"You Don't Raise Taxes During A Recession" (Corporate Profits, employment, wages)
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BJ, where is your evidence for any of what you say? What you write is just endless assertions.
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Looking at the evidence
Joel Slemrod, a professor of Stephan Ross School of Business at the University of Michigan and Harvard PhD who studies and writes about this phenomena, has noted: Judging by the political scene in Washington, one would think that low taxes were the main source of economic growth in the United States and around the world (even most Democrats dare not demand that President Bush's tax cuts be rescinded), but there is no compelling evidence that high taxes impede economic growth.
Based on his above findings, Slemrod wrote: "There is no supportive evidence for the claim that low taxes guarantee prosperity. In fact, if you just plot out the points (internationally), you will find a clear, positive correlation between high tax rates and prosperity, and that is because developed countries are the ones with the high tax ratios." And similarly regarding capital-gains tax reductions, "That argument is not implausible, but I know of no evidence that establishes a connection between prosperity and at what rate we tax capital gains."
The fallacy is most apparent at the highest end of tax forgiveness. In recent years, the top 400 taxpayers had an average income of $344.8 million, up from their average $263.3 million income in 2006, according to figures in a report that the IRS issued. Their effective income tax rate fell to 16.62 percent. That rate is lower than the typical effective income tax rate paid by Americans with incomes in the low six figures.
Giving the rich a tax break is obviously not needed — they figure out their own tax benefits. Yet, there is absolutely no real evidence that this generous tax advantage among the upper wealthy is incenting them to create new jobs. It simply is not happening. Folks this rich do not need to trivialize themselves creating new jobs, and Ryan's tax proposal is simply ridiculous for this group; they can get along very well with about $300 million after taxes. The facts are further described in a new report on angel and venture capital investing in 2010.
Angel investors investing less
Virtually everyone concedes it will be small businesses, and often "start ups," that will propel an improved economy, But despite the low tax rates (now extended), this report confirms that wealthy angel investors are not increasing investing in new job creation. In fact, they are investing less. Total investments in Q1,2 2010 were $8.5 billion, a decrease of 6.5 percent over Q1,2 2009, according to the Center for Venture Research at the University of New Hampshire. Angel investors have decreased their appetite for seed and start-up stage investing, with 26 percent of Q1,2 2010 angel investments in the seed and start-up stage, marking a steady decrease in the seed and start-up stage that began in 2008 (45 percent) and 2009 (35 percent), and it is the smallest percentage in seed and start-up investing for several years. This significant percentage of latent investors indicates that while many high-net-worth individuals may be qualified investors, they have not converted this interest into direct participation — and it is not taxes that are driving their decisions.
In short, the premise and the promise that giving substantial tax breaks to the very wealthy will stimulate the economy, and "create new jobs," simply has no basis in fact or reality. What it has done, factually, is to increase the deficits whenever it has been tried. It further confirms the failure of trickle-down economics, and it has made the already wealthy, wealthier. It also makes for great sound bites for conservative proponents of the plan. But what is has not done is to create new jobs as proponents have portrayed — because that is a myth.
Read this book. The more people who do, the better off we all will be.
My general bias tells me that I will not like the book. I like Krugman and he pretty much says she is shameless mouthpiece for conservative think tanks like AEI. But I will read it, if it is in the library. I am not going to pay for it.
So? I have a housekeeper; I bring my car to a mechanic; I go to a supermarket that employs people. I see no meaningful distinction between your consumption and Warren Buffett's consumption.
do you own a corporate jet that needs servicing? i will bet that warren buffet does. that jet also needs a flight crew. warren buffet invests his money in businesses, where do you invest yours? warren buffet has a tax exempt foundation, and in order to maintain that tax exempt status, he has to give away a percentage of the value of that foundation every year.
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In addition, businesses invest money to make money. They don't do it to employ people. Why does anyone buy this myth that low taxes on the wealthy creates more jobs? Since 2001, the nation has had the lowest taxes on the wealthy since before WWII and there is no evidence -- as in zilch -- that it did anything to create jobs. In fact, and we had the slowest job growth in 75 years. So let's put this "job creators" lie to bed.
yes you are correct, businesses invest money to make money, but in order to make money, those businesses need employees, or did you think that bill ford builds a few million cars every year by himself? and it is more than just taxes that affect a business decision to expand or not. regulation also plays a huge role. if a business owner does not know what will happen in the near future, and if the business prospects look bleak, they will NOT expand their business. and since the obamacare law, and the financial reform law, and the threat of higher taxes, conspire to create uncertainty in the business world, businesses are going to sit on their money until such time as the uncertainty goes away.
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Let's identify what this 'job creators' narrative means. It means the GOP plan for America's job creators is just another tax cut windfall for the gilded class.
rubbish. if you raise taxes on the very people that create the jobs in this country, the small business owners, then what incentive do they have to hire anyone?
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John Boehner warned that "The mere threat of tax hikes causes uncertainty for job creators -- uncertainty that results in less risk-taking and fewer jobs." As he told Harry Smith of CBS:
"The top one percent of wage earners in the United States...pay forty percent of the income taxes...The people he's {President Obama] is talking about taxing are the very people that we expect to reinvest in our economy."
and he is right.
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If so, those expectations were sadly unmet under George W. Bush. After all, the last time the top tax rate was 39.6% during the Clinton administration, the United States enjoyed rising incomes, 23 million new jobs and budget surpluses. Under Bush? Not so much.
from 2003 through 2007 we had plenty of job creation. it went away in late 2008 when the housing bubble popped and crashed the stock market, and oil prices had been driven to record levels. during the clinton administration we had the dotcom bubble, and when it burst, we lost jobs and the economy slowed down, and then we had the 9/11 attacks which hurt the economy even more.
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So, as I said earlier, let's put this "job creators" lie to bed. It has no basis in facts or evidence. It's just a slogan to plead for tax-cuts on the rich that after ten years has conclusively proven doesn't work.
you claim it doesnt work, but reality shows otherwise. the unemployment rate dropped to below 5% during the bush years, even clinton didnt have that good of an unemployment rate. try again because you are failing in your erroneous arguments.
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What do they say about people who try the same policy over and over expecting different results?
well many people will tell you that liberalism is a mental disease, you tell me.
My general bias tells me that I will not like the book. I like Krugman and he pretty much says she is shameless mouthpiece for conservative think tanks like AEI. But I will read it, if it is in the library. I am not going to pay for it.
By the way, Amity Shlaes is not a "she" (I know, it fooled me too).
If you like Krugman, this may not be the book for you. It relies on well-known fundamental principles of economics, so acolytes of Krugman generally have a tough time with it.
But I appreciate your willingness to take a look at it if the price is right. I hope you find it and read it. There is likely to be a point or two you will find interesting.
and yet raising taxes on the rich back then did the same thing it will do now, cut back on job availability. as i have said before, the rich are going to do what it takes to secure their assets, and their income. if that means cutting jobs, then that is what will happen.
There is no proof that raising taxes on the rich affected job growth in any way. In fact, it may have increased job growth by making people at the top of the food chain need to hussle more to make money.
The fact remains that there is a undeniable correlation between high upper tax rates and a prosperous economy.
Nope, not true at all. The only reason those taxes could be set that high was because we just destroyed most competitors. Sure, we had free reign then... Still doesn't mean things couldn't have been better during that same time period with a lower top marginal rate.
The jobs are leaving because now we're in a truly global economy and you're competing with someone making $.90/hr (hopefully).
You need to study your history, the tax rates were raised during the depression.
In addition, we have always been in a global economy; it is not a new thing. The difference is before we used tariffs to protect our domestic workers and limit access to our markets, which are our biggest asset.
You all might be forgetting about Obamacare mandates and small business which is about 65% of where all employment originates.
For some reason our government thinks that paying penalties and implementing government mandates is "incentive" for small business to grow. With laws, regulations and people like this do any of you wonder why the multinationals have offshored or the small businesses are making due ?
Sebelius: Obamacare's Penalty on Small Businesses a 'Great Incentive' for Growth | CNSnews.com
"Health and Human Services Secretary (HHS) Kathleen Sebelius told CNSNews.com on Monday that a provision in President Barack Obama's health-care law that requires small businesses to begin buying health insurance for their workers when they hire their 50th employee--or otherwise pay a penalty to the federal government--"will actually be a great incentive" for businesses to grow."
There is no proof that raising taxes on the rich affected job growth in any way. In fact, it may have increased job growth by making people at the top of the food chain need to hussle more to make money.
The fact remains that there is a undeniable correlation between high upper tax rates and a prosperous economy.
You need to study your history, the tax rates were raised during the depression.
In addition, we have always been in a global economy; it is not a new thing. The difference is before we used tariffs to protect our domestic workers and limit access to our markets, which are our biggest asset.
Perhaps you should study history too.
While you are technically correct, ("tax rates were raised during the depression.") you need to get your timeline right. Top rates prior to the Depression were lowered from 73% to 24% and it wasn't until 1932 -- when the Depression's toll already devastated the economy (GNP dropped 50%), that Congress enacted the Revenue Act of 1932. Thus, if you trying to prove that raising upper income tax-rates caused or contributed to the Depression, that fact doesn't do it, since the Depression was it's worst before 1932.
You also should understand the old line, "those who fail to learn history are doomed to repeat it." Hoover's policies sound like today's GOP proposals.
Hoover was a firm believer in balanced budgets, and was unwilling to run a budget deficit to fund relief programs. Hoover started the Mexican Repatriation program -- thinking that Mexicans were taking American jobs and forced 500,000 Mexicans in the U.S. back to Mexico.
Thus, what do we learn from the Depression? Balancing the budget makes things worse and taxes on the rich have no effect and blaming immigrants doesn't help either. The theory that raising upper-income tax-rates diminishes economic activity is merely a canard.
What we also learn is that government spending and not worrying about short-term debt coupled with jobs programs reverses economic decline.
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