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Problem Solving 102 – Taxes (Not Enough of Them!)

This post is somewhat redundant

Last week, I identified the biggest problem facing our Nation – and that was the Republican party (and don't ask me why it's called a party when none of those people are any fun at all).   Clearly when a group of people take over a portion of your  Nation's Government and proceed to do things that are destroying it from within – THAT's a MAJOR problem!  Other than the country actually being on fire or sinking into the ocean, it's hard to imagine something worse than that.  

Since we are not on fire or sinking (at the moment – Global Warming is a slow process), we now need to look at the next thing that is causing our Nation to self-destruct which, I believe are lack of adequate (or fair) taxation.  I know that this issue has been twisted and framed as a spending issue and yes, we do spend a lot, but not compared to other developed countries.  In fact, we collect 33% LESS taxes as a percentage of GDP than the average of 33 OECD nations and that, of course, INCLUDES us dragging down the average!  

Graphic by Paul Kiel and Krista Kjellman Schmidt, ProPublica

Not only that but our Defense Spending is LARGER than ALL of the other OECD nations COMBINED.  NOT including our $300,000,000,000 annual war spending which is, in theory, temporary – the US budgets $546,786,000,000 per year for the Pentagon, that "Military Industrial Complex" that President Eisenhower warned us would grow to pose a threat to "the very structure of our society."  General Eisenhower said:

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the Military-Industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.  We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.

Two hundred years before Ike, Benjamin Franklin observed that "they who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety."  This is not, however, an article debating the size and scope of our military spending but we need to set a realistic background for a discussion of taxation when US military spending is now approaching 1/2 of all Government spending outside of Social Security and Medicare – two programs that are self-funded and STILL running at a current account surplus.   

Notice that, since 2000 – our taxes collected have dropped from 29% of our GDP to 24% of our GDP while Defense Spending (and these charts never include debt on Defense Spending, of course) has grown from 2.5% of our GDP to over 5% of our GDP.  It does not take a math wiz to figure out that those two figures alone put us 7.5% of our GDP behind each year.  On a $15Tn GDP, lower tax collection and higher military spending combine to put our Nation $1,125,000,000,000 deeper in the hole each year.  THAT is your Deficit – plain and simple!  

The fact that we don't even talk about these two factors in a rational matter is why I still believe the real problem is Republicans – it takes a massive propaganda campaign to convince an entire population that the two biggest issues affecting our National Budget are not the real issue.  It takes a constant stream of lies and deflection to keep people distracted from such an obvious truth – that the reason we are running a $1.4Tn deficit is NOT because NPR has a $1M budget and it's NOT because little Jimmy needs a science book that was written this century but VERY SIMPLY because we collect less taxes than we ever did before while we spend more money on the Military-Industrial Complex than we ever did before.  The elephant in the room is, ironically, completely ignored by the Party represented by an elephant:  

What I find most interesting about the Conservative pundits (and their rabid fans) is how they generally claim to be successful capitalist but continue to push for decisions on our Nation's economy that would drive any corporation into bankruptcy.  If you look at the US as a business, we have $15Tn of outstanding debt, we have $15Tn in revenues (GDP) and an operating profit (taxes) of $2.2Tn and $3.4Tn in expenditures.  If we cut our expenditures in half without raising taxes, we would have a $500Bn surplus and it would take us 30 years to pay off our debt (assuming interest rates remained this low for 3 decades).  This is very simple math yet to hear the Punditocracy discuss it, you would think just dropping teacher's salaries to minimum wage would fix everything.

When you have a company in this situation, you cut what you can, of course – but you can't cut all of your staff and you can't cut all of your rent or equipment etc.  Cutting Education, for example, is like a company deciding they should not devote money towards training employees.  Just keep randomly throwing people into jobs and hope for the best.  Corporations pay for "Infrastructure" all the time – it's necessary if you want to expand – anyone who's run a large business can tell you that but, according to many – all those programs can be cut as well from our National Corporation. 

So cut, cut, cut – cut it all until we are nothing BUT an army with a $1Tn budget and the discretionary spending of a 3rd World Nation and that still won't be enough to pay down our debt with just $1.3Bn of non-FICA collections.  A large part of the idiocy in the argument to cut SS and Medicare is that $850Bn comes in and $770Bn goes out so what would be the point of cutting it unless the intention is to force those earning under $106,800 to contribute 6.2% personally for SS plus another 6.2% from their employer plus 1.45% for Medicare or $14,791.80 (13.85%) to be used to pay off other debts while terminating the program the taxes were originally scheduled for.  

Let's pretend, just for a second, that we could get the "job creators" to realize this would be unfair – taking away retirement benefits but still taking the money away from the, what do you call them if you a Conservative bent on dehumanizing American workers? – job TAKERS.  If we could just get over that logical leap of faith and cut SS and Medicare out of the conversation, then we'd see that the US collects just $1.3Tn  in other revenues or just 8.66% of GDP, just barely 1/4th of the OECD average (which is dragged way down by our ridiculous 8.66%).

NOW we are beginning to get a look at the real numbers!  Notice that Corporate Income Tax Collections are just $191Bn or 1.27% of our GDP while individuals pay $899Bn or 5.9% of our GDP or 4.6 TIMES MORE than Corporations pay, which is kind of funny because JUST the Fortune 500 declared a NET, AFTER TAX PROFIT of $758,820,700,000 last year.  Since ALL 1M US Corporations paid $191Bn in taxes last year and since $191Bn is ONLY 20% of $950Bn (pre-tax profits) we can see that even if the other 999,500 US Corporations made ZERO, and paid ZERO taxes, we would still have an effective tax rate for the Fortune 500 of just 20.1%.  

The reality is that the 999,500 US Corporations who can't afford armies of accountants, lawyers and lobbyists actually pay MOST of that $191Bn in taxes while the Fortune 500 walk away virtually tax-free on their $10.7Tn in sales.  More idiocy in the Conservative camp when they talk about Marginal Corporate Tax Rates – it doesn't matter what your posted rates are if nobody pays them, does it?  

Do you really want to balance the budget?  It's VERY simple.  We need $3Tn and we have a $15Tn GDP so just charge 20% on all transactions and there's $3Tn collected an no one has to pay a penny of income taxes, corporate taxes, SS or Medicare.  There, wasn't that simple?

The only people who don't want to see a flat, no-loophole tax like this one in place are, obviously, people and Corporations who are paying LESS than 20% in taxes.  As a consumer, even if Corporations passed the entire 20% VAT Tax on to you (but supply and demand will not allow that), 20% is still a lot less than most people and most business owners pay in taxes.  You can even get fancy and exclude food ($600Bn a year) and clothing ($200Bn a year) from the VAT and maybe put a 5% tax on incomes over $10M a year for individuals and over $100M a year for Corporations to offset it.  

There are many merits to a transaction tax.  We wouldn't need the IRS, we wouldn't need tax accountants or tax lawyers, we wouldn't need complex accounting in small businesses and, best of all, foreign corporations selling INTO our market will pay their 20%, just like we do – NO LOOPHOLES!  Our consumers are the greatest in the World – we SHOULD command a premium for our services…

Very simply, when you sell something, you give 20% of the revenues to the government – end of story.  This will also have the added benefit of having the taxpayers subsidize unprofitable businesses by allowing them to accumulate write-offs, even when they are making sales.  

If my daughters open a lemonade stand and sell a $1 glass of lemonade – 20 cents goes to Uncle Sam.  If the market will bear $1.25 – then they clear $1 and, if not, then they clear .80 on a $1 sale and if they can't run a profitable business for $1 – SHUT IT DOWN!  

THAT is Capitalism folks – taxes are a cost of doing business and all we have to do is cut out all the BS, eliminate the 16,845 pages of the US Tax Code and get America back to business.  You would think Conservatives would be thrilled because those poor people buying a $300 refrigerator will pay the same 20% tax ($60) that a rich person buying a $3,000 refrigerator pays ($600) and the poor person buying a $199 flat screen TV will pay the same 20% ($40) that a rich person buying a $3,999 flat screen TV ($800).  That is what we call FAIR!  

Best of all, by eliminating the need for half the lobbyists, we weaken the stranglehold Corporations have on our Government.  Also, if the Government wants more revenue, the simplest solution is to work to boost our Nation's GDP – finally all of our interests begin to become aligned as the Government, Big Business and our Citizens all want to grow our GDP – just like any good business should seek to expand its revenue stream.  No more game playing – just make stuff that makes money and everyone is happy.  

Let's talk about that!  

 


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  1. Why should we be like other countries in the OECD? Perhaps they collect too many taxes as well? I would be fine with higher taxes once someone can defend the argument that the Government is running optimally and following it’s mandates as set by the Constitution. I don’t want to be like other OECD countries.
    On the spending side, where you an I do agree there is a problem, the military needs to be re-focused in it’s role. It has become more about making the rest of the world like us rather than the defense of our borders and interests abroad. If you take the possible cuts from the military coupled with a 30-40% reduction in the waste and fraud currently in the system would you still argue for higher taxes? At least after doing that you would have a more legitimate position with the hardliners who believe Government has overstepped it’s boundaries and spends too much. It most certainly does not deserve a pass or our trust that it will take care of it’s problems after it gets paid! Yet, the door remains wide open for Warren Buffett, Hollywood, and whomever else that wants to pay more to an entity where they will get no guarantees on how it will be spent. Really, such a smart man Warren Buffett, and he would just write a check and hope for the best; Nary a question or an expectation on how it would be spent? Perhaps that works for him, as with most rich people, they already made it. On the system they now claim is unfair. Where was he with these words as he was coming up!


  2. Fortunately, the only people who think there are too few taxes are a skinteenth of a fraction of a fraction of a minority. And growing smaller with each notch down the middle class descends. They likely only exist on this forum. So no worries about their hijacking even more of the majority’s income.
    I’d love to see any (democratic) politician campaign, let alone some loony republican, on confiscating and redistributing even more of the diminishing income of the middle class.
    In fact, you ought to run for office just once (or as many times as you want to bang your head against a brick wall) and see how far your platform of  MORE TAXES takes you.
    Move on.  That drivel is tiresome and going nowhere.


  3. Flips
    Apparenlty the GOP think there are too few taxes
    http://news.yahoo.com/gop-may-ok-tax-increase-obama-hopes-block-124016578.html


  4. The problem I see with taxation is that ‘they’ will never allow taxes to increase on just the super wealthy regardless of how concentrated wealth becomes.  Tax increases, if they go through at all,  will always include some increase for those as far down the income scale as can politicos can push it in the interest of ‘fairness’ resulting in many working people paying significantly more tax.  The overall amount of taxes collected should not change over time, but the distribution of who pays them should follow any changes in the distribution of wealth. 


  5. Flips-Before you dismiss Phils argument completely, you may want to inform your self of some of the public opinion polls that have been done on the tax increase issue. Here’s a list:
    capitalgainsandgames.com/blog/bruce-bartlett/2341/23-polls-say-people-support-higher-taxes-reduce-deficit
    Besides, when did having yearly income of over a million qualify as middle class? As Phil so correctly states, we have a government dominated by an ideology that seeks to destroy the concept of protecting social welfare. The Republican party has deconstructed itself into a party of religious fanatics, war profiteers and Ann Ranndian dog-eat-dog free market fundamentalists. Ike. Nixon and even Reagan would be shocked to see it.


  6. @dogtown
    Goog Sunday afternoon, dogtown.
    Lies, damned lies, and statistics.
    I can fashion a poll to get any answer I want. The question that needs asked and wasn’t:
    "Would you, dogtown, immediately pay more in taxes to ‘reduce the deficit due by the end of the year, and every year thereafter, and if so, how much more would you vote to tax yourself, in actual FRNs, out of your current income? 
       1 -10  11-100  101-1,000  1,001-2,000    2,001-3,000      3001-5,000   5001-10,000  10,000
    Well?


  7.  In the spirit of our thread last weekend regarding new ideas to lift this country, here is a similar opinion piece from NYT which asked a variety of successful people "what would you do if you were president?"
     
    http://www.nytimes.com/interactive/2011/08/21/opinion/sunday/20110821_Kornbluth_President.html
     
    My favorite is from Neil Tyson, astrophysicist – paraphrasing – we don’t have dysfunctional politicians, we have dysfunctional voters, so I’d focus on "bringing an objective reality to the electorate so it could choose the right leaders in the first place." Smart guy, although unfortunately impractical!


  8. @drcraig
    Only an Astrophysicist would think we don’t have dysfunctional politicians.  His head is in the stars.
    The voter may well be too, but to opine that we have no dysfunctional politicians is absurd.
    If I need to detail that contrary view then someone’s not been paying attention to the 17% CONgress approval rating and the two thirds who think theBamster is ineffective.
    WADR


  9. @flips & drcraig – I have to agree with DrCraig on this one Flips.  I know its good fun to blame "the politicians" as if they are an alien species forced on the citizenry, but they are who we voted in.  We may have larger systemic problems with campaign finance, and special interests who are able to strong arm their pet issues through.  But ultimately we the people, if we were informed and interested enough could end all of this nonsense.  The problem is that we aren’t. 
     
    And if you think I’m living in fantasy-land, there are lots of "grown-up" European countries where this nonsense doesn’t happen (or as much).  Did you know that parties and politicians can’t advertize on TV in many European countries.  There are other restrictions that would make Americans’ heads spin.  Things can be done a different way, and we could have a different democracy if we cared enough.


  10. Phil: Mis played spreads on momo’s
    Several months ago I started some spread on the likes of OPEN, NFLX, GMCR. In some cases as bear put spreads and in others bull put spreads with the long puts Jan 12, selling near months to lower the basis.  With the drastic moves up and down, and now way down the adjustments I made on the putters have left me in crappy spreads and frustrated since the original premise was correct to play these stocks down .My general questions are is that because of their violent moves were MOMO’s bad choices to do calendar spreads on? Better to just do a targeted vertical?
    Secondly what would you recommend now with long (10) GMCR Jan 72.50P’s full covered short Sept 87.5′s or long (8) OPEN Jan 75′s full covered short Sept 70′s.  I won’t go into all ins and outs of these suffice it to say they are not near profitable because of all the adjusting and the underlyings falling so quickly it has been hard to adjust into selling more premium.    TIA


  11.  Flips – The politicians behave perfectly rationally within the alternate reality of politics. It just looks dysfunctional from the outside. That’s why you never look in and see any "normal" people. That’s why no politician ever gives a simple and straight answer to a question from an outsider. The question is always reoriented to dodge the politically difficult material and give the politician a chance to stump for something his base won’t fault him on. BO was asked by Wolf Blitzer last night "are corporations people?" in reference to that assertion being made by Mitt Romney. It took him forever to work his way around to "No". Can America handle a politician that doesn’t talk like a politician? 


  12. @drcraig
    Was Weiner acting Rationally?  Did Clinton? Packwood? Gingrich? Jenkins? The Kennedys?  What you’re saying is that the system itself is dysfunctional and therefore if you are performing within the confines of it , according to the demands of it, then you are behaving rationally.  No wonder I’m growing more cynical by the day.
    Can I handle it?  Yes. 
    Can you or Phil, or all the members, lurkers, and your friends, famly and acquaintances? I don’t know.
    But I’d rather know that for 60 years politicians of both parties have been too cowardly to tax the people for the financing of the Welfare state, than wake up today, finding out—-oh, wait a second, Tip O’neill is dead but he spearheaded the greatest raid on the Social Security Trust fund ever concocted to pay for his Social Programs and simultaneously placed a monstrous burden on the children and grandchildren of those people who elected him. He’s gone, but he has obligated the United States to pay for lifetime pensions, healthcare, and other perks that he never had any intention of paying for, leaving it to other politicians to deal with his financial wreckage .
    Since so few approve of the way politicians are doing their job, then the next question, "Are your politicians doing their jobs or is only the other guy in Ohio not doing his job"? 
    Even though we may have 3-4 highway projects going on now thanks to the american recovery act, which total over $100,000,000 I want to know who the contractors are that are getting paid for these boondoggles, how much they skim off the top, and how well they live.  Just like I want—no-- demand to know where are all those billions of dollars that disappeared in Iraq?  How in hell do you lose a C-Transport full of american dollars and no one seems to be doing a damned thins about it?  I can handle better than I can not knowing.


  13.  Flips- let’s not get carried away. Do politicians act dysfunctionally *sometimes* (even by the standards of their alternate universe)-- of course they do. I really don’t care what Weiner does with his wiener, or Bill Clinton for that matter, I do care whether or not they serve their duty to the country. 
    I agree with your demands for information and accountability. 
    Hey Flips.. what do you think about *her* accountability, eh??
    http://www.dailymail.co.uk/news/article-2026964/Susanne-Emans-bid-worlds-fattest-woman-52st-mother-2-supersizing.html
     
    Flips, are you there Flips? Of did your head just explode?
    I think she wants to argue the finer points of social security disability and the food stamp program with you!


  14. @drcraig
    …well, was going to have ribs and potato salad for dinner, chocoate chips with ice cream for fun.  Now I think I’ll just have some celery and a small can of tomato juice.
    I don’t consider a rapist or harasser or an abuser of power as fit for office. They should be in jail.  


  15. Cruised along at 6:50 pace for 15 miles this morning. I only take a politician seriously if they can run faster than me.
     
    Which basically leaves no one   8)


  16.  Flips- not sure I would apply those terms to Weiner or Clinton. Weiner = narcissistic fool. Clinton = total hornball. These are non-issues compared to what some our politicians do in the name of corporate cronyism. Some of that stuff would qualify as crimes against humanity. Oh wait, Bush/Cheney are dark age torturers!


  17. @drcraig
    It appears 90 senators, (I don’t think they are all repugs) think Gitmo should remain an alternative.  Tacit agreement with what goes on there.    
    On May 20, 2009, the United States Senate passed an amendment to the Supplemental Appropriations Act of 2009 (H.R. 2346) by a 90-6 vote to block funds needed for the transfer or release of prisoners held at the Guantanamo Bay detention camp.[11] As of May 2011, 171 detainees remain at Guantanamo.[12]
    On Jan 7, 2011, President Obama signed the 2011 Defense Authorization Bill which contains provisions preventing the transfer of Guantanamo prisoners to the mainland or to other foreign countries, and thus effectively stops the closure of the detention facility. However he strongly objected to the clauses and stated that he would work with Congress to oppose the measures.[16] U.S. Secretary of Defense Gates said during a testimony before the US Senate Armed Services Committee on February 17, 2011: “The prospects for closing Guantanamo as best I can tell are very, very low given very broad opposition to doing that here in the Congress.”[17]
    TheBamster made a political calculation that he better not transfer prisoners to his own state, simply to enrich some of his cronies there.


  18. Flips: GottA agree with Dcraig on polIticians. It might be nice to have choir boys, but I’d rather have good leaders who keep their various perversions to themselves. It has been said that the problem with heaven is that it’s missing all the interesting people.


  19.  Flips – This is what I’m talking about:
    http://thinkprogress.org/politics/2009/01/17/34948/bush-43-worst/
     
    How can sexting and a little clandestine hanky panky compare to this record? Bush should be hanged for all he did.


  20. drcraig – Yesssssss! and…… Yuchhhhh!


  21. Blah, blah, blah, go get em Phil ! Tax and spend, tax and spend, tax and spend. We can always count on Phil to have a good Jon Stewart clip waiting to roll. I’m insulted (as others should be) that you and every other liberal seems to think no American can take care of themselves and the only way us disadvantaged helpless souls can get by is by overtaxing already overburdened companies and the wealthy (that also in most cases pay more than any other income group). The real facts are The U.S. has one of the highest corporate tax rates in the world. Only four countries have higher corporate tax rates than the U.S. Gee, I wonder why the look for loophooles???  Things aren’t always fair.  This is America. Some will do better than others. We cannot persecute the succesfull because we envy their good fortune. Phil, Here’s an idea for you.  If you are so desperate to have a socialist  system in this country then move to Europe. You and the three or four other here you have managed to brainwash can start your own Utopia where no one works, the Govt. takes care of all and you all sit around singiing John Lennon songs all day long.  Have fun.


  22. @drcraig
    You could, if you choose to,  google theBamster, plug in "worst POTUS", and you will get more than a few references to post here as well. I won’t bother with that because it will get us nowhere.
    Personally, W was the worst of the worst that I can remember.  I have no argument with that. I am thankful that he was so bad that I tuned him out three months into his first campaign and only heard him on 9/11.  After that it was a blessing to avoid every second of his terms. Awful, just spectacularly failed and dismal.
    What is so hard for most people to figger out is that rabid partisanship is not my position on anything.  I have as much despisement for the left as the right.  More so for the right when Evangelicals, like Perry, begin their campaigns. Being a  "baptized and confirmed" atheist, I find all references to religion in politics abhorrent.  So don’t please mistake my antipathy for MORE TAXES espoused by the owner of this board as some kind of alliance with the right wing.  
    I know what all the taxes are that I and my countrymen who actually pay taxes, do pay.  And the burden Phil lists above is only part of it.  No one is likely to con me into paying one cent more to any government without a vigourous opposition. And I expect to be joined by the vast majority in that. And using some failed socialist states up to their asses in debts for not taxing themselves enough who owe themselves and others trillions of dollars, as an example of how we should tax ourselves somemore is intellectual torpor in motion.


  23. @O X O
    Some still think that this country is governable with men of highly questionable character, many of them unindicted criminals at large, so long as they provide great leadership.
    Any come to mind? 
    I can’t think of s single solitary one.
    @Dogtown
    How much more are you willing to pay in taxes?  Pick a number from 1$ to 10,000 per year from here on in to ‘reduce the deficit’. 


  24. I see our resident conservatrolls are at work.  How nice.


  25.  Flips – No one wants to pay more tax, but what’s wrong with raising our tax rates a little bit so we can reduce our national debt and afford the entitlements people genuinely care about? Is the problem that you oppose Medicare, Medicaid, and Social Security? How about our $600B defense department? Since you don’t want to pay more tax, what would you like to cut? Should we axe NPR and Planned Parenthood to save a few bucks? Food stamps? 
     
    I agree with you that government "waste" is a problem, and we should certainly do what we can to ferret that out. But what of the meat and potatoes above?


  26. JCaesar-  Very bright, Did you come up with that all by yourself? Typical Liberal response. Use insults whenever you are unable to have a logical debate.  Can you say, "Ignore this user"  DONE


  27. How about we start with eliminating experimental planes capable of reaching Mach 20 before they crash and burn? I have no ides how much this cost DARPA but surely it wasn’t necessary – http://www.msnbc.msn.com/id/44208437/ns/technology_and_science-space/t/superfast-military-plane-hit-mach-crash/


  28. Dr. Craig- Are you serious? "What’s wrong with raising our taxes a little bit"???  Did you even think about what you wrote before your wrote it? This government has so fat to be trimmed and you really think your little bitty tax increase would be spent properly by elected officials? We need to go on a diet and giving more tax money to irresponsible elected officials is not the correct solution.


  29. dr craifg i am form mane my dad form ellesworth what is your specialty are you in bangor?


  30. Well my weekend didn’t go as planned!  Just got home, futures up a bit so going to bed, will try to catch up in the morning. 


  31.  fellow conservatives:
    Please stop saying things like this "overtaxing already overburdened companies and the wealthy (that also in most cases pay more than any other income group). The real facts are The U.S. has one of the highest corporate tax rates in the world. Only four countries have higher corporate tax rates than the U.S. Gee, I wonder why the look for loophooles??? "
    You undermine any serious, thoughtful discussion with this kind of mindless bs, overburdened? why not look for loopholes? how about who pays for the defense of your assets overseas, your oil wells, mines etc, Switzerland?  whose patent and trademark system is the foundation to protect your intellectual property here and abroad, China? Which country provides the infrastructure for your manufacturing and distribution, educates and provides security for your employees and customers?  Where are the "patriots" when it comes to a time where your country is really in trouble and needs sacrifice from everyone, yes even the overburdened companies and wealthy.
    I don’t know what the ultimate solution is but neither does anyone else so there needs to be compromises on all sides, ie increase some taxes and cut some expenditures. and act like responsible adult citizens and hope that filters up and is reflected in the people we elect to govern this very flawed system of governance.
    I’m sure several of you served in combat defending your country in the past and if asked to do so again probably would.  But in the past your willingness to sacrifice surely wasn’t to protect the "overburdened companies and the wealthy".  We can sacrifice a little now for the system we have all benefited from or we can refuse and be shocked when it collapses and we are not asked to sacrifice, but rather are forced to give up far more in the future.


  32.  Actually I’ll stand up and say I wouldn’t mind paying more taxes.  We are very middle class and dont have a ton to spare – but I’d rather pay into things like SS instead of 401 K’s any day.  Ever look at the options of your typical 401K?  No hedging, no cash and of course no gold – and you can’t even take it out!   It’s a sacrificial lamb served up nice and warm.  
    Medicare has it’s issues – but a purely private health care system?  Really?  Wait for people to be sick and then make them pay through the nose.  By what mechanism would we suggest my grandparents get health care from?
    To the conservative types who hang here through what looks like constant partisan propaganda – I get it.  I really really do.  But when I look at the big business culture in our world I dont see Randian heroes.  I see the villains.  Don’t mistake Dagny Taggart for James and dont think your blind faith in the "market" will change their essential nature.
    Capitalists maintain that their money is made through creative production.  I maintain that once that production has grown to sufficient size equal amounts of money can be made through it’s DESTRUCTION.  The financialization of our world is one such process.  Do not mistake the destoyers for the creators.  They are not the same.  Make no mistake – the typical wall street trader/banker expects the population to exist for his benefit.  He expects you to die so that he may live.  The typical engineer does not.
    We all trade here and might take part in the "go for the kill" spirit.  But as our world has become dominated by this philosophy all of us have suffered.  Perhaps you think it’s foolish to ever take your foot off your opponents throat – but when your opponent is my Grandmother’s pension it makes me very very mad.
    We need government to act as a ballast against concentrated power in the private sector.  We need government to protect the weak.  We need government to set simple rules by which we can all compete – but compete without conflict.   Our problems – at their core – are not that government is too big or small but rather that it has been subverted to serve the powerful over the many.
    We have become a pathetically small minded, short sighted population – of that there is no question.   I have no doubt that we will reap the crop we have sown.  But before we reach the point of no return we must all take a look at what is truely in our own RATIONAL self interest.
    It is not in my self interest to live in a world with an unchecked poor population and lax gun laws.  I really dont understand anyone who claims that it is.


  33. I updated the PLX cash on hand and other info fwiw.  In March, the company did a share offering of 5.50….I am still acuumulating under 4.70.  Will sell some at $5 and above, reducing the cost basis along the way. 


  34. There’s a saying in legal circles that hard cases make for bad laws. Solving the U.S. fiscal problem is very tough, primarily because years of U.S. prosperity raised wages and consumption to levels that are unsustainable in a now-globalized market economy: blame Yeltsin, Gorbachev and the death of Mao for that, if you like. How much does our immense military positively affect the predominance of the dollar in world trade? To what extent are medical and pension benefits unsustainable as life expectancy rose beyond projections? Why does the U.S. apparently pay more and get less for its educational dollar than other advanced countries? Why do U.S. corporations pay less net effective tax than in most developed economies, and is that a net positive in terms of their international competitiveness?

    I do not claim that these are even the most important questions; I’m not sure we know what those are. But I am sure that political partisanship or knee-jerk responses will neither determine nor solve them. And I do know that it took many years of wrong-headed policies to get us to this point, and that it will take real thinking and farsighted policies rather than slanging and slogans to fix it. Yet even on this board the discussion seems to retreat even further into liberal-versus-conservative labels. I am a conservative, I am pro-business, I believe that overly-generous social support systems reduce the incentive to work, and I believe that public school unions are run for the benefit of teachers, not students. Nonetheless, I doubt that these generalizations, however valid or worthy, themselves contain policy prescriptions for reversing 40 years of declining competitiveness. Yet the pressure of circumstances seems to be pushing Americans in exactly the opposite direction, towards simplistic solutions from simpleton politicians. That would point to the economy going from bad to worse, as thoughtful compromise proposals become anathema amidst the partisan braying.


  35. Interesting take on the markets:  http://www.tickerville.com/


  36. @drcraig
    @O X O
    The answer to both your questions if the same.  It’s even the questions themselves:  The US is too large, diversified, and polycultural to be run as one country.
    Break it down, or as I have said many times before be prepared to have these heated conversations between liberals and conservatives— forget the thouands of ones going one between lesser known adversaries—-for the entire run of your lives. 
    A little bit more taxes will solve nothing. 


  37. For further reference on what needs to be done, google Libyan Rebels. They have the solution, because their country is small enough to depose their King.  That can’t be done here because there is no solidarity massive enough to get it done.
    A great many of our people are benfitting from the status quo and will not join a movement to overthrow a corrupt senate, house, judiciary, and executive.
    Those who advocate a one world government know this.  Why do you think they want that power over every single person on the planet?
    Size matters above all.  Especially if you are King Kong and all those tiny creatures below you from Lilliput cannot turn you into Gulliver.


  38.  Lincoln, Lightning, Zero- All well said, and much better articulated than I could do. 
     
    Flips- You would really break down our union? Our size and diversity ought to be a great strength to embrace and capitalize on. I don’t think the problem is that we’re too diverse and no one can agree on solutions. Listen to what people say when they are interviewed and polled across this country- generally speaking they support reasonable, rational solutions to our collective problems. It’s our politicians who are NOT beholden to these reasonable masses that fail to implement these ideas. Why? Because they exist to help maintain the status quo for the moneyed. 
     
    Jakester- You make a valid, but unfortunately very cynical point. It’s easy to be cynical, believe me- I am too. "Government sucks, just let it die already." Sorry Jake, but this is the only system we’ve got, and we have to find a way to make it work. I’d rather NOT go the route of violent revolution. I don’t like the way politicians spend my money either, but Im not about to throw in the towel just yet. Politicians who actually serve the people, and not the moneyed interests, might just spend our money effectively. Now rather than cynically starve our government of the cash it needs to solve problems, maybe we could work on the root problem of money influencing politics? 


  39. Good morning!  

    Gadhafi’s going down and Europe seems pleased about it as well as Merkel’s comments that indicate there may be Euro Bonds down the road, which is now recognized as the best chance to stabilize the region.  Mostly FTSE (up 1.6%) and CAC (up 1.4%) with Germany up just 0.3%.  Oil holding up so far at $83.25 and gold way up at $1,883 after topping out at $1,898 – maybe other dictators still nervously moving money into gold. 

    Our futures are up almost 1% so far.  Asia was mixed this morning with the Yen at 76.78, the Dollar topped out at 74.25 at 3am and is now down to 73.94 so under 74 is going to be bullish.  The Euro is $1.4425 and the Pound is $1.649.  

    After that huge run we caught back to $2.86 on Friday, gasoline (/RB) fell all the way to $2.76 again at 3am and now crossing back over $2.80.  It’s a little early this week but we do have a holiday driving weekend in two weeks so next time gasoline dips to $2.76 we might have to consider it a buy again.  

    Copper is right on the $4 line, nat gas $3.86, silver took a big jump to $43.78.

    Libya is going to be a fine example of re-distributing wealth at the point of a gun.  Ghadafi has an estimated $40Bn (about 50% of the country’s GDP) while the 6M people in his country have a per capita income of $11,300.  The country produces 1.5Mbd of oil or $46Bn a year, also half of GDP so sharing the oil money with the people would pop their incomes by 50%.  That would be a terrible thing for other Middle Eastern nations – the better this revolution comes out for the people, the more it will encourage others so it will be interesting to see how things play out now.  

    It looks like we’re going to avoid a blow-off bottom thanks to this news but we’re not in a real recovery until we are past the Must Hold lines again with the Dow closest, "just" 200 points below 11,011.  A cross there would be enough to get a bit bullish on as we expected a Bernanke bounce this week anyway.  

    The gap between Brent Crude and WTIC is huge.  BNO is a Brent Oil ETF and is outperforming USO by 50% over the year, although 20% down from it’s own peak at the end of April.  I think Libya may push Brent below $100 (now $109) so I like BNO as a short at $72.79 and they do have Sept $71 puts which look cheap at $2.88 but very thinly traded or I’d really be loving them.  

    I didn’t get around to Q&A over the weekend so please feel free to re-ask anything NON-POLITICAL in the morning post and I’ll get caught up.  I am very interested in people’s views on a nice, flat, fair 20% VAT tax.  I can’t even see how Conservatives can object to this but, then again, I can’t understand how Sarah Palin was chosen to run for VP in 2008 either nor how Michelle Bachmann can win a straw poll so we’ll see.  

    You can cut spending (especially military) all you want down the road but first – how about balancing the budget by simply having EVERYONE pay 20%?


  40. @drcraig
    You bet I would. Starting today. 
    Surely you can see that D.C is a Separate country already, it’s inhabitants making out like bandits on your and my dimes, telling you how to live while they are immune and live under their own set of rules, accountable to no one but the globalists who finance it. Do you disagree with that?  Do you really think theBamster is all that different from Bush, or that a democrat is different from a republican, especially among the senior committee members who have been incumbents for more than 5 years?
    The evidence is all around and has been for 40 years. What are you going to do when there are 600,000,000 people living between East and West coasts?  No country on earth has EVER been this large, diversified, and operating as a democratic republic. Not even the U.S. is.  It is run by 42,000 lobbyists, or more importantly by their behind the curtain contributors.  The politicians are using the divide and conquer tactic to split off even more splinter groups, not uniting us. It’s time to recognize that there is already a separate country, that doesn’t even vote that runs the rest of our world. 
    Diversity works in nature, but not in democratic republicanism. Contained within its own words is its Achilles heel.
    And I already pay more than 20%, so I would get a tax cut.
    I’m in favor of allowing all taxing authorities  to take one third of my assets, and income, not a cent more, regardless of the needs of anyone.  But it’s already way over that. I cannot argue with "everyone paying 20%" , but something instinctive tells me that even if everyone did pay that 20% it wouldn’t be near enough once that other country, D.C. decides it isn’t.


  41. @drcraig; O X O;Jakester
    Freddie and John rap it better than I can:
    http://www.youtube.com/watch?v=d0nERTFo-Sk


  42.  Phil
    Added the finviz article feed – let me know if this is not something you want me to do as its held for moderation. If its ok, I’ll try to keep it updated every couple hours – varied sources which I find valuable – but I know you use SA so if you think its enough let me know. 
     
    Also – blog sources could be added without much trouble and are often more valuable as well. thx


  43.  Phil / BNO 
    Few questions on Brent Crude.  I read this morning on marketwatch that Brent fell overnight:
     
    The front-month October Brent crude contract on London’s ICE futures exchange fell $1.37 to $107.25 a barrel. Nymex crude futures CL1U +1.37%   rose $1.24 in electronic trade to $83.50 a barrel.
     
    Are you recommending us wait until $72 to short, or a short from the current levels down to $72, or are you reccommending selling the 71 puts to go long BNO at the bottom?  


  44. VAT/Phil – clarify it a bit more for me…does this replace all income tax, individual and corporate? What about medicare and ss tax? All gone? So our paychecks would no longer have the Fed, FICA, etc deductions? I’m sure you’ve said this before, but just repeat it for gently forgetful retired professor here.


  45. Phil    your flat tax idea is remarkably similar to the conservative "Fair Tax" proposal.  It does make an enormous amount of sense if decoupled from all the rest of the liberal/conservative noise.   WE get rid of the IRS  collect taxes on the shadow economy    and all those nonproductive tax advisers will be free to do something that adds economic value.  Like trading…….
    seriously think of all the brainpower in our country wasted on taxation issues


  46.  A day late, a comment short, but most tax studies have indicated that, no matter what nominal rate of tax is set by the governing authorities, people will in practice not pay more than one-third.  They just won’t; they find ways not to.  It is some kind of universal "sense of fairness" rule lurking in humanity’s subconscious.  Of course, at gunpoint, I suppose people would give up everthing.  But in a self-reporting tax system, like that of the U.S. and most countries, 1/3 is the limit.  Twenty percent would be considered fair — if everyone pays it, naturally.  Otherwise, we’re back to spending lots of time and money on tax avoidance.


  47. @O X O
    How many are subject to withholding, though?  All of your trades are reported to the IRS by the brokers, banks and every dollar tracked even if you are not audited.  Two years ago I inadvertently left off a sizable trade in my dad’s Schedule D Long term cap gains section
    The IRS sent us a bill for the taxes due on the "proceeds" which had no cost associated with it. All I had to do was submit the buy side of the trade information to get the bill knocked out, but it told me how closely they track any dollar that you receive.
    It’s not very easy without a cash business to avoid paying taxes no matter how high the rate.
    Funny though. I posted this morning that I was willing to pay about 1/3 for all taxes from all taxing authorities as my absolute limit no matter how desperate the government was for more money.