Are we heading for a market crash?

[Brandon]

Rise rates, plateau, recession.  The fed is just about to pause their rate hates before the next recession hits.  If the fed gets to 3% before they pause the hikes i would be shocked.

That purple line does not exist. What would happen in 2030 if that purple line was there?

One may argue that purple line is there since 1980: https://www.macrotrends.net/2015/fed-funds-rate-historical-chart
What would happen?... Well, there are unsustainable economic patterns - and one cannot count on continuation of current trends into indefinite future. 

The line, if one looks 1980 to present, appears to be logarithmic, not straight, with a curve that may reach zero or near zero by 2030.

[Rothman]

No.  Trickle-down economics is a myth.

Good.  Now I don't feel bad for keeping all my stimulus check a few years ago.

That is exactly why it is a myth.  The rich hold onto new money rather than spend it in ways that would benefit the little people.

[J N Winkler]

When you or I claim deductions on our taxes, why does nobody accuse us of "finding every tax loophole we can"?  Or when a small business owner hires a tax preparer at H&R Block to calculate the best way of filing taxes, nobody thinks anything out of the ordinary is afoot?  Doing so is simply considered smart and prudent, and not doing so is viewed as paying more money to the government than necessary.  Yet somehow, when it's a wealthy person *gasp* doing a similar thing through their accountants, suddenly people say it's selfish and vile.

Let us agree at the outset (per a famous 1920's court decision from Judge Learned Hand) that nobody is legally obliged to pay more tax than he or she owes.  Therefore, any argument that a segment of society does not pay enough in taxes is therefore implicitly an argument that those people's tax liability should be legally adjusted to serve an economic or social policy goal.  Such adjustments are inevitably a political choice.

However, while tax liability in theory is fixed in law, in practice there is some discretion in enforcement and the wealthy are better equipped to take advantage of it.  The IRS cannot pursue every instance of tax noncompliance any more than the police can pursue every instance of exceeding the speed limit by so much as a mile an hour.  This is why, for example, the New York Times' story on Trump's inheritance from his father quoted from an IRS agent saying that in the context of an audit, pursuing inconsistent valuations of real property (something the Times reported that Trump's father, and later Trump himself, used to reduce their tax bills) is a last resort.

Similarly, the wealthy have broader opportunities for wealth accumulation compared to you and me simply because many investment vehicles have quite high minimum buy-ins.  For example, I cannot cash in on the (now national) success of Freddy's Frozen Custard because it is structured as a type of limited partnership and very few people have the money to get in.  While legal compulsion could be brought in to open things up for small investors, this would constrain entrepreneurs' economic freedom to choose the business structure that is most appropriate for their commercial activities.  Again, the tradeoff between the two eventually becomes a political choice.

I believe you and I were looking at the same data, just from different years.  But, if those figures have deductions already rolled in–then it doesn't really discount my assertion that the wealthy pay more taxes than the rest of us by percentage point, does it?

I am not so sure, for two reasons.  First, the basis for calculating AGI changes over time as some deductions become available while others go away.  Second, as I understand it (not being a tax expert), deductions work by offsetting income that would otherwise be counted as adjusted gross income (so, e.g., a $10,000 deduction wipes $10,000 off of income).  Since it is probable that most of the rich have more flexibility in structuring their income to maximize deductions, it is conceivable that a high tax burden as a percentage of AGI translates to a much smaller burden as a percentage of gross income without deductions applied.

What I do see in the Tax Foundation data is that year on year, the tax burden of the one-percenters converges very close to the 27.1% AGI value.  This leads me to suspect that most one-percenter filers are stacking up enough deductions that they end up paying the AMT, the brackets for which range from 26% to 35%.

Moreover, as Rothman alludes to, the flip side of the majority of the tax take coming from the one-percenters is that small, incremental changes in their effective marginal tax rates have disproportionate effects on whether the government is able to cover its bills.

[J N Winkler]

This sort of math puzzles me.  Nobody would take $1 from someone who is down to his last $10.  Hardly anyone would suggest taxing an extra $2000 out of someone who earns $20,000 a year.  But, for some reason, taxing an additional $500,000 out of someone who earns $5 million a year is fine and dandy.  Why is the person who works hard to earn $20,000 a year somehow more entitled to what they've earned than the one who built a business empire and earns substantially more?  Why disincentivize people from building their businesses by letting them keep less of what they earn?  Isn't growing business what keeps the economy going?

The empirical experience is that income is not the sole motivator for an entrepreneur to build a business empire.  In fact, it may not even be the primary driver.  Our longest sustained periods of business growth were between 1945 and 1980, when top marginal tax rates were quite high, there was no "shareholder value" mantra to serve as an obstacle to companies using their retained earnings to expand, and CEO pay was a small multiple of entry-level worker pay.

There are enormous prestige benefits to being the CEO of a successful company, as well as wide opportunities for on-the-job consumption (access to a corporate jet, company picking up the cost of meals and transportation, etc.--to name just two of probably at least fifty different ways in which life is made sweet in the C-suite).  At a time of high marginal tax rates, these were probably far more important than the money actually paid to the CEO.

[Mark68]

Here is an article by Nick Hanauer, a billionaire venture capitalist, about how trickle-down economics is a scam sold to the American people and how it does not help the vast majority of Americans.

http://prospect.org/article/want-expand-economy-tax-rich

He's been interviewed and has written many other articles about this simple fact: If you raise the minimum wage, you give people at the bottom of the pay scale more money that they will then use to buy more goods and services, and the economy will grow.

OTOH, you give people like him a tax cut, it doesn't grow the economy, other than in niche markets (like private planes and yachts). They will just invest, much of it overseas. That doesn't help the economy, and as we've seen, that's exactly what happened after the 2017 tax cuts.

Trickle-down economics has never actually been based in reality.

[hbelkins]

Less than zero?

Had an OK soundtrack. Probably most memorable for Aerosmith's version of "Rockin' Pneumonia and the Boogie Woogie Flu."

[kphoger]

If you raise the minimum wage, you give people at the bottom of the pay scale more money that they will then use to buy more goods and services, and the economy will grow.

Then let's set the minimum wage to $300 an hour.  Problem solved.

[MNHighwayMan]

If you raise the minimum wage, you give people at the bottom of the pay scale more money that they will then use to buy more goods and services, and the economy will grow.

Then let's set the minimum wage to $300 an hour.  Problem solved.

Don't be ridiculous.

[kphoger]

If you raise the minimum wage, you give people at the bottom of the pay scale more money that they will then use to buy more goods and services, and the economy will grow.

Then let's set the minimum wage to $300 an hour.  Problem solved.

Don't be ridiculous.

Sorry.  Let's do $50 an hour instead.

[Takumi]

Less than zero?

Had an OK soundtrack. Probably most memorable for Aerosmith's version of "Rockin' Pneumonia and the Boogie Woogie Flu."

I was hoping for the Elvis Costello song, but that'll do.

[kevinb1994]

If you raise the minimum wage, you give people at the bottom of the pay scale more money that they will then use to buy more goods and services, and the economy will grow.

Then let's set the minimum wage to $300 an hour.  Problem solved.

Don't be ridiculous.

Sorry.  Let's do $50 an hour instead.

How about $25 an hour which is more than likely to happen in the (near) future.

[abefroman329]

Less than zero?

Had an OK soundtrack. Probably most memorable for Aerosmith's version of "Rockin' Pneumonia and the Boogie Woogie Flu."

I was hoping for the Elvis Costello song, but that'll do.

I think that was a bigger hit than the shitty Bret Easton Ellis adaptation H. Belkins alluded to. And he's wrong, the most memorable song is the Bangles' cover of Hazy Shade of Winter.

[abefroman329]

My iPhone auto-corrected "Belkins"  to "Bellies,"  is THAT ever appropriate.

[kevinb1994]

Less than zero?

Had an OK soundtrack. Probably most memorable for Aerosmith's version of "Rockin' Pneumonia and the Boogie Woogie Flu."

I was hoping for the Elvis Costello song, but that'll do.

I think that was a bigger hit than the shitty Bret Easton Ellis adaptation H. Belkins alluded to. And he's wrong, the most memorable song is the Bangles' cover of Hazy Shade of Winter.

I think you meant to refer to him as H.B. Elkins (or H.B. for short).

My iPhone auto-corrected "Belkins"  to "Bellies,"  is THAT ever appropriate.

LOL it sounds like it wanted you to refer to him as a hillbilly.

[kalvado]

If you raise the minimum wage, you give people at the bottom of the pay scale more money that they will then use to buy more goods and services, and the economy will grow.

Then let's set the minimum wage to $300 an hour.  Problem solved.

Don't be ridiculous.

Sorry.  Let's do $50 an hour instead.

How about $25 an hour which is more than likely to happen in the (near) future.

I don't believe dollar would collapse that low.

[abefroman329]

LOL it sounds like it wanted you to refer to him as a hillbilly.

Certainly not. That would be a personal attack, and personal attacks are expressly forbidden.

[kphoger]

If you raise the minimum wage, you give people at the bottom of the pay scale more money that they will then use to buy more goods and services, and the economy will grow.

Then let's set the minimum wage to $300 an hour.  Problem solved.

Don't be ridiculous.

Sorry.  Let's do $50 an hour instead.

How about $25 an hour which is more than likely to happen in the (near) future.

Ah, OK, right.  $7/hour is too low, $300/hour is ridiculous, $50/hour is still too high, but $25/hour (or $15/hour) is just right.  The key to financial well-being in a society is apparently giving a lot of people more money–just not too much money.  Kind of like Goldilocks.

If doubling the minimum wage would make everything better, than why wouldn't quadrupling it make it even better than that?  What's wrong with demanding a $300/hour minimum wage that isn't also wrong with demanding a $15/hour minimum wage?

[MNHighwayMan]

Please tell me you understand that it's not a linear, "more is better" sort of thing.

[kphoger]

Please tell me you understand that it's not a linear, "more is better" sort of thing.

I'm not the one saying more is better.

[Takumi]

My iPhone auto-corrected "Belkins"  to "Bellies,"  is THAT ever appropriate.

Neither is funny.

[MNHighwayMan]

Please tell me you understand that it's not a linear, "more is better" sort of thing.

I'm not the one saying more is better.

But it's not really arguing in good faith to put some ridiculous number out there–one that I assume you're mentally competent enough to understand why it would never work–and then suggest that the whole idea is rubbish.

The whole point of minimum wage is to set a bottom level, a floor, for wages. A level where one is at least able to live from, if frugally and modestly. That hasn't been the case for a number of years now.

[NE2]

Mr. Phoger is just an idiot. Ignore his spew.

[abefroman329]

But it's not really arguing in good faith to put some ridiculous number out there–one that I assume you're mentally competent enough to understand why it would never work–and then suggest that the whole idea is rubbish.

It's not, it's a combination of the slippery slope and appeal to ridicule fallacies.

[kphoger]

Please tell me you understand that it's not a linear, "more is better" sort of thing.

I'm not the one saying more is better.

But it's not really arguing in good faith to put some ridiculous number out there–one that I assume you're mentally competent enough to understand why it would never work–and then suggest that the whole idea is rubbish.

It’s not, it’s a combination of the slippery slope and appeal to ridicule fallacies.

Then tell me what number is unreasonably high and why it's unreasonably high.  I have yet to hear anybody AT ALL explain why minimum wage should be $15/hour but not $40/hour.  Every argument I've heard in favor of the former should work for the latter–and every argument I've heard against the latter should apply to the former.

I work for a small business owned by a wealthy man, and I do not believe it would be beneficial to increase everybody's pay by some amount.  Overhead is already tight as it is, and I've seen many a co-worker let go because we could no longer afford to employ them.  And I've seen several others take a cut in working hours per week in order to stay.  Reducing the owner's take-home pay by increasing his personal income tax and then reducing his company's profitability by requiring him to pay his employees more in wages is not a good way of ensuring people have disposable income to spend into the economy.  Rather, it's a good way of ensuring people lose their jobs and have no disposable income to spend into the economy. 

[Tonytone]

So most of the people on the forum are Pro-Conservatives?


iPhone