Yeah noone. Noone is saying we should increase the tax rate to 90%.
to 90%? Cite please or remove that straw man from my sight.
If the expected return is positive then someone WILL open that store. Its not that people don’t understand the concept of risk, its that you don’t seem to understand any concept other than risk.
Once again, you seem to be the only one proposing a 90% tax.
I think this is where we point out the difference between earned income and gambling. Back when the top marginal rates were at 92%, CEO salaries were significantly lower and yet we didn’t have any trouble getting the best and brightest striving to become CEOs.
You realize the most aggressive plan out there is to return to the tax rates we had under Clinton, don’t you? I think it is hard to argue that those tax rates stifled economic activity. The bright side was that we also had enough tax revenue to pay for government.
I thought the Laffer curve was entirely about the relationship between tax rates and tax revenue. At a rate of 0% you get $0 in taxes because you don’t collect any money. At 100% you collect $0 because there isn’t any money to collect. At some point you reach a point where increasing the tax rate will not increase tax revenue. This was an important part of conservative ideology because they wanted to reduce tax rates but didn’t want to cut and spending when they realized that any spending cuts would have to come from medicare or defense because Reagan had pretty much cut most of the fat from the government already (seriously, there are people who are highlighting cutting shit like the ATF as if that’s even one percent of one percent of our deficit) but they wanted to cut taxes anyways. The only way they could justify it was by saying that the tax cuts would result in even higher tax revenue.
Its pretty much accepted by most reputable economists that we are on the left hand side of the laffer curve. ie an increase int ax rates will result in an increase in revenues. If you’ll notice, noone is even trying to claim that increasing tax rates will lower government revenue.
If it was 100% guaranteed, I would play a million of those tickets every week.
You are positing a stifling tax environment. We are proposing CLinton era tax rates. If you point is that even a 1% increase in taxes is going to have some marginal effect on investment decisions, then fine but recognize that the money does not evaporate into thin air when it is taxed, it is either reinjected into the economy or it is used to pay down debt.
Nit: Clinton raised taxes. Taxes were at 28% when Reagan left office and we were running historic deficits. HW Bush raised taxes some in between.
Yeah, but not by a whole lot.
Yes, which is why the Laffer curve is not really a very good instrument for measuring what we seem to want to measure. Its like taking someone’s temperature with a ruler.
Do you think that cutting spending will have any less deleterious effect? People are not sitting on their money because taxes are too high, they are sitting on their money because economic activity is too low.
Not really. In the current situation, stimulating investment to accelerate the economy is like trying to push a rope.
The economy can’t run on Harry Potter movies and iPad 2s.
Do you know what the definition of a recession is? The market pricing mechanism can break down.
I don’t particularly want to raise taxes but if given a choice between raising taxes on upper incomes and cutting spending during a recession, I want to raise taxes.
Lack of investment is not what is stalling our economy. Recessions are often identified by excess production capacity. We don’t need more Burger King’s we need more people buying Whoppers meals. We shouldn’t be bowing to Burger King franchisees, we should be bowing to the fat kid waiting in line waiting to get a happy meal.
To be fair, you have never complained about your own taxes. I think your libertariansim comes from naivete not greed.
Holy crap, that has to be a new record for consecutive posts.
"I don’t particularly want to raise taxes but if given a choice between raising taxes on upper incomes and cutting spending during a recession, I want to raise taxes. "
I’d rather not do either, but the US is in a particularly fucked position with respect to three years of recessions and a massive deficit.
And let’s be clear about something: this isn’t about party politics, I don’t give a rats ass which way you vote. As far as I can tell, the US has run out of available credit. Even if the debt ceiling is raised tonight we’ll still be in the same mess tomorrow.
Both the Bush tax cuts, and the Obama stimulus were deficit financed and failed to deliver. The “demand” either of those were supposed to create failed to materialize.
Quite the opposite. All I did was make a simple proposal, “Let’s tax lottery winnings at 90%.”
And this was met with several people responding, “Why would they bother playing?”
For some reason, when I propose we increase the tax ration on lottery winnings, the intuitive response is that fewer people would participate.
Yet when discussing an increase on the top marginal tax rate, what should have been the same intuitive response is some how absent. In fact, it’s 180[sup]o[/sup]. Many on this board actually believe that those being taxed won’t alter their behaviour, and that the government can redistribute money to come out ahead.
That is trying to have it both ways.
What’s amusing is that lottery players are anything but rational, and it’s just as likely that raising the tax rate on them would do nothing. While I’d like to believe those in the top marginal tax rate a just ever so slightly more rational when it comes to investing. There are plenty of jokes to be made about what the rich spend their money on, but I think it’s safe to say that tax **avoidance **plays a role, and that is ultimately the point of this discussion.
No, not perfectly. Are you trying to suggest that taxes are not factored in to investment decisions?
It’s not accurate to say “we’ve run out of credit” if countries will loan us trillions more if we just ask. It’s not like we’re a minimum wage worker taking out a $90,000 loan to buy an Aston Martin. If we want to pay off the debt, we could, there’s just no stomach for the tax increases to do so.
I’m also sort of puzzled that you just sort of offhandedly remarked that the Bush tax cuts failed to grow our economy. Isn’t the whole premise of your thread that tax cuts = economic boom, tax increases = crippled economy?
Failed to deliver? You mean the stimulus didn’t magically change the economy’s vector from freefall to bubble? Or are you trying to imply that merely bring us back from the brink of ruin proves that Keynesian economics doesn’t work?
Even Libertarians generally don’t deny the stimulative effect of deficit spending, are you going one step further and saying that Keynes was full of shit?
eta: and sorry for the chainposting. I can’t multiquote and there was a lot of stuff that deserved a response.
No, you didn’t propose an increase in the tax rate for lottery winnings, you proposed a confiscatory tax rate for lottery winnings. If you had said, lets tax lottery winnings at 39.6% instead of 35%. What do you think the response would have been?
They won’t alter it by much if you raise the top marginal rate from 35 to 39.6. After all Clinton raised it from 31% to 39.6% and he presided over some reasonably good economic growth.
a 4.6% difference in the top marginal tax rate wouldn’t make much of a difference.
Here is a fun fact, America has been in debt since the Revolutionary War. We can continue to be in debt for the rest of time.
Here is another fun fact. Over the last few years during which time we have borrowed about half our GDP, we have actually been able to float our debt for increasingly less and less interest. We have to pull ourselves out of this mess and have a plan for paying down our debt and increasing taxes should be part of that plan.
Oh, are we doing economics on a popular poll now? I thought you might actually have some economic insight you were trying to share. Apparently, all you were doing was trying to play a game of “gotcha.” Why didn’t you just say that from the beginning?
And, of course, I notice that you neatly managed to sidestep my argument by pointing to what other posters were doing. That must be because you don’t have an actual response to my arguments.
And here is the evidence that you were trying to play “gotcha” rather than have a serious economic debate. Not everyone gets to study economics (and I’m beginning to suspect that you are one of those people). You might try actually informing people, rather than trying to put one over on people who can’t wade through a model.
Oh, that was your point? I think not. If that was your point, you would have started a thread on the best strategies to mitigate tax avoidance. You don’t care about tax avoidance, you want to play “gotcha” games and well… I’m not sure what else the purpose is here.
Hee! I don’t know whether to think you are being intentionally ridiculous or ironic or if you actually have poor reading comprehension. It’s like you are a parody of a libertarian. Go read my post #100 for an answer to that question.
No, that’s the sort of retarded and simplistic thinking that gets countries/companies/people into messes like this. Just as saying spending cuts = people dying in the streets, spending increases = utopia for all.
The point of this thread isn’t to be against tax increases, or for tax cuts. Simply put, it’s to remind people that there are consequences for the decisions they make. Raising the top marginal tax rate 1% or 65% will have consequences. Cutting spending received by the bottom 20% will also have consequences. But it’s the former that is so often overlooked while people bitch about the latter.
To the rest of the crowd: This chart shows comparative gdp per capita between the US and Canada. See that looooong flat part from 1991 to 2001? That was when Canada made massive spending cuts (that included cuts to health care), held taxes (in some cases raised them higher), and balanced the budget. That’s what happens to gdp growth when government shrinks a deficit, consequences of actions. And then look from 2002 until 2007, that was real GDP growth based on a solid foundation with a balanced budget. During that time the government both cut taxes, and also increased spending, as revenue grew with increased gdp.
Of course, and all I ask is that people realize what increasing the top marginal tax rate actually means.
Ah yes, that word, confiscatory, which only gets applied arbitrarily to numbers that sound high. Do I really have to link to historical top marginal tax rates again? As to your second question, the responses would have been a garbled mess of confusion, because for some reason it confuses people to think in small terms.
90% is obviously confiscatory and will stop people from playing
39.6% is confusing, people don’t know what the current rate is, some think it’s confiscatory, others think it’s too low
35% would have been funny people that’s the current rate and few people know that, so some would say, “why would they play” and others would say, “there would be a mad rush for tickets”
The error in your application of going from 35 -> 39.5 is that you’re trying to look conclude that an infentesably small number won’t have a downside, so then make that number a little larger, and a little larger. I went the other way and jumped straight to 90% which is obviously confiscatory, now we move smaller. What if I said 80%? 70%? 60%
So what we get is this weird gap. Increasing by 1% does nothing, but increasing by 64% shuts it all down. Problem is that if we say 2% vs 64% we get the same answer, ditto for 3 and 60. We can then project convergence at a number were two people have opposite answers, which shows their true motivation (and party allegiance).
But you don’t know that. You just think that because it lines up with what you want to believe. The world was different in the 90s when Clinton was raising taxes. We’ve had two bubbles pop since then.
Nope, I love stimulus spending, but some times it fails, and some times it makes things worse.