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Bar Stool Economics

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Re: Bar Stool Economics

#2

Post by fab13n »

> they might start drinking overseas where the atmosphere is somewhat friendlier.

That's the limiting factor indeed. However, even if taxation is much lower in Bolivia or Burma or Afghanistan, I doubt they'd be happier there even with 0% taxation. Happiness and disposable income are positively correlated, but not proportional, especially for higher incomes.

Moreover, many fortunes built in America are dependent on USA. Intel or Microsoft couldn't have been built in Albania. This co-dependence between the country and its businesses allows the former to command financial support from the later.

This is where the bar metaphor falls into pieces: the drinkers spend money together, but don't make this money co-dependently. If they were, the rich guy wouldn't leave because it would remove his source of income.

Intel couldn't relocate to Zimbabwe, hire local engineers and keep making money. It could maybe entertain the fiction that its money is made in Caiman Island or some other fiscal paradise, but that would be a gross lie; for US state representatives to tolerate such an absurd claim, some form of corruption would most likely be necessary.

Re: Bar Stool Economics

#3

Post by lzw »

This kind of math is the origin of the so called "bush tax cuts forth rich". Bush proposed cutting the tax rate for the lowest bracket in half giving the poorest the biggest benefit, but that didn't make it past the democrats. In e end, the poorest got the biggest percentage tax cuts and the highest bracket got the smallest...yet despite helping the poorest taxpayers the most people call these tax cuts "for the rich". In fact, how many of You even knew the lowest bracket had a dramatically higher percentage cut?

Re: Bar Stool Economics

#4

Post by lzw »

fab13n wrote: post #2

> they might start drinking overseas where the atmosphere is somewhat friendlier. That's the limiting factor indeed. However, even if taxation is much lower in Bolivia or Burma or Afghanistan, I doubt they'd be happier there even with 0% taxation. Happiness and disposable income are positively correlated, but not proportional, especially for higher incomes. Moreover, many fortunes built in America are dependent on US…

Intel makes chips in many such countries, like costa rica and Malaysia. There are many countries around the world with good standards of living and lower taxes and lower overall regulatory burden.

Plus with Internet businesses and the easy ability to have virtual office with employees living remotely, you can locate your business in a jurisdiction that is more favorable. Intel or Microsoft can't move, but starting a new business off shore can make a lot of sense.

Re: Bar Stool Economics

#6

Post by Destruct1 »

lzw wrote: post #3

This kind of math is the origin of the so called "bush tax cuts forth rich". Bush proposed cutting the tax rate for the lowest bracket in half giving the poorest the biggest benefit, but that didn't make it past the democrats. In e end, the poorest got the biggest percentage tax cuts and the highest bracket got the smallest...yet despite helping the poorest taxpayers the most people call these tax cuts "for the rich"…

The important figure is net taxes payed. You add all the taxes you pay and subtract all the direct benefits you gain. If someone pays a lot of taxes but gets free high school education for their 4 children and medicare for their sick wife, he is a net winner of the system.

Modern states spend 60-80% of their income for social things. Defense, police, education and infrastructure are only a fraction of the expenses (at least in europe).

Since rich people rarely use social services, every tax cut directly eases their tax-burden. Middle class people end up paying less taxes but also receive less benefits from the goverment.

I am not saying the author is wrong, but you need to compare the net money paid to goverment.

Re: Bar Stool Economics

#8

Post by cies »

lzw wrote: post #4
fab13n wrote: post #2

> they might start drinking overseas where the atmosphere is somewhat friendlier. That's the limiting factor indeed. However, even if taxation is much lower in Bolivia or Burma or Afghanistan, I doubt they'd be happier there even with 0% taxation. Happiness and disposable income are positively correlated, but not proportional, especially for higher incomes. Moreover, many fortunes built in America are dependent on US…

Intel makes chips in many such countries, like costa rica and Malaysia. There are many countries around the world with good standards of living and lower taxes and lower overall regulatory burden. Plus with Internet businesses and the easy ability to have virtual office with employees living remotely, you can locate your business in a jurisdiction that is more favorable. Intel or Microsoft can't move, but starting a…

> > Bolivia or Burma or Afghanistan

> Intel makes chips in many such countries, like costa rica and Malaysia.

many "such" countries... there is a _HUGE_ difference in freedom, social economic development and stability between these two sets of countries.

i dont reckon the infrastructure in the first set of countries would be sufficient for intel to consider it.

Re: Bar Stool Economics

#10

Post by cturner »

JonnieCache wrote: post #7

The reason this logic doesn't convince many is because the very rich are so proficient at tax evasion. http://www.guardian.co.uk/business/interactive/2009/feb/02/t... http://static.guim.co.uk/sys-images/Guardian/Pix/pictures/20...

Still, there will be a groupt analogyous to the people in the top tax brackets.
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