Are you looking at effective tax rate on page 9? That is a meaningless number by itself. You can see that incomes rose for the super wealthy and, even though they paid a lower effective tax rate, the total paid remains the same or increases (sometimes greatly)
The government creates wealth by paying for useful things. See, this is how it works: A need is identified. A company says ‘We can do that!’ The government pays for the work. The company makes money (i.e. wealth is created) because the company charges more to do the work than it costs them to do it. It’s called ‘profit’. Government programs provide the incentive – the ‘stimulus’, if you will – for companies to make money.
We’re talking about government spending. Contrary to popular (Republican) belief, the government doesn’t just give money away to undeserving poor people. Government programs pay for things that are needed.
It would if digging holes and filling them in produced value. But you’re choosing an absurd hypothetical situation. Supporting the infrastructure gives value for the money spent. Digging holes and filling them in would provide jobs, and the money made by the workers would help the economy; but the result of the work would be nothing.
Only it’s been shown empirically that this is not true.
I didn’t say that, and you know it.
Patriot: one who loves his or her country and supports its authority and interests
Note that a patriot supports his country. That includes financial support. If a person refuses or objects to paying for the functioning of his country, then he’s not a patriot.
And yet this has been shown to be incorrect, especially in the last dozen years.
And yet this has been shown to be incorrect, especially in the last dozen years.
Way to shift the goal posts. First you say that tax rates don’t matter to the super-rich, and I show that they do. Now you shift the discussion to “total paid,” whatever that means.
That’s not shifting the goal posts at all. I stated that tax rates don’t necessarily correlate to tax revenue. You showed me that as a result of the tax cuts effective tax rates for the wealthy decreased. I am pointing out that the wealthy can move money and benefits around to avoid paying taxes. When taxes are lower they will invest in more productive venues thus increasing their total taxes paid. Lower taxes are the incentive to engage in economic activity which may not be beneficial to them at higher tax rates. As a result, total taxes paid can increase.
Ignoring that for a moment…you can see that, for whatever reason, total income seems to increase when taxes are cut for the wealthy. The result is more money being taxed at a lower rate. A lot of money comes out of hiding when rates are reduced. As I stated, Mellon figured this out in the 1920’s
In a very real sense, we are.
When Bush passed these tax cuts in 2001, he did so with a sunset provision in place. It was a bit of political legerdemain designed to obscure the true cost of these tax cuts; nonetheless, he said that these cuts were temporary and would expire. If we do nothing, these temporary cuts end, and people go back to paying their regular rate.
We’re talking about whether we should give people another tax cut. One proposal on the table is that we do nothing, and the vacation from regular taxes is over and we go back to paying our regular rate. Another proposal is that we continue the vacation for everyone. A third proposal is that the wealthiest Americans end their vacation now, since they’re in the best position to go back to the regular rate and their doing so will make a significant dent in our financial straits, but that the middle class, who are still in a rough patch, get to go on another tax vacation.
This is sort of like the question of whether the individual mandate’s penalty is a tax or a tax break. In this case, though, the way Republicans framed the conversation back in 2001 is that it was a temporary tax cut, so it’s not especially fair now to refer to the deliberate end of this temporary situation as a tax hike; rather, it’s just a return to normality, unless we decide to give folks another tax cut.
Oh, so all needs are funded by government dollars? That is called a centralized economy and, if you are not aware, we are not quite there yet. The vast majority of businesses make money by giving people what they want or need directly for a profit.
Undeserving poor people. That’s priceless!
Again with the infrastructure. I’m still not aware that was a point of contention.
No, it has not.
Patriots can disagree on what government should spend our tax dollars to do. Your unpatriotic argument is still at the 3rd grade level. What if the US decided to bomb Canada and steal its natural resources. Would you be unpatriotic for not supporting that? C’mon…think a little instead of trotting out that unpatriotic nonsense.
How?
How?
That looks perilously close to a willful misunderstanding of what he wrote, and I’m not sure how a willful misunderstanding can possibly move the discussion forward. When he wrote “government creates wealth by…” of course he didn’t mean that all wealth is created by the government, nor that “all needs are funded by government dollars”; he was simply refuting your claim that “the government cannot create wealth” by showing you how it could.
And of course it can. You may argue that it’s not as efficient at wealth-creation, but to claim it cannot create wealth is simply and irrefutably untrue.
Now, as you’re saying we need to cut programs, I wonder if you’d give us your suggestion for which programs to cut and by how much, along with some analysis of what effects such a cut might have? I don’t think it’d be fair to ask you to show sufficient cuts that we can end the deficit and pay down the debt; rather, since you’re objecting to ending a tax cut whose end would pay off about 8% of the deficit, maybe you can propose program cuts of $85 billion annually. Who knows, I might even agree with your proposed cuts.
I meant that we are not talking about further lowering taxes on the wealthy. If you look at the chart Ravenman provided you can see that the effective tax rates for the super wealthy have not changed much as a result of the Bush tax cuts. Incomes have increased so total taxes paid have increased. What’s the problem?
LHoD covered this.
Well, let’s see… We’ve had a decade of the lowest tax rates ever. Corporations are sitting on trillions of dollars. Unemployment is high. Thus it is shown that cutting taxes does not cause companies to hire people.
Either cutting taxes results in more hiring, or it doesn’t. Empirical evidence shows that it doesn’t.
Government does not create wealth. It transfers wealth. Building a road or a bridge definitely has value but the value is created by those who do the work. The government can fund the work by transferring some of our wealth to companies that provide the work. That is not creating wealth.
I’m willing to bet you realize that this is a gross oversimplification. Cutting taxes in and of itself does not result in more hiring. IF companies need more employees AND the tax rates are favorable to pick up more people THEN companies will hire more people. If not, companies will just work the employees they have harder.
Do you think raising taxes will increase employment? Any clue why corporations are sitting on all that money? Are companies better off sitting on money as opposed to putting it to work?
You’re sounding like a Marxist here! 
Sure, of course wealth is just accumulated labor, and it’s created by the working class. But how is the government’s role in this example different from the role of a capitalist?
This is just totally made up. Tax rates have nothing to do with taxable income. When the economy grows, income goes up – there’s no correlation with income rising and tax rates. Frankly, it’s just a silly idea.
Look at page 17 of my previous cite. Tax rates were cut considerably in 1980, but the economy was doing poorly in the early part of the decade. Incomes didn’t change that much. Get into the mid-80s and the economy recovers, people get richer. Chug along to the early 1990s and there’s the recession, and incomes drop for a year. Then tax rates go up when Clinton gets into office, and the economy recovers, and incomes for the very rich triple under “high” tax rates. Then tax rates go down and the economy stumbles again, incomes drop a lot. Tax rates stay down, and the economy recovers, and incomes go up.
This fiction that income is a function of tax rates is just pure fantasy. It makes no sense, and I fail to see why any sensible person would actually believe it.
Actually I think its just " IF companies need more employees THEN companies will hire more people" I don’t see what tax rates have to do with it. If increasing payroll makes the owner of the company a net increase of $50,000 after taxes, then I don’t think he will suddenly decide not to increase payroll just because he only gets a net increase of $48,000.
No, but the alternative, cutting spending more, is likely to hurt employment more than tax increases.
There is no point in making products that no one will buy. The top 1% don’t eat 40 times as much food, or need 40 times as many cars or televisions as the lower 99%, they just have 40 times as much money. So the lower 99% doesn’t buy things because they don’t have the money. the top 1% don’t buy things because they already have everything they need. As a result they have this big pile of money they don’t want to spend, but don’t have anyplace to invest in, so it just sits there. Far better to take just a little bit of it and put it into something useful.
You are going off on a tangent but I’ll make a few points.
So, tax rates go down and the economy improves. As a result income increases and total taxes paid by the wealthy increases. I didn’t say that tax rates directly affect taxable income. I said that taxable income seems to increase when taxes are lowered…probably because of the improved economy. That being said, though, tax rates can indeed affect taxable income as many people will take tax-free benefits as opposed to income when rates are high (no, I am not talking about the current situation).
My point about money coming out of hiding has nothing to do with income but where the wealthy park their money. The very wealthy can park their money in tax-free munis or move money overseas if taxes here make those options more worthwhile.
The recession ended in late 1992 and Clinton raised taxes in late 1993 so your timeline is a bit skewed.
Also, you are pointing to minimum adjusted income on page 17 in order to make a point but I don’t know what that point is.
Not necessarily. Using your example then sure. But in reality businesses must weigh the cost of a new employee versus the cost of working existing employees more.
Cutting government spending does not necessarily mean that people will be laid off by government. But, even if it does, we are taking money from people to keep other people employed. That is removing capital from the private sector. I’m not suggesting that this is the best time to start laying off government employees but, if we hope to shrink government, layoffs are unavoidable.
No. Shareholders will start to demand that something productive be done with the cash. Either improvements or pay higher dividends. Moody’s found that close to 60% of that cash is being held overseas in emerging markets or due to the negative consequences of repatriating the funds.
I really don’t want to get sidetracked discussing this. I did this a few years ago in detail in another thread. The major difference is that the government takes our money by force while a capitalist hopes to make a return on his investment. Government can take tax dollars from Alaska to build a bridge in New York that no Alaskan will ever benefit from. A capitalist uses his money, or that of investors, to produce something that he can sell at a profit to people that want or need the good or service.
The income listed for each percentile there is a good barometer of how much the top 1% (or 0.1% or whatever) is actually making in income.
No. You’re not paying attention to what I wrote. Tax rates going down does not make the economy improve. The 1990s show that tax rates can go up and the economy improves a lot. In the 2000s, taxes went down by a lot, but income growth was pretty modest.
Wrong. Again, tax rates for the rich went down a lot in the 1980s, and their incomes grew modestly, clearly because of the improving economy. Tax rates for the rich went up in the 1990s, and the economy improved a lot, leading to huge growth in the incomes of the wealthy. There’s no connection between tax rates and income growth. There’s no connection between tax rates and economic growth. There is, obviously, a direct connection between economic growth and income growth for the wealthy.
A minor quibble with how I phrased something is a trifle compared to your entire argument being unsupported by facts.
No wonder you don’t want to discuss it.
Tax money (the investment) is levied by the elected representatives of the people (the investors) and funneled through Congress to the Executive branch to the people who actually do the work - who might be government employees or contractors.
Excluding startups with direct representation by VCs, in a business executives selected by the Board who are (theoretically) elected by the investors (share holders) take money from where-ever and funnel it to the workers who actually do the work.
The situations are almost identical. If you say government does not create value because workers do the work, CEOs don’t create value because workers do the work - and so should certainly not make as much as they are making today.
Part of our problem is that the states have been laying off employees, lots of employees. The unemployment rate would be a lot lower if they had not.
Cutting government spending will mean either laying off workers for the government, or workers at companies the government is giving money to. When the government stops a defense contract, workers get laid off. There are some raw materials which will be cut, sure, but I suspect most of any cuts will hurt workers.
Tax increases do remove capital from the private sector. What you need to ask is whether this capital is best employed by a government project or a private project. It is only a bad thing economically of every penny of private capital is used more effectively than it could be used by the government. Is private capital now parked in low yield bonds really being used better than if it were used for road repair, to keep a dam from breaking, or for R&D which might yield the next Internet? Is the pseudo-moral aversion of the right to giving up money to the people worth the damage to the economy?