OnPoint by Keith Ng

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OnPoint: Transcription of new Rick Perry ad

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  • James Bremner, in reply to Russell Brown,

    His ratings have slipped in the past six months, to about where Reagan was at the same point in his presidency, but he still beats a generic Republican candidate, and seems likely to beat anyone from the utter freakshow that is the Republican lineup. Given that he took office at the beginning of the US’s most severe financial crisis since the 1930s, he was always going to face challenges on the economic front.
    Sweet dreams. In the year before the 84 election the US economy was growing strongly and unemployment was coming down significantly. That ain't going to happen here because Obama's policy setting are the opposite of Reagan's. Volker was operating a strong dollar monetary policy, Bernake is printing money like toilet paper, Reagan cut taxes on job creators, Obama wants to increase them, Reagan was reducing economic growth stifling regulations, Obama is increasing them at an amazing rate, Reagan wanted to cut govt expenditure (he didn't thanks to a Dem congress) Obama has increased govt expenditure faster and to a higher level than at any time outside war. As a result of the diametrically different policy settings, Reagan and Obama's political trajectories are also heading in opposite directions.
    In many ways we should thank Obama. He has conducted a full throated Keynesian/Progressive experiment, and it has been an absolute bust. It will be interesting to see who can and who can’t absorb the lessons of Obama’s great Keynesian experiment.

    This is actually the problem – as you unwittingly implied above. The US revenue system is borked, to the point where there simply is not the revenue base available to fund the kind of superpower Americans perceive their country to be

    Wrong. With the right economic policies (i.e. not what Obama is doing) economic growth will return quickly increasing tax revenues. Cut out all the crap Obama has added to the budget, or just adopt Ryan's spending plan and the budget would get back into shape much sooner then many expect.

    You are wrong about Bush's tax cuts, as you can see from the linked graph (I know, it is from Heritage, sorry about that, but they used to have this graph at the CBO but I can't find it anymore. It is the same info, there is nothing controversial about this graph)


    You can see that revenues dropped sharply after 2000, due to the dot com bubble bursting, the impact of 9/11 and yes, Bush's tax cuts. The tax cuts were only one factor in that drop. But look how sharply revenues increased after the 2003 cap gains cuts and the reduction of double taxation on dividends. When Bush left office, revenues were higher than when he arrived. Sure they were trending down thanks to the GFC, but that wasn't his fault.

    Note the 15% top rate on dividend income.
    A common mistake, you are in good company on that one. There are many screwed up things about the US tax code, one of the more destructive is double taxation of dividends. Corporate income is taxed at 35%, and distributions of dividends post corp tax income are then taxed again at 15% at the individual level, for a combined effective tax rate of 47.5% (35% + ($65*15%)). Hardly a low level of taxation and prior to being cut in 2003 the effective taxation of corp income would have been as high as 60% (with a 39% personal income tax rate.
    Just about every other country in the world, including NZ, gives you credit for corp income tax paid on dividends, so they aren't double taxed.
    This double taxation is really destructive, it drives a lot of marginal M&A activity, as company's can't pass excess cash to shareholders without punitive taxation, so they try to drive stock price by buying companies. Most M&A doesn’t not create more value than it costs. This is also why so many US corps have huge piles of cash sitting on their balance sheets doing nothing useful.
    And remember when you are talking about cap gains and dividend income, you are not just talking about rich wankers that lefties love to hate, you are talking about the majority of Americans who have their retirement, education and life savings in stocks and mutual funds. They are the people who suffer the most from bad tax policy. It doesn’t matter how high tax rates get, Warren Buffet and his other insufferable rich liberals will not feel an iota of pain. Everyone else will.

    Regarding state taxes, 8.97% really is a long way away from 10% isn't it? Massive difference, LOL. My point was that in some states such as CA and NY (I forgot to include NJ) Fed plus State plus local taxes (paid out of income) get north of 50%. 35% (39% if Bush's cuts expire) + 8.97%, plus local and state sales taxes, + property taxes get north of 50%. Deductions for children and mortgage interest etc get used up pretty quick. You only get to deduct $3,000 a year for stock market losses. Deducting a loss from an LLC would impact taxes paid and the effective rate. But you only get to make that deduction if your company or a company you have invested in makes a loss. Unless it is in the startup phase, that is a loss you don't want!! And if it is a start up, isn't that what we want? Wealthy people spending money creating companies and jobs?

    NOLA • Since Nov 2006 • 353 posts Report

  • Lucy Stewart,

    The next time I need to explain the Gish Gallop to someone, this thread is going to be a wonderful resource.

    Wellington • Since Nov 2006 • 2105 posts Report

  • Craig Ranapia, in reply to Lucy Stewart,

    Would it be quicker and less painful if I stuck a brick in a pair of pantihose, came round your house and you gave that wall the day off?

    North Shore, Auckland • Since Nov 2006 • 12370 posts Report

  • Lucy Stewart, in reply to Craig Ranapia,

    Would it be quicker and less painful if I stuck a brick in a pair of pantihose, came round your house and you gave that wall the day off?

    That's really very thoughtful of you.

    Wellington • Since Nov 2006 • 2105 posts Report

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