# Taxes and growth **URL:** \ **Category:** Great Debates\ **Created:** [March 10, 2017, 1:00am UTC](https://boards.straightdope.com/t/taxes-and-growth/781822 "2017-03-10T01:00:38Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Crane](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/crane/32/3495_2.png) [@Crane](https://boards.straightdope.com/u/Crane)\ **Post date:** [March 11, 2017, 3:52pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/21 "2017-03-11T15:52:52Z")
Sear, It’s the vacuum cleaner principal: politicians suck all the money into their pockets - government is just the hose . Crane ---
**Author:** ![sear](https://avatars.discourse-cdn.com/v4/letter/s/cab0a1/32.png) [@sear](https://boards.straightdope.com/u/sear)\ **Post date:** [March 11, 2017, 5:00pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/22 "2017-03-11T17:00:46Z")
C #21 I just LOVE these electrical appliance metaphors! Q: What’s the difference between a Harley and a Hoover? A: The position of the dirt-bag. > [@](#): > > “In framing a government which is to be administered by men over men, the great difficulty is in this: you must first enable the government to control the governed, and in the next place, oblige it to control itself.” James Madison > > “A government exists when it has a reasonable monopoly on the legitimate use of violence.” George Will ---
**Author:** ![Munch](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/munch/32/5281_2.png) [@Munch](https://boards.straightdope.com/u/Munch)\ **Post date:** [March 12, 2017, 1:03am UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/23 "2017-03-12T01:03:42Z")
So he IS able to use the quote function… ---
**Author:** ![davida03801](https://avatars.discourse-cdn.com/v4/letter/d/b5e925/32.png) [@davida03801](https://boards.straightdope.com/u/davida03801)\ **Post date:** [March 12, 2017, 11:42am UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/24 "2017-03-12T11:42:47Z")
> [@boffking](#): > > Taxes on the rich were much higher in the 1950’s than they are now, and there was much more economic growth back then. I say the conservatives are dead wrong on this. So wish the progressives, but you are only stating 1/2 the facts and leaving out an important point. While it is correct the tax rates were much higher in the 1950’s so were the deductions much higher. A fact that is always left out. Therefore the effective tax rate was much lower than you think. ---
**Author:** ![sear](https://avatars.discourse-cdn.com/v4/letter/s/cab0a1/32.png) [@sear](https://boards.straightdope.com/u/sear)\ **Post date:** [March 12, 2017, 12:58pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/25 "2017-03-12T12:58:20Z")
#24 The Laffer Curve. ---
**Author:** ![igor\_frankensteen](https://avatars.discourse-cdn.com/v4/letter/i/839c29/32.png) [@igor\_frankensteen](https://boards.straightdope.com/u/igor_frankensteen)\ **Post date:** [March 12, 2017, 6:22pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/26 "2017-03-12T18:22:18Z")
> [@sweeteviljesus](#): > > It seems to be a given among conservatives that lower taxes will lead to more economic growth. Are conservatives talking about lowering the corporate tax rate (which are currently the highest in the world and cause multinational corporations to avoid repatriating profits), or are they speaking about lowering individual income taxes? If it’s the latter, is there any data that shows that businesses are undercapitalized due to lack of money to invest because too much is tied up in taxes? I accept that that can be true in principle, but how true is it in practice? The last I heard, American businesses were sitting on piles of cash, waiting for demand to increase. I don’t think that the wealthiest 1% are a huge source of demand. What’s the straight dope? > > Thanks, > Rob I submit that the “straight dope,” is that the bulk of the advocates of lowering the upper crust’s and business taxes, simply don’t understand anything about economics or business. All you really need to do, is think through the basics. I like to liken it to any problem solving situation involving a mechanism. The economy is often likened to an engine, as an example. If you think of what will make an engine run faster or more powerfully, simply saying that “adding more fuel” will do it is obvious idiocy. At least it is obvious to anyone who knows how engines run. An engine requires fuel, air, oil, properly coordinated pistons and so on. So. If your engine is not running well, will adding more oil fix it? Well, yes, but only if the reason for it not running well, is lack of enough oil. The economy is very similar. _ **IF** _ the reason why the economy is sluggish, is that businesses haven’t got enough cash on hand to expand, then lowering their costs (including taxes) can help rev them up. The problem with the modern Republican “thinking” about this is, that they are doing much worse than IGNORING the fact that engines need more than oil, they are outright denying it. “Supply side economics” is based on the idea that an engine will run better and faster, despite having no fuel or air, if you just add more oil. Translating that into economic factors, it mean that they think that if they add more investment capital to the mix, by lowering taxes on businesses and on investors, that despite the fact that they are also actively working to REDUCE the amount of purchasing power of the CUSTOMER CLASSES, that intelligent business people will use their tax reduction windfall, by expanding their businesses, hiring more people, and giving raises to them, all in order to increase production, even as they see their customer base shrinking. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 13, 2017, 1:41pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/27 "2017-03-13T13:41:00Z")
> [@sear](#): > > - excellent - > > Please name an anarchy that’s more prosperous, that has a higher per capita standard of living than a State that implements any form of taxation. WTF are you talking about? Every fucking economist in the world thinks that taxes are a drag on the economy. Every last fucking one. That doesn’t mean that government spending can’t result in economic benefits. One of the reasons why deficit spending is such a good short term accelerant for the economy is that it accelerates the economy without creating a tax drag. Paying it back might be a bitch but it works for the short term. > [@](#): > > I understand the GDP taxation share / ratio concept. > > But it’s an ideological self-serving lie to say that all government, which MUST be supported economically, is a net detriment. So when I say that taxes are a drag and government spending is an accelerant, you stopped reading after the word drag? > [@](#): > > It’s absurd! You need to read more carefully. > [@](#): > > To make that claim is to insult the U.S. Founders, who clearly felt government was a net plus. Much more carefully. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 13, 2017, 1:48pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/28 "2017-03-13T13:48:56Z")
> [@igor\_frankensteen](#): > > I submit that the “straight dope,” is that the bulk of the advocates of lowering the upper crust’s and business taxes, simply don’t understand anything about economics or business. > > All you really need to do, is think through the basics. > > I like to liken it to any problem solving situation involving a mechanism. The economy is often likened to an engine, as an example. If you think of what will make an engine run faster or more powerfully, simply saying that “adding more fuel” will do it is obvious idiocy. At least it is obvious to anyone who knows how engines run. An engine requires fuel, air, oil, properly coordinated pistons and so on. > > So. If your engine is not running well, will adding more oil fix it? Well, yes, but only if the reason for it not running well, is lack of enough oil. > > The economy is very similar. _ **IF** _ the reason why the economy is sluggish, is that businesses haven’t got enough cash on hand to expand, then lowering their costs (including taxes) can help rev them up. > > The problem with the modern Republican “thinking” about this is, that they are doing much worse than IGNORING the fact that engines need more than oil, they are outright denying it. “Supply side economics” is based on the idea that an engine will run better and faster, despite having no fuel or air, if you just add more oil. > > Translating that into economic factors, it mean that they think that if they add more investment capital to the mix, by lowering taxes on businesses and on investors, that despite the fact that they are also actively working to REDUCE the amount of purchasing power of the CUSTOMER CLASSES, that intelligent business people will use their tax reduction windfall, by expanding their businesses, hiring more people, and giving raises to them, all in order to increase production, even as they see their customer base shrinking. I mostly agree with you that adding lack of capital is not the bottleneck to economic growth. However taxes always crowd out marginal investments because it reduces return on investment. I don’t think any reasonable economist would say that corporate taxes are at an unhealthy level that creates this sort of crowding out. There may also be leakage to other lower tax jurisdictions that are trying to compete with us on tax but this sort of tax competition is a race to the bottom. ---
**Author:** ![sear](https://avatars.discourse-cdn.com/v4/letter/s/cab0a1/32.png) [@sear](https://boards.straightdope.com/u/sear)\ **Post date:** [March 13, 2017, 3:14pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/29 "2017-03-13T15:14:50Z")
> [@](#): > > “WTF are you talking about? Every fucking economist in the world thinks that taxes are a drag on the economy. Every last %$#@ing one.” DA #27 I’ve never read Paul Krugman assert that. Not Paul Solmon either. Are persons entirely opposed to government revenue not anarchists? So you’re telling us “Every last %$#@ing” economist is an anarchist? I didn’t know anarchies had economies. > [@](#): > > “One of the reasons why deficit spending is such a good short term accelerant for the economy is that it accelerates the economy without creating a tax drag. Paying it back might be a bitch but it works for the short term.” I imagine Keynesian economic theory is quite familiar in this forum. But in what way is the drag of paying back $money the feds borrowed different from any other loan payback? Why is it different from a car loan, or a mortgage, or any other financial loan? > [@](#): > > it’s an ideological self-serving lie to say that all government, which MUST be supported economically, is a net detriment. > So when I say that taxes are a drag and government spending is an accelerant, you stopped reading after the word drag?" I advocate balanced budgets. But many a pseudo-con simply advocate for tax cuts; they rarely if ever get around to corresponding spending cuts. But the compulsive tax cutters, the deficit doves love to say: _ **“We can’t tax our way to prosperity.”** _ I repeat my challenge. Name any anarchy that provided a better, more comfortable, safer standard of living than the ones enjoyed by U.S. $tax $payers. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [March 13, 2017, 3:44pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/30 "2017-03-13T15:44:45Z")
> [@sear](#): > > I repeat my challenge. > Name any anarchy that provided a better, more comfortable, safer standard of living than the ones enjoyed by U.S. $tax $payers. Your challenge has no bearing on taxes being a drag on the economy. ---
**Author:** ![sear](https://avatars.discourse-cdn.com/v4/letter/s/cab0a1/32.png) [@sear](https://boards.straightdope.com/u/sear)\ **Post date:** [March 13, 2017, 4:08pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/31 "2017-03-13T16:08:58Z")
> [@](#): > > “Your challenge [to cite a prosperous anarchy] has no bearing on taxes being a drag on the economy.” Oh? What anarchy collects tax? What’s the most prosperous, wealthy State in our Union? Is there not some semblance of $balance in its budget there? They can’t print $money the way “Uncle Sam” can. [Happy Birthday “Uncle Sam”] Not all borrowing promotes prosperity. But it can. I’ll cite a personal example. I needed a new car late last year, and had in the bank $ten $times the amount I needed to buy it. But my portfolio is cooking along, and I got a 3 year car loan significantly under 3% interest. I’ve been debt free for decades. But as Janet Yellin will be announcing interest rate hikes, I figured $money that $cheap was too good a bargain to pass up. And as I live over 10 miles from the nearest store, a 20+ mile stroll for an arm full of groceries once a week, in this climate (Northern New York State) didn’t seem that sensible an alternative, for a retiree collecting both pension and Social Security. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [March 13, 2017, 4:20pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/32 "2017-03-13T16:20:20Z")
> [@sear](#): > > Oh? What anarchy collects tax? > > What’s the most prosperous, wealthy State in our Union? > Is there not some semblance of $balance in its budget there? You are welcome to make an argument if you like. Just Asking Questions doesn’t get you there. ---
**Author:** ![sear](https://avatars.discourse-cdn.com/v4/letter/s/cab0a1/32.png) [@sear](https://boards.straightdope.com/u/sear)\ **Post date:** [March 13, 2017, 5:15pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/33 "2017-03-13T17:15:56Z")
I thought I already had. A reprise: the standard of living is better in States that tax, compared to non-States that don’t. And proving that wrong would be as simple as naming ONE example of any anarchy that collects no revenue, but somehow results in a higher standard of living than that in the U.S. Thus my challenge, which I’ve now mentioned at least 3 times. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [March 13, 2017, 6:57pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/34 "2017-03-13T18:57:54Z")
> [@sear](#): > > I thought I already had. > > A reprise: > the standard of living is better in States that tax, compared to non-States that don’t. > > And proving that wrong would be as simple as naming ONE example of any anarchy that collects no revenue, but somehow results in a higher standard of living than that in the U.S. > > Thus my challenge, which I’ve now mentioned at least 3 times. Governments are useful in that the allow businesses to spend less money on security and fewer public goods would be produced. So a government with no revenue would not be useful and businesses would be worse off. Once that threshold is passed excess government revenue is detrimental to businesses. Is it your contention that we are currently on the inflection point and that any reduction in taxes would be harmful to business? Because no one in this thread has argued for anarchy. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 13, 2017, 7:20pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/35 "2017-03-13T19:20:26Z")
> [@sear](#): > > I’ve never read Paul Krugman assert that. > Not Paul Solmon either. Of course they do. Every economist acknowledges this. I think you may not be reading very carefully. > [@](#): > > Are persons entirely opposed to government revenue not anarchists? Who is opposed to government revenue? > [@](#): > > So you’re telling us “Every last %$#@ing” economist is an anarchist? > I didn’t know anarchies had economies. No, I’m saying every last fucking economist thinks that taxes are a drag. The question isn’t whether or not taxes are a drag, the question is whether government can put the tax revenue to good enough use to outweigh that drag on society by enough to justify taxation. > [@](#): > > I imagine Keynesian economic theory is quite familiar in this forum. > > But in what way is the drag of paying back $money the feds borrowed different from any other loan payback? > Why is it different from a car loan, or a mortgage, or any other financial loan? Paying back fiscal debt is different than paying back bank debt because private borrowers do not have the power of taxation. The borrower has to produce something of value in order to raise the funds necessary to pay back the loan with interest. And with great regularity, society is better off as a result. When you deficit spending, it may or may not make society better off than the cost of that spending. It frequently is but there is no guarantee that it will be. > [@](#): > > I advocate balanced budgets. As long as there is a pressure valve, sure, I can see a reasonable argument for balanced budgets > [@](#): > > But many a pseudo-con simply advocate for tax cuts; they rarely if ever get around to corresponding spending cuts. > > But the compulsive tax cutters, the deficit doves love to say: > > _ **“We can’t tax our way to prosperity.”** _ > > I repeat my challenge. > Name any anarchy that provided a better, more comfortable, safer standard of living than the ones enjoyed by U.S. $tax $payers. I will challenge you to cite where I have made that claim or anything that would lead to that claim. ---
**Author:** ![sear](https://avatars.discourse-cdn.com/v4/letter/s/cab0a1/32.png) [@sear](https://boards.straightdope.com/u/sear)\ **Post date:** [March 13, 2017, 7:24pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/36 "2017-03-13T19:24:01Z")
> [@](#): > > “Is it your contention that we are currently on the inflection point and that any reduction in taxes would be harmful to business?” pg #34 I haven’t asserted that. But the first sentence in the lead post is: > [@](#): > > “It seems to be a given among conservatives that lower taxes will lead to more economic growth.” Lead So I used the technique the ancients called: reductio ad absurdum > [@](#): > > " no one in this thread has argued for anarchy. " Just follow the premise to logical extreme. If a 2% tax reduction is good, is a 4% tax reduction twice as good? And if it’s a steady progression, why all the half-stepping? If cutting taxes is always good, then why not cut them out? Zero% $tax. Right? Some tax reductions are beneficial. BUT !! Deficit spending is except in sovereignty-threatening emergency, horrendous. > [@](#): > > “What’s pernicious about deficits for conservatives is this. It makes big government cheap. What we’re doing, we’re turning to the country, the “conservative” administration turns to the country and says: We’re going to give you a dollar’s worth of government, we’re going to charge you seventy five cents for it. And we’re going to let your kids pay the other quarter.” George Will Nov 30, 2003 Anyone that wants to slash taxes, my answer to that is: Excellent. $Slash $Spending $Farther $First !! ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 13, 2017, 7:24pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/37 "2017-03-13T19:24:06Z")
> [@sear](#): > > I thought I already had. > > A reprise: > the standard of living is better in States that tax, compared to non-States that don’t. > > And proving that wrong would be as simple as naming ONE example of any anarchy that collects no revenue, but somehow results in a higher standard of living than that in the U.S. > > Thus my challenge, which I’ve now mentioned at least 3 times. I think you may be misreading what I said. Taxes are one side of the equation and they are a drag on the economy. Who you tax and how you tax them will affect how much of a drag it is. Spending is the other side of the equation and depending on what you spend it on and how you spend it, the effect of that spending can overcome the negative effects of the taxation. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 13, 2017, 7:27pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/38 "2017-03-13T19:27:48Z")
> [@sear](#): > > I haven’t asserted that. > > But the first sentence in the lead post is: > > So I used the technique the ancients called: reductio ad absurdum > > Just follow the premise to logical extreme. > > If a 2% tax reduction is good, is a 4% tax reduction twice as good? > > And if it’s a steady progression, why all the half-stepping? If cutting taxes is always good, then why not cut them out? Zero% $tax. > > Right? > > Some tax reductions are beneficial. > > BUT !! > > Deficit spending is except in sovereignty-threatening emergency, horrendous. > > Anyone that wants to slash taxes, my answer to that is: > Excellent. > > $Slash $Spending $Farther $First !! I don’t feel like we are participating in the same conversation. I don’t think I disagree with you as much as you seem to disagree with me. ☹ ---
**Author:** ![sear](https://avatars.discourse-cdn.com/v4/letter/s/cab0a1/32.png) [@sear](https://boards.straightdope.com/u/sear)\ **Post date:** [March 13, 2017, 7:35pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/39 "2017-03-13T19:35:54Z")
PS > [@](#): > > “Who is opposed to government revenue?” DA #35 Government revenue comes from taxes. So those that assert: > [@](#): > > “taxes are a drag.” DA #35 Are out of touch with a fundamental reality. > [@](#): > > “If you will the end, you must will the means to that end.” George Will Taxes are a means for government to derive revenue. Reductio ad absurdum. - Without government revenue, what government funding? - Without government funding, what government? - Without government, isn’t that anarchy, by definition? > [@](#): > > anarchy (àn´er-kê) noun > plural anarchies > Absence of any form of political authority. > > Excerpted from The American Heritage® Dictionary of the English Language, Third Edition © 1996 by Houghton Mifflin Company. Electronic version licensed from INSO Corporation; further reproduction and distribution in accordance with the Copyright Law of the United States. All rights reserved. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [March 13, 2017, 7:51pm UTC](https://boards.straightdope.com/t/taxes-and-growth/781822/40 "2017-03-13T19:51:24Z")
> [@jshore](#): > > The most recent time the experiment of cutting taxes on the wealthy has failed is in Kansas: [Hard times for Kansas and its schools as economic 'experiment' creates gaping budget hole](http://www.latimes.com/nation/la-na-kansas-hard-times-snap-20161121-story.html) > > Of course, it has basically failed every other time that it has been tried too. The only reason it is still considered a serious approach is because of the religious fervor of its adherents (which also conveniently aligns with the economic interests of their big campaign contributors). Interesting. So, there have been substantial tax cuts in both the US and really all around the world that have happened in the last 50 years. Are you seriously suggesting that these cuts have ‘basically failed every other time that it has been tried too’? That there are no instances where a tax cut had a positive effect? That cutting effective taxes from 90% or 70% to 40% or 30% have had zero positive effect…ever?? :dubious: What I THINK you actually mean is that cutting taxes is not a panacea for all ills. It CAN have a positive effect on growth under certain circumstance, while in others it can either have no effect at all or a negative effect. But making a blanket statement like yours is as wrong as folks who say that cutting taxes always has a positive effect. Which is pretty much the answer to the OP. [Previous page](https://boards.straightdope.com/t/taxes-and-growth/781822.md?page=1) [Next page](https://boards.straightdope.com/t/taxes-and-growth/781822.md?page=3)