[newarts]

mike...
The rational for the 18% is that regardless of whether the top marginal tax rate is 35% or 90% the federal government's tax collection will only pull down about 15-20% of GDP.

It may have been but need not be.

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Last edited by newarts; 07-29-2011 at 01:03 PM.

[jeffkrol]

The rational for the 18% is that regardless of whether the top marginal tax rate is 35% or 90% the federal government's tax collection will only pull down about 15-20% of GDP.

VOODOO...........and it doesn't kick in till
HIGH real tax rates i.e. 60%
anyways..fun

A Laughable Laffer Curve from the WSJ : Good Math, Bad Math

I don't know where we fit on the Laffer curve. Frankly, I think our tax code is so distorted by random loopholes that it's probably impossible to make a blanket statement; for some businesses, we're probably taxing them enough effectively reduce the tax revenues received from them; for many others (can you say oil company?), we're clearly not.

But the idea that this curve produced by the WSJ folks has any meaning at all is simply laughable.

The catch, of course, is that for that to be true, you need to be on the far side of the curve, where revenues are dropping because the rate is so high that it's stifling investment. The WSJ editorial board constantly argues that we're on that side. And they argue it in stupid, sloppy ways.

More flat earth philosophy from Mike..........

http://economistsview.typepad.com/economistsview/2008/01/the-new-laffer.html

[Nesster]

This chart however seems to demonstrate that federal revenue does not fit the laffer curve nor supply side beliefs. During Reagan and Bush II I do not see federal revenues go up, rather the reverse. During Clinton the revenues grow.

What I do see is that the states and municiplalities step into the breech and that revenue explodes.

[Nesster]

Do you think that Reid is stalling until the last possible minute before introducing his bill so that he can be the last bidder or have the last word?

If so, that is a very contentious and dangerous approach. Right now, the only thing out there that has had a vote that could be moved forward is the CC&B bill from last week.

Actually, Reid has a problem with the filibuster in the Senate. Brinksmanship may be the only way to avoid being shut down...

Because of Senate parliamentary rules, if Reid gets the legislation rolling at some point Friday, as he promised in his news conference, then the Senate would have to hold a series of votes that could not finish until Tuesday unless all the Republicans relented. It will be hard enough, as Reid suggested, just to get the few GOP senators needed to advance through a 60-vote filibuster threshold.

Schumer said another compromise or two and the gravity of the situation should make it possible for Republicans get on board.

"Since it will be the last train leaving the station, we expect Senate Republicans will give it a long, careful look," Schumer said.

[mikemike]

Actually, Reid has a problem with the filibuster in the Senate. Brinksmanship may be the only way to avoid being shut down...

My daughter has the exact same problem with the monsters that live under her bed.

The house has passed TWO bills to raise the debt ceiling, the senate hasn't even started to talking about one.

[jeffkrol]

My daughter has the exact same problem with the monsters that live under her bed.

The house has passed TWO bills to raise the debt ceiling, the senate hasn't even started to talking about one.

No, they passed 2 bills w/ NO CHANCE IN H@LL of passing into law.. which is as pointless as no bill at all..

BTW:
http://www.christianpost.com/news/boehner-bill-versus-reid-bill-what-are-the-differences-53094/
and..

MA Senator Scott Brown had pledged his support to the Boehner bill, but denounced the House vote delays as "pathetic." The House vote delays and House vote are over.

The House vote passed 218-210, but the Boehner bill was dead upon arrival in the Senate, with a 59-41 vote.

Brown says he also supports Reid's bill, which the Senate will vote on this Sunday, if it sticks to the parameters.

Reid spoke out today with harsh words for his critics.

guess it doesn't count unless they send you a copy???

[jolepp]

...
The rational for the 18% is that regardless of whether the top marginal tax rate is 35% or 90% the federal government's tax collection will only pull down about 15-20% of GDP.

It would seem that OECD countires on average have managed to rake in ~35% of GDP, of these Danmark and Sweden are close to ~50%. US rate in this comparision is 27.9 % from 2006; this includes everything the public sector collects, not just (federal) income tax.

http://www.oecd-ilibrary.org/taxation/taxation-key-tables-from-oecd_20758510 / "Total tax revenue"

The Laffer curve is about an "optimum" tax rate (to maximize revenue). While the idea of such an "optimum" rate is interesting and potentially useful the question of the exact "optimum" rate (and the shape of the curve in general) is left open. From the above it would seem that the tax rate can be as high as 50% of GDP in an advanced country with a high standard of living though.

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Last edited by jolepp; 07-30-2011 at 12:41 AM.

[mikemike]

It would seem that OECD countires on average have managed to rake in ~35% of GDP, of these Danmark and Sweden are close to ~50%. US rate in this comparision is 27.9 % from 2006; this includes everything the public sector collects, not just (federal) income tax.

http://www.oecd-ilibrary.org/taxation/taxation-key-tables-from-oecd_20758510 / "Total tax revenue"

The Laffer curve is about an "optimum" tax rate (to maximize revenue). While the idea of such an "optimum" rate is interesting and potentially useful the question of the exact "optimum" rate (and the shape of the curve in general) is left open. From the above it would seem that the tax rate can be as high as 50% of GDP in an advanced country with a high standard of living though.

in the US you have three levels of taxes federal, state and local. I was 18% is talking about federal only. Our total taxes are typically in the 30-40% range when you include state and local taxes.

Jeff the article isn't disputing the concept of the laffer curve it is just poking holes in a single attempt at applying it by the WSJ editorial. That's like if I tried to use Einstein's theory of general relativity to prove time travel is possible. My time travel hypothesis could be disproven without invalidating Einstein's theory.

[shooz]

Come again?
How is paying our bills like time travel?

[seacapt]

Come again?
How is paying our bills like time travel?

Well the idea that it's good for the country as a whole to spend money we don't have while increasing debt and interest on debt is kinda like Mystery Sci Fi Theater.

[shooz]

I got the CURE!!!!!!!
Pull all our troops out of foreign occupations and use them to invade the Caymans, Switzerland, Lichtenstein and the Bahamas, to raid their unsavory banking and shell corporations to get our money back!!!!!!
Thing is, you know it would work.

spend money we don't have while increasing debt and interest on debt

The thing about this is, no one from the "right" said a word during Reagan/Bush or GWB years.
All the while they both made even bigger government and increased the debt too.
Now that the train is racing towards the cliff, you guys what to remove the brakes.
Makes NO sense to me.
It will take energy, in the form of money, to slow this train down and you really can't expect the poor,sick, disabled and retirees to pay it.

Besides, I'd like to believe you, but the "right" did NOTHING but B****, when Clinton actually did that! All you guys could do is look at that spot on Monica's dress and tune in to FLAKESnews, for even more!

[jeffkrol]

in the US you have three levels of taxes federal, state and local. I was 18% is talking about federal only. Our total taxes are typically in the 30-40% range when you include state and local taxes.

Jeff the article isn't disputing the concept of the laffer curve it is just poking holes in a single attempt at applying it by the WSJ editorial. That's like if I tried to use Einstein's theory of general relativity to prove time travel is possible. My time travel hypothesis could be disproven without invalidating Einstein's theory.

See this is the problemm.. YOU apply the Laffer Curve across the board, like it fits and works on ANY "spread".. Even Laffer stated it DOESN"T.. Will have to find you the refernce..

As an example between 0 to 20% tax there is no valid curve..
or 10-40.
ONLY WHEN you get a say 20-90% tax is it VALID..

The Laffer Curve itself does not say whether a tax cut will raise or lower revenues. Revenue responses to a tax rate change will depend upon the tax system in place, the time period being considered, the ease of movement into underground activities, the level of tax rates already in place, the prevalence of legal and accounting-driven tax loopholes, and the proclivities of the productive factors. If the existing tax rate is too high--in the "prohibitive range" shown above--then a tax-rate cut would result in increased tax revenues. The economic effect of the tax cut would outweigh the arithmetic effect of the tax cut.

EVEN considering his simplistic chart the "curve" doesn't decline till REAL 50% tax rate



The Laffer Curve: Past, Present, and Future | The Heritage Foundation

see.. 77% to 25%.........
[quote]In 1913, the federal progressive income tax was put into place with a top marginal rate of 7 percent. Thanks in part to World War I, this tax rate was quickly increased significantly and peaked at 77 percent in 1918. Then, through a series of tax-rate reductions, the Harding-Coolidge tax cuts dropped the top personal marginal income tax rate to 25 percent in 1925[/qupte]

NOBODY's suggesting going to even 50%..........
The CURRENT arguement using a Laffer curve is WEAK.........historically and as a basis of economic math...

Maybe it works in a "bubble economy" though it should be OBVIOUS that there we other factors involved than just taxation........

The Adam Smith Institute stated in a 2010 report that "The 1997 Budget in Ireland halved the rate of taxation of realized capital gains from 40% to 20%. The then Minister for Finance, Charlie McCreevy, was heavily criticized on the grounds that this change would reduce revenues. He countered by predicting that revenues would rise substantially as a result of the lower tax rate. Revenues rose considerably, almost trebling in fact, and greatly exceeded official predictions."[24] The effects of the credit bubble in the Republic of Ireland have not been included in this research, although since the bubble burst the taxes collected have proven far from adequate to continue operating the Irish state or economy.

A bit more for you.............

Crucially, supply siders did not simply advocate tax cuts. As Domitrovic emphasizes, they argued for a mix of both fiscal and monetary policies, namely, restrictions in the money supply (contra, incidentally, the advice of free market paladin Milton Friedman) combined with tax cuts. These policies, they argued, would cure stagflation, or the combination, once thought inconceivable, of high unemployment and high inflation. This was precisely the mix advocated by Nobel winner Robert Mundell, who, Domitrovic discovered, had not only inspired the Kennedy tax cuts, but had blessed Wanniski’s editorial prior to its publication.

Reagonomics, then, was not the crank tax cutting doctrine that the Laffer Curve Legend would have it be. It was based, rather, on an academic theory, albeit a controversial one. What’s more, it was spectacularly successful. Federal Reserve chairman Paul Volcker, whom Reagan supported despite irate calls for his head, held the money supply steady, after it had been inflated throughout the 1970s. Meanwhile, the Economic Recovery Tax Act slashed marginal tax rates. Whatever else may be said of these policies, it is undeniable that after they were implemented both inflation and unemployment fell dramatically. Stagflation was cured. Further, the real costs of the government deficit did indeed drop. With interest rates plummeting, the government could borrow like it had never had before. It was, in effect, a free lunch.

How then did supply side economics become so disreputable? Partisan politics no doubt have much to do after it. After thirty years, however, those can no longer explain how a high-minded columnist such as Bob Herbert still falsely derides Reaganomics. As Domitrovic shows, the culprit is Wanniski himself. A combustible personality, he introduced the napkin tale (and others) years after the alleged fact, which critics pounced upon as evidence of supply side economics’ irresponsibility. Wanniski worked tirelessly for the supply side cause, but also made it an easy target.

Now, none of this is to say that the supply side policy mix is right for today. It certainly does not mean the current GOP tax-cutting gospel should be accepted. It does, however, suggest a different diagnosis of today’s economic ills. In the Bush-Obama years, the country abandoned the successful tight money policies of the Reagan, Bush I, and Clinton years. Difficult as it may be to accept, it may be that it is the abandonment of a full one-half of the supply side doctrine that has brought us our current woes.

http://www.frumforum.com/the-lefts-laffer-curve-myths
some for you, some for me.. BIG problem w/ Reganomics was it started the class gap we see today...
so if you ask ME to choose between a "robust yet unequal" banana type republic, and a slightly slower more "just" society MOST would envision.. choice is easy for me..

Wealth without social value is just worthless "stuff".......

[deadwolfbones]

McCain erupts: Conservatives are lying to America - The Plum Line - The Washington Post