I’ve made this exact observation before. There must be an optimum tax rate that maximizes revenue. The easiest method is to gradually reduce taxes until that event occurs.
It’s not a new concept. Kennedy recognized it.
It’s not a Fox talking point if Obama says it. Raising capital gains tax for the purposes of fairness is a Marxist position. This will greatly affect the elderly as they tap into their 401K’s.
Aren’t 401k disbursements taxed as ordinary income, not capital gains?
I don’t like paying my taxes, but I happen to believe it is FAIR if my tax rate is higher - as long as people like me also have higher income tax rates. To me, that is the definition of a FAIR tax system. There is a lot of disagreement in tax policy about what is fair, you don’t agree - but please do not speak for everyone with a good income about how UNFAIR it is or about how everyone who has a better job agrees with you - there are plenty of people like me out here.
(I actually like doing my taxes - its what I’m trained to do - it isn’t what I do for a living, but I went to school to be a tax accountant.)
Making changes to the rate of taxes paid, while keeping the same structure is not Marxism. It is a minor fiscal policy change that, if you oppose the policy should be met with valid fiscal arguments, not with MARXIST!! THERE, UNDER THE BED!!!
You might have a slight point if Obama were proposing for the first time, a capital gains tax, or a graduated income tax that had higher rates the more you made. These would be major policy changes. You’re having a coronary over a relatively minor change to an existing system. But then cries of MARXIST!!!OMG!! is pretty much all McCain has left.
From the The Toledo Blade (Holland, Ohio where Joe lives, is a suburb of Toledo):
Joe isn’t working now, and I heard him make some allusions last night on a news channel that he will be back to work presumably in a few weeks after he becomes licensed. He and his employer were under the mistaken mpression that he could work under his employers license which is not the case locally.
As to the code ramifications of preexisting work done without a license, I am not sure. But I have also seen an earlier article that mentioned that the Toledo Plumbing Board of Control might possibly investigate and there could be repercussions.
OK, then, so it’s not a matter of proven mathematical economic fact that lowering rates always increases revenue. So in that case, if you want to argue that lowering taxes is good in our current economic situation, you need to show some real-world empirical data, showing that revenues were higher under the lower tax rate than they were under the higher rate. Got any of that data handy?
Exactly. The problem is there is no such evidence. The economic literature is unequivocally clear that US marginal rates are NOT hovering over or near the theoretical right side of the theoretical peak on the Laffer curve. Every comprehensive study which has looked at this issue has come to the same answer.
But alas, we just keep hearing this simplistic rhetoric from non-economists spouting political anti-tax mantras, which aren’t even grounded in the technical caveats of supply side literature. Of course, supply side economics is a paradigm which is losing ascendency in academic economics anyway, but the problem is that people frequently misrepresent the Laffer curve as an argument that raising taxation always increases revenue, which is pure, unadulterated nonsense on stilts.
It’s all WSJ Op-ed page, Jude Wanniski napkin-scrawl hackery and no economics.
Well if you’re not interested in being engaged with arguments, studies, and authorities I have provided on the subject then I can’t help you. Hand waiving is all you’re doing here.
Again, nobody denies that reducing taxation increases economic growth - what you’re not understanding - and what you simply refuse to acknowledge - is that your argument about increased revenue receipts requires that the growth which is achieved attributable to these cuts be such that economic pie is so much bigger than it would otherwise be, that the taxation revenue receives increases compared to first effect of losses. The economic literature simply doesn’t show that.
You can pretend it does with your political talking points all you like, but it doesn’t.
Here is Andrew Samwick, Chief Economist on the Staff of the United States President’s Council of Economic Advisors, on the supposed “record revenues” of the Bush tax cuts:
The barrel of shit you are trying to push up a hill here is simply not an accepted position in economics. Now, there is an argument that taxation on the theoretical right side of the peak on a Laffer curve where this is plausible, and in situation where regulatory defects create massive non-compliance, but given we are talking about the differences between Obama and McCain’s policies, and hence a baseline of post-Reagan taxation, there is simply no basis for you argument.
Apparently you need to go back to economics 101 and then take 201 and 301 as well because you are simply misrepresenting the issue. You are still not understanding that the issue is about you proving increased receipts, when you control for the behavioral change, as a result of economic growth attributable to that.
Honestly, you don’t have the faintest idea what you’re talking about.
Uh huh. Economics was my minor in college. Have a nice day.
Based on this thread I don’t think that statement will have the impact you are hoping for.
I base my financial planning on what I learned and not on internet opinion. If taxes are raised it will affect the economy in a negative way. It’s a simple fact of life. People will risk more money when there is a greater return and shift it to other markets when the return goes down. Taxes do not represent risk, they are definitive changes in return on investment so any changes in tax structure represent a direct change in return.
None of this is relevant to the statement that Obama made regarding “fairness” in his taxation philosophy. Your attempt to redirect the spotlight away from this is expected and duly noted.
Which university was it, just out of interest? I am just utterly unconvinced that any professor would tell you that tax cuts always improve government budgets, or that it is easy to measure and control for a so-called “dynamic soaring” effect. Virtually no economist believes either assertion.
What seems far more likely, in my mind, is that your lecturer may have used the Laffer curve as a pedagogical tool to illustrate the insight that margins matter, and that we should pay attention to the idea that the tax base can increase through economic growth.
Look, I’m not trying to get personal about this, or to crusade against anyone who has been taught supply side theory. I’ve said I don’t fully subscribe to that paradigm myself, but I am more than happy to admit that reasonable and credible economists disagree about this. Certainly supply side economic thinking has been influential in shifting us away from past macroeconomic emphasis on balancing aggregate demand towards microeconomic reform and concomitant gains in productivity efficiency.
Putting aside the broader questions of political economy for a moment, would you agree that that is a fair summary of the paradigm you were taught?
On that score, I am certainly not trying to dispute your picture of a relationship between taxation relief, productivity and economic growth in this context. So, all those points you are making about general taxation relief, and capital gains taxation relief, I am not disputing them. I just want to make that clear in case you think I am.
My grief with you has been solely with your assertion that capital gains tax, and apparently taxation more broadly, can always be lowered to improve government budgets – because you collect more receipts from an enlarged economic pie.
In that dispute, I may sound snarky, but I am just using pithy language to advance the uncontroversial consensus position of economists on the matter. By doing so, I am not trying to exclude or deny you the separate claims about the economic desirability of particular instances progressive taxation rates, at various time in history, which have affected GDP and productivity unduly. Indeed, I have explicitly conceded that I am sympathetic to the idea that prior to the 1980s, the top marginal rates were too high.
The problem enters when we switch from this question of desirability, to the assertion that any given relief will always create such growth as to overtake the first order effect of decreased revenues. In this you are swimming against all the literature, swathes of conservative and liberal economists, and frankly, just plain common sense.
What I think is happening is that you’re taking a pedagogical tool, the Laffer curve, which is designed chiefly to illustrate, not as real policy or empirical overlay, and then you’re applying it without its basic caveat that revenue is only claimed to increase when rates are at right of the theoretical peak. My argument, all along, is that you cannot defend this claim, because even Reagan era cuts increased kept bringing in deficits, and certainly, post-Reagan, every study has shown no evidence we are anywhere near that right-hand side of the peak.
I’m not making the claim that always lowering a tax improves a revenue stream. look at post 141. I wouldn’t limit a discussion to capital gains taxes either. Taxes are taxes. However, if the focus is on capital gains and a philosophy of fairness is used then the concept of maximizing revenue stream would be in conflict.
I submit that in a bear market, raising taxes, particularly capital gains taxes, will harm investment and leverage the market down. The idea of spreading the wealth is based on the idea that the “pie” is finite and needs to be reapportioned. Not only is the pie not finite, it will grow and shrink based on investment return. As taxes rise, money will be redirected to other markets causing the pie to shrink. If fairness is applied to a shrinking pie then even more money will be pulled from the market. The goal should not be fairness of proportionment but rather the ability for people to earn greater wealth (enlarge the pie). The only market force the government should exert is short-term incentives for hard asset ventures.
I can’t answer the question regarding the optimum capital gains tax rate. Nobody can. All we can do is adjust it during stable cycles and watch the results. We know what it will do if it’s raised during a down-cycle.
Ah yes, drive by poster reads one line and makes yet another incorrect broad brush paint job. As an employer, I am not concerned with the employees of other businesses. As a member of my community however, I am concerned with my common man and take measures beyond paying my taxes, thinking that is good enough.
Good enough to get the job done, or at least maximize the good, or good enough to just ensure that your personal slate is even?
I don’t believe I ever used the word unfair. Nor do I intend to speak for anyone else. IF you read that in my posts, chalk it up to yet another misconception. I don’t like paying more and more taxes for what I see as failing government intentions. Throwing more money around will not solve all problems.
Do my personal best knowing that the job will never be done. There will always be folks that are hungry. But I try to diversify my attempts to make the widest and biggest impacts. Like I said multiple times, I’m not the right wing-hack asshole that many seem to want to paint me as. I just have a different opinion as to how tax revenues should be spent. In turn, I take issue with being told to pay even more into what I see as a troubled system.
That’s good, but you’re not approaching the problem from both sides. You assume we’re on the right-hand side of the curve’s peak, and that we must experiment with reducing taxes to find the optimal level.
But we don’t have to experient. We already know we’re actually on the left side of the curve’s peak, because the recent history of rate reductions have, in fact, been accompanied by budgetary decreases, and the recent history of raising of rates have been used to balance the budget successfully.
This would not be the story if we were on the right side. That doesn’t mean that tax relief can’t be argued under other arguments about incentives, just reward and economic growth. It just means that the economic growth won’t offset the loss of revenue.
Of course, I would argue this is the point, in the end, behind slippery interpretations of the Laffer curve - to starve the beast, whilst politically offering a story which says tax cuts always pay for themselves.
Yes I agree they’re in conflict, but I’ve avoided fairness discussion here and did not assert that the objective here was to maximise revenue. I simply denied that Obama’s plans would have a negative revenue impact - as part of what appeared to be your axiomatic appeal to Laffer principles within that band of variable rates under consideration.
That’s what the question comes down to - are either plans plausibly on the right side of the curve’s peak? Economists say no.
The question of fairness should be kept separate IMO, as it involves political economy and political morality questions which necessarily take us far beyond this discussion.
I am not arguing against any of this, as I’ve detailed above. Those are a separate arguments which support the desirability of growth as the engine of prosperity etc.
Again, that does not have anything to do with our argument about receipts within the band of rate variables set out under Obama’s plan. You don’t just need economic growth to show receipt increases, you need sufficient growth to offset revenue losses. As I’ve gone to considerable trouble to show - this isn’t demonstrated on the facts within the band of rate variables we are talking about.
Capital gains is slightly more complicated by the behavioral effect, but the story is the same.
We’re covered this…
:rolleyes: In case you have forgotten, it is possible to endorse a progressive, even openly redistributive, tax system without being a Marxist. The early-20th-Century American Progressives were anything but Marxists. FDR was no Marxist.