.

[cybercoma]

But it also doesn't make sense to cut programs during a recession in a lot of cases.

Especially when many times those programs are designed such that they're supposed accumulate money when times are good and spend the money when times are bad to soften the blow of inevitable market fluctuations.

[carepov]

Pandering to populist ideas is a poor way to structure tax policy.

I agree. In Canada the best examples of this is the cut to the GST and the incomprehensible repeal of the HST in BC.

However, pandering to the rich is also a poor way to structure tax policy.

As Mr. Romney fatally pointed out, 47% of Americans pay no income tax at all.

Well, if it is true, that is yet another negative consequence of excessive inequality.

Oh what is a poor overtaxed secretary to do ?

Quit her job and collect entitlements. Maybe start a small cash business?

Total U.S. federal, state, and local gov't spending now surpasses WW2 levels as a percentage of GDP:

As I said, I agree, excessive spending is a problem.

[bush_cheney2004]

Quit her job and collect entitlements. Maybe start a small cash business?

And that is exactly what many "rich" folk are going to do, realizing the futility of generating more income only to have it confiscated by "progressive" tax policies. They are moving off shore to less expensive nations where a fat nest egg will go a long way, all while collecting earned "entitlements" from back home.

[TimG]

I agree. In Canada the best examples of this is the cut to the GST and the incomprehensible repeal of the HST in BC.

Like the GST, dividend tax credits are a part of a well designed tax system (see my post above). Eliminating them is an exercise in pandering to populism.

[carepov]

Like the GST, dividend tax credits are a part of a well designed tax system (see my post above). Eliminating them is an exercise in pandering to populism.

I am not advocating the elimination of dividend tax credits.

[TimG]

I am not advocating the elimination of dividend tax credits.

You are the one complaining about Buffett paying a lower taxation rate than his secretary. He pays lower taxes because of the dividend tax credit. If you are not advocating for the elimination of dividend tax credit then you should make it clear what you mean when you use that example to make a point. Edited January 24, 2014 by TimG

[carepov]

You are the one complaining about Buffett paying a lower taxation rate than his secretary. He pays lower taxes because of the dividend tax credit. If you are not advocating for the elimination of dividend tax credit then you should make it clear what you mean when you use that example to make a point.

Are you sure that it's not due to:

-stock option benefits and other capital gains?

-tax loopholes and/or tax avoidance tools?

[Moonlight Graham]

You are the one complaining about Buffett paying a lower taxation rate than his secretary. He pays lower taxes because of the dividend tax credit. If you are not advocating for the elimination of dividend tax credit then you should make it clear what you mean when you use that example to make a point.

It doesn't matter how the tax system works, Warren Buffet paying an overall lower total tax % (a combo of ALL taxes paid, not just income tax) than his secretary is utterly ridiculous, whether a dividend credit is issued or not.

[bush_cheney2004]

It doesn't matter how the tax system works, Warren Buffet paying an overall lower total tax % (a combo of ALL taxes paid, not just income tax) than his secretary is utterly ridiculous, whether a dividend credit is issued or not.

Why is it "ridiculous" ? Despite Mr. Buffet's latest posturing, he is on record as striving to maximize gains and minimize tax liability:

One cannot fault Buffett for striving to maximize after-tax returns for himself and his shareholders within the confines of the law as it existed at any point in time. What is shameful is that, in an effort to advance a political agenda, he would now use his credibility to rewrite history and deny that tax rates and characteristics can have substantial economic effects by altering the financial calculations confronting businesses and individuals.

http://www.forbes.com/sites/realspin/2012/11/30/buffetts-billions-cant-buy-him-exemption-from-his-tax-averse-past/

[TimG]

Are you sure that it's not due to:

-stock option benefits and other capital gains?

-tax loopholes and/or tax avoidance tools?

Well there is some debate whether Buffett did his math correctly:

http://www.forbes.com/sites/realspin/2013/10/23/warren-buffetts-actual-tax-rate-is-31-while-his-office-workers-pay-21/

But I don't know what Buffett's split is between dividends and capital gains.

Given his investment strategy I assume that dividends are a big part of it and if so his marginal taxation rate would be less than someone with middle class income even if the preferential treatment of capital gains was eliminated.

That said, if you understand that the dividend tax credit makes sense then you should also understand that people like Buffett can structure their affairs to pay capital gains or dividends and if the preferential treatment for capital gains was eliminated then Buffett would start making income as dividends.

Edited January 25, 2014 by TimG

[ReeferMadness]

And where on the graph is "Cost of living"???

You are not aware of how a standard of living is determined.

WWWTT

Very good point.

[ReeferMadness]

No, it is not a problem. They still pay the lion's share of the taxes. Pandering to populist ideas is a poor way to structure tax policy. As Mr. Romney fatally pointed out, 47% of Americans pay no income tax at all. Oh what is a poor overtaxed secretary to do ?

Total U.S. federal, state, and local gov't spending now surpasses WW2 levels as a percentage of GDP:

You're absolutely right. Dealing with the problem of inequality primarily via the taxation system is a fool's errand. What is really needed is to end the unwarranted and unfair distribution at source. Problem solved. Well done - you're a genius!

Edited January 25, 2014 by ReeferMadness

[Shady]

You're absolutely right. Dealing with the problem of inequality primarily via the taxation system is a fool's errand. What is really needed is to end the unwarranted and unfair distribution at source. Problem solved. Well done - you're a genius!

There is no such thing as income distribution. Income is earned and is dependent on many factors. There is no line up to see a man at a booth "distributing" money.

[Michael Hardner]

There is no such thing as income distribution. Income is earned and is dependent on many factors. There is no line up to see a man at a booth "distributing" money.

This is true, but there is a board game called the economy wherein the government can affect the success/failure of players.

[Shady]

This is true, but there is a board game called the economy wherein the government can affect the success/failure of players.

Absolutely.

[eyeball]

He said enthusiastically.

[-1=e^ipi]

[bleeding heart]

I can't help but think that Kevin O'Leary is a Stalking Horse for economic Marxists, trying like hell to make capitalists look like uncaring, un-self-reflective buffoons.

But seriously, he argues not from good faith, but as a part of his entrepreneurship; like many a pundit--Ann Coulter, say, or Mark Steyn or Camille Paglia--he understands that being provocative and outrageous will earn him some more success.

And it works quite well (well....Paglia is more or less on a downward public-career turn, and her ravings are becoming correlatively more desperate). But it's working so far for O'Leary, which proves at least part of his arguments on certain points, I suppose.

[TimG]

Fascinating article about social mobility in the US:

http://www.slate.com/articles/double_x/doublex/2014/01/new_harvard_study_where_is_the_land_of_opportunity_finds_broken_families.html

Of all the factors most predictive of economic mobility in America, one factor clearly stands out in their study: family structure. By their reckoning, when it comes to mobility, “the strongest and most robust predictor is the fraction of children with single parents.” They find that children raised in communities with high percentages of single mothers are significantly less likely to experience absolute and relative mobility.

Income inequality within communities is correlated with lower levels of mobility. However, its predictive power—measured in their study by a Gini coefficient—is comparatively weak: According to their results, in statistical models with all of the five factors they designated as most important, economic inequality was not a statistically significant predictor of absolute or relative mobility.

The study also acknowledges that many of these key factors are correlated with one another, such as income inequality and the share of single mothers in a community. This means that economic inequality may degrade the two-parent family or that increases in single parenthood may increase economic inequality.

I predict these findings will be ignored by the left because they are inconvenient. Edited January 25, 2014 by TimG

[eyeball]

Why? All the correlations still stand.

In any case, figures lie and liars figure, always have and always will. You don't need math to see what's really wrong. It's what always goes wrong in societies that melt down. Look around the planet, the relationship between people who govern, and those who are governed is breaking down, increasingly irrevocably with significant consequences for society, like when enough families do. The issue is the disparity in power and the ability to influence power. It's gotten completely out of whack, again, and everything else like economic dysfunction including inequality follows that.

Edited January 26, 2014 by eyeball

[TimG]

Why? All the correlations still stand.

You missed the key statement:

"economic inequality was not a statistically significant predictor of absolute or relative mobility."

In any case, figures lie and liars figure, always have and always will. You don't need math to see what's really wrong.

Like I have said multiple times: lefties only care about science when it produces results that support their preconceived notions. If it does not the shameless hypocrites will trash the science and/or the people who produce it. Edited January 26, 2014 by TimG

[eyeball]

Ideology has got dick all to do with it. As you've ignored multiple times this is about disparity in power and influence-the real predictor. It happens to governments of all stripes regardless of ideology, with predictable results.

Your capacity to suspend disbelief (another predictor) has crippled you. You're blind as a bat. Multiply the inability to see reason by nearly 7 billion people and the enormity of the trouble we're really in is probably enough to drive anyone towards religion.

Edited January 26, 2014 by eyeball

[bleeding heart]

Eyeball is right. The only people who give a rat's derriere about how comparatively wealthy people are--if the subject is wealth itself, in a vacuum--are those who enviously wish themselves in the top .001 percent. Very few folks care about that level of wealth.

The issue, as eyeball says, is that of Power, and political influence.

The fact that money equals political power is not a debatable subject. It's an uncontroversial truism. And people with more money have more power--which is plainly an issue in any society.

[TimG]

The fact that money equals political power is not a debatable subject. It's an uncontroversial truism. And people with more money have more power--which is plainly an issue in any society.

In democracies money equals political power because money allows one to influence voters. Many of the large donors to the Tides Foundation which is bankrolling opposition to the oil sands are people who stand to benefit from the crony capitalism that accompanies anti-CO2 policies. Yet the various NGOs receiving this money like to pretend it is some altruistic desire to save the planet.

Big unions spend a lot on money in elections trying to influence the vote in order to pad the wallets of their members. They will always claim they are standing up for altruistic values but we all know it is really about more money for unions.

OTOH - you could say that these things are evidence that groups of people pooling their resources with groups like unions or NGOs can overcome any disadvantage caused by wealth disparities.

Of course, people don't look it that way because if they don't get their way they automatically assume the system was rigged against them by some nefarious cabal of wealthy people. I guess conspiracies are more appealing than admitting their ideas don't always win public support because they are bad ideas.

Edited January 26, 2014 by TimG

[bleeding heart]

And if I were to agree with every single point you've just made, we could only conclude that my general thesis was precisely correct.