Recessionomics

[jackson33]

npts2020; I think you have a sub-point, possibly a waste of resources that could be used for social needs opposed to protection, but that billion dollars worth of bombs, involved a whole list of non military business to create each bomb. Steel Mills, fabrication, mineral mining, administrative and all the transportation involved. It does end with the dropping of those bombs and if protection is not important so does the economic value.

 

Housing is probably the best example of a useful item, Where all that goes into building one home is bought by one family, spending probably up to half their income (for years, then a portion) on all it takes to own the home bought. This probably best explains the current problem, when (as Bruce mentioned) CONFIDENCE, is removed from any equation. New items, such as TV's (related items), computers (related items) and the prospect of alternative energy sources or what 'Nanotechnology' will evolve can be very productive to any economy. Transfer of money is basically an economy, the longer any dollar can circulate through an economy, before being absorbed into non productive items (usually taxes) the better that dollar will contribute to the economy...

Edited January 7, 2009 by ecoli

[ecoli]

Transfer of money is basically an economy, the longer any dollar can circulate through an economy, before being absorbed into non productive items (usually taxes) the better that dollar will contribute to the economy...

 

That's true, but dollars a traded for consumption goods. If I buy a TV, that TV will never re-enter the economy (or it could but the value would depreciate significantly). If I bought an ounce of gold instead, that constitutes a savings rather than consumption.

 

Here's my question (to anybody) during recession is it better to consume dollars for savings or for consumption?

[iNow]

Better for whom and consumption of what?

[ecoli]

Better for whom and consumption of what?

Better for longterm economic growth and consumption of anything.

 

If Barack Obama starts handing out stimulus checks should I put it in the bank (or invest in gold/ other savings) or should I go buy a TV?

[iNow]

Cool. The point I was trying to make is that it really depends on what is being consumed, and what the downstream impact is of that purchase. Also, when you say "longterm economic growth," I presume you mean US specifically.

 

This clarification is needed because if I buy a TV that was built in China, then it doesn't really help the US economy a whole lot, but would help China's. If I buy solar panels or wind turbines built in the old GM and Chrysler plants (a little foreshadowing there), and hire someone to install them, then it would have a positive effect on the US economy, but would simultaneously hurt the Chinese economy (since my dollars didn't go to the TV they built).

 

As for consumption v savings, I'm incined to think consumption is better (given the caveats above) since putting money under a mattress effectively takes it out of the economic equations completely. However, for your own personal longterm growth and well-being, savings is a good way to go. It really depends on how you define the question.

[jackson33]

That's true, but dollars a traded for consumption goods. If I buy a TV, that TV will never re-enter the economy (or it could but the value would depreciate significantly). If I bought an ounce of gold instead, that constitutes a savings rather than consumption.

 

Here's my question (to anybody) during recession is it better to consume dollars for savings or for consumption?

 

No matter what you buy, spend on, that money you give up goes on. You bought the TV or an ounce of gold, who you gave the money to will replace the TV in a store, or the person you bought the gold from may buy that replacement. If you have a savings account, invest in some stock or anything seen as 'savings' that money is far from 'out of the economy'. The Bank or the company you invest in will, turn around and invest or use your money. Pay wages or whatever on the promise you will receive -X%- interest or the company will grow your investment. The answer to your question is 'either' will have the same effect. This is why the US Government promotes savings in the first place. Oh yes, that TV remains in the economy in many other ways; Even if under warranty any repairs will be paid by some one, your cable hook up, all those billions spent trying to get products into your home by advertising or sponsoring programs and when you trash it or trade it in, a new owner takes over or the local land fill get involved.

[ecoli]

This is why the US Government promotes savings in the first place.

 

But the government isn't promoting savings right now. I disagree with this author's conclusions (that savings is bad during a recession) but there is a certain truth to it http://online.wsj.com/article/SB123120525879656021.html

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This clarification is needed because if I buy a TV that was built in China, then it doesn't really help the US economy a whole lot, but would help China's.

 

That's not completely true, though. If I help Chinese businesses by buying their TVs, this turns into investment capital that they can use to develop new TV technology that can lower production costs. Americans can benefit from these savings by having even cheaper TVs and having excess capital for other desires/products or savings/investment.

Edited January 6, 2009 by ecoli
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[npts2020]

I would disagree with the notion that taxes are the final resting place for dollars. The government has never successfully run a surplus for any significant period other than to pay off a previous deficit. That means the money has to be going somewhere i.e spent on goods, services, subsidies etc. The biggest problem is that the government is fairly inept at doing it and often gets little return on its dollar. If this can be changed through better oversight and direction of funds, IMO there is no reason government spending cannot significantly help in putting our economy back to a positive direction.

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*note: The "multiplier effect" of job creation for military spending should also be true of any other kind, so really does nothing to justify spending on military over anything else

[iNow]

That's not completely true, though. If I help Chinese businesses by buying their TVs, this turns into investment capital that they can use to develop new TV technology that can lower production costs. Americans can benefit from these savings by having even cheaper TVs and having excess capital for other desires/products or savings/investment.

 

You're absolutely correct. I (unfortunately) brushed over that caveat in the interest of simplicity and quickness when writing my previous post. However, the effect of future reduced costs is rather smaller than a direct infusion of consumption within the US (and also depends greatly on overall demand... i.e. Just b/c the manufacturer reduces their operating costs doesn't mean they have to reduce costs on the retail front).

 

 

With all of that said, besides just from the perspective of the individual, how would savings have any positive impact on the economy of the whole? Do you (or anyone) know what those folks are suggesting when they say that? That just doesn't make sense to me. The economy is (by definition) about the movement and flow of funds, not the holding of them under a mattress at your grandmother's house.

[ecoli]

With all of that said, besides just from the perspective of the individual, how would savings have any positive impact on the economy of the whole? Do you (or anyone) know what those folks are suggesting when they say that? That just doesn't make sense to me. The economy is (by definition) about the movement and flow of funds, not the holding of them under a mattress at your grandmother's house.

I assume because people tend not to save their money under a mattress but in banks.

 

But perhaps there is merit to keeping your money under a mattress. Right now the government is trying to prop up a lot of industries that may fail anyway. Would you rather have your money under a mattress or invested in a doomed business? (Assuming the rate of inflation is lower than rate of capital destruction through the malinvestments).

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However, the effect of future reduced costs is rather smaller than a direct infusion of consumption within the US (and also depends greatly on overall demand... i.e. Just b/c the manufacturer reduces their operating costs doesn't mean they have to reduce costs on the retail front).

it depends on the scale of improved productivity, but in a highly competitive environment these savings in production costs can mean a lot on the retail side. Especially for goods/services more vital to existence than televisions.

Edited January 7, 2009 by ecoli
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[npts2020]

I assume because people tend not to save their money under a mattress but in banks.

 

But perhaps there is merit to keeping your money under a mattress. Right now the government is trying to prop up a lot of industries that may fail anyway. Would you rather have your money under a mattress or invested in a doomed business? (Assuming the rate of inflation is lower than rate of capital destruction through the malinvestments).

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it depends on the scale of improved productivity, but in a highly competitive environment these savings in production costs can mean a lot on the retail side. Especially for goods/services more vital to existence than televisions.

 

At the rate the government is printing money this (the bold part) is a questionable proposition.

[ecoli]

At the rate the government is printing money this (the bold part) is a questionable proposition.

This remains to be seen. The consumer price index is a bad measure of inflation right now. The Fed is massively printing:

 

 

but the banks aren't lending this money yet. So, we're not seeing the expected inflation.

[jackson33]

IMO there is no reason government spending cannot significantly help in putting our economy back to a positive direction.

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The short answer and obviously an opinion, opposed to the majority now in charge and those that will soon be in charge of "action"....

 

Creations of FALSE BOTTOMS; Anytime in history when one or another aspect of an economy pops/burst/declines or reaches its peek in a period of time, it has declined in value until interest or the investment society again becomes interested. Whether the many during the 'Great Depression' or the hundreds of times one sector is involved, that sector will suffer until it reaches a REAL bottom. Government by intervention (over that of the private sector) creates a false bottom. In todays market the investor/consumer is NOT confident that bottom is real. Banks for instance IMO, are not now or have they been with out resources to loan funds to whom ever they please, but lack the confidence to loan based on government spending, the historic results of that spending and the (as indicated) the PRODUCTIVITY when government becomes involved. Our 15 Trillion dollar GDP, with Japan second at under 5 Trillion and the total World GDP of around 55 Trillion, has occurred with massive improvements in what each spent dollar to an eventual outcome has been based on unparalleled productivity. From mass production (Henry Ford) to Computerization this has occured...

 

The longer answer would involve circumstances leading up to a perceived problem, requiring hours to explain. Even today IMO, either the Bush or Obama administration, could make a few announcements. Most controversial and again IMO, the cause and effect of this so called crisis...

 

1- Make all Bush Tax Cuts 2003 permanent. Ceremonial for sure, since most every administration has changed some aspects of the Tax Code. Obama could make a few adjustments, reduce the Corporate Tax down to 25% or so, at least in line with most the industrialized world. This alone and by noon the next day the markets (all) would be up 20%.

 

2- Shut down all regulations of American Resources on public land and/or off shore. This would involve 'Executive orders' taking authority away from Courts or in many cases States. The price of oil would drop to 15-20/B and remain there, whether on not much activity actually followed. There are just so many people/industry involved and are working around the world already, even today. Side note on this; Road and Infrastructure Building Company's

are already also going 100%. New ones can't form for the same reason the existing one can't increase in size. Availability of labor in most places or the cost of labor in other unionized areas. Where I live in SE NM, we just completed the largest Road Project in NM in years. Since its over, guess its OK to say most all workers were not from the US, legal or not I don't know for sure.

 

3- Pass an 'Immigration Reform Act', should have passed two years ago. Even in this period of increasing unemployment, there are some jobs people living in this country (from where ever) just won't do and other jobs they want to many perks or wages to make the company competitive in a World Economy. I am familiar with long haul 'Trucking Company's' and would hate to list the failures in this business over the past 50 years. Rail cars have replaced over half the long haul drivers. Side note; Did you know nearly half the Medical Doctors are foreign born or first generation? Seems many will no longer go through 16-20 years of education and 4-7 years of internship.

 

4- Deregulate the auto industry, at least allowing another 10 years or so, for the 'Big Three' to retool into what ever alternative energy emerges on top. The Janesville Wisconsin GM Chevrolet Plant, closed 2 week ago, no longer feasible to retool into anything. It was the oldest US Plant (built 1919) but many others nearly as old still exist. As for emission and/or m/g rules, at least hold to todays and forget the 2011 requirements or any of the State requirements now being proposed or placed into law. I am not sure any auto maker can profitably produce an auto/truck or that the public will in fact pay for that product.

 

There are more, but have offered a scenario where todays problems have stemmed from or where continuous problems will persist. I haven't bothered to go into the Health Care Service, Educational Programs or pending problems in SS, which government will most certainly effect in short order. IMO again, could all be avoided and won't be...

 

 

 

ecoli; After 9/11 and in the current atmosphere, government is saying to 'go about business as usual', I don't think they have dropped the savings issue as a foreseeable problem. This probably has as much to do with 'baby boomer's' as anything, who in general are going to be dependents on society, if they don't save at a much quicker rate, statistically anyway.

[npts2020]

Jackson33; I would tend to agree that massive govenment spending creates a false bottom, however, I think that applies only to things government does not normally spend money on. The price of things like roads, sewer systems, water supply pipelines, etc. are not much affected by whether the government or someone else spends the money, since it is the government that undertakes the ovewhelming majority of those sorts of expenditures anyway. I don't think individuals should be required to pay income taxes (questionably legal anyway IMO) but the companies they work for should. The reason being that the tax code is so complex that the ones who have to hire accountants anyway should just have them keep track of it all. We can argue about how that is done exactly and at what level but it would simplify things for most people and make one less thing they can get in trouble with their government over.

The rest of your post seems to me like a prescription for corporate anarchy, IMO. It seems to me corporate America needs more regulation, not the indvidual citizens giving up their rights to corporations for corporate "freedom".

[ecoli]

Jackson33; I would tend to agree that massive govenment spending creates a false bottom, however, I think that applies only to things government does not normally spend money on. The price of things like roads, sewer systems, water supply pipelines, etc. are not much affected by whether the government or someone else spends the money, since it is the government that undertakes the ovewhelming majority of those sorts of expenditures anyway.

That's questionable... it's true that private corporations bid on these construction projects which are ultimately run by governments. I wonder if prices would come down if these projects were operated by private corporations... Like instead of taxes, people would be charged to drive on roads based on tolls, etc. I suspect it would, but only if people could change the way the think about supposedly "public" services.

 

 

The rest of your post seems to me like a prescription for corporate anarchy, IMO. It seems to me corporate America needs more regulation, not the indvidual citizens giving up their rights to corporations for corporate "freedom".

Corporate america needs its freedoms too, although obviously not at the expense of individual freedom. Still markets innovate better with less regulations, but don't work well at all when markets aren't kept free. As in, the ability for entrepreneurs to enter markets freely and some form of copyright law.

[Mr Skeptic]

That's questionable... it's true that private corporations bid on these construction projects which are ultimately run by governments. I wonder if prices would come down if these projects were operated by private corporations... Like instead of taxes, people would be charged to drive on roads based on tolls, etc. I suspect it would, but only if people could change the way the think about supposedly "public" services.

 

I don't think that would be acceptable. The right to travel is constitutionally protected, and there are privacy (or convenience) issues for charging based on road usage. Additionally, road ownership would be like a monopoly regardless of how many owners there were, as people likely won't have a good alternative to use any particular road.

[ecoli]

I don't think that would be acceptable. The right to travel is constitutionally protected,

though not necessarily with automobiles

and there are privacy (or convenience) issues for charging based on road usage.

how is this any different than the current method of tolling?

 

Additionally, road ownership would be like a monopoly regardless of how many owners there were, as people likely won't have a good alternative to use any particular road.

different companies would own different roads, thus competing with each other and other forms of mass transit.

 

edit: now that I think of it, private road ownership probably would promote carpooling to cut the costs of travel even more.

[Sisyphus]

Privatizing all roads is a tempting idea, but ultimately untenable, I think. It's just not something that can support an effective market, since consumer choice is necessarily insufficient, and local monopolies would be way too easy. If somebody buys up the main roads in your area, it's not like you can choose to use the roads in a different area. And entrepreneurs can't come in and build their own roads to compete, since there's just no place for them. Of course, it might make things so miserable for drivers that it reverses suburban sprawl, so it might actually be a good thing, anyway...

[Phi for All]

That's questionable... it's true that private corporations bid on these construction projects which are ultimately run by governments. I wonder if prices would come down if these projects were operated by private corporations...

Do you have any examples of a formerly government-run entity that was taken over by a private corporation where prices did come down? I can't see past my monthly energy bill atm.

[npts2020]

That's questionable... it's true that private corporations bid on these construction projects which are ultimately run by governments. I wonder if prices would come down if these projects were operated by private corporations... Like instead of taxes, people would be charged to drive on roads based on tolls, etc. I suspect it would, but only if people could change the way the think about supposedly "public" services.

 

I fail to see how changing control from an entity whose main regard in running an enterprise is the betterment of its citizens (in theory anyway), to one whose only goal is to make a profit will benefit the majority of us. Maybe someone can explain to me exactly how that works.

 

 

Corporate america needs its freedoms too, although obviously not at the expense of individual freedom. Still markets innovate better with less regulations, but don't work well at all when markets aren't kept free. As in, the ability for entrepreneurs to enter markets freely and some form of copyright law.

 

Well, it seems to me the more "freedoms" corporations enjoy, the fewer most of the rest of us have. How is it to anyone's (other than those making money from it) benefit to allow enterprises to cause oil spills in the oceans, dump toxic chemicals into rivers and lakes, or cause acid rain? How is it to the majorities advantage to allow wages to be depressed to the point where the lowest paid workers in the world become the standard? By the standard you have stated above, the last couple of decades of the 19th century should have been among the most innovative in history, is this true (hint, try to think of major corporate advances from that time)? One of the problems with allowing corporate anarchy (or "freedom" if you prefer), is that all of the rights, privileges, and responsibilities I have ever read about in any of our republic's founding documents apply to individuals not corporations. In fact, there is nothing in them that I have ever seen that even gives a corporation a legal right to exist much less any specific rights or priveleges.

[ecoli]

Do you have any examples of a formerly government-run entity that was taken over by a private corporation where prices did come down? I can't see past my monthly energy bill atm.

 

telephone services used to be state owned. I don't have stats of relative prices, but I'm almost sure prices came down when they were privatized. Though the point was made before (Sisyphus) that the type of infrastructure your dealing with for roads would be completely different.

 

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Privatizing all roads is a tempting idea, but ultimately untenable, I think. It's just not something that can support an effective market, since consumer choice is necessarily insufficient, and local monopolies would be way too easy. If somebody buys up the main roads in your area, it's not like you can choose to use the roads in a different area. And entrepreneurs can't come in and build their own roads to compete, since there's just no place for them. Of course, it might make things so miserable for drivers that it reverses suburban sprawl, so it might actually be a good thing, anyway...

 

The last point speaks volume and demonstrates how government ownership distorts markets. This is not a problem if we all agree that government is doing the right thing anyway, but (sufficiently protected) markets tend prevent the sort of inefficiency you see with suburban life (great example).

 

A thought about residential streets: you have a good point because land in this sense is a very finite resource. Perhaps auctioning off highways would be a better starting point. I'm not sure sure that even private ownership of residential streets would constitute a monopoly, however, because assuredly innovation would come up with new ways to travel. (subways, flying cars??).

 

I fail to see how changing control from an entity whose main regard in running an enterprise is the betterment of its citizens (in theory anyway), to one whose only goal is to make a profit will benefit the majority of us. Maybe someone can explain to me exactly how that works.

Gladly. The basic point is that profits incentivize. Yes corporations seek to make profits, but you have to remember, they're always competing with another corporation who's trying to after the same market share. That never ending search for profits drives innovation, to cut costs and improve the quality of life.

 

In this way, capitalism works for citizens better than government ownership, because there is little incentive to reduce costs.

 

 

Well, it seems to me the more "freedoms" corporations enjoy, the fewer most of the rest of us have.

Perhaps that's true in today's world but, intellectually, its a false dichotomy.

 

How is it to anyone's (other than those making money from it) benefit to allow enterprises to cause oil spills in the oceans, dump toxic chemicals into rivers and lakes, or cause acid rain?

It's not for anyone's benefit not, even for the corporations who risk long term sustainability for immediate profits.

 

The answer is better consumer awareness and better enforcement of property rights. Meaning, consumers need to understand environmental impact before making purchases (which is currently happening in markets anyway) and acts of environmental degradation need to be punished in a court system based on the perceived value done to common (or other people's private) property.

 

 

How is it to the majorities advantage to allow wages to be depressed to the point where the lowest paid workers in the world become the standard?

In very brief, this keeps unemployment and prices low which lowers the cost of livings to come into line with actual wages.

 

By the standard you have stated above, the last couple of decades of the 19th century should have been among the most innovative in history, is this true (hint, try to think of major corporate advances from that time)?

Profit-driven innovations happen only in a free market where competition is not driven out by illegal activities. During the early days of the industrial revolution government intervention was low, but illegal corruption wasn't (basically government enforced monopolies) and things like property rights and copyright laws were relatively unenforced.

 

Competition works, and needs only limited government oversight, but the oversight is very important for the system to work.

 

One of the problems with allowing corporate anarchy (or "freedom" if you prefer), is that all of the rights, privileges, and responsibilities I have ever read about in any of our republic's founding documents apply to individuals not corporations. In fact, there is nothing in them that I have ever seen that even gives a corporation a legal right to exist much less any specific rights or priveleges.

 

The protection of individual liberties naturally leads to capitalism, but not corporate anarchy in the sense your thinking of. Corporate anarchy stems from the type of cronyism and government-corporate complexes that are illegal at the expense of individual liberties and purposefully limit competition.

 

Competition is bad for business owners, because it restricts profits, but it's ultimately good for everyone in the market because it improves the standard of living. Any type of behavior that deviates from this pattern is not typically a result of free market capitalism.

Edited January 8, 2009 by ecoli
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[jackson33]

Jackson33; I would tend to agree that massive govenment spending creates a false bottom, however, I think that applies only to things government does not normally spend money on. The price of things like roads, sewer systems, water supply pipelines, etc. are not much affected by whether the government or someone else spends the money, since it is the government that undertakes the ovewhelming majority of those sorts of expenditures anyway. I don't think individuals should be required to pay income taxes (questionably legal anyway IMO) but the companies they work for should. The reason being that the tax code is so complex that the ones who have to hire accountants anyway should just have them keep track of it all. We can argue about how that is done exactly and at what level but it would simplify things for most people and make one less thing they can get in trouble with their government over.

The rest of your post seems to me like a prescription for corporate anarchy, IMO. It seems to me corporate America needs more regulation, not the indvidual citizens giving up their rights to corporations for corporate "freedom".

 

Think your (and others) are confusing State and the Federal Government. Since 1980 the US Federal Government has issued 'Block Grants' (by policy) to States based on population for most whatever they are involved with. Most infrastructure expenditures by States is a combination of State/Federal Funds, neither necessarily collected for a specific purpose. You mentioned roads; Gas/Diesel Taxes, collected specifically for 'Roads/Bridges/Repairs or maintenance' in most States is far above the Federal 18.5G/24D per gallon, but percentage wise pay far less than 10% of the actual cost. Toll Road Receipts, do not go to the Federal Government, are the responsibility of States to maintain and are 100% paid for by private of State Funds. Additionally, the only Federal Assistance for Highway Construction/Maintenance are for the National Highways, not State/County highways or city streets (unless part of some National Highway). This includes any bridges, tunnels or whatever infrastructure exist on any roadway. Then the States are obligated to offer for bidding (contracts) anything being built in their individual States, not the Federal, even work on the Interstate System. There are certain requirements, the Interstate System having similar limitations in all States and much less restrictive on other National Roads. The point of this is, unless the Federal, under some stimulus program has a means to offer 'Categorical Grants' and then enforce any requirements, even to simply being used for the purpose requested (they do not have the means) the entire idea is impractical. I don't think the Sewer System of any City/Town is Federal Responsibility.

 

Most people don't pay Federal Income Tax, to begin with, you know all the current arguments. As for legal, think you know Congress has the authority to Tax and can tax whatever they want. If anything is Illegal it would be Social Security and most everyone does pay this. If wanting to argue legality, would question 'forced savings account' which is the premise of the system. On Corporate Tax Accounts, I do agree good Tax Attorney's can keep these taxes down, legally and where small companies can't afford quality accountants, can become costly. Every year thousand of truck or rail car product is en-route to someplace from 12-30 to 1-2, to avoid some tax, sometimes even going through Canada, the same for payments due and a host of things to get out of inventory tax or posting profits. It part of the game, but remember most the Corporations you have in mind (publicly owned) pay absolutely NO taxes in the first place. They collect from the consumer...

 

On losing rights to the Capitalistic System, I am a bit confused. You have every right to become part of that system, can buy stocks in some company (or not) buy the products/services of some company (or not) and yet receive all the benefits of a competitive system. The Wal Mart Story is true and if you do shop at Wal Mart or some other big retailer your going to save a great deal of money over buying the same products from a host of small retailers. I venture to say in 30 years or so, prices paid by the consumer today will still be around or if nothing else, the availability of products to consumers will be enhanced. That is if government, doesn't get involved through taxation of popular products seen by a few as anti-environmental, harmful to people or some species, too extravagant, not extravagant enough or the shape/size/color is offensive to some one else. If your over 30, you have lost rights, but from government, not the Corporate Structure...IMO.

[iNow]

Most people don't pay Federal Income Tax, to begin with, you know all the current arguments.

 

Please clarify/support this statement. I've got a significant portion of every one of my paychecks which shows otherwise.

[ecoli]

Please clarify/support this statement. I've got a significant portion of every one of my paychecks which shows otherwise.

 

http://www.usatoday.com/news/politics/2008-10-21-2191142216_x.htm

 

40% of Americans don't pay federal income tax. I believe its because they are able to claim liabilities to offset their tax rate, so their marginal rates are zero. In other words, they have no taxable income.

[jackson33]

Please clarify/support this statement. I've got a significant portion of every one of my paychecks which shows otherwise.

 

Should have said most 'filers' don't' pay any or 'significant amounts'. In 2006 of the 100% of filers paid IRS as Income tax...50% of people, paid 2.99% of the total and the other 50% paid 97.01%. It is based on a 'Adjusted Gross/Taxable Incomes' of 31,987, or wages minus deductions (itemized or not). Below 31,987 AGI paid the 2.99%. Every wage earner, whether 2 or more in the same family pays somewhere around 16% in SS/Medicaid Taxes, up to around 97,000, regardless of deductions or whether Income taxes are due. I do understand an employer pays 1/2, but consider that part of the employees cost. Ironically the self employed person pays SS/M only on the profits reported, ATI to the employee, not the income received, though does pay the entire amount, him/her self.

 

Side note; On you personal check deductions. You have the option to claim dependents, which dictates your paycheck deductions for all taxes. Most folks use this as a saving account, claim -0- dependents, not very smart, and receive up to 100% back each year. Others choose to use the 'Standard Deduction' when in fact many would be far better off 'itemizing deductions.

 

Another factor would be retired folks, who live off investments, dividends or property gains. These people, including myself, pay taxes not necessarily Income, but statistically added to those paying 'Income Taxes'. Millions of others on disability or some form of welfare, are limited to earning, don't file and assumed not required.

 

Most PEOPLE, don't pay 'Federal Income Taxes'...