Is the Liberal Political Mind one dimensional?

...but Clinton really didn't have the problems Bush has had

okie wrote:

Please answer the following questions, Joe.

If the tax rate was 100% vs 0%, would economic activity be affected?
If it was 99% vs 0%, would it be affected?
If it was 98% vs 0%, would it be affected?
If it was 90% vs 0%, would it be affected?
If it was 75% vs 0%, would it be affected?
If it was 50% vs 0%, would it be affected?
If it was 25% vs 0%, would it be affected?
If it was 10% vs 0%, would it be affected?

Now, if your answer to all the above questions is no, I think you are nuts, but regardless, the graph would be a straight line, not a curve, and your opinions about this would be correct.

First of all, your questions are incomprehensible. 100% vs. 0%? What does that mean? Why are you comparing rates?

Secondly, it is incredibly simplistic (but not surprising) that a supply-sider would speculate on the impact of a 100% tax rate while assuming that all other factors would remain the same. That you would do that, okie, is particularly ironic, given that the entire premise of this thread is that liberals never take the entire picture into consideration. Or, as you put it:

The liberals so far posting are proving themselves one dimensional, for example they evidently see no relationship whatsoever between minimum wage and employment, and tax rates to economic activity.

Yet you display the same sort of one-dimensional thinking here. Of course a 100% tax rate would change incentive structures, but then it would probably change a whole lot of other things too. Indeed, before a society could adopt a 100% tax rate, it would need to fundamentally alter many of its economic structures. It is, therefore, unthinkable that a society like the US could impose a 100% income tax rate while everything else remained the same.

I can, for instance, imagine a society where a 100% tax rate would work just fine, but it wouldn't look like our society. To give a prosaic example, service staff in restaurants frequently split tips on a pre-determined basis. In effect, they impose a 100% tax on tips, and then divide the money among themselves afterwards. Could this type of system work on a nationwide scale? Perhaps. Could it work without massive changes to the current system. No, not at all.

To ask, then, if economic activity would be affected if the state imposed a 100% income tax rate is a bit like asking if pigs had wings would the price of bacon remain the same.

okie wrote:

If your answer is yes to only the first one, then the graph would not be flat, but a straight line through 99%, then with a precipitous jump or slope to whatever the effect would be at 100%, and there is a curve that results. It would not look like I think it would look because I would answer yes to all questions, however the effect of 10% might be fairly minimal, so my curve as visualized would start out fairly flat or gently sloping with a steeper climb at the higher tax rates, or drop however you plot the numbers.

But the point is, Joe, you have a curve if you answer even one of the questions yes.

Well, as parados notes, if you answer "yes" to one of the questions, the graph would probably look more like a straight line than a curve. But I can't understand your questions anyway, so I don't know what the graph would look like.

Your example of tips actually mirrors a communistic society, which has been shown to falter economically.

Parados, I do not agree that if you answer one question yes, it is a straight line. It would go flat to 99%, then jump to whatever the effect is at 100%. You could draw it as a bar graph I suppose, or a straight line between the 99% and 100%, but only a fool would believe that if there is an effect at 100%, the the effect would not be something at 99.5% or 99.99% or even 99.9999%, so mathematically, you will end up with a curve. Under your analysis, the curve does not start occurring until just below the 100% tax figure.

Now that we have established the existence of a curve, you can argue about its shape all day.

As to your figures of economic growth under Clinton and Bush, as Joe has already pointed out, there are lots of other things in the mix besides tax rates, so it is foolhardy to say your graphs prove anything.

That's true only if the Laffer Curve works, and there's no evidence that it does.

Comparing Bush and Clinton doesn't really show much does it?

Yes, the scenario of 100% tax rate is not practical, but that is the point, Joe.

The politicians know it would destroy commerce as we know it, and that is the point. It would change the face of the way things are done. Your example of tips actually mirrors a communistic society, which has been shown to falter economically. So, face it, there is an effect, and there is a curve.

You can't understand the questions? If you have studied economics, I cannot understand why such simple questions would befuddle you? They are made as simple as possible to understand an inescapable mathematical principle. And a big part of economics is mathematics.

There is ample evidence that the supply-and-demand model works. Admittedly, to assess this evidence adequately, one needs more knowledge of econometrics than one can reasonably expect in an online community of laymen. This is why I'm reluctant to discuss the evidence directly here. What I will say, though, is this: If the model of supply and demand applies to the labor market, and if the labor market is competitive to an acceptable approximation, there will be something like a Laffer curve.

That's why no card-carrying economist, not even a socialist economist like Abba Lerner, denies that tax rates have some effect on the supply of labor and the demand for it, and that. No economist denies that there is, in principle, a point at which people cease putting in extra hours at work to evade the tax on it.

Let's not claim that the Laffer Curve says something that it doesn't. The Laffer Curve posits a relationship between tax rates and tax revenues. It says nothing about the labor market or about supply and demand.

That's why I think you'd have a stronger case of you granted the existence of a Laffer curve, and concentrated on the conservatives' ridiculous overstatements of its scope.

okie wrote:

Yes, the scenario of 100% tax rate is not practical, but that is the point, Joe.

No, that's not the point at all. At first, you asked:

If the tax rate was 100% vs 0%, would economic activity be affected?

Clearly, you asked this because you expected that the answer would demonstrate that there is a relationship between revenues and taxes that fits with the Laffer Curve. The Laffer Curve says nothing about the practicability of a 100% tax, it just predicts that a 100% tax would bring in no tax revenues.

okie wrote:

The politicians know it would destroy commerce as we know it, and that is the point. It would change the face of the way things are done. Your example of tips actually mirrors a communistic society, which has been shown to falter economically. So, face it, there is an effect, and there is a curve.

Your continued insistence that there is a curve is no substitute for actual evidence of a curve-like relationship between revenues and taxes. So stomp your little feet and cry "there's a curve!" all you like, okie, it doesn't convince me. Show me some evidence instead.

okie wrote:

You can't understand the questions? If you have studied economics, I cannot understand why such simple questions would befuddle you? They are made as simple as possible to understand an inescapable mathematical principle. And a big part of economics is mathematics.

Your question makes no sense because it is framed as a comparison. As a reminder, you asked:

If the tax rate was 100% vs 0%, would economic activity be affected?

But it doesn't make any sense to ask if the rate was "100% vs 0%," since the tax rate is neither the former nor the latter. If what you really wanted to ask was:

If the tax rate was 100% would economic activity be affected?

then I already answered that question:

Of course a 100% tax rate would change incentive structures, but then it would probably change a whole lot of other things too. Indeed, before a society could adopt a 100% tax rate, it would need to fundamentally alter many of its economic structures. It is, therefore, unthinkable that a society like the US could impose a 100% income tax rate while everything else remained the same.... To ask, then, if economic activity would be affected if the state imposed a 100% income tax rate is a bit like asking if pigs had wings would the price of bacon remain the same.

Parados and you continue to contend there is no curve. It is nothing more than intellectual dishonesty to admit 100% would affect the economy,

okie wrote:

Your example of tips actually mirrors a communistic society, which has been shown to falter economically.

A "tronc-system" has nothing to do with a communist society but was invented by capitalists.

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Parados and you continue to contend there is no curve. It is nothing more than intellectual dishonesty to admit 100% would affect the economy,

100% affecting the economy has nothing to do with your claim that 2 points make a curve.

If a man makes a hundred grand and pays 20% or 20 grand in taxes, they assume if they raise taxes to 30%, the government will collect 30 grand.

If a company is taxed at a higher rate, they assume the company will continue to make the same profits for shareholders and employ the same number of people at the same wages as before.

If the minimum wage is increased, they assume there will be the same number of jobs and unemployment will not be affected. Also, the number of people satisfied with minimum wage jobs is always the same regardless of what the minimum wage is.

If they decrease the interest rates for college loans, they assume there will be the same number of loans given by banks and that tuition costs charged by colleges and universities will not be affected.

Locking up terrorist suspects at Gitmo has not deterred terrorists at all, but they are only locked up for vague political reasons.

Maybe not, but the model of supply and demand says something about the Laffer curve. Specifically, it predicts the effects of a tax on any market being taxed: about supply, demand, consumer welfare, producer welfare, and tax revenue in that market. Consequently, if you apply supply and demand to the labor market, the model will make predictions about the same things as the Laffer curve does.

A rather spartanic welfare analysis of a tax, which I'll be happy to explain if necessary, is webbed on the webpage of Berkeley's Christina Romer. In this diagram, at some sufficiently high tax rate, the length of the trapezoid (c+g) will decrease faster than its width increases, at which point the government loses revenue if it raises the tax rate. That's Laffer restated in the language of supply and demand.

There are consequences to the fact that Laffer's curve is merely the special case of this model applied to the labor market.

If you seriously believe that the curve reflects a mistaken theory, you must be believing that (1) supply and demand is a mistaken model, or (2) that supply and demand doesn't apply to the labor market, or (3) that the labor market as a whole isn't competitive. Point (3) is a minority position among economists, albeit a respected one. On the other hand, (1) and (2) are so wacky as to be outside the realm of serious scholarly discussion. That's why I think you'd have a stronger case if you granted the existence of a Laffer curve, and concentrated on the conservatives' ridiculous overstatements of its scope.

Well, read Thomas. And as far as I'm concerned, the evidence is already been admitted by yourself, in that 100% would obviously bring about a drastic change.

So the practicality of 100% tax rate is as impractical as pigs having wings. You've answered the question whether you like the answer or not, Joe.

The reason it is impractical is because the economy would fall like a ton of lead. Which proves a relationship and a curve.

Parados and you continue to contend there is no curve.

It is nothing more than intellectual dishonesty to admit 100% would affect the economy, but to continue to contend that 99.9% tax rate would not, so face it, there is a curve.

You say the example isn't valid because it isn't being instituted or has not been tried. The point is it isn't being tried because it is impractical and unworkable.

I would have to say okie, the only thing you are proving in this thread is how one dimensional your mind is.

You started this thread with a faulty premise supported with specious claims.

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If a man makes a hundred grand and pays 20% or 20 grand in taxes, they assume if they raise taxes to 30%, the government will collect 30 grand.

Find me one instance of a liberal politician saying this. The income tax rate is a graduated tax. Raising the top tax rate to 40% from 30% doesn't make it a 40% tax on all of a person's income. The liberals have written much of the present tax policy. Show where they didn't understand the idea behind tax brackets. Until you do this is a specious claim.

Quote:

If a company is taxed at a higher rate, they assume the company will continue to make the same profits for shareholders and employ the same number of people at the same wages as before.

You assume that a company only has the cost of wages and profit for shareholders. I would assume no such thing. It is possible for a company to pay higher taxes, employ MORE people and still make more money for the shareholders. Companies do it all the time. The income tax rate for corporations is a graduated tax rate. When companies grow and increase profits they pay more in taxes. Please point to a liberal politician that thinks companies only have profit and wages.

Quote:

If the minimum wage is increased, they assume there will be the same number of jobs and unemployment will not be affected. Also, the number of people satisfied with minimum wage jobs is always the same regardless of what the minimum wage is.

You are assuming that it will decrease the number of jobs. Your one dimension not the liberals one.

Quote:

If they decrease the interest rates for college loans, they assume there will be the same number of loans given by banks and that tuition costs charged by colleges and universities will not be affected.

This statement shows a complete lack of understanding of how banking and guaranteed loans work. A bank will be more likely to loan money at 6% if the payment is guaranteed by the government than they will at 7% if the loan is not guaranteed. The government pays the loan costs that would be rolled into the 7% loan. Please provide an example of liberal politicians requiring banks to take less than the going interest rates on secured loans.
An explanation of the present legislation can be found here.
http://kmareka.com/index.php/?p=806

Quote:

Locking up terrorist suspects at Gitmo has not deterred terrorists at all, but they are only locked up for vague political reasons.

In case you were not aware of the facts Okie, since the US opened Gitmo as a terrorist holding camp the number of terrorist acts world wide have gone up over 500%. Speciousness at its finest.