Do lower taxes = faster growth?

[WATU2]

Evidently not in Kansas... http://tinyurl.com/pso8c7y

 

[TUMe]

Let's look at history. Go all the way back to 1932 and work forward. Ignore the legend and look at the facts. FDR raised taxes and government spending. 1938 unemployment was higher than in 1932. Most countries had recovered better than the US which was back up to near 20%. World War II they raised taxes to 100% for people making over $25,000 [equivalent to about $350k today.] It's not hard to have a booming economy and low employment during a huge war.

War got over. Truman cut top tax bracket. Truman was a Democrat. Post war slump was lessened. Flash ahead to JFK another Democrat. He wanted to cut taxes. Although he died in November, the tax cut on the top rate a few months later led to one of the great booms periods in our history.

Let's do this again. James Earl Carter was president. The unemployment and interest rates were horrid. Ronald Reagan came in and cut top taxes. There were ups and downs but by the time Reagan left office both unemployment and interest rates were far lower than when he came in.

But why look at decades of American history when you can look at a few years in Kansas.

 

[2PoorTUFans]

Let's look at history. Go all the way back to 1932 and work forward. Ignore the legend and look at the facts. FDR raised taxes and government spending. 1938 unemployment was higher than in 1932. Most countries had recovered better than the US which was back up to near 20%. World War II they raised taxes to 100% for people making over $25,000 [equivalent to about $350k today.] It's not hard to have a booming economy and low employment during a huge war.

War got over. Truman cut top tax bracket. Truman was a Democrat. Post war slump was lessened. Flash ahead to JFK another Democrat. He wanted to cut taxes. Although he died in November, the tax cut on the top rate a few months later led to one of the great booms periods in our history.

Let's do this again. James Earl Carter was president. The unemployment and interest rates were horrid. Ronald Reagan came in and cut top taxes. There were ups and downs but by the time Reagan left office both unemployment and interest rates were far lower than when he came in.

But why look at decades of American history when you can look at a few years in Kansas.

Oh yes. those tremendous tax cuts JFK wanted where the top marginal tax bracket had its rate cut all the way to 62%. If only we could learn the lessons of JFK, and tax our wealthiest citizens at a rate like that, we would really have something.

These two situations aren't remotely comparable. Kansas and Wisconsin can't even hope to pay their bills. Essential services are being neglected, education systems are in shambles, and there's no chance the situation gets better until the powers that be take a good hard look in the mirror and realize they've been sold a lie. There comes a point where further tax cuts aren't a stimulus for anything, and are just ill-advised drops in revenue pushed for by anti-tax fanatics who don't understand basic math and millionaires.

 

[rabidTU]

I think the point is that cutting taxes in general equates to growth since higher taxes are a drag on it - to different degrees of course. Again, that was the point I assume. Its a general economic rule devoid of specifics .

 

[TUMe]

Oh yes. those tremendous tax cuts JFK wanted where the top marginal tax bracket had its rate cut all the way to 62%. If only we could learn the lessons of JFK, and tax our wealthiest citizens at a rate like that, we would really have something.

.

Let's go over what I said again. From about 1946 the top rate went from

100%->90%->70%->62%. And two of the three presidents were Democrats. During the late 1940s-1960s there was the greatest growth in American history. Reagan cut taxes and got us out of what even Democrats don't like to talk about during the Carter years. Carter was the John Phillips, btw, of presidents. A fine person who was in over his head.

 

[2PoorTUFans]

Let's go over what I said again. From about 1946 the top rate went from

100%->90%->70%->62%. And two of the three presidents were Democrats. During the late 1940s-1960s there was the greatest growth in American history. Reagan cut taxes and got us out of what even Democrats don't like to talk about during the Carter years. Carter was the John Phillips, btw, of presidents. A fine person who was in over his head.

Right. My entire point is that cutting rates from 100% to 62% is a whole different animal from the types of rate cuts we see now. Those types of cuts honestly probably were pro-growth, but at this point allowing our lightly-taxed landed gentry to keep another few thousand each year at the expense of poorly funded government programs can't possibly be pro-growth, and you need only look at the current difference between Wisconsin and Minnesota to see that.

This is just another symptom of the sickness of income inequality in this country. Those new thousands that the rich get to keep don't get recirculated back into the system the way they would be if they were distributed to a working class person who is behind on their bills and car maintenance. That rich guy is going to sit his new financial windfall in the bank and let it nurture and grow in isolation. We had the greatest growth in American history in the middle of this century because that money kept getting recirculated as a result of the thriving middle class. We now have a sickly middle class that is struggling to get by and more and more money sits in the investment accounts of plutocrats. And Jeb Bush claiming that he and his buddies getting to keep more money will grant the poor "the right to rise" is an insult to not only the working man, but also the thinking man.

 

[TUMe]

2Poor, I understand what you are saying...although money in the bank isn't growing much now. A one percent CD! But some of those rich people take that money and go back and make jobs. If I had millions of dollars, I would do just what you said. Rat hole it and be happy. But some people are so damn greedy that they want more. They open a new shop, firm, factory or invent something or finance some guy that did.

 

[2PoorTUFans]

You know who used to be able to open those shops and firms? Middle class folk.

 

[TUMe]

And they did it to get rich...at least in part. Half of new businesses go broke. It's a risk. People take risks for rewards. Stop the rewards or most of them there is less temptation to take that risk.

 

[2PoorTUFans]

You are out of your mind if you think the the prospect of paying the top tax rate is in any way a disincentive towards becoming rich. I will give you American money if you can find one person who honestly and truly didn't try to get rich solely because of the existence of marginal tax brackets. I mean, that theory is completely divorced from how people actually act.

 

[aTUfan]

lets see ,

give everyone a 10% tax cut. now taxpayers have more money to spend on items they wish.
don't cut taxes. The government just redistributes that same money to deadbeats that just drain the system

 

[2PoorTUFans]

lets see ,

give everyone a 10% tax cut. now taxpayers have more money to spend on items they wish.
don't cut taxes. The government just redistributes that same money to deadbeats that just drain the system

It must be nice to have a worldview as hilariously simplistic as yours. I know I would sleep better if the world was as uncomplicated as you seem to think it is. A world where all poor people are poor because they are lazy and stupid, all rich people are rich because they earned it, where all Muslims are evil, all Republicans are paragons of virtue, free enterprise, and personal liberty, and all Democrats are anti-American freeloaders, would be very easy to live in indeed.

Unfortunately, the rest of us adults know things aren't that simple. I mean, if your worldview was correct, you would sleep in a bus station every night, and would only post on this board during the library's hours of operation.

 

[Gmoney4WW]

2Poor, I understand what you are saying...although money in the bank isn't growing much now. A one percent CD! But some of those rich people take that money and go back and make jobs. If I had millions of dollars, I would do just what you said. Rat hole it and be happy. But some people are so damn greedy that they want more. They open a new shop, firm, factory or invent something or finance some guy that did.

Except that a larger portion of the wealthy simply invest money that doesn't open a new shop, firm, or factory today. They invest in things that bet on future values in the market, but do nothing to stimulate the economy. There are way more investments today that simply push numbers around. It has gotten steadily worse on this issue since the early 80's. The concept is a nice one that is still true, but less so every decade that passes, since the 80's.

 

[TUMe]

Except that a larger portion of the wealthy simply invest money that doesn't open a new shop, firm, or factory today. They invest in things that bet on future values in the market, but do nothing to stimulate the economy. There are way more investments today that simply push numbers around. It has gotten steadily worse on this issue since the early 80's. The concept is a nice one that is still true, but less so every decade that passes, since the 80's.

Sadly, that is true. "Bet" is a key word. It simply becomes legalized gambling. You can do things today that you couldn't do before the speed of computers.

 

[WATU2]

Bush thinks taxes cuts are magic elixir. It is for his own 1040..according to Fox. Even Fox calls BS.

http://usuncut.com/politics/watch-f...an-reagan-contributed-greatly-to-the-deficit/

As the article points out payroll taxes have replaced corporate taxes as a source of government revenue. Hedge fund managers do not pay payroll taxes on most of their income as it is taxed as capital gains. These could help explain why 95% of the growth in income since 2009 has gone to the top 1%.

 

[TUMe]

Just my opinion, but I don't think we need a tax cut like Bush is proposing. I also don't think we need a tax increase to take money from one group to give to another. If there are any tax increases the revenue should be used to balance the budget. I know that is a shocking idea.

 

[Gmoney4WW]

I've recently have dipped my wick into the crossfire section of the sports board. The reason why, if u haven't already figured that out, is because an issue in politics really has me worried, more so than usual. And I'm pretty certain u know that reason.(Trump) It's an issue that I think I have more control over, than the other issue out there that has me overly worried.

Side Note(The security issues of the world ratcheting up, with all the strife and conflict from today's evil actor government entities,(Iran, Russia, China, Lamar, etc.) and all the unrest over terrorism and the middle east, has me greatly concerned too. But it is something I don't feel I can have much control over, as an individual actor. Too many working parts that individuals cannot have any greater influence over...)

Yes I know I am probably kidding myself thinking an individual can have influence over the Trump issue, but I'm not willing yet, to cure myself of that delusion. It is for this reason I am once again going to temporarily sway this post topic over towards Trump. Sorry for my long drawn out diatribe/explanation/apology of why I continually sway the topic towards Trump.(For some unexplainable reason I feel like TUBla at this moment. Wink, wink, nudge, nudge, know what I mean?)

So anyway, here goes... I have a question that I do not know the answer to, but THINK I have an idea about. I welcome, and ask u, to contradict and/or confirm my thoughts with the answer to this question: How many hedge fund managers approximately are there across the US?

Will continue this after you guys throw your 2 cents into the ring.

 

[2PoorTUFans]

So anyway, here goes... I have a question that I do not know the answer to, but THINK I have an idea about. I welcome, and ask u, to contradict and/or confirm my thoughts with the answer to this question: How many hedge fund managers approximately are there across the US?

Will continue this after you guys throw your 2 cents into the ring.

CNBC gives a number of about 11,000 individual hedge funds. So let's shoot for somewhere around 11,000.

 

[Gmoney4WW]

There is usually just one manager of a hedge fund? I saw that stat too, I just didn't know if it was usually one man at the helm.

 

[TUMe]

My guess would be that when people talk of hedge fund managers they mean the chief executive. I'm sure the larger ones have sector managers who specialize in certain industries and forms of securities.

 

[Gmoney4WW]

Thanks, that was the clarification I was wanting. I've seen that the average salary of a hedge fund manager is 2.4 million. So that would make the total salary of hedge fund managers approximately $2.4 trillion?

 

[Gmoney4WW]

Here's the nuts and bolts question that I reallly wanted to know, out of that $2.4 trillion, how many of those managers pay US taxes on their income? How much of that 2.4 trillion is taxable by the US government? I am trying to figure out how much taxable income the 'burden' would be shifted to, 'if' Trump became president. The only place he is implying would carry the burden of all of his tax cuts would be US hedge fund managers. It doesn't really matter who it would be shifted to, or how much income those people have. Mainly due to the fact that they would find ways to change which government could tax their income, if the US tax level becomes significantly higher for them. But I would at least like to have this knowledge, for any discussion I get in with somebody who is a Trump supporter.

 

[Gmoney4WW]

I really do love, that he is going back to the argument that I'm going to make those hammers, washers, toilet seats cheaper than whatever ridiculous price we pay now. Politicians have been promising that since Reagan, and nobody has come through with that promise yet....

 

[TUMe]

I believe that would be 26 Billion, not trillion

 

[2PoorTUFans]

Here's the nuts and bolts question that I reallly wanted to know, out of that $2.4 trillion, how many of those managers pay US taxes on their income? How much of that 2.4 trillion is taxable by the US government? I am trying to figure out how much taxable income the 'burden' would be shifted to, 'if' Trump became president. The only place he is implying would carry the burden of all of his tax cuts would be US hedge fund managers. It doesn't really matter who it would be shifted to, or how much income those people have. Mainly due to the fact that they would find ways to change which government could tax their income, if the US tax level becomes significantly higher for them. But I would at least like to have this knowledge, for any discussion I get in with somebody who is a Trump supporter.

My knowledge of the finer points of taxation is rudimentary, but my understanding is that through some loophole hedge fund managers get to claim virtually their entire income at the capital gains tax rate of 20%, instead of the normal marginal tax rates, of which 39% is currently the top rate. So just as an extremely rough estimate, the 19% difference between the two tax rates on 11,000 hedge fund managers comes to about $5 billion.

 

[Gmoney4WW]

Yeah your right, I had my decimal point off. A hell of a lot smaller number to start with. The value of all the funds is around that many trillion, but not the salaries of the managers. I still have the same question related to that corrected figure though, and that is if it is for US hedge fund managers, that they must be subject to US employee taxation rules, or if there is some portion of those managers who are not being taxed by the US govt., but by foreign governments. Are those US hedge funds regulated to have to pay their manager in US taxable dollars, or can the manager find loopholes around being taxed by US, and be taxed by another government. I think the answer is no there are no loopholes around that, but I just want to clarify it.

 

[Gmoney4WW]

My knowledge of the finer points of taxation is rudimentary, but my understanding is that through some loophole hedge fund managers get to claim virtually their entire income at the capital gains tax rate of 20%, instead of the normal marginal tax rates, of which 39% is currently the top rate. So just as an extremely rough estimate, the 19% difference between the two tax rates on 11,000 hedge fund managers comes to about $5 billion.

Was typing my former post when u posted above post. Yeah that was the numbers I was going to put in, I was just wanting to ensure the base #(26 billion) was correct before I put in the percentages. Anyway if that figure is correct on their base income, that 5 billion is a drop in the bucket as far as the approximately 900 billion in income tax we pull in a year. Where the hell is he going to get it, just a pie in the sky attitude, that he thinks he can slide by the 'ignorant' base of the Republican party. I hope he's wrong on being able to get away with that. .And this zero taxation on those that earn $25,000 or less, sounds nice to the public low wage earners, but that is an empty promise. I just hope the people that are believing him and hanging on every one of his hocus pocus words, will wake up, or get woken up by somebody. At this point the media is failing miserably, the public masses that are buying what he says, are ignoring the media completely. It's wonderful when nothing anybody says, regardless of whether it is backed up by facts or not, can have any kind of effect on his base of voters. The media and his competitors are flailing madly, and are all incredulous that nothing has any effect on the Teflon Don.

 

[2PoorTUFans]

Was typing my former post when u posted above post. Yeah that was the numbers I was going to put in, I was just wanting to ensure the base #(26 billion) was correct before I put in the percentages. Anyway if that figure is correct on their base income, that 5 billion is a drop in the bucket as far as the approximately 900 billion in income tax we pull in a year. Where the hell is he going to get it, just a pie in the sky attitude, that he thinks he can slide by the 'ignorant' base of the Republican party. I hope he's wrong on being able to get away with that. .And this zero taxation on those that earn $25,000 or less, sounds nice to the public low wage earners, but that is an empty promise. I just hope the people that are believing him and hanging on every one of his hocus pocus words, will wake up, or get woken up by somebody. At this point the media is failing miserably, the public masses that are buying what he says, are ignoring the media completely. It's wonderful when nothing anybody says, regardless of whether it is backed up by facts or not, can have any kind of effect on his base of voters. The media and his competitors are flailing madly, and are all incredulous that nothing has any effect on the Teflon Don.

Well, I think you will find as you dive deeper into the Trump phenomenon that the people who support him could give a about any policy proposals. They like him because of his brash, in-your-face rhetoric and thinly veiled racism. His policies not making any sense isn't going to change how they view him.

 

[WATU2]

My understanding is Trump makes a show of getting rid of Hedge fund managers' carried interest loop hole (a scandalous loop hole that limits their top rate to capital gains rates and gives them control of when to recognize their income.) but then Trump proposed to reduce the top rate for all the wealthy to 25%. That alone will run up the deficit.....,,unless you live over the rainbow in Kansas

 

[Gmoney4WW]

Well, I think you will find as you dive deeper into the Trump phenomenon that the people who support him could give a about any policy proposals. They like him because of his brash, in-your-face rhetoric and thinly veiled racism. His policies not making any sense isn't going to change how they view him.

That's what I was tryin ta say, just din't put it quite so eleguntly in so fews words.

 

[WATU2]

That was the thrust of the New York magazine article: that Trump is not afraid to say in short, clear words what core Republicans want to hear: racism, xenophobia, Washington gridlock, etc. He's not a policy maker or a manager, but a cheerleader for Republican voters' anger.

Trump is doing what he does best: selling a deal or a project. You are buying into the Trump brand. By voting for him, he's going to do for you what he has done for himself. You'll be cut in on the fat hog he's going to slice up.

If my dad were still around, his word would for Trump would be "high binder".

 

[TUMe]

I assume the "you" in WATU's post is a rhetorical one. I don't think that many on this board will vote for Trump or want him to be the nominee. But I will have to call WA on "highbinder" which is an anti-Chinese remark that is out of place in the modern pluralistic world.

http://amst312.umwblogs.org/2009/01/29/the-highbinders/

 

[2PoorTUFans]

Anyone wanna try defending Oklahoma's .25% rate cut to the top bracket in the face of this billion dollar shortfall everyone knew we had coming? This had better be some jaw dropping growth.

 

[rabidTU]

I don't think that many on this board will vote for Trump or want him to be the nominee.

http://amst312.umwblogs.org/2009/01/29/the-highbinders/

Bingo! I'd actually ponder voting for that dishonest liar, Hillary, before Trump. If the two front runners become the nominees, I'll probably just stay home in disgust. The problem i have with either of them is a lack of integrity, honesty and their aloofness from the common folks who pay for the crappy govt we have today. I want a person who has actually worked hard and done a bit of physical labor to get where they are. But from all I gather, neither of them even drive their own car or could if they needed to. I bet Trump has never even mowed a lawn or could even start that mower. Could you see Hillary doing the dishes or sweeping the floor? That should tell us something right there. Its called "disconnect".
IMO

 

[WATU2]

Way way back when I was grad school in a class devoted to making international direct investments, tax rates were only a single item among many an investor had to consider. Stability and market size were initial screens. Those took into account political stability and distribution of income, because too much concentration of wealth was an indication of instability and a lack of purchasing power at the bottom. Infrastructure (transportation, communication) education, work force skills, commercial skills, functioning legal system, lack of currency controls, and other elements were also important. Sure, low taxes are a positive, but the idea that cutting taxes automatically results in growth or increased investment is so naieve that it is hard to believe that someone can be elected to an elite office spouting that nonsense. Will Rogers had it right.

The US has stability going for it, but it's educational system and infrastructure are decaying along with purchasing power at the bottom. We are still a haven for investors (because the rest the world is less stable?) but compared to where we were decades ago, we are letting too many things slide.

Anyone wanna try defending Oklahoma's .25% rate cut to the top bracket in the face of this billion dollar shortfall everyone knew we had coming? This had better be some jaw dropping growth.

 

[TUMe]

Way way back when I was grad school in a class devoted to making international direct investments, tax rates were only a single item among many an investor had to consider.

Your post makes sense about international investments. But most small business investments in this country are from domestic sources. An American taxpayer seeking to start a business gives little thought to starting it overseas.

 

[WATU2]

There is usually just one manager of a hedge fund? I saw that stat too, I just didn't know if it was usually one man at the helm.

Most hedge funds are run by teams led by a "name" manager who was principally responsible for raising the fund. For example Ray Dalio's Bridgewater Associates. The whole team does well but the founder/lead manager does the best. Investors usually pay an annual management fee of around 2% plus @20% of any gains. The minimum investment is well into the millions if not tens of millions. For example, Bridgewater has about $160B under management, so the 2% annual fee alone is not a bad deal (.02 X $160B= $3.2B) plus the 20% can add up to real money. Unlike wage earners, these guys pay no payroll taxes on the 20% portion, receive capital gains treatment, and have the ability to time when to take the gains. Some funds use offshore structures for international direct investments to further reduce capital gains taxes.

The pernicious side of this tax system, beyond the lack of fairness and loss of tax revenue, is that it creates a class of super wealthy people who with the help of Citizens United have become extraordinarily influential in our money-driven electoral process. These guys can and are increasingly willing to out spend the national political parties. Just look at the sweet deal they want to protect. Candidates are so dependent on this group's contributions that only Trump has been willing to mention hedge fund managers in public, and only in the context of lowering taxes for an even larger group of the very wealthy.

If money is speech (SCOTUS), these guys drown out everyone else.

 

[Gmoney4WW]

Thanks for the run down, much appreciated. I was mainly wanting to get the figures right on how much this tax increase Trump was offering on this sector, would amount to. My only beef was that Trump acted as if the only place he was going to increase taxes was here, and implied this would make things all better. His skyrocketing economy is a joke, and this is an empty promise. All the congressmen, no matter how corrupt they might be, will not allow this 'plan'. It won't be because of their money loyalties, but because it would send the economy down the tubes. Trump knows this, but still promises it, in hopes of gaining a nomination from a bunch of ignorant people. But yes the hedge fund industry obviously does need tax reform and increased regulation.

I like that Bill Clinton is speaking out now, seeing as how he has some pull with both republicans & democrats. Would be rather ironic if him speaking out is the beginning of what would save the republicans from this runaway pompous near nominee, for president.
.

 

[TUBballJunkie]

Anyone wanna try defending Oklahoma's .25% rate cut to the top bracket in the face of this billion dollar shortfall everyone knew we had coming? This had better be some jaw dropping growth.

I thought there were thresholds for revenue/budget before this could even kick in?

That cut was just dumb.

 

[2PoorTUFans]

I thought there were thresholds for revenue/budget before this could even kick in?

That cut was just dumb.

It's a rate cut that affects only our richest citizens. It would be shocking if such an ill advised and nonsensical move had any sort of conditions for implementation. Good governance isn't what Oklahoma state government is about.