Outcome of a second civil war?

[Bryan]

Whether the government takes the money that the "evil" rich person earned or the person spends it as they see fit the government still takes in about the same amount of revenue. I know what you're thinking, "How dare someone make a lot of money in this country and be allowed to keep it!"

That's not _quite_ what I'm thinking. What I'm thinking is this: "How dare a rich person not pay his fair share of taxes?!" Those are two slightly different (but important) concepts.

Since lowering the tax rate induces economic growth the an increase to the GDP it serves to increase the government tax revenue. Increased government revenue (and some spending control) equals lower deficit and reduction of the debt. Remember Tax Revenue = Approx. 20% GDP regardless of tax rate. The goal of the government should be economic expansion.

I can't help but notice that you dodged the direct questions I asked you in my previous post. Do I assume correctly that you blame the MASSIVE increase in the national debt during the 1980's on uncontrolled spending?

 

[Bryan]

I understand the Laffer Curve and the relationship between lower taxes and economic growth...

Gardener, in your own carefully considered opinion, where do you personally think we are on the Laffer Curve at the present time? The left side, or the right side? Or right in the middle?

 

[The Gardener]

Bryan, I think that question is a matter of opinion.

I think we have been too far to the long side of the curve, tax cuts past the point of diminishing returns. I don't think that further tax cuts would spur growth because our economy has reached a point of capital over-saturation. Government's slice of the pie is too small... but the US has been able to operate like a "big slice" nation thanks to the use of financial manipulation that we have been afforded as a result of our post-WW2 currency hegemony. This can be seen in the unprecedented level of economic disparity between the working class and the ultra-wealthy. This is not to say that I think there is widespread poverty in the US, but rather, I think that the American ultra-wealthy had never had it this well, as compared to any country, in history.

There comes a point where you end up with an economy like, say, Brazil, where you have the ultra rich who control the lion's share of the nation's wealth and don't pay taxes (either through legal or illegal means), and a wide gap that separates them from the other classes. I guess, in a nutshell, what I am saying is that unfettered and low-tax economies would inevitably morph into a society with extreme gaps in wealth. Taxation serves as a sort of moderating influence on society... and if I look at the US using this observational criteria, I think we're too long on the curve. You can't just look at the Laffer curve in terms of dollars of tax revenue, I think you need to look at the overall economic utility of the result, which is a matter of opinion. Personally, I think it's quite worthwhile to pay a tax if in return I get to walk outside my house and not get shot at. Yes, there is an inherent quantitative "uneconomical" quality to thinking this way, but from a qualitative perspective, I think it is very economical.

In pure capitalism, there would be no minimum wage. Some people like this idea because they think it would be more idealogically pure... but I don't think they are taking into account the effects of having millions of neighbors in their cities who are trying to get by on sub-minimum income whilst they are trying to navigate the streets in their Bentleys. Sure, getting rid of the minimum wage might guarantee that more people might be able to find jobs, but it doesn't guarantee that said jobs will earn them enough to find shelter in a city. This is where taxation comes in, to moderate these distinctions in society, and set some standards as to how civil a society we want to live in.

 

[Bryan]

I think we're too long on the curve.

I'm not familiar with that expression, but I guess it's clear enough what it means from the rest of what you said. Thanks for the reply.

 

[CCS]

Remember Tax Revenue = Approx. 20% GDP regardless of tax rate.

The only way that could be true if through tax evasion. I would find a constant figure more believable if it was based on a dollar amount.

I could understand revenue falling lower, or GDP falling lower, if tax rates are raised. But percent of GDP taken would still be hire. Double check your source.

I think the fact is: If you raise taxes above a certain rate, revenue will go up temporarily, but will then fall, and may keep falling as the economy shrinks. If you had raised the rates slightly less, revenue may go up and stay there, but the economy will not grow anymore and revenue stays the same for years. If you had lowered the rates, revenue will decrease in the short run, but will then increase as the economy grows, and might even increase much faster as many people are now willing to enter the market. You are dealing with the investment curves of many different people, causing short and long term effects.