From: Zhang, Yangkun (Yangkun.Zhang@FMR.COM)
Date: Wed Oct 18 2000 - 07:37:57 PDT
> wink. Anyway, I'm beginning to ramble.... What was my point? Oh yes,
> please don't play the "They won Nobel Prizes therefore they are right and
> you are stupid" card. It just points to your arrogance.
No, I'm playing the "Grlygrl201 doesn't know a damned thing about
statistics, accounting, economics, and spews forth unsubstantiated claims
while never putting forth numbers" card. It doesn't point to my arrogance so
much as my extreme irritation at trying to have an intellectual discourse
with someone who is neither logical or analytical. Ever tried explaining
evolution to a creationist? Mention scientific papers, studies, and other
evidence--you'll get the "but god says so..." argument. Same damn thing
Grlygrl201 is doing.
> supply-side economics = trickle down = fascism.
Notice how she never attacks the numbers or the charts I put forth and only
writes this kind of unsubstantiated crap? I will say this again, if anyone
has a problem with the numbers, point them out WITH OTHER STUDIES.
I simply fail to see how cutting EVERYONE's tax rate is equivalent to
fascism. Is a low tax rate fascism and therefore a confiscatory one
democratic?
I will say this: according to the Laffer Curve, there are two tax rates that
shall give the same revenue.
Note this study from the Joint Economic Committee:
"Optimal Capital Gains Tax Policy: Lessons from the 1970s, 1980s, and 1990s"
http://www.house.gov/jec/fiscal/tx-grwth/gwartney/optimal/optimal.htm
You don't even have to read the entire paper, just read the sections they've
printed in BOLD LETTERS. Here're some:
"Like our earlier calculations, regression analysis indicates that, within
the range of capital gains tax rates imposed during 1974-1994, the changes
in the capital gains tax rates were almost exactly offset by changes in the
tax base, leaving revenues unaffected."
"The implications for capital gains taxation are straightforward: If the
revenue-maximum rate is no higher than 20 percent as we estimate, the
optimal capital gains rate must be significantly lower, probably 15 percent
or less."
"Cutting the capital gains tax rate from 28 percent to 20 percent would
provide a substantial efficiency gain without any significant loss in
revenue. From an efficiency standpoint, however, even the 20 percent rate is
too high because the size of the excess burden of taxation is very high in
the range near the maximum-revenue tax rate. These findings suggest that the
optimal capital gain rate is probably 15 percent or less."
Incidentally, the revenue-maximum rate mentioned above is the reason why
supply siders such as William Roth (of the Roth IRA fame) et all pushed
through TRA97's 20% capital gains rate. WILL SOMEONE PLEASE EXPLAIN TO ME
WHAT IS FACIST ABOUT MAXIMIZING GOVERNMENTAL REVENUE WHILE CUTTING TAXES???
Am I missing something here?
And here's another paper:
"The Economic Effects of Capital Gains Taxation"
http://www.house.gov/jec/fiscal/tx-grwth/capgain/capgain.htm
"The historical evidence suggest that capital gains tax reductions tend to
increase tax revenue."
I'll highlight the important part: CAPITAL GAINS TAX REDUCTIONS TEND TO
INCREASE TAX REVENUE!!!!!!
I may very well be "mr. linear thinker" as glygrl posits, but I can most
certainly read.
Oh, incidentally, who would benefit from a tax cut? Quoting from the Joint
Committee again:
47 percent of [all investors] are women;
55 percent are under the age of 50; and
50 percent are not college graduates.
Damn, if this is fascism, please give me fascism in spades! Hey, this is
just the first few paragraphs, shall we continue?
How's this for a quote:
"summarized in Table 2, estimates that cutting the capital gains tax rate
would lower the net cost of capital, thus raising the level of business
spending by about $18 billion in 2007. Over a 10-year period, the capital
stock would rise 1.2 percent above its baseline level, increasing
productivity by roughly 0.4 percent. Real GDP could be 0.4 percent higher
than in the baseline due to the effects of increased investment."
Wow! Increasing the level of business = fascism. I must have missed
something both in my Marxist-Leninist thought indoctrinations in China as
well as my American Democracy Is the Best In the World classes here in the
US. I was taught back in China that the business and the capitalist class is
counter-revolutionary rightist thinking, and that leads to spiritual
pollution and ultimately American hegemony, but even they never claimed it
was fascist.
But here's the real kicker:
"The evidence suggests to almost all economists that a capital gains cut is
good for the economy and roughly neutral for tax collections."
Never mind the Nobel Prize winners, how about "almost all economists"? Oh,
here's another quote:
"Most economists now agree that reducing the capital gains tax rate would
encourage investment, boost productivity, raise living standards, and
stimulate economic growth."
But perhaps America simply thrives in this type of supply-side-fascism. What
about other nations? Let's take a look at "Toward Meaningful Tax Reform in
Japan"
(http://www.freetrade.org/pubs/speeches/ar-4-6-98.html) presented at the
Keidanren-Cato Institute Symposium in Tokyo.
Their analysis? The cause of a large part of the Japanese economic malaise
in the 1950s were due to "brutal income tax rates" and that "taxes designed
to punish additions to income must also punish additions to output --
economic growth." "In late 1950, following a similar policy coup in Germany,
Japan's highest individual income tax rate was slashed to 55% from 86%. From
1950 to 1974, Japan cut taxes every year (except 1960) often by greatly
increasing the income thresholds at which the higher tax rates applied, or
by enlarging deductions and exemptions. The taxable income needed to fall
into a 60% tax bracket was raised to 3 million yen by 1953, for example,
compared with only 300,000 in 1949."
To the Truth Believers in Democracy in America, such a fascist "Tax
reduction was considered 'foolhardy' precisely because it fostered rapid
economic growth. American economists were convinced that Japan would always
be plagued with what Bronfenbrenner called 'endemic Japanese balance of
payments problems.' Failing to distinguish between tax rates (which were
falling) and tax revenues (which were soaring), the U.S. critics argued on
Keynesian grounds that Japan's taxes had to be kept high to suppress
economic growth."
What was the result of such fascist activities? "growth in Japan (Figure 3)
averaged 9.6% a year from 1952 to 1973."
Okay, never mind Japan. They've obviously been corrupted. What about our
neighbor to the north? These Canadians? Take a look at "Unlocking Canadian
Capital - A Critique of the Revenue-Raising Function" by the Fraser
Institute at
http://www.fraserinstitute.ca/publications/books/capital_gains/section_06.ht
ml
I'll jump right to the conclusion:
"lower rates would improve the fiscal situation of Canadian governments.
There is also a high probability that, in the longer run, overall tax
revenues would also increase, or at least remain unchanged. This might be
true even if the capital gains tax were eliminated completely. A worst case
scenario is that in the longer run overall revenues would drop slightly, but
this drop might well be accompanied by savings in public and private costs
of dealing with the tax, so that the fiscal losses are turned into net
overall economic gains."
The Standing Senate Committee on Banking, Trade and Commerce Evidence in
Ottawa
has a meeting transcript called "Unlocking Canadian Capital" at
http://www.fraserinstitute.ca/publications/books/capital_gains/section_18.ht
ml
Here's a quick summary:
"What capital gains tax reduction does is increase savings, capital spending
and capital formation, which, in turn, helps economic growth. That, in turn,
helps increase jobs, productivity and, through the productivity increase,
the potential output of an economy ... Finally, for Canada, perhaps the most
important aspect of capital gains tax reduction lies in the enhancement of
its international competitiveness, especially vis-a-vis the United
States..."
Interestingly enough, they mention Germany:
"many Canadians think that the Americans do everything for the rich, but
when that socialist paradise in Germany lowers capital gains it will make a
lot of people think about what is happening in the world."
Damn, such supply-side fascism now exists in Germany as well. Well, the
Germans were always fascists to begin with, weren't they?
Our socialist neighbors in the north finally posits: "Language means a lot.
Perhaps we could find another expression for 'trickle down.' 'Vertically
stimulative' might be more helpful."
Hey, want more quotes? From non-Nobel Prize winners?
The tax on capital gains directly affects investment decisions, the mobility
and flow of risk capital... the ease or difficulty experienced by new
ventures in obtaining capital, and therefore the strength and potential for
growth in the economy.
- President John F. Kennedy, Special Message to the Congress on Tax
Reduction and Reform, January 24, 1963
I had no idea president Kennedy was such a fascist as well!
How about:
The point I made at the Budget Committee was that if the capital gains tax
were eliminated, that we would presumably, over time, see increased economic
growth which would raise revenues for the personal and corporate taxes as
well as the other taxes we have. The crucial issue about the capital gains
tax is not its revenue-raising capacity. I think it is a very poor tax for
that purpose. Indeed, its major impact is to impede entrepreneurial activity
and capital formation. While all taxes impede economic growth to one extent
or another, the capital gains tax is at the far end of the scale. I argued
that the appropriate capital gains tax rate was zero.
- Federal Reserve Chairman Alan Greenspan in testimony before the Senate
Banking Committee on February 25, 1997
This type of "vertically stimulative" fascism I can definitely live with!
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