[quote]hspder wrote:
Actually, a very good case can be made for ZERO corporate tax, provided that:
I know I deleted some of your rationale, but I would just like to see someone propose this to the public, and make it out of the press conference alive.
I have seen a lot of opposing economic theory, but my root question is this: What is the MORAL implications of higher taxes? I have a problem wrapping my head around the concept that we should just let the government confiscate personal property anytime it wants, in the amount it wants, for whatever it wants. There are very few necessary things our Constitution mandates the government do, primarily defense of the nation and promotion(not provision)of the general welfare. We the people have allowed the government to become the monster that it is, and erode our freedoms, because we are collectively lazy. It is easier to let the government hand out cash for myriad social programs than it is for you and I to get involved in helping those who need it ourselves. It is easier to let the government educate our children than taking an active role ourselves. It is easier to let the government “save” some of my money for me rather than be disciplined enough to do it myself. All these “easier” things cost us more in the short and long run. Government will never be able to save everyone from themselves and the bad choices that are made. As long as we refuse to hold elected officials accountable, they will confiscate an increasing amount of our income. The most disappointing aspect of the Bush Presidency to me personally has been the wanton lack of fiscal repsonsibility. While tax cuts do stimulate economic growth, unless Congress reigns in their spending, huge deficits will continue. You want to look at historical arguments; the Reagan tax policy doubled government revenue, yet deficits exploded because Congress spent like drunken sailors. Bottom line is; It is NOT their money!
[quote]rainjack wrote:
I don’t have the desire, nor the ability to look up reems of mind-numbing position papers. All I have to go on is my own observances.
You can take it or leave, but wrt the current tax cut - I know that I’ve seen a big increase in business spending. The lion’s share of the spending is coming from the backbone of theis nations economy - small businesses, and most of these businesses are sole proprietors.
The Bush Cuts allowed for $100,000 in Sec.179 expensing - up from 24,000 under Clinton. The Sec 168 depreciation allows for up to 60% first year depreciation for qualified new assets.
That’s quite an incentive for a small businessman to go out and buy, while at the same time, saving atleast 22.65% on every dollar invested in his business.
Since 9/12/01, I have personally seen more new purchases than ever.
Please tell me how that is bad for the economy, or how the economy would have been advanced had there not been this tax break(which would be a relative tax increase).
And I live in the middle of po-dunk nowhere. My clients can’t be unique to the rest of the nation.[/quote]
Rainjack, again please note I’m not arguing against taxcuts, nor am I arguing that taxcuts can have a stimulative effect. I’m repsonding to universal statements. In regard to Bush’s taxcuts there is no doubt that they were better than nothing, but the question would be would there have been a better way of stimulating job growth, and the answer based on the jobs created vs. the cost to create each job is most likely yes.
[quote]deanec wrote:
the Reagan tax policy doubled government revenue, yet deficits exploded because Congress spent like drunken sailors. Bottom line is; It is NOT their money![/quote]
Well Reagan could have sent congress a balanced budget, but never did. While congress could have passed a balanced budget they did appropriate less than Reagan submitted. And Bob Dole sen.maj.leader in 85-86 could have progressed to a balanced budget when deficits grew by 459 billion, but didn’t. The point is there’s plenty of blame to go around all the time, but voters don’t always hold people responsible for fiscal irresponsibility.
[quote]100meters wrote:
Rainjack, again please note I’m not arguing against taxcuts, nor am I arguing that taxcuts can have a stimulative effect. I’m repsonding to universal statements. In regard to Bush’s taxcuts there is no doubt that they were better than nothing, but the question would be would there have been a better way of stimulating job growth, and the answer based on the jobs created vs. the cost to create each job is most likely yes.[/quote]
I disagree. Can I assume that we both agree that business is the cornerstone of our economy? Can we further assume that, from an employment aspect, small businesses are by far (upwards of 75-80%) the most important part of our economy? If we can agree on these, then the tax cuts provided to small businesses are by far the best way to spur their growth, and ultimately the entire economy.
I agree that Bush’s tax cuts could have been better targeted. Had he not given taxcuts to those who pay no taxes, which amounts to welfare, we would have actually kept more money in the treasury, and increased revenue at an even faster rate than the current tax cuts/economic rebound has provided. But politics get in the way of common sense.
[quote]100meters wrote:
Well Reagan could have sent congress a balanced budget, but never did. While congress could have passed a balanced budget they did appropriate less than Reagan submitted. And Bob Dole sen.maj.leader in 85-86 could have progressed to a balanced budget when deficits grew by 459 billion, but didn’t. The point is there’s plenty of blame to go around all the time, but voters don’t always hold people responsible for fiscal irresponsibility.
[/quote]
A national debt is not the bad thing that folks make it out to be. It actually adds to make for a more stable country. Most of Reagan’s budgets were very heavy on defense spending in order to restock/revitalize an armed forces gutted by Carter. He also used debt to try and ignite an economy ravaged by high unemployment and even higher interest rates. Once the economy reignited, we made up the gap through increased tax revenues.
I think a mistake tha a lot of folks make is that tax policy has a lag time before you see its full effects. It will never have the dynamic speed of spending.
[quote]rainjack wrote:
hspder wrote:
Actually, a very good case can be made for ZERO corporate tax, provided that:
I know I deleted some of your rationale, but I would just like to see someone propose this to the public, and make it out of the press conference alive.
[/quote]
Why? I’m talking about people earning AT LEAST over $200k a year per head in the household ($200k is the bare minimum – the cutting point for the highest bracket would probably be higher than that, possibly $500k). Do you really think ANY of the journalists that would be on the press conference would fall in that bracket? I sincerely doubt it… On the countrary – most journalists, and most of the public would applaud it. Nobody ever complains about taxing the heck out of rich people – except the very rich people, that make up a very, very small part of our population.
The problem, my friend, would come at the time of funding the next campaign… Don’t doubt for a moment that compaign finance is the sole reason tax hasn’t been raised for the extremely wealthy. And that’s why I feel that campaign finance should get a dramatic overhaul. But that’s another story!
[quote]hspder wrote:
Why? I’m talking about people earning AT LEAST over $200k a year per head in the household ($200k is the bare minimum – the cutting point for the highest bracket would probably be higher than that, possibly $500k). Do you really think ANY of the journalists that would be on the press conference would fall in that bracket? I sincerely doubt it… On the countrary – most journalists, and most of the public would applaud it. Nobody ever complains about taxing the heck out of rich people – except the very rich people, that make up a very, very small part of our population.
The problem, my friend, would come at the time of funding the next campaign… Don’t doubt for a moment that compaign finance is the sole reason tax hasn’t been raised for the extremely wealthy. And that’s why I feel that campaign finance should get a dramatic overhaul. But that’s another story!
[/quote]
You spoke of the psychological effects of taxes in your earlier post and the usefulness of game theory to determine its effect on the population. What do you think the psychological effects would be if people knew that if they made over 200k they would be taxed at the rates your propose? You stated it wouldn’t drastically affect the “American Dream,” I’m not convinced.
I think plenty of perspective entrepreneurs would throw in the towel and not try. I’m not an expert in game theory, but if someone were to look at their current income situation, and then look forward at the cost in cash, risk, opportunity and effort when deciding if they should move to the “entrepreneur square,” I am not convinced that it would be worth their effort at those tax rates and they would decide they are in Nash equilibrium or whatever you want to call it, and stay in their current situation.
I have no doubt that you have seen a model that shows a large middle class is best for economic growth, but the means by which you propose it, through excessive taxation on the rich, might as well be socialism.
For anyone interested, “Taxing Ourselves” by Joel Slemrod and Jon Bakija gives a nice look into the tradeoffs of various tax systems.
While I have my degree in economics, I think pretty much anyone who keeps up on the news can digest it pretty easily.
[quote]hspder wrote:
Why? I’m talking about people earning AT LEAST over $200k a year per head in the household ($200k is the bare minimum – the cutting point for the highest bracket would probably be higher than that, possibly $500k). Do you really think ANY of the journalists that would be on the press conference would fall in that bracket? I sincerely doubt it… On the countrary – most journalists, and most of the public would applaud it. Nobody ever complains about taxing the heck out of rich people – except the very rich people, that make up a very, very small part of our population.[/quote]
I hate to spoil your rationale, but as an individual that would hardly be considered even upper-middle class, I strongly oppose soaking the rich.
I find it punitive to tax the most productive segment of our society because they have worked hard to achieve success. Class warfare won’t solve anything. And that’s exactly the marketing tool you’ve chosen to advertise this idea of yours. I suppose you would be in favor of a punitive estate tax, as well.
If the top 5% of taxpayers are shouldering over 85% of the tax burden already, what good would it do to raise their taxes even higher?
I believe your Euro-centric wealth distribution panties are showing again.
[quote]Anderson wrote:
You spoke of the psychological effects of taxes in your earlier post and the usefulness of game theory to determine its effect on the population. What do you think the psychological effects would be if people knew that if they made over 200k they would be taxed at the rates your propose? You stated it wouldn’t drastically affect the “American Dream,” I’m not convinced. [/quote]
There are a couple of things that you are missing: first, I said $200k per head. Assuming, for example, you are married and have two kids, it’s a lot of people to divide it by. So you and your wife would have to earn together over $800k to get there.
Also, I said $200k is the a number I just threw it for the sake of example – quite possibly it wouldn’t be necessary to go that low, especially if we curbed tax evasion – I do not have access to the whole tax information of this country in order to give you the exact number.
[quote]Anderson wrote:
I think plenty of perspective entrepreneurs would throw in the towel and not try. I’m not an expert in game theory, but if someone were to look at their current income situation, and then look forward at the cost in cash, risk, opportunity and effort when deciding if they should move to the “entrepreneur square,” I am not convinced that it would be worth their effort at those tax rates and they would decide they are in Nash equilibrium or whatever you want to call it, and stay in their current situation. [/quote]
You are assuming that people become entrepreneurs because of the money. They don’t. People become entrepreneurs because they prefer it to working for other people. The money is just a nice perk. And, as rainjack said (very correctly), it’s the small businesses that drive the economy – and most, if not all, small business owners cannot “give” themselves salaries over $200k. They usually put most of their earnings back into the company, as they should.
[quote]Anderson wrote:
I have no doubt that you have seen a model that shows a large middle class is best for economic growth, but the means by which you propose it, through excessive taxation on the rich, might as well be socialism.
[/quote]
I wouldn’t call it “excessive taxation”. And it’s not socialism per se, because it is necessary exactly because of the tendency of capitalist economies to create a “camel’s back distribution” of wealth, rather than a normal distribution – which makes capitalist economies inherently cyclical – which, by the way, can be a very bad thing if one of the “dips” in the cycle goes too sour.
In a socialist system, you do NOT have a free market. Also, high income tax for the rich is not really helpful… because nobody gets to be rich!
What I’m proposing is basically in the “third way” line of thought, although not necessarily the Clinton-Blair-Schroder “third way”.
There’s this document / site:
http://www.cesj.org/thirdway/comparison3rdway.htm
… that, although grossly simplified, exagerated and biased, may help you understand where I’m going with this.
[quote]rainjack wrote:
I find it punitive to tax the most productive segment of our society because they have worked hard to achieve success. [/quote]
“Most productive segment of our society”? Hardly. Think about the corrupt CEOs that do nothing but sit around and dispense ignorance; Think about people from the entertainment industry, most of which would be more than happy to pay more tax; Think about people that simply inherited their wealth and sit around all day doing nothing but going to parties and fund-raisers and getting ready to go to more parties and more fund-raisers.
The most productive segment of our society, the segment that keeps America at the forefront of productivity, the segment that does indeed work hard – to keep food on the table – are the millions and millions of Americans who earn $10 an hour. Or less. And work two or three jobs to support their family. THAT?s the productive segment of our society. Not lazy, stupid, lard-ass CEOs.
What kind of impact on morale do you think it has knowing that one of my previous employer?s CEO (when I was in the ?business world?) flew over on his personal private jet to the Caribbean with his family for a nice vacation on a luxury hotel the day after he fired 30% of the company?s workforce, with no warning or severance payments? Felt so good that, even though I was not part of the group that was fired, I was back in Stanford begging for them to take me back the next day. Not a single day in the ?business world? since.
Still today, I see more private jets landing at SJC daily than commercial jets ? even though the unemployment rate in the Silicon Valley is outrageous.
[quote]rainjack wrote:
Class warfare won’t solve anything. And that’s exactly the marketing tool you’ve chosen to advertise this idea of yours. I suppose you would be in favor of a punitive estate tax, as well.[/quote]
Estate tax? Not at all – as I said, I’d completely eliminate ALL taxes BUT personal income tax. You’d pay tax on the profit you make by selling the estate, of course, but if you keep it – no tax for that.
[quote]rainjack wrote:
If the top 5% of taxpayers are shouldering over 85% of the tax burden already, what good would it do to raise their taxes even higher?[/quote]
Simple: it increases the buying power of the other 95% of taxpayers and hence gets the money rolling – rather than sitting in some offshore account.
[quote]rainjack wrote:
I believe your Euro-centric wealth distribution panties are showing again.[/quote]
Euro-centric? Try proposing the elimination of VAT to any government in Europe and you’ll see what is euro-centric… In The Netherlands, for example, I got taxed in so many different ways that I got more tax bills from the Government than from everyone else together. Besides the insane VAT rate, of course. It is just ridiculous, and I?d never support a system like that.
[quote]100meters wrote:
Well Reagan could have sent congress a balanced budget, but never did. While congress could have passed a balanced budget they did appropriate less than Reagan submitted. And Bob Dole sen.maj.leader in 85-86 could have progressed to a balanced budget when deficits grew by 459 billion, but didn’t. The point is there’s plenty of blame to go around all the time, but voters don’t always hold people responsible for fiscal irresponsibility.
[/quote]
See, we can agree on something!
[quote]hspder wrote:
You are assuming that people become entrepreneurs because of the money. They don’t. People become entrepreneurs because they prefer it to working for other people. The money is just a nice perk. And, as rainjack said (very correctly), it’s the small businesses that drive the economy – and most, if not all, small business owners cannot “give” themselves salaries over $200k. They usually put most of their earnings back into the company, as they should.[/quote]
I’m not going to pretend that I know why everyone becomes an entrepreneur, but I will tell you that it’s money that motivates me. I hate to draw a conclusion from an end of one, but I will in this case. I maintain that even if a perspective entrepreneur can not afford to pay him or herself the 200k (or whatever hypothetical income level you are proposing) it is the psychological potential of the “American Dream,” that is important, and destroying that dream through excessive taxation (and yes, I believe what you are talking about is excessive) would pose a larger burden than you admit.
Step with me outside of the realm of academia for a second. You’re a professor and study this for a living. This is nothing more than an idea to you that makes sense in theory and on paper. I’m trying to start my own business and have a goal to be very wealthy. What you are proposing scares the crap out of me. Now how great can that theory really be, when people in the real world, which it has the potential, not even the certainty, just the potential, to one day effect, want nothing to do with it? I guess that?s a hypothetical question, but chalk me down as one person against what you are proposing.
That post you gave rainjack about the ceo’s and the entertainers deserving to be punitively taxed (my interpretation of your words)? Why stop there? You know who really doesn’t earn their money, in my opinion? University business professors! No shit, every one I?ve studied under is a nice enough person, but those guys (and I don’t mean this as a personal insult) do “research” on what the doers of society are actually accomplishing, and they get lifelong tenure for it! Talk about a scam. You want to tax anyone; I’d start with those yahoos!
All joking aside, I think taxing people with adjustable rates is fundamentally wrong. I think we’ll just have to part ways on this one because I don’t think it’s possible to agree. Good luck and thanks for the interesting discussion.
One, small, quick little note on this – the idea of instituting a virtual “head tax”, as opposed to our current system of just ticking off family income, would be a HUGE improvement.
You can argue about the progressive nature and the income levels, but not about the per-person apportionment – that is beauty. Too bad we’ll never see it – it’s too fair.