Today was a busy news day!
President Obama administration’s 2010 budget proposes to limit the mortgage deductions on “higher income
Rain City Guide
Your Guide to the Seattle Real Estate Market
Today was a busy news day!
President Obama administration’s 2010 budget proposes to limit the mortgage deductions on “higher income
Please let me be the first to tackle the Obama plan concerning the wealthy and banks. The two are kind of hand in hand.
The very wealthy in this country, maybe throughout the world, have been on a free ride of having thier wealth create greater wealth. It’s been easy to invest money and get a return.
The wealthy have created huge speculative bubbles that they controlled and generated profits from. It has been largely unregulated by allowing different investment strategies to work in concert with each other.
It is no coincidence that Chase, the home of the 30% consumer credit interest rate, now owns Washington Mutual. Credit is credit until it’s converted into a mortgage and then it becomes Note secured by a Deed of Trust. This is what our security markets are made of.
So a consumer credit company can turn lose thier phone bank on consumer credit customers to try to convince them to consolidate consumer credit into a refinance or consolidation loan.
But wait there’s more. Credit can finance huge planned community projects. That 30% interest income spread out over millions of users generates huge profits. If you were to invest that interest income into a planned community in Arizona, California, or Florida you control the leases on retail, the infrastructure, housing, commercial development, residential sales and price point.
In the olden days this would be called a conspiracy theory. Today this is the face of American business. The smart cons and swindles go on and on. Each step of the way there have been profits.
Anyway you get the idea. There were checks and balances in the past that have been eroded. Insurance companies invest in banks, and banks invest in insurance companies. All entities invest in the stock market that is being lead by massive investment trusts, and funds.
Obama is saying there will be more over sight which the stock market takes to mean less profit. That may be true unless the truly wealthy get off thier butts and begin investing in business rather than paper profits.
If a person loses a tax break they need to generate tax deductions. In my opinion under Bill Clintons plan you saw businesses upgrading with new software, technology, machinery, and durable goods for business.
What I see is Obama doing the right thing by making money available. I think though that as the year goes on fewer and fewer corporate CEOs are going to want the money. These people operate best in the dark, under rocks. If they are going to have to account for tax dollars they may find themselves losing more than they are gaining.
The entire idea of banks being nationalized is a non starter. It seems inconcievable to me. Our government will want a lot of distance from the banking industry. There will be a wide berth given to get banks in order. There is no larger scandal in the world today than our government deregulating banks. The banking system will sort itself out in the closet, in the dark, with gratitude of this Great Nation.
There are a lot of skeletons in those very dark closets, in my opinion. I think businesses will want to look ahead to future profits rather than lament the good old days.
Please let me be the first to tackle the Obama plan concerning the wealthy and banks. The two are kind of hand in hand.
The very wealthy in this country, maybe throughout the world, have been on a free ride of having thier wealth create greater wealth. It’s been easy to invest money and get a return.
The wealthy have created huge speculative bubbles that they controlled and generated profits from. It has been largely unregulated by allowing different investment strategies to work in concert with each other.
It is no coincidence that Chase, the home of the 30% consumer credit interest rate, now owns Washington Mutual. Credit is credit until it’s converted into a mortgage and then it becomes Note secured by a Deed of Trust. This is what our security markets are made of.
So a consumer credit company can turn lose thier phone bank on consumer credit customers to try to convince them to consolidate consumer credit into a refinance or consolidation loan.
But wait there’s more. Credit can finance huge planned community projects. That 30% interest income spread out over millions of users generates huge profits. If you were to invest that interest income into a planned community in Arizona, California, or Florida you control the leases on retail, the infrastructure, housing, commercial development, residential sales and price point.
In the olden days this would be called a conspiracy theory. Today this is the face of American business. The smart cons and swindles go on and on. Each step of the way there have been profits.
Anyway you get the idea. There were checks and balances in the past that have been eroded. Insurance companies invest in banks, and banks invest in insurance companies. All entities invest in the stock market that is being lead by massive investment trusts, and funds.
Obama is saying there will be more over sight which the stock market takes to mean less profit. That may be true unless the truly wealthy get off thier butts and begin investing in business rather than paper profits.
If a person loses a tax break they need to generate tax deductions. In my opinion under Bill Clintons plan you saw businesses upgrading with new software, technology, machinery, and durable goods for business.
What I see is Obama doing the right thing by making money available. I think though that as the year goes on fewer and fewer corporate CEOs are going to want the money. These people operate best in the dark, under rocks. If they are going to have to account for tax dollars they may find themselves losing more than they are gaining.
The entire idea of banks being nationalized is a non starter. It seems inconcievable to me. Our government will want a lot of distance from the banking industry. There will be a wide berth given to get banks in order. There is no larger scandal in the world today than our government deregulating banks. The banking system will sort itself out in the closet, in the dark, with gratitude of this Great Nation.
There are a lot of skeletons in those very dark closets, in my opinion. I think businesses will want to look ahead to future profits rather than lament the good old days.
Dr. Krugman is smoking too much weed to ease his aches and pains. How this guy has any credibility left escapes me. Spend. spend, spend is all he knows. Who is going to pay, pay, pay? Give me a break.
Meanwhile, Hillary is in China begging them to buy our debt with dollars they themselves need to support their own collapsing economy. Who goes down first, us or them? Does it matter in the end?
Crash this sucker, throw the remains on the burn pile, clean it up and get on with the rebuilding.
This will decrease demand of the upper end houses and increase demand of the lower tiers. $1M houses will become less expensive and $500k homes will become more expensive. In the short term, this will make housing more expensive for people earning under $200k. In the long term, it will encourage the building of smaller luxery houses.
As a personal anecdote, I am looking for a new lease. Compared to last June when I was moving back here, I would say rents are already down about 15-25%. In own building they are advertising on craigslist about 20% less than I am paying right now, so I am negotiating with them first. This is for 2×2 “luxury” 2003+ apts on the Eastside. I was astonished when I moved back here last year that rents were basically similar to back in Silicon Valley, but now it seems I just came right at ‘peak’ rent prices.
This will discourage anyone with household incomes over $208k from buying a home. There aren’t many tax advantages all ready for this tax bracket…and the Gov is taking one more away.
Flat tax anyone? Wouldn’t that be the most fair?
This will discourage anyone with household incomes over $208k from buying a home. There aren’t many tax advantages all ready for this tax bracket…and the Gov is taking one more away.
Flat tax anyone? Wouldn’t that be the most fair?
B- re:#4
In addition to what you are seeing in residential I’m seeing Commercial R. E. rents falling up in Sno Co as well. I’ve never been contacted so many times to consider moving to another office space at rents that are nearly 40% less from what we’ve normally been paying. Fortunately, I’ve got a landlord that seems to “get it” and has kept us in place, so far.
As a side note, it always made me wonder why one of the larger commercial leasing companies in Snoh. Co. seemed to be oblivious to the mounting problems in CRE and Res. R.E. with their ads on Craigslist for Commercial space that seemed nearly as high as you would find in Bellevue or Downtown Seattle (including what appeared to me to be fluff commentary in the Snohomish County Bus. Journal about the health of the markets.) And this is from a long standing CRE leasing co. name whose founders are one of the largest shareholders of CASB–who accessed TARP and has lost in the neighborhood of 90% of it’s share value.
Just nutty.
Rhonda,
I used to think a flat tax would be a good idea; however, I actually prefer no income tax at all — have a federal sales tax instead. This way people are not taxed on what you earn, they are taxed on what they consume. To make this fair to lower income folks we could do something like have no tax on essentials like typical groceries and articles of clothing under say $125 ( + a yearly adjustment for inflation) – or have a sales tax rebate. Sales tax on a home purchase could be rolled into the mortgage.
No IRS, difficult to evade paying your taxes (including by say illegal immigrants), simpler, fairer, etc.
Gene
Rhonda,
I used to think a flat tax would be a good idea; however, I actually prefer no income tax at all — have a federal sales tax instead. This way people are not taxed on what you earn, they are taxed on what they consume. To make this fair to lower income folks we could do something like have no tax on essentials like typical groceries and articles of clothing under say $125 ( + a yearly adjustment for inflation) – or have a sales tax rebate. Sales tax on a home purchase could be rolled into the mortgage.
No IRS, difficult to evade paying your taxes (including by say illegal immigrants), simpler, fairer, etc.
Gene
CR is reporting on an agreement between Citigroup and the U.S. government:
http://www.calculatedriskblog.com/2009/02/report-citi-and-us-government-reach.html
In my humble opinion, here are a few ideas :
1) Cut down military spending immediately. By at least 5%-7% this year, and by at least 25% by 2012. This will reduce the deficit and free up funds for more productive uses.
2) Geithner was a wrong choice. Now, Bernanke and Geithner make terrible combination. The notion that you can spend your way out of deflation and financial crisis is completely wrong. Either get rid of Geithner (difficult) or bring in someone who can provide an effective counter-balance.
3) Allow one auto-maker to fail (bankruptcy) in the next 6 months. This is inevitable – it is better to have a “controlled demolition” of one, that having three zombies around. Wagoner is a useless fellow – fire him or ask him to step down. Probably the best guy to run the US auto-industry right now is Carlos Ghosn – CEO of Nissan and Renault.
4) Raise the deduction on capital gains/loss from $4000 to $7500 (or up to a maximum percentage of gross income).
5) Make interest earned on savings accounts, treasuries and CDs tax free – say for the next 3 years.
6) Interest charges reduction or “no-interest” on consumer loans (credit cards etc) for 3 months be offered by all banks and lending institutions receiving bailout funding. This will slow down bankruptcies and give overdrawn consumers some breathing space and time. However, the interest saved by the consumer be treated as income and taxed accordingly.
7) Voluntary Disclosure of overseas accounts and funds – If you bring in undisclosed money (stashed) overseas, then invest in US Treasury and pay a one-time 15% penalty. Otherwise, step up the heat on overseas accounts.
8) Let a couple of banks in the top-10 list fail. Perhaps a controlled and co-ordinated demolition (similar to WaMu takeover).
>> I wonder what this will do to upper end home values?
Fairly simple. What happens to “blue-chip” stocks when the whole market tanks ?
The market will value them accordingly. If potential buyers perceive the prices to be too high, they will pass on. Today’s upper-end homes will be priced at today’s “middle class” home prices tomorrow – the wonders of deflation.
Looking at various socio-economic metrics, the prices must come down by at least 20%.
I’m sorry this thread never took off.
Newt Gingrich in his comments on Obama’s proposed budget started by saying there were good things there. Last night Hannity was having a hard time convincing a Republican that Obama was Satan.
Today the United States government is taking a stake in CitiGroup which is an international branch of Citi Financial.
We are in very strange times that look to me as being very positive for a broader market.
What I see is that both Republican and Democrat law makers are looking for a larger consensus on how to move forward. It seems no one wants to look back.
I’m sorry this thread never took off.
Newt Gingrich in his comments on Obama’s proposed budget started by saying there were good things there. Last night Hannity was having a hard time convincing a Republican that Obama was Satan.
Today the United States government is taking a stake in CitiGroup which is an international branch of Citi Financial.
We are in very strange times that look to me as being very positive for a broader market.
What I see is that both Republican and Democrat law makers are looking for a larger consensus on how to move forward. It seems no one wants to look back.
Gene, I’ve never thought of that–a Federal sales tax is so simple and makes sense. I like it… but it’s because it’s simple and makes sense…the Gov won’t do it.
People would have the option to pay very little in tax if they are not consumers…
Let’s wipe out lobbiest while we’re at it, too.
Gene, I’ve never thought of that–a Federal sales tax is so simple and makes sense. I like it… but it’s because it’s simple and makes sense…the Gov won’t do it.
People would have the option to pay very little in tax if they are not consumers…
Let’s wipe out lobbiest while we’re at it, too.
HUD Secretary Donovan is on CNBC right now talking about the mortgage tax deduction.
Gene, I’ve never thought of that–a Federal sales tax is so simple and makes sense. I like it… but it’s because it’s simple and makes sense…the Gov won’t do it.
People would have the option to pay very little in tax if they are not consumers…
Gag.
Regressive taxation with the result of a widening of the already massive chasm separating the rich from the poor. Forcing the working poor to pay a huge percentage of their income in taxes compared to the rich is a recipe for revolution; or at least even more wide-spread misery among the have-nots. Bzzzt. Try again.
biliruben, ELIMINATE income tax in exchange for sales tax? I think it’s interesting. People could control how much they’re taxed by reducing what they spend…wanna grow a garden or make you own clothes? Are you a big spenda…fine. I think this is more fair than having folks who make the most pay the higher percentage of their incomes.
Rhonda -We have just a sales tax here in Washington. I don’t have time now to look up the stats, but go look at the percentage of taxes payed by the poor vs. the Rich in this state: The poor pay a vastly disproportionate portion of their income to pay for our government needs here in Washington, compared to the Rich. We are the worst state in the nation in terms of funding ourselves off the backs of the working poor. I find it disgusting that one the most progressive states funds its policies, not from the Bill Gates of the world, but from our house cleaners and baristas.
This is not something we should emulate on a national scale.
biliruben, I don’t have time right now to look up the stats either–I DO AGREE that our state taxes are insane. 🙁
In other news today, Paul Krugman has some interesting data that debunks the myth that banks are suffering because their mortgage backed securites are actually worth MORE than today’s value:
http://krugman.blogs.nytimes.com/2009/02/27/stress-test-this/
Our state taxes are actually quite reasonable overall, in comparison to what I have paid in other places I’ve lived (NY, ILL). It’s just that we chosen a really poor method of collecting them.
biliruben, consider this:
“Obama’s two-fifties are not the same as Clinton’s. Today’s two-fifties have just lost half their retirement savings, lost half their investments, lost home equity, can’t sell their higher-end homes anyway, cannot borrow against them, and have the same job-loss risk as everyone else. Tell them now that their taxes are going up?”
From Lou Barne’s Credit News/Feb 27, 2009
That’s pretty easy. “Your taxes are going up.”
Sorry, Rhonda. If you, or Lou think that I’m going to be shedding any tears for the rich, you are mistaken. Half the country has no retirement money to lose, and most people’s idea of an investment is a nice stamp collection or some baseball cards in the attic.
Now if you start talking about how those on a fixed income now have to start paying 30% on a jar of peanut butter or a pair of slippers, because the rich can’t stand paying a few extra % on there 250,001th they make this year, than maybe you can get me to show some concern.
I’m sorry, but anyone who makes more than 250K a year should be pretty darned embarrassed at their amazing luck, and kissing the ground thankful that they were lucky enough to live in a country that provided them with an a fantastic political system, free education, public health, medical care, and infrastructure and a enlightened work for that enabled them to make that amazing amount of money. Whining about a few extra percent tax when put in context only earns my scorn.
That’s pretty easy. “Your taxes are going up.”
Sorry, Rhonda. If you, or Lou think that I’m going to be shedding any tears for the rich, you are mistaken. Half the country has no retirement money to lose, and most people’s idea of an investment is a nice stamp collection or some baseball cards in the attic.
Now if you start talking about how those on a fixed income now have to start paying 30% on a jar of peanut butter or a pair of slippers, because the rich can’t stand paying a few extra % on there 250,001th they make this year, than maybe you can get me to show some concern.
I’m sorry, but anyone who makes more than 250K a year should be pretty darned embarrassed at their amazing luck, and kissing the ground thankful that they were lucky enough to live in a country that provided them with an a fantastic political system, free education, public health, medical care, and infrastructure and a enlightened work for that enabled them to make that amazing amount of money. Whining about a few extra percent tax when put in context only earns my scorn.
biliruben, your owl eye avatar is looking VERY scornful. 😉
I don’t think those with household incomes over $250k are expecting any tears of sympathy from anyone.
I love our country–I’m just afraid we are far out of the woods and I’m not sure we’re even on the right (if any) path.
My concern is that Obama’s plan will create more divide than bring the country together. I think this could discourage people from buying homes–even if we’re talking a small percentage of difference–it becomes an emotional decision after a while.
I want to feel better about our future…and I don’t… I probably should not be commenting here today and should stay away from Twitter…I’m riled up…between this and HVCC (appraisals being controlled by banks and large corporations)…I’m fit to be tied.
Time to walk away from the blog. 😉
biliruben, your owl eye avatar is looking VERY scornful. 😉
I don’t think those with household incomes over $250k are expecting any tears of sympathy from anyone.
I love our country–I’m just afraid we are far out of the woods and I’m not sure we’re even on the right (if any) path.
My concern is that Obama’s plan will create more divide than bring the country together. I think this could discourage people from buying homes–even if we’re talking a small percentage of difference–it becomes an emotional decision after a while.
I want to feel better about our future…and I don’t… I probably should not be commenting here today and should stay away from Twitter…I’m riled up…between this and HVCC (appraisals being controlled by banks and large corporations)…I’m fit to be tied.
Time to walk away from the blog. 😉
…jobs will be what’s most important or there will be nothing to tax.
Heh. Owls do appear fairly scornful don’t they! 😉
The good news, from your point of view at any rate, is I hear most of these tax issues won’t kick in until 2011 at the earliest. When we hopefully be in full recovery mode. Hopefully.
I’m going to go for a nice long walk in the sun for lunch myself! And remind myself how lucky I am to have a wonderful family, a job that, though it won’t make me rich, provides me with enough to pay for the things we need, and a little extra to save for old age or spend on things we want, and live in a fantastic town that is gorgeous and who’s citizens think first of their fellow man (or woman), even though that occasionally leads them to behave in misguided ways. At least their hearts are usually in the right place.
I will leave out any ideological comment on the fairness of transferring wealth from productive high earning individuals to low income citizens by raising taxes on the well off and on all Americans through CO2 emissions taxes. Nor will I question the wisdom living way beyond our means by building up enormous deficits that our children will be paying for for years. Nor will I comment on the justice in punishing people who play by the rules, pay their mortgages and live within their means so that irresponsible individuals can be bailed out of their stupid actions.
I will however question our new president’s wisdom on increasing taxes on high income individuals who drive a lot of economic activity like it or not. Do people not think that raising taxes or even the mere threat of increased taxes and reduced deductions will not change behavior?
I make in the $200k – $245k range annually and live relatively frugally and way within my means. I cut back my spending by about 10% over the past 3 months until the new budget proposal was introduced.
My reaction? I have eliminated all discretionary spending amounting to approximately $18,400 of annual spend all of this from the local Seattle economy. I stopped shopping at Met Market & neighborhood butcher where I spent around $1200 monthly on food and wine (yes I know it is a lot but we are foodies) and replaced this with a once a month trip to Costco to stock up on chicken and meat and soup (for less than $200) and a weekly order of fruit and vegetables from Amazon Fresh for around $50. I stopped buying wine at the neighborhood wine shop which saves me around $200 monthly. We no longer eat out at restaurants which saves me around $400 monthly. I just canceled my membership at the local gym for a monthly saving of $65. Overall, my monthly savings are $1,500. I plan to cancel my DirecTV when my contract is up which will save me an additional $67 monthly. I have eliminated any thought of renovating parts of my home over the next several years.
Bottom line is that I am actually now saving money even net of the new tax increases. The downside is that the Seattle economy and small business has lost out. When enough people react the same way I have the economic death spiral we are in will worsen dramatically.
I will leave out any ideological comment on the fairness of transferring wealth from productive high earning individuals to low income citizens by raising taxes on the well off and on all Americans through CO2 emissions taxes. Nor will I question the wisdom living way beyond our means by building up enormous deficits that our children will be paying for for years. Nor will I comment on the justice in punishing people who play by the rules, pay their mortgages and live within their means so that irresponsible individuals can be bailed out of their stupid actions.
I will however question our new president’s wisdom on increasing taxes on high income individuals who drive a lot of economic activity like it or not. Do people not think that raising taxes or even the mere threat of increased taxes and reduced deductions will not change behavior?
I make in the $200k – $245k range annually and live relatively frugally and way within my means. I cut back my spending by about 10% over the past 3 months until the new budget proposal was introduced.
My reaction? I have eliminated all discretionary spending amounting to approximately $18,400 of annual spend all of this from the local Seattle economy. I stopped shopping at Met Market & neighborhood butcher where I spent around $1200 monthly on food and wine (yes I know it is a lot but we are foodies) and replaced this with a once a month trip to Costco to stock up on chicken and meat and soup (for less than $200) and a weekly order of fruit and vegetables from Amazon Fresh for around $50. I stopped buying wine at the neighborhood wine shop which saves me around $200 monthly. We no longer eat out at restaurants which saves me around $400 monthly. I just canceled my membership at the local gym for a monthly saving of $65. Overall, my monthly savings are $1,500. I plan to cancel my DirecTV when my contract is up which will save me an additional $67 monthly. I have eliminated any thought of renovating parts of my home over the next several years.
Bottom line is that I am actually now saving money even net of the new tax increases. The downside is that the Seattle economy and small business has lost out. When enough people react the same way I have the economic death spiral we are in will worsen dramatically.
Anon, hats off to a fellow foodie! Have you noticed less samples at Costco and Met Market? I’m pulling back on our shopping too and it’s too bad it took the economy to bring some “reason” to it. I cook for 3 teens and my husband so the grocery bill can get up there.
Anon – You are getting a tax cut, not a tax hike.
Congratulations! Now get spending!
Anon – You are getting a tax cut, not a tax hike.
Congratulations! Now get spending!
Rhonda,
We joined Costco last month so I can’t say if the freebies have dropped off but I did notice Met Market stopped sending out their freebie or twofer mailers late last year and just resumed sending them out in my neighborhood last month.
The good news I think, as long as you can live with giving up Organics, the meat and chicken from Costco is great. I couldn’t believe I got two 31/2lb whole chickens for $9 and they tasted great roasted. You just have to be more creative. I think in the end, reducing consumption and having frugality become cool is good for us even if it isn’t for the economy.
Hi Anon,
I’m with you…it will be interesting to see if the “green” and “organic” movement can survive these tough economic times.
I may even decide to try the basic store brand milk this week which is way less per half-gallon than the Safeway “Organic” label milk. Between my daughters and I, we go through a half gallon every day.
But, but, but how could I give up Blue C Sushi? I can’t make that at home…..or could I?
Hi Anon,
I’m with you…it will be interesting to see if the “green” and “organic” movement can survive these tough economic times.
I may even decide to try the basic store brand milk this week which is way less per half-gallon than the Safeway “Organic” label milk. Between my daughters and I, we go through a half gallon every day.
But, but, but how could I give up Blue C Sushi? I can’t make that at home…..or could I?
Anon: Those ‘productive high earning individuals’ were the ones who got us into this mess.
The CEO’s of Merrill Lynch, WaMu, Bear Sterns, AIG, and others raked in millions of dollars in salary and bonuses by creating this unsustainable mess. And you think it is unfair to ask them to pay a little of it back?
tomtom
If you think that most people making $200k plus are CEOs or work / worked for an Investment bank you are delusional. By far the biggest group of people in the $200 k plus bracket are small businesses, S corporations or sole proprietors. These are precisely the people who create most of the job growth in the USA.
tomtom
If you think that most people making $200k plus are CEOs or work / worked for an Investment bank you are delusional. By far the biggest group of people in the $200 k plus bracket are small businesses, S corporations or sole proprietors. These are precisely the people who create most of the job growth in the USA.
Anon: Personal attacks will be ignored. Sorry.
Based on the fury witneseed here, it’s frankly amazing that the rich even managed to survive these oppressive tax rates in the 90s not to mention grow even richer.. And the economy grew by leaps and bounds too? Amazing.
Trickle. Down. Economics. Does. Not. Work.
And Anon, as Biliruben said, if your stated finances are correct you’ll be getting a nice fat tax cut. Maybe it’s a good time to go back to the wine shop for some celebratory libations?
The wealthy make far more than $250K. That’s nothing.
Personal over head for one of these ‘productive high earning individuals’ is easily over $500k per year probably double that.
It makes no difference. The topic today in politics is the economy and how to make more money. That’s the key. Spending less will get us nowhere. We need to make more.
In the world of taxes you can off set income with expenses. Doing business over seas is an expensive proposition, as an example.
I can easily say that in our government Democrats and Repulicans will hammer out some compromises. There is more than enough money. Banks, corporations, and investment trusts are hoarding cash.
You may be losing money, but the people at the top, the ‘productive high earning individuals’ are cash rich. They need to do something and are waiting for a deal to be done with government.
The wealthy make far more than $250K. That’s nothing.
Personal over head for one of these ‘productive high earning individuals’ is easily over $500k per year probably double that.
It makes no difference. The topic today in politics is the economy and how to make more money. That’s the key. Spending less will get us nowhere. We need to make more.
In the world of taxes you can off set income with expenses. Doing business over seas is an expensive proposition, as an example.
I can easily say that in our government Democrats and Repulicans will hammer out some compromises. There is more than enough money. Banks, corporations, and investment trusts are hoarding cash.
You may be losing money, but the people at the top, the ‘productive high earning individuals’ are cash rich. They need to do something and are waiting for a deal to be done with government.
Anon – Unless you think the years between 1945-2001 were terrible times for the rich, then I doubt a marginal increase in taxes on people over $250k a year is going to effect anything but the governments income. Back in the go-go 80’s the top tier tax rates were 50%, and tax-hating Republicans worship the man like he is Jesus 2.0. One of the most productive times in America, and probably the best time for the middle class every, was the 1950’s when top tier tax rates were around 90%.
How many jobs can you count in this comment that may have been lost?
And this from a guy who is taking home more money under the new budget than he was under the prior administration!
I can only deduce anon’s panicked response had more to do with his reaction to the recognition that Bush’s 8 years and decimated the economy for a good long time than anything Obama has proposed to try and correct the damage.
Yet, nobody is talking about the big lie.
Before a national audience before Congress, Obama railed, “If you earn less than $250,000 your taxes will not go up ONE DIME. NOT ONE DIME.”
The new home deduction take away plan starts at $208,000.
Hmmm. this plan came out the day after the big promise.
Now everyone wants to gang up on wage earners who earn over $250,000. First of all keep in mind, the $250K is for a dual income household. Second, $250,000 wage earners are not rich. They are wage earner. Rich is really defined as accumulated wealth a high net worth.
So who are these $250,000 wage earners? The are among America’s most productive, hard-working citizens: our doctors, attorneys, architects, and entrepreneurs, the owners and builders of cleaning companies, delis and security franchises. These wage earners are the group that employ workers in America.
Currently the top 1% pay 40% of the freight now. Here are 2006 figures from the IRS:
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$388,806
39.89
Top 5%
$153,542
60.14
Top 10%
$108,904
70.79
Top 25%
$64,702
86.27
Top 50%
$31,987
97.01
Bottom 50%
<$31,987
2.99
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
With current spending, it has been estimated that if the over $250,000 gave 100% of their income to the government, the new projected deficits would not be reduced.
Should the rich pay more. The truly wealthy, yes. But the government needs to tread carefully on the WAGE EARNER, who is the person creating small business and much needed jobs. Tax this guy in a recession, and we’ll see jobs creation halt and jobs go away.
Yet, nobody is talking about the big lie.
Before a national audience before Congress, Obama railed, “If you earn less than $250,000 your taxes will not go up ONE DIME. NOT ONE DIME.”
The new home deduction take away plan starts at $208,000.
Hmmm. this plan came out the day after the big promise.
Now everyone wants to gang up on wage earners who earn over $250,000. First of all keep in mind, the $250K is for a dual income household. Second, $250,000 wage earners are not rich. They are wage earner. Rich is really defined as accumulated wealth a high net worth.
So who are these $250,000 wage earners? The are among America’s most productive, hard-working citizens: our doctors, attorneys, architects, and entrepreneurs, the owners and builders of cleaning companies, delis and security franchises. These wage earners are the group that employ workers in America.
Currently the top 1% pay 40% of the freight now. Here are 2006 figures from the IRS:
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$388,806
39.89
Top 5%
$153,542
60.14
Top 10%
$108,904
70.79
Top 25%
$64,702
86.27
Top 50%
$31,987
97.01
Bottom 50%
<$31,987
2.99
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
With current spending, it has been estimated that if the over $250,000 gave 100% of their income to the government, the new projected deficits would not be reduced.
Should the rich pay more. The truly wealthy, yes. But the government needs to tread carefully on the WAGE EARNER, who is the person creating small business and much needed jobs. Tax this guy in a recession, and we’ll see jobs creation halt and jobs go away.
#37,
The answer is none. This is a guy who contributes nothing to our economy. A wage earnerer refusing to spend money will only bank or invest. Net gain, or loss is nothing.
This is money in, we give this guy money, and out, he spends or saves it. He creates nothing, does nothing, and contributes nothing.
Re: #37
The impact of cutting back spending does affect jobs.
I signed a client last night around 8pm and the discussion turned towards jobs. The client/gentleman is a long time electrician. His supplier laid of two staffers who have been in the business YEARS providing great support and supplies for local res/commercial electrical contractors. He knows of (I’ve heard this story first hand countless times in signing small bus. contractors at the closing table) a few contractors who are owed TENS OF THOUSANDS of dollars by developers and builders who are struggling or bankrupt.
So, those who are deciding not to make home improvements do have a meaningful impact on the jobs that make remodeling happen.
Re: #37
The impact of cutting back spending does affect jobs.
I signed a client last night around 8pm and the discussion turned towards jobs. The client/gentleman is a long time electrician. His supplier laid of two staffers who have been in the business YEARS providing great support and supplies for local res/commercial electrical contractors. He knows of (I’ve heard this story first hand countless times in signing small bus. contractors at the closing table) a few contractors who are owed TENS OF THOUSANDS of dollars by developers and builders who are struggling or bankrupt.
So, those who are deciding not to make home improvements do have a meaningful impact on the jobs that make remodeling happen.
#39 David, I suggest you study economics 101 prior to making nonsensical comments. None? Last I saw, people worked for a paycheck not for the sheer joy of working. A reduction in consumer spending directly reduces economic activity (GDP contracted by 6.2% on annualized basis in 4th quarter – why do you think that is? People STOPPED spending!) because 75% of economic activity in the USA is consumer driven – that is part of the problem with the USA today. We do not produce anything of value we just consume value. Asia produces economic value in the form of manufactured goods and technology while the USA consumes it in the form of imports financed by Asian savings. This is why Obama’s budget does nothing to address the real imbalances which have decimated the real economy over the past 2 decades. The USA cannot compete in a global economy when we enact environmental, minimum wage, child labor, OSHA regs while countries like China have none. Geographic arbitrage allows business to avoid these by locating offshore or importing. This eliminates the middle class from the value chain relegating them to flipping burgers and until recently real estate. If anything, his carbon credit tax actually will drive more jobs to Asia.
As to my contribution to the economy I find your comment amusing coming as it does from someone engaged in real estate.
Savers provide the capital for businesses to be created and grow. Savers loan money to banks, banks re-loan that money to businesses and homeowners.
And where will this money for Gov’t stimulus packages come from? The gov’t can either 1) raise taxes, 2) borrow money from savers through the issuance of gov’t debt (Treasuries), or 3) print more money.
Treasury rates are low because we are able to sell our debt to saver countries such as China.
Savers provide the capital for businesses to be created and grow. Savers loan money to banks, banks re-loan that money to businesses and homeowners.
And where will this money for Gov’t stimulus packages come from? The gov’t can either 1) raise taxes, 2) borrow money from savers through the issuance of gov’t debt (Treasuries), or 3) print more money.
Treasury rates are low because we are able to sell our debt to saver countries such as China.
Greg, I hope this isn’t a trend
“Yet, nobody is talking about the big lie.
Before a national audience before Congress, Obama railed, “If you earn less than $250,000 your taxes will not go up ONE DIME. NOT ONE DIME.
Greg, I hope this isn’t a trend
“Yet, nobody is talking about the big lie.
Before a national audience before Congress, Obama railed, “If you earn less than $250,000 your taxes will not go up ONE DIME. NOT ONE DIME.
We took the kids out to breakfast/brunch this morning… and the first restaurant we went to, Ama Ama, is no longer doing Saturday brunch. The second restaurant we went to, The Bohemian, is doing “weekend brunch” but the place was empty.
Speaking of the ‘big lie’, did anyone believe him?
Seriously, do the math. Big economic crisis + big gov’t expenditure + declining incomes + higher unemployment doesn’t equal lower tax rates.
tomtom, are you suggesting that we shouldn’t believe President Obama?
#42
“As to my contribution to the economy I find your comment amusing coming as it does from someone engaged in real estate.”
There’s nothing amusing about it. You should become more familiar with how American business is done. Savers money, as a basis of the economy, may work in Japan, but the United States is a debtor economy.
How does that work?
We borrow to invest. American business borrows money at 3% to lend at 8% and does that all day long. You can keep your savongs in the mattress. Please do, don’t shop, go to your job, go home, and save your money.
The consumer economy that government keeps talking about is really based on consumer credit. It’s consumer credit, the credit markets, that are in trouble. Those markets did themselves in by being greedy.
30%, penalties, and fees, were fine while the economy was growing. Once it stopped growing people stopped paying.
Bankruptcy and foreclosure are the only recourse in the United States. So the credit, mortgage, and financials that go along with it are in trouble.
Keep your cash, it will never add up the trillions out on loan.
#42
“As to my contribution to the economy I find your comment amusing coming as it does from someone engaged in real estate.”
There’s nothing amusing about it. You should become more familiar with how American business is done. Savers money, as a basis of the economy, may work in Japan, but the United States is a debtor economy.
How does that work?
We borrow to invest. American business borrows money at 3% to lend at 8% and does that all day long. You can keep your savongs in the mattress. Please do, don’t shop, go to your job, go home, and save your money.
The consumer economy that government keeps talking about is really based on consumer credit. It’s consumer credit, the credit markets, that are in trouble. Those markets did themselves in by being greedy.
30%, penalties, and fees, were fine while the economy was growing. Once it stopped growing people stopped paying.
Bankruptcy and foreclosure are the only recourse in the United States. So the credit, mortgage, and financials that go along with it are in trouble.
Keep your cash, it will never add up the trillions out on loan.
At the end of 2006, the (Japanese) government passed legislation to lower the maximum interest rate on consumer loans from 29.2% to 20%. Japanese courts also ruled that interest rates had been illegally high, allowing customers to ask for refunds.
http://www.forbes.com/2009/02/23/sfcg-bankruptcy-protection-markets-equity-0223_japan_4.html?partner=contextstory
At the end of 2006, the (Japanese) government passed legislation to lower the maximum interest rate on consumer loans from 29.2% to 20%. Japanese courts also ruled that interest rates had been illegally high, allowing customers to ask for refunds.
http://www.forbes.com/2009/02/23/sfcg-bankruptcy-protection-markets-equity-0223_japan_4.html?partner=contextstory
>>Bloomberg says the black hole known as AIG “may get a backstop from
>> the U.S. to protect against further losses on credit-default swaps.
>>Bloomberg says the black hole known as AIG “may get a backstop from
>> the U.S. to protect against further losses on credit-default swaps.
#47
Rhonda,
I believe we should always maintain a healthy skepticism of politician’s statements during a political campaign. Remember George Bush’s “Read my lips, no new taxes?” History has shown us that campaign promises and post-election follow through aren’t always tightly correlated. And that’s not necessarily a bad thing. The President should be flexible enough to deal with the current reality, not dogmatically stick to what he may have said in the past (especially on economic issues).
I do believe him when he says that we will all have to make a few sacrifices before this economic crisis ends. Increased tax rates may be one of them.
– Tom
#47
Rhonda,
I believe we should always maintain a healthy skepticism of politician’s statements during a political campaign. Remember George Bush’s “Read my lips, no new taxes?” History has shown us that campaign promises and post-election follow through aren’t always tightly correlated. And that’s not necessarily a bad thing. The President should be flexible enough to deal with the current reality, not dogmatically stick to what he may have said in the past (especially on economic issues).
I do believe him when he says that we will all have to make a few sacrifices before this economic crisis ends. Increased tax rates may be one of them.
– Tom
#51:
I do believe him when he says that we will all have to make a few sacrifices before this economic crisis ends. Increased tax rates may be one of them.
We need the President to tell us make sacrifices during economic crises ? I thought that was common sense !!
Increasing tax rates helps end economic crises ? How so ?
By giving more hard-earned money to the Government to spend it wisely ?
Like propping up AIG with another round of funding ? Or purchasing preferred shares of Citigroup at 35% premium above market value ?
#51:
I do believe him when he says that we will all have to make a few sacrifices before this economic crisis ends. Increased tax rates may be one of them.
We need the President to tell us make sacrifices during economic crises ? I thought that was common sense !!
Increasing tax rates helps end economic crises ? How so ?
By giving more hard-earned money to the Government to spend it wisely ?
Like propping up AIG with another round of funding ? Or purchasing preferred shares of Citigroup at 35% premium above market value ?
tomtom, this early in his Presidency, I find it concerning that he’d renege on his statement that he made very pronounced:
“If you earn less than $250,000 your taxes will not go up ONE DIME. NOT ONE DIME.
“I wonder how the folks who voted for him in the $208k-$250k income brackets are feeling about him now…”
All 8 of them? They are probably thrilled to have the AMT adjustment save them far more money than the teensy increase they are getting from the mortgage interest deduction.
If you can find one actual human making less the 250K who’s situation has remained the same, yet are paying more taxes this year than last, I’ll be all ears. Until then, this is just a lame attempt at a gotcha.
The mortgage interest deduction should be completely wiped out, in any case. It’s a horrible way to increase speculative investment in RE for the rich. It uses tax-payer dollars to encourage taking risks beyond your means. Abolish it and create a tax-credit, so first-time homebuyers will get some benefit.
Cam, do you think it’s okay for Obama to break his campaign promise (lie) so early in his term?
That’s 208K, after adjustment for personal exemptions and various deductible expenses. Anyone making that kinda jack who can’t find 42K worth of exemptions and expenses is too stupid to be making that kind of money.
I repeat: if you can find even one person in our entire nation making less than 250K who’s situation hasn’t changed, whose tax bill increases in 2009 vs. 2008, I’ll be the first to call Obama a liar. Until then, it’s just a bunch of Limbaugh rhetoric in my mind.
Cam, for the record, I’m not a Limbaugh fan. What’s wrong with an equal income tax…of 10% for example.
You make $20,000 = 2k for tax.
200k = 20k
Look at Greg Perry’s comment again…it’s wrong to have those with the highest income taxed at the highest rate.
I’m for getting rid of waste and promoting jobs…and fair taxation (if we must be taxed).
bleh… ps….is it my computer or do you now write all the post at RCG (check out the photos below).
Cam, for the record, I’m not a Limbaugh fan. What’s wrong with an equal income tax…of 10% for example.
You make $20,000 = 2k for tax.
200k = 20k
Look at Greg Perry’s comment again…it’s wrong to have those with the highest income taxed at the highest rate.
I’m for getting rid of waste and promoting jobs…and fair taxation (if we must be taxed).
bleh… ps….is it my computer or do you now write all the post at RCG (check out the photos below).
Heh. I think it must be your computer, Rhonda.
I am also in favor if getting rid of waste and promoting jobs. I’m also for fair taxation. I’m not sure who isn’t.
I just happen to think that those who have inordinately benefited from all this country provides – be it infrastructure, education, government funded research, health care, security, or any of a thousand other things that people take for granted but makes this country great and allows people to take those risks and make their mint – they should pay back what I consider a fair share, so that the next generation will also share in the fruits of our great nation and continue to allow all those less fortunate a chance, through hard work, to also achieve a prosperous lifestyle.
I particularly think that those who profit on the backs of those less fortunate should pay even greater percentages in order to pay for the health care and education that their employees might otherwise not be able to afford.
If you think 10% of income will perpetuate that, you need to look at the numbers a bit more closely. That wouldn’t even fund the military, much less the important things.
Heh. I think it must be your computer, Rhonda.
I am also in favor if getting rid of waste and promoting jobs. I’m also for fair taxation. I’m not sure who isn’t.
I just happen to think that those who have inordinately benefited from all this country provides – be it infrastructure, education, government funded research, health care, security, or any of a thousand other things that people take for granted but makes this country great and allows people to take those risks and make their mint – they should pay back what I consider a fair share, so that the next generation will also share in the fruits of our great nation and continue to allow all those less fortunate a chance, through hard work, to also achieve a prosperous lifestyle.
I particularly think that those who profit on the backs of those less fortunate should pay even greater percentages in order to pay for the health care and education that their employees might otherwise not be able to afford.
If you think 10% of income will perpetuate that, you need to look at the numbers a bit more closely. That wouldn’t even fund the military, much less the important things.
Woops! You are right. My baby’s everywhere!
Creepy.
Cam, what is a fair percentage to pay back? In my mind, a flat percentage is fair and equal. If you make less, you pay less–a proportionate share…if you make more, you pay the same percentage and you’re paying more “back”.
I think a graduated income tax, where those who can afford more pay more, is very fair.
If you are living off of 20K a year, 35% of that or 7K would be the difference between eating top-raman and Annie’s mac and cheese.
For those earning 200K, a year, it means a Lexus instead of a Mercedes.
I think I’ll let them eat Annie’s and let the rich make due with the Lexus.
I think a graduated income tax, where those who can afford more pay more, is very fair.
If you are living off of 20K a year, 35% of that or 7K would be the difference between eating top-raman and Annie’s mac and cheese.
For those earning 200K, a year, it means a Lexus instead of a Mercedes.
I think I’ll let them eat Annie’s and let the rich make due with the Lexus.
Cam, that’s really not an accurate picture in my opinion…and I see a lot of loan applications from many income levels. There are plenty of folks driving a mercedes or lexus who make less annually than what the car (once) sold for.
I think in order for something to be fair, it needs to be porportionate.
For the record, today I’m so tired of hearing Timothy Geithner talk about “fair” and income taxes…considering how he tried to slip by not paying back taxes he owed…ironic.
Cam, that’s really not an accurate picture in my opinion…and I see a lot of loan applications from many income levels. There are plenty of folks driving a mercedes or lexus who make less annually than what the car (once) sold for.
I think in order for something to be fair, it needs to be porportionate.
For the record, today I’m so tired of hearing Timothy Geithner talk about “fair” and income taxes…considering how he tried to slip by not paying back taxes he owed…ironic.
I’m not sure how this will make you feel, but I found it interesting.
There was a poll in the NYTimes magazine a year or so ago, asking people if they felt poor “in the presence of the rich”.
The people who responded saying they felt poor, were not the actual poor, or even the “middle-class”, but those making more than $200K.
I find this to be a clue as to where our country went off the tracks these last few years.
If I’m confronted with one of these individuals, we will never agree on what is “fair”. Their perceptions are something I will never be able to wrap my head around, no matter how much money I end up making in my life.
At least I hope not.
I’m not sure how this will make you feel, but I found it interesting.
There was a poll in the NYTimes magazine a year or so ago, asking people if they felt poor “in the presence of the rich”.
The people who responded saying they felt poor, were not the actual poor, or even the “middle-class”, but those making more than $200K.
I find this to be a clue as to where our country went off the tracks these last few years.
If I’m confronted with one of these individuals, we will never agree on what is “fair”. Their perceptions are something I will never be able to wrap my head around, no matter how much money I end up making in my life.
At least I hope not.
“I think in order for something to be fair, it needs to be porportionate.”
Proportionate to what? I deal with proportions all day, every day. I can assure you I can make a tax “proportionate”, but the rich will not think it’s fair.
There are about 3% of household in this country who make above 200K a year. I’m sure most work very hard. I am also sure most derive at least some, if not most of their earnings not directly from their labor, but from the labor of those below them. Those also working hard, but passing some, if not most, of their income up the food chain.
Take the owner of a trucking company:
He is benefiting much more than me from the labor of his long-haul truckers he employes, the subsidizing of roads, highways and bridges. The subsidizing of oil. The military keeping the world stable in order for commerce to continue unabated and for him to have things to ship. The free education that his book-keepers and middle-managers obtained. The public health initiatives that keep his work force on the job. And on and on.
What’s “proportionate” taxation for him to repay to this country all the tremendous benefits that he has owning a company in the great land? I argue it more than some barista walking to work on Capital Hill. Not only because he can afford to pay more, but also because he owes more, because this country has provided him the opportunity to make something from his hard work.
“I think in order for something to be fair, it needs to be porportionate.”
Proportionate to what? I deal with proportions all day, every day. I can assure you I can make a tax “proportionate”, but the rich will not think it’s fair.
There are about 3% of household in this country who make above 200K a year. I’m sure most work very hard. I am also sure most derive at least some, if not most of their earnings not directly from their labor, but from the labor of those below them. Those also working hard, but passing some, if not most, of their income up the food chain.
Take the owner of a trucking company:
He is benefiting much more than me from the labor of his long-haul truckers he employes, the subsidizing of roads, highways and bridges. The subsidizing of oil. The military keeping the world stable in order for commerce to continue unabated and for him to have things to ship. The free education that his book-keepers and middle-managers obtained. The public health initiatives that keep his work force on the job. And on and on.
What’s “proportionate” taxation for him to repay to this country all the tremendous benefits that he has owning a company in the great land? I argue it more than some barista walking to work on Capital Hill. Not only because he can afford to pay more, but also because he owes more, because this country has provided him the opportunity to make something from his hard work.
Hello Jillayne,
As to organics and the food markets (comment #30), if the federal government invokes carbon tax fees then the price of chemical fertilizers are likely to increase substantially. This will help organically produced foods to be more competitive.
Sincerely,
Chris Worsley