How are we going to pay for all this shit?

[Texas Contrarian]

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Earlier I saw a little back-and-forth between WTF and Lusylad on the "Laffer curve," what the "sweet spot" that maximizes revenue might be, and a few other things.

(Way too many posts for me to go back, find them, and quote them, so I'll just toss in a couple of random comments.)

First, I think the revenue-maximizing rate and the optimal rate are different, since the need for revenue needs to be balanced against the desire to impose a high enough rate that an excessive level of deadweight loss occurs.

https://en.wikipedia.org/wiki/Deadweight_loss

A good example is the capital gains tax. Many students of the issue believe that the revenue maximizing rate (which might be around 28%, according to a number of studies) is higher than the rate beyond which some "lock-in" effects begin to occur. If investors are disincentivized to sell an asset and redeploy the capital to a "higher and better use" in an investment with better prospects, the whole economy may be burdened, not just the individual investor.

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[lustylad]

Originally Posted by WTF

So may I ask wtf was this question in relationship to Laffer's concept?

I could have just as easily asked wtf is this nonsense about supporting inequality. In fact I sorta did in a nice way...when instead of making fun of you mixing the concept of Laffer's Curve and inequality...I simply asked you to give me a specific example of wtf it was you were trying to get at with that silly ass question.

The only thing I was getting at was how you are stuck in a 1981 time warp superficially mis-representing the views of a third-rate economist. When anyone asks you to elaborate on your superficial mis-representations, you duck and deflect and run for cover, showing us what a complete charlatan you are.

Now if someone like tiny or CM cares to have an intelligent conversation about how a steeply progressive income tax system incentivizes govt to grow the economy in a way that shovels income gains to the highest earners, I'd be happy to participate.

But it's obvious that you've forfeited all credibility on this or any other point having to do with economics and need to just stfu now.

[Texas Contrarian]

Originally Posted by lustylad

Now if someone like tiny or CM cares to have an intelligent conversation about how a steeply progressive income tax system incentivizes govt to grow the economy in a way that shovels income gains to the highest earners, I'd be happy to participate.

OK, I'll play! There's a whole lot to unpack in that area of discussion, and obviously a lot of moving parts.

A fun question to ask our progressive friends:

Did the 1980s deficits, in any significantly material sense, result from tax cuts for the wealthy? (For that matter, after all the tax law changes during the Reagan era were passed, were taxes on the wealthy raised at all? And if your answer is "yes," are you sure?)

And just to show that I'm a truly "bipartisan" sort of guy, here's a question I've occasionally asked my conservative and libertarian friends:

"Do you remember when Jimmy Carter took aggressive action against the Soviet Union during the Cold War?"

Yes, seriously. That usually elicited a facial expression that said, "Huh?? What??" (But after my explanation, and tracing ensuing developments over the next five years or so, they agreed agreed with me!)

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[WTF]

Originally Posted by CaptainMidnight

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First, I think the revenue-maximizing rate and the optimal rate are different, since the need for revenue needs to be balanced against the desire to impose a high enough rate that an excessive level of deadweight loss occurs.



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I disagree here...because the rate is fluid and when I say fluid, I'm talking instantly, The r-mr would , ideally frequently cross the optimum
rates path or at least closely parallel.

This from your link: (which just amplifies Laffer's point.)


The varying deadweight loss from a tax also affects the government's total tax revenue. Tax revenue is represented by the area of the rectangle between the supply and demand curves. When a low tax is levied, tax revenue is relatively small. As the size of the tax increases, tax revenue expands. However, when a much higher tax is levied, tax revenue eventually decreases. The higher tax reduces the total size of the market; Although taxes are taking a larger slice of the "pie," the total size of the pie is reduced. Just as in the nail example above, beyond a certain point, the market for a good will eventually decrease to zero.[3]

[lustylad]

Originally Posted by CaptainMidnight

.

Earlier I saw a little back-and-forth between WTF and Lusylad on the "Laffer curve," what the "sweet spot" that maximizes revenue might be, and a few other things.

(Way too many posts for me to go back, find them, and quote them, so I'll just toss in a couple of random comments.)

First, I think the revenue-maximizing rate and the optimal rate are different, since the need for revenue needs to be balanced against the desire to impose a high enough rate that an excessive level of deadweight loss occurs.

https://en.wikipedia.org/wiki/Deadweight_loss

A good example is the capital gains tax. Many students of the issue believe that the revenue maximizing rate (which might be around 28%, according to a number of studies) is higher than the rate beyond which some "lock-in" effects begin to occur. If investors are disincentivized to sell an asset and redeploy the capital to a "higher and better use" in an investment with better prospects, the whole economy may be burdened, not just the individual investor.

Yes, this is a point you and I have made here many times.

There are lots of taxes out there - federal/state/local income taxes, payroll taxes, sales taxes, capital gains taxes, etc. Only a simple-minded simpleton would speak of revenue maximization (or optimization) without reference to the specific tax, since there is such a wide variety out there, like orchids.

And yes, there are very real trade-offs to consider. Seeking to find some elusive, imaginary, revenue-maximizing "sweet spot" is a fool's errand if it ignores the impact on growth, inequality, and efficient capital allocation. Only a simple-minded simpleton would fail to see and acknowledge this!

Some of those simple-minded simpletons can't stop ranting against imaginary straw men called "supply siders" who supposedly claim any & every tax cut ever enacted since the time of Adam & Eve has "paid for itself" by unleashing more revenues than it cost.

But of course, careful readers of eccie know that you, tiny and I have only suggested this is often true for capital gains taxes, and we have repeatedly rolled out historical data and graphs to support our point.

How many times do we have to repeat ourselves to be heard above the constant, annoying din of the simple-minded simpletons who spam this forum with their ignorant generalizations?

[Texas Contrarian]

Originally Posted by WTF

I disagree here...because the rate is fluid and when I say fluid, I'm talking instantly, The r-mr would , ideally frequently cross the optimum
rates path or at least closely parallel.

This from your link: (which just amplifies Laffer's point.)


The varying deadweight loss from a tax also affects the government's total tax revenue. Tax revenue is represented by the area of the rectangle between the supply and demand curves. When a low tax is levied, tax revenue is relatively small. As the size of the tax increases, tax revenue expands. However, when a much higher tax is levied, tax revenue eventually decreases. The higher tax reduces the total size of the market; Although taxes are taking a larger slice of the "pie," the total size of the pie is reduced. Just as in the nail example above, beyond a certain point, the market for a good will eventually decrease to zero.[3]

What I would point to from the Wikipedia entry (which I think covers this issue pretty well) is that although deadweight loss is low when the tax rate is low, it in fact can rise faster than the tax when the rate is headed into a sub-optimal range.

The Wikipedia snippet to which I am referring:

"How deadweight loss changes as taxes vary:

Taxes may be changed by the government or policymakers at different levels. For instance, when a low tax is levied, the deadweight loss is also small (compared to a medium or high tax). An important consideration is that the deadweight loss resulting from a tax increases more quickly than the tax itself; the area of the triangle representing the deadweight loss is calculated using the area (square) of its dimension. Where a tax increases linearly, the deadweight loss increases as the square of the tax increase. This means that when the size of a tax doubles, the base and height of the triangle double. Thus, doubling the tax increases the deadweight loss by a factor of 4.

The varying deadweight loss from a tax also affects the government's total tax revenue. Tax revenue is represented by the area of the rectangle between the supply and demand curves. When a low tax is levied, tax revenue is relatively small. As the size of the tax increases, tax revenue expands. However, when a much higher tax is levied, tax revenue eventually decreases. The higher tax reduces the total size of the market; Although taxes are taking a larger slice of the "pie," the total size of the pie is reduced. Just as in the nail example above, beyond a certain point, the market for a good will eventually decrease to zero.[3]"

[End of excerpt]

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[WTF]

Originally Posted by lustylad

Yes, this is a point you and I have made here many times.

There are lots of taxes out there - federal/state/local income taxes, payroll taxes, sales taxes, capital gains taxes, etc. Only a simple-minded simpleton would speak of revenue maximization (or optimization) without reference to the specific tax, since there is such a wide variety out there, like orchids.

Jesus...it is a concept!!!!

The r-mr is the artificial rate politician set on a multitude of taxes. The optimal tax rate fluctuates constantly between all tax rates! Nobody knows wtf it is at any one moment because of all the factors we know and don't know constantly changing!

So your continued chest beating is you bragging about a concept you seem to not fully grasp.

Nobody on the entire planet can nail down the most efficient/optimum tax rate.

We guess...and then we analyze the results and then guess about the reason such and such did such and such and guess what...we guess more.

The most efficient tax rate is a concept....like God.

But one fucking thing for sure...you haven't grasped the concept as of yet.

[lustylad]

I'm beginning to grasp it now. Searching for your imaginary "sweet spot" is as pointless as Olivia Howard trying to find your dick!

Your problem (or one of your many problems) is that you never support a tax cut of any kind anywhere, but you are always ready to endorse any tax increase that comes down the pike.

So stop pretending you are fair or balanced or just innocently looking for a sweet spot. You're a partisan hack. And a one-trick pony who only wants to balance the budget by raising taxes to levels that are not only sub-optimal and self-defeating - but damaging and destructive to the private sector, which grows the economy and without which there would be nothing for government to confiscate in the first place.

[WTF]

9t

Originally Posted by lustylad

I'm beginning to grasp it now. Searching for your imaginary "sweet spot" !

It is not imaginary like your Economics degree.

That is your problem it seems...you think because you can not figure the exact number , then it does not exist!!

What a fucking ego, poor fella.

[WTF]

Originally Posted by lustylad

Your problem (or one of your many problems) is that you never support a tax cut of any kind anywhere, but you are always ready to endorse any tax increase that comes down the pike.

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I would support them cutting my taxes to Zero....Hell throw in a transfer of wealth Rebate!


I'll support a tax cut if we balance the budget and are running surpluses....unless of course those surpluses are meant for our retirement. Then I'd recommend continuing on.

If we wanted to spend more on Defense...I'd recommended a funding source.

Are you sure you are a conserative....you sound like a welfare queen who does not want to pay taxes, yet wants to use roads and the like.

[WTF]

Originally Posted by lustylad

So stop pretending you are fair or balanced or just innocently looking for a sweet spot. You're a partisan hack. And a one-trick pony who only wants to balance the budget by raising taxes to levels that are not only sub-optimal and self-defeating - but damaging and destructive to the private sector, which grows the economy and without which there would be nothing for government to confiscate in the first place.

Did you say all that in one breath? Calm the fuck down.

Your analysis of me is incorrect.

Quit calling names and let's get back to this concept you are having so much trouble with.

Once you grasp that, you'll understand that I'm for raising or lowering the taxes. I'm for optimum/efficient tax rates.

[WTF]

Originally Posted by CaptainMidnight

s.

A fun question to ask our progressive friends:

Did the 1980s deficits, in any significantly material sense, result from tax cuts for the wealthy? (For that matter, after all the tax law changes during the Reagan era were passed, were taxes on the wealthy raised at all? And if your answer is "yes," are you sure?)

And just to show that I'm a truly "bipartisan" sort of guy, here's a question I've occasionally asked my conservative and libertarian friends:

"Do you remember when Jimmy Carter took aggressive action against the Soviet Union during the Cold War?"



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Answer 1... idk. But I am got reducing a 70% tax. Although at the time I was more worried about the price of beer!

Answer 2....He drew the Soviets into their own Vietnam.

So go ahead Captain, correct me if I'm wrong!

[bambino]

Biden’s Christmas Gift To America: Inflation, Debt, And Recession

READ: https://thefederalist.com/2021/12/20...and-recession/ • @FDRLSTT

[eccieuser9500]

[Tiny]

Which is why I made a lot of trips to Ciudad Acuna.

Mystery 1:

Originally Posted by lustylad

Now if someone like tiny or CM cares to have an intelligent conversation about how a steeply progressive income tax system incentivizes govt to grow the economy in a way that shovels income gains to the highest earners, I'd be happy to participate.

Mystery 2:

Originally Posted by lustylad

You said you want the federal government to maximize its tax revenues. So do you support policies that will increase income/wealth inequality?

Mystery 3:

Originally Posted by CaptainMidnight

Did the 1980s deficits, in any significantly material sense, result from tax cuts for the wealthy? (For that matter, after all the tax law changes during the Reagan era were passed, were taxes on the wealthy raised at all? And if your answer is "yes," are you sure?)

Mystery 4:

Originally Posted by CaptainMidnight

And just to show that I'm a truly "bipartisan" sort of guy, here's a question I've occasionally asked my conservative and libertarian friends:

"Do you remember when Jimmy Carter took aggressive action against the Soviet Union during the Cold War?"

You throw out these questions, all of which are very intriguing, BUT YOU DON'T GIVE THE ANSWERS.

I suspect WTF has correctly solved Mystery 4, at least partly.

And as to Mystery 3, I've read that changes to the tax system during the Reagan Administration actually made the income tax more progressive. The top rate went from 70% to 28%, but loopholes were removed and upper income taxpayers had more motivation to make money. And less motivation to invest in tax shelters. This is a good piece:

http://www.house.gov/jec/fiscal/tx-g...t/reagtxct.htm

What Lusty Lad may be getting at with Mystery 2 is that the easiest way to raise a butt load of money is with something like a VAT or sales tax, which could increase income/wealth inequality, and actually disadvantage lower income earners, depending on how you spend the money you raise. And so far as the income tax is concerned, if you milk middle income tax payers for every dime you can, you're going to raise a lot more money than by milking the upper income earners, who will just stop recognizing income (see Mystery 3 above).

The MOST intriguing to me in Mystery 1. I'd love to hear LL's views on that. Actually I'd love to hear CM's and LL's views on all the questions they've raised.