Tax breaks are now social welfare

[TeeDub]

I never felt so privileged before.    I just thought of it as "not gouged so much."

From the article...

Three programs make up most of this "hidden welfare state," as another scholar calls it. The first is employer-based health insurance, which is subsidized by the ability of businesses to deduct some of the costs from their taxes. The second is the home mortgage interest deduction for individuals, and the third is the creation of tax-free retirement accounts, into which employers and employees can contribute. Yale political scientist Jacob Hacker calculates that such "tax-advantaged" programs make up almost a third of America's social welfare spending.


http://www.latimes.com/news/opinion/commentary/la-oe-rodriguez-submerged-20110228,0,7749424.column

[Red Arrow]

I never felt so privileged before.    I just thought of it as "not gouged so much."

You have the wrong perspective.  It's not your money, it's the governments'.  They allow you to keep some for your amusement.

401K accounts are tax deferred, not tax free.  I'll be paying tax on both the prinicple and interest when I start withdrawing it.  The "loss" to the government is that I will likely be in a lower tax bracket.  They could fix that by only having one bracket.

[we vs us]

Theoretical question:  why is money "yours"?  Why isn't it the government's?  You worked for it, but the government decided it should exist, printed it, and loaned it to the banks.  They then lent it to someone else who spent it into the economy.  It made its way to you because someone bought you or your boss's goods or services.  You got paid out of that.  So in that entire cycle, why did you decide that the money belongs to you?  

[Red Arrow]

Money is just a convenient way to trade goods and services.  If I cut your lawn, I could charge you a bushel of apples that you grew in your yard.  But I don't need a bushel of apples.  I need a bag of rice.  The guy with the rice doesn't need apples either.  He wants some pork.  And so on.  The piece of  paper may belong to the government but that is all.

Edit: grammar check

[Gaspar]

Theoretical question:  why is money "yours"?  Why isn't it the government's?  You worked for it, but the government decided it should exist, printed it, and loaned it to the banks.  They then lent it to someone else who spent it into the economy.  It made its way to you because someone bought you or your boss's goods or services.  You got paid out of that.  So in that entire cycle, why did you decide that the money belongs to you?  

Excellent argument.  Once upon a time, our currency was backed.  Today it is not.

[Townsend]

Excellent argument.  Once upon a time, our currency was backed.  Today it is not.

It's backed.  If it was not, it would be worth the same as my Townsend Bucks.  Cha-ching

[swake]

Excellent argument.  Once upon a time, our currency was backed.  Today it is not.

Please, please, please don't take us down the Ron Paul rabbit hole.

[we vs us]

It's backed.  If it was not, it would be worth the same as my Townsend Bucks.  Cha-ching

So wait.  Those Townsend Bucks are worthless?  Next you'll tell me that my Dave and Buster's coupons won't spend at Reasor's! Unpossible!

[Red Arrow]

Dollar bills used to say Silver Certificate rather than Federal Reserve Note.  You could take a Silver Certificate dollar bill to the bank and get a real silver dollar (coin). My grandfather used to do this for each of his kids, their wives (dad had 2 brothers but no sisters), and the grandkids each Christmas until it was no longer allowed. I think it was around 1965 when silver coins were no longer made of silver.  I believe the official backing was at $35 per ounce (troy) of gold except citizens weren't allowed to own gold except for jewelery, dental work and perhaps a few other examples.  

[Red Arrow]

So wait.  Those Townsend Bucks are worthless? 

About like the Federal ones.

[we vs us]

About like the Federal ones.

Thank god. 

If federal dollars were backed by something that was finite and actual, we'd be unable to solve for inflation.  Our money would be completely beholden to whoever owned the biggest gold (or silver, or copper, or dirt) mine, and however much they chose to pull out at any given time.  We would have zero control over the worth of our currency and we would be vulnerable to all sorts of fluctuations -- not just inflation but currency runs, cornered markets, etc.  All the things that made early Industrial economies so remarkably unstable.

Don't get me wrong:  the Fed's current method has its own problems and pitfalls, but unlinking our currency from gold, frankincense, and myrrh -- finite resources that can be controlled by others -- was an exceptional financial innovation.

[Gaspar]

Please, please, please don't take us down the Ron Paul rabbit hole.

Just responding to the "why is the money yours?" question.  The answer that no one has bothered to provide, and what WevsUs does not get is:

No, the money is not yours, the value is.  The value belongs to you. 

Once again WevsUs' own words provide an awesome window into his thinking:

It made its way to you because someone bought you or your boss's goods or services.  You got paid out of that.  So in that entire cycle, why did you decide that the money belongs to you?

In red:
He takes all responsibility off of the productive labor of an individual and places it on the buyer or the boss.  Excellent!  What about the production of the individual?  In his view it seems that money/wealth is a game of chance, and your ability to obtain money is somehow granted by the government.

We trade production for value.  Money is simply a representation of that value.  It is the value that moves through the economy, and value is perceptional.  Otherwise the cost of all labor, production and items would be dictated by a central bank.  Labor would be regulated and therefore centrally assigned by some government body.  There is a word for that type of system.

[swake]

Tax breaks are social welfare when they aren't equally given to all taxpayers.

[we vs us]

Just responding to the "why is the money yours?" question.  The answer that no one has bothered to provide, and what WevsUs does not get is:

No, the money is not yours, the value is.  The value belongs to you. 

Once again WevsUs' own words provide an awesome window into his thinking:
In red:
He takes all responsibility off of the productive labor of an individual and places it on the buyer or the boss.  Excellent!  What about the production of the individual?  In his view it seems that money/wealth is a game of chance, and your ability to obtain money is somehow granted by the government.

We trade production for value.  Money is simply a representation of that value.  It is the value that moves through the economy, and value is perceptional.  Otherwise the cost of all labor, production and items would be dictated by a central bank.  Labor would be regulated and therefore centrally assigned by some government body.  There is a word for that type of system.

But that's my point.  Money isn't worthless until you work for it.  That's not the point in the cycle where we place value onto it.  It starts to have value when the government places it in the account of a given bank and they start lending it out.  I don't particularly like that, and it gives banks far too much power but it is what it is.  That's how the Fed puts money into the economy.

Of course the work you do and the work I do has value, but it's pegged where it is by a variety of different forces, many of which are out of my control (and yours).  I can control the volume of my work, I can control -- to a degree -- the knowledge I bring to the table, and I bring my native ability to the table.  I may even be able to control (to a degree) the people who work for me. But I can't control the market for my work, I can't control my company's hiring processes, and I can't control what the market for my services says I'm worth.  All of these things are more powerful than what I can personally bring to any table. 

So yes, much of what you can accomplish in the marketplace is based on luck and chance, definitely as much as your hard work and native ability.  I appreciate your faith in self-reliance but I think it pushes you into this weird solipsism and rigid adherence to ideology when faced with the wholesale failure of economies that we've just seen. It places you directly against the suffering of the country.  Literally millions of people have been caught in this destruction, and at this point it's taken up the guilty and innocent alike.  Self-reliance has virtually no role to play in some of these things. 

[Gaspar]

But that's my point.  Money isn't worthless until you work for it.  That's not the point in the cycle where we place value onto it.  It starts to have value when the government places it in the account of a given bank and they start lending it out.  I don't particularly like that, and it gives banks far too much power but it is what it is.  That's how the Fed puts money into the economy.

. . .

So yes, much of what you can accomplish in the marketplace is based on luck and chance, definitely as much as your hard work and native ability.  I appreciate your faith in self-reliance but I think it pushes you into this weird solipsism and rigid adherence to ideology when faced with the wholesale failure of economies that we've just seen. It places you directly against the suffering of the country.  Literally millions of people have been caught in this destruction, and at this point it's taken up the guilty and innocent alike.  Self-reliance has virtually no role to play in some of these things. 

We are getting closer to understanding, but our paradigms are so very different.

Red:
"It starts to have value when the government places it in the account of a given bank and they start lending it out." No. this is not when it achieves value.  At this point it is the most vulnerable.  It achieves value only after the entity that receives the loan turns a profit on it.  Until that time it is a gamble, a wager on the success of the entity loaned to.

This is why the whole Fannie/Freddy thing was able to almost topple our economy. 

Green:
"Self-reliance has virtually no role to play in some of these things." Wrong!  The ability of the individual to bounce back is directly related to the dependence or lack thereof that they have allowed themselves to become subject to.

Recessions and depressions teach people very hard and important lessons.  Self-reliance is at the heart of each of those lessons.  My Grandmother is responsible for filling my head with most of the silly thoughts about self-reliance that I still carry to this day.  Though the stories irritated me as a child, she knew that they would be of great merit to me as an adult.