patrick.net

dublin hillz says

Ultimately, demand occurs when people are paid well at their jobs. Paying people pittance so that they can barely afford rent and utilities does not "stimulate the economy." Unltimately, taxation issues while important pale in comparison to providing well paying jobs to consumer pool.

People earning excess income does indeed increase demand. The question is does taxation increase or decrease demand? Careful examination will reveal that taxation reduces demand through several mechanisms. It increases costs for producers and also increases prices for consumers.

Vaticanus says

Actually yes investment is required in order to create goods and services. And the smartest investors will find a way to maximize return. If taxes and other costs are raised, wise investors will pull their investment and switch it to an industry or country will lower costs and taxes.

That is the scare tactics used by Republicans. The investment does not make the goods and services. Don't be ridiculous. that is the most naive and ignorant comment I have ever hard. Your ignorance and stupidity rivals that of Wong. People with ideas do. Smart investors invest in a business that they believe that would give them the better return. The tax could be one of the factors for them to consider. But it is always the return.

People with excessive income do not impact the overall demand. You are talking about 1%. You are crazy to think 1% has any impact on demands.

The taxing the rich will not impact the price of goods. How can increasing the tax on 1% impact the price. Who is this moron who did the careful examination. Sorry I forgot; it was you. If you make a wild claim that 1% can impact the price or demand, show the fact. Perhaps, you are brainwashed by the Republicans and Romney.

Now, I see how Republicans and Romney can get to people without a proper education like you and Wong. Speaking of which, making it more and more difficult for the middle class to attend college is a good thing for Republicans. You get more uneducated idiots.

Melmakian says

Nobody says

So why do you believe that giving money to the rich will create jobs?

Who is giving money to the 'rich' unless you are talking about the Wall St, GM and Solyndra crony capitalist fundings or 'bailouts' by the government when in control of either party?

If you are referring to taxation, that is not 'giving money' the rich. That is letting them keep more of THEIR money from being confiscated. Big difference.

OK. So does that create jobs?

Melmakian says

Yup. Helluva lot more than wasting it on 'stimulus checks' to the Eaters do. The entire history of modern capitalism backs me up on that one.

If you think so, cite the facts.

Melmakian says

The New Deal and Hoover's policies before it, the policies of the entire 70s (Two Republican, one Democrat administration) and the first Bush tax cut (remember, those were rebate checks where the government just handed out money w/o it being tied to any change in people's behavior...let alone behavior that leads to more production), and the Obama Stimulus package and what its proponents promised it would deliver.

You basically cited the history of failed economy by giving tax breaks to the rich. And it also tells me any government handout never works. I agree.

Let me ask you this. Do you think the tax breaks have created people like Mark Zuckerberg, Bill Gates, Steve Jobs etc. or companies like Google, Apple, Microsoft and Intel?

Nobody says

Wake up, giving money to rich will not create jobs.

Another Govt backed venture failed California wasts $3,000,000,000 to tax payers.

Five years later, ESCR has failed to deliver and backers of Prop 71 are admitting failure. The California Institute for Regenerative Medicine, the state agency created to, as some have put it, restore science to its rightful place, is diverting funds from ESCR to research that has produced actual therapies and treatments: adult stem cell research. It not only has treated real people with real results; it also does not come with the moral baggage ESCR does.

To us, this is a classic bait-and-switch, an attempt to snatch success from the jaws of failure and take credit for discoveries and advances achieved by research Prop. 71 supporters once cavalierly dismissed. We have noted how over the years that when funding was needed, the phrase "embryonic stem cells" was used. When actual progress was discussed, the word "embryonic" was dropped because ESCR never got out of the lab.

Read More At IBD: http://news.investors.com/ibd-editorials/011210-517870-californias-proposition-71-failure.htm#ixzz2BP9Ys3a8

And now today.. no one can stop the continued waste of tax payers money.

We already know that embryonic stem cell research is a waste of time and money—in fact we knew that when the California voters agreed to spend $6 billion ($3 billion for the bond and $3 billion for the interest on the bond).

Now, we know the most stem cell “research” is obsolete.

“Dr. Victor Dzau, a Duke University professor of medicine and chancellor of health affairs, said it this way: “Right now, there’s no good evidence stem cells can do the job” (of regenerating damaged cells). And RNA reprogramming apparently regenerates tissues without the dangerous side effect of creating tumors as stem cells do.”

How do we stop and end this waste of tax money—we need to close this boondoggle today—California can no longer afford to pay off special interests. What do you think?

http://capoliticalnews.com/2012/05/06/unneeded-gov%E2%80%99t-agency-unable-to-stop-wasting-billions/

Melmakian says

If you are referring to taxation, that is not 'giving money' the rich. That is letting them keep more of THEIR money from being confiscated. Big difference.

OK, so let's tax the middle class and let's forget about taxing the rich. Is that what you are saying?

thomaswong.1986 says

And now today.. no one can stop the continued waste of tax payers money.

If you are saying this needs to be discouraged. I agree. But that does not relate to the subject of "Giving money to the rich (I should have said as a form of tax break) does not create jobs."

The government invests in many things without the clearly defined return like school. It's merely one's perspective of what is wasteful. I don't see building highway system or FEMA activity a waste of our valuable tax. But why should the government spend money on FEMA, building highway systems and schools? Is that merely wasting our tax money?

Nobody says

I don't see building highway system or FEMA activity a waste of our valuable tax. B

Purchasing goods and services.. are not investments.. they are expenditures without any intention of payback.

Nobody says

f you take the lowest of 2008 to lowest of 2012, then there will be more than 100% increase from 2008 to 2012.

And if you take the highest of 2008 to the highest of 2012, gas is down.

You cite the recession which was deflationary but then cite gas prices that crashed directly as a result of the recession.

Sorry, I picked a date 6 months before the recession and compared prices to today. I picked prices in many difference areas. Foods. Housing. Cars. Energy.

The results were mixed. Some prices were higher. Some were lower.

Under your money supply = inflation theory, we would not see lower prices in so many areas. No price sector with the possible exception of health care has kept up with the growth in money supply.

The money multiplier has simultaneously crashed with the increase in money supply. Look at a graph of the M1 money supply compared to the m1 money multiplier. They move in opposite directions and explain why prices are unaffected.

http://research.stlouisfed.org/fred2/graph/

All that simply means you cannot say "increasing the money supply causes inflation," or by association, increasing government deficit spending causes inflation.

Nobody says

But that does not relate to the subject of "Giving money to the rich (I should have said as a form of tax break) does not create jobs."

Economic Recovery Tax Act of 1981

The Economic Recovery Tax Act of 1981 (Pub.L. 97-34), also known as the ERTA or "Kemp-Roth Tax Cut," was a federal law enacted in the United States in 1981.

It was an act "to amend the Internal Revenue Code of 1954 to encourage economic growth through reductions in individual income tax rates, the expensing of depreciable property, incentives for small businesses, and incentives for savings, and for other purposes".]

Included in the act was an across-the-board decrease in the marginal income tax rates in the U.S. by 23% over three years, with the top rate falling from 70% to 50% and the bottom rate dropping from 14% to 11%.

This act slashed estate taxes and trimmed taxes paid by business corporations by $150 billion over a five-year period. Additionally the tax rates were indexed for inflation, though the indexing was delayed until 1985.

results...

https://www.youtube.com/watch?v=EU-IBF8nwSY

Many economists have stated that Reagan's policies were an important part of bringing about the second longest peacetime economic expansion in U.S. history, and followed by an even longer 1990s expansion that began under George H.W. Bush in 1991.[24][25] This economic expansion continued through the Clinton administration with unemployment rates steadily decreasing throughout his presidency (7.3% at the start of his presidency and 4.2% at the culmination, with the lowest rate reaching 3.9% in 2000).[26] During the Reagan administration, the American economy went from a GDP growth of -0.3% in 1980 to 4.1% in 1988 (in constant 2005 dollars),[27] which reduced the unemployment rate by 1.6%, from 7.1% in 1980 to 5.5% in 1988, but with peaks of around 10.8% in 1983.[26][28] A net job increase of about 21 million also occurred through mid-1990. Reagan's administration is the only one not to have raised the minimum wage.[29] The inflation rate, 13.5% in 1980, fell to 4.1% in 1988, which was achieved by applying high interest rates by the Federal Reserve (peaked at 20% in June 1981).[30] The latter contributed to a relatively brief recession in 1982: unemployment rose to 9.7% and GDP fell by 1.9%.

Nobody says

"Giving money to the rich (I should have said as a form of tax break) does not create jobs."

The Obamatron view

per Obama... "It's going to take more than 4 years to undo 30 years of damage"

go back to higher taxes for social programs ... such as that of the 60s and 70s.

Isnt that what Obama wants ? Undo 30 years of economic expansion.

thomaswong.1986 says

results.

Of course, if we ignore 1982, after this act was passed, when unemployment increased and the GDP (in chained 2005 dollars) fell 2%, then this seems like a slam dunk.

Then of course, there was this in 1982:
http://en.wikipedia.org/wiki/Tax_Equity_and_Fiscal_Responsibility_Act_of_1982

which rescinded many aspects of the Kemp-Roth tax cut. (That means Reagan RAISED taxes if you follow current Republican logic - repealing a tax cut is a tax increase, after all)

After which, GDP grew in 1983 by 4.5% in chained 2005 dollars. Then in 1984, GDP grew by 7.1% in chained 2005 dollars. That is an average annual growth rate of 5.8%.

Then there was this one:

http://en.wikipedia.org/wiki/Deficit_Reduction_Act_of_1984

where Reagan again raised taxes. And in 1985 GDP grew by 4.1%. Then in 1986 GDP grew by 3.4% , in 1987 GDP grew by 3.1%. That is annual aggregate growth of 3.6%. Then we got this one:

http://en.wikipedia.org/wiki/Tax_Reform_Act_of_1986

where tax rates were lowered again, this time it was on rich folks and raised on poor folks. The new tax rates were not fully implemented until 1988. By the way, in 1987 GDP grew by 3.1% and in 1988 it grew by 4.1%. Then fell to 3.5% in 1989, 1.8% in 1990, and finally losing .3% in 1991. Recovered to 3.3% in 1992 and 2.8% in 1993. That is average annual aggregate growth of 2.2% over seven years.

Oh and then there was this one:
http://en.wikipedia.org/wiki/Omnibus_Budget_Reconciliation_Act_of_1993

Which as you know raised taxes on top earners. And we had GDP growth of 4%, 2.5%, 3.7%, 4.4%, 4.4%, 4.8%, & 4.1% in 1994-2000. If you are counting at home, that is seven years with annual aggregate growth of 3.4% after a tax increase.

Phew! What does all that mean? Well, we have a tax reduction in 1981, followed by GDP falling 2% in 1982. Then we have a tax increase in passed in '82 for 1983, followed by two years of average GDP growth of 5.8%. Then we have another tax increase, and we had three years of GDP growth averaging 3.6%. Then we had another tax decrease which after enacted in 1988 led to seven years of average GDP growth of 2.2%. Finally, we have tax increases in 93 under Clinton, followed by seven years of GDP growth averaging 3.4%.

So tax increases have following GDP growth of 5.8%, 3.6%, and 3.4%. Tax decreases have GDP growth of -2%, 2.2% and the coup de grace, Bush's tax cuts in 2001, which lead to annual aggregate GDP growth of 1.4%.

But tell me again, how did tax cuts passed in 1981, largely repealed in 1982 and 1984, lead to jobs and economic growth in the mid to late 1990s???

Especially after another round of tax cuts that were largely repealed by a democrat in the White House?

http://www.bea.gov/national/index.htm#gdp

GDP growth by year in chained 2005 dollars. Use excel and prove the numbers wrong.

Oh and this says nothing of increased government spending during the go-go 80s. Which I am sure had nothing to do with Reagan or economic expansion. That would mean Keynesianism, and demand, might have caused the expansion!

Here is that data if you are interested:

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200

Hint: While GDP grew a combined 35% in chained 2005 dollars under Reagan, Federal Government spending grew...wait for it...80% combined under Reagan.

Gosh I don't know...since Government spending is a component of GDP...maybe they are related....

Have a nice night.

david1 says

which rescinded many aspects of the Kemp-Roth tax cut. (That means Reagan RAISED taxes if you follow current Republican logic - repealing a tax cut is a tax increase, after all)

you mean changed the individual tax rates ... which ones ?

The Office of Tax Analysis of the United States Department of the Treasury summarized the tax changes as follows:

1 repealed scheduled increases in accelerated depreciation deductions
2 tightened safe harbor leasing rules
3 required taxpayers to reduce basis by 50% of investment tax credit
4 instituted 10% withholding on dividends and interest paid to individuals
5 tightened completed contract accounting rules
5 increased FUTA wage base and tax rate

david1 says

Then there was this one:

http://en.wikipedia.org/wiki/Deficit_Reduction_Act_of_1984

Same question... what rates were changed.

he Office of Tax Analysis of the United States Department of the Treasury summarized the tax changes as follows:[3]

1 repealed scheduled 15% net interest exclusion ($900 cap)
2 reduced benefits from income averaging
3 reduced tax benefits for property leased by tax exempt entities
4 temporarily extended telephone excise tax (through 1987)
5 increased depreciation lives for real property from 15 years to 18 years

david1 says

ttp://en.wikipedia.org/wiki/Tax_Reform_Act_of_1986

where tax rates were lowered again, this time it was on rich folks and raised on poor folks. The new tax rates were not fully implemented until 1988.

Income tax rates

The top tax rate was lowered from 50% to 28% while the bottom rate was raised from 11% to 15%.

Many lower level tax brackets were consolidated, and the upper income level of the bottom rate (married filing jointly) was increased from $5,720/year to $29,750/year.

This package ultimately consolidated tax brackets from fifteen levels of income to four levels of income.

---------------

As they say... the DEVIL is in the DETAILS ....

https://www.youtube.com/watch?v=NG_qF2mHOlA

thomaswong.1986 says

you mean changed the individual tax rates ... which ones ?

Nope. I mean what I said.

david1 says

Nope. I mean what I said.

LIke Obama said.. Lets undo the past 30 years... NOT GOING TO HAPPEN !

thomaswong.1986 says

LIke Obama said.. Lets undo the past 30 years...

Nah.. just pointing out how ridiculous citing a 1981 tax law, then citing job and economic growth numbers from the next 10-15 years combined as proof of success really is. I mean, never mind all of the other tax laws passed in the meantime, or other factors that might have played a part in it. Nope. Not to Republicans. There was a law passed once that lowered tax rates and then sometime in the future jobs were created and the economy grew.

It's like saying Obama took a leak in the Atlantic in 1998 and that is what caused Hurricane Sandy this year.

Lets add some spice..

How about getting rid of the Mortgage Interest Deduction...

there is no use for it since interest rates are at a far lower rate than decades before.
the original tax regulation was a to reduce the interest burden.. that burden is minimal. Today its no more than a subsidy and point of abuse for the Realtors.

How about getting rid of the phase out of the 1997 capital gains on sale of home..

Might as well.. it was a contributing factor to home purchase speculation and the bubble. There is no reason to continue this in our tax laws.
http://en.wikipedia.org/wiki/1997_taxpayer_relief_act

Melmakian says

I've never gotten a paying job from a poor man/woman in my entire life. Have you?

This is the old If-we-had-no-rich-people-who-would-we-work-for fallacy.

Very handy philosophy if you happen to be the plantation owner.

david1 says

I mean, never mind all of the other tax laws passed in the meantime, or other factors that might have played a part in it.

http://research.stlouisfed.org/fred2/graph/?g=dBo

blue is debt/GDP
red is fed funds rate.

leverage shot up in the 1980s, but conservatives don't want to put that in their thesis. It was the magic of Reaganism they'll say.

Guys,

Are you suffering from amnesia? How was the housing bubble created?

We had too much investment money which forced many risky transactions in the housing market. I can't write on my iPhone; I need to get back.

Nobody says

We had too much investment money which forced many risky transactions in the housing market. I can't write on my iPhone; I need to get back.

That money didn't "force" the system to its full crimogenic operation 2004-2007.

Suicide lending -- liar loans, teaser rates, IO/negative amortization (!), automated underwriting -- was the primary mechanism as to how borrowing got detached from affordability.

Plus there was a feedback loop of higher valuations -> more equity -> equity withdrawal -> economic activity -> higher valuations that was working 2002-2005, too. But by 2006 that engine was running on fumes.

APOCALYPSEFUCK is Shostakovich says

The rich need human sacrifices to be cajoled into providing work for the unwashed.

You have to get them to look up from the hookers and blow.

Wake up, taking money from the rich will not create jobs either.

Peter P says

Wake up, taking money from the rich will not create jobs either.

Actually, taking money from the rich would create more jobs.

Jobs come from consumer demand. The 1% is clearing between 1/6th and 1/5th of the TOTAL national income.

http://taxfoundation.org/article/summary-latest-federal-income-tax-data-2012

This is one out of 100 households receiving one out of five of the dollars in the economy.

The top 5% -- one out of twenty -- is taking one out of THREE dollars.

This 1% winning cohort simply cannot consume this income flow -- they are clearing over $1M/yr on average.

So instead of redirecting this flow back into the consumer economy, it ends up in investments.

But what productive investments are there when the 95% are being sucked dry by the parasitical 5%?

http://research.stlouisfed.org/fred2/series/GINIALLRH

Tripling the corporate income tax:

http://research.stlouisfed.org/fred2/series/FCTAX

http://research.stlouisfed.org/fred2/series/CP

would knock corporate profits back to 2005 levels, the horror.

And with that extra $600B in revenue we could NOT raise taxes on the middle class while we restructure the rest of the system to be more efficient in wealth accretion.

We really suck at that, now.

http://research.stlouisfed.org/fred2/series/NETEXP

Lowering the top tax rate to 15% from 90+% (Eisenhower) destroyed any semblance of self control, and productive USA based investment, the ambitious may have had. The price of bimbos, real estate, and all things bright and shiny suffer from inflation because that is what people who don't need to work hard for income blow it on. And we have an epidemic of corruption thanks to the concentration of wealth that is willing to pay bribes of every type. With productivity gains, bread (albeit tainted) can be given away, unless it gets burned for fuel. With technology gains the circus is now nearly free.

Again, any research can be tailored to "prove" anything.

Why pseudo-rationalists hate the rich?

Bellingham Bill says

Nobody says

We had too much investment money which forced many risky transactions in the housing market. I can't write on my iPhone; I need to get back.

That money didn't "force" the system to its full crimogenic operation 2004-2007.

Okay, so "encouraged" would be a better word than 'forced' but his point is true. That demand for investment vehicles and the response of "the market" with fraudulent mortgage backed securities, was a factor, along with all the idiots that somehow thought they better not miss out on the continued double digit increases in housing.

I wonder whether the history books will frame it as a uniquely American thing - focusing on the abstract - too many people trying to essentially make easy money? Or will they focus it just on govt encouragement via GSEs, mortgage bankers, and heard mentality.

Same thing I guess.

We had the debate here. I go along with those who say that the shadow banking market and those fraudulent securities were a bigger factor than congress and or the GSEs.

marcus says

We had the debate here. I go along with those who say that the shadow banking market and those fraudulent securities were a bigger factor than congress and or the GSEs.

They bought all three branches of government so that's a fair conclusion.

marcus says

were a bigger factor than congress and or the GSEs.

The GSEs were bystanders in this. Well, their main contribution was taking the 80% slice of Countrywide's incredibly dodgy 80/20 business.

What CFC would do was syndicate out the 20% first-loss piece in CDOs etc, selling the 80% piece to the GSEs. Traditionally, 80% was perfectly safe, but CFC was also gaming qualifications with the GSE's automatic loan underwriting software, changing numbers on applications until they were approved.

Congress' problem was doing nothing in the 2002-2005 period to stop this feedback loop in its tracks.

I don't know how much active agency the executive had in this. They were the same operators that gave us the 1980s S&L crisis, so I suspect they knew what they were doing in allowing the system to go on tilt again.

Or they could just be colossal idiots. Tough to tell with conservatives, the old 'stupid' vs. 'evil' argument.

How many jobs were lost each month at the end of the Bush fiasco?
I don't know how to search. lol

Excel Spread Sheet inputs. Tax 2 Million families more than a year more, = ~ . But the US with its needs (need large screen, ne car, not an entitlement!).

Can anyone explain the effect of $40 Billion per year of new tax revenue on $1Trillion dollar per year deficit spending plus new baseline of $16T?

Expected value brackets dont work in this forum. Should say $40T per year revenue.

HEY YOU says

How many jobs were lost each month at the end of the Bush fiasco?

http://research.stlouisfed.org/fred2/graph/?g=dE9

shows the monthly declines were 200,000 per month for the first half of 2008 and then 800,000/mo during the worst of it (4Q08/1Q09).

http://research.stlouisfed.org/fred2/graph/?g=dEb

yikes, that graph is looking pretty weak at the end.

http://research.stlouisfed.org/fred2/graph/?g=dEu

ah, that's better

Why do people think that once Bush was out of the office, he was no longer damaging our economy, and blame Obama? It took 8 years for Bush to do the damage. How do you think it can be fixed in 8 years? Don't you know fixing something takes more effort and time than to damage?

While letting out of control Liberal pipe dreams creates Jobs in China.
Obama's golden boy company 123 battery manufacture, has been sold to China

CaptainShuddup says

While letting out of control Liberal pipe dreams creates Jobs in China.
Obama's golden boy company 123 battery manufacture, has been sold to China

Another failed investment scheme to create jobs. So what's new? People gotta realize it is not the investment that creates the jobs. It is the profit. The investment is merely there to drive the slaves to work harder, so they can extract more money from the slaves. And the rich people are just denying this.

If you had too much money to invest, you will soon realize that you are running out of resources to invest in. Then you need to create the resources to invest in by engaging in a risky, almost criminal type, investment. Well, the investors demand that their money being used to create more money, not jobs. The balance should be maintained between the resources and the investment in a healthy economy.

So I don't deny investment. But you need to consider the reason for investment. It is always for the return. I have never seen any investors demanding their money be used to create jobs. (Well, Wang said to this effect, but I highly doubt he is an investor. He is just a lying troll from China.) So to create jobs, you will ultimately need to keep the rich investors happy by giving the investors the portion of your hard earned money. The relationship is like a parasite and a host. If there are too much parasite, it will kill the host. Too much investment has the similar effect. Hence my thread.