Friday, December 28, 2012
John Maynard Keynes on Punitive Tax-Rates (Yeah, You Heard Me Right)
"Taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget."......Wow, it kinda sounds like he's articulating something similar to the Laffer Curve here, the Law of Diminishing Returns, etc..
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21 comments:
But what sde of the Laffer Curve are we on?
My opinion, Jerry, is that taxes could go up a tad and it wouldn't hurt us too badly. I wouldn't, however, pull a "Hoover" (the raising of taxes 152% during a very weak recovery - as Mr. Hoover did during 1930).
A 152% increase would raise the top rate from 35% to 88%. Nobody is proposing such a large increase.
However, one increase that is coming close to such a large percentage increase is taxing capital gains as ordinary income. Perhaps it should be raised in a series of steps over several years if implemented at all.
Sorry, I didn't mean to imply that anybody was, just that it would be a stupid idea to do so.......As for the President's idea to raise the top tax-rates from 35 to 39.6%, that's a 13.1% increase and I would probably scale that back to about 37-38% and raise the threshold to about what the President has recently proposed; $400,000. That way we would still probably raise about $40 billion a year and it would also have minimal effect on investor behavior.......Of course nobody down there is asking me now are they?
No mention of spending cuts? No mention of entilement cuts?
So typical of the present american way......keep spending,lets put everyone on disability,lets give everyone food stamps,lets give everyone free healthcare,lets allow almost half of the population pay zero federal taxes,lets raise the death tax to %50,let raise capital gaines tax.....you guys spend hours debating how much the the tax rate should be yet never even mention any slowing of spending.
Russ, I am strongly in favor of the Bowles-Simpson/Domenici-Rivlin/Gang of Six approach to debt consolidation. All 3 of those proposals have significant spending cuts (not to mention entitlement reform) and I embrace them. Come on, you know me better than that.
I will consider spending cuts seriously when they put the single biggest spending item on the table, the defense budget.
Jerry, I am SO with you on this one. We spend 48% of the world's defense budget and more than the next 14 countries combined. It is well past time that counties like Germany, Japan, and South Korea started paying a little bit more for their own defense and we started closing down some of those more exotic military bases. Hell, even Donald Rumsfeld said that we could save a healthy 12 billion a year simply by closing down unnecessary installations. Hear hear!
And just what occupation would you give the soldiers and sailors put out of work? Perhaps just put them on unemployment....hell,maybe on disability.
How about all the lost jobs at Boeing,Grumman-Northrup and the rest of the contractors? What about the suppliers?
Its so damn easy to say just cut defense spending when you dont consider the ramifications.
All government spending cuts result in job losses.
Maybe Rusty has hit on the solution to our unemployment -- increase defense spending.
Russ, you're buying full-throttle into that Military Industrial Keynesianism argument of the neocons. Yeah, there will no doubt be some job losses in certain segments of the economy but you will also be freeing up investments that could clearly be spent more efficiently elsewhere. The government is constantly misallocating resources and having military bases in places like Aruba (which effectively stimulates their economy more so than it does ours) is classic example of that.
I fully agree with military spending reductions in ordr to reduce waste. Will has the right idea. I just oppose the idea of spending reductions in order to weaken our nation and make our enemie stronger. Sorry. Mr. Kucinich.
Rusty: Yes, I do strongly disagree with your support of military spending as a welfare/handout program. The government should not be paying those sailors and Boeing contractors unless it is necessary. Employing them as you want just to waste money on them to keep them off the unemployment lines does not cut it at all, and is pure waste. Defense spending should be solely to defend the nation, not squander money on gifts to those too lazy to find a real, necessary job.
No Will,Im not at all buying into any Military Industrial Keynesianism....Im saying you guys want to kill a rabbit with a cannon.And Will,you always bring up our base in Aruba,of course its idiotic to be there.Is it also idiotic to have troops in South Korea or Japan or Turkey or Germany?
My point was,massive cuts in military spending would make letting GM fail look like chicken feed.This weak economy could'nt absorb the emassive loss of jobs.
And what investments would be "freed up?" More Solyndra's? Fiskers? Useless wind farms?
Stop looking for pie in the sky.
"...massive cuts in military spending would make letting GM fail look like chicken feed."
Massive cuts in any government spending will make letting GM fail look like chicken feed.
"...massive cuts in military spending would make letting GM fail look like chicken feed."
Massive cuts in any government spending will make letting GM fail look like chicken feed.
Good old Jerry and the liberal talking points.So very typical,one trick ponies.
Excellent repudiation of what I said, Rusty.
Russ, I'm not looking for massive military cuts. The 12 billion figure that I used comes from Rumsfeld and the fact that I want to get Japan and Germany to help us out a little bit more with THEIR defense isn't an outrageous request. The 2012 defense budget is 737 billion. Trimming it by 20 billion would be less than a 3% cut and it would really help us reduce the deficit. Yes, the Democrats need to relent a little on entitlements but so, too, do the Republicans need to examine their sacred cows.
Hopefully I didn't alienate everybody with that one.
Oh, and, Russ, get this. Virtually every Keynesian economist near the end of WW2 was predicting that the economy was going to go into another deep depression (actually we were still in the Great Depression during the war but that's another story) once the war ended and they wanted yet another massive spending program. Truman (prodded by the Republicans) decided against that and instead cut federal spending 40 PERCENT. The result? 1946 was one of the best economic years in American history. Cutting the defense budget 2.7%, we can do that in our sleep.
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