Cutting taxes for the rich does not stimulate the economy.

[Acanthus]

http://www.mediafire.com/?nmxjmy4nzmm

This is a brief paper i wrote on the failure of supply-side economics.

If you would like to dispute any of the data, i can directly link the data that i drew my conclusions from.

My goal is to put to rest the fallacy that cutting taxes always helps the economy. This is not the case and even back in the Regean days was not the ploy they were trying to tell the public. Regeanomics was based on the fact that in the very specific case of the times, under those very specific conditions, economists thought that cutting taxes would increase tax revenue. This has somehow become the bastardized supply-side economics that republicans push today.

 

[charrison]

Originally posted by: Acanthus
http://www.mediafire.com/?nmxjmy4nzmm

This is a brief paper i wrote on the failure of supply-side economics.

If you would like to dispute any of the data, i can directly link the data that i drew my conclusions from.

My goal is to put to rest the fallacy that cutting taxes always helps the economy. This is not the case and even back in the Regean days was not the ploy they were trying to tell the public. Regeanomics was based on the fact that in the very specific case of the times, under those very specific conditions, economists thought that cutting taxes would increase tax revenue. This has somehow become the bastardized supply-side economics that republicans push today.

For the most part cutting capitcal gains taxes has increased tax revenues.

But lets agree, there is a point where taxes become counterproductive at raising revenue when they get too high. Finding the optimal rate for revenue collection is the hard part.

 

[Acanthus]

Originally posted by: charrison

Originally posted by: Acanthus
http://www.mediafire.com/?nmxjmy4nzmm

This is a brief paper i wrote on the failure of supply-side economics.

If you would like to dispute any of the data, i can directly link the data that i drew my conclusions from.

My goal is to put to rest the fallacy that cutting taxes always helps the economy. This is not the case and even back in the Regean days was not the ploy they were trying to tell the public. Regeanomics was based on the fact that in the very specific case of the times, under those very specific conditions, economists thought that cutting taxes would increase tax revenue. This has somehow become the bastardized supply-side economics that republicans push today.

For the most part cutting capitcal gains taxes has increased tax revenues.

But lets agree, there is a point where taxes become counterproductive at raising revenue when they get too high. Finding the optimal rate for revenue collection is the hard part.

Some of the countries strongest growth was when taxes on the highest bracket topped 89%. My argument always has been, the rich will invest to get more money, regardless of the tax rate.

 

[charrison]

Originally posted by: Acanthus

Originally posted by: charrison

Originally posted by: Acanthus
http://www.mediafire.com/?nmxjmy4nzmm

This is a brief paper i wrote on the failure of supply-side economics.

If you would like to dispute any of the data, i can directly link the data that i drew my conclusions from.

My goal is to put to rest the fallacy that cutting taxes always helps the economy. This is not the case and even back in the Regean days was not the ploy they were trying to tell the public. Regeanomics was based on the fact that in the very specific case of the times, under those very specific conditions, economists thought that cutting taxes would increase tax revenue. This has somehow become the bastardized supply-side economics that republicans push today.

For the most part cutting capitcal gains taxes has increased tax revenues.

But lets agree, there is a point where taxes become counterproductive at raising revenue when they get too high. Finding the optimal rate for revenue collection is the hard part.

Some of the countries strongest growth was when taxes on the highest bracket topped 89%. My argument always has been, the rich will invest to get more money, regardless of the tax rate.

And the other thing is true is anyone with money will seek to make the most of their money. When taxes are high, money will find shelters to hide in. No one is going to make investment if they will be taxed at 75%, unless the reward is absolutely huge.

What you need to realize is that as tax rates have fallen over the years, money finds its way out of shelters to be taxed. So even though tax rates are much lower today, the rich a paying a much larger share than when tax rates where higher. This is true in the US and pretty much every other country that has got from very high tax rates to much lower tax rates.

 

[Craig234]

Acanthus:

Cutting capital gains and/or the highest tax bracket does not help do anything but make the rich more rich.

That's largely right. But there are cases where it's not - check the JFK tax cut for an example where it was more helpful, cutting the top rate from 91% to 70%.

Originally posted by: charrison
And the other thing is true is anyone with money will seek to make the most of their money. When taxes are high, money will find shelters to hide in. No one is going to make investment if they will be taxed at 75%, unless the reward is absolutely huge.

What you need to realize is that as tax rates have fallen over the years, money finds its way out of shelters to be taxed. So even though tax rates are much lower today, the rich a paying a much larger share than when tax rates where higher. This is true in the US and pretty much every other country that has got from very high tax rates to much lower tax rates.

Wrong, but if you were right, the answer is close the loopholes, not surrender and let the wealthy get away with not paying what they should.

I heard an anecdote today of a small business owner who said when the tax rate was higher, he felt incented to put a lot more money back into the business and paying employees, because he didn't get to keep as much; but when Reagan lowered it way down, he got to keep so much that he wanted to pay a lot more to himself and less to the business and employees. The incentives of high tax rates aren't just 'tax shelters'.

 

[charrison]

Originally posted by: Craig234

I heard an anecdote today of a small business owner who said when the tax rate was higher, he felt incented to put a lot more money back into the business and paying employees, because he didn't get to keep as much; but when Reagan lowered it way down, he got to keep so much that he wanted to pay a lot more to himself and less to the business and employees. The incentives of high tax rates aren't just 'tax shelters'.

The purpose of taxes is fund the government, nothing more nothing less. Excessively high taxes keep taxes from being paid. The point it to find the optimum rate.

And what did this guy do the money he saved because of lower taxes? Did he put it under his mattress, or did he put it back in the economy. My guess is it went back into the economy and not under his mattress.

 

[soccerballtux]

Need to put (and keep) capital gains at 0% for any and everyone making below a certain amount of money/year...say $100k, depending on children, cost of living, etc.
We need to encourage people to save. Empower people to move from lower-middle to middle to upper middle class.

I don't think anyone would disagree with me on this principle; disagreement over the cutoff point sure but you get my point.

OP--One of the things that helped during Reagan days was expensive money-- large incentive to simply save for the interest rate. This meant lots of people had money sitting around to spend when cool new product xyz (computer) came out.

 

[Craig234]

Originally posted by: charrison

Originally posted by: Craig234

I heard an anecdote today of a small business owner who said when the tax rate was higher, he felt incented to put a lot more money back into the business and paying employees, because he didn't get to keep as much; but when Reagan lowered it way down, he got to keep so much that he wanted to pay a lot more to himself and less to the business and employees. The incentives of high tax rates aren't just 'tax shelters'.

The purpose of taxes is fund the government, nothing more nothing less. Excessively high taxes keep taxes from being paid. The point it to find the optimum rate.

We're so far from the excessive tax rates that cause lower taxes, it's not worth discussing.

And the purpose isn't to find the 'optimal' rate, it's to tax at the rate needed for paying the bills, Keynesian economics' deficits notwithstanding.

And what did this guy do the money he saved because of lower taxes? Did he put it under his mattress, or did he put it back in the economy. My guess is it went back into the economy and not under his mattress.

Here's what the wealthy mostly do with wealth: own more. Some parts increase economic investment and productivity, small parts are consumed, mainly they own more.

If they buy an existing business, that's more profit, on average, for them to then buy another business, and the trend is toward concentration of wealth, not increased productivity. Democracy provides some limitations to the concentration of wealth, but it happens too much with many Americans - you among them, I suspect - victims of propaganda why the policies that benefit the wealthy are good for the nation.

The wealthy often do add value to the economy, creating companies that increase wealth and employment. The workers add value to the economy, too.

So you should not use one-sided views that only pay attention to the wealthy, and instead look for 'balance' - that's where to look for optimal tax rates.

Since Reagan, the pendulum has been well on the side of the welthy, who have skyrocketed their wealth while most are flat after inflation. That's imbalanced.

 

[soccerballtux]

Craig234 I think you're right on.

 

[Craig234]

Originally posted by: soccerballtux
Need to put (and keep) capital gains at 0% for any and everyone making below a certain amount of money/year...say $100k, depending on children, cost of living, etc.
We need to encourage people to save. Empower people to move from lower-middle to middle to upper middle class.

I don't think anyone would disagree with me on this principle; disagreement over the cutoff point sure but you get my point.

OP--One of the things that helped during Reagan days was expensive money-- large incentive to simply save for the interest rate. This meant lots of people had money sitting around to spend when cool new product xyz (computer) came out.

IMO we need to raise the capital gains rate to at least the same as income, though I'm leaning towards no problem with your exemption up to a certain amount.

 

[Acanthus]

I wholeheartedly agree Craig that there is an optimal place to put rates.

The paper was more about stomping out the "low taxes are great for everyone, especially if its for the rich!" mantra.

 

[miketheidiot]

there is nothing to suggest that lower tax rates makes people invest 'smarter' or 'dumber', in otherwise it shouldn't have any significant impact on market efficiency.

for the austrians out there, you could possibly make the argument that extremely low rates on dividend, capital gains on income lead to excessive financial capital ie cheap money, just like federal reserve policy. Of course austrian economics is horseshit anyways.

 

[trenchfoot]

Originally posted by: Acanthus
http://www.mediafire.com/?nmxjmy4nzmm

This is a brief paper i wrote on the failure of supply-side economics.

If you would like to dispute any of the data, i can directly link the data that i drew my conclusions from.

My goal is to put to rest the fallacy that cutting taxes always helps the economy. This is not the case and even back in the Regean days was not the ploy they were trying to tell the public. Regeanomics was based on the fact that in the very specific case of the times, under those very specific conditions, economists thought that cutting taxes would increase tax revenue. This has somehow become the bastardized supply-side economics that republicans push today.

In support of your premise I submit as evidence the end result of the eight years that Cheney and Bush put into practice that very ideology which you have disproved.

 

[boomerang]

This thread reminds me of that old saying;

Figures lie and liars figure.

 

[charrison]

Originally posted by: Craig234


We're so far from the excessive tax rates that cause lower taxes, it's not worth discussing.

And the purpose isn't to find the 'optimal' rate, it's to tax at the rate needed for paying the bills, Keynesian economics' deficits notwithstanding.

You do want to find the optimal tax rate. Tax to little you shorts yourself on revenues, tax to much and you have the same problem.

And what did this guy do the money he saved because of lower taxes? Did he put it under his mattress, or did he put it back in the economy. My guess is it went back into the economy and not under his mattress.

Here's what the wealthy mostly do with wealth: own more. Some parts increase economic investment and productivity, small parts are consumed, mainly they own more.

If they buy an existing business, that's more profit, on average, for them to then buy another business, and the trend is toward concentration of wealth, not increased productivity. Democracy provides some limitations to the concentration of wealth, but it happens too much with many Americans - you among them, I suspect - victims of propaganda why the policies that benefit the wealthy are good for the nation.

The wealthy often do add value to the economy, creating companies that increase wealth and employment. The workers add value to the economy, too.

So you should not use one-sided views that only pay attention to the wealthy, and instead look for 'balance' - that's where to look for optimal tax rates.

Since Reagan, the pendulum has been well on the side of the welthy, who have skyrocketed their wealth while most are flat after inflation. That's imbalanced.[/quote]


There is no way to consume anything without affecting production. Even buying things that currently exist affects production as they are exchanging money for something else.

 

[StageLeft]

The rich will always get more money unless their tax rate is 100%. The problem is what to do with the money taken via taxes. Perhaps instead of in a larger gov it could be thrown to the people, but then that's really what we have here anyway.

 

[lupi]

Oh please god can someone tell me how this abysmal country got started and managed to last so long when there was no income tax.

 

[Bateluer]

Originally posted by: lupi
Oh please god can someone tell me how this abysmal country got started and managed to last so long when there was no income tax.

Exactly. There were only a few, small temporary income taxes prior to the 16th Amendment in 1913. Before that, income tax was levied in a few wars, War of 1812, the Civil War, and in 1898. And the tax brackets ranged from 1 to 7%.

We need to cap the tax rate at 10% maximum, and then severely slash and scale back our bloated government bureaucracy.

Here's a start. Reduce the House of Representatives from 437 to 217 and the Senate from 100 to 50, allow with a similar reduction in staff and aides. Each state gets the same proportion of representation in Congress and the tax payer saves millions. Win-win.

 

[Genx87]

Originally posted by: Acanthus

Originally posted by: charrison

Originally posted by: Acanthus
http://www.mediafire.com/?nmxjmy4nzmm

This is a brief paper i wrote on the failure of supply-side economics.

If you would like to dispute any of the data, i can directly link the data that i drew my conclusions from.

My goal is to put to rest the fallacy that cutting taxes always helps the economy. This is not the case and even back in the Regean days was not the ploy they were trying to tell the public. Regeanomics was based on the fact that in the very specific case of the times, under those very specific conditions, economists thought that cutting taxes would increase tax revenue. This has somehow become the bastardized supply-side economics that republicans push today.

For the most part cutting capitcal gains taxes has increased tax revenues.

But lets agree, there is a point where taxes become counterproductive at raising revenue when they get too high. Finding the optimal rate for revenue collection is the hard part.

Some of the countries strongest growth was when taxes on the highest bracket topped 89%. My argument always has been, the rich will invest to get more money, regardless of the tax rate.

Depends if you truely want to gather the tax or if you want to have a pretty number to look at. One interesting thing to note is in the early 1990s a study was done which showed regardless of the top rate the feds took in about 19.5% of GDP in taxes. Which tells me when you have very high tax rates people hide the income.

That said some of the strongest growth we have seen also fell under the 28 and 39% top brackets.

 

[soccerballtux]

Originally posted by: Genx87

Originally posted by: Acanthus

Originally posted by: charrison

Originally posted by: Acanthus
http://www.mediafire.com/?nmxjmy4nzmm

This is a brief paper i wrote on the failure of supply-side economics.

If you would like to dispute any of the data, i can directly link the data that i drew my conclusions from.

My goal is to put to rest the fallacy that cutting taxes always helps the economy. This is not the case and even back in the Regean days was not the ploy they were trying to tell the public. Regeanomics was based on the fact that in the very specific case of the times, under those very specific conditions, economists thought that cutting taxes would increase tax revenue. This has somehow become the bastardized supply-side economics that republicans push today.

For the most part cutting capitcal gains taxes has increased tax revenues.

But lets agree, there is a point where taxes become counterproductive at raising revenue when they get too high. Finding the optimal rate for revenue collection is the hard part.

Some of the countries strongest growth was when taxes on the highest bracket topped 89%. My argument always has been, the rich will invest to get more money, regardless of the tax rate.

Depends if you truely want to gather the tax or if you want to have a pretty number to look at. One interesting thing to note is in the early 1990s a study was done which showed regardless of the top rate the feds took in about 19.5% of GDP in taxes. Which tells me when you have very high tax rates people hide the income.

That said some of the strongest growth we have seen also fell under the 28 and 39% top brackets.

I believe the article you're referring to is called "You can't soak the rich".

The thing about taxing the rich is if we do it too much, they'll just take their money elsewhere to more tax friendly environments. As China gains on us economically, this will be an ever increasing problem. I'm sure you can guess what we'll do anyways.

 

[Atreus21]

Dude, who was this paper written for? An econ class? Did you seriously end a paper with the word "bullshit"?

 

[QuantumPion]

Originally posted by: Bateluer

Originally posted by: lupi
Oh please god can someone tell me how this abysmal country got started and managed to last so long when there was no income tax.

Exactly. There were only a few, small temporary income taxes prior to the 16th Amendment in 1913. Before that, income tax was levied in a few wars, War of 1812, the Civil War, and in 1898. And the tax brackets ranged from 1 to 7%.

We need to cap the tax rate at 10% maximum, and then severely slash and scale back our bloated government bureaucracy.

Here's a start. Reduce the House of Representatives from 437 to 217 and the Senate from 100 to 50, allow with a similar reduction in staff and aides. Each state gets the same proportion of representation in Congress and the tax payer saves millions. Win-win.

I disagree, that would make the entrenched bureaucrats even more powerful. The house members should be based on the population instead of capped at 400 whatever. If it wasn't capped, there would be something like 1000 house members. The senators should be appointed by governors instead of elected so that they aren't beholden to the same pressures of reelection that congressmen are, so that they act as a check against the house.

As for taxes and reducing the government, a flat tax or fair tax would be great but I think an even simpler idea would be to outlaw income withholding. If every American worker had to manually write a check to the government every month for 1/3 of his income, the vast majority would immediately demand smaller and more efficient government. The reason why the federal government has allowed to become so bloated in the first place is because the costs are hidden by income withholding and inflation.

 

[Craig234]

Originally posted by: lupi
Oh please god can someone tell me how this abysmal country got started and managed to last so long when there was no income tax.

Tariffs.

?For centuries England has relied on protection, has carried it to extremes and has obtained satisfactory results from it. There is no doubt that it is to this system that it owes its present strength. After two centuries, England has found it convenient to adopt free trade because it thinks that protection can no longer offer it anything. Very well then, gentlemen, my knowledge of our country leads me to believe that within 200 years, when America has gotten out of protection all that it can offer, it too will adopt free trade.?
Ulysses Grant

 

[her209]

If I can get away with making money and not paying taxes, I wouldn't care what you taxed me at.

 

[fskimospy]

Originally posted by: Bateluer

Originally posted by: lupi
Oh please god can someone tell me how this abysmal country got started and managed to last so long when there was no income tax.

Exactly. There were only a few, small temporary income taxes prior to the 16th Amendment in 1913. Before that, income tax was levied in a few wars, War of 1812, the Civil War, and in 1898. And the tax brackets ranged from 1 to 7%.

We need to cap the tax rate at 10% maximum, and then severely slash and scale back our bloated government bureaucracy.

Here's a start. Reduce the House of Representatives from 437 to 217 and the Senate from 100 to 50, allow with a similar reduction in staff and aides. Each state gets the same proportion of representation in Congress and the tax payer saves millions. Win-win.

/facepalm

Yet again, another idea that nobody has even spent 5 minutes thinking through. Sadly this is often typical of the "SLASH ALL THE GOV'T" movement. People already feel that their representatives are out of touch with their needs, and your solution is to double the number of people covered by each representative? That sounds like a terrible idea.

Which representatives get eliminated? Who decides this? Now we have to redraw every congressional district in the US simultaneously, meaning that we're going to change the partisan makeup of a whole ton of congressional districts, completely screwing up their congressional representation. I sure as hell wouldn't be happy to have Susan Davis replaced by Darrell Issa. What about senators, and if a state has a Republican and a Democrat in there? Who goes and who stays?

All this would require a constitutional amendment anyway, and one party or the other is going to view itself as getting the short end of things, so they will heavily resist it. (not to mention the fact that you're asking people to vote themselves out of a job, and in many cases to the detriment of their constituents, when their job is to look after them) Then you'll have a fight getting your amendment ratified across the states... this would be a clusterfuck of the first order. All this to save a few million bucks that could be cut from one of a hundred other programs with 1/100th the trouble.

So no, it's not really a start.