Mike Kimel has repeatedly suggested here that based on his calculations on the workings of the economy, the optimal top tax rate should be around 65%. Via Delong, we find that Emmanuel Saez and Nobel laureate economist Peter Diamond are essentially in agreement (70%) – and that Adam Smith would probalby agree as well.
if you mean for “growth,” well, there are other things that growth.
i would accept Kimel’s conclusion that higher taxes are not going to destroy the economy, but I kind of hate it when folks who ought to know better decide that money is the most important thing in the world and that we need more of it, more, more, more.
if you mean for “growth,” well, there are other things than growth. even the famous econ 101 textbook has a graph fairly early in the book that shows a trade off between “growth” and present consumption.
i would accept Kimel’s conclusion that higher taxes are not going to destroy the economy, but I kind of hate it when folks who ought to know better decide that money is the most important thing in the world and that we need more of it, more, more, more.Today, 6:30:52 PM PST– Reply – Delete
This line of reasoning assumes that the government will make better use of this money than the people who earned it. The rich don’t just buy yachts, they also invest. If you believe the government is better at investing for the future, why not let them control the means of production outright?
Doesn’t that depend on what you mean by “better”? If the goal is to increase the wealth of the few above all else, then your approach is probably better. If creating jobs in the United States or at least doing something to help those who are unemployed is better then your approach will not help and will probably hurt. Modern investors don’t invest in things that create jobs, or at least not on purpose. A good profit isn’t enough for publicly held companies, it has to be enough to make Wall Street happy. Since Wall Street has no clue what Main Street is like those goals are rarely realistic.
It really doesn’t matter what rich people spend their money on. The deal is that if they design a tax system that actually enriches them, other people have a beef. Taxes are payments in support of a government. The less you pay relative to your wealth, the less you contribute to the community you belong to and the government that protects and benefits you. They call it being a free rider, Flint. Any way you look at it, I am happy to pay my share of taxes. I just want rich people to do the same. NancyO
Heart of flint Kimel has not been reasoning as you claim. He has been showing, statistically, that higher top marginal tax rates (up to a point) have led to higher economic growth rates. As an explanation, Kimel has hypothesized that higher top marginal income tax rates lead businesses to apply more of their income to efforts to grow, which thereby increases overall economic growth. If he’s right–and I think he is–then the higher top tax rates lead to more business income going to investment and spending that benefits business growth, and less business income going to the top 1 percent for conspicuous consumption and less-productive activities.
Again if Kimel is correct, I wonder if the gain in economic growth comes at the cost of a type of “freedom” for the business owner, as viewed from that perspective. In a sense, the high marginal rate reduces owners’ freedom to use business income as they please outside of the business, for example, for spending on personal yahts or real estate. I guess owners still become more wealthy but more of their wealth is in the value of their businesses. Also, I wonder what the higher marginal rate does to pay at various levels below the ownership.
The notional value of arcane financial instruments that nobody can rationally value nd very fw can even understand is estimated (because nobody really knows) between 10 and 20 times aggregate GDP of the planet. This is money diverted from real investment into the ultimate rentier activity – scraping dollars from other peoples dollars and doing nothing to promote the real economy.
So, yeah, I think government can do it better.
The answer is not to have governemnt own the means of production, but to have governemnt regulate, tax, and control the finance sector.
Again if Kimel is correct, I wonder if the gain in economic growth comes at the cost of a type of “freedom” for the business owner, as viewed from that perspective.
Not exactly. It doesn’t reduce freedom. It just associates a differential tax liability to different actions. The business owner if still free to make either decision. It just costs something to do one rather than the other.
Th point is that growing the pie is the best was to increase the standard of living for those who have the least. Since around 1980, when everything changed, the pie growth has been slower while the slice captured be the fattest has grown. I believe there is cause and effect between the rich grabbing an ever bigger slice and the stunting of the pie’s growth.
Taxing that wealth and investing in, frex, infrastructure, which we sorely need, is far, far better than increasing the notional market value of credit default swaps.
The effect on growth is one consideration, although I think we are at the end of growth and need to focus on a rhythmic stability and reduction of a lot of what we do. (“We” meaning human beings.)
But I also think that a very high top marginal rate has another, more important purpose. I suspect that below some level of top marginal rate, possibly as high as 80%, we reach an event horizon beyond which the top earners accumulate enough financial leverage to bend the government and regulators to their own wishes. This leads, as we have seen, to a series of crashes and the contraction of the whole economy (to say nothing of the toxic effect it has on democracy.)
Therefore, if 65% is the optimal rate for growth, but is at the hazardous edge of the event horizon, a prudent choice would be to set the rate higher — 75-85% — and nail it there.
i don’t agree. growing the pie seems to decrease the share that goes to those who have the least. very much so, as you would understand if you knew the living conditions of the modestly poor sixty years ago compared to today. i am not talking about the dirt poor…. who, oddly enough, were put into that condition by the growth of the industrial economy in the last century… the other last century.
and yes, i am perfectly happy with taxing some of that wealth to improve living conditions… but you can’t do it with a “soak the rich – give the poor welfare” attitude.
and i don’t know if interest and profits on stocks counts as GDP. seems to me it shouldn’t.
because we are not stupid. if there is no room in your brain between taxing wealth to provide for “common” welfare and “owning the means of production outright” you don’t have enough brain space to have a chance of understanding what we are talking about.
which is one way of reducing (degrees of) freedom. but “pfreedom”, like “growth” is not a complete “good”. i pay taxes too. i like to think i am getting something for my “loss of fredom” to spend the money in some other way. Hell, if i buy a car, I have lost the freedom to do something else with the money.
i’d be afraid of basing policy on wild speculation. it is possible that excessive concentration of wealth is destructive to society, but then the (an) answer would be taxing enough to break up the excessive concentration. that would not depend it seems to me on some arbitrary high tax rate but on a fairly careful look at what is causing the concentration of wealth and finding a way to break it up that is seen as “fair” by reasonable people. ah, there’s the rub.
Maximizing the Laffer curve isn’t merely about regulation. It is about shifting as much wealth as possible away from earners and into government hands. Why should we assume that this is desirable? If the government is better at investing than the private sector, why not let them do all the investing? Private ownership without the possibility of profit is perhaps worse than communism because the private owners have no incentive to create value.
jazz – If the government “controls” the financial sector, it has been effectively nationalized.
You are missing my point. The question is: “should government or private industry control investment?” Maximizing the laffer curve is an attempt to transfer as much of that power to government as possible while still maintaining an appearance of private ownership. But if the goal is to transfer power to the government, why bother with private ownership at all?
the goal is not to transfer power to the government. the goal is to maximize the welfare of all the people including the rich. even including the rich who are too dumb to realize that if they leave a nickle on the table the other guy might use it to grow the stock of wealth available and increase the wealth of even the rich guy.
neither the government nor private industry can or should “control investment.” private industry makes investments that return profit to the private investor… good up to the point where the private investment depends upon poisoning or stealing from other people. the government makes investments that arguably increase the strength of the country and increase the welfare of all the people.
you see it’s not an all or nothing world, it’s not even zero sum. but if you only have a two-state brain it may look that way to you.
go back to your original fallacy: flnt says “maximizing … is an attempt to transfer as much power to government as possible.” this is an assertion not a “fact.” flint then reasons from his assertion to “proof by rhetorical question”: why bother?
well, we bother because your assertion is not true. in fact your assertion is more or less disproved by the reductio ad absurdum of your rhetorical question.
flint, you don’t have much brain. why don’t you find something more fun to do than prove it to us. are you looking for pity?
coberly – You are easily the worst thing about this site. I don’t expect people to agree with me, but you are the only one who consistently and unimaginatively insults me. You seem to be under the impression that anyone who disagrees with you lacks a brain. Your childish insults are a disgrace to your cause. Assuming you are not merely emotionally incapable of honest debate, I must assume that you hope to drive off those who challenge your perspectives, so you can preserve this playground in which mainstream economic views are dissmissed out of hand. As you wish, I will leave this site to those who share your ideas.
most people here don’t share my ideas. i am indeed sorry to have to insult you, but the fact is that your “thinking” does not give my much else to go on.
most people here do not share my ideas. i am indeed sorry to have to insult you, but the quality of your thinking is a pretty good example of why political “debate” never gets anywhere.
if you can get past the insults, try to understand the more substantive part of my criticism.
Exactly . . . Furtermore, why would Wall Strret invest in a three percent return when CDS and CDO offer far greater returns and the government will bail them out?
As small as a 5% increase in taxes on private owners would cause them to leave earnings within the corporations they now have as it would become more expensive to withdraw earnings than what it is today. Leaving rarning within a corporation would not subject it to taxation and would, or could, cause the company to invest or at least be taken over :).
I’m afraid it goes deeper than that. The insults merely reveal that you do not take opposing ideas seriously. There is nothing crazy about the idea that maximizing tax revenue will decrease private investment. Yet the more mainstream the idea, the more you take it as evidence that I merely adopted it from some shill. Time and again, I have advanced fairly mainstream arguments and have seen you dismiss them as unworthy of consideration. It is your ideas that are unworthy of consideration, not because you lack inteligence or education, but because you refuse to engage oposing perspectives. We do not share enough intelectual common ground for discussion to be fruitful.
Govrnments do not tax the people I order to effect economic growth in one way or another. That’s an old canard intended to raise a straws argument concerning the need to tax. Taxation has one goal, that being to pay for government activities. If you think that the government should sit idly by and do nothing then little will be needed in the way of tax receipts. If you live in the real world and recognize that the government has to meet the needs of the country which it governs then taxation will follow. A government doesn’t get to rule the rest of the world and blunder it’s resources without a cost. A government provides for the development and maintenance of infrastructure so that the people can carry out their daily activities both social and economics. It all has a cost. So cut the crap about economic growth and it’s relationship to taxation as it is a stew dog with no validity. Government collects taxes in order to pay its expenses that serve its citizens both rich and poor, usually a lot more for the rich than the poor.
first.. let me offer an apology of sorts. thinking it over i realize i would not be as mean to someone i know. i don’t like to hurt people’s feelings.
second… i can’t know if it is only because i disagree with you that i find your “reasoning” painful. but it is a fact that i do. you could live with that.. decide that i am wrong, or not very smart myself… it shouldn’t hurt you what i think… but, of course, i know that it does. humans seem to be wired that way. so, again, sorry to hurt your feelings. really sorry. but that doesn’t change the fact that your “thinking” drives me crazy.
please note that here you say “… nothing crazy about the idea that maximizing tax revenue will decrease private investment.” but that’s not what you said before … you said “it’s an attempt to transfer as much..power to government as possible…. why not let [the government] control the means of production outright”
if you can’t see what’s wrong with that… then, indeed we do not share enough intellectual common ground for discussion to be fruitful.
We have been though this before. Your reasoning is equally painful to me, and you needn’t worry about my feelings, but your lack of respect does not facilitate a meaningful exchange of ideas. If I may offer you some advice: when you feel like making some nasty remark because someone’s ideas are so painful to you, take a minute to reflect on what they have said and collect your thoughts, allow your emotions to pass, and then make a reasoned response without being insulting. Otherwise you run the risk of making an emotional response that fails to reflect the merit of your views.
The point I was trying to make is that it is undesirable to maximize the Laffer curve for revenue. The objective of doing so is to put as much money as possible in the hands of the government. I hardly think it is a leap of logic to say that money is power. This economic power comes directly at the expense of those taxed, which in this case will often be investors. In effect, you are taking money from investors and transfering it to the government. Since maximizing the Laffer curve maximizes this transfer, I assume that you want the government to have as much economic power as possible. In fact, jazz essentially admits as much by saying “So, yeah, I think government can do it better.” If you really think the government can do a better job, it would seem to follow that the government should own the means of production.
you’d be surprised. it’s not emotional, and it isn’t done to hurt your feelings. it’s like when i corrected math papers for a living. i tell you where your mistake is. doesn’t mean you won’t make the same mistake next time.
as for the point you are trying to make: “the objective of doing so is to put as much money as possible in the hands of the government.” this is not true. the objective of doing so would be to maximize the rate of growth of GDP. I have argued that that is not an especially good thing to do. you failed to notice that argument. you appear to believe that “… to put as much money as possible in the hands of the government” is a kind of axiom that doesn’t need to be demonstrated and can’t be denied.
that does not lead to “a leap of logic that money is power.” no one would dispute that money is power. they dispute that “the reason to tax at the rate that maximizes growth is to put power into the hands of the government.”
of course taxing people reduces their economic “power” from one day to the next compared to what they would have had if everybody else paid taxes and that one person didn’t have to. but since everybody does pay taxes, even that one person ends up better off than he would have if no one paid taxes.
but jazz saying “the government can do it better” is not the same as “giving the government the most economic power possible. you simply can’t go from one statement to the other unless both statements are part of your religion. this is not thinking. or even arguing. it is just blathering.
it does not follow that “if the government can do a better job of X that therefore the government should own the means of production.” it could well be that the government does a better job of arranging the infrastructure for wealth than the private sector can, but still be the case that the for most or many things it is not better that the government should own the means of production.
you simply attach one sentence you believe to some other sentence you believe … without any real world, causal, or logical connection whatsoever… and imagine that you have made an “argument.”
what is painful to you is not my reasoning… you have no idea what reasoning is…. it is the fact that i disagree with you… and that i don’t know how to pretend i “respect” your reasoning.
if you were a person i knew, i would just smile and nod and agree with you and look for a chance to go do something else. because you are only a commenter on a blog, talking nonsense about a subject with potential to cause great harm… because so many other people who think no better than you do have similar defective “ideas”… that i have no other way to record not just my disagreement with you opinions but my opinion that your thought process is defective.
all i can offer you is that you are not the only one. on either “side.”
See that was much better. I now have some idea where you misunderstand what I am saying. You could have saved a few paragraphs about how I don’t really think, but as they say, baby steps. Unfortunately, I do not have infinte time, and the most convincing thing you have said to me is that I probably have something better to do.
I agree. The entire “government steals”, “government takes” and “government maximizing investment” is based on the idea of a monarchy or dictator and thus Laffer’s argument fails. We are not either, at least not in construct.
In our government, there is not a single entity such as Sir Government or King Government or Queen Government or General Government that collects taxes and then put’s it in their pocket for personal gain. Every penny We the People collects gets right back to us. The question then becomes: What is the best vehicle/agent to get that money back to us in such a way as to reduce the risk of living?
Now, certainly if I our any single person were the prime “decider” on all things money, then Laffer would have a point. As we have seen too many times, no single person seems to ever get it correct as far as what to invest in when their concerns regarding results is narrow or singular.
Laffer and his curve do not apply to a We the People government that is functioning as a We the People government.
having thought a little further, i’d have to agree with your point: if it turned out that it took a marginal tax rate of, say, 90% on income over a million to break up a dangerous concentration of wealth, then we should accept the reduced growth rate that would come from that according to the kimel formula.
yes. granted that “we the people” are probably not any more or less smart than a king, or a cabal, or a commisariat, or the board of directors, or the pope and all his bishops, the best hope we have is for a democracy of checks and balances and a mixed economy of regulated capitalism,
something we used to have in America before the corporations found a way to buy the government and perfected the means of mass disinformation.
Actually, there have been many studies regarding decision making and results. We the People have an advantage over small number/singular decision makers.
In nature, science has learned that group decision is the norm and not the alpha male model of decision making.
Plus, from Michael’s calculations (can’t find right now) I seem to recall that even 90% Top Marginal doesn’t reduce growth very much in comparison to the 65% rate, and both are better than 30-35%, associated with the LOWEST growth rate in his charts, which oddly is our current top marginal rate.
Taxation is a reflection of politics in the sense defined by Lasswell over 75 years ago, “about who gets what, when, and how.” We can propose or argue that it ought to reflect some rational objectives or key values, like paying for government activities or maximizing gdp or enhancing individual freedom or increasing social justice or whatever, and such arguments certainly are worthwhile. They don’t make it so in practice.They may, however, push policies in a political direction preferred by some and not others.
that people with enough money work the hardest to get the legislation they favor, and have the easiest access, and generally favor policies that enrich them in the short run.
there is no evidence anyone in politics takes the long view for long.
this is not completely unreasonable from an evolutionary perspective. if you are going to be around for the long view you need to win today’s struggle.
on the other hand, as a country we ought to be able to find a way to institutionalize the long view. at least enough to make it competitive with short view self interest.
i think that even among lions, the long view is represented evolutionarily by the fact that the lion who loses today’s fight does not fight to the death, nor does the winner.
“Actually, in the US, that has not been true for several decades.” s_t_r
No, that is just your interpretation of the process probably in large measure due to the wrangling of vested interests to reduce their fair share of the financial burden of government. Lobbyists may come up with all manner of excuse, like “effect on economic growth” and may have cohorts in the economics proffession and amongst the political class. Read tax legislation and demonstrate the concept of taxation for other than payment of government activities. All of the many “exceptions” have been tagged on as benefits to political donors. They are not the reason for the collection of taxes. Those exceptions are the ratinale for tax avoidence.
Mike Kimel has repeatedly suggested here that based on his calculations on the workings of the economy, the optimal top tax rate should be around 65%. Via Delong, we find that Emmanuel Saez and Nobel laureate economist Peter Diamond are essentially in agreement (70%) – and that Adam Smith would probalby agree as well.
http://www.project-syndicate.org/commentary/delong120/English
How ’bout dat!
Cheers!
JzB
depends on what optimal means.
if you mean for “growth,” well, there are other things that growth.
i would accept Kimel’s conclusion that higher taxes are not going to destroy the economy, but I kind of hate it when folks who ought to know better decide that money is the most important thing in the world and that we need more of it, more, more, more.
depends on what optimal means.
if you mean for “growth,” well, there are other things than growth.
even the famous econ 101 textbook has a graph fairly early in the book that shows a trade off between “growth” and present consumption.
i would accept Kimel’s conclusion that higher taxes are not going to destroy the economy, but I kind of hate it when folks who ought to know better decide that money is the most important thing in the world and that we need more of it, more, more, more.Today, 6:30:52 PM PST– Reply – Delete
This line of reasoning assumes that the government will make better use of this money than the people who earned it. The rich don’t just buy yachts, they also invest. If you believe the government is better at investing for the future, why not let them control the means of production outright?
Doesn’t that depend on what you mean by “better”? If the goal is to increase the wealth of the few above all else, then your approach is probably better. If creating jobs in the United States or at least doing something to help those who are unemployed is better then your approach will not help and will probably hurt. Modern investors don’t invest in things that create jobs, or at least not on purpose. A good profit isn’t enough for publicly held companies, it has to be enough to make Wall Street happy. Since Wall Street has no clue what Main Street is like those goals are rarely realistic.
flint….the world you live in has only two options….all or nothing? What a sad way to think.
It really doesn’t matter what rich people spend their money on. The deal is that if they design a tax system that actually enriches them, other people have a beef. Taxes are payments in support of a government. The less you pay relative to your wealth, the less you contribute to the community you belong to and the government that protects and benefits you. They call it being a free rider, Flint. Any way you look at it, I am happy to pay my share of taxes. I just want rich people to do the same. NancyO
Heart of flint Kimel has not been reasoning as you claim. He has been showing, statistically, that higher top marginal tax rates (up to a point) have led to higher economic growth rates. As an explanation, Kimel has hypothesized that higher top marginal income tax rates lead businesses to apply more of their income to efforts to grow, which thereby increases overall economic growth. If he’s right–and I think he is–then the higher top tax rates lead to more business income going to investment and spending that benefits business growth, and less business income going to the top 1 percent for conspicuous consumption and less-productive activities.
Again if Kimel is correct, I wonder if the gain in economic growth comes at the cost of a type of “freedom” for the business owner, as viewed from that perspective. In a sense, the high marginal rate reduces owners’ freedom to use business income as they please outside of the business, for example, for spending on personal yahts or real estate. I guess owners still become more wealthy but more of their wealth is in the value of their businesses. Also, I wonder what the higher marginal rate does to pay at various levels below the ownership.
Flint –
The notional value of arcane financial instruments that nobody can rationally value nd very fw can even understand is estimated (because nobody really knows) between 10 and 20 times aggregate GDP of the planet. This is money diverted from real investment into the ultimate rentier activity – scraping dollars from other peoples dollars and doing nothing to promote the real economy.
So, yeah, I think government can do it better.
The answer is not to have governemnt own the means of production, but to have governemnt regulate, tax, and control the finance sector.
JzB
PJR
Again if Kimel is correct, I wonder if the gain in economic growth comes at the cost of a type of “freedom” for the business owner, as viewed from that perspective.
Not exactly. It doesn’t reduce freedom. It just associates a differential tax liability to different actions. The business owner if still free to make either decision. It just costs something to do one rather than the other.
Cheers!
JzB
Dale –
Th point is that growing the pie is the best was to increase the standard of living for those who have the least. Since around 1980, when everything changed, the pie growth has been slower while the slice captured be the fattest has grown. I believe there is cause and effect between the rich grabbing an ever bigger slice and the stunting of the pie’s growth.
Taxing that wealth and investing in, frex, infrastructure, which we sorely need, is far, far better than increasing the notional market value of credit default swaps.
Cheers!
JzB
Since I’m incapable of typing, I wish I would learn to proof-read.
Alas,
JzB
http://www.time.com/time/photogallery/0,29307,1878468_1842267,00.html This is a Mongolian take on rugged individualism. NancyO
The effect on growth is one consideration, although I think we are at the end of growth and need to focus on a rhythmic stability and reduction of a lot of what we do. (“We” meaning human beings.)
But I also think that a very high top marginal rate has another, more important purpose. I suspect that below some level of top marginal rate, possibly as high as 80%, we reach an event horizon beyond which the top earners accumulate enough financial leverage to bend the government and regulators to their own wishes. This leads, as we have seen, to a series of crashes and the contraction of the whole economy (to say nothing of the toxic effect it has on democracy.)
Therefore, if 65% is the optimal rate for growth, but is at the hazardous edge of the event horizon, a prudent choice would be to set the rate higher — 75-85% — and nail it there.
Noni
jazz
i don’t agree. growing the pie seems to decrease the share that goes to those who have the least. very much so, as you would understand if you knew the living conditions of the modestly poor sixty years ago compared to today. i am not talking about the dirt poor…. who, oddly enough, were put into that condition by the growth of the industrial economy in the last century… the other last century.
and yes, i am perfectly happy with taxing some of that wealth to improve living conditions… but you can’t do it with a “soak the rich – give the poor welfare” attitude.
and i don’t know if interest and profits on stocks counts as GDP. seems to me it shouldn’t.
flint
because we are not stupid. if there is no room in your brain between taxing wealth to provide for “common” welfare and “owning the means of production outright” you don’t have enough brain space to have a chance of understanding what we are talking about.
jazz
which is one way of reducing (degrees of) freedom. but “pfreedom”, like “growth” is not a complete “good”. i pay taxes too. i like to think i am getting something for my “loss of fredom” to spend the money in some other way. Hell, if i buy a car, I have lost the freedom to do something else with the money.
noni
i’d be afraid of basing policy on wild speculation. it is possible that excessive concentration of wealth is destructive to society, but then the (an) answer would be taxing enough to break up the excessive concentration. that would not depend it seems to me on some arbitrary high tax rate but on a fairly careful look at what is causing the concentration of wealth and finding a way to break it up that is seen as “fair” by reasonable people. ah, there’s the rub.
The last time income tax rates were this high the US dominated the world economy and globalization was a word we rarely heard.
Be careful what you wish for, you migth not like the results.
Maximizing the Laffer curve isn’t merely about regulation. It is about shifting as much wealth as possible away from earners and into government hands. Why should we assume that this is desirable? If the government is better at investing than the private sector, why not let them do all the investing? Private ownership without the possibility of profit is perhaps worse than communism because the private owners have no incentive to create value.
jazz – If the government “controls” the financial sector, it has been effectively nationalized.
You are missing my point. The question is: “should government or private industry control investment?” Maximizing the laffer curve is an attempt to transfer as much of that power to government as possible while still maintaining an appearance of private ownership. But if the goal is to transfer power to the government, why bother with private ownership at all?
brain of flint
the goal is not to transfer power to the government. the goal is to maximize the welfare of all the people including the rich. even including the rich who are too dumb to realize that if they leave a nickle on the table the other guy might use it to grow the stock of wealth available and increase the wealth of even the rich guy.
neither the government nor private industry can or should “control investment.” private industry makes investments that return profit to the private investor… good up to the point where the private investment depends upon poisoning or stealing from other people. the government makes investments that arguably increase the strength of the country and increase the welfare of all the people.
you see it’s not an all or nothing world, it’s not even zero sum. but if you only have a two-state brain it may look that way to you.
go back to your original fallacy: flnt says “maximizing … is an attempt to transfer as much power to government as possible.” this is an assertion not a “fact.” flint then reasons from his assertion to “proof by rhetorical question”: why bother?
well, we bother because your assertion is not true. in fact your assertion is more or less disproved by the reductio ad absurdum of your rhetorical question.
flint, you don’t have much brain. why don’t you find something more fun to do than prove it to us. are you looking for pity?
once again flint
reasons from his assertion which is demonstrably false.
coberly – You are easily the worst thing about this site. I don’t expect people to agree with me, but you are the only one who consistently and unimaginatively insults me. You seem to be under the impression that anyone who disagrees with you lacks a brain. Your childish insults are a disgrace to your cause. Assuming you are not merely emotionally incapable of honest debate, I must assume that you hope to drive off those who challenge your perspectives, so you can preserve this playground in which mainstream economic views are dissmissed out of hand. As you wish, I will leave this site to those who share your ideas.
flint
most people here don’t share my ideas. i am indeed sorry to have to insult you, but the fact is that your “thinking” does not give my much else to go on.
flint
most people here do not share my ideas. i am indeed sorry to have to insult you, but the quality of your thinking is a pretty good example of why political “debate” never gets anywhere.
if you can get past the insults, try to understand the more substantive part of my criticism.
Jim:
Exactly . . . Furtermore, why would Wall Strret invest in a three percent return when CDS and CDO offer far greater returns and the government will bail them out?
heart:
As small as a 5% increase in taxes on private owners would cause them to leave earnings within the corporations they now have as it would become more expensive to withdraw earnings than what it is today. Leaving rarning within a corporation would not subject it to taxation and would, or could, cause the company to invest or at least be taken over :).
Yep!
I’m afraid it goes deeper than that. The insults merely reveal that you do not take opposing ideas seriously. There is nothing crazy about the idea that maximizing tax revenue will decrease private investment. Yet the more mainstream the idea, the more you take it as evidence that I merely adopted it from some shill. Time and again, I have advanced fairly mainstream arguments and have seen you dismiss them as unworthy of consideration. It is your ideas that are unworthy of consideration, not because you lack inteligence or education, but because you refuse to engage oposing perspectives. We do not share enough intelectual common ground for discussion to be fruitful.
Govrnments do not tax the people I order to effect economic growth in one way or another. That’s an old canard intended to raise a straws argument concerning the need to tax. Taxation has one goal, that being to pay for government activities. If you think that the government should sit idly by and do nothing then little will be needed in the way of tax receipts. If you live in the real world and recognize that the government has to meet the needs of the country which it governs then taxation will follow. A government doesn’t get to rule the rest of the world and blunder it’s resources without a cost. A government provides for the development and maintenance of infrastructure so that the people can carry out their daily activities both social and economics. It all has a cost. So cut the crap about economic growth and it’s relationship to taxation as it is a stew dog with no validity. Government collects taxes in order to pay its expenses that serve its citizens both rich and poor, usually a lot more for the rich than the poor.
heart of flint
first.. let me offer an apology of sorts. thinking it over i realize i would not be as mean to someone i know. i don’t like to hurt people’s feelings.
second… i can’t know if it is only because i disagree with you that i find your “reasoning” painful. but it is a fact that i do. you could live with that.. decide that i am wrong, or not very smart myself… it shouldn’t hurt you what i think… but, of course, i know that it does. humans seem to be wired that way. so, again, sorry to hurt your feelings. really sorry. but that doesn’t change the fact that your “thinking” drives me crazy.
please note that here you say “… nothing crazy about the idea that maximizing tax revenue will decrease private investment.” but that’s not what you said before … you said “it’s an attempt to transfer as much..power to government as possible…. why not let [the government] control the means of production outright”
if you can’t see what’s wrong with that… then, indeed we do not share enough intellectual common ground for discussion to be fruitful.
flint
if it makes you feel any better, about half the people in the country agree with your politics.. because they think the same way you do
and the other half of the people agree with the opposite politics… because they think about the same way you do, but started from a different place.
if people could think any better there’d be half a chance of solving some of our problems without hurting people.
or maybe not. sometimes it seems to me that some people like to be cruel. and some of them are plenty smart.
We have been though this before. Your reasoning is equally painful to me, and you needn’t worry about my feelings, but your lack of respect does not facilitate a meaningful exchange of ideas. If I may offer you some advice: when you feel like making some nasty remark because someone’s ideas are so painful to you, take a minute to reflect on what they have said and collect your thoughts, allow your emotions to pass, and then make a reasoned response without being insulting. Otherwise you run the risk of making an emotional response that fails to reflect the merit of your views.
The point I was trying to make is that it is undesirable to maximize the Laffer curve for revenue. The objective of doing so is to put as much money as possible in the hands of the government. I hardly think it is a leap of logic to say that money is power. This economic power comes directly at the expense of those taxed, which in this case will often be investors. In effect, you are taking money from investors and transfering it to the government. Since maximizing the Laffer curve maximizes this transfer, I assume that you want the government to have as much economic power as possible. In fact, jazz essentially admits as much by saying “So, yeah, I think government can do it better.” If you really think the government can do a better job, it would seem to follow that the government should own the means of production.
flint
you’d be surprised. it’s not emotional, and it isn’t done to hurt your feelings. it’s like when i corrected math papers for a living. i tell you where your mistake is. doesn’t mean you won’t make the same mistake next time.
as for the point you are trying to make: “the objective of doing so is to put as much money as possible in the hands of the government.” this is not true. the objective of doing so would be to maximize the rate of growth of GDP. I have argued that that is not an especially good thing to do. you failed to notice that argument. you appear to believe that “… to put as much money as possible in the hands of the government” is a kind of axiom that doesn’t need to be demonstrated and can’t be denied.
that does not lead to “a leap of logic that money is power.” no one would dispute that money is power. they dispute that “the reason to tax at the rate that maximizes growth is to put power into the hands of the government.”
of course taxing people reduces their economic “power” from one day to the next compared to what they would have had if everybody else paid taxes and that one person didn’t have to. but since everybody does pay taxes, even that one person ends up better off than he would have if no one paid taxes.
but jazz saying “the government can do it better” is not the same as “giving the government the most economic power possible. you simply can’t go from one statement to the other unless both statements are part of your religion. this is not thinking. or even arguing. it is just blathering.
it does not follow that “if the government can do a better job of X that therefore the government should own the means of production.” it could well be that the government does a better job of arranging the infrastructure for wealth than the private sector can, but still be the case that the for most or many things it is not better that the government should own the means of production.
you simply attach one sentence you believe to some other sentence you believe … without any real world, causal, or logical connection whatsoever… and imagine that you have made an “argument.”
what is painful to you is not my reasoning… you have no idea what reasoning is…. it is the fact that i disagree with you… and that i don’t know how to pretend i “respect” your reasoning.
if you were a person i knew, i would just smile and nod and agree with you and look for a chance to go do something else. because you are only a commenter on a blog, talking nonsense about a subject with potential to cause great harm… because so many other people who think no better than you do have similar defective “ideas”… that i have no other way to record not just my disagreement with you opinions but my opinion that your thought process is defective.
all i can offer you is that you are not the only one. on either “side.”
See that was much better. I now have some idea where you misunderstand what I am saying. You could have saved a few paragraphs about how I don’t really think, but as they say, baby steps. Unfortunately, I do not have infinte time, and the most convincing thing you have said to me is that I probably have something better to do.
I agree. The entire “government steals”, “government takes” and “government maximizing investment” is based on the idea of a monarchy or dictator and thus Laffer’s argument fails. We are not either, at least not in construct.
In our government, there is not a single entity such as Sir Government or King Government or Queen Government or General Government that collects taxes and then put’s it in their pocket for personal gain. Every penny We the People collects gets right back to us. The question then becomes: What is the best vehicle/agent to get that money back to us in such a way as to reduce the risk of living?
Now, certainly if I our any single person were the prime “decider” on all things money, then Laffer would have a point. As we have seen too many times, no single person seems to ever get it correct as far as what to invest in when their concerns regarding results is narrow or singular.
Laffer and his curve do not apply to a We the People government that is functioning as a We the People government.
should probably say that i do agree about the infra structure and credit default swaps.
noni
having thought a little further, i’d have to agree with your point: if it turned out that it took a marginal tax rate of, say, 90% on income over a million to break up a dangerous concentration of wealth, then we should accept the reduced growth rate that would come from that according to the kimel formula.
but there’s be other troubles.
becker
yes. granted that “we the people” are probably not any more or less smart than a king, or a cabal, or a commisariat, or the board of directors, or the pope and all his bishops, the best hope we have is for a democracy of checks and balances and a mixed economy of regulated capitalism,
something we used to have in America before the corporations found a way to buy the government and perfected the means of mass disinformation.
Actually, there have been many studies regarding decision making and results. We the People have an advantage over small number/singular decision makers.
In nature, science has learned that group decision is the norm and not the alpha male model of decision making.
“Taxation has one goal, that being to pay for government activities.”
Actually, in the US, that has not been true for several decades.
It is about incentives and disincentives.
The pentagon is the worst place to invest for the future.
US shipyards support the largest by 30 times navy in the world, and builds not one super tanker to get half the uS’ crude oil to the states.
And if you get on a region airline you are flying Canada or Brazil made airplanes because the US is putting $400B into the F-35.
Crowding out occurs when the pentagon wastes 5% of GDP.
heart of flint
that would make you smarter than me. good luck.
could explain why we aren’t paying our bills then.
and of course who it is we incentivize to do what may explain the rest of our troubles.
Becker
that’s true, i think. even science ultimately relies on “the many” to confirm what the geniuses thought they thought.
but we still need the geniuses, within reason.
Plus, from Michael’s calculations (can’t find right now) I seem to recall that even 90% Top Marginal doesn’t reduce growth very much in comparison to the 65% rate, and both are better than 30-35%, associated with the LOWEST growth rate in his charts, which oddly is our current top marginal rate.
Noni
Taxation is a reflection of politics in the sense defined by Lasswell over 75 years ago, “about who gets what, when, and how.” We can propose or argue that it ought to reflect some rational objectives or key values, like paying for government activities or maximizing gdp or enhancing individual freedom or increasing social justice or whatever, and such arguments certainly are worthwhile. They don’t make it so in practice.They may, however, push policies in a political direction preferred by some and not others.
pjr
the thing is, or seems to be
that people with enough money work the hardest to get the legislation they favor, and have the easiest access, and generally favor policies that enrich them in the short run.
there is no evidence anyone in politics takes the long view for long.
this is not completely unreasonable from an evolutionary perspective. if you are going to be around for the long view you need to win today’s struggle.
on the other hand, as a country we ought to be able to find a way to institutionalize the long view. at least enough to make it competitive with short view self interest.
i think that even among lions, the long view is represented evolutionarily by the fact that the lion who loses today’s fight does not fight to the death, nor does the winner.
“Actually, in the US, that has not been true for several decades.” s_t_r
No, that is just your interpretation of the process probably in large measure due to the wrangling of vested interests to reduce their fair share of the financial burden of government. Lobbyists may come up with all manner of excuse, like “effect on economic growth” and may have cohorts in the economics proffession and amongst the political class. Read tax legislation and demonstrate the concept of taxation for other than payment of government activities. All of the many “exceptions” have been tagged on as benefits to political donors. They are not the reason for the collection of taxes. Those exceptions are the ratinale for tax avoidence.