Are the rich paying their 'fair' share?

[BlackCat]

He doesn't want to be a pedophile in prison...

That was just to speed up his experience curve - robbing a bank will prolong that

[Aeson]

That guy in the very top center is butt raping some poor fella who has a sheet over his head. Notice the casual observers in the bleachers they have set up to watch. This clearly happens very often...

[Al B. Sure!]

I still want an answer from Jaguar. He might miss this if he sees this thread is now about 'Booty Warriors'



My question is why does this change the demand curve and not the supply one? I would think the reduction in returns would make the supply curve shift to the left because investors would be discouraged from lending and would require higher returns for the same quantity supplied. Interest rates would therefore go up while quantity of loans will decrease.

Or could they both shift a certain amount relative to the taxation levels and consequently reduce the quantity even more but have a more or less same interest rate, depending on the disparity between the tax rates?

[giblets]

I still want an answer from Jaguar. He might miss this if he sees this thread is now about 'Booty Warriors'



My question is why does this change the demand curve and not the supply one? I would think the reduction in returns would make the supply curve shift to the left because investors would be discouraged from lending and would require higher returns for the same quantity supplied. Interest rates would therefore go up while quantity of loans will decrease.

Or could they both shift a certain amount relative to the taxation levels and consequently reduce the quantity even more but have a more or less same interest rate, depending on the disparity between the tax rates?

If corporate profits are taxed, it doesn't impact the willingness of lenders to supply loanable funds because they aren't paying any new taxes. The corporations who must pay the tax are on the demand side.

[Kuciwalker]

This is a really good explanation. I'm going to use your post elsewhere but add some further explanations for those who have difficulty understanding supply and demand curves.

My question is why does this change the demand curve and not the supply one? I would think the reduction in returns would make the supply curve shift to the left because investors would be discouraged from lending and would require higher returns for the same quantity supplied. Interest rates would therefore go up while quantity of loans will decrease.

Take Jaguar's orange curve #1 and intersect it with a new green curve #2 (that is the original green curve shifted left). Draw green curve #2 so that it intersects orange curve #1 directly above where green #1 intersects orange #2 (because regardless of where we collect the tax, from the lender or borrower, the economic effect is the same so the quantity of investment must be the same).

The position on the vertical axis where green #1 intersects orange #2 is the interest rate received by lenders after imposition of the tax (they receive something less than 5%). The position on the vertical axis where green #2 intersects orange #1 is the interest rate paid by borrowers (they pay something more than 5%). The difference is the amount of interest that is paid in tax.

Both graphs are "true" in that they show you the same answer for how quantity of investment changes; they just show you prices (interest rates) from different perspectives, lender and borrower.

[Al B. Sure!]

Take Jaguar's orange curve #1 and intersect it with a new green curve #2 (that is the original green curve shifted left). Draw green curve #2 so that it intersects orange curve #1 directly above where green #1 intersects orange #2 (because regardless of where we collect the tax, from the lender or borrower, the economic effect is the same so the quantity of investment must be the same).

The position on the vertical axis where green #1 intersects orange #2 is the interest rate received by lenders after imposition of the tax (they receive something less than 5%). The position on the vertical axis where green #2 intersects orange #1 is the interest rate paid by borrowers (they pay something more than 5%). The difference is the amount of interest that is paid in tax.

Both graphs are "true" in that they show you the same answer for how quantity of investment changes; they just show you prices (interest rates) from different perspectives, lender and borrower.

So the borrowers would have a cost of capital between 5 and 6% and the lenders will be receiving as a return between 4 and 5% with the difference being the 1% (20% of 5%) that the government takes, assuming a 20% tax on profits?

Thank you for the clarification.

[Kuciwalker]

Well the tax paid may not be exactly 1%. The model isn't specified enough for us to know exactly what the new prices are; we just know that 0.8 * (interest the borrower pays) = (interest the lender receives). So if the new price the borrower pays is 5.5% then the lender will receive 4.4% and the taxes paid will be 1.1%.

[Al B. Sure!]

Well the tax paid may not be exactly 1%. The model isn't specified enough for us to know exactly what the new prices are; we just know that 0.8 * (interest the borrower pays) = (interest the lender receives). So if the new price the borrower pays is 5.5% then the lender will receive 4.4% and the taxes paid will be 1.1%.

I know. Just saying 1% for simplicity's sake. The difference between the two rates being the tax is the important part. Thanks.

[MrFun]

But are you starving or malnourished? Look, your situation sucks a lot, and you still have food, shelter, internet, smartphones, and a CAR. I'm not saying you should be content but JM going all chicken little with starving children is horse****.

I am very fortunate to find ways to make the best of my under employment situation for time being.

There are so many others out there who are homeless or are going hungry and are either under employed too, or do not have any job.


EDIT: Yeah, I do have a car and it's paid for, but it's a '99 Chevy Lumina.

[The Mad Monk]

I have a '98 Dodge Dakota. What's your point?

[Al B. Sure!]

I have legs.

[SlowwHand]

I have a '96 Toyota Tacoma that has the clutch cylinders out, the A/C has a leak and the front windshield is cracked. I love that truck.

[Hauldren Collider]

I drive a 2000 Accord. Still runs, although the AC barely works. Can't complain, though.

[b etor]

2000 chrysler 300m. tires leak, but it's a trooper considering the way i drive it.

[The Mad Monk]

I have a '96 Toyota Tacoma that has the clutch cylinders out, the A/C has a leak and the front windshield is cracked. I love that truck.

A/C out, cracked windshield for seven years, paint coming off for three, transmission acting odd, check engine light on for three months running -- I'm never letting this truck go!