Need some good links on upper income spending/stimulus, etc....

[vi5]

I was talking with my parents this weekend. They are in their 60's and are very well off, having started with nothing and raised poor by extremely working class parents who struggled to make ends meet.

My parents are very socially liberal (staunchly pro-gay rights, staunchly pro-choice, mostly anti-war) and are extremely generous and charitable people. And economically they are not freepers or wingnuts by any stretch of the imagination. But they both watch a lot of financial news TV(CNBC, Bloomberg, etc.) and it shows in how little pieces of information that seep in get dropped in their conversation when things turn political or economic. And the conversation this weekend referenced 1)how overtaxed they are, 2)how 40% of the people pay no taxes, and 3)how the wealthy are the ones who when they get more money through tax breaks, etc. stimulate the economy.

I've got a few decent articles that I want to send them from fairly mainstream news sources (they are likely to dismiss any articles from lefty sources/sites, but similarly do the same for things from Fox news or wingnut sites) about how the myth that they are overtaxed is bogus and that taxes at their level are the lowest in decades, and also the myth that 40% pay no taxes when in reality as a percentage these same people pay more than the wealthy. But I can't seem to find any good data about how the wealthy don't spend enough from tax breaks and refunds and stimulus to generate drives and move the economy, or at least not as much as if it's spread out over infrastructure or lower income stimulus. I have few articles that reference some CBO findings but they don't include much of the data or charts themselves.

Anyone have anything good for that? Much appreciated.

[Davis_X_Machina]

1. "...how 40% of the people pay no taxes.

Pay no federal income taxes. SS yes. Medicare, yes. Federal excise taxes on everything from telephone service to tires, yes. Gas taxes, yes. State sales taxes. Motor vehicle excise taxes. Property tax, if they're homeowners.

No one pays 'no taxes' unless he or she is living on lichen and sleeping in a cave somewhere.

[vi5]

2. Yes. I know that.

As I stated, I have articles and charts debunking that one. I know this. I need them to know this. I said this in our conversation but I want to send them the data, which I have.

[Davis_X_Machina]

3. I usually link...

...to this David Leonhardt piece from last April's Times. Paywalled, but quoted here.

[vi5]

6. That's the one I have for that....

Really good article. Explains it fairly simply without being dogmatic or throwing around a lot of political buzzwords.

[Ruby the Liberal]

4. I don't have the patience to debunk the nonsense from CNBC/Bloomberg but here are some talking pts

Sorry, in the industry and I have to listen to that blather 5 days a week.

1. "Overtaxed". Most ultra high net worth individuals earn their money in the form of interest and dividends, which (if held 1 year + 1 day) is taxed at a max rate of 15%. Check out the tax rates for ordinary income for someone making, say $75k a year. These talking heads are conflating amount paid vs percentage of income. Also look up the quotes going back over a decade where Warren Buffett has been saying over and over that it should be a crime that he pays a smaller % in taxes than his secretary (use that word in a search, even if you think it is politically incorrect because thats how he references it). You may also want to look up "interest carryover" loopholes that explain how the ultra ultra ultra high net worth people get away with paying nothing.

2. 40% of the people? I am guessing that is Federal as FICA/Medicare isn't phased out for lower incomes. Those numbers are thrown out so randomly that I wouldn't even know where to begin. Suggestion is to look at how Bechtel is considered a "small business" under IRS code because they are privately held and have less than 20 owners (and are as such afforded all of those "small business job creator" benefits that the GOP is so desperate to "protect). Another fun one - check out how much Bank of America, GE and ExxonMobile paid in taxes in 2010 vs their profits. (Hint - all 3 were given billions in REFUNDS and owed nothing).

3. This one is just plain stupid on all counts. First of all, if you have an extra $50 and give it to someone who has nothing, they are going to spend it. If you give it to a millionaire, they will save it as they have less need for it. Why is that important? Because the economy grows from the ground up, not the ground down. It is called the Multiplier Effect. Rachel Maddow has some amazing research showing that the 2 greatest stimulators of an economy are (i) food stamps and (ii) unemployment insurance. Tax breaks are at the bottom of the pile.

Here is a little story that explains the Multiplier Effect, and how the more money circulates (multiplies) the faster it grows the economy:

Gentleman takes a vacation to the south of France. Checks into a hotel and gives the hotel manager $100 for his room. He then leaves and goes out to sightsee. Manager takes the $100 and gives it to the maid for her pay. Maid takes the $100 and goes to the market to buy some food for her kids. Market owner takes the $100 and pays the farmer to replenish his stock. Farmet takes the $100 and gives it to the mechanic who fixed his tractor. Tractor mechanic takes the $100 and goes to the florist to buy flowers for his wife's birthday. Florist takes the $100 and rents a tuxedo for his son's wedding. Gentleman on vacation returns to the hotel and upon inspecting his room, decides that is isn't up to his liking and asks for a refund, which the hotel manager complies with. Dude leaves town with his original $100 back in his pocket.

Look at the number of people who got paid and how circulation of currency moves the economy (again, $100 to a rich guy isn't going right back into the economy, the additional money will be saved as opposed to the poor who spend).

Do you see the difference?

[vi5]

5. I know and said all of this stuff....

It's not that they out and out dismiss me. But they know I'm definitely a very hard left person in my politics so they take what I say on the subjects with a bit of a side eye glance. And their response as always was, as I said "Well they said that on the financial news." which is why I'm looking for any good links.

Like I said, I have really good ones on the first 2. But the third one is just proving harder to find.

[Ruby the Liberal]

7. Google Velocity of Money or the Money Multiplier

if you can't use my story (which usually works rather well in explaining this).

You are looking for stimulus value - what investment provides the biggest bang for the buck in return on investment.

Plenty of stuff out there showing that our least ROI is tax cuts and the greatest ROI is social programs (food stamps and unemployment).

[vi5]

8. Thanks. I will use the story....

Appreciate the help.

[Ruby the Liberal]

9. Good luck with your research, and check out Rachel's site

She has done a lot of research on Multipliers and ROI and have graphs and charts out the wazoo showcasing the research.

[JHB]

11. If you haven't already pointed it out...

...the guys on the financial news look at low wages and lack of "trickle down" as a good thing; that's "maximizing profit".

[vi5]

14. That was my other argument....

I pointed out that my dad, as an executive and a heavy duty shareholder, gets more money when profits are maximized. And he knows full well that the way that is done is to cut jobs, or send them to other, cheaper locations, or extract concessions from unions. He knows this because he hates this and it's struggling with that which is causing him to want to retire earlier.

So I said does he really not see how reprehensible it is to cut people's salaries, or send their jobs overseas, or reduce their benefits so that he can make more money but then to turn around and complain that those same people aren't paying enough taxes?

[JHB]

10. They're asking you to point to a cloud from within it

The reason there's few succinct sources is because the effects are all over: stagnant wages, outsourcing and offshoring of high-paying jobs, boosts to stock prices after layoffs, etc.
http://www.epi.org/publications/entry/bp195/

The thing to ask them is why they think tax breaks for high-income people will stimulate the economy?

They're obviously old enough to remember Reagan. Do they remember Reagan's claim that by lowering the tax rates, people would use that money to modernize out industrial plant? Part of the conventional wisdom back then was that every other major manufacturing nation had suffered massive destruction during WW2, so most of their factories were newer and more efficient than ours. Modernizing them would help turn around the problems that were turning the Steel Belt into the Rust Belt.

The wealthy got the tax breaks, but what happened? The money went to Wall Street, and what we got was Mergermania. That stimulated stock prices, and made a lot of money for a few people, but ordinary people were just "fat" that needed to be "trimmed". The modernized factories were mostly built in Mexico and other cheap-labor countries.

The same bait-and-switch sales tactics happened again and again: LBO's, the New Economy, etc. The claim is that this is needed to get ahead of the ball, but the benefits never quite reach the lower levels.

Here's the point: why should they? Making money by real investment (developing a new product or process, or providing the resources to those who do, and getting a piece of the action on the money made from that) involves hard work and real risk of it not panning out. What's a much easier and surer way to make money? Squeezing people: cut wages, cut jobs, make people work longer hours without added pay, sending jobs to cheap-labor countries.

All Wall Street cares about is the numbers on the quarterly report, so it doesn't care about how those numbers are gotten. Real investment in development takes a back seat to speculation and liquidation. You can get real fat from eating seed corn, but only if you don't mind a lot of people starving later.

Go to http://www.barlettandsteele.com/ and look up some of the stories and books these journalists have written over the last 20 years. Try corresponding with them and with the people who've written some of the articles you've found that were too short to include the actual data. They may be able to help point to the data AND to things that better describe things in layman's terms.

[vi5]

12. The one thing that always gets them....

Is when I point out that their parents, doing exactly the same things they did 30, 40, and 50 years ago would never be able to do the things they were able to (own a house, put kids through college, etc.) and as such my parents would not have been able to have the success they had. I always ask them why they want to support policies that would deny people in the same situations they came from, the same opportunities they have.

It drives them crazy when they talk about wanting to be able to leave me and my kids the money they worked for without it having to be taxed too high, and I respond that if that happens I should be taxed on it higher. That I didn't earn that money. That I didn't work for it. And that keeping so much of it in the same family does nothing to help this country, does nothing to help the economy and only serves to further entrench the opportunities in the hands of the few.

[JHB]

13. I don't know how much they have and what their taxes are...

...but since they're in a position to even talk that way, I'm willing to venture that they're at or near the top rate. I'd argue that one of the reason's their taxes aren't lower is because taxes on those with much more than them are not higher.

This isn't even a matter of the direct levy: when we had topheavy tax rates in the 50s and 60s, very wealthy people did different things in order to avoid paying those high rates: charitable donation (which was tuned into other peoples' pay), investing in research (which was turned into other peoples' pay), using "carrots" more than "sticks" with their employees (which meant more pay for the employees), hiring enough people to do the jobs they needed done, and train new people (which meant pay for those people)... do you see the theme here? What "trickle down economics" did was break the very mechanisms that actually accomplished the trickling down.

The structure of the economy we had when your parents were starting off and establishing themselves -- including the topheavy taxes -- worked in favor of people trying to get ahead. Since Reagan, with his deregulation and tax cut ideology, it has worked in favor of those who already are (ahead).

[JHB]

15. Chapter 1 of Bartlett & Steele's "America: What Went Wrong" is online...

...here:
http://americawhatwentwrong.org/stories/excerpt-america-what-went-wrong/

Keep in mind, the book is from 1992. Things have only gotten worse since.