Wednesday, February 22, 2012

Economic Lessons in the News

1. The U.K. government is learning about the economic lesson that "if you tax something, you get less of it."  Following an increase in the top marginal income tax rate to 50%, tax revenues from high-income taxpayers are falling, and are not going up, as the Treasury somehow expected by ignoring the economic lesson that "people respond to incentives." A U.K. Treasury official explained the disappointing drop in tax revenues by saying it "was partly due to highly-paid individuals arranging their affairs to avoid paying the 50% rate."  Duh.

2. The economic lessons of "consumer sovereignty," "competition breeds competence" and "free trade benefits consumers" are illustrated in this AP story "For Car Buyers, It's Harder to End Up with a Lemon":

"In the past five years, global competition has forced automakers to improve the quality and reliability of their vehicles — everything from inexpensive mini-cars to decked-out luxury SUVs. The newfound emphasis on quality means fewer problems for owners. It also means more options for buyers, who can buy a car from Detroit or South Korea and know it will hold up like a vehicle from Japan.

With few exceptions, cars are so close on reliability that it's getting harder for companies to charge a premium. So automakers are trying to set themselves apart with sleek, cutting-edge exterior designs and more features such as luxurious interiors, multiple air bags, dashboard computers and touch-screen controls."

"It's a great time to be a consumer," says Jesse Toprak, vice president of industry trends for the TrueCar.com auto pricing website. "You can't really screw up too badly in terms of your vehicle choice." 

Thanks to Morgan Frank and Dale Weaver.

46 Comments:

At 2/22/2012 10:29 AM, Blogger Che is dead said...

Speaking of the U.K., it seems that the spectre of Greece has resulted in a concentration of the collective mind:

Why the UK Is Ditching Socialized Medicine, Front Page Mag

Britain Plans to Decentralize Health Care, NYT

 
At 2/22/2012 10:34 AM, Blogger Methinks said...

It would be an even better time for consumers if we didn't have CAFE standards that force manufacturers to make less safe cars than they otherwise would.

Gives new meaning to "nanny us to death".

 
At 2/22/2012 10:38 AM, Blogger morganovich said...

we have seen this same thing over and over in the US as well leading to the positing of "hauser's law" which shows that top tax rates have no effect at all on tax income.

http://www.hoover.org/publications/hoover-digest/article/5728

where tax income is 19.5% of gdp +/- 0.5% regardless of the top tax rate.

of interest, the first major excursion from hauser's law has been going on in the last couple years.

the drop in receipts below 19% has been prolonged and unprecedented since ww2. this gives fuel to the "tax the rich" crowd, but such a conclusion is baseless.

however, the reason for it is, based on past evidence, unlikely to be that the top earners are not paying enough, but rather that 51% of americans are not paying any net income tax, up from 26% just a decade ago and that the one tax that everyone actually was paying, fica, has been cut.

based on this, the tax hikes on the top brackets in the new obama budget are unlikely to do anything to increase revenues or close the budget hole. it never worked before.

this is doubly ironic as the US already has the most progressive tax system in the OECD, as mark has demonstrated so well in the past.

http://mjperry.blogspot.com/2011/03/us-has-most-progressive-tax-system-for.html

new taxes like the big hike on dividends are particularly likely to fail at corporate behavior will simply adjust.

" Mr. Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%. Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8%—nearly three times today's 15% rate.

Keep in mind that dividends are paid to shareholders only after the corporation pays taxes on its profits. So assuming a maximum 35% corporate tax rate and a 44.8% dividend tax, the total tax on corporate earnings passed through as dividends would be 64.1%"

When the rate fell to 15% on January 1, 2003, dividends reported on tax returns nearly doubled to $196 billion from $103 billion the year before the tax cut. By 2006 dividend income had grown to nearly $337 billion, more than three times the pre-tax cut level.

Shortly after the rate cut, Microsoft, which had never paid a dividend, distributed $32 billion of its retained earnings in a special dividend of $3 per share. According to a Cato Institute study, 22 S&P 500 companies that didn't pay dividends before the tax cut began paying them in 2003 and 2004.
As former Citigroup CEO Sandy Weill explained at the time: "The recent change in the tax law levels the playing field between dividends and share repurchases as a means to return capital to shareholders. This substantial increase in our dividend will be part of our effort to reallocate capital to dividends and reduce share repurchases."
And that's what happened. An American Economic Association study by University of California at Berkeley economists Raj Chetty and Emmanuel Saez examined dividend payouts by firms and concluded that "the tax reform played a significant role in the [2003 and 2004] increase in dividend payouts." They also found that the incentive for firms to pay dividends rather than sit on cash helped "reshuffle" capital from lower growth firms to "ventures with greater expected value," thus increasing capital-market efficiency.
http://online.wsj.com/article/SB10001424052970204880404577225493025537660.html?mod=WSJ_hp_LEFTTopStories

i see no reason that this trend will not run in reverse.

this budget is going to be a massive failure. revenues will not increase, but growth will slow.

in particular, the 60% hike in cap gains tax is going to be extremely harmful. it was the slashing of cap gains that set off the huge investment and venture capital cycle of the 80's that carried through into the 90's.

 
At 2/22/2012 10:49 AM, Blogger Methinks said...

The Liberal Democrats have insisted that it must stay because it is important to demonstrate that the rich are paying their fair share.

Libs still haven't learned you can't eat demonstrations and you can't get blood from a stone.

 
At 2/22/2012 11:03 AM, Blogger Paul said...

Morganovich,

this budget is going to be a massive failure. revenues will not increase, but growth will slow.

One thing I wish the GOP would point out is Obama's massive $3.8 trillion 2013 budget contains all his cherished tax hikes on upper incomes and oil companies and he still leaves a gaping trillion dollar hole. He and the Democrats have been dishonestly insinuating all along that all we need to do is take more out of the hide of the guy with the nicest house on the block and all would be well.

 
At 2/22/2012 11:45 AM, Blogger morganovich said...

paul-

if history is any guide, even that trillion dollar hole will be a rosy assumption.

there is no evidence that an increase in cap gains taxes and the top marginal rate can increase tax revenues in a durable fashion (or possibly at all).

what it can do, is crush investment levels (already too low in the US), hamstring growth, and create capital and wealth flight.

i have dual citizenship.

most of my taxes are cap gains, facing a 60% hike.

that's enough money that i'm giving serious though to giving up us citizenship and getting out of here.

like many people, i like the US, but i would pay ZERO income tax if i gave up citizenship and left. st kitts doesn't even have one.

my business is mobile and can easily be run offshore. many in the HF community are looking at this.

wanna see a whole industry leave and NYC implode in a gaping revenue shortfall? this is how to do it.

and before the "you are not patriotic" crowd starts in with their nonsense, consider the facts:

i am more devoted to the principles on which this nation was founded than 99% of americans. rather than excoriating me for not wanting to pay for your free stuff, perhaps realize that this is precisely the tyranny the US had a revolution to escape.

tyranny of the majority is still tyranny and this is exactly why democracy and wealth redistribution are incompatible.

51% pay no income tax and so vote for more spending and more taxes on me. why would i sit and such that up. that's nothing like the american way nor remotely consistent with our founding principles.

it's detoquville's prediction coming true.

stop ask ask yourself, how much would you need to be paid to leave the US? $50k a year? $100k? $200k?

there are lots of nice places to live.

i've started 5 companies, helped found dozens more, employ a number of people, and pay more taxes annually than 90% of americans have in income.

am i really the guy you wanna chase out?

i seem to get pelted with stones anytime i talk about leaving rather than staying to be a milchcow for social policies i oppose, but perhaps rather than doing so, you should ask yourself "what have we done to alienate such a productive member of society to the point where he'd leave?"

this incessant class war and "eat the rich" mentality has a price. i doubt many liberals are going to be happy if they have to pay it.

 
At 2/22/2012 11:45 AM, Blogger Che is dead said...

"One thing I wish the GOP would point out is Obama's massive $3.8 trillion 2013 budget contains all his cherished tax hikes on upper incomes and oil companies and he still leaves a gaping trillion dollar hole." -- Paul

They are pointing it out:

Paul Ryan on Meet the Press: The Serious Consequences of the President's Unserious Budget He addresses your point at about the 4:30 mark.

Ryan also called out Tim Geithner on the lack of a Democrat plan to address the coming debt crisis:

Tim Geithner to Paul Ryan: "We don't have a definitive solution ... We just don't like yours"

As you can tell from the focus of the questions ask by Obamas apologists in the media at the Republican debate and the narrative that they have been promoting recently, the last thing that the Democrats want to talk about is the deficit and the debt.

 
At 2/22/2012 11:49 AM, Blogger Che is dead said...

i seem to get pelted with stones anytime i talk about leaving rather than staying to be a milchcow for social policies i oppose, but perhaps rather than doing so, you should ask yourself "what have we done to alienate such a productive member of society to the point where he'd leave?" -- morganovich


“Where liberty dwells, there is my country” -- Benjamin Franklin

 
At 2/22/2012 12:07 PM, Blogger morganovich said...

che-

good old franklin.

man had some great quotes.

"Democracy is two wolves and a lamb voting on what to have for lunch."

 
At 2/22/2012 12:08 PM, Blogger Methinks said...

Nice response to Morganovich, Che.

You don't even have to live in St. Kitts, Morganovich. You can retain your citizenship in St. Kitts, give up your U.S. citizenship and live in Switzerland, if you want.

At the very least giving up U.S. citizenship means that foreign banks will once again do business with you.

A friend of mine who works in banking said that American banks will no longer open bank accounts for Americans who live abroad because of the Patriot Act.

Non-American banks won't open accounts for any U.S. citizen either because of the onerous burdens the IRS places on banks that open accounts for anyone (doesn't have to be a U.S. citizen) who is under U.S. tax jurisdiction.

What are these people to do, then? It suddenly sucks to be American as the U.S. government gets aggressive not only in robbing its most productive but also hunting them to the ends of the earth and restricting Americans' every freedom.

Far from pelting you, Morganovich, I'll see you in St. Kitts :)

 
At 2/22/2012 12:22 PM, Blogger Benjamin said...

Milton Friedman advocated taxing polluters, who are, in effect practicing communism. Polluters force the costs on production onto everyone else--we all pay for pollution, without compensation. Communism.

I have yet to read the section of the US Constitution that reads, "You have the right to pollute other people's private property, and the common air and water."

So, let's tax pollution. I also favor taxing gasoline consumption, but lowering taxes on productive behavior, such as working.

As for communism, in the United States, our most communistic organizations, are of course federal and state governments, especially the military. Financed through coercive taxation, and never tested by market competition.

Such organizations need to be sunsetted every 10 years or so.

 
At 2/22/2012 1:02 PM, Blogger morganovich said...

"You don't even have to live in St. Kitts, Morganovich. You can retain your citizenship in St. Kitts, give up your U.S. citizenship and live in Switzerland, if you want."

oh, i know.

one of the key reasons i chose st kitts is that it's former british commonwealth.

a kittician passport lets you live, work, and own property visa free anywhere in the former BC, so canada, UK, irelans, australia, New zealand, the whole carribean (through the caribean community) and then anywhere else that would take you.

not worried about finding a place, just would be sad to leave so much behind in the US.

ps.

if you want a fun project in the carribean, st kitts is confederated with nevis. they just found a big geothermal cell on nevis and are putting in a plant that will rpovide the first cheap electricity in the carribean.

nevis is one of the darkest financial black holes on the planet. make the caymans look like california.

can you say "data center"?

oh the fun one could have.

 
At 2/22/2012 1:09 PM, Blogger Buddy R Pacifico said...

From the Tax Foundation using 2009 IRS figures:

"... the top 1 percent of tax returns paid 36.7 percent of all federal individual income taxes and earned 16.9 percent of adjusted gross income (AGI)."

"... In 2009, this top 0.1 percent filed 137,982 tax returns, reporting 7.8 percent of all adjusted gross income earned and paying approximately 17.1 percent of the nation's federal individual income taxes."


further...

The top 10% of wage earners paid 70.5% to income taxes paid and earned 43% of all AGI.

So, how many people filed an income tax return in 2009;

and got all their income tax that was witheld back,

and recieved money from the IRS?

59 million income tax filers
.

Try repeating these figures to a lot of people and they don't want to believe them, and can be disgusted that one would bring them up.

 
At 2/22/2012 1:12 PM, Blogger morganovich said...

benji-

it's all a matter of degree.

i suggest you read coase on the topic.

very small amounts of pollution are not worth regulating.

it all comes down to the size of the harm, the ease of getting and making redress, and the ability to regulate.

if i dump 1000 gallons of polonium in your yard, the easy solution of for you to sue me.

if i pump soot into the air and it falls over 3 million homes 100 miles away causing $1 of damage each, then perhaps regulation is the better way to handle an externality as suing would be prohibitive.

alternately, we may decide that it's juts not enough harm to matter.

it all comes down to the construction of rights and which are granted primacy. claims of "communism" are ridiculous. it misses the whole point.

do smokers have the right to smoke in a public place, or do you have a right to clean air and clothes that don't stink?

your pollution example is interesting, but it seems to contradict your views on zoning.

isn't a lack of zoning also "communism" by your definition? i can build a huge home near you and take your and everyone else's view.

i can put in a hog rendering plant and reduce your property value that way.

you have, in the past, argued that such things ought to be allowed because it's YOUR property.

yet this is totally incompatible with what you are saying on pollution. suddenly, if you harm others, you need to pay.

so how do you square those views?

you seem to be on both sides of this issue and making inconsistent claims.

 
At 2/22/2012 1:22 PM, Blogger morganovich said...

buddy-

in the mid 80's, 15% of tax filers paid no net income tax.

that number is now 49.5%-51% depending on who you read.

i think you are correct. the problem is not that the rich stopped paying their share, it's that the number of free riders more than tripled.

worse, consider what happens in a democracy when 50%+ of voters (and lots of voters do not file at all) know that any spending measure is going to be paid for by someone else. if the cost is zero, why not vote for any perceived benefit?

 
At 2/22/2012 1:33 PM, Blogger morganovich said...

benji-

to further illustrate how such issues as pollution are a matter of degree, let's consider a this thought experiment.

let's say you have a right to clean, unsullied air.

let's say we are sitting next to each other on a bus.

i spray you with skunk musk.

even if i love the smell, most would agree that my behavior was unacceptable and that you were entitled to redress. proving harm was done is quite easy, and i ought to pay for your cleaning, lost time, etc.

but if i just have terrible BO from not showering for a month and wearing the same clothes, well, that's more ambiguous.

some might say i should be kept off the bus, some might say, hey, it's unpleasant, but you need to put up with it. it may be that the smell is bad enough that real harm was done, but quantifying it would be very difficult.

now let's say i just had a sandwich full of raw onions.

i may have unpleasant breath, but almost no one would argue that you had a right to sue me for it or that any real harm was done. establishing monetary damage would seem silly.

assuming you agree to the above, you must then agree that your right is not absolute. if it were, even disliking the scent of my deodorant would be cause to sue/regulate and anyone who burped (or even breathed) could be in trouble.

the amount of harm matters and has a real effect on the calculus of the relative primacy of rights.

rights contradict one another all the time.

most localities uphold the right to quiet enjoyment of your home. however, i also have the right to free speech.

if i choose to sing at the top of my lungs (and i cannot carry a tune in a bucket, believe me) outside your window at 3 in the morning, well, we have to decide whose right trumps whose. if both are absolute, well, that's an impasse.

you cannot just look at one set of rights and view the world from that one point.

reality is much more complex.

 
At 2/22/2012 2:45 PM, Blogger juandos said...

morganovich says: "this gives fuel to the "tax the rich" crowd, but such a conclusion is baseless"...

Exactly!

Its all about the volume of taxpayers vs hosing a particular sector of taxpayers...

morganovich also points out the ugly little secret of the progressive tax system we have today...

The Facts about Tax Progressivity

The US has the most progressive tax system when compared to countries like Australia, Canada, UK, Germany, etc....

 
At 2/22/2012 3:09 PM, Blogger marmico said...

there is no evidence that an increase in cap gains taxes and the top marginal rate can increase tax revenues in a durable fashion (or possibly at all).

1993-2001. Individual income tax revenues as a percent of GDP increased from 7.6% to 10.2% of GDP; a 34% real increase.

The proof of the counterfactual is in your corner. Neither Reagan (an 11% real decline) nor Bush 2 (a 20% real decline) cut it.

CBO Table F-2

 
At 2/22/2012 3:26 PM, Blogger Methinks said...

1993-2001. Individual income tax revenues as a percent of GDP increased from 7.6% to 10.2% of GDP; a 34% real increase

You mean during the tech bubble? Golly.

 
At 2/22/2012 3:46 PM, Blogger morganovich said...

marmico-

that's a complete cherry pick.

you are comparing the weak spot right after the 1992 doldrums to the strong one right after the 2000 equity boom.

the number in 2002 was the same as 1990. the number in 1996 was just like 1983.

you are picking one anomalous period and trying to use it to anchor a trend.

it was the tail and of a massive equity bubble.

the tax hike was in 1993. nothing happened for 4 years.

this casts severe doubt on your purported causality.

then we had an epic bubble, one of the greatest in history.

that had an effect, but still, it was not durable.

in 1994, federal tax recpeits were well below the long term average as a % of gdp.

this persisted until 1997, well after the "irrational exuberance" speech.

the facts, when looked at honestly, fail to support your narrative.

 
At 2/22/2012 4:06 PM, Blogger morganovich said...

also:

your timeframe has a severe flaw in it:

taxes were CUT in 1997.

congress forced it through.

the 1997 cuts included a reduction of the capital gains rate from 28 percent to 20 percent. This opened the capital floodgates necessary for entrepreneurs to develop, harness, and bring to market the wonders of the new information technologies.

Business investment skyrocketed after the tax cut,[6] and the economy grew at an annualized rate of 4.4 percent (33 percent faster than after the Clinton tax hike) from 1997 through the end of the Clinton presidency. Real wages reversed their downward trend and grew 1.7 percent per year during the same time.

so sorry m, but the data is that clintons tax hike did just about nothing to revenues. the big jumps came later, once cap gains were cut.

1994 looked just like 1993.

and growth really took off after the tax cut too.

 
At 2/22/2012 4:16 PM, Blogger morganovich said...

sorry, meant to include data.

1992: 7.6%
1993: 7.7%, lower than any year in the 80s'
1994: 7.8%, tied for lowest year in the 80's with 1984
1995: 8%, tied for second lowest year in the 80's with 1988. 3 years into the tax rise, and rev increase is negligible and absolute level is quite low.
1996: 8.5%, finally, a decent year, but well under the early 80's

1997: taxes cut 28% on cap gains, 9%

1998: 9.6%

etc.

growth post 1997?

33% faster than before.

so, there's the proof.

could not be more clear.

that tax hike accomplished pretty much nothing from a revs standpoint, but cutting cap gains sure coincided with a jump in growth (and taxes as a % of gdp).

note that the current plan is to up cap gains taxes by about 60%.

expect growth and investment to dive and tax receipts with them.

 
At 2/22/2012 4:44 PM, Blogger VangelV said...

The UK is collapsing. What it needs is another Thatcher.

 
At 2/22/2012 4:54 PM, Blogger Curtis said...

"The U.K. government is learning about the economic lesson that 'if you tax something, you get less of it'" is not a lesson. It's a possibility. You could easily end up with more revenue.

It's best not to be misleading if one wants to be taken seriously.

 
At 2/22/2012 5:12 PM, Blogger marmico said...

Golly

Look at the data before "irrational exuberance", if that is what you mean by the "tech bubble". Go ply your trade at cafe hayek, methinkis.

taxes were CUT in 1997. You are just a revisionist Frank Morgan or Morgan Frank. Of course, cap gains were cut from 28% to 20% in 1997 but the top marginal rate was increased from 31% to 39.6% in 1993.

Don't be some effing school yard pimple prick, morganovich, because you are incompetent to analyze data.

Data is the game, rhetoric is your name. Yes, I understand that the business cycle affects the data.

So when are you going to produce the counterfactual?

As an aside, it only took Bush 2 until 2006 to get nominal individual income tax receipts back to 2000 levels.

I just don't understand politicized revisionists. Clinton was way better for the 1% than the junior Bush. Obama is even better than Clinton. The top 1% can steal at will.

 
At 2/22/2012 5:31 PM, Blogger juandos said...

Well as usual marmico does forget the otherside of the tax cut coin, the one the Republicans forgot also, 'don't spend more'...

 
At 2/22/2012 5:34 PM, Blogger morganovich said...

lol.

marico, that's pathetic.

you lose an argument and turn into a flaming asshole to try and cover up how wrong you are.

i have already given you the evidence.

1993, top marginal rate hiked.

next 4 years, no real move in income tax as a % of gdp. if it were going to come, it would have by then.

you are just using bluster to hide you bad read of the data.

tax cut in cap gains, bingo, big jump in growth AND in rate leading to a huge jump in nominal receipts.

so, tax hike, no gains, tax cut, big gains.

the facts are very clear.

real wages fell during the 4 years after the tax hike, then rose immediately after.

you are playing a stupid rhetorical game.

you are just being a clown and cherry picking unrepresentative datapoints to try and make a false case.

2000 was a fluke year resulting from the biggest equity bubble in history.

the next few years were heavily depressed by HUGE loss carryforwards.

even so, 2002 was higher than 1994 in % of gdp terms.

then, with big cuts for the low end, taxes eroded.

the % of taxpayers paying no income tax tripled. that's where the low revenues came from.

actual taxes paid by the top 10% were not the problem.

it was all the freeloaders.

you are making all the wrong attributions and yet make absurdist claims about others being revisionist when you are flat out ignoring the hard data.

wake up and smell what you are shoveling kid.

 
At 2/22/2012 5:38 PM, Blogger morganovich said...

your whole argument is just preposterous.

it's like saying that you had the clap and took vitimin c to clear it up for 4 weeks and nothing happened, but then, right after you took penicillin, that the vitamin c worked.

for you to make such an absurd case and accuse others of revisionism is beyond ridiculous.

i cant tell if you are just a wild liar or staggeringly stupid and poorly informed.

also note that clinton OPPOSED that cap gains cut but a republican congress pushed it through anyway.

you live in a fantasy world.

 
At 2/22/2012 6:17 PM, Blogger Methinks said...

your whole argument is just preposterous.

Marmico has an argument? I hadn't noticed.

 
At 2/22/2012 6:22 PM, Blogger Ron H. said...

"...a kittician passport..."

That's one I haven't heard before. I need to write that down. :)

I'm not sure who thinks you're unpatriotic for not agreeing to be bled to death.

 
At 2/22/2012 8:35 PM, Blogger VangelV said...

Well as usual marmico does forget the otherside of the tax cut coin, the one the Republicans forgot also, 'don't spend more'...

Both sides forgot that one. Which is why both the GOP and Democratic Party have to go.

 
At 2/22/2012 8:44 PM, Blogger VangelV said...

i have already given you the evidence.

1993, top marginal rate hiked.

next 4 years, no real move in income tax as a % of gdp. if it were going to come, it would have by then.

you are just using bluster to hide you bad read of the data.


Some people are allergic to facts.

tax cut in cap gains, bingo, big jump in growth AND in rate leading to a huge jump in nominal receipts.

so, tax hike, no gains, tax cut, big gains.

the facts are very clear.


Yes they are. But let us also not forget that the Fed was injecting huge amounts of liquidity that worked together with the capital gains caps to create a huge bubble in equities.

you are just being a clown and cherry picking unrepresentative datapoints to try and make a false case.

That is very clear. But it is also clear that the Fed plays a big role as well. When you inject a lot of liquidity and understate inflation it is easy to make things look a bit better in real terms than they are. And in the early days of an inflationary bubble it is easy to make things look better than they actually are. When that bubble bursts, as happened in 2000 the piper has to be paid.

To be clear I mostly agree with you. Your friend has lost the argument and is trying to hide it by making personal attacks. It would be better if everyone were a bit more honest.

 
At 2/22/2012 8:55 PM, Blogger Methinks said...

I'm not sure who thinks you're unpatriotic for not agreeing to be bled to death.

The Vampires, of course!

 
At 2/22/2012 10:10 PM, Blogger Ron H. said...

Curtis: ""The U.K. government is learning about the economic lesson that 'if you tax something, you get less of it'" is not a lesson. It's a possibility. You could easily end up with more revenue.

It's best not to be misleading if one wants to be taken seriously.
"

If you understood the saying "If you tax something, you will get less of it", you wouldn't have written what you did.

The rest of the paragraph explains why.

In other words if you increase the tax rate on high earners, they will produce less taxable income.

 
At 2/22/2012 10:25 PM, Blogger Ron H. said...

Methinks: "The Vampires, of course!"

Oh, Like this one and this one?

 
At 2/23/2012 1:29 AM, Blogger arbitrage789 said...

Lot of economically valid arguments here (e.g., those by Morganovich and Methinks).

However, Obama is politics first, politics second and politics third.
For him, economics never really enters into the calculation.

 
At 2/23/2012 8:23 AM, Blogger VangelV said...

However, Obama is politics first, politics second and politics third. For him, economics never really enters into the calculation.

Obama is simply serving out Bush's third term. He continued the same big-government deficit financed policies that Bush used and continued with Bush's bailout schemes. I used to think that Bush would go down as one of the worst presidents that the US has ever had but I was shocked to see how much worse Obama turned out to be.

 
At 2/23/2012 10:10 AM, Blogger morganovich said...

v-

i agree with you about the fed.

no question that greespan was the undoing of volcker and that the late 90's were the start of it.

but we saw a similar boom in the 80's when the cap gains tax was cut from carter's ruinous rates, so i think that you probably saw a similar effect in the late 90's. growth and investment accelerated and income tax as a % of gdp rose, even through the 1982 volcker recession when he broke the horrible inflationary cycle burns set off.



the difference is that greenspan fed the boom too much money and created a massive bubble from what should have been a healthy situation.

that caused the bust which he then tried to get us out of with more loose money creating a massive consumer credit and mortgage bubble, and we all know how that worked out.

ever classy, alan bailed out when there was 1/4" of fuse left on the bomb and handed it to ben who seems to have the same one trick pony mentality and is determined to turn a smoking crater into a hole to the other side of the world.

he's going to go down in history as a disaster and deserves to.

 
At 2/23/2012 11:42 AM, Blogger juandos said...

morganovich says: "the % of taxpayers paying no income tax tripled. that's where the low revenues came from.

actual taxes paid by the top 10% were not the problem.

it was all the freeloaders
"...

Well now even some of the Brits are snickering at the situation...

From the UK Daily Mail: HALF of Americans don't pay income tax despite crippling government debt

 
At 2/23/2012 12:37 PM, Blogger Hydra said...

"if you tax something, you get less of it."

Yes, but when you add a tax on to the price of a product, you are actually getting two things.

For the same money spent on product, you get the same product. then you pay tax on top of that to buy something else [which you may feel you do not need]. But that does not mean that what you paid for is valuless.

You buy a car, you pay for crash testing, and mileage testing, even if you never crash a car.

The mantra that "if you tax something, you get less of it." is half a thought.

 
At 2/23/2012 12:39 PM, Blogger Hydra said...

stop ask ask yourself, how much would you need to be paid to leave the US? $50k a year? $100k? $200k?

there are lots of nice places to live.

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

Another example of market based regulation.

 
At 2/23/2012 12:50 PM, Blogger Mark J. Perry said...

Hydra: "If you tax something, you get less of it," is really saying the same thing as "Demand curves slope downward" and "Incentives matter," both of which I think are pretty irrefutable. If they impose a $10,000 tax on new cars, people will buy fewer new cars.

On the other hand, if you provide subsidies (tax credits, etc.) for new cars like Cash for Clunkers, people will buy more new cars, proving the corollary that "if you subsidize something, you get more of it."

It's basic economics.

 
At 2/23/2012 1:12 PM, Blogger morganovich said...

hydra-

"Yes, but when you add a tax on to the price of a product, you are actually getting two things."

not exactly.

you are also losing a thing: choice.

if you can only buy soda with a cheeseburger, sure, you get 2 things for the price, but it leaves you in a rotten spot and overpaying if you only actually want one of them.

taxes work just like that in many cases, especially because the burger you are forced to buy tend to go to someone else.

you pay a great deal more for soda and so buy less of it. this hurts you and the soda manufacturer.

this "second thing" is, especially in the case of income and cap gains taxes, not for you but for someone else. so, you are often not getting 2 things unless you count a mugging as a thing.

the amount of income tax that flows back to the top 10% of payers is likely 20 cents on the dollar, tops, even if you value government spending at its cost.

 
At 2/23/2012 4:04 PM, Blogger Ron H. said...

"Yes, but when you add a tax on to the price of a product, you are actually getting two things.

For the same money spent on product, you get the same product. then you pay tax on top of that to buy something else [which you may feel you do not need].
"

Wow. There's not much I can add to what you've already been told, except I still recommend that you ask for your money back for your economics education.

"But that does not mean that what you paid for is valuless."

If I don't value it, then it is valueless. I don't want to pay for things I don't value.

I don't want to pay for things other people value unless I choose to do so.

It's that simple.

I shouldn't be forced to pay for what you, or central planners think is valuable.

Repeat after me:

"all value is subjective"

"all value is subjective"

...

 
At 2/23/2012 4:09 PM, Blogger Ron H. said...

M: "this "second thing" is, especially in the case of income and cap gains taxes, not for you but for someone else. so, you are often not getting 2 things unless you count a mugging as a thing."

Hydra DOES count a mugging as a thing, and enjoys having some of his property rights stolen by his neighbors, in the form of local codes reducing his right to build what he wants to build on his own property.

 
At 2/23/2012 4:10 PM, Blogger Ron H. said...

"Another example of market based regulation."

?? How do you figure that?

 

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