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Post by Yoda on Jul 9, 2010 9:21:26 GMT -8
The right always wants to cut taxes on the theory you can maximize taxes collected by the growth in the economy that would result from a reduction in tax rates. So cut taxes, everybody gets wealthier, and we all pay more taxes as a result.
Taking that to it's illogical extreme, one might suggest that if you cut taxes to zero % and we would get wealthy enough that we would get the greatest inflow of profit driven taxes possible. While that extreme would obviously be idiotic in it's logic, it does raise a question...
Where's the bottom? How far should taxes be cut? At what point, does the lower tax rate result in less income rather than more? Where do the so-called conservatives want the tax rate set at?
Yoda out...
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Post by aztecwin on Jul 9, 2010 12:08:26 GMT -8
The right always wants to cut taxes on the theory you can maximize taxes collected by the growth in the economy that would result from a reduction in tax rates. So cut taxes, everybody gets wealthier, and we all pay more taxes as a result. Taking that to it's illogical extreme, one might suggest that if you cut taxes to zero % and we would get wealthy enough that we would get the greatest inflow of profit driven taxes possible. While that extreme would obviously be idiotic in it's logic, it does raise a question... Where's the bottom? How far should taxes be cut? At what point, does the lower tax rate result in less income rather than more? Where do the so-called conservatives want the tax rate set at? Yoda out... The reverse of that question is how high must taxes be before liberals are happy? Is it when there is no business and no private wealth left? There is an optimum level where economic activity is stimulated to the point that tax income to government is also maximized. We have been close a couple times but Congress has chosen to screw it up and raise taxes in general and the wrong taxes in particular. Cutting spending and getting some stability is also crucial. |
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Post by Yoda on Jul 9, 2010 12:24:46 GMT -8
The right always wants to cut taxes on the theory you can maximize taxes collected by the growth in the economy that would result from a reduction in tax rates. So cut taxes, everybody gets wealthier, and we all pay more taxes as a result. Taking that to it's illogical extreme, one might suggest that if you cut taxes to zero % and we would get wealthy enough that we would get the greatest inflow of profit driven taxes possible. While that extreme would obviously be idiotic in it's logic, it does raise a question... Where's the bottom? How far should taxes be cut? At what point, does the lower tax rate result in less income rather than more? Where do the so-called conservatives want the tax rate set at? Yoda out... The reverse of that question is how high must taxes be before liberals are happy? Is it when there is no business and no private wealth left? There is an optimum level where economic activity is stimulated to the point that tax income to government is also maximized. We have been close a couple times but Congress has chosen to screw it up and raise taxes in general and the wrong taxes in particular. Cutting spending and getting some stability is also crucial. The difference is, my question was serious. The issue is always addressed in yes or no terms -- should we cut taxes or not -- but I've never seen anyone try and address what the "right" tax rate is -- what we should cut them to. I presume Paul Laffer had a number in mind somewhere but I've never seen it. As for your question... I believe that Obama has spoken not of increases per se but of letting the current temporary cuts lapse. That would still leave the highest marginal tax rate under 40% -- as opposed to the 69% (iirc) that we had and supported during the 60's and 70's?. Yoda out... |
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Post by aztecwin on Jul 9, 2010 13:01:09 GMT -8
The reverse of that question is how high must taxes be before liberals are happy? Is it when there is no business and no private wealth left? There is an optimum level where economic activity is stimulated to the point that tax income to government is also maximized. We have been close a couple times but Congress has chosen to screw it up and raise taxes in general and the wrong taxes in particular. Cutting spending and getting some stability is also crucial. The difference is, my question was serious. The issue is always addressed in yes or no terms -- should we cut taxes or not -- but I've never seen anyone try and address what the "right" tax rate is -- what we should cut them to. I presume Paul Laffer had a number in mind somewhere but I've never seen it. As for your question... I believe that Obama has spoken not of increases per se but of letting the current temporary cuts lapse. That would still leave the highest marginal tax rate under 40% -- as opposed to the 69% (iirc) that we had and supported during the 60's and 70's?. Yoda out... There was nothing flippant about what I said. You even touched on it. What is the optimum tax policy and rates? |
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Post by monty on Jul 9, 2010 13:28:53 GMT -8
The movie Dave is one of my favorites, there is a point where the guy pretending to be the president calls in his every day accountant friend, and they sit up all night and look at how they can trim the budget. It is naivete to think that could be done not because the budget is so much more complex than just an average dude and an average number cruncher could handle, but because we have this system built on cigar smoked rooms and payolla.
We can't even reasonablly answer the question because regardless of how much money is generated with raising or lowering taxes, it'll burn a whole in the collective pocket, friends will be repaid, future favors earned and a line of credit taken out to assure more comes in.
California is the perfect example, older folks vote to freeze property taxes and the funding to institutions that nearly nobody would find fivolous or socialistic get slashed and burned, while at the same time billions of new spending is voted in over the next 30 years through the initiative, while the legislature and governor approve spending on the quid or quo.
We want to know how many gallons the bucket holds, but everytime we pour into it we come in with another one and take some out, have hoses hooked up to siphen out what comes in, or just take it out before it gets poured in at all.
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Post by davdesid on Jul 9, 2010 14:37:32 GMT -8
>>> as opposed to the 69% (iirc) that we had and supported during the 60's and 70's?.<<<
Yes, the highest marginal tax rates were about 70% back then. But you leave out the many deductions that were available at that time. Sales taxes, credit card interest, and more. All those have been gone since the '80s.
So to appeal to the tax rates of bygone days without referring to the many deductions that were available then smacks of "bait and switch".
Jack Kennedy recognized the efficacy of lowering tax rates. He's the one who brought the top rate down from 90% to 70%. Reagan brought them down further, but eliminated most of the old deductions.
"In short, it is a paradoxical truth that ... the soundest way to raise the revenues in the long run is to cut the rates now. The experience of a number of European countries and Japan have borne this out. This country's own experience with tax reduction in 1954 has borne this out. And the reason is that only full employment can balance the budget, and tax reduction can pave the way to that employment. The purpose of cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus."
– John F. Kennedy, Nov. 20, 1962, news conference
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Post by aztecwin on Jul 9, 2010 15:24:10 GMT -8
One more bigger part of this question is what are the real numbers on the spending side of the budget equation? We can find the optimum tax rate and maximize tax income, but we will never get a handle on the spending side until we figure out how to solve the cash vs accrual way of accounting for our spending. You can not go on piling up unfunded future liability for future generations and have any amount of tax income be sufficient.
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