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The great Kansas experiment continues... - Printable Version +- Cincinnati Bengals Message Board / Forums - Home of Jungle Noise (http://thebengalsboard.com) +-- Forum: Off Topic Forums (http://thebengalsboard.com/Forum-Off-Topic-Forums) +--- Forum: Politics & Religion 2.0 (http://thebengalsboard.com/Forum-Politics-Religion-2-0) +---- Forum: P & R Archive (http://thebengalsboard.com/Forum-P-R-Archive) +---- Thread: The great Kansas experiment continues... (/Thread-The-great-Kansas-experiment-continues) |
RE: The great Kansas experiment continues... - JustWinBaby - 10-02-2016 (10-02-2016, 12:18 PM)GMDino Wrote: But also if taxes trickle down why haven't the tax cuts? Lower prices, more jobs, better pay, etc? Because wage increases are tied to market rates much more so than profitability. For tax cuts to "trickle down", you have to have job growth making a tight labor market and bidding up wages. And it's job growth that is tied to profitability. RE: The great Kansas experiment continues... - GMDino - 10-02-2016 (10-02-2016, 08:57 PM)JustWinBaby Wrote: Because wage increases are tied to market rates much more so than profitability. For tax cuts to "trickle down", you have to have job growth making a tight labor market and bidding up wages. And it's job growth that is tied to profitability. Then the tax breaks aren't needed. Thanks. RE: The great Kansas experiment continues... - treee - 10-02-2016 (10-02-2016, 08:51 PM)JustWinBaby Wrote: And I think that's a big part of what's failed here. Obviously we know 0% tax rates and 100% tax rates are not optimal, but the debate is always what is optimal (and it's probably not a constant number). Definitely. Quote:The idea of "trickle down" is more jobs and supply & demand leads to wage growth. But in this case the Kansas job market was already doing fairly well, so there weren't a lot of jobs to gain. I also think the artificially low interest rates have provided plenty of easy money to businesses for investment, so you don't see the traditional bump in spending from tax cuts because there was already so much cheap financing available. I thought it was universally agreed upon by most economists that supply side economics as we've known them up to this point are largely ineffective. Quote:Higher taxes and bigger government DOES lead to slower growth (and less jobs). But other than marginal corporate tax rates being high, the average tax rates here are still lower overall vs. the EU. So optimal might be higher, but probably not all that much higher (and not nearly enough to close the deficit without also lowering spending). I agree that there are cuts that need to be made in conjunction with slight tax hikes in order to reduce the deficit effectively. I personally believe that we need to do whatever possible to responsibly subsidize higher education because these student loans are going to absolutely kill our economy in the no-too-distant future. Quote:Because wage increases are tied to market rates much more so than profitability. For tax cuts to "trickle down", you have to have job growth making a tight labor market and bidding up wages. And it's job growth that is tied to profitability. U.S. wages are never going to trend upward naturally in the free market again as long as we are competing against these countries with such low standards of living. It is just the grim reality of things. RE: The great Kansas experiment continues... - JustWinBaby - 10-03-2016 (10-02-2016, 09:10 PM)treee Wrote: I thought it was universally agreed upon by most economists that supply side economics as we've known them up to this point are largely ineffective. Not remotely. That's just what tax & spend liberal economists like Krugman claim. Supply side economics are pretty much principle foundation....it's just that there are many factors involved and the supply side issues are not always dominant or most relevant. You know what guys like Krugman said when an unprecedented TRILLION dollar stimulus did nothing? That it wasn't enough. RE: The great Kansas experiment continues... - JustWinBaby - 10-03-2016 (10-02-2016, 09:10 PM)treee Wrote: U.S. wages are never going to trend upward naturally in the free market again as long as we are competing against these countries with such low standards of living. It is just the grim reality of things. This is very, very true. It's a global labor market now. Yes, the rich are getting richer off globalization, but they are just shaving off a slice for themself. The real wealth transfer is, as you said, those people with much lower standards of living. And it only gets worse with automation and AI. RE: The great Kansas experiment continues... - treee - 10-03-2016 (10-03-2016, 01:08 AM)JustWinBaby Wrote: This is very, very true. It's a global labor market now. Yes, the rich are getting richer off globalization, but they are just shaving off a slice for themself. The real wealth transfer is, as you said, those people with much lower standards of living. At some point there has to be a basic universal income that you can compliment by participating in the labor market (if possible). RE: The great Kansas experiment continues... - Belsnickel - 10-03-2016 (10-02-2016, 12:54 PM)Aquapod770 Wrote: And in places where Dems have the most power things are just as shitty. It's almost as if our government was designed to work on a system of checks and balances... (10-02-2016, 12:58 PM)GMDino Wrote: Checks and balances don't mean crap when one side or the other refuses to compromise on anything at all. (10-02-2016, 01:01 PM)Aquapod770 Wrote: Fair enough. The biggest problem with our government right now is the lack of compromise from both sides. (10-02-2016, 01:09 PM)GMDino Wrote: Agreed. It's one of the interesting things to me. Politics really is just governance. One textbook definition talks about decisions being made about how people are going to live together. Somewhere along the way, politics is a word that has taken on a whole other connotation. I know I am guilty of saying I don't want politicians, I want statesmen. But when did the concept of politics move from being just about governance to being more about the parties and getting reelected? I mean, what has occurred, at least in our country, is that to the general public that is what they think politics is. It's a sad state of affairs. RE: The great Kansas experiment continues... - treee - 10-03-2016 (10-03-2016, 10:15 PM)Belsnickel Wrote: It's one of the interesting things to me. Politics really is just governance. One textbook definition talks about decisions being made about how people are going to live together. Somewhere along the way, politics is a word that has taken on a whole other connotation. I know I am guilty of saying I don't want politicians, I want statesmen. But when did the concept of politics move from being just about governance to being more about the parties and getting reelected? I mean, what has occurred, at least in our country, is that to the general public that is what they think politics is. It's a sad state of affairs. Somewhere along the line, the public psyche stopped viewing politics as a way that they could shape their world with their vote, and started looking at it as a force above them that dictated their lives. RE: The great Kansas experiment continues... - fredtoast - 10-04-2016 (10-02-2016, 08:51 PM)JustWinBaby Wrote: you don't see the traditional bump in spending from tax cuts because there was already so much cheap financing available. If companies want to spend money on investment then higher taxes are actually an incentive. Every dollar they re-invest is a tax deduction that reduces their taxable income. So why would a tax cut increase motivation to re-invest profits? Tax cuts just lead to larger amounts being taken out of the company as profit. RE: The great Kansas experiment continues... - Belsnickel - 10-04-2016 (10-04-2016, 01:32 PM)fredtoast Wrote: If companies want to spend money on investment then higher taxes are actually an incentive. Every dollar they re-invest is a tax deduction that reduces their taxable income. If an investment of their profits is in their retained earnings then they are still going to be taxed on that. Reinvestment in the company, if it increases the companies assets then there will still be an increase in taxable income. A lot of investments are in assets. RE: The great Kansas experiment continues... - JustWinBaby - 10-05-2016 (10-03-2016, 03:32 PM)treee Wrote: At some point there has to be a basic universal income that you can compliment by participating in the labor market (if possible). I would tend to agree with this. But anyone's guess as to when that is, though it may be much closer than we think. Big part of the issue right now is, as the global labor market transitions to being truly global, there's a lag before those workers start consuming to the point where their imports (our exports) start paying dividends. Initially (for how long is a tough guess) that money goes to food, shelter and other local needs like infrastructure, and so provides virtually no offset to that job that left here. RE: The great Kansas experiment continues... - JustWinBaby - 10-05-2016 (10-04-2016, 01:32 PM)fredtoast Wrote: If companies want to spend money on investment then higher taxes are actually an incentive. Every dollar they re-invest is a tax deduction that reduces their taxable income. No, that's fundamentally wrong. Every dollar they invest has an after-tax cost of say $0.65, so the tax "incentive" only reduces, not eliminate, the investment cost approximately 1/3. So spending $1 to save $0.35 isn't what we would call an incentive. Investments are tax advantaged, but the demand and ROI has to be there, and higher taxes raises that ROI which actually deters investments that would otherwise be made. If I make 10% ROI in a tax-free environment, but you then raise my tax rate to 50%, now I have to make a 20% ROI to get the same yield on that investment. This is why tax-free municipal bonds have a lower yield than comparable taxable bonds because it's the after tax return that matters to investors. Again, there are many factors involved here...but the empirical data is pretty conclusive that higher taxes and higher government spending is correlated with lower growth and higher unemployment. And that's not an argument for no taxes, or even that very low taxes are optimal. RE: The great Kansas experiment continues... - fredtoast - 10-05-2016 (10-05-2016, 04:59 AM)JustWinBaby Wrote: No, that's fundamentally wrong. Every dollar they invest has an after-tax cost of say $0.65, so the tax "incentive" only reduces, not eliminate, the investment cost approximately 1/3. So spending $1 to save $0.35 isn't what we would call an incentive. But you claimed that low interest rates were the reason that we did not see the increase in spending from tax cuts. If the ROI is not there for a company to make out re-investing their own profits then why would they be borrowing money to re-invest? RE: The great Kansas experiment continues... - JustWinBaby - 10-08-2016 (10-05-2016, 01:41 PM)fredtoast Wrote: But you claimed that low interest rates were the reason that we did not see the increase in spending from tax cuts. Because most companies HAVE to borrow to invest, they don't have the cash to cover it. Taxes have a lot to do with how much an investment is actually worth to you, and borrowing costs have a lot to do BOTH with how much the investment is worth AND how big of an investment you can afford (if at all). I'm not going to going into the technical details, but in corporate finance there is what is known as the "debt tax shield", such that optimal capital structures have some amount of debt. And a lot has to do with taxes, and why I might borrow to finance an investment even if I have the cash (and might not do if I can't borrow to finance). And both rates play heavily in the investment decision, so it's not always easy to determine how big of an impact a cut in rates or taxes would have. Obviously if tax rates were 100% [private] investment would essentially be zero RE: The great Kansas experiment continues... - fredtoast - 10-09-2016 (10-08-2016, 06:53 PM)JustWinBaby Wrote: Because most companies HAVE to borrow to invest, they don't have the cash to cover it. If this is true then we should still see a bump in investment when taxes are cut. If corporations wanted to invest in growing their bussiness they would use the tax savings to invest instead of taking them out as profit. even at low interest rates it is cheaper to re-invest corpoarte profits than to bowwow money. The fact is that tax cuts won't lead to more investment. It will lead to more profits for the business owners. Most big business have used the low interest rates to borrow and buy back thei own stock instead of investing in improving the company. That is why the claim that lower corporate taxes will grow the economy is false. RE: The great Kansas experiment continues... - JustWinBaby - 10-09-2016 (10-09-2016, 10:40 AM)fredtoas Wrote: The fact is that tax cuts won't lead to more investment. No, that is fundamentally and empirically wrong. Not a single economist worth a damn would agree with you. No one disputes that tax cuts grow the economy. Really, you're just completely wrong on this. The debate has always been about govt revenues (i.e. tax receipts) and that the cuts don't pay for themselves (as far as revenues). No one disputes that tax cuts are pro-growth. RE: The great Kansas experiment continues... - GMDino - 05-15-2017 https://www.theguardian.com/us-news/2017/may/15/kansas-trump-style-tax-cuts-economic-disaster?CMP=share_btn_tw Quote:Kansas is broke – but you wouldn’t guess it looking at its shining state capitol in Topeka. The imposing limestone monument, crowned by a shiny copper dome and limned with John Steuart Curry’s luminous murals, has just undergone a $325m facelift. What’s happening inside the state house is a lot less pretty, and may well foreshadow the far uglier battle looming over the future of taxation in the United States. RE: The great Kansas experiment continues... - Dill - 05-15-2017 (05-15-2017, 09:10 AM)GMDino Wrote: https://www.theguardian.com/us-news/2017/may/15/kansas-trump-style-tax-cuts-economic-disaster?CMP=share_btn_tw Very interesting: Over freshly prepared burritos at Bon Bon, made with vegetables from the cafe’s garden, Billen outlines all the reasons for working in Lawrence: good schools, great food, central location, fantastic people, relatively cheap. The tax? “I probably get $5,000 to $10,000 a year extra. That’s great, but if I take a step back, where is it coming from? I’d rather it went back into the community. When you see the impact it’s having on education, it’s scary,” he said. “They are making this state worse. For what? I think we’d all pay a little extra to make it better.” RE: The great Kansas experiment continues... - Belsnickel - 06-07-2017 Had to post quickly, so sorry for the opinionated piece. Just wanted to get this in so I didn't forget before I left work. The great Kansas experiment may be coming to an end. https://www.washingtonpost.com/posteverything/wp/2017/06/07/its-a-great-day-kansas-legislature-pulls-the-plug-on-gov-brownbacks-failed-trickle-down-experiment/?tid=sm_tw&utm_term=.2b251a00f590 RE: The great Kansas experiment continues... - GMDino - 06-07-2017 (06-07-2017, 05:54 PM)Belsnickel Wrote: Had to post quickly, so sorry for the opinionated piece. Just wanted to get this in so I didn't forget before I left work. The great Kansas experiment may be coming to an end. Just heard a bit on NPR before I had to step out of the office. Have to follow up later from home. |