toldailytopic: Taxing more or spending less? Which is the most wise path to reduce th

[Yorzhik]

Any projection based on averages and downright guesses can be wrong. All projections about the revenue from taxes depend on guesses about any number of economic factors, and therefore it isn't surprising when some specific factor doesn't turn out the way we expect. For instance, earlier and lower than expected sales of Facebook stock from the first investors in the IPO were one of the reasons given for the shortfall.

It's a projection. We don't know yet how accurate it will be, but it's probably better than a blind guess.

We may well have another shortfall, that being tax revenue lower than expected. What I've said, what's been projected by the government is that we'll see increased revenue as a result of the new taxes. So yes, please do keep me honest about that prediction.

While it might be true that revenue goes up, it won't go up as much as predicted, which is how much money was spent in the budget. So the debt of CA will go up.

What CA needs to do is not simply start bullying people to get a little more here or there, what they need to do is create an incentive for the private sector to transact more. Clearly if one wants to start or expand a business they need to feel like they can do whatever they need to do to make their business work without a gov't bully waiting in the wings.

Nevada had a real estate crash because of regulation.

Do explain.

The nice thing about Nevada is that Las Vegas pretty much is the entire state economically. And so we only need focus on that city. Another nice thing is that LV does not have the complicated "growth policies" that hurt markets in both CA and Florida. LV's crash happened because of the perfect storm of low interest rates and the gov't underwriting Fannie Mae and Freddie Mac.

So the two regulations were the gov't controlling the cost of money and promising banks that taxpayers would cover their bad loans. Overbuilding ensued, and a crash was inevitable when the building stopped for building's sake.

Edit: And in researching this it turns out to again be regulation on top of the general problems of artificially low interest rates and sub-prime loans:

Nevada is a unique case where nearly all of the land in the state is owned by the federal government. The rapid growth of Las Vegas and Reno have been enabled by federal land sales, but concerns over environmental issues slowed such sales after 2000 and led to rising prices. Moreover, under the Southern Nevada Public Land Management Act of 1998, most of the revenue from land sales in Clark County (Las Vegas) is dedicated to buying open space and other amenities.38 Since then, nearly half the revenues from land sales have been used to buy parklands, effectively requiring developers to buy two acres from the federal government to net one more acre of developable land.39 In effect, Nevada growth management is regulated at the federal level.

source

Um, ok, I don't want to put words in your mouth...but supply side economics argues that the best economic outcome is achieved by removing the barriers to production, such as taxes and regulation. It's basically defining for supply-side economics. Is that not exactly what you have been arguing for?

Also, the Laffer Curve was designed by supply-siders.

I think it's more accurate to say that you're following their ideas without realizing it.

The problem is that if I agree with Suppy Siders I immediately get painted as a Republican Politician and all the compromising politics that goes with them. And that isn't right.

Thus, it is more accurate to say we both get our ideas from classical liberals. God being the first classical liberal and He wrote His ideas in the bible. Just because we both agree on a large list of the same ideas does not mean we should be put in the same group. Especially since you want to lump me in with Bush.

Only, I didn't say that, and it isn't logically drawn from my arguments either.

Yes, you did:

For instance, in 2001, and again in 2003, President Bush lowered taxes. If we were on the right side of a Laffer Curve, the model predicts that revenue should have increased. So did it? http://www.taxpolicycenter.org/taxfa....cfm?Docid=200 No, it didn't. Both years, tax revenue dropped. This proves...

"This proves" was too strong a phrase to use if you weren't trying to logically conclude that lowering taxes was the only factor in revenue generation.

It's a strange thing to cite the Laffer Curve as a reason to draw a conclusion, and then when I disprove the impact of the Laffer Curve on the situation that we are discussing, to act as if you completely agree with me and I'm boring you for even bringing it up.

No, your disproof of the Laffer Curve was in a context where it didn't apply.

The theory behind the Laffer Curve does not say that taxes control the economy. The theory behind the Laffer Curve says that taxes play a roll in the economy.

I really don't know what your point was in bringing it up now.

It was a sub-point of a bigger point. The bigger point is: what is the best policy the gov't can have to improve the economy? A flat tax rate (and the best rate is determined by the Laffer Curve). And just as important, if not more important, is the regulation the gov't imposes on the economy.

Well no. I haven't argued that the projections are perfect. What I have argued is that we will see an increase in revenue as a result of the taxes. So we can compare the tax revenue to the previous year to see if my prediction is correct, and then look and see if there are confounding factors that deflect the numbers one way
or the other.

The problem is a budget was created, and the obligation is locked in to be spent, on a projected revenue that will come up short. So the economy will be in even worse shape in the future even if revenues go up due to the tax increase. They won't go up as much as the projection said, and bigger debt and a bigger burden on the economy will have to be dealt with in the future when things are worse. It would be better, now, for the gov't to stop spending and allow people to transact how they see fit.

0%? Are we allowed to go negative?

Was that supposed to be a joke? It would be somewhere between 0% and 100%. The gov't performs a function for the economy. Namely, it insures contracts and the infrastructure to do that takes money.

But regulation and spending, including the threat of regulation and spending, obviously affects the economy more than taxes.

Do explain.

Because at least with high taxes and no regulation one is free to pay them in any way they can get the money (barring stealing), while regulation with low taxes limits freedom to transact, which affects the ability of one to have an income to live.

And, one thing to note, a progressive tax rate includes government regulation within it. If you'd like me to explain this let me know.

Please do.

A progressive tax rate is not based on the revenue the gov't needs to operate, but on regulating income based on some bureaucrat's personal preference of how much someone should be allowed to have. It is also an admission, lending itself to regulation, that all income belongs to the government and they let you have income at their gracious whim. Also, once you create a progressive income tax, those that can pay for lobbying will lobby for rule changes and exceptions which is directly a form of regulation.

 

[lightbringer]

I believe in having a strong American economy so lets tax more and spend less!

Once the country is healthy again then we can level off some of the taxes but maintain a healthy attitude towards spending.