njlauren
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Joined: 10/1/2011
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ORIGINAL: subrosaDom
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ORIGINAL: njlauren
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ORIGINAL: DomKen
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ORIGINAL: mnottertail
Well here is a laffer curve, (actually find the maximum area under the curve, from calculus) problem is, neither Art Laffer or anyone else who is of the nutsacker persuasion understands it, and think it means cut taxes. It means anything but, for each segment of the earning folk, there is a maximization point, a maximum amount of tax that can be extracted from each earner in each different strata without materially affecting their life, nor their earning desire.
this of course requires hard data and known variables, since not all income flows weekly or bi-weekly, nor is the life of each strata equivalent. The fools that tout this shit (nutsackers) are masturbating in fantasy and saying Lo, here!!! Lo, there!!! but they are fucking inept as well as innumerate.
Definitively it can be said that the Laffer curve brought to America one great thing.
St. Wrinklemeat said that he would not do more than 4 pictures a year since the taxes ate him up. So, there is the positive, it kept us from too many Reagan movies.
Incidentally, a non-sequitur to be taken up by others, because they did not make the income Reagan did, nor do they work as second banana to chimpanzees.
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Not ever to defend Laffer who is wrong on just about everything but that was not his argument.
Basically he argues that tax revenue versus tax rate would produce a bell graph. Therefore for tax rates above the peak of the curve you should be able to cut taxes and immediately see an increase in tax revenue. He's been disproven many many times but that doesn't stop the nuts but you should at least get his idea right.
The problem with Laffer and the whole supply side economic theory is that tax cuts as they propose them tend to go to the well off, the problem with that being that the stimulus from doing that is limited, because the people in those brackets for each extra dollar they get doesn't spur all that much activity. For example, cutting the capital gains rate was supposed to increase capital formation that would create jobs, but what it ended up doing, besides cutting tax revenue, was increase wealth in the top 1% without spurring much growth (investment income in the top 1% increased at a rate of 10% a year for the past 8 years or so, but GDP grew only at a very small amount, if at all. Ironically, dollars spent by the government generate a lot more economic activity, the multiplier rate with government spending, because it tends to go to those in the middle and lower classes, who when given a dollar spend it, then with taxes which for every dollar they get, the top 1% spend very little.
The top 1% invest. As you well know. Whether directly or indirectly through deposits in banks or other financial institutions, which themselves invest it. Unless they stuff their money under a mattress, it goes to work in some sense. If they own a company, it becomes jobs. (This doesn't apply with many charities, but it does apply with microloans and other things like that.)
There is an ethical issue too. The top are already paying more marginally. It's not a tax cut. Further, a cut suggests the money belongs to the government. Actually the government only takes. It earns nothing. Its attempts at running businesses have been pretty poor. Japan and other industrial powers fared no better. The government can't pick winners and losers, especially because the losers often don't lose, as they do in the free market.
Was Laffer entirely correct? No. But a reductio ad absurdum shows, too, that if taxes were ideal, then we ought to tax everyone at 100%. Or how about, per M. Hollande, at 70%? Not working out so well for him, either. Capital, as does water, seeks its lowest (taxed) level. It's contrary to human nature to expect people to work harder for something when they get a lesser amount of the reward.
As far as your comments about the middle and lower classes, much of those claims rely on static analyses, that assume there is no upward or downward movement among income and wealth quintiles. This is palpably false. Looking at mere percentages in a quintile tells you very little. It's who is in the quintile, how old they are, and why they're there.
The economic stats of the past 30 years or so proves what I am saying. Since the 1980's, the real tax rates on the well off (nominal rates mean absolute jack, it is number that is meaningless) have plummeted while their wealth and income as a percentage of the whole have hit record levels, maybe not seen since the 19th century. If tax cuts to the well off creates real stimulous, we should have seen GDP increasing, and with that, salaries and job growth, and it hasn't happened. GDP growth during that period has been mostly anemic, and while investment income has risen at a rate of 10% a year for the upper classes, income levels for the bottom 99% have remained stagnant or have fallen off in real terms.
The real problem isn't that the upper class invests, it is where they invest. They don't put it in a bank, where the kindly banker loans that money out to the factory owner seeking to expand, or corporate bonds used to finance the company, or new issuances of stock. The reality is that when that top 1% invests, large percentages of it are designed to generate large returns, and a lot of that doesn't go into capital formation. Buying stock for example sounds like a grand idea to spur growth, but the problem is that most of the stock they have been buying is not an ipo that goes to the companies coffers, it is stock that has been around a while, and the only people who benefit are the brokers and traders, the company itself doesn't benefit when you buy existing stock. Sure, buying stock can help boost the stock price, which increases the value of treasury stock, but that in of itself doesn't generate the kind of capital formation that creates jobs. Worse, the whole shareholder management that is now the dominant force in business, actually leads to declines in employment, because having employees is frowned upon by stock analysts who actually drive stock prices. Hire a bunch of workers at a good salary and they downgrade the stock; send 10,000 jobs to China and India at dirt cheap salaries, and the stock god smiles on you.
As far as the conservative canard that the money doesn't belong to the government, that is basically the argument that the well off work hard for their money and are the titans of our economy, so how dare they have to pay anything? This is the basic drumbeat of the scumbag Koch Brothers and Grover Norquist et al, and it fails in a major way. The problem with that thinking is that the well off don't live in a vacuum, and despite claims to the contrary, the government and the systems we have set up here are a good part of the reason they are well off, and yes, they owe the systems. The Koch brothers can go on and on about how taxes 'steal' money from them, and I am sure there deal old dad said the same thing, but it is bullshit, utter bullshit. Without going into the millions of details, much of the wealth they have acquired happened because of our system, and while they can claim they did it all themselves, that government had nothing to do with it, they are full of shit. The infrastructure that government built, the schools that educate people they need, the technology that they use, most of which was developed by Uncle Sam's dollars, the government system of checks and balances that is paid for by tax dollars, the regulatory structure that despite their bellyaching, often goes a long way towards allowing them to be successful (banks love to whine about government regulation, but if it weren't for the FDIC and the banking regulations we have, no one in their right mind would put their money in the bank). The SEC and other oversight agencies make sure that trading is done fairly and that people cannot take advantage of inside information, and it makes the financial system work, because people have trust in it. Want to see the difference? Despite all the hoopla about a well educated workforce, how their universities are turning out engineers and technical people and so forth, who are supposedly superior, India as a country struggles to produce anything new, really add to the world economy, and its educated people depend on jobs from western countries because job creation within the country is practically non existent, and part of that is the government there simply cannot do what ours has done.
More importantly, the real problem with the tax cuts to nominal rates is that along with this, loopholes abound, and someone like Mitt Romney can pay on a huge amount of income, less as a percent than a secretary or an office worker, and that is a big problem. There are a lot more secretaries and office workers and forklift operators, and their tax burden is higher as a percent than those in the top brackets, and that is problematic because someone who is 'ordinary' generates a lot more economic impact then those in the 1%, because there are so many more of them. Given an extra buck to someone in the middle class, and that buck turns into about 5 bucks (known as the multiplier effect), give that buck to Mitt Romney and it generates about 1.50. What really has happened is that the burden has been shifted heavily onto the middle and lower classes, they pay as a percent of income a lot more, and many of those taxes are regressive. SS, that is basically just another tax (the trust fund bullshit is exactly that), that is going to fund the government with its surpluses, costs most workers 6.25% of their salary, whereas someone in the top 1% pays off their SS at most in a month of so, and represents a fraction of 1%. All the excise taxes people pay on phone service, sales taxes and the like, are regressive and hit the lower classes much more. To make up for lost federal revenue, states and localities have increased property taxes and fees, which hit the lower classes much harder than those in the upper ones (to give you an idea, in the town I live in, a typical house on a typical lot is probably around 500k, the tax bill is about 7k. There are some multi million dollar houses, and their tax rate for that house is around 10 grand, despite the fact it is worth 4 times that typical house). The well off have shifted the burden on everyone else, which you don't need a curve to figure out, squelches demand that our economy depends upon. Cut taxes on the well off, and their marginal propensity to spend increases very little; increase the tax burden on the lower classes, and the marginal propensity to consume drops like a stone.
As far as companies and such looking for the lowest tax rates, that is one of those lies if told enough becomes the truth. If that were true, all those low tax states would be the next wall street, the next silicon valley, the next economic engine, but they aren't. States down south have attracted foreign automobile manufacturers, but that primarily was because of relatively low wages and also because thanks to Uncle Sam, there is cheap infrastructure in the region (power in the region is dirt cheap thanks to the TVA that sells power at cost). The reality is, companies and people locate to places where they think they can do business. If low taxes and friendly government was the big criteria, silicon valley would be in Biloxi, Mississippi or Muscle Shoals, Alabama, not northern California, but it isn't. Capital flows to where they think they can do business, and a high tech firm isn't going to move to Mississippi for low taxes, because the state cannot attract world class talent nor can it supply it, given how poor the education system is and how bad the infrastructure is.
It isn't that tax cuts can't stimulate demand, it is that the kind of tax cuts we have seen, like the capital gains rate cut under Bush II, haven't produced what they claimed it would, broad based economic growth. The problem is that morons like Brownback have taken economics and turned it into Dogma, in many ways it reminds me in a different way of what the old USSR was like. There, they took a book of economic theory and turned it into dogma, so for example, they decided computers were against the ideals of marx/lenin, or accepted a theory of genetics that was hogwash. The loony right has taken as gospel that tax cuts increase growth, that any tax cut does that, and more importantly, that somehow if given tax cuts the very wealthy help spur the economy, and that simply isn't true, or rather, has limited effect, and that targeted tax cuts do more. The other problem with the wackjob right, maybe because they also reject science, is that they keep trying the same thing over and over again, because they believe it works, rather than looking at the data and saying "ya know, that just doesn't work; cutting the capital gains rate to 15% just didn't increase the kind of capital formation we wanted to see". The proof is in the pudding, yet they refuse to see it, in the past 30+ years the amount of taxes the well off pay as a percent of their income has been slashed in real terms (and nominal terms), yet all it has produced is 30+ years of budget deficits. Bush II pulled off one of the largest tax cuts in history, yet in the end he doubled the national debt, when his cuts should have, in his words, pay for themselves and then some, and it didn't, the bush tax cuts cost the government trillions of dollars that ended up as new debt (for the record, bush II inherited a debt of 5.5 trillion and a budget in surplus, and left with at least 11 trillion in debt, and budget defiicits approaching 800 billion). Reagan ran deficits, Bush I ran deficits, Bush II ran deficits, none of them even came close to balancing the budget, yet all of them made tax cuts their economic priority..so as they used to say on the Wendy's commericial, where is the beef?
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This is a known failure. Why continue this idiocy? - 
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