2 Trillion dollaor hole in public pensions - Another pyramid scheme

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Zebo

Elite Member
Jul 29, 2001
39,398
19
81
They might if they thought it would cover it. But this is the fallacy being purported by the left, that taxing the rich will pay for all sorts of things.

It will barely make a dent in our debt. The left puts a spin on the rich to elicit a reaction and some are buying it. It's actually just that they can't stand that someone has more than they do.

It's a misguided kindergarten mindset.

Just look at those at the top on the left. Millionaires all. But they're different? Hah!

Talk about being manipulated. Like that's something only those mean righties would do.
Most rich people pay less than a plumber. Don't tell me about the BS income tax charts I'm not talking about w2 wages of semi wealthy Orthopedic surgeons who do indeed pay a lot... I'm talking options for 100M dollar CEOs taxed at 15% or a hedge funds managers whole salary taxed at 15% not to mention deductions, exclusions and exemptions working folk can't take advantage of. This ant right. I'd prefer a flat tax to so called graduated which it isn't if you have a half a clue.

Both issues need to be addressed taxes and spending.
 
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Jhhnn

IN MEMORIAM
Nov 11, 1999
62,365
14,681
136
They might if they thought it would cover it. But this is the fallacy being purported by the left, that taxing the rich will pay for all sorts of things.

It will barely make a dent in our debt. The left puts a spin on the rich to elicit a reaction and some are buying it. It's actually just that they can't stand that someone has more than they do.

It's a misguided kindergarten mindset.

Just look at those at the top on the left. Millionaires all. But they're different? Hah!

Talk about being manipulated. Like that's something only those mean righties would do.

Yep- there it is, the usual dance of the anti-tax zealot...

In 2007, the top 1% paid an average federal tax rate of 22.5% on 22.8% of all taxable income. In 1980, prior to Reaganomics, they paid 34.5% on 8.5% of all taxable income. As Zebo points out, top filers have myriad deductions and exclusions on their incomes, and they don't pay SS taxes on the vast majority of it, either- that's ~6.5% for ordinary wage earners. It's even more profound for the very top filers, who paid 17% on incomes averaging $263M in 2007.

Many claim residence in states where there is no income tax. They own a ranch in Texas, for example, where they spend a few weeks a year.

Meanwhile, they've offshored production of manufactured goods and many services, depriving the American economy and workers of income while increasing their own income. They also own the debt, and receive income from funds that would have been paid as taxes in a sane system. They created the need for more govt services and employment when they started paying foreigners rather than Americans, then flimflammed the electorate into borrowing the money to do it from them.

This has been an ongoing process for 30 years. The effects of compound interest over that period of time are profound on both sides of the debt equation.

Raising taxes at the top isn't the whole answer, obviously, but it's part of the answer, and is a necessity if we're to maintain any sort of social cohesion at all.

But, rave on, fools. We live in a world where work is a necessity for the vast majority, given that the vast majority have no capital, in a country rich in capital and increasingly scarce in work. That capital/work partnership was the basis of our greatness, the bedrock agreement implicit in the New Deal. If that deal is truly broken, and I think it is, then we need to find other ways to create the kind of cashflow in the domestic economy that allows us all to thrive, not just a very, very few to live at a stratospheric level of opulence.
 

StageLeft

No Lifer
Sep 29, 2000
70,150
5
0
Hyperinflation will cure that ails America.
These pensions are tied to inflation as are most government outlays.

I have seen the wealth of the rich in some pie chart. They should be taxed more but they cannot be taxed enough; they are only part of the solution. The spending HAS to come down.
 

rudder

Lifer
Nov 9, 2000
19,441
86
91
What is the rationale for giving anyone a pension?

Back in the day.... the government (states and Feds) had to sweeten the pot so people would work for the government for less than they would in private industry.

Of course Government salaries are growing... matching and in many cases exceeding private sector salaries... all the while the sweet retirement packages remain.
 

Mursilis

Diamond Member
Mar 11, 2001
7,756
11
81
A survey by the watchdog group California Foundation for Fiscal Responsibility found that some 15,000 Golden State public employees are knocking down $100,000 or more, while some 200, mostly police and fire chiefs and school administrators, are members of the $200,000-a-year-and-up club.

Stories are rife around the country of various pension hijinks by public employees. A Contra Costa Times article bemoaned the artistry of a retired local fire chief in San Ramon, Calif., who boosted his annual pension from $221,000 a year to $284,000 by getting credit in his final earnings for unused vacation and sick leave.

That's just amazing pay for some local administrator-type functionary. Similar positions at the federal level don't pay that well. Insane.
 

nick1985

Lifer
Dec 29, 2002
27,158
6
81
Back in the day.... the government (states and Feds) had to sweeten the pot so people would work for the government for less than they would in private industry.

Of course Government salaries are growing... matching and in many cases exceeding private sector salaries... all the while the sweet retirement packages remain.

Its really sweet, let me tell ya.
 

StageLeft

No Lifer
Sep 29, 2000
70,150
5
0
Its really sweet, let me tell ya.
It is now. I don't see the pensions carrying on, they are mathematically unsustainable. At least I think so. Once the boomers are starting to really die off in 20 years or so we'll know for sure.

That guy who bumped his salary with vacation making $24k a month, what a scam.
 

blackangst1

Lifer
Feb 23, 2005
22,914
2,359
126
Yep- there it is, the usual dance of the anti-tax zealot...

In 2007, the top 1% paid an average federal tax rate of 22.5% on 22.8% of all taxable income. In 1980, prior to Reaganomics, they paid 34.5% on 8.5% of all taxable income. As Zebo points out, top filers have myriad deductions and exclusions on their incomes, and they don't pay SS taxes on the vast majority of it, either- that's ~6.5% for ordinary wage earners. It's even more profound for the very top filers, who paid 17% on incomes averaging $263M in 2007.


:thumbsup:
 

Zebo

Elite Member
Jul 29, 2001
39,398
19
81
Rioting or Starvation is the only question.

Pensioners not receiving ANY payments following the bankruptcy of their city.
http://globaleconomicanalysis.blogspot.com/2010/03/bankruptcy-court-gives-prichard-alabama.html

How are people going to react as more and more Americans lose jobs, pensions, savings, homes, businesses while we bailout out Wall Street?

Am I the only one who sees socialism for rags and richest?

How long can Obama keep spending 2 Trillion more a year than comes in?

How long can we survive w/o an industrial base?

How many holes can we dig or roads can we build?

Can we all be bankers?

Just random thoughts...
 
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Zebo

Elite Member
Jul 29, 2001
39,398
19
81
More on the other Pyramid, social security. You know the totally sound SS till 2038 SS. Not so and boomers have not even hit yet, just wait. 1947 + 65 = 2012

SS to tap so called IOUs for 29 billion this year. (this really comes out of general budget, money was spent the second it arrived from massive surpluses years ago)
http://news.yahoo.com/s/ap/20100314...wN5bl9tb3N0X3BvcHVsYXIEc2xrA3NvY2lhbHNlY3VyaQ

Now the government will have to borrow even more money, much of it abroad, to start paying back the IOUs, and the timing couldn't be worse. The government is projected to post a record $1.5 trillion budget deficit this year, followed by trillion dollar deficits for years to come.

Almost everyone is out of money ..... cities, counties, states, banks, businesses and the Federal Gov't....Unsustainable. It's not the end of the world but simply the end of the world as you know it. Prepare.
 

StageLeft

No Lifer
Sep 29, 2000
70,150
5
0
Rioting or Starvation is the only question.

Pensioners not receiving ANY payments following the bankruptcy of their city.
http://globaleconomicanalysis.blogspot.com/2010/03/bankruptcy-court-gives-prichard-alabama.html

How are people going to react as more and more Americans lose jobs, pensions, savings, homes, businesses while we bailout out Wall Street?

Am I the only one who sees socialism for rags and richest?

How long can Obama keep spending 2 Trillion more a year than comes in?

How long can we survive w/o an industrial base?

How many holes can we dig or roads can we build?

Can we all be bankers?

Just random thoughts...
These public benefits have not been managed properly, like a poorly managed fishery. Like a fishery, there is a finite amount of money (or fish). If everybody tries to grab what they can as fast as they can the stocks fall apart and now there isn't even enough for anybody, so you close it down. If you were more sparing and less greedy to begin with (or stop demanding huge public pensions), then there is enough to sustain long term. Yet another example of the tragedy of the commons.

So you get what they have in Prichard, which is to go from full pension checks to none whatsoever, instead of a more reasonable lessening but still existing payment of checks.
 

Zebo

Elite Member
Jul 29, 2001
39,398
19
81
The money to pay these pension bets never existed, and never will. Could be managed by Buffet (with his returns) math don't work as stated in OP. But the real issue that's accelerating their demise is the slow destruction of tax base. The offshoring of our production that has destroyed both incomes and the tax base. Housing, welfare and borrowing staved it off for awhile till it crashed, followed by the banking crash, and now the government crashes are coming. Prepare.

Oh and those parasites called govt workers - no offense, they are needed, but it's fiscally true as they do not directly produce anything and their wages and benefits they can collect MUST inexorably track the actual productive output of the nation - will be SOL so long as we don't produce.



Shark is on life support.
 
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Jhhnn

IN MEMORIAM
Nov 11, 1999
62,365
14,681
136
Referencing govt workers as "parasites" is entirely unfair, Zebo. People take whatever jobs are available to them out of necessity. The creation of govt jobs as substitutes for private sector jobs, paying for them with borrowed money, is part and parcel of the deception necessary to advance the agenda of predatory offshored capitalism and looting by the financial elite. Offshoring and trickledown economics never could have been sold without it.

Pension promises are part of it, as well, whether that's govt entities or GM. As currently practiced, the whole thing is a way to move liabilities off the balance sheets, overstate profits so as to inflate executive compensation.
 

Zebo

Elite Member
Jul 29, 2001
39,398
19
81
You misunderstand what I meant by parasite. Gov't workers need a tax base to live and live off them. Like the cleaner wrasse on the shark above. Cleaner wrasse is a parasite but shark needs him too or he dies from disease. Anyway. Shark is analogous to a solid productive middle class tax base without which govt worker/cleaner wrasse dies. Unless we go all Soviet.
 

blackangst1

Lifer
Feb 23, 2005
22,914
2,359
126
Yep- there it is, the usual dance of the anti-tax zealot...

In 2007, the top 1% paid an average federal tax rate of 22.5% on 22.8% of all taxable income. In 1980, prior to Reaganomics, they paid 34.5% on 8.5% of all taxable income. As Zebo points out, top filers have myriad deductions and exclusions on their incomes, and they don't pay SS taxes on the vast majority of it, either- that's ~6.5% for ordinary wage earners. It's even more profound for the very top filers, who paid 17% on incomes averaging $263M in 2007.

Many claim residence in states where there is no income tax. They own a ranch in Texas, for example, where they spend a few weeks a year.

Meanwhile, they've offshored production of manufactured goods and many services, depriving the American economy and workers of income while increasing their own income. They also own the debt, and receive income from funds that would have been paid as taxes in a sane system. They created the need for more govt services and employment when they started paying foreigners rather than Americans, then flimflammed the electorate into borrowing the money to do it from them.

This has been an ongoing process for 30 years. The effects of compound interest over that period of time are profound on both sides of the debt equation.

Raising taxes at the top isn't the whole answer, obviously, but it's part of the answer, and is a necessity if we're to maintain any sort of social cohesion at all.

But, rave on, fools. We live in a world where work is a necessity for the vast majority, given that the vast majority have no capital, in a country rich in capital and increasingly scarce in work. That capital/work partnership was the basis of our greatness, the bedrock agreement implicit in the New Deal. If that deal is truly broken, and I think it is, then we need to find other ways to create the kind of cashflow in the domestic economy that allows us all to thrive, not just a very, very few to live at a stratospheric level of opulence.

A few things need to be made clear. First, about deductions. The envy crowd cries about all the deductions the rich have that the middle and poor dont. Well, no shit. They have more. If the middle and poor had qualifying assets, they, too, could (and WOUD!) take those deductions. So, red herring rebuttal.

Next, about SS. Of course its true they dont pay SS taxes on income above the limit; however, they also get a limited amount when they claim it. And why shouldnt they? Why is someone who paid in $50,000 over a lifetime more entitled to their SS than someone who paid $500,000? So yet another red herring rebuttal.

And lastly, the shipping out of production. Let me give you a hypothetical scenario that mirrors real life. Lets say youre a small business owner who has invented a widget. Let's say market trials show stong interest in your widget. Now, you have two choices (basically). Just to use round numbers for the argument's sake, lets say you discover a manufacturing plant here in the USA that will make your widgets, and it will cost you 60% of your cost to make. So, you sell your widget at $1, and it costs you $.60 right off the top. Next, you discover you can have your widget made in Mexico. But, it will only cost 15% of your cost to make.

I know offshoring is a very emotional issue for people. But I seriously doubt most people would pass up that kind of profit margin (read: money in THEIR pocket. Food on THIER table. Lifestyle for THEIR family.) in order to not offshore. Sure, maybe most on this board even would say that in a post. But at the end of the day, we all want a better life for ourselves and our family. And if it affected us directly having a net profit of $24,000/year vs $90,000/yr, I highly doubt most people would take the former.


Youre arguments are dubious at best, and lack real honesty. But rage on man if it makes you feel better.
 

Hacp

Lifer
Jun 8, 2005
13,923
2
81
Referencing govt workers as "parasites" is entirely unfair, Zebo. People take whatever jobs are available to them out of necessity. The creation of govt jobs as substitutes for private sector jobs, paying for them with borrowed money, is part and parcel of the deception necessary to advance the agenda of predatory offshored capitalism and looting by the financial elite. Offshoring and trickledown economics never could have been sold without it.

Pension promises are part of it, as well, whether that's govt entities or GM. As currently practiced, the whole thing is a way to move liabilities off the balance sheets, overstate profits so as to inflate executive compensation.

I agree that outsourcing jobs is a big problem, but the way to solve that problem is not by hiring government workers. You solve outsourcing by cutting taxes, getting rid of unions, cutting the minimum wage, and tearing down regulation. Make it cheaper for businesses to do business in the USA. Then, they won't move the jobs to India or China.
 

senseamp

Lifer
Feb 5, 2006
35,787
6,195
126
Yeah, you solve outsourcing by turning US into a cheap labor tax shelter banana republic that developed countries like to outsource work to.
 

Zebo

Elite Member
Jul 29, 2001
39,398
19
81
For awhile till the capital overlords find someplace cheaper. Mexico is loosing job to Vietnam right now. China to Malaysia and so forth. Race to the bottom with obscene wealth on the one hand and destitution and misery on the other. Not a world in which I'd like my kids to grow up in. Not to mention it wont support a pension system either.

The local/state/fed regs part I admit are too much though. They're intended to be in many instances to keep competition out.
 

Zebo

Elite Member
Jul 29, 2001
39,398
19
81
WAR! War what is it good for? Pensions absolutely Pensions!

Forget Iran...The Wars are about to begin here at home...
"We face a square-off between the public-sector unions and the taxpayers of the commonwealth."

http://articles.lancasteronline.com/local/4/249697

Wait till these pensions discover all their value is derivative of a 30 year growing Ponzi scheme of lending and spending. And what happens to that value as we run out of savings and banks starve credit and debt defaults at increasing rates.
 
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Fern

Elite Member
Sep 30, 2003
26,907
173
106
-snip-
Do you think it's reasonable to drastically slash rather modest pensions for elderly retired state and federal workers? Do you want Grandma to have to move in with you?

They are not "modest pensions", that's the problem. Did you not read the article?

The article didn't even mention the cost of the gold-plated HC insurance they also receive.

Fern
 

bfdd

Lifer
Feb 3, 2007
13,312
1
0
The times they are a-changin' brother. The only way I see to escape what's coming down the pike is to cash out, pay the taxes, renounce your citizenship and get out of Dodge.

I would never renounce my citizenship, but I have been thinking of getting the fuck out.
 

Jhhnn

IN MEMORIAM
Nov 11, 1999
62,365
14,681
136
They are not "modest pensions", that's the problem. Did you not read the article?

The article didn't even mention the cost of the gold-plated HC insurance they also receive.

Fern

Righties always find the most extreme examples, then claim they're universal. far from it.

As for blackangst1's post, the one thing righties simply refuse to acknowledge is that truly progressive federal income taxes are the only way to prevent runaway accumulation of wealth and plutocracy at the tippy-top. That's how capitalism works, and is the reason it needs to be managed, tamed, tempered. As a society, we haven't done that well at all beginning in the Reagan years, and we're starting to experience the effects of that mismanagement.

Innuendo wrt to deduction envy is really quite unbecoming, too... At some point or another, we need to recognize that deductions for mortgage payments, for example, need to have limits. Yeh, sure, I won't argue that it encourages homeownership, not a bad thing, but it's applied to people who really don't need any encouragement... who nonetheless get to deduct enormous payments from equally large incomes... and that applies to a lot of other things as well.

I think we also need to realize that all of us, other than the most whacked out anti-tax zealots, would probably be thrilled to death, or should be, if we were paying Pre-Reagan taxes on incomes of millions/year. I'm not greedy enough or uncharitable enough to think otherwise, but I'm apparently a bit Pollyanna-ish when it comes to that kind of stuff, looking at the way the financiers of right wing think tanks feel about paying any taxes at all...
 

Fern

Elite Member
Sep 30, 2003
26,907
173
106
Perhaps the perspective of a tax professional and academic can add some insight into this....

Yep- there it is, the usual dance of the anti-tax zealot...

In 2007, the top 1% paid an average federal tax rate of 22.5% on 22.8% of all taxable income. In 1980, prior to Reaganomics, they paid 34.5% on 8.5% of all taxable income.

Which is more, 22.5% of 22.8%, or 34.5 of 8.5%?

Statistics are great, except when they're not understood or used to mislead....

Yes, Reagan era tax law cut top rates, but also eliminated almost all deductions/write-offs available that top earners (or anybody really) took advantage of.

What was the result?

HIGHER taxable income and lower rates. Which results in a higher tax bill, high rates on a smaller taxable income or lower rates on a higher taxable income?

Reagan didn't cut taxes nearly as much as left claims. I know, I was doing tax returns for wealthy before, during, and after his term as President.

Because of the elimination of a slew of deductions, the % of taxable income of the wealthy increased dramatically just by virture of the deductions disappearing. It's simple mathematics (when one can remove the partisan "beam from thine eye").

As Zebo points out, top filers have myriad deductions and exclusions on their incomes, and they don't pay SS taxes on the vast majority of it, either- that's ~6.5% for ordinary wage earners. It's even more profound for the very top filers, who paid 17% on incomes averaging $263M in 2007.

He refers to incentive stock Options (ISO's). Yes, if the holding period is met, the LT cap gain will be taxed at 15%. People complaining about this fail to take into account a number of important things:

1. The employee/CEO is NOT given the stock, they must PAY for it. The price is equal to the FMV of the stock at the time of grant. If/when stock is just given (or even a grant) for less than the FMV it is immediately taxable as wages and goes on a W-2 - it is treated the same as receiving cash.

2. The top corporate rate is 35% (except for a little bubble that is higher so as to make the corp rate a flat 35% - i.e., they are recapturing the lower brackets), the top individual rate is 35%. So, if a CEO is paid $1 million how much does the government make?

The answer is zero. The corp gets to reduce it's taxes by $350k ($1M x 35%). The CEO pays in $350K. This nets the gov zero.

However, for ISO's the corp gets NO deduction. The CEO pays 15%. So, ISO's are a good deal for the gov, they net out $150K.

3. The exec must hold onto the stock he bought for at least a year. This means they are assuming some risk, if the stock price doesn't rise, or falls, they lose money.

The hedge fund manager 'loophole' he mentions can be blaimed on Sen Chuck Schumer (D) of NY. He has thwarted all efforts to have that closed, including those made under the Bush admin. IMO, this needs to be fixed, even Buffet, who benefits from it, agrees.

Many claim residence in states where there is no income tax. They own a ranch in Texas, for example, where they spend a few weeks a year.

It doesn't work like that. States have their own rules on how (tax) residency is defined. Merely owning a home in TX or FL, or some other state with no personal income tax, is insufficient. If you do have a home in one of those states, you better be there for most of the year, or lie about it etc.

Meanwhile, they've offshored production of manufactured goods and many services, depriving the American economy and workers of income while increasing their own income. They also own the debt, and receive income from funds that would have been paid as taxes in a sane system. They created the need for more govt services and employment when they started paying foreigners rather than Americans, then flimflammed the electorate into borrowing the money to do it from them.

The US, unlike most all other countries, taxes it's citizens on world-wide income. Moving your company to a foreign country will not get you out of US taxation, we have massively complicated rules most people aren't even remotely aware of. Yes, it can be moved and hidden, but if caught you get a free trip to a federal penal institute.

You cannot stop off-shoring, IMO, unless and until you repeal big chunks of the Bill of Rights. We have, naturally, the freedom to pursue commerce abroad.

Lefties throw a fit about not respecting the civil rights of some non-US citizen accused of terrorism, but then turn around and demand evil rich Americans have theirs stripped.

They also throw a fit about building walls to keep out illegal immigrants, but then want those same walls to keep the evil rich locked in.

This has been an ongoing process for 30 years. The effects of compound interest over that period of time are profound on both sides of the debt equation.

Raising taxes at the top isn't the whole answer, obviously, but it's part of the answer, and is a necessity if we're to maintain any sort of social cohesion at all.

But, rave on, fools. We live in a world where work is a necessity for the vast majority, given that the vast majority have no capital, in a country rich in capital and increasingly scarce in work. That capital/work partnership was the basis of our greatness, the bedrock agreement implicit in the New Deal. If that deal is truly broken, and I think it is, then we need to find other ways to create the kind of cashflow in the domestic economy that allows us all to thrive, not just a very, very few to live at a stratospheric level of opulence.

As a conservative, even I can agree that tax increase at the top may be necessary. However, we must be careful not to raise them too much or it becomes a disincentive, no economists deny this. Add the top US rate of 35%, plus Medicare at 1.45% and state & local income taxes, we're already close to the magic number of 50% in many areas of the country.

Government spending must be decreased. It has steadily risen since 1900 (from about 7% of GDP) to almost 50% of GDP now. Given the recession and increased spending by this Congress, I wouldn't be surprised if we have passed the 50% mark. That is unsustainable.

http://www.usgovernmentspending.com/us_20th_century_chart.html

Maybe what we really can't afford are the world's lowest tax rates on huge incomes

We do not have the "world's lowest tax rates on huge incomes", not by a long shot.

First, one should be aware that, IIRC, other than Switzerland we are the only country to have 'state & local taxes', therefor looking at our federal rate is incomplete.

Our corporate rates are, IIRC, the second highest in the world.

Nor is our personal rate that low. Yes, countries like France have a higher rate (50%), but takes 30% right off the top. What's 50% (tax rate) of 70% (income), yep an effective rate of 35%, same as our top rate. BTW: they also have other tax breaks we don't. Comparing tax rates among countries is not 'apples to apples' as many pretend.

Hope that helps,

Edit: Cliffs Jhhnn is wrong or misguided.

Fern
 
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