Competent vs ideology. Practical vs ideology. What works at the lowest cost vs ideology. And so on. Everything vs ideology. The majority of the country doesn’t care about ideology, especially from those on the extreme right and left who control both parties. They just want good value for their money, and neither side seems willing to give that.

Happy days are here again for the Republicans, or so you might think. Barack Obama’s popularity rating is sagging well below 50%. Passing health-care reform has done nothing to help him; most Americans believe he has wasted their money—and their view of how he is dealing with the economy is no less jaded. […] Sixty per cent of Americans think the country is on the wrong track.
[…]
The Republicans at the moment are less a party than an ongoing civil war (with, from a centrist point of view, the wrong side usually winning). There is a dwindling band of moderate Republicans who understand that they have to work with the Democrats in the interests of America. There is the old intolerant, gun-toting, immigrant-bashing, mainly southern right which sees any form of co-operation as treachery, even blasphemy. And muddying the whole picture is the tea-party movement, a tax revolt whose activists (some clever, some dotty, all angry) seem to loathe Bush-era free-spending Republicans as much as they hate Democrats. Egged on by a hysterical blogosphere and the ravings of Fox News blowhards, the Republican Party has turned upon itself.
[…]
As for ideas, the Republicans seem to be reducing themselves into exactly what the Democrats say they are: the nasty party of No. They may well lambast Mr Obama for expanding the federal deficit; but it is less impressive when they are unable to suggest alternatives.
[…]
Out of power, a party can get away with such negative ambiguity; the business of an opposition is to oppose. The real problem for the political right may well come if it wins in November. Just as the party found after it seized Congress in 1994, voters expect solutions, not just rage.




  1. ECA says:

    Thomas,

    100% for both corps and Cits…LOVE IT..

    It means everything is PAID FOR.
    WE work, and dont need to care anymore..about bills, rent,food, clothes,… ALL supplied when you WANT IT.

    But it wouldnt be that way.
    CORPS would force the GOV to pay premium prices on IMPORTS, so that could make Illegit profits.. Even regulating prices/costs wouldnt give the GOV. any idea of the COST of goods(they couldnt tell COST over SRP if there brains were 6 grade level).
    The problem we have is INBRED politics. Its those that have been in gov service for 20-40 years, THEN a pres that was there most of that TIME, and was elected to FOLLOW THE LINE.

    Want to fix it…CLEAN HOUSE, ALL the way down.
    The same people have been running it sense the BEFORE the 40’s. When the corps gained POWER during WAR. ASK about the SCRAP price of goods DUMPED after veitnam.. When shipped, they were Valued at $0 on return by the CORPS, and were DUMPED at sea. Think about all the JEEPS/PLANES/electronics that could have been salvaged and used in Civilian times.

  2. Mr. Fusion says:

    #99, Thomas,

    The liberal says, “If we make the tax rate 100%, tax revenue will be INFINITE!!!!!”
    The Laffer Curve, as promulgated by the right, is built upon false premises. Simply put, it is wrong. And yes, we realize that you are being facetious about the 100%. You might want to read a little of what Dick Stockton, Reagan’s budget chief, had to say about it. If you don’t believe that Laffer’s theory has failed, then you are in denial as to America’s National Debt.

    Is no one taught the concept of a mathematical CURVE anymore? Proof that economics and mathematics are simply not taught often enough in schools.
    Mathematics are a pure change. It is all perfect definition, form, and structure. Economics are a social science. It is widely known in all social sciences that there are no rules, only trends. But I guess they don’t teach that in your school.

  3. MikeN says:

    Actually, it is basic math. If there are two points on a curve that have the same y value, then either the curve is flat, or it goes up and then goes down, or it goes down and then goes up.

    So if the amount of revenue raised is equal at any two points, such as 0 and 100%, then there is a point on the curve at which revenues will go down with a tax rate increase.

  4. bobbo, libertarianism fails when its Dogma blinds them to the rising threat of Corporations that can only be held in check by Government thru the will of the people says:

    I understand the Laughing Curve as pseudo science that there is a sweet spot of taxation that maximizes both Government income thru Taxation as well as Private Sector productivity thru growth and productivity.

    The failure of the concept comes that it is used by supply siders to assume that any cut in taxes will produce positive results: ie==totally ignoring the theory they base their claims on.

    Just like liebertardianism.

  5. Mr. Fusion says:

    #102, Lyin’ Mike,

    Since I last regularly visited DU, you haven’t changed much. I guess you also don’t think there is a National Debt.

    Mathematics require defined, finite components. Economics can’t. Absolutes don’t work in any social setting.

    Actually, it is basic math. If there are two points on a curve that have the same y value, then either the curve is flat, or it goes up and then goes down, or it goes down and then goes up.

    There may be several explanations of why there are two similar y points on a graph. It is simply wrong to make a mathematical statement without first outlining the conditions. For example, (2+6)=y, so does (3+5)=y, and (10-2)=y as does (2*4)=y and (48/7)=y.

    BTW, if the “curve” is flat, it isn’t a curve.

    So if the amount of revenue raised is equal at any two points, such as 0 and 100%, then there is a point on the curve at which revenues will go down with a tax rate increase.

    Another fail. The amount of revenue is a data point. In order to be compared or enumerated you need to produce your comparison, you didn’t.

    The Laffer Curve compares the amount of revenue that may be raised by a government through taxation, etc., compared to how much of the economy is lost to the underground (taxless) economy. As the tax rate rises, there is more inclination to hide income by failing to declare income (underground economy) or hiding income (offshore accounts in tax shelter countries), or just refusing to pay taxes (civil disobedience).

    While the theory is nice it fails to account for collection efforts, moral persuasion, alternatives, tax shelters, mobility, national demands, and other flexible conditions. For example, even though Bush II lowered taxes to the lowest rates in decades, many people continued to hide money in offshore accounts (see USB and their problems with the IRS) and the underground economy still hasn’t evaporated.

    The argument that revenues increased hasn’t been proven. That argument is based upon historical data from recessions using lower taxes as a spur to the economy. Of course government revenue falls during a recession and increases during a recovery. That doesn’t prove the recovered economy revenues would be more than pre-recession revenue. The Clinton Administration can be compared to the Bush II Administration’s lower taxes to disprove the idea.

  6. Pissy says:


    …And I guess the Democrats, aka “Enlightened Liberals” are somehow better?!

    GIVE ME A BREAK!!!

    Someone please hand that “objective reporter” some hemlock!

  7. Anon says:

    As I said, Dems and their mystical, magical, thinking.

  8. Mr. Fusion says:

    Why is it the right wing nuts can only parrot “braaaa, stupid liberals, stupid liberals”. Don’t any of them have any ideas?

  9. Guyver says:

    70, Bobbo,

    a plan with no substance is not a plan. If you think that Republican Response is subject to consideration, you are being foolish but I think you are just being disingenuous. The Repugs prove themselves to be without ideas==at least on healthcare, I didn’t check the rest. I assume they are equally vacuous and a lie. You do realize a lie is not a plan?

    It’s real simple. The article’s author said the GOP hasn’t suggested alternatives. I said that was not true and you wanted proof. Now that I’ve provided it, you want to split hairs over what qualifies as an alternative. Why quibble?

    Look, the fact is they suggested alternatives. You don’t like them and that’s fine. But the bottom line is the author is not factually correct. I was merely pointing out what should otherwise be obvious but instead you want to split hairs.

  10. Mr. Fusion says:

    #108, Guyver,

    You didn’t give any alternatives. Your suggestions are either already available or further erosion of State authority. They do absolutely nothing about the ever increasing cost health care.

  11. Thomas says:

    From #101
    The Laffer Curve, as promulgated by the right, is built upon false premises.

    Could you be more ignorant? The concept that the optimal tax rate is measured on a curve is built on the fundamental rules of economics and mathematics. Just as 100% tax rate is unsustainable, so is 0% tax rate. How much money do you think the government would make if it made the tax rate 100%? I’ll wait. For you, I guess I’ll have to wait longer…..Done? Answer: ZERO. If working 40 hours a week would net you the same as doing nothing, doing nothing (or something else) would be in your self interest.

    Btw, I was being as facetious about 100% tax rate as the original poster was about a 0% tax rate. Both ideas are ridiculous and ignore reality.

    From #104

    The amount of revenue is a data point.

    Actually, Mike N is absolutely correct. The amount of tax revenue can be measured on a curve in comparison to the tax rate. At some point on the curve, raising taxes will reduce tax revenue and lowering taxes will reduce tax revenue. The given amount of tax revenue for a given tax rate is a data point.

    As the tax rate rises, there is more inclination to hide income by failing to declare income (underground economy) or hiding income (offshore accounts in tax shelter countries), or just refusing to pay taxes (civil disobedience)

    Said like a true tree-hugging, economically ignorant liberal; which is to say that you are completely wrong. When the tax rate goes up, the return on tax free investments becomes more attractive than the return less taxes paid on taxable investments. The result is that the wealthy put more of their money in LEGITIMATE investments which yield less tax revenue but have a higher rate of return than taxable investments less the tax that would be owed. In short, when that tipping point hits, the government loses a significant amount of tax revenue due to legitimate tax avoidance not evasion. Since the wealth pay about 90% of the tax in the country, the effect on the tax revenue is significant but does not happen overnight. Given that there are penalties for moving between various types of investments, the change takes a year or two. Let’s see what the GAO says about tax revenue this year. Perhaps the tax rate was too low. We’ll find out.

  12. Mr. Fusion says:

    #110, Thomas,

    Once again, you show yourself less than enlightened.

    # 110 Thomas said, on June 15th, 2010 at 6:34 pm

    From #101
    >The Laffer Curve, as promulgated by the right, is built upon false premises.”

    Could you be more ignorant? The concept that the optimal tax rate is measured on a curve is built on the fundamental rules of economics and mathematics.

    You didn’t address my point at all. Those on the right continue to demand ever lower taxes and use the rational of the Laffer Curve as justification.

    “The amount of revenue is a data point.”

    Actually, Mike N is absolutely correct. The amount of tax revenue can be measured on a curve in comparison to the tax rate. At some point on the curve, raising taxes will reduce tax revenue and lowering taxes will reduce tax revenue. The given amount of tax revenue for a given tax rate is a data point.

    Nope. Wrong again. The amount of revenue collected is a data point. It is a single piece of data. When you change the parameters, then you end up with multiple data points. One data point is just that, a data point. Multiple points are just that, multiple points that may be plotted and interpreted. So until you have multiples, you only have one data point.

    On any graph, if you can only plot the extremes of 0% and 100% then you have no idea of anything ion between. The line may be flat or curved. (And remember, the degree of any curve is related to the scaling of the graph.)

    “As the tax rate rises, there is more inclination to hide income by failing to declare income (underground economy) or hiding income (offshore accounts in tax shelter countries), or just refusing to pay taxes (civil disobedience)”

    Said like a true tree-hugging, economically ignorant liberal; which is to say that you are completely wrong. When the tax rate goes up, the return on tax free investments becomes more attractive than the return less taxes paid on taxable investments. The result is that the wealthy put more of their money in LEGITIMATE investments which yield less tax revenue but have a higher rate of return than taxable investments less the tax that would be owed.

    Again, nope. It is not the “legitimate” investments that drive the Laffer Curve. “Legitimate” investments are a social aspect of government policy and are always designed to encourage investment in areas where it might not be otherwise. It is the illegitimate and thus illegal economy that justifies the Laffer Curve.

    The same with the legitimate, high risk / high payoff investments, illegal transactions in the underground economy are related to 1) the risk of being caught, 2) the degree of punishment, 3) the rate of return. Thus, I can pay our baby sitter less but not give her a receipt. Now she doesn’t pay tax on her income but I don’t write it off my income. The risk is minimal as I won’t be reporting her, her punishment would be the amount owed plus a small fine, and she doesn’t have to keep all her receipts, file a return, or pay maybe another $1,000/yr tax.

    The baby sitter example will not file taxes at all. But the guy that paves my driveway will be thinking. I could pay him cash too. Only his risk of being caught is higher. He has materials and helpers to pay. They will most likely have to report some income. Plus he has equipment he needs to explain. If he is caught his fine would be more severe and could end up being the loss of some equipment and license. A repeat offender could end up doing jail time. His rate of return varies with the amount of taxes compared to how he feels about jail and losing his business.

    The higher the tax rate, the higher the rate of return on the risk of not paying taxes. THAT is the Laffer Curve. True that 0% is an extreme, but that is the amount of tax the tea baggers want to pay.

  13. Thomas says:

    You didn’t address my point at all.

    Frankly, no. You are ignoring the point. You are the one that dismissed the concept of the optimal tax rate being measured on a curve. Do you accept that concept or not? Until we get past that, there is no point in even discussing potential policy decisions that might be made based on that concept.

    The amount of revenue collected is a data point. It is a single piece of data.

    You write much but say little. This entire paragraph is meaningless drivel with respect to the discussion.

    On any graph, if you can only plot the extremes of 0% and 100% then you have no idea of anything ion between. The line may be flat or curved. (And remember, the degree of any curve is related to the scaling of the graph.)

    Clearly mathematics is not your strong suit. If the amount of tax revenue received were measured on a straight line from 0% to 100%, it would mean, depending on the slope of the line, that increasing or decreasing would *always* affect tax revenue in the same way. For example, suppose that each percentage increase in tax rate increases tax revenue. With a straight line, it would mean that we should set the tax rate to 100% because that will provide the maximum amount of revenue. However, that is clearly not true. At some point, increasing the tax rate results in diminishing returns until we hit a point where the benefit received from the next increase is zero. If we continue to increase the tax rate past the point of diminishing returns, it means that each additional increase in tax rate provides less tax revenue. That means it MUST be measured on a curve. Now, we can talk all day about the exact shape of the curve or where we are on the curve, but those are entirely orthogonal to the concept that it is a curve. These are fundamental concepts of economics.

    It is the illegitimate and thus illegal economy that justifies the Laffer Curve…

    Your entire line of thinking is complete tin-foil-hat bullshit. By that definition nothing Congress every does regardless of motivation could ever in any way affect the economy because it is ruled by this vaporous illegal economy. By your logic, Ms. Kerry has a 12% tax rate because she’s stuffing her money into illegal offshore investments.

    The wealthy generally find ways to pay less tax by:
    A. Putting their money in tax-free investments
    B. Funneling their money through businesses which only pay taxes on profit.

    The way to increase tax revenue is to find ways of encouraging the wealthy to invest in taxable investments.

    The higher the tax rate, the higher the rate of return on the risk of not paying taxes.

    What you are suggesting here is yet another concept that liberals can never seem to grasp: supply and demand. To a legitimate investor, a given investment is evaluated on its benefit-cost. If the cost is higher than the benefit because of taxes, the investor will look elsewhere. Legitimate investors will move their money into investments that are profitable. If the tax rate causes a given investment to not be profitable, they will either find a legal way of lowering cost by moving the “ownership” of the investment to a proxy like a company or choose a different investment. Loopholes and avoidance are not illegal. The overwhelming majority of the wealthy are not criminal investors trying to screw the government by moving investments offshore. They hire armies of lawyers to find ways of legitimately making the most money for their investments and eventually, if the tax rate is high enough and the loopholes are gone, they’ll put their money in tax free investments.

    The Laffer Curve concepts are result of these fundamental behaviors of investors. Investors will move money to those investments that make them the most profit. At some point, increasing the tax rate will lower revenue because the wealthy will move their money into investments that are not taxable. Are we at that point on the curve? Maybe not. Maybe we can increase the tax rate and increase tax revenue and if so, fine. But if the tax revenue drops, don’t go looking to excuses that people have more than enough and we need to increase it yet further.

    I come back to the original premise: just 0% is ridiculous, so is 100%.

  14. Mr. Fusion says:

    You are ignoring the point. You are the one that dismissed the concept of the optimal tax rate being measured on a curve. Do you accept that concept or not?

    Yup. You’re ignoring the point.

    “The amount of revenue collected is a data point. It is a single piece of data.”

    You write much but say little. This entire paragraph is meaningless drivel with respect to the discussion.

    Sorry that is over your head and beyond your comprehension. Go back and look at where that came from.

    Clearly mathematics is not your strong suit. If the amount of tax revenue received were measured on a straight line from 0% to 100%, it would mean, depending on the slope of the line, that increasing or decreasing would *always* affect tax revenue in the same way.

    Clearly you don’t understand either basic math or basic English. You may not project any plots in between because you only know the extremes.

    Your entire line of thinking is complete tin-foil-hat bullshit. By that definition nothing Congress every does regardless of motivation could ever in any way affect the economy because it is ruled by this vaporous illegal economy. By your logic, Ms. Kerry has a 12% tax rate because she’s stuffing her money into illegal offshore investments.

    YOU miss the point of the Laffer Curve. Congress may determine and set social policy. Included in social policy is fiscal policy. What is NOT part of Congresses intention, and is the major influence on the Laffer Curve, is the illegal economy. At any given time, the illegal economy is many times greater than any tax free or low tax investment.

    What you are suggesting here is yet another concept that liberals can never seem to grasp: supply and demand. …

    Supply and demand? This has nothing to do with the Laffer curve.

    BTW, Investors will generally invest where their profit is greatest balanced by the risk of losing their investment. Since taxes are always less than 100%, the more they earn, the more they keep.

    Unless, you can show a paper rebutting that.

    Fail. You don’t know what you are talking about. I don’t care if you reply, I’m done talking with an idiot.

  15. Thomas says:

    #113
    Between the two of us, one of us has a degree in economics and mathematics and the other does not. Whom do you suppose that is?

    What is evident is that you do not understand the fundamental concept of diminishing returns or mathematical limits. Until you do, you will continue to make an ass out of yourself with respect to economics. You keep suggesting that the Laffer Cuvrve and the concept of an optimal tax rate are synonymous. News flash: they are not. The Laffer Curve takes the economic concept that there IS an optimal tax rate and claims that A: we are on the high side of the curve (taxes are too high) and B: that by lowering tax rate you will increase the tax revenue. There is a tax rate at which that will definitely be true. If the tax rate is 99% and you lower it to 75%, tax revenue will go UP. However, it is ALSO true that if the tax rate is 1% and you increase it to 5%, tax revenue will ALSO go up. Similarly, if you are at the optimal rate, any increase OR decrease will lower tax revenue (by definition).

    What is NOT part of Congresses intention, and is the major influence on the Laffer Curve, is the illegal economy. At any given time, the illegal economy is many times greater than any tax free or low tax investment.
    Supply and demand? This has nothing to do with the Laffer curve.

    More proof that you haven’t the foggiest idea what you are saying. Seriously, give up on posts that have to do with economics because you clearly do not have a clue.

    Supply and demand has EVERYTHING to do with the illegal economy. If a commodity is legally restricted but in high demand, people will find a way to acquire it. That is Supply and Demand 101. However, that is orthogonal to the Laffer Curve at reasonable tax rates where you are claiming that proponents suggest that increasing the tax rate will significantly increase the illegal economy. That might be true if your boy increases the tax rate to 100% but in general that is not at the heart of the Laffer Curve. The false presumption is that by definition everyone that has to pay higher taxes will start breaking the law. Instead, it is saying that people will LEGALLY move those investments into ones that cost them less tax and thus generate less tax revenue.

    This comes down to the fundamental difference between tax AVOIDANCE vs tax EVASION. You are suggesting Laffer Curve proponents are saying that higher taxes will push a *huge* percentage of people into evasion and that is complete tin-foil hat bullshit. There are far better, LEGAL ways of AVOIDING taxes.

    BTW, Investors will generally invest where their profit is greatest balanced by the risk of losing their investment. Since taxes are always less than 100%, the more they earn, the more they keep.

    More proof that you are clueless. You are forgetting rate of return. If your expected rate of return in investment A is 10% with a 28% tax rate but in investment B it is 8% and tax free, you will make more profit with investment B. However, the government will lose ALL of that 28% tax rate when you switch to a tax free investment.

    Like I said, you should seriously just stop posting on anything to do with economics. You have proven that you do not understand either. While you are at it, stop voting on anything to do with finance or economics until you DO understand it.


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