President Trump

[Belz...]

In any case, I can say with certainty that higher marginal tax rates make me work less. I definitely cut back in response to the rise in tax rates in 2013.

Heavens, why? One way or another, working less means making less money. If you mean worked less for the same gross income, then you were just being an ass, punishing your employer because you don't like contributing to social services.

 

[Stacko]

The grift continues.

The Secret Service is in negotiations with the Trump Organization to take over two vacant floors in the gilded 68-story Fifth Avenue tower, law enforcement sources told The Post.

The federal agency and the NYPD plan to run a 24/7 command post out of the space that would be housed at least 40 floors below Trump’s $90 million penthouse triplex, where wife Melania and their 10-year-old son Barron will continue to reside at least through the spring, sources said.

The first 26 floors of the glass-clad skyscraper are commercial tenants while the remaining levels are luxury apartments.

But several commercial floors are currently vacant, sources said. The Secret Service is eyeing two contiguous floors for over 250 agents and cops, sources said.

At least he's declining the $400,000 salary.

 

[sunmaster14]

And yet, the economy collapsed in 2007-8, when taxes were lower, and it's booming today, after the Bush cuts ended. The economy soared through '60s, when rates were extortionate by current standards, and lagged during the '70s, after rates dropped. The point is that people and businesses make economic decisions based on numerous factors other than the tax rates.

The financial collapse in 2007-8 was building for a long time and was driven by a number of factors, not least of which were the myriad ways the government interfered in the market. That being said, the Wall Street collapse would have been greatly mitigated, and perhaps the Main Street collapse could have been avoided altogether if taxes had been cut and budget deficits boosted immediately. It was a larger problem than one of incentives though. The private sector needed financial equity that only the federal government could provide.

Your historical claims about tax rates are simply wrong, even accepting your apples and oranges comparisons, which are also of little value. There were big tax cuts in the early 1960s (thanks to JFK), and the 1970s saw big implicit tax hikes due to high inflation coupled with a failure to index tax brackets to inflation. In addition, Nixon created the alternative minimum tax in 1969, which raised marginal tax rates for particularly savvy and tax-sensitive investors.

A very important point however is that until the Reagan tax reforms of 1986, it was quite easy for rich people to shelter income and avoid paying the headline marginal tax rates. The real marginal tax rate was the one applying to a much lower bracket plus the marginal cost of investing in tax shelters and hiring accountants to make everything work.

 

[sunmaster14]

An alternate view:

http://www.epi.org/publication/raising-income-taxes/

Interestingly, that paper supports my claim, even though it is framed misleadingly. It shows that a 1% decrease in one's after-tax value of a marginal dollar earned (e.g. a 0.5% increase in the net marginal tax rate for a 50% marginal tax rate), there is a 0.25% decrease in reported, pre-tax income. This is actually a larger effect than I had expected, but of course reported, pre-tax income could also include the effect of tax minimization strategies in addition to simply generating less income.

The paper is written from the perspective of maximizing tax revenue, which, in my view, is a stupid goal. The goal of tax policy should be maximizing economic productivity and the nation's standard of living.

 

[sunmaster14]

Heavens, why? One way or another, working less means making less money. If you mean worked less for the same gross income, then you were just being an ass, punishing your employer because you don't like contributing to social services.

I am self-employed. Working less means more leisure time, which has value for me. Some of which I spend here actually. Although I'll admit that encountering gratuitously nasty responses like yours above does make me question whether I should be working instead.

 

[tyr_13]

I am self-employed. Working less means more leisure time, which has value for me. Some of which I spend here actually. Although I'll admit that encountering gratuitously nasty responses like yours above does make me question whether I should be working instead.

So you spend more money on leisure activities which helps the economy, you do less work leaving more for others to do which helps employ more people, both of which increase tax revenue overall, and this...is...an argument...against...higher marginal tax rates...

 

[SezMe]

The general idea is that whether "better" spent or not, Adam Smith's "Invisible Hand" remains an efficient way to allocate resources. To a certain point, that is.

This may be an inappropriate use of the notion "Invisible Hand". For a VERY brief summary of why I say this, read the article on it in Wikipedia. And your second sentence is very important because where that "certain point" is is critical for public policy making. I claim, without evidence, that we are beyond the point where more individual wealth at the top of the pyramid accrues to the benefit of society.

By the way, Fast, the citation you used for the "Invisible Hand" is quite often used inappropriately. And my apologies in advance if you know marco-economics better than I.

 

[SezMe]

Bill's not going to build a new factory just because he got some more money in his pocket. He's going to build a factory when the demand for his product exceeds what his current facilities can handle. And the best way to increase that demand is to get more money into the hands of middle-class consumers.

QFT.

This is a very important point. The wealthy are not necessarily job creators. DEMAND for products and/or services is the driving engine. Were it that THIS was Republican dogma.

 

[SezMe]

That's far more charitable than I would have been. He starts with a demand to prove something that is in virtually every introductory microeconomics textbook,...

In that case, there must be a source on the web that shows the effect you are citing. Do you have such a link? <--- Serious question. I took marcro a loooong time ago and I am sure much has changed in the interim.

Every dynamic economic model assumes the claim I made

The Republicans have long claimed that the CBO should use dynamic scoring when evaluating tax policy. When the Republicans do it, some goofy results are generated. There may be a case for dynamic marco modeling but it can easily be overdone with the result: GIGO.

 

[SezMe]

Nvm. sunmaster14 responded.

 

[Belz...]

I am self-employed. Working less means more leisure time, which has value for me. Some of which I spend here actually. Although I'll admit that encountering gratuitously nasty responses like yours above does make me question whether I should be working instead.

Nasty? In what way? If you had been working for someone else, would I have not been right?

But since you're self-employed, why would you want to reduce the amount of money you earn even further? What does that have to do with taxes?

 

[The Don]

Nasty? In what way? If you had been working for someone else, would I have not been right?

But since you're self-employed, why would you want to reduce the amount of money you earn even further? What does that have to do with taxes?

If we're going with anecdotes, here's my data point.

I'm a business owner and prevailing tax rates (personal or corporate) have had absolutely no difference on how hard I've worked or how I've tried to grow the business.

Prevailing tax rates have made a difference about how much money I've taken out of the business and whether I've chosen to do it with salary, bonus or dividends but none of it has affected productivity or efficiency.

 

[alfaniner]

But since you're self-employed, why would you want to reduce the amount of money you earn even further? What does that have to do with taxes?

There are different levels of being taxed. If you can go from paying 25% to 15% by reducing your income $1000, it might be wiser to take the hit.

 

[The Don]

There are different levels of being taxed. If you can go from paying 25% to 15% by reducing your income $1000, it might be wiser to take the hit.

Are there any income taxes administered in that way ? Stamp duty in the UK used to be like that, but it's been fixed now.

 

[sunmaster14]

Nasty? In what way? If you had been working for someone else, would I have not been right?

If I had been working for someone else, you still would have been gratuitously insulting. I was obviously talking about a situation where I could make more pre-tax income by working harder or less pre-tax income by working less. Even in regular jobs this is possible, since working harder can lead to overtime pay, larger bonuses, or higher probability of raises or promotions. If you don't see how calling somebody an ass, even one qualified by an "if" is nasty, then I guess that there is no hope of change.

But since you're self-employed, why would you want to reduce the amount of money you earn even further? What does that have to do with taxes?

I explained this already. Work represents an opportunity cost in terms of lost leisure time. My goal in life is not to maximize the numbers on my bank statements. It is to enjoy life and be happy. Working is like an investment in happiness. If the expected return on a potential investment is too low, I don't make the investment.

 

[sunmaster14]

Are there any income taxes administered in that way ? Stamp duty in the UK used to be like that, but it's been fixed now.

Income taxes don't work that way, so I suspect alfaniner is confused. Interestingly, Obamacare subsidies do work that way. They don't phase out as you earn more income, but instead cutoff. For example, if you make 400% of the poverty line income, you can get a subsidy worth several thousand dollars to buy health insurance on an Obamacare exchange. If you make 400% of the poverty line plus $1 you get squat. Such is the brilliant design of Obamacare.

Even worse, of course, is that you won't know what the poverty line is until after your tax year is over, so you can't even plan. Better to make a few thousand dollars less than 400% of the expected poverty line just to be safe that you won't end up paying a marginal tax rate of several hundred percent on the last thousand dollars.

 

[Belz...]

If I had been working for someone else, you still would have been gratuitously insulting.

Oh, please. If you're working for someone who is paying you, and you decide to work less in protest to higher income taxes, you're a jerk, full stop.

I explained this already. Work represents an opportunity cost in terms of lost leisure time. My goal in life is not to maximize the numbers on my bank statements. It is to enjoy life and be happy. Working is like an investment in happiness. If the expected return on a potential investment is too low, I don't make the investment.

But that makes no sense. Working less means you reduce your earnings, increasing the effects.

 

[The Don]

Income taxes don't work that way, so I suspect alfaniner is confused.

OK, that makes sense...

Interestingly, Obamacare subsidies do work that way. They don't phase out as you earn more income, but instead cutoff. For example, if you make 400% of the poverty line income, you can get a subsidy worth several thousand dollars to buy health insurance on an Obamacare exchange. If you make 400% of the poverty line plus $1 you get squat. Such is the brilliant design of Obamacare.

Well that doesn't sound fair at all. Why isn't a much fairer system of subsidy, or better yet a single payer system.

Even worse, of course, is that you won't know what the poverty line is until after your tax year is over, so you can't even plan. Better to make a few thousand dollars less than 400% of the expected poverty line just to be safe that you won't end up paying a marginal tax rate of several hundred percent on the last thousand dollars.

How did a question about whether a small increase in income tax decreases productivity become about Obamacare ?

 

[DreadNiK]

But that makes no sense. Working less means you reduce your earnings, increasing the effects.

No, he's right. Just take extreme examples and work from there...not sure what you aren't following here...

 

[Craig B]

I'm glad that NYT has caught up with this stuff. If Trump is fighting for the little people, he's been hiding that fact rather successfully here in Scotland.