Your argument is not logical. My argument is that productivity gains would have been higher with lower income taxes. An income tax increase doesn’t mean negative productivity growth. It means that your productivity growth would be less than what it was otherwise.</p>
<p>I’m saying that the progressive tax structure, in general, is bad because it decreases the incentive to earn. I mean, why not advocate a 90% tax rate for the highest bracket…they don’t need the money. Hint: The economy would tank.</p>
<p>Furthermore, sales taxes (presumably taxing higher income items) or other taxes could be the basis for our tax structure.</p>
Hilariously, the president has a minimal impact on the economy.</p>
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In theory. In reality, the top 5% pay something like ~50% of the taxes. The top 10% pay 65% and the top 50% pay 96% of taxes. So, truly, the government doesn’t take from the poorer half.</p>
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Some benefit more than others.</p>
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In fact, probably around 50% of the federal budget helps “the poor” with social security and medicare/medicaid. The other two biggest expenditures are national defense and paying interest on public debt.</p>
<p>Obviously there are great benefits for society when impoverished people aren’t impoverished anymore. And frankly put, American society is quite good with helping people who want to get out of poverty. The other portion of the population that just leeches wealth from others…well, not so good.</p>
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Oh, I don’t think there should be deductions for mortages, kids, marriage and a lot of other things. They usually allow older people to benefit while younger people don’t.</p>
<p>How about this Father Daughter talk (trying to make the analogy work better)</p>
<p>Daughter: I worked hard for my 4.0 GPA </p>
<p>Father: That’s great but I think you should give some back to the school</p>
<p>Daughter: Why? I worked hard for my GPA and should keep the rewards of my labor. I did so well I got into that great class with Prof 3togo and got the a chance to do great research in the lab.</p>
<p>Father: You have done a great job and deserve to be rewarded. Do you realize Prefessor 3togo’s salary is paid with student GPA points or that the lab in which you conducted your research was built with student GPA points, or the campus secuirty is paid for with student GPA points. Do you still want to keep all your GPA points for yourself? Or do you think sharing some would be better for your community? (Extra credit question … and if a 2.0 minumum is required to graduate should all students give an equal number of GPA points to “pay” for things on campus or should students with more GPA points give more than those students with lower GPAs?)</p>
<p>Yes, it is meant as a joke (even my history teacher back in high school said so), it has been passed around on forums like freerepublic.com and other conservative forums for years. Since you’re a Republican, I highly advise you check out that forum. </p>
<p>As an independant conservative, I welcome you to CC. Don’t be scared of the die hard libs on here and don’t let them attack you (I’ve been attacked constantly, and I am still fightin’). Most of them are nice people. :)</p>
<p>“My argument is that productivity gains would have been higher with lower income taxes. An income tax increase doesn’t mean negative productivity growth. It means that your productivity growth would be less than what it was otherwise.”</p>
<p>This is what is called a counterfactual. There’s no way to prove what would have happened if someone did not do x. There’s very a very interesting set of counterfactual works by historians and science fiction writers – with themes like what would have happened if the south won the Civil War or what if Russia had established a space colony in 1970 – and they are interesting intellectual exercises and a nice source of amusement. What they are not is evidence of empirical relationships that actually exist.</p>
<p>The only way to investigate the income tax-productivity relationship in a rational way is to compare situations (holding lots of variables constant in an econometric model) where taxes rose and ones where they did not, and with an dependent variable of productivity growth. This is reality-based economic research.</p>
<p>the re-distribution of wealth would not imply that hard work no longer has its benefits. many liberals simply aim to provide everyone with a fair share of the wealth based on need. once everyone has what they need, capitalist competition can be implemented to give hard workers what they want.</p>
<p>Audrey shouldn’t live in luxury, but she is entitled to survival. Good for the daughter–her hard work will still pay off.</p>
You don’t believe changes in income tax affects productivity? Do you not believe in the concept of incentives?</p>
<p>If the top 5% only paid taxes (an extremely progressive system) you think productivity would stay constant? You think it would increase? You think it would decrease? What does the research say?</p>
<p>An earlier poster mentioned that a lot of the federal budget covers nondiscretionary categories. That is true, but relatively little of that involves funding for the poor. Everyone who has had a paycheck contributes to and gets Social Security and the amount received goes up with the working income. And everyone over 65 gets Medicare. While Medicaid is a program for the poor, it is a relatively small program in the context of the overall federal budget. The bulk of dollars in the “other” mandatory programs fund programs for retirees, while smaller pots of money going to a variety of programs such as unemployment insurance, student loans, and food stamps. </p>
<p>Therefore, the idea that federal taxes primarily take from the rich and give to the poor is just not accurate.</p>
<p>“You don’t believe changes in income tax affects productivity? Do you not believe in the concept of incentives?”</p>
<p>Rational people don’t “believe” in an idea such as incentives. Instead, they examine evidence to see how they operate in the real world. Only ideologues believe in concepts without examining evidence.</p>
<p>Of course, incentives are a driver of human behavior, although as with most human behavior, how much they matter can be answered by: yes, but it depends on many factors when and by how much. Try reading the journals filled with articles by PhD economists (especially the recent work in behavioral economics, a field in which its practitioners have won Nobel prizes in Econ) and you will find many empirical studies on the impact of incentives in many areas of life and under varied conditions. The use of social/cognitive psych along with economics has yielded some very interesting findings! Some of that work is reported in the bestseller, Freakonomics.</p>
<p>In any case, incentives are not the issue at at hand. You said that productivity increases are linked to tax policy, but you have yet to provide any evidence that this is so.</p>
<p>Asking me what would happen in a situation that does not exist in the real world is not reality-based research, so I see no reason to respond to your hypothetical. (See my discussion of counterfactuals, above.) No one would adopt the policy that you suggest and, in any case, even if you could determine the effect of extreme policies, this wouldn’t tell you much about policies which are much less extreme.</p>
Yeah. I think the main evidence in this case would be that of the USSR & the current Russian entity (whatever it is). It’s top citizens are a bit more productive now than in the past. Of course, there are a huge amount of variables in play and I don’t have the skill or knowledge to do an analysis. Perhaps you’d like to do it?</p>
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Yeah, I’ve read it. Others too.</p>
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Well, considering the productivity increases on the top end of the income spectrum currently (most visibly after Bush’s tax cuts)…it seems like this should be a visible truth, but apparently it’s not.</p>
<p>As I have a non-hypothetical job, I have to cut back on my comments to this discussion.</p>
<p>Just one response: The USSR example shows the importance of incentives, but that doesn’t tell you anything about the impact of changes in marginal income tax rates in the US today. Why? It’s case at the extremes and policy choices from pre-Clinton to Clinton to GW Bush involved relatively small changes in marginal income tax rates.</p>
<p>Income tax incentives are cross cultural. And in the cases of extreme taxation (Communism is effectively a 100% income tax rate) there is extreme repercussions.</p>
<p>First, while you see the recent economic performance as evidence of the effectiveness of lower tax rates … I see a classic Keynsian tax cut which spurs economic growth (while also creating a deficit). The ultimate tax cut President, Reagan took both Keynsian paths that drive econimic growth, tax cuts and increased government spending, and some claim the growth under his watch is “proof” of the effectiveness of a low taxation government … to me I claim “proof” of classical economic policy of running deficits in the short term will drive a boast in the economy. I’d love to hear an example of a low tax policy driving growth while maintaining anything close to a balanced budget … do you have one? (BTW - I’d claim the Clinton years is about as close as you can get as we had relatively balanced budgets and very low tax burdens compared to almost all other capialistic economies).</p>
<p>Second, even if I were to conceed on the approach of lowering the tax burden in the US … why not provide the tax break to the poor and the middle class? By any economic analysis I’ve read that makes sense providing tax breaks lower in the economy provides more overall positive effect for the economy than providing it to the rich (give bucks to the poor and the money will overwhelmingly be spent on businesses in the local economy) … so why are the Bush tax breaks so overwhelmingly in favor of the rich?</p>
<p>I can be converted but it will take some good evidence … evidence I have not seen yet. (for example, even though I am one of CCs socialists I have been convinced that a business income tax is basically counter productive)</p>
<p>“*n the cases of extreme taxation (Communism is effectively a 100% income tax rate) there is extreme repercussions.”</p>
<p>Indeed – there are extreme repercussions from extreme taxation. But that doesn’t mean that there is an impact with small changes in marginal income tax rates. </p>
<p>In the case of the USSR, the tax system was not the only or even necessarily most important difference between it and industrialized democracies. I’m sure you will concede there clearly were many other issues in the USSR, including such major institutional conditions such as centralized planning and partyocracy.</p>
I didn’t make that claim. I made the claim that a tax cut to the top will make the most productive citizens more productive (income per person), which is not a direct correlation with what you said. I do admit they are related though (as the influence in capital returns in income is much higher when the economy is doing well).</p>
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Ireland? Virtually all the Anglo countries have pretty low tax burdens relative to other states and all are doing very well relative to other states.</p>
Noticeable “impact”. If one increases the top marginal tax rate 1% each year there might not be any noticeable impact on a year to year basis. But a longer time line would likely indicate what we already know (high top marginal tax rates impede growth).</p>