To be fair, in a normal economy that’s not necessarily always the case – for instance, if you price your product low enough there may be enough demand for it that you can take a loss while establishing market dominance.
But this ain’t a normal economy. We have trillions of dollars sitting on the sidelines and an already quite low tax structure – quite possibly the lowest since the beginning of WW2. Lowering taxes won’t do jack to stimulate this economy.
Another idea, no less nuttier than the one in the OP I hope. How about all illegal immigrants who don’t have criminal records and so on are given amnesty but they as they sneaked into the country illegally have a special “Illegal tax” to pay based on various factors?
I’m torn on whether to answer or just say this has absolutely not one thing to do with anything in this thread.
Oh, I guess I decided. Yeah. That has zero to do with this thread.
Okay, but if we start charging admission it’s only fair that we stamp everyone’s hand so they don’t end up having to pay twice.
Yeah, like Android, and IOS, and OSX… In case you haven’t noticed, Windows is losing market share, but more interestingly the desktop OS in general is facing competition from mobile devices like crazy. Microsoft is under attack in the marketplace from multiple directions.
If our OS was mandated by government, I can only imagine the response - everything from making competitors illegal to heavily regulating them for our ‘safety’ while using taxpayer money to subsidize the government OS. And if the government had created that operating system standard fifteen years ago, we’d all still be using Windows 95.
I think its an excellent idea.
For many poor people its their one chance of becoming rich, enjoying a gret lifestyle and being able to give up work.
And we can’t have that can we ?
So lets take the poor sods only, remote opportunity and tax most of their winnings off of them.
That way they might be able to buy themselves a few treats, nice holiday maybe, perhaps a new car…
And then put them back in poverty where they belong.
We could also forbid from owning t.v.s , that way they’d have to read books and improve themselves.
Yep you really would be a blessing to the poor. EMACK if you had your way.
Still think it’s a strawman?
Didn’t take long to get someone to post that. Now go back to the OP, which was intuitively obvious, and ask why it’s not so obvious when talking about the rest of the economy. The idea proposed by Der Trihs is that we should take money from the entrepreneurs, give it to their customers, so that the customers can give it to the entrepreneurs, filtering it through the government in between.
You also didn’t see my mention it, so how do you know what I think about spending cuts? But to answer your question, deficit spending both from the government and from the general consumer created a boom for the economy. Neither can continue forever, right? At some point the budget will have to be balanced, either by confiscatory tax rates, or as you pointed out painful spending cuts.
The jobs you’re referring to were paid for on credit, think about that for a second. How long can that last?
Bit of a chicken and egg situation. Oddly enough, even in a shitty economy people still want to spend, they line up at 4am and trample people to do it.
There is always demand, but it becomes a question of price (obviously). Consider this entire discussion but instead put a 15% (or 90%) sales tax on, let’s say, lottery tickets, demand will go down. A good entrepreneur should be able to adapt and adjust to what ever market is available. If the economy sucks and people have less to spend (but still want to spend), make an iPod with 10gigs in it instead of 30gigs, 1 slice of American cheese instead of 2.
Adding taxes on top of what is obviously low demand cuts further into it.
Goes back to the point at the beginning. But you’re still admitting that if means you’ll get less participation at 35% than 30%, and what you want is participation. But even if they get a larger share of the market, they’re getting smaller profits as a result of the higher tax burden. They needed the larger market share, and if it wasn’t available they wouldn’t have participated. In the end what you’re saying is that you’ll reduce competition and encourage monopolies. (you can see Little Nemo’s point about operating systems)
No, because most in the real world (save the extremists and anarchists) know that there is a benefit to having some government, and that government needs to be paid for, and it’s paid for through taxes. Fire, police, courts, roads, health care, all make an environment more profitable, and actually encourage participation. The regulatory role of improving the flow of information gets things happening faster and cheaper.
Paying for a navy to fight pirates is cheaper than insurance, lost ships, and fear to leave dock. So it makes sense to have a tax system pay for a navy, and use the navy to improve shipping.
Where we get into problems is when the navy runs out of pirates and has to go looking for them in landlocked countries that then requires multiple carrier groups and ballistic nuclear subs…
You can, but that means you acknowledge that some of your entrepreneurs are refusing to participate because of the tax burden. You bow to them when it becomes too many and your economy stalls.
Gladly.
I think the solution is to adopt both spending cuts and tax increases. They are not mutually exclusive, you know; and if both are implemented, the spending cuts need not be destructive, and the tax increases need not be confiscatory. How do you feel about a balanced solution to the deficit?
Favour?
:dubious:
Where are you from? Most Americans don’t spell favor as favour.
While I disagree with your basic premise about taxing lottery wins excessively, you did talk a lot of sense in post 88.
But the “always” flaw about giving away money so that it will be spent and boost the domestic economy is that
(A) They may spend it on imported goods, so you’re boosting someones economy but not necessarily your own.
And , (B) They may spend it on drugs, which is also usually an import.
This is not a minor economic matter, the drugs trade is worth billions annually, I think that I read somewhere that every banknote in London had been handled by a cocaine user.
I realise that you’re American but this thread is equally appropriate to other Western nations .
Not necessarily. Not if the taxes that were taken allowed more consumers to enter/stay in the market via unemployment benefits, disability, or stimulus funding.
It’s almost a chicken-and-egg cycle, but it really does start with demand, not supply. How many entrepreneurs would be willing to start a business and hire employees and then wait until enough paychecks have gone out that the employees can begin buying things? Doesn’t happen, and you know it. There needs to be money in the system before business owners will try to seek it out.
They could tax lotto winnings at 90 percent. Then, when the state tax comes is, you might owe money. That would do a lot for sales.
Because otherwise the rich parasites will just sit on it. And what qualifies them as “entrepreneurs” just for having money?
The ones I know who obsessive-compulsively play the lottery, yes. They unanimously not only are hooked like crack addicts, they have no concept of mathematics, odds, and reality. Every single person I know who obsessively plays the lottery claims that they are “ahead”, “beating the system”, and “making money” off of it.
I support raising taxes on the lottery, but I also know there would be diminishing returns to doing so. Despite my disdain above, there would be a chilling effect if taxes were raised exorbitantly. I have no idea what the optimal number would be, other than a gut feeling of 50%.
In general I prefer the balanced solution to reducing the deficit, which to me means deep cuts to government programs, a halt on new programs, and keeping taxes high.
But in reality, my -> perception <- has been that over the course of decades tax increases lag spending increases, no idea if this is correct or not. (hence the term deficit spending) The result being that when we hit a wall, it’s spending that needs to be reigned in, while holding taxes steady. Then, as GDP growth recovers, tax revenue will increase, and it’s here that taxes are held while the budget moves to a surplus.
In theory the two can work together, but I don’t believe that’s going to work when we’re in the midst of a recession. In fact, reducing spending and raising taxes are a terrible idea when the economy has stalled. With that said though, deficit spending can’t continue, at the very least there needs to be a way to stop increasing the deficit. But there is no way around the fact that the poor are going to suffer. It sucks but that’s the way it is. The mechanism for transferring wealth has been broken by the deficit.
But the poor don’t have to die in the streets. In the midst of a crisis people will step up when asked. If the government were to scale back social services until the budget was balanced, private charities will step up. Just like after Katrina, and 9/11, and the Tsunami(s).
And while I’m up here on my soap box: there is no question the Bush Tax Cuts were a huge mistake, but as they say, the cat is out of the bag and ain’t going back in. He had the opportunity to cut back spending to generate a surplus and squandered that. But that’s in the past. We also just went through a MASSIVE deficit based stimulus, that had no plan for repayment. The US federal budget took two massive hits from the left and the right.
Pretty bleak outlook but there you have it.
One last thing that occurred to be this morning was that having a high (or higher) federal tax rate makes it harder for individual states to deal with their own monetary problems. Where tax increases would help they are over shadowed by federal tax increases.
Hmm, let’s see. People who purchase lottery tickets don’t do a proper ROI calculation, because if they did, nobody would buy lottery tickets. So, when people are purchasing tickets, they are looking at something else than just the rate of return. Which means that it’s not certain that increasing or decreasing taxes on lottery winnings will affect behavior. The only way to figure this out is too look at data from various tax rate regimes and see how lottery ticket sales fare, which controlling for other factors such as the unemployment rate or rate of GDP growth. Without data, there’s no point in stating that a 90% tax rate must decrease lottery sales. I suspect that may be true. But claiming that it must be true without any data is a flawed economic argument.
Speaking of flawed economic arguments:
Yes, let’s point at instances with heavy government involvement as evidence that private charities will be able to fill the gap. This isn’t evidence for anything, except that private charities can assist in government driven activities.
And if you would bother to read a history book, you would find ample evidence that private charity often cannot provide the services that people are most concerned about. Prior to the advent of Medicare, the elderly often went without healthcare. If you want to guarantee a minimum amount of health care to everyone, there is no economic model under which the private market will do it. If you don’t think that everyone should be guaranteed a minimum level of health care, that’s a different story. But those of us who want government involvement in the health care sector do so because we want everyone to be guaranteed a minimum level of health care.
Federal tax rates are the lowest they’ve been in awhile, and yet Republicans and Blue Dogs are still fighting tooth and nail against state tax increases. There is absolutely no evidence for this proposition.
Yes? Yes?
D’oh!!
This is why the talks are deadlocked, conservatives just don’t fight fair. You have taken any federal revenue increases off the table, so there is no basis for compromise. This is fine if you hold all the cards, but you don’t; Democrats hold the White House and the Senate. Plus, Democrats know the unspoken truth that will let the wind out of conservative sails; Wall Street has you guys by the balls, and all we need is 20 Republicans in the House to get cold feet, and the ball game is over. I am confident that when corporate donors start leaning on the GOP, at least that many will choose money over principle and the debt ceiling will be raised at the eleventh hour, probably with a minimum of spending cuts, and all because your guys value tax loopholes and corporate welfare over spending cuts.
So, have it your way. I ain’t askeered.
Let’s also not forget who makes the government services cost more than they have to: the Republicans and Blue Dogs (I suppose we can throw the “centrists” in there). Want Medicare to include voluntary end-of-life counseling? Can’t have that. Want Medicare to negotiate drug prices? Can’t have that either. Want a public option? Nope, definitely can’t have that. Nope, we have to spend unnecessary amounts of money just so that the Republican/Blue Dog/Centrist coalition can redistribute our tax money to big companies.
At least they managed to get Comparative Effectiveness Research through despite Republican/Blue Dog opposition.
You are trying to have it both ways in this thread. On the one hand, you want us to assume that investors make perfectly rational calculations based on tax rate. Then they turn around and make irrational decisions to leave money on the table. Or conversely, that lottery purchasers are perfectly rational about tax calculations, even though purchasing lottery tickets is an irrational decision. Then we’re supposed to assume an imperfect market which tends towards monopoly.
In the real world, the ROI is not solely based on tax rates. For example, if you raise the rate from 30% to 35%, I’m not going to stick my money in my mattress. I might try and find an investment overseas that taxes less. But when I do that, I have to take into account all sorts of other risks, like currency risks or the risk of nationalization, and it may be the case that my projected ROI is still better in the US than overseas.
Furthermore, in the real world, people do make investment decisions based on other factors besides purely financial ones. So, it’s not necessarily the case that every increase in the tax rate dampens investment.
The only way to figure it out is to look at historical rates and see if there’s a correlation with investment activity, and we certainly have evidence that you can have high investment at higher tax rates (see, e.g., Clinton era).
Now, I personally wouldn’t raise taxes or cut spending in the middle of a recession. I’d rather engage in serious infrastructure spending and put in serious long-term cost controls that are achievable and will actually achieve better outcomes. But if it’s a choice between cutting benefits now or raising taxes now, I’m going to choose raising taxes.