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Topic: Why do higher taxes on the rich historically correlate to higher economic growth - page 2. (Read 7827 times)

hero member
Activity: 728
Merit: 500


I see little to no correlation...

I think that is the right conclusion. The data show that reducing/increasing taxation of high income earners has little effect on economic growth performance. Obviously this would not apply with say 99% taxation, but within the limits of US historical experience it seems valid.

Therefore, if you believe in diminishing marginal utility, governments improve national welfare by taxing the rich heavily and redistributing the proceeds. That seems right to me. Governments are failing to tax sufficiently. Vote Obama if you care about the US as a whole.

If you do not believe in diminishing marginal utility, then governments cannot make people better off on average through redistribution. In this case, governments can do whatever they like and it doesn't really affect national welfare. Vote Obama if you are poor and Romney if you are rich.
 


I don't follow this, "utility" is subjective and I would like to see some support for the idea that every individual's utility maximizing behavior is good for the society as a whole. If I get small amount of more money I will spend it on beer. If I get a large amount I will invest in something I don't understand and be slowly robbed. The concept only works when there is sufficient negative feedback.
legendary
Activity: 3472
Merit: 4794
. . .That's interesting dependent on where it comes from. . .
That's an interesting graph.  I'm not sure I trust the source. I'd like to see an independent review of his math. I tried following the links at the blog, but couldn't find the numbers being reported in the graph.
legendary
Activity: 1666
Merit: 1057
Marketing manager - GO MP


That's interesting dependent on where it comes from the charts tell different stories.
But if you look at the description on top what do you say to the term "All Taxes" and that, mostly, growth rates were declining over time.
legendary
Activity: 1050
Merit: 1003


I see little to no correlation...

I think that is the right conclusion. The data show that reducing/increasing taxation of high income earners has little effect on economic growth performance. Obviously this would not apply with say 99% taxation, but within the limits of US historical experience it seems valid.

Therefore, if you believe in diminishing marginal utility, governments improve national welfare by taxing the rich heavily and redistributing the proceeds. That seems right to me. Governments are failing to tax sufficiently. Vote Obama if you care about the US as a whole.

If you do not believe in diminishing marginal utility, then governments cannot make people better off on average through redistribution. In this case, governments can do whatever they like and it doesn't really affect national welfare. Vote Obama if you are poor and Romney if you are rich.
 
legendary
Activity: 1540
Merit: 1000
hero member
Activity: 896
Merit: 532
Former curator of The Bitcoin Museum
How about everyone give me ALL their money, and I'll look after everyone with it.  FREE HOUSES, FREE FOOD, FREE TV, FREE DRUGS.  What else could a country want?

hero member
Activity: 728
Merit: 500
From OP:
Quote
http://conceptualmath.org/philo/taxgrowth.htm

First of all this correlation is only shown for maximum marginal tax rate, which almost noone pays and generates a very small percentage of total tax revenue.
Second of all the correlation is almost entirely due to 6 years all occurring before 1945.
Third of all why does this chart only go to 2003 when the data source used goes to 2008. It also skips 1946.
Fourth of all this only looks at the US.
Fifth of all what correlation?


Quote
So what do we see in the data overall? Perhaps we should look at the data more thoroughly.
Yes, indeed this author should look at the data more thoroughly.


http://www.usgovernmentspending.com/spending_chart_1902_2015USd_13s1li011mcn_30f_Defense_Spending_In_20th_Century
http://www.irs.gov/uac/SOI-Tax-Stats---Historical-Table-23
http://www.bea.gov/national/xls/gdplev.xls

I see little to no correlation, any that does exist looks like it is completely explained by wartime defense spending. Is he suggesting we should have more wars?
legendary
Activity: 4438
Merit: 3387
Correlation is not the same as causation. Perhaps you would like to rephrase your question?

Anytime a topic mentions correlation, this needs to be the first reply.

He's asking what the cause of the correlation is.  I don't see a problem with his subject.
Taken at face value, it is a legitimate question, but the correlation is never really the subject. Perhaps I am wrong in this case. It really depends on the replies, I guess.

Here is my suggestion for a cause (assuming there is one, of course) of the correlation: During times of higher economic growth, the rich get richer; the general population sees that as unfair and insists on raising taxes on the rich. As a result of the increased taxes, the economic growth ends and taxes are rescinded to try to return to economic growth. There you have it - higher economic growth begets higher taxes on the rich, lower economic growth begets lower taxes on the rich.
legendary
Activity: 1904
Merit: 1002
Correlation is not the same as causation. Perhaps you would like to rephrase your question?

Anytime a topic mentions correlation, this needs to be the first reply.

He's asking what the cause of the correlation is.  I don't see a problem with his subject.
legendary
Activity: 4438
Merit: 3387
Correlation is not the same as causation. Perhaps you would like to rephrase your question?

Anytime a topic mentions correlation, this needs to be the first reply.
legendary
Activity: 1988
Merit: 1012
Beyond Imagination
Some high productivity people have small spending while low productivity people have no spending power. High productivity people are only a few, and their needs have mostly fulfilled, they will not generate enough consumption,  move some of those spending power from high productivity people to low productivity people will make the total consumption more even

In this process, those talent people might leave this country or move his operations abroad, so unless the same concept is applied everywhere in the world, it is difficult to set higher tax on rich people

hero member
Activity: 840
Merit: 1000
I can't believe nobody has as yet pointed out the glaringly obvious: correlation does not imply causation.
Meh, it doesn't exclude it either., Smiley
donator
Activity: 213
Merit: 100
I can't believe nobody has as yet pointed out the glaringly obvious: correlation does not imply causation.
hero member
Activity: 840
Merit: 1000
I think you need to answer this question:

How much is a person's life worth?  If you could use $5 of taxpayer (or people who pay for healthcare) money to do it, would you?  $10?  $1,000?  $1M?  $1B?  $1T?

At what point is the drain on society as a whole too much to bear to save a single life?

never

But you are missing the point. With todays level of technology that sum is so marginal that it doesn't affect society more than random fluctuations in the market.
It truly is negligible.
Never?  Really?  So you would have taxpayers pay $1T to save someone's life?  100 lives later, and you've increase the national debt to 7 times what it is now, forever indebting your descendents to live a life of slavery in vain attempt to pay off said debt?  And somehow, that is ok with you?

Individual instances do not add much, but unpaid healthcare costs as a whole are a huge burden on society.  The general attitude seems to be that every life is priceless, and everyone should be forced, via taxes or increased healthcare costs, to pay these priceless prices, but I think that is an inappropriate way to look at it.  There are other concerns at play, such as opportunity cost and quality of life.

For the record, i agree on this.
Quote
  Some procedures or series of procedures or ongoing health care can cost millions of dollars.  Most people won't make more than a million dollars (present value) in their lifetime.  And how many lives could be saved in third-world countries with the money spent on one procedure here in the US?  Is it appropriate for us to deem the lives of our countrymen that much more valuable than the lives of other people around the world?

If government is forcing us to "help" people in the way that they deem appropriate, then we have less funds available to help people the way we see fit, which, in some cases, might include saving a hundred lives of people in a third world country instead of one life in the US.  Why does the government get to make such a judgement call on an issue of morality like this?

I don't think it's 'the government' that made this choice, it is society.
If there is a too big political steering then things go bad. It would be ideal if government only diverted a stream of funds to this cause and let more knowledgeable people decide on how to spend it.
But as an institution such basic care is very valuable to any society.
And i agree that there may be a limit to what procedures should be supported by society.
I mean i would not want to pay tax money because someone wants a nose correction or something like that.
These are indeed hard ethical questions. Where do we draw a line.
But i think that it is good if there is at least some basic care.
sr. member
Activity: 420
Merit: 250
The basic issues I have with taxation is that it isn't fairly done. The secondary issue I have that it put barriers to growth in the worst places.

Why is there any sort of payroll taxes that an employer pays - this builds a barrier to growth into every business. Why does the percentage of income we pay increase (percentage-wise) as we make more money - this puts a barrier against growth.

Ideally we need a flat tax on sales and/or a flat tax on income - junk the payroll taxes entirely - and a flat tax on profit via capital gains.  Get rid of property tax entirely as part of the bargain. Ideally each tax would have the same percentage rate for everyone.

At about 10% we'd see gains on the money that's actually collected while at the same same removing the dis-incentives to business. Then we'd see some massive wealth creating and gdp growth in this country.

legendary
Activity: 1400
Merit: 1005
I think you need to answer this question:

How much is a person's life worth?  If you could use $5 of taxpayer (or people who pay for healthcare) money to do it, would you?  $10?  $1,000?  $1M?  $1B?  $1T?

At what point is the drain on society as a whole too much to bear to save a single life?

never

But you are missing the point. With todays level of technology that sum is so marginal that it doesn't affect society more than random fluctuations in the market.
It truly is negligible.
Never?  Really?  So you would have taxpayers pay $1T to save someone's life?  100 lives later, and you've increase the national debt to 7 times what it is now, forever indebting your descendents to live a life of slavery in vain attempt to pay off said debt?  And somehow, that is ok with you?

As I said before you are missing the point.


Individual instances do not add much, but unpaid healthcare costs as a whole are a huge burden on society.  The general attitude seems to be that every life is priceless, and everyone should be forced, via taxes or increased healthcare costs, to pay these priceless prices, but I think that is an inappropriate way to look at it.  There are other concerns at play, such as opportunity cost and quality of life.  Some procedures or series of procedures or ongoing health care can cost millions of dollars.  Most people won't make more than a million dollars (present value) in their lifetime.  And how many lives could be saved in third-world countries with the money spent on one procedure here in the US?  Is it appropriate for us to deem the lives of our countrymen that much more valuable than the lives of other people around the world?

Isn't that what countries are supposed to do? But for the sake of argument: Lets say we spend as much as threat everybody in Zimbabwe for Aids and Malaria. And which point do you think the production methods would be efficient enough that costs per person are down one order of magnitude, two, three or four orders?
Why should that efficiency be lost for western patients for which the treatment costs would be negligible?

If government is forcing us to "help" people in the way that they deem appropriate, then we have less funds available to help people the way we see fit, which, in some cases, might include saving a hundred lives of people in a third world country instead of one life in the US.  Why does the government get to make such a judgement call on an issue of morality like this?

There are enough resources available to do it. The only reason why the current system isn't able to provide a good live for everybody is that it is inefficient. Heck if we switch to Thorium power every man woman and child could live a very high energy lifestyle, we could make the Sahara into an oasis, and there would still be enough time and resources to colonize motherfuckin space.
This discussion is getting stale.  I'm just going to agree to disagree with you at this point.
legendary
Activity: 1666
Merit: 1057
Marketing manager - GO MP
I think you need to answer this question:

How much is a person's life worth?  If you could use $5 of taxpayer (or people who pay for healthcare) money to do it, would you?  $10?  $1,000?  $1M?  $1B?  $1T?

At what point is the drain on society as a whole too much to bear to save a single life?

never

But you are missing the point. With todays level of technology that sum is so marginal that it doesn't affect society more than random fluctuations in the market.
It truly is negligible.
Never?  Really?  So you would have taxpayers pay $1T to save someone's life?  100 lives later, and you've increase the national debt to 7 times what it is now, forever indebting your descendents to live a life of slavery in vain attempt to pay off said debt?  And somehow, that is ok with you?

As I said before you are missing the point.


Individual instances do not add much, but unpaid healthcare costs as a whole are a huge burden on society.  The general attitude seems to be that every life is priceless, and everyone should be forced, via taxes or increased healthcare costs, to pay these priceless prices, but I think that is an inappropriate way to look at it.  There are other concerns at play, such as opportunity cost and quality of life.  Some procedures or series of procedures or ongoing health care can cost millions of dollars.  Most people won't make more than a million dollars (present value) in their lifetime.  And how many lives could be saved in third-world countries with the money spent on one procedure here in the US?  Is it appropriate for us to deem the lives of our countrymen that much more valuable than the lives of other people around the world?

Isn't that what countries are supposed to do? But for the sake of argument: Lets say we spend as much as threat everybody in Zimbabwe for Aids and Malaria. And which point do you think the production methods would be efficient enough that costs per person are down one order of magnitude, two, three or four orders?
Why should that efficiency be lost for western patients for which the treatment costs would be negligible?

If government is forcing us to "help" people in the way that they deem appropriate, then we have less funds available to help people the way we see fit, which, in some cases, might include saving a hundred lives of people in a third world country instead of one life in the US.  Why does the government get to make such a judgement call on an issue of morality like this?

There are enough resources available to do it. The only reason why the current system isn't able to provide a good live for everybody is that it is inefficient. Heck if we switch to Thorium power every man woman and child could live a very high energy lifestyle, we could make the Sahara into an oasis, and there would still be enough time and resources to colonize motherfuckin space.
full member
Activity: 126
Merit: 100
Web Programmer, Gamer
And in those cases where people end up with nothing, those people die off.  What's the big deal?

Well, most people on earth realize that our society can only exist if we take care of everyone.
We are social animals and thus feel compassion for others because everyone knows that there is a good chance that they themselfs may need help at some point.
If everyone thought like you then we would not live in this relatively nice and stable world.
It would be dog eat dog and only assholes would survive.
Now, would you want to live in a world composed primarily out of assholes or is it enough for you to look in the mirror in the morning?


+1.

Your explanation worth taking count. I believe the same way, we are a society that holds on social connections and thus helping each other in small ways can bring everyone up.
We slowly crawled to this point and if we wouldn't  then we would still live in era of poverty, wars and dictatorship.
legendary
Activity: 1400
Merit: 1005
This conversation seems to be hijacked. If I understood correctly, the original question was "Why have higher taxes on the rich historically correlated to higher economic growth?"  I didn't click through either of the original links, so I'm not sure if the OP presented reliable evidence to support the proposition as fact.  Regardless, none of the recent posts on this discussion thread seem to be attempting to answer or even discuss the question any longer.  Perhaps these posts belong in some other thread, or in a new thread of their own?
In my humble opinion (though many don't agree with me), threads/conversations are meant to wander.
legendary
Activity: 3472
Merit: 4794
This conversation seems to be hijacked. If I understood correctly, the original question was "Why have higher taxes on the rich historically correlated to higher economic growth?"  I didn't click through either of the original links, so I'm not sure if the OP presented reliable evidence to support the proposition as fact.  Regardless, none of the recent posts on this discussion thread seem to be attempting to answer or even discuss the question any longer.  Perhaps these posts belong in some other thread, or in a new thread of their own?
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