Buffett made $62,855,038 last year

[Myth465]

Great post Az, you guys are funny. Your arguments basically amount to let them eat cake, we all know how that worked out for Mary ann...

 

Buffet as usual is 6 chess moves ahead of the curve..

occupy wall street is growing.......

[Cardboard]

While I agree with Buffett that every tax payer should pay its fair share, I really don't see what it is going to do to help the middle class or the poor. The inequality between the very rich and the others comes from too high salaries paid to executives, too high salaries paid to stars and athletes and the greatest force in the universe according to Einstein or compounding interest. While the "old" middle class and the poor suffer from globalization (many can now do what they do) and poor management of their finances.

 

On the latter, I simply won't accept things like they "have done everything right". They have followed the crowd for the most part and saving money is not a priority. Much more important to be like the Jones.

 

Unless people in developed countries go for more specialized skills, they will get poorer or trend closer to same skill workers in developing countries. Having been involved in sourcing studies in manufacturing, I don't see how that

can be avoided.

 

So I think that Buffett should go 2 steps further and support education and really push for a complete reform of board of directors. How they are elected and how they decide on proper executives compensation.

 

Cardboard

[Hawk4value]

If capital is taxed away at a higher rates that is obviously a hinderance to capital going into start-ups and capital injections into existing companies. It also affects the relative pricing of entrepeneuring: if stocks and bonds are higher priced due to more available capital, then entrepeneurship gets more attractive in relative risk-reward.

 

Again Invert, could not have said it better myself. There is a direct connection between the pool of passive capital (savings and investment monies) and the ability of entreprenuers to fund their businesses. Responsible gov'ts want to encourage this pool to become as large as possible, and ever growing. Every dollar the gov't takes from this pool in taxes is that much less that can be compounded ad infinitum. Also, lets remember that this money has already been taxed as earned income. To repeatedly tax the same money annually over and over again is conceptually abhorent to me.  Also let me be clear, reasoning that a higher or lower or zero capital gains tax will not neccessarily deter entreprenuers from starting businesses misses the whole point. Wealth generation comes from people using risk capital to follow their dreams, start businesses, create jobs, etc.  Society should jealously guard this capital and keep it out of gov't hands where inefficiency and waste squanders it.  The first $800mil stimulous package was a prime example. I say zero tax on passive income from savings and investments forever. 

[ERICOPOLY]

I don't think looking at this specific point in time is very instructive. That kind of top-down managing is not something I believe in or have seen any evidence of working very well historically. No one knows when things are going to turn and suddenly there are loads of capital being used highly suboptimally via government. There is no human being that has the kind of foresight to prevent that.

 

It was top-down managing when it was cut to 15% in the first place. 

 

Did you say at that time "This kind of top-down managing is not something I believe in or have seen any evidence of working very well historically".

No, I regard the status quo as 0%. Taxing is top-managing, cutting taxes is changing management from the top to the bottom. Regarding tax-cutting as subsidizing seems to me a very odd outlook on government's role in the economy. But this is another issue.

 

It would be a net of 0% -- just putting back what was already there originally. 

 

Your handle is "always invert".  I'm merely inverting it.  It's a top-down management in one direction but not the other according to you -- yet it nets out to 0%.  That becomes a logical imbalance actually.

Inverting is not the same as calling things something they aren't. Cutting taxes is not central planning, it is diverting power to the citizenry at the expense of top-down management. The net result of cutting taxes is less power in the hands of government, no matter what the motives behind the cut is. If that is a good thing or not is another story and up for debate.

 

If you are going to play the game of it being "a net of 0%" I can just point to the 19th century or whenever there was no capital gains tax in the US. Productive discussion, eh?

 

So if I point out that the tax was cut less than 10 years ago to 15%, then you'll go back to the 19th century?  No, this is not productive.

 

The tax cut even had a sunset provision.  It has been temporarily extended.  Yes, by all means keep arguing that this is as good as going back to the 19th century. 

 

I'm nearly 40 years old.  10 years no longer seems like much.  Maybe you are only 20 and 10 years is 1/2 of your life?  If not, what's with the 19th century argument?

 

[ERICOPOLY]

Great post Az, you guys are funny. Your arguments basically amount to let them eat cake, we all know how that worked out for Mary ann...

 

Buffet as usual is 6 chess moves ahead of the curve..

occupy wall street is growing.......

 

So Myth what do you think is going on with Australia?  They have a $15 minimum wage and an unemployment rate under 5%.  Our Republican friends here in the USA think our much lower minimum wage is driving jobs away.

 

What is keeping them from having the runaway unemployment that people say will happen here if minimum wages were raised?

 

Does their no-double-taxation if the Australian corporation already paid tax -- does that keep jobs in Australia by making them more competitive against foreign labor?

 

Is it the import tariffs?  Their exported commodities aren't vulnerable to retaliatory tariffs.

 

Do they just have everyone employed in government jobs picking up trash in the park, or what?  What do you see in Melbourne?

 

I understand mining is a job that can't get exported.  Perhaps when demand for their resources cools off the party ends? 

 

Does a higher minimum wage only work for economies that export raw commodities in this period of globalized manufacturing?

[AZ_Value]

I completeky agree with you Cardboard

 

My very own brother is quite an irresponsible dude and somehow I fear that sooner or later his situation will blow up and I will be left worrying about his wife getting something to eat and my baby nephew getting milk everyday. i ve had this conversation with him many times so trust me I am living your point. And mind you he is my older brother and I am only 27 and still a bachelor myself but  would have no choice, they're family.

 

however there needs to come a point when someone calls bullshit on the whole personal responsibility argument.

If the US is producing millions of college graduates that start their adult lives with tens and tens of thousands in debt then it is no longer their problem, it is society's problem because society  has failed them.

The US is the richest nation on earth and even on a per capita GDP we're still up there so there shouldnt be anything that someone can do that we can't do.

 

So if only we could get our collective heads out of our collective behinds we could ask why is it that kids in say Finland go to school for free and get a top notch education for free so much so that they kick our asses in all subjects even in English which is considered a mother tongue in the US.

Why is it that a school teacher in Germany doesnt have to worry that if his wife is diagnosed with breast cancer he will have to go through the pain of personal bankruptcy to get her treatment and why ours do?

If you go back through this thread and others you'll see people talking about the free riders getting handouts and the people we're talking about are the school teachers, firemen, policemen etc.... and just because they have no way of making the kind of money I make or earning the money I earn from my investments I dont consider them any less as productive members of our society.

 

So how about we look at whats working elsewhere and learn from it but the problem is that if we begin the conversation some people view it as more government and are quick to tell you F you! But if someone thinks that any of this will be solved without government, congress or some entity representing us collectively mandating somethimg they should share whatever they're smoking with the rest of the board.

 

And the thing is simply that these thngs dont happen in a vaccum, they'r related.

Take for example Buffett's idea that he estimates would touch some 50K people and how much he estimates that would raise in taxes, and compare that to the budget of all public universities and let's ask ourselves if its worth the trade off of having those people go from 20% to 25% or 30% if it meant that American kids (i.e. our future) doesnt start their productive lives with tens of thousands in debt and of the people those reforms would hurt I am one of them. I figure college loans reform would hurt banks and I am a BAC shareholder (yes Parsad and Al convinced me to swing lol) but I think it's worth the discussion. But the problem with far right people is that they wont even agree to talking about what would help us all if we meet in the middle.

 

My basic point is that we shouldnt fool ourselves that sooner or later an angry majority will not turn against a lucky minority and just like Buffett I think we should agree on orderly reforms that will benefit the nation as a whole

 

[ERICOPOLY]

I found this documentary to be instructive in understanding how the comfortable and fortunate in society can disregard the unfortunate:

 

National Geographic:  Science of Evil

http://movies.netflix.com/WiMovie/National_Geographic_Science_of_Evil/70146678?trkid=2361637

 

The documentary covers the experiment at the Stanford County Prison (a psych lab on the Stanford University campus) where they take a group of students and make them guards and another group and make them prisoners.

 

The guards fall into their role and abuse the prisoners.  Even the psychologist directing the study gets sucked into allowing abuses that shock his peers.

 

My point is that the "let them eat cake" people can be completely normal people.  They are not evil -- it's just that the situation brings it out of them.  It's somewhat like an economic prison we're running here.  We have the guards (the wealthy elite), and the prisoners (the working class).  Unless some economic power is taken from the guards, I'm afraid they will continue to behave abusively.

[alwaysinvert]

I don't think looking at this specific point in time is very instructive. That kind of top-down managing is not something I believe in or have seen any evidence of working very well historically. No one knows when things are going to turn and suddenly there are loads of capital being used highly suboptimally via government. There is no human being that has the kind of foresight to prevent that.

 

It was top-down managing when it was cut to 15% in the first place. 

 

Did you say at that time "This kind of top-down managing is not something I believe in or have seen any evidence of working very well historically".

No, I regard the status quo as 0%. Taxing is top-managing, cutting taxes is changing management from the top to the bottom. Regarding tax-cutting as subsidizing seems to me a very odd outlook on government's role in the economy. But this is another issue.

 

It would be a net of 0% -- just putting back what was already there originally. 

 

Your handle is "always invert".  I'm merely inverting it.  It's a top-down management in one direction but not the other according to you -- yet it nets out to 0%.  That becomes a logical imbalance actually.

Inverting is not the same as calling things something they aren't. Cutting taxes is not central planning, it is diverting power to the citizenry at the expense of top-down management. The net result of cutting taxes is less power in the hands of government, no matter what the motives behind the cut is. If that is a good thing or not is another story and up for debate.

 

If you are going to play the game of it being "a net of 0%" I can just point to the 19th century or whenever there was no capital gains tax in the US. Productive discussion, eh?

 

So if I point out that the tax was cut less than 10 years ago to 15%, then you'll go back to the 19th century?  No, this is not productive.

 

The tax cut even had a sunset provision.  It has been temporarily extended.  Yes, by all means keep arguing that this is as good as going back to the 19th century. 

 

I'm nearly 40 years old.  10 years no longer seems like much.  Maybe you are only 20 and 10 years is 1/2 of your life?  If not, what's with the 19th century argument?

 

...

 

Yes, the reductio ad absurdum is clearly working to show how silly your argument was. My job is done.

[alwaysinvert]

Great post Az, you guys are funny. Your arguments basically amount to let them eat cake, we all know how that worked out for Mary ann...

 

Buffet as usual is 6 chess moves ahead of the curve..

occupy wall street is growing.......

 

So Myth what do you think is going on with Australia?  They have a $15 minimum wage and an unemployment rate under 5%.  Our Republican friends here in the USA think our much lower minimum wage is driving jobs away.

Since I was the one  making that argument I might as well answer.

 

First of all there are billions of other variables, as you well know. Second, to say that it's "driving jobs away" is misrepresenting the situation. What it does is making the people who arent productive enough to motivate paying whatever the minimum wage is unemployable. Thus, it is a weapon that the middle-class uses to keep the poor off their back. And no, these effects aren't up for debate. Yes, they make the marginal worker who barely earns his keep at the minimum level enjoy less competition. That's the "positive" effect. 

 

And btw, I'm as far from republican as you could come. I don't like being categorized as that anymore than you do.

[Cardboard]

AZ_Value,

 

"If the US is producing millions of college graduates that start their adult lives with tens and tens of thousands in debt then it is no longer their problem, it is society's problem because society  has failed them."

 

Well that is a very interesting issue especially in the U.S.  I have had co-workers coming from the "elite" schools like Yale, Princeton and others and some from state universities. Maybe that my company was great at only finding top talent from the state universities, but I really could not find a difference in intelligence, skills or overall behavior between them. The main difference is that the guy from the state school did not end up with a yearly tuition fee of $40,000. His start in life was definitely easier even if the company did not give him a $5,000 signing bonus.

 

Personally, I would have no issue with education being paid fully by the government and for people living far from main centers to receive financial help for their cost of living. On the other hand, I have a problem when I believe that the majority would end up studying in fields that are not in large demand by society. The majority don't like math and science, but that is what is mainly needed. It would be interesting to see what France has achieved with free tuition (I believe it still is) vs the U.S.  I would think that in the U.S., you will pay more attention to job perspectives before entering college. It is a tough issue to address properly.

 

Regarding teachers, policeman, fireman, nurses and the like, they sure don't seem poor in Eastern Canada. I could see them getting in trouble in Toronto or Vancouver where real estate prices are prohibitive, but not here. Good pension plan, good salaries, care coverage and job security certainly give them a solid middle class ranking. However, if they had the kind of debt coming out of school like is often the case in the U.S. I could see them having some trouble.

 

A solution IMO is for the very expensive centers like New-York, San Francisco, Vancouver and other to pay a "special" tax for people performing essential services. It does not make sense for them to receive the same wages as in lower cost areas of the country. So the rich who contribute to inflate real estate and all other living expenses in these areas would need to pay to ensure that they obtain proper services.

 

Cardboard

[alwaysinvert]

To give a real world example of the effect of minimum wages from my country Sweden: we have an official youth unemployment rate (15-24 year olds) of 27%. And since we have free uni (6 years of subsidized post-high school education) that figure doesn't capture all the young people who take absolutely meaningless classes just to get income. To be fair we don't have legislated minimum wage laws but instead ridiculously strong labour unions that have an effect comparable to the Australian minimum wage law.

 

Although the employer fee (31.42% tax plus some labour negotiated fees amounting to about 5% more; this is on top of the tax paid by the employee of 31% in municipality tax and a further 20-25% government tax on those who earn more than approximately $58.000 a year) and other burdens on the employer - such as the last in first out rule - makes the comparison hard, to be fair.

 

Don't forget to discount the fact that Sweden's downturn has been considerably less serious since our financial house before '08 was in better order after the experiences of our 90's bank crisis and the massive currency devaluations that followed. Running big government deficits have not been politically feasible here since then because the memory of that crisis is still in fresh memory. And of course our housing bubble is just now starting to pop. So it's not a stretch to say that those numbers are truly dismal (official total unemployment rate of 7.4%)

[alwaysinvert]

Only mildly related to the subject but related to the minimum wages. A famous liberal (in the European sense) politician started a sallad bar and made a point of not signing collective agreements for the employees,  but paid higher wages than what would be allowed under the collective agreements stipulated by the labour union in question. Of course, this was not to be allowed by the union and subsequently they started a blockade against the sallad bar, stopping people from entering the place at all hours. Since this is perfectly legal in Sweden (to stop them would be an infringement on the right to demonstrate) the place was doomed from the get-go and  naturally ended up in bankruptcy.

 

Moral of this story? You don't want to imitate our system.

[ERICOPOLY]

And btw, I'm as far from republican as you could come. I don't like being categorized as that anymore than you do.

 

Nobody called you a Republican, but if you feel like you are taking similar stances then what is a Republican after all?  I doubt anyone is 100% Republican.

 

Strip out the moral/religious garbage and many of the tax arguments and they still have things I would stand for.  So, it's a spectrum.  I'm not registered to any party -- there are things I like from both.  The minimum wage argument is supported by members of both parties, but I think it's a Republican stronghold.

 

I wasn't referring to you -- over the years I've heard a billion times the minimum wage argument.

 

[ERICOPOLY]

Yes, the reductio ad absurdum is clearly working to show how silly your argument was. My job is done.

 

This one is a gem.  We're done debating using logic now, we'll just call each other "silly" or "naughty poo poo head" now.

 

[alwaysinvert]

Yes, the reductio ad absurdum is clearly working to show how silly your argument was. My job is done.

 

This one is a gem.  We're done debating using logic now, we'll just call each other "silly" or "naughty poo poo head" now.

I didn't call you silly but your argument, just like I called the Ipad argument silly earlier in this thread. You seem to be a very intelligent person judging from your posts on this board although I obviously don't think you measure up to that in this thread. I do think you can agree that we have exhausted the particular topic. I think my reductio ad absurdum clearly showed that your argument didn't work. In Sweden we at one point during the 70s had over 100% marginal tax rate on certain income brackets but I don't see anyone arguing in favor of a reversal to that with the notion that we are now "subsidizing" high income-earners as opposed to what we did historically.

 

As a curiosity it was the world-famous (?) author Astrid Lindgren who brought attention to this, which subsequently ended up putting the social democrats out of office.

 

I mean there could of course be a decent argument for harmonizing capital gains tax rates with other taxes (I have yet to see one that pleased me, mind you), but the argument from history really doesn't work to show that logically. Hence my referral to the 19th century.

[ERICOPOLY]

I think my reductio ad absurdum clearly showed that your argument didn't work.

 

It clearly showed nothing except that you have adopted a strategy of distortion.  From my point of view when somebody does that they have stopped arguing facts -- instead they attempt to stretch the perception of the facts.

 

The fact is that the tax cuts took place 8 years ago.  This is too short a time frame for you, because it is too familiar for all of us.  We can easily remember and imagine going back to 2003 -- thus it feels like it's within the bounds of returning to a status quo.  So you attempt to kill that feeling by comparing it to a 111-211 year time frame.  There, with a slight of hand you've attempted to get the reader to think of a really long time frame when the tax cut of 2003 is mentioned.

 

Why would you do this?  Of course, it's because 8 years is not long enough.  You didn't compare it to something that happened in 2009.  Why not?  Well, because that would have the opposite effect on the reader.  Your goal is not to make the reader think of a vastly shorter time frame, but rather a much longer one.  Much much longer. 

 

The tax cuts took place in 2003 -- that's 8 years.  Modern times.  You compared this to the 19th century, anywhere from 111 to 211 years ago.  Why, now it's as if I'm arguing about buggy whips.  Clever!  Simple but clever!

 

In other words, the timescale was too small so in order to make your argument fit you had to stretch it from 13x to 26x. 

 

Take something reasonable in time frame, stretch it 13x to 26x until it becomes unreasonable, and then say "See how unreasonable it is!  Hah, it is "silly and absurd"".

 

[alwaysinvert]

No, it's not some kind of rhetorical trick. My argument has the exact same form as yours, only differing in timescale. You obviously acknowledge that my argument says nothing about proper policy, but it's not because the timescale is different, it's because the bigger timescale allows you to see the absurdity of your claim. If that didn't work I also added the +100% marginal tax rate example as an aid, which also has the exact same form as your initial argument and might aid you in understanding that your logic is flawed since a tax rate of more than what you earn is inherently absurd.

[ERICOPOLY]

You've made a scale model of my argument that is 13x to 26x it's actual size and your new argument is effectively "hey, it's ridiculously large". 

 

You aren't saying that 8 years is ridiculous, you are saying that the 19th century is ridiculous.

 

 

[alwaysinvert]

You've made a scale model of my argument that is 13x to 26x it's actual size and your new argument is effectively "hey, it's ridiculously large". 

 

You aren't saying that 8 years is ridiculous, you are saying that the 19th century is ridiculous.

No, it has nothing at all with the actual contents of the policies discussed to do.

 

"Policy x was made into x/2 8 years ago"

 

"In the 19th century x was prohibited"

 

This is the form of the argument. Now x might be considered anything. For the sake of making the argument clear we might call x torture and x/2 flogging (half as bad as allowing all torture, humour me). Now where do we get?

 

"Torture was repealed, but flogging kept legal 8 years ago"

 

"In the 19th century all torture was prohibited"

 

Do you see? And also we might call the 19th century 10 years ago, it doesn't matter one iota.

[alwaysinvert]

To be absolutely clear: the reason why your argument fails has nothing to do with morals or timescale. It's because your ought doesn't follow from your is. Now you might say for reason y and z policy x from 8 years ago was better than policy x/2 and that might help your argument. But the timescale is not an argument in and of itself.

[ERICOPOLY]

You've made a scale model of my argument that is 13x to 26x it's actual size and your new argument is effectively "hey, it's ridiculously large". 

 

You aren't saying that 8 years is ridiculous, you are saying that the 19th century is ridiculous.

No, it has nothing at all with the actual contents of the policies discussed to do.

 

"Policy x was made into x/2 8 years ago"

 

"In the 19th century x was prohibited"

 

This is the form of the argument. Now x might be considered anything. For the sake of making the argument clear we might call x torture and x/2 flogging (half as bad as allowing all torture, humour me). Now where do we get?

 

"Torture was repealed, but flogging kept legal 8 years ago"

 

"In the 19th century all torture was prohibited"

 

Do you see? And also we might call the 19th century 10 years ago, it doesn't matter one iota.

 

You are pointing out that a long time ago in history there was no capital gains tax.  Is that it?

 

There were no labor laws either.  No limits on hunting wildlife. No national parks.  No FAA.  No paved highways.  No public libraries. There was vigilante justice in California.  Insider trading was legal.  Today taxes pay for these things.

 

So you want to get rid of the barbarism or "torture"?  I think taxes already did that.  It's referred to by some as the "price of civilization".

 

Let's get rid of the taxes but keep the amenities.  I think we signed up for that under the tag line "deficits don't matter".

 

 

 

[alwaysinvert]

To be absolutely clear: the reason why your argument fails has nothing to do with morals or timescale. It's because your ought doesn't follow from your is. Now you might say for reason y and z policy x from 8 years ago was better than policy x/2 and that might help your argument. But the timescale is not an argument in and of itself.

I don't think I can say it better than this so I'm leaving it at this now. Your last post had absolutely nothing to do with what I'm saying in any part.

[ERICOPOLY]

To be absolutely clear: the reason why your argument fails has nothing to do with morals or timescale. It's because your ought doesn't follow from your is. Now you might say for reason y and z policy x from 8 years ago was better than policy x/2 and that might help your argument. But the timescale is not an argument in and of itself.

I don't think I can say it better than this so I'm leaving it at this now. Your last post had absolutely nothing to do with what I'm saying in any part.

 

The point of my last post was to demonstrate that you are comparing apples to oranges.  You can't conveniently pick what you want from the 19th century without bringing the context along with it.  Perhaps you can, but I will cry foul.

 

You stated that in the 19th century all torture was prohibited.  No it wasn't.  It was just assigned to different variables.  Instead of being assigned to the tax variable, it was assigned to the variables such as "no public highways, no labor laws, legalized insider trading, no national parks, vigilante justice"... etc.. etc...

 

This is why I am saying your argument is deceptive.  Over the past 111+ years many of the "torture" values previously assigned to other variables have been reassigned to the "tax" variable. 

 

Your argument makes sense if we don't think about these other variables to which torture was previously assigned.  However I do think about them.

 

Keeping out these variables you construct a straw man that you knock down.  You develop an equation with a single variable, but the problem is multivariate.

[alwaysinvert]

To be absolutely clear: the reason why your argument fails has nothing to do with morals or timescale. It's because your ought doesn't follow from your is. Now you might say for reason y and z policy x from 8 years ago was better than policy x/2 and that might help your argument. But the timescale is not an argument in and of itself.

I don't think I can say it better than this so I'm leaving it at this now. Your last post had absolutely nothing to do with what I'm saying in any part.

 

The point of my last post was to demonstrate that you are comparing apples to oranges.  You can't conveniently pick what you want from the 19th century without bringing the context along with it.  Perhaps you can, but I will cry foul.

Look, that is the 19th century is totally inconsequential, that's just something I drew out of my arse to be reasonably sure that it corresponded with reality, but the fact that it does (?) doesn't matter. Reread my posts and maybe you see what I'm trying to say.

 

The only thing I am saying is that the argument from history IS NOT VALID. It's not valid if you say something was this and that in the 19th century, in the Roman empire, in the stone age or 8 years ago and therefore should be so now. I'm NOT defending the policies of the 19th century by pointing that out. Now, if you in some way can show that it worked better (and this can be highly subjective, like that it was fairer), then it's an empirical argument, but merely pointing out that something was different x number of ago is not and will never be an argument.

[ERICOPOLY]

To be absolutely clear: the reason why your argument fails has nothing to do with morals or timescale. It's because your ought doesn't follow from your is. Now you might say for reason y and z policy x from 8 years ago was better than policy x/2 and that might help your argument. But the timescale is not an argument in and of itself.

I don't think I can say it better than this so I'm leaving it at this now. Your last post had absolutely nothing to do with what I'm saying in any part.

 

The point of my last post was to demonstrate that you are comparing apples to oranges.  You can't conveniently pick what you want from the 19th century without bringing the context along with it.  Perhaps you can, but I will cry foul.

Look, that is the 19th century is totally inconsequential, that's just something I drew out of my arse to be reasonably sure that it corresponded with reality, but the fact that it does (?) doesn't matter. Reread my posts and maybe you see what I'm trying to say.

 

The only thing I am saying is that the argument from history IS NOT VALID. It's not valid if you say something was this and that in the 19th century, in the Roman empire, in the stone age or 8 years ago and therefore should be so now. I'm NOT defending the policies of the 19th century by pointing that out. Now, if you in some way can show that it worked better (and this can be highly subjective, like that it was fairer), then it's an empirical argument, but merely pointing out that something was different x number of ago is not and will never be an argument.

 

I think it would help to stop pretending that 2003 was an arbitrary point in time.  The law is the law no matter how hard you try to make it just another point in history.

 

Maybe if you are not a US national you don't realize how the tax cut was legislated.  The reason why we are discussing 8 years ago vs any other time line is that in 2003 congress agreed to temporarily cut the capital gains tax, reverting back to the prior tax levels at the end of 2010.  Since then, another short term extension was voted in favor of the cuts -- political bargaining.

 

You aren't a resident of the US and I'm giving you a mulligan as I in turn know nothing about the Swedish tax provisions.

 

But going on and on pretending like I'm pulling 2003 out of thin air is getting very tiresome if you truly understand that the law requires action in order to extend it.  Status quo could be viewed as just to do nothing -- let it expire.  Treat it for what it was legislated to be -- temporary.  There are many people who don't think it brought the jobs it was promised to bring, and it's not hard to see their point. 

 

I think though the Reagan tax cuts were a big hit and I've heard many people claim that all tax cuts will bring more prosperity.  However if one looks at the inflation adjusted tax rates immediately prior to the cuts, the people at the bottom (or nearer the middle where they actually have lots of money to spend after buying essentials) were being taxed very heavily.  Something like a 35% tax rate on $80,000 (present dollars) of income.  This came about because of the high inflation rates over the prior decade.  The tax brackets hadn't been adjusted for inflation.  Thus there was a lot of bracket creep.  People who spend most of their income suddenly were paying very high tax rates.  Thus they had reduced disposable income and we had anemic growth.  The tax cuts that Reagan brought in not only cut taxes for the wealthy, but they also cut taxes dramatically at the bottom.  Thus there was a very sudden broad based enormous boom in real disposable consumer income and the economy took off.  Well, of course it did -- final demand took off!  This of course set off a massive boom in both tax revenues and job growth.  Now, compare that to the Bush tax cuts which didn't dramatically increase the disposable income for the people at the bottom.  It doesn't surprise me that we never got the lasting boom in economic growth and tax receipts that were promised.  The investor class pocketed the tax cut because there was little increase in final demand as a result of the tax cuts doing relatively little for the consumer class.  Now, had there been a huge increase in final demand they certainly would have invested it as they did in the 1980s after the Reagan tax cuts. 

 

Others argue that in the 1980s the top tax brackets were too high to encourage investment.  I think that's a half-truth.  I believe they wouldn't have reinvested their tax cut if final demand had not increased along with the tax cut.  As Buffett says, cutting his taxes won't make him build more factories and hire more workers if final demand isn't there.