**** Elections thread *****

[wufwugy]

Tax cuts for consumers are basically a wage increase. Tax cuts for producers are basically an investment increase. While it is important for consumers to have strong wages, more positive over the long term tends to be done when investment is strengthened. Increasing demand doesn't increase prosperity; increasing supply does. Increasing wages does have a positive effect on supply, but that comes as a response to its positive effect on demand. Increasing supply can be hit more directly and productively with focused tax cuts, which ultimately results in an even greater increase in wages than the alternate scenario.

In addition, journalists are typically incorrect when they assess taxes. They tend to conflate legal incidence of tax and economic incidence of tax. I'm out of my wheelhouse on by this point so I can't go into detail. There are a lot of taxes that are said to benefit the rich disproportionately that actually don't.


The Democrat tax cut strategy (in the rare occasion they want one) is not that economically sound. They erroneously think that more consumption equates to more prosperity. The Republicans tend to use a handful of legitimate economic ideas behind their tax cut rationales. One is to increase supply by reducing marginal rates. When targeted smartly, this can work well. Another is to increase savings and investment. Savings is future consumption; investment is basically future production. Tax cuts targeting savings result in more production and consumption than one targeted at current consumption.

What specific policies that Trump has proposed do you not like?

[CoccoBill]

Tax cuts for consumers are basically a wage increase. Tax cuts for producers are basically an investment increase. While it is important for consumers to have strong wages, more positive over the long term tends to be done when investment is strengthened.

Shouldn't those two go hand in hand though? My conception is that all measures taken in the past decades have been to help the producers, and they have indeed being doing exceptionally well, unlike the workers.

Increasing demand doesn't increase prosperity; increasing supply does. Increasing wages does have a positive effect on supply, but that comes as a response to its positive effect on demand.

Increasing supply without altering demand lowers prices right? Increasing demand would increase prices, therefore increasing profits.

[BananaStand]

Shouldn't those two go hand in hand though?

No, one comes first, the other comes second.

My conception is that all measures taken in the past decades have been to help the producers

Nope, 8 years of Obama has left us waist deep in job-killing, wage-depressing, regulations.

, and they have indeed being doing exceptionally well, unlike the workers.

I wouldn't say they've been doing well. American manufacturing is definitely on the down slope. Sequestration crippled the defense industry. I could go on. It's these problems that have led to more people leaving the workforce, which depresses wages.

If the workers are hurting because of high unemployment, under employment, and low wages, it's not because producers are being greedy.

[wufwugy]

Shouldn't those two go hand in hand though? My conception is that all measures taken in the past decades have been to help the producers, and they have indeed being doing exceptionally well, unlike the workers.

You could say that, because one typically affects the other. I'll explain more below.

We have to be careful with statistics because one can pretty much make whatever case they want depending on selected variables. As far as I can tell, the statistics youre alluding to don't appear to be capturing the effect of policy, but instead are capturing a trend with little explanation. To evaluate policy more accurately, we need to do things like compare similar labor markets with recent divergences in relevant policies. Two that Scott Sumner has discussed are that even though the modern western trend is one of increasing productivity gains going to producers than laborers, where supply side reforms were adopted have done better than where they were not. I couldn't find his work on this again as it's buried in his blog (it was Reaganomics related and I posted it here like 3 years ago). Another one is comparing Germany to France (or the rest of Europe) in the 90s. Germany underwent significant supply side reforms and went from the "sick man" of Europe with high natural unemployment to the model for other countries to follow, with very low natural employment. Meanwhile France adopted more reforms that push up demand without pushing up supply, and it went from low unemployment to high. Sumner briefly covered it a day or so ago here http://econlog.econlib.org/archives/...veloped_w.html

Increasing supply without altering demand lowers prices right? Increasing demand would increase prices, therefore increasing profits.

Yes to both. The increase in demand can lead to an increase in supply as well due to those increased profits. This incentivizes expansion of existing firms in the market and entry of new firms, which begins pushing profits down again until the incentive for expansion and entry is gone, leaving a larger market overall, with greater production and consumption.

An issue is that when there are restrictions on increasing supply, this increase in demand can result in greater consumption and greater profits, but not greater expansion of supply and the subsequent re-dropping of prices. We saw this with Obamacare. The law added a lot of demand to the system without much supply, resulting in higher prices and greater profits for entities with enough incumbent advantage.

The supply and demand model I'm referencing can show us why increasing supply in a market is better than increasing demand. An increase in demand will increase output and price, while an equivalent increase in supply will equally increase output while reducing price. This leaves consumers wealthier at the higher consumption level, allowing them to consume more or save/invest more. We can see how supply side reforms benefit consumers here. If we raise demand instead (by doing something like increasing wages), consumers have a higher level of consumed output without the additional higher consumption/savings/investment, while producers have higher profits. A supply increase resulting from this should be expected, but if the demand increase is financed by government deficit expenditures or if there are supply restrictions in the market, the supply increase won't come or will be small.

Ultimately, government boosting demand doesn't yield as good of results as government boosting supply, probably because reducing taxes to increase supply tends to result in greater growth and thus offsets the expected higher future taxes.

If you have questions, please ask. My post is not the most succinct and may be confusing.

[JimmyS1985]

Tax cuts for consumers are basically a wage increase. Tax cuts for producers are basically an investment increase. While it is important for consumers to have strong wages, more positive over the long term tends to be done when investment is strengthened. Increasing demand doesn't increase prosperity; increasing supply does. Increasing wages does have a positive effect on supply, but that comes as a response to its positive effect on demand. Increasing supply can be hit more directly and productively with focused tax cuts, which ultimately results in an even greater increase in wages than the alternate scenario.

In addition, journalists are typically incorrect when they assess taxes. They tend to conflate legal incidence of tax and economic incidence of tax. I'm out of my wheelhouse on by this point so I can't go into detail. There are a lot of taxes that are said to benefit the rich disproportionately that actually don't.


The Democrat tax cut strategy (in the rare occasion they want one) is not that economically sound. They erroneously think that more consumption equates to more prosperity. The Republicans tend to use a handful of legitimate economic ideas behind their tax cut rationales. One is to increase supply by reducing marginal rates. When targeted smartly, this can work well. Another is to increase savings and investment. Savings is future consumption; investment is basically future production. Tax cuts targeting savings result in more production and consumption than one targeted at current consumption.

What specific policies that Trump has proposed do you not like?

The producers have been doing exceptionally well. The workers have not. And I just don't see investing further in the wealthy, when the wealthy, are the wealthiest, or perhaps wealthier, than the Robber Barons of the 1890's, to 1920's.

Trickle Down Economics only works, if the wealth does in fact trickle down. If the wealth consolidates, the whole economic theory fails.

Wealthy countries, are not measured by how wealthy, their wealthiest 1 in 1000 citizens is. They're measured by how wealthy, and the high standard of living, their population as a whole is. Right now it appears our population is slowly but surely falling into poverty.

And that's what's been happening over the past 40 years. Reagan came in, he said, if we give these huge tax cuts to the wealthy, they will in turn, use them to help the lower and middle class. If there was evidence of that happening, at minimum the wealth distribution would have stayed the same as it was in 1977, as it is today in 2017.

To borrow a quote from a scholar's paper on wealth inequality in America:

"Americans today live in a starkly unequal society. Inequality is greater now than it has been at any time in the last century, and the gaps in wages, income, and wealth are wider here than they are in any other democratic and developed economy."

http://scalar.usc.edu/works/growing-...equality/index


Also purely from a budgetary standpoint, tax cuts for the wealthy, have wreaked havoc on our nations fiscal situation. In 1945, the debt to GDP ratio, was around 120% or so GDP. By 1981, the debt to GDP was 32% or so. We basically paid off the entire WWII debt.

Today, the debt, again is around over 100% of GDP. What happened? We use to balance the budget almost annually between 1945-1981. Now we annually run up a debt. We have only balanced the budget 4 times in the last 36 years (1997-2000).

I've always said, that tax cuts should never be financed with borrowed money from China and Japan. Because if you have to borrow the money to pay for the tax cut, at face value, it appears you're weakening the United States, and strengthening China and Japan.

Unfortunately I can rarely get a supply sider to agree with me on that statement, they firmly believe in tax cuts, even if you have to borrow money for the next 32 out 36 years (1981-2017) to finance the tax cuts. It just seems like when it comes to balancing the budget, and paying down the debt, the supply-sider always, eternally, puts that on the back burner of his priorities.

[BananaStand]

The producers have been doing exceptionally well.

Totally disagree. http://www.tradingeconomics.com/unit...tes/gdp-growth

The workers have not.

Agreed. But they've been doing poorly because the producers are doing poorly. Fewer jobs, lower wages, and more under-employment are the results of a lack of capital investment.

Trickle Down Economics only works, if the wealth does in fact trickle down. If the wealth consolidates, the whole economic theory fails.

So why do you support measures that would cause wealth to consolidate....like raising taxes?

Wealthy countries, are not measured by how wealthy, their wealthiest 1 in 1000 citizens is. They're measured by how wealthy, and the high standard of living, their population as a whole is.

Who told you that? Europe? Sounds like something they would say.

Right now it appears our population is slowly but surely falling into poverty.

Agreed. Why do you think that is? What's causing millions of people to leave the workforce and sign up for entitlement programs?

And that's what's been happening over the past 40 years. Reagan came in, he said, if we give these huge tax cuts to the wealthy, they will in turn, use them to help the lower and middle class.

That's exactly what happened!! Unemployment was over 10% when Reagan came in. When he left, it was under 5%. Take a look at the GDP growth chart I linked earlier. How'd those tax cuts work out?

Inequality is greater now than it has been at any time in the last century, and the gaps in wages, income, and wealth are wider here than they are in any other democratic and developed economy.".

Thats NOT a bad thing. Income inequality is fine, a good thing even, as long as you have income mobility. Those other "developed economies" that the paper refers to have low income mobility. We discussed this earlier when we were talking about Finland. Finland has much better income equality, but low income mobility. If you're bright and motivated, you prefer mobility to equality. If you're lazy and selfish, you prefer equality to mobility.

http://www.foxnews.com/opinion/2014/...nequality.html

Today, the debt, again is around over 100% of GDP. What happened?

There were a couple more wars.

We have only balanced the budget 4 times in the last 36 years (1997-2000).

I give Reagan full credit for that. Economies don't turn on a dime. It was Ronnie's policies that fueled the "clinton boom years"

I've always said, that tax cuts should never be financed with borrowed money from China and Japan. Because if you have to borrow the money to pay for the tax cut, at face value, it appears you're weakening the United States, and strengthening China and Japan.

Disagree. Money is loaned for expansion and growth all the time, all over the world, in gov't and business. It has nothing to do with relative strength. If China is loaning us money, it's because they expect to be paid back. If they expect to be paid back, it's because they believe they are investing in a strong economy. If they don't think our economy is strong, and are loaning us money anyway, then that weakens China, not us.

[JimmyS1985]

Totally disagree. http://www.tradingeconomics.com/unit...tes/gdp-growth


Agreed. But they've been doing poorly because the producers are doing poorly. Fewer jobs, lower wages, and more under-employment are the results of a lack of capital investment.


So why do you support measures that would cause wealth to consolidate....like raising taxes?


Who told you that? Europe? Sounds like something they would say.


Agreed. Why do you think that is? What's causing millions of people to leave the workforce and sign up for entitlement programs?


That's exactly what happened!! Unemployment was over 10% when Reagan came in. When he left, it was under 5%. Take a look at the GDP growth chart I linked earlier. How'd those tax cuts work out?


Thats NOT a bad thing. Income inequality is fine, a good thing even, as long as you have income mobility. Those other "developed economies" that the paper refers to have low income mobility. We discussed this earlier when we were talking about Finland. Finland has much better income equality, but low income mobility. If you're bright and motivated, you prefer mobility to equality. If you're lazy and selfish, you prefer equality to mobility.

http://www.foxnews.com/opinion/2014/...nequality.html


There were a couple more wars.


I give Reagan full credit for that. Economies don't turn on a dime. It was Ronnie's policies that fueled the "clinton boom years"


Disagree. Money is loaned for expansion and growth all the time, all over the world, in gov't and business. It has nothing to do with relative strength. If China is loaning us money, it's because they expect to be paid back. If they expect to be paid back, it's because they believe they are investing in a strong economy. If they don't think our economy is strong, and are loaning us money anyway, then that weakens China, not us.

I don't know how to Multi-Quote, I'd like to learn how.

#1 Producers are doing fine. Stock market is near all time high. Our wealthy haven't been this wealthy since the 1920's. Despite their drastic increase in wealth and income over the past 4 decades, there has been no correlated increase in wealth and income for the US worker. The idea has always been, when the wealthy get wealthier, everyone else is suppose to get wealthier. Instead it appears, that when the wealthy get wealthier, everyone gets poorer. This represents a fatal flaw in how Trickle Down economics has been implemented, it was never called "Consolidation Economics" it was always called "Trickle Down Economics". If the wealth never trickles down, then the whole economic theory is either a failure, or a lie.

At the same time our workers are hurting. 51% of US Workers, make $30,000 or less per year. 38% of US workers make $20,000 or less per year. This means over half of the US work force, is at, near, or below the poverty level. Not to mention we've had 4 decades, roughly, of stagnant wages for US workers.

http://www.washingtonsblog.com/2015/...rs-a-year.html

"You can find the report that the Social Security Administration just released right here. The following are some of the numbers that really stood out for me…

-38 percent of all American workers made less than $20,000 last year.

-51 percent of all American workers made less than $30,000 last year."

#2 Standard of living for the population as a whole, is often a way to measure how well off a country's population is. Afghanistan, has members of it's population with $multiple millions of dollars. It's still by and large considered an extremely poor country. I remember the Afghanistan Vice President being caught in an airport because he had $57 million in American money on him. Obviously money from US tax payers due to our war, and his government's corruption. Nothing we could do about it, he was Vice President of Afghanistan. His country is still considered extremely poor, even with a Vice President with $57 million in wealth in their midst.

http://www.pewresearch.org/fact-tank...d-for-decades/

#3 I argue that people are leaving the work force, because of 40 years of stagnant wages, and increased childcare costs. Stagnant wages are so bad, what's the point of working if you're still poverty stricken at the end of the day? Purchasing power of the US Median Household, has been roughly the same for the past 30 years. Trickle Economics dictates, that when the wealthy get "super wealthy" their wealth is supposed to improve the lives of the US Median Household. It hasn't worked though, their purchasing power today, is the same as 1987.

http://voxeu.org/article/long-term-d...ies-address-it

"This labour demand shock would result in firms paying lower wages to their workers, some of whom are unwilling to work at these wages and drop out of the labour force. CEA analysis finds that state-level labour force participation rates for prime-age men are associated with the absolute and relative levels of wages."

"What happened? Research by economists Francine Blau and Lawrence Kahn at Cornell University finds that the United States’ lack of family friendly policies to support women in their prime childbearing and career years explains one-third of the decrease in women’s labor force participation. The U.S. political landscape contrasts with many European countries, which have enacted and expanded policies such as paid parental leave, childcare subsidies, and part-time work entitlements to encourage women’s employment."

Our country is economically unfriendly to the financial situation of expecting mothers. We do not provide them with paid maternal leave. Often times it is in the woman's best interest to not work at all, and cover her own childcare herself, than work and still not have enough money for childcare, or have very little money left over.

#4 Reagan, #'s of $'s wise, increased the national debt by 200% to do as well as he did. In 1981, the national debt was $900 billion. In 1989, it was $2.8 trillion. That would appear advocate for borrowing massive amounts of money, in order to jump start the economy. In some ways you could argue, he was a Keynesian in that sense. Unfortunately his political party, ever since he's left, has eternally put balancing the budget on the nation's back burner of priorities. We have had a very bad track record of balancing the budget between 1981-2017 (We've only balanced the budget 4x in the last 36 years) vs the nearly annual paying down of the debt between 1945-1981. Not to mention, Supply-Side Economics weren't even implemented between 1945-1981, and we had some of our greatest economic years in this country's history during that time period, vs the 1981-2017 years.

#5 SOME Income inequality is fine. Too much, is bad. If you want to be Middle Class and have a decent standard of living, you look to nations that have strong middle classes, not Plutocracy's like El Salvador.

"The picture that emerged was startling to those who still clung to the notion of America as a middle-class society, or who thought of rising inequality as mainly a tale of divergence between blue-collar workers and a fairly broad elite, like college-educated workers. Mr. Piketty and Mr. Saez showed that the actual story of rising inequality since 1980 or so was dominated not by the modestly rising salaries of skilled workers but by gigantic gains at the very top — a doubling of inflation-adjusted income for the top 1 percent, a quadrupling for the top 0.1 percent, and so on. They also showed that these surging top incomes had more or less reversed earlier movements toward equality, that the concentration of income in the hands of a small minority was back to “Great Gatsby” levels."

To support the status quo, or even a more extreme version of the status quo such as Trump's tax cuts for the wealthy very well could exacerbate, is to be fundamentally and morally opposed to the idea that America should have a middle class at all. It would be in support of having a super 0.1% wealthy elite, and a continually more poverty stricken, bottom 90% of Americans or so, or to put that in numbers, 320,000 Americans will get continually wealthier, while 288,000,000 Americans continually get poorer and poorer.

#6 If you support Economic Mobility, instead of Equality, America is not the country look to, most of Western Europe is.

http://www.politifact.com/punditfact...-dream-europe/

"The United States is "behind many countries in Europe in terms of the ability of every kid in America to get ahead."

"Families at all earning levels were growing together after World War II but have been growing apart since in the decades since, Krueger wrote. The country’s top earners have pulled a lot further ahead than the middle and lower class, he said, and the trend line suggests the future earnings of today’s children will be tied more and more to the income level of their parents.

"Not since the Roaring 20s has the share of income going to the very top reached such high levels," Krueger said, according to prepared remarks.

Krueger compared income inequality of 10 developed countries with the correlation between a parent’s income and their children’s (it’s more complicated than we described, check out the details in Krueger’s presentation or this Bloomberg infographic). The "Gatsby Curve" showed economic possibilities for children in European countries such as Finland, Norway, Denmark, Sweden, Germany and France were much less connected to their parents’ income than in the United States and United Kingdom."

#7 "Disagree. Money is loaned for expansion and growth all the time, all over the world, in gov't and business. It has nothing to do with relative strength. If China is loaning us money, it's because they expect to be paid back. If they expect to be paid back, it's because they believe they are investing in a strong economy. If they don't think our economy is strong, and are loaning us money anyway, then that weakens China, not us."

And this is what I'm worried about with Trump's tax cuts. We've already gone from a Triple AAA credit rating, to Double AA. Trump has implied in the past that he's willing to default on the US Government's national debt. We've also had the Republican Congress threaten Obama in budgetary showdowns with defaults on the national debt as well. If Trump passes massive tax cuts, and if the Bond market gets the opinion, that the US Treasury no longer has any intention of honoring it's debt, the bond market's will freak out, and I can't imagine that can be good for the US Economy.

We saw this play out in Kansas over the past 6 years. They passed huge tax cuts, on the business owners, but have consistently ran up large debts every year since.

http://www.kansas.com/news/politics-...e91961917.html

"A major rating agency on Tuesday downgraded Kansas’ credit rating for the second time in two years because of the state’s budget problems.

S&P Global Ratings dropped its rating for Kansas to AA-, from AA, three months after putting the state on a negative credit watch. S&P also dropped the state’s credit rating in August 2014.

Read more here: http://www.kansas.com/news/politics-government/article91961917.html#storylink=cpy"

And the same economics, which has lead to the S&P downgrading Kansas's credit rating 2 times in 2 years, is the same economic plan that Trump has for the United States. And I don't think I'm out of line to be very concerned about this.

[CoccoBill]

Totally disagree. http://www.tradingeconomics.com/unit...tes/gdp-growth

[wufwugy]

The producers have been doing exceptionally well. The workers have not. And I just don't see investing further in the wealthy, when the wealthy, are the wealthiest, or perhaps wealthier, than the Robber Barons of the 1890's, to 1920's.

Trickle Down Economics only works, if the wealth does in fact trickle down. If the wealth consolidates, the whole economic theory fails.

Wealthy countries, are not measured by how wealthy, their wealthiest 1 in 1000 citizens is. They're measured by how wealthy, and the high standard of living, their population as a whole is. Right now it appears our population is slowly but surely falling into poverty.

And that's what's been happening over the past 40 years. Reagan came in, he said, if we give these huge tax cuts to the wealthy, they will in turn, use them to help the lower and middle class. If there was evidence of that happening, at minimum the wealth distribution would have stayed the same as it was in 1977, as it is today in 2017.

To borrow a quote from a scholar's paper on wealth inequality in America:

"Americans today live in a starkly unequal society. Inequality is greater now than it has been at any time in the last century, and the gaps in wages, income, and wealth are wider here than they are in any other democratic and developed economy."

http://scalar.usc.edu/works/growing-...equality/index


Also purely from a budgetary standpoint, tax cuts for the wealthy, have wreaked havoc on our nations fiscal situation. In 1945, the debt to GDP ratio, was around 120% or so GDP. By 1981, the debt to GDP was 32% or so. We basically paid off the entire WWII debt.

Today, the debt, again is around over 100% of GDP. What happened? We use to balance the budget almost annually between 1945-1981. Now we annually run up a debt. We have only balanced the budget 4 times in the last 36 years (1997-2000).

I've always said, that tax cuts should never be financed with borrowed money from China and Japan. Because if you have to borrow the money to pay for the tax cut, at face value, it appears you're weakening the United States, and strengthening China and Japan.

Unfortunately I can rarely get a supply sider to agree with me on that statement, they firmly believe in tax cuts, even if you have to borrow money for the next 32 out 36 years (1981-2017) to finance the tax cuts. It just seems like when it comes to balancing the budget, and paying down the debt, the supply-sider always, eternally, puts that on the back burner of his priorities.

I addressed a lot of this in my response to Bill. Other things:

Income inequality is a meaningless statistic. It tells us pretty much nothing and is misleading. Example: triple all real incomes and you've eradicated poverty while increasing inequality. Or invent something great that increases prosperity for millions and you've increased inequality. Create something that makes one person a billion dollars wealthier and a million people a thousand dollars wealthier, and you've increased inequality.

Tax cuts in higher brackets are tiny relative to the deficit and debt compared to equivalent cuts in lower brackets. The majority of investment capital exists in high incomes and the majority of human capital and labor exist in low incomes. Dollar for dollar, tax cuts to high incomes should have a bigger positive effect on the economy, while cutting restrictions should have a greater positive effect on low incomes.

That said, tax cuts for the wealthy aren't fair. Taxes should be flat. That would make them the most fair. There are a bunch of other benefits that come from that too.

[JimmyS1985]

I addressed a lot of this in my response to Bill. Other things:

Income inequality is a meaningless statistic. It tells us pretty much nothing and is misleading. Example: triple all real incomes and you've eradicated poverty while increasing inequality. Or invent something great that increases prosperity for millions and you've increased inequality. Create something that makes one person a billion dollars wealthier and a million people a thousand dollars wealthier, and you've increased inequality.

Tax cuts in higher brackets are tiny relative to the deficit and debt compared to equivalent cuts in lower brackets. The majority of investment capital exists in high incomes and the majority of human capital and labor exist in low incomes. Dollar for dollar, tax cuts to high incomes should have a bigger positive effect on the economy, while cutting restrictions should have a greater positive effect on low incomes.

That said, tax cuts for the wealthy aren't fair. Taxes should be flat. That would make them the most fair. There are a bunch of other benefits that come from that too.

Flat taxes are fair in a country with a relatively even distribution of wealth and income. We don't live in that kind of country. In a country with an extremely lopsided distribution of wealth and income, like our country, flat taxes are essentially arguing in favor of lower taxes on the super wealthy, paid for by higher taxes on the poor.

Lets suppose you've got 2 people, one guy pulls in $20,000 a year, and spends 100% of yearly take income (these are also known as workers who live from paycheck to paycheck). The man's income is so low, he pays no federal income tax. Now a Flat tax implemented. Now he has to pay $2,000 a year in taxes, and has thusly taken a 10% loss in income for his yearly expenses. This will drastically hurt him in his economic situation, that is already limited, and significantly lower his standard of living.

Now we take a guy who makes $2,000,000 a year. He spends 10% per year on his living expenses. He consistently has money left over, that is not used on living expenses. If he pays a 10% tax, he still has $1,800,000 left over, and he only uses $200,000 on living expenses. He will face no reduction in his standard of living under the same tax.

So the one who takes it in the shorts under a flat tax, is the poor, and lower classes, and the middle class. The ones who get a huge tax cut under a flat tax, would be the very wealthy.

This would further exacerbate the income/wealth inequality between the rich and the poor. It kind of reminds me of the economic conditions that lead to the French Revolution in 1780's/1790's France.

[wufwugy]

Flat taxes are fair in a country with a relatively even distribution of wealth and income. We don't live in that kind of country. In a country with an extremely lopsided distribution of wealth and income, like our country, flat taxes are essentially arguing in favor of lower taxes on the super wealthy, paid for by higher taxes on the poor.

Lets suppose you've got 2 people, one guy pulls in $20,000 a year, and spends 100% of yearly take income (these are also known as workers who live from paycheck to paycheck). The man's income is so low, he pays no federal income tax. Now a Flat tax implemented. Now he has to pay $2,000 a year in taxes, and has thusly taken a 10% loss in income for his yearly expenses. This will drastically hurt him in his economic situation, that is already limited, and significantly lower his standard of living.

Now we take a guy who makes $2,000,000 a year. He spends 10% per year on his living expenses. He consistently has money left over, that is not used on living expenses. If he pays a 10% tax, he still has $1,800,000 left over, and he only uses $200,000 on living expenses. He will face no reduction in his standard of living under the same tax.

So the one who takes it in the shorts under a flat tax, is the poor, and lower classes, and the middle class. The ones who get a huge tax cut under a flat tax, would be the very wealthy.

This would further exacerbate the income/wealth inequality between the rich and the poor. It kind of reminds me of the economic conditions that lead to the French Revolution in 1780's/1790's France.

The poor are already taking it in the shorts by the poverty traps created by labor restrictions, welfare, and progressive taxation.

Economics is often backwards. What often looks like something that helps somebody is an incentive for that person to behave in such a reduced in productivity way that he is worse off than if he didn't get that "help" in the first place.

[JimmyS1985]

The poor are already taking it in the shorts by the poverty traps created by labor restrictions, welfare, and progressive taxation.

Economics is often backwards. What often looks like something that helps somebody is an incentive for that person to behave in such a reduced in productivity way that he is worse off than if he didn't get that "help" in the first place.

Stagnant wages for multiple decades, is what's causing the country to fall behind. In the ultimate end, you're still arguing that the Median Household's purchasing power should remain unchanged, are you not? You're clearly not arguing that their purchasing power should be increased, and your flat proposal, if it applies to poor people, would clearly decrease their purchasing power significantly.


Between 1945-1981, when there was a rise in GDP per Capita, the gains got distributed among the populace as a whole. Between 1981-2017, when there was a rise in GDP per Capita, the gains got distributed to the super wealthy, particularly the wealthiest 0.1% of Americans.

And in essence you're arguing for the system of 1981-2017 to remain in place, over that of 1945-1981.

[wufwugy]

Stagnant wages for multiple decades, is what's causing the country to fall behind. In the ultimate end, you're still arguing that the Median Household's purchasing power should remain unchanged, are you not?

I've argued that it should be increased and that it is increased by more by reforms that finance more investment and promote more labor than ones that don't as much.

Between 1945-1981, when there was a rise in GDP per Capita, the gains got distributed among the populace as a whole. Between 1981-2017, when there was a rise in GDP per Capita, the gains got distributed to the super wealthy, particularly the wealthiest 0.1% of Americans.

Why do you think this one statistic that is about as broad as possible tells enough of the story? The proposed regression would likely tell even less of the story than the examples we used in my econometrics textbook to show regressions that don't tell much of the story they're trying to tell.