What it will take to solve the debt crisis

[SolarHawk]

No, dont raise the social security age but raise the ceiling on which SS taxes are collected. I think the current ceiling is about $160 to $170 thousand dollars. For SSec, raise that ceiling as there are a whole lot of people that make way more than that and the millionairs and billionaires need to pay more into SS and Medicare. The rich and Big Bix just need to pay more taxes period because they use roads and all infrastructure more in their drive to make more money. Anyone who makes money or stocks etc that moves goods or digital info around is using infrastructure the govt helped finance and develop.

When you take into account the tax cuts to the rich and Big Biz in 2017 then that means we are taking in way less tax dollars.

Fvck this, everyone needs to feel pain and contribute, which means raising the age for SS. We're living longer, it's not possible to keep things as they are if we're going to make a difference. And it's quite obvious some of you have never made nearly the cap in salary. Last year I paid $60k fvcking dollars in taxes. At some point I've given more than my fair share, so I would not be in favor of eliminating the cap. You're thinking in terms of only millionaires and billionaires.

 

[hawkeyetraveler]

Your example doesn’t allow an instance to cash flow any leverage of assets prior to death. Which creates an artificial inflation or deflation of the utility value of any asset to make money.

If you don’t mind can you give me a specific example? For instance, are you talking about a situation like inheriting a 1,000 acre family farm with debt?

In that case the debt would be tied to a business and it transfers with the business.

Or are you talking about someone who has a personal mortgage on a farmhouse that needs to be settled when the farm passes down? In that case I suppose you could settle the debt with any liquid assets. If such assets don’t exist then yes you would have to sell all or part of the business to pay off the personal debt of the estate.

Why would this artificially affect the value of the business in any way? The business should be valued based on the given price someone will pay when you go to sell minus any debt on the business.

 

[hawkeyetraveler]

Those assets were already taxed two or three times over. To tax the dead is just full on greed.

Earn it, taxed.
Buy it, taxed.
Invest it, taxed.
Give it away, taxed.
Die, taxed.

Great, how about instead of shooting down ideas you give us the magic solution to our debt crisis. And don’t tell me it is just Doge, that is a drop in the bucket.

You know what will hurt worse than an inheritance tax? Finding out all of your asset valued has been gutted because the US printed money to avoid default on our federal debt. One way or the other we have to pay the piper. Taking it from the dead sure seems like a better option than taking it from our children (which is what we are doing now).

 

[Whiskeydeltadeltatango]

I've had a fair amount of windshield time over the past 2 days and it has brought me many thoughts.


If you donated 1% of every check you made to gold, starting at the time you made your first check, it would be almost impossible to not be a millionaire, simply due to inflation, by the time you hit 65.

I'm not foolish enough to think the goverment is going to provide a retirement planning service for free, but the idea that they are so inefficient they not only give you a fraction of what multiple safe vehicles would return at they are going broke in the process.



We are in the middle of it so I don't know what the answer is, other than the goverment just starts writing checks, but SS is a ****ing Scam.




Take the "they have my money" out of it, it's a sham organization. Whoever thought it was a good idea was a giant asshole.

 

[cohawk]

No, it doesn’t.

The middle classes pay WAY less in taxes than comparable countries.

There is no easy way out of this.

Actually, it would do just that. If we went back to pre 70s rates we'd be fine. They were taxed at 65%. Amazingly no one left.

 

[onlyTheObvious]

I would be fine with a national sales tax to help with debt but not until spending is cut, as in freeze it at current amount.

Drones should make defense cheaper than manned planes.

Do we really need more carriers than the rest of the world combined?

Tired of the boogie man stories.

 

[scruffyhawk]

If you don’t mind can you give me a specific example? For instance, are you talking about a situation like inheriting a 1,000 acre family farm with debt?

In that case the debt would be tied to a business and it transfers with the business.

Or are you talking about someone who has a personal mortgage on a farmhouse that needs to be settled when the farm passes down? In that case I suppose you could settle the debt with any liquid assets. If such assets don’t exist then yes you would have to sell all or part of the business to pay off the personal debt of the estate.

Why would this artificially affect the value of the business in any way? The business should be valued based on the given price someone will pay when you go to sell minus any debt on the business.

A specific example isn't necessary other than debt on a fixed term. Say a fixed asset is on a 20 year interest lock with 15 years to go. The value has appreciated 30% but interest rates have also gone up 40%. A similar, but uniquely valuable asset, is up for sale. In this instance if the entity purchases with no cash down, the average interest and average loan value dictate cash flow. Those loans however are not transferable upon death so any debt load would have to be reamortized. The stepped up basis would allow business activities to continue if interest rate and other underwriting factors are favorable. Some assets potentially need shed in these instances, but possibly a full liquidation isn't desired. Your example of a 1000 acre family farm having business debt that transfers between generations may require it to be a 600 acre farm post taxes in a business where asset accumulation is one of the main drivers to sustainability.

You assume no situational nuance is in play by trying to claim there are no consequence simple changes to tax law that affects trillions in assets. Rhetorically by changing anything you are assigning winners and losers a handicap to how they have structured trusts, wills, life insurance, key person salaries and benefits, etc. Anyone suggesting changes are simple or can be fluidly risk managed is being trite. How do you handle a situation where the primary beneficiary is also the power of attorney and executor of a dementia sufferer? The responsibility when making even subtle changes especially after a long period of best practices for risk management has been applicable is immense.

 

[seminole97]

Homeboy up in here like trickle down works, look at this laffer curve that supports my premise even though most it isn't a wildly accepted theory,

Who doesn’t ’accept’ the Laffer Curve, and based on what logic?

That comment makes me think you couldn’t actually describe the Laffer Curve and what it shows.

 

[seminole97]

Fvck this, everyone needs to feel pain and contribute, which means raising the age for SS.

I don’t think raising the benefit age for someone who is poor or middle class so that we can make sure and write a full SS check to Bill Gates or Warren Buffett makes any sense on any level as a public policy.

 

[hawkeyetraveler]

A specific example isn't necessary other than debt on a fixed term. Say a fixed asset is on a 20 year interest lock with 15 years to go. The value has appreciated 30% but interest rates have also gone up 40%. A similar, but uniquely valuable asset, is up for sale. In this instance if the entity purchases with no cash down, the average interest and average loan value dictate cash flow. Those loans however are not transferable upon death so any debt load would have to be reamortized. The stepped up basis would allow business activities to continue if interest rate and other underwriting factors are favorable. Some assets potentially need shed in these instances, but possibly a full liquidation isn't desired. Your example of a 1000 acre family farm having business debt that transfers between generations may require it to be a 600 acre farm post taxes in a business where asset accumulation is one of the main drivers to sustainability.

You assume no situational nuance is in play by trying to claim there are no consequence simple changes to tax law that affects trillions in assets. Rhetorically by changing anything you are assigning winners and losers a handicap to how they have structured trusts, wills, life insurance, key person salaries and benefits, etc. Anyone suggesting changes are simple or can be fluidly risk managed is being trite. How do you handle a situation where the primary beneficiary is also the power of attorney and executor of a dementia sufferer? The responsibility when making even subtle changes especially after a long period of best practices for risk management has been applicable is immense.

I get there will be negative consequences where people inherit far less than they hoped. Yes, in a case where you inherit a debt laden far, you are selling land if you want or need to settle that debt. And yes, the farm could become subscale to the point you have to sell it. But since we are in imaginary world anyway, why not just accept that the debt passes with the asset and if you are so inclined you can run the business with the existing debt burden. Seems pretty straightforward actually,

As to nuances around dementia patients, orphaned children and trusts etc I’m sure we could work out an issue that carves out something for care.

None of this would be necessary if we hadn’t gone crazy with spending over the past 40 years, but we did so now we have to pay a painful price. My way seems like it impacts the fewest people and is inherently fairer than other methods. You only pay tax on what you earn. Why should a trust fund recipient get a lower tax burden than a middle class worker when they did far less to get that money in the first place?

 

[Huey Grey]

Value added tax. Raise cap on SS. 500.00 tax on dogs. Raise fees and tolls on roads and bridges. Raise tax rates 4% across the board.

Better solution: tax the gd rich.

 

[seminole97]

Actually, it would do just that. If we went back to pre 70s rates we'd be fine. They were taxed at 65%. Amazingly no one left.

1971 to 1978 the federal government collected less as a share of GDP (<18%) than it did last year.

Also, the people don’t leave, they just structure their investments to lower their tax burden, and the result can often be less tax collected at the higher rate, because there is less investment made subject to it. The lower investment isn’t a benefit to the economy.
Punitive rates do wonders for puny minds, but not much else.

 

[HawkeyeHitman]

Tax the gd rich. That solves most of it. Stop coddling the billionaires.

How about you get your phoggat ass to work.

 

[IIowaFarmBoy]

Everyone should pay their way. Roads, fire protection, police etc. Airports, should I go on? Go to Ukraine if you want to see that in practice (or Russia)

Of course I'm being sarcastic. We do have corruption which needs to be curtailed. Balancing a budget is why most states in EU are in trouble. They can't manipulate their currency. That is why we had Brexit.

 

[hawkeyetraveler]

How about you get your phoggat ass to work.

What’s a phoggat?

Is that a gay man who loves Vietnamese food?

 

[HawkeyeHitman]

Better solution: tax the gd rich.

Better solution: We stop giving you Biktarvy and you die. Think of all the money we will save.

 

[seminole97]

Balancing a budget is why most states in EU are in trouble. They can't manipulate their currency. That is why we had Brexit.

The British had Brexit because they ultimately didn’t want to be governed by unelected bureaucrats in Brussels.
They always kept the Pound, so they could always manipulate their currency. Currency manipulation just spreads the ‘trouble’, it doesn’t fix it.

 

[IIowaFarmBoy]

The British had Brexit because they ultimately didn’t want to be governed by unelected bureaucrats in Brussels.
They always kept the Pound, so they could always manipulate their currency. Currency manipulation just spreads the ‘trouble’, it doesn’t fix it.

We would be ever in boom bust cycles. And yes, they wanted control of their currency for the reason you stated. So, I am correct.

 

[scruffyhawk]

I get there will be negative consequences where people inherit far less than they hoped. Yes, in a case where you inherit a debt laden far, you are selling land if you want or need to settle that debt. And yes, the farm could become subscale to the point you have to sell it. But since we are in imaginary world anyway, why not just accept that the debt passes with the asset and if you are so inclined you can run the business with the existing debt burden. Seems pretty straightforward actually,

As to nuances around dementia patients, orphaned children and trusts etc I’m sure we could work out an issue that carves out something for care.

None of this would be necessary if we hadn’t gone crazy with spending over the past 40 years, but we did so now we have to pay a painful price. My way seems like it impacts the fewest people and is inherently fairer than other methods. You only pay tax on what you earn. Why should a trust fund recipient get a lower tax burden than a middle class worker when they did far less to get that money in the first place?

Debt in dollars passes, but specific loans do not. Refinancing is 100% not optional. There is nothing straightforward about relative value based on utility between multiple parties. The value at an auction is acceptable as basis, and a lowball written offer is often used in place of an appraisal in estates. The lender requires an appraisal on the asset for financing per their federal auditor. They do not need to correlate. These are real world type of funding issues that are not simple, and often why when receiving stepped up basis the estate sells prior to a group of individuals inherenting some or all assets.

The care aspect of dementia isn't the issue. It's the conflict of interest the fidicuary has to redo any aspect of the estate. Other heirs have claims if there isn't an agreement on who benefits. A complete hornets nest if the fidicuary is the one currently running the business and the other heirs have a defined, but now disadvantaged benefit, if the business needs aren't concurrent with the prior planning. The dementia sufferer may have moments of lucidity, but not enough it wouldn't turn into a contentious estate.

A trust fund recipient had money spent and invested on their behalf using relevant expertise. Why should they be penalized because the middle class worker did far less for end of life planning? Why is hiring expertise something looked down upon if wealth preservation is important? Is a life estate going to be invalid if laws are suddenly changed that might disadvantage either party? Are taxes going to be waived or refunded on however many billions or trillions have been in place prior to a substantially different treatment of assets?

Fair is never a term that applies. The person using it is always trying to be the arbiter to claim their views aren't arguable. I have kicked people out of negotiations who try using this tactic. If someone isn't well enough prepared they have to fall back on emotional bias then they likely aren't going to accept reason or reality. Just an FYI so you don't take this discussion as an argument. Education can happen with anonymous user names! Exactly the spirit of message boards.

 

[seminole97]

We would be ever in boom bust cycles. And yes, they wanted control of their currency for the reason you stated. So, I am correct.

The central bank manipulation of interest rates, and thus credit creation and the money supply distortion, are what creates boom and bust cycles.

Paul Krugman, from a 2002 New York Times editorial:

“To fight this recession the Fed needs…soaring household spending to offset moribund business investment. [So] Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”

 

[IIowaFarmBoy]

The central bank manipulation of interest rates, and thus credit creation and the money supply distortion, are what creates boom and bust cycles.

Paul Krugman, from a 2002 New York Times editorial:

“To fight this recession the Fed needs…soaring household spending to offset moribund business investment. [So] Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”

Paul Krugman... ha ha

But, you are correct due to corruption. It would be worse with boom bust cycles. Go back and look at history.

 

[hawkeyetraveler]

Debt in dollars passes, but specific loans do not. Refinancing is 100% not optional. There is nothing straightforward about relative value based on utility between multiple parties. The value at an auction is acceptable as basis, and a lowball written offer is often used in place of an appraisal in estates. The lender requires an appraisal on the asset for financing per their federal auditor. They do not need to correlate. These are real world type of funding issues that are not simple, and often why when receiving stepped up basis the estate sells prior to a group of individuals inherenting some or all assets.

The care aspect of dementia isn't the issue. It's the conflict of interest the fidicuary has to redo any aspect of the estate. Other heirs have claims if there isn't an agreement on who benefits. A complete hornets nest if the fidicuary is the one currently running the business and the other heirs have a defined, but now disadvantaged benefit, if the business needs aren't concurrent with the prior planning. The dementia sufferer may have moments of lucidity, but not enough it wouldn't turn into a contentious estate.

A trust fund recipient had money spent and invested on their behalf using relevant expertise. Why should they be penalized because the middle class worker did far less for end of life planning? Why is hiring expertise something looked down upon if wealth preservation is important? Is a life estate going to be invalid if laws are suddenly changed that might disadvantage either party? Are taxes going to be waived or refunded on however many billions or trillions have been in place prior to a substantially different treatment of assets?

Fair is never a term that applies. The person using it is always trying to be the arbiter to claim their views aren't arguable. I have kicked people out of negotiations who try using this tactic. If someone isn't well enough prepared they have to fall back on emotional bias then they likely aren't going to accept reason or reality. Just an FYI so you don't take this discussion as an argument. Education can happen with anonymous user names! Exactly the spirit of message boards.

I still don’t see a debt argument based on what you shared. I agree there are tricky aspects with respect to care needs and fiduciary responsibility that would need to be addressed. Relative to trust funds - I really don’t care if those people wasted time and money setting one up. Hell, I myself set up a family trust.

The issue is, all of us are borrowing from our children’s future right now. As a country we are all paying less than it takes to support our current lifestyle. That is not fair to the future generations. It stands to reason those of us who benefited more should then pay more. If we weren’t in a fiscal crisis I wouldn’t feel that way, but we are.

So yeah, I want to eliminate any tax shelters. I want to tax inheritance. It is a sustainable path to getting back to fiscal responsibility and way better than most other alternatives. The problem that so many people have is they find all the reasons new taxes suck, but they pretend that doing nothing is a better alternative when it is not. Taxes suck, but they suck less than defaulting on our debt load.

 

[seminole97]

Paul Krugman... ha ha

But, you are correct due to corruption.

Corruption isn’t the core of why central bank credit driven booms turn into busts. The cause is that central bank credit creation paints an artificial picture of the underlying economic reality that genuine, market driven prices would better show.
If savings appear flush (due to artificial credit creation instead of genuine accumulation of unconsumed production) projects begin that wouldn’t under a more correct assessment of resource availability. After repeated exchanges under the inflated money supply prices rise to reflect the change the pool of money. This is when many plans undertaken at the beginning of the boom are recognized as no longer viable under the updated price regime (cause by the credit manipulation inflating the monetary pool). Unsustainable projects inevitably fail as capitalism redirects resources away from loss.
The extraordinary rise in business failures stems from the initial credit manipulation that effectively mislead entrepreneurs as to real prices, and thus what people really want.

It would be worse with boom bust cycles. Go back and look at history.

Pick one and we can discuss the origin.
The worst financial crises have come after the central banks took over money.

“A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World War I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion.

But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline — argued economic interventionists — why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely — it was claimed — there need never be any slumps in business. And so the Federal Reserve System was organized in 1913.”

- Alan Greenspan, Gold and Economic Freedom

 

[scruffyhawk]

I still don’t see a debt argument based on what you shared. I agree there are tricky aspects with respect to care needs and fiduciary responsibility that would need to be addressed. Relative to trust funds - I really don’t care if those people wasted time and money setting one up. Hell, I myself set up a family trust.

The issue is, all of us are borrowing from our children’s future right now. As a country we are all paying less than it takes to support our current lifestyle. That is not fair to the future generations. It stands to reason those of us who benefited more should then pay more. If we weren’t in a fiscal crisis I wouldn’t feel that way, but we are.

So yeah, I want to eliminate any tax shelters. I want to tax inheritance. It is a sustainable path to getting back to fiscal responsibility and way better than most other alternatives. The problem that so many people have is they find all the reasons new taxes suck, but they pretend that doing nothing is a better alternative when it is not. Taxes suck, but they suck less than defaulting on our debt load.

Stepped up basis, or any variation of how basis accrues, isn't a tax shelter. If you want to change rates on various income classes or how capital gains that is a much more straightforward, but politically loaded, path. It isn't a new tax, just a rate adjustment. Estate tax is only one of many basis is critical to. Messing with a formula, instead of a variable, is ill advised.

Changing how something is calculated isn't simple or straightforward because it's a sales job instead of actuarial. Any tax changes are going to have a tipping point where the pace of rate increases or decreases inverts on total future collections. Deficit spending at the rate we are is not sustainable. Getting a bipartisan agreement on which rates to raise is the biggest issue facing the budget. The interest rate paid out of GDP is a tax class in itself.

 

[hawkeyetraveler]

Stepped up basis, or any variation of how basis accrues, isn't a tax shelter. If you want to change rates on various income classes or how capital gains that is a much more straightforward, but politically loaded, path. It isn't a new tax, just a rate adjustment. Estate tax is only one of many basis is critical to. Messing with a formula, instead of a variable, is ill advised.

Changing how something is calculated isn't simple or straightforward because it's a sales job instead of actuarial. Any tax changes are going to have a tipping point where the pace of rate increases or decreases inverts on total future collections. Deficit spending at the rate we are is not sustainable. Getting a bipartisan agreement on which rates to raise is the biggest issue facing the budget. The interest rate paid out of GDP is a tax class in itself.

All I’m suggesting with my plan is if you get an asset via inheritance we set your cost basis at the exact cost you paid for it: $0. That’s it. When you sell you pay capital gains on the net proceeds (after resolving debt or any other type of obligations - this could include dependent beneficiaries I suppose). That’s the whole idea and there is an absolute ton of revenue to be generated this way.

Agree on the need to sell a solution - whatever it is. America would vote out anyone who implemented my idea because Americans are too selfish to see the crisis we have. Same with an income tax increase and the same reason Trump gets elected promising a tax decrease which is ludicrous in the extreme.

 

[seminole97]

Agree on the need to sell a solution - whatever it is. America would vote out anyone who implemented my idea because Americans are too selfish to see the crisis we have.

It’s always presented as ‘selfish’ to not want to give more to Uncle Sam, but it’s never presented as ‘selfish’ to want to use Uncle Sam to take more from other people.

 

[hawkeyetraveler]

It’s always presented as ‘selfish’ to not want to give more to Uncle Sam, but it’s never presented as ‘selfish’ to want to use Uncle Sam to take more from other people.

Show me your solution, because spending cuts alone aren’t going to get this done.

 

[IIowaFarmBoy]

Corruption isn’t the core of why central bank credit driven booms turn into busts. The cause is that central bank credit creation paints an artificial picture of the underlying economic reality that genuine, market driven prices would better show.
If savings appear flush (due to artificial credit creation instead of genuine accumulation of unconsumed production) projects begin that wouldn’t under a more correct assessment of resource availability. After repeated exchanges under the inflated money supply prices rise to reflect the change the pool of money. This is when many plans undertaken at the beginning of the boom are recognized as no longer viable under the updated price regime (cause by the credit manipulation inflating the monetary pool). Unsustainable projects inevitably fail as capitalism redirects resources away from loss.
The extraordinary rise in business failures stems from the initial credit manipulation that effectively mislead entrepreneurs as to real prices, and thus what people really want.



Pick one and we can discuss the origin.
The worst financial crises have come after the central banks took over money.

“A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World War I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion.

But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline — argued economic interventionists — why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely — it was claimed — there need never be any slumps in business. And so the Federal Reserve System was organized in 1913.”

- Alan Greenspan, Gold and Economic Freedom

I don't think we are as far apart as it seems. The long depression comes to mind. The Great Recession was about a lot of corruption plain and simple.

I abhor what we did post Great Recession. That and leading up to it lead to a huge transfer of wealth. The COVID stuff and remnants of the GR is why we have inflation now. We created money that did not lead to money creating money like it should have in velocity acceleration.

 

[seminole97]

Show me your solution, because spending cuts alone aren’t going to get this done.

Was the federal government too small in 1999 when it spent 18% of GDP?

 

[soybean]

The reasons why are history. This now. The only real solution now, today, is to increase revenue. There will be pain no matter what, and the sooner, the better.

 

[hawkeyetraveler]

Was the federal government too small in 1999 when it spent 18% of GDP?

I would be ecstatic if we found a way to reduce spending. Let’s do the math though as it is not that easy.

2024 GDP: $29.17 trillion

18% is $5.25 trillion as a 2024 budget target vs 2024 actual of $6.75T. That means we would need to find cuts of $1.5 trillion. That is the vast majority of our discretionary spending (which was $1.8T). So are you taking it all from there or are you hitting entitlements, if you take it all from there what are you cutting? Please be specific.

Even after all that, revenues in 2025 were only $4.9T so we still need to increase revenue somehow. How are you doing that?