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Thread: financial consequences of an Obama / Hilary victory ...

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    Default financial consequences of an Obama / Hilary victory ...

    (snip)"We've also got big trouble on the election front - we certainly will have a Democrat Congress, but it is looking increasingly like a Democrat in the White House is a lock, as all of the "hide the sausage" games are not only failing (and must, mathematically) but worse, have sucked retail investors back into the pool only to be devoured by the Sharks of Wall Street, and the blame for that, along with the mess in the first place, is, will and should fall on The Republican Party.

    In short, The Republican Party is and has squandered its opportunity to force all the fraudsters out into the open and lock more than a few of them up, with Hanky Paulson being one of the worst offenders in the "look the other way on purpose" department.

    A three-house Democrat sweep would mean a serious and immediate increase in taxes, especially capital gains and dividend tax. The bond and stock markets will both tank immediately if that becomes apparent, with the stock market being far worse because a revocation of the "better" treatment for capital gains and dividends will be front-run by people selling ahead of the end of year to take advantage of the breaks while they still exist. This also changes the "fair value" computations for the stock indices, and if people are consistent (who knows if they will be) would result in a roughly 15% immediate "discount" being applied to all of the American indices across the board.

    And you though the bear market was over......"(snip)

    from

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    Default Re: financial consequences of an Obama / Hilary victory ...

    That makes no sense that the market would collapse if taxes on capital gains and dividends are increased. If anything, it would discourage flipping and encourage reinvestment of dividend income into tax deferred investment vehicles.

    The real estate bubble is arguably a direct result of the reduction of capital gains taxes. Increasing taxes will slow down the speculators, and thereby create stability in all markets.

    But I guess my crystal ball is just as accurate as everyone else's. Clearly, continuing down the same path and expecting to arrive at a different location, isn't going to happen.

    But if you want to look at historical record, high taxes on the obscenely wealthy, and heavy funding of social programs creates stability in and health in a society.


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    Default Re: financial consequences of an Obama / Hilary victory ...

    I posted this LINK once before, probably a good time to post again, here are some of the highlights:

    The University of Nevada-Reno economics professor also uncovered the following while conducting the economic comparison between Republican and Democratic presidential administrations from 1949 to 2005:
    • Unemployment Rate- Republicans 6.0%, Democrats 5.2%
    • Change In Unemployment Rate- Republicans +0.3%, Democrats -0.4%
    • Growth of Multifactor Productivity- Republicans 0.9%, Democrats 1.7%
    • Corporate Profits (share of GDP)- Republicans 8.8%, Democrats 10.2%
    • Real Value of Dow Jones Index- Republicans 4.3%, Democrats 5.4%
    (in logarithmic growth rates)- Republicans 2.8%, Democrats 4.4%
    • Real Weekly Earnings- Republicans 0.3%, Democrats 1.0%
    • CPI Inflation Rate- Republicans 3.8%, Democrats 3.8%

    Just some food for thought.

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    Default Re: financial consequences of an Obama / Hilary victory ...

    But if you want to look at historical record, high taxes on the obscenely wealthy, and heavy funding of social programs creates stability in and health in a society.
    speaking of historical record on tax policy, you might want to consult John F. Kennedy ...






    Also the problem with dragging out statistics is who gets to choose the criteria for the statistical study.

    (snip)"This study assesses the Reagan supply-side policies by comparing the nation's economic performance in the Reagan years (1981-89) with its performance in the immediately preceding Ford-Carter years (1974-81) and in the Bush-Clinton years that followed (1989-95).

    On 8 of the 10 key economic variables examined, the American economy performed better during the Reagan years than during the pre- and post-Reagan years.

    Real economic growth averaged 3.2 percent during the Reagan years versus 2.8 percent during the Ford-Carter years and 2.1 percent during the Bush-Clinton years.

    Real median family income grew by $4,000 during the Reagan period after experiencing no growth in the pre-Reagan years; it experienced a loss of almost $1,500 in the post-Reagan years.

    Interest rates, inflation, and unemployment fell faster under Reagan than they did immediately before or after his presidency.

    The only economic variable that was worse in the Reagan period than in both the pre- and post-Reagan years was the savings rate, which fell rapidly in the 1980s. The productivity rate was higher in the pre-Reagan years but much lower in the post-Reagan years.

    This study also exposes 12 fables of Reaganomics, such as that the rich got richer and the poor got poorer, the Reagan tax cuts caused the deficit to explode, and Bill Clinton's economic record has been better than Reagan's."(snip)

    from


    actually, this graph sums up the results of Reagan tax cut policies policies rather concisely ...



    (snip)"Fable 12: The Rich Saw Their Tax Bills Go Down in the 1980s While Everyone Else Paid More

    Contrary to popular rhetoric, the wealthiest Americans did not pay less taxes; rather, they paid more taxes after the income tax rate cuts in 1981. In constant dollars, the richest 10 percent of Americans paid $177 billion in federal income taxes in 1980 but paid $237 billion in 1988. The remaining 90 percent of households paid $5 billion less in income taxes over this period. [52] They earned more and they paid more. In fact, Federal Reserve Board member Lawrence Lindsey has shown that taxes paid by the wealthy were substantially higher than they would have been if the top tax rate had remained at 70 percent.[53] Figure 14 shows that the share of total income taxes paid by the wealthiest 1 percent of all Americans actually rose from 18 percent in 1981 to 25 percent in 1990. The wealthiest 5 percent of Americans saw their tax share rise from 35 to 44 percent. So the rise in the deficit was clearly not a result of "tax cuts for the rich." "(snip)


    high taxes on the obscenely wealthy
    arguably, the official establishment of high tax rates on the obscenely wealthy only motivates the lawyers and accountants employed by the obscenely wealthy to redirect their investments towards areas that offer higher AFTER TAX returns. This typically involves an exodus from stocks in favor of tax free muni bonds, an exodus from US investments in favor of offshore investments, redirection of investment money toward 'tax favored' industries (like ethanol refiners, corn farms) where production tax credits can be used to offset other tax liabilities, etc. In the end, the obscenely rich pay less actual dollars out in taxes when higher official tax rates are put into effect. None of this tax motivated redirection is helpful either in terms of US economic growth, in terms of US stock price levels, or in terms of total tax revenue collected by the US gov't from the obscenely rich ! However, the concept is useful during election years even if the reality of the situation differs from the publicity value.



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    Last edited by Melonie; 05-11-2008 at 08:43 AM.

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    Default Re: financial consequences of an Obama / Hilary victory ...

    [quote=Melonie;1539435]speaking of historical record on tax policy,{multiple snips by minnow}


    actually, this graph sums up the results of Reagan tax cut policies policies rather concisely ...



    (snip)"Fable 12: The Rich Saw Their Tax Bills Go Down in the 1980s While Everyone Else Paid More

    Contrary to popular rhetoric, the wealthiest Americans did not pay less taxes; rather, they paid more taxes after the income tax rate cuts in 1981. In constant dollars, the richest 10 percent of Americans paid $177 billion in federal income taxes in 1980 but paid $237 billion in 1988. The remaining 90 percent of households paid $5 billion less in income taxes over this period. [52] They earned more and they paid more. In fact, Federal Reserve Board member Lawrence Lindsey has shown that taxes paid by the wealthy were substantially higher than they would have been if the top tax rate had remained at 70 percent.[53] Figure 14 shows that the share of total income taxes paid by the wealthiest 1 percent of all Americans actually rose from 18 percent in 1981 to 25 percent in 1990. The wealthiest 5 percent of Americans saw their tax share rise from 35 to 44 percent. So the rise in the deficit was clearly not a result of "tax cuts for the rich." "(snip)

    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

    The above assertions , graph, and statistics have flaws in them, because they fail to mention that the income (and wealth) of the top 1% have increased FAR faster than their taxes.

    Consider that in 1980, the average S&P 500 CEO made 42 times the average worker. In 2006, average CEO made 364 times average worker, and present figure may well be >400 x. I don't pretend to know every single factor that contributed to this, "methinks" that this trend is more symptomatic of a feudal society than a viable functioning democracy. Whether the "just balance" answer is changes in tax rates, tax policy, corporate governance, whatever- the present course is not an entirely acceptable state of affairs.

    I'm not disputing statistics on tax shares, but I'll offer an anology on Joe&Jane 6 pack vs CEO Warbucks, pre Reagan & post Reagan:
    1) J&J 6P has 1 gallon of blood. Pre Reagan, they bled a little over a quart of blood in taxes & had a little less than 3 qts of blood left over. //Post Reagan,
    they bled a little less than a quart of blood, and had a little more than 3 qts.
    of blood left over. Meanwhile..........................

    CEO Warbucks had 40 gallons of blood, Pre Reagan, bled 28 gallons in taxes,
    had 12 gallons of blood left over. POST REAGAN- CEO Warbucks NOW has
    360 gallons of blood, bled a whopping 126 gallons in taxes, but now has an
    even MORE WHOPPING 234 Gallons of blood left over.

    Summary: Pre Reagan ; J6P- <~ 3qts of blood// CEO WB 12 gallons of blood

    Post Reagan: J6P>~ 3 qts of blood// CEO WB 234 GALLONS of Blood

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    Default Re: financial consequences of an Obama / Hilary victory ...

    I made my statement based not on the history of US economics but by comparison to other democratic nations in existence today.


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    Default Re: financial consequences of an Obama / Hilary victory ...

    ^^^ oh, you mean the western European countries that don't have to worry about including defense spending in their national budgets since Uncle Sam covers their asses at OUR expense ?

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    Default Re: financial consequences of an Obama / Hilary victory ...

    ^^^

    really?.... because I think its just lobbying by companies that make us spend disproportionately on military, compared to other item.

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    Default Re: financial consequences of an Obama / Hilary victory ...

    Quote Originally Posted by Melonie View Post
    ^^^ oh, you mean the western European countries that don't have to worry about including defense spending in their national budgets since Uncle Sam covers their asses at OUR expense ?
    You're being too kind to those wonderful European democracies with their high unemployment ( except for Ireland ); sluggish economic growth ( except for Ireland) and over taxed and over -regulated private sectors ( except for Ireland).

    Ireland has low taxes and has one of the WORLD's LOWEST unemployment rates and HIGHEST rates of economic growth.

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    Default Re: financial consequences of an Obama / Hilary victory ...

    ^^^ nor did I mention reliance on a 20% 'sales tax' being typically employed by Western European democracies in lieu of income taxes, which both penalizes the European 'poor' and reduces the competitiveness of US and other imported products !

    Nor did I mention that Western European EU countries are under a similar assault situation to that of the US vs China from the EU's own 'new' members in Eastern Europe.

    Nor did I mention that a significant percentage of highly skilled young 'graduates' from Western European EU countries are leaving their home countries to establish careers in more 'tax friendly' countries i.e. the middle east, 'new' EU member countries in Eastern Europe etc.


    I'm also completely aware of Ireland's 'business friendly' corporate tax structure ... which is being used as a 'loophole' by such highly profitable US corporations as Microsoft to avoid paying high US corporate tax rates on software royalty income.


    Circling back on topic, a picture is always worth 1000 words ...



    of course, this pre-primary spending estimate left out newer spending proposals by Obama, such as a 'Global Poverty Tax' on US citizens.



    (snip)"Jeffrey Sachs, who runs the U.N.’s “Millennium Project,” says that the U.N. plan to force the U.S. to pay 0.7 percent of GNP in increased foreign aid spending would add $65 billion a year to what the U.S. already spends. Over a 13-year period, from 2002, when the U.N.’s Financing for Development conference was held, to the target year of 2015, when the U.S. is expected to meet the “Millennium Development Goals,” this amounts to $845 billion. And the only way to raise that kind of money, Sachs has written, is through a global tax, preferably on carbon-emitting fossil fuels.

    Obama’s bill has only six co-sponsors. They are Senators Maria Cantwell, Dianne Feinstein, Richard Lugar, Richard Durbin, Chuck Hagel and Robert Menendez. But it appears that Biden and Obama see passage of this bill as a way to highlight Democratic Party priorities in the Senate. "(snip)

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