will health care bill affect November elections?

[Conan71]

Yeah, 21 million jobs created under Reagan tax codes was a total coincidence, Swake. 

[Gaspar]

Yeah, 21 million jobs created under Reagan tax codes was a total coincidence, Swake. 

Yeah and the cuts really hurt the government. . . Tax revenue doubled.

But this is just history. 

Lets try something new and see if it works.

[Conan71]

I see he removed his post, he must be re-tooling it.

[nathanm]

Yeah and the cuts really hurt the government. . . Tax revenue doubled.

But this is just history. 

Cutting taxes from the pre-Reagan levels was probably a good idea. Even Laffer himself thinks that cutting income taxes from their currently very low rates wouldn't have the same effect it did in the 80s. Also, the significant wage and price inflation during/after those tax cuts mix up the message quite well.

It's probably true that a 70% top marginal rate is too high, unless it only applies to truly stratospheric levels of income.

In 2005, a CBO study found that reducing taxes across the board by 10% would likely result in an overall decrease in government revenue. The study estimated that only 28% of the reduced revenue would be recouped over ten years.

And Reagan's 21 million jobs? How many of those were in defense? How many were due to the explosion of new technologies? How much of it actually had to do with cutting taxes and raising interest rates?

[Conan71]

A bunch of hypotheticals trying to counter history. Why is it people have such a hard time giving President Reagan his props, yet even the most fiscally conservative will heap praise on the Clinton Admins fiscal policies.

[nathanm]

A bunch of hypotheticals trying to counter history.

Huh? You make no sense. Last I checked, our top marginal rate now is not 70%, as it was in 1980. Slavish dedication to historical precedent is not helpful when there is no real precedent due to radically different conditions.

Interestingly, looking at the numbers (federal revenue as a percentage of GDP), there's no clear correlation between the Reagan tax cuts and increased revenue. There was a spike a few years after the cut, but the trend in that direction began in 1977.

Looking at the data, it appears there's a much stronger correlation with the condition of the economy as a whole than any change in tax policy. The biggest increases in revenue (both in raw numbers and as a percentage of GDP) come not from tax cuts, but from financial bubbles.

[Conan71]

Nathan, probably=hypothetical. What is so hard to grasp?  Care to cite data and/or analysis by recognized experts?  Up to this point you simply sound like the blowhard Harvard undegrad Matt Damon's character smacked down in Good Will Hunting.  Too much macro econ from a jaded professor and limited real world experience is what your sophomoric musings sound like.  

[nathanm]

Nathan, probably=hypothetical. What is so hard to grasp?  Care to cite data and/or analysis by recognized experts?  Up to this point you simply sound like the blowhard Harvard undegrad Matt Damon's character smacked down in Good Will Hunting.  Too much macro econ from a jaded professor and limited real world experience is what your sophomoric musings sound like. 

Any prediction of the future is a hypothetical. You can be an donkey if you want, but it certainly doesn't contribute to good discussion.

Economics is so hard to get right precisely because it's fuzzy. There is to this day no reliable quantification of the amount of good the Reagan tax cuts did. As I mentioned earlier, I think they probably did some good. There are strong reasons to believe that would not be the case were we to attempt yet another broad based tax decrease on the wealthy. The least of which, as anybody with common sense can grasp, is the vast difference in magnitude in the change from a 70% top marginal rate to a 28% top marginal rate and any possible decrease from here.

[Red Arrow]

For 2008, the top bracket had crept back up to 35%. 

This year they sent me the 1040A booklet instead of the 1040 booklet.  It doesn't have the brackets listed after the tables.  I guess they don't want me to know.

[nathanm]

For 2008, the top bracket had crept back up to 35%. 

Interestingly, the tax increases didn't manage to thwart the 1990s boom.

[we vs us]

Which is owned by poor people?

Sorry to punch your buttons but:

"Turns out the rich, among other things, are too few in number to make much of a dent on the economy.  And they don't spend efficiently.  They order one yacht, rather than keep buying groceries for a year." 

Is an incredibly flawed principle on many levels.  One of the worst leftist meme's.

The rich spend more on value-added services which help keep many other businesses, well, in business.

The corporation is actually owned by a mix of:  individuals, other companies, funds and their managers, and the original owner, who still has at least some preferred stock.  All of these stakeholders are represented by a board of directors, who have in turn hired a CEO and other upper management figures to run the company.  So it's an entity that is professionally run and is accountable to a mix of different shareholders.  Nowhere in that structure is there a slot that requires one or more rich guys to make the company run.  Of course, there will be many folks in there who are incidentally rich, but none upon which my company specifically relies on to be rich in order to function. 

Even the original owner, for whom the company is named, isn't integral to the business any more.  He performs a specific function within the organization (new hotel development) but nowhere is my organization reliant on his personal capital to keep us funded.  In other words, his tax situation means love-all to my employment. 

In the country at large, this structure is the rule not the exception.  That's why the corporate structure exists (in all it's pseudo-personhood glory):  to protect the personal capital of individual investors. 

In the case of my company, I'm sure my owner did put up some of his own money way back in the day, but that initial investment is long gone . . .  as the company took on a life of its own -- and more people were brought in and given voices in the management of it in return for their capital -- I'm sure the company paid him back whatever he put in initially.   

So, no, I'm still not convinced this is the worst meme of the left.  In fact, deifying the rich as the One True Font of Pure Capitalism just doesn't wash in this day and age.  This is kinda one of the things I was talking about in my Reagan rant up above.  It's one of his ideological pillars that we take for granted nowadays but which, really, in the end, doesn't hold true. 

And of course, keep pushing my buttons.  I definitely intend to keep pushing yours 

[Red Arrow]

And of course, keep pushing my buttons.  I definitely intend to keep pushing yours 

What station do we get if we push the right most button?   

[Red Arrow]

Interestingly, the tax increases didn't manage to thwart the 1990s boom.

Reagan & Bush I (as opposed to Bush II) had set the economy up pretty well.  Clinton rode it to the top.  It was starting to have problems by the end of Clinton's 2nd term, at least in the machine tool manufacturing business.  (Nothing I haven't said before.)

[Gaspar]

Any prediction of the future is a hypothetical.

Economics is so hard to get right precisely because it's fuzzy.

The basic laws are steadfast.  The behavior of complex systems can be extrapolated with if historical data exists (and it does).  There are many outside factors that influence systems and are beyond control, but basic economic theory is not fuzzy.  Principals have remained the same since the days of Hammurabi and beyond.  It gets fuzzy when politics are injected into the system.

There are strong reasons to believe that would not be the case were we to attempt yet another broad based tax decrease on the wealthy.

What are these reasons?  If you have made some discovery that affects a thousand years of economic theory, please let us know.  Your statement also requires qualification.  Past tax cuts affected everyone, and the "Wealthy" make up a minute proportion of the economy (less than 2%).  The "for the wealthy" BS no longer flies, because it only preys on emotion, and has little affect on the outcome of such economic changes.  Yes taxes on the wealthy decreased more because they pay more in taxes and are affected more by rate changes.  More than half of the "wealthy" are actually small businesses filing under LLC and only pulling a salary from that business.

The least of which, as anybody with common sense can grasp, is the vast difference in magnitude in the change from a 70% top marginal rate to a 28% top marginal rate and any possible decrease from here.

"Common sense" would therefore dictate that the boom to the economy would be smaller with tax cuts now.  Agreed?   So would 15% growth be bad?  How about 10%?  Perhaps 5%?  Or even if the adjustment took us out of the negative, would it be bad?

You offer opinion, and your contribution to the discussion is valuable, but don't fight the BASIC laws of economics.  It's like fighting the laws of physics, eventually you get hurt.

[Conan71]

The corporation is actually owned by a mix of:  individuals, other companies, funds and their managers, and the original owner, who still has at least some preferred stock.  All of these stakeholders are represented by a board of directors, who have in turn hired a CEO and other upper management figures to run the company.  So it's an entity that is professionally run and is accountable to a mix of different shareholders.  Nowhere in that structure is there a slot that requires one or more rich guys to make the company run.  Of course, there will be many folks in there who are incidentally rich, but none upon which my company specifically relies on to be rich in order to function. 

Even the original owner, for whom the company is named, isn't integral to the business any more.  He performs a specific function within the organization (new hotel development) but nowhere is my organization reliant on his personal capital to keep us funded.  In other words, his tax situation means love-all to my employment. 

In the country at large, this structure is the rule not the exception.  That's why the corporate structure exists (in all it's pseudo-personhood glory):  to protect the personal capital of individual investors. 

In the case of my company, I'm sure my owner did put up some of his own money way back in the day, but that initial investment is long gone . . .  as the company took on a life of its own -- and more people were brought in and given voices in the management of it in return for their capital -- I'm sure the company paid him back whatever he put in initially.   

So, no, I'm still not convinced this is the worst meme of the left.  In fact, deifying the rich as the One True Font of Pure Capitalism just doesn't wash in this day and age.  This is kinda one of the things I was talking about in my Reagan rant up above.  It's one of his ideological pillars that we take for granted nowadays but which, really, in the end, doesn't hold true. 

And of course, keep pushing my buttons.  I definitely intend to keep pushing yours 

Thanks for the Bus3010 lecture.  I'm quite aware of how corporate structures work and their purpose, you should know that by now.  I see it's allowed you to comfortably side-step the wealth argument and what happens when rich people are allowed to put money back into the economy.  Many wealthy people put money into funds, stocks, and other investment products which help provide the capital necessary for companies to expand, and in some cases, continue to operate when times are lean.

The people who stay in the hotel you work at and the companies who have meetings and book large blocks of rooms don't pay for it with government chits (although I'm quite aware the government books thousands if not millions of room nights per year). 

Low income people generally don't utilize your restaurant and banquet services (but one example of what I mean with "value-added services").  Let's face it, you work in a more upscale hotel.  Your company depends on wealth to operate, both from investors and from customers.  Less wealth to spend means less potential customers and investors.  Last I checked, local, state, and federal governments were not investing heavily in the hospitality industry.