The Instigator
cobiader
Con (against)
Losing
0 Points
The Contender
waylon.fairbanks
Pro (for)
Winning
14 Points

Taxing the rich will benefit our economy

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Voting Style: Open Point System: 7 Point
Started: 9/9/2011 Category: Politics
Updated: 5 years ago Status: Voting Period
Viewed: 2,394 times Debate No: 18241
Debate Rounds (5)
Comments (13)
Votes (5)

 

cobiader

Con

First round - accept
Second round - opening arguments (take two positions)
Third round - first position argument
Fourth round - second position argument
Fifth round - rebuttal
waylon.fairbanks

Pro

Accept. I see nothing wrong with the format. Good luck
Debate Round No. 1
cobiader

Con

Finally! Thank you for accepting!

In this debate I will show how increasing the wealthy's tax rates will hurt the U.S economy.

First argument: Taxing the super rich ($250,000+) reduces job creation and company expansion.
It is the wealthy, who primarily create jobs and provide capital for business expansion. There are exceptions of course, but generally speaking, the wealthy account for the majority. Obama classifies the "super rich" as having a $250,000+ salary. These are the people who are trying to expand their business. By increasing their tax rates, we reduce the necessary cash flow needed for expansion.

Second argument: There is no way we can tax those in excess of "super rich" without discouraging all other Americans from investing.
There are two types of income, earned and unearned. The warren buffets of the country (who far exceed Obama's "super rich" classification) do not have much earned income. They have unearned income, which is systematically withdrawn to receive special taxation, called capital gains. The only way to tax those who far exceed "super rich" is to increase capital gains rates, which discourages the rest of America from investing.
waylon.fairbanks

Pro

Introduction
It's my pleasure to debate this subject with you.

I will be arguing that although cutting taxes itself on the Wealthiest Americans would worsen the economy, the usage of those funds by the government would have a more positive effect on the economy than letting the rich keep their taxes. Here are some assumptions before going forward.

Assumptions
-The "super rich" are the people making over $250,000 a year, who are currently (under the Bush tax cuts ) taxed at 35%, which Obama has proposed to raise to 39% [1] [2].
- Economic stagnation is partially caused by business uncertainty over federal deficit [3].

First Argument
The primary problem with the current economic situation is the high unemployment figures and lack of investment. Tax cuts for the rich do not encourage them to invest in their businesses. When a business person decides whether to hire a new employee, it is a simple calculation as to whether that new employee will produce more wealth through productivity than the employee costs in wages. So if the economy is bad, a business person is not going to invest in a new employee with their higher tax return, they are going to save it- which does nothing for hiring unemployed workers and therefore nothing for the economy.

Economic growth and hiring is facilitated by demand. Say a business man runs a restaurant. With a bad economy and nobody in the community wealthy enough to eat out, he is not going to hire a new employee regardless of his tax rates because it will be a net loss for him. He'll take his 3% tax cut and keep it in the bank, where it does not see the economy. But, if economic conditions improve and more individuals have disposable income, more people will eat out at the restaurant, increasing the businessman's revenues, and thus hiring a new employee would be a net gain for his company. Therefore, the rich do not create jobs through increased supply, but the middle-class consumer enables the business man to hire through demand.

Moreover, the lower and middle classes in America spend over 100% (accumulating debt) of their yearly income, whereas more wealthy Americans tend to save more, and thus spend less income into the economy [4]. So, if the US government raised taxes on the wealthiest Americans by 3 or 4%, and exclusively spent that revenue on public works, infrastructure, middle class tax cuts and public employees, the recipients of that revenue would be more likely to spend that money back into the economy (since lower and middle classes spend more than upper classes), thus creating demand, and thus inventivizing the wealthy in America to invest in new employees, which benefits the rich, poor, and everyone in between.

I'll expand on this next round

Second Argument

This one is pretty simple. Polls and studies overwhelmingly show that the US debt and deficit are preventing businessmen and the wealthy from investing (see assumption 2 and source 3). The present tax cuts on the rich have, since their signings in 2001 and 2003, prevented 3.9 trillion dollars to be collected by the treasury, which added considerably to the deficit and debt, and every year the tax cuts are in place adds 200-300 million to the deficit [5]. The GOP talking point that the growth caused by the tax cuts actually increases revenues has never occurred once in US history. And with the Bush tax cuts being the single greatest contributor to the deficit since 2001, it is reasonable to assume that the lowering of tax rates on the rich have weakened the economy over despair over the deficit, and by raising taxes and thus decreasing the deficit, the economy of the US would actually see growth through certainty.

I'll expand more, and good luck!









[1] http://www.taxfoundation.org...
[2] http://money.cnn.com...
[3] http://www.oregonlive.com...
[4] http://tutor2u.net...
[5] http://www.csmonitor.com...
Debate Round No. 2
cobiader

Con

Kudos to my opponent for providing a well thought out debate! Just to clarify to the voters, my opponents "Introduction" which states what he is arguing is suitable and will be the topic of judgment.

First Argument: Taxing the rich ($250,000+) reduces job creation and company expansion.
The problem with the U.S economy is that our government has their hand in the free market which is causing a kink in the natural course of capitalism. Our high unemployment rates and lack of investments are caused by uncertainty. When you have an inconsistent government trying to pass laws that directly affect the profitability of the private sector, investors become fearful and sell their stock. This eventually causes a bear market, and the combination of a bear market and an unstable government further depreciates the market and ultimately causes a recession. Companies rely on investors for productivity and profitability. When investors remove themselves from the market, it causes the companies debt/income ratio to increase. In order stay profitable, they remove expenses, most commonly in the form of employment.

My point in the paragraph above, is that capitalism is a top to bottom method for economic and social well being. Capitalism only involves the private sector, so they are not included nor should they be included in our economy's success or failure. Therefore, it starts at the top after supply is created to fulfill demand. Those are the people who create jobs and have the power to stimulate our economy.

Increasing the tax rates for those who receive $250,000+ will do absolutely nothing to enhance our economic situation. It is proposed that by increasing their tax rates, it will provide the government with 1.1 trillion in additional income. With the additional money, as my opponent stated, Obama is planning on building and fixing infrastructure, as well as provide money for public employees and allowing for middle class tax cuts.

The problem with this, is that the demand created by the increased taxes have no long term affects in economic stimulation. Building infrastructure creates a temporary demand. It will provide temporary work to an outsourced, private sector company solely for the purpose of providing temporary jobs. However, because we have limited funds and limited infrastructure, it will inevitably end. People don't invest in something with limited value, so nothing but government spending and temporary work will become of it. With regards to public employees, the demand has always been there. They would simply alleviate some of the hiring freezes that were put in to place after layoffs. Regardless, public sector jobs don't provide for investment opportunities, so the market will continue on its current track.

As my opponent stated, the low and middle class spend more than the upper class. This is true, however, the middle class only account for 10.6% of U.S taxes. The government can't afford to lower them to the degree where the increased saving and spending would even scratch the surface of improving our economy.

As everything stated above suggests, taxing the rich provides our government with money, but does absolutely nothing to stimulate our economy. At best, it provides temporary work for infrastructure and places public workers back in to jobs they shouldn't have lost in the first place.

Now let's talk about the individual. Small business owners make up about half of U.S employees. There are a little under 6 million small businesses who employ roughly 160 million people. The average U.S salary is about $27,000. Roughly 1 million of those small businesses make $500,000 to $1 million. For simplicities sake, we'll use $500,000 as an average small business owners income. 39% of 500,000 is nearly 200,000. Let's say we reduce the tax rate to 30%. Now we're at $150,000. By reducing the tax rate we are saving a small business owner $50,000, which is potentially two salaries and two less unemployed. If we did that for every small business owner we would have 12 million new jobs created.

Let's say the business was at full staff and couldn't hire anyone else. The average person who makes that kind of money already has an established emergency fund. An emergency fund is typically 3 to 6 months of savings for emergency events that arise. All additional money either gets spent or is invested. $50,000 x 6 million business owners is 300 billion dollars that is put back in to our economy. Even if they save, a savings account is technically an extremely liquid loan to the bank, who takes the money you just deposted, and invests it. So regardless of whether the additional money is in a savings account, or a brokerage account, it is still circulating the market.


Bottom line, taxing the rich will not stimulate our economy. It will provide $1.1 trillion to be spent on temporary jobs and jobs that should have never been lost in the first place. It will not be put back in to the market nor will it provide an environment to entice people to invest in the market. Keeping taxes the same or even reducing them, however, will allow capitalism to run its natural course. It will provide for billions of dollars to be put back in to the market that everyone of us depend on. New investors allow companies to expand in every aspect of their business. Stimulated businesses create jobs. Jobs reduce unemployment and allow for investing. Investing drives interest rates up, and our government reaps the benefits from all angles. More taxes are paid because there are more employees. They make more money off of corporate taxes because of expansion. And, it allows the federal reserve to charge higher interests because more money is flowing through the market.

Sources:
http://www.csmonitor.com...
http://www.census.gov...
http://www.sba.gov...

waylon.fairbanks

Pro

waylon.fairbanks forfeited this round.
Debate Round No. 3
cobiader

Con

cobiader forfeited this round.
waylon.fairbanks

Pro

Since Both my opponent and I have forfeited, it seems best that I will further argue my first argument in this round, while attempted to refute my opponents as well. Since both my argument and my opponents are somewhat similar (though arguing opposite ends), and we will have no last round purely for rebuttals, I will try to refute his argument here, since I laid out my argument in depth in the second round.

My opponent starts by making this statement: "The problem with the U.S economy is that our government has their hand in the free market which is causing a kink in the natural course of capitalism." Since the policies of Alexander Hamilton in George Washington's government (the first Administration in US history), the Federal Government has played a role in the economy. Hamilton's policies were markedly protectionist. [1] This myth that the "free market" is self regulating and that there is a "natural course" of capitalism is superstition. Every presidential administration in history has levied taxes and regulated the economy, so to attribute economic recession to this is inaccurate.

Moreover, my opponent asserts that "Capitalism only involves the private sector". This is also false. For example, the issuing of government bonds is capitalism. The government guarantees a return rate for investment- which is the most simple and fundamental role of capitalism. Moreover, capitalism relies on the existence of incorporated businesses (called corporations) to create shareholders and distribute risk, but a corporate charter has always been awarded by the US government.

My opponents biggest mistake in attacking my argument is stating that infrastructure spending causes "temporary" jobs. True, if the government pays a construction worker to build a bridge, when the bridge is finished his job is finished, but then all service sector jobs are temporary. But the true misunderstanding of my opponent is that while the construction worker may only have a temporary employment, his income that is spend into the economy causes permanent growth, which on a large enough scale raises demand, and thus incentivizes the private sector to hire for "permanent" positions. If my opponent understood my position as merely arguing that public works would lower the unemployment rate directly, I must have been unclear. My argument, the Keynesian argument, the argument of established economic policy accepted by economists, is that the income by temporarily hired people will be spent back into the economy, which creates growth.

My opponents scenario is dead wrong. I have worked for several small businesses, and have discussed his scenario with my bosses many times. Consider my opponents scenario: the economy is stagnant (as it is now), and small business owners have given a 50,000 tax cut. Since business is not very good, due to the economy, hiring a new employee for 25,000 a year would cost more to the employer than he would gain in productivity. This is a very simple truth. In a time when there is no demand in the economy, hiring is always a direct loss. Capitalism is all about creating the largest profit possible, and even if small businesses' tax rate was reduced to 0%, hiring would not increase. An employer simply subtracts wages from productivity and if the difference is negative, he will put the tax cut in the bank, where it allows for greatest profit. Therefore, my opponent is incorrect in his assertion that supply creates demand, and capitalism is a top down structure.

The great disposable income the consumer has, the more money is spent into the service economy. And while the Christian Scientist Monitor article you cited states that the rich pay the highest taxes, you forget to mention that in the past 5 years the percentage of total income earned by the top 1% in the US is at record highs [2]. In 2007 the top 1% earned 23.5% of all income in the US, and this number is rising. So, if the richest Americans have received greater proportional wealth since the beginning of the recession in 2008, why has there been increasing unemployment. Whether you like Obama or hate him, there is one thing we can all agree on: he is ineffective in passing his agenda. The tax structure is identical to that under Bush. Corporate profits in 2011 were the highest in 60 years [3], yet hiring is at a standstill. This is easily explained. Since demand is still so low in the economy, the wealthiest Americans and corporations still have reason to invest in new employees.

Reluctant corporations holding assets to keep profits high instead of hiring people is capitalism running its "natural" course. Instead of allowing the wealthy to sit on assets and wait for the economy to recover, we the people through our government ought to instead reinvest these funds into the middle class, creating a boom in income, and a boom in spending. Since most middle class people spend all of their income, increasing their income would increase activity in the markets, which would in turn increase growth in the private sector, and make hiring a new employee a net gain in the productivity the employee creates.

Thank you




[1]http://en.wikipedia.org...
[2] http://www.economist.com...
[3] http://www.nytimes.com...
Debate Round No. 4
cobiader

Con

cobiader forfeited this round.
waylon.fairbanks

Pro

Obviously, due to my forfeit and my opponent's two forfeits, the nature of this debate was altered from the format that Con laid out in round 1. We never fully addressed the second position argument, and never had a round solely confined to rebuttal. With that said, we both got to argue our first positions fully, and we both cross-examined each others positions, and therefore the debate is complete enough for voting.

I believe my last round sufficiently made the case for why demand is essential to economic stimulation and that by using tax revenue to stimulate demand, the economy would improve faster than with rich people hiding their fortunes from the markets. Therefore I have no further points to contend, and I thank my opponent for a debate which, at times, was quite interesting.

And to the voter, I ask this: although we all have our opinions about Keynesian economics versus Supply-side economics, please refrain from voting for a position because you already agree with it. This seems to happen too often. Just vote on the arguments' merit. I know this is assumed, but it happens surprisingly little.
Debate Round No. 5
13 comments have been posted on this debate. Showing 1 through 10 records.
Posted by cobiader 5 years ago
cobiader
I'll forfeited as well so there isn't an advantage to your forfeit.
Posted by waylon.fairbanks 5 years ago
waylon.fairbanks
Hey, sorry about the forfeit. I will just post both arguments in round four
Posted by cobiader 5 years ago
cobiader
...The U.S government, that is.
Posted by cobiader 5 years ago
cobiader
According to our government, it is defined as 250,000+
Posted by Lordknukle 5 years ago
Lordknukle
Define rich. For some people, rich is 20 000+ a year. For others it is 10 million+ a year.
Posted by waylon.fairbanks 5 years ago
waylon.fairbanks
Yeah, I bet your glad I am not one of those ebunga bastards that are ruining this site!
Posted by cobiader 5 years ago
cobiader
No, a 100 yr old can't debate. I did that because of that one guy who keeps messing with peoples debates. On all of his profiles he is 100. If anyone wants to debate this topic in a different format that is fine with me, as well. I was just trying to keep it more structured. Naturally, you can use your opponents point of views to support your argument in r3 and r4, but the criticism of the entire view point is saved until the last round. Like I said, I'm not picky (although I guess it appears I am), we can structure it however anyone likes. As for Waylon.Fairbanks, that sounds like a supporting argument to me.
Posted by cobiader 5 years ago
cobiader
r2 an introduction with your two main bullets, yes.
r3 first bullet and support
r4 second bullet and support
r5 rebuttal

I keep reading a bunch of debates that are just difficult to understand because they bounce back and forth so much. So I'm just trying to keep it a little more structured.
Posted by BangBang-Coconut 5 years ago
BangBang-Coconut
: What do you mean by two positions?

Yeah, what does that mean?
Posted by Marauder 5 years ago
Marauder
I think I understand what you mean by positions, like if I could break down my case into bullets I have to make only 2 right?
But I don't get the flow you want these 2 positions argued in, R2 you want cases for both positions right, and R3 only cases for just one. and its not until R5 that you have rebut all. so I get to spend no time on your case at all until the last round? theirs no room for counter rebuttal that way.
5 votes have been placed for this debate. Showing 1 through 5 records.
Vote Placed by 16kadams 5 years ago
16kadams
cobiaderwaylon.fairbanksTied
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Total points awarded:01 
Reasons for voting decision: F
Vote Placed by curious18 5 years ago
curious18
cobiaderwaylon.fairbanksTied
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Total points awarded:07 
Reasons for voting decision: Forfeits!
Vote Placed by PartamRuhem 5 years ago
PartamRuhem
cobiaderwaylon.fairbanksTied
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Total points awarded:02 
Reasons for voting decision: Too many forfeits...
Vote Placed by Ore_Ele 5 years ago
Ore_Ele
cobiaderwaylon.fairbanksTied
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Total points awarded:03 
Reasons for voting decision: Not giving anyone conduct, since they both forfeited. The fact that Con forfeited twice, rather than once doesn't really matter. Pro wins the arguments because they largely went unrefuted, and those that were refuted, he addressed. He provided reasoning why tax cuts, themselves, do not create jobs.
Vote Placed by F-16_Fighting_Falcon 5 years ago
F-16_Fighting_Falcon
cobiaderwaylon.fairbanksTied
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Total points awarded:01 
Reasons for voting decision: Double forfeit = definite loss