AaronT
AaronT Reader
4/8/22 6:04 p.m.

In reply to SV reX :

Which group or system would you suggest that people support if they're interested in representing the rights of workers against the vast political influence of the moneyed class?

frenchyd
frenchyd MegaDork
4/8/22 6:38 p.m.
Streetwiseguy said:

So, after a skim of this page, everyone in the entire continent wants to have an above average income, whether employer or employee, and it's somebody else's fault.

Ok, it's clear now.laugh

Just gonna say it again, we are richer and healthier now, than we have ever been in human history.

Some are. But a serious percentage of American kids go to bed Hungry ( along with a lot of others globally). 
I accept the world is never going to be perfect but that shouldn't stop us from trying. 
  Plus you are aware that American's are dying sooner and sooner? A few months ago I passed the average life span. I'm nearing 74.  It used to be 79 for American Males.  
 Other countries have longer average lives.  Plus citizens of other countries are happier. Americans are now what 22nd? 
   My point is we need to improve. Myself included.   

barefootcyborg5000
barefootcyborg5000 PowerDork
4/8/22 6:53 p.m.

In reply to frenchyd :

Dude. I don't know where you're getting some of your info. 
 

93EXCivic
93EXCivic MegaDork
4/8/22 7:03 p.m.

In reply to barefootcyborg5000 :

That looks to be from 2019. It has dropped for a fairly obvious reason over the past two years. link

But not down to 74.

Streetwiseguy
Streetwiseguy MegaDork
4/8/22 7:38 p.m.
frenchyd said:
Streetwiseguy said:

So, after a skim of this page, everyone in the entire continent wants to have an above average income, whether employer or employee, and it's somebody else's fault.

Ok, it's clear now.laugh

Just gonna say it again, we are richer and healthier now, than we have ever been in human history.

Some are. But a serious percentage of American kids go to bed Hungry ( along with a lot of others globally). 
I accept the world is never going to be perfect but that shouldn't stop us from trying. 
  Plus you are aware that American's are dying sooner and sooner? A few months ago I passed the average life span. I'm nearing 74.  It used to be 79 for American Males.  
 Other countries have longer average lives.  Plus citizens of other countries are happier. Americans are now what 22nd? 
   My point is we need to improve. Myself included.   

And, no matter how you cut it, fewer people in the world are starving now than 20 years ago, and fewer then than 40 years ago.

Yes.  There is more room to improve, but don't try to tell me we are worse now than we were, because you are wrong.  You, personally, may be in a worse place, but as a society, we are in a better place.

Boost_Crazy
Boost_Crazy Dork
4/8/22 7:57 p.m.

In reply to GameboyRMH :

Your links aren't to studies, they are highly biased opinion pieces that would not hold up to any scrutiny. I can give you links to opinion pieces stating the world if flat, it doesn't make it so. The arguments are highly flawed to put it mildly. Ironically, the writer in the first piece's first argument is that the Laffer curve is inaccurate because it fails to take real world variables into account. He then goes on to give this example...

Let’s say the top tax rate is a punishing 99 percent of income over $5 million, but all other aspects of the tax code are intact. These income earners are unlikely to take a dollar over that $5 million, but the excess money doesn’t simply evaporate – it came to them through profits the business.

 

There are two places where this money could go: back into the business or the hands of employees. Shareholders benefit either way, through increased capital reserve or infrastructure investment or happier, better-paid labor. That is one very important purpose of a strong progressive tax structure – it incentivizes those on the top to take less for themselves and invest in their business.

The writer assumes that if you tax someone at 99% over 5 million, they will continued to produce excess goods or services for free and there will be excess money to redistribute. Talk about inaccurate to real world variables. If you put a cap on the income from production, you put a cap on production. 

 

Boost_Crazy
Boost_Crazy Dork
4/8/22 8:22 p.m.

In reply to frenchyd :

  Plus you are aware that American's are dying sooner and sooner? A few months ago I passed the average life span. I'm nearing 74.  It used to be 79 for American Males.  
 

Don't worry Frenchyd, the statistics can be a bit misleading. Our average is lower than other countries, and there is a large difference between men and women. It isn't because our older people don't live as long, it's because our younger men die at higher rates due to a variety of factors. Once a man has lived to the age of 50, 60, 70, his statistical average life span climbs because he is likely past the point of being killed by his own actions. I believe if you are healthy in your 60', you are likely to live into your 80's, longer if you are healthy in your 70's. 

Duke
Duke MegaDork
4/8/22 8:24 p.m.

In reply to Boost_Crazy :

That exact scenario played out in microcosm at my father's employer (a global F500 company):

In 1983 or so some MBA (I assume) decided that they were top heavy and they should encourage the higher-paid, older folks to retire early.  So they sweetened the pot and lo and behold many many of the Old Guard happily called it quits.

In 1985 or so it became apparent that they really needed a lot of those folks they had encouraged to go away.  So they hired a number of them back into their old jobs as "consultants."

But some other MBA had decided that previous employees shouldn't be allowed to make more as consultants than their salary had been, so they capped the yearly consulting fees at that amount.

Which meant that most of these folks were making exactly the same annual salary that they had been; they were just doing it in 4-8 months or less, and staying home getting their jollies the rest of the year.  Not a single one volunteered to work the remaining months for free.

 

GameboyRMH
GameboyRMH MegaDork
4/8/22 11:49 p.m.
Boost_Crazy said:

In reply to GameboyRMH :

Your links aren't to studies, they are highly biased opinion pieces that would not hold up to any scrutiny. I can give you links to opinion pieces stating the world if flat, it doesn't make it so. The arguments are highly flawed to put it mildly. Ironically, the writer in the first piece's first argument is that the Laffer curve is inaccurate because it fails to take real world variables into account. He then goes on to give this example...

Let’s say the top tax rate is a punishing 99 percent of income over $5 million, but all other aspects of the tax code are intact. These income earners are unlikely to take a dollar over that $5 million, but the excess money doesn’t simply evaporate – it came to them through profits the business.

 

There are two places where this money could go: back into the business or the hands of employees. Shareholders benefit either way, through increased capital reserve or infrastructure investment or happier, better-paid labor. That is one very important purpose of a strong progressive tax structure – it incentivizes those on the top to take less for themselves and invest in their business.

The writer assumes that if you tax someone at 99% over 5 million, they will continued to produce excess goods or services for free and there will be excess money to redistribute. Talk about inaccurate to real world variables. If you put a cap on the income from production, you put a cap on production. 

 

To get to that, you had to cruise right past this:

There has never been a conclusive study that demonstrates a connection between lowered tax rates on the wealthy and GDP growth or increased tax receipts. During the 1940s and the 1970s, the top marginal tax rate was anywhere between 70 percent and 94 percent. In this same period, we experienced the largest GDP growth our country has ever seen, and we were able to invest in the future of our children, economy and environment.

 The idea that production would be capped if income is capped by very high tax rates is easily disproved by history. It's the economic equivalent of arguing today that igniting a nuclear bomb would set the atmosphere on fire.

Here are some more scholarly debunkings:

https://itep.org/DebunkingLaffer/

frenchyd
frenchyd MegaDork
4/9/22 12:30 a.m.
Boost_Crazy said:

In reply to frenchyd :

  Plus you are aware that American's are dying sooner and sooner? A few months ago I passed the average life span. I'm nearing 74.  It used to be 79 for American Males.  
 

Don't worry Frenchyd, the statistics can be a bit misleading. Our average is lower than other countries, and there is a large difference between men and women. It isn't because our older people don't live as long, it's because our younger men die at higher rates due to a variety of factors. Once a man has lived to the age of 50, 60, 70, his statistical average life span climbs because he is likely past the point of being killed by his own actions. I believe if you are healthy in your 60', you are likely to live into your 80's, longer if you are healthy in your 70's. 

Several points of why Americans aren't living as long.  Drugs such as fentanyl were introduced and cheaply from China. That started almost 10 years ago and as a result drug related deaths are taking a lot of Americans, 

    Returning military dealing with the ravages of war are committing suicide at rates not seen since post Vietnam.  
 Plus we've had a pandemic to shorten life spans. 
  Meanwhile American men suffer from very high rates of obesity.  If you look at food ingredients you'll notice we have one that Canadians and most developed countries have banned.    
    As for me  personally?  I feel possible to have another 10-15 years or so.  But my actuarial chart says 84.  We'll see. 

frenchyd
frenchyd MegaDork
4/9/22 12:35 a.m.
barefootcyborg5000 said:

In reply to frenchyd :

Dude. I don't know where you're getting some of your info. 
 

The numbers for 2021 are out and it's 73.4 

Boost_Crazy
Boost_Crazy Dork
4/9/22 3:55 a.m.

In reply to GameboyRMH :

To get to that, you had to cruise right past this:

There has never been a conclusive study that demonstrates a connection between lowered tax rates on the wealthy and GDP growth or increased tax receipts. During the 1940s and the 1970s, the top marginal tax rate was anywhere between 70 percent and 94 percent. In this same period, we experienced the largest GDP growth our country has ever seen, and we were able to invest in the future of our children, economy and environment.

 The idea that production would be capped if income is capped by very high tax rates is easily disproved by history. It's the economic equivalent of arguing today that igniting a nuclear bomb would set the atmosphere on fire.

Here are some more scholarly debunkings:

https://itep.org/DebunkingLaffer/

You keep trying to use incomparable examples to support your position. This is nothing more than confirmation bias, you are only seeing what you want to see. We had record GDP growth after the 40's. And we had high tax rates. And just about every other manufacturing country in the world had been destroyed and needed rebuilding. There are some causes and effects there that you may want to take a closer look at. Kind of like claiming we just had the greatest job growth in history, without mentioning that we artificially shut the economy down prior. Apples and oranges, but it sounds good if you don't look past the surface. There is a saying for that- figures lie and liars figure. The trouble with statistics is that you can frame and present them to "prove" just about anything. I didn't skip past it, I saw it for what it is along with the rest of the opinion piece. 

On the recent links, you have the same problem. They take shots at the Laffer curve concept in minute specific situations and present the "failure" as evidence of the concept being flawed as a whole. But they don't challenge the concept. Look at the first example. Different state tax rates vs unemployment rate. The key word being different. The base concept is stretching it pretty thin- the interaction between tax rate and unemployment rate, ignoring the multitude of variables that go into unemployment. It would be hard to show a link in a single state. They take it a step farther by comparing it between all states, which each have their own unique variables. Then they take it farther by noting the high tax states vs. the no tax states, which have even greater variables between them. This is also a binary difference, kind of hard to show a curve with just two data points. California is a high tax state and Nevada is a zero tax state. The states are about as different from each other as you can get, equating the unemployment rates based solely on tax rates is junk science. They also picked only one kind of tax rate. Some states have low income tax but high sales and property taxes and vice versa. 

 

GameboyRMH
GameboyRMH MegaDork
4/9/22 12:43 p.m.
Boost_Crazy said:

On the recent links, you have the same problem. They take shots at the Laffer curve concept in minute specific situations and present the "failure" as evidence of the concept being flawed as a whole. But they don't challenge the concept. Look at the first example. Different state tax rates vs unemployment rate. The key word being different. The base concept is stretching it pretty thin- the interaction between tax rate and unemployment rate, ignoring the multitude of variables that go into unemployment. It would be hard to show a link in a single state. They take it a step farther by comparing it between all states, which each have their own unique variables. Then they take it farther by noting the high tax states vs. the no tax states, which have even greater variables between them. This is also a binary difference, kind of hard to show a curve with just two data points. California is a high tax state and Nevada is a zero tax state. The states are about as different from each other as you can get, equating the unemployment rates based solely on tax rates is junk science. They also picked only one kind of tax rate. Some states have low income tax but high sales and property taxes and vice versa.

I think you've actually made a great summary of why the Laffer curve is wrong - it's an oversimplification beyond the point of uselessness because there are so many other variables. Trying to use a single curve as a predictive tool becomes a complete joke. Could you run experiments on an economy and plot out a tax rate vs. tax revenue curve for income or corporate taxes for a chosen economy? Sure. Can you try to draw up a single all-purpose curve and use it a a universal predictive tool as the Laffer curve is supposedly capable of? Of course not. It's like the difference between measuring an engine on a dyno and using an equation that claims to be able to produce a dyno graph for any engine based on just redline RPM and displacement.

Boost_Crazy
Boost_Crazy Dork
4/9/22 2:02 p.m.

In reply to GameboyRMH :

I think you've actually made a great summary of why the Laffer curve is wrong - it's an oversimplification beyond the point of uselessness because there are so many other variables. Trying to use a single curve as a predictive tool becomes a complete joke. Could you run experiments on an economy and plot out a tax rate vs. tax revenue curve for income or corporate taxes for a chosen economy? Sure. Can you try to draw up a single all-purpose curve and use it a a universal predictive tool as the Laffer curve is supposedly capable of? Of course not. It's like the difference between measuring an engine on a dyno and using an equation that claims to be able to produce a dyno graph for any engine based on just redline RPM and displacement.

Yes! You have been asking for mathematical proof that it's correct, while I've been trying to explain that it's mostly a an economic concept. There are far too many changing variables to use it as a plug in equation to determine the "best" tax rate. We know the curve exists because we know the extreme ends, 0% tax and 100% tax, and that the two points are not connected by a straight line. We don't know the shape or shift of the curve, which surely changes as the other variables change. We know the concept is sound. As tax rates increase from zero, tax revenue increases as long as production is unaffected. We know that as we get closer to 100% tax, production drops because fewer people would want to work just to have most of their earnings confiscated. Somewhere in between lies a point where modest decrease is production is offset by the tax rate maximizing tax revenue. 

Now, this opens up two debates. One is where we are on the curve. Some believe there is more meat on the bone. Others believe that tax increases will push us past the point where overall tax revenue will drop. The second debate is wether we should be even trying to find that maximum point. The curve likely flattens out as it approaches the max, meaning increased tax rates realize less increases in revenue. Some would call that excessive taxation, and question whether the goal should be to maximize tax revenue. Others are less concerned that they pass the point of maximum revenue as their goal is redistribution. I found this as a pretty good summary of what the Laffer curve is or isn't, and it doesn't appear to try to influence an opinion...

Laffer Curve Definition Investopedia

Pete. (l33t FS)
Pete. (l33t FS) MegaDork
4/9/22 2:15 p.m.

In reply to Boost_Crazy :

The concept that people stop wanting to make money is generally untrue aside from outliers like certain religious sects who do not want to make enough money to have to pay Federal taxes because they are pacifist to the extreme that they cannot stomach contributing to a government that creates and uses weapons of war.  (Which is pretty hardcore, IMO)

What happens is people put their money in tax shelters, which is a kind of positive reinforcement baked into the tax structure.  Or companies spend more money on R&D and advertising (business expenses!) which furthers innovation and also helps people who are supported by advertising dollars, like auto racers...

RX Reven'
RX Reven' UltraDork
4/9/22 2:50 p.m.

In reply to Boost_Crazy :

I've been teaching and practicing engineering statistics for 25 years and I'd be proud if I had written your post.

Pete. (l33t FS)
Pete. (l33t FS) MegaDork
4/9/22 3:04 p.m.

Forgot my other point.  I am not of the opinion that we do need to maximize tax revenue per GDP. The government should work for us and not the other way around.  I merely do not subscribe to the opinion that right now, lowering taxes will increase revenue.  And I AM of the opinion that most of the people who say that it will are being intellectually dishonest.

Boost_Crazy
Boost_Crazy Dork
4/9/22 4:12 p.m.

In reply to Pete. (l33t FS) :

In reply to Boost_Crazy :

The concept that people stop wanting to make money is generally untrue aside from outliers like certain religious sects who do not want to make enough money to have to pay Federal taxes because they are pacifist to the extreme that they cannot stomach contributing to a government that creates and uses weapons of war.  (Which is pretty hardcore, IMO)

What happens is people put their money in tax shelters, which is a kind of positive reinforcement baked into the tax structure.  Or companies spend more money on R&D and advertising (business expenses!) which furthers innovation and also helps people who are supported by advertising dollars, like auto racers...
 

It is completely true. The only question is at what point production is decreased based diminished return. It is not linear, and not true for every point on the curve- you are not likely to reduce production if you increased taxes from 16% to 17%. But jump from 40% to 70%, and you will likely have a different outcome. If I told you that you only get 20% of your pay for overtime hours, would you work overtime? Probably not. If not, it's more money, are you saying you don't want more money? Another thing that you are forgetting is that the government generates zero production. Every dollar it spends it must take from someone else. It's a dollar taken from the productive sector of our economy and put into an unproductive sector. 
 

 

Forgot my other point.  I am not of the opinion that we do need to maximize tax revenue per GDP. The government should work for us and not the other way around.  I merely do not subscribe to the opinion that right now, lowering taxes will increase revenue.  And I AM of the opinion that most of the people who say that it will are being intellectually dishonest.

I don't think the intent from most people is to maximize the amount you can tax, more to illustrate that there is a maximum and it doesn't coincide with with the highest rates. Those rates may likely even be to high to be beneficial overall. I don't think anyone argued for lowering taxes right now. I'm not against it for other reasons, but I don't think that would have much affect on total tax revenue right now. Some have called for raising taxes, some dramatically. You specifically mentioned post WWII tax rates of 70 to 94%. I realize you didn't call for those rates specifically, but citing that example it appears that you believe those rates would not be detrimental. 

Edit: I just realized that it was Gameboy that had the post WWII example, sorry for the confusion. 

frenchyd
frenchyd MegaDork
4/9/22 6:03 p.m.

In reply to Boost_Crazy :

The fundamental flaw with that thinking  is the tax of income.  Taxing income by definition is taking something away.  
The  alternative is to tax acquisitions. Then it's elective. Tax occurs when purchase is completed. It's just part of the cost of things.  
  If everything is taxed.  Everything.  I mean every single thing. The federal sales tax could be really trivial. 2% maybe less. 
     Not only tax cars,  and food, but everything any buddy buys. If you sell your lawn mower for $100 to your neighbor, you deposit $98. And pay $2.00   If I buy $100 dollars worth of stock.  I get $98 worth of stock and $2 goes to Uncle Sam. If Ford buys a roll of metal 2% is taxes. 
   If you buy  a business 2% goes to Uncle Sam. 
   No more tax forms.  No tax breaks for anybody. If your city buys a dump Truck 2% goes to The IRS. 
 

What if you sell that Lawn mower and keep all $100 

 first time you pay 4%.  Second time 8%. At some point honesty really is the best alternative.  

RX Reven'
RX Reven' UltraDork
4/9/22 6:30 p.m.

In reply to frenchyd :

First, thank you for your post...you consistently bring a unique prospective and although I don't always agree with you, I appreciate the diversity you interject into the conversation.

Oh, and for the record, I completely understand your recent post about paying for services that keep you out of danger.  I'm a California lifer but pre-COVID, I constantly commuted back and forth to your fine state of Minnesota.

In fact, in 2017 I was scheduled to provide two one-week training sessions on Engineering Statistics in Minnetonka (I know, very close to you).  I flew in on Sunday and setup my training theatre for the eighteen engineers that were enrolled...Monday morning came and only seventeen engineers arrived.  Around 9:00 AM, an Admin. walked into the room and quietly told me that my missing engineer had fallen off of his roof the previous day while cleaning his rain gutters and died.  He was in his 40's and had a wife and two young kids.

Anyway, a classic maxim in economics is "you get less of what you tax more".  So, assuming people generally accept that thinking, the question simply becomes two-fold:

1.  What is the ideal effective tax rate.

My household is at 30.6% with 62K going to the fed, 26K going to the state, 3.6K going to property, 2.6K going to sales, 0.7K going to gas, and 0.6K going to use for a total of 95.5K 

2.  What behaviors do we want to encourage and what behaviors do we want to disincentivize.

I think you're advocating for a Value Added Tax (VAT) would result in higher income people paying less tax and lower income people paying more tax...this would benefit my selfish interest but I'm OK with the 30.8% effective tax rate I'm currently pay.ing.

Flight or Flight...our brains have evolved to grab onto one or the other but a third option "sustain" is often the best path...how about we push VAT into into the future to a post COVID, point in time?

I suggest we focus on restoring the supply chain and once implemented, we move forward.

Boost_Crazy
Boost_Crazy Dork
4/9/22 6:36 p.m.

In reply to frenchyd :

For the most part, I'm really on board with a flat tax or value added tax with no other taxes. But that it very unlikely to happen, as taxes are more than just a revenue source for the government. They are a means of control of behaviors. If they want less of something, they tax it more, if they want more, they tax it less. They lose those levers with a flat tax. The other issue is that it would turn our progressive tax structure into a regressive structure. Since the poor generally spend all of their money, they would be taxed on everything with no exemptions. Currently they pay little to no federal tax, often getting "refunds" of more than they have paid. I'm not okay with raising taxes on the poor, so I'd guess a lot of people would really not be okay with that. I'm also uncomfortable with taxing stocks- if you are talking a one time tax to the purchaser at the purchased value, that's interesting, and possibly much more workable than taxing the owner for unrealized gains as some have recommended. I'd need to think about that one.

Duke
Duke MegaDork
4/9/22 7:43 p.m.

In reply to frenchyd :

Welcome to Value Added Tax hell.

 

Duke
Duke MegaDork
4/9/22 7:45 p.m.

In reply to Boost_Crazy :

Frankly, I'm in a pretty high tax bracket, and I don't give a single crap about lowering taxes.

What I do care about is reducing federal spending, across the board, with no sacred cows at all.

 

frenchyd
frenchyd MegaDork
4/9/22 10:04 p.m.
Duke said:

In reply to frenchyd :

Welcome to Value Added Tax hell.

 

The current system has so many exemptions that it takes 77,000+ pages to outline them all.  
That's  not  beginning to count what are called legal precedents. Which require lawyers fees of $1000 an hour to discover. But basically are avoid paying any taxes at all cards. 
    A fair tax system should be simple to explain and apply equally to everyone.  
   Why should you be able to avoid paying taxes if you can pay millions for lawyers?    

frenchyd
frenchyd MegaDork
4/9/22 10:12 p.m.
Duke said:

In reply to Boost_Crazy :

Frankly, I'm in a pretty high tax bracket, and I don't give a single crap about lowering taxes.

What I do care about is reducing federal spending, across the board, with no sacred cows at all.

 

 In a country of 330 million citizens. Just reducing federal spending is like only paying part of the bill.   
        We are in that particular he'll right now. IRS agents have been more than cut in half while the complexity continues to grow.
By cutting  agents in half, enforcement is also cut in half.  That means a lot fewer collections, so for those who do pay taxes , more money is required. 
       
I suggest eliminating ALL INCOME TAX completely.       Don't want to pay a 2% tax?  Don't buy anything. 

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