The Fiscal cliff

[rwh11385]

Still rockin'.... Just haven't been posting.

Lots of people here must have been reading "how to lie with statistics". You cannot think about any of this in absolute terms - big numbers are scary when not compared to other big numbers -no one is scaling the situation. Look at this as a percentage of something else and not on a nominal basis and it looks a lot different.

We also need to remember that we have seen several periods in u.s. history where the debt as a % of GDP has been much higher than now. Can this go on forever? No. But it can go a lot farther. Comparisons to us and Greece are ridiculous - Greece doesn't have and essentially never had a viable economy in the first place - plus their tax collection system is a joke.

My thoughts on how you fix the economy?

- reinstate glass-steagall, repeal sarbox
- stop letting banks park money at the fed deposit window for 25bps risk free
- stop flattening the yield curve to give banks a reason to lend so there is some margin/spread there which should help increase the velocity of money (lending).
- cut unemployment benefit duration by at least half.

I'd start there, but then there are a lot of subsequent steps you would have to take that I don't have the patience to hammer out.

The forum misses rational economic talk from ya man.

Context is very important and I don't think many people demand putting things into perspective anymore. Shock factor with nothing to size up against is key for TV ratings.

And as big as our debt is and people repeat the number (and attribute it to the current President, regardless of who it is), it's the result of policies of many years in the making and will take many years (and intelligent, rational decision making) to fix. But like debt, our government spending as % of GDP is lower than the other countries like France and Greece. We can get better but it isn't worth burning down the place over.

Like joshh said, if it is factual since he didn't provide the quoting source, Obama shouldn't be seeking higher rates as punishment or class warfare, but trying to claim that the economy is going to be that negatively effected by the top marginal tax rates from the 90s without providing any support is dubious. I'd love it if someone could provide a deep look into how tax rates across income groups influence the economy and growth, as that could be used for an optimization of the Laffer Curve and rates would be set instead of a constant quibble. But I haven't seen anything like that.

But maybe the economy is defined by more than simply marginal tax rates which are meaningless without considering deductions or credits in our convoluted code? Stuff like technology and innovation, education, population growth rates, trade balance, and lifestyle changes might also have a little bit of influence too.

A private space race / mining asteroids, better fuel efficiency, cheap renewable energy, more productive agriculture can help the economy... so can a higher % of people finishing high school and also people learning technical skills instead of dropping out or learning valuable skills in college instead of just racking up debt that can't solve the world's problems... allowing people who want to work here can do so and pay payroll taxes instead of being under the table, take advantage of our reshoring and reduce demand for foreign energy... and legalize gay marriage and stop the war on drugs to grow the economy, particularly with less people costing money in prison and removed from the labor force as well as less enforcement to fight a losing effort. Plus tax it. But I guess if the news wants people to focus on marginal tax rates, then we should do as we are told.

[uofom3]

Although I personally prefer lower taxes, I think the onus is on you to prove your claim. Everyone says X will have Y effect but don't necessarily have the numbers and analysis to back it up. I registered Republican after a HS teacher wanted me to do a report on how Reaganomics failed and could only summarize why it was successful, although looking back down the support wasn't exactly definitive by my standards today. More private activity in lieu of government is preferred, and we're ahead of many countries in that regard... but the last time Dems got their way and raised taxes (after a Republican president did the same) didn't exactly meet your claim here.





Fortunately, personal consumption has generally been becoming a greater factor in GDP.



And I said, I'm all for lower taxes, a more efficient government, less crowding-out... but your claim doesn't match necessarily history.

Truth - no correlation exists between changing tax rates and a bad stock market/economy...

[rwh11385]

Total avoidance, good tactic. Throw some questions back at me instead of just answer the questions directly.

You know you are asking questions to avoid my initial prompt, right? Or did you forget? I still don't see any support whatsoever.

So you're going to give up on your Reagan tactic now that you know his first big tax cut was 1981? Your data supports my argument. Thank you.

What? "now that you know" The point was that the most significant change in top marginal tax rate wasn't until the later part of the 80s so any assumed huge influence on disposable income from top rate changes is shown to be invalid.

And so does the idea that you can raise taxes in a good economy.

What does?

I know you think I have the idea that lower taxes=booming economy. It's not the case. But it won't matter at this point because your hostility over powers your logic.

Building a strawman? I believe that for a particular portion of the Laffer Curve, lower taxes mean economic growth and enough of it for an increase in tax revenues.

However, are you saying that you don't think lowering taxes drives economic growth? So why are you so gungho that a small increase on a small percentage of the population would have a drastic change, particularly compared to a fiscal cliff being gone off of if a compromise isn't reached?

What hostility? My determination to stick to logic, facts, and reason instead of just making simplistic claims with no support? Maybe you should just a forum where people accept statements without any data to back them up and stop posting where people will hold you to the most basic standard of a discussion.

Wow you're really getting desperate again. Have you ever owned you're own business? Those that don't pass this tax on to their customers will only see less money in their own pocket. Their choice. If their business is already successful they more than likely can take it in stride. If not, you're question that they wouldn't pass the cost on is juvenile.

I'm desperate? You are the one who spends two entire pages of a thread avoiding questions because you lack any ability to respond to them.

Way to assume it up and make a claim based on your premises instead of stuff called data or facts.

[uofom3]

The important fact in this here thread is a previously thought extinct Ted appears.

Still rockin'.... Just haven't been posting.

Lots of people here must have been reading "how to lie with statistics". You cannot think about any of this in absolute terms - big numbers are scary when not compared to other big numbers -no one is scaling the situation. Look at this as a percentage of something else and not on a nominal basis and it looks a lot different.

We also need to remember that we have seen several periods in u.s. history where the debt as a % of GDP has been much higher than now. Can this go on forever? No. But it can go a lot farther. Comparisons to us and Greece are ridiculous - Greece doesn't have and essentially never had a viable economy in the first place - plus their tax collection system is a joke.

My thoughts on how you fix the economy?

- reinstate glass-steagall, repeal sarbox
- stop letting banks park money at the fed deposit window for 25bps risk free
- stop flattening the yield curve to give banks a reason to lend so there is some margin/spread there which should help increase the velocity of money (lending).
- cut unemployment benefit duration by at least half.

I'd start there, but then there are a lot of subsequent steps you would have to take that I don't have the patience to hammer out.

[joshh]

What other questions? You mean the ones in the rambling in which you didn't provide any information and instead of backing up your claims you shifted the burden of proof for me to be distracted by your new questions instead of actually having you respond to my points? Your questions were your tactic to AVOID my call for you to back your claims. So therefore, where is your support?

Maybe you should provide more information to properly frame your questions.


How many business owners are making $250K?
What are their business costs today compared to the last 20 years?
What are their profit margins?
What would be the impact on their business if no compromise was reached?

You have a vague and poorly defined question that is simple and general instead of useful.


This is a leading question, so it is more of a statement. But goes back to the previous one - profit margin and how many will be impacted by it. (percentage of all business owners) Would they pass on the price and risk less business or try to make up the small difference with increased sales? What evidence do you have for your assumption that they would pass on the cost?


This is premised on your assumption of the middle question. Look at the post above where I question how much a small tax on a fraction of the income earned would make such a drastic change as you seem to be believing in.

The real question isn't if taxes are good or bad, but rather by what data or analysis do you have to base your claims upon.

Total avoidance, good tactic. Throw some questions back at me instead of just answer the questions directly.

So you're going to give up on your Reagan tactic now that you know his first big tax cut was 1981? Your data supports my argument. Thank you.

And so does the idea that you can raise taxes in a good economy.

I know you think I have the idea that lower taxes=booming economy. It's not the case. But it won't matter at this point because your hostility over powers your logic.

Wow you're really getting desperate again. Have you ever owned you're own business? Those that don't pass this tax on to their customers will only see less money in their own pocket. Their choice. If their business is already successful they more than likely can take it in stride. If not, you're question that they wouldn't pass the cost on is juvenile.

[rwh11385]

Even in the 93-01 era, average tax rate for the top quintile was still only ~27%


The Laffer Curve doesn't assume you can indefinitely lower the marginal rate, so until there is solid science and experimentation to determine the optimal rate for revenue and economic growth, it's all just speculation. (Why 35%? Why not 28%? How about the effects of 40%? What about 37%?) But risking a fiscal cliff over a few percent is silly - hopefully they come to a compromise soon. Like 10/15/25/30/35/37.5, whatever... I'm more concerned about the government's inability to make a decision than someone paying a few percent more on income beyond $388,350. Of course, for the people at the top 1%, they obviously may care more about the latter then the former.

Both sides have skewed the truth so much and played on people's emotions and concerns for their wallets instead of just acting like adults and being rational.

It's hilarious that RWNJs complain about not being certain enough of models or not enough consensus about climate change, yet want to determine tax rates on a couple data points that are inconclusive, some hodge podge analysis, and a bunch of speculation.

[rwh11385]

rwh did it for me.

Still can't answer my other questions rwh?

What other questions? You mean the ones in the rambling in which you didn't provide any information and instead of backing up your claims you shifted the burden of proof for me to be distracted by your new questions instead of actually having you respond to my points? Your questions were your tactic to AVOID my call for you to back your claims. So therefore, where is your support?

Maybe you should provide more information to properly frame your questions.

Are we going to assume all business owners making $250k are rolling in the dough and can afford to pay a tax on top of the high business costs we're seeing today?

How many business owners are making $250K?
What are their business costs today compared to the last 20 years?
What are their profit margins?
What would be the impact on their business if no compromise was reached?

You have a vague and poorly defined question that is simple and general instead of useful.

Do you think that cost won't be pushed down to the consumer?

This is a leading question, so it is more of a statement. But goes back to the previous one - profit margin and how many will be impacted by it. (percentage of all business owners) Would they pass on the price and risk less business or try to make up the small difference with increased sales? What evidence do you have for your assumption that they would pass on the cost?

Taking money out of the pocket of those who do not have businesses but still make $250k now will have less to spend as a consumer. Do you think that's going to help this economy considering consumer spending is a large part of our economy?

This is premised on your assumption of the middle question. Look at the post above where I question how much a small tax on a fraction of the income earned would make such a drastic change as you seem to be believing in.

The real question isn't if taxes are good or bad, but rather by what data or analysis do you have to base your claims upon.

[joshh]

Once again, joshh fails to provide even a crumb of evidence, data or facts to back up his attacks

rwh did it for me.

Still can't answer my other questions the?

I see rwh edited his last post to make sure he sounds non-partisan. Rwh Obama already knows that, he fucking said it himself. Would you like a link? Or did google break on your browser?

[rwh11385]

There you go straight into aggressive mode.

More disposable income means they have more money to spend. How hard is that for you to understand?
Your own fucking graph supports my claim.
Reagan lowered taxes in 1981...take another look at the graph.

Can't answer my questions?

No, I go straight into "where is your support for your claims" mode.

But is it actual disposable income that matters, or just the marginal tax rates? Because it doesn't seem like the tax cuts have a direct relationship on that. And for just a fraction of the country, or the picture as a whole?

http://taxfoundation.org/article/us-federal-individual-income-tax-rates-history-1913-2011-nominal-and-inflation-adjusted-brackets

Top marginal tax rates:
1981: 70%
1982-1986: 50% (1981 cut)
1987: 38.5%
1988-1991: 28%
1992: 31%
1993+: 39.6%


joshh, if the Reagan tax cut to 50% is what you want, why are you complaining about 39.6%? Heck, you might as well settle on 38.5% at least.


Still, you just making claims. I'd actually really like research on what top tax rate change would do, since it might be useful to explain to Obama that a punish-the-richers strategy is no good. But all you can do is make general statements without any support. Maybe if people got down to the facts, data, and reasoning they could come to a compromise and make it about information instead of emotion, either defensive or jealousy.

[CorvallisBMW]

Once again, joshh fails to provide even a crumb of evidence, data or facts to back up his attacks

[joshh]

All you ever do is ASSUME and you know what they say about that. Why don't you provide ANY support or reasoning to back your claims?

Wouldn't that have been a factor in Clinton's era as well? (People not having as much money after taxes) If you look at the real disposable income chart, it seems that it decreases after the Reagan cuts, increase in the 90s, and decline in the 2000s. Do you think that real disposable income has more to do with the money left to spend, or just sticking to simply the marginal tax rates??



Where did you talk about this? What information did you have? I'd honestly be curious because analysis on both sides I've seen has been far from conclusive (unless you want to accept it with strong confirmation bias) and think it should be researched more. Certainly having different data points (compromise tax rates) would help develop a better model and understanding of the Laffer Curve. But if you have definitive proof that demonstrates your position please share it.

There you go straight into aggressive mode.

More disposable income means they have more money to spend. How hard is that for you to understand?
Your own fucking graph supports my claim.
Reagan lowered taxes in 1981...take another look at the graph.

Can't answer my questions?

[rwh11385]

Are we going to assume all business owners making $250k are rolling in the dough and can afford to pay a tax on top of the high business costs we're seeing today? Do you think that cost won't be pushed down to the consumer? Taking money out of the pocket of those who do not have businesses but still make $250k now will have less to spend as a consumer. Do you think that's going to help this economy considering consumer spending is a large part of our economy?

All you ever do is ASSUME and you know what they say about that. Why don't you provide ANY support or reasoning to back your claims? This is just your opinion and statements.

Wouldn't that have been a factor in Clinton's era as well? (People not having as much money after taxes) If you look at the real disposable income chart, it seems that it decreases after the Reagan cuts, increase in the 90s, and decline in the 2000s. Do you think that real disposable income has more to do with the money left to spend, or just sticking to simply the marginal tax rates?? And wouldn't people with less debt as % of their income hold positive potential for the future as well?

Additionally, what analysis do you have of the tax rate change faced by $250K earners on the overall economy? I'd be interested in seeing either way to be better knowledgeable about the influence, especially since you seem so sure about it. People making $250K+ earn 23% of the income, but don't spend all of that. Their average tax rate for 2010 was 22% up to $1M and 23% over $1M (not 35%). It's hard without running all the numbers to find out what their new average rates would be. But let's take as a value that it would be 39.6%/35%*23% = 27%. So therefore using this assumption, they would have had 17.7% of all income earned to spend before and then 16.8% of all income earned after the new higher taxes to spend. The average tax rate for all taxpayers is 10%. Before and after, roughly, (1-.23)*(1-.1) = 69.3% of all income earned is available to spend from those making under $250K.

Before richers tax hike to Clinton levels: 87% of all income earned is available after taxes
After richers tax hike to Clinton levels: 86.1% of all income earned is available after taxes

If for simplicity sake, we take that directly, PCE = 70% of GDP, so roughly therefore 0.63% change. And the money wouldn't disappear. Maybe it goes towards that deficit problem or the federal debt you keep talking about. Or training programs so people with outdated skills can get jobs and pay taxes.

Of course that was done in a couple minutes with back of an envelope analysis, but the point is people can complain that taxing the rich won't raise that much revenue... but it also wouldn't change consumption that much. Just saying general statements is useful compared to putting things into context. Even the extreme of raising tax rate income rate from 35 to 39.6 doesn't mean that will be the difference in their average rate or the decrease in their disposable income, nor does it mean that is the amount of which the entire disposable income of the country will be reduced.

Data points gathered from here: http://www.aei-ideas.org/2012/09/10-...-s-tax-system/

We talked about this before.

You can't take two government models that are near polar opposites and try to compare them. The Clinton era vs the Bush era.

The reason why Clinton was able to raise taxes was because the economy was doing very well. People had money (your second graph shows the difference between the eras as an example). Banks were loaning to businesses. Energy was ridiculously cheap. Business was good. The tax man wanted some more money, big deal. No one liked it but they could afford it....generally.

We don't have that today. Some businesses could pay more and be fine. Others are barely hanging on. We also have Obamacare coming down the pipe. And those same businesses don't know exactly what to expect.

Where did you talk about this? What information did you have? I'd honestly be curious because analysis on both sides I've seen has been far from conclusive (unless you want to accept it with strong confirmation bias) and think it should be researched more. Certainly having different data points (compromise tax rates) would help develop a better model and understanding of the Laffer Curve. But if you have definitive proof that demonstrates your position please share it.

[joshh]

Although I personally prefer lower taxes, I think the onus is on you to prove your claim. Everyone says X will have Y effect but don't necessarily have the numbers and analysis to back it up. I registered Republican after a HS teacher wanted me to do a report on how Reaganomics failed and could only summarize why it was successful, although looking back down the support wasn't exactly definitive by my standards today. More private activity in lieu of government is preferred, and we're ahead of many countries in that regard... but the last time Dems got their way and raised taxes (after a Republican president did the same) didn't exactly meet your claim here.





Fortunately, personal consumption has generally been becoming a greater factor in GDP.



And I said, I'm all for lower taxes, a more efficient government, less crowding-out... but your claim doesn't match necessarily history.

We talked about this before.

You can't take two government models that are near polar opposites and try to compare them. The Clinton era vs the Bush era.

The reason why Clinton was able to raise taxes was because the economy was doing very well. People had money (your second graph shows the difference between the eras as an example). Banks were loaning to businesses. Energy was ridiculously cheap. Business was good. The tax man wanted some more money, big deal. No one liked it but they could afford it....generally.

We don't have that today. Some businesses could pay more and be fine. Others are barely hanging on. We also have Obamacare coming down the pipe. And those same businesses don't know exactly what to expect.

Are we going to assume all business owners making $250k are rolling in the dough and can afford to pay a tax on top of the high business costs we're seeing today? Do you think that cost won't be pushed down to the consumer? Taking money out of the pocket of those who do not have businesses but still make $250k now will have less to spend as a consumer. Do you think that's going to help this economy considering consumer spending is a large part of our economy?

[CorvallisBMW]

Once again Heeter lays the info smackdown :)

[rwh11385]

And interesting data point for economics and politics:
http://www.heritage.org/index/countr...e#open-markets last

The frequent rhetoric and procurement rules about buying American is reducing the economic freedom score of the US.

The trade weighted average tariff rate is 1.8 percent, with non-tariff barriers such as “buy American” procurement rules adding to the cost of trade.

http://www.heritage.org/research/reports/2009/01/buy-american-hurts-america