I hope you will reveal how much Mr. Limbaugh pays you to keep his name in the spotlight...
And as for the larger point...
1. As President Warren Harding's secretary of the treasury, Andrew Mellon, a Pittsburgh multimillionaire, molded the relationship between government and business during the 1920s, a relationship that influenced politics throughout the decade. Committed to retrenchment and economy in government, Secretary of the Treasury Mellon reduced federal spending vigorously. He consistently opposed the veterans' bonus bill and the McNary-Haugen farm bills. But even more central to Mellon's financial vision than spending reduction was tax reduction, especially for the rich. Mellon rejected the progressive philosophy of taxation that insisted those Americans most able to pay should pay more taxes. Instead the he articulated a philosophy later known as "trickle-down economics." Taxing the rich, Mellon argued, inhibited their investment ability, thus impeding job growth and the entire economy. Without a heavy tax burden, the wealthy would invest, create jobs, and ultimately all participants in the economy would become beneficiaries of investors' tax-free profits as prosperity filtered down to workers and farmers, Mellon argued. Republicans eagerly returned America to a peacetime budget, dramatically reducing government spending that had grown substantially during World War I. Congress did, however, approve substantial tax cuts in 1921. This was the first of many tax reductions enacted during the decade at Mellon's instigation, as he was reappointed secretary of the treasury during both Coolidge's and Hoover's administrations.
Mellon, Andrew W. 1855-1937 ? FREE Mellon, Andrew W. 1855-1937 information | Encyclopedia.com: Find Mellon, Andrew W. 1855-1937 research
a. Oprah only lives in her Ca. mansion for the requisite number of days so that she doesnt have to pay Ca. resident taxes.
b. U2 moved their company hq to Netherlands when Ireland raised income tax
c. Michael Moore got a tax credit from Michigan for filming in that state.
2. As tax rates rise, taxpayers reduce taxable income by working less, retiring earlier, scaling back plans to start or expand businesses, moving activities to the underground economy, restructuring companies, and spending more time and money on accountants to minimize taxes. Tax rate cuts reduce such distortions and cause the tax base to expand as tax avoidance falls and the economy grows.
A review of tax data for high-income earners in the 1920s shows that as top tax rates were cut, tax revenues and the share of taxes paid by high-income taxpayers soared. Secretary Mellon knew that high tax rates caused the tax base to contract and that lower rates would boost economic growth. In 1924, Mellon noted: "The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business." He received strong support from President Coolidge, who argued that "the wise and correct course to follow in taxation and all other economic legislation is not to destroy those who have already secured success but to create conditions under which every one will have a better chance to be successful."
Internal Revenue Service data show that the across-the-board rate cuts of the early 1920s-including large cuts at the top end-resulted in greater tax payments and a larger tax share paid by those with high incomes. As tax rates were cut in the mid-1920s, total tax revenues initially fell. But as the economy responded and began growing quickly, revenues soared as incomes rose. By 1928, revenues had surpassed the 1920 level even though tax rates had been dramatically cut.
1920s Income Tax Cuts Sparked Economic Growth and Raised Federal Revenues | Veronique de Rugy | Cato Institute: Daily Commentary
3. The criticism that the tax payments of the rich would fall under ERTA was based on a static conception of human behavior. As a 1982 JEC study pointed out,[1] similar across-the-board tax cuts had been implemented in the 1920s as the Mellon tax cuts, and in the 1960s as the Kennedy tax cuts. In both cases the reduction of high marginal tax rates actually increased tax payments by "the rich," also increasing their share of total individual income taxes paid. Unfortunately, estimates of ERTA by the Democrat-controlled CBO continued to show falling tax payment by upper income taxpayers, even after actual IRS data had become available showing a surge of income tax payments by affluent taxpayers.
The 1993 Clinton tax increase appears to having the opposite effect on the willingness of wealthy taxpayers to expose income to taxation. According to IRS data, the income generated by the top one percent of income earners actually declined in 1993. This decline is especially significant since the retroactivity of the Clinton tax increase in that year limited the ability of taxpayers to deploy tax avoidance strategies, temporarily resulting in an increase in their tax burden.
The Reagan Tax Cuts: Lessons for Tax Reform
4. Laffer Curve: What Does Laffer Curve Mean?
Invented by Arthur Laffer, this curve shows the relationship between tax rates and tax revenue collected by governments. The chart below shows the Laffer Curve:
The curve suggests that, as taxes increase from low levels, tax revenue collected by the government also increases. It also shows that tax rates increasing after a certain point (T*) would cause people not to work as hard or not at all, thereby reducing tax revenue. Eventually, if tax rates reached 100% (the far right of the curve), then all people would choose not to work because everything they earned would go to the government.
Laffer Curve
5. One study of the United States between 1959 and 1991 placed the revenue-maximizing tax rate (the point at which another marginal tax rate increase would decrease tax revenue) between 32.67% and 35.21% Hsing, Y. (1996), "Estimating the Laffer curve and policy implications", Journal of Socio-Economics 25 (3): 395401, doi:10.1016/S1053-5357(96)90013-X,
ScienceDirect - Journal of Socio-Economics : Estimating the laffer curve and policy implications*1, retrieved 2009-04-21
6. [We wish] a wise and frugal government, which shall restrain men from injuring one another, but shall leave them otherwise free to regulate their own pursuits of industry and improvement. Thomas Jeffeson.
