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Old 07-08-2011, 05:25 PM  
The Mad Crapper The Mad Crapper is offline
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"Soak the rich" is pure folly

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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.

http://www.nationalreview.com/corner...h-mario-loyola

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Old 07-08-2011, 05:47 PM   #2
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Old 07-08-2011, 05:53 PM   #3
The Mad Crapper The Mad Crapper is offline
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Thank you, Newt Gingrich.
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Old 07-08-2011, 06:10 PM   #4
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Thank you, Newt Gingrich.
Oh, no,,,sorry, we were going for 'Compared to Obama, Clinton was the best president in history'. Thanks for playing.
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Old 07-08-2011, 06:24 PM   #5
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Thank you, Newt Gingrich.
Computer industry blew up. Even Obama couldn't have screwed that up. Well he probablly would have though.
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Old 07-08-2011, 06:43 PM   #6
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Yes, everyone knows the economy was in freefall when GWB became prez...And he absorbed that blow, as well as the unprecedented terrorist act known as 911, and still turned the economy around. Then in 2007 the Dems took over Congress and the slide began, followed by the election of Prince Barack and here we are today with the economy swirling 'round the toilet as the Prince approaches the end of his term...
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Old 07-08-2011, 07:08 PM   #7
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Originally Posted by mikey23545 View Post
Yes, everyone knows the economy was in freefall when GWB became prez...And he absorbed that blow, as well as the unprecedented terrorist act known as 911, and still turned the economy around. Then in 2007 the Dems took over Congress and the slide began, followed by the election of Prince Barack and here we are today with the economy swirling 'round the toilet as the Prince approaches the end of his term...
The whole world knows this is bullshit.
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Old 07-08-2011, 07:51 PM   #8
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Originally Posted by The Mad Crapper View Post
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.
The Laffer Curve is definitely a solid concept, and it is stupid for the left to try to dismiss it altogether.

However, it is also tough to credibly argue that we are currently to the right of the inflection point of the curve, as we probably were during the first years of Reagan. The corollary to that last sentence I bolded, which a lot of people don't want to talk about, is if a tax is set lower than its "revenue-maximizing"point, overall tax revenue will decrease as well.

The top earners are paying some of the lowest marginal income tax rates in modern US history. Given their much greater reliance on capital gains taxes which receive very favorable tax treatment, and proportionately less on income, the very top super-wealthy earners pay a smaller overall effective tax rate than the merely "pretty wealthy" workaholic professionals who rely on a 50-60 hour a week high 6 figure income.
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Old 07-08-2011, 07:56 PM   #9
The Mad Crapper The Mad Crapper is offline
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Oh, no,,,sorry, we were going for 'Compared to Obama, Clinton was the best president in history'. Thanks for playing.
At least Clinton knew how to play the game, but B.O. is a cradle to present Marxist indoctrinated sot.

I think what kept Clinton on an even keel was his desire for pussy (however disgusting and trailer park his tastes were) whereas Obama is a closet homo and he just has nowhere to channel all of his pent up sexual frustrations.
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Old 07-08-2011, 07:59 PM   #10
petegz28 petegz28 is offline
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hmmm, yep...Obama has the worst showing so far
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Old 07-08-2011, 08:19 PM   #11
alnorth alnorth is online now
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A few relevant charts:



So, a guy making over 10 million generally pays a lower effective rate than a guy making $750,000, due to capital gains. (which historically has generally been somewhere between 20% and 28% until GWB was elected)

Also:



(That is the top marginal income tax rate)

Compared to:



I'm not suggesting that we hike the top rate back over 50% like it was before Reagan, but the 1950's and 60's didn't seem that terrible.

Listening to the right fringe, you'd think that if the top tax rate goes up just ~3% back to where it was during Clinton, we'd have a global meltdown and unemployment over 25%. There's obviously other things going on with jobs than just the top marginal rate.
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Old 07-08-2011, 08:30 PM   #12
petegz28 petegz28 is offline
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Originally Posted by alnorth View Post
A few relevant charts:



So, a guy making over 10 million generally pays a lower effective rate than a guy making $750,000, due to capital gains. (which historically has generally been somewhere between 20% and 28% until GWB was elected)

Also:



(That is the top marginal income tax rate)

Compared to:



I'm not suggesting that we hike the top rate back over 50% like it was before Reagan, but the 1950's and 60's didn't seem that terrible.

Listening to the right fringe, you'd think that if the top tax rate goes up just ~3% back to where it was during Clinton, we'd have a global meltdown and unemployment over 25%. There's obviously other things going on with jobs than just the top marginal rate.
Alnorth, while I have other reasons I would like to see the CG tax raised, the fact of the matter is those at the high end who make a lot of their money from CG's are the one's who are investing and taking chances and making it possible to have jobs in the first place.

The irony of it all is Obama wants to run up the debt so he can "invest" in the economy to create jobs and tax those in the private sector higher for doing the same. The thing is those in the private sector that invest "their" monies and not tax payer monies are the one's who creat the lasting jobs.
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Old 07-08-2011, 08:38 PM   #13
The Mad Crapper The Mad Crapper is offline
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I'm not suggesting that we hike the top rate back over 50% like it was before Reagan, but the 1950's and 60's didn't seem that terrible.
Well yeah, they weren't terrible because we didn't have millions of Mexicans living here illegally, and black illigitimacy was under 21%.

White illigitimacy was under 10%.
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Old 07-08-2011, 08:41 PM   #14
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Originally Posted by petegz28 View Post
Alnorth, while I have other reasons I would like to see the CG tax raised, the fact of the matter is those at the high end who make a lot of their money from CG's are the one's who are investing and taking chances and making it possible to have jobs in the first place.

The irony of it all is Obama wants to run up the debt so he can "invest" in the economy to create jobs and tax those in the private sector higher for doing the same. The thing is those in the private sector that invest "their" monies and not tax payer monies are the one's who creat the lasting jobs.
I agree that we should not raise capital gains until unemployment is under.... say, 8% at least? Preferably lower than 7% and we are in a clear recovery. (though generally speaking, a rate of 15% is just too low, barring the worst recession in 100 years)

All I'm arguing is that we are likely on the left side of the Laffer curve for income tax rates. If the top rates go up a few percent, its not going to hurt the country, and we need the money. The debt and deficit is just too high to solve with politically-impossible cuts, and even steep cuts are probably not going to happen if the Dems aren't thrown a bone here. They'd sooner default and campaign in 2012 on class warfare. (just as some in the GOP may possibly prefer to default rather than allow a few rich people take an almost unnoticably small hit on personal income taxes)
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Old 07-08-2011, 08:43 PM   #15
alnorth alnorth is online now
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Well yeah, they weren't terrible because we didn't have millions of Mexicans living here illegally, and black illigitimacy was under 21%.

White illigitimacy was under 10%.
True enough. I'm just saying the equation has a few more variables than just "top tax rate greater than 35% = economic death".
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