The Instigator
LiberalCrusader
Con (against)
Tied
0 Points
The Contender
baus
Pro (for)
Tied
0 Points

Tax Rates on the Affluent Should be Reduced

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Voting Style: Open with Elo Restrictions Point System: Select Winner
Started: 5/25/2014 Category: Economics
Updated: 2 years ago Status: Post Voting Period
Viewed: 587 times Debate No: 55418
Debate Rounds (5)
Comments (1)
Votes (0)

 

LiberalCrusader

Con

Resolution: Tax rates on the affluent should be reduced

Stipulations:
-Pro will argue that reducing tax rates on the affluent would be economically beneficial, whereas Con will argue that it would not be.
-"Affluent" will be, in this case, the top 1 percent of income earners
-Pro will have the BOP because he will argue for a chance in the status quo.


Structure:

Round 1: I, Con, will post the rules and Pro will post his opening arguments.

Round 2: I, Con, will post my opening arguments and Pro will post his rebuttal.

Round 3: Both debaters will post their rebuttals.

Round 4: I, Con, will post a rebuttal and Pro will post his final rebuttal and closing statements.

Round 5: I, Con, will post my final rebuttal and Pro will post "no round as agreed upon." This is so that both debaters will have an equal amount of arguments.

Any deviation from this structure, including but not limited to, Pro posting anything other than "no round as agreed upon" in his final round will result in a forfeit.

No trolling, semantics, or plagiarism is allowed.

The rules cannot be changed after the point of acceptance, nor can any agreed-upon definitions.
baus

Pro

In the words of the instigator, "Pro will argue that reducing tax rates on the affluent would be economically beneficial, whereas Con will argue that it would not be."

Thus any moral or political repercussions of doing so are invalid counter-arguments as Pro limited this to a purely economic basis.

I shall now explain why.

The affluent, inherently, seem to have a knack for business (hence they are affluent) and thus the more money they have to use, the more they can abuse their power and force the economy into massive growth.

Additionally, by not funding welfare as sufficiently, the weak and disabled shall slowly die off or move out of the country. This, in turn, will mean that the majority of people within the country are now proportionally more healthy than before.

Following from this, the rich are now more free to choose to pay harder workers more and lazier workers less without the lazier workers being in poverty as there is still the minimum wage law in place.
Debate Round No. 1
LiberalCrusader

Con

I will begin by refuting the ludicrous arguments my adversary has laid out, and then will offer a case of my own.

I would like to remind Pro that he bears the burden of proof. As a result, he must be able to prove his case beyond a reasonable doubt. Thus far he hasn't provided a single source. At this point, we can simply discredit everything that he has said simply for that reason.

He first states "The affluent....a knack for business (hence they are affluent)...force the economy into massive growth."

But this is unsourced and frankly irrelevant and unsubstantiated. The argument is essentially this:

P1: Affluent people have a knack for business -- or, in other words, if someone has a knack for business, they are affluent because of it.
P2: The more money affuent people have to use, the more they can invest to grow the economy -- implict in this is that they will grow the economy.
C: Therefore, a tax cut is beneficial.

Both P1 and P2 are highly fallacious and thus the conclusion falls.

First, the notion that the affluent have a biological knack for business is ridiculous. Many people, like Donald Trump for instance, inherited a large amount of money and are succesful because of it, even though he has failed on multiple occasions, including taking his casinos bankrupt.

Second, to say that luck isn't a factor is ludicrous. You cannot look at success as an end and simply state that skill and having a "knack" was the means.

Third, the majority of jobs in the U.S. -- 70 percent of them, in fact -- are created by small businesses according to the Small Business Administration and the Burea of Labor Statistics (1).

Next my adversary asserts that, placing more money into the hands of the affluent will allow them to "force the economy into massive growth" -- that is, grow the economy.

We can take this as an appeal to Say's Law, which operates like this:

P1: Savings equals investment (Say's Identity).
P2: If we promote savings, we promote investment.
P3: If we promote investment, we create jobs and the economy grows.
P4: Tax cuts promote savings.
C: Therefore, tax cuts grow the economy and create jobs.

Of course, P4 is very true as the tax multiplier is much lower than the spending multiplier (2) -- that is, the boost in MPC from an increase in government spending is greater than the boost in MPC from a tax cut.

P3 is also plausible, as we would think that investment provides businesses with the capital they need to expand, and investment in physical stock boosts G.D.P. (G + C + I + NX) and spawns a multiplier effect.

However, P1 and P2 are untrue, and thus this logic falls. Because it appears that my opponent has not disputed that MPC is higher for low-income consumers than for affluent people -- that is, there is a diminishing returns of money, whereby affluent people tend to save more and poor people will consume with about 100 percent of their income. Noting this is crucial, as the crux of Pro's case is for investment, not consumption.

To refute P1 and P2, I simply must refute "rational expectations theory": This is the notion that consumers are omniscient and rational and make their decisions with perfect information, meaning that an increase in savings equates to an increase in investment.

First and foremost, most small businesses cite uncertainty as one of their chief concerns about the economy (3). We know that people don't act with perfect information and that human beings are susceptible to error, and we need only look to the financial calamity on Wall Street in 2008, or the financial panics in the 1800s, for evidence of this.

Second, my opponent's assumption is that businesses and affluent individuals always want to expand. This is a flat-out distortion on his part. A study from the University of Chicago, for instance, shows that only 1 in 4 small business owners have an interest in expanding (4). The rest simply aim to maintain a steady amount of employees.

Third, we know that savings doesn't equate to investment because it hasn't. In the wake of the crisis of 2008, for instance, executives from big businesses are holding into a whopping $2 trillion in idle capital which they are holding as cash (5) and not investing. A large reason for this is

Therefore, savings does not equal investment and my opponent's first argument falls.

Pro then states "Additionally, by not funding welfare as sufficiently..proportionally more healthy than before."

Ignoring the moral implications of his claim, this argument is simply fallacious and poorly reasoned -- in fact, not at all reasoned. Let's place this argument into a syllogism:

P1: If we cut taxes, we are not funding welfare as sufficiently.
P2: If we do not fund welfare as sufficiently, poor people will die off.
P3: If poor peope die off, the majority of people within the country are not proportionally healthier than they were before.
C: We should cut taxes to increase health.

First, when he speaks of health, I presume he means economic health, as physical health is the same appeal to morality that he has stated, correctly might I add, that I cannot invoke.

But let's examine his conclusion before tearing down his premises. I do not believe he knows what "proportionally" means. Proportionally means "forming a relationship with other parts or quantities; being in proportion" (7). Let's begin with the intuitively plausible assumption that he has, which is that poor people tend to be less healthy than people healthier than them, and so forth -- and the logic extends, by that standard, that middle-income people are not as healthy as affluent people. So, relatively speaking, middle-income people are not the worst off because, relative to poor people, they are proportionally healthy. But if poor people die off, the only frame of reference is affluent people, who are healthier than them. In this case, they are WORSE off in relative terms, ceteris paribus, unless the wealth "trickled down to them" -- and it's up to Pro to prove that it can.

There's of course, the fact that poor people didn't have much to begin with, so there isn't much "wealth" to go around, so we are to believe that it is prima facie than real wealth will remain as it is if they were to die off.

We also need to consider that wealth, if anything, will DECLINE with fewer poor people. Why? Well, let's go back to the fact that poor people have a higher MPC than rich people. With fewer people, we have less consumption, and consumption is 70 percent of G.D.P. (8). So velocity is already low, as I have demonstrated, and will fall even more with fewer people to consume, unless we assume that their incomes will simply be put to efficient use, into the hands of people who will spend it, which my opponent cannot verify because the claim not only possesses no truth value, but is highly unlikely, anyway.

Let's also attack the claim head-on by noting that no one has said anything about funnelling welfare as sufficiently. This was a figment of my opponent's imagination. Many proponents of tax cuts would argue that it raises revenue, or that we could run a larger budget deficit to pay for it, or we could prioritize government resources. But this is merely an assumption. So even if his prior logic were accurate -- it isn't, obviously -- this case would fall.

His next statement is merely an appeal to rational expectations theory whereby hard workers are paid more and lazy workers are paid less. This doesn't contribute to the resolution at all, but let's pretend that it does. First, median wages have flat-lined since above 1980 while productivity has nearly doubled (9). Wages have NOT kept pace with productivity. In fact, 95 percent of the income gains since 2009 have gone to the top 1 percent of income earners (10). I could bring in the statistics as to the disparity between CEO pay and average worker pay -- moved up from 42 times in 1980 to about 380 times now (11).

Next, he claims that "lazier workers" won't be in poverty because of the minimum wage. This is another bold-faced lie. The current federal minimum wage is about $7.25, which translates to an income of about $15,000 (12), which is well below the federal poverty line (13). So my opponent's claims are unfounded.

Now I will briefly offer my own contentions and expand on them in later rounds when I have more room.

Contention 1: Reducing tax rates will not grow the economy exacerbate income inequality.

Both the Economy Policy Institute (14) and the Congressional Research Service (15) have conducted research on this, and not only have they both concluded that tax cuts do not lead to increases in saving, investment, or productivity, but that they exacerbate income inequality which itself hinders recovery and growth, as Joe Stiglitz eloquently argued (16).

Contention 2: Tax Rates Could be Much Higher

Andrew Fieldhouse examined some research in this area (17) -- including a paper from Peter Diamond and Emmanuel Saez (18), which states that the optimal top marginal tax rate is around 73 percent -- and conclude that the "peak of the Laffer Curve" is about 68.7 percent effective, at a top marginal rate of around 54 to 80 percent depending on whom you read. We are nowhere close to that.

Contnetion 3: Higher Tax Rates Historically
Tax rates have been on a downward trend in history. From 1945 to 1980, tax rates ranged from 70 percent to 94 percent, and yet the economy boomed, income inequality was less severe, and the federal government had more revenue to invest (19).

Sources
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3. http://tinyurl.com...
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5. http://tinyurl.com...
6. http://tinyurl.com...
7. http://tinyurl.com...
8. http://tinyurl.com...
9. http://tinyurl.com...
10. http://tinyurl.com...
11. http://tinyurl.com...
12. http://tinyurl.com...
13. http://tinyurl.com...
14. http://tinyurl.com...
15. http://tinyurl.com...
16. http://tinyurl.com...
17. See 11
18. http://tinyurl.com...
19. http://tinyurl.com...

baus

Pro

Before I proceed with this round's debate, I just want to state my outright disappointment with Con's reliance upon straw-man arguments that hey are attacking which actually have nothing to do with the points I was raising and, in the case of Say's Law, are entirely conjured arguments of their own that they have decided to attack.

I have supplied a YouTube video explaining how the straw-man fallacy works and hope that this will shed some light on Con's faulty style of taking my case down.

Alright then, enough complaining! I shall be quoting Con's case, piece by piece and systematically addressing them while reinforcing the resolution throughout.

This will go as (r)ebuttal by Con and (c)ounter (r)ebuttal by Pro.

#1

R: First, the notion that the affluent have a biological knack for business is ridiculous. Many people, like Donald Trump for instance, inherited a large amount of money and are successful because of it, even though he has failed on multiple occasions, including taking his casinos bankrupt.

CR: Although it's true to say that there is not a 100% correlation between affluence and business acumen, I shall refer to the Darwinist theory of natural selection to establish why it's very probable that alleviating taxes on the affluent would only boost the economy, as opposed to destroy it or leave it stagnant.

Darwinism is based on the theory that evolutionary change comes about through the abundant production of genetic variation in every generation. The relatively few individuals who survive, owing to a particularly well-adapted combination of inheritable characters, give rise to the next generation.[http://www.talkorigins.org...] If this is true, then it indicates that amongst the affluent, where wealth is a significant characteristic in establishing who is a male, or female, those most capable of either become rich or staying rich will be the most selected for mating, so to speak.

Nevertheless, it's also true that the spouse of many affluent individuals is often not as good as business as them and perhaps the child inherits the genes that are less affluent-prone than the other parent's set of genes in this area. However, due to natural selection working on a grand scale in business, the least capable to maintain their wealth will inevitably be out-done by their more profit-driven competitors who are more capable at the world of business than they are. if someone is only rich due to inheritance, they'd inevitably fall out of the 1% of wealth category due to their competition driving them down the drain. Therefore, they'd no longer receive the tax cut and be pushed even further down the scale of affluence once they are required to pay tax due to being in the bottom 99% of the nation's wealth.

On a final note, if someone has inherited wealth, it indicates that their ancestors had the business acumen to gain it. The theory of inherited characteristics indicates that this line of DNA will inevitably raise business-prone children.[http://www.abpischools.org.uk...] This is not only due to the DNA, it's also due to the style of upbringing of the parents meaning they will grow to both bond emotionally for marriage and raise their children in a similar way to what they were familiar with. [http://psychology.about.com...].

#2

R: Second, to say that luck isn't a factor is ludicrous. You cannot look at success as an end and simply state that skill and having a "knack" was the means.

CR: The fact that they are in the top 1%, whether by luck or talent, means that they are the most powerful economically and thus giving them more financial power only increases the influence they can have over the economy which they are likely to want to further increase in order to remain untaxed.

#3

R: Third, the majority of jobs in the U.S. -- 70 percent of them, in fact -- are created by small businesses according to the Small Business Administration and the Bureau of Labor Statistics.

CR: That's because the affluent are being taxed significantly more than those owning small businesses. If they were taxed less, or even equal proportions of their income, then this wouldn't be the case.

#4

R: We can take this as an appeal to Say's Law, which operates like this:
P1: Savings equals investment (Say's Identity).
P2: If we promote savings, we promote investment.
P3: If we promote investment, we create jobs and the economy grows.
P4: Tax cuts promote savings.
C: Therefore, tax cuts grow the economy and create jobs.

CR: This debate isn't about cutting taxes in general, it's about only cutting the taxes of the affluent (who are currently being taxed significantly more, by proportion of their income, in most countries, than the rest of the people in them).

I also never once brought up Say's law and am not sure why Con felt the need to attack this law.

#5

R: Most small businesses cite uncertainty as one of their chief concerns about the economy. We know that people don't act with perfect information and that human beings are susceptible to error, and we need only look to the financial calamity on Wall Street in 2008, or the financial panics in the 1800s, for evidence of this.

CR: This does not provide a single argument against my case for lowering taxes on the affluent and is attacking a straw-man case where I have insinuated that consumers are omniscient. I did not even mention Say's law and do not uphold it.

#6

R: my opponent's assumption is that businesses and affluent individuals always want to expand. This is a flat-out distortion on his part. A study from the University of Chicago, for instance, shows that only 1 in 4 small business owners have an interest in expanding. The rest simply aim to maintain a steady amount of employees.

CR: If the tax cut on the rich was made under the specific condition that they seek to expand their businesses, then it could very well give them an incentive to do so. Additionally, I am not referring to small businesses at all here, I'm referring to those owned by the top 1% of a nation; in other words huge businesses.

#7

R: We know that savings doesn't equate to investment because it hasn't. In the wake of the crisis of 2008, for instance, executives from big businesses are holding into a whopping $2 trillion in idle capital which they are holding as cash and not investing.

CR: This is again attacking the straw-man of Say's law which I never brought up or upheld in the remotest fashion.

#8

R: P1: If we cut taxes, we are not funding welfare as sufficiently.
P2: If we do not fund welfare as sufficiently, poor people will die off.
P3: If poor people die off, the majority of people within the country are not proportionally healthier than they were before.
C: We should cut taxes to increase health.

CR: This is another straw-man of my argument.

Let me reword this listing to what I actually stated:

P1: If we cut taxes, we are not funding welfare as sufficiently.
P2: If we do not fund welfare as sufficiently, those relying on it will either die off or leave the country as soon as they can.
P3: If the disabled and those incapable of steady employment die off, the majority of the country will now be healthier and less likely to be disabled than the prior majority.
C: Lowering taxes forces those of undesirable reliance on the state to be deterred from remaining alive within the country.

This is the actual syllogism I was proposing. Con was attacking a completely different argument to what I had stated.

#9

R; His next statement is merely an appeal to rational expectations theory whereby hard workers are paid more and lazy workers are paid less.

CR: What I said was that if the affluent are given more money, then their 'lowest wage' is likely to be higher than their previous 'lowest wage' and thus they cay harder workers with a larger gap whilst not paying the lazier workers, who will be in a lower pay-grade, insufficient wages to survive, which is most likely occurring due to the large amount of taxation being placed on them leaving them less disposable income to spend on their workers.
Debate Round No. 2
LiberalCrusader

Con

LiberalCrusader forfeited this round.
baus

Pro

baus forfeited this round.
Debate Round No. 3
LiberalCrusader

Con

LiberalCrusader forfeited this round.
baus

Pro

baus forfeited this round.
Debate Round No. 4
LiberalCrusader

Con

LiberalCrusader forfeited this round.
baus

Pro

baus forfeited this round.
Debate Round No. 5
1 comment has been posted on this debate.
Posted by thett3 2 years ago
thett3
Isn't this kind of a biased resolution? Who would want to defend lowering taxes for just the affluent? A better resolution is reduced taxes for everyone or you arguing for increased taxes. I'd probably take it if it was the latter.
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