Should We Redesign Payroll Taxes?

[distraff]

I'd prefer going back to a system of tariffs to fund the government. Taxing our own people (especially the non-wealthy laborers) should be done as little as possible.

Actually tariffs are a hidden tax on your own people and the higher prices that result raise costs on consumers has the same effect as a sales tax. They are an example of the government using taxation to fix a problem with the free market by effectively being a sin tax. I don't believe in implementing a sin tax for any other purpose than to discourage the sin.

Another problem with the free market is natural monopolies. In some industries at certain technological levels the barriers to entry are so high that monopolies naturally form. For example water companies are natural monopolies because its impossible to have 20 different lines of pipes for 20 different companies going to each house and the cost to extend water pipe infrastructure to an area is enormous. That is why the government is involved in water. The fix for natural monopolies is to either let the government either to handle or heavily regulate the industry.

 

[phattonez]

Actually tariffs are a hidden tax on your own people and the higher prices that result raise costs on consumers has the same effect as a sales tax. They are an example of the government using taxation to fix a problem with the free market by effectively being a sin tax. I don't believe in implementing a sin tax for any other purpose than to discourage the sin.

Another problem with the free market is natural monopolies. In some industries at certain technological levels the barriers to entry are so high that monopolies naturally form. For example water companies are natural monopolies because its impossible to have 20 different lines of pipes for 20 different companies going to each house and the cost to extend water pipe infrastructure to an area is enormous. That is why the government is involved in water. The fix for natural monopolies is to either let the government either to handle or heavily regulate the industry.

I'm totally against monopoly as well. I want many businesses in this country broken up.

How would you combat American companies exploiting foreign labor if not with tariffs?

Sent from my HTC phone. Instaurare omnia in Christo.

 

[distraff]

I'm totally against monopoly as well. I want many businesses in this country broken up.

How would you combat American companies exploiting foreign labor if not with tariffs?

Sent from my HTC phone. Instaurare omnia in Christo.

I am in favor of limited targeted tariffs because tariffs have a history of backfiring (see the great depression). I also support regulations limiting monopolies. These two things means that we no longer have a free market, but it means we have a regulated market that is better for workers than a free market.

 

[Neomalthusian]

I'm totally against monopoly as well. I want many businesses in this country broken up.

Which ones? I'd be curious to know which companies you think have monopoly power, invoking government's anti-trust regulatory responsibilities.

Natural monopoly power is natural. There's nothing necessarily wrong with monopoly power as long as the government is involved in maximizing service provision and minimizing profit, usually through heavy regulation such as price-controls or public oversight commissions. Some things cannot provided well by an unregulated free market of competing firms. Utilities are the most common example.

 

[phattonez]

I am in favor of limited targeted tariffs because tariffs have a history of backfiring (see the great depression).

I'm not at all convinced that tariffs exacerbated the depression. The evidence for such an idea is specious. It's hard to disentangle the tariffs from the total breakdown of all Western economies.

I also support regulations limiting monopolies. These two things means that we no longer have a free market, but it means we have a regulated market that is better for workers than a free market.

Sounds good to me.

 

[phattonez]

Which ones? I'd be curious to know which companies you think have monopoly power, invoking government's anti-trust regulatory responsibilities.

Amazon is easily the most notable example.

Natural monopoly power is natural. There's nothing necessarily wrong with monopoly power as long as the government is involved in maximizing service provision and minimizing profit, usually through heavy regulation such as price-controls or public oversight commissions. Some things cannot provided well by an unregulated free market of competing firms. Utilities are the most common example.

And what do we with utilities? We nationalize them.

 

[Neomalthusian]

Amazon is easily the most notable example.

Fail. Incorrect. Amazon is not even a monopoly at all. It's the left wing's meme du jour, but not a monopoly. Try again if you want.

And what do we with utilities? We nationalize them.

There is no need to "nationalize" them. What we do with utilities is as I said in the previous post. As distraff pointed out, some industries become naturally if not practically inexorably naturally monopolistic, necessitating government involvement and regulation in their operations to prevent easy rent-seeking and inefficient levels of profit.

 

[phattonez]

Fail. Incorrect. Amazon is not even a monopoly at all. It's the left wing's meme du jour, but not a monopoly. Try again if you want.

Even Standard Oil didn't have 100% market share. That doesn't mean that it didn't have monopoly power.

There is no need to "nationalize" them. What we do with utilities is as I said in the previous post. As distraff pointed out, some industries become naturally if not practically inexorably naturally monopolistic, necessitating government involvement and regulation in their operations to prevent easy rent-seeking and inefficient levels of profit.

They're effectively nationalized. Let's not split hairs here.

Sent from my HTC phone. Instaurare omnia in Christo.

 

[D_NATURED]

So if you make good money and pay into Social Security your benefit will be capped. Basically, you just want to take someones wages and hand them to other people.

Why should I pay SS tax on a half million dollar salary if my benefit will be capped at $48k/yr? How is that fair and why would I possibly agree to such terms?

How is it fair to have old people eating dog food while your dog eats filet mignon? You guys are shamelessly greedy and cruel.

 

[Neomalthusian]

Even Standard Oil didn't have 100% market share. That doesn't mean that it didn't have monopoly power.

Amazon is not even close to a monopoly.

 

[Neomalthusian]

How is it fair to have old people eating dog food while your dog eats filet mignon? You guys are shamelessly greedy and cruel.

Social Security itself gives more money to the people who can already afford to feed their dogs filet mignon than it gives to the ones who are poor.

 

[phattonez]

Amazon is not even close to a monopoly.

You're acting as if this only becomes a problem once a company reaches 100% market share, that there is no problem if a company has 99.9% market share because that 0.1% is competition and that forces them to keep prices low and wages high. That's simply not true, and there's no reason to believe that. In fact, if there are only a few companies that dominate an industry and they all want to keep wages low, then they can do it.

The Goldman note builds on the work of many economists, including MIT’s David Autor, who wrote in a 2017 paper that globalization and new technology were driving the emergence of superstar firms. “Industries are increasingly characterized by a ‘winner-take-most’ feature where a small number of firms gain a very large share of the market,” he wrote.

The paper also pins the well documented decline in the proportion of income going to workers on superstar firms. Labor share, Autor argues, is not falling at the average company. Rather, those companies with higher profit levels and lower fixed labor costs -- and thus lower labor share -- are capturing more and more of total output. In other words, it’s a case of reallocation and not general decline. But it’s expected to get worse.

“As the importance of superstar firms increases, the aggregate labor share will tend to fall,” he wrote.

https://www.bloomberg.com/news/arti...n-spotlight-at-jackson-hole-eco-research-wrap

And here is the abstract for that paper:

The fall of labor’s share of GDP in the United States and many other countries in recent decades
is well documented but its causes remain uncertain. Existing empirical assessments of trends
in labor’s share typically have relied on industry or macro data, obscuring heterogeneity among
firms. In this paper, we analyze micro panel data from the U.S. Economic Census since 1982 and
international sources and document empirical patterns to assess a new interpretation of the fall
in the labor share based on the rise of “superstar firms.” If globalization or technological changes
advantage the most productive firms in each industry, product market concentration will rise as
industries become increasingly dominated by superstar firms with high profits and a low share of
labor in firm value-added and sales. As the importance of superstar firms increases, the aggregate
labor share will tend to fall. Our hypothesis offers several testable predictions: industry sales
will increasingly concentrate in a small number of firms; industries where concentration rises
most will have the largest declines in the labor share; the fall in the labor share will be driven
largely by between-firm reallocation rather than (primarily) a fall in the unweighted mean labor
share within firms; the between-firm reallocation component of the fall in the labor share will
be greatest in the sectors with the largest increases in market concentration; and finally, such
patterns will be observed not only in U.S. firms, but also internationally. We find support for
all of these predictions.

 

[Neomalthusian]

You're acting as if this only becomes a problem once a company reaches 100% market share

No, I'm not.

 

[phattonez]

No, I'm not.

Then why do you ignore the connection between decreased competition and lower labor share? Why do you think that wages at Amazon wouldn't increase if the firm were broken up?

 

[Neomalthusian]

Then why do you ignore the connection between decreased competition and lower labor share?

I don't ignore anything. Amazon isn't anywhere near a monopoly in general.

Why do you think that wages at Amazon wouldn't increase if the firm were broken up?

I haven't made any claim concerning wages "if the firm were broken up," there is no legal or rational reason to suggest it should be broken up because monopoly power. The conditions that have to be met (and should have to be met) in order for government to have a duty to split up a firm are not met in this case.

Wages are low for entry level work throughout the entire retail sector. Amazon is not some strange and unusual offender concerning wages. So why is Amazon being brought up at all? Because it's the partisan left wing's hot button du jour.

 

[phattonez]

I don't ignore anything. Amazon isn't anywhere near a monopoly in general.



I haven't made any claim concerning wages "if the firm were broken up," there is no legal or rational reason to suggest it should be broken up because monopoly power. The conditions that have to be met (and should have to be met) in order for government to have a duty to split up a firm are not met in this case.

Wages are low for entry level work throughout the entire retail sector. Amazon is not some strange and unusual offender concerning wages. So why is Amazon being brought up at all? Because it's the partisan left wing's hot button du jour.

Would wages be higher or lower if Amazon were broken up?

 

[Neomalthusian]

Would wages be higher or lower if Amazon were broken up?

No idea. The question isn't even clear. Wages just on the low end of Amazon's workforce? Or all Amazon wages? Or all retail wages? Or all wages in the economy?

Whether Amazon were "broken up" or not, the retail sector is 1) very competitive for price-sensitive customers and 2) relatively low-paying, at least for part-time entry-level positions. My assumption is that wages overall wouldn't noticeably change if Amazon were "broken up."

But returning to the original claim -- Amazon is not nearly a retail monopoly and thus there is no basis for the urge to see it broken up.

 

[phattonez]

No idea. The question isn't even clear. Wages just on the low end of Amazon's workforce? Or all Amazon wages? Or all retail wages? Or all wages in the economy?

Whether Amazon were "broken up" or not, the retail sector is 1) very competitive for price-sensitive customers and 2) relatively low-paying, at least for part-time entry-level positions. My assumption is that wages overall wouldn't noticeably change if Amazon were "broken up."

But returning to the original claim -- Amazon is not nearly a retail monopoly and thus there is no basis for the urge to see it broken up.

Thanks for just completely ignoring the paper I sent you that explains exactly how these massive firms have brought the labor share down to historic lows. I'm not going to argue with you when you just totally ignore the evidence that I present.

Sent from my HTC phone. Instaurare omnia in Christo.

 

[distraff]

I'm not at all convinced that tariffs exacerbated the depression. The evidence for such an idea is specious. It's hard to disentangle the tariffs from the total breakdown of all Western economies.



Sounds good to me.

Tariffs have a negative short-term effect even thought they might protect jobs in the long term. In the short term both countries put up tariffs which employs people working on these exported products. That is the immediate impact before the new jobs are created to replace them. This just adds to the death spiral of the depression. The tariffs also raise prices which reduces spending. Raising taxes is something you don't want to do during a depression.

 

[JoeTheEconomist]

The mechanics of the program have never been an issue but what the govt. did with the money is. Funding is as intended, use not so much. SS and Medicare ARE in Inter Govt. holdings and are funded by FICA which had the sole purpose of funding SS and Medicare and nothing else. The fact that there are trillions in IOU's should tell you something about what the bureaucrats do with dollars sent to them. Far too many people have no clue as to the taxes they pay, their purpose, or what the bureaucrats do with the money. The IOU's remain the issue and how they get funded.

The SSA says that the program has collected around 15.45 T in payroll taxes and distributed roughly $15.3 T in benefits. There is about $150 B in total in excess contributions. Since inception the program has received about $700 B in general fund subsidies. This means that 'the bureaucrats' spent every penny of excess contribution on one thing Social Security. I am dumbfounded how you can't understand that it is impossible for them to spend on anything else. The "trillions of IOUs" are mostly interest $2T and general fund subsidies $700 B - not excess contributions.

Your reasoning is based on non-facts, and your explanations are garbled. And you say "people have no clue". It is true. They have no idea how the world works in your mind.

 

[Conservative]

The SSA says that the program has collected around 15.45 T in payroll taxes and distributed roughly $15.3 T in benefits. There is about $150 B in total in excess contributions. Since inception the program has received about $700 B in general fund subsidies. This means that 'the bureaucrats' spent every penny of excess contribution on one thing Social Security. I am dumbfounded how you can't understand that it is impossible for them to spend on anything else. The "trillions of IOUs" are mostly interest $2T and general fund subsidies $700 B - not excess contributions.

Your reasoning is based on non-facts, and your explanations are garbled. And you say "people have no clue". It is true. They have no idea how the world works in your mind.

So where is the disconnect between what has been collected and the IOU's that now are in the account? Interest payments aren't debt obligations? Really? And I don't know how the world works? There is nothing centrist in your point of view nor is their accuracy or reality

 

[rickc]

So where is the disconnect between what has been collected and the IOU's that now are in the account? Interest payments aren't debt obligations? Really? And I don't know how the world works? There is nothing centrist in your point of view nor is their accuracy or reality

conservative

what is your point? you keep repeating that congress squandered the social security money. we all agree with that.

what has that got to do with fixing social security for the future?

is it that you feel congress will continue to squander any additional monies they receive? it seems to me that is your defense of your position on taxes. there is a disconnect between federal revenues and expenses. it seems congress has no understanding of the relationship between the two. Therefore why should we even pay any taxes.

well how do we elect fiscally conservative representatives?

 

[Conservative]

conservative

what is your point? you keep repeating that congress squandered the social security money. we all agree with that.

what has that got to do with fixing social security for the future?

is it that you feel congress will continue to squander any additional monies they receive? it seems to me that is your defense of your position on taxes. there is a disconnect between federal revenues and expenses. it seems congress has no understanding of the relationship between the two. Therefore why should we even pay any taxes.

well how do we elect fiscally conservative representatives?

Since we agree with it, why would you support giving more money to the bureaucrats that created the problem? To correct SS and Medicare Payroll taxes and SS and Medicare truly need to be removed from the budget and placed in that Al Gore lockbox meaning the way the system is managed has to change. The size and scope of the Federal Govt. has to change as we don't need a 4 trillion dollar federal govt. as I have pointed out many times and the actual taxes paid should fund the items those taxes were created to fund, not the operating expenses of the U.S.

 

[MTAtech]

Since we agree with it, why would you support giving more money to the bureaucrats that created the problem? To correct SS and Medicare Payroll taxes and SS and Medicare truly need to be removed from the budget and placed in that Al Gore lockbox meaning the way the system is managed has to change. The size and scope of the Federal Govt. has to change as we don't need a 4 trillion dollar federal govt. as I have pointed out many times and the actual taxes paid should fund the items those taxes were created to fund, not the operating expenses of the U.S.

Congress didn't "squander" the SSA trust fund. Given that the policies over the last 35 years have been to lower taxes, primarily on the rich, the choice was between borrowing the SSA Trust Fund and giving SSA special bonds in return or putting the SSA trust fund in a surplus 'lock box,' while the Treasury went out on the bond markets and raised trillions of dollars through debt. The effect is essentially the same.

The plain fact is that due to conservative policies, the government doesn't raise enough money through taxes as it decides to spend on Social Security, Medicare, Medicaid and defense. Bringing tax-rates back to where they were in the early 1970s would cure this issue.

 

[Conservative]

Congress didn't "squander" the SSA trust fund. Given that the policies over the last 35 years have been to lower taxes, primarily on the rich, the choice was between borrowing the SSA Trust Fund and giving SSA special bonds in return or putting the SSA trust fund in a surplus 'lock box,' while the Treasury went out on the bond markets and raised trillions of dollars through debt. The effect is essentially the same.

The plain fact is that due to conservative policies, the government doesn't raise enough money through taxes as it decides to spend on Social Security, Medicare, Medicaid and defense. Bringing tax-rates back to where they were in the early 1970s would cure this issue.

You can dance, divert, distort until hell freezes over but that doesn't answer the question, where did the IOU's for SS and Medicare come from? Your stunning hatred and jealousy of the rich doesn't do your credibility any good at all

Due to liberal policies and LBJ is the reason we have this problem and you don't seem to have a clue as to what you are talking about. It isn't the government's role to raise money to fund SS and Medicare as that is due to payroll taxes and had the money not been put on budget by LBJ you have no proof there wouldn't be enough money today to fund the liabilities but know, money wasted and you want to give them more. That is why liberalism is a disaster