Trickle Down? Or Trickle Up? Which Economic Model is Better?

[kaol]

[QUOTE=Guido Monzino;2804232]Trickle down via no income tax, implementation of the FairTax, which lowers production costs, puts your money back in your pocket, brings international jobs back home, reduces government spending (no IRS), and restores personal liberties.

Its a no-brainer.

For those of you unfamiliar, read this for a brief summary: [url]http://en.wikipedia.org/wiki/Fairtax[/url][/QUOTE]

I agree. It would do a number of things:
1- Would tax wealth, as well as income. Thus, hedge fund managers who now claim that they make nothing and draw their multimillion dollar salaries as capital gains(at a 15% tax rate) would have to pay on purchases. This would also tax guys like Donald Trump(who has great wealth, and yet claims little income)
2. Would limit welfare recipients from buying massive flat screen Tv's while buying food with food stamps
3. Would provide a tax stream from "hidden" taxpayers like drug dealers and illegal aliens
4. Would eliminate the IRS as we know it.A smaller entity would still most probably be required
I'm sure there are manyadditional benefits, but those come to mind immediately.

[dcJet]

I heart the Fair tax system. Sign me up.

[JetPotato]

[QUOTE=Tanginius;2804298]I know all about VATs so I don't need to read the wiki on them, and personally I am not opposed if implemented correctly. Then again I'm also a Canadian citizen and working on getting my Croatian citizenship (for future EU citizenship) and I travel extensively so I am very used to paying VATs[/QUOTE]

This isn't a VAT. This is paid on a single level. And VATs don't include prebates, do they?

[chesapeakejet]

[QUOTE=Warfish;2804241]How would you make the Poor "richer" then?

And should the Rich then, be made poorer do you think?[/QUOTE]

You closet Marxist! :D

[quantum]

Why is it bad for the rich to get richer? Taking (good) risks should be rewarded. The rich have more means to create an environment for more people to succeed.

This works well until executive pay comes into play: bloated, undeserved salaries, and bonuses for cutting people's job. That needs to be regulated, but never will since both parties always have their hand out.

[Winstonbiggs]

It seems to me that trickle up or trickle down are both government policies based on redistribution of wealth through the tax system that has as its core philosophy a stagnant economy that doesn't grow just redivides.

If we focused on growth rather than redistribution there might be trickles in both directions. The other notion is that the people's lot in life doesn't change that they are stagnant locked away in a class struggle. While the stats on the poor and the middle class may not change that much people do get rich who aren't and people who are do fall back.

We waste far to much time over debates on redistribution and spend far to little time on investing our publicly owned assets in growth and return on investment. Much of that has to do with the way both parties utilize our public assets to build governing majorities in our pluralistic democracy.

[Sourceworx]

I think Trickle Down is the way go so long as there's some government regulation.

The problem is that in the last 10 years deregulation has allowed CEOs the freedom to run companies into the ground while parachuting out with millions. Meanwhile employees are left in the wind to twist.

When Republicans talk about how tax cuts allow corporations to invest in R&D, expansion, etc, they are theoretically correct. However we do need to have [I]some[/I] regulation along with it.

[Carlton]

It's amazing how some people's attitude suggests that rich people are lucky and should be punished for having so much money. I'm not sure which of these systems works, but let's keep in mind that wealth has at least a little bit to do with hard work.

[Warfish]

One of the big problems, as I see it, is the lack of internal corporate oversight and accoutabillity at the top.

Today, CEO's and Boards do everytyhing possible....not for the company, but for their own income and retirement (golden parachute), up to an including some very questionable accounting practices.

Once they leave, the company is left holding the bag. And as we've seen, when the bag is in a vital industry, that bag gets tossed to us taxpayers.

CR has railed on this for a long while, and I'm beginning to agree with him, but in a different way. I don't think Govt. limits are the answer. I think companies need to have a far more strict internal set of rules/polciies/check/balances/etc. to ensure that CEO's and Boards are wroking for the company, not for themselves.

Not sure how to make it happen, sadly, but this is clearly an issue today IMO.

[bitonti]

[QUOTE=Warfish;2804574] I think companies need to have a far more strict internal set of rules/polciies/check/balances/etc. to ensure that CEO's and Boards are wroking for the company, not for themselves.

Not sure how to make it happen, sadly, but this is clearly an issue today IMO.[/QUOTE]

here's how it happens

if the CEO of a Company presides over something illegal or fraudulent HE goes to jail. Not white collar country club jail. Real don't drop the soap jail.

The GOP has protected CEOs for years - after enron everyone wanted transparency and accountability - the GOP prez and congress only allowed transparency in terms of not cooking the books - they haven't closed the deal with accountability.

[Warfish]

[QUOTE=bitonti;2804592]here's how it happens

if the CEO of a Company presides over something illegal or fraudulent HE goes to jail. Not white collar country club jail. Real don't drop the soap jail.

The GOP has protected CEOs for years - after enron everyone wanted transparency and accountability - the GOP prez and congress only allowed transparency in terms of not cooking the books - they haven't closed the deal with accountability.[/QUOTE]

Trouble is Bit, not nearly all of it is (or should be) ILLEGAL per se.

Making a decision as CEO/Board that benefits short-term profit at the expense of long-term viabillity isn't, and cannot, be illegal.

Thats why this isn't such a cut and dry issue IMO. There is tons, all withint he law, that a CEO/Board can do that is in their best interests but not the company they work for.

[crasherino]

[QUOTE=Warfish;2804574]One of the big problems, as I see it, is the lack of internal corporate oversight and accoutabillity at the top.

Today, CEO's and Boards do everytyhing possible....not for the company, but for their own income and retirement (golden parachute), up to an including some very questionable accounting practices.

Once they leave, the company is left holding the bag. And as we've seen, when the bag is in a vital industry, that bag gets tossed to us taxpayers.

CR has railed on this for a long while, and I'm beginning to agree with him, but in a different way. I don't think Govt. limits are the answer. I think companies need to have a far more strict internal set of rules/polciies/check/balances/etc. to ensure that CEO's and Boards are wroking for the company, not for themselves.

Not sure how to make it happen, sadly, but this is clearly an issue today IMO.[/QUOTE]

The problem is, in order to attract high level talent (or what is perceived to be high level talent) you need to woo these guys from where they are. That includes a golden parachute in case things don't work out for whatever reason as well as attractive incentives. Otherwise, the guys who are qualified for these jobs will simply turn them down and take their big fat rolodexes and head to a private equity shop and make $10 million +.

No one rails against the pay of a CEO when the company is doing well...its only when it tanks that they get called out. I bet Goldman shareholders aren't complaining that Lloyd Blankfein gets how ever much he gets (its huge, I know that).

I don't disagree with you that its a problem, I'm just not sure what the solution is (which is ultimately your conclusion as well).

[nuu faaola]

[QUOTE=Warfish;2804605]Trouble is Bit, not nearly all of it is (or should be) ILLEGAL per se.

Making a decision as CEO/Board that benefits short-term profit at the expense of long-term viabillity isn't, and cannot, be illegal.

Thats why this isn't such a cut and dry issue IMO. There is tons, all withint he law, that a CEO/Board can do that is in their best interests but not the company they work for.[/QUOTE]

I think transparency ought to be the best weapon here. A company ought to have to disclose why it thinks Joe CEO deserves that golden parachute or huge bonus. It ought to have to demonstrate similar pay given by peer companies or prove that higher compensation was the result of a bidding war or an attempt to preempt a likely bidding war.

Beyond better disclosure rules and better standards to govern corporate comp, I agree that it's not really a legal matter, but a civil one. The shareholders --whose money is being given away, after all-- ought to be empowered to sue the crap out of companies that fail to meet these basic standards.

That's the language these boards understand.

[Warfish]

[QUOTE=nuu faaola;2804623]I think transparency ought to be the best weapon here. A company ought to have to disclose why it thinks Joe CEO deserves that golden parachute or huge bonus. It ought to have to demonstrate similar pay given by peer companies or prove that higher compensation was the result of a bidding war or an attempt to preempt a likely bidding war.

Beyond better disclosure rules and better standards to govern corporate comp, I agree that it's not really a legal matter, but a civil one. The shareholders --whose money is being given away, after all-- ought to be empowered to sue the crap out of companies that fail to meet these basic standards.

That's the language these boards understand.[/QUOTE]


I agree to a point about transparency. However, even with that it would be too much to legislate that CEO pay must be within X to X based ont he things you listed. Barring a company from "overpaying" is no better a solution than what we have now.

Worse, I have to disagree with your "sue them" idea. Sounds great in theory......till you have 10000000 shareholders, each suing every time the company makes ANY decision they don't agree with, or that lowers their stock price by $0.01/share. Like I said, sounds great, till it freezes every company we have in the US from ever making another decision.

No, companies in a free )or as free as we can make it) market need to have the freedom to screw up, overpay, and fail. Thats how the market works. hence the proble with "fixing" what is inherantly a part of teh systemn, the right of a comapny to hire bad people, who make bad sel-serving decisions, legal ones of course, and walk away with teh cahs and leaving others with the bag without ever having broken a law.

My intial feeling is, let them fail. Companies who make such mistakes should pay for it, as should those who invest in a badly run, poorly managed company. It's on the market, and other employers, not to re-hire these self-serving failures again someplace else.

[bitonti]

[QUOTE=Warfish;2804645]
My intial feeling is, let them fail. [/QUOTE]

that ship has sailed

[PlumberKhan]

How about when a crooked CEO runs a company into the ground...the shareholders get to go to his house and take HIS ****? And then they get to follow him around for the rest of his life and take his money until they are paid back in full...

Ken Lay is "dead"...yeah...right....

[bitonti]

how about the bail out rule

if you are the CEO of a company that's getting bailed out

you have to go to jail and get bailed out as well

[Warfish]

[QUOTE=bitonti;2804650]that ship has sailed[/QUOTE]

So has the one on Iraq.

Making a mistake once doesn't mean one cannot advocate not making it again.

[nuu faaola]

[QUOTE=Warfish;2804645]I agree to a point about transparency. However, even with that it would be too much to legislate that CEO pay must be within X to X based ont he things you listed. Barring a company from "overpaying" is no better a solution than what we have now.

Worse, I have to disagree with your "sue them" idea. Sounds great in theory......till you have 10000000 shareholders, each suing every time the company makes ANY decision they don't agree with, or that lowers their stock price by $0.01/share. Like I said, sounds great, till it freezes every company we have in the US from ever making another decision.

No, companies in a free )or as free as we can make it) market need to have the freedom to screw up, overpay, and fail. Thats how the market works. hence the proble with "fixing" what is inherantly a part of teh systemn, the right of a comapny to hire bad people, who make bad sel-serving decisions, legal ones of course, and walk away with teh cahs and leaving others with the bag without ever having broken a law.

My intial feeling is, let them fail. Companies who make such mistakes should pay for it, as should those who invest in a badly run, poorly managed company. It's on the market, and other employers, not to re-hire these self-serving failures again someplace else.[/QUOTE]

Well, the transparency thing re: CEO pay is actually not too difficult to do. Most public companies already pay third parties to generate "fairness opinions" about pay packages and other dealings. (These are occasionally pretty weak, though, as you might imagine.) All I'm proposing is that the fairness opinion be published in the company's annual disclosure documents.

It's just like when your bank lends you money for a house: It has to send an assessor to check out what stuff in the neighborhood is selling for. Basic due dilligence.

Shouldn't be too much to ask in the case of top exec pay, given the dollar amounts involved.

[Warfish]

[QUOTE=nuu faaola;2804726]Well, the transparency thing re: CEO pay is actually not too difficult to do. Most public companies already pay third parties to generate "fairness opinions" about pay packages and other dealings. (These are occasionally pretty weak, though, as you might imagine.) All I'm proposing is that the fairness opinion be published in the company's annual disclosure documents.

It's just like when your bank lends you money for a house: It has to send an assessor to check out what stuff in the neighborhood is selling for. Basic due dilligence.

Shouldn't be too much to ask in the case of top exec pay, given the dollar amounts involved.[/QUOTE]

No disagreement here.

But all a Board has to do is say "this guy is worth it, and we're doing it".

Worse, the disclosure documentation wouldn't likely be available till AFTER the guy in question was already hired.

Third, if you impose any mandatory research/waiting period, companies who don't do it, don't qualify to have to do it, etc. will be at an advantage against publicly held companies. and yes, investors would scream about that too.

Trouble with transparacy Nuu, is it's only truly useful after the fact, when nothing can be done.