A 70% tax on income above $10 million; what do we think of this idea?

[ch33zw1z]

I don't disagree with anything of this, the first company I worked for after college had a pension program but you had to have started working their one year before I started to be eligible. Baby boomers don't realize how good they had it. Between rising costs of college, healthcare and the worsening of employee benefits millennial are really in rough shape going forward. Not to mention continued growth in income inequality making things worse and worse.

Circling back to the thread topic, this is why I'm totally fine with creating a new/higher tax bracket to try and help the middle class. I'm not sure if 70%/$10M is the right number but I agree with the principle.

Yea, I agree. It's shameful unless avarice doesn't cause you shame.

https://www.cnbc.com/2018/01/22/her...creased-compared-to-yours-over-the-years.html

 

[Chromagnus]

That's not really true. The only reason it works that way is because management has been free to outsource labor. As the population of the pension pool dries up the system is starved for funding. They also used pension promises in lieu of wage increases, knowing they couldn't deliver when the time came. It's not like they planned on sticking around until it happened, either. They're long gone, cashed out & retired. See ya, chumps.

Pensions depend on partial funding from working members of the plan & always will. They pay it forward to support retired members. I did it myself for decades.

Outsourcing and making problems they couldn't keep are things that I think of when I say they are "bad at math or don't listen to the people who are good at math". I don't think most businesses intentionally tanked their pension plans, they just made unsustainable promises. They thought they'd get "X%" return forever because the "market always goes up". They didn't listen to the people running the accounts when they said they should only expect returns of "Y". They thought their business would continue to grow and they'd have more people funding the pool in 10 years and not less.

It's too easy for businesses to choose aggressive projections for pension returns to make things look better in the short term and ruin things in the long term.

 

[zinfamous]

I agree with most of what you are saying but 401Ks have replaced pensions largely because pensions have proved to be unsustainable. Granted pensions are unsustainable because people are either bad at math or don't listen to the people who are good at math. Pensions just fundamentally don't work well because most people/companies fail to properly manage them.

At least 401Ks are honest about the fact that it's all built up on a gamble. Pensions just lied about it and guaranteed money they couldn't deliver.

But that's the point of the argument: Pensions only really proved unstable when that money was effectively removed from the plans and directly given to the CEOS. It was an intentionally self-fulfilling prophecy that didn't really have to happen, or, at least: was sold to the public as a monumental lie.

I don't think pensions could always be the answer--certainly companies like GM and Caterpillar and US Steel and whatever were always going to face a labor crisis eventually because that is just what has happened to labor regardless of this overhaul of our tax base and federal/private benefits system, but again if you encourage employers to keep that money within, rather than turn it directly over to the Feds, you end up with longer-sustained workforce that is able to actually continue participating in the economy, and perhaps we don't really worry about the rising costs of labor because it is internally sustained by employers that learn the benefit of keeping the company and its employees successful--rather than quarterly earnings so that he/she can float along on their guaranteed bonuses and restitution packages when their expected 3-5 year term is over because of a heroic defense of middling share-holder value all the while shedding labor and watching the company fold to better competition. But hey, decent quarterly earnings!

 

[zinfamous]

The stock market is a gamble. Everyone is completely free to not put their retirement in the stock market but if they do they are taking a risk. Pensions are also invested in markets and they got in trouble because they were essentially guaranteeing stock market returns that they couldn't deliver on. Both 401Ks and pensions gamble money on the stock market, I just think 401Ks are more honest about that fact.

On the bright side it is a gamble that in the long run has always gone up so it's still a smart gamble to make but there are plenty of examples of people that weren't smart and stayed too aggressive as they got older that got burned by the downturns.

Right, but the point that is missed is that those absurd guarantees could (and were) actually met by simply injecting annual surplus profits into the pool rather than send it direct to the feds. When the employers no longer have the incentive to do it, and are actively encouraged to now treat those ballooning profits as their own personal retirement plan instead (never the purpose of a corporation, by the way--not in any model of capitalism that was ever supposed to work), well, you certainly manage to force the point that you always wanted to make: Pensions will eventually fail once we insist that they must!

 

[zinfamous]

Outsourcing and making problems they couldn't keep are things that I think of when I say they are "bad at math or don't listen to the people who are good at math". I don't think most businesses intentionally tanked their pension plans, they just made unsustainable promises. They thought they'd get "X%" return forever because the "market always goes up". They didn't listen to the people running the accounts when they said they should only expect returns of "Y". They thought their business would continue to grow and they'd have more people funding the pool in 10 years and not less.

It's too easy for businesses to choose aggressive projections for pension returns to make things look better in the short term and ruin things in the long term.

You're right: I don't think they intentionally did it, they were just "gifted" a new golden system by the administration that they gleefully voted in. Of course when you're in that position and tasked with protecting shareholder value, you start to convince yourself that "hmm, yeah. I guess labor really is damn expensive. We need to put a handle on this because 5% growth year on year just ain't my favorite...I'd really like 15%...oh, we can do WHAT now?"

 

[Ken g6]

A higher income tax is good. But I like Warren's wealth tax better.

"I think when you spread the wealth around it's good for everybody." - Barack Obama

I agree with this, but I prefer to spread the wealth through capitalism when possible. I'd particularly like to add an amendment to Warren's plan for a non-refundable credit of the salary of each worker the wealthy person pays directly, capped at 4 times the poverty line per worker. This would help small businesses, for instance.

 

[Meghan54]

A higher income tax is good. But I like Warren's wealth tax better.

"I think when you spread the wealth around it's good for everybody." - Barack Obama

I agree with this, but I prefer to spread the wealth through capitalism when possible. I'd particularly like to add an amendment to Warren's plan for a non-refundable credit of the salary of each worker the wealthy person pays directly, capped at 4 times the poverty line per worker. This would help small businesses, for instance.

Unfortunately, true capitalism doesn't spread the wealth around as you can already see from our not-quite-so-true-capitalism system we have. The wealth just concentrates at the top, as it increasingly has since Reagan cut taxes and suckered the plebes with the "trickle down" theory of economics, something his VP called voodoo economics. The vast majority of wealth never comes back into circulation. If it did, we wouldn't have increasing concentration of the wealth of the nation like we're experiencing today. But that's a feature of unrestrained and uncontrolled capitalism......

 

[cytg111]

yeah, it's also weird how dependable, universal benefits like that suddenly vanished at the same time CEOs were able to increase their personal wealth by 10 and 20 fold, the general pension idea was replaced with the 401k, and then this whole sector called "finance" was created, essentially to siphon money at 1% and 2% at a time from that gigantic wad of cash that was now essentially required from employee pay-out to replace the "suddenly broken and now-impossible-to-fund pension programs for some reason." At least there was always the big bad union scapegoat to blame in defense of the new genius plan from the Ronnie Rayguns cabal. ---because when you look at how much employer money will suddenly be required to fund this vast, and for some reason totally important Finance sector to exist, it is accurate to hypothetically look back on a situation that actually didn't exist, and apply the new paradigm as an argument for why Unions are not sustainable. ....er, "were well on their way to bankrupting this country!" yeah, that's it.

Don't pay attention folks: math is always better when we can disingenuously misapply it to retroactively defend preposterously terrible ideas that never passed any kind of smell test from the beginning, and of course were not in any way under the same stresses to the system that we simply invented later as a means to "effectively" argue for their eventual necessity.

It's just how the current Tax theft plan works: write out a bunch of $10 checks to the rubes, make them think they are earning some kind of free money, but just balloon the deficit by another 300% or whatever, then use the catastrophic deficit situation several years later to argue that we need to spend less! oh and of course it's not our fault. etc. Same fucking tired and obvious song for more than 4 decades from the god damn criminal GOP.

Any day, Its gonna trickle down any day now.

 

[glenn1]

Right, but the point that is missed is that those absurd guarantees could (and were) actually met by simply injecting annual surplus profits into the pool rather than send it direct to the feds. When the employers no longer have the incentive to do it, and are actively encouraged to now treat those ballooning profits as their own personal retirement plan instead (never the purpose of a corporation, by the way--not in any model of capitalism that was ever supposed to work), well, you certainly manage to force the point that you always wanted to make: Pensions will eventually fail once we insist that they must!

Presuming roughly the same amount was being put into pension plans as is put into 401Ks now, why would pensions be more stable or "less likely to fail"? Having "the company be the fiduciary and custodian of a pooled bunch of retirement funds doesn't magically allow for better asset growth than having "self directed" plans controlled by the worker and invested in mutual funds would produce. No matter whether in the wrapper of a "pension" or 401k the basic problem of retirement funds basically tracking overall stock market growth would remain. The increasing lifespan of beneficiaries ensures their ongoing needs for retirement fund distributions would outstrip the accumulation and growth of funds set aside for retirement; if that gap needs to be made up somehow then why should that society-level problem be the exclusive problem of their former employers?

It's basically the same problem that social security faces. If a worker over his/her lifetime contributes amount A to their SS fund and the employer adds their share (amount B) and over time grows to be Amount C. Presuming the person survives long enough to collect benefits, the Amount C will be annuitized and the person will get a monthly annuity of X percentage of C. If the government does the calculation correctly then the aggregate of those annuity payouts for all workers will roughly match their lifespans. Corporations and pensions did roughly the same guesstimations. However now since people are greatly outliving those life expectancy projections, the amount of collected funds in SS/pension accounts is too low to sustain the payouts at those levels indefinitely with the accumulated funds. If you're the feds you can simply print more money or finance the payments via national debt, if you're a company with a pension fund deficit your company goes bankrupt to make up the difference? That makes zero sense from any lens; the economy isn't better off, the government isn't better off, even workers aren't better off. You can complain all day long "well the companies SHOULD have put more money into pension plans" but that doesn't change the current situation any more than complaining to a heart attack victim "you shouldn't have eaten all those cheeseburgers when you were younger," the heart attack isn't going to be fixed if you now put the patient on a starvation diet.

 

[IronWing]

Your take on the SS funding crisis is incorrect. If the percentage of GDP going to workers (and therefore subject to SS taxes) had remained steady over the past decades, there would be no SS funding crisis. The hyper-concentration of income accruing to the wealthy class (and not subject to SS taxes) drives the SS funding crisis. The hyper-concentration of income was the result of the deliberate policies of conservative politicians helping out their wealthy donors.

 

[glenn1]

Your take on the SS funding crisis is incorrect. If the percentage of GDP going to workers (and therefore subject to SS taxes) had remained steady over the past decades, there would be no SS funding crisis. The hyper-concentration of income accruing to the wealthy class (and not subject to SS taxes) drives the SS funding crisis. The hyper-concentration of income was the result of the deliberate policies of conservative politicians helping out their wealthy donors.

In this case you're overlooking the consideration that if they had gotten those higher wages then their SS account balances and thus SS payments would be higher also thus it wouldn't actually fix the problem at all. We'd still have to address the actuarial gap, just with different (higher) numbers in both the incoming and outgoing sides of the ledger.

Also if you're going to handwave away the actuarial problems caused by increasing lifespans as a function of "concentration of wealth" then I can likewise handwave it away by saying we're allowing the elderly to live too long and not killing them off Logan's Run style. Or by saying if we would actually prosecute employers for using illegal alien workers for below market wages then SS would be fine.

 

[Chromagnus]

Presuming roughly the same amount was being put into pension plans as is put into 401Ks now, why would pensions be more stable or "less likely to fail"? Having "the company be the fiduciary and custodian of a pooled bunch of retirement funds doesn't magically allow for better asset growth than having "self directed" plans controlled by the worker and invested in mutual funds would produce.

Theoretically speaking, if pensions were run perfectly (which they aren't) there would be some benefits to a large pool of investments for pensions versus 401Ks. As an individual ages and gets closer to retirement their investments should be moving into more conservative investments that have lower returns but are less risky. If you have a pension pool with a constant funding stream of younger employees cycling in there wouldn't be the need to move to more conservative investments and the long term gains should be higher than individual 401Ks.

Unfortunately pensions haven't been managed well so they don't work as well as they theoretically could.

 

[dainthomas]

I don't disagree with anything of this, the first company I worked for after college had a pension program but you had to have started working their one year before I started to be eligible. Baby boomers don't realize how good they had it. Between rising costs of college, healthcare and the worsening of employee benefits millennial are really in rough shape going forward. Not to mention continued growth in income inequality making things worse and worse.

Circling back to the thread topic, this is why I'm totally fine with creating a new/higher tax bracket to try and help the middle class. I'm not sure if 70%/$10M is the right number but I agree with the principle.

I started only maybe 4-5 years before my company got rid of their pension. New employees it's 401k only.

Dem candidates need to not only support the 70% marginal rate, but bundle it with getting rid of tax on SS. Basically undoing some of the worst things Ronnie did. How would old red staters be against that?

 

[dainthomas]

In this case you're overlooking the consideration that if they had gotten those higher wages then their SS account balances and thus SS payments would be higher also thus it wouldn't actually fix the problem at all. We'd still have to address the actuarial gap, just with different (higher) numbers in both the incoming and outgoing sides of the ledger.

Also if you're going to handwave away the actuarial problems caused by increasing lifespans as a function of "concentration of wealth" then I can likewise handwave it away by saying we're allowing the elderly to live too long and not killing them off Logan's Run style. Or by saying if we would actually prosecute employers for using illegal alien workers for below market wages then SS would be fine.

Blaming undocumented farm workers for SS problems instead of decades of congress stealing from the trust fund is precious.

Poor people aren't stealing your money, it's the ones TELLING you poor people are stealing your money.

 

[fskimospy]

Blaming undocumented farm workers for SS problems instead of decades of congress stealing from the trust fund is precious.

Poor people aren't stealing your money, it's the ones TELLING you poor people are stealing your money.

I never got the idea of ‘stealing from the trust fund’. The trust fund doesn’t exist and more importantly how could it exist? The trust fund as it is described is a collection of US treasury bills. What’s a treasury bill though? It’s an obligation by the US government to pay someone X dollars. In the case of the trust fund it’s an obligation by the US government to pay...the US government.

In the end our society has and will always have the capacity to support our elderly citizens (basically) based on the sum total of goods and services we as a nation produce in a year. You can’t game it and replace social security with 401(k)s, you can’t concoct an accounting fiction trust fund, that’s just life.

We will have a larger proportion of our population in retirement for a decade or two and that means we have to make a choice as to how to care for them.

 

[Jhhnn]

Your take on the SS funding crisis is incorrect. If the percentage of GDP going to workers (and therefore subject to SS taxes) had remained steady over the past decades, there would be no SS funding crisis. The hyper-concentration of income accruing to the wealthy class (and not subject to SS taxes) drives the SS funding crisis. The hyper-concentration of income was the result of the deliberate policies of conservative politicians helping out their wealthy donors.

Well, yeh, of course. It's been top down class warfare since Reagan. SS was a giant cash cow from then until recently enabling tax cuts at the top all along. Now that it isn't the people who benefited most from low taxes want to disown responsibility.

I mean, what way is there at present to honor the SS trust obligations other than with general fund revenues?

 

[Jhhnn]

We will have a larger proportion of our population in retirement for a decade or two and that means we have to make a choice as to how to care for them.

Given the way income has shifted to the top a lot of them will be rendered considerably poorer in the process. That truth underlies the discontent among Trump voters. When they measure overhead against future earnings in retirement they know they're screwed. And yet they've done all the things asked of them by the system.

 

[glenn1]

I mean, what way is there at present to honor the SS trust obligations other than with general fund revenues?

<shrug> The U.S. government owns millions of acres of land, we could monetize that to pay SS liabilities. It's correct though the "Social Security Trust fund" is basically an IOU of one part of government to another and at current the only funding source would be general funds (whether raised in taxes, borrowed in debt, or via additional money creation which is an inflation risk). Surplus SS deposits theoretically could have been invested in actual assets (like gold bullion, shares of publicly traded companies, etc) but that presents its own sets of problems that are likely worse than the Trust Fund (corruption, massive federal ownership of the private sector, mismanagement of assets, etc).

 

[Jhhnn]

<shrug> The U.S. government owns millions of acres of land, we could monetize that to pay SS liabilities. It's correct though the "Social Security Trust fund" is basically an IOU of one part of government to another and at current the only funding source would be general funds (whether raised in taxes, borrowed in debt, or via additional money creation which is an inflation risk). Surplus SS deposits theoretically could have been invested in actual assets (like gold bullion, shares of publicly traded companies, etc) but that presents its own sets of problems that are likely worse than the Trust Fund (corruption, massive federal ownership of the private sector, mismanagement of assets, etc).

The financial elite loves your idea.

 

[glenn1]

The financial elite loves your idea.

The financial elite realize that Uncle Sam doesn't have a coffee can hidden in the garage with several trillions of dollars in it to pay SS. You asked what other sources the Feds could use to pay SS liabilities and I gave one. That you dislike that answer on political grounds has no impact on the truth value of that answer.

 

[dainthomas]

The financial elite loves your idea.

Real estate scammers, energy/resource corporations and other members of the lootocracy would drool at the chance to get their mitts on public land for pennies on the dollar.

 

[IronWing]

The financial elite realize that Uncle Sam doesn't have a coffee can hidden in the garage with several trillions of dollars in it to pay SS. You asked what other sources the Feds could use to pay SS liabilities and I gave one. That you dislike that answer on political grounds has no impact on the truth value of that answer.

Taxing the crap out of the wealthy makes more sense to me.

 

[ivwshane]

Taxing the crap out of the wealthy makes more sense to me.

Or cutting the military budget.

 

[glenn1]

Taxing the crap out of the wealthy makes more sense to me.

And those funds from "taxing the crap out of the wealthy" go into (wait for it) the Treasury general fund. Great answer to the question "I mean, what way is there at present to honor the SS trust obligations other than with general fund revenues?" Is this you in the photo below?

 

[IronWing]

Or cutting the military budget.

On the spending side, I've got my list but spending cuts won't happen until spending hurts the people who matter (the wealthy). Making spending hurt the people who matter requires jacking up tax rates on the wealthy to cover spending. Spending will come down fast once that happens.