Higher taxes does NOT equal higher revenues: PROOF

tradingjournals · Feb 23, 2012

Quote from americanhero:

You guys should examine Laffer curve theory.

You want guys like Mav to look at a curve theory? If it was something like Laffer Talk, then maybe...

Lucrum · Feb 23, 2012

Quote from americanhero:

I am a major in economics from Harvard.

Come back we've you've obtained the rank of colonel.

americanhero · Feb 23, 2012

Quote from Lucrum:

Come back we've you've obtained the rank of colonel.

Be quiet, you anti-patriotic person. God bless Israel and USA.

Lucrum · Feb 23, 2012

Quote from tradingjournals:

You want guys like Mav to look at a curve theory? If it was something like Laffer Talk, then maybe...

Hey, when are you going to resume that $100 journal of yours that blew up in your face?

americanhero · Feb 23, 2012

Quote from Lucrum:

Hey, when are you going to resume that $100 journal of yours that blew up in your face?

Immature personal attacks get you nowhere.

Lucrum · Feb 23, 2012

Quote from americanhero:
Immature personal attacks get you nowhere.

Like this one?

Quote from americanhero:
Be quiet, you anti-patriotic person.

Hombre · Feb 23, 2012

Quote from trefoil:

Look at this carefully:

Francesca Lagerberg, head of tax at Grant Thornton, an accountancy firm, said: âMy guess is that because the 50 per cent rate was flagged up in advance many taxpayers, particularly those with their own businesses, decided to extract dividends ahead of the change. It highlights the fact that high tax rates donât always deliver high tax revenues.â

Her last sentence is a non sequitur. Most small businesses aren't of the sort that can just pick up and move their operations to the Caymans, you know. Given that, next year those dividends will be taxed at the new rate, and the revenues will be higher.
Wishing for something doesn't make it so.

I guess, you will have to wait till the next year to see if i am right. I know i am right but you will have to wait one year to realize that .

piezoe · Feb 23, 2012

Quote from americanhero:

I am a major in economics from Harvard. You guys should examine Laffer curve theory.

I hope for the sake of whoever paid your tuition you got far more than Laffer theory out of your studies. Now, if you can tell us, with reasonable probability of being right, where the maximum in the curve lies for the current U.S. economy, I'll think you've got your, or your sponsor's, money's worth.

Good luck in your studies. I'll pass forward to you what one of my economist friends tells me: "There are no jobs for Ph.D. economists." So maybe you should consider graduate school in some other area, assuming you'll need a job eventually.

trefoil · Feb 23, 2012

Quote from Hombre:

I guess, you will have to wait till the next year to see if i am right. I know i am right but you will have to wait one year to realize that .

That's fine. Meantime, you might want to consider this old study by the CBO of what happens when cap gains rates are changed:

Simulations of individual tax payments using the most likely estimates of the realizations response all find that the 1986 act will increase revenue from capital gains taxes in the long run, and that lowering the top rate on gains to 15 percent would reduce revenue.
The estimated realizations responses from four alternative equations imply that the 1986 act will lead to an annual increase in revenue from capital gains taxes of between $2.6 billion and $5.9 billion compared with previous law; this amount is much less than the increase that would occur if taxpayers were assumed to have no behavioral response, in which case the revenue pickup would be $22.4 billion.
Simulations with a 15 percent maximum rate on capital gains show an annual revenue loss of between $3.9 billion and $7.8 billion, compared with current law.

The 1986 act eliminated special treatment of cap gains, so that they were taxed as ordinary income, at the then highest rate of 28%. So they were comparing revenue at 28% to revenue at 15%, just to set the context of that quote.
Behavior does change in response to changes in rates, but overall increased rates lead to increased revenues, and decreased rates to decreased revenue. What the Brits apparently failed to do was to take account of the obvious fact that behavior changes when taxes change. Not the same thing as saying that revenue would actually fall over any reasonable time frame.

jem · Feb 23, 2012

Quote from piezoe:

I hope for the sake of whoever paid your tuition you got far more than Laffer theory out of your studies. Now, if you can tell us, with reasonable probability of being right, where the maximum in the curve lies for the current U.S. economy, I'll think you've got your, or your sponsor's, money's worth.

Good luck in your studies. I'll pass forward to you what one of my economist friends tells me: "There are no jobs for Ph.D. economists." So maybe you should consider graduate school in some other area, assuming you'll need a job eventually.

since tax revenues have increased after the mellon, kennedy, Reagan tax cuts... its safe to say the maximum on the curve is frequently lower than the tax structure in place at the time of the tax cuts.

Also we should not be trying to maximize tax revenue as much as societal well being. the maximum on the curve is the worst tax structure which should be in place.