Cutting taxes on the rich

[ronpaulfollower999]

If you got rid of the corporate and individual income tax, you'd only have to go back to FY 97 or FY 98 to have a budget surplus.

 

[ronpaulfollower999]

nm

 

[Jordan]

People get hired because they provide more productivity to the business than they cost. The idea that lower tax rates will significantly boost employment is folly as no one hires a worker just because they have $20-100k more in their pocket.

 

[Tpoints]

People get hired because they provide more productivity to the business than they cost. The idea that lower tax rates will significantly boost employment is folly as no one hires a worker just because they have $20-100k more in their pocket.

well said!

 

[Zippyjuan]

If you got rid of the corporate and individual income tax, you'd only have to go back to FY 97 or FY 98 to have a budget surplus.

I can't find revenue breakdowns for more recent years so let's look at 2009 revenue.

Estimated receipts for fiscal year 2009 are $2.7 trillion (+7.1%).
$1.21 trillion – Individual income tax
$949.4 billion – Social Security and other payroll taxes
$339.2 billion – Corporate income tax
$68.9 billion – Excise taxes
$29.1 billion – Customs duties
$26.3 billion – Estate and gift taxes
$47.9 billion – Other

$2.7 trillion minus $1.2 trillion for personal income taxes. That leaves $1.5 trillion. Now take away corporate income taxes of $340 billion - $1.16 trillion. That would still leave a $600 billion deficit if you only spent at 1998 levels (of $1.7 trillion).

http://thewesternexperience.com/201...nment-how-to-cut-government-spending-smartly/

 

[Paul Or Nothing II]

Again may I ask- if you run a company, what would make you more likely to hire more people- seeing sales increase or being able to borrow more money? It comes down to this. If you give a tax cut to the wealthy, it means more money put into investments. If you give a tax cut to lower incomes, it increases demand for goods since it is more likely to be spent. If you want to cut taxes as a means of increasing jobs, which would be more effective?

Here's what I'd like to see if I was running a company, there's a surplus of labor so I'd like to falling wages/salaries so that I can hire more people without increasing costs, hiring more people will help increase production & lower prices of products, & more people will be able to buy those products, falling prices increase demand.

What if you'd lots of oranges to sell but nobody was willing to buy them at current price, what should you do? You should LOWER THE PRICE to the level where people are willing to buy them otherwise they are just going to rot. Similarly, there's a lot of labor to be sold but businesses aren't willing to buy it, what should laborers do? LOWER THE PRICE. But the problem with that apart from minimum wage laws is that people have less incentive to do that because of all the welfare like unemployment benefits, this benefit, that benefit & what not!

Please take the time to read these -
http://www.scribd.com/doc/105544135/Trickle-Down-Theory-and-Tax-Cuts-for-the-Rich-by-Thomas-Sowell
http://mises.org/daily/2492

 

[Paul Or Nothing II]

OK, I grant you they don't keep ALL THEIR money in mattresses. But the opposite is true too, they don't invest ALL their money in job creation. If it were the case that the rich always or mostly always invests in job creation and economy stimulation, than trickle down theory would be true, and bailing out the rich would always be the right thing to do.

Learn facts - http://www.scribd.com/doc/105544135/Trickle-Down-Theory-and-Tax-Cuts-for-the-Rich-by-Thomas-Sowell
Higher taxes causes rich people to invest their money in tax-free avenues like government bonds or simply hide it or send it overseas while lowering taxes encourages them to look to exploit good business opportunities where they can make good profit.

Secondly, bailing out anybody is WRONG, be it poor or rich. Forced wealth-transfers are wrong, period.

Some do, some don't, it's got a lot to do with opportunities available, and their personal goals, little to do with how much money they have. Rich people may have lots of ABILITY to invest and help the economy, but not always the DESIRE TO. People don't want to tax the rich because they like stealing, they only do so because they believe the rich are not spending it the right way. If the rich (any rich) were either throwing money around to charity or creating more jobs than we need, they'd be loved, not hated, and encouraged, not asked to be taxed.

And why is it that rich are obligated to spend & invest THEIR money the way some socialist idiots think they should? Should somebody be able to steal YOUR money & spend it the "right way" on your behalf? Socialist-thievery is unjustifiable no matter the pretext.

Besides, if businesses weren't so damned overtaxed & overregulated by socialist-thieves then the rich might be willing to invest more, if socialist thieves weren't so greedy then may be rich wouldn't take their money overseas!
And many of the rich have been helping create jobs forever but do socialist-thieves ever appreciate it? Nope, they just ungratefully keep bitching & always want to steal more & more from others!

 

[ILUVRP]

" Besides, if businesses weren't so damned overtaxed & overregulated ".

i do agree that businesses are over regulated ( way too much ) , as far as the taxes business pays -- i had a small business ( bonded , lic, insured ) , i knew pretty much what my taxes were going to be , i added my costs ( including taxes ) to the price when i submitted my bid , so who was paying the taxes .

if people think about it , the consumer of the product/service pays the taxes , it is always tacked onto the price , anyone that thinks exxon--shell--wallymart--mcdonalds pays taxes is wrong , they are just the middle man passing the taxes the customer paid to the goverments , one other thing , if the business loses money they don't even send the goverment the money the customer paid for the product/service.


i am wondering one thing , when you say you want to pay lower wages what levels are you thinking , 30/hr to 20/hr or 8/hr to 5/hr , not to debate the idea , just wondering.

 

[Zippyjuan]

Here's what I'd like to see if I was running a company, there's a surplus of labor so I'd like to falling wages/salaries so that I can hire more people without increasing costs, hiring more people will help increase production & lower prices of products, & more people will be able to buy those products, falling prices increase demand.

What if you'd lots of oranges to sell but nobody was willing to buy them at current price, what should you do? You should LOWER THE PRICE to the level where people are willing to buy them otherwise they are just going to rot. Similarly, there's a lot of labor to be sold but businesses aren't willing to buy it, what should laborers do? LOWER THE PRICE. But the problem with that apart from minimum wage laws is that people have less incentive to do that because of all the welfare like unemployment benefits, this benefit, that benefit & what not!

Please take the time to read these -
http://www.scribd.com/doc/105544135/Trickle-Down-Theory-and-Tax-Cuts-for-the-Rich-by-Thomas-Sowell
http://mises.org/daily/2492

On the flip side of that, if people's wages are falling (your labor costs) then they will have less money to spend buying your oranges (or whatever) in the first place so demand for them may be declining as well. You are correct that if wages are allowed to fall that this would make the hiring of additional labor easier and less expensive for producers. The decision to hire or not to hire would be based on if you thought taking on more labor would lead to higher profits for you. If the demand is not there for your goods (and this no additional profits to be made), then you won't hire more no matter what the price of labor.

 

[CaptUSA]

On the flip side of that, if people's wages are falling (your labor costs) then they will have less money to spend buying your oranges (or whatever) in the first place so demand for them may be declining as well. You are correct that if wages are allowed to fall that this would make the hiring of additional labor easier and less expensive for producers. The decision to hire or not to hire would be based on if you thought taking on more labor would lead to higher profits for you. If the demand is not there for your goods (and this no additional profits to be made), then you won't hire more no matter what the price of labor.

Damn, Zippy, you are so stuck in that Keynesian fallacy. I don't know how to get you unstuck.

If people's wages are falling, but there are more people making wages, it doesn't matter. You'd still have the same amount of capital to fulfill the demand. However, what happens when the price of labor goes down, is that you create MORE capital because there is more wealth creation.

Do you understand how wealth is created? Might be a good place to start.

 

[Tpoints]

Learn facts - http://www.scribd.com/doc/105544135/Trickle-Down-Theory-and-Tax-Cuts-for-the-Rich-by-Thomas-Sowell
Higher taxes causes rich people to invest their money in tax-free avenues like government bonds or simply hide it or send it overseas while lowering taxes encourages them to look to exploit good business opportunities where they can make good profit.

Secondly, bailing out anybody is WRONG, be it poor or rich. Forced wealth-transfers are wrong, period.

And why is it that rich are obligated to spend & invest THEIR money the way some socialist idiots think they should? Should somebody be able to steal YOUR money & spend it the "right way" on your behalf? Socialist-thievery is unjustifiable no matter the pretext.

Besides, if businesses weren't so damned overtaxed & overregulated by socialist-thieves then the rich might be willing to invest more, if socialist thieves weren't so greedy then may be rich wouldn't take their money overseas!
And many of the rich have been helping create jobs forever but do socialist-thieves ever appreciate it? Nope, they just ungratefully keep bitching & always want to steal more & more from others!

Higher taxes or lower taxes only change how people invest IF ALL THINGS WERE EQUAL. If opportunities existed at the time of high taxes, and not when there are no taxes, opportunities would be the greater factor of where money goes.

Does Sowell say trickle down theory is correct or not?

Why is bailing out the rich wrong if you are sure they will help the economy? Or are you admitting they can't always, and/or helping the economy is not a good thing to do?

The rich are not obligated to do anything. Should somebody be able to do anything? Thanks for asking my opinion as if it matters.

Yes, they MIGHT, and they MIGHT NOT. Whether they will invest and whether the investment is going to be successful are two uncertainties, whereas taxing them is a guarantee. Oh, before you type up an angry response I didn't say I like or advocate taxing, I am just pointing out the facts.

 

[Tpoints]

Damn, Zippy, you are so stuck in that Keynesian fallacy. I don't know how to get you unstuck.

If people's wages are falling, but there are more people making wages, it doesn't matter. You'd still have the same amount of capital to fulfill the demand. However, what happens when the price of labor goes down, is that you create MORE capital because there is more wealth creation.

Do you understand how wealth is created? Might be a good place to start.

Did I just read somebody say "oh, as long as the total amount of dollars doesn't decrease, it doesn't matter how much you have yourself"?

 

[CaptUSA]

Did I just read somebody say "oh, as long as the total amount of dollars doesn't decrease, it doesn't matter how much you have yourself"?

Discussing aggregate demand. Debunking Keynesianism. I did not say it doesn't matter to the person whose wages are lower. Try not to parse, you're missing the point.

 

[Liberty4life]

People/businesses who get lower taxes use that capital which would normally be sent to the government they take or they open new store and hire more people that's the reason why lower taxes are good because when more businesses have lower taxes are good because when more businesses are created you create more jobs which all around create more tax revenue for the government so it might be a lower rate but it create more overall revenue

 

[Zippyjuan]

Damn, Zippy, you are so stuck in that Keynesian fallacy. I don't know how to get you unstuck.

If people's wages are falling, but there are more people making wages, it doesn't matter. You'd still have the same amount of capital to fulfill the demand. However, what happens when the price of labor goes down, is that you create MORE capital because there is more wealth creation.

Do you understand how wealth is created? Might be a good place to start.

Might take a look at how the economy has been doing in Japan. This is the best real-world example available (vs theories). They have been deflating for a while now (20 years). Have they been creating tons of wealth?

http://www.huffingtonpost.com/barry-d-wood/japanese-economy_b_2069010.html

Pummeled by a strong currency and two decades of deflation, Japanese companies are shifting production to China and elsewhere. Japan's industrial core is eroding and threatened with being hollowed out, as happened in parts of the U.S. rust belt. Long ago, Japan ceased being anyone's economic model. Growth figures tell the tale of relative decline. From 1953 to 1973, a still rebuilding Japan grew by 9 percent annually. From 1974 to 1990 GDP growth slowed to 4.2 percent while from 1991 to present growth has barely been positive, averaging a mere .5 percent annually.

What went wrong? How did a nation with world-class companies, a highly educated work force, and a well-deserved reputation for efficiency and discipline descend into protracted decline?

The high point of the Japanese economy appears to have been 1989, when property prices peaked and Tokyo's main stock market index reached a record high of 39,000. By 2007, the stock market had recovered to 18,000, but since then it has fallen another 50 percent to the current 9,000.

Meanwhile the exchange rate of the yen, regarded as a reflection of the nation's economic health, has steadily appreciated from the 227 yen to the dollar that prevailed in 1983 to a mere 78 yen to the dollar today. Phillip Suttle, chief economist at Washington's Institute of International Finance, believes the yen is overvalued by half and should trade in the range of 130 yen to the dollar. At any rate, the currency's rise has done little to reduce Japan's chronic balance of payments surplus. Japan remains the largest foreign holder of U.S. treasuries.

Since Japan's asset bubbles burst over 20 years ago, policy makers have persistently fiddled with the levers of monetary and fiscal policy but their efforts have spectacularly failed. Meanwhile the brutal deflation that accompanied the bust persists. Falling prices have translated into massive wealth destruction. Stop and go monetary and fiscal stimulus accomplished little. Consumer prices have declined for seven of the past 10 years.

 

[BlackJack]

Rich people do not keep their money in their mattresses. They have it invested in the economy. In other businesses. In their own businesses.
If you rob their wealth to feed the government, that's more money taken out of the economy. Fewer jobs.

People invest where they think they can get the most return. It sends proper signals to the market. Government screws up the signals and wealth is misallocated.

I've been trying to break this down in the simplest form possible.

Great point. This explains why billionaires' net worth is always fluctuating every year.

 

[Paul Or Nothing II]

" Besides, if businesses weren't so damned overtaxed & overregulated ".

i do agree that businesses are over regulated ( way too much ) , as far as the taxes business pays -- i had a small business ( bonded , lic, insured ) , i knew pretty much what my taxes were going to be , i added my costs ( including taxes ) to the price when i submitted my bid , so who was paying the taxes .

if people think about it , the consumer of the product/service pays the taxes , it is always tacked onto the price , anyone that thinks exxon--shell--wallymart--mcdonalds pays taxes is wrong , they are just the middle man passing the taxes the customer paid to the goverments ,

Yes, it's true that "corporate tax" really is consumer tax, which is another reason why it shouldn't exist but here's economics 101, higher prices reduce consumption & the less people buy, generally the less profits businesses make, that's why they look for ways to reduce the price, either by moving to less taxed & less regulated places as well as places where price of labor is lower.

one other thing , if the business loses money they don't even send the goverment the money the customer paid for the product/service.

Why should they pay government anything if they weren't even able to recoup their investment? Why should anybody pay government anything? Because they are a mafia that would take away your freedom or even kill you if you don't pay extortion to them????

i am wondering one thing , when you say you want to pay lower wages what levels are you thinking , 30/hr to 20/hr or 8/hr to 5/hr , not to debate the idea , just wondering.

Different labor/skillset will naturally get different wages/salaries, obviously, every buyer (businesses in this case) will try to pay as little as they can while every seller (workers in this case) will try to ask for as high a price for their product as they can, nonetheless, the point is that if there's a surplus of something & people are not buying it then prices will have to be lowered to the level people are willing to buy at. So if there's a surplus of labor then labor-prices need to go down but the problem being that minimum wage laws & welfare creates a price-floor whereby the labor in the economy isn't optimally utilized to increase total production.

 

[Seraphim]

Japan has been deflating and inflating.

Their base money supply is inflating at a ridiculous pace. They have been bailing out and subsidizing zombie banks and corporations for 20 years. Done how? Keynesian injections of government debt and base money supply into the hands of these select few.

This is robbing the average Japanese citizen of opportunity and productive jobs - this in turn reduces the capacity for wage earners to spend (as real wages descend), lowering aggregate demand for consumer goods - all the while base money and government debt rapidly expand to fulfill the Fascist Order.

BIFLATION.

Forget stagflation - what is coming is far worse then the 1970's stagflation.

Imagine two massive techtonic plates rubbing agaisnt each other. One is the deflationary side of the equation, the other the inflationary. Government policy (In conjuction with Central Bank policy), deficits and subsidies/bailouts are the inflationary side of the equation.

The popping of asset bubbles (debt fueled asset bubbles bought into by the middle class), the descending aggregate demand of the ever more impoverished middle class/poor and limitations on capital venture (as the resources are sucked away by the State and it's preferred Corporations) are the deflationary forces.

Eventually one techtonic plate will over power the other and the seismic waves commence.

2008 is the lesson and framework. The deflationary forces will be stopped at all costs - including currency collapse/hyperinflation.

It stands to reason that hyperinflation will not occur (it will be a different sort of currency collapse). A bank run/bank holiday will occur and then a massive systemic revaluation. Bond and currency holders will be decimated.

Might take a look at how the economy has been doing in Japan. This is the best real-world example available (vs theories). They have been deflating for a while now (20 years). Have they been creating tons of wealth?

http://www.huffingtonpost.com/barry-d-wood/japanese-economy_b_2069010.html

 

[Paul Or Nothing II]

On the flip side of that, if people's wages are falling (your labor costs) then they will have less money to spend buying your oranges (or whatever) in the first place so demand for them may be declining as well. You are correct that if wages are allowed to fall that this would make the hiring of additional labor easier and less expensive for producers. The decision to hire or not to hire would be based on if you thought taking on more labor would lead to higher profits for you. If the demand is not there for your goods (and this no additional profits to be made), then you won't hire more no matter what the price of labor.

You're assuming that the people whose wages are going down initially are the only ones who would be buying the produce but that's not true, if 10% are unemployed then it's because they are unwilling to take the jobs & pay that market is offering them, so if there were no minimum wage laws & no welfare to create price-floors on wages then many of the unemployed would be willing to take up whatever jobs & pay they are getting from the market & that will help businesses to produce cheaper goods & services that could be sold profitably enough to the other 90% who are working & haven't priced themselves off of the market.

 

[Paul Or Nothing II]

Higher taxes or lower taxes only change how people invest IF ALL THINGS WERE EQUAL. If opportunities existed at the time of high taxes, and not when there are no taxes, opportunities would be the greater factor of where money goes.

Does Sowell say trickle down theory is correct or not?

Opportunities of varying degrees always exist, so the less scared the investing community is of being robbed, the more of the existing opportunities will be utilized. Opportunities are also created. During the early half of the U.S. history total taxes (federal + state + local) were only about 5% of GDP & it turned a bunch of British colonies into a very prosperous country while the living standards of people rose rapidly & opportunities & jobs were aplenty & that's why you'd people from various parts of the world coming to the U.S., not for any "free stuff" but for the opportunities & prosperity it helped create for everyone.

Why is bailing out the rich wrong if you are sure they will help the economy? Or are you admitting they can't always, and/or helping the economy is not a good thing to do?

If a business fails then it's because they aren't good enough to run it, so why steal money from somebody else to keep them afloat? Instead, let them go out of business & let other capable people buy & take those economic resources like land, labor & capital to produce goods & services more efficiently. Profit is usually the market-indicator of success.

What you're saying is like, ok, if students getting goods grades is a good thing, then why not just give As to everybody?

Yes, they MIGHT, and they MIGHT NOT. Whether they will invest and whether the investment is going to be successful are two uncertainties, whereas taxing them is a guarantee. Oh, before you type up an angry response I didn't say I like or advocate taxing, I am just pointing out the facts.

Of course, life is full of uncertainties nonetheless, just saving money helps, money not spent is money not used to drive up prices of things, they'll at least put them in banks, it's the banks that then do the investing on their behalf & lends out to businesses, those businesses that succeed shouldn't be bothered while those who fail are automatically taken out of the market (unless government bails them out )

And again, there's no "guarantee" with respect to taxes, you should really read that link, it's a known phenomenon that higher the taxes, the more rich people will invest in tax-exempt securities or hide their wealth or capital will leave to other countries.