Fiscal irresponsibility - McCain & Obama tax policies

[Mormon Red Death]

Originally Posted by ChinoCoug

I don't have time to give you an economics lesson right now, but google "asymmetric information," for more on why banking needs to be regulated, take a class on quantitative methods at your local JC and then review the empirical literature on the elasticity of the labor supply on the top income bracket, and then we'll have an intelligent discussion.

The definition of economics is the

"the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses."

what this means is that economics is a about incentives. What are the incentives for a party to act in the way they do.

What incentives happen when higher taxes on richest are enforced? What they do is create a backward bending curve just like the one you posted here. rich people decide only to make enough money that their time isnt worth paying most of it to the government.

Archae is right... we need a president who will cut back costs not try and raise revenue.

[ChinoCoug]

Originally Posted by Mormon Red Death

The definition of economics is the

"the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses."

what this means is that economics is a about incentives. What are the incentives for a party to act in the way they do.

What incentives happen when higher taxes on richest are enforced? What they do is create a backward bending curve just like the one you posted here. rich people decide only to make enough money that their time isnt worth paying most of it to the government.

Archae is right... we need a president who will cut back costs not try and raise revenue.

there's no question higher taxes for anybody reduces incentives to work. but we need to get on the ground and discover how much. the point I've been making is that the answer for the rich is, not much. in aggregate, the rich are not very responsive to changes in the tax code. if you look closely at the graph, in Dem adm years, when taxes are usually higher, the rich still did slightly better off than in GOP adm years.

there are many reasons why this is so. some rich work more to recover their taxed-away income. there are also other forces at work. when tax cuts drive up the deficit, heavy govt borrowing will kick up interest rates, and which ultimately is a tax

[Tex]

Originally Posted by ChinoCoug

there's no question higher taxes for anybody reduces incentives to work. but we need to get on the ground and discover how much. the point I've been making is that the answer for the rich is, not much. in aggregate, the rich are not very responsive to changes in the tax code. if you look closely at the graph, in Dem adm years, when taxes are usually higher, the rich still did slightly better off than in GOP adm years.

there are many reasons why this is so. some rich work more to recover their taxed-away income. there are also other forces at work. when tax cuts drive up the deficit, heavy govt borrowing will kick up interest rates, and which ultimately is a tax on investors anyway.

The exceptionally rich also have ways of hiding money away from taxes. You take those loopholes away, and they find others, or change their behavior such that they are no longer required to pay the tax in question. More importantly, the liberal definition of "rich" seems to have magical elasticity.

Soaking the rich has always been an amateur solution to economic troubles.

[Mormon Red Death]

Originally Posted by ChinoCoug

there's no question higher taxes for anybody reduces incentives to work. but we need to get on the ground and discover how much. the point I've been making is that the answer for the rich is, not much. in aggregate, the rich are not very responsive to changes in the tax code. if you look closely at the graph, in Dem adm years, when taxes are usually higher, the rich still did slightly better off than in GOP adm years.

there are many reasons why this is so. some rich work more to recover their taxed-away income. there are also other forces at work. when tax cuts drive up the deficit, heavy govt borrowing will kick up interest rates, and which ultimately is a tax on investors anyway.

Can the rich afford? of course no one is questioning that. What we are questioning is the policy to get more revenue instead of cut costs. If we really wanted to cut our deficit we would cut subsidies, Means test Medicare etc.. Instead what we are hearing is "we'll tax the bastard rich people who have more money than us to pay for whatever we want" [my summation of his fiscal policies]

[ChinoCoug]

Originally Posted by Tex

The exceptionally rich also have ways of hiding money away from taxes. You take those loopholes away, and they find others, or change their behavior such that they are no longer required to pay the tax in question.

First, yes that's true to some extent, but I don't know of an instance where it's so pronounced that raising income tax rates did not raise tax revenue.

Second, no matter how many shenanigans they use, it hardly affects how much they work and produce.

This book presents evidence by leading economists of the effects of taxes on the formation of businesses, the supply of labor, the form of executive compensation, the accumulation of wealth, the allocation of portfolios, and the realization of capital gains.

Among its findings are that the labor supply of the rich remained unchanged in the face of large tax cuts in 1986, and that in late 1992 executives exercised billions of dollars' worth of stock options in order to beat the tax increases expected in 1993. The book also presents a history of efforts to tax the rich, a demographic snapshot of the financially affluent, and a road map to widely used tax-avoidance strategies.

http://www.hup.harvard.edu/catalog/SLEDOE.html

[Tex]

Originally Posted by ChinoCoug

First, yes that's true to some extent, but I don't know of an instance where it's so pronounced that raising income tax rates did not raise tax revenue.

Second, no matter how many shenanigans they use, it hardly affects how much they work and produce.


http://www.hup.harvard.edu/catalog/SLEDOE.html

What exactly is the "labor supply" of the rich, and what does it mean that it was unchanged? That paragraph is very vague.

You're not going to convince me that raising taxes doesn't correspond to a change in behavior, no matter how many Harvard studies you cite. Tax receipts have also been shown to increase when taxes are cut and new growth is stimulated. So what's your point?

[ChinoCoug]

Originally Posted by Mormon Red Death

Can the rich afford? of course no one is questioning that. What we are questioning is the policy to get more revenue instead of cut costs. If we really wanted to cut our deficit we would cut subsidies, Means test Medicare etc.. Instead what we are hearing is "we'll tax the bastard rich people who have more money than us to pay for whatever we want" [my summation of his fiscal policies]

fair enough. I'm for reducing the deficit from both sides of the equation, but that's a philosophical debate we can't resolve today.

[ChinoCoug]

Originally Posted by Tex

What exactly is the "labor supply" of the rich, and what does it mean that it was unchanged? That paragraph is very vague.

how much they work.

Tax receipts have also been shown to increase when taxes are cut and new growth is stimulated. So what's your point?

No. Just because increased receipts from growth came right after a tax cut doesn't mean the tax cuts increased tax receipts. Economies grow as they come out of a recession no matter what.

JFK's cuts recovered only 1/3 of the revenue. Reagan's man says Reagan's tax cuts only recovered 1/4 of the revenue.

[il Padrino Ute]

Originally Posted by ChinoCoug

No. Just because increased receipts from growth came right after a tax cut doesn't mean the tax cuts increased tax receipts. Economies grow as they come out of a recession no matter what.

JFK's cuts recovered only 1/3 of the revenue. Reagan's man says Reagan's tax cuts only recovered 1/4 of the revenue.

How much of the revenue that wasn't recovered was the result of not cutting the wasteful social programs?

An honest question, as I have no idea.

[Tex]

Originally Posted by ChinoCoug

how much they work.

Well, no surprise there. I don't expect the rich to just sit on the couch and relax when taxes go up. I simply dispute that they don't find new ways to prevent the feds from getting their money. Perhaps before a tax increase they had planned to sink money into R&D for product X ... but now that product X is being taxed, they elect for product Y. Or worse, they choose not to develop a new product at all.

Originally Posted by ChinoCoug

No. Just because increased receipts from growth came right after a tax cut doesn't mean the tax cuts increased tax receipts. Economies grow as they come out of a recession no matter what.

One could just as easily say that increased tax receipts after a tax hike are unrelated to the tax hike. And tax cuts may assist in coming out of a recession, thus making them an indirect cause of increased receipts.