US going to hell in a hand basket?

What would have happened if Reagen had cut taxes
but did not increase spending? Seems like a good thing
on the surface. Any negatives hiding in there?

The tax cut did create huge tax revenues, which they then
BLEW. Why cant they learn from this and try ONLY cutting
taxes next time?

I think Trader Vic made a good point about the markets
and taxes as well. Capital gains are so high that people
are not willing to risk money in the markets and will go
with more guaranteed lower risk investments.

If you want to see stronger markets, the cap gains must
come down a bit so they are more attractive to
people as a form of investment. People then plunge
money into stock, which feed business, which feed
growth, which feed employment, etc,etc, the cycle gets
stronger.

What is flawed with this?


peace

axeman
 
Socialism starts out as government charity for the poor, and "fairness".

Welfare for the poor? Fairness? Good grief! How dare they!

Then it becomes central planning to deal with "inequalities" and "inconsistencies" which are really just part of nature.

AIDS and Malaria are also "just a part of nature", would you advocate halting efforts to eradicate them too?

Then we get massive booms and busts because of mismanagement, deficit spending, and Fiat currency.

You'd get them anyway!

You're dreaming of some libertarian fantasy land where "anything goes" somehow (magically) is going to lead socially desirable outcomes. Who know, maybe you consider a return to 12+ hour working days, rampant crime and general anarchy, perpetual social unrest etc to be in some way "beneficial".
 
Quote from axeman:

What would have happened if Reagen had cut taxes
but did not increase spending? Seems like a good thing
on the surface. Any negatives hiding in there?

The tax cut did create huge tax revenues, which they then
BLEW. Why cant they learn from this and try ONLY cutting
taxes next time?

I think Trader Vic made a good point about the markets
and taxes as well. Capital gains are so high that people
are not willing to risk money in the markets and will go
with more guaranteed lower risk investments.

If you want to see stronger markets, the cap gains must
come down a bit so they are more attractive to
people as a form of investment. People then plunge
money into stock, which feed business, which feed
growth, which feed employment, etc,etc, the cycle gets
stronger.

What is flawed with this?


peace

axeman

We can speculate what if, but fact is that Bush is following Reagan's plan (which was denounced by the architect of the plan) almost exactly. Increase spending, and cut taxes.

Try that at home with your own budget, see what happens. Spend more, and save less, and just borrow money to bridge the gap.

People plunging money into existing stock is meaningless for the economy. All it does is push up stock price, and unless they take profits and buy goods and services, it is not money well spent.

If people invest in new companies with new technologies, etc. that is a different story.

It is such a complete sham, so obvious. Why not give major tax incentives to companies developing alternative energy, energy efficiency, etc?

Because, that doesn't help the old line money, does it?

We went to war with Iraq to a great extent because of our oil dependency. I am not going to get into discussion on the real reason for the war, but oil was a factor....and is a factor.

In 30 years, how much focus has been on developing alternative methods of energy? Why not? Because it is not profitable for corporate Amercia to do so, when oil is still relatively cheap.

So, we maintain our dependency, which is not healthy in the long run, and the rich just keep getting richer.

I favor tax cuts and reduced spending on waste, but how much government reform have we seen in the current and previous adminsitration? How much forward thinking?

Supply side is all about favoring the rich, the status quo....not progress and problem solving.

Look at the current budget deficit....reduction of tax is going to cure that?

The rich aren't suddenly going to go out and spend more with a tax cut, they will just buy more T-Bills.

If we have to be consumer driven, why not focus on getting the money in the hands of the consumers, and encourage them to buy energy saving devices? Energy saving cars, etc.?

Why? Again, because the old line companies are not going to profit from this.

FOLLOW THE MONEY, IT ISN'T THE ECONOMY STUPID, IT IS THE OLD LINE MONEY!
 
Reading the for/against supply side/trickle down theories reminds me of the second law of economics:

For every economist who holds an opinion, there exists a second economist with an equal, but opposite opinion, and they are both wrong.

DS
 
Quote from AAAintheBeltway:



The basis of supply side theory is that incentives matter. People make economic decisions at the margin, which is Econ 101, and their decisions reflect the marginal utility of varying courses of action. Raise the price of something, and demand will drop. Similarly, tax an activity heavily and you decrease its attractiveness.

This may strike most as common sense but it was heretical to an economics establishment that was raised to believe that economic activity had to be controlled by careful adjustments to fiscal and monetary policy. No doubt one reason it was resisted was that it took vast numbers of economists to calculate precisely how hard to hit the gas pedal or when to tap the brakes. History records few examples of the established priesthood yielding gracefully to a new regime.

Not surprising, there was a huge political element to this fight as well. Supply side theory was used chiefly to advance tax cutting. It was identified with Ronald Reagan. Since these two, tax cuts and Reagan, are to this day the biggest bogeymen in the Democrat playbook, it became incumbent to discredit both. Their answer became the socalled Reagan deficits.

As noted by another poster, the fact is the Reagan tax cuts were a huge success, revitalizing an economy that had been punished by inept policy for 20 years and producing a gusher of tax revenues.

If you think supplyside theory is economic voodoo, as a one term president famously remarked, then ask yourself is it reasonable to calculate the buget effects of a tax cut without considering how the cut will affect behavior. The attacks on supplyside analysis rely heavily on just this sort of static analysis in which we are asked to assume that everything stays the same, except the tax rate. Of course this is absurd in practice. We adjust our actions in response to changed circumstances. Cut cap gains rates and people start taking profits. They are willing to pay the lower cap gains rate. Raise the same rates and people sit tight. Of course, if you accept this, you are regarded by the economics profession as a crank.


AAA, you need to consider incentives on an absolute basis, not just a relative one.
Sure, we'd all prefer to make $15MM instead of $10MM, but $10MM itself is still a hell of a lot of money. It's not like higher taxes simply cause the entire population to drop the national obsession with getting rich.
Again, history has proven, conclusively, that low taxes simply ARE NOT a requirement for economic growth. I don't know how to state that more simply.

You might as well come out and say it in so many words, it's an ideological dispute between those who only care about getting rich -- and to hell with anything that stops them from doing so -- and those who have an interest in creating a fairer, more equitable society, one which recognises man as homo sapiens not as homo economicus.

Oh, and I love the way that the tax cuts get the credit for the economic expansion rather than the government spending. Eco101, as you put it.
 
I agree that spending and govt waste is what needs
to be targetted. But im all for lowering taxes.

If lowering taxes does in fact increase tax revenues
like it did in the Reagen era, then the deficit wont be
a problem for long. They just need to use all that
new revenue wisely instead of blowing it again.

When Trader Vic talked about people investing in the
markets because of lower cap gains, I think he was
refering to new companies. He talked a lot about
new businesses having a hard time getting money by
offering new stock because the risk reward doesnt
cut it with todays high cap gains taxes.


The repubs seem to have is half right, but the dems
seem to have it all wrong. I hate those righteous repubs
but I simply cannot ever vote for a party with a tax increasing
track record like the dems.

Taxes are killing me because im technically a "rich" guy. HAH!
Anyone making over 35K a year is labelled RICH by the
dems. Sick of those bastards. Im being taxed to DEATH.
I look at my gross salary, and then look at what im capable
of saving each year, and I nearly cry.


peace

axeman



Quote from OPTIONAL777:



Try that at home with your own budget, see what happens. Spend more, and save less, and just borrow money to bridge the gap.

People plunging money into existing stock is meaningless for the economy. All it does is push up stock price, and unless they take profits and buy goods and services, it is not money well spent.

If people invest in new companies with new technologies, etc. that is a different story.
I favor tax cuts and reduced spending on waste, but how much government reform have we seen in the current and previous adminsitration? How much forward thinking?

Look at the current budget deficit....reduction of tax is going to cure that?
 
Quote from axeman:

I agree that spending and govt waste is what needs
to be targetted. But im all for lowering taxes.

If lowering taxes does in fact increase tax revenues
like it did in the Reagen era, then the deficit wont be
a problem for long. They just need to use all that
new revenue wisely instead of blowing it again.

The repubs seem to have is half right, but the dems
seem to have it all wrong. I hate those righteous repubs
but I simply cannot ever vote for a party with a tax increasing
track record like the dems.

Taxes are killing me because im technically a "rich" guy. HAH!
Anyone making over 35K a year is labelled RICH by the
dems. Sick of those bastards. Im being taxed to DEATH.
I look at my gross salary, and then look at what im capable
of saving each year, and I nearly cry.


The thing is, there is really no evidence that suggests that tax cuts -- alone -- increase tax revenues. In fact, all the evidence I have come across suggests the opposite, smaller revenues. (Yet in spite of this, you're still "all for lowering taxes".)

I'm not sure on what basis you're claiming that Dems have it "all wrong"; don't you think that's going a bit far? I guess, like most Americans I come across on this site, you're stuck in a "if it makes me $, it's gotta be good" mindset. It's understandable, but nevertheless quite unfortunate.
 
No... Im in the "Let me keep what I earn" category of people.

The government robs me at a disporpotionately high rate
compared to lower income earners, and then gives this
stolen money to people who are less ambitious, and didnt
work as hard as me at creating a good life for myself.
( And no I didn't start with rich parents, we were poor, no
head start for me ).

Since your all about "fairness", please educate me on
hows this is "fair".

A system of government which consistenly punishes
people for working hard and being successful is
NOT a fair government.

Where is the incentive? If taxes got any higher, I'd
move to a Euro country and collect my massive unemployment
benefits from all the SUCKERS who are out there working
hard to support me! :D

Apprently your history contradicts mine, because from what
I've read, high taxes stifle economies. And although
low taxes are not necessary for economic growth, this
does not mean that high taxes don't slow things down.
Logical fallacy.

Socialism sux. Want proof? Compare the capitalistic
countires to the socialistic countries.
Where would you want to live?

If you really want to be a socialist, please be sure not to
do it in the United States. We have enough leaches here.
Go drain some other countries tax base where they
accept socialism as a way of life.



peace

axeman



Quote from alfonso:




The thing is, there is really no evidence that suggests that tax cuts -- alone -- increase tax revenues. In fact, all the evidence I have come across suggests the opposite, smaller revenues. (Yet in spite of this, you're still "all for lowering taxes".)

I'm not sure on what basis you're claiming that Dems have it "all wrong"; don't you think that's going a bit far? I guess, like most Americans I come across on this site, you're stuck in a "if it makes me $, it's gotta be good" mindset. It's understandable, but nevertheless quite unfortunate.
 
The government robs me at a disporpotionately high rate
compared to lower income earners, and then gives this
stolen money to people who are less ambitious, and didnt
work as hard as me at creating a good life for myself.
( And no I didn't start with rich parents, we were poor, no
head start for me ).



There are costs associated with living in a (orderly) society. However much you may detest it, you cannot deny that you derive your benefits -- in fact, your entire way of life -- from it.

Also, I notice you are equating "work hard" with "good life". Yes, there is a something of a causal relationship, but only up to a certain extent. Thinking thus isn't entirely a bad thing, but it does tend to prevent a person from considering alternatives, or even acknowledging that alternatives might exist.

And do you really think it's fair to ascribe people's failure to reach your standards of a "good life" solely to their lack of ambition? I think that might be a bit tough to justify.
(PS, I did start with rich parents, so it's not the sour grapes of a "leach" you're hearing.)

Since your all about "fairness", please educate me on
hows this is "fair".

A system of government which consistenly punishes
people for working hard and being successful is
NOT a fair government.


As I said, you live in and derive your benefits from a society. Taxing you is the cost of it.
Notice, you don't really appear to be questioning the current rate of taxation, but the concept of taxation as a whole. Have you really thought about what kind of a world it would be without taxes? It's worth considering, just in case you ever get what you wish for -- something the old sayings warn us against.

And again, you seem to be implying that the balance of your bank account is the only valid measure of success.
Have you questioned why you adopt or choose to adhere to this standard, and this standard alone?



Where is the incentive? If taxes got any higher, I'd
move to a Euro country and collect my massive unemployment
benefits from all the SUCKERS who are out there working
hard to support me! :D


Correct me if I'm wrong, but ALL your earnings are not eaten up by tax are they? There is still something left for you isn't there?
Well, I'd call that an incentive. :)

I take it to mean, though, that it's not incentive enough. Well, that becomes more a question of adaptation to environment. If tax rates were 15% (as they are in Hong Kong, I believe) and they jumped to 20%, I bet you'd still be crying foul about being "robbed".

Other entrepreuneurs obviously haven't been as troubled as you about the level of incentive, as long an incentive exists; they were still willing to risk capital and start companies even when tax rates were much higher.

Apprently your history contradicts mine, because from what
I've read, high taxes stifle economies. And although
low taxes are not necessary for economic growth, this
does not mean that high taxes don't slow things down.
Logical fallacy.


I do remember looking at figures that show decreasing revenues with decreasing tax rates. I'll have to have a look. Although if you have something that shows otherwise, I'd really appreciate you posting a link.
I think you're being a little quick to cry "logical fallacy" too; it's not one because I never claimed higher taxes wouldn't slow an economy down, I merely pointed out that they are not an insurmountable obstacle.
I think we might need to remind ourselves just why an economy is important, why we measure things like GDP. Isn't it because it's one measure of the quality of life we are leading? Certainly GDP is not a complete measure of well being -- the list of problems with using it as such is long indeed -- but there is a strong correlation between quality of life (depending on whose standards of quality you use) and GDP. Using that measure, any growth at all is positive; you don't need blistering 5% growth.


Socialism sux. Want proof? Compare the capitalistic
countires to the socialistic countries.
Where would you want to live?


I don't recall ever claiming socialism is superior. There are certainly, I think, some aspects of socialist theory/ideology that are worth considering, and I think it's a big mistake to reject them off hand, but that's far from considering myself a socialist, in the traditional, Marxian sense.
(And I'm glad that you used the term "capitalistic" rather than "capitalist", because you (USA) are certainly not employing the pure version of the latter.)

EDIT
I just wanted to add, I'm certainly not opposed to market economies. For the most part, I think they do a very good job of efficiently allocating resources. But, given that they do fail, from time to time, I am very much in favor of regulating them in order to create more socially desirable outcomes; more socially desirable, that is, for the greater number of people than pure free markets create.
 
Quote from axeman:
If taxes got any higher, I'd
move to a Euro country and collect my massive unemployment
benefits from all the SUCKERS who are out there working
hard to support me! :D

Socialism sux. Want proof? Compare the capitalistic
countires to the socialistic countries.
Where would you want to live?

although that seems the general consensus, there is some room for doubt -- if you compile the total tax burden in the US: fed, state, county, city, sales, social security, medicare, factor in your exposure to corporate, estate, and gift tax, then add in the effect of the amazing number of hidden taxes and fees like gasoline, telephone, flight, road tolls, etc. -- you might be find that you pay the same or MORE than some Europeans. add insult to injury by factoring in the amount you pay for health care in the US.

as for where one would want to live - that may depend on where you're talking about. you may have an argument if you compare Havana with Palo Alto, but less so comparing Stockholm and Newark. (or maybe even Havana with Newark, for that matter.)
 
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