Laffer Curve
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Author Topic: Laffer Curve  (Read 15696 times)
Benjamin Frank
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« Reply #25 on: August 09, 2020, 12:47:28 PM »

Whether he wants to acknowledge it or not, Laffer originally had the peak at 50%, which not coincidentally was the top rate after the first Reagan tax cuts in 1981.

Funny how the ideal top rate just kept dropping to whatever top rate the Republicans were proposing at the time!

There probably is an ideal top marginal rate for generating revenue ... but it's also probably somewhere around 80+%, making the whole concept of the Laffer Curve meaningless. Laffer never made any attempt to prove otherwise, relying solely on the intuition that very high rates would discourage additional income seeking.

Which is a really, really stupid assumption that brings his overall judgment into question. If there does exist a point where having more money is somehow worse than having less money, additional taxes would have nothing to do with it.

Only if you operate on the really, really, really, stupid assumption that only money has value. The Laffer curve is based upon the sound economic principle that time has value. If you reduce the monetary reward for spending time pursuing certain activities, you reduce the demand for them because time is the one commodity that everyone has an equal income in, earning twenty-four hours each day. The Laffer Curve is real, the tricky part is trying to determine where we are on the curve. Based on real world experience, it doesn't appear that we're on the part of the curve, where reducing tax rates would stimulate a sufficient increase in economic activity that tax revenue would be increased as a result.
That only works if income is based on time. Obviously, it isn't.

So you're saying that there's no point to the eight hour workday?

Ultimately money is just an abstraction that lets people efficiently trade time (in the form of what people produce or otherwise obtain during that time). Even if you are simply investing money to earn interest or dividends, the resulting income comes from others using that money to enable them to take the time to figure out and then actually produce a good or service that others want.

The only problem with the Marxian labor theory of value is when it oversimplifies and treats all labor as being of equal value. As Adam Smith wrote:
Quote from: Wealth of Nations, Book 1, Chapter V
The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people.

George Bernard Shaw believed that all labor should be of equal value.
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True Federalist (진정한 연방 주의자)
Ernest
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« Reply #26 on: August 09, 2020, 02:51:13 PM »

Whether he wants to acknowledge it or not, Laffer originally had the peak at 50%, which not coincidentally was the top rate after the first Reagan tax cuts in 1981.

Funny how the ideal top rate just kept dropping to whatever top rate the Republicans were proposing at the time!

There probably is an ideal top marginal rate for generating revenue ... but it's also probably somewhere around 80+%, making the whole concept of the Laffer Curve meaningless. Laffer never made any attempt to prove otherwise, relying solely on the intuition that very high rates would discourage additional income seeking.

Which is a really, really stupid assumption that brings his overall judgment into question. If there does exist a point where having more money is somehow worse than having less money, additional taxes would have nothing to do with it.

Only if you operate on the really, really, really, stupid assumption that only money has value. The Laffer curve is based upon the sound economic principle that time has value. If you reduce the monetary reward for spending time pursuing certain activities, you reduce the demand for them because time is the one commodity that everyone has an equal income in, earning twenty-four hours each day. The Laffer Curve is real, the tricky part is trying to determine where we are on the curve. Based on real world experience, it doesn't appear that we're on the part of the curve, where reducing tax rates would stimulate a sufficient increase in economic activity that tax revenue would be increased as a result.
That only works if income is based on time. Obviously, it isn't.

So you're saying that there's no point to the eight hour workday?

Ultimately money is just an abstraction that lets people efficiently trade time (in the form of what people produce or otherwise obtain during that time). Even if you are simply investing money to earn interest or dividends, the resulting income comes from others using that money to enable them to take the time to figure out and then actually produce a good or service that others want.

The only problem with the Marxian labor theory of value is when it oversimplifies and treats all labor as being of equal value. As Adam Smith wrote:
Quote from: Wealth of Nations, Book 1, Chapter V
The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people.

George Bernard Shaw believed that all labor should be of equal value.


That and a nickel will get you a five-cent cigar.

If I'm hungry for an apple pie, it doesn't matter if you're the world's best maker of mud pies. Your labor in making a mud pie is of no value to me.

It's a nice utopian idea that all labor should be of equal value, but that's not the real world, and never could be.
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Benjamin Frank
Frank
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« Reply #27 on: August 09, 2020, 05:43:25 PM »

Whether he wants to acknowledge it or not, Laffer originally had the peak at 50%, which not coincidentally was the top rate after the first Reagan tax cuts in 1981.

Funny how the ideal top rate just kept dropping to whatever top rate the Republicans were proposing at the time!

There probably is an ideal top marginal rate for generating revenue ... but it's also probably somewhere around 80+%, making the whole concept of the Laffer Curve meaningless. Laffer never made any attempt to prove otherwise, relying solely on the intuition that very high rates would discourage additional income seeking.

Which is a really, really stupid assumption that brings his overall judgment into question. If there does exist a point where having more money is somehow worse than having less money, additional taxes would have nothing to do with it.

Only if you operate on the really, really, really, stupid assumption that only money has value. The Laffer curve is based upon the sound economic principle that time has value. If you reduce the monetary reward for spending time pursuing certain activities, you reduce the demand for them because time is the one commodity that everyone has an equal income in, earning twenty-four hours each day. The Laffer Curve is real, the tricky part is trying to determine where we are on the curve. Based on real world experience, it doesn't appear that we're on the part of the curve, where reducing tax rates would stimulate a sufficient increase in economic activity that tax revenue would be increased as a result.
That only works if income is based on time. Obviously, it isn't.

So you're saying that there's no point to the eight hour workday?

Ultimately money is just an abstraction that lets people efficiently trade time (in the form of what people produce or otherwise obtain during that time). Even if you are simply investing money to earn interest or dividends, the resulting income comes from others using that money to enable them to take the time to figure out and then actually produce a good or service that others want.

The only problem with the Marxian labor theory of value is when it oversimplifies and treats all labor as being of equal value. As Adam Smith wrote:
Quote from: Wealth of Nations, Book 1, Chapter V
The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people.

George Bernard Shaw believed that all labor should be of equal value.


That and a nickel will get you a five-cent cigar.

If I'm hungry for an apple pie, it doesn't matter if you're the world's best maker of mud pies. Your labor in making a mud pie is of no value to me.

It's a nice utopian idea that all labor should be of equal value, but that's not the real world, and never could be.

I didn't say it was, but he makes some good arguments in his book The Intelligent Woman's Guide to Socialism, Capitalism (and whatever else, the two editions have different titles.)

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pbrower2a
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« Reply #28 on: November 27, 2020, 10:15:48 AM »

Whether he wants to acknowledge it or not, Laffer originally had the peak at 50%, which not coincidentally was the top rate after the first Reagan tax cuts in 1981.

Funny how the ideal top rate just kept dropping to whatever top rate the Republicans were proposing at the time!

There probably is an ideal top marginal rate for generating revenue ... but it's also probably somewhere around 80+%, making the whole concept of the Laffer Curve meaningless. Laffer never made any attempt to prove otherwise, relying solely on the intuition that very high rates would discourage additional income seeking.

Could it be desirable that more people go into entrepreneurial efforts? Inheritor classes are rarely the ones to start new businesses unless those are near-hobbies or vanity projects. So you are flush with cash and start a winery, or you start a 'book publisher' that offers books praising your religious or political values. Big deal!

In view of the death of the department store, I miss the small-town clothing stores that include the JC Penney stores that got closed so that they would not 'cannibalize' the revenue of mall anchors. A small-town version could hire plenty of workers with low education and no obvious skills. In minority-majority areas such stores could better fit local needs. Clothing designed for Caucasians usually fits Asians (except southwest Asians) badly, and some styles that look good on white people are disasters on blacks. JC Penney used to be three miles away from me in a town of 10,000 people... and then forty miles away in a city of 40,000... and it is now seventy miles away in a city of population 250,000+.

3-D printing can be much more responsive to customer needs than is manufacturing for a mass market. Mass markets are likely to disappear with greater prosperity.  It has the benefit of not producing excess stuff that typically ends up being sold at a huge discount as seconds and overruns.

America has all the class privilege that it needs -- and really has an over-run. We need more capitalists and more capitalism, and not further bloat of corporate behemoths with bureaucratic narcissists paid well for treating others badly while kissing up to shareholders. The idea behind the Laffer Curve is that the key to prosperity is to ensure that those already get rich get even richer while closing off opportunities to others.     
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