Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: ggersh who wrote (145637)	1/22/2019 6:36:17 PM
From: TobagoJack	Read Replies (1) \| Respond to of 217910

it could be that the tax rate, and the electorates' hankering for such, should they hanker enough to put the tax-hikers in control, is a consequence of the times the politicians are just doing what they must, per cycle of history. the politicians may think they are leaders and leading, whereas it is possible that most of them are mere puppets of history don't know, watch and brief should be instructional to all, especially those who espouse 'history doesn't matter' wsj.com The Crippling Cost of 70% Tax RatesAlexandria Ocasio-Cortez’s proposal would smother investment and innovation, leaving America poorer. Edward Conard Jan. 21, 2019 3:58 p.m. ET Newly elected Rep. Alexandria Ocasio-Cortez spent her first few weeks on Capitol Hill calling for a 70% top marginal income-tax rate, and suddenly the debate over optimal rates has reopened. To support her charge, some liberals are citing a 2011 study by economists Peter Diamond and Emmanuel Saez, which advocates for confiscatory upper-range tax rates. But a quick look at their analysis reveals grave caveats that only an advocate of higher taxes could possibly overlook. Messrs. Diamond and Saez admit that taxes can have detrimental long-term effects on growth. Yet they ignore the long-term effects of marginal tax rates on growth. Their analysis assumes there is no effect on growth when the government taxes, redistributes and consumes income that Americans otherwise would have invested. The authors grant that new taxes on high earnings would decrease work effort, but they don’t account for the reduced supply of talent reducing investment opportunities over time. They similarly assume confiscatory tax rates won’t diminish workers’ willingness to endure tough training and often tedious work in fields essential to growth, such as computer programming, accounting and engineering. Most important, Messrs. Diamond and Saez ignore how inhibiting investment, risk-taking, training and work effort slows the rate at which the economy builds productivity-compounding institutions. Companies like Google accelerate innovation by exposing American workers to cutting-edge ideas and opportunities. This exposure, together with communities of experts like Silicon Valley that facilitate the commercialization of innovation and cultural norms that encourage entrepreneurial success, magnifies the productivity of America’s talent. Punitive taxes would slow the creation of these institutions by disincentivizing the behaviors that create them. It doesn’t take much imagination to see how society benefits more in the long run from higher growth than from larger annual tax levies. Even many liberal economists agree that for every dollar investors earn on average, they create $5 of value for the rest of the economy, chiefly for their customers and workers. So why would an “optimal” tax policy maximize taxes collected on the $1 of earnings rather than maximizing the value of investment to others? One study last year that did account for taxes’ long-term effect on growth found that the optimal top marginal tax rate would be between 30% and 35%. At best, a 70% marginal tax rate would maximize federal revenue in the short term before eventually slowing the growth of America and the rest of the world. The stifling effect of reducing the value of success is clear when comparing the U.S. and European economies. With greater payoffs for success, it’s no surprise America’s most talented workers work longer hours and take more entrepreneurial risks than their counterparts in other high-wage economies. Since the commercialization of the internet in the early 1990s, American innovation has significantly outpaced Western Europe. Today the value of privately held American startups priced above $1 billion—so-called unicorns—is seven times the figure in Europe. Another discouraging aspect of Ms. Ocasio-Cortez’s tax plan is that, even putting aside its long-term costs, its short-term upside isn’t significant. The Tax Foundation finds that a 70% tax rate on incomes over $10 million would increase federal revenue by less than $30 billion a year over the coming decade—a pittance compared with the more than $800 billion deficits expected this year. The same study found that revenue would actually decrease if the new top rate were extended to capital gains as some of its backers are advocating. In truth, America runs enormous deficits because, unlike Europe, it doesn’t tax the middle class for the full cost of the government services they consume. The only way to cover the cost of burgeoning debt without growth-crushing taxes is to encourage faster economic growth. High-skilled immigration is America’s only viable option. Today innovation, and the skilled workers who produce it, drives growth. The country could potentially double its long-run growth rate by using immigration to double the six million ultrahigh-skilled workers who represent the top 5% of its full-time workforce. It could do this by redirecting the million green cards a year it currently issues to all immigrants exclusively to the world’s most talented workers—workers who pay far more in taxes than the value of the government services they consume. That would go a long way toward solving the problem. But those immigrants won’t come to America if the government confiscates their hard-earned success. Mr. Conard is an American Enterprise Institute visiting scholar, a former Bain Capital partner, and author of “The Upside of Inequality: How Good Intentions Undermine the Middle Class.”

To: ggersh who wrote (145637)	1/22/2019 9:30:20 PM
From: TobagoJack	Read Replies (2) \| Respond to of 217910

more good news, (1) that if the Davos 0.001% start to see they are wrong, then there be plenty of down sides to go around, and (2) given the outlook aggregate indicated by the chart, china and usa seem to be still ok, with Japan expecting great stuff should expectation of japan not work out, ouch - deep value should surface in the mean time the Germany and may try to stay clear of trade war given already dire outlook bloomberg.com Davos Doesn’t Think There’s Going to Be a Global Recession Simon Kennedy23 January 2019, 08:48 GMT+8 The global economy is stumbling but not falling over. That’s the analysis of investors, bankers and former policy makers attending the World Economic Forum in Davos, Switzerland, as they argue the expansion is weakening but not by enough to generate a recession. Photographer: Simon Dawson/Bloomberg “We’re slowing, but we’re still growing,” said Philipp Hildebrand, vice chairman of BlackRock Inc. and a former Swiss central banker. “The chances of a recession short of a major mistake or accident this year are limited.” Financial markets have wobbled in recent months, with the S&P 500 Index dropping 1.4 percent on Tuesday -- on concern economic weakness in the U.S. and China could barrel out of policy makers’ control and fears a trade truce may not hold. Other political flash points such as Brexit and the U.S. government shutdown have added to investors’ concerns. Blame Europe IMF sharply downgrades outlook for German, euro-area economies Source: International Monetary Fund The half-glass full attitude was on display in the International Monetary Fund’s updated outlook released on Monday. While it forecast this year would witness the softest global growth since 2016 of 3.5 percent, it left its estimates for the U.S. and China in 2018 unchanged and predicted a slight pickup worldwide next year. “The bottom line is that after two years of strong expansion, the world economy is growing more slowly than expected and risks are rising,” IMF Managing Director Christine Lagarde said. “Does that mean that a global recession is around the corner? The answer is ‘no’.” Photographer: Jason Alden/Bloomberg Davos delegates echoed that view about a decade after visitors to the Swiss alpine retreat failed to predict the 2009 recession -- the deepest since the Great Depression. “I would not even call it a slowdown,” said Jacob Frenkel, vice chairman of JPMorgan Chase International. “There is already the ingredients of ‘gee, we’re about to enter another recession.’ That’s not the case.” China ConcernsThe chief concern is that Chinese officials prove unable to cushion their economy, the second biggest and responsible for about a third of global growth. Data released Monday showed 2018 was the slowest expansion since 1990 as the government tries to rely less on investment and debt while insulating demand threatened by the trade war. “The biggest story in the global economy at the moment is the Chinese slowdown,” said Adair Turner, a former Bank of England policy maker and now chairman of the Institute for New Economic Thinking. “Right in the middle of that very difficult transition, which I think they were managing quite well, they were hit by the tariffs, hit by the trade war.” Photographer: Jason Alden/Bloomberg Fang Xinghai, vice chairman of China’s Securities Regulatory Commission, said the trade tensions with the U.S. haven’t changed the long-term direction of the nation’s economy and that the slowing is “not going to be a disaster.” Chinese policies are “very responsive and data dependent,” said Fang. Policy RiskAnother risk cited in Davos is that central banks tighten monetary policy too aggressively. That’s becoming less of a threat given Federal Reserve Chairman Jerome Powell has indicated a willingness to be more patient after raising interest rates four times last year. In the major economies there’s a “reasonable chance” that the reaction to fading growth will once again be looser monetary policy and fiscal policy than “what is now discounted in markets,” said Ray Dalio, the billionaire founder of hedge fund Bridgewater Associates LLC. Still, there is concern in Davos that when the next recession hits, central banks won’t have the scope to react given rates will likely be lower relative to the eve of prior slumps. Photographer: Jason Alden/Bloomberg “What scares me the most longer term is that we have limitations to monetary policy, which is our most valuable tool, at the same time as we have greater political and social antagonism,” said Dalio. “So the next downturn in the economy worries me the most.” UBS Group AG President Axel Weber said the European Central Bank had already missed the chance to tighten monetary policy. As for the U.S., even with its government partially shut down, Blackstone Chief Executive Officer Stephen Schwarzman said it will still grow at least 2.5 percent this year, avoiding recession. Unemployment near the lowest in 50 years is a key positive as it fans faster wage growth. “I’m not seeing an economic slowdown,” said David Abney, CEO of United Parcel Service Inc. “There is still a healthy increase in consumer spending.” Before it's here, it's on the Bloomberg Terminal. LEARN MORE