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income inequality debate

WFFaithful said:
http://www.vox.com/2014/10/7/6921153/buybacks-dividends

"CEOs have increased the proportion of cash flow allocated to stock buybacks to more than 30 percent, almost double where it was in 2002, data from Barclays show. During the same period, the portion used for capital spending has fallen to about 40 percent from more than 50 percent. The reluctance to raise capital investment has left companies with the oldest plants and equipment in almost 60 years. The average age of fixed assets reached 22 years in 2013, the highest level since 1956, according to annual data compiled by the Commerce Department."
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Hell yeah milk that shit CEOs you earned it cuz you took the right classes and went to the right school and whatnot you tried harder than the poors.
 
Bootstraps! Try harder pussies.
 
That is an absolutely asinine position to take. So by the donor keeping its own money and giving it to the school, that is actually the government giving the money to the school? So any business expenditure for which a deduction is taken, the government is giving a portion of the money to the recipient? Or any other deduction for that matter? That is ridiculous. So how much money did the government give childcare workers last year? Howabout fast food workers via claimed meal deductions? That makes two massive assumptions: (1) that the donor would have not made the donation without the deduction; and (2) that the money would not have been spent on another deductible expenditure in lieu of the donation. Tax is calculated on net taxable income, not a build-up of each and every individual component. This article is basically starting from the position that all money is the government's unless a citizen is allowed to keep it, which is (at least in theory) the exact opposite of how it actually works. It is the citizen's unless it is taxable.
 
@2&2: calculating "tax expenditures" is a very common way of analyzing how government interacts with the economy. Tax deductions for childcare and so forth are "tax expenditures" in the same way as charitable writeoffs. If there is a stated tax rate, every deduction against that tax rate is a loss of potential revenue and should be at least recognized as such when considering government activity. These deductions are important drivers of economic decisions, just like sending a social security check to an old lady is an important driver of her economic decisions.

The ideological split here is important, but not in the way that you describe. Rather than assuming all money is the government's, as you disparagingly put it, I see tax expenditures as a prime way that our overlords in Washington hide the ball when giving away money to their well-heeled friends. Tax expenditures don't benefit the poor much because they don't have much income to use the deductions against. They disproportionately benefit the wealthy (the mortgage interest deduction is the best known example). If these deductions were not important, there wouldn't be legions of lobbyists in DC trying to get more and more of them all the time. That in and of itself is an important reason to understand them and treat them as what they are, government subsidies to well-connected players.
 
2&2 Slider To Leyritz said:
That is an absolutely asinine position to take. So by the donor keeping its own money and giving it to the school, that is actually the government giving the money to the school? So any business expenditure for which a deduction is taken, the government is giving a portion of the money to the recipient? Or any other deduction for that matter? That is ridiculous. So how much money did the government give childcare workers last year? Howabout fast food workers via claimed meal deductions? That makes two massive assumptions: (1) that the donor would have not made the donation without the deduction; and (2) that the money would not have been spent on another deductible expenditure in lieu of the donation. Tax is calculated on net taxable income, not a build-up of each and every individual component. This article is basically starting from the position that all money is the government's unless a citizen is allowed to keep it, which is (at least in theory) the exact opposite of how it actually works. It is the citizen's unless it is taxable.
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I'm firing my accountant. Sorry Jay.
 
Deacon923 said:
@2&2: calculating "tax expenditures" is a very common way of analyzing how government interacts with the economy. Tax deductions for childcare and so forth are "tax expenditures" in the same way as charitable writeoffs. If there is a stated tax rate, every deduction against that tax rate is a loss of potential revenue and should be at least recognized as such when considering government activity. These deductions are important drivers of economic decisions, just like sending a social security check to an old lady is an important driver of her economic decisions.

The ideological split here is important, but not in the way that you describe. Rather than assuming all money is the government's, as you disparagingly put it, I see tax expenditures as a prime way that our overlords in Washington hide the ball when giving away money to their well-heeled friends. Tax expenditures don't benefit the poor much because they don't have much income to use the deductions against. They disproportionately benefit the wealthy (the mortgage interest deduction is the best known example). If these deductions were not important, there wouldn't be legions of lobbyists in DC trying to get more and more of them all the time. That in and of itself is an important reason to understand them and treat them as what they are, government subsidies to well-connected players.
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It may be common, but to quote the favorite trump phrase of our resident board libs, it is "intellectually lazy". To try to make a direct link between the amount of the deduction, the amount of the gift, and the "lost" tax revenue so as to equate the lost revenue with a portion of the gift assumes that everything else is completely equal absent the applicable deduction with respect to both donor intent and economic/tax ramifications, which assumption is simply not the case in virtually any situation, let alone transactions of the size being thrown around in that article. If I have the means and want to give $30 million to Princeton because that is how much my dream dorm costs, then chances are I am giving them $30 million to build the damn dorm, regardless of how it impacts my tax bill the following year. The tax ramifications may factor in one way or another to some degree, but it is not a simple dollar-for-dollar offset with respect to how much the donee actually receives.
 
Put another way, do you cheap out on giving people birthday presents because you don't get a tax deduction for them? Do you do the math each time you buy a birthday present to determine what you would have spent on it had it been deductible, or do you give them what you think would be a nice present anyway?
 
2&2 Slider To Leyritz said:
It may be common, but to quote the favorite trump phrase of our resident board libs, it is "intellectually lazy". To try to make a direct link between the amount of the deduction, the amount of the gift, and the "lost" tax revenue so as to equate the lost revenue with a portion of the gift assumes that everything else is completely equal absent the applicable deduction with respect to both donor intent and economic/tax ramifications, which assumption is simply not the case in virtually any situation, let alone transactions of the size being thrown around in that article. If I have the means and want to give $30 million to Princeton because that is how much my dream dorm costs, then chances are I am giving them $30 million to build the damn dorm, regardless of how it impacts my tax bill the following year. The tax ramifications may factor in one way or another, but it is not a simple dollar-for-dollar offset with respect to how much the donee actually receives.
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Then why is the taxpayer subsidizing your choice to the tune of perhaps $10,000,000 in lost tax revenue?

I feel like you are arguing just to be argumentative about this, but I'm not really sure what you're arguing. The article and the analysis of tax expenditures presents a useful way to examine and compare all-in government support of all activities. It's not the only way, but it's a very relevant and useful one. Are you arguing that tax expenditures should not be counted at all when comparing government support for one activity or institution vs another? Refusing to acknowledge the relevance of tax expenditures in calculating taxpayer support for nonprofits is comparable to a liberal refusing to count the welfare check received by a citizen in calculating the citizen's income. If you and I run the same business, and I am able to structure my business to take more tax deductions than yours, that's going to translate pretty directly to our relative take home profit, no?
 
Deacon923 said:
Then why is the taxpayer subsidizing your choice to the tune of perhaps $10,000,000 in lost tax revenue?

I feel like you are arguing just to be argumentative about this, but I'm not really sure what you're arguing. The article and the analysis of tax expenditures presents a useful way to examine and compare all-in government support of all activities. It's not the only way, but it's a very relevant and useful one. Are you arguing that tax expenditures should not be counted at all when comparing government support for one activity or institution vs another? Refusing to acknowledge the relevance of tax expenditures in calculating taxpayer support for nonprofits is comparable to a liberal refusing to count the welfare check received by a citizen in calculating the citizen's income. If you and I run the same business, and I am able to structure my business to take more tax deductions than yours, that's going to translate pretty directly to our relative take home profit, no?
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Between you and I as the business owners, yes. But that isn't who the author is analyzing; he is analyzing the third-party recipient. Using your example, if you and I run the same business, is our vendor from whom we both buy supplies going to make more or less profit from me than you because for some reason I can deduct my expenditures and you cannot? Maybe, maybe not; there are a dozen variables that go into how much I am purchasing from him. And even if yes, is it going to be a dollar-for-dollar increase equal to the amount of my deduction? No way in hell. The author's conclusion is nothing more than a wildly speculative guess.
 
2&2 Slider To Leyritz said:
Between you and I as the business owners, yes. But that isn't who the author is analyzing; he is analyzing the third-party recipient. Using your example, if you and I run the same business, is our vendor from whom we both buy supplies going to make more or less profit from me than you because for some reason I can deduct my expenditures and you cannot? Maybe, maybe not; there are a dozen variables that go into how much I am purchasing from him. And even if yes, is it going to be a dollar-for-dollar increase equal to the amount of my deduction? No way in hell. The author's conclusion is nothing more than a wildly speculative guess.
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What, in your view, is the author's conclusion that is so speculative? He is simply pointing out that on a per pupil basis, (a) foregone tax revenue associated with donations to elite private universities and tax-exempting their endowments is substantially larger than (b) the sum of direct public support plus foregone tax revenue associated with public universities. Seems like a pretty straightforward math comparison to me.

Here's the underlying Reich article if you want more information. http://robertreich.org/post/99923361875

I am not sure where you are going with the vendor example. I assume you are equating the vendor to the university's donors (which is odd, since they are giving money, while the vendor is getting paid). That doesn't really make any sense. But if for some reason, a vendor got a special extra tax deduction or got to exclude his profit from income when he sells to me, and not when he sells to you, the government would be forgoing tax revenue to encourage the vendor to sell to me. The vendor might respond by charging me a lower price, or might respond by pocketing the extra money. Either way, you and all other taxpayers are effectively subsidizing that behavior. This is called a tax expenditure. It's very measurable and quantifiable.

The Congressional Budget Office issues reports on it all the time. http://www.cbo.gov/publication/43768 Are they just making wildly speculative guesses as well?

A table from that page illustrates the link to income inequality:

43768-land-TaxExpenditures.png
 
FWIW, here's info on Princeton's 2010 tax year. http://www.eri-nonprofit-salaries.com/?FuseAction=NPO.Summary&EIN=210634501&BMF=1&Cobrandid=0&Syndicate=No

They received over $482,000,000 in contributions. For purposes of the article I posted first, the author assumed that only $100,000,000 of that was motivated by tax considerations and applied a 35% tax rate for a tax expenditure estimate of $35,000,000. So the actual tax expenditure here, assuming a 35% tax rate and leaving aside the unknown and unknowable issue of what mix of emotions actually motivated the givers, was around $169,000,000 in foregone tax revenue.
 
Tax Expenditures, as indicated in the CBO graphs, are measured with respect to the taxpayer claiming the deduction, not the third-party recipient of where the non-taxed cash ends up. Again, the Donee School is not the entity claiming the deduction (just like the vendor in your business example). In your first graph, the CBO is not claiming that the Highest Quintile is where the cash is spent, it is saying that the Highest Quintile is who claims the deduction. It is an apples-to-oranges comparison to try to compare that where the cash goes, hence why the author's conclusion doesn't make sense. He is using the concept of tax expenditures and trying to hoist the numbers on a third party who is not the party measured by tax expenditures as if they substitute evenly.
 
Deacon923 said:
FWIW, here's info on Princeton's 2010 tax year. http://www.eri-nonprofit-salaries.com/?FuseAction=NPO.Summary&EIN=210634501&BMF=1&Cobrandid=0&Syndicate=No

They received over $482,000,000 in contributions. For purposes of the article I posted first, the author assumed that only $100,000,000 of that was motivated by tax considerations and applied a 35% tax rate for a tax expenditure estimate of $35,000,000. So the actual tax expenditure here, assuming a 35% tax rate and leaving aside the unknown and unknowable issue of what mix of emotions actually motivated the givers, was around $169,000,000 in foregone tax revenue.
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So, in other words, it is a wild guess.
 
2&2 Slider To Leyritz said:
Tax Expenditures, as indicated in the CBO graphs, are measured with respect to the taxpayer claiming the deduction, not the third-party recipient of where the non-taxed cash ends up. Again, the Donee School is not the entity claiming the deduction (just like the vendor in your business example). In your first graph, the CBO is not claiming that the Highest Quintile is where the cash is spent, it is saying that the Highest Quintile is who claims the deduction. It is an apples-to-oranges comparison to try to compare that where the cash goes, hence why the author's conclusion doesn't make sense. He is using the concept of tax expenditures and trying to hoist the numbers on a third party who is not the party measured by tax expenditures as if they substitute evenly.
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I can't even make sense of this post. I posted a very straightforward, and in fact conservative, analysis of taxpayer subsidies for different kinds of higher education. You took that and leaped down a rabbit hole of incomprehensibility. Godspeed.
 
I've read the article 923 cited three times and I can't figure out what in the world you're talking about 2&2. The point of the article is to examine donations to universities through a lens of tax expenditures and ways to fix the existing system. Now what you're talking about, I don't know or how it relates to the article at all. I think you're attacking the methodology but I can't figure out what exactly it is you have an issue with.
 
I think he is trying to say that tax expenditures should not count unless we are dead level certain that the only reason the economic actor acted was to reap the tax benefits. Which basically means we shouldn't count or consider tax expenditures at all. I propose that we also don't count government cash outlays to the poor, old and disabled unless we are absolutely dead level certain that the recipients would not have been poor, old or disabled in the absence of the payments. I think 2&2 and I just solved our deficit problem!
 
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