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originally posted in:Liberty Hub
7/11/2016 10:20:16 PM
20
There's a big difference between the statutory rates and the effective rates.
English
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Right, and the more that gets taken by the state, the less that people are willing to produce/make in the future. Statutory rates by themselves also contribute. Why produce more if I'm facing a 70% tax rate?
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No idea. Nobody faces that.
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I'm referring to the 1980 rate under President Carter.
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Edited by Britton: 7/11/2016 10:32:25 PMStill no idea. Those are indeed some messed up brackets. 70% for 200k and up? No good. But, that's not how much they actually paid. Like I said, there's quite a difference between effective and statutory
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Which is why we look at how much the IRS reported collecting. With a 28% rate, the IRS reported collecting five times more than they collected with a 70% rate.
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Yeah but your not even looking at tax breaks, legal loopholes, any of that.
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Which is why I said... [quote]This is, as Daniel Mitchell puts it, "the Laffer Curve on steroids." Now, there are other factors that explain this disparity in income, including inflation, population growth, and other policy changes under Reagan. However, it would be ridiculous to suggest that the Laffer Curve doesn't play a part in the disparity.[/quote]
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Edited by Britton: 7/11/2016 10:41:51 PMYes but its definitely not the end all be all like your making it seem.
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Certainly. The tax code is a disaster. However, we see a giant disparity in income between two vastly different rates, and the Curve explains some of that disparity.
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Edited by Britton: 7/11/2016 10:46:55 PMWith the amount of bull crap in the tax code at the top, the laffeur curve is only going to be reading true at the bottom where the avg w-2 is relatively simple.
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The table provided deals exclusively with "the wealthy," at 200k and above. There's a 600% difference in income between a 28% rate and a 70% rate. The curve fits at the upper end too, unless we want to attribute a five times increase entirely to inflation and population growth.
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How does the curve account for tax havens?
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Account for them? What do you mean? Lower taxes would remove the incentive for shipping money out of the country. Tax havens, as well as any strategy for avoiding taxes, contribute to the downward decline of revenue as taxes climb.
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If we have legal tax havens, and we do, that undermines taxes. So does the background information behind the curve consider the compare the presence of legal tax havens to them not being available?
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I'm not sure. Is your point that we could maximize revenue with 1) high taxes, and 2) eliminating escape routes that contribute to the downward slope of the Curve? People who have an income between 200k-500k aren't really notorious for sending their money to the Caymans, and the Curve still applies to that bracket.
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My point is that we could increase the effective rates by eliminating the havens, therefore increasing revenues without also increasing the actual statutory rates. I understand the need for moderate rates, I'm not arguing against that. I am arguing the infallibility of this curve.
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[quote]My point is that we could increase the effective rates by eliminating the havens, therefore increasing revenues without also increasing the actual statutory rates.[/quote] Maybe. Effective rates are still taken into consideration, though, and trying to patch holes in the tax code is what turned it into a quilted monstrosity in the first place. [quote] I am arguing the infallibility of this curve.[/quote] It's certainly not a concrete shape, and it isn't the only determining factor of income. However, there's a measurable difference in revenue collected through high rates and low rates. At some point, the law of diminishing returns kicks in and all we're doing is punishing productivity.
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I don't disagree, but I do think patching it is better than nothing. IMO what turns everything into the giant mess is how bills are passed. Amendments on amendments shoved into these bills making them giant messes that affect way more than the core issue of the bill. This, to me is the main driver behind the tangled mess and constant corruption we see. "Thanks for the money Mr. Lobbyist, I'll make sure to add this amendment you personally wrote on behalf of your employer straight into this must pass legislation"
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[quote]IMO what turns everything into the giant mess is how bills are passed. Amendments on amendments shoved into these bills making them giant messes that affect way more than the core issue of the bill. This, to me is the main driver behind the tangled mess and constant corruption we see.[/quote] Pork-barrel legislation is absolutely ridiculous. The ACA had a "Cornhusker Kickback," for Nebraska. You've just gotta buy the right legislators with public funds, and you can wield the ever-expanding power of the state. Then private funds get involved, you get conflict of interest, and nobody takes the time to say, "Maybe we don't actually have this authority."
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Indeed. It goes hand in hand with the corruption.
