Interesting article on taxes

[bills_fan]

This article claims that tax revenue, no matter the marginal tax rates, has been approximately 19.5% of GDP since 1950. There have been very small deviations, no matter if marginal tax rates have risen, fallen or remained constant. Its a point I have long argued, but less eloquently than the article states.

 

Interesting Article

[GG]

Save your breath. The rich need to pay more because it's their duty to the rest.

 

(ps - To make the article complete you should have linked last week's pieces on UBS and Lichtenstein to show what the true rich do when you slap high taxes on them)

[Chef Jim]

(ps - To make the article complete you should have linked last week's pieces on UBS and Lichtenstein to show what the true rich do when you slap high taxes on them)

 

I met a bunch of them last week in Tortola.

[bills_fan]

Save your breath. The rich need to pay more because it's their duty to the rest.

 

(ps - To make the article complete you should have linked last week's pieces on UBS and Lichtenstein to show what the true rich do when you slap high taxes on them)

 

 

Yeah, but they may soon get caught and end up cutting deals with DOJ.

[Steely Dan]

What makes Hauser's Law work? For supply-siders there is no mystery. As Mr. Hauser said: "Raising taxes encourages taxpayers to shift, hide and underreport income. . . . Higher taxes reduce the incentives to work, produce, invest and save, thereby dampening overall economic activity and job creation."

 

First off let's call it what it is, Trickle Down Economics. So you can't raise taxes on the rich because then they'll cheat more so it's ineffective? Doesn't that kind of ruin his whole argument? Tax increases aren't really tax increases because the rich will cheat in order to pay the same?! Therefore there is no such thing as a tax increase unless the rich become honest and more tax enforcement is done. I know it doesn't make sense to me either. I say raise the %age to 100% if it doesn't matter. If that's true it shouldn't affect the tax revenue at all as it wouldn't if we changed it to 0%.

 

Also if we reduce the top bracket down to .5% according to this guy tax revenues would stay the same?

 

If you raise taxes on the rich they'll become lazy? That line alone is worth the read!!

 

 

Presidential candidates, instead of disputing how much more tax to impose on whom, would be better advised to come up with plans for increasing GDP while ridding the tax system of its wearying complexity. That would be a formula for success.

 

The easing of complexity in the tax filing process will never happen. There are far too many industries built around the tax code being as muddled as possible. These industries are too powerful IMO.

 

This is a tremendously simplistic analysis. It fails to take into account inflation, unemployment, the internet boom of the 90's, wartimes, and extreme deficits and other things I can't think of but probably have an effect.

 

If he wants to prove that total tax revenue, specifically as it relates to the fluctuating tax %age on the rich, as compared to the GDP doesn't change then the graph should include what the GDP was during that time and the rates of the other tax brackets as well. He's making us trust that he arrived at his numbers correctly. To me this looks like taking a conclusion and then manipulating the facts to fit it.

 

Figures don't lie, but liars figure. - Samuel Clemens (alias Mark Twain)

[bills_fan]

The point of the article really is that the economy, as measured by GDP, contracts when taxes are raised and expands when they are lowered. The 19.5% of GDP simply says that the government takes in the same % of GDP no matter the tax rates. If the goverment wants to expand the economy, and take in more revenue, it will lower taxes, thereby increasing GDP.

[GG]

First off let's call it what it is, Trickle Down Economics. So you can't raise taxes on the rich because then they'll cheat more so it's ineffective? Doesn't that kind of ruin his whole argument? Tax increases aren't really tax increases because the rich will cheat in order to pay the same?! Therefore there is no such thing as a tax increase unless the rich become honest and more tax enforcement is done. I know it doesn't make sense to me either. I say raise the %age to 100% if it doesn't matter. If that's true it shouldn't affect the tax revenue at all as it wouldn't if we changed it to 0%.

 

It's not cheating, if the friggin loopholes exist in the first place. And don't pretend that it's only conservatives who take advantage of those loopholes.

 

The rationale for a low flat tax is simple, you raise the cost of tax avoidance. The goal for the government should be to maximize revenue, which is obviously contrary to populist politicians' goal to get elected.

 

Also if we reduce the top bracket down to .5% according to this guy tax revenues would stay the same?

 

If you raise taxes on the rich they'll become lazy? That line alone is worth the read!!

 

Spoken like someone who makes a living off other people's contribution to the economy. Raising taxes won't make people lazy. It will, however, remove the incentive to work harder and take more risks. I'll use a simple example, since you thrive on them - without a culture and tax code that rewards entrepreneurship, there's zero incentive for Bill Gates to drop out of Harvard.

 

Presidential candidates, instead of disputing how much more tax to impose on whom, would be better advised to come up with plans for increasing GDP while ridding the tax system of its wearying complexity. That would be a formula for success.

 

The easing of complexity in the tax filing process will never happen. There are far too many industries built around the tax code being as muddled as possible. These industries are too powerful IMO.

 

Cool, a new quote for the board:

 

It's hard to do, so we shouldn't try it. - Steely Dan.

 

This is a tremendously simplistic analysis. It fails to take into account inflation, unemployment, the internet boom of the 90's, wartimes, and extreme deficits and other things I can't think of but probably have an effect.

 

Those are all effects of the capitalist economy not causes.

[Steely Dan]

It's not cheating, if the friggin loopholes exist in the first place. And don't pretend that it's only conservatives who take advantage of those loopholes.

 

"Raising taxes encourages taxpayers to shift, hide and underreport income. .

 

So it's your belief that hiding and underreporting income isn't cheating? It also seems to be your, and his, belief that these loopholes are only taken advantage of when tax rates are raised?

 

I never said that others don't cheat on their taxes, this guy is arguing that it will happen more if we raise taxes on the rich. It seems that he believes it's not going on now and only when taxes are raised. To what level he never says.

 

The rationale for a low flat tax is simple, you raise the cost of tax avoidance. The goal for the government should be to maximize revenue, which is obviously contrary to populist politicians' goal to get elected.

 

Ok, riddle me this Squidward.

 

For example lets say the government needs to bring in X for their operating budget. Currently group A pays 60% of X, group B 25% and group C 15%.

 

Then we go to a flat tax to even out everybody's part of X. So that works out to 33% for A, B and C. So group A gets a 27% tax decrease, group B gets an 8% increase and group C an 18% increase. It's your opinion that that wouldn't have a detrimental affect on the middle class and poor?

 

 

Spoken like someone who makes a living off other people's contribution to the economy. Raising taxes won't make people lazy. It will, however, remove the incentive to work harder and take more risks. I'll use a simple example, since you thrive on them - without a culture and tax code that rewards entrepreneurship, there's zero incentive for Bill Gates to drop out of Harvard.

 

I have no idea why you're arguing with me about that. If you have a problem with that idea write to the articles author;

 

Higher taxes reduce the incentives to work, produce, invest and save, thereby dampening overall economic activity and job creation."

 

It won't make them lazy just removes the incentive to work harder, ohhhh, I get it now!

 

 

Cool, a new quote for the board:

 

It's hard to do, so we shouldn't try it. - Steely Dan.

 

Why not try to get the government the right to negotiate with pharmaceutical companies for their prescription program first? What are the odds of that happening?

 

 

Those are all effects of the capitalist economy not causes.

 

So prove that higher taxes and lower taxes on the rich are the cause of an economy without taking boom and bust times into account.

[Alaska Darin]

"Raising taxes encourages taxpayers to shift, hide and underreport income. .

 

So it's your belief that hiding and underreporting income isn't cheating? It also seems to be your, and his, belief that these loopholes are only taken advantage of when tax rates are raised?

 

I never said that others don't cheat on their taxes, this guy is arguing that it will happen more if we raise taxes on the rich. It seems that he believes it's not going on now and only when taxes are raised. To what level he never says.

 

 

 

Ok, riddle me this Squidward.

 

For example lets say the government needs to bring in X for their operating budget. Currently group A pays 60% of X, group B 25% and group C 15%.

 

Then we go to a flat tax to even out everybody's part of X. So that works out to 33% for A, B and C. So group A gets a 27% tax decrease, group B gets an 8% increase and group C an 18% increase. It's your opinion that that wouldn't have a detrimental affect on the middle class and poor?

 

 

 

 

I have no idea why you're arguing with me about that. If you have a problem with that idea write to the articles author;

 

Higher taxes reduce the incentives to work, produce, invest and save, thereby dampening overall economic activity and job creation."

 

It won't make them lazy just removes the incentive to work harder, ohhhh, I get it now!

 

 

 

 

Why not try to get the government the right to negotiate with pharmaceutical companies for their prescription program first? What are the odds of that happening?

 

 

 

 

So prove that higher taxes and lower taxes on the rich are the cause of an economy without taking boom and bust times into account.

Ladies and gents, proof that length of post has little to do with substance or intelligence. Thanks so much. Jesus Christ.

[Steely Dan]

Ladies and gents, proof that length of post has little to do with substance or intelligence. Thanks so much. Jesus Christ.

 

Translation, I got nuthin to say so I'll just insult.

[GG]

Translation, I got nuthin to say so I'll just insult.

 

Or, it's concise and to the point.

 

Please, stick with arguing legal theory. You're much more credible there.

[DC Tom]

Or, it's concise and to the point.

 

Please, stick with arguing legal theory. You're much more credible there.

 

Don't encourage him.

 

sh--, don't encourage me. Think of the children...

[GG]

"Raising taxes encourages taxpayers to shift, hide and underreport income. .

 

So it's your belief that hiding and underreporting income isn't cheating? It also seems to be your, and his, belief that these loopholes are only taken advantage of when tax rates are raised?

 

Who said anything about under-reporting? Or is it the feeble mind that automatically equates loophole with cheating? Income takes on many different forms, which are all taxed differently, and the superwealthy are in the best position to defer cash income (which I'm guessing the only thing you can comprehend.) Chew on that, Mr Robin Hood.

 

I never said that others don't cheat on their taxes, this guy is arguing that it will happen more if we raise taxes on the rich. It seems that he believes it's not going on now and only when taxes are raised. To what level he never says.

 

That's exactly the point. B by raising the top rate, you lower the cost to the superwealthy to move income and assets to lower tax jurisdictions. Ask people why they love Florida & Texas and not NYS.

 

 

Ok, riddle me this Squidward.

 

For example lets say the government needs to bring in X for their operating budget. Currently group A pays 60% of X, group B 25% and group C 15%.

 

Then we go to a flat tax to even out everybody's part of X. So that works out to 33% for A, B and C. So group A gets a 27% tax decrease, group B gets an 8% increase and group C an 18% increase. It's your opinion that that wouldn't have a detrimental affect on the middle class and poor?

 

Typical response, thinking that overall income and GDP doesn't rise. Capitalist economies are not a static output driven society. As it is, in the US the top earners' share of total tax payments has been increasing as the marginal rate has been decreasing. Explain that one.

 

I have no idea why you're arguing with me about that. If you have a problem with that idea write to the articles author;

 

You seemed to have enjoyed the line, so I dumbed it down for you to understand.

 

Higher taxes reduce the incentives to work, produce, invest and save, thereby dampening overall economic activity and job creation."

 

It won't make them lazy just removes the incentive to work harder, ohhhh, I get it now!

 

What's so hard to understand? Compare the productivity of socialist countries to the US. Don't even think of introducing Sweden, because other factors are at work there that aren't replicable to the rest of the world. If they were, USSR would be dominant.

 

Why not try to get the government the right to negotiate with pharmaceutical companies for their prescription program first? What are the odds of that happening?

 

I am sorry, but how does the government's real job of setting tax policy square with the imaginary job of setting industrial policy?

 

So prove that higher taxes and lower taxes on the rich are the cause of an economy without taking boom and bust times into account.

 

Booms & bust are created by overinvestment and their subsequent collapses, which have nothing to do with tax policy, unless a wayward tax policy leads to the overinvestment by favoring one asset class vs another (hint: homeownership)

[Chilly]

What's so hard to understand? Compare the productivity of socialist countries to the US. Don't even think of introducing Sweden, because other factors are at work there that aren't replicable to the rest of the world. If they were, USSR would be dominant.

 

This got me a bit curious, care to expand on those other factors?

[TPS]

Yes, a brilliant piece. A graph that shows a roughly horizontal line at 19.5% because the vertical coordinates are such to make it look like there's virtually no movement. However, when one actually looks at the numbers from the CBO web site, those "little movements" from a $10 trillion base really mean something. For example, revenues as a % of gdp were 20.9% in 2000 and 16.3% in 2004. That change means a drop in revenues by a few hundred billion dollars. One doesn't quite see anything so significant from that graph. Or, the other period when marginal rates were reduced, in 1982 revenues were 19.2% and in 1986 they were 17.5%. Those almost imperceptible dips in the "hoser" graph, mean significant changes in revenues. That's why in both periods we saw the most significant increases in the government budget deficits. Yes GG, spending was NOT held in check, but revenues also dropped.

 

The other big problem with the piece is that he shows the marginal tax rate changes and "total" revenues, which includes corp taxes, social security taxes, and a few other sources. If someone wants to make an argument about the effect marginal personal rates have on revenues, then focus on the individual income tax revenues, not total revenues. For example, while Reagan cut the marginal personal rate in the 1980s, the Greenspan Commission recommended an increase in SS taxes, which also happened under Reagan. There are a few more issues, but it's late...

[DC Tom]

Yes, a brilliant piece. A graph that shows a roughly horizontal line at 19.5% because the vertical coordinates are such to make it look like there's virtually no movement.

 

Works for global warming...

[Steely Dan]

Who said anything about under-reporting? Or is it the feeble mind that automatically equates loophole with cheating? Income takes on many different forms, which are all taxed differently, and the superwealthy are in the best position to defer cash income (which I'm guessing the only thing you can comprehend.) Chew on that, Mr Robin Hood.

 

Ok, here's some help for you. Go to the original link. Four paragraphs from the bottom you'll see this;

 

What makes Hauser's Law work? For supply-siders there is no mystery. As Mr. Hauser said: "Raising taxes encourages taxpayers to shift, hide and underreport income. . .

 

Look carefully at the underlined word. Get it? Mr. Hauser, the guy who developed this theory, said it. Glad to help!

 

 

 

That's exactly the point. B by raising the top rate, you lower the cost to the superwealthy to move income and assets to lower tax jurisdictions. Ask people why they love Florida & Texas and not NYS.

 

That's a great reason to not tax them higher. We aren't talking about state taxes. We're talking about Federal taxes.

 

 

 

Typical response, thinking that overall income and GDP doesn't rise. Capitalist economies are not a static output driven society. As it is, in the US the top earners' share of total tax payments has been increasing as the marginal rate has been decreasing. Explain that one.

 

Show me proof of that first.

 

You seemed to have enjoyed the line, so I dumbed it down for you to understand.

 

 

 

What's so hard to understand? Compare the productivity of socialist countries to the US. Don't even think of introducing Sweden, because other factors are at work there that aren't replicable to the rest of the world. If they were, USSR would be dominant.

 

I used to work with a guy who said; "If they paid me more I'd work harder." He was full of crap too.

 

 

I am sorry, but how does the government's real job of setting tax policy square with the imaginary job of setting industrial policy?

 

The analogy is that it would be just as difficult to do that as it would be to remove the jobs of tax accountants, tax lawyers H&R Block and the like companies. It won't happen too many people help drive the economy because of the tax difficulties. Simplifying the tax code would put a lot of people out of work. Letting the government save billions of dollars on pharmaceuticals would be a much smarter thing to start with but the PC's have waaaay to much power.

 

 

I said, This is a tremendously simplistic analysis. It fails to take into account inflation, unemployment, the internet boom of the 90's, wartimes, and extreme deficits and other things I can't think of but probably have an effect.

 

You said, Those are all effects of the capitalist economy not causes.

 

I said, So prove that higher taxes and lower taxes on the rich are the cause of an economy without taking boom and bust times into account.

 

Booms & bust are created by overinvestment and their subsequent collapses, which have nothing to do with tax policy, unless a wayward tax policy leads to the overinvestment by favoring one asset class vs another (hint: homeownership)

 

Mr. Hauser says, . . Higher taxes reduce the incentives to work, produce, invest, and save, thereby dampening overall economic activity and job creation."

 

So is overinvesting good or bad? Does that mean we should tax them higher so they can't overinvest?

[Steely Dan]

Yes, a brilliant piece. A graph that shows a roughly horizontal line at 19.5% because the vertical coordinates are such to make it look like there's virtually no movement. However, when one actually looks at the numbers from the CBO web site, those "little movements" from a $10 trillion base really mean something. For example, revenues as a % of gdp were 20.9% in 2000 and 16.3% in 2004. That change means a drop in revenues by a few hundred billion dollars. One doesn't quite see anything so significant from that graph. Or, the other period when marginal rates were reduced, in 1982 revenues were 19.2% and in 1986 they were 17.5%. Those almost imperceptible dips in the "hoser" graph, mean significant changes in revenues. That's why in both periods we saw the most significant increases in the government budget deficits. Yes GG, spending was NOT held in check, but revenues also dropped.

 

The other big problem with the piece is that he shows the marginal tax rate changes and "total" revenues, which includes corp taxes, social security taxes, and a few other sources. If someone wants to make an argument about the effect marginal personal rates have on revenues, then focus on the individual income tax revenues, not total revenues. For example, while Reagan cut the marginal personal rate in the 1980s, the Greenspan Commission recommended an increase in SS taxes, which also happened under Reagan. There are a few more issues, but it's late...

 

As I said it's a very simplistic look at this that appears to have taken the answer and then adjusted the facts to fit the conclusion.

[Alaska Darin]

Works for global warming...

Beat me to that one...

[/dev/null]

If you raise taxes on the rich they'll become lazy?

 

The rich are already lazy. They don't actually work, they invest and let others do the work.

 

Higher taxes = Less money to invest and less incentive to invest.

Less investment = Fewer new businesses

Fewer new businesses = Fewer new jobs