Tax cuts don't make basic economic sense - Politics Forum.org | PoFo

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#15117785
If tax cuts boost economic growth, then the added taxes will do just the opposite when it comes time to pay it back.

Taking on debt to give tax cuts may not be such a good idea.

How can you use "more economic growth" to justify tax cuts when those tax cuts are paid for by more borrowed money?

And here's something to consider:
There were six times in US history in which budget surpluses were achieved for long enough to retire a significant amount of debt. Five of those were followed by depressions, the last of which culminated in the Great Depression of the 1930s.
When you start taking money out of the economy to pay down debt (either through higher taxes or less government spending) that starts causing the economy to contract.
What I'm saying is it's going to be very difficult to pay down this debt, and in the meantime time just the costs of servicing it are going to eat away a substantial chunk of the government budget.

Of course the root of the problem wasn't trying to get out of debt but getting into it in the first place.
#15126530
Tax cuts are an excuse to cut programs that earlier presidents established. Or a president might think that if less spending is on education, more money can be allocated towards the defense department. Money gets wasted on travel though so the cuts are not beneficial.
#15130552
SaddamHuseinovic wrote:You can not today tax the wealthy, France tried this under Holland with the result they moved to Belgium.

They take their private jet and move their wealth in a country with low taxes.


Sure you can. But you have to tax the right areas. Besides, the rich are already moving their cash to havens because $5bn isn't enough it seems. The trick is to tax the areas they cannot embezzle. Income tax. Corporation tax. Tax levies on businesses trading within your borders. Because as much as the rich might move their wealth to an offshore account, none of them ever plan on living or working for a tinpot state.
#15130558
The Liberal Globalist model is to have you're main production base in China. Obviously a cut of the profits have to go the Chinese Communist Party to support the Chinese Imperialist National Socialist machine. But they keep the workers in line and hide your profits from the prying eyes of western tax departments and western electorates. Its a great deal for the Corporations. Its a great deal for the rootless bankers and financiers of the world

You then have a smaller work force in the West based around marketing, warehousing and other services. This will be a self policing woke work force. This part of the business will engage in massive virtue signalling. As long as you censor any opinions that go against the current Cultural Marxist orthodoxy you'll be fine. Some corporations like Facebook were a bit slow to get with the programme.

In 2016 the Republicans held the Presidency, the Senate and the House. They had a nominal Conservative majority on the Supreme Court. They had high levels of control in State Governorships, House and Senates. And how they did crow. Yes,yes, I enjoyed watching the Young Turks election night melt down same as the next person. But American Conservatives failed to recognise that might be in government, but they were not in power. The Cultural Marxist control over the Cultural institutions of America was strengthening not weakening. Mark Zuckerburg might have been slower than some but pretty soon after Trump's victory he woke, so to speak to the realities of power in America.
#15134656
Puffer Fish wrote:If tax cuts boost economic growth, then the added taxes will do just the opposite when it comes time to pay it back.

Taking on debt to give tax cuts may not be such a good idea.

How can you use "more economic growth" to justify tax cuts when those tax cuts are paid for by more borrowed money?

And here's something to consider:
There were six times in US history in which budget surpluses were achieved for long enough to retire a significant amount of debt. Five of those were followed by depressions, the last of which culminated in the Great Depression of the 1930s.
When you start taking money out of the economy to pay down debt (either through higher taxes or less government spending) that starts causing the economy to contract.
What I'm saying is it's going to be very difficult to pay down this debt, and in the meantime time just the costs of servicing it are going to eat away a substantial chunk of the government budget.

Of course the root of the problem wasn't trying to get out of debt but getting into it in the first place.

You are making an assumption that it not supported by economic history.
Your assumption is taught by mainstream economists, but it is still just an assumption. And it still is not supported by economic history.

IIRC, the only nation to ever have paid off its entire debt was the US Gov. in the early 1800s. It could do this because it was by far and away the richest nation the world has ever seen. Why, you ask? Because it "owned" all the land from the Atlantic to the Mississippi. All it had to do was steal it from the natives. This was very easy because of its tech advantage and the sicknesses that the natives died from. This was very unique in history. OTOH, right after the US made the final payment, it fell into (what some say was) the worst economic depression that it has ever had, and only got out of it when it started a war with Mexico which it paid for by selling bonds which just put the US back into debt. It has never paid off its debt in the 173 years since then.
. . . Another example is England, aka the UK. It has had a national debt since 1694 and never paid it down much in any of those 326 years.
. . . Nations cancel their debts (example Spain in the 16th and 17th cent) or just die to be replaced by a new gov. that doesn't assume their debts (a form of cancelation, examples are France after the Fr. Rev. and Russia after its rev.).

So, I deny the truth of your assumption. The US will never again have a surplus to pay down the debt.

OTOH, I agree with the others that Repud tax cuts are just give aways to the 1% and are justified by the lie that it will trickle down to the economy as a whole. Since Reagan there has been no trickle down because labor unions have been crushed.
. . . So, I do agree that tax cuts don't make economic sense, if the goal really was to help the people as a whole. But, that isn't the goal. The goal is to give mega $$ to the 1% and to make the Dems cut programs that support the people or at least stop them from expanding programs or starting new ones. The Repud tax cuts *have* achieved those goals.
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#15134666
Tax cuts don't help anybody but the rich. If you initiate tax cuts then the government will have to get it from somewhere else in various different ways, some of them round about ways. All too often the government gets even more money out of the poor to pay for government that the rich are not paying for given that tax cuts generally benefit the rich.

That being said, you don't want to overtax your over-all population either. You gotta strike that right balance of still giving people the incentive to work too. Wages for workers have stagnated while the rich just keep richer, all the while, the working and middle classes end up paying more in taxes. Of course, the rich know this, which is why they seek to cut social programs and safety nets so it forces working people to continue working despite a lack of any real incentive. The only real incentive they really have is just to only get by and survive by the skin of their teeth which is no fun.
Last edited by Politics_Observer on 08 Nov 2020 05:22, edited 1 time in total.
#15134667
@SaddamHuseinovic

SaddamHuseinovic wrote:You can not today tax the wealthy, France tried this under Holland with the result they moved to Belgium.

They take their private jet and move their wealth in a country with low taxes.


Yeah, that's one of the big problems too. The rich escape paying taxes while saddling working and middle classes with a higher tax burden. If government can't get taxes out of the rich to pay the full cost of government, then they will simply get even more money out of a struggling working and middle class. You can pass laws to crack down on people like hackers and tax dodgers but then they will just find another place with less or no laws to get away from paying taxes or from being held accountable.

That's one of the big problems with the internet and capital is that they have the whole globe to move around, but laws don't. The US government goes after citizens living abroad and taxes them on their individual tax returns. However, corporations that are incorporated in a tax haven but not paying dividends to shareholders, the US government can't touch legally.

Because those dividends haven't been paid to US citizens who own stock in that company that was created in a tax haven. The money might not really be able to spent by an American shareholder (or maybe it can but I am not sure on that) given that the profit of the corporations stays in the corporation and is not paid out to the shareholder where that shareholder could then be taxed.

Perhaps the best solution to this problem is making sure international trade agreements allow workers to have a voice so they are paid more money and then it wouldn't matter if the rich evade taxes by offshoring their money in tax havens. The rich would be making less profit but still be making a decent profit whereas workers will get a higher share of the profit and paying more in taxes but living better off too.
#15134694
Politics_Observer wrote:@SaddamHuseinovic



Yeah, that's one of the big problems too. The rich escape paying taxes while saddling working and middle classes with a higher tax burden. If government can't get taxes out of the rich to pay the full cost of government, then they will simply get even more money out of a struggling working and middle class. You can pass laws to crack down on people like hackers and tax dodgers but then they will just find another place with less or no laws to get away from paying taxes or from being held accountable.

That's one of the big problems with the internet and capital is that they have the whole globe to move around, but laws don't. The US government goes after citizens living abroad and taxes them on their individual tax returns. However, corporations that are incorporated in a tax haven but not paying dividends to shareholders, the US government can't touch legally.

Because those dividends haven't been paid to US citizens who own stock in that company that was created in a tax haven. The money might not really be able to spent by an American shareholder (or maybe it can but I am not sure on that) given that the profit of the corporations stays in the corporation and is not paid out to the shareholder where that shareholder could then be taxed.

Perhaps the best solution to this problem is making sure international trade agreements allow workers to have a voice so they are paid more money and then it wouldn't matter if the rich evade taxes by offshoring their money in tax havens. The rich would be making less profit but still be making a decent profit whereas workers will get a higher share of the profit and paying more in taxes but living better off too.

I have suggested that the US Gov. put a "land like" tax on stock shares, on the wealth they represent.** This would be possible for every corp. that is incorporated in the US. For foreign corps. the US could only let them sell stuff in the US if they let the US tax the profit on those sales. If they don't let the US tax them a little, then slap a 90% tariff on their goods.


** This tax would be based on the average price of that share on each day. Whoever owns a share on any day, has to pay that amount or 1/2 of that amount of tax. If 3 people own it on a given day, then all 3 pay 1/2 that amount. The rate might be something like 1/10,000 of the average share price. this rate could even be "progressive, being higher the higher the total value of all the shares of a corp. is (to deal with stock splits).
. . . This is like taxing the owners of commercial land and buildings.
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#15134707
@Steve_American

Steve_American wrote: For foreign corps. the US could only let them sell stuff in the US if they let the US tax the profit on those sales. If they don't let the US tax them a little, then slap a 90% tariff on their goods.


Are you proposing a national sales tax only on foreign corporations on all goods and services they sell in the US? What would the trade offs be to imposing a national sales tax only on foreign corporations on goods and services they sell here state side? Are there any trade offs? Could it discourage foreign corporations from doing business here in the US?

Right now, states and various counties have sales taxes on goods (but not services, at least not that I can remember on services) sold by all corporations here in the U.S. The corporations get a small percentage of the revenue collected at least in my state that is sent to the state Department of Revenue (I know this because I used to run my own business and was legally required to charge sales taxes on some of the product I sold and send the proceeds to the state).
#15134734
Politics_Observer wrote:@Steve_American

Are you proposing a national sales tax only on foreign corporations on all goods and services they sell in the US? What would the trade offs be to imposing a national sales tax only on foreign corporations on goods and services they sell here state side? Are there any trade offs? Could it discourage foreign corporations from doing business here in the US?

Right now, states and various counties have sales taxes on goods (but not services, at least not that I can remember on services) sold by all corporations here in the U.S. The corporations get a small percentage of the revenue collected at least in my state that is sent to the state Department of Revenue (I know this because I used to run my own business and was legally required to charge sales taxes on some of the product I sold and send the proceeds to the state).

Read what I wrote again.
I said to tax US corps. by taxing the owners (shareholders) on their stock's value. I explained that it needs to be the ave. of each day's stock price because, if it was on any given day then it would change the market as people tried to sell before that day and buy the day after.

I suggested the part you quoted because I'm not sure that the US can tax the owners of foreign corps. in the same way.

If a corp. doesn't want to pay some US tax then why should the US let them sell things here?
________________________________________________________

The main proposal assumes that the US Gov. can track the owner of every share of US corporate stock. Many would not like it to let the Gov. have all this info.

Like land, the US Gov. could seize shares if the tax was not paid and sell them to get the tax paid, i.e. collect the tax.
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#15134939
Puffer Fish wrote:when those tax cuts are paid for by more borrowed money?

Terribly wrong assumptions.

If revenues are less, government can just spend less, not necessarily borrow money.

Tax cuts may lead to higher revenues, due to increased economic activity. It happened in many Eastern European countries which in the late 90s/early 2000s switched from high progressive taxation(~35-50%) to low flat taxation(10-20%)
#15134943
Politics_Observer wrote:Tax cuts don't help anybody but the rich.

Tax cuts do help socialist morons who work for the rich - without tax cuts the rich can relocate their businesses and the socialist morons would be unemployed and the state deprived of taxes from which to hand over benefits to socialists. ;)
#15134953
@ccdan

ccdan wrote:Tax cuts do help socialist morons who work for the rich - without tax cuts the rich can relocate their businesses and the socialist morons would be unemployed and the state deprived of taxes from which to hand over benefits to socialists. ;)


There is a problem in your logic. Unfortunately, nothing in this world is free. Government costs money too. So if you give tax cuts to the rich, then that tax cut will be paid for by taking social security away or taking medicare away. You see, nothing is free. The rich are doing better than ever before and were well off before any tax cuts. Why give them the tax cuts when they were and are doing so well when it will harm those less fortunate in the process?

And if you want to help the less fortunate to get better paying jobs, they need job skills for the information age economy. Well guess what? Training in those job skills costs money too and is not free. I don't see very many effective job training programs for the American people who were not born wealthy so they can do better for themselves and make more money unless they are willing to go into debt to get that training.

Student loan debt is a big problem right now that is preventing people from opening businesses and owning homes. But the rich are making even more money than they ever have and can easily pay for school or job training for themselves without going into debt unlike most working people. So it's a feedback loop of the rich getting richer and the poor getting poorer when you consider inflation in the economy and wage stagnation for the poor.
#15134962
@Rancid

Rancid wrote:I don't understand why I pay more taxes than most rich people. :hmm:


Me either. Donald Trump not paying taxes for years here in the U.S. and then his $750 tax return for another year. Dude's an American citizen and paid more in foreign taxes every year than he did here in the U.S. Heck, I paid more in taxes as a business owner when I was a business owner for 7 years here stateside than Trump did here stateside for the same time period when he was not U.S. President. What kind of bullshit is that? He gets the protection of the U.S. government and the benefits of being a U.S. citizen but doesn't pay for it like most Americans. Yet, here he is paying all kinds of money to foreign governments in taxes and he is not even a citizen of those countries. And he was President of the US! Representing the US!
#15135747
Politics_Observer wrote:@ccdan
There is a problem in your logic. Unfortunately, nothing in this world is free. Government costs money too. So if you give tax cuts to the rich, then that tax cut will be paid for by taking social security away or taking medicare away. You see, nothing is free.

My logic is perfect!

As I already said, there are countries which experienced increases in revenues following tax cuts!

But if revenues are lower, you don't "pay for", you just cut your expenses accordingly!

The American people should ask their government/politicians do the following things:

- stop the murderous rampage of the American military outside US borders(what they're doing right now is totally illegal from an international standpoint, they're committing lots and lots of war crimes - and they know it - they take advantage of the fact that they have the strongest military for now and no one can hold them responsible - but that's about to change!)

- cut down very heavily on (useless and often very abusive) criminal legislation(or any other legislation that can turn into criminal stuff under certain circumstances) - aside from illegal wars, this is the biggest issue the American society faces: extreme overcriminalization! (unfortunately the average individual is too dumb to realize what's going on!)

- cut down on law enforcement financing - there's some really absurd waste of money - from using helicopters for some very trivial issues, to the heavy militarization of the police and some other departments(which should not have such policing powers at all)

- stop financing private education - all those funds should go to public educational institutions, including medical schools(in case you don't know, some of the richest universities like Harvard and Yale also get public funding)

- re-model the the healthcare system(including insurance) - it should be primarily managed by the state - as it happens in most other developed countries! Medicine in general - with a few exceptions here and there - is incompatible with the rules of the free market.

All of the above can save TONS of MONEY! No need for absurd taxes!
#15135748
ccdan wrote:they take advantage of the fact that they have the strongest military for now and no one can hold them responsible - but that's about to change!


I agree that the United States army are not the best disciplined forces, and many of their campaigns are operated out of greed, but be careful of what you wish for.
#15135830
ccdan wrote:My logic is perfect!

As I already said, there are countries which experienced increases in revenues following tax cuts!

But if revenues are lower, you don't "pay for", you just cut your expenses accordingly!

The American people should ask their government/politicians do the following things:

- stop the murderous rampage of the American military outside US borders(what they're doing right now is totally illegal from an international standpoint, they're committing lots and lots of war crimes - and they know it - they take advantage of the fact that they have the strongest military for now and no one can hold them responsible - but that's about to change!)

- cut down very heavily on (useless and often very abusive) criminal legislation(or any other legislation that can turn into criminal stuff under certain circumstances) - aside from illegal wars, this is the biggest issue the American society faces: extreme overcriminalization! (unfortunately the average individual is too dumb to realize what's going on!)

- cut down on law enforcement financing - there's some really absurd waste of money - from using helicopters for some very trivial issues, to the heavy militarization of the police and some other departments(which should not have such policing powers at all)

- stop financing private education - all those funds should go to public educational institutions, including medical schools(in case you don't know, some of the richest universities like Harvard and Yale also get public funding)

- re-model the the healthcare system(including insurance) - it should be primarily managed by the state - as it happens in most other developed countries! Medicine in general - with a few exceptions here and there - is incompatible with the rules of the free market.

All of the above can save TONS of MONEY! No need for absurd taxes!

While I might agree with your money saving ideas and your logic maybe perfect, however if any of your assumptions are false then your conclusion is not valid.

It is just an accounting fact that every dollar the US Gov. (or any nation's gov.) spends is counted as part of its GDP. So, if the US Gov. spends less then the GP is less. This is why cutting the budget doesn't balance the budget. Govs. are not households. That analogy is not accurate and, in fact, is useless.
. . . Let me give you my analogy. Lets say an uber driver has to cut back on his spending for some reason. If he cuts back on his gas budget, then his income falls and he actually makes less money after expenses. This is because he can't drive as many miles if he has less gas. When the Gov. cuts its spending it cuts someone's income, that someone will likely pay less in taxes by the end of the year, and she/he will have to also spend less on everything, which will reduce the sales and therefore profits of many other people, businessmen or women. These business people will then also pay less taxes. Etc.
. . . OTOH, in your example, reducing taxes on someone leaves them with some more money which they might spend. However, it has been found that on average about 20% of what these people didn't pay in taxes is not spent. It is saved. Dollars that are saved *DO* just sit there, they are not lent out by banks because every dollar a bank loans is created out of thin air. The banking laws sort of license the banks to create money. This is the main reason that the Fed. can't fine tune the money supply. I'm told that it tried for decades and finally admitted defeat and gave up trying.
. . . What this means is that increasing spending is 20% more efficient than cutting taxes to stimulate the economy, aka increase the GDP. This is compounded, if the new spending is aimed at the poor who will not save any of it.
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