News Should the Bush tax cuts be extended?

[loseyourname]

That's to the good for the government macro planner. Moving the rates around rapidly imposes a cost on business operations through a lack of predictability.

Even with fiscal room to maneuver, observation shows that is unlikely government can bring itself to pull the correct levels in the short term swings of business cycles, furthermore the fiscal economic guidance of what to do is unclear. The only clear economic lever pulling successes of the last several decades have been in monetary policy, and even there we have had mistakes (easy Greenspan money 01-03).

These are sort of competing problems here. The major problem with fiscal policy is that it's lagging because of how slowly spending measures move through Congress. So even though monetary policy has less of the desired effect, we use it more because it's more administratively efficient.

But I'm not talking about making wild rate swings left and right all the time. Just that fiscal policy is only effective when it's actually used and different situations call for different rates. Sometimes you need to raise them and sometimes you need to cut them. They can't be set in stone. As for the effect on business operations, I think that's pretty easily avoided by not taxing business operations.

How about 25%? Keynes himself apparently said, "25 percent taxation is about the limit of what is easily borne."

As far as I know, empirical studies have indicated that 40% is the marginal rate at which the taxed activity starts to be significantly discouraged. You see this with nurses. When overtime starts knocking them into the highest bracket, they stop working overtime.

But what the number is doesn't matter. The point is just that there is a point at which tax rates get too high and we should cap them and allow flexibility beneath that cap.

Consider that the savings (instead of investment/spending) in that bracket may well be due to http://en.wikipedia.org/wiki/Permanent_income_hypothesis" of the pending rate increases. Take away that threat, and I suspect investment and spending will start to climb again, in a matter much more likely to increase employment than when the government takes tax money out for stimulus joy ride.

High-income households have high savings rates regardless of future tax forecasts. Shifting wealth from low- to high-MPC consumers will always have a short-term stimulative effect. That isn't to say it's always the right thing to do, and that's why I qualified the "theoretical projection of effect" above with caveats regarding negative long-term effects. Plus, at a certain point, it's unethical to just confiscate money. Still, there will always be a short-term stimulative effect when you take money that isn't being spent and spend it.

The US has been unable to run up debt in this downturn?

That isn't really what I meant. The government, practically speaking, can issue damn near as much debt as it wants to. But when you run up debt during boom times, you cripple your ability to act prudently during busts. Because now, passing a debt-funded spending package doesn't simply create debt, it creates excessive debt. The proper way to do it is to run surpluses during boom times and deficits during busts to maintain predictable service levels in the face of volatile national income and to smooth the business cycle. Running a deficit all the time just results in a permanently increasing national debt that kills the future. If you run a deficit during booms and then cut back during busts, you just worsen the business cycle and turn booms into bubbles and busts into depressions.

 

[Al68]

...so I have a good feel about how much of a "hardship" rescinding 3% of the marginal tax rate would have on me. Not enough to worry about. We live comfortably, and well within our means. I'm certain that the millionaires (including most Senators) who want to continue the tax break can learn to live without it.

Yep, poor, poor rich people. And lower middle class people like me that feel so sorry for them and take their side against the righteous Dems. People like me who just can't stand the thought of rich people like you having such hardships.

I think it's now safe to assume you are very aware that your representation of those that disagree with you is laughably absurd and fraudulent, and you are not really as uninformed of the opposing viewpoint as you pretend, so there is no point in arguing about it.

 

[turbo]

Yep, poor, poor rich people. And lower middle class people like me that feel so sorry for them and take their side against the righteous Dems. People like me who just can't stand the thought of rich people like you having such hardships.

I think it's now safe to assume you are very aware that your representation of those that disagree with you is laughably absurd and fraudulent, and you are not really as uninformed of the opposing viewpoint as you pretend, so there is no point in arguing about it.

I was earning over 30K/year in a "draw" salary, and far exceeded many, many times that for years in my sales incentives (you could call them bonuses but they were structured very strictly WRT to department performance). My wife and I both came from poor families and we never needed to keep up for appearances.

It is "safe to assume" NOTHING. Get a grip. And get a viewpoint that doesn't originate from political views that are purely neo-con blather. There are conservatives like myself that have had to go independent since the GOP has abandoned all conservative tenets in order to pander to the wealthy.

 

[Al68]

It is "safe to assume" NOTHING. Get a grip. And get a viewpoint that doesn't originate from political views that are purely neo-con blather.

John Lock: neo-con blather-er extraordinaire. Yeah, that's it.

There are conservatives like myself that have had to go independent since the GOP has abandoned all conservative tenets in order to pander to the wealthy.

Yeah, we all know you're the love child of Barry Goldwater and Ayn Rand.

I can play this game, too: I'm a socialist myself, a huge fan of Marx. I just object to the extreme version of socialism advocated by Dems. I favor a more moderate version of socialism favored by the few Republicans left that haven't turned completely into advocates of that radical extreme version of authoritarian socialism.

 

[turbo]

I can play this game, too: I'm a socialist myself, a huge fan of Marx. I just object to the extreme version of socialism advocated by Dems. I favor a more moderate version of socialism favored by the few Republicans left that haven't turned completely into advocates of that radical extreme version of authoritarian socialism.

I have made more money/year than 98% of the inhabitants of the US for a number of years. I also happen to be a fiscal conservative. That is something that the neo-cons fail to appreciate. I expect that you are among them ( the neo-cons)

I don't support the waging of wars fought on arguments that cannot be logically supported (based on lies, if you want to be honest). I do not support the gutting of Social Security by any means. I do not support the imposition of unfunded Federal mandates on state and local governments (No Child Left Behind). If you yearn for a return to "W's" presidency, please provide some rational arguments why this would be a good thing, in the spirit of PF's drive toward balance and fairness.

 

[nismaratwork]

John Lock: neo-con blather-er extraordinaire. Yeah, that's it.Yeah, we all know you're the love child of Barry Goldwater and Ayn Rand.

I can play this game, too: I'm a socialist myself, a huge fan of Marx. I just object to the extreme version of socialism advocated by Dems. I favor a more moderate version of socialism favored by the few Republicans left that haven't turned completely into advocates of that radical extreme version of authoritarian socialism.

Well, speaking as someone who's already earned more money than I'll spend in one lifetime, I agree with Turbo-1 as well, for much the same reasons. Would you care to expand your ad hominem attacks to me as well?

 

[Al68]

I have made more money/year than 98% of the inhabitants of the US for a number of years. I also happen to be a fiscal conservative. That is something that the neo-cons fail to appreciate. I expect that you are among them ( the neo-cons)

Well, if you will define "neo-con", I'll tell you. Is it the same as a classical liberal? I'm only guessing that because you use the term to describe those with classically liberal positions, or as Dems fraudulently say: "for the rich".

I don't support the waging of wars fought on arguments that cannot be logically supported (based on lies, if you want to be honest). I do not support the gutting of Social Security by any means. I do not support the imposition of unfunded Federal mandates on state and local governments (No Child Left Behind). If you yearn for a return to "W's" presidency, please provide some rational arguments why this would be a good thing, in the spirit of PF's drive toward balance and fairness.

I yearn for liberty. W's positions were more economically libertarian than Obama's (which isn't saying much), but far less than mine.

As far as a spirit of balance and fairness, your habit of consistently misrepresenting the views of those you disagree, like using the words "pandering to the wealthy" to describe positions barely more libertarian than Dems, leaves no room for honest debate. I have no intention of presenting any argument in favor of views that no one espouses.

That's an important point: the positions you keep arguing against are positions that no one has advocated. That's called a strawman argument. Try arguing against someone's stated position, and without any reference to their supposed motives (ad hominem argument), or any other well known logical fallacies.

 

[nismaratwork]

Well, if you will define "neo-con", I'll tell you. Is it the same as a classical liberal? I'm only guessing that because you use the term to describe those with classically liberal positions, or as Dems fraudulently say: "for the rich".I yearn for liberty. W's positions were more economically libertarian than Obama's (which isn't saying much), but far less than mine.

As far as a spirit of balance and fairness, your habit of consistently misrepresenting the views of those you disagree, like using the words "pandering to the wealthy" to describe positions barely more libertarian than Dems, leaves no room for honest debate. I have no intention of presenting any argument in favor of views that no one espouses.

That's an important point: the positions you keep arguing against are positions that no one has advocated. That's called a strawman argument. Try arguing against someone's stated position, and without any reference to their supposed motives (ad hominem argument), or any other well known logical fallacies.

You've made some truly absurd claims here that require sourcing. In what way and on what planet was the spending practices of W.'s admin "Libertarian"?! I assume it couldn't have been military spending, or creating The DHS... neither very libertarian moves. You're talking out of your backpassage, so cite in accordance with PF rules or back up.

 

[Al68]

Well, speaking as someone who's already earned more money than I'll spend in one lifetime, I agree with Turbo-1 as well, for much the same reasons. Would you care to expand your ad hominem attacks to me as well?

LOL. Sure, you must be the other love child of Barry Goldwater and Ayn Rand.

You've made some truly absurd claims here that require sourcing. In what way and on what planet was the spending practices of W.'s admin "Libertarian"?! I assume it couldn't have been military spending, or creating The DHS... neither very libertarian moves. You're talking out of your backpassage, so cite in accordance with PF rules or back up.

Why don't you instead cite where I made any claim that W's spending practices were libertarian. I was obviously referring to the subject of this thread: tax cuts.

Who's talking out of their backpassage here?

 

[OmCheeto]

No structure of marginal tax brackets should be seen as permanent or unchangeable. Otherwise, the available tools of fiscal policy are basically rendered impotent to react appropriately to the business cycle. We should probably set reasonable caps (for instance, no activity should ever be taxed at a combined local-state-federal rate of 40% or greater), but the rates and brackets themselves should change every year.

As for the specific impact of moving the rate for income over $250,000 from 36% to 39%, it should theoretically have a short-term stimulative effect since the government will spend the money, whereas the private income-earners are saving it, but that will also hurt investment. If "investment" just means stockpiling gold, that could actually be a good thing, but only if the rate goes down again immediately when private investment in productive assets starts to recover, which probably won't happen.

Of course, normally the point of raising marginal rates is to retire debt at the peak of a recovery, and if that's all they're going to do, it's pointless, because we're still closer to the bottom than the top, it would remove any theoretical stimulative effect, and rates are too low right now to justify retiring debt in the absence of a budget surplus. Plus, the more rational way to generate a surplus is organically at the peak of the business cycle when receipts increase even at existing rates and demand for social services hits a low, not to do it at the trough of a cycle by raising rates in the face of otherwise falling receipts.

The larger problem is that we crippled our ability to respond with proper policy by running up so much debt during a boom, making us unable to do it when we were supposed to during a downturn, causing this proposal to raise taxes just to maintain existing service levels, which should never be necessary at the federal level.

Bah! You sound like you know what you are talking about. I hate that...

---------------------------------
not really. will you be my pf friend? please...

 

[nismaratwork]

LOL. Sure, you must be the other love child of Barry Goldwater and Ayn Rand.

So the answer to, "Will you expand your ad hominem" is "yes". I assume this also means you can't or won't abide by PF rules and support your earlier statements?

 

[Al68]

So the answer to, "Will you expand your ad hominem" is "yes".

That ad hominem attack was intended as humor, not a serious argument. Maybe that wasn't as obvious as I thought it was.

I assume this also means you can't or won't abide by PF rules and support your earlier statements?

OOps, I edited my last post too late. As I said there, I never made the statement you claimed I made. I was obviously referring to the subject of this thread, tax cuts, not spending practices, when I referred to W's position as "barely more libertarian than Dems".

His spending practices were far more "drunk sailorism" than libertarianism.

 

[OmCheeto]

All kidding aside, just watched Peter Orszag on the Charlie Rose show.

Wow. It's amazing how smart young people can be.

I think he said that all the tax cuts should be allowed to expire in the next couple of years.

hmmm... That makes me, the former director of the OMB, and the former chairman of the Fed, that think that.

And I think LisaB was on my side about this also.

One more, and we have a movement.

 

[CRGreathouse]

His spending practices were far more "drunk sailorism" than libertarianism.

Indeed, especially in his last half-year. But how, then, to characterize Obama's spending?

 

[OmCheeto]

Indeed, especially in his last half-year. But how, then, to characterize Obama's spending?

Stimulating!

Sorry... I'm kidding again. Orszag stated that it was a room full of economists who in both the Bush and Obama cases, decided on how best to stimulate the economy.

So I find it a bit disingenuous to characterize either Bush or Obama's spending as being all their fault. They were probably both given a choice. Spend, or watch the US collapse into an economic depression.

Unfortunately, the transcript is not available, so you will either have to watch it in re-run, or take my word for it. But it was an incredibly honest account of the politics that goes on behind the scenes in Washington.

 

[nismaratwork]

Stimulating!

Sorry... I'm kidding again. Orszag stated that it was a room full of economists who in both the Bush and Obama cases, decided on how best to stimulate the economy.

So I find it a bit disingenuous to characterize either Bush or Obama's spending as being all their fault. They were probably both given a choice. Spend, or watch the US collapse into an economic depression.

Unfortunately, the transcript is not available, so you will either have to watch it in re-run, or take my word for it. But it was an incredibly honest account of the politics that goes on behind the scenes in Washington.

Their fault, but not their idea. One key difference is that when you choose to start a war, you build in enormous and unforeseeable expenditures, and that WAS Bush's fault.

 

[mheslep]

His spending practices were far more "drunk sailorism" than libertarianism.

Yes, though the treasury will eventually recoup much of that 2008 spending (and is), at least the portion allocated to TARP.

Indeed, especially in his last half-year. But how, then, to characterize Obama's spending?

Severe cirrhosis of the liver, refusing rehab.

 

[OmCheeto]

Their fault, but not their idea. One key difference is that when you choose to start a war, you build in enormous and unforeseeable expenditures, and that WAS Bush's fault.

Yes. Wars are not what they used to be. I was thinking about that the other day. WWII wrecked most of Europe and much of Asia, and left America rather unscathed, leaving us the only manufacturing superpower for at least a couple of decades. It strikes me as no surprise that we did as well as we did for so long.

I hate to keep dwelling on the Orszag interview, but he made so many salient points, that I could not help but to admire his honesty. One of his points was how important education was, and I interpreted this as the neo-war weapon. Unfortunately, one of my subordinates today pointed out that America is sadly lacking in the upcoming brainpower race. He said that one of those stinking Scandinavian countries was #1 in math and physics, and we were around #25.

I thought that was kind of sad.

hmmm... Maybe Japan invaded us with video games(slash kiddie crack) for a reason.

hmmm...

but I digress from the topic.

Raise taxes! One of these days!

 

[CRGreathouse]

So I find it a bit disingenuous to characterize either Bush or Obama's spending as being all their fault.

I entirely agree.

 

[Al68]

His spending practices were far more "drunk sailorism" than libertarianism.

Indeed, especially in his last half-year. But how, then, to characterize Obama's spending?

How about "drunk sailor in a whorehouse with credit"? I could have said W's spending was libertarian relative to Obama's, but that would be like saying a grasshopper is tall relative to a cricket.

What amazes me most about this tax issue is how the rhetoric is virtually identical to what I heard said by Dems about Reagan 30 years ago, and the position is essentially the same for those favoring a lower top marginal rate, yet some think this is all about some new phenomena called "neoconism" or "Fox news". It's analogous to the way kids now think their generation invented the F-word or sarcasm.

And they spout the same nonsense Dems were spouting 30 years ago thinking they're making some relevant point, while refusing to even acknowledge the other side's point of view, pretending instead, like some in this thread, that they're completely oblivious to the fact that there even is another point of view, just opponents with bad motives instead.

They prefer propaganda like "they're just for the rich" to legitimate debate, knowing full well that debating motives instead of the merits of the issue is flawed logic, because that propaganda is a tried and true method for stirring up hatred among their constituents

 

[Al68]

So I find it a bit disingenuous to characterize either Bush or Obama's spending as being all their fault.

I don't think anyone suggested that, since government spending is the responsibility of congress, too. But both Bush and Obama are responsible for their own official actions, like signing the spending bills passed by congress. Neither can claim spending to "not be their fault" after signing the spending bills into law.

 

[OmCheeto]

propaganda is a tried and true method for stirring up hatred among their constituents

Yes it is: Watch the http://crooksandliars.com/david-neiwert/kurtz-calls-out-hannity-his-deceptiv" .

Even though the above video was in regards to the tax cuts, I don't think that was the point, so let's progress:

The David Brooks - Charlie Rose interview that aired Thursday is http://www.charlierose.com/view/interview/11206" . David also said that we should let all the tax cuts expire in 2012. (around 33 minutes into the interview)

 

[WhoWee]

I have a solution to the entire tax debate - a new "fair tax" concept. Basically, the higher the IQ and Degree - the higher the tax rate charged.

Why(?) you ask? It's simple, the higher your IQ and the greater your education, the greater the advantage you have over the rest of the workforce, thus the higher your potential to earn.

 

[OmCheeto]

I have a solution to the entire tax debate - a new "fair tax" concept. Basically, the higher the IQ and Degree - the higher the tax rate charged.

Why(?) you ask? It's simple, the higher your IQ and the greater your education, the greater the advantage you have over the rest of the workforce, thus the higher your potential to earn.

Except that those with really high IQ's don't usually have any interest in making money.

I am absolutely convinced that no wealth in the world can help humanity forward, even in the hands of the most devoted worker. The example of great and pure individuals is the only thing that can lead us to noble thoughts and deeds. Money only appeals to selfishness and irresistibly invites abuse. Can anyone imagine Moses, Jesus or Ghandi armed with the money-bags of Carnegie?

Christopher Michael Langan (born c. 1952) is an American autodidact whose IQ was reported by 20/20 and other media sources to have been measured at between 195 and 210. Billed by some media sources as "the smartest man in America", he rose to prominence in 1999 while working as a bouncer on Long Island.

But watch out for those that do take an interest:

1 William Gates III IQ 145-160
2 Warren Buffett IQ 135-145+
3 Carlos Slim Helu IQ 135+
http://infoproc.blogspot.com/2009/11/if-youre-so-smart-why-arent-you-rich.html"

hmmm... I wonder what those three think about the tax cuts?

http://www.usatoday.com/money/industries/technology/2003-01-12-gates_x.htm"
By Jim Hopkins, USA TODAY
1/12/2003

SAN FRANCISCO — President Bush, in pushing big tax cuts for America's wealthiest, is about to get an earful from an unlikely opponent, again. Bill Gates Sr. — father of the co-founder of Microsoft who is the USA's richest man — is fighting to keep Bush from killing the estate tax that hits the super-rich but also some small-business owners and farmers.

His son agrees with him, as do billionaires Warren Buffett, David Rockefeller Sr. and others.

...

The tax generates about $30 billion in annual federal revenue, about 1% of all, Gates says. That doesn't sound like much, but it will likely go higher as thousands of Americans who amassed fortunes in recent decades begin to die, putting up for grabs as much as $136.2 trillion in wealth.

Wow. $136 trillion. That would sure take a bite out of he [STRIKE]deficit[/STRIKE] debt($13.5 trillion).

 

[nismaratwork]

Except that those with really high IQ's don't usually have any interest in making money.





But watch out for those that do take an interest:

1 William Gates III IQ 145-160
2 Warren Buffett IQ 135-145+
3 Carlos Slim Helu IQ 135+
http://infoproc.blogspot.com/2009/11/if-youre-so-smart-why-arent-you-rich.html"

hmmm... I wonder what those three think about the tax cuts?




Wow. $136 trillion. That would sure take a bite out of he [STRIKE]deficit[/STRIKE] debt($13.5 trillion).

Not to mention the obvious: being a brilliant scientist often means that you work for the government, which pays for ****. Other options are similar, but unless you're truly exceptional in a narrow field such as pharmaceutical development, your cash-flow is going to sting. Once you're done with the government, or eschewing that entirely, academia is often home, and that pays... also for ****.

Finally, unless your brilliance allows you to personally succeed in the manner of Gates or Buffet, even if you discover a cure for HIV/AIDS... most of the money made is going to the company you're under contract to. If you're a physicist, there are not a ton of high-paying jobs, and mathematicians and computer gurus?... the NSA isn't cheap, but it's hardly going to make you wealthy.

Forget IQ... being bright and being rich are hard to link... being in management or a similar position IS, and that's not the realm of the extremely intelligent AFAIK.

 

[nismaratwork]

Oh, on a separate topic, how about legalizing cannabis and taxing it like cigarettes? That would be a nice fat source of revenue, and would ameliorate at least some expense in criminal proceedings. Just a thought before we go shutting down schools...

 

[OmCheeto]

Oh, on a separate topic, how about legalizing cannabis and taxing it like cigarettes? That would be a nice fat source of revenue, and would ameliorate at least some expense in criminal proceedings. Just a thought before we go shutting down schools...

And make those who cheat on their taxes pay:

http://www.npr.org/templates/story/story.php?storyId=15111003"
October 9, 2007

The government believes if everyone paid what they owed, the IRS would collect $345 billion more than it does now. The tax agency hopes what it learns from the three-year random audit program will help the IRS collect more of that money.

Ha ha! That would make a good poll. We'd have to make it non-incriminating though:

How many of your friends brag about cheating on their taxes, or at least brush it off, claiming that everyone does it.

 

[WhoWee]

How many of your friends brag about cheating on their taxes, or at least brush it off, claiming that everyone does it.[/I]

Why none of course (people cheat on their taxes?).

 

[nismaratwork]

And make those who cheat on their taxes pay:
Ha ha! That would make a good poll. We'd have to make it non-incriminating though:

How many of your friends brag about cheating on their taxes, or at least brush it off, claiming that everyone does it.

Well, honestly I don't know any admitted tax cheats, but I'm not the kind of person that would be first to hear about that; I'm a moral relativist, but I LOATHE cheating of all kinds.

I like the tax cheat idea, especially for these new nutcases who live in "tax free" communities (other than churches, har har) by cheating to reclaim their "sovereignty". Grrrr..Oh, and maybe let's tax religious groups, that works for me too.

 

[mheslep]

And make those who cheat on their taxes pay:

Random Tax Audits Return to the IRS
October 9, 2007

The government believes if everyone paid what they owed, the IRS would collect $345 billion more than it does now. The tax agency hopes what it learns from the three-year random audit program will help the IRS collect more of that mon

I suspect that's got be a static calculation, i.e. how much could theoretically be collected tax cheats, and therefore not very useful.