Several comments note that higher taxes just make people turn to other-than-monetary-forms of compensation and shelters, and economic activity is suppressed, so that the end result is, at best, a proportionally small net gain.
But, there is another reason raising taxes won’t help us, and that is because the Democrats still have a long wish list of things they want to spend your money on. Feeding the beast more only makes him hungrier.
Recent articles have shown that actual tax revenues have historically been at or below 20% of GDP for decades regardless of the tax rates. Whether the top bracket was 28% or 70%, the actual revenues collected stayed at or below 20% of GDP as shown in this CBO source. The graph shows tax revenues as a percentage of GDP since 1960. It has ranged from 17 to 20 percent over the entire period. Unfortunately, government spending has averaged well over the revenues for all that time so we’re now massively in debt.
That historical fact alone should finally disprove the idea of static analysis where increases in tax rates are automatically assumed to result in revenue increases because it doesn’t consider that behavior changes. Simply increasing tax rates on “the rich” (however they are defined) won’t result in any significant or lasting increase in revenue because people will adapt their behavior in result to the changes.
This year’s deficit is about $1.5 trillion or $1,500 billion. They damned near shut down the government over a “cut” of about $32 billion. You could completely close down the Department of Defense and you’d still have a deficit this year alone of about $700-800 billion. Something has to give and it won’t be pretty.
It won’t work. She used to many big words that have to many syllables. Here is my explanation of why tax hikes will hurt, not help, the economy. Feel free to pass it along to your liberal friends:
“The economy” is our name for the process of producing goods and services to sell. When the government raises taxes, that means everyone will have less money to buy goods and services, because they have to give more money to the government. Also, bosses will have less money to pay employees and hire new ones. So there will be less, not more jobs.
Note: your liberal friends might say something about how the government will just make more jobs — by which they mean government jobs. Tell them this: government jobs don’t count, as they are paid out of taxes; raising taxes, creating more government jobs, and then saying that is an improvement to the economy, is like saying that draining a pint of your own blood into a jar and then drinking it for dinner is the same thing as eating a nourishing meal.
Obama is on record for saying that even if tax hikes on capital gains did not increase revenues, he would be for it anyway on the grounds of fairness. The tax code is therefore seen for what it is, a device for social engineering.
The tax code is therefore seen for what it is, a device for social engineering.
Indeed, if the tax code was just information on how much various forms of income was taxed; it wouldn’t need to be 17,000 pages to explain.
One issue she left out is the “People hate paying taxes/Hauser’s Law” aspect.
One of the things I’d like to ask every single time the “We have lots of money, and we think we should be taxed more!” crowd starts talking is: Are you associated with a non-profit or personal/family corporation? And what does this company do, exactly, other than shelter your income?
I don’t want to pay more taxes. I think I pay enough. I tell my representative that all the time. I tell those who think I should pay more taxes to go perform a physiologically impossible act.
Anyone who wants to pay more money to the government is free to do so at any time. They can simply write a check to the Bureau of the Debt (or whatever the exact name is). I’ve read you can even use a credit card.
What they really want is to feel good about themselves with their posturing while not paying any more of their own money. No, they want more money to come from others.
With some 40 cents of every dollar in this year’s budget being borrowed, the government is clearly out of control. Before they come demanding more taxes, they need to prove they’ve actually cut spending to the greatest extent possible. Then and only then should we address tax increases.
Tax revenues and tax rates are two entirely different things as has been discussed here many times. Tax rates indicate how much of each additional dollar of income above a certain threshold goes to taxes. Tax revenues are the monies actually collected. As the CBO link I provided above shows, the percentage of the GDP actually collected in revenues has remained remarkably stable for the past 50 years, ranging from about 17 to 20 percent of GDP. During that same time, the highest tax rates ranged from a low of 28% to a high of over 70%. There seems very little correlation with raising rates and raising revenue.
History has shown that lowering rates can stimulate the economy. Back in the 1980s when the highest rates were significantly cut, high income earners changed their focus from sheltering income to generating more income. IRS data proves that the percentage of total income tax revenues paid by the top 10%, 5% and 1% of wage earners has increased. Their tax rates are lower but they’re paying more taxes, so in effect they’ve had a tax increase. Raising the highest tax rates will just get people to return to sheltering income. This doesn’t help the economy and will result in lower revenues. To think that simply raising tax rates will result in a lot more revenues is ignorant and naive. History proves otherwise.
The bulk of government spending draws money away from professions that create or maintain wealth and toward professions that do neither.
Note that it is not only liberals pushing higher taxes, but a lot of businesses seem to be as well. While my client prohibits linking to their site, several writers at Aviation Week have been pushing for higher taxes, as opposed to even the tiniest nick in the defense budget. It is one of the reasons I am letting my subscription lapse next month. I have to cut back in order to keep my 35 mpg Ford Focus fueled, and subscriptions to magazines that live in a fantasy world aren’t worth it anymore.
It just pure marxist mentality of class warfare. It’s not even about redistribution. It’s about envy and control. In Obamaworld, 100% taxation is the goal and will work because they will give it back fair. You just have to trust them with complete power over your lives. You’re not against fair are ya?
Don, what you’re seeing is a manifestation of crony capitalism. They want to protect their businesses at all cost and don’t care who gets hurt so long as they get theirs. They want the gravy train of fat cost-plus contracts to go on forever and refuse to accept the idea that we can’t afford it any more.
Reality is slowing beginning to come into focus for a lot of people and they don’t like what they see. The results won’t be pretty.
Heard this on the radio, the other day, and I thought it was apt:
Taxing productive people, and funneling the money to people who choose to be non-productive, is kind of like taking a grade or so off of a hard working student’s GPA, and giving it to a screw off who parties and gets D’s and F’s.
Several comments note that higher taxes just make people turn to other-than-monetary-forms of compensation and shelters, and economic activity is suppressed, so that the end result is, at best, a proportionally small net gain.
But, there is another reason raising taxes won’t help us, and that is because the Democrats still have a long wish list of things they want to spend your money on. Feeding the beast more only makes him hungrier.
Recent articles have shown that actual tax revenues have historically been at or below 20% of GDP for decades regardless of the tax rates. Whether the top bracket was 28% or 70%, the actual revenues collected stayed at or below 20% of GDP as shown in this CBO source. The graph shows tax revenues as a percentage of GDP since 1960. It has ranged from 17 to 20 percent over the entire period. Unfortunately, government spending has averaged well over the revenues for all that time so we’re now massively in debt.
That historical fact alone should finally disprove the idea of static analysis where increases in tax rates are automatically assumed to result in revenue increases because it doesn’t consider that behavior changes. Simply increasing tax rates on “the rich” (however they are defined) won’t result in any significant or lasting increase in revenue because people will adapt their behavior in result to the changes.
This year’s deficit is about $1.5 trillion or $1,500 billion. They damned near shut down the government over a “cut” of about $32 billion. You could completely close down the Department of Defense and you’d still have a deficit this year alone of about $700-800 billion. Something has to give and it won’t be pretty.
It won’t work. She used to many big words that have to many syllables. Here is my explanation of why tax hikes will hurt, not help, the economy. Feel free to pass it along to your liberal friends:
“The economy” is our name for the process of producing goods and services to sell. When the government raises taxes, that means everyone will have less money to buy goods and services, because they have to give more money to the government. Also, bosses will have less money to pay employees and hire new ones. So there will be less, not more jobs.
Note: your liberal friends might say something about how the government will just make more jobs — by which they mean government jobs. Tell them this: government jobs don’t count, as they are paid out of taxes; raising taxes, creating more government jobs, and then saying that is an improvement to the economy, is like saying that draining a pint of your own blood into a jar and then drinking it for dinner is the same thing as eating a nourishing meal.
Obama is on record for saying that even if tax hikes on capital gains did not increase revenues, he would be for it anyway on the grounds of fairness. The tax code is therefore seen for what it is, a device for social engineering.
The tax code is therefore seen for what it is, a device for social engineering.
Indeed, if the tax code was just information on how much various forms of income was taxed; it wouldn’t need to be 17,000 pages to explain.
One issue she left out is the “People hate paying taxes/Hauser’s Law” aspect.
http://ace.mu.nu/archives/315066.php
One of the things I’d like to ask every single time the “We have lots of money, and we think we should be taxed more!” crowd starts talking is: Are you associated with a non-profit or personal/family corporation? And what does this company do, exactly, other than shelter your income?
I don’t want to pay more taxes. I think I pay enough. I tell my representative that all the time. I tell those who think I should pay more taxes to go perform a physiologically impossible act.
Anyone who wants to pay more money to the government is free to do so at any time. They can simply write a check to the Bureau of the Debt (or whatever the exact name is). I’ve read you can even use a credit card.
What they really want is to feel good about themselves with their posturing while not paying any more of their own money. No, they want more money to come from others.
With some 40 cents of every dollar in this year’s budget being borrowed, the government is clearly out of control. Before they come demanding more taxes, they need to prove they’ve actually cut spending to the greatest extent possible. Then and only then should we address tax increases.
Tax revenues and tax rates are two entirely different things as has been discussed here many times. Tax rates indicate how much of each additional dollar of income above a certain threshold goes to taxes. Tax revenues are the monies actually collected. As the CBO link I provided above shows, the percentage of the GDP actually collected in revenues has remained remarkably stable for the past 50 years, ranging from about 17 to 20 percent of GDP. During that same time, the highest tax rates ranged from a low of 28% to a high of over 70%. There seems very little correlation with raising rates and raising revenue.
History has shown that lowering rates can stimulate the economy. Back in the 1980s when the highest rates were significantly cut, high income earners changed their focus from sheltering income to generating more income. IRS data proves that the percentage of total income tax revenues paid by the top 10%, 5% and 1% of wage earners has increased. Their tax rates are lower but they’re paying more taxes, so in effect they’ve had a tax increase. Raising the highest tax rates will just get people to return to sheltering income. This doesn’t help the economy and will result in lower revenues. To think that simply raising tax rates will result in a lot more revenues is ignorant and naive. History proves otherwise.
The bulk of government spending draws money away from professions that create or maintain wealth and toward professions that do neither.
Note that it is not only liberals pushing higher taxes, but a lot of businesses seem to be as well. While my client prohibits linking to their site, several writers at Aviation Week have been pushing for higher taxes, as opposed to even the tiniest nick in the defense budget. It is one of the reasons I am letting my subscription lapse next month. I have to cut back in order to keep my 35 mpg Ford Focus fueled, and subscriptions to magazines that live in a fantasy world aren’t worth it anymore.
It just pure marxist mentality of class warfare. It’s not even about redistribution. It’s about envy and control. In Obamaworld, 100% taxation is the goal and will work because they will give it back fair. You just have to trust them with complete power over your lives. You’re not against fair are ya?
Don, what you’re seeing is a manifestation of crony capitalism. They want to protect their businesses at all cost and don’t care who gets hurt so long as they get theirs. They want the gravy train of fat cost-plus contracts to go on forever and refuse to accept the idea that we can’t afford it any more.
Reality is slowing beginning to come into focus for a lot of people and they don’t like what they see. The results won’t be pretty.
Heard this on the radio, the other day, and I thought it was apt:
Taxing productive people, and funneling the money to people who choose to be non-productive, is kind of like taking a grade or so off of a hard working student’s GPA, and giving it to a screw off who parties and gets D’s and F’s.