Do You Support The "Occupy"Protests?

[Brick Top]

Simple version

Kennedy lowered tax rates but closed loopholes equaling increased tax revenue.

Reagan
In terms of the most basic measure of economic growth - increase in gross domestic product (GDP) - the vaunted "Reagan boom" was an unremarkable period of time. If we look at Reagan's eight years, and compare them with Clinton's and JFK/LBJ's, Reagan comes in dead last, with 31.7 per cent compared with Clinton's 33.1 per cent and JFK/LBJ's 47.1 per cent. Only Nixon/Ford's eight years make Reagan look good, with a mere 26.2 per cent growth

If we examine incomes, we discover that Reagan's eight years marked a real take-off for inequality, while average incomes stagnated. The income growth of the top once per cent was ten times that of everyone else during his term: 61.5 per cent versus 6.15 per cent. Under JFK/LBJ, the bottom 99 per cent actually did better: gaining 30.9 per cent compared with 26.9 per cent for the top once per cent. And while inequality continued to rise under Clinton, the bottom 99 per cent did more than twice as well as they did under Reagan, gaining 16.7 per cent compared with 56.6 per cent for the wealthiest one per cent

Under Ronald Reagan, the US went from being the world's largest creditor nation to the largest debtor nation in just a few years - and we have remained the largest debtor nation ever since. In 1981, Reagan's first year in office, the US was a net creditor to the tune of $140.9bn. By 1984, that had shrunk to just $3.3bn - and the next year, the US shifted from being a creditor nation to a debtor nation for the first time in almost 70 years. By 1987, the US was a net debtor by $378.3bn - the largest debtor nation in the world. The figure rose to $532.5bn by the end of 1988, when Reagan left office.

Reagan followed up his 1981 tax cuts with increases in 1982 and 1983 (mostly on the middle class). And for good reason: The unemployment rate - already high when Reagan took office - continued to skyrocket after his tax cuts were passed - peaking at 11.2 per cent in 1983, when the jobless rate finally started to come down. The exact mixture of cause and effect over such an extended period may be subject to debate. But one thing is certain: Reagan's 1981 tax cuts did not magically result in job creation in anything like the way that conservatives nowadays mindlessly claim.

Bush Sr.
More voodoo economics

Clinton
Glass-Steagall killed off, Nafta and the telecom bill, does any more need to be said

Bush Jr
More voodoo economics, eight years and counting of tax cuts to the rich... where are these jobs you said would be created if this occurred? The present meltdown

Classic uber-liberal propaganda conjured up to blow a smokescreen to obscure the facts so they could continue their class warfare tax and spend policies.

 

[WillyBagseed]

Those are facts and, as you replied to another poster... do you intend to disregard them?


And please do not call me a Liberal, they are way to far to the right for me.


** If you notice, I also included Clinton's 3 massive fuckups as well. I don't know many Liberals who bash Clinton.

Most elected Republicans are far right atm, and the majority of elected "Liberals" would have been called center left 30 years ago. There is no true left wing party with any true power in the USA at the moment.

BTW, WHERE ARE THE FUCKING JOBS PROMISED WITH THESE TAX CUTS TO THE RICH TEN YEARS AGO? lol, not enough time yet?

 

[mame]

OK, you will not accept what has happened each time taxes have been lowered as proof, and you refuse to accept that a Joint Economic Committee concluded that when you lower tax rates the result is increased collected tax revenues. But did you research the exact same thing that the joint economic committee researched and come up with a different conclusion? Are you saying the joint economic committee was inaccurate in their conclusion? If so, do you hold equal or better qualifications to the members of the joint economic committee that makes you as or better qualified to formulate a conclusion? Are you saying that you are a greater authority on the results of taxation than the joint economic committee was? If so, why?

Since you demand proof, even though you will not accept it when it is provided, where is your proof? What can you provide that proves your position other than just saying, does not?

I'm an economics major, so it's not like I'm clueless on these matters but if you want to "pull rank" The Center on Budget and Policy Priorities (PDF) did a study as well finding exactly the opposite.

 

[Brick Top]

Read this and then try to tell me that low tax rates do not cause economic growth and that high tax rates do not slow economic growth.


Economic Growth by Robert J. Barro and Xavier Sala-i-Martin (MIT Press, 2004, p. 514) lists among the world’s twenty fastest-growing economies Taiwan, Singapore, South Korea, Hong Kong, Botswana, Thailand, Ireland, Malayasia, Portugal, Mauritius, and Indonesia. As Table 1 shows, all these countries either had low marginal tax rates to begin with (Hong Kong) or cut their highest marginal tax rates in half between 1979 and 2002 (Botswana, Mauritius, Singapore, Portugal, etc.). This might be dismissed as a remarkable coincidence were it not for a plethora of economic studies demonstrating several ways in which high marginal tax rates can adversely affect economic performance.
Numerous studies, ably surveyed by Karabegovic et. al. (2004), have found that high marginal tax rates reduce people’s willingness to work up to their potential, to take entrepreneurial risks, and to create and expand a new business: “The evidence from economic research indicates that ... high and increasing marginal taxes have serious negative consequences on economic growth, labor supply, and capital formation” (p. 15).
Federal Reserve Bank of Minneapolis senior adviser Edward Prescott, corecipient of the 2004 Nobel Prize in economics, found that the “low labor supplies in Germany, France, and Italy are due to high [marginal] tax rates” (Prescott 2004, p. 7). He noted that adult labor force participation in France has fallen about 30 percent below that of the United States, which accounts for the comparably higher U.S. living standards.

 

[Brick Top]

I'm an economics major, so it's not like I'm clueless on these matters but if you want to "pull rank" The Center on Budget and Policy Priorities (PDF) did a study as well finding exactly the opposite.

Keynesian, I presume?

I wonder how many members of the joint economic committee who came to the conclusion I have presented were more than just an economic major, as in having held degrees for a good while plus having years of experience?

But I guess that you believe that as a student you know more than the members of the joint economic committee and that without even researching the exact same events and exact same figures that you can divine from thin air a more accurate conclusion than their research led them to conclude. Right?

 

[WillyBagseed]

High tax rates do nothing that reinvesting in your own company does not fix.

If your an eco 101 freak you know what that means without explanation. It is extremely easy to lower your companies tax rates.



** Please look up and post what these "high" USA tax rates are.... then please look up actual tax rates paid...... then do the math... high tax rates my ass.

Just because you hold a "degree" doesn't mean shit... ask all those "I am a Phoenix" people ( no disrespect if you have this but, not so good in the real world comparatively speaking). Chicago School is bottom of the barrel. If your going to spew freaky eco then at least use Austrian School and only Austrian. I mean, you are a Libertarian are you not? =)


I truly do not understand people who defend policies that favor the wealthy at the expense of the poor. Trickle down, let them eat cake, let them have the crumbs that fall off the table economics does not work for the average citizen.

 

[mame]

Keynesian, I presume?

I wonder how many members of the joint economic committee who came to the conclusion I have presented were more than just an economic major, as in having held degrees for a good while plus having years of experience?

But I guess that you believe that as a student you know more than the members of the joint economic committee and that without even researching the exact same events and exact same figures that you can divine from thin air a more accurate conclusion than their research led them to conclude. Right?

Oh that's how it is eh? Well then Jon Quiggins, Brad Delong, Christie Romer and Paul Krugman are all far more qualified than either of us. They're professors, nobel prize winners, authors, public servants - and yes - Keynesian. They disagree with the Joint economic Committee as well. I wonder what's going on with that...

 

[mame]

Looks like Jeff Frankel of the Economic Policy Insititute (PDF) seems to also disagree with the Joint economic committee...

 

[mame]

Besides, it shouldn't be about who says what... Facts are facts and they support the conclusion that tax cuts do not lead to increased revenues.

 

[Brick Top]

Oh that's how it is eh? Well then Jon Quiggins, Brad Delong, Christie Romer and Paul Krugman are all far more qualified than either of us. They're professors, nobel prize winners, authors, public servants - and yes - Keynesian. They disagree with the Joint economic Committee as well. I wonder what's going on with that...

What about what was said below?


Economic Growth by Robert J. Barro and Xavier Sala-i-Martin (MIT Press, 2004, p. 514) lists among the world’s twenty fastest-growing economies Taiwan, Singapore, South Korea, Hong Kong, Botswana, Thailand, Ireland, Malayasia, Portugal, Mauritius, and Indonesia. As Table 1 shows, all these countries either had low marginal tax rates to begin with (Hong Kong) or cut their highest marginal tax rates in half between 1979 and 2002 (Botswana, Mauritius, Singapore, Portugal, etc.). This might be dismissed as a remarkable coincidence were it not for a plethora of economic studies demonstrating several ways in which high marginal tax rates can adversely affect economic performance.


Numerous studies, ably surveyed by Karabegovic et. al. (2004), have found that high marginal tax rates reduce people’s willingness to work up to their potential, to take entrepreneurial risks, and to create and expand a new business: “The evidence from economic research indicates that ... high and increasing marginal taxes have serious negative consequences on economic growth, labor supply, and capital formation” (p. 15).


Federal Reserve Bank of Minneapolis senior adviser Edward Prescott, corecipient of the 2004 Nobel Prize in economics, found that the “low labor supplies in Germany, France, and Italy are due to high [marginal] tax rates” (Prescott 2004, p. 7). He noted that adult labor force participation in France has fallen about 30 percent below that of the United States, which accounts for the comparably higher U.S. living standards.


Now try and tell me that low tax rates do not stimulate investment and economic growth, but somehow high tax rates do.

 

[WillyBagseed]

Most entrepreneurial risks are taken at the small to medium size company area and at a lower rate than a large corporation.

"high marginal tax rates reduce people’s willingness to work up to their potential", what, too high of taxes (15% capital gains) make them feel like not clicking a button on their PC to trade? Even at the old 29% they would be trading their asses off.

 

[Brick Top]

Christie Romer

What about Christina Romer?




Christina Romer's Faulty Depression History Monday, July 06, 2009 by Robert P. Murphy

"Romer's historical account only makes sense if one has an a priori commitment to the remedial role of deficit spending."

Christina Romer, chair of the Council of Economic Advisers to President Obama, recently wrote an ode to Keynesian deficit spending as a method for curing severe recessions. Yet a simple glance at the big picture shows that the Keynesian story makes no sense.
Romer on the "Mistakes of 1937"

Romer worries that President Obama will cave in to political pressures, and cut stimulus efforts before the economy has sufficiently healed. She alleges that this was the same mistake Roosevelt made after his initial (apparent) success in battling the Depression:

[T]he recovery in the four years after Franklin Roosevelt took office in 1933 was incredibly rapid. Annual real GDP growth averaged over 9%. Unemployment fell from 25% to 14%. The second world war aside, the United States has never experienced such sustained, rapid growth.
However, that growth was halted by a second severe downturn in 1937–38, when unemployment surged again to 19% … The fundamental cause of this second recession was an unfortunate, and largely inadvertent, switch to contractionary fiscal and monetary policy. [Spending cuts and tax hikes] reduced the deficit by roughly 2.5% of GDP, exerting significant contractionary pressure.

​

In the present article, I don't want to focus on Romer's claims about monetary policy. Instead I want to focus on her argument concerning deficit spending and the 1937–38 "depression within the Depression," because many prominent Keynesians consider it a bulletproof demonstration of the success of their recommendations.
Let's recap the Keynesian case: Herbert Hoover foolishly tried to balance the budget and that's why things got so awful; Krugman tells us we dare not repeat Hoover's mistake. Then, in the first three years of the New Deal, FDR ran large deficits and the economy improved tremendously. But alas, in 1937 FDR chickened out, and tried to balance the budget. This reversed some of the New Deal's gains, plunging the economy back into recession. The Depression was finally licked with the massive deficit spending of World War II.
At first, this Keynesian history sounds compelling. After all, it seems to explain two sharp turns in the unemployment rate. What more evidence do the "liquidationist" Austrians need to realize the error of their ways?
Yet, on closer examination, the Keynesian story falls apart. Romer's historical account only makes sense if one has an a priori commitment to the remedial role of deficit spending.
Understanding the Fiscal Record

Fortunately, we can settle the debate fairly quickly; all of the relevant fiscal data are available in convenient form at this site. But before diving into the numbers, a few words on dating:
The federal budget deficit is measured according to fiscal years, which had different start dates back then. Fiscal Year (FY) 1929 ran from July 1, 1928, through June 30, 1929. In addition, at that time new presidents had to wait longer for their inaugurations. Hoover won the election in November, 1928, and was not sworn into office until March 4, 1929. At that point FY 1929 only had four months left to run, so Hoover obviously had little to do with it. That is why FY 1929 should be attributed to Calvin Coolidge.
In fact, the presidential historians at the site above go so far as to credit FY 1930 with Coolidge as well, but I think their method leads to some implausible classifications later on. I think it's most sensible to say that Hoover was responsible for FY 1930–1933, and that FY 1934 was the first one that we should associate with FDR and the New Deal.
Hoover's Deficits versus Roosevelt's: Talk about the Butterfly Effect!

In the first full year in which Hoover and Congress would have realized the country was in serious trouble, they boosted federal spending by a whopping 31 percent (from FY 1931 to FY 1932), and this occurred while tax receipts collapsed by 39 percent! Are these facts consistent with the picture of Hoover as a tight-fisted liquidationist that some modern Keynesians are painting?
In any event, Hoover's last fiscal year was FY 1933, which ran from July 1, 1932, to June 30, 1933. (Roosevelt was sworn in on March 4, 1933.) Unemployment in 1933 averaged 25 percent. But, as Romer told us in the block quotation above, the unemployment rate fell rapidly once Roosevelt took over and cranked up the spending.
Yet look at the relatively insignificant increase in deficits. In the rock-bottom FY 1933, the deficit was 4.5 percent of GDP. In the first three years of the New Deal — when Romer says the economy illustrated the success of (modest) Keynesianism — the deficit averaged 5.1 percent of GDP.
Isn't that a rather subtle result? Romer and the other Keynesians are claiming that the timid 4.5 percent deficit under Hoover, allowed the economy to sink into the worst Depression in US history, with monthly unemployment rates above 25 percent. Yet by bumping up the deficit's share of the economy by a mere 60 basis points, FDR was able to achieve the most spectacular turnaround in US history.
Can that be right? Do those numbers really make sense? I submit that there are other factors involved, and that focusing on the size of the government's budget deficit to explain economic growth, is about as useful as focusing on taco sales to explain Major League batting averages.
The "Problem" of the War's End

As we've seen above, Romer's account relies on an implausibly large sensitivity of the economy to deficits; going from a deficit of 4.5% of GDP to one of 5.1%, meant the difference between disaster and impressive recovery.
Yet even if Romer could come up with a fancy model to yield that result, she would then face the opposite problem: government spending and the deficit absolutely collapsed at the end of World War II, and yet the economy adjusted fairly quickly. Specifically, in FY 1945 the deficit was 21.5 percent of GDP. Yet two years later, the budget surplus was 1.7 percent of GDP!

$20 $17


Since a sixty-basis-point swing (over one year) meant such a big difference between Hoover and Roosevelt, one would think that the 2,320-basis-point swing (over two years) would make a much bigger difference between the economies under Roosevelt and Truman. Yet the postwar recession lasted a mere eight months, and the official unemployment rate for (calendar year) 1946 was — get ready — a whopping 3.9 percent.
Conclusion

The Keynesians have no leg to stand on. Let's suspend our disbelief and entertain the hypothesis that the way to help a depressed economy is for politicians to spend borrowed money. Even so, only the most convoluted story can tie the historical movements of federal deficits with the national unemployment rate. In her latest attempt, Christina Romer focuses on events of the 1930s and 1940s that support her theory, while ignoring the events that demonstrably refute it.


Robert Murphy is an adjunct scholar of the Mises Institute, where he teaches at the Mises Academy. He runs the blog Free Advice and is the author of The Politically Incorrect Guide to Capitalism, the Study Guide to "Man, Economy, and State with Power and Market," the "Human Action" Study Guide, The Politically Incorrect Guide to the Great Depression and the New Deal, and his newest book, Lessons for the Young Economist. Send him mail. See his article archives. Comment on the blog.

 

[Tales]

MAYDAY- MAYDAY

My threads been hijacked..... where is Batman & Robin when you need them. wtf

Please see signature if you need a place to argue tax related issues to this degree.

Thanks in advance!

 

[WillyBagseed]

oops, sorry.

Yes I support the "Occupy" protests. Just wish they get it together a little better.

 

[Brick Top]

Besides, it shouldn't be about who says what... Facts are facts and they support the conclusion that tax cuts do not lead to increased revenues.

Since that is what you believe in, walk the walk instead of just talking the talk.

I am still waiting for proof of your position, instead of just the uber-liberal revisionist history propaganda you posted.

 

[Tales]

oops, sorry.

Yes I support the "Occupy" protests. Just wish they get it together a little better.

No prob... sawl gud

 

[Johnny Retro]

Most entrepreneurial risks are taken at the small to medium size company area and at a lower rate than a large corporation.

"high marginal tax rates reduce people’s willingness to work up to their potential", what, too high of taxes (15% capital gains) make them feel like not clicking a button on their PC to trade? Even at the old 29% they would be trading their asses off.

You think traders create jobs? ( i am one btw)
Its the huge corporations that create the most jobs. And when your facing 35% if you making over 18mil, which is not that much, you opt out to move to a different country that is more competitive. A 9% corporate tax rate would DEFIANTLY create jobs.

 

[WillyBagseed]

No it is not "huge corporations" that create the most jobs, small business creates the majority of jobs in this country. Look up actual paid tax rates of large corporations, it is closer to 19-20% and many pay ZERO%

I still support the occupy protests.

You are a trader and I am a truck driver... goes to show what that higher edumacation gets ya. =)

 

[Dan Kone]

You think traders create jobs? ( i am one btw)
Its the huge corporations that create the most jobs.

False. More people in America are employed by small businesses than major corporations.

A 9% corporate tax rate would DEFIANTLY create jobs

If all corporations had to actually pay that, I agree. But having small business pay the full tax rate while corporations like GE pay nothing, that's not a competitive environment.

 

[Tales]

Hypothetical scenario:
I don't know about any of you, but over here in NY our taxes are right around ~50%... upper middle class..
If you were already giving away more than half of your money every year, and then somebody said you know what were gonna go ahead and take some more.. How would you feel?

Right, thats why its not a tax related issue! I would feel shitty, but then I would take a dip in my private pool and go for a ride in my Hummer on thru a virgin redwood forest that I am gonna clear cut, just after I smoke some Meth.

Please debate tax issues elsewhere. Danke schön!