Robot Payroll Taxes

[sumpnz]

^^^ Yeah, that.

We need a "like" button around here.

[KD5NRH]

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.

This; it's really not that hard for the average worker to put their savings to work in ways that the capital gains tax very nearly ruins.  IMO, one of the best ways to help out the low-to-moderately skilled but hard working folks out there would be a HS class on how to invest relatively small amounts and a complete rework (if not outright elimination) of the way capital gains are taxed.

[AJ Dual]

We will cope.

One of the main problems in society is how we define "poverty". It's a constant game of "move the cheese" by those who can make political gains from constantly redefining what "poor" is. If you have a safe functional roof over your head, and utilities, you are not "poor" by any meaningful standard worldwide, or throughout history.

Automation does remove jobs, but it also lowers costs and improves productivity, leading to cheaper goods and services. Granted, this doesn't help if your income is "zero", but think long and hard... I mean really OCD obsessively deep about every last product and service you use during the day that isn't directly related to basic survival. And all the supporting logistical industries that supply those, and so on.

These are all products of industrialization and automation.

Honestly, when we consider a highly automated future where fewer and fewer people need to "work", including "knowledge jobs", as computer design and software creation itself starts to automate, we may not be even looking at what the real problems might be.

And then we're not even getting into what kind of savings we can have if we automate vast swaths of government, reducing its tax burden.

https://archive.org/stream/galaxymagazine-1954-04/Galaxy_1954_04#page/n59/mode/2up

[KD5NRH]

One of the main problems in society is how we define "poverty". It's a constant game of "move the cheese" by those who can make political gains from constantly redefining what "poor" is. If you have a safe functional roof over your head, and utilities, you are not "poor" by any meaningful standard worldwide, or throughout history.

So much this; I don't think the guy at church with a 3800sf house and two year old top-options-package truck realizes how close I've come to feeding him his teeth when he whines about not being able to afford a new truck or a house that's "big enough" for his family of four.  Frankly, I think I've come closer to initiating violence in a house of God to shut him up than anything else.

Granted, this doesn't help if your income is "zero",

Actually it does; people are much more likely to be charitable if that meal you need is three bucks than if it's $20.

[Firethorn]

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.

He pays a lower percentage of his income.  He has relatively very little "regular income", while the Secretary has comparatively little capital gains, more regular income, that puts the secretary into the highest marginal tax rates anyways.

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%.

You missed my mentioning that the corporate tax rate is too high, didn't you?  It's what has resulted in investors being more for 'growth' corporations than ones that pay a steady dividend.

Lowering the corporate tax rate might actually increase tax revenues.

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%?

Nope.  Lowering FICA by a % or so would do that.  The boost to capital gains would be to offset the taxes lost by doing so, in order to keep a neutral revenue flow.  I don't actually support lowering overall taxes until we don't have a deficit and are making inroads on paying off our debt.

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.

A bit of a slippery slope here, I said "lower" not "drop" or eliminate.  I'm not trying to completely eliminate FICA, just lower the burden it places on employers.

Also, capital gains is more than just the stock market.

About $93B year, about a 14.4% effective rate.

FICA is roughly $700B, at a 15.3% tax rate.

Drop it 1%, and you'd need to make up about $46B.  You'd need to increase capital gains, exclusive of behavior shifts, to 21.5% effective.

So, no, not 50-75% 'on top of'.  Lowering the corporate tax rate would probably result in more stability for businesses, because the current situation favors growth too much, over stability.

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.

Then what else are they spending it on?  If they're out buying stuff, that's economic stuff people will need to be employed to produce.

[cordex]

He pays a lower percentage of his income.  He has relatively very little "regular income", while the Secretary has comparatively little capital gains, more regular income, that puts the secretary into the highest marginal tax rates anyways.

His secretary earns (or did back when he was making a stink) only about $60,000 per year.  That puts her at maximum in the 25% tax bracket for her salary assuming zero deductions.  Most people who make $60,000 a year get away with a lot lower rate than that - something like 11% or 12%.  The capital gains on the investments he gifts her with would be taxed at a lower rate because of her tax bracket - 15% at the worst case for her current salary. 

So, no, still not true.

Nope.  Lowering FICA by a % or so would do that.  The boost to capital gains would be to offset the taxes lost by doing so, in order to keep a neutral revenue flow.  I don't actually support lowering overall taxes until we don't have a deficit and are making inroads on paying off our debt.

Lowering FICA is great, but I maintain that trying to offset it with capital gains is not likely to keep a neutral revenue flow.

A bit of a slippery slope here, I said "lower" not "drop" or eliminate.  I'm not trying to completely eliminate FICA, just lower the burden it places on employers.

You are correct, you did say "lower", not "drop".  My mistake.

Also, capital gains is more than just the stock market.

About $93B year, about a 14.4% effective rate.

A few points:
1. Yes, capital gains applies to more than the stock market.  But what happens when the stock market tanks?  Take a look at the actual capital gains in the chart you linked to and what happened between 2007 and 2009.
2. Where did you get your $93 billion number from?
3. The chart above ends in 2009 when the maximum long-term rate was 15.35%.  A more current version of the same chart shows data through 2014.  Note that the current effective rate is 19.4%.

FICA is roughly $700B, at a 15.3% tax rate.

Those numbers are from 2002.

More current data shows that we're well over a trillion dollars today.

Drop it 1%, and you'd need to make up about $46B.  You'd need to increase capital gains, exclusive of behavior shifts, to 21.5% effective.

So, no, not 50-75% 'on top of'.  Lowering the corporate tax rate would probably result in more stability for businesses, because the current situation favors growth too much, over stability.

I like the idea of reducing FICA, but you're suggesting replacing a relatively stable tax with an incredibly volatile tax.  Further, the current maximum rate on capital gains is already 23.8%. 

Using 2014's numbers: drop FICA by 1% and you have to make up about $67 billion.  Capital gains collections for 2014 were $139 billion at 19.4% effective.  That means that to replace a 1% FICA reduction you'd have to raise capital gains to 28.8% effective.  But 2014 was a pretty good year.

As noted, in 2009 the same 1% drop would have necessitated the replacement of $58 billion in taxes or - for that year - an effective capital gains tax rate of 36%.  For one measly percent in FICA reduction.

Then what else are they spending it on?  If they're out buying stuff, that's economic stuff people will need to be employed to produce.

Oh yeah!  Just like in all the other stock market collapses!

[Firethorn]

1. Yes, capital gains applies to more than the stock market.  But what happens when the stock market tanks?  Take a look at the actual capital gains in the chart you linked to and what happened between 2007 and 2009.

It's the government.  It can afford to ride out fluctuations.  One can argue that it should only have balanced revenues and spending on a basis averaged over time.  IE build up a surplus when the economy is good, spend it when it's bad.

2. Where did you get your $93 billion number from?

Average of last 5 years of capital gains, because they do vary.

3. The chart above ends in 2009 when the maximum long-term rate was 15.35%.  A more current version of the same chart shows data through 2014.  Note that the current effective rate is 19.4%.

Then with very little modification it could be done.

Those numbers are from 2002.

Why I said 'about'.  They were a little difficult to find, I went with what I found.

For one measly percent in FICA reduction.

At the scale FICA works at, it ends up not being all that measly if it gives 'everybody' who earns $20k another $200 in their pocket, because $200 is something useful to them.  Though that depends on whether you're giving it on the employee or employer side.

[cordex]

It's the government.  It can afford to ride out fluctuations.  One can argue that it should only have balanced revenues and spending on a basis averaged over time.  IE build up a surplus when the economy is good, spend it when it's bad.

I commend your optimism, but since we're going whole hog and presuming long-term governmental fiscal responsibility and steady economic growth why not presume some spending cuts alongside?

Then with very little modification it could be done.

  What could be done?  You are using bad numbers to inform changes that wouldn't do what you claim they would.  Raising taxes to the levels your hasty calculations say it should be (based on outdated data from different years) would not even come close to replacing the FICA revenue lost at current levels.

Why I said 'about'.  They were a little difficult to find, I went with what I found.

Sure, what's a few hundred billion among friends?

At the scale FICA works at, it ends up not being all that measly if it gives 'everybody' who earns $20k another $200 in their pocket, because $200 is something useful to them.  Though that depends on whether you're giving it on the employee or employer side.

An extra McDonalds meal twice a month for low-income folks is nice but isn't going to have a dramatic impact.  The 2% FICA holidays of a few years back were pleasant but didn't change very many lives.

[KD5NRH]

Using 2014's numbers: drop FICA by 1% and you have to make up about $67 billion.

Well, how much can we get if instead of firing (or "encouraging to resign") all those useless bureaucrats, we sell them instead?  Slavery or spare parts, doesn't really matter; as long as they go to reducing the amount previous administrations have wasted employing them.

[charby]

Why aren't tax cuts working out for Kansas?

[MechAg94]

Well, how much can we get if instead of firing (or "encouraging to resign") all those useless bureaucrats, we sell them instead?  Slavery or spare parts, doesn't really matter; as long as they go to reducing the amount previous administrations have wasted employing them.

Who would buy them?

[Scout26]

Why aren't tax cuts working out for Kansas?

What do you mean by "Not working out" ??

[Scout26]

I commend your optimism, but since we're going whole hog and presuming long-term governmental fiscal responsibility and steady economic growth why not presume some spending cuts alongside?
   What could be done?  You are using bad numbers to inform changes that wouldn't do what you claim they would.  Raising taxes to the levels your hasty calculations say it should be (based on outdated data from different years) would not even come close to replacing the FICA revenue lost at current levels.
Sure, what's a few hundred billion among friends?
An extra McDonalds meal twice a month for low-income folks is nice but isn't going to have a dramatic impact.  The 2% FICA holidays of a few years back were pleasant but didn't change very many lives.

You both are missing the big picture.  The beast needs to be starved, not feeding from difference troughs...

[charby]

What do you mean by "Not working out" ??

You been reading the news? Brownback's trickle down experiment isn't working out.

[Perd Hapley]

How low would taxes need to be before keeping more of one's money gets to the point of not working out?

[charby]

How low would taxes need to be before keeping more of one's money gets to the point of not working out?

When your house is on fire and no fire department to put out the flames. When you don't have potable water, no sanitary sewer, etc.

[Perd Hapley]

When your house is on fire and no fire department to put out the flames. When you don't have potable water, no sanitary sewer, etc.

This currently obtains in Kansas, because the state cut taxes? Cut them to what? 0?

[charby]

This currently obtains in Kansas, because the state cut taxes? Cut them to what? 0?

Cut income taxes (eventually to 0), raised consumptive taxes to offset, state income dropped, services got reduced even more, residents are pissed about that and recently even the GOP there (seeing the need for some services) is going against Gov Brownback. It's been in the news a lot in the last couple of months. Even talking about restoring planned parenthood funding and teacher tenure.

[KD5NRH]

When your house is on fire and no fire department to put out the flames. When you don't have potable water, no sanitary sewer, etc.

Which tends to happen at about .01% tax cuts as the politicians cut critical services first to make the situation look vastly worse than it is.

[charby]

Which tends to happen at about .01% tax cuts as the politicians cut critical services first to make the situation look vastly worse than it is.

No, it usually what the politician sees as not necessary but the minority party hold close to their chest.

[KD5NRH]

No, it usually what the politician sees as not necessary but the minority party hold close to their chest.

Around here, it's usually the police budget that gets threatened first; road, sewer, etc. cuts don't have immediate, highly visible results.  Another trick was cutting the city water department's hours to worse than a bank.

[Scout26]

You been reading the news? Brownback's trickle down experiment isn't working out.

No, what you have the NYT, HuffPo and others getting the vapors because the bureaucrats issued a report "recommending" where the budget needed to by cut (if only cuts were made and no tax increases) that call for the sale of widows and orphans, along with closing every school.

Which is the typical bureaucrat response to every attempt to cut a government budget.  "Wellllllllllllllll, you could do that but we'll have to start putting old people on iceflows in the winter and turn school kids into soylent green during the school year.

Why is the State involved in Education?  Should that be under local control ?  With those taxpayers determining who much they should spend for K-12 education?   Same with higher ed.  Shut off the "free money" taps (both grants to schools, and loans to students) and watch demand drop and prices also (We have a skills gap in this country, too many overeducated idiots who could contribute to society if we didn't have this "Everyone goes to college" bushwa.)

Here in Illinois, we haven't had a budget, or a state government for that matter, for over 2 years.   If the MSM didn't keep beating the "Gov Rauner is making the sky fall !!!" everyday, no one would notice.   Roads suck just as much as they did 3 years ago, we still have cops, fire departments (Town next door is all volunteer), schools are open.   Only the Chicago Public Schools are doing the "We'll run out of money 3-4 weeks before the beginning of summer vacation" rain dance, but outside of Chicago, the consensus is pretty much "Good.  Do it."    If anything there is probably less graft and corruption* simply because there's no money to steal.

Counties, Towns, Villages, et al. have had to tighten their belts and learn to do with less.   In my county bureaucrat headcount has shrunk through attrition.  No one notices. 

There aren't any mass die-offs in the streets.  The ER at the local hospital is just as packed with illegal aliens with the cold and flu as it has been in years past (maybe a bit moreso, since Illinois went full retard on the Obamacare Medicaid Expansion.  That's a ticking budget timebomb...)  Trash got picked up today, traffic lights continue to work, and life goes on.   Proving that State government is pretty much farking useless and worthless.  Other than causing some consternation and hand wringing as bureaucrats will have to sharpen their pencils, I hope Brownbeck holds the course and shrinks the .gov. 


All this fear and panic in Kansas sounds like the smoke and mirrors we get here. 


*- Chicago being the exception, simply because they are not totally broke yet, so there is still money to steal.

 

[Perd Hapley]

Cut income taxes (eventually to 0), raised consumptive taxes to offset, state income dropped, services got reduced even more, residents are pissed about that and recently even the GOP there (seeing the need for some services) is going against Gov Brownback. It's been in the news a lot in the last couple of months. Even talking about restoring planned parenthood funding and teacher tenure.

Sounds way too good to be true, if you think about. Like, with your brain and stuff. I wish every state had such a problem.

[charby]

No, what you have the NYT, HuffPo and others getting the vapors because the bureaucrats issued a report "recommending" where the budget needed to by cut (if only cuts were made and no tax increases) that call for the sale of widows and orphans, along with closing every school.

Which is the typical bureaucrat response to every attempt to cut a government budget.  "Wellllllllllllllll, you could do that but we'll have to start putting old people on iceflows in the winter and turn school kids into soylent green during the school year.

Why is the State involved in Education?  Should that be under local control ?  With those taxpayers determining who much they should spend for K-12 education?   Same with higher ed.  Shut off the "free money" taps (both grants to schools, and loans to students) and watch demand drop and prices also (We have a skills gap in this country, too many overeducated idiots who could contribute to society if we didn't have this "Everyone goes to college" bushwa.)

Here in Illinois, we haven't had a budget, or a state government for that matter, for over 2 years.   If the MSM didn't keep beating the "Gov Rauner is making the sky fall !!!" everyday, no one would notice.   Roads suck just as much as they did 3 years ago, we still have cops, fire departments (Town next door is all volunteer), schools are open.   Only the Chicago Public Schools are doing the "We'll run out of money 3-4 weeks before the beginning of summer vacation" rain dance, but outside of Chicago, the consensus is pretty much "Good.  Do it."    If anything there is probably less graft and corruption* simply because there's no money to steal.

Counties, Towns, Villages, et al. have had to tighten their belts and learn to do with less.   In my county bureaucrat headcount has shrunk through attrition.  No one notices. 

There aren't any mass die-offs in the streets.  The ER at the local hospital is just as packed with illegal aliens with the cold and flu as it has been in years past (maybe a bit moreso, since Illinois went full retard on the Obamacare Medicaid Expansion.  That's a ticking budget timebomb...)  Trash got picked up today, traffic lights continue to work, and life goes on.   Proving that State government is pretty much farking useless and worthless.  Other than causing some consternation and hand wringing as bureaucrats will have to sharpen their pencils, I hope Brownbeck holds the course and shrinks the .gov. 


All this fear and panic in Kansas sounds like the smoke and mirrors we get here. 


*- Chicago being the exception, simply because they are not totally broke yet, so there is still money to steal.

 

Actually I first read about on The National Review website.

[MechAg94]

When your house is on fire and no fire department to put out the flames. When you don't have potable water, no sanitary sewer, etc.

Down here in Texas the local cities, towns and counties handle those services.  I guess they must do it differently up there in Kansas.