France Imposed A 75% Tax On The Highest Incomes: It Didn’t Work And Here’s Why

Discussion in 'Political Discussions' started by Lerner, Oct 15, 2020 at 5:49 AM.

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  1. Johann

    Johann Well-Known Member

    Then why do you (as a society) and your Government owe so much. How can your country be wealthy and in debt past the top of Mt. Rushmore? How can Canada, for that matter? Ontario (where I live) owes more money than any other entity on earth, barring Sovereign Nations. WE owe more than California, FFS!

    How can you say you're a wealthy nation? The Government cycle is borrow, print and squander. Many individuals just skip the middle step. (We're the same way here.) Stanislav pointed out that 22% of ALL US dollars in existence have been printed this year.

    If the Government were a corporation, it would be declared bankrupt. (In fact, municipal governments in US seem to do that quite frequently. E. G. Orange County CA. City of Detroit, etc. etc etc. all have declared bankruptcy at least once. In fact, there was a time when St. Louis MO defaulted on its Municipal Bonds yearly. They got sued regularly and issued "Judgement Funding Bonds" to raise money to pay the default and stave off disaster for yet one more year. Many burgs and counties have credit ratings that translate to "stinkypoo minus."

    Your society "Incredibly wealthy?" (Or ours.) HA!
     
    Last edited: Oct 16, 2020 at 10:48 PM
  2. Johann

    Johann Well-Known Member

    Who are the really "Incredibly wealthy?" OUR FOREIGN CREDITORS! And without them we'd both be screwed! In fact, I think we're screwed with or without them. ...
     
  3. Bill Huffman

    Bill Huffman Well-Known Member

    Wealth comparison of this sort is usually in terms of GDP Gross Domestic Product is an estimated total of all expenditures, private, business, and government. Debt is not typically factored in. So it is kind of a strange definition for wealth isn't it?
     
  4. Johann

    Johann Well-Known Member

    My definition? Strange? I don't really think so, Bill.

    Your personal wealth (net worth) is assets minus debts. A corporation's net worth is the same. Liabilities are subtracted from assets at the bottom of a balance sheet to ascertain financial position. Fundamental accounting principle. "Your debits must equal your credits or your assets in jail." :)

    Generally, much trouble results from forgetting about debts. Another maxim I heard from an accountant - "Large debt tends to grow." People on your Capitol Hill and here in Ottawa sure have lost the compass on that one!

    You're talking to a guy who was made (for no good reason) to take basic accounting FOUR times in College and University! ("Yes, but you haven't taken it here!") I got A's every time and have NEVER forgotten those principles - I can't, even if I try. I must say, they've done something for me in my personal life over the last 30+ years. (The four times occurred between 1985 and 2000 - ages 42 to 57.)
     
    Last edited: Oct 17, 2020 at 1:04 AM
  5. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    Yes, and socialism would be an incredibly effective way to change that.

    But I expect what you actually meant was social democracy. Even then, even Democrats recoiled when Warren admitted how much her universal healthcare proposal would really cost. And that's pocket change compared with a UBI.

    Perhaps someday advanced automation may increase productivity to the point where paying for UBI programs wouldn't destroy the economy required to fund them, but for the foreseeable future that's science fiction. The goose of a market economy lays all the golden eggs she can, but you can't just reach up her cloaca and grab as many as you want.
     
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  6. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    Not that it matters, but I think that was me.

    And at that rate, the money supply doubles in less than four years. We've seen what happens to countries that don't pull out of that sort of monetary nosedive, and it's very, very ugly. Worse, if the U.S. does it we'll take the whole world economy with us.
     
  7. Johann

    Johann Well-Known Member

    It matters to me, Steve. Thanks for pointing out yet another of my mistakes - and I apologize.
    Thirty years working in consumer (and some commercial) credit - and work-related courses have taught me the following:

    What a person, company or government owes - determines their ability to pay for things.

    With individuals, potential lenders and other credit providers look at debt to income. That is a large part of credit decisions. Existing debt reduces ability to pay new obligations. If an individual has maxed out cards, is struggling to barely make a large car loan and a hefty mortgage, no prudent, ethical lender (a minority to be sure) wants to get him in deeper.
    They MIGHT, at best, advance him money to consolidate his obligations and reduce his payment load - but not to buy a boat, etc.

    If a company's statements indicate debt beyond certain conventional ratios - that company can expect strictness from its creditors until back in line. There will be limits on the amount it can purchase on credit.

    If a government goes beyond accepted ratios - e.g. debt to GDP - its bonds etc. risk a downgrade. If that happens - same thing. New borrowing becomes difficult and more expensive.

    In light of the current state of affairs and huge debts, I fail to see why America should be considered wealthy - or how in blazes the US Government or the American people are responsible, as Rich asserts, for "not choosing" to eliminate all these social evils. Where in Sam Hill is the money supposed to come from? It's all been spent. The printing press is overheated. The moneylenders are getting worried...
     
  8. Johann

    Johann Well-Known Member

    @Rich Douglas If you mean by "wealthy country" the wealth concentrated in the hands of a few - "The 1%" or whatever you wish to call them -- by what Draconian measures (or otherwise) would you redistribute or appropriate their wealth? Or would you do that at all? Just "show me the wealth," ... please.

    I don't think "moral suasion" would cut any ice with the large majority of the super-wealthy. There are not many Bill Gates-like individuals, foundation builders and humanitarians etc. among that select crowd. And Mr. Gates and the very few like him - already do their part - and more. I think his co. now makes lousy operating systems - but Bill is one of the good guys.

    The Greek Government, in desperation, proposed a money grab - a 20% "haircut" on ALL bank accounts over a few hundred Euros. They had already limited withdrawals so there would be no escape. It didn't fly. Nor should it have.
     
  9. Johann

    Johann Well-Known Member

    Canada takes a bit of a different approach: go after the big guy, leave the little individual alone - give him/her a break.

    Beside retirement funds etc, Canadians 18 or over can save and invest around $6,500 per year in a Tax Free Savings Account without being taxed on the monies in the plan (it's already been taxed once before it got in the plan) or taxed on the profits, interest etc. from investing it. Various investment vehicles can be held inside the plan -CDs stocks, bonds etc. If you were 18 in 2009 and you open your plan tomorrow, you can put up to around $70K in - one shot, if you like or in several instalments until you max out the conrtribution limit. If you make withdrawals (tax free) you can repay those into the plan when and if you want - but not until the next calendar year.

    This was done as a reward for saving and to combat Canadians of relatively ordinary means hiding money in offshore accounts. The theory is, if the average Canadian (or a little better saver than average) were given a chance to save (and make) money tax-free at home, tax investigators could concentrate on the BIG violators. It seems to be working. Not perfectly, but working...
     
  10. Johann

    Johann Well-Known Member

    The theory is that you don't confiscate from the average people - you go after only the ill-gotten part of rich people's gains. You make the little people wealthier - you don't take TOO much from the rich unless they try to hide or keep what they should be paying. By and large they stay wealthy. That's nature's way.

    Making the COUNTRY wealthy? No. It would be nice - but there's no viable way to do that. It's too far gone. We're screwed. Absolutely. Matter of time. So, I believe are you. MAGA-hats won't help. Countries have been to the wall on this recently - Iceland, New Zealand. Ireland did once before in 2009. Greece, Portugal, Spain. A REALLY big country like the US? The bigger they are, the harder they fall? I hope not.

    Good luck to both of us!
     
  11. Rich Douglas

    Rich Douglas Well-Known Member

    Only a wealthy nation could carry such debt.

    A nation's economy is not like your household finances.* When someone is swamped in credit card debt and has no savings, it would be hard to describe them as wealthy. But the US is hugely wealthy with the largest GDP on the planet. We have debt not because we can't pay our bills, or because we don't create enough wealth. Our debt is due to our unwillingness to tax our populace at levels that support our spending. But we're able to carry that debt.

    No, the government isn't a corporation. But even if it was, the government is only a part of the economy. You're over-simplifying the situation by focusing on one thing, the national debt. As far as the corporate comparison goes, it doesn't even hold (besides being irrelevant). Lots of companies thrive in a debtor situation. It took Amazon a decade-and-a-half to turn a profit, for example.

    By any measure, the United States is the wealthiest nation on Earth, even if it does choose to carry a large credit card bill.

    (*If you doubt there's a difference, try relieving your debt with quantitative easing or currency devaluation.)

    Again, I'm not an economist, so I don't want to get out over the tips of my skis here. I'll leave it at that.
     
  12. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    Some U.S. federal debt to GDP ratios:

    1960: 52.32%
    1980: 34.68%
    2000: 55.98%
    Now: 137.78%

    And no one in Washington is even talking about this. The Trump era has silenced Republican deficit hawks, such that the only difference between Team Red and Team Blue is whether to run the money printing presses at Mach 2 or Mach 3.
     
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  13. Johann

    Johann Well-Known Member

  14. Bill Huffman

    Bill Huffman Well-Known Member

    Sorry, I meant using the word wealth to describe the GDP calculation for a country. It is strange to ignore debt when referring to wealth of a country.

    Yes I agree about the lost compass. The only time we hear politicians talking about the horrible debt is when they are using it insincerely as a convenient political weapon to beat on an opponent.
    Although I have to agree with Rich that debt is not as critical to a country as it is to individuals and businesses. So it is understandable.
     
    Last edited: Oct 17, 2020 at 10:18 PM
  15. Rich Douglas

    Rich Douglas Well-Known Member

    Is the USA's debt "horrible"? I guess that depends on your point of view. The debt's main threat is its potential impact on inflation and interest rates, but that hasn't happened.

    I have a lot of debt. That's because, like two-thirds of American families, we have a mortgage. But I don't think anyone is worrying about my debt because of obvious other factors.

    The USA has a GDP the size of the next three nations on the list combined. The debt is a function of what we choose to spend and whether we pay cash or charge it. It is NOT a function of our inability to pay our way.
     
  16. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    The IMF, World Bank, and CIA all agree that when it comes to GDP (PPP), China's alone is larger than that of the U.S. Not that it matters, since the issue is debt-to-GDP ratio.

    You're right that national debt doesn't work the same as household debt, but mostly in the sense of what J. Paul Getty said: "If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem."

    Well, when you owe $27 trillion, that's everybody's problem.
     
  17. Stanislav

    Stanislav Well-Known Member

    That is such a lazy argument. How expensive is your current corporate healthcare, for the nation as a whole (as opposed to the federal budget, which as Rich points out is only part of the whole economy)?

    Bernie and AOC love to point out to that study that showed M4A is billions cheaper to what you have now. I do think this is optimistic, but in the grand scheme of things there's nothing in the more saner ways of paying for healthcare that necessarily make it DRASTICALLY more expensive. The size of the industry will be roughly the same.
     
  18. Rich Douglas

    Rich Douglas Well-Known Member

    Sources?

    https://worldpopulationreview.com/countries/countries-by-gdp
    https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal) (They also provide the World Bank rankings, with the USA at the top.)
    https://databank.worldbank.org/data/download/GDP.pdf (The World Bank, where it has the USA on top.)

    I didn't realize the fact that the USA has the world's largest economy, that it generates the most wealth, was in serious dispute. It doesn't seem to be.
     
  19. Rich Douglas

    Rich Douglas Well-Known Member

    Okay. Please point out how it is a problem. We never seem to hear about that.
     
  20. Johann

    Johann Well-Known Member

    Lots of problems: One being that within 10 years, the US will spend more on interest payments on its debt than on research and development, infrastructure and education COMBINED! Like I said (and you denied) high debt will limit the amount you can spend - whether as a person, a company or a government.

    I don'y know all that much about Government - but I DO know something about credit. Worked and learned for 30 years.

    See this: https://www.pgpf.org/infographic/the-national-debt-is-now-more-than-27-trillion-what-does-that-mean

    People in financial difficulties used to hand me the same line. We both KNEW they lived on credit because they couldn't get by on their own resources. I think someone told 'em a dirty old lie.

    If the US is so rich, why don't they pay some of their debt off - at least enough for breathing room?
     
    Last edited: Oct 18, 2020 at 3:54 AM

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