Obama's State of the Union Address

[JoeTheJuggler]

But aren't the banks hoarding the cash and not loaning it out?

Yes. I linked to an article above (post #72) saying just that. (The headline said something like they've got cash that they can't put to good use.)

Also many big companies, leery of the tentative recovery, are sitting on large cash reserves rather than doing a lot of hiring and increasing of capacity.

 

[MattusMaximus]

My mistake. He's a great man and above any satire or sarcasm.

I see what you did there

 

[MattusMaximus]

This was my opinion too. The rebuttal seemed unrelated to what Obama had said.

That's the problem with a rebuttal speech. Obama probably surprised them with a few things, and they didn't have any time to make adjustments. There's also the fact that the GOP basically has crappy arguments.

 

[DavidJames]

That's the problem with a rebuttal speech. Obama probably surprised them with a few things, and they didn't have any time to make adjustments. There's also the fact that the GOP basically has crappy arguments.

A Republican strength, in some respects, is the ability to stay on message. Hammer it home and hope, regardless of it's relationship with reality, the public buys it.

 

[eeyore1954]

But the proposal isn't to change the capital gains tax rate. It's something that would only apply to people making a million dollars or more.

And really, people who do that, and aren't being payed a regular salary are essentially disguising regular income as capital gains. They should be taxed at the max income tax rate for their income.

I think the "Warren Buffet rule" approach would resolve the problem without the problems that just increasing the capital gains tax would add. With the inequity in tax rates, people who do investing for a living have an incentive to define their income as capital gains. While raising the capital gains rate across the board would address that problem, it would also cause all the problems conservatives point to (discourage investment, cause problems for some people selling their homes, etc.)

Obama's proposal, it seems to me, is a pretty focused solution, that seems to me to be a no-brainer.

Isn't it in effect just raising the cap gains rate. People with ordinary income above 1,000,000 are probably in the 30%+ range already. If there is a problem with carried interest that should be addressed separately.

 

[balrog666]

So how can anyone (politically) argue against the proposed Warren Buffet rule for a minimum tax for people with over $1 million in income?

I'm very interested to see where the right is still able to portray itself as a populist movement catering to working class people but argue that rejecting this minimum 30% tax is somehow in the interest of the "soon to haves".

There is already a minimum tax called the AMT (Alternative Minimum Tax) - Obama is simply blissfully ignorant of the tax code he is charged with enforcing. Or he thinks the general USA population is (ooh, he might be correct on that one).

 

[balrog666]

Also, capital gains taxes are low precisely because they aren't indexed for inflation and Obama (the incredible fluffer) could fix that with a simple executive order. So why doesn't he?

All hail Obama The Prevaricator! The Union Activist! The Community Organizer! The Abject Clown! The Dada, VC, DSO, MC, CBE, SCOAMF, and Last King of Scotland!

 

[DavidJames]

So how can anyone (politically) argue against the proposed Warren Buffet rule for a minimum tax for people with over $1 million in income?

I'm very interested to see where the right is still able to portray itself as a populist movement catering to working class people but argue that rejecting this minimum 30% tax is somehow in the interest of the "soon to haves".

There is already a minimum tax called the AMT (Alternative Minimum Tax) - Obama is simply blissfully ignorant of the tax code he is charged with enforcing. Or he thinks the general USA population is (ooh, he might be correct on that one).

Huh? Obama wants a mandatory tax of 30% and you think Obama is ignorant that AMT already provides such a thing.

ignorant and indeed.

 

[eeyore1954]

There is already a minimum tax called the AMT (Alternative Minimum Tax) - Obama is simply blissfully ignorant of the tax code he is charged with enforcing. Or he thinks the general USA population is (ooh, he might be correct on that one).

Except the AMT does not really apply on LTCG.

 

[balrog666]

Huh? Obama wants a mandatory tax of 30% and you think Obama is ignorant that AMT already provides such a thing.

ignorant and indeed.

Gee, did I say 30% anywhere?

If Obama The Prevaricator! The Union Activist! The Community Organizer! The Abject Clown! The Dada, VC, DSO, MC, CBE, SCOAMF, and Last King of Scotland! wants to change the AMT rates and/or to apply it to long term capital gains why doesn't he just say that?

 

[eeyore1954]

In my opinion President Obama talks about shared sacrifice but he is mainly only asking those groups that do not have many votes to sacrifice. The people from 50,000 to 1,000,000 could also be asked to share in the but there are too many votes there.

 

[Cl1mh4224rd]

The only objections I can think of myself are these 2:

1. It takes money away from "job creators" who would otherwise use the money to create jobs.

I know you're not actually making it, but I don't get this argument. We're talking about personal income for these CEOs, not company profits. What jobs are these folks creating with their personal fortunes?

 

[The Central Scrutinizer]

Why on earth did any of you skeptics bother to watch the Dear Leader's speech? Good for you if you want to vote for him, but I can find much better ways to spend an hour of my life than listening to any president repeat a laundry list of talking points.

This.

Why on earth do people waste time listening to this or the debates?

 

[The Central Scrutinizer]

The CEO isn't the owner of the business, he or she is just the one empowered by the owners to make operating decisions.

The CEO and the owner can be one and the same.

 

[The Central Scrutinizer]

You make it sound so easy. The amount of money that the executives make, and then sit on, has led to a lack of circulation of wealth through the ecconomy, thus cutting demand for consumer goods and services, thus a lack of jobs.

The people who make the most money these days are doing the least for the world.

Are you sure about that?

 

[JoeTheJuggler]

Isn't it in effect just raising the cap gains rate.

No. He's proposing this minimum 30% apply only to people with a total income of $1 million or more. He's not proposing a change to the capital gains tax rate at all.

People with ordinary income above 1,000,000 are probably in the 30%+ range already.

Exactly! The problem is, people in certain financial jobs who earn $1 million or more are able to treat some of that income as capital gains and thereby get away with paying a much lower tax rate on their income. The idea of this proposal is to make sure that doesn't happen.

And in fact, it's a conservative approach. There are probably people who earn *only* $500,000 who do this as well (treat what should be considered to be salary or earnings as capital gains), and they'll continue to get away with it. The idea is that whatever source the income is, if you make $1 million, you can afford and should pay at least 30%.

 

[The Central Scrutinizer]

By the same token, a CEO who drives a company into the ditch should have to return part of his paycheck.

Do the employees also have to return part of their paychecks? Or did the CEO drive it into the ditch all by himself?

 

[JoeTheJuggler]

I know you're not actually making it, but I don't get this argument. We're talking about personal income for these CEOs, not company profits. What jobs are these folks creating with their personal fortunes?

I'm actually speaking about the Warren Buffet rule. It really doesn't apply to CEOs, at least not in most industries. CEOs normally get a salary and other compensation. If they get a million or more and they're able to treat some of it as capital gains (such that they end up paying under 30% all around), then it would apply to them.

At any rate, the supply side argument is that they are creating jobs with their personal fortunes. That is, they either buy stuff or invest the money. (Even money in CDs, the theory says, is money that is loaned out or otherwise re-invested in ways that can stimulate the economy.)

But my response to that argument is what I said above. Basically, we don't know for sure that it will be spent in ways that stimulate the economy. (It could be invested outside the U.S. or spent on imported products, or given to the Mormon Church.) If the government doesn't collect a fair share of taxes from these people earning over a million dollars, then that money is still theirs (the millionaires, that is) to do with as they please with absolutely no conditions or oversight.

 

[JoeTheJuggler]

Do the employees also have to return part of their paychecks? Or did the CEO drive it into the ditch all by himself?

If the CEO drives the company into the ditch, the employees don't get paychecks. They get laid off. In some cases, a CEO who lays off employees will claim to have improved the company and wins bonuses!

(I haven't been following this CEO discussion, so I have no idea where it started or what the general points being made are. Just chiming in on this narrow point.)

 

[The Central Scrutinizer]

If the CEO drives the company into the ditch, the employees don't get paychecks. They get laid off. In some cases, a CEO who lays off employees will claim to have improved the company and wins bonuses!

So the CEO isn't an employee? Or is he the only one who received a paycheck?