<p>That is an interesting idea, Bay. The components of this Index seem to be RESULTS of the great spending and economic returns.
From many years prior of such.
I do wonder how quickly the US rank in HDI will erode in this weak and stuck economy, though…
And whether we in the US have been incredibly inefficient in how we attained this ranking.</p>
<p>And I question the index in a number of ways- it does not really look at the QUALITY of education, for instance. It is a number. And there could be better or worse numbers.</p>
<p>I am asking what is on the other side of the balance sheet?</p>
<p>If a person tells me they have a mortgage on a house of $400,000… I don’t know if that is too much or too little…What is the house worth? What is the income of the homeowner?</p>
<p>So…what are the assets of the United States?</p>
<p>And government debt is just one part of the debt in the US. What is the debt of individuals in the US? And business debt is?</p>
<p>My water heater tank is leaking 2 gallons per minute. I need a new one. I go to the store. The water heater is cheap … but the installation is a week’s pay for the average American worker. That’s for one wire and two solder joints.</p>
<p>(And please PLEASE don’t get me started on Nursing Home stories!)</p>
<p>I have a good life. Our family qualifies as “comfortable.” But we got that way by working long hours and doing ourselves many things others pay for. I don’t mind doing that. But what about my kids? And other people’s kids? Who installs their water heaters?</p>
<p>Dstark - those are good questions to which I do not know the answers. You can play around on that chart and look at debt as a percentage of GDP, which I think is kind of like looking at a person’s debt to income ratio. Its gone up from 38.65 in 2004 to 68.6% in 2011. Doesn’t sound good to me.</p>
<p>Also, I did some googling on wikipedia. If you look at the federal budgets, in 2010, the interest payment on our debt was 18% of the budget outlays, or 164 billion. I hope the interest rates stay low!</p>
<p>Oops, sorry … I kind of jumped to a conclusion there without a segway.</p>
<p>I agree that our country has a systemic problem. Taxing the rich won’t solve it, neither will taxing the poor. Socialism certainly won’t … nor will unregulated capitalism. We’ve gotten to the point where choices have been limited … and limited in a bad way. Pay the warehouse store $500 to install your water heater, or try to line up a licensed electrician and a licensed plumber to do the work. Or take on the risk yourself. Here’s my question … why should it cost $500 to swap a wire and solder two joints? Who decided that was good for the country?</p>
<p>“The reasons for the growing disparity, which the CBO, without irony, measured by an increasing “Gini coefficient,” were buried deep in the report. It’s how income was taxed that allowed the ultra-wealthy to keep more of what they earned compared to middle- or lower-class Americans.
INVESTMENT INCOME EARNERS ARE TAXED LESS
Most lower- and middle-class earners make their money from wages, which are subject to Social Security, Medicare, federal and state taxes. But income from businesses, capital gains and dividends may be taxed at lower rates. In the CBO study period, the share from capital gains and business income increased, meaning upper-income families reaped greater after-tax benefits just from the kinds of non-wage income they reported.
When you’re on salary, you get taxed regularly through your paycheck. If you hold stocks, bonds, business equity and property, your capital gains – if any – can be delayed for years. Holding securities in tax-deferred retirement accounts can put off taxes for decades.
EXECUTIVES AND FINANCIAL PROFESSIONALS DID BEST
Again, no surprise here. But when you can structure your compensation so that it’s tax-deferred, paid in stock options or paid as capital gains, dividends or carried interest, you can pay much less to Uncle Sam and keep more of your income. Long-term capital gains, dividends and carried interest are taxed at a maximum 15 percent rate.
When the bulk of your income comes in those forms, you avoid taxes at the maximum 35-percent marginal federal rate. So those at the top of the compensation pyramid not only made more in gross income, their overall tax rates were lower because of how their pay was received. Billionaire Warren Buffett is a good example. His average rate was 17.4 percent.
LOWER-INCOME HOUSEHOLDS PAY MORE IN PAYROLL TAXES
Since the highest earners were paying less in overall taxes because they were paid in non-wage income, their payroll tax rate was also lower. The CBO found that the lowest fifth of families paid an average 8 percent in payroll taxes while the highest-income group paid under 2 percent.
Why are the poor paying quadruple the amount of payroll taxes than the rich?
They are unlikely to report investment or business income at the lowest rates. Attention tax reformers: You could make a case that the wealthiest Americans are not paying their fair share for Social Security, Medicare, state and federal programs. But since the tax code allows them to avoid paying any more, it’s perfectly legal now.
CONVERSION TO S CORPS ALSO HELPED WEALTHY
Those who ran their income through corporations (even small ones) reaped even more breaks by converting from a standard “C” to an “S” corporation. The S corporation essentially taxes business earnings at your personal rate in the year that you make the money. That opens up a number of ways to legally pare tax liability and gave many high-income households yet another loophole. I know, because I had an S Corp for years. “The observed growth in the conversion of C corporation income into S corporation income has contributed to the rapid growth in income for the highest-income households,” the CBO reported.
THOSE WHO HAVE MOST LOOPHOLES BENEFITS MOST
It’s a cumulative giveaway: The more deductions you can take at the most-favorable rates, the lower your after-tax income. Who did the best? No surprises here. “Employees in the financial and legal professions made up a larger share of the highest earners than any other group.” Hello Wall Street and K Street.”</p>
<p>dstark,
I feel like all you care about is that the rich get taxed more, as opposed to advocating particular programs that you think deserve funding and will help out the economy.</p>
<p>Technically I am (just barely) one of the now much aligned 1%ers in annual earnings (depending on which statistic you accept, Ive seen several). I grew up in a trailer in south georgia. I went to a local state college. I inherited nothing to speak of except a strong work ethic, a strong sense of independence and self reliance, and the a commitment to do the right thing. It has served me well, and yes better than most. I worked my butt off starting in my 20s and 30s when many were still out partying and sowing their wild oats. No doubt, I caught a good wave. Being a woman in banking in the 1980s, I likely was helped by Affirmative Action. And no doubtI made really good choices. And no doubtI could have screwed it up.</p>
<p>I didnt. And I dont feel a darn bit of guilt about any of this. But I am grateful for all of it.</p>
<p>Bay…I think I have talked about programs plenty…I have talked about austerity not working…infrastructure…alternative energy investments…multiplier effects…etc…</p>
<p>Taxes matter Bay…you know it…and I know it…</p>
<p>People are figuring it out… the press is figuring it out…
Time Magazine cover story…yahoo is running multiple stories…financial papers are running stories…we have 30 years of data…</p>
<p>I’m returning to the topic upthread of CEO compensation, and compensation of celebrities, sports stars, etc. In the free enterprise system, compensation is driven primarily by supply and demand. It is really that simple. The more labor that exists capable of performing a job, the lower it makes. LeBron James (or maybe Dirk Nowitzki?) make what they make because so few of us are 6’8" and can play basketball like they can. And yes the endorsements and the ticket buyers are there. They make what they make because whoever is paying them believe it to be a good financial investment with profitable return. Winning teams command higher tickets sales. Losing teams do not. Its that simple. I’m much more excited about going to see the Dallas Mavericks as NBA champions than I was 7 years ago. Do we really want to legislate pay? Really? I dont.</p>
<p>CEO compensation is similar (but I also know the crap that goes with that.) Successful CEOs of multi billion conglomerates arent that plentiful. The average tenure is 3 years or so before they get fired. You cant even understand an organization’s culture in less than 3 years, much less plot and execute a meaningful change strategy for an floundering organizaiton when you come in. Knowing this, most of them negotiate their exit package on the way in. They get that the bar is as high as the stakes. Where it gets really off is – bluntly – the cross pollination among corporate boards is scary. It is a boys club. They tend to fill each others pockets by sitting on each others boards’. Serious board reform I can get behind. I’m not for legislating pay for CEOs either. I’m a big captialist at heart. (Hey communisim and socialism failed too.) But the board room decision makers are incentuous beyond belief.</p>
<p>My plumber charges about $400 to install a new water heater, and that includes the cost of the water heater and removing and disposing of the old one.</p>
<p>The labor portion is probably $150, that includes draining the old one, disconnecting the water and gas lines and exhaust pipe, removing the old one, bringing in the new one, hooking everything back up, and testing it.</p>
<p>If I had to pay $500 just for labor, I would either call around for a new plumber or buy a blow torch and learn to solder a joint. It’s not that hard. </p>
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