Who said this?

As far as tax rates go, I invoke Hauser's Law:

http://en.wikipedia.org/wiki/Hauser's_Law

Look a tax is nothing more than a price. Like any price, there is a point in which revenues are maximized. That is the only thing the laffer curve shows. As someone who quotes prices everyday, it is a constantly moving target, so who knows where we are on the scale.

My take on taxes is this: I have no problem with the progressive system we have. I would tax by quintiles, and the top marginal rate would be no more than 33%. Right now it's 35% so that's pretty close.

As far as letting the Bush tax cuts expire, rates would jump to 39% Is that enough to make a difference? Let's see.

I broker trees and shrubs to Landscape Contractors and Garden Centers. One of my customers specializes in high end residential, and I have literally sold $100,000 plus in plant material to a single residence earning me (for simplicity's sake) a $10,000 commission.

Autozone is located here and they did the CEO's house. I saw listed that he earned $1.2 million. The top tax rate is 35 % on anything over $372,951 for married filing jointly. That's 35% of $827,049 or $289,467 in taxes.
If it jumps to 39%, it will be $322,549 or $33,000 more.

In the long run, it's debatable if it makes that much difference, but in the short run, Due to price shock, he cuts the landscape budget, reducing materials cost by $20,000, meaning $2000 out of the $33,000 extra he paid in came from me. (Sorry, Honey, no new kitchen tile until next year.)

I really don't know that the 4% They are talking about now makes a huge difference in the long run. I do know it is higher than what I agree with philosophically. Also, I am not sure many in the middle and lower classes wanting the Bush tax credits to end in order to sock it to the rich are aware that the child tax credit would drop back to $500 instead of $1000, meaning that the average 2 child family would get $1000 less back in refunds.

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Originally Posted by janvanvurpa

Just how do you explain the continuous economic growth and increasing standard of living, indeed the rise to dominance of the American MIDDLE CLASS post WWII--3 decades of mostly rising standards---and taxes higher than later---a period of virtual stagnation for 30 years?

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Economic Growth is largely a result of labour inputs, capital inputs and improvements to technology, resulting in either improved efficiencies and/or new markets.

The post war increase was mainly due to a very big increase in the population relative to what was before it, immense new capital investments in both the government and private sectors, and sweeping technological improvements.

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Originally Posted by Rollo

Economic Growth is largely a result of labour inputs, capital inputs and improvements to technology, resulting in either improved efficiencies and/or new markets.

The post war increase was mainly due to a very big increase in the population relative to what was before it, immense new capital investments in both the government and private sectors, and sweeping technological improvements.

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Ah! There, a little better with emphasis.
capital expenditures!
INVESTMENTS in the future in other words.
In contrast to the pre-war years the governments of ALL the Western Democracies including the new democratic Federal Republic of Germany
all invested heavily in building and (in Europe) rebuilding ports, railways, airlines (gotta do something with all those factories and people that had been cranking out aircraft like machine gun shells piling up), hiways/roads, schools and universities, research (again for just within a few years had invented products and production systems and distribution for things only dreamed of 5-10 years before eg radar, synthetic rubber, synthetic drugs).

A point the Neanderthal "so-called "conservatives" vigorously avoid looking at is the role of more centralised planning and cooperation between Governments (local, county, State, National) and business and the educational sector together with infrastructure investments made possible by higher taxes, and how all of the West underwent a veritable metamorphosis and the standard of living shot upwards in the 30 years after the end of WWII for the huge majority of every country's population. HUGE improvements in healthcare, and education yielded sweeping improvements in productivity.
Until the madness of what is now the drum beat of "Nothing is more ineffcient than the government" and "why should I (who was educated in a public school, drives on public roads, over public bridges, protected by public fire and police departments, yakking over phone and sattelites finances with public grants and off-sets and deals, drinking water from a system built and run for generatiosn by the public, flushing their crap down sewage systems built and maintained by the public, eating food from around the world shipped thru ports built by the people, on hiways and railways built by the public or on over land given by the Government in the millions of acres and on and on) pay anything for schools--or libraries or parks for some other schmucks snot nosed kids?"

And so the re-investments slowed and all of a sudden the rise in the standard of living of all but a small minority stagnated, and for the majority, regressed, and hours worked (in USA anyway) rose, spouses entered the labor force, housing as a % of disposable income rose.

And the baton of the leader of the worlds economy was fumbled and then dropped to a place where Government/Business/Educational system co-operates and invests in the future (a little longer than 2-3 quarters ahead): The Eastern edge of Asia.

Short sightedness, narrow focus, and simple greed in two sectors of the population can take credit for that;: the so called "information poor" sectors which historically has voted "conservative" and small "crafts" type business owners who think just because they lay concrete of fix a car, or screw two pipes together that they know all about what the society and the country needs.

Or it could be that people have just become dumber as they have gotten reinforcement for their "me only" attitudes.

Oh not too sure about the "sweeping technological improvements" in the time frame '45-75... In industry there were a few subtle but important changes---one being the arrival of powered metal, titanium nitrided indexable bits for cutting tools for lathes and mills which gave a massive increase in tool life, feed rates, wear and therefore accuracy and repeatability. These little buggers about the size of a fingernail were the biggest revolution in that time period, and it was a big one. But they were adopted first in the most progressive industrial countries first and only later became the standard in the more conservative counties
http://www.productionmachining.com/c...per-Insert.jpg

Those inserts in tool holders like these
http://www.axiantech.com/GROUP_01%20on%20Black.jpg

easily increased production of machined parts by 5 times...
And prior to 1975, the predecessor of CNC (Computer Numerical Control), NC machining was only just getting accepted, the enormous gains realised by CNC were a decade away...
So other than that I don't know what huge technological sweeping advances there were....

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Originally Posted by janvanvurpa

So other than that I don't know what huge technological sweeping advances there were....

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The transistor c.1947, the Integrated Circuit Board and the Printed Circuit Board? Practically everything electrical shrunk in size like you would not believe.

Even something as simple as radio which used to take up a teak piece of furniture in the living room, could be shrunk by 1970 into something smaller than one of the valves which went into it in the first place.

Typesetting, computerization of loads of stuff, relatively cheap air travel, television and then colour television, satellites, Automatic Teller Machines, the microwave oven, the pill, etc etc etc... technology is a major driver of economic growth.

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Originally Posted by Rollo

The transistor c.1947, the Integrated Circuit Board and the Printed Circuit Board? Practically everything electrical shrunk in size like you would not believe.

Even something as simple as radio which used to take up a teak piece of furniture in the living room, could be shrunk by 1970 into something smaller than one of the valves which went into it in the first place.

Typesetting, computerization of loads of stuff, relatively cheap air travel, television and then colour television, satellites, Automatic Teller Machines, the microwave oven, the pill, etc etc etc... technology is a major driver of economic growth.

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Rollo, I was around for almost all the 50s, I remember when "transistor radios came out (and ate batteries like you wouldn't believe) and I don't see the Transistor radio as major step in increasing the standard of living. Or TV.
Cheap air travel really was a mid/late 60s deal
ATMs were first used in 1972 according to Wiki and really weren't in widespread use for quite some time.
I think your timelines are off considerably and the net effect of much of what you list, like the rise of these computers we type on is highly debatable ie
computerised typesetting may have eased the job---of those few left--- after the rest were laid off, and like a lot of tech stuff speeded the rate of some jobs, but the records shows this has led to higher and higher profits, not increases in standards of living of the workers using the stuff...

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Originally Posted by Rollo

Has it been proven that raising taxes decreases revenue? Did Laffer do it?

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Yes, did you read the WSJ article that you linked to?

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Originally Posted by Rollo

http://en.wikipedia.org/wiki/Laffer_Curve
http://upload.wikimedia.org/wikipedi...-Curve.svg.png

Laffer's theory suggests that at 0% tax, zero revenue is collected. The rate of revenue collected raised, also rises at some point t, and then drops off to zero revenue at a tax rate of 100%.
The problems with the theory are twofold:

1. What point are we currently at? Are we actually at some point t*¹ to the right of t°? If so then there may be a point to be made. If we are currently at a point to the left which we'll label t², then as we increase tax rates towards t°, then according to Laffer's own theory, taxation revenues should increase.
But since Laffer himself couldn't prove or even guess through actual empirical where t°, t¹ or t² are, then the statement "as been proven many times (read the article) that raising taxes decreases revenue, and lowering taxes increases revenue" is materially false.
Unless you have links to some proper data, then you're reliance on supposed proof is totally unfounded.

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Yes, we are either to the right of the t point or at least at it. When Bush cut taxes in '01-'03, revenues went UP. That means that prior to that we were on the right side of the curve. I would argue that we probably still are, but at the very least we are at it. What is being proposed now is to let those tax cuts expire. So that would necessarily put us back to the right side of the curve, and thus LOWERING revenues.

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Originally Posted by Rollo

2. The theory doesn't work in the real world anyway. The assumption that taxation revenues drops off to zero revenue at a tax rate of 100%, simply isn't true. China currently has marginal taxation rates which exceed 100%, and still experiences economic growth.

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So do you want to be taxed at 100%? Do you honestly think that is the best way to go? You brought up "mass inequality" before, do you think China or the US is worse for this?

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Originally Posted by Rollo

Obviously the purpose of raising taxes is to collect more in taxation revenues than the government spends.

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So I'll ask again, why do you want to raise taxes when evidence (Bush tax cuts of '01-'03) says that we are still to the right of the curve?

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Originally Posted by Rollo

The other option is to decrease government spending. I would suggest slashing Social Security, Medicare, Medicaid and the Department of Defence spending, because those are the biggest areas pulling the budget, and it is impossible to decrease the interest bill unless you first start running surpluses.

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I would agree with that. I'd also add the department of Education (State's responsibilities), the Department of Energy, the EPA, on and on.

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Originally Posted by chuck34

Yes, we are either to the right of the t point or at least at it. When Bush cut taxes in '01-'03, revenues went UP. That means that prior to that we were on the right side of the curve.

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No it doesn't.

If revenues, profits and therefore taxes as a result are rising, it means that the economy generally is experiencing a period of boom. The DJIA peaked at 11722.90 on 19 Jun 2003.
If anything prudent taxation policy should be counter cyclical. That is, it should be more aggressive during periods of boom, and less so in downturns.

Revenues rising doesn't indicate anything with regards at what point t we are according to Laffer. In fact not even he could prove where we are relative to point t.

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Originally Posted by chuck34

So I'll ask again, why do you want to raise taxes when evidence (Bush tax cuts of '01-'03) says that we are still to the right of the curve?

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There are about 12 trillion reasons, with 44% of those reasons now being held by overseas countries, especially China.

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Originally Posted by Rollo

No it doesn't.

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So prove the counter is true.

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Originally Posted by Rollo

If revenues, profits and therefore taxes as a result are rising, it means that the economy generally is experiencing a period of boom. The DJIA peaked at 11722.90 on 19 Jun 2003.
If anything prudent taxation policy should be counter cyclical. That is, it should be more aggressive during periods of boom, and less so in downturns.

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And why was the economy experiencing a period of boom? There was a recession in 2000-2001. What brought us out of that?

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Originally Posted by Rollo

Revenues rising doesn't indicate anything with regards at what point t we are according to Laffer. In fact not even he could prove where we are relative to point t.

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Sure it's hard to prove exactly where we are, but the evidence suggests that we are on the right of the t point.

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Originally Posted by Rollo

There are about 12 trillion reasons, with 44% of those reasons now being held by overseas countries, especially China.

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Again, you are talking about spending. On that you and I are on the same page. We need to cut spending.

Here's a story on one of the factors involved in the Laffer Curve. The principle that the "Rich" will avoid taxes if they are too high. And from a Liberal Senator who espouses the benifits of higher taxes no less! HA!

http://www.bostonherald.com/track/in...icleid=1269698

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Sen. John Kerry, who has repeatedly voted to raise taxes while in Congress, dodged a whopping six-figure state tax bill on his new multimillion-dollar yacht by mooring her in Newport, R.I.

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Could the reason be that the Ocean State repealed its Boat Sales and Use Tax back in 1993, making the tiny state to the south a haven - like the Cayman Islands, Bermuda and Nassau - for tax-skirting luxury yacht owners?

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Kerry saved approximately $437,500 in sales tax and an annual excise tax of about $70,000.

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Originally Posted by chuck34

So prove the counter is true.

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Ok.
http://www.budget.gov.au/2007-08/bp1...p1_bst7-01.htm

Australia introduced a Goods and Services Tax in the year 2000. With a small reduction in income tax, the additional consumption tax effectively caused a net overall tax increase in real terms.
So much so that in 2007, the net debt was lowered to zero.

An increase in the effective rate of taxation, led to an increase in revenues for the government collected by taxation, and therefore a discharge of debt.

QED.

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Originally Posted by chuck34

And why was the economy experiencing a period of boom? There was a recession in 2000-2001. What brought us out of that?

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Al-Qaeda.

Committing government spending to counter the threat of terrorism, boosted aggregate demand. Government spending as an injection into the economy, has a far greater influence over aggregate demand, than fiddling with tax rates will.

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Originally Posted by chuck34

Again, you are talking about spending. On that you and I are on the same page. We need to cut spending.

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No I'm not. I'm referring to the $12 trillion and rising in government debt.

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Originally Posted by chuck34

Sure it's hard to prove exactly where we are, but the evidence suggests that we are on the right of the t point.

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What evidence?!

"Receipts by Source. Retrieved from the Government Printing Office Access.". GPOAccess.gov.2009.
http://www.gpoaccess.gov/usbudget/fy...s/hist02z1.xls

For the years 2001-2003 which acording to you "When Bush cut taxes in '01-'03, revenues went UP", they did not. They FALL in each of those years across the board. In fact there isn't even one single set of reciepts from tax which goes up.
Laffer's theory IS crap and official government data shows it to be crap.