# Impact of cutting marginal tax rates.



## Intrepid (Feb 20, 2005)

Let's just stipulate in advance that liberals will attack the following as the rantings of the radical right wing, wing nuts.

However, The IRS just released figures, showing the result of the 2003 reduction on marginal tax rates.

Those with adjusted incomes of over $200,000 (@3% of taxpayers) paid federal taxes at a rate that increased by 19.4% - more than double the 9.3% increase for all other taxpayers.These are the people that largely start small businesses that drive the engine of the economy,that the rest of us benefit from.

Cutting marginal rates, INCREASES federal tax revenue. Always has. 

The Treasury just released data showing that tax collections for the past 12 months exploded by 14.4%. A two year increase in federal revenue of at least $500 billion.The largest two year increase in revenue to the treasury, adjusting for inflation, ever recorded.

If we could ever get bipartisan agreement on the empirical evidence, and quit arguing who gets to remain in power, our republic wouold be much the better for it.

Carpe Diem


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## I_Should_Be_Working (Jun 23, 2005)

Here, here.

Unfortunately I think the tyranny of the majority will hold sway.

Facts and figures dull, while rhetoric excites. That "Rich get richer..." line wins out. As a gross generalization, liberals tend to be bad with math, and a lot of conservatives simply need to relax.


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## tiger02 (Dec 12, 2004)

> quote:_Originally posted by I_Should_Be_Working_
> Unfortunately I think the tyranny of the majority will hold sway.


What does this mean, in a country that has voted consistently on the right for 50 years?

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Death is...whimsical...today


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## Intrepid (Feb 20, 2005)

Good point Tiger, you might double check the dates to be sure I havn't miscalculated, however:

Great Society and war on poverty came to us in the Lyndon Johnson term starting in 1962.

Supreme Court was controlled by the liberals from FDR in the 1940s until a few weeks ago.

The Congress controlled by the liberals until 1994.

Maybe my dates are off, but this is the way it seems.

Carpe Diem


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## Étienne (Sep 3, 2005)

> quote:_Originally posted by Intrepid_
> If we could ever get bipartisan agreement on the empirical evidence, and quit arguing who gets to remain in power, our republic wouold be much the better for it.


That evidence leaves me rather sceptical. Are those figures adjusted for the non-tax-cut-fueled growth?

I have not researched the matter rigorously, but I had always read, for exemple, that the marginal tax cut of the Reagan years had diminished the revenue rather sharply. Also, a French study a few years ago showed that an increase of the marginal tax rate in the French income tax (much lower on average than its US counterpart) would increase tax revenues, and I don't see why the two countries would differ so strongly.

(and by the way, the government shoved this study and proceeded to decrease the marginal tax rate still)


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## odoreater (Feb 27, 2005)

As long as the Evangelical fundamentalist anti-abortion social conservatives continues to hijack the Republican party in national politics I will not vote for them, even though I am a fiscal conservative. In other words, I agree with Republicans on economic issues, but disagree strongly with them on social issues and my disagreement on social issues outweighs my agreement on economic issues. In local politics I vote Republican, but in national politics I almost invariably vote Democrat, and I don't see any change in that coming (unless the Republicans nominate Rudy ).

_I fought the law and the law won._​


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## I_Should_Be_Working (Jun 23, 2005)

Etienne, I've always seen the opposite regarding reductions in marginal rates. Recall the US once had a top marginal rate exceeding 70%. The growth fueled by the Reagan cuts served to increase Federal revenue. This triggers the debate of dynamic versus static scoring. 

Sure, on paper we can say an X percent cut will yield an X percent reduction in federal income. However, this does not take into account the alternative uses such dollars will find. If I invest rather than pay tax, or better yet, help start a new business, overall domestic income may rise to such levels whereby federal income increases. Another factor to consider is that high marginal rates encourage various tax shelter devices. When taxes appear more reasonable, people won't bother with the time or expense of such complications. This is something typically lost in the debate.

Certainly you have seen data demonstrating how increased federal spending will "crowd out" the private sector, and actually impede economic growth. The multiplier effect within the private economy is greater than witnessed with public spending.


As for my comments regarding the tyranny of the majority, these are most certainly appropriate. Very rarely do we witness a public debate about the realities of the tax structure. Rather, the conversation sticks to the margins of truth, appealing to rhetoric and emotion. Democrats, as a party, simply will not acknowledge the economic development which can arise from reduced capital gains taxes. This simply doesn't jive with their "working man" schtick. Really sad, because increased investment spurs job growth in sectors offering higher wages. Republicans have botched their credibility with the current runaway spending.


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## Intrepid (Feb 20, 2005)

> quote:_Originally posted by Ã‰tienne_
> 
> 
> 
> ...


The left has always tried to discredit the huge growth in federal revenue as a result of the marginal cuts in tax rates, in the 80s by bringing up the point that the deficit grew during this period.

Most certainly true, but the deficit grew because SPENDING grew at a faster rate than revenue increased. Same thing is happening now.In your personal life, if you get a raise, but increase spending by an amount far greater than your raise, you will go deeper into debt. It works exactly the same way with any branch of government.

Until we get term limits, and a line item veto, congress can't resist the urge to follow the advice that Harry Hopkins gave FDR "Mr. President, tax, tax, tax, spend, spend, spend, elect, elect, elect."

Carpe Diem


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## Intrepid (Feb 20, 2005)

> quote:_Originally posted by odoreater_
> 
> As long as the Evangelical fundamentalist anti-abortion social conservatives continues to hijack the Republican party in national politics I will not vote for them, even though I am a fiscal conservative. In other words, I agree with Republicans on economic issues, but disagree strongly with them on social issues and my disagreement on social issues outweighs my agreement on economic issues. In local politics I vote Republican, but in national politics I almost invariably vote Democrat, and I don't see any change in that coming (unless the Republicans nominate Rudy ).
> 
> _I fought the law and the law won._​


Interesting point, OE. I agree with you completely on the abortion issue, but the American people will never pass a constitutional ammendment outlawing abortion. So to me it seems like a non issue. The religious right can rant about it all they want, but they might as well be arguing that the earth is flat.

The Republican congress has proven to be a big disappointment, but you still have to ask yourself who is best suited to:

Orchestrate a national defense policy that will protect our country.

Who is best equipped to come up with an economic policy that won't let us drift more rapidly into socialism.

Carpe Diem


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## longwing (Mar 28, 2005)

Cutting marginal tax rates will increase revenues only up to a point. The Lafer (sp?) Curve reaches negative slope at some point. Isn't the question where is the point of maximum revenue?


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## Wayfarer (Mar 19, 2006)

> quote:_Originally posted by odoreater_
> 
> As long as the Evangelical fundamentalist anti-abortion social conservatives continues to hijack the Republican party in national politics I will not vote for them, even though I am a fiscal conservative. In other words, I agree with Republicans on economic issues, but disagree strongly with them on social issues and my disagreement on social issues outweighs my agreement on economic issues. In local politics I vote Republican, but in national politics I almost invariably vote Democrat, and I don't see any change in that coming (unless the Republicans nominate Rudy ).


Odor, you sound like you have much in common with me concerning how we feel about Republicans. However, we are at different stages in our lives and I am betting when you start making a high income, you'll hold your nose and vote for people that have *not* promised to raise your taxes, like the last two Dem presidential candidates did to me 

Alas, poor George has the tax cutting and Social Security part right, but even he has the spending policy all messed up.

Warmest regards


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## Wayfarer (Mar 19, 2006)

> quote:_Originally posted by LongWing_
> 
> Cutting marginal tax rates will increase revenues only up to a point. The Lafer (sp?) Curve reaches negative slope at some point. Isn't the question where is the point of maximum revenue?


You are quite correct. The problem is that many refuse to believe in this function wholesale. They are usually the same people whom you can run through the graphs on what happens with effective minimum wages, how all taxes on corporations *are not* passed on to consumers, how comparative advantage and free trade raises all boats, etc. and they refuse to believe the math. It used to frustrate me no end in my younger days, now I realize nature endows understanding on a Bell Curve also.

Warmest regards


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## PennGlock (Mar 14, 2006)

Hell, I dont even care about empirical evidence. Im for the tax reduction on general priciple.


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## MER (Feb 5, 2006)

Couple of problems. First is that it doesn't recognize the nose dive federal tax revenues took in the 2 previous years. So yeah, huge growth, but compared to the ridiculously low tax revenues brought in in 2003.  Add to that the fact that tax revenues should always be growing: inflation, population increase, and (hopefully) economic growth. But the real problems occur when you look at the increases in federal tax revenue and increases in spending. Especially in terms of the interest on the federal debt.

So I don't think any on here will argue with you that federal revenues will grow despite cutting taxes, but they still wont' be as high as they would without the cuts and it takes a little while for the growth to show up. Plus, if you're just going to increase spending...

But the main criticism made against the bush and reagan tax cuts are that they locate the growth almost exclusively in the top tax brackets, so one America is doing great, but the other America...not so well.

And dishonesty about taxation occurs all over the place, from George W. "the vast majority of my tax cuts goes to those on the lower end of the economic spectrum" Bush to Ronald "We'll see the revenue growth within a year" Regan.

In terms of fairness, if we really wanted to make it reflect our values as a socieety, why is 300K the top bracket? Why is an ER surgeon in the same bracket as Tom Cruise? or Lee Raymond for that matter? I say we start making some higher brackets, 800, 2 mil, 10 mil, etc.

And they won't need an amendment to get rid of Roe, they have the numbers right now to get rid of it, but will probably do a Casey and death by a thousand cuts.

But we would need an amendment if we want to bring back the line item veto. Of course for it to work you really need divided government.


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## I_Should_Be_Working (Jun 23, 2005)

> quote:_Originally posted by LongWing_
> 
> Cutting marginal tax rates will increase revenues only up to a point. The Lafer (sp?) Curve reaches negative slope at some point. Isn't the question where is the point of maximum revenue?


True, but most on the left dismiss the Laffer Curve with, yes, a laugh. Ironically enough, there is a lot of common sense involved. How much would you work if tax rates were 100%? Zero, and federal revenue would be zero. How much would you work if tax rates were 0%? A lot, but again, federal revenue would be zero. Somewhere in between exists a range where tax rates have not discouraged productivity to the point where they become a drag on the economy.

If anyone deserves term limits, those who reside on Appropriations committees get my vote. Anyone familiar with the issues of regulation will know the term "captured" in regards to regulators. I believe this applies in large measure to appropriators; they are captured by the process, freely doling out funds. One might also argue they serve themselves, though.


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## Wayfarer (Mar 19, 2006)

> quote:_Originally posted by MER_
> 
> So I don't think any on here will argue with you that federal revenues will grow despite cutting taxes, *but they still wont' be as high as they would without the cuts*...


No, this is *exactly* where people will take issue. The economic data is to the contrary of your statement, you can indeed cut taxes and increase tax revenue, that is the basic premise of the Lafler Curve. As I stated above, people either will understand the math or will a) not understand it or b) refuse to understand it (worse in my opinion).



> quote:
> But the main criticism made against the bush and reagan tax cuts are that they locate the growth almost exclusively in the top tax brackets, so one America is doing great, but the other America...not so well.


If you are paying $0.00, how can you cut that more? Oh yeah, tax welfare, better known as the (un)Earned Income Tax Credit.



> quote:
> In terms of fairness, if we really wanted to make it reflect our values as a socieety, why is 300K the top bracket? Why is an ER surgeon in the same bracket as Tom Cruise? or Lee Raymond for that matter? I say we start making some higher brackets, 800, 2 mil, 10 mil, etc.


Always the answer of the left. No, I say we have a two bracket system, 0% and <insert number here>%. This is better known as a flat tax.

I understand we will not agree on this issue and can remain gentlemanly about it. However, the math and the empirical data is on my side.

Warmest regards


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## I_Should_Be_Working (Jun 23, 2005)

Tax revenue is not static. You can not raise or cut taxes and expect those paying to remain neutral in their behavior. One key element is the multiplier effect. Dollars spent through the private sector create more economic gain than through government spending.


For simplicity sake, if taxes are set at a flate rate of 75% versus 25%, which will deliver greater governmet revenue?


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## gmac (Aug 13, 2005)

Isn't this better known as Voodoo Economics?

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## jbmcb (Sep 7, 2005)

> quote:_Originally posted by gmac_
> 
> Isn't this better known as Voodoo Economics?


No, that's trickle-down theory. This is supply-side economics. Similar, but different.

Bueller? Bueller? Bueller? 

Good/Fast/Cheap - Pick Two


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## Wayfarer (Mar 19, 2006)

> quote:_Originally posted by gmac_
> 
> Isn't this better known as Voodoo Economics?


To see you quote George Bush is priceless. However, math to disprove the economics would be more impressive 

Warmest regards


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## Karl89 (Feb 20, 2005)

Off topic - abortion comment warning in advance

Odoreater,

I have to point out that the GOP allows debate about abortion in its ranks (I can name at least ten pro-choice Senators and Powell, Rice and Giuliani are all prominent Republicans who hold pro-choice positions)while the Democrats allow no such dissent from the party line. Pro-choice Republicans were given primetime speaking slots at the last Convention. Are there any pro-life Democrats? Former Governor Casey of PA, the last notable pro-life Democrat, was denied a speaking slot at the 1996 Democratic Convention bc of his views on abortion. Full discloure - I am pro-life though I do not favor the criminalization of abortion.


Karl


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## MER (Feb 5, 2006)

Hey now, flat tax changes everything, but it's not going to happen in our life times. Likewise I don't think Dan Shaviro's progressive consumption tax would ever stand a chance of happening.

As far as the debate within the existing structure between the republicans and the democrats, the empirical evidence seems to be on the side of the democrats.

When you correct for inflation and population growth, federal revenues from 2000 to 2005 were .6% less then from 1995 to 2000. Now perhaps 2005 is the mark of something new, but you would basically have to have 8% corrected revenue growth for the next five years to balance these past five years out and match the revenue numbers we saw in the 90s. However, I don't think that is going to happen.

This seems to fall in line with what has happened historically. Compare the 80s to the 90s. Federal revenue growth corrected for population growth and inflation was almost double in the 90s what it was in the 80s.

Even the administration doesn't claim that federal revenues will grow as fast under their plan as they have traditionally. Their numbers corrected for population growth and inflation come down to .6% forecasted revenue growth per year. Compare that to about 3.5% revenue growth per year (also corrected for population growth and inflation) during the 90s when marginal rates were higher. And about 2% corrected revenue growth for the 80s. 

So I would say, we've tried it both ways, and look at the numbers. 

Now, can you cut taxes and increase tax revenue even when correcting for population growth and inflation? Yes, if the tax rates are at higher then optimal levels. I think the empirical evidence of the past 25 years shows this not to be the case. But if you've seen conflicting data, I would be very interested to see it.

Oh, and there are a ton of pro-life democrats...just not in the senate. There is only nelson in the senate, oh but Casey is trying to get in. I can think of 4 governors that are prolife. And about 30 members of the house with another 10 or so trying to get in in the next election.


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## Wayfarer (Mar 19, 2006)

> quote:_Originally posted by MER_
> 
> As far as the debate within the existing structure between the republicans and the democrats, the empirical evidence seems to be on the side of the democrats.
> 
> ...


To compare 1995-2000 to 2000-2005, within our current discussion, is just plain nonsensical. A huge economic bubble vs. a bear then recovering economy? That is like saying, "I ate more but lost weight from 1995 - 2000, and I ate less from 2000 - 2005 and gained weight, therefore eating less causes me to gain weight" totally leaving out that from 1995 - 2000 I cycled 400 miles a week and in 2000 had an injury that made it barely possible for me to walk.

There is a basic premise in looking at economic data and that premise is *all other things being equal*. Are you going to attempt to tell me the two time periods were equal, economically speaking? Truly, it is a simple concept, just think of it like an inverse indifference curve. Also, it was well summarized above concerning the extremes, 0% and 100%, please scroll up.

Warmest regards


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## Intrepid (Feb 20, 2005)

> quote:_Originally posted by LongWing_
> 
> Cutting marginal tax rates will increase revenues only up to a point. The Lafer (sp?) Curve reaches negative slope at some point. Isn't the question where is the point of maximum revenue?


Precisely! If marginal tax rates were reduced to zero, the tax revenue would also reach zero. If the marginal rate was 100%, federal revenue would also be zero. Why work?

Arthur Lafer has determined mathematically how to set taxes to maximize incentive to produce with the ability to maximize revenue to the federal government.

The problem arises when liberals conclude that a marginal rate of 100% on "rich people" is about right. As former Senator Phil Graham said," did you ever get a job from a poor man?"

Who knows if Sen McCain can get the Rep nomination, or if he can defeat Hillary if nominated. Sen McCain knows absolutely nothing about economics, but he said that if elected, he would appoint Arthur Lafer as his economics advisor.

We'll have to see.

Carpe Diem


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## ksinc (May 30, 2005)

Go Intrepid! "I have fought a good fight, I have finished my course, I have kept the faith."


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## Wayfarer (Mar 19, 2006)

I just realized, some possible explanation is needed. First, let us remember some basic calculus, namely Rolleâ€™s Theorem which can be stated simply as follows: if a curve crosses the abscissa twice then there must be a point between the crossings where the tangent to the curve is parallel to the axis. So with 0% tax being one point and 100% being the other, a continuous function is thereby described and said parallel tangent should exist. Where T = optimal tax rate and t = the actual rate and x = the tax base, T = tx(t), find the point T with parallel tangent to the abscissa and you're in business. I will submit this will be a moving target as economies are anything but static. 

Warmest regards


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## Karl89 (Feb 20, 2005)

Gents,

Please note that Russia, Slovakia and Estonia all have flat rate tax regimes and are doing extremely well. Bush really wasted his chance in 2005 by not pursuing a flat tax out of the gate. I think a flat tax would provide a great stimulant to the economy, reduce regulatory costs and if properly structured remove millions of lower income filers off the tax rolls. The tricky question is how to account for the charitable deduction bc I believe that private philanthropy is why the US has such a dynamic civil society and superior universities and research institutes.

Karl


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## Intrepid (Feb 20, 2005)

> quote:_Originally posted by MER_
> 
> Couple of problems. First is that it doesn't recognize the nose dive federal tax revenues took in the 2 previous years. So yeah, huge growth, but compared to the ridiculously low tax revenues brought in in 2003. Add to that the fact that tax revenues should always be growing: inflation, population increase, and (hopefully) economic growth. But the real problems occur when you look at the increases in federal tax revenue and increases in spending. Especially in terms of the interest on the federal debt.
> 
> ...


Roe is a result of a Supreme Court decision. Unless the court is willing to reverse a previous court decision, is would take a constitutional ammendment to reverse a supreme court ruling. Congress couldn't do it, and the American people would never pass an ammendment to make abortion illegal.

There is legislation pending that will allow a line item veto. Under Clinton, the Supreme court overturned the law because it abrogated the congressional right of congress to control spending.

They will probably get it right this time. The pending legislation gives congress the up or down vote on a line ltem veto. This probably can't be overturnes as unconstitutional.

Carpe Diem


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## odoreater (Feb 27, 2005)

> quote:_Originally posted by Karl89_
> 
> Off topic - abortion comment warning in advance
> 
> ...


Karl,

I appreciate what you are saying. But, when I made the comment about the anti-abortion evangelicals, I wasn't so much making a comment about abortion (I really don't care much about the issue either way because it doesn't affect me), but the problem that this issue has been hijacking public debate and affecting other areas. For example, one area that I do care about that's been tainted by the discussion of abortion is stem-cell research. This issue also taints discussions about Supreme Court and other federal judges. I really think that there's a lot more important things that are going to be coming before the Supreme Court that should be discussed more than overturning Roe v. Wade (for example, let's get that abomination of a decision Kelo overturned). As I said in my original post if the Republicans were to nominate Rudy or Christie Whitman for President, I would definitely vote for them.

By the way, just as a disclaimer, I have no party affiliation (although my ideological leanings are pretty libertarian, I think being part of a Libertarian party is just, well, un-libertarian).

_I fought the law and the law won._​


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## ksinc (May 30, 2005)

> quote:_Originally posted by odoreater_
> 
> As long as the Evangelical fundamentalist anti-abortion social conservatives continues to hijack the Republican party in national politics I will not vote for them, even though I am a fiscal conservative. In other words, I agree with Republicans on economic issues, but disagree strongly with them on social issues and my disagreement on social issues outweighs my agreement on economic issues. In local politics I vote Republican, but in national politics I almost invariably vote Democrat, and I don't see any change in that coming (unless the Republicans nominate Rudy ).
> 
> _I fought the law and the law won._​


Odoreater you should come up with some label-less ways to describe yourself and your opponents. If everyone who claimed to be economically-conservative and socially liberal or moderate was, we wouldn't be divided 51%-49% in this country.

Do you really think you agree with Republicans on economic issues because you are a fiscal conservative? No offense, but have you perused a Budget Amendment since 1994? Neither political party is economically conservative. All true economic conservatives have left the building.

JMO, sorry to leap in and hit you over the head and run. It's not intentional. I just know you can do a better job of articulating your beliefs.


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## Karl89 (Feb 20, 2005)

Gents,

If Roe were overturned (and I think this court might go that route) it would not make abortion illegal, it would simply place the matter in the hands of each state. NY and CA would probably allow abortions while TX and UT would not. Intrepid you are right, there will never be a constitutional amendment banning abortion but just as unlikely is an amendment enshrining abortion as a constitutional right. Federalism may be the best solution to our most divisive issue. 

Karl


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## ksinc (May 30, 2005)

> quote:_Originally posted by Karl89_
> Federalism may be the best solution to our most divisive issue.


The truth in that statement scares the heck out of this American.


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## Intrepid (Feb 20, 2005)

> quote:_Originally posted by Karl89_
> 
> Gents,
> 
> ...


Superb point! I wondered if anyone would bring up the flat tax.

Right, it will never happen in our lifetime. It is too easy for the left to demagog. Since Steve Forbes brought it up, it can easliy be dismissed as a rich man's ploy for those that have little other than class envy to butress their arguments with.

However, even the left compliment Russia on the tremendous success that they have enjoyed with a flat tax. Not only did compliance rise dramatically, but state revenue also increased dramatically.

Maybe we will have to reach the economic disintegration that the Soviet Union reached before we will be willing to try something like this, that has proven conclusively to work.

Carpe Diem


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## odoreater (Feb 27, 2005)

> quote:_Originally posted by Karl89_
> 
> Gents,
> 
> ...


Just to clarify something though, the proposed abortion amendment would not have made abortion illegal everywhere either. The proposed amendment would have overturned Roe and would have allowed states to choose whether to legalize abortion or not.

_I fought the law and the law won._​


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## Wayfarer (Mar 19, 2006)

> quote:_Originally posted by Intrepid_
> Superb point! I wondered if anyone would bring up the flat tax.


Scroll up my friend, you'll see I brought it up first.

Warmest regards


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## odoreater (Feb 27, 2005)

> quote:_Originally posted by ksinc_
> 
> Odoreater you should come up with some label-less ways to describe yourself and your opponents. If everyone who claimed to be economically-conservative and socially liberal or moderate was, we wouldn't be divided 51%-49% in this country.
> 
> ...


No, what I said was that I don't vote for Republicans even though I'm a fiscal conservative. I don't think that the current batch of Republicans that are in power are really fiscally conservative (e.g., huge spenders). That's why I don't belong to a party, because there is no party out there that coincides with my views on a majority of issues.

_I fought the law and the law won._​


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## Karl89 (Feb 20, 2005)

Gents,

I don't think the Constitution should be tampered with lightly whether the issue is to ban abortion or gay marriage. The older I get the more I appreciate the genius of federalism. Of course certain rights must be afforded in all 50 states but on the truly contentious issues, where its not black and white, let each state decide. The abortion issue would be far less toxic in this country if two things happened - first the Right needs to get over its allergy to birth control and allow for an educational curriculum that allows for both abstinence and birth control and secondly the Left needs to admit that whether or not its legal, each abortion represents a tragic failure on some level and even those who support abortion rights need to work towards a society where abortion is rare.

Karl


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## odoreater (Feb 27, 2005)

I agree with you Karl. While I am pro-choice I am also anti-abortion (not pro-life). I think people should have the right to get an abortion if they really want one, but I don't think that an abortion is always the best thing to do.

I don't think that overturning Roe would be such a bad thing actually because that would give each state the right to decide the issue in their own way. But, the only problem is that this might lead to an increase in dangerous back-alley abortions in states where it is illegal for women who can't make the trip to NY or CA.

_I fought the law and the law won._​


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## ksinc (May 30, 2005)

I know a pro-choice, evangelical minister who says about abortion, "God gave people free will. Which means they get to choose whether they want to burn in hell or not."

So how about that flat tax?


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## Intrepid (Feb 20, 2005)

> quote:_Originally posted by Karl89_
> 
> Gents,
> 
> ...


Absolutely right! In our federalist society the people of each state should be left to their own good judgement.

Carpe Diem


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## odoreater (Feb 27, 2005)

> quote:_Originally posted by ksinc_
> 
> I know a pro-choice, evangelical minister who says about abortion, "God gave people free will. Which means they get to choose whether they want to burn in hell or not."
> 
> So how about that flat tax?


Touche! 

_I fought the law and the law won._​


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## MER (Feb 5, 2006)

Wayfarer, 2000-2005 compared to 1995-2000 is simply the most striking example , but if you take 2000-2005 and compare it to any 5 year period of the last 25 years you'll find the results are the same. In fact, as I pointed out, even the forecasted administration numbers are far lower than we are used to. The average revenue growth since the second world war has been 2.7% corrected, and their number is at .6% corrected. I would love it if we could factor out all the complications the real world presents, but that's not going to happen. So in reality at some point you're going to have so ask, which one is working better out there , and that result is clear.

As far as the flat tax, I don't think it is a good model for achieving the greatest federal revenue. The problem I have with it is that it assumes too much. The optimal tax level for revenue generating is going to be different for different economic groups. I think the graduated income tax better reflects this, although I also believe we stumbled into that finding by accident in an attempt to punish the rich. However the flat tax does have substantial benefits that may outweigh this problem of assuming too much. As already mentioned, the flat tax may mean more compliance and less regulatory spending which could outweigh its problems. But politically there is no way it is going to happen.

A brief anecdote about Roe. I remember last year I was talking to a doctor from texas about abortion. We argued back and forth about it for a little while, then he finally said "the main problem I have with it is that now viability is earlier and the law should reflect that. The line should be when the fetus is viable, not any of this trimester stuff." I looked at him for a moment then said "The Supreme Ccourt decided this case we call Casey."


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## Wayfarer (Mar 19, 2006)

.....example of how a thread is hijacked....insert fetus and stir.

Warmest regards


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## ksinc (May 30, 2005)

> quote:_Originally posted by Wayfarer_
> 
> I just realized, some possible explanation is needed. First, let us remember some basic calculus, namely Rolleâ€™s Theorem which can be stated simply as follows: if a curve crosses the abscissa twice then there must be a point between the crossings where the tangent to the curve is parallel to the axis. So with 0% tax being one point and 100% being the other, a continuous function is thereby described and said parallel tangent should exist. Where T = optimal tax rate and t = the actual rate and x = the tax base, T = tx(t), find the point T with parallel tangent to the abscissa and you're in business. I will submit this will be a moving target as economies are anything but static.
> 
> Warmest regards


You could also use M&M to solve for T


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## Intrepid (Feb 20, 2005)

> quote:_Originally posted by Wayfarer_
> 
> 
> 
> ...


Sorry that I didn't give proper attribution. In any any event Wayfarer, thank you for bringing the subject up. It is not possible to discuss taxes without at least a mention of a flat tax.

Carpe Diem


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## Wayfarer (Mar 19, 2006)

> quote:_Originally posted by MER_
> 
> Wayfarer, 2000-2005 compared to 1995-2000 is simply the most striking example , but if you take 2000-2005 and compare it to any 5 year period of the last 25 years you'll find the results are the same. In fact, as I pointed out, even the forecasted administration numbers are far lower than we are used to. The average revenue growth since the second world war has been 2.7% corrected, and their number is at .6% corrected. I would love it if we could factor out all the complications the real world presents, but that's not going to happen. So in reality at some point you're going to have so ask, which one is working better out there , and that result is clear.


So basically, you just are not going to deal with the true economics of the situation? You are just going to look at raw numbers, put in one or two variables that do not affect the outcome you desire, and declare what is "clear"? Even given your entirely faulty analysis, why stop at 25 years? Why do we not compare 1995 - 2000 to say, 1975 -2000 and see the results? Oh, because that would show a five year time period with lower tax rates and higher tax revenues?

Warmest regards


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## ksinc (May 30, 2005)

I'm confused. Why is the goal to achieve the highest federal revenue? 

In economics we study GDP growth and distribution and in finance we study earnings growth. 

What is the name of the school that studies federal revenue growth?


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## Karl89 (Feb 20, 2005)

Wayfarer,

I don't get the whole hijacking of threads complaint. Some issues are complex and they bring into focus other issues and the conversation can move into all sorts of unexpected areas. I don't view this as a bad thing, quite the contrary. Give me a lively mind anyday! Now go "hijack" this thread and lets discuss something entirely different and just as fascinating.

Karl


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## Wayfarer (Mar 19, 2006)

> quote:_Originally posted by ksinc_
> 
> I'm confused. Why is the goal to achieve the highest federal revenue?


Good question. If I made it sound like a goal in presenting the function that describes the Laffer Curve, I did not mean to. My goal would be not to go beyond "T" but any point to the left of it is also fine with me. It is when we go to the right of "T" and are destructive to the economy that we must prevent again.

Warmest regards


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## ksinc (May 30, 2005)

> quote:_Originally posted by Wayfarer_
> 
> 
> 
> ...


Yep. I'm not sure if it was you or not, but MER responded to you, "As far as the flat tax, I don't think it is a good model for achieving the greatest federal revenue". As if that was a problem with the flat tax theory or its stated goal.


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## gmac (Aug 13, 2005)

> quote:_Originally posted by Wayfarer_
> 
> To see you quote George Bush is priceless.


Even a broken clock is right twice a day......

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## MER (Feb 5, 2006)

Well, the OP was attempting to justify the tax cuts as raising federal tax revenues and I was pointing out that there are justifications for the tax cuts, but raising federal tax revenues isn't one of them. Even if you believe the Laffer Curve there is no reason to believe we are to the right of the apex. I assumed Wayfarer brought up the flat tax as being justified for the same reason, as some have argued that the problem with the graduated income tax system is that by its nature (because it taxes at different rates) it will never be able to achieve the optimal federal tax revenue. But looking again at his posts I realize that was not his intention. 

Which begs the quesiton, which type of flat taxer are you? Forbes type? Armey type? Negative Income type? True Flat?


As far as federal tax revenue growth and comparing it to previous years, all i have in front of me are the past 25 years of corrected federal tax revenue growth. If you have further back go ahead and share it and we'll see how it matches up. But I really don't think it is out on a limb to say that the current administrations policies don't grow federal tax revenues nearly as much as its predecessors.

Looking at federal tax revenue and its growth is something done mainly by places like the CBO, but you'll find pretty much any government orientated tax institute looking at the same thing. Although I think it has been largely in self defense since supply siders have been drawing half circles on everything.


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## gmac (Aug 13, 2005)

> quote:_Originally posted by Karl89_
> each abortion represents a tragic failure on some level and even those who support abortion rights need to work towards a society where abortion is rare.


Exactly what Bill Clinton said.

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## gmac (Aug 13, 2005)

> quote:_Originally posted by Intrepid_
> Absolutely right! In our federalist society the people of each state should be left to their own good judgement.


Didn't you have a little local dispute about that 150 years ago or so?

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## Wayfarer (Mar 19, 2006)

> quote:_Originally posted by gmac_
> 
> 
> 
> ...


And I see you are not going to argue with my math and impress me (the rest of my post that you edited out). Ahhh well, I did hope. Quips are not proofs.

Warmest regards


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## Wayfarer (Mar 19, 2006)

> quote:_Originally posted by MER_
> Which begs the quesiton, which type of flat taxer are you? Forbes type? Armey type? Negative Income type? True Flat?


Hmm, actually, there is no question begging from me today. To "beg the question" is to use as proof, one of the premises of a proposition. Something like, "All doctors are smart because you have to be smart to be a doctor". However, in answer to your question, I think if you scroll back and read my post, you will see I indicate what type of flat taxer I am.

Warmest regards


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## Intrepid (Feb 20, 2005)

> quote:_Originally posted by ksinc_
> 
> 
> 
> ...


ksinc, it doesn't seem that you have reason to fear the federalist system.

Roe v Wade is the law of the land. The Supreme Court almost never overturns a SC decision, Dred Scott, is a well justified, but a very rare occurance.

That being so, the only way that R v Wade is going to be overturned is by Constitutional ammendment.That just isn't going to happen. Look what happened when there was an attempt to pass the ERA as a constitutional ammendment, It failed.

When the system works, the people at the state level make the best decisions.

When John Ashcroft was in Congress, he tried to get a law passed to outlaw assisted death.He failed. Oregon passed a law making this legal in Oregon.

As Attorney General, Ashcroft overrulled the Oregon law. The Supreme court recently held that the AG had no authority to overrule the will of the people, the law stands.

If you live in Georgia, and don't want a law like this, vote it down in the state legislature.

The system is a beautiful one, and works well, most of the time, it would seem.

Carpe Diem


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## Intrepid (Feb 20, 2005)

> quote:_Originally posted by gmac_
> 
> 
> 
> ...


gmac, many of us agree completely with that statement, and feel that it is not the place of any branch of the government to interfere in a private decision of that nature.

The Libertarian view is that the government should interfere as little as possible in the rights of individual citizens. If a person has a religious belief that abortion is wrong, fine. If another person has a different belief, they should be able to act accordingly.It's absolutely no different from adultery. If it's ever decided to enforce a law against it, there aren't enough cops in the US and Canada to address the issue.

The same with stem cell research. If there is no science that shows that this is wrong, then it should proceed for the greater good. The "moral majority" is neither, and should be resisted if they attempt to impose their views on society, it seems to me.

Carpe Diem


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## odoreater (Feb 27, 2005)

> quote:_Originally posted by Intrepid_
> ksinc, it doesn't seem that you have reason to fear the federalist system.
> 
> Roe v Wade is the law of the land. The Supreme Court almost never overturns a SC decision, Dred Scott, is a well justified, but a very rare occurance.
> ...


Intrepid,

I think the biggest fear of the federalist system comes from its failures in the south during Jim Crow. The federal government was instrumental in getting civil rights for blacks in the south and arguably, without the federal civil rights law, there would be much wider discrimination (especially in the south) than there is now. So, Jim Crow represents a major and dramatic failure of federalism and was probably the beginning of the end for robust federalism.

_I fought the law and the law won._​


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## Wayfarer (Mar 19, 2006)

> quote:_Originally posted by MER_
> 
> Even if you believe the Laffer Curve...


Excuse me, "even if you believe" in it? My good sir, I just provided a fairly detailed mathmatical analysis. I am not presenting Grimm tales here, I have provided the justification. Please do not dismiss it like that, provide similar proof *to the contrary*.

Warmest regards


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## gmac (Aug 13, 2005)

> quote:_Originally posted by Intrepid_
> The "moral majority" is neither, and should be resisted if they attempt to impose their views on society, it seems to me.


Couldn't agree more.

I have my own views on abortion which I won't bore everyone with. However, I don't feel that everyone else should be forced to share or go along with my viesw.

The conservative argument on stem cell seem ridiculous.

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## odoreater (Feb 27, 2005)

> quote:_Originally posted by gmac_
> 
> 
> 
> ...


There's way too many of us on this thread that normally vehemently disagree with one another that are agreeing. It makes me sick. [xx(]

jk. 

_I fought the law and the law won._​


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## Wayfarer (Mar 19, 2006)

Well, since the abortion topic doesn't seem to want to die (bad choice of words, I know), I might as well toss my Malotov Cocktail on the topic.

I am pro-abortion. Not pro-choice, I am pro-abortion, meaning I do not think enough of them occur. 

I also think the parties have their stances mixed up because a) government interference is supposed to be a liberal thing, not a conservative thing and b) I think most abortions occur in the likely to vote Dem segment of society, so Dems are allowing likely Dem voters to be killed off while Repubs are keeping 'em alive. Makes no sense to me.

Warmest regards


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## I_Should_Be_Working (Jun 23, 2005)

First off, let's stick to taxes, not other topics of controversy.

Here is my view on the tax debate. Gmac and those like him, hold tight. This entails gutting the current tax code.

First off eliminate the corporate tax. Secondly, keep capital gains taxes relatively low. These two factors will boost economic development. Eliminate the graduated scale and AMT. Institute a flat tax for earners right above where most with joint filers with two or three kids begins to pay federal tax. 

What would this achieve? First it would relieve citizens of the tremedous burden the current tax code presents. Everyone would pay the same share; no shelters, no schemes for folks like the Heinz-Kerrys, and no CPAs and tax attorneys for people who earn less than a $1k a day. It would encourage investment and development, not debt and spending. The best part is the effect it would have on our lobbyist/politician culture. Without a tax code to manipulate, which until earmarks has been the prominent target of lobbying, the power of the politician would diminish. The ridiculous tax code allows for rent seekers to capture and maintain power.

Any thoughts.


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## MER (Feb 5, 2006)

> quote:_Originally posted by Wayfarer_
> 
> 
> 
> ...


The traditional formulation sure, but the modern formulation, especially that used in political discourse, means "the question really should be addressed." As you obviously understood I meant the modern formulation from the context, I can't really see the point of making this little diversion. Nor the point of making someone scroll back to find your brief mention of wanting two brackets. Especially when it still leaves the reader unsure of your position on possible deductions or consumption taxes. But that's just me.

Anyway, as far as Intrepid's post, Dredd Scott was overruled by the 14th amendment, not the SC itself. That being said, the SC overrules decisions all the time, they were within one vote of overuiling roe with Casey and didn't leave much left when they were through. So it is very much an open game, especially with the "moral majority" in full control of a number of states. Overruilng Roe would have a tremendous effect, and no doubt swallow American politics for another 30 years, which hopefully will prevent the court form pulling the trigger.

Ok, to Wayfarer's next post: when was this detailed mathematical analysis? I seem to have overlooked it? All I can recall is some scribblings on a cocktail napkin No, critiques of the Laffer curve are numerous ranging from the idea that there is no reason to belive it would resemble a bell curve, is too simplistic to reflect the realities of federal revenue, and is statitc (as you mentioned.) I merely included the "even if you believe" to acknowledge that some don't (and I must admit as part of a argumentation habit of never conceeding anything until I have to). But the problem in it being a useful construct, for me at least, is that it is nearly impossible to be on the right side of the curve as the necessity to work is pretty inelastic. Studies done as far as where that point would be have put it at 80%, 65%, etc. well higher than anyone in the public discourse has argued to place the top bracket so it seems silly to invoke it as a justification for tax cuts.

Ishouldbeworking - what about the effect that would have on community service? Many people are more willing to donate if it means less taxes.

To open it up further. How does everyone feel about an estate tax?


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## Wayfarer (Mar 19, 2006)

Sorry, I am bowing out of this talk. I am conceding defeat if you will. We believe what we believe, some of us with the economics and math on their side, some of us without, but we are not about to change each other's minds. I mean, a function that crosses the abscissa twice will necessarily have a shape similar to a Bell Curve as it *crosses the abscissa twice.* Take a moment and draw a straight line. Draw any continuous arc that crosses that line twice. It will therfore have a point that is tangental to.....who am I kidding? Basically, I am admitting we just have all been wasting our time.

Warmest regards


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## gmac (Aug 13, 2005)

> quote:_Originally posted by I_Should_Be_Working_
> 
> First off eliminate the corporate tax.


I'm not familiar with the US tax code but I believe there is an element of double taxation on corporate profits i.e the corporation pays taxes and then you pay taxes on the dividend you receive from the corpration.

I don't think corporate taxes should be eliminated but I do think the double taxation should be eliminated - if I recall from my accounting classes many years ago there was a system of paying advanced corporation tax in the UK which resolved this problem. Couldn't explain it if my life depended on it though.

Flat tax? As proposed by Lenin? Sure, but you'll just end up paying it in consumption taxes.

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## gmac (Aug 13, 2005)

> quote:_Originally posted by Wayfarer_
> We believe what we believe, some of us with the economics and math on their side, some of us without,


Because all of the economists beyond this forum agree?

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## Wayfarer (Mar 19, 2006)

> quote:_Originally posted by gmac_
> 
> 
> 
> ...


I am sorry gmac, I have directly challenged you more than once on this thread to provide some proof, as in economic model, theorum, etc. to counter what I have said. You have yet to do anything beyond make comments like the above one. Again, quips are not proofs. This is why I give up, how can I possibly counter, "Even a broken clock is right twice a day" with such lame retorts as, "Rolleâ€™s Theorem which can be stated simply as follows: if a curve crosses the abscissa twice then there must be a point between....T=tx(t)..."? I acknowledge your quips outgun my attempt at serious posting.


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## gmac (Aug 13, 2005)

I'm no economist and I won't offer you any substantive argument on this topic.

But, and do correct me if I am wrong, economists have been known to disagree on the matters being discussed here. As such I am sure I could go to wikipedia and rip off some theorum to counter yours.

Would I understand it? Probably not. Would it advance the discussion? I doubt it. Are rhetorical questions a dumb way of making a point? Yes.

That's why I stick to quips.

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## I_Should_Be_Working (Jun 23, 2005)

Regarding the charitable giving, there is a lot of fluff in the system going under the moniker charity. But as we all know, there is more good. Perhaps what I would envision would entail a contraction of some giving. My opinion, though, is that the majority remain. The reasons for charity go beyond tax breaks, and greater wealth through economic development might offset the loses. Certainly this is an issue more complicated than this forum allows.

A high corporate income tax stymies development and encourages mischief. How many more companies must we witness locate overseas? Let them come here, and let those that are here to stop utilizing income shifting schemes. No one ever calculates the investment of time and effort into tax reduction efforts. Costs to consumers will decrease by a significant amount (though less than the tax reduction, Econ 101). Profits will rise as well, rewarding investors, encouraging savings and further investment.


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## I_Should_Be_Working (Jun 23, 2005)

> quote:_Originally posted by gmac_
> 
> I'm no economist and I won't offer you any substantive argument on this topic.
> 
> ...


As you get more specific with an issue, there is more disagreement. For instance, almost every economist believes in trade as a worthwhile activiy for improving utility. But the practical applications of Cafta, for instance, might evoke debate.

Likewise, there are hardly any economists who believe in state control. Yet with the field of healthcare, witness Krugman calling for a single payer system (Medicare). Personally I find him too partisan to be an effective economic analyst; both parties make egregious suggestions. Nonetheless, your claim is largely accurate. Academic and policy economists are more varied in their opinions on such matters, while market economists would be more apt to be in agreement on taxes. Go figure.


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## odoreater (Feb 27, 2005)

> quote:_Originally posted by I_Should_Be_Working_
> 
> Regarding the charitable giving, there is a lot of fluff in the system going under the moniker charity. But as we all know, there is more good. Perhaps what I would envision would entail a contraction of some giving. My opinion, though, is that the majority remain. The reasons for charity go beyond tax breaks, and greater wealth through economic development might offset the loses. Certainly this is an issue more complicated than this forum allows.
> 
> A high corporate income tax stymies development and encourages mischief. How many more companies must we witness locate overseas? Let them come here, and let those that are here to stop utilizing income shifting schemes. No one ever calculates the investment of time and effort into tax reduction efforts. Costs to consumers will decrease by a significant amount (though less than the tax reduction, Econ 101). Profits will rise as well, rewarding investors, encouraging savings and further investment.


My tax professor calls the charitable giving deduction the "sacred cow" of the tax system along with the home-mortgage interest deduction. Congress will never touch either one of these.

_I fought the law and the law won._​


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## MER (Feb 5, 2006)

WooHoo! I win![^][^]

Just kidding.

No, Wayfarer, everyone understands what you are talking about. It is not a new concept nor is it very complex. But, at base, it's a useless way of thinking about taxation.

The first time you show it to someone what do they always do? They put the peak right in the middle. Then a supply sider says, well the peak isn't going to be in the middle it's going to be at around 17% or so...Because its good for the economy and its your money.

Then someone on the left will say, but come on, people HAVE to work. So even if you tax them at 98% they are still going to work to attempt to support themselves, so really the peak is somewhere around 80%.

So there maybe an optimal value, and pretty much everyone will agree with you on that, the tough part is where is that value? And does that value differ greatly for different groups so that it might make more sense to have different tax rates for different income brackets?

As far as charitable giving. I dunno, I'm kind of cynical and tend to think that people would be far less likely to give to charity if they couldn't deduct it. But then again a lot of charity goes to Duke, Yale, Princeton, etc. and losing some of that giving might not be so terrible.


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## Hanseat (Nov 20, 2004)

As you obviously like economics I'm sure you'll appreciate the *first video* on that follies site from Columbia (Every breath you take):


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## Intrepid (Feb 20, 2005)

> quote:_Originally posted by gmac_
> 
> 
> 
> ...


 I'm missing your point, gmac.

The outcome of the US civil war, if that is what you are referring to, did nothing to change our federalist system of government, nor did it diminish states rights.

The outcome of the civil war was the enactment of the 13th ammendment, that outlawed slavery.

Carpe Diem


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## odoreater (Feb 27, 2005)

> quote:_Originally posted by Intrepid_
> I'm missing your point, gmac.
> 
> The outcome of the US civil war, if that is what you are referring to, did nothing to change our federalist system of government, nor did it diminish states rights.
> ...


The Fourteenth Amendment was also an outcome of the Civil War, through which all of the other amendments were made applicable to the states. Even though the First Amendment, for example, reads "Congress shall pass no law..." the amendment is applicable to the states by incorporation through the Fourteenth Amendment. So, there, for example, is a major effect that the civil war had on federalism.

_I fought the law and the law won._​


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## Intrepid (Feb 20, 2005)

> quote:_Originally posted by MER_
> 
> 
> 
> ...


 Check it out. The 14th ammendment has nothing to do with the Dred Scott decision. It was reversed by the SC. The 13th ammendment outlawed slavery.

Carpe Diem


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## Intrepid (Feb 20, 2005)

> quote:_Originally posted by I_Should_Be_Working_
> 
> First off, let's stick to taxes, not other topics of controversy.
> 
> ...


You are right on the corporate tax, however, never in a million years will it be repealed. It is too easy to demagog, and it is not well understood, anyway.

It is impossible to tax a corpration. The corp passes taxes on to consumers in the price of he product, or deducts it from the wages of workers.

The cost of collecting corp tax far exceeds the amount collected.

Intellectually, it is absurd to contemplate. However, don't you have a life size picture of getting elected to anything on that platform?

Congress is trying to slap an extra tax on the oil companies, that generate only 30% of their profits in the US, and need to reinvest to keep us from running out of oil. With that mind set, doing away with the corporate income tax, as much as it makes sense, is a non starter.

Carpe Diem


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## Intrepid (Feb 20, 2005)

> quote:_Originally posted by I_Should_Be_Working_
> 
> 
> 
> ...


 At the conclusion of a recent lecture by Krugman, during the Q & A, I asked Krugman if he is a Marxist. He wouldn't answer the question, and changed the subject.

He is.

Carpe Diem


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## odoreater (Feb 27, 2005)

> quote:_Originally posted by Intrepid_
> Check it out. The 14th ammendment has nothing to do with the Dred Scott decision. It was reversed by the SC. The 13th ammendment outlawed slavery.


Huh???

_I fought the law and the law won._​


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## Intrepid (Feb 20, 2005)

MER brings up the estate tax. It is morally indefensible to pay 36.9% on earned income while working and then have to pay a significant portion to the state at death.

However, it seems like almost a non issue. You can pass everything to a spouse with no estate tax, and for about $1000 you can have an AB trust drawn that will postpone taxes for one more generation.

Further, it is a miniscule part of total govt revenue.

No matter what politicians do with estate taxes, they can't screw up the economy.

Not so with marginal income tax rates. Raise them too much, or at the wrong time and we have a disaster to deal with. Hoover raised marginal tax rates, and signed the Smoot Hawley tarriff bill in l929, and the result wasn't pretty.

In summary, I don't much care what they do about estate taxes. Some people get in a lather about what happens to their money when they are dead. Not me.

Carpe Diem


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## Intrepid (Feb 20, 2005)

Since we have moved out somewhere near the third ring of Saturn in this thread, here is something else for your leisure consideration.

In the book Freakanomics, written by two economists, and a continual participant on the best seller list, they make a point in the first chapter that you may find interesting.

The crime rate in the US started to decline in the early 70s and has continued to decline. A lot of people want to take credit for the decline. City mayors say they are doing a better job. Police depts say that their efforts are the reason, etc.

The authors say that it is directly attributable to the Roe v Wade decision. With abortion readily available, on a legal basis, fewer unwanted children coming into the world is the total causitive factor for the declining crime rate.

I have never seen anyone attempt to refute their thesis. 

The point remotely ties into our ramblings in previous posts, and some of you that havn't read the book might find it interesting to ponder.

Carpe Diem


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## Karl89 (Feb 20, 2005)

Intrepid,

I actually favor keeping the estate tax. I think it prevents the formation of a permanent aristocracy in the US (I mean the Kennedys are finally running out of money, though not car accidents it seems!), it keeps capital liquid and dynamic rather than having fortunes dwindle to keep idle playboys and heiresses in style and rehab and it encourages what I believe is the secret strength of the US, private philanthropy. When Harvard (just one US university!) has an endowment which is several times the annual amount spent on higher education in Germany and the UK it speaks to the superiority of American civil society.

I do however think the tax free exemption should be raised by a few million and it should be pegged to the US CPI.

Good God! I am advocating taxes now! Gmac, have you slipped me a socialist mickey? If I start singing the Internationale then call Kav or JLibourel and have them shoot me and put me out of my free marketeer misery!

Karl


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## Gong Tao Jai (Jul 7, 2005)

Intrepid, Freakonomics does not claim that abortion is the only factor involved in the lower crime rate, just that it is one factor. Other reasons for the decrease are also discussed in the book. This thesis has been attacked numerous times (abortion opponenets of course, are not going to concede that that procedure could have any upside, just as opponents will accept absolutely no limitations on the circumstances under which it may be performed), but the theory does seem pretty robust to me.


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## Intrepid (Feb 20, 2005)

> quote:_Originally posted by Karl89_
> 
> Intrepid,
> 
> ...


You may be right, Karl. As I said, I don't much care what they do with estate taxes.

It is often the farmer, whose land has appreciated dramatically in value, that leaves an estate that causes heirs to have to close down the farm. Also a small business owner whose business has grown to considerable value. In that instance, the heirs often have to sell the business, and close it down to come up with cash for estate taxes.

You may also be right on charity. However, many of the great philanthropists, like Carnagie mage huge charitable contributions before any extate, or income tax was in effect.

I probably have a naive faith in the goodness of the human spirit.Could be wrong there, as well.

Carpe Diem


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## Karl89 (Feb 20, 2005)

Intrepid,

If you are wrong about having faith in the human spirit then so I am. I'd rather cherish the faint hope that eventually decency and goodness will prevail. Maybe when the Mets win the Series all will be well again..........and this could be the year!

Karl


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## MER (Feb 5, 2006)

The estate tax had exceptions geared toward preventing the small farm or business from being targeted: you could exempt about 1 million dollars of the value of the farm or business interest fairly easily. And the value was based on fair market value(according to your accountant of course) not what you actually paid for it. Further, studies have shown it has been the greatest incentive toward private philanthropy, but again as I mentioned much of that money goes to getting a building named after the guy at Duke, not drug rehab clinics. And since when are taxes supposed to reflect morality?

Oh, and the opening line of the 14th amendment reads "all persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United Statees and of the State where in they reside." Which was understood by those who passed it and the court in later decisions as overturning the holding of Dredd Scott, which was that African Americans had no rights the government had to respect as they were not included in the "we the people" mentioned at the beginning of the constitution. But in your other point you are right, the 13th amendment outlawed slavery.


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## hopkins_student (Jun 25, 2004)

> quote:_Originally posted by I_Should_Be_Working_
> 
> Institute a flat tax for earners right above where most with joint filers with two or three kids begins to pay federal tax.


I don't like the idea that that many people could be paying nothing. It's bad enough to listen to people that pay *next to nothing* complain about how the government does nothing for them, it'd be a real insult for those funding the government to have to listen to this out of the mouthes of people who pay *absolutely nothing*. No matter how progressive we're *forced* to make our tax code, I'd like for the majority of filers to pay at least a little.


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## Concordia (Sep 30, 2004)

> quote:_Originally posted by Karl89_
> 
> Intrepid,
> 
> ...


I think you're right on all counts. Hope that doesn't ruin your day. [8D]


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## Fogey (Aug 27, 2005)

Since I don't recall many (any?) of you being in favour of a wealth cap on my infamous thread on that topic, it seems odd that any here would favour an estate duty/tax. What would be wrong if a single person wound up with, say, a third of all wealth in a country? Surely that would be his God-given right in a capitalist society. And it's not as though it would all be in a giant money bin in Duckburg. Though then again, maybe it would be if gold coins were as easy to swim in as cartoons suggest.

Perhaps all nations should abolish taxation (since it hurts people's feelings), and move to a retail bribery system (which apparently already flourishes wholesale, anyway). Need a policeman? Place an ad in the newspaper and hire one. Need a fireman? Hire a private fire department, and hope you aren't faced with an automated incompetent customer disservice line when you phone them (as with any other private corporation). Need a pension? Well...oops, that's what you get for being poor and unproductive, isn't it? Better luck next time.

All these inconveniences will be well worth it for the abundance of warm and fuzzy feelings that would inevitably result with the knowledge that Steve Forbes and his friends wouldn't be made to feel sad by having to pay a bit of tax to that big bad scawy gummint.


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## Intrepid (Feb 20, 2005)

> quote:_Originally posted by hopkins_student_
> 
> 
> 
> ...


Your posts are always very perceptive, HS. At the present time the top 55% of the wage earners pay 95% of the taxes, and it is moving rapidly upward. When it gets to about 40% of the wage earners paying 100% of the taxes, we will never get any kind of tax reform, or simpfilication. The majoriy of the voters will be insulated from the system that has gotten so complicated that very few individuals can even prepare their own return.

The problem arose in WWII with the witholding tax. Most people think of what they earn is net after tax, and don't even think of the amount of tax that they pay, because they never see it. If every individual had to write a check for the total amount on Aril 15, we would get reform. If there was a law that each member of congress had to prepare their own tax return, that would also lead to reform.

The insidious thing about the witholding tax, is that many people are overwitheld, and are making an interest free loan to the govt for 12 months. They look at the "refund" as a nice bonus.

Really a perverse ststem, huh?

Carpe Diem


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## Tom Buchanan (Nov 7, 2005)

Intrepid,

I have one word for you: AMEN!

Keep telling it like it is. I cannot stand the villainization of "those rich people" or "those corporations" by liberals. It is ignorance and does not stand up to numbers or facts.

Keep fighting the good fight.


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## ksinc (May 30, 2005)

WH also exagerates their involvement in taxes. Many people have WH that then claim and act like they pay taxes when they get a complete refund and pay nothing. Having WH is NOT paying taxes.

I liked Sen. Graham's comment about how the people riding in the wagon shouldn't complain about the people pushing it.


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## Wayfarer (Mar 19, 2006)

> quote:_Originally posted by JLPWCXIII_
> 
> Since I don't recall many (any?) of you being in favour of a wealth cap on my infamous thread on that topic, it seems odd that any here would favour an estate duty/tax. What would be wrong if a single person wound up with, say, a third of all wealth in a country? Surely that would be his God-given right in a capitalist society. And it's not as though it would all be in a giant money bin in Duckburg. Though then again, maybe it would be if gold coins were as easy to swim in as cartoons suggest.
> 
> ...


I pretty much ignore you. However this post rose to the level that I just needed to share how utterly assinine it was. Not to say that you are not a wonderful person, just that you hide it well in your posts.

Warmest regards


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## Fogey (Aug 27, 2005)

> quote:_Originally posted by Wayfarer_
> 
> I pretty much ignore you. However this post rose to the level that I just needed to share how utterly assinine it was. Not to say that you are not a wonderful person, just that you hide it well in your posts.


All lies. You don't ignore me, and I'm not a wonderful person.


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## I_Should_Be_Working (Jun 23, 2005)

> quote:_Originally posted by Intrepid_
> 
> 
> 
> ...


This is the very scenario that prompted my "tyranny of the majority" comments. As it stands, the majority do not pay very much if anything. Soon, this phenomenon will increase, exacerbating the moral hazard of any 'national discussion' concerning taxes.

We can consider tax reform another victim of political polarization. The last major piece of real, lasting reform (not tax cuts with an expiration date) was the legislation dealing with welfare in the mid 90's. None of the big issues - taxes, social security, health care, etc. - will be dealt with effectively by having one party line up their own votes. Real leadership will be needed when confronting such cows. Worse, Congressional leaders are simply devoid of big ideas. Staying in power has corrupted the GOP, and its time for an internal shakeup. If something doesn't happen within the next 10 years, the above scenario will be reality,


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## Karl89 (Feb 20, 2005)

JLPWCXIII,

I tend to think of you as the upmarket version of Gmac. What you describe is actually a school of thought - anarchocapitalism, which is hardly espoused by anyone serious.

My good man you seem to excel in witty asides and reductio ad absurdum but can you make a serious, coherent argument? I think you can but the more likely scenario will be some flip comment, if only to confirm to the rest of us what a sophisticated wit you are. Confirm my suspicion that a serious mind lurks within you or continue to play the dilettante. Your choice.

Karl


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## Étienne (Sep 3, 2005)

> quote:_Originally posted by Intrepid_
> Arthur Lafer has determined mathematically how to set taxes to maximize incentive to produce with the ability to maximize revenue to the federal government.


Excuse me? Laffer (two "f") did not "determine mathematically" anything. He merely gave a catchy drawing summary of a classical argument.

That a government would get nothing taxing at 0% and at 100% is almost self-evident. That the shape of the "curve" in the middle is a simple bell-curve, as Laffer pretended, is an hypothesis. It could have several maxima for all we know. That any country is on the downward-sloping part of said curve is a testable hypothesis, and I have found many evidence on the contrary.

The first post in this thread was very precise ("marginal rate of the income tax" - not the average rate of all taxation as Laffer uses, "federal revenue" - not all public revenue). That made me think that it was refering to a precise body of data. It seems that this was not the case.

If we want to argue about taxation in general, and not about "the marginal rate of income tax", then I don't think any economy in the world is on the downward-sloping part of the Laffer curve, if such a thing exists. In any case, there is absolutely not a clear evidence as the first post by Intrepid says. See a report by the CBO last year for contradictory evidence :


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## I_Should_Be_Working (Jun 23, 2005)

> quote:_Originally posted by Ã‰tienne_
> 
> 
> 
> ...


A bell curve would likely prove to be simplistic. But the point remains, however, that there is a curve which will turn downward at some level of taxation. Where the conversation errs, though, is that dynamic scoring of tax changes is rarely performed and is somewhat difficult. I would certainly believe it is likely that certain European countries constrain their growth with high taxes, to the extent greater economic development would have offered a better net gain. And if not in tax revenue, than in overall improved economic conditions. Russia, for instance, was a tax nightmare for many years. Anyone successful was at the same time very likely to be a tax cheat. Though this was via a combination of national, regional, and local taxes, it nevertheless proved the point of such thinking behind the Laffer curve.

In Washington there is great debate over dynamic versus static scoring. This is finally being addressed, and with time, you likely find improved research and insight into the issue. Static scoring does not fully capture changes in economic behavior with tax policy changes: a dollar cut is a dollar lost. Effects on GDP and the CPI are ignored. Such assumptions are downright silly, and unfortunately, this is the data that most debate centers around.

Etienne, while it is helpful to provide reports and data, always be keen to know the background of such information. Even large organizations, having teams of economists, who should produce the most accurate projections, often utilize assumptions forced upon them by politicians or project backers.


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## Intrepid (Feb 20, 2005)

Flat Tax Models
Individual rate corporate rate

Estonia 23% 24%
Georgia 12 20
Latvia 25 15
Lithuania 33 15
Romania 16 16
Russia 13 24
Serbia 14 14
Slovakia 19 19
Ukraine 13 25

What these countries, that all adopted these flat tax rates had in common was:
Almost no compliance with previous attempts to collect taxes,
All had hit the bottom economically, and were in desperate shape
Unlike the US, they had no special interests with powerful lobbys to preserve their special tax carve outs.

It will never happen here, because it is too easy to demonize Steve Forbes, who happens to be right. However, we could learn a lot from these countries that are digging their way out of desperate economic situations.

Carpe Diem


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## Intrepid (Feb 20, 2005)

One other point for your consideration:
The internal revenue code is over 1 million words, and 13, 458 pages, and increasing with every session of congress.It benefits rich special interests, not the "little guy".

A flat tax could be described on one page for individuals, one page for corporations.

The tax return for individuals and corporations could be handled in one sentence:

During calendar year 2005, I earned $__________, the effective rate of ______%, results in a tax due of $__________. Check enclosed.

If you wanted to make it progressive, OK. Take everyone earning under $35,000 off of the tax rolls (sorry Hopkins Student). Have a 20% - 30% - 35% rate at various income levels, and do away with decuctions.Let the tax lobbyists find meaningful work.

You could let 95% of the people working for the IRS take early retirement. Pay them to stay at home and just go away. Ultimately the savings would be huge.

If you look at "fairness". 20% of $50,000 is $10,000, and 35% of $1,000 000 is $350,000.The guy earning $1,000, 000 is likely to put some of the remaining $650,000 back into a business and hire more people making $50.000.

Just a thought.

Carpe Diem


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## Concordia (Sep 30, 2004)

> quote:_Originally posted by Intrepid_
> 
> Flat Tax Models
> Individual rate corporate rate
> ...


As we have generally good tax compliance and we're not digging our way from rock bottom, it could also be that we don't _need _ a flat tax. Just a thought.


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## Intrepid (Feb 20, 2005)

> quote:_Originally posted by Concordia_
> 
> 
> 
> ...


You may very well be right, Concordia. However, the point is that it will never come about in the US.

Carpe Diem


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## MER (Feb 5, 2006)

Excellent post Etienne, couldn't have said it better myself...even though I tried.

Problem with comparing complaince to the eastern bloc is that a lot of the problems with compliance over there speak to a larger problem of lack of adherence to laws in general. After the fall of communism crime shot up because people started thinking "hey, no rules, we're free. I'm going to go set a car on fire." So part of the increased compliance probably has something to do with the gradual increased adherence to laws in general following the brief period of very loose compliance just after the fall of communism.

As far as the Laffer curve, the CBO has been following revenues pretty closely and gathering a lot of data, and it seems to support the view that the peak would be far over to the right of where we are now. The best argument for lowering taxes is not increased revenues it is economic growth, which is why I think the Laffer curve is a useless thing to bring up when you're arguing for tax cuts.


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## Wayfarer (Mar 19, 2006)

> quote:_Originally posted by MER_
> 
> The best argument for lowering taxes is not increased revenues it is economic growth.


So much is going through my mind right now....I just cannot believe you said this.

For the record, I could easily discuss the implications of a multi-modal function, etc., but the callous on my head from yesterday is still sore, I will not beat it against the wall more today. Again, we all already believe what we want to believe, nothing posted here will change it.

Warmest regards


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## jcbmath (Jan 11, 2006)

I have to object to the use of mathematics as voodoo in this thread. For instance:



> quote:
> You are quite correct. The problem is that many refuse to believe in this function wholesale. They are usually the same people whom you can run through the graphs on what happens with effective minimum wages, how all taxes on corporations are not passed on to consumers, how comparative advantage and free trade raises all boats, etc. and they refuse to believe the math. It used to frustrate me no end in my younger days


One believes in voodoo; one does not ever "believe" in mathematics or science, one proves statements in mathematics and one provides evidence (via experimentation) in science.

Economists hide behind faulty or vacuous mathematics to fool "believers" into accepting theories for which they have no evidence. Then a line like "people just refuse to believe the mathematics" or "they just don't understand the mathematics" is used to dismiss critism.

"Laffer's curve" is, from the point of view of economics, totally vacuous. It is a restatement of the assertion that a continuous function on a compact set has a maximum value (as I believe another poster who mentioned Rolle's theorem was getting at). Absolutely nothing more.

As far as I can tell, it has no implications for economics whatsoever. The equivalent in physics would be saying "if it goes up it must come down." True but pointless. The proper test of understanding is whether you can make predictions about the shape of the curve between the point at which there is 0% taxation and point at which there is 100% taxation; or to continue with the physics comparison, the trajectory of an object after its been thrown. Laffer's curve leaves us with absolutely no ability to predict anything ... other than "there exists a optimal tax rate;" that's been known for thousands of years.



> quote:
> now I realize nature endows understanding on a Bell Curve also.


This, at least, you got right.


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## Wayfarer (Mar 19, 2006)

> quote:_Originally posted by jcbmath_
> 
> I have to object to the use of mathematics as voodoo in this thread. For instance:
> 
> ...


While you objected, you did not provide contary formulaic assertions, instead you basically called me stupid and economists witchdoctors. Good job there.

Is the Laffer curve Bell shaped, bi-modal, multi-modal, etc. are all valid questions. For me, the basic point of it is to get leftists to admit that taxation can lead to lower utility and decreased productivity. Admit to that and we can talk, deny it and we are just speaking different languages.


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## jcbmath (Jan 11, 2006)

> quote:
> While you objected, you did not provide contary formulaic assertions, instead you basically called me stupid and economists witchdoctors. Good job there.


You miss my point entirely. I make no predictions about the shape of such a curve, ergo I need provide no evidence about the shape of the curve. I simply point out that Laffer makes no predictions about the shape of the curve either, other than it is a continuous function defined on a compact interval. (Wow! What a bold assertion! Economists only make this assumption rarely --- well wait, they assume pretty much everything is a continuous function; and most of the time its quite reasonable).

I'm incidently not sure what "fomulaic assertions" are. I can only assume you mean hypotheses involving mathematical formulae. There is no particular reason to even believe that such a formula exists, or that it is reasonable to try to "write" tax revenue as a function of tax rate. A much more practical approach would be statistical analysis; i.e. careful study of the correlations of the variables and an attempt to establish casuation.



> quote:
> For me, the basic point of it is to get leftists to admit that taxation can lead to lower utility and decreased productivity. Admit to that and we can talk, deny it and we are just speaking different languages.


I am neither a "rightist" nor "leftist." I make no claims about tax models and I don't even dispute Laffer's claim. I only object to the "economics methodology" of Laffer in particular and many (I perhaps painted with too broad a brush earlier) economists in general. What Laffer does is typical of much work in economics. He says nothing and then pretends he has evidence for the claim "reduce tax rates and you will increase revenue." As another example, see the Black-Shoals model. Great mathematics; no evidence that it has anything to do with stock prices whatsoever.

We do indeed speak in different languages. Mine is logic, science, and reason. What is yours?

Edit: several times for grammer; the logic I have down the English is another matter


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## Wayfarer (Mar 19, 2006)

> quote:_Originally posted by jcbmath_
> We do indeed speak in different languages. Mine is logic, science, and reason. What is yours?


Give me a big hairy break. Buh bi.


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## Fogey (Aug 27, 2005)

> quote:_Originally posted by Karl89_
> 
> JLPWCXIII,
> 
> ...


 Is this your acceptance speech for winning the Troll of the Month award?

Encore!


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## Étienne (Sep 3, 2005)

> quote:_Originally posted by jcbmath_
> What Laffer does is typical of much work in economics.


Not really, since he does not do any empirical test of his claims. Apart from the assumption on the shape of the curve, another, more serious problem, is reducing taxation to one average rate.

Say you decrease the income tax rate and offset that by an increase in the consumption tax. On Laffer's "curve" you have not moved, but I doubt the economic implication of such a move are nil.


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## Karl89 (Feb 20, 2005)

JLPWCXIII,

Exactly as I predicted. Posting vintage photographs and asking open ended questions seem to be your strength rather than putting forth serious, coherent arguments. Fair enough.

Am I a troll bc I tried to solicit a serious, coherent argument from you? Whatever the answer it reflects poorly on you.

Karl

P.S. -since you already awarded FlatSix troll of the month I guess I will have to wait until June. Perhaps I can secure victory by posting to the thread you start on "Which came first - the chicken or the egg?"

Karl


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## Fogey (Aug 27, 2005)

> quote:_Originally posted by Karl89_
> 
> JLPWCXIII,
> 
> ...


 I apologise for confusing you with FlatSix. But your implication that I have never made a 'serious argument' on the Interchange is rather insulting. What could you possibly hope to gain by making such an insipid claim? If you have issue with something that I have posted, then lay it out. I am not psychic.


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## I_Should_Be_Working (Jun 23, 2005)

> quote:_Originally posted by jcbmath_
> 
> I have to object to the use of mathematics as voodoo in this thread. For instance:
> 
> ...


That Laffer's curve may or may not be mathematically faulty, in my opinion, is somewhat second to the value gained when people are confronted with taxation and its effects. Quite honestly, if you ask a room of 100 people the question concerning govt revenue with 0% or 100% taxation, many if not the majority will get it wrong. Laffer's curve is relatively simple way for lay people to understand some basic issues.

This is not a defense of bad math, and I have not performed any rigorous analysis of this model. From a practical perspective, I would leave the Laffer curve for theoretics and philosophical debate. This should in way, however, dimish the work of others promoting dynamic analysis of taxation.


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