Raising Taxes Will Not Balance The Budget

Submitted by: 5cats 4 years ago in

Learn Liberty explains why higher Federal tax rates often mean LOWER tax revenue.
There are 57 comments:
Female 74
Something else no one seems to consider is Charities. You see, a lot of rich people don`t donate out of the goodness of their hearts (though some DO), but rather the health of their bank accounts. A sales tax would completely wipe out ANY incentive the rich have to donate, thus again screwing the poor, and many of the flat tax systems I`ve seen proposed will also remove a lot of these deductions.

Unfortunately, taxing the rich more has historically never worked. They are too attached to their money, and will go to any extreme to keep it. This includes things like getting rid of employees if they own a business, to cutting back hours or pay rate for their in-home domestic help.

Yes, rich people -should- give out of sheer human compassion, but the reality is that, often, the richer you are, the more you want to keep what you have. Charities and low-rung employees are the first to suffer when the pressure is put on the rich. That`s the sad fact.
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Male 40,291
@CrakrJak: "flat tax" and "sales tax" are completely different!

Also: In Canada we`re paying about 12% Sales tax on MANY common items, including foods...
The Conservative Party lowered it by 2%! Hooray!

Trying to fund the ENTIRE US Government (which is what @Shelworth seems to be saying) with a mere "sales tax" is insane... it would need to be about 30% and apply to virtually EVERY item sold.
The poor would pay a HUGE % of their income on sales tax, the rich? Tiny %... Just like now! Only worse!

And "gasoline tax"... zomg! Even worse in terms of "harm the poor"... (I think we agree on that though).

@OutWest: "flat tax" could work... but then again it could backfire completely. It would require honest <politicians> to work, and how many of THOSE are around these days?
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Male 546
I think if we are all honest, raising taxes has nothing to do with increasing revenue for our government.

Do any of you, that are for raising taxes proportionally higher on those that make more than you, really believe that is fair taxation?

If so, then your logic is they have more so let`s take more to make the outcome of our income fair? Rather than let`s be fair and all pay the same proportion of our income to a shared community.
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Male 174
Although I believe simplifying the tax code will benefit everyone, the rest of his argument doesn`t make sense.
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Male 17,512
5Cats: This is where I disagree with you Steve Forbes shown years ago a 15% flat tax, with an exception for food stuffs and the poor, those getting food stamps, is not a bad idea.

It`s easier to collect, kills the income tax completely (except for FICA), massively reduces the size and bureaucracy of the IRS, and since the rich and corporations buy more they`d have to pay more without any loopholes to dive through.
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Female 2,674
Nerd_Rage, way to show absolutely no compassion for your fellow man. I guarantee there are tons of poor people who have worked way harder than you ever will.
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Male 40,291
@Nerd_Rage: Allow me to expand on my point AND enlighten your trolly-brainz.

The Poor: the 50% of the USA who earn less than the other 50%.

Got it? It`s REALLY simple!

If HALF the population SUFFERS Disproportionatly? It`s probably a BAD idea!

But what about "The Rich" you ask. Don;t they pay more too?

Yes, the TOP 20% (aka: "The Rich") DO PAY more! But on a percentage basis it`s a FRACTION of what the poor pay!

(Hint: the 30% in between "rich" and "poor" is the "Middle Class" eh? Percentages vary accoring to Nation and Political System of course...)

SO: A 20% sales tax HARMS the Poor, is IGNORED by the Rich and the Middle breaks even, at best.

Sounds good to you?

With said Tax: the poor pay a HUGE % of their income ON TAXES just to pay the daily bills.
Get it? Percentage paid on things you need to SURVIVE...
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Male 425
@5cats
The poor are where they are because that`s where they want to be. End of story. Not my fault you slacked, not my fault you`d rather continue working at burger king than make a resume and try to find a better job. And you reap all the benefits, you get social benifits, exemptions, credits, and other "entitlements" that you so desperately need. Get yourself a clue and get another job and stop complaining about rich people.
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Male 40,291
[quote]replace the income tax with a 20% sales tax...[/quote]
@Shelworth: That is the DUMBEST thing I`ve hear in AGES!

A "sales tax" is MASSIVELY disproportionat! It harms the POOR and the rich barely notice it!

Please buy a clue before saying such stupid poo...
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Male 770
wouldnt it be nice if all taxes were simple and had fewer loopholes like the soc. sec. tax?

Oh, i just got the point of the video.
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Male 493
replace the income tax with a 20% sales tax and a balanced budget amendment. Everybody pays the same percentage = fairness. Spend a lot, pay a lot, save your money, and you keep it.
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Male 2,357
[quote]So you are somehow under the impression that any president is responsible for the decline of corporate taxes?[/quote]
Nope - not at all. I was careful to label everything as (President)-era. I purposefully stated that the taxes were only in the era of that President.

[quote]therefore you`re being intentionally misleading to make your neo-con point.[/quote]
Yep - though I am not a neo-con.

[quote]That`s stooping rather low, don`t you think?[/quote]
Probably, but I see liberals (and neo-cons) doing it all the time and I enjoy doing it to them as well. I don`t believe in the whole "take the high road" nonsense.

[quote]that mega-corporations have gained so much power in our society that they have been able to game the system to lower their tax burden[/quote]
I agree; they should not be able to lobby, period.
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Male 2,711
[quote]an opportunity to take a shot at Obama and his supporters.[/quote]
So you are somehow under the impression that any president is responsible for the decline of corporate taxes? I do believe you are smarter than that, therefore you`re being intentionally misleading to make your neo-con point. That`s stooping rather low, don`t you think? My only point was (as I stated in a different thread) that mega-corporations have gained so much power in our society that they have been able to game the system to lower their tax burden at the expense of us natural (ie."non-corporate") people. Yet another of their successful ploys to externalize their costs to you and me.
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Male 2,357
[quote]Why not go back a bit further?[/quote]
Also, what are you trying to accomplish by showing that EVERY administrative-era post-1940 taxed corporations more than the Obama-era, as a percentage of GDP?

You do realize that you are helping me take a shot at the anti-corporation/pro-Obama crowd right? Seriously, your numbers just show that corporations have been taxed the least during the Obama-era years!

I thank you for your assistance, but I was doing just fine. =)
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Male 2,357
[quote]Cherry pick much? Nice try, but why did you start at 2005? Didn`t Bush tax policies start a bit earlier?[/quote]
Yes I did - purposefully. I was (still am?) using these numbers as an opportunity to take a shot at Obama and his supporters.

By the way, thanking you for including the other Bush-era years:

2001 - 1.5
2002 - 1.4
2003 - 1.2
2004 - 1.6

Did you notice that they are still higher than the Obama-era years? This means that, during Bush`s presidency, as a percentage of GDP, corporations were taxed more than during the Obama-era years.

[quote]Sorry if that wasn`t clear enough.[/quote]
It was perfectly clear; again, taking a fun shot at the anti-corporation but pro-Obama crowd.

[quote]Why not go back a bit further?[/quote]
Because comparing the Obama-era years and the Bush-era years is so much more effective in upsetting the liberals among us.
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Male 2,711
@HumanAction
Cherry pick much? Nice try, but why did you start at 2005? Didn`t Bush tax policies start a bit earlier? (At least we`re using the same chart. That`s a step in the right direction, eh? :-))
2001 - 1.5
2002 - 1.4
2003 - 1.2
2004 - 1.6

I wasn`t insinuating anything, I came right out and stated my conclusion: corporations are shouldering less of the total tax burden year after year. Sorry if that wasn`t clear enough.

Why not go back a bit further? Like maybe one of our biggest boom times, the 50s and 60s?
1952 - 6.1
1953 - 5.7
1954 - 5.6
1955 - 4.5
1956 - 4.9
1957 - 4.7
1958 - 4.4
1959 - 3.5
1960 - 4.1
1961 - 4.0
1962 - 3.6
1963 - 3.6
1964 - 3.7
1965 - 3.7
1966 - 4.0
1967 - 4.2
1968 - 3.3
1969 - 3.9

Get corporate taxes back to the 4-5% range, and excise taxes back to 2.5-3% and that would be a huge step towards getting back on financial track.
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Male 761
watched about 20 seconds and realized this guy is freaking Canadian. Stopped watching immediately.
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Male 30
How does his lecture lead us to the conclusion that a simpler tax code is the solution to tax arbitrage? This economist needs a lesson in exposition: never introduce new material in your conclusion
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Male 10,855
[quote]and his charts are misleading because they consider Social Security tax to be revenue.[/quote]

This statement is even more misleading.
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Male 2,357
[quote">This shows corporations have been consistently shouldering less of the total tax burden year after year, and his charts are misleading because they consider Social Security tax to be revenue.[/quote">
Interesting, let`s look into Corporate Tax rates as a percentage of GDP by year:

2005 - 2.2%
2006 - 2.7%
2007 - 2.7%
2008 - 2.1%
2009 - 1.0%
2010 - 1.3%
2011 - 1.2%

I shall be so kind as to provide the source: Table 2.3

Based on this data and your comments, aren`t you insinuating that you prefer the Bush-era way of taxing corporations compared to the Obama-era ways?
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Male 2,711
Using his chosen years:
1954: personal tax (PT) was 7.8% of gdp, corporate tax (CT) was 5.6%, social insurance (SI) was 1.9%, and exise tax (ET) was 2.6%. The official total was 18.5% of gdp.

1964: PT was 7.6% (small drop), CT was 3.7% (much larger drop), SI was 3.4% (an increase that seemingly offsets those drops) and ET was 2.1% (another small drop). Official total of 17.6% of gdp.

In 1984, PT rose back to 7.8%, CT dropped tremendously to just 1.5% which was again "offset" (in his numbers) by SI climbing to 6.2%. ET dropped to just 1.0% for an official total of 17.3% of gdp.

Now jump to 2011. PT dropped a bit to 7.3%, CT dropped to 1.2%, SI dropped to 5.5%. ET dropped to 0.5% for an official total of 15.4% of gdp.

This shows corporations have been consistently shouldering less of the total tax burden year after year, and his charts are misleading because they consider Social Security tax to be revenue.
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Male 5,811
...So yes, Obama saying they will get more money from tax increases to the rich could be inferred as him implying the concept of "always" just as this guy does. It still doesn`t validate what this guy is saying, though.
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Male 5,811
[quote]specific enough?[/quote]
Easy there, I sense I`ve got you in full-on rage here and I`m just trying to be calm and logical about this. You are correct in that he didn`t say that exactly, but after talking about his many data points that show a negative correlation, he is making the argument that lowering taxes increases revenue, without at all saying that this is not always so. Regardless, I didn`t spend much time beating that horse because it wasn`t really the point I was making.

[quote]So Obama says MORE REVENUE will be gained by raising the tax rate on "the rich"... and you`re saying he`s not saying that? [/quote]
That`s not what I said at all. He`s talking about this instance, not always. The point is that Obama (in the context of what I just quoted you saying) would be guilty of the same thing this guy is, ergo my comment about two wrongs not making a right.
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Male 4,847
I`m actually for this imaginary "fiscal cliff" the conservatives have created a story line for. The tax cuts will expire then the Senate will send their already approved bill to extend the cuts for the middle class down to the House where they will be forced to sign.
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Male 4,847
Obama does not want to raise taxes he wants to let the tax breaks expire for families that make over $250,000 a year. These people will be fine. What can`t be done while we are still pulling out of the recession is to let the tax breaks for the people below the $250,00 line expire. A lot of people depend on these breaks to survive. Once the recession is over we`ll need to let those breaks expire also. The only way to lower the debt is a balanced approach of raising taxes and cutting spending like Clinton did. We could try the George Bush method again of cutting taxes and raising spending but that didn`t work out so well. The biggest thing Clinton did to reduce the deficit is he kept us out of major wars. The military spending is ridiculous in this country.
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Male 5,811
@Cajun: Hmm, well I`ll say that only increasing revenue won`t really help the bottom line, but that`s the best I can do. In a hypothetical world where you could easily stop wasteful spending I`d agree with you, but how many decades have they been trying to cut spending?
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Male 40,291
[quote]I don`t remember Obama saying "always" all I remember him saying is that the rich need to pay a little more,[/quote]
So Obama says MORE REVENUE will be gained by raising the tax rate on "the rich"... and you`re saying he`s not saying that?

If "more revenue" is not part of the Democrat equation, WHY raise the rate at all?
Logic!

Obama and the Dems think they`ll get massive revenue increases, oh about 1.5 TRILLION worth... out of tax rate increases!

And Romney`s plan was "unrealistic"? (said the MSM, over and over again.)

[quote]"You can`t say lowering taxes will always increase revenue just as you can`t say raising them always will."[/quote]

That first part: strawman, NO one is making that claim. Not in this video, not the Repubs, no one... specific enough?
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Male 10,855
Patchgrabber, can we at least agree that Washington has a SPENDING problem not a REVENUE problem?
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Male 5,811
[quote]This is to counter the arguement that "Raising tax rates ALWAYS increases revenue" which is what Obama and the Democrats are BASING THEIR FISCAL POLICY ON![/quote]
I don`t remember Obama saying "always" all I remember him saying is that the rich need to pay a little more, and you`re inferring the "always" yourself. But that`s neither here nor there, I don`t see how two wrongs make a right in this situation. Notice that I didn`t say this guy is wrong, because I don`t know. The *reason* I don`t know is because he isn`t providing enough information, so how is it wrong to point that out?
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Male 5,811
[quote]I think, given the current complex tax code we have, it would be nearly impossible to prove such a causation.[/quote]
I agree 100% This is all I have been saying, that you can`t oversimplify something the way he has. I am also 100% in agreement with a more simplified tax code, but I`ll leave it for those with the inclination to delve into thousands of pages of tax jargon (yuck) to figure out how to do that.

[quote]@patchy: NO ONE is claiming that! [/quote]
Claiming what? I might need you to be a tad bit more specific as I have made many points on this thread (probably too many).

[quote]@patchy: It`s a YOUTUBE video, not a PHD THESIS! [/quote]
I know it isn`t, but to imply causation where there may be none is reprehensible. If he wants to use *data* then he has to provide the complete context for these data.
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Male 5,811
[quote]Let`s hear it then.[/quote]

There are too many factors to consider, at least for me, not being an economist or having a detailed understanding of your tax code. But for starters, he could factor in ALL sources of tax, i.e. if one decreases and one increases maybe they offset each other. Perhaps revisions to the tax code in a year created more loopholes that money slipped through. I can`t know all the possible variables. What I do know is that it is not correct to only consider one independent variable when there are many. All I`m saying is that without more statistical context for his graphs, the graphs don`t really mean anything.

[quote]I really don`t have any problem with his showing the correlative nature between the two variables[/quote]
I don`t have a problem with him sharing a correlation, it`s just that he`s implying that it`s causal.
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Male 40,291
[quote]Occam`s razor comes to mind.[/quote]
Too right @Cajun!
@patchy: It`s a YOUTUBE video, not a PHD THESIS!

KiSS!

@Yawn-Man: lolz! I just typed that, THEN read you comment! Great minds eh?

@patchy (again) This is to counter the arguement that "Raising tax rates ALWAYS increases revenue" which is what Obama and the Democrats are BASING THEIR FISCAL POLICY ON! ok?
THEY say, over and over, the deficit can be cleared by TAX THE RICH" policies.
WE SAY: Um, no! Here`s ONE reason why, out of many.

@hot4teachery: Um, I think it says so in the video description? Anyhow, it`s NOT a secret, why mention it? Does it change the FACTS one iota??

(iota is my "word of the week" :-) )
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Male 40,291
[quote]Good submission man.[/quote]
Thanks @aj! I think IAB`s @AntEconomist is either part of that group or IS that guy... iirc...

Anyhow, just the other day an IABer was saying "tax rates were 90% in the 50`s and the economy was great!"
When I told him Reagan LOWERED the top rate and revenues WENT UP he called me names... BUT IT`S TRUE!
Here`s proof! It makes perfect sense to me!

@patchy: NO ONE is claiming that! However it has happened before, so yes it could `be true`.

@jops360: He says exactly that! Close the loopholes, SIMPLIFY the tax system and presto! More revenue! So... you agree?

@sssfdg: It`s all in "real dollars" adjusted for inflation, idiot! Calling other `morons` when you cannot understand a basic concept = TYPICAL!

@Cajun = gets it!
@An_egg = gets it!
@HumanAction = gets it!
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Male 2,357
[quote]Imagine if we dropped that down to under 75 pages and made it so everyone could understand it without needing an accountant.[/quote]
Imagine if we reduced it to one line: you owe (X) percent of you total income. Better yet, imagine is we abolished it and simply had the states pay federal taxes (as in, the way it was supposed to work); then the states would collect all taxes and then you would only need to worry about one organization taking your money.
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Male 17,512
He`s arguing for a simplification of the tax code, which is not a bad thing. There are currently 73,608 pages in the 2012 tax code and that number is growing. Imagine if we dropped that down to under 75 pages and made it so everyone could understand it without needing an accountant.
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Male 10
2 seconds of googling revealed that this was funded by a Koch brother. If you don`t know who that is then you`re obviously not familiar with government-corporation corruption.
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Male 809
WILL GETTING A NEW SERVER BALANCE THE BUDGET?
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Male 2,357
[quote]which is that he`s only focusing on one tax rate vs. tax earnings at a time, meaning that he`s implying causation between two factors when there are many more things at play[/quote]
Ahh... I see. I thought he was implying that the years weren`t recent enough.

I agree that he shouldn`t imply that A causes B so directly. However, I really don`t have any problem with his showing the correlative nature between the two variables. I think, given the current complex tax code we have, it would be nearly impossible to prove such a causation.
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Male 10,855
[quote]only that you should favour simplicity UNLESS a competing hypothesis has greater explanatory power.[/quote]

Let`s hear it then.
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Male 5,811
@Cajun: Occam`s razor doesn`t suggest that the simplest answer *is* the correct one, only that you should favour simplicity UNLESS a competing hypothesis has greater explanatory power. In this case, taking more variables into account that lend a greater degree of explanation should be favoured.
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Male 51
Most of those graphs showed pretty poor correlation. Agree with his conclusion though: Keep It Simple Stupid.
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Male 10,855
[quote]which is that he`s only focusing on one tax rate vs. tax earnings at a time, meaning that he`s implying causation between two factors when there are many more things at play[/quote]

Occam`s razor comes to mind.
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Male 5,811
I`d be much more inclined to believe his data if he showed high r^2 or even better, a low p-value, but he doesn`t show either of these for any of his charts, at least not that I could see.
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Male 5,811
@An_Egg: I didn`t see anyone picking at that part of his presentation, which was the only part I actually agreed with. However people keep droning on about simplifying the tax code, but it never gets simplified. It`s not as easy as it sounds, and big business lobbies to keep it complicated.
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Male 5,811
@Cajun: You also should have quoted the part where I said "You can`t say lowering taxes will always increase revenue just as you can`t say raising them always will."

[quote]Like what? His data is up to 2009. That`s rather relevant. [/quote]
I think what @Patchouly was getting at is what I had said earlier, which is that he`s only focusing on one tax rate vs. tax earnings at a time, meaning that he`s implying causation between two factors when there are many more things at play. I`d be equally skeptical if his graph showed, say, top marginal tax increase vs. tax revenue that showed an increase. If he`s on to something, he`s presenting it in a very bad way.
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Male 2,357
[quote]How does that fit in to this "low tax is better" theory?[/quote]
That wasn`t his theory though... He states, at the end, that his theory is that a complicated tax code is the problem.

[quote]The problem here is, his focus is so narrow, he`s leaving out most of the relevant data, effectively skewing the results.[/quote]
Like what? His data is up to 2009. That`s rather relevant.

[quote]you know the population grows as well... more people paying taxes means more money coming in[/quote]
*facepalm* ... per capita Billy... It`s PER CAPITA. Don`t bother going the "inflation" route either because he stated that the calculations are standardized to one year.
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Male 884
So what you all seem to agree on is that the tax code should not be simplified and the very rich and big companies should continue to make out like bandits while the average person continues to get screwed.

Try not to be distracted by shiny things.

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Male 10,855
[quote]The fault in his analysis is that he is comparing two things (i.e. top marginal tax and tax revenue) and making it seem like one is the ONLY influence on the other. It`s misleading.[/quote]

As the deficit stands right now, raising the taxes on the top earners to 100% wouldn`t even come close to fixing the budget. This chart shows that raising the top marginal tax rate does not definitively raise revenue.
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Male 190
what a dumbpoo.... you know the population grows as well... more people paying taxes means more money coming in. face palm... morons that believe this ridiculous BS
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Male 689
the real problem is that the rich dont even use the normal tax rate. they use capitol gains tax which is the lowest there is. that is how they pay under 14%. that and how they use loopholes to lower it even more. the key is to stop the loopholes and make them pay the real tax rate. we could raise it to 90% but as it is right now they will still pay under 14%. we need someone in there to find and stop the loopholes.
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Male 4,745
If you are going to base a theory on numbers (which isn`t a bad thing), you HAVE to make sure you use ALL the numbers. The problem here is, his focus is so narrow, he`s leaving out most of the relevant data, effectively skewing the results.
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Male 15,178
That`s pretty much like saying "Dieting without exercise won`t give me an Adonis-like physique. Therefore, NOM NOM NOM". Disingenuous.
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Male 5,811
@Gerry: Good point. You can`t say lowering taxes will always increase revenue just as you can`t say raising them always will. There are amounts of tax that are too much just as there are amounts that are too little. The fault in his analysis is that he is comparing two things (i.e. top marginal tax and tax revenue) and making it seem like one is the ONLY influence on the other. It`s misleading.
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Male 39,538

Incomplete analysis. Spending habbits have changedd over 60 years. In 1954 people bought a house to live in. Now they buy it as an "investement". People buy more on credit, which as unusual in 1954. Also, back then businesses paid taxes, now they have so many loopholes they don`t {GE for example}.

Bill Clinton raised taxes, and still paid down the defecit, had a surplus in SSI & we enjoyed a record booming economy. How does that fit in to this "low tax is better" theory?
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Male 5,811
Post hoc ergo propter hoc. The r^2 of a trendline can merely tell you how many things influence the variable being observed, but it doesn`t reflect causality. His focus is too narrow.
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Male 10,338
In b4 "5Cats posted this so it`s not true!"

Good submission man.
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Male 40,291
Link: Raising Taxes Will Not Balance The Budget [Rate Link] - Learn Liberty explains why higher Federal tax rates often mean LOWER tax revenue.
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