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.
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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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
So, I think your "B," as stated, is misleading, and that the Laffer curve instead illustrates approximately how tax rates affect the economy, and can be charted by a curve that approaches 0 tax revenues as the curve approaches 0% or 100% tax rates, with an optimum peak of revenues somewhere in between. This is such an elementary point, and so simple, that it is simply amazing that so-called intelligent people should argue over its existence.
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.
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.
The problem is, raising taxes won't always make the amount of receipts go up, and lowering won't always make them go down - no matter what point on the curve you are. Economists understand that their best theoretical models are only somewhat better than useless when subjected to the varegations of real-world occurances, many of which can affect dramatic change upon both policy and the direction of markets.
The point is that the 'laffer curve' only represents a theoretical way of thinking about taxation, not an actual model which you can use to predict or explain behavior. As Joefromchicago has pointed out, every economist agrees that there is no real way to tell where on the laffer curve we are! Shouldn't that provide compelling evidence to you that this isn't perhaps the best model to use when formulating your assumptions?
Let me tell you something. If I was making 100 grand per year this year, and the gov't raised the tax rate so I paid 30 grand instead of 20 grand, what exactly is it you think I would do? Quit my job? Not ask for or take a raise?
You think people honestly don't keep trying to work, even when the taxes go up, to get ahead?
When the marginal tax rates were far higher than they were now, people were trying to get ahead.
We revolted from England in part because of high taxation; but the English citizens paid far more than we did, something to the tune of 60% of their income if I recal correctly. Did they (the english) stop striving to make money and succeed, to work, to feed their families?
Hell no!
It is purely obvious to me that a man will work as hard as he intends to work regardless of any reasonable level of taxation, with insane projections like 95+% and 5-0% thrown out because they don't have any place in the real world, which is what we are ostensibly discussing!
Cycloptichorn
parados wrote:
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.
How did the exemptions change tax revenues in a huge way? Perhaps the charts are more akin to comparing Golden Delicious to Jonathon apples rather than apples to oranges? If you can show that any change in exemptions was likely to cause the amplitude of shift in tax revenues shown in the graphs I linked, then that should be considered. Your example wherein you eliminated the "no tax" for the first million, while lowering the rate for the second million, was very bad logic, Parados, far worse than the curves I cited.
My example points to the flaw in your logic. I just happened to spell out the exemption to make it clear to you.
Cycloptichorn wrote:
The problem is, raising taxes won't always make the amount of receipts go up, and lowering won't always make them go down - no matter what point on the curve you are. Economists understand that their best theoretical models are only somewhat better than useless when subjected to the varegations of real-world occurances, many of which can affect dramatic change upon both policy and the direction of markets.
The point is that the 'laffer curve' only represents a theoretical way of thinking about taxation, not an actual model which you can use to predict or explain behavior. As Joefromchicago has pointed out, every economist agrees that there is no real way to tell where on the laffer curve we are! Shouldn't that provide compelling evidence to you that this isn't perhaps the best model to use when formulating your assumptions?
Whew!!!! Finally. Yes, I agree we don't know exactly where we are on the curve, and agreed the point of the peak may change. I feel like shouting it from the housetop. But at least if politicians agreed that something this basic existed, the subject of taxation could be debated and enacted in Congress more intelligently. We do not need to use the model to plot exact points, but if can use the model to be aware of possible consequences. If we agree to the existence of a curve, we can at least debate where we might be on it, using the best projections of economists. At least, predictions of tax rates increasing or decreasing revenues can be more informed, instead of looking at tax rates as a one dimensional factor.
Quote:Let me tell you something. If I was making 100 grand per year this year, and the gov't raised the tax rate so I paid 30 grand instead of 20 grand, what exactly is it you think I would do? Quit my job? Not ask for or take a raise?
You think people honestly don't keep trying to work, even when the taxes go up, to get ahead?
When the marginal tax rates were far higher than they were now, people were trying to get ahead.
We revolted from England in part because of high taxation; but the English citizens paid far more than we did, something to the tune of 60% of their income if I recal correctly. Did they (the english) stop striving to make money and succeed, to work, to feed their families?
Hell no!
It is purely obvious to me that a man will work as hard as he intends to work regardless of any reasonable level of taxation, with insane projections like 95+% and 5-0% thrown out because they don't have any place in the real world, which is what we are ostensibly discussing!
Cycloptichorn
Right to a point, but wrong in part. People will keep working as long as they need to work and see that their work is being rewarded. If the rewards decrease, it works just like supply and demand, people will tend to work less hard after they have enough to eat and provide for basics. If they have to work 50% harder to go out to eat twice a week, it will not be worth it to a percentage of people.
In your example of paying 30 grand in taxes, you may not quit your job, but you won't have as much money to buy goods and services, so the businesses you support will suffer, and their profits drop, they lay off employees, cut costs, quit upgrading equipment, and the effects become very real. What if you were barely making your house payment on a huge house, now you can't make the payment, and have to move to a smaller house, which all affects housing markets and other parts of the economy? This is simply basic economics, for crying out loud, where nothing happens in a vacuum, much less tax rates and taxes.
You are just plain wrong that "man will work as hard as he intends to work regardless of any reasonable level of taxation, with insane projections like 95+% and 5-0% thrown out because they don't have any place in the real world, which is what we are ostensibly discussing!" Man does not work the same, independant of the reward given for his work, and to say that he does is utter nonsense and ignorance of human nature, period. A few might, but most will not. We are talking about everybody on average. Also, 0% does have a place in the real world if Congress would simply do it with the stroke of a pen, but they will not, because the math is inescapable, it would generate no tax revenue. What is so difficult to fathom about this? Simple math. The 95% or 100% is also in the real world, witness communist systems where business is state owned wherein all revenues funnel through the government, same as if you taxed them 100%. Take a look at the economies of such countries and then try to tell me the people there are working just as hard and producing just as much.
To remind you that this discussion is very applicable in the world right now, certain countries with very high tax rates vs gdp may need to lower tax rates to get their economies going better, otherwise they will suffer further. And wait until Hugo Chavez nationalizes all business in Venezuela and runs the economy as it is now further into the ground.
Right to a point, but wrong in part. People will keep working as long as they need to work and see that their work is being rewarded. If the rewards decrease, it works just like supply and demand, people will tend to work less hard after they have enough to eat and provide for basics. If they have to work 50% harder to go out to eat twice a week, it will not be worth it to a percentage of people.
In your example of paying 30 grand in taxes, you may not quit your job, but you won't have as much money to buy goods and services, so the businesses you support will suffer, and their profits drop, they lay off employees, cut costs, quit upgrading equipment, and the effects become very real. What if you were barely making your house payment on a huge house, now you can't make the payment, and have to move to a smaller house, which all affects housing markets and other parts of the economy? This is simply basic economics, for crying out loud, where nothing happens in a vacuum, much less tax rates and taxes.
You are just plain wrong that "man will work as hard as he intends to work regardless of any reasonable level of taxation, with insane projections like 95+% and 5-0% thrown out because they don't have any place in the real world, which is what we are ostensibly discussing!" Man does not work the same, independant of the reward given for his work, and to say that he does is utter nonsense and ignorance of human nature, period. A few might, but most will not. We are talking about everybody on average. Also, 0% does have a place in the real world if Congress would simply do it with the stroke of a pen, but they will not, because the math is inescapable, it would generate no tax revenue. What is so difficult to fathom about this? Simple math. The 95% or 100% is also in the real world, witness communist systems where business is state owned wherein all revenues funnel through the government, same as if you taxed them 100%. Take a look at the economies of such countries and then try to tell me the people there are working just as hard and producing just as much.
To sum it up:
- I don't believe the Laffer Curve is a valid theory.
- I don't agree that it is useful for tax policy at all.
- You haven't presented any historical or real-world data to support your theories (other than hyperbolic extremes).
- You seem to be rather one-dimensional on this issue.
Stubbornly insisting that because you have a theory inside your head, it must be true, is not a good way to convince others of your theory. Appealing to Extremes is not a good way to convince others of your theory.
Cycloptichorn
The theory in my head is not my theory, but rather it is accepted theory by a large portion of professional economists, cyclops.
I believe the effect of tax rates on the economy needs to be considered every time a tax rate is changed, and any economist worth his salt should agree.
as obviously the overall gdp or economy should be better as tax rates are lowered.
One last comment. A subject that has not been addressed. Optimum tax revenues is not necessarily the best point of tax rates or tax rate policy, as obviously the overall gdp or economy should be better as tax rates are lowered. If we can pay for all the government services we want and need with a lesser tax rate, why tax ourselves simply because we can? In other words, we don't need and hopefully do not want the biggest government that we can possibly attain.
I might have to find that old spreadsheet and see if I can still open it.
AMong the post-State of the Union comments was a remark (to the effect) that the economy would be in better shape if there had not been the bush tax cut.
"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."
plainoldme wrote:AMong the post-State of the Union comments was a remark (to the effect) that the economy would be in better shape if there had not been the bush tax cut.
And is there a very remote chance those comments just might have come from a Democrat? I know I would be surprised if it was, but just maybe it was?
plainoldme wrote:AMong the post-State of the Union comments was a remark (to the effect) that the economy would be in better shape if there had not been the bush tax cut.
And is there a very remote chance those comments just might have come from a Democrat? I know I would be surprised if it was, but just maybe it was?
pom, have you found any good stores to buy material to sew your garments lately, or are the stores just as crummy as ever?
