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At 10/16/09 10:42 AM, lapis wrote: Everybody's pragmatic. People with a low income are pragmatic by wanting to tax the fuck out of the rich. People with a high income are pragmatic by not wanting to be taxed the fuck out of.

Pragmatic in the sense of the method that will result in the greatest personal gain.
We were, however, talking about it in the sense of paying of the the nation's debt.

Sweden and Denmark have individual income tax rates that go up to 57% and 59% respectively in the highest bracket. Still, I don't think that the poor over there are scavenging for trash can food. In fact, their poor are in terms of income about comparable to those in the US. In addition, they get health insurance, cheaper public transport, better access to universities etc.

Well for one thing, their respective economies are considerably smaller than that of the US's. Secondly, were they already in debt by the same percentage of GDP as America is, I would hardly think that such a system would get them out of their situation.

Of course there are limits on the extent to which you can tax the rich, however, if we assume that the tax rates stay within certain bounds the poor will profit from a higher tax rate and a more even income distribution. So you will get a clash between interest instead of a single objectively fair solution.

More even income distribution.

What makes this distribution of income "objectively moral"?

You have your morality, someone else's morality may be more along the lines of "from each according to his ability, to each according to his needs". In the end, the morality of the majority is what becomes government policy in a democratic country.

Okay cool beans and all, but this is not at all indicative of it being the best solution pragmatically or morally, which was kind of the thing we were discussing, because now it seems like you're saying "Oh well do you have a better solution? Pfft who cares doesn't matter anyway coz you don't decide so ner ner"

The tax burden of top 1% now exceeds that of bottom 95%.

Maybe that says more about the income distribution than the fairness of the taxes.

I don't see how you can bang on about the necessity of an objective moral framework when determining economic policy, but yet you don't seem mind, or even are happy with, the idea of the government being arbitrarily assigned the position of moral adjudicators who get to decide from whom money is taken and to whom it is given, without even a hint of objectiveness about any of it.

If you want to make universities more accessible to people regardless of their parents' income by using taxpayer money to partially fund their education, then who are you going to tax? Poor people?

Please, there are far more examples of unjustified spending out there i.e. the majority of Obama's stimulus package.

With the universities, however, the US should consider a HECS help system like that of Australia's(except far better), were you can choose to have the government pay for all your fees, and you then pay back this money through the taxation system once you start earning over X dollars. Sure, not everyone who goes to college will get a job with enough income to ever start paying back the loan, or a job at all, overall you're going to get more people who will be able to afford tertiary education, and comparatively very little spending. Hell, whack on a flat 10% interest on all loans and you're probably going to be spending very little.

At 10/16/09 09:14 PM, Der-Lowe wrote: As the deficit was created by a reduction in taxes, it follows that inverting the cause of the problem would solve it.

Please, if the US had a government that was truly fiscally conservative, then we wouldn't have NEEDED to have high tax rates to cover ridiculous government spending in the first place.

Now, what this thread was (or at least, intended to be) about was the best way of raising revenue so as to cancel, or rather, reduce the debt burden. Professor Mankiw has suggested imposing a VAT, whereas I am more in favor of intensifying the income tax, for the reasons that were being discussed prior to your digression.

The intensifying of income taxes in the way you talk about is neither morally or pragmatically justifiable.

At 10/16/09 08:21 AM, Der-Lowe wrote:

Unemployment takes place where there is not enough demand of labor. Demand of labor depends on, the relationship between the wage the firm has to pay, and the amount of money the labor "bought" will generate.

Businesses get money taken away from them, they have to tighten belt and thus not think about expanding their practises, or even reduce them.
Said expansion leads to, wait for it, an increase in demand for labour.

At 10/16/09 10:13 PM, Korriken wrote:

At 10/16/09 08:57 PM, Der-Lowe wrote:

This a nice example of the fallacy of composition, one of the most popular ones in economics. You say that, according to you, because a measure has had negative effects on states it will therefore have negative effects if it is imposed on the country as a whole.

It
already
Happens

Ignoring the dubious accuracy of your first statement, it does not follow that the effects imposed on an individual (or a subset of individuals) will have the same effects on the whole. One of the most clear examples is with the printing of money. If I print 100,000 dollars and hand them to you, you'll certainly be better off, since the expansion of the money supply will be minimal, you'll gain 100,000 dollars. However, if I were to do the same for every American, then the price level will certainly adjust to the massive printing.

printing and giving out money has little to do with crushing the well off with a massive tax burden. the rich will always protect their money. you start handing out massive quantities of printed money, and the rich will swap their american dollars for another currency to protect the value of their money. This is also why most of the well off own a lot of gold.

It was an example about the fallacy of composition, to show how a measure in an individual has different effects from a measure taken globally. You don't argue the example, you argue whether the fallacy of composition applies to the case we're discussing.
And switching from monetary to non-monetary assets is a practice held by everybody in an inflationary context.

Same happens with your example; a tax imposed on a State within the US is likely to be easily avoided by simply moving to other State, because most states are alike: they share the same customs, legal practices, educational levels, average incomes, etc, so moving from one state to the other is quite straight forward.

do go on....

This is not the case for leaving the US. There are few countries to which a major reallocation of resources could take place (safe legal framework, highly qualified labor) if a tax hike were to take place, and they all have higher taxes than the US.

I wouldn't be so sure about that one, Jimbo.

So people who have been born in the US, and have nothing to do with it rather not be American, because they get taxed anyway. This is not relevant at all with the imposing of an income tax.

You seem to forget that lowering taxes is what has created the debt in the first place.

Horse crap.

You see, before the 80s, the US had a very basic yet effective fiscal policy: when we're at war, we take debt to pay for it, and then in peace years, we create surpluses to pay it back. This "law" was broken in the 80s with the beginning of the tax-cut policy, fixed in the 90s, and broken again in the year 2001.

Lowering taxes has been proved catastrophic for the coffers of the US Treasury.

Do not
feed me
Lies!!

See the graph below. You'll see that debt/gdp ratio increases are caused by world wars, except for the 80s. Since it does not include recent data, during the Clinton Administration fell to 30%, with budget reduction, and yes, new economy boom. The Bush administration saw taxes being cut and a slow economy, hiking the figure to the current 70%.

Back to your links, each link more pathetic than the other. All of them share the same the same fallacy, the failure to apply ceteris paribus, or to hold other thing constant. The 1920s were the roaring 20s, that's why tax revenues increased, it was one of the biggest expansionary cycles in the US, that came through the reconstruction of europe, US based, and the cashing of loans to the War.
The second link is basically the same, it ignores that the US economy was under a high strain because of the aggressive Volker inflation-fighting policies and oil crisis. The crisis ended, and growth resumed.
And the third link simplifies the issue, by ignoring the deductions that the tax reform eliminated, closing the loopholes.

The links you provided are so ridiculous that even Samuelson in his introductory Economics book, in the very first chapter gives it as an example of flawed thinking:

* Failure to hold other things constant: A second pitfall is failure to hold other things constant when thinking about an issue. For example, we might want to know whether raising tax rates will raise or lower tax revenues. Some people have put forth the seductive argument that we can eat our fiscal cake and eat it too. They argue that cutting tax rates will at the same time raise government revenues and lower the budget deficit. They point to the Kennedy-Johnson tax cuts of 1964, which lowered tax rates sharply and were followed by an increase in government revenues in 1965. Hence, they argue, lower tax rates produce higher revenues.
What is wrong with this reasoning? This argument overlooks the fact that the economy grew from 1964 to 1965. Because people's incomes grew during that period, government revenues also grew, even though tax rates were lower. Careful studies indicate that revenues would have been even higher in 1965 had tax rates not been lowered in 1964. Hence, this analysis fails to hold other things (namely, total incomes) constant.

that is common sense!

A final comment: common sense is the mental process laymen have. Us scientists rather use the scientific method.

Common sense is the backbone of the scientific method. but what would liberals know about either since they cast both aside when it does not work for what they want?

You believe there are no economists that are left wing? You seriously do?

This is the lowest point in your argument. Macroeconomics, which handles the issue of unemployment, has never pointed in the direction you have stated.

thats because macroeconomics is WRONG!

Well, I suggest you publish your work debunking the sum of all knowledge economists have created from 1936 to date, and win the nobel prize. Remember to share the 1.4 million.

Unemployment takes place where there is not enough demand of labor. Demand of labor depends on, the relationship between the wage the firm has to pay, and the amount of money the labor "bought" will generate.

Unemployment happens when businesses can't afford to expand and make purchases of new equipment and such.

True if there's unemployment because the rate of change in employment is below populational growth. But there isn't unemployment now because jobs have been created slower than people have been introduced in the labor force, there's unemployment because firms have fired people. There isn't full capacity, firms are working below their capacity.

However, that's somewhat accurate only if you consider there to be associated costs with hiring: recruitment, selection processes, etc. But wouldn't it be cheaper just to lend money to the businesses that are in need of it, instead of giving businessmen money that we're not quite sure they'll actually spend, since they will only do so if they believe that the will be able to market the goods they produce?
Something like, Obama's hiring loans?

Keynes was wrong.

That is not Keynesian theory, that's core economic thinking: benefit-cost analysis.
Keynesian theory says that unemployment is possible in the long run. If you were against keynes, you'd say the the government should do nothing, like our fellow minarchist here.

At 10/17/09 04:05 AM, SadisticMonkey wrote:

At 10/16/09 09:14 PM, Der-Lowe wrote: As the deficit was created by a reduction in taxes, it follows that inverting the cause of the problem would solve it.

Please, if the US had a government that was truly fiscally conservative, then we wouldn't have NEEDED to have high tax rates to cover ridiculous government spending in the first place.

Firstly, I never said the US had a fiscally conservative government. Precisely the contrary.
Government spending levels are not ridiculous in the US by any measure.

Now, what this thread was (or at least, intended to be) about was the best way of raising revenue so as to cancel, or rather, reduce the debt burden. Professor Mankiw has suggested imposing a VAT, whereas I am more in favor of intensifying the income tax, for the reasons that were being discussed prior to your digression.

The intensifying of income taxes in the way you talk about is neither morally or pragmatically justifiable.

Lapis has already commented on your morality argument, and I have treated your pragmatist questions in my first replyin this thread.

Businesses get money taken away from them, they have to tighten belt and thus not think about expanding their practises, or even reduce them.
Said expansion leads to, wait for it, an increase in demand for labour.

Read frank's article.

At 10/17/09 04:05 AM, SadisticMonkey wrote: More even income distribution.

What makes this distribution of income "objectively moral"?

We're not on the same frequency. My point is that there is no objective moral framework to decide what taxing/spending habits are just and which are iniquitous. So the only way to decide what kind of policy to pursue is to have a majority vote on it.

Because in the end, the poor look out for themselves and the rich look out for themselves, there's nothing wrong with that. However, it would be stupid on the part of the poor if heavily taxing the rich would in fact hurt their own interests. I'm arguing that the do profit from it (as long as the taxing is not too excessive), and therefore the pragmatism argument comes into play: if they profit from it then they should vote for parties that support it. And then it just boils down to which group has the strongest electoral base.

We were, however, talking about it in the sense of paying of the the nation's debt.

Replace the "health insurance, cheaper public transport, better access to universities" in previous post with "faster paying off of the debt" and the same reasoning applies. The argument about whether it's fair to put a highest tax burden on the rich transcends the issue of debt alone.

Secondly, were they already in debt by the same percentage of GDP as America is, I would hardly think that such a system would get them out of their situation.

Why not? Either you spend 20 years on paying off your debt or 30 years, perhaps 50. I don't see the fundamental difference here.

Okay cool beans and all, but this is not at all indicative of it being the best solution pragmatically or morally, which was kind of the thing we were discussing, because now it seems like you're saying "Oh well do you have a better solution? Pfft who cares doesn't matter anyway coz you don't decide so ner ner"

You do get to decide! In a way. By voting. However, if you don't become the majority then, yeah, ner ner or whatever. Look, for the Communist or the poor person a solution can be pragmatic or moral, yet the same solution can be immoral and nonpragmatic for the free-market liberal or the rich person. That's because pragmatism and morality depend on the person and the situation that he's in. I know that moral relativism can be dangerous but when it comes to fairness of taxing/spending then I feel that it's a reasonable observation.

There's a story that I know from book on fair division by Moulin that is said to go back to Plato. Once upon a time in a small village, there is a fluteplayer who has just died and a discussion arises about which of the children in the village should get his flute.

The first is the son of the fluteplayer, who by his birthright has the right to claim the flute.
The second has always worked hard cleaning the flute and keeping it safe.
The third has very poor parents and has no other toys to play with.
The fourth is a very talented fluteplayer and could probably make the best music using the flute.

Which of the children should get the flute? You can formulate formal frameworks that you can use to decide which child should get the flute, like exogenous rights (child 1), reward (child 2), compensation (child 3) and fitness (child 4), but you'll have a hard time arguing which of the principles is superior to the others. Objectively, that is.

Sure, not everyone who goes to college will get a job with enough income to ever start paying back the loan, or a job at all,

So who gets to cover this gap? Do you propose a tax that specifically targets poor people in order to cough up the money to pay for this discrepancy? Because they'll be the ones that cause this money loss, right?

At 10/17/09 11:17 AM, Der-Lowe wrote: Firstly, I never said the US had a fiscally conservative government. Precisely the contrary.

I know, I'm saying that if they were, as they should be, then lowering the taxes wouldn't be a problem.
ie. you're blaming the wrong thing

Government spending levels are not ridiculous in the US by any measure.

I think the 12 trillion dollar debt would suggest otherwise.

At 10/17/09 12:20 PM, lapis wrote: We're not on the same frequency. My point is that there is no objective moral framework to decide what taxing/spending habits are just and which are iniquitous. So the only way to decide what kind of policy to pursue is to have a majority vote on it.

What isn't objective about "It's wrong to take money from people who have earned it, with the use of force, and give it to people who haven't earned it."

Which of the children should get the flute?

1. This situation is different to inheritance.

The current situation is more akin to a man who produces a product and makes a profit off of it. The man deserves the profit because he worked hard for it.
However, the government believes that he doesn't deserve all of it, and so takes some of it off him and decides arbitrarily who DOES deserve it. Also, if the man doesn't comply he will be thrown into prison.

2. It's wrong to suggest that the people who receive the tax dollars are in the same situations that the children are in. I mean seriously, what are you basing that on?

3. -If the flute owner wanted his son to have his flute, then it's his property and so he should have the right to decide to whom it goes.
-The second child should have worked towards having skills that are valued enough to allow him to earn enough money to afford a flute, if he wanted one so much.
- The third child, although in an unfortunate situation, should work hard so that one day he too can afford a flute. Giving the flute to his family is going to disincentivise working towards affording a flute through their own work.
- If the flute player really is that good, then there should be someone willing to invest in his talent.

So who gets to cover this gap? Do you propose a tax that specifically targets poor people in order to cough up the money to pay for this discrepancy? Because they'll be the ones that cause this money loss, right?

Well it doesn't matter because in the end you're spending less anyway.
I mean, it's funny, I believe that the taxes of the rich should actually be lowered, but I haven't even suggested that once in this thread so far. All I've been doing arguing against raising them, when in reality anyone can see that with the amount of tax money the government receives, it could be going so much better.

Call me an idiot... but isnt the economy doomed to fail as it is?

If all money comes from banks (the only people who can legally print money....) and they only give money through loans that charge interest.. isnt there always more debt than money in existance??

like say a bank printed the first 20 dollars, and loaned it to someone with a 25% interest.

He now owes 25 dollars, but only 20 dollars even exist. What is he to do? Nothing butwork off his debt.

thething about our country is the saturation of population has stalled (and simultaniously added to the devistation of) the depression bound to happen :/

There is no fix. Not legalising drugs, not selling land, nothing.

At 10/23/09 04:05 AM, SadisticMonkey wrote: What isn't objective about "It's wrong to take money from people who have earned it, with the use of force, and give it to people who haven't earned it."

The word "earn"?
Is Paris Hilton richer than someone who has to work two jobs to afford treatment for multiple sclerosis simply because she "earned" it more than the second guy? And that's an extreme example, but it's not that much of a stretch to say that success is to an extent dependent on nature and nurture that no newborn can "earn". Of course, personal responsibility is always an important, if not the most important, factor. But to say that's it's objectively immoral to want to level the playing field is rather narrow-sighted.

Also, why stress the "use of force"? The whole reason we call a group a "government" rather than just a board of management is that the former has a (legal) monopoly on the use of force. If you're against governments using force then you're against government. What if someone refused to pay taxes that would be used to fund the military? Use force? I guess a staunch pacifist would find that very immoral.

Which of the children should get the flute?

2. It's wrong to suggest that the people who receive the tax dollars are in the same situations that the children are in. I mean seriously, what are you basing that on?

???
I'm furthering the case that there is no objective moral standard that prescribes what kind of collective welfare policies are "moral", and this was a classic example. Of course the situations aren't completely parallel, if this example does what it needs to do then why would I spend time polishing it up until it's a perfect analogy?

3. -If the flute owner wanted his son to have his flute, then yada yada

Argh, the last reason why I posted that bit was for you to post YOUR personally preferred solution to it. What this is about is that 200 people could answer this question and come up with completely different answers, and probably 200 different nuances. The only reason to discard a response would be the line of reasoning (if it's not elaborate or incoherent), not the outcome of the reasoning. To avoid future misunderstanding: I'm not saying that your line of reasoning is wrong per se. I think that should be clear by now but I'm a little pessimistic.

Well it doesn't matter because in the end you're spending less anyway.

If matters when you want to test the absoluteness of your objective moral framework.

I mean, it's funny, I believe that the taxes of the rich should actually be lowered, but I haven't even suggested that once in this thread so far.

Going by what you had posted about your objective moral framework, it was pretty much implied.

All I've been doing arguing against raising them, when in reality anyone can see that with the amount of tax money the government receives, it could be going so much better.

And "better" is another subjective term, at least in this context.

IF they want to pay the debt then maybe they should stop spending so much money on stuff we don't need.

At 10/23/09 07:28 PM, Deathbybible wrote: Call me an idiot... but isnt the economy doomed to fail as it is?

If all money comes from banks (the only people who can legally print money....)

The Federal Reserve, actually. Which is a bank, but government owned.

and they only give money through loans

This is not true, the fed can buy stocks, other monies, gold, etc.

that charge interest.. isnt there always more debt than money in existance??

Actually, money is a right. When you have US currency, the Fed owes you. So you're exchanging debt for debt

like say a bank printed the first 20 dollars, and loaned it to someone with a 25% interest.

He now owes 25 dollars, but only 20 dollars even exist. What is he to do? Nothing butwork off his debt.

Oh, and the Fed generally puts money in the system through the US government, it buys us debt with money. But then all the profits earned by the Fed go back to the Treasury, so no harm done.

At 11/8/09 02:30 AM, Der-Lowe wrote: The Federal Reserve, actually. Which is a bank, but government owned.

;;;
excuse me... privately owned !
See Lewis vs United States, 680 F.2d 1239 (1982)
This came out of an Accident where a person was hit by a federal reserve vehicle, he could not sue the Government...because they are not the owners or in control of these banks.
The judge ruled...
THe Federal Reserve Banks are independant, privately owned & locally controled corperations. (There are 12 of them)
The Reserve Banks are deemed to be Federal instrumentalities for purposes of immunity from State taxes.

Like it or not...this is still TRUTH.
http://www.apfn.org/apfn/fed_reserve.htm

At 11/8/09 10:32 AM, morefngdbs wrote:

Economically, it's government owned, since government gets all the interest that the Fed earns by buying US T-bills.

At 11/8/09 02:14 PM, Der-Lowe wrote:

At 11/8/09 10:32 AM, morefngdbs wrote:

Economically, it's government owned, since government gets all the interest that the Fed earns by buying US T-bills.

I think you've hit something here. It's basically worth saying that any sort of unique, exclusive, and symbiotic nature between a private company and government would suggest that the government effectively owns and governs that private institution.

This line of logic would suggest that the government has far more that it 'owns' than one would initially expect.

At 11/8/09 05:57 PM, SmilezRoyale wrote:

At 11/8/09 02:14 PM, Der-Lowe wrote:

At 11/8/09 10:32 AM, morefngdbs wrote:

Economically, it's government owned, since government gets all the interest that the Fed earns by buying US T-bills.

I think you've hit something here. It's basically worth saying that any sort of unique, exclusive, and symbiotic nature between a private company and government would suggest that the government effectively owns and governs that private institution.

This line of logic would suggest that the government has far more that it 'owns' than one would initially expect.

Yeah, Friedman in Price Theory says that the US govt effectively owns 40% of every business, since that is (was) the corporate income tax.

At 11/9/09 09:41 AM, Der-Lowe wrote: Yeah, Friedman in Price Theory says that the US govt effectively owns 40% of every business, since that is (was) the corporate income tax.

;;;
I don't know how many Corperate Companies you guy's own...& i don't know much about US taxes.
But I do own a registered Canadian Corperation.
I am the only share holder & have complete control seeing as I am the President, Secretary Treasurer
In Canada I don't have to pay taxes on what my company earns.
I have to pay taxes on what my PROFIT is.
If I right off new equipment, gas, insurance, expendibles, rent/mortgage etc etc etc etc & if I still show a profit I can defer it to the next tax year.
I haven't paid 1 cent of Corperate tax in the last 10 years .
Not 1 penny :)

I also have to collect a tax called H.S.T. in Nova Scotia.
But i don't have to pay all the tax I collect into the government. I look at all my expenses, where I paid HST & i deduct that amount from what I collected & then pay the difference, most years its about a third of what I collect.

All of this is 100% legal.
I file taxes every year & I have a professional accounting service prepare my tax forms & they do my books, so I'm not hiding anything ,nor am I doing anything illegal.

So I for one couldn't survive paying 40% tax...I don't believe for a second any US company does either.

In closing you can dance all around the subject, but the Federal Reserve is a Privately owned Corperate company , the people who own it are not the Government , nor are any of them elected by the people of the US. they make a profit & are 'paid ' for their shares & they are making a shit load of money off the American people.
What do they do when they fuck up ?
they come to the American people to bail them out...absolute insanity.

At 10/17/09 11:10 AM, Der-Lowe wrote:

Keynes was wrong.

That is not Keynesian theory, that's core economic thinking: benefit-cost analysis.
Keynesian theory says that unemployment is possible in the long run. If you were against keynes, you'd say the the government should do nothing, like our fellow minarchist here.

Those businesses you talk about are making the right choice. The only reason that those particular businesses were able to get loans, expand, or operate in general in the first place was based on the assumption that of wrong signals put through the economy stirred by artificially low interest rates. That the marginal revenue of the labor is not equate to the wages that laborer is paid means that the laborer, and perhaps the entire business is unproductive and therefore should have it's assets sold off to more productive ends.

Then again outright firing may not be necessary and this may not be the case. The Macro-Economic theory seems to assume that the only alternative is either save the workers from mass unemployment by stimulus, or the worker isn't worth his wage and gets fired. The system should be flexible enough to allow workers wages to be lowered rather than cut completely.

This is pretty much what happened in the 1919-21. The Harding administration did less than the hoover administration, there should have been an incredible recession in that era.

And with lower nominal wages people would get pushed into lower tax brackets (We didn't always have indexing, and even with indexing, more and more people are being forced to pay the AMT) and have relatively more income.

Cut ridiculous government spending, go to even sales tax for everyone, and drop business taxes to restimulate economy.