[Ratmagiclady]

What would be better is a flat tax as has been proposed before.

'Flat taxes' are just code for 'regressive taxes,' ...those profited off pay to subsidize what the richest benefit the most from, and do the most damage, really, *with.*

[JohnInIndy]

Sorry, this does not make sense to me. However low prime is, it is higher than the fed funds rate which is almost 0. So, for a bank to lend to a credit-worthy customer still makes more sense than sitting on the reserves. The reason they do not lend is that they are worried that even a credit-worthy customer like you will default because of the economy. So, the problem is not the low rate, but the overall economic dire straits, where there are not enough credit-worthy customers to lend to (if you want to see the exact mechanics of bank reserves, go here.)
Prime going up will stifle the whatever small amount of housing market activity there is right now, putting additional stress on the economy. These things are all connected, you cannot change one without it affecting the other.
You need to understand that government spending is dollar-for-dollar private sector savings. Government does not need to tax to spend. Taxes are a tool to regulate money supply. So, the government could cut taxes for all and it would not constraint its ability to spend one bit. This could however lead to inflation. Inflation is best thought of as a tax for all. So, if we increase spending by simply cutting taxes for some group of people (yes, those are equivalent in terms of money supply), the result could be inflation of X%, which is the same as X% tax increase for everybody in the economy. Who benefited? You tell.

The reason they aren't lending is to keep the reserves up. Well that and fear.

You're correct about taxes. If government can't cover it's expenditures with taxes it can do what you and I can't. It can print more. All that does is devalue the dollar. It's already happened and China of all people told Obama to stop printing unbacked money.
Cutting taxes is not the same as increasing spending however. Equate taxes to your income. You work less hours you have less too spend assuming you are not printing your own money. Inflation isn't a tax. Inflation means you get less for your money.

[JohnInIndy]

'Flat taxes' are just code for 'regressive taxes,' ...those profited off pay to subsidize what the richest benefit the most from, and do the most damage, really, *with.*

Why would a flat 10% tax with a minimum deduction be regressive. If you make 20,000 per year and the deduction is 25,000 you pay no tax. Make $1million and you still only pay 10% of that above 25,000. You pay 10% of 975,000 or 97,500 out of that million.

[GeneV]

Banks don't actually have much incentive to be banks right now. They get money from the government practically free, and they can invest it in bonds (including Treasuries) and other instruments that are low risk, and then they pocket the difference. Most of the big banks are making out very well while decreasing traditional commercial lending. They don't need to pay for deposits, either as long as the Fed keeps them supplied with free money. It's a great deal if you can get it.

[GeneV]

Why would a flat 10% tax with a minimum deduction be regressive. If you make 20,000 per year and the deduction is 25,000 you pay no tax. Make $1million and you still only pay 10% of that above 25,000. You pay 10% of 975,000 or 97,500 out of that million.

Most of the flat tax proposals are for sales tax, which is regressive. I doubt that the total amount for a flat tax on earnings could be 10%, because even the poorest worker pays close to that in payroll taxes right now with no deduction.

[skyredoubt]

The reason they aren't lending is to keep the reserves up. Well that and fear.

No. they don't need reserves above the minimal requirements. Which is why they would lend to each other any excess reserves at rates which will converge to the Fed Funds Rate. If there are credit-worthy customers they would lend to them even if they don't have excess reserves! A bank doesn't need to have reserves to lend (another mainstream fallacy) - it can always "cover" its lending in the next periods thru the Central Bank (the Fed). So, the reason they don't lend is the "fear" as you put it. Really, go to the link I quoted and see all the details how it works.

You're correct about taxes. If government can't cover it's expenditures with taxes it can do what you and I can't. It can print more. All that does is devalue the dollar.

It could devalue the dollar. For inflation to happen it is not enough for the money supply to go up. If all the money ends up in bank reserves, it is not inflationary. If economic output goes up at about the same pace it is not inflationary either. Basically

money supply * velocity of money = price level * productivity

In other words, even with rising money supply, one needs to have velocity of money (speed of turnover of money in the economy) to at least not go down and productivity (the economic output) to at least not to go up fast enough for inflation to occur (price level go up).

It's already happened and China of all people told Obama to stop printing unbacked money.

Sorry, this is a total misconception of what QE2 is. Regardless of whether it will work or not, it is not inflationary either and does not amount to printing money (and what does "unbacked" mean - we're not on Gold Standard anymore!) The Fed buying securities is equivalent to shifting the existing money between checking accounts (reserves) and savings accounts (US treasuries). This is an interest rates operation and not a money supply operation. The idea is to push the mid- and long-term interest rates down (since short term is totally controlled by the Fed and is already at almost 0).
Yo need to realize the the only difference between US debt and the dollar in your pocket is that one is interest bearing while the other is not. Both are "backed" by exactly the same credit of the US Govt (which derives it from its stipulation that you pay your taxes in USD.)

Cutting taxes is not the same as increasing spending however. Equate taxes to your income. You work less hours you have less too spend assuming you are not printing your own money. Inflation isn't a tax. Inflation means you get less for your money.

From the point of view of money supply there is no difference. One injects new money into the economy, the other takes less money out of the economy. One puts more water into the well, the other just doesn't take out as much.
What is the difference for you if you were taxed at 5% - so you were able to spend 5% less - or if the inflation was 5%, so you were able to buy 5% less with your money? They are exactly the same.

[deadwolfbones]

Most of the flat tax proposals are for sales tax, which is regressive. I doubt that the total amount for a flat tax on earnings could be 10%, because even the poorest worker pays close to that in payroll taxes right now with no deduction.

Yeah, most estimates for a workable flat tax are somewhere in the 17-25% range, as I recall.

[Ratmagiclady]

Why would a flat 10% tax with a minimum deduction be regressive. If you make 20,000 per year and the deduction is 25,000 you pay no tax. Make $1million and you still only pay 10% of that above 25,000. You pay 10% of 975,000 or 97,500 out of that million.

It still concentrates wealth at the top, being the problem, and the simple fact is that big incomes and big property actually get a whole lot more benefit from the nation than ten percent pays for. (Especially when they already *have* most of the actual wealth and hold lots of debt over people, while expecting the nation to pay for the foreign debt that goes into subsidising that concentration of wealth. When you get to people and corporations who take in hundreds millions to tens of billions, it gets especially obvious.

The problem with captialism is that it tends to start eating itself when it runs out of others to take from. For it to *work* and be worth living in, it has to be balanced. There's really no such thing as a 'free market' when the market itself can be bought.


I mean, don't get me wrong, I'd like to buy in, on a pretty small and local scale, mind you, but there aren't a lot of situations out there in which someone with my limitations, and particularly someone who's *been* poor and disabled, is going to prosper, particularly when there's a huge surplus of *able-bodied* people who aren't discriminated against and look like better workers on paper, even if, and in many ways *because* I never had an unpaid credit card balance in my independent life, (I discovered the hard way that cash-on-the-barrelhead is a really good way to be sure that the big money has *no* interest in you ever making a wage, cause they aren't into you for any of it:
thanks, system-that-kicks-you-when-down-and says 'Get a Job, but not here. This makes you' free,' but you'll take whatever we give whatever the deal is or else.) ...basically, the pretty monolithic idea of 'employment' and 'employable' very rarely is doable or obtainable with my limitations, and even more rarely even makes much use of or even rewards what I really *can* do.

Long and short of that is that given a bit of a basis and stability, my best chance is either self-employment or some cooperative enterprise. But if all the capital and such is already pretty much in the same hands, keeping ninety percent of what I can't get while people that own everything and write the bills do the same is, for one thing, the picture of 'anti-competitive.' No matter *how* badly the big corporations screw up, or *how* badly they dissatisfy consumers, while stacking the deck so they take the profits and leaving the waste behind for the public bill and tell the people, 'You lose, sorry! Aren't you glad
we call everything 'Socialist?' You wouldn't want to be a *socialist,* like we call the ability to make a shop union or anything....'

I've lived in neighborhoods where most of the people living there were putting around eighty five percent of their income just to keeping a roof over their heads, trying to make up the food and transportation out of the rest, tending to run up any credit they have, ...and if lucky, a little something to try and actually live some life with.

Doesn't leave a whole lot for community-based ventures, when most such mean paying *more* rent and bills to the very same rich people who already have bought most of the market.


I'm unlikely to be *using* much of the government corporate welfare or infrastructure, except maybe the very postal service the fatcats want to cut back and privatize: I'm not going to be shipping tons of goods over the roads or having multiple accounts each maxed out to FDIC coverage limits, not going to have overseas assets for the US military to protect, or have Delta Force on call when I get abducted cutting multimillion dollar deals in Rio....

Won't be getting government subsidies for R&D and market research, and while I hope to be in a position where a microloan could do a whole lot at the right time, I wouldn't be expecting that to happen when the richest can spend as much on elections as they care to....
I love the fire department, but they also won't be rolling four alarms with tower trucks and all to reduce the insurance costs of any billion dollar facilities of *mine,* after all. There's not much 'proportional' about having me pay the same for *that* stuff out of what I might make from a business maybe run out of my shed.


So, if I *get* to participate in capitalism, after six years of trying to squeeze in some training and accumulate something that'll pass for the equipment I need to pursue a little photo end of things, (Frankly, my ambition there is just to be *useful,* ...supporting myself alone's probably out of the question unless I can do enough different things to make a go, but hey, it's the dream, right?) ....Well, it's not the tax *rate* that makes the market 'free' for me, it's the *stratification of wealth.*


It's who owns what already. For the whole system to work, rather than corrupt itself, it needs a *balance,* not just what they call 'Fair tax.'

It's a nice sounding idea, if we all started out with an equal share, stuck to a well-managed plan, and then said, 'Let us free market,' ..at least for a while, till the cycle repeats, but that's not the reality.

The reality is that even if there were a ninety percent tax on the further takings of the very richest, their ten percent, along with what they've already got, would still be tons more powerful than even ninety percent what of whole towns could take home, when it comes to 'market forces.' If they *keep* ninety percent of the further take from all the country does for them, and give little back, it's far, far worse. Either way, the balance is stacked to the ownership classes. The plutocracy. If Bill Gates paid ninety percent on his income taxes next year, (assume he wasn't retired already) he'd still be filthy rich and Microsoft would still be a juggernaut. But it'd be paying its way and there'd be more room for more to participate. (and less of the economic debilitation that comes when a nation doesn't care for its resources, people, health or infrastructure.)

If there's that much stacked against new participation in the economy, and rich corporations and people keep getting so much *more* in quantity, the 'flat tax' still means they get most of the bennies and control all the capital. If they don't like the competition or any social mobility, well, all they gotta do is raise the bills. Which they do in fact do whenever they can.

[JohnInIndy]

It still concentrates wealth at the top, being the problem, and the simple fact is that big incomes and big property actually get a whole lot more benefit from the nation than ten percent pays for. (Especially when they already *have* most of the actual wealth and hold lots of debt over people, while expecting the nation to pay for the foreign debt that goes into subsidising that concentration of wealth. When you get to people and corporations who take in hundreds millions to tens of billions, it gets especially obvious.

It concentrates wealth at the top? The wealth is always at the top. And someone has to be at the bottom. Again, have a deduction so the poorest don't pay any tax. That's what happens now anyway. (Gene, they may pay it up front but get it back come the next year. You know it and I know it)
RML when is the last time a poor person paid you a salary? My wages always come from a person or corporation that needs a service I am able and willing to perform and they are willing to pay for. I've never made a dime from someone who didn't need my services or who didn't want to pay my price for that service. Have you? If so can I have their names? I've got a bridge or three I need to unload.

As for them who have. If they worked for it you hold it against them? If they put their entire life and life savings on it and made it big you hold it against them? Why?
If they failed with an idea that didn't stand a snowball's chance in Hades would you give them a handout?

DWB even at 25% it's still less than the 50-60% that's paid now by the "rich".

I wonder how come you all want to penalize someone who had an idea and made money with it. And what's so special about 250K? Why not 100K? Or 50K for that matter? Why not make it so that you (anyone) can't have assets totaling over 250K anyhow? Make 250K including assets and you can't make anymore.

My first venture cost me over 8 million. And I lost. My next one was 6 million. And I lost. Now those debts are repaid with interest and I do OK for myself. But by the same token I don't have family to fall back on. My failures are mine. My success is also mine. I'd trade it however for family. Someday. I'm just 40 so I still have time.

[mikemike]

Given that the bones being thrown to liberals last for one year and the tax cuts last for two years, the questions that really must be asked are these...

In 2011 will Speaker Boehner be up for extending any of these bones?

In 2012 will Speaker Boehner bring any tax bill to the floor for extending the tax cuts which doesn't include the $250+ bracket?

In 2012, in the middle of his re-election campaign, will Obama be any more willing to veto the subsequent re-extension of Bush tax cuts thereby raising taxes on everyone?

[Nesster]

John, by your logic then, the times where America created the most jobs and general prosperity should not have happened, as the marginal tax rates where even higher than the 'let the Bush cut expire' would be.

We may get paid by moneybags; this doesn't mean that worshipping said moneybags will make our lives better or more secure monetarily. It doesn't get him to pay us more or even pay more of us.

Of course those 'at the top' make the most and/or own the most, that's not at question. The question is, for a healthy society, one that provides you and me and our children the best opportunities, where does the income and wealth inequality become counter productive? For the wealthy do depend on a sea of consumer demand - one way or another - to provide wealth. Damning the rivers to that sea eventually make it a Dead Sea, unable to support more wealth. That's why this question is important.

[Ratmagiclady]

It concentrates wealth at the top? The wealth is always at the top. And someone has to be at the bottom.

It's a matter of *degree,* (sometimes exponential degree)... Yes, if you play games like capitalism, some win, and some 'lose,' ... that doesn't mean that the system must or should concentrate *more* toward those who already have more than they can use a thousand times over, and make the conditions for those not already 'winners' that much harder or worse.

I don't *mind* if someone's a millionaire or a billionaire, what I mind is them thinking they own everyone's future and whine if they can't keep taking and taking and buying the rules to favor themselves, regardless of cost or consequence.

Again, have a deduction so the poorest don't pay any tax. That's what happens now anyway. (Gene, they may pay it up front but get it back come the next year. You know it and I know it)

As I said at length, 'not paying any tax' on nothing, doesn't add up to something.

Paying the same tax on a *little* doesn't mean you get the same benefit as people who pay a little bit on using the whole system on big money scales. And own most of the capital and stuff and space already.

RML when is the last time a poor person paid you a salary?

About as long as it's been since a rich person did: never. Salary and attending benefits are for the better-off. Even in retail management as a kid I got about six bucks an hour.

My wages always come from a person or corporation that needs a service I am able and willing to perform and they are willing to pay for. I've never made a dime from someone who didn't need my services or who didn't want to pay my price for that service. Have you? If so can I have their names? I've got a bridge or three I need to unload.

Irrelevant to the effects of regressive taxation. That's just an implied attack on my character and intelligence based on some accusation you pulled out of nowhere, however much it illustrates just the kind of prejudice against people not-already-'winners' the 'class war' really uses to keep a lot of people 'down' quite unnecesarily.

It's justifying tilting the playing field toward the already-wealthy even more than that's pretty inevitable. And that wealth-stratification makes the whole damn system unstable, even for the rich, even if they get the huge bailouts while claiming the poor and old and disabled are 'parasites' for not fitting into the wage-slave world and credit-debt-dependency that so many live with while being told 'Consume!'

As for them who have. If they worked for it you hold it against them? If they put their entire life and life savings on it and made it big you hold it against them? Why?

I *don't.* What I hold against certain ideologies is people like you claiming false things, for one, and also trying to justify some notion of denying those chances, even for less-greedy-lives to others.

If you 'make it big,' congratulations, that doesn't entitle you to forever making it *bigger.* Not at the expense of others, or on the public tab, whether you in fact win or lose.

If they failed with an idea that didn't stand a snowball's chance in Hades would you give them a handout?

I *am* the snowball's chance in Hades.

No one said people have to be snowballs, without warmth in Hades, or held to braziers. (Yeah, by the way, both in Hades, various Hells, and the low end of 'market capitalism,' lack of 'liquidity' is often the very nub of the problem.

And, yes, when you're on the street yourself, you meet a lot of people who didn't 'win.' What you call 'handout,' if it's not billions more to the rich, ...Is what we call 'sharing.'

[Nesster]

There's this peculiar idea seeminly fixated on the right - a black and white thinking - where any mention of 'more tax' is automatically taken to mean 'confiscate all wealth', and any mention of 'transfer income' is taken to mean '100% welfare support of lazy bums using my money'. With this sort of reactionary thinking, nothing penetrates after the key words are said, implied, or read into what someone says. I.e. logic and facts go out the window.

Changing the marginal tax rate for people, very few or any that we actually know personally, by a couple of percentage points is NOT the same as confiscating all of their income. It won't put any of them in the poor house, nor will it directly affect our jobs and incomes - well, perhaps if you happen to be an undocumented immigrant, say, on the bubble as the third gardener on the second estate of said moneybags

We've covered the fact that a) ambitious people will be successful and make much money and create companies even with higher tax rates (Bill Gates, Warren Buffet just to name two) b) if our ambitious people really need the 'incentive' to work through tax cuts, something's seriously wrong, or, we're in fact subsidizing the lazy, uninspired and stupid to take leading positions in our economy... which actually explains a lot of recent events

[JohnInIndy]

It's a matter of *degree,* (sometimes exponential degree)... Yes, if you play games like capitalism, some win, and some 'lose,' ... that doesn't mean that the system must or should concentrate *more* toward those who already have more than they can use a thousand times over, and make the conditions for those not already 'winners' that much harder or worse.

I don't *mind* if someone's a millionaire or a billionaire, what I mind is them thinking they own everyone's future and whine if they can't keep taking and taking and buying the rules to favor themselves, regardless of cost or consequence.





As I said at length, 'not paying any tax' on nothing, doesn't add up to something.

Paying the same tax on a *little* doesn't mean you get the same benefit as people who pay a little bit on using the whole system on big money scales. And own most of the capital and stuff and space already.





About as long as it's been since a rich person did: never. Salary and attending benefits are for the better-off. Even in retail management as a kid I got about six bucks an hour.




Irrelevant to the effects of regressive taxation. That's just an implied attack on my character and intelligence based on some accusation you pulled out of nowhere, however much it illustrates just the kind of prejudice against people not-already-'winners' the 'class war' really uses to keep a lot of people 'down' quite unnecesarily.

It's justifying tilting the playing field toward the already-wealthy even more than that's pretty inevitable. And that wealth-stratification makes the whole damn system unstable, even for the rich, even if they get the huge bailouts while claiming the poor and old and disabled are 'parasites' for not fitting into the wage-slave world and credit-debt-dependency that so many live with while being told 'Consume!'



I *don't.* What I hold against certain ideologies is people like you claiming false things, for one, and also trying to justify some notion of denying those chances, even for less-greedy-lives to others.

If you 'make it big,' congratulations, that doesn't entitle you to forever making it *bigger.* Not at the expense of others, or on the public tab, whether you in fact win or lose.




I *am* the snowball's chance in Hades.

No one said people have to be snowballs, without warmth in Hades, or held to braziers. (Yeah, by the way, both in Hades, various Hells, and the low end of 'market capitalism,' lack of 'liquidity' is often the very nub of the problem.

And, yes, when you're on the street yourself, you meet a lot of people who didn't 'win.' What you call 'handout,' if it's not billions more to the rich, ...Is what we call 'sharing.'

So by your own admission saying a rich person never paid you a salary you have never had a job. You've forever been on the public roles? Yet you say you made six bucks an hour. Who paid that to you? A poor person?

You've tried to start your own business?

And why is it always taking and taking? Couldn't a rich person have product/services that someone is willing to give money for? Why fault Bill Gates for having the forethought to develop an OS that people want to give him stupid amounts of money for? Don't want to make him richer it's your choice. Buy a Mac. Or use Linux.
My mechanic tunes/maintains my vehicles. I pay him his hourly rate plus parts and markup on parts. He's expensive. I still use him. Why? Because if something goes awry I know he will make it right. If I need him at 3 am he's there. I pay heavily for that but he's there. So what's the big deal?

Paying the same tax on a little? Like I said nothing would change from what people who make little to no money know pay.

Nesster, I've found the amount I can make and still keep some of it. I don't get any bigger because then I am working to pay the government. If the restriction wasn't there I could see hiring about 10 more people. And I pay a good wage without unions because I don't want good people. I want the best, and only the best.

[Ratmagiclady]

So by your own admission saying a rich person never paid you a salary you have never had a job. You've forever been on the public roles? Yet you say you made six bucks an hour. Who paid that to you? A poor person?

No, I'm saying that 'salaried position' and 'job' aren't synonymous, silly. Most working people punch time clocks. The only time *I* managed to be offered a salaried position, I'd been homeless with pneumonia as well as other worsening health problems, trying to fend off a violent dude just to be reachable by phone while both that dude and a family I'd been hiding from were both actively trying to tell the place that wanted to hire me that I didn't exist or had never been heard of, in the latter case so they could try to force me to become straight. Do you think that constituted some 'level playing field' or that a 'flat tax' would have helped? Righteous guy?

(A few bucks worth of amoxycillin, on the other hand, compared to over a decade of poverty... Or a safe place to live, or even not taking a chronic adrenal-related illness (*Probably* a result of Big Pharma messing with me and my sister through irresponsible hormonal stuff before we were even born) and exacerbating it with reliance on over-the-counter ephinephrine inhalers just to keep breathing... Whatever the ideology or tax rate, or percentage of what I don't make I could keep, ...those little glands above the kidneys aren't coming back, never mind going to let me 'work up from the mail room,' to maybe start using my brains for something before I'm sixty if I don't collapse on my feet every day and a half, ...not paying taxes on any work I can even *get* in an ever more controlled and corporately-regimnented world, when the able-bodied aren't employed even as Wall Street's back to record profits already... Well, that doesn't mean that regressive policies are going to anything to salve your indignance that 'People are lazy,' just cause they aren't 'winning' at a system you think isn't stacked toward the already-wealthy *enough as it is,* )

It's the *greed,* silly.

The system is out of balance. It decouples wealth from reality (and work) and well-being by ever-increasing *multiples.* Surprise, surprise, but *capitalism* has everything to do with *capital,* (not just 'income' and 'tax brackets' ) and when too much is in one place, it eats everything else around, and then itself. This is what's been happening for decades. It's a matter of degree, not 'absolutes.'

Nothing worse than a whining rich guy complaining about the poor supposedly stealing a piece of his next million. Or attacking everyone's personal character to justify regressive economic theories. (That seem to wonder why a corporate consumerist economy somehow doesn't have enough *customers who can spend.*)



That's among other things you're ignoring. Try again. Reading, this time. Before you use your ignorance to go after my character again.