[luke warm]

helene_t, on Oct 24 2009, 06:47 AM, said:

The optimal rate isn't the one that generates maximum revenue.

what would be the purpose for the optimal rate?

[PassedOut]

luke warm, on Oct 24 2009, 08:15 AM, said:

helene_t, on Oct 24 2009, 06:47 AM, said:

The optimal rate isn't the one that generates maximum revenue.

what would be the purpose for the optimal rate?

I suppose Helene has some other factors in mind, but I would think that you must be at least on the right track by suggesting as optimum the rate that generates maximum revenue. Such a rate would clearly be low enough for the economy and businesses to thrive, meanwhile permitting the government to maximize its services to the public.

I see that some folks in Germany believe that an adjustment in their rates is called for: Rich Germans demand higher taxes

Quote

A group of rich Germans has launched a petition calling for the government to make wealthy people pay higher taxes.

The group say they have more money than they need, and the extra revenue could fund economic and social programmes to aid Germany's economic recovery.

Germany could raise 100bn euros (£91bn) if the richest people paid a 5% wealth tax for two years, they say.

The petition has 44 signatories so far, and will be presented to newly re-elected Chancellor Angela Merkel.

The group say the financial crisis is leading to an increase in unemployment, poverty and social inequality.

Simply donating money to deal with the problems is not enough, they want a change in the whole approach.

"The path out of the crisis must be paved with massive investment in ecology, education and social justice," they say in the petition.

Those who had "made a fortune through inheritance, hard work, hard-working, successful entrepreneurship, or investment" should contribute by paying more to alleviate the crisis.

Our family is not rich, but we've paid a lot of taxes over the years and have never minded doing so. I surely don't like government waste, but I agree with Joe Biden that paying taxes is a patriotic act. The Germans signing the petition sound like fine citizens indeed.

[luke warm]

PassedOut, on Oct 24 2009, 04:10 PM, said:

Our family is not rich, but we've paid a lot of taxes over the years and have never minded doing so. I surely don't like government waste, but I agree with Joe Biden that paying taxes is a patriotic act. The Germans signing the petition sound like fine citizens indeed.

i don't equate tax paying with patriotism, or at least higher rates with patriotism, but this does raise a question... if someone feels this way, why ask that higher rates be placed on everyone? why don't those who feel this way simply write a check to the german treasury?

[helene_t]

luke warm, on Oct 24 2009, 02:15 PM, said:

helene_t, on Oct 24 2009, 06:47 AM, said:

The optimal rate isn't the one that generates maximum revenue.

what would be the purpose for the optimal rate?

If tax inhibits economic activity, surely the optimal rate is zero*, if the aim of the economic policy is to stimulate growth. No? Of course revenue should also be considered, but for any trade-off between revenue and growth there is an optimal rate somewhere between zero and the revenue-maximizing rate.

*thinking about it, a negative rate might be even better. But then again, another aim of income tax is to inhibit inflation.

[PassedOut]

luke warm, on Oct 24 2009, 04:17 PM, said:

i don't equate tax paying with patriotism, or at least higher rates with patriotism, but this does raise a question... if someone feels this way, why ask that higher rates be placed on everyone? why don't those who feel this way simply write a check to the german treasury?

Because the amount paid by a single family has no overall impact.

[kenberg]

One thing that a country wants is wealth and the capacity to act. This is not necessarily equivalent to getting large revenue from taxes. I will make up some figures here: Suppose that we come to believe that it would be a good thing if 60% of the population finished a four year college degree. This takes money. If a fair portion, let's say 50% of the population, is quite well off (I said I would make up numbers) then the government can embark on a plan too get the 60% off to college without having to devote too many tax dollars for scholarships and such. If a much smaller fraction of the population is well off, then this plan will take lots of tax dollars. So what is needed is wealth, not necessarily tax revenue. So wealth is important, not necessarily tax revenues.


Actually this is some part of the current issue with health care. If the cost doesn't worsen greatly, I can afford it. Some cannot. The more that can afford it, the fewer that cannot afford it, then fewer tax dollars are needed to provide health care.


i know I have hopelessly oversimplified, I don't intend it as a serious contribution to the discussion of health care, but it seems to me we want to create wealth. Of course wealth has to be at least somewhat dispersed. But first it has to be there, otherwise it is hard to disperse it.

How, or even if, the Laffer curve fits into this I do not know. But it seems to me that the creation of wealth is a good thing to optimze on.

[mike777]

PassedOut, on Oct 24 2009, 04:10 PM, said:

luke warm, on Oct 24 2009, 08:15 AM, said:

helene_t, on Oct 24 2009, 06:47 AM, said:

The optimal rate isn't the one that generates maximum revenue.

what would be the purpose for the optimal rate?

I suppose Helene has some other factors in mind, but I would think that you must be at least on the right track by suggesting as optimum the rate that generates maximum revenue. Such a rate would clearly be low enough for the economy and businesses to thrive, meanwhile permitting the government to maximize its services to the public.

I see that some folks in Germany believe that an adjustment in their rates is called for: Rich Germans demand higher taxes

Quote

A group of rich Germans has launched a petition calling for the government to make wealthy people pay higher taxes.

The group say they have more money than they need, and the extra revenue could fund economic and social programmes to aid Germany's economic recovery.

Germany could raise 100bn euros (£91bn) if the richest people paid a 5% wealth tax for two years, they say.

The petition has 44 signatories so far, and will be presented to newly re-elected Chancellor Angela Merkel.

The group say the financial crisis is leading to an increase in unemployment, poverty and social inequality.

Simply donating money to deal with the problems is not enough, they want a change in the whole approach.

"The path out of the crisis must be paved with massive investment in ecology, education and social justice," they say in the petition.

Those who had "made a fortune through inheritance, hard work, hard-working, successful entrepreneurship, or investment" should contribute by paying more to alleviate the crisis.

Our family is not rich, but we've paid a lot of taxes over the years and have never minded doing so. I surely don't like government waste, but I agree with Joe Biden that paying taxes is a patriotic act. The Germans signing the petition sound like fine citizens indeed.

Great post I think it really gets to the very heart of the conservative vs liberal debate on taxes.


Rich Germans feel they need to be taxed alot more to help the economy, create jobs and social issues. For sake of discussion I will call this side A.

OTOH I think Side B would suggest just the opposite that Rich Germans with even more money they do not really need could create jobs themselves and donate money to education, medicine etc?

[Al_U_Card]

When they passed(?!) the Income tax act in 1913, they neglected to have it ratified.....making it illegal. So pay your taxes as a patriot....makes sense.

[Winstonm]

I happen to believe there is also a problem in the U.S. about the level of benefits received (or at least perception of benefits received) from tax contributions compared to many other parts of the world.

We seem to get little in the way of "bang for our buck" when others are receiving benefits like national health care, mass transportation services, atomic energy production, and cleaner air and water.

I doubt many would object so strongly to paying their U.S. taxes if they could walk into any doctor's office or hospital they wished at any time and receive health services at no cost.

What we see now has the appearance of a lot of waste - we pay our taxes for the FDA and then read stories about poisoned products coming in from China. It doesn't look like we are getting much FDA safety for our tax dollars spent.

[mike777]

Winstonm, on Oct 24 2009, 07:04 PM, said:

I happen to believe there is also a problem in the U.S. about the level of benefits received (or at least perception of benefits received) from tax contributions compared to many other parts of the world.

We seem to get little in the way of "bang for our buck" when others are receiving benefits like national health care, mass transportation services, atomic energy production, and cleaner air and water.

I doubt many would object so strongly to paying their U.S. taxes if they could walk into any doctor's office or hospital they wished at any time and receive health services at no cost.

What we see now has the appearance of a lot of waste - we pay our taxes for the FDA and then read stories about poisoned products coming in from China.  It doesn't look like we are getting much FDA safety for our tax dollars spent.

If by US taxes you mean income taxes keep in mind more than 50% of us pay zero in income taxes if we count young and old. So no as long as people, me, you, pay no taxes...yes raise them..


If that means you(young person) sends me (old person) a bigger check...sign me up pls.

In any event if the government can do a better job creating jobs than rich germans on their own...I am all for it. OTOH if a rich german wants to invest in my company and not pay more taxes......I am for that.

[blackshoe]

mike777, on Oct 24 2009, 10:29 PM, said:

In any event if the government can do a better job creating jobs than rich germans...I am all for it.

I suspect that's a very big if.

[mike777]

I am a part owner of Mercedes Benz and BMW perhaps these 44 super Rich germans would at least consider giving my companies some money rather than paying more in taxes? We might hire more people or lower our prices so more can buy our cars? We pay benefits to our workers. We have Unions.


OTOH perhaps the German government can do better?


btw these are great cars...posters please buy more of them.

[jdonn]

Winstonm, on Oct 24 2009, 07:04 PM, said:

I happen to believe there is also a problem in the U.S. about the level of benefits received (or at least perception of benefits received) from tax contributions compared to many other parts of the world.

We seem to get little in the way of "bang for our buck" when others are receiving benefits like national health care, mass transportation services, atomic energy production, and cleaner air and water.

I doubt many would object so strongly to paying their U.S. taxes if they could walk into any doctor's office or hospital they wished at any time and receive health services at no cost.

What we see now has the appearance of a lot of waste - we pay our taxes for the FDA and then read stories about poisoned products coming in from China. It doesn't look like we are getting much FDA safety for our tax dollars spent.

I disagree on two counts.

One is that we don't get much "bang for our buck". To me the greater problem is we don't give enough buck. The US has notoriously low taxes compared to say Europe. It's no wonder they receive services that we don't.

The other disagreement is that you doubt many would object to paying plenty of taxes if they got plenty of government services for them. I'm pretty sure almost every Republican would feel quite the opposite of that, or at least claim to.

[Lobowolf]

And more than a few Democrats, too.

[mike777]

It is terrible that we do not get the services that Europe does.

At the very least someone should pay for them.

My guess is the young should pay more...much more.....

[mike777]

Please can the next one thousand or ten thousand posts be who pays for all of this not.....who gets all of this?

My bet is we cannot go ten thousand posts without someone saying ....they should get money....not pay/work for it..

[Winstonm]

jdonn, on Oct 24 2009, 11:49 PM, said:

Winstonm, on Oct 24 2009, 07:04 PM, said:

I happen to believe there is also a problem in the U.S. about the level of benefits received (or at least perception of benefits received) from tax contributions compared to many other parts of the world.

We seem to get little in the way of "bang for our buck" when others are receiving benefits like national health care, mass transportation services, atomic energy production, and cleaner air and water.

I doubt many would object so strongly to paying their U.S. taxes if they could walk into any doctor's office or hospital they wished at any time and receive health services at no cost.

What we see now has the appearance of a lot of waste - we pay our taxes for the FDA and then read stories about poisoned products coming in from China.  It doesn't look like we are getting much FDA safety for our tax dollars spent.

I disagree on two counts.

One is that we don't get much "bang for our buck". To me the greater problem is we don't give enough buck. The US has notoriously low taxes compared to say Europe. It's no wonder they receive services that we don't.

The other disagreement is that you doubt many would object to paying plenty of taxes if they got plenty of government services for them. I'm pretty sure almost every Republican would feel quite the opposite of that, or at least claim to.

First, I agree that the U.S. pays low taxes compared to other countries, but that is partially due to the dollar as the reserve currency of the world and the necessity to purchase treasury bonds because of that. The world finances a great deal of our profligacy, so much of our tax costs are delayed, pushed ahead in the form of increased national debt.


Second, I did not say Americans would not object to higher taxes if they got more return government services - I said they would not object to paying their taxes (current levels) if they perceived a benefit in doing so.

[luke warm]

PassedOut, on Oct 24 2009, 04:45 PM, said:

luke warm, on Oct 24 2009, 04:17 PM, said:

i don't equate tax paying with patriotism, or at least higher rates with patriotism, but this does raise a question... if someone feels this way, why ask that higher rates be placed on everyone? why don't those who feel this way simply write a check to the german treasury?

Because the amount paid by a single family has no overall impact.

but should a group (rich germans) be forced to pay a higher rate because someone is of the opinion they should? what if, as mike says, i am of the opinion that the rate on age group 25 - 55 should be increased, should we do it?

btw, if i were dictator the rate would be a flat 60% - but there would be no unemployment, infrastructure would be sound, education would be free thru, in some cases, grad school, and health care would be free

[kenrexford]

Two ideas (among many) that are plausible:

1. Reduce taxes. This places more money in the hands of those who make money, with minimal distribution cost (the placement is relatively automatic). These folks make more money with that money at a rate that hopefully exceeds the tax loss from the policy.

2. Loan money to the money-lenders. That money never is "lost," in theory, because it will be paid back. This places money in the hands of the money-makers, per the "experts opinion," rather than the market opinion. More distribution costs, because you pay the middle-man "expert" for "targeted" re-investment.

Both risk favoritism, in theory. Tax policy, as to types of recipients or behavior; loan policy, as to personal/political favors AND as to tax benefit favoritism. So, probably more favoritism in latter.

Big point, though, is that these BOTH seem like supply-side economics, at the core, just with a difference as to who is supplied and with how many strings.

Oh -- and I'm talking specifically about bailouts and stimulus.

[Winstonm]

My belief is that in a healthy economy supply=demand (roughly). In modern societies, this simple equation can be re-written as: production=wages + new debt.

There is an (unspecified) ratio between productivity and wage growth that needs to remain constant in order to absorb increased production.

Tax (and other government) policies can dramatically alter the productivity/wage ratio in real terms. With the GOP-led tax cuts that went primarily to the wealthy and with continued wage arbitrage due to globalization, productivity gains were not distributed in the ratio needed to absorb productivity gains.

The only thing that can replace wage growth is new debt. The problem with new debt is the solvency limitation - at some point both individuals (and countries) reach a point where they can borrow no more. If the individual (or the country) is dependent on rolling over existing debt into new debt, what Minsky called Ponzi financing, and can no longer do so there is a crash.

That in a nutshell is how we got from there to here over the past 25 years. We developed a wage/productivity gap that was filled by new debt and ease of financing, which led to a false demand that was followed by increased supply that had no real demand backing it.

That is how you end up with a 10-11 month supply of homes on the market and home lenders collapsing.