Recession on the loom

[dvcgirl]

Germany is a nice model for a lot of things (and a terrible model for others - they haven't handled their immigrant issues any better than we have). They do have intergenerational households. A friend lives in the home her family has had for four hundred years. The family also owns an apartment in the city. At any given time, three (sometimes four) generations are living in these two homes in whatever configuration works best for the family. Family size is small - one or maybe two children. No car - trains in Germany are excellent still, and you walk or bike or bus where the train won't get you.

They took a hit integrating East Germany, and that hasn't worked its way through completely yet, but they pulled together.

And of course, there's the taxation in Germany vs. the U.S. The median personal income tax is much, much higher. They're over 50% whereas we're at 28%. And yet their corporate tax rate is lower. So yes, I do think that our corporate taxes should go down....which might stop some of the off-shoring we're seeing. But personal income taxes in this country have to go up. And I'm saying that knowing that my own taxes will definitely increase. It has to happen. There's no way around it.

And yet Germany has solid healthcare for all. A much better education system.....and so, we in this country need to balance things out a bit. We need to decide if we want a nation of the 1% of uber-wealthy Americans, 30% or more in poverty (as that percentage will surely go up from where we are today) and the rest of us in the middle.

 

[dvcgirl]

I agree with everything you said. You can now expect replies from people who believe that people should be able to make as much money as possible because that is the American way.

No CEO is worth 200 Million dollars, especially when the wages of the people they are paying are being subsidized by government programs such as food stamps and other welfare payments. There is something seriously wrong when people have to rely on government payments because even working 50+ hours a week they still qualify for these kinds of programs, I am not taking about people who have a tribe of children either.

You have people getting back $7000 - $8000 tax refunds when they paid less than $1000 tax for the year, if any at all. No matter what side of the fence you are on that is a redistribution of wealth, why should the government and tax payers be picking up the tab for this? Why shouldn't the burden of paying a responsible wage be on the companies who are making all the money?

Well, this is coming from someone who has voted for Republicans (I voted for Bush...but also voted for Obama). I definitely went through a real phase where I had anger as a high income earner....both my DH and I did. We're in the second highest federal tax bracket...a full 1/3 of our income goes right the government. But the older, and hopefully wiser I get....the more I realize that without a healthy and thriving middle class....we're going to continue to struggle.

I hear the argument all of the time that 48% of Americans pay no taxes. Well, that's not exactly true...many pay FICA....yes, there's the earned income credit and all of that. But the reality is that most of those people don't pay taxes because they can't afford to pay taxes!

What amuses me is that a lot of people who are all fired up about an increase in personal income tax, would not see their taxes go up by a penny. And yet, somehow they've been hoodwinked into identifying with this "Don't tax the rich!" message....when they're not even remotely wealthy.

I'm all for earning as much money as possible....but so many loopholes and advantages go to the wealthiest among us, that the playing field is skewed.

 

[OceanAnnie]

Seeing how our elected officials can not manage the money they have take in by taxation and borrowing, I don't think more taxation is the answer.

If they managed their own finances in this manner and were an average citizen they would be behind bars.

ETA- The very ones (elected officials) eschewing the rich and crying corporate foul are filthy rich themselves and dodging taxes. Oh the irony!

 

[Oglet]

Well, this is coming from someone who has voted for Republicans (I voted for Bush...but also voted for Obama). I definitely went through a real phase where I had anger as a high income earner....both my DH and I did. We're in the second highest federal tax bracket...a full 1/3 of our income goes right the government. But the older, and hopefully wiser I get....the more I realize that without a healthy and thriving middle class....we're going to continue to struggle.

I hear the argument all of the time that 48% of Americans pay no taxes. Well, that's not exactly true...many pay FICA....yes, there's the earned income credit and all of that. But the reality is that most of those people don't pay taxes because they can't afford to pay taxes!

What amuses me is that a lot of people who are all fired up about an increase in personal income tax, would not see their taxes go up by a penny. And yet, somehow they've been hoodwinked into identifying with this "Don't tax the rich!" message....when they're not even remotely wealthy.

I'm all for earning as much money as possible....but so many loopholes and advantages go to the wealthiest among us, that the playing field is skewed.

I'm not saying that businesses should not be able to make a profit, companies should be able to make healthy profits and there should be no limit put on the profit a company can make, however, there should be certain requirements that need to be met while making these profits. There is a reason a company like Disney ships thousands of kids off to work at WDW every few months and its not to give them real world work experience. The college program is workforce exploitation at its best, they are charged rent by Disney, paid low wages, have no union protection (and I am not a union person) while Disney take hours away from Part Time workers to give the new CP's. It happens all the time to the poor PT workers, their shifts are pulled after being posted and when asked why they are told its because they needed hours for CP's. CP's are worked FT hours without any kind of FT benefits. PT Disney CM's are on lists for months if not years for some roles to try and get FT.

Our system is broken on so many levels, lawsuits, health care, insurance costs, taxation, overseas jobs the list goes on and on.

Without sounding too full of doom and gloom, I don't know if we can ever fix the problems we have in this country.

 

[dvcgirl]

Seeing how our elected officials can not manage the money they have take in by taxation and borrowing, I don't think more taxation is the answer.

If they managed their own finances in this manner and were an average citizen they would be behind bars.

ETA- The very ones (elected officials) eschewing the rich and crying corporate foul are filthy rich themselves and dodging taxes. Oh the irony!

Yes, I agree that there's government waste. And yes...there's a lot of pork in a lot of bills. It's up to us to hold these officials accountable...and vote them out when necessary.

Our political system is broken...no doubt about it. But we can't continue to pile up deficits like we have for the last ten years and not eventually pay the piper.

I just think that the lowest personal income taxes in our nation's history for the last ten years have benefitted the top 1% disproportionately. Look where we are now. Even with this latest financial crisis....the worst since the Great Depression....that top 1% continue to see their wealth explode, while everyone else is either stagnant or in much worse shape.

The current model simply isn't sustainable, and to keep doing the same thing and expect a different outcome seems ludicrous to me.

 

[OceanAnnie]

Yes, I agree that there's government waste. And yes...there's a lot of pork in a lot of bills. It's up to us to hold these officials accountable...and vote them out when necessary.

Our political system is broken...no doubt about it. But we can't continue to pile up deficits like we have for the last ten years and not eventually pay the piper.

I just think that the lowest personal income taxes in our nation's history for the last ten years have benefitted the top 1% disproportionately. Look where we are now. Even with this latest financial crisis....the worst since the Great Depression....that top 1% continue to see their wealth explode, while everyone else is either stagnant or in much worse shape.

The current model simply isn't sustainable, and to keep doing the same thing and expect a different outcome seems ludicrous to me.

On that point, we agree.

Free our businesses from the out of control regulations. Maybe then some of those businesses will come back to the USA.

We need to stop the outrageous spending. Just stop it.

Stop being the world police.

Additionally, you can't levy heavy taxes on the rich without ramifications. There will be an exodus of the rich to countries that don't have penalties for success. The rich provide jobs by way of consumerism.

More money isn't the answer. The stimulus packages didn't work. That's one thing that keeps coming up with expectations that it will work after failing miserably.

 

[crisi]

You are going to need to both increase taxes on the wealthy (the wealthy have most of the wealth and you can't squeeze blood from a rock) and lower spending. The increased revenue needs to go towards retiring debt, not new programs. You are going to need to be very careful lowering spending though, since the government puts a LOT of money into the U.S. economy and is the source of a LOT of jobs and if that money dries up, the deep doo doo we are in gets a LOT deeper. But you don't get out of this mess without both increasing revenue and decreasing spending.

 

[crisi]

Additionally, you can't levy heavy taxes on the rich without ramifications. There will be an exodus of the rich to countries that don't have penalties for success. The rich provide jobs by way of consumerism.

Well, the U.S. has this really unfair tax system - we make citizens pay U.S. taxes whether they live here or not. And we don't let you renounce your citizenship for tax reasons. If you stop paying taxes, you won't be able to set foot in this country again without risking jail. So I don't think its a real risk - I used to, but people do want to be able to come and go.

As to jobs, I used to believe that too. And then I saw my wealthy CEO and COO start to move all of our jobs overseas. In ten years, we won't have much of a U.S. footprint at all. We are a bigger company than we were in 2008 in terms of employment - but smaller in the U.S. Giving companies or the wealth tax breaks in the U.S. does mean jobs creation - but not necessarily in the U.S. Don't let the rich blackmail us over jobs they aren't going to deliver to us.

 

[OceanAnnie]

Well, the U.S. has this really unfair tax system - we make citizens pay U.S. taxes whether they live here or not. And we don't let you renounce your citizenship for tax reasons. If you stop paying taxes, you won't be able to set foot in this country again without risking jail. So I don't think its a real risk - I used to, but people do want to be able to come and go.

As to jobs, I used to believe that too. And then I saw my wealthy CEO and COO start to move all of our jobs overseas. In ten years, we won't have much of a U.S. footprint at all. We are a bigger company than we were in 2008 in terms of employment - but smaller in the U.S. Giving companies or the wealth tax breaks in the U.S. does mean jobs creation - but not necessarily in the U.S. Don't let the rich blackmail us over jobs they aren't going to deliver to us.

Class warfare is dangerous.

 

[Judyat]

Yes you are going to need both taxes on the rich and reduced spending. Anyone who says otherwise is not dealing with the reality of the situation. And while we're at it let's stop the tax breaks for big oil and corporate jets. It all helps and anyone who says otherwise is pulling a con on the American people. Time to wake up folks and demand our rights or big corporations will swallow us up.

 

[Muushka]

Well, this is coming from someone who has voted for Republicans (I voted for Bush...but also voted for Obama). I definitely went through a real phase where I had anger as a high income earner....both my DH and I did. We're in the second highest federal tax bracket...a full 1/3 of our income goes right the government. But the older, and hopefully wiser I get....the more I realize that without a healthy and thriving middle class....we're going to continue to struggle.

I hear the argument all of the time that 48% of Americans pay no taxes. Well, that's not exactly true...many pay FICA....yes, there's the earned income credit and all of that. But the reality is that most of those people don't pay taxes because they can't afford to pay taxes!

What amuses me is that a lot of people who are all fired up about an increase in personal income tax, would not see their taxes go up by a penny. And yet, somehow they've been hoodwinked into identifying with this "Don't tax the rich!" message....when they're not even remotely wealthy.

I'm all for earning as much money as possible....but so many loopholes and advantages go to the wealthiest among us, that the playing field is skewed.

People who say that 48% of Americans pay no taxes should be saying that 48% of Americans pay no income taxes.
The point being that people who pay no income tax have no problem saying that others should pay more income tax.
They have no dog in the fight.

Also that old argument that people make that Warren Buffet's secretary pays more taxes than he does (many people quote that too, incorrectly). She may pay a higher rate, but certainly not more taxes. And I understand that Buffet is a bit behind in his tax burden.

I agree with the loopholes statement. If they reformed taxes, the tax breaks that the truly wealthy manage to find, would disappear.

On that point, we agree.

Free our businesses from the out of control regulations. Maybe then some of those businesses will come back to the USA.

We need to stop the outrageous spending. Just stop it.

Stop being the world police.

Additionally, you can't levy heavy taxes on the rich without ramifications. There will be an exodus of the rich to countries that don't have penalties for success. The rich provide jobs by way of consumerism.

More money isn't the answer. The stimulus packages didn't work. That's one thing that keeps coming up with expectations that it will work after failing miserably.

 

[punkin]

Globalization dictates that companies will outsource jobs to places where the labor costs are lower than the US (making allowances for comparable productivity). However, as the US slides into recession (depression?) and the dollar retreats, comparative labor costs will drop here. American labor will be cheaper than foreign labor and companies will come flocking back. Frankly, this scares me.

Class warfare...that's a joke. For the past 30 years or so, there has been a war and the working class has been losing.

 

[OceanAnnie]

Yes you are going to need both taxes on the rich and reduced spending. Anyone who says otherwise is not dealing with the reality of the situation. And while we're at it let's stop the tax breaks for big oil and corporate jets. It all helps and anyone who says otherwise is pulling a con on the American people. Time to wake up folks and demand our rights or big corporations will swallow us up.

You could say we are going to need another stimulus package in addition to reduced spending, and get the same exact results. More money didn't work. That is the reality. They don't know how to handle it!

 

[Colleen27]

And of course, there's the taxation in Germany vs. the U.S. The median personal income tax is much, much higher. They're over 50% whereas we're at 28%. And yet their corporate tax rate is lower. So yes, I do think that our corporate taxes should go down....which might stop some of the off-shoring we're seeing. But personal income taxes in this country have to go up. And I'm saying that knowing that my own taxes will definitely increase. It has to happen. There's no way around it.

And yet Germany has solid healthcare for all. A much better education system.....and so, we in this country need to balance things out a bit. We need to decide if we want a nation of the 1% of uber-wealthy Americans, 30% or more in poverty (as that percentage will surely go up from where we are today) and the rest of us in the middle.

I agree. I think particularly through this financial crisis it has become very clear that govt is no longer working for the people. They're working for reelection, ideology, campaign donations, you name it but not for the long-term good of the nation as a whole.

We CANNOT continue to borrow to support policies of low tax rates and indirect subsidies to businesses which serve only to concentrate wealth in the hands of the few, and for the life of me I cannot understand how the "Atlas Shrugged" rhetoric has gained such momentum in the current economic environment when our own history shows much more stability, more sustainable/even growth, and an economy that was much more beneficial to the entire nation rather than just to a select few.

We're a consumer based economy. That means we need consumers, and 20 households earning 50K/year generate far more economic activity than one household earning 1M/year. That's an inescapable fact and one that our "leaders" seem determined to bury their heads in the sand and ignore.

 

[Colleen27]

Class warfare is dangerous.

That's not class warfare. That is fact backed up by plenty of recent history, and evidence of one of the biggest misunderstandings that permeates economic discourse these days - the rich, big business, however you want to label it DO NOT hire in response to higher profits or lower taxes. They hire only when it makes sense to do so based on consumer demand. So we bail them out at the top, supposedly to save jobs, but instead find they sit on the money. Why? Because top-down stimulus does NOTHING to increase consumer demand so there is no incentive to hire.

That joke of a stimulus package would have been much, much more effective if instead of spending $200K+ to create a $30K/year job they'd just issued checks to every American household. Direct stimulus gets spent - people pay down debt, make home repairs, buy higher-dollar items like furniture or appliances, take vacations, and that money flows through the economy rather than fattening up the "cash reserves" line on a corporate balance sheet. But to suggest such a thing would be political suicide - politicians must at all costs avoid the perception of handing someone even one dime that isn't earned (unless it is handing that 200K to be divvied up between various stakeholders before creating that low-wage job).

 

[Oglet]

I agree. I think particularly through this financial crisis it has become very clear that govt is no longer working for the people. They're working for reelection, ideology, campaign donations, you name it but not for the long-term good of the nation as a whole.

We CANNOT continue to borrow to support policies of low tax rates and indirect subsidies to businesses which serve only to concentrate wealth in the hands of the few, and for the life of me I cannot understand how the "Atlas Shrugged" rhetoric has gained such momentum in the current economic environment when our own history shows much more stability, more sustainable/even growth, and an economy that was much more beneficial to the entire nation rather than just to a select few.

We're a consumer based economy. That means we need consumers, and 20 households earning 50K/year generate far more economic activity than one household earning 1M/year. That's an inescapable fact and one that our "leaders" seem determined to bury their heads in the sand and ignore.

The math doesn't lie.

20k households trading in/buying maybe purchasing a new car is better for the car maker than 1 person making 1Million/ year buying one expensive European car

20k households going on vacation is better for airlines and tourism than a person making 1/Million a year

20k households will spend far more money on food than 1 person making 1 million/year

20k households being able to purchase a new home and maintain payments has a far greater impact on things than building 1 multi million dollar mansion.
not only are they spending money, they are putting money in the hands of other people who will in turn be doing the same.

A strong middle class has a huge impact on how the economy is in general.

Obviously these numbers are skewed but the concept is simple, the middle class is always going to far outweigh the uber wealthy in terms of numbers. Its because of a strong middle class than many of the uber wealthy are currently in that position.

BTW 1 Million/Year isn't uber wealthy. 1 Million isn't what it once was either.

When your middle and lower class can longer afford to purchase products then who is going to win then? No one, less tax revenue, less jobs, higher unemployment, lower profits and one huge mess.

 

[karice2]

I read most of the posts on this board and think that we probably make more sense than our elected officials. Politicians hold up the dying middle class as flag to say that we need to do something to fix it but then enact laws that are directly detrimental to the middle class.

Let's be honest, most of the middle class people we are speaking of are the people who didn't go to college but could do some sort of trade or work in a factory. They bought home a decent enough salary to go out for dinner once in a while, maybe go on vacation every couple of years and put away enough for their kid to go to school. Those jobs have been vanishing to a point that one cannot do an honest day's labor for a decent living wage. No matter what anyone says $8 is not a living wage in most parts of the country.

We have helped to put ourselves in that situation by insisting on more and more for less and less. Two industries come to mind, construction and lawn maintenance. The salaries in those industries have steadily decreased over the past 25 years.

We toss around the words "knowledge workers" as our saving grace. Not everyone is going to be a knowledge worker because they can't retain the knowledge if they wanted to.

We have over regulated some industries to the point that it couldn't exist in this country even if they wanted to. Most of the time, the ingenuity of the American people has brought us out of our previous down economies. It is now to expensive to be ingenious and put people to work. The unemployment taxes in Maryland alone has put a hold on any business idea that I would want to implement.

What is most frustrating is that Congress can't stop acting like petulant children long enough to do something that is meaningful and far reaching. Ideology doesn't put food on the table. Jobs do.

 

[crisi]

Class warfare is dangerous.

The rich (and by many measures, I am rich - I'm getting my taxes raised in almost every version of "tax the rich" that I've seen) have been waging a war against the working and middle class for 30 years - the working and middle class just haven't realized it. Yes, it IS dangerous, its part of why we are in this mess.

 

[blondietink]

Here is my own situation/views on the class warfare situation. Our family is considered "middle class". Yes, I have been unemployed for 15 months now. But, my DH is retired and we have his pension and social security for income which puts us in the middle class bracket. We do not qualify for any "social" programs which are supposed to aid people who are unemployed such as myself. It really irritates me that when I buy groceries and I am buying cheap chicken, no-name brands, etc., that the person considered "poor" ahead of me in line is buying steak and other luxury foods with their food stamps that I as a middle class person cannot afford. I also do not qualify for HEAP, rental subsidy, free higher education, free health care (Medicaid), income tax refunds,free cell phone service, etc. because of my middle class status, even though we have a lower standard of living than those considered "poor". We also bought our house in the 1980's, when the interest rate on a mortgage was 10%. We managed to pay it off without any help by having our interest rate reduced, amount owed reduced, assistance with a deposit, etc. It seems that in this society, the more well-off are in the "poor" income bracket while the middle class is being shafted. JMHO

 

[DawnM]

Breakdown of income compared to others in the USA:

http://www.mybudget360.com/how-much...reaking-down-the-us-household-income-numbers/

Breakdown of who actually pays the taxes:

http://www.american.com/archive/200...zine-contents/guess-who-really-pays-the-taxes