50 years of tax cuts for the rich failed to trickle down, economics study says • Hacker News Board

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#101

Post by AnthonyMouse » Thu, Dec 17, 2020, 9:43 PM UTC

gumby wrote: post #67

AnthonyMouse wrote: post #59

> The study compared countries that passed tax cuts in a specific year, such as the U.S. in 1982 when President Ronald Reagan slashed taxes on the wealthy, with those that didn't, and then examined their economic outcomes. All of these studies consistently miss one thing. Effective tax rates haven't really changed since before Reagan. Prior to Reagan, the tax code was riddled with loopholes. Not like how it is now wh…

They did a third thing which was to make the tax system more regressive. That was by deliberate design: there is a specific argument for it going back to Burke at least. I strongly disagree with it but I understand the argument.

Whether or not that was their stated intent, it isn't what they actually did.

Here's the effective rate table going back to before Regan:

https://www.taxpolicycenter.org/statistics/historical-averag...

Not exactly huge differences before and after. And compare the recent effective rates to the ones at the start of the table. About the same for the top quintile, significantly lower for all the others. So we should be seeing a reduction in wealth inequality then, right? Or at worst it should stay the same, so why are we seeing the opposite?

Obviously this doesn't prove that the thing that hasn't actually been tried would actually help, but it does point to the idea that maybe the problem lies somewhere else entirely. For example, lack of effective antitrust enforcement.

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#102

Post by umvi » Thu, Dec 17, 2020, 9:44 PM UTC

metiscus wrote: post #74

umvi wrote: post #63

Earlier quoted context omitted.

I think it's a valid question though. In my mind, the closest thing to a fair tax law is one that applies evenly to everyone, like UBI. Consider a flat 10% income tax applied evenly regardless of socio-economic status. If you made 1M, then you pay $100K. If you made $10K, you pay $1K. If you made $0 or less, you pay 0. That's it. In some senses that is very fair - everyone pays 10% of their income, no exceptions. It'…

Flat taxes are often criticized for failing to be progressive and that argument has some merit. As an example, 1 dollar in tax means more to someone making 10k than it does to someone making 100k.

That's true, one drawback is that it isn't progressive, but I would argue that the massive simplification of the tax law would allow the government to bring in much more money than it currently does, which it can then divert to social services for those who most need it.

As an example of a working implementation of this system, The Church of Jesus Christ of Latter Day Saints effectively taxes all their members at a flat 10% of their annual income, and I thought I read somewhere the church is both debt-free and has a crazy amount of money in the bank ($100B+). Even though the poorest members still pay 10% and it impacts them more than Mitt Romney-type members, the poor members can then go and receive assistance from the church (rent money, food, etc.) if they need it.

Of course, with a church people voluntarily give their money whereas with the government people do everything they can to keep their money, so perhaps it wouldn't be as effective as I think it would be. However, what is very clear to me is that the current tax law needs to be much, much simpler.

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#103

Post by dlp211 » Thu, Dec 17, 2020, 9:44 PM UTC

profile53 wrote: post #87

soared wrote: post #41

Earlier quoted context omitted.

This doesn’t seem like a question inviting genuine discussion. Tax laws don’t take into account how hard someone works, where they went to school, or a taxpayers character. Unless your argument is that taxes should be based on factors outside of income/etc, it seems like you might be trying to bait people with some version of “Look how hard Steve works - you can’t possibly support raising taxes on him.”

I think that’s exactly what the parent commenter is saying, but I don’t think it is wrong to discuss per se. Consider 3 people: - Morgan. Worked 80 hour weeks for 40 years developing treatments for childhood cancer. Runs a charity supporting orphanages in their free time. Net worth: 8 million, income: 1 million - Sam. Started the largest pornography empire in the world and works as the CEO. Accused of child sex traff…

We are a nation of laws, not men. Everyone should be treated the same under the law. Every person in your example should pay the same amount of tax.

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#104

Post by z3t4 » Thu, Dec 17, 2020, 9:45 PM UTC

throwaway894345 wrote: post #37

imtringued wrote: post #13

Earlier quoted context omitted.

It's just an excuse to justify selfish tax policy that favors the wealthy. It obviously doesn't work because the wealthy don't have to invest into domestic jobs. They can also use their money abroad. If you give them more money they are just going to spend more of it outside your country. The opposite is also true. The vast majority of consumers spend their money domestically. Yes the products they buy are often impo…

In fairness, we could and should also charge adjustments for goods and services produced that don’t meet some standard for labor and environmental standards so American companies can compete (for example, a border-adjusted carbon tax). Similarly, end the subsidies that allow for cheaper shipping from China than a neighboring state. If anything, I would expect “trickle-down economics” to have reduced globalization, si…

Buying from cheap places will help them get out of poverty though. Which would in turn solve most problems.

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#105

Post by souprock » Thu, Dec 17, 2020, 9:45 PM UTC

Florin_Andrei wrote: post #29

slindz wrote: post #20

Earlier quoted context omitted.

From my perspective, it costs an awful lot of money to run for office. If the only way to reach office is to convince wealthy people to fund your campaign, it shouldn't be a surprise if their interests wind up getting preferred treatment.

The way church and state are supposed to be separate (lots of potential comments here, but let's move on), we should have a separation of money and politics. And for reasons that are quite similar. It's a public office, where public servants work, for the good of everyone, not for personal enrichment. It's a job just like all the others. It should not be a place where oceans of cash keep sloshing around. No more lobb…

That thinking led to the corruption. Any normal senator, governor, or president has the skills to work at a high level in corporate America. That pays better, counting only the legitimate pay. It should be no surprise that voters are seldom able to hire (elect) anybody non-corrupt. We aren't paying market rate for the desired skills or for the level of responsibility.

Senators get about $200,000 and the president gets about $400,000.

At an S&P 500 company, CEO pay is about $15,000,000 on average. Elon Musk gets around $595,000,000. Tim Cook gets around $133,000,000. Sundar Pichai gets around $280,000,000. Satya Nadella gets around $77,000,000.

None of those CEOs have responsibility for tariffs, military operations, hundreds of millions of people, thousands of nuclear weapons, or over 10 million employees.

You get what you pay for.

Proper pay: The senate splits 0.1% of GDP, the house splits 0.1% of GDP, the supreme court splits 0.1% of GDP, and the president gets 0.1% of GDP. Lump the VP in with the senate, probably. That totals 0.4% of GDP for the whole group.

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#106

Post by pwinnski » Thu, Dec 17, 2020, 9:47 PM UTC

dwaltrip wrote: post #79

pwinnski wrote: post #42

Earlier quoted context omitted.

You seem to radically misunderstand the history of cars, computers, and cell phones, and I fail to see how we're all benefiting from rockets to mars--which don't yet exist--at this time.

It is true that many innovative developments occur from well-off people funding or buying the initial versions. But it is ridiculously absurd to assert that all developments or even most come from this.

Agreed! Innovation via excess wealth seems like one of the most inefficient possible means of innovation. It happens, but it is by no means necessary.

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#107

Post by jacques_chester » Thu, Dec 17, 2020, 9:47 PM UTC

johndevor wrote: post #39

durnygbur wrote: post #32

The rich prefer to hire armies of accountants and lawyers to design the most hermetic pipeline funelling out everything they consider to be an excess. There is not a single droplet dropping, how could anything tricke down?

Cars, computers, cell phones, rockets to mars, etc... all exist because rich people bought the super expensive first versions or funded their development. We all benefit from those things greatly.

We also greatly benefit from the enormous public R&D spending on these products over several decades, a lot of it for military purposes.

The super rich can contribute to public R&D through taxes.

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#108

Post by bluecalm » Thu, Dec 17, 2020, 9:48 PM UTC

otikik wrote: post #91

11thEarlOfMar wrote: post #36

This is only tangentially on topic, but I genuinely wonder about this. When people state that they want the wealthy to pay their fair share, the first two questions I have are, what constitutes wealthy and what constitutes fair? Let's take a specific person as an example of wealthy (let me know if you don't agree), and I'd be grateful to hear your thoughts: Wealthy Person X: - CEO, 55 years old, University of Illinoi…

The answer is always the same: a gradual tax on his income. So the first, say, 40k he pays is taxed at, say 10%. The next 60k at 15%. And so on. Don't concentrate on the numbers, concentrate on the concept: As brackets go up, the higher the taxed percentage. It never comes to 100% but it should be quite high after the first million. Why I think this is fair? Because it is no longer possible for people to "put themsel…

Except if you provide a useful service people want to exchange money for then you made society better off even if you don't pay any taxes ever. This is obvious yet so often missed by the "rich people evil" rhetoric.

If you think people are enriching themselves unjustly focus on fixing those mechanism instead of punishing those who make the world a better place for everyone around them.

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#109

Post by Zenst » Thu, Dec 17, 2020, 9:48 PM UTC

The way to solve TAX is to tap into the spending more than the earning. Can only triage the TAX system and at least raise the threshold before paying TAX and tap into the expenditure with the taxes upon the niceties in life that the rich gravitate towards.

Also trickle down thinking just needs to see how water trickles down when the rich have their own underground pipe network to catch it all.

Tree economics would be a more apt term for what we have as like a large tree, you have a root system holding that up and yet nobody see's the roots until the tree has fallen. Bit like the fallout when some large company goes bust, same with small ones at scale.

TAX cuts via rate changes should really of taken a back seat and raising TAX thresholds would of been the better approach. Raise the bar and do tax cuts that way.

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#110

Post by umvi » Thu, Dec 17, 2020, 9:50 PM UTC

dlp211 wrote: post #95

umvi wrote: post #76

Earlier quoted context omitted.

> there is no reason that the top marginal tax rate shouldn't be 90% But why should the government get to essentially steal 90% of wealth generated by a person above an arbitrary threshold? Because "there's no reason someone needs that much money"? I would argue that if you do this, you'll get less things like SpaceX and Tesla, which required a person with much more than 25MM to decide to create them.

1. Taxes are not theft. 2. No man/woman is an island. They did not create their success on their own. 3. Marginal utility of dollars. Taking 90 cents from that person and giving it to someone that is not as well off is better for the economy and our society. 4. Marginal propensity to spend. Again, that $.90 is far more valuable being spent today than in capital investment. Capital is no longer a scarce resource. 5. T…

Not legally theft, but conceptually the same thing. If I pass a law that says you and only you get taxed at a 100% rate, technically it's not theft because it's legal (I just passed it as a law), but conceptually it is theft because I take every dollar you earn against your will.

Also aren't you essentially saying: "People that have hundreds of millions or billions can keep their wealth, but starting now we don't really want anyone in the rising generations to have a net worth much more than ~$25MM"?