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One for the Economics Guru's


Imploder
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Hi All, the hub has got some pretty insightful and Knowledgeable people in it. So this one is for the economics gurus. I just read this article on Moneyweb about the downgrading of the USA Sovereign Debt.

 

Money Web Article

 

Was the USA's big mistake making the bailout play during that whole credit crisis in '08?

 

Was it a short term plan that just delayed the inevitable?

 

If someone could paint a picture of where we would be three years on if they had just let it be and no bailout was provided I would love to hear your ideas.

 

Thanks

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In a nutshell - no bailout, companies go bust and therefore a highly diminished tax revenue stream. Big Business is the primary source of a country's tax, and any large dip in that figure could spell disaster...

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How about me asking you a simple question?

 

Do you think a debt addict can be cured by issuing him more debt without putting him in a rehab facility?

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How about me asking you a simple question?

 

Do you think a debt addict can be cured by issuing him more debt without putting him in a rehab facility?

 

Not at all... In this instance, the US of A is the debt addict, and needs to wean themselves off asap, without causing the rest of the world to collapse at the same time (very easily done if they call in their debts owing)

 

In the case of the bailout grants though, they were a necessary evil, put there to ensure that things didn't go even more pear shaped with their skewed economical system.

 

They, for one, need debt counselling, methinks. As well as needing to cut their spending drastically.

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Big Business is the primary source of a country's tax,

Not sure you are right here... You might want to double check on that one.

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Hey TW... Double checked, and seen the figures you refer to...

 

Seems as if "corporation" tax revenue is 1/5th of the total individual tax revenue.

 

But - "corporation" tax revenue does not include tax revenue from partnerships & what they term "S Corporations" - simply businesses that have their income taxed in the hands of the shareholder.

 

So - the actual figure arising from business income (I am including partnerships in this) could still be assumed as being more than that arising from personal taxation...

 

Edit - source of the figures: My link

Edited by cptmayhem
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Not sure you are right here... You might want to double check on that one.

 

Good question that Topwine

 

2008 projections for the US fed, the latest easily findable by me,in USD

 

1,146 billion - individual income taxes

275 billion - corporate income taxes

906 billion - social security taxes

81 billion - excise taxes

25 billion - estate and gift taxes

25 billion - customs duties

47 billion - miscellaneous receipts

TOTAL - 2,506 billion

 

What may skew these numbers is that these are federal taxes, the individual states also charge various taxes etc. to companies and persons in addition to these.

 

However, bottom line is that income taxes in both normal and social security forms comprises 82% of their tax receipts. Does seem a bit high. I gather that for SA, the split is about 33% in income tax, 33% is business tax, the rest is VAT, Fuel levies etc. combined. Don't quote me though..

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Good question that Topwine

 

2008 projections for the US fed, the latest easily findable by me,in USD

 

1,146 billion - individual income taxes

275 billion - corporate income taxes

906 billion - social security taxes

81 billion - excise taxes

25 billion - estate and gift taxes

25 billion - customs duties

47 billion - miscellaneous receipts

TOTAL - 2,506 billion

 

What may skew these numbers is that these are federal taxes, the individual states also charge various taxes etc. to companies and persons in addition to these.

 

However, bottom line is that income taxes in both normal and social security forms comprises 82% of their tax receipts. Does seem a bit high. I gather that for SA, the split is about 33% in income tax, 33% is business tax, the rest is VAT, Fuel levies etc. combined. Don't quote me though..

 

Ditto - it is a good Q, Topwine... And I echo Patham's sentiments here. The portion attributed to personal & social security seems VERY skewed.

 

What interested me in that little link was that the amount of returns for Partnerships was over 3m, vs 212k odd for companies. So I don't think that one could assume (from that data at least) that individuals make up the highest component ito tax revenue.

 

And call it what you like, income into a partnership is still business income, in my opinion. Even though it is only taxed in the individual partners' hands.

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