As we sit back and watch, we will see that it can more accurately be called the “Laugher Curve”. CA is out of its mind.
Goodness. The last thing Texas needs is a bunch of liberal/humanist nose buds who think they are smarter than and superior to the people who make Texas a place in which to flee places like California.
Look at what happened to poor conservative and sane New Hampshire after they hosted the Mass. tax runners.
I think your answer is pretty clearly wrong.
Some other points: Ohio, under governor Celeste a number of years back, was tired of industry moving south, so they passed an "exit tax", whereby any company leaving the state had to deposit a tax equal to six months wages. After the bill was signed into law, Celeste couldn't figure out why new business formations dropped to virtually zero. Fortunately, others with a few neurons still firing figured the problem out and killed the tax.
Finally, with the unemployment problems faced in CA, why would you make it less attractive to do business there for the very people who drive your economic engine? I don't know about the rest of you, but in 45 year in the labor force, I was never once hired by a poor person.
What he wrote made sense, but he didn’t use the clearest example at the end. Let me try a different example.
And elementary school bully demands a dollar from the lunch money of 10 kids he has intimidated at his school. So every day he gets $10 from them. But then he gets greedy and demands that each of them also chip in a dime, so every day they will pay him $1.10, for a total of $11.
But one kid just can’t take it anymore, so he convinces his parents to move him to another school. This means that, from the 9 remaining kids, the bully only gets a total of $9.90, so even by charging more, he is getting less.
The trouble is that the *reason* the bully demanded money in the first place is because he is a drug addict. And he’s already maxed out his tab with his drug dealer, so to get any more of the increasing amounts of drugs he craves, he has to pay cash. No cash, no more drugs.
So what is the bully going to do? He could cut back on his drugs, or he could lean even harder on the remaining 9 kids. Which do you think he will do?
I disagree with this offer. He states unilaterallly that we are not in what he calls the prohibitive zone without evidence. Even though Obama extended the Bush tax cuts yet continued to “jawbone” the so called “rich” about raising them later. This had two effects.
1) To ostensibly reduce the income to the Treasury for you people that don’t believe in dynamic economic analysis like Obama, and...
2) To check the hand of the “job creators” from actually deploying that capital that they saved in the extension into creating jobs. Who wants to create a job that you will be nailed with other costs like Obamacare later.
So in short this was a Lose/Lose situation for the U.S. Treasury. Accept lower revenues to stimulate the economy and then forgoe the benefits of that trade off by “bitch slapping” those Job creators during the entire term, yet hoping they will trust that their committments would be honered with a reasonable regulatory, legislative and tax environment.
This is evidence that we ARE INDEED in that prohibitive zone.
Obviously the after-tax income of the taxpayer is the product of his taxable income times the difference between 100% and the state tax rate, times the difference between 100% and the state tax rate (YMMV if you also have local sales tax, or if you itemize your deductions). So if the Feds are greedy and risk going past the peak of the Laffer curve in their own right, the effect of a state income tax easily functions as the last straw which breaks the camels back. Combine that effect with the additional flexibility which typically attaches to the affairs of the most prosperous, and you have a recipe for a Rush Limbaugh leaving New York for Florida, and shaking the dust off his shoes as he goes.
The other point about the Laffer Curve is that taxes on capital gains are notorious for yielding less revenue whenever the rates are raised, and more revenue when they are lowered. A state income tax on capital gains would thus be most certain to be counter-productive.Finally, if the government actually wanted to maximize revenue (and not indulge in class warfare, which is the presidents obvious objective) you would set a limit on the revenue of the capital gains tax, providing that any increase above that ceiling would be pro rata rebated to the taxpayer (Obviously you would set that limit above your current revenue from the tax). If you were actually below the counterproductive range, you would see no change - the revenue limit would not be reached because nothing else had changed to make revenue change. But if your rate is significantly above the counterproductive limit, people who have capital gains would realize them, in the confidence that there would be a rebate, and the effective tax rate would in fact be well below the counterproductive limit. That would be a self-fulfilling prophesy, and the government would net the higher revenue which it had set as the revenue limit for the tax.
The government would then have a data point on the Laffer curve, known to be below the counterproductive limit. The government could then simply set the tax rate to that non-prohibitive value, and dispense with the revenue limit. I would estimate that the resulting tax rate would be below 10%.
Finally, it is important to note that whenever the tax rate is above the Laffer counterproductive limit, raising the rate lowers the revenue by the mechanism of causing a recession. A recession is not a valid excuse for explaining away a decline in revenue associated with an increased tax rate, recession is the predicted symptom of a tax increase into the counterproductive range.
Is it REALLY the job of government to MAXIMIZE revenue paid in taxes?
Or to do its job with the least impact to society...?
When the taxes kickin just watch the tax revenue ‘unexpectedly’ drop even further than it presently does on a quarterly basis.
Kalifornia has devoured golden eggs and is presently going after the goose as well.