Preparing to shrug...
Every time tax rates are cut revenue increases. What more proof do you need that we are to the right of the maximum.
It would be hard to find a more inappropriate analogy.
Well I guarantee that if my taxes go up any more I’m definitely gonna “shrug”. Sounds like they are trying to argue that taxes can go up a little more without hurting revenues. I find that hard to believe.
Increased taxation provides a nice incentive to do the kind of work that pays in under-the-table ‘cashy money.’
This is a future model. What is needed is a historical graph. One that shows the real tax rate (Fed plus state) against total revenues (Fed, + State income + State sales) for the past 50 years.
You can avoid all this by using the Charlie Rangel “Instant Tax Cut” software package. Guaranteed to cut your taxes!
This assumes that we want the govt to get the most money it can. Only a population of willing slaves thinks that increasing govt revenue is a good thing.
Maximum revenue to the Treasury is repeatedly and reliably analyzed by economists to be at 22% of GDP.
The U.S. tax take is >35% of GDP. State and Local included.
Therefore, the Treasury could RAISE RECEIPTS by lowering taxes, since more people would work more, more than offsetting losses due to rate reductions.
Smart liberals know this. It is proved.
However, smart liberals also know that ENVY wins elections. So they convince their green-with-envy constituents that they will raise taxes on those evil rich neighbors, and the stupid proles vote for the libs.
Only through the purposeful manipulation of the human instinct to envy in violation of G-d’s Commandment do the liberals achieve votes and office.
EVIL.
There are so many false premises behind the author’s argument that it’s not worth listing them all. However, the most important one is the idea that maximizing the government’s tax take is any sort of ideal or overriding goal. The goal is to adequately fund proper and legitimate government functions. Taking any more than that is not just counterproductive, it’s evil.
However, in the longer term investors are less likely to invest in the United States. Consumers will learn to live with less deciding that they would rather have a 500 sq. ft. apartment and only work 40 hours a week to pay for it instead of the 80 hours they needed on their old houses after taxes. They will also learn to work off the books and might even abandon the US for a lower tax job. Thus the long term Laffer Curve has a peak at a much lower tax rate than the short term tax rate.
If the government takes most of the harvest, it might make more sense to eat the seed corn and let the land lay fallow next year.
It is well below that, to allow real investment to grow the economy over time.
The article is still stuck in first partial land. That is better than the delusion that the government can just take everything, but it is still bad economics and bad policy.
“Shut up and do science”
An essential point about the Laffer Curve: there are TWO points that yield the exact same level of tax revenue. One is at the high rate the other at the low rate. People who foolishly think that boosting rates can boost taxes have more faith in the compliance/compulsion culture of Washington than they do in the natural yearning of everyone to keep as much of their own income as possible.
Combined with Hauser's Law, it is an excellent rule to figure out when the tax rates become counterproductive and actually lead to diminishing returns, i.e. instead of growing the economy ("the pie") and tax revenues, they start shrinking the tax revenues.
Unfortunately, many economists make a mistake in calculating only federal income tax revenues in the USA, partly because it's ideologically convenient, partly due to difficulty to account for multitude of separate taxes, i.e., states and municipalities income and sales taxes (including use, "sin" and other taxes) as well as special purpose taxes, such as Social Security.
There is also no accounting to implicit "taxes" (business or personal expenses) caused by excessive regulations from federal, state and municipal regulations.
Reference to Kurt Hauser's Law :
You Can't Soak the Rich [Regardless of tax rates, federal tax revenue is always 19.5% of GDP] - FR / WSJ, 2008 May 20, by David Ranson
Comment on power of combining Hauser's Law with Laffer Curve :
You Can't Soak the Rich [Regardless of tax rates, federal tax revenue is always 19.5% of GDP] - FR / WSJ, 2008 May 20, by David Ranson
You can play Evony and figure out Laffer Curve. It’s pretty straighforward.
I actually won this debate with an econ professor in college. I also asked what is the basis of a model and forecast that predicts what consumers/tax payers will spend and what their threshold is? He could not answer this.
I argue that supply and demand drives what revenue potential taxes will produce and that the unemployment rate affects the government's take of taxes more than the average tax rate. Cutting taxes is affective because it reduces costs and puts more cash into citizen pockets. Freed up capitol in businesses and for citizens inspires consumption and drives unemployment down. I would argue that our country is to the right (over) the most efficient taxation level based on historical evidence. Since these models and history cannot be tied together, I do not put much faith in it. Our number one problem is that government spends more than American's will tolerate funding. So they borrow and steal.
Is it the total tax burden, Federal, state, and local. It has been my experience that the homeowner ultimately carries the freight with real estate and school taxes increasing when ever any other taxes are cut.
The tax people are very creative when it comes to extracting money from a property owner. The studies rarely comment on the inefficiencies and graft inherent in the present system.