Bush tax cut analysis

[Torvald Von Mansee]

http://www.tax.com/taxcom/taxblog.nsf/Permalink/CHAS-89LPZ9?OpenDocument

[mookiemookie]

Any way you slice it, there's very little correlation between lowering tax rates and spurring economic growth. However you want to measure it - GDP, employment rate, personal income growth - none of them show a clear correlation. But yet this old canard is trotted out time and time again.

The Laffer Curve is bunk and always has been.

[Torvald Von Mansee]

Any way you slice it, there's very little correlation between lowering tax rates and spurring economic growth. However you want to measure it - GDP, employment rate, personal income growth - none of them show a clear correlation. But yet this old canard is trotted out time and time again.

The Laffer Curve is bunk and always has been.

You must feel very lonely living in Houston.

[mookiemookie]

You must feel very lonely living in Houston.

Like a Jew in Berlin circa 1942

[krashkart]

But yet this old canard is trotted out time and time again.


Is that to say that promises of tax breaks always seem to fly around when the elections are a'comin' up? I've begun to wonder why people even cheer that old line anymore. :-?

[antikristuseke]

Thinking takes energy. It's fare easyer to just accept politicians claims at face value.

[krashkart]

I always seem to overlook that. :)

[SteamWake]

Any way you slice it, there's very little correlation between lowering tax rates and spurring economic growth.

Other than the fact it has worked everytime it has been tried.

[August]

Other than the fact it has worked everytime it has been tried.

You'd never get a Democrat to agree with it. Socialism has to be paid for somehow... :DL

[mookiemookie]

Other than the fact it has worked everytime it has been tried.

[citation needed]

Oh look, I have one!

http://img.slate.com/media/86/marginalGrowth.jpg

Man those dark dark days of 90% tax rates in the 50's sure put a damper on GDP....err....wait....it was still between 3-4%

And look at all the jobs created when tax rates are cut!

http://www.faireconomy.org/files/images/tax_emp.gif

Wishing something were so doesn't make it so. I have data. You have talking points. You lose.

[SteamWake]

You'd never get a Democrat to agree with it. Socialism has to be paid for somehow... :DL

I know I dont even know why I bother.

http://www.house.gov/jec/fiscal/tx-grwth/reagtxct/reagtxct.htm

[Sailor Steve]

On the other hand I don't see why taxation and the economy are compared at all. The only reason for taxes to exist is that government has no means to generate revenue, so if we want any kind of government programs at all we have to have some taxes.

But my opinion is that they should always be considered a necessary evil, and only used where absolutely needed. Politicians like to come up with programs that will make them look good, and then force others to pay for them later.

"It is no contradiction—the most important single thing we can do to stimulate investment in today's economy is to raise consumption by major reduction of individual income tax rates."
—John F. Kennedy, annual message to the Congress: "The Economic Report Of The President; January 21, 1963

[SteamWake]

government has no means to generate revenue.

You answered your own question Steve.

Sure taxes are needed to keep essential services up and running like fire and rescue, etc.

But you put more tax burden on a society that has the highest percentage of pepole on food stamps. More pepole in the 'poverty level'. Well Im sure you can see where this is a losing propisition.

"Essential" services not crap like teaching Africans how to wash their genetailia.

[tater]

That analysis is rubbish.

Look at revenue as a % of GDP. It remains remarkably constant in the face of changes to the marginal tax rates.

When the top marginal rate dropped in the early 80s (hugely dropped from a top rate ~70%), tax revenues initially fell by a percent or two, then came back up.

The goal should always be to have the very lowest rate of taxation possible to support spending that is required. Required as in mandated by the Constitution. Defense. Interstate trade, perhaps. Entitlement spending is pretty indefensible constitutionally. I'm fine with a "safety net." That's great, but really look at the analogy. You put safety nets up where people MIGHT fall. You don't sting them up, then push every single person nearby off into the nets. The vast majority of Americans should never see any "safety net" money. None. It should be a fraction of what it is now, only designed to protect the people who have nothing else.

Spending needs to be cut, period. Current spending as a % of GDP is grossly higher than it should be, and the problem is not the discretionary budget, but "programatic" spending (entitlements).

[GoldenRivet]

Like a Jew in Berlin circa 1942

Something tells me you dont have it that bad :nope:

At any rate we have learned that deep tax cuts dont spur the economy.


we have also learned that taxing peoples asses off and bailing out big business fat cats with the money doesnt do it either.

so what is your solution guys?

[August]

Like a Jew in Berlin circa 1942

For you to say that shows you know absolutely nothing about the subject. Has the government made you wear one of those Obama symbols on your clothing? Have they confiscated everything you had of value and destroyed the rest?

Has anyone carted you and your family off to a death camp?

Frankly your post is an insult to the memory of the millions of people who were murdered or dispossessed by the nazis and it's not at all funny. :nope:

[GoldenRivet]

Frankly your post is an insult to the memory of the millions of people who were murdered or dispossessed by the nazis and it's not at all funny. :nope:

agreed.

in another since he is practically calling Houstonians or even Texans as a whole "NAZIs"

[August]

agreed.

in another since he is practically calling Houstonians or even Texans as a whole "NAZIs"


The thing is I usually like Mookies post but he went way over the line this time.

[SteamWake]

So... we were talking about??

[tater]

Current revenues as a % of GDP are just shy of 18% (17.7, 17.8, etc) with the Bush cuts in place.

This is an entirely normal value. The cuts did not decrease revenue as a % of GDP in any meaningful way. In addition, you cannot say what losses might have taken place with the previous rates, it's all speculation, and economic forecasting is frankly crap (coming from a physics background, I expect far smaller error bars before I'm willing to call something predictive).

The % has been in this range up and down since WW2 (between 16.something and 20% of GDP, and the vast majority of years in the 17% range).

Since revenues are essentially flat WRT marginal rates, why have them higher? Increase rates, and economy must contract just enough to offset the rise. Decrease rates, and it rises a little, keeping the revenue % nearly constant.

With any substantial changes in either direction, you'll see a spike for the year(s) of introduction, that's it. Then it stabilizes again.

What I'd prefer to see is a rationalization for spending 2/3 of our tax dollars (those of us that actually, you know, pay taxes enough to matter) on charity programs given mostly to people who don't need charity.

[mookiemookie]

For you to say that shows you know absolutely nothing about the subject. Has the government made you wear one of those Obama symbols on your clothing? Have they confiscated everything you had of value and destroyed the rest?

Has anyone carted you and your family off to a death camp?

Frankly your post is an insult to the memory of the millions of people who were murdered or dispossessed by the nazis and it's not at all funny. :nope:

agreed.

in another since he is practically calling Houstonians or even Texans as a whole "NAZIs"

The thing is I usually like Mookies post but he went way over the line this time.

Oh stop it. I'm the liberal. I'm supposed to be the easily offended one.

A little light reading for you: http://en.wikipedia.org/wiki/Hyperbole

[Aramike]

Something tells me you dont have it that bad :nope:

At any rate we have learned that deep tax cuts dont spur the economy.


we have also learned that taxing peoples asses off and bailing out big business fat cats with the money doesnt do it either.

so what is your solution guys?Deep tax cuts DO spur the economy, but only on a long term basis when consumer confidence is high. People tend to spend when they have more money in their pockets, but they tend to hoard that money when they feel as though they may need it down the road in the near term.

As far as a solution goes, your guess is as good as mine. However, I would make damned sure not to raise tax rates right now. I also would try further incentivizing companies that do production-oriented business stateside. Finally, I would penalize companies that produce goods in other nation's whose markets are not as open to us as ours are to them.

[Ducimus]

Something tells me you dont have it that bad :nope:

At any rate we have learned that deep tax cuts dont spur the economy.


we have also learned that taxing peoples asses off and bailing out big business fat cats with the money doesnt do it either.

so what is your solution guys?

Yesterday I watched some of this program on the history channel called "The crumbling of America." What it was about, was how our infrastructure is falling apart because it is not being maintained properly, or upgraded. This ranges from the sewer systems, highway and transportation, dams and levee's, the power grid, etc. Several examples the program cited were MAJOR eye openers. Particuarly the nations power grid, which, at current rate, according to estimates, will be on par with a 3rd world nation in 20 to 30 years. Imagine that, being equivlant to a 3rd world nation?

Upgrading, modernizing, replacing America's infra structure would be a HUGE source of jobs. Unfortunately, NOBODY wants to spend the money. What I think we should do, is shut down some of our overseas bases, like say in Korea. Also shut down any and all foreign aid, and the like that only bennfit other nations. Use that money, and start a work program to work on our infrastructure. I think this would go much farther to stimulate the economy then a lousy 200 dollar check that most people probably deposit in their saving because income and job prospects are dismal.

[tater]

Cancel all of the unspent "stimulus."

Spend a good fraction of it on infrastructure repair.

Save the rest.

Very little of the stimulus was actually roads, and other things that are both stimulating, and useful. Most was pork (estimates I've seen show ~90% of the "stimulus" was BS political payback).

[GoldenRivet]

Yesterday I watched some of this program on the history channel called "The crumbling of America." What it was about, was how our infrastructure is falling apart because it is not being maintained properly, or upgraded. This ranges from the sewer systems, highway and transportation, dams and levee's, the power grid, etc. Several examples the program cited were MAJOR eye openers. Particuarly the nations power grid, which, at current rate, according to estimates, will be on par with a 3rd world nation in 20 to 30 years. Imagine that, being equivlant to a 3rd world nation?

Upgrading, modernizing, replacing America's infra structure would be a HUGE source of jobs. Unfortunately, NOBODY wants to spend the money. What I think we should do, is shut down some of our overseas bases, like say in Korea. Also shut down any and all foreign aid, and the like that only bennfit other nations. Use that money, and start a work program to work on our infrastructure. I think this would go much farther to stimulate the economy then a lousy 200 dollar check that most people probably deposit in their saving because income and job prospects are dismal.

I can agree with this statement to some extent. a few points though.

1. What happens to South Korea when the United States closes a couple of bases? North Korea senses the US is weakening in its stance in the Pacific? Perhaps attacks them? maybe maybe not

2. Sure we need to upgrade our infrastructure but the fact is that almost every spending bill out there is filled with "pork spending" in other words. if you sign a bill for $1.5B you can bet the first half of that money is going to go to some BS like teaching Africans to wash their genitals or to study foot odor or some other nonsense.

3. In a time when a lot of people are fed up with government spending and stimulus packages to bail out big business and the ever increasing and astronomical national debt ... how do you as a representative of the people justify spending the trillions of dollars to upgrade all of the things you have mentioned?

The fact is that the federal government has its hands in too many things. and needs to shrink.

the government needs to do what it was meant to do and simply:

1. regulate interstate and international trade

2. levy fair taxes

3. defend the borders of our nation from invasion, intrusion or attack.

4. Let the states handle everything else.

[Tribesman]

When the top marginal rate dropped in the early 80s (hugely dropped from a top rate ~70%), tax revenues initially fell by a percent or two, then came back up.

And the whole point is that the theory is crap because the losses during the initial fall are never made up by the eventual rise.
So all it does is increase the debt which has to be serviced.

[Ducimus]

I can agree with this statement to some extent. a few points though.

1. Who the ******* cares? America First IMO.

2. Pity we can't purge washington of professional politicians worried about re election and special interest groups. That's why this is all academic, and nothing will ever be accomplished.... ever. All we'll get is the same old BS. I question if "We the people" have any real say in the country anymore.

3. Idea was to reallocate (as much as possible) money that was being spent that was not a direct bennffit to the American people. Foreign aid, bases where people spit in our faces, etc. Again, America first. Ideally you'd want infrastructure repair at the state level, but that is clearly not going to happen if California is any example.

We can sit here and wish, and armchair politico all we want, vote, whatever, but in the end, nothing will ever happen.

[tater]

And the whole point is that the theory is crap because the losses during the initial fall are never made up by the eventual rise.
So all it does is increase the debt which has to be serviced.

Huh? The revenue generated does not fall over any meaningful time period as a % of GDP.

GDP, OTOH, increases, so the total revenue actually does increase.

So you get a 1% drop for 1 year, then back up, say, and the GDP rises 3%. Net gain is 2%.

Regardless, doom and gloom that states that tax cuts HURT are similarly BS. If the claims they were harmful were true, revenue would plummet, and stay there with tax cuts. Neither are true. The idea that cuts contribute to growth seems true since revenue seems constant WRT GDP with cuts or tax increases. Raise taxes, and you get a 1 year spike, maybe, but GDP stagnates and total revenue remains constant.

[Aramike]

Oh stop it. I'm the liberal. I'm supposed to be the easily offended one.

A little light reading for you: http://en.wikipedia.org/wiki/Hyperbole Heh, fair enough - but perhaps for everyone's sake you could keep the Holocaust hyperbole to a minimum? :up:

[Tribesman]

So you get a 1% drop for 1 year, then back up, say, and the GDP rises 3%. Net gain is 2%.

No because the net gain is no where near 2% and the lost revenue is lost with interest.
One reason why the tax cut boost doesn't work is because to match the loss of revenue you have to cut the expenses, but in the wonderful way government and nations work cutting expenses is expensive so it either isn't done or would have been better if not done.
Its a never ending loop

[Torvald Von Mansee]

"Essential" services not crap like teaching Africans how to wash their genetailia.

And yet...you conservatives never seem to mention the 600 pound hog feeding at the public trough: the military-industrial-congressional complex (I prefer the original term Eisenhower was going to use).

We need to spend twice as much on the military as something like the next largest 30 countries...why?

[tater]

And yet...you conservatives never seem to mention the 600 pound hog feeding at the public trough: the military-industrial-congressional complex (I prefer the original term Eisenhower was going to use).

We need to spend twice as much on the military as something like the next largest 30 countries...why?

If we didn't, the free world would have to invent a replacement for us, that's why.

The US occupies a unique geopolitical position in the world. It;s not just the size of the economy, but our physical location away from other major powers (Europe and Asia), and having access to both oceans (and a Navy to control both of them).

Regardless, the military is not the bulk of spending. It's maybe 50% of the discretionary budget, but the discretionary budget is only 1/3 of the US budget—2/3 is social programs (entitlements). That doesn't count debt service, either.

Any meaningful spending cuts MUST come from entitlements.

How about medicare/medicaid stop covering any non-palliative care for terminal disease? Yep, "death panels." If you want to pay for stuff like that, have private insurance. People on charity care should be SOL—that care is ineffective anyway, and the outcome—death—is certain anyway.

[tater]

BTW, can I just not pay, dunno, say 42 grand in taxes next year? Or heck, just the first 42 grand from Bush cut expiration over the next few years.

I promise to pay it all back if I'm ever made Secretary of the Treasury. Really, every penny. Heck, I'll pay it back if I get ANY cabinet position. That's fair, right?

[Tribesman]

Regardless, the military is not the bulk of spending. It's maybe 50% of the discretionary budget, but the discretionary budget is only 1/3 of the US budget—2/3 is social programs (entitlements). That doesn't count debt service, either.

Any meaningful spending cuts MUST come from entitlements.

Entitlements?
For a long long time the major expense the US govt had was pensions and payments to civil war vets or their relatives.
The current entitlements program for social spending on vets and their families is the 2nd biggest dept of the government ......after the military.
So where are you going to swing that axe on social spending?

[tater]

Entitlements?
For a long long time the major expense the US govt had was pensions and payments to civil war vets or their relatives.
The current entitlements program for social spending on vets and their families is the 2nd biggest dept of the government ......after the military.
So where are you going to swing that axe on social spending?

It's not the biggest expense, entitlements (SS, medicare, medicaid, etc) is BY FAR. Veteran's affairs is a fraction of entitlement spending.

Cut SS, medicare and medicaid first.

I don't expect to live off that, so I'm not expecting anyone else to. (obviously it would have to be a phased thing, I do not suggest ending payments to current retirees, but a phased increase in retirement age, and means testing so only people that are too poor to survive get any safety net. As a "retirement plan" it should cease to exist, the Constitution doesn't guarantee a life without work after some arbitrary age.

BTW, when pensions was a major outlay, total government spending as a % of GDP was a tiny fraction of what it is today. (like 2.5% vs 25%)

[AVGWarhawk]

SS is nothing but a revolving account or rainy day fund for Washington. Guess what...it is always raining in Washington. So yeah, SS is basically a joke.

Let dig into say...the welfare system.....:yep: Gosh...I know two that are on the governments tab. These are just 2 of thousands taking money were money is not due. High time welfare officials do spot check follow up. The insurance companies follow up on those claiming disablity...why does'nt uncle Sam?

[mookiemookie]

Regardless, the military is not the bulk of spending. It's maybe 50% of the discretionary budget, but the discretionary budget is only 1/3 of the US budget—2/3 is social programs (entitlements). That doesn't count debt service, either.

http://upload.wikimedia.org/wikipedia/commons/c/c8/2010_Receipts_%26_Expenditures_Estimates.PNG

[tater]

Assuming to scale, that shows my point nicely. Military ~50% of discretionary. The bulk "mandatory."

[AVGWarhawk]

What do you believe the 'other' is for the mandatory part?

[antikristuseke]

Hookers and cocaine.

[AVGWarhawk]

Hookers and cocaine.


:har: I was thinking Pelosi face lift fund.

Ok back on topic.

[Torvald Von Mansee]

It's not the biggest expense, entitlements (SS, medicare, medicaid, etc) is BY FAR. Veteran's affairs is a fraction of entitlement spending.

Cut SS, medicare and medicaid first.

I don't expect to live off that, so I'm not expecting anyone else to. (obviously it would have to be a phased thing, I do not suggest ending payments to current retirees, but a phased increase in retirement age, and means testing so only people that are too poor to survive get any safety net. As a "retirement plan" it should cease to exist, the Constitution doesn't guarantee a life without work after some arbitrary age.

BTW, when pensions was a major outlay, total government spending as a % of GDP was a tiny fraction of what it is today. (like 2.5% vs 25%)

So...cut charity so the wealthy can keep a tax cut?

Do you call yourself a Christian?

[gimpy117]

So...cut charity so the wealthy can keep a tax cut?

Do you call yourself a Christian?

Agree. The budget needs balancing. Time the rich ponied up like they used to.

[Torvald Von Mansee]

If we didn't, the free world would have to invent a replacement for us, that's why.

The US occupies a unique geopolitical position in the world. It;s not just the size of the economy, but our physical location away from other major powers (Europe and Asia), and having access to both oceans (and a Navy to control both of them).

It's not our job to police the world, only guard our interests. And there's PLENTY of bloat in the military budget.

[August]

What I think we should do, is shut down some of our overseas bases, like say in Korea. Also shut down any and all foreign aid, and the like that only bennfit other nations. Use that money, and start a work program to work on our infrastructure. I think this would go much farther to stimulate the economy then a lousy 200 dollar check that most people probably deposit in their saving because income and job prospects are dismal.

Though I think Korea still deserves our military commitment I can agree with the general idea of closing foreign bases that have outlived their usefulness. Europe doesn't really need us there anymore and there is also a lot of boondoggle in our foreign aid that could be cut back as well.

[Sailor Steve]

Agree. The budget needs balancing. Time the rich ponied up like they used to.
They never did until 1913. The income tax was created solely to force the rich to pay "their fair share". If taxes weren't necessary at all you'd still be crying about "the rich".

[The Third Man]

I cannot think of any reason why I would like the government to take my property in order to give it back to me if I follow their rules, paper work, and regulation, with interest. Let me just keep my money.

[Tribesman]

Hey Tater, "means testing"???????
Can I point you back to the bit about cutting expenses being very expensive?

BTW, when pensions was a major outlay, total government spending as a % of GDP was a tiny fraction of what it is today.
Yes back then you had a tiny military, an export led economy and very little overseas commitments.

[gimpy117]

They never did until 1913. The income tax was created solely to force the rich to pay "their fair share". If taxes weren't necessary at all you'd still be crying about "the rich".

in 3 years it will be 100 years of taxes. Taxes are a necessary thing. Unless you live in Monaco (a country basically existing just because it has no taxes) or Somalia you probably have them. The thing is, The Mega rich pay a disproportionate amount. They have so much expendable income yet are not asked to pay much more than the rest of us (unless you are cripplingly poor).
so when it comes down to it, me making 5,000 for school and having somwhere around $900.00 taken out has more effect than a rich man having his 35% top rate taken.

[tater]

Hey Tater, "means testing"???????
Can I point you back to the bit about cutting expenses being very expensive?


Yes back then you had a tiny military, an export led economy and very little overseas commitments.

We either cut entitlements, or close shop. The rest of the budget is practically noise.

Yeah, "means testing." SS/Medicare should be a safety net ONLY. So only people who will literally starve to death without it should get it. Once that is set, the FICA tax rates can be dropped (or the cap lowered).

Regarding overseas commitments, the current % spent—~25% of GDP—would be fine without entitlements. Then the total is more like 10% of GDP, of which the military is ~ half.

So with virtually no entitlements (nothing but a safety net for the most poor), we could maintain our military, etc, and still spend a fraction of what we do now.

[Sailor Steve]

in 3 years it will be 100 years of taxes. Taxes are a necessary thing.
Yes they are. Without them a government can't exist. But creating taxes just to soak the rich is an abuse of the reason governments exist in the first place. You can argue the value of helping others all you like, but forcing someone else to fulfill a moral obligation as you see it is abuse, no matter how you sugarcoat it.

The thing is, The Mega rich pay a disproportionate amount. They have so much expendable income yet are not asked to pay much more than the rest of us (unless you are cripplingly poor).
By whose standard? Taxes exist so government can function. Anything more than that is an attempt to legislate your personal morality, pure-and-simple.

so when it comes down to it, me making 5,000 for school and having somwhere around $900.00 taken out has more effect than a rich man having his 35% top rate taken.
That statement makes no sense. You making "5,000" what? If you only make $5000 per year you pay no taxes. I know a guy who gets a huge tax break because of his nine kids. The people who prudently decided to help the population problem by having none have to pay for their schooling. Right? Wrong?

The problem with money isn't this country isn't the bloated individuals with "too much money" - it's the bloated government that keeps spending other people's money to expand its own wasteline (and yes, I misspelled that intentionally).

Yes, taxes are necessary. But they are still a necessary evil, and until you see it that way you will continue to think that government is the answer to all our problems, when in fact it is the creator of most of them.

[Aramike]

Yes they are. Without them a government can't exist. But creating taxes just to soak the rich is an abuse of the reason governments exist in the first place. You can argue the value of helping others all you like, but forcing someone else to fulfill a moral obligation as you see it is abuse, no matter how you sugarcoat it.


By whose standard? Taxes exist so government can function. Anything more than that is an attempt to legislate your personal morality, pure-and-simple.


That statement makes no sense. You making "5,000" what? If you only make $5000 per year you pay no taxes. I know a guy who gets a huge tax break because of his nine kids. The people who prudently decided to help the population problem by having none have to pay for their schooling. Right? Wrong?

The problem with money isn't this country isn't the bloated individuals with "too much money" - it's the bloated government that keeps spending other people's money to expand its own wasteline (and yes, I misspelled that intentionally).

Yes, taxes are necessary. But they are still a necessary evil, and until you see it that way you will continue to think that government is the answer to all our problems, when in fact it is the creator of most of them.Oh, man - excellent post Steve! :salute:

[August]

Oh, man - excellent post Steve! :salute:

+1 !

[Takeda Shingen]

As a related anecdote, I have always found the class warfare endorsed by the Left to be just as repugnant as the ethnocentric fear endorsed by the Right.

[The Third Man]

When the government asks for personal property (money) it is deemed necessary. If a person asks the same question it is deemed a crime.

[mookiemookie]

When the government asks for personal property (money) it is deemed necessary. If a person asks the same question it is deemed a crime.

If you don't want to live in a society, you can move to someplace without a functioning central government like Somalia.

[August]

If you don't want to live in a society, you can move to someplace without a functioning central government like Somalia.

And another +1 !

[Sailor Steve]

When the government asks for personal property (money) it is deemed necessary. If a person asks the same question it is deemed a crime.
And likewise when the government spends money it can't repay it is applauded for going and taking it from people who still have some. If you or I do the same they applaud the people who come and arrest us.

[Oberon]

The difference between the rich and the poor is that the rich can move to the Virgin Islands, or Jersey or the UAE or at the very least move their money around. The poor often don't have that luxury, they are static cash flows which makes them easier to extract funds from than the rich who can be adept at hiding it. By rich, of course, I mean those with six figure salaries, the extremely rich, the kind of people that most people think of when the terms 'fat cat' get thrown around.

Eh, capitalism is an awkward thing, some places it works, others it doesn't, and it depends on how you look at it really. No way that everyone is going to be treated the same, not on this planet, not in any of our lifetimes, so you just have to live within the system you live in. Grass isn't always greener...after all, look what happened after Lenin. :dead:

[gimpy117]

That statement makes no sense. You making "5,000" what? If you only make $5000 per year you pay no taxes. I know a guy who gets a huge tax break because of his nine kids. The people who prudently decided to help the population problem by having none have to pay for their schooling. Right? Wrong?


oh no, I pay them, I just have to file a tax return to get a refund. But i only get income refunds. If what you are saying was true, i would have and extra 900 in my account right now. which would really help because I could use that cash right about now for school.

also steve, I was not talking about taxing the rich for a "HA! sucks to you" sort of approach, Im talking about how our government is in a money crunch, and the bush tax cuts helped put us there. We need that extra revenue. It will be an unpopular move for sure, But it's not unprecedented.

[August]

oh no, I pay them, I just have to file a tax return to get a refund. But i only get income refunds. If what you are saying was true, i would have and extra 900 in my account right now.

also steve, I was not talking about taxing the rich for a "HA! sucks to you" sort of approach, Im talking about how our government is in a money crunch, and the bush tax cuts helped put us there. We need that extra revenue. It will be an unpopular move for sure, But it's not unprecedented.

IMHO the government is in a money crunch because it has wasted and continues to waste enormous amounts of it. It's very difficult to sell a solution that involves giving them even more money.

All you'll accomplish is to set the bar higher and we'll be back here in a few years debating having to give them even more money to get them out of their latest boondoggles.

[tater]

If you pay positive income taxes on $5000 income you're doing it wrong—assuming you are not a dependent.

The tax cuts have pretty much nothing to do with the government's money problems. The problem is they spend too much, period. There is no other problem.

Revenues are fine as a % of GDP WRT modern norms with the top marginal rate down to 35 (all the other tax changes don't mean squat, since unless you pay in the top bracket you don't pull even a single "fair share" (some folks in the top of the 2d quintile might actually pay a "fair share" assuming they are single).

Since revenues remain fairly constant WRT GDP regardless of small changes (or even large changes) in marginal tax rates, clearly raising taxes doesn't help raise more money. Why is open to discussion, but the idea that it stifles growth makes plenty of sense in that context. The converse, that lowering rates seems to enhance growth enough to have the "cost" of the lower rates offset seems also to be true. Obviously outside of some range this might fall apart, economics is not remotely predictable (sorry to any economists out there that think they have some sort of science—they don't. (yeah, I'm a physics snob... tough :) )

[gimpy117]

If you pay positive income taxes on $5000 income you're doing it wrong—assuming you are not a dependent.


oh no im a Dependant, I basically work to try to pay for as much school as i can

[Aramike]

Im talking about how our government is in a money crunch, and the bush tax cuts helped put us there. We need that extra revenue. It will be an unpopular move for sure, But it's not unprecedented. What about the approach of cutting spending?

[mookiemookie]

IMHO the government is in a money crunch because it has wasted and continues to waste enormous amounts of it. It's very difficult to sell a solution that involves giving them even more money.

All you'll accomplish is to set the bar higher and we'll be back here in a few years debating having to give them even more money to get them out of their latest boondoggles.

Actually what it boils down to is increasing our debt for no appreciable return. It's been empiracally proven that the Bush tax cuts, or tax cuts for the rich in general (i.e. Trickle down economics) do not spur growth, no matter what metric you want to use. You can debate theory and what should or ought to happen all you like, but when it comes down to measurable and data driven analysis, it just doesn't fly. Tax cuts for the rich are spending in exactly the same way as entitlements for the poor are.

[August]

Tax cuts for the rich are spending in exactly the same way as entitlements for the poor are.

Y'know you seem to think that taxes are something the government owns instead of something the government takes from the rightful owners. It's a subtle but important ideological difference.

Now the Dems can call it tax cuts all they want but the bottom line is they're advocating a tax increase and everybody knows it.

So we'll see what the voters think of that idea come November. :DL

[tater]

Actually what it boils down to is increasing our debt for no appreciable return. It's been empiracally proven that the Bush tax cuts, or tax cuts for the rich in general (i.e. Trickle down economics) do not spur growth, no matter what metric you want to use. You can debate theory and what should or ought to happen all you like, but when it comes down to measurable and data driven analysis, it just doesn't fly. Tax cuts for the rich are spending in exactly the same way as entitlements for the poor are.

Tax cuts are NEVER "spending." Spending if writing a check.

The government should be FORCED to spend only what it takes in with any programs not specifically mentioned in the Constitution at the end of the line (and first to go).

Tax revenues are constant regardless of rate changes. What is the mechanism? It can only be growth at some level, particularly as the labor force contracts.

We should pick limited things for the feds to do, then pay for them. Everything else should get scrapped. Retirement for all is not a "right." Stop that first.

[Sailor Steve]

oh no, I pay them, I just have to file a tax return to get a refund. But i only get income refunds. If what you are saying was true, i would have and extra 900 in my account right now. which would really help because I could use that cash right about now for school.
Yes, it's true - if you work taxes are taken out. And if you make less than a certain amount you end up getting it all back - after the government has earned some interest on it.

also steve, I was not talking about taxing the rich for a "HA! sucks to you" sort of approach, Im talking about how our government is in a money crunch, and the bush tax cuts helped put us there. We need that extra revenue. It will be an unpopular move for sure, But it's not unprecedented.
As has been pointed out, the government is not in trouble because of Bush's tax cuts, or because of Reagan's, or because of Kennedy's back in 1963. The government is in trouble because congress regularly (read always, every single year) spends more money than they take in, the same kind of practice that will get you or me thrown in jail.

Here's an example: The government proudly boasts that they have created 10,000 new jobs. Only problem - they are jobs with the government. Sure, they pay taxes on what they make, but the money to pay them comes from taxes. It's this simple - every single government job is also welfare. A great many of those jobs are necessary, but many more of them aren't. Congressmen are paid $174,000 per year. Whether they actually earn that is a subject for another discussion, but my point is that they don't sell anything or create the corporate wealth that you complain about. They are paid from your taxes! As is every staff member they hire. Here in Utah our wonderfully conservative senator Orrin Hatch was paid that same $174,000 last year. But his staff was paid an additional two million dollars. That all came from taxes. Multiply that by 535, and you get over a billion dollars of your tax money every year just to pay the congressional staff workers.

Did you know that during the Constitutional Debates Benjamin Franklin proposed that Congress not be paid at all?

[edit] I just did a quick check, and it gets worse. Did you know that Speaker Of The House Nancy Patricia D'elassandro Pelosi's salary expenditures for last year totaled over one million dollars? To be fair, that includes her own $223,500 salary. I'm not including perks that come from outside sources, because that isn't your tax money. But the numbers listed are.

And you trust the government more than you trust the 'evil rich'? At least they stole theirs fair and square.
http://www.legistorm.com/salaries.html

[Aramike]

Actually what it boils down to is increasing our debt for no appreciable return. It's been empiracally proven that the Bush tax cuts, or tax cuts for the rich in general (i.e. Trickle down economics) do not spur growth, no matter what metric you want to use. You can debate theory and what should or ought to happen all you like, but when it comes down to measurable and data driven analysis, it just doesn't fly. Tax cuts for the rich are spending in exactly the same way as entitlements for the poor are.It depends on what you qualify as "rich".

The Bush tax cuts was indeed a large cut for the rich, but they were also large cuts for those business owners seeking growth.

You're right - trickle down economics is a myth, but that's not why tax cuts work in the first place. An excellent article: http://www.businessandmedia.org/commentary/2006/com20060111.asp

A market economy is based on voluntary exchange. I cannot force you to buy something that I produce, and you cannot force me to produce something for you. The only way you can get rich in a market economy is to produce something that others want and are willing to pay for. Since there are not a lot of rich people, you are more likely to get rich producing something for the poor and middle class that they will want and at a cost that they can and are willing to pay.

The marginal tax rate is the one that affects your incentive to do this. It tells you how much of the next dollar the government will take and how much of the next dollar you get to keep. Lowering the marginal tax rates creates a greater incentive for people to find a way to produce things for the poor. This is what happens in any market economy, be it the United States or Estonia (which is growing rapidly after reducing its top marginal tax rates). It also makes it easier for people who are poor to become rich, thus increasing their willingness to work hard and risk their assets to produce what others will want.

If the government taxes away 90 percent of each additional dollar you earn, there will be little incentive for you to risk your life's earnings in a new venture that has an uncertain payoff, and it will be very difficult for you to move from poverty to wealth. On the other hand, if you get to keep 75 percent of each dollar that you earn, you will have an incentive to risk your capital, work hard, and produce goods and services that others want at a cost they can afford.

[mookiemookie]

It depends on what you qualify as "rich".

The Bush tax cuts was indeed a large cut for the rich, but they were also large cuts for those business owners seeking growth.

You're right - trickle down economics is a myth, but that's not why tax cuts work in the first place. An excellent article: http://www.businessandmedia.org/commentary/2006/com20060111.asp

[/FONT]

The article's central premise highlights the fatal flaw of trickle down, supply side, Laffer curve, whatever you want to call it economics. Lower tax rates are not as much of an incentive to work more as the author thinks. People will continue to work and earn money, regardless of the general level of taxes. Look at an effective 100% tax rate under Soviet Russia - by the author's line of thinking, nobody would work. But they did. When our top marginal tax rates were 90% in the 1950s we saw a big economic boom.

The Laffer curve also fails on the lower end of the tax rate spectrum. If you're keeping more of what you earn (i.e. paying a lower tax rate) the effect of lower taxes is not going to have the same effect as it would if you're a high earner (i.e. high taxpayer). You're giving up tax revenues and not getting much in return for it.

Plus, if you're working a full time 9-5 schmuck office job, you're going to continue to work your 9-5 schmuck office job regardless of the tax rates because you need to put food on the table. Most people are fairly inelastic in their work habits.

I've said it before - no one in their right mind is going to give up extra income because the government is going to tax a portion of it. I'd love to make enough to have the problem of dealing with 35% or 39.5% top marginal tax rates. :yeah:

[August]

Look at an effective 100% tax rate under Soviet Russia - by the author's line of thinking, nobody would work. But they did.

They only worked because it meant a one way trip to Siberia for them and their family and possibly a bullet if they didn't do what they were told. Is that the kind of work incentive the Progressives really want to institute?

[mookiemookie]

They only worked because it meant a one way trip to Siberia for them and their family and possibly a bullet if they didn't do what they were told. Is that the kind of work incentive the Progressives really want to institute?

Yes. You figured out our plan. :ping:

[AVGWarhawk]

Yes. You figured out our plan. :ping:

Have to agree with August on that one. Permafrost...is not your friend.

[August]

I've said it before - no one in their right mind is going to give up extra income because the government is going to tax a portion of it. I'd love to make enough to have the problem of dealing with 35% or 39.5% top marginal tax rates. :yeah:

That's assuming you can still make a profit on the remainder. Not all business overhead is deductible. 4.5% could therefore easily be the difference between a profitable and unprofitable venture.

Besides people have a right to equal treatment under the law. Graduated tax rates are inherently contrary to that right.

[mookiemookie]

Besides people have a right to equal treatment under the law. Graduated tax rates are inherently contrary to that right.

I doubt you'd find any court in the nation that would agree that being rich is a suspect classification. No fundamental right to life liberty or pursuit of happiness is being denied. A progressive tax system also pases the rational basis review.

[August]

I doubt you'd find any court in the nation that would agree that being rich is a suspect classification. No fundamental right to life liberty or pursuit of happiness is being denied.


So you're saying that discrimination only exists if it involves a certain set of legislated circumstances? That's a lot like saying you don't have a right unless it's mentioned in the Bill of Rights.


A progressive tax system also pases the rational basis review

Sez you. Show me where it's been applied to progressive taxation.

[gimpy117]

That's assuming you can still make a profit on the remainder. Not all business overhead is deductible. 4.5% could therefore easily be the difference between a profitable and unprofitable venture.


If my business was that close to losing money, I'd probably either find new work, or rethink my business model

[August]

If my business was that close to losing money, I'd probably either find new work, or rethink my business model

So what kind of profit margin does your business enjoy?

[mookiemookie]

Show me where it's been applied to progressive taxation.

Page 5-10: https://docs.google.com/viewer?url=http://www.courtinfo.ca.gov/opinions/archive/B211815.DOC&pli=1

Especially the last sentence on page 10.

[gimpy117]

So what kind of profit margin does your business enjoy?

like a bazillion ;)

[August]

Page 5-10: https://docs.google.com/viewer?url=http://www.courtinfo.ca.gov/opinions/archive/B211815.DOC&pli=1

Especially the last sentence on page 10.

Wow a California court, imagine that. :DL

But I guess you got me. Still, we'll see how the voters feel about progressive taxation come November.

[August]

like a bazillion ;)

:roll:

[mookiemookie]

Wow a California court, imagine that. :DL

But I guess you got me. Still, we'll see how the voters feel about progressive taxation come November.

A California court quoting the Supreme Court.

And regardless of who you put into office, the tax system isn't going to appreciably change much.

[Aramike]

People will continue to work and earn money, regardless of the general level of taxes. That wasn't the author's point at all. His point was that less people would be willing to risk capital in order to start businesses and therefore attempt to become rich - I happen to agree with the author there.

Come on, mookie, you're a lib ... but you're advocating policies which lead people straight into the employ of the evil corporations in the name of job security.