sigh

The laffer curve. Lol. Do people still take that nonsense seriously?

Why the Laffer Curve Is Garbage

Not only have numerous studies and authors debunked these economic underpinnings, but the model itself is an unreliable predictor of economic outcomes.

There has never been a conclusive study that demonstrates a connection between lowered tax rates on the wealthy and GDP growth or increased tax receipts. During the 1940s and the 1970s, the top marginal tax rate was anywhere between 70 percent and 94 percent. In this same period, we experienced the largest GDP growth our country has ever seen, and we were able to invest in the future of our children, economy and environment.

After the 1980s, when the top marginal tax rate began its steady decline, we haven’t seen nearly the GDP gains that we saw during our post-World War II boom. Currently, our top marginal tax rate rests at 39.6 percent.

To understand why The Laffer Curve is garbage economics, we need to look past first order consequences. Rather, we need to try to determine the second and third level effects of the given cause.

Let’s say the top tax rate is a punishing 99 percent of income over $5 million, but all other aspects of the tax code are intact. These income earners are unlikely to take a dollar over that $5 million, but the excess money doesn’t simply evaporate – it came to them through profits the business.

There are two places where this money could go: back into the business or the hands of employees. Shareholders benefit either way, through increased capital reserve or infrastructure investment or happier, better-paid labor. That is one very important purpose of a strong progressive tax structure – it incentivizes those on the top to take less for themselves and invest in their business.

Adjusting income tax rates does not completely remediate the problem. Capital earners pay nearly half of what top income earners pay. It is these capital earners who most distort our economic and political systems. As a result of this tax schema, the share of the economic pie the wealthy command is metastasizing. We need to revisit how we tax capital, too.

Successful economy? That’s capitalism.
Failed economy? Socialism. — Xtrix

The GDP of Japan and South Korea holds the 8 % GDP of the entire world. Meanwhile Cuba only 0.12 %. You will not imagine who are the capitalists in the equation.

you’re not involved — Xtrix

It is my thread not yours. @frank can argue whatever he wants. At least he sees the amazing developments of China. Something you seem not to understand what is the cause yet.

Adjusting income tax rates does not completely remediate the problem. Capital earners pay nearly half of what top income earners pay. It is these capital earners who most distort our economic and political systems. As a result of this tax schema, the share of the economic pie the wealthy command is metastasizing. We need to revisit how we tax capital, too

Your obsessed with the capital, Jesus! You are delusional if you think we solve everything taxing the damn capital. Leave the capital earners alone!

The laffer curve. Lol. Do people still take that nonsense seriously? — Xtrix

Imagine calling “nonsense” to a scientific research which takes years to develop it.

Are you opposed to income tax? Or just capital gains taxes? Or what?

I am opposed to abusive taxation in both income and capital gains. I just want to justify that we can live formidably with less fees of taxation

I am opposed to abusive taxation in both income and capital gains. I just want to justify that we can live formidably with less fees of taxation — javi2541997

Are taxes abusively high where you are?

Are taxes abusively high where you are? — frank

Yes. They are so abusively high. Our socialist government is destroying the middle class.

Yes. They are so abusively high. Our socialist government is destroying the middle class. — javi2541997

Is this driven by Brussels?

Is this driven by Brussels? — frank

No. Brussels even recommends to Spain to try to reduce the debt with "inderect" taxes such as "Value-added tax" and not by taxing income or capital earnings.

frank

No. Brussels even recommends to Spain to try to reduce the debt with "inderect" taxes such as "Value-added tax" and not by taxing income or capital earnings. — javi2541997

A value-added tax would fall on manufacturers? Maybe Spain is afraid that would chase off jobs producers?

Why the heavy emphasis on reducing debt?

Why the heavy emphasis on reducing debt? — frank

Because the European Comission is worried about the high debt of Spain. Between 2011 and 2018 a conservative government promoted spending cuts policies, reduce taxes on incomes and collecting as much as possible from indirect taxation. This policy was welcomed by European countries as Austria and other European commissioners.
But since the new government is ruling the country they are doing exactly the opposite. They have increased many points the income taxes because the president and treasury minister think that the previous measures only benefit the richest citizens. I am not agree at all. For example: My parents paid around 28 % or 30 % of their income in taxes five or six years ago. But now the percentage increased to 43 % because it is time to be solidary with the rest of the citizens. I don't consider my family as "rich"as to pay such amount of taxes. I see it unfair.

Maybe Spain is afraid that would chase off jobs producers? — frank

No at all because those taxes are paid ofently. It is worse the capital earning tax because those entrepreneurs have to pay 23 or 25 % of their revenue in taxes each year...

But now the percentage increased to 43 % — javi2541997

It sounds like your family is pretty well off?

It sounds like your family is pretty well off? — frank

No, we are not. I promise we are a normal middle class family. I don't even understand why the fees increased that much in contrast to their income

No, we are not. I promise we are a normal middle class family. I don't even understand why the fees increased that much in contrast to their income — javi2541997

It's a bad idea to diminish the economic standing of the middle class. I'm guessing the tax was meant for the rich, but the rich were able to shove it down hill to the middle class. That's not good.

I'm guessing the tax was meant for the rich, but the rich were able to shove it down hill to the middle class. That's not good. — frank

The line between middle class and rich is vanishing. It is difficult to distinguish a real rich person from a middle class worker. For example: I do not consider "rich" a person who owns 200.000 € in the bank. It is an amount of money you can earn working hard along your life

The line between middle class and rich is vanishing. It is difficult to distinguish a real rich person from a middle class worker. — javi2541997

Spain doesn't have a wealthy elite?

Spain doesn't have a wealthy elite? — frank

Not as other countries such as Japan or USA. Yes we have an elite but these are only bourgeois persons whose rents come from king's favours or Fraco's era.

I see.

Tax hike in Japan due to defense spending. The Ukraine-Russia war is impoverishing every middle-class family in the world.

Tax hike plan for defense spending OK’d, despite lack of schedule

Kishida on Dec. 8 announced that Japan would need 1 trillion yen (ONE F*CKING TRILLION) ($7.3 billion) more in tax revenue by fiscal 2027 to fund the defense spending increase of 17 trillion yen over the five-year period from fiscal 2023 through fiscal 2027.

Although the research commission agreed that personal income, corporate and cigarette taxes would be raised, it put off until next year a decision on when those increases would kick in.

The government, in turn, could end up planning specific programs and projects to enhance the nation’s defense capabilities amid uncertainties overhow the measures will be paid for.

Under the research commission’s plan, a 1-percent tax will be tacked on to the personal income tax to pay for defense, while the special tax for reconstruction from the 2011 natural disasters will be cut from 2.1 percent to 1.1 percent.

The cigarette tax will be gradually raised for a total hike of 3 yen per cigarette.

For fiscal 2027, the government and ruling coalition are seeking to secure between 700 billion yen and 800 billion yen in corporate taxes and about 200 billion yen each in cigarette and personal income taxes.

But with no specific start for the tax hikes, it is unclear if those figures can be reached.

Japan to increase defense budget by ¥1 trillion in fiscal 2023

The ease with which a government can squeeze money from the citizen’s wealth is profound. You just tack it on and you’re 1 trillion yen richer.

Well, if this public expenditure would go to science and real state it would be acceptable. But it will be vanish in defense spending...

Zelensky's selfishness and Putin's incompetence is destroying all the savings of workers in many countries.

Defense is more acceptable than any other expenditure, and is arguably one of the few jobs of government worth paying for. Anything else would be much worse, in my opinion.

Here in Canada the government is raising taxes all the time. We’re getting a beer tax here in April, for heavens sake. Meanwhile the government sends vast sums of cash to other governments. It just sent Ukraine $115 million so the country can fix its electrical grid, while here the government services such as healthcare and policing are struggling to do their most basic tasks.

The ease with which a government can squeeze money from the citizen’s wealth is profound. You just tack it on and you’re 1 trillion yen richer. — NOS4A2

And don't forget about "mystery" inflation that just so happens to evaporate government debts at the expense of the citizen's buying power.

And spending never slows…

And spending never slows… — NOS4A2

Never will... it is frustrating to see how modern states borrow themselves far more than they can afford.

Holy fuck. 200k earning per year is really rich. That's C-level pay. Especially in Spain. How are you not considering this as rich?

It depends on life costs. Japan is a very expensive country and Tokyo has a lot of costs related to transport, real state, rents, etc... so no. 200K per year as a Japanese worker is middle class.

It is true that in Spanish perspective is different. Sadly, our sh*t ass tourism economy says that you are rich if you earn more than 65.000 € per year. We are clearly poorer than Japan. They are the 3rd economy of the world and we are 16th.
A filthy pit of tourism and restaurants.

But hey this is not about richness but efficiency: while Japanese government offers 7.500 euros to help families live outside Tokyo, here our reckless government only offers 200€ to pay a rent. Our politicians don't care about us and they waste the public spending in stupid stuff.

Simply not true: https://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=Spain&country2=Japan&city1=Madrid&city2=Tokyo&tracking=getDispatchComparison

You are grossly overestimating the cost of living in Tokyo compared to say Madrid (and Barcelona is pretty close to that). That's, as far as I know, the most expensive city in Spain.

On 65k EUR I could comfortably live in Amsterdam and support 2 kids and a wife, which is more expensive than Tokyo (and Madrid) but not stay in the best neighbourhood. Median income in the Netherlands is about 40k (pre-tax) in the Netherlands. So yes, 65k EUR is "rich" - especially if you move to the suburbs or away from the most expensive parts of the biggest cities. I think you're spending too much time on Instagram and have a skewed idea of what rich is. Rich is being able to provide comfortably for a family. It's not having a second home, a yacht and a bugatti.

The 1 million yen per child offered by the Japanese government is not to meet cost of living but a one-off incentive for families to move out of Tokyo to less populated and ageing areas. It's not comparable to rent support at all.

I think you're spending too much time on Instagram — Benkei

I don't have instagram...

Rich is being able to provide comfortably for a family. It's not having a second home, a yacht and a bugatti. — Benkei

I am agree, when did I considered rich was the ability to buy a yacht?

Again, it is not about the notion about what is being rich but efficiency with public spending. For example:

Mark Rutte was sceptic about European Funds (also called as "Next Generation") aimed at Spanish crisis. He had a lot of doubts regarding our public expenditure and ability to control the waste of money by corrupt politicians. I was completely agree with your PM. Probably in Netherlands the economy is built and controlled with more sense but here is the opposite.
So, taxing the middle class without a serious control would only make the disappearance of it.

You put a good example: "Rich is being able to
provide comfort in a family". Exactly, but here our government is not doing so. Something is going wrong when we pay a lot of taxes but the public administration is not capable of promoting houses for families or increasing the salaries of the workers for being able to raise kids...

The Netherlands is every bit as corrupt as Spain and Mark Rutte is one of the most unethical prime ministers we've ever had. His opinion on ethical issues should be disregarded on principle. I wish he'd keel over and die.

I understand from your post though that taxes aren't the issue but how the government spends its money. I think I already stated early on in this thread that the really relevant question is: what should governments do? And then in a democracy we say that's whatever people vote for. Resulting in a situation where nobody gets what they want nor believes the government does what it should and everybody complains (even the filthy rich!). The alternatives are living in authoritarian regimes, where an elite gets what they want, one way or the other but not likely either of us will be in the winning side. Long live democracy I suppose...