Don't put words in my mouth. I never argued for or against any particular level of tax revenue. Only that it is very illogical to assume that we are past the peak of the Laffer Curve. The post was mainly aimed at the idea that it is actually the Laffer Curve that suggests that up until some arbitrarily high rate, tax cuts result in revenue decreases. I clearly indicated that the 50% was my opinion. My opinion is based on human nature and incentives with a bit of historical precedent. No reasonable person in the country who currently pays around 12-15% would increase productivity if they were only paying 10%. They are also not going to deliberately reduce their income if the rate increased to 20%. Now if someone were to suggest a 50+% I can see many people becoming resentful that the gment is taking more than 1/2 of their income. Whether they become less productive or simply evade taxes isn't the point. One way or another, revenue would be adversely affected. I would suggest that at anything around 75% taxation this would be an absolute certainty. But the plain and simple truth is that when the effective rate for the vast majority of the population is already below 20%, tax cuts are not going to do a whole lot besides simply decreasing tax revenue.
I never intended to I didn't mean to suggest that you had Which if I'm reading correctly is based mostly on your opinion, not necessarily fact. Well...it's certainly clear now. So again, are you arguing that the government should find that optimal "sweet spot" on the curve for maximum attainable taxation?
This is true, but there are better and more direct ways to accomplish this IMO. Subsidies and credits are a much more efficient and direct form of stimulus if that is the chosen direction. I would argue that the idea is not to encourage investment at this point. For the most part, investment in a company is simply a loan to the company. Obviously, any seasoned investor knows that equity and bonds are different, but the point remains the same. Both provide essentially borrowed capital to the company. Whether they are indebted to a bondholder or a shareholder, the effect is the same. Companies right now do not need more debt. They need more revenue. More revenue and demand for their goods will result in more hiring. Not saying that I agree with the idea of stimulus, but if that is the chosen course, almost all resources should be focused on the most efficient methods for increasing consumption. It is unrealistic to assume that any type of "hiring subsidy" would do anything to encourage job creation. That is like getting a mortgage purely for the interest deduction. All tax monies used for job stimulus should be focused on the consumer, and not in the form of lower tax rates. Right off the bat I would announce a building renovation credit. Fed Gov will pay for something like 40% of approved real estate renovation projects, up to a max of something like $25K. The result would be dramatically increased consumption in building materials and services. Job creation in one of the hardest hit sectors. The ability for home owners to actively increase property values without worrying about getting a full return on their investment.
No, I don't think it is the business of the gment to attempt to extract as much money as possible from the population. On the contrary, I think that it is the fiduciary responsibility of elected representatives to minimize required taxation as much as is possible without resulting in increased national debt.
Epic... I think you are buying into the leftist misunderstanding of business. There may be a lack of demand for current business and business approaches. That is what happens in a contraction... we had too much supply and capacity in certain areas. The idea is to allow those areas to contract and find new more productive areas. Lower taxes... means more startup and investment capital for small businesses which create the jobs. I have seen in one of my own businesses. There was opportunity to flip houses... but we were only projecting 20 percent returns... which was not enough to get the money off the sidelines... that money would analyse their net after taxes. So we had to use our own money and some hard money to prove the model. We also has to wait for a few great values to show up. But they did and we proved the model. Now with greater than 20% returns we can raise a lot more money. That business has hired two employees already and we hired contractors... it is growing and we are now hiring a foreman and a couple of crews. That model would have gotten off the ground 6 months earlier with lower taxes...
Take that same model and assume that the gment would send you a check for the lesser of $25K or 40% of the renovation costs on those flips. As it pertains only to the profit generated by flipping those buildings, would you rather have that subsidy/credit or a 10% lower tax rate next April?
BTW, no I don't buy into the left's misunderstanding of business. I simply also don't buy into the right's delusions of business.
I don't disagree that a contraction was inevitable and necessary in housing. But unfortunately we created a situation in which the entire economy is dependent upon the strength of the real estate market. The discovery of new, more productive areas is not realistic in the short term without consumption. When people are upside down on their homes, their priority must be to fix that problem before consumption can increase, unless whatever tax reduction, credit, or subsidy implemented is directly tied to specific consumption. That is precisely why sending a check to every person in the nation didn't have any real effect. The idea then is not to create a new bubble in housing, but instead to stabilize an industry that has historically been at the center of our jobs market and personal finance. That is why I suggested a credit for renovation and not new construction. We need stable value in real estate, not more supply. Millions of upside-down mortgages creates instability by creating far too many short sales. These transactions do not result in accurate discovery of fair market values. If there is enough of them, it creates two markets of the same products. The foreclosure market is wreaking havoc on the normal market in terms of property valuation. If a person is upside down on their home, they can't realistically wait for the price to come back in an unstable market, but they can attempt to create value in their home via renovation. Unfortunately, most renovation is done at a net loss to the home owner. If there must be intervention then my opinion is that it should be directly aimed at reducing or eliminating that net loss, and providing an incentive for people to consume and create real value.
I might also mention that the bulk of negative equity mortgages are homes valued below $200K. It is estimated that there are about 11MM negative equity mortgages right now and almost 2MM could move out of the negative equity group with a mere 5% increase in value. This means that a renovation of simply $10-20K would get most of these homes out of the predicament they are in. This alone would at least dramatically lower the rate of short sales, and provide a more stable pricing for the general market. With a reduction in the quantity of short sales, banks become less inclined to take large losses on properties which distort the fair market values. The part of Adam Smith's invisible hand that the GOP conveniently ignores is that fair valuation only occurs when both parties have sufficient information to come to a mutually fair conclusion. If either/each party cannot realistically determine a fair value, then the invisible hand model begins to break down. Such is the case in our current housing market, and it will only change when valuations are stable.