Bad Economic Predictions

[Leisher]

Chinese delegation leaving early.

And probably not because they made a ton of progress quickly.

I heard it was because the farmers (they were scheduled to visit) wouldn't reveal all of their methods and secrets in exchange for being able to sell their wares to China.

[Vince]

Heheh

[Leisher]

Program to forgive student debt is a colossal failure.

[TheCatt]

US Manufacturing not great. Maybe has something to do with tariffs, who could know?

A gauge of U.S. manufacturing from the Institute for Supply Management showed the sector contracted to the lowest level in more than 10 years in September.

The ISM U.S. manufacturing Purchasing Managers’ Index fell to 47.8% in September, the lowest since June 2009. Any reading below 50% signals a contraction. The reading is down from 49.1% in Augus

[TheCatt]

Payroll growth is slowing

Private payrolls rose by 135,000 in September, ahead of Dow Jones estimates for 125,000, according to ADP and Moody’s Analytics.
That brought the monthly average for 2019 down to 145,000, compared to 214,000 for the same period last year.
Education and health services saw the fastest growth with 42,000 positions. Trade, transportation and utilities was next with 28,000.

[TheCatt]

3rd set of bad economic news this week. Service sector, while still growing, more sluggish than expected

The Institute for Supply Management said its reading on the U.S. services sector fell last month to its lowest level level since August 2016. The ISM nonmanufacturing index came in at 52.6 for September. Economists polled by Dow Jones expected a print of 55.3.

[Vince]

If Trump loses the economy, he'll have only his likability to run on next year.

[TheCatt]

If Trump loses the economy, he'll have only his likability to run on next year.

[Vince]

Exactly

[TheCatt]

Billionaires pay lower tax rate than workers in US

It finds that in 2018 the average effective tax rate paid by the richest 400 families in the country was 23 per cent, a full percentage point lower than the 24.2 per cent rate paid by the bottom half of American households.

In 1980, by contrast, the 400 richest had an effective tax rate of 47 per cent. In 1960, their tax rate was as high as 56 per cent. The effective tax rate paid by the bottom 50 per cent, by contrast, has changed little over time.

If policies like these don't lead to the rise of progressives, I'd be stunned.

[Leisher]

Yeah, I'm not down with Bernie's "tax the rich until they're poor" bullshit, but stuff like the rich paying at a lower rate needs to be fixed.

[TheCatt]

[Leisher]

Is this because of all the loopholes that the rich can take advantage of or actual policy that allows them a lower tax rate?

Would a flat tax completely eliminate the difference in the tax rates?

[GORDON]

1. I thought the bottom 50% of people in this country didn't pay any income taxes at all.

2. It feels dishonest talking about a tax rate when a millionaire could actually pay 6 figures in taxes, even if the "rate" is lower than a middle class person paying $10k. I can see the argument on both sides. I like Thib's idea, one dollar = one vote.

3. Whenever I see the title of this thread, I chuckle to myself, "Does he mean predictions that are dire, or predictions that are just way off?"

[TheCatt]

Is this because of all the loopholes that the rich can take advantage of or actual policy that allows them a lower tax rate?

It is both. For example, I am partially self-employed.
1 - Policy allows me to deduct 20% of that income before I pay any taxes.
2 - If I incorporated into a S-corp and changed my tax elections (see many book-writing politicians, except Bernie, iirc), I could pay myself a "salary" and take the rest of the income as dividends to lower my taxes, especially self employment taxes.
3 - SocSec (payroll) taxes cap at $132k/yr in 2019. So everyone below that pays either 6.2% (W2 jobs) or 12.4% (self employed). Beyond $132k, they pay no SocSec payroll taxes (but still pay Medicare/Medicaid, 1.45/2.9%).
4 - I can put a LARGE amount of my income into tax sheltered accounts due to my 2 separate jobs (more than the median US income). Mitt Romney was able to turn thousands of dollars of a self-directed Roth IRA into > $30 Million by creative accounting that was entirely legal.
5 - Roth IRAs phase out based on income. But, you can just contribute to a traditional, but non-deductible IRA, then roll that into a Roth IRA immediately to get the exact same benefit.
6 - Capital gains and Dividend taxes are super low, relative to the past 60 years. Rich people have lots of $$$ in investments.
7 - Lowering the estate tax.
8 - Gift reporting is elective. My wife was a CPA and after she quit, she learned of clients that kept separate books to avoid this reporting.

I thought the bottom 50% of people in this country didn't pay any income taxes at all.

The above is total tax burden. Federal, state, and local (so I assume including property taxes, payroll taxes, etc). And is averaged across the 50%.

It feels dishonest talking about a tax rate when a millionaire could actually pay 6 figures in taxes, even if the "rate" is lower than a middle class person paying $10k.

I do not understand why that would be considered dishonest? I'm not exactly "from each according to their ability, to each according to their need," but I see no reason the billionaire should be paying of a share of their income than the poors.

"Does he mean predictions that are dire, or predictions that are just way off?"

The latter.

[GORDON]

It's dishonest because the argument, and the charts that represent it, show the "rate" for the rich to be much lower. This feels manipulative, when an individual billionaire pays a magnitude more in taxes than an individual code monkey. But that particular bar chart wouldn't be anywhere near as manipulative.

Hey, I get it. I'm all for taxing the rich at 80%, because I've come around to the idea of "fuck them, pay me." But I have no illusions that as an individual, they're paying way more than their nebulous and completely undefined "fair share," compared to everyone else.

[TheCatt]

It's dishonest because the argument, and the charts that represent it, show the "rate" for the rich to be much lower. This feels manipulative, when an individual billionaire pays a magnitude more in taxes than an individual code monkey. But that particular bar chart wouldn't be anywhere near as manipulative.

Hey, I get it. I'm all for taxing the rich at 80%, because I've come around to the idea of "fuck them, pay me." But I have no illusions that as an individual, they're paying way more than their nebulous and completely undefined "fair share," compared to everyone else.

I honestly don't know anyone making this argument but you, so it's novel to me. So the tax burden of the rich should be lower, cuz the absolute amount is higher? Huh. I would say the floor is everyone paying the same percentage, but again, I think in terms of disposable income, $ needs for necessities, etc, that's not 'fair'. So I would still advocate for a progressive system like we've mostly have until very recently.

[GORDON]

Federal income tax started in... the 1930s? Back then it was seen as "punishing success" measure. The argument is valid.

I know I'm not the first to make this argument. As individuals, paying a mill in taxes does not give you any more rights as a citizen than if you make money on earned income credit. You don't get more votes, you don't (officially) get any special treatment by the government, there aren't any additional rights given by the income threshold in the constitution. On it's face.... it's pretty unfair that one person pays a shitload more than the other, with no official benefit.

But as I said, I get it. If they are still making $2mill that year even after paying $8mill in taxes, I think they'll live. Give me that money, because I want it. But that feels way beyond "fair share," and I wont pretend otherwise just because I benefit from it.

[TheCatt]

Federal income tax started in... the 1930s? Back then it was seen as "punishing success" measure

Civil War, to pay for the war, but it lapsed shortly after.

Then in the late 1800s we create an estate tax to pay for Spanish-American war.

1913 - 16th amendment allowed income tax after it was found unconstitutional in late 1800s.

Here's the basis of what we have today

The Revenue Act of 1916 began the practice of adjusting tax rates and income scales. The original income tax was 1% for the bottom bracket, which was comprised of income up to $20,000, and 7% for the top bracket which was comprised of income over $500,000. Revenue Act of 1916 raised the top bracket to $2,000,000 and raised the rate for the bottom bracket to 2% and the top bracket rate to 25%.

Rates over time.

As individuals, paying a mill in taxes does not give you any more rights as a citizen that if you make money on earned income credit. You don't get more votes, you don't (officially) get any special treatment by the government, there aren't any additional rights given by the income threshold in the constitution. On it's face.... it's pretty unfair that one person pays a shitload more than the other, with no official benefit.

The benefit is a society that allowed you to create that wealth. It's not happening in a vacuum. You benefited more from property rights + law enforcement than others. And have more property to keep protected.

[GORDON]

Yes, Obama's "You didn't build that" argument. I get it. Still not sure I agree with the morality of it, on principle.