Saturday, August 07, 2010

Just a little question on taxes...

In the great debate on whether or not lower income tax rates create increased tax revenue, the answer to one question seems to be missing.  To wit: where do US tax rates fall on the Laffer curve?  The GOP believes any tax cut increases revenue, and the Democrats believe tax rate increases (on the "rich", of course) can raise enough revenue to fix our fiscal problems.  How the hell do they know?  They don't know where we are on the curve!

Let's assume for the sake of argument the idea behind the Laffer curve is correct.  If, like the GOP, one is using it as a justification for cutting taxes they ought to be able to prove tax cuts to be the correct course instead of just asserting it.  In other words, they should be able to make a case that our tax burden is such that we are on the part of the curve where tax cuts generate enough increased activity to generate more tax revenue than a higher rate.   But I haven't seen any conservatives attempt to make a quantitative case that this is true. 

(Note to conservatives - if capital represents the money used to create/expand business (and jobs), explain why capital gains taxes are too high at 10 (or 15) percent.  If a dollar that comes into my pocket from the sale of the business is used to buy stuff and pay bills just like my wages, why shouldn't the capital gains from the sale be taxed as regular income unless the money is invested?  After all, I pay higher rates on my paycheck than Warren Buffet does on his billions.  Why should capital be taxed less than labor?)

Now the Democrats are even worse, because they don't seem to have any sort of argument for raising taxes except a need for funds for programs they favor and the idea the rich are too wealthy and shouldn't have all that money.   There isn't even enough there to properly criticize.... .