Laffer or laugher

Discussion in 'Economy' started by midcan5, Dec 21, 2009.

  1. midcan5
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    midcan5 liberal / progressive

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    The debate over taxes goes on and on and on. Money is the root of all evil, well sometimes I think it is power, but maybe money buys power. Anyway it seems money is the great love of all people, so take any, and you have taken their loved ones. Remember Scrooge McDuck wallowing in his riches? So this thread is just food for [tax] thought.

    "In his very interesting piece in this morning's Times, Lord Saatchi asserts that:

    "Lower tax rates mean higher tax revenues in the long run"*

    Let me try the reverse Art Laffer trick on that statement.

    The economist Art Laffer, while dining in a Chicago restaurant with a Republican congressman (Dick Cheney as it happens), drew a famous curve on a cocktail napkin.

    He said that if tax rates were 100 per cent of income, then revenues would be zero because everyone would stop working. So there must, said Laffer, come a point as we approach a 100 per cent rate, when tax revenue actually falls in response to a tax rise."

    Lord Saatchi and the reverse Art Laffer trick - Comment Central - Times Online - WBLG

    * Faster growth is the only way out of this hole | Maurice Saatchi - Times Online

    The reverse position:

    "There is no historical evidence that tax cuts spur economic growth. The highest period of growth in U.S. history (1933-1973) also saw its highest tax rates on the rich: 70 to 91 percent. During this period, the general tax rate climbed as well, but it reached a plateau in 1969, and growth slowed down five years later. Almost all rich nations have higher general taxes than the U.S., and they are growing faster as well."

    Tax cuts spur economic growth

    The Idolatry of Ideology-Why Tax Cuts Hurt the Economy by Russ Beaton

    Spending Cuts Vs. Tax Increases at the State Level, 10/30/01

    Or a more radical POV.

    "On moral grounds, then, we could argue for a flat income tax of 90 percent to return that wealth to its real owners. In the United States, even a flat tax of 70 percent would support all governmental programs (about half the total tax) and allow payment, with the remainder, of a patrimony of about $8,000 per annum per inhabitant, or $25,000 for a family of three. This would generously leave with the original recipients of the income about three times what, according to my rough guess, they had earned."

    UBI and the Flat Tax
     
  2. Neubarth
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    Neubarth At the Ballpark July 30th

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    There are always errors in generalizations. Always have been and always will be.

    In a booming economy, you can raise taxes and things can be fine for a while. Just the same, any movement in the economy eventually has an effect over time.

    To point out what increasing taxation can do to business, look on a smaller level than national. In states that have increased business taxes, they find that they drive businesses out of the state because it becomes less expensive to move elsewhere. Sometimes, that is totally out of the country.

    Increasing taxes take away from the bottom line and hurt the company. Companies eventually fold or move.

    California has driven many businesses out of the state as they have tried to set up a socialist utopia. What the liberals have created instead is a mess of unemployment and far too many people on the dole. The state is now essentially bankrupt and can not provide many of the so called "basic services" to the people. Roads are decaying without maintenance. Schools are in horrible shape and further cutbacks are in the offing. Half the people in the state are looking for assistance that only prolongs their misery. What a mess.
     
  3. midcan5
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    midcan5 liberal / progressive

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    Neubarth, I would agree a little but outsourcing isn't done because of taxes, and taxes affect workers first. Bricks and mortar cost lots, but consider the growth of Wal-mart, do taxes bother them? What bothers them is having to pay a fair wage. So we are caught in a kind of conundrum. Taxes are required to maintain and build the infrastructure, but no one wants to pay for it. They just want to use it and often abuse it.
     
  4. Neubarth
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    Neubarth At the Ballpark July 30th

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    Most historians will agree that our tremendous infrastructure is what made the United States the leading Industrial country in the world. We built the roads and the dams and the train systems to ship raw commodities and final product from the heartland to any coast. We had the means. Since 1960 we have let most of the infrastructure go downhill. We need to put people back to work rebuilding our infrastructure again. Where the hell is Ike when we need him?

    As regards taxes, it is all about the bottom line. If you take away too much of the profit margin, Walmart will shut down the store. They are in business to make money. They can turn a decent profit by paying bottom of scale wages, or charging higher prices. The only problem with the higher prices is that they draw their customers because of the lower prices. Raise taxes and they can not charge those lower prices. Either the prices go up or the wages have to go lower if the store is going to make money.
     
    Last edited: Dec 22, 2009

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