different point of view - Page 2

On January 23 2009 22:38 Baal wrote: Show nested quote + On January 23 2009 22:04 Uptown wrote: While I cant argue with your example of bringing up that clown monkey formerly known as the commander and chief, to say that it is a cakewalk to get in and cruise through these highly prestigious universities is an insult to the thousands of kids who legitimately grinded their tails off to attain success. For every empty skull that exits the doors of Harvard/Yale/etc, there are several hundred hardworking and capable individuals that come out with them. Baal I would be foolish to deny that there is plenty of legacy entrants and semi-"bribe" acceptants to these schools in the form of endowments (Whitman and Bloomberg giving 30Million+ comes to mind), to generalize the entire group of students at these institutions is simply going too far. As a successful poker player you obviously had to put in countless hours of work to get to the point you are, and no one should be able to take these accomplishments away from you, or diminish your abilites. However, to degrade the legitimate students at these places due to the select few who come into the spotlight for their idiocy and "cheating" ways is analogous to the lay man illegitimizing your accomplishments and hard work as a poker player because of the select few "SuperUsers" that exist. Blame the 'system' or the heirarchy within the academic institutions themselves who have decided that accepting these underqualified individuals would benefit the overall student body as a whole for one reason or another, but please reconsider your overarching judgement on the overwhelming majority of students who deserve what they have achieved and won through their own perseverance. Its not a walk in the park, but intelligent people will pass it withouth much trouble, like many people int his forums what im saying is that if you are lets say Daut, graduate from Harvard bla bla, u will do good, but you wont be the CEO of Cerberus, because you are not IN the club.

Ah. If taht's what you're saying, yeaaaaaaaaaaaaaaa I think I have to agree with you(or at the last, you'd have to defy huge odds against you). Add to this the issue of race and you'll have an even more retarded situation

While I don't know for a 'fact' whether such 'old boys clubs' exist (they probably do exist on the East Coast, but I'm so used to the West Coast mentality), I certainly can't deny their existence.

I guess the question then is, "how do you try to rectify this entrenchment of power" situation that you describe and detest, while fostering the creative power and entrepreneurship of the legitimate folks?

I own my own business and I paid over 30K in quarterly sales tax last month. I also pay a shitload in payroll tax, income tax, disability insurance, workers compensation insurance and a bunch of other things mandated by our government. Do I like paying taxes? Of course not. In fact, I pretty much take every measure to pay as little in taxes as possible. But I feel that CEO's letter is pure bullshit and I'm speaking from the same perspective here. In fact, I feel his whole argument is pretty much the rich man's excuse. If they reduce my taxes, I'm not gonna give my employees a raise or hire more people, I may use that money to start another business which would expand the economy, but it's just as likely that I'll move into a nicer apartment when my lease is up, or take a nicer vacation or take a trip down to AC, get a suite/8-ball/hookers and enjoy carnal pleasures.

I am in favor of an improved tax code that is highly targeted to encourage economic growth but much of what is proposed is really a tax cut for the rich disguised as a greater good. IMO, what this country needs is a more progressive tax code and and a sound fiscal policy based on a balanced budget. Let's be realistic here, government is gonna have waste and while I hope that they improve upon that, there is no way we will have a balanced budget if we start cutting taxes on the upper class. And I believe a balanced budget will do way more to spur economic growth than keeping capital gains taxes at 15%.

x a fucking 1000 on the OP.

I guess this guy is in the south caribbean now!

The crux of the issue is if you believe that productive people deserve to be more wealthy or not. If you believe this, then you should feel sympathy for the rich guy. He has been infinitely more productive in his life, as in net benefit produced to real people, than any of his employees.

On a side note, the vast majority of millionares are self-made. They become millionares through hard work for decades and being EXTREMELY frugal during the entirety of their life. The millionare is very rare that you'll see driving a foreign luxury car.

Anyway the guy is right at least that if you reward productivity, you get more, which makes everybody better off, and if you punish it, you get less, which makes everybody worse off. Regardless of what kind of distribution of wealth is fair, if both the rich and the poor lose it's a bad system. Even if the distribution is more fair then. I think excessive taxing does hurt everybody.

I've seen some people mention inheritance, seeming to think that if you've inherited your money you've got less right to it. Whenever I bring up the productivity argument, saying that rich people deserve the money in exchange for being productive for society, they say that not all rich people deserve their money, since some inherited it.

This is bollocks. The inherited fortune, after all, has already paid its productivity debt to society when it was first gathered. After that, it's spent by the rich guy, either on himself or on other people as he wishes. By what logic can you tax that fortune if the rich guy decides to give it to charity? By what logic then, if he gives it to his best friend? Or to his daughter? The question is not whether that daughter deserves the money, but whether the rich guy does, and if he does, he ought to be able to spend it however way he likes. If you tax inheritance money, you're not taxing the recipient as much you are taxing the dead guy, and this has all the same implications for productivity as other taxes.

Someone said "money attracts money." I take this to imply that you believe rich people aren't necessarily more productive, since they can just sit on their money lazily and it will attract more money all by itself. If you believe this, I don't think you understand quite how money attracts money. Money attracts money because money itself is productive. Consider the example in the letter.

A guy works hard for a decade to gather capital, depriving himself of any luxury, in order to start a company. Once he is successful, he makes more money than his employees. Imagine if the employees were willing to live like that guy for a decade, depriving themselves of all luxury, in exchange for a big paycheck after that decade. If employees were willing to do that, rich guys in the economy would be completely unnecessary. Everyone would just work for free and wait until they receive their paychecks a decade later. The employees aren't willing to do that, showing that money is productive. In the form of investments, it allows people to get paid now for work that is only useful in the future, enabling productivity in the long term.

The argument is similar for the millionaire, although not as obvious. Instead of spending one of his millions on charity or whatever else he finds important, he invests it into a business. He then waits a decade for that money, until eventually the paychecks come in. Because waiting a decade for your money is not someone ordinary folks are willing to do, the rich guys are crucial to the economy. Their money is productive, and they are compensated for it.

So in the end, you can make two arguments in defense of the rich guy. One is that it's fair for productive people to get paid more, and the other is that, regardless of your opinion about fairness, it's a sensible idea for productive people to get paid more, as you'll naturally get more productivity then (making everyone better off).

a fucking men

On January 23 2009 23:38 Fudyann wrote: The crux of the issue is if you believe that productive people deserve to be more wealthy or not. If you believe this, then you should feel sympathy for the rich guy. He has been infinitely more productive in his life, as in net benefit produced to real people, than any of his employees. On a side note, the vast majority of millionares are self-made. They become millionares through hard work for decades and being EXTREMELY frugal during the entirety of their life. The millionare is very rare that you'll see driving a foreign luxury car. Anyway the guy is right at least that if you reward productivity, you get more, which makes everybody better off, and if you punish it, you get less, which makes everybody worse off. Regardless of what kind of distribution of wealth is fair, if both the rich and the poor lose it's a bad system. Even if the distribution is more fair then. I think excessive taxing does hurt everybody. I've seen some people mention inheritance, seeming to think that if you've inherited your money you've got less right to it. Whenever I bring up the productivity argument, saying that rich people deserve the money in exchange for being productive for society, they say that not all rich people deserve their money, since some inherited it. This is bollocks. The inherited fortune, after all, has already paid its productivity debt to society when it was first gathered. After that, it's spent by the rich guy, either on himself or on other people as he wishes. By what logic can you tax that fortune if the rich guy decides to give it to charity? By what logic then, if he gives it to his best friend? Or to his daughter? The question is not whether that daughter deserves the money, but whether the rich guy does, and if he does, he ought to be able to spend it however way he likes. If you tax inheritance money, you're not taxing the recipient as much you are taxing the dead guy, and this has all the same implications for productivity as other taxes. Someone said "money attracts money." I take this to imply that you believe rich people aren't necessarily more productive, since they can just sit on their money lazily and it will attract more money all by itself. If you believe this, I don't think you understand quite how money attracts money. Money attracts money because money itself is productive. Consider the example in the letter. A guy works hard for a decade to gather capital, depriving himself of any luxury, in order to start a company. Once he is successful, he makes more money than his employees. Imagine if the employees were willing to live like that guy for a decade, depriving themselves of all luxury, in exchange for a big paycheck after that decade. If employees were willing to do that, rich guys in the economy would be completely unnecessary. Everyone would just work for free and wait until they receive their paychecks a decade later. The employees aren't willing to do that, showing that money is productive. In the form of investments, it allows people to get paid now for work that is only useful in the future, enabling productivity in the long term. The argument is similar for the millionaire, although not as obvious. Instead of spending one of his millions on charity or whatever else he finds important, he invests it into a business. He then waits a decade for that money, until eventually the paychecks come in. Because waiting a decade for your money is not someone ordinary folks are willing to do, the rich guys are crucial to the economy. Their money is productive, and they are compensated for it. So in the end, you can make two arguments in defense of the rich guy. One is that it's fair for productive people to get paid more, and the other is that, regardless of your opinion about fairness, it's a sensible idea for productive people to get paid more, as you'll naturally get more productivity then (making everyone better off).

terrible first line, i think everybody (or almost everybody) on the planet think that the productive deserves more.

Excesive taxing doesnt hurt everybody, again just look at Denmark. tax wasting is the problem.

in Denmark your taxes go for healthcare, student aids etc, in USA your taxes go to bail out chrysler and bank of america

On January 23 2009 22:49 TenBagger wrote: I own my own business and I paid over 30K in quarterly sales tax last month. I also pay a shitload in payroll tax, income tax, disability insurance, workers compensation insurance and a bunch of other things mandated by our government. Do I like paying taxes? Of course not. In fact, I pretty much take every measure to pay as little in taxes as possible. But I feel that CEO's letter is pure bullshit and I'm speaking from the same perspective here. In fact, I feel his whole argument is pretty much the rich man's excuse. If they reduce my taxes, I'm not gonna give my employees a raise or hire more people, I may use that money to start another business which would expand the economy, but it's just as likely that I'll move into a nicer apartment when my lease is up, or take a nicer vacation or take a trip down to AC, get a suite/8-ball/hookers and enjoy carnal pleasures. I am in favor of an improved tax code that is highly targeted to encourage economic growth but much of what is proposed is really a tax cut for the rich disguised as a greater good. IMO, what this country needs is a more progressive tax code and and a sound fiscal policy based on a balanced budget. Let's be realistic here, government is gonna have waste and while I hope that they improve upon that, there is no way we will have a balanced budget if we start cutting taxes on the upper class. And I believe a balanced budget will do way more to spur economic growth than keeping capital gains taxes at 15%.

This...

Bill O'Reilly said the "tax me less and ill produce more" in almost with the same exact words (and lots of poor ppl believe it ffs!), tax me less and ill give employment!... and we all know that O'Reilly is wrong in 100% of his beliefs, so there is no need to discuss this any further.

i believe in tax me less and i'll produce more but not tax me less and i'll give employment

where's the motivation to work if gov't takes over 50% of ur income

there's a reason why communism failed.

its human nature, face it, its embedded into our brains for hundreds of thousands years and we're not going to change it anytime soon

On January 23 2009 23:53 Baal wrote: terrible first line, i think everybody (or almost everybody) on the planet think that the productive deserves more.

I suppose, but a lot of people also believe that the unproductive deserve the money of the productive, and don't realize that this position is hard to reconcile with the above position. There's plenty of people who believe in egalitarian ideals.

Excesive taxing doesnt hurt everybody, again just look at Denmark. tax wasting is the problem. in Denmark your taxes go for healthcare, student aids etc, in USA your taxes go to bail out chrysler and bank of america

Excessive taxing hurts by definition. A lot of taxing doesn't necessarily hurt more than a little taxing, depending on what is done with the money. I agree that there is plenty of ways for the government to screw over the economy other than taxes. Spending tax money on things that hurt the economy hurt twice. First in the tax, second in the way it's spent. If you spend the tax money on things that are good for the economy, the taxes hurt far less. In this way a government with big taxes and big spending can damage the economy less than a government with small taxes and small spending, depending on how the money is spent.

For a tax to be a net benefit to the economy though, you have a pretty tough standard to meet. Taxes cause so much deadweight loss in the economy that you really need to spend the money well to make up for that. Some tax dollars may be well spent, but even if this is better arranged in Denmark than in the USA, I daresay that many taxes are still a net loss.

I think the "tax me less and I'll produce more" applies strongly to the entrepreneur type who must invest 100% of his energy for his start up to succeed. A higher return stimulates him to go for another start up, while a dramatically higher tax rate on his gains inevitably affects his desire to pull the long hours (for years) again, and will question whether it is truly worth it when 50% of his gains are lost.

However, I'm not sure this is the case for the the executives in established Fortune 500 firms. For this subset of the very wealthy, I somehow feel that the difference between a 30% tax rate and 50% tax rate on their income - at the very least - impacts their drive on a smaller scale than for the enterprising individual. I can't really express myself too eloquently on this suspicion, but I guess I'll leave it at "first impression"

========================
I think these are the issues that have come up in the two threads on LP thus far:

Are CEOs worthless?
- Some are, many aren't.

Should the CEOs be taxed more?
- If by taxing their personal income more, their drive to produce is diminished, there's an argument for not doing so. But there seems to be two subsets of "execs" who have vastly different "elasticities" (if you can call it that) between tax rate and work drive and it is difficult to come up with a "one size fits all" plan. Tax break for start up pple who create jobs? idk.

Is the 'old boys club' an issue?
Yes, but honestly what can you do about this? I cant dispute being "in the club" (as Baal says) is a huge factor in politics, but I personally do not know about what it is like for the corporate world on this front and cannot voice an opinion on it. I would like to believe that it is not the case, but for firms based in the Northeast, I wouldn't be too terribly surprised if instances of this existed.

Personal income tax brackets, Corporate Tax rates, Capital Gains Tax rates?
I know I'm opposed to a hike on the Capital Gains tax, but I'm not so sure I have a clear opinion for the other two. I know for a fact that the proposed adjustment of persona income tax brackets wont even reach 10% of what the Govt needs for that financial firm rescue budget, even when taxing the rich heavier, b/c there just arent enough of them around.

And I honestly don't know enough about Corporate Tax rate issues to give an informed opinion that actually has any meaning.

I agree with you guys in theory...

But in practical terms you guys really think it goes down like this:

Entrepreneurs see that capital gains tax goes up from 15% to 20% so they decide to work 33% less hard.

CEO sees his marginal income tax rate go from 35% to 39.6% so he decides not to work as hard.

In practical terms, in both scenarios, they are gonna work just as hard. We're not talkin bout the difference from capitalism to communism here, we're talkin bout a couple percent and it really isn't gonna make much of a difference IMO in the motivational factor that drives our ecomony. But it will make a difference in the rich man's wallet and it will make a difference in our national deficit.

let me correct myself,

it wont make much of a difference in the rich man's wallet, but it will make a huge difference in the poor man's wallet since the lost tax revenue will be shifted and the tax burden will fall on the middle and lower class.

correct me if I'm wrong b/c I'm not sure either, but isn't the gains tax scheduled to go far higher than 20%? I think the gains tax affects VC investment and general investment (and hence growth opportunities) rather than personal returns for an entrepreneur starting up a company. But when investors and investment institutions are faced with substantially more unfavorable rates (let's say it's increased to like 40%), I do think that a lot of high risk high tech start ups will have great difficultly finding capital aside from MAYBE angel money.

For income tax, let's say that federal, state, municipal, etc combined now brings the total income tax to say, 55-60%. While the entrepreneur will surely put everything he's got into his first endeavor and he makes $10Mil. But will he go for a 2nd shot in something completely different, given that he already has enough money, but knows that tons of it will be taken away? (even though he's still got the drive to create something enw from scratch again) I think in this situation, (which I believe is not a trivial one) the effect of a higher income tax rate is profound. I know a few people who either did or heavily considered, the option of spending less than half the year in the country so that they would not be taxed, because of reasons of this nature.

But I do concede that these are mostly hypotheses that are scribbled on paper, as you say.


What I do wonder, is whether there is or should be a way to increase the $ the govt has to work with, without having to deal with all these problems? Like, oh, say not make as many bombs?

On January 24 2009 00:07 JYang wrote: i believe in tax me less and i'll produce more but not tax me less and i'll give employment where's the motivation to work if gov't takes over 50% of ur income there's a reason why communism failed. its human nature, face it, its embedded into our brains for hundreds of thousands years and we're not going to change it anytime soon

The main reason why communism didnt work its because the government is too powerful, and corrupt.

But yeah you need incentive to work harder however paying the toilet scrubber less and the CEO more doesnt do the trick, ill put Denmark as an example again, taxing is ridiculous and i dont see people not motivated to work, its all about finding the balance.

The wealth distribution in wrong and im not advocating communism but rich people getting explonentionally richer and richer must be stopped, the Sam Waltons are hurting for the global economy.

Its better to have 560,000 small stores than having a Walmart devouring all competition... capitalism isnt perfect and it needs strict monopoly supervision and it does not.

On January 24 2009 01:46 Baal wrote: Its better to have 560,000 small stores than having a Walmart devouring all competition

why

On January 24 2009 02:04 TedHastings wrote: Show nested quote + On January 24 2009 01:46 Baal wrote: Its better to have 560,000 small stores than having a Walmart devouring all competition why

Obviously so we can all pay three times as much!

Edit: I should elaborate. So long as Walmart is devouring all competition, that means it's producing efficiently from the consumer's standpoint. That's a good thing, because it means we pay less.

Once Walmart starts taking advantage of it's monopoly position by raising prices, it won't be producing efficiently from the consumer's viewpoint anymore, and it will then be profitable for small stores to compete. There will be more stores.

On January 24 2009 00:22 Uptown wrote: I think the "tax me less and I'll produce more" applies strongly to the entrepreneur type who must invest 100% of his energy for his start up to succeed. A higher return stimulates him to go for another start up, while a dramatically higher tax rate on his gains inevitably affects his desire to pull the long hours (for years) again, and will question whether it is truly worth it when 50% of his gains are lost. However, I'm not sure this is the case for the the executives in established Fortune 500 firms. For this subset of the very wealthy, I somehow feel that the difference between a 30% tax rate and 50% tax rate on their income - at the very least - impacts their drive on a smaller scale than for the enterprising individual. (...) If by taxing their personal income more, their drive to produce is diminished, there's an argument for not doing so. But there seems to be two subsets of "execs" who have vastly different "elasticities" (if you can call it that) between tax rate and work drive and it is difficult to come up with a "one size fits all" plan.

The deadweight loss caused by a tax is more easily understood if you don't look at a single individual but if you look at the so called marginal producer. Let's take entrepeneurship as an example. The marginal entrepeneur is that person who ran the numbers, and just barely decided to go into entrepeneurship instead of getting a high-paying job or being an artist or a becoming poker player or whatever options are open to her. That person that is exactly on the edge, that's so close to deciding to do something else, even a miniscule change in the tax rate, you're going to lose that person. The less miniscule your change is, the more of these marginal entrepeneurs you're going to lose. They'll all be doing other things. So if the government conjures up a tax that makes it only slightly less attractive to start a business, you're going to lose lots of those marginal people that were close to deciding to do something else. And that's all lost productivity.

You can try to get creative with your tax plan to make sure only the "right" people shoulder the burden, but what usually ends up happening is that everyone pays part of the cost no matter who you're taxing. For example, if you follow politics, you see some people advocating that corporations be taxed more rather than "people." But what's going to happen if you tax a business, then that business is going to raise it's prices and it's going to share its costs with the consumers. It's very hard to work around this and even if you somehow succeeded in making a business not pass the tax on to consumers then quite a few would probably just close down. This is an example of business-consumer but the same principle is at work everywhere, tax burden is either going to be passed on or a lot of marginal agents in the taxed segment are going to decide to switch over to a less heavily taxed role.

On January 24 2009 01:46 Baal wrote: The main reason why communism didnt work its because the government is too powerful, and corrupt. But yeah you need incentive to work harder however paying the toilet scrubber less and the CEO more doesnt do the trick, ill put Denmark as an example again, taxing is ridiculous and i dont see people not motivated to work, its all about finding the balance. The wealth distribution in wrong and im not advocating communism but rich people getting explonentionally richer and richer must be stopped, the Sam Waltons are hurting for the global economy. Its better to have 560,000 small stores than having a Walmart devouring all competition... capitalism isnt perfect and it needs strict monopoly supervision and it does not.

The main reason why communism didn't work is because it does not in any way stimulate entrepreneurs. It could work if there was a way to encourage people to start a succesfull business, in other words switch to capitalism. However capitalism has its flaws aswell, namely the will to control the economy. Some things are just not in your hands. I am reading a very interesting book on this matter, "Econoshock". I must note that the book is in dutch, so it wont be much help to most of the people on this forum.

The thing is we have a huge economic shock which is hitting the world as we speak. We can not escape its effects so we are going to have to learn how to live with it. This economic shock was (according to the writer of the book) perfectly perdictable, so to me if these companys go broke then thats their fault. If they have to size down, well so be it they are succesfull in building up a flexible business. Hell, everybody will have to adapt to be able to prevail, so why shouldnt the corporations.

I do understand why the CEO in this case is writing this letter. He does this pure out of frustration, but he has to face the facts he is going to have to size down if he can no longer bear the costs of his endeavour. Again i say this, he is not alone in this situation. I think that (just as the writer of the book proposes) this i going to get a whole lot worse before it gets better. But when we recover from this crisis we will be stronger than when we went in it. I do see that this suggests that there isn't much of a bright future for curent entrepreneurs, but this is just the way the cooky crumbles.

I am still a student so maybe i got it all wrong, but i beleive in what i wrote down here. And i will do my very best to adapt to the comming situation. I am looking forward to your comments.