Originally Posted by The Mad Crapper
Let's fry some more moonbat brain...
The Folly of Soaking the Rich
July 3, 2011 6:50 P.M. By Mario Loyola
The chart Andrew Stiles referred to Friday (from an earlier post by Veronique de Rugy) shows only the start of how counterproductive it is to increase taxes on the wealthy. As a result of lower tax rates on the top income earners, not only do they pay a much larger share of all taxes, but they pay much more taxes total — and revenue to the government has increased. This is because lowering taxes on the rich creates more rich people and richer rich people. The federal government gets much more revenue if you impose a 40 percent tax on a large number of very wealthy millionaires than if you impose a 70 percent tax on a small number of less wealthy millionaires.
Every tax has a “revenue-maximizing” point well short of 100 percent. If a tax is set higher than its “revenue-maximizing” point, overall tax revenue to the government will decrease. This is the basic theory behind the Laffer Curve, which states that when taxes are zero percent, revenue to the government is (obviously) zero, but when taxes are 100 percent, revenue to the government is also zero, because by taxing all the income of a particular group of people, you kill all economic activity in that group, so you’re left with nothing to tax. Between those two extremes is a curve whereby revenue to the government rises as you increase taxes from zero percent, but begins to fall as you approach 100 percent taxation — that’s the Laffer Curve.
Arthur Laffer and Ford Scudder explore this phenomenon at length in their brilliant series The Onslaught from the Left. In keeping with what Veronique pointed out, they write, in Part II of the series:
In the year Ronald Reagan took office (1981) the top 1% of income earners as reflected by the Adjusted Gross Income of all tax filers paid 17.58 % of all federal income taxes. Twenty-five years later, in 2005 the top 1% paid 39.8% of all income taxes, representing a greater than doubling of the share of tax payments made by this group.
But even more to the point, from 1981 to 2005 the income taxes paid by the top 1% rose from 1.59% of GDP to 2.96% of GDP. In addition to the huge rise in the percent of GDP paid in income taxes by the top 1% of income earners and the more than doubling of the share of taxes paid by this group was the huge absolute increase in real taxes (2005 dollars using the GDP price deflator [in other words, adjusting for inflation - ML]) from 1981 through 2005. In 1981 total tax payments from from the richest 1% were $98.84 billion, while in 2005 the top 1% paid $368.13 billion in taxes; that’s a 288% increase in 25 years. In rough numbers, that means that each of the richest 1% of filers in 1981 paid a little over $100,000 in 2005 dollars, while in 2005 each filer on average paid over $288,000. And remember that’s inflation-adjusted dollars.”
This astonishing statistic is explained by a simple fact. As a result of reducing taxes on the rich, the rich got much richer — so much so that they wound up paying nearly four times as much total tax (and nearly three times as much tax per rich person) as when taxes were higher.
This also reveals the truth behind the increased income inequality that liberals love to cite as their chief evidence against supply-side economics. In fact, as Laffer explains in Part I of the Onslaught from the Left series, the poor have gotten richer — just not as quickly as the rich have. “The increasingly unequal distribution of income during the era of supply-side economics has resulted from the poor increasing their income at a rate that has not kept pace with the phenomenal gains in income the rich have experienced — not from the poor getting poorer.” He goes on to show that in fact, lower taxes rates have led both to higher income among the bottom 50 percent of income earners and lower total taxes paid by that group.
Most important of all, of course, is the fact that when the rich get richer, they invest more money in the economy, thereby stimulating economic growth. Democrats generally can’t stomach the rich getting richer, even when it means everyone is better off. But you’d think they would at least propose tax policy that increases government revenue. Alas, they so want to punish the rich that they are even willing to lower government revenue in the process.
— Mario Loyola is director of the Center for Tenth Amendment Studies at the Texas Public Policy Foundation, the new of the Laffer Center for Supply-Side Economics.
Barack Hussein Obama!
Mmmmmmmmmm mmmmmmmm mmmmmmmmmmmmmm!
The Senate finally passed a budget:
it's chock full of the standard moonbat BS.
WASHINGTON — After a grueling, all-night debate that ended close to 5 a.m., the Senate on Saturday adopted its first budget in four years, a $3.7 trillion blueprint for 2014 that would fast-track passage of tax increases, trim spending gingerly and leave the government still deeply in the debt a decade from now.
The 50-49 vote sets up contentious — and potentially fruitless — negotiations with the Republican-dominated House in April to reconcile two vastly different plans for dealing with the nation’s economic and budgetary problems. No Republicans voted for the Senate plan on Saturday, and four Democrats — Mark Pryor of Arkansas, Kay Hagan of North Carolina, Mark Begich of Alaska and Max Baucus of Montana — also opposed it. All four are Red State Democrats up for re-election in 2014.
“The Senate has passed a budget,” Senator Patty Murray of Washington, the Senate Budget Committee chairwoman, declared at 4:56 a.m. Saturday.
The House plan ostensibly brings the government’s taxes and spending into balance by 2023 with cuts to domestic spending even below the automatic “sequestration” levels now roiling federal programs, and it orders significant changes to Medicare and the tax code.
The Senate plan, in contrast, includes $100 billion in upfront infrastructure spending to stimulate the economy and calls for special fast-track rules to overhaul the tax code and raise $975 billion over 10 years through legislation that could not be filibustered. Even with that tax increase and prescribed spending cuts, the Senate plan would leave the government with a $566 billion deficit in 10 years, and $5.2 trillion in additional debt over that time.
“The first priority of the Senate budget is creating jobs and economic growth from the middle out, not the top down,” Ms. Murray, the chairwoman of the Budget Committee, said. “With an unemployment rate than remains stubbornly high, and a middle class that has seen their wages stagnate for far too long, we simply cannot afford any threats to our fragile recovery.”
Republicans were dismissive of the Democrats’ priorities.
“Honest people can disagree on policy, but where there can be no honest disagreement is the need to change our nation’s debt course. The singular truth that no one can escape is that the House budget changes our debt course while the Senate budget does not,” said Senator Jeff Sessions of Alabama, the Budget Committee’s ranking Republican.