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acesn8s
03-21-2008, 05:24 PM
Taxes...Whether Democrat or a Republican you will find these statistics enlightening and amazing.

www.taxfoundation.org/publications/show/151.html (http://www.taxfoundation.org/publications/show/151.html) (you can verify the numbers here)
http://www.taxfoundation.org/blog/show/22958.html

<TABLE cellSpacing=0 cellPadding=0 width=311 border=1><TBODY><TR align=middle><TD width=311 colSpan=3 height=54>Individual Income Taxes Under Presidents Clinton and Bush, 1999 Law and 2008 Law</TD></TR><TR><TD align=middle width=311 colSpan=3 height=50>For taxpayers who take the standard deduction and have no children</TD></TR><TR><TD align=middle width=127 height=67>Taxpayer</TD><TD align=middle width=94>Tax under Clinton, 1999 tax law</TD><TD align=middle width=90>Tax under Bush, 2008 tax law</TD></TR><TR><TD width=127 height=59>Single, income of 30,000</TD><TD align=right width=94>$3,157.50 </TD><TD align=right width=90>$2,756.25 </TD></TR><TR><TD width=127 height=51>Single, income of 50,000</TD><TD align=right width=94>$7,262.50 </TD><TD align=right width=90>$6,606.25 </TD></TR><TR><TD width=127 height=54>Married, income of $50,000</TD><TD align=right width=94>$5,085.00 </TD><TD align=right width=90>$4,012.50 </TD></TR><TR><TD width=127 height=46>Married, income of $60,000</TD><TD align=right width=94>$6,585.00 </TD><TD align=right width=90>$5,512.50 </TD></TR><TR><TD width=127 height=51>Single, income of $75,000</TD><TD align=right width=94>$14,262.50 </TD><TD align=right width=90>$12,856.25 </TD></TR><TR><TD width=127 height=53>Married, income of $75,000</TD><TD align=right width=94>$9,426.50 </TD><TD align=right width=90>$7,762.50 </TD></TR><TR><TD width=127 height=47>Single, income of $125,000*</TD><TD align=right width=94>$29,378.50 </TD><TD align=right width=90>$26,472.25 </TD></TR><TR><TD width=127 height=41>Married, income of $125,000*</TD><TD align=right width=94>$23,426.50 </TD><TD align=right width=90>$19,462.50 </TD></TR><TR><TD width=311 colSpan=3 height=45>*This chart does not take into account the Alternative Minimum Tax</TD></TR></TBODY></TABLE>

It is amazing how many people that fall into the categories above think Bush is screwing them and Bill Clinton was the greatest President ever. If Obama or Hillary are elected, they both say they will repeal the Bush tax cuts, and a good portion of the people that fall into the categories above can't wait for it to happen. This is like the movie The Sting with Paul Newman; you scam somebody out of some money, and they don't even know what happened.

EDIT: Edited for accuracy but results still show lower taxes in 2008.

Rain Man
03-21-2008, 05:26 PM
I want my $600, dammit!

keg in kc
03-21-2008, 05:31 PM
The thing that I have a hard time grasping is how, if Bush's taxes are less, he's able to increase governmental spending across the board.

jAZ
03-21-2008, 05:52 PM
The thing that I have a hard time grasping is how, if Bush's taxes are less, he's able to increase governmental spending across the board.
I guess borrowing money from your children so that you can have more to spend right now is more acceptable than you might expect.

acesn8s
03-21-2008, 05:52 PM
The thing that I have a hard time grasping is how, if Bush's taxes are less, he's able to increase governmental spending across the board.
According to some the rich are getting richer. If the rich use to make $100,000,000 but now make $150,000,000 they would pay more in taxes in overall dollars.

banyon
03-21-2008, 06:23 PM
Taxes...Whether Democrat or a Republican you will find these statistics enlightening and amazing.

www.taxfoundation.org/publications/show/151.html (http://www.taxfoundation.org/publications/show/151.html) (you can verify the numbers here)

Taxes under Clinton 1999 Taxes under Bush 2008
Single making 30K - tax $8,400 Single making 30K - tax $4,500
Single making 50K - tax $14,000 Single making 50K - tax $12,500
Single making 75K - tax $23,250 Single making 75K - tax $18,750
Married making 60K - tax $16,800 Married making 60K- tax $9,000
Married making 75K - tax $21,000 Married making 75K - tax $18,750
Married making 125K - tax $38,750 Married making 125K - tax $31,250

.

This seems kind of manipulative with the data, or just flat bad math.

For one thing, the 1998 limits are set artificially high, encompassing the second tax tier from $25,750 all the way to $62,450 and thus taxed at 28.0%. The 2008 tax tier is set to cut off at a different tier, from $8,250-$32,550, or at the 15.0% level. Adjusting for inflation, these are the same people that would have been in the near poverty bracket in 1999 and still paying 15.0%.

This deception carefully continues all the way through the upper brackets, making sure to catch the people that are just in between the two data sets where the limits were raised for inflation.

For someone making $33,000 a year, for example, in 1999 or 2008 (a figure which doesn't try to cheat the data sets) a person would've paid $9240 (28.0%)in taxes in 1999, and then $8250 (at 25.0%) in 2008, so really the difference to them is ninety dollars for their Bush tax cut. This figure would of course be more than offset in the increase in their property taxes, health care costs, fuel costs, and inflation in general, etc. since Bush took office.

bango
03-21-2008, 07:02 PM
Clinton did not really mess with Reaganomics as much as Bush has. It helped Bill having Republicans acting like Republicans back then. If he had eight years of total control with the Dems having Congress he may not have been so fondly remembered. He also did not really need to raise taxes that much with all of the revenue coming in during a booming economy. Bush could only remember parts of Voodo Economics correct. He lowered taxes, but forgot to cut spending. Clinton's Wars were smaller and less costly too.

SBK
03-21-2008, 07:21 PM
The thing that I have a hard time grasping is how, if Bush's taxes are less, he's able to increase governmental spending across the board.

Lower tax rate brings in higher revenues for the government.

And there's borrowing trillions more than you could ever pay....

'Hamas' Jenkins
03-21-2008, 07:29 PM
Clinton did not really mess with Reaganomics as much as Bush has. It helped Bill having Republicans acting like Republicans back then. If he had eight years of total control with the Dems having Congress he may not have been so fondly remembered. He also did not really need to raise taxes that much with all of the revenue coming in during a booming economy. Bush could only remember parts of Voodo Economics correct. He lowered taxes, but forgot to cut spending. Clinton's Wars were smaller and less costly too.

When did Reagan ever cut spending? Reaganomics isn't about low taxes and spending, it's cutting taxes, disproportionately more for the upper classes and putting a brick on the gas pedal of spending.

tiptap
03-21-2008, 07:34 PM
Clinton did not really mess with Reaganomics as much as Bush has. It helped Bill having Republicans acting like Republicans back then. If he had eight years of total control with the Dems having Congress he may not have been so fondly remembered. He also did not really need to raise taxes that much with all of the revenue coming in during a booming economy. Bush could only remember parts of Voodo Economics correct. He lowered taxes, but forgot to cut spending. Clinton's Wars were smaller and less costly too.

Except Reagan didn't cut spending either. He increased government spending. Just like Bush. Except he did add taxes later and of course Bush I did the correct thing and raised taxes. Clinton's surtax carried the government out of the current borrowing excesses. There was a surplus. And of course plenty of capital for private investment.

bango
03-21-2008, 07:53 PM
Cutting taxes for the wealthy in hoping that they take the surplus and spend it so that a tax stream flows in, or they invest it hopefully. I thought that Ronny cut spending in his first term and raised it in his second mainly on defense in hopes that it would bankrupt the Soviets? I also thought that in doing so the Dems wanted to spend they okayed his spending in trade?

tiptap
03-21-2008, 08:04 PM
Cutting taxes for the wealthy in hoping that they take the surplus and spend it so that a tax stream flows in, or they invest it hopefully. I thought that Ronny cut spending in his first term and raised it in his second mainly on defense in hopes that it would bankrupt the Soviets? I also thought that in doing so the Dems wanted to spend they okayed his spending in trade?

Tip, the speaker of the House, and Ronny agreed to the spending increase to the military ALONG with spending domestically increase. And at the same time the number of categories of income tax rate was cut. The result was a cut in taxes overall. In the first term. The national dept shot up and the percentage of spending on Defense went up and has only been duplicated during the Bush II regime. As far as bankrupting the Soviets, anyone who truly thought the Soviet Cenralized control was self defeating knew it would come. Ronnie maybe just sped it up some. And I am glad on one hand not to have the Soviet missiles. But why then do have to spend for military expenditures at a rate as if the Soviets, a nation of 150 million and technically savy, is what we are fighting. Fighting a bunch of sand bunnies shouldn't require that kind of expenditure. Additionally the investment in the Military was toward research. As oppose to presently were we throw away materials in the form of real bombs and bullets. And spend money far away from home.

banyon
03-21-2008, 08:19 PM
Lower tax rate brings in higher revenues for the government.


Hasn't for Bush.

revenue from income taxes fell quite a bit (esp. taking inflation into account, which these numbers do not) from 2001 to 2005.

(in millions of dollars)

2000 1,004,462
2001 994,939
2002 858,345
2003 793,699
2004 808,959
2005 927,722

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=203

Mr. Laz
03-21-2008, 08:39 PM
.oooh aahhh... seems so nice under bushy...

BUT!!!!

Total Money Supply in the economy 2000 4.3 trillion dollars

Total Money Supply in the economy 2008 10.2 trillion dollars....

Aka


If each dollar that you earned under clinton was worth a dollar....

Now it is worth 4.3/10.2 = 42 cents.

So we see


2000 single under clinton making 30k - taxed 8400 and you're left with 21,600
2008 single under bush making 30k - taxed 4500 and you're left with 25,500

multiply by .42..... well now you (30k man) REALLY have 10,500 worth of purchasing power under bush in clinton dollars.

did that not convince you?



lets try again....

Canadian Exchange rate 2000 1 us dollar = 1.39 canadian dollars
Canadian Exchange rate 2008 1 us dollar = 95 canadian cents

So we go back to that single individual making 30k....

2000 single under clinton making 30k - taxed 8400 and you're left with 21,600
2008 single under bush making 30k - taxed 4500 and you're left with 25,500

and we multiply the 25,500 x (.95/1.39) = 17,300 that would be... single under bush... in clinton dollars adjusted for canada

A little better if you look at it that way... but the poor chap is still worse off under bush

wait.... lets do it one more time...

2000 pound sterling... $1.55
2008 pound sterling... $2.05

1.55/2.05 = .75

25500 *.75 = 18,750

So... clinton in 2000 and you've got 21,600

or bush in 2008 and you've got 17,300 ; 18,750 ; or 10,500 in 2000 dollars depending on how you look at it after taxes...

lets average

17,300 + 18,750 + 10,500 = 15,500

So... even though you thought you're getting 25,500 it is only worth 15,000 or about 60%

this is getting fun!

Lets compare the guy making 125k to the guy making 30k

Clinton...

125k- 38,750 he's left with 86250 lets say he spent 10,000 on food and clothes... 76,250 disposable income

and our 30k guy under clinton... 21,600 and he spends 10,000 on food and clothes... 11,600 disposable income

THE GAP between rich man and poor man during clinton:

76250/11600 = 6.57

Bush...

125k - 31250 = 93750 but that 93k is only hold 60% value... 56250... he spends 10k on clothes and food... 46,250 disposable

and our 30k guy under bush... 15,500... and he spends 10,000 on food and clothes... 5,500 disposable income

now how much richer is the 125k guy vs the 30k guy?

46250/5500 = 8.4

SO SEE... what really happened was...

under clinton... rich man was 6.5 times richer than poor man

and under bush... he's 8.4 times richer

You don't want me to calculate the change in disparity between the man making over a million dollars annually and the small guy...

alnorth
03-21-2008, 08:52 PM
For someone making $33,000 a year, for example, in 1999 or 2008 (a figure which doesn't try to cheat the data sets) a person would've paid $9240 (28.0%)in taxes in 1999, and then $8250 (at 25.0%) in 2008, so really the difference to them is ninety dollars for their Bush tax cut. This figure would of course be more than offset in the increase in their property taxes, health care costs, fuel costs, and inflation in general, etc. since Bush took office.

As much as I often like you as a poster, I have to report that both you and acesn8s fail at math. (well, tax math anyway)

It drives me crazy how often people dont get what a marginal tax bracket is, vs their total taxes. People just usually let Turbotax figure it out without understanding why they pay what they pay.

These are *marginal* tax rates. As in, anything above $xx,xxx is taxed at that rate. However, everything below each bracket is still taxed at the lower rates.

Unless you are hit by AMT (which is a flat tax), everyone pays the 0% tax bracket (deductions), the 10% bracket, the 15% bracket, and every bracket up to the last bit they pay into their marginal bracket. If your trying to figure out what it would cost you to earn new money, then your marginal bracket is important, but marginal does not = total taxes.

To use a simple example, lets take that $30,000 single taxpayer under both years. Lets pretend they have no deductions (I am too lazy to look up what the standard deduction was in those two years), so the final answer here will actually be too high.

1999

$25,750 x 0.15 = $3,862.50
$4,250 x 0.28 = $1,190

Tax = $5,052.50

2008

$8,025 x 0.10 = $802.50
$21,975 x 0.15 = $3,296.25

Tax = $4,098.75

tiptap
03-21-2008, 08:59 PM
As much as I often like you as a poster, I have to report that both you and acesn8s fail at math. (well, tax math anyway)

It drives me crazy how often people dont get what a marginal tax bracket is, vs their total taxes. People just usually let Turbotax figure it out without understanding why they pay what they pay.

These are *marginal* tax rates. As in, anything above $xx,xxx is taxed at that rate. However, everything below each bracket is still taxed at the lower rates.

Unless you are hit by AMT (which is a flat tax), everyone pays the 0% tax bracket (deductions), the 10% bracket, the 15% bracket, and every bracket up to the last bit they pay into their marginal bracket. If your trying to figure out what it would cost you to earn new money, then your marginal bracket is important, but marginal does not = total taxes.

To use a simple example, lets take that $30,000 single taxpayer under both years. Lets pretend they have no deductions (I am too lazy to look up what the standard deduction was in those two years), so the final answer here will actually be too high.

1999

$25,750 x 0.15 = $3,862.50
$4,250 x 0.28 = $1,190

Tax = $5,052.50

2008

$8,025 x 0.10 = $802.50
$21,975 x 0.15 = $3,296.25

Tax = $4,098.75


I have hated ATM for decades now. Thank you for reminding us about marginal rates. I had to have this talk with my son recently when he wanted to talk fairness in taxes.

alnorth
03-21-2008, 09:00 PM
It is amazing how many people that fall into the categories above think Bush is screwing them and Bill Clinton was the greatest President ever.

It amazes me how many people dont know anything about how taxes are calculated. Your numbers are completely wrong.

(Not to directly dispute the point your trying to make because there may be some merit to the arguement)

banyon
03-21-2008, 09:04 PM
As much as I often like you as a poster, I have to report that both you and acesn8s fail at math. (well, tax math anyway)

It drives me crazy how often people dont get what a marginal tax bracket is, vs their total taxes. People just usually let Turbotax figure it out without understanding why they pay what they pay.

These are *marginal* tax rates. As in, anything above $xx,xxx is taxed at that rate. However, everything below each bracket is still taxed at the lower rates.

Unless you are hit by AMT (which is a flat tax), everyone pays the 0% tax bracket (deductions), the 10% bracket, the 15% bracket, and every bracket up to the last bit they pay into their marginal bracket. If your trying to figure out what it would cost you to earn new money, then your marginal bracket is important, but marginal does not = total taxes.

To use a simple example, lets take that $30,000 single taxpayer under both years. Lets pretend they have no deductions (I am too lazy to look up what the standard deduction was in those two years), so the final answer here will actually be too high.

1999

$25,750 x 0.15 = $3,862.50
$4,250 x 0.28 = $1,190

Tax = $5,052.50

2008

$8,025 x 0.10 = $802.50
$21,975 x 0.15 = $3,296.25

Tax = $4,098.75


This looks better than my meager effort. Perhaps I'll pay more attention to this stuff when I stop filing the 1040 EZ/A. :)

alnorth
03-21-2008, 09:08 PM
Thank you for reminding us about marginal rates. I had to have this talk with my son recently when he wanted to talk fairness in taxes.

Knowing how tax brackets work can also lead to some pretty good tax strategy that people often pay accountants to figure out for them.

Lets say you have an old person with a really super-big IRA. Converting the whole thing to a Roth would obviously be stupid, but what if after they spent everything they want to spend out of it for the year, they are still in the 15% marginal bracket? Well, thats a pretty low bracket, so even though they dont need any more money, I'd advise that person to figure out how much "room" they have left in the 15% before they hit the next 25% bracket, and convert just that amount to lock in that 15% tax. Even if they died without spending the newly-created Roth conversion, their heirs could easily be in a higher than 15% bracket.

Amnorix
03-21-2008, 09:20 PM
I have hated ATM for decades now. Thank you for reminding us about marginal rates. I had to have this talk with my son recently when he wanted to talk fairness in taxes.

Assuming you meant AMT, then you shouldn't hate it. It's very good for not letting high income individuals use deductions to the point where the taxes they pay are nominal.

It needs to be tied to inflation, however, as it's picking up people who really aren't all THAT wealthy...

'Hamas' Jenkins
03-21-2008, 09:59 PM
Lest we forget that Bush repealed the AMT for corporations, and did so retroactively, so that every corp who paid it from 86-2001 got every dollar they paid in those taxes back, straight from Uncle Sams coffers.

Logical
03-21-2008, 11:33 PM
Lower tax rate brings in higher revenues for the government.
....As far as I know no economist has ever claimed that. They claim that a lower tax rate expands economic growth of business and the increased business taxes result in overall more tax revenue. I don't know if it has ever actually been proven.

wazu
03-21-2008, 11:50 PM
As far as I know no economist has ever claimed that. They claim that a lower tax rate expands economic growth of business and the increased business taxes result in overall more tax revenue. I don't know if it has ever actually been proven.

It has never been conclusively proven. However, I would be able to accept the theory in principle if it were to accompany spending cuts. Instead, many Republicans adopt the convenient political platform of cutting taxes left and right while raising spending. Way to govern, morons.

Reagan was the patron saint of this philosophy, and was woefully incompetent, as was his successor, at balancing the federal budget.

Logical
03-21-2008, 11:56 PM
Assuming you meant AMT, then you shouldn't hate it. It's very good for not letting high income individuals use deductions to the point where the taxes they pay are nominal.

It needs to be tied to inflation, however, as it's picking up people who really aren't all THAT wealthy...

No shit, I have been hit 5 of the last 6 years, I am very well off but far from wealthy. I average around 38K in deductions but the government seems to think that is excessive.:rolleyes:

alnorth
03-22-2008, 12:08 AM
It appears that acesn8s did not read his own link very carefully. For added hilarity, check out the note at the top of the page in that link.

Logical
03-22-2008, 12:14 AM
It appears that acesn8s did not read his own link very carefully. For added hilarity, check out the note at the top of the page in that link.ROFL

Guru
03-22-2008, 02:29 AM
It appears that acesn8s did not read his own link very carefully. For added hilarity, check out the note at the top of the page in that link.

It is still lower now though.

patteeu
03-22-2008, 08:45 AM
Assuming you meant AMT, then you shouldn't hate it. It's very good for not letting high income individuals use deductions to the point where the taxes they pay are nominal.

It needs to be tied to inflation, however, as it's picking up people who really aren't all THAT wealthy...

Deductions are supposed to be there so that the income tax actually falls on income, as I'm sure you know. If I spend $1 in order to make $4, my actual income is only $3. I shouldn't have to pay income tax on $4, I should be able to deduct my $1 expense and pay income tax on only $3.

The AMT is a way of forcing high income earners to pay tax on that fourth dollar. It's inherently unfair, IMO. If the deductions that these high income earners are using to zero out their tax liability are invalid, they ought to be repealed. Or better yet, lets move away from an income tax and replace it with a consumption tax.

patteeu
03-22-2008, 08:49 AM
It has never been conclusively proven. However, I would be able to accept the theory in principle if it were to accompany spending cuts. Instead, many Republicans adopt the convenient political platform of cutting taxes left and right while raising spending. Way to govern, morons.

Reagan was the patron saint of this philosophy, and was woefully incompetent, as was his successor, at balancing the federal budget.

Reagan had to work with a democratic Congress that was hellbent on domestic spending and would have been able to block much of the defense spending and tax cut legislation that Reagan considered his top priorities. I think it's unfair to consider him incompetent in light of that reality. GWBush was faced with an unexpected war, but he still has to take responsibility for the domestic spending surge under his watch because he had a Republican Congress to work with and therefore no excuse, IMO.

DaFace
03-22-2008, 08:56 AM
So apparently there needs to be a Snopes for stupid political forwards now.

patteeu
03-22-2008, 09:06 AM
As far as I know no economist has ever claimed that. They claim that a lower tax rate expands economic growth of business and the increased business taxes result in overall more tax revenue. I don't know if it has ever actually been proven.

This is not right. Economists have indeed claimed that lower individual taxe rates *can* increase revenue from the federal individual income tax, although most casual observers don't realize that supply side economists also recognize that beyond a certain point, lowering taxes will decrease revenue.

http://upload.wikimedia.org/wikipedia/en/thumb/3/36/Laffer-Curve.svg/250px-Laffer-Curve.svg.png

The Laffer curve got it's name from economist Arthur Laffer. It's often ridiculed by fools who don't really understand it, but it's essential truth has been expressed in other ways by non-supply siders like John Maynard Keynes and Ludwig von Mises. The idea is that at tax rates of 0% and 100%, absent coercion, revenues drop to zero and at some tax rate greater than 0% but less than 100%, positive revenues are achieved. The curve between these three points may not be as symetrical as the idealized version shown above, but the theory is that for a given set of economic conditions/incentives there is an optimum tax rate for maximum revenue. The question becomes, where on this curve is a given taxpayer. If he is on the right side of the curve, decreasing his tax rate will increase revenues as long as it isn't decreased past the optimum point. If he is on the left side of the curve, decreasing his tax rate will decrease revenues.

BucEyedPea
03-22-2008, 09:21 AM
The Laffer curve got it's name from economist Arthur Laffer. It's often ridiculed by fools who don't really understand it, but it's essential truth has been expressed in other ways by non-supply siders like John Maynard Keynes and Ludwig von Mises.
Miseans consider the Laugh-er curve...well a good laugh!
It merely has points of truth that a tax cut benefits an economy making it richer.

patteeu
03-22-2008, 09:35 AM
Miseans consider the Laugh-er curve...well a good laugh!
It merely has points of truth that a tax cut benefits an economy making it richer.

What exactly do you laugh at? It seems pretty uncontroversial to me as long as you actually understand what it's saying.

RedDread
03-22-2008, 09:36 AM
The thing that I have a hard time grasping is how, if Bush's taxes are less, he's able to increase governmental spending across the board.

He can do it, but it doesn't have positive effects.

http://ichart.finance.yahoo.com/5y?usdeur=x
(Dollar vs Euro)

bkkcoh
03-22-2008, 03:22 PM
The thing that I have a hard time grasping is how, if Bush's taxes are less, he's able to increase governmental spending across the board.

What would be nice to really know is how much of the deficit was truly caused by pork-barrel spending and various other earmarks that was added to the budget in order for some legislators to vote for the budgets. I realize that number is probably quite small in the grand scheme of the budget, but year after year, it adds up and with the interest on the debt increasing, it rises close to exponentially.

Logical
03-22-2008, 09:56 PM
This is not right. Economists have indeed claimed that lower individual taxe rates *can* increase revenue from the federal individual income tax, although most casual observers don't realize that supply side economists also recognize that beyond a certain point, lowering taxes will decrease revenue.

http://upload.wikimedia.org/wikipedia/en/thumb/3/36/Laffer-Curve.svg/250px-Laffer-Curve.svg.png

The Laffer curve got it's name from economist Arthur Laffer. It's often ridiculed by fools who don't really understand it, but it's essential truth has been expressed in other ways by non-supply siders like John Maynard Keynes and Ludwig von Mises. The idea is that at tax rates of 0% and 100%, absent coercion, revenues drop to zero and at some tax rate greater than 0% but less than 100%, positive revenues are achieved. The curve between these three points may not be as symetrical as the idealized version shown above, but the theory is that for a given set of economic conditions/incentives there is an optimum tax rate for maximum revenue. The question becomes, where on this curve is a given taxpayer. If he is on the right side of the curve, decreasing his tax rate will increase revenues as long as it isn't decreased past the optimum point. If he is on the left side of the curve, decreasing his tax rate will decrease revenues.

You can quote Laffer, Keynes and Mises, because I want to see them explain how lower income taxes on everyone will result in income tax revenue growth. That makes no sense whatsoever. Now if you want to say it will grow the overall business base, therefore more people will be working to pay taxes maybe I will believe that. But that is just a variation on what I said.

patteeu
03-22-2008, 11:20 PM
You can quote Laffer, Keynes and Mises, because I want to see them explain how lower income taxes on everyone will result in income tax revenue growth. That makes no sense whatsoever. Now if you want to say it will grow the overall business base, therefore more people will be working to pay taxes maybe I will believe that. But that is just a variation on what I said.

If you were paying taxes at a 100% rate, how much work would you do? How many capital gains will you realize?

If someone lowered your tax rate to 10%, how much work would you do? How many capital gains will you realize?

I'm confident that if you answer both of those questions honestly, and do the math, you'll recognize that the government is going to generate more revenue with a 10% tax than a 100% tax.

But let me correct your misconceptions.

1. No one who understands supply-side economics or the Laffer curve says that lowering taxes on everyone will inevitably increase revenues. You can only increase revenues by lowering the rates on people who are currently on the right side of the optimum point of the curve in my previous post. For people on the left side of the curve, lowering rates will lower revenue. For those people, increasing rates will increase revenues.

2. Increasing the number of people working because more jobs are created is not a variation on what you said. You were specifically talking about business taxes. Increasing the number of people working increases the revenue from individual income taxes. And yes, that effect is the other reason why revenues can increase with a lowering of rates. That's the so-called trickle-down effect.

Logical
03-22-2008, 11:35 PM
If you were paying taxes at a 100% rate, how much work would you do? How many capital gains will you realize?

If someone lowered your tax rate to 10%, how much work would you do? How many capital gains will you realize?

I'm confident that if you answer both of those questions honestly, and do the math, you'll recognize that the government is going to generate more revenue with a 10% tax than a 100% tax.

But let me correct your misconceptions.

1. No one who understands supply-side economics or the Laffer curve says that lowering taxes on everyone will inevitably increase revenues. You can only increase revenues by lowering the rates on people who are currently on the right side of the optimum point of the curve in my previous post. For people on the left side of the curve, lowering rates will lower revenue. For those people, increasing rates will increase revenues.

2. Increasing the number of people working because more jobs are created is not a variation on what you said. You were specifically talking about business taxes. Increasing the number of people working increases the revenue from individual income taxes. And yes, that effect is the other reason why revenues can increase with a lowering of rates. That's the so-called trickle-down effect.90% of all workers work 40 hours and have almost no chance to work more, so what in the world are you talking about?

patteeu
03-23-2008, 08:26 AM
90% of all workers work 40 hours and have almost no chance to work more, so what in the world are you talking about?

First of all, that's not true. Most people work 40 hours and it would take a lot of incentive to make them work any more or less, but they can quit and they can take a second job if they want to. They can also change jobs. Some people will tolerate a higher tax rate than others before deciding to quit their job because it's not worth it.

Can you deny the end points of the curve? Can you deny that at some point between the endpoints there is a positive amount of revenue? If you can't deny these things, how can you deny that there is some curve that will connect these three points? And if you accept that there is some curve that connects the points, how can you conceive of a curve that has more than one maximum?

I agree that the circumstances a person finds him or herself in might make them more desperate to work at almost any price and less sensitive to changing tax rates, but it doesn't make them completely insensitive to them. And for people who are less desperate to work, the sensitivity will be greater. That's why the supply-side effect is greater in the higher income levels. Cutting taxes on a low income earner in the 15% tax bracket is probably going to decrease revenues. Cutting taxes on a high income earner in a 70% tax bracket (as Ronald Reagan did) is probably going to increase revenues. The optimum revenue point for capital income (capital gains and dividends) is probably a lower tax rate than the optimum revenue point for a lower middle class worker who is scraping by.

Braincase
03-23-2008, 08:43 AM
He can do it, but it doesn't have positive effects.

http://ichart.finance.yahoo.com/5y?usdeur=x
(Dollar vs Euro)

It has positive effects if you are an owner of the companies that are recieving the big government contracts. Ike warned us, but did we listen?

wazu
03-23-2008, 10:24 AM
Reagan had to work with a democratic Congress that was hellbent on domestic spending and would have been able to block much of the defense spending and tax cut legislation that Reagan considered his top priorities. I think it's unfair to consider him incompetent in light of that reality. GWBush was faced with an unexpected war, but he still has to take responsibility for the domestic spending surge under his watch because he had a Republican Congress to work with and therefore no excuse, IMO.

Military spending counts, too. And Reagan and GWBush both grossly overspent in that area. We weren't even at war when Reagan was mortgaging the country's future. With Bush it was even more unnecessary, and was a war of his own personal choosing, funded almost entirely by debt. Neither of these men were fiscally competent presidents.

What's sad is that Reagan started office with the best of intentions, having railed against deficit spending for decades. He included fiscal responsibilty as a top priority, but didn't govern to back it up.

Republicans don't get a pass for having a Democrat congress either, unless they are vetoing the budget, and then congress is overriding their veto every year.

patteeu
03-23-2008, 11:25 AM
Military spending counts, too. And Reagan and GWBush both grossly overspent in that area. We weren't even at war when Reagan was mortgaging the country's future. With Bush it was even more unnecessary, and was a war of his own personal choosing, funded almost entirely by debt. Neither of these men were fiscally competent presidents.

What's sad is that Reagan started office with the best of intentions, having railed against deficit spending for decades. He included fiscal responsibilty as a top priority, but didn't govern to back it up.

Republicans don't get a pass for having a Democrat congress either, unless they are vetoing the budget, and then congress is overriding their veto every year.

No, Reagan did not overspend, grossly or otherwise, on the military. We were in a war during his term, the cold war. Winning the cold war was far more important than balancing a budget. You have an unrealistic view of history if you think Reagan's original good intentions wrt small government were abandoned because of fiscal incompetence. You're also mistaken if you think Reagan ever made a balanced budget his top priority.

If Reagan had been left to his own devices, there's no reason to think that he would have racked up big deficits because despite his focus on expanding the military, he was in favor of cutting the size of the rest of the government budget. It is because he had to compromise with democrats (who were intent on increased domestic spending) in order to pursue his goals that he ended up with large deficits.

Placing full blame on a president for budget imbalances because he doesn't simply shut down government by vetoing nonbalanced Congressional budgets is ridiculous unless you assume that a balanced budget is the first priority of government, which IMO is ludicrous.

'Hamas' Jenkins
03-23-2008, 11:38 AM
Patteeu, you've spent the better part of 50 posts trying to defend a philsophy that was constructed upon a dinner napkin, and whose substance never outgrew its original parchment.

patteeu
03-23-2008, 12:14 PM
Patteeu, you've spent the better part of 50 posts trying to defend a philsophy that was constructed upon a dinner napkin, and whose substance never outgrew its original parchment.

Not only is that not a refutation, it's not even accurate. The basics of the concept are simple enough that they can be explained on a napkin, but the theory wasn't constructed on one. It's not like Arthur Laffer came up with the concept in that impromptu meeting with Dick Cheney and Jude Wanniski. According to the Laffer Curve entry on wiki (http://en.wikipedia.org/wiki/Laffer_curve), the concept can be traced back to a muslim intellectual in 1377. I hadn't ever heard that before this thread, but I think it's pretty interesting.

alnorth
03-23-2008, 12:33 PM
Patteeu, you've spent the better part of 50 posts trying to defend a philsophy that was constructed upon a dinner napkin, and whose substance never outgrew its original parchment.

You can not reasonably deny the validity of the Laffer Curve, its a very simple and solid concept. If you have 0% taxes, you collect nothing. If the government takes everything you make, there is also no incentive to work, so 0% is collected. Alternatively, if we wanna equate the 100% tax as a communist state where everything is redistributed, then some people will work, but the world has conclusively seen that the incentive to work and the revenues that are collected are less than a system that doesnt have 100% redistribution.

This isnt some evil sinister political philosophy, its just a fact that a tax rate somewhere between 0% and 100% collects more revenue than the endpoints, which leads to the curve. If you want to claim that US tax rates are so low that nearly everyone is on the left side of the curve, fine. To deny that the curve exists at all makes you look silly.

alnorth
03-23-2008, 12:39 PM
90% of all workers work 40 hours and have almost no chance to work more, so what in the world are you talking about?

In other words, you believe the Laffer curve looks like this?

alnorth
03-23-2008, 12:47 PM
and to be fair, many in the GOP would probably argue that the curve looks like this. Who is right?

patteeu
03-23-2008, 12:50 PM
If you want to claim that US tax rates are so low that nearly everyone is on the left side of the curve, fine. To deny that the curve exists at all makes you look silly.

Good post, alnorth. This last part is a particularly good addition. I think that many people confuse the idea of the Laffer curve with the mistaken notion that tax cuts *always* lead to increased revenues. It's possible, after the Reagan and Bush tax cuts that everyone (or a large majority of people) are now on the left side of the curve. If that's the case, then the Laffer argument for increasing revenues by decreasing taxes goes away.

Someone posted an article from Art Laffer here recently that indicated that Laffer, himself, thinks that most people in the lower tax brackets are on the left side of the curve and may have been there before the Bush tax cuts. His argument was that the Bush tax cuts on the higher brackets did have a revenue enhancing effect, IIRC. Of course, this message isn't attractive to liberals like 'Hamas' so I don't expect him to accept it or acknowledge the possibility that it might be right.

patteeu
03-23-2008, 12:52 PM
and to be fair, many in the GOP would probably argue that the curve looks like this. Who is right?

I think the real answer is that it probably looks different for people in different circumstances. For those just scaping by, it probably looks more like the graph in post #46. For those who have more flexibility, it probably looks more like the graph in post #47.

Rain Man
03-23-2008, 03:44 PM
Deductions are supposed to be there so that the income tax actually falls on income, as I'm sure you know. If I spend $1 in order to make $4, my actual income is only $3. I shouldn't have to pay income tax on $4, I should be able to deduct my $1 expense and pay income tax on only $3.

The AMT is a way of forcing high income earners to pay tax on that fourth dollar. It's inherently unfair, IMO. If the deductions that these high income earners are using to zero out their tax liability are invalid, they ought to be repealed. Or better yet, lets move away from an income tax and replace it with a consumption tax.

Man, don't get me started on that. If I invest money in new equipment for my company, I have to pay personal taxes on that amount to start with, on money that I never see. And then on top of it, I lose my mortgage and charitable deductions?

If the revenoo'ers knew what was good for them, they would encourage me to have a profitable and growing company. They'd make more in the long run. Instead, I get double-taxed on investments and job creation, which means that I have to slow down growth. And that's not even including taxing me on my company's equipment and furnishings via personal property taxes, and then charging me a local head tax for every person I employ. That last one is a particularly well thought out tax if you want to discourage economic growth.

When you add all of this together and then throw in school taxes and sales taxes and stuff, my personal tax rate in 2006 topped 60 percent. We had a really good year, but the government took TWO-THIRDS of it.

BucEyedPea
03-23-2008, 03:57 PM
No, Reagan did not overspend, grossly or otherwise, on the military. We were in a war during his term, the cold war. Winning the cold war was far more important than balancing a budget. You have an unrealistic view of history if you think Reagan's original good intentions wrt small government were abandoned because of fiscal incompetence. You're also mistaken if you think Reagan ever made a balanced budget his top priority.

If Reagan had been left to his own devices, there's no reason to think that he would have racked up big deficits because despite his focus on expanding the military, he was in favor of cutting the size of the rest of the government budget. It is because he had to compromise with democrats (who were intent on increased domestic spending) in order to pursue his goals that he ended up with large deficits.

Placing full blame on a president for budget imbalances because he doesn't simply shut down government by vetoing nonbalanced Congressional budgets is ridiculous unless you assume that a balanced budget is the first priority of government, which IMO is ludicrous.

Oh my Gawd!!!
That's been my argument to you when you claim RR wasn't a real conservative but a NeoCon ( liberal hawk republican). Just using your words this time, not mine. Not using as an epithet here. I think Adam still brings up an excellent point something I've seen other conservatives criticize RR for: he could have done more to hold congresses feet to the fire. That and he halted Carter's momentum on deregulation. He did little to cut the size of govt down, not even accounting for the military. He never cut the Dept of Ed which was also a compaign promise and which has worsened education on top of the ridiculous sums of money thrown at it. In fact after he passed tax cuts, I think it was only a year later, he undid by passing the largest tax increase in our history by that time. Then he resorted to standard Keynesianism to stimulate the economy. Laugher-curve!!! Laughing all the way!

BucEyedPea
03-23-2008, 04:03 PM
Man, don't get me started on that. If I invest money in new equipment for my company, I have to pay personal taxes on that amount to start with, on money that I never see. And then on top of it, I lose my mortgage and charitable deductions?

If the revenoo'ers knew what was good for them, they would encourage me to have a profitable and growing company. They'd make more in the long run. Instead, I get double-taxed on investments and job creation, which means that I have to slow down growth. And that's not even including taxing me on my company's equipment and furnishings via personal property taxes, and then charging me a local head tax for every person I employ. That last one is a particularly well thought out tax if you want to discourage economic growth.

When you add all of this together and then throw in school taxes and sales taxes and stuff, my personal tax rate in 2006 topped 60 percent. We had a really good year, but the government took TWO-THIRDS of it.

You should quit working and only go very part time like me. It's not worth it and your story proves it. That's what I call controlling the major means of production including you, as the owner. Very sad.

Logical
03-23-2008, 04:08 PM
In other words, you believe the Laffer curve looks like this?








Yup maybe shifted slightly left of where you have the peak, but yes I think it is close to this.

BucEyedPea
03-23-2008, 04:10 PM
What exactly do you laugh at? It seems pretty uncontroversial to me as long as you actually understand what it's saying.
I'm only pointing out that Miseans don't have a favorable view of the Laugher- Curve or Supply Side, including the founder of the Austrian School himself who was a genious and an economist. So I don't you can tag him with not understanding it.

but it's essential truth has been expressed in other ways by non-supply siders like John Maynard Keynes and Ludwig von Mises.

You changed this to what it was earlier I think...now it's an "essential truth?"
Mises debunks supply-side including this curve. Anyhow, I used the word laugh because of what you claimed Mises thought of it.

Long term spending must also be cut.

BucEyedPea
03-23-2008, 04:16 PM
Patteeu, you've spent the better part of 50 posts trying to defend a philsophy that was constructed upon a dinner napkin, and whose substance never outgrew its original parchment.

Hmmm? Do you know how many hit songs were written on napkins?
I do my best concept work on napkins while eating in restaurants. I call it taking advantage of inspiration when it strikes since it does not happen from nine-to-five, on a desk or on special paper.

Rain Man
03-23-2008, 06:21 PM
You should quit working and only go very part time like me. It's not worth it and your story proves it. That's what I call controlling the major means of production including you, as the owner. Very sad.

I certainly would like to, but I'd rather not retire part-time, and the mortgage company insists on getting full payment. They won't even listen to other options.

Unless of course the government has some kind of grant program that'll make up the difference for me. Hmmmmmm.

patteeu
03-23-2008, 06:55 PM
Man, don't get me started on that. If I invest money in new equipment for my company, I have to pay personal taxes on that amount to start with, on money that I never see. And then on top of it, I lose my mortgage and charitable deductions?

If the revenoo'ers knew what was good for them, they would encourage me to have a profitable and growing company. They'd make more in the long run. Instead, I get double-taxed on investments and job creation, which means that I have to slow down growth. And that's not even including taxing me on my company's equipment and furnishings via personal property taxes, and then charging me a local head tax for every person I employ. That last one is a particularly well thought out tax if you want to discourage economic growth.

When you add all of this together and then throw in school taxes and sales taxes and stuff, my personal tax rate in 2006 topped 60 percent. We had a really good year, but the government took TWO-THIRDS of it.

It's a little shy of two thirds (as you know), but President Obama will fix that. :p

patteeu
03-23-2008, 06:58 PM
Oh my Gawd!!!
That's been my argument to you when you claim RR wasn't a real conservative but a NeoCon ( liberal hawk republican). Just using your words this time, not mine. Not using as an epithet here. I think Adam still brings up an excellent point something I've seen other conservatives criticize RR for: he could have done more to hold congresses feet to the fire. That and he halted Carter's momentum on deregulation. He did little to cut the size of govt down, not even accounting for the military. He never cut the Dept of Ed which was also a compaign promise and which has worsened education on top of the ridiculous sums of money thrown at it. In fact after he passed tax cuts, I think it was only a year later, he undid by passing the largest tax increase in our history by that time. Then he resorted to standard Keynesianism to stimulate the economy. Laugher-curve!!! Laughing all the way!

The part that you don't seem to get is that so-called neocons like Reagan and many others (including myself) *are* real conservatives.

And I note that you still refuse to explain what's so laughable about the Laffer curve. :shrug:

patteeu
03-23-2008, 07:00 PM
I'm only pointing out that Miseans don't have a favorable view of the Laugher- Curve or Supply Side, including the founder of the Austrian School himself who was a genious and an economist. So I don't you can tag him with not understanding it.



You changed this to what it was earlier I think...now it's an "essential truth?"
Mises debunks supply-side including this curve. Anyhow, I used the word laugh because of what you claimed Mises thought of it.

Long term spending must also be cut.

I don't recall changing anything, but Mises recognized that increasing taxes beyond a certain point failed to generate increased revenues. You, yourself, in post #52, demonstrate the real life behavior that is described by the Laffer curve. It's ironic that you laugh at it at the same time you live it.

Rain Man
03-23-2008, 07:01 PM
It's a little shy of two thirds (as you know), but President Obama will fix that. :p

Well, how about if I throw in the taxes on rental cars, hotels, and all of those fees on my cell phone bill?

I'm starting to sense that you're not an Obama fan. Is he actually a greater evil than Mrs. Clinton?

BucEyedPea
03-23-2008, 07:03 PM
The part that you don't seem to get is that so-called neocons like Reagan and many others (including myself) *are* real conservatives.
I never said RR was one. You did. That was the point. Did you actually read my post?

And I note that you still refuse to explain what's so laughable about the Laffer curve. :shrug:
I was telling you what the Mises thought of it because you put words in their mouth about it. That's why.
I alluded to it's wrong focus before for myself. Carry on.

patteeu
03-23-2008, 07:18 PM
Well, how about if I throw in the taxes on rental cars, hotels, and all of those fees on my cell phone bill?

I'm starting to sense that you're not an Obama fan. Is he actually a greater evil than Mrs. Clinton?

Oh no, I'm supporting Obama for the nomination. But only because I think he'll be easier to beat in November. I fear Hillary's ability to win in November unless she tears her party apart in order to get the nomination. From my conservative point of view, I think both would be equally bad in terms of their beliefs. I'd guess that Obama would be less prone to slash and burn politics, but I'd fear that his smooth talk might give him the ability to talk majorities into supporting his liberal policies whereas I think there's a built-in skepticism of Hillary.

In other words, he'd be the enticing, friendly drug dealer by the playground who makes trying his stuff sound so cool while Hillary would be the thuggish dealer with a bad reputation and a prison tattoo that most people would instinctively know to stay away from.

patteeu
03-23-2008, 07:21 PM
I never said RR was one. You did. That was the point. Did you actually read my post?

Yes, did you read mine? He was both a neocon (as you define them) and a true conservative. What he wasn't was an isolationist perversion of a conservative.


I was telling you what the Mises thought of it because you put words in their mouth about it. That's why.
I alluded to it's wrong focus before for myself. Carry on.

You haven't explained anything. But you have inadvertently admitted to being living evidence of the truth of the Laffer curve.

BucEyedPea
03-23-2008, 07:37 PM
That's not completely what I meant. I used to defend RR as a conservative having a Dem congress, and you said he was a NC.

Re: Laffer curve — that still wasn't my point on it. I was saying that Mises didn't say as you said. I also never said there was zero merit to it. I claimed it emphasized the wrong thing in the past: tax revenues more than spending and productivity.

You're just looking for an argument by putting something there that was never said or meant.

patteeu
03-23-2008, 07:45 PM
That's not completely what I meant. I used to defend RR as a conservative having a Dem congress, and you said he was a NC.

Re: Laffer curve — that still wasn't my point on it. I was saying that Mises didn't say as you said. I also never said there was zero merit to it. I claimed it emphasized the wrong thing in the past: tax revenues more than spending and productivity.

You're just looking for an argument by putting something there that was never said or meant.

You've apparently misunderstood much of what I've said about Reagan, Mises' support for the Laffer curve, and supply-side economics in general. It's all for the best that you don't want to argue because I don't have time to straighten you out tonight anyway.

BucEyedPea
03-23-2008, 07:48 PM
Mises does not support the Laffer Curve. That's what I've been saying for several posts now. Mises does not support Supply Side economics either. He makes fun of it. Does that mean he's against tax-cuts? No. Any tax cut is beneficial per him. If you think that you haven't read enough Mises particularly on this.

patteeu
03-23-2008, 07:53 PM
Mises does not support the Laffer Curve. That's what I've been saying for several posts now. Mises does not support Supply Side economics either. He makes fun of it. Does that mean he's against tax-cuts? No. Any tax cut is beneficial per him. If you think that you haven't read enough Mises particularly on this.

You have yet to explain either Mises' or your own critique of the Laffer curve. I didn't ever say he supported it, but what I did say is that he acknowledges the essential truth behind it, as do you by your actions. Until you articulate specific critiques, your assertions ring hollow to me. I'll check back in tomorrow to read your critiques if you choose to post any.

BucEyedPea
03-23-2008, 08:07 PM
I said earlier he did not acknowledge the essential truth of it. I said it looked like you edited your post from earlier.
Why don't you show me where Mises did this. And I don't have to explain anything. I was just pointing this out about Mises.
And told you my problem with SS. And yes, we've had this debate before.

Der Flöprer
03-23-2008, 11:18 PM
This seems kind of manipulative with the data, or just flat bad math.

For one thing, the 1998 limits are set artificially high, encompassing the second tax tier from $25,750 all the way to $62,450 and thus taxed at 28.0%. The 2008 tax tier is set to cut off at a different tier, from $8,250-$32,550, or at the 15.0% level. Adjusting for inflation, these are the same people that would have been in the near poverty bracket in 1999 and still paying 15.0%.

This deception carefully continues all the way through the upper brackets, making sure to catch the people that are just in between the two data sets where the limits were raised for inflation.

For someone making $33,000 a year, for example, in 1999 or 2008 (a figure which doesn't try to cheat the data sets) a person would've paid $9240 (28.0%)in taxes in 1999, and then $8250 (at 25.0%) in 2008, so really the difference to them is ninety dollars for their Bush tax cut. This figure would of course be more than offset in the increase in their property taxes, health care costs, fuel costs, and inflation in general, etc. since Bush took office.

Bingo.

patteeu
03-24-2008, 07:35 AM
I said earlier he did not acknowledge the essential truth of it. I said it looked like you edited your post from earlier.
Why don't you show me where Mises did this. And I don't have to explain anything. I was just pointing this out about Mises.
And told you my problem with SS. And yes, we've had this debate before.

I would quote Mises for you, but I know that I can't count on you to back up anything you've said in return so I'll just leave you with your naked assertions (disproven, in part, by your own actions). While you laugh at the Laffer curve, I'll enjoy the irony.

patteeu
03-24-2008, 07:36 AM
Bingo.

Read on. Banyon makes a fine point or two, but alnorth gives the rest of the story.

Amnorix
03-24-2008, 07:50 AM
Man, don't get me started on that. If I invest money in new equipment for my company, I have to pay personal taxes on that amount to start with, on money that I never see. And then on top of it, I lose my mortgage and charitable deductions?

If the revenoo'ers knew what was good for them, they would encourage me to have a profitable and growing company. They'd make more in the long run. Instead, I get double-taxed on investments and job creation, which means that I have to slow down growth. And that's not even including taxing me on my company's equipment and furnishings via personal property taxes, and then charging me a local head tax for every person I employ. That last one is a particularly well thought out tax if you want to discourage economic growth.

When you add all of this together and then throw in school taxes and sales taxes and stuff, my personal tax rate in 2006 topped 60 percent. We had a really good year, but the government took TWO-THIRDS of it.


I've said it before and I"ll say it again -- you chose for the tax advantaged S Corp or LLC pass-thru tax treatment that you now claim to suffer from because you pay taxes on money that you never see.

And if you're pass-thru taxed, then you don't pay any "double tax" at all that I can fathom.

C corporation status can be automatically selected by simply "checking the box".

Your 60% tax rate is what -- the amount of taxes you paid out of all that you you actually TOOK HOME? I'm trying to understand how you could possibly get to 60%.

If so, then your post is exceedingly misleading in my view, to those who don't understand that you have consciously and intentionally selected to commingle your company and yourself (to a very large degree) for tax purposes.

And, again, if you don't like it, you can easily flip to C Corp status, pay the flat corporate rate, and then pay personal income tax when the money is distributed to you.

Amnorix
03-24-2008, 08:01 AM
Well, how about if I throw in the taxes on rental cars, hotels, and all of those fees on my cell phone bill?


Are you not able to deduct the taxes on the rental cars and hotels from the income generated by the business? I honestly don't know -- I'm not an accountant after all.

Does your company pay for your car, which I assume is leased, and do you then apply that against your business income as well? Don't know if that gimmick works for pass-thru taxed entities.

How about your cell phone? Company pay the bill and then it's offset against income?

Ever use "company" dollars to pay for a "business trip" that was in fact a pleasure trip?

Maybe you do everything on the ultra-conservative side, but let's just say that most small-business owners I know seem to play many games (some of which are legitimate, some of which not so much), to lessen their tax burden. I don't care, it's not my problem as I'm not a tax attorney and they have (hopefully) qualified accountants on these matters. But the point remains that there can be many tax-advantaged perks to running a corporation.

Forgive my skepticism, but I've heard high powered, VERY highly paid executives complain about their tax rate, and all I'm thinking is how the EXECUTIVE EMPLOYMENT CONTRACT THAT I WROTE gives them a $500/month car allowance, 5 weeks of vacation, company-paid life insurance and disability insurance for the benefit of their family if they die, and a golden parachute giving them a huge windfall if anything all happens to them during their employment, even if the company tanks and it's all their fault.

Not that they don't work hard, and the contract isn't well deserved, and "market", but the point remains that sometimes people who bitch about taxes are staring at a single tree and ignoring the forest entirely.

I don't recall ever saying to any of them, however, "well, move into a lower tax bracket by quitting or taking a massive pay cut." :D

Amnorix
03-24-2008, 08:02 AM
errr...if anyone is actually denying that the Laffer Curve exists in some form or fashion, then they really don't get it.

bkkcoh
03-24-2008, 08:57 AM
errr...if anyone is actually denying that the Laffer Curve exists in some form or fashion, then they really don't get it.

Isn't that like saying that some of the the KKK or Reverand Wright said is right. :banghead: Just like I think that all of the politicians do want a better US, but I just can't accept the method in which they want to get there.

One can parse anything from a graph or a speech and make great claims that it is correct. Can't they?

patteeu
03-24-2008, 09:13 AM
Isn't that like saying that some of the the KKK or Reverand Wright said is right. :banghead: Just like I think that all of the politicians do want a better US, but I just can't accept the method in which they want to get there.

One can parse anything from a graph or a speech and make great claims that it is correct. Can't they?

Do you have a specific complaint about the Laffer curve?

bkkcoh
03-24-2008, 09:26 AM
Do you have a specific complaint about the Laffer curve?

No, not at all. it is just the fact that if you look at any small segment of something, you can make valid arguments that they are correct. But not always the case when looking at the entire picture.

Uncle_Ted
03-24-2008, 09:37 AM
You can not reasonably deny the validity of the Laffer Curve, its a very simple and solid concept. If you have 0% taxes, you collect nothing. If the government takes everything you make, there is also no incentive to work, so 0% is collected. Alternatively, if we wanna equate the 100% tax as a communist state where everything is redistributed, then some people will work, but the world has conclusively seen that the incentive to work and the revenues that are collected are less than a system that doesnt have 100% redistribution.

This isnt some evil sinister political philosophy, its just a fact that a tax rate somewhere between 0% and 100% collects more revenue than the endpoints, which leads to the curve. If you want to claim that US tax rates are so low that nearly everyone is on the left side of the curve, fine. To deny that the curve exists at all makes you look silly.


The problem is that the right has latched itself to a bunch of pseudo-economists who (1) are clueless about the shape and disposition of the curve, and (2) claim we are always on the downside of the curve (i.e. reduced taxes = increased revenue no matter who gets the tax cuts or how big they are) when the overwhelming majority of real economists will tell you that it's simply not the case.

patteeu
03-24-2008, 09:44 AM
The problem is that the right has latched itself to a bunch of pseudo-economists who (1) are clueless about the shape and disposition of the curve, and (2) claim we are always on the downside of the curve (i.e. reduced taxes = increased revenue no matter who gets the tax cuts or how big they are) when the overwhelming majority of real economists will tell you that it's simply not the case.

That's not true of all of the right and it's certainly no more prevalent than those on the left who either deny the curve altogether or insist that everyone is on the left side of the curve (i.e. increased taxes = increased revenue no matter who gets the tax increases or how big they are). The truth is that if there is a place where lower tax rates can generate more revenue, it tends to be in the tax brackets that democrats most want to raise.

Amnorix
03-24-2008, 09:52 AM
Isn't that like saying that some of the the KKK or Reverand Wright said is right. :banghead: Just like I think that all of the politicians do want a better US, but I just can't accept the method in which they want to get there.

One can parse anything from a graph or a speech and make great claims that it is correct. Can't they?

I don't really see it that way.

To me, the concept behind the Laffer curve is pretty simple -- at some point the tax burden is so great, that people are disincentivized to work harder. As a result, tax revenues fall off at a point prior to 100% taxation.

Let's say, hypothetically, that there were two tax brackets. 10% at <$250,000 per year, and 98% for income over $250,000 per year. To the degree that you actually had to work MORE or HARDER to achieve income over $250,000, who would bother? At that point, $1M more of gross income would be another $20,000 after taxes. And more importantly, the company that would pay the salary about the $250K would convince them that there was something else the employee preferred instead that wasn't taxable. Better benefits, for example.

The Laffer Curve, ultimately, is just a statement of simple human psychology.

And that is ignorning long term investment issues that may arise due to lack of concentration of weatlh, which may restrict GDP growth. In other words, it may disincentivize economic growth in various indirect ways.

Argue all day WHERE it kicks in, but I think it's inarguable that it does kick in at some point.

Amnorix
03-24-2008, 09:54 AM
The problem is that the right has latched itself to a bunch of pseudo-economists who (1) are clueless about the shape and disposition of the curve, and (2) claim we are always on the downside of the curve (i.e. reduced taxes = increased revenue no matter who gets the tax cuts or how big they are) when the overwhelming majority of real economists will tell you that it's simply not the case.


In general terms, I'd agree with that.

patteeu
03-24-2008, 09:59 AM
Argue all day WHERE it kicks in, but I think it's inarguable that it does kick in at some point.

This is a tax issue on which we're in full agreement. Where it kicks in is subject to all kinds of complications and we could argue forever about it without really knowing who was right.

An example of one of the complications described by Jude Wanniski is how changing psychology can even shift the curve for a person who's economic realities are static. He suggested that during wartime, a person who is sympathetic with the war goals and who believes his sacrifice will help the war effort will tolerate a higher optimum tax rate than he would during peacetime even if his cost of living and income level are the same in both circumstances.

bkkcoh
03-24-2008, 10:04 AM
...
Let's say, hypothetically, that there were two tax brackets. 10% at <$250,000 per year, and 98% for income over $250,000 per year. To the degree that you actually had to work MORE or HARDER to achieve income over $250,000, who would bother? At that point, $1M more of gross income would be another $20,000 after taxes. And more importantly, the company that would pay the salary about the $250K would convince them that there was something else the employee preferred instead that wasn't taxable. Better benefits, for example.

...


Agreed on that point.

I guess the question is, at what point does that truly kick in, the point at which people determine that it isn't worth while to make more then X. When that happens, what will happens to innovation and discovery. That is what has made the US such a great country, the innovation and inventiveness that has been made by US companies and it workers.

But do the politicians actually see that there is a threshold in the amount of tax that the US citizens are willing to pay?

BucEyedPea
03-24-2008, 10:27 AM
I would quote Mises for you, but I know that I can't count on you to back up anything you've said in return so I'll just leave you with your naked assertions (disproven, in part, by your own actions).
Oh please, pat! Naked assertsions...that's what you did when you said Mises acknowledged "the essential truth" of the Laugher Curve. You're the one making the assertion about Mises saying this. So you prove it. If the man hasn't written anything acknowledging this as a truth how does one prove the negative?

And we had a debate before on SS and I brought up the same points and quoted links for you showing where Miseans stood on it.

While you laugh at the Laffer curve, I'll enjoy the irony.
I'm enjoying the irony of you're having to resort to debating the poster because you can't provide anything showing Mises asserted this as essential truth. Tax cuts are good for economic growth but that doesn't mean he supports SS.

The reason I laugh at it, is because what is so great about maximizing tax revenue for the govt, particularly when a conservative or libertarian is being the chief advocate for it? That's why I call it the "Laugher-Curve."

And don't get me wrong the left criticizes SS for all the WRONG reasons.

Now I have just said the same thing to you 5 different ways through several posts. I don't expect you to duplicate what I was saying because you never field the ball. You were looking for an argument over a brief statement on Mises true position on this and you changed my words around, again, so you could pin me into a position I never took.

patteeu
03-24-2008, 10:39 AM
Oh please, pat! Naked assertsions...that's what you did when you said Mises acknowledged "the essential truth" of the Laugher Curve. You're the one making the assertion about Mises saying this. So you prove it. If the man hasn't written anything acknowledging this as a truth how does one prove the negative?

And we had a debate before on SS and I brought up the same points and quoted links for you showing where Miseans stood on it.



I'm enjoying the irony of you're having to resort to debating the poster because you can't provide anything showing Mises asserted this as essential truth. Tax cuts are good for economic growth but that doesn't mean he supports SS.

The reason I laugh at it, is because what is so great about maximizing tax revenue for the govt, particularly when a conservative or libertarian is being the chief advocate for it? That's why I call it the "Laugher-Curve."

And don't get me wrong the left criticizes SS for all the WRONG reasons.

Now I have just said the same thing to you 5 different ways through several posts. I don't expect you to duplicate what I was saying because you never field the ball. You were looking for an argument over a brief statement on Mises true position on this and you changed my words around, again, so you could pin me into a position I never took.

So now you seem to admit that Miseans accept the truth of the Laffer curve but they just don't like the application of that curve in the pursuit of maximum revenues. That's a completely different story. And I can even agree with you on that to a large degree.

BucEyedPea
03-24-2008, 10:50 AM
There you go again. I did not say that either. You're re-phrasing my words and you did not get the point originally and now. Although it's much better. That isn't Mises point. That is why I laugh at it and call it the Laugher-Curve.

As far as I know, tax revenues climb and fall with and without changes in policy. So I don't know that it always results in revenue increase or not....or if it's due to that alone. But tax cuts are good for economic growth. I don't know if anyone on the right denies that but that's not the only thing SS is trying to address.

Rain Man
03-24-2008, 02:58 PM
Are you not able to deduct the taxes on the rental cars and hotels from the income generated by the business? I honestly don't know -- I'm not an accountant after all.

Does your company pay for your car, which I assume is leased, and do you then apply that against your business income as well? Don't know if that gimmick works for pass-thru taxed entities.

How about your cell phone? Company pay the bill and then it's offset against income?

Just because I can write it off doesn't mean it's not a tax. It's still a tax that costs me money. Writing it off just means that I don't pay more tax.


Ever use "company" dollars to pay for a "business trip" that was in fact a pleasure trip?

Actually, I don't ever do that. 'Tis not right. Honestly, it really annoys me when I hear of people doing stuff like that, too.

Maybe you do everything on the ultra-conservative side, but let's just say that most small-business owners I know seem to play many games (some of which are legitimate, some of which not so much), to lessen their tax burden. I don't care, it's not my problem as I'm not a tax attorney and they have (hopefully) qualified accountants on these matters. But the point remains that there can be many tax-advantaged perks to running a corporation.

Maybe I've got an ultra-conservative accountant, but I get no benefits. In fact, I have to pay taxes on my health insurance benefits when none of my employees do. I still can't figure out why that's the case.

Forgive my skepticism, but I've heard high powered, VERY highly paid executives complain about their tax rate, and all I'm thinking is how the EXECUTIVE EMPLOYMENT CONTRACT THAT I WROTE gives them a $500/month car allowance, 5 weeks of vacation, company-paid life insurance and disability insurance for the benefit of their family if they die, and a golden parachute giving them a huge windfall if anything all happens to them during their employment, even if the company tanks and it's all their fault.

I really get nothing other than the hookers, and even then, I can't write off the cheap whiskey with which I ply them.

Not that they don't work hard, and the contract isn't well deserved, and "market", but the point remains that sometimes people who bitch about taxes are staring at a single tree and ignoring the forest entirely.

I don't recall ever saying to any of them, however, "well, move into a lower tax bracket by quitting or taking a massive pay cut." :D

I guess I look at my single tree and wonder why I pay proportionally higher taxes when I've produced a significant number of good-paying jobs. It seems like I should be rewarded for that, or at least not punished. Instead, I have to pay more taxes for my health insurance, I don't get the mortgage deduction that most other Americans get, and I have to pay multiple types of taxes on investments designed to create more jobs.

On the whole, I agree that it's a less bad problem than being poor, but that doesn't mean it's not a problem.

patteeu
03-24-2008, 03:05 PM
On the whole, I agree that it's a less bad problem than being poor, but that doesn't mean it's not a problem.

Don't give in on this point to the progressive tax oppressors! There are plenty of happy poor people who probably don't even realize the significance of April 15! ;)

bkkcoh
03-24-2008, 03:05 PM
...I guess I look at my single tree and wonder why I pay proportionally higher taxes when I've produced a significant number of good-paying jobs. It seems like I should be rewarded for that, or at least not punished. Instead, I have to pay more taxes for my health insurance, I don't get the mortgage deduction that most other Americans get, and I have to pay multiple types of taxes on investments designed to create more jobs.

On the whole, I agree that it's a less bad problem than being poor, but that doesn't mean it's not a problem.


Yeah, who ever said that the tax system isn't a form of punishment. The more you make, the more you are required to pay. :banghead:

Don't give in on this point to the progressive tax oppressors! There are plenty of happy poor people who probably don't even realize the significance of April 15! ;)

Yeah, those people who get bad more money then they pay into the system.

Rain Man
03-24-2008, 03:12 PM
I've said it before and I"ll say it again -- you chose for the tax advantaged S Corp or LLC pass-thru tax treatment that you now claim to suffer from because you pay taxes on money that you never see.

And if you're pass-thru taxed, then you don't pay any "double tax" at all that I can fathom.

C corporation status can be automatically selected by simply "checking the box".

The only thing worse than an S Corporation is all of the others.

Your 60% tax rate is what -- the amount of taxes you paid out of all that you you actually TOOK HOME? I'm trying to understand how you could possibly get to 60%.

If so, then your post is exceedingly misleading in my view, to those who don't understand that you have consciously and intentionally selected to commingle your company and yourself (to a very large degree) for tax purposes.

Yeah, I'm comparing the money that entered my household to my personal taxes. I paid roughly 62 percent of my gross personal income in taxes in 2006. My 1040 showed a lot higher income than I got because of investments I made in the company that are passed through to my personal tax form.

And yeah, I could conceivably remove the cash from the company, but ... why? I'm trying to be a responsible business owner, but does the government like that? [John Belushi voice] Nooooo-oooooo![/John Belushi voice] And I sure can't take out cash for things I bought like desks and computers and stuff.

I intellectually recognize that, on the top line, that type of money is "profit", but as a businessperson I sure think the government should encourage me to expand my business, when in reality I'm running the race with federal, state, and local government all trying to tackle me.

I had a meeting with a government representative once, and about blew a gasket. She was a moderate bigwig who wanted health care coverage for companies that didn't provide it, and she said to a roomful of people, "It's easy. Just raise the taxes. It's easy. Then you can use the money to set up insurance programs for the companies that don't have it." She asked me if I would do a survey of businesses to assess support of it, and I said, "You want to implement a tax on companies that provide health insurance, so they can fund their competitors who don't provide health insurance? I can save you some research money right now and give you the answer." This woman had never earned a penny in her life. She just thought that money comes in via a big spigot and you can just turn it up for whatever you want. Fie on her.

And, again, if you don't like it, you can easily flip to C Corp status, pay the flat corporate rate, and then pay personal income tax when the money is distributed to you.

Then we're really talking double taxation. I'll take a pass on that.

All I want is low taxes, good roads, some military, and maybe a little space exploration. Is that too much to ask for?

Rain Man
03-24-2008, 03:13 PM
Don't give in on this point to the progressive tax oppressors! There are plenty of happy poor people who probably don't even realize the significance of April 15! ;)

If amnorix starts pinning me down, I may need to call you in for a heavy artillery bombardment.

patteeu
03-24-2008, 03:21 PM
If amnorix starts pinning me down, I may need to call you in for a heavy artillery bombardment.

If you give an inch to these people, they'll just raise your tax rate by another percentage point. :)

BucEyedPea
03-24-2008, 03:24 PM
I'm still waiting for a quote by Mises where he acknowleges the essential truth of the Laffer Curve, pat.

You wanted me to come up with points to my naked assertions?
I wasn't sure of the date he died but thought it was before the RR election.
Turns out it's correct. So how's this: Mises died in 1973 and the Laffer Curve popularity and application post dates him.

Concept isn't new from what I just checked as well.Laffer says he learned it from self-avowed socialist John Maynard Keynes per wiki.

Things that make you go hmmmmmmm. :hmmm:
Looks to me that this is just another central management tool to keep the welfare state in business. Unless one also addresses spending, which SS don't do.

patteeu
03-24-2008, 03:32 PM
I'm still waiting for a quote by Mises where he acknowleges the essential truth of the Laffer Curve, pat.

You wanted me to come up with points to my naked assertions?
I wasn't sure of the date he died but thought it was before the RR election.
Turns out it's correct. So how's this: Mises died in 1973 and the Laffer Curve popularity and application post dates him.

Concept isn't new from what I just checked as well.Laffer says he learned it from self-avowed socialist John Maynard Keynes per wiki.

Things that make you go hmmmmmmm. :hmmm:
Looks to me that this is just another central management tool to keep the welfare state in business. Unless one also addresses spending, which SS don't do.

Laffer didn't invent the concept, he's just recognized for popularizing it with his curve. You still haven't explained to me why the Laffer curve is laughable, unless you're admitting that you only meant that people who misuse the Laffer curve are laughable but that the curve itself is solid.

BucEyedPea
03-24-2008, 03:37 PM
Laffer didn't invent the concept, he's just recognized for popularizing it with his curve. You still haven't explained to me why the Laffer curve is laughable, unless you're admitting that you only meant that people who misuse the Laffer curve are laughable but that the curve itself is solid.

I most certainly did explain why the Laugher-Curve was laughable to me. And I did it several times. Please read. Or are you just channeling penchief to day for a right-wing verson of him?

patteeu
03-24-2008, 03:44 PM
I most certainly did explain why the Laugher-Curve was laughable to me. And I did it several times. Please read. Or are you just channeling penchief to day for a right-wing verson of him?

The only comment I can see that was relevant to how you view the Laffer Curve was this one:

You should quit working and only go very part time like me. It's not worth it and your story proves it. That's what I call controlling the major means of production including you, as the owner. Very sad.

That indicates to me that you are in agreement with the Laffer Curve. "It's not worth [working more when taxes get too high]" you said. That *is* the Laffer Curve (or at least the more controversial half of it).

BucEyedPea
03-24-2008, 03:51 PM
The only comment I can see that was relevant to how you view the Laffer Curve was this one:

That indicates to me that you are in agreement with the Laffer Curve. "It's not worth [working more when taxes get too high]" you said. That *is* the Laffer Curve (or at least the more controversial half of it).

My comment is independent of any curve though. It does not rely on a curve to point that out. You need a curve to tell you that?

The purpose of the curve is used to manage that sentiment in order to keep the welfare state in business and that's it's main use—to maximize govt revenue. That is the antithesis of libertarianism and conservatism. And that's why it's laughable, to me, when a conservative uses it. It's used as a central management tool for the purpose of govt revenue. Big govt and does not address the spending side of these issues.

The other part of said curve is whether or not it always results in a revenue increase. I said I didn't know if it always did or not or if other factors came into play. I've read pro and con on that aspect from Mises Institute.

BucEyedPea
03-24-2008, 03:59 PM
Oh and pat, how 'bout you specify what the essential truth of the Laffer Curve is so we're on the same page. I thought your essential truth was that it maximizes revenue for the govt. Mises would never take such a stand. I never said it was without any merit. You're just making a straw man.

To use my claim of incentive destroying aspects of taxation is really a half-truth in this context.

BucEyedPea
03-24-2008, 04:12 PM
Here's Rothbard on the subject. Rothbard was student and advocate for Mises.

P.T. Branum was right. (http://www.lewrockwell.com/rothbard/rothbard92.html)

Critics of supply-side economics are right, though not always for the right reasons, when they attack the Laffer curve as "voodoo economics." There are many grave fallacies in the Laffer theory.

First, production can never increase instantaneously, and any Laffer effect would take years to develop. Second, there is no reason to suspect that the Laffer effect would be enough to balance the budget or counteract the inflationary effect of turning on the money taps. Third, there would probably be no Laffer effect at all; that is, a deep tax cut would probably lead to a deep revenue cut, though perhaps not equally deep. I wait in trepidation for some liberal critic of the Laffer curve to throw down the gauntlet as follows: "Okay, let’s test the Laffer curve. Let’s raise income taxes by 30 percent and see if total revenue drops." I’d bet my bottom dollar that total revenue would rise.

And what’s so great about increasing tax revenue anyway? Why must we try to arrange things so that the government will extract the maximum possible amount from the poor taxpayer? I should think that alleged free market economists would be opting not only for cuts in crippling tax rates-but also for cuts in total revenues, which indicate the total resources extracted from private citizens to support the bloated aid unproductive government sector. Surely we should try for drastic cuts in both tax rates and revenues.

Once we dispose of the Laffer curve, we are still left with the dread problem of inflation.

Aren’t the orthodox economists right, then, and mustn’t we tighten our belts and forgo tax cuts until we can cut government spending and get inflation under control?

The answer should be a resounding No. First there are two strategic reasons for calling for full speed ahead on tax cuts regardless of inflation. As Milton Friedman has long been suggesting, if taxes are cut steeply, this will increase the pressure on Congress to cut government spending as well. The specter of bigger deficits may well force Congress to shrink the budget. Moreover, it is important for those who wish to roll back big government, cut the budget, slash taxes, and abolish regulation, never to lock themselves in to a restrictive set of priorities of their own making...

That pretty much sums up the Misean point of view on the subject.

patteeu
03-24-2008, 04:26 PM
Oh and pat, how 'bout you specify what the essential truth of the Laffer Curve is so we're on the same page. I thought your essential truth was that it maximizes revenue for the govt. Mises would never take such a stand. I never said it was without any merit. You're just making a straw man.

To use my claim of incentive destroying aspects of taxation is really a half-truth in this context.

It's not a half truth at all. How can a curve maximize revenue for a government? It's the use of the theory expressed by the curve that will either maximize revenue for the government or not, not the curve itself. The curve is just a simple and less confusing way of saying the following:

The essential truth of the Laffer curve is (a) that tax rates of 0% generate no revenue, (b) that, for most normal situations, tax rates of 100% generate no revenue, (c) that there is a point of taxation somewhere between 0% and 100% that generates maximum revenue, (d) that tax rates higher than that maximum point result in less revenue than the maximum, and (e) that tax rates lower than that maximum point result in less revenue than the maximum.

patteeu
03-24-2008, 04:34 PM
Here's Rothbard on the subject. Rothbard was student and advocate for Mises.

P.T. Branum was right. (http://www.lewrockwell.com/rothbard/rothbard92.html)



That pretty much sums up the Misean point of view on the subject.

That's not a criticism of the curve, it's an argument about where we were at the time the article was written on the curve or about difficulties that would be involved in using the theory of the curve for the purpose of maximizing revenue (and how Rothbard doesn't think maximizing revenue is a good goal to pursue anyway). Surely Rothbard and other Miseans wouldn't be against cutting taxes if they knew that government revenues would actually increase as a result would they?

BTW, someone should check up on Rothbard's prediction. My understanding is that income tax revenues did increase over the course of the Reagan administration (in which he cut the top tax rate from something like 70% to a maximum of 28%).

[In]dividual income tax revenues rose from $244 billion in 1980 to $446 billion in 1989 (http://www.house.gov/jec/fiscal/tx-grwth/reagtxct/reagtxct.htm)

Logical
03-24-2008, 04:38 PM
I want to complement ainorth for his excellent presentation of his arguments. Very impressive and done with no malice whatsoever.

I also want to say to Mr Rain Man that I sympathize with his plight as a small business owner, the one class of business that seems to get a royal screwing by the government.

BucEyedPea
03-24-2008, 04:45 PM
It's not a half truth at all. How can a curve maximize revenue for a government? It's the use of the theory expressed by the curve that will either maximize revenue for the government or not, not the curve itself. The curve is just a simple and less confusing way of saying the following:

The essential truth of the Laffer curve is (a) that tax rates of 0% generate no revenue, (b) that, for most normal situations, tax rates of 100% generate no revenue, (c) that there is a point of taxation somewhere between 0% and 100% that generates maximum revenue, (d) that tax rates higher than that maximum point result in less revenue than the maximum, and (e) that tax rates lower than that maximum point result in less revenue than the maximum.

In this context, yes it is. (1) I originally posted to a post of yours that Mises never made any acknowledgement of the Laffer Curve as an essential truth. That's all I was commenting on...not the pros and cons of the Laffer Curve that you tried so hard to bully me into participating on. (2) The main argument for the Laffer curve is revenue generation for the govt and it only considers the production destroying aspects of the tax systems as a factor in getting such revenue. This post I quoted shows that again. So to claim my statement of not being worth working, which was somewhat tic to RainMain, as my endorsement is a half the story. Hence a half-truth.

BucEyedPea
03-24-2008, 04:54 PM
That's not a criticism of the curve, it's an argument about where we were at the time the article was written on the curve or about difficulties that would be involved in using the theory of the curve for the purpose of maximizing revenue (and how Rothbard doesn't think maximizing revenue is a good goal to pursue anyway). Surely Rothbard and other Miseans wouldn't be against cutting taxes if they knew that government revenues would actually increase as a result would they?

BTW, someone should check up on Rothbard's prediction. My understanding is that income tax revenues did increase over the course of the Reagan administration (in which he cut the top tax rate from something like 70% to a maximum of 28%).

I'll repeat his statement:
Critics of supply-side economics are right, though not always for the right reasons, when they attack the Laffer curve as "voodoo economics." There are many grave fallacies in the Laffer theory.—Rothbard

BucEyedPea
03-24-2008, 05:06 PM
Ten Great Economic Myths—Rothbard (http://www.lewrockwell.com/rothbard/rothbard150.html)

Read Myth 9 ( Laffer Curve) for his pov. Similar to what I've seen before over at Mises site.

patteeu
03-24-2008, 09:14 PM
In this context, yes it is. (1) I originally posted to a post of yours that Mises never made any acknowledgement of the Laffer Curve as an essential truth. That's all I was commenting on...not the pros and cons of the Laffer Curve that you tried so hard to bully me into participating on. (2) The main argument for the Laffer curve is revenue generation for the govt and it only considers the production destroying aspects of the tax systems as a factor in getting such revenue. This post I quoted shows that again. So to claim my statement of not being worth working, which was somewhat tic to RainMain, as my endorsement is a half the story. Hence a half-truth.

No matter how hard you try, you can't make the Laffer curve mean something other than what it really means. Both you and Mises have acknowledged that increases in tax rate discourage work. That's is at the heart of the essential truth of the curve, which I outlined in my previous post. You simply fail to recognize the distinction between the theory behind the curve and the various policies that various people have tried to use the curve to support.

I'll repeat his statement:

Rothbard isn't talking about the generic curve, he's talking about the theory advanced by Laffer to those in the Reagan administration as a particular point in time that argued that proposed tax cuts would increase revenue. And while I haven't performed an exhaustive analysis of the Reagan tax cuts and their impact on subsequent tax revenues, at first glance, Rothbard appears to have gotten it wrong anyway.

patteeu
03-24-2008, 09:17 PM
Ten Great Economic Myths—Rothbard (http://www.lewrockwell.com/rothbard/rothbard150.html)

Read Myth 9 ( Laffer Curve) for his pov. Similar to what I've seen before over at Mises site.

You should re-read it, more attentively this time. In it, Rothbard admits:

It is true that if tax rates are 99%, and they are cut to 95%, tax revenue will go up.

Rothbard is acknowledging that the Laffer Curve is valid, he's just arguing about the shape of the curve.

BucEyedPea
03-24-2008, 10:02 PM
You should re-read it, more attentively this time. In it, Rothbard admits:
Rothbard is acknowledging that the Laffer Curve is valid, he's just arguing about the shape of the curve.

I think you should re-read it and not leave things out of the whole that make one part appear more sweepingly true than they are:

It is true that if tax rates are 99%, and they are cut to 95%, tax revenue will go up. But there is no reason to assume such simple connections at any other time.
In other words it's nothing to write home about other than in this case.

Just because Mises or I feel income taxes discourage production, it's across the board the statement is made not where it falls on a curve. Our view is the heart of classical economics. We don't need no damn curve. The only reason the curve exists is to set taxes at a point where revenue will increase. So it's essential truth comes in two parts—not one. To claim otherwise is a half-truth. Income taxes should be totally abolished per Mises, and myself, not tinkered with to deal with the problem. You're inferring the wrong idea from our statement.

Frankie
03-24-2008, 10:06 PM
The thing that I have a hard time grasping is how, if Bush's taxes are less, he's able to increase governmental spending across the board.

Thanks to loans from China, and your pocket. I love it when Bush supporters point out minimal tax cuts and completely forget they are paying more than twice as much for gas, milk, etc.

BucEyedPea
03-24-2008, 10:22 PM
No matter how hard you try, you can't make the Laffer curve mean something other than what it really means. Both you and Mises have acknowledged that increases in tax rate discourage work. That's is at the heart of the essential truth of the curve, which I outlined in my previous post. You simply fail to recognize the distinction between the theory behind the curve and the various policies that various people have tried to use the curve to support.

No matter how hard you try, the Reagan tax cuts never really occurred because they were undone a year later. Yet, people still worked, did they not?

But this is not likely to happen with the income tax. People are not going to stop working or leave the country because of a relatively small tax hike, or do the reverse because of a tax cut.—Rothbard

That being said, Mises never made any such acknowledgment since he died nearly ten years before it's time.

'Hamas' Jenkins
03-24-2008, 10:28 PM
You can not reasonably deny the validity of the Laffer Curve, its a very simple and solid concept. If you have 0% taxes, you collect nothing. If the government takes everything you make, there is also no incentive to work, so 0% is collected. Alternatively, if we wanna equate the 100% tax as a communist state where everything is redistributed, then some people will work, but the world has conclusively seen that the incentive to work and the revenues that are collected are less than a system that doesnt have 100% redistribution.

This isnt some evil sinister political philosophy, its just a fact that a tax rate somewhere between 0% and 100% collects more revenue than the endpoints, which leads to the curve. If you want to claim that US tax rates are so low that nearly everyone is on the left side of the curve, fine. To deny that the curve exists at all makes you look silly.

It's so obvious as to not even merit a response:

Gee, if I tax someone 0% I won't get any money. If I tax them 100%, they probably aren't going to care about how much money they make or work they do...

Really?? BRILLIANT!!!

'Hamas' Jenkins
03-24-2008, 10:31 PM
The only thing that I find sinister about the Laffer curve is that I feel it's also a Trojan Horse for a flat tax.

BucEyedPea
03-24-2008, 10:41 PM
It's so obvious as to not even merit a response:

Gee, if I tax someone 0% I won't get any money. If I tax them 100%, they probably aren't going to care about how much money they make or work they do...

Really?? BRILLIANT!!!

ROFL Well, if ya' put it that way, I can see what ya' mean.

patteeu
03-25-2008, 06:28 AM
I think you should re-read it and not leave things out of the whole that make one part appear more sweepingly true than they are:

It is true that if tax rates are 99%, and they are cut to 95%, tax revenue will go up. But there is no reason to assume such simple connections at any other time.

In other words it's nothing to write home about other than in this case.

The part you added in bold just indicates that Rothbard is rather inflexible in his view of the shape of the curve not that he denies the curve. Maybe this is part of the reason he appears to have gotten his prediction about the Reagan tax cuts wrong.

Just because Mises or I feel income taxes discourage production, it's across the board the statement is made not where it falls on a curve. Our view is the heart of classical economics. We don't need no damn curve. The only reason the curve exists is to set taxes at a point where revenue will increase. So it's essential truth comes in two parts—not one. To claim otherwise is a half-truth. Income taxes should be totally abolished per Mises, and myself, not tinkered with to deal with the problem. You're inferring the wrong idea from our statement.

Ah, I see. This is another one of your obstinate head-in-the-sand arguments. You don't like statistics because you worry about how they are used and now you don't like graphical representations of ideas for the same reason.

patteeu
03-25-2008, 06:38 AM
No matter how hard you try, the Reagan tax cuts never really occurred because they were undone a year later. Yet, people still worked, did they not?

The Laffer Curve is about marginal tax rates. Reagan raised some excise taxes, social security taxes, and got rid of some income tax deductions, but the overall effect over the course of his presidency was a decrease in marginal rates for the top tax brackets. And not only did people continue to work, but the economy flourished and, contrary to Murray Rothbard's prediction, government revenues dramatically increased.

That being said, Mises never made any such acknowledgment since he died nearly ten years before it's time.

Sure he did. The idea that people will replace work with leisure as the after-tax reward for additional work is diminished, (i.e. the "essential truth" behind the Laffer Curve) predates both Laffer and Mises.

patteeu
03-25-2008, 06:49 AM
The only thing that I find sinister about the Laffer curve is that I feel it's also a Trojan Horse for a flat tax.

Actually, it might even be an argument for a regressive tax if revenue generation is the only goal of taxation. But I'll settle for a flat tax. ;)

tiptap
03-25-2008, 08:04 AM
The Laffer Curve is about marginal tax rates. Reagan raised some excise taxes, social security taxes, and got rid of some income tax deductions, but the overall effect over the course of his presidency was a decrease in marginal rates for the top tax brackets. And not only did people continue to work, but the economy flourished and, contrary to Murray Rothbard's prediction, government revenues dramatically increased.



Sure he did. The idea that people will replace work with leisure as the after-tax reward for additional work is diminished, (i.e. the "essential truth" behind the Laffer Curve) predates both Laffer and Mises.

The trouble with this assertion is that the Keynesian Deficit created by Reagan could also be argued as the stimulus for the economy. By way of comparison the Bush II tax cut also was Keynesian. It would mean more if in cutting marginal tax rates, tax spending followed tax revenues. We could see more clearly the Laffer Curve effect.

I think it always comes down to what that money is invested in. For Reagan it was the military. And we got return on that in research with some esoteric things but also some practical returns. And what endured in that investment is what spread through the whole economy. That is in contrast to Bush II where the "investment" ends up being destroyed is real combat losses of material as opposed to building something enduring in the US.

patteeu
03-25-2008, 08:53 AM
The trouble with this assertion is that the Keynesian Deficit created by Reagan could also be argued as the stimulus for the economy. By way of comparison the Bush II tax cut also was Keynesian. It would mean more if in cutting marginal tax rates, tax spending followed tax revenues. We could see more clearly the Laffer Curve effect.

I agree that the idea that the Laffer Curve effect was responsible for the increase in revenues is not inarguable, but the fact that revenues increased rather than decreased gives one reason to at least entertain the possibility. Rothbard, by contrast, speculated that deep tax cuts would result in revenue decreases. It's within the realm of possibility that other stimulative effects overwhelmed the effect that Rothbard foresaw, but at first glance at least, the results tend to suggest that Rothbard was just wrong. I'll leave the burden on Rothbard's supporters to show why that view isn't accurate.

Saggysack
03-25-2008, 09:13 AM
Knowing how tax brackets work can also lead to some pretty good tax strategy that people often pay accountants to figure out for them.

Lets say you have an old person with a really super-big IRA. Converting the whole thing to a Roth would obviously be stupid, but what if after they spent everything they want to spend out of it for the year, they are still in the 15% marginal bracket? Well, thats a pretty low bracket, so even though they dont need any more money, I'd advise that person to figure out how much "room" they have left in the 15% before they hit the next 25% bracket, and convert just that amount to lock in that 15% tax. Even if they died without spending the newly-created Roth conversion, their heirs could easily be in a higher than 15% bracket.

A younger person would be wise convert to a Roth right now, IMO. Pay the taxes now while the value is down logic. I could see one scenerio an older person would be tempted to convert to a Roth as well... Inheritance! But to be honest, I'm pretty dumb about these things.

patteeu
03-25-2008, 09:20 AM
A younger person would be wise convert to a Roth right now, IMO. Pay the taxes now while the value is down logic. I could see one scenerio an older person would be tempted to convert to a Roth as well... Inheritance! But to be honest, I'm pretty dumb about these things.

One risk people take when investing in a Roth is that future Congresses can always tamper with their tax favored withdrawal status. In a traditional IRA, you don't get the same benefit of beating higher future taxes, but you at least insure that you've reaped a tax advantage on the front end. I'm not saying your Roth idea is wrong, though. I'm just giving you one more thing to think about.

tiptap
03-25-2008, 09:48 AM
I agree that the idea that the Laffer Curve effect was responsible for the increase in revenues is not inarguable, but the fact that revenues increased rather than decreased gives one reason to at least entertain the possibility. Rothbard, by contrast, speculated that deep tax cuts would result in revenue decreases. It's within the realm of possibility that other stimulative effects overwhelmed the effect that Rothbard foresaw, but at first glance at least, the results tend to suggest that Rothbard was just wrong. I'll leave the burden on Rothbard's supporters to show why that view isn't accurate.

He did not include the Keynesian stimulus in his consideration. He had no idea that the tax cut by Reagan wouldn't include the government spending cut. After all the other half of the mantra was SMALLER government. Regulations aside, the percentage of government spending of the total economy grew during the Reagan Administration. We have gone through that before.

Amnorix
03-25-2008, 09:56 AM
One risk people take when investing in a Roth is that future Congresses can always tamper with their tax favored withdrawal status. In a traditional IRA, you don't get the same benefit of beating higher future taxes, but you at least insure that you've reaped a tax advantage on the front end. I'm not saying your Roth idea is wrong, though. I'm just giving you one more thing to think about.


I don't disagree, but the political fallout for messing with Roth IRAs would be very heavy. I don't really see it happening absent truly extraordinary circumstances.

patteeu
03-25-2008, 10:25 AM
I don't disagree, but the political fallout for messing with Roth IRAs would be very heavy. I don't really see it happening absent truly extraordinary circumstances.

When it comes to the income tax, non-savers have been sticking it to savers for a long time, but I agree that it would be politically difficult absent a fiscal crisis such as the kind that runaway entitlement programs could someday bring about.

patteeu
03-25-2008, 10:37 AM
He did not include the Keynesian stimulus in his consideration. He had no idea that the tax cut by Reagan wouldn't include the government spending cut. After all the other half of the mantra was SMALLER government. Regulations aside, the percentage of government spending of the total economy grew during the Reagan Administration. We have gone through that before.

I'm not sure why you're continuing to argue with me after I conceded that the point could be argued (but not without extensive analysis, which rules the two of us out at this point, I suspect). None of what you say makes it any more likely, on the surface at least, that Rothbard had it right when he said that deep Reagan tax cuts would result in deep revenue cuts.

And the numbers I see say that government expenditures dropped as a fraction of GDP from 1981 to 1989, falling from 22.2% to 21.2% (according to Historical Tables from the FY 2005 Budget of the United States Government, pp 23-24.).

pikesome
03-25-2008, 10:50 AM
When it comes to the income tax, non-savers have been sticking it to savers for a long time, but I agree that it would be politically difficult absent a fiscal crisis such as the kind that runaway entitlement programs could someday bring about.

"Save Social Security or save Roth IRAs"?

That would be the way it would be phrased.

It's the same reason talk about any major legislation change is accompanied by Amendment talk. You can't trust the Congress not to change the rules as they see fit.

patteeu
03-25-2008, 11:28 AM
"Save Social Security or save Roth IRAs"?

That would be the way it would be phrased.

It's the same reason talk about any major legislation change is accompanied by Amendment talk. You can't trust the Congress not to change the rules as they see fit.

Yep, except I might amend it to something like:

"Save Social Security or save the Roth IRAs of the rich?"

Heck, they might even means test it and allow those with puny Roths to keep their tax advantage while repealing the tax free status of people who've been sacrificing for decades in order to build up a sizeable Roth.

BucEyedPea
03-25-2008, 11:49 AM
He did not include the Keynesian stimulus in his consideration. He had no idea that the tax cut by Reagan wouldn't include the government spending cut. After all the other half of the mantra was SMALLER government. Regulations aside, the percentage of government spending of the total economy grew during the Reagan Administration. We have gone through that before.

Paul Craig Roberts, an economist and Assistant Secretary of the Treasury in the Reagan Administration referred to as the "Father of Reaganomics", said in one article I read that it was the overall policy mix of Reagan including that inflation fell a lot faster than anticipated. But you're right about how they did resort to Keynesian stimulus.

He has a book out on what went on behind the scenes with the in-fighting and refusal by mainstream economists to go along for fear they'd lose their prestige in the economics profession. That's how ingrained Keynesianism is. I'm thinkin' of pickin' it up.

BucEyedPea
03-25-2008, 11:53 AM
BTW, I believe the bill that undid the cuts a year later was the 1981 Omnibus Budget Reconciliation Act.

BucEyedPea
03-25-2008, 11:59 AM
The trouble with this assertion is that the Keynesian Deficit created by Reagan could also be argued as the stimulus for the economy.

Bingo! Beside the major point of Misean economics is there are so many things happening in an economy, including some unpredictability, that it's hard to have controls to measure everything and know everything. For example the fact that inflation fell a lot faster than anticipated. That and govt stats are formulated based on not just a little opinion as to what to include. Then they change those when things don't appear to be going well. I do think the Reagan years were good economic years though.

patteeu
03-25-2008, 12:04 PM
BTW, I believe the bill that undid the cuts a year later was the 1981 Omnibus Budget Reconciliation Act.

It didn't undo the cuts. It included some unrelated tax increases, but the rate cuts of the previous year were untouched. Most of the tax increases were not related to income so your attempt to pretend that the increases would have a reverse impact on income-generating activities (i.e. the choice between work and leisure) is woefully misplaced.

Edit: I think you've got the wrong measure anyway because I believe the tax increases occurred in 1982.

BucEyedPea
03-25-2008, 12:10 PM
Sure he did. The idea that people will replace work with leisure as the after-tax reward for additional work is diminished, (i.e. the "essential truth" behind the Laffer Curve) predates both Laffer and Mises.
My point, which you ignore because you want to twist things around to suit your antagonism, is that this is only part of the essential truth so it's a half-truth. And this is why you haven't understand another pov on this.

I've read the articles on Mises on this and they do not take the stand you claim they do. They're opposed to income taxation period, all of it as a drag on production, as well as on savings. See the nuance in that sentence? If you had said it matched some points that Mises made I'd have no problem with that. Instead you claimed he spefically endorsed the "essential truth"of the LC, implying him to be in the SS camp. He is not. And yes there is a subtle difference.

The Laffer Curve also addresses the best point to tax so the govt can have revenue. That's a key part that cannot be separated as part of it's essential truth, otherwise why have it? That's exactly what Miseans criticize about it. You never clarified earlier what you felt the essential truth was. You like to leave out part of the whole to make it sound different ignoring that we said it had some merit.

But it's still a tool for economic central management for the sake of BIG govt. You're still stuck in the big govt central management mold. These guys diss the Laffer Curve for those reasons too. I only put Rothbard's statements up to show what a Misean pov really looked like. It was never my intention to argue stats or validity but to correct your statement about Mises and laugh at it as a big govt tool because it doesn't do diddly-squat about real cuts in spending. It's used to bolster the welfare state. Again, my purpose in citing Rothbard's was not to show whether or not his predicitions were right or wrong, but simply to show you a real Misean viewpoint. You just missed the nuance, over your head and read more into everything I said, even once clarified, to suit your antagonistic tone, ego and to pick a fight. You're an angry man pat. ( back atcha for getting personal and snarky)

BucEyedPea
03-25-2008, 12:13 PM
It didn't undo the cuts. It included some unrelated tax increases, but the rate cuts of the previous year were untouched. Most of the tax increases were not related to income so your attempt to pretend that the increases would have a reverse impact on income-generating activities (i.e. the choice between work and leisure) is woefully misplaced.

Edit: I think you've got the wrong measure anyway because I believe the tax increases occurred in 1982.

It was the largest increase in taxes as a lump sum total in the history of this republic. It was outdone later by Bush Sr.

patteeu
03-25-2008, 12:48 PM
My point, which you ignore because you want to twist things around to suit your antagonism, is that this is only part of the essential truth so it's a half-truth. And this is why you haven't understand another pov on this.

I've read the articles on Mises on this and they do not take the stand you claim they do. They're opposed to income taxation period, all of it as a drag on production, as well as on savings. See the nuance in that sentence? If you had said it matched some points that Mises made I'd have no problem with that. Instead you claimed he spefically endorsed the "essential truth"of the LC, implying him to be in the SS camp. He is not. And yes there is a subtle difference.

The Laffer Curve also addresses the best point to tax so the govt can have revenue. That's a key part that cannot be separated as part of it's essential truth, otherwise why have it? That's exactly what Miseans criticize about it. You never clarified earlier what you felt the essential truth was. You like to leave out part of the whole to make it sound different ignoring that we said it had some merit.

But it's still a tool for economic central management for the sake of BIG govt. You're still stuck in the big govt central management mold. These guys diss the Laffer Curve for those reasons too. I only put Rothbard's statements up to show what a Misean pov really looked like. It was never my intention to argue stats or validity but to correct your statement about Mises and laugh at it as a big govt tool because it doesn't do diddly-squat about real cuts in spending. It's used to bolster the welfare state. Again, my purpose in citing Rothbard's was not to show whether or not his predicitions were right or wrong, but simply to show you a real Misean viewpoint. You just missed the nuance, over your head and read more into everything I said, even once clarified, to suit your antagonistic tone, ego and to pick a fight. You're an angry man pat. ( back atcha for getting personal and snarky)

I described the "essential truth" of the Laffer Curve in post #100. I assume you just missed it. You'll note that a part of that essential truth is indeed that the curve indicates a theoretical optimum point for maximum revenue. That doesn't mean that the curve argues in favor of a tax policy that optimizes revenue (which is your errant argument). It is neutral on that point.

patteeu
03-25-2008, 12:52 PM
It was the largest increase in taxes as a lump sum total in the history of this republic. It was outdone later by Bush Sr.

Despite having it explained to you twice, you're still ignoring that it wasn't the kind of tax increase addressed directly by the Laffer Curve. The marginal income tax rates were largely if not completely unaffected by the increase. You're not much of a student of economics (at least not tax policy) if you don't understand this basic concept.

BucEyedPea
03-25-2008, 01:06 PM
Legerdemain

We're not arguing the same thing....but carry on tilting at windmills.

patteeu
03-25-2008, 02:01 PM
Legerdemain

We're not arguing the same thing....but carry on tilting at windmills.

Yes, you were arguing the wrong point the whole time. I kept trying to point that out to you. I'm happy to see this resolved.

wazu
03-25-2008, 02:13 PM
Placing full blame on a president for budget imbalances because he doesn't simply shut down government by vetoing nonbalanced Congressional budgets is ridiculous unless you assume that a balanced budget is the first priority of government, which IMO is ludicrous.

It should always be the first priority. In fact it should be made illegal to pass a budget that is not balanced. Deficit spending is irresponsible and immoral, and is the greatest threat to the continued prosperity of our nation.

BucEyedPea
03-25-2008, 02:16 PM
Yes, you were arguing the wrong point the whole time. I kept trying to point that out to you. I'm happy to see this resolved.

That's just it, I wasn't trying to argue much of anything. You just wanted an argument and had to bait me on my opinion that I laugh at this curve for revenue enhancement for the state and that Mises doesn't say EXACTLY what you say. Ya' know kinda where and how the details fall that shade it differently.
But I see your competitive lawyeresque ego is still operating here. There's was nothing ever to win, pat. Just a clarification was being made was all.

Continue tilting at those windmills though.

patteeu
03-25-2008, 02:25 PM
It should always be the first priority. In fact it should be made illegal to pass a budget that is not balanced. Deficit spending is irresponsible and immoral, and is the greatest threat to the continued prosperity of our nation.

We'll have to agree to disagree on that one.

patteeu
03-25-2008, 02:32 PM
That's just it, I wasn't trying to argue much of anything. You just wanted an argument and had to bait me on my opinion that I laugh at this curve for revenue enhancement for the state and that Mises doesn't say EXACTLY what you say. Ya' know kinda where and how the details fall that shade it differently.
But I see your competitive lawyeresque ego is still operating here. There's was nothing ever to win, pat. Just a clarification was being made was all.

Continue tilting at those windmills though.

This is how I see what happened:

1. I posted the Laffer curve for the purpose of illustrating a pretty noncontroversial point that alnorth, amnorix, you, and a few others have all accepted either by word or by deed.

2. You apparently presumed that I was trying to make a different point, disparaged the curve without being specific, and got your back up because I mentioned Mises.

3. I explained the noncontroversial idea behind the curve on numerous occasions but you continued to ignore my explanations and object to the curve because of your misplaced idea that the way some people use the curve is equivalent to the noncontroversial idea behind the curve itself.

4. You've finally realized that you missed my point all along which means we're all good now. I see no need for either of us to be competitive now. We've reached an understanding.

BucEyedPea
03-25-2008, 02:37 PM
You never quit do you. You don't know when to end something.
I'm not interested in carrying on with this.