Where is the US economy headed?

Thomas wrote:

georgeob1 wrote:
Hence my observation that recessions and other like economic "phases" are identifiable and useful mostly in retrospect.

Oh, on that observation I agree with you.

How silly. Everyone knows that economics is hard science (My Profs all told me that) and presidential policy makes all the difference. Liberals tax and spend and conservatives cut taxes and the economy booms. I believe all of that. And yeah, protestants believe in the beatitudes.

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Thomas wrote:

There is very scarce evidence in the economic literature that tax cuts increase long run growth.

What about the improvements in the performance of the UK economy after three decades of contraction and stagnation under the high (indeed almost confiscatory) tax rates under Labor governments? I will readily agree that there was more going on there than just high tax rates (i.e. government ownership and mismanagement of industry and all the rest), however the transformation under Thatcher was truly profound and lasting in the long-run. In contemporary Europe, low tax rates do indeed correlate well with higher economic growth. Here too there are other factors going on as well - Ireland and the other tigers have perhaps more capacity to grow in terms of untapped labor skills, etc. However even here the situation suggests more than "scarce evidence" that there is a significant contribution. The remedies being applied in the current wave of (relatively) conservative governments in Europe also suggests that some there believe that less government intervention in the economy is conducive to economic growth.

I suppose that the economic performance of Sweden is the convenient reference for those inclined to promote (or merely excuse) high tax rates. However the Swedes are the exception to many rules and even there, they are retreating a bit from their former ways in the name of increased individual freedom and economic growth. (not to mention their much ballyhooed swearing off nuclear power

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cicerone imposter wrote:

georgeob: Wars and national security issues cannot be assessed in and exclusively economic context. We spent a great deal to fight WWII. Had we stayed out of that war would our economic condition in 1950 have been better or worse? Not an easy question to answer.

Poor analogy; no relationship between WWII and the war in Iraq, and the world economic conditions between the two periods.

I made no analogy at all. I merely illustrated the truth of a general proposition.

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Thomas wrote:

georgeob1 wrote:
Hence my observation that recessions and other like economic "phases" are identifiable and useful mostly in retrospect.

Oh, on that observation I agree with you.

That was a rather thin acknowledgement of a more substantivve issue.

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georgeob1 wrote:

cicerone imposter wrote:
georgeob: Wars and national security issues cannot be assessed in and exclusively economic context. We spent a great deal to fight WWII. Had we stayed out of that war would our economic condition in 1950 have been better or worse? Not an easy question to answer.

Poor analogy; no relationship between WWII and the war in Iraq, and the world economic conditions between the two periods.

I made no analogy at all. I merely illustrated the truth of a general proposition.

Analogy = proposition. Funny.

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I just don't believe there is any validity in economic theories for which no actual evidence can be presented.

Cycloptichorn

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cicerone imposter wrote:

Analogy = proposition. Funny.

No, you are wrong.

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Cycloptichorn wrote:

I just don't believe there is any validity in economic theories for which no actual evidence can be presented.

Cycloptichorn

To what theory do you refer? You have not yet stated the proposition you indicated was coming concerning tax rates and economic growth, so I don't know how to respond.

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georgeob1 wrote:

Cycloptichorn wrote:
I just don't believe there is any validity in economic theories for which no actual evidence can be presented.

Cycloptichorn
To what theory do you refer? You have not yet stated the proposition you indicated was coming concerning tax rates and economic growth, so I don't know how to respond.

Quote:

There is little doubt that the marginal effect of the tax cuts was to stimulate economic activity (although it is even possible that Cyclo will argue to the contrary on that point as well).

George, can you specifically point to which part/section of the economy were stimulated by the tax cuts? Specifically. Because, it seems to me, that if you wanted to advance this as a serious argument, you would be able to do so, or at least give some general evidence of this happening.
[/quote]

I of course refer to the Lafferish proposition that you have forwarded, that there is 'little doubt' that the tax cuts stimulated the economy and led to the soft landing.

There is no actual evidence that this is true. It is likely that the economy would have rebounded with or without the tax cuts. You are mistaking correlation for causation.

Cycloptichorn

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Not to interrupt the conversation here but when someone gets time later, I am curious about something. I have not heard this or read this anywhere, but it is my thought that if it begins to look likely that Hillary will be elected as the election approaches next year, you will see a sell off of assets and businesses so as to declare capital gains at 15% before the rate goes to 20% or who knows what. Could this spur a sort of surge in that portion of the economy and an increase in tax revenues for Bush's last year as president?

Actually, such would be a sort of demonstation of the point being argued right now.

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okie wrote:

Not to interrupt the conversation here but when someone gets time later, I am curious about something. I have not heard this or read this anywhere, but it is my thought that if it begins to look likely that Hillary will be elected as the election approaches next year, you will see a sell off of assets and businesses so as to declare capital gains at 15% before the rate goes to 20% or who knows what. Could this spur a sort of surge in that portion of the economy and an increase in tax revenues for Bush's last year as president?

Actually, such would be a sort of demonstation of the point being argued right now.

heh - it would most likely take until the first year of her first term to pass sweeping tax reform, at the very least. And then things wouldn't go into effect until some set date after the bill was signed.

She'd get credit for it Laughing

not that I really believe that this will happen.

Cycloptichorn

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You don't believe people buy and sell to take advantage of tax rates going up or coming down? I think they obviously do, and unless other stronger factors mask the effect, I think it will clearly manifest itself. I hope to remember this prediction, but hopefully we won't have to find out, because I am not at all convinced that Hillary is a done deal. Nobody with negatives that high has ever been elected as far as I know.

And actually, Hillary is deceitful enough and smart enough to push the rise in rates to one year after election, and make it well known early on, so that she could get credit for the windfall.

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okie, Why is it that you seem to isolate issues into 'your' interpretation of what you assume will happen without acknowledging that 1) the market has continued to operate at higher and lower tax rates than the current rate, and 2) tax doesn't influence the market - profit does.

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The tax code is used extensively to influence economic behavior, imposter. This is not even arguable.

Taxes affect profits.

Incidentally, a 5% rise in capital gains tax rate on 10 million is a half million dollars. That could affect profits after tax, don't you think?

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okie wrote:

The tax code is used extensively to influence economic behavior, imposter. This is not even arguable.

Taxes affect profits.

Incidentally, a 5% rise in capital gains tax rate on 10 million is a half million dollars. That could affect profits after tax, don't you think?

Show me proof that the tax code has influenced the buying and selling of stock?

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okie wrote:

The tax code is used extensively to influence economic behavior, imposter. This is not even arguable.

Taxes affect profits.

Incidentally, a 5% rise in capital gains tax rate on 10 million is a half million dollars. That could affect profits after tax, don't you think?

Affect them enough to sell off the entire business? Hell, your profits would probably fluctuate by at least that much from year to year. I find your contention to be unreasonable.

Cycloptichorn

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Those of us over 70-years of age are required by the tax code to sell a portion of our IRA holdings irregardless of the tax rates; the tax codes leaves us no choice. If we don't sell the required amount, we are fined in addition to the taxes due.

Where did you get your education?

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I guess my questions would be: are you predicting a boom period followed by an economic slowdown?

Second, if Hillary is straight up about raising taxes - and I think the Dems as a whole have made it pretty clear that the Bush tax cuts aren't going to be renewed at the very least - seems to me that she wouldn't be 'duplicitous' at all, would she?

Cycloptichorn

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Cycloptichorn wrote:

I just don't believe there is any validity in economic theories for which no actual evidence can be presented.

Cycloptichorn

Well, you certainly haven't presented any evidence in support of yours.

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georgeob1 wrote:

Cycloptichorn wrote:
I just don't believe there is any validity in economic theories for which no actual evidence can be presented.

Cycloptichorn

Well, you certainly haven't presented any evidence in support of yours.

Only this: I have yet to study a period of American history in which people did not attempt to better their businesses and selves through innovation and investment. I find the notion that small tax rate changes affect this principle to be laughable.

Luck is as much as a factor as anything else in determining where our economy will head; technology alone can rapidly evolve economic situations, as it did in the 90's.

Cycloptichorn

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Where is the US economy headed?

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