Why raising taxes on the rich fails

[jfrog]

Originally Posted by deacon blues

Except that the FACTS and history prove otherwise. Lower taxes fuel more economic activity. Higher taxes squelch it. Lower taxes give individuals and businesses more capital to hire, to research and develop, to innovate, to generate more economic activity. Higher taxes cause individuals and businesses to layoff workers, freeze hiring, cut back on inventory, etc.

Kennedy cut taxes and tax revenues increased. Reagan cut taxes and tax revenues increased. Clinton cut taxes and tax revenues increased. Bush cut taxes and tax revenues increased.

The problem is when with the increased revenues government won't cut spending to generate a surplus. They oftentimes get spend happy and run up greater deficits. Then come the cries for raising taxes on the rich---so gov't can keep up the spending, rather than cutting the fat and controlling their appetite for spending.

Taxing the rich hurts everyone. They are the creators of jobs and economic activity.

Republicans argue that lowering taxes will give the rich guys more money so they can hire more workers. In reality it's not that simple. If I'm a rich guy and I get a big tax cut, I'm not just going to go and hire workers. I'm going to see how much upping the supply of my product will affect my income. If I project that it will raise my income enough then I will hire new workers to up my supply. The other side to this is that the noise generated by a major tax break will usually cause me to project that the economy is about to get better and a better economy will translate to more demand and more demand means I need more workers to keep supply up. It sounds like it might work. However, if we keep cutting taxes to spur the economy then eventually we will get to a point where we cannot cut taxes anymore. (Some things are essential). I have not heard any Republican explain what to do in this situation?

Kensyians on the other hand argue that to spur the economy that we should increase government spending. This will cause demand which will cause more workers to be hired in order to keep up supply and those workers will then generate their own demand which will cause other comapnies to increase supply and so on. This sounds like it might work. So, why not just keep spending more and more? Well, the deficit will get to really big. How do we stop this from happening? We either raise taxes or cut the spending we used to help spur the economy and since the economy is now better we will begin to have a surplus which will pay for the deficit even with the spurt the extra government spending gave the economy. I can't think of any question to ask about this theory?

Of course I'm proabably vastly simplifying everything but that is my understanding of the issues.

Oh and one last thing... taxing the rich doesn't hurt anyone IF it is to provide money for government spending that will then increase demand which will then increase how much money the rich guy is making which will then cause him to want to increase supply to keep up with the new demand.

[coadie]

Originally Posted by jfrog

Do you have any real data on the average income of the top 1% in New York? If not then hush up. And yes I realize there is a difference between income and wealth. What kind of a dummy doesn't? Yes I know your going to throw my term "richest 1%" up in my face. So what? Maybe I did use the wrong term, but the thing is I got my point across, aegsm understood me and everyone else that reads my posts will. If you want to nitpick then be my guest, but I really could care less about your personal attacks mr. know it all coadie.

You are talking in circles.

Typical lib.

Only wealth can be used to invest in construction, lending factories and support working capital for paying salaries.

You don't understand if a wealthy person has both his wealth and income taxed, he sure isn't going do capital expenditures and hire workers.

It is so twisted when the left attacks wealth and then they don't want to work for a boss that can't make payroll.

[aegsm76]

Originally Posted by jfrog

Republicans argue that lowering taxes will give the rich guys more money so they can hire more workers. In reality it's not that simple. If I'm a rich guy and I get a big tax cut, I'm not just going to go and hire workers. I'm going to see how much upping the supply of my product will affect my income. If I project that it will raise my income enough then I will hire new workers to up my supply. The other side to this is that the noise generated by a major tax break will usually cause me to project that the economy is about to get better and a better economy will translate to more demand and more demand means I need more workers to keep supply up. It sounds like it might work. However, if we keep cutting taxes to spur the economy then eventually we will get to a point where we cannot cut taxes anymore. (Some things are essential). I have not heard any Republican explain what to do in this situation?

Kensyians on the other hand argue that to spur the economy that we should increase government spending. This will cause demand which will cause more workers to be hired in order to keep up supply and those workers will then generate their own demand which will cause other comapnies to increase supply and so on. This sounds like it might work. So, why not just keep spending more and more? Well, the deficit will get to really big. How do we stop this from happening? We either raise taxes or cut the spending we used to help spur the economy and since the economy is now better we will begin to have a surplus which will pay for the deficit even with the spurt the extra government spending gave the economy. I can't think of any question to ask about this theory?

Of course I'm proabably vastly simplifying everything but that is my understanding of the issues.

Oh and one last thing... taxing the rich doesn't hurt anyone IF it is to provide money for government spending that will then increase demand which will then increase how much money the rich guy is making which will then cause him to want to increase supply to keep up with the new demand.

jf - I think your basic understanding is correct.
The debate is really where the appropriate tax level is to be obtained.

I have been doing some more reading on a proposal called the fairtax and it is fairly intriguing.
Here is the link.
http://www.fairtax.org/site/PageServer

[jfrog]

Originally Posted by aegsm76

jf - I think your basic understanding is correct.
The debate is really where the appropriate tax level is to be obtained.

I have been doing some more reading on a proposal called the fairtax and it is fairly intriguing.
Here is the link.
http://www.fairtax.org/site/PageServer

I don't see what benefit taxing people at retail instead of income gives?

[aegsm76]

I believe the basic premise is that it will encourge investment from other countries in the US.
Since you would not be taxed on what you make, but what you spend.
It would also end the loopholes that many use to "hide" their income.
However, I am just starting to try to understand it.

[jfrog]

Originally Posted by aegsm76

I believe the basic premise is that it will encourge investment from other countries in the US.
Since you would not be taxed on what you make, but what you spend.
It would also end the loopholes that many use to "hide" their income.
However, I am just starting to try to understand it.

The loopholes can be ended without a brand new tax system and besides whose to say a new tax system won't have its own loopholes? As far as encouraging investment from other countries in the U.S. I'm not sure I understand how they arrive at the conclusion that a new tax system would change anything in that respect?