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Originally posted by Merinda
So I assumed tax rates would be really really low because the job creators were so busy and the middleclass was rocking.
Well turns out back in the day America had some of the highest taxation. The income tax went as high as 91% for the top bracket,
Originally posted by Merinda
I looked up the 60s, when America was on the way to the moon muscle cars were being dreamed up that sold for 5000 Dollars back then and go for 80.000 Euros in Sweden now (in good condition) and the economy was growing like crazy and employment was good. So I assumed tax rates would be really really low because the job creators were so busy and the middleclass was rocking.
Well turns out back in the day America had some of the highest taxation. The income tax went as high as 91% for the top bracket, that would give even the most socialist countries in Europe a stomach age. Capital gain tax went up to 35%. Now we are being told, high tax baaad, low tax good. However taxes have been low and things have not been so great. Now we are being told we just did not lower them enough.
So how do taxes really impact an economy? Do high taxes for the rich flush fresh capital back into the system without the inflation of the printing press?
Originally posted by peck420
reply to post by Indigo5
Sure seems like the advertised tax rate is meaningless doesn't it?
Oh, that's because it is.
Fiscal problems will continue until they throw Laffer's Curve out in respect to US taxation.edit on 30-11-2012 by peck420 because: (no reason given)
This has been thoroughly and repeatedly researched over 100 years to the point that it is not an idealogical or political debate.
If fact there is a .3 correlation shown between increasing corporate tax rates (both actual and effective tax rates) and GDP growth.
Capital flight to more tax friendly nations is short-term. Places like Ireland will drop tax rates to draw in foriegn capital when thier economy is struggling, but can't maintain those levels and recover.
Originally posted by Indigo5
See my post above. Increasing corporate rates isn't a direct boost to gov revenues.
Corps can either...keep profits or invest.
Increased corp tax rates incentivize corporations to re-invest (hiring and expansion) rather than reserve that money to be taxed as profit.
That hiring and expansion moves the money to the consumer, not the gov. What you get is an increasing long-term trend line in GDP as the economy picks up. Long-term less dependance on safety nets, welfare, unemployment etc. and the gov saves on expenses not revenue.edit on 30-11-2012 by Indigo5 because: (no reason given)
Originally posted by hezro
reply to post by Indigo5
This has been thoroughly and repeatedly researched over 100 years to the point that it is not an idealogical or political debate.
If fact there is a .3 correlation shown between increasing corporate tax rates (both actual and effective tax rates) and GDP growth.
Could you link to the statistics? I don't disagree with any of your conclusions, but I would like to see the numbers laid bare.
Furthermore, it does not appear lower corporate tax rates result in higher GDP.
Real GDP has trended down slightly since 1947, while corporate tax rates have declined significantly.
Obviously, there is more to the slowdown in the GDP growth trend than corporate taxes, but even when looking at year-over-year change in the tax rate there does not appear to be a boost to GDP.
The correlation between the year-over-year change in corporate tax rate and GDP is a weak, but surprisingly positive, .35. Since 1947, an increase in corporate tax rates has been positively correlated to GDP
I believe government spending is too high and taxes as well. This philosophical framework aside, I had to ask myself are corporations the best entities to target for tax cuts.
Originally posted by hezro
Capital flight to more tax friendly nations is short-term. Places like Ireland will drop tax rates to draw in foriegn capital when thier economy is struggling, but can't maintain those levels and recover.
Perhaps, but how long is short-term? Given the number of nations to which capital can migrate, can our economy stay strong long enough to benefit from the re-balancing? As is often repeated, the market can stay irrational longer than you can stay solvent. Though perhaps I overestimate the number of places for capital to fly to given the instability of many countries.