The Rich & Job Creation

[FinetalPies]

If we tax the rich less, they'll create more jobs and everyone will benefit rich white dudes will have more money.

I know exactly why the 'job creator' kind of thinking came into play, I'm just not sure how everyone apparently fell for it.

[takingarms1]

QUOTE (FinetalPies @ Aug 6 2013, 07:28 AM) If we tax the rich less, they'll create more jobs and everyone will benefit rich white dudes will have more money.

I know exactly why the 'job creator' kind of thinking came into play, I'm just not sure how everyone apparently fell for it.

Probably because you're young and don't follow history. Look up the Carter years, what top tax brackets were, and the effect it had when Reagan significantly cut those top tax brackets. I believe Kennedy did something similar, also. As I said above, capitalists and right-wing types play up the job creator theme probably more than it deserves, but there's empirical evidence (as well as plain common sense) that supports the fact that entrepreneurs do create jobs. Add to that fact that most entrepreneurs don't start out rich, they become that way after they succeed (see e.g. steve jobs, bill gates, etc etc ad naseum). Hating someone for being rich and white is just as dumb as hating someone for being any particular color or class.

That said, tax policy should be about economics not social engineering. We should tax the top brackets enough to generate income without depressing economic growth too much. Then we should spend only what we take in, and no more, failing emergencies. Instead, you have politicians constantly trying to spend more than we take in and tax whomever doesn't vote for them. It's kind of absurd but that's politics I suppose.

@Camaro, what authors? I'm not saying I disagree with everything you said, in fact I think we're closer than we appear - when I say moderate inflation I mean almost none (like 1-3%). Anyway, Friedman is a neo-classical guy I think, right? And I'm pretty sure he thought deflation was not a good thing. I confess I'm no expert here though.

[Icky]

QUOTE (TakingArms @ Aug 6 2013, 09:30 AM) Probably because you're young and don't follow history. Look up the Carter years, what top tax brackets were, and the effect it had when Reagan significantly cut those top tax brackets. I believe Kennedy did something similar, also. As I said above, capitalists and right-wing types play up the job creator theme probably more than it deserves, but there's empirical evidence (as well as plain common sense) that supports the fact that entrepreneurs do create jobs. Add to that fact that most entrepreneurs don't start out rich, they become that way after they succeed (see e.g. steve jobs, bill gates, etc etc ad naseum). Hating someone for being rich and white is just as dumb as hating someone for being any particular color or class.

That said, tax policy should be about economics not social engineering. We should tax the top brackets enough to generate income without depressing economic growth too much. Then we should spend only what we take in, and no more, failing emergencies. Instead, you have politicians constantly trying to spend more than we take in and tax whomever doesn't vote for them. It's kind of absurd but that's politics I suppose.

@Camaro, what authors? I'm not saying I disagree with everything you said, in fact I think we're closer than we appear - when I say moderate inflation I mean almost none (like 1-3%). Anyway, Friedman is a neo-classical guy I think, right? And I'm pretty sure he thought deflation was not a good thing. I confess I'm no expert here though.

I have to respond to this because the "plain common sense" argument here is complete BS.

Increasing taxes on the top brackets ENCOURAGES them to create jobs. Why? Well if their taxes are lower, that's an incentive to take that money as profit. If the taxes are HIGHER, that's an incentive to put that money back into their business (where it won't be taxed) and/or to increase payroll (also not taxed).

Cutting taxes on "entrepreneurs" is encouraging them to keep that money and not reinvest it into their businesses.

[ryujin]

QUOTE (TakingArms @ Aug 6 2013, 09:30 AM) the effect it had when Reagan significantly cut those top tax brackets

you are still an idiot
http://www.econdataus.com/taxcuts.html

[takingarms1]

QUOTE (Ryujin @ Aug 6 2013, 11:22 AM) you are still an idiot
http://www.econdataus.com/taxcuts.html

Actually, you are. I was obviously talking about the effect on the economy not the effect on net revenue generation, which is what your article addresses.

But, from your very own link:
QUOTE As can be seen in the first table, total receipts increased 76.05 percent from 1981 to 1991. However, this was the slowest 10-year growth rate since a 75.41 percent growth in total receipts from 1956 to 1966. Of course, these results are likely skewed by the high inflation that occurred during the 70's. Hence, it makes more sense to look at the "real" (inflation-adjusted) rates. The second table shows that the real growth rate from 1981 to 1991 was 17.72%. The 10-year growth rate increased in the following years to a high of 37.75% from 1984 to 1994. However, the real growth rate of total receipts reached higher highs of 42.63% in 1971 to 1981 and 53.11% from 1990 to 2000.[/quote]

The above very un-clearly states that the revenues DID increase after the Reagan tax cuts, and later on the article proceeds to explain that although the revenues did increase, based on historical data, the author believes that revenues would have been even higher without the Reagan tax cuts. Also, there are lots and lots of other articles that dispute this one's conclusion if you actually use google a bit and have an open mind.

QUOTE (Icky @ Aug 6 2013, 10:29 AM) I have to respond to this because the "plain common sense" argument here is complete BS.

Increasing taxes on the top brackets ENCOURAGES them to create jobs. Why? Well if their taxes are lower, that's an incentive to take that money as profit. If the taxes are HIGHER, that's an incentive to put that money back into their business (where it won't be taxed) and/or to increase payroll (also not taxed).

Cutting taxes on "entrepreneurs" is encouraging them to keep that money and not reinvest it into their businesses.

I get what you're saying but there's another side to that logic. First, let me state that my "common sense" argument was directed to entrepreneurs creating jobs. Bottom line - if my boss didn't take a risk and start a firm, there would be 50 less jobs in the economy. That's the common sense argument.

As to your logical argument, there are several problems. First, there is a payroll tax so money you put there IS taxed. Second, the only reason an entrepreneur invests in a business is to make MORE money. That's the goal. Now I do agree that to a certain extent, lowering taxes on wealthy individuals won't encourage them to try to make any more money. There's a sweet spot, so to speak. So at one point, when tax brackets were upwards of 80%+ for certain levels of income, a high earner would literally stop trying to make money once they reached a certain level, because they wouldn't get to keep much of it. However, dropping the top rate from 50% to 40% might not do that much in terms of job creation. That's an oversimplification, but it's really more of a sciency-type question - what top rate is going to generate the most revenue balanced against the depressing effect that the tax has on the economy? That's where we should put the top bracket. It has nothing to do with how much rich people deserve a tax break or poor people deserve to take money from rich people. That's all I'm saying.

[Viscur]

Economics seems to be less "Science" and more "Theorycrafting" in that theres a lot of people with conflicting ideas with a lot of data supporting each side that no one can really agree upon what any of it means in the end.

I vote we all just become a global communistic society and move past it already.

[lexaal]

QUOTE (Viscur @ Aug 6 2013, 11:54 PM) I vote we all just become a global communistic society and move past it already.

The difference between the communist economy scientist and the capitalist economy scientist is that the communists believe that the economy can be predicted exactly by an accurate mathematical model while the capitalists in opposition to that believe that the economy can be predicted accurately by an exact mathematical model.

[takingarms1]

QUOTE (Viscur @ Aug 6 2013, 05:54 PM) Economics seems to be less "Science" and more "Theorycrafting" in that theres a lot of people with conflicting ideas with a lot of data supporting each side that no one can really agree upon what any of it means in the end.

True, but at least we have rational things to discuss instead of completely subjective things like "fairness" where one side defines fair as rich people paying for almost everything and the other side defines fair as everyone pays the exact same thing (or rich people paying nothing).

[Adept]

QUOTE (TakingArms @ Aug 7 2013, 01:09 AM) True, but at least we have rational things to discuss instead of completely subjective things like "fairness" where one side defines fair as rich people paying for almost everything and the other side defines fair as everyone pays the exact same thing (or rich people paying nothing).

Subjective to a degree, but also utterly fundamental to the human psyche. Evolution has favoured fairness and cooperation, and continues to do so. Small children asked to split a cake, for instance tend to make equal shares, and are furious if the ne doing the split tries to cheat. http://www.bbc.co.uk/news/science-environment-23529849

[Vortrog]

It takes a lifetime to learn bad habits socially and even logically.
Have an adult and a 4 year old child pick up a small box off the ground. Which one bends their knees and gets their body close to the object to not stuff their back up? Will happen every time.