To try and summarize everything very briefly. If the return on capital is greater than the growth of the economy then the owners of capital own an increasing share of the pie, of capital, of wealth. Example would be historical ROI rates are 4 to 5 %. So if an economy is growing less than 4 to 5% it is a safe bet the wealthier are getting more wealthy. If the GDP growth were 1% you could tax Capital Gains at 80% and the wealthy will still consume more and more of the pie. In this way taxes keep wage earners from being destroyed into peasantry. Taxes used effectively can create a broad middle class and raise the median income. Low taxes may cause such a flood of capital to the wealthy that they need to invest that money anywhere they can. But what about when there is so much oversupply there is no where to put that money? Then you get banks who hold on to money rather than make loans because oversupply both of money and of businesses just don't make enough small businesses viable investments (low economic growth). Capital will always grow 4 to 5% it has through out history been the documented desirable return of all owners of all societies. This is a human psychological condition not some effect of productivity. Humans want 4 to 5% because of risk vs. Reward. Humans get 4 to 5%. These factors mean cutting taxes is a big lie. And has hurt everyone who doesn't have $1 billion dollar portfolios.
An example of where that 4 to 5% return comes from is agriculture. Consumption. This is true for all consumer economies and goods. As long as something exists to consume there will be a 4 to 5% returnot And producers have ensured consumption will always exist by planned obsolescence.
You seem fixed on a 5% return, as if that's enough. Several things to consider: -It is downright simple to get a 10% or more return if you have the right people. These right people are expensive because you're buying trade secrets from them. I have ideas not yet thought of that could change everything, but I am still thinking about them. -There is an abundance of elderly and with that comes an abundance of heathcare. Bottom line, 30 years from now they'll be gone and doctors will become ambulance chasers. -We don't have any money to do anything. We pulled $3 Trillion out of our butts to fund Dubya's Conquest and the wells are dry. "Every day the bucket goes to the well, one day the bottom will drop out." -We need to become the world's first post-industrial nation.
Why is Texas doing better than California economically? Both states have large diverse populations, share a border with Mexico, have large sea ports, tourism, and have a lot of agriculture. What's the difference? Taxes? Oil? Wind farms? Politics? Natural disasters? If the feds would just respect the 10th Amendment, we could find out what works and what doesn't on all kinds of programs. (taxes, welfare, healthcare, energy, education, etc....)
California's GDP was $2Trillion last year, Texas was $1.4Trillion. Texas has a long way to go to beat California economically.
Texas is doing just as well as California per capita and we do it with much lower taxes. We do it without a state income tax and our cost of living is significantly less. About 1/2 of the families moving into my neighborhood in the past 10 years came from California. Businesses are moving here as well. http://www.thestatesproject.org/state-debt/
And Texas has FAR more people living in poverty without health insurance coverage. This despite getting subsidized by the Federal government.
That is an interesting postulation. I do not believe it is a completely true statement, but there may be some truth to it.
