The 91% Tax Fantasy: Peter Schiff

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sbayhills
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The 91% Tax Fantasy: Peter Schiff

Postby sbayhills » Fri Dec 07, 2012 8:31 am

Please watch the video. Some excellent food for thought.

http://finance.yahoo.com/blogs/daily-ti ... 14554.html

The fiscal cliff deadline is looming and President Obama refuses to sign any legislation that doesn't raise tax rates on the top 2%. There is an understandable amount of debate on either side of the aisle over the president's decision.

In the past month, Warren Buffett and Paul Krugman have each released opinion pieces that tout the 1950s as an exemplary era for the country. The top tax rate was as high as 91% but individual wealth and GDP still managed to grow like wildfire.

In Krugman's Twinkie Manifesto, he claims that in the 1950s "incomes in the top bracket faced a marginal tax rate of 91% while taxes on corporate profits were twice as large, relative to national income, as in recent years."

Sure, executives didn't have mansions with a team of staff members he says but, "the high-tax, strong-union decades after World War II were in fact marked by spectacular, widely shared economic growth: nothing before or since has matched the doubling of median family income between 1947 and 1973."

Buffett's A Minimum Tax for the Wealthy article touts similar ideas.

"Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well," Buffett writes.

In an op ed published in Friday's Wall Street Journal, Peter Schiff challenges the increasingly popular pro-tax rate hike argument:

"The confiscatory top marginal rates of the 1950s were essentially symbolic—very few actually paid them. In reality the vast majority of top earners faced lower effective rates than they do today," he writes.

Schiff joined The Daily Ticker to further explain his argument. According to Schiff, the supposed 91% tax rate would only kick in if someone was making over $3 million in 1950 dollars (that would be more like $30 million today). In the 1950s there was no distinction between different types of income, he adds, so "a doctor who earned $50,000 through his medical practice could reduce his taxable income to zero with $50,000 in paper losses or depreciation from property he owned through a real-estate investment partnership."

Schiff also argues that middle and lower income households paid more tax in the 1950s than they do today.

"In 1958, even the lowest-tier filers, which included everyone making up to $5,000 annually, were subjected to an effective 20% rate. Today, almost half of all tax filers have no income-tax liability whatsoever, and many "taxpayers" actually get a net refund from the government," he writes.

The bottom line?

"The best thing we can do for economic growth is to lower taxes on the rich...they're already too high...but we also have to acknowledge that government is too big," he tells The Daily Ticker. "We have to dramatically reduce the size of government spending and if we don't do that then we need to be talking about tax increases on the middle class and working poor."



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Wabash
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Re: The 91% Tax Fantasy: Peter Schiff

Postby Wabash » Fri Dec 07, 2012 8:41 am

sbayhills wrote:"The best thing we can do for economic growth is to lower taxes on the rich...they're already too high...but we also have to acknowledge that government is too big," he tells The Daily Ticker. "We have to dramatically reduce the size of government spending and if we don't do that then we need to be talking about tax increases on the middle class and working poor."

If lowering taxes created jobs, the US should be at low unemployment or full employment given that tax rates are lower than they've been in a decade.

There is nothing empirical to support his claim that lowering taxes will stimulate the economy. What is known is that the highest periods of US productivity have occurred when the top marginal tax rate was over 50%.
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Re: The 91% Tax Fantasy: Peter Schiff

Postby Troglodyte » Fri Dec 07, 2012 9:55 am

Higher rates or fewer tax breaks _ what's worse?
By ALAN FRAM, Associated Press
Published OC Register: Dec. 7, 2012 9:25 AM ET

WASHINGTON (AP) — In the fiscal cliff wars, a pivotal battle is raging between Democrats demanding to raise revenue by boosting tax rates on the nation's highest earners and Republicans insisting on eliminating deductions and other tax breaks instead. Which is better for the economy? Analysts say it depends.

Economists generally agree that a simpler tax code with lower rates and fewer deductions, exemptions and credits would help the economy. With fewer tax preferences, people would be more likely to seek the best investments for their money instead of the most lucrative tax breaks. And lower rates would leave them more money to spend. Both would add oomph to the economy.

But ask whether the higher tax rates that President Barack Obama wants would hurt the economy more than curbing deductions, as Republicans assert, and the picture is less clear. While many economists say the economy theoretically would work more efficiently if the tax code provided fewer preferences, many said it would depend on which deductions lawmakers curb — a complicated exercise in a world where one person's wasteful loophole may be viewed by others as an economic lifeline.

For example, one of the biggest tax breaks is the widely popular deduction for interest on home mortgages below $1 million. Because of it, the government this year will take in $87 billion less than it would if the deduction didn't exist.

That deduction allows many to buy homes they otherwise couldn't afford and is strenuously defended by the housing industry. But critics say it does little to help lower-income people while it encourages others to go into debt for costlier homes than they need — an activity they say taxpayers should not subsidize.

"I'd definitely go for cutting deductions first, especially if I have the opportunity to make the choices about which deductions go," said Alan Auerbach, director of the Robert Burch Center for Tax Policy and Public Finance at the University of California, Berkeley.

The nonpartisan Congressional Budget Office said in a report last month that raising tax rates would dampen people's incentive to work and reduce the nation's labor supply. Raising the same amount of revenue by eliminating tax breaks would probably be less negative, but the impact would depend on which deductions were erased, the budget office said.

That report estimated that extending the George W. Bush-era tax breaks for everyone would mean the economy would grow by 1.4 percent more than if all the tax cuts are allowed to expire. Extending the tax breaks for all but the top earners as Obama wants would produce economic growth of 1.3 percent, just 0.1 percent less. In a nearly $16 trillion economy, that one-tenth of 1 percent equals $16 billion.

The present faceoff is also a tactical duel ahead of an even larger war over revamping the entire tax code that could come next year. Both sides know that if tax rates on the wealthy rise now, it will be harder to push them back down later.

In addition, the battle underscores ideological differences in the two parties' constituencies.

Republicans say raising tax rates on high-income Americans discourages investments that would produce new jobs.

"Here's how Republicans think," said Kenneth Kies, a former top House GOP tax aide and now a tax lobbyist. "If I'm a risk-taker and I'm getting ready to invest $1, if I'm successful and the top rate is 35 percent, I get to keep 65 cents."

If the top tax rate is much higher, Kies said, he would get to keep less "and my incentive to invest is significantly reduced."

For Democrats, imposing higher tax rates on people making the most money is a fair way to make them contribute to deficit reduction. They say Obama would merely return rates to levels that existed under President Bill Clinton, and the economy prospered then.

Because various tax breaks have such powerful defenders — for example, charities, churches and colleges — it's politically difficult to limit them. The subsequent search for revenue could expose the middle class to higher taxes, Democrats say.

During the presidential campaign, Republican nominee Mitt Romney suggested limiting itemized deductions to a dollar cap, such as $25,000. The nonpartisan Tax Policy Center estimates that capping deductions at $25,000 would raise $1.3 trillion. But 29 percent of it would come from those earning under $200,000, whose taxes both parties say they don't want to increase.
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Re: The 91% Tax Fantasy: Peter Schiff

Postby Wabash » Fri Dec 07, 2012 11:47 am

Troglodyte wrote:"Here's how Republicans think," said Kenneth Kies, a former top House GOP tax aide and now a tax lobbyist. "If I'm a risk-taker and I'm getting ready to invest $1, if I'm successful and the top rate is 35 percent, I get to keep 65 cents."

If the top tax rate is much higher, Kies said, he would get to keep less "and my incentive to invest is significantly reduced."

Mr. Kies must not be aware of recent history or economics. This statement has nothing to support it.
They told me if I voted for Hillary Clinton the president would be emotional, impulsive, and unpredictable. They were right. I voted for Hillary Clinton and got a president that is emotional, impulsive, and unpredictable.

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Re: The 91% Tax Fantasy: Peter Schiff

Postby joefutbol » Fri Dec 07, 2012 11:50 am

sbayhills wrote:Please watch the video. Some excellent food for thought.

http://finance.yahoo.com/blogs/daily-ti ... 14554.html



You didn't know that already? I'm not surprised considering you also think the rich will be paying 50% of their income in CA state and federal taxes when the tax cuts expire.

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Re: The 91% Tax Fantasy: Peter Schiff

Postby sbayhills » Fri Dec 07, 2012 12:24 pm

joefutbol wrote:
You didn't know that already? I'm not surprised considering you also think the rich will be paying 50% of their income in CA state and federal taxes when the tax cuts expire.


Another brilliant rejoinder from joe. I bet you ate up the "twinkie manifesto" and the 91% BS. Maybe you should stick to the sports side of this forum.

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Re: The 91% Tax Fantasy: Peter Schiff

Postby joefutbol » Fri Dec 07, 2012 1:08 pm

sbayhills wrote:
Another brilliant rejoinder from joe. I bet you ate up the "twinkie manifesto" and the 91% BS. Maybe you should stick to the sports side of this forum.


Says the guy who posts about taxes yet doesn't have a clue how taxes work. Stick to watching Matlock and enjoy paying 50% of your income in taxes. :roll:

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Re: The 91% Tax Fantasy: Peter Schiff

Postby sbayhills » Fri Dec 07, 2012 2:13 pm

joefutbol wrote:
Says the guy who posts about taxes yet doesn't have a clue how taxes work. Stick to watching Matlock and enjoy paying 50% of your income in taxes. :roll:


Instead of reading what the other side has to say about taxes, you attack me for posting it. Typical Liberal attack the messenger response.

BTW, Where do you come up with the 50% income tax line? Yes, Joe, we're going to tax our way out of the recession. Brilliant. ](*,) Maybe you should try to stay on subject.

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Re: The 91% Tax Fantasy: Peter Schiff

Postby joefutbol » Fri Dec 07, 2012 2:48 pm

sbayhills wrote:
Instead of reading what the other side has to say about taxes, you attack me for posting it. Typical Liberal attack the messenger response.

BTW, Where do you come up with the 50% income tax line? Yes, Joe, we're going to tax our way out of the recession. Brilliant. ](*,) Maybe you should try to stay on subject.


No, I attack you for demonstrating more than once that you have no idea how income taxes work. I get the idea that you believe income taxes will go up to 50% with increases on the state and federal level because that is what you've said in the past. No?

As far as the article, there is a lot of truth to it; I like Peter Schiff. However, making an argument for either case in 2012 because of what happened in 1950 is ridiculous. The world, country, and economy are not even close to the same. Sure bottom earners paid 20% in 1958, but the median value of a home in California was also the equivalent of less than $100,000 today. There's a lot more to it than what the article states, and nobody on The OC Connect Forums knows enough to make an intelligent argument. Especially people who like you who add percentages together and complain taxes are too high as a result of whatever incorrect figure you come up with.

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Re: The 91% Tax Fantasy: Peter Schiff

Postby sbayhills » Fri Dec 07, 2012 3:03 pm

Well I'm glad you actually read the article. Why did it take you 3 takes to comment on it without the insults?

On what basis do you comment that I don't know how income taxes work? If you're so fired up about paying more taxes, please have at it.

Yes, taxes on the rich will go up to 50% when you add State, Federal, Sales, property, and all the taxes we pay on goods on a daily basis.

You say what happened in 1950 is ridiculous, yet don't comment about Buffet and Krugman and his infamous Twinkie Manifesto, believing that the rich should pay 1950 style taxes of 91%?

Schiff very ably pointed out that neither of these two were correct in their comments.

Taxes are too high. I don't care if you're paying 20, 30, 50, or 91%. Its our money, and I sure as heck feel that I'd do a better job of spending it than the bureaucrats in Washington or Sacramento.

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Re: The 91% Tax Fantasy: Peter Schiff

Postby Parrotpaul » Fri Dec 07, 2012 3:10 pm

Geez, one could argue you're selfishly worried about your millions being endangered and impacted by taxes. The raise in my Social Security check next year will be $1....true. :D

I wish I could come in here and whine and cry and rant about the "poor" rich being treated unfairly. I just smile watching you guys squirm, and you continue to drink tea. :mrgreen:
"I think I may say that of all the men we meet with, nine parts of ten are what they are, good or evil, useful or not, by their education." John Locke

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Re: The 91% Tax Fantasy: Peter Schiff

Postby sbayhills » Fri Dec 07, 2012 3:17 pm

I'm amazed that you just don't get it. It isn't the rich that are the only ones being affected by these taxes. The biggest group are people like the small business owners, who are the driving force behind a thriving economy. Do you want them paying taxes, or hiring and re-investing?

But at least you haven't called me a racist yet today.....

Nice rant yourself Paul.

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Re: The 91% Tax Fantasy: Peter Schiff

Postby Parrotpaul » Fri Dec 07, 2012 3:21 pm

33 straight months of consecutive private sector job growth. Unemployment at its lowest rate since 2009. Obama was re-elected....get over it. We the people spoke.

PS...I do get it. So do you. You just can't stand admitting Obama has been far better than anything the Tea Party offered and his policies are working.
"I think I may say that of all the men we meet with, nine parts of ten are what they are, good or evil, useful or not, by their education." John Locke

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Re: The 91% Tax Fantasy: Peter Schiff

Postby sbayhills » Fri Dec 07, 2012 3:34 pm

You're out of touch. Try to stay on subject. This is about Schiff commenting about Krugman and Buffet and suggesting that the rich should pay 91% in taxes. I'm discussing the error in raising taxes, and who that will really effect. You have know idea what I can or can't stand. But you always seem to butt your ugly head into conversations and try to put words in people's mouths. You're the one who keeps bringing up Obama. You need to get over it. He won the election. Now he needs to show some leadership.

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Re: The 91% Tax Fantasy: Peter Schiff

Postby sbayhills » Fri Dec 07, 2012 3:45 pm

How many times do we all have to listen to you whine about your Social Security. Geez......you need to get over it.

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Re: The 91% Tax Fantasy: Peter Schiff

Postby sbayhills » Fri Dec 07, 2012 3:47 pm

My last rant of the day. I post an article, with no negative comments. And then the negativity starts from the usual subjects. You're the ones who seem to still feel threatened.

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Re: The 91% Tax Fantasy: Peter Schiff

Postby joefutbol » Fri Dec 07, 2012 5:13 pm

sbayhills wrote:Yes, taxes on the rich will go up to 50% when you add State, Federal, Sales, property, and all the taxes we pay on goods on a daily basis.


If the worst case scenario being proposed on both the state (California) and federal levels for top earners occurs, someone making $400,000 would be subject to an effective tax rate of 36%. That is without any loopholes or deductions, which would never ever happen. The highest average effective federal tax rate paid by top earners since 1975 was somewhere around 20-22% and that was around the year 2000.

I've challenged heywould and donray before to provide numbers or give me any scenario where anyone would be paying anywhere near 50% in taxes. Now I'm asking you. You can choose to throw in any taxes you want.... federal, state, sales, property, CRV.... whatever you want.

Donray was complaining because his wife's income was being taxed at over 50% when they filed jointly. I asked him to share the effective tax rate of his household and got no response. If you think taxes are too high and want to justify your position with accurate information then good on you. Everyone has an opinion and that's fine. It's when you guys on here start supporting your claims with complete BS that gets to me.

sbayhills wrote:You say what happened in 1950 is ridiculous, yet don't comment about Buffet and Krugman and his infamous Twinkie Manifesto, believing that the rich should pay 1950 style taxes of 91%?


I didn't see the thread. But I agree with both sides on many issues regarding taxes, including those made by Krugman, Buffet, and Schiff.

sbayhills wrote:Schiff very ably pointed out that neither of these two were correct in their comments.


No, they were not entirely correct. And neither is Schiff. Both sides skew data and fudge numbers to support whatever position they hold. That's when you need to think for yourself and come to your own conclusions. Both sides make good arguments and both sides are full of crap.

sbayhills wrote:Taxes are too high. I don't care if you're paying 20, 30, 50, or 91%. Its our money, and I sure as heck feel that I'd do a better job of spending it than the bureaucrats in Washington or Sacramento.


Do a better job spending it on what? Are you going to build roads, hire police and fire, regulate utilities, etc...? There's plenty of waste in government and there's plenty of good spending as well. The ability to operate a business and regulate the economy comes with a price. You think it's too high, and that's fine, but realize there is no better place in the world to make money than where you are.

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Re: The 91% Tax Fantasy: Peter Schiff

Postby sbayhills » Fri Dec 07, 2012 6:17 pm

The article I posted was in response to Buffet and Krugman who who proposing we revisit the tax rates of the 1950' s which had a 91% rate for the highest earners. You went off on a different tangent on a 50% tax rate, that was not brought up by me. Please discuss the article that was posted.

As you can gather, I am against raising the taxes on anyone at this time. The bureaucrats will just spend more and more if they have it. I see nothing positive in raising taxes during a recession. I do not trust politicians to be wise with our money.

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Re: The 91% Tax Fantasy: Peter Schiff

Postby joefutbol » Fri Dec 07, 2012 6:40 pm

sbayhills wrote:The article I posted was in response to Buffet and Krugman who who proposing we revisit the tax rates of the 1950' s which had a 91% rate for the highest earners. You went off on a different tangent on a 50% tax rate, that was not brought up by me. Please discuss the article that was posted.

As you can gather, I am against raising the taxes on anyone at this time. The bureaucrats will just spend more and more if they have it. I see nothing positive in raising taxes during a recession. I do not trust politicians to be wise with our money.


The 50% was a comment you made some months back. Are you retracting that statement or you just don't want to address it? I can start a new thread to discuss that if you wish.

Schiff's numbers don't jive with what's on the history books. I don't know where he got them so I can't refute what he wrote since he does not go in depth with his analysis. I had no sound to watch the video earlier. Do they hit on that in the clip?

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