Preempting the storm: RIP Margaret Thatcher

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I find the idea that you can't help out the poor and vulnerable, without handing out more and more tax breaks to the rich, offensive.

 

dogsoldier,

I don't think people are arguing that it's bad that people attempt to pay as little tax as possible. In addition to reasons you list, no one would voluntarily pay more than they were required to pay. I think the problem many people have is with the tax code. In other words, we don't dislike the people making the money, or using the laws available to them to minimize their tax payments, but rather they have a problem with the way the tax code itself is written.

 

In my honest opinion the income gap is a very flawed statistic but not completely useless. The chief conservative argument would be that the economy grows because of a tax break to the rich and the leftist argument that the economy would have grown in similar fashion even without the tax cut. Factually proving the causality is challenging at best. Which is why economics often becomes a matter of faith. You find yourself a political opinion and pick a theory that conveniently fits your ideology. That's why economic expertise in generally untrustworthy. Paul Krugman is a brilliant economist but also a man with an obvious political agenda.

Let's take the minimum wage as an example since it was mentioned. As Aldeth said it would simply rise the price of the products. Conservatives do, however, point out that rises in minimum wage could lead to unemployment (some jobs would not just be economically feasible) and have an inflationary effect which would eat up the purchasing power provided by the minimum wage. Both arguments are pretty much impossible to conclusively prove or disprove since both the unemployment and inflation has dozens of other indicators.

To get this post a bit more on topic the same goes for Thatcher's legacy. Her time at the helm were difficult and turbulent for Britain. The left argue that the social disaster and the dismantling of unions and much of the heavy industry was avoidable while conservatives argue that it was necessary in order to move Britain forward and make the economy competitive again. Both sides have their point and it boils down to a matter of opinion.

 

"The US is to send distinctly low-key official representation to Lady Thatcher's funeral on Wednesday, with a delegation led by George Shultz and James Baker, who both served as US secretary of state while Thatcher was in power.

While Barack Obama was invited, he has opted to send a presidential delegation comprising no serving politicians. Shultz was secretary of state to Ronald Reagan while Baker served the elder George Bush. Also representing Obama will be Barbara Stephenson, chargé d'affaires at the US embassy in London, and Louis Susman, the recently departed ambassador to Britain." via The Guardian

I'm having a hard time thinking of somebody else who should have gone? Reagan if he was alive would have been the logical choice, Nancy was invited but wasn't well enough to go.

We sent ex-PM John Howard over who is probably the highest profile living conservative we have, that knew Thatcher personally. If he wasn't available, I can't think of another easy choice for who we could send.

 

Interesting, as I find the concept of stealing (I mean taxing) greater and greater amounts from hard working people to give to the poor and vulnerable quite offensive.

I am curious as to what more and more tax breaks to the rich you are talking about. About the only thing in the past ten years that I can think of that has been a real benefit was the addition of bonus depreciation. That enabled businesses to quickly write off and get the tax benefit of a purchase quickly. While that is clearly a nice tax break, but it has paid dividends as it has helped many businesses purchase things and stimulate the economy.

The last time that the tax rates for the highest earners went down was 2003. Is this what you mean by more and more tax breaks for the rich?

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I can understand if Obama was too busy to go (he may have had a basketball game to play in), but for crying out loud, isn't that why we have a Vice President. What the hell is Biden doing that he couldn't go to the funeral of one of our staunchest allies of the past 50 years.

 

Snook, you know there's no pleasing some people, if he'd sent Biden, the commentators would say well why didn't Obama go himself if it was important enough to send the VP? If Obama himself went the commentators would say the country is blowing up (Texas/Boston) and Obama is sipping tea on the other side of the world?! He's a monster!!

 

Valid point. Although I still would have sent Biden.

 

Just a quick reply to dogsoldier as I understand things you have the lowest taxes in over a hundred years in the US at the moment. Especially for the rich. When Reagan came into power the highest tax bracket was 70% according to my sources.

This may be slightly off topic but it would be interesting if modern American conservatives would study what Reagan actually did as a president and not what he said he would do. In modern (and American) terms Reagan was a pragmatic moderate when it came to the economy. Not an ideological blinded radical conservative with a paranoid fear of the state and a phobia for sharing like the current American right.

 

Nah. You can look here ( http://taxfoundation.org/article/us...-2013-nominal-and-inflation-adjusted-brackets) but there is a lot of data and it's sometimes confusing (especially after my 3rd Guinness of the night, i.e. right now).

The tax rate on the top bracket was lower than it is now through the '80s, until the '93 Clinton tax increases--when they grew to match the current "top rate." GW Bush dropped the top tax rate. So right now the top earners are paying more than they have since '93, and before that, since '82. The interesting thing, however, is when you look at what income one had to have to be in the top bracket--right now it's $388 thousand, but (adjusted to '11 dollars) in '88 it was only $56 thousand. Which, right now, is something like the 3rd bracket (out of 7). (See http://en.wikipedia.org/wiki/Income_tax_in_the_United_States ).

I don't really care about top earners that much, though. Maybe I'm cold-hearted but there are so few of them, and most of them make so much money, that having to pay a percentage point more here or more there frankly affects them little.

According to this site (http://www.nowandfutures.com/taxes.html) the average American is paying over half of their income. Slightly higher earners are paying more. This is more or less backed up by the Washington Post, which only looked at the state, local, and federal tax burden (but didn't, as far as I can tell, look at Medicare or Social Security, as taxes, which is really what they are: http://www.washingtonpost.com/blogs...-47-percent-argument-is-an-abuse-of-tax-data/ ).

 

My numbers are different and I found them in a shape easier to understand: http://www.ritholtz.com/blog/wp-content/uploads/2012/08/dfadf.png

 

wow, Aldeth, I'm glad you started that statement as you did, because you have just crippled your economy.
I'm going to switch this around into pounds and pence because that's what I work in and before I start we have to accept 3 things to be true:
1- companies paying minimum wage will have to increase the wages of all of their employees by £1
2- companies that pay above minimum wage but by less than £1 will have to increase to either bring their wages in line or by more to keep their employees above minimum wage.
3- companies that pay above minimum wage by more that £1, many will still increase the wages of their workers in order to keep a pay divide as incentive to keep their employees who may be skilled workers (e.g. a sewer worker earning £8 an hour pre-wage increase now only earns 75p more than people working in chocolate shops, the company will increase his wage to keep him sweet).

I think we can accept these statements to be true.

Ok, we'll start with McDonalds, since that was your example, but you've increased the national minimum wage, not McDonalds minimum wage, so you haven't figured in the knock-on factor. McDonalds is a tertiary industry meaning they sell the final product to the customer. However you havent factored in the secondary industries (manufacturing, e.g. the meat processing plants) or the primary industries (raw materials, e.g agriculture) that are also now increasing their prices inline with their wage increases, the wages of the 'necessary evils' of the companies (employees who do not make the business money e.g. I.T. techs, admin, finance) have also gone up, that will need to be added to the products too. The other areas involved have also increased their costs, logistics, utilities, cleaning supplies, you name it, its all gone up this is all added to the price of your burger too, at every stage of sale between the 3 sectors tax is applied, the more a product costs, the more tax is paid, this is added to the price of your burger too.
so, your burger hasn't gone up by 10p its gone up by more than half of its original cost, if you buy a meal, the fries, coke, tomato sauce, napkins whatever, have all added to the price so your £3.50 big mac meal, now potentially costs upwards of £5. That pushes your demand and supply curve to the right less will be bought at the higher price.
The knock on effect of course goes further, because everything a family uses or buys is now more expensive so you can expect a family to cut from their budget in favour of bare necessities, lots of families may consider that 4 meals at £20 isn't worth it when it was just £14 a few weeks ago. McDonalds business decreases, jobs are lost across the business. Knock-on further McDonalds is no longer buying as much as it did from its suppliers so the secondary part of the sector cuts jobs, knock-on back to the primary sector, resulting in mass job losses from multiple industries. As imports will be much cheaper than British goods it would be likely that many local businesses would not survive the price wars and more jobs would be lost.

 

Or, or and I know I am being controversial companies that are doing well, which is a surprising amount, could take some of the money from their profits. I don't have the numbers with me now but I read somewhere that the pure profit of businesses have almost doubled in the last 40 years. 1970 2/3 of the earnings went to wages and 1/3 to profit now it is supposedly the other way around. (This was in Sweden but I doubt it is very different in the rest of the world.)

 

I don't think we can. I think the only statement we can accept to be true is the first one. The two others are debatable. I'm not saying you're wrong but I am saying that you are expecting a causality without much evidence. What you said could happen, in some industries and some individual cases certainly and you could probably find an economist pointing out why raising the minimum wage would cost jobs but it's certainly not an undisputed causality. Here's a dissenting opinion from a man that I already mentioned.

http://www.nytimes.com/2013/02/18/opinion/krugman-raise-that-wage.html

 

Yeah just google wage growth vs productivity, every chart looks the same, productivity climbing, wage growth flat. Example:


source.

 

I'm going to cite a probability based on the business trend, companies post high profits and then raise prices and cut jobs. Lloyds TSB are a perfect example they posted a profit of £2.6billion in 2012 excluding one off costs like ppi compensation, and yet they are cutting 5000 jobs to cut costs. Companies today have a much higher level of private investment than they did 30 years ago and keeping a high profit pleases investors. If you increase minimum wage too fast you either see job losses or high price increases which will ultimately lead to job losses so that is why businesses cut jobs first.
Any increase in minimum wage has to be done slowly and in small increments you can't do it quicker than your economy can respond.

 

Gleefully cruel and without scruples or remorse, she was any hard-line conservative's wet dream.
I lived with my single mom in the UK 1984-1989, and we left for fear that I'd grow up to eventually become a drug addict/dealer, because Scotland was and still is in a shambles. In the Netherlands, I managed to finish my Master's degree in Evolutionary Biology. So, if you want a solution to the 'immigration problem', do what Maggie Milksnatcher did: Burn down your own house, until people decide that other countries look a lot better than the UK.
Good riddance, Maggie!

 

Wow - that sounds reasonable ... Except that we've had increases to minimum wage several times in the last several years, and what you describe didn't happen.

In 2007, mimum wage increased from $5.15 to $5.85 per hour. In 2008, it went up to $6.55 per hour. In 2009, it went up to it's present level of $7.25.

If we raised minimum wage today by $1, that would be about a 14% increase. The increase in 2007 was also about 14%, in 2008 it was about 12%, and in 2009 it was about 11%. So a $1 increase would be a very similar proportional increase to what we've had in the past. And this isn't ancient history - this is in the last 6 years! And keep in mind that in that 3 year period, the total percentage change in minimum wage was a huge 41% increase.

If what you say is true, and that each increase in minimum wage would increase the cost of commonly purchased products by 50% or more, we should have seen such a price increase three times in three years, and the increase would have compounded each time. Under your scenario, a $5 value meal at McDonalds in 2006 would have increased to a whopping $16.87 by 2009. (From $5 to $7.50 in year one, from $7.50 to $11.25 in year 2, and from $11.25 to $16.87 in year 3.)

I haven't eaten at McDonalds recently, but I'm betting I can still pick up a value meal for around $7. Now, that $2 is a 40% increase in price, but it is much closer to what we'd expect just based on a standard rate of inflation over that time frame. Assuming a base rate of around 3% annually (which is the historical mean) we'd expect something that cost $5 in 2006 to cost about $6.15 in 2013. Which again implies that the price passed down to consumers was very small.

So while I greatly appreciate your attempt to aid in the development of my economic IQ, I'm still not quite there...

EDIT:

Gee, you're the only other person I know (besides myself) with one of those. I also have one in Biochemistry. What am I doing with those degrees today? Nuttin. I'm a defense contractor. So happy I put all that education to great use.

 

Aldeth! Stop it! Do not confuse economic theory with reality! That is just plain mean. Remember a documentary I saw where they confronted prominent economists with a reality that was completely opposite of what their theories predicted. It was awkward.

 

Economic theory rarely has anything to do with reality. Which is why economists are generally the most untrustworthy people around. I'd call them propagandists with a fancy degree.

 

It is especially obvious if you follow up on the people who get the prize for economic research in the memory of Alfred Nobel. Most of those theories are debunked within a decade, several of the researchers are ruined and I even think a few of them are sent to prison. So yes, your description is very apt Morgoroth.