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Doesn't the market ultimately determine how much revenue income tax brings in?

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No2statism posted on Mon, Apr 29 2013 8:10 PM

Why or why not?

Aren't market agents/human action more of a factor in how much the govt gets than anything the govt can do (when it comes to income tax)?

I'm asking because Rothbard seemed (to me) to reject Dr. Walter E Wiliams' finding that income tax revenue is always about the same percentage of GDP.  I would be tempted to side with Dr. Walter E Williams on this if he weren't a Keynesian.

 

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Answered (Verified) Bogart replied on Mon, Apr 29 2013 8:28 PM
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No in the short run government could steall almost all the wealth of society and society would function albeit in a crappy state.

Maybe in the long run.  In the long run most economic activity would settle into the black market as it did in the Soviet Union and China, and as it does increasingly in the USA (Current estimates are two trillion dollars of GDP are transacted on the black and grey markets.  And clearly this is beyond contraband.  My own theory is that this number is boosted by people receiving unemployment and disabilities doing work for cash and barter.)  The difficulty is in measuring these activities.  As bad as GDP is to measure, measuring black and grey market activity is worse as it is mixed in with the other activities.

As for this inference by Dr Williams, there is no theory dictating that the percentage of GDP coming in tax revenue would be consistent.  My guess is that it is just a weird quirk stemming from the collective behavior of Congress and their desire not to destroy the economy with tax increases.

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Answered (Verified) cab21 replied on Mon, Apr 29 2013 8:29 PM
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government is made up of human agents, just like the market.

income tax depends on human agents and nonhuman agents, as nonhumans contribute to the market as well.

 

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Answered (Verified) Clayton replied on Tue, Apr 30 2013 11:04 AM
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Please cite the claim that Walter Williams is a Keynesian.

"Income tax" is just a euphemism. It is an annual property seizure*. As has already pointed out, a larger seizure nets more revenue for the government.

Clayton -

*There is no difference between a wealth tax and an income tax... both are wealth taxes.

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Monetarist is not Keynesian.

Clayton -

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Answered (Verified) Monroe replied on Tue, Apr 30 2013 4:51 PM
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As you can see, this is my first post. That being said, I am excited for many more to come.

 

To address your question, intution might suggest that because income correlates to work which correlates to strength of the job market,  yes the income tax revenue would be a stem from market strength. Although, what would need to be constant? The income tax rate - which in many ways seen and unseen is not constant.

Now GDP teeters on very mixed definitions. For instance, we can all hopefully agree that the job market is weak, but government manipulation can boost GDP statistics in a number of ways. I remember seeing recently that they are trying to change the definition of Investments (remember GDP = C (onsumer spending) + I (nvestments) + G (overnment spending) + X-M (nex exports)), by allowing for more value to be added to "I" - so that the act of looking into a job is considered an investment...

Whereas, I do not see the correlation of income revenue and GDP/market as entirely untrue, I feel that it is easily manipulated.

"...if there is one thing that stings people just enough to commit violence, it is the feeling of powerlessness." - Monroe "yes, I just quoted myself..." - Monroe
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Answered (Verified) Monroe replied on Tue, Apr 30 2013 4:56 PM
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https://mises.org/community/forums/p/28064/456722.aspx

^

there seems to be another thread for that question

"...if there is one thing that stings people just enough to commit violence, it is the feeling of powerlessness." - Monroe "yes, I just quoted myself..." - Monroe
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Answered (Verified) Bogart replied on Mon, Apr 29 2013 8:28 PM
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No in the short run government could steall almost all the wealth of society and society would function albeit in a crappy state.

Maybe in the long run.  In the long run most economic activity would settle into the black market as it did in the Soviet Union and China, and as it does increasingly in the USA (Current estimates are two trillion dollars of GDP are transacted on the black and grey markets.  And clearly this is beyond contraband.  My own theory is that this number is boosted by people receiving unemployment and disabilities doing work for cash and barter.)  The difficulty is in measuring these activities.  As bad as GDP is to measure, measuring black and grey market activity is worse as it is mixed in with the other activities.

As for this inference by Dr Williams, there is no theory dictating that the percentage of GDP coming in tax revenue would be consistent.  My guess is that it is just a weird quirk stemming from the collective behavior of Congress and their desire not to destroy the economy with tax increases.

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Answered (Verified) cab21 replied on Mon, Apr 29 2013 8:29 PM
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government is made up of human agents, just like the market.

income tax depends on human agents and nonhuman agents, as nonhumans contribute to the market as well.

 

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Answered (Verified) Clayton replied on Tue, Apr 30 2013 11:04 AM
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Please cite the claim that Walter Williams is a Keynesian.

"Income tax" is just a euphemism. It is an annual property seizure*. As has already pointed out, a larger seizure nets more revenue for the government.

Clayton -

*There is no difference between a wealth tax and an income tax... both are wealth taxes.

http://voluntaryistreader.wordpress.com
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@Clayton:  I thought he was a monetarist.  I guess I'm wrong.  Sorry about that.

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Answered (Verified) Monroe replied on Tue, Apr 30 2013 4:51 PM
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As you can see, this is my first post. That being said, I am excited for many more to come.

 

To address your question, intution might suggest that because income correlates to work which correlates to strength of the job market,  yes the income tax revenue would be a stem from market strength. Although, what would need to be constant? The income tax rate - which in many ways seen and unseen is not constant.

Now GDP teeters on very mixed definitions. For instance, we can all hopefully agree that the job market is weak, but government manipulation can boost GDP statistics in a number of ways. I remember seeing recently that they are trying to change the definition of Investments (remember GDP = C (onsumer spending) + I (nvestments) + G (overnment spending) + X-M (nex exports)), by allowing for more value to be added to "I" - so that the act of looking into a job is considered an investment...

Whereas, I do not see the correlation of income revenue and GDP/market as entirely untrue, I feel that it is easily manipulated.

"...if there is one thing that stings people just enough to commit violence, it is the feeling of powerlessness." - Monroe "yes, I just quoted myself..." - Monroe
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Answered (Verified) Monroe replied on Tue, Apr 30 2013 4:56 PM
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https://mises.org/community/forums/p/28064/456722.aspx

^

there seems to be another thread for that question

"...if there is one thing that stings people just enough to commit violence, it is the feeling of powerlessness." - Monroe "yes, I just quoted myself..." - Monroe
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