We DO NOT have to RAISE taxes!! A highly inconvenient truth

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posted on Oct, 19 2008 @ 06:47 PM
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Hauser's Law - Please look it up.

So here's the bottom line: Hauser's Law shows that the only way that politicians can increase government revenue significantly is to increase economic growth significantly. And the most effective way they can do that is to lower tax rates significantly.

Everyone should agree about this issue. A growing economy is good for rich and poor, young and old, and of every political persuasion. Politicians in every party, in every country, just need to be convinced of a simple fact: They'll have more money to spend if you have more money to spend!

"No matter what the tax rates have been, in postwar America tax revenues have remained at about 19.5% of GDP." What a pity that his discovery has not been more widely disseminated.

The data shows that the tax yield has been independent of marginal tax rates over this period, but tax revenue is directly proportional to GDP. So if we want to increase tax revenue, we need to increase GDP.

What happens if we instead raise tax rates? Economists of all persuasions accept that a tax rate hike will reduce GDP, in which case Hauser's Law says it will also lower tax revenue. That's a highly inconvenient truth for redistributive tax policy, and it flies in the face of deeply felt beliefs about social justice. It would surely be unpopular today with those presidential candidates who plan to raise tax rates on the rich – if they knew about it.

s.wsj.net...

online.wsj.com...

www.exceluser.com...

Our analysis uses US government data to make the conclusion
clear. The only way for government to increase revenues a lot
is to cut the tax rates for you and your employer...a lot.




posted on Oct, 19 2008 @ 07:16 PM
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Cutting your taxes our even putting in place a flat tax rate. Doesn't necessarily increase growth, other factors come in affect.

Example is Russia - 13% Tax Link to Quote



Whilst in most countries the introduction of a flat tax has coincided with strong increases in growth and tax revenue, there is no proven causal link between the two. For example, it is also possible that both are due to a third factor, such as new government that may institute other reforms along with the flat tax. A study by the IMF showed that sharp increases in Russian GDP growth and tax revenue around the time of the introduction of a 13% flat tax were not the result of the tax reform, but of a sharp increase in oil prices, strong real wage growth, and intensification in the prosecution of tax evasion.[13]



posted on Oct, 19 2008 @ 07:21 PM
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reply to post by infolurker
 


The problem with Hauser's Law is that it dont explain why in the face of the current tax cuts policies that this current administration has implemented, we still are loosing our job, our economy is in a recession, people STILL underreport income and companies STILL shift jobs overseas.

What Hauser's Law fails to take in consideration is that our trades policies are not favorable to our economy. Also that no matter what tax policy we put in place people are still going to cheat in their taxes, like JOE "the Plumber" there is not better example, here is a guy that is worried about tax increase but then it comes out that he has cheated on his taxes. Human behaviour is something that sometimes hard to quantify in these studies.

I agree with the overall data, no problem there, specially this

Because Mr. Hauser's horizontal straight line is a simple fact, it is ultimately far more compelling. It also presents a major opportunity. It seems likely that the tax system could maintain a 19.5% yield with a top bracket even lower than 35%.


But I look at it this way, what our tax policies do to the economy? Do they stimulate growth or do they allocate government resources to places that are not needed.

If you look at our past 8 years obviously the tax cuts policy has not work, the intended purpose has not yield any benefits to our economy, to our GDP and to the contrary it has exploded our National Debt.

With that said and taking Hauser's Law at face value if we raise taxes to companies and the rich in order to stimulate the economy by placing that money in the hand of middle and lower income people and you get the keynesian effect, we might very well have an economic boom that at least can take us out of this recession or better yet create another economic boom like in the Clinton years when we saw the biggest economic boom this country has EVER experience. All that while maintaining the same federal tax revenue yield.

That's why I believe that when it comes to tax policy, is not only about the policies, to raise or to lower, is also about how they are implemented.





[edit on 19-10-2008 by Bunch]



posted on Oct, 19 2008 @ 07:51 PM
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You are correct,
Jobs moving overseas and other causes of "lost GDP" are primarily responsible for the lack of GDP growth recently but my point is raising taxes is NOT going to put more revenue in the Government coffers to pay for all of the spending. The only way to get out of this is to grow the GDP.

I do not have a problem with import taxes on foreign goods or rewarding / penalizing companies that keep jobs here instead of outsourcing. This is simply explaining that raising taxes is not going to work.



posted on Oct, 19 2008 @ 08:25 PM
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Originally posted by infolurker
You are correct,
Jobs moving overseas and other causes of "lost GDP" are primarily responsible for the lack of GDP growth recently but my point is raising taxes is NOT going to put more revenue in the Government coffers to pay for all of the spending. The only way to get out of this is to grow the GDP.

I do not have a problem with import taxes on foreign goods or rewarding / penalizing companies that keep jobs here instead of outsourcing. This is simply explaining that raising taxes is not going to work.


I get your point,

But what I'm getting at is that EVEN with all these loss of jobs the yield for the Federal Government remains the same as Hauser's Law shows. That means that the government has had basically the same revenue no matter what tax policy is put in place.

So you are found in this conundrum in a slumping economy what do you do? Do you cut taxes even MORE like McCain proposes, or you cut taxes like Obama proposes? They are both promising to cut taxes, is the sector that is targeted on those tax cuts that are different.

I myself I believe that keynesian economics are the way to go in this current economic situation, many could disagree, and thats just my opinion. The trickle-down concept employ for the last 8 years hasn't work so I think we need to move in a different direction and thats what Obama proposes.

I believe and again is my opinion that with keynesian economics put in place you might very well get the trickle-down effect as a result and at the end this country could be headed for a big economic recovery and perhaps a boom.

I think this country is headed for that, and the fact that so many countries are dependant on us right now also gives me confidence that this can happen.



posted on Oct, 19 2008 @ 08:27 PM
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You guys have to consider.......not taxing the rich, will only stimulate growth, if they are encouraged to keep industry and production on Domestic soil. Otherwise, tax the sh$t out of them.
Also consider that if they are to be profitable on domestic soil, grow and create jobs,.......we better take a good hard look at this Green Movement, Which has effectively tied the hands of industry from harvesting natural resources in our country. Hence we have become service based.



posted on Oct, 19 2008 @ 08:32 PM
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although I have not decided yet which to vote for, it will take a stimulus to enable corporate America to grow AND a reason (economic) to grow jobs in America to turn the economy.......You cannot offer a stimulus to keep jobs in America AND increase the income tax rates at the same time.....IMHO



posted on Oct, 19 2008 @ 08:44 PM
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Originally posted by habu71
although I have not decided yet which to vote for, it will take a stimulus to enable corporate America to grow AND a reason (economic) to grow jobs in America to turn the economy.......You cannot offer a stimulus to keep jobs in America AND increase the income tax rates at the same time.....IMHO


Yes you can, is how you implement tax policy that would yield result.

For example under Obama tax policy plan, he would give tax creadits to companies that create job here in America and increase those of companies that ship job overseas.

At the same time he is increasing taxes on the top 5% of earners while giving tax cuts to those in the middle and lower brackets. Why? It is a proven tenet of ecnomics that the middle and lower income classes tend to spend more and spend often, that why the middle class is so key, a strong middle class means a better economy.

So lets say that Obama gets elected and he puts in place is tax policy, there is no reason to think that companies that want to ship jobs would be deter to do so, so we at least get that tax from them, unlike now that they ship jobs but there is not punishment on them to do so. He increase the taxes as he proposes the middle and lower income people keep more of their money increase thei spending, energizing the economy creating more economic growth.

Now this companies are going to see that this new economic boom is going to off set the higher taxes that they going to pay, and at the end they get more revenue, they get more demand which cause them to create more jobs, they get the tax credits for creating jobs, which would enlarge their balance sheets and the cycle just keep repeating.

Thats how a good tax policy should work. Thats keynesian economics that result in trickle-down effect. And thats what we need right now.

[edit on 19-10-2008 by Bunch]



posted on Oct, 23 2008 @ 08:37 AM
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reply to post by Bunch
 


Hauser's Law is a realistic effect of how politics influences the market, and vice versa. The current problems with the economy stem from a lack of understanding from Washington. GSE's like Fannie Mae and Freddie Mac are guaranteed certain levels of security (i.e. when it fails, it gets bailed out), and a culture on Wall Street that encourages people to make riskier loans due to government bail-out programs.

Bottom line, privatized profit, and socialized risk is not capitalism and creates a system of self destruction.

As for Hauser's Law... when you remove capital from the private market and displace it on an irresponsible government, it is likely that the private market will not grow as fast, or will not grow at all.





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