Who's buying into the "job creators" angle?

[Victor Charlie]

We've been hearing for years now we can't raises taxes on the top two percent because it'll limit their ability to hire. Well, after more than a decade of this, where are the jobs? Considering the wealthy have amassed more wealth than at any time since the Guilded Age, clearly they're not investing much of their largesse into job creation. There certainly are a lot of potential jobs sitting in their bulging overseas bank accounts. At the same time they're demanding a massive reduction in government spending, including needed infrastructure improvements that would, get ready for it... create jobs. Isn't this an instance where taxing the wealthy would lead to more job creation than leaving their tax cuts in place?

[Voyager]

They are told that the rich really have their interests at heart, and even poor schlubs like Joe the Plumber will surely become rich, so they should vote for the party of the rich. Since we all agree that jobs are important, the rich will clearly create a lot of jobs if they just had a few more dollars and relief from these oppressive lowest in decades taxes. As you point out, that it hasn't worked doesn't affect them at all.
It's like a religious tenet for them. They are like economic creationists - here is the holy book, and don't bother me with the facts.

[Twoflower]

Business don't create jobs because they have extra money that needs spending. They create jobs because they have work that needs doing.

[TriPolar]

I don't know their names, but they're all very gullible people. The major advocates don't believe it themselves. If a reasonably intelligent person tells you they believe this, they're probably lying. Remember that this version of supply side economics didn't take hold until the previous versions created the current economic crisis.

[WillFarnaby]

Capital formation happens only with savings. The wealthy tend to have the most savings so these savings can be invested in capital. If these savings are not being invested in capital it is probably because of uncertainty. There is no other explanation for the hording of cash. The market is sending confused signals to investors for different reasons.

[Ludovic]

Originally Posted by Victor Charlie

Well, after more than a decade of this, where are the jobs?

This is the crux of the matter. The hypothesis that lowering taxes will always create jobs is not a completely ludicrous proposition at first glance. But it's not borne out by reality. At all. Like you said: where are the jobs?

[WillFarnaby]

Originally Posted by Ludovic

This is the crux of the matter. The hypothesis that lowering taxes will always create jobs is not a completely ludicrous proposition at first glance. But it's not borne out by reality. At all. Like you said: where are the jobs?

So are you suggesting that there would be more jobs if we took more money from employers? Economic empiricism in an impossibility.

[Der Trihs]

Originally Posted by WillFarnaby

So are you suggesting that there would be more jobs if we took more money from employers?

Yes; ordinary people having more money to spend would increase demand, and therefore create a reason to hire people to meet that demand.

Originally Posted by WillFarnaby

If these savings are not being invested in capital it is probably because of uncertainty. There is no other explanation for the hording of cash.

Of course there is; most obviously, they don't have any reason to hire more people or to invest. They don't hire people out of the goodness of their hearts; they do it because there's no other way to meet demand. If demand stays stagnant or can be met by squeezing their present workforce harder, they'll just sit on their money.

[Lobohan]

Originally Posted by WillFarnaby

So are you suggesting that there would be more jobs if we took more money from employers? Economic empiricism in an impossibility.

I think he's suggesting that there wouldn't be any meaningful amount less.

I think it's something like 97% of small businesses are below the increased tax number. So thinking it would meaningfully impact business is a little silly.

On top of that businesses hire people when there is demand for their product or service that can't be met with existing payroll. Certainly if we had raised taxes on the top few percent when they should have expired, we could have cut less and would have more public sector employment. That employment would have driven demand more and probably helped much more than any small amount the tax cuts would have.

[Lobohan]

Originally Posted by WillFarnaby

Capital formation happens only with savings. The wealthy tend to have the most savings so these savings can be invested in capital. If these savings are not being invested in capital it is probably because of uncertainty. There is no other explanation for the hording of cash. The market is sending confused signals to investors for different reasons.

The most obvious reason for hoarded capital is that investors would be stupid to build a new McBurgerhut when the existing McBurgerhuts are barely hanging on.

[Ludovic]

Originally Posted by WillFarnaby

So are you suggesting that there would be more jobs if we took more money from employers?

In many situations there will be. The obvious two are when you can use the taxes to support the economy (such as, at a minimum, the rule of law,) and when deficits are so high that the pain of higher taxes is overshadowed by the risk of a government default.

[Robot Arm]

Originally Posted by Victor Charlie

Well, after more than a decade of this, where are the jobs?

A decade? Republicans have been cutting taxes since Reagan. They are the cure for everything from economic uncertainty to gout. The whole Job Creators^TM thing may be recent, but for 30 years they've been saying that tax cuts lead to increased economic activity, which certainly suggests increased jobs.

If it actually worked, we'd be up to our eyeballs in jobs by now.

[Fear Itself]

Business owners don't create jobs, any more than oil companies create oil. Business owners harvest demand; employees are the machinery that make that possible. No demand, no jobs.

[Ambivalid]

Originally Posted by Twoflower

Business don't create jobs because they have extra money that needs spending. They create jobs because they have work that needs doing.

But they only have work that needs doing if there is a thriving middle class that is buying what they're selling.

[greenslime1951]

In order to answer this question meaningfully in terms of the past decade, we'd have to get in a time machine, go back to the year 2000 or so, cancel the tax cuts on the eeeeeevil rich, and then see how things play out.

In other words, the question "If tax cuts create jobs, where are the jobs, then, huh, huh?" is meaningless. For all we know, without the tax cuts, unemployment would be much higher than it is now. It's not a proposition I'm prepared to debate as it would be counterfactual history.

Let's set aside the populist anti-rich rhetoric for juuuuust a moment. Taxing the rich reduces the supply of capital; whether you love or hate the rich, this is a basic truth. Taxing earnings--whether corporate or personal--increases the risk/reward ratio for capital investment, because it reduces the potential reward while doing nothing to reduce the risk. An eeeeevil rich person is less likely to open up a business if we raise his tax rate, because he'll make less money if he succeeds, but lose the same amount if he fails.

I've actually heard people counter this argument by saying, in effect, that all rich people are like Scrooge McDuck and have giant basement vaults filled with cash that they like to go down to and roll around in for fun, so what's the difference if we hit 'em up for a couple extra million. The trouble is, economics is all about incentives. If you set up your tax structure so that it discourages investment and risk-taking, by those who are the primary movers of such activities, you will naturally see a reduction in the amount of capital available in the capital markets--and that is what creates jobs--availability of capital.

[Johnny L.A.]

Originally Posted by Robot Arm

A decade? Republicans have been cutting taxes since Reagan.

To be fair, Saint Ronnie saw the error of his ways and raised taxes eleven times after he cut them. Oh, and in 1986 he said that a bus driver shouldn't pay a higher tax rate than his employer.

[Wesley Clark]

It was my understanding that buying new equipment and buildings, or paying wages and benefits were tax deductible, so corporations don't pay taxes on those anyway. So I don't know why it would matter what the tax rate on net profits is.

[Wesley Clark]

Originally Posted by greenslime1951

In order to answer this question meaningfully in terms of the past decade, we'd have to get in a time machine, go back to the year 2000 or so, cancel the tax cuts on the eeeeeevil rich, and then see how things play out.

In other words, the question "If tax cuts create jobs, where are the jobs, then, huh, huh?" is meaningless. For all we know, without the tax cuts, unemployment would be much higher than it is now. It's not a proposition I'm prepared to debate as it would be counterfactual history.

Let's set aside the populist anti-rich rhetoric for juuuuust a moment. Taxing the rich reduces the supply of capital; whether you love or hate the rich, this is a basic truth. Taxing earnings--whether corporate or personal--increases the risk/reward ratio for capital investment, because it reduces the potential reward while doing nothing to reduce the risk. An eeeeevil rich person is less likely to open up a business if we raise his tax rate, because he'll make less money if he succeeds, but lose the same amount if he fails.

I've actually heard people counter this argument by saying, in effect, that all rich people are like Scrooge McDuck and have giant basement vaults filled with cash that they like to go down to and roll around in for fun, so what's the difference if we hit 'em up for a couple extra million. The trouble is, economics is all about incentives. If you set up your tax structure so that it discourages investment and risk-taking, by those who are the primary movers of such activities, you will naturally see a reduction in the amount of capital available in the capital markets--and that is what creates jobs--availability of capital.

In the current economy the income and wealth of the top 1%, corporate profits and corporate cash reserves are all at record highs. Corporate profits are 3x what they were about 10 years ago, income for the top 1% are about 3x what they were 30 years ago, etc. Even with the role of capital, tripling the income of wealthy individuals and corporate profits has not created jobs. Corporations have something like 2 trillion in cash they aren't using because there are no investments. There is no demand for any goods or services, so they do not expand their businesses or hire new workers. If corporate profits jump to 4x what they were 10 years ago instead of 3x, that isn't going to change that problem.

[greenslime1951]

Originally Posted by Wesley Clark

It was my understanding that buying new equipment and buildings, or paying wages and benefits were tax deductible, so corporations don't pay taxes on those anyway. So I don't know why it would matter what the tax rate on net profits is.

You are confusing quite a few different concepts:

Profits can either be retained with the company--"retained earnings," distributed to shareholders--"dividends," or invested in equipment, buildings, etc.--"capital improvements." Each of these is treated differently for tax purposes.

In terms of capital improvements, corporations are allowed to pay lower taxes on profits that are reinvested in capital improvements than if they had retained or disbursed those profits. (Strictly speaking, they are allowed to defer some taxes.) It is wildly inaccurate to say that corporations pay no taxes whatsoever on profits reinvested in capital improvements. The favorable tax treatment is meant to encourage modernization and improvements, but they still do pay taxes on those reinvested profits.

Wages and benefits are expenses, and so are figured into the company's profit and loss statement before taxes are ever calculated. As with any other companies, taxes are paid on the net profit, not the gross profit.

[greenslime1951]

Originally Posted by Wesley Clark

In the current economy the income and wealth of the top 1%, corporate profits and corporate cash reserves are all at record highs. Corporate profits are 3x what they were about 10 years ago, income for the top 1% are about 3x what they were 30 years ago, etc. Even with the role of capital, tripling the income of wealthy individuals and corporate profits has not created jobs. Corporations have something like 2 trillion in cash they aren't using because there are no investments. There is no demand for any goods or services, so they do not expand their businesses or hire new workers. If corporate profits jump to 4x what they were 10 years ago instead of 3x, that isn't going to change that problem.

You didn't seem to understand what I meant so I'll restate it more simply.

We don't know if the last decade's tax policies helped or hurt job creation. There is no way to go back in the past, change those policies, and see if it would have made any difference.

You seem to view increased corporate profits as an inherently bad thing, and the existence of the rich as likewise an evil. I submit that there have been times in our history when corporate profits reached record lows, and those time weren't much fun for anybody.

[Wesley Clark]

Originally Posted by greenslime1951

You didn't seem to understand what I meant so I'll restate it more simply.

We don't know if the last decade's tax policies helped or hurt job creation. There is no way to go back in the past, change those policies, and see if it would have made any difference.

You seem to view increased corporate profits as an inherently bad thing, and the existence of the rich as likewise an evil. I submit that there have been times in our history when corporate profits reached record lows, and those time weren't much fun for anybody.

When did I say being rich was evil? And corporate profits would be fine if they actually led to job creation. But there is no evidence.

here is your argument from what I can tell:

Supply side tax cuts occur at the same time jobs are created = supply side tax cuts create jobs

Supply side tax cuts occur at the same time as miserable job growth = supply side tax cuts prevent jobs from being eliminated

It is all theoretical win/win. If the economy does well it is because of supply side economics. If it does bad then it would be worse if not for supply side economics.

As for your statement that times when corporate profits reached record lows were not fun for anyone isn't true. Corporate profits were much much lower in the 90s, and the economy was doing much better.

http://static.seekingalpha.com/uploa...ead_origin.JPG

Does that mean low corporate profits = a better economy? Not necessarily. But you can't claim that high corporate profits lead to a better economy for people. There is no evidence for that.

[Wesley Clark]

Originally Posted by greenslime1951

Wages and benefits are expenses, and so are figured into the company's profit and loss statement before taxes are ever calculated. As with any other companies, taxes are paid on the net profit, not the gross profit.

And when people say 'you need to keep taxes low so companies will have money to hire people' I don't get it because the wages aren't taxed, they are deducted before the tax is calculated. The implication being presented is that higher taxes means less money to hire people.

I understand the difference between gross and net profit. But the rhetoric on the right implies that they don't (in actuality I'm sure they do understand that, but half-true rhetoric that wages and benefits for working class jobs are taxed at 35% can get the working class to support supply side economics).

[greenslime1951]

Originally Posted by Wesley Clark

When did I say being rich was evil? And corporate profits would be fine if they actually led to job creation. But there is no evidence.

A basic economics course would be of great benefit to you.

I'll restate one more time: there is no way to empirically test either the premise that increased corporate profits do, or that they don't, lead directly to job creation--not without a time machine.

[Fear Itself]

Originally Posted by greenslime1951

A basic economics course would be of great benefit to you.

In the absence of demand for products, corporate profits do not create jobs. Why would they? That's why the jobs disappeared in the first place; corporations laid them of because demand for products dried up, not because they lacked capital. They have trillions of dollars in capital, waiting for the market to change.

Sounds like basic economics to me.

[Robot Arm]

Originally Posted by greenslime1951

I'll restate one more time: there is no way to empirically test either the premise that increased corporate profits do, or that they don't, lead directly to job creation--not without a time machine.

So it'd be okay with you if we raised taxes on the rich and corporations?

And you didn't answer the rest of Wesley's question. When did he (or anyone in this thread, for that matter) say that being rich was evil?

[greenslime1951]

Originally Posted by Fear Itself

In the absence of demand for products, corporate profits do not create jobs. Why would they? That's why the jobs disappeared in the first place; corporations laid them of because demand for products dried up, not because they lacked capital. They have trillions of dollars in capital, waiting for the market to change.

Sounds like basic economics to me.

I'm sorry that that sounds like basic economics to you.

You should reexamine what you just said: "In the absence of demand for products..." In the absence of demand for products, nothing is going to create jobs.

So to answer the question meaningfully, you would have to stipulate that there is, in fact, consumer demand which could be satisifed by the expansion of capital, the resultant marketplace, and yes, jobs. All others things being equal, capital creates jobs. The fact that many corporations are stockpiling CASH (not capital), does nothing to disprove that basic axiom.

[greenslime1951]

Originally Posted by Robot Arm

So it'd be okay with you if we raised taxes on the rich and corporations?

And you didn't answer the rest of Wesley's question. When did he (or anyone in this thread, for that matter) say that being rich was evil?

His painting of (increased) corporate profits as an inherently bad thing could have had no rational justification other than the populist view that businesses, corporations, rich people, etc. are themselves inherently undesirable.

I was more deriding the overall populist POV than that of Wesley, though, so if that isn't his true outlook, I apologize for implying that it was. His somewhat shaky logic kind of impelled me to see his posts as just another anti-big business diatribe.

To answer your question, no, it wouldn't be okay in a vacuum. There would have to be some demonstrable benefit from doing so. Sometimes, in fact, the tactic can backfire, in that increased taxation of the rich and corporations can actually decrease revenue. In Oregon, we recently passed a soak-the-rich bill that increased the marginal tax rate of the highest earners. The revenues collected from that portion of the tax dropped by $150 million in the next year. Three major companies that were going to build major operations in the Portland area decided not to after the tax was implemented--if you want to talk about the relationship between taxing the rich/corporations and jobs.

[Fear Itself]

Originally Posted by greenslime1951

You should reexamine what you just said: "In the absence of demand for products..." In the absence of demand for products, nothing is going to create jobs.

That is just fundamentally wrong. We increase the debt, start spending on infrastructure, get some paychecks flowing, before you know it, people start spending again. It is how we have always gotten out of recessions; at least, for the last 100 years or so, since the Federal Reserve was formed.

All others things being equal, capital creates jobs.

If you learned that in college, you should ask for your money back.

[fumster]

Originally Posted by greenslime1951

I'm sorry that that sounds like basic economics to you.

You should reexamine what you just said: "In the absence of demand for products..." In the absence of demand for products, nothing is going to create jobs.

So to answer the question meaningfully, you would have to stipulate that there is, in fact, consumer demand which could be satisifed by the expansion of capital, the resultant marketplace, and yes, jobs. All others things being equal, capital creates jobs. The fact that many corporations are stockpiling CASH (not capital), does nothing to disprove that basic axiom.

God, those stupid CEOs. All they have to do is convert all that cash to capital; maybe they should be fired. They are so stupid they probably think that they should fully utilize their current capital investments until demand increases. I don't understand why people just don't buy more stuff though. What difference does it make if you max out one credit card or two? I think that the 99% is basically unpatriotic for not spending more money.

[Robot Arm]

Originally Posted by greenslime1951

To answer your question, no, it wouldn't be okay in a vacuum. There would have to be some demonstrable benefit from doing so. Sometimes, in fact, the tactic can backfire, in that increased taxation of the rich and corporations can actually decrease revenue. In Oregon, we recently passed a soak-the-rich bill that increased the marginal tax rate of the highest earners. The revenues collected from that portion of the tax dropped by $150 million in the next year.

But without a time machine we'll never really know what the revenue would have been without the tax increase, will we?

[greenslime1951]

Originally Posted by Robot Arm

But without a time machine we'll never really know what the revenue would have been without the tax increase, will we?

Sorry, you don't get to employ the internet kiddie tactic of sneering at a person's argument in one breath and "adopting" it in another.

In this instance, we had an almost constant adjusted-for-inflation revenue stream from the top marginal earners from 1995 to 2009 (1995 being the last year the top marginal rate was adjusted). After the soak-the-rich bill was enacted, revenue from the top marginal earners dropped by 60%, while revenues from the remaining earners dropped by 5%. Pretty strong cause-effect correlation.

[greenslime1951]

Originally Posted by fumster

God, those stupid CEOs. All they have to do is convert all that cash to capital; maybe they should be fired. They are so stupid they probably think that they should fully utilize their current capital investments until demand increases. I don't understand why people just don't buy more stuff though. What difference does it make if you max out one credit card or two? I think that the 99% is basically unpatriotic for not spending more money.

I can't tell whether you're being sarcastic or not, but the fact that corporations are stockpiling cash and not using it for investments or capital improvements, and that job creation is stagnant, would seem to suggest that a lack of capital investment at least correlates with a lack of job creation.

[greenslime1951]

Originally Posted by Fear Itself

That is just fundamentally wrong. We increase the debt, start spending on infrastructure, get some paychecks flowing, before you know it, people start spending again. It is how we have always gotten out of recessions; at least, for the last 100 years or so, since the Federal Reserve was formed.If you learned that in college, you should ask for your money back.

If "we" (I presume you mean the government) started spending on infrastructure, wouldn't that be creating demand for products and labor?

You're not seeing how circular your arguments are, so I should probably give up on you. You will believe what you want to believe.

Spending our way out of a recession is by no means universally regarded as the magic solution. Doing so either increases debt (if we decide not to pay for it) or decreases productivity (if we do, by taxation).*

*And if you think that increasing taxes increases productivity, well, then, we should tax them rich 100% to maximize productivity!

[Robot Arm]

Originally Posted by greenslime1951

Sorry, you don't get to employ the internet kiddie tactic of sneering at a person's argument in one breath and "adopting" it in another.

When did I sneer at it? You, on the other hand, dismiss statistics you don't like because there's no basis for comparison, and then happily cite others.

In this instance, we had an almost constant adjusted-for-inflation revenue stream from the top marginal earners from 1995 to 2009 (1995 being the last year the top marginal rate was adjusted). After the soak-the-rich bill was enacted, revenue from the top marginal earners dropped by 60%, while revenues from the remaining earners dropped by 5%. Pretty strong cause-effect correlation.

Yes. Certainly nothing else happened to the economy in 2009 that could account for it.

[drewder]

Originally Posted by Fear Itself

That is just fundamentally wrong. We increase the debt, start spending on infrastructure, get some paychecks flowing, before you know it, people start spending again. It is how we have always gotten out of recessions; at least, for the last 100 years or so, since the Federal Reserve was formed.If you learned that in college, you should ask for your money back.

yeah that works so well every time its tried. It has been shown that FDR's make work programs lengthened the depression. Keynesism was almost universally rejected in the 70s era stagflation. How well have all of our current spending and trillion dollar stimuluses / bailouts been working for you? Government spending does not create prosperity. It screws with price and other economic indicators and causes inefficiency in the market and wasted resources.

[Victor Charlie]

Originally Posted by Robot Arm

A decade? Republicans have been cutting taxes since Reagan. They are the cure for everything from economic uncertainty to gout. The whole Job Creators^TM thing may be recent, but for 30 years they've been saying that tax cuts lead to increased economic activity, which certainly suggests increased jobs.

If it actually worked, we'd be up to our eyeballs in jobs by now.

I was limiting my reference to Bush Jr's tax cut. Remember, both Reagan and Bush Sr. raised taxes.

[Robot Arm]

Originally Posted by Victor Charlie

I was limiting my reference to Bush Jr's tax cut. Remember, both Reagan and Bush Sr. raised taxes.

I know. It's rather complicated, with multiple brackets, and the definitions of those brackets changing. And is it a tax cut if someone lowers rates a lot and then raises them a little?

But this thread is about who's buying the argument about tax cuts. Regardless of the actual rates (and who changed them), the argument (under different phraseology) goes back more than 10 years.

[Victor Charlie]

Originally Posted by greenslime1951

In order to answer this question meaningfully in terms of the past decade, we'd have to get in a time machine, go back to the year 2000 or so, cancel the tax cuts on the eeeeeevil rich, and then see how things play out.

The same could be said for any policy. What would've happened if we hadn't waged what now looks like a disastrous war in Iraq? What if we hadn't supported the mujahadin in the '80s. Here's what we know: Since the tax cuts, unemployment has been on a fairly consistent rise and the 2% are wealthier than ever. We can't know exactly what unemployment would be otherwise, but I'm not buying the argument that it would be even worse if the obscenely wealthy were slightly less obscenely wealthy.

Let's set aside the populist anti-rich rhetoric for juuuuust a moment. Taxing the rich reduces the supply of capital; whether you love or hate the rich, this is a basic truth. Taxing earnings--whether corporate or personal--increases the risk/reward ratio for capital investment, because it reduces the potential reward while doing nothing to reduce the risk. An eeeeevil rich person is less likely to open up a business if we raise his tax rate, because he'll make less money if he succeeds, but lose the same amount if he fails.

That's great in theory, but they're not spending their capital. How long does the hording have to continue before you give up on this rubbish? You want to see them create jobs with their capital? Tax them at a fair amount and use that money on much needed infrastructure. Voila! Jobs.

[Victor Charlie]

Originally Posted by drewder

yeah that works so well every time its tried. It has been shown that FDR's make work programs lengthened the depression.

Really? Care to cite that one?

How well have all of our current spending and trillion dollar stimuluses / bailouts been working for you?

Ask the U.S. Auto industry. The banking sector would've experienced a disastrous collapse. The recession would've turned into a full-fledged depression. Stimulus kept a hemhorrhage from becoming a bloodbath. Taking the Palin rhetoric won't get you far.

[Victor Charlie]

Originally Posted by greenslime1951

if you want to talk about the relationship between taxing the rich/corporations and jobs.

Nobody's talking about raising taxes on corporations.

[Drum God]

You know, I teach middle school band. One of the things I have to teach my budding young musicians is how to play together in tune. Most of the kids can tell when they are in tune with their neighbors, but they cannot tell who is sharp or flat. So, I make sure that one of my students is playing the pitch in tune. Then, I have the other student decide if he is flat or sharp. He plays. If it sounds better, he guessed correctly. If it is worse, he guessed incorrectly. If it sounds worse, I tell the student to go the other direction.

So, in the case of macroeconomics, it seems to me that we have guessed how to keep the economy humming by cutting tax rates. Things got worse. So, let's try something else. If things get better, then we're on the right track. If not, then there's nothing that says we can't tack back in the other direction.

[Blackberry]

Originally Posted by greenslime1951

the eeeeeevil rich

Do you have any idea how many times you've said that? Time for a new annoying catchphrase.

[Voyager]

Originally Posted by greenslime1951

I can't tell whether you're being sarcastic or not, but the fact that corporations are stockpiling cash and not using it for investments or capital improvements, and that job creation is stagnant, would seem to suggest that a lack of capital investment at least correlates with a lack of job creation.

And demand, which is a word you seem to be allergic to, drives both. With no demand there are no jobs, or rather, fewer jobs, which decreases demand still more. Those without jobs of course cut spending, but even those with jobs do also, since they are afraid of losing their jobs. With a decrease in demand factories are under-utilized, so there is no reason to invest capital in increasing production.

So, they park their money someplace safe, and wait for a better investment climate. That's being smart. In fact, everyone is doing exactly what is in their best interests, and we bump along with no money.

Now, you can decrease taxes on the rich more than the poor, but that just gives them more money to not invest. If instead you took some money from them and gave it to the poor and unemployed, they would spend it, increase demand, and create jobs.
If we were in a situation where tax rates for the rich were reasonable and the deficit were under control, you'd just increase the deficit. But since Bush screwed the pooch on both of these, we have low tax rates for the rich and a big deficit. The most obvious way of getting money to increase demand is taking it from the rich, who have it. Since there is a ton of capital around, it is unlikely to hurt investment.

BTW Keynes said that government should not run a deficit during times of prosperity. Sure glad that Bush was an anti-Keynesian, aren't you?

BTW, as for what would have happened in 2001, economists don't just guess, they have models. Tax cuts made sense in 2001, but Bush's tax cuts were weighted to the rich, so the middle class did not get the stimulus required and the recovery was very slow. So what would have happened in not just a guess - and I believe most economists thing it was the wrong strategy.

[greenslime1951]

Originally Posted by Robot Arm

Yes. Certainly nothing else happened to the economy in 2009 that could account for it.

I didn't think I'd have to point out the obvious: that the 5% drop in overall revenues was, in fact, due to the worsening state of the economy. However, the drop in revenues collected from the highest marginal earners was 60%--far more than could be attributed to the economy.

You know, that's the kind of shallow thinking I thought that people here were immune to. I mentioned that tax revenues in Oregon from the rich dropped by more than half after a bill was passed that increased the rate charged to them, and then you inferentially mention the recession, as if the recession caused a contraction in the economy of 60%!

Look, I get it. You hate corporations and the rich. Tax 'em into oblivion and we'll all be better off. Destroying corporations and the rich will create jobs!

[al27052]

Originally Posted by greenslime1951

I submit that there have been times in our history when corporate profits reached record lows, and those time weren't much fun for anybody.

What are your thoughts on the times when economic disparity was at its highest? Was a good time had by all during those times?

[greenslime1951]

Originally Posted by Victor Charlie

That's great in theory, but they're not spending their capital. How long does the hording have to continue before you give up on this rubbish? You want to see them create jobs with their capital? Tax them at a fair amount and use that money on much needed infrastructure. Voila! Jobs.

This is illustrative of the fundamental misunderstandings that have permeated this discussion. Cash is not capital; capital is not cash. You can't "spend" capital--you can liquidate it, and spend any resultant cash, but that's not the same thing at all.

I don't know what you think a "fair" amount would be. My guess is 100%, based on your assertion that it would be much more wisely and socially optimally spent by the government. So to summarize your argument, take all that cash away from the undeserving corporations and spend it on infrastructure. And when those corporations need the cash, don't have it available, and go belly-up as a result? No problem. We don't even need to worry about the jobs lost as a result--that guy who works in IT can retrain to drive a loader for his new infrastructure job.

Oh by the way, I realized you very well might not know something: those greedy corporations already paid corporate income tax on those earnings that generated that cash. So you want to re-tax the remainder?

One other thing you might be ignorant of: if those corporations do use that cash for capital improvements, their tax liability would decrease. Their cash hoarding thus generates more tax revenue for the government than if they had spent it on capital improvements.

[greenslime1951]

Originally Posted by al27052

What are your thoughts on the times when economic disparity was at its highest? Was a good time had by all during those times?

Here's how I differ from, it seems, 99% of the population: I am not whipped into a froth by the fact that some people are rich. I would not mind if there were twice as many rich people as there are now, in fact.

Why not? Life is not a zero-sum game. The rich man isn't rich because he takes money from the poor; that's a stupid populist fallacy.

To answer your question as if it were an actual question, no, there has never been a time when a good time was had by "all." Nor will a good time be had by all when we reach that socialist nirvana when every single person has the exact same amount of money. It is neither fair nor unfair that there is economic disparity--it's a simple aspect of reality.

I favor a safety net for all, so that there is a minimum income level regardless of circumstances. I cannot see a rational--or even moral--reason for any kind of upper limit on wealth, even "obscene" wealth (translation: more than I have), as one poster puts it.

[Beware of Doug]

Originally Posted by Victor Charlie

...they're not spending their capital. How long does the hording have to continue before you give up on this rubbish?

The hoarding can continue until the Earth crashes into the Sun for all the wealth holders know, or care. They have no endgame. Certainly none that accounts for anyone less fortunate.

You want to see them create jobs with their capital? Tax them at a fair amount and use that money on much needed infrastructure. Voila! Jobs.

I honestly think that a lot of them would sooner go broke and take the country down with them.

[Victor Charlie]

Originally Posted by greenslime1951

This is illustrative of the fundamental misunderstandings that have permeated this discussion. Cash is not capital; capital is not cash. You can't "spend" capital--you can liquidate it, and spend any resultant cash, but that's not the same thing at all.

If cash is not capital then we can dispense with the notion that higher taxes will affect capital investment.

I don't know what you think a "fair" amount would be. My guess is 100%, based on your assertion that it would be much more wisely and socially optimally spent by the government.

This is the most inellectually dishonest argument made on this issue. I don't know what the optimum balance is, but returning to the pre-Bush tax rates is certainly reasonable, especially considering that was the rate during one of our most prosperous decades, and still half of what it was during our other most prosperous decade.

So to summarize your argument, take all that cash away from the undeserving corporations and spend it on infrastructure. And when those corporations need the cash, don't have it available, and go belly-up as a result? No problem. We don't even need to worry about the jobs lost as a result--that guy who works in IT can retrain to drive a loader for his new infrastructure job.

Oh by the way, I realized you very well might not know something: those greedy corporations already paid corporate income tax on those earnings that generated that cash. So you want to re-tax the remainder?

You're confusing corporate tax with personal income tax, which is the subject of this debate. Unless, of course, you believe corporations are people.

One other thing you might be ignorant of: if those corporations do use that cash for capital improvements, their tax liability would decrease. Their cash hoarding thus generates more tax revenue for the government than if they had spent it on capital improvements.

Again, personal income tax, not corporate. I don't know if you're ignorant, but you certainly are confused. But, I'll humor you. Capital spending would employ people which would generate jobs which would get the economic engine turning and lead to even more jobs, thus improving the economy some more and so on and so on. High employment is better for the economy and tax collection than cash sitting in a bank. Using your argument, corporations should save 100% and never spend any money as far as tax collection goes.

[Victor Charlie]

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