The Student Who Caught Out The Professors [Pic+]

Submitted by: thenedman 3 years ago

Student finds mistake in famous academic paper often used to make the case for austerity cuts.
There are 19 comments:
Male 1,692
Paying interest to itself rather than investors would free up a lot of monies for private and municipal production projects and would employ millions of citizens.
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Male 1,692
The main aversion I have towards a flat tax is that the cost of say paying 13% on an income of $10,000 hurts the poorer taxpayer more than paying 13% on an income of $100,000. Same goes for sales tax hikes,they still are unfair to those eking out a living.

Its like Apple. Why would Apple sit on all that capital, well they feel the markets are too volatile and are holding back investing since they believe the returns aren`t good enough. Same goes for the banks, its why there should be a federal bank that pays interest to its citizens, not a federal reserve private bank that earns profit for its investors. A stimulus of capital to bring production inland would help greatly as well as a repeal of NAFTA and fair tariffs. I read that the USA has a 2% tariff on Chinese goods yet China has a tariff of 20% on US made goods. These "Free Trade" agreements are imbalances that pool capital from governments and into transnational investor pockets. We need a parallel univers
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Male 2,357
[quote]But what is to stop a corp from paying their ceos $1/yr. and providing stocks in lieu of wages.[/quote]
That`s actually a pretty good question... I`d like to see a flat-rate tax for everything - income and capital gains included. So, when someone sold stock, then the net profit from that would be taxed as normal income. It`s my parallel universe (cause it won`t happen).

[quote]Should there be corp tax if a corp is sitting on vast sums of $$$ and not investing it? [/quote]
Well, I can understand the reasoning for wanting to tax capital or assets that are "sitting" but even money in a checking account is economically active (the woes of fractional reserve banking). Plus, why would a company want to sit on capital? There are better ways of investing money to ensure at least a small return on it.
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Male 1,692
Hi Human!

You make a very interesting argument regarding the differences between personal income tax and corporate income tax. I have heard that many corps that do not pay their tax burden instead are given the tax credit since they employ thousands of workers and the workers do pay their payroll taxes. We all are paying more payroll taxes at this point, from less than 5% to a higher 6.2%. There is need for fairer taxing, But what is to stop a corp from paying their ceos $1/yr. and providing stocks in lieu of wages. I can imagine if Romney had his way, with no taxes on capital gains then the super wealthy shareholders would certainly not pay their fair share or any in taxes, payroll wages included. Yes, I believe that you make a good assessment, the tax system must be overhauled and simplified removing these loopholes and placing a fairer tax on corps.

Should there be corp tax if a corp is sitting on vast sums of $$$ and not investing it?
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Female 2,509
kudos to his perseverance.
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Male 2,357
@llaa

[quote]The main problem with the current economic slump is that most production for the us and eu has been moved overseas.[/quote]
I agree that this is the major problem with the US economy. Production is the only method of increasing national wealth; service-based industry only transfers wealth between parties.

[quote]Stimulus could mean tariffs on foreign produced goods or government spending for new manufacturing[/quote]
I would also add that stimulus could mean revocation of restrictive laws and tax policies placed on corporations. Since every individual is taxed, why then should a corporation also be taxed? This results in business owners being double-taxed.

While it`s true that some producers aren`t being taxed, the overwhelming majority are.
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Female 1,467
Ani187, I`m not high enough.
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Female 1,467
The first time on record anyone has ever *done* their homework.
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Female 4,447
I am too high for this right now.
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Male 1,692
Well if the tax code is so complicated it certainly works well for companies that dont pay taxes or just get paid with low tax incentives to operate in the states like GE and other companies. As for is the alternative better, I dont think so, if you spend some time on liveleak.com you`d see some bad stuff happening to workers overseas. How could they be starving, they dont grow food overseas? I mostly assume that the workers in Indonesia just work cheaply and live tedious and hard short lives.

Pay may never go to those extremes here, but theoretically if the cost of shipping were null then we could absolutely be competing with slavery overseas. Thankfully we`re in carbon based economy and the limits to carbon fuel resources makes shipping an increased cost over time until more resources are discovered and we choke out the planet with more burned cheap carbon fuel. My point is that alternative could be much worse for us.
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Male 10,845
[quote] Alot of corporations dont pay any taxes already so where else is there an incentive for corps to invest their profits? [/quote]

The "lot" you`re referring to don`t pay because of an idiotically complicated tax code that distorts market signals. If we`re going to have a progressive tax then EVERYONE should pay according to the brackets.
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Male 10,845
[quote]The main problem with the current economic slump is that most production for the us and eu has been moved overseas.[/quote]

Of course it has, we`re a service economy now. It means cheap goods for us, while starving people in the third world get money to pay for food and shelter.

[quote]Currently many overseas workers get paid roughly a dollar a day...[/quote]

The alternatives are a LOT worse.

[quote]...I dont want to compete with slavery.[/quote]

No one is putting a gun to your head and compelling you to work. That`s loaded rhetoric.
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Male 1,692
Hi Cajun,

It`s not that simple.

The main problem with the current economic slump is that most production for the us and eu has been moved overseas. There must be federal stimulus to create the incentive to produce goods in the home countries so that there is employment for workers. Stimulus could mean tariffs on foreign produced goods or government spending for new manufacturing.

Cutting taxes to make a better profit for corporations is only going to cheapen the cost of labor in order to bring back production jobs from overseas. Alot of corporations dont pay any taxes already so where else is there an incentive for corps to invest their profits?

Currently many overseas workers get paid roughly a dollar a day and I dont want to compete with slavery.
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Male 10,845
[quote]is it best to let debt increase in the hope of stimulating economic growth to get out of the slump, or is it better to cut spending and raise taxes aggressively to get public debt under control?[/quote]

No, you want to cut spending AND taxes. Not cut one and raise the other.
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Male 1,692
I am big fan of the academic work at the University of Amhearst. Here`s an interview with Herndon and Prof. Ash on The Real News. Link to The Real News Interview
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Male 373
He looks very rapey.
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Male 2,549
Wow, well I`m glad that the student`s suspicions of his ineptitude were relieved.

On the flip side, I hope that Reinhart and Rogoff were correct in their analysis that the error didn`t cause unnecessary job losses.

I really don`t know enough about economics to remark on the matter.
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Male 298
Link: The Student Who Caught Out The Professors [Pic+] [Rate Link] - Student finds mistake in famous academic paper often used to make the case for austerity cuts.
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