A Comparison of Tax Rates

Flopping Aces ^ | 12-21-12 | johngalt

[Starman417]

As we near the so-called "Fiscal Cliff", I feel it necessary to point out, again, that higher tax rates will lead to lower revenue for the federal government. Previously, I only had the words of various economists on my side, and re-iterated those words in defense of keeping the tax rates low. However, recently I worked to come up with a comparison showing how higher tax rates lead to lower revenues, and vice versa.

The results actually surprised me, as to how far they were in the favor of the lower rates, when you extrapolated out the difference to a ten year period. When you consider the tax rates under the two most recent Presidents not named Obama, the following was observed:

Given the period from 1994 to 1999, the growth period under Clinton, federal revenues increased by 1.3% for every 1% increase in GDP.

Given the period from 2003-2007, the growth period under Bush, with the lower tax rates, federal revenues increased by 1.7% for every 1% increase in GDP.

(excerpt) Read more at floppingaces.net...

[arthurus]

Even Hannity and Levin don’t seem to understand this. Both discuss it in terms of static analysis. They occasionally mention that static analysis is not accurate but then go back to static analysis. like-> If all the income of the richest X% were taken by the government it would only run the government for X days. Then they might note that that could only be done once but it does not occur to them that it won’t happen even that once. Money is going offshore even as we discuss the problem and wealthy people are taking other citizenship. They note that rich people can simply leave but then don’t use that observation to modify their calculations about how much the kenyan can get from the millionaires and billionaires who earn more than &250k.

[kevkrom]

I get what you're saying, but it's a very convenient rhetorical device to basically say "even if we grant all of your assumptions, the idea won't work because..." -- so, even if we could rely on a static analysis, the amount of extra revenue obtained would be so small as to be pointless anyway. That way, you don't worry about arguing over the assumptions, so you can go straight after the conclusions.

[silverleaf]

Well then, if Barry’s plan crashes the economy, we’ll just have to have more “stimulus”, right?

Another “stimulus” was built into Barry’s offer, no wonder McConnell laughed Geithner out of his office

[arthurus]

But they never add that in real dynamic analysis the gain becomes a loss. If they were arguing from static analysis just to show in that analysis there is insufficient gain to be worthwhile then they would also mention that even that gain disappears and becomes a negative in real world dynamic analysis. But they don’t. They don’t understand it. I wish I could hear Rush talk about it. He has in the past indicated he understands how I works. I am limited at work to Hannity and Levin and someone called Schnitt. I know that Hannity doesn’t understand it.I don’t think he understands anything, really. He talks well but I think he has accepted a mostly conservative stance on most things because he learned it and he has observed results. His talk indicates he doesn’t actually understand how it all works. I cringe every time (very often) he misses the point with a caller because he doesn’t actually understand how things work. Levin bothers me because he is way too smart to not understand and argue, at least once in a while, from dynamic analysis.