Conservative Skeptics?

[AmateurScientist]

First, let me declare my enduring ignorance when it comes to economics, so if what I'm about to say is wrong or makes no sense, just give me a sarcastic smiley and move on....

I don't use smilies, and I'm not going to ridicule you. Economics is hard, and I'm no expert on it either.

Looking at your link (thanks for the info), it seems that while total receipts remained constant, tax receipts for individual and corporate income actually rose and fell with the tax rates.

If you're looking at the link, which has raw numbers as opposed to being a graph, then you're looking at receipts by source of tax revenue as a percentage of GDP. Thus, those aren't numbers representing gross receipts from taxes. They are expressed as percentages of GDP.

If you are looking at the graph (not the Laffer Curve), then again, you are looking at a blue line showing federal income taxes as a percentage of GDP and a black line showing total federal tax revenue receipts (including social security and excise taxes) also as a percentage of GDP. The heavy black line at the top of that same graph denotes the highest marginal tax rate for the highest income earners. It varies tremendously over time. The other two lines don't. The point is that varying income tax rates for the top earners does not affect tax revenue as compared with gross domestic product, which is the most commonly used indicator of the productivity of the nation. Roughly, it means income tax revenues rise and fall with the nation's productivity, not with the tax-the-rich schemes pushed by class warfare advocates.

This is what fuels the supply-side economist who claims that if you want to raise federal income tax revenues, you should provide the entrepreneur and high income earners every incentive to increase productivity and to make more money. That will generate more gross revenue for the federal government because GDP will rise (the federal revenue generated will remain approximately 19.5% of GDP, but the absolute numbers will increase). Hence Reagan's mantra that a rising tide lifts all boats. Of course, macroeconomics is far more complex than simply being a factor of tax policy, so it doesn't really work that way in practice. There are "natural" business cycles that occur, local and/or temporary scarcities and gluts of goods and services, varying unemployment rates, interdependence on foreign goods and services, international monetary and currency fluctuations, natural disasters that affect markets, and so forth.

From 1948 to 1964, when rates were at their highest (in your graph), total individual and corporate income tax receipts averaged at 11.81%. From 1965 to 1982, when the tax rate dropped, receipts averaged in at 11.11%. From 1983 to 1986, when rates were drastically lowered, receipts went to 9.4%; the same with 1987 to 1994, they were at 9.77%, and then from 1994 to 2000, when rates were raised slightly, receipts were at 11.3%. Moreover, corporate income tax receipts as a percentage were consistently under 2% during the lowest tax rates and consistently above 3% (and sometimes much higher) during the highest tax rates.

So, while total receipts remained constant, it was due to other factors such as the increase in Social Security and Retirement receipts over the years. With the cap on Social Security taxable income at $90,000 (I may not be saying that correctly, but hopefully you know what I mean), is it fair to say that Social Security is a tax that hits lower and middle classes harder than income tax rates, and by reducing the rates and amount corporations have paid in income tax and increasing the Social Security tax, we have effectively shifted tax burden from corporations to the lower and middle classes?

That's very close, and shows good insight into the issue. Actually, the social security tax hits the middle income earners with the greatest impact, as a share of the total burden. That's because it's not progressive, so its impact tapers off on the higher income earners, and also because the marginal rates are lower for certain types of income, so the burden is reduced for lower income earners.

Look at the graph in this link which illustrates this point. Again, sorry I can't post the whole thing, so I'll just have to link to it.

http://www.newsbatch.com/bud-efftax1.html?

The source is newsbatch, which is apparently run by a lawyer in California. His graphs are generated from government sources, so I don't doubt their accuracy. If you are interested, I recommend wading through his brief slide show on taxes, which includes charts on sources of federal and state tax revenue, and also on federal budget expenditures.

AS

 

[Belz...]

We still have 1.2 million reservists ready and willing. While it may not be an immediate logistical possibility to invade another nation, once we're "through" with Iraq it will be.

Ah, invade another nation. Correct me if I'm wrong, but aren't wars of aggression illegal, somehow ?

And, not to create turmoil, but isn't Iraq now more influenced by muslim fundamentalists than during Hussein's reign ?

 

[Upchurch]

Ah, invade another nation. Correct me if I'm wrong, but aren't wars of aggression illegal, somehow ?

How about wars of self-defence? No, wait... that was so last year. Wars of Spreading Our Form Of Government, But Not In A Communist Manifesto Kinda Way? Are those legal?

 

[Kerberos]

We still have 1.2 million reservists ready and willing. While it may not be an immediate logistical possibility to invade another nation, once we're "through" with Iraq it will be.

You're forgetting a rather important factor, it might very well be militarilly possible for you to take on another nation after you're done with Iraq, even a farily powerful nation such as Iran, but it would not be politically possible and they know that very well. The popularity of the current war in Iraq is low and dropping which means that there'd need to be a very convincing reason, before it would be politically possible to start another right afterwards.

 

[Cleon]

Ah, invade another nation. Correct me if I'm wrong, but aren't wars of aggression illegal, somehow ?

Now, now, if there's one thing the Iraq fiasco has taught us, it's that nothing is illegal as long as you apply the proper amount of spin.

And, not to create turmoil, but isn't Iraq now more influenced by muslim fundamentalists than during Hussein's reign ?

Shhh...You're not supposed to remind people that Saddam isn't a muslim fundamentalist, it's too inconvenient for the Al-Qaeda/Saddam Conspiracy theory.

 

[epepke]

Yes, probably.
Yes, but where does the initiative for that sound science, better awareness, and more information come from? Certainly not from sticking to the tried and true, waiting for someting better to come along. Broadly speaking, liberalism is the impetus, conservativism is the grounding.

Well, not to put too fine a point on it, but the main reason that the US had fairly decent science education for a couple of decades was that people who were called conservatives in the 1950s wet their pants over the Soviet Union and Sputnik. The liberals of that time would have been just as happy chanting in picket lines and singing folk songs in "homey" dialect, and the Democrats were the party of segregation, and the Republicans had had the Equal Rights Amendment in their platform since 1921.

Go back a hundred years before that, and it was the liberals who spearheaded the Enlightenment, while the conservatives were dancin' to the fiddle and saw.

Of course, the terms "conservative" and "liberal" have changed so much in their meaning over the years that they're approximately useless.

 

[Upchurch]

Well, not to put too fine a point on it, but the main reason that the US had fairly decent science education for a couple of decades was that people who were called conservatives in the 1950s wet their pants over the Soviet Union and Sputnik. The liberals of that time would have been just as happy chanting in picket lines and singing folk songs in "homey" dialect, and the Democrats were the party of segregation, and the Republicans had had the Equal Rights Amendment in their platform since 1921.

It is my contention that the Democrats are not always the liberals nor the Republicans always the conservatives. However, to your example, the liberals of the time were also paving the way for the civil rights movement and the sexual revolution.

Go back a hundred years before that, and it was the liberals who spearheaded the Enlightenment, while the conservatives were dancin' to the fiddle and saw.

The conservatives of the time would have been the ones wanting to maintain the British Empire in the Americas. ...from a modern American perspective, I'll admit that I have a hard time finding the beneficial silver lining to desire. I'm sure they felt they were doing the right thing at the time....

 

[AmateurScientist]

Well, not to put too fine a point on it, but the main reason that the US had fairly decent science education for a couple of decades was that people who were called conservatives in the 1950s wet their pants over the Soviet Union and Sputnik. The liberals of that time would have been just as happy chanting in picket lines and singing folk songs in "homey" dialect, and the Democrats were the party of segregation, and the Republicans had had the Equal Rights Amendment in their platform since 1921.

That's an excellent point. Throughout human civilization, most major technological innovations have occurred due to a desire to improve military arms, or to gain an advantage over one's opponents in gambling, or trade, or politics. Greed and the seeking of power are the great innovators and instigators of change for civilization as a whole. Passivism and harmony are anathema to great societal change, as paradoxical as that may sound.

AS

 

[epepke]

The conservatives of the time would have been the ones wanting to maintain the British Empire in the Americas. ...from a modern American perspective, I'll admit that I have a hard time finding the beneficial silver lining to desire. I'm sure they felt they were doing the right thing at the time....

That would have been 225 years ago, not 150. The conservatives 150 years ago would have been trying to maintain slavery.

 

[bagtaggar]

The popularity of the current war in Iraq is low and dropping which means that there'd need to be a very convincing reason, before it would be politically possible to start another right afterwards.

This was a war of opportunity. We saw an opening to win some in the geopolitical sense.

What did we win?

Nothing. Yet.

The pressure to create a stable government in Iraq is extremely high for the United States. We acted unilaterally under false pretenses (WMD's, terrorism). So we have to compensate for that by establishing a peaceful government. You'll notice that talk of an exit plan is very sketchy. That's because there isn't one. We're staying as long as we like.

What happens if we succeed? The political cachette is enourmous. It will basically serve as a "shut the hell up" to nations that get in the way of our unilateralism in the future.

Is this right? Is it wrong?

Who cares, it's what's happening and there isn't much we can do to stop it. The last time protesting mattered in the United States was... actually never. Woman's suffrage, Black Civil Rights, and pulling out of Vietnam were economically/politically motivated. I could argue this if you wish.

Welcome to the globalizing world.

You vote with your shares/holdings.

 

[Belz...]

How about wars of self-defence? No, wait... that was so last year. Wars of Spreading Our Form Of Government, But Not In A Communist Manifesto Kinda Way? Are those legal?

Was that an actual question, or sarcasm ?

 

[Belz...]

Who cares, it's what's happening and there isn't much we can do to stop it. The last time protesting mattered in the United States was... actually never. Woman's suffrage, Black Civil Rights, and pulling out of Vietnam were economically/politically motivated. I could argue this if you wish.

Welcome to the globalizing world.

You vote with your shares/holdings.

Nah. I plan on conquering the world. Then my vote's a 100%!

 

[bagtaggar]

Nah. I plan on conquering the world. Then my vote's a 100%!

Not before I do!

Tell you what, you can have half.

I'll even be nice, I'll take the half with more water.

 

[punchdrunk]

If you're looking at the link, which has raw numbers as opposed to being a graph, then you're looking at receipts by source of tax revenue as a percentage of GDP.

Right; my mistake for not expressing my numbers as a percentage of GDP.

The point is that varying income tax rates for the top earners does not affect tax revenue as compared with gross domestic product, which is the most commonly used indicator of the productivity of the nation.

This is where I tried to show that, while this is true of tax receipts as a whole, individual and corporate income tax receipts as a percentage of GDP have risen and fallen with tax rates.

Roughly, it means income tax revenues rise and fall with the nation's productivity, not with the tax-the-rich schemes pushed by class warfare advocates.

So while increasing the tax rate for the upper class will not result in more tax revenues, it should result in a larger percentage of total tax revenue being paid by the upper class - if my simple numbers are correct.

This is what fuels the supply-side economist who claims that if you want to raise federal income tax revenues, you should provide the entrepreneur and high income earners every incentive to increase productivity and to make more money. That will generate more gross revenue for the federal government because GDP will rise (the federal revenue generated will remain approximately 19.5% of GDP, but the absolute numbers will increase). Hence Reagan's mantra that a rising tide lifts all boats. Of course, macroeconomics is far more complex than simply being a factor of tax policy, so it doesn't really work that way in practice. There are "natural" business cycles that occur, local and/or temporary scarcities and gluts of goods and services, varying unemployment rates, interdependence on foreign goods and services, international monetary and currency fluctuations, natural disasters that affect markets, and so forth.

I took a look at the annual GDP percentage change ( http://www.bea.gov/bea/dn/gdpchg.xls ) to see if I could find a correlation between tax rates and growth of the GDP, but I can't find any. Not that I have the expertise to accomplish this anyway. And, as you say, it's more complicated than just tax policy. Which leads me to my next question: since GDP seems to grow regardless of the tax rate, what proof do we have that lowering taxes spurns the economy? Ideally it makes perfect sense, but I don't see any numbers to verify it.

AS

Thanks again for taking the time with the info and links; it's much appreciated.

 

[punchdrunk]

How about wars of self-defence? No, wait... that was so last year. Wars of Spreading Our Form Of Government, But Not In A Communist Manifesto Kinda Way? Are those legal?

I understand how you feel. I'm not a fan of hawkish foreign policy either.

I do have a few questions for you though:

Is there a difference between spreading democracy and spreading tyranny?

Is it in our best national interest that eventually all other countries should become democracies, assuming that 1) no democracy can ever fully trust a tyranny, and 2) two democracies will never wage war against each other?

Is it in our best national interest to wait for tyrannies to collapse under their own rot, or aggresively pursue changes in key strategic areas of the world?

 

[punchdrunk]

Which leads me to my next question: since GDP seems to grow regardless of the tax rate, what proof do we have that lowering taxes spurns the economy? Ideally it makes perfect sense, but I don't see any numbers to verify it.

I found this: http://www.econlib.org/library/Enc/GrossDomesticProduct.html

[FONT=verdana,arial,helvetica][SIZE=-1]GDP measures production, not exchange. If economists, policymakers, and news commentators kept this simple truth in mind, much confusion over the interpretation of economic statistics might be avoided. Many proposals to cut taxes, for example, are aimed at "stimulating consumer spending," which is expected to cause an increase in GDP. But consumer spending is a use of GDP, not production. A rise in consumer demand could simply crowd out investment, not raise GDP.

I'm going to have to reread this a few times and hope I eventually understand it.
[/SIZE][/FONT]

 

[bagtaggar]

Is it in our best national interest to wait for tyrannies to collapse under their own rot, or aggresively pursue changes in key strategic areas of the world?

I find it interesting that the supposedly humanitarian left, which so often rants and raves about the responsibilities that developed nations have to the rest of the world (in the form of throwing money at starving people) would rather leave the Iraqi people to suffer under Saddam than offer them the hope of a free and civil existence, albeit through armed coup and for selfishly motivated reasons.

Many would even be willing to withdraw all of our troops this very instant, abandoning millions of Iraqi citizens to fend for themselves in this delicate time.

The casualties of this war are, in my opinion (and that of the Iraqi citizenry) worth it if a stable democracy is achieved.

And they aren't even that bad, compared to other armed conflicts.

 

[CapelDodger]

The pressure to create a stable government in Iraq is extremely high for the United States. We acted unilaterally under false pretenses (WMD's, terrorism). So we have to compensate for that by establishing a peaceful government. You'll notice that talk of an exit plan is very sketchy. That's because there isn't one. We're staying as long as we like.

Assuming you mean "we" as in "We, the People", the world is very interested in how long "as long as we like" turns out to be. Is the US electorate committed on a gut-level to this war? They were when it came to Japan, Germany and Talibani Afghanistan. I don't think they are now, just as they weren't in Indo-China. If that proves to be the case, other countries will discount the possibility of further US intervention before the US is directly attacked. Cue Iranian defiance.

What happens if we succeed? The political cachette is enourmous. It will basically serve as a "shut the hell up" to nations that get in the way of our unilateralism in the future.

IMO, the US has revealed its weakness, not its strength, by this intervention. Their stick has proved to be big, but unwieldy.

 

[Tony]

No, it doesn't.

This is an odd response. Can you clarify what you mean here?

It's a great Liberal phrase, yet the men who preached it, while liberal for their time, would be considered conservative or ultra-conservative in ours. By our modern standards, Jefferson et al fell short of their own words. The question is then, if classic liberals don't meet our modern liberal standards, is it their failing, a sign of their time, or is it an indication of our misunderstanding of what they really envisioned with such a phrase?

I'd say it's a sign of their time and cultural surroundings. I stand by my contention that, judging by their stated principles and their respect for reason, some of the founders (and other enlightenment figures) would agree with the gay rights argument.

How can we be sure that a classic liberal wouldn't reject what you call classic liberalism, or what I call present-day liberalism.

Since they were men who put reason over dogma and tradition, it's safe to say that some would be persuaded by the gay-rights argument. Furthermore, I submit that, in principle, classic liberalism was more liberal than present-day liberalism.

 

[Upchurch]

Is there a difference between spreading democracy and spreading tyranny?

Absolutely, but that is nowhere near the point.

The point is that we have no business forcing our form of government on other countries. On an individual level, one of the founding principles of the US was self-determiniation. By entering another country and telling them that they have the wrong form of government, we are being hypocritical to that principle.

Now, if we had had a legitimate reason for being there in the first place, then rebuilding a destroyed government would have been a reasonable responsibility to assume. I do not consider spreading democracy a legitimate reason in and of itself.

Is it in our best national interest that eventually all other countries should become democracies, assuming that 1) no democracy can ever fully trust a tyranny, and 2) two democracies will never wage war against each other?

Absolutely. However, it is also in our best national interest to a tyrrany of democratic enforcement. If we want to promote democracy through economic and political pressures, outstanding. It would have still been the contry's choice whether or not they wanted to become democratic. When we start spreading democracy via military force, that country doesn't really have the free will to become democratic. (Ultimately, I don't think such a democracy will be sustainable once the military force is removed, but we shall see.)

Is it in our best national interest to wait for tyrannies to collapse under their own rot, or aggresively pursue changes in key strategic areas of the world?

Ah, but it is the method of "aggressive pursuit" that is question on the table. In the long run, I do not think it is within our best national interest to use military action to force a country to become democratic. My guess is that the Iraqi democracy will collapse like a house of cards once we remove the US force supporting it. I hope that I am wrong.