Income Growth Over Time

[Kulindahr]

You're absolutely right, Kulindahr.

A while back, you mentioned the Laffer curve, so I took your advice and researched it a little.

If you look for non-partisan sources (which is hard!), the break-even point with the Laffer curve is believed to be somewhere between 50-70%, depending upon whom you asked. I remember one person who mentioned 67%.

Just like you said.

Here's something else: according to some very highly placed people in Baby Bush's administration, the Bush tax cuts were never intended to pay for themselves. They knew it was going to add to the deficit.

Of course they knew. The basic information for knowing that the Laffer Curve is a limited phenomenon was already out there.

And the current Republicans, and Obama, know that the only reason to keep the tax cuts for the filthy rich was to benefit people who write big checks for campaigns.

 

[bankside]

It's not that simple. The flow of wealth preferentially to those who already have it is built into the entire economic system, through laws and regulations along with actions by corporations.

When we're looking at a situation where the top 400 wealthiest households could have their worth stripped to "only" one billion each and it would eliminate a deficit of over a trillion dollars, there's something seriously wrong, and it has been for some time.

I think it is. They can already pay more in taxes than many people earn in their lifetimes, and they don't necessarily consume government services out of proportion to most other people. Inequality is an income problem, not a government redistribution problem.

Umm...the other thing is, even though I favour improved earnings distribution, the top 400 wealthiest households are not really consuming that money themselves; it is just their names on the asset.

 

[Kulindahr]

I think it is. They can already pay more in taxes than many people earn in their lifetimes, and they don't necessarily consume government services out of proportion to most other people. Inequality is an income problem, not a government redistribution problem.

Umm...the other thing is, even though I favour improved earnings distribution, the top 400 wealthiest households are not really consuming that money themselves; it is just their names on the asset.

When government has been aiding and abetting the flow of wealth preferentially to those who already have it for several generations, government action to undo that is required.

And it doesn't really matter what form those households' wealth is in; it means others are impoverished.

 

[Kulindahr]

^
OTOH, do you realize how long it would take to undo the government-aided plunder that's taken place for the last forty years?

And we're not as free to maneuver as we were back then -- the world economy is a much larger factor. The minimum wage right now, if it had kept up with other economic factors, should be on the order of $20/hr. But try doing THAT to the economy overnight....

What's needed is to unionize workers in China, Indonesia, Mexico....

 

[bankside]

When government has been aiding and abetting the flow of wealth preferentially to those who already have it for several generations, government action to undo that is required.

And it doesn't really matter what form those households' wealth is in; it means others are impoverished.

Yes. Government needs to clear the decks to allow unions reasonable access to employees to make their case, by which I mean not introducing artificial barriers to impede communication.

And I would consider inheritance reform. I've just had an idea: for estates valued at over 10 000 000 (for example - we can argue about the number later), an estate tax will be due, equal to the amount willed to a named beneficiary or personal trust fund. Amounts given to art galleries or humane societies or cancer research will go untaxed.

So, if Bill Gates wants to leave 5 billion to his kids, he can do so and pay 5 billion for the privilege. Or he can give 10 billion to philanthropic causes and pay nothing.

I agree!

Are you paying attention to what's going on in Wisconsin? Why, if I were there, I'd be on the street at this very moment demonstrating, instead of typing these words.

Woo-hoo! It's the 60s again. Makes the adrenaline flow through my veins.

I hope the dynamism spreads.

I'm afraid I don't normally group "Wisconsin" and "dynamism" together very often to be honest...LOL. However I appreciate the unduly ignored. I'm glad they're doing something.

What's needed is to unionize workers in China, Indonesia, Mexico....

I agree, and for some reason I think something like facebook will make it happen.

 

[Kulindahr]

And I would consider inheritance reform. I've just had an idea: for estates valued at over 10 000 000 (for example - we can argue about the number later), an estate tax will be due, equal to the amount willed to a named beneficiary or personal trust fund. Amounts given to art galleries or humane societies or cancer research will go untaxed.

So, if Bill Gates wants to leave 5 billion to his kids, he can do so and pay 5 billion for the privilege. Or he can give 10 billion to philanthropic causes and pay nothing.

I still prefer my proposal: they can leave it to whom they will, but no more than (1 million)*(minimum wage)/2 to any individual entity.*

So if Bill Gates dies and is worth $54 billion...

($54 bn)/[(1 mn)($7.50)/2] = 14,400 people or charities to split it among.
























*except the "Mars for Rednecks" endowment, dedicated to shipping rednecks to the red planet -- they can leave up to half their fortune to it

 

[jackoroe]

Jack, what you and the other righties always conveniently leave out, is the fact that while revenues did increase, the amount of tax revenues as percentage of GDP significantly dropped. That percentage dropped quite dramatically during the lower-the-taxes-on-the-rich George Bush years.

You guys always leave that out. I wonder why?

Pay no attention to the man behind the curtain.

"Black" is "white".

I do agree with you on one central point: if they're going to lower taxes, they are going to have to lower spending, too. Tax cuts for the rich don't pay for themselves. I believe that that has been conclusively proven.

Mainly because it isn't relevant to the discussion. Our friends on the left would have us believe that reducing marginal rates equals reduced tax revenues. You've freely admitted this not to be the case, fine. I admire your honesty in doing so.

So, if revenue increased, pretty significantly at that. What caused the Reagan deficits? Duhh....SPENDING more than the increases in revenue.

I have to disagree with my friend, Kuli. You will never have a deficit unless you spend more than you take in. That's the very essence of the term.

 

[Kulindahr]

^ Thank you for noting that "taking in" is a critical part of having a deficit.

The Republicans in Congress plainly don't understand that, since they have been voting to decrease what we take in and hand us the most enormous deficits ever seen. The giant deficit facing us is not Obama's deficit, it's the Republicans' deficit, because they're the ones who decided that we don't need income to balance the books. They'd rather have us six to eight trillion more in debt than actually try for fiscal health. They deliberately insisted that taxes continue to be cut for people at the top, despite all the history showing that it won't help the economy worth crap and won't increase revenues, knowing that it will mean worse and worse infrastructure. And they made the deal knowing that the way it was written, it was a tax increase for the bottom brackets.

Any sensible person would have looked at the deficit and done some simple math: if we let the tax cuts for the wealthy expire, and increase taxes on the uber-wealthy, half the deficit will disappear. That leaves something like two-thirds of a trillion to cut, but that's a figure we ought to be able to reach in a few years. Instead the Republicans tossed out common sense for the sole purpose of racking up the deficit to a figure so high they know there aren't enough cuts to be found to fix it, at least not for the foreseeable future.

They're like a farmer with a leaky water tank, who, rather than making sure there's enough water coming in, makes promises about patching the hole, meanwhile letting the cows wither from thirst.

 

[Kulindahr]

I keep thinking that the economics of the Laffer curve are very much like a problem in hydraulics.

Trouble is, I remember about enough about hydraulics to know that a hose will drain better if the tangent at every point in its length goes downhill.

 

[jackoroe]

One thing to keep in mind is that, for Jackaroe's theory to be accurate....wait a minute! Let's do the math.

OK.

Tax revenues were supposed to have increased 50%. But the deficit increased 2000%.
For his theory to be accurate, spending, then, would have had to increase 1950%.

No, that's not right. It can't be. Something's wrong.

We need a math whiz. (Folks, I haven't studied advanced math in over 30 years.)

You can't use percentages. Use dollars. Then you can convert them to percentages after you do the calculation.

 

[jackoroe]

^I think you can, using Calculus, but I haven't had that for decades.

Besides, Jack, you didn't answer my question. With your tax cuts, there has to be a breaking point—a point where it's no longer cost effective.

Where is that point for you?

Yes, the Laffer Curve does show that. Unfortunately he didn't put numbers on the damned thing so we can see exactly where we are.

I'm far more concerned that I work five full months to pay all of my taxes. Tax freedom day is May 30th this year. That's far too much money going down a rathole.

I'd favor repeal of this ponderous, incomprehensible income tax law in favor of a flat tax. Say 17-20% no deductions everything included. Or maybe a sales tax of a similar amount in lieu of any income taxes. We are clearly working too long to satisfy the needs of a government that inarguably pisses money away. If we don't send it, they can't waste it.

Do you think it's OK to work 5 months for the government every year?

 

[BostonPirate]

Yes, the Laffer Curve does show that. Unfortunately he didn't put numbers on the damned thing so we can see exactly where we are.

I'm far more concerned that I work five full months to pay all of my taxes. Tax freedom day is May 30th this year. That's far too much money going down a rathole.

I'd favor repeal of this ponderous, incomprehensible income tax law in favor of a flat tax. Say 17-20% no deductions everything included. Or maybe a sales tax of a similar amount in lieu of any income taxes. We are clearly working too long to satisfy the needs of a government that inarguably pisses money away. If we don't send it, they can't waste it.

Do you think it's OK to work 5 months for the government every year?

12/5= 41.66 percent.

what tax bracket pays 41.6 percent in income taxes? who? where?

• Tax Bracket Married Filing Jointly Single
• 10% Bracket $0 – $17,000 $0 – $8,500
• 15% Bracket $17,001 – $69,000 $8,501 – $34,500
• 25% Bracket $69,001 – $139,350 $34,501 – $83,600
• 28% Bracket $139,351 – $212,300 $83,601 – $174,400
• 33% Bracket $212,301 – $379,150 $174,401 – $379,150
• 35% Bracket Over $379,150 Over $379,150

http://www.fivecentnickel.com/2010/02/15/2011-federal-income-tax-brackets-irs-income-tax-rates/

 

[Kulindahr]

^
Tax freedom day is calculated using all direct and hidden taxes, and the actual federal budget -- not just federal tax rates.

I can't recall whether the 'wars' in Asia are counted or not -- I suspect not, or we'd be seeing a Tax Freedom Day in June.

 

[BostonPirate]

^
Tax freedom day is calculated using all direct and hidden taxes, and the actual federal budget -- not just federal tax rates.

I can't recall whether the 'wars' in Asia are counted or not -- I suspect not, or we'd be seeing a Tax Freedom Day in June.

so where does the state taxation issue begin and the federal one end? is anyone considering whether or not they are protesting the right people? Look its easier to effect state and local taxes than it is federal, as an individual.

 

[Kulindahr]

States taxes are insignificant beside the [STRIKE]power of the dark side[/STRIKE] size of federal ones, in most places.

 

[bankside]

Ms. vos Savant is not convincing. A sales tax (in particular, a value-added tax) is effective. Government income tax revenue also drops during a recession. What is she proposing instead? A poll tax? THAT's popular during a recession...

Which brings us to the advantage of taxes based on percentages of things; they scale according to the economy. If you really wanted stable revenue, you would have a poll tax instead, but that would be an incredible hardship for many people during times of economic upheaval.

 

[Kulindahr]

I have an idea:

since the government and the wealthy have been fleecing the rest of us for the last thirty years, we just take half the net worth of everyone in the top five percent, any time there's a recession. And since there's no real way to keep them from doing it again, we make that a permanent feature. So if they want to keep their unearned loot, they have to be responsible and keep the economy humming at least feebly.

 

[bankside]

I have an idea:

since the government and the wealthy have been fleecing the rest of us for the last thirty years, we just take half the net worth of everyone in the top five percent, any time there's a recession. And since there's no real way to keep them from doing it again, we make that a permanent feature. So if they want to keep their unearned loot, they have to be responsible and keep the economy humming at least feebly.

How about just a surtax on income over X thousand per year that is equal to the unemployment rate?

 

[Kulindahr]

How about just a surtax on income over X thousand per year that is equal to the unemployment rate?

That's creative!

Plus inflation and the prime rate.