Is the Liberal Political Mind one dimensional?

High Seas wrote:

Cycloptichorn wrote:

............ there is no principle that consistently relates tax rates to revenues.
.............................
Cycloptichorn

It's called "effective tax rate"; not to be confused with average or marginal tax rates. You can find statistics and links here: http://www.econlib.org/library/CEECategory.html

Thanks, but I didn't see 'effective tax rate' under the CEEC.

I did find it on Wikipedia, who had this to say about the definition:

Quote:

The effective tax rate is the amount of tax an individual or firm pays when all other government tax offsets or payments are included, divided by the individual or firm's total income or taxable income.

And I see where you were going, but my point (which should have been worded better) is this:

That there is no principle which directly ties Tax Rates to Federal Revenues collected. There are far too many factors in play to say that cutting taxes or raising taxes directly leads to more revenue collected by the Federal Government.

Okie,

Quote:

To amplify on this a bit, B represents the economy with no taxation whatsoever, which I think would of course be the most productive of all

No roads, no military, no police. Sounds like an productive situation.

Cycloptichorn

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Thomas wrote:

If your measure of progress is economic efficiency, the evidence seems to have been pretty good in the late 60s and early seventies, when the minimum wage was much higher in real terms than it is now. ($8-$9 in today's dollars) It seems to be pretty well established econometrically that the minimum wage in France (about $10) contributes to the high unemployment rate in this country.

Quote:

Not to be pedantic, but the minimum wage in France has nothing to do with the state of the economy in the US which is the host country for this forum or with that of Germany, where you claim to be.

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I think this thread answers the question, "Does okie have a one track mind?"

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gustavratzenhofer wrote:

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

Does anyone?

Of course, he didn't have the problems. Clinton is articulate.

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BTW -- We should all remember this thread, because, at some point in the not too distant future, okie will have a tantrum at one of us because we use anecdotal evidence.

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Cycloptichorn wrote:

Okie,

Quote:

To amplify on this a bit, B represents the economy with no taxation whatsoever, which I think would of course be the most productive of all

No roads, no military, no police. Sounds like an productive situation.

Cycloptichorn

I already said we would need some taxes to support the government we decided to afford and need as a country. I simply point out that the private sector would likely be the most productive without any burden of any tax whatsoever vs any amount of tax rate. As tax rates increase, productivity would decrease, due to increased expenses for business coupled with less ability of consumers to purchase goods and services.

You have actually hit upon a point here, where some services are mandated by the constitution, such as police protection and military defense, and taxes for those services are warranted. Where taxes are collected to conduct inefficient, wasteful, and overly burdensome government services, the system begins to break down, and if the services become so great that taxes become so punitive that citizens begin to lose the incentive to work harder for their own rewards, the system breaks down even further.

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Here are some sites that discuss some related facts:
This one purportedly shows total taxes as a % of gdp to be around 30% for the U.S. I could not find data to support what I thought I hear regularly that the tax burden totals around 50%, but if you consider social security and medicare taxes, then the additional above 30% should approach at least 40% I am guessing, if those collections are not figured into the 30%.

http://www.oecd.org/dataoecd/6/63/1962227.pdf

Here are graphs that relate to tax revenue growth during the Coolidge, Kennedy, and Reagan tax rate cuts:

http://www.heritage.org/Research/Taxes/images/bg1086c4.gif
http://www.heritage.org/Research/Taxes/images/bg1086c6.gif
http://www.heritage.org/Research/Taxes/images/bg1086c10.gif
http://www.heritage.org/Research/Taxes/images/bg1086c11.gif
http://www.ncpa.org/sub/dpd/index.php?page=article&Article_ID=14054

I realize economists are political animals as well, and can look at the same figures but interpret them differently.

I do not think the Laffer curve has been tested, even with the very high marginal tax rates in the past, because they were only marginal rates, not overall rates, as Joe previously pointed out, so the overall average tax rate has never approached the point on Laffers curve that would indicate a complete failure of the economy. The reduction of the very high marginal rates do appear to clearly show a correlation between those reductions and increased revenues, so that it would appear those marginal rates were on the downward side of the Laffer curve. Our experience with the Laffer curve has been in its mid-range, so that tax rate cuts and increases do indicate effects, but not great enough to be totally convincing to all economists. But add to the fact that we know without a doubt that 0% tax rate would generate 0% tax revenues, and that we can project the likely effect of a hypothetical overall 100% tax rate, which we for sure do not wish to try, and that we have seen effects in the mid-range, it is enough evidence to show the existence of some kind of curve similar to Laffers.

At present, I tend to think we are below the peak of the Laffer curve and could raise top marginal rates slightly, not a great deal, and still raise more tax revenue, although the economy may suffer in accordance. However, I would of course favor more reductions of government programs and reduced spending instead of higher taxes. I disagree with Democrats in terms of not favoring more programs and increased spending as they do, but I may disagree with Republicans in terms of lowering tax rates much more if we insist on spending more money, as it only will increase the federal deficit further. And Republicans have been acting like Democrats lately in terms of more spending and programs. Both parties are irresponsible in the spending department.

I think this subject has about run into the ground. It is only one issue where one dimensional thinking exists, so I would prefer to go to another one. Thanks to those that seriously debated the thread so far. I think its been fun.

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Okie, you post garbage.

Look at this idiocy you have thrown at Joefromchicago:

Okie wrote:

Joe, you clearly deny the Laffer curve, which by definition, argues that taxes affect the economy and economic behavior

Ahem. Joe said that taxes affect the economy. That is all. Yet, you lambaste him for seeming to contradict himself, because you say he cannot-cannot-at the same time maintain that taxes affect the economy while denying the Laffer curve-because the Laffer curve is based on the idea that taxes affect the economy and that this relationship can be charted with a high degree of accuracy.

There is no contradiction at all in Joe's position. The Laffer curve depends on two things to be true.
A-Taxes affect the economy
B-How taxes affect the economy can be charted with a high degree of accuracy.

Joe agrees with A. Joe does NOT agree with B.

Okie, a seventh grader could see through your attempt to try to accuse Joe of contradicting himself when YOU are the one who maintains that if A is true, B must be true. You give no proof whatsoever of this. Things can affect each other but not be chartable.

okie wrote:

To refresh your memory again, Joe, the main point that all of this discussion revolves around was my assertion that taxes affected the economy, which of course requires a curve by definition,

What definition says that if one thing is affected by another, a chart can be drawn that accurately predicts how much it will be affected? That definition doesn't exist, genius. Some things affect other things in ways that can be charted, some things affect other things in ways which cannot be charted. Joe never, ever maintained that a chart can be drawn which accurately predicts how the economy can be affected by taxes. He merely said that taxes affected the economy.

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okie wrote:

Joe, I will confess you got me on that one. My algebraic formula does not work, and does not fit the effect that has been described. Try this formula:
A x ((100% - A) x B) = C
Where A = tax rate from 0 to 100%, B = the economy, and C = tax revenues.
This formula has A influencing both C directly and C indirectly by also influencing B, which we know does happen, and which you also acknowledge. The formula also matches what we would expect at each end of the curve, hypothetically, and that is $0 in tax revenues if the tax rate is either 0% or 100%, this being in a purely capitalistic system where the government gave nothing back to the people to provide for the essentials of life in the form of food, clothing, and shelter.

Your math has improved, but your formula still lacks any empirical evidence that it is correct. Of course, in this regard, your theory is as valid as Laffer's.

okie wrote:

Joe, I am not attempting to come up with a magical formula here, obviously, but having a little fun here with a principle that obviously has some kind of formula in the economic world.

Well, no, you have been attempting to show that liberals have a "one-dimensional" mindset. Yet throughout this thread the only person who has consistently displayed one-dimensional thinking is you, okie.

okie wrote:

Surely, Laffer understood this as well, and to denegrate a formula based on its inability to be precise misses the point that his curve is clearly demonstrating, that being its overall principle.

If Laffer's theory is bunk, then his overall principle is bunk as well.

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kelticwizard wrote:

Ahem. Joe said that taxes affect the economy. That is all. Yet, you lambaste him for seeming to contradict himself, because you say he cannot-cannot-at the same time maintain that taxes affect the economy while denying the Laffer curve-because the Laffer curve is based on the idea that taxes affect the economy and that this relationship can be charted with a high degree of accuracy.

There is no contradiction at all in Joe's position. The Laffer curve depends on two things to be true.
A-Taxes affect the economy
B-How taxes affect the economy can be charted with a high degree of accuracy.

Joe agrees with A. Joe does NOT agree with B.

Okie, a seventh grader could see through your attempt to try to accuse Joe of contradicting himself when YOU are the one who maintains that if A is true, B must be true. You give no proof whatsoever of this. Things can affect each other but not be chartable.

Thanks, kw, you actually explained that better than I did.

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okie, your argument shows nothing since it doesn't deal with the "effective tax rates."

If the first $1 million is exempted and the tax is 90% on everything over that a person making $2 million pays $450,000 in taxes.

Now if we drop the tax rate to 50% with no exemption the person making $2 million will pay $500,000 in taxes. We have cut the tax rate but increased the revenues.

The increase in revenues has nothing to do with the 90% being on the wrong side of Laffer. In fact it shows that the effective tax rate with the 90% was still below anything on Laffer.

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joefromchicago wrote:

If Laffer's theory is bunk, then his overall principle is bunk as well.

Well, if you think Laffer isn't addressing a relationship and a curve is total bunk, it only shows your own mental capacity to understand simple laws of supply and demand, and human nature. If I am a seventh grader, you haven't even made it to kindergarten.

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parados wrote:

okie, your argument shows nothing since it doesn't deal with the "effective tax rates."

If the first $1 million is exempted and the tax is 90% on everything over that a person making $2 million pays $450,000 in taxes.

Now if we drop the tax rate to 50% with no exemption the person making $2 million will pay $500,000 in taxes. We have cut the tax rate but increased the revenues.

The increase in revenues has nothing to do with the 90% being on the wrong side of Laffer. In fact it shows that the effective tax rate with the 90% was still below anything on Laffer.

Don't compare apples and oranges, Parados. If you reduce the 90%, do not also do away with the first million being non-taxable at the same time. You should do each of those in separate examples to test the results fairly.

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okie wrote:

parados wrote:
okie, your argument shows nothing since it doesn't deal with the "effective tax rates."

If the first $1 million is exempted and the tax is 90% on everything over that a person making $2 million pays $450,000 in taxes.

Now if we drop the tax rate to 50% with no exemption the person making $2 million will pay $500,000 in taxes. We have cut the tax rate but increased the revenues.

The increase in revenues has nothing to do with the 90% being on the wrong side of Laffer. In fact it shows that the effective tax rate with the 90% was still below anything on Laffer.

Don't compare apples and oranges, Parados. If you reduce the 90%, do not also do away with the first million being non-taxable at the same time. You should do each of those in separate examples to test the results fairly.

That's the whole point - merely changing the rate of taxation does not scale to increases or decreases in revenue with any reliability, given the vast majority of other factors involved.

You chose not to respond to KW's fine post, which sums up Joe and my and his and Parados' argument completely; so I'll repost it here -

Quote:

Ahem. Joe said that taxes affect the economy. That is all. Yet, you lambaste him for seeming to contradict himself, because you say he cannot-cannot-at the same time maintain that taxes affect the economy while denying the Laffer curve-because the Laffer curve is based on the idea that taxes affect the economy and that this relationship can be charted with a high degree of accuracy.

There is no contradiction at all in Joe's position. The Laffer curve depends on two things to be true.
A-Taxes affect the economy
B-How taxes affect the economy can be charted with a high degree of accuracy.

Joe agrees with A. Joe does NOT agree with B.

Okie, a seventh grader could see through your attempt to try to accuse Joe of contradicting himself when YOU are the one who maintains that if A is true, B must be true. You give no proof whatsoever of this. Things can affect each other but not be chartable.

This has been my point all along; you are committing a Tautology when you say that because taxes affect the economy somehow, the laffer curve must be true, because taxes affect the economy. You can't say that A is true because A = B and B is true because B = A. It doesn't follow, logically.

Just because taxes effect the economy doesn't mean that they can be charted - especially not with a simplistic and simplified curve - which is what Laffer tries to do, and then the rest of the supply-siders try to use as proof that taxes should be lowered.

Cycloptichorn

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I have a very good answer for you, cyclops, but I don't have time now. Later.

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okie wrote:

Well, if you think Laffer isn't addressing a relationship and a curve is total bunk, it only shows your own mental capacity to understand simple laws of supply and demand, and human nature. If I am a seventh grader, you haven't even made it to kindergarten.

I never compared you with a seventh grader, okie, and I never will. After all, in my lifetime I've known some fairly intelligent seventh graders.

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I always thought of the Laffer "curve" as a concept. It's a nice illustration of an oversimplified concept, charting tax revenues against the tax rate.

It has never been proven true, there is anecdotal evidence (hello okie!) that seems to confirm the curve, there is anecdotal evidence that actually hints to the contrary (I think Thomas has mentioned the kibbutzim).

So there's not even much certainty about the 0% and the 100% points - and we don't know much about what happens in between those points. Not much of a curve, really.

I just don't understand the fascination people have with that curve.

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okie wrote:

parados wrote:
okie, your argument shows nothing since it doesn't deal with the "effective tax rates."

If the first $1 million is exempted and the tax is 90% on everything over that a person making $2 million pays $450,000 in taxes.

Now if we drop the tax rate to 50% with no exemption the person making $2 million will pay $500,000 in taxes. We have cut the tax rate but increased the revenues.

The increase in revenues has nothing to do with the 90% being on the wrong side of Laffer. In fact it shows that the effective tax rate with the 90% was still below anything on Laffer.

Don't compare apples and oranges, Parados. If you reduce the 90%, do not also do away with the first million being non-taxable at the same time. You should do each of those in separate examples to test the results fairly.

Oh? Really OKIE. So then we can expect the same from you?

So, do you still stand by all those charts you posted from Heritage? They compare apples to oranges since they fail to account for the various changes in the tax law that changed exemptions. Try to be consistent okie.

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Quote:

I just don't understand the fascination people have with that curve.

Just read my sig line a few times and you'll get it

Cycloptichorn

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Okie typed: If I am a seventh grader, you haven't even made it to kindergarten.

Remember this the next time he gets huffy over arguments ad hominem.

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Is the Liberal Political Mind one dimensional?

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