Timothy Geithner said what?

[ERCougar]

Yes you do. This country needs rich guys like you to pay taxes.

I'm only here because Bush cut taxes!

[byu71]

Ugh. This obscure, controversial, and almost certainly irrelevant to the US' current tax situation, economic idea is all the economics that cougarboarders know, but it's like gospel over there.

Sorry, Ted. I know this doesn't describe you, but it just brings back memories of snipe and company.

For this to be relevant, you have to show that people will work less--a lot less--if you raise taxes above current rates. I don't want my taxes raised any more than anyone else does, but there's now way this is true for me, and if people are being honest, it's not true for them either, with rare exception. The Laffer curve may be relevant in extreme situations, but really, they're extreme (probably around a 70% marginal tax rate).

I'll go into this more later, if youre interested (but i suspect youre just throwing it out there) but I have to get to work.

It has a lot to do with the rich's willingness to invest. When you invest you consider risk vs return. If the government takes a bigger chunk of your return your willngness to risk goes down.

This especially is true of a small businessman when he is considering expanding his business.

One of the real oddities of the tax system is capital gain vs loss. You recognize a $100,000 gain you are taxed. If you lose $100,000 you can write it off at a rate of $3,000 a year.

[Uncle Ted]

Ugh. This obscure, controversial, and almost certainly irrelevant to the US' current tax situation, economic idea is all the economics that cougarboarders know, but it's like gospel over there.

Sorry, Ted. I know this doesn't describe you, but it just brings back memories of snipe and company.

For this to be relevant, you have to show that people will work less--a lot less--if you raise taxes above current rates. I don't want my taxes raised any more than anyone else does, but there's now way this is true for me, and if people are being honest, it's not true for them either, with rare exception. The Laffer curve may be relevant in extreme situations, but really, they're extreme (probably around a 70% marginal tax rate).

I'll go into this more later, if youre interested (but i suspect youre just throwing it out there) but I have to get to work.

Take a look at the dividend and capital gains tax using the bush tax cuts as an example...

By 2003, Mr. Bush grasped this lesson. In that year, he cut the dividend and capital gains rates to 15 percent each, and the economy responded. In two years, stocks rose 20 percent. In three years, $15 trillion of new wealth was created. The U.S. economy added 8 million new jobs from mid-2003 to early 2007, and the median household increased its wealth by $20,000 in real terms.

But the real jolt for tax-cutting opponents was that the 03 Bush tax cuts also generated a massive increase in federal tax receipts. From 2004 to 2007, federal tax revenues increased by $785 billion, the largest four-year increase in American history. According to the Treasury Department, individual and corporate income tax receipts were up 40 percent in the three years following the Bush tax cuts. And (bonus) the rich paid an even higher percentage of the total tax burden than they had at any time in at least the previous 40 years. This was news to theNew York Times, whose astonished editorial board could only describe the gains as a “surprise windfall.”

[ERCougar]

Take a look at the dividend and capital gains tax using the bush tax cuts as an example...

I won't disagree with you on the potential of capital gains tax cuts to increase growth and revenue. Most economists agree that this is a terrible taxation idea. I was referring to income tax rates.

[DU Ute]

Raising the tax rate does not necessarily result in more tax revenue....

That would be much more useful if that Laffer fellow had given us a number where the tax rate is. It looks like it's right around 50%, so maybe we should go with that.

[Uncle Ted]

I won't disagree with you on the potential of capital gains tax cuts to increase growth and revenue. Most economists agree that this is a terrible taxation idea. I was referring to income tax rates.

Historically, no matter what the income tax rate has been the tax revenue is pretty much always about 18% of GDP. For some reason, Obama disagrees with most economists and raised capital gains, which obviously does nothing for raising the GDP.

One thing raising the cap gains tax rate (while adding more unfunded entitlements) most likely did do is speed up the death match to this country's insolvency.

[ERCougar]

Historically, no matter what the income tax rate has been the tax revenue is pretty much always about 18% of GDP. For some reason, Obama disagrees with most economists and raised capital gains, which obviously does nothing for raising the GDP.

One thing raising the cap gains tax rate (while adding more unfunded entitlements) most likely did do is speed up the death match to this country's insolvency.

Man, is there a better linker on the board?

Interesting info. I don't know enough about the specific taxation rates of each decade to say, but what the table seems to indicate is that today's tax structure is the least progressive it has ever been, not that tax rates have no impact on tax revenues. That's certainly what common sense would suggest, although we'd need to see the various tax rates to bear that out.

[Green Monstah]

I found it interesting that he uses education spending as something that the federal government would have to cut. Education spending is $122B (even after the 70+% increase) of the $3.69T budget. It would have been a little more interesting if he said if we don't raise taxes then we might have to pull our troops out of places like Iraq and Afghanistan where we have spent over $1.2T bombing the hell out of things.

Uncle Ted for Prez.

I hate to say it, but I think we've left the domain of tax cuts or reduced spending, and we have to simply come to terms with the fact that we need to do both simultaneously.

There will be growing pains, and it will suck for many, but I think the alternative is far worse.

[Green Monstah]

Man, is there a better linker on the board?

Interesting info. I don't know enough about the specific taxation rates of each decade to say, but what the table seems to indicate is that today's tax structure is the least progressive it has ever been, not that tax rates have no impact on tax revenues. That's certainly what common sense would suggest, although we'd need to see the various tax rates to bear that out.

Agreed. I hadn't thought of this, but it makes fairly good sense.

[Jacob]

Uncle Ted for Prez.

I hate to say it, but I think we've left the domain of tax cuts or reduced spending, and we have to simply come to terms with the fact that we need to do both simultaneously.

There will be growing pains, and it will suck for many, but I think the alternative is far worse.

We've left the domain of tax cuts or reduced spending? We never got started!

[RobinFinderson]

A couple of points, mostly for Ted:

Concerning the Laffer curve, the concept makes sense, but I have yet to hear anyone make a compelling argument for where the tax rates sit on the curve. It could be that we are on the left side of the curve, and that increased taxes would make a lot of sense for dealing with our fiscal woes. Without producing evidence that we are on the right-side of the curve, merely presenting the Laffer curve concept isn't enough.

Second, regarding our race to insolvency, won't we have turned most of the baby boomers into soilent green by 2049? Why is there no downtick in the projected costs to reflect the demise of the boomers?

[NorthwestUteFan]

Man, is there a better linker on the board?

Interesting info. I don't know enough about the specific taxation rates of each decade to say, but what the table seems to indicate is that today's tax structure is the least progressive it has ever been, not that tax rates have no impact on tax revenues. That's certainly what common sense would suggest, although we'd need to see the various tax rates to bear that out.

True, and the irony of that statement is that we now have a greater percentage of people paying zero taxes than at any time over the course of that chart. After tax credits, (EITC, etc.), 47% of earners paid zero dollars in federal taxes, or got money back from the government.

Here is a hint: Just because a person fills out a tax form doesn't make him or her a taxpayer. If you filled out a 1040, and got back more money than you paid or had withheld over the course of the year, YOU ARE NOT A TAXPAYER!!

I am sure many will agree with me that there is a wide gulf of difference between one person who just barely hits the $379,150* mark to quality for the 35% bracket, and another who clears $30M. Yet they are in the same tax bracket. If they wanted to make a TRULY progressive on taxes, leave the rates essentially where they are, but add an extra 1% for each million in excess of $1M. So $1M would pay 36%, $2M would pay 37%, $10M would pay 45%, and the federal pillagers would take everything in excess of $65M. Hollywood would FREAK out over this one...



*in a big city like San Francisco or in Manhattan, making $250k is honestly "just getting by" because it is SO expensive to live in those places

[ERCougar]

It would be really nice for someone to come forward with a symbolic compromise of $1 of spending cuts for every $1 of tax hikes until we get on a path to repay our debt. Sadly, Obama seems a lot closer to this than the Republicans, but no one is very close.

[ERCougar]

True, and the irony of that statement is that we now have a greater percentage of people paying zero taxes than at any time over the course of that chart.

Link? (You may be right, but I'm a little skeptical.)

[Green Monstah]

We've left the domain of tax cuts or reduced spending? We never got started!

I realize that, Jake. As a plan, Jacob; as a plan.