wiegie Posted August 15, 2011 Share Posted August 15, 2011 relevant to what you are getting at: the top 5% currently earn roughly 35% of reported income and generate roughly 60% of federal income tax revenue. in your mind, what exactly IS their "fair share"? Do these federal taxes include FICA and SS taxes or is it just "income" taxes? (I ask because what is really germaine to both sides' positions is the proportion of total government revenue that is generated by various groups along the wealth/income distribution.) Quote Link to comment Share on other sites More sharing options...
Azazello1313 Posted August 15, 2011 Share Posted August 15, 2011 Do these federal taxes include FICA and SS taxes or is it just "income" taxes? (I ask because what is really germaine to both sides' positions is the proportion of total government revenue that is generated by various groups along the wealth/income distribution.) you know the answer (my sentence was not vague on this point). you can find those numbers if you want to, but I gotta cry foul. let me try and illustrate why. FICA and SS are regressive taxes by design, and the benefits are even more regressive. the idea being that everybody pays in while they are working, and everyone pulls the benefits when they are not. the rich don't pay (much) more when they are working, and when they are not working, rich and poor alike all pull roughly the same amount. let's say the government passed a new program, where everybody, rich and poor alike, has to pay $5,000 a year into a fund....and then in 10 years, everybody gets a $6,000 per year payout. now that $5,000 per year tax is going to be shockingly "regressive" if you are inclined to view it in those terms. and if you considered it with the rest of the tax burden, it would make the tax burden look more regressive as a whole. but the important part is that the government benefit paid out 10 years later will be equally regressive. so the program doesn't affect income distribution at all, it just forces current "investment" in a later payout across the board. the primary justification for asking the rich to pay more taxes than the less rich is that they gain more from the government. they have more to protect from criminals or foreign marauders, they gain more from the enforcement of contracts and rules of commerce, and so on. this is a strong argument for requiring the rich to foot more of the tax bill than the less rich. but with SS and medicare and my theoretical forced investment scheme, the rich do not gain more than the less rich. if there is a specific regressive tax to pay for a specific regressive benefit, that benefit is not something the rich will experience more than the poor. you're obviously used to considering the tax side, whether such and such revenue-collecting policy makes the overall tax burden more progressive or more regressive. but I'll bet you never even specifically considered whether a policy was progressive or regressive on the benefit side, or whether some explicitly regressive benefit might dillute the moral justification for progressive taxation in the first place. FICA, in theory, essentially represents a forced investment in your own future. as such, it does not really deserve recognition as a contribution to the general welfare. Quote Link to comment Share on other sites More sharing options...
wiegie Posted August 15, 2011 Share Posted August 15, 2011 you know the answer (my sentence was not vague on this point). you can find those numbers if you want to, but I gotta cry foul. let me try and illustrate why. FICA and SS are regressive taxes by design, and the benefits are even more regressive. the idea being that everybody pays in while they are working, and everyone pulls the benefits when they are not. the rich don't pay (much) more when they are working, and when they are not working, rich and poor alike all pull roughly the same amount. let's say the government passed a new program, where everybody, rich and poor alike, has to pay $5,000 a year into a fund....and then in 10 years, everybody gets a $6,000 per year payout. now that $5,000 per year tax is going to be shockingly "regressive" if you are inclined to view it in those terms. and if you considered it with the rest of the tax burden, it would make the tax burden look more regressive as a whole. but the important part is that the government benefit paid out 10 years later will be equally regressive. so the program doesn't affect income distribution at all, it just forces current "investment" in a later payout across the board. the primary justification for asking the rich to pay more taxes than the less rich is that they gain more from the government. they have more to protect from criminals or foreign marauders, they gain more from the enforcement of contracts and rules of commerce, and so on. this is a strong argument for requiring the rich to foot more of the tax bill than the less rich. but with SS and medicare and my theoretical forced investment scheme, the rich do not gain more than the less rich. if there is a specific regressive tax to pay for a specific regressive benefit, that benefit is not something the rich will experience more than the poor. you're obviously used to considering the tax side, whether such and such revenue-collecting policy makes the overall tax burden more progressive or more regressive. but I'll bet you never even specifically considered whether a policy was progressive or regressive on the benefit side, or whether some explicitly regressive benefit might dillute the moral justification for progressive taxation in the first place. FICA, in theory, essentially represents a forced investment in your own future. as such, it does not really deserve recognition as a contribution to the general welfare. So, does all of this mean that the top 5% is responsible for 60% of all federal revenue or not? That is all that I was asking. Quote Link to comment Share on other sites More sharing options...
wiegie Posted August 15, 2011 Share Posted August 15, 2011 And now, concerning the regressive nature of SS and FICA benefits: Given your above analysis, you would then agree that right-wing attempts to cut entitlement spending represents (in overall terms) a regressive change that hurts poorer people much more than it hurts wealthier people... correct? Quote Link to comment Share on other sites More sharing options...
Azazello1313 Posted August 15, 2011 Share Posted August 15, 2011 (edited) And now, concerning the regressive nature of SS and FICA benefits: Given your above analysis, you would then agree that right-wing attempts to cut entitlement spending represents (in overall terms) a regressive change that hurts poorer people much more than it hurts wealthier people... correct? well let's see. reforming entitlement spending will primarily redistribute wealth from the old and middle aged (who have been promised benefits far in excess of what their contributions can sustain) to the young. or more accurately, it will somewhat blunt the massive redistribution in the opposite direction represented in current law. so, to answer your question, I guess we have to ask which age groups are wealthier? Edited August 15, 2011 by Azazello1313 Quote Link to comment Share on other sites More sharing options...
westvirginia Posted August 16, 2011 Share Posted August 16, 2011 So, does all of this mean that the top 5% is responsible for 60% of all federal revenue or not? That is all that I was asking. wedgie, you know the answer, as az indicated, It's INCOME TAX revenue. It doesn't include cap gains (which is almost entirely footed by the wealthy) or FICA-funded programs, which, as was also indicated, are regressive with both monies in and monies out. Quote Link to comment Share on other sites More sharing options...
The Irish Doggy Posted August 18, 2011 Share Posted August 18, 2011 Here we go again.... Quote Link to comment Share on other sites More sharing options...
CaP'N GRuNGe Posted August 18, 2011 Share Posted August 18, 2011 Once again I love how our efficient markets now have human emotions built into them that allows such violent 1 day swings. What really changed in the world from 24 hours ago? Quote Link to comment Share on other sites More sharing options...
Avernus Posted August 18, 2011 Share Posted August 18, 2011 Once again I love how our efficient markets now have human emotions built into them that allows such violent 1 day swings. What really changed in the world from 24 hours ago? planetary alignment and yesterday was great for me, today not so much...24 hours can make all the difference in the world... Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted August 18, 2011 Share Posted August 18, 2011 Once again I love how our efficient markets now have human emotions built into them that allows such violent 1 day swings. What really changed in the world from 24 hours ago? Exactly. It's just f'n stupid. Quote Link to comment Share on other sites More sharing options...
MikesVikes Posted August 18, 2011 Share Posted August 18, 2011 Maybe we should start another topic called Stock Market Didn't take a beating today and pin these two up on the top. Or just pin the one in effect for the day. Quote Link to comment Share on other sites More sharing options...
SEC=UGA Posted August 18, 2011 Share Posted August 18, 2011 Can we start one called "My wife took a beating yesterday"? Or, maybe one for Taz called "I took a beating walking home last night". Sorry, Taz, it was there. Quote Link to comment Share on other sites More sharing options...
Brentastic Posted August 18, 2011 Share Posted August 18, 2011 Anyone still buying the dips Quote Link to comment Share on other sites More sharing options...
Big Country Posted August 18, 2011 Share Posted August 18, 2011 (edited) Dollar Cost Average my friend. Too risky to time it. Stay the course What should you do about the latest stock market volatility? Nothing at all, according to a recent survey from Fidelity Investments. The mutual fund giant’s just-released report shows that people who maintained a long-term savings and investing strategy are emerging as clear winners from the 2008-09 downturn. This evidence is good to keep in mind as you’re reeling over the latest market downturn. The Fidelity survey shows that 401(k) plan participants who maintained their equity allocation in their 401(k) accounts during the most recent downturn now have the largest increase in their account balances: Plan participants who dropped their equity allocation to zero between October 1, 2008 and March 31, 2009 and kept it there experienced an average 2 percent increase in their 401(k) account balances through June 30 of this year. Investors who changed their equity allocation to zero but returned to some level of equity investment after the downturn showed an average increase in their account balance of 25 percent. The clear winners were the investors who maintained their allocation to stocks during the above period; they now show average account balance increases of 50 percent. The same survey shows that 401(k) participants who continued contributing during the downturn experienced average account increases of 64 percent, compared to average account increases of 26 percent for investors who stopped contributing completely. So if you’re worried about the latest stock market volatility, the message is quite clear: Maintain your asset allocation, and keep contributing to your 401(k) plan. This message is consistent with recent posts by CBS MoneyWatch bloggers Allan Roth and Larry Swedroe. Of course, this advice is easier said than done, and you often need a strategy to help you stay the course. Here are some ideas: Invest in a balanced mutual fund that automatically rebalances your investments for you, selling stocks at highs and buying at lows. One example is the Vanguard Balanced Index fund. Then vow to stay invested during any market downturns, knowing that you have a good strategy in place. If you’re near retirement, or already retired, invest the next three to five years’ worth of withdrawals in ultra-safe vehicles to cover your living expenses. Examples could include CDs, as suggested by Allan Roth. This gives you the assurance that you can wait out stock market fluctuations with your remaining retirement investments. Don’t read the latest financial news or check your accounts daily. Better yet, laugh at the stock market craziness. So click off the latest bad investing news and go for a walk. Better yet, do something even more important: Call a friend you haven’t talked with in awhile, visit your kids or grandkids, or just get out and enjoy life. That’s a much better choice than worrying about your money. Edited August 18, 2011 by Big Country Quote Link to comment Share on other sites More sharing options...
Brentastic Posted August 18, 2011 Share Posted August 18, 2011 Stay the course So the industry leader in financial management and retirement accounts thinks everyone should stay the course - not too surprising. They need people to keep dumping money into their portfolios to stay profitable. And just because a given strategy worked in the past, doesn't mean it will continue to work in the future. For anyone who believes we're just in another correction, then by all means, keep dollar cost averaging your investments - it's a great strategy in a bull market. The reality, however, is that we're in a major bear market. So if you're like me and you think a global depression is in the works, then you should not follow their recommendation of 'staying the course'. 2008 was the first wake-up call that something is not right in our financial system and it was the 1st major leg of a deepening bear market. The next leg of the bear market (which has already begun, btw) will most certainly keep the market down for several years. I think there will be a tremendous buying opportunity in about 5-10 years for those who are preserving cash now while the market cleanses itself. Buying now is buying at the top of a decades-long bull market that must reset. The run up from the Mar 09 lows never reached the peak of 2007 - the bigger trend is DOWN. And if you look historically at the market, you can see this is no ordinary bull market correction. This is full-on BEAR MARKET. Buyer, beware. Quote Link to comment Share on other sites More sharing options...
MikesVikes Posted August 18, 2011 Share Posted August 18, 2011 Anyone still buying the dips Quote Link to comment Share on other sites More sharing options...
Brentastic Posted August 18, 2011 Share Posted August 18, 2011 Noooo, not you, Mike. I thought you were mostly cash?? Quote Link to comment Share on other sites More sharing options...
bushwacked Posted August 18, 2011 Share Posted August 18, 2011 I can always tell how the stock market is doing each day based on how many posts Brent has in here each day. Quote Link to comment Share on other sites More sharing options...
Brentastic Posted August 18, 2011 Share Posted August 18, 2011 I can always tell how the stock market is doing each day based on how many posts Brent has in here each day. What's the formula for that? 3 posts (now 4) and a DOW drop of 419 pts? Quote Link to comment Share on other sites More sharing options...
bpwallace49 Posted August 18, 2011 Share Posted August 18, 2011 What's the formula for that? 3 posts (now 4) and a DOW drop of 419 pts? Day aint over yet . . . . Quote Link to comment Share on other sites More sharing options...
MikesVikes Posted August 31, 2011 Share Posted August 31, 2011 Link We're in the black for the year. Quote Link to comment Share on other sites More sharing options...
CaP'N GRuNGe Posted August 31, 2011 Share Posted August 31, 2011 My 401k as of yesterday is down 1.2% on the year. And Brent, if we are in this Bear market and I've got 30 yrs to go until I retire then I'm fine buying cheaper and cheaper stocks for a while. I tried the whole timing thing last year, sort of, and it didn't work for me as I didnt get back in in time. (I got out in the flash crash because I wanted to preserve my funds in the short term as I needed a chunk for a loan to help buy a house. By the time I got back in I lost out on a lot of appreciation.) Screw it. Dollar cost averaging for me. Quote Link to comment Share on other sites More sharing options...
bushwacked Posted August 31, 2011 Share Posted August 31, 2011 Anyone still buying the dips It won't be long now. Quote Link to comment Share on other sites More sharing options...
MikesVikes Posted August 31, 2011 Share Posted August 31, 2011 (edited) Noooo, not you, Mike. I thought you were mostly cash?? Well the Dow is up 780 from the day of this post. Edited August 31, 2011 by MikesVikes Quote Link to comment Share on other sites More sharing options...
The Irish Doggy Posted August 31, 2011 Share Posted August 31, 2011 Meh. Might take a dive if the market doesn't like was Bernake has to say next month. I try not to get too worked up about +/-5% fluctuations from where I bought a couple weeks ago (i.e. short term). Hopefully, next summer, 5 summers, and 30 summers from now, I'll be happy. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.