I think your f(I) is different from my f(I). I defined my f(I) as current total income after the effects of previous taxation and spending have been applied. But you set your f(I) equal to revenue, which wouldn't make sense under my definition of f(I). You also set it equal to ET*I, the amount of revenue collected through taxation given a constant amount of income, again this is not the same as what my f(I) represents. In short, your f(I) = Revenues, my f(I) = Income minus losses from tax revenues plus gains from spending. -Meta
Look, it's very simple. If I drop something with a known mass from the top of a building with a known height, I can predict virtually exactly when the object will hit the ground. I can do this repeatedly. I KNOW the equation is valid because it has been demonstrated, again and again, in thousands if not millions of different contexts and circumstances. Certainly there are variations. Nothing is perfect. But it is very reliable and useful. It has REAL WORLD application and prediction. Your equation cannot predict jack squat. That is because it does not actually represent the insanely complex multivariate system that is "the economy". The system is simply too complex to be modeled by a simple little equation like that. REAL SCIENTISTS let the evidence determine the equations; you are just asserting your equation on an ad hoc basis. You must first start with observations and then work your way towards the equation. The world of economics has it backwards. They start with the model or the equation, and try to make the evidence conform to that. Your problem is FUNDAMENTAL. If you do not grasp the FUNDAMENTALS of science and math, then you cannot understand why throwing a bunch of equations around is not the same as observation-based evidence.
Actually, what Iriemon stated can be proven mathematically. Given our equation R = ET * I and given that I = 12,000,000,000,000 if ET = 0.2 then R = 0.2 * 12,000,000,000,000 = 2,400,000,000,000 if ET = 0.25 then R = 0.25 * 12,000,000,000,000 = 3,000,000,000,000 3,000,000,000,000 - 2,400,000,000,000 = 600,000,000,000 -Meta
Here is the real equation. Tax revenues = Taxes paid by taxpayers to the government The variables which determine "taxes paid by taxpayers to the government" are nebulous and manifold. Boiling it down to a simple-ass math equation is just asinine.
You keep implying that the R = ET * I equation lacks real world predictive application, but you still haven't told me what it is you want the equation to do that it is not already doing. You also keep saying that the equation doesn't predict anything, but I've shown you multiple times now that it can be used to predict whether a change in tax rates will lead to increased or decreased revenues, again, is that not exactly what we were looking for? And you say that the equation is flawed because it wasn't derived from observations, and yet, there was not one piece of the equation that was not derived from a real world observation or a mathematical given. So can you please be more specific as to what your objection is? Again, what do you want the equation to do that it is not currently doing? -Meta
Taxes paid by taxpayers to the government is the same as ET * I, I being the total income and ET being the effective tax rate as a percentage of that income. And again, ET can be broken down further into, ET = T - (D + TE). You seem to believe this is an over-simplification,well if you believe that to be the care, rahter than throwing your hands up and saying "I give up, its too complicated", why not list out any major variables which you believe the current equations are not accounting for? -Meta
Actually, I understand the equation perfectly, like you said, it is a simple math equation. What I am unsure of, is why you do not seem to get it. -Meta
The equations already account for taxation and spending. Can you be just a LITTLE more SPECIFIC as to other income affecting variables you think we should include? ie: Do you think things such as climate change, random diseases, or other natural/man-made disasters should be included within the equations for our purposes? -Meta
Meta, you have done an excellent job, and your arguments and positions have been sustained by clear, logical and rational statements that any objective person easily understands and agrees with. But we are not dealing with logical objective people here. Instead, we are dealing with folks whose fundamental political position, like the Grover Norquist Party, is to keep taxes on the rich and trust fund babies (into which category they no doubt fall) as low as possible. You see this position in their every post. Federal tax collections are proportionately the lowest in 60 years, and proportionately $800 billion lower per year than in 2000. The country is drowning in debt in large part because of tax cuts. And even a child understands that if you reasonably raise tax rates, like putting them back to where they were in the 1990s, will increase the amount of tax revenues collected. An obvious solution, along with trimming spending, is to raise taxes. But that prospect is anathema to those for whom more is never enough. They are motivated by their own selfish greed to the point of the absurd, where they cannot even admit the simple, obvious proposition that raising tax rates will bring in more revenues. So they take these absurd positions to deny that obvious fact, and pretend that raising tax rates would have no effect on increasing revenues. They deny it happened in the past under Clinton despite irrefutable evidence, and they deny it will in the future. Their alternate reality is that whether the tax rate is 1% or 50%, we'll get just the same amount of revenues, so why raise taxes on the rich? That's why they pretend they don't "get it". And they never will. You see it in their dodges and vague answers and positions based on nothing more than unsupported say-so and absurd statements like "equations don't show anything." And when they are boxed into a corner, they resort to their typical MO or ad homs and rants and accusations, just as we've seen in this thread.
your math is flawed from the beginning. You start with the simple equation for Revenue, R=ET*I and immediately substitute I with f(I), a function of I, yielding the equation. R = ET * f(I) This is wrong right out of the gate. I=I, it does not equal a function of I, namely f(I), unless f(I) = 1*I. also R=ET*I, so f(ET*I)=f(R) It would not equal total current income, it would equal f(R), a function of R if you wish to describe the effect of tax and spending on total income, you need to set up I as a function of the variables ET and S This would result in I= F(ET,S) Then your equation would be R =ET*f(ET,S) Revenue equals the product of ET and f(ET,S), the effects of taxes and spending on Income. Now, you need to define f(ET,S), which is the function that relates taxes and spending to income. Note, that function is also incomplete as thousands of other variables from savings, debt, leverage, interest rates, commodity prices, energy availability, regulations, etc., etc., etc., affect income.
For the most part it works, but nobody can assume government spending always has a positive impact, you could have CETA raking leaves in the forest (or sweeping sand out of my street, to come back every week to do it again while they steal the grapes off the vines on the fence that borders the property), or Joseph Califano wanting them tagging people at the beach to tell them when to leave (to save us from skin cancer), seriously you cannot make that stuff up, or dumping small amounts of money into households, when it might be more effective to have fewer people under a bridge with a needle gun and some paint and if looking to the long term benefits building Green Plants, and a better electrical grid, like a TVA. If (f(S) == f(doing_what_you_need)) { If f(ET*I) == f(S) then R = ET * I; if f(ET*I) < f(S) then f(I) > I; if f(ET*I) > f(S) then f(I) < I; } else { Get_a_new_president(); } I cannot blame Obama for trying, but still "It is not Camelot stupid!"
You seem to have been confused by my use of the term "f(I)". Again, I defined f(I) as the total income after the affect of taxes and spending were applied, so base income minus the effects of taxes plus the effect of spending. f(I) as such is as you stated, not simply a function of I, but nor is it simply a function of ET and S, rather it is a function of I, ET, and S, so technically it would be written as f(I, ET, S) but I choose to write is as f(I) for short. But you can call it pretty much anything you want, call it x or something if that's what you like, as it doesn't change the equation. And yes, f(ET*I) does equal f(R). Now here, you have changed the meaning of what that variable after "ET*" is supposed to be. Call it f(ET,S) or f(I), but it is supposed to represent the total income after the effects of taxation and spending have been applied. Not the affect itself. Ie: if we have a base income of $100 and due to the net effect of taxation and spending, that income goes down $10. The -$10 would be the effect, $90 would be the resultant total income, or f(I) or f(ET,S). So in the equation we would have R = ET * 90, and not as you seemed to have implied R = ET * 10. Again the function is as follows, f(I) or f(ET,S) = I - f(ET*I) + f(S) And like I mentioned before, to understand the exact values for f(ET*I) and f(S) would require us to know just how far the multiplier effect extends, which is difficult to say the least. But what we can do is make determinations based off of how f(ET*I) and f(S) relation to one another will affect I: If f(ET*I) == f(S) then R = ET * I if f(ET*I) < f(S) then f(I) > I if f(ET*I) > f(S) then f(I) < I I have more, but do you understand everything I've written up till this point? Also, I have to leave right now so it will be latter in the day before I get to the rest. -Meta
I can't believe you guys are still arguing about this. Meta is absolutely correct, and he provided the answer right here: Iriemon is arguing that we can instantaneously increase revenues by instantaneously increasing ET. By being instantaneous, there is no time for the new ET to have any effect on I, ie. f(ET*I)=f(S), so R=ET*I. What we don't know is how changes in the ET will change I in the future except by computing the functions f(ET*I) and f(S), which Meta also correctly said are unknown variables. We don't know what they are, therefore we can not predict the relationship between ET and I. So while what Iriemon is saying is true in an instantaneous sense, it is not necessarily true over time. Like most things in economics, the only way we can get any idea of what the relationship between ET and I is, is to look at real world data over time and attempt to construct a rough function based on that past data. What conclusion can we yield from the data?
I'm not arguing that. I'm arguing that for any given level of income, the amount of revenues is based on the effective tax rate. Except no one here has demonstrated at all that there is any relationship between ET and I at all, much less describe what it is and defend it with data. All we have are unsupported claims that some such relationship exists. Which is contrary to 60 years worth of data showing there is absolutely no correlation between economic performance and tax policy. That there is no correlation between tax rates and income, which is generally a function of GDP. Our last two major tax revisions were in 1993 and in 2001. In 1993, taxes were signficantly increase, and the economy kicked ass. In 2001, taxes were significantly cut, and the economy has sucked. Directly in contrast to what many conservatives predicted. Thus, the logical conclusion suggested by the data, in absence of some other persuasive argument, is that taxes have either no or an insignificant effect on gross income, and thus there is no reason to expect that a moderate tax increase would do anything except increase the revenues for whatever incomes are achieved.
I know, and I'm agreeing with it. "Any given level of income" implies that you are looking at instantaneous incomes, which would eliminate the effects of any time-based relationship that I and ET have - if such a relationship even exists in the first place. But the statement "increasing taxes will lead to increased revenues" may not necessarily be true if there is a relationship between ET and I. The relationship between economic performance and ET is irrelevant. We're talking about the relationship between ET and incomes. Are you are denying that such a relationship exists, or simply saying that we cannot know if such a relationship exists? You are restricting your analysis to only the last 20 years. What about major tax revisions prior to 1993? You can't prove that the increase in ET contributed to the economy kicking ass. You can't prove that the decrease in ET contributed to the economy sucking.
So squidward, does that mean you agree with the accuracy of the equations that have been posted so far? I just want to make sure we all agree on that part before I add the remaining bits of what I have to say.
There would have to be a significant negative effect on gross income of higher taxes. No one claimed such an effect exists, and IMO the data does not support such a proposition. Income and economic performance are pretty related items. Income is the by far biggest component of income based GDP. I was referring to them as the most recent examples. Here is the econmic performance of different past periods. Average annual real growth in the 50s = 4.15%. Average annual real growth in the 60s = 4.44%. Average annual real growth in the 70s = 3.26%. Average annual real growth in the 80s = 3.07% Average annual real growth in the 90s = 3.11% Average annual real growth during FDR: 9.17% Average annual real growth during Eisenhower: 2.99% Average annual real growth during Kennedy: 4.25% Average annual real growth during Johnson: 5.22% Average annual real growth during Nixon: 3.55% Average annual real growth during Ford: 1.53% Average annual real growth during Carter: 3.26% Average annual real growth during Reagan: 3.40% Average annual real growth during Bush1: 2.15% Average annual real growth during Reagan & Bush1: 3.0% Average annual real growth during Clinton: 3.87% Average annual real growth during Bush 2: 2.03% Average annual growth rate since Bush tax cuts passed: 1.59% The 1950s-70s were periods were the top tax rate was 70-90%. Reagan cut taxes significantly, Clinton raised them significantly, Bush cut them siginificantly, Obama cut them more. Why would I want/need to prove that? I've made no such claim. Why would I want/need to prove that? I've made no such claim.
