djAdvocate
Member Emeritus
only posting when the mood strikes me.
Joined: Jun 21, 2011 12:33:54 GMT -5
Posts: 75,233
Mini-Profile Background: {"image":"","color":"000307"}
|
Post by djAdvocate on Sept 19, 2012 17:34:15 GMT -5
Honestly I don't think tax policy matters as much to the economy as either side would like to give it credit for. if you are saying that BOTH sides seem to believe this totally unproven idea that cutting income taxes grows GDP, then i agree with you. otherwise, what are you claiming, here?
|
|
djAdvocate
Member Emeritus
only posting when the mood strikes me.
Joined: Jun 21, 2011 12:33:54 GMT -5
Posts: 75,233
Mini-Profile Background: {"image":"","color":"000307"}
|
Post by djAdvocate on Sept 19, 2012 17:37:38 GMT -5
The fact is, no one thing can lead to economic growth, because there's too much shit happening all at once. But some things can help lead to, or boost, growth, and I believe proper tax cuts can help do so. so long as you are not in a position to affect tax policy, believe whatever you like.
|
|
Sum Dum Gai
Senior Associate
Joined: Aug 15, 2011 15:39:24 GMT -5
Posts: 19,892
|
Post by Sum Dum Gai on Sept 19, 2012 18:01:18 GMT -5
I'm saying it doesn't really matter. Politics is a bit like professional football. Lots of die hard fans and stat nerds that get really into the game. But at the end of the day it doesn't matter who wins the Superbowl.
Revenue and job growth are determined more by business cycles than tax policy. In the early 90s we could have cut taxes or raised taxes, it wouldn't have mattered. Revenue was going to grow through the rest of the decade due to the internet boom. It had nothing to do with tax policy. Fortunes were being made and lost as companies duked it out to monetize the web and reshape the way we do business. They would have done so whether they got to keep 90% of the profits, or 20% of the profits. It had nothing to do with tax policy, or any government policy really. It was about business innovation, technology, and the huge piles of money to be made. It's the same in every boom.
It's the same during a bust too, but going the other way. No demand, means no jobs. Companies don't hire people because of a couple percentage point change in federal tax policy. They hire people because there's more demand for their products than they can currently fill.
|
|
mwcpa
Senior Member
Joined: Jan 7, 2011 6:35:43 GMT -5
Posts: 2,425
|
Post by mwcpa on Sept 19, 2012 18:03:44 GMT -5
"If the tax cuts the Reps propose are done correctly, which they aren't set up to do from what I've heard (although I haven't heard a very detailed plan), then yes they can spur growth" So, on blind faith we should believe them.... Please refer to the Q&A by George Stephanopoulos of Paul Ryan... www.washingtonpost.com/blogs/the-fix/wp/2012/09/09/paul-ryan-says-plan-to-tax-loopholes-not-a-secret-but-he-is-short-on-specifics/no direct answers was given, just "tax rate cuts" and trust me "Stephanopoulos pressed Ryan for specifics. “Don’t voters have a right — to know which loopholes you’re going to go after?” he asked." No direct answer came, just rhetoric and a trust me attitude from a 14 year member of Congress... what is the opposite of Progress....
|
|
djAdvocate
Member Emeritus
only posting when the mood strikes me.
Joined: Jun 21, 2011 12:33:54 GMT -5
Posts: 75,233
Mini-Profile Background: {"image":"","color":"000307"}
|
Post by djAdvocate on Sept 19, 2012 18:09:49 GMT -5
I'm saying it doesn't really matter. Politics is a bit like professional football. Lots of die hard fans and stat nerds that get really into the game. But at the end of the day it doesn't matter who wins the Superbowl. Revenue and job growth are determined more by business cycles than tax policy. In the early 90s we could have cut taxes or raised taxes, it wouldn't have mattered. Revenue was going to grow through the rest of the decade due to the internet boom. It had nothing to do with tax policy. Fortunes were being made and lost as companies duked it out to monetize the web and reshape the way we do business. They would have done so whether they got to keep 90% of the profits, or 20% of the profits. It had nothing to do with tax policy, or any government policy really. It was about business innovation, technology, and the huge piles of money to be made. It's the same in every boom. It's the same during a bust too, but going the other way. No demand, means no jobs. Companies don't hire people because of a couple percentage point change in federal tax policy. They hire people because there's more demand for their products than they can currently fill. spot on. so, given that case, taxes policy should NOT be centered around economic growth, as it has been, but based on some OTHER issue. since everyone seems so wound up in deficits, maybe we should focus on that?
|
|
djAdvocate
Member Emeritus
only posting when the mood strikes me.
Joined: Jun 21, 2011 12:33:54 GMT -5
Posts: 75,233
Mini-Profile Background: {"image":"","color":"000307"}
|
Post by djAdvocate on Sept 19, 2012 18:11:46 GMT -5
"If the tax cuts the Reps propose are done correctly, which they aren't set up to do from what I've heard (although I haven't heard a very detailed plan), then yes they can spur growth" So, on blind faith we should believe them.... Please refer to the Q&A by George Stephanopoulos of Paul Ryan... www.washingtonpost.com/blogs/the-fix/wp/2012/09/09/paul-ryan-says-plan-to-tax-loopholes-not-a-secret-but-he-is-short-on-specifics/no direct answers was given, just "tax rate cuts" and trust me "Stephanopoulos pressed Ryan for specifics. “Don’t voters have a right — to know which loopholes you’re going to go after?” he asked." No direct answer came, just rhetoric and a trust me attitude from a 14 year member of Congress... what is the opposite of Progress.... the truth is that they don't know. and the reason that they don't know is that they have no supporting data. but rather than simply saying that they don't know, they basically...well....LIE i think is the only fair way to put it. and why? because everyone wants economic growth. so, if they can get enough people to believe this myth, they can cut taxes to zero.
|
|
mwcpa
Senior Member
Joined: Jan 7, 2011 6:35:43 GMT -5
Posts: 2,425
|
Post by mwcpa on Sept 19, 2012 18:19:20 GMT -5
"It had nothing to do with tax policy." but do not tell that to those who think all business decision are made based solely on tax policy (which include many who post here and that are in Congress)..... if that were the case, if taxes were to rise it would make sense to invest more so we could lower our taxes by taking tax deductions for the investment (in labor and new plants/equipment)... but we know that is not the case.... tax rates are at long time lows..... and no one is investing.... but, if Mr. Romney gets elected miraculously when he cuts tax rates by 20% and reduce deductions by 25% (we are just gonna keep those cuts in our back pocket until November 7th and release it only of we win, we are not going to share it with Congress now... well, because you need to trust us that we are not going to screw you over... we are gonna make that 47% pay... all them old people living on just Social Security, they gotta pay their fair share) to keep it revenue neutral (meaning the same dollars will be collected) we will have tremendous growth.... as Wayne and Garth used to say.... NOT
|
|
Sum Dum Gai
Senior Associate
Joined: Aug 15, 2011 15:39:24 GMT -5
Posts: 19,892
|
Post by Sum Dum Gai on Sept 19, 2012 18:23:45 GMT -5
Totally agree. In my opinion, the best scenario moving forward is to have government focus on getting their revenue and spending in order, and leave private business to worry about making money, creating demand, and whatnot.
There is some low hanging fruit they could go after when it comes to tax policy to spur employment at the margins, but tax policy alone can't steer the entire economy. It can't even come close.
If you listen to candidates you'd think there's a big green button on the president's desk that he can push to instantly create 100k jobs, and a big red one he can push to instantly destroy 100k jobs. It doesn't work that way though. It's never worked that way. And they all know it doesn't work that way. Or at least we all hope they know it. A president that clueless is really scary. Voters are by and large kind of dumb though, and we like to buy into the fairytale I guess.
|
|
rockon
Senior Member
Joined: Dec 22, 2010 8:49:55 GMT -5
Posts: 2,384
|
Post by rockon on Sept 19, 2012 20:03:25 GMT -5
As with most of these issues there are many fallacies from both sides. The tax burden is just one of many factors that affect our economy but in theory if everything else was equal with countries we have free trade agreements with then the tax rate would be the deciding factor on where the jobs were created. Right now we have one of the highest corporate rates and we trade with countries who have huge advantages in other areas like wages and regulation. Not a good position. Any study to determine the effect of tax rate changes against the economic increase or decrease would have to do it when everything else remained constant and that will never happen.
|
|
tallguy
Senior Associate
Joined: Apr 2, 2011 19:21:59 GMT -5
Posts: 14,193
|
Post by tallguy on Sept 19, 2012 21:27:19 GMT -5
I think it boils down to a little truth on each side. Tax cuts MAY have a small effect on growth, but they will not grow the economy to any degree which will come close to ameliorating the loss of revenue from the cuts themselves.
|
|
djAdvocate
Member Emeritus
only posting when the mood strikes me.
Joined: Jun 21, 2011 12:33:54 GMT -5
Posts: 75,233
Mini-Profile Background: {"image":"","color":"000307"}
|
Post by djAdvocate on Sept 19, 2012 22:03:37 GMT -5
"It had nothing to do with tax policy." but do not tell that to those who think all business decision are made based solely on tax policy (which include many who post here and that are in Congress)..... if that were the case, if taxes were to rise it would make sense to invest more so we could lower our taxes by taking tax deductions for the investment (in labor and new plants/equipment)... but we know that is not the case.... please stick around the board so that the next time i make this point, you can say "amen".
|
|
djAdvocate
Member Emeritus
only posting when the mood strikes me.
Joined: Jun 21, 2011 12:33:54 GMT -5
Posts: 75,233
Mini-Profile Background: {"image":"","color":"000307"}
|
Post by djAdvocate on Sept 19, 2012 22:05:02 GMT -5
Totally agree. In my opinion, the best scenario moving forward is to have government focus on getting their revenue and spending in order, and leave private business to worry about making money, creating demand, and whatnot. for all of their talk of the "proper role" of government, it is surprising how INFREQUENTLY you hear this idea coming from the GOP.
|
|
djAdvocate
Member Emeritus
only posting when the mood strikes me.
Joined: Jun 21, 2011 12:33:54 GMT -5
Posts: 75,233
Mini-Profile Background: {"image":"","color":"000307"}
|
Post by djAdvocate on Sept 19, 2012 22:11:11 GMT -5
As with most of these issues there are many fallacies from both sides. The tax burden is just one of many factors that affect our economy but in theory if everything else was equal with countries we have free trade agreements with then the tax rate would be the deciding factor on where the jobs were created. Right now we have one of the highest corporate rates and we trade with countries who have huge advantages in other areas like wages and regulation. Not a good position. Any study to determine the effect of tax rate changes against the economic increase or decrease would have to do it when everything else remained constant and that will never happen. why not? it is not that hard to control for variables if you have enough data, and you know how strongly the variables influence the economy. i think we have enough economic data to do that. we certainly do for analyzing the revenue generating (or degenerating) impact of tax changes. that issue has been thoroughly studied and codified, and has virtually unanimous consensus among economists. except supply siders, if course. i can't see why a similar study could not be done on economic impact...oh wait, never mind....someone did. ;D
|
|
djAdvocate
Member Emeritus
only posting when the mood strikes me.
Joined: Jun 21, 2011 12:33:54 GMT -5
Posts: 75,233
Mini-Profile Background: {"image":"","color":"000307"}
|
Post by djAdvocate on Sept 19, 2012 22:13:01 GMT -5
I think it boils down to a little truth on each side. Tax cuts MAY have a small effect on growth, but they will not grow the economy to any degree which will come close to ameliorating the loss of revenue from the cuts themselves. this is a more "government centered" analysis, and not really what the OP has in mind. what the study in the OP analyzes is not the revenue effects of tax changes, but the economic growth changes. there is actually a comprehensive study on revenue changes associated with taxation. it is OTA Paper 81. but that is another issue for another thread.
|
|
mwcpa
Senior Member
Joined: Jan 7, 2011 6:35:43 GMT -5
Posts: 2,425
|
Post by mwcpa on Sept 20, 2012 4:34:26 GMT -5
"please stick around the board so that the next time i make this point, you can say "amen"."
I will give you an amen now....
|
|
|
Post by Savoir Faire-Demogague in NJ on Sept 20, 2012 10:02:48 GMT -5
"... Christina Romer, the first chair of Obama’s Council of Economic Advisers. In 2010, she published a study in the American Economic Review that said, “Tax increases appear to have a very large, sustained, and highly significant negative impact on output.” Romer found that, on average, every tax increase of one percent of GDP is linked to a three percent drop in real GDP over the next 10 quarters." -- Politico www.politico.com/news/stories/0812/80058.html
|
|
djAdvocate
Member Emeritus
only posting when the mood strikes me.
Joined: Jun 21, 2011 12:33:54 GMT -5
Posts: 75,233
Mini-Profile Background: {"image":"","color":"000307"}
|
Post by djAdvocate on Sept 20, 2012 10:28:48 GMT -5
"... Christina Romer, the first chair of Obama’s Council of Economic Advisers. In 2010, she published a study in the American Economic Review that said, “Tax increases appear to have a very large, sustained, and highly significant negative impact on output.” Romer found that, on average, every tax increase of one percent of GDP is linked to a three percent drop in real GDP over the next 10 quarters." -- Politico www.politico.com/news/stories/0812/80058.htmlthanks, SF. this is a very well done paper, but unfortunately, it doesn't separate income taxes from other tax effects.
|
|
|
Post by Savoir Faire-Demogague in NJ on Sept 20, 2012 10:46:23 GMT -5
thanks, SF. this is a very well done paper, but unfortunately, it doesn't separate income taxes from other tax effects.
Irrelevant. A tax increase of any kind takes money from productive uses.
|
|
djAdvocate
Member Emeritus
only posting when the mood strikes me.
Joined: Jun 21, 2011 12:33:54 GMT -5
Posts: 75,233
Mini-Profile Background: {"image":"","color":"000307"}
|
Post by djAdvocate on Sept 20, 2012 10:49:11 GMT -5
thanks, SF. this is a very well done paper, but unfortunately, it doesn't separate income taxes from other tax effects. Irrelevant. A tax increase of any kind takes money from productive uses. sorry, but the subject of this thread is how income taxes affect economic growth. i am sure that other forms of taxation (like consumption taxes) absolutely affect economic growth, but what the paper in the OP shows is that income tax changes do NOT. therefore, based on YOUR paper, i am guessing that OTHER forms of taxation DO affect economic growth. that is not surprising, but it is not the subject of this thread, nor is it what the paper in the OP addresses. edit: i don't believe, to paraphrase what you just said, that all taxes are created equal. some probably do have an impact. just not income taxes.
|
|