Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Your stats (and your understandings) are shockingly incomplete. In the real world, tax burden has been disproportionately left behind as the incomes of top earners have disproportionately advanced.
If my income were to flat out double, my spending patterns would change only a little. I'm not going to go drop money on things I don't value
Of course. Poor people spend their money, though.
Quote:
Instead, if income were to flat out double, I would invest more
Again, this is typical and obvious. Tax cuts for the rich will not result in higher consumption (production), but it *may* result in greater investment.
In reality though, the rich invested more when taxes were high. Why?! Because they took capital gains and sheltered their income... which they could only do domestically. Cutting taxes and changing our trade policies resulted in a large portion of capital leaving the country.
At any rate, there is no lack of capital to invest at the present time. The cash is piling up or driving up asset and equity prices. Investment is lacking because consumer demand has been systematically screwed for the last 40 years. The debt bubbles we've been floating have all popped. The smart money knows that demand will remain low for many years to come.
Really? What does the number of pages in the tax code have to do with economics? I would suggest that the tax code is complicated only because the economy itself is complicated. Also that only a tiny number of all the pages in the tax code actually apply to any individual taxpayer.
The tax code is complex because Congress has continued to use the tax code to distort the cost of goods and services. Congress is meddling. Congress has decided that people who borrow money to buy houses, have children, give to charity, have medical expenses, etc. should pay less federal income tax.
My financial situation is ordinary. Nothing exotic. Not even a mortgage any more. But it takes software, or a paid professional, to do my taxes accurately. The tax code itself is an economic stimulus program.
New research paper indicates tax cuts for lower income people generates higher economic activity.
I found this study to be quite interesting.
Tax Cuts For Whom? Heterogeneous Effects of Income Tax Changes on Growth and Employment
Owen M. Zidar
NBER Working Paper No. 21035
Issued in March 2015
New research paper indicates tax cuts for lower income people generates higher economic activity.
I found this study to be quite interesting.
Tax Cuts For Whom? Heterogeneous Effects of Income Tax Changes on Growth and Employment
Owen M. Zidar
NBER Working Paper No. 21035
Issued in March 2015
Seeing as something like 40% of Americans pay no income taxes, how does one cut their taxes?
I suppose we could give poor people cards which exempt them from sales taxes, excise taxes, gas taxes.
40% pay little or no FEDERAL income taxes....except for social security. Lower the social security tax rate, while removing the cap for example. And that 40% number is a bit more complex as well.
But really if you want to see our economy explode? A basic income.
It's going to be difficult to give additional tax cuts to the 38% of lower income Americans who don't pay any income tax at all.
Not really. All you do is increase the EITC amount and you've effectively given them an additional tax cut, or larger negative tax rate.
As far as stimulating the economy, I don't disagree. Giving people in the bottom 40% who don't pay any federal income taxes an amount of money, say $1 billion, is going to have a greater immediate impact on the economy than given the same $1 billion tax cut to the top 60%. especially if it goes predominantly to the top 5%. I'm not in the top 5% but mostly what I'd do with a tax cut is increase my savings rate.
Really the philosophical difference is what the role of government is supposed to be. Taxes are fundamentally necessary to pay for government functions, but what exactly those functions are supposed to be depends on viewpoint. I don't view widespread reallocation of wealth ala a Western European style welfare state to be a desirable government function. I'm for it on a limited scale but not to that extent. Mostly, however, I'm just a simple fiscal conservative. First and foremost, I'd like to see a balanced budget. Since we've chosen to habitually spend more than we bring in in tax revenue I'm just pretty negative of any tax cuts. Maybe in the short term like the payroll tax cut I can see the point of running a deficit or bankrupting social security faster, but in the long-term solvency is much more important than tax cuts.
Anyway, that argument is to me moot right now. Q4 2014 GDP growth was solid. The early estimate of Q1 2015 was not but I'd need to see several quarters of consecutive weak GDP growth as a justification for a need for any Keynesian intervention.
Also, all the right wing stuff is a bunch of garbage. EITC had overwhelming support from both sides. It's a good program that gives welfare to people who work but earn little money by increasing taxes on the wealthy. Again, I'm not huge on extensive redistribution of wealth but some assistance to the working poor I'm not flat out opposed to. I'd much rather see welfare given to people who work but don't earn a lot of money. For an expansion of EITC, I don't really see it as necessary. Regardless, like EITC it would have to be accompanied with higher taxes on the wealthy such that it's revenue neutral for me to support it or cuts in federal spending elsewhere. I'm just not that thrilled about the idea at all to begin to be perfectly honest. There's bigger priorities for me that redistributing wealth like the deficit and deplorable state of infrastructure.
40% pay little or no FEDERAL income taxes....except for social security. Lower the social security tax rate, while removing the cap for example. And that 40% number is a bit more complex as well.
But really if you want to see our economy explode? A basic income.
Social security/Medical taxes aren't defined as an income tax. It gets categorized as a payroll tax.
Personally, I think the wealth redistribution component of social security is too large already. We're just fundamentally at opposing views on that is my guess. I'd much rather see a flat system like Germany's where what you pay in is what you get out rather than our system where low earners get more benefits at the expense of higher earners. That's not going to happen, of course. When the inevitable reforms finally end up happening little of the cuts will be to low earners.
Fortunately for me, I can control that to a great extent. I'm not high enough income where I'm at the really punitive stages but as my income continues to grow I always have the option of restructuring and taking a portion of my income as dividends and avoiding payroll taxes. It really doesn't matter to me personally. The reality though is that I just choose to work less. I turn down work regularly because I don't need to earn more and don't want to work longer hours.
Anyway, that argument is to me moot right now. Q4 2014 GDP growth was solid. The early estimate of Q1 2015 was not but I'd need to see several quarters of consecutive weak GDP growth as a justification for a need for any Keynesian intervention.
I agree with much of what you said, but would like to address this part. Define what you think a good rate of growth is for GDP, 4%? 8%? 11%? 100+% Its only been in the last decade or so that we've seen growth this consistently low. And honestly I believe a large part of that is that our inequality levels have gotten so high.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
