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Peter1469
08-02-2012, 09:07 PM
http://online.wsj.com/article/SB10000872396390443687504577562842656362660.html

Most of it is good. But lowering everyone's rate by 20% is a political tool to reel in the stupid fish.

Art Laffer taught us that the cost-benefit of taxes is represented by a bell curve. Now I am for tax cuts, but a 20% cut will put us on the left side of the optimal level of taxation and revenue. If I were the liberal Mitt I would at least propose phased cuts in the marginal rates- 2% at a time until we found the sweat spot of maximum tax revenue. I do believe that the current level of taxation retards growth.

And for the far left Statists who claim that tax rates were higher in the past; they are correct. But the loop holes and deductions were massive and anyone back then who had an ounce of sense paid less taxes than people today.

http://en.wikipedia.org/wiki/Laffer_curve

Captain Obvious
08-02-2012, 09:13 PM
Exactly - the focus should be on effective tax rate.

But that puts politicians in a dilemma. Base tax rate cuts solves that problem. Keeps campaign contributions from drying up and keeps the voting masses comfortably numb on political opiates.

Carygrant
08-03-2012, 12:17 AM
If his Tax plan is only half as good as his recent European Charm offensive debacle , Americans will also get screwed .
Screw that . Everybody will be screwed by a dribbling Mutt .

RollingWave
08-03-2012, 04:35 AM
Exactly - the focus should be on effective tax rate.

But that puts politicians in a dilemma. Base tax rate cuts solves that problem. Keeps campaign contributions from drying up and keeps the voting masses comfortably numb on political opiates.


Yes, but how to actually do it is the big question.

If there were no limitations, then the most ideal way would simply be to track all your income VIA a cloud which monitors your bank accounts and/or other information and then just auto generate and mail you the tax as a form you can pay at a counter somewhere... that's the least complex for the people... but that obviously also quite clearly will draw a lot of question on infringment of personal information...

So that's really half of the problem, most of the methods that would make taxing less of a hassel probably would involve some form of infringment on personal information... though on the other hand it's not like that isn't being infringed on by the governments to begin with...

Captain Obvious
08-03-2012, 08:05 PM
Fuck that, when the IRS starts (openly) tapping my activity, that's when I grab my pitchfork.

Everyone shits the bed when we have to get patted down at the airport and you're suggesting real-time fed monitoring?

Yeah, right.

Audits work just fine, thanks.

RollingWave
08-06-2012, 01:00 AM
yeah, I can see that being the obvious blow back reaction, though the Audit system is pretty much the main problem for the rather huge disparity between nominal and effective tax rate for high earner, since their source of income is usually quite complex that they can hire folks to simply play word games and tricks on their tax filings, something that normal wage earning joe can't do since their source of income is usually just their wage.


And as you sorta hinted anyway, the IRS (and other comparable departments in other countires) probably could already (and does already) do this to some extend, and it's very unlikely to outlaw it, so why not go the other way and make it official and thus open to scrutiny and oversight? The USA is basically demanding all other international banks (and government) to give them such details on whoever they name (that they suspect to launder money or being a terrorist) anyway. This sort of shit has been happening for a long time anyway.

Chris
08-06-2012, 06:25 AM
Art Laffer taught us that the cost-benefit of taxes is represented by a bell curve. Now I am for tax cuts, but a 20% cut will put us on the left side of the optimal level of taxation and revenue. If I were the liberal Mitt I would at least propose phased cuts in the marginal rates- 2% at a time until we found the sweat spot of maximum tax revenue.

The Laffer Curve says that at 0% and 100% tax rates there will be no revenue and that at some incalculable point the tax rate is maximal. IOW, it doesn't tell us that at any given tax rate what will be the effect of raising or lowering the tax rates on revenue, nor does it tell us, except in theory where all other variables are held constant, that there exists some specific sweet spot. In short, it simply dispels any direct relationship between tax rates and revenues.

Now like Milton Friedman I never met a tax cut I didn't like especially one that might starve the beast. This is also part of Romney's plan, "The governor's plan would reduce federal spending as a share of GDP to 20%—its pre-crisis average—by 2016" (from op link). I think I've read 19% is optimal. However, the Laffer Curve doesn't tell us lowering tax rates will starve the beast, it could as well end up raising revenue.

Anyone on the left should be able to beat Romney's straw man up simply by pointing out it's just another supply-side solution. --To which my counter will be neither do demand-side solutions work.

Still, the idea of leaving more money in the hands of people who earn it is better than the socialist redistributive plan of Obama we're under today.

KC
08-24-2012, 01:47 AM
I love the idea of finding the sweet spot of the Laffer curve. I also love the idea of lowering taxes. The problem is, I don't see any reason to believe that the current highest income tax bracket is too high. It seems like the sweet spot must be the product of a tax increase. My claim stands on shaky ground; the only evidence I present can be found here. (http://www.taxpolicycenter.org/briefing-book/background/bush-tax-cuts/revenue.cfm) According to that website:


From 1970 to 2000 these taxes were typically in the range of 8 to 9 percent of GDP. In 2000 individual income taxes were 10.3 percent of GDP, their highest level ever. By 2004 individual income taxes had dropped to 7.0 percent of GDP, their lowest level since 1951.

The Bush tax cuts, which were by no means extreme, did not result in even a modest increase in revenue, meanwhile Congress financed expensive wars, entitlement spending and a prescription drug program. This leads me to believe that we were much closer to the sweet spot during the Clinton years, back when Republicans in Congress successfully reigned in spending and a booming economy along with a higher tax rate brought in more revenue. It seems like we had it right.

There's a pretty good chance that I've overlooked something. I'd really appreciate any criticism you can offer, or, if you give a good reason why the alternative is the stronger theory, I'd also really like to see it.

Peter1469
08-24-2012, 03:31 PM
I love the idea of finding the sweet spot of the Laffer curve. I also love the idea of lowering taxes. The problem is, I don't see any reason to believe that the current highest income tax bracket is too high. It seems like the sweet spot must be the product of a tax increase. My claim stands on shaky ground; the only evidence I present can be found here. (http://www.taxpolicycenter.org/briefing-book/background/bush-tax-cuts/revenue.cfm) According to that website:



The Bush tax cuts, which were by no means extreme, did not result in even a modest increase in revenue, meanwhile Congress financed expensive wars, entitlement spending and a prescription drug program. This leads me to believe that we were much closer to the sweet spot during the Clinton years, back when Republicans in Congress successfully reigned in spending and a booming economy along with a higher tax rate brought in more revenue. It seems like we had it right.

There's a pretty good chance that I've overlooked something. I'd really appreciate any criticism you can offer, or, if you give a good reason why the alternative is the stronger theory, I'd also really like to see it.

You can look at the GDP numbers and come to your own conclusion (I used a date range from 2000 - 2008)

http://www.tradingeconomics.com/united-states/gdp-growth

You can also see tax revenues:
http://www.usgovernmentrevenue.com/downchart_gr.php?year=2000_2010&view=1&expand&units=k&fy=fy11&chart=F0-total&bar=0&stack=1&size=l&title&state=US&color=c&local=s

I would never argue that Bush didn't spend way too much.

Peter1469
08-24-2012, 03:33 PM
If his Tax plan is only half as good as his recent European Charm offensive debacle , Americans will also get screwed .
Screw that . Everybody will be screwed by a dribbling Mutt .

And the opinion of a bitter old Brit means nothing in the US. Mitt's European tour was just fine. We could care less what you think about it.

Get ready to pay for your own defense.

KC
08-27-2012, 08:18 AM
Those charts were useful, Peter, but is there any way to know whether or not tax cuts were really the cause of the revenue spikes? I've begun to look at several blogs and articles about both the Bush and Reagan tax cuts from sources as left as Obama supporters to sources who credit the heritage foundation with most of their info, but it seems like all the most anyone could say was that there was no way of establishing a direct causal relationship. If we could find a way of weeding out other factors, like the business cycle...

Anyway I'd like to learn more about tax policy. I'm open minded as long as the goal of more revenue is accomplished. I'm not looking to starve the beast either but we definitely need spending cuts in real ways, too.

Peter1469
08-27-2012, 08:46 AM
Those charts were useful, Peter, but is there any way to know whether or not tax cuts were really the cause of the revenue spikes? I've begun to look at several blogs and articles about both the Bush and Reagan tax cuts from sources as left as Obama supporters to sources who credit the heritage foundation with most of their info, but it seems like all the most anyone could say was that there was no way of establishing a direct causal relationship. If we could find a way of weeding out other factors, like the business cycle...

Anyway I'd like to learn more about tax policy. I'm open minded as long as the goal of more revenue is accomplished. I'm not looking to starve the beast either but we definitely need spending cuts in real ways, too.

The economy is not static, it is dynamic. So many factors go into those revenue spikes. If you want to gain more confidence that those spikes were causes, at least in part, by tax cuts, look at other periods of time were taxes were cut, such as under JFK and RR.

The problem with the claim that tax cuts lower revenue are based in static accounting models. They don't take into account any economic change from the tax rate- for good or bad.