http://news.yahoo.com/stop-coddling-...084140678.html
:)
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No doubt.Quote:
"People invest to make money, and potential taxes have never scared them off."
Now let's see if the idiots in Congress actually pay attention.
Of course, I'd be more impressed if Mr Buffett actually put his money where his mouth is and wrote out a check to the US Treasury for enough to make up the difference to 36ish % of his taxable income. There's nothing like an example to get people motivated ;)
Buffet has pledged the vast majority of his wealth - more like 40 billion - to charitable causes. This is three orders of magnitude greater than the additional tax you would have him pay to the IRS for the year. So he's on solid ground ethically.
James
^^^ Buffett's original NY Times opinion piece actually included a higher priority recommendation than doing away with the 'carried interest' tax loophole and raising the capital gains tax rate on those earning over $1 million per year. Buffett's #1 recommendation to the new 12 member 'super committee' was to significantly reduce gov't spending i.e. implement 'austerity measures'.
from
(snip)"Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues.(snip)
If Buffett's recommendations were actually followed by the 12 members of the 'super-committee', in Buffett's order of priority of significant gov't spending cuts followed by some amount of tax increases upon those who are best able to absorb tax increases ( i.e. those with earnings over 1 million a year ), MANY Americans including myself would have no problem with that approach.
Unfortunately, as the Yahoo rehash of Buffett's actual comments indicates by its absence, Buffett's #1 priority suggestion of significant gov't spending cuts appears to fall on 'deaf ears'. Additionally, Buffett's distinction of a 1 million dollar threshold for tax rate increases would exclude negative effects on a significant number of American small businesses ... negative effects those small businesses will definitely be hit with if Washington's $200k / $250k per year threshold is applied instead.
^^^^Another good quote from Warren Buffet in the same article:
"And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation."
^^^ and from a purely financial standpoint, Warren Buffett has a history of 'betting' against the US dollar and a history of investing in offshore companies whose profits are booked in foreign currencies ( see ) . Thus from a purely economic standpoint, if Buffet is again holding 'short' US dollar positions, and if Buffet is still 'long' a ton of offshore companies, he and his Berkshire Hathaway investors would stand to profit handsomely if the US economy / US dollar 'tanked' as the result of Buffet's proposed tax increase on the 'rich' actually being implemented.
Altruistic offer of 'fairness' by Buffett ? Or a back-door effort to profit handsomely from a near future US dollar / economic decline ( despite the fact that a higher tax rate might apply to those handsome new profits ) ? Or both ? Personally I think that Buffett is first and foremost a businessman ... one doesn't accumulate 62 billion by concentrating on altruistic generosity ! And Buffett also now has 40 billion worth of altruistic 'promises' to keep ( talk about a major charitable tax deduction LOL ) !
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Interestingly enough, last year (appx) I caught an interview of Buffet and Gates together on some news type show (sorry cant' remember which) where they were both lauding the idea of taxation on services, like a sales tax. Does not seem consistent with this idea that he is purporting now. Not anything to do with percentages, but, it sure sounds fair to equalize percentages, doesn't it?
However, as a stripper, I have short changed my DJ on a few occasions. There've been plenty of nights when I earned nearly a thousand bucks ... should have given the DJ 80 or 90 and only gave him 50 instead of the 10 percent I was supposed to give him... I justified this by giving the bouncers the difference. I was very well liked. And when I had a problem, I snapped my fingers politely and the bouncers were always by my side. Perhaps this is wrong, but it's the truth of what I've done and the DJ's were pretty happy campers.
I think this reflects the idea that the super rich theoretically are contributing to the flow of money in the private sector by providing jobs, in essence and this is how the imbalance of percentages has been justified perhaps.
I always say that the average strip club is a micro economic system that reflects what true capitalism is all about.
If that theory were true it would be OK, in practice however it seems to be very far from accurate. Since Bush II's temporary tax cuts were implemented we've had the lowest tax rates in almost 50 years, there was no corresponding jump in jobs, in fact there was a tremendous decline. Big business and the rich are making extremely high profits and yet money is being sucked out of the poor and the middle class. The money getting sucked out of the poor and middle class is not being returned to circulate in the economy. This is the problem with "Trickle Down", in reality very little of it winds up trickling down. Poor people will spend EVERYTHING they receive, middle class will spend ALMOST EVERYTHING they receive, that money goes directly back into the economy and stimulates the economy and creates jobs and income for people and businesses. The money that the wealthy and super wealthy receive often sees a large part of it locked up into investments and other accounts which are often outside of the US.
You can get as ideological as you want and go on about what is fair and what's not- the simple bottom line however is that we are all of us living in a society together and everything is interelated. Sustainability should be the main focus for everyone. Yes, rich people shouldn't have to pay a higher rate or proportion than other people. Would you rather be right and enforce that idea and have the whole economy collapse or go to a 3rd World level or would you rather have them pay a little more and create sustainability?. Almost all the moeny that goes to the poor and middle comes right back anyway. Besides all of that, by having sustainability you get to avoid other nasty stuff like large-scale riots, revolutions and political instability.
From a purely economic standpoint, in terms of volume of sales tax dollars paid versus taxable income, sales taxes are as 'regressive' as they come. The reason of course is that the richest person can only consume so much in the form of outright purchases of items subject to sales tax i.e. cars, watches, furniture etc. Thus even if they are paying premium prices for luxury goods at 10 X price levels of 'middle class' goods, on a percentage basis versus a 20 x + income level the resulting sales tax percentage paid by the rich will be far lower than that paid by the 'middle class'. The 'serious' money spent by the uber-rich is typically for real estate ... which is not subject to sales tax, or spent during out-of-country 'vacations' thus typically not subject to US sales tax.Quote:
they were both lauding the idea of taxation on services, like a sales tax. Does not seem consistent with this idea that he is purporting now. Not anything to do with percentages, but, it sure sounds fair to equalize percentages, doesn't it?
Granted that a new 'value added' tax could circumvent some ( but clearly not all ) of the sales tax limitations.
True enough. However, with increasing regularity, a significant amount of the money being 'recycled' right back into the economy by the poor and the middle class is creating jobs and income for FOREIGN producers. This is especially true for 'poor' Americans who will typically opt for the lowest cost alternative i.e. Chinese consumer goods, Korean cars and appliances, Mexican / Asian grown foods, India produced clothing etc.Quote:
Poor people will spend EVERYTHING they receive, middle class will spend ALMOST EVERYTHING they receive, that money goes directly back into the economy and stimulates the economy and creates jobs and income for people and businesses.
Again trying to stay on the economic side of the issue, 'sustainability' can never be achieved while the 'world market value' of unskilled US labor is perhaps twice that of foreign unskilled labor, but the mandated 'all-in' cost of US labor is more like 3-5 times the cost of foreign unskilled labor. Same goes for semi-skilled labor. The magnitude of the permanent 'subsidies' necessary to offset this 'all-in' labor cost differential ... which I assume you intend to finance via raising taxes on the 'rich' ... simply can't be sustained even if you collected 100% of the incomes of those earning $ 1/2 million or more per year.Quote:
create sustainability
(snip)In fact, in tax year 2009 (the last year for which IRS has published statistics), the combined gross income of all Americans earning $500,000 per year or more was about $1.03 trillion ($1,029,256,075,000.00) of which these Americans paid $256.7 billion ($256,699,499,000.00) in federal income taxes.
That left this group of Americans about $773 billion ($772,556,576,000.00) in income that the federal government had not taken away in income taxes.
Also during tax year 2009, according to the Bureau of the Public Debt, the national debt increased by $1.61 trillion ($1,611,544,812,899.90).
If the federal government had increased the income-tax rate on Americans earning more than $500,000 to 100 percent in 2009–and seized the remaining $773 billion in income it had not initially taken away from these Americans–that would have closed the federal deficit for the year to $839 billion ($838,988,236,899.90).
After taxing away 100 percent of the income of those earning $500,000 or more in 2009, the Obama administration would still have needed to increase taxes on Americans earning less than $500,000 by a total of $839 billion–just to balance federal accounts for the year.(snip) from
... Thus all political discussion aside, even if it was agreed that such permanent subsidies were desireable, the revenue numbers simply cannot work to allow those permanent subsidies to happen on a sustainable basis. And obviously there will be very few Americans earning more than 1/2 million a year who will 'sit still' for a 100% tax rate ... or who will continue working if subject to a 100% tax rate.
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Jimboe... and I've heard that the middle class is shrinking and the disparity between low income and high income is growing, which is a big concern, because you are right about the middle & lower economic classes driving the economy. The middle class needs to be watched out for. But, individuals must begin to watch out for themselves too. It goes both ways.
I could not be more supportive of the idea of sustainability. I think that is really the key to a stable economic environment and I do believe the younger generation is being encouraged to understand the idea of sustainability. Although, doesn't it depend on both business practices and consumer choices alike? Do you think raising the taxes on those in the big brackets would actually have anything to do with encouraging sustainability?
It seems like sustainability depends upon the same kind of integrity that the trickle down idea depends upon, to a certain degree. In fact, i think the idea of trickle down, whether it really works or not, assuming it is not, is a sustainability practice, in theory LOL... At any rate, sustainability seems to be a growing idea in my area and I've met some young people working on sustainability degrees, which I was surprised to hear about... I see a bright future and believe things will all work themselves out eventually.
I don't necessarily feel any kind of need to be right, however, I'm just looking at a micro situation and pointing out what seems to be the argument for the imbalance in tax burden. It's not my argument really, it's just an idea someone else gave me and I can see how it could work in a micro environment. Some "things" may work well in micro environments, but not in macro.
I think the whole bad biz practices going on in the mortgage industry and the damaging after effects are an example of just how right you are about the theoretical idea of how "trickle down" does not work because it depends upon ethical behavior or loyalty to one's fellow citizens to reinvest in our own economy. Many corps seem to fail to realize the importance of the idea that "what's best for everyone, is best for us (the corp) in the long run" ... I believe some corps are starting to see this, and more consumers need to be aware of who is executing sustainable business practices and support them consciously. It's simply voting with dollars. This is why I always say that consumers themselves could really evoke some serious change, but I don't know how many peeps really understand that their purchases are a form of power, couple that with the fact that sustainability is not always convenient in our convenient driven society and it becomes more challenging to get consumers on board. Change can happen, but it will be gradual without government controls.
I like to discuss ideas and I am open to gain a better understanding of the situation before I would voice any kind of support any kind of law change. I just feel like it is important to understand why something is the way it is before allowing it to be changed. I never really began to think this way until AZ passed that illegal immigration law that allows the police to question people about their citizenship. No one here in AZ was asking the question... at least that I found, why don't the police already have this power? Maybe there is a good reason why they don't have this power. Do they need to continue to have this power in 20 years when perhaps the problem it was created for no longer exists?
I am a proponent for consumers and businesses beginning to understand about the ideals of sustainability and beginning to act accordingly in the private sector voluntarily before resorting to government control. Whether this is feasible, I don't know. Just seems preferrable.
^^^Great post pollywogg. You make a lot of good points and raise some great questions.
I guess to sum it up in IMHO, I feel that there is kind of a red zone where a certain amount of taxing and a certain amount of entitlements and distribution of those revenues etc. work for the majority of people and allow the economy and the country to be sustainable for long periods of time. I don't think it has to be precise, but the closer you are to the exact right formula the better things will be.
If you go out of that hyphothetical range too far on the non-taxing side, you will get very large income-distribution gaps and the many problems that go along with it. If you go outside the range on the distribution side, you also wind up with problems that can be just as severe. I think the mid to late 90's is a good example of that equation being implemented intelligently. This is for sure oversimplified and there other factors that have an impact, but I think it's a decent place to start in putting together an economical model and deciding policy.
Melonie, I've read your entire last post and as always you seem to adjust facts and actual dynamics to support your ideology. For example:
"True enough. However, with increasing regularity, a significant amount of the money being 'recycled' right back into the economy by the poor and the middle class is creating jobs and income for FOREIGN producers".. This is a really faulty analysis as much of the money will go to services and local businesses- movies, restaurants, convenience stores etc. Many of the "poor" you mention further on in the post have horrible health habits and will put a significant amount of their money into McDonalds, Coca Cola, Marlboro and Budwieser. While some of those American mainstays may now have foriegn owners- they are created, transported, served and sold by Americans in the good ol' US of A. In addition sales tax and payroll taxes are charged and collected on all of those transactions. Even with item manufactured in other countries, cars, clothes and other items, the stores that sell them, people that do sales, service, managment, accounting are almost 100% here in the US. If you get down to it, the pizza place that delivers the pizza for lunch to the Audi car dealership and to the Wall-Mart staff for their Christmas party are all part of the equation.
The following post about sustainability and how we can't solve the problem by taxing the income of those with over $500K per year is equally short-sighted. First off the current plan is to tax those making over $250K so the pool would be exponentionally larger than those making over $500K. Secondly, the goal is to work the deficit down little by little over time, not in one short fell swoop. With something like this every bit helps and over time big differences can be made by relatively small adjustments ie. 2.5% on amounts over $250,000. Very large spending cuts that increase as the economy gets stronger and increased tax revenue from hight rates which should expand to lower income brackets will help get us there that much quicker- it has to be balanced and sustainable. People do not mind paying higher taxes if there income, profits are going up- the 90's proved that.
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I've read your entire last post and as always you seem to adjust facts and actual dynamics to support your ideology
Indeed some facts need to be adjusted. Your movie example counts the small percentage of ticket revenue paid to ushers and refreshment stand workers, but does not acknowledge the far larger percentage paid to the film's producers ... who are increasingly offshoring their productions to Canada, Aus / NZ, Eastern Europe etc. in an effort to sidestep high US production costs. As to restaurants frequented by those on a 'restricted budget', your example counts the percentage of total bill paid to waitstaff, cooks etc. but does not acknowledge the payments for shrimp imported from Vietnam, for vegetables imported from China or Mexico, for hamburger from Aus / NZ ( Burger King ) etc. As to convenience stores, by far the largest flow of money is the percentage of gasoline expenditures finding their way 'home' to Venezuela ( Citgo ) or another foreign oil source. I'm not claiming that your point is 100% wrong. Certainly SOME money ... and admittedly the majority of money in some cases ... does recycle within the US economy. But not ALL of it does. And the percentage that does is arguably declining.Quote:
This is a really faulty analysis as much of the money will go to services and local businesses- movies, restaurants, convenience stores etc
More adjustment of facts is in order. The Clinton era marked the great transtion from salary / dividend income to capital gains income ... mostly based on the growing tax rate disparaty ( i.e. the 1993 increase in tax rates on salary income versus the 1997 lowering of the cap gains rate to 20% ). And in my book at least, the lowering of the cap gains tax rate from 28% to 20% did not constitute 'paying higher tax rates'. It did obviously translate into 'paying higher amounts of tax revenues' via far higher cap gains income levels being taxed at the lower 20% rate.Quote:
People do not mind paying higher taxes if there income, profits are going up- the 90's proved that
(snip)The effects of increasing taxes on Treasury receipts can be seen in the Clinton and Democrat-controlled congressional tax increase of 1993, one of the largest in history. Despite a more robust job market following a recession, the 1993 tax increase didn't accomplish what Democrats expected. The tax increases added very little to treasury receipts despite their magnitude. Reports from the Congressional Budget Office, the Office of Management and Budget, and the Internal Revenue Service all agree.
In fact, the balanced budgets of the Clinton years didn't occur until after a Republican Congress passed and the president reluctantly signed a 1997 tax bill that lowered the capital gains rate from 28% to 20%, added a child tax credit, and established higher limits on tax exclusion for IRAs and estates.
The Clinton tax policies of the early '90s were based on rate increases and luck -- the luck provided by a normal growth cycle that began in 1992 as America emerged from a mild recession and a communications revolution. It was tax relief that improved receipts following the disappointing outcome of the 1993 tax hikes and made the Clinton economy successful. The 1997 rate reduction on capital gains unleashed the economy, causing capital investment to more than triple by 1998 and double again in 1999. Treasury receipts for this category of tax obligation increased dramatically. (snip) from
It just so happens that Prof. Walter Williams ran the 100% tax rate scenario on those earning $250,000 ...Quote:
it has to be balanced and sustainable ... $250,000
(snip)"According to IRS statistics, roughly 2 percent of U.S. households have an income of $250,000 and above. By the way, $250,000 per year hardly qualifies one as being rich. It’s not even yacht and Learjet money. All told, households earning $250,000 and above account for 25 percent, or $1.97 trillion, of the nearly $8 trillion of total household income. If Congress imposed a 100 percent tax, taking all earnings above $250,000 per year, it would yield the princely sum of $1.4 trillion. That would keep the government running for 141 days, but there’s a problem because there are 224 more days left in the year."(snip)
Again I'm trying to stay on the economic side of your point ... and the numbers clearly and simply show that those 'tax the rich' economics simply come up way short of achieving your theoretical objective. These income distribution numbers plus well established demographic trends dictate that there can't be a successful sustainable scenario where the standard of living of the American poor and/or elderly won't decline in the future, regardless of how high tax rates are raised on the 'rich'. Prof. Williams even goes one step further and adds in the scenario of increasing tax rates on US corporations and the 'uber-rich' ...
(snip)"How about corporate profits to fill the gap? Fortune 500 companies earn nearly $400 billion in profits. Since leftists think profits are little less than theft and greed, Congress might confiscate these ill-gotten gains so that they can be returned to their rightful owners. Taking corporate profits would keep the government running for another 40 days, but that along with confiscating all income above $250,000 would only get us to the end of June. Congress must search elsewhere.
According to Forbes 400, America has 400 billionaires with a combined net worth of $1.3 trillion. Congress could confiscate their stocks and bonds, and force them to sell their businesses, yachts, airplanes, mansions and jewelry. The problem is that after fleecing the rich of their income and net worth, and the Fortune 500 corporations of their profits, it would only get us to mid-August. The fact of the matter is there are not enough rich people to come anywhere close to satisfying Congress’ voracious spending appetite. They’re going to have to go after the non-rich.(snip)
... and in his last sentence, the admittedly 'less than objective' Prof Williams hits the proverbial nail on the head - and despite the 'less than objective' source there is no argument about the number crunching. The only workable and sustainable economic equation that WOULD be able to support your theoretical objective is to significantly increase tax rates on the US middle class - which I think even you will agree would generate an abundance of negative economic consequences.
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Jimboe... By all means, taxation is necessary... and wouldn't it be nice if we could vote with dollars on which national projects we want to support when sending in our IRS checks... "Put 50 percent on the space program and the rest on national parks please!" If this were to happen, I could honestly say the power of the people is truly in place LOL (satire)
As far as safety nets (entitlements) are not wrong either... I'm happy to know that we have them in place as much as the conservatives hate them and use them to justify why things are so bad... of course our world has been coming to an end since I was 10 and probably even before that too LOL... a few years back I was researching the happiest countries and one of the factors in why some of those countries were happy places, according to one article, was that there were good safety nets in place. The article did point out that safety nets work better in micro climates... I think safety nets should be provided by states... and as far as I know, they already are. I don't know if the states get any kind of welfare funding from the feds?? Although, I'm beginning to wonder how well those safety nets work to contribute to overall happiness after what's recently happened in the UK. Yikes!
If we weren't in so much debt, would people still be talking about ways to create more tax revenues? Again, ever since I can remember, everybody has been freaking out about the national debt. Maybe now we really have reached the ceiling and maybe we could follow through with Buffets suggestion on taxing the wealthiest more and cut down on stuff like the space program, the war(s) and earned income credits or ??and let everything run it's course. (According to Molonie, we can't possibly tax enough, so we need to make cuts too... at least that's what I gathered from a quick perusal of her comments ... feel free to correct me if I'm wrong about what she was saying) I think the original intention of the creators of our country, was to let markets do what they do naturally and fluctuate.
I think the real fix to our economic problem is to stop viewing it as a problem and do what Bhutan does and begin to measure Gross National Happiness! On top of encouraging sustainable practices, of course.
What a great thread! I'm really impressed with the quality of postings in this forum. It makes me proud to be a stripper!
It amuzes me to see the tea party economic theology (melonie) butting heads with the super liberal economic theology (jimboe7373). As always the debates get muddled in semantics. Like the sales tax rates for instance.
Just look at the effects of revenues between states with and states without sales taxes.
They never stack up against the revenue generated by income tax.
They do have their place with things like Cigaretts, booze, fire arms and gambling but these are still very weak points in the legislation. The tea party morons here in New Hampshire recently wasted way to much time and legislation on $.10 tax brake for cigaretts that will expire in just under six months anyway. It was a matter of a few hundred thousand dollars at the end of the day.
Likewise it is insane and equally wasteful for liberals to still be begging for welfare extensions for Americans who are very capable of working but haven't for over THREE YEARS. Screw those people.
There has to be a middle way here. The tea party is using a shot gun where a fishing line is needed and the liberals want it to keep raining everywhere despite the costs.
We don't need farm subsidies anymore, that is on thing neither side seems to see any point in talking about and it is a huge fucking chunk of our economy.
Since Obama has proven he is more effective in hunting terrorist leaders we might as well leave iraq and afganistan already but of course the GOP will piss and moan about that.
The rich CAN and SHOULD be paying more taxes as well. Bending over and handing them tax brakes hasn't spurred our industry to keep jobs or commodities in this country or it's market center so obviously it is something else they need. Might have something to to with all those piss poor trade negotiations that morons like the Bushs put into effect.
I just tried to set some heavy deck screws by tapping them in and the drill bit i was using (from china) actually folded after the second tap. That thing sure as hell wasn't 100% titanium. That bridge job they cleared that Chinese construction company for in Jersey, they had to send all of the first load of steel back because each of the components were anywhere from 20% to 40% impure. But the American contractor who hired them and bought the steel still gets their tax breaks and to keep the contract. WE just end up paying more for all the extensions and losing the jobs in steel processing. But of course they will still contract with them next year because the Chinese company bid so low.
That is what it all boils down to. That they want to save money. It doesn't matter to the TEA party or the GOP that the products all suck worse and worse the more they sell our industries away to other countries as long as all the GOP lobbyists, the Koch brothers and every other industry that lines their pockets and gets them re-elected can save some money by selling us out to other countries.
As long as they can keep everyone thinking that it is TAXES that are the real problem.
If those trailer park red necks still have enough disposable income to blow on an X-box 360 and a case of stones for dad every other day while running a gas sucking SUV obviously we are still not as bad off as they try to say.
And the Hippies could honestly open up on the welfare Issues. Even i can deal with paying another 10% on my taxes BUT I don't want to pay for the red necks to have their pointless wars or the hippies to loaf out of work on my dime when any one of them could be flipping burgers to at least earn their keep half the week.
While I don't disagree with most of your post, the part about not working for years isn't completely accurate. There are people who have been unemployed years but just can't find jobs. I am not talking the uneducated we always hear about but the middle class. I know a teacher, supposedly a "safe"field who's been unemployed three years. There are people who have exhausted their unemployment and can't find anything. The unskilled jobs don't hire these types of people (many have degrees)to flip burgers. Many employers won't hire them either because they've been unemployed too long for no fault of their own. These people aren't usually on welfare either.
The fact is we need to wake up about outsourcing because this is ruining our lifestyle here. First it was the manufacturing jobs, then it was the customer service jobs, now it's the skilled professions like law. Add in the outrageous amounts of visas to come here and it doesn't take a genius we will never have a healthy economy again until we look at this issue. I recently went on an interview with an employer who admitted they bring all the mangement jobs over from India and hire Americans here for the low unskilled jobs. The jobs they are bringing people over are ones with many applicants, such as marketing. In fact I originally applied for this job but instead interviewed me for an entry level receptionist job which I turned down.
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That bridge job they cleared that Chinese construction company for in Jersey
That is what it all boils down to. That they want to save money
I'm glad to see that we've got some actual economic content to work with !!! Arguably, where New Jersey is concerned, it's not a question of the gov't wanting to save money but the gov't facing a necessity of saving money !!! Why is that a necessity ? ... arguably because New Jersey has already increased tax rates to the point where taxpayers are 'voting with their feet' ! From
(snip)"More than $70 billion in wealth left New Jersey between 2004 and 2008 as affluent residents moved elsewhere, according to a report released Wednesday that marks a swift reversal of fortune for a state once considered the nation’s wealthiest.
Conducted by the Center on Wealth and Philanthropy at Boston College, the report found wealthy households in New Jersey were leaving for other states — mainly Florida, Pennsylvania and New York — at a faster rate than they were being replaced.
“The wealth is not being replaced,” said John Havens, who directed the study. “It’s above and beyond the general trend that is affecting the rest of the northeast.”
This was not always the case. The study – the first on interstate wealth migration in the country — noted the state actually saw an influx of $98 billion in the five years preceding 2004. The exodus of wealth, then, local experts and economists concluded, was a reaction to a series of changes in the state’s tax structure — including increases in the income, sales, property and “millionaire” taxes.
“This study makes it crystal clear that New Jersey’s tax policies are resulting in a significant decline in the state’s wealth,” said Dennis Bone, chairman of the New Jersey Chamber of Commerce and president of Verizon New Jersey.
The report was commissioned by the state Chamber of Commerce and the Community Foundation of New Jersey to study the effects of wealth migration on charitable giving after executives noticed more affluent philanthropists were moving away. Wealth includes assets such as real estate, stocks, bonds, 401ks, mutual funds and vehicles.
But economists say there are many other implications for the state’s financial health.
Wealthy residents are a key driver for everything from job creation and consumer spending to the real estate market and the state budget, said Jim Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. In New Jersey, the top 1 percent of taxpayers pay more than 40 percent of the state’s income tax, he said.
“That’s probably why we have these massive income shortfalls in the state budget, especially this year,” he said.
Until the tax structure is improved, he said, “we’ll probably see a continuation of the trend, until there are no more high-wealth individuals left.”
He added the report reinforces findings from a similar study he conducted in 2007 with fellow Rutgers professor Joseph Seneca, which found a sharp acceleration in residents leaving the state. That report, which focused on income rather than wealth, found the state lost nearly $8 billion in gross income in 2005.
Findings from the Boston College report show that about 302,780 households left New Jersey between 2004 and 2008, only slightly lower than the 323,350 households that moved into the state. However, the average net worth of the departing households was about 70 percent higher, at $618,330.
Those who left were also more likely to be older and more educated, with jobs as entrepreneurs or in the finance and professional industries, the study found. Those replacing them tended to hold management or support jobs in the manufacturing industry. The study analyzed data from three main sources: The Federal Reserve’s Survey on Consumer Finances, the Census Bureau and the Internal Revenue Service.
Experts pointed to an abundance of anecdotal evidence to support the numbers. Ken Hydock, a certified public accountant with Sobel and Company in Livingston, said in this 30-year-career he’s never seen so many of his wealthy clients leave for "purely tax reasons" for states like Florida, where property taxes are lower and there is no personal income or estate tax"(snip)
For better or for worse, when a gov't chooses to spend large amounts of money for whatever reason, and when that gov't attempts to fund those large expenditures by enacting higher taxes on a particular segment of the population, it's an inconvenient truth that said particular segment of the population will eventually react to those higher taxes. New Jersey now faces a situation ( along with New York, California, Michigan, Illinois etc.) where the state tax rates are so high that some higher tax bracket individuals and businesses have chosen to pack up and move in order to avoid those higher taxes. When that happens, that gov't is left with the same financial obligations but fewer high income individuals and businesses as a major source of tax revenues with which to pay those obligations. This arguably leads to a snowball effect where, in the absence of MAJOR spending cuts, the gov't must increase tax rates even more on those higher tax bracket individuals and businesses that still remain ... which in turn provides even stronger motivation for more higher tax bracket individuals to also move away !
The logical end result is a 3rd world-esque situation where the population consists of a small number of 'uber-rich' who don't really care about the gov'ts tax rate ( since their sources of income can be partially shielded from high taxes via capital gains or tax free municipal bonds or offshore accounts ) and a large number of 'poor' who expect to collect more 'dollars worth' of gov't benefits than they are required to 'pay in'. This is the inherent danger of expensive gov't 'safety nets' plus generous gov't worker pay rates and benefits etc. 'Safety Net' eligible residents represent a net 'cost' to the gov't since they contribute far less in tax revenues than the equivalent cash value of the benefits they receive. Gov't workers also represent a net 'cost' to the gov't since every dollar of tax revenues collected from them started out as a gov't check payment from the gov'ts treasury. With extremely few exceptions, the gov't 'system' actually depends on the tax revenues collected from productive private sector businesses and individuals ... who actually inject 'new' money into gov't coffers ( as opposed to gov't workers or 'safety net' recipients who merely recycle money that originated from gov't coffers ). Note - in this context gov't workers and gov't contractor workers are not 'productive' since the tax revenues collected from them by the gov't don't inject any 'new' money into gov't coffers.
In the real world, there is a certain maximum level of taxation / gov't spending that productive people will tolerate. If a gov't significantly exceeds that level of taxation, the productive people will react. And without a sufficient number of productive people present to actually fund the gov't spending, high levels of gov't spending become unsustainable. Yes the gov't can 'kick the can' by spending borrowed money in addition to actual tax revenues ... for a while. But eventually the debt service costs become significant and compound the snowball effect.
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An excellent post in my opinion twigs. I'd just like to point out, I don't consider myself super-liberal, I consider myself for what actually works in practice. As for welfare, I'm for sending money downstream to keep the peace, but to also keep the economy flowing. That said, I'd be strongly in favor of having people receiving benefits having to report somewhere and do something. Not being able to sit around and do nothing as it is now. I'd like to see teams of recipients go out cleaning up graffite, doing neighborhood watches and other things that keep them busy, better the community and give them a sense of contribution. Likewise with prisons, I'd like to see them working to grow as much of their own food as possible and also doing some light manufactering with proceeds going to their victims or a victims fund. They would actually be able to beat the Chinese in the low-wage department.
I would also be in favor of really tightening up the welfare system and heavily punishing any fraud or abuse that was occurring. I'm a strong proponent of Kiva and think that could make a big difference in a lot of the poorer communities if implemented on a large scale: http://www.kiva.org/
WOW ... careful, Jimboe, or you may be mistaken for a southern state conservative !!!Quote:
I'd like to see teams of recipients go out cleaning up graffite, doing neighborhood watches and other things that keep them busy, better the community and give them a sense of contribution. Likewise with prisons, I'd like to see them working to grow as much of their own food as possible and also doing some light manufactering with proceeds going to their victims or a victims fund. They would actually be able to beat the Chinese in the low-wage department.
^^^ same observance in metro NY and NJ !!!
I've heard that about both (that there is a lot of fraud). Almost everyone I've known using assistance took advantage of the system, from selling food stamps to getting medications then selling them to others. I've been in the store when welfare checks were issued and saw so much abuse then. Last Christmas I was in Kmart and saw this woman trying to buy electronics with her Link Card (Illinois food stamp card). People often think that I am being nasty by saying this but this is what I saw. I used to think it was unfair to pick on people on welfare until I saw all this abuse, many by friends of mine.
^^^To the above few posts. I am not a liberal and I'm not a conservative, I feel the 2 group have become so isolated and there is such vitrolic these days that you either join or get lumped into one or the other, and then fresh, outside the box ideas become harder and harder to propose and implement.
Welfare should be given to those who truly need it, any corruptrion or fraud with it should be punished extremely harshly. It should not just be doled out as a gift, to receive benefits people must log a certain amount of hours doing community service of some kind. Deliberately make it where the service they must do is just slightly worse or harder than work to keep them from getting comfortable and avoiding job-hunting.
Military spending is such a vital thing to our national interests. It should be considered with incredible devotion because of it's importance and given all kinds of special treatment. But, in exchange for that special devotion etc., it should conduct itself with the very hightest levels of morality and integrity- from submitting budgets to costs and almost every other facet. Any person violating that almost sacred trust should be punished extremely, extremely severely.
I would advocate going acroos the board and putting in accountability in as many department and areas that we can. Have some rewards for doing a good jog and have very bad penalties for incompetence and have massive penalties for corruption or deliberate deciet or theft.
If the parameters are set properly and people are aware of what they have to lose and gain, the ones who do bad things will soon stick out way more than they do no, and be much easier to contain.
As with any article provided by a partisan source I have to do the fact checking.
This article is only focusing on rich people leaving New Jersey. Where is the data on unemployment, deficit, revenues or the effects on workers or the middle class? By concocting that a state is losing “wealth” just because it’s rich are migrating to avoid taxes is in no way a factual statement if by “wealth” you are trying to establish that the states general “wealth” (deficit, unemployment, volume of income and revenues) is being poorly effected.
This is America; the rich can live wherever they want to avoid taxes.
This part for instance:
“
But economists say there are many other implications for the state’s financial health.
Wealthy residents are a key driver for everything from job creation and consumer spending to the real estate market and the state budget, said Jim Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. In New Jersey, the top 1 percent of taxpayers pay more than 40 percent of the state’s income tax, he said.”
BUT WHERE IS THE DATA PROVING that jobs have left or the middle class is suffering, spending less or losing work? Where is the actual data proving this “suggestion”?
A business owner can jump the state for tax reasons but it is kind of hard to move the business itself. Which means that the business revenues are still there.
Of course in the case of a local contractor handing jobs and purchases to China, it is pretty damn obvious that the middle class just took a hit on jobs AND revenues while a few individuals made some money for their new cabanas in Florida.
This articles just proves the point more that the Rich will displace jobs and revenues to anyone BUT the American people if it means they can save even a pittance of their enormous wealth even though they keep doubling their wealth annually. Even thought it is the middle class who end up taking up those lost tax revenues weather it is by the rich leaving or getting tax breaks. Eventually they will all do what totalitarian capitalists have done through out history, they will move out of the country entirely while lowering the jobs and pay rates at all their American businesses and industry until they can move enough of it to other countries that they no longer need their American holdings (outside of storefronts of course). But then of course who needs a store front in a country that can no longer afford your product anyway? They can just dump all their American holdings into wal-marts, lawn care and strip mines. Then we can all work at either a wal-mar, landscaping or in a mine and buy everything at wal-mart. Our kids can go to wal-mart charter schools and get the shittiest educations possible until we sell them into indentured labor while the top 20% of Americans who now own everything live in other countries.
New jersey’s state deficit is just shy of 11 billion. That is just under half of the nations highest and about five billion more than the lowest.
I have to note here that the lowest state deficits in this country are among other blue states that put fair tax rates on the rich while ALSO keeping people off unnecessary welfare and state expenses.
Keeping things in a fair medium always works the best.
Outsourcing is something the GOP has promoted for decades now. It keeps their primary voter and lobbying base (the rich) supporting them and it keeps them from having to get into serious issues with American workers like health care. To stop outsourcing simply get the TEA party and the GOP to stop awarding the rich for outsourcing and sending all our commodities and market center to other countries. It is one of the hardest things to do politically at the moment but it is worth it in the end.
I am a teacher and I haven't had serious work for about FIVE years now. So instead of being like most liberal cry baby teachers and squatting on welfare for years on end, I simply got into other work and started teaching independently. I can rent a room at UW's mini course and make my own money teaching final cut pro on an adult ed platform or as an after school project and make my own money. Though I've gotten a lot better work as a consultant over the yeas. Granted, a high school English teacher wouldn't be able to do that but there is always something else people can do. It is one of the worst excuses to stay on welfare simply because you think since you became a teacher that is all you can and should be doing.
Tell that to a family on welfare who's earning parent are both unable to work because of illness or injury. If a person can work, they will work. If a person can work and they simply do not, they waste everyone's time and money.