Government systems that benefit the already wealthy

[Rhea]

There are a lot of system infrastructure attributes that unfairly benefit the owner class or the wealthy class or the corporate class. A lot of people who think the working poor are lazy forget these massive systemic advantages to which the workers have no access.

Some of these include:

• Binding arbitration: wherein as a condition of employment in the USA, you can be required to sign away your civil rights to a day in court over your grievance INCLUDING sexual harassment and worker safety.
• Clauses that prevent you from sharing salary information with coworkers to determine if pay is fair.
• Mandatory overtime
• below-living wages
• Subsidies to massive corporations like oil and gas
• The attachment to employment of healthcare and the allowable denial of insurance to certain citizens such that entrepreneurs cannot start new companies easily because of healthcare needs.

This thread is to add to the list and discuss. If it turns out to be huge, we could split off specific discussions for their own thread as needed.

 

[steve_bank]

Corporate socialism. Trump for years paid little to no taxes. That is the corporate rule not the exception. There are many ways in the tax code to reduce tax burden by showing small, zero, or a loss on the bottom line. That us what tax attorneys and accountants do.

A company can post a loss for tax purposes while making money and profit.

I had an uncle who worked for a company in NYC that provided ongoing tax information and how to make maxim use.

I

 

[Harry Bosch]

Corporate socialism. Trump for years paid little to no taxes. That is the corporate rule not the exception. There are many ways in the tax code to reduce tax burden by showing small, zero, or a loss on the bottom line. That us what tax attorneys and accountants do.

A company can post a loss for tax purposes while making money and profit.

I had an uncle who worked for a company in NYC that provided ongoing tax information and how to make maxim use.

I

Your post is pretty vague. What corporate socialism are you against? In Trump's case, he inherited real estate, made poor decisions, and suffered incredible losses. The current tax code allows losses to offset future profits. Are you against this? My company is in it's 5th year. We had massive losses the first three years. Did okay last year. This year looks very very good. But we'll pay no taxes due to the loss carry forward. It sounds like there will be people in this thread who'll be against the carryforward. It's what allowed Google to pay no taxes last year. But I can tell you, that if you eliminate this provision, there will be much less startups. Startups are great sources of new job creation and economic development.

 

[ZiprHead]

Corporate socialism. Trump for years paid little to no taxes. That is the corporate rule not the exception. There are many ways in the tax code to reduce tax burden by showing small, zero, or a loss on the bottom line. That us what tax attorneys and accountants do.

A company can post a loss for tax purposes while making money and profit.

I had an uncle who worked for a company in NYC that provided ongoing tax information and how to make maxim use.

I

Your post is pretty vague. What corporate socialism are you against? In Trump's case, he inherited real estate, made poor decisions, and suffered incredible losses. The current tax code allows losses to offset future profits. Are you against this? My company is in it's 5th year. We had massive losses the first three years. Did okay last year. This year looks very very good. But we'll pay no taxes due to the loss carry forward. It sounds like there will be people in this thread who'll be against the carryforward. It's what allowed Google to pay no taxes last year. But I can tell you, that if you eliminate this provision, there will be much less startups. Startups are great sources of new job creation and economic development.

Regular people don't get to carry forward losses to offset future taxes. Google is far from a startup. Amazon is far from a startup. Why do these corporations need these tax breaks, essentially US taxpayers subsidizing them?

 

[Harry Bosch]

Corporate socialism. Trump for years paid little to no taxes. That is the corporate rule not the exception. There are many ways in the tax code to reduce tax burden by showing small, zero, or a loss on the bottom line. That us what tax attorneys and accountants do.

A company can post a loss for tax purposes while making money and profit.

I had an uncle who worked for a company in NYC that provided ongoing tax information and how to make maxim use.

I

Your post is pretty vague. What corporate socialism are you against? In Trump's case, he inherited real estate, made poor decisions, and suffered incredible losses. The current tax code allows losses to offset future profits. Are you against this? My company is in it's 5th year. We had massive losses the first three years. Did okay last year. This year looks very very good. But we'll pay no taxes due to the loss carry forward. It sounds like there will be people in this thread who'll be against the carryforward. It's what allowed Google to pay no taxes last year. But I can tell you, that if you eliminate this provision, there will be much less startups. Startups are great sources of new job creation and economic development.

Regular people don't get to carry forward losses to offset future taxes. Google is far from a startup. Amazon is far from a startup. Why do these corporations need these tax breaks, essentially US taxpayers subsidizing them?

Loss carryforwards aren't only for startups. I don't know how or why the law allowing this originated. But I know this, again fewer startups would begin if the provision didn't exist. There would be fewer investors and owners willing to take the plunge if they couldn't deduct their massive losses at the beginning. Secondly, one of the the differences between individuals and companies is that they have very different cycles. Most businesses have a hockey stick kind of cycle. Massive losses in the beginning, higher profits as they mature, eventual decline at some point. Loss carry forward helps smooth out the business cycle.

Again, Amazon and Google are simply following the tax code. Their current profits are offset by historical losses. I apologize for butchering my definition as I'm not a CPA!

 

[Canard DuJour]

- The outsourcing of the money supply to commercial lenders.

Nearly all money in circulation is lent into existence by commercial banks with corresponding debt plus interest. That is, NOT issued by central banks (eg the Fed or Bank of England), and NOT lent from savers' deposits (or fractions thereof).

Money Creation in the Modern Economy - Bank of England

Why Banks Don't Need Your Money to Make Loans

Govts with sovereign currencies could expand the money supply as the economy needs, debt-free, and pay people to do useful things in the process. But rules have been instituted, mostly at the behest of powerful banking lobbies, which either prevent this or commit govts to bond issuance whenever they net spend into the economy.

 

[Harry Bosch]

- The outsourcing of the money supply to commercial lenders.

Nearly all money in circulation is lent into existence by commercial banks with corresponding debt plus interest. That is, NOT issued by central banks (eg the Fed or Bank of England), and NOT lent from savers' deposits (or fractions thereof).

Money Creation in the Modern Economy - Bank of England

Why Banks Don't Need Your Money to Make Loans

Govts with sovereign currencies could expand the money supply as the economy needs, debt-free, and pay people to do useful things in the process. But rules have been instituted, mostly at the behest of powerful banking lobbies, which either prevent this or commit govts to bond issuance whenever they net spend into the economy.

Well, companies need bank loans for capital assets and to support growth. How is the economy harm by banks creating money? BTW: I trust my banker a hell of a lot more than I trust Trump.

 

[Canard DuJour]

- The outsourcing of the money supply to commercial lenders.

Nearly all money in circulation is lent into existence by commercial banks with corresponding debt plus interest. That is, NOT issued by central banks (eg the Fed or Bank of England), and NOT lent from savers' deposits (or fractions thereof).

Money Creation in the Modern Economy - Bank of England

Why Banks Don't Need Your Money to Make Loans

Govts with sovereign currencies could expand the money supply as the economy needs, debt-free, and pay people to do useful things in the process. But rules have been instituted, mostly at the behest of powerful banking lobbies, which either prevent this or commit govts to bond issuance whenever they net spend into the economy.

Well, companies need bank loans for capital assets and to support growth.

Very little of the money created by banks goes on that. Most, by far, goes to fuel competition for existing real estate. And commercial lending is not the only way to support growth.

How is the economy harm by banks creating money?

More like debt plus interest minus debt-free issuance by govt = credit and asset bubbles, especially real estate, then debt deflations e.g. 2008.

https://www.youtube.com/watch?v=iUakALXqi7s

 

[Harry Bosch]

Very little of the money created by banks goes on that. Most, by far, goes to fuel competition for existing real estate. And commercial lending is not the only way to support growth.

How is the economy harm by banks creating money?

More like debt plus interest minus debt-free issuance by govt = credit and asset bubbles, especially real estate, then debt deflations e.g. 2008.

https://www.youtube.com/watch?v=iUakALXqi7s

So, your idea is to fire all the US bankers in order to prevent another banking crash similar to 2008? Are you open to the idea that making financing more difficult for US companies could lead to another deep recession? There are some foreign owned banks operating in the US. Would you allow them to pick up the slack? Finally, I'm confused by your point that "most... goes to fuel competition for existing real estate". Are you saying that when a company buys a new property (either a larger building for growing business, or smaller building for contracting business), that it isn't important?

 

[Loren Pechtel]

There are a lot of system infrastructure attributes that unfairly benefit the owner class or the wealthy class or the corporate class. A lot of people who think the working poor are lazy forget these massive systemic advantages to which the workers have no access.

Some of these include:
[*]Binding arbitration: wherein as a condition of employment in the USA, you can be required to sign away your civil rights to a day in court over your grievance INCLUDING sexual harassment and worker safety.

In theory binding arbitration was a good idea--settle things without waiting the eternity of the legal system and without the wild swings juries are prone to. Unfortunately, in practice the arbiters have to keep their results in line with what the big guys want if they want to remain arbiters. I do not believe it was designed to be evil, it was just not designed with enough defenses against bias.

[*]Clauses that prevent you from sharing salary information with coworkers to determine if pay is fair.

You should be comparing your salary to the market in general, not specifically to your coworkers.

[*]Mandatory overtime

Agreed. There should be no such thing.

[*]below-living wages

"Living wage" is a liberal code-word for more, more, more. It lets them not expose how unreasonable their position actually is. It's been discussed on here before--there's a wide range in what different people need to live on, thus it's not possible to put a value on this.

[*]Subsidies to massive corporations like oil and gas

While I'm sure some exist much of what is reported as "subsidies" is not really.

[*]The attachment to employment of healthcare and the allowable denial of insurance to certain citizens such that entrepreneurs cannot start new companies easily because of healthcare needs.

This is not a government system and wasn't set up to benefit the wealthy. Rather, it is the result of wage freezes during WWII. As usual when the government freezes a price the market finds a way around it--in this case, offering benefits that weren't considered wages.

And the problem you are referring to was eliminated by the ACA.

 

[Loren Pechtel]

Corporate socialism. Trump for years paid little to no taxes. That is the corporate rule not the exception. There are many ways in the tax code to reduce tax burden by showing small, zero, or a loss on the bottom line. That us what tax attorneys and accountants do.

A company can post a loss for tax purposes while making money and profit.

I had an uncle who worked for a company in NYC that provided ongoing tax information and how to make maxim use.

I

Your post is pretty vague. What corporate socialism are you against? In Trump's case, he inherited real estate, made poor decisions, and suffered incredible losses. The current tax code allows losses to offset future profits. Are you against this? My company is in it's 5th year. We had massive losses the first three years. Did okay last year. This year looks very very good. But we'll pay no taxes due to the loss carry forward. It sounds like there will be people in this thread who'll be against the carryforward. It's what allowed Google to pay no taxes last year. But I can tell you, that if you eliminate this provision, there will be much less startups. Startups are great sources of new job creation and economic development.

Regular people don't get to carry forward losses to offset future taxes. Google is far from a startup. Amazon is far from a startup. Why do these corporations need these tax breaks, essentially US taxpayers subsidizing them?

They don't? If your capital losses exceed your capital gains you can deduct IIRC $3k of them, anything more than that is carried forward to next year where the same calculation is applied. You can't have a loss on regular income so the idea of an individual carrying it forward makes no sense.

 

[Loren Pechtel]

- The outsourcing of the money supply to commercial lenders.

Nearly all money in circulation is lent into existence by commercial banks with corresponding debt plus interest. That is, NOT issued by central banks (eg the Fed or Bank of England), and NOT lent from savers' deposits (or fractions thereof).

Money Creation in the Modern Economy - Bank of England

Why Banks Don't Need Your Money to Make Loans

Continuing to harp on this doesn't make it true. The banking system amplifies the money the government creates, it doesn't simply create it. And you can't realistically have a banking system without this--a 100% reserve requirement would make banking an uneconomic business.

Govts with sovereign currencies could expand the money supply as the economy needs, debt-free, and pay people to do useful things in the process. But rules have been instituted, mostly at the behest of powerful banking lobbies, which either prevent this or commit govts to bond issuance whenever they net spend into the economy.

Down that road lies inflation. Lots of inflation.

 

[Loren Pechtel]

Very little of the money created by banks goes on that. Most, by far, goes to fuel competition for existing real estate. And commercial lending is not the only way to support growth.

How is the economy harm by banks creating money?

More like debt plus interest minus debt-free issuance by govt = credit and asset bubbles, especially real estate, then debt deflations e.g. 2008.

https://www.youtube.com/watch?v=iUakALXqi7s

So, your idea is to fire all the US bankers in order to prevent another banking crash similar to 2008? Are you open to the idea that making financing more difficult for US companies could lead to another deep recession? There are some foreign owned banks operating in the US. Would you allow them to pick up the slack? Finally, I'm confused by your point that "most... goes to fuel competition for existing real estate". Are you saying that when a company buys a new property (either a larger building for growing business, or smaller building for contracting business), that it isn't important?

Deep recession?

Try epic depression!

 

[Canard DuJour]

Very little of the money created by banks goes on that. Most, by far, goes to fuel competition for existing real estate. And commercial lending is not the only way to support growth.

How is the economy harm by banks creating money?

More like debt plus interest minus debt-free issuance by govt = credit and asset bubbles, especially real estate, then debt deflations e.g. 2008.

https://www.youtube.com/watch?v=iUakALXqi7s

So, your idea is to fire all the US bankers

Don't be silly.

in order to prevent another banking crash similar to 2008? Are you open to the idea that making financing more difficult for US companies could lead to another deep recession? There are some foreign owned banks operating in the US. Would you allow them to pick up the slack?

No, I'd restrict and control (not eliminate) the power of commercial lenders to create money/debt, and relax or rescind rules preventing govt/central banks from issuing their own currency, debt-free. The functional finance model, based on Keynesianism, I've pointed to before :

Lerner's ideas were most heavily in use during the Post-World War II economic expansion, when they became basis for most textbook presentations of Keynesian economics and the basis for policy.

https://en.wikipedia.org/wiki/Functional_finance#History_of_use

Finally, I'm confused by your point that "most... goes to fuel competition for existing real estate". Are you saying that when a company buys a new property (either a larger building for growing business, or smaller building for contracting business), that it isn't important?

Of course not. Are you asking how firms would acquire commercial real estate? Same ways they do now. Mostly with retained revenues; failing that, bank loans or grants. And, no, they wouldn't be any less likely to obtain finance. The proportion of bank lending to productive firms has significantly declined since the deregulations of the 1980s. Keynes, Schumpeter and Minsky have been proven right : credit markets left to their own devices tend to shift financial resources away from real-sector investment and innovation and towards asset markets and speculation.

 

[Canard DuJour]

- The outsourcing of the money supply to commercial lenders.

Nearly all money in circulation is lent into existence by commercial banks with corresponding debt plus interest. That is, NOT issued by central banks (eg the Fed or Bank of England), and NOT lent from savers' deposits (or fractions thereof).

Money Creation in the Modern Economy - Bank of England

Why Banks Don't Need Your Money to Make Loans

Continuing to harp on this doesn't make it true. The banking system amplifies the money the government creates, it doesn't simply create it. And you can't realistically have a banking system without this--a 100% reserve requirement would make banking an uneconomic business.

Nor do your unsupported assertions make anything either true or untrue. Read the links. As it is, your comment merely indicates the popular misunderstanding of the monetary and banking system addressed therein.

Govts with sovereign currencies could expand the money supply as the economy needs, debt-free, and pay people to do useful things in the process. But rules have been instituted, mostly at the behest of powerful banking lobbies, which either prevent this or commit govts to bond issuance whenever they net spend into the economy.

Down that road lies inflation. Lots of inflation.

Down the current road lies inflation. Lots of inflation. But of asset prices rather than of consumer goods and wages. Especially of real estate and speculative financial assets. Down the current road lies private debt. Lots of private debt. An economy-crashing bubble of low wage growth, asset price inflation and private debt.

If inflation of consumer goods becomes problematic, people would be free to elect austerian govts, which they've already shown a marked propensity to do, even when there's no danger of inflation. Even when there's danger of deflation. Other possibilities include fiscal equivalents of the MPC/FOMC setting spending limits based on economic indicators, with spending priorities left to democratic govt.

Here's a Bank of England (i.e. people who actually manage the monetary system and don't mistake their opinion for fact) seminar on possible alternatives :

[YOUTUBE]https://www.youtube.com/watch?v=6uGvjOwdaUM[/YOUTUBE]

 

[ZiprHead]

Regular people don't get to carry forward losses to offset future taxes. Google is far from a startup. Amazon is far from a startup. Why do these corporations need these tax breaks, essentially US taxpayers subsidizing them?

They don't? If your capital losses exceed your capital gains you can deduct IIRC $3k of them, anything more than that is carried forward to next year where the same calculation is applied. You can't have a loss on regular income so the idea of an individual carrying it forward makes no sense.

Regular people still suffer huge losses all the time. See uninsured Oklahomans who's houses are now blocks away from the foundations.

 

[Axulus]

Regular people don't get to carry forward losses to offset future taxes. Google is far from a startup. Amazon is far from a startup. Why do these corporations need these tax breaks, essentially US taxpayers subsidizing them?

They don't? If your capital losses exceed your capital gains you can deduct IIRC $3k of them, anything more than that is carried forward to next year where the same calculation is applied. You can't have a loss on regular income so the idea of an individual carrying it forward makes no sense.

Regular people still suffer huge losses all the time. See uninsured Oklahomans who's houses are now blocks away from the foundations.

Such casualty losses are deductable:

https://www.irs.gov/taxtopics/tc515

Also:

When Your Loss Deduction Exceeds Your Income

If your loss deduction is more than your income, you may have a net operating loss (NOL). You don't have to be in business to have an NOL from a casualty. For more information, refer to Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts.

NOLs can be carried back to claim refunds on past taxes paid and/or carried forward to offset future income, just like is being discussed.

The reason to allow NOLs is perfectly logical. A year is an arbitrary timeframe to report income and pay taxes on it. Therefore, if someone has business (or casualty) losses in one period, it should be allowed to offset income in another period.

Imagine if you had to report income daily and pay taxes on it. Some days you might pay your bills, other days you collect a bunch of income. You would be paying massive taxes if you couldn't take the deductions from the days you pay your bills against the days when you receive the income. Taxes on fictitious income.

 

[PyramidHead]

It's useful to frame discussions like these in the larger context of why governments make policies that benefit the already wealthy. Without an overarching theory to explain it, we risk viewing these institutions as momentary occurrences driven by greed or irrationality. There is certainly an element of greed, but the policies are anything but irrational. And the rationale for enacting them runs deeper than any single one, which is why reformism is ultimately a dead end if you want to attack the problem at its roots. That's not to say reforms shouldn't be pursued; the important thing is not to lose sight of the need for structural transformation, otherwise (as we have seen time and time again) the reforms will be reversed or go unenforced depending on who is in charge.

 

[RVonse]

So, your idea is to fire all the US bankers in order to prevent another banking crash similar to 2008? Are you open to the idea that making financing more difficult for US companies could lead to another deep recession? There are some foreign owned banks operating in the US. Would you allow them to pick up the slack? Finally, I'm confused by your point that "most... goes to fuel competition for existing real estate". Are you saying that when a company buys a new property (either a larger building for growing business, or smaller building for contracting business), that it isn't important?

Deep recession?

Try epic depression!

At some point won't borrowing and "free" financing have to be normalized so the economy is not loaded with mal investment and stock buy backs? Without asset valuation causing ridiculous and unsustainable property values in California how does the middle class manage to buy a home there?

I am not an economist. But even I am smart enough to know that capitalism requires using money that is stable so that future decisions of capital can be intelligently made. And the stability of that money also requires a reasonable interest rate that is at least above the future rate of real inflation.

I am not sure it is a banking issue but probably a political one. But in either case, the financiers of capital are letting everyone down in a major way right now.

 

[Jimmy Higgins]

Corporate socialism. Trump for years paid little to no taxes. That is the corporate rule not the exception. There are many ways in the tax code to reduce tax burden by showing small, zero, or a loss on the bottom line. That us what tax attorneys and accountants do.

A company can post a loss for tax purposes while making money and profit.

I had an uncle who worked for a company in NYC that provided ongoing tax information and how to make maxim use.

I

Your post is pretty vague. What corporate socialism are you against? In Trump's case, he inherited real estate, made poor decisions, and suffered incredible losses. The current tax code allows losses to offset future profits. Are you against this? My company is in it's 5th year. We had massive losses the first three years. Did okay last year. This year looks very very good. But we'll pay no taxes due to the loss carry forward. It sounds like there will be people in this thread who'll be against the carryforward. It's what allowed Google to pay no taxes last year. But I can tell you, that if you eliminate this provision, there will be much less startups. Startups are great sources of new job creation and economic development.

It memory served, there was a loophole that allowed Trump to offset "profits" with other people's losses.