Why do conservatives belieave the earth is 8K years old and global warming is false?

[minmike]

Quote from jem:

I agree that everyone looks at the impacts of taxation when looking at investment. But in itself, that doesn't prove one way is better than another.


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this argument seems to brush aside the merit of the example I gave without addressing it.


I am not sure what you mean. Are you saying you are not sure it would have been better for the U.S. to have invested in cds over information technology last decade?

Not sure which example you are talking about.

You seem to switch from trying to talk about analysis to examples whenver it suits you.

Again you framed the question with only two options. The third, consumption. You need a demand for IT before it is worth investing in. If the demand is high enough, then the payoff from investing in IT becomes worthwhile even with a higher tax braket.

 

[jem]

Quote from jem:

bond said -

One of the best-known criticisms of a progressive tax rate, is that it does not encourage savings. You have to come up with some very twisted logic to argue the opposite of all economists have known for centuries. You think you're a candidate for a Nobel Prize in economy?
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No but I think I was considered qualified enough to teach on this simple material in a business class at a college.

You must have missed class.

A proper comparison is to compare the utility of savings to the utility of investment under a progressive rate structure.

With progressive rates - the utility of savings vs investing is skewed in favor of saving.

why risk your money on a 1-10 shot.

with progressive rates. you are discouraged from investing in a long shot which may have a big payout.

Even if your tech startup hits paydirt- your profits get taxed away at an increasing rate and you therefore do not get reimbursed for the tech startups that failed.

With progressive rates -- pools of venture and angel capital are discouraged from forming.

Progressive rates cause people to become more risk averse. Capital and Intellectual capital get drained out of the economy. you get more savings relative to investment.

the above is how the debate started.

I pointed out that progressive rates cause people to favor savings over investment. I do not address consumption. (I could have but that is not my concern.)


You really can not argue the point I made.

If 99% of your income over 1000 dollars is taxed and you are making 1000 dollars are you going to risk a portion of your money on startup companies. And I know you are smart enough to understand this is a generalization across a society of rational decision makers who attempt to maximize their utilities.

Whether it be tech startups or widgets - the logic is the same.

 

[minmike]

Sure if you take the arguement to an extreme. Nobody is advacating a 99% tax level.

At resonable levels, you get back to the question wether the substitution effect that you like, or the income effect prevails. As you said the evidence is pretty inconclusive.