25 Hedge Fund Managers Are Worth 680,000 Teachers

[Rajiv]

Re: 25 Hedge Fund Managers Are Worth 680,000 Teachers

The answer to your question is partially in my reply to GRG55. The larger question is "Why is there that 3% mandate?" It is there to partially compensate for inflation -- and Why is Inflation there? The answer to anybody who has read Michael Hudson and Margrit Kennedy -- is usury, and the consequent need for at least nominal growth.

[Rajiv]

Re: 25 Hedge Fund Managers Are Worth 680,000 Teachers

The above is taken from a very good slide show that I am embedding below

[radon]

Re: 25 Hedge Fund Managers Are Worth 680,000 Teachers

I think the aim of the article was more along the lines of what is stated here - Wealth Disparities in U.S. Approaching 1920s Levels

Rubbish. The article was deliberately misleading in order to support a untenable political position. It was intended to capitalize on anger directed toward bankers. The authors assumed that people who already agree with their position won't bother to read it closely. And so they didn't bother to support it with any actual evidence. Its motives are as clear as the article is indefensible.

I think that the hedge fund managers were used as an example of the people who have been compensated excessively.

Based on the graph above, a strong case could be made to going back to the tax structure that existed in the late 60's and early 70's adjusted for Shadowstats inflation. The data above is based on the work of Emmanuel Saez.

That tax structure is irrelevant because nobody ever paid those rates.

The world is a competitive place. Finance and professional sports are only two of the places where the real world intrudes into your little wealth redistribution scheme. At the top of a profession talent matters as much as hard work and perseverance.

You will find that talented people who spend their entire lives working obscene hours to get to the top of their profession. Once they make it people will line up around the block to pay for their services. Their clients do this because they feel it is worth it. Maybe it's because they save them time, or produce a product that is unique in its quality, or make them more money than they could have otherwise. But instead of letting their clients decide how much the service is worth you want to have some social policy dictate it.

This article is propaganda created by people who don't want to give people the ability to become rich, instead they want to engineer social policy to make sure everyone stays poor.

Also talking of Overpaid atheletes, there was this paper from Saez - "Taxation and International Mobility of Superstars: Evidence from the European Football Market" with Henrik Kleven and Camille Landais, first draft December 2009

There was also this interview with Kapoor on Exposing Wall Street -- It contained a segment on off shore tax havens - Lehman and Beyond - 8 videos of Sony Kapoor

Maybe that should serve as a warning to governments who think they will get more money by implementing a draconian tax structure. The world is a small place and the rich will just leave, so will anyone else with a markable skill. Many countries have benefited from brain drain by fostering an environment where people can succeed.

[radon]

Re: 25 Hedge Fund Managers Are Worth 680,000 Teachers

It's polemical, at the very least it highlights how the present social order is neither what the people want and as such demonstrates a failure of democracy and the so-called free market.

In a system of society free of corruption, such persons would never have been able to pervert government authority for such extraordinary theft.

Growing corruption is an artifact of the centralization of power.

Allowing the government to expand rolls into social policies by increasing taxes only will only exacerbate this problem. We should be trying to starve the beast not feed it.

Getting rid of hedge fund managers and taking all the money out of high paid professions through taxes will not increase teachers salaries. This is not a net sum game. All that it will succeed in doing is to remove the motivation for people to be extraordinarily productive.

America had tremendous growth during a period where the federal government had less influence and no income tax. They didn't need one because they used gold and silver as currency and had no central bank.

[radon]

Re: 25 Hedge Fund Managers Are Worth 680,000 Teachers

Here is a graph of average salaries -- so if some teachers are getting $85-90k then many are geting a lot less than that. See also my reply to GRG55

Median Salary by Job - All K-12 Teachers (United States)

Compare your salary: Get a free Salary Report

I thought we were comparing the top hedge fund managers with top teacher salaries.

Information is provided by the Illinois Board of Education:

http://www.championnews.net/salaries.php

The highest salary was over 400K.

[radon]

Re: 25 Hedge Fund Managers Are Worth 680,000 Teachers

Then there is this to go along with my tax structure argument

Click on the image to see a larger image

So you're comparing one tax rate that nobody ever paid with another tax rate that nobody ever paid.

Why don't you extend the chart back a little farther to see what things looked like when the tax rate was 0%

[chr5648]

Re: 25 Hedge Fund Managers Are Worth 680,000 Teachers

The answer to your question is partially in my reply to GRG55. The larger question is "Why is there that 3% mandate?" It is there to partially compensate for inflation -- and Why is Inflation there? The answer to anybody who has read Michael Hudson and Margrit Kennedy -- is usury, and the consequent need for at least nominal growth.

Compensate for inflation, what about private sector workers getting compensation for inflation, anytime wage inflation happens the fed and .gov doing everything in their power to stop it.

The other day you posted this criticizing the progressive tax system.

http://www.itulip.com/forums/showthread.php?t=4026

I even posted there encouraging taxing the rentier/usuary class through property taxes and criticizing progressive taxation.
Now your are potentially implying an increase in progressive tax rates will solve these .gov financial and societal problems.

The system is complete ass backwards, you have people complaining or praising a free market that doesn't exist. Dreaming and Hoping to change this system with some political magic, nothing is gonna change.

It reminds me of disadvantaged boxers and mma fighters who grow up with some stupid human interest story like a single mother with a peg leg, they have all these aspirations, dreams, and hope and then some guy comes in the knocks them out with one great punch in the first round. Reality hits them right in the face. Moral = stop dreaming. Anyway, what time is American Idol on?

[radon]

Re: 25 Hedge Fund Managers Are Worth 680,000 Teachers

The answer to your question is partially in my reply to GRG55. The larger question is "Why is there that 3% mandate?" It is there to partially compensate for inflation -- and Why is Inflation there? The answer to anybody who has read Michael Hudson and Margrit Kennedy -- is usury, and the consequent need for at least nominal growth.

The demand for money expands the supply. Interest rates reflect this demand.

[BK]

Re: 25 Hedge Fund Managers Are Worth 680,000 Teachers

Median Salary of Teachers would be a More interesting Data point.

I won't belabor the Point about out of Control Teacher salaries on the East and West Coast.

Look at any newspaper of Any Town on the East and West Coast. Biggest problem is Municipal Budget - and where is 70% of the Municipal Budget Teacher Salaries and Benefits.

There are a lot fewer obscenely Paid Hedge Fund Managers. There are any Tax Payer supported Entities that owe these Hedge Fund Managers a Pension or Lifetime of Heathcare services. If the Hedge Fund Manager doesn't deliver and losing customers then he eventually closes up shop and moves on.
Towns and Cities are stuck with Teacher Salaries/Benefit packages that cannot be funded in an era of declining Real Estate Values and Tight Credit Markets. Sadly, there will be very good teachers that are downsized because of the need to trim the Budget and Teachers Union Refusal to give back any Pay Increases or Benefits.

I'm No Fan of Hedge Fund Managers - I'm not one and I don't have a family members who are....but, the Municpal Employees is Where the Problem is.....this is Not a Popular position ....but, the general public is slowly waking up to the fact that anyone in the Private Sector looks like a chump.

[radon]

Re: 25 Hedge Fund Managers Are Worth 680,000 Teachers

Median Salary of Teachers would be a More interesting Data point.

But then we would have had to use the median salary, without benefits or bonuses, of Hedge fund managers.

Taking the outliers from one sample group and comparing it to the median of another seems to be particularly useful in politics. I guess the headline of, "the median hedge fund manager salary can fund up to 8.5 teachers" just doesn't sound as nice.

[Rajiv]

Re: 25 Hedge Fund Managers Are Worth 680,000 Teachers

That is not true, because the tax receipts of those years clearly show that people were paying taxes at those marginal rates, and a significant amount of revenue was derived from that tax bracket

[Rajiv]

Re: 25 Hedge Fund Managers Are Worth 680,000 Teachers

Only partially true -- take some time out and do some in depth reading. I would suggest starting with Michael Hudson and Margrit Kennedy. Also, I think you really have to spend some time with "the crash course" -- of course you will have to temporarly put your ideological mindset on hold. Otherwise, the time spent may well be a useless expenditure.

[BK]

Re: 25 Hedge Fund Managers - how about Going after CDFIs

This article demonstrates how dumb the Average person is on Finance.

Weren't Hedge Fund Managers the First to figure out that Enron was a fraud? I thought Jim Chanos was one of the early discoverers of the cooked books at Enron.

Focus on Income disparity! Why is Washington DC one of the Most Expensive areas of the Country to live - over paid Government Employees. I know the Public Employees will lead you to believe that they will all quit if they didn't get their Pay Raises.

None of you Reading this Thread are aware of the Massive Network of CDFI (Community Development Finance Institutions) that act as Banks , in the United States and are treated as NON-Profits.
This story is too complicated for most people to follow or to Read.

These CDFIs (basically Private Investment Banks) get a Bonus from the US Treasury call New Market Tax Credits. Timmy Geithner hands out TAX CREDITS to a list of Non-profits Private Investment Banks - that invest in economically challenged Areas. What are we doing letting a Government Bureacrat hand out Tax Credits - why Can't we all be eligible for these SPECIAL Tax Credits.

These Tax Credits allow the Investors in CDFI Funds to get a 40% TAX CREDIT on THE INVESTMENT they make. Additionally, the Investor gets a Stream of Cash from his Investment that would be Taxed at the 15% Rate I believe.

The Treasury has an Entire Organization Dedicated to giving TAX CREDITS to Politically connected CDFIs. So, We PAY Government Employees to Give away Government Money- you can't make this kind of stuff up. Check out

In 2009 these CDFI s(Private Investment Banks or Funds) received $5 BILLION IN TAX CREDITS - that is future TAX REVENUES that the US TREASURY WON't BE GETTING......
http://www.cdfifund.gov/docs/2009/nm...tee%20List.pdf

My favorite is the TRFUND.COM - they gave at least $15,000 to the Obama Election Campaign and then saw their NM Tax Credit go tp $70 MILLION in 2009 - AGAIN that is $70 MILLION IN future Tax Revenue that our US TREASURY will NOT GET OVER the next 7 years.

So, while we chumps are getting all worked up about Hedge Fund Managers there is a quiet and massive Network of CDFIs that are stealing our future Tax Revenues.

The New Market Tax Credit Program was a parting gift from the Clinton Administration and was designed to help Community organizing groups.

So, wake up and Realize that HEDGE FUNDS are Not the problem.

[radon]

Re: 25 Hedge Fund Managers Are Worth 680,000 Teachers

That is not true, because the tax receipts of those years clearly show that people were paying taxes at those marginal rates, and a significant amount of revenue was derived from that tax bracket

In 2007 Warren Buffet said he paid 17.7% when the top marginal rate was 35%. Did he not make enough money to get into the top tax bracket?

I'm not arguing that the top marginal rate was not 91% or that people did not pay taxes in the 1954. I will say that none of the "rich" paid 91% of what they earned. They don't today and they didn't then. Why do you think there was a big push in 1969 to introduce the AMT. It was because 21 millionaires, in 1969 dollars, paid no taxes whatsoever because of deductions. Yet according to the chart it was still a tax utopia.

In reality that tax reform you want to reverse simply changed the structure to reflect more closely what people were actually paying. Rolling back these changes won't hurt the rich. They have armies of tax attorneys and accountants. Their earnings are whatever they decide they want to earn that year. They have political protection and loopholes. All raising top tax bracket will do is soak the middle and upper middle class who cannot afford such protection and actually live on their salaries. This will only get worse over time as inflation runs ahead and pushes them into higher tax brackets without increasing their purchasing power.

The gap in wealth narrowed in the period you cite because the value of those assets was destroyed by deflation and didn't recover for decades. Taxes had nothing to do with it.

[Rajiv]

Re: 25 Hedge Fund Managers Are Worth 680,000 Teachers

This article is propaganda created by people who don't want to give people the ability to become rich, instead they want to engineer social policy to make sure everyone stays poor.

Let us look at that statement you just made. The history of the last fifty years does not justify your claim.

Let us look at pre tax family income from 1977 to 1995 -- The picture is only slightly worse from 1995 to date.

From data from the Congressional Budget Office, "Preliminary Estimates of Effective Tax Rates" (September 7, 1999)

Average Pre-Tax Family Income (in 1995 US Dollars)

Income Category	1977	1979	1981	1983	1985	1987	1989	1991	1993	1995	1999 (Projected)
Highest 20%	$94,300	$98,300	$95,900	$99,500	$109,000	$113,000	$118,000	$111,000	$114,000	$120,000	$132,000
Fourth 20%	$49,300	$50,400	$48,400	$48,000	$49,600	$51,100	$50,900	$49,300	$49,000	$49,600	$53,000
Middle 20%	$36,400	$36,200	$34,600	$32,800	$34,200	$34,900	$35,000	$33,600	$32,300	$33,300	$35,400
Second 20%	$23,700	$23,200	$21,700	$19,800	$21,300	$21,600	$21,400	$20,600	$19,600	$20,100	$21,200
Lowest 20%	$10,000	$9,600	$8,900	$8,100	$8,700	$8,700	$9,000	$8,400	$7,800	$8,100	$8,400
All Families	$42,900	$43,500	$42,000	$42,000	$44,500	$45,800	$46,800	$44,600	$44,100	$45,700	$49,500
Top 1%	$356,000	$389,000	$367,000	$435,000	$524,000	$544,000	$635,000	$547,000	$584,000	$660,000	$719,000
Top 5%	$166,000	$179,000	$168,000	$182,000	$207,000	$216,000	$236,000	$217,000	$225,000	$244,000	$276,000
Top 10%	$125,000	$130,000	$125,000	$132,000	$148,000	$153,000	$166,000	$153,000	$158,000	$168,000	$188,000

This is price adjusted using BLS data. The situation is worse if one were to use shadowstats CPI calculator. Rough estimates using that are below - remember that this is pretax family income, and not individual income -- Individual income picture will be worse (because the percentage of two income families was more in 1995 than in 1977)

Lowest 20%

$13,000

$12,500

$12,000

$8,100

$10,500

$10,900

$10,800

$10,800

$9,700

$8,700

$8,400

In other words at the lowest quintile, real family income in 1995 was 62% of that in 1977.

This is not the situation with the top quintile, the top 10% or the top 1%. Actually it appears that real income improved for the top 10%, while it delined for the bottom 90%