Market crash: are we there yet ?

[sck5]

a historical note. i may be remembering wrong but I think the first federal income tax was during the civil war. very unpopular and they burned the tax rolls publicly in Washington after the war to prove they would not keep doing it.

Interestingly, that later income tax iin 1913 was quite small and was only on very rich people. it was taken for granted back then that rich people not only could afford it, but that their wealth was at least in part based on the work of others and so it was only fair to do it that way.

[wind_magic]

Originally Posted by sck5

a historical note. i may be remembering wrong but I think the first federal income tax was during the civil war. very unpopular and they burned the tax rolls publicly in Washington after the war to prove they would not keep doing it.

Interestingly, that later income tax iin 1913 was quite small and was only on very rich people. it was taken for granted back then that rich people not only could afford it, but that their wealth was at least in part based on the work of others and so it was only fair to do it that way.

It's still like that, the rich still pay most of the taxes. From wikipedia ..

Some argue that the current income tax system, which is the government's largest revenue source, is too progressive and redistributive.[29] In 2007, the top 5% of income earners paid over half of the federal income tax revenue.[30] The top 1% of income earners paid 25% of the total income tax revenue.[31] Forty percent of Americans pay no federal income tax,[30] which raises moral concerns regarding wealth redistribution and the economics for controlling the size and spending of government.[29]

Source: Income tax in the United States

Worth reading, by the way.

[sailaway21]

Thanks, Windy! I was just amazed to find a man of his years that did not realize that jobs are the by-product of business, not the goal of business.

[wind_magic]

Sck5, I would like to ask you a question - talking about the top 5% and top 1% of incomes only, what would you consider taxes that were too high ? The top 1% tax rate right now is like 35%, and I assume you wouldn't mind if that went back to 39% like it was before the "Bush tax cuts". But what about 40% ? Or 42%, or 45%, or higher ? 50% ? When does it get to the point that even Sck5 thinks taxes are too high, is there a limit, 60%, 70%, 99% ??? 100% ?? 100% being state ownership of everything, obviously. When is enough enough ? I'm really curious what you think the limit should be.

[snider]

http://www.irs.gov/pub/irs-soi/06in11si.xls

It's interesting that people making between $100,000 and $200,000 pay the majority of collected taxes, 20.4%. Sure people making more money pay more percentage wise of their taxable income, it's just there are so many more people in the 100 to 200 thousand tax bracket that they bear the most weight of the total taxes collected. So the upper middle class contributes the most. I love Wikipedia but you have to fact check it because anyone can go in and edit the information.

[wind_magic]

Originally Posted by snider

http://www.irs.gov/pub/irs-soi/06in11si.xls

It's interesting that people making between $100,000 and $200,000 pay the majority of collected taxes, 20.4%. Sure people making more money pay more percentage wise of their taxable income, it's just there are so many more people in the 100 to 200 thousand tax bracket that they bear the most weight of the total taxes collected. So the upper middle class contributes the most. I love Wikipedia but you have to fact check it because anyone can go in and edit the information.

I don't see how that conflicts with Wikipedia ??

I don't think I would say "more people in the 100 to 200 thousand tax bracket that they bear the most weight of the total taxes collected." - the top 5% of incomes in this country pay 50% of the tax regardless of how many people are involved. Despite their small numbers, they pay a higher percentage of their income in tax, and that income when added with the other people in that 5% equals about 50% of the total tax collected, more than the middle class's 20+%. Remember, someone in that 5% might make a billion $us a year and pay half a billion in taxes, that adds up fast despite their small numbers.

Now I might agree with you that the middle class pays the highest percentage of their discretionary income in taxes - because after you make a certain amount of income the rest is just icing on the cake, and if you make below a certain amount you aren't paying any tax anyway, so it really is the middle class that carries the burden in terms of suffering and misery, they are the ones who have to give up the money they might have had for retirement to the tax man.

[snider]

Originally Posted by wind_magic

I don't see how that conflicts with Wikipedia ??

I don't think I would say "more people in the 100 to 200 thousand tax bracket that they bear the most weight of the total taxes collected." - the top 5% of incomes in this country pay 50% of the tax regardless of how many people are involved. Despite their small numbers, they pay a higher percentage of their income in tax, and that income when added with the other people in that 5% equals about 50% of the total tax collected, more than the middle class's 20+%. Remember, someone in that 5% might make a billion $us a year and pay half a billion in taxes, that adds up fast despite their small numbers.

Now I might agree with you that the middle class pays the highest percentage of their discretionary income in taxes - because after you make a certain amount of income the rest is just icing on the cake, and if you make below a certain amount you aren't paying any tax anyway, so it really is the middle class that carries the burden in terms of suffering and misery, they are the ones who have to give up the money they might have had for retirement to the tax man.

I didn't mean to imply that it conflicted with Wikipedia, I was just making a statement. I know this is off topic but our tax code is interesting to me.

I was just stating that the government collects the most money from the 100-200 thousand tax bracket. Part of that bracket falls into the top 5% and yes the top 5% pays a higher share of taxes, 58.2%, even though the majority of people are in the 50-100 thousand tax bracket. The group that pays the highest of their discretionary income is the bracket between 500 thousand to 5 million, they pay 27% of taxable income.

[snider]

Didn't mean to double post. I saw an article erlier stating that A lot of states are raising taxes because their budgets are so messed up.

[Cruisingdad]

Housing prices dropping 18+% and still dropping, over a half million still losing their jobs and none to go to, commercial real estate and CC's are starting to really look ugly... we ain't out of this yet!!

House Price Crash Rate Finally Beginning to Ease: Tech Ticker, Yahoo! Finance

- CD

[Sailormann]

jobs are the by-product of business, not the goal of business.

This is the thinking that will assure an extended period of poverty for the US.

Forget all of the convoluted economic theories that we have developed and propagated to justify unethical behaviour. Keynes, Maynard, Say, Marx, Mao, Greenspan et al. have served up various essays on how, why and therefores.

In the end we all want the same thing - male, female, black, white, religious, pagan, straight, gay, able-bodied, disabled, whatever....

We want to live in a secure society with enough food to eat, a roof over our head and opportunity for our children to do the same.

In this, we are no different from plants and animals. They exist to propagate.

The thing that does differentiate us is that we have the potential to recognise these desires in others, and to accomodate them while concurrently achieving the goals ourselves.

Where plants will strangle each other without thought in order to assure their own survival, and where animals - although they may work in herds and packs to achieve their own goals - will do the same, we have the opportunity through the capacity of conscious thought to survive ourselves without destroying others.

It is entirely possible have enough for ourselves while allowing the same dignity to others. It is not possible to acquire an obscene excess of wealth without engendering an immoral degree of poverty in others whose work went to generate that wealth.

I have watched quite a few businesses expire over the last 18 months. One thing that they all had in common was a lack of respect for the employees and the customers who actually made the businesses work, and an idiotic belief that "efficient" management would obviate the need for those employees. So the workers went, the customers followed quickly and the "efficient" managers are unemployable.

I also see a lot of other companies like the ones that we have tried to be - where employees and the knowledge they have are recognised as the most valuable resource a business has. Not a lot of us going under right now. Things are tighter to be sure and there's not a lot of cash to go around but we'll survive and pick up some extra business as others go by the wayside.

At this point, it makes no difference what President Obama does, the US economy is no longer the most important one on the globe. You are facing a very difficult couple of decades, followed by another five or ten decades of evolution.

In the end, if things go well for you, you will end up like the Portugal an earlier poster disparaged above, or any one of hundreds of other politically stable, somewhat socialist yet productive economies where the incredibly wealthy and the incredibly poor are statistical anomalies rather than identifiable sectors of the society.

Unfortunately, you've been indoctrinated over the last sixty years to believe that "socialism" is an evil thing - interchangeable with "communism" and an anti-American credo. The folks who made sure you were spoon-fed this crap are the ones who stood to benefit most from your continued unenlightenment. The rise of the "conservative values" movement follows the same timeline as the rise in the average compensation of a corporate CEO in your country, and the rise in the number of medically uninsured citizens.

There will be an inordinate amount of ranting and wailing on your parts I am sure, and the recovery is not really going to get going until there has been actual generational change, but if you work hard, save your money and keeep smiling you'll wind up in a better place.

In the meantime...your debt is just getting too big. You are no longer producing enough to pay it off and your credit is going to get cut off soon (the late fall). The continued erection of trade barriers is going to guarantee it.

Your dollar is going to fall pretty substantially. You don't want to be in the stock market or even in cash at that point. Land is good as "they aren't making any more of it". Gold should be good. Oil is dying an acccelerating death but will still be valuable for another 15 years or so...

Probably best just to hunker down and hope - may be a good time to sell and go cruising.

As a matter of fact, the conditions that could start World War III seem to be boiling up but let's hope that doesn't happen huh ??