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Paul Krugman: The Economics of Soaking the Rich

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  • #31
    Originally posted by Flagg View Post
    A self deprecating anecdote about Professor Strebulaev is that in a bet over a bottle of nice wine he predicted the bankruptcy of GM within HOURS.

    A bet with a colleague had him pick a date(several years prior to it occurring) by which GM would declare bankruptcy.

    He chose “X date”, GM declared bankruptcy literally just a few hours after, costing him a flash bottle of wine.

    He used it in a classroom lecture as an example of how you can be quite accurate in your prediction, but still be wrong and lose.
    Sounds very Russian

    Comment


    • #32
      Originally posted by Flagg View Post

      57% of public market capitalisation wealth creation

      38% of jobs created

      https://www.gsb.stanford.edu/insight...ive-us-economy

      The author is a professor of mine.

      He is widely regarded as having the best VC investment data set on the planet.
      I was going to ask you to ask your professor if there are some credible studies that offer convincing evidences for the claim that higher income tax would indeed harm the economy.

      Comment


      • #33
        Originally posted by MRAPer View Post

        I was going to ask you to ask your professor if there are some credible studies that offer convincing evidences for the claim that higher income tax would indeed harm the economy.
        To what end?

        To waste people’s valuable time in never being able to convince you of the truth that you’re super-duper wrong?

        Let’s keep it simple.

        Think of capital gains tax as the brakes on your vehicle.

        0% tax equals 0% brakes, 100% tax equals 100% brakes.

        Increasing application of brakes converts kinetic energy(wealth and jobs creation) into friction/heat(taxation)

        While some(but far from all) of the waste heat(taxation) can be applied with success to things like heating the cabin and regenerative braking, much of it’s potential value is completely lost.

        If you cannot understand how the linear progression of vehicle brakes/capital gains taxation leads to decreased kinetic energy, new wealth creations, and new jobs created.

        Brakes and taxation inhibit respective motion.

        I’m not arguing brakes and taxation are required.

        However, I am arguing that you require even more jibber jabber from one of the world’s leading economists on venture capital to refute your unified theory that pushing more on the brake pedal doesn’t actually slow the car down.

        It defies Newtonian Law as applied to economics, entrepreneurship, and finance.

        Increase capital gains tax and you decrease new wealth and new jobs creation.

        “Capital gains tax versus new wealth and new jobs creation” isn’t a binary choice, it’s a progressive one, like the application of your vehicle brakes.

        Stop being silly.

        If you want higher tax that’s great, but don’t BS about it.

        Comment


        • #34
          Originally posted by Flagg View Post

          To what end?

          To waste people’s valuable time in never being able to convince you of the truth that you’re super-duper wrong?

          Let’s keep it simple.

          Think of capital gains tax as the brakes on your vehicle.

          0% tax equals 0% brakes, 100% tax equals 100% brakes.

          Increasing application of brakes converts kinetic energy(wealth and jobs creation) into friction/heat(taxation)

          While some(but far from all) of the waste heat(taxation) can be applied with success to things like heating the cabin and regenerative braking, much of it’s potential value is completely lost.

          If you cannot understand how the linear progression of vehicle brakes/capital gains taxation leads to decreased kinetic energy, new wealth creations, and new jobs created.

          Brakes and taxation inhibit respective motion.

          I’m not arguing brakes and taxation are required.

          However, I am arguing that you require even more jibber jabber from one of the world’s leading economists on venture capital to refute your unified theory that pushing more on the brake pedal doesn’t actually slow the car down.

          It defies Newtonian Law as applied to economics, entrepreneurship, and finance.

          Increase capital gains tax and you decrease new wealth and new jobs creation.

          “Capital gains tax versus new wealth and new jobs creation” isn’t a binary choice, it’s a progressive one, like the application of your vehicle brakes.

          Stop being silly.

          If you want higher tax that’s great, but don’t BS about it.
          I understand what you tried to say. However, physical laws do not apply to economics. Economic activity is not similar to the operation of a car. You made a faulty comparison. The evidence provided in Krugman's article is completely contrary to what you say, just go to the link and look at the diagram. The growth of economy and creation of wealth is multi-factorial, singling out capital-gain tax as the only factor is just reductionism.

          Here is an example why you should not approach an economic issue in a simplistic way. According to your thinking, raising income tax in the US will reduce investment and harm the economy. However, if you use the increased revenue to fund a single-payer universal healthcare system, then you may change the outcome completely. The takeover of healthcare by the government will relieve businesses from the absurdly expensive private insurance they currently have to deal with, and reduce the cost of American products and increase their competitiveness on the international market. So increase income tax may well help the US economy. The real effects of economic policies need careful analysis, not empty assertions.
          Last edited by MRAPer; 09-01-2019, 05:49 PM.

          Comment


          • #35
            'Over 90 percent?' Liberals eyeing White House vie for title of highest tax raiser

            https://www.washingtontimes.com/news...t-highest-tax/

            Democrats eyeing bids for the White House also are competing to see who is willing to go the highest in raising taxes.

            Rep. Alexandria Ocasio-Cortez, - 70 per cent

            Julian Castro, - “fair share.”

            Sen. Elizabeth Warren, - spoke approvingly of major rate hikes.

            President Ronald Reagan oversaw a cut to 50 percent and then 28 percent. President George H.W. Bush signed an increase to 31 percent. President Bill Clinton took it to nearly 40 percent, President George W. Bush cut it to 35 percent, and President Barack Obama returned the level to the Clinton era, with an add-on for Obamacare.

            The tax overhaul Mr. Trump signed in 2017 cuts that top marginal rate to 37 percent. That kicks in for individuals making $500,000.
            Mr. Green predicted that Democrats will be willing to roll back top rates at least to 50 percent.

            Erica York, an analyst with the Tax Foundation, said the increases wouldn’t be likely to produce a windfall for the government.

            Comment


            • #36
              To sum up:
              • Not politically realistic (GOP will oppose)
              • Tax loopholes must be closed first
              • Corporate tax must go up
              • Capital gains tax as well
              Otherwise the proposal will only increase tax revenue by 3.6%.

              If you simply calculate the amount of money the tax would raise if the wealthy paid all of the tax, it would yield roughly $72 billion a year. That would increase federal tax revenue by about 3.6 percent — more than nothing, but not a huge amount either. It would certainly not be nearly enough to pay for Ocasio-Cortez’s Green New Deal, which could easily cost more than 13 times that amount.
              https://www.bloomberg.com/opinion/ar...t-very-radical

              Comment


              • #37
                I don't know how the $72 billion number was determined. But we need a more progressive tax policy, more tax brackets between 37% and 70%.

                Comment


                • #38
                  Originally posted by MRAPer View Post

                  I understand what you tried to say. However, physical laws do not apply to economics. Economic activity is not similar to the operation of a car. You made a faulty comparison. The evidence provided in Krugman's article is completely contrary to what you say, just go to the link and look at the diagram. The growth of economy and creation of wealth is multi-factorial, singling out capital-gain tax as the only factor is just reductionism.

                  Here is an example why you should not approach an economic issue in a simplistic way. According to your thinking, raising income tax in the US will reduce investment and harm the economy. However, if you use the increased revenue to fund a single-payer universal healthcare system, then you may change the outcome completely. The takeover of healthcare by the government will relieve businesses from the absurdly expensive private insurance they currently have to deal with, and reduce the cost of American products and increase their competitiveness on the international market. So increase income tax may well help the US economy. The real effects of economic policies need careful analysis, not empty assertions.
                  Behavioural Economics was widely and aggressively disparaged, then people like Dan Kahneman started winning Nobel Prizes.

                  Econophysics is a thing.

                  Physical law impacts everything due to causality.

                  Unless you believe Elon Musk that we may live in a sandbox simulation with the great software engineer in the sky adjusting the rules of our physical world.

                  This paper was shared by Paul Graham. The lefty founder of Y-Combintor that pooped out AirBnB, Stripe, Reddit. Zenefits, Dropbox, Twitch, Instacart, etc that have created north of 30,000 high paying jobs and $100 billion value created.

                  The magic number is 29% to optimise innovation and social benefit:

                  https://www8.gsb.columbia.edu/facult...hop/toptax.pdf

                  Taxing higher results in lower innovation and ultimately lower gains from a higher tax threshold redistribution.

                  Comment


                  • #39
                    Originally posted by Cowboy's daughter View Post
                    'Over 90 percent?' Liberals eyeing White House vie for title of highest tax raiser

                    https://www.washingtontimes.com/news...t-highest-tax/

                    Democrats eyeing bids for the White House also are competing to see who is willing to go the highest in raising taxes.

                    Rep. Alexandria Ocasio-Cortez, - 70 per cent

                    Julian Castro, - “fair share.”

                    Sen. Elizabeth Warren, - spoke approvingly of major rate hikes.

                    President Ronald Reagan oversaw a cut to 50 percent and then 28 percent. President George H.W. Bush signed an increase to 31 percent. President Bill Clinton took it to nearly 40 percent, President George W. Bush cut it to 35 percent, and President Barack Obama returned the level to the Clinton era, with an add-on for Obamacare.

                    The tax overhaul Mr. Trump signed in 2017 cuts that top marginal rate to 37 percent. That kicks in for individuals making $500,000.
                    Mr. Green predicted that Democrats will be willing to roll back top rates at least to 50 percent.

                    Erica York, an analyst with the Tax Foundation, said the increases wouldn’t be likely to produce a windfall for the government.

                    The number than optimises for innovation and social benefit is 29%:

                    https://www8.gsb.columbia.edu/facult...hop/toptax.pdf

                    Comment


                    • #40
                      Originally posted by Flagg View Post

                      Behavioural Economics was widely and aggressively disparaged, then people like Dan Kahneman started winning Nobel Prizes.

                      Econophysics is a thing.

                      Physical law impacts everything due to causality.

                      Unless you believe Elon Musk that we may live in a sandbox simulation with the great software engineer in the sky adjusting the rules of our physical world.

                      This paper was shared by Paul Graham. The lefty founder of Y-Combintor that pooped out AirBnB, Stripe, Reddit. Zenefits, Dropbox, Twitch, Instacart, etc that have created north of 30,000 high paying jobs and $100 billion value created.

                      The magic number is 29% to optimise innovation and social benefit:

                      https://www8.gsb.columbia.edu/facult...hop/toptax.pdf

                      Taxing higher results in lower innovation and ultimately lower gains from a higher tax threshold redistribution.
                      It's just one person's economic model vs that of another. BTW, wealth inequality is even worse than income inequality in the US, so a wealth tax can also be considered.

                      Comment


                      • #41
                        Originally posted by Jonathan View Post
                        One of the many problems is too many people are completely clueless about how the tax system in the US actually works.

                        For example, there aren't a ton of people out there making an ordinary income in the millions. Want to know how Warren Buffet pays less than 20% in taxes, whereas my effective tax rate after deductions is closer to 40%? It sure as shit ain't because I'm making more money than him. Many of the ultra-rich folks discussed here aren't even being taxed on ordinary income, but on either carried interest or capital gains (essentially profit from investments as opposed to, for example, a salary). And guess what? Capital gains are taxed at a reduced rate.

                        Unfortunately, under the current clusterfuck that is the US tax code raising capital gain taxes isn't a solution because it will disproportionately adversely affect small business owners. The ultra rich like Warren Buffet and Mitt Romney will simply get more aggressive with creative write-offs (e.g. cost segregation to write off depreciation on their real estate investments at an accelerated schedule, equity swaps, etc).

                        The point is, if you're really rich you have all kinds of fun different ways to shelter your income and net worth gains legally if you have a good enough tax planner. That's why all these projections from academics like Krugman end up being total bullshit. They expect everyone to act in the same exact way if the taxes are raised. Good luck on that.

                        The real problem, besides the fact the government is spending too damn much money that necessitates raising taxes to avoid perpetual deficits, is that our tax system is a complete fucking bloated mess that needs to be overhauled and simplified. That's how you get the "ultra rich" to pay more taxes and make the entire system more fair. Instead the democrats simply lobby to increase taxes across the board, which will disproportionately punish the upper middle class and make upward mobility more difficult.
                        This.

                        The whole bruhaha over Buffet's tax rate can be summed up in 2 words: capital gains.

                        Comment


                        • #42
                          Originally posted by MRAPer View Post

                          It's just one person's economic model vs that of another. BTW, wealth inequality is even worse than income inequality in the US, so a wealth tax can also be considered.
                          Of course you’re going to say that to fit your inflexible point if view.

                          Comment


                          • #43
                            Originally posted by GB_FXST View Post

                            This.

                            The whole bruhaha over Buffet's tax rate can be summed up in 2 words: capital gains.

                            I could write all day about Buffett.

                            Half good, half bad.

                            The bad half is that he is most definitely NOT the kind old uncle persona he likes to portray.

                            He is a ruthless shark with a history of saying one thing and actually down another, particularly during the last GFC when it can to aspects of reinsurance.

                            But I think he is bang in with his balance of trade concept around tradeable import/export credits.

                            If you’re an exporter, and export $100m in good/services, you have $100 million in electronic exchange tradeable credits to sell to importers who require them to import goods.

                            Forget tariffs, consider import/export credits

                            Comment


                            • #44
                              Originally posted by Flagg View Post


                              I could write all day about Buffett.

                              Half good, half bad.

                              The bad half is that he is most definitely NOT the kind old uncle persona he likes to portray.

                              He is a ruthless shark with a history of saying one thing and actually down another, particularly during the last GFC when it can to aspects of reinsurance.

                              But I think he is bang in with his balance of trade concept around tradeable import/export credits.

                              If you’re an exporter, and export $100m in good/services, you have $100 million in electronic exchange tradeable credits to sell to importers who require them to import goods.

                              Forget tariffs, consider import/export credits
                              I have been interested in Buffett for over 15 years.

                              Yeah. Nice guys don't become multi-billionaires.

                              Comment

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