Laffer Doesn't Know if Bush Tax Cuts Pay for Themselves

[Toro]

The problem with the Bush Tax Cuts is that they were not accompanied by cuts in spending.

Just sayin'.

BINGO!

That's the problem with the Laffer Curve and the Republican Party over the past 20-30 years in general. The Republican Party long ago stopped believing in fiscal responsibility, at least at the federal level. Republicans have argued vigorously for tax cuts in a vacuum, believing in this silly Laffer Curve. Republicans are always talking about tax cuts but not what spending they would cut. In this sense, they are no better than Democrats who want to spend, spend, spend.

 

[boedicca]

Indeed.

Fiscal conservatives requires both restraint in taxation and spending. We haven't had that in ages.

 

[antagon]

It's absurd to believe that people are unaffected by tax policy. Economists should first work in the private sector, then teach and write.

its absurd to believe that companies hire in response to tax-cuts. politicians should first work...

It's amazing to me how many seem impervious to the idea that lowering tax rates makes everyone's stuff worth more, but there you go

inflation? ...true.

 

[☭proletarian☭]

How much of the increase in GDP is due to population increase and technological advance?

1% of GDP growth is because of population growth, 2% is productivity growth. 3% is the long-term trend of growth in the US.

Where'd you get these numbers and how is 'the long-term trend of growth in the US' defined?

 

[Paulie]

its absurd to believe that companies hire in response to tax-cuts.

When taken as an absolute statement, this is in ITSELF absurd.

It's ridiculous to think a company isn't more incentivized to hire in the event that their taxation is decreased.

Especially right now, when a lot of companies are already under-staffed for no other reason than because they HAVE to be.

You take away some of their taxation, and now they can afford to up manpower as needed.

 

[Toro]

How much of the increase in GDP is due to population increase and technological advance?

1% of GDP growth is because of population growth, 2% is productivity growth. 3% is the long-term trend of growth in the US.

Where'd you get these numbers and how is 'the long-term trend of growth in the US' defined?

The long-term is what it has grown over many decades. The population grows about 1% a year, which is from the Census, and productivity comes from the BEA, I believe.

 

[☭proletarian☭]

Do you have sources that explain where these numbers come from and how they explain the amount of change you attribute to them?

 

[antagon]

its absurd to believe that companies hire in response to tax-cuts.

When taken as an absolute statement, this is in ITSELF absurd.

It's ridiculous to think a company isn't more incentivized to hire in the event that their taxation is decreased.

Especially right now, when a lot of companies are already under-staffed for no other reason than because they HAVE to be.

You take away some of their taxation, and now they can afford to up manpower as needed.

new hires are a tax shelter, buddy. taxes incentivize: hiring, bonuses and wage increases. sweeping tax-cuts dont, whatsoever. thats speaking from the businessman's experience approaching april. from a macro perspective, it has never panned out, ever, that cutting taxes has precipitated employment -- not between our shores.

politicians only beat this horse because citizens like yourself buy the backwards logic. the validity in the laffer curve is the political carrot, clearly not the math.

 

[Toro]

Do you have sources that explain where these numbers come from and how they explain the amount of change you attribute to them?

Productivity comes from the BLS.

That graph is rising at about 2% per year, maybe a little more. Not coincidentally, GDP per capita has grown at 2% per year, as I demonstrated in an earlier post.

Why it grows at 2%, I'm not really sure. That is the rate of technological progress. There are theories but nobody knows for sure.

 

[Paulie]

its absurd to believe that companies hire in response to tax-cuts.

When taken as an absolute statement, this is in ITSELF absurd.

It's ridiculous to think a company isn't more incentivized to hire in the event that their taxation is decreased.

Especially right now, when a lot of companies are already under-staffed for no other reason than because they HAVE to be.

You take away some of their taxation, and now they can afford to up manpower as needed.

new hires are a tax shelter, buddy. taxes incentivize: hiring, bonuses and wage increases. sweeping tax-cuts dont, whatsoever. thats speaking from the businessman's experience approaching april. from a macro perspective, it has never panned out, ever, that cutting taxes has precipitated employment -- not between our shores.

politicians only beat this horse because citizens like yourself buy the backwards logic. the validity in the laffer curve is the political carrot, clearly not the math.

That you presume to speak for all of business in such an absolute sense is laughable.

The fact is, you don't have a clue how each individual business might choose to utilize a particular tax cut.

While there will certainly be those who cheat the system and hire no one, there will be others who will be more than willing to utilize such a savings by adding much needed manpower.

Do you think every business out there WANTS to be understaffed right now?

Even the farthest left of the aisle are advocating cutting taxes for job growth these days.

 

[Ravi]

its absurd to believe that companies hire in response to tax-cuts.

When taken as an absolute statement, this is in ITSELF absurd.

It's ridiculous to think a company isn't more incentivized to hire in the event that their taxation is decreased.

Especially right now, when a lot of companies are already under-staffed for no other reason than because they HAVE to be.

You take away some of their taxation, and now they can afford to up manpower as needed.

new hires are a tax shelter, buddy. taxes incentivize: hiring, bonuses and wage increases. sweeping tax-cuts dont, whatsoever. thats speaking from the businessman's experience approaching april. from a macro perspective, it has never panned out, ever, that cutting taxes has precipitated employment -- not between our shores.

politicians only beat this horse because citizens like yourself buy the backwards logic. the validity in the laffer curve is the political carrot, clearly not the math.

I agree with this.

 

[Paulie]

When taken as an absolute statement, this is in ITSELF absurd.

It's ridiculous to think a company isn't more incentivized to hire in the event that their taxation is decreased.

Especially right now, when a lot of companies are already under-staffed for no other reason than because they HAVE to be.

You take away some of their taxation, and now they can afford to up manpower as needed.

new hires are a tax shelter, buddy. taxes incentivize: hiring, bonuses and wage increases. sweeping tax-cuts dont, whatsoever. thats speaking from the businessman's experience approaching april. from a macro perspective, it has never panned out, ever, that cutting taxes has precipitated employment -- not between our shores.

politicians only beat this horse because citizens like yourself buy the backwards logic. the validity in the laffer curve is the political carrot, clearly not the math.

I agree with this.

You own a business if I recall.

If you were given a nice tax break, and you were understaffed because of decreased income during this recession, you wouldn't take that savings and add someone to your payroll that you otherwise needed?

 

[Ravi]

new hires are a tax shelter, buddy. taxes incentivize: hiring, bonuses and wage increases. sweeping tax-cuts dont, whatsoever. thats speaking from the businessman's experience approaching april. from a macro perspective, it has never panned out, ever, that cutting taxes has precipitated employment -- not between our shores.

politicians only beat this horse because citizens like yourself buy the backwards logic. the validity in the laffer curve is the political carrot, clearly not the math.

I agree with this.

You own a business if I recall.

If you were given a nice tax break, and you were understaffed because of decreased income during this recession, you wouldn't take that savings and add someone to your payroll that you otherwise needed?

No, the savings wouldn't be enough to hire someone. The tax break would probably go into my pocket.

 

[Ravi]

Pauli, it'd be silly to hire someone if the economy didn't pick up and you felt confident would be making a cost effective choice.

Freelancers would be the way to go if short staffed. No tax burden for business when hiring freelancers...I know that wouldn't work for every business but it would for mine.

 

[Paulie]

I agree with this.

You own a business if I recall.

If you were given a nice tax break, and you were understaffed because of decreased income during this recession, you wouldn't take that savings and add someone to your payroll that you otherwise needed?

No, the savings wouldn't be enough to hire someone.

We never mentioned any specific dollar amount, so that is a bit over-assuming on your part.

Pauli, it'd be silly to hire someone if the economy didn't pick up and you felt confident would be making a cost effective choice.

Freelancers would be the way to go if short staffed. No tax burden for business when hiring freelancers...I know that wouldn't work for every business but it would for mine.

Fair enough if free-lancers would benefit you, but there are plenty of businesses out there who really need more full-time staff and just can not afford to add it at this time. Big corporations, that's a different story. I'm talking small businesses anyway.

I find it ridiculous that anyone can say a tax break for a business will not add any jobs.

A scenario would be a small business where the owner who would normally be off location or just doing other productive work for the business, now has to stay on location and provide manpower where he/she can not afford to hire someone new.

The girlfriend and I are in the process right now of starting a pre school. The girlfriend will be filling a spot as a teacher when we open, but she would be better suited doing other things for the business and instead hire a second certified teacher to handle the workload. In fact, I'll probably even be putting some time in there myself as an "aide" to simply meet child to aide ratio requirements until she can hire someone.

I'll tell you right now, that if a decent enough tax break came through for her that would fill one of those needed spots, we would do it immediately.

 

[☭proletarian☭]

You own a business if I recall.

If you were given a nice tax break, and you were understaffed because of decreased income during this recession, you wouldn't take that savings and add someone to your payroll that you otherwise needed?

No, the savings wouldn't be enough to hire someone.

We never mentioned any specific dollar amount, so that is a bit over-assuming on your part.

Or revealing of a how she thinks?

 

[antagon]

You own a business if I recall.

If you were given a nice tax break, and you were understaffed because of decreased income during this recession, you wouldn't take that savings and add someone to your payroll that you otherwise needed?

No, the savings wouldn't be enough to hire someone.

We never mentioned any specific dollar amount, so that is a bit over-assuming on your part.

Pauli, it'd be silly to hire someone if the economy didn't pick up and you felt confident would be making a cost effective choice.

Freelancers would be the way to go if short staffed. No tax burden for business when hiring freelancers...I know that wouldn't work for every business but it would for mine.

Fair enough if free-lancers would benefit you, but there are plenty of businesses out there who really need more full-time staff and just can not afford to add it at this time. Big corporations, that's a different story. I'm talking small businesses anyway.

I find it ridiculous that anyone can say a tax break for a business will not add any jobs.

A scenario would be a small business where the owner who would normally be off location or just doing other productive work for the business, now has to stay on location and provide manpower where he/she can not afford to hire someone new.

The girlfriend and I are in the process right now of starting a pre school. The girlfriend will be filling a spot as a teacher when we open, but she would be better suited doing other things for the business and instead hire a second certified teacher to handle the workload. In fact, I'll probably even be putting some time in there myself as an "aide" to simply meet child to aide ratio requirements until she can hire someone.

I'll tell you right now, that if a decent enough tax break came through for her that would fill one of those needed spots, we would do it immediately.

paulie: im not sure what your biz background is, but youve got the deal turned backwards. when you start your biz, you'll (hopefully) mount a healthy tax liability. hiring employees (training them, remodeling your office to accommodate them, paying for their healthplans) are ways to cut said liability down to size through deductions. if youre in business for a profit, lower taxes are a welcomed (dont get me wrong) addition to your profitability, however, there is no logical connection between that extra cash and hiring.

people who buy into a deduction-free tax system, flat taxation, across-the-board tax cuts, etc, with the hopes that these will stimulate the economy, dont recognize that its the tax deductions that direct businesses to pay their employees, offer them benefits and invest in their enterprises.

sweeping tax breaks have only proven effective at upping profit-taking, mainly for principals in large, public businesses.

 

[antagon]

No, the savings wouldn't be enough to hire someone.

We never mentioned any specific dollar amount, so that is a bit over-assuming on your part.

Or revealing of a how she thinks?

...or revealing of how clearing the $50k involved in hiring an employee would entail an unheard-of 10%+ break in gross tax for a small biz... not in cash, but money you woulda had to pay.

 

[Ravi]

You own a business if I recall.

If you were given a nice tax break, and you were understaffed because of decreased income during this recession, you wouldn't take that savings and add someone to your payroll that you otherwise needed?

No, the savings wouldn't be enough to hire someone.

We never mentioned any specific dollar amount, so that is a bit over-assuming on your part.

Pauli, it'd be silly to hire someone if the economy didn't pick up and you felt confident would be making a cost effective choice.

Freelancers would be the way to go if short staffed. No tax burden for business when hiring freelancers...I know that wouldn't work for every business but it would for mine.

Fair enough if free-lancers would benefit you, but there are plenty of businesses out there who really need more full-time staff and just can not afford to add it at this time. Big corporations, that's a different story. I'm talking small businesses anyway.

I find it ridiculous that anyone can say a tax break for a business will not add any jobs.

A scenario would be a small business where the owner who would normally be off location or just doing other productive work for the business, now has to stay on location and provide manpower where he/she can not afford to hire someone new.

The girlfriend and I are in the process right now of starting a pre school. The girlfriend will be filling a spot as a teacher when we open, but she would be better suited doing other things for the business and instead hire a second certified teacher to handle the workload. In fact, I'll probably even be putting some time in there myself as an "aide" to simply meet child to aide ratio requirements until she can hire someone.

I'll tell you right now, that if a decent enough tax break came through for her that would fill one of those needed spots, we would do it immediately.

A tax break is never going to be enough to hire an employee...unless you mean you want the government to actually pay your employees.

When you start off you have to deal with these problems of doing jobs that you are overqualified for...including keeping an eye on the little devils. Once you get a good client base you can hire more people...you need money coming in to add employees, not a tax break.

 

[Ravi]

No, the savings wouldn't be enough to hire someone.

We never mentioned any specific dollar amount, so that is a bit over-assuming on your part.

Or revealing of a how she thinks?

Yeah, rationally.