GM CEO calls for $1 gas tax hike

[CL65 Captain]

Now if you want to talk about problems with the current system, let's talk about how the very rich don't pay estate tax due to loopholes of life insurance products.

They do pay taxes, the proceeds of the LI pays the taxes. If I die and owe $20MM in estate taxes then the "goal" is to have insurance that pays $20MM when I die so my cats get to keep my inheritance. What's wrong with that? It's not a loop hole, I would be paying the LI premium. Uncle Sam still gets their $20MM.

 

[Pignsteak]

Why shouldn't we let individual people and the free markets determine what products to buy and offer versus a government regulated average minimum which invariably restricts the products a company offers. If, hypothetically, I wanted to buy a car with a naturally aspirated 7 liter engine and pay more for the gas, why shouldn't I have that option versus GM dropping it from their lineup to reach an arbitrary government mandated CAFE minimum? Do you all really think CAFE minimums are the best way to acheive better overall fuel economy/efficiency? As a free market proponent, I don't.

Give people options and make them pay for what they use. Seems like a very American solution to me.

Liquid,

I absolutely agree with you that market-based mechanisms and effective competition create the best solutions in the fastest time, but want to point out that they do nothing for what are known in the economics world as externalities (the classic example of which is pollution.)

For example, if your 7-liter naturally-aspirated engine emitted 15 pounds of black soot for every mile you traveled, I don't care if you're willing to pay for the gas - you might be damaging my property and I'd have no way to get compensated for that! What I can do is organize a group of people to get together, agree that NONE of us want our properties covered with smoke, and collectively make sure that none of our engines emit too much of it. That collective group (which we in the US call "government") is absolutely acting in a value-added role in this case.

I don't want to misinterpret your comment, so I'll make clear that I'm not answering whether or not CAFE standards are the best way to achieve overall fuel efficiency (since it's not as clearly obvious that CO2 is a pollutant like thick black smoke - a debate that's well beyond the scope of this forum.) I'm just saying that market-based mechanisms aren't always a perfect solution.

Giving people options and having them pay for what they use is an excellent idea - as long as they're paying for all the costs incurred and not just the ones they see directly.


PS - Wikipedia has a great article on CAFE standards, which includes the excellent point that, although Europe has higher mileage standards than the US, several cars that meet their regulations wouldn't meet ours precisely because we have tighter regulations on non-controversial pollutants like soot. http://en.wikipedia.org/wiki/Corporate_Average_Fuel_Economy

 

[Liquid]

Liquid,

I absolutely agree with you that market-based mechanisms and effective competition create the best solutions in the fastest time, but want to point out that they do nothing for what are known in the economics world as externalities (the classic example of which is pollution.)

For example, if your 7-liter naturally-aspirated engine emitted 15 pounds of black soot for every mile you traveled, I don't care if you're willing to pay for the gas - you might be damaging my property and I'd have no way to get compensated for that! What I can do is organize a group of people to get together, agree that NONE of us want our properties covered with smoke, and collectively make sure that none of our engines emit too much of it. That collective group (which we in the US call "government") is absolutely acting in a value-added role in this case.

I don't want to misinterpret your comment, so I'll make clear that I'm not answering whether or not CAFE standards are the best way to achieve overall fuel efficiency (since it's not as clearly obvious that CO2 is a pollutant like thick black smoke - a debate that's well beyond the scope of this forum.) I'm just saying that market-based mechanisms aren't always a perfect solution.

Giving people options and having them pay for what they use is an excellent idea - as long as they're paying for all the costs incurred and not just the ones they see directly.


PS - Wikipedia has a great article on CAFE standards, which includes the excellent point that, although Europe has higher mileage standards than the US, several cars that meet their regulations wouldn't meet ours precisely because we have tighter regulations on non-controversial pollutants like soot. http://en.wikipedia.org/wiki/Corporate_Average_Fuel_Economy

Now we're getting to some more thoughtful points of debate. I disagree with only one thing in your post - the assumption that somehow we cannot include the externalities (CO2 emissions) in the cost. I think it can and it should, and then I think we are basically in complete agreement.

 

[TURBO2GO]

Well then, why don't you explain?

LOL... oh no...

 

[Liquid]

They do pay taxes, the proceeds of the LI pays the taxes. If I die and owe $20MM in estate taxes then the "goal" is to have insurance that pays $20MM when I die so my cats get to keep my inheritance. What's wrong with that? It's not a loop hole, I would be paying the LI premium. Uncle Sam still gets their $20MM.

I bet you're not familiar with irrevocable life insurance trusts. There is a huge, immensely profitable part of the life insurance and financial planning business built specifically around avoiding estate taxes.

There's also a separate philisophical debate around whether transferring massive sums of wealth intra-generationally is the best thing for our society (there are any number of incredibly spoiled rich kid examples of why it is not) but I'll leave that for a separate thread.

 

[Pignsteak]

Now we're getting to some more thoughtful points of debate. I disagree with only one thing in your post - the assumption that somehow we cannot include the externalities (CO2 emissions) in the cost. I think it can and it should, and then I think we are basically in complete agreement.

Absolutely! People can argue about the price to set for CO2 emissions and who's entitled to what share of the funds collected, but we completely agree that CO2 and other costs could be baked into the price of the gasoline - my point was simply that they're not in there today.

There's also a separate philisophical debate around whether transferring massive sums of wealth intra-generationally is the best thing for our society (there are any number of incredibly spoiled rich kid examples of why it is not) but I'll leave that for a separate thread.

I don't know anything about irrevocable trusts (yet...), but as for the second part of your post, two interesting examples are Bill & Melinda Gates and Warren Buffett, both of whom are donating essentially their entire fortunes to charity.

Warren Buffett's son Peter was recently profiled on Freakonomics radio (it's available as a podcast), and one of the key things he said was that, growing up, he had no idea how wealthy his family was. Even Warren's first wife Susan didn't know - she once threw a bunch of dividend checks down the incinerator by accident, but didn't worry too much about it since she didn't know they were for $15,000 (in 1950s dollars!) If I remember correctly, Warren will leave each of his kids something like $10 million as well as something like $100 million to found/fund charities. He's come out several times as being in favor of a 75-100% estate tax rate (at least on the part of the estate over $10-25 million or so.)

Interesting side note, I believe he also has a standing bet with his employees - he'll give $1,000 to any of them who have a lower effective tax rate than he does. To my knowledge, nobody's ever collected despite having incomes several orders of magnitude below his. (Let the tax-policy flames begin!)

 

[TURBO2GO]

Interesting side note, I believe he also has a standing bet with his employees - he'll give $1,000 to any of them who have a lower effective tax rate than he does. To my knowledge, nobody's ever collected despite having incomes several orders of magnitude below his. (Let the tax-policy flames begin!)

That's really interesting...

 

[Pignsteak]

That's really interesting...

To make it clear, Warren was rather disgusted with this outcome (as should be clear from what I said earlier about his position on the estate tax.) All this comes from his biography that came out a few years ago called "The Snowball" if anyone's interested in learning more.

 

[Vega$ NSX]

Now if you want to talk about problems with the current system, let's talk about how the very rich don't pay estate tax due to loopholes of life insurance products.

I bet you're not familiar with irrevocable life insurance trusts. There is a huge, immensely profitable part of the life insurance and financial planning business built specifically around avoiding estate taxes.

Well it sounds like to me the lesson learned by all this is to become rich then. If the rich have it easy and that there are loopholes that make it easy to stay rich, then the solution is to make a lot of money and become rich yourself. That's what I did. :smile:

 

[SilverStone05]

LOL... oh no...

:biggrin:

 

[SilverStone05]

Now if you want to talk about problems with the current system, let's talk about how the very rich don't pay estate tax due to loopholes of life insurance products.

Now if you want to talk about problems with the current system let's talk about how half the country pays 0 federal income tax.

Or let's talk about generations of families living their whole lives on welfare/food stamps/medicaid/SSDI and other subsidies due to loopholes in the entitlement systems.

 

[SilverStone05]

Interesting side note, I believe he (Buffet) also has a standing bet with his employees - he'll give $1,000 to any of them who have a lower effective tax rate than he does. To my knowledge, nobody's ever collected despite having incomes several orders of magnitude below his. (Let the tax-policy flames begin!)

His effective tax rate is so low because the vast majority of his wealth is his Berkshire stock holdings which, when sold, are taxed at the long term capital gains rate - which is now max 15%.

Futhermore - while his effective tax rate (percentage) is lower - he still pays a LOT more than his employees in dollar terms. :wink:

For simplicity's sake just calculate what 15% of 1MM is compared to 20% of 100k. 150,000 vs 20,000.

LTCG rates are on the lower side to encourage folks, rich- and not so rich, to invest and save for their future. It is a great incentive- one that shouldn't be changed.

 

[Budweiser®]

His effective tax rate is so low because the vast majority of his wealth is his Berkshire stock holdings which, when sold, are taxed at the long term capital gains rate - which is now max 15%.

You bring up a great point, which prompted me to find out what his salary actually is.

Drumroll...$100,000!

http://www.forbes.com/lists/2011/12/ceo-compensation-11_Warren-E-Buffett_C0R3.html

 

[Liquid]

Now if you want to talk about problems with the current system let's talk about how half the country pays 0 federal income tax.

Or let's talk about generations of families living their whole lives on welfare/food stamps/medicaid/SSDI and other subsidies due to loopholes in the entitlement systems.

I'm still waiting for that explanation about how my reading comprehension needs help, but I'll take this debate in the meantime. My question to you is are you focused on the cause or the effect? It seems to me like your attention is misdirected at the effect and not the cause. What I see is the real question is why is half of the country making so little that they don't meet the thresholds to pay federal income tax?

In the link below is a comparison versus the German economy. It raises some simple questions, such as 'Why have real hourly wages only grown 6% in this country since 1985 (versus 30% for Germany) while the share of total income for the top 1% have doubled (from 9% to 20%) since 1970?'

It also raises some less simple questions, like 'Is this good/bad/indifferent for our society and economy?' and 'To what extent are what we observe the effects of globalization and not even within our control domestically?'

http://www.nytimes.com/2011/06/08/business/economy/08leonhardt.html?_r=1

Drawing any sort of firm conclusions based on a sample of one is always a bad idea, but it at least gets the mind asking questions which is always a good thing.

Would you like to broaden the discussion from personal income tax to corporate income taxes now? I'd like that very much.

 

[TURBO2GO]

What's the most fascinating is how that top 1% convince everyone else that getting raped by them is good for them. People like silverstone, who mind you is not a corporate CEO, will start defending the corporate ways and supporting the quest to have more and more and more. Fuck the planet, the world, the environment, the poor. He will defend loosening of all regulations that serve as any sort of control over an out-of-control entity that is only about money, even when it will eventually come as an expense to him.

The most fascinating part of all of this to me, is this.

 

[TURBO2GO]

the real question is why is half of the country making so little that they don't meet the thresholds to pay federal income tax?

It's because they are a bunch of lazy ass people that want to mooch off of hard-working people like the rest of us.

Liquid I don't really know why you are wasting time on things like Corporate tax rates when these welfarers are stealing all the pinatas.

 

[Liquid]

His effective tax rate is so low because the vast majority of his wealth is his Berkshire stock holdings which, when sold, are taxed at the long term capital gains rate - which is now max 15%.

This is true. Here's a good graph which shows the effective tax rates for the richest 400 is much more correllated with the capital gains tax rate than the highest effective marginal tax rate.

http://www.quickanded.com/2010/02/effective-tax-rates-of-the-richest-400-americans.html

You'll also note the declining overall trend, which is also confirmed with other analysis that looks at the tax burden more broadly(including corporations and the non-super rich) and over a longer term, one written by a former senior Republican government advisor and one in Business Week. Taxes are LOW overall.

http://economix.blogs.nytimes.com/2011/05/31/are-taxes-in-the-u-s-high-or-low/

http://www.businessweek.com/magazine/content/11_16/b4224045265660.htm

Given we're spending more than a trillion dollars on our wars, our aging population (never mind where medical expenses have been going or why - that too is another story for another thread), and our already accumulated $15 trillion in debt, who is going to pay for it? I bet it's going to be people like me. People who are making a nice living but not truly rich (as I would define it - making more than a million a year or more than 10 million in net worth). Now Vega$, are you truly rich or are you just a sucker like me?

Now start asking who SHOULD be helping to pay the bill?

 

[Liquid]

His effective tax rate is so low because the vast majority of his wealth is his Berkshire stock holdings which, when sold, are taxed at the long term capital gains rate - which is now max 15%.

This is true. Here's a good graph which shows the effective tax rates for the richest 400 is much more correllated with the capital gains tax rate than the highest effective marginal tax rate.

http://www.quickanded.com/2010/02/effective-tax-rates-of-the-richest-400-americans.html

You'll also note the declining overall trend, which is also confirmed with other analysis that looks at the tax burden more broadly(including corporations and the non-super rich) and over a longer term, one written by a former senior Republican government advisor and one in Business Week. Taxes are LOW overall. Lowest in a generation (since 1950, apparently).

http://economix.blogs.nytimes.com/2011/05/31/are-taxes-in-the-u-s-high-or-low/

http://www.businessweek.com/magazine/content/11_16/b4224045265660.htm

Given we're spending more than a trillion dollars on our wars, our aging population (never mind medical expenses), and our already accumulated $15 trillion in debt, who is going to pay for it? I bet it's going to be people like me. People who are making a nice living but not truly rich (as I would define it - making more than a million a year or more than 10 million in net worth). Now Vega$, are you truly rich or are you just a sucker like me?

Now start asking who SHOULD be helping to pay the bill, and maybe you come up with the same answers some pretty smart guys (like Buffet and Gates) have too.

 

[Vega$ NSX]

Now Vega$, are you truly rich or are you just a sucker like me?

I'm in the top 1% of that chart if that is what you are asking.

Anybody has the potential to be rich. That's the great thing about living in America.

It's not taxes, not government, not "the man", not regulations or lack thereof, not democrats, or republicans that keeps someone from being rich.

The thing I find is the greatest obstacle to people becoming rich is themselves.

 

[SilverStone05]

People like silverstone, who mind you is not a corporate CEO, will start defending the corporate ways and supporting the quest to have more and more and more.

Because the only economic system able to drastically raise the standard of living for all its constituents and sustain that high standard is capitalism.

More and more and more for Corporate America also means more and more and more for consumers and citizens. Are you trying to tell us that your life isn't better off due to the likes of the big bad Apple Computer, or Microsoft, or Sony or Exxon or AT&T?

So - while I am not a coporate CEO yet, I am in the top 1% of earners in this country and I do have hope that one day, thanks to this economic system which rewards merit and hard work, I will be. :smile:

You need a beer, man. :biggrin:

 

[SilverStone05]

Now start asking who SHOULD be helping to pay the bill, and maybe you come up with the same answers some pretty smart guys (like Buffet and Gates) have too.

Obvious question -

the people who already pay nothing at all

I don't care if its 5 bucks or .50. Everyone should pay something.

If half the country doesn't have a vested interest in its future - you are in real trouble.

 

[SilverStone05]

What I see is the real question is why is half of the country making so little that they don't meet the thresholds to pay federal income tax?

It isn't that they make so little. Median income in this country is over 30k/y.

It's the convuluted tax system that allows the most ridiculous deductions and credits that favor both the rich and poor.

But in the end, since we have a graduated tax system, the wealthier folks still end up footing the entire bill- while a good deal in the bottom 50% actually get a check.

 

[Liquid]

So you have an ideological disagreement with a progressive tax code then. I can understand your point of view, but it is not held as a mainstream view among developed nations or economists.

http://en.wikipedia.org/wiki/Progressive_tax

If half the country doesn't have a vested interest in its future - you are in real trouble.

This I totally agree with. But do you think the best way to get someone a vested interest in this country is to tax them more?

 

[SilverStone05]

So you have an ideological disagreement with a progressive tax code then. I can understand your point of view, but it is not held as a mainstream view among developed nations or economists.

http://en.wikipedia.org/wiki/Progressive_tax

Did you come up with that yourself? :smile:

Half the country doesn't pay anything.

You think that 50% that pays nothing is going to actively try and get rid of that peachy situation? :wink:

And no the progressive tax system is fine with me - those who earn more I think should pay more. I just don't think they should pay ALL.

 

[SilverStone05]

This I totally agree with. But do you think the best way to get someone a vested interest in this country is to tax them more?

What do you mean tax them MORE?

They don't pay ANYTHING ALREADY. Didn't we just cover this?

But semantics aside, yes. Everyone should pay something. People respect things more and use services more sparingly when they pay the way themselves.

Everyone is conservative when it comes to their own money.