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Can you elaborate on how that has a relevant impact on my point?

deleted 14y ago
[deleted]
pdonis 14y ago
Hm, actually I may have misread somewhat. By "spending" do you mean government spending? If so, then you're right, I shouldn't have focused on spending. Instead the problem is that you're also assuming that everyone's incomes stay the same, so you can just recompute the government's revenue by applying the new tax rates to the same income figures as before. That would give you a much higher revenue figure. But that won't happen: instead rich people will find ways to decrease their taxable income, so that the revenue increase you're calculating won't actually materialize. Check out this article: http://reason.com/blog/2010/11/29/the-remarkably-stable-amount-o http://reason.com/blog/2010/11/29/the-remarkably-stable-amou... It shows that government revenue as a percentage of GDP has been remarkably stable over large changes in tax rates.
- mistercow 14y ago
  Yes, the problem that the rich can afford to find ways to dodge taxes is a big problem. I was not bringing the concept up as an actual solution, but in refutation of vaadu's claims about wealth distribution. If you could actually tax 90% of the income of the top 10% (where "income" means what we all would think of as income, not what the very best accountants fail to sweep under various rugs), and that income remained about the same as it is now, then it would rapidly pay down the debt. Is it possible to tax the most powerful people in world like that? No, probably not, as you said. It would require extremely smart people to write extremely smart laws while somehow keeping lobbyists from intentionally inserting tax loopholes, so good luck to us with that. Would the "real" income of the top 10% remain the same under such conditions? Hard to say, really. We don't really have the data to see how an economy would behave under such alien circumstances, so any predictions we make are bound to be based on ideology, and ideology is notoriously poor at making accurate predictions.

deleted 14y ago

[deleted]

Hm, actually I may have misread somewhat. By "spending" do you mean government spending? If so, then you're right, I shouldn't have focused on spending. Instead the problem is that you're also assuming that everyone's incomes stay the same, so you can just recompute the government's revenue by applying the new tax rates to the same income figures as before. That would give you a much higher revenue figure. But that won't happen: instead rich people will find ways to decrease their taxable income, so that the revenue increase you're calculating won't actually materialize. Check out this article: http://reason.com/blog/2010/11/29/the-remarkably-stable-amount-o http://reason.com/blog/2010/11/29/the-remarkably-stable-amou... It shows that government revenue as a percentage of GDP has been remarkably stable over large changes in tax rates.

mistercow 14y ago
Yes, the problem that the rich can afford to find ways to dodge taxes is a big problem. I was not bringing the concept up as an actual solution, but in refutation of vaadu's claims about wealth distribution. If you could actually tax 90% of the income of the top 10% (where "income" means what we all would think of as income, not what the very best accountants fail to sweep under various rugs), and that income remained about the same as it is now, then it would rapidly pay down the debt. Is it possible to tax the most powerful people in world like that? No, probably not, as you said. It would require extremely smart people to write extremely smart laws while somehow keeping lobbyists from intentionally inserting tax loopholes, so good luck to us with that. Would the "real" income of the top 10% remain the same under such conditions? Hard to say, really. We don't really have the data to see how an economy would behave under such alien circumstances, so any predictions we make are bound to be based on ideology, and ideology is notoriously poor at making accurate predictions.