Do you believe we need to go back to supply side econ with slow GDP growth and low taxes for the wealthy?
- Yes
- No
0 voters
2 Likes
I have FA’d this political post. It’s exactly posts like this that cause pointless friction on METAR.
Wendy
9 Likes
Wendy,
It is not political. This is about economic opinions.
I’d think discussing our opinions on policy matter.
Anyway for now 100% or six votes were against slow GDP growth and lower taxes for the wealthy.
6 Likes
I’d think discussing our opinions on policy matter.
Unless this is congress or the consortium that selects lobbyist for congress, your statement reveals your hubris.
Your original post should be FA’d and you should go do penance somewhere.
Qazulight
3 Likes
Qaz,
That is not how this board works or we’d all be doing penance for our individual hubris.
In a republic people discuss things. That is not over confidence. That is simply an open society.
The post is not political at all. We have had forty years of supply side econ managing our wallets. Discussing slow GDP growth and lower taxes for the wealthy is economic history.
You have your opinion. You are welcome to it. Others see things very differently.
4 Likes
Anyway for now 100% or six votes were against slow GDP growth and lower taxes for the wealthy.
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12 votes are NO
4 votes are YES
I guess Wendy voted YES
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Do you believe we need to go back to supply side econ with slow GDP growth and low taxes for the wealthy?..
…This is about economic opinions
Leap, so you say, but what I read was yet another tedious turgid tendentious leftover from teenage taunting tropes doing the opposite of usefully posing a question for useful actual policy discussion. It is to polling what “twerking” is to “trying on pants”.
david fb
10 Likes
I guess Wendy voted YES
Jaak,
I still love her.
Leap, so you say, but what I read was yet another tedious turgid tendentious leftover from teenage taunting tropes doing the opposite of usefully posing a question for useful actual policy discussion. It is to polling what “twerking” is to “trying on pants”.
david fb,
You are reading far too much into it. You seem to do that as a kneejerk reaction if you do not agree with something. I can not control that.
If we separate that out, we can discuss econ. You have honest opinions. We are here for them. I have honest opinions. The kneejerk close him down would be a problem if I needed to fight back on that level. I do not.
3 Likes
15 yard penalty for abusive alliteration.
Why is there no yellow flag emoji?
1 Like
US macroeconomic data has shown that the Laffer curve is false, and so supply-side economics is a failed theory, with little academic support.
Supply-side economics
“This article needs attention from an expert in economics. The specific problem is: Needs more academic or scholarly research, rather than newspaper articles… Supply-side economics is a macroeconomic theory that postulates economic growth can be most effectively fostered by lowering taxes, decreasing regulation, and allowing free trade… A basis of supply-side economics is the Laffer curve, a theoretical relationship between rates of taxation and government revenue… Critics also point out that several large tax cuts in the United States over the last 40 years have not increased revenue.”
https://en.wikipedia.org/wiki/Supply-side_economics
4 Likes
US macroeconomic data has shown that the Laffer curve is false…
It’s not false; people just disagree on its shape.
It is clear that at a zero tax rate, zero revenue would be collected and at a 1% tax rate more money (than at zero) would be collected. A 2% tax rate would collect almost twice as much, as there would be little incentive to cheat, change economic behavior or go underground.
Thus, at the low end the curve looks something like this:
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At the very high end, most people would agree that a 100% or 99% tax rate would also bring in very little money. People would leave the country or go on welfare.
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The question then becomes, where does the curve peak? The arguement is over the shape of the curve.
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DB2
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US macroeconomic data has shown that the Laffer curve is false
I don’t think so.
The Laffer curve postulates that a 0% tax rate on economic activity generates no tax revenue - obviously true - and that a 100% tax rate also generates no tax revenue because there’s no incentive to economic activity. The best data we have on the latter is probably from the USSR “we pretend to work, and they pretend to pay us” and North Korea.
And that somewhere between those two extremes is an optimal rate that gets maximum sustainable tax revenue. Which must be true, given those endpoints, or no tax rate would produce any revenue at all (obviously false).
If the Laffer Curve has a flaw, it’s due to being too simple. There are LOTS of other things, besides tax rates, that affect economic activity and therefore tax revenues.
3 Likes
DrBob2
US macroeconomic data has shown that the Laffer curve is false…
It’s not false; people just disagree on its shape.
Good replotting of the chart…
Exchanging the X and Y axis, plotting % on the abscissa
The change made a eureka moment for me. I struggled with tweaking the curve with % on the Y axis.
Should have thought of it earlier… old age creeping up, I guess…
1 Like
The arguement is over the shape of the curve.
And, on where we are on the curve. There are those who consistently assume we are past the peak, so that lowering the rate will increase the take versus those who assume we are not yet at the peak.
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Raising the tax rate on the top two brackets and capital gains at this time will increase the GDP.
I am not talking about more than a 5% increase in each case.
I am not aiming at a purer math in this. Just a redistribution to harness demand in the middle class as a whole. By the time “optimizing the economy” happens that target has moved.
I am talking altering or increasing public good allocations. I am not talking targeted welfare.
That last point about public good allocations can not be emphasized enough.
The arguement is over the shape of the curve.
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And, on where we are on the curve. There are those who consistently assume we are past the peak, so that lowering the rate will increase the take versus those who assume we are not yet at the peak.
Assuming we want to increase the take…
DB2
It’s not false; people just disagree on its shape.
Virtually all (maybe all) mainstream economists think the maximum revenue tax rate is on the order of about 75%. Supply siders like Arthur Laffer and Larry Kudlow think the maximum tax revenue rate is something less than what we have now.
Trigger warning! Names of politicians appear below, but this is more about history and economics than politics.
Supply siders like Arthur Laffer often point to the Kennedy tax cuts as proof that tax cuts cause revenue growth. But that is a misrepresentation/misunderstanding of what happened. The tax cuts were actually passed by Johnson but were drafted largely by Kennedy’s economic team. And Kennedy indeed cut tax rates a lot on income, capital gains, as well as corporate taxes. But most tax cuts went to lower income payers, including a major change to the standard deduction which changed from a percentage to a flat dollar amount which benefited mostly lower income payers.
And in fact tax revenues surged impressively. But it wasn’t because of the Laffer Curve. It is because the tax cuts were designed as stimulus and revenues increased as the economy improved. Kennedy even warned that tax cuts would lead to budget deficits in the short term:
I repeat: our practical choice is not between a tax-cut deficit and a budgetary surplus. It is between two kinds of deficits: a chronic deficit of inertia, as the unwanted result of inadequate revenues and a restricted economy; or a temporary deficit of transition, resulting from a tax cut designed to boost the economy, increase tax revenues, and achieve--and I believe this can be done--a budget surplus.
https://www.presidency.ucsb.edu/documents/address-and-questi…
Of course, the budget was never balanced. The Vietnam War and Johnson’s Great Society ate up all the surplus and more.
Then in the late 1970s Laffer became an advisor to Ronald Reagan, who campaigned on the promise that his package of tax cuts would balance the budget by 1982 or 1983. Reagan’s tax cuts were passed in 1981, however income tax revenues (when adjusted for inflation) actually went down and Reagan never submitted a balanced budget to Congress.
Laffer’s next appearance was in Kansas where his package of tax cuts was supposed to spur economic growth to unseen levels and of course pay for themselves. They didn’t, and were later repealed.
Laffer then became an advisor to President Trump in 2017 and helped push through the TCJA. Laffer predicted that the TCJA would result in 6% economic growth and the Sec. of Treasury said that not only would the tax cuts pay for themselves, they would even reduce the debt. That didn’t happen either.
It is time to put the supply side theory to bed. It doesn’t work, never has.
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