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Proof that tax hikes don't hurt the economy?

imabench
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11/11/2012 7:24:10 PM
Posted: 4 years ago
At 11/11/2012 7:18:56 PM, 1Percenter wrote:
http://www.dailyfinance.com...

"[The] data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth."

Are you seriously trying to argue that raising taxes is harmless just because lowering taxes in top tax rates also proved harmless?
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twocupcakes
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11/11/2012 7:28:09 PM
Posted: 4 years ago
I agree. The USA should increase taxes on the wealthy. I don't know why Republicans are making a big deal out out of wanting to extend tax cuts for the wealthy. It makes sense to tax the rich more to decrease the burden on the middle class.
twocupcakes
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11/11/2012 7:29:46 PM
Posted: 4 years ago
At 11/11/2012 7:24:10 PM, imabench wrote:
At 11/11/2012 7:18:56 PM, 1Percenter wrote:
http://www.dailyfinance.com...

"[The] data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth."

Are you seriously trying to argue that raising taxes is harmless just because lowering taxes in top tax rates also proved harmless?

I thought he was arguing in support of tax increases on the wealthy. This article supports higher tax rates for wealthy. What is OP arguing?
imabench
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11/11/2012 7:31:42 PM
Posted: 4 years ago
At 11/11/2012 7:29:46 PM, twocupcakes wrote:
At 11/11/2012 7:24:10 PM, imabench wrote:
At 11/11/2012 7:18:56 PM, 1Percenter wrote:
http://www.dailyfinance.com...

"[The] data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth."

Are you seriously trying to argue that raising taxes is harmless just because lowering taxes in top tax rates also proved harmless?

I thought he was arguing in support of tax increases on the wealthy. This article supports higher tax rates for wealthy. What is OP arguing?

From the title it smelled like he was talking about all tax hikes in general.
Kevin24018 : "He's just so mean it makes me want to ball up my fists and stamp on the ground"
Geogeer: "Nobody is dumb enough to become my protege."

7/14/16 = The Presidency Dies

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1Percenter
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11/11/2012 7:34:11 PM
Posted: 4 years ago
The article tries to make the case that lower marginal tax rates haven't had much of an effect on the economy.

I would titled the thread "tax increases on the rich" but said "tax hikes" instead due to character constraints.
twocupcakes
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11/11/2012 7:43:59 PM
Posted: 4 years ago
At 11/11/2012 7:34:11 PM, 1Percenter wrote:
The article tries to make the case that lower marginal tax rates haven't had much of an effect on the economy.

I would titled the thread "tax increases on the rich" but said "tax hikes" instead due to character constraints.

No. This article argues that lowering taxes on the wealthy does nothing to boost the economy. As it says in the article...

"To summarize: Lowering taxes on the wealthy makes the rich richer, and doesn't do anything to boost economic growth."

"data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth." These reductions did, however, result in "increasing concentration of income at the top of the income distribution. The share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007"

"the CRS took up the question of whether "reduced [tax rates on the wealthy] would increase economic growth, increase saving and investment, and boost productivity."

Their conclusion: It wouldn't."
1Historygenius
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11/11/2012 7:49:03 PM
Posted: 4 years ago
At 11/11/2012 7:28:09 PM, twocupcakes wrote:
I agree. The USA should increase taxes on the wealthy. I don't know why Republicans are making a big deal out out of wanting to extend tax cuts for the wealthy. It makes sense to tax the rich more to decrease the burden on the middle class.

Incorrect. Lower taxs on ever odd increases capital. Capital is then spent or saved. Both ways help the economy.
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twocupcakes
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11/11/2012 7:52:58 PM
Posted: 4 years ago
At 11/11/2012 7:49:03 PM, 1Historygenius wrote:
At 11/11/2012 7:28:09 PM, twocupcakes wrote:
I agree. The USA should increase taxes on the wealthy. I don't know why Republicans are making a big deal out out of wanting to extend tax cuts for the wealthy. It makes sense to tax the rich more to decrease the burden on the middle class.

Incorrect. Lower taxs on ever odd increases capital. Capital is then spent or saved. Both ways help the economy.

Did you read the article? Yes, in theory tax cuts increase saving and investment. But, this is only in theory. Empirical data shows that this has not been the case in the USA.
thett3
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11/11/2012 7:57:34 PM
Posted: 4 years ago
At 11/11/2012 7:18:56 PM, 1Percenter wrote:
http://www.dailyfinance.com...

"[The] data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth."

So let me get this straight, your source is arguing that if you take less from the wealthy they neither save it nor invest it nor spend it...what the hell do they do with it then?
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1Historygenius
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11/11/2012 8:00:50 PM
Posted: 4 years ago
At 11/11/2012 7:52:58 PM, twocupcakes wrote:
At 11/11/2012 7:49:03 PM, 1Historygenius wrote:
At 11/11/2012 7:28:09 PM, twocupcakes wrote:
I agree. The USA should increase taxes on the wealthy. I don't know why Republicans are making a big deal out out of wanting to extend tax cuts for the wealthy. It makes sense to tax the rich more to decrease the burden on the middle class.

Incorrect. Lower taxs on ever odd increases capital. Capital is then spent or saved. Both ways help the economy.

Did you read the article? Yes, in theory tax cuts increase saving and investment. But, this is only in theory. Empirical data shows that this has not been the case in the USA.

In 1919, the country was stuck in a recession with 6.5% unemployment and real GDP was 2%. President Harding came and cut taxes. The result was 3.1% unemployment and 3.4% real GDP. History shown it works. I am the master historian of this website. You are too ignorant to know history.
"The chief business of the American people is business." - Calvin Coolidge

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Contra
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11/11/2012 8:00:54 PM
Posted: 4 years ago
Correlation/Causation Fallacy

If you take away their money, you do two things

1. Reduce Freedom
You are destroying their marginal economic liberty by reducing their money.

2. Harm the Economy
They aren't investing it because of a lack of certainty. They want to use it, but won't because of the fiscal cliff plus Obamacare - soon to kick in. In the square 15 miles around my house, employers are ready to hire an additional 125 employees. But, because of the looming tax hikes, they are afraid to.

Their money is used to expand their businesses and used for investment. Taxing the job creators is not going to do anything but harm them. Imagine if the wealthy had a good business climate with less regulations, cut spending, and cut taxes. The $1.2 trillion in unrepatriated income overseas would flow back to the USA. Businesses would expand to create higher profits, and this would massively stimulate the economy.

Let's just say that we eliminated the corporate income tax. It has been estimated that a 10% cut in the corporate income tax increases growth by 1.1%. [1] Thus, by eliminating the CIT, growth would increase by 3.85%, a huge increase in economic growth.

After analyzing 55,000 companies in 9 European countries, Oxford economists found that a $1 increase in corporate taxes reduced wages by 75%. [2] Why? Because businesses aren't people, they are just a mechanism that organizes resources. "Everything that corporations earn ultimately goes to people." Eliminating the CIT would thus increase wages for a median worker by an additional $1,276.45.

Foreign offshore investment would increase by 7.7% using proportional math. [3]

Now, since you would get a very attractive business climate, and would unleash massive amounts of wealth and confidence to American and overseas businesses alike, they would invest in America. Assuming only the Heritage Foundation's estimates [4] by cutting the CIT by 10% and using proportional math, eliminating this harmful tax altogether would increase employment by 1,858,000 jobs annually in the private sector from 2011 to 2020, increase real USA GDP by $462 billion, and improve the living standards of all Americans.

Sources:

[1] Young Lee and Roger H. Gordon, "Tax Structure and Economic Growth," July 15, 2004, p. 22.

[2] Economists at the
Oxford University Centre for Business
Taxation used data on over 55,000 companies
located in nine European countries. They
found that a $1 increase in the corporate tax
would reduce real wages at the median by 75
percent. (Wiji Arulampalam, Michael P. Devereux, Giorgia Maffini, "The Direct Incidence of Corporate Income Tax on Wages," Oxford University Centre for Business Taxation,
WP 09/17, August 2009, p. 8.)

[3] Simeon Djankov, Caralee McLiesh, Rita Ramalho, Andrei Shleifer, "The Effect of Corporate Taxes on Investment and Entrepreneurship," NBER Working Paper 13756,
January 2008, p. 22.

[4] http://www.heritage.org...
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
twocupcakes
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11/11/2012 8:09:12 PM
Posted: 4 years ago
At 11/11/2012 8:00:50 PM, 1Historygenius wrote:
At 11/11/2012 7:52:58 PM, twocupcakes wrote:
At 11/11/2012 7:49:03 PM, 1Historygenius wrote:
At 11/11/2012 7:28:09 PM, twocupcakes wrote:
I agree. The USA should increase taxes on the wealthy. I don't know why Republicans are making a big deal out out of wanting to extend tax cuts for the wealthy. It makes sense to tax the rich more to decrease the burden on the middle class.

Incorrect. Lower taxs on ever odd increases capital. Capital is then spent or saved. Both ways help the economy.

Did you read the article? Yes, in theory tax cuts increase saving and investment. But, this is only in theory. Empirical data shows that this has not been the case in the USA.

In 1919, the country was stuck in a recession with 6.5% unemployment and real GDP was 2%. President Harding came and cut taxes. The result was 3.1% unemployment and 3.4% real GDP. History shown it works. I am the master historian of this website. You are too ignorant to know history.

This article contains a report that uses years of economic data. And you debunk it with one un-cited example?

I agree tax-cuts increase output. However, tax cuts on the wealthy are not as effective. Tax increases on the wealthy allow tax cuts on the middle class.
twocupcakes
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11/11/2012 8:17:54 PM
Posted: 4 years ago
At 11/11/2012 8:00:54 PM, Contra wrote:
Correlation/Causation Fallacy

If you take away their money, you do two things

1. Reduce Freedom
You are destroying their marginal economic liberty by reducing their money.

2. Harm the Economy
They aren't investing it because of a lack of certainty. They want to use it, but won't because of the fiscal cliff plus Obamacare - soon to kick in. In the square 15 miles around my house, employers are ready to hire an additional 125 employees. But, because of the looming tax hikes, they are afraid to.

Their money is used to expand their businesses and used for investment. Taxing the job creators is not going to do anything but harm them. Imagine if the wealthy had a good business climate with less regulations, cut spending, and cut taxes. The $1.2 trillion in unrepatriated income overseas would flow back to the USA. Businesses would expand to create higher profits, and this would massively stimulate the economy.

Let's just say that we eliminated the corporate income tax. It has been estimated that a 10% cut in the corporate income tax increases growth by 1.1%. [1] Thus, by eliminating the CIT, growth would increase by 3.85%, a huge increase in economic growth.

After analyzing 55,000 companies in 9 European countries, Oxford economists found that a $1 increase in corporate taxes reduced wages by 75%. [2] Why? Because businesses aren't people, they are just a mechanism that organizes resources. "Everything that corporations earn ultimately goes to people." Eliminating the CIT would thus increase wages for a median worker by an additional $1,276.45.

Foreign offshore investment would increase by 7.7% using proportional math. [3]

Now, since you would get a very attractive business climate, and would unleash massive amounts of wealth and confidence to American and overseas businesses alike, they would invest in America. Assuming only the Heritage Foundation's estimates [4] by cutting the CIT by 10% and using proportional math, eliminating this harmful tax altogether would increase employment by 1,858,000 jobs annually in the private sector from 2011 to 2020, increase real USA GDP by $462 billion, and improve the living standards of all Americans.

The report is OPs article argues otherwise useing many years of past data. However, suppose CIT is reduced as you plan. Who picks up the tab? Does the Govt run a deficit? If not, the middle class would pick up the tab. When the middle class plays more, they have less to spend. When the middle class cannot spend, businesses do poor. A strong middle class is important for the success of organizations.
1Percenter
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11/11/2012 8:19:15 PM
Posted: 4 years ago
Alright, here's my take on this...

My problem with the article is that it assumes marginal income tax rates are good indicator of much taxes the rich are actually paying. The data shows little correlation between tax receipts and top marginal income tax rates. This is because at high tax rates, tax avoidance strategies are employed.

For example, raising taxes on higher incomes reduces the incentive to be paid in cash. Instead they could choose be compensated through other benefits and perks. To put it more simply, higher marginal tax rates = fewer high incomes reported. Lower marginal tax rates = more high incomes reported. The data supports this.
http://www.cato.org...

Conversely, lower top tax rates would result in more higher incomes and capital reported, but a smaller share of the taxes would be paid by the top earners.

This is why lower revenues don't result from huge reductions reductions in tax rates.
darkkermit
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11/11/2012 8:19:17 PM
Posted: 4 years ago
At 11/11/2012 8:09:12 PM, twocupcakes wrote:
At 11/11/2012 8:00:50 PM, 1Historygenius wrote:
At 11/11/2012 7:52:58 PM, twocupcakes wrote:
At 11/11/2012 7:49:03 PM, 1Historygenius wrote:
At 11/11/2012 7:28:09 PM, twocupcakes wrote:
I agree. The USA should increase taxes on the wealthy. I don't know why Republicans are making a big deal out out of wanting to extend tax cuts for the wealthy. It makes sense to tax the rich more to decrease the burden on the middle class.

Incorrect. Lower taxs on ever odd increases capital. Capital is then spent or saved. Both ways help the economy.

Did you read the article? Yes, in theory tax cuts increase saving and investment. But, this is only in theory. Empirical data shows that this has not been the case in the USA.

In 1919, the country was stuck in a recession with 6.5% unemployment and real GDP was 2%. President Harding came and cut taxes. The result was 3.1% unemployment and 3.4% real GDP. History shown it works. I am the master historian of this website. You are too ignorant to know history.

This article contains a report that uses years of economic data. And you debunk it with one un-cited example?

I agree tax-cuts increase output. However, tax cuts on the wealthy are not as effective. Tax increases on the wealthy allow tax cuts on the middle class.

At the same time taxing the wealthy doesn't increase revenues.

http://neighborhoodeffects.mercatus.org...
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twocupcakes
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11/11/2012 8:25:46 PM
Posted: 4 years ago

At the same time taxing the wealthy doesn't increase revenues.

http://neighborhoodeffects.mercatus.org...

Not enough data to make that conclusion. This graph shows that as tax rates on rich go down, the average tax rate goes up.
Ore_Ele
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11/11/2012 8:26:31 PM
Posted: 4 years ago
At 11/11/2012 8:00:50 PM, 1Historygenius wrote:
At 11/11/2012 7:52:58 PM, twocupcakes wrote:
At 11/11/2012 7:49:03 PM, 1Historygenius wrote:
At 11/11/2012 7:28:09 PM, twocupcakes wrote:
I agree. The USA should increase taxes on the wealthy. I don't know why Republicans are making a big deal out out of wanting to extend tax cuts for the wealthy. It makes sense to tax the rich more to decrease the burden on the middle class.

Incorrect. Lower taxs on ever odd increases capital. Capital is then spent or saved. Both ways help the economy.

Did you read the article? Yes, in theory tax cuts increase saving and investment. But, this is only in theory. Empirical data shows that this has not been the case in the USA.

In 1919, the country was stuck in a recession with 6.5% unemployment and real GDP was 2%. President Harding came and cut taxes. The result was 3.1% unemployment and 3.4% real GDP. History shown it works. I am the master historian of this website. You are too ignorant to know history.

In 2001 President bush dealt with a 3% job loss recession and cut taxes in 2001, 2003, and 2005, and the economy saw its worst job recovery ever.
"Wanting Red Rhino Pill to have gender"
Contra
Posts: 3,941
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11/11/2012 8:28:55 PM
Posted: 4 years ago
At 11/11/2012 8:26:31 PM, Ore_Ele wrote:
In 2001 President bush dealt with a 3% job loss recession and cut taxes in 2001, 2003, and 2005, and the economy saw its worst job recovery ever.

And growth went from 1.7% to 4.1% for a time. Only a 140% increase in economic growth.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Contra
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11/11/2012 8:33:42 PM
Posted: 4 years ago
At 11/11/2012 8:17:54 PM, twocupcakes wrote:
At 11/11/2012 8:00:54 PM, Contra wrote:
Correlation/Causation Fallacy

If you take away their money, you do two things

1. Reduce Freedom
You are destroying their marginal economic liberty by reducing their money.

2. Harm the Economy
They aren't investing it because of a lack of certainty. They want to use it, but won't because of the fiscal cliff plus Obamacare - soon to kick in. In the square 15 miles around my house, employers are ready to hire an additional 125 employees. But, because of the looming tax hikes, they are afraid to.

Their money is used to expand their businesses and used for investment. Taxing the job creators is not going to do anything but harm them. Imagine if the wealthy had a good business climate with less regulations, cut spending, and cut taxes. The $1.2 trillion in unrepatriated income overseas would flow back to the USA. Businesses would expand to create higher profits, and this would massively stimulate the economy.

Let's just say that we eliminated the corporate income tax. It has been estimated that a 10% cut in the corporate income tax increases growth by 1.1%. [1] Thus, by eliminating the CIT, growth would increase by 3.85%, a huge increase in economic growth.

After analyzing 55,000 companies in 9 European countries, Oxford economists found that a $1 increase in corporate taxes reduced wages by 75%. [2] Why? Because businesses aren't people, they are just a mechanism that organizes resources. "Everything that corporations earn ultimately goes to people." Eliminating the CIT would thus increase wages for a median worker by an additional $1,276.45.

Foreign offshore investment would increase by 7.7% using proportional math. [3]

Now, since you would get a very attractive business climate, and would unleash massive amounts of wealth and confidence to American and overseas businesses alike, they would invest in America. Assuming only the Heritage Foundation's estimates [4] by cutting the CIT by 10% and using proportional math, eliminating this harmful tax altogether would increase employment by 1,858,000 jobs annually in the private sector from 2011 to 2020, increase real USA GDP by $462 billion, and improve the living standards of all Americans.

The report is OPs article argues otherwise useing many years of past data. However, suppose CIT is reduced as you plan. Who picks up the tab? Does the Govt run a deficit? If not, the middle class would pick up the tab.

No, you would cut spending equal to the loss in revenues.

When the middle class plays more, they have less to spend.

Yeah, but with higher incomes and job creation, they would have more to spend, increasing consumption levels, helping businesses.

When the middle class cannot spend, businesses do poor. A strong middle class is important for the success of organizations.

Of course.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
twocupcakes
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11/11/2012 8:43:01 PM
Posted: 4 years ago

The report is OPs article argues otherwise useing many years of past data. However, suppose CIT is reduced as you plan. Who picks up the tab? Does the Govt run a deficit? If not, the middle class would pick up the tab.

No, you would cut spending equal to the loss in revenues.

You are going to cut government spending/programs to pay for tax cuts for the wealthy? It is pretty well documented that government spending creates a greater output increase than tax cuts. Lets look at some multipliers, that is the extra increase in output fr every dollar spent/cut.

Permanent Tax Cuts
Extend Alternative Minimum Tax Patch 0.48
Make Bush Income Tax Cuts Permanent 0.29
Make Dividend and Capital Gains Tax Cuts Permanent 0.37
Cut Corporate Tax Rate 0.30

Spending Increases
Extend Unemployment Insurance Benefits 1.64
Temporarily Increase Food Stamps 1.73
Issue General Aid to State Governments 1.36
Increase Infrastructure Spending 1.59
http://www.economy.com...

So, decreasing govt programs with high multipliers, for Bush tax cuts, would decrease output. Not to mention it would leave people without the benefits of the programs.

When the middle class plays more, they have less to spend.

Yeah, but with higher incomes and job creation, they would have more to spend, increasing consumption levels, helping businesses.

When the middle class cannot spend, businesses do poor. A strong middle class is important for the success of organizations.

Of course.
darkkermit
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11/11/2012 8:48:52 PM
Posted: 4 years ago
At 11/11/2012 8:43:01 PM, twocupcakes wrote:

The report is OPs article argues otherwise useing many years of past data. However, suppose CIT is reduced as you plan. Who picks up the tab? Does the Govt run a deficit? If not, the middle class would pick up the tab.

No, you would cut spending equal to the loss in revenues.

You are going to cut government spending/programs to pay for tax cuts for the wealthy? It is pretty well documented that government spending creates a greater output increase than tax cuts. Lets look at some multipliers, that is the extra increase in output fr every dollar spent/cut.

Permanent Tax Cuts
Extend Alternative Minimum Tax Patch 0.48
Make Bush Income Tax Cuts Permanent 0.29
Make Dividend and Capital Gains Tax Cuts Permanent 0.37
Cut Corporate Tax Rate 0.30

Spending Increases
Extend Unemployment Insurance Benefits 1.64
Temporarily Increase Food Stamps 1.73
Issue General Aid to State Governments 1.36
Increase Infrastructure Spending 1.59
http://www.economy.com...

So, decreasing govt programs with high multipliers, for Bush tax cuts, would decrease output. Not to mention it would leave people without the benefits of the programs.

When the middle class plays more, they have less to spend.

Yeah, but with higher incomes and job creation, they would have more to spend, increasing consumption levels, helping businesses.

When the middle class cannot spend, businesses do poor. A strong middle class is important for the success of organizations.

Of course.

Payroll Tax Holiday 1.29
Across the Board Tax Cut 1.03
Refundable Lump-Sum Tax Rebate 1.26

Although I'll have to look at the source. Seems a bit faulty to me, especially considering the fact that the multiplier effect depends on a lot of consideration, not just what is done, but what the state of the economy is in, what the savings rate is, what US government debt is and so forth.
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twocupcakes
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11/11/2012 8:55:21 PM
Posted: 4 years ago

Payroll Tax Holiday 1.29
Across the Board Tax Cut 1.03
Refundable Lump-Sum Tax Rebate 1.26

Although I'll have to look at the source. Seems a bit faulty to me, especially considering the fact that the multiplier effect depends on a lot of consideration, not just what is done, but what the state of the economy is in, what the savings rate is, what US government debt is and so forth.

I highlighted bush tax cuts because that is a current issue and that is what OPs article is about. However, I feel it is generally accepted that tax cuts have a lower multiplier than government spending.
Contra
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11/11/2012 9:02:22 PM
Posted: 4 years ago
At 11/11/2012 8:55:21 PM, twocupcakes wrote:

Payroll Tax Holiday 1.29
Across the Board Tax Cut 1.03
Refundable Lump-Sum Tax Rebate 1.26

Although I'll have to look at the source. Seems a bit faulty to me, especially considering the fact that the multiplier effect depends on a lot of consideration, not just what is done, but what the state of the economy is in, what the savings rate is, what US government debt is and so forth.

I highlighted bush tax cuts because that is a current issue and that is what OPs article is about. However, I feel it is generally accepted that tax cuts have a lower multiplier than government spending.

Some evidence points out that a tax cut of $1 raises GDP by roughly $3 over three years.

Besides, taxes must be extracted from the economy. So if gov't spending increases GDP by $1, that $1 would of been used anyway in the private market.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
1Percenter
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11/11/2012 9:13:46 PM
Posted: 4 years ago
At 11/11/2012 8:55:21 PM, twocupcakes wrote:

Payroll Tax Holiday 1.29
Across the Board Tax Cut 1.03
Refundable Lump-Sum Tax Rebate 1.26

Although I'll have to look at the source. Seems a bit faulty to me, especially considering the fact that the multiplier effect depends on a lot of consideration, not just what is done, but what the state of the economy is in, what the savings rate is, what US government debt is and so forth.

I highlighted bush tax cuts because that is a current issue and that is what OPs article is about. However, I feel it is generally accepted that tax cuts have a lower multiplier than government spending.

There is no evidence that government spending has a multiplier effect on GDP.
http://www.nber.org...
darkkermit
Posts: 11,204
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11/11/2012 9:20:52 PM
Posted: 4 years ago
At 11/11/2012 9:13:46 PM, 1Percenter wrote:
At 11/11/2012 8:55:21 PM, twocupcakes wrote:

Payroll Tax Holiday 1.29
Across the Board Tax Cut 1.03
Refundable Lump-Sum Tax Rebate 1.26

Although I'll have to look at the source. Seems a bit faulty to me, especially considering the fact that the multiplier effect depends on a lot of consideration, not just what is done, but what the state of the economy is in, what the savings rate is, what US government debt is and so forth.

I highlighted bush tax cuts because that is a current issue and that is what OPs article is about. However, I feel it is generally accepted that tax cuts have a lower multiplier than government spending.

There is no evidence that government spending has a multiplier effect on GDP.
http://www.nber.org...

If the multiplier is greater then 0, then government spending will increase GDP. It just won't increase investment or consumer spending.
Open borders debate:
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twocupcakes
Posts: 2,750
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11/11/2012 10:14:03 PM
Posted: 4 years ago

Some evidence points out that a tax cut of $1 raises GDP by roughly $3 over three years.

Yes, but in general, most tax cuts have lower multipliers. There may be some data to the contrary, but that is not the general consensus.

Besides, taxes must be extracted from the economy. So if gov't spending increases GDP by $1, that $1 would of been used anyway in the private market.

The different is that in the private market, the spending is reduced by the marginal propensity to consume. So, people do not spend all their money they get back in taxes, but the government spends all of the money they tax.

Seeing as how rich people have lower MPCs then poor, it makes even more sense to tax the rich.
1Percenter
Posts: 781
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11/11/2012 11:12:49 PM
Posted: 4 years ago
At 11/11/2012 10:14:03 PM, twocupcakes wrote:

Some evidence points out that a tax cut of $1 raises GDP by roughly $3 over three years.

Yes, but in general, most tax cuts have lower multipliers. There may be some data to the contrary, but that is not the general consensus.

Besides, taxes must be extracted from the economy. So if gov't spending increases GDP by $1, that $1 would of been used anyway in the private market.

The different is that in the private market, the spending is reduced by the marginal propensity to consume. So, people do not spend all their money they get back in taxes, but the government spends all of the money they tax.

Seeing as how rich people have lower MPCs then poor, it makes even more sense to tax the rich.

Actually it makes no sense to tax the rich. Stimulus and deficit spending now necessitates reduced spending and production (due to lack of savings) in the future. Sure, you can steal the money from the people that are saving and investing their money and give it to people the people who are more likely to spend it immediately, but that just means there is that much less money to be spent producing and consuming down the road. And you can't consume something that isn't produced.

The only thing that government spending will stimulate is more debt.
sadolite
Posts: 8,839
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11/11/2012 11:17:58 PM
Posted: 4 years ago
At 11/11/2012 7:28:09 PM, twocupcakes wrote:
I agree. The USA should increase taxes on the wealthy. I don't know why Republicans are making a big deal out out of wanting to extend tax cuts for the wealthy. It makes sense to tax the rich more to decrease the burden on the middle class.

Just out of curiosity what was the yearly income after taxes of the poorest person who ever employed you, if in fact you have ever been employed.
It's not your views that divide us, it's what you think my views should be that divides us.

If you think I will give up my rights and forsake social etiquette to make you "FEEL" better you are sadly mistaken

If liberal democrats would just stop shooting people gun violence would drop by 90%
sadolite
Posts: 8,839
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11/11/2012 11:22:50 PM
Posted: 4 years ago
At 11/11/2012 11:17:58 PM, sadolite wrote:
At 11/11/2012 7:28:09 PM, twocupcakes wrote:
I agree. The USA should increase taxes on the wealthy. I don't know why Republicans are making a big deal out out of wanting to extend tax cuts for the wealthy. It makes sense to tax the rich more to decrease the burden on the middle class.

Just out of curiosity what was the yearly income after taxes of the poorest person who ever employed you, if in fact you have ever been employed.

Also what percentage of "all federal income tax" should the wealthy pay. We will call the wealthy "the top 10% of wage earners".
It's not your views that divide us, it's what you think my views should be that divides us.

If you think I will give up my rights and forsake social etiquette to make you "FEEL" better you are sadly mistaken

If liberal democrats would just stop shooting people gun violence would drop by 90%