# Is the conservative belief that a low tax rate on the rich is necessary to stimulate growth a fraud? **URL:** \ **Category:** Great Debates\ **Created:** [July 2, 2011, 6:34am UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608 "2011-07-02T06:34:28Z")\ **Posts on this page:** 17\ **Page:** 3
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [July 2, 2011, 9:48pm UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608/41 "2011-07-02T21:48:39Z")
> [@John\_Mace](#): > > Methinks that **W-a-M** protests too much. How so? Once is protesting too much? ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [July 2, 2011, 9:52pm UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608/42 "2011-07-02T21:52:07Z")
> [@elucidator](#): > > He said, batting big, brown innocent eyes. “Why, no, I’m not reducing your argument to an absurdity and inviting you to deny it! Just askin’, is all!” > > Got no beef against snark, **John** , be the last. But if you try to pretend that snark is polite discourse, you oughta get busted for it. Mildly, to be sure, but busted. Why is it an absurdity? If one person makes the point that: “Hey, these guys pay the majority of taxes!” the implication, in a thread about who should pay what, is that this is somehow unfair. If not why bring it up? If we both have to pay 10% and you have $1000 and I have $100 dollars you will pay more. Yeah you with $1000 pays more in absolute terms. So what? His post is smoke and mirrors, pay no attention to the guy behind the curtain. It is reasonable to call him on it. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [July 2, 2011, 10:00pm UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608/43 "2011-07-02T22:00:51Z")
> [@gonzomax](#): > > It would not be one time. It would yield 900 billion, year after year. It would impact the debt every year it was in place, until the debt was gone. At the current rate of deficit spending it would never impact the debt and the debt would never be gone. It would reduce the rate at which the debt grows, by quite a lot, but in fact the federal deficit is well above $938 billion a year, so without some other form of revenue generation or spending reduction, the debt would keep growing. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [July 2, 2011, 10:06pm UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608/44 "2011-07-02T22:06:45Z")
> [@John\_Mace](#): > > [Here’s an interesting analysis](http://economix.blogs.nytimes.com/2010/04/13/taxing-the-rich-over-time/) that gets to the issue I brought up earlier. Tax rates are down for the realthy, but the percent of the tax burden paid is up. > > So the rich are paying more than they used to, but they are making more, too. I’ll try it this way… What does this indicate to you? What does this tell you as you think about what our future policy should be? ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [July 2, 2011, 10:07pm UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608/45 "2011-07-02T22:07:11Z")
> [@Sitnam](#): > > While I happen to agree with Ben Stein on this he’s burned the last of his credibility with me. So outside of Argument from Authority wheres the proof he’s right? Apologies for a double reply, but… as Mr. Stein points out, it’s simple arithmetic. You don’t have to prove basic math, I should hope. In FY 2010 the U.S. federal deficit was 1.3 TRILLION dollars. The federal government spent $3.46 trillion and brought in $2.16 trillion, so the deficit is gigantic in terms of absolute terms and in terms of its percentage of the budget. It is arrestingly notable that there isn’t any one part of the federal budget that you could eliminate that would eliminate the deficit - if the U.S. were to reduce military spending next year to zero, there would still be a substantial deficit. It seems to me the available choices are rather stark. Raise more revenue or eliminate the Defense Department AND Medicare AND Medicaid. The former seems more possible. ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [July 2, 2011, 10:31pm UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608/46 "2011-07-02T22:31:08Z")
> [@Whack-a-Mole](#): > > “Hey, these guys pay the majority of taxes!” the implication, in a thread about who should pay what, is that this is somehow unfair. When did this thread become about who should pay what? The OP is about whether a low tax rate on the rich stimulates growth. John posted some figures showing that the richest Americans are paying a lower rate than in years past. That, coupled with the current struggling economy, seems to be exactly on topic. ---
**Author:** ![Sitnam](https://avatars.discourse-cdn.com/v4/letter/s/6a8cbe/32.png) [@Sitnam](https://boards.straightdope.com/u/Sitnam)\ **Post date:** [July 2, 2011, 10:43pm UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608/47 "2011-07-02T22:43:57Z")
> [@RickJay](#): > > Apologies for a double reply, but… as Mr. Stein points out, it’s simple arithmetic. You don’t have to prove basic math, I should hope. > > In FY 2010 the U.S. federal deficit was 1.3 TRILLION dollars. The federal government spent $3.46 trillion and brought in $2.16 trillion, so the deficit is gigantic in terms of absolute terms and in terms of its percentage of the budget. It is arrestingly notable that there isn’t any one part of the federal budget that you could eliminate that would eliminate the deficit - if the U.S. were to reduce military spending next year to zero, there would still be a substantial deficit. > > It seems to me the available choices are rather stark. Raise more revenue or eliminate the Defense Department AND Medicare AND Medicaid. The former seems more possible. All of that doesn’t answer the question raised in the OP. Does our economy and our government (by taxes later) gain more in the long run by easing the tax burden on those most capable of investing now. I don’t know. I would like to see proof one way or the other. ---
**Author:** ![The\_Hamster\_King](https://avatars.discourse-cdn.com/v4/letter/t/8edcca/32.png) [@The\_Hamster\_King](https://boards.straightdope.com/u/The_Hamster_King)\ **Post date:** [July 2, 2011, 11:01pm UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608/48 "2011-07-02T23:01:37Z")
> [@Sitnam](#): > > Does our economy and our government (by taxes later) gain more in the long run by easing the tax burden on those most capable of investing now. Investing in WHAT? Why would anyone expand a business when demand is down? And if demand is UP then you don’t need to be rich to expand. You go to a bank (which pools the resources of small investors) and take out a loan. Then pay it back with the increased profits from your bigger business. ---
**Author:** ![Alan\_Smithee](https://avatars.discourse-cdn.com/v4/letter/a/2acd7d/32.png) [@Alan\_Smithee](https://boards.straightdope.com/u/Alan_Smithee)\ **Post date:** [July 3, 2011, 1:15am UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608/49 "2011-07-03T01:15:06Z")
> [@Whack-a-Mole](#): > > When the money goes to the government it does not disappear. The government uses it to do stuff. Of course we can argue whether the government is efficient or not. In some cases they are the only ones to do the job (military, mail delivery, etc.) and in other cases they would be terrible (selling iPods). > > One thing that is certain though is concentrating wealth into the hands of a very few is not good for economic activity. How many iPods would you own if you were the richest person in the world? How many Big Macs would you eat if money were no issue? > > The chart I linked to above showed there was not a correlation between employment and income taxes. Besides, rich people don’t create jobs, businesses do. Not only do middle-class people generate most of the economy’s demand, they provide most of the labor, too. When income taxes go up, businesses have to pay more to attract employees, so they hire fewer people. If you shift the tax burden from the poor and middle class to the rich, businesses will (theoretically) hire fewer rich people and more poor and middle-class people. As far as I know, out-of-work billionaires are not a major force in driving the unemployment rate. By the same logic, shifting the tax burden away from the rich should slow employment, especially among the non-wealthy, at the same time that it reduces demand. So the entire economy slows, with the middle class bearing more and more of the brunt of it while wealth accumulates in pockets of the few already wealthy. Which is exactly what’s happened since the Clinton years. And the Republican solution is more of the same.:rolleyes: ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [July 3, 2011, 1:33am UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608/50 "2011-07-03T01:33:43Z")
> [@Der\_Trihs](#): > > No they aren’t. That statement is based on the right wing idea that the government is useless. No, it’s based on the real economic fact that taxes reduce people’s real earnings and create disincentives. However, I am not disputing that taxes are necessary for the proper functioning of government. But thank you for taking my statement to it’s logical absurdity. I would also agree that this notion of “rich people create all jobs” is silly. Entrepreneurs and innovators create jobs. Successful businesses create jobs. > [@The Hamster King](#): > > Originally Posted by Sitnam > Does our economy and our government (by taxes later) gain more in the long run by easing the tax burden on those most capable of investing now. > > Investing in WHAT? Why would anyone expand a business when demand is down? You do realize that every business in the economy does not grow or shrink together in lock step, right? I work for a small startup right now and I can’t hire people fast enough to staff projects. Literally, my client won’t expand their contract until they physically meet the guy who will be running that segment. I have to show up to their offices wearing disguises and a fake accent so they think I’m some other director. (that part I made up). Inc magazine also has a list of 5000 fastest growing companies. ---
**Author:** ![Sitnam](https://avatars.discourse-cdn.com/v4/letter/s/6a8cbe/32.png) [@Sitnam](https://boards.straightdope.com/u/Sitnam)\ **Post date:** [July 3, 2011, 1:37am UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608/51 "2011-07-03T01:37:09Z")
> [@The\_Hamster\_King](#): > > Investing in WHAT? Why would anyone expand a business when demand is down? > > And if demand is UP then you don’t need to be rich to expand. You go to a bank (which pools the resources of small investors) and take out a loan. Then pay it back with the increased profits from your bigger business. And how would any company be able to service more customers without investment? The bank, that’s hilarious. The only way to borrow money from a bank is to prove you don’t need it. ---
**Author:** ![The\_Hamster\_King](https://avatars.discourse-cdn.com/v4/letter/t/8edcca/32.png) [@The\_Hamster\_King](https://boards.straightdope.com/u/The_Hamster_King)\ **Post date:** [July 3, 2011, 1:56am UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608/52 "2011-07-03T01:56:34Z")
> [@Sitnam](#): > > And how would any company be able to service more customers without investment? But increased demand has to come FIRST. Unmet demand provides an opportunity to expand. It creates a NEED for more investment. But investment doesn’t stimulate demand. It doesn’t matter if you’re producing twice as much if nobody wants it. ---
**Author:** ![Alan\_Smithee](https://avatars.discourse-cdn.com/v4/letter/a/2acd7d/32.png) [@Alan\_Smithee](https://boards.straightdope.com/u/Alan_Smithee)\ **Post date:** [July 3, 2011, 3:20am UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608/53 "2011-07-03T03:20:02Z")
> [@Sitnam](#): > > And how would any company be able to service more customers without investment? > > The bank, that’s hilarious. The only way to borrow money from a bank is to prove you don’t need it. Are you serious? I’ve heard people say that all my life, but of course the credit crisis (You remember that, don’t you?) was because the banks were lending to anyone with a pulse. Things are harder now and that slows the economy, but what are you going to do? Besides, while all that applies to individuals and small businesses, don’t large corporations usually have vast lines of credit available to them? No one’s all that worried about Google or Wal-Mart going bankrupt, so they can borrow whatever they need. I’d be curious what percentage of corporate debt is owned by banks versus individual investors, but I’d guess it’s sizable. ---
**Author:** ![Kobal2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kobal2/32/20_2.png) [@Kobal2](https://boards.straightdope.com/u/Kobal2)\ **Post date:** [July 3, 2011, 3:44am UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608/54 "2011-07-03T03:44:52Z")
> [@Sitnam](#): > > The bank, that’s hilarious. The only way to borrow money from a bank is to prove you don’t need it. Precisely. And a stable, profitable company doesn’t need the loan, nor does it really need to expand. It’s already making money. The reason for the expansion (and the loan) is that it would make even \*more \*money that way. Which banks are fond of. So they will hardly ever deny a loan if you can present a business case, and if there’s demonstrable demand for more of what you’re slinging. If there’s no demand, and you’re looking for a loan as a desperate measure to push up production to hopefully drive up demand in turn, they’ll laugh at you. And rightly so. ---
**Author:** ![China\_Guy](https://avatars.discourse-cdn.com/v4/letter/c/779978/32.png) [@China\_Guy](https://boards.straightdope.com/u/China_Guy)\ **Post date:** [July 3, 2011, 4:19am UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608/55 "2011-07-03T04:19:03Z")
I moved back to the US after 25 years with no credit rating (not bad credit just no credit). All my credit history was too old to be of use (paying back student loans). I could only get a bankruptcy credit card (eg, looks like a credit card but it’s actually a debit card back by a $10,000 deposit). Tried to lease a new car on credit and only the Nissan dealer was willing to play, and that would have been with about 30% down and a usurious rate of interest. Poor me. It didn’t help my credit to buy the mini van with cash either. However, it was \*\*\*not \*\*\*a problem to borrow a $400k mortgage if I was willing to put down 20%. So, zero credit, I walked away with a $400k loan painlessly a few months ago. So, there is some truth that banks make loans to those that don’t really need them. Certainly, my story would be different if I only had 5% or 10% to put down. Now of course, I’m getting pre-approved credit cards in the mail practically every day. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [July 3, 2011, 4:57am UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608/56 "2011-07-03T04:57:25Z")
> [@RickJay](#): > > At the current rate of deficit spending it would never impact the debt and the debt would never be gone. It would reduce the rate at which the debt grows, by quite a lot, but in fact the federal deficit is well above $938 billion a year, so without some other form of revenue generation or spending reduction, the debt would keep growing. > **[CHART: When Will Tax Cuts Become The Public Debt's Biggest Problem?](https://www.huffpost.com/entry/bush-tax-cuts-debt_n_864812)** > > CHART: When Will Tax Cuts Become The Public Debt's Biggest Problem? Here is what caused the debt. The single biggest factor was the Bush tax cuts for the rich. Then running 2 wars off the books. It was a recipe for financial disaster. It has to be reversed as quickly as possible. But as you can read, many who buy the idea that eliminating the tax cuts will not help. are not understanding what a huge factor they were in causing the problem. They should never have been allowed to happen. The sooner we get rid of them, the better off we will be. We also have to eliminate corporate tax evasion. A generation ago, business tax was a 30 percent contributor to the budget. Now it is under 6. It all has to be fixed. You can not cut your way out of this mess.It is way too big now. It should certainly not be done on the backs of the poor and the middle class who did not benefit from the Bush financial fiasco. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [July 3, 2011, 5:10am UTC](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608/57 "2011-07-03T05:10:38Z")
I wonder why there should be a “conservative” view to this question in the first place. Mostly, conservative means that one thinks that political power and its Sodomese Twin, money…largely those things are held in the most worthy hands, and the Republic is best served by it remaining so. Taxation is a necessity, and they don’t actually lose their shit until you add the word “progressive”, then they clutch their pearls, beshit themselves and faint dead away. For the most part it seems from here than conservative-tinged economic theory is little more than reverse engineering, ascertaining what is desirable and constructing some sort of rational that can enlist economics in service to that end. Witness the following: [http://www.tampabay.com/news/business/billionaires-role-in-hiring-decisions-at-florida-state-university-raises/1168680](http://www.tampabay.com/news/business/billionaires-role-in-hiring-decisions-at-florida-state-university-raises/1168680) TL:DR One of the Koch Brothers donates money to a Florida University for the Economics faculty, with the proviso that said faculty must reflect correct economic theory as the Koch Foundation understands it. Which raises the question, of course, to wonder how much of our academic economics as she is taught reflects more the wealth and intent of benefactors than any standard of expertise? How much then is our academic economics a reflection of the wealth distribution of our country? Would there even be such a thing as “conservative” economics? Shirley there would, I suppose, academic freedom would foster variety of opinion, so surely someone would stake out such a position. But would it be so prominent? In many of our discussions, we seem to presume an equivalence, that whatever science there is in economics, we always end up somehow uncertain, and so both sides must be given equal attention and significance. Perhaps the conservative wing of economics are totally right. But if that were the case, couldn’t they simply prove it, why would they need to be sustained by outside influences. (A pity Mr Krugman is so happily tenured at that backwater New Jersey college he is so fond of. Would have been entertaining to see him show up at the door with this c.v. freshly printed and polishing his Nobel Prize…) [Previous page](https://boards.straightdope.com/t/is-the-conservative-belief-that-a-low-tax-rate-on-the-rich-is-necessary-to-stimulate-growth-a-fraud/587608.md?page=2)