Back on the economic point.once again, tax increases are not a major deflationary problem so long as spending increases as well. I am willing to bet that during the first Clinton term that Clinton increased both taxes and spending.
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As a final point, I would like to understand why the Imraniacs want to massively increase tax rates on the top 1% of Americans. If the sole purpose is to reduce the deficit, as demonstrated above, this would only harm America as a whole for a number of reasons, one which is that deficits are good, and second is that higher tax rates drive the wealthy too move investments into tax shelters rather than into income producing investments. You can be certain that the wealthy are not going to pay more very much more in taxes but that the tax rate increases are going to harm America.http://tools.wikimedia.de/~gmaxwell/jorbis/JOrbisPlayer.php?path=John+Williams+The+Imperial+M arch+from+The+Empire+Strikes+Back.ogg&wiki=en
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Well, if we are going to have taxes instead of just printing money or borrowing it (and that appears to be the way we are going to be doing things for the forseeable future), then why shouldn't you increase tax rates on the rich?
If deficits don't matter because the money just comes out of the general economy anyway, then taxes don't matter either.* They too just come out of the general economy and the economy will adjust to whatever level of taxation you impose, excluding, of course, certain extreme scenarios.
So why not tax the rich instead of everyone else? There are fewer of them, so we can tax them cheaply and easily. There are also fewer of them to annoy.
*This simplifies the case presented by deficit enthusiast considerably, of course. But since the merit of their arguments is debatable anyway, clarity is better than accuracy.VANGUARD
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I should point out that the Surplus Mania article (http://www.levy.org/1/docs/pn/99-3.html) does not make a lot of sense.
Wray appears to believe that taxation reduces disposable income. This not true. It does of course reduce disposable income for some people. But it also raises disposable income for others.
This is a classic mistake. Wray, like so many others, seems to believe that the government simply destroys most of the production it takes in as taxation. It does not. Government simply provides a different set of goods and services than business. Frequently in a more efficient manner than businesses could.
His data and charts are probably roughly correct, I guess. But who cares? It doesn't prove anything.Last edited by Vanguard; March 13, 2004, 00:01.VANGUARD
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Vanguard, at the high end, the Laffer curve actually works. That is why tax rates at the high end should be lowered.http://tools.wikimedia.de/~gmaxwell/jorbis/JOrbisPlayer.php?path=John+Williams+The+Imperial+M arch+from+The+Empire+Strikes+Back.ogg&wiki=en
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Vanguard, as to health care, don't be too surprised if Bush announces his goal to create national health insurance during his acceptance speach in September.http://tools.wikimedia.de/~gmaxwell/jorbis/JOrbisPlayer.php?path=John+Williams+The+Imperial+M arch+from+The+Empire+Strikes+Back.ogg&wiki=en
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Oh, please. The Laugh-er Curve? A brave little cocktail napkin it was but, alas, soon torn to shreads by the shrill harpy of empirical evidence.
Well, at least you said "at the high end". I don't think there is any good evidence to support that claim, but if the Laffer Curve is true at all, it will obviously have most of its effect at the highest marginal rates (because it is a 'curve'). Anyway, it seems more likely to be true. So I'll grant it as a hypothesis.
But even with this hypothesis, there is no reason to think that higher tax avoidance means that you should borrow money instead of taxing it. Why should it? All that higher tax avoidance does is slightly increase the costs of collecting taxes. That's bad, of course. But not neccessarily worse than the alternative.
After all, people only lend the government money because they are paid to do so. And borrowing more money increases the amount you have to pay, at a gradually increasing rate.
So, while there may be a Laffer curve working at some level of taxation, there is also a curve in the costs of borrowing money. As you borrow more money you move up the curve, reducing, to some unknown degree, the advantage of keeping tax rates lower.
One of these curves might be better than the other, or a mix of the two might be optimal. But since we have no idea where we are on either curve, there doesn't seem to be any economic reason to prefer one to the other.Last edited by Vanguard; March 13, 2004, 21:55.VANGUARD
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taxing the rich more doesnt necessairly mean they will spend less. look at it this way - rich have lots of money, so each dollar has less value for him (basic economic principles) therefore, taking an extra 30,000 from them wont really mean much."Everything for the State, nothing against the State, nothing outside the State" - Benito Mussolini
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You seem to neglect that the fact that high marginal tax rates combined with deductions for this or that for the rich to investing in tax shelters.http://tools.wikimedia.de/~gmaxwell/jorbis/JOrbisPlayer.php?path=John+Williams+The+Imperial+M arch+from+The+Empire+Strikes+Back.ogg&wiki=en
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Hmmm... Reading the last couple of pages...
Regarding deficits, they do matter. How much of a concern they are is another story. To be sure, large persistent deficits are no good. I would hold Bush to a plan of eliminating the deficit by the time he is out of office, rather than half measures, like he is proposing.
Baggins: That indeed is what the article says. I would like to see how that was derived. The article doesn't give much context.
but the actual growth rate was around the same as beforeI came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891
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Let's go back to first principles on the Laffer Curve.
The Laffer Curve predicts that lowering high tax rates will increase tax revenues by reducing tax avoidance. The whole point of lowering the tax rates is to increase taxes collected.
But if you lower tax rates and don't get higher revenues then by definition the Laffer Curve has failed. The Laffer Curve only works if it increases taxes. It doesn't make any other predictions.
So, if lowering tax rates increases the deficit, then clearly the Laffer Curve was wrong for those rates. It was supposed to decrease the deficit, not increase it.
And that, in fact, is exactly what has occured every time we have lowered rates------- the deficit has gone up.
QED, the Laffer Curve is wrong.
Now that is not to say that there isn't a grain of truth in the idea behind the Laffer Curve. Clearly high tax rates greatly increase the incentive to avoid taxation.
But that doesn't mean that you should decrease tax rates. It is probably better to simply eliminate tax shelters and increase tax enforcement. That reduces the hightened incentive to avoid taxation in the cheapest possible manner.
Of course, there is no real reason to have super high tax rates anyway. We aren't at war, after all (well, not all-out war). We can easily eliminate the deficit, if we want to, with rates that have no Laffer potential. The debt and future social obligations are maybe another matter. But that problem is difficult no matter how you finance it.
On the other hand, debt is easier politically and with debt we have the additional option of being able to default. I agree in advance that that course is not without costs. But it is worth considering all your options.Last edited by Vanguard; March 14, 2004, 00:02.VANGUARD
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Laffer Curve predicts that lowering high tax rates will increase tax revenues by reducing tax avoidance.
Only if the rates are above the certain point between 0% and 100% where raising taxes leads to less revenue. The Laffer Curve isn't wrong because of history, rather the perception of where we were on the curve itself is wrong.“I give you a new commandment, that you love one another. Just as I have loved you, you also should love one another. By this everyone will know that you are my disciples, if you have love for one another.”
- John 13:34-35 (NRSV)
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Originally posted by Lawrence of Arabia
taxing the rich more doesnt necessairly mean they will spend less. look at it this way - rich have lots of money, so each dollar has less value for him (basic economic principles) therefore, taking an extra 30,000 from them wont really mean much.I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
- Justice Brett Kavanaugh
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Unemployment rate in 2004 is actually pretty low by any standard, although you can say the actual rate could be much higher, but then why shouldn't it be the case in the past, too? The statics are always created the same way.
Remember back in early 90s, there were also lots of talks about lack of jobs and etc... The democrats received a throurough trouncing in the mid-term election of 1994. It wasn't really until 1995 when the job finally market heated up, and much of that job growth was due to the expansion of high-tech industries.
This time, we may not a get big job rush until some significant catalysts kick in. Last time, they were the semiconductor, internet, telecom, and software. What will be the hot topics this time?
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