Obama gets one right (for the wrong reasons),,,

[Gustaf]

Gustaf,

I noticed you once again engaged in evasion.

Is your support for tax increases (on the United States) because you believe they increase (or do not impact) employment levels, or because you want unemployment levels in the United States to increase due to increased taxes?

Or, are you totally indifferent to the impact of increased taxes on the unemployment rate?

Firstly, Sweden has a lower unemployment rate than the US, despite taxes that are at least 50% higher. Thus, the correlation between taxation rates and unemployment is not as clear-cut as you seem to think. Whether taxes hurt employment or not depends largely on what is taxed and, more importantly, how the money is spent. That is why Sweden has higher employment than most continental European countries despite higher taxes - our tax money tends to be better spent.

If you like I can provide you with of academic papers on these issues.

Of course, you might have meant overall employment and there it is more true that there is a negative correlation with taxes.

And my main point is that I think American society in reality wants (and should have) a levl of spending above the current tax rates (but below the current overall spending level). While that might have some negative impacts on parts of the economy I believe the social benefits in terms of utility increases for the poorest to outweigh those costs.

[CARLHAYDEN]

First, thank you for partially answering my question, when you noted there is a negative correlation between "overall employment" and taxes.

Second, from the rest of your response, I must infer that you don't care how high the unemployment rate/level becomes so long as tax rates are increased to support big government.

So, ultimately it is the level/amount of government that determines the means of reducing the deficit and debt.  You want big government (with higher/more taxes) and I want smaller government.

You support for more taxes/higher taxes is therefor (ergo) the result of you wanting a higher amount of government, rather than the impossibility of containing/reducing expenditures to live within revenue means.

[Gustaf]

First, thank you for partially answering my question, when you noted there is a negative correlation between "overall employment" and taxes.

Second, from the rest of your response, I must infer that you don't care how high the unemployment rate/level becomes so long as tax rates are increased to support big government.

So, ultimately it is the level/amount of government that determines the means of reducing the deficit and debt.  You want big government (with higher/more taxes) and I want smaller government.

You support for more taxes/higher taxes is therefor (ergo) the result of you wanting a higher amount of government, rather than the impossibility of containing/reducing expenditures to live within revenue means.

I don't think that the tax increases we're talking about here would have a very negative effect on unemployment (nor on overall employment). It is perfectly possible to retain American levels of employment even with somewhat higher taxes than currently, since it is not the only factor involved.

But, again, I never said that it was principally or mathematically impossible to eliminate the deficit without raising taxes. Simply that I don't think it's realistic. That is why I have asked you to specify more clearly how you would eliminate the deficit via spending cuts. I suspect that once you get into that it will become clear that it's unlikely to be appealing to most of the electorate.

Furthermore, you also have the issue of demographic change which will lead to higher demands on both medicare and social security in the future.

[The Vorlon]

To Carl & Gustaf:

Firstly, corporations do not "pay" taxes, corporations "collect" taxes...

By definition, a corporation must pass on it's expenses to the customers who purchase it's products and services, or it ceases to exists.. passing on tax increases to the customer is thus a matter of existential inevitability...

Canada has some of the highest taxes on Banks in the world, and, as surely as night follows day, the spread between what the banks pay on deposits and what they charge on loans in Canada is also higher than other countries by an amount that almost exactly equals the additional taxes paid by the Banks.....

Secondly, many major corporations are transnational, they have so much trade between so many parts of the world that they can, using fairly basic accounting methods, realize for taxation purposes corporate income in just about any nation they choose to realize it in.. (ie the one with the lower tax rate) - That is why the effective tax rate on corporation is so vital.. if it is too high you don't get more tax revenue, the income just moves to a lower tax jurisdiction...  How much of the "growth" in the Texas and Nevada economies is real, and how much is just companies getting the F#&k out of California to use a inter-US example....?

GE paying zero taxes is just one example of this globally.....

Sweden is an interesting example because, oddly enough because they are so "socialist" many ideas we consider to be "conservative" get a fair and open hearing.

In the United States anybody who tries to "slash medicare" (when in fact they may simply be proposing some sane and rational savings that everybody should support) runs into an ideological brick wall that mitigates against common sense reform, in Sweden by contrast, since all parties have accepted the underlying concepts of their medical insurance system, these ideas tend to get a fair(er) hearing.....

The other interesting thing is that because lower income swedes actually pay a fairly high percentage of their income in taxes, they have a vested interest in prudent, frugal, and cost effective government.

By contrast, in the United states, despite all the moaning and groaning about how the rich too small a percentage of the total taxes, the objective reality is quite different.  The top 1% pay 39% of all income taxes, The top 25% pay 86% of all taxes, the top  50% of the population pays 97% of all federal income tax.. the bottom 50% just 3%.. in fact the bottom 35% of the population receive more in tax credits than they pay in taxes....  (ie the government writes them a check, not the other way around)

I am not saying this is totally "wrong" - the wealthy have more to tax, so they pay more taxes, but the net effect of this is that the vast majority of Americans have no interest in EFFICIENT government, but rather only in MORE government.... while even the poorest Swede when faced with a 30% maginal rate will tend to question the need for more taxes and/or if programs can be delivered more efficiently....

If you pay no taxes, you are (from a purely selfish perspective) in favor of more government, no matter how inefficient of poorly run, because some of that pork just might land in your lap...    
Logically speaking, a program to load up a 747 with $100 bills and randomly scatter them over the countryside would be supported (from a purely self interested perspective) by the majority of Americans...... if the $100 bills are "free" (ie you pay no taxes) and one of them just might happen to land in your lap.... well of course you want more government.....

I point out the Japan at 33.5% has the highest effective corporate rate in the world, and has also been in a deep 20 year long recession.......  Coincidence? - I think not.....

[Gustaf]

You make fair points.

I'd point out that how much of a corporate tax gets passed on to consumers depend on how the market looks. Theoretically, it could be all of it or none of it and in reality often something in between. With banks it tend to be pretty much all of it, for some reason.

It is hard to maintain a higher corporate tax than comparable countries, true.

And I'm basically in agreement with your analysis on taxes and its relation to effective government. It can be viewed as a double casuality - you can't run a society with taxes as high as Sweden's if those taxes aren't put to at least somewhat reasonably good use. And, of course, if people see tax money getting reasonably spent they will be more ready to accept higher levels.

Health care is an interesting topic. The Social Democrats started slashing it quietly as costs got out of control and the centre-right government did it more openly. It has now become sufficiently controversial that we will probably see some loosening again, but the basic problem of costs running amok seems to be under control by now.

[The Vorlon]

I'd point out that how much of a corporate tax gets passed on to consumers depend on how the market looks. Theoretically, it could be all of it or none of it and in reality often something in between. With banks it tend to be pretty much all of it, for some reason.

The sane and reasonable thing to do with corporate taxes is...... to eliminate them, but tax the "profits" when they leave the company in the form of dividends or capital gains

A company exists for one purpose only...... to provide a rate of return for it's owners....  Every dollar of profit will eventually leave the company (or be invested in the hold of greater profit) because that is the reason corporations exist.. so as to return a rate if return to their owners....

If corporations paid zero taxes, they would have more capital to expand, would grow at a higher rate, and there would be no incentive to move money from one country to another to avoid taxes... no economic activity be undertaken based upon tax considerations.. the sole criteria would be market forces and common sense.

Any profits the company accumulates would be taxed when the money left the company in the form of dividends. (and virtually all the tax paid on these dividends would be paid by the more affluent in the country, as they own more stock... and because they had on average higher incomes) the marginal tax rate on corporate income (one step removed) would thus also be higher...

In the event the corporation decided to retain all it's earnings and not pay dividends,  the price of individual shares would rise as assets accumulated within the company (thus triggering capital gains tax) when the stocks were sold....

......

Of course the notion of elimination corporate taxes is a political absurdity... and thus will never happen......

[True Federalist (진정한 연방 주의자)]

The sane and reasonable thing to do with corporate taxes is...... to eliminate them, but tax the "profits" when they leave the company in the form of dividends or capital gains

Actually that is the insane thing to do, unless you think driving capital and talent outside of your country is sane.

What you advocate would make the shell games played now by companies to move taxable income from one jurisdiction to another even worse as well as encourage high investment income people to change where they pay their taxes to places with lower dividend or capital gains tax rates.

Taxes need to be mainly or even entirely based on sales of goods and services, wages, and physical property precisely because such taxes generally cannot be avoided by shifting net income from one jurisdiction to another via accounting gimmicks.