Buffett: Tax the Rich

[xjx388]

Yet the Cato-type people want to 'broaden the tax base', by imposing higher taxes on poor Americans. Which coincidentally would raise even less in revenue.

I'll take Krugman over Cato hacks any single day.

Maybe the point is that tax increases are not sufficient to cover the deficit? Maybe the point is that reducing spending is the solution?

 

[cesarz]

The only problem is that what Cato promotes works - and what Krugman says doesnt.

http://www.youtube.com/watch?v=nhUOpNve1bY&feature=player_embedded#!

Of course dont have my high hopes that you would watch it and do your research. Because Cato are hacks (no proof of course).

 

[DC]

Maybe the point is that tax increases are not sufficient to cover the deficit? Maybe the point is that reducing spending is the solution?

and maybe the real point is doing both?

 

[Toke]

The only problem is that what Cato promotes works - and what Krugman says doesnt.

I see it the other way around.

and maybe the real point is doing both?

Or even better, ignore the deficit, raise public expenditure and get the economy going again. If possible get a few years with high inflation to get home owners above water.

Taxing the richest would not harm either as they are not investing anyway due to lack of demand.

 

[Dr. Keith]

How is the highest tax rate 20%? Income tax at his income level is 35%.

Capital gains are not taxed the same as earned income. Long term capital gains are the bulk of his income and are taxed at 15%.

That is the point of the article and the major discussion in this thread. Read one or the other.

 

[DC]

I see it the other way around.
Or even better, ignore the deficit, raise public expenditure and get the economy going again. If possible get a few years with high inflation to get home owners above water.
Taxing the richest would not harm either as they are not investing anyway due to lack of demand.

you forgot the sarcasm tags?

 

[cesarz]

I see it the other way around.

Well its your right to SEE IT how you want.

 

[NoZed Avenger]

Anyhow, this thread isn't about whether Buffet is a genuine philanthropist or not, it's about his views on how much the uber rich pay in taxes.

And I was only making a narrow point (poorly written as well), in that several people are at least implicitly asserting that Buffet ismaking these pronoucements despite being potentially harmed by higher taxes, by asking to pay more. But just as he has lobbied to increase death taxes -- when he also owns and heavily invests in insurance companies which benefit from people buying their products toavoid the worst of the "death tax," he has ownership interests in a number of firms that could benefit from the tax change. (As, forexamle, when he bought up stock in financial instituions when arguing for them to be bailed out). I am only asking that we not assume he will belosing money by the changes he advocates, and that ths angle has not been seriously looked at.

The larger concern of mine - and I haven't made a conclusion yet, I am just listing things that bother me - remains that the actual tax revenues are being assumedhighe merely bcausethe rate is higer. Idon't think the historical reord supports this -- and the tax rate changes specifically listed by Buffet did *not* lead to higher revenue, just higher rates.
There may be other influences we need to exclude, but I need someone to show me the math. When the capital gains rate was raised in th 80s, capital gains tax revenues went down. When the capital gains tax rate was reduced in the 90's (under Clinton), capital gains and income tax revenues both rose considerably.

So a higher tax rate might lead to higher revenues, or it might not. A smaller incease in the tax rate (say a 3% rise) might lead to more money for the governmnt, where moving it all the way to 25% or 30% might actually decrease revenue.

 

[Mister Agenda]

I recommend reading Paul Krugman's blog in the NYT.

He have been writing on "Liquidity Trap" and how businesses are currently sitting on huge piles of cash with no incentive to invest in production as there is no demand.

One solution would be to tax it and then spend it on public projects.

At least then we'd have infrastructure in good repair to show for it.

 

[Mister Agenda]

And I was only making a narrow point (poorly written as well), in that several people are at least implicitly asserting that Buffet ismaking these pronoucements despite being potentially harmed by higher taxes, by asking to pay more. But just as he has lobbied to increase death taxes -- when he also owns and heavily invests in insurance companies which benefit from people buying their products toavoid the worst of the "death tax," he has ownership interests in a number of firms that could benefit from the tax change. (As, forexamle, when he bought up stock in financial instituions when arguing for them to be bailed out). I am only asking that we not assume he will belosing money by the changes he advocates, and that ths angle has not been seriously looked at.

The larger concern of mine - and I haven't made a conclusion yet, I am just listing things that bother me - remains that the actual tax revenues are being assumedhighe merely bcausethe rate is higer. Idon't think the historical reord supports this -- and the tax rate changes specifically listed by Buffet did *not* lead to higher revenue, just higher rates.
There may be other influences we need to exclude, but I need someone to show me the math. When the capital gains rate was raised in th 80s, capital gains tax revenues went down. When the capital gains tax rate was reduced in the 90's (under Clinton), capital gains and income tax revenues both rose considerably.

So a higher tax rate might lead to higher revenues, or it might not. A smaller incease in the tax rate (say a 3% rise) might lead to more money for the governmnt, where moving it all the way to 25% or 30% might actually decrease revenue.

This. The tax rate that will produce the most revenues is a moving target. If you raise taxes and revenue doesn't increase, they're too high. If you lower taxes and the revenue doesn't increase, they're too low; if your only concern is maximizing revenue you have to be willing to experiment to find the sweet spot, and understand that it isn't going to be in exactly the same place next year.

 

[Toke]

you forgot the sarcasm tags?

No, not really.
The problem in a recession is that nobody is spending any money, that means that the government have to step in and do it.
Cutting government spending now will just make the problem worse.

Sure, the US deficit is high but the interest on it is close to zero so it is not a significant problem to maintain payments. Actually the low interest makes this a great time to catch up on decades of crumbling infrastructure.

 

[Toke]

This. The tax rate that will produce the most revenues is a moving target. If you raise taxes and revenue doesn't increase, they're too high. If you lower taxes and the revenue doesn't increase, they're too low; if your only concern is maximizing revenue you have to be willing to experiment to find the sweet spot, and understand that it isn't going to be in exactly the same place next year.

As I recall Wiki the highest revenue on income tax is at 70%, with 35% for companies. I agree that it is likely a moving target.

A lot of variation will stem from how/if it is enforced.

 

[DC]

No, not really.
The problem in a recession is that nobody is spending any money, that means that the government have to step in and do it.
Cutting government spending now will just make the problem worse.

Sure, the US deficit is high but the interest on it is close to zero so it is not a significant problem to maintain payments. Actually the low interest makes this a great time to catch up on decades of crumbling infrastructure.

okey, you have a point with the almost 0 interest.

 

[cesarz]

No, not really.
The problem in a recession is that nobody is spending any money, that means that the government have to step in and do it.
Cutting government spending now will just make the problem worse.

Sure, the US deficit is high but the interest on it is close to zero so it is not a significant problem to maintain payments. Actually the low interest makes this a great time to catch up on decades of crumbling infrastructure.

http://www.downsizinggovernment.org/balanced-budget-plan

"Some analysts claim that cutting government spending would hurt the economy, but that idea is based on faulty Keynesian theories. In fact, federal spending cuts would shift resources from often mismanaged and damaging government programs to the more productive private sector, thus increasing overall GDP. Consider Canada's experience. In the mid-1990s, the country faced a debt crisis caused by runaway government spending—similar to our current situation. The Canadian government changed course and slashed total spending 10 percent in just two years and then held it roughly flat for another three years.1 The Canadian economy did not sink into recession, but was instead launched on a 15-year economic boom.

Policymakers shouldn't think of spending cuts as a necessary evil needed to reduce debt. Rather, the government's fiscal mess is an opportunity to make reforms that would spur growth and expand individual freedom."

 

[DC]

http://www.downsizinggovernment.org/balanced-budget-plan

"Some analysts claim that cutting government spending would hurt the economy, but that idea is based on faulty Keynesian theories. In fact, federal spending cuts would shift resources from often mismanaged and damaging government programs to the more productive private sector, thus increasing overall GDP. Consider Canada's experience. In the mid-1990s, the country faced a debt crisis caused by runaway government spending—similar to our current situation. The Canadian government changed course and slashed total spending 10 percent in just two years and then held it roughly flat for another three years.1 The Canadian economy did not sink into recession, but was instead launched on a 15-year economic boom.

Policymakers shouldn't think of spending cuts as a necessary evil needed to reduce debt. Rather, the government's fiscal mess is an opportunity to make reforms that would spur growth and expand individual freedom."

i think this is based on faulty friedmanism

 

[Toke]

faulty Keynesian theories

There are different schools of economics, one of them call Keynes wrong.

Did you notice that Canada in you example were not in a recession, they just had a high debt?
So it is not "similar to our current situation" and you should not try a similar approach.

You should be careful about sources like this.

 

[Toke]

i think this is based on faulty friedmanism

Yes, looks like it.

 

[cesarz]

And on what level Friedman was wrong?
And when Keynes was right because its seems his ideas never worked?

 

[Toke]

And on what level Friedman was wrong?
And when Keynes was right because its seems his ideas never worked?

Keynes ideas worked quite well and still do, as for Friedman I have a nice book here called "Zombie economics, how dead ideas still walk among us."

 

[cesarz]

Keynes ideas worked quite well and still do, as for Friedman I have a nice book here called "Zombie economics, how dead ideas still walk among us."

Yes when and where they working?

Please support it with any links or data

http://www.aei.org/article/102443

"A 2002 study by economists Richard Hemming, Selma Mahfouz and Axel Schimmelpfennig of recessions in 27 developed economies from 1971 to 1998 found that increased spending by government had, in almost all cases, a barely noticeable impact, and sometimes a negative one. Heavily indebted countries that spent more in recessions grew about 0.5 percent less, relative to trend, than countries that didn't, the study found."

And as for Friedman there are so many countries that are doing great thanks to his ideas.