Paying a "fair share"

If Acme Co has voluntarily agreed to only employ Union X labor by contract then the Acme Co has a contractual obligation to do that. Are you opposed to the Acme Co's right to engage in a contact with Union X?

 

The article is interesting, but it does not relect the core issues within tax policy, especially the two key questions you asked in your post.

The current system definitely rewards those who make long term financial decisions. This is evident within all income groups in that the effective tax rate is always lower than the percentage share of taxes. If a flat rate was used across the board, then the share of taxes would be equal to the effective rate.

The system now is slowly reverting back to the early days of the 16th amendment where only the upper crust paid taxes while the rest did not even though they consumed the resources generated. For most, living was a struggle, even for modest income earning families. But it was not until WW2 that the tax policy took a fundamental change to include nearly all persons subject to the tax policy. iN 1942, marginal rates were changed and the introduction of federal income tax withholding was introduced. This made nearly everyone who earned income subject to some form of federal income taxation.

Buyt today, less and less are actually paying into the federal system while the increase in use taxes is being forwarded. The use taxes have a direct impact on the poor and middle class than the upper echelons of the income earners. This type of policy is generating the wealth gap that we see today and why the tx policy is beginning to show sings to fail. The has resulted the federal government running large deficits while federal agencies not having the financial resources to do its basic jobs. On top of that, the federal legislature has placed larger burdens on the federal agencies by increasing the tasks it is required to perform under law even though Congress does and has not funded those agencies. And hence w we have the current problem today.

 

No. I'm not opposed to Acme Co's right to engage in a contract with Union X. My question was: Do you support the ability of someone to enter into employment outside and independent of any contract negotiated by others, such as a union? For example, let's say Acme Co has an agreement with Union X. Do you support the right of Joe Schmoe to negotiate his own contract with Acme Co independent and separate from Union X?

 

But you are forgetting the 16th amendment and the "necessary and proper" clause within Article 1 Section 8 of the United States Constitution.

 

When it comes to taxes, the only possible amount that is a "fair share" would be zero.

 

When TRA was passed, long term investment income was taxed the same as wages. It was not until the mid 1990's that long term investment income began to be taxed differently than wages on the personal side. For corporate taxation, long term investment income is still taxed as ordinary income, ie marginal tax rate.

That being said, ling term investment on personal side do not generate economic growth. It generates wealth and that is why investors are very reluctant to have their primary source of income taxed the same as wages.

For true economic growth, it must come from all three sources: foreign direct investment, infrastructure investment, and capital investment. Each of these expenditures are taxed and deducted under the marginal tax bracket and not the capital gains bracket. There is not study that proves that personal long term investment generates economic growth. No reliable study that is.

 

I think Obama is one of our worst presidents in a century. However, as long as they obey the rules, they should be able to minimize the taxes they pay. The loop holes exist and the Obamas have as much right as any of us to take advantage of them. I agree our tax laws should be changed, but the reality is different from hope.

 

Most employers never value skill, they value something else.

 

Math? It has nothing to do with math. You just came to the conclusion that IPOs are a legitimate example of outside investment, but you then - inexplicably - cite stock, bond and futures purchases as inside investment.

And you completely ignore private companies, and their growth. Whiskey Tango Mushrooms.

Repeating yourself doesn't make it any more true. Most initial investment is outside investment: loans, angel money or venture capital. Most expansion money is on lines of credit.

All of that is outside investment. You don't know what you're talking about.

Was that one billion inside money?

It couldn't sell its products because they were ridiculously expensive and horribly ineffective.

I'll close this round with a TKO: was the billion dollars that Solyndra inside or outside investment?

 

Productivity. Which is often improved by skill.



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That is not exactly true.

Any investment speculation, whether it is land, stock, curremcu. etc, is extremely risky with very few people being taxed on the net earnings. Most actually lose money and use that loss to offset other income from other sources.

The principle of the investment is never taxed on the income level. Its earnings, or profits are. Corporate profits, aka retained earneings, are taxed at the corporate level. But it cumulated retained earnings, or profits from the past, are not taxed each eyar.

In addition, retained earnings does not mean actual cash. For most corporations, those retained earnings are put back into the organization through its capital structure. In some situaitons, those expenditures would be deducted, partially or fully, by the entity on the next year tax return. The idea is to increase its revenue, which would be taxed after all dedutions are accounted for.

Thus, it is not the idea of incrasing taxes on investment would not generate economic stimulus, but the exact oppositie since corporations do not like paying income taxes to begin with. It wold change their expenditure behavior to make sure that the net profits are taxed as little as possible.

And that casuse a different problem altogether.

 

yeah it is called ECONOMIC reality

 

Illustrating zero understanding of basic economics.

 

A discussion on what the "taxes" (expenses for the common goals and interests) should be based on would be both interesting and potentially beneficial.

 

Once again it depends upon the contract the Acme Co and Union X have agreed to. If the Acme Co has voluntarily agreed to only directly employ union labor (i.e. a closed shop) then it would be in violation of the contract to directly hire Joe Schmoe but there are typically ways around that contractual provision.

The Acme Co can employ Joe Schmoe as "contract labor" under certain conditions. The key being that a contract laborer is not a direct employee of the Acme Co but instead is an employee of another company contracted to do work for the Acme Co. Joe Schmoe could start his own company and then could negotiate a contract with the Acme Co. Under such a contract he's an indirect employee and not a direct employee of the Acme Co and doesn't violate the "closed shop" contractual provisions between the Acme Co and Union X.

For perhaps 1/4th of my career in aerospace I worked as contract labor where I was non-union working at, but not directly for, a company where that job role was a union job.

What I oppose are "right to work laws" where the rights of contract by the Acme Co and Union X are violated because a contract cannot be negotiated where the company voluntarily agrees to only directly employ union labor. Acme Co and Union X should be able to agree to any provisions they want without government interventionism but "right to work" laws violate that principle of contract. They are "union busting" laws that deny a right of contract where negotiated terms and conditions are voluntarily entered into by the employer and the union workers (that voluntarily authorized the union to negotate on their behalf and that vote on the contract).

BTW - I'm sure that you're aware of the "grandfather clause" in union contracts. An employee that is not a member of a union when the shop votes to become a "union shop" is never forced to join the union and/or pay dues to the union. It only affects those that are employed after the shop becomes a "union shop" and those new employees voluntarily agree to join the union as a condition of employment based upon the contract between the union and the enterprise. No one's rights are violated by the union or the enterprise when a shop becomes a union shop.

 

I would disagree. Employers value skill but aren't typically willing to pay for it. Compensation is not based upon performance but instead is based upon "market" compensation rates.

By way of example I know of a single employee that was individually responsible for saving the corporation he worked for about $22 million but he was not paid a dime more than the other employees in his job classification. The compensation rate was established by the market and not by the performance.

 

No, I did not imply that investments that don't invest directly in corporations are "inside" investments. What I stated accurately is that they don't fund enterprise (except for the brokers handing the transactions that receive small fees for doing so) but the argument by Republicans has always been that these investments are funding enterprise and corporate expansion but they're not. As noted if we address all investments and round off to 1/1000% the percentage of investments that actually fund enteprise are equal to 0%!!!

The primary argument for the Capital Gains tax is that it funds enterprise which results in economic growth but when the effective percentage is 0% then the argument is a lie.

No, just the contrary. I argue that economic growth is overwhelmingly due to private investments by individuals creating companies and then using profits to expand the enterprise. The Boeing Company was started by individuals that used private funding. Harley-Davidson was created by individuals that used private funding. Microsoft was started by individuals that used private funding. The list goes on and on. Eventually these companies went "public" but that was not the origin of the enterprise that relied on sales to generate profits for expansion and even after going "public" the expansion of the enterprise was overwhelmingly funded by sales (consumption) and not the funding from the stock issuance. If we look at the history of the Boeing Company, for example, it has an estimated value of about $95 billion while all of it's corporate stock sales throughout history combined equal less than $1 billion. The value of the Boeing Company is based almost exclusively on the sales of it's products with an insignificant amount originating from outside investment.

 

If Acme Co entered into an agreement with Union X that it would ONLY hire employees from Union X then I would agree that hiring a third party would be a violation of that contract. However, on a free market, I don't see what would cause any company to agree to such a contract.

 

You missed the point.

Most employers are not going to pay someone based on the value of their skill. But employers will want to cut pay as much as possible in order to maximize profits.

 

You think employers analyze and react to the shifts in the IS-LM model?

Please, the posts you have made on this forum shows you failed high school civics.

 

It depends on how you define "value" Shiva. Employers do not value skill in a way that one values a rare item. Ef employers truly value skill in your example, then that employee would have been offered a job promotion because he earned it. Or the employee would have been offer extra responsibilities within his job description and thus extra pay, but it appears he did not. Thus, employers treat job skill more like a commodity that can be interchanged but value profits first.

This is not a knock on employers because profits is what makes any employer stay in business. But to say that employers value skill is a misnomers because employers are not iwlling to pay for something that has full value.

Thus, it is an accounting issue, not economics when discussing job skill, pay raise, and "value" to the employer.

 

You name Harley Davidson, Boeing and Microsoft as companies that started with private funding. You no longer hold to the ridiculous claim that they started with funding from within. You've shifted your own goal posts.

The funding from outside sources - private investors - is the single largest source of economic growth.

So I think we're done here.

 

While you might not understand why an employer would enter into a contract for a "union shop" they've obviously had reasons to do so but I think we could reasonably assume that "profit" is their ultimate driving motive.

We can also note that some employers have avoided unionization of their workforce by providing superior wages and benefits when compared to union shops. When I worked for Northrop it was non-union (except for the welders) and it remained non-union because it provided higher wages and better benefits than Boeing and Lockheed that were union shops.

This is why it can accurately be stated that "union shops" increased wages and benefits across the market creating the middle class in the United States but with the decline of the power of the unions this upward force on compensation and benefits has been lost in the American economy which is a primary reason behind the decline of the middle class. Union busting laws, like "right to work" laws (that violate the right of contract), are responsible for the decline of union strength and membership in unions.

 

The founders of these companies all provided the initial funding for them and there were no outside investors. It was "insider funding" by the founders and not "outsider funding" by investors.

 

The employee was highly valued by the company and was already at the top of the compensation ladder for their position and in the highest possible job category. The company could not have increased compensation based upon the performance nor could it promote him within his field. The corporation couldn't even issue a "bonus" because the exceptional contribution was considered to be within the "job description" of the position (even though hundreds of other employees at the same pay in the same grade were incapable of providing the same savings to the corporation over several decades). The compensation was based upon "market compensation" as opposed to being "performance based compensation" but that doesn't imply the corporation didn't appreciate the employee's contribution the corporate profits.

The problem is "market based compensation" that doesn't reward performance.