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Instead, this is what Romer wrote just last May, that says the exact opposite: Not really...In other words, increase taxes on the top 2%, and they'll change their behavior to be less productive, taking GDP down with them. EXACTLY what we've been trying to tell you liberals.
Reading helps. This is from the link:
Quote:
But a critical review of several natural-experiment studies concluded that the best available estimates of this sensitivity range from 0.12 to 0.40. The midpoint of the range, 0.25, implies that if the marginal tax rate for high earners decreased from its current level of 35 percent to 28 percent (which Mr. Romney proposes), reported income would rise by just 2 1/2 percent.
In a new study, David Romer and I found that changes in marginal rates in the 1920s and ’30s had even smaller effects. (Mr. Romer is my husband and a colleague at Berkeley.) The rate shifts in that era make those after World War II look tame, and varied greatly across income groups. The Revenue Act of 1935, for example, raised marginal rates on the very highest earners to 79 percent from 63 percent, but barely raised rates at all for those below the top one-fiftieth of one percent of households. (Now that was class warfare!)
Where does this leave us? I can’t say marginal rates don’t matter at all. They have some impact on reported income, and it’s possible they have other effects through subtle channels not captured in the studies I’ve described. But the strong conclusion from available evidence is that their effects are small. This means policy makers should spend a lot less time worrying about the incentive effects of marginal rates and a lot more worrying about other tax issues.
This means, that there were small (or tiny) effects. If they happen at all, the effect of changing taxes on GDP is small, so small, that policy makers should spend a lot less time worrying about the incentive effects of marginal rates and a lot more worrying about other tax issues.
GDP will also decline with spending cuts. But, tax revenue HAS declined while GDP has increased. GDP steadily increased from 2000 to 2001 to 2002 to 2003 to 2004 but tax revenue was higher in 2000.
Quote:
Not really...In other words, increase taxes on the top 2%, and they'll change their behavior to be less productive, taking GDP down with them. EXACTLY what we've been trying to tell you liberals.
They aren't idiots, like the peasants "protecting them" at ANY cost.
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Originally Posted by InformedConsent
I just did. It's used up supporting increasing amounts of non-productivity.
This means, that there were small (or tiny) effects. If they happen at all, the effect of changing taxes on GDP is small, so small, that policy makers should spend a lot less time worrying about the incentive effects of marginal rates and a lot more worrying about other tax issues.
Romer wrote:
Quote:
"...if the marginal tax rate for high earners decreased from its current level of 35 percent to 28 percent (which Mr. Romney proposes), reported income would rise by just 2 1/2 percent."
We're not talking about a tax decrease on the top 2%. Obama wants to INCREASE their tax rate.
We already know the Romers found that for every 1% of a tax INCREASE, GDP decreases by 2.5-3%. I'm not so sure I would call an amplification effect of 2.5-3 times so small.
Romer wrote:We're not talking about a tax decrease on the top 2%. Obama wants to INCREASE their tax rate.
We already know the Romers found that for every 1% of a tax INCREASE, GDP decreases by 2.5-3%. I'm not so sure I would call an amplification effect of 2.5-3 times so small.
I must note that your user ID is indeed ironic.
Then, the first study discusses overall tax-rates, not just changes on the top end. There is little evidence that a small tax increase on just the top end would decrease GDP at all. Buffett already concluded that it wouldn't discourage investment.
This means, that there were small (or tiny) effects. If they happen at all, the effect of changing taxes on GDP is small, so small, that policy makers should spend a lot less time worrying about the incentive effects of marginal rates and a lot more worrying about other tax issues.
So why all the concern if the marginal rates for everyone revert?
Then, the first study discusses overall tax-rates, not just changes on the top end.
Romer does indeed address the top end:
Quote:
"We found that an increase in marginal rates on an income group leads to a decrease in its reported taxable income relative to other groups."
What is the end result of reducing the income of the source of roughly 50% of the federal income tax revenue?
Quote:
Originally Posted by MTAtech
There is little evidence that a small tax increase on just the top end would decrease GDP at all.
It's not just the 1% or 2% top end. You're talking about what amounts to those responsible for generating so much productivity that they pay roughly 50% of the federal income tax revenue.
Quote:
Buffett already concluded that it wouldn't discourage investment.
So why all the concern if the marginal rates for everyone revert?
I think they should -- in fact, I'd return to the pre-Reagan rates. But the President is concerned that the high income earners have done far better than everyone else and therefore take most of the hikes.
I can't keep up with you guys. You liberals cried that the Bush tax cuts were bad. Now you don't want to reverse them because that would be bad.
You said they didn't stimulate the economy. Now you're saying it will cripple the economy if we undo what you previously said didn't do anything.
Slightly different climate right now, I don't understand some of these arguments that there too many people on social support programs, what do expect when we had one of the greatest downturns in history
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