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Author: DRWHISKEY Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 211945  
Subject: OT: The Coming Inflation Tax Date: 11/28/2012 12:53 PM
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Okay, let's just say Obama and Buffett get what they want: current tax rates for the 98% remaining where they are today and the remaining 2% get the tax increases Obama and Buffett believe is "fair."

In Buffett's own words, he says this tax on the "rich" would amount to about 1% of GDP per year or roughly 55-60 billion annually in new taxes, also known as government revenue. So the $1 trillion plus in deficit spending over the last 4 years, and assuming 2% GDP growth next year and no huge market drawdowns, is reduced by $60 billion + increase in other tax revenue (2% GDP growth should equate to slightly higher tax revenues as well).

So we're still talking MASSIVE deficits--$900 billion plus at least--as Buffett has been very forthright with--"tax on rich doesn't solve defict gap but it's a start."

Then let's say the Republicans get exactly the spending cuts they want in the current disscussions--that lops off another $65 billion annuually. Okay, with me so far: everyone is playing along nicely and compromising. So we still have at least an $850 billion dollar deficit hole: and according to Buffett's own article in The Greenback Effect the printing presses will STILL have to work overtime in the Marriles Ecceles building based on these numbers.

I realize Buffett knows these aren't enough cuts even if both parties agree with what's on the slate at the moment (he's mentioned many times spending needs to be around 21% of GDP with tax revenues around 18%). The point is even if both parties perfectly concede to one another's wishes--we'll stiill have a ways to go on reducing the defict to a 3% gap.

And so with the printing presses sure to run next year, it's really no wonder Buffett remains a constant buyer of stocks (not bonds, unlike the general public). Inflation is a mandatory side-effect of our current system which is of course a no duh, but for things to be held together I think this has never been more true: total credit market debt needs to skyrocket to maintain our current standards of living: no easy feat given lack of income growth.

As I said in the thread subject line, they might as well call the current plan the Inflation Tax on the 98% (which Buffett has another article on which should instead be called something like "How Inflation Will Rob from the 98%--especially those with little in the way of assets."

I think no matter the outcome, the standard of living will continue to go down for the middle class: as it has since 2000. Inflation in all the things we need will most certainly not help them. And if interest rates get out of control at some point....forget about these cuts, they'll mean diddly squat. Every 1% rise in interest rates equate to roughly $150 billion more in costs to service the U.S. debts outstanding.

As the chinese proverb goes, "may you live in interesting times." Yes, it's going to get more interesting all right.

Good luck all.
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Author: DavidAMinnesota Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196285 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 11/28/2012 4:20 PM
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I'll preface my remarks by saying that I'd like to see entitlement reform and a balanced federal budget. That said, however, I don't see how a $900 billion deficit next year would be a catastrophe.

The U.S. GDP is about $15 trillion and assets are worth about $188 trillion. The $900 billion deficit therefore represents 6.5% of our income (GDP) and 0.5% of our net worth. I'm not sure how this size deficit equates to the sky falling; I think I'd be more concerned about massive changes to tax rates or government benefits that might be required to eliminate the deficit.

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Author: commoncents33 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196287 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 11/28/2012 4:28 PM
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The U.S. GDP is about $15 trillion and assets are worth about $188 trillion. The $900 billion deficit therefore represents 6.5% of our income (GDP) and 0.5% of our net worth. I'm not sure how this size deficit equates to the sky falling; I think I'd be more concerned about massive changes to tax rates or government benefits that might be required to eliminate the deficit.

If our true deficit was only $900 billion, the sky wouldn't be falling. But if you use the kind of accounting that we demand for private businesses (i.e., real-life accounting), then the deficit is roughly eight times that amount. That represents nearly half our income.

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Author: DRWHISKEY Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196291 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 11/28/2012 4:48 PM
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The $900 billion deficit therefore represents 6.5% of our income (GDP) and 0.5% of our net worth.

GDP isn't income--it's total economic output. A huge difference. Secondly, NPV of all net worth minus liabilites is a far cry from 188 trillion in assets. Assets-liabilities=net worth, also 101. Plus, what ya going to do? Sell assets, say the southern states, to China? Grab 30% of all prudent savers wealth to balance the budget?

Go ahead, bury your head in the sand if it helps you.

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Author: sykesix Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196294 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 11/28/2012 5:31 PM
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I'll preface my remarks by saying that I'd like to see entitlement reform and a balanced federal budget. That said, however, I don't see how a $900 billion deficit next year would be a catastrophe.

The U.S. GDP is about $15 trillion and assets are worth about $188 trillion. The $900 billion deficit therefore represents 6.5% of our income (GDP) and 0.5% of our net worth. I'm not sure how this size deficit equates to the sky falling; I think I'd be more concerned about massive changes to tax rates or government benefits that might be required to eliminate the deficit.


Thank you for the voice of sanity. The hysteria on the board today has been just a wee bit over the top. The debt situation is a problem, it is not a crisis. The main problem with the debt is the cost of debt service. However, compared to the GDP, debt service is in the same range as it has been the last few decades. It is a large dollar figure, but manageable for now. It would be nice if it the cost was smaller, but it is manageable.

The causes of debt problem basically boil down to two things:

1) Usually high spending due almost entirely due to the wars and the economy, especially Medicaid and unemployment insurance.

2) Unusually low receipts due to the weak economy and the lowest tax rates in many decades.

So unless the economy never improves (hugely unlikely), both 1) and 2) improve on their own. And if we have the maturity to raises taxes to something close to where they used to be, along with some common sense spending cuts we've then taken huge strides to fix the problem.

I don't want to suggest for a second there isn't a problem. There is. But the problem isn't particularly overbearing compared to our past history and the solutions, while not pleasant, are relatively straight forward and don't require draconian actions. They do require intelligent actions by adults--which might be too much to hope for--but nothing drastic.

A couple posters today have mentioned the specter of "extreme inflation." The only thing that is extreme is the unlikelihood it will ever happen. None of the conditions today are similar to those when hyper-inflation has occurred in the past. Just not likely.

I realize Prophets of Doom are much more interesting than Prophets of Mild Unpleasantness, but I'm just not seeing the Doom.

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Author: DRWHISKEY Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196295 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 11/28/2012 5:38 PM
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None of the conditions today are similar to those when hyper-inflation has occurred in the past

LOL. Thanks for clarifying your complete and utter failure to review the history of hyper-inflations. Take a look at the last 56 hyper-inflations--you might just see a few similiarities. We hardly need to go there--but plenty of similiarities which are all too obvious even to idiots.

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Author: sykesix Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196297 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 11/28/2012 5:45 PM
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LOL. Thanks for clarifying your complete and utter failure to review the history of hyper-inflations. Take a look at the last 56 hyper-inflations--you might just see a few similiarities. We hardly need to go there--but plenty of similiarities which are all too obvious even to idiots.

I can point fundamental differences between now and any of those you care to name. But that would require that you try to have an adult conservation. Based on your posting history, I see zero chance of that happening.

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Author: DRWHISKEY Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196298 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 11/28/2012 5:49 PM
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I'm not an adult. I only 16 so you have to excuse my one-offs. But I wouldn't expect to have a blind adult point anything out to me--I only go by the facts man. Not some pollyanna's world.

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Author: commoncents33 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196299 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 11/28/2012 6:05 PM
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The main problem with the debt is the cost of debt service. However, compared to the GDP, debt service is in the same range as it has been the last few decades.


Well, I don't know where you get your information, but it does not comport with any figures I've seen.

Here's just one example:

http://www.usgovernmentspending.com/spending_chart_1900_2016...


The only time we were close to this was following World War II. But our country was completely different back then (we were the manufacturing powerhouse of the world, for one), and the cause of our debt was totally different (the one-time expenditures for the great war, rather than all sorts of ongoing handouts and entitlements). And the trajectory of our debt is clearly in an ugly direction. It's even worse when people stop having the fantasy that we're ever going to get back to historical rates of GDP growth.

Read Jeremy Grantham's latest report, then come back and try again. If you have a sound rationale (rather than vague emotionality) to debunk his arguments, or to debunk the numbers on debtclock.org, I'd love to hear them.

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Author: DRWHISKEY Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196300 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 11/28/2012 6:24 PM
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I wish I could remain more diplomatic like commocents in the face of stupidity. I just cannot. Which is clearly a problem I have to work through.

The complete complacency about the dire problem ahead of us is what worries me most--posts like that of te styx guy are problematic in that there is complete complaceny and a belief that there's virtually no pain ahead of any kind.

Pain is going to come. The more complacent we are--the more there is going to be.

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Author: sykesix Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196301 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 11/28/2012 6:26 PM
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Well, I don't know where you get your information, but it does not comport with any figures I've seen.

Here's just one example:

http://www.usgovernmentspending.com/spending_chart_1900_2016......


The only time we were close to this was following World War II.


You didn't read what I wrote. I said "debt service" not "deficit." I said it twice in the portion you quoted. As I'm sure you know (I hope) those are two quite different things. Debt service cost about 1.2% of GDP last year. By comparison, debt service was 1.8% in 1986, 2.0% in 1968, 2.6% in 1964, and 3.3% in 1949.

The budget numbers are available from a myriad of sources, CBO, OMB, etc.

It would be nice if the number was smaller but it isn't out of line with recent history. In fact, since WWII there have only been a few years when it was smaller than that. That is why I said it was manageable for now.

Read Jeremy Grantham's latest report, then come back and try again.

Why beat around the bush? If there was something I said that was wrong, point it out. I'm here to learn. I do ask you first read what I write, please.

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Author: mungofitch Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196333 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 11/29/2012 8:59 AM
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You didn't read what I wrote. I said "debt service" not "deficit."
I said it twice in the portion you quoted. As I'm sure you know (I
hope) those are two quite different things. Debt service cost about
1.2% of GDP last year. By comparison, debt service was 1.8% in 1986,
2.0% in 1968, 2.6% in 1964, and 3.3% in 1949.


To be fair to the fellow, those might not be very meaningful comparisons.
Debt service costs are a function of borrowing costs, which vary though time.

Real US interest rates are anomalously and unsustainably low.
From the point of view of historical observation, real borrowing costs are 1.47%
below the average since 1943. I took the average of 3-5 year notes and long
bonds as a proxy for the average cost of funding for the US government.
From the point of view of causality, it appears that the rates are
abnormally low due to a mix of (a) large buyers who are not motivated
by a real return, such as the Chinese central bank, and (b) the fact that
the global economy is in a period of deflationary tendencies, deficient
demand, and surplus savings. Both of these factors are likely to be transient.

Thus, the fact that current interest costs are low (and as you say
comparable to historical levels of the same metric) should not offer any
comfort, since it's the future average real interest rate and payments that matter.
Given the high level of indebtedness it would seem prudent to pencil
in an estimate that real rates in the next 30 years will be higher,
not lower, than the real rates in the past 70.

In short, debt service isn't a problem right now solely because real interest
rates on the debt are temporarily low (around -0.8%). But that won't last.
One can be very familiar with the figures and still be worried.
I don't have any particular position on US budgets, but sharply higher average real bond
yields should be a baseline assumption for any evaluation of economic sustainability.

As a non-US based private investor allocating capital, I wouldn't lend long to
the US government a penny at negative real rates. Given the fiscal
outlook, it would probably take real rates of 5% to tempt me*.
If that sounds implausibly high, bear in mind real rates never got that
low for a moment 1982-1986 and were over 9% in two separate stretches.
It's not just because inflation was high; these are real rates.
If you assume real borrowing rates rise to and stay at 5% over the next 5-10
years and assume ongoing high deficits, how does the debt service cost look?
The US defaulted before, and it will happen again if the numbers don't add up.
Forced devaluation is of course much more likely that the prior
outright default, but for the world's savers it's the same thing.

Jim
* to be more precise, it would take nominal coupons at least 5% higher
than current inflation. TIPS rates of 3% might be worth considering

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Author: wax Big red star, 1000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196466 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/2/2012 10:53 AM
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Doc;

Having been around the Fool a very long time, I understand that there are folks that hang on every word Mr. Buffett utters. In fact, the vast majority accept everything he says without question, as if it is gospel.

I'm sure Mr. Buffett is a nice person, but to me, it stops there.

I have not seen or read that Mr. Buffett has actually paid in any extra taxes. He runs his head about how the rich need to pay more and all the rest of this silliness, but that seems to be all he does.

In the end, it all just more Buffett self-promotion.

The simple fact is that government spending is now, and has been for a very very long time, completely out of control.

Instead of increasing taxes for anyone, including the rich, why not cut the salaries of the member of Congress by 40%, and make every nickle they collect in contributions taxable to them?

Why not set term limits on these members just as there are for the President, only for the members...NO retirement, no free insurance, and no free government cheese! None, zip, zilch.

In addition, why not remove limo service for the members. If the truly self-importment members like Ms. Lee need to get somewhere, then they can take a bus, or a cab.

Better yet, they can walk or ride a bike. I mean they are supposed to be the voice of the people, right? So why not at least ACT like the people they are supposed to represent?

In the end what will change? My vote is on nothing.

The debt ceiling will be increased, Americans' overall standard of living will continue to decline, all of the free money the government has given and continues to give to banks will not employ a single out of work person on a permanent basis, and the same liars and retreads will be re-elected.

And Mr. Buffett? He will simply continue to self-promote, to get his old mug on as many news shows and websites as he can.

All the while bitching and moaning that his secretary pays more in taxes than he does.

If memory serves, it was Mr. Buffett that said if you sit down at a card table and don't know who the mark is, it's you...or something similar to that.

Well Doc ask yourself this....when it comes to Mr. Buffett's self-promotion, when it comes to all of his bluster and blarney about taxes...who's the mark?

Cause it certainly ain't him.

Wax

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Author: Umm Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196476 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/3/2012 6:25 AM
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"And Mr. Buffett? He will simply continue to self-promote, to get his old mug on as many news shows and websites as he can."

Yes, clearly Buffett is wading into the political muck for self-promotional purposes. Without politics he never had any opportunity to self-promote.

That is sarcasm BTW.

"Well Doc ask yourself this....when it comes to Mr. Buffett's self-promotion, when it comes to all of his bluster and blarney about taxes...who's the mark?

Cause it certainly ain't him."


Do you realize that if Buffett gets his way on the tax law named after him then his taxes will increase?

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Author: wittgenstein Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196482 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/3/2012 8:56 AM
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Terrific post Wax. Not least the

Instead of increasing taxes for anyone, including the rich, why not cut the salaries of the member of Congress by 40%, and make every nickle they collect in contributions taxable to them?

Why not set term limits on these members just as there are for the President, only for the members...NO retirement, no free insurance, and no free government cheese! None, zip, zilch.

In addition, why not remove limo service for the members. If the truly self-importment members like Ms. Lee need to get somewhere, then they can take a bus, or a cab.

Better yet, they can walk or ride a bike. I mean they are supposed to be the voice of the people, right? So why not at least ACT like the people they are supposed to represent?


part...for starters.


jz

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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196483 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/3/2012 9:05 AM
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Sheila Bair had an interesting proposal for linking Congressional pay to performance:

http://finance.fortune.cnn.com/2012/11/06/congress-pay-perfo...

I particularly like the idea of paying members of Congress partly with ten year treasury bonds that are not transferable or redeemable until maturity. They would still get $90K/year in cash. And cry me a river if a member of Congress claims to not be able to live on nearly twice the median family income in cash compensation plus Bair's proposed DC housing allowance.

I would change Bair's proposal to pay members 50% cash, 25% ten year non-redeemable, non-transferable treasuries, and 25% thirty year non-redeemable, non-transferable treasuries.

Fed oversight hearings would be more interesting.

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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196487 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/3/2012 12:11 PM
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Terrific post Wax. Not least the
Instead of increasing taxes for anyone, including the rich, why not cut the salaries of the member of Congress by 40%, and make every nickle they collect in contributions taxable to them?
Why not set term limits on these members just as there are for the President, only for the members...NO retirement, no free insurance, and no free government cheese! None, zip, zilch.
In addition, why not remove limo service for the members. If the truly self-importment members like Ms. Lee need to get somewhere, then they can take a bus, or a cab.
Better yet, they can walk or ride a bike. I mean they are supposed to be the voice of the people, right? So why not at least ACT like the people they are supposed to represent?


I can't stand it. This was so brain damaged the first time, but I have to say, this is stupid beyond comprehension.

There no "free insurance." People in Congress have access to the same health insurance as any other Federal Employee, with a few fairly minor differences. (They can get treatment at a military base, for instance. And for another $600 a year they can get minimal services from the Attending Physician office on Capital Hill. Payment in advance, one person only; no family plan.)

There is no "free government cheese." Cutting the salaries of Congress by 40% will do nothing. I would say that every member of Congress could instantly double or triple his/her salary by leaving for the private sector. They are not there for "the salary." They are there for the prestige and the ability to move the country in a direction that they prefer.

There is no "limo service", unless they pay for it out of their own pocket or their office allowance, which is not generous considering the work and staff that it must pay for. Their offices, for the most part, are far less plush than a mid-level executive at any Fortune 500 company. I know. I visited them annually as part of a lobbying trip, and I was constantly amazed at how dank the surroundings (Hart Senate office building excepted) and how Salvation Army rescue the furniture.

A few get special treatment: those in succession line for the Presidency. These people are required to maintain two homes, and usually have extensive travel back in their home states on what most people would consider "weekends". They maintain political offices in home districts to deal with constituent issues, and then there's those funny things called "elections", which somehow manage to cost money.

I am not saying the system is perfect, or even great, but the idea that there are a bunch of freeloaders wallowing in piles of filthy lucre, hookers and booze is the stuff of Tea Party ignorance or worse. Yes, some of these people do stupid things, and have 400 reporters breathing down their necks, which corporate types do not; they can be voted off the island for things they never did, because their party is out of favor, or for a dozen other reasons both valid and not, and they do it for a pittance of the renumeration they might receive elsewhere.

There are perks, obviously. The job does open financially rewarding doors down the line (something I would like to see ended). I don't disagree fully with term-limits, although I'd put the cap at 15-20 years for all service. And there are lots of things that are stupid: the filibuster without actually filibustering rule, for instance. And the seniority-determines-all assignment of chairmanships. And there are more, obviously.

But this endless screed of "they're all a bunch of blood sucking parasites" is just too asinine for words, which I have already used too many of.

"They can ride a bike. Why not at least ACT like the people they are supposed to represent?"

Seriously. The people they represent "ride bikes"? What country are you living in, Vietnam?
 


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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196491 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/3/2012 12:36 PM
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I would say that every member of Congress could instantly double or triple his/her salary by leaving for the private sector. They are not there for "the salary."

I don't think my representative could command a private sector salary above the poverty line, with the exception of possibly entering into a lobbying contract which is inherently corrupt and should be illegal for at least five years after leaving Congress. Some representatives can obviously earn more, many quite a bit less. I see no reason to pay members of Congess more than twice the median family income plus a housing allowance indexed to compensate for the difference between the median home cost in their district vs the usually more expensive Washington DC area. It is call public service for a reason.

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Author: thinkerdoer Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196501 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/3/2012 2:54 PM
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I don't think my representative could command a private sector salary above the poverty line, with the exception of possibly entering into a lobbying contract which is inherently corrupt and should be illegal for at least five years after leaving Congress. Some representatives can obviously earn more, many quite a bit less. I see no reason to pay members of Congess more than twice the median family income plus a housing allowance indexed to compensate for the difference between the median home cost in their district vs the usually more expensive Washington DC area. It is call public service for a reason.

The principal problem with the notion that we should pay members of Congress a lot less than they are now paid is that, as in the rest of life, you get what you pay for. You may not think you're getting much now, but just wait until you've decreased pay to the point where the only people who can run for office are those who've been "promised" (wink-wink) jobs in the private sector when they're done. While it's true that members of Congress gain valuable knowledge while in Congress which can often be parlayed into lucrative compensation after they've left office, most of that kind of knowledge is in the hands of congressional staff. Knowledge, not only of the ins and outs of the legislative process, but also of the political landscape on an issue-by-issue basis and of a congressional district, is quite valuable as evidenced by the compensation of former members of Congress (including those who will never run for public office again) and their staff (who may never run for public office at all).

One side effect of extending the "low pay" idea to congressional staff is that, again, you'd end up getting what you paid for, which would result in even more power being shifted to lobbyists.

I do like the idea of tying congressional pay to national performance on such indicators as employment and economic growth, though I would also link it to such other factors as child poverty rates, secondary school graduation rates, and perhaps some measure of the efficiency of our health care system. Though even better would be linking it to Gross National Happiness which, believe it or not, is measured by the country of Nepal. Anyone interested in this idea should take a look at the book entitled "The Geography of Bliss", by Eric Weiner.

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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196502 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/3/2012 3:09 PM
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The principal problem with the notion that we should pay members of Congress a lot less than they are now paid is that, as in the rest of life, you get what you pay for.

If members of Congress are supposed to be representatives of the people rather than an elite ruling class, the pay should be set at some reasonable multiple of median incomes. I don't necessarily even have a problem with pay at current levels provided that, in exchange, members of Congress are completely banned from any type of lobbying activity for at least five years after leaving service. I also like the idea of paying part of the salary in "performance units" tied to some measure of national well being.

I think we should want people to run for Congress out of a sense of duty and service rather than for the pay or for future prospects of better pay after leaving Congress. We shouldn't demand a vow of poverty either but 2-3x median income is hardly poverty level and at least somewhat ties the member of Congress to the life and experiences of his constituents.

(As an aside, I had an opportunity to take a tour of Congress and some of the office buildings a few years ago. I also did not find the offices to be extravagant at all ... more like vintage 1960s style in need of an update...)

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Author: thinkerdoer Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196505 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/3/2012 4:17 PM
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I think we should want people to run for Congress out of a sense of duty and service rather than for the pay or for future prospects of better pay after leaving Congress.

I hate to break this to you, but I think the overwhelming majority of the people who run for Congress do so for exactly the motivations you want. But to hope that people would serve their country, in whatever way, without regard to their future financial well-being is naive. The trick is to harness this desire to improved national performance, which is an idea with which we both agree.

So why don't we get the kind of government we all want? Many reasons, but I'd point to 1) the effects of money on our political system stack the deck in favor of the wealthy getting into and keeping office, and of legislation being passed the net effects of which benefit the wealthy disproportionately, 2) our representatives are truly representative of the political divisions in our country, which is why they have trouble agreeing on much, and 3) nearly all of them feel that their sense of duty and service includes being re-elected so as to prevent the evils which they feel would come to pass were their opponents to gain power.

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Author: razorfangius Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196519 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/4/2012 12:22 PM
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Singapore is #5 on the corruption index, compared to #24 for the US:

http://cpi.transparency.org/cpi2011/results/

What Singapore does is pay politicians very high salaries and then throw them in prison if they take any kind of bribe. Makes sense to me.

If you cut Congressional salaries, how do you think they are going to make that up? Already their salary is usually only 20% of their income. The rest come from the spouses, who sit on all kinds of non-profit orgs, funded by lobbyists (see Sleeping with the Devil). Perfectly legal, for some reason I can't fathom.

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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196520 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/4/2012 2:12 PM
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If you cut Congressional salaries, how do you think they are going to make that up? Already their salary is usually only 20% of their income

This implies that a Congressman needs $900K-$1 million/year to make ends meet? Do we have a ruling class or representatives?

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Author: eurotrash01 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196522 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/4/2012 2:56 PM
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This implies that a Congressman needs $900K-$1 million/year to make ends meet? Do we have a ruling class or representatives?


It would help. We can learn a lot of good things from Singapore.

Layer on top Buffett's suggestion that sitting members of Congress may not run for re-election if expenditures on their watch exceed revenues by more than 3%. Then add on Jeff Greenfield's notion of a federal tax lottery and we're be most of the way home.

http://news.yahoo.com/lotto-fever--hey--let%E2%80%99s-use-it...

[I'd limit the top prize quite a bit...I think I could scrape by on a measly $200mm tax free.]

et

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Author: wax Big red star, 1000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196643 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/9/2012 9:52 AM
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Umm;

In the end, I really don't care about Mr. Buffett's taxes, regardless of which direction they go.

But certainly you nailed it..."Do you realize that if Buffett gets his way on the tax law named after him...?"

This is what Mr. Buffett cares about I think, not that more taxes will be collected.

Wax

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Author: wax Big red star, 1000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196644 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/9/2012 9:53 AM
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This certainly would get my vote!

Wax

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Author: wax Big red star, 1000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196645 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/9/2012 9:59 AM
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Goofyhoofy;

"I would say that every member of Congress could instantly double or triple his/her salary by leaving for the private sector."

All I can say is good-bye. I hope the door doesn't hit them in the rear end on the way out.

As to limo service...Shelia Jackson Lee....has a limo paid for by the citizens.

As to bikes....it was metaphoric....in simple terms they represent the average person....act like one.

Wax

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Author: wax Big red star, 1000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196646 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/9/2012 10:02 AM
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thinkerdoer;

"The principal problem with the notion that we should pay members of Congress a lot less than they are now paid is that, as in the rest of life, you get what you pay for."

My point exactly. The American people keep paying and paying and getting nothing.

In the end, why not dump them all? The next set of retreads couldn't be any worse!

Wax

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Author: Umm Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196659 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/9/2012 5:22 PM
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"In the end, I really don't care about Mr. Buffett's taxes, regardless of which direction they go."

Then why bring them up and make erroneous implications about them?

"This is what Mr. Buffett cares about I think, not that more taxes will be collected."

You think that Buffett is in this to have a tax law named after him?

You don't think that he is doing it because he thinks it is good for the country? After all Buffett has said and done throughout his life about the subject of dynastic wealth and taxes on the rich (his parable about the ovarian lottery, his thoughts regarding leaving his wealth to his children, etc) you think he is doing this to get his name on a tax law.

That seems rather silly.

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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196672 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/10/2012 7:19 AM
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Like Buffett said recently (I think on The Daily Show), having a new tax named for him is about as attractive as having a deadly disease named after him. He is obviously doing what he believes to be in the best interests of the country. He does seem to love being in the media spotlight as well but if that's what he was after he could simply give large amounts of money to various good causes and he would still get attention and interviews all the time without the controversy associated with taxes.

Recently I heard an interesting argument that essentially put forward the idea that Buffett should shut up on taxes because he has a fiduciary duty to act in the best interest of shareholders. This is a false argument because Buffett has no duty to act as personal tax advocates for Berkshire shareholders. He does have a duty to act in our interests with respect to Berkshire's tax strategy. But not in terms of our personal tax situation. If Buffett used his position to set Berkshire up inefficiently from a tax perspective to suit his political views, we would have reason to complain. But the opposite is true... Berkshire is marvelously efficient when it comes to taxes at the corporate level due to the company's ability to profitably reinvest earnings reallocated within the conglomerate structure. And since it pays no dividend shareholders are in the driver's seat when it comes to the timing of realizing capital gains.

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Author: wax Big red star, 1000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196882 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/13/2012 5:29 AM
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Umm;

Here's my take. YES! I think Mr. Buffett can't wait to see his name on a tax law.

Wax

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Author: wax Big red star, 1000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196883 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/13/2012 5:56 AM
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rationalwalk;

People in the public spotlight say and do many things within the context of that public spotlight, and as far as I'm concerned Mr. Buffett is no different.

As I have said, if Mr. Buffett believes he should pay more taxes, then all he needs to do is stop flapping his gums, write a check for 40% of his Unadjusted Gross Income, and send it in.

I mean as you noted..."He is obviously doing what he believes to be in the best interests of the country."

In the end, the middle class are going to get screwed, that's a given. Taxes are going to increase and the increase is going to be immediate when it happens.

Cuts in government spending will not be immediate, they will take place over a 10 (or more) year period.

Regardless, deficit spending will continue, the national debt will grow, and the same worthless Congressional folks will continue to be re-elected.

The only thing that will change is that you and I will have less change in our pockets.

But golly...Mr. Buffett should be happy.

Wax

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Author: karensie Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196884 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/13/2012 7:10 AM
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"Berkshire buyback seen clashing with estate tax push"

http://www.reuters.com/article/2012/12/12/berkshire-buyback-...

Tim

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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196885 of 211945
Subject: Re: OT: The Coming Inflation Tax Date: 12/13/2012 7:34 AM
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The article makes no sense. Estate taxes are assessed based on the rates in effect in the year of death applied to the taxable portion of the estate. The individual who sold is already dead. The stock held in the estate gets a step up in basis at the date of death. The only capital gains tax that would apply is to appreciation between the date of death and liquidation of the position.

I'm not getting how this repurchase is some great tax avoidance move but not being a billionaire with tax accountants on staff I may be missing something.

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