Post #326,520
5/19/10 1:49:10 AM
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Effect of tax cuts and tax hikes on economic expansions
http://www.angrybear...tax-hikes-on.html
This graph also does not appear to mesh with popular wisdom (not to mention accepted economic theory) in America today. In general, when tax cuts occurred during or just after a recession, the resulting expansion has been slower than when the tax rates are kept unchanged. Expansions associated with early tax hikes are the fastest of all.
Which leads us to the overall growth of the economy during the entire length of each expansion, which is shown in the next graph.
Once again, the theoretical benefits of a tax cut do not seem to match what the data shows, which is that least impressive expansions are those that follow decreases in marginal income tax rates (either during the recession itself or at the start of the recession).
So where does this leave us? Well, simply put, the data and the theory/popular wisdom do not agree. Going as far back as there is official data on economic growth, what we find is that expansions associated with reductions in the top marginal income tax rate have been shorter and slower than expansions that did not involve tax cuts. Which means, simply put, that the theory is probably wrong, and we as a nation continue to buy into it at our detriment.
You mean the conventional wisdom is wrong??!?!?! ;-)
Cheers,
Scott.
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Post #326,527
5/19/10 8:24:41 AM
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no, he doesnt understand economics
tax cuts should be measured against collections not gdp however lets measure apples and oranges
The NBER uses a broader definition of a recession than do many economists. The traditional definition of a recession is two consecutive quarters of a shrinking gross domestic product (GDP).[3] In contrast, the NBER defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." so if we define recessions differently than everyone else the graphs wont be as similar will they
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Post #326,534
5/19/10 9:20:09 AM
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Sure he does...
...real world economics, anyway...which is if you can put it in a pretty chart you can say anything you want and someone will post it online :-)
I will choose a path that's clear. I will choose freewill.
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Post #326,540
5/19/10 10:22:11 AM
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Why?
tax cuts should be measured against collections not gdp
Says who?
The purpose of federal taxes is ultimately to "promote the general welfare". It does so by funding the government and by regulating commerce.
Ultimately, the government wants sustainable growth in GDP. So ultimately the best metric of the effect of taxes should be long-term GDP growth.
If you disagree, tell me why.
Oh, and I think your apples and oranges comment is a distraction. I'll throw you a bone, though - http://www.nber.org/papers/w13264 ;-)
Cheers,
Scott.
(Who suspects the problem is more complicated and nuanced than Romer and Romer indicate, and that Rdan's analysis is closer to the truth. But who can't prove it.)
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Post #326,542
5/19/10 11:05:08 AM
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Isn't it the *rate* that matters?
If we're talking about relative effects of various tax policies, isn't it the actual rate that matters? Because some people argue that lower rates lead to higher collections. Others say higher rates lead to higher collections. And of course the same arguments play out over what effect the rates have on GDP.
So isn't is specifically the rate we should be comparing, to see what effect it actually does have on those two numbers?
--
Drew
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Post #326,544
5/19/10 11:28:33 AM
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Dunno.
I think one could argue that it's the rate of change that matters. Increasing the tax rate from 20% to 25% (either a 5% or 25% increase, depending on how you look at it) may be different from increasing the tax rate from 5% to 10% (either a 5% or 100% increase, depending on how you look at it).
R&R's paper shows that it's complicated and tough to separate out the variables. They argue that the marginal rates are important. It makes much more sense to me that the actual end-of-the-day tax burden is what matters. Who cares if the theoretical marginal rate is 90% if nobody actually pays it due to various deductions and exclusions?
Cheers,
Scott.
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Post #326,548
5/19/10 12:01:56 PM
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left out a couple of things
to pay the Debts and provide for the common Defence and general Welfare of the United States so pay debts, armed forces, infrastructure, no mention of using taxes to regulate commerce.
To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes congress job is to regulate interstate, international and Indian Commerce, doesnt say anything about a lot of commerce that doesnt fit the model which congress regularly gets their nose stuck in.
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Post #326,550
5/19/10 12:44:01 PM
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"among the several states"
You know that's the hole the Federal government has driven several fleets of aircraft carriers through. ;-)
But also, look at the end of Section 8:
To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof.
The question of what the federal government can do with respect to taxes and interstate commerce was decided long ago. See Gibbons v. Ogden - http://en.wikipedia..../Gibbons_v._Ogden :
The Court went on to conclude that Congressional power over commerce should extend to the regulation of all aspects of it, overriding state law to the contrary:
If, as has always been understood, the sovereignty of Congress, though limited to specified objects, is plenary as to those objects, the power over commerce with foreign nations and among the several states is vested in Congress as absolutely as it would be in a single government, having in its constitution the same restrictions on the exercise of the power as are found in the Constitution of the United States.
It is sensible to interpret the Constitution as giving the Congress vast (but not unlimited) powers with respect to interstate commerce. And that's the way it has been interpreted.
The Constitution isn't a static document and wasn't intended to be. I posted this link earlier (but it appears one has to scroll...) - http://www.theatlant...#comment-49391198
[...]
Second: when people talk about judicial activism, one of the things they often say is: the Framers never imagined protecting X (or: making X illegal.) This, even if true, is irrelevant. What matters is construing the various meanings of the terms they used accurately, not matching up with their beliefs about what those terms apply to. My standard example: suppose that a law bans "carcinogens", and that some substance in common use when that law was enacted turns out, later, to be carcinogenic. This substance might then be banned, even though the legislators who enacted the law never anticipated that it would be. Would this show that "carcinogenic" had changed its meaning? No; just that we had discovered that it applies to something people didn't know it applied to when the law was passed. Someone who thought that this law should be read to ban only substances believed to be carcinogens when the law was passed would be a judicial activist: s/he would be trying to read a law that bans carcinogens as though it banned substances believed to be carcinogens at a given time. But if the legislators had intended to ban only those substances, they could perfectly well have said so.
It's easy to see that a law saying "no carcinogens" applies to all the things that are, in fact, carcinogens, and allows for future discoveries about the carcinogenic properties of apparently innocuous substances. But consider: are there similar discoveries about what "due process of law" requires? How would it be made? And how widely accepted would such a discovery have to be before it could be used to ground new due process rights? I don't think the answer to this question is clear *at all*. I am clear that saying "due process means whatever the Framers thought it meant" doesn't work: either it refers to the meaning (the "process of law" that is "due"), which is what's under debate, or else (Scalia version) it interprets "due process of law", as used by the Framers, to mean "those processes that we, the Framers, think count as 'due processes'", which it plainly does not mean. (If they had meant that, they could have said so.)
Likewise, in construing texts you often have to make assumptions about the intent of the author(s). Suppose the Constitution, or a law, refers to some right that makes no sense unless something else is presupposed: should you say that the Constitution/law holds that we ought to have that thing? (E.g., if it referred to a "right to vote" without stipulating that there had to be elections, and if it seemed plain from the text that the people who wrote it expected that there would be elections, would you say that the Constitution required it?) Likewise, is it generally a good principle of textual construction that an interpretation that makes the authors seem minimally sane and sensible is to be preferred to one that does not (e.g., that interpreting a document that refers to a "right to vote" as requiring the existence of elections is preferable to interpreting it as ensuring a right to vote, but as blithely unconcerned with whether or not any actual occasion to vote ever arises?) Arguably, yes: but people who don't like this will call it "judicial activism".
Here, the devil truly is in the details.
Werd.
HTH.
Cheers,
Scott.
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Post #326,559
5/19/10 1:13:33 PM
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judicial activism means the judge isnt doing what you want
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Post #326,560
5/19/10 1:23:01 PM
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Ding ding ding ... we have a winner
Which means it's a bogus claim. Same as "Obama was golfing" is a bogus claim. So when someone points out the brush cutting, that's not the same as saying, "Yes, it's bad, but your guy was bad too, so that makes it okay." What it means is it's a bogus claim for either side. If your side didn't make the claim about your guy, then you don't get to make it about the other guy.
--
Drew
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Post #326,561
5/19/10 1:39:26 PM
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thats different tiger doesnt get as much golf in
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Post #326,563
5/19/10 2:54:56 PM
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Tiger works for the federal government now?
I must have missed the press conference
"Chicago to my mind was the only place to be. ... I above all liked the city because it was filled with people all a-bustle, and the clatter of hooves and carriages, and with delivery wagons and drays and peddlers and the boom and clank of freight trains. And when those black clouds came sailing in from the west, pouring thunderstorms upon us so that you couldn't hear the cries or curses of humankind, I liked that best of all. Chicago could stand up to the worst God had to offer. I understood why it was built--a place for trade, of course, with railroads and ships and so on, but mostly to give all of us a magnitude of defiance that is not provided by one house on the plains. And the plains is where those storms come from."
-- E.L. Doctorow
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Post #326,567
5/19/10 3:53:08 PM
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Sure - he's qualified now . . .
. . having been caught in a sex scandal, he'll fit right in. Should be running for Congress soon.
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Post #326,570
5/19/10 4:24:34 PM
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hafta be a dem, he is hetro
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Post #326,572
5/19/10 4:37:49 PM
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I LOLed
--
Drew
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Post #326,615
5/20/10 10:09:26 PM
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Re: Why?
Thanks for the re-post. When addressing the narrative that is used in politics and media...tax cuts correlate with growth...the weight of the evidence in 82 years of data is definitively negative correlation, and thereby discredits the narrative. The narrative involves growth of gdp, not revenue ups and downs.
One can slice and dice a million ways (Congressional party, lags of different lengths, etc.) and it mcomes out the same. Standard definitions of recession is used. It is not causation either. But the political narrative is garbage economics.
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Post #326,617
5/20/10 10:16:43 PM
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Welcome. Stick around if you can - we like new perspectives
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Post #326,645
5/21/10 9:48:48 AM
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hey cool, new blood. Feel free to hang out
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Post #326,699
5/22/10 1:17:15 PM
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Krugman offers support for your thesis today.
http://krugman.blogs...-the-memory-hole/
HereÂs a rough-cut version. The blue line, left scale, shows median family income in 2008 dollars; the red line, right scale, shows the top marginal tax rate, a rough indicator of the overall stance of policy. Basically, US postwar economic history falls into two parts: an era of high taxes on the rich and extensive regulation, during which living standards experienced extraordinary growth; and an era of low taxes on the rich and deregulation, during which living standards for most Americans rose fitfully at best.
Yup.
Not proof, and there's that bugaboo I have about the importance of the top marginal rate vs the actual total tax percentage paid, but it's an interesting correlation.
Cheers,
Scott.
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Post #326,832
5/25/10 4:36:58 AM
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Hmmm Rdan
Might you have a nodding acquaintance with 'Our Lady' (in native vernacular) ??
(Wouldn't want to wreck an incognito..) :-0
I could almost see voting for Palin in 2012 on the grounds that this sorry ratfucking excuse for a republic, this savage, smirking, predatory empire deserves her. Bring on the Rapture, motherfuckers!
-- via RC
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Post #326,833
5/25/10 7:32:33 AM
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He's not really hidden.
http://www.angrybear...t-angry-bear.html
Scroll down about 1 page.
:-)
Cheers,
Scott.
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Post #326,918
5/27/10 9:29:40 AM
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I'd like to add my voice to the chorus
I've been reading you for a year or so on Angry Bear... be nice if you hung out and argued with us. And don't worry... if you're looking for an argument you came to the right place. Abuse is down the hall in Flame On.
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