Richard This is wonderful and very thoughtful of you to do this, Richard!  It certainly is one less worry for those affected!

For those who keep on asking me why I like Richard Rost so much, I am just going to point them to this post.
You are a true gentleman. And I have experienced this firsthand.

Thank you, Richard!

Rick,

If you want to setup a fund... I would contribute to help maintain membership for those affected.

-Raymond

I can hear dear ol' dad say " You are blessed to be a blessing to someone else" we ought not keep the good things in life to ourselves. Kudos Good Sir

RG

Raymond I am with you on this as well.

Thank you all for your kind words.

Raymond that is much appreciated but not necessary. Honestly, yes, this is what I do for a living, but it doesn't cost me much to be generous to someone else who is in need. So if I have to put someone's membership on hold for a few months (hopefully only for a few weeks, if these clowns in Congress get their act together) it's not a huge burden to me.

As a former government employee (US Air Force 1969-1972) I'd like to shed a little light on this situation.   G.S. employees who get paid once a month (as I did for four years) were paid on September 30th, as did their twice monthly counterparts.  The bi-monthers won't start feeling any pain for another 10 days.   Hopefully cooler heads will prevail and this stupid shutdown will be behind us by then.

It's not only the salaries of employees that are at stake here. Unfortunately, many programs whose funding is not guaranteed are feeling the pinch immediately.

Trump is talking about cutting jobs to achieve a smaller government, which is always his goal.  So this may not be mere temporary job losses for many, but firings.  It used to be common belief that governmental positions were much safer than most positions, but apparently not anymore.

Yeah, I've received emails from people too who work for either companies or agencies that have lost their funding. Whether they're in science or any other number of fields. Lots of people are hurting right now. Even if they're not direct government employees. I'm all about smaller government, of course. But it needs to be done with a scalpel and not a sledgehammer.

I would start by cutting levels of bureaucracy. Why do we need a local government, a county government, a state government, and a federal government? I think two would work just fine. But that's just me.

Richard That's an interesting question for the group-- where would you start? I think we all probably agree that we need less government. I would start with the income tax: make it extremely simple, get rid of the loopholes, tax the crap out of the top 1%, and shed the jobs that support that monstrous bureaucracy.

See, I'd actually go in kind of the opposite direction. I'd get rid of income tax completely and stop taxing people on what they earn. Instead, I'd move to a consumption-based system - a national sales tax. But it wouldn't be one flat rate across the board. I'd scale it based on necessity.

No tax at all on the basics you need to survive - bread, milk, that kind of thing. Then a lower rate for everyday items like gas, tools, lawn mowers, stuff people need to function day to day. And finally, a higher rate for luxury items - expensive cars, jewelry, designer clothes, electronics, big-ticket stuff. You could even make it graduated like income tax: the more expensive the item, the higher the rate.

That way, people aren't punished for working hard and earning money, and the government only collects when people choose to spend. The rich will still end up paying more because they'll buy more and buy bigger, while lower-income folks won't get hit just for earning a paycheck.

As for where else to cut - like I said earlier, we've got too many layers of government. Local, county, state, and federal - all with their own courts, executives, and legislatures. It's redundant. I'd streamline it down to just two: a national government for big-picture stuff like defense and infrastructure, and local governments to handle policing, zoning, and community issues. County and state governments are relics from the 18th century. We don't need that anymore.

Trim the fat, simplify the structure, and we'd have a lot less waste - and a lot less bureaucracy standing in the way of actually getting things done.

And regarding the 1%, yeah, one big problem is the "Buy, Borrow, Die" loophole. Wealthy people avoid taxes by buying assets, never selling them, borrowing against them, and then passing them on at death. When they die, thanks to the "step-up in basis" rule, their heirs inherit the assets at whatever the market value is at that moment - effectively wiping out all the unrealized gains for tax purposes.

Because they they get "paid" in stock options, they borrow against them instead of selling, and then they don't trigger capital gains taxes. And because of the step-up in basis, those gains never get taxed, even when passed down. We need to kill that loophole - for example by treating gains as realized when borrowing or forcing carryover basis (so heirs inherit the original basis). That way, you can't just dodge taxes forever by borrowing your wealth and passing it on.

The only real way to prevent an aristocracy or oligarchy from forming is to tax wealth at inheritance. If we don't, we end up with dynasties where fortunes just keep compounding generation after generation. That's how we get these billionaires who never actually built anything themselves - they were simply born into it.

I'm not saying people shouldn't be able to leave something to their kids. If your mom passes and leaves you the family home, fine. But there should be a reasonable cap on what passes tax-free. In my opinion, one million dollars is plenty. Beyond that, it's not about protecting families - it's about building empires. And history has shown that when wealth concentrates in too few hands, democracy starts to erode.

Taxing large inheritances isn't about punishing success - it's about keeping opportunity alive for everyone else.

Richard I'm not sure a sales tax would capture the money gained by the top 1%. What Elon pays for clothes and even homes is a pittance compared to what he "earns." How do you capture a piece of that $1T salary? How do you capture the money made by our Congresspeople through not-insider trading?

Richard   Joe Biden made a 2022 proposal (that was later rejected) on taxing unrealized capital gains at death if the gains are $1m-2m or above (picture below).  I can see why this and similar proposals have been rejected: $1m-2m is not exactly a high amount, and it certainly doesn't indicate "super-rich."  Even though $1m-2m would put you among the top 5% wealthiest Americans (as of now), it is not a great deal of money when it comes to things like retirement, health care, long-term care, etc.  If you retire at age 60s in America, you need about $1m today (not always accurate, but a good ball-park figure for most) to have a comfortable retirement with a very low risk of running out of money, even if you live to age 90s.  And that's just for a single retiree.  A retired couple would need double.  Each of their children would need double ($2m) when they retire due to inflation, and their children's children $4m, and so on.  So even if someone inherits $1m, he still has work cut out for him to double his money during his lifetime, which is not a given.  Back to the tax proposal, if $1m-2m isn't the right amount, then what is?  Too low and it will hurt ordinary Americans, and too high and it will not tax enough people.  Also, not all "rich" people are always rich.  Some may have been poor and/or had low net worth earlier in their lives, but became millionaires through savings, hard work, financial acumen, etc.  Taxing those people would discourage them from saving money and achieving wealth.

Yeah, finding that right amount to tax for inheritance would be tricky, but I would make it a graduated tax just like income tax is now. Maybe we don't tax inheritance under $1M, and then from $1M to $2M is taxed at 20%. And then 2M to 4M is taxed at a higher 25%. And so on until you're up over $100M, you're paying 80% of it. This way, it allows people to pass some wealth down to their kids and their grandkids, but we're not building empires here. Ya can't take it with you.

In my view, money is nothing more than a labor coupon.  It's a tangible format that is convenient for saving, trading and giving.

Inheritance tax and income tax, mistakenly focuses on how to capture money(labor) that someone else has accumulated.  This is what governments tend to do.  They promote the fallacy of zero-sum wealth and the "us vs them" mentality to tribalize our society into "teams".  The need these "teams" so that they may acquire power on the backs of industrious people.  When you play this game, there is always somebody else that thinks you are rich and that they have a right to take your money(labor) from you.  The net effect is punishment for people working too industriously or saving too responsibly.

Sales tax is inherently progressive.  Rich people buy expensive things and more of them, and thus would pay more in sales tax.  If you only taxed newly manufactured, non food, items, you would only be taxing people as they can afford to pay.  If people buy a used couch, they pay nothing, if they buy a new couch, they pay a little, and if they buy a new jet, they pay a lot.

This would be environmentally friendly, too.  It would raise the value of used goods and create a resurgence in the repair industries.  This would reduce consumption of natural resources and waste to landfills, while maintaining an economy of trade.

There is a lot of consternation about Elon Musk, for example, and years where he didn't pay income taxes.  People fail to account for the tens of thousands of jobs he has created and that fact that he has contributed more to the public good than almost anyone.  

If someone inherits a fortune, they have two options, invest it or spend it.  If they are worthy stewards of what was given to them, they invest and create jobs.  Otherwise they spend it all away and paying taxes.  Either way they contribute to the public good.

With a sales tax, many of the current banking, tax, and probate laws would be nullified.  Everyone currently working to create, support, and enforce these laws is taking part in a massive "make work" scheme.  This is a waste of all of our labor.  The key is sales tax gets the government out of the redundant business of trying to evaluate how much each person "can afford" to contribute.  The people already do that themselves, at the time of purchase.

Matt I think I can make a very, very strong case that Elon has not contributed to the public good. DOGE is just one aspect of his behavior that has wrecked his legacy forever. I am frankly dumbfounded by how people defend uber-capitalism. Why defend soulless billionaires? If we just enforce some morally good behavior on the demons of capitalism, you can have your capitalism, make your $20M, and be just fine.

The easy example is Bill Gates. He took active steps to create a monopoly (Windows OS). Not just creating a great product, but legal shenanigans to bolster that product. He has paid fines that are a pittance compared to what he made. Then he overcharged for that product, which one can do when one has a monopoly. So yes, I begrudge him his billions and think he has woefully underpaid it back to the citizens of the US. Yes, he gives to charity. HIS designated charities. Every other billionaire, save rare cases like Mackenzie Scott, has gained their money by morally questionable practices.

Matt I think you make an excellent point about how a sales-based tax could actually encourage more sustainable behavior. I've thrown away my share of appliances and furniture that were cheaper to replace than to fix. My old garage fridge just died, and it cost almost the same to buy a new one as it would have to repair it. A system that rewards repair and reuse would be good for the economy and the planet.

I also agree that the way we tax income today makes no sense. It punishes productivity. Collecting taxes at the point of sale simplifies everything and gets rid of a mountain of bureaucratic waste. The trick would be scaling the rates properly - zero or low for essentials, higher for luxuries - so you're not hurting working families.

As for Elon, I'm on the fence too. I respect innovation and risk-taking, and I really want SpaceX to succeed, but I don't always agree with how he handles his influence - DOGE being a prime example. And with Bill Gates, I get it. They definitely played rough during the monopoly years, but at least he seems to be using his money now for something productive with his vaccine initiative.

I don't hate billionaires just because they're rich, but I do think there's a point where enough is enough. Personally, I think you should "win life" at $999 million. After that, you get a trophy and the rest goes back into the system to help everyone else.

In the end, I'm all for smaller government and a fairer system - but it needs to be done with a scalpel, not a sledgehammer.

Richard That's the crux of it-- how much is enough? With all the inequity in the world, anything beyond that needed for a nice living is just greed, IMHO. For most Americans, $10M in the bank at 60 yrs old is a generous threshold for enough. [Note: I do not have near that much...]

I am a believer in rewarding someone who brings value to people. Value is a matter of perspective. Little ol' me, ER doc for 30 years, probably saved hundreds of lives. How many lives has Elon saved?

My "win life" number is substantially lower than $999M. If you have $10M in the bank and get 5% interest/investment income, that's $500K. If you're spending more than that a year, IMHO you're living too rich.

I just picked 999M as a nice sounding number. You're right.. I'd be happy with 2M in my portfolio. LOL

Elon Musk has created 140,000 jobs, advanced the EV and Renewable industries, brought internet to millions of people that might not otherwise have had access, paid $20 Billion in taxes, and may have done more for us space travel than anyone outside of NASA.  If he had been limited to $20 million or even $1 billion, none of that would have happened.  He would not be able to raise the capital necessary without it being taken by people who did none of those things.  I am not saying he is perfect.  I'm not a Bill Gates fan, but as you point out, he also has worthy accomplishments.

In the end, both were operating within the arena of the US legal system.  If they got too little guidance/correction that is on the government.  Everyone else was playing on the same field.  How they choose to spend their money now, is of no concern to me.

The real danger in embracing the logic of confiscating other peoples' wealth, is that 51% of the US has a net worth below $193,000.  Using this logic, we could find a majority willing to agree to cap net worth at $193,000, "Because anything above that is unnecessary."  Retirement might to be tough, since the home value would eat into this allowable net worth.  No matter where we put the decimal, it is always wrong.  When you take someone's money, you are taking the portion of their life they traded to earn it.

From my perspective, DOGE was the first time in my lifetime, anyone impartial had tried to even review government spending for waste.  DOGE merely reported their findings.  Everything DOGE found should be publicly available, anyway.  I am not offended, since that we are the ones funding that spending.

Richard , for the sales tax, I think one rate would work fine.  Everything is either exempt...or it's not.  10% of a $100 million yacht is still $10 Million in taxes.  It is a meaningful contribution without killing demand.  Asking stores to tax different people at different rates, would be an unnecessary burden.

All very good points. Like I've said before - I've got no problems with cutting government spending. However, it should be done with a scalpel, not a sledgehammer. It should be done thoughtfully and with some consideration. The way they did it was just way too blunt.

And yes, I actually bought a Starlink receiver myself. During the last major hurricane (Ian) we had no power or Internet for over a week, and even our cell phones were dead for 3 or 4 days. Well, mine was dead for a week. My wife's came back on after like 3 days.

So I coughed up the money for a Starlink receiver just for emergencies like that. It sits in a box in the garage until that day I hopefully never need it. Starlink offers a $5/mo "emergency" service for people to do exactly what I'm doing. Then if you need it, you hook it up, connect, and upgrade your service. I think it's 50 GB for $50/mo, which is plenty for a week during an emergency. I won't be uploading videos, but I can check email and make sure my website is still running.

And I can listen still stream Rush, of course. Ah... who am I kidding. I've got all their songs on my NAS as MP3 files. I still stream them on Amazon Music though. Gotta make sure the boys get my $0.02 every time I play Tom Sawyer. :)

Very interesting.  I did not know Starlink offered that.  I will have to check that out.  I have a cellular router but as you illustrated, the cell towers rely on local power too.

I understand the sledgehammer vs scalpel concern.  Maybe we could compromise with, say, a Ginsu Knife?  ;)

Matt How quickly we forget:
https://www.cbsnews.com/news/clinton-reinventing-government-doges-comparison/
I've never been a Clinton fan, but this approach avoids the sledgehammer. And he balanced the budget. Our current budget, despite the sledgehammer, is not even close to balanced. General consensus is pretty clear-- it's the tax cuts to the rich (includes corporations). If that makes you think Trickle Down Economics will make this a good thing, here's an analysis with cited references:
https://www.ebsco.com/research-starters/economics/trickle-down-theory

I did forget about that.  To be fair I was 21 when it rolled out and was not really paying a lot of attention to politics at the time.  Really, Kudos to Bill Clinton and the Congress that worked with him.  While I understand that we disagree on methodology, 30 years is not out of line to revisit the cutting of fat.  Maybe part of the "sledgehammer" image is due to the fact that this time it is being driven by the executive branch against an uncooperative congress.

You are right that we are currently operating at about 30% deficit.  That can be traced back, in large part, to the 47% budget increase of 2020.  The spending was never rolled back after the covid mess subsided.  If I understand correctly, we are still operating under CR's from the 2022-ish budget.  No fiscally responsible person would operate their personal finances in this way, in my opinion.  I don't believe it is sustainable for a nation to operate this way either.  We can never forget that every dollar the government spends is a dollar that the taxpayers have to earn for them.

I read the EBSCO piece.  It primarily focuses on income equality.  My life represents income inequality.  I used to be broke and now I am not.  I have gained experience and skills and have had time for my investments to grow.  To me, that is the American dream and it's foundation is the promise that I can keep the fruits of my labor.  There will always be people way more and less wealthy than me.  That doesn't concern me.  The opportunity for growth is what keeps people rising in the earnings ranks.

Great points, both of you. I love that this conversation has stayed sharp but still civil. That's a rare thing online these days.

Matt this wins the Internet today: My life represents income inequality.  I used to be broke and now I am not. And sure... Ginsu it is. Even though those weren't Japanese. The infomercials were made to convince people they were Japanese... but it was just some ad schmucks selling Ohio-made knives. Great marketing tho.

Michael you're right that Clinton's "reinventing government" approach is a good historical comparison. Thoughtful reform beats reckless slashing every time. From what I've read, DOGE is trying to use that same language as cover, but the comparison doesn't really hold up. Clinton's team worked to streamline operations while keeping the government functional. DOGE, on the other hand, feels a lot more like cutting muscle instead of fat. You can't gut agencies overnight without breaking things that actually matter. And yeah, tax policy and spending discipline have both been out of balance for way too long. You can't keep cutting revenue and inflating expenses and expect the math to work out forever.

I think what everyone here is getting at, from different angles, is the same idea: efficiency, accountability, and fairness. Whether that comes from smart spending cuts, tax simplification, or a new approach to how we measure value - it all starts with being honest about what's working and what's waste. Data. Collect and examine the data. We've got plenty of it!

As far as the data goes, the evidence on trickle-down economics is pretty clear. Decades of research across multiple countries show that tax cuts for the wealthy don't lead to stronger GDP growth or job creation. Instead, the main effect is higher income inequality and more wealth concentration at the top. The idea that benefits "trickle down" through investment and hiring just doesn't hold up - most of the gains stay in financial markets or corporate profits. Real-world tests like the Kansas tax experiment proved the same point: revenues drop, deficits grow, and the promised boom never comes. We've tried it over and over, and the data shows it simply doesn't work.

This has been one of the best Captain's Log threads in a while. Thanks to all of you for keeping it intelligent and respectful.

Sledgehammer gives you mistakes like the infamous firing of nuclear safety specialists. That's just one well-publicized example. Similarly the purge using AI (don't get me started!) to wipe out documents that contain words like "gay." Like I said, I'm all for making government more efficient and significantly smaller. Just don't put the country at risk to do it. Make the cuts intelligently.