The Historical Lessons of Lower Tax Rates

Funny how nations with some sort of universal health care have more mom and pop businesses?

Oh wait... The facts don't fit the narrative the right makes up about government healthcare.

 

Ah yes, the fabled "Laffer Curve". No proof that it exists and the conservatives seem to think that even though it's called a "curve" that it is actually a straight line.



In actuality, the US's greatest periods of growth were under top marginal tax rates between 60-90%.

 

And still no job creation or economic growth from tax cuts over the last 30 years.

 

That's not quite true. There's numerous studies that have supported the existence of a Laffer curve. The problem for the right is that the evidence suggests that it has multi-peaks and therefore the analysis can be used to suggest tax rises are advisable.

 

Shhhh... that's supposed to be a secret.

 

I was being a bit facetious. I should restate my assertion: the right-wing's concept of the Laffer Curve has never been proven.

I've seen number-crunchers that say that the sweet spot, in terms of positive economic activity, for the top marginal tax rate is around 65%.

I think that the success of such a high marginal tax rate pivots around the idea that nobody in that tax bracket who knows an accountant worth their pay is going to actually pay that rate so the real tax rate ends up being considerably lower.

 

Its certainly the underground economy that dictates the upper rates that we can set. Its that which makes the standard humph over the Laffer Curve dodgy: i.e. because of the need to maximise work incentives on the poorer deciles we have to seek maximisation of revenues on the accountant whoring richer deciles.

 

Try looking at the facts, lowest tax rate in 50 years, highest unemployment. Highest Corporate profits EVER, no new employment. What is happening to the profits, it goes into the stockholders pockets and is NOT reinvested. Solution, instead of lowering taxes, which has made things worse, try raising them. Give the corporations a reason to put money back into the company. Reduced taxes for REINVESTMENT not for pockets.

 

But what are your views on the laffer curve empirical relationship? You can't just whine at the silly right wingers

 

I would add that the Laffer Curve is premised on a gimmick involving capital gains taxation, which conservatives have invoked on numerous occasions. Laffer just gave it pseudoscientific validity by making it a graph. The graph, however, only tells a part of the story.

Specifically, the top income percentiles tend to accumulate lots of unrecognized capital gain over time as capital assets (particularly stock) appreciates over the years. This hardly affects most Americans, who own hardly any capital assets and rarely recognize any capital gain.

By lowering cap gain rates, the wealthy have an incentive to sell off their capital assets, lock in the lower rates, and reorder their portfolios. Mostly this is just rich people selling stock to other rich people.

This produces a spurt of revenue as capital transaction increase.

But the Laffer Curve doesn't show what happens next. Once the assets are sold off and the portfolios reordered, capital transactions fall back to normal. But this time round, the tax rates are lower, resulting in the reduction of recognized gain and less tax revenue.

The Laffer Curve leave out this legacy of diminishing capital gain revenues.

When that happens, conservatives come along and say, see, we need to cut capital gains to spur recognition. And the spiral continues, each turn resulting in lower and lower revenues from the top brackets.

Like I say, it's a tax gimmick. It's sad the American people keep falling for it.
What happens then is spurt of revenue

 

Your theory would work if business people would actully spend rather than save. Their rich because they save and not spend. So now that we have the reality of how rich people behave, I'm sure you understand why lower tax rates allow for profit-taking, higher tax rates demand reinvestment. Your theory is a complete non sequitor considering the data rejects your claim.

 

And 8 years of extreme deficit spending to the tune of trippling the debt in 8 years didn't hurt to create artificial growth. Explain how so-called lame duck Carter had a higher rate of job creation than Reagan and he didn't deficit spend like a drunk sailor.

 

Taxes were never lower than 82% at the time you note and you're calling them low to hang your banner on low taxes. What a joke. OK, let's put em at 82% and we'll let you have your way. You want them fascist pig Ronnie low, so quit trying to call 82% to 91% during the 50's, low.

 

Don't make a joke of yourself, most of the debt was accrued under Reagan and GWB, and considering they inherited stable debt scenarios and the latter inherited the best economy ever. Maybe pictures will help: http://http://en.wikipedia.org/wiki/National_debt_by_U.S._presidential_terms


Look at the chart at the bottom of the page and understand. GWB's last year alone had teh debt increase over 1 trillion dollars, then he handed that POS off to Obama and I see that it's his fault of course. Both Clinton and Obama inherited a mess and it took Clinton until his second term to fix it. Of course he had the courage to tell the R's to F themselves, Obama apparently does not.

 

Whoa, nelly.
The debt has been tripled since Obama took office. This is easy to research and confirm, so I'll not bother to cite it.

Call me a joke and whatever insults you please, but I'm right. Dems promise freebies for votes. Lie to yourself if you want to. Not my problem.

 

You really don't have a clue about this data, do you? The debt when Obama took office was: 10.626T It is now: 14.853T

Is that tripled? GWB's last year the debt increased > 1T, so that's what Obama got handed to him along with a housing/mortgage industry in collapse, unemp that had risen 3% in just the previous year alone, a stock market blowing down thru 8K. Obama did screw up and not let the 5% tax cut expire, I will give you that. Just keep forgetting the country was on the verge of another full-on depression and you can critique Obama all you want. Your beloved turd handed off this mess and now you want to blame Obama.

http://www.npr.org/2011/01/25/133211508/the-weekly-standard-obama-vs-bush-on-debt

 

Seeing as how we currently have the lowest tax rates in 50 years, and the poorest business reinvestment, the highest corporate profit EVER, and the lowest reinvestment, the HIGHEST dividends ever paid, and the LOWEST REINVESTMENT I would have to suggest that the standard about lowering taxes to increase the economy is complete and total idiocy.

 

Obviously, that's what I was saying to Trinnity. I don't see her back, I assume we won't inthis thread unless she can construct a website showing us how Obama has trippled the debt.

This whole mess could be saved by raising taxes to 60% top brkt. Stupid thing is that even the Dems wouldn't vote for that. Why are politicians so much more stupid than they were pre-1970's?

 

LOLOLOLOL, they were just as stupid then as now, but then they focused their stupidity on Communists, Soviet Union, Vietnam, those evil racial people trying to attack white rights, and they left the economy alone to handle itslef.

 

It's not the politicians. In the pre-1970s the "greatest generation" was willing to sacrifice for the good of the nation, and in the case of the WWII debt, pay tax rates up to 91% to get the debt down.

Starting in the 1980s, the "pass the buck" or "me" generation started dominating. They elect politicians that pander tax cuts and punish those who have run responsible budgets.

 

The debt skyrocketed during Bush's misrule, and he cut taxes.

The debt skyrocketed during Reagan's misrule, and he cut taxes.

You seem to be arguing against yourself.

 

Worse than left it alone they traded it for antiquated ideology and expired fears kept alive for no good reason.

Fascist Ronnie going after the USSR was as pathetic and symbolic as it could be, they had virtually no Navy then, we were supplying much of their grain and they were so entrenched in Afghanistan that they could not even fathom attacking us even if they wanted to. They must have laughed when the senile one brought this dwindling Cold War to reality; they were so done with it.