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With the top tax bracket being 39.6% surely some people have effective rate at 36% or more and it's not because they don't have a good accountant. Ordinary income of 4mm would put you above the 36% effective mark
True. However, Laffer's figure is laffable anyways (Hi-Yo!). Emanuel Saez's actual research on the subject puts the top marginal rate to generate increased income at about 70%.
Tuck's Dad, I hate to tell you, but if we are talking about direct taxation and direct spending, the federal government can basically do as much as it wants to. The "general welfare" clause has been held to relate to spending (and only to spending). While the government can't make laws pursuant only to the general welfare clause as far as restrictions on behavior, etc..., it CAN spend any money it takes in. And its power to tax is essentially plenary.
I am actually not making that argument. The government has taxed more and less over time, and the income tax has been ruled constitutional. I beleive some level of taxation is needed, as well as certain government services. However, there is a point beyond which the governments use of taxation retards economic growth - people can differ about where that limit is, I think we are there.
I understand your point about tax power, but that takes us a different direction than this thread if taken to the extreme it begs the question: Do we own the government, and only surrender those liberties (and taxes) needed for the common good, or does the government own us (and our incomes/production), and give us the liberty (income) it can afford?
If it has finally devolved to the latter, then I expect we will see a long term decline of economic activity as people opt out of productive pursuits, and move to government approved pursuits.
If it has finally devolved to the latter, then I expect we will see a long term decline of economic activity as people opt out of productive pursuits, and move to government approved pursuits.
But that's the assumption you keep making; that government-approved pursuits are somehow different from or opposed to "productive pursuits". What can the private sector do that the government couldn't also do? Why would pursuits encouraged by the government (or income allocations pursued by the government) lead to decreased productivity in any utilitarian sense?
True. However, Laffer's figure is laffable anyways (Hi-Yo!). Emanuel Saez's actual research on the subject puts the top marginal rate to generate increased income at about 70%.
Haven't read his work, but a top marginal rate at 70% depnding on when it kicks in could yeild very different effective rates.
If I understand Laffer's work correctly, at 36% (he actually had a range, not a specific figure) economic behavior begins to adjust and revenues go down from anticipated revenues based on the tax percentage, and as econimic activity shifts, total revenues also decline. Logically, that makes sense to me, but I am not a mathmetician and have not replicated his numbers, so perhaps Saez's is better to cite.
However, there is still an upper limit after which taxation is counterproductive, and lower taxation does result in private sector expansion.
But that's the assumption you keep making; that government-approved pursuits are somehow different from or opposed to "productive pursuits". What can the private sector do that the government couldn't also do? Why would pursuits encouraged by the government (or income allocations pursued by the government) lead to decreased productivity in any utilitarian sense?
They can be the same. In a theoretical sense, there would be no difference, but in reality, private sectors always outperform governments at efficiently allocating resources (and sometimes that creates problems). Relying solely on private sector functions also creates gaps in services, the most obvious is the military, but there are a lot of other examples, so there are roles for both - finding the most effecient balance of who does what (private vs. gov.) is the challenge.
Our government was not set up to be productive (like a communist model is), but to fill those gaps the private sector would ignor. We do have a lot of metamorphasis since the founding though, so the government does exert a role in private sector R&D for example, as well as other roles it was not originally envisioned to fulfill.
It is just that I believe that private sector is a better way to get the job done in most cases, but there are clear roles for the government.
But that's the assumption you keep making; that government-approved pursuits are somehow different from or opposed to "productive pursuits". What can the private sector do that the government couldn't also do? Why would pursuits encouraged by the government (or income allocations pursued by the government) lead to decreased productivity in any utilitarian sense?
Because it is disparity that encourages people to work hard and move forward.
Keep in mind that even communist governments never allowed true socialism. They made people work hard and yet get a miserable life and very modest benefits. In other words, communists were deeply worried and implicitly acknowledged that people would do what they can to get away with things. They didn't have a capitalist incentives system but they instead had a machine that made people bust their butt.
You have to find something that will make people do what you want them to do. You fail when you assume that they likely will voluntarily do it. That doesn't work. People get spoiled. You need an incentives system, which leads to some wealth disparity. Or you can also install a violent system, in which case people have to do it.
The best bet for all is entrepreneurial capitalism (not crony capitalism) where we all get to be innovative, creative, and excited about our projects. With guaranteed income and no incentives to innovate and create, there would be no mass access to the internet, no PC's, no Mac's, no iPhones, no cool new watches with computers in them, no great little coffee shops, no independent people providing wonderful services we all take for granted.
The financial illiteracy in this country is astounding and terrifying. It is entrepreneurial capitalism that has lifted people out of poverty from the beginning of time. I grow or make something you need, you grow or make something I need, we figure out a way to trade it using paper or gold or barter. We are both happy.
Lowering the bottom doesn't ever work. Ask Alcoholics Anonymous. That's their main platform. When you guarantee income people get used to being taken care of. Why do the forest services tell us not to feed the animals or they will become dependent on us and starve when we disappear?
I believe in giving a hand UP, not a hand OUT. Working on something you love and succeeding is the best way to have high self esteem and motivation. When people are handed everything they need to survive and aren't asked to do more, it's demeaning. It's the bigotry of lowered expectations.
It's also interesting how many people are willing to give others guaranteed income as long as it doesn't come directly out of their OWN pocket. This brainwashing against entrepreneurial capitalism is really a concern. You can't lump that little store owner on the corner with behemoth multi-nationals. Two completely different type entities. Yet those who are on the dole are more than happy to yell for laws and restrictions that wind up shutting down their favorite little coffee bar because - hey - "capitalism is bad! amirite?" No - it isn't. Take a step back and think about what you are asking for.
"Basic/Minimum income" is just another textbook income redistribution scheme. The irony is that it would probably costs each household more than 11k in taxes for the government to be able to afford it. Nothing more expensive than something "Free" from the government.
Then again they can always print the money instead of taxing it.
No we are not. Basic income should cover the average price of the basics to live. not the max, not the min. the average in the US. We have very specific ways of calculating this, and have done so for a long time. The idea behind this is not to make people rich, etc. its to say "Heres enough to survive". It may mean moving someplace cheaper. For example if I lost my job, I could not afford to live in my current city. I COULD however move elsewhere. People often pick a number, but thats preference. Pegging it to inflation means it shouldn't need to change.
It is basic. But if someone has used up theirs, you are not going to watch them die are you? You will need to give them more.
If you lost your job, that's where the basic income comes in. That income is proportionate to your city's standard of living. Then why would you move? And if you live in a desirable location, people would want to move there. Giving them basic income would encourage everyone to move there.
Again! I think this creates a whole lot of problems and give too much control to whomever gets to decide on this.
The best bet for all is entrepreneurial capitalism (not crony capitalism) where we all get to be innovative, creative, and excited about our projects. With guaranteed income and no incentives to innovate and create, there would be no mass access to the internet, no PC's, no Mac's, no iPhones, no cool new watches with computers in them, no great little coffee shops, no independent people providing wonderful services we all take for granted.
The financial illiteracy in this country is astounding and terrifying. It is entrepreneurial capitalism that has lifted people out of poverty from the beginning of time. I grow or make something you need, you grow or make something I need, we figure out a way to trade it using paper or gold or barter. We are both happy.
Lowering the bottom doesn't ever work. Ask Alcoholics Anonymous. That's their main platform. When you guarantee income people get used to being taken care of. Why do the forest services tell us not to feed the animals or they will become dependent on us and starve when we disappear?
I believe in giving a hand UP, not a hand OUT. Working on something you love and succeeding is the best way to have high self esteem and motivation. When people are handed everything they need to survive and aren't asked to do more, it's demeaning. It's the bigotry of lowered expectations.
It's also interesting how many people are willing to give others guaranteed income as long as it doesn't come directly out of their OWN pocket. This brainwashing against entrepreneurial capitalism is really a concern. You can't lump that little store owner on the corner with behemoth multi-nationals. Two completely different type entities. Yet those who are on the dole are more than happy to yell for laws and restrictions that wind up shutting down their favorite little coffee bar because - hey - "capitalism is bad! amirite?" No - it isn't. Take a step back and think about what you are asking for.
Everything you said is an unverified platitude. Entrepreneurial capitalism often wastes human lives, wrings them out, and gives them nothing in return, because capitalism works for and in the interested of only the capitalist (literally, not as a value judgment). There is nothing about socialism that is inherently against "trade", but against the fact that only those with capital can command the social order. Even the "innovators" have to give a large share of their innovations to those who already have capital.
The whole nonsense about the "bigotry of lowered expectations" is useless. People without capital, without equal resources growing up, equal access to connections, etc... are far less likely - by any measure - to move up. It's worse here, in a nation that has much more inequality, than it is in many nations that do far more to ensure a basic and adequate standard of living. This includes things like guaranteed paid vacation, universal healthcare, etc... They realize that nobody makes anything on their own and everyone - everyone - is 100% reliant upon the unearned benefits of society. It is at least a partial recognition that all the knowledge arising from all past generations and all other people outside our immediate sphere, all the infrastructure upon which we rely, etc... is the PROPERTY of all mankind and not some supposed self-created savior. There are no uncaused causes, there is no independent earning of any wealth.
Capitalism is the destruction of our humanity in every sense.
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