Yeah - I've never understood when people make the Laffer Curve argument. All the Laffer Curve suggests is that there's basically a parabolic relationship between tax rate and tax revenue. But the problem is we have no idea which side of the parabola we're on. In the early 80's, it was pretty safe to assume we're on the side of "lower tax rate = higher revenue". If you're at 2%, it's pretty safe to assume you're on the side of "higher tax rate = higher revenue". Where we are (15-20% overall), no one really knows.
Quote: If there's one thing that economists agree on, it's that these claims are false. We're not talking just ivory-tower lefties. Virtually every economics Ph.D. who has worked in a prominent role in the Bush Administration acknowledges that the tax cuts enacted during the past six years have not paid for themselves--and were never intended to. Harvard professor Greg Mankiw, chairman of Bush's Council of Economic Advisers from 2003 to 2005, even devotes a section of his best-selling economics textbook to debunking the claim that tax cuts increase revenues. Quote: And how did things work out? Laffer is convinced that the reduction of the top tax rate from 70% to 28% during the Reagan years paid for itself--in part by encouraging the rich to stop finagling--and the evidence mostly backs him up I 'm no expert on this, but I don't see logically how the Bush tax cuts, oriented toward the rich led to greater deficits and the Reagan/ Laffer cuts did not--Laffer being convinced that they paid off or not. My other question is that the economy was excellent during the late 60's when the tax rates were much higher, 70% or greater according to the original post. How does this square with the claim that we will always ruin the economy if we have higher taxes.
The basic logic of the Laffer Curve is this. High taxes serve as a deterrent to work - and this makes sense. If the government taxes you at 100%, no one is going to work because they don't earn anything. Thus, the government gets $0 in revenues. If the government taxes at 0%, they are also going to get $0. The maximum tax income is somewhere in between. So if you lower tax rates from 100% to 95%, a few people will work and you'll increase revenues with lower tax rates. If you raise tax rates from 0% to 5%, you might slow the economy a bit, but it will increase revenues because you had none. The question is where the peak is. It's mostly accepted now that when Reagan came in with 70%+ tax rates, you were on the side that lowering it would increase how much / how hard people would work, expand the economy, and thus increase tax revenues (and apparently reduce the incentive to avoid taxes). When going from 35% to 28% or whatever the Bush cuts did, it's much less clear what side of the curve we're on - and the evidence from both the Clinton tax hike and Bush tax cut suggests that we're on the side that raising rates = higher revenue as opposed to vice versa.
I'm not going to delve into the potical, economic and social aspects, But shouldn't the gap between rich and poor would widen every year? The rich become rich by adding to their income and wealth, not subtracting from it. Most rich people I know don't stop making money once they become rich, so its only logical that the wealthy have an increasing share of the total income in this country every year, its a lot easier to make money when you already have a ton of it. From the article Sorry to say, but the poor just don't have as many options as the wealthy to increase their wealth on an individual basis. This is a very simplistic view, but I don't have a problem with people making more money. The question that should be asked is, if the wealthy are becoming wealthy at the cost of those below them, and thats very debatable.
They may not have the options to become rich over night, but they do have the options not to increase the riches wealth. Our economy is spurred by the increase of the wealth gap. We are encouraged to keep spending every dollar we make. Hell, the government is even subsidizing part of the cost to switch from broadcast analog TV to digital TV. The only way to spur the middle class is to lower our standard of living, slow down the economy, and people living on what they can afford w/out amassing debt.
Because that's exactly how the rich people became rich: By not spending every dollar they earned on HD tv's but instead investing their money into buying assets like property and businesses. The government can't help it if people don't choose to freely do that by themselves. And if it wants to set an example of good spending itself, it should reduce its own spending instead of borrowing from other countries.
^A new year, and thank god this thread has gotten back to where it should be - ragging on poor people and a bunch of platitudes about saving and bootstraps. Well trained. It's shocking to me how little people get what the true issue is with income inequality. It is not about poor people not saving or buying an HDTV. What you people think of as "rich" is not rich. That is the problem. In fact it is not remotely close to being rich. And it has not been as far away from being rich as it has been since the 1890's. And the problematic issues that arise from that are myriad. I suppose that that being truly ric today is so far beyond the capacity of the average joe today, and has not been further away, in terms of both income or possibility, at any time in the last 100 years, is one explanation as to why you guys have such a hard time grasping it.
Tell that to the founders of Amazon, Yahoo, Google, heck any business that has been bought out...... There is still opportunity to get rich in this country, but I agree it is just not going to happen by saving long term anymore... DD
That's exaclty what I am talking about. those guys constitute a handful of individuals in a nation of 300 million. I guarantee you that as hard as you work, you will pretty much never fly around in your own 747 like Sergey Brin. It doesn't really matter how smart you are or how hard you work. You will never have as much money or power as he does (or his children, most likely). And you will never come remotely close. I am 100% confident that this applies to everybody on this BBS. Why should I care? Well, ask Bill Gates, pere, or Warren Buffet, or simply read your history books. Dynastic wealth and massive inequalities in income distribution is not a healthy societal charactersitc - that is an understatement.
I get what you are saying, and I agree to a point. Wealth...true wealth is a very small percentage. But on the flip side of that there are tons more millionaires now, it is just that a million bucks does not go as far as it used to. Honestly to me, if you have $3-5 million you can retire comfortably. DD
True wealth? Isn't that defined by lifestyle choices? I mean most people don't want a 747 to fly them around. I would say that you are truly wealthy if you don't have to worry about any financial matters. And are set for life.....but that is just my definition, and does not include Ferraris etc... DD
What is so hard to grasp about a story out of Atlas Shrugged? First, you want to say people have no idea of what truly being rich is about and then turn around saying people do not have capacity of being truly rich. Through time, wealth has been redistributed; from land to money to business to information. A man in todays time will never become wealthy as an employee of a corporation just as well as a serf in feudalistic time period had a chance to become a nobleman. Unlike land which has a finite supply, a man now has a chance to rule a portion of our indefinite economy. How you choose to define wealth is a complete different topic. I define poor as a state of mind and broke as the lack of money/resources. Rich is having a large amount of money/resources while wealth is how you maintain your riches. Greed is something totally different. Threre is a fine line between being greedy and wealthy. Rockefeller was greedy. Donald Trump is wealthy.
It's so laughable some folks feel the need to explain that they are the only ones who understand what being "really rich and truly wealth" is. Then bring out the line "just ask Gates and Buffet, they agree with me", as if they are part of the billionaire elite the average joes will never comprehend. Please, you freaking post on a basketball bbs, you have no more understanding on what a billionaire thinks than the rest of us.
Well, see deepblue, take heart young one, understanding the mind of the rich is not so difficult. I have access to this magical tool called "Google", which I can use to access their direct personal comments on this topic on numerous occasions. Bill Gates, pere on income inequality and why he is a crusader on behalf of the estate tax Warren Buffet on why income inequality is poisoning democracy and why he should pay more taxes If you need more help using google, please gmail me.
It sounds like a lot of the issue is still defining what it means to be wealthy but lets say we can define it having enough money to do basically whatever you want instead of having to worry about how you are going to pay off your mortgage, insurance and still eat. How do we address the wealth gap?
