The Money Mustache Community
Other => Off Topic => Topic started by: scottish on June 13, 2017, 05:16:45 PM
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Trickle down economics is the hypothesis that by cutting taxes on the rich, they will do things that benefit the economy and society as a whole.
Effused by Democrats (trumped up trickle down economics, I believe she said...), the state of Kansas has just completed a 5 year experiment to determine if trickle-down economics works. According to the Washington Post, the experiment did go as well as it could have. The SCOTUS itself ruled that the funding cuts to education were unconstitutional. The legislature has had enough and they have decided to *reverse* the tax cuts. Republicans reversing tax cuts?
Linky
https://www.washingtonpost.com/opinions/trickle-down-economics-is-a-nightmare-kansas-proved-it/2017/06/12/c2d7aae0-4fa6-11e7-91eb-9611861a988f_story.html?utm_term=.1f1b623e4e36 (https://www.washingtonpost.com/opinions/trickle-down-economics-is-a-nightmare-kansas-proved-it/2017/06/12/c2d7aae0-4fa6-11e7-91eb-9611861a988f_story.html?utm_term=.1f1b623e4e36)
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The whole country tried an experiment to find out if trickle down economics worked. It was called the Reagan-Bush years.
The whole notion was only ever supposed to be a facetious cover story for cutting taxes on the rich. I'm still shocked anytime someone appears to be taking the idea seriously.
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During a discussion, an uncle of mine on FB said "some economists support it." Interested in learning and seeing other opinions I turned to google but could not find any evidence for it on the first two pages. I politely told him as much and asked for a source, I did not get one, and he did not concede the point.
I think the US population may just have seen Ferris Bueller's Day Off with Ben Stein and the "laffer curve" scene one to many times. That and everyone thinks one day they will be go-gillion-ares and then will want low taxes on the rich so best set low taxes on the rich now.
In SimCity cutting taxes can spur some growth but it really does not results in more tax income. The best way to get tax revenue in the game is to either invest in education or get tons of pollution. So there you go :-)
But really if there is good data to support Trickle Down please post a link, I would genuinely like to read it.
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Yeah, started with Reagan here and Thatcher in the UK. Total nonsense. The marginal propensity to consume and/or invest for those dollars for the rich is less than the mpc for for those with low disposable income.
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What will boost the economy is giving everyone $20k that phases out as you earn more.
Then you can also eliminate a bunch of social programs and get rid of the "people scamming the system" arguments. You can also get rid of the "government doesn't know how to spend money" since people will get it and spend it.
The poorest will spend all of it, the rich won't get any, but that's ok, they wouldn't spend it anyway.
UBI baby, it has to come.
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The poorest will spend all of it, the rich won't get any, but that's ok, they wouldn't spend it anyway.
When you say it that way, the obvious solution for rich people is to figure out how to sell whatever all the poor people will be buying.
For example, if everyone is going to get $20k, how many new cars will hit the market at $19,999?
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Car payments. It's not the sticker price on the car, it's the monthly car payment that will be tuned to the basic income.
Wow, it boggles the mind. How many ways could you pack recurring fees into $1666.67/month? Cell phones, cars, tablets, watches, media subscriptions.
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The poorest will spend all of it, the rich won't get any, but that's ok, they wouldn't spend it anyway.
When you say it that way, the obvious solution for rich people is to figure out how to sell whatever all the poor people will be buying.
For example, if everyone is going to get $20k, how many new cars will hit the market at $19,999?
Yeah, most of them will blow all of their UBI, but that's why you have higher taxes on the rich to keep the flywheel going. Productivity gains will eventually make this necessary.
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During a discussion, an uncle of mine on FB said "some economists support it." Interested in learning and seeing other opinions I turned to google but could not find any evidence for it on the first two pages. I politely told him as much and asked for a source, I did not get one, and he did not concede the point.
I think the US population may just have seen Ferris Bueller's Day Off with Ben Stein and the "laffer curve" scene one to many times. That and everyone thinks one day they will be go-gillion-ares and then will want low taxes on the rich so best set low taxes on the rich now.
In SimCity cutting taxes can spur some growth but it really does not results in more tax income. The best way to get tax revenue in the game is to either invest in education or get tons of pollution. So there you go :-)
But really if there is good data to support Trickle Down please post a link, I would genuinely like to read it.
"Support" kind of implies a value judgment independent on positive effects. But, you're not going to find anyone supporting "trickle-down" economics, because "trickle-down" specifically is a rhetorical attack by left-of-center, specifically in the last few years.
Proponents will typically call their policies "supply-side." There are a couple pieces in here, but the three big ones (and they are distinct):
1. High government debt/deficit crowds out private investment.
2. High taxes discourage work/savings/investment.
3. Government spending inefficiently targets well-being.
These are all different. A lot different. You can totally think that taxes don't do a thing to discourage work, but that the government is still incompetent so taxes are essentially wasted. You also can think high deficits crowd out spending and be opposed to deficits and debt, but not be opposed to government spending per se. You can also think deficits don't matter, that government does a good job of spending money, but taxes are a big burden to growth.
Basically all three are different, you can pick and choose. Strong orthodox supply-siders believe all three.
#2 seems to be the most hotly contested, so here's a quick article that might provide some background:
http://voxeu.org/article/income-tax-and-labour-supply-let-s-acknowledge-what-we-don-t-know
Reading the recent empirical literature, I have been struck to find that while authors may differ on the magnitude of labour-supply elasticities, they largely agree on the sign. The consensus is that increasing tax rates usually reduces work effort.
Since labor is incorrectly spelled with a "u," you can probably guess this isn't some right-wing American source saying it.
This guy goes on to use some labor-leisure preferences to sorta say it's still undetermined, but my reading is that he's an outlier: consensus is tax increases discourage work. It's not at all clear how much, or among which groups. For example, women tend to increase their work hours more when taxes are cut/wages are higher. There's a lot of substitution effect there.
Even Sweden used a dynamic scoring (IE, tax cuts boost economic growth) when they did their tax reforms 20+ years ago.
The specific claim "tax cuts pay for themselves" is total bollocks. I don't know ANY serious economist who actually believes that. The Kansas situation doesn't really surprise anyone.
If you want to see the supply-side thought on Kansas, look here: https://www.forbes.com/sites/rexsinquefield/2016/07/18/kansas-an-unsung-hero-for-economic-growth/#2a0d003d58f4
Significantly, every year since the tax cuts were implemented, Kansas has surpassed the state record for new business formations. When we consider that startups have decreased nationwide since the Great Recession of 2008, this achievement is particularly remarkable. What’s more, the Kansas unemployment rate stands at 3.7% – the lowest the state has seen since 2001, and well below the national average of 5.5%.
I think economists generally think capital is more sensitive to taxes than labor but I'm less confident on that.
Also, keep in mind that even if you think tax cuts might raise GDP to some extent, that doesn't mean you'll think tax cuts/spending cuts are a good idea. If we cut taxes by $700 billion initially, raised GDP by $1 trillion, and got $200 billion back, we'd still have to cut Medicare by 5/7. Most people would think that's a bad trade-off.
I'm personally skeptical of broad-based labor tax cuts and think taxes should probably increase, given the pressure on public finances. But I'm also highly skeptical that any of the proposed social programs that are left-versions of voodoo economics (free college, single payer) will perform any better.
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I think the US population may just have seen Ferris Bueller's Day Off with Ben Stein and the "laffer curve" scene one to many times. That and everyone thinks one day they will be go-gillion-ares and then will want low taxes on the rich so best set low taxes on the rich now.
I think the reason the theory still exists is because poor people look at rich people and think "they must be doing something right, so if they say this is the best way, then I believe them because I want to be rich". Way back when someone said "if you're not a democrat at age 20, you have no heart; If you're not a republican at age 35, you have no brain." I personally believe that this was the most effective campaign in recruiting people who do not think for themselves in the past 50 years of politics. Young people age believing at some point when they get serious about their finances, that they should start re-thinking their economic beliefs.
Just my opinion.
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During a discussion, an uncle of mine on FB said "some economists support it." Interested in learning and seeing other opinions I turned to google but could not find any evidence for it on the first two pages. I politely told him as much and asked for a source, I did not get one, and he did not concede the point.
I think the US population may just have seen Ferris Bueller's Day Off with Ben Stein and the "laffer curve" scene one to many times. That and everyone thinks one day they will be go-gillion-ares and then will want low taxes on the rich so best set low taxes on the rich now.
In SimCity cutting taxes can spur some growth but it really does not results in more tax income. The best way to get tax revenue in the game is to either invest in education or get tons of pollution. So there you go :-)
But really if there is good data to support Trickle Down please post a link, I would genuinely like to read it.
"Support" kind of implies a value judgment independent on positive effects. But, you're not going to find anyone supporting "trickle-down" economics, because "trickle-down" specifically is a rhetorical attack by left-of-center, specifically in the last few years.
Proponents will typically call their policies "supply-side." There are a couple pieces in here, but the three big ones (and they are distinct):
1. High government debt/deficit crowds out private investment.
2. High taxes discourage work/savings/investment.
3. Government spending inefficiently targets well-being.
These are all different. A lot different. You can totally think that taxes don't do a thing to discourage work, but that the government is still incompetent so taxes are essentially wasted. You also can think high deficits crowd out spending and be opposed to deficits and debt, but not be opposed to government spending per se. You can also think deficits don't matter, that government does a good job of spending money, but taxes are a big burden to growth.
Basically all three are different, you can pick and choose. Strong orthodox supply-siders believe all three.
#2 seems to be the most hotly contested, so here's a quick article that might provide some background:
http://voxeu.org/article/income-tax-and-labour-supply-let-s-acknowledge-what-we-don-t-know
Reading the recent empirical literature, I have been struck to find that while authors may differ on the magnitude of labour-supply elasticities, they largely agree on the sign. The consensus is that increasing tax rates usually reduces work effort.
Since labor is incorrectly spelled with a "u," you can probably guess this isn't some right-wing American source saying it.
This guy goes on to use some labor-leisure preferences to sorta say it's still undetermined, but my reading is that he's an outlier: consensus is tax increases discourage work. It's not at all clear how much, or among which groups. For example, women tend to increase their work hours more when taxes are cut/wages are higher. There's a lot of substitution effect there.
Even Sweden used a dynamic scoring (IE, tax cuts boost economic growth) when they did their tax reforms 20+ years ago.
The specific claim "tax cuts pay for themselves" is total bollocks. I don't know ANY serious economist who actually believes that. The Kansas situation doesn't really surprise anyone.
If you want to see the supply-side thought on Kansas, look here: https://www.forbes.com/sites/rexsinquefield/2016/07/18/kansas-an-unsung-hero-for-economic-growth/#2a0d003d58f4
Significantly, every year since the tax cuts were implemented, Kansas has surpassed the state record for new business formations. When we consider that startups have decreased nationwide since the Great Recession of 2008, this achievement is particularly remarkable. What’s more, the Kansas unemployment rate stands at 3.7% – the lowest the state has seen since 2001, and well below the national average of 5.5%.
I think economists generally think capital is more sensitive to taxes than labor but I'm less confident on that.
Also, keep in mind that even if you think tax cuts might raise GDP to some extent, that doesn't mean you'll think tax cuts/spending cuts are a good idea. If we cut taxes by $700 billion initially, raised GDP by $1 trillion, and got $200 billion back, we'd still have to cut Medicare by 5/7. Most people would think that's a bad trade-off.
I'm personally skeptical of broad-based labor tax cuts and think taxes should probably increase, given the pressure on public finances. But I'm also highly skeptical that any of the proposed social programs that are left-versions of voodoo economics (free college, single payer) will perform any better.
That sounds like a lot of sensible economics combined with a couple of American myths.
The big one is about single payer health care. It seems to be pretty generally accepted that single payer health care works better than the US system in western Europe and Canada. For definitions of better I suppose. Up here the wealthy can always go to the states if the single payer system doesn't meet their needs. For the other 99%, single payer works out better.
But I have to ask, are you American or English? Labor is the American spelling, but bollocks is usually an English expression.
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Here is a fiscal conservatives economists view of it.
"The phrase “trickle down” often comes up in discussions of tax policies. Historically, tax revenues have in a number of instances gone up when tax rates have been reduced. But any proposal by economists or others to cut tax rates, including reducing the tax rates on higher incomes or on capital gains, can lead to accusations that those making such proposals must believe that benefits should be given to the wealthy in general or to business in particular, in order that these benefits will eventually “trickle down” to the masses of ordinary people. But no recognized economist of any school of thought has ever had any such theory or made any such proposal. It is a straw man. It cannot be found in even the most voluminous and learned histories of economic theories.
What is sought by those who advocate lower rates of taxation or other reductions of government’s role in the economy is not the transfer of existing wealth to higher income earners or businesses but the creation of additional wealth when businesses are less hampered by government controls or by increasing government appropriation of that additional wealth under steeply progressive taxation laws. Whatever the merits or demerits of this view, this is the argument that is made – and which is not confronted, but evaded, by talk of a non-existent “trickle-down” theory." -Thomas Sowell’s book “Basic Economics: A Common Sense Guide to the Economy“:
So basically "trickle-down" is just political rhetoric mis-characterizing actual economic goals to make a potentially complex balancing act seem simple and palatable to the public.
The question is growth being hampered by bad tax policy is an open question. Wealth is not however being simply transferred from the rich to the poor.
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Wealth is not however being simply transferred from the rich to the poor.
If you're literally cutting taxes on the upper income bracket, how is that not transferring wealth to the rich?
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Wealth is not however being simply transferred from the rich to the poor.
If you're literally cutting taxes on the upper income bracket, how is that not transferring wealth to the rich?
I read in the Washington Post the other day that, ironically, the restoration of the previous tax rates in Kansas (prior to the predictably disastrous tax reduction "experiment") will hit poor people there harder than the rich. Everyone's rates will go up, but the rates for the poor will go up significantly more than for the rich. It was somewhere along the lines of the poor paying 6% more, while the rich would pay about 2% more. At least, hopefully, those people will get some basic services restored, like a reasonable education (the tax cuts had destroyed the public schools system in Kansas along with other public services).
Even though trickle-down- or supply-side- or voodoo- or whatever-you-want-to-call-it-economics has proven to be a complete failure the previous 20 times it's been tried, I'm sure the 21st time the results will be different...
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Wealth is not however being simply transferred from the rich to the poor.
If you're literally cutting taxes on the upper income bracket, how is that not transferring wealth to the rich?
I have a fundamental and philosophical problem calling "not taking" money from someone "transferring it" to them. If you take $3 from my wallet instead of $5, you didn't transfer me $2.
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Wealth is not however being simply transferred from the rich to the poor.
If you're literally cutting taxes on the upper income bracket, how is that not transferring wealth to the rich?
I have a fundamental and philosophical problem calling "not taking" money from someone "transferring it" to them. If you take $3 from my wallet instead of $5, you didn't transfer me $2.
Agreed, cutting taxes on group X does is not the same as transferring wealth from all groups not X (unless, of course, those tax cuts are paid for by increasing taxes on the not X groups).
That being said, I still believe, and studies show, the most effective way of helping the poor IS to take money from the rich and give it directly to them in cash. Not through social programs and other mechanisms.
Here's an article that references many studies and trials on social program (food for the poor and others) vs straight up giving them cash:
https://www.theatlantic.com/international/archive/2015/09/welfare-reform-direct-cash-poor/407236/ (https://www.theatlantic.com/international/archive/2015/09/welfare-reform-direct-cash-poor/407236/)
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Wealth is not however being simply transferred from the rich to the poor.
If you're literally cutting taxes on the upper income bracket, how is that not transferring wealth to the rich?
I have a fundamental and philosophical problem calling "not taking" money from someone "transferring it" to them. If you take $3 from my wallet instead of $5, you didn't transfer me $2.
I'm making a few assumptions based on your very short response, but why is it that the money you are able to receive/extract in our current social and economic system is somehow "fair" or "natural" or "proper"? Everything about our economic system is social in nature, down to money itself. These are data, notations, balancing an incredibly diverse group of people, processes, businesses, interests, values, etc. Money represents work and value, but it also represents so much more, and is influenced and created and destroyed and flows by the workings of so many different parts of our social system. Just because you get paid $X or make $X through a business, invention, or idea, doesn't mean the rest of society has absolutely no continued claim or power over it. Money belongs to all of us in some sense, it's not some deserted (or maybe not so deserted) island that you can stake a claim to and declare yourself sole principality over. And vice versa, most of us would be abhorrent of a system that ceded complete control over to "everyone else". It's called balance, and while society and economy are constant works-in-progress, I find the idea that money is completely sacrosanct as useless and detrimental as it's twin, which proclaims money arbitrary.
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Wealth is not however being simply transferred from the rich to the poor.
If you're literally cutting taxes on the upper income bracket, how is that not transferring wealth to the rich?
I have a fundamental and philosophical problem calling "not taking" money from someone "transferring it" to them. If you take $3 from my wallet instead of $5, you didn't transfer me $2.
Taxes aren't taking, . They are the price of an all access pass to American services.
Instead of thinking about lightening your wallet, think of buying a movie ticket. Everyone pays for one, but then the republicans give the theater owner a 50% refund on his. His ticket is suddenly cheaper, plus he's the one already getting rich from everyone else's ticket purchases.
This is essentially the argument behind tax cuts for the wealthy. They argue that by making the theater owner richer, he'll make the theater nicer for everyone and then people will want to but more tickets. Which maybe works in situations where the theater is really shitty (and the owner is childless and benevolent), but a more effective way to increase the number of tickets sold is to give that money to the customers who buy the tickets, instead of to the theater owner who sells them.
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Wealth is not however being simply transferred from the rich to the poor.
If you're literally cutting taxes on the upper income bracket, how is that not transferring wealth to the rich?
I have a fundamental and philosophical problem calling "not taking" money from someone "transferring it" to them. If you take $3 from my wallet instead of $5, you didn't transfer me $2.
Taxes aren't taking, . They are the price of an all access pass to American services.
They are the price, however they are mandatory, and we only have so much say in what the fee is.
Instead of thinking about lightening your wallet, think of buying a movie ticket. Everyone pays for one
Ahh...no, they don't. About 47% (famously according to Mitt) don't. (They pay for SSI/FICA but that's more of a standalone program; they also pay sales tax, indirect property tax, etc, but these are not funding sources for the US Federal gov).
but then the republicans give the theater owner a 50% refund on his. His ticket is suddenly cheaper, plus he's the one already getting rich from everyone else's ticket purchases.
Again, no; his ticket is generally more expensive and he is generally one of the few paying. He may get a bigger discount, but he is still paying far more for his ticket.
This is essentially the argument behind tax cuts for the wealthy. They argue that by making the theater owner richer, he'll make the theater nicer for everyone and then people will want to but more tickets. Which maybe works in situations where the theater is really shitty (and the owner is childless and benevolent), but a more effective way to increase the number of tickets sold is to give that money to the customers who buy the tickets, instead of to the theater owner who sells them.
The problem is, how do you give a discount on a free ticket? At some point you are simply advocating taking from the rich and giving to the poor and working poor. That may be advantageous for the poor, but is it advantageous for the country?
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That being said, I still believe, and studies show, the most effective way of helping the poor IS to take money from the rich and give it directly to them in cash
I won't argue with that statement, however I will quibble with the bolded; is that the question we are looking to answer? Is that what's best for the country and society or just for the poor? It seems like a one-dimensional answer to a one-dimensional question that exists in a multi-dimensional system.
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I think people who are opposed to high taxes on the rich should be in favour of at least a living wage for everyone, and aid for those who can't get a job. It's crazy that in a wealthy country like the states waitresses can be paid 2.13 an hour and have to make the rest up in tips, and that is completely legal. The system is not fair, not to the poor at least. At federal minimum wage in the US, working full time, you only gross 15,080 a year. In Canada, it's 22K. No matter how frugal you are, it's almost impossible to live and save on that wage for one person, let alone someone with dependents. This whole argument about rich people needing tax breaks because they give oh so much to society and uncle sam already pisses me off. From my perspective, someone making 180K a year literally gets a years salary of minimum wage every month and is way past worrying about meeting their basic needs, so what are they complaining about? They do not have to choose between heating and food, they are worrying about where to jet off on vacation next. The system needs to be fixed so that people working an honest job can earn a living. Then we can worry about the rich people.
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That being said, I still believe, and studies show, the most effective way of helping the poor IS to take money from the rich and give it directly to them in cash
I won't argue with that statement, however I will quibble with the bolded; is that the question we are looking to answer? Is that what's best for the country and society or just for the poor? It seems like a one-dimensional answer to a one-dimensional question that exists in a multi-dimensional system.
Meh, I think if we help the people that have the least society benefits overall. Giving a billionaire another 100 million isn't going to help anyone. Giving 100 thousand poor people $1k for food and other necessities will help their lives a lot.
Also, if you read the article I linked, giving money to people who spend it all is good for rich folks too (since they are beneficiaries of people spending money) and the middle since they get jobs.
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A thought to add to the taxes discussion upstream: why do some folks who want to cut taxes and pay down the deficit. still want to keep adding to the defense budget? Because the rich have the most assets, both domestically and abroad, which they would like to protect.
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A thought to add to the taxes discussion upstream: why do some folks who want to cut taxes and pay down the deficit. still want to keep adding to the defense budget? Because the rich have the most assets, both domestically and abroad, which they would like to protect.
Two reasons:
1. Defense is one of the few specifically enumerated powers in the Constitution for the Federal government.
2. It's one of the things that really is not well provided for in most instances by the private sector, and is not done hardly at all by the states (lots of other things are double dipped, state and Fed)
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That being said, I still believe, and studies show, the most effective way of helping the poor IS to take money from the rich and give it directly to them in cash
I won't argue with that statement, however I will quibble with the bolded; is that the question we are looking to answer? Is that what's best for the country and society or just for the poor? It seems like a one-dimensional answer to a one-dimensional question that exists in a multi-dimensional system.
Meh, I think if we help the people that have the least society benefits overall. Giving a billionaire another 100 million isn't going to help anyone. Giving 100 thousand poor people $1k for food and other necessities will help their lives a lot.
Also, if you read the article I linked, giving money to people who spend it all is good for rich folks too (since they are beneficiaries of people spending money) and the middle since they get jobs.
Except that most "tax the rich" strategies are not set at the billionaire level. You want to soak Zuck and Buffet and Gates and the like, knock yourself out. But too often "Tax the rich" strategies extend way too far down, to where Hillary and Bernie think us schlubs making $250k/yr need to be soaked too.
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A thought to add to the taxes discussion upstream: why do some folks who want to cut taxes and pay down the deficit. still want to keep adding to the defense budget? Because the rich have the most assets, both domestically and abroad, which they would like to protect.
I don't think one can argue that the rich aren't, by far, the largest consumers of all types of government spending.
Take this example:
You are Joe Schmoe and work at a warehouse earning $15/hr ($31200/yr), and walk to work because you're too poor for a car, and rent your house because you're too poor for a house and don't own any stock or business because you're too poor to have saved anything and don't fly anywhere because you can't afford plane tickets - you consume virtually no government resources but pay:
$2653 in federal income tax
$550 in california income tax
$1934 in social security (which you are statistically less likely to collect than a rich person because you die earlier)
$452 in medicare (ditto)
Now, rich dividendman works for a tech company and makes $400k/yr.
He owns a car and thus takes advantage of the interstate highway system, uses the state DMV, and all the other government car services. He owns a house and pays $20k interest on his home loan a year, for which he gets a deduction. He flies multiple times a month visiting places and for work, so he is consuming all sorts of airport and DHS services and infrastructure. He works for a tech company that has all sorts of patents, so he's consuming the patent office resources. He travels abroad 4 times a year, and is consuming all the immigration and passport services. He has a $1M portfolio of all these other companies which are getting subsidies and they themselves are consuming government resources. He has his house and rentals in the hills for which the fire department and department of the interior battles wildfires for him - so he consumes those resources. His employer and the stocks he owns utilize the state department and other federal agencies to battle for better trade deals and business investments, etc. etc.
He pays:
$113300 in federal income tax
$36621 in california income tax
$7347 in social security
$7600 in medicare
(assuming he doesn't use any business loopholes, gets all of his income in straight salary AND doesn't deduct anything like mortgage interest)
Now.... is dividendman paying too much for his consumption of government resources? Maybe, but he's definitely using a lot of them.
Is Joe Schmoe paying too much for his consumption of government resources? Definitely - he's consuming none yet still paying!
Except that most "tax the rich" strategies are not set at the billionaire level. You want to soak Zuck and Buffet and Gates and the like, knock yourself out. But too often "Tax the rich" strategies extend way too far down, to where Hillary and Bernie think us schlubs making $250k/yr need to be soaked too.
I agree with you, but if you read my post above I think you'll agree that Joe Schmoe is getting ripped off more than dividendman. But I also agree that dividendman is getting ripped off more than Buffet and the billionaires.
I think there should be many MORE tax brackets.
Keep the current tax brackets but instead of pretending that someone who earns $400k should be taxed at the same rate as someone earning $4M, we can keep being progressive about the taxes all the way up to 90% or so.
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we can keep being progressive about the taxes all the way up to 90% or so.
Philosophically I disagree there should ever be a bracket over 49.9% on earned income. I don't think the government should ever be entitled to half (or more) of something someone earned.
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The top tax bracket in Ontario is currently 54%. I don't mind paying my way. However I do mind when I see the government piddling away my tax dollars on pointless things, while important things are being neglected.
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Kansas did it wrong. It was a trainwreck. They exempted all self-employment income, ordinary income from S-Corps, partnership income, rental income, and farm income.
The theory was that small businesses are job creators. Uh... wut?
If small businesses are job creators, why are we exempting rental income?
If small businesses are job creators, why is there no gross receipts or net profits cap so that we don't exempt large businesses?
It made zero sense. They did too much, too fast and none of the politicians understood what they were voting for. Republicans in Kansas started talking like they were shocked and surprised by the effects of the tax cuts. They called it the "LLC Loophole" because of a common misconception about the plan - when in fact it was neither a Loophole nor did you have to be an LLC to qualify.
As a CPA, I just wanted to bang my head against the wall. Do they seriously not even read these bills before voting on them? The people responsible for Kansas' tax regime had no F-ing clue what Kansas' tax regime was. No one should be surprised they failed.
I favor low taxes. I think low taxes pressure politicians to be decent fiscal stewards. The less money politicians in Kansas are trusted with, the better.
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But too often "Tax the rich" strategies extend way too far down, to where Hillary and Bernie think us schlubs making $250k/yr need to be soaked too.
You think 250k is too far down? That's almost 10x the median individual salary, and 15x the median for blacks and Hispanics.
I'm totally in favor of 50% effective tax rates on income of over one million per year, but I don't think 30% effective rates on a quarter million per year is unreasonable while we still have American children literally going hungry while you upgrade your yacht.
Think about what you're saying here. American citizens go hungry, die of preventable diseases, and are denied access to education or adequate police protection, because there is no federal funding to help them, and you want multimillionaires with mansions and three BMWs to get tax breaks so they can afford vacation homes in France? Do you see how totally fucked up that is?
Rich people do not need even more money than America has already provided then. Poor people do need food and medicine that you are denyng them by asking to cut taxes on the rich. America was built on a shared goal of improving the lives of all Americans, and trickle down economics is just an excuse to undo all of the progress we have made toward that goal. It's a vote for returning to the days of the aristocracy, and that is not what America is about.
Philosophically I disagree there should ever be a bracket over 49.9% on earned income. I don't think the government should ever be entitled to half (or more) of something someone earned.
The very richest among us do not work harder than the poorest. They are not more deserving. Do you think trump is rich because he is a better human being than you are?
The very richest Americans earn those crazy incomes precisely because our taxes have been used to build and protect an economic system that makes their income possible. Taxes pay for the police and army that defends their assets, the roads that transport their products, the education that trains their workers, the media that let's them advertise, and the financial regulations that allow their marketplace to exist and thrive. Arguably, their income should never exceed by much the economic benefits the government had provided to them, and in the case of billionaires that usually means 90%+ tax rates are defensible. Taxes are the only thing that has made them rich in the first place, and maybe they should repay the favor?
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Holy red herrings Sol!
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Holy red herrings Sol!
Oh, please elaborate. Was it my assertion that people making more than 10 times the median salary can comfortable pay higher taxes that upset you?
Maybe it was my attempt to highlight the gross inequality of wealth in America that our current economic system perpetuates and protects?
Or was it the observation that the success of American capitalism is entirely predicated on effective taxation that has you up in arms?
Please, tell me more!
If also love to hear your take on the republican health care plan that offers the huge tax cut on the wealthy that you seek, and pays for it by taking health insurance away from tens of millions of poor, elderly, and disabled people. Is that really the kind of policy you think will make America stronger? Do you think it's good for those poor people to have their health insurance taken away, as if trickle down economics will somehow provide them better health insurance than they had before?
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Think about what you're saying here. American citizens go hungry, die of preventable diseases, and are denied access to education or adequate police protection, because there is no federal funding to help them, and you want multimillionaires with mansions and three BMWs to get tax breaks so they can afford vacation homes in France? Do you see how totally fucked up that is?
Red herrings be here.
Rich people do not need even more money than America has already provided then. Poor people do need food and medicine that you are denyng them by asking to cut taxes on the rich.
And here
The very richest among us do not work harder than the poorest. They are not more deserving. Do you think trump is rich because he is a better human being than you are?
Strawmen be here.
The idea that the only thing standing between poor people and medicine and food is a bunch of rich people hoarding tax money so they can buy BMWs and yachts is simply absurd. Even if we doubled everyone's taxes I have no confidence the federal government could use that money effectively to accomplish anything. I mean, exhibit A I saw yesterday. (https://www.bloomberg.com/politics/articles/2017-06-15/trump-orders-government-to-stop-work-on-y2k-bug-17-years-later) Yeah, I don't trust these fucktards with more money.
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The idea that the only thing standing between poor people and medicine and food is a bunch of rich people hoarding tax money so they can buy BMWs and yachts is simply absurd. Even if we doubled everyone's taxes I have no confidence the federal government could use that money effectively to accomplish anything.
So your complaint is that the federal government doesn't spend it's tax revenues wisely, and you think that's the reason we have poverty in America?
Let's review. You're literally asking the federal government to give more money to rich people than they currently get, because you think the federal government isn't doing enough to address American poverty? That's some classic trickle down bullshit, right there.
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The idea that the only thing standing between poor people and medicine and food is a bunch of rich people hoarding tax money so they can buy BMWs and yachts is simply absurd. Even if we doubled everyone's taxes I have no confidence the federal government could use that money effectively to accomplish anything.
So your complaint is that the federal government doesn't spend it's tax revenues wisely, and you think that's the reason we have poverty in America?
Let's review. You're literally asking the federal government to give more money to rich people than they currently get, because you think the federal government isn't doing enough to address American poverty? That's some classic trickle down bullshit, right there.
Nope. Not what I said. I made no connection between tax revenues and poverty, you did, in your strawman/red herringfest above.
My argument is simply that because I consider the government exceptionally incompetent at handling money, I have a real problem giving them more of it to piss away. YOU made the claim that we have poverty because the government doesn't take enough money away from us, I am saying that A) no, that's not true, and B) even if we did give them more money they don't know how to spend it intelligently and efficiently anyways.
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If people actually believe that giving more money to the government is the right thing to do and that it will help solve some of the problems in our society, why have I never met a single person that has knowingly paid one cent more than they were legally required to pay in taxes?
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During a discussion, an uncle of mine on FB said "some economists support it." Interested in learning and seeing other opinions I turned to google but could not find any evidence for it on the first two pages. I politely told him as much and asked for a source, I did not get one, and he did not concede the point.
I think the US population may just have seen Ferris Bueller's Day Off with Ben Stein and the "laffer curve" scene one to many times. That and everyone thinks one day they will be go-gillion-ares and then will want low taxes on the rich so best set low taxes on the rich now.
In SimCity cutting taxes can spur some growth but it really does not results in more tax income. The best way to get tax revenue in the game is to either invest in education or get tons of pollution. So there you go :-)
But really if there is good data to support Trickle Down please post a link, I would genuinely like to read it.
"Support" kind of implies a value judgment independent on positive effects. But, you're not going to find anyone supporting "trickle-down" economics, because "trickle-down" specifically is a rhetorical attack by left-of-center, specifically in the last few years.
Proponents will typically call their policies "supply-side." There are a couple pieces in here, but the three big ones (and they are distinct):
1. High government debt/deficit crowds out private investment.
2. High taxes discourage work/savings/investment.
3. Government spending inefficiently targets well-being.
These are all different. A lot different. You can totally think that taxes don't do a thing to discourage work, but that the government is still incompetent so taxes are essentially wasted. You also can think high deficits crowd out spending and be opposed to deficits and debt, but not be opposed to government spending per se. You can also think deficits don't matter, that government does a good job of spending money, but taxes are a big burden to growth.
Basically all three are different, you can pick and choose. Strong orthodox supply-siders believe all three.
#2 seems to be the most hotly contested, so here's a quick article that might provide some background:
http://voxeu.org/article/income-tax-and-labour-supply-let-s-acknowledge-what-we-don-t-know
Reading the recent empirical literature, I have been struck to find that while authors may differ on the magnitude of labour-supply elasticities, they largely agree on the sign. The consensus is that increasing tax rates usually reduces work effort.
Since labor is incorrectly spelled with a "u," you can probably guess this isn't some right-wing American source saying it.
This guy goes on to use some labor-leisure preferences to sorta say it's still undetermined, but my reading is that he's an outlier: consensus is tax increases discourage work. It's not at all clear how much, or among which groups. For example, women tend to increase their work hours more when taxes are cut/wages are higher. There's a lot of substitution effect there.
Even Sweden used a dynamic scoring (IE, tax cuts boost economic growth) when they did their tax reforms 20+ years ago.
The specific claim "tax cuts pay for themselves" is total bollocks. I don't know ANY serious economist who actually believes that. The Kansas situation doesn't really surprise anyone.
If you want to see the supply-side thought on Kansas, look here: https://www.forbes.com/sites/rexsinquefield/2016/07/18/kansas-an-unsung-hero-for-economic-growth/#2a0d003d58f4
Significantly, every year since the tax cuts were implemented, Kansas has surpassed the state record for new business formations. When we consider that startups have decreased nationwide since the Great Recession of 2008, this achievement is particularly remarkable. What’s more, the Kansas unemployment rate stands at 3.7% – the lowest the state has seen since 2001, and well below the national average of 5.5%.
I think economists generally think capital is more sensitive to taxes than labor but I'm less confident on that.
Also, keep in mind that even if you think tax cuts might raise GDP to some extent, that doesn't mean you'll think tax cuts/spending cuts are a good idea. If we cut taxes by $700 billion initially, raised GDP by $1 trillion, and got $200 billion back, we'd still have to cut Medicare by 5/7. Most people would think that's a bad trade-off.
I'm personally skeptical of broad-based labor tax cuts and think taxes should probably increase, given the pressure on public finances. But I'm also highly skeptical that any of the proposed social programs that are left-versions of voodoo economics (free college, single payer) will perform any better.
That sounds like a lot of sensible economics combined with a couple of American myths.
The big one is about single payer health care. It seems to be pretty generally accepted that single payer health care works better than the US system in western Europe and Canada. For definitions of better I suppose. Up here the wealthy can always go to the states if the single payer system doesn't meet their needs. For the other 99%, single payer works out better.
But I have to ask, are you American or English? Labor is the American spelling, but bollocks is usually an English expression.
I'm American, hence the jab about the "u" in labour. :P
Also, I'm right-of-center in American politics, so I'm skeptical of all government spending and presumed government efficiencies...and highly skeptical additional government interventions will benefit me. I'm also skeptical of interventions in general, so I'm skeptical of virtually all medical spending, so I don't think ANYONE should be paying for it, let alone government at any level.
But that last part might not be relevant, so leaving that aside.
How exactly does single payer achieve efficiency? Asking this question, you usually get some mixture of arguments that are a short step away from all-out socialism (elimination of profits and marketing expenses) to government abusing a monopoly buyer position (monopsony in economic terms) in a way that's politically unrealistic and potentially harmful, or otherwise done in some fashion by insurers (insurance companies are already pretty big). Like, is the US federal government really going to implement a bunch of aggressive HMO-style cost controls? Is it really going to tell a drug maker to take a hike if it doesn't like the drug price? Yeah...I doubt it. Maybe the VA can get away with it, but I don't think the federal government would.
Otherwise a big insurance company could do just do the same thing today and make oodles of money.
Realistically, I don't expect the US to get any gains from expanding coverage, I expect it to just cost more.
There's some pretty convincing arguments that health insurance doesn't work well in a private market format. And honestly, I wouldn't like a full free-market system. But that's not what the US has. The US has a mixture of subsidized employer-health systems, single-payer and subsidized insurance for seniors, health-care exchanges for individual policies, and means-tested managed healthcare programs.
And keep in mind, this system works out fine for me. I am an upper middle class white male that works out a corporation that gets a tax deduction. My wife is in the same position. We'd like to retire early, but one of us can keep working and still have reasonable access to health insurance. There will be Medicare when we hit the appropriate age.
Life expectancy stats bare this out pretty well. LE in Minnesota is 81, which is above the OECD average. So when people say the US healthcare system is broken...yeah, it costs me a pretty penny, but it works fine for me.
Same for, say, public education. Again, I live in a wealthy suburb with good schools: works just fine for me.
This is why "if you like your health care, you can keep it" was such a big promise. Because any intervention the government makes in my life can quite easily screw it all up, and it works pretty good as it is.
Sorry for the length of this post, just trying to present the right-of-center view here (which is going to be typical of suburbs that are middle class or above, which tend to be "swing" voters in elections).
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The very richest among us do not work harder than the poorest. They are not more deserving. Do you think trump is rich because he is a better human being than you are?
I've met quite a few rich, and quite a few poor people. In my experience, the rich people have always worked harder than the poor people. Obviously there are outliers in either situation, but I know at least 5 lazy poor people I've talked to in the last two weeks who skip work all the time and take sick days like they're going out of style. They also quit jobs for all sorts of weird reasons, and have no desire to do beyond the bare minimum required of them. I don't know any rich person who takes more than a couple weeks of vacation a year, and usually not that much. Granted I don't know all that many rich people compared to poor people, but I frequently I see them working from 6-7 until 6-7 every day or more and being on their cell phones or email after those hours. A few of them also have heart problems from all of the stress and their poor diet/health, largely due to a lack of time to do those things. Workaholic is a good description.
I'm not saying that taxes need to be cut for rich people, but the idea that the only reason poor people are poor is because of our laws and taxes is ridiculous. If you gave everyone a "do over" and split up all the money evenly among rich and poor people today, I bet 90% of people would be back where they started within 2-3 years. Granted, I think we need to make it easier for that extra 10% to move up where they need to be, and I'm all for single payer healthcare and more taxes on the rich. I'm just not under any delusion that rich and poor people are basically the same except for their salaries.
How exactly does single payer achieve efficiency?
You could ask one of the dozens of countries that does it successfully at a much lower cost than the United States. It's not like this is a pie in the sky theory, it's being done all over Europe, and even in Canada which is our next door neighbor.
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If people actually believe that giving more money to the government is the right thing to do and that it will help solve some of the problems in our society, why have I never met a single person that has knowingly paid one cent more than they were legally required to pay in taxes?
Good question. Maybe for the same reason that those people who believe paying more taxes will not help solve some of the problems in our society, then never pay that same money to homeless shelters, poverty programs, etc. or otherwise make an attempt at solving those same problems.
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My argument is simply that because I consider the government exceptionally incompetent at handling money, I have a real problem giving them more of it to piss away.
Just curious but shouldn't that apply to CEO's etc. as well? I agree the government is terrible with handling money. I am not sure anyone will argue that. But the concept of trickle down is tax cuts for the rich will somehow benefit the not rich folks weather by hiring more people and/or paying them more is completely bullshit. The problem though doesn't stop there. If the government collects less revenue through tax cuts for the wealthy then they either have to A. Reduce spending or B. make cuts elsewhere or some combination of both. What is often proposed is cuts to programs that benefit the poor/middle class .
With this strategy you essentially have a situation where the rich keep more of their own money and the poor keep less of their own money. Sure give them tax cuts as well. But since they make very little the tax cut is mostly meaningless. And cuts to programs they rely on will eat that away in no time, plus more. The new healthcare bill is a great example of this. Tax cuts for the rich, jack up rates and kick those off who can't afford it.
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You could ask one of the dozens of countries that does it successfully at a much lower cost than the United States. It's not like this is a pie in the sky theory, it's being done all over Europe, and even in Canada which is our next door neighbor.
You're snipping out a rather significant part of my post. Regardless, you can't just import the Canadian health-care system by changing a financing mechanism. You will get the American healthcare system, with a different financing mechanism. It will have a distinctly different character than any other national single payer system.
Expenses also vary dramatically between other OECD nations, and other OECD nations still have rising healthcare expenditures.
EDIT: I should add that I wouldn't mind having a European system, since it's cheaper and does a good enough job. It'd match my preferences. That doesn't mean I have any faith the US can implement one.
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My argument is simply that because I consider the government exceptionally incompetent at handling money, I have a real problem giving them more of it to piss away.
Just curious but shouldn't that apply to CEO's etc. as well? I agree the government is terrible with handling money. I am not sure anyone will argue that. But the concept of trickle down is tax cuts for the rich will somehow benefit the not rich folks weather by hiring more people and/or paying them more is completely bullshit. The problem though doesn't stop there. If the government collects less revenue through tax cuts for the wealthy then they either have to A. Reduce spending or B. make cuts elsewhere or some combination of both. What is often proposed is cuts to programs that benefit the poor/middle class .
With this strategy you essentially have a situation where the rich keep more of their own money and the poor keep less of their own money. Sure give them tax cuts as well. But since they make very little the tax cut is mostly meaningless. And cuts to programs they rely on will eat that away in no time, plus more. The new healthcare bill is a great example of this. Tax cuts for the rich, jack up rates and kick those off who can't afford it.
What if there was a magical third option, where the government had to become more efficient with the money it did receive? The reason this doesn't exist today is because the government knows that if they ask for more money, ~50% of the country will demand and vote that we (not necessarily the same 50%) give it to them. It would be like turning a 5y/o loose in Toys R Us and never telling them "no". OF COURSE they'll spew money like it's water. What if instead we said "hell no, fucksticks, you get nothing until you show up how you're going to provide the same level of service you do now for 20% less cost." Maybe then they'd figure out how to do it efficiently, AND THEN we could have the conversation about how much more money they really need.
FWIW, I don't really believe in "trickle down economics" but I do believe in "let people hang on to as much of their own money as possible because they know better what to do with it than the government."
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You could ask one of the dozens of countries that does it successfully at a much lower cost than the United States. It's not like this is a pie in the sky theory, it's being done all over Europe, and even in Canada which is our next door neighbor.
You're snipping out a rather significant part of my post. Regardless, you can't just import the Canadian health-care system by changing a financing mechanism. You will get the American healthcare system, with a different financing mechanism. It will have a distinctly different character than any other national single payer system.
Expenses also vary dramatically between other OECD nations, and other OECD nations still have rising healthcare expenditures.
EDIT: I should add that I wouldn't mind having a European system, since it's cheaper and does a good enough job. It'd match my preferences. That doesn't mean I have any faith the US can implement one.
I agree with you there, I just think we need to be careful in how we phrase what we're looking for. I'm not suggesting we'll get the best healthcare system in the world, or something cheaper than in Europe, or that it won't have problems. I just find it very hard to believe it would be worse than our current system.
Most people I know who don't want to go to a single payer system are either old and rich, or are very healthy. I've had to deal with friends and family members doing the doctor thing a lot in the last year, and it's MISERABLE. You basically have to be an expert at navigating forms and insurance and scheduling and yada yada yada to get anything done, even then it's awful. My girlfriend finally buckled and paid an extra $1000 for a scan she had recently just because going through all of the insurance paperwork and back and forth wasn't worth it.
I'm not saying people in the UK don't have problems with their system, I'm sure they do, but I've asked at least a few of them if they'd prefer our system and the answer is always a resounding "Hell no" usually with them laughing. The same for Canadians, hell even the people in Costa Rica I've talked to have no desire for American healthcare.
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If people actually believe that giving more money to the government is the right thing to do and that it will help solve some of the problems in our society, why have I never met a single person that has knowingly paid one cent more than they were legally required to pay in taxes?
Good question. Maybe for the same reason that those people who believe paying more taxes will not help solve some of the problems in our society, then never pay that same money to homeless shelters, poverty programs, etc. or otherwise make an attempt at solving those same problems.
Except your argument doesn't have much basis in reality as American Conservatives are the among the most charitable people on Earth. The people begging for the government to take care of it tend to be less charitable.
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FWIW, I don't really believe in "trickle down economics" but I do believe in "let people hang on to as much of their own money as possible because they know better what to do with it than the government."
Eh-I'm not so sure about that. I think that the average retirement savings in the US, one of the richest countries on the planet, tells you a lot more about whether people actually know better. I am eternally grateful that our country treats most of our populace like children in retirement and provides a subsistence-level income and healthcare for the elderly. I am also confident that many elderly people would starve without the government actually knowing better than they do what's good for them. I think our current system of progressive taxation is the best compromise. Let people keep most of their money, particularly those who need it most, but be there when they screw up or experience hardship.
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If people actually believe that giving more money to the government is the right thing to do and that it will help solve some of the problems in our society, why have I never met a single person that has knowingly paid one cent more than they were legally required to pay in taxes?
Good question. Maybe for the same reason that those people who believe paying more taxes will not help solve some of the problems in our society, then never pay that same money to homeless shelters, poverty programs, etc. or otherwise make an attempt at solving those same problems.
Except your argument doesn't have much basis in reality as American Conservatives are the among the most charitable people on Earth. The people begging for the government to take care of it tend to be less charitable.
Except your argument doesn't have much basis in reality as my statement didn't specify that charitable giving was a conservative or liberal trait. Because it's not. I try not to make blanket statements about either party. But, to your point, the American Conservative is certainly known worldwide for taking care of the sick, poor and needy.
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My argument is simply that because I consider the government exceptionally incompetent at handling money, I have a real problem giving them more of it to piss away.
Just curious but shouldn't that apply to CEO's etc. as well? I agree the government is terrible with handling money. I am not sure anyone will argue that. But the concept of trickle down is tax cuts for the rich will somehow benefit the not rich folks weather by hiring more people and/or paying them more is completely bullshit. The problem though doesn't stop there. If the government collects less revenue through tax cuts for the wealthy then they either have to A. Reduce spending or B. make cuts elsewhere or some combination of both. What is often proposed is cuts to programs that benefit the poor/middle class .
With this strategy you essentially have a situation where the rich keep more of their own money and the poor keep less of their own money. Sure give them tax cuts as well. But since they make very little the tax cut is mostly meaningless. And cuts to programs they rely on will eat that away in no time, plus more. The new healthcare bill is a great example of this. Tax cuts for the rich, jack up rates and kick those off who can't afford it.
What if there was a magical third option, where the government had to become more efficient with the money it did receive? The reason this doesn't exist today is because the government knows that if they ask for more money, ~50% of the country will demand and vote that we (not necessarily the same 50%) give it to them. It would be like turning a 5y/o loose in Toys R Us and never telling them "no". OF COURSE they'll spew money like it's water. What if instead we said "hell no, fucksticks, you get nothing until you show up how you're going to provide the same level of service you do now for 20% less cost." Maybe then they'd figure out how to do it efficiently, AND THEN we could have the conversation about how much more money they really need.
FWIW, I don't really believe in "trickle down economics" but I do believe in "let people hang on to as much of their own money as possible because they know better what to do with it than the government."
Too bad the government doesn't run on pixie dust and unicorn farts eh?
Trickle down is not really a belief. And I think your statement that folks are better with their own money than the government is extremely subjective. You could easily find cases to support either side. Government funds needless wars and baseless spending, but also provides critical services to needy folks, provides medical research funding that leads to finding cures for diseases saving countless lives. There is no way you could quantify such a belief.
So we are stuck with the system we have, because that is reality. And I think rich folks should pay more. In some cases a hell of a lot more. I don't think they should get to keep more of their own money if it means poorer folks get to keep less.
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Wealth is not however being simply transferred from the rich to the poor.
If you're literally cutting taxes on the upper income bracket, how is that not transferring wealth to the rich?
I said from rich too the poor. The claim is that it trickles to the poor which would be a transfer of wealth. I never implied the converse wasn't true.
I personally wouldn't call a tax cut for income people a "transfer of wealth". Even though I think the net effect is what you say. We are allowing high income earners to keep more money which will do nothing to improve the lives of those making less than them. While having to cut potentially useful government programs due to a loss in revenue.
I am not really much an ideologue when it comes to the issue of taxation. I would rather see it as a complex system in constant need of tweaking and debate to try to get the desired result.
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we can keep being progressive about the taxes all the way up to 90% or so.
Philosophically I disagree there should ever be a bracket over 49.9% on earned income. I don't think the government should ever be entitled to half (or more) of something someone earned.
I find 50% to be a fairly arbitrary number. Why not less? There are some that would say that even a 1% difference in taxes between a low wage earner and a high wage earner is inherently not fare.
There is no magical set of tax brackets in our current tax system that will make them fair. Though I suppose some might argue the fair amount would be to squash it to one flat tax bracket.
But then you have to deal with the problem of making up that revenue from other form of taxes or massively shrink Federal government. A consumption focused sales tax bears the risk of being far more regressive and may squash social mobility.
Intrinsically I agree I would have no interest earning money for a government that was taking 90% of it. Technically arguing for any change to our tax system no matter how minor is fraught with upsides and downsides.
Philosophically I think the number one priority when it comes to changing the flow of revenue into say the Federal, State or Local government should be maintaining or improve social mobility.
If you find your tax plan is taking away government funding and forcing say cuts to education programs, scientific research, and social welfare then there is a good chance you are harming social mobility for those with less means. That is especially questionable if those changes are primarily helping a group already doing very well.
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A 50% marginal tax rate is high enough to be annoying. It would be more tolerable if government waste was less obvious. If you could see the money going to useful things all the time you could feel good about it! But when government bureaucrats take 4 weeks to reply to an e-mail... Or the city government spending money replacing perfectly good sidewalks... Or hundreds of millions for security at a G8 meeting... and so on.
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50% isn't arbitrary, it's the exact dividing line between keeping the majority of your wages and losing it to taxes.
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The problem with all the studies I have seen that "prove" trickle down economics doesn't work is that they all have too narrow a focus and ignore international capital flows. I don't believe that lower taxes on the rich in, say, America will necessarily benefit poor Americans more than if taxes on the rich were higher and those tax funds were used to fund social programs in America. But I believe that lower taxes on the rich in America will benefit the poor in other countries.
If the rich in America get more money in the form of lower taxes, they either:
- spend that money - in which case, the effect on GDP will probably be neutral because that money would have been spent (by the government) if it had been taxed anyway
- hoard that money - in which case, the money supply effectively decreases as a sum of money is taken out of circulation, and everyone else's purchasing power is effectively increased (i.e. everyone else's money is worth a bit more - the opposite of inflation)
- invest that money - in which case, the place in which they invest will likely reap much of the benefits, with some benefits flowing through to other countries in the form of trade, etc.
Most likely, rich people will invest most of the money they get from tax cuts. They are likely to invest some of that money in developing countries. It will benefit poor people in those countries much more than if the money had been spent on social welfare programmes in America. To those who say neoliberalism and trickle down economics doesn't work - there is no proof for this when a global view is adopted. Look at how many people have been lifted out of poverty in China, in India, and in Vietnam under this system. Granted, this is not definitive proof - and you'll never get definitive proof in the field of macroeconomics - but it does suggest that the current system might be working.
I guess if you're an American with an America-centric view, you might not care about people in those developing countries and prefer to protect the interests of middle class/poor in America. But if you take a more global view - as I prefer to - you wouldn't be so quick to dismiss "trickle down economics" as "bullshit".
For the record, I do support a system of progressive taxation, with higher tax rates for the rich than the poor; and I support taxes on capital gains being at least as high as taxes on labour. But tax competition exists, and capital is mobile, so if a country increases taxes on capital too much it will just drive investment offshore, which is worse for the country (including its poor) overall. Countries and governmental organisations are slowly moving towards a more "united" system of taxation to try and stop tax competition, but this is not nearly as simple as some liberals assume it is, and I am not entirely sure that a more united system will be better for the world on the whole - as opposed to just being better for richer countries like the OECD group.
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50% isn't arbitrary, it's the exact dividing line between keeping the majority of your wages and losing it to taxes.
"Your" money is actually a privledge granted to you by the government. "Your" ability to amass that money is controlled heavily by the safety, services, and financial policy pursued by your government. Sure, there's a lot of hard work that you do . . . but given that the only reason you can complain about the loss of your wages is due to the environment created by those you're paying, I'm not sure you can really argue that the 50% dividing line has any real meaning at all.
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50% isn't arbitrary, it's the exact dividing line between keeping the majority of your wages and losing it to taxes.
"Your" money is actually a privledge granted to you by the government. "Your" ability to amass that money is controlled heavily by the safety, services, and financial policy pursued by your government. Sure, there's a lot of hard work that you do . . . but given that the only reason you can complain about the loss of your wages is due to the environment created by those you're paying, I'm not sure you can really argue that the 50% dividing line has any real meaning at all.
Yeah I will never agree with that philosophically.
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50% isn't arbitrary, it's the exact dividing line between keeping the majority of your wages and losing it to taxes.
"Your" money is actually a privledge granted to you by the government. "Your" ability to amass that money is controlled heavily by the safety, services, and financial policy pursued by your government. Sure, there's a lot of hard work that you do . . . but given that the only reason you can complain about the loss of your wages is due to the environment created by those you're paying, I'm not sure you can really argue that the 50% dividing line has any real meaning at all.
Yeah I will never agree with that philosophically.
It's not a philosophy. Look up the definition of 'Legal Tender'.
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50% isn't arbitrary, it's the exact dividing line between keeping the majority of your wages and losing it to taxes.
"Your" money is actually a privledge granted to you by the government. "Your" ability to amass that money is controlled heavily by the safety, services, and financial policy pursued by your government. Sure, there's a lot of hard work that you do . . . but given that the only reason you can complain about the loss of your wages is due to the environment created by those you're paying, I'm not sure you can really argue that the 50% dividing line has any real meaning at all.
Yeah I will never agree with that philosophically.
It's not a philosophy. Look up the definition of 'Legal Tender'.
All I see are references that require money to be recognized as payment for debts. Nothing more.
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You can lead a horse to water . . .
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If people actually believe that giving more money to the government is the right thing to do and that it will help solve some of the problems in our society, why have I never met a single person that has knowingly paid one cent more than they were legally required to pay in taxes?
Good question. Maybe for the same reason that those people who believe paying more taxes will not help solve some of the problems in our society, then never pay that same money to homeless shelters, poverty programs, etc. or otherwise make an attempt at solving those same problems.
Except your argument doesn't have much basis in reality as American Conservatives are the among the most charitable people on Earth. The people begging for the government to take care of it tend to be less charitable.
Except your argument doesn't have much basis in reality as my statement didn't specify that charitable giving was a conservative or liberal trait. Because it's not. I try not to make blanket statements about either party. But, to your point, the American Conservative is certainly known worldwide for taking care of the sick, poor and needy.
Except is does have a basis in reality, because both of my statements have been actual facts and neither of yours have contained any as far as I know. Do you have any evidence for your claim that "people who believe paying more taxes will not help solve some of the problems in our society ... never pay that same money to homeless shelters, poverty programs, etc. or otherwise make an attempt at solving those same problems"? I have never seen this stated anywhere. It's also a strawman to my original question, for which you never actually provided a response. Not sure who taught you to discuss things in this manner but it's very disingenuous and makes conversation pointless.
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You can lead a horse to water . . .
Cut the smug horseshit. Make your argument and cite your references.
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If people actually believe that giving more money to the government is the right thing to do and that it will help solve some of the problems in our society, why have I never met a single person that has knowingly paid one cent more than they were legally required to pay in taxes?
Good question. Maybe for the same reason that those people who believe paying more taxes will not help solve some of the problems in our society, then never pay that same money to homeless shelters, poverty programs, etc. or otherwise make an attempt at solving those same problems.
Except your argument doesn't have much basis in reality as American Conservatives are the among the most charitable people on Earth. The people begging for the government to take care of it tend to be less charitable.
Except your argument doesn't have much basis in reality as my statement didn't specify that charitable giving was a conservative or liberal trait. Because it's not. I try not to make blanket statements about either party. But, to your point, the American Conservative is certainly known worldwide for taking care of the sick, poor and needy.
Except is does have a basis in reality, because both of my statements have been actual facts and neither of yours have contained any as far as I know. Do you have any evidence for your claim that "people who believe paying more taxes will not help solve some of the problems in our society ... never pay that same money to homeless shelters, poverty programs, etc. or otherwise make an attempt at solving those same problems"? I have never seen this stated anywhere. It's also a strawman to my original question, for which you never actually provided a response. Not sure who taught you to discuss things in this manner but it's very disingenuous and makes conversation pointless.
I think you are conflating two different things. When you resorted to breaking it down on a political level (weather true or not is irrelevant) it wasn't a valid reply to the original comment. It was in essence either a diversion or straw-man itself.
It's certainly true that folks who pay the minimum in taxes also donate large portions. Bill Gates foundation is an excellent example. Buffet and others have pledged to donate a huge portion of their earnings after they pass. But even Buffet will admit he paid the minimum in taxes (actually less percentage wise than most middle class folks). He often speaks out against as well and will tell you it's not fair.
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But then you have to deal with the problem of making up that revenue from other form of taxes or massively shrink Federal government.
There are some, including me, who consider that property an additional feature rather than a bug.
I see no reason why social support mechanisms ought to be Federal. Any given program should be as local as is feasible. There's nothing particularly country-wide or inherently federal about giving food to those people unable to buy it themselves. Make that a local program and let local taxpayers decide how they want it run and how much to fund it.
It's almost like I wish our founding fathers had thought more carefully about how to divide the powers between the feds and the states and maybe bothered to write some simple text into the Constitution on the topic. Oh wait, they did and we just ignore it (http://www.americasfreedom.com/us-constitution/article10.html).
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50% isn't arbitrary, it's the exact dividing line between keeping the majority of your wages and losing it to taxes.
"Your" money is actually a privledge granted to you by the government. "Your" ability to amass that money is controlled heavily by the safety, services, and financial policy pursued by your government. Sure, there's a lot of hard work that you do . . . but given that the only reason you can complain about the loss of your wages is due to the environment created by those you're paying, I'm not sure you can really argue that the 50% dividing line has any real meaning at all.
Yeah I will never agree with that philosophically.
It's not a philosophy. Look up the definition of 'Legal Tender'.
But it is a philosophy. It's a political philosophy. We currently have and support a government that endorses capitalism on an individual level. I am allowed to choose my career, work, and keep the money that I earned (to an extent), and spend it on what I want (with limited restrictions).
If the government instead shifts its philosophy toward... say... communism, which places more restrictions on those things, then we're in a different political philosophy. And indeed. as Chris indicates, that government may lose the support of its people.
It may also cripple the economy, since communist governments have proven to be poor stewards of tax dollars and economic well being.
Another philosophy that leads one down the same road is a theocracy, where my ability to choose careers, work, keep my money and spend it on what I want are narrowed and redistributed in different ways.
That's the problem with large, powerful governments and relying on the government's good nature to do the "right thing." There are some governments who sit around that 50% tax mark who seem to be doing alright - but there are plenty more large governments that aren't hallmarks of success.
At any rate - it absolutely is a philosophy. And we as individuals in a democracy have every right to choose whether or not we support our government's philosophy.
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We currently have and support a government that endorses capitalism on an individual level. I am allowed to choose my career, work, and keep the money that I earned (to an extent), and spend it on what I want (with limited restrictions).
You're right to choose your career work, etc. have nothing to do with capitalism.
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We currently have and support a government that endorses capitalism on an individual level. I am allowed to choose my career, work, and keep the money that I earned (to an extent), and spend it on what I want (with limited restrictions).
You're right to choose your career work, etc. have nothing to do with capitalism.
Wouldn't happen if your system was communist. Just sayin...
I think the reason the government is so inefficient at spending money is because the politicians and bureaucrats have no skin in the game. Once in a while you'll get a politician who feels its his/her duty to be fiscally responsible (cf Paul Martin), but generally the best you'll get is someone who will try to spend the money rationally.
Just look at the way most people spend their own money. Would we really expect our political leadership to be better?
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We currently have and support a government that endorses capitalism on an individual level. I am allowed to choose my career, work, and keep the money that I earned (to an extent), and spend it on what I want (with limited restrictions).
You're right to choose your career work, etc. have nothing to do with capitalism.
Wouldn't happen if your system was communist. Just sayin...
Again, false. People are not assigned jobs under communist rule. If our government suddenly instituted communism they wouldn't remove me from being an engineer and tell me I am now a janitor. Feel free to provide examples of communist countries past or present that assigned specific jobs to the population.
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We currently have and support a government that endorses capitalism on an individual level. I am allowed to choose my career, work, and keep the money that I earned (to an extent), and spend it on what I want (with limited restrictions).
You're right to choose your career work, etc. have nothing to do with capitalism.
Wouldn't happen if your system was communist. Just sayin...
Again, false. People are not assigned jobs under communist rule. If our government suddenly instituted communism they wouldn't remove me from being an engineer and tell me I am now a janitor. Feel free to provide examples of communist countries past or present that assigned specific jobs to the population.
You ignored the rest. You could choose to be a doctor under communism, but you could not choose to keep what you earned - that amount would be set by government standards for your salary. You could not choose what to buy, or even what property to own - all of that would have severe restrictions under communism. Doctor shortages are a hallmark of nationalized healthcare systems, so we can't pretend that those restrictions don't impact career choices.
Under a theocracy, as a woman, I might not be able to choose to be a doctor. I might not be able to drive a car or even have a bank account. There are many countries where I would have zero freedom of choice and would need the permission of my male relatives to do anything.
As an engineer, under communist rule, you might be forced to accept a government job because your workplace becomes centralized instead of privatized. You could be forced to accept a salary that is a fraction of what you current enjoy, and you might be forced to downsize your standard of living. Your property could be seized and you might be forced to move to another city because that's where you've been told to work. You may be assigned to an engineering project that you find uninteresting. But you chose to be an engineer... so all is well? To me, I look at that scenario and say: Nope, actually, you really didn't have a heck of a lot of choice.
Capitalism and democracy are political philosophies that affect every aspect of our lives. Taxation and personal enrichment are two aspects of the interplay between those two philosophies.
My point is - governments have philosophies about taxation, about freedom, about a whole host of things. It's wrong to say they don't have philosophies. It's wrong to pretend that we're unaffected by those philosophies. And it's wrong to say that we have no choice but to agree with those philosophies.
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I see no reason why social support mechanisms ought to be Federal. Any given program should be as local as is feasible. There's nothing particularly country-wide or inherently federal about giving food to those people unable to buy it themselves. Make that a local program and let local taxpayers decide how they want it run and how much to fund it.
The reason things like that are federal is because money. Department of Agriculture does SNAP. Alabama's broke so states that are in the black send more of their taxes to support the whole. I'm guessing a lot of local programs wouldn't have the coin if they ran their own SNAP and there'd be a lot more starving people around than there are already (in the richest country on the planet and at least until the current administration cuts that program too)
IMHO, each state having it's own stupid laws is pretty inefficient, but I can't imagine how much worse it would be if there weren't federal standards to rein it in.
Concerning inefficiency...some of our government by nature will always be inefficient. The process itself is inefficient. It was designed that way and we should want it that way.
Concerning taxes, you get what you pay for. I'm not ready for the third world yet. Although the government can be quite inefficient at times I'm not convinced that the private sector doing the job would really be better.
Also, I feel like those who complain about taxes are stuck with 1980's pricing.
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We currently have and support a government that endorses capitalism on an individual level. I am allowed to choose my career, work, and keep the money that I earned (to an extent), and spend it on what I want (with limited restrictions).
You're right to choose your career work, etc. have nothing to do with capitalism.
Wouldn't happen if your system was communist. Just sayin...
Again, false. People are not assigned jobs under communist rule. If our government suddenly instituted communism they wouldn't remove me from being an engineer and tell me I am now a janitor. Feel free to provide examples of communist countries past or present that assigned specific jobs to the population.
I was thinking of trying to work under Joseph Stalin in Russia, for example. Linky https://en.wikipedia.org/wiki/Soviet_working_class (https://en.wikipedia.org/wiki/Soviet_working_class)
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We currently have and support a government that endorses capitalism on an individual level. I am allowed to choose my career, work, and keep the money that I earned (to an extent), and spend it on what I want (with limited restrictions).
You're right to choose your career work, etc. have nothing to do with capitalism.
Wouldn't happen if your system was communist. Just sayin...
Again, false. People are not assigned jobs under communist rule. If our government suddenly instituted communism they wouldn't remove me from being an engineer and tell me I am now a janitor. Feel free to provide examples of communist countries past or present that assigned specific jobs to the population.
You ignored the rest.
No I specifically responded to the part that was false (see bolded).
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Except your argument doesn't have much basis in reality as American Conservatives are the among the most charitable people on Earth. The people begging for the government to take care of it tend to be less charitable.
I'm going to have to ask for a source on this claim.
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50% isn't arbitrary, it's the exact dividing line between keeping the majority of your wages and losing it to taxes.
"Your" money is actually a privledge granted to you by the government. "Your" ability to amass that money is controlled heavily by the safety, services, and financial policy pursued by your government. Sure, there's a lot of hard work that you do . . . but given that the only reason you can complain about the loss of your wages is due to the environment created by those you're paying, I'm not sure you can really argue that the 50% dividing line has any real meaning at all.
Yeah I will never agree with that philosophically.
It's not a philosophy. Look up the definition of 'Legal Tender'.
All I see are references that require money to be recognized as payment for debts. Nothing more.
I think the philosophical difference isn't about the actual minting of currency, it's about how you perceive your own success (or lack thereof).
It's my position that most (meaning well more than 50%) of your financial standing in life is pure luck. Where you were born being the major indicator of later financial success and this has nothing to do with your own choices/skills/hard work.
So, if like me, you think your position is mostly luck based on your surroundings, you will feel more obligated to contribute, and force all the other lucky folks, to contribute heavily to those surroundings that allowed for fertile ground in which people like me could flourish.
For those people like you (I presume) who think their own skills and choices are the predominant reason they are in their position are less likely to believe their hard work should be taken away and given to others because those others failed to make the smart decisions and hence your problem with > 50% tax.
My own life is like this: 1) I was born to poor immigrants but was born in a rich country that allowed me to get a valuable skill set, 2) I did try decently hard at school and work to advance this skill set, 3) I now make > $400k/yr with this skill set.
So, did I do most of the work of acquiring this very lucrative skill set? Or was most of the work the luck of my parents moving here, being in a rich place with relatively cheap education, being able to migrate to Silicon Valley with ease, and being part of the recent tech boom?
It's hard to say how much % is the luck part and how much is me working hard/making smart decisions. Sometimes I tend to think I'm really smart and deserve all the money. Other times I look around and wonder how I can make so much, am I really that different from the McDonalds drive through person I just got my coffee from but that person couldn't get a tech education? It's tough.
Anyway, in recent years I'm coming down on the side that me and the McDonalds person probably aren't that different except for our environments and hence I (and the folks lucky enough to be in my position) should pay more in tax to allow that person to have a better life.
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50% isn't arbitrary, it's the exact dividing line between keeping the majority of your wages and losing it to taxes.
"Your" money is actually a privledge granted to you by the government. "Your" ability to amass that money is controlled heavily by the safety, services, and financial policy pursued by your government. Sure, there's a lot of hard work that you do . . . but given that the only reason you can complain about the loss of your wages is due to the environment created by those you're paying, I'm not sure you can really argue that the 50% dividing line has any real meaning at all.
Yeah I will never agree with that philosophically.
It's not a philosophy. Look up the definition of 'Legal Tender'.
But it is a philosophy. It's a political philosophy. We currently have and support a government that endorses capitalism on an individual level. I am allowed to choose my career, work, and keep the money that I earned (to an extent), and spend it on what I want (with limited restrictions).
If the government instead shifts its philosophy toward... say... communism, which places more restrictions on those things, then we're in a different political philosophy. And indeed. as Chris indicates, that government may lose the support of its people.
It may also cripple the economy, since communist governments have proven to be poor stewards of tax dollars and economic well being.
Another philosophy that leads one down the same road is a theocracy, where my ability to choose careers, work, keep my money and spend it on what I want are narrowed and redistributed in different ways.
That's the problem with large, powerful governments and relying on the government's good nature to do the "right thing." There are some governments who sit around that 50% tax mark who seem to be doing alright - but there are plenty more large governments that aren't hallmarks of success.
At any rate - it absolutely is a philosophy. And we as individuals in a democracy have every right to choose whether or not we support our government's philosophy.
Legal tender is a concept, not something concrete. When you amass fiat currency issued by a government, you aren't actually amassing anything. The government can choose to make all the money you've got invalid and unusable. The government can choose to inflate away the value of 'your' money. When you choose to use the money, it is implicitly agreeing to be bound by the terms and conditions that the issuing government has stated. That's why it's silly to get upset about paying taxes . . . the money that you believe you own is actually owned and is effectively controlled by the government at all times. (This of course, doesn't even touch on the fact that it would be difficult to impossible to amass any quantities of the government's money without the infrastructure that said government has put into place to facilitate your actions.)
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50% isn't arbitrary, it's the exact dividing line between keeping the majority of your wages and losing it to taxes.
"Your" money is actually a privledge granted to you by the government. "Your" ability to amass that money is controlled heavily by the safety, services, and financial policy pursued by your government. Sure, there's a lot of hard work that you do . . . but given that the only reason you can complain about the loss of your wages is due to the environment created by those you're paying, I'm not sure you can really argue that the 50% dividing line has any real meaning at all.
Yeah I will never agree with that philosophically.
It's not a philosophy. Look up the definition of 'Legal Tender'.
But it is a philosophy. It's a political philosophy. We currently have and support a government that endorses capitalism on an individual level. I am allowed to choose my career, work, and keep the money that I earned (to an extent), and spend it on what I want (with limited restrictions).
If the government instead shifts its philosophy toward... say... communism, which places more restrictions on those things, then we're in a different political philosophy. And indeed. as Chris indicates, that government may lose the support of its people.
It may also cripple the economy, since communist governments have proven to be poor stewards of tax dollars and economic well being.
Another philosophy that leads one down the same road is a theocracy, where my ability to choose careers, work, keep my money and spend it on what I want are narrowed and redistributed in different ways.
That's the problem with large, powerful governments and relying on the government's good nature to do the "right thing." There are some governments who sit around that 50% tax mark who seem to be doing alright - but there are plenty more large governments that aren't hallmarks of success.
At any rate - it absolutely is a philosophy. And we as individuals in a democracy have every right to choose whether or not we support our government's philosophy.
Legal tender is a concept, not something concrete. When you amass fiat currency issued by a government, you aren't actually amassing anything. The government can choose to make all the money you've got invalid and unusable. The government can choose to inflate away the value of 'your' money. When you choose to use the money, it is implicitly agreeing to be bound by the terms and conditions that the issuing government has stated. That's why it's silly to get upset about paying taxes . . . the money that you believe you own is actually owned and is effectively controlled by the government at all times. (This of course, doesn't even touch on the fact that it would be difficult to impossible to amass any quantities of the government's money without the infrastructure that said government has put into place to facilitate your actions.)
Of course you can be upset with the government for taking away your work and money you've amassed just because they can, especially if they change the deal midway through your life. It's all part of a give and take. Sure the government can technically do what they want with our money, then again we can revolt and destroy the government. To suggest "they have control so you can't be mad at anything they do" is just ridiculous, and worryingly submissive. I guess if they came and raped your wife, shot your dog, and stole your kids to send to labor camps you'd just shrug and say "Well it's their system, so I can't be upset. I only had a wife, dog, and kids because of their systems they put in place, so it's their right."
You would've made a great motivational speaker for slaves back in the day.
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50% isn't arbitrary, it's the exact dividing line between keeping the majority of your wages and losing it to taxes.
"Your" money is actually a privledge granted to you by the government. "Your" ability to amass that money is controlled heavily by the safety, services, and financial policy pursued by your government. Sure, there's a lot of hard work that you do . . . but given that the only reason you can complain about the loss of your wages is due to the environment created by those you're paying, I'm not sure you can really argue that the 50% dividing line has any real meaning at all.
I think we started off with the wrong dispute. GuitarStv had a point to make but it really had nothing to do with the arbitrariness of the 50% mark.
I would argue that 50% is arbitrary given the equation in question. Sure it is the difference between minority/majority but that is purely emotional in this circumstance.
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50% isn't arbitrary, it's the exact dividing line between keeping the majority of your wages and losing it to taxes.
"Your" money is actually a privledge granted to you by the government. "Your" ability to amass that money is controlled heavily by the safety, services, and financial policy pursued by your government. Sure, there's a lot of hard work that you do . . . but given that the only reason you can complain about the loss of your wages is due to the environment created by those you're paying, I'm not sure you can really argue that the 50% dividing line has any real meaning at all.
I think we started off with the wrong dispute. GuitarStv had a point to make but it really had nothing to do with the arbitrariness of the 50% mark.
I would argue that 50% is arbitrary given the equation in question. Sure it is the difference between minority/majority but that is purely emotional in this circumstance.
Is it purely arbitrary? Once the majority of your additional income goes to benefit someone other than yourself (and family, etc) I'd argue that's a pretty big disincentive.
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Is it purely arbitrary? Once the majority of your additional income goes to benefit someone other than yourself (and family, etc) I'd argue that's a pretty big disincentive.
So, just a question that I haven't seen asked/answered yet, is there no level of income that we actually want to disincentive?
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Is it purely arbitrary? Once the majority of your additional income goes to benefit someone other than yourself (and family, etc) I'd argue that's a pretty big disincentive.
So, just a question that I haven't seen asked/answered yet, is there no level of income that we actually want to disincentive?
I certainly don't think so.
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50% isn't arbitrary, it's the exact dividing line between keeping the majority of your wages and losing it to taxes.
"Your" money is actually a privledge granted to you by the government. "Your" ability to amass that money is controlled heavily by the safety, services, and financial policy pursued by your government. Sure, there's a lot of hard work that you do . . . but given that the only reason you can complain about the loss of your wages is due to the environment created by those you're paying, I'm not sure you can really argue that the 50% dividing line has any real meaning at all.
I think we started off with the wrong dispute. GuitarStv had a point to make but it really had nothing to do with the arbitrariness of the 50% mark.
I would argue that 50% is arbitrary given the equation in question. Sure it is the difference between minority/majority but that is purely emotional in this circumstance.
Is it purely arbitrary? Once the majority of your additional income goes to benefit someone other than yourself (and family, etc) I'd argue that's a pretty big disincentive.
Your initial statement:
Philosophically I disagree there should ever be a bracket over 49.9% on earned income. I don't think the government should ever be entitled to half (or more) of something someone earned.
was opposed to >50% on principal. What I'm saying is that that number is arbitrary mathematically speaking.
Now if we're changing the discussion to what will incentivize others, I would agree that 50% is an important number due to people's (irrational) emotions.
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50% isn't arbitrary, it's the exact dividing line between keeping the majority of your wages and losing it to taxes.
"Your" money is actually a privledge granted to you by the government. "Your" ability to amass that money is controlled heavily by the safety, services, and financial policy pursued by your government. Sure, there's a lot of hard work that you do . . . but given that the only reason you can complain about the loss of your wages is due to the environment created by those you're paying, I'm not sure you can really argue that the 50% dividing line has any real meaning at all.
I think we started off with the wrong dispute. GuitarStv had a point to make but it really had nothing to do with the arbitrariness of the 50% mark.
I would argue that 50% is arbitrary given the equation in question. Sure it is the difference between minority/majority but that is purely emotional in this circumstance.
Is it purely arbitrary? Once the majority of your additional income goes to benefit someone other than yourself (and family, etc) I'd argue that's a pretty big disincentive.
That's arbitrary as well. Your assuming the money is spent on something that doesn't benefit the originator of the money as well.
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Is it purely arbitrary? Once the majority of your additional income goes to benefit someone other than yourself (and family, etc) I'd argue that's a pretty big disincentive.
So, just a question that I haven't seen asked/answered yet, is there no level of income that we actually want to disincentive?
I certainly don't think so.
Wow. Don't you think that's kind of an extreme position?
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So, just a question that I haven't seen asked/answered yet, is there no level of income that we actually want to disincentive?
I certainly don't think so.
Wow. Don't you think that's kind of an extreme position?
If you disagree with it, then it's an extreme position. If you agree with it (as I do), then the opposite is an extreme position.
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So, just a question that I haven't seen asked/answered yet, is there no level of income that we actually want to disincentive?
I certainly don't think so.
Wow. Don't you think that's kind of an extreme position?
If you disagree with it, then it's an extreme position. If you agree with it (as I do), then the opposite is an extreme position.
Well, I agree that the opposite (that we should disincentive all income levels) would also be extreme. Are you trying to imply that there is no possible position on this issue that is not extreme?
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I believe that a call for a 100% (or greater) marginal rate as a disincentive for income production over a certain level is an extreme position.
I believe that those who believe that "all taxation is theft" are also holding an extreme point of view.
I'm not as interested in theoretically angels on heads of pins discussion of whether there exist any possible <foo> such that <bar> is true.
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I believe that a call for a 100% (or greater) marginal rate as a disincentive for income production over a certain level is an extreme position.
I believe that those who believe that "all taxation is theft" are also holding an extreme point of view.
I'm not as interested in theoretically angels on heads of pins discussion of whether there exist any possible <foo> such that <bar> is true.
As Chris22 has already pointed out, "a 100% (or greater) marginal rate" is not required to dis-incentivize income...
ETA: My point was simply that everyone seems to be assuming that dis-incentivizing income is -always- a bad thing. There is absolutely no discussion going on of whether there are good reasons for us to want to dis-incentivize (not ban) certain levels of income and I don't believe that the position that we may want to dis-incentivize extreme levels of income to some degree is extreme.
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I believe a major fault of the popular tax systems is they all tax income (production) vs spending (consumption).
This violates the basic precepts of: reward what you want to encourage. tax what you want to discourage.
Income tax discourages productivity; encourages hiding income (evasion).
I think a better system would be consumption tax. Or maybe just poll tax. You want to vote, to be represented? pay up. It works that way anyway - let's just be more honest about it.
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A thought to add to the taxes discussion upstream: why do some folks who want to cut taxes and pay down the deficit. still want to keep adding to the defense budget? Because the rich have the most assets, both domestically and abroad, which they would like to protect.
Two reasons:
1. Defense is one of the few specifically enumerated powers in the Constitution for the Federal government.
2. It's one of the things that really is not well provided for in most instances by the private sector, and is not done hardly at all by the states (lots of other things are double dipped, state and Fed)
Sure, but why keep spending more & more? Especially if at the same time there are complaints by the same people about "debt" and "deficit"
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I don't believe that the position that we may want to dis-incentivize extreme levels of income to some degree is extreme.
OK; fair enough. Turn it around. Why do you believe it does make sense to dis-incent extreme levels of income? What goal(s) are you hoping to accomplish with that?
That's the philosophy; now for the practicality:
Do you think that any perturbance of activity by taxpayers would result? Would the aggregate result be more or less beneficial than the progressive rate system we have today?
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I don't believe that the position that we may want to dis-incentivize extreme levels of income to some degree is extreme.
OK; fair enough. Turn it around. Why do you believe it does make sense to dis-incent extreme levels of income? What goal(s) are you hoping to accomplish with that?
That's the philosophy; now for the practicality:
Do you think that any perturbance of activity by taxpayers would result? Would the aggregate result be more or less beneficial than the progressive rate system we have today?
One reason could be to manage (***manage != eliminate***) the extreme inequality potential of raw capitalism.
As to the practical questions, how would a 70-ish% top rate at extreme levels of income (just to throw a number out there, 1.5MM/year maybe) be significantly different from our current progressive rate system besides the rates?
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50% isn't arbitrary, it's the exact dividing line between keeping the majority of your wages and losing it to taxes.
"Your" money is actually a privledge granted to you by the government. "Your" ability to amass that money is controlled heavily by the safety, services, and financial policy pursued by your government. Sure, there's a lot of hard work that you do . . . but given that the only reason you can complain about the loss of your wages is due to the environment created by those you're paying, I'm not sure you can really argue that the 50% dividing line has any real meaning at all.
I think we started off with the wrong dispute. GuitarStv had a point to make but it really had nothing to do with the arbitrariness of the 50% mark.
I would argue that 50% is arbitrary given the equation in question. Sure it is the difference between minority/majority but that is purely emotional in this circumstance.
Is it purely arbitrary? Once the majority of your additional income goes to benefit someone other than yourself (and family, etc) I'd argue that's a pretty big disincentive.
A person could reasonably come along just as offended by having to give up say 40% for very similar reasons. 40% is still a shit load of money to give to the government for work you did. Since reasonable people can disagree on the same premise that 30%,40%, 50% is a lot to part with I think the number at which you find income tax offensive is arbitrary with respect to the feelings of the greater population. I can't very well tell you what is arbitrary for you personally.
For me personally I think "trickle down economics" is part of a long narrative that has been feed to the right to convince them beyond a shadow of a doubt that progressive income tax is akin to theft, which goes along with our slow push to crunch all the tax brackets down to one. But I think the reality of what is too much income tax and what is not enough greatly depends on context. There are many higher tax Western nations where by and large high middle income earners are very happy because they perceive that they are getting value out of their taxes.
In the US we generally have much more control of our income for better and worse, depending on your state of residence. I think the complexity of our tax code obfuscates the reality of how much taxes we really pay. With sales tax, import taxes, hidden gas taxes, income tax, payrole tax, property tax ect, it becomes incredibly difficult for the average person to take the time to understand how much they are being taxed from anyone source and how much return services or improvements they are seeing as a result. People on this site tend to have a better idea than most because many of us are interested in min maxing our earnings.
My long winded point is that there is probably more to your perception that there is something deeply wrong with giving half or more of every dollar earned to the government probably doesn't apply to everyone. It sounds like for you the crux of the matter is that you think it insane that a government should have more of a say on what your money will be used for than you do thus the line where they take the majority of your earned income is a well reasoned line. Thats certainly a argument you could make.
My impression of complicated tax systems is that they are more than just a means to funnel money into the government. Tax code is as much about trying to fairly fund necessary government functions as it is about favoring certain positive behaviors and penalizing ones we perceive as bad, while not taking away the freedom to partake in bad behavior if we value it enough.
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A thought to add to the taxes discussion upstream: why do some folks who want to cut taxes and pay down the deficit. still want to keep adding to the defense budget? Because the rich have the most assets, both domestically and abroad, which they would like to protect.
Two reasons:
1. Defense is one of the few specifically enumerated powers in the Constitution for the Federal government.
2. It's one of the things that really is not well provided for in most instances by the private sector, and is not done hardly at all by the states (lots of other things are double dipped, state and Fed)
Sure, but why keep spending more & more? Especially if at the same time there are complaints by the same people about "debt" and "deficit"
It is one thing to believe in the mandate of our federal government to provide defense. It is entirely another to suggest that our defense budget is in need of more money. We spend double the amount on defense of our 3 largest adversaries combined (China, Russian and Saudi's)... that alone is highly suspect. Perhaps we should stop projecting so much force globally as if our allies are helpless. It would take a long independent study to convince me that we should not be streamlining our defense budget and cutting costs and programs not making us safer.
If you are a purely a deficit hawk you should be just as concerned about overspending in the military as any other program. Dumping more money into the military is a lazy way for politicians to prove they are pro defense. If our Navy needs to grow, veterans need better care or aging forces need better equipment surely we can divert that money form elsewhere in the our defense budget. I would at least like to see the effort being made.
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As to the practical questions, how would a 70-ish% top rate at extreme levels of income (just to throw a number out there, 1.5MM/year maybe) be significantly different from our current progressive rate system besides the rates?
1.5MM/person (double that for MFJ), I would be OK with a higher rate, and maybe 70% is OK. But remember, we're already smacking that person with 3.8% ACA surtax; that person is probably paying a state income tax on it and might also be paying a local income tax on it. The closer you walk to a 100% effective marginal rate, the more actions people take to defer the recognition of income. Maybe I take shares in a company that allow me to take capital gains in later years. Maybe I trade off some of my own income this year for deferred comp in future years. If instead of making $15MM this year where you tax away $12MM of it, maybe I structure my comp as $1.5MM for each of the next 10 years where you only tax away $7.5MM of it. If that comp is essentially guaranteed, I can still borrow against the future income stream, meaning my purchasing power [and associated control] is preserved, but without the taxman taking quite as deep a bite.
How would a top 70% headline rate (an effective 80+% all-in rate) different from a 39.6% headline rate (effective 50% rate)? Well, it would provide a lot more potential energy to drive structuring of affairs so as to avoid taking current income in favor of future income. Do those things add value to economy? IMO, no; they suck the time, energy, creativity, and attention of smart people away from things that advance society and channel them towards largely unproductive [for society] structuring affairs.
Besides than the weight, how does a 5'10", 300# person significantly differ from a 5'10" 150# person?
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I believe a major fault of the popular tax systems is they all tax income (production) vs spending (consumption).
This violates the basic precepts of: reward what you want to encourage. tax what you want to discourage.
Income tax discourages productivity; encourages hiding income (evasion).
I think a better system would be consumption tax. Or maybe just poll tax. You want to vote, to be represented? pay up. It works that way anyway - let's just be more honest about it.
Wait - are there no consumption taxes in the US?
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There are sales taxes in most areas (not all) and fuel taxes everywhere.
They are not at EU VAT levels, though, more typically 4-10%.
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I believe a major fault of the popular tax systems is they all tax income (production) vs spending (consumption).
This violates the basic precepts of: reward what you want to encourage. tax what you want to discourage.
Income tax discourages productivity; encourages hiding income (evasion).
I think a better system would be consumption tax. Or maybe just poll tax. You want to vote, to be represented? pay up. It works that way anyway - let's just be more honest about it.
Wait - are there no consumption taxes in the US?
Yes, it's called a sales tax. And the original poll tax ended with the 24th amendment in 1964. Funny how allegedly "encouraging" hiding income is bad but discriminatory laws are somehow "better."
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I believe a major fault of the popular tax systems is they all tax income (production) vs spending (consumption).
This violates the basic precepts of: reward what you want to encourage. tax what you want to discourage.
Income tax discourages productivity; encourages hiding income (evasion).
I think a better system would be consumption tax. Or maybe just poll tax. You want to vote, to be represented? pay up. It works that way anyway - let's just be more honest about it.
Wait - are there no consumption taxes in the US?
91% of fed income is income tax
http://www.cbpp.org/research/policy-basics-where-do-federal-tax-revenues-come-from
Which, IMHO, is bass-akwards
“Income tax has made more liars out of the American people than golf.” — Will Rogers
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China, Russian and Saudi's)..
Saudi... You meant Iran, right?
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China, Russian and Saudi's)..
Saudi... You meant Iran, right?
In this case I meant the Saudi's. We all round out the top 4 spenders. Iran isn't even a top 10. Technically we are allies but I think fundamentally we have enough difference to where we view Saudi military power much different than say UK military power.
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As to the practical questions, how would a 70-ish% top rate at extreme levels of income (just to throw a number out there, 1.5MM/year maybe) be significantly different from our current progressive rate system besides the rates?
1.5MM/person (double that for MFJ), I would be OK with a higher rate, and maybe 70% is OK. But remember, we're already smacking that person with 3.8% ACA surtax; that person is probably paying a state income tax on it and might also be paying a local income tax on it. The closer you walk to a 100% effective marginal rate, the more actions people take to defer the recognition of income. Maybe I take shares in a company that allow me to take capital gains in later years. Maybe I trade off some of my own income this year for deferred comp in future years. If instead of making $15MM this year where you tax away $12MM of it, maybe I structure my comp as $1.5MM for each of the next 10 years where you only tax away $7.5MM of it. If that comp is essentially guaranteed, I can still borrow against the future income stream, meaning my purchasing power [and associated control] is preserved, but without the taxman taking quite as deep a bite.
How would a top 70% headline rate (an effective 80+% all-in rate) different from a 39.6% headline rate (effective 50% rate)? Well, it would provide a lot more potential energy to drive structuring of affairs so as to avoid taking current income in favor of future income. Do those things add value to economy? IMO, no; they suck the time, energy, creativity, and attention of smart people away from things that advance society and channel them towards largely unproductive [for society] structuring affairs.
Besides than the weight, how does a 5'10", 300# person significantly differ from a 5'10" 150# person?
See, now your talking about details and to be honest I haven't done the research that I would need to in order to tell you exactly what rates I would recommend and at what income levels I would place them (I'm not a congress-person after all). My instinct based on what I do know is to recommend an ~70% top rate placed somewhere around 20-25x median income (adjusted for inflation, of course). That's based largely on research that I've seen that indicates that the top rate can go as high as ~70% before we see a significant disincentive to income and the fact that I think that at that level of income it is entirely reasonable to intentionally discourage more income at least slightly. I also fully understand that some people will try to work around it and still make more income. But some won't, and I'm sure we can account for some of those workarounds in the actual legislation. My entire point was really just that the idea that there is no level of income which we might want to discourage is extreme and detrimental to society.
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My entire point was really just that the idea that there is no level of income which we might want to discourage is extreme and detrimental to society.
What if Elan Musk decided that after selling Paypal, if he was only going to make 10% of his future income post tax it just wasn't worth creating Tesla, Space-X, etc, and he might as well go lay on the beach somewhere. Is society better off?
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My entire point was really just that the idea that there is no level of income which we might want to discourage is extreme and detrimental to society.
What if Elan Musk decided that after selling Paypal, if he was only going to make 10% of his future income post tax it just wasn't worth creating Tesla, Space-X, etc, and he might as well go lay on the beach somewhere. Is society better off?
Do you actually think Elon Musk is motivated by money?
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My entire point was really just that the idea that there is no level of income which we might want to discourage is extreme and detrimental to society.
What if Elan Musk decided that after selling Paypal, if he was only going to make 10% of his future income post tax it just wasn't worth creating Tesla, Space-X, etc, and he might as well go lay on the beach somewhere. Is society better off?
Do you actually think Elon Musk is motivated by money?
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Do you think Tesla or SpaceX would have gotten off the ground if Elon hadn't had about $100 million of his own money to put into each of them?
Of course there are plenty of examples of rich people using their money in neutral or damaging ways to society (lobbying being a big one), but Elon is the perfect example of someone whose riches are on the way to advancing society in a very meaningful way. I think the same could be said of Bill Gates and his foundation.
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My entire point was really just that the idea that there is no level of income which we might want to discourage is extreme and detrimental to society.
What if Elan Musk decided that after selling Paypal, if he was only going to make 10% of his future income post tax it just wasn't worth creating Tesla, Space-X, etc, and he might as well go lay on the beach somewhere. Is society better off?
Do you actually think Elon Musk is motivated by money?
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Maybe maybe not, but I bet he isn't interested in working for (nearly) free. At least not as hard.
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The other thing to consider is that most people with megabucks (billions) are not making their money on earned income. They're making it via stock gains and company ownership. And income tax doesn't affect that, it falls under capital gains (once realized). There are very few segments of society where people are making serious money (millions) solely on wage income; stock brokers/bankers who aren't partners, movie stars, and pro athletes are some of the few groups who do. So maybe people think it's worth taking a significant chunk of the income from those groups, but most other extremely highly compensated individuals make their millions through stock, profit sharing on partnerships (lawyers, etc), that sort of thing. Which is generally unaffected by taxes on ordinary income.
So basically, not only is it a bad idea, it's also likely ineffective.
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Maybe maybe not, but I bet he isn't interested in working for (nearly) free. At least not as hard.
According to him, he is. He said he's not doing SpaceX and Tesla for the money, and that he's basically a volunteer. His motivations were to bring the shift to renewable fuels and us becoming a multi-planetary species closer. He works pretty damn hard.
This isn't meant as part of the ongoing discussion here, just an aside.
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Maybe maybe not, but I bet he isn't interested in working for (nearly) free. At least not as hard.
According to him, he is. He said he's not doing SpaceX and Tesla for the money, and that he's basically a volunteer. His motivations were to bring the shift to renewable fuels and us becoming a multi-planetary species closer. He works pretty damn hard.
This isn't meant as part of the ongoing discussion here, just an aside.
Perhaps. But he owns somewhere between $3B and $5B worth of TSLA stock that he hasn't exactly given away. It's easy to say you aren't in it for the money when you are making serious money.
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Do you think Tesla or SpaceX would have gotten off the ground if Elon hadn't had about $100 million of his own money to put into each of them?
Of course there are plenty of examples of rich people using their money in neutral or damaging ways to society (lobbying being a big one), but Elon is the perfect example of someone whose riches are on the way to advancing society in a very meaningful way. I think the same could be said of Bill Gates and his foundation.
Yep, you found two of the reasons I wouldn't want to ban extreme incomes. I have no problem discouraging them though for a couple reasons... 1. Taxing extreme incomes doesn't prevent anyone from amassing a fortune. 2. People like Elon and Bill will find a way. I don't believe high tax rates on extreme incomes would have stopped either of them from doing what they did. Made it a little harder maybe, but a little extra difficulty wouldn't stop someone like Elon.
Maybe maybe not, but I bet he isn't interested in working for (nearly) free. At least not as hard.
I disagree. Based on everything I've read about him I firmly believe that he would be working on the same problems whether he was making money on them out not. I get that it may be hard for you to understand if you don't have a similar passion, but people with that kind of passion do exist.
Perhaps. But he owns somewhere between $3B and $5B worth of TSLA stock that he hasn't exactly given away. It's easy to say you aren't in it for the money when you are making serious money.
So, because he's not giving away his current stash he must have created Tesla and SpaceX to make more money? I don't think that follows.
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The other thing to consider is that most people with megabucks (billions) are not making their money on earned income. They're making it via stock gains and company ownership. And income tax doesn't affect that, it falls under capital gains (once realized). There are very few segments of society where people are making serious money (millions) solely on wage income; stock brokers/bankers who aren't partners, movie stars, and pro athletes are some of the few groups who do. So maybe people think it's worth taking a significant chunk of the income from those groups, but most other extremely highly compensated individuals make their millions through stock, profit sharing on partnerships (lawyers, etc), that sort of thing. Which is generally unaffected by taxes on ordinary income.
So basically, not only is it a bad idea, it's also likely ineffective.
This is true. And although the answer would be to impose a tax on capital gains at the same rates, as I've pointed out above - capital is mobile. So unless all countries do it, what you'll get is people investing their capital in other countries with lower taxes. I'm not even talking about tax havens - if the US puts a top marginal rate of 70% on capital but Canada doesn't, you can bet that Canada will get a lot of investment that would have otherwise gone to the US. That would not be good for the US as a whole.
And if you don't tax capital as heavily as income, you get horizontal inequity and avoidance opportunities. Because someone earning, say, $1m/year in income will get taxed at up to 70% but someone earning $1m/year in capital gains could pay much less tax.
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I pay the same capital gains tax - to the Canadian government - on my US investments as my Canadian investments. As you mentioned above, we only pay taxes when the gains are realized. So it doesn't matter if I make $1000 on Pfizer or $1000 on Saputo, I pay the same amount of tax.
Is this not the same in the US? I have the impression the IRS is even more picky and determined than the CRA. so you would have to emigrate to Canada to get the better capital gains rate in Canada (in the unlikely event that our tax rates ever become lower than US tax rates)?
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Yes, most countries tax based on residence and source. (US is unusual in that it also taxes based on citizenship.) So if you're resident in Canada but have a capital gain in the US, you'd potentially be liable to tax under both countries. To prevent this double taxation, there are tax treaties. US and Canada might have agreed that Canada has the sole right to tax in that case - in which case you'd only be concerned about Canada's tax rates. And you'd be correct in saying that you'd get the better capital gains rate in Canada (if Canada's tax rates are lower than the US) by emigrating to Canada.
But the treaty may give the right to tax to the US instead - e.g. the US will tax your capital gain, and Canada only gives you a tax credit for US tax paid to offset your Canadian tax liability resulting in zero additional Canadian tax to pay if the US tax rate is higher. Or they may give Canada the first right to tax, but allow US the right to tax the residual (e.g. if Canada tax is 30% and US tax is 70%, the treaty will let the US tax only 40%). In these cases, even though you're in Canada, you'd still be paying tax at the higher US tax rate. So if the US tax rate for capital gains is 70% and you're a Canadian with capital to invest, you may well decide to invest back in Canada instead, or the UK, or Australia, or one of the many other countries with lower tax rates.
I'm not saying foreign investment in the US would completely dry up. But anyone outside the US with serious capital to invest, faced with a US tax rate of 70%, will certainly reconsider investing in the US, or at least structure their investment so that their US profits are minimal. (This already happens to an extent, but a 70% tax rate would exacerbate it.) And the US - as with all other countries - benefits greatly from foreign investment.
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Yes, that happens with dividend payments from US companies for my cash accounts. They withhold tax at US rates, and then I get a credit from the CRA when I file for the taxes paid to the IRS.
We occasionally hear stories about the US going after non-resident citizens who live in Canada and didn't bother to file a US tax return. In most cases, it seems like a lot of trouble for no benefit. I guess if they catch a billionaire once in a while it would be cost effective though.
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The other thing to consider is that most people with megabucks (billions) are not making their money on earned income. They're making it via stock gains and company ownership. And income tax doesn't affect that, it falls under capital gains (once realized). There are very few segments of society where people are making serious money (millions) solely on wage income; stock brokers/bankers who aren't partners, movie stars, and pro athletes are some of the few groups who do. So maybe people think it's worth taking a significant chunk of the income from those groups, but most other extremely highly compensated individuals make their millions through stock, profit sharing on partnerships (lawyers, etc), that sort of thing. Which is generally unaffected by taxes on ordinary income.
So basically, not only is it a bad idea, it's also likely ineffective.
This is a great point, and it's also one of the hidden reasons that there is so much opposition to the ACA. The ACA introduced a tax on capital gains that only affects high earners like the ones mentioned by Chris.
With all the fuss kicked up over a 3% marginal increase in W-2 income over 450k under Obama, I can't imagine what kind of misinformation would happen if someone tried tax capital gains at the rate of ordinary income. Probably an army of Joe the Plumbers making 30k under the table and loudly complaining about how someone was trying to tax all their (nonexistent capital gains) income.
Hey-remember when Trump said he was going to close the carried interest loophole? Good times.
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The idea that the only thing standing between poor people and medicine and food is a bunch of rich people hoarding tax money so they can buy BMWs and yachts is simply absurd. Even if we doubled everyone's taxes I have no confidence the federal government could use that money effectively to accomplish anything.
So your complaint is that the federal government doesn't spend it's tax revenues wisely, and you think that's the reason we have poverty in America?
Let's review. You're literally asking the federal government to give more money to rich people than they currently get, because you think the federal government isn't doing enough to address American poverty? That's some classic trickle down bullshit, right there.
You don't routinely deal in economics or how the economy and taxes work do you? You seem to have a fundamental misunderstaning.
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You don't routinely deal in economics or how the economy and taxes work do you? You seem to have a fundamental misunderstaning.
Are you suggesting that trickle down economics is not a fraud? Because if so, you can just come out and say so. We're accustomed to dealing with all kinds of ridiculous opinions on this forum.
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You don't routinely deal in economics or how the economy and taxes work do you? You seem to have a fundamental misunderstaning.
Are you suggesting that trickle down economics is not a fraud? Because if so, you can just come out and say so. We're accustomed to dealing with all kinds of ridiculous opinions on this forum.
Are you suggesting that positive financial incentives to create businesses and jobs doesn't increase the number of businesses and jobs created?
Or are you suggesting that the removal of those incentives will cause the same number of businesses and jobs to come into being?
Let's imagine that we're playing a game where we flip a fair coin. Every time it comes up heads, you win some amount of money, X. Every time it comes up tails you win nothing. You must pay $10 in order to flip the coin. Does the value of X change your willingness to play the game at all?
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How do I know it's a fair coin?
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How do I know it's a fair coin?
Look at the history of the coin. Or, since this is a mental exercise, take it as a given. Or, if you are worried that it's unfair, pick a different $X to offset the bias you perceive.
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You don't routinely deal in economics or how the economy and taxes work do you? You seem to have a fundamental misunderstaning.
Are you suggesting that trickle down economics is not a fraud? Because if so, you can just come out and say so. We're accustomed to dealing with all kinds of ridiculous opinions on this forum.
Are you suggesting that positive financial incentives to create businesses and jobs doesn't increase the number of businesses and jobs created?
Or are you suggesting that the removal of those incentives will cause the same number of businesses and jobs to come into being?
Let's imagine that we're playing a game where we flip a fair coin. Every time it comes up heads, you win some amount of money, X. Every time it comes up tails you win nothing. You must pay $10 in order to flip the coin. Does the value of X change your willingness to play the game at all?
Incentives don't create jobs. People create jobs. The likelihood that a particular incentive will convince a person to do something that creates a job is dependant upon a lot of variables, many of which have little / nothing to do with the incentive.
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Incentives don't create jobs. People create jobs. The likelihood that a particular incentive will convince a person to do something that creates a job is [dependent] upon a lot of variables, many of which have little / nothing to do with the incentive.
Agreed (of course).
Ceteris paribus, do incentives making the creation of jobs more financially rewarding to employers tend to increase, have no effect, or decrease job creation?
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Ceteris paribus, do incentives making the creation of jobs more financially rewarding to employers tend to increase, have no effect, or decrease job creation?
The fundamental problem with this, and all of trickle down economics, is that different incentives are effective at different points in the business cycle, or depending on the status of the current economy.
In an economic environment in which taxes are stifling business growth because businesses are too poor to have access to capital to expand, then cutting taxes on businesses incentivizes growth by giving them access to more funds to invest in their businesses. In an environment in which businesses are flush with cash (like now) and businesses can't expand because they can't find new customers, then cutting taxes on (lower income) customers incentivizes growth, because it creates more demand. In an environment in which the government cannot protect a functioning fair free market, then raising taxes incentivizes growth, because it prevents monopolies and fraud.
Of these three scenarios, I think the US economy has most recently had more problems with market abuses (credit default swaps, anyone?) and a lack of low income customers (stagnant worker wages, anyone?) than it has with businesses being unable to afford expansion (historically low interest rates, anyone?).
At this point in time, cutting taxes on businesses is the exact wrong thing to do if you want to grow the economy. It is only the right thing to do if you want to make our wealthiest citizens wealthier at the expense of our economy. Unfortunately, our wealthiest citizens have bought approximately half of our elected representatives to pursue exactly that outcome. I include both candidates of the most recent presidential election on the "bought" list.
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Incentives don't create jobs. People create jobs. The likelihood that a particular incentive will convince a person to do something that creates a job is [dependent] upon a lot of variables, many of which have little / nothing to do with the incentive.
Agreed (of course).
Ceteris paribus, do incentives making the creation of jobs more financially rewarding to employers tend to increase, have no effect, or decrease job creation?
All else equal, it'll help create some jobs, but the cost is pretty high. You're essentially giving everyone a tax break in order to induce some marginal investment.
Like, if you have 100 companies investing a total of $100 billion, and you switch to immediate deduction of all expenses, you're losing $100 billion in tax revenue. You might increase investment, say to $110 billion, but you're hitting the government bottom line at a 10:1 ratio.
I personally support the idea of eliminating corporate taxes, but it should be coupled with increases in personal income and dividend and capital gains taxes.
For inducing growth in the supply side....well...I think the US is actually doing an awesome job, all things considered. I'm a big believer in the "Great Stagnation" hypothesis that suggests all the easy innovations of the industrial revolution were exhausted by the early 1970s, with a resulting drop in productivity growth. The US has managed that transition very well, much better than pretty much any other nation.
The real hope is to get the US up the technology curve, which is going to depend on frontier firms pushing technology, smart people for those frontier firms, and having a good mix of people so best practices can percolate through the economy.
There's some convincing evidence that laggard firms aren't picking up best practices as quickly as they used to. I think workers aren't moving around as much as they used to, particularly at the higher levels. I guess those Wall Street consultants aren't a good substitute for actual workforce turnover...
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Hehe, you Americans are too busy digging up coal to move up the technology curve.
Observations in the field suggest that incentives to create jobs provide bonuses to the executives responsible for gaining the incentives for their companies. Job creation? I'll believe it when you can demonstrate it.
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Incentives don't create jobs. People create jobs. The likelihood that a particular incentive will convince a person to do something that creates a job is [dependent] upon a lot of variables, many of which have little / nothing to do with the incentive.
Agreed (of course).
Ceteris paribus, do incentives making the creation of jobs more financially rewarding to employers tend to increase, have no effect, or decrease job creation?
It depends on the incentive. If you can guarantee that the incentive you're providing will only incentivize job creation, then sure . . . It'll probably create jobs. Tax breaks (for example) have historically not been correlated with job creation though.
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People love to confuse issues.
Tax cuts != job creation
Government spending = job creation
Businesses will only create jobs if required to increase profits. Every business is looking at how to increase efficiency (read: eliminate people/do more work with less people). It's entirely possible that cutting taxes will allow businesses to invest in technology that will allow them to eliminate even more positions.
I don't think creating jobs is good reason to do anything.
I want the corporate tax cut because I'm rich, own a bunch of capital, and this will give me more. If you want the corporate tax cut for some other reason you're going to be disappointed.
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Well of course. Corporate tax cuts benefit corporate shareholders, boards of directors and corporate executives.
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Maybe maybe not, but I bet he isn't interested in working for (nearly) free. At least not as hard.
I disagree. Based on everything I've read about him I firmly believe that he would be working on the same problems whether he was making money on them out not. I get that it may be hard for you to understand if you don't have a similar passion, but people with that kind of passion do exist.
My boss's boss is one of those people. He retired years ago after selling a business, and ended up coming to work here because he loves the job. Even taking that into account, I can tell you he wouldn't be doing it for free, he's told me that himself.
Money may not be the primary motivator for people, but it's often enough to push them over the edge, and to keep them doing the not so fun stuff. My dad just retired and is doing some contract work traveling around. He enjoys the job, but a big part of his motivation is the money (even though he doesn't need it). The money also keeps him going during the days of paperwork and meetings that aren't as glamorous.
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People love to confuse issues.
Tax cuts != job creation
Government spending = job creation
Businesses will only create jobs if required to increase profits. Every business is looking at how to increase efficiency (read: eliminate people/do more work with less people). It's entirely possible that cutting taxes will allow businesses to invest in technology that will allow them to eliminate even more positions.
I don't think creating jobs is good reason to do anything.
I want the corporate tax cut because I'm rich, own a bunch of capital, and this will give me more. If you want the corporate tax cut for some other reason you're going to be disappointed.
Ehhh, the chances of technology causing widespread unemployment are really low. It hasn't happened before and practically every economist I have read has come out against the Neo-Luddite narrative. Assuming that we actually do hit Technological Singularity, and people become useless, we'll be incredibly rich, not poor.
Getting business to invest more is a key goal of supply-side tax policy. We want to get businesses to create more capital, because we're richer as we have more capital per worker. Part of the problem with recent wages (by which I mean post-2008 recent) is a lack of investment and less capital growth per worker.
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Assuming that we actually do hit Technological Singularity, and people become useless, we'll be incredibly rich, not poor.
Agreed that we as a species will be incredibly rich. The problem lies in the distribution of the wealth. If it's concentrated in the few who control the means of production (and an awful lot in recent history would seem to indicate this is the most likely scenario) then people becoming useless will coincide with the vast majority of people being extremely poor.
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Even taking that into account, I can tell you he wouldn't be doing it for free, he's told me that himself.
Then he's not one of the people that I'm talking about. I know these type of people exist, because I am one. I work on my passion in my off time now, for free. I do have plans to make money off of it eventually, but that's only because that will give me more time to work on my passion instead of having to work another job for basic subsistence. And if I actually make it to FI before I am able to monetize my passion, then I'll likely do it for free.
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A person could reasonably come along just as offended by having to give up say 40% for very similar reasons. 40% is still a shit load of money to give to the government for work you did. Since reasonable people can disagree on the same premise that 30%,40%, 50% is a lot to part with I think the number at which you find income tax offensive is arbitrary with respect to the feelings of the greater population. I can't very well tell you what is arbitrary for you personally.
For me personally I think "trickle down economics" is part of a long narrative that has been feed to the right to convince them beyond a shadow of a doubt that progressive income tax is akin to theft, which goes along with our slow push to crunch all the tax brackets down to one. But I think the reality of what is too much income tax and what is not enough greatly depends on context. There are many higher tax Western nations where by and large high middle income earners are very happy because they perceive that they are getting value out of their taxes.
It's already been explained up-thread, but "trickle down economics" is not a narrative that has been fed to the right. It is a narrative fed to the left. If you are arguing for or against trickle down economics, you are either (1) dishonestly setting up and attacking a straw man to sucker other people, (2) honestly attacking a strawman you don't realize has been set up by other people to sucker you, or (3) arguing in favor of a strawman argument just because you think the people arguing against it are idiots and you're just assuming you should be for whatever they are against.
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Assuming that we actually do hit Technological Singularity, and people become useless, we'll be incredibly rich, not poor.
Agreed that we as a species will be incredibly rich. The problem lies in the distribution of the wealth. If it's concentrated in the few who control the means of production (and an awful lot in recent history would seem to indicate this is the most likely scenario) then people becoming useless will coincide with the vast majority of people being extremely poor.
Going to have a lot of people eating their yummy steak in the Matrix
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I'm going to toss another wrinkle into this discussion, one that was briefly mentioned on page 2 but not fleshed out enough IMO. That issue is the question of which level of government should be setting economic policy and doing the spending, and on what.
In other words, why do we have so much of our spending/economic policy/taxation originate on a federal level? When I look at education, infrastructure, law enforcement, urban planning, social welfare, etc, the vast majority of them would be better handled on a more local level. For example, my village wants to widen 4.5 miles of road (2 lanes ->4) and add roundabouts at a half dozen locations. The projected cost is $50 million. That's a lot of money for a village of 30,000 to raise. But it's no problem, because Uncle Sam is going to pay for a bunch of it!
If instead the village had to finance the project entirely on their own, they'd be forced to reconsider what they actually need to build. Instead of paving 4 lanes for the entire distance, they'd probably realize "hey, two lanes is actually enough, it's just at intersections that it becomes a problem." Or, instead of building a massive 100-foot-wide corridor (8' bike path, grass strip, 4' paved shoulder, 2x 11' lanes, 18' median, 2x 11' lanes, 4' shoulder, grass strip, 4' sidewalk, plus more right-of-way on either side), they'd be forced to only build what is needed. But since they're expecting the lion's share to be paid by the Federal government, there doesn't appear to be much appetite for restraint.
In short, it's a lot easier to accept higher taxes (of any sort on anyone) when they're being spent efficiently, and with greater accountability to the folks paying the taxes. And that's more likely to happen the more local the taxing and spending happens.
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When I look at education, infrastructure, law enforcement, urban planning, social welfare, etc, the vast majority of them would be better handled on a more local level.
There's an issue with uniformity when doing what you suggest.
To pick a single point to dispute let's look at education. The purpose of education is to produce enough useful minds in the workforce to keep the economy chugging along. If education isn't standardized then you will get a different education depending on where you live. Some places will be great and produce large quantities of bright students. Some places will suck and produce useless students. This will have the ultimate effect of certain areas of the country failing year after year (since it can take a very long time to change people's opinions about the effectiveness of their chosen course) . . . which means that students from some areas will be passed over when competing for higher education time and again . . . which means that you will end up with a large number of people unable to significantly contribute to the economy. Although I suspect that eventually some course correction will take place . . . having a couple generations of badly/poorly educated is going to be a hell of a difficult obstacle to overcome.
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When I look at education, infrastructure, law enforcement, urban planning, social welfare, etc, the vast majority of them would be better handled on a more local level.
There's an issue with uniformity when doing what you suggest.
To pick a single point to dispute let's look at education. The purpose of education is to produce enough useful minds in the workforce to keep the economy chugging along. If education isn't standardized then you will get a different education depending on where you live. Some places will be great and produce large quantities of bright students. Some places will suck and produce useless students...
That's a valid concern, but I have three counterpoints:
1) We already have a system of uniformity, and it doesn't appear to be producing much uniformity. Compare Chicago Public Schools to the suburbs, for example. Would some school districts show worse performance, given more local control? Possibly. Would some school districts show better performance without the micromanagement and unfunded one-size-fits-all mandates? Absolutely.
2) Transparency. The quality of schools (often judged on the basis of standardized test scores) is already a major factor in where people decide to live, and all that information is readily available.
3) The quality of a school system isn't the only factor affecting students' success down the road, nor is it the biggest factor. The biggest factor (from what I've heard) is parental involvement in their kids' education. Which means that issues of non-uniformity are more a cultural problem (and in some cases, a financial problem, if both parents have to work a lot and don't have the time) than a regulatory or fiscal one. I would argue that attempts to encourage uniformity actually make this issue worse, because parents lose their ability to influence their kids' education, and so they become less engaged in the education process.
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When I look at education, infrastructure, law enforcement, urban planning, social welfare, etc, the vast majority of them would be better handled on a more local level.
There's an issue with uniformity when doing what you suggest.
To pick a single point to dispute let's look at education. The purpose of education is to produce enough useful minds in the workforce to keep the economy chugging along. If education isn't standardized then you will get a different education depending on where you live. Some places will be great and produce large quantities of bright students. Some places will suck and produce useless students...
That's a valid concern, but I have three counterpoints:
1) We already have a system of uniformity, and it doesn't appear to be producing much uniformity. Compare Chicago Public Schools to the suburbs, for example. Would some school districts show worse performance, given more local control? Possibly. Would some school districts show better performance without the micromanagement and unfunded one-size-fits-all mandates? Absolutely.
I suspect that the answer to your two questions would be 'Yes.' and 'Yes.' The US is a big place, and there are going to be over and under-performers no matter what you do.
The system of uniformity doesn't guarantee that every student will do as well as the next. It guarantees that students are presented with roughly the same information.
2) Transparency. The quality of schools (often judged on the basis of standardized test scores) is already a major factor in where people decide to live, and all that information is readily available.
While I'm not a huge fan of it, the standardized testing used to rank schools is part of the federal government program that you're trying to do away with. With each school studying a different curriculum and responsible for their own testing, test scores are simply not comparable to each other. An 80 in California might only be worth a 60 in Utah. That makes information much more difficult to get and use. Without a nation wide standard set of tests and results, the only way you can tell how an education system is doing is to check university results . . . which means you're waiting a generation or so before you have any kind of useful data.
3) The quality of a school system isn't the only factor affecting students' success down the road, nor is it the biggest factor. The biggest factor (from what I've heard) is parental involvement in their kids' education. Which means that issues of non-uniformity are more a cultural problem (and in some cases, a financial problem, if both parents have to work a lot and don't have the time) than a regulatory or fiscal one. I would argue that attempts to encourage uniformity actually make this issue worse, because parents lose their ability to influence their kids' education, and so they become less engaged in the education process.
You're attempting to use one of the triumphs of a standardized curriculum to attack it. The goal of standardization is that each student is presented with the same material in school. Even a shitty teacher still has to teach the same stuff as everyone else. You lose this protection when you allow schooling to be a local issue. All of a sudden a class in Idaho with the best teacher may not be as well prepared for university as a student in Georgia.
Sure, parental involvement in education is very important. The attitude of parents and the community has a huge impact on kids work ethic. Appreciation of cultural differences is very important too. If the parents are more involved because they live in the bible belt and the class is now teaching creationism as though it were something legit, I'd argue that the increase in parental involvement and extra culture is actively damaging the child's education though. The most enthusiastic parent in the world isn't giving their kid a good education if the basic facts being taught are wrong.
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When I look at education, infrastructure, law enforcement, urban planning, social welfare, etc, the vast majority of them would be better handled on a more local level.
There's an issue with uniformity when doing what you suggest.
To pick a single point to dispute let's look at education. The purpose of education is to produce enough useful minds in the workforce to keep the economy chugging along. If education isn't standardized then you will get a different education depending on where you live. Some places will be great and produce large quantities of bright students. Some places will suck and produce useless students...
That's a valid concern, but I have three counterpoints:
1) We already have a system of uniformity, and it doesn't appear to be producing much uniformity. Compare Chicago Public Schools to the suburbs, for example. Would some school districts show worse performance, given more local control? Possibly. Would some school districts show better performance without the micromanagement and unfunded one-size-fits-all mandates? Absolutely.
I suspect that the answer to your two questions would be 'Yes.' and 'Yes.' The US is a big place, and there are going to be over and under-performers no matter what you do.
The system of uniformity doesn't guarantee that every student will do as well as the next. It guarantees that students are presented with roughly the same information.
I guess we're seeing the same thing here, but are focusing on opposite ends of the spectrum. You are worried about underperforming schools/students being left behind, while I'm worried about high-performing schools/students being hindered. My argument is that enforced uniformity hurts the latter more than localized control might hurt the former.
As for "same information," I'll get to that in a bit.
2) Transparency. The quality of schools (often judged on the basis of standardized test scores) is already a major factor in where people decide to live, and all that information is readily available.
While I'm not a huge fan of it, the standardized testing used to rank schools is part of the federal government program that you're trying to do away with. With each school studying a different curriculum and responsible for their own testing, test scores are simply not comparable to each other. An 80 in California might only be worth a 60 in Utah. That makes information much more difficult to get and use. Without a nation wide standard set of tests and results, the only way you can tell how an education system is doing is to check university results . . . which means you're waiting a generation or so before you have any kind of useful data.
Please don't misunderstand me--I'm not advocating the abolition of standardized tests, and I dislike them as much as you. :) What I object to is Federal money being tied to a state or district's acceptance of a specific program chosen by the DoE in DC. It's one thing to rate states/districts/schools on standardized test scores. It's entirely another to tie money to it.
3) The quality of a school system isn't the only factor affecting students' success down the road, nor is it the biggest factor. The biggest factor (from what I've heard) is parental involvement in their kids' education...
You're attempting to use one of the triumphs of a standardized curriculum to attack it. The goal of standardization is that each student is presented with the same material in school. Even a shitty teacher still has to teach the same stuff as everyone else. You lose this protection when you allow schooling to be a local issue. All of a sudden a class in Idaho with the best teacher may not be as well prepared for university as a student in Georgia.
We're getting off the track of funding and down the rabbit hole of curriculum, but I'll dive into it anyway. This is an even more fundamental question of who decides what should be taught. You're concerned that students in some conservative Christian areas would be taught Creationism as fact. The folks in those areas might be equally concerned that kids in more liberal areas would be taught that there's nothing wrong with sexual promiscuity. Personally, I find it very concerning that so many people in our country have very little understanding of how our government is structured. (https://www.annenbergpublicpolicycenter.org/americans-are-poorly-informed-about-basic-constitutional-provisions/) I feel that students should have a decent grasp of civics and basic economics, but it's clear that such knowledge is getting left behind. Besides all that, folks on the right have developed a deep distrust of pretty much everything that comes out of DC, and often with good reason. Government employees, including those at the DoE, are overwhelmingly liberal, and the policies and regulations they issue are perceived as an ever-encroaching attack on their values and beliefs.
It's not just at the extremes, either. It goes all the way down to what materials are used in the classroom. Das Kapital, or Atlas Shrugged? Are native Americans portrayed as noble savages? Which historical figures do you spend time studying? Do you portray the Founding Fathers as enlightened statesmen, or privileged, rich white slaveowners?
So back to the question: who decides what gets taught? And who decides what material is used in that teaching?
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I think one of my posts may have been garbled. Education as is isn't very centralized, even at the state level. There are curriculums and standardized tests, but many states do not provide any ability for the state to impose management on a local school district. A lot of places failed the NCLB standards and were never held to account.
In several states, it's the nominally "small-government" GOP trying to pre-empt local school district rule, usually in Blue inner-city school districts.
Most of what the US federal government does (spending-wise) are income transfers that make some bit of sense at a federal level. It helps even out regional differences, so states that are falling on hard times that can get income from states that are doing relatively well. That and the military, which has been a huge, and federal, responsibility since WWII.
The majority of road spending does come from state and local governments:
http://www.bidnet.com/bne-cms/content/bid-resources/business-insights/us-government-spending-highway-infrastructure-en.jsp
Since 2009, highway infrastructure spending has begun to increase again; but some of this increase can be attributed to a rise in the cost of construction labor and materials. In 2014, a total of $416 billion was spent on highway and water infrastructure, $320 billion of which came from state and local government, with $112 billion for capital projects and $207 billion for operation and maintenance. The federal contribution amounted to $96 billion, of which $69 billion was for capital projects and $27 billion was for operation and maintenance. Of the $416 billion total, $165 billion was for highways alone, which includes national, state and local roads, bridges and tunnels. Mass transit spending amounted to $65 billion.
Out of the almost $4 trillion the US government spends, only $600 billion is spent on stuff that can conceivably be returned to states (non-defense discretionary spending). And actually that's an overestimate, because that includes $200 billion for VA, State, DHS, and Intelligence, which can't be turned over to the states, so realistically $400 billion. I'm absolutely okay with halting the education portion of it, because I don't think we get any value for our money, but I don't see the value in not investing in NIH research spending, which accounts for a pretty big chunk.
There's probably certain regulations that can be turned over to the state governments. The EPA punishes counties for exceeding certain pollutant thresholds. The EPA shouldn't be concerned if the state of Utah chooses to poison itself, only if the state of Utah poisons the people of Nevada in the absence of an interstate compact.