Taxes and failed predictions, a lesson for class warriors

[Genx87]

I dont know if anybody remembers when Britain implemented a 50% tax rate on millionaires. Well the numbers are in and it was predictable. Predictable except for those who advocated such an absurd tax rate.

http://www.telegraph.co.uk/news/970...aires-left-Britain-to-avoid-50p-tax-rate.html

In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs.

This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election.

Oh it gets better

Far from raising funds, it actually cost the UK £7 billion in lost tax revenue.

Not that I am saying we shouldnt look at raising revenue. But people need to realize riasing the rates does not in any way relate in a linear fashion to revenue generated.

I think this article describes it pretty well how failed predictions of revenues can happen.

http://www.cato-at-liberty.org/a-la...for-president-obama-and-other-class-warriors/

Being a thoughtful and kind person, I offered some advice last year to Barack Obama. I cited some powerful IRS data from the 1980s to demonstrate that there is not a simplistic linear relationship between tax rates and tax revenue.

In other words, just as a restaurant owner knows that a 20-percent increase in prices doesn’t translate into a 20-percent increase in revenue because of lost sales, politicians should understand that higher tax rates don’t mean an automatic and concomitant increase in tax revenue.

So lets not believe taxing the "rich" will completely solve our budgetary problems. And if we do it in an asinine way like Britain, it may even make the situation worse.

 

[Munky]

Too bad the US bureaucrats will have to find out the hard way. Go ahead, raise the taxes, and watch as people refuse to undertake the effort, time and risk of capital creation only to be robbed for succeeding.

 

[corwin]

So lets not believe taxing the "rich" will completely solve our budgetary problems.

Of course it will, that's the base of Bam-Bam's re-election...we're gonna tax the "rich" till they're poor like everybody else

 

[Thump553]

Same old tired and distorted argument. I suspect the percentage of the population that believes "taxing the rich will completely solve our budgetary problems" is well south of the percentage of GOP that believe Obama was born in Kenya. The point, and the real argument, is whether ANY tax increase at all on the richest of Americans is PART of a solution to balance the budget. Obama's proposals were roughly 80-90% spending cuts, 10-20% tax increases. That's hardly the class warfare you are so spooked about.

BTW there has already been a class war, and guess what? We are the losers. The USA is becoming more and more economically stratifed, soon we will be in the banana republic sphere. But God forbid we want to raise taxes on Rush and the rest of the so-called job creators, no no.

 

[yllus]

Obama's not dumb. Brown wasn't either, but he was rather ideological and needed the street rat / survivor instincts of Blair to keep Labour in power.

Point is, they all know that the incentive to lie and find other ways to hide income increases when taxes are raised. It's just that it can reasonably seen as necessary when you introduce a structural deficit that's as major as the one you're currently faced with:

Despite the eyeroll-worthy tributes to Atlas Shrugged that inevitably occur when raising taxes is brought up in conversation, the fact of the matter is that at worst what is being proposed is a return to Clinton era tax rates. In many people's minds, the stability of that era is well worth the trade.

 

[Incorruptible]

Raising taxes wont work yet the same idiots will continue to parrot this line. We have a spending problem and the spending must be cut

We have too many people on welfare which wastes a lot of tax dollars, end the entitlement and wars

 

[xj0hnx]

Raising taxes wont work yet the same idiots will continue to parrot this line. We have a spending problem and the spending must be cut.

Except the "spending cuts" aren't even actually spending cuts, their cuts to proposed higher spending, so if this year we spent $10 dollars, and next year we plan to spend $12 dollars, their "cut" is that we only spend $11.75.

 

[Matt1970]

n/m

 

[Incorruptible]

Except the "spending cuts" aren't even actually spending cuts, their cuts to proposed higher spending, so if this year we spent $10 dollars, and next year we plan to spend $12 dollars, their "cut" is that we only spend $11.75.

I know, there not cuts at all yet the idiots keep whining how these cuts are social darwinism, pos obama

We need real cuts starting with the leeches on welfare and the wars

 

[CrackRabbit]

I know, I'm an idiot, yet I keep whining because I have no clue what I'm talking about.

We need to cut off people's posting ability starting with mine.

I couldn't agree with you more.

 

[First]

Most well informed people know that, say, a 10% increase in tax rates won't generate that exact amount in tax receipts. It will undeniably lead to higher revenue, however. Controlling for economic growth, marginal tax rate increases lead to more than marginal increases in revenue.

Most well informed people will also tell you that a tax increase from 35% to nearly 40% will not substantially change top earner's investment behavior or cost jobs mainly because 1) the rate increase isn't nearly severe enough (the way Hoover's was in 1932) and 2) top earners don't spend anywhere near as much or contribute anywhere near as much to demand as the other 98% of spenders. Demand creates jobs more than any other single factor (sometimes, by a lot), and therefore the middle class 98%-of-the-population demand creates jobs in substantially larger numbers than top earners could ever sniff (this is a fact, not opinion).

We saw these same conservative claims of dire economic consequences of top rate increases in 93 soundly defeated by reality when the economy suffered not a bit in 94 and beyond. The voodoo economic claims of cutting taxes somehow creating revenue in the early 90's, btw, is yet another unserious and completely academically baseless claim that needs to go out to pasture the way trickle-down slowly has. It's baseless, and the best one could hope for is some very minor gains in revenue or revenue-neutral results. But it won't raise revenue substantially, period, and I challenge anyone in here to give concrete examples to the contrary.

Also, quoting Cato is pointless, they aren't taken seriously by virtually anyone particularly serious. Plus you lose all credibility when Tucker Carlson is one of your senior fellows.

 

[werepossum]

Except the "spending cuts" aren't even actually spending cuts, their cuts to proposed higher spending, so if this year we spent $10 dollars, and next year we plan to spend $12 dollars, their "cut" is that we only spend $11.75.

We need to put tax rates and spending on the same basis, so that a tax cut of 5% is actually a tax increase because we'd like to cut taxes by 10%. Other than that I'm fine with returning to Clinton-era tax rates for everyone, including letting lapse the cut that is rapidly bankrupting Social Security.

Crap, forgot I'm a proggie now. Let's punish those leeches who've won life's lottery! Spread their wealth around, they don't need it and I do!

Yeah, that's better. Now to find me a government program . . .

 

[werepossum]

Most well informed people know that, say, a 10% increase in tax rates won't generate that exact amount in tax receipts. However, these same people also know that a tax increase from 35% to nearly 40% will not substantially change top earner's investment behavior or cost jobs mainly because 1) the rate increase isn't nearly severe enough (the way Hoover's was in 1932) and 2) top earners don't spend anywhere near as much or contribute anywhere near as much to demand as the other 98% of spenders. Demand creates jobs more than any other single factor (sometimes, by a lot), and therefore the middle class 98%-of-the-population demand creates jobs in substantially larger numbers than top earners could ever sniff (this is a fact, not opinion).

We saw these same conservative claims of dire economic consequences of top rate increases in 93 soundly defeated by reality when the economy suffered not a bit in 94 and beyond. The voodoo economic claims of cutting taxes somehow creating revenue in the early 90's, btw, is yet another unserious and completely academically baseless claim that needs to go out to pasture the way trickle down slowly has.

Also, quoting Cato is pointless, they aren't taken seriously by virtually anyone particularly serious. Plus you lose all credibility when Tucker Carlson is one of your senior fellows.

So Tucker Carlson costs you credibility but, say, Robert Reich, the man who literally cannot identify a screwdriver, is a bastion of credibility. Got it.

If only there was some way to determine these things, we could just put a letter in parentheses after their names so we would - hey, wait a minute!

 

[First]

So Tucker Carlson costs you credibility but, say, Robert Reich, the man who literally cannot identify a screwdriver, is a bastion of credibility. Got it.

Huh? Robert Reich was Secretary of Labor during the most prosperous years for labor in many, many decades, was a Rhodes scholar, Berkeley professor, etc. Tucker Carlson is a college drop-out, ex-TV host, and currently spends time running the Daily Caller. He's still most famous for a 2004 showdown with a comedian. You comparing the two is quite funny. In a bad way.

If only there was some way to determine these things, we could just put a letter in parentheses after their names so we would - hey, wait a minute!

Your posts lack the ingredients necessary for convincing people you're right.

 

[DesiPower]

Too bad the US bureaucrats will have to find out the hard way. Go ahead, raise the taxes, and watch as people refuse to undertake the effort, time and risk of capital creation only to be robbed for succeeding.

I guess the "bureaucrats" you talk about already know that. Its the first step of social engineering or "reform", if you will. They want to create jobs themselves, want to drive the private entrepreneurs out and take over the society.

 

[werepossum]

Huh? Robert Reich was Secretary of Labor during the most prosperous years for labor in many, many decades, was a Rhodes scholar, Berkeley professor, etc. Tucker Carlson is a college drop-out, ex-TV host, and currently spends time running the Daily Caller. He's still most famous for a 2004 showdown with a comedian. You comparing the two is quite funny. In a bad way.



Your posts lack the ingredients necessary for convincing people you're right.

Yeah, I need to figure out how to change my tag to werepossum (D). Then I'd rock.

I think we may differ though in how many credibility points to deduct for "Berkeley professor".

 

[First]

Yeah, I need to figure out how to change my tag to werepossum (D). Then I'd rock.

I think we may differ though in how many credibility points to deduct for "Berkeley professor".

I'll help you with that; you gain credibility points as a Berkeley professor. Or as a professor, period, of any credible research institution. It probably means you're a lefty, but it also means you aren't a knuckle dragger like, oh say, Tucker Carlson. Don't mean to bag on Tucker though, he's the Einstein of the knuckle draggers out there.

 

[Jhhnn]

Too bad the US bureaucrats will have to find out the hard way. Go ahead, raise the taxes, and watch as people refuse to undertake the effort, time and risk of capital creation only to be robbed for succeeding.

Drivel. Taxes on the Rich were much higher pre-Reagan, but they still invested, still put in the effort to make more money.

Few suggest raising their taxes to those rates, let alone UK rates, or that higher taxes will solve all problems.

 

[Pr0d1gy]

Drivel. Taxes on the Rich were much higher pre-Reagan, but they still invested, still put in the effort to make more money.

Few suggest raising their taxes to those rates, let alone UK rates, or that higher taxes will solve all problems.

And yet here we are hearing the same old tired ass arguments about raising taxes. Give it up folks, nobody believes your "job creator" mythology anymore.

 

[Acanthus]

I'd find out where the 10000 millionaires put their money.

Audit them all for tax evasion. No big deal.

 

[Pr0d1gy]

I'd find out where the 10000 millionaires put their money.

Audit them all for tax evasion. No big deal.

And then nationalize their bank accounts, even the offshore ones. Time for some real patriotism.

 

[Screech]

I'll help you with that; you gain credibility points as a Berkeley professor. Or as a professor, period, of any credible research institution. It probably means you're a lefty, but it also means you aren't a knuckle dragger like, oh say, Tucker Carlson. Don't mean to bag on Tucker though, he's the Einstein of the knuckle draggers out there.

Indeed. A bowtie can be difficult to tie!

OT: not surprising. The real question is, how high would tax rates have to go in the US for similar things to happen? The issue with comparing things to the past is that it is arguably so much easier now to move around large amounts of income and wealth than it was in the past. Tax rates being high when the rest of the world is a smoking ruin following WW2 vs tax rates being high when moving your assets offshore is a few phone calls.......are not necessarily identical.

 

[dmcowen674]

Taxes and failed predictions, a lesson for class warriors

I dont know if anybody remembers when Britain implemented a 50% tax rate on millionaires.

Nevermind 50%, lets make it 90%, that will test their Patriotism and label as job creators.

 

[WhipperSnapper]

Too bad the US bureaucrats will have to find out the hard way. Go ahead, raise the taxes, and watch as people refuse to undertake the effort, time and risk of capital creation only to be robbed for succeeding.

But are you certain that all of the taxation is robbery? If we were to "check our premises", could an argument be made, contrary to the "no-think" free market dogmatism that we've been indoctrinated with, that a good portion of the profit has actually been robbed from the workers who engage in the physical act of the wealth production?

 

[WhipperSnapper]

BTW there has already been a class war, and guess what? We are the losers. The USA is becoming more and more economically stratifed, soon we will be in the banana republic sphere. But God forbid we want to raise taxes on Rush and the rest of the so-called job creators, no no.

No worries. The poor can do what people do in third world nations--kidnap members of the wealthy and hold them for ransom.