How much do you want?

[Woodruff]

I thought I stated it...I think the $15,000 flat exemption is a bit too low. As I said, I think it's the right idea, but I just think the "bottom end" of beginning to pay any taxes should be a bit higher than that. Any system would also need a mechanism for adjusting that level (up and down).

Why is the exemption too low?

It seems to me that expecting someone to live below the poverty line and still pay taxes is a bit onerous.

The poverty line is a bit of bullshit, in my opinion. It even used to be below $15,000, but as a bureaucrat, depending on where you adjust it, you can create the illusion of a problem, so I don't find your position to be very convincing.

Besides, if you're earning $16,000, you pay (0.20 * 1000), which is a Grand Total of $200 in taxes---Did he say $200? OMG, Folks. $200! Call the police and the army! ;P

All people should pay taxes of some proportion because having the incentive of being taxed induces people to not vote for perverse outcomes.

Honestly, $16 in a given month CAN make a significant difference. You can only get so much from shelters. I lived it while I was lower enlisted for a couple of years, unfortunately, and that was with the military base services helping us out some and certainly pointing us out to places we could go to for help (which a lot of poverty-level individuals don't have. So I'd have to say that your claim regarding the $200 is an unfair one.

Haha, there's that fairness argument. It was about time! Thanks for playing, Woodruff.
The benefits of having $200 extra for whatever don't offset the costs of enabling an environment which creates perverse incentives.

You say this as if it in any way refutes my point. Just because you don't give a shit about people at the bottom doesn't mean it's okay to f*ck them over. As well, my only "claim to fairness" was that YOUR claim about the $200 not being significant was unfair, not the idea of "it being an unfair level of taxation". But go ahead and spin it that way...I know that's kind of your thing.

I sidestepped the fairness argument with BVP and haven't brought that up with you, so you're putting words in my post.

I'm not really trying to put words in your mouth, I'm simply pointing out that you seemed to be making that presumption. Because I can't think of another reason why you'd try to make that comparison.

Why should we make comparisons to reality?
BBS:
(1) Because making comparisons matter.
Otherwise, 'why change it from A to B?' Without a comparison, I don't see how the argument bears much relevance. With tax policy debates, we'd be shifting from tax policy A to tax policy B. It helps to know where you came from and where you're going in order to explain that an alternative route would be better/worse.

(2) with policy, the opportunity cost matters. Whenever you commit yourself to a certain plan, it helps to know the value of the second most valuable plan which was foregone. Without knowing the opportunity cost, you would be unable to understand if what you are doing is better or worse than doing something else.

Woodruff:
(1) It seems stupid to me to compare something to an even more shitty something as a basis for whether that something is a good thing or not.
(2) I didn't say making comparisons (evaluating progress or plans to alternatives) is stupid!


Lol, okay, woodruff!

No, it isn't. Phatscotty labels me as a dick because he wants an excuse to ignore me (or pretend to ignore me, more accurately). Beezer and DangerBoy label me as a dick because they're unrepentant ultra-conservatives who wouldn't understand a cogent discussion if their lives depended on it. Most folks (including me) will just say I can act like a dick at times, but that I don't usually.

Great defense, but you were still being a dick.

Nowhere have I said that, and nowhere have I remotely suggested that.

Then you brought it up for no reason at all.

When you portray people who ask you to stop misconstruing things, do you

(1) stop doing so?
(2) throw a temper tantrum while claiming that the other person is calling out your poor behavior for no good reason at all?

I'd go with (2).

Next, you'll be saying "f*ck YOU, TROLL!"

As for the rest, merits don't mean much if you can't evaluate progress or plans to alternatives.

Where did you get the idea I can't evaluate progress or plans to alternatives? In fact, I'd say I did when I stated that the current system is shit, as well as when I said that I tend to like the flat tax rate (other than your stated $15,000 exemption). But you wouldn't be trying to put words into my mouth or anything, right?

" It seems stupid to me to compare something to an even more shitty something as a basis for whether that something is a good thing or not. "

You see, "evaluating progress or plans to alternatives" is called "making a comparison," which you think is stupid.

You sound ridiculous, Woodruff, but I'm just going with what you said. This is you saying that it's stupid to compare a policy to the current one, which is worse.

Sorry, but you have to compare policy to current reality; otherwise, it doesn't mean much.

You might have to sit this debate out if you can't have it your way.


"In fact, I'd say I did [make a comparison] when I stated that the current system is shit, as well as when I said that I tend to like the flat tax rate." But comparisons to current plans are stupid, according to you. I guess you're being stupid according to you?

You might have to sit this debate out.

You might have to start being honest. Well...you wouldn't want to go that far, I don't imagine. (Don't you have some more words to put in my mouth?)

[BigBallinStalin]

Actually, I think it's called accounting. I'm not historian, but if all the guys that had deposited their $1 million in the bank came and got it, wouldn't there be a problem?

Yes... it's called a "run" on the banks... and when/if it happens it is bad.

In the US we prevent this sort of chaos by having the FDIC. So even if YOUR particular bank runs out of cash... you know you will get your money (up to $250,000) because it is backed by the FDIC.

Before the FDIC, this occasionally happened, but what banks did to mitigate this risk was to expand their capital assets (roughly 20%). I'm not sure how much it is today, but the FDIC certainly subsidizes the risks which banks should be paying for.

[BigBallinStalin]

Haha, there's that fairness argument. It was about time! Thanks for playing, Woodruff.
The benefits of having $200 extra for whatever don't offset the costs of enabling an environment which creates perverse incentives.

You say this as if it in any way refutes my point. Just because you don't give a shit about people at the bottom doesn't mean it's okay to f*ck them over. As well, my only "claim to fairness" was that YOUR claim about the $200 not being significant was unfair, not the idea of "it being an unfair level of taxation". But go ahead and spin it that way...I know that's kind of your thing.

Nice straw man. Anyway, it's not fair to make other people pay more taxes for those who pay less. Fairness cuts both ways, so that's why I consider it to be a dumb argument.

The current tax system creates a large group of people who vote on public policy yet do not pay for the costs (because many pay essentially no federal income taxes). This creates perverse incentives which lead to poor outcomes--at the cost of every taxpayers. Your position is unfair to all other taxpayers (see how this fairness argument gets stupid?). Still, you'll have to explain how not paying $200 is totally great--even at the cost of the perverse incentives.

I sidestepped the fairness argument with BVP and haven't brought that up with you, so you're putting words in my post.

I'm not really trying to put words in your mouth, I'm simply pointing out that you seemed to be making that presumption. Because I can't think of another reason why you'd try to make that comparison.

Why should we make comparisons to reality?
BBS:
(1) Because making comparisons matter.
Otherwise, 'why change it from A to B?' Without a comparison, I don't see how the argument bears much relevance. With tax policy debates, we'd be shifting from tax policy A to tax policy B. It helps to know where you came from and where you're going in order to explain that an alternative route would be better/worse.

(2) with policy, the opportunity cost matters. Whenever you commit yourself to a certain plan, it helps to know the value of the second most valuable plan which was foregone. Without knowing the opportunity cost, you would be unable to understand if what you are doing is better or worse than doing something else.

Woodruff:
(1) It seems stupid to me to compare something to an even more shitty something as a basis for whether that something is a good thing or not.
(2) I didn't say making comparisons (evaluating progress or plans to alternatives) is stupid!


Lol, okay, woodruff!

No, it isn't. Phatscotty labels me as a dick because he wants an excuse to ignore me (or pretend to ignore me, more accurately). Beezer and DangerBoy label me as a dick because they're unrepentant ultra-conservatives who wouldn't understand a cogent discussion if their lives depended on it. Most folks (including me) will just say I can act like a dick at times, but that I don't usually.

Great defense, but you were still being a dick.

Nowhere have I said that, and nowhere have I remotely suggested that.

Then you brought it up for no reason at all.

When you portray people who ask you to stop misconstruing things, do you

(1) stop doing so?
(2) throw a temper tantrum while claiming that the other person is calling out your poor behavior for no good reason at all?

I'd go with (2).

Next, you'll be saying "f*ck YOU, TROLL!"

As for the rest, merits don't mean much if you can't evaluate progress or plans to alternatives.

Where did you get the idea I can't evaluate progress or plans to alternatives? In fact, I'd say I did when I stated that the current system is shit, as well as when I said that I tend to like the flat tax rate (other than your stated $15,000 exemption). But you wouldn't be trying to put words into my mouth or anything, right?

" It seems stupid to me to compare something to an even more shitty something as a basis for whether that something is a good thing or not. "

You see, "evaluating progress or plans to alternatives" is called "making a comparison," which you think is stupid.

You sound ridiculous, Woodruff, but I'm just going with what you said. This is you saying that it's stupid to compare a policy to the current one, which is worse.

Sorry, but you have to compare policy to current reality; otherwise, it doesn't mean much.

You might have to sit this debate out if you can't have it your way.


"In fact, I'd say I did [make a comparison] when I stated that the current system is shit, as well as when I said that I tend to like the flat tax rate." But comparisons to current plans are stupid, according to you. I guess you're being stupid according to you?

You might have to sit this debate out.

You might have to start being honest. Well...you wouldn't want to go that far, I don't imagine. (Don't you have some more words to put in my mouth?)

Stop crying and get logical.

[patches70]

Actually, I think it's called accounting. I'm not historian, but if all the guys that had deposited their $1 million in the bank came and got it, wouldn't there be a problem?

Yes... it's called a "run" on the banks... and when/if it happens it is bad.

In the US we prevent this sort of chaos by having the FDIC. So even if YOUR particular bank runs out of cash... you know you will get your money (up to $250,000) because it is backed by the FDIC.

Before the FDIC, this occasionally happened, but what banks did to mitigate this risk was to expand their capital assets (roughly 20%). I'm not sure how much it is today, but the FDIC certainly subsidizes the risks which banks should be paying for.

The banks pay into the FDIC, that's how it's funded (and it's underfunded, go figure). The FDIC also has a line of credit through the Treasury of around $600 billion, just in case. Taxpayers don't have to pay into the FDIC unless things to completely bat shit insane.

[BigBallinStalin]

Oh, that's interesting. But it still leads to that moral hazard.

If the government promises $600bn, it'll promote riskier behavior (likewise subsidizing the costs of riskier behavior). If the banks form their own voluntary pools of assets, then that's fine too. Even better would be their making wiser investments in more liquid capital to cover the real risks of their behavior--as oppose to slopping the risks to the FDIC/Treasury.

That's all I'm pointing out.

[patches70]

Oh, that's interesting. But it still leads to that moral hazard.

If the government promises $600bn, it'll promote riskier behavior (likewise subsidizing the costs of riskier behavior). If the banks form their own voluntary pools of assets, then that's fine too. Even better would be their making wiser investments in more liquid capital to cover the real risks of their behavior--as oppose to slopping the risks to the FDIC/Treasury.

That's all I'm pointing out.

Sure, sure, I understand your point. The FDIC can't cover everything if a serious bankrun problem whipped across the entire country. Ultimately the US taxpayer is on the hook, but at that point, I don't think it would matter all that much, would it?

I mean, that'd be the least of our problems. The bankruns would only be a symptom.

[BigBallinStalin]

Oh, that's interesting. But it still leads to that moral hazard.

If the government promises $600bn, it'll promote riskier behavior (likewise subsidizing the costs of riskier behavior). If the banks form their own voluntary pools of assets, then that's fine too. Even better would be their making wiser investments in more liquid capital to cover the real risks of their behavior--as oppose to slopping the risks to the FDIC/Treasury.

That's all I'm pointing out.

Sure, sure, I understand your point. The FDIC can't cover everything if a serious bankrun problem whipped across the entire country. Ultimately the US taxpayer is on the hook, but at that point, I don't think it would matter all that much, would it?

I mean, that'd be the least of our problems. The bankruns would only be a symptom.

Well, if what I'm stating is true, then it follows that the FDIC should be abolished (over time), and/or strict rules should be enacted (which magically somehow) prevent the government from dumping $600bn into banks (thus rewarding them for poor decisions).

Current US legislation and regulation has enabled the banks to leverage more debt while holding less capital, which undermines the stability of the economy.

[patches70]

Oh, that's interesting. But it still leads to that moral hazard.

If the government promises $600bn, it'll promote riskier behavior (likewise subsidizing the costs of riskier behavior). If the banks form their own voluntary pools of assets, then that's fine too. Even better would be their making wiser investments in more liquid capital to cover the real risks of their behavior--as oppose to slopping the risks to the FDIC/Treasury.

That's all I'm pointing out.

Sure, sure, I understand your point. The FDIC can't cover everything if a serious bankrun problem whipped across the entire country. Ultimately the US taxpayer is on the hook, but at that point, I don't think it would matter all that much, would it?

I mean, that'd be the least of our problems. The bankruns would only be a symptom.

Well, if what I'm stating is true, then it follows that the FDIC should be abolished (over time), and/or strict rules should be enacted (which magically somehow) prevent the government from dumping $600bn into banks (thus rewarding them for poor decisions).

Current US legislation and regulation has enabled the banks to leverage more debt while holding less capital, which undermines the stability of the economy.

During the height of the crisis, to restore confidence, the amount the FDIC would insure was raised to unlimited. That means if you had 10 million in a checking/saving account (or other qualified account) and the bank went under, you'd get your 10 million back from the FDIC. Since then, that has expired and it's back to the 250K max insurance.
That's how the FDIC limits supposedly keeps the risk from having to rely on loans from the Treasury to pay back accounts of failed banks. It's never had to be put to the test, as the most bank failures in a year period since the creation of the FDIC is maybe 140-150 or so banks went insolvent (at the height of the crisis). The number of "troubled" banks is much higher, but in reality all the banks are insolvent (IMO). All it'll take is another heavy straw and the FDIC will really be put to the test. I'm a betting the FDIC won't be able to do much of anything at that point.

As far as the leveraging, ridiculous. The shadow banking industry is estimated $10 trillion for the US alone. That's all off the books, impossible to gauge the risk. Worldwide the shadow banking is some $24 trillion estimated. No one can really know for sure. When the shit hits the fan ain't no insurance in the world, even back by good ole Uncle Sam can do a damn thing to save the whole enchilada from going Boom. No amount of reserves can cover that shadow market.

[patches70]

Oh, and the bank failures where the FDIC had to step in because the bank was insolvent, total amount of "assets" for those banks-
$95 billion. In 2010. (157 banks).

Only 92 bank failures in 2011.

Most of the banks that fail end up being bought up by other banks, who I assume make up for the money lost in accounts, not sure how that works. In 2011, only 8 banks were flat out closed and the accounts paid by the FDIC directly.

[Night Strike]

It seems to me that expecting someone to live below the poverty line and still pay taxes is a bit onerous.

Every person should pay taxes, even if it's only 1%. Maybe then you wouldn't be getting a minimum of 45% of the population voting for the party that promises them more and more wealth transfers.

Ok here's my issue with a flat tax. It's not going to cut it.

With the current tax regime government has difficulty paying for everything.

So how do we make up the difference in revenue? Well you'd have to meet somewhere in the middle to get the same revenue.

This would undoubtedly mean a higher tax rate on the lower income earners.

Unless of course you slash and burn government spending. Which would have a medley of consequences as well,likely resulting in decreased services for lower income earners, those most likely to use them.

Sure in theory it sounds great, in practice it seems to me there would be significant issues.

If the government has trouble paying for everything right now, shouldn't the government be cutting programs and spending instead of adding new ones?

And I actually doubt the revenues would decrease with a 20% flat tax (if that is the number we use). Remember, the "super rich" are decried because their income is only taxed at 15% with some deductions making it even lower. Not only would all those deductions be gone, but the tax rate would also be increased, which would come to a lot more money being paid by the "super rich". That's why so many of these tax debates regarding the top income earners are so disingenuous: according to liberals they're getting a massive tax cut if you're discussing the system we are here while they're paying "less than their secretaries" every time the liberals want to raise taxes. Let's speak some truth here people.

By the way, maybe those lower income earners will stop using as many government services and instead find a way to earn more income if the service becomes lousier than it already is. If you want great customer service, you should be going to the private sector anyway.

[jimboston]

Jim, you are quadruple posting now. What's wrong with you?

Everything... Or Nothing.

[BigBallinStalin]

Right, what NS said, but as I stated, here in the CC we don't know because no one crunched the numbers.

TGD also mentioned the same. A flat tax would be applied to all income, whether it's from capital gains or "income," as in one's wage...

(which would be income: 35% --> 20%; and capital gains: 10%-15%? ---> 20%)


Still not seeing any good arguments against the flat tax. Come forth and don't be a dick; otherwise, I will be forced to respond with equal dickishness.

[jimboston]

Actually, I think it's called accounting. I'm not historian, but if all the guys that had deposited their $1 million in the bank came and got it, wouldn't there be a problem?

Yes... it's called a "run" on the banks... and when/if it happens it is bad.

In the US we prevent this sort of chaos by having the FDIC. So even if YOUR particular bank runs out of cash... you know you will get your money (up to $250,000) because it is backed by the FDIC.

Before the FDIC, this occasionally happened, but what banks did to mitigate this risk was to expand their capital assets (roughly 20%). I'm not sure how much it is today, but the FDIC certainly subsidizes the risks which banks should be paying for.

The FDIC is insurance... Which the banks DO pay for.

[jimboston]

Oh, that's interesting. But it still leads to that moral hazard.

If the government promises $600bn, it'll promote riskier behavior (likewise subsidizing the costs of riskier behavior). If the banks form their own voluntary pools of assets, then that's fine too. Even better would be their making wiser investments in more liquid capital to cover the real risks of their behavior--as oppose to slopping the risks to the FDIC/Treasury.

That's all I'm pointing out.

Sure, sure, I understand your point. The FDIC can't cover everything if a serious bankrun problem whipped across the entire country. Ultimately the US taxpayer is on the hook, but at that point, I don't think it would matter all that much, would it?

I mean, that'd be the least of our problems. The bankruns would only be a symptom.

Well, if what I'm stating is true, then it follows that the FDIC should be abolished (over time), and/or strict rules should be enacted (which magically somehow) prevent the government from dumping $600bn into banks (thus rewarding them for poor decisions).

Current US legislation and regulation has enabled the banks to leverage more debt while holding less capital, which undermines the stability of the economy.

The FDIC has worked well since its' inception... the FDIC is NOT the cause of the recent Financial problems.

[patches70]

The FDIC has worked well since its' inception... the FDIC is NOT the cause of the recent Financial problems.

Umm...ok? I'm not sure anyone made such an assertion, but thanks anyway?

[BigBallinStalin]

Actually, I think it's called accounting. I'm not historian, but if all the guys that had deposited their $1 million in the bank came and got it, wouldn't there be a problem?

Yes... it's called a "run" on the banks... and when/if it happens it is bad.

In the US we prevent this sort of chaos by having the FDIC. So even if YOUR particular bank runs out of cash... you know you will get your money (up to $250,000) because it is backed by the FDIC.

Before the FDIC, this occasionally happened, but what banks did to mitigate this risk was to expand their capital assets (roughly 20%). I'm not sure how much it is today, but the FDIC certainly subsidizes the risks which banks should be paying for.

The FDIC is insurance... Which the banks DO pay for.

They put in a proportion. The FDIC lends out more money from the Treasury, which is money that the banks did not put it. Therefore, the banks do NOT pay for it all.

Besides, the FDIC will still provide perverse incentives (moral hazard) for banks. If someone has your back, you can make riskier decisions. In other words, the FDIC subsidizes the rate of risk which banks face. This in turn leads to a decreased demand of the banks for capital/assets which are more liquid. Why hold more liquid assets and capital if you expect to be bailed out by the FDIC through the Treasury? It's rational to think this way, even though it creates systemic instability in the economy, and this instability is created unintentionally by the FDIC.

Also, this insurance scam net reduces the lenders' need to assess the actual performance of any bank. As a lender, i.e. one who deposits his money in an account at any bank, you should have an incentive to ensure that such a bank is not risky or has a good history. But we don't have this incentive when the FDIC covers everything, so the demand from lenders on banks to perform better is undermined by the FDIC.


Why is there an FDIC?

Because a crisis happened, people screamed, and politicians were eager to maximize their votes (regardless of the unknowns and long-term costs). Today, we're stuck with a system that fundamentally weakens the economy and is too complex for the average Joe to understand (which is understandable). Since voters are largely uninformed, then the political accountability of voting is completely ineffective in ensuring that politicians do not ignore systemic and long-term costs. This is another fundamental problem of (liberal democratic) government when it stretches beyond its Limited role.

It's funny because people screamed about the 2008 financial crisis and about the banks, but when it comes to reforming these systemic problems, the voting public at large has no idea, so politicians don't have to pander to them in order to fix the problems which they created. It's a great system for politicians and bureaucrats--not so great for the people.

[BigBallinStalin]

The FDIC has worked well since its' inception... the FDIC is NOT the cause of the recent Financial problems.

Umm...ok? I'm not sure anyone made such an assertion, but thanks anyway?

It's one of the causes, for reasons already mentioned.

[patches70]

The FDIC has worked well since its' inception... the FDIC is NOT the cause of the recent Financial problems.

Umm...ok? I'm not sure anyone made such an assertion, but thanks anyway?

It's one of the causes, for reasons already mentioned.

You may be right. I never really ever pay the FDIC much mind. Even with your valid points, I'm still of the opinion- "meh".

The Fed is the ultimate backstop. Get rid of the FDIC you still got The Fed who would just do whatever the FDIC would do (and more).

[Baron Von PWN]

Right, what NS said, but as I stated, here in the CC we don't know because no one crunched the numbers.

TGD also mentioned the same. A flat tax would be applied to all income, whether it's from capital gains or "income," as in one's wage...

(which would be income: 35% --> 20%; and capital gains: 10%-15%? ---> 20%)


Still not seeing any good arguments against the flat tax. Come forth and don't be a dick; otherwise, I will be forced to respond with equal dickishness.

Well you said to put aside the fairness issue. ok
We can't crunch the numbers so put that aside. ok

What's left to discuss?

Tax brackets are inherently about fairness. So if you take that out of the picture then what are we talking about?
We can't crunch the numbers because no one here has those resources so what are we talking about? (main reason for introducing the graduated tax rates was to increase state revenue)

If the wealthy pay lower rates because of tax loopholes with regards to dividend income. then close those loopholes and have them taxed at the current rates. That isn't an argument for a flat tax it's an argument against the ridiculous tax loopholes. Get rid of the loopholes keep the same graduated tax rate.

[Baron Von PWN]

Not necessarily a higher tax rate.

You wrote "higher tax rate." Just saying.

You slash and burn government services to balance a budget with a 20% flat tax. So the lower income earners in all likelihood lose most of the services they used to enjoy courtesy of the government, and now must provide them themselves or go without and pay just as much tax as they used to.

In effect they pay for the wealthier citizen's massive tax cut, and must now pay for services formerly paid for by the state, or lose them entirely. How does this not increase the burden on the poor?

(1) Why are we cutting services to low income earners? You've made that assumption, which, for my purposes, is a false one. I would like to cut a lot of services that apply to high income earners. For example, military spending and business cash incentives. We're also eliminating tax benefits. For example, special deductions and credits for businesses. For example, raise the rate on capital gains to the flat tax rate.

(2) Massive tax cut? Wealthy people WHO WORK FOR A LIVING pay up to 35%. Wealthy people WHO INVEST FOR A LIVING pay 15%. It would be a TAX INCREASE on the wealthy investors (e.g. Romney, Buffett). The people who would benefit most are those who earn ordinary income which is taxed at 35% who earn more than $1 million (essentially). Not a lot of those people around.

1) I suspect such a flat tax would mean a loss of quite a bit of revenue. So I'm thinking it would mean quite significant cuts to balance the budget. Theres already a large deficit and we re talking about reducing revenue and making spending cuts.

2) you don't think a 15% tax cut is massive? usually when tax rates are altered its by 1 or 2% tops. As for the investor types treat their income from investments like any other income. keep the graduated rate.

[Baron Von PWN]

It seems to me that expecting someone to live below the poverty line and still pay taxes is a bit onerous.

Every person should pay taxes, even if it's only 1%. Maybe then you wouldn't be getting a minimum of 45% of the population voting for the party that promises them more and more wealth transfers.

Ok here's my issue with a flat tax. It's not going to cut it.

With the current tax regime government has difficulty paying for everything.

So how do we make up the difference in revenue? Well you'd have to meet somewhere in the middle to get the same revenue.

This would undoubtedly mean a higher tax rate on the lower income earners.

Unless of course you slash and burn government spending. Which would have a medley of consequences as well,likely resulting in decreased services for lower income earners, those most likely to use them.

Sure in theory it sounds great, in practice it seems to me there would be significant issues.

If the government has trouble paying for everything right now, shouldn't the government be cutting programs and spending instead of adding new ones?

And I actually doubt the revenues would decrease with a 20% flat tax (if that is the number we use). Remember, the "super rich" are decried because their income is only taxed at 15% with some deductions making it even lower. Not only would all those deductions be gone, but the tax rate would also be increased, which would come to a lot more money being paid by the "super rich". That's why so many of these tax debates regarding the top income earners are so disingenuous: according to liberals they're getting a massive tax cut if you're discussing the system we are here while they're paying "less than their secretaries" every time the liberals want to raise taxes. Let's speak some truth here people.

By the way, maybe those lower income earners will stop using as many government services and instead find a way to earn more income if the service becomes lousier than it already is. If you want great customer service, you should be going to the private sector anyway.

Yeah maybe they should. While their doing that maybe they shouldn't be considering ways to bring in less money.

Kill the loops holes and tax them at the rate they should be taxed then.

NS to poor people. *Why dont you just stop being poor? have you tried that?*

[jimboston]

The FDIC has worked well since its' inception... the FDIC is NOT the cause of the recent Financial problems.

Umm...ok? I'm not sure anyone made such an assertion, but thanks anyway?

I only get in here once or twice a day. I tend to start where I left of and respond as I see fit in order without reading all other posts.

Sometimes it means I make a point someone else has already made.

Since this is all BS anyway (the idea that our comments in a forum like this matter)... I don't see a problem

[jimboston]

The FDIC is insurance... Which the banks DO pay for.

They put in a proportion. The FDIC lends out more money from the Treasury, which is money that the banks did not put it. Therefore, the banks do NOT pay for it all.

Besides, the FDIC will still provide perverse incentives (moral hazard) for banks. If someone has your back, you can make riskier decisions. In other words, the FDIC subsidizes the rate of risk which banks face. This in turn leads to a decreased demand of the banks for capital/assets which are more liquid. Why hold more liquid assets and capital if you expect to be bailed out by the FDIC through the Treasury? It's rational to think this way, even though it creates systemic instability in the economy, and this instability is created unintentionally by the FDIC.

Also, this insurance scam net reduces the lenders' need to assess the actual performance of any bank. As a lender, i.e. one who deposits his money in an account at any bank, you should have an incentive to ensure that such a bank is not risky or has a good history. But we don't have this incentive when the FDIC covers everything, so the demand from lenders on banks to perform better is undermined by the FDIC.


Why is there an FDIC?

Because a crisis happened, people screamed, and politicians were eager to maximize their votes (regardless of the unknowns and long-term costs). Today, we're stuck with a system that fundamentally weakens the economy and is too complex for the average Joe to understand (which is understandable). Since voters are largely uninformed, then the political accountability of voting is completely ineffective in ensuring that politicians do not ignore systemic and long-term costs. This is another fundamental problem of (liberal democratic) government when it stretches beyond its Limited role.

It's funny because people screamed about the 2008 financial crisis and about the banks, but when it comes to reforming these systemic problems, the voting public at large has no idea, so politicians don't have to pander to them in order to fix the problems which they created. It's a great system for politicians and bureaucrats--not so great for the people.

If the FDIC is "lending" out more moeny than they put in.. presumably those loans are paid back.

I think the consensus is the FDIC has been and still is a good thing.

Without the FDIC you would have...
1) a higher chance of Bank Runs... which are bad
2) less savings... which is bad
3) less loans... which is bad

(Note... not talking about the quality of the loans... bad loans are of course bad. MOST loans made by banks are good and there is overall economic prosperity because we can borrow money.)

[jimboston]

[
Also, this insurance scam net reduces the lenders' need to assess the actual performance of any bank. As a lender, i.e. one who deposits his money in an account at any bank, you should have an incentive to ensure that such a bank is not risky or has a good history. But we don't have this incentive when the FDIC covers everything, so the demand from lenders on banks to perform better is undermined by the FDIC.

It is impossible for your average consumer with a checking account and a few grand in savings to "assess" the balance sheet of a bank in any meaningful way.

Furthermore... even a bank with a solid balance sheet could get caught in a bank run if there was some bad news or other outside factor.

Example>
Bank A has a bad balance sheet and fails... there then is a higher probability of a "run" on Bank B. Even if their loans are good and balance sheet is good. A Bank operates by taking deposits and making loans. If every depositor wants his/her money back NOW because another 9/11 then the Bank would fail.

Usually you make good arguements... but you fail in this case.

[BigBallinStalin]

Right, what NS said, but as I stated, here in the CC we don't know because no one crunched the numbers.

TGD also mentioned the same. A flat tax would be applied to all income, whether it's from capital gains or "income," as in one's wage...

(which would be income: 35% --> 20%; and capital gains: 10%-15%? ---> 20%)


Still not seeing any good arguments against the flat tax. Come forth and don't be a dick; otherwise, I will be forced to respond with equal dickishness.

Well you said to put aside the fairness issue. ok
We can't crunch the numbers so put that aside. ok

What's left to discuss?

Tax brackets are inherently about fairness. So if you take that out of the picture then what are we talking about?
We can't crunch the numbers because no one here has those resources so what are we talking about? (main reason for introducing the graduated tax rates was to increase state revenue)

If the wealthy pay lower rates because of tax loopholes with regards to dividend income. then close those loopholes and have them taxed at the current rates. That isn't an argument for a flat tax it's an argument against the ridiculous tax loopholes. Get rid of the loopholes keep the same graduated tax rate.

1) It's not that simple with loopholes. We currently don't just have a progressive tax rate. We have different types of taxes and different rates for different sources of revenue. The flat tax says, "f that," and taxes all income at a set percentage. This closes the government's ability to manage growth, thus creating a tax system which favors the wealthy at the expense of the poorer (fairness argument cuts both ways all the time almost every time, which is why it's ridiculous).


2) If the flat tax of 20% with a $15,000 exemption were to create 80% of the current government tax revenues (which does not include deficit spending), then would you have a problem with the flat tax?