Buffett, Romney, and Taxes

It's election season, and with it comes the obligatory discussion – or, more often, heated debate -- about taxes.

The signs are everywhere. In Tuesday's State of the Union speech, President Obama invited Warren Buffett's secretary, Debbie Bosanek, to showcase what he sees as inequities in the tax system: "Right now, because of loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle-class households. Right now, Warren Buffett pays a lower tax rate than his secretary."

Buffett himself is stirring the tax pot, too. Responding to criticism that if he feels taxes on the rich are too low (an argument he's made before), he can donate money to the IRS, Buffett offered to match Sen. Mitch McConnell three-to-one on any donations made to lower the deficit. When he found out that Rep. Scott Rigell already donates 15% of his salary -- about $25,000 a year -- to pay down the debt, Buffett allegedly agreed to write a check to the Treasury for $49,000 (the amount Rigell donated over the last two years).

Then there's Mitt Romney. After releasing his tax returns for 2010 and an estimate of 2011, a small bit of hell broke loose. On more than $20 million of income, Romney paid an effective federal tax rate of just 13.9%. People haven't been this outraged at a presidential candidate's taxes since … John Kerry revealed his 13% tax rate in 2004.

What should you make of it all?

It's impossible to write a complete examination of the tax code in one short article. And you're bound to offend many when talking about this stuff, so I (sort of) apologize in advance. But after listening to the tax debates this week, I think there are two points to keep in mind.

One argument we heard a lot this week is that Mitt Romney's tax rate is lower than many working-class Americans. Indeed, that was the thrust of Warren Buffett's criticism of the tax code.

But dig into the numbers, and it's not so clear. The top tax rate on earned income is currently 35%, but it kicks in only on income over $388,350. Since all income earned below that level is taxed at a lower rate, and deductions lower the amount taxed even more, very few people have an effective federal tax rate close to 35% -- even those with high incomes. In fact, Romney's 14% tax rate still puts him in the top quintile of taxpayers:

Effective Federal Tax Rate

Percentage of Tax Filers Who Paid This Amount (2006)

No income taxes 31.7%
Under 5% 20.6%
5% to 10% 26.0%
10% to 15% 14.8%
15% to 20% 5.1%
20% to 25% 1.2%
25% to 30% 0.5%
30% to 35% 0.1%
Over 40% <0.05%

Source: Tax Policy Center. The year 2006 used because it was a non-recession year.

Still, frustration about Romney's tax rate, is, I think, valid. A lot of the reason why Romney's -- and many of the nation's wealthiest's – rates are relatively low is thanks to a loophole given to private equity and hedge fund managers that allows fees earned from managing other people's money to be taxed as capital gains, rather than as ordinary income.

Here's how it works. If I gave you $100 to manage and agree to pay you 20% of the profits as a fee, and you double my money, you would earn $20. In most businesses, this money would be taxed as ordinary income (up to 35%), since it's a fee for service. But for private equity and hedge fund managers, it's considered a capital gain, where the tax rate maxes out at 15%. As Bloomberg explained:

The private-equity industry argues unconvincingly that the capital-gains rate is appropriate for managers such as Romney because they put their own money at risk. Opponents of the carried-interest tax break point out, correctly, that private-equity managers are eligible for that low rate on profit just for managing other people’s money, regardless of whether they themselves have any skin in the game. It's worth noting that workers in other financial sectors -- investment bankers and portfolio managers -- pay ordinary rates on their income, even though they perform essentially the same service for their clients.

The loophole, called "carried interest," is contentious virtually everywhere except in private-equity boardrooms. Bloomberg recently asked 1,200 of its financial clients if the carried-interest loophole was defensible. Two-thirds said it was "unjustified." On Wednesday, the Wall Street Journal reported, "If elected president, Mitt Romney might consider ending a tax break that helped the former Massachusetts governor accumulate his fortune, an aide suggested Tuesday," referring to carried interest. Last week, News Corp. chairman Rupert Murdoch tweeted: "Carried interest tax racket. Billions over many years. Why and where has Obama been?" With the exception of private equity managers themselves, few seem to be able to argue rationally that taxing carried interest as a capital gain makes sense.

Tax rates do matter, of course, and everyone should want the lowest taxes possible that pay for the services people demand. But another point frequently made lately is that raising taxes at all -- such as returning to 1990s tax levels on higher-income earners -- will spoil economic growth and undermine business investment.

That might happen. But the link between taxes and the strength of the economy may not be so black and white. When tax rates were brought up last year, Buffett made an interesting point:

I have worked with investors for 60 years and I have yet to see anyone -- not even when capital gains rates were 39.9 percent in 1976-77 -- shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs was added between 1980 and 2000. You know what's happened since then: lower tax rates and far lower job creation.

Dig into the numbers, and you might see what he means. For example, consider job growth over the last half-century at various tax rates:

Sources: Tax Policy Center, Federal Reserve, author's calculations.

The same goes when looking at capital gains taxes and real (inflation-adjusted) gross private investment growth:  

Sources: Tax Policy Center, Federal Reserve, author's calculations.

If there is a link between tax rates and economic growth, you might actually conclude that higher taxes are consistent with higher growth. That's silly, and no rational person should make that argument. Correlation is not causation. Instead, I think what the numbers show are that tax rates are less important in determining economic growth than some give them credit for. They aren't the magical knobs that, when tweaked, can dictate the path of the economy. Other variables -- such as the ideas of entrepreneurs, the confidence of consumers, the stability of the financial system, the status of other global economies, demographics of the labor force, the savings rate, and productivity, to name a few -- seem far more important. A tax cut when rates are extremely high will likely give growth a boost. But the idea that going back to 1990s tax levels for a small subset of taxpayers will sink the economy? That's a different argument, and one that history isn't terribly kind to.

This isn't a call to raise taxes. I think some tax rates, particularly corporate taxes, should be dramatically lower, since shifting business to a low-tax haven is so easy for large corporations to do. But these debates are more useful when you have as much information and context as possible. Does Mitt Romney pay a lower tax rate than most middle-class Americans? No. Would ending a few of the tax code's more flagrant inequities derail economic growth? History shows it probably would not.  

Disagree? Let me know why below.

Check back every Tuesday and Friday for Morgan Housel's columns on finance and economics.

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Follow him on Twitter @TMFHousel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On January 27, 2012, at 6:13 PM, DukeTG wrote:

    Romney doesn't may a lower rate than *most* Americans, but he sure makes way more money. It's hard to argue that we have a very progressive tax system when this is how it shakes up.

    Also, if you factor payroll taxes into that calculation I think things might come out a bit differently. I already pay about 1% more than Romney on a middle class income, and that's before factoring in payroll taxes. I think that was a major part of Buffet's point: payroll taxes are about 0% of Romney's taxes, but by definition they're about 6% if you make less than $100k.

  • Report this Comment On January 27, 2012, at 6:14 PM, DukeTG wrote:

    ^sorry, payroll taxes are like 2%. I was thinking total of employer and employee.

    Still, you get the idea...

  • Report this Comment On January 27, 2012, at 6:47 PM, Bert31 wrote:

    I think the "carried interest" is indefensible and should be changed. But I was unaware Mitt Romney was managing other peoples money last year and that he was taking advantage of this loophole...

    As far as taxes on dividends, well as far as I am concerned that is double taxation. Corporations pay dividends from earnings that are taxed at 35% already, then the dividends themselves are taxed further. Second, capital gains come with great risk, possible loss of all invested capital!

  • Report this Comment On January 27, 2012, at 6:52 PM, CaptainWidget wrote:

    The tax code is an indefensible mess. Regardless of what the top nominal rate in each year, the best the federal government has ever collected has been 20% with a 18.5% average.

    The pragmatist would suggest, if 18.5% is all you're going to get before people start investing in avoidance, then ask for 18.5% flat. Give exactly one deduction, a flat number per human being dependent upon your income (1 for single, additional for children) and only make dollars earned over the deduction amount taxable.

  • Report this Comment On January 27, 2012, at 6:53 PM, TMFHousel wrote:

    ST,

    Thanks for your comments. Romney has left Bain of course, but the gains he's still reaping are left over from when he worked there, thus the continued tax treatment of carried interest.

    I understanding the double taxation of dividends argument. It's a fair point. But nearly every dollar in the economy is double/triple/quadruple taxed. I pay income taxes, and then have to pay sales taxes if I want to spend it. The business that gets that money has to pay payroll taxes/income taxes, and the employee whose salary is based off the income I spend has to pay income taxes, who then pays sales tax ... it's a continuous loop.

  • Report this Comment On January 27, 2012, at 6:55 PM, jeffloun wrote:

    "appropriate for managers such as Romney"

    exactly as SoundTrading was saying, this has nothing to do with his last 2 years taxes, he hasn't mananged other's money since 1999, he is actually investing his money and making capital gains for which he pays the capital gains rate.

    if you think he should have paid more taxes in 2009 and 2010 then you need to argue the 15% cap gains rate, it has nothing to do with the carried interest loophole.

    How he made his fortune in the 90s can probably be attributed to the loophole, yes, but the current simplifications in the news and "blame the loophole" are ridiculous and basically just lies. This is why the American people are so misinformed, since no one cares that cnn and fox news just boil down complex issues to one-liners that are factually incorrect.

  • Report this Comment On January 27, 2012, at 7:05 PM, TMFHousel wrote:

    <<this has nothing to do with his last 2 years taxes, he hasn't mananged other's money since 1999, he is actually investing his money and making capital gains for which he pays the capital gains rate.>>

    Romney's retirement package with Bain allowed him to keep receiving income from Bain deals and treat it as carried interest.

  • Report this Comment On January 27, 2012, at 7:16 PM, jeffloun wrote:

    I'm not sure sure how his Bain benefits play in exactly, sure there is probably an argument he is still benefiting from the loophole based on his labour from the 90s, which should still be taxed at labour-rates if not for the carried interest.

    But the guy has what? 240M or so in assets and makes 20M/year or so income, that seems like a reasonable-ish percentage for investment returns (we all wish we could get it, but still, not absurd), so I hardly think blaming the loophole for his tax rate is fair still.

    @ "How on earth do you people think he paid 14% on $20M of income any other way?"

    The Long-term Capital Gains Tax Rate is 15%, knock off his 3.5M a year in donations and you get less than 14% easy.

  • Report this Comment On January 27, 2012, at 7:17 PM, Bert31 wrote:

    "How on earth do you people think he paid 14% on $20M of income any other way?"

    Well Morgan did clear that one up for me, but I was unaware of Senator Kerry's career in money management?

  • Report this Comment On January 27, 2012, at 7:31 PM, bfgrp wrote:
  • Report this Comment On January 27, 2012, at 8:38 PM, 415el wrote:

    The one thing I still don't understand with Buffett and Obama's argument about the secretary having an effective tax rate higher than his is baffling. According to filings, he takes $524K a year in income (which is admirable considering he can take $1 and still live his life very well). But I don't make that much a year, and I'm sure my tax rate is higher than my assistant.

    There are only 3 possible scenario for this:

    1) Mr Buffett (who I'm a big fan of) and Mr Obama, is lying to us to make a political point

    2) Buffett's secretary, Debbie Bosanek, makes more than he does (which is totally stupid to compare her to us normal folks, so just shut it)

    3) Mr Buffett doesn't file a tax return and BRK doesn't withhold anything for him, so he should be getting a letter from the IRS

    I get it that there's an issue, but stop treating us as stupid people. Can't trust politicians and the rich.

    Buffett - I know you like Obama, but come on, why do you want to side with these sleaze bags.

  • Report this Comment On January 27, 2012, at 8:50 PM, TMFHousel wrote:

    There is a 4th possibility, which happens to be the accurate one: Buffett makes about $50 million a year in dividends and capital gains, which are taxed far lower than ordinary income.

  • Report this Comment On January 27, 2012, at 9:36 PM, CaptainWidget wrote:

    Housel is correct. 500K a year at 36% gets diluted pretty fast by 49.5 million a year at 15%.

    If Buffet really wants higher taxes, it's simple. Refuse to take dividends and accept his 50M compensation in a straight salary. It's completely intellectually dishonest for him to complain about his low tax rate which is solely constructed for him by the board at his company.

  • Report this Comment On January 27, 2012, at 9:40 PM, TMFHousel wrote:

    CaptainWidget,

    The dividends don't come from Berkshire. Berkshire doesn't pay dividends. Buffett holds a personal portfolio of about $500 million outside his Berkshire holdings where his dividend/capital gains income is derived.

    Thanks for the comments, all.

  • Report this Comment On January 27, 2012, at 9:59 PM, jabez1 wrote:

    There are lots of ways to view this situation. I look at it this way. Romney paid $2.78MM for the privilege of living in America for one year. This is more than I'll pay in a lifetime.

    I'm not as concerned with the US tax code as I am the US spending code.

  • Report this Comment On January 27, 2012, at 10:01 PM, BMFPitt wrote:

    How do you get a rate over 35%, exactly?

    And there's a HUGE difference between capital gains and dividends (which a reasonable argument can be made for taxing at a lower rate) and carried interest (which is simply comission-based income.) It is an outrageous loophole.

  • Report this Comment On January 27, 2012, at 10:02 PM, PeterD7510 wrote:

    Obama's latest budget calls for $3.7 billion in spending. The population of the US is 313 miilion. Therefore, the cost of government works out to roughly $11,821 per citizen. Mr. Romney paid $3 miilion in taxes. I think he has paid his "fair share".

  • Report this Comment On January 27, 2012, at 10:12 PM, TMFHousel wrote:

    <<How do you get a rate over 35%, exactly?>>

    It's kind of funny: dig deep into the numbers, and every year about 7,000 people have tax rates over 80%. I really don't know how, but I bet it has to do with reversing deductions taken in previous years.

  • Report this Comment On January 27, 2012, at 11:07 PM, WdanW wrote:

    You're killing me with all this "loophole" nonesense - it's a Tax Code Provision! To be fair then, the 401(k) is a loophole...

  • Report this Comment On January 27, 2012, at 11:15 PM, DonkeyJunk wrote:

    PeterD, you are welcome to pay $12k in taxes every year in order to earn your right to stay in the country. Frankly, not being as wealthy as you and Mr. Romney (not because I don't work hard or don't deserve it), I'll stick with the current progressive tax code until we come up with something better.

  • Report this Comment On January 27, 2012, at 11:20 PM, rando101 wrote:

    Why not lower Mr Buffets Secretary's tax rate, and everyone elses tax rate to 15% max. Now all is fair in Mr Obama's world, and he, with the rest of the politicians, can work on cutting goverment spending. Which is what they should be doing instead of raising taxes.

  • Report this Comment On January 27, 2012, at 11:26 PM, TMFHousel wrote:

    rando,

    I think there are three reasons why:

    1) Overwhelmingly, voters demand generous entitlements and other safety nets (Social Security, Medicare, unemployment benefits).

    2) Overwhelmingly, voters demand the world's largest military.

    3) These two combined make up three-quarters of government spending.

  • Report this Comment On January 27, 2012, at 11:54 PM, richardrollo wrote:

    I think Buffett is being disingenuous. Tax rates and actual money collected are two different things. The Democrats love higher tax rates, but then turn around and give their friends (large contributors) tax breaks, inside deals, that make up for the higher tax rates, assuming they actually pay higher taxes.

    Some have been making the case that Buffett's tax advocacy is what helped kill the Keystone Pipeline so that his Burlington Northern would transport the oil in rail cars. If that is true, then he has morphed from brilliant investor to crony capitalist.

    When the income tax was first devised, it was only supposed to apply to millionaires. But then, what do you know? There were not enough millionaires, so they had to begin taxing where the real money is: the middle class. Taxing the middle class is a much better idea, because they can't afford full time lawyers and tax accountants. So, comparable to what Solzhenitsyn said about Lenin: once they had killed the Tsar, the Tsarina, and their children, it became much easier to kill the ordinary people. What Obama and Buffett are setting the stage to do is EXACTLY to tax Buffett's secretary at a higher rate down the line, because after all, every one has to pay their fair share. It doesn't matter, we'll never be able to afford the government spending at the rate they've done it in the last three years.

    Incidentally, in Warren Buffett's Omaha News Herald, there is an editorial whining about the treatment of Buffett's secretary and demanding that critics lay off her. Why, Warren, why did you make a public figure out of her? Couldn't you see that coming down the road? That is an example of how the world's greatest investor is a little shy on political acumen.

  • Report this Comment On January 28, 2012, at 12:15 AM, wolfman225 wrote:

    I've never understood this pre-occupation with someone else's financials. In an earlier time, gossiping about someone's wealth was second only to bragging about one's own wealth in terms of boorishness and bad manners.

    As I've said/posted elsewhere: Absent criminal behavior, it's none of my (or your) business. The only legitimate motivation we should have to ask any candidate about his/her taxes is to investigate possible evidence of undue influence. Using the information to browbeat those we have a political disagreement with for no other reason than to gin up hate and discontent is wrong and does the rest of us a disservice in our attempt to evaluate our nominees.

    I'm all for clearing out the weeds in the tax code in favor of a cleaner, simpler schedule. Something that was been done once before in the Reagan years, for example. The overall rates were lowered and the lower rates were balanced by the elimination of several deductions and loopholes.

    Perhaps, if politicians were more interested in the health of the American economy and less in their own political futures and the welfare of their friends, and contributors............

    one can only hope. I'm not holding my breath.

    In the meantime, I think it absurd to be agitated over who is/is not paying their "fair share" (whatever that is) while nearly half of Americans pay no Federal Income Tax, and many of them actually get a "refund" of tax that wasn't ever paid to begin with.

    "Fairness" applies to all. To do otherwise makes a mockery of the concept.

  • Report this Comment On January 28, 2012, at 1:51 AM, rando101 wrote:

    TMFHousel

    There is only one reason why Mr Obama and the Congress won't stop spending our money.

    They like the power to spend other peoples money, and when some people oppose this reckless spending. They are quick to call them greedy or selfish for wanting to keep more of their own money or demanding that the government spend it more wisely.

  • Report this Comment On January 28, 2012, at 9:26 AM, BMFPitt wrote:

    @WdanW

    "You're killing me with all this 'loophole' nonesense - it's a Tax Code Provision! To be fair then, the 401(k) is a loophole..."

    The carried interest loophole is more like lobbying to have your specific product that has nothing to do with retirement classified as a 401(k) for tax purposes.

  • Report this Comment On January 28, 2012, at 9:32 AM, WeWereWallStreet wrote:

    Buffett: http://www.WeWereWallStreet.com/Two-thousand-dollar-Ballys.h...

    Romney: http://www.WeWereWallStreet.com/Wall-Street-Psychos.html

    and Taxes: http://www.WeWereWallStreet.com/Krugman-Oscar.html

    Hong Kong taxes everything at 15%, and they're getting on pretty OK, as long as you don't mind not having social security, an army, or clean markets. Oh, and as long as you don't mind 5 guys owning every square inch of real estate. OK, that's an exaggeration. There's a flat in the New Territories owned by five hookers from Shenzen who've made good.

    Capitalism is good. Capitalism run amok and gamed by the few who learned how to do it isn't good.

    We hate to say this, but absent a lot of the traders just putting some dosh back on the table, we think regulation is needed to rein in the excesses.

  • Report this Comment On January 28, 2012, at 9:58 AM, wolfman225 wrote:

    One other thing about the Great Tax Rate Debate:

    It seems to me that it's all Apples/Oranges. Hear me out. Everyone's financial situation is unique. None of us has the exact same income, living arrangement (house or rental), or investment income. Some of us supplement wages with income from dividends, income from rental properties, or cap gains from sales of stocks/real estate while some live entirely on income from various investments.

    All of this is treated differently by the current tax code. Add to this the labyrinthine structure of the various credits, exemptions, allowances and "incentives" and you have a complex knot that no one can fully understand.

    While comparing Income Tax rates among groups or sectors of industry may provide some insight, comparing the rates of individuals is a useless exercise that accomplishes nothing except stoking the fires of envy. The complexity of the tax code, with it's different treatment of specific types of income and the (too) many schedules of exemption and deduction make any talk of "So-and-so pays a lower tax rate than his/her employees". meaningless.

    For example: I'm supposed to be outraged that people like Buffet and Romney pay "only" 15% as an "effective tax rate". So? My own "effective tax rate" is somewhat under 9%. I personally know people whose "effective tax rate" (boy, are we going to be sick of reading/hearing that before too long) is somewhere in the range of -5% or even -10%!! In other words, they got a "return" well in excess of what little they paid in. Funny how you don't hear anyone complaining about that, eh?

  • Report this Comment On January 29, 2012, at 4:42 AM, MrSheepish wrote:

    I find these sorts of comments to be completely wrong:

    "the cost of government works out to roughly $11,821 per citizen. Mr. Romney paid $3 miilion in taxes. I think he has paid his "fair share"."

    Fair would be if you pay back roughly the amount of benefit that you receive, which is totally not the case. Mr. Romney would not be rich without millions being spent to educate workers that made the companies run that he later took over. Mr. Romney also would not be rich without millions being spent to build roads and provide the electricity that allowed the same companies to function. In addition to his own hard work (I'm not arguing with this) he has received a huge benefit from the taxpayers. The same statement holds true for most if not all millionaires. If you receive a hundred times more benefit from taxpayers then fair would be to pay back a hundred times more benefit as well, in my opinion.

  • Report this Comment On January 29, 2012, at 6:31 AM, Rhaufe wrote:

    In all discussions regarding the "Buffet Rule" there seems to be too much focus on "Tax Rates" and not enough focus on "Tax Revenue."

    The focus should be on revenue, after all that is the end game. The purpose of taxes is to raise revenue sufficient to cover government expenses.

    I wish the author would examine the correlation between rates and the amount of revenue generated. I am sure all Fool readers have heard of the "Laffer Curve." The "Laffer Curve" suggests that raisning rates doesn't necessarily generate more revenue.

    What is the link between rates and revenue? More importantly, what is the link between rates and GDP growth. The historical data I've seen suggests that lower rates do not effect revenue, but they do have a positive effect on growth in GDP. I'd be interested to know the author's take.

  • Report this Comment On January 29, 2012, at 7:19 AM, rd80 wrote:

    One factor that helped lower Romney's taxes and hasn't been mentioned is charitable donations of something like $3 million for each of the last two years.

  • Report this Comment On January 29, 2012, at 2:00 PM, wolfman225 wrote:

    @MrSheepish--

    "Mr. Romney would not be rich without millions being spent to educate workers that made the companies run that he later took over. Mr. Romney also would not be rich without millions being spent to build roads and provide the electricity that allowed the same companies to function."

    This is a specious argument based on a false premise. Everybody who pays income taxes helped pay for these things, unless you are making the claim that Mr. Romney and other millionaires made no contribution to roads, infrastructure, and public education of the workforce. He, and others, certainly contributed tax revenue to these projects prior to becoming millionaires.

    Your argument about what's "fair" is similarly flawed:

    "Fair would be if you pay back roughly the amount of benefit that you receive, which is totally not the case."

    I can only see two ways to read this comment. You are either advocating a position that no one should be allowed to succeed and accumulate wealth out of proportion to the general population (an absurd position that fails to take into account personal drive and ability) or you didn't think it through before posting what could be interpreted as support for requiring the "poor" to contribute back at least some portion of what they receive in government benefits.

    I actually agree with (b). If we truly are all in this boat together, everyone needs to grab a paddle. Somehow, I don't think this is what you meant.

  • Report this Comment On January 29, 2012, at 2:00 PM, wolfman225 wrote:

    @rd80-- +1

  • Report this Comment On January 29, 2012, at 2:54 PM, mm4AUTigers wrote:

    Romney also donated a considerable amount of his income to charity. I am quite sure this money was used much more effectively than it would have used by our federal government which waste so much of our tax dollars.

  • Report this Comment On January 29, 2012, at 3:34 PM, rando101 wrote:

    Mr Sheepish

    “Fair would be if you pay back roughly the amount of benefit that you receive”

    Your statement means that the rich are not contributing to the "pie" as much as they are taking from it. That would imply that they are paying little in taxes, while getting a lot of benefits from the tax payers. Do you see a lot of Billionaires on Medicaid? Are the rich using Food Stamps, housing subsidies, or getting their utilities paid? Despite not using these programs the rich are still paying taxes. The rich are the majority of the tax payers and they are not receiving any benefits for those tax dollars. That does not sound like they are not paying their "fair share," but sounds like they are contributing to the pie and not taking from it.

    The highest 1% of American earners pays 40% of all income taxes – while the lowest 15% of American earners pay no income tax at all.

    If the lowest 15% of America earners contribute $0 to the pie, but are using Medicaid, food stamps, housing subsidies, or getting their utilities paid by the taxpayer, That sounds like they are taking from the pie and not contributing to it. Does that sound fair to you?

  • Report this Comment On January 29, 2012, at 5:36 PM, whomalone wrote:

    Why are approx 50% of taxpayers paying less than 5% on taxes and a third paying no taxes. Thats why the nation is in such trouble financially.

  • Report this Comment On January 30, 2012, at 6:51 AM, MrSheepish wrote:

    Re: rando11:

    I am not saying that the rich are not contributing to the pie. But you are wrong to say that because the rich are not on food stamps, medicaid, etc, they are not benefiting much from taxpayers. People who make money from investments do so because of companies that are successful. Companies that are successful owe a large part of that success to large government subsidies to education, infrastructure, and protection (paid for by taxpayers). Without these subsidies the companies would not have been successful, or would have been much less successful. Thus a significant fraction of a billionaire's income is financed by the taxpayers. Asking them to pay a significant fraction of their taxes back to support these subsidies of future companies - which will lead to future stock market wealth - seems very reasonable to me.

    Re wolfman:

    I hope it is more clear what I mean now. I am in favor of all parties paying a reasonable share of taxes. My response was to someone who was claiming that a reasonable share is a flat fraction of total government spending (not based on their own income which relies in large part upon the government) which is absurd for the reasons I explain above. I think that unless you consider that peoples' wealth rely in large part upon government subsidies you will end up advocating for a grossly unfair tax system.

  • Report this Comment On January 30, 2012, at 7:32 AM, BMFPitt wrote:

    @MrSheepish

    Are you suggesting that companies that exclusively hire foreign-educated workers pay less in taxes? And why would these be federal taxes, then, when the states and localities do the education spending?

    The majority of federal spending - things other than defense and a handful of useful agencies (some of which are funded directly through user fees) - doesn't provide value to people like Romney or Buffet. There are significant chunks that provide negative value to everyone. Things like that, as well as the impossibility of measuring and attributing this "value" to the beneficiaries of it in most cases, should make you rethink your shallow justifications for current federal tax rates based on past municipal spending.

  • Report this Comment On January 30, 2012, at 10:09 AM, devoish wrote:

    Mr Sheepish,

    You should point out to BMFPitt and Rando101, and Wolfman that food stamps and medicaid measure a portion of the amount the Romney is overpaid, and the employees of the companies he invested in are underpaid.

    best wishes,

    Steven

  • Report this Comment On January 30, 2012, at 11:31 AM, slpmn wrote:

    Mr. Sheepish nails the reason the progressive tax code is fair. It's ludicrous to think a wealthy entrepreneur/investor/executive/corporation doesn't get proportionately more out of the public infrastructure, education system, national defense complex, and even social safety net than an ordinary citizen.

    What do you think the military is protecting - your house or the property and business interests of large corporations? Who do you think benefits more from public universities - you personally or the corporations that are provided hundreds of thousands of highly trained graduates to hire each year? Who gets more out of the interstate highway system - you on your family vacation or the millionaire who owns a big trucking company, and the corporations that literally couldn't function without it?

    I'm am constantly amazed at the people who think wealth is created in a vacuum and that a modern capitalist/industrial society can function properly without proportionate contributions from those that benefit the most from it.

  • Report this Comment On January 30, 2012, at 1:37 PM, sactownfool wrote:

    TMFhousel, Can you clarify the Romney situation. I completely concur with your argument on carried interest, its non-sensical to argue any other way. I think Romney's income in the last two years derives from capital gains on money that was previously given the beneficial carried interest treatment, but then was reinvested in Bain funds. Do you know how much of his income in the last two years specifically derived from the carried interest loophole and was not simply a capital gain on assets that were previously his? Does his retirement agreement give him access to additional carried interest or simply allow him continued investment in the funds?

  • Report this Comment On January 30, 2012, at 3:33 PM, sheldonross wrote:

    I may get massacred for this suggestion on this site, but why aren't dividends progressive?

    No need to tax the little guy trying to save up for an earlier retirement as much as the guys that make millions a year off dividends.

    I think the solution is just to translate dividends to ordinary income, after all it sure feels like income when I get that deposit in my account.

  • Report this Comment On January 30, 2012, at 3:41 PM, whereaminow wrote:

    Econometrics is such a poor excuse for science. We have, judging from these charts, no idea whether or not the two variables have any causal link at all. We can not isolate any variables to determine what is truly driving changes in employment. We can't subject different tax rates to vigorous scientific experiments subject to peer review.

    This is not science. This is sixth grade level civics class.

    We could, however, look at economics as a system of logical deductions that begin from an a priori maxim, in the same way that mathematics is built on logic. That economic science is performed by the Austrian School of Economics, of which Ron Paul is a member. While the econometrics were randomly hoping two statistics would eventually correlate enough to shine light on our world, the Austrian School was doing things like correctly predicting the housing bubble and crash, the dot com bubble and crash, etc.

    I'd like to finish by pointing out that even if by some magical fairy dust all the tax revenue collected actually created a few jobs, that doesn't alter the fact that the vast majority of government spending is done to enslave/kill either you or some brown person overseas.

    David in Liberty

  • Report this Comment On January 30, 2012, at 4:03 PM, ibuildthings wrote:

    The purpose of the lower capital gains tax is to provide a little more incentive for someone to risk their own money in an investment. Romney's loophole should be closed, because like Morgan says, he was being paid to manage other people's risked capital.

  • Report this Comment On January 30, 2012, at 4:11 PM, ETFsRule wrote:

    sactownfool:

    He already explained:

    "Romney's retirement package with Bain allowed him to keep receiving income from Bain deals and treat it as carried interest. "

    I think that's pretty clear.

    This loophole is obviously indefensible. There's really no case to be made for keeping it the way it is right now.

    Also, what would really help reduce the extreme inequality in our country would be if states would get their tax revenue exclusively from a progressive income tax. This means eliminating regressive taxes such as sales tax, which hits poor families for a much higher % of their annual income compared to wealthy families.

  • Report this Comment On January 30, 2012, at 4:15 PM, ibuildthings wrote:

    I like the notion of a flat tax, but I am OK with graduated taxes too, but with four requirements:

    1) The "upper" brackets should start above the range where a taxpayer can afford to buy a home in a safe neighborhood, pay for their own health insurance, and provide a worry free educational experience for their kids (no gangs, 80+ percentile schools or private school) and put back 10% per year for retirement. That state of life is my definition of "reasonably secure" living. If you have that, you are bordering on rich. In NY, that is probably $400,000. In Kansas, a lot less.

    2) Everyone MUST PAY SOMETHING. The reason is obvious. Everyone who feels the pinch when a politician want to start a new war or create a new entitlement program will care enough to evaluate whether it is worth it or not. When they are giving away Joe's money, you care less than when it is your paycheck being eaten up by someone's "good idea".

    3) It must be stable and predictable. Pick something and don't change it for 10 years, so that people and businesses can plan spending and hiring around a business environment that is predictable. All that predictability you like so much when evaluating businesses to invest in is what makes business easy to transact.

    4) Fewer deductions, so taxes are easy to do and don't provide too many ways to game the system. Keep the deductions per kid, since item 1 above depends on the number of dependents a person has.

  • Report this Comment On January 30, 2012, at 4:53 PM, BMFPitt wrote:

    @devoish

    "You should point out to BMFPitt and Rando101, and Wolfman that food stamps and medicaid measure a portion of the amount the Romney is overpaid, and the employees of the companies he invested in are underpaid."

    I agree with the assertion that those employees would make more money in the absence of food stamps and Medicaid, but not nearly as much as they woudl make in the absence of Social Security or Medicare. I don't see how you claim Romney in particular is "overpaid" though.

    @slpmn

    "Mr. Sheepish nails the reason the progressive tax code is fair. It's ludicrous to think a wealthy entrepreneur/investor/executive/corporation doesn't get proportionately more out of the public infrastructure, education system, national defense complex, and even social safety net than an ordinary citizen."

    I agree that a head tax is not fair or practical. But your assertion, if it were to be taken literally, would be one in favor of a flat tax. To argue for a progressive tax, you will want to claim that a rich person disporportionately benefits from government spending.

    "I'm am constantly amazed at the people who think wealth is created in a vacuum and that a modern capitalist/industrial society can function properly without proportionate contributions from those that benefit the most from it."

    I'm constantly amazed at the people who think that there are people who think wealth is created in a vacuum. Can you cite some examples of people actually making this claim?

    @ibuildthings

    You seem to want tax brackets to vary based on location. That would be an incredibly bad idea in practice. It would in effect be a large subsidy on high cost-of-living areas.

  • Report this Comment On January 30, 2012, at 5:39 PM, slpmn wrote:

    @BMFPitt - I think what I'm arguing against is a tax system in which a guy making $20 million a year has a lower effective income tax rate than someone making $250,000 a year because he benefits from the carried interest/dividend/cap gains rate. While not a flat tax advocate, I would acknowlege it's better than the reality of the current system, which for certain of the ultra wealthy, is effectively regressive rather than progressive.

    What I mean when I say some people think that they created their wealth in a vacuum is they think they built their fortune without benefit of assisstance from anyone or anything else. Because they believe this, they feel it's wrong that they have to pay taxes. If they felt they benefitted from things like public education, infrastructure, secure property rights, etc., etc., how could they not feel obligated to pay back into the pool that funds those things?

    I don't think the notion is really that tough to understand. It's far harder to understand why else anyone could state with a straight face that they shouldn't have to pay taxes, and people do that all the time.

  • Report this Comment On January 30, 2012, at 6:28 PM, mark516119966 wrote:

    Thanks wolfman for dictating my comment. Couldn't agree more.

    Further, why am I inferring socialism from some of these comments? On this site of all places.

    Basically no one really is putting the blame for spending on the politicians where it belongs. Hence the discussion of "Who's paying their fair share." Don't you know even if there is a way to tax differently, so the appearant senile old man from Nebraska can pay more, unless the leak is fixed it will never be enough?

  • Report this Comment On January 30, 2012, at 6:59 PM, BMFPitt wrote:

    @kahunacfa

    A capital gain is something earned on money put at risk. The carried interest loophole is a commission paid for a service, in which no money is risked. No rational person can claim these to be the same thing.

    @slpmn

    "What I mean when I say some people think that they created their wealth in a vacuum is they think they built their fortune without benefit of assisstance from anyone or anything else."

    And I asked you to tell me who "they" is. It seems that you have refused this, probably because you don't know of anyone who has ever actually said anything that could even loosely be interpreted that way.

    "It's far harder to understand why else anyone could state with a straight face that they shouldn't have to pay taxes, and people do that all the time."

    They say that for vastly different reasons. Most of those reasons boiling down to them claiming that they have been "coerced," which assumes that they do not have the option to leave. To the best of my knowledge, none of the people I have heard that from were posting from North Korea.

  • Report this Comment On January 30, 2012, at 8:20 PM, devoish wrote:

    I agree with the assertion that those employees would make more money in the absence of food stamps and Medicaid, but not nearly as much as they woudl make in the absence of Social Security or Medicare. - BMFPitt

    Did I say that?

    You should point out to BMFPitt and Rando101, and Wolfman that food stamps and medicaid measure a portion of the amount the Romney is overpaid, and the employees of the companies he invested in are underpaid. - devoish

    What I was trying to say, was that Romney puts employees on food stamps when he lays them off and cuts their pay to pad his pockets.

    Good for us in our roles as investors, but not so good for us all in our roles as employees.

    Steven

  • Report this Comment On January 31, 2012, at 2:18 PM, whereaminow wrote:

    --------> What I was trying to say, was that Romney puts employees on food stamps when he lays them off and cuts their pay to pad his pockets. <------

    C'mon Steve, you can do better.

    --------> What I was trying to say, was that Romney puts employees on food stamps<-----------

    This is conjecture. You have no idea what happens to those former employees. I've lost a few jobs in my lifetime and never had to settle for food stamps.

    ---------> and cuts their pay to pad his pockets. <------

    Which one is it? Does he cut their pay or does he put them on food stamps?

    If an employee is providing a valuable service, cuts to their pay merely increase the incentive to find higher paying work elsewhere. If the employee isn't providing a valuable service, why wouldn't you cut his pay?

    I'm curious how you can spend so much energy arguing against market forces when you don't even know how they work.

    David in Liberty

  • Report this Comment On January 31, 2012, at 5:41 PM, ronhartman wrote:

    Hope you also support my position - I do not want to "End the Fed" as Ron Paul suggests, as we need a system to finance our economy - just take it away from the control of the "banksters"! That comes first - then all the other stuff - nothing gets done in a day - it took 75 years (1844-1919) for women to get the right to vote and 105 years to get some healthcare (1905 - Teddy Roosevelt / 2010 "Obamacare") And that is NOT a bad word - it must be retained and improved upon!

    ++++++++++

    NO MORE BABY STEPS IN REFORMS

    To be delivered to: The United States House of Representatives, The United States Senate and President Barack Obama

    ++++++++++

    We need to take ownership of the Federal Reserve System away from the "banksters" and put ownership under the Social Security System, so that any banking profits - from safe and sane banking practices - benefit workers of America, and not the entities controlled by and for the top 1%.

    ++++++++++

    Next we give this new Federal Reserve System an added duty - as the new tax collector to replace the "Infernal Revenuer System" and to collect a new "payment transfer tax" that will replace ALL other Federal Taxes.

    This tax policy will initially run parallel to the antiquated IRS system until all "bugs" are removed so that only the one higher tax would prevail at first.

    We would take a flat 1/2 of 1% (one-half of one percent) off the top of all payments as they are being deposited into ALL payee accounts [ OF ALL PAYEES regardless of personhood, or citizenship or charter or function or stated business purpose or domicile ]! When I say ALL PAYEES, I mean ALL PAYEES!

    And to do business in America, you must have an American banking account, and no funds are repatriated to foreign lands without first clearing through our system!

    I call this a "Fair Privilege-Opportunity Tax" - and soon all tax shelter scams would fall by the wayside as inter-company transfers would only increase the tax paid rather than create a tax dodge.

    ++++++++++

    This tax also should increase stock market stability when being applied to computerized nanosecond stock and option speculative trading - that otherwise adds to market instability and volatility. FRANTIC FRENZY COMES TO A SCREECHING HALT - APPLYING THIS TAX TO IT!

    And on the other hand, investment judgment in selling/holding decisions would no longer be clouded by arbitrary holding periods imposed to qualify for a lower tax rate.

    ++++++++++

    The Republicans should be happy that the "DEATH TAX" would also be abolished by this and a family receiving a "cash equivalent value" of $100million would only pay a nominal tax of $500,000. SUCH A DEAL!!!

    ++++++++++

    Welfare for the poor and needy would no longer be tied to the tax code and a new system devised to determine need and benefits that is beyond the immediate scope of this missive -

    But any worker earning a paltry $60,000 per year would pay a tax of $300! Whether he is single or married - or how many kids he has is his choice and his duty to provide for them.

    ++++++++++

    Then with this reduction, Social Security can be further revised to eliminate all employer contributions (Republicans and businessmen - say thank you!) and the employee would instead contribute 15% on all his wages to a "personal account" on which he could later collect an annuity for life based on his attained age - if then faced with being laid off before 65 and needing retraining and reemployment at an earning level below his past history.

    In my personal and humble opinion, to increase the age for Social Security benefit eligibility is madness and flies in the face of economic reality and the needs created in our economy by the massive and pervasive outsourcing of many industrial jobs in particular to third world countries where workers are exploited, subjected to hazardous working conditions and are paid next to nothing.

    ++++++++++

    This outsourcing practice is another side issue that should as well be effectively discouraged by this tax reform!

    AS AN ADJUNCT, THERE IS A CRYING NEED FOR A LAW THAT WE WILL NO LONGER PERMIT ANY AMERICAN CORPORATIONS TO EITHER OUTSOURCE JOBS TO, NOR IMPORT WORK IN PROGRESS OR FINISHED GOODS FROM, ANY COUNTRY THAT DOES NOT ALLOW FULL COLLECTIVE BARGAINING FOR WORKERS - WHETHER BEING ITS NATIVE CITIZENS OR IMMIGRANTS.

    AMERICANS REFUSE TO PARTICIPATE IN A “RACE TO THE BOTTOM”!

    ++++++++++

    So, in returning to the central issue, how is an "opportunity tax" rate of one-half of one percent derived as fair and reasonable?

    It is based on 2004 website statements [no longer there] made by the Federal Reserve that they then processed some $3trillion payment transfers every business day. That means more than $750trillion of payment transfers annually that could be taxed..

    Based on a 2004 statement, IRS claimed it then collected $2trillion for Uncle Sam that past year. Adjusting for current Federal budget needs of some $3+trillion, the proposed rate of 0.5% when applied to $750trillion should conservatively raise over $3.5trillion annually.

    ++++++++++

    Now also with this uniform tax policy and method, Congress can no longer use the tax code as a secretive bribe/reward system for corporate and billionaire donations to their campaigns.

    ++++++++++

    Also all immigrants would have to have a banking relationship and could not get one (or get a job either) if they were here illegally! So the illegal immigrant problem would end!

    ++++++++++

    I am talking about essentially accelerating the current and obvious trend to a cashless society.

    THE ESSENTIAL POINT AND INGREDIENT IS FOR PROFITS FROM THIS NEW SYSTEM TO BENEFIT THE WORKERS OF AMERICA AND NOT THE BANKSTERS!

    NOW HOW IS THAT FOR THINKING "OUTSIDE THE BOX" AND BEING A "PARADIGM SHIFT"?

    The graduated income tax concept is hated by almost everyone for its complexity and inequality and division of the American public into competing special interests.

    And it is observably and grossly ineffective, as long as CPAs can dream up deductions and other tax scam dodges.

    ++++++++++

    Middle-class American families are tired of being the last ones to be considered by business and by their government - and I am sure Michael Moore would agree with me and so would Ralph Nader.

    So let us REBUILD AMERICA!

    ++++++++++

    CARING MORE ABOUT INTERNATIONAL CORPORATION PROFITS THAN THE WELL-BEING OF THE AMERICAN PUBLIC IS TREASONOUS, IN MY HUMBLE OPINION.

    Here's the link for my new petition: http://signon.org/sign/no-more-baby-steps-in?source=c.url&am...

  • Report this Comment On February 01, 2012, at 2:28 AM, whereaminow wrote:

    ^^^^

    Are you familiar with the term Syndicalism? It is what you are advocating. No I don't support such violence. I'm a peaceful person that believes in voluntary cooperation.

    David in Liberty

  • Report this Comment On February 01, 2012, at 9:37 AM, ravensmaniac1968 wrote:

    31.7% pay no income taxes? If you have a job, you pay income taxes. It is withheld every single paycheck.

    I think we need to be more clear when we talk about paying income taxes. I can't realy tell from this article or when media pundits talk about it, but it seems like what they are saying is that come April 15th, you end up paying taxes or you get a refund.

    If you receive unemployment, luckily I've never has to, but I believe you have taxes w/h from your unemployment check. So even then you're paying income taxes.

  • Report this Comment On February 02, 2012, at 1:26 PM, DJDynamicNC wrote:

    --> "We could, however, look at economics as a system of logical deductions that begin from an a priori maxim, in the same way that mathematics is built on logic. That economic science is performed by the Austrian School of Economics, of which Ron Paul is a member. While the econometrics were randomly hoping two statistics would eventually correlate enough to shine light on our world, the Austrian School was doing things like correctly predicting the housing bubble and crash, the dot com bubble and crash, etc." <--

    A few points here:

    1) That's a gross mischaracterization of Keynesian economics and you know it. :P

    2) The Austrian school was also predicting Dow under 4,000, total economic collapse, and hyperinflation, none of which came to pass. If you only count the hits, you too can believe in magic. This is how "The Secret" works, by the way.

    --> "I'd like to finish by pointing out that even if by some magical fairy dust all the tax revenue collected actually created a few jobs, that doesn't alter the fact that the vast majority of government spending is done to enslave/kill either you or some brown person overseas." <--

    More accurate than I'd like it to be. And something any American should be happy to be working to change. Just because government IS doing something doesn't mean government MUST do something - and just because government is doing something poorly doesn't mean that the only solution is for government not to do it at all.

    David, for all that we disagree, I like you and respect you. I have a proposal. In true Fool fashion, let's Moneyball our debates a little bit. Make a couple of specific predictions based on Austrian economics for the next couple of years. Then let's bet on them. We can use silver if you prefer, or stock (this is an investing website, after all). And, of course, pride will be on the line. We can revisit the state of affairs in two years and compare.

    What do you think?

  • Report this Comment On February 02, 2012, at 2:03 PM, DJDynamicNC wrote:

    @RonHartman - I like the passion you bring to the table, but I do need to point out that any profits made by the Federal Reserve are already automatically disbursed to the US Treasury.

  • Report this Comment On February 03, 2012, at 12:26 PM, sjbpa wrote:

    Actually, a consistent progressive tax rate is very consistent with higher economic growth.

    You may not like what your charts and graphs reveal but that is exactly what they say.

    Looks like we should go back to the 70-80% tax-rate..silly, maybe, but definitely worth a try.

  • Report this Comment On February 03, 2012, at 2:26 PM, clm5567 wrote:

    Taxes are a mess! Even if you are willing to pay your fair share it does not take much activity in the markets, rentals or anything else outside of straight earned income to make them quite complicated. A straight flat rate or even a flat sales tax rate might make more sense.

    Also here people are complaining about a guy that contributed almost 3 million to support excessive government spending when over half of the US citizens (about 52% according to this article) pay less than 5% of thier income and over 30% do not pay any taxes at all! Maybe they should contribute with labor instead of money!

  • Report this Comment On February 04, 2012, at 4:05 AM, CrankyTexan wrote:

    ravensmaniac1968, if your annual income is low enough, 100% the income tax you paid during the year will be refunded to you. This is why 50% of Americans pay zero federal income tax.

  • Report this Comment On February 04, 2012, at 7:57 PM, RUKIDME wrote:

    Whomalone posted:

    "Why are approx 50% of taxpayers paying less than 5% on taxes and a third paying no taxes. Thats why the nation is in such trouble financially."

    It' actually 47% and of that and a majority make below the poverty level of income, this includes retirees collecting Social Security Pensions, disabled, and the working poor. The other portion of those have adjusted income that reflects no tax obligation.

  • Report this Comment On February 05, 2012, at 10:04 AM, carjjc wrote:

    It is with a happy heart that i read the article above putting an end to the myth of lower taxes creates jobs and that Mitts tax loophole cannot be justified.

    I would like to extend the discussion. Why is my investement in a stock held more than a year taxed at a capital gains rate. I did not create a job or help fund a company to grow.

    Or society benefits if we do not have a tax code that allows companies (The stocks of which we own) to pay their top executives unreal salaries and benefits. I as a stock holder lose as well. Or tax code should prevent CEOs from getting options and other giveaways that take huge value out of my stock.

    Or society also benefits from social insurance. These programs keep the banks deposits available to its owners when the bank goes under. Social security keeps a large number of americans from starving in bad times. These programs shoud not be given to Wall Street to manage. It does not provide security. These programs make us all richer and beter citizens.

    When we cut the middle class incomes to give the high earners a break we significantly reduce demand. This is why the policies of the past 10 years has not worked.

    We need to pay taxes and worry about real problems our country and work have. It is not paying too much taxes or having too large of a government.

  • Report this Comment On February 05, 2012, at 3:12 PM, CrankyTexan wrote:

    carjjc, when you buy mutual funds, you ARE putting people to work. Your money is used by corporations to hire new people. This is how corporations grow.

    Yes, it is very nice to give free money to people, but the USA is BROKE. The national debt is $15 trillion and increasing by $1.5 trilion each year, and you don't care.

    The poorly managed government entitlement programs that you adore are funded by taxes and loans from China. And you don't care.

    You said we need to pay taxes. Tell that to half the country who don't pay taxes.

  • Report this Comment On February 05, 2012, at 3:17 PM, CrankyTexan wrote:

    carjjc, in fact, while we're at it, let's borrow 100 trillion from China and buy every American a free house. And free food. And free healthcare. And free cars. And free clothes. Freebies for everyone! Who cares that we will end up like Greece.

  • Report this Comment On February 05, 2012, at 3:20 PM, CrankyTexan wrote:

    By the way, if you are unhappy with your tax rate, you are more than welcome to send EXTRA money to the IRS. They accept donations. What are you waiting for?

  • Report this Comment On February 05, 2012, at 11:32 PM, CrankyTexan wrote:

    Correct me if I am wrong, but if the economy were recovering, the debt clock would be going in the other direction.

  • Report this Comment On February 05, 2012, at 11:46 PM, TMFHousel wrote:

    <<Correct me if I am wrong, but if the economy were recovering, the debt clock would be going in the other direction.>>

    If true, the economy has been in a near-constant state of decline for 100 years.

    And for what it's worth, total economy-wide debt as a percentage of GDP has been declining since 2007.

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