govt along with basic fraud that occurs when someone is handing out free money and there is no way and hell that math works. 

Even without all that, companies are in business to make money.  Essentially buying their own goods to hand to others is not profitable.  Including extra middle men (govt) in the mix doesn't change that.  It only makes it more complicated and therefore easier to sell to people who don't want to think about it (communism). 

[MechAg94]

If someone wants to make a mint producing robots, invent a Robotic Government Bureaucrat.  There would be an endless need. 

However, if you design it to be completely honest, it may not work.  You need to include add ons for political influence and lobbyists. 

[MechAg94]

I am not worried about jobs.  Someone has to design and build the robots.  Someone has to program them.  Someone will have to maintain and repair them.  Despite Hollywood movies, magic robots that self construct and self repair don't exist.  Even today, automated manufacturing plants require a lot of maintenance and major overhauls.  A big part of what our operators and maintenance guys at the chemical plants do is try to identify problems developing and troubleshooting and fix problems that occur.  It is a continuous job.  I can't see that disappearing. 

[cordex]

Just wanted to make a point on this.  Paying taxes has a cost in accountants and tax preparation.  Collecting taxes has a cost in accountants and auditors and enforcement.  Even if you assume very high govt efficiency, there will be a percentage leeched off just paying and collecting taxes.  So even without waste and inefficiency included, the math doesn't work.  Add to that the waste and general inefficiency of govt along with basic fraud that occurs when someone is handing out free money and there is no way and hell that math works. 

Even without all that, companies are in business to make money.  Essentially buying their own goods to hand to others is not profitable.  Including extra middle men (govt) in the mix doesn't change that.  It only makes it more complicated and therefore easier to sell to people who don't want to think about it (communism). 

Just so we are clear I am completely in agreement and aware of all of these points.  My response was generously simplified for the sake of argument, and the response that resulted was pretty much what I expected.

[Firethorn]

Personally, rather than taxing 'robots', I'd bump capital gains or such.

Here's my reasoning:
More and more, the wealth of our economy is generated by capital - robots, industrial machines, computers, and similar than by actual labor. 

This creates an eventual problem that we see even today when Billionaires pay less in taxes than their secretaries - because even though they're very excellently paid secretaries, we currently tax labor more than capital gains and dividends.  This makes it hard for people to, by working an honest job, build up sufficient capital to enjoy a significant portion of that pie.  Especially since the returns on said pie have been dropping, meaning that you need more capital than ever to make enough return to live on.

So, rather than some radical change, all I suggest is lowering the 7.65% we're taxing employers simply to hire employees and instead charge a smidge more in capital gains(corporate tax rates are too high as is), or perhaps institute some sort of property tax - businesses pay a percentage(tiny small) of the valuation of their assets.  Perhaps put an 'alternative minimum' tax on businesses like there are for people, given how many highly profitable businesses have managed to avoid nearly all taxation for decades.

[MechAg94]

Or just lower payroll and income taxes and spend less money.   

[MechAg94]

Just so we are clear I am completely in agreement and aware of all of these points.  My response was generously simplified for the sake of argument, and the response that resulted was pretty much what I expected.

Okay.  Sometimes I wonder if dumb ideas spread partly because others assume everyone realizes it is dumb and say nothing.   

[Firethorn]

Or just lower payroll and income taxes and spend less money.   

I tend to isolate systems.  Spending less money to be able to lower taxes is a separate argument, and I'd rather balance the budget first.

[CypherNinja]

If someone wants to make a mint producing robots, invent a Robotic Government Bureaucrat.  There would be an endless need. 

Don't do that, they'll have you killed. That kind of thing is for the proles to deal with.

[cordex]

Billionaires pay less in taxes than their secretaries

Nope.  You're thinking of Warren Buffett's comment, which was actually untrue at just about every level.  He pays a higher rate on his regular income, and pays vastly more in taxes.  Further, he annually gives his secretary significant stock investments for which she pays the same capital gains rate as he does.  So, no.

Further, the corporation already pays taxes on the dividends before they go to the investor.  The reality is that for an investor to pocket $100 the company must earn $201.90 in profit.  The company pays $70.66 and then the investor pays another $31.24.  That's a tax rate of over 50%.

This makes it hard for people to, by working an honest job, build up sufficient capital to enjoy a significant portion of that pie.  Especially since the returns on said pie have been dropping, meaning that you need more capital than ever to make enough return to live on.

Let's say you boosted capital gains to 40% or something.  Would that help the poor people working an honest job earn one dime more?  What about 50%?  60%?

But you said you wanted to drop FICA, right?  If you increased capital gains to replace FICA, you'd have to double or triple the current rate just to replace FICA in a good year for the stock market.  And that assumes that when you start taxing people at 50-75% on top of the 35% corporate taxes they choose to keep investing at all.  My guess is folks - rich and poor - would pull their assets out of the market pretty quickly at that point.  People respond to incentives and the incentive there is to crash the stock market.

So much for balancing the budget.

[cordex]

I was an adult before the Internet as we know it was available. I'd be fine with returning to those times.

Nothing is stopping you.  You can achieve a middle-class 1960s era lifestyle on a lower-class budget today.

I'm talking more about wages and your spending power.

But that's not what we were talking about.  The discussion has been about the impact of technology on quality of life.  Advances in technology and automation have improved quality of life for everyone, including people at lower wages.

[MechAg94]

I tend to isolate systems.  Spending less money to be able to lower taxes is a separate argument, and I'd rather balance the budget first.

That is the rub.  It isn't a separate issue.  If you are spending more than your income, you are not going to balance anything.  You don't increase taxes first to balance the budget rather than decrease spending.  It is very rare for a government budget problem to be too much revenue.  

If you listen to Dave Ramsey, his financial discussion usually starts with making a budget and eliminating unnecessary spending. 

[Ben]

Personally, rather than taxing 'robots', I'd bump capital gains or such.

It's a pet peeve of mine, so apologies in advance if I sound snippy. Hell no on the capital gains and dividend tax increases.

Everyone always seems to equate capital gains and dividend income with Thurston Howell III. My middle income retirement is based on capital gains and dividend income. I (and many others) don't want to be punished for being better savers while we were working. When I maxed my TSP contributions, extra money went into Vanguard taxable accounts, which I'm partially living on now until I hit an age where I can draw tax advantaged money.

It's bad enough that I get taxed at all on capital gains and dividends, given that the money I invested for them was already taxed via payroll. To me, it's double dipping by fed.gov and the state.