Loose: Tax cuts are bad for the wealthy

[Yurt]

From what I have heard and read from the dems, is that those evil tax cuts that Bush gave to the wealthy, the very wealthy, what not, were bad. In fact, the democratic platform is to increase the taxes on the wealthy, especially the very wealthy 1%.

Loosy; and here is your chance to debate, what say you regarding taxes?

Btw, this debate is open to all members. I really don't feel like debating Loosy one on one again (leave it alone), rather, I would like to see the masterful debator, as he/she indicates he/she is, debate this topic.

I proffer no rules, for they are useless with you. Attack all you want. The board and those on the net who see this board will know your "skill" at debating. I am not an expert in this field, but, you have run rampant around this forum with cries of, debate, debate, debate....

Bring it Loosecannon.

[diuretic]

If lowering taxes for the very wealthy (I mean "very" wealthy, not just comfortably well off) would help the economy then I'd support them. But they don't because the very wealthy (see above) simply keep their additional wealth and don't put it back into the economy. So tax cuts cease to become an economic stimulus and simply become a nice little earner for the already very wealthy.

[loosecannon]

From what I have heard and read from the dems, is that those evil tax cuts that Bush gave to the wealthy, the very wealthy, what not, were bad. In fact, the democratic platform is to increase the taxes on the wealthy, especially the very wealthy 1%.

Loosy; and here is your chance to debate, what say you regarding taxes?

Btw, this debate is open to all members. I really don't feel like debating Loosy one on one again (leave it alone), rather, I would like to see the masterful debator, as he/she indicates he/she is, debate this topic.

I proffer no rules, for they are useless with you. Attack all you want. The board and those on the net who see this board will know your "skill" at debating. I am not an expert in this field, but, you have run rampant around this forum with cries of, debate, debate, debate....

Bring it Loosecannon.

Well sure. Tho I have yet no idea at all what your actual question is.

Taxes are an uneccesary evil. We do not need to be taxed in the first place. There are several ways to fund nations other than taxes. But if you discount all of them, you are left with only the system of tax as a means to fund government.

So what is taxation supposed to accomplish? Funding the gummit.

What else? Well taxation is additionally bound by two other standards: providing or retarding economic growth and being equitable in terms of progressive and regressive dynamics.

Fortunately taxing the wealthiest the most has always proven to be the best compromise in both cases.

It is most equitable and provides the greatest relative stimulus to the economy. (which is still negative but not as negative as the alternatives. My favorite choices have always involved no taxes at all because all taxes drain the economy)

So what exactly was your question?

[Hobbit]

If lowering taxes for the very wealthy (I mean "very" wealthy, not just comfortably well off) would help the economy then I'd support them. But they don't because the very wealthy (see above) simply keep their additional wealth and don't put it back into the economy. So tax cuts cease to become an economic stimulus and simply become a nice little earner for the already very wealthy.

Incorrect. You think rich people simply hide their money in a mattress? Hell no. Some of it is in banks, the rest is in the stock market.

Banks use the money to give out loans, about 80% of it, in fact (if I remember correctly, average minimum reserves is 20%). Those loans go mainly towards houses, cars, and small businesses, all of which contribute greatly to the economy. In fact, small business is the leading creator of jobs, and most small businesses start with a loan (after they make the business plan to present to a bank loan officer).

The stock market, well, is simple. If you don't know how stock market investments improve the economy, then it's really not worth it to debate this with you, but if you honestly don't know, money that goes into the stock market goes directly into investments by publicly traded companies. Those companies use this extra capital to expand, thus creating new jobs and stimulating the economy.

These two investments, in fact, contribute a great deal more to the economy than the impulsive, wasteful spending of the lower class. Just look at who buys lottery tickets and the fact that that money causes zero economic growth.

As to loosecannon's post, I think our best deal was taxing consumption. For a long time, our country could fund itself on far less intrusive taxes than an income tax, and the income tax, by its very definition, slows the economy by removing VAST sums of money from it before those funds are even spent. This is why I support the FairTax. Also, if taxing the rich is such a good idea, then how come states with very progressive income taxes (i.e. California) lag far behind states with no income tax at all in terms of economic growth (i.e. Texas). In fact, the states with no income tax are the fastest growing economies in the Western Hemisphere (with economically free countries like Singapore and Hong Kong growing faster). In fact, taxing income, and the income of the wealthy more so, is only a good idea if the end goal is political power, rather than an efficient form of funding the government. It's monolithic, slows economic growth by leaps and bounds, and is pretty easy to avoid.

[diuretic]

Incorrect. You think rich people simply hide their money in a mattress? Hell no. Some of it is in banks, the rest is in the stock market.

Banks use the money to give out loans, about 80% of it, in fact (if I remember correctly, average minimum reserves is 20%). Those loans go mainly towards houses, cars, and small businesses, all of which contribute greatly to the economy. In fact, small business is the leading creator of jobs, and most small businesses start with a loan (after they make the business plan to present to a bank loan officer).

The stock market, well, is simple. If you don't know how stock market investments improve the economy, then it's really not worth it to debate this with you, but if you honestly don't know, money that goes into the stock market goes directly into investments by publicly traded companies. Those companies use this extra capital to expand, thus creating new jobs and stimulating the economy.

These two investments, in fact, contribute a great deal more to the economy than the impulsive, wasteful spending of the lower class. Just look at who buys lottery tickets and the fact that that money causes zero economic growth.

As to loosecannon's post, I think our best deal was taxing consumption. For a long time, our country could fund itself on far less intrusive taxes than an income tax, and the income tax, by its very definition, slows the economy by removing VAST sums of money from it before those funds are even spent. This is why I support the FairTax. Also, if taxing the rich is such a good idea, then how come states with very progressive income taxes (i.e. California) lag far behind states with no income tax at all in terms of economic growth (i.e. Texas). In fact, the states with no income tax are the fastest growing economies in the Western Hemisphere (with economically free countries like Singapore and Hong Kong growing faster). In fact, taxing income, and the income of the wealthy more so, is only a good idea if the end goal is political power, rather than an efficient form of funding the government. It's monolithic, slows economic growth by leaps and bounds, and is pretty easy to avoid.

Did you read my post?

Let me reproduce it for you:

If lowering taxes for the very wealthy (I mean "very" wealthy, not just comfortably well off) would help the economy then I'd support them. But they don't because the very wealthy (see above) simply keep their additional wealth and don't put it back into the economy. So tax cuts cease to become an economic stimulus and simply become a nice little earner for the already very wealthy.

Can you address the point? I mean your post couldn't be more irrelevant if you planned it that way.

The very wealthy don't spend their increased money. An economy would be far better off to cut the income tax rates for the less well off and increase the tax rates for the very wealthy. The objective of tax is to get money for the government to function. It doesn't matter where the money comes from, the government just needs the money. Now if the very wealthy pay more it means there's more left for the less well-off to spend and they do spend it. In a consumer-driven economy such as in the US having more spending moves the economy along nicely.

It's really dumb to tax the not-so wealthy a larger amount of their total income than it is to tax the very wealthy.

Simple really.

If you have the time to read it there's a very good paper by Christopher Carroll from Johns Hopkins just here - http://www.econ.jhu.edu/Papers/Carroll/why.pdf It's called "Why Do the Rich Save So Much?" and unlike your spray it's actually an empirical study. Do have a read, educate yourself.

[Hobbit]

Did you read my post?

Let me reproduce it for you:



Can you address the point? I mean your post couldn't be more irrelevant if you planned it that way.

The very wealthy don't spend their increased money. An economy would be far better off to cut the income tax rates for the less well off and increase the tax rates for the very wealthy. The objective of tax is to get money for the government to function. It doesn't matter where the money comes from, the government just needs the money. Now if the very wealthy pay more it means there's more left for the less well-off to spend and they do spend it. In a consumer-driven economy such as in the US having more spending moves the economy along nicely.

It's really dumb to tax the not-so wealthy a larger amount of their total income than it is to tax the very wealthy.

Simple really.

If you have the time to read it there's a very good paper by Christopher Carroll from Johns Hopkins just here - http://www.econ.jhu.edu/Papers/Carroll/why.pdf It's called "Why Do the Rich Save So Much?" and unlike your spray it's actually an empirical study. Do have a read, educate yourself.

I addressed your point. The wealthy may not spend their money on goods and services, but they do invest it, and investment easily leads to economic growth. One more time:

Investments by the wealthy grow the economy, often even faster than direct spending!

And before you jump on me, I'm not advocating tax hikes on the poor. That would just be mean. I'm just saying that if you look at it solely from the viewpoint of maximum economic growth, it makes far more sense than tax hikes on the wealthy.

Ok, read most of the paper. All it says is that the wealthy save a lot, rather than spend (that's why they're wealthy, you know). What I'm saying is that saving also grows the economy. That money isn't hiding in the mattress, you know. Rich people got that way by either being smart or being related to somebody smart, and smart people who make more than they spend send the rest of the money out to 'work for them.'

[diuretic]

I addressed your point. The wealthy may not spend their money on goods and services, but they do invest it, and investment easily leads to economic growth. One more time:

Investments by the wealthy grow the economy, often even faster than direct spending!

If the wealthy invest their money then that means they put money into companies right? The companies take their money and use it. If things work out they give the wealthy more money back, if they don't then the wealthy have lost that money. But the companies produce more goods and services with that money from the wealthy right? And people, consumers, buy those goods and services.....so.....the economy is driven by the consumer and since the wealthy are investors and not high consumers....they're not helping the economy.

And before you jump on me, I'm not advocating tax hikes on the poor. That would just be mean. I'm just saying that if you look at it solely from the viewpoint of maximum economic growth, it makes far more sense than tax hikes on the wealthy.

And I'm looking at it from the point of view of the reason tax exists - to fund government. As I said, government needs x amount of dollars to function. If the wealthy can provide more of that amount of dollars without hurting their own interests then they should because if the poor or middle class have to shell out more in terms of percentage of their personal income then it means there's less money for them to spend in an economy driven by the consumer. So it makes sense from that standpoint to get the wealthy to pay more tax.

Now, to be fair, it would be interesting to hear your views on the link between taxation and economic growth. Really, I'm here to learn.

Ok, read most of the paper. All it says is that the wealthy save a lot, rather than spend (that's why they're wealthy, you know). What I'm saying is that saving also grows the economy. That money isn't hiding in the mattress, you know. Rich people got that way by either being smart or being related to somebody smart, and smart people who make more than they spend send the rest of the money out to 'work for them.'

Some make the money themselves, some inherit it. Some borrowed it to get started. I am always minded of that old saying that if you owe the bank fifty thousand dollars and you can't pay it you're in trouble but if you owe the bank fifty million dollars and you can't pay it then the bank's in trouble. Ah it's all about risk management.

You know it's an old economic maxim that saving never made anyone wealthy. The only way to generate personal wealth in a capitalist economy is............to be a capitalist! Yes, you have to actually invest money rather than save it, investing generates far more return than simply saving. Saving is for the poor or the middle class. Saving gives a buffer in bad times. Investing is what the wealhy do so they can get wealthier and pass the wealth onto their children, who then get wealthier still.

Saving doesn't grow an economy. Saving is dead money in economic terms. If it's sitting around not working then how does that help the economy?

[Hobbit]

If the wealthy invest their money then that means they put money into companies right? The companies take their money and use it. If things work out they give the wealthy more money back, if they don't then the wealthy have lost that money. But the companies produce more goods and services with that money from the wealthy right? And people, consumers, buy those goods and services.....so.....the economy is driven by the consumer and since the wealthy are investors and not high consumers....they're not helping the economy.

Consumers have nothing to consume without investors. In the long run, yes, investments are meant to make money, but smart investors invest in the long term, meaning that the money sits there and is used to grow the economy for a LONG time. In fact, many retirement plans center around investing mountains of cash and then living off of the dividends. The money continues to be used by the company, and the profits they make off of that are the return.

And I'm looking at it from the point of view of the reason tax exists - to fund government. As I said, government needs x amount of dollars to function. If the wealthy can provide more of that amount of dollars without hurting their own interests then they should because if the poor or middle class have to shell out more in terms of percentage of their personal income then it means there's less money for them to spend in an economy driven by the consumer. So it makes sense from that standpoint to get the wealthy to pay more tax.

Yes, and the income tax also fails to effectively fund the government by reducing the power of the economy, something which tax revenue is inherently dependant upon. Once again, this is why I support the FairTax, as it doesn't tax income, which is a really stupid idea...unless your sole purpose is to gain political power by exploiting class warfare.

Now, to be fair, it would be interesting to hear your views on the link between taxation and economic growth. Really, I'm here to learn.

The more taxes are raised on income, the less people have to spend, and the slower the economy grows. It's actually pretty simple.

Some make the money themselves, some inherit it. Some borrowed it to get started. I am always minded of that old saying that if you owe the bank fifty thousand dollars and you can't pay it you're in trouble but if you owe the bank fifty million dollars and you can't pay it then the bank's in trouble. Ah it's all about risk management.

You know it's an old economic maxim that saving never made anyone wealthy. The only way to generate personal wealth in a capitalist economy is............to be a capitalist! Yes, you have to actually invest money rather than save it, investing generates far more return than simply saving. Saving is for the poor or the middle class. Saving gives a buffer in bad times. Investing is what the wealhy do so they can get wealthier and pass the wealth onto their children, who then get wealthier still.

Saving doesn't grow an economy. Saving is dead money in economic terms. If it's sitting around not working then how does that help the economy?

Investing is just another form of saving. If you put all of your money in one stock or play the stocks like it's some sort of massive game of Keno, then no, it's not saving, it's just stupid. However, most people invest by spreading their money around. It's a good way to make it grow while they don't use it. Many also open savings accounts. Once again, money in the bank is money being used to grant loans, which grow the economy.

[diuretic]

Thanks I'm learning a lot about this stuff as I go along here. And it's good to discuss things without invective.

Consumers have nothing to consume without investors. In the long run, yes, investments are meant to make money, but smart investors invest in the long term, meaning that the money sits there and is used to grow the economy for a LONG time. In fact, many retirement plans center around investing mountains of cash and then living off of the dividends. The money continues to be used by the company, and the profits they make off of that are the return.

Consumers don't need investors to consume, they just need something to purchase. That could be from an individual couldn't it?

An individual investor (as opposed to an institutional investor) who can afford (has to afford I suppose) to wait must need a lot of money to keep him and his family alive while the investment money ticks along for a few years. I wonder if, with the growth of institutions that invest, pension funds for example - particulary in the public sector - the smallish as opposed to the extremely wealthy - investor is eventually going to get sidelined?

Yes, and the income tax also fails to effectively fund the government by reducing the power of the economy, something which tax revenue is inherently dependant upon. Once again, this is why I support the FairTax, as it doesn't tax income, which is a really stupid idea...unless your sole purpose is to gain political power by exploiting class warfare.

I doubt if anyone is stupid enough to use economic policy to pursue class warfare when in government. You know how it goes:

Sung to the tune of O Tannenbaum: *

"The working class can kiss my arse,
I've got the bosses job at last!"

Tax policy is out of my league but I do think that income tax is a necessity. A consumption tax - Goods and Services Tax that we have for example - is useful to roll in all the other visible and invisible taxes (Australians can't get used to the various state taxes on goods in the US, it's quite confusing). A government can't rely solely on a consumption tax for its income.

The more taxes are raised on income, the less people have to spend, and the slower the economy grows. It's actually pretty simple.

Yes, the economy is driven by consumption, that was my original point.

Investing is just another form of saving. If you put all of your money in one stock or play the stocks like it's some sort of massive game of Keno, then no, it's not saving, it's just stupid. However, most people invest by spreading their money around. It's a good way to make it grow while they don't use it. Many also open savings accounts. Once again, money in the bank is money being used to grant loans, which grow the economy.

That makes sense.

------------------------------

*The original song The Red Flag was set to the tune of O Tannenbaum. There is an altenativ version that is much less mournful and a bit more lively and it's sung to the tune of the old Jacobite song The White Cockade

[OCA]

Interesting how this was an invitation by Yurt to Loose, 1 reply from Loose, being a smartass as usual, then nothing.

He/she is afraid.

[OCA]

Taxing the wealthy at a high rate is counterproductive to a healthy economy, the wealthy create new business and investment which in turn creates more jobs which in turn creates more money being pumped into the economy via consumption of goods and services, simple really. When was the last time the poor created any new jobs?

Libs love high taxes because they believe that government knows how to appropriate funds better than the individual.

[loosecannon]

Banks use the money to give out loans, about 80% of it, in fact (if I remember correctly, average minimum reserves is 20%). Those loans go mainly towards houses, cars, and small businesses, all of which contribute greatly to the economy.

This is almost entirely myth. The reserve requirements for banks is less than 1% now.

And banks hardly hold any cash from depositors to relend. Banks borrow the vast majority of what they lend from central banks at discounted interest rates and make profits based on the differences in those interest rates.

[loosecannon]

The stock market, well, is simple. If you don't know how stock market investments improve the economy, then it's really not worth it to debate this with you, but if you honestly don't know, money that goes into the stock market goes directly into investments by publicly traded companies. Those companies use this extra capital to expand, thus creating new jobs and stimulating the economy.

More myths. The only money that goes into the coffers of corporations from the sale and purchase of stocks occurs at the initial offering of those stock certificates. And then only if those stocks are sold. Many, perhaps most stocks issued by corps today are compensation to employees and mangement producing no investment capital at all.

Once a share of stock is sold it is usually retraded dozens or hundreds of times. NONE of that money ever goes into corporate coffers for investments that stimulate econ growth. It is just recirculated thru the hands of investors and is not only not producing any growth in the econoimy but is subtracting from the capital available for corporate growth.

After their first sale stocks only serve to deplete the economy.

[loosecannon]

These two investments, in fact, contribute a great deal more to the economy than the impulsive, wasteful spending of the lower class.

Another two myths.

Without demand then producing products to buy can not stimulate the economy.

No amount of capital for investments into production capacity can do a thing to stimulate the economy unless there is a customer who is ready to buy that product.

Aggregate demand is even more important than capital in driving economic growth.

And that impulsive, wasteful consumer that you criticize comprises 2/3 of the purchasing power of the US economy.

AND poorer consumers spend a larger % of their income immediately which immediately stokes the cycles of demand/production/economic growth.

The ideal economy would be one in which everybody spent every penny they earned asap and saved nothing. The cycles of consumption and production and growth would be optimized.

It would make for an imbalanced world but an optimized economy.

[loosecannon]

I think our best deal was taxing consumption. For a long time, our country could fund itself on far less intrusive taxes than an income tax, and the income tax, by its very definition, slows the economy by removing VAST sums of money from it before those funds are even spent.

That was my point. ALL taxes do this including taxing consumption.

Also, if taxing the rich is such a good idea, then how come states with very progressive income taxes (i.e. California) lag far behind states with no income tax at all in terms of economic growth (i.e. Texas).

Well really? You do realize that if CA was a nation it would be the worlds fifth largest economy right?

Whatever CA is doing, must be working.