View Full Version : The Mitt-Lefty Paradox of taxation
Interesting article (http://www.cnn.com/2013/01/25/opinion/mccaffery-mickelson-taxes/index.html?hpt=hp_c1) about how we tax in this country. Essentially, it talks about the downside of taxing work, rather than wealth or spending.
It's the story of two multimillionaires: Mitt Romney, who has an effective tax rate of 14% and who has to bump it up for public perception by not taking charitable deductions; and Phil Mickelson who earns his keep by golfing and thereby has to pay at a tax rate of 60-65%. Not that we are crying for Phil, but the article also talks about how this system keeps the working poor in poverty.
Consumption taxes are fine, but the author doesn't demonstrate a very good understanding of our tax system
There is a growing sentiment that the progressive tax rate is the largest single road block to building wealth and the largest boon to the current aristocracy that could be created. The idea is that the uber-rich don't have much income that gets taxed. They have appreciating assets which are only subject to taxes if sold, so they never sell. They receive dividends which are taxed at a low rate (and because most of us depend on dividends for retirement it needs to stay that way). Like anyone else they take advantage of whatever write offs are available. What they usually don't do is take a large salary that is subject to the high end of the tax tables.
For example, Warren Buffett, the poster boy for 'tax reform', takes a salary of $1 per year. He has that little $50B nest egg to fall back on if he needs to so has no need for a taxable salary so nothing in the progressive tables will hurt him even if the top rate goes to 99%. BTW, nobody ever paid 95% back when the rates went that high, but that's another thread.
Where it hurts is people on their way up. The business owners and executives who need income to build their assets. It's the only way they can get to a higher level. The progressive tax rate slows or stalls their climb every time. I won't go so far as saying the super rich are trying to lock the door to the clubhouse, but there is no incentive for them to want to change anything. I think Mr. Buffett's stand is pure show, a nice PR move. The current hikes on incomes that are no where near the top shelf will not result in enough income to make a dent, but it will work to slow down one class of folks that actually could make good things happen.
How do you tax wealth? Would it be a one time thing or would you tax the same wealth each year until it was completely absorbed by the government?
How do you tax wealth? Would it be a one time thing or would you tax the same wealth each year until it was completely absorbed by the government?
It's not *your* wealth anyways, Alan, it's *society's* wealth, you are just its temporary steward.
It's not *your* wealth anyways, Alan, it's *society's* wealth, you are just its temporary steward.
Ahhh, now I get it.
How do you tax wealth? Would it be a one time thing or would you tax the same wealth each year until it was completely absorbed by the government?
You tax income. Period. If that income comes from dividends, or from digging ditches, you tax it at the same rate. Period. Income is income.
Pretending you don't know what people are talking about when they talk of fair taxation just makes a person look dense, and totally clueless. Kind of like Romney. who lost. Largely because of his cluelessness, and clumsiness in understanding how the world works.
Now Alan, do you really not understand this very basic, and incredibly simple principal? Really?
You tax income. Period. If that income comes from dividends, or from digging ditches, you tax it at the same rate. Period. Income is income.
Pretending you don't know what people are talking about when they talk of fair taxation just makes a person look dense, and totally clueless. Kind of like Romney. who lost. Largely because of his cluelessness, and clumsiness in understanding how the world works.
Now Alan, do you really not understand this very basic, and incredibly simple principal? Really?
Hi Peggy, long time no see.
Did you read the OP? Did you see the part about "the downside of taxing work, rather than wealth or spending"? I know it might be asking a lot to expect everyone to follow the flow of a discussion, but I'll bet you could do it if you tried.
What are your thoughts on federal taxation? Should it be progressive or flat? How many times should the same dollar be subject to taxation? Is it a responsibility of all citizens or should the entire burden fall on specific groups?
Being dense (and apparently clueless), it would help if you spelled it out for me.
Well Alan, since you are clueless, I'll talk real slow for ya. Taxing someone who has to actually work for their income more than taxing someone who just sits back and lets it roll in (dividends) is not fair. If both examples, like the golfer and Mitt in the OP example, both make 1,000,000, why should the golfer have to pay a higher tax rate than Mitt, who doesn't have to swing a club, or shovel, or 'hash' to 'earn' his income?
Talking about 'double taxation' is a diversion. If they are taxed 'double' on the same dollar, then they are also profiting double on the same dollar. No one is filtering their money through a corporation just so they can pay MORE on tax. They do it to pay less, per Romney.... The end result is the story. Romney paid 13% tax on his income, only after he fiddled it to pay a higher rate, as it turns out, and the golfer paid more. Much more. I'm pretty sure if Romney were to release the past 10 years of tax returns we would see just how little he actually pays, (which, of course, is why he refused to release those forms)
The American people see through this BS, which is why Romney lost....but keep talking. Keep the 'faux outrage' going, here and on Fox/Limbaugh. I kind of like the democrats having the White House. All we really need to do now is stop the dishonest gerrymandering of districts and voter suppression (now they want to tinker with the electoral college). Desperate people doing desperate things!
Why it never occurs to the right to just craft an agenda that actually serves the people is beyond me...but hey, keep it up republicans.
Yossarian
1-25-13, 10:54pm
If they are taxed 'double' on the same dollar, then they are also profiting double on the same dollar.
Can you explain that? How does one profit double on the same dollar of income?
Taxing someone who has to actually work for their income more than taxing someone who just sits back and lets it roll in (dividends) is not fair. If both examples, like the golfer and Mitt in the OP example, both make 1,000,000, why should the golfer have to pay a higher tax rate than Mitt, who doesn't have to swing a club, or shovel, or 'hash' to 'earn' his income?Unfortunately, this is a matter of morality, something that each person can decide to set aside for themselves, to rationalize that which advantages themselves at the expense of those more in need of such advantages, if they so choose. To truly appreciate what you're saying, it requires placing one's self as a member of the whole, rather than conceptualizing one's self as superior to "the little people". All someone needs to do to side-step the implications of a moral definition of fairness is define themselves in this latter way, and shape their world-view around some image that rationalizes the promotion of one's own desires while marginalizing the abject needs of others. Such a corruption of the relative primacy of "desires" versus "needs" could readily justify, for example, the transgressor's dogs eating better than other humans in their community, though that's admittedly an extreme example.
Talking about 'double taxation' is a diversion.Perhaps. I think of it and similar rhetoric as a rationalization for refusing to internalize and acknowledge the ramifications on others of one system versus the other. I think a diversion must be conscious, but most of the time such rationalizations aren't, and, rather, are crafted because their absence would invariably tarnish the self-image of those who support the more regressive system.
A progressive system leaves more people able to pay for their own abject needs. A regressive system leaves more wealth in the hands of the wealthy, and leaves more poor people without the means of surviving without additional assistance. A progressive system, which most definitions of morality define as fairer, supports best that idea of a society of citizens working together at all levels of society to move society forward as a whole. A regressive system supports best that idea of a society of puppet master using lesser humans to figuratively turn the cranks of the machine that lifts the puppet masters higher and higher. If you are inclined to advancing your own desires regardless of the impact on the ability of others to afford their own survival, then you'll adopt a rationalization to justify your choice.
Romney paid 13% tax on his income, only after he fiddled it to pay a higher rate, as it turns out, and the golfer paid more. Much more. I'm pretty sure if Romney were to release the past 10 years of tax returns we would see just how little he actually pays, (which, of course, is why he refused to release those forms)I think this is a myth. The best indications I have seen indicate to me that Romney only sought to shield one year's tax forms from publication, 2009. My evidence of this is that Mitt Romney ran for President in 2008, and if he had been nominated would have had to reveal at least a couple of years worth of taxes, 2007, 2006, ... The 2009 tax forms would have showed whether the Romneys shielded themselves from prosecution for tax evasion through an amnesty offered that one tax year (http://www.nytimes.com/2011/09/16/business/amnesty-program-yields-millions-more-in-back-taxes.html).
The American people see through this BS, which is why Romney lost....Sorry peggy, but I think this is wishful thinking, as stated. 47% of the American voters voted for Romney. A great number of them almost surely did not see through the BS, and (either through being manipulated or through self-deception) have and will continue to shield themselves from the understanding that would pierce the BS. And while it is invariably true that many others did see through the BS, they still voted for Romney because the see themselves exploiting the advantages that reactionary world-view affords those with wealth, and rely on rationalization as I indicated above to side-step the negative aspect of supporting a system that feeds their own discretionary desires at the expense of the abject needs of others. The point is that it isn't enough to point out the manipulations, deceptions, rationalizations and diversions; there may very well be enough people who's definition of morality is such that the impact of anything on people other than themselves and their own family and friends is of no significant importance.
And there is every indication that that trend is accelerating. One of the most insidious aspects of reactionary perspective is that it rewards doubling-down on itself. The more such things make it more difficult for more people to follow-along with those benefiting from society's prosperity, the more those who are facing that increasing difficulty are motivated to rationalize the measures they support that they see will foster their own comfort and luxury even at the expense of others' abject needs. For example, when management makes competition more cut-throat in the office, such as by doing away with team incentives and replacing them with individual incentives, the most aggressive self-promoters increase their rationalization of offensive actions against others, stealing each other's leads, throwing each other under the bus at status meetings, etc. And going back to what I said about rationalizations, there are many who tout the benefits of such a system, by hardening themselves against having to face and internalize the negative ramifications of such a system on people. If you have a chance to hear someone defend such a system, watch how deftly they avoid humanizing those harmed by the system.
You tax income. Period. If that income comes from dividends, or from digging ditches, you tax it at the same rate. Period. Income is income.
But that experiment has already failed peggy. By taxing the wrong thing (income aka work) the heaviest burden is placed on the people who can least afford it. And you can't tax "wealth" because the only way to accomplish that is through de facto confiscation. I also think the tax RATE of individuals is a red herring. The progressive rate is an attempt to move the burden up the scale, but it doesn't work because the working poor can't even afford the lowest rates and the heaviest burden is placed on those who are producing at a high level. Whether you like high earners or not we need that kind of production to maintain our society's lifestyle.
The notion of taxing spending, rather than earning, is interesting. Sure, the top of the food chain could figure out a way to purchase their BBJ's in Mexico to avoid it, but overall there could be a lot of benefits from this kind of shift. It might be worth a closer look.
You tax income. Period. If that income comes from dividends, or from digging ditches, you tax it at the same rate. Period. Income is income.
Pretending you don't know what people are talking about when they talk of fair taxation just makes a person look dense, and totally clueless. Kind of like Romney. who lost. Largely because of his cluelessness, and clumsiness in understanding how the world works.
Now Alan, do you really not understand this very basic, and incredibly simple principal? Really?
So I take it, based on this very basic and incredibly simple principal, you'd be in favor of abolishing estate, excise and property taxes?
I am hardly the tax expert, but one difference I see between the likes of Romney and Lefty is income from wages earned and income from dividends and capital gains. While the income from wages is indeed progressive, the conservatives actually won a huge victory with the new tax laws which made the bush tax cuts on dividends and capital gains permanent. I see this system as indeed favoring the wealthy. The average mid-class American is only marginally invested in stocks and business ventures that would give lower taxed dividend and capital gain income relative to the wealthy. The conservatives, including Mitt, proposed closing some of these tax loopholes to increase revenue but unfortunately never came up with the specifics that might have expedited this.
The concept that progressive personal income tax rates stifles economic prosperity just doesn't fly with me. The rates on higher incomes are at historic lows and times of higher tax rates for the wealthy have gone hand in hand with times of economic prosperity. What does stifle growth is the burgeoning federal debt and the interest burden on that debt. The only practical way I see to reduce debt and balance the budget in the balanced approach of spending reductions and tax increases. This would help to preserve the integrity of SS and medicare, and also provide income for infrastructure improvements and sustainable energy development. While the concepts of a flat tax and huge military cuts are enticing concepts, practically speaking I just don't see these happening. What seems more likely to me is the closing of tax loopholes that mostly favor the wealthy.
Actually, Lefty is from California, where they recently achieved a balanced budget. And state tax increases were a big part of that.
But that experiment has already failed peggy. By taxing the wrong thing (income aka work) the heaviest burden is placed on the people who can least afford it. And you can't tax "wealth" because the only way to accomplish that is through de facto confiscation. I also think the tax RATE of individuals is a red herring. The progressive rate is an attempt to move the burden up the scale, but it doesn't work because the working poor can't even afford the lowest rates and the heaviest burden is placed on those who are producing at a high level. Whether you like high earners or not we need that kind of production to maintain our society's lifestyle.
The notion of taxing spending, rather than earning, is interesting. Sure, the top of the food chain could figure out a way to purchase their BBJ's in Mexico to avoid it, but overall there could be a lot of benefits from this kind of shift. It might be worth a closer look.
First of all Gregg, you are trying to deflect and misdirect again by saying 'taxing wealth'. No one is talking about confiscation, and you know that. Please don't pretend ignorance. Income is income. Whether that income comes from investments, or flipping burgers, it is still income (that which you did not have at the start of the year and has come into your possession during the year---does that make it more understandable? Do I REALLY need to explain what income is?)
bUU is right about that. Some seem to see themselves, and their income different. Kind of like gifts from god, or their personal right, and not income, really (a dirty word!) therefore they are above the whole tax/income thing. That's for the little people.
You say the tax system we have has failed because the poorer pay more percentage wise. Well, duh! That's the problem. If it were to actually work, you know, ALL income taxed in a progressive way, then it would work. Close the loopholes, which to be honest, is exploited more by the ones who can afford accountants and lawyers to dedicate themselves to this. You could even put Romney in charge since he has worked every loophole and tax avoidance scheme out there!
As far as taxing spending alone, that is but another way to get the 'little people' to pay more tax and let the wealthy get off. It's just re-wrapping the same old crap. It does away with capitol gains, inheritance tax, and gives corporations (and their owners) more gifting in how that tax (or lack of) structure works.
And the average worker, who doesn't get their income from the above but rather works for it and largely spends it on the necessities, pays tax on just about every dollar they earn (spend). A few dollars more on that superyacht isn't going to faze the wealthy, but a few dollars more on food, clothing, rent, fuel, and small 'luxuries' (dinner out, movies, ballgame) would have a huge impact on people with limited income. People who maybe didn't pay much in federal taxes (because their income is so low) are suddenly paying way more in taxes as they go about daily living.
So I take it, based on this very basic and incredibly simple principal, you'd be in favor of abolishing estate, excise and property taxes?
We are talking about income tax here.
And, by the way, estate taxes ARE taxing income. (if someone dies and you inherit 5,000,000 then that sure is income even if you didn't have to lift a finger to 'earn' it) And no, they don't affect the average person, and they don't even affect the wealthy unless they decide to 'sell the farm' or 'split up' the large, wealthy estate.
We are talking about income tax here.
And, by the way, estate taxes ARE taxing income. (if someone dies and you inherit 5,000,000 then that sure is income even if you didn't have to lift a finger to 'earn' it) And no, they don't affect the average person, and they don't even affect the wealthy unless they decide to 'sell the farm' or 'split up' the large, wealthy estate.
So you tax income, period; and all wealth is the result of income. Therefore all wealth is taxable?
If it were to actually work, you know, ALL income taxed in a progressive way, then it would work.The problem others have pointed out is that if you try to tax all income as income, you really will motivate hording of wealth to avoid taxation. By the same token, there are ways to tax wealth, without confiscation, that effectively addresses economic inequity of the past, and avoids these pitfalls others have highlighted, but it requires far more moral will than all the moral people in the US have, collectively. One maverick example of this would be to re-conceptualize "unrealized gains" and "unrealized losses", as taxable and deductible, respectively. Effectively, it would be like having everyone sell everything they have on December 31, and re-buying it on January 1 (for tax purposes only, of course). Of course, there are pitfalls with this approach as well. For example, it will devalue the "buy and hold" advice typically relied on to drive people to invest in their own retirement. Of course, given recent statistics (http://www.fool.com/retirement/general/2012/10/15/17-frightening-facts-about-retirement-savings-in-.aspx), that motivation is impotent anyway, so probably no great loss. However, that's why there wouldn't be enough will to make something like that real: Those wealthy folks who would benefit from the status quo and the wanna-bes would cite implications as pitfalls, without any regard to how things are in actuality.
As far as taxing spending alone, that is but another way to get the 'little people' to pay more tax and let the wealthy get off.Typically true, but it doesn't have to be. It would be a trivial exercise to craft a sales tax system that doesn't tax anything that people "need". There would be loads of political wrangling about what is "need" and what is "want", but a line could be drawn, and taxation could then be a flat rate for anything about the line. And if the line is drawn responsibly (a big "if"), then it's a very clean, neat, progressive, and fair system.
So you tax income, period; and all wealth is the result of income. Therefore all wealth is taxable?She said income. Not wealth. Income is wealth that comes in, not wealth that is already there. When someone inherits, their benefactors wealth leaves the benefactor's estate and comes in to the beneficiary's assets.
Read it again. You'll see that it is talking about "money that moves".
First of all Gregg, you are trying to deflect and misdirect again by saying 'taxing wealth'. No one is talking about confiscation, and you know that. Please don't pretend ignorance. Income is income. Whether that income comes from investments, or flipping burgers, it is still income (that which you did not have at the start of the year and has come into your possession during the year---does that make it more understandable? Do I REALLY need to explain what income is?)
Do I REALLY need to explain to you how the experiment failed? If it worked this conversation wouldn't be happening, would it?
You say the tax system we have has failed because the poorer pay more percentage wise. Well, duh!
That's not even close to what I said, now is it peggy? Time to wake up and smell the bacon. Percentages on the progressive tax scale have nothing to do with it. It's nothing but a political talking point to snag the low information voters. If you REALLY want to get into it you will realize that the EFFECTIVE tax rate is what matters. To everyone. Besides, the working poor don't pay higher percentages than I do or than you probably do. What hurts them is that they don't have enough money left over to achieve a better life. It doesn't make the slightest bit of difference what percentage is taken out of their checks when they can't afford to have ANYTHING taken out.
As far as taxing spending alone, that is but another way to get the 'little people' to pay more tax and let the wealthy get off.
It is EASY to get around that, isn't it peggy? Like bUU said, it's simple to eliminate taxes on necessities. Here in Nebraska there is no sales tax on food. Zero. Poor people spend a much higher percentage of their income on food than rich people do so it is the working poor who derive the most benefit from that approach. It's that simple. And it's pretty much a given that rich people spend more on non-necessities than poor people and so would pay more tax on those categories of goods. It is elegant in it's simplicity unless your tripping point is that eliminating sales tax on ramen noodles means you would have to eliminate it on foie gras as well...
A VAT can work, true, but you would have to craft it carefully, and knowing the climate, and business of congress, I doubt it would be done right. I fear it would be just more funneling of wealth to the top 2%.
Why do you say the tax system hasn't worked? There is a cut off below which poorer people don't pay federal tax. But they still get shafted by state taxes, and payroll taxes. I thought we were just discussing federal taxes, but if you want to talk over all taxes then, yeah, poorer people still pay a higher percentage of their money in taxes. Or rather it affects their bottom line more. (ok I'm lumping payroll taxes with state taxes here, I know) It's a fallacy that some in our society pay no taxes, but it makes for a good talking point if you want to wage class warfare dividing society into 'makers and takers' as a recent candidate did.
I still think the real problem lies in loopholes. Whatever the tax rate on paper says, the actual taxes paid is the real world figures we have to work with. Unfortunately, the real power of congress, and party/individuals is in taxation, and 'gifts' of loopholes/deductions/etc... I really don't see congress giving up that power for a simple flat tax, or VAT system. Too simple without the wiggle room to gift favored donors/industry.
The real problem, which no one wants to face is, we like our lives. We like how our country is structured and runs. We like our good roads, schools, library systems. We want our food inspected, and our water to be clean and safe. And we want our homes, cities, and rural areas to be protected by police and fire. And we really don't want the return of The Poor House, so we want our grandparents to be able to live simple, but affordable lives through SS and Medicare. And even on the local level, we want to know our kids school buildings have been inspected and meet all the requirements where the inspectors haven't been simply 'paid off' on the inspection, as I suspect happened in Brazil with that nightclub, if an inspection was even required. There are a million things, large and small, that we use the government for.
It all costs money. Every bit of it. And it must come from somewhere. If not from state taxes then federal taxes. But it must come from somewhere. And it must meet our costs, and yes those costs rise just as surely as our personal costs of running our households rises.
Are their ways to trim the budget? Sure there are, but no one wants to actually talk about those things. And congress surely doesn't want to tell a favored industry/donor that their personal gravy train is stopping. So what do they say? They stand up and make pretty speeches about 'cutting the budget', chest beating and all, but the only thing they mention is entitlements, and even there won't go into specifics. Just vague mumbling. Why don't they mention specifics? When Paul Ryan was asked for specifics of his 'cutting' he said nothing. Crickets.....Here is a guy hailed as some saviour of the budget with his hard charging budget cuts...yet would not say what those cuts were.
Here's a start, and one I don't think you will hear from congress. Stop subsidizing the oil industry. Stop the corn subsidies. Stop honey and milk producers subsidies. Stop all those 'favored industries' subsidies. Of course our food prices will go up, but that is expected. For every action there is a reaction.
Let every church/temple apply for non-profit status. Each one, individually, and stop 'subsidising' churches with no taxes.
Actually, as an aside, I wonder where the Libertarians stand on oil/milk/honey/corn/etc...subsidies? I guess I don't remember them talking about that.
I am hardly the tax expert, but one difference I see between the likes of Romney and Lefty is income from wages earned and income from dividends and capital gains. While the income from wages is indeed progressive, the conservatives actually won a huge victory with the new tax laws which made the bush tax cuts on dividends and capital gains permanent. I see this system as indeed favoring the wealthy.
Maybe, but all it did was lower the discrimination. Equity income (e.g. dividends) is still taxed at a higher rate than interest or wages. Although Peggy is totally wrong about the way the tax system works, she did stumble on one truth- smart people know this and try to plan around it. The net effect is to have companies with too much debt and, in a classic application of the law of unintended circumstances, actually causes US companies to be too leveraged and maybe encounter bankruptcy more often.
Actually, as an aside, I wonder where the Libertarians stand on oil/milk/honey/corn/etc...subsidies? I guess I don't remember them talking about that.
Since Libertarian thought wants as little big government as possible, there is no libertarian love for gooberment subsidies.
ApatheticNoMore
1-27-13, 2:15pm
It's of course about as relevant a question as asking the anachro-syndicalist position on Obamacare, for all it matters, well it's an interesting intellectual exercise I guess ..... In actual truth anyone elected from a farm state that has people that are disproportionately benefitting from subsidies will support subsidies.
FWIW on farm subsidies: they would only make sense if they encouraged sutainable not unsustainable farming. That would not be the present subsidies.
It's of course about as relevant a question as asking the anachro-syndicalist position on Obamacare, for all it matters, well it's an interesting intellectual exercise I guess ..... In actual truth anyone elected from a farm state that has people that are disproportionately benefitting from subsidies will support subsidies.
FWIW on farm subsidies: they would only make sense if they encouraged sutainable not unsustainable farming. That would not be the present subsidies.
The problem with this is it creates a system where one wants government to be a bigger and bigger cookie jar so there are more cookies to fight over. Entitlements are also subsidies, just one step removed - I expect places like Walmart would be major opponents in reductions in things like food stamps - food stamps are sent out to individuals but a large portion of those are sitting in their cash registers by the end of the month.
Maybe, but all it did was lower the discrimination. Equity income (e.g. dividends) is still taxed at a higher rate than interest or wages.
Not to quibble over details, but qualified dividends are actually taxed at the same rate as capital gains. which is lower than income or interest rates.
http://en.wikipedia.org/wiki/Qualified_dividend
Ordinary dividends are taxed at the same rate as income from wages and interest.
Not to quibble over details, but qualified dividends are actually taxed at the same rate as capital gains. which is lower than income or interest rates.
No quibble at all, I like it when people think about these things (I'm a law school tax professor :~))
But you need to think bigger. Interest and wages are deductible to corporations, so that income is only taxed once. Let's say you invest $1,000 in a business conducted through a corporation and it earns $100 the first year. If you invested that $1000 in the corp as a loan at say a 10% interest rate, the corp pays you the 100 as interest but takes a deduction for the same 100. So no tax at the corp level (100 earned - 100 interest paid = no taxable income). You receive the 100 as interest and pay tax at ordinary income rates, which is say 40%, leaving you with 60. But if you funded the corp with equity, the corp pays 40 of tax on the 100 it earned and has 60 to send to you as a dividend. If you tax dividends again at 40% like some people want to, that leaves you with $36 of the original 100 of earnings. Your effective rate of tax on your share of income is 64% (it's actually higher when you factor in state taxes). This is what pushes people to invest in a corporation as debt, and why there is a whole body of tax law that tries to address this. Small business owners can also try to game things this way by paying a salary to themselves (which is again deductible) but there is the added complexity of employment taxes in that case.
Other types of businesses, limited partnerships or LLCs, typically default into a tax regime that only taxes that income once, so you keep 60 of the 100, sometimes more depending on the type of business.
There is a currently a regime, qualified dividends, that tries to lessen this disparity (i.e. the 60 after tax versus 36 that you would otherwise get from a corporation). But even with the rate lowered to 15% you still only get $48 of the original 100, less than the 60 for other payments. In a perfect world shareholders would be taxed at their ordinary rates but get a tax credit for the taxes paid by the corporation. Some European countries have done their systems this way. Alternatively you could tax the income at a corporate level and make dividends tax-free, but that has problems from a vertical equity perspective. Or you could make dividends taxable as ordinary income and but make the dividend deductible to the paying corporation. Note, we already have a system like this in place, but it only applies to a politically favored subset of corporations (REITS).
It's of course about as relevant a question as asking the anachro-syndicalist position on...
I thought it was "anarcho-syndicalist" ...
http://youtu.be/fxGqcCeV3qk
Thanks for the explanation, Yossarian. I will have to re-read it a couple of times. It brings up the issue, at least to me, that our tax laws are extremely complicated. Which makes discussion of tax reform difficult, even for politicians. People look for an easy answer to a complicated issue. (And one of my degrees is in finance).
No quibble at all, I like it when people think about these things (I'm a law school tax professor :~))
But you need to think bigger. Interest and wages are deductible to corporations, so that income is only taxed once. Let's say you invest $1,000 in a business conducted through a corporation and it earns $100 the first year. If you invested that $1000 in the corp as a loan at say a 10% interest rate, the corp pays you the 100 as interest but takes a deduction for the same 100. So no tax at the corp level (100 earned - 100 interest paid = no taxable income). You receive the 100 as interest and pay tax at ordinary income rates, which is say 40%, leaving you with 60. But if you funded the corp with equity, the corp pays 40 of tax on the 100 it earned and has 60 to send to you as a dividend. If you tax dividends again at 40% like some people want to, that leaves you with $36 of the original 100 of earnings. Your effective rate of tax on your share of income is 64% (it's actually higher when you factor in state taxes). This is what pushes people to invest in a corporation as debt, and why there is a whole body of tax law that tries to address this. Small business owners can also try to game things this way by paying a salary to themselves (which is again deductible) but there is the added complexity of employment taxes in that case.
Other types of businesses, limited partnerships or LLCs, typically default into a tax regime that only taxes that income once, so you keep 60 of the 100, sometimes more depending on the type of business.
There is a currently a regime, qualified dividends, that tries to lessen this disparity (i.e. the 60 after tax versus 36 that you would otherwise get from a corporation). But even with the rate lowered to 15% you still only get $48 of the original 100, less than the 60 for other payments. In a perfect world shareholders would be taxed at their ordinary rates but get a tax credit for the taxes paid by the corporation. Some European countries have done their systems this way. Alternatively you could tax the income at a corporate level and make dividends tax-free, but that has problems from a vertical equity perspective. Or you could make dividends taxable as ordinary income and but make the dividend deductible to the paying corporation. Note, we already have a system like this in place, but it only applies to a politically favored subset of corporations (REITS).
Well, maybe i don't understand it as well as a 'law school tax proffessor' but neither does anyone else. And that's kind of the point. Only the wealthy can afford to hire law school tax proffessors to devote their lives to tax loopholes, obscure deductions, and tax avoidance schemes. People like Romney, who took deductions on his dancing horse that equaled many people's annual salery, or more than, in many cases.
And no, it's not the 'smart' people, but the wealthy who do this.
Saying it is only the 'smart' people who game, or play the system as it should be played is the kind of arrogance displayed by people who are 'smart' (rich) enough to hire the smart people (law school tax proffessors) to do it for them. You do realize that 70%+ of the population can not do this.
I may not be a law school tax professor, but I do know that when Reagan came into office and starting fiddling with the tax codes, the great whooshing sound we all heard was the rush of wealth to the top 3%, and it hasn't stopped. I also know the wealthy have such a 'burden' of tax that Romney was reluctant to disclose his returns (as all candidates, including his own father, have traditionally done) as we 'might' see it in negative terms as to what he actually paid. And when he finally released his one return, it comes out that he refused to take some deductions just so it appears he paid a higher tax.
So where, exactly, is this great tax burden on the wealthy? Where is it? If it was so onerous, why didn't this wealthy candidate put his burden front and center? Why didn't he make it a center piece of his candidacy, instead of totally bogus, out of context sound bites? Why did he have to make up a rallying cry? Oh he promised to eliminate capitol gains tax on DAY ONE, yet refused to prove, by his own real world example, himself, as to why he would do that.
I'm sure you will comfort yourself, and dismiss me by saying, 'oh, she just wants to confiscate every one's wealth and she hates wealthy people anyway', but that's not the truth. The simple truth is, I like the way this country is, with all the comforts it affords. And so do you, and so does everyone else, including all the tea baggers with their signs saying 'keep the government out of my medicare'. But I'll be damned if I pay a penny more while people like Romney takes every obscure deduction, and tax avoidance scheme, like for dancing horses, and super wealthy oil companies, whose profits border on the obscene, get MY tax dollars in subsidy.
Paul Ryan, and the teabaggers are cowards. And the far Right are cowards, when all they can offer is grandma tightening her belt, or poor people just skipping a meal a day, or (my personal favorite) not EVERYONE actually deserves basic medical care....let's just let the insurance companies decide.
Instead of just shooting down my ideas, why not list some of your own. I have, now let's see yours. Specifically.
I do my own taxes, it doesn't seem all that complicated. I don't even hire super-duper specialists, because they in the past have been not able to offer me any of these fabled shelters and loopholes, even though I had, well, a lot of money to throw at the problem.
The real problem, which no one wants to face is, we like our lives. We like how our country is structured and runs. We like our good roads, schools, library systems. We want our food inspected, and our water to be clean and safe. And we want our homes, cities, and rural areas to be protected by police and fire. ...
It's true, most of us do like our lives.
And congress surely doesn't want to tell a favored industry/donor that their personal gravy train is stopping. ...
Yes, that would be hard, but not nearly as hard as telling the citizens of this country that THEIR gravy train is also coming to an end. Think $20 gas and $30 hamburger and $800 electric bills and...
Here's a start, and one I don't think you will hear from congress. Stop subsidizing the oil industry. Stop the corn subsidies. Stop honey and milk producers subsidies. Stop all those 'favored industries' subsidies. Of course our food prices will go up, but that is expected. For every action there is a reaction.
That's also true. For the record I'm a Libertarian who is generally in favor of phasing out our subsidized lifestyle (note: phasing out, not abruptly ending). But you have to keep in mind that it is our entire lifestyle, not just a bit here and a piece there, that is subsidized by our government. Big oil is the poster child so think about what happens if you end subsidies there. Obviously it will cost you more to fill your tank. It will also cost more to fill the tank of every truck, train, plane and ship that gets ANYTHING you buy to where you buy it. Those costs will be passed along meaning the cost of everything you don't grow in the back yard will go up. Another layer of increases will come through the manufacturing/production side. Any product that uses oil as a raw material or to power the production process will become more expensive. Nylon, medicine, make-up, food, plastics, paint, etc. All of it goes up. We can keep going, showing layer after layer of cost increase to every product we all use, but I'm sure you get the idea.
It's true, most of us do like our lives.
Yes, that would be hard, but not nearly as hard as telling the citizens of this country that THEIR gravy train is also coming to an end. Think $20 gas and $30 hamburger and $800 electric bills and...
That's also true. For the record I'm a Libertarian who is generally in favor of phasing out our subsidized lifestyle (note: phasing out, not abruptly ending). But you have to keep in mind that it is our entire lifestyle, not just a bit here and a piece there, that is subsidized by our government. Big oil is the poster child so think about what happens if you end subsidies there. Obviously it will cost you more to fill your tank. It will also cost more to fill the tank of every truck, train, plane and ship that gets ANYTHING you buy to where you buy it. Those costs will be passed along meaning the cost of everything you don't grow in the back yard will go up. Another layer of increases will come through the manufacturing/production side. Any product that uses oil as a raw material or to power the production process will become more expensive. Nylon, medicine, make-up, food, plastics, paint, etc. All of it goes up. We can keep going, showing layer after layer of cost increase to every product we all use, but I'm sure you get the idea.
Oh you're absolutely right. Things will go up, but not necessarily because the poor companies can hardly get by without the tax payers subsidies. Again taking the big oil companies. Their profits are obscene, and they could very well take a bit of a cut. But, you are right in that they won't because greed rules! It's not the cost of production that will raise our prices but pure, nasty greed!
But, everything else will go up too, but what is the answer? I mean, everyone keeps saying we need to trim the budget, and can't possibly ask anyone to pay a dime more in taxes. Why, the republicans would have taxes cut even more! But, stuff costs. Our lifestyle costs. (and by lifestyle I mean good roads/schools, clean water, etc...) All those things that we expect of living in America costs.
Where does it come from? If not eliminating subsidies, or raising taxes, or cutting from the military which the republicans deplore, then where? Where is it coming from? roads? Bridges? Our infrastructure is already so outdated I'm surprised only one major bridge has collapsed in the last 10 years. Maybe we don't need so many water and food inspections? Well, maybe not...until some people get sick, or die even from tainted water or food. Schools? Is there anything left to squeeze out of the schools?
Of course there is always grandma. But her rent isn't going down, nor is her food budget/utilities. And dang it all, she needs to eat..every day!
So, pay more for food/gas/stuff...or pay more in taxes to keep the subsidies (payoffs) rolling. Gee, if people (and by people I mean the big industries we pay 'protection' money to) would just be satisfied with modest profits. Even good profits would be fine. But obscene profits at the America public's expense is disgusting.
I guess I'm just sick and tired of paying my tax dollars to some greedy fat cat just for the 'privilege' of being gouged at the pump.
Oh you're absolutely right. Things will go up, but not necessarily because the poor companies can hardly get by without the tax payers subsidies. Again taking the big oil companies. Their profits are obscene, and they could very well take a bit of a cut. But, you are right in that they won't because greed rules! It's not the cost of production that will raise our prices but pure, nasty greed!
But, everything else will go up too, but what is the answer? I mean, everyone keeps saying we need to trim the budget, and can't possibly ask anyone to pay a dime more in taxes. Why, the republicans would have taxes cut even more! But, stuff costs. Our lifestyle costs. (and by lifestyle I mean good roads/schools, clean water, etc...) All those things that we expect of living in America costs.
Where does it come from? If not eliminating subsidies, or raising taxes, or cutting from the military which the republicans deplore, then where? Where is it coming from? roads? Bridges? Our infrastructure is already so outdated I'm surprised only one major bridge has collapsed in the last 10 years. Maybe we don't need so many water and food inspections? Well, maybe not...until some people get sick, or die even from tainted water or food. Schools? Is there anything left to squeeze out of the schools?
Of course there is always grandma. But her rent isn't going down, nor is her food budget/utilities. And dang it all, she needs to eat..every day!
So, pay more for food/gas/stuff...or pay more in taxes to keep the subsidies (payoffs) rolling. Gee, if people (and by people I mean the big industries we pay 'protection' money to) would just be satisfied with modest profits. Even good profits would be fine. But obscene profits at the America public's expense is disgusting.
I guess I'm just sick and tired of paying my tax dollars to some greedy fat cat just for the 'privilege' of being gouged at the pump.
Are roads and bridges paid for from income taxes or are they financed through gas taxes (state and federal), and use fees (commercial transportation/hauling)?
Also, what constitutes an "obscene" profit? Is it an established threshold for profit as a percentage of revenue? Are other industries besides energy, such as sports, entertainment, high tech, etc., subject to the "obscene profits" label?
When you talk about "subsidies (payoffs)", are you talking about standard business deductions such as accelerated depreciation which is applicable to all industries or is it only a payoff if it's granted to specific industries?
I can certainly understand the frustration you feel at being "gouged at the pump", but have you considered what percentage of that "gouging" is the result of state & federal taxation and the costs of environmental regulation? How much more would you be "gouged" if energy companies were excluded from enjoying the same deductions other industries enjoy?
I guess what I'm asking is, from a taxation perspective, do you feel that the government should use the tax code to encourage or discourage specific things that benefit society, and if so, how do you choose?
"We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity"
"legislative Powers herein granted shall be vested in a Congress of the United States ... Every Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States: If he approve he shall sign it, but if not he shall return it, with his Objections to that House in which it shall have originated, who shall enter the Objections at large on their Journal, and proceed to reconsider it. If after such Reconsideration two thirds of that House shall agree to pass the Bill, it shall be sent, together with the Objections, to the other House, by which it shall likewise be reconsidered, and if approved by two thirds of that House, it shall become a Law. ..."
Are roads and bridges paid for from income taxes or are they financed through gas taxes (state and federal), and use fees (commercial transportation/hauling)?
Also, what constitutes an "obscene" profit? Is it an established threshold for profit as a percentage of revenue? Are other industries besides energy, such as sports, entertainment, high tech, etc., subject to the "obscene profits" label?
When you talk about "subsidies (payoffs)", are you talking about standard business deductions such as accelerated depreciation which is applicable to all industries or is it only a payoff if it's granted to specific industries?
I can certainly understand the frustration you feel at being "gouged at the pump", but have you considered what percentage of that "gouging" is the result of state & federal taxation and the costs of environmental regulation? How much more would you be "gouged" if energy companies were excluded from enjoying the same deductions other industries enjoy?
I guess what I'm asking is, from a taxation perspective, do you feel that the government should use the tax code to encourage or discourage specific things that benefit society, and if so, how do you choose?
Yes, I do believe the federal highway system is cared for by the feds, but this thread seems to be jumping from federal income tax to all tax to back to just federal tax. It's all taxes, and if you are for tax reform at the federal level, then you need to mind the pennies (local taxes) too, cause it's coming from somewhere.
But, I take it you are not for tax reform, as you seem comfortable with the system we have now. At least for big business. You don't seem to want to eliminate, or reform the code to direct our tax dollars to things that do benefit us all (good roads and bridges), but keep the status quo and their 'obscene' profits. (by obscene I mean special perks gained at the public's expense) I'm all for profit, but the reality is it has to come from somewhere. It shouldn't come from our taxes.
http://priceofoil.org/fossil-fuel-subsidies/
Of course i am for business, and promoting business, but it's getting too expensive for us. Especially as republicans keep saying 'no new taxes, ever!'
Again, it has to come from somewhere. Where Alan? Where would you cut? specifically?
Oh you're absolutely right. Things will go up, but not necessarily because the poor companies can hardly get by without the tax payers subsidies. Again taking the big oil companies. Their profits are obscene, and they could very well take a bit of a cut. But, you are right in that they won't because greed rules! It's not the cost of production that will raise our prices but pure, nasty greed!
I don't think that's exactly correct peggy. The people living in the US get more benefits from the subsidies than big oil does. All those "poor companies" get is money (albeit a lot of money). Being one of the 50 million or more people that have big oil stocks in their retirement accounts I get a nice benefit from that. Even if you don't have stock in the oil industry you still save a LOT of money because we don't pay true market rate for anything that uses petroleum in its manufacture, production, packaging or delivery. That's pretty much everything. We also get to live in a world that is relatively free of conflict, where disease is diminishing and where all the modern conveniences are available at the flip of a switch.
If subsidies go away prices would/will rise in conjunction with higher production costs, not because of greed. One HUGE subsidy for big oil is our military. The OPEC countries, where most of our oil comes from, are a mix of kingdoms, unstable regimes, bases for terrorist organizations and all manner of other politically unfortunate situations. As countries they need our money and we need their oil so there is a bit of a balance, but we all know who else is there. The threat of force from our military is what keeps a lot of negative activity in check. Big oil has a web of partnerships that creates drilling rigs, pipelines, refineries, shipping ports, etc. Without the military's muscle behind them the risk to infrastructure, especially in the middle east and east Africa, would simply be too high to keep going. An abrupt end to that would not be good for the US or the global economies.
Several years ago a guy named Matthew Simmons did a study on the real cost of oil. He was an industry analyst, investment banker in the petroleum business, author and a peak oil proponent. I did not immediately find the study I'm thinking of online, but I do remember his assessment was that the TRUE cost of oil was something like $450/barrel and this was several years ago. Others have come to similar conclusions. That's roughly 5x what is is currently selling for. We can eliminate the subsidies, but it wouldn't be a matter of prices going up for a while and then settling in at a level a little above where we are now. It would be the creation of a new normal that is quite a bit different than what we have going today. I'm not saying that would be all bad, but it could be a really bumpy ride to get there.
I don't think that's exactly correct peggy. The people living in the US get more benefits from the subsidies than big oil does. All those "poor companies" get is money (albeit a lot of money). Being one of the 50 million or more people that have big oil stocks in their retirement accounts I get a nice benefit from that. Even if you don't have stock in the oil industry you still save a LOT of money because we don't pay true market rate for anything that uses petroleum in its manufacture, production, packaging or delivery. That's pretty much everything. We also get to live in a world that is relatively free of conflict, where disease is diminishing and where all the modern conveniences are available at the flip of a switch.
If subsidies go away prices would/will rise in conjunction with higher production costs, not because of greed. One HUGE subsidy for big oil is our military. The OPEC countries, where most of our oil comes from, are a mix of kingdoms, unstable regimes, bases for terrorist organizations and all manner of other politically unfortunate situations. As countries they need our money and we need their oil so there is a bit of a balance, but we all know who else is there. The threat of force from our military is what keeps a lot of negative activity in check. Big oil has a web of partnerships that creates drilling rigs, pipelines, refineries, shipping ports, etc. Without the military's muscle behind them the risk to infrastructure, especially in the middle east and east Africa, would simply be too high to keep going. An abrupt end to that would not be good for the US or the global economies.
Several years ago a guy named Matthew Simmons did a study on the real cost of oil. He was an industry analyst, investment banker in the petroleum business, author and a peak oil proponent. I did not immediately find the study I'm thinking of online, but I do remember his assessment was that the TRUE cost of oil was something like $450/barrel and this was several years ago. Others have come to similar conclusions. That's roughly 5x what is is currently selling for. We can eliminate the subsidies, but it wouldn't be a matter of prices going up for a while and then settling in at a level a little above where we are now. It would be the creation of a new normal that is quite a bit different than what we have going today. I'm not saying that would be all bad, but it could be a really bumpy ride to get there.
Kind of makes cheap oil sound like another government entitlement program.
I don't think that's exactly correct peggy. The people living in the US get more benefits from the subsidies than big oil does. All those "poor companies" get is money (albeit a lot of money). Being one of the 50 million or more people that have big oil stocks in their retirement accounts I get a nice benefit from that. Even if you don't have stock in the oil industry you still save a LOT of money because we don't pay true market rate for anything that uses petroleum in its manufacture, production, packaging or delivery. That's pretty much everything. We also get to live in a world that is relatively free of conflict, where disease is diminishing and where all the modern conveniences are available at the flip of a switch.
If subsidies go away prices would/will rise in conjunction with higher production costs, not because of greed. One HUGE subsidy for big oil is our military. The OPEC countries, where most of our oil comes from, are a mix of kingdoms, unstable regimes, bases for terrorist organizations and all manner of other politically unfortunate situations. As countries they need our money and we need their oil so there is a bit of a balance, but we all know who else is there. The threat of force from our military is what keeps a lot of negative activity in check. Big oil has a web of partnerships that creates drilling rigs, pipelines, refineries, shipping ports, etc. Without the military's muscle behind them the risk to infrastructure, especially in the middle east and east Africa, would simply be too high to keep going. An abrupt end to that would not be good for the US or the global economies.
Several years ago a guy named Matthew Simmons did a study on the real cost of oil. He was an industry analyst, investment banker in the petroleum business, author and a peak oil proponent. I did not immediately find the study I'm thinking of online, but I do remember his assessment was that the TRUE cost of oil was something like $450/barrel and this was several years ago. Others have come to similar conclusions. That's roughly 5x what is is currently selling for. We can eliminate the subsidies, but it wouldn't be a matter of prices going up for a while and then settling in at a level a little above where we are now. It would be the creation of a new normal that is quite a bit different than what we have going today. I'm not saying that would be all bad, but it could be a really bumpy ride to get there.
YES! YES! By golly I think he gets it!:)
Now Gregg....tell me. Where. does. it. come. from? For every subsidy, there is an equal government program that is as important, as necessary, and as needed to keep THE LIFESTYLE going. This is our life. THIS IS LIFE IN THE U.S. I happen to enjoy being a citizen of this country. If I didn't, I could just self-deport, as anyone in the US is welcome to do.
Everything costs. Do we agree on that? And costs go up, just as our personal household costs go up. Do we agree on that? OK, I'm going to assume we do. Now, the question. Where does the money come from? Where? If you really believe grandma should tighten her belt to protect your retirement fund, then say so. I don't think you believe this, but I'm not sure. I'm really trying to get you to commit here, I know. But I'm a little frustrated by people who keep hollering 'cut the budget, cut the budget', but won't say what. 'Entitlements' is all i hear, but that isn't specific. As creaker pointed out, subsidies to big oil (your retirement fund;)) is in fact an entitlement.
I'm really not trying to pick on you Gregg, but you seem the only one who actually wants to discuss this and not just toss out a few sound bites and run. I want to discuss it too. I don't like paying taxes any more than the next person, but I do realize taxes are the price of living here, and as I said, I like living here. But I also agree there is a problem we need to solve. We need to get a handle on this budget. If there are places to cut, let's cut. But I firmly believe we need to increase taxes. In context of the world, we pay relatively little taxes for what we get in return, but it's time for the reckoning.
I'm wondering if maybe we could just back off on the subsidies a bit. Not eliminate them completely, but cut back, so to speak. Yes, honey will cost more. Gas will cost more, but they manage in Europe, and there gas is sold by the liter! And really, we don't subsidise beauty shops. We don't subsidise exterminators. We need to examine all the 'favored industries' subsidies. And we need to separate the necessities, like oil, from the 'gifts', like honey, and some others whose biggest 'contribution' to society is through some senator/congress person!
So, let's you and I solve this problem. We've solved so many of the worlds problems on this forum, I think we are up to the task.;)
ApatheticNoMore
1-29-13, 8:42pm
Are roads and bridges paid for from income taxes or are they financed through gas taxes (state and federal), and use fees (commercial transportation/hauling)?
Of course the exact same thing was true of Social Security for decades and then it was used to finance the general budget since it was so much in excess.
Also, what constitutes an "obscene" profit? Is it an established threshold for profit as a percentage of revenue? Are other industries besides energy, such as sports, entertainment, high tech, etc., subject to the "obscene profits" label?
Basically in a truly competitive market the rate of profit will be kept fairly low, it won't be great, due to competition of course. Excessive profit generally indicates oligopoly or some kind of rent seeking. Some of these are so called "natural monopolies" like utilities and should be regulated as such and generally are, others are rent seeking gone bananas, excessive time periods for intellectual property etc.
I can certainly understand the frustration you feel at being "gouged at the pump", but have you considered what percentage of that "gouging" is the result of state & federal taxation and the costs of environmental regulation? How much more would you be "gouged" if energy companies were excluded from enjoying the same deductions other industries enjoy?
I've always supported a carbon tax, it can be offset otherwise. Of course energy industries are subsidized in many many ways, like not paying the full cost of the mess they make (the payouts from the gulf oil spill are legally capped), like direct subsidies from the Dept of Energy (that's not mostly going to solar and wind), etc..
I guess what I'm asking is, from a taxation perspective, do you feel that the government should use the tax code to encourage or discourage specific things that benefit society, and if so, how do you choose?
I wouldn't mind if it used the tax code to tax "bads", externalities, like hey pollution and carbon (except forms of pollution that are outright banned of course). I dont' give a flying whether a person buys a house or not, but I think taxing the cost to the planet we all live on is a good idea.
ApatheticNoMore
1-29-13, 9:17pm
Wait what problem are we trying to solve here, the federal budget deficit or ...
Yes, that would be hard, but not nearly as hard as telling the citizens of this country that THEIR gravy train is also coming to an end. Think $20 gas and $30 hamburger and $800 electric bills and...
the environmental exploitation of the whole world to disproportionally benefit the west? Because that's ultimately what that is about. Small populations of the world using most of the worlds resources. :\
It won't solve all the worlds problems but suffice to say many people have given a lot of thought to carbon taxes, it's not impossible, you could offset them with rebates (or payouts):
http://www.the9billion.com/2011/10/20/rethinking-carbon-taxes-pricing-pollution-at-the-point-of-extraction/
It's very ambiguous whether subsidizing fossil fuels is some kind of net gain to the average person, and if it is, it doesn't mean Exxon doesn't benefit a lot more than the average person (they obviously do, being 1%ers and all, they have more and benefit more and of course being Exxon their benefit is from fossil fuel). For countless wars for oil the average person got maybe cheaper gas (doubtful it all goes on the world market anyway and assuming the gas was going to be sold anyway), and they got a runaway security state (oh they definitely got this), the spending on which is out of control and the behavior of which is out of control as well. If they know service members they got people to mourn for, and the survivors, people for the veterans administration to pay for for years, mentally damaged people, they got a a more militarized police force (ex-military are probably serving, the whole homeland security thing etc.), they got a more violent society (war damanged service members have killed, but also a militarized society is violent to the core), and all the side effects of that reverberating endlessly. Americans benefit from deep sea drilling right .... except all the fishermen, all the people that eat the fish ... The average person benefits that much, oh do they? But sure oil company profits do.
So, let's you and I solve this problem. We've solved so many of the worlds problems on this forum, I think we are up to the task.;)
I'm game. And as usual, we aren't very far apart. AMN and creaker both touched on very valid parts of the bigger picture. I think we, as a society, DO have an entitlement mentality. I really do think that we believe we deserve to live the life we have. Even to the point of sweeping all the nasty bits under the carpet and hoping no one will really notice.
It's no secret that we're borrowing all we can from our kids and grandkids to fund our lifestyles. What gets overlooked is that we are borrowing a lot more than money from them. We're using up resources at a blinding rate and most of them can't be replaced. Forget oil, what about potable water? Top soil? Clean air? Maybe it's time to call a spade a spade and admit we aren't borrowing anything. We are flat out stealing the environment from future generations. In that light the money becomes kind of insignificant.
It's not the popular stand, but I don't really blame big oil or big anything else. I know we've talked about the chicken or the egg when it comes to consumers; does the product fill a need or create one? It's an interesting conversation, but at this point I'm not sure it really matters. Big oil got rich by producing something that is environmentally unsound because it makes our lives a whole lot easier so we keep buying it. In that sense it's no different than why people bought slaves for a couple hundred generations, but we can wax philosophical another time. I honestly believe most government subsidies were all created to keep the electorate pacified, not (initially) to benefit business, and that the extra profits were just a sparkly bonus in the good old boy network. Give us a job, a house (the American dream, you know), TV at night and a chicken in every pot and we Americans can ignore just about any atrocity you care to name. So the question becomes how to you get people to willingly leave their easy, comfortable and dare I say simple lives and make changes that, at first, will require more of their time and energy and will often be more expensive as well? It doesn't make for an easy sales pitch.
The average person benefits that much, oh do they?
Well, yea they do. I'm not saying the downside of oil isn't extreme, but the upside of cheap oil is incredible. It gets a little esoteric pretty quickly, but there are dozens and dozens of books that trace the rise of our civilization to the discovery of oil and what it can do. More technological advances in the past generation than in the total of the 100 generations before it? You have to ask what changed? Lots of very bright people think it was oil.
Think of it this way: a barrel of oil has an energy equivalent of ~24,000 man hours of labor. That's SIX HUNDRED WEEKS at the all American pace of 40 hours a week. And all for under $100 with no need for food/clothing/shelter. Every one of us benefits from that and, because it is so versatile and portable, it is irreplaceable. So far we don't have anything even close. I'm all for changing the world, but we have to be realistic about what we're up against to do it.
Powered by vBulletin® Version 4.2.5 Copyright © 2025 vBulletin Solutions Inc. All rights reserved.