General

Re: What is the response to this?

John James — Wed, 10 Aug 2011 09:47:02 GMT

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.

Re: What is the response to this?

Wheylous — Wed, 10 Aug 2011 09:14:52 GMT

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.

Re: What is the response to this?

John James — Wed, 10 Aug 2011 08:55:03 GMT

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.

Re: What is the response to this?

John James — Wed, 10 Aug 2011 08:31:59 GMT

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.

Re: What is the response to this?

David Sherin — Tue, 09 Aug 2011 22:22:19 GMT

"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.

Re: What is the response to this?

Kaiser — Tue, 09 Aug 2011 21:17:10 GMT

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.

Re: What is the response to this?

John James — Tue, 09 Aug 2011 20:50:10 GMT

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.

Re: What is the response to this?

John James — Tue, 09 Aug 2011 20:37:44 GMT

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?

Re: What is the response to this?

Wheylous — Tue, 09 Aug 2011 20:21:31 GMT

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!

Re: What is the response to this?

David Sherin — Tue, 09 Aug 2011 20:17:08 GMT

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.

Re: What is the response to this?

David Sherin — Tue, 09 Aug 2011 20:04:19 GMT

"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.

Re: What is the response to this?

John James — Tue, 09 Aug 2011 19:58:20 GMT

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...?

Re: What is the response to this?

David Sherin — Tue, 09 Aug 2011 19:48:49 GMT

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.

Re: What is the response to this?

John James — Tue, 09 Aug 2011 18:37:01 GMT

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.

Re: What is the response to this?

Wheylous — Tue, 09 Aug 2011 18:17:07 GMT

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.