Tax Cuts Didn’t Lead to Faster Growth

Discussion in 'Budget & Taxes' started by Shanty, Feb 16, 2015.

  1. Shanty

    Shanty New Member

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    I think it's well past time that conservatives stop tilting at windmills and get down to governing for the best interests of US citizens.

    http://www.epi.org/publication/tax-...ail&utm_term=0_e7c5826c50-7d86260599-55955889

    Tax Cuts Didn’t Lead to Faster Growth

    By Josh Bivens | February 11, 2015

    *SNIP*
    *SNIP*
     
  2. Cordelier

    Cordelier New Member

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    That article is a bit disingenuous, Shanty - here's a more detailed chart from the Labor Department:

    nfbbar.gif

    As you can see, Productivity Growth was moribund during the 1973-79 period and then showed steady growth until 2007. The way I figure it, you can grow productivity in two ways - top-down or bottom-up. Surely you can't deny that cutting taxes on the wealthy does free up investment capital which can then lead to top-down productivity growth, can you? Who knows, though - maybe we've gone as far as we can or should go along that road... maybe it's time to take a more bottom-up approach and focus more on overhauling the public education system and making it more efficient and relevant to today's digital economy?
     
  3. Woolley

    Woolley Well-Known Member

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    The wealthy rarely invest much in new business creation. They are too busy investing in asset bubbles and protecting their stash.
     
  4. Cordelier

    Cordelier New Member

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    Well, unless they're putting all of their after-tax income into their mattresses, odds are the bulk of it ends up going towards investment capital, does it not? You can have too much of a good thing, though... too much investment to the point where supply outstrips demand can lead to asset bubbles - what worked for Reagan didn't necessarily work for Bush, Jr.
     
  5. Woolley

    Woolley Well-Known Member

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    In reality, they protect their money not risk it. The little that they might choose to risk is a pittance compared to the money that has been accumulated by the top 1% or by corporations. Ever wonder why a CEO would use billions to buy back stock? They could just invest in their own company by hiring more people, paying them more or going into new markets. Some do but most are choosing to buy back stock to increase the price of their own stock. Nothing is gained really, it just protects capital.
     
  6. Cordelier

    Cordelier New Member

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    There's nothing wrong with risk management, Woolley, but look at it this way - the increased after-tax income goes toward increasing shareholder equity which allows corporations to reduce their leverage ratios and puts them in a stronger financial position to take on new debt to fund any expansions - should market conditions call for it.

    That's the key phrase here, though, isn't it? Should market conditions call for it. If you go back to my original post in this thread and look at the productivity chart I posted, you can see strong growth in the 1948-73 period (actually that growth started to dip right around the mid-60's) - what drove it? Low inflation and a middle-class friendly tax code that drove strong demand. Now you come to the 70's and you still have that middle-class friendly tax code, but inflation has picked up - demand has out-stripped supply. So lo and behold Reagan makes the tax code more wealth-friendly to stimulate the supply side, productivity increases and inflation is tamed... until you get to the 2000's. After 30+ years of supply-side economics, supply has outstripped demand - the issue now is deflation, with all of it's economic distortions. The trick now is how to increase demand by making the tax code more middle-class friendly but not so much as to put so much of a burden on the wealthy that supply is unduly affected. Inflation and deflation are the rumble strips on either side of the road that we keep hitting as we weave our way along.
     
  7. OldManOnFire

    OldManOnFire Well-Known Member

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    All of this crap is whining on steroids! Whether taxes were increased or decreased, no matter anything you can dream up to whine about, please tell me which nation other than the USA do you feel in the past 30-40 years would give you more opportunities to realize your potential? Please be specific and provide data to show those nations who have so much more to offer than the USA.

    Anyone who did not realize their potential in the USA during the past 30-40 years, and is still complaining about it, is a loser!

    The USA has become one big pity party!
     
  8. CourtJester

    CourtJester Well-Known Member

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    Are you assuming a correlation between productivity growth and GDP growth?
     
  9. CourtJester

    CourtJester Well-Known Member

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    Talking facts is not whining. Do an easy search about class mobility in the United States and educate yourself.
     
  10. CourtJester

    CourtJester Well-Known Member

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    The wealthy invest around the world. That is why trickle down doesn't really work except on a worldwide basis. Cutting taxes on the wealthy or on Corporations does not guarantee any actual benefits occuring in the United States.
     
  11. Cordelier

    Cordelier New Member

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    Yes, but that's true whether taxes on the wealthy are high or low, is it not? In fact, isn't there an argument to be made that this capital outflow is actually encouraged by higher taxes?

    You're absolutely right, though - there are no guarantees - so how do you offset the attraction of low-cost foreign labor? I've got to figure one of the most important things to do is focus on increasing the productivity of domestic workers.
     
  12. CourtJester

    CourtJester Well-Known Member

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    What the US has done is to basically keep wages flat for thirty years while actual wages have gone up overseas. Increasing productivity has the unfortunate effect of reducing the number of workers required with the resulting pressure on wages ( law of supply and demand). Incidentally I believe this is the reason neither party actually does anything about illegal immigration.
     
  13. Cordelier

    Cordelier New Member

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    The whole thing about illegal immigration is that people focus too much on the "illegal" and not near enough on the "immigration". Take a look at the world situation:

    US
    GDP: $16.768 Trillion
    Labor Force: 155.4 Million
    Output/Worker: $107,902

    China
    GDP: $9.469 Trillion
    Labor Force: 797.6 Million
    Output/Worker: $11,872

    India
    GDP: $7.277 Trillion
    Labor Force: 487.3 Million
    Output/Worker: $14,933

    The typical American worker is 9 times more productive than the typical Chinese worker - are you going to tell me that Americans are 9 times as intelligent or 9 times more hard-working? Of course not. So what accounts for the discrepancy? I think a large part of it is because of the investment in plant and equipment that the American worker is supplied with. But even that only takes you so far - you don't get anywhere without enough labor to get the job done. America is a big place - there's lots of elbow room for new immigrants, just like there was for all of the immigrants in the 1800's and early 1900's landing there in the shadow of the statue of liberty.

    The way I figure it, there are two ways you can go - you can look inward and put up protectionist walls and keep out the new blood and gradually let yourself go to seed, or you can go out and embrace the competition that the world brings and use it to keep yourself lean and strong. Your choice.
     
  14. OldManOnFire

    OldManOnFire Well-Known Member

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    Try to explain, with your finite education, precisely what is keeping you or anyone from class mobility? What is preventing any person from achieving more?
     
  15. OldManOnFire

    OldManOnFire Well-Known Member

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    Don't you think business is required to earn profits? Don't you think that 99% of businesses have competitors knocking at their doors? Unless you want a protectionist economy, seal up the USA with no imports and no exports, don't you think most businesses today are competing in a global marketplace? Forget all the socialist political crap for a moment and think about being a business leader; your primary goal every day is to keep the doors open and expand the business and be profitable...plus keep the shareholders happy. You will do whatever is necessary, including outsourcing from anywhere in the world, to achieve your goals. The other option is to close the doors because you refuse to take steps to be competitive. Why don't we build all electronic products inside the USA? If you can honestly answer this question, you will understand the competitive dynamics of the economy. Lastly, industry IS NOT a social experiment in which government and people can force unnecessary policy and costs without downside risks. Industry must meet their goals or they disappear. A by-product of business success is jobs, technology, tax revenues, etc. If you can grasp this last comment, then if you want more jobs and technology and tax revenues, then allow everything imaginable for industry to be successful inside the USA...
     
  16. OldManOnFire

    OldManOnFire Well-Known Member

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    This is completely absurd! There is NO conspiracy to keep wages at any levels! The reason more policy is not created towards immigration is because the US DEPENDS on immigrant labor and it is immensely complex dealing with PEOPLE...
     
  17. Cordelier

    Cordelier New Member

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    I've read your post a couple of times now and I've got to admit, I don't have a clue what your point is... do you find fault with bolstering domestic productivity to combat lower-cost foreign workers or not?
     
  18. dad2three

    dad2three New Member

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    9+ million PRIVATE sector jobs under Carter
    14 million under Reagan

    22 million under Clinton

    Loss of 1+ million under Dubya

    NET of 7+ million under Obama

    WHAT DOES TAX RATES HAVE TO DO WITH IT???


    Non-Partisan Congressional Tax Report Debunks Core Conservative Economic Theory

    The conclusion?

    Lowering the tax rates on the wealthy and top earners in America do not appear to have any impact on the nation’s economic growth.

    This paragraph from the report says it all—

    “The reduction in the top tax rates appears to be uncorrelated with saving, investment and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.”



    These three sentences do nothing less than blow apart the central tenet of modern conservative economic theory, confirming that lowering tax rates on the wealthy does nothing to grow the economy while doing a great deal to concentrate more wealth in the pockets of those at the very top of the income chain.

    http://www.forbes.com/sites/rickung...rvative-economic-theory-gop-suppresses-study/


    http://data.bls.gov/timeseries/CES0500000001



    [​IMG]
     
  19. CourtJester

    CourtJester Well-Known Member

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    A false dichotomy. We could have a rational immigration policy that allows the immigrants who are a benefit to the country and prohibits those who are not. Educated, highly skilled immigrants should be encouraged and the immigrants who,compete at the bottom of the economy should be discouraged.
     
  20. CourtJester

    CourtJester Well-Known Member

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    Bad public education system.
    Poor home environment.
    Low intelligence
    Disability

    And you obviously have grammar problems as evidenced by your confusing finite with infinite which is the term I am sure you meant to apply to my education.
     
  21. CourtJester

    CourtJester Well-Known Member

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    Could you try that last sentence again using the English language.
     
  22. Hoosier8

    Hoosier8 Well-Known Member Past Donor

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    Bush had one of the lowest rates of unemployment in history, you are not going to add jobs when the market is already full of jobs and you are going to lose them when an equity bubble bursts. Obama adding jobs is not hard after loosing more than 9 million of them to begin with. Net job gain has been relatively flat under Obama considering what needs to be added due to population growth.
     
  23. CourtJester

    CourtJester Well-Known Member

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    Blaming the job losses on Obama is a stretch since it was a result of the housing market and stock market crashes that occured during the Bush administration. But if you can find any responsible economist to support blaming the job losses on Obama feel free to post the links.
     
  24. Hoosier8

    Hoosier8 Well-Known Member Past Donor

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    I never blamed them on Obama or Bush. They were caused by an equity bubble bursting. I just pointed out the fallacy of jobs added as something Presidents do.
     
  25. Woolley

    Woolley Well-Known Member

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    Correct. The key issue here though is that corporations have become protectors of wealth (shareholders) without any concern or worry about any other measure. I believe this was called agency back in the 70s' and 80s when it became the sole rationale behind the destruction of unions, benefits and any vestiges of social responsibility that once had the ear of boards and CEO's. In order to fix this, you must attack the source of this greed and it is clear that increasing shareholder value above all else has contributed to the destruction of the middle class. We can change this by erasing the tax cuts at the top and increasing taxes on earned revenue for all corporations. When it no longer is attractive to protect share prices and options, they will do what they used to do, reinvest in their own company. The other component is mergers and acquisitions. We have let them go unfettered and every time a company is bought, at least half the staff are cut. Who benefits from a merger or buyout? Shareholders on both sides of the sale. Employees, markets, customers and the greater good are immaterial.
     

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