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TaxProf Blog: WSJ: Why 70% Income Tax Rates Won’t Work

June 17, 2011

TaxProf Blog: WSJ: Why 70% Income Tax Rates Won’t Work.

LIES! ALL LIES!

Mainly because we had rising deficits at a time of tax cuts.

When you continue to outspend the increased revenue brought in by lower tax rates… well… if you keep spending more and more despite getting a raise at work… you get unsustainable debt….

Meh. Lies. All Lies.

Oh, and Brawndo has electrolytes….

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8 Comments
  1. Michael permalink
    June 18, 2011 6:21 am

    For some reason, you keep going back to the idiot well of that blog. I have proven that he doesn’t know what he’s talking about, fudges numbers and makes crap up, yet you still drag his stuff over to your page. You are collectively lowering the IQ of your “followers” when you insist on using TaxMoron’s stuff. Shame on you…

    “In short, reductions in top tax rates under Presidents Kennedy and Reagan, and reductions in capital gains tax rates under Presidents Clinton and George W. Bush, not only “paid for themselves” but also provided enough extra revenue to finance negative income taxes for the bottom 40% and record-low income taxes at middle incomes.”

    That is absolutely false, and also parsed.

    http://factcheck.org/2008/01/the-impact-of-tax-cuts/

    His “facts” also ignore the reality that Reich mentioned:
    “the nation’s pre-tax income was far less concentrated at the top than it is now. In the mid-1970s, for example, the top 1 percent got around 9 percent of total income. By 2007, they got 23.5 percent.”. The top 2% approach 40% of all income.

    Craig, you can do better than this guy. Maybe you just had a lazy day, and didn’t want to think too much, but try taking a nap instead of linking to TaxMoron.

  2. June 18, 2011 9:08 am

    Yes. He’s an idiot Mike. Noted. I’m sure he cries himself to sleep every night because of your analysis of his numbers.

    Ofcourse, you should probably be calling Alan Reynold’s writing in the WSJ as being the bigger moron who fudges his numbers, since that is where TaxProf got his post…

    Oh. And you don’t address his numbers… those troubling little things…

    Here, I’ll even put the chart here for you to read:

    Yet the chart nearby clearly shows that reductions in U.S. marginal tax rates did not cause “falling tax revenue.” It is not necessary to argue that tax rate reduction paid for itself by increasing economic growth. Lowering top marginal tax rates in stages from 91% to 28% paid for itself regardless of what happened to GDP.

    It is particularly remarkable that individual tax revenues did not fall as a percentage of GDP because changes in tax law, most notably those of 1986 and 2003, greatly expanded refundable tax credits, personal exemptions and standard deductions. As a result, the Joint Committee on Taxation recently reported that 51% of Americans no longer pay federal income tax.

    Since the era of 70% tax rates, the U.S. income tax system has become far more “progressive.” Congressional Budget Office estimates show that from 1979 to 2007 average income tax rates fell by 110% to minus 0.4% from 4.1% for the second-poorest quintile of taxpayers. Average tax rates fell by 56% for the middle quintile and 39% for the fourth, but only 8% at the top. Despite these massive tax cuts for the bottom 80%, overall federal revenues were the same 18.5% share of GDP in 2007 as they were in 1979 and individual tax revenues were nearly the same—8.7% of GDP in 1979 versus 8.4% in 2007.

  3. Michael Eaton permalink
    June 19, 2011 10:24 am

    It is a false set of numbers, simply, Craig. They are random date periods, false causation, and have absolutely no data points except tax rates and GDP comparisons. I could as easily drawn comparisons to what network was number 1, and the effect on GDP. As in my link below: “Simultaneity does not equal causation.”

    Debunk? Here you go:

    http://www.slate.com/id/2245781/

    “During the period 1951-63, when marginal rates were at their peak—91 percent or 92 percent—the American economy boomed, growing at an average annual rate of 3.71 percent. The fact that the marginal rates were what would today be viewed as essentially confiscatory did not cause economic cataclysm—just the opposite. And during the past seven years, during which we reduced the top marginal rate to 35 percent, average growth was a more meager 1.71 percent.”

  4. June 21, 2011 12:35 pm

    Talk about false causation and confusing correlation… As if high tax rates, like cancer, kill over night. If high taxes meant booming economies (which makes no sense), then let’s just raise them taxes back up and see that wonderful economy just start running like a fine tuned engine. Sheesh. What’s Greece’s problem then? Oh. Because you can’t tax yourself into prosperity. Just ask the Soviet Union how that worked for them.

    And those aren’t “random date periods” Mike where they’re cherry-pickng year groups to reflect the statistics most favorable to them. That is your attempt to discount them. I’m pretty sure they grouped those years into periods BASED ON THE TAX RATES AT THE TIME. Dear Heavenly Zeus, the authors of that graph didn’t MIX years into tax rates that were favorable to their argument, CONGRESS passed the laws that created those periods…

    Unreal. Reminds of this again.

  5. Michael Eaton permalink
    June 21, 2011 2:34 pm

    “If high taxes meant booming economies (which makes no sense)”

    Really? It makes as much sense (historically) as low tax rates equal booming economies…

    “what we’ve seen over the past 30 years is that lower marginal tax rates have not led to particularly impressive economic growth, labor markets or revenues. Growth was actually more impressive back when marginal tax rates were higher”

    http://www.washingtonpost.com/blogs/ezra-klein/post/tax-rates-and-economic-growth-in-one-graph/2011/05/19/AGLaxJeH_blog.html

    “you can’t tax yourself into prosperity. Just ask the Soviet Union how that worked for them.”

    ?? Craig, you occasionally bring an irrelevant/false statement in, but this one is Pat-worthy… What does the Soviet Union have to do with tax rates in the US??

    “And those aren’t “random date periods” Mike where they’re cherry-pickng year groups to reflect the statistics most favorable to them”

    Yeah, actually, they are, you didn’t read my whole statement: “They are random date periods, false causation, and have absolutely no data points except tax rates and GDP comparisons. I could as easily drawn comparisons to what network was number 1, and the effect on GDP. As in my link below: “Simultaneity does not equal causation.””

    Were those tax rates alone the sole cause of “percent of GDP revenues” (not a real common data point for determining success of tax policy)? If you think so, then the link I provide above is MORE IMPORTANT.

  6. June 21, 2011 3:50 pm

    “Really? It makes as much sense (historically) as low tax rates equal booming economies… ”

    You mean giving money back to the people to spend, and save (which is then lent to businesses and for secured loans) doesn’t spur the economy? Are there other market forces at play? Ofcourse, especially when you have central banks with their fingers in the pie manipulating as well. But to argue that higher tax rates equates to a better economy makes absolutely no sense… All Klein can point to is correlation as evidence, with no mention on causation…

    “?? Craig, you occasionally bring an irrelevant/false statement in, but this one is Pat-worthy… What does the Soviet Union have to do with tax rates in the US?? ”

    Mike, I’m not surprised you find such an observation as “irrelevant” or “false”. The point of the matter is that the Soviet Union couldn’t keep itself from collapsing simply on the sheer will of the government, even when the government had absolute control over the economy and the people. It couldn’t force the people to produce, and it couldn’t create wealth out of whole cloth because it really, really wanted to…. and neither can our government.

    When I see NY Times editorial page writers like Tom Friendman point to China as the shining beacon that we should more emulate, I begin to think that perhaps all of your soothing words that screaming “socialist” or “communist” is “silly” and “incorrect”, are nothing more then the siren song leading towards the rocks…

  7. June 21, 2011 4:19 pm

    “Yeah, actually, they are, you didn’t read my whole statement:”

    Oh I read it. Your claim that you could have picked what cable network was number one is relation to % of revenue compared to GDP is the kinda of logic I would expect from someone who reads Media Matters for their talking points.

    The graphs were showing that despite the tax rates going down, the percentage of revenue, as related to GDP ((and since tax rates are a primary way of gaining revenue for the government, they are relevant, and since the GDP is the wealth of the nation being taxed, also relevant), were going up. How can that be?

  8. texan2driver permalink
    June 22, 2011 10:40 pm

    Hidden Video of Craig Debating Michael

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