Sunday, April 25, 2010

How Kennedy Tax Cuts Changed Pro Boxing

From The Atlantic article "How Taxes Changed Boxing":

"The 1950s was the era of the 90 percent top marginal tax rate, and by the end of that decade live gate receipts for top championship fights were supplemented by the proceeds from closed circuit telecasts to movie theaters. A second fight in one tax year would yield very little additional income, hardly worth the risk of losing the title. And so, the three fights between Floyd Patterson and Ingemar Johansson stretched over three years (1959-1961); the two between Patterson and Sonny Liston over two years (1962-1963), as was also true for the two bouts between Liston and Cassius Clay (Muhammad Ali) (1964-1965).


Then, the Tax Reform Act of 1964 cut the top marginal tax rate to 70 percent effective in 1965. The result: two heavyweight title fights in 1965, and five in 1966."

MP: A few lessons: 1) If you tax something, you get less of it, and 2) if you cut tax rates, you might get more tax revenues.

63 Comments:

At 4/25/2010 8:49 AM, Blogger pakurilecz said...

could we not use the word 'revenue' in conjunction with taxes. in actuality they are receipts. Revenue implies that individuals are voluntarily purchasing a product that is being sold by the government. That is not the case

 
At 4/25/2010 8:57 AM, Blogger juandos said...

"Revenue implies that individuals are voluntarily purchasing a product that is being sold by the government. That is not the case"...

Hmmm, I'm thinking that Llewellyn H. Rockwell, Jr might agree with those sentiments...

 
At 4/25/2010 9:43 AM, Blogger PeakTrader said...

Hauser's Law:

"An empirical observation that, in the United States, federal tax revenues since World War II have always been equal to approximately 19.5% of GDP, regardless of wide fluctuations in the top marginal tax rate.

The Wall St. Journal published a graph showing that even though the top marginal tax rate of federal income tax had varied between a low of 28% to a high of 91%, between 1950 and 2007, federal tax revenues had indeed constantly remained at about 19.5% of GDP.

The data show that the tax yield has been independent of marginal tax rates over this period, but tax revenue is directly proportional to GDP. So if we want to increase tax revenue, we need to increase GDP."

 
At 4/25/2010 9:48 AM, Anonymous Anonymous said...

How about a story on how the Nixon Tarriff helped Harley Davidson

 
At 4/25/2010 9:51 AM, Blogger Ted said...

MP--Please feel free to share your observation with our current administration.

 
At 4/25/2010 10:12 AM, Blogger PeakTrader said...

It's likely, when marginal tax rates fall, economic activity increases.

Attacking the rich may actually hurt the poor.

 
At 4/25/2010 10:56 AM, Blogger juandos said...

"How about a story on how the Nixon Tarriff helped Harley Davidson"...

Did it? You have something credible that we can link to that backs up that statement?

"Attacking the rich may actually hurt the poor"...

It probably always hurts the poor since when was the last time a poor person was able to hire anyone to do anything and pay that person?

 
At 4/25/2010 11:15 AM, Blogger PeakTrader said...

Venezuela's economy:

"Artists, lawyers, physicians, managers and engineers are leaving the country by droves...The wealthiest among them are buying condos in Miami and Panama City...oil engineers are working rigs in the North Sea and sifting the tar sands of western Canada. Those of European descent have applied for passports from their native lands...An estimated million Venezuelans have moved abroad in the decade since Chávez took power.

2010 economy:

The IMF said that Venezuela's economic recovery is expected to be "delayed and weak" compared to other countries in the region.

Venezuela will remain the "black sheep" of the region as far as economic growth is concerned, as it will contract 2.6 percent this year, mainly due to ongoing power shortages that are adversely affecting the industry. The IMF expects that the Venezuelan economy will have a small rebound in 2011 with a 0.4 percent growth.

According to the semi-annual report entitled World Economic Outlook, April 2010, Venezuela will show a double-digit inflation, with rates of 29.7 percent in 2010 and 33 percent in 2011.

 
At 4/25/2010 1:29 PM, Anonymous Anonymous said...

Venezuela???? How about Norway: high taxes, peaceful, extensive list of social benefits AND the highest per capita income in the world. Go figue.

http://www.globalpropertyguide.com/Europe/Norway/Taxes-and-Costs

 
At 4/25/2010 1:36 PM, Anonymous Benny The Man said...

Tax something and get less of it?

Great--let's tax pollution. And rap music.

 
At 4/25/2010 2:10 PM, Blogger Ron H. said...

>"The data show that the tax yield has been independent of marginal tax rates over this period, but tax revenue is directly proportional to GDP."

This doesn't mean that marginal tax rates make no difference in the AMOUNT of taxes collected, only that taxes collected as a percentage of GDP appears to correlate well.

>"So if we want to increase tax revenue, we need to increase GDP."

Probably the best way to do that, is to leave more of their money in the hands of those who produce wealth, thus higher GDP, through lower marginal tax rates.

 
At 4/25/2010 2:10 PM, Blogger misterjosh said...

Is Norway anything like Sweden? Ask Johan Norberg how that situation's developing.

Norway has oil wealth & cultural homogeneity that we couldn't hope to match.

 
At 4/25/2010 2:21 PM, Blogger juandos said...

"How about Norway: high taxes, peaceful, extensive list of social benefits AND the highest per capita income in the world"...

Hmmm, interesting link and something my relatives living in Oslo and Alesund would probably quibble with...

Peaceful?

Hmmm, I always thought so but then again consider this supposed source: World Top Ten Countries With Highest Reported Crime Rates

Mind you I'm more than a bit leary of Norway being in that crowd but then again the operative word might be 'Reported'...

You might find this interesting: Worldwide Cost of Living survey 2009 – City ranking

Norway, a truly lovely place to visit but to live there on what I make here and now, I don't think it would work...

 
At 4/25/2010 2:22 PM, Blogger Ron H. said...

juandos, thanks for the link. I found the following gem. Classic Rockwell.

>"One helpful way to understand this is to think of a robber who promises to stop coming through your front door if you promise to leave the back door open. So it is with the state that promises to stop taxing your income if you let it tax your consumption. The issue is not the method; it is the amount."

 
At 4/25/2010 2:32 PM, Blogger Ron H. said...

World Top Ten Countries With Highest Reported Crime Rates

hmmm...most of the countries on that list are in cold climates. Would warmer temperatures reduce crime? Maybe we should reconsider all that "reduce carbon dioxide" stuff.

 
At 4/25/2010 2:56 PM, Blogger juandos said...

"hmmm...most of the countries on that list are in cold climates"...

Ahhh Ron H, I had to chuckle about the, 'carbon dioxide' bit in your comment...

Strictly anectdotal on my part but my experience in the Scandanavian countries, dealing with the 'original natives' is that there blindingly wide streak of indomitable honesty that has been inculcated into those folks...

The first time I went to Norway in the early seventies my relatives would leave the keys in the car's ignition and go into the stores to shop...

Thirty years later and that habit hasn't been broken...

Back in the late eighties I was train traveling with a cousin who lives in Chicago...

Somehow he left his Hasselblad camera and accouterments on a train coming out of Tyreso, Sweden and I don't know what it was worth but I'm guessing in excess of $15K...

Someone from SJ (Swedish Rail) spent close to $80 to ship to his address in Chicago...

Would that happen where you live?

The odds of it happening where I live are slim to nil...:-)

 
At 4/25/2010 3:21 PM, Blogger Ron H. said...

>"Would that happen where you live?

Only if I agreed to pay a hefty ransom up front, and then it's doubtful.

 
At 4/25/2010 4:45 PM, Anonymous Anonymous said...

reported crimes????? I say BS...US homicide rate is .04 per 100,000, Norway's is .01.....Norway must report spitting on the street as a crime;) anyway that was a nice delflection of the original point: Norway has high taxes, a vast social safety net and the highest per capita income in the world...oh yeah and it has oil too like Venezuela............so it ain't all about taxes

 
At 4/25/2010 6:27 PM, Blogger Ron H. said...

Any of you ANONs that comment on this blog who think that socialism provides a better standard of living please read PeakTrader's comment on "Venezuela's Economy". Pay special attention to the following:

>Artists, lawyers, physicians, managers and engineers are leaving the country by droves...

>...An estimated million Venezuelans have moved abroad in the decade since Chávez took power.

Notice that people are LEAVING that paradise, not trying to sneak in for a better life.

>...economic growth...will contract 2.6 percent this year, mainly due to ongoing power shortages...

Power shortages? This is a country with one of the largest oil reserves in the world. How can there be power shortages?

>According to the semi-annual report entitled World Economic Outlook, April 2010, Venezuela will show a double-digit inflation, with rates of 29.7 percent in 2010 and 33 percent in 2011.

This is a direct result of government counterfeiting money to pay its bills, as economic activity is too anemic to provide enough tax receipts.

Does this sound familiar? Is this where current progressive US leadership is taking us?

 
At 4/25/2010 7:24 PM, Blogger OA said...

Anonymous said...
...anyway that was a nice delflection of the original point: Norway has high taxes, a vast social safety net and the highest per capita income in the world...oh yeah and it has oil too like Venezuela............so it ain't all about taxes



Interesting that Norway's tax rates fall in the middle, not the top, of this chart, which is unfortunately from Wikipedia.

http://en.wikipedia.org/wiki/File:Income_Taxes_By_Country.svg

However the source is the more authoritative tables here:
http://www.oecd.org/document/60/0,2340,en_2649_34533_1942460_1_1_1_1,00.html#pir

Sweden's personal rate (and the graph includes social security programs) is about 10 percent higher than Norway. How are they doing again? How about France, Germany, and Belgium? They should be rocking and rolling with those tax rates and all the government handouts.

Norway's rates are higher than the US, but looks like people in more than a dozen countries might not call Norway's rates "high."

 
At 4/25/2010 8:35 PM, Blogger PeakTrader said...

Anon: "How about Norway: high taxes, peaceful, extensive list of social benefits AND the highest per capita income in the world."

How about Alaska with a per capita income over $10,000 more than Norway (based on a hard currency rather than PPP, and excluding U.S. consumer surplus, which far exceeds Norway)?

 
At 4/25/2010 8:45 PM, Blogger PeakTrader said...

Connecticut 2008 GDP per capita $56,248 (in dollars).

Norway 2009 GDP per capita $53,269 (PPP).

 
At 4/25/2010 8:59 PM, Blogger PeakTrader said...

Source: Facts - 2009, The Norwegian Petroleum Sector
Ministry of Petroleum and Energy, Norway

"Saudi Arabia was the largest exporter of oil at 8.1 million barrels per day. Russia came in at second. Norway ranked fifth with 2.3M barrels per day.

Russia was the largest exporter of natural gas. It is interesting to note that Canada was the second major exporter followed by Norway."

 
At 4/25/2010 9:06 PM, Anonymous Lyle said...

The article demonstrates the truth of the laffer curve, the big question is that given that the curve government revenue versus tax rate at what rate would it peak? Its clear that at the 91% rate its to high, and at 0% its to low the middle is the question.

 
At 4/25/2010 10:13 PM, Blogger Colin said...

An American expat comments on Norway's standard of living:

http://www.nytimes.com/2005/04/17/weekinreview/17bawer.html

 
At 4/25/2010 10:40 PM, Blogger Ron H. said...

>...the big question is that given that the curve government revenue versus tax rate at what rate would it peak? Its clear that at the 91% rate its to high, and at 0% its to low the middle is the question.

Lyle, 91% papa bear is too high, 0% mama bear is too low, so what % baby bear is just right?

I recently had an exchange with an ANON on that very subject. I sent him(her?) to this interesting article. he(she?)didn't read it, or didn't understand it, and came back with "Ya, but what's the answer to my question?"

As the article explains, there is no exact answer to that question unless you know many things about current economic conditions, especially tax rates, as is explained in the article. Even then, the only way to know for sure, I suppose, is to raise or lower tax rates until increasing or decreasing tax receipts change direction. The Laffer curve is a concept, not a measurement.

In my opinion, leaving more money in the hands of those who earn it is almost always best, so lower tax rates are better.

 
At 4/25/2010 11:14 PM, Anonymous Lyle said...

The peak of the laffer curve is one of a number of questions I wish economists could settle rather than deciding that economics is just a branch of philosophy which labors mightily producing lots of tomes, but accomplishes nothing. Another that would help make a decision on climate change is what is a fair discount rate to use for the future. I do know whats to low and to high. But if you can't agree on this one can't do a cost benefit analysis. As the results depend greatly on the value of the discount rate, if it is high the future fix has little present value and vice versa.

 
At 4/26/2010 2:22 AM, Blogger Ron H. said...

>"How about Alaska with a per capita income over $10,000 more than Norway (based on a hard currency..."

I must be old school. I still think of a "hard currency" as one backed by gold or silver. No major currency in the world fits that definition any more. All currencies are only what their respective issuers say they are.

If relative stability is the only criteria for a "hard currency", then the Norwegian krone also qualifies.

 
At 4/26/2010 2:23 AM, Blogger PeakTrader said...

Colin, your article on Norway shows GDP doesn't reflect living standards accurately, and government creates massive inefficiencies, leading to lower living standards.

 
At 4/26/2010 2:29 AM, Blogger PeakTrader said...

Ron, the U.S. dollar is the ultimate hard currency. It's the world's reserve currency, and the most demanded currency in the world.

When Saddam was captured, he didn't have euros, yen, Swiss francs, gold, or Iraqi dinars, he had U.S. dollars.

 
At 4/26/2010 3:20 AM, Blogger Ron H. said...

Lyle said:

>"The peak of the laffer curve is one of a number of questions I wish economists could settle rather than deciding that economics is just a branch of...

...what is a fair discount rate to use for the future."


Translation: I would like to be able to predict the future.

>Another that would help make a decision on climate change is what is a fair discount rate to use for the future.

Why do you think a decision must be made on climate change?

You are probably not responsible for climate change, and if you are, it's only an inconsequential amount; In any case, there's not likely anything you can do about it,so relax. No discount rates are needed.

If you're still worried, the best thing you could do is promote business with poor countries, so they can become wealthy. Then they too can worry about climate change, and devise their own solutions instead of extorting money from rich countries.

 
At 4/26/2010 3:33 AM, Blogger Ron H. said...

>"...the U.S. dollar is the ultimate hard currency. It's the world's reserve currency, and the most demanded currency in the world."

You're right, but I wonder how much longer that will be true. China, among others, is clamoring for a new reserve currency. I think they worry about high inflation in the US, leaving the IOUs they hold worth much less..

It's unsettling when a currency is based on nothing more than the word of a national government saying, in effect, "This is a dollar, because we say it is."

 
At 4/26/2010 5:29 AM, Blogger sethstorm said...

It would be a very long stretch to think of that as the sole reason.


It probably always hurts the poor since when was the last time a poor person was able to hire anyone to do anything and pay that person?

Neal Boortz wants his quote back.

The reality is that poor person is only so because they already paid out wages and expenses. That's how they can exist.

 
At 4/26/2010 7:13 AM, Blogger save_the_rustbelt said...

MP: A few lessons: 1) If you tax something, you get less of it, and 2) if you cut tax rates, you might get more tax revenues.


I'm a Reagan Republican and a former tax professor, and at best this is simplistic dittohead nonsense.

 
At 4/26/2010 8:47 AM, Blogger Paul said...

"The reality is that poor person is only so because they already paid out wages and expenses. That's how they can exist."

That's seriously your theory of poverty? What does that even mean?

 
At 4/26/2010 8:56 AM, Anonymous Lyle said...

Ron H the way I look at climate change there is a possibility that it is real. I would like to be able to buy insurance against that possibility, but obviously need to know the premium. Clearly then the discount rate is critical in deciding if the premium is reasonable in terms of the risk.
People all say that trying to reduce this to a cost benefit ratio is immoral, but other than invoking moral points of view on either side how can one make a decision. Assume that I can show that I could solve the problem (if it exists ) for 1 billion dollars over the next 30 years (not likely but for for the sake of the argument) I would pay the premium if you said 100 trillion the answer would be different. Only when you compare costs versus benefits can you have a dialog rather that the multiple monologues we have today.

 
At 4/26/2010 9:59 AM, Anonymous Anonymous said...

Attacking the rich may actually hurt the poor.

"may" being the operative word.

Anyway, you assume that the poor are taking part in economic activity, which for the truly poor, isn't true.

 
At 4/26/2010 10:02 AM, Anonymous Anonymous said...

Did it? You have something credible that we can link to that backs up that statement?

Long term, or short?

Long term, Harley is now hurting (again).

Short term, Harley sales doubled after Nixon slapped a 200% tarriff on Japanese bikes.

 
At 4/26/2010 10:53 AM, Blogger juandos said...

anon @ 4/26/2010 10:02 AM says: "Short term, Harley sales doubled after Nixon slapped a 200% tarriff on Japanese bikes"...

Hmmm, interesting and I think I see where you're coming from...

anon @ 4/26/2010 9:59 AM says: "Anyway, you assume that the poor are taking part in economic activity, which for the truly poor, isn't true"...

Well maybe this 'alledged poor' you feel so bad about should get some job skills so there's a reason to hire them...

BTW how many of these 'alledged poor' are poor due to poor life choices they made? 10%? 20%? More? Less?

 
At 4/26/2010 11:06 AM, Blogger sethstorm said...


Paul said...

That means that they're barely getting by after paying out wages and expenses.

 
At 4/26/2010 11:37 AM, Blogger sethstorm said...


Well maybe this 'alledged poor' you feel so bad about should get some job skills so there's a reason to hire them...

Or the employers in the area are being overly picky.

 
At 4/26/2010 12:16 PM, Blogger Ron H. said...

>"Hmmm, interesting and I think I see where you're coming from..."

strange article: "The year before, citizens had been giddy with patriotic pride...

I guess I missed that part, except for the giddy. After all, we had just elected Mr. Peanut as our President.

 
At 4/26/2010 12:50 PM, Blogger Ron H. said...

ANON @ 10:02 you said:

>"Short term, Harley sales doubled after Nixon slapped a 200% tarriff on Japanese bikes."

I'm unable to find anything about this.Please provide a reference.

 
At 4/26/2010 12:59 PM, Blogger Ron H. said...

ANON @ 09:59

>"Anyway, you assume that the poor are taking part in economic activity, which for the truly poor, isn't true."

Everyone, including the truly poor, take part in economic activity. Everyone buys food, shelter, clothing, etc., or someone buys it for them. Anything that reduces the availability of those things the "rich" produce, or raises their prices, affects everyone, especially the truly poor.

 
At 4/26/2010 1:46 PM, Blogger Ron H. said...

>"I'm a Reagan Republican and a former tax professor, and at best this is simplistic dittohead nonsense."

Gee, Mr. rustbelt, I'm sorry to hear Dr. Perry's blog doesn't meet your high standards for economic discourse.

Many of us here don't have advanced degrees, and obviously aren't nearly as smart as you must be. However, I for one, feel I benefit from reading and discussing this simplistic dittohead nonsense.

As luck would have it, you aren't likely doomed to reading only this blog. There must be others that more closely meet your high intellectual needs.

As a former tax professor, it's possible that you miss the satisfaction of enlightening others, and watching them learn. In that spirit, perhaps you could provide us with links to more edifying material, so that those of us who yearn for something more than simplistic dittohead nonsense could benefit from your guidance.

 
At 4/26/2010 2:32 PM, Anonymous Anonymous said...

Everyone, including the truly poor, take part in economic activity. Everyone buys food, shelter, clothing, etc., or someone buys it for them.

At the margin, you are correct, but from a practical standpoint you are utterly clueless.

I have acquaintances that live in unheated unplumbed hovels, with cockraoches the size of your cellphone, subsisting on what they can grow, scrounge, or recycle, or the government gives them.

They are so far removed from what the rich do that if you were to tell them that they dependon rich people to their face, they would just laugh at you.

Technically, you are right. Practically, this is nonsensical hubris.

 
At 4/26/2010 3:26 PM, Anonymous Anonymous said...

Politics of Motorcycle tarriffs.

http://www.cato.org/pubs/pas/pa032.html


I was wrong, it was Reagan that signed, but I could have sworn the problem went back earlier than 1975.



Even when you have customers who tattoo your brand on their forehead, you can only go so far with "A Hundred Years of Tradition, Unmarred by Progress".

 
At 4/26/2010 3:59 PM, Blogger Ron H. said...

ANON

>"I have acquaintances that live in unheated unplumbed hovels, with cockraoches the size of your cellphone, subsisting on what they can grow, scrounge, or recycle, or the government gives them."

I plead guilty to an amount of insensitivity in my previous comment, but I didn't realize that you were trying to make the minor point that some people will fall through the cracks. Such people will likely exist in any society, and under any economic system.

I have several questions on that subject and an observation. You may not know the answers.

How did your acquaintances come to be in their current condition?

Where are the families/friends/neighbors/communities of these truly poor people?

What do you think others should do, if anything, to help these people? Are you personally doing anything to help?

My observation is that apparently cockroaches have gotten smaller over the years.

 
At 4/26/2010 4:30 PM, Blogger Ron H. said...

>"When Saddam was captured, he didn't have euros, yen, Swiss francs, gold, or Iraqi dinars, he had U.S. dollars.

Peak, I would imagine Saddam had 2 reasons for carrying USD; the reason you gave, that they are the most widely accepted currency in the world, but also because they are lighter than gold.

The $100 bills would be the ideal denomination to carry for a person on the run, and the total amount, $750k he had with him, is probably the amount he was able to stuff in a briefcase on his way out the door.

I'm sure he would have preferred gold, but the USD in his briefcase would weigh about 17lb, whereas the same value in gold, which could also be easily stuffed into that briefcase, would weigh roughly 125lb. Mighty awkward as carryon, and prohibitively expensive as checked luggage.

 
At 4/26/2010 4:34 PM, Anonymous Anonymous said...

I read your Laffer curve article and concluded that it was fluff as far as making any conclusion about the shape of the curve.

You hav tot think the shape is hypergeometric or somthing to b skewed enough so that government revenue rises with loser tax rates in the range of 20%-40%.

Draw the cruve that makes that argument and it is a lot different from the uniform parabolic curve ususally presented. It isn't the truth of the Laffer curve idea that is in question, it is the SHAPE of the curve.

Your article pretty much says the sahpe can be whatever you beleive it to be.

It is also not a question of whether taxes increase or decrease economic activity, it is about whether government revenue is increased.

In our preveious conversation, all I asked you was whether you consider there is a lower bound for tax rates below which government revenues will decrease, whci you doded.

Somwhere I have a model built from first principals where you plug in certain variables, to see how they affect the sahpe of the theoretical curve. If I can dig it out or the reference I built it from, I'll post it.

As I recall, places like Norway with something like 60% total tax rate would benefit from lower rates. The curve went up pretty steep until about 20%, and then it was more or less flat until greater than 50%.

It's only a model, so I suppose youcould make any shape you like with sufficient asumptions.

Places like Norway, Alaska, and Qatar are highly skewed by oil production, sot the tax argment isn't really meaningful. Hard to claim people are disincentivized by taxes when they are not making the money, it is given to them out of oil revenue.

All I know is that I have yet to reach a tax rate that is so high that I would quit working and forego ANY income rather than pay the tax and have SOME income.

===========================

Locked door story in my town: met a member of my church at the IGA and he was locking his truck. I asked him why, and he said it was that time of year: if he doesn't lock his truck, someone will leave him some more zucchini.

 
At 4/26/2010 4:49 PM, Anonymous Anonymous said...

Where are the families/friends/neighbors/communities of these truly poor people?


Also truly poor.

Really, these are people that it would be hard to hurt much more, short of exterminating them.


We just have different idesa of who the poor are. When I say poor, I mean really poor. With seven kids on a teachers salary, my family was far from rich. Families like that can get hurt by economic changes, as you suggest.

But when you really got nothing, like the people I'm talking about, you got nothing to lose. My family wasn't trappped, and I was able to break out, even though I spent a few years trying to multiply by near zero. The people I'm talking about are, for the most part, trapped, by the circumstances they are in and the society that surrounds them (surrounded them, this was a long time ago, society has changed, some.) Only the best and brightest of them will break out, and they will need luck and help.

It is not ONLY a matter of self determination and hard work, even in America.

 
At 4/26/2010 5:08 PM, Anonymous Anonymous said...

How did your acquaintances come to be in their current condition?

They were born that way. Generations in a house without a book. Used to study with a guy named Percy: he didn't have one thing going for him except he knew how bad off he was. And this place was an improvement for him: his mother shipped him of to the wealthy relatives becasue she couldn't afford to keep him.


Are you personally doing anything to help?

Not any more. Lotsa reasons. Lost track, gave up, moved away, endless task and limited resources, had problems of my own, didn't see any point in helping when so many others were bent on just the opposite.

Most of all, I decided there were professionals who were a lot better at it. I am glad there are such people. Whether i am too haertless or have too much heart, one way or another I could not do what those folks do. I had a taste of it for a while, working as a manager in a sheltered workshop.

No thanks.

 
At 4/26/2010 8:14 PM, Blogger Ron H. said...

>"didn't see any point in helping when so many others were bent on just the opposite."

What others? What does this mean?

 
At 4/26/2010 11:29 PM, Blogger Ron H. said...

Anon # 4:34 PM, I will attempt to explain this to you one last time, although I think you must be arguing just to argue, because no one could be as obtuse as you seem to be.

If you have indeed read the article, as you claim, then there's nothing I can add that will help you, so I will just respond to your comment pretty much point by point.

>"I read your Laffer curve article and concluded that it was fluff as far as making any conclusion about the shape of the curve."

Did you notice that the article was written by Arthur Laffer?

>"You hav tot think the shape is hypergeometric or somthing to b skewed enough so that government revenue rises with loser tax rates in the range of 20%-40%."

You should consider proofreading and spell checking your comments before you hit the "publish" key. This stuff is hard to read.

No, it is not hypergeometric,(do you even know what that means? Did you just use a big word to sound important?) it is a regular 2 dimensional shape.

If I understand your tortured writing correctly, your are trying to assign values (20%-40%) to a curve with NO VALUES MARKED ON EITHER AXIS. This is just wrong. You are allowing your eyeball guess at relationships that aren't there.

>"Draw the cruve that makes that argument and it is a lot different from the uniform parabolic curve ususally presented. It isn't the truth of the Laffer curve idea that is in question, it is the SHAPE of the curve."

No, the CONCEPT is also a problem for you. Later in your comment you question the CONCEPT of diminishing tax receipts with higher tax rates.

Forget about the shape. It doesn't matter. You can only guess that it is parabolic, as there are NO VALUES ASSIGNED TO THE AXES OF THE GRAPH.

>"Your article pretty much says the sahpe can be whatever you beleive it to be."

It Is not MY article, it was written by Arthur Laffer.

>"It is also not a question of whether taxes increase or decrease economic activity, it is about whether government revenue is increased."

Wrong: it IS about ALL of that.

>"In our preveious conversation, all I asked you was whether you consider there is a lower bound for tax rates below which government revenues will decrease, whci you doded."

The answer is in the article. Lowering tax rates cause tax revenues to decrease if your current rate is below the tip of the boob, boob. Sorry, the last part is unreadable. In the future please proofread before publishing.

>"Somwhere I have a model built from first principals...If I can dig it out or the reference I built it from, I'll post it."

That would be great! I'd love to see it.


>"It's only a model, so I suppose youcould make any shape you like with sufficient asumptions."

Just like any model. Think climate models.

>"Places like Norway, Alaska, and Qatar ...Hard to claim people are disincentivized by taxes when they are not making the money, it is given to them out of oil revenue."

People are still concerned with taxes even when they get an annual dividend from oil production, as in Alaska. The amount has varied from $331 to $3200/yr. Not likely anyone's total income.

>"All I know is that I have yet to reach a tax rate that is so high that I would quit working and forego ANY income rather than pay the tax and have SOME income."

You might not quit working, but you might work less.

Let's pretend you make $20/hr, and you get 1.5 times, or $30/hr for overtime. At a marginal tax rate of 50% you would take home $15/hr for working overtime. If your top rate increased to 90%, you might not be too interested in overtime if you only got to keep $1.50.hr.

Your rational response to this abusive tax rate would be to avoid taxable income, thereby reducing government tax receipts.

 
At 4/26/2010 11:40 PM, Anonymous Anonymous said...

You might not quit working, but you might work less.


Let me know when you figure out how to do that and earn more income.

 
At 4/26/2010 11:58 PM, Anonymous Anonymous said...

"Let's pretend you make $20/hr, and you get 1.5 times, or $30/hr for overtime."

I'm not an idiot. Lets pretend I get $75 an hour with no overtime, and I can hire people who make $20 an hour and turn $2 an hour profit on each one.

How many should I hire, before I lose the incentive to make more money?

If I had a 90% tax rate, I would agree with you that we were on the far side of the Laffer curve. Ronald Reagan actually incurred such rates after the war.

It might have altered his way of thinking.

The question is, what do you think the low side of the curve is, below wich you cannot lower rates ann more without losing revenue.

 
At 4/27/2010 12:08 AM, Anonymous Anonymous said...

If your top rate increased to 90%

If that happens, I'll be complaining witht the best of them.

If being the operative word. I prefer to work in the real world.


As for climate models, I've never done one. I have done toxic plume models (think terrorist attack). These have been tested in actual cities (using simulants for the toxins) with good results. Of course, you wouldn't want the authorities to actually use such a model to plan evacuation alerts, because we all know how unrealiable models are.

Like the Laffer curve model.


Yes, people getting free money are concerned about the taxes they pay, on it.


People are concerned about celebrity sex life, also.

Your thought patttern seems to be:
"The food is terrible here and the portions are small, too." As negative and cynical as you seem to be, how do you ever get anything accomplished or find time to smile?

 
At 4/27/2010 12:12 AM, Anonymous Anonymous said...

you question the CONCEPT of diminishing tax receipts with higher tax rates.


I don't question that concept, I agree with you that IF there was a top tax rate of 90%, that would probably happen.

My question to you was how low does the tax rate have to go before the oppposite does NOT happen.

You and the article you posted have dodged that question.

 
At 4/27/2010 12:15 AM, Anonymous Anonymous said...

Your rational response to this abusive tax rate would be to avoid taxable income, thereby reducing government tax receipts.

I agree, but I haven't reached the 90% rate, have you?

If I make that much money, taxes are the least of my problems.

 
At 4/27/2010 9:47 PM, Blogger juandos said...

"I'm a Reagan Republican and a former tax professor, and at best this is simplistic dittohead nonsense"...

Yeah, sure you are and I'm Carlos Slim and I do brain surgery on the side...

Well rustybelt you might be able to understand the simplicity of what is your basic Laffer curve if you didn't hang with the Keynesian Klowns over at the INANE BEAR...

 
At 4/28/2010 10:26 PM, Anonymous Anonymous said...

C'mon. Can we agree that at zero tax there is zero revenue to government?

Can we agree that at 100% tax there is very little incentive to work, except for what the government gives back?

OK, then there must be SOME shape fpor the curve in between, given that other economic values are more or less constant, or that they chage in tandem with the curve.

Maybe it is skewed left and taxes are too high for current conditions, maybe it is skewed right and taxes are too low.

I think it is table shaped with a big plateau, but maybe it is bumy and has multiple peaks and valleys.

But given that it has ends, it must have SOME shape.

We cannot determine that shape with partisan arguments. and using it for partisan arguments without knowing the shape is meaningless.

 
At 4/28/2010 10:36 PM, Anonymous Anonymous said...

Did you notice the article was written by Arthur Laffer?

Did you notice he disclaimed credit for the idea?

Even if we give him credit for inventing the curve, he can't tell you what shape it is. that's what the article says.

It is titles "All you need to know about the Laffer curve", but it does not produce what it says.

The article is fluff, whether it is written by God or not. Without knowing the shape, the concept is next to worthless.

 
At 4/28/2010 10:39 PM, Anonymous Anonymous said...

Probably the best way to do that, is to leave more of their money in the hands of those who produce wealth, thus higher GDP, through lower marginal tax rates.

Only if the rate you produce GDP is higher than the rate at which you reduce tax rates, and assuming that the taxable portion of GDP remains constant.

 

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