Under 55? You could be screwed!

[Dzan]

I love his "few fixes" - Increase taxes, increase wages, create more jobs. Well thanks, Capt. Obvious. I wonder why our government hasn't just done that?

Because it has one political party that only believes government spending can create jobs when that money is spent on the military, and another party that is too cowardly to fight over it.

[waddsworth]

That was a rhetorical question.

[Dzan]

a corporate income tax cut helps the 1%? How does that even make sense? Corp income tax only appllies to C corporations. For anyone to get get income out of the corporation they have to pay their normal tax, PLUS the corporate tax (unless they are paid through wages, in which case its just the personal income tax rate). In any case our corporate income tax in america is quite high. If anything revenues have dropped as corporations have found ways to hide money from our "higher than most corporate" tax rates.

I can think of a couple of scenarios where corporate tax rates benefit the wealthy, though I wouldn't speak for the author about how exactly he was referring. My list, in order of importance from least to most...

1. There is a tax loophole that allows corporations to be partnered with individuals with the intention of accruing interest on an investment and giving the proceeds of the investment to the individual tax free down the road not as a dividend or as partnership income but as a 'return of capital.' One of the few (legal) ways you can turn a $1,000.00 investment into a $1,000,000.00 investment. I'm not personally familiar with the specifics of this arrangement because in my practice I don't deal with clients who are hundred-millionaires, but I know this loophole exists and people are exploiting it.

2. People with Deferred Income Accounts with very large corporations (like board members, and C-level execs) care a lot about corporate taxes because the costs of the Deferred Income accounts are passed on to the shareholders, and the lower the tax rates get the more they can put into their deferred accounts.

1. People who make a significant fortune every year from dividend income (the 0.1%?) stand to gain quite a bit of income from the lowering of corporate tax rates. And since dividends are rather lightly taxed themselves, it's like a double win.

I'm sure there are more but those are the main ones that jump out.

[Aaron Peluso]

I can think of a couple of scenarios where corporate tax rates benefit the wealthy, though I wouldn't speak for the author about how exactly he was referring. My list, in order of importance from least to most...

1. There is a tax loophole that allows corporations to be partnered with individuals with the intention of accruing interest on an investment and giving the proceeds of the investment to the individual tax free down the road not as a dividend or as partnership income but as a 'return of capital.' One of the few (legal) ways you can turn a $1,000.00 investment into a $1,000,000.00 investment. I'm not personally familiar with the specifics of this arrangement because in my practice I don't deal with clients who are hundred-millionaires, but I know this loophole exists and people are exploiting it.

2. People with Deferred Income Accounts with very large corporations (like board members, and C-level execs) care a lot about corporate taxes because the costs of the Deferred Income accounts are passed on to the shareholders, and the lower the tax rates get the more they can put into their deferred accounts.

3. People who make a significant fortune every year from dividend income (the 0.1%?) stand to gain quite a bit of income from the lowering of corporate tax rates. And since dividends are rather lightly taxed themselves, it's like a double win.

I'm sure there are more but those are the main ones that jump out.

I believe that all of these have to do with the capital gains tax rate not the corporate tax rate.

1) I believe in this example you are referring to a carried interest in which income is taxed as ROI? And even if you are referring to something else it seems that this would be a loophole issue not a corporate tax rate issue? Raising or lowering the corporate tax rate alone would not affect such a loophole that I can see?

2) I dont really understand this one honestly. Google didnt help.

3) Dividend income almost always derived from money that has already been taxed through income or estate taxes. So the dividend tax is only on the growth of after tax savings. Profits from such investment is taxed but there are heavy restrictions on writing off investment losses. The risk, lack of writeoffs and double taxation elements are justifications for the 'slightly' lower rates (for most taxpayers).

In any case a lower corporate tax rate would make company net income go up. The company would then be free to either invest in new R&D, inventory etc (benefiting workers and common folk) or increase dividends (benefiting shareholders, including grandmas) or build savings and stability for the company (good for all), or some mix of all three. In any case I think its pretty hard to make the argument that a lower corporate tax rate is a handout to the 1%.

[Aaron Peluso]

I am all for closing BS loopholes in conjunction with lowering the corporate tax rate to competitive levels. There is no reason small businesses should be paying 35% while GE pays 2%.

[Dzan]

I believe that all of these have to do with the capital gains tax rate not the corporate tax rate.

1) I believe in this example you are referring to a carried interest in which income is taxed as ROI? And even if you are referring to something else it seems that this would be a loophole issue not a corporate tax rate issue? Raising or lowering the corporate tax rate alone would not affect such a loophole that I can see?

2) I dont really understand this one honestly. Google didnt help.

3) Dividend income almost always derived from money that has already been taxed through income or estate taxes. So the dividend tax is only on the growth of after tax savings. Profits from such investment is taxed but there are heavy restrictions on writing off investment losses. The risk, lack of writeoffs and double taxation elements are justifications for the 'slightly' lower rates (for most taxpayers).

In any case a lower corporate tax rate would make company net income go up. The company would then be free to either invest in new R&D, inventory etc (benefiting workers and common folk) or increase dividends (benefiting shareholders, including grandmas) or build savings and stability for the company (good for all), or some mix of all three. In any case I think its pretty hard to make the argument that a lower corporate tax rate is a handout to the 1%.

1. No, but that is a loophole I'd love to close too. Carried interest is total bullshit that only exists as a tax dodge for the ultra rich. Again, my specialty is not creating tax loopholes for the ultrarich so I don't know the precise legal mechanism, but there is a way that an individual forms a Partnership with the other member a C-Corp. The individual contributes, say, $1,000 as capital. The corporation contributes, say, an asset worth $500,000. Over the course of time the asset appreciates to $1,000,000. At that point they dissolve the Partnership and the individual winds up with the $500,000 gain as a 'return of capital' and dodges paying any income tax on it. It's absolutely insane, and it works. I'll research it more next week and get back to you.

2. http://en.wikipedia.org/wiki/Deferred_compensation CEO's and the like get the non-qualified retirement plans that are virtually unlimited in scope. The only limit is that the C-corp has to pay income tax on that money since its technically a retained earning. So the stockholders get to pay corporate tax on compensation for the CEO. the CEO gets to accrue interest in this account until he retires at which time he can cash out. Remember a tax deferred for 10 years is basically a tax avoided. The only limit on these plans is the ability of the shareholders to absorb the cost of the tax, and when C_Os are deferring millions upon millions per year its not an inconsequential amount of money.

3. All kinds of people own dividend bearing assets, you're right. But there are an entire class of people in this country who earn tens of millions of dollars per year from dividends, the top 0.1% or maybe even more elite than that. Who knows, because there are 100+ year old family trusts in this country that have never had to declare assets, but we can imagine some of the money is figures are immense. Anyway, anything that shifts the burden of taxation in a way that increases dividends and punishes earned income it is not good for working class peoples.

I'm also all for lowering corp taxes and closing loopholes in the corporate tax code. Why a CEO is allowed to use the corporate jet for his personal use as a tax deductible expense I'll never understand. They might have closed that one already actually, but there are plenty more where that came from!

[OG Mike D]

I love political threads. Love the discussion, hope to see more of these as the election gets near.

[Aaron Peluso]

1) I would be interested to know more about the scheme you were talking about. While carried interest exists for the ultra wealthy and may or may not make sense it also exists for working folk at least in real estate. Probably still wealthy by most standards but not necessarily crazy so. And it really makes quite a bit of sense in real estate.

2) Per my reading of the wikipedia page it looks like the corporation pays corporate income taxes on the initial amount then the employee pays capital gains later on when the money is eligible for withdrawl... I dont see how this is tax avoidance. It looks more like double taxation if anything. As best I can tell the only time you would want to do this is when you want to ensure long term employee loyalty right? Maybe I am missing something. Qualified is the one that looks like the tax dodge if anything...?

3) I think the people the number of individuals that earn tens of millions of dollars from dividend income in this country is extraordinarily low. Most people who have that kind of money invest in things like real estate, growth stocks, venture capital etc... Rule against perpetuities aside, 100 year old family trusts, should they exist, no longer go to 5 people. 100 years later there are a lot of ancestors. Maybe there are some old trusts that have huge income, but it for sure gets split up a bunch of different ways, then spent/invested in a lot of different ways.... The lower rate for capital gains makes a lot of sense a lot of different ways. Most ordinary folk are largely exempted from ever having to pay significant amounts of these taxes at all through the homeowners deduction on appreciation. So really, its effectively a tax targeted at the rich in the first place. I mean... should warren bugget pay a little more? Ok, sure... lets make some upper end brackets for the guys at the top. Im ok with that... But say raising it to match the income tax rates/brackets would be a huge hit to small business people all over the country who maybe have spend their whole lives investing in an asset or a handful of assets.... Not to mention how that would affect all investment markets. Think anyone will be selling stocks prior to Jan 1 if Obama wins this election? Think small businesses will be for sale? Think real estate will flood onto the market? I do.

Ok, corporate jet loopholes are not really the ones I was talking about. Ok, close them... but thats not what allows GE to pay ridiculously low taxes some years... things like renewable energy tax credits are. The kinds of things that are basically payoffs to big business to do what the gov wants them to do... those are the real loopholes and they are only available to big businesses with good connections. Well I shouldnt say that... small businesses can profit off them in the short run.

Example, shortly after Obama took office these Mexican guys started up a business next to Chias airplane shop. They had figured out how to take advantage of a new renewable energy program somehow and were going to 'make biofuel'. Well they bought all this stuff they had no idea how to use, had no real business plan or anything other than get the gov money. Chia always had a good story about them cause they would always be coming over asking Chia how to do basic stuff. I think they had some big explosion or something at some point... it was a mess... but they were never stressed out. Chia would ask them what they were doing and why and they would just say the gov was paying them to do this.... Chia doesnt think they ever sold a thing and maybe never successfully produced anything. They have been gone for a while now but who knows how much money they made those few years they were there... I guess at least GE makes stuff... but still... the point is the same.

[Dzan]

You use the interest on the unqualified plan to pay the taxes on the income when you cash it out upon retirement. A tax deferred for 10 years (give or take, depending on interest rates) is a tax avoided. Since they are investing their income at interest for years and years without paying taxes they are essentially skipping paying their income taxes. The unfairness if that isnt already unfair enough is that us normal humans have 401K that are often limited in scope and have contributions capped. It's definitely a middle class problem, but I know lot's of people who would like to contribute more to their IRA or 401K but can't because of the caps. Why C-level execs should be allowed to contribute tens of millions of dollars is considered fair is puzzling.

[Aaron Peluso]

I am still not seeing it... The corporation pays full corporate tax rates on the initial amount then the recipient pays full cap gains tax on any appreciation right? Where is the tax avoidance?

I also don't get the ten year thing. You pay taxes on the interest/appreciation... That's the income being taxed in the first place. The tax always comes out of the income...

I don't see any tax avoidance or even deferral looking at the big picture with the non qualified... The qualified however looks like a big tax break since the initial contribution is tax free, which is probably why they have to be offered to all employees and have limits and such... The employee also send to get all the money at lower cap gains tax rates too.. Which is also a tax break...

Sent from my SAMSUNG-SGH-I777 using Tapatalk 2

[Fuji]

I feel like these threads always end up with AP and some other sucker going at it in an endless debate.

[Dzan]

Yeah but the people paying the corporate tax arent the same as the people receiving the income. The executives are shifting the payment of the tax for their income to the shareholders.

Imagine John Q. CEO makes $20m in 2012. He defers $15m of it, avoiding about 5 million of income tax. He takes the $5 as W-2 Income today. The corporation pays tax on the 15m. Using his DCA he invests the money wisely and doubles his money in 10 years. At that time, he cashes out his account and pays income tax on it, which would be about 8-9m. So he essentially got millions of tax free dollars. Well tax free to him. Luckily the shareholders picked up the tab for him.

The main complaint is twofold:

1. They are getting millions of dollars tax free.
2. Me and you are given one set of rules that we have to play by with our retirements. Executives at large corporations get a separate set of rules that are extremely tax advantageous. The idea of two separate legal classes of citizens should be abhorrent to Americans.

As far as the concept of a tax deferred being a tax avoided... if I can earn more interest in the deferral period than I would have paid in tax had I been forced to pay it when I earned it, then I got my taxes paid or at least hugely subsidized. Plus, thanks to inflation a $1 of tax paid today is a bigger expense than $1 of tax paid 10 years from now.

[Dzan]

LLP Tax Evasion Scam. Asked one of the associates at my firm to explain this one to me and here it is...

Start a partnership where one partner is a for-profit corporation who contributes $10. The other partner is a tax exempt non-profit who contributes $990; setting up a 1%/99% split. Years down the road, when the profits of the partnership are returned to the taxable partner, they are not taxed as a capital gain, they are a 'return of capital.' Here is how it works...

The partnership owns a half a billion dollar depreciating asset as well as other huge investments. You have to report the profits of the other investments, and assign 99% of it to the tax exempt partner, avoiding $150 million in tax. You can't just give those profits to the taxable partner since it would be a taxable event, so the trick is characterizing the profits as capital that can be given tax free to the taxable partner as a 'return of capital.' You achieve it by depreciating the depreciable half a billion dollar asset over several years which eliminates the taxes the partnership earns on its other assets. Eventually the profits of the partnership utilize the depreciation fully and you have half a billion dollars of untaxed profits now classified as capital, which can be distributed to the taxable partner as a return of capital. So over the course of some years you successfully avoided about $330 million in taxes.

And these numbers aren't made up, this was sadly a real world example. The Department of Justice declined to prosecute it, because they felt their chances of not getting a conviction were too high, and if you establish that precedent it becomes de-facto legal until congress specifically rules on it.

[OG Mike D]

Dan, can you dO my taxes and be my financial advisor?

[Dzan]

Dan, can you dO my taxes and be my financial advisor?

Yes, and no. But paying me to do your taxes probably isn't worth it unless you're rolling in cash. In which case, I'd love to work with you.

[waddsworth]

Yeah but the people paying the corporate tax arent the same as the people receiving the income. The executives are shifting the payment of the tax for their income to the shareholders.

This is an absurd assessment. The shareholders pay because until the executives are eligible to receive those assets they still belong to the shareholders/corporation. Until the executive receives it, he cannot benefit from it in any tangible way. He cannot spend it or even borrow against it. He can't even direct it. However, the assets are still useful to the corporation as working capital - so why shouldn't they pay?

Imagine John Q. CEO makes $20m in 2012. He defers $15m of it, avoiding about 5 million of income tax. He takes the $5 as W-2 Income today. The corporation pays tax on the 15m. Using his DCA he invests the money wisely and doubles his money in 10 years. At that time, he cashes out his account and pays income tax on it, which would be about 8-9m. So he essentially got millions of tax free dollars. Well tax free to him. Luckily the shareholders picked up the tab for him.

But if he took that initial $20M as income, paid $6M in income taxes (30% seems to be the accepted rate), invested the remaining $14M and doubled it in 10 years, he'd have $28M. Except now, whatever he cashes out is at a favorable Cap. Gains rate, not income, which in this case would amount to a tax liability of, at most, 15% on $14M gained = $2.1M. In this scenario he's collected ~$25M and paid out ~$8M in taxes. In your scenario he's collected ~$34M and paid out ~$11M in taxes. But I should point out that in your scenario the money was still being taxed through corporate taxes while the corporation still held onto and used those assets. Seems to me that the deferred compensation scenario is a win-win for the executive as well as the Government in terms of the revenues it generates.

[Dzan]

He can't even direct it.

You really think that?

[Aaron Peluso]

To recap on the 15m scenario... unless I am missing something....

Deferred:
5.25M - Corp pays 35% immediately to IRS (2012)
15M grows to 30M in ten years (2022)
In 2022 employee cashes out 30M, 15M taxed as income (5.25M in tax), second 15M taxed at cap gains (expected to be 18% or 2.7M)
Company can now deduct the 15M, getting a 'refund' of their original 5.25M
Effective total tax paid = 5.25M in 2012 and 2.7M in 2022
Walks away in 2022 with 22.05M


Standard
15M taken as earned income, employee pays 5.25M in federal income tax netting 9.75M
Employee invests 9.75M doubling investment in 2022 to 19.5M for a 9.75M gain
Employee pays 1.75M in cap gains tax (18%) in 2022
Effective total tax paid = 5.25M in 2012 and 1.75M in 2022
Walks away in 2022 with 17.75M

Right?

[Aaron Peluso]

LLP Tax Evasion Scam. Asked one of the associates at my firm to explain this one to me and here it is...

Start a partnership where one partner is a for-profit corporation who contributes $10. The other partner is a tax exempt non-profit who contributes $990; setting up a 1%/99% split. Years down the road, when the profits of the partnership are returned to the taxable partner, they are not taxed as a capital gain, they are a 'return of capital.' Here is how it works...

The partnership owns a half a billion dollar depreciating asset as well as other huge investments. You have to report the profits of the other investments, and assign 99% of it to the tax exempt partner, avoiding $150 million in tax. You can't just give those profits to the taxable partner since it would be a taxable event, so the trick is characterizing the profits as capital that can be given tax free to the taxable partner as a 'return of capital.' You achieve it by depreciating the depreciable half a billion dollar asset over several years which eliminates the taxes the partnership earns on its other assets. Eventually the profits of the partnership utilize the depreciation fully and you have half a billion dollars of untaxed profits now classified as capital, which can be distributed to the taxable partner as a return of capital. So over the course of some years you successfully avoided about $330 million in taxes.

And these numbers aren't made up, this was sadly a real world example. The Department of Justice declined to prosecute it, because they felt their chances of not getting a conviction were too high, and if you establish that precedent it becomes de-facto legal until congress specifically rules on it.

I dont really follow this.

The depreciation offsets the income from the other assets... then you have 'after tax cash' (capital) that is sitting in the partnership which can be distributed back to the partners in a 99/1 ratio. So 1% of the after tax cash can be returned to the partner right? But there was a also a half billion dollar hit to the balance sheet as that asset depreciated right?

[Dzan]

Corp pays 35% on the 15m in 2012. And when they pay out the 30m in 2022 they don't get any kind of deduction since the money has already been taxed as profits. If it was a normal 401K or Keogh or whatever they would get a tax deduction, but unqualified plans are generally not.

[Dzan]

I dont really follow this.

The depreciation offsets the income from the other assets... then you have 'after tax cash' (capital) that is sitting in the partnership which can be distributed back to the partners in a 99/1 ratio. So 1% of the after tax cash can be returned to the partner right? But there was a also a half billion dollar hit to the balance sheet as that asset depreciated right?

You don't have to return capital in a specific ratio. Your partnership agreement determines compensation, and that up to the partners.

The depreciated asset can stay with the non-profit forever as an endowment, or do whatever they want with it. If they sell it, obviously there would be a taxable event that would cause the 1% member to realize a taxable gain. My guess would be that the mega corp would utilize it in some other manner that would be tax beneficial.

[Aaron Peluso]

Corp pays 35% on the 15m in 2012. And when they pay out the 30m in 2022 they don't get any kind of deduction since the money has already been taxed as profits. If it was a normal 401K or Keogh or whatever they would get a tax deduction, but unqualified plans are generally not.

I have read multiple places that the corporation gets the deduction when the benefits are taxable to the employee. I will cite wikipedia since its easiest for me to find:

The employer cannot claim a deduction until the benefits are taxable to the employee.^[13]

http://en.wikipedia.org/wiki/Nonqual...d_compensation

Presuming my numbers above are correct that means the employee would net 25% more money in 10 years with the deferred plan presuming he met all of the qualifications of the plan (long term commitment to the company, not dying, not leaving for a competitor etc...). The IRS would also collect 8% more in total taxes and the company would have a mechanism to ensure long term employee loyalty... Like wadds said it really kinda seems like a win win win... If anybody loses I would actually say its the employee in this case since most people in such a situation would take 25% less money ten years earlier in order to have total flexibility in what they do with it. It seems like the treasury is the only entity that doesnt give something up...

Of course, this all presumes that investments double every 10 years which in the last 10 years for instance has not happened. In the case found over the last ten years the investments would be close to flat and the employee would get very little benefit for what he gives up. So there is real risk there I think.

Bottom line. Doesnt seem like a big tax dodge to me.

[Aaron Peluso]

You don't have to return capital in a specific ratio. Your partnership agreement determines compensation, and that up to the partners.

The depreciated asset can stay with the non-profit forever as an endowment, or do whatever they want with it. If they sell it, obviously there would be a taxable event that would cause the 1% member to realize a taxable gain. My guess would be that the mega corp would utilize it in some other manner that would be tax beneficial.

Per my recollection distributions do not have to be in line with ownership percentages but do have to be justified in some way such as a partner bringing intangible assets such as a client list or book of business to the company... I can see how those lines would be fuzzy but not as fuzzy as I am on how this all results in huge tax benefits.

I do not doubt that there are fringe loopholes utilized by the most aggressive financial planners for the ultra wealthy. It is a continuous process of the IRS creating case law to close down new schemes and has been going on for a long time.

But back to the original point, I dont think this is a major reason why we have social security funding issues.

[Dzan]

But back to the original point, I dont think this is a major reason why we have social security funding issues.

Nope, the reason we have funding issues is demographics and the fact we have been borrowing money from the social security trust fund to make up shortfalls in the general fund since at least the 80's.

[narwhal]

Because it has one political party that only believes government spending can create jobs when that money is spent on the military, and another party that is too cowardly to fight over it.

My thoughts entirely. It irritates the shit out of me that we spend so much time focusing on discussions like welfare, SS, and Medicare (which I admit are very important discussions)...when there's another elephant in the room being defense spending. The rate at which the United States out spends the world is astounding. We could easily scale back defense spending and still have "the most powerful military in the world".

[thewelsh]

I am not a republican, but I am pretty sure they don't believe government spending creates jobs. Most republicans I know believe the government does not create jobs.

[Aaron Peluso]

Nope, the reason we have funding issues is demographics and the fact we have been borrowing money from the social security trust fund to make up shortfalls in the general fund since at least the 80's.

Yes. Particularly the demographics at this point.

[Aaron Peluso]

My thoughts entirely. It irritates the shit out of me that we spend so much time focusing on discussions like welfare, SS, and Medicare (which I admit are very important discussions)...when there's another elephant in the room being defense spending. The rate at which the United States out spends the world is astounding. We could easily scale back defense spending and still have "the most powerful military in the world".

Looks like we are short about 17% in the current budgets.

http://www.usgovernmentspending.com/breakdown

I would be in favor of cutting all areas 17% for instance. However if I had my choice I would weight it on pensions and cut there a little steeper while cutting a little less on the others.

[penguinofsleep]

narwhal and dzan, maybe my other post was too long but check the link there and see how defense spending is a smaller part of our budget today vs SS, medicare, and medicaid.

even then, like i mention in my previous post, a lot of the money that goes into "military" or defense spending also results in many technologies that we see 20 or 30 years down the road. ie look at most of say the science or engineering professors at many major universities. how many of them get significant funding from stuff like darpa or other military grants? look at how many of the things that were done to get through ww2 for the military came back and improved commercial technology in big leaps and bounds. while there isn't so much direct correlation anymore and a lot of the spending simply enables the US to terrorize people, abroad or domestic, and there is no doubt A LOT of wasteful spending in defense and a lot of corruption in it just like medicaid, i would say defense spending does indirectly benefit the private sector significantly. proportional to how much it costs vs other stuff - that i don't know.

that and imo one of the few things that should be relegated to any government (vs private sector or independent) is the proper defense of its people. similar to basic infrastructure, etc. consequently, defense spending will be a little bit high proportionally.

[Dzan]

Penguin, my point isn't that military spending is always wasteful, though much of it is, it's that from an economic perspective hiring an army of soldiers is strictly worse than hiring an army of teachers, doctors, or construction crews.

[Dzan]

I am not a republican, but I am pretty sure they don't believe government spending creates jobs. Most republicans I know believe the government does not create jobs.

I'm pretty sure all the republican senators who works their ass off to get military bases built in their state, or representatives who try to get military industrial projects assigned to factories in their districts understand that those things bring job.

[narwhal]

even then, like i mention in my previous post, a lot of the money that goes into "military" or defense spending also results in many technologies that we see 20 or 30 years down the road. ie look at most of say the science or engineering professors at many major universities. how many of them get significant funding from stuff like darpa or other military grants? look at how many of the things that were done to get through ww2 for the military came back and improved commercial technology in big leaps and bounds. while there isn't so much direct correlation anymore and a lot of the spending simply enables the US to terrorize people, abroad or domestic, and there is no doubt A LOT of wasteful spending in defense and a lot of corruption in it just like medicaid, i would say defense spending does indirectly benefit the private sector significantly. proportional to how much it costs vs other stuff - that i don't know.

that and imo one of the few things that should be relegated to any government (vs private sector or independent) is the proper defense of its people. similar to basic infrastructure, etc. consequently, defense spending will be a little bit high proportionally.

Ok but there's a vast array of different kinds of defense spending.

To your point on advancement in technologies.... I agree to a certain extent and I am not really proposing huge cuts in that area.... One day go on Fed Biz Opps (Google it and you don't have to have a log in) and look at the amount of solicitations coming out...it's insane and most of it's not R&D.

I applauded the BRAC program. (it's needs to be done again to further extent) However a lot of these bases "closed" were actually expanded. Take Ft. Pickett in Virginia. This base lost most of it's operations to Ft. Eustis in Virginia. Now the State Department has "purchased" half the base and plans to spend hundreds of millions on a training facility for state department employees. The vast array of military bases in Virginia could easily handle this need the state department has but nevertheless they want their own facility.

Tell me if it makes a lot of sense: http://en.wikipedia.org/wiki/List_of...y_expenditures

Now I understand that we are fighting a war but pre-war is will still insanely high vs the world. (and the cold war was over and we had no legitimate enemy)

Watch this sometime: http://www.youtube.com/watch?v=c_VD0pE37vo

[thewelsh]

I'm pretty sure all the republican senators who works their ass off to get military bases built in their state, or representatives who try to get military industrial projects assigned to factories in their districts understand that those things bring job.

I was referring to the voting citizens registered republican not the politicians, but you do make a good point.

On that note there are quite a large number of people employed because of the military industrial complex, I do not know if it is more or less than what the left wants to do. I am actually one of those currently employed by that fact, which is ironic cause I'm a Paul fan, but don't worry I'll be moving to the bio tech industry.

[Aaron Peluso]

Ok but there's a vast array of different kinds of defense spending.

To your point on advancement in technologies.... I agree to a certain extent and I am not really proposing huge cuts in that area.... One day go on Fed Biz Opps (Google it and you don't have to have a log in) and look at the amount of solicitations coming out...it's insane and most of it's not R&D.

I applauded the BRAC program. (it's needs to be done again to further extent) However a lot of these bases "closed" were actually expanded. Take Ft. Pickett in Virginia. This base lost most of it's operations to Ft. Eustis in Virginia. Now the State Department has "purchased" half the base and plans to spend hundreds of millions on a training facility for state department employees. The vast array of military bases in Virginia could easily handle this need the state department has but nevertheless they want their own facility.

Tell me if it makes a lot of sense: http://en.wikipedia.org/wiki/List_of...y_expenditures

Now I understand that we are fighting a war but pre-war is will still insanely high vs the world. (and the cold war was over and we had no legitimate enemy)

Watch this sometime: http://www.youtube.com/watch?v=c_VD0pE37vo

as a percentage of gdp our defense spending is high but not nearly as high as that graph makes it seem. Its also worth considering that China may spend a fifth what we spend on defense, however with their labor rates and costs compared to ours............ its probably really close to par in terms of amount of product received. They might even be higher in terms of product received.

i mean, they are definitely higher in terms of number of personnel...... approaching an army twice the size of ours....
http://en.wikipedia.org/wiki/List_of...tary_personnel

I think we could find 10% - 17% woth of waste in there somewhere... however this idea that our defense spending is totally out of control because of dollar figure comparisons is rather simplistic I think.

[Aaron Peluso]

yes penguin... i was trying to find this link

http://www.npr.org/blogs/money/2012/...ing-in-1-graph

I think that really sheds a lot of light on where our spending was and now is... and where cuts need to be made...