Tax changes???

[SonomaCat]

grizbeer: I wasn't basing the possibility of revolt exclusively on the works of Woody Guthrie or John Steinbeck. I was just using that as lasting examples for us to reference to give us an idea of the pop culture of the day and how it might suggest the mood of the country. Similarly, people certainly will be able to look back on Michael Moore and his popularity years from now and conclude that support for the Iraq were wasn't complete within our country. It won't speak to the whole picture, but it will display that a certain point of view was present, and that it enjoyed a degree of popular support.

I think the more telling points were the outbreaks of labor-related violence that were occuring around the country, and the rising populist sentiments that were causing it. Things of that nature definitely get the attention of the general public, and were large parts of the public debate. Those were the kinds of events that struck fear of a large-scale revolution in the minds of those in power.

So while I disagree with nothing you wrote, you also have to admit that the changes that the motivation for the New Deal was certainly influenced by the violence and other pressures put on my the labor movement, which was itself (in many aspects, if not overtly) philosophically aligned with socialistic and communist movements.

[grizbeer]

BAC we might have a chicken or egg argument here. Yes there was rising interest in communism and socialism, because people were searching for an answer to the economy, and losing faith in the current system. FDR was searching for the same answers. I guess we can debate if the primary reason FDR and the rich in the country embraced the New Deal was because they wanted to get the economy moving, in order to get re-elected, or because they feared a great people revolution. A fourth alternative is that FDR was desperate to get economic house in order so that he could prepare for war with Japan and Germany.

Of all these arguments I would say concern about a communist revolution weighed the least in their concerns. Yes there was labor disturbances and deaths during the 30's, but the same thing had been happening since the 1800 - Frank Little was lynched in Butte in 1917. If anything the labor and socialist movement may have been feeding off an administration they viewed as sympathetic to their views, and saw the time ripe for more activism. I believe it is much more plausible to believe that labor violence in the 30's were a result of the New Deal and FDR being sympathetic to their cause than it is likely the New Deal was in response to labor unrest.

And HB I would agree that WWII was what finally moved the country out of the depression, and that in some ways the New Deal and FDR's policies may have slightly retarded the economic growth (making it more expensive to do business, and taking away incentives to invest are not usually the best ways to spur the economy), but there was also no doubt that Keynes theories, while not perfect, were sensible, and that classical economic theory at the time (higher tarrifs on imports, less government spending to balance the budget) would not have moved the country out of a depression.

I think there is also an argument to be made that FDR knew that he was going to war as early as the mid 30's and that he needed to progress with the economy, and restore the countries confidence in order to go to war. From this perspective FDR and the New Deal were extremely successful.

[SonomaCat]

Thanks for insight, grizbeer. It's always fun to read your takes on history since you really seem to know what you are talking about. Are you a history nut by hobby or by profession?

Again, I can't disagree with anything you wrote -- the points of view you added make perfect sense to me and jive with perspectives I have read in other sources as well. I, too, am not convinced that the New Deal was a good thing, but with all things economic, I have a hard time making a case either way -- a billion things play into the economy, and I have a problem with trying to simplify it into a simple yes or no answer.

I am kind of forgetting what my original point was ... oh yeah, that there is a theory that holds that social programs actually benefit the wealthy along with the poor as it is argued that the social stability insured by the social programs preserves the status quo and in turn, the wealth of the rich. I think there is some merit to that argument, and that it was more of a concern in the 30s than now, but that if we gutted our tax system in a way that shifted the tax burden away from the wealthy and towards the poor, we could find ourselves worrying about it again.

[gtapp]

Isn't the Catholic church one of the wealthiest organizations in the world? I assume that wealth is stashed in Vatican City, though, so no country could tax it even if they wanted to.

According to the book Angels and Demons by Dan Brown, the Catholic Church's wealth consists mostly of priceless jewelry, artwork, etc. from early Christian times. Thus, while the church is wealthy, it may not have much "income" on a year to year basis.

And there's no reason to think that Dan Brown's book is anything other than 100% accurate.

So how did they write those millions of $$$ of checks for all of the sexual abuse scandals? Did they sell jewelry to pay for it?

[Grizlaw]

So how did they write those millions of $$$ of checks for all of the sexual abuse scandals? Did they sell jewelry to pay for it?

Yes.

And their adjusted tax basis in the jewelry was higher than the amount realized, thus generating long-term capital losses.

[SonomaCat]

So how did they write those millions of $$$ of checks for all of the sexual abuse scandals? Did they sell jewelry to pay for it?

Yes.

And their adjusted tax basis in the jewelry was higher than the amount realized, thus generating long-term capital losses.

Just to piss off those who don't like icky history about beloved institutions ... as much of what the Catholic church owns was stolen/taken by force from others during the early years, do they still get to claim a basis in the property?

These are the hard-hitting issues that torment a tax attorney's mind, aren't they?

[Grizlaw]

Just to piss off those who don't like icky history about beloved institutions ... as much of what the Catholic church owns was stolen/taken by force from others during the early years, do they still get to claim a basis in the property?

These are the hard-hitting issues that torment a tax attorney's mind, aren't they?

Well, since income from illegal activities is required to be reported as income under section 61, I'm sure the church dutifully reported all stolen property as income on its tax return at the time of the alleged robbing and pillaging. Thus, the church should have a tax-cost basis of whatever amounts it previously reported as income.

--GL (This is by far the most ludicrous conversation I've had in a while. Is it Friday yet?)

[SonomaCat]

Just to piss off those who don't like icky history about beloved institutions ... as much of what the Catholic church owns was stolen/taken by force from others during the early years, do they still get to claim a basis in the property?

These are the hard-hitting issues that torment a tax attorney's mind, aren't they?

Well, since income from illegal activities is required to be reported as income under section 61, I'm sure the church dutifully reported all stolen property as income on its tax return at the time of the alleged robbing and pillaging. Thus, the church should have a tax-cost basis of whatever amounts it previously reported as income.

--GL (This is by far the most ludicrous conversation I've had in a while. Is it Friday yet?)

Dude, the P&I on that would be like, so totally huge.

['93HonoluluCat]

Paranoid and conspiratorial ... no. Practical ... yes.

They were reacting to the forces that were present at the time, and something had to be done to keep civil order. I'm not understanding how that is even debatable, actually. The New Deal, even in the most basic tellings of history, was a reaction to the Depression. What was the worst case scenario from the Depression? A bunch of people peacefully starving to death? Certainly not. Had the government not reacted, there would have been a rebellion. That's just what happens in societies where the disparity between rich and poor is huge and the vast majority of the population is desperate.

Factor in the very well chronicled violent labor uprisings of the time and the pervasiveness of Marxist influences within the country at the time, and it all makes perfect sense. Desperate times call for desperate measures, which is why the sweeping changes caused by the New Deal were politically possible at that point in history.

Since I keep saying the same thing and you seem to be disagreeing with me (and I am having a one-way conversation), what is your view on the genesis of the New Deal? Once that is on the table, then we will be better able to compare and contrast what we are saying. As it is, I am struggling to figure out exactly in what way you are seeing things differently.

The difference may be just semantics and point of reference. I will not disagree that unemployment was widespread across the country. I will also not dispute socialism and communism were becoming popular as a result. These are historical facts, and really can't be disputed factually.

I do disagree with the insinuation you pose (at least in the tone that I read your posts) the New Deal was a desperate attempt to try to keep the socialists and communists from turning the United States into "The People's Republik of Amerika." I genuinely believe the Roosevelt Administration was trying to find jobs for the jobless, rather than attempting to stave off the second major Socialist Revolution of the 20th Century.

I'm hoping you're not reading my posts as being advesarial, BAC...I just wanted to know why you think the FDR Administration created the New Deal to prevent the socialists from taking over.

[SonomaCat]

I can either say that I was on FDR's cabinet in a previous life and have inside information, or I can say that the books I mentioned before go into some detail setting up the prospects of a popular revolt as one of the fears that led to the New Deal.

It certainly was one of the factors -- not necessarily the primary one for FDR himself (I don't know if there is any published material that gets inside of his head), but certainly of many people who threw their support to him during that time. FDR couldn't do it alone -- he needed a lot of political support to pass legislation that dramatic, and fear (as we are all way too aware these days) is the most effective tool one can have to motivate people to support hard choices ... much more effective than compassion for those less fortunate.

['93HonoluluCat]

...[F]ear (as we are all way too aware these days) is the most effective tool one can have to motivate people to support hard choices...

I have no idea what you're talking about.

[SonomaCat]

Funny quote in this CNN article about the proposed tax changes (subtitled "How we can further shift the tax burden to the blue states," in committee reports):

Under the proposals, taxpayers would no longer be allowed to deduct the state and local taxes they pay on wage income, investment income and property.

Former Senator John Breaux of Louisiana, who is the panel's vice chair, on CNBC Tuesday morning explained part of the panel's reasoning this way: "If people in California want to pay extra taxes to have their trash picked up, people in Texas shouldn't have to subsidize it."

http://money.cnn.com/2005/11/01/pf/taxe ... tm?cnn=yes

Does anyone else see a little irony in someone from Louisiana talking about the rest of the country subsidizing someone else?

Perhaps what would REALLY be fair is if the federal taxes paid by each state were only spent in that state (or allocated such that the state got the proportionate share of the benefit).

This BS theory that other states are "subsidizing" the taxes paid in high tax states due to being able to deduct those taxes is a bit silly. After all, if there wasn't such a flow of federal funds from high tax to low tax states, maybe the low tax states would have to raise their taxes dramatically to pay for their own roads, universities, social programs, etc. And they might even have to pay for their own cleanups after disasters caused by building cities below sea level.

[SonomaCat]

Here's the full text of the proposed changes:

http://www.taxanalysts.com/www/freefile ... ecSUMM.pdf

After reading the whole thing, I found a lot of good and a lot of bad, so I'm not as pissy as I was just reading the snippets from CNN. Although the ideas about eliminating the state tax deduction and capping out the mortgage interest deduction are quite clearly more detrimental to high cost of living areas much more than cheaper areas, and if the true goal of this project is to make taxes more "fair," I'm not seeing that as advancing their cause.

I also don't buy the idea of making interest non-deductible at the corporate level to discourage corporate debt and to encourage equity investing. I'm not a huge fan of government telling businesses how to do business, and that appears to be exactly what they are doing. If it's a bona fide business expense, as interest clearly is, I see no justification for making it non-deductible. The act would also destroy the ability for entities to issue muni bonds, as corporations woudn't be taxes on interest income, and would have no reason to buy lower-yielding muni bonds. Taking all of the corporate cash off of the table would kill the demand for those bonds (which means it would be much more expensive for MSU to sell bonds to expand the stadium, to bring it into an MSU scope).

The idea that reducing the number of tax brackets is a significant "simplification" of the tax code is funny as well. It's nice for window dressing, but in reality, cutting the number of tax brackets saves the average taxpayer about 10 seconds of reading, and nothing else. It's not the tax brackets that makes taxes difficult. To their credit, though, they do propose a lot of changes that would make things easier.

I'm intrigued to hear more about their proposals for overhauling our international tax regime. That's an area that the U.S. is really out of whack with the rest of the world, to the detriment of U.S. businesses.

[Scrogger]

If we taxed churches at 40% (since they are a business) that would reduce taxes for everyone.

I agree that, as a matter of policy, churches should probably be taxed, but do you really think most churches actually operate at a substantial profit? 40% of essentially zero is still essentially zero; I really doubt that imposing a tax on churches would have much of an impact on the fisc.

Churches would not pay any tax because they use every penny they have to keep the church running and to help the poor and disadvantaged. Trust me on this one, I have seen financial reports from churchs. They spend every penny they get each year. Churchs do make a profit.

Credit Union's fall into this type of catogory. We really need to start to tax Credit Union's especially with the profits that they show.