Unfortunately, this is probably the primary motivation for your ideas:



I've been quiet long enough... so here's a quote that also contains an article reference you can possibly use as a 'rigorous analysis'.

"From 1951 through 1963, the U.S. maintained extremely high marginal tax rates. The lowest rate of federal income tax was 20%, and the highest equaled 91%. The tax structure back then generated revenue equal to 7.7% of GDP.

Marginal rates were lowest from 1988 through 1990, when the lowest rate was 15% and the highest rate was 28%. With that structure, federal income taxes brought in revenue equal to 8.1% of GDP. (This information comes from Alan Reynolds' well-sourced piece in the June 16, 2011 Wall Street Journal.)

The point is, the liberal Democratic policy goal of using income taxes for social engineering is extremely inefficient. It lowers tax revenues at a time when the government is deep in debt. The amount of revenue generated is only one small part of the puzzle. What goes unmeasured is the resulting disincentive to work and invest under high marginal tax rates. And yes, this second consideration is vastly more important than merely the technical detail about revenues. But the technical detail about revenue is a clearly proven fact that the tax-'em-until-they-bleed crowd can't ignore."



Or unless you're talking about stealing from Peter to give to Paul.

"What goes unmeasured is the resulting disincentive to work and invest under high marginal tax rates"

You can't measure it - because it doesn't exist.

"he technical detail about revenue is a clearly proven fact"

You haven't proven anything. You've vaguely asserted it. Post your proof, or it doesn't exist either.

"the tax-'em-until-they-bleed crowd"

Unfortunately for you, taxes under Obama are at their lowest in over 30 years.

The answer to your question is $75-100 billion depending on which estimate you take ($1 trillion over the 10 year time frame).

"The point is, the liberal Democratic policy goal of using income taxes for social engineering is extremely inefficient. It lowers tax revenues at a time when the government is deep in debt."

Right; which is why they should lower income tax; and tax capital gains higher; and reinstate the inheritance/estate tax; and tax rentiers; and stop letting people write off their mortgages...


ie, lower income tax, and make up the difference by taxing unearned income.

...or $100 trillion over a thousand year timeframe...

seriously why do they always use timeframes that make things get to the $1T range; "We will save one TRILLION dollars over (X years where X = 1T/(actual savings))"

They say that to give the illusion of an effect. While in reality the money they are saving in the meantime (small as you point out) disappears when they spend more later on. Never trust them when they say they are saving a billion here or a hundred billion there. They will be spending that money (and more) later on. The whole budget process for the government is a mess. Increasing revenue through taxes without fixing the problem isn't going to help. The problem isn't lack of taxes. It's wasteful spending.

Taxes raises should come after getting things in order. Not before.

qz...look it up for yourself.

"In 1995, the first year for which these data are available, just over $8 billion in venture capital was invested.[5] Venture capital is especially critical to a vibrant economy because high-risk/high-return investment permits promising new businesses to blossom, rapidly spreading new technologies and new ideas into the marketplace and across the economy. Such investments, when successful, generate returns to investors that are subject primarily to the tax on capital gains. By 1998, the first full year in which the lower capital gains rates were in effect, venture capital activity reached almost $28 billion, more than a three-fold increase over 1995 levels, and by 1999, it had doubled yet again."
http://www.heritage.org/...e-produced-the-1990s-boom

(sorry for a heritage article...didn't want to go through government documents for a blog debate, I figure the stats in the paragraph will at least wet your whistle)


Basically Newt with Clinton's help lowered capital gains tax rates and the revenue for capital gains sky rocketed(literally). You can use that as a perfect example for the overall picture of how a society based on "equality" lowers incentive while a society based on prosperity will increase productivity. There is a reason that goods in Europe generally cost more Euros than goods in America cost dollars(and remember the Euro is worth more right now). However America won't be a good example for much longer, our regulations are stifling productivity, so perhaps the example would work better using models from 20 years ago.

Another example would be the recession of 1920 in America which was much more drastic than the crash in 1929. Then look to the policy that created the great depression with the Smoot-Hawley tariff.

As I asked above, what is the point of government? Is it to create equality or prosperity? Equality will necessarily bring down the best among the population and any man worth his salt will try to leave that country in search of a place that is geared for his talents. In our world of increasingly simplified ways of traveling, it just accentuates the problem. Gear a society on prosperity and the best from around the world will flock. This does not stop at tax rates either, I would argue that regulations are much more important than tax rates because that stifles business before it even begins.

Our society used to be based on prosperity and millions have flocked here in search of the "American Dream", to rise through the classes under ones own achievement. Now millions flock here to depend on a government check. It is a never ending cycle. Those who cannot will flock towards a society based on "equality" and those that can will flock to a society based on prosperity.

I have been putting "equality" in quotes for the reason that any society that has ever based their society on equality has necessarily ended up with two classes(the political class and the plebs/commoners), not equality.

Unsympathetic - to deny it exists belies logic and your intelligence. I fear going any further will be pointless, but I'll try.

Do you really think people or corporations would move to a state/county/city where the tax rates are much higher than they are now? How about the flip side: would people or corporations relocate to areas with lower taxation? One might consider that evidence as disincentive to work and invest...just maybe. I suppose you'll just say 'it doesn't exist because I say so' or 'prove it'. Okay: California, now.

Oh, and the proof of the revenue is in there...if you read it.

If taxes are at their lowest rate in 30 years, then I applaud Obama for that, despite the fact he is trying to raise taxes in many ways right now through budget/debt crisis. Don't worry, he'll find a way to mess that up too.

That's a fair quetion.

The short explanation is that when you go through the government budgeting process, you typically end the year where some agencies/programs/commissions/etc end with unused funds and some expend more than project. So almost every budgeting process for government requires a revenue estimate.

But your revenue estimates aren't static because sometimes you know things will change. For instance you may know that you passed a law enabling new gambling revenue which comes online in FY13. If that were the case and you're a governor dealing with a deficit, you may borrow out of an established fund (could be a transportation trust fund, an environmental fund, shoot from pension funds, etc) to recoup the temporary difference. You effectively pass what's known as a 'reconcillation' bill in most states. You may also revert unspent dollars to help you negotiate a budget hole or change spending priorities.

All-in-all, your budget items fluctuate and so you have to look at longer term estimates. You know you're heading into a recession which means two years into it you're going to have the hardest hit on your revenues (tax dropoffs trail recessions due to the nature of tax reporting) and whatnot.

Ok, that's a two inch deep answer for a complicated question. Haha...all those years of my life wasted on state budgeting process.

That's a cynical view, but I think a view rooted in accuracy. Where I find optimism is in the reluctance to raise the debt ceiling. Everyone else thinks I'm crazy, but if the federal government bipartisanly makes a fundamental notion that they can't/won't raise the debt ceiling again then they're forced to live within their current means. Nevermind that we know that's not really plausible, it's the notion that they're boxing themselves in rather than relying on the old safety valves--raise taxes/raise debt to skate by. If that mood holds for the longer term then we may just be able to escape the fate of Greece. But if we don't fix things in next 2-3 Congresses, then we're screwed (screwed because the problem lies in compound interest and obligations).

I would generally agree with you. A lot of painful things (for some people) need cut out and there needs to be a change to the way bills are written. A budget has no meaning when you can slip in a million here or few hundred million there for whatever pet project you have.

Imagine a family that is on a tight budget just to put food on the table but it allows every member of the household to spend money outside of the budget on frivolous things. That's a good analogy to the way government handles money right now. It needs to be changed because there is no way to have a balanced budget like that. Money in government is looked at with the mentality that it must be spent. Either by increasing the size of some favored program or by creating a new program.

I think the problem is every cut has a constituency and even those are miniscule compared to entitlement programs. The only way you get a bite at the entitlement apple is by weaning people off it with incremental changes. I'm just not sure we're in the fiscal position to do incremental changes yet the political reality is that's probably all we can get. It's a real quagmire of a situation