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Hmm

To be clear: There is simply no empirical evidence or plausible economic mechanism to support the claim that cutting top tax rates spurs economic growth.

But then Nick Hanauer always has been an idiot, no?

27 thoughts on “Hmm”

  1. Hmmm. Abolish tariffs on foreign corn, natives have surplus after paying to eat, natives spend surplus on extra economic activity.

  2. I thought the reason for not having aviation fuel duty was to spur growth in aviation.
    It might be a good idea to restrain the growth of aviation and there might be some right level of duty that mitigates the externalities, but I’m pretty sure it would restrain the growth of the industry.

  3. ‘Democrats can’t just run against the Trump/Ryan tax cuts; they need to run for substantially raising taxes on me and my wealthy friends’

    Bring it! Efite writer believes his shite! The people who vote won’t!

    The Dems have a Thanatos Complex.

  4. @jgh @bongo

    Cutting food tariffs or aviation fuel costs isn’t what NH said. He was referring to top tax rates.

    And he has a reasonable argument, the evidence is inconclusive.

  5. If there was an aviation fuel duty or import tariff then the top tax rate is equal to the bottom tax rate for the particular consumption tax. Around 4/10ths of the UK takes no flights a year. They include the infirm and sick but I’m willing to bet they are predominantly low income sorts.
    So if we apply a tax on aviation fuel the rich will pay it more so than the poor. But Nick Hanauer thinks the evidence is inconclusive that such a move would affect the economy either way? I suspect the truth is that he’s just ignorant of regressive taxes.

  6. “Bring it! Efite writer believes his shite! The people who vote won’t!”

    The people who pay taxes and vote won’t.

  7. Sorry, that is simple, straighforward *lie*
    Geoffrey Howe increased growth by cutting top tax rates.
    It has worked.
    QED
    The 1951-64 conservative government increased economic growth by cutting top tax rates but most of their impact was getting rid of lots of wartime controls 7 years after the war ended (it took months to abolish them0

  8. @Nick Reid

    Suppose, just to humour you, there’s no evidence that cutting top rates of tax boosts the economy.

    Is there any evidence that high rates of tax does boost the economy?

    There’s certainly plenty of evidence that cutting top rates results in (I) more tax and (ii) that the wealthiest pay a higher proportion of that tax. The proof being the UK tax take. Cutting the high rates in the 80s has resulted in more income tax being collected and a more than doubling of the percentage of total income tax which is paid by the wealthiest 1%. It’s empirical and documented.

    So what are we left with? High taxes are a spite and envy driven weapon of the left. Well, on that I won’t argue.

  9. Could we have a list of the evidence, to be able to quote to lefties in future?

    My impression from having read bits is that the evidence is that cutting top tax rates does increase economic growth, but that the effect is perhaps not as large as we would like.

  10. The real answer is; it depends. Is the money otherwise kept by the rich spent on mindless consumption, invested in productive output or invested in productive output in the US? probably a bit of each. Or is the money redistributed by Government better spent? depends on your quality of governance. There may be a correlation between a country’s highest marginal tax rate and productive investment. My gut feeling is Ms Clinton would have taken a rather large commission, leaving less for the other three options and, unlike a brothel keeper, not devoted to productive value adding investment.

  11. There’s no such thing as ‘mindless consumption’, that’s just stuff you don’t think they should buy.

  12. @Forester

    If you are the producer of “mindless consumption”, would that change your view?

    “is the money redistributed by Government better spent?”

    No.

    “The real answer is”

    No, that’s just your opinion.

  13. So, if there’s no evidence freeing the slaves would boost the economy, we should carry on slaving? Uhuh.

    Apart from probably cocaine, what “mindless consumption” doesn’t result in lots of loverly jobs for the people satisfying that consumption?

  14. Gamecock:

    The recent US tax reform did raise taxes on some rich people in blue states by limiting the amount of state and local taxes that can be itemized as a deduction on the federal tax return.

    Politicians in blue states have responded by having hissy fits.

    (I’m sure you knew all this, but there are people on the other side of the pond who may not be aware of it.)

  15. @ Richard T
    I don’t have data from the USA (which Mr Hanaeur seems to believe is the whole world) but the UK data from HMRC shows an increase in the actual amount of tax paid by top rate taxpayers has increased following cuts in the rate, demostrating a significant rise in earned income (unearned income is *very* unlikely to be affected, but some trivial amounts that were not previously collected because the net after tax amount was less than the costof collection may be part of the increase.
    Even Gideon’s cut from 50% to 45% in the top rate has resulted in an increase in tax paid implying a greater than 10% increase in earnings.
    There is one sub-sector of the economy that has declined as a consequence – tax lawyers and tax-planning accountants but they added no value to the nation.
    If you take a look at HMRC data, you’ll find chunks of evidence.

  16. To be clear

    “To be clear”, “Let me be clear”, etc are unconscious signals that what is to follow is anything but, and very likely to be the opposite of the truth.

  17. You can view these taxes in two ways: one, as a way of raising revenue, so a fall in the rate but a rise in the yield is welcome. The other way is to view tax as a confiscatory weapon. Any fall in the tax rate is unwelcome, regardless of how much extra it raises, despite the fact that the extra money can be spent on the public services these people claim to support.

    As this second stance makes the holder look a bit envious and motivated by anything other than virtuous motives, flat denial tends to be used.

  18. @John 77 “There is one sub-sector of the economy that has declined as a consequence – tax lawyers and tax-planning accountants but they added no value to the nation.”

    Yeah, thanks for that assessment of the last 30 years of my life. I spend a lot of my time getting morons who think they don’t need a tax advisor out of the compliance shit they get themselves into. Chance would be a fine thing if I had time to actually do some tax planning for them.

    But where’s your evidence that tax advice has declined as a sector of the economy?

  19. @ Andrew C
    They wouldn’t *be* in Compliance shit if they weren’t trying to be too clever. The only thing for which I have needed a tax adviser in my life was to convince my wife that I was not trying to diddle anyone by changing the nomination of my DC pension fund from herself to #1 son.
    I apologise for wording it badly – I was talking about people finding ways to avoid/evade paying tax that is due, not those explaining taxes to people so that they can complete their tax returns correctly (I should have been classed as one of those as I used to sort out my mother-in-law’s tax return).
    In reply (i) I remember the schadenfreude in the City in 1980 when the press was full (OK, part-full) of reports of tax lawyers and tax accountants made redundant.
    (ii) Sharp fall in the number of tax avoidance/evasion schemes marketed to me
    (iii) Most of the IFAs named in the last few years as facilitating investment in film schemes etc deemed invalid by the courts had already gone out of business before their clients sued them so they must have been selling fewer schemes
    (iva) Tax advice is worth paying for only if the tax saved exceeds the cost of the advice so every cut in the top rate reduces demand for tax advice
    (ivb) Tax receipts dor top rate taxpayers have risen by more than is plausibly solely due to the economic impact on gross incomes of the tax cuts

  20. “They wouldn’t *be* in Compliance shit if they weren’t trying to be too clever.”

    Bullshit. Properly preparing taxes includes identifying costs. Far more complicated than just filling out the right form.

  21. Gamecock +1

    ‘Compliance’ is nothing to do with being ‘clever’ it’s just trying to keep up with the bewildering and constantly changing rules, even if you’re trying to organise you tax affairs as Spud would want you to do.

    Even the Fair Tax Mark filed their first accounts late.

  22. @John 77

    “I should have been classed as one of those as I used to sort out my mother-in-law’s tax return”

    really? You classify yourself as a tax advisor because you helped your mother in law fill in a tax return. Fuck me, why did I bother with 3 1/2 years’ training at the start of my career and non-stop CPD?

    “Sharp fall in the number of tax avoidance/evasion schemes marketed to me”

    Maybe that’s due to your attitude towards tax advisors and tax advice?

    Sure, marketed schemes have fallen. That’s because of DOTAS and the courts changing attitudes. Do you think that means we’ve just stopped working? You think we’re incapable of devising arrangements which fall outside DOTAS – one identifying condition of which is that the scheme is marketed?

    “Tax advice is worth paying for only if the tax saved exceeds the cost of the advice”

    Always has been the case. I’ve never given tax planning so marginal that a 5% fall in the top rate of tax would make it uneconomic.

    I could go on.

    But you clearly have a view based on your own preconceptions mingled with obvious ignorance of real tax planning.

    You keep on believing what you do. I’ve never been busier and certainly don’t need any client as reluctant and grudging as you no doubt would be.

    Positively Murphyesque

  23. @ AndrewC
    No I do *not* classify myself as a tax advisor, but it appeared from your comments that *you* did.
    Since I never respond to people marketing tax schemes they don’t know my attitude so that cannot influence the decline in schemes marketed to me (and my repeatedly telling those marketing energy schemes that I cannot use them hasn’t stopped them calling me); try again, after a cup of black coffee.
    If you recall (or if you don’t recall let me tell you) Geoffrey Howe reduced the top rate of tax from 98% to 60% – that is a bit more than 5%. Nigel Lawson cut it from 60% to 40%, also more than 5%.
    Grow up!

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