"Socialist Tendencies"

[HarmanSingh]

Leading up to the election we have heard a lot of talk from the right about ?socialism? and attacks on Obama for being a ?communist? and his supposed dreams of creating a welfare state. But what is not being discussed is the actual ISSUE of supply side economics and the McCain/Palin view of the way a nation should tax/spend and the way Obama/Biden think a nation should tax/spend. Instead, we just hear people regurgitating the talking points of Obama wanting to take all the money from wealthy Americans to give it to the poor. What is funny is if you actually ask many of these people what exactly socialism is, they seem to struggle to actually define it. And to top this off, for McCain/Palin to have the gall to call Obama a socialist while he just approved & raved about the bailout plan which nationalized American banks is amazing. The way these guys speak out of both sides of their mouth and the way people eat it up as if socialism is this evil out to get America is sickening. And if you need any more proof of the desperation of the McCain campaign to find ANYTHING to make Obama seem ?risky?, just watch this clip: http://www.youtube.com/watch?v=31A1t6_bZ08 . I guess we have 2 socialists running for the presidency?

Supply side economics sounds good on the surface for a logical person. It argues tax cuts and business incentives encourage economic growth that businesses and individuals will use tax savings to make new businesses and grow old businesses, which in turn will increase productivity, employment, and general well being. If taxes are raised for the wealthy, businesses will cut employee benefits, cut jobs and may send them overseas. But if you actually look at the results, this idea falls flat on its face.

The fastest amount of growth in this country was during WW1 and WW2, when taxes were at the highest. Well, you could argue World Wars are anomalies and those periods should be thrown aside. Fine. Check this chart out: http://www.nytimes.com/interactive/2008/10/14/opinion/20081014_OPCHART.html

Here is another good article debunking supply side economics and examining the McCain & Obama views on it:
http://www.nytimes.com/2008/03/26/business/26supply.html?_r=1&partner=rssnyt&emc=rss&oref=slogin

 

[KaraN]

great post Harman i totally agree with u man and i only have one thing to say, i heard that obama has the same economic advisers as clinton, so when people call obama a socialist for his ways...hello! clinton did the same exact thing before. Politics is politics and what is happening is that people just want the facts point blank and simple...and wat mccain and obama were doin b4 was just the usual campaign talk but i think at the last debate obama came out and sorta said what he was gonna do and wat he wasnt....john mccain was a funny person man i remember watchin him on late night 2-3 years ago and he was a nice person...now he just seems like a old man needing some anger management issues...i just hope america doesnt mess up 3 times in a row now

 

[Summy]

Is this really a debate issue in the states right now? Sorry I may be out of the loop, but do people honestly really think in America that additional taxation of high income individuals is socialism?

Every successful country that isnt at the mercy of privatization in the government employs additional taxation for the wealthy- america does it to an extent. The problem with Obama's plan in my opinion and how it opposes for example the Canadian taxation system is the fact that taxes purpose is to drive government. If government just handed out a huge 840 billion dollar handout, I really want to know how Obama is planning to reduce the defecit, stimulate the economy with no additional taxation to 95% of the country and pay for not only this package but there is talk about another stimulus package by only adding taxes to higher income owners more. The reason why war statistics are not comparable is because taxes were high in the world wars to fund the wars.

The United States pays the lowest tax rate per household I think in the world with something like 2 or three children. It is by a huge amount. You guys pay about 20% less than each family does around the world. The reason why your household taxes are so low, is because everything is privatized in your country for the purpose of wealth. Your government becomes wealthy with private buisnesses, your law makers, the rich become richer. The first step for an overhaul of the american system to starting to drive the government from income tax of its residences and stop making CEOs and the buisness sector of your country the end all be all. The TSX (canada's market) may have went down but my tution fees, and my health premiums dont go up a bit. They are independent of the actions of large buisnesses. The housing market is safe here for the time being because its not private institutions that are the seconardy lenders like Mac and Mae.


This is the problem with Obama's plan and why it differs from other international nations. The way the canadian tax system works is that one is taxed for their income on a escalating bracket. I posted this before, so ill post again....

"Firstly, just to explain the canadian tax system for americans. Okay, so each purchase, no matter what, you get taxed. Go and buy a 1.00 choclate bar, with tax, it will come up to 1.13. You go out and buy a car, for 50,000, you will be taxed 13% of that purchase. This is independent and separate to your income tax.

Your income tax, you file once a year. You have tax brackets in Canada. I think the numbers are 15% up to 40,000, then 22% up to I think it is 75,000, and then some number above that. But the way it works is different than what Obama is purposing. Lets say I make 60,000/ year. I will pay 15% the 40,000 (maximum allowed in first bracket) and then 22% out the remaining balance (20,000). Lets say I make 150,000/year... Well then I will pay 15% of 40,000, then 22% of 35,000, the the remaining percentage will be paid by the next brackets. So you pay by each bracket you are above. So its not like your paying 22% of 70,000. Your paying 22% of 30,000, and 15% or 40,000...

The problem with Obama is that for those making over 250,000 +, he will tax you on that total income, and not the escalating tax brackets. So people have legitimate concerns saying, for the same 50,000 I make, why do I get taxed more than the 50,000 another person makes. BUT, in Canada, and the world for that matter, that is not an excuse. You are taxed equally for your 50,000, and as you earn more, taxation changes for you. We think of rich people as those who may not work as hard for their money, but many of them have sacrificed. It is really a fair and honest concern to critisize obama and say why is my 50,000 more taxable than someone elses./


Taxation and increases are nessceary and when you have a dual taxation like in Canada, then you are able to cut taxes equally to the rich and the poor. In America, because of privatization and the fact that the United States government income is dependent largely of private companies who dictate taxation of the residences, your taxes are dependent on the brackets above you. If your a middle class person, your taxes are dependent on how much the rich pay, and vice versa....

Obama's plan falls WAY short of the international community. I have never heard socialism brought up in Canadian debates, or anywhere else in the world as the UK and Europe employs similar taxation tactics. I would be very surprised if Obama keeps his word with his tax breaks to the middle class, sheer spending has left the government handcuffed.

You cant depend on the rich for everything. You need to tax the middle class especially if your in an economic low. How he plans to stimulate the economy from taxing 5% of the population is BEYOND me. There is no way he can tax 250k+ people and recieve as much as a stimulus as if he taxed the middle class. It doesnt surprise me that the middle class is his strong hold, and who he is catering too. It surprises me that people cant see beyond his bullshit as well. Obama's platform wouldnt get him elected a mayor in any other country. His tax plan is dumbed down for the american public. Harman you said it yourself, America was at its best when taxes are high, so when he decides to not increase the taxes to the middle class at all, how is this beneficial for america especially during these times?

Bottom line, take a lesson from the world america.

 

[Saleem]

SUmmy are you sure about what you said regarding Obama and total income over $250K, what I have read is that it's rather normal, that is, tax on the marginal income. And he says the same in his discussion with the now infamous Joe the Plumber. Please elaborate/cite thanks

 

[Summy]

Obama is proposing like pseduo european tax plan, which is a veil for what is reality. Basically, what he is proposing in a sense of marginal taxation but marginal taxes can and will be represented as effective tax rates. The difference between Obama's plan, which I am for, as opposed to McCains, is that he taxation is independent of local and state taxes. So in effective the marginal rate for the upper tax bracket, and even the the upper middle class bracket, will double which at the top bracket becomes like a fix rate. So the a progressive tax rate like that in Canada is different in Obama's plan because Obamas plan is only marginally progressive up till 250. But I can see the mix up here. I should have choosed better words, its not that Obama will tax you for the total 250, it is that under his state and local independent tax rates, he would tax in a manner that would give the illusion of taxation on the full 250k. In Canada, your taxation rate is included with your GST, and PST which are filed with your income tax as a whole property.


But thats beside the point, the real issue is if, or how much he is lieing. Listen, both candidates are not going to say they are going to raise taxes to the middle class, they would get hammered. The bottom line is, like Harman pointed out, economic boosts or booms, what the economy is lacking right now, is usually accomplished with raising taxes and increasing government revenue. You cant possibly keep the taxes right now the same, and cut montly expendatures like the war in iraq, and deal with a finicial crisis that looses billions a day. You have to raise taxes, you have to increase government revenue.

The biggest problem with Obama's plan is the ability to disguise personal income and buisness tax, because of the taxation levy on the middle class. People can all transfer their compensation from wages to capital gains, since the capital gains under obama would only be at 25%. That makes each company want to make sure their stock raises by any means. His plan is alot better than McCains who has no plan to increase taxes at all but waits for the magic fairy to bring the US out of defecit and stimulate the economy. All I am saying is that Obamas tax plan is almost a pseduo european plan, and he should include taxation on the local and states levels into his plan so its not like your taxed twice for the same income.

As opposed to McCains tax plan, Obama's is better, but it is far from reality. If he doesnt increase your taxes, he will increase government revenue in some manner. I dont believe this waste government program bullshit because if that was true the preceeding 10 presidents would have done something about them.

The fact is if he doesnt plan to raise taxes in the middle class, and he only wants to return the upper 5% taxes back to pre-bush tax cuts, then how the heck does he expect to pull the economy out of its downspiral. Stephen Harper our PM said in our PM debates, that be prepared if the worst happens for your income tax brackets to get higher, as did the opposition leaders, as it is the most practical way to get out of a recession. So I think people are caught up in the moral hype around taxing the rich like Harman's post, but the fact of the matter is, the government will have to tax you unless they are just willing to ride out the storm.

 

[Summy]

P.S.

It would be interesting to hear what you guys have to say about this, which I dont necessarily agree with, which goes against what harman posted:

 

[KaraN]

Its funny how when the world's economy was getting played i remember telling myself...what about canada we never hear their name when cnn talks about global financial crisis...now i know why..thanks summy.

 

[[Sher] Imran]

In regards to the comment made about being concerned as to why a person who makes 50k is being taxed differently than a person who makes 250k (and why the latter's 1st 50k is taxed differently), when you look at it on a stratified basis, then yes you are correct. But Obama's tax policy, according to his tax factsheet @ http://www.barackobama.com/pdf/taxes/Factsheet_Tax_Plan_FINAL.pdf says that if you're making over 250k, you won't pay at a higher rate than you would've in the 1990s (aka 39.6%). He also wants to jack up Cap Gains tax to 20%, as well as increase payroll taxes if you bank in more than 250k (up to 6% or something?). I dont think its about taxing the 5% as much as its about NOT taxing the other 95%. Tax relief for the middle class, combined with an increase of tax revenues from the upper class might give us the jump we need. In essence he is asking the wealthy to shoulder the load for a bit, very opposite from what Regan proposed with his supply side tax cuts. You're putting money back into the hands of people who spend it immediately on consumer goods. If you give Joe the Plumber the tax break that Obama is proposing, he isnt going to go buy a long term business asset like a building- he's gonna go buy a computer, or maybe a car for his family, something immediate. In the short term, this could start the flow of money that this economy is in desperate need of. I'm not really sure how this plan will work with the taxation of the upper class, especially since the AMT has been renewed.

We also pay a tax on purchases, although it varies per state/city/county. The sales tax is an excellent way for local govt's to raise money for infrastructure and what not. I would be a huge fan if the federal government could swoop in, skim 1% of the sales tax proceeds, and offer a credit for sales tax or something. If businesses can add taxes to their cost of production and charge a higher price, why can't we benefit in a similar way from the taxes we pay? I feel that there is a lot of potential in sales tax revenue, if we refine it.

Once you go Barack, you never go bock.

 

[Summy]

Can people not see the problem with Obama's plan? Man, I knew he was glorified, but to this extent?

Lets look at the last recession. Obama always says america is in its worst economic state since the great depression. The times are different, but lets see how America recovered from that depression and consequently the lessons learned in other countries. The government began heavy heavy spending in the late 30's and in 1940 mainly in arms and military. What that did was give security to those spenders on where their tax money would go. Taxes incrased.

THe war employed about 20 million new youth, which dealt with a huge problem of unemployment. The government depended on small buisness which was important. During teh war, the government subsisized qages through cost plus contracts. These were contracts that the government paid in full plus a percentage on top of that for profirt. That meant that what buisnesses would do would that they would take unskilled workers, which were the mass population of the unemployed and train them at the governments expense. That helped the economy gain some steam.

The taxation of buisnesses rose but only in accordance to the profits that buisnesses were creating with the new labour and government funding. The bottom line is taxes got higher in all classes. It is absolutely great that Obama has a plan to tax the rich, which is great. Morally amazing. But when we move beyond a campaign and you start thinking about how his tax plan may work in fixing the economy, something is missing. Your not going to see the McCain camp critisizing him for that because they dont want to admit that taxes should be higher either.


PEOPLE have to see through his shit. I know hes great, and hes this new frontier and this meshiah of the middle class, but can nobody really see beyond politics in his platform? There is NO possible way to get out of a recession without increasing resident output and increasing government revenue. Thats the way its going to happen and its great he will do that to the upper class, but pre bush tax cut rates are not sufficent. In the 1990s we were not in a recession. You need an influx of capital, you need more.

You cant have a 1990 Tax plan for the problems of 2008. Obama is smarter than that, and so are his advisors. They will change their plans in office and do not get things twisted, he knows what he is doing.

 

[HarmanSingh]

Summy,

By no means am I an Obama groupie. In my opinion, he has a better ideology and world view than McCain, and has a better chance of restoring some sort of economic stability to middle America. Heck, just last year McCain said himself that he was not well versed in economics and just days before the meltdown on wallstreet he was insisting that the fundamentals of the economy were strong. Believe me, I am not getting it twisted and thinking Obama is going to go into office, wave a magic wand and fix every problem the world has ever seen. I wish people would realize Democrats and Republicans really aren't that different. Sure, they have some basic differences. But when it comes down to it, they are all at fault for where we are right now with this economic crisis and 2 wars. And I do acknowledge that what he is saying now may not be what is done when he gets into office. But really...when has any politician been 100% with the people?

Regarding the tax policies, I think their may be some twisting of the facts/confusion going on here. Here is a link to the candidates' tax plans that shows how his tax policy is not redistribution of wealth: http://www.taxpolicycenter.org/UploadedPDF/411741_updated_candidates.pdf

McCain proposed rolling back the corporate tax rate 10% as an incentive to draw business. However, even if you believe that this will stimulate the economy (another opinion, not a fact, and one that has no credibility among economists), it will not actually effect either corporate or public revenue, considering that 66% of corporations registered in the US paid NO taxes between 1999 and 2005
http://www.gao.gov/new.items/d08957.pdf

Also, there are many unionized workers that have either failed to see even cost of living pay raises over the next decade or lost their job to outsourcing, while corporate profit margins are actually the highest they have EVER been. This lack of income in the lower quartile of income has been cited as perhaps the largest cause of the current recession. Many economists and the non-partisan Council for Foreign Relations concluded that the most effective way to counter this trend would be including a unionization plank in our foreign policy. So, unions are more necessary to the economy than ever http://www.economist.com/opinion/displaystory.cfm?story_id=3645126

I know some of these points may be scattered, but I think you guys get the point.

 

[HarmanSingh]

By the way Summy, that chart is from the Heritage Foundation- a conservative thinktank which laid the groundwork for the Iraq war. These guys' donations come from large corps and their mission is to: "formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense." They worked hard to get Reagan elected and even Reagan's budget director has admitted his policies were a failure and just led to a growing divide between America, while the wealthy profited.

I don't t think we should take what they publish at face value.

 

[Summy]

I dont think there is much a debate here as long as people understand that Obama's current tax plan is a way to springboard him into office. I realize the picture I posted is from a questionable source but the NY times isnt the most neutral enterprise themselves.

But there is a connection between high taxes and unemployement. But in todays economy, you need high taxes because with a recession the employment will be higher without high taxes then it will be.

The reason why presdential elections are so tiring is because there is very little reality involved. Obama is going to raise taxes maybe giving a lesser raise to the middle class IF he is serious about getting the US out of this spiral ASAP. McCain would launch the country into further depth, although unlike somone else, I believe his belief that he would buy up the sub prime mortgages is a better idea than what Obama has proposed.

We will see where this goes, but I think a better discussion would be where the economy failed and how the international markets had less of a hit than Americas and why.

 

[[Sher] Imran]

I think we as Americans glorify our economic system to the point where we are blinded by the reality of the situation, and its obvious that this was a prime example. The foreign markets took a hit, but obviously not as much as the US, probably because foreign investors arent retarded enough to hold onto sub-primes (luckily we are). When you have banks that are over-leveraging themselves, as they did during the real-estate bubble, the collapse is just that much more magnificent. From a finance perspective [as someone who is applying to hedge funds], it seems that boutique i-banks, p/e firms, and hedge funds are popping up as the big boys are falling down. Banks have diversified their risk, but you're not going to find foreign banks/markets that are going to buy up that much risk- we have the mentality that everyone still worships us, but i think the reality is that everyone LOLs at us when we aren't looking.

There shouldn't even be sub-prime lending, both sides are at fault. I was fiercely against the bailout, because if i ever am that f*** stupid and have to declare bankruptcy, NO ONE is going to come to my aid and drop me $1million, so why the F should i give these dumbass companies scrilla to go on hunting trips and get facials?