The Instigator
dairygirl4u2c
Pro (for)
Losing
4 Points
The Contender
1Historygenius
Con (against)
Winning
8 Points

increasing taxes, as a practical matter, is necessary for the financial well being of the USA*

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Post Voting Period
The voting period for this debate has ended.
after 4 votes the winner is...
1Historygenius
Voting Style: Open Point System: 7 Point
Started: 6/29/2013 Category: Politics
Updated: 4 years ago Status: Post Voting Period
Viewed: 906 times Debate No: 35165
Debate Rounds (3)
Comments (2)
Votes (4)

 

dairygirl4u2c

Pro

increasing taxes, as a practical matter, is necessary for the financial well being of the USA,,, aside from utilizing government health care to save money.

where are the cuts going to come from to balance the budget, if there are no tax increases?

background, we have a seventeen trillion dollar debt, and a deficit that fluctuates up to a trillion a year. everyone worth their salt as an expert says we need to do something about the deficit.

about ten percent of the budget is spent on the poor, so even if you cut that in half, it wouldn't make much of a difference.

even if you privatized social security, we'd still have current expenditures to maintain our promise to current retirees, which almost everyone agrees should be done. and most people dont want it privatized anywaays.

perhaps gutting medicare and medicaid would us from having to increase taxes, but is that really what we want, and really necessary? health care is a basic necesssity, a basic right, if you aren't just lazy, no?
plus we should be going in the direction of government health care, or tightly regulated private insurance. all other countries spend around ten percent GDP on healthcare, whereas we spend around 17 percent. that's a savings of a trillion dollars in itself. in fact, if we dont want to increase taxes, or gut government health care, the only other way to save the country's finances is via government health care.

where else would we cut anything of signfiicance? sure there's plenty of waste and fraud and abuse out there, but as far as i can see, the only structurally significant reform is government health care or increasing taxes.

to put it in perspective, roughly, we got 500 billion on defense, 500 billion on interest and debt payments, 500 billion in social security, 500 billion on general government expenses, and 500 billion going on a trillion in health care.

most "poor' people and general government expenditures, which are often a rallying cry of conservatives, is not much in way of significance.

historically, we had much higher tax rates, and other counties do too, and they all show how a country can do just fine that way.
http://newsjunkiepost.com...
i grant that im not sure how superfluous government pensions and perks are factored into the whole budget, there's surely places of mention in these areas.

as per "growing" ourselves out of the problem, historically the government's revenue is only 18% of GDP, which is back to its historical average. i dont see how one could expect to do much better.

so aside from government health care, i dont see how else we can balance the budget other than by increasing taxes.
1Historygenius

Con

My Case

The Laffer Curve

To understand raising taxes to increase government revenue would be a good idea, we must look at the Laffer curve. The Laffer curve, which Dr. Arthur Laffer leant his name to the curve after discussing it with some aides from the Ford administration, shows the relationship between tax rates and tax revenues. I will link a picture to show what it looks like.

Basically, there is a prohibitive range and you don't want to raise taxes very high or else you will actually lose revenue. This is because people will start moving their money to tax shelters and some might reduce their production and work less if they are not making enough money. In the end, higher rates decrease revenue. Instead, lower tax rates increase revenue because people will start pulling money out of their shelters. Lower rates also means more economic growth. [1,2]

Dr. Laffer also says:

"Moving from total tax revenues to budgets, there is one expenditure effect in addition to the two effects that tax-rate changes have on revenues. Because tax cuts create an incentive to increase output, employment, and production, they also help balance the budget by reducing means-tested government expenditures. A faster-growing economy means lower unemployment and higher incomes, resulting in reduced unemployment benefits and other social welfare programs." [1]

History

To understand if this really works, we must look at history and see if it has work and there are four major examples of income taxes getting cut and driving up a surplus while also creating massive economy growth.

I. Harding-Coolidge Tax Cuts

When President Woodrow Wilson left the White House, the country was in a recession and we were in massive debt. The new president, Warren G. Harding, responded by cutting taxes from Wilson's 77% rate to 50%. When Harding died, Coolidge cut the rate down to 25%. What followed was massive economic growth and a huge budget surplus.

Federal real revenue growth increased from -9.2% to 0.1%. Did more and people may more taxes? The answer is yes because the unemployment rate reduced dramatically allow more people to pay taxes. In fact, the rich payed more in taxes than the poor with their lower rates. In 1920, the share of revenue for those with over an income of $100,000 was 29.9%, but it was 62.2% by 1929. The national debt went from $28 billion to $17.65 billion. [1,3]

II. Kennedy Tax Cuts

John F. Kennedy was also a supporter of cutting taxes. From Coolidge's lower 25% rate, taxes rose to a staggering 90%. However, people started moving their money to tax shelters and through loopholes, so the government never received the revenue it needed. Kennedy wanted to lower the tax rates to increase economic growth and government revenue.

Real income tax revenue growth increase from 2.1% to 8.6%. This growth increase government revenue dramatically. At the same time, less unemployed workers meant that more people could pay more money. Revenue exceeded expectations and skyrocketed. [1]

III. Reagan Tax Cuts

When he was younger, Reagan was inspired by John F. Kennedy's and Calvin Coolidge's tax cuts to cut taxes of his own. The tax rates went back down to 50% and then to 28% in two tax cuts during the Reagan presidency. Just like before, revenue increased from -2.8% to 2.7% and there was more economic growth. The unemployment rate reduced allowing more people to pay taxes. There was massive income mobility.

The middle class moved into higher brackets meaning they payed more taxes. The rich also payed more taxes. The number people with an income over $1 million went from 5,000 to 25,000 and the number of billionaires rose to over 50 by the end of the 1980s. [1,4]

IV. Clinton Capital Gains Tax Cut

Bill Clinton should also be noticed for his capital gains tax cut. This is important because it is just before his surplus. Clinton decided to cut the capital gains tax and revenue boomed to $131 billion in capital gains revenue. Before that, it averaged $39 billion meaning that it increased dramatically and was a contributing factor to the surplus. This is because less taxes means that more people are willing to make capital gains. More people means more revenue. [5]

Sources


1. Laffer, Arthur. "The Laffer Curve: Past, Present, and Future." Heritage.org. The Heritage Foundation, 1 June 2004. Web.
2. http://www.debate.org...
3.
Shlaes, Amity. Coolidge. New York: Harper, 2013. Print.
4. D'Souza, Dinesh. Ronald Reagan: How an Ordinary Man Became an Extraordinary Leader. New York: Free, 1997. Print.
5. Cain, Herman, and Rich Lowrie. 9-9-9: An Army of Davids. Herndon, VA: Velocity ; Mascot, 2012. Print.
Debate Round No. 1
dairygirl4u2c

Pro

i generally agree that there must be a curve associate with taxes and revenue. but i contest many points.

first, you've presented nothing to indicate that we are at the sweet spot on the curve, assuming that's what we are shooting for. we could very well be the left side of the curve, and could increase revenue by increasing taxes.

second, historically, government revenue is around 18%. this is regardless of how high or low taxes are, for the most part, if you look at that tax rate graph i cited and compare it to what's occurred since the 40's.
http://www.usgovernmentrevenue.com...

on a side note, that graph shows that the New Deal and War spending probably boosted us to that 18% rate previously we had been lower.

so, if we are going to get the same revenue with higher taxes, we might as well increase taxes. this would all mean we are probably on the left side of the curve.

most of your points like this president or that president cut taxes and there was a boom afterwards, appears to be just empty words. you didnt cite anything usually, and the bottomline again is the tax rate v revenue comparison.

third, many economists think the curve should be slanted to the right. there's nothing magical about a regular parabola other than that's often how things work.

http://upload.wikimedia.org...
*A possible non-symmetric Laffer Curve with a maximum revenue point at around a 70% tax rate, based on "How Far Are We From The Slippery Slope? The Laffer Curve Revisited" by Mathias Trabandt and Harald Uhlig.

historically, our tax rates have been about twice what they are now. and we've still gotten that 18% figure. that means we can actually increase taxes, and perhaps that 70 figure isn't so far off, given historically our tax rates are close to that. it's not always a sin to increase taxes, which seems to be just a presupposition of most conservatives these days. even reagan increased taxes many times. it's a basic idea, you tax what you spend for. in many ways it's a conservative principle.

borrow and spend, not so much.
or, as a last point, you haven't shown any other alterantives, what are we going to cut? if you are going to argue cuts to most of this stuff, it has to be a matter of necessity, and as of now you are just arguing rhetoric, empty words. empty words dont mean much when grandma is living in stark poverty or dying of relatively easily addressable issues.

*on a last point about capital gains, and i address this as it's a specific argument besides taxes and revenue generally. yes there was a lot of capital gains after the cuts. but that only means people were taking their gains due to the opportunity. that means it was temporary. eventually revenue from gains went back to the normative rate increase. as proven by this graph.
http://www.econlib.org...
1Historygenius

Con

My Case

The Laffer Curve

My opponent's first refutation is about government revenue. He says here:

"so, if we are going to get the same revenue with higher taxes, we might as well increase taxes. this would all mean we are probably on the left side of the curve."

Here's the problem with that. You don't want to raise the taxes too high because then people will move some of their income and assets to tax shelters. This means that the economy will slow down and that's the negative effect of high taxes.

My opponent also said that I did not bring in the best rate to tax and later he shows a graph that finds the best rate to be at 70%. Generally, this rate has been accepted by many, but now its considered too high by many including Dr. Laffer himself. A recent study has found that the best tax rate is far less than 70% and this is explained in the Prager University video I will provide. In fact, the rate should be 33% because if it is higher, the government gets less revenue. Let's move on to the history.

History

"most of your points like this president or that president cut taxes and there was a boom afterwards, appears to be just empty words. you didnt cite anything usually, and the bottomline again is the tax rate v revenue comparison."

My opponent claims that I did not cite anything here, but this is incorrect because I divided my history argument into four sections for different eras (Harding-Coolidge, Kennedy, Reagan, and Clinton). At the end of each section it put footnotes and then the sources were in my sources section. My point here is that these tax reductions made more revenue, but it is also important to understand that we should not raise them too high or else we risk economic growth.

"on a last point about capital gains, and i address this as it's a specific argument besides taxes and revenue generally. yes there was a lot of capital gains after the cuts. but that only means people were taking their gains due to the opportunity. that means it was temporary. eventually revenue from gains went back to the normative rate increase. as proven by this graph."

The dot-com bubble had burst in the early 2000s, so there was a recession. With this recession came less investments because no one wanted to risk their money. After that the revenue increased again.

Conclusion

I have proven that the proper rate should be 33% or less because that gives us maximum revenue. To raise it higher means less revenue and less economic growth. At the same time, my historial arguments have held.

Debate Round No. 2
dairygirl4u2c

Pro

a couple points.

one. i don't see any reason your single study should trump years of consensus. at best, you have an outlier study. at worst, you're disagreeing with tons of reputable people, people more reputable than us. you have not specified enough fo the reasoning that we must all the sudden accept a single study. you've presented a blanket citation, without much to back it up in terms of reasoning etc.

second. even that study says while it thinks we must magically be at the tipping point of the parabola, increasing taxes to reduce the deficit isn't necessarily a wrong approach. why not go with that exception, what's preventing us? who knows why that's the case, maybe cause it's better to accept less revenue with the certainty we will pay the deficit and take care of our obligations. i dont know, but even that study says so.
http://www.motherjones.com...

last. it's hard to get around raw data. years of revenue to the government at an average of almost seventy percent, and the revenue has been around 18%. this is not really disputable, while the methods and such of that study are disputable, especially again with so much argument against that study. this almost necessitates that it's skewed to the right parabola, cause it's not gone down much just stays the same roughtly, skewed a bunch to the right.

with so much uncetainty, it seems the best decision is to defer to social security workers, and others. sure we can have everyone have some skin in the game to some extent, cuts and increases, a balanced approach... but the bottomline is we should at least see what happens if we increase taxes, before we ask the poorest and everyone else dependent on programs to such it up. you're asking so much based on some obscure study to risk you being right.

at least, all this must be the case as you've not really established how we can keep all these programs as they are, and still cut taxes, or even keep taxes as they are. you keep ignoring it, almost making it seem like a polititican who faces the truth and doesnt want to state what he must be really thinking, that he expects the elderly and poor to suck it up in terms of lifestyle and health care.
1Historygenius

Con

My Case

The Laffer Curve

"one. i don't see any reason your single study should trump years of consensus. at best, you have an outlier study. at worst, you're disagreeing with tons of reputable people, people more reputable than us. you have not specified enough fo the reasoning that we must all the sudden accept a single study. you've presented a blanket citation, without much to back it up in terms of reasoning etc."

It used to be the consensus, but it is no longer due to the new studies. The people you are discussing rely on older data, but his is new information and that is why it is far better to use than outdated information. Also, the study is not only information out there to prove this, as illustrated by the Learn Liberty video I will post.

"second. even that study says while it thinks we must magically be at the tipping point of the parabola, increasing taxes to reduce the deficit isn't necessarily a wrong approach. why not go with that exception, what's preventing us? who knows why that's the case, maybe cause it's better to accept less revenue with the certainty we will pay the deficit and take care of our obligations. i dont know, but even that study says so."

The risk of raising taxes is less economic growth. Also, I have proved with several historical examples that the lower rate the better the economic growth. Income mobility increases dramatically which leads to more tax revenue because they would be of a higher income.

"last. it's hard to get around raw data. years of revenue to the government at an average of almost seventy percent, and the revenue has been around 18%. this is not really disputable, while the methods and such of that study are disputable, especially again with so much argument against that study. this almost necessitates that it's skewed to the right parabola, cause it's not gone down much just stays the same roughtly, skewed a bunch to the right."

We have to look further than how much of GDP the government revenue is. Every time taxes are lowered, we get more revenue. Tax increases create less revenue because it drops people to lower brackets and makes them hide their money. They could instead be putting it into the economy with a simple smaller rate.

"with so much uncetainty, it seems the best decision is to defer to social security workers, and others. sure we can have everyone have some skin in the game to some extent, cuts and increases, a balanced approach... but the bottomline is we should at least see what happens if we increase taxes, before we ask the poorest and everyone else dependent on programs to such it up. you're asking so much based on some obscure study to risk you being right."

I have used more than a study to prove that lower tax rates are better tax rates. Look at the history and you seem to have given up on refuting it.

"at least, all this must be the case as you've not really established how we can keep all these programs as they are, and still cut taxes, or even keep taxes as they are. you keep ignoring it, almost making it seem like a polititican who faces the truth and doesnt want to state what he must be really thinking, that he expects the elderly and poor to suck it up in terms of lifestyle and health care."

This debate was primarily about tax rates as the title says. Your argument is:

"increasing taxes, as a practical matter, is necessary for the financial well being of the USA,,, aside from utilizing government health care to save money."

If you mean getting the government out of healthcare, I'm all for it. However, this debate was not about cutting spending. You argued that increasing taxes is necessary for the United States to be financially well. I must argue that it is not. In the rest of your opening statement, you talked about budget cuts, but this was irrelevant to a debate that was strictly about taxes.

Conclusion

My opponent dropped and has not properly refuted the historical examples I have provided. I was able to prove that the perfect tax rate is far less than what many people thought it once was. Even the creator of the curve, Arthur Laffer, says raising the tax rates to the 70s would be a bad idea in the the first video. My opponent never really made a case except the 18% of GDP argument, but I argued why taxes should not be increased because it would slow down economic growth meaning less financial progress.

Vote Con!
Debate Round No. 3
2 comments have been posted on this debate. Showing 1 through 2 records.
Posted by dairygirl4u2c 4 years ago
dairygirl4u2c
i will add that there's studies to prove anything. i can surely cite some examples. per the thirty three percent laffer curve.
id also point out that your references were to citations that can't be read online or very easily. not that htat makes it wrong, just that it's less persuasive for that reason.
in both cases of how high revenue should be, and in response to those studies, it is hard to get around the fact that govenmetn revenue stays aound that same spot.
im sure most of con's studies are just some people who noticed a cut and relatively soon later an increase in revenue. they surely were looking at the trees instead of the forest.
you can't really get around the revenue the govenmetn brings in. it's not based on obscure methodology and arguments.
but a bottomline is that revenue is around 18% even with higher taxes.

i wanted to look into the study mentioned in that youtube video more though. before i cement my final arguments.
Posted by dairygirl4u2c 4 years ago
dairygirl4u2c
i'll also add a basic example, of how tax cuts arent always the magic solution to everything. if the people make ten dollars, and the government gets five dollars. we could give two dollars back to the people, but the most straightforward approach to this is that the government will be out that two dollars, and by definition can only get a fraction of it back. that means the government will be out what it had before.

of course there are other theories of compounding revenues, but these are mostly abstractions. with pretty much the same basis in abstraction as keynes economics, liberal arguments. the above is the most staightforward, and the 18% figure is a bottomline, empirically.
4 votes have been placed for this debate. Showing 1 through 4 records.
Vote Placed by utahjoker 4 years ago
utahjoker
dairygirl4u2c1HistorygeniusTied
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Total points awarded:03 
Reasons for voting decision: Con should the affect the laffer curve would have if we increase taxes, also con gave historical evidence that shows that increasing taxes has negative qffects.
Vote Placed by Subutai 4 years ago
Subutai
dairygirl4u2c1HistorygeniusTied
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Reasons for voting decision: Counter PatriotPerson.
Vote Placed by Contra 4 years ago
Contra
dairygirl4u2c1HistorygeniusTied
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Reasons for voting decision: This was a close debate. The arguments were roughly even. Pro was strong by using her "consensus" argument regarding the "optimal" top tax rate. Additionally, she hit the mark more so than Con in the regard that increasing taxes would at least do something to improve the fiscal health of the U.S. government. Con used videos as both arguments and sources... which isn't usually accepted on DDO. Additionally, although his arguments were generally fine, the idea that tax cuts will increase revenues to such a degree to balance the budget is kind of unbelievable. However though, Con gets the conduct point because he had a slight edge regarding sources... Pro cited "Mother Jones", a blatantly liberal site.
Vote Placed by PatriotPerson 4 years ago
PatriotPerson
dairygirl4u2c1HistorygeniusTied
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Total points awarded:43 
Reasons for voting decision: Not only did I agree with con, but I felt his side had easier relation and the better voting properties. Yet Pro had some aspects on which I had to go with him.