Trump, "not Paying Taxes Makes Me Smart"

Discussion in 'Pro-Liberal Discussions' started by amberbeer, Sep 28, 2016.

  1. Alex_P_Keaton

    Alex_P_Keaton Well-Known Member

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    If you want a discussion of Supply-side policies, we'll need to set a framework for what constitutes Supply-side policies.

    Supply-side theory isn't merely "tax cuts." If that were the case, Keynes would be a Supply-sider since he believed in tax cuts as well. From a theoretical perspective, Supply-side holds higher tax rates don't necessarily produce higher revenues and there's a rate at which revenue is maximized. This a point that Larry Summers (an economist for the Clinton administration) agreed with when he said tax rates above fifty percent are counter productive from a revenue perspective.
     
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  2. FuzzyLumpkins

    FuzzyLumpkins Well-Known Member

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    The notion pushed by conservatives that tax cuts -particularly for the higher brackets and capital gains- pay for themselves due to growth caused that will compensate for the reduced rate.

    What Trump is arguing for obviously.
     
  3. Alex_P_Keaton

    Alex_P_Keaton Well-Known Member

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    According to Supply-side theory, tax cuts only "pay for themselves" if the previous tax rate was to the right of the point of revenue maximization.
     
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  4. cml750

    cml750 Well-Known Member

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    How in the world could supply side cause the 1981 recession when Reagan took office in January 1981??? Are you actually claiming Carter was a supply-sider???? That is what it would take for supply side to cause the 1981 recession. Have you ever actually studied history beyond your liberal / socialist websites you frequent? Do you even think about what you are typing or just spout off your liberal / socialist talking points with zero thought?
     
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  5. Alex_P_Keaton

    Alex_P_Keaton Well-Known Member

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    Reagan's tax cuts took effect in 1982. The recession was over in November 1982. 1983 was one of the best growth years on record.

    We have not seen a year like it since.

    US Real GDP Growth Rate by Year
     
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  6. cml750

    cml750 Well-Known Member

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    I do not think fuzzy actually understands history. They do not talk about real history at his Saul Alinsky fan club meetings.
     
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  7. Alex_P_Keaton

    Alex_P_Keaton Well-Known Member

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    That's nothing. Paul Krugman used to blame Reagan for things that happened back in 1978. I mean, Reagan must've known Doc Brown or something.
     
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  8. Nelson

    Nelson Well-Known Member

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    coming from a liberal , I will take that as a compliment.
     
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  9. Nelson

    Nelson Well-Known Member

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    Do you really want to argue about the validity of a Nobel
    prize?
     
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  10. iceberg

    iceberg Well-Known Member

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    stay down, fuzzy. its getting ugly.
     
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  11. cml750

    cml750 Well-Known Member

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    But, but he won the nobel prize???? How can this be????:D
     
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  12. Nelson

    Nelson Well-Known Member

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    What do you think the rich does with the money when their taxes are lowered?
     
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  13. FuzzyLumpkins

    FuzzyLumpkins Well-Known Member

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    And it wasn't because of tax cuts. He was raising corporate taxes at that point too.

    http://www.nber.org/papers/w1792.pdf
     
    Last edited: Sep 28, 2016
  14. FuzzyLumpkins

    FuzzyLumpkins Well-Known Member

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    Hoard it.
     
  15. Nelson

    Nelson Well-Known Member

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    Rich people don't hoard money, they invest it to make more money. Hoarding is a poor man's ideal because he has never had money.
     
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  16. Alex_P_Keaton

    Alex_P_Keaton Well-Known Member

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    Martin Feldstein. Fuzzy, I'm impressed. He's one of my favorite economists.

    That was a 1986 study. Here's what he had to say more recently about Supply-side economics. He is a major proponent by the way:

    "Now much of my own work over the years has been about taxes and about the response of households and businesses to taxes in various ways. And in particular if you look at the household response to marginal tax rates, the typical professional economist's view and also that of most tax policy officials is that people don't seem to respond very much. If you look at the relationship between labor force participation and tax rates, or working hours and tax rates, there's not much there. There is for married women, who have more discretion, but for single women, or men between 25 and 60, there's virtually no response of labor force participation.

    I've argued that that's really looking in the wrong place. The measure of labor supply that matters is not just hours. The relevant labor supply includes human capital formation, choice of occupation, willingness to take risk, entrepreneurship and so on. All of these affect income and tax revenue.

    What's more, taxes cause a further distortion that causes a “deadweight loss,” that is, an economic inefficiency. Taxes change the way people choose to be compensated. I get compensated in fringe benefits rather than taxable cash because I have the choice between 65 cents of spendable cash or a dollar of fringe benefits. That choice of fringe benefits that are worth less than a dollar for every dollar that they cost to produce implies economic waste. It shows up as lower taxable income. A reduction in taxable income, whether it occurs because I work less or because I take my compensation in this other form, creates the same kind of inefficiency.

    Economic analysis shows that if you want a single measure of the inefficiencies created by the tax on labor income, you can just look at taxable labor income. You don't have to distinguish whether a higher tax rate reduces taxable income because I work fewer hours or I bring less human capital to the table or I get compensated in the form of fringe benefits and nice working conditions.

    Therefore, we should look at the data on how taxable income relates to marginal tax rates. I looked at the experience before and after the 1986 tax cut, because that was a very big, bold one. The Treasury provided data that allowed one to track individual taxpayers over time. So you could look at an individual a few years before the 1986 Tax Reform Act and at that same individual a few years later. And that comparison suggested quite a large response: Taxable income responded with an elasticity of about 1, meaning that a 10 percent increase in the after-tax share that an individual got to keep, say, going from 60 percent to 66 percent, would increase their taxable income by 10 percent. So those are big numbers.

    Think about an across-the-board tax cut. Let's say you cut all tax rates by 10 percent, so that the 25 percent rate goes to 22 1/2 percent, 15 percent rate goes to 13 1/2 percent, and so on. That raises taxable incomes. The revenue cost of that tax cut is only about two-thirds of the so-called static result that you'd get if you didn't take behavior into account. So both in terms of thinking about the economic efficiency, which is very hard to explain to the lay public—I've been bending my sword trying—and also in terms of tax revenue, these are very large effects."

    Economist's View: An Interview with Martin Feldstein
     
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  17. FuzzyLumpkins

    FuzzyLumpkins Well-Known Member

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    I asked for proof of success not theorycrafting. That also doesn't dispute his earlier findings.
     
  18. FuzzyLumpkins

    FuzzyLumpkins Well-Known Member

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    Amounts to the same thing. Fact is that it does not 'trickle down.'
     
  19. FuzzyLumpkins

    FuzzyLumpkins Well-Known Member

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    This is not the peace prize, dim.
     
  20. Alex_P_Keaton

    Alex_P_Keaton Well-Known Member

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    You didn't read it. Feldstein gave you real world numbers and examples, specifically related to the TRA.

    All economics is theory, and it is very difficult to test because there are so many variables. The 1980s saw the longest peacetime economic expansion in on American history up to that point. Is all that growth solely attriubutable to supply-side economics? I sincerely doubt it. There are so many factors involved aside from what the government does.

    However, we can say the preponderance of empirical evidence shows that high tax rates hurt growth:

    What Is the Evidence on Taxes and Growth?
     
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