Do you know the difference between macro and micro? I don't think you do. If you do, then this is mind-bottlingly stupid. And by that I meant that I want to literallly take my mind, find an old bottle, a nice hearty cork, and place it inside the bottle, sealing the bottle away in a safe deposit box so as to be insulated from the bed bugs of this post's stupidity.
Let me give you my background as a small business owner, I am not rich by any means and I will admit my business in the last two years has been struggling. Corporate tax cuts are fine but the problem we have is that they are meaningless since our revenues are already down. If you cut our taxes by 5% that's great but consider our taxes were already low since our revenues have dropped by greater than that in the last two years. Tax cuts aren't doing anything for us to bring in more revenue. Granted my experience is anecdotal but I suspect that if you talk to many business owners you will find that we are not unique in this regard. I don't believe in honorus taxes and believe tax cuts have some stimulative effect but in an era when we already have very low taxes they aren't going to save the economy. As others have noted low taxes, especially that primarily benefit corporations and the wealthy, do little to stimulate widespread demand in a consumer based economy.
I know a few and generally they do a mix of those things. As has been noted earlier while the wealthy do spend and invest where we are at with the economy their spending and investing alone cannot revive the economy because the economy is consumer based. Spending by the wealthy helps but they are not spending enough in the goods and services sectors that will have widespread benefit, the 12 Bentleys versus 1,000 Chevys. Investment helps too but if companies aren't generating revenues because of lack of demand investment isn't doing much at the moment.
Wait wait wait! You might want to check again, because if you get enough tax cuts you can just hire some new employees whether there is an increase in demand for what you offer or not. Just ask Commodore.
Sorry it's not obvious to me, can you clarify? Lower tax rates put more wealth in the pockets of consumers to purchase whatever you are selling. They also make it cheaper for you to provide that good or service, allowing you to hire more employees and/or reduce the price of your product to increase quantity demanded and net profit. It sounds as if you want the demand for your good or service to be artificially high (i.e. stimulus) by state transfer of wealth to you (subsidies, grants, etc.). Beyond the obvious inefficiency, do you not recognize the inherent immorality in artificially increasing the demand for your product via state coercion, at the expense of other people's wealth? What exactly are you wanting the state to do?
If in doubt, just ignore reality and support your arguments by using simplistic maxims that offer formulaic solutions to problems that have proven to be immune to formulaic solutions.
I didn't say "all." I said tax cuts are stimulative, which they are, in the real world, because they are never saved 100%. I didn't say tax cuts were stimulative under all fantasy scenarios Sam Fisher could come up with. My statement was correct. Even that article doesn't state that the rich saved ALL of the tax cut, or that the stimulus effect was 0, it just says that the demand boost would be smaller. I'm not even advocating tax cuts at this time, I'm just saying that tax cuts DO stimulate demand, which your article did not contradict. So do you know now what the supply side effect of a tax cut is. Or you need more help there?
The problem with the OP is the naive belief that the government works for the benefit of average people. The entire stimulus is literally robbery; Congress is robbing the poor and middle class to shelter their corporate friends from the problems Congress created by fixing the banking system in their favor. The government is just a middleman. They don't produce anything. They tax the people's voluntary productive capacity for the benefit of sheltered corporations. That isn't stimulus. All the government is doing is squandering the average person's wealth to prop up a corrupt fascist economic system.
Thanks for your perspective, and actually I mostly agree with you. I am not saying we should lower taxes, I'm just saying it's incorrect to state that tax cuts don't stimulate. At this point, I believe the FED should do more to stimulate demand. Which it seems to finally be doing with another round of quantitative easing.
I wasn't speaking about this govt. stimulus which I agree isn't large enough, and some of it was misdirected.
The whole notion of cutting tax for the poor, or giving break for the rich, is just absurd. That is the government trying every possible way to CREATE unfairness in the society, and the whole tax system is creating as many loopholes as possible. Two words: FLAT TAX. Flat tax rate of 25% for instance, with a minimum taxable income level ($30K for example). NO tax deductible for interest paid, so people don't try every possible way to get a bigger mortgage; NO tax break for long term or short term capital gain, so accountants and organizations don't get fancy with bonuses or options or any kind of income. NO tax break for anything at all. I believe 70% of the government officials in IRS can be fired, and 50%+ accounting firms can be closed, and 50%+ accounting lawyers can learn to do something else instead of digging out loopholes in tax code. That is flat rate for every single tax payer with income above $30K. Federal and State? They can fight it over who gets how much from that 25%, it's not tax payer's job. 25% gets taken whenever there is income occurred. And yes, capital gain is going to be taxed the same. No, it's not taxed double, because that winning profit was never taxed to start with. Law is supposed to be fair and unambiguous, and it is very wrong, if you need experienced and highly trained professionals to interpret it freely. This has unfairness written all over it. If some people needs special help, create a special program with tax money to help them. But don't make exceptions left and right on the tax system. Keep it simple, keep it steady, and keep it to ZERO exception. Maybe then, we can hear less politicians arguing about such nonsenses. Hong Kong government can live with a 15% flat tax rate, why can't US live with a 25%? How about 30%?
Hiring someone would be great, if we had the revenue to justify hiring someone. Tax cuts at the moment aren't stimulating demand because in an time when corporate revenue is down along with personal incomes we aren't paying a lot of taxes to being with. First off I didn't say anything in this thread regarding the stimulus but am talking about how tax cuts aren't helping the economy. In regard to what the state can do I actually don't think it can do a lot. We are in a downturn of the business cycle and it will take time to work it out. My field is architecture and there is an oversupply of things like housing, office and commercial space at the moment and it will take a while for the economy to absorb that. I will say though in regard to my business we are indirectly benefiting from government spending in terms of that a lot of our recent work has been on public sector projects, visitor centers, transit stations and arenas. I will point out that while in some sense they are a subsidy to people like me they also provide a long term good in increasing infrastructure. Now whether that is immoral are inefficient are perhaps subjects for other threads but I would point out if you are going to argue that then consider what is the alternative of having small businesses like myself go out of business and then not employ anyone.
The one who is not talking about real world actions here is not me, it's you. You're in a fantasy land of Laffer curves and homo economicus and one or two variable models - I'm in the real world looking at the data. Actually it does in fact say that, it says exactly that small changes in the income tax rate for high income families exhibit zero correlation with their propensity to consume vs. save. Look at the graph in the Moody's report you can see that the increase in the Savings rate and the coresponding decrease in consumption for most people is FAR greater than the decrease in the tax rate in years following a phase-in of a tax increase (5% increase in savings rate in 2003), and actually the Moody's data is misleading since it only measures top quintile - I guarantee you if you shrink the sample size the correlation is even worse for your side of the argument. Let's say somebody is making 300,000. The 2003 tax cuts generated for them something like $500 in tax savings, ceteris paribas. So they have $500 more in 2003 vs. 2002 - under your model, consumption would increase by 500 - savings. Is this what happened? No - in 2003, that person, if they followed the model of the mean high-income consumer, adjusted their savings rate (and decreased their investment and consumption necessarily) from a level of 0 in 2002 to 5% ($12,500) in 2003. So unless you can tell me that the $500 tax cut > $12,500 savings increase (each of which is deducted from C) - it's impossible for you to prove that C has increased from 2002 to 2003. But what do I know, it's just the real world I'm talking about. Yes I do want to know, very clearly, what you meant by that comment. It sounds to me a lot like an allusion to magic. Explain to me how your magic works!
My wife works for a guy. He has lots of money, a few hundred million. He grew up in a middle class family in South Texas and worked his way through the oil industry, eventually owning his own oil company. He employs 12 people directly. He employes about 1,200 people (contract work) indirectly. He spends lots of money. He and his wife shop a lot. Their pour tens of millions into the local economy through construction projects for him and his children, through shopping, through travelling. He just ordered a jet. He built a house in Colorado. (funny enough, he gets looked down upon in some of the more upscale portions of Colorado because he personally made his money and doesn't have a "family name" and inheritence) He also saves a lot of money. He never spends more than he made in a year. He donates a lot as well. He has donated and given away over $150 million since my wife has worked for him to various causes. He pays taxes. A lot of taxes. He pays every kind of tax you can think of to dozens of states, municipalities, etc. Because of the nature of his business he has over 150 tax returns a year all over the place. He is also an extremely nice guy that is down to earth and very generous with his money to those he knows and those who work for him. So there is some background on the rich guy I personally know. He built up his wealth over his lifetime, the only thing he got from his parents was a decent education (no money). He does all of the above. He saves (spends less than he makes), but he spends anyways (a lot). He is extremely generous. He also reinvests his money constantly. He employs a lot of people through is investments in new projects. He also works hard. A lot. He could "retire" but he chooses to stay working. He's not some evil "behind the gate" rich guy that takes advantage of people. If you saw him in Starbucks, you wouldn't know he was wealthy unless you saw his watch. He often will walk into a store and pick up everybody's tab. He's not somebody that you would "rise up" against. You would find it absurd to think of him in that way if you actually knew him. I *think* but don't know that most wealthy people are like him. Basically normal people that happen to be wealthy. You wouldn't work to overthrow them if you knew them or something insane like that. The only ones you ever hear about, however, are the ones that make the news for doing bad or shady things. Its strange the perspective you have when you personally know someone that could basically have anything they want ever and while they have some cool toys, they are basically normal people that watch Texans football and root for the Rockets (just from a box).
A flat tax on discretionary income (say anything above $40k or whatever), no deductions, no exemptions, is an excellent idea, and it eliminates the problem of regressiveness (sp?). But politicians and regulators love the power that comes with the massive thousand page+ tax code, full of carrots and sticks for one favored group or another. They can encourage or discourage behavior with it, and they will never give up that social engineering power willingly. There is also the idea of a national sales tax on any spending above the cost of living, as a replacement for the income tax (the FairTax ). This has the added benefit of tourists and illegals paying it.
lol @ Sam flailing around trying to pull his usual trick of twisting words and spitting out random #&$* to argue a point nobody was even arguing.
