Why do lower taxes bring in more revenue?

[Voyager]

@bldysabba

I thought the crux of your objection was that higher taxes would not discourage investment because taxes only apply on positive profit. Both Sam Stone and I pointed out that you were incorrect. Higher taxes can easily discourage investment by reducing the return below the level where it cannot compete with other uses of your money as you stand at this point in time. If all you were doing was a nitpick about the phrase breaking even, then ok, but it isn’t particularly relevant.

There are certain times where this is true. Now is not one of them. Companies in the US are sitting on pools of money which they are not investing because they can’t find good things to invest in. Taxing away some of this money is not going to hurt investment. If the tax money is used for the kinds of things, like infrastructure or unemployment which will increase demand, then good investment opportunities will appear as we’d no longer have excess capacity.
Someone whose factory is sitting idle is not about to build a new one.

[magellan01]

@tomndebb

You are just so fired up to find something with which to disagree with me that you will make the silliest, blown up issue out of even an off-hand post.

Have fun. You obviously need this more than I do.

Project much?

Look at the tone of what I wrote, Post 99, and then your reply. You seem to be the one all in a huff. The one who “needs” something. And that something is to 1) not be shown to be called out when you are wrong and 2) not admit it when you are.

Good ol’ tomndebb.

[magellan01]

@Honesty

Is this a joke? If higher taxes did result in lower revenues, then taxes - individual and corporate - should be incrementally raised until revenues match expenditures. It’s that straightforward.

Say what? If a state raised taxes and it had actually lowered revenues, your solution would be to raise taxes again? You’ll have to explain the logic behind that.

@Honesty

All loopholes should be closed and the IRS given broad authority to crack down on companies using international subsidiaries to funnel taxable profits. The U.S government does itself no favors in the lackadaisical approach it has to getting money. For example, let’s say you’re hit with a $1000 tax bill and decide, “Fuck it, I’m not going to pay my federal tax return, I’ll pay them in eight months. Yeah, fuck the government.” If you did this, your penalty fine would be a max of $135. Pretty sweet deal, eh? In case you’re in doubt, here’s the relevant section in the IRS code:

I generally agree with this. But if the overall tax bite is too large, and companies can’t lower it by loopholes and such, they will move to places where the tax policy is more business friendly. So, I’d be all for eliminating all loopholes and such if the tax rate was lowered to be an inviting one.

[YogSothoth]

@cornopean

This shows a fundamental misunderstanding of how wealth is created. There is not a fixed amount of wealth that is then divvied up amongst people. Wealth is created by entrepreneurs who start businesses and create things that we want. To say that rich people don’t need any more money is absurd. The fact is that rich people create this wealth and are therefore entitled to it. the really amazing thing about this is that they enrich many others by their greed for more. The richer they get, the richer we all get.

Pointless non-sequitur. You didn’t address what I said, substituting your own straw man in which you could knock down. Let me clue you in a bit: nowhere do I posit a fixed amount of wealth. The income gap is relative, that’s what you completely missed. Please read the wiki entry on this as a start then take a high school civics course from 9th to 12th grade then come back, thanks

@magellan01

The reason the exchange is important is that…**

This topic isn’t about whatever pet gripe you have at the moment with Obama. Its about the ratio of taxes to revenue. The fact is that the claim of low taxes equaling higher revenue is due to other factors such as the boom during the decade in question. Higher taxes at the time would have brought in more revenue as well

[magellan01]

@YogSosoth

This topic isn’t about whatever pet gripe you have at the moment with Obama. Its about the ratio of taxes to revenue. The fact is that the claim of low taxes equaling higher revenue is due to other factors such as the boom during the decade in question. Higher taxes at the time would have brought in more revenue as well

It’s not a pet gripe. I agree that the debate over the proper level of taxation should be concern different levels of taxation and the corresponding amounts of revenue they generate. But Obama admits in that exchange that he doesn’t believe that. He wants to include “fairness”, beyond what the numbers say.

[Really_Not_All_That_Bright]

So does everyone else. Every Congress since about 1908 has used taxation or lack thereof to incentivize behavior and effect social change. Why do you think we don’t tax churches or other non-profits?

[PhillyGuy]

@cornopean

what do you hope to accomplish by raising taxes on the rich?

The same thing conservatives on this thread say they hope to accomplish by lowering taxes on the rich – raise revenue, while creating a more prosperous nation.

If both sides are sincere, optimal taxation isn’t a political matter, but a scientific question.

However, you don’t need a doctorate in economics to see what’s mistaken in the right wing POV here. Take the OP statement by T. W. Shannon. He’s apparently convinced that we are such a point in the Laffer Curve that changes to the small portion of all taxes paid to the state (local taxation and federal taxation are both higher) swamp the affect of revenue changes to the state.

Here’s how that would have to work:

You first reduce the state revenue for state purposes from ten percent of the tax pie (if Oklahoma taxation is average) to five percent. This would, again if Oklahoma is average, reduce Oklahoma’s percent of GDP spent on taxation from the current 24.8 percent by one part in twenty, to a 23.6 percent total tax burden. I am supposed to believe that this tiny reduction in the tax burden is going to more than double all the economic activity in Oklahoma that is subject to taxation. Of course Shannon doesn’t propose trying to halve taxation. Instead he favors minuscule decreases, such as, as just passed, reducing the top income tax rate by a quarter point. But the Laffer Curve logic is just as ridiculous for a big decrease as a small one. It’s just easier to fool people about the effect of a small decrease.

Question: How is it that the most prosperous country in Europe has some of the highest taxes:

http://www.expatfocus.com/expatriate-luxembourg-city-taxation

[Voyager]

@magellan01

It’s not a pet gripe. I agree that the debate over the proper level of taxation should be concern different levels of taxation and the corresponding amounts of revenue they generate. But Obama admits in that exchange that he doesn’t believe that. He wants to include “fairness”, beyond what the numbers say.

There are lots of possible allocations of taxes across items and income classes which will produce the same revenue. So, to choose one, we need some sort of guiding principle.
Do you think that trying to even the tax burden in terms of pain across all income levels is a reasonable principle to follow?