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On May 30 2013 06:12 Mohdoo wrote:Show nested quote +On May 30 2013 02:48 Sermokala wrote:
The jokes on us, shes probably going to try to run for president again. I hope so. Radical republicans in the primary helped with Obama the presidency from forcing Romney to be a nutcase.
I still have no clue why anyone thought the guy behind obamacare was a good idea to run against obama. The quality of candidates available was just that shitty.
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On May 30 2013 06:09 Sermokala wrote:
A small tariff on foreign production would jump start the american manufacturing industry. The big reason why manufacturing jobs have come back to america in recent years is that the long supply lines and resulting large transport costs from bringing product from overseas to american markets.
We don't need a tariff on every single simple manufacturing industry but picking and choosing a few low-medium tech jobs that are on the border zone of being worth it to bring the jobs back to america would pay itself back a dozen fold.
We should stop this mad enslavement to free trade and actually use the concept from the perspective to help our country first and the rest of the world second.
Tariffs are dangerous and I don't feel comfortable using them to shore up a lack of competitiveness. They make sense to counteract large subsidies countries may be giving to certain industries, but tariff wars are bad. You also add the danger of inflexible policies that are unresponsive to market changes by "picking and choosing" manufacturing sectors to assist.
You're right though. The increased cost in shipping things overseas and back during manufacturing has begun making American manufacturing more appetizing, even if it's Mexico factories instead of US.
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On May 30 2013 06:18 Sbrubbles wrote:Show nested quote +On May 30 2013 03:42 aksfjh wrote:On May 30 2013 01:46 JonnyBNoHo wrote:On May 29 2013 21:54 oneofthem wrote:
well, when the marginal rate on a slice of income is approaching 90%, it makes sense for that rate to have a large impact on income share, whether it is through taxing that income away, or through making people rearrange their income stream to avoid the tax. I don't think it's being taxed away (unless you meant indirectly as well?). The average tax rate on the 1% in 1979 was 35.1% compared to a 35.3% average tax rate in 1995 ( source) despite vastly different top marginal rates. Rearranging income sounds very plausible. On May 29 2013 20:54 aksfjh wrote:On May 29 2013 20:09 mcc wrote:On May 29 2013 17:50 aksfjh wrote:On May 29 2013 09:44 JonnyBNoHo wrote:On May 29 2013 08:58 aksfjh wrote:Tax policy and correlation on top income brackets share of income. + Show Spoiler + You think the marginal rate is that powerful a factor? That's some pretty solid correlation. Obviously other factors are involved, but it looks like a key player. Correlation is not causation, how do you know that some other factor is not causing changes to both of the attributes you displayed ? For example "political climate" can cause tax rates to go down and at the same time influence passing/revoking of other laws that make it possible for rich to get more wealthy. I am not saying you are wrong and I am far from saying that my scenario is true (I am rather sure it is not), but I would be more cautious about calling causation. I think you would need to at least analyze how much did they save on taxes and analyze how much money could have been gained by investing that saved money. Which would be pretty hard to do without rather sophisticated model. But looking at the graph, the correlation seems to be near immediate, so maybe it would be enough to analyze how much they saved on lower tax rates and if it explains majority of the wealth gain. I don't have enough of an economic and/or political science background to make detailed analysis to prove causation. However, causation would be logically consistent in this case, especially in the earlier half of the century. The 2 variables seem to be linked without being dependent, unlike, say debt to GDP ratios vs GDP or GDP growth. In that example, you have to look at more data to make bold statements, like one causes the other. In the graph above, however, we know that higher income share doesn't cause rates to go down instantaneously, so that reverse causation possibility is eliminated. The only other likely scenarios involve either culture shifts (which are gradual, so a rapid jump mid 1980s seems out of place) and major policy changes. Those major policy changes in the 80s deal mostly with tax policy. About the worst I could do with my assumption is that large changes in tax policy outside of marginal rates play the primary role and marginal rates just happen to coincide, but that's really hard to prove. If I were doing real research on this, I would probably focus on determining if the income share of the top is stable or unstable depending on tax rates or why the correlation decouples in the mid 90s (this is probably where policy or capital gains come in). What do you think the causation is/would be though? Are the rich shrugging off the tax and accepting lower income? Or are they changing their behavior? My suspicion is that a higher tax would lead to behavior changes much more often than benign acceptance, which is a problem from a tax policy perspective. The 1980's is the part of the graph where correlation looks really strong. During that time businesses in the US were undergoing some pretty radical changes. Those changes certainly went hand in hand with tax changes. My point here being that cultural changes can happen much faster in the business sector than the country as a whole. I want to clarify that I'm not talking about taxes in this sense as strictly a means of generating revenue. I'm looking at the data in more of a "how did income inequality get so great" light, and less of a "how do we pay for government?" Thus, I'm mostly talking about behavioral changes anyways. I've knocked around the theory before that higher tax rates at the top actually encourage investment much more than we're led to believe. My experience is anecdotal, mainly pertaining to business owners wanting to put their money to "better use" than the government. Instead of letting Uncle Sam take 50-70% of that next 50-100k that you don't "need," you hire 2 workers or reinvest in your business to make your life easier running the business and/or increase competitiveness. The opportunity cost is drastically reduced because the government would be taking a lot of that money anyways. So, in a sense, they aren't "shrugging off the tax" as much as they are finding ways to use that money before the government can get to it. Business culture, in my opinion, does change faster than in the community and at home, but it still takes close to a decade to see those changes permeate the market. Think about how long it took small offices to adopt computers and electronic databases. The income inequality gap trend since the drastic reversal in marginal tax rates at the top in the 80s could possibly be described as culture slowly changing to accommodate the shock. Policy experts have theorized that business culture changed in the 80s, in a way that removed the stigma around very generous compensation for executives. I think your train of thought is a bit off, at least theoretically. I can interpret your scenario as a business owner, when foreseeing profit, being faced with 3 options: 1) Doing nothing: government taxes profits (now) 2) Invest well: government taxes anyway later through future, higher profits (or now through a tax on capital gains since your business will be worth more) 3) Invest badly: just threw away money Since 3) is a bad idea (30% of something is better than 0% of something), you're left with 1 and 2, and in both cases you're gonna get taxed the same (unless you differentiate tax on profits from tax on long-term capital gains, but that's a different story).
You assume that the only thing business owners value is profit. Investment in this case give back non-monetary returns, like reduced responsibility and less personal overtime. With a low tax rate (10% on first 100k, 20% on rest), the choices look like:
a) Business nets $300k, pay $50k in taxes, final income $250k
b) Business nets $300k, decide to hire worker for $30k, pay $44k in taxes, final income $226k
That worker costs him $24k.
In a high tax scenario (10% on first 100k, 70% on rest):
a) Business nets $300k, pay $150k in taxes, final income $150k
b) Business nets $300k, decide to hire worker for $30k, pay $129k in taxes, final income $141k
That worker costs him only $9k.
That worker may or may not increase profits or production, but the risk and investment for hiring that employee is much less to the owner. Add that with the "non-monetary" benefits, and it's a solid package.
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On May 30 2013 06:09 Sermokala wrote:
A small tariff on foreign production would jump start the american manufacturing industry. The big reason why manufacturing jobs have come back to america in recent years is that the long supply lines and resulting large transport costs from bringing product from overseas to american markets.
We don't need a tariff on every single simple manufacturing industry but picking and choosing a few low-medium tech jobs that are on the border zone of being worth it to bring the jobs back to america would pay itself back a dozen fold.
We should stop this mad enslavement to free trade and actually use the concept from the perspective to help our country first and the rest of the world second.
Ugh. Economic Nationalism...never good for the consumer (e.g. individual Americans).
protective tariffs are a means whereby nations attempt to prevent their own people from trading. What protection teaches us is to do to ourselves in time of peace what enemies seek to do to us in time of war.
-- Henry George
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On May 30 2013 07:00 Wegandi wrote:Show nested quote +On May 30 2013 06:09 Sermokala wrote:
A small tariff on foreign production would jump start the american manufacturing industry. The big reason why manufacturing jobs have come back to america in recent years is that the long supply lines and resulting large transport costs from bringing product from overseas to american markets.
We don't need a tariff on every single simple manufacturing industry but picking and choosing a few low-medium tech jobs that are on the border zone of being worth it to bring the jobs back to america would pay itself back a dozen fold.
We should stop this mad enslavement to free trade and actually use the concept from the perspective to help our country first and the rest of the world second. Ugh. Economic Nationalism...never good for the consumer (e.g. individual Americans). Show nested quote +protective tariffs are a means whereby nations attempt to prevent their own people from trading. What protection teaches us is to do to ourselves in time of peace what enemies seek to do to us in time of war.
-- Henry George
Unemployment is much worse for the consumer.
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On May 30 2013 05:54 aksfjh wrote:Show nested quote +On May 30 2013 04:29 JonnyBNoHo wrote:On May 30 2013 04:14 aksfjh wrote:On May 30 2013 03:57 JonnyBNoHo wrote:On May 30 2013 03:42 aksfjh wrote:On May 30 2013 01:46 JonnyBNoHo wrote:On May 29 2013 21:54 oneofthem wrote:
well, when the marginal rate on a slice of income is approaching 90%, it makes sense for that rate to have a large impact on income share, whether it is through taxing that income away, or through making people rearrange their income stream to avoid the tax. I don't think it's being taxed away (unless you meant indirectly as well?). The average tax rate on the 1% in 1979 was 35.1% compared to a 35.3% average tax rate in 1995 ( source) despite vastly different top marginal rates. Rearranging income sounds very plausible. On May 29 2013 20:54 aksfjh wrote:On May 29 2013 20:09 mcc wrote:On May 29 2013 17:50 aksfjh wrote:On May 29 2013 09:44 JonnyBNoHo wrote:
[quote]
You think the marginal rate is that powerful a factor? That's some pretty solid correlation. Obviously other factors are involved, but it looks like a key player. Correlation is not causation, how do you know that some other factor is not causing changes to both of the attributes you displayed ? For example "political climate" can cause tax rates to go down and at the same time influence passing/revoking of other laws that make it possible for rich to get more wealthy. I am not saying you are wrong and I am far from saying that my scenario is true (I am rather sure it is not), but I would be more cautious about calling causation. I think you would need to at least analyze how much did they save on taxes and analyze how much money could have been gained by investing that saved money. Which would be pretty hard to do without rather sophisticated model. But looking at the graph, the correlation seems to be near immediate, so maybe it would be enough to analyze how much they saved on lower tax rates and if it explains majority of the wealth gain. I don't have enough of an economic and/or political science background to make detailed analysis to prove causation. However, causation would be logically consistent in this case, especially in the earlier half of the century. The 2 variables seem to be linked without being dependent, unlike, say debt to GDP ratios vs GDP or GDP growth. In that example, you have to look at more data to make bold statements, like one causes the other. In the graph above, however, we know that higher income share doesn't cause rates to go down instantaneously, so that reverse causation possibility is eliminated. The only other likely scenarios involve either culture shifts (which are gradual, so a rapid jump mid 1980s seems out of place) and major policy changes. Those major policy changes in the 80s deal mostly with tax policy. About the worst I could do with my assumption is that large changes in tax policy outside of marginal rates play the primary role and marginal rates just happen to coincide, but that's really hard to prove. If I were doing real research on this, I would probably focus on determining if the income share of the top is stable or unstable depending on tax rates or why the correlation decouples in the mid 90s (this is probably where policy or capital gains come in). What do you think the causation is/would be though? Are the rich shrugging off the tax and accepting lower income? Or are they changing their behavior? My suspicion is that a higher tax would lead to behavior changes much more often than benign acceptance, which is a problem from a tax policy perspective. The 1980's is the part of the graph where correlation looks really strong. During that time businesses in the US were undergoing some pretty radical changes. Those changes certainly went hand in hand with tax changes. My point here being that cultural changes can happen much faster in the business sector than the country as a whole. I want to clarify that I'm not talking about taxes in this sense as strictly a means of generating revenue. I'm looking at the data in more of a "how did income inequality get so great" light, and less of a "how do we pay for government?" Thus, I'm mostly talking about behavioral changes anyways. I've knocked around the theory before that higher tax rates at the top actually encourage investment much more than we're led to believe. My experience is anecdotal, mainly pertaining to business owners wanting to put their money to "better use" than the government. Instead of letting Uncle Sam take 50-70% of that next 50-100k that you don't "need," you hire 2 workers or reinvest in your business to make your life easier running the business and/or increase competitiveness. The opportunity cost is drastically reduced because the government would be taking a lot of that money anyways. So, in a sense, they aren't "shrugging off the tax" as much as they are finding ways to use that money before the government can get to it. Business culture, in my opinion, does change faster than in the community and at home, but it still takes close to a decade to see those changes permeate the market. Think about how long it took small offices to adopt computers and electronic databases. The income inequality gap trend since the drastic reversal in marginal tax rates at the top in the 80s could possibly be described as culture slowly changing to accommodate the shock. Policy experts have theorized that business culture changed in the 80s, in a way that removed the stigma around very generous compensation for executives. That's possible, but it likely wouldn't be good (i.e. productive) investment. Prior to the 80's US businesses were plagued by bloated management structures and empire building. Lower tax rates gave owners an incentive to increase competitiveness because they'd actually benefit from it. They did benefit from it before, just not monetarily. And it was good, in a sense, but not directly. While it bloated payrolls, it also propped up the middle class and made it possible for people to make important choices in life (college, housing, training), as opposed to the road map and dice roll we have today. That kind of propping up is unsustainable. If companies were similarly bloated today they'd be getting crushed by foreign competitors and productivity would be stagnant. The current propping of the economy through consumer debt is unstable as well, hence our crash and weak recovery. I'm not convinced the US would be crushed by foreign competition though. There are things we can't do cheaper than other parts of the world, but there are local goods and services that would thrive as long as locals can pay for them. Of course, being a high-tech information economy would shore up that competitive side as well. Also, every industry that could flee for cheaper labor did so already, and nothing short of selling low/no-skilled American workers to some form of slavery would change that.
Of course we'd be crushed by foreign competition - that's what happened in the past! If US businesses lose competitiveness foreign companies will take market share either domestically or abroad (or likely both). GM held off restructuring for a long time and their long decline in market share and inevitable bankruptcy were testament to that.
And competitiveness isn't just about labor costs. I brought it up mainly in reference to outdated business practices and general complacency.
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On May 30 2013 06:22 Sermokala wrote:Show nested quote +On May 30 2013 06:12 Mohdoo wrote:On May 30 2013 02:48 Sermokala wrote:
The jokes on us, shes probably going to try to run for president again. I hope so. Radical republicans in the primary helped with Obama the presidency from forcing Romney to be a nutcase. I still have no clue why anyone thought the guy behind obamacare was a good idea to run against obama. The quality of candidates available was just that shitty.
It doesn't matter since Fox picks the candidate for the GOP anyways. They're pushing Rubio big, so I imagine unless he makes some more colossal mistakes he'll get the majority of airtime. If the GOP had any brains they would have nominated Ron Paul last cycle, but alas...
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On May 30 2013 07:02 Sermokala wrote:Show nested quote +On May 30 2013 07:00 Wegandi wrote:On May 30 2013 06:09 Sermokala wrote:
A small tariff on foreign production would jump start the american manufacturing industry. The big reason why manufacturing jobs have come back to america in recent years is that the long supply lines and resulting large transport costs from bringing product from overseas to american markets.
We don't need a tariff on every single simple manufacturing industry but picking and choosing a few low-medium tech jobs that are on the border zone of being worth it to bring the jobs back to america would pay itself back a dozen fold.
We should stop this mad enslavement to free trade and actually use the concept from the perspective to help our country first and the rest of the world second. Ugh. Economic Nationalism...never good for the consumer (e.g. individual Americans). protective tariffs are a means whereby nations attempt to prevent their own people from trading. What protection teaches us is to do to ourselves in time of peace what enemies seek to do to us in time of war.
-- Henry George Unemployment is much worse for the consumer.
You have zero knowledge of economics. The primary motivators of our unemployment situation has little do to with our current trade policies (which are contrary to popular belief, NOT FREE TRADE *they're mercantilist*). If you want to increase employment figures axing regulatory statutes and burdens, eliminating taxes esp. payroll and capital gains, abolishing the Federal Reserve and instituting competing currencies, and axing a host of other Government interferences such as unemployment Welfare. (It goes without saying that spending should be massively reduced to if I had my choice, 1787 levels)
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On May 30 2013 06:09 Sermokala wrote:
A small tariff on foreign production would jump start the american manufacturing industry. The big reason why manufacturing jobs have come back to america in recent years is that the long supply lines and resulting large transport costs from bringing product from overseas to american markets.
We don't need a tariff on every single simple manufacturing industry but picking and choosing a few low-medium tech jobs that are on the border zone of being worth it to bring the jobs back to america would pay itself back a dozen fold.
We should stop this mad enslavement to free trade and actually use the concept from the perspective to help our country first and the rest of the world second.
I don't think you'll get far with tariffs in terms of employment. A lot of manufacturing jobs have been and will continue to be lost to productivity gains (meanwhile manufacturing output is growing just fine). So you'll go through all that work to bring jobs back, deal with all the pain from the tariff and then see manufacturing jobs continue to decline.
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On May 30 2013 07:03 JonnyBNoHo wrote:Show nested quote +On May 30 2013 05:54 aksfjh wrote:On May 30 2013 04:29 JonnyBNoHo wrote:On May 30 2013 04:14 aksfjh wrote:On May 30 2013 03:57 JonnyBNoHo wrote:On May 30 2013 03:42 aksfjh wrote:On May 30 2013 01:46 JonnyBNoHo wrote:On May 29 2013 21:54 oneofthem wrote:
well, when the marginal rate on a slice of income is approaching 90%, it makes sense for that rate to have a large impact on income share, whether it is through taxing that income away, or through making people rearrange their income stream to avoid the tax. I don't think it's being taxed away (unless you meant indirectly as well?). The average tax rate on the 1% in 1979 was 35.1% compared to a 35.3% average tax rate in 1995 ( source) despite vastly different top marginal rates. Rearranging income sounds very plausible. On May 29 2013 20:54 aksfjh wrote:On May 29 2013 20:09 mcc wrote:On May 29 2013 17:50 aksfjh wrote:
[quote]
That's some pretty solid correlation. Obviously other factors are involved, but it looks like a key player. Correlation is not causation, how do you know that some other factor is not causing changes to both of the attributes you displayed ? For example "political climate" can cause tax rates to go down and at the same time influence passing/revoking of other laws that make it possible for rich to get more wealthy. I am not saying you are wrong and I am far from saying that my scenario is true (I am rather sure it is not), but I would be more cautious about calling causation. I think you would need to at least analyze how much did they save on taxes and analyze how much money could have been gained by investing that saved money. Which would be pretty hard to do without rather sophisticated model. But looking at the graph, the correlation seems to be near immediate, so maybe it would be enough to analyze how much they saved on lower tax rates and if it explains majority of the wealth gain. I don't have enough of an economic and/or political science background to make detailed analysis to prove causation. However, causation would be logically consistent in this case, especially in the earlier half of the century. The 2 variables seem to be linked without being dependent, unlike, say debt to GDP ratios vs GDP or GDP growth. In that example, you have to look at more data to make bold statements, like one causes the other. In the graph above, however, we know that higher income share doesn't cause rates to go down instantaneously, so that reverse causation possibility is eliminated. The only other likely scenarios involve either culture shifts (which are gradual, so a rapid jump mid 1980s seems out of place) and major policy changes. Those major policy changes in the 80s deal mostly with tax policy. About the worst I could do with my assumption is that large changes in tax policy outside of marginal rates play the primary role and marginal rates just happen to coincide, but that's really hard to prove. If I were doing real research on this, I would probably focus on determining if the income share of the top is stable or unstable depending on tax rates or why the correlation decouples in the mid 90s (this is probably where policy or capital gains come in). What do you think the causation is/would be though? Are the rich shrugging off the tax and accepting lower income? Or are they changing their behavior? My suspicion is that a higher tax would lead to behavior changes much more often than benign acceptance, which is a problem from a tax policy perspective. The 1980's is the part of the graph where correlation looks really strong. During that time businesses in the US were undergoing some pretty radical changes. Those changes certainly went hand in hand with tax changes. My point here being that cultural changes can happen much faster in the business sector than the country as a whole. I want to clarify that I'm not talking about taxes in this sense as strictly a means of generating revenue. I'm looking at the data in more of a "how did income inequality get so great" light, and less of a "how do we pay for government?" Thus, I'm mostly talking about behavioral changes anyways. I've knocked around the theory before that higher tax rates at the top actually encourage investment much more than we're led to believe. My experience is anecdotal, mainly pertaining to business owners wanting to put their money to "better use" than the government. Instead of letting Uncle Sam take 50-70% of that next 50-100k that you don't "need," you hire 2 workers or reinvest in your business to make your life easier running the business and/or increase competitiveness. The opportunity cost is drastically reduced because the government would be taking a lot of that money anyways. So, in a sense, they aren't "shrugging off the tax" as much as they are finding ways to use that money before the government can get to it. Business culture, in my opinion, does change faster than in the community and at home, but it still takes close to a decade to see those changes permeate the market. Think about how long it took small offices to adopt computers and electronic databases. The income inequality gap trend since the drastic reversal in marginal tax rates at the top in the 80s could possibly be described as culture slowly changing to accommodate the shock. Policy experts have theorized that business culture changed in the 80s, in a way that removed the stigma around very generous compensation for executives. That's possible, but it likely wouldn't be good (i.e. productive) investment. Prior to the 80's US businesses were plagued by bloated management structures and empire building. Lower tax rates gave owners an incentive to increase competitiveness because they'd actually benefit from it. They did benefit from it before, just not monetarily. And it was good, in a sense, but not directly. While it bloated payrolls, it also propped up the middle class and made it possible for people to make important choices in life (college, housing, training), as opposed to the road map and dice roll we have today. That kind of propping up is unsustainable. If companies were similarly bloated today they'd be getting crushed by foreign competitors and productivity would be stagnant. The current propping of the economy through consumer debt is unstable as well, hence our crash and weak recovery. I'm not convinced the US would be crushed by foreign competition though. There are things we can't do cheaper than other parts of the world, but there are local goods and services that would thrive as long as locals can pay for them. Of course, being a high-tech information economy would shore up that competitive side as well. Also, every industry that could flee for cheaper labor did so already, and nothing short of selling low/no-skilled American workers to some form of slavery would change that. Of course we'd be crushed by foreign competition - that's what happened in the past! If US businesses lose competitiveness foreign companies will take market share either domestically or abroad (or likely both). GM held off restructuring for a long time and their long decline in market share and inevitable bankruptcy were testament to that. And competitiveness isn't just about labor costs. I brought it up mainly in reference to outdated business practices and general complacency.
If these guys had their choice, we would still all be riding around in horse buggies. Tariffs not only stifle innovation and progress, but the standard of living of every American at the expense of protecting and subsidizing select industries. Why on Earth anyone would want any politician picking winners and losers is beyond me.
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A bill being drafted in the House could potentially undermine the climate science research activities and the oceans programs of the National Oceanic and Atmospheric Administration (NOAA). It also would open up the weather satellite sector, which has been a troubled area for NOAA in recent years, to more privatization.
The bill, known as the “Weather Forecasting Improvement Act,” would put more emphasis on research and development of new weather forecasting capabilities for anticipating near-term, high-impact events, such as tornadoes and hurricanes, at the possible expense of two of the agency’s other long-standing areas of focus — climate and marine science.
The bill was the subject of a May 23 hearing in the House Science Subcommittee on the Environment. It has not yet been formally introduced, and is largely being drafted by Republicans on the subcommittee, which has jurisidiction over NOAA’s National Weather Service, according to several close observers of the legislation.
Representatives of NOAA and the academic research community were absent from the hearing, which featured members of two private sector weather companies — AccuWeather and GeoOptics. In the past, AccuWeather has backed legislation to open more of NOAA’s activities to private competition.
NOAA said it was invited to the hearing but did not receive sufficient advanced notice to allow it to formulate a response to the bill and also clear testimony through the White House. The agency has asked for an opportunity to testify at a subsequent hearing. The subcommittee’s Democratic members requested a second hearing to give NOAA officials a chance to testify, and to bring in representatives of the academic research community, as well.
The hearing came largely in response to news coverage of the increasing gap between the accuracy of NOAA’s main weather forecasting model, known as the Global Forecast System (GFS) and a model run by the European Center for Medium-Range Weather Forecasts, or ECMWF. For example, the ECMWF model correctly projected Hurricane Sandy’s devastating left turn into the New Jersey coast about a week in advance, whereas the GFS model didn’t project that outcome until the storm was closer to the East Coast.
Source
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On May 30 2013 07:03 JonnyBNoHo wrote:Show nested quote +On May 30 2013 05:54 aksfjh wrote:On May 30 2013 04:29 JonnyBNoHo wrote:On May 30 2013 04:14 aksfjh wrote:On May 30 2013 03:57 JonnyBNoHo wrote:On May 30 2013 03:42 aksfjh wrote:On May 30 2013 01:46 JonnyBNoHo wrote:On May 29 2013 21:54 oneofthem wrote:
well, when the marginal rate on a slice of income is approaching 90%, it makes sense for that rate to have a large impact on income share, whether it is through taxing that income away, or through making people rearrange their income stream to avoid the tax. I don't think it's being taxed away (unless you meant indirectly as well?). The average tax rate on the 1% in 1979 was 35.1% compared to a 35.3% average tax rate in 1995 ( source) despite vastly different top marginal rates. Rearranging income sounds very plausible. On May 29 2013 20:54 aksfjh wrote:On May 29 2013 20:09 mcc wrote:On May 29 2013 17:50 aksfjh wrote:
[quote]
That's some pretty solid correlation. Obviously other factors are involved, but it looks like a key player. Correlation is not causation, how do you know that some other factor is not causing changes to both of the attributes you displayed ? For example "political climate" can cause tax rates to go down and at the same time influence passing/revoking of other laws that make it possible for rich to get more wealthy. I am not saying you are wrong and I am far from saying that my scenario is true (I am rather sure it is not), but I would be more cautious about calling causation. I think you would need to at least analyze how much did they save on taxes and analyze how much money could have been gained by investing that saved money. Which would be pretty hard to do without rather sophisticated model. But looking at the graph, the correlation seems to be near immediate, so maybe it would be enough to analyze how much they saved on lower tax rates and if it explains majority of the wealth gain. I don't have enough of an economic and/or political science background to make detailed analysis to prove causation. However, causation would be logically consistent in this case, especially in the earlier half of the century. The 2 variables seem to be linked without being dependent, unlike, say debt to GDP ratios vs GDP or GDP growth. In that example, you have to look at more data to make bold statements, like one causes the other. In the graph above, however, we know that higher income share doesn't cause rates to go down instantaneously, so that reverse causation possibility is eliminated. The only other likely scenarios involve either culture shifts (which are gradual, so a rapid jump mid 1980s seems out of place) and major policy changes. Those major policy changes in the 80s deal mostly with tax policy. About the worst I could do with my assumption is that large changes in tax policy outside of marginal rates play the primary role and marginal rates just happen to coincide, but that's really hard to prove. If I were doing real research on this, I would probably focus on determining if the income share of the top is stable or unstable depending on tax rates or why the correlation decouples in the mid 90s (this is probably where policy or capital gains come in). What do you think the causation is/would be though? Are the rich shrugging off the tax and accepting lower income? Or are they changing their behavior? My suspicion is that a higher tax would lead to behavior changes much more often than benign acceptance, which is a problem from a tax policy perspective. The 1980's is the part of the graph where correlation looks really strong. During that time businesses in the US were undergoing some pretty radical changes. Those changes certainly went hand in hand with tax changes. My point here being that cultural changes can happen much faster in the business sector than the country as a whole. I want to clarify that I'm not talking about taxes in this sense as strictly a means of generating revenue. I'm looking at the data in more of a "how did income inequality get so great" light, and less of a "how do we pay for government?" Thus, I'm mostly talking about behavioral changes anyways. I've knocked around the theory before that higher tax rates at the top actually encourage investment much more than we're led to believe. My experience is anecdotal, mainly pertaining to business owners wanting to put their money to "better use" than the government. Instead of letting Uncle Sam take 50-70% of that next 50-100k that you don't "need," you hire 2 workers or reinvest in your business to make your life easier running the business and/or increase competitiveness. The opportunity cost is drastically reduced because the government would be taking a lot of that money anyways. So, in a sense, they aren't "shrugging off the tax" as much as they are finding ways to use that money before the government can get to it. Business culture, in my opinion, does change faster than in the community and at home, but it still takes close to a decade to see those changes permeate the market. Think about how long it took small offices to adopt computers and electronic databases. The income inequality gap trend since the drastic reversal in marginal tax rates at the top in the 80s could possibly be described as culture slowly changing to accommodate the shock. Policy experts have theorized that business culture changed in the 80s, in a way that removed the stigma around very generous compensation for executives. That's possible, but it likely wouldn't be good (i.e. productive) investment. Prior to the 80's US businesses were plagued by bloated management structures and empire building. Lower tax rates gave owners an incentive to increase competitiveness because they'd actually benefit from it. They did benefit from it before, just not monetarily. And it was good, in a sense, but not directly. While it bloated payrolls, it also propped up the middle class and made it possible for people to make important choices in life (college, housing, training), as opposed to the road map and dice roll we have today. That kind of propping up is unsustainable. If companies were similarly bloated today they'd be getting crushed by foreign competitors and productivity would be stagnant. The current propping of the economy through consumer debt is unstable as well, hence our crash and weak recovery. I'm not convinced the US would be crushed by foreign competition though. There are things we can't do cheaper than other parts of the world, but there are local goods and services that would thrive as long as locals can pay for them. Of course, being a high-tech information economy would shore up that competitive side as well. Also, every industry that could flee for cheaper labor did so already, and nothing short of selling low/no-skilled American workers to some form of slavery would change that. Of course we'd be crushed by foreign competition - that's what happened in the past! If US businesses lose competitiveness foreign companies will take market share either domestically or abroad (or likely both). GM held off restructuring for a long time and their long decline in market share and inevitable bankruptcy were testament to that. And competitiveness isn't just about labor costs. I brought it up mainly in reference to outdated business practices and general complacency.
I think I addressed a lot of this already in an earlier post to sermokala. I think the US will inevitably be priced out of many industries and their manufacturing sectors, so fighting it by selling our poor into slave wages isn't likely to help anybody. Move those people into low skilled service sector jobs that are bought by higher paid skilled workers that deal in high-tech/skilled industries, like design and automation. Right now, those workers that do provide those high skilled sectors are having wages depressed by a glut in the workforce in general.
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On May 30 2013 06:51 aksfjh wrote:Show nested quote +On May 30 2013 06:18 Sbrubbles wrote:On May 30 2013 03:42 aksfjh wrote:On May 30 2013 01:46 JonnyBNoHo wrote:On May 29 2013 21:54 oneofthem wrote:
well, when the marginal rate on a slice of income is approaching 90%, it makes sense for that rate to have a large impact on income share, whether it is through taxing that income away, or through making people rearrange their income stream to avoid the tax. I don't think it's being taxed away (unless you meant indirectly as well?). The average tax rate on the 1% in 1979 was 35.1% compared to a 35.3% average tax rate in 1995 ( source) despite vastly different top marginal rates. Rearranging income sounds very plausible. On May 29 2013 20:54 aksfjh wrote:On May 29 2013 20:09 mcc wrote:On May 29 2013 17:50 aksfjh wrote:On May 29 2013 09:44 JonnyBNoHo wrote:On May 29 2013 08:58 aksfjh wrote:Tax policy and correlation on top income brackets share of income. + Show Spoiler + You think the marginal rate is that powerful a factor? That's some pretty solid correlation. Obviously other factors are involved, but it looks like a key player. Correlation is not causation, how do you know that some other factor is not causing changes to both of the attributes you displayed ? For example "political climate" can cause tax rates to go down and at the same time influence passing/revoking of other laws that make it possible for rich to get more wealthy. I am not saying you are wrong and I am far from saying that my scenario is true (I am rather sure it is not), but I would be more cautious about calling causation. I think you would need to at least analyze how much did they save on taxes and analyze how much money could have been gained by investing that saved money. Which would be pretty hard to do without rather sophisticated model. But looking at the graph, the correlation seems to be near immediate, so maybe it would be enough to analyze how much they saved on lower tax rates and if it explains majority of the wealth gain. I don't have enough of an economic and/or political science background to make detailed analysis to prove causation. However, causation would be logically consistent in this case, especially in the earlier half of the century. The 2 variables seem to be linked without being dependent, unlike, say debt to GDP ratios vs GDP or GDP growth. In that example, you have to look at more data to make bold statements, like one causes the other. In the graph above, however, we know that higher income share doesn't cause rates to go down instantaneously, so that reverse causation possibility is eliminated. The only other likely scenarios involve either culture shifts (which are gradual, so a rapid jump mid 1980s seems out of place) and major policy changes. Those major policy changes in the 80s deal mostly with tax policy. About the worst I could do with my assumption is that large changes in tax policy outside of marginal rates play the primary role and marginal rates just happen to coincide, but that's really hard to prove. If I were doing real research on this, I would probably focus on determining if the income share of the top is stable or unstable depending on tax rates or why the correlation decouples in the mid 90s (this is probably where policy or capital gains come in). What do you think the causation is/would be though? Are the rich shrugging off the tax and accepting lower income? Or are they changing their behavior? My suspicion is that a higher tax would lead to behavior changes much more often than benign acceptance, which is a problem from a tax policy perspective. The 1980's is the part of the graph where correlation looks really strong. During that time businesses in the US were undergoing some pretty radical changes. Those changes certainly went hand in hand with tax changes. My point here being that cultural changes can happen much faster in the business sector than the country as a whole. I want to clarify that I'm not talking about taxes in this sense as strictly a means of generating revenue. I'm looking at the data in more of a "how did income inequality get so great" light, and less of a "how do we pay for government?" Thus, I'm mostly talking about behavioral changes anyways. I've knocked around the theory before that higher tax rates at the top actually encourage investment much more than we're led to believe. My experience is anecdotal, mainly pertaining to business owners wanting to put their money to "better use" than the government. Instead of letting Uncle Sam take 50-70% of that next 50-100k that you don't "need," you hire 2 workers or reinvest in your business to make your life easier running the business and/or increase competitiveness. The opportunity cost is drastically reduced because the government would be taking a lot of that money anyways. So, in a sense, they aren't "shrugging off the tax" as much as they are finding ways to use that money before the government can get to it. Business culture, in my opinion, does change faster than in the community and at home, but it still takes close to a decade to see those changes permeate the market. Think about how long it took small offices to adopt computers and electronic databases. The income inequality gap trend since the drastic reversal in marginal tax rates at the top in the 80s could possibly be described as culture slowly changing to accommodate the shock. Policy experts have theorized that business culture changed in the 80s, in a way that removed the stigma around very generous compensation for executives. I think your train of thought is a bit off, at least theoretically. I can interpret your scenario as a business owner, when foreseeing profit, being faced with 3 options: 1) Doing nothing: government taxes profits (now) 2) Invest well: government taxes anyway later through future, higher profits (or now through a tax on capital gains since your business will be worth more) 3) Invest badly: just threw away money Since 3) is a bad idea (30% of something is better than 0% of something), you're left with 1 and 2, and in both cases you're gonna get taxed the same (unless you differentiate tax on profits from tax on long-term capital gains, but that's a different story). You assume that the only thing business owners value is profit. Investment in this case give back non-monetary returns, like reduced responsibility and less personal overtime. With a low tax rate (10% on first 100k, 20% on rest), the choices look like: a) Business nets $300k, pay $50k in taxes, final income $250k b) Business nets $300k, decide to hire worker for $30k, pay $44k in taxes, final income $226k That worker costs him $24k. In a high tax scenario (10% on first 100k, 70% on rest): a) Business nets $300k, pay $150k in taxes, final income $150k b) Business nets $300k, decide to hire worker for $30k, pay $129k in taxes, final income $141k That worker costs him only $9k. That worker may or may not increase profits or production, but the risk and investment for hiring that employee is much less to the owner. Add that with the "non-monetary" benefits, and it's a solid package.
I get the math. Any 30k that the business owner spends before profits would turn into less than 30k if he took his profits home with him. It seems that you're getting 30k instead of 9k, but, if the investment is a good one, those 30k will be taxed down to 9k when the business is sold because of taxes on capital gains, since the net worth on the business will have gone up by those 30k.
"Non-monetary" benefits exists, but I doubt they apply to medium and big companies. Seems to me they would be only relevant to companies in which the owners are the managers (in other words, small companies), thus not really important for the economy as a whole (or for really wealthy business owners as a matter of fact!).
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Cayman Islands24199 Posts
i prefer tax on rentier income rather than investment or whatever productive labor income people generate through actual work and effort. it's good for the economy as well by disincentivizing rent seeking.
but the problem with rentier tax is that rent is often generated by established powers, and taxing those powers often requires neutralizing the very power that enables rent seeking.
for instance, taxing a professional union(doctors, lawyers etc)'s cartel rent runs counter to the legalization of that professional union. rent generated from too big to fail, having cornered the market in some way through having more friends and money than others, can't be taxed unless the same political power that enables the rent generating situation to persist goes away.
catch 22
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On May 30 2013 07:23 aksfjh wrote:Show nested quote +On May 30 2013 07:03 JonnyBNoHo wrote:On May 30 2013 05:54 aksfjh wrote:On May 30 2013 04:29 JonnyBNoHo wrote:On May 30 2013 04:14 aksfjh wrote:On May 30 2013 03:57 JonnyBNoHo wrote:On May 30 2013 03:42 aksfjh wrote:On May 30 2013 01:46 JonnyBNoHo wrote:On May 29 2013 21:54 oneofthem wrote:
well, when the marginal rate on a slice of income is approaching 90%, it makes sense for that rate to have a large impact on income share, whether it is through taxing that income away, or through making people rearrange their income stream to avoid the tax. I don't think it's being taxed away (unless you meant indirectly as well?). The average tax rate on the 1% in 1979 was 35.1% compared to a 35.3% average tax rate in 1995 ( source) despite vastly different top marginal rates. Rearranging income sounds very plausible. On May 29 2013 20:54 aksfjh wrote:On May 29 2013 20:09 mcc wrote:
[quote]
Correlation is not causation, how do you know that some other factor is not causing changes to both of the attributes you displayed ?
For example "political climate" can cause tax rates to go down and at the same time influence passing/revoking of other laws that make it possible for rich to get more wealthy.
I am not saying you are wrong and I am far from saying that my scenario is true (I am rather sure it is not), but I would be more cautious about calling causation. I think you would need to at least analyze how much did they save on taxes and analyze how much money could have been gained by investing that saved money. Which would be pretty hard to do without rather sophisticated model. But looking at the graph, the correlation seems to be near immediate, so maybe it would be enough to analyze how much they saved on lower tax rates and if it explains majority of the wealth gain. I don't have enough of an economic and/or political science background to make detailed analysis to prove causation. However, causation would be logically consistent in this case, especially in the earlier half of the century. The 2 variables seem to be linked without being dependent, unlike, say debt to GDP ratios vs GDP or GDP growth. In that example, you have to look at more data to make bold statements, like one causes the other. In the graph above, however, we know that higher income share doesn't cause rates to go down instantaneously, so that reverse causation possibility is eliminated. The only other likely scenarios involve either culture shifts (which are gradual, so a rapid jump mid 1980s seems out of place) and major policy changes. Those major policy changes in the 80s deal mostly with tax policy. About the worst I could do with my assumption is that large changes in tax policy outside of marginal rates play the primary role and marginal rates just happen to coincide, but that's really hard to prove. If I were doing real research on this, I would probably focus on determining if the income share of the top is stable or unstable depending on tax rates or why the correlation decouples in the mid 90s (this is probably where policy or capital gains come in). What do you think the causation is/would be though? Are the rich shrugging off the tax and accepting lower income? Or are they changing their behavior? My suspicion is that a higher tax would lead to behavior changes much more often than benign acceptance, which is a problem from a tax policy perspective. The 1980's is the part of the graph where correlation looks really strong. During that time businesses in the US were undergoing some pretty radical changes. Those changes certainly went hand in hand with tax changes. My point here being that cultural changes can happen much faster in the business sector than the country as a whole. I want to clarify that I'm not talking about taxes in this sense as strictly a means of generating revenue. I'm looking at the data in more of a "how did income inequality get so great" light, and less of a "how do we pay for government?" Thus, I'm mostly talking about behavioral changes anyways. I've knocked around the theory before that higher tax rates at the top actually encourage investment much more than we're led to believe. My experience is anecdotal, mainly pertaining to business owners wanting to put their money to "better use" than the government. Instead of letting Uncle Sam take 50-70% of that next 50-100k that you don't "need," you hire 2 workers or reinvest in your business to make your life easier running the business and/or increase competitiveness. The opportunity cost is drastically reduced because the government would be taking a lot of that money anyways. So, in a sense, they aren't "shrugging off the tax" as much as they are finding ways to use that money before the government can get to it. Business culture, in my opinion, does change faster than in the community and at home, but it still takes close to a decade to see those changes permeate the market. Think about how long it took small offices to adopt computers and electronic databases. The income inequality gap trend since the drastic reversal in marginal tax rates at the top in the 80s could possibly be described as culture slowly changing to accommodate the shock. Policy experts have theorized that business culture changed in the 80s, in a way that removed the stigma around very generous compensation for executives. That's possible, but it likely wouldn't be good (i.e. productive) investment. Prior to the 80's US businesses were plagued by bloated management structures and empire building. Lower tax rates gave owners an incentive to increase competitiveness because they'd actually benefit from it. They did benefit from it before, just not monetarily. And it was good, in a sense, but not directly. While it bloated payrolls, it also propped up the middle class and made it possible for people to make important choices in life (college, housing, training), as opposed to the road map and dice roll we have today. That kind of propping up is unsustainable. If companies were similarly bloated today they'd be getting crushed by foreign competitors and productivity would be stagnant. The current propping of the economy through consumer debt is unstable as well, hence our crash and weak recovery. I'm not convinced the US would be crushed by foreign competition though. There are things we can't do cheaper than other parts of the world, but there are local goods and services that would thrive as long as locals can pay for them. Of course, being a high-tech information economy would shore up that competitive side as well. Also, every industry that could flee for cheaper labor did so already, and nothing short of selling low/no-skilled American workers to some form of slavery would change that. Of course we'd be crushed by foreign competition - that's what happened in the past! If US businesses lose competitiveness foreign companies will take market share either domestically or abroad (or likely both). GM held off restructuring for a long time and their long decline in market share and inevitable bankruptcy were testament to that. And competitiveness isn't just about labor costs. I brought it up mainly in reference to outdated business practices and general complacency. I think I addressed a lot of this already in an earlier post to sermokala. I think the US will inevitably be priced out of many industries and their manufacturing sectors, so fighting it by selling our poor into slave wages isn't likely to help anybody. Move those people into low skilled service sector jobs that are bought by higher paid skilled workers that deal in high-tech/skilled industries, like design and automation. Right now, those workers that do provide those high skilled sectors are having wages depressed by a glut in the workforce in general.
Yes the US will not be competitive in certain industries. I don't know what you're getting at. Again, I'm not discussing wage levels so I don't understand why you are bringing up "slave wages" other than to distract from the discussion.
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On May 30 2013 08:14 JonnyBNoHo wrote:Show nested quote +On May 30 2013 07:23 aksfjh wrote:On May 30 2013 07:03 JonnyBNoHo wrote:On May 30 2013 05:54 aksfjh wrote:On May 30 2013 04:29 JonnyBNoHo wrote:On May 30 2013 04:14 aksfjh wrote:On May 30 2013 03:57 JonnyBNoHo wrote:On May 30 2013 03:42 aksfjh wrote:On May 30 2013 01:46 JonnyBNoHo wrote:On May 29 2013 21:54 oneofthem wrote:
well, when the marginal rate on a slice of income is approaching 90%, it makes sense for that rate to have a large impact on income share, whether it is through taxing that income away, or through making people rearrange their income stream to avoid the tax. I don't think it's being taxed away (unless you meant indirectly as well?). The average tax rate on the 1% in 1979 was 35.1% compared to a 35.3% average tax rate in 1995 ( source) despite vastly different top marginal rates. Rearranging income sounds very plausible. On May 29 2013 20:54 aksfjh wrote:
[quote]
I don't have enough of an economic and/or political science background to make detailed analysis to prove causation. However, causation would be logically consistent in this case, especially in the earlier half of the century. The 2 variables seem to be linked without being dependent, unlike, say debt to GDP ratios vs GDP or GDP growth. In that example, you have to look at more data to make bold statements, like one causes the other. In the graph above, however, we know that higher income share doesn't cause rates to go down instantaneously, so that reverse causation possibility is eliminated. The only other likely scenarios involve either culture shifts (which are gradual, so a rapid jump mid 1980s seems out of place) and major policy changes. Those major policy changes in the 80s deal mostly with tax policy. About the worst I could do with my assumption is that large changes in tax policy outside of marginal rates play the primary role and marginal rates just happen to coincide, but that's really hard to prove.
If I were doing real research on this, I would probably focus on determining if the income share of the top is stable or unstable depending on tax rates or why the correlation decouples in the mid 90s (this is probably where policy or capital gains come in). What do you think the causation is/would be though? Are the rich shrugging off the tax and accepting lower income? Or are they changing their behavior? My suspicion is that a higher tax would lead to behavior changes much more often than benign acceptance, which is a problem from a tax policy perspective. The 1980's is the part of the graph where correlation looks really strong. During that time businesses in the US were undergoing some pretty radical changes. Those changes certainly went hand in hand with tax changes. My point here being that cultural changes can happen much faster in the business sector than the country as a whole. I want to clarify that I'm not talking about taxes in this sense as strictly a means of generating revenue. I'm looking at the data in more of a "how did income inequality get so great" light, and less of a "how do we pay for government?" Thus, I'm mostly talking about behavioral changes anyways. I've knocked around the theory before that higher tax rates at the top actually encourage investment much more than we're led to believe. My experience is anecdotal, mainly pertaining to business owners wanting to put their money to "better use" than the government. Instead of letting Uncle Sam take 50-70% of that next 50-100k that you don't "need," you hire 2 workers or reinvest in your business to make your life easier running the business and/or increase competitiveness. The opportunity cost is drastically reduced because the government would be taking a lot of that money anyways. So, in a sense, they aren't "shrugging off the tax" as much as they are finding ways to use that money before the government can get to it. Business culture, in my opinion, does change faster than in the community and at home, but it still takes close to a decade to see those changes permeate the market. Think about how long it took small offices to adopt computers and electronic databases. The income inequality gap trend since the drastic reversal in marginal tax rates at the top in the 80s could possibly be described as culture slowly changing to accommodate the shock. Policy experts have theorized that business culture changed in the 80s, in a way that removed the stigma around very generous compensation for executives. That's possible, but it likely wouldn't be good (i.e. productive) investment. Prior to the 80's US businesses were plagued by bloated management structures and empire building. Lower tax rates gave owners an incentive to increase competitiveness because they'd actually benefit from it. They did benefit from it before, just not monetarily. And it was good, in a sense, but not directly. While it bloated payrolls, it also propped up the middle class and made it possible for people to make important choices in life (college, housing, training), as opposed to the road map and dice roll we have today. That kind of propping up is unsustainable. If companies were similarly bloated today they'd be getting crushed by foreign competitors and productivity would be stagnant. The current propping of the economy through consumer debt is unstable as well, hence our crash and weak recovery. I'm not convinced the US would be crushed by foreign competition though. There are things we can't do cheaper than other parts of the world, but there are local goods and services that would thrive as long as locals can pay for them. Of course, being a high-tech information economy would shore up that competitive side as well. Also, every industry that could flee for cheaper labor did so already, and nothing short of selling low/no-skilled American workers to some form of slavery would change that. Of course we'd be crushed by foreign competition - that's what happened in the past! If US businesses lose competitiveness foreign companies will take market share either domestically or abroad (or likely both). GM held off restructuring for a long time and their long decline in market share and inevitable bankruptcy were testament to that. And competitiveness isn't just about labor costs. I brought it up mainly in reference to outdated business practices and general complacency. I think I addressed a lot of this already in an earlier post to sermokala. I think the US will inevitably be priced out of many industries and their manufacturing sectors, so fighting it by selling our poor into slave wages isn't likely to help anybody. Move those people into low skilled service sector jobs that are bought by higher paid skilled workers that deal in high-tech/skilled industries, like design and automation. Right now, those workers that do provide those high skilled sectors are having wages depressed by a glut in the workforce in general. Yes the US will not be competitive in certain industries. I don't know what you're getting at. Again, I'm not discussing wage levels so I don't understand why you are bringing up "slave wages" other than to distract from the discussion.
I'm exhausted and I get the feeling we're not actually at odds on anything right now, but are acting like it...
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Ak, why would anyone continue to invest in a venture where the more money you make, the more tax is levied upon you. It simply is not worth their labor and time for such a modest gain, especially considering all the risks and Government burdens placed on employers. Taxes in this country are also a million times more complex than your simple illustration. I assume you're also very much a logical positivist, so even your methodology is very flawed since you're making axiomatic statements. I simply find your axiomatic statements logically wrong in the first place, so your chain of reasoning will lead to wrong conclusions. I could simply demonstrate an argument from absurdum to show that increasing tax rates do not increase productivity or investment, since the monies are simply diverted from productive ventures to Government, which is far from productive and almost always lines the pockets of special interests who, if they were competitive in the first place, wouldn't bribe politicians for competitive advantage.
You talk about behavior, but I'm not sure you understand human behavior. Do you think it is worth someone's time and labor for a measly 9k increase? Taking on employees in this current atmosphere is very risky and burdensome. Most people would value their leisure and less-stress much higher than 9k, never mind that you're leaving off other liabilities.
My point is, you're making vast assumptions and generalizations which lead you to your desired outcome in the first place. Take away your blinders and bias and focus strictly on methodology and epistemology. I think logical positivism is hogwash in the first place, but if you're going down that route well, I'm going to call you out on trying to mix your positivism with my deductionism/empiricism.
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On May 30 2013 06:51 aksfjh wrote:Show nested quote +On May 30 2013 06:18 Sbrubbles wrote:On May 30 2013 03:42 aksfjh wrote:On May 30 2013 01:46 JonnyBNoHo wrote:On May 29 2013 21:54 oneofthem wrote:
well, when the marginal rate on a slice of income is approaching 90%, it makes sense for that rate to have a large impact on income share, whether it is through taxing that income away, or through making people rearrange their income stream to avoid the tax. I don't think it's being taxed away (unless you meant indirectly as well?). The average tax rate on the 1% in 1979 was 35.1% compared to a 35.3% average tax rate in 1995 ( source) despite vastly different top marginal rates. Rearranging income sounds very plausible. On May 29 2013 20:54 aksfjh wrote:On May 29 2013 20:09 mcc wrote:On May 29 2013 17:50 aksfjh wrote:On May 29 2013 09:44 JonnyBNoHo wrote:On May 29 2013 08:58 aksfjh wrote:Tax policy and correlation on top income brackets share of income. + Show Spoiler + You think the marginal rate is that powerful a factor? That's some pretty solid correlation. Obviously other factors are involved, but it looks like a key player. Correlation is not causation, how do you know that some other factor is not causing changes to both of the attributes you displayed ? For example "political climate" can cause tax rates to go down and at the same time influence passing/revoking of other laws that make it possible for rich to get more wealthy. I am not saying you are wrong and I am far from saying that my scenario is true (I am rather sure it is not), but I would be more cautious about calling causation. I think you would need to at least analyze how much did they save on taxes and analyze how much money could have been gained by investing that saved money. Which would be pretty hard to do without rather sophisticated model. But looking at the graph, the correlation seems to be near immediate, so maybe it would be enough to analyze how much they saved on lower tax rates and if it explains majority of the wealth gain. I don't have enough of an economic and/or political science background to make detailed analysis to prove causation. However, causation would be logically consistent in this case, especially in the earlier half of the century. The 2 variables seem to be linked without being dependent, unlike, say debt to GDP ratios vs GDP or GDP growth. In that example, you have to look at more data to make bold statements, like one causes the other. In the graph above, however, we know that higher income share doesn't cause rates to go down instantaneously, so that reverse causation possibility is eliminated. The only other likely scenarios involve either culture shifts (which are gradual, so a rapid jump mid 1980s seems out of place) and major policy changes. Those major policy changes in the 80s deal mostly with tax policy. About the worst I could do with my assumption is that large changes in tax policy outside of marginal rates play the primary role and marginal rates just happen to coincide, but that's really hard to prove. If I were doing real research on this, I would probably focus on determining if the income share of the top is stable or unstable depending on tax rates or why the correlation decouples in the mid 90s (this is probably where policy or capital gains come in). What do you think the causation is/would be though? Are the rich shrugging off the tax and accepting lower income? Or are they changing their behavior? My suspicion is that a higher tax would lead to behavior changes much more often than benign acceptance, which is a problem from a tax policy perspective. The 1980's is the part of the graph where correlation looks really strong. During that time businesses in the US were undergoing some pretty radical changes. Those changes certainly went hand in hand with tax changes. My point here being that cultural changes can happen much faster in the business sector than the country as a whole. I want to clarify that I'm not talking about taxes in this sense as strictly a means of generating revenue. I'm looking at the data in more of a "how did income inequality get so great" light, and less of a "how do we pay for government?" Thus, I'm mostly talking about behavioral changes anyways. I've knocked around the theory before that higher tax rates at the top actually encourage investment much more than we're led to believe. My experience is anecdotal, mainly pertaining to business owners wanting to put their money to "better use" than the government. Instead of letting Uncle Sam take 50-70% of that next 50-100k that you don't "need," you hire 2 workers or reinvest in your business to make your life easier running the business and/or increase competitiveness. The opportunity cost is drastically reduced because the government would be taking a lot of that money anyways. So, in a sense, they aren't "shrugging off the tax" as much as they are finding ways to use that money before the government can get to it. Business culture, in my opinion, does change faster than in the community and at home, but it still takes close to a decade to see those changes permeate the market. Think about how long it took small offices to adopt computers and electronic databases. The income inequality gap trend since the drastic reversal in marginal tax rates at the top in the 80s could possibly be described as culture slowly changing to accommodate the shock. Policy experts have theorized that business culture changed in the 80s, in a way that removed the stigma around very generous compensation for executives. I think your train of thought is a bit off, at least theoretically. I can interpret your scenario as a business owner, when foreseeing profit, being faced with 3 options: 1) Doing nothing: government taxes profits (now) 2) Invest well: government taxes anyway later through future, higher profits (or now through a tax on capital gains since your business will be worth more) 3) Invest badly: just threw away money Since 3) is a bad idea (30% of something is better than 0% of something), you're left with 1 and 2, and in both cases you're gonna get taxed the same (unless you differentiate tax on profits from tax on long-term capital gains, but that's a different story). You assume that the only thing business owners value is profit. Investment in this case give back non-monetary returns, like reduced responsibility and less personal overtime. With a low tax rate (10% on first 100k, 20% on rest), the choices look like: a) Business nets $300k, pay $50k in taxes, final income $250k b) Business nets $300k, decide to hire worker for $30k, pay $44k in taxes, final income $226k That worker costs him $24k. In a high tax scenario (10% on first 100k, 70% on rest): a) Business nets $300k, pay $150k in taxes, final income $150k b) Business nets $300k, decide to hire worker for $30k, pay $129k in taxes, final income $141k That worker costs him only $9k. That worker may or may not increase profits or production, but the risk and investment for hiring that employee is much less to the owner. Add that with the "non-monetary" benefits, and it's a solid package.
That's why the high tax would be bad. Managers would have an incentive to make work cushier, rather than increase productivity and cap ex.
Edit: In the scenario you gave we have to assume that the worker will not increase output at all. Otherwise revenue and net income will change and the numbers will be different.
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He address's that there is a glut in the workforce and with the same post dismiss's any solution at all to deal with said workforce glut.
No one can look at the current recovery and say that its a good situation. Other countries are already waging a tariff war on us. There will always be people who are not competitive, selling our poor into bread lines and a welfare lifestyle on the alter of free trade is no reasonable way to run a country. Free trade only works when it goes both ways, and it is definitely not going both ways. So either give our poor jobs or reign in china's anti-free trade policies but for fucks sake stop living in a fantasy world where a free trade ideology is infallible.
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On May 30 2013 08:21 Wegandi wrote:
Ak, why would anyone continue to invest in a venture where the more money you make, the more tax is levied upon you. It simply is not worth their labor and time for such a modest gain, especially considering all the risks and Government burdens placed on employers. Taxes in this country are also a million times more complex than your simple illustration. I assume you're also very much a logical positivist, so even your methodology is very flawed since you're making axiomatic statements. I simply find your axiomatic statements logically wrong in the first place, so your chain of reasoning will lead to wrong conclusions. I could simply demonstrate an argument from absurdum to show that increasing tax rates do not increase productivity or investment, since the monies are simply diverted from productive ventures to Government, which is far from productive and almost always lines the pockets of special interests who, if they were competitive in the first place, wouldn't bribe politicians for competitive advantage.
You talk about behavior, but I'm not sure you understand human behavior. Do you think it is worth someone's time and labor for a measly 9k increase? Taking on employees in this current atmosphere is very risky and burdensome. Most people would value their leisure and less-stress much higher than 9k, never mind that you're leaving off other liabilities.
My point is, you're making vast assumptions and generalizations which lead you to your desired outcome in the first place. Take away your blinders and bias and focus strictly on methodology and epistemology. I think logical positivism is hogwash in the first place, but if you're going down that route well, I'm going to call you out on trying to mix your positivism with my deductionism/empiricism.
It's a quick example that demonstrates anecdotal experience in my life. It's a highlight of a possible microeconomic force, but amounts to little more than a notion or rough idea.
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EPT![[image loading]](http://i.imgur.com/jkcYK6h.png)
