Higher taxes in 2011 and the economic collapse

Krazen1211 said: JoeFriday said: Krazen1211 said: JoeFriday said: geo123 said: JoeFriday said: I just wanted to learn where these incidences of “overtaxing people, which stifles economic growth” were.Seriously?
Ah, yep.

You’re the one that has been going on and on about “correlation” and “causation”, so I wanted to see where these incidences of “overtaxing people” that “stifles economic growth” were that you were claiming.

1993 to 1996. Hence the following.

Year GDP Growth
1993 2.9
1994 4.1
1995 2.5
1996 3.7
1997 4.5
1998 4.4
1999 4.8
2000 4.1
And where was the overtaxation that stifled economic growth ?
The first 4 years. The average growth rate for the last 80 years is 3.4%. We were below this from 1993-1996, and only surpassed that in 1997-2000 after taxes were cut.
I’m afraid not.

As I assume your reference to taxes being cut was the reduction in the Capital Gains rate, there are two major flaws with your assertion:

1) The Balanced Budget Act of 1997 and the Taxpayer Relief Act of 1997 weren’t signed into law until August of 1997, while the GDP in the 1st QTR of 1997 was 3.1% and the GDP in the 2nd QTR of 1997 was 6.1%, the highest since taxes were increased on the Rich & Corporate, BEFORE the capital gains legislation was even signed let alone enacted.

2) The lowered rate on Capital Gains applied only if the assets had been held for more than 18 months AFTER July 29th 1997, so there would have been no results until at least 18 months later in the 1999 tax year.

HumDoHamaraDo said:
Exactly, no one quits a Business where they make $225K so they can collect $24K in Unemployment just because the tax rate is going up. Scare tactics for a pre-determined political agenda.
Thats just W2 income and made more than that a year working. It does not include my investment income which about 85% of come from bank interest so taxed at personal rate. And yes this was pre-determined, I knew what was coming and turns out I was right. The 3.8% tax surcharge on unearned income is a joke, By no longer working they can't get me on it and that alone makes it all worth it.

JoeFriday said: Well, you can’t get much higher than the 94% top tax rate we had earlier, yet I’ve seen no evidence that it stifled economic growth, just the opposite.I've been trying to give you the benefit of the doubt, but at this point it is quite clear that you either do not know the difference between correlation and causation or that you do know it and are intentionally using an objectively and demonstrably false argument to advance your point. After all the posts explaining this rather basic issue to you, you are still trying to suggest that the fact that two things happened at the same time suggests or establishes a causal link between them.

As I've pointed out, I am not taking sides in this debate as I don't think that it's possible to even begin to resolve it without a lot more data and calculations. What I can tell you, however, is that your asinine insistence that you can show causation in this case because two things happened at the same time is causing a lot more harm to your cause (at least in this thread) than pretty much anything else that people on the other side of this debate have posted.

JoeFriday said: RS4Rings said: More will stop working like I did. The author of the story came up the laffer curve, You can only push people so far.
As I previously posted in an earlier THREAD, Warren Buffett says your premise is bunk:

During an interview with Charlie Rose on November 13th, Rose asked Warren Buffett about the argument some advance that higher federal income taxation of the wealthy inhibits economic growth. Buffett responded:

"I've worked with all kinds of systems of taxation. I've worked with rich people, even in the '50s and the '60s when the top rate was 70% and I've worked with them when the capital gains rate was 39.6%, and not one of them ever said 'It's one o'clock, instead of working this afternoon I think I'll go to the movies because my marginal rate is so high'. If anything, THEY WORKED HARDER."

(emphasis mine)Warren Buffet isn't always right, his frame of reference isn't the only one that's valid. I read the quote you referenced as well, and my reaction is that Warren is wrong on this.

It's a basic fact that increasing the cost of doing something reduces how much of it gets done. Maybe he saw it as these people were working harder, but people frequently have fond memories of "how it was", but that doesn't mean it's representative of the broad market.

.

kamalktk said: JoeFriday said: geo123 said: JoeFriday said: And where was the overtaxation that stifled economic growth ?Are you disagreeing with the premise that there is a point of diminishing marginal returns at which increased taxation can stifle economic growth?
Well, you can’t get much higher than the 94% top tax rate we had earlier, yet I’ve seen no evidence that it stifled economic growth, just the opposite.

Keep in mind these top rates were only applicable to less than 1% of American taxpayers. They have never been the engine driving our national economy.
You directly contradict this statement by yourself. link
Nope.

As I already posted upthread:
You’re conflating the statement of historical fact in one post with the posting of an opinion in another post.

mikef07 said:

Can someone explain what this means. I would assume that a person here would be in a 35% tax bracket and a 10% state income tax bracket. Does this mean that any interest earned is taxed at an extra 3.8%? Does it mean everything above the $ amount where the 35% tax bracket starts is taxed at 3.8%
Have no Idea how it kicks in, Was easier to just quit working than figure it out. I do know I would have been paying close to 50% in taxes on unearned income. Now with deductions it will be around 10%.

JoeFriday said: Krazen1211 said: JoeFriday said: Krazen1211 said: JoeFriday said: geo123 said: JoeFriday said: I just wanted to learn where these incidences of “overtaxing people, which stifles economic growth” were.Seriously?
Ah, yep.

You’re the one that has been going on and on about “correlation” and “causation”, so I wanted to see where these incidences of “overtaxing people” that “stifles economic growth” were that you were claiming.

1993 to 1996. Hence the following.

Year GDP Growth
1993 2.9
1994 4.1
1995 2.5
1996 3.7
1997 4.5
1998 4.4
1999 4.8
2000 4.1
And where was the overtaxation that stifled economic growth ?
The first 4 years. The average growth rate for the last 80 years is 3.4%. We were below this from 1993-1996, and only surpassed that in 1997-2000 after taxes were cut.
I’m afraid not.

As I assume your reference to taxes being cut was the reduction in the Capital Gains rate, there are two major flaws with your assertion:

1) The Balanced Budget Act of 1997 and the Taxpayer Relief Act of 1997 weren’t signed into law until August of 1997, while the GDP in the 1st QTR of 1997 was 3.1% and the GDP in the 2nd QTR of 1997 was 6.1%, the highest since taxes were increased on the Rich & Corporate, BEFORE the capital gains legislation was even signed let alone enacted.

2) The lowered rate on Capital Gains applied only if the assets had been held for more than 18 months AFTER July 29th 1997, so there would have been no results until at least 18 months later in the 1999 tax year.

I’m afraid not.

The assets had to be held for 18 months from the date of purchase, not 18 months after July 29, 1997. Thus, an asset bought in March 1996 and sold in September 1997 qualified.

This is shown by capital gains realizations. The US public realized $261 billion in gains in 1996, followed by $365 billion in 1997, followed by $455 billion in 1998. Naturally, GDP growth increased during this time, up to 7.1% in Q4 1998.

There were also many other tax provisions.

Laffer going to be on FOX's Your World with Neil Cavuto at 4pm.

geo123 said: JoeFriday said: geo123 said: JoeFriday said: Well, you can’t get much higher than the 94% top tax rate we had earlier, yet I’ve seen no evidence that it stifled economic growth, just the opposite.I've been trying to give you the benefit of the doubt, but at this point it is quite clear that you either do not know the difference between correlation and causation or that you do know it and are intentionally using an objectively and demonstrably false argument to advance your point. After all the posts explaining this rather basic issue to you, you are still trying to suggest that the fact that two things happened at the same time suggests or establishes a causal link between them.
Wrong.

I merely stated a historic fact...Do you seriously think that repeating that 2+2=5 over and over will make it so? For the sixth time in this thread, you posted a historic fact to support your argument that higher taxes can increase economic growth.

No, I didn’t.

I posted that the 94% top tax rate refuted YOUR claim that there was causation between “overtaxing people” and “which stifles economic growth”.

It is a historical fact that the GDP went from negative 13% to positive 13% after the top rate was raised to 94%. It could not possibly have stifled economic growth.

Historical fact.

Still waiting for you to cite the incidences where you claim that “overtaxing people” led to “stifles economic growth”.

JoeFriday said: I posted that the 94% top tax rate refuted YOUR claim that there was causation between “overtaxing people” and “which stifles economic growth”.Are you seriously suggesting that there is no point at which tax rates will stifle economic growth? If so, your view is directly contracted by every single economist out there, including those that do favor increasing tax rates at this time. This is an incredibly basic point and there is no controversy associated with it.

It is a historical fact that the GDP went from negative 13% to positive 13% after the top rate was raised to 94%. It could not possibly have stifled economic growth.

Historical fact.You can't seriously be that dense, can you? It could not have been that economic growth was experienced inspite of the higher taxes and would have been higher if tax rates were slashed, could it? As I've previously posted, I have no idea which one is correct, but you can't answer this question based on the mere fact that two things happened at the same time.

Better to keep your mouth shut and be thought a fool than to open it and remove all doubt (c) Mark Twain.

JoeFriday said: It is a historical fact that the GDP went from negative 13% to positive 13% after the top rate was raised to 94%.
The rate was made 94% in 1944. You can see inflation adjusted growth rates here: link
1944 growth rate: positive 13%
1945 growth rate: positive less than 5%
1946 growth rate: negative

This is exactly the opposite of what you claim.

kamalktk said: JoeFriday said: It is a historical fact that the GDP went from negative 13% to positive 13% after the top rate was raised to 94%.
The rate was made 94% in 1944.
He swings and misses !

Try during FDR.

geo123 said: JoeFriday said: geo123 said: JoeFriday said: Well, you can’t get much higher than the 94% top tax rate we had earlier, yet I’ve seen no evidence that it stifled economic growth, just the opposite.I've been trying to give you the benefit of the doubt, but at this point it is quite clear that you either do not know the difference between correlation and causation or that you do know it and are intentionally using an objectively and demonstrably false argument to advance your point. After all the posts explaining this rather basic issue to you, you are still trying to suggest that the fact that two things happened at the same time suggests or establishes a causal link between them.
Wrong.

I merely stated a historic fact...Do you seriously think that repeating that 2+2=5 over and over will make it so? For the sixth time in this thread, you posted a historic fact to support your argument that higher taxes can increase economic growth. If you are using this historic fact to suggest that higher taxes cause economic growth, then you need evidence beyond just stating that we've had periods in the past when we had both high taxes and economic growth.

If, on the other hand, you aren't trying to establish a causal link between the two, then your statistical fact has no relevance to your example.

This thread is going way down even faster than I expected it to because JoeyFriday is now just trolling.

Agreed...trolling.

Krazen1211 said: JoeFriday said: Krazen1211 said: JoeFriday said: Krazen1211 said: JoeFriday said: Krazen1211 said: JoeFriday said: geo123 said: JoeFriday said: I just wanted to learn where these incidences of “overtaxing people, which stifles economic growth” were.Seriously?
Ah, yep.

You’re the one that has been going on and on about “correlation” and “causation”, so I wanted to see where these incidences of “overtaxing people” that “stifles economic growth” were that you were claiming.

1993 to 1996. Hence the following.

Year GDP Growth
1993 2.9
1994 4.1
1995 2.5
1996 3.7
1997 4.5
1998 4.4
1999 4.8
2000 4.1
And where was the overtaxation that stifled economic growth ?
The first 4 years. The average growth rate for the last 80 years is 3.4%. We were below this from 1993-1996, and only surpassed that in 1997-2000 after taxes were cut.
I’m afraid not.

As I assume your reference to taxes being cut was the reduction in the Capital Gains rate, there are two major flaws with your assertion:

1) The Balanced Budget Act of 1997 and the Taxpayer Relief Act of 1997 weren’t signed into law until August of 1997, while the GDP in the 1st QTR of 1997 was 3.1% and the GDP in the 2nd QTR of 1997 was 6.1%, the highest since taxes were increased on the Rich & Corporate, BEFORE the capital gains legislation was even signed let alone enacted.

2) The lowered rate on Capital Gains applied only if the assets had been held for more than 18 months AFTER July 29th 1997, so there would have been no results until at least 18 months later in the 1999 tax year.

I’m afraid not.

The assets had to be held for 18 months from the date of purchase, not 18 months after July 29, 1997. Thus, an asset bought in March 1996 and sold in September 1997 qualified.
But that is before the fact. You would not have been acting on it prior to the legislation being enacted as you would have been unaware of it, and you could not have anticipated it because Clinton had vetoed earlier cap gains legislation.

The GDP was still the highest prior to the legislation being signed.

I’m afraid your still wrong.

I'm afraid not.
I’m afraid so.

I already posted the total gdp growth from years 1998-2000 and how they exceeded total previous years.
But the lower rate on the cap gains could not have been realized until 1999. The retroactive part was unknown before the fact.

Your insistence on picking single quarters rather than entire years shows this.
That was only for the year 1997, which clearly displays your assertion wrong, as the legislation was not even signed until August.

Do try and keep up.

JoeFriday said: Krazen1211 said: JoeFriday said: Krazen1211 said: JoeFriday said: Krazen1211 said: JoeFriday said: Krazen1211 said: JoeFriday said: geo123 said: JoeFriday said: I just wanted to learn where these incidences of “overtaxing people, which stifles economic growth” were.Seriously?
Ah, yep.

You’re the one that has been going on and on about “correlation” and “causation”, so I wanted to see where these incidences of “overtaxing people” that “stifles economic growth” were that you were claiming.

1993 to 1996. Hence the following.

Year GDP Growth
1993 2.9
1994 4.1
1995 2.5
1996 3.7
1997 4.5
1998 4.4
1999 4.8
2000 4.1
And where was the overtaxation that stifled economic growth ?
The first 4 years. The average growth rate for the last 80 years is 3.4%. We were below this from 1993-1996, and only surpassed that in 1997-2000 after taxes were cut.
I’m afraid not.

As I assume your reference to taxes being cut was the reduction in the Capital Gains rate, there are two major flaws with your assertion:

1) The Balanced Budget Act of 1997 and the Taxpayer Relief Act of 1997 weren’t signed into law until August of 1997, while the GDP in the 1st QTR of 1997 was 3.1% and the GDP in the 2nd QTR of 1997 was 6.1%, the highest since taxes were increased on the Rich & Corporate, BEFORE the capital gains legislation was even signed let alone enacted.

2) The lowered rate on Capital Gains applied only if the assets had been held for more than 18 months AFTER July 29th 1997, so there would have been no results until at least 18 months later in the 1999 tax year.

I’m afraid not.

The assets had to be held for 18 months from the date of purchase, not 18 months after July 29, 1997. Thus, an asset bought in March 1996 and sold in September 1997 qualified.
But that is before the fact. You would not have been acting on it prior to the legislation being enacted as you would have been unaware of it, and you could not have anticipated it because Clinton had vetoed earlier cap gains legislation.

The GDP was still the highest prior to the legislation being signed.

I’m afraid your still wrong.

I'm afraid not.
I’m afraid so.

I already posted the total gdp growth from years 1998-2000 and how they exceeded total previous years.
But the lower rate on the cap gains could not have been realized until 1999. The retroactive part was unknown before the fact.

Your insistence on picking single quarters rather than entire years shows this.
That was only for the year 1997, which clearly displays your assertion wrong, as the legislation was not even signed until August.

Do try and keep up.

I'm afraid not. There's no retroactivity involved.

A smart investor would look at historical capital gains rates and realize that smart policians will eventually lower capital gains rates to increase tax revenues. Those smart investors would already have assets on hands to sell when a smart politician actually followed through with the proper policy.

More importantly, the lowering of capital gains rates was part of Congressional policy from November 1994 onward. Investors were well aware of these policies.

Krazen1211 said: nycll said: Krazen1211 said: nycll said: bigeye said: Oh yeah, that's makes perfect sense...tax people more and they will work harder. If that's true lets raise taxes for everyone so we all work harder. What crap.If you think about it, it is very intuitively true. Say you want to buy an engagement ring or a big TV. What you need is some fixed amount of after tax dollars. If the tax is higher, then you obviously need to make more pretax dollars. What's so hard to understand?

More likely, you simply wait back and let the government provide you with endless unemployment checks and other handouts. Then buy the TV."More likely" has a statistical meaning. Do you have anything about people's behavior in the top tax bracket? I don't see how government handout can play any meaningful role in this people's decision.


Not the top tax bracket folks, per se (who of course have enough money to buy any material possession many times over and would hardly have to work harder for it, as well as the ability and means to shelter money, legal or otherwise), but there's evidence of this happening for normal folks, and buying their TVs this way.

Why work when you don't have to?I am pretty sure WB was talking about top income bracket folks, instead of gardeners.

bigeye said: nycll said: bigeye said: Oh yeah, that's makes perfect sense...tax people more and they will work harder. If that's true lets raise taxes for everyone so we all work harder. What crap.If you think about it, it is very intuitively true. Say you want to buy an engagement ring or a big TV. What you need is some fixed amount of after tax dollars. If the tax is higher, then you obviously need to make more pretax dollars. What's so hard to understand?

Ok, I'll bite. I am a small business owner and I have worked, saved, and invested long enough to retire fairly well at an relatively early age. I don't "need" my business and frankly would like to retire. I continue to work and employ people because the income stream is pretty good. But frankly the stress sucks and if the tax scale tips too much further I'll bail just like RS4Rings. I don't "chase" big tv's, house's, car's, etc by working more. I simply enjoy the freedom of knowing I can buy any of these things if I want too and I can leave the rat race any time I choose.

I think you assume way too much about the desire or motivation of the "rich" (according to the IRS tax tables) to work when the reward dwindles.Relax, I am not trying to trick you.

I see what you are saying. As in my example with big TV and ring, you already have it so you don't need to make any more money. There are definitely people like you. But WB's statement is still true because statistically more people will choose to work more under normal circumstances under marginally higher tax rate, because otherwise they would not have the money to buy that TV. I was just giving your an example of a mechanism how this can happen.

Let me ask you in a different way, which might be easier to understand for you and scott. You claim you have achieved financial independence. Great. There is a dollar amount associated to that, right? Let's call that $10 million. OK. Say 5 years ago, you net worth was 8 mil. And tax was hiked up from 33% to 39%. Wouldn't that make you work harder or longer because you still would like to save up that $10 million? Conversely, say the tax went from 39% to 33%, and you reached your goal faster. Wouldn't you be more likely to drop out of the rat's race earlier (hence work less)?

jkimcpa said: brettdoyle said: This is the guy that supported "Starve the beast" policies. Why hadn’t anybody thought of it before? Apparently if you want to cut your personal spending the rational thing to do is run up all of your credit cards and then you'll be forced to stop spending.

If Laffer and his cronies didn't spend like drunken sailors on shore leave during the 80's there wouldn't be such an awful federal deficit or desperate need to raise taxes.

I prefer it as a lesser of two evils in a democracy. Starve the beast > enable the commie. As least with my money I can choose to sell my fiat and trade it for investments as I see fit. Whereas under the alternative I have no incentive to produce.Don't forget the Greek style debt melt-down increases the risk of commies taking over.

^No, I am not trying to maximize taxes. I was commenting on bigeye's initial post, which is still quoted.

Reading is basic.