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Does Hiking Tax Rates Raise More Revenue?
MarketWatch.com ^ | July 2, 2010 | Kurt Brouwer

Posted on 04/09/2012 8:31:38 AM PDT by Son House

We really don’t know what the optimum tax rate would be that maintains revenues at 18-20% of GDP while allowing for maximum GDP growth, but we do know that economic growth is good for everyone and as the economy grows, tax revenues grow automatically. Ideally, our leaders in Washington would try to figure out the optimum tax structure to generate revenues at 18-20% of GDP while stimulating economic growth. Once that level is determined, I believe they should set the rate and forget it.

Unfortunately, tinkering with the tax code seems to be irresistible to almost all politicians. In addition, raising taxes on the ‘rich’ is a populist theme many politicians have adopted. This idea is widespread even though there is a very good chance that higher tax rates will not lead to higher tax revenues. Our political leaders often misunderstand the long-term consequences of tax law changes and they advocate policies that bear little or no relationship to economic reality.

As you can see from these charts, soaking the rich by raising tax rates generally does not work. And, there can be collateral damage in that high tax rates almost always reduce economic activity which hurts everyone. If the goal is to maximize economic growth and generate adequate tax revenues, we know what makes sense.

I put together the information in this post to answer the question initially raised — does raising tax rates increase tax revenues? I used information from both liberal and conservative sources to help you get comfortable with the history of tax rates and tax revenues.

...I believe we need a steady, consistent tax policy with two goals: generating steady and adequate current tax revenues and maximizing economic growth.

(Excerpt) Read more at blogs.marketwatch.com ...


TOPICS: Business/Economy; Constitution/Conservatism; Government; Politics/Elections
KEYWORDS: raise; rates; revenue; tax
No, the more you take out of the private sector, the smaller the private sector; the less job opportunities.

As the author notes and an honest Democrat would have already acknowledged: generating steady and adequate current tax revenues and maximizing economic growth, although I would disagree with the "adequate current" and instead put that to the House of Representatives: to make sure total spending is equal to or less than the generated current tax revenues. Don't make promises that you can't keep.
1 posted on 04/09/2012 8:31:47 AM PDT by Son House
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To: Son House
How much revenue would Ubama collect at a 100% tax rate on everyone?

Anyone? Buehler?

2 posted on 04/09/2012 8:41:19 AM PDT by E. Pluribus Unum (Over half of U.S. murders are of black people, and 90% of them are committed by other black people.)
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To: Son House

The fist thing that needs to be done is to cut spending.


3 posted on 04/09/2012 8:43:38 AM PDT by corlorde (Drone strikes: the preferred method of killing by Nobel peace prize winners since 2009)
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To: Son House

See: Laffer Curve.


4 posted on 04/09/2012 8:54:34 AM PDT by rlmorel (A knife in the chest from a unapologetic liberal is preferable to a knife in the back from a RINO.)
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To: Son House
high tax rates almost always reduce economic activity which hurts everyone.

Taxes hurt the economy because they are an assault on savings which reduce investment and productive expenditure which cause less capital accumulation, and which reduces the demand for labor resulting in lower average money wage rates and lower employment rate.

5 posted on 04/09/2012 8:59:18 AM PDT by mjp ((pro-{God, reality, reason, egoism, individualism, natural rights, limited government, capitalism}))
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To: Son House

The level of taxation will never be enough for those that vote FOR their living from taxes.


6 posted on 04/09/2012 9:09:22 AM PDT by griswold3 (Big Government does not tolerate rivals.)
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To: Son House

Psychotic Progressives will never be convinced to take the U.S. Constitution seriously.

The only part they love to embrace and support is the one that allows Congress to impose taxation on anything that moves.

IMHO


7 posted on 04/09/2012 9:19:01 AM PDT by ripley
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To: ripley
Does Hiking Tax Rates Raise More Revenue?

Sure, if you raise rates from zero. But after a certain point, it will cease to have this effect.
8 posted on 04/09/2012 9:21:59 AM PDT by aruanan
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To: aruanan

“Sure, if you raise rates from zero. But after a certain point, it will cease to have this effect.”

HOw about a 9% tax rate for all, as suggested by Herman Caine?

Imagine the rate of growth that would take place; it would probably be astronomical.

IMHO


9 posted on 04/09/2012 9:53:12 AM PDT by ripley
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To: E. Pluribus Unum

There are two key points on the tax rate vs. revenue curve — tax rates of 0% generate zero revenue and tax rates of 100% generate zero revenue. There’s an optimum for society somewhere between those two points and it is usually in the 15% to 20% range — and that would be the TOTAL tax take from your town up to the Feds. We are WAY beyond that.

Of course, the discussion of what is optimal is totally moot because the socialists and communists want to use taxes to create mythical “fairness”. Their ultimate objective, of course, is to abolish private property ownership and have it all owned by the State, empirical evidence be damned. It’s all about their distorted view of “fairness.”


10 posted on 04/09/2012 10:28:31 AM PDT by ProtectOurFreedom
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To: ProtectOurFreedom

What they ultimately want is for everybody that they don’t like to be dead.


11 posted on 04/09/2012 10:32:34 AM PDT by E. Pluribus Unum (Over half of U.S. murders are of black people, and 90% of them are committed by other black people.)
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To: Son House
As the author notes and an honest Democrat would have already acknowledged

If they're still a Democrat there's no way they're honest. Not after Comrade Zero.

12 posted on 04/09/2012 10:36:54 AM PDT by Marathoner (2 goals this year: (1) S##tcan Obamacare; (2) S##tcan Obama)
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To: Son House
Read this:
13 posted on 04/09/2012 10:40:56 AM PDT by Yosemitest (It's simple, fight or die!)
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To: E. Pluribus Unum
How much revenue would Ubama collect at a 100% tax rate on everyone?

That was a dream from his commie father.

14 posted on 04/09/2012 10:48:14 AM PDT by cynwoody
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To: IncPen; Nailbiter

ing


15 posted on 04/09/2012 10:48:54 AM PDT by Nailbiter
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To: IncPen; Nailbiter

ing


16 posted on 04/09/2012 10:49:32 AM PDT by Nailbiter
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To: E. Pluribus Unum
That's an easy one. The answer is ZERO because no one would work to give up 100% of their earnings!
17 posted on 04/09/2012 11:30:44 AM PDT by USMA '71 ((Re-elect no one!))
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To: E. Pluribus Unum

That sums it up. The communists Soviet Union and China expedited getting rid of everybody they didn’t like — they lined up against the wall and shot them. Seems to take the totalitarians in the US a little longer to get there. Remember Bill Ayers and his pals wanted to eliminate 26 million Americans that they thought stood in their way of utopia? Liberalism is a death cult.


18 posted on 04/09/2012 11:42:15 AM PDT by ProtectOurFreedom
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To: ProtectOurFreedom
Remember Bill Ayers and his pals wanted to eliminate 26 million Americans that they thought stood in their way of utopia?

I am guessing that 26 million was the population of the US during Bill and Bernadine's glory days?

19 posted on 04/09/2012 12:19:43 PM PDT by E. Pluribus Unum (Over half of U.S. murders are of black people, and 90% of them are committed by other black people.)
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To: E. Pluribus Unum

LOL, it only FEELS like they’ve been around since 1860. These vermin are always with us, just like rats.


20 posted on 04/09/2012 1:48:07 PM PDT by ProtectOurFreedom
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