Topic: Why do higher taxes on the rich historically correlate to higher economic growth - page 4. (Read 7840 times)

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?

It would equate to the rich and the wealthy paying a smaller percentage of their income in taxes vs the middle class and poor.  Doesn't make much sense to me.

I really don't care what the history of various taxes are.  Just because income taxes were only implemented during draconian periods doesn't mean they are a bad way to tax people.

You are not arguing about it either?  
Even while income taxes are considered illegal and were only implemented during draconian periods and kept. Even while property taxes are a relic out of pre-republic times.
Even while profit taxes applied selectively to those who aren't in with the cronies.

Another point: If the states only income comes from consumption which is by definition the motor of economic health it's main incentive becomes to keep the economy healthy.

Yes, I am still not convinced.

Still not convinced that taxing only consumption instead of income, profit, property and consumption is a good thing?

That's actually some pretty solid reasoning...

It would not make your money worth more. You need to look at it in this view, someone who is mega rich, they're going to buy huge 10 million dollar yachts. Lets do some hypothetical here.. These companies might only employ 5 people for 20 orders a year. Say there is 50 yacht companies doing equal work.
If the rich stop hoarding money, and they buy yachts, and now these 50 companies are making 40 boats a year, thus needing to double their staff.
Now there is need for 250 more college graduates who have studied the field of making yachts.. Who are getting a very good pay, they cant afford to buy a Ferrari, but they can afford to buy a 4-wheeler/quad/atv type deal from a guy working off commission.


In between all that, hundreds of other people will benefit, the people who make the yacht parts, truck drivers, the atv parts, then the people who who those people spend their money on. The government taxes them all when they get paid, and when they spend the money, thus making the government more on the money the rich are holding. In Florida taxes are 6.5%, (1) 10m boat will make 650k in revenue.

I don't think it will be worth more, because it will be spread around, and the guys at the bottom still wont be able to buy everything the rich can.

Rich people have tend to spend a smaller proportion of their income than poor people (its called the marginal propensity to consume). Presumably because the poor people can't afford to save...

Anyway, by taxing the rich and giving to the poor, you are taking money from people who only spend say 70% of their income to give to people who spend 99% of their income. That is going to have the effect of increasing consumption. Western economies are heavily dependent on consumer spending, so increasing consumption increases economic growth. It's probably not the only factor, but it might contribute to it.

It then gets more complicated because an economy that consumes too much and doesn't save enough will have lower consumption in the long run because it becomes less productive through under-investment. But then China is saving too much and is exporting its savings to the US, which increases investment despite high consumer spending. In the best traditions of economics, it could probably be argued either way.

Who cares how much the rich/businesses are taxed?  As someone that does not own a business, I have to rely on someone fronting me the money to work for them.  Whether that is a millionaire or a billion dollar corporation, it doesn't matter to me.  What does matter is the number on my paycheck.  If taxes increase for that person or business, that is less money to go around & smaller numbers on my paycheck. 

The only people that pay taxes (no matter how high or low) are the people that can't pass it off - poor & middle class.

Keep believing the party line all you want, it's what they want you to believe, that is why so many loop holes exist in the first place.
You really think any of the fortune 500 companies actually pay total taxes of 40, 30 or even 20%? No, they don't.
In the past 10 years, a good portion of those, have paid from total tax in single digits, to tax rebates, worth millions or even billions.
Doesn't sound like they are paying their fair share to me. Especially if they are suppose to be some of the most profitable companies in the world.

Fact is, the super rich, boast massive million or even billions of Net profits when it comes to pleasing their shareholders.
However, when it comes to taxing season, will find any way possible to make out they companies profits are low or obscured so can't be taxed or are owed a refund etc.

So no, when a company can make out business is booming, I don't see anything wrong with taxing them properly and getting rid of all these loop holes.

Well, as far as classical libertarian ideology goes that is a good thing.
One of the many reason not to be a Libertarian. 

Most people like to do things and cooperate.  The only people who just work for money are wage slaves.

But you still must account for opportunity costs.

Would you work for $1/hr instead of $10/hr?  Probably not.  Why not?  Because your time is worth more than that.  That is your opportunity cost.

Would a rich person put in effort and risk investment to build a company from the ground up if they stand to lose 90% of any profits they manage to make?  Probably not nearly as often as they would do the same if they stood to only lose 35% of any profits they managed to make.

Now, I can agree that there is some disparity between the two examples, and rich people are going to continue chasing at least some profits no matter the tax rate, but it is only logical that any tax rate hike is going to be met with more conservative investing on the part of the wealthy.

Unless the tax is greater than 100%, any increase in pre-tax income should still result in an increase in income after tax.

Arguably part of the reason for outsourcing is the need for lower pricing within the US where wages have not kept up with economic growth. And arguably the US does not maintain any kind of international dominance over any sectors other than financial, anymore. The simplest way to force companies to maintain a US presence with high taxes is tariffs.


I was just making a potential argument to the contrary. I don't know why there is a correlation between higher taxation and economic growth, I was speculating, as I said.

Exactly, that's the beauty of it, wealth is not affected as long as you don't spend it. And that case if your consumption is taxed at 40% you could only get 60% out of it.
But then for the system I am proposing 40% would be an extreme example. I don't think it would even get that high, but if it does it would still be less than most people currently pay, and even if they are not very wealthy, healthy, young, etc...



Well at least we can agree to disagree  

Well that makes even less sense.  If you only had taxes on consumption, then the rich could keep 100% of a given pool of money by not hiring people, but would have to pay 140% of said pool if they hired people with it.

And in those cases where people end up with nothing, those people die off.  What's the big deal?

Regardless, we obviously have different ideas of how helping those who cannot help themselves should work, so we're not going to agree on that. 


On the contrary, people are already complaining about too many US jobs moving overseas.  With the modern globalization of the world's economy at this point, do you really think it is viable and smart for the US to alienate corporations with higher tax rates?  The higher the tax rates, the less incentive a company has to conduct business in the US, and it is a lot easier for a company to operate internationally based in a different country today than it was in the 50's and 60's.

I still don't quite understand why hiring people would be better than saving money, even at a 90% tax rate.  Surely a rich person would rather save 10% than 0%?  Or are you saying that hiring people would "expand the company," resulting in greater profitability down the road?  Even in that case though, it's essentially the same incentive.  Right now, it is invest 100% in new employees for 65% of future profits or take 65% now, but with a 90% tax rate, it would be invest 100% in new employees for 10% of future profits or take 10% now.  Where is the extra incentive to hire people if a higher tax rate is in play?

I'm saying the benefit could easily outweigh the costs. If the choice is to expand the company or to cut costs at every turn, cost-cutting becomes less and less viable as a profitable measure the higher the tax is. And the tax would probably have to be higher than 40%, that is about what it is now in the US and most of europe. The US has had taxes in the 90s for a short period, as well as in the 50s and 60s for extended periods. The scary, untenable, uncapitalistic thought is that economies run better the more evenly that wealth is distributed. It makes a pretty logical form of sense when it is the 99% that move the economy.

I was talking about the possibility of keeping the welfare state operating, which imo is possible, and desirable.


In the end a disabled person isn't paying for consumption one way or the other, except for the social-darvinistic approach where you let em die. I don't believe in the concept of charities and social support inside the family and friends only goes so far, there would still be cases where people end up with nothing.

No, what I am saying is that taxes should only be charged on consumption.
As far as employing goes that would be consumption of a service.