Tax Cuts Better for Politicians Than for Economy

People who make less than $250k want to extend the Bush tax cuts for high earners because they have delusions that oen day they too will make $250k +. It's a load of BS that is apread by the likes of Fox News to get lower paid people to support tax cuts for the rich.

I remember!
"When they were signed into law in 2001 and 2003, the huge package of income and capital gains tax reductions that became known as the Bush tax cuts were hailed as a way distribute the government surplus and promote long-term economic growth. Mr. Bush was so confident in their power to generate business growth and revenue that he predicted they would enable the government to pay down $1 trillion in debt in just four years."
In the same line, do you remember when the CBO got in a huge tiff over the cost of the Iraq war, with Rumsfeld arguing it would cost nothing, and the bean counters wanted to budget $100 million? I believe the compromise figure was $70M. Those were the days when people knew how to lie in a really big way.

Well, If the non-partisan New York Times reported it , it must be true(keep in mind that any findings the CBO comes out with are based on assumptions they are told to make)..

The whole thread is poorly worded, The question is whether it's better to follow the Republican plan of budget deficits via cutting taxes more than decreasing spending, or the Democratic plan of deficits via increased spending more than the increase in taxes

"I cannot in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us, at the expense of middle-class Americans who most need tax relief."

--John McCain

n one of the more ridiculous Keynesian theories to date, Gauti B. Eggertsson at the New York Fed comes to the conclusion Tax Cuts Will Deepen The Recession. Simple logic would dictate that letting people and businesses keep more of their money would be a good thing but amazingly Eggertsson comes to the opposite conclusion.

The belief is based on a bunch of incomprehensible (to the non-economist) equations such as this one.

I am not going to bother to explain what each symbol means because it is all nonsense. The theory in English suggests

1) Tax cuts will increase aggregate supply
2) Tax cuts will reduce wages according to this chart

I am not going to bother explaining that chart either because the number of assumptions that go into the charts and formulas is staggering. Instead let's skip to the conclusion of the paper.

The main problem facing the model economy I have studied in this paper is insufficient demand. In this light, the emphasis should be on policies that stimulate spending. Payroll tax cuts may not be the best way to get there. The model shows that they can even be contractionary. What should be done according to the model? Traditional government spending is one approach. Another is a commitment to inflate. Ideally the two should be put together.

We are in this mess precisely because consumers spent every cent they had and then some. Now Eggertsson wants consumers to spend more. If they don't spend, then Eggertsson wants government to spend on their behalf. Excuse me but common sense alone would suggest that is spending got us into this mess so spending is not going to get us out of it.

Furthermore, never do any of these Keynesian clowns tell us what is going to happen as soon as the stimulus is taken away. Somehow they believe in a free lunch perpetual motion theory of the economy where spending feeds on itself and we all live happily ever after.

In practice Japan tried that for a decade and it did not work and it did not work in the Great Depression either. A more recent example of the idiocy of fiscal stimulus can be found in 2003 when Greenspan slashed interest rates to 1% fueling the biggest property bubble in the history of the world. That bubble has now imploded and the Keynesian clowns did not learn a damn thing from it.

And as soon as the bridges are fixed and the potholes patched and nothing happens, the Keynesian clowns will be back at it wanting government to spend still more taxpayer money. Not one Keynesian ever has said what happens once the stimulus stops.

Triumph Of Faith Over Reason

Caroline Baum takes the Keynesian clowns to task in Fiscal Stimulus Is a Ruse Absent Fed Pixie Dust

It’s a jobs-creation program. No, it’s investment in our future.

It’s a tax-relief plan. Wait, it provides assistance to consumers hardest hit by the economic recession.

It’s legislation to jump-start the economy. No, it’s a recovery program. It’s a life raft for state and local governments. It’s a spending bill.

Which is it? Fiscal stimulus is all things to all people. In other words, it represents the triumph of faith over reason.

When I first learned about fiscal stimulus according to John Maynard Keynes in an introductory economics course, it made a modicum of sense. The idea was that at times when the private sector isn’t pulling its weight, the government can step in and spend instead.

It doesn’t take an inquiring mind very long to find the flaw in the argument. How exactly does the government get the money to pay for its spending? Neither borrowing (today) nor taxing (tomorrow) increases aggregate demand. All they do is transfer the ability to spend from one entity to another and the timing of that spending from the future to today.

“Empirically, nobody can point to a single Keynesian episode that worked,” says Dan Mitchell, senior fellow at the Cato Institute, a libertarian think tank in Washington.

Attempts to spend their way out of a slump by Herbert Hoover, Franklin Roosevelt, George W. Bush, Japan (in the 1990s) and Europe yielded little in the way of results, Mitchell says. “The only thing Keynesians have ever been able to point to that worked was World War II,” which isn’t something we want to repeat.

Left to its own devices, the economy’s natural tendency is to grow. That may sound like a cliche, but it’s true.

Eggertsson proposes tax cuts will reduce wages. I propose tax cuts will keep people employed. Eggertsson proposes rising prices are a good thing. I propose they are not. The more money people have and get to keep, the more money they will eventually spend. That is logic that any eight grader can understand.

The problem with most economists is they put their belief in ridiculous theories and formulas that have failed time and time again. Instead economists might try using one ounce of common sense. Is that too much to ask?

http://globaleconomicanalysis.blogspot.com/2009/02/can-tax-cuts-deepen-recession.html

So is it government spending or government taxing?

No, it's new Shimmer!

http://www.nbc.com/saturday-night-live/video/shimmer-floor-wax/1056743/

Tax cuts do deepen recessions by concentrating money in the hands of just a few people. We had one of the biggest income disparities in 1928.

"Income inequality grew significantly in 2005, with the top 1 percent of Americans - those with incomes that year of more than $348,000 - receiving their largest share of national income since 1928, analysis of newly released tax data shows."

Hmm, 1928, what happened next year?

2005, what happened 2 years later?

http://www.nytimes.com/2007/03/29/business/worldbusiness/29iht-income.4.5075504.html

Economic analysis wrapped in politics. The New York Times is liberal and believes in redistribution of income and other liberal causes. No surprise here. For every Times article there are other papers who say the opposite. I just posted a few.

New Obama shimulus. Will outlast every other shimulus and it's delicious!

Opponents of the tax cuts do not seriously dispute these claims about the productivity benefits of lower rates. Instead, their real objection is that the Bush tax cuts (allegedly) favor the wealthy.

This claim is true in part; lower tax rates on the high income earners are obviously beneficial for those earners. Yet this is only part of the story. To stimulate work, saving, and investment, tax cuts have no choice but to favor the taxpayers who respond most to taxes, as well as those likely to save and invest. That means high income earners. So policy must accept some inequality in exchange for more efficiency.

And in the case of dividend and capital gains taxation, the economy can have its cake and eat it too. These taxes appears to hit wealthy capitalists, but in reality they fall partly on consumers, via higher prices, and on workers, via lower demands for their services when corporations shut down or move overseas. So low taxation of dividends and capital gains helps both low and high income taxpayers.

President Obama is opposed to extending the Bush tax cuts and is instead proposing to allow full write-off of business investment through 2011. This proposal is reasonable, but the impact is likely to be small; this policy merely allows businesses to deduct investment now rather than later as depreciation. Given currently low interest rates, this shifting of expenditure is not worth much.

A different problem with the president’s approach is that it emphasizes short-run stabilization, not long-run efficiency. To prosper over the long haul, the economy needs certainty about taxes, rules, and regulations, not ever-evolving policy initiatives.

Likewise, markets want an emphasis on productivity, not on redistribution. Yet most administration policies have paid off liberal constituencies, from unions to teachers to the green lobby. It may be this tilt that explains the anemic recovery. To restore vitality to U.S. capitalism, the president needs to show real faith in that capitalism. Extending the Bush tax cuts is a good place to start.

http://www.nytimes.com/roomfordebate/2010/09/08/mixing-economics-with-politics/how-the-bush-tax-cuts-worked?scp=1&sq=miron&st=cse

Sorry Riversider. But that NY Times article you just posted is not credible and I am IGNORING it. A source tells me that the NY Times is "liberal and believes in redistribution of income and other liberal causes."

That was a very good answer! Bravo!!!

Riverisider cites Der Speigel, a self-proclaimed Socialist newspaper, as a legitimate proof. But the NYT quoting the non-partisan CBO is a leftist plot.

Don't be hard on RS, he's made excellent progress today.
"the problem with most economists is that they put their belief in ridiculous theories and formulas that have failed time and time again."
He's almost there, getting closer to empirical evidence.

Shameless libs trying to come up with justification for taking other people's money and redistributing it. Sad.

Shameless conservs trying to take money from the middle class and redistrubute it to the rich. Sad.

Why are you so supportive of the Bush tax cuts for the rich LICC? We all know you don't make more than $250k.

Feb. 17 (Bloomberg) -- It’s a jobs-creation program. No, it’s investment in our future.

It’s a tax-relief plan. Wait, it provides assistance to consumers hardest hit by the economic recession.

It’s legislation to jump-start the economy. No, it’s a recovery program. It’s a life raft for state and local governments. It’s a spending bill.

Which is it? Fiscal stimulus is all things to all people. In other words, it represents the triumph of faith over reason.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a3_NEEk3tTNU

When I first learned about fiscal stimulus according to John Maynard Keynes in an introductory economics course, it made a modicum of sense. The idea was that at times when the private sector isn’t pulling its weight, the government can step in and spend instead.

It doesn’t take an inquiring mind very long to find the flaw in the argument. How exactly does the government get the money to pay for its spending? Neither borrowing (today) nor taxing (tomorrow) increases aggregate demand. All they do is transfer the ability to spend from one entity to another and the timing of that spending from the future to today.

"Shameless libs trying to come up with justification for taking other people's money and redistributing it."

You claim to have money & you live in Long Island City?

HAHAHAHAHA!

Face it, LICC, most of the budget goes for a) military spending; b) Medicare and Medicaid; and c) interest on Republican deficits. You should support Medicaid, because a) it means you don't have to pay for your parents' medical care so it saves your inheritance; and b) Medicaid will stop you from catching bubonic plague from your LIC neighbors.

"Neither borrowing (today) nor taxing (tomorrow) increases aggregate demand."

Wrong. Try again. Unemployment benefits increase aggregate demand.

In the bizarro world of LICC & Riversider, money is only made in exploding stars, banks shouldn't create money, workers' should be denied their constitutional right to assemble and form unions, and Robber Barons are good for the economy.

Better to let their neighbors die of disease than allow the Soviet Union to invade Czechoslovakia, so keep that military spending going!

How about we sign a free-trade pact with South Korea so we can better compete with China?

You know Pres must be feeling particularly stupid in this argument since he as fallen to steve's level in resorting to ad hominem attacks.

Don't be jealous of others who make more money than you Pres.

Pres- interesting delusion about taking from the middle class to give to the rich. Higher income people pay more taxes than middle income, both in dollars and as a percentage of income. Sorry, that was another in a long line of your silly statements.

According to Warren buffet, he pays a lower percentage of his income than does his secretary. Do you think he's lying about this?

According to steve, I guess, Social Security is not a significant part of the federal budget and Medicare and Medicaid don't need any cost reform. Bizarro world.

steve, don't let it bother you that there are lots of young, happy professionals living in LIC that are more financially successful than you. Some people like beautiful new homes in a waterfront area with a great, young diverse crowd, and other people like living in a dumpy rental building on 52nd and 8th. To each his own buddy.

"According to steve, I guess, Social Security is not a significant part of the federal budget."

No, actually, it's not. It has a separate budget, and it's in SURPLUS.

"and Medicare and Medicaid don't need any cost reform"

They absolutely do. No more fee for service. Nationalize health care.

"don't let it bother you that there are lots of young, happy professionals living in LIC"

Happy?

"Higher income people pay more taxes than middle income, both in dollars and as a percentage of income."

Wrong again, LICC. Social Security / Medicare payments are capped at a certain salary limit, not charged against anything but earned income, including dividends and capital gains. AMT is phased out ABOVE a certain earnings level (around $350k, I think). Dividends and LT capital gains are charged a lower tax rate than earned income. Hedge fund managers pay a flat 15% tax on "carried interest".

The net percentage of income paid in tax of someone earning $20,000 is MUCH higher than that of someone earning $200 million. Sorry. It's true. Ask Warren Buffett.

Further to this point

http://www.theatlantic.com/politics/archive/2009/03/why-buffett-pays-less-than-his-secretary/1616/

Almost half the people don't pay federal income tax.
About three quarter of the federal income tax collected comes from the top 10% of earners.
Is it really that surprising that the same top 10% control most of the power and how that tax money should be spent?

Sunday- thanks for showing the facts, which steve likes to consistently ignore to instead focus on his fantasies.

I understand that having people who earn more than $250k pay more in income taxes has widespread support from those earning less than 250k.

Starting with President Obama.

Oh, whoops, he makes a lot more.

Silly rabbit, he's seeking re-election and the hit on his taxes is nothing compared to the money he'll make in speaking fees, book deals and consulting gigs(which will be considerably higher after his 2nd term).

So, you think he's advocating repealing the tax cut simply to make more money for himself?

I think he's doing anything and everything to get himself and his party re-elected, and he's very cognizant of the fact that as an ex-president he'll be richer than g-d. An extra 100 bps of income taxes is nothing for him.

So...he ran for president for personal financial gain?

So if the people with the money don't pay taxes, who should?

And let us not forget social security and medicare (paid more by the poor than the rich, percentagewise) and sales tax (ditto) and excise taxes (double-ditto).

Most budgets are run with the understanding that if the money is not there, you spend less of it. Novel idea?
And social security is a pyramid scheme. The people who got in first made out ok, but now we play games like raising the retirement age and index less than the inflation rate. Oh I guess its good we haven't privatized it, because we all know you can only trust the government to not play games with the benefits...

Steve Medicare taxes are not capped, you are wrong. SS yes. Including federal income taxes and payroll taxes together, we do have progressive FEDERAL taxes. Inclcluding all 50 states and the territories' state and local taxes, it's flat to regressive, depending on the source. That is because on average, state and local taxes - especially sales and property - are HEAVILY regressive. And because many state taxes are deductible - which only helps those rich enough tonitemize and help higher brackets more.

"Most budgets are run with the understanding that if the money is not there, you spend less of it."

Apparently the money IS there, else there would be no rich people; everybody would be poor. Your point seems to be that there should be no taxes at all. Nice idea, but it would lead to ruin.

Social Security is not a "pyramid scheme"; it is a "pay-as-you-go" system. Nothing is wrong with increasing the retirement age as the people's lifespans increase. In fact, I have no plans of retiring ever. What would you do if you were retired? My father retired at my age, sat on the couch drinking coffee for 10 years. It's a surefire way to get depressed.

"Oh I guess its good we haven't privatized it, because we all know you can only trust the government to not play games with the benefits..."

We haven't "privatized" it because it's purpose is to be public; where "privatization" has been tried (Chile) it was an abysmal failure. It's not intended to support your retirement; it's intended to supplement your "privatized" retirement benefits: 401k, whatever.

You know, RS, if any of the things you support ever had any support in accepted theory or in practice, then I'd support them. But they've NEVER worked. Not ever. Your solution is to take what works 99% of the time and say, "Well, it doesn't work 1% of the time, so let's scrap it."

And replace it with something that works 0% of the time.

Great.

"How about we sign a free-trade pact with South Korea so we can better compete with China?"

Right, because I am sure America can compete with a bunch of workers making 31 cents an hour at Fox Conn. Are you that dense?

"I understand that having people who earn more than $250k pay more in income taxes has widespread support from those earning less than 250k."

Really? What about Warren Buffett? What about Michael Moore? What about Hollywood? They all make more than $250k the last time I checked.

GOP plan to extend tax cuts for rich adds $36 billion to deficit, panel finds

A Republican plan to extend tax cuts for the rich would add more than $36 billion to the federal deficit next year -- and transfer the bulk of that cash into the pockets of the nation's millionaires, according to a congressional analysis released Wednesday.

http://www.washingtonpost.com/wp-dyn/content/article/2010/08/11/AR2010081105864.html

The new division of labor: Adding profits, subtracting workers

On the outside of its majestic headquarters in Washington, across the park from the White House, the U.S. Chamber of Commerce recently hung four giant banners that spell out exactly what it thinks is missing from the current economy: J-O-B-S.

This is a particularly Orwellian bit of political theater, given that it is the private businesses the Chamber purports to represent that eliminated 8 million jobs in 2008 and 2009 and have managed to add a scant 600,000 since then. If Chamber President Tom Donohue wants to round up those responsible for the lack of job growth in this country, all he has to do is call a meeting of his board of directors.

http://www.washingtonpost.com/wp-dyn/content/article/2010/07/29/AR2010072906281.html

Fox Conn. Are you that dense?
That's China, not South Korea.

I know that. MY question is how having a free trade agreement with S Korea will better help us compete with Fox Conn workers in China?

Apparently the money IS there, else there would be no rich people; everybody would be poor.

Great, you want to makes sure anyone with money is taxed till they're poor? I guess that's the goal of redistribution. Much easier to redistribute a shrinking pie than to make it bigger.

How do tax cuts make the pie bigger? Do they increase the currency that is in circulation?

If you want to make the pie bigger, you print more money and dump it out of a helicopter.

The fact is that you and yoru Chamber of Commerce cronies have LOST. Taxes are going up for rich pigs and there is nothing you can do about it.

"Great, you want to makes sure anyone with money is taxed till they're poor? I guess that's the goal of redistribution."

Typical black-and-white, all-or-nothing thinking, RS, which is a primitive defense mechanism: look it up.

Whoever said that there's nothing in between a 0% tax rate and a 99% tax rate? Just you.

Doesn't seem to me that Bill Gates or Mike Bloomberg are in any danger of being taxed till they're poor.

Taxation buys things, like education and roads and infrastructure and regulation of erratic markets. It's in the interest even of the wealthy to have proper taxation: extremes in wealth distribution (and Manhattan has a wealth distribution similar to Guatemala's, BTW) lead to revolutions like Venezuela's and Cuba's and Russia's. Education buys a better workforce. You can't distribute your products without roads and rails and rivers and airports. All things the government does extremely well, that the private sector doesn't.

Not everybody can broadcast their TV programs on the same frequencies at the same time.

Sheesh. What foolishness. Like money is created in exploding stars.

As far as I can tell the raise the tax on the higher earners crowd believes the following,
We need to have more safety nets on humanitarian grounds.
Welfare, Unemployment insurance and the like is stimulus and grows the economy
Providing welfare is charitable and the right thing to do
The rich are not helping out enough

Basically, you think other people aren't being charitable enough, and you want government to engage in a
"Robin Hood" policy.

And to the extent we have a deficit, you either have not considered it, think it does not have to be repaid or
believe the wealthy should pay that too.

Also missing is any discussion on what encourages capital formation, and whether differences in tax rates across different countries or in this country have any affect on investment or someone starting a business.

Idiot. Idiot. Idiot.

To the extent that we have a deficit?

Nuts.

http://2.bp.blogspot.com/_nSTO-vZpSgc/TIx2b9qkz9I/AAAAAAAAJU4/VyxM539_ppM/s1600/sunday+funnies+2010-09-12+worthless+dollar.png

OMG, RS, you're ranting!

I'll just address the last of your ridiculous statements: "Also missing is any discussion on what encourages capital formation"

Apparently, according to you, exploding stars, because that's where gold comes from.

"and whether differences in tax rates across different countries or in this country have any affect on investment or someone starting a business."

"Effect," not "affect," one, and two, with the exception of some very small tax havens, the richest and most stable places on earth are the ones with the highest tax rates.

Ditto "someone starting a business": lots more businesses are started in New York and California than in Mississippi or Alabama.

Ditto even at the county level: Nassau county, with high taxes, is much wealthier than Cuyahoga County, with lower tax rates.

You just don't get it, do you, RS? NOTHING supports your economic theories except your own fantasies. They have been disproved theoretically and empirically.

RS, you sound more and more like Castro:

"Goldberg wrote in a blog on Wednesday that he asked Castro, 84, if Cuba's model was still worth exporting to other countries.

""The Cuban model doesn't even work for us anymore,'' Castro told him.

Castro confirmed that he said those words "without bitterness or concern.'' But, he said, "the reality is that my response means exactly the opposite.''"

Very much Alice in Wonderland, no?

steve can't figure out that taxes are higher in Nassau County compared to some poor upstate county because that is where the money is. Once government gets their hands on private sector income, the pigs can't stop spending thus driving the taxes up.

Some people on this board used to think steve had some intellectual ability, but that was year ago, before he was exposed. Now he is good for a laugh with his wacky theories and positions combined with delusional arrogance.

"steve can't figure out that taxes are higher in Nassau County compared to some poor upstate county because that is where the money is."

Oh, LICC! You'd think that taxes would be LOWER in Nassau — wouldn't you? — because the governments provide the same services so a lower rate would be needed in Nassau than upstate.

The people in Nassau are free to elect whomever they want, and they have for the past 50 or so years elected Republicans, who've raised their taxes. If they wanted lower taxes more than, say, good schools, they could just kick the bastards out.

"Delusional arrogance"?

Really? Did you find me extolling the virtues of Long Island City anyplace that I'm not aware of?

Here's a Handy Tax Calculator, LICC/RS:

http://calculator.taxpolicycenter.org/

Tell me how bad the results are for you.

For corporations taxes are certainly a consideration when considering investment.
For individuals taxes are certainly a consideration when considering residence.

If one accepts that the above are true then all things being equal(and we know they aren't always) the low cost haven wins out.

hilarious.

just checked the tax calculator. message comes back saying try later, too many requests.

looks like rent stabilizer and his talking dummy have broken. it.

hilarious

what happened to the thread where Rhino called stevjx a "gay translating accountant"?

Deleted?

Between that and the one where w67thstreet advocated that all Arab countries and Israel blow each other up, streeteasy is sure doing a lot of inconvenient thread deletion.

I wonder if the thread still exists where w67thstreet said that the real estate industry is responsible for the mother who killed her 4 children. (and said the mother had a kind heart because she didn't kill her 2 year old).

I think also the one where w67thstreet said "of the thousands of people who touched my wife" - I think that was deleted too.

"If one accepts that the above are true then all things being equal(and we know they aren't always) the low cost haven wins out."

Unfortunately, they're not true. Otherwise, Wyoming would be LOADED with people and corporations, and it's not.

It's just an empirical fact:

http://daily.sightline.org/daily_score/archive/2010/08/17/wealthy-flock-to-pay-income-taxes

Wealthy people deliberately choose to live in places with high taxes. It's called "Wagner's Law," and it is a recognized fact:

http://www.nytimes.com/2010/03/17/business/economy/17leonhardt.html

The Ayn / Ron / Rand / Tea Party Crowd would have you believe that you can run a modern urban economy on rural agricultural or at best mercantilist tax policies.

You can't. It don't work. Not in theory, not in practice.

It just plain don't.

Wagner's law. That's hysterical.
If someone is truly wealthy they can afford their own "social services".

you don't get it, do you?

On a state level if the taxes become too much of a burden, you move to another state and visit. It depends too on how one makes their living, but many people who work for large companies travel for business and/or work from home do in fact play this "game" and make another state say Florida their primary residence. The wealthy have a great deal more flexibility when it comes to these types of decisions.

anecdote or fact?

or fiction?

it's like seeing doppelgangers!

how true.....rent stabilizer and his many alter egos.

How's the weather upstate?

Whenever steve says something is a fact, you can have confidence that it is ridiculously false.

"On a state level if the taxes become too much of a burden, you move to another state and visit."

That is why taxes on the federal level must go up. When the federal taxes go up, nobody can avoid paying the taxes.

There's nothing like LICC and RS when it comes to reality - their bizzaro opinions must prevail, even over empirically proven facts: rich people live where the taxes are highest, because their taxes buy them things: good roads, good schools, good neighbors. It's been known and true for over a hundred years, yet they dismiss it out of hand with no contrary evidence.

In their bizzaro world, Huntsville, Alabama is a better business environment than Cupertino, California, because the taxes are lower there. Which is why, in their minds, Huntsville is the REAL headquarters of Apple, HP, and all the other denizens of Silicon Valley.

LMFAO.

If I'm building a car assembly plant, Alabama may be better...

BMW went with Sout Carolina
Honda with Ohio
Toyota has plants in Alabama & Kentucky

And since when is Ohio a low-tax state?

Toyota Motors North America is headquartered in Manhattan.

http://www.hoovers.com/company/Toyota_Motor_North_America_Inc/rrrssxi-1.html

BMW is based in Germany, one of the highest-tax countries in the world.

Next examples, RS (as petrzitz would say, "Tool!").

steve thinks companies are in California because of the state's high taxes. And he calls other people delusional?

So you are saying Steve that BMW builds cars in the united states because German tax rates are too high?

"steve thinks companies are in California because of the state's high taxes"

Never said that, LICC, just like I never said that people live in Long Island City because it's a nice place to be.

What I said was that while taxes may influence certain business and personal decisions, on the whole they are not determinative of where businesses and people locate. People and businesses CHOOSE to pay higher taxes because they get things in return: better infrastructure, better schools, better neighbors.

Thus lowering taxes WILL NOT have the desired effect, UNLESS it's possible to lower them WHILE maintaining the level of government services demanded. That, of course, is not possible, but the Tea Partiers and others in the Something-for-Nothing Crowd - the Republicans who insist it's possible to lower taxes AND maintain services - seem to believe it is. Hence the deficits, deteriorating infrastructure, and all the other problems associated with the "Starve the Beast" mentality.

It goes against human nature, but it's a great sales pitch: ask Marie Antoinette.

"So you are saying Steve that BMW builds cars in the united states because German tax rates are too high?"

No.

BMW USA is based in New Jersey:

http://www.bmwusa.com/Standard/Content/CompanyInformation/

None of what you're saying, RS, is supported by any empirical evidence. None. The evidence all points in the opposite direction, yet you and LICC press on with your Voodoo.

So steve thinks that exorbitant teacher pensions that drive up property taxes in Nassau County are ok because it leads to better schools.

Also, note how steve supplies no data or facts to support the claim that good school quality correlates to high taxes.

But he does like to just conclude he is correct even when his views are wacko.

Steve does have a point, that infrastructure, good schools, a quality labor pool and transportation system etc add to the value of a location for boht businesses and individuals. I agree with that. Of course efficiency counts too.

"So steve thinks that exorbitant teacher pensions that drive up property taxes in Nassau County are ok because it leads to better schools."

I don't think I said that, but I agree with you about teach pensions & benefits. Vastly overpaid, as I've said before.

I don't live in Nassau. My sister does, however, and that's why they moved there.

"Also, note how steve supplies no data or facts to support the claim that good school quality correlates to high taxes."

Again, these are not decisions that I'M making - they're decisions made by others, supported by the data.

That said, I DELIBERATELY choose to live in Manhattan, with high taxes. Why? Because a) I like the lifestyle; and b) when you do the calculations, the high taxes are buying me services that I'd have to pay for separately if I lived elsewhere. Such as public transportation versus a car.

Thus, supposedly low-tax venues like Florida are actually more expensive in the end, when you add everything up. I know because I lived there. A car alone costs you $1,000 a month in depreciation, maintenance, insurance, and loan payments. Excluding operating expenses. Just knock that off my rent and there's no way to get anything nearly as cheap there as here.

Your theories don't hold up to the test of empirical data, LICC. They just don't.

The title of this thread led me to believe the argument was going to claim that 85%+ of politicians are in the highest tax brackets, and therefore benefit from the Bush tax cuts. I was very disappointed not to discover any factual evidence of this once clicking the link.

RS, if I knew of a way to make government more efficient, I'd be rich. I don't know of a way, however, and "starving the beast" doesn't work. What I do know is that the private sector is no more efficient: health care is worse than the post office, and the VA does, in fact, have one of the most efficient health care systems in the world. Sad to say, but true.

Apple and HP stay in San Jose because that's where the people they want are and want to be. It's one thing to put a factory in Alabama; it's quite another to put a major research facility there. New York City and environs are successful because of what they offer, taxes be damned. What is true, though, is that the rest of New York State is not efficient enough to support the tax structure that the city can support.

That's my point: what works for Allegheny doesn't work for Manhattan. It's the same Jefferson / Hamilton argument all over again. Jefferson won the argument over where to site the capital, and good for NYC, too, that it was moved from here: it got the government out of private enterprise. Just like moving the capital to Madrid got the priests out of the Spanish Empire, which saved their necks unlike the French.

Having Buffalo use the same tax structure that works in Manhattan is about like having Greece using the same currency as Germany: it makes no sense, and will bankrupt Greece AND Buffalo. Taxes MUST be higher in Manhattan because of the sheer complexity of running the place. Applying agrarian and farmers' market economic policies to the entire country - which is what the Tea Partiers would have us do - is sheer insanity.

Well one way to make the government more efficient would be to kill Davis Bacon. Efficiency means delivering services at the lowest price and Davis Bacon goes in the other direction. Davis Bacon was for a different time and a different place. If I thought the gov't would ship in foreign laborers I'd be supportive, but as it stands it basically prevents the hiring of local companies who pay non-union style type wages..

"Also, note how steve supplies no data or facts to support the claim that good school quality correlates to high taxes."

The top 4 states with the best public schools are all high tax states:

1. Maryland
2. Masachusetts
3. New York
4. Virginia

http://www.walletpop.com/specials/best-and-worst-public-school-systems-in-us/

And more than half of the best high schools in the US are in high tax states:

http://www.usnews.com/articles/education/high-schools/2009/12/09/americas-best-high-schools-gold-medal-list.html

And of course Banks and wall street firms have never set up shop or offices in Westchester, Stamford, Charlotte, Mclean etc.

"If I thought the gov't would ship in foreign laborers I'd be supportive,"

Well then you shold be supportive because the govt hires contractors who then in turn hire day laborers.

So here is a question for the riversider/ LICC crowd:

If high taxes are not good for business, why are SO many states headquartered in high tax states?

Why is Siilicon Valley in CA? Why is finance in NY? Why is Pharma in NJ? Why are all the foreign automakers based in the northeast?

steve, your argument is backwards. Manhattan is complex because of all the business and people activity here. That activity creates wealth. It creates more wealth than other places and should be more than sufficient for top-level government services with reasonable tax rates. But Government sees the wealth and decides it can gorge it with taxes because that is where the wealth resides.

Because taxes are just one part of the equation. Infrastructure matters too. Basically it's about value. Factors include communication, transportation, housing, high quality labor pool. That said companies do move their head quarters out of New York.

Why do people go to expensive restaurants?

There is a limit on how much these restaurants can charge, regardless of how hard it is to get reservations there. If a restaurant cross that line, their customers will eventually turn on them.

yep.

LICC, my argument is sound: Manhattan does all of those things AND it has high tax rates. The government doesn't "see the wealth and decide it can gorge itself with taxes" - rather, it's the other way around; if it weren't - if taxes were just high and nobody got anything in return for them - then companies and people WOULD move, as they did here in the 70's and 80's.

Companies do move from Manhattan, and they move TO Manhattan, as well. They do it for a number of reasons, taxes being just one of them. That's why the Tea Party / RS / LICC argument is false: low taxes are not ALWAYS good. Sometimes, they're very, very bad.

Ask Haiti.

"There is a limit on how much these restaurants can charge, regardless of how hard it is to get reservations there. If a restaurant cross that line, their customers will eventually turn on them."

Then you've never been to Nello's in southampton.

"Taxes: What people forget about Reagan

Those who oppose higher taxes and are fed up with record levels of U.S. debt may pine for Ronald Reagan, the patron saint of lower taxes and smaller government.

But it's worth considering just what Reagan did -- and didn't do -- as lawmakers grapple with many of the same issues that their 1980s counterparts faced: a deep recession, high deficits and a rip-roaring political divide over taxes..."

http://money.cnn.com/2010/09/08/news/economy/reagan_years_taxes/index.htm