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What is the response to this?

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unreal030 Posted: Mon, Aug 8 2011 10:53 PM

I have been trying to explain tax cuts as well as the financial crisis to a number of liberals who have pretty much zero understanding of economics. I was succeeding, greatly, up until this point, in which I am not sure in which way it is best to respond, and I am also curious myself as to the answer, and would appreciate an elaboration for my own intellectual interests:

The conversation was like this:

One man linked this:
http://www.huffingtonpost.com/2011/05/20/bush-tax-cuts-debt_n_864812.html
(
How do I respond to this? ^ this is my question)

The people then posted the following: FYI I am not any of the people below:

Douglas Jones-To fix the problem easily you just cut out the Bush tax cut loop hole subsides for corporations and oil companies that can afford their jet airplanes and dinners! They are NOT creating jobs or we wouldn't have a lack or revenue or a recession would NOT have happened!

Tim- Douglas, google Laffer curve for me please....

James- That graph is from the CBPP based on the CBO.

Tracey- ‎3...2...1 - "The CBO is biased..."

Douglas Jones- Tim! I did and I got this!
http://blogs.ajc.com/jay-bookman-blog/2010/09/14/the-laffer-curve-debunked-part-one/
You look up the other parts to the story now and get back to me! 
In economics, the Laffer curve is a theoretical representation of the relationship between government revenue raised by taxation and all possible rates of taxation. Key word here is "theoretical" http://en.wikipedia.org/wi‚Äčki/Laffer_curve 
Now what Tim?



I really appreciate any explanations people are willing to give me here. Thank you very much.

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Well first of all, if you notice, they had to correct their own article:

"An earlier version of this post incorrectly stated in one instance that the tax cut portion of the chart refers to tax cuts for the top earners. In fact, the Bush-era tax cuts apply to a broader range of income levels."

[as in, all income levels.  Everyone got a tax cut under the so-called "Bush tax cuts" (at least, everyone who paid taxes, of course.  But then again, check out that link.  Even people who didn't pay any taxes benefitted.]

So that's one thing right there.  You'll find Leftists always like to pull out this class-warfare card of how tax cuts are only for the rich.  For one thing, as the Huffington Post had to admit, Bush cut taxes for everyone, contrary to what their narrative says.  But on top of that, you'll sometimes hear the claim that cuts "only help the richest people."  And they'll use ridiculous charts like this one shown in the film Inside Job:


http://i1035.photobucket.com/albums/a438/pics56/defaced-insidejob-xvidavi_snapshot_013621_20110404_042943.jpg?t=1301916844

And Matt Damon says "most of the benefits of these tax cuts went to the wealthiest 1% of Americans."  (This film won the Oscar for best documentary, by the way.)

Gee...The people who pay the most in taxes saw the most savings when tax rates were cut.  So you mean if I pay $1 million in taxes, and tax rates go down 10%, I actually get to keep $100k more of my money that I earned...and the guy who pays $0 in taxes...he doesn't save anything?  What the hell.  Yeah I see what he's getting at.  That's fucked up.  If you virtually don't pay any taxes already and rates go down, you should actually get money.  That's only fair.  Oh wait...They did

Yes.  The bottom 40% of "income tax payers" didn't pay any income tax starting as early as 2002...thanks to those "only for the rich" Bush tax cuts.  In fact, not only did they not pay any income tax, they got checks from the government. [See the links above].

This goes to the whole "barstool economics" story.  (For a text version, you can check here.)

 

Next, you have to realize the worldview people and articles like this are operating from.  Take a look at the very first sentence: "If the Bush-era tax cuts are renewed next year, that policy will by 2019 be the single largest contributor to the nation's public debt..."  The most obvious part of this is the fact that they are using projections out to over 8 years from now.  They can't even project into the next quarter accurately.  And we're supposed to believe they know what things will look like almost a decade from now?

But let's put that statement into simpler terms.  "If people are allowed to keep more of their own money, that will be the largest contribution to the nation's loan obligations."  In other words, somehow, letting people keep more of their money contributes to the government going into debt.

Notice how they tie the dirty word of "debt" to the notion of cutting taxes.  Again, they are asserting that when you let people keep more of their money, it equates to increasing the national debt.  The key point here is it is a total neglect of the true cause of any debt: spending.  Next, that chart they show is possibly one of the more dishonest things I've seen in a while.  (Almost as much as the one shown above).  Seriously think about it.  How does cutting taxes increase a debt?  For one thing, it doesn't.  But the implication is that there is less revenue for the government, meaning that if spending stays the same (or increases, as is the true case), and revenue is less, then debt rises.

This of course assumes two things: (1) the tax cuts reduced tax revenue, (2) the current level of government spending (and the level of growth in spending) is completely unchanagable (as in, it is impossible for the government to function while spending less money).

For number 1, we have plenty of evidence to the contrary:

DWYER: Bush tax cuts boosted federal revenue

The Washington Post’s Weak Case for Ending the 2001/2003 Tax Cuts

Ten Myths about the Bush Tax Cuts

And again, we're talking about government tax revenue...they're definitely not starving for funds:

Even the Washington Post admits the "Bush tax cuts" aren't the cause:

"In 2007, well after the tax cuts took effect, the budget deficit stood at 1.2 percent of GDP. By 2009, it had increased to 9.9 percent of the economy. The Bush tax cuts didn't change between 2007 and 2009, so clearly something else is to blame."

 

But more importantly, how in the world they purport to know what percent of revenue shortfall below expectations (you have to say it that way because overall it hasn't declined...it has risen)...but how in the world they know what percentage of that is due to tax cuts, and what percent is due to "the recession", and what percent is due to bailout programs, and all the rest of it, is just asinine.  How do they even quantify lower (than expected?) tax revenues due to "the recession"?  You can't.

We're not even close to being done yet.  Think about #2.  The suggestion is that we don't have enough money...but as we can see, revenue has continued to go up and is now roughly $2.5 Trillion annually.  In other words the government has never taken in more money in its history...and for some reason we seem to be in the biggest deficit in history.  Revenue is obviously not the problem.  Do you realize that in 2001 the federal government was spending a little more than half that (inflation adjusted)?  I remember 2001...that wasn't that long ago.  Was the economy in shambles?  Was the world coming to an end?  And we're supposed to believe that everything the government is spending today is absolutely necessary...so much so that any decrease in tax revenue adds to the deficit?

And then you might say government spending should be measured as a percentage of GDP.  Okay.  In 2001 the percentage was a little over 33%.  This year it will be at least 41%.  Again, do we really need government to account for that much more of the economy?  It's just a given that 41% is absolutely necessary?  (When obviously 33% was managable a decade ago?)  That much has to be spent by the government, even if it means we go further into debt?  Nonsense.

And then, we just absolutely have to increase the size of government 8% every decade?  (Remember, this is as a percentage of GDP...government itself has grown much more than that...i.e. doubled in size.  This begs the question...8% more of the economy has to be government-controlled every 10 years?  When do we stop?  How much is enough?  50%?  60%?  95% of the economy?)

Then you hear that even tax revenue should be measured this way, as a percentage of GDP.  This. Is. Absurd.

What gets me in all this is people just automatically assume that whatever the governement spends is a given...it's written in stone as if a commandment from God.  It's just what needs to be spent.  Period.  And if we don't have enough money to spend that much, well then that's obviously not because politicians are spending too much, no, it's because they just haven't taken enough of everyone else's money.  We need to raise taxes.  We need to raise the debt ceiling so we can borrow more.  Because there's no way in the world that civilization could survive if the government spent less money.

Then you have to understand the implication of this notion that a tax cut is a "handout" that is "expensive", and would "cost" a lot of money that we would have to "borrow" to give them.  Seriously.  Not kidding.  Listen to Austan Goolsbee, Obama's former head of the Council of Economic Advisers.  Think about that.  We have to borrow money, to let people keep more of their own.  Here again we see the exact same mentality that the level of government spending is a given.  But more importantly, notice what this also implies.  This notion that cutting taxes (letting people keep more of their own money) is a "handout" literally implies that the government owns 100% of everyone's income and it decides how much we can keep.  I would love to hear a Leftist own up to that.  (And I bet if you push them enough, they'll finally just break down and admit that they believe yes, the government does own your income.)

See the next post for the response to the conversation you posted.

 

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Extremely thorough answer, JJ.

I would add that perhaps yes, tax loopholes should be closed, because they represent government-sanctioned behavior (marriage, big oil, etc).

Having loopholes means that the government believes that this industry/undertaking is more important than the others. For example, big oil:

- We need to give big oil a tax cut because we all use oil and the burdens on big oil are already large

1) We have no natural entitlement to oil

2) By saying that the tax burden is too large on this company you are admitting that it is too large on others too

3) If the tax burden is too large relative to regulations, then you are admitting the regulations are too heavy and are just laws that politicians want, not laws that NEED to exist

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Tim was on the right track.  His whole point was to illustrate that there is an upper limit to tax rates...as in a point at which tax revenue actually decreases as the tax rate increases.  This is undeniable.  There is also a point at which lower tax rates lead to lower tax revenue.  This is illustrated quite nicely by the charts in that link Douglas Jones gave.  It's interesting the title of that post claims it "debunks" the Laffer Curve, when in fact it agrees with everything the curve says.  The only debate is where exactly those points are....which is almost impossible to tell.  (Again, as the post admits).

But going back to Douglas Jones' first comment, first off you have to notice he's falling into the same trap we covered earlier...namely that the level of government spending is a given.  He says "To fix the problem easily you just cut out the Bush tax cut loop hole subsides for corporations and oil companies that can afford their jet airplanes and dinners!"  Notice again we hear nothing about simply not spending so much.  But notice also what he says...he calls tax cut loopholes (which, I'm not even sure what that means, as I thought the tax cuts were the problem, but apparently there's loopholes in tax cuts that allow you to pay less taxes?)...but anyway he calls them "subsidies"...again, as in, letting people keep more of their money is a "handout".  But this is actually even worse because by definition a "subsidy" actually is a handout.  Meaning it is money taken from one person and handed over to another.  This is the exact opposite of a tax cut.  He may not be meaning to say this, but if you go by what he wrote, he's claiming that letting people keep more of their own money is literally taking money from someone and handing it to someone else.  I doubt he realizes this error, but it just goes to show how much he really knows.

His next sentence is equally rich: "They are NOT creating jobs or we wouldn't have a lack or revenue or a recession would NOT have happened!"  We can take it in parts.  First of all, "they are not creating jobs".  I assume he's going by the unemployment numbers.  So we can get this straight...A company either does not expand (and hire more people) because it simply cannot (i.e. it doesn't have (or at least have the access to) the resources to do so) or it does have the resources and simply decides not to expand because it realizes it wouldn't be profitable.  (I would hope he would at least agree to this...I would think we could assume that a company is interested in more profit.)  The question is, why doesn't the company have access to the resources it needs, or in the latter case, why wouldn't more profit be generated from expanding operations?  I would love to hear his attempted answer to those questions, but I'll give you the real one: because government intervention in the market makes it that way.

First, there isn't any capital available for small firms because the government is crowding everyone out of the market.  Second, regulation and taxes make it such that expanding operations (and hiring more employees) is actually so costly that the company would lose money on the operation.  This is why jobs aren't being created.  The resources and climate necessary to do so are being destroyed by government interference.  (For a deeper look into this, here is a recent source.)

Next we can look at his assertion that if jobs were being created "we wouldn't have a lack of revenue".  Well...if one takes "a lack of revenue" to mean taking in less than what is spent (i.e. a deficit), obviously we've had a "lack of revenue" for the vast majority of the 20th century.  (Even the Clinton "surpluses" were legerdemain.  I.E. the national debt actually increased during the entirety of Clinton's tenure).  So here again, we obviously can't blame tax rates or the greedy businessmen of modern times.  The government is collecting more money in taxes than ever in history, and we have bigger deficits than any time in history.  Obviously revenue is not the problem.

Then he claims that "a recession would NOT have happened!".  This one he is pretty sure about, as illustrated by his exclamation point.  But this is obviously nothing less than idiocy.  He's essentially saying "if the guy wasn't pushed off the bridge, he wouldn't have fallen."  Yes, technically if somehow millions of jobs were created throughout the late 2000s, there wouldn't have been a recession.  But technically if a pig had wings it wouldn't be pig.  The point is his statement is obviously useless, as it assumes that jobs somehow could have been created, but just weren't (because job creaters are evil or something I guess).

If you're interested, I would definitelly check out Meltdown by Thomas Woods.  It would be impressive if you could get any of those guys to read it, but obviously if you read it, you would better understand what really happened and the reasonings for it, so that you might better explain and debate.

And although you may not be able to get them to read a book (even though it's quite short) you may be able to get them to watch a movie...

Overdose: The Next Financial Crisis is possibly the best I've seen for explaining the crisis.  It's based on Johan Norberg's book Financial Fiasco and includes interviews with Peter Schiff, Gerald Celente, Vernon Smith, and even a former chief economist for Freddie Mac saying the regulatory structure was "spotty".  It introduces the concept of low interest rates created by the Federal Reserve creating booms and uses the analogy of spiking a punch bowl at a party.  It's here on YouTube in its entirety.

 

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Wheylous:
I would add that perhaps yes, tax loopholes should be closed, because they represent government-sanctioned behavior (marriage, big oil, etc).

You mean tax deductions should be eliminated?  As in, people should have to pay more taxes.  I fail to see how you could justify this.

 

Having loopholes means that the government believes that this industry/undertaking is more important than the others.

That's a great argument for cutting taxes (or "creating 'loopholes'" if you prefer) for all the rest of the industries that have higher rates (which I would love to hear what those are).

 

For example, big oil:

- We need to give big oil a tax cut because we all use oil and the burdens on big oil are already large

I'm sorry, politicians have been arguing for tax cuts to oil companies?

 

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Esuric replied on Tue, Aug 9 2011 9:14 AM

 You mean tax deductions should be eliminated?  As in, people should have to pay more taxes.  I fail to see how you could justify this.

There are times when tax increases, from an economic point of view, are justifiable, though I see no reason whatever to place the entire burden on the top 10% income earners (who already account for ~68% of total federal tax revenue). 

Government deficits and debt create an enormous political incentive to inflate, in order to avoid the crowding-out effect.

"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."

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Esuric:
There are times when tax increases, from an economic point of view, are justifiable

Please, do share.  While you're at it, I'd be interested to hear the argument for utilitarianism trumping individual rights.

 

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Wheylous replied on Tue, Aug 9 2011 12:17 PM

You mean tax deductions should be eliminated?  As in, people should have to pay more taxes.  I fail to see how you could justify this.

If you are going to keep the general current framework of large statism, closing tax loopholes is the fairest course of action, because it removes government morality. I believe that the better course of action would be to close loopholes and lower taxes a hella lot (to a minarchist state if not eliminate to AnCap; that is simply a fundamental difference we currently have, JJ, though I might be switching over)

That's a great argument for cutting taxes (or "creating 'loopholes'" if you prefer) for all the rest of the industries that have higher rates (which I would love to hear what those are).

For example, alternative energy tax cuts. Again, I am talking about the current framework. Ideally we would cut/remove all taxes a lot.

I'm sorry, politicians have been arguing for tax cuts to oil companies?

Not now, but obviously before.

 

 Esuric:
There are times when tax increases, from an economic point of view, are justifiable

Please, do share.  While you're at it, I'd be interested to hear the argument for utilitarianism trumping individual rights.

Now you're just arguing against yourself. You agreed that the Laffer curve is a practical reality. Note Esuric says "from an economic point of view. That means that if you are looking for the pragmatic statist solution (idk why you'd do that, but what the heck) this is it. Note also he said "there are times" They could be very rare. And non-existent.

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Wheylous:

Please, do share.  While you're at it, I'd be interested to hear the argument for utilitarianism trumping individual rights.

Now you're just arguing against yourself. You agreed that the Laffer curve is a practical reality. Note Esuric says "from an economic point of view. That means that if you are looking for the pragmatic statist solution (idk why you'd do that, but what the heck) this is it. Note also he said "there are times" They could be very rare. And non-existent.

Uh...no.  I said the Laffer Curve is reality.  I guarantee you at a given time there is a certain tax rate at which tax revenue is maximized, and that at 0% tax rates, revenue will be 0%...just as it will at 100% tax rates (although I suppose one could argue total physical slavery might overcome that, but then I think it would mostly be semantics).

Your problem is you're operating under the assumption that maximized tax revenue is a good thing.

 

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I think Esuric has a point. One thing to consider is that deficits are fianced from savings, whereas taxes tend to come from both saving and consumption. I'm not making an ethical judgement on this, I'm only pointing it out. Accumulated debt must also be paid off with higher future taxes to cover interest payments. 

That said, another thing to consider is that it's likely that an increase in taxes could simply lead to an increase in spending leaving the deficit in tact only at a higher level of government predation on the economy.

Again, the ethics/morality of it is a different question and not one I'm trying to address. 

 

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David Sherin:
One thing to consider is that deficits are fianced from savings, whereas taxes tend to come from both saving and consumption.

You're going to have to explain this.

 

Accumulated debt must also be paid off with higher future taxes to cover interest payments.

Didn't you just say "deficits are financed from savings"?

 

That said, another thing to consider is that it's likely that an increase in taxes could simply lead to an increase in spending leaving the deficit in tact only at a higher level of government predation on the economy.

And this is a good thing because...?

 

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"I would add that perhaps yes, tax loopholes should be closed, because they represent government-sanctioned behavior (marriage, big oil, etc)."

I know what you're getting at and I used to hold the same belief. The implied goal behind this is to have a tax code that is neutral to the market, something that doesn't distort the structure of production or distort incentives. But government necessarily does this by it's very existence. If the government is spending money in any way that is different from the people it is extracting taxes from, it must be changing the structure of production and altering what otherwise would be the make-up of the market.

A deduction or loophole puts more money in the hands of private individuals (without taking from someone else as in the case of a subsidy). This may  cause more economic activity to go to the the industry with the tax deduction, but what's the alternative? The alternative is of course for the government to have more money. This to me is less desirable than alloiwing people to change their behavior a bit in order to keep more of their money. I want the government to have as little money as possible.

People usually look at a tax credit and say that it distorts incentives. In reality, they should be looking at the tax and saying that it distorts incentives, not the tax credit since it is the tax that is arbitrarily imposed.

 

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I think you misread my tone. I'm not advocating either higher taxes or deficits, just pointing some things out. 

"You're going to have to explain this."

If the government issues debt the buyer of that debt must forego present consumption. If the buyer has a set amount he wishes to save then his choice to buy a government bond versus a private bond will divert savings from the private sector to the government. That's all I was trying to get at.

I should have noted that if interests rise due to the issue of government bonds, people will save a greater amount and then it can be said that deficits are fianced both by savings and consumption, but I think the savings still bears the most weight. 

"Didn't you just say "deficits are financed from savings"?"

They are, but the debt that accumulates from the deficit must be paid off through taxes at a later date.

"And this is a good thing because...?"

I didn't mean to imply that it was lol. I made one point about why higher taxes might be better economically than deficits and then I threw the second part in to offer an alternative view that higher taxes might not be better. Again, I'm not taking a position or arguing from an ethical point of view.

My own opinion (taking economics and morality into account) is that taxes should always be as low as possible.

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I said the Laffer Curve is reality

I was using "practical" not as "essentially" but as "practical as in it does happen." So we're on the same page.

Your problem is you're operating under the assumption that maximized tax revenue is a good thing.

If it includes cutting taxes, yes. Otherwise, no. Even if Laffer says that cutting taxes is good, I hesitate using that as a liertarian argument, because the Laffer curve then begins to support "a reasonable and revenue-maximizing level of taxes." Still, cut the taxes.

And this is a good thing because...?

He is implying it's not.

they should be looking at the tax and saying that it distorts incentives

That too. But two distortions are worse than one. Plus, it creates a morality that the government imposes, which is terrible. Through a fiscal loophole the government expands its powers into areas it could never hope to invade like getting people to get married.

To summarize: We all agree that lower/no taxes are better. Yay for arguing without disagreeing!

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David Sherin:
If the government issues debt the buyer of that debt must forego present consumption.

The Federal Reserve doesn't have to forego anything.

 

"And this is a good thing because...?"

I didn't mean to imply that it was lol. I made one point about why higher taxes might be better economically than deficits and then I threw the second part in to offer an alternative view that higher taxes might not be better. Again, I'm not taking a position or arguing from an ethical point of view.

Esuric said "there are times when tax increases, from an economic point of view, are justifiable".  You said he has a point, and then stated all that stuff you stated.  I still don't see where you have defended that point.  Certainly not here.  I mean if your entire support is that "higher taxes might be better economically than deficits" then you're simply committing the exact same "government spending is literally unchangable" fallacy I outlined in the beginning of this thread.  In other words, if your explanation for how higher taxes can be justified economically is that they "might be better than deficits", then you have nothing more than a false dichotomy that says "either taxes have to go up or deficits do." 

You sure you didn't author the article linked in the OP? wink

 

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Wheylous:

Your problem is you're operating under the assumption that maximized tax revenue is a good thing.

If it includes cutting taxes, yes. Otherwise, no.

So...basically it's not maximized revenue that is a good thing, it's cutting taxes.

 

Even if Laffer says that cutting taxes is good, I hesitate using that as a liertarian argument, because the Laffer curve then begins to support "a reasonable and revenue-maximizing level of taxes." Still, cut the taxes.

Again, the only way the people perceive the Laffer Curve saying "cutting taxes is good" is when they are operating under the assumption that maximized tax revenue is a good thing.  I say more money for the government is a bad thing.

 

He is implying it's not.

Well, he began the whole thing with "I think Esuric has a point."  Usually when people say something like that, what follows is an elaboration of why.

 

To summarize: We all agree that lower/no taxes are better. Yay for arguing without disagreeing!

Just because there is agreement on one point doesn't mean it's unanimous across all points.  I strongly disagree that "there are times when tax increases, from an economic point of view, are justifiable".  I strongly disagree that "tax deductions should be eliminated" (as, I have to assume that's what Wheylous meant by "tax loopholes should be closed").  There is plenty disagreement here and I haven't heard any reasonable support for those positions.

 

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Kaiser replied on Tue, Aug 9 2011 3:17 PM

When you cut taxes so much that it turns into a deficit: yes that can be bad.  I did some calculations from this (http://www.cbo.gov/doc.cfm?index=5746&type=0&sequence=1#pt4) CBO page and income tax returns and came up with numbers for revenue shortfall caused by the Bush tax cuts of 2001, 2002, and 2003 (the major cut was in 2003):

2001 $81b, 2002 $101b, 2003 $225b, 2004 $256b, 2005 $164b, 2006 $164b, 2007 $163b, 2008 $176b

*in 2008 dollars

So the dent was significant.  But these numbers also assume no consequential increase in income from cutting taxes, so the additional deficit is probably less than estimated.

I'm suspicious about the math behind the CBPP numbers.  The funny thing about these numbers that aren't Obama's fault is that you can't really calculate them without making some big estimations.  It lists the "eonomic downturn" as adding $280-$450 billion every year from 2009-2019, which doesn't make sense.  Also, the "cost" of the Bush-era tax cuts are listed as rising disproportionately compared to the rest of the data (costingg $692 billion apparently in 2019 alone.)  Would it be better economically to let them expire?  It's certainly a trade-off.  The tax cuts certainly haven't raised revenue and there is a big need to lower the deficit.  But it probably doesn't make a big difference.

"I know that it is a hopeless undertaking to debate about fundamental value judgments."-Albert Einstein

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"The Federal Reserve doesn't have to forego anything."

I was referring to private holders of US govt debt. Monetization of course has it's own problems.

"You said he has a point,..."

To me, having a point doesn't mean the person is necessarily absolutely right, only that they have something perhaps valuable to add to the conversation. I felt it was worth touching upon. I'm curious to see if Esuric has more to say on it. 

"you're simply committing the exact same "government spending is literally unchangable" fallacy"

That's why I added my second point about higher taxes likely encouraging higher spending. 

"In other words, if your explanation for how higher taxes can be justified economically is that they "might be better than deficits", then you have nothing more than a false dichotomy that says "either taxes have to go up or deficits do." "

I'm not creating the dichotomy, I'm taken it as given since that's what the dicussion is about (at least at the point I jumped in). If I'm asked if I would rather shoot myself in the foot or the hand, choosing one doesn't mean I want it to happen. It's just a preference given the choice I have. If I had the choice to not shoot myself at all, I'd take it. In this case, if I could get rid of deficits and taxes, I would. In fact I'd get rid of all government.

"You sure you didn't author the article linked in the OP?"

I'm sure. I did state that I want taxes as low as possible (hopefully to the point of being non-existent).

Trust me, I'm not advocating higher taxes, nor was I trying to suggest that taxes are necessarily better than deficits in my original post. 

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Kaiser:
When you cut taxes so much that it turns into a deficit: yes that can be bad.

*sigh*

Sometimes it would be nice if people would actually read before they post.

 

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David Sherin:
I was referring to private holders of US govt debt. Monetization of course has it's own problems.

And what percent of US government debt is held by private holders?  What percent is held by the Fed?

 

To me, having a point doesn't mean the person is necessarily absolutely right, only that they have something perhaps valuable to add to the conversation. I felt it was worth touching upon. I'm curious to see if Esuric has more to say on it.

Again, I'm still wondering what this "something of value" is.  It still hasn't yet been illustrated.

 

I'm not creating the dichotomy, I'm taken it as given since that's what the dicussion is about (at least at the point I jumped in).

The fact that it's taken as a given is what the discussion is about.  The most important point I made in the initial rebuttal to that huffpost nonsense was the false dichotomy they set up.  By taking the false dichotomy as a given you are doing nothing more than committing the same fallacy they are, or at least supporting it...and thereby giving the fallacy validity...and in turn, contributing to the problem.

 

If I'm asked if I would rather shoot myself in the foot or the hand, choosing one doesn't mean I want it to happen.

But it does infer that you think it's a valid proposition.

 

Trust me, I'm not advocating higher taxes, nor was I trying to suggest that taxes are necessarily better than deficits in my original post.

You've made it quite clear you do not necessarily think higher taxes is better than deficits.  The issue is you have taken a false dilemma and sat around and debated the two choices as if the dilemma itself were valid...thus giving it legitimacy.  In my view this not only does not contribute to the solution, but in fact contributes to the problem.

It is no different than any of the debt debates or any other government debate, for that matter.  The debate has been framed such that it is not a discussion of how much government will be cut, or even whether it should be cut....but just how much it will grow.  Democrats say it should grow X amount, Republicans say it should grow Y amount.  The point is they're both in favor of government growth.  And by participating in that debate between whether taxes should be raised or deficits should be raised and attempting to weigh those two sides and pick one, you sanction the notion that government should grow...despite your claims that you are against that.

 

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Wheylous replied on Wed, Aug 10 2011 3:14 AM

Sometimes it would be nice if people would actually read before they post.

Lol. I agree. You clearly outlined how cutting taxes does not mean handing out money. Yet I also think that sometimes you don't read what others write:

I strongly disagree that "there are times when tax increases, from an economic point of view, are justifiable".

You likely don't: We're simply working under different definitions of "economic." The poster meant government economics, where the government wants to maximize revenue. It doesn't mean that government economics are a good thing that should exist. It just means that IF we want the government to maximize its money, it sometimes may need to raise taxes. Again, IF.

I strongly disagree that "tax deductions should be eliminated" (as, I have to assume that's what Wheylous meant by "tax loopholes should be closed")

Correct assumption. I made that statement considering the follow options:

1) Close deductions

2) Leave deductions

With no option of "cut all taxes!". Government deductions create a "correct morality" of living, which governments should never be allowed to do. Because in the same line of reasoning, government can, for example, cut taxes on GM cars to 0 so that more people buy GM cars so that the government has more money to play with. Hence, I believe it better, if not from an economic (government economy or Austrian economy) standpoint, from an ethical standpoint I think it's better to remove deductions. Given the option, of course, I would choose to level the other higher taxes and then lower all of them collectively, of course. I am open to opinions, though, and I would like to hear more of your argument.

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Wheylous:
I also think that sometimes you don't read what others write:

I strongly disagree that "there are times when tax increases, from an economic point of view, are justifiable".

You likely don't: We're simply working under different definitions of "economic." The poster meant government economics, where the government wants to maximize revenue. It doesn't mean that government economics are a good thing that should exist. It just means that IF we want the government to maximize its money, it sometimes may need to raise taxes. Again, IF.

Just because I take what he says and interpret it to mean what he says in terms of the commonly understood definitions of the words he uses, while you claim to know "what he really meant" doesn't mean I didn't read what he wrote.  I can assure you I've read everything in this thread.

Personally I fail to see how you could possibly presume to know "what he really meant" by the few sentences he provided.  My comment was "I fail to see how you could justify having people pay more taxes" and his response was that there are times when higher taxes are justifiable "from an economic point of view."  Most people would interpret that to mean a "utilitarian" point of view...as in from the perspective of the good of the economy as a whole. 

If his whole argument was that "there are times when tax increases are justified from a tax collector's point of view" then (a) I would think he would say that, and (b) it's not even really an argument.  As, I would think if all you're concerned about is the tax collector's point of view, I don't see when taxes would ever not be justified...as in, if it's just up to the tax collector, what exactly is the justification that is needed?  It's just what the collector says.

Usually when you are arguing that there is "justification" for something, you're claiming that there is an outside reasoning that makes the decision valid.  In other words, justification literally refers to something other than just want the person performing the action wants.

So a I'm not exactly sure how someone would argue that the justification for raising taxes comes from looking at it from the point of view of the tax collector.

 

Correct assumption.

Great.  So I was right.  You're in favor of raising taxes (at least for some people).  I am not.  This is a source of disgreement.  This is why there is not "Yay for arguing without disagreeing!"

 

I made that statement considering the follow options:

1) Close deductions

2) Leave deductions

So you admit to legitimizing the same false dilemma that the Huffington Post, Democrats, Republicans, and David Sherin prescribe to.

 

Government deductions create a "correct morality" of living, which governments should never be allowed to do. Because in the same line of reasoning, government can, for example, cut taxes on GM cars to 0 so that more people buy GM cars so that the government has more money to play with.

But, government's should be allowed to take your money against your will, right?  Because in the same line of reasoning if government "shouldn't be allowed" to do something, then you will argue against it.

 

Hence, I believe it better, if not from an economic (government economy or Austrian economy) standpoint, from an ethical standpoint I think it's better to remove deductions.

Great.  So it's ethical to take even more money from people against their will.  Got it.

 

Given the option, of course, I would choose to level the other higher taxes and then lower all of them collectively, of course.

You know, for someone who makes fun of others for not rtff, and who accuses others of doing so, you really seem oblivious to what has been said.

 

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