US Bishops: Save SNAP

[ishii]

Yes, because when we don’t cut taxes we also get economic growth, more jobs and more revenue. So it appears that in our economy over the past hundred years, economic growth, more jobs and more tax revenue happen the overwhelming majority of the time.

However, in the four cases cited, the economy was in the doldrums or recession - and cutting taxes turned things around. I wonder if we can establish a cause effect relationship between lowering taxes and increased economic growth.

Tom is for the most part a good economist, but we have to remember, he is not a tax expert. He could not get his claim that lower tax rates caused increased tax revenues published in the Journal of Political Economy, because the evidence that he presents does not establish cause and effect. And the JPE is published by the University of Chicago, if you could prove that lower tax rates cause higher revenue they would love to publish such a paper because it would fit their bias.

I wonder why you feel the need to disrespect Thomas Sowell by calling him “Tom”. He is a respected scholar. Perhaps you could tell us how you are qualified to judge Thomas Sowell as an economist? And offer a citation to back up your contention on the reason why he couldn’t get his article published?

Reading Tom’s books is a good start, but to really understand economics you also have to read more broadly as well. I would suggest starting with Greg Mankiw’s books.

I do have to give Greg Mankiw credit for angering some of his students who were involved in the occupy wall street crowd. But there are different schools of economics and an economists for every viewpoint.

 

[stinkcat_14]

However, in the four cases cited, the economy was in the doldrums or recession - and cutting taxes turned things around. I wonder if we can establish a cause effect relationship between lowering taxes and increased economic growth.

You may be able to get a correlation, but then again correlation does not imply causation. There are a couple of problems here, first is that the economy grows even when taxes are raised.

I wonder why you feel the need to disrespect Thomas Sowell by calling him “Tom”.

Its part of the culture of the profession, especially among the academics in the profession, we never use title to address each other, but always refer to each other by their first names.

He is a respected scholar. Perhaps you could tell us how you are qualified to judge Thomas Sowell as an economist?

A Ph.D in economics with over 20 years experience.

And offer a citation to back up your contention on the reason why he couldn’t get his article published?

You have never seen the JPE have you? I read his essay and he does not establish cause and effect, because he doesn’t address the other issues that cause tax rates to go up. The essay is not rigorous enough to be published in the JPE.

I do have to give Greg Mankiw credit for angering some of his students who were involved in the occupy wall street crowd. But there are different schools of economics and an economists for every viewpoint.

So why is Tom right and Greg wrong?

 

[Ridgerunner]

A Ph.D in economics with over 20 years experience.

A PhD in economics is certainly worthy of respect, and a certain degree of deference. I mean that sincerely.

I only have a “PhD” in making money when it’s there to make and not making it when it isn’t. However tax rates might affect an economy as a whole, I know for certain that when I get to keep more of my income, I can (and do) invest productively and hire people. The more of it that gets taken away, the less I have to do that with.

I know lots and lots of business people, and it’s the same with them. Maybe low taxation doesn’t produce investment or hiring on paper with the formulas you all use, and maybe the calculations are right, but it sure does “on the ground”.

 

[SamH]

I know lots and lots of business people, and it’s the same with them. Maybe low taxation doesn’t produce investment or hiring on paper with the formulas you all use, and maybe the calculations are right, but it sure does “on the ground”.

Agreed. All one has to do is look at the massive amount of money that I submit by weekly to the federal goverment to realize what an effect it would have if the amounts were reduced by just 10%.

 

[stinkcat_14]

A PhD in economics is certainly worthy of respect, and a certain degree of deference. I mean that sincerely.

I only have a “PhD” in making money when it’s there to make and not making it when it isn’t. However tax rates might affect an economy as a whole, I know for certain that when I get to keep more of my income, I can (and do) invest productively and hire people. The more of it that gets taken away, the less I have to do that with.

Now what you say is true, but that wasn’t what was being discussed here. As one famous liberal economist once said: “Taxes are designed to hurt” because they take away purchasing power. If the government taxes you more you will have less to spend and invest, so holding everything else equal having lower taxes is more desirable.

What was being discussed however was the effect of rates on tax revenue. For example, higher taxes will cause some people to work less, but it could also cause some to work more. For example, I have a friend in the top tax bracket who just bought a vacation home with a big mortgage. He has to make that mortgage payment regardless of his tax rate, so a modest increase in tax rates probably won’t affect his behavior much. Others, it may affect more, so the net effect is difficult to predict beforehand.

It also depends on what the government does with the money, there are some infrastructure investments that can actually increase income even after accounting for the reduced income from taxes. For example, I was in a country that was building a railroad to a seaport, which may well be good for farmers and other producers, even if they are taxed to pay for it. On the other hand, there are plenty of wasteful infrastructure projects as well because political factors go into their choices.

I know lots and lots of business people, and it’s the same with them. Maybe low taxation doesn’t produce investment or hiring on paper with the formulas you all use, and maybe the calculations are right, but it sure does “on the ground”.

We do take taxation into consideration in our models, but there are other factors that need to be considered as well.

 

[seekerz]

Let’s see. They have proposed eliminating Obamacare how many times? 40 isn’t it now? Always dies in the Senate and Obama has threatened to veto it besides. They have tried to include Keystone Pipeline approval in debt ceiling negotiations, but were defeated in the Senate by Democrats. They tried to include it in a transportation bill, but the Senate rejected it. articles.latimes.com/2012/mar/08/nation/la-na-congress-keystone-20120309

And liberals accuse them of wasting time trying to do the impossible with these things.
How many times do you require that they propose those things to be defeated in the Senate?

Eliminating Obamacare so that people who can’t afford health insurance now get to not afford it…possibly forever? How does that help the poor become LESS dependent?

 

[Ridgerunner]

Eliminating Obamacare so that people who can’t afford health insurance now get to not afford it…possibly forever? How does that help the poor become LESS dependent?

The last estimate I saw indicated that the number of people who will NOT be covered under Obamacare is 30 million; no fewer than at least some of the pre-Obamacare estimates of the number of people Obamacare was supposedly designed to get insured.

My guess is that 30 million is now short of the mark.

And an additional 17 million will be put on Medicaid, crowding out the truly poor.

And additional numbers will no longer get employer-paid insurance because they are being shifted to part-time.

And the chief actuary for medicare says that Obamacare will cause Medicare to pay less than medicaid in a few years. Some elderly, of course, are poor.

How, then, does that help the poor become less dependent?

 

[SamH]

And the chief actuary for medicare says that Obamacare will cause Medicare to pay less than medicaid in a few years. Some elderly, of course, are poor.

How, then, does that help the poor become less dependent?

Or just help the poor - much less become less dependent?

 

[saintjohnxxiii]

Stinkcat,

I had heard that when the cap gains tax was lowered during the Bush Administration years, it resulted in the highest tax revenues.

Even if that isn’t true, don’t lowering taxes for cap gains make it more attractive for investment because of the inherent risk involved?

 

[stinkcat_14]

Stinkcat,

I had heard that when the cap gains tax was lowered during the Bush Administration years, it resulted in the highest tax revenues.

It is true that during the Bush years (particularly 2005-2007) that the amount of capital gains tax paid was high. Although to be fair, tax revenue from capital gains taxes was also high in 1999 and 2000 when capital gains tax rates were significantly higher. My guess if we overlaid stock market returns with capital gains tax revenue we would get a pretty strong correlation. So the question is how much effect did the tax rate itself have on the gains? It clearly can have some effect, for example capital gains tax receipts spike in 1986 right before Reagan increased capital gains tax rates, but how much effect is an open question.

Even if that isn’t true, don’t lowering taxes for cap gains make it more attractive for investment because of the inherent risk involved?

Lower capital gains tax rates does encourage risk taking, which can be a good thing. Although the downside is that it can also encourage too much risk taking. If I borrow money on a venture and fail, I share the risk with the lender and I may not be as concerned about whether I am overextending myself, as I would if I were using purely my own money.

 

[seekerz]

The last estimate I saw indicated that the number of people who will NOT be covered under Obamacare is 30 million; no fewer than at least some of the pre-Obamacare estimates of the number of people Obamacare was supposedly designed to get insured.

My guess is that 30 million is now short of the mark.

And an additional 17 million will be put on Medicaid, crowding out the truly poor.

And additional numbers will no longer get employer-paid insurance because they are being shifted to part-time.

And the chief actuary for medicare says that Obamacare will cause Medicare to pay less than medicaid in a few years. Some elderly, of course, are poor.

How, then, does that help the poor become less dependent?

Crowding out the truly poor? A person who cannot afford the treatment their illness requires is NOT poor, at least with regard to health care? A person who goes into bankruptcy due to medical bills is what, rich?

 

[SamH]

Crowding out the truly poor? A person who cannot afford the treatment their illness requires is NOT poor, at least with regard to health care? A person who goes into bankruptcy due to medical bills is what, rich?

What do you think happens to the services provided by the government when you add a third again more people to the program without adding a third again more money?

 

[DeniseNY]

foxnews.com/politics/2013/09/24/one-man-obamacare-nightmare/

And where is a family like this supposed to find almost $1,000 a month for their insurance? Weren’t we promised that premiums would decrease?

 

[ishii]

You may be able to get a correlation, but then again correlation does not imply causation.  There are a couple of problems here, first is that the economy grows even when taxes are raised.

I believe there is more than just a correlation, just as Thomas Sowell and other respected economists and analysts do.

Its part of the culture of the profession, especially among the academics in the profession, we never use title to address each other, but always refer to each other by their first names.

That may (or may not) be the case in the “culture of the profession.” However, this is an internet forum - not the halls of academia.

A Ph.D in economics with over 20 years experience.

Good for you. However, I would judge ones arguments not based on an advanced degree, but on how cogent and persuasive the arguments are, as well as the facts. Also, I might question of the wisdom of someone who insists, “there is no difference between Republicans and Democrats.” A lack of political wisdom might call into question wisdom in other areas - such as economics.

You have never seen the JPE have you? I read his essay and he does not establish cause and effect, because he doesn’t address the other issues that cause tax rates to go up. The essay is not rigorous enough to be published in the JPE.

That is your opinion. Do you always present your opinion as fact? Or did the folks at JPE contact you (being a PhD and all) and tell you why “Tom” didn’t get published?

So why is Tom right and Greg wrong?

When did I say Thomas Sowell was wrong and Greg Mankiw was right? All I said was Greg Mankiw was okay in my book because he angered the march on wallstreet/99% folks.

Ishii

 

[stinkcat_14]

I believe there is more than just a correlation, just as Thomas Sowell and other respected economists and analysts do.

Now the question is, how do you explain the research such as Greg Mankiw’s 2006 paper that suggests that tax cuts do not pay for themselves? In Sowell’s piece he does not attempt to control for other factors that influence tax revenue and Mankiw does, so why is Sowell right and Mankiw wrong? Because obviously they both cannot be right, so if you prefer Sowell’s argument over Mankiw’s then you must have a reason based on economic theory, so let’s have it.

Good for you. However, I would judge ones arguments not based on an advanced degree, but on how cogent and persuasive the arguments are, as well as the facts.

You should look at the facts rather that what degree’s someone has, although when you were defending Thomas Sowell, you did bring up his education, so is education relevant or irrelevant?

Also when it comes to the facts, do you believe that population growth and inflation are determinants of tax revenue and if not why not? Also, how do you determine that the biggest determinant of tax revenue is the tax rate? You claim you are making a dispassionate argument based on the facts, well you have done nothing but a cherry picked correlation. So if you want to prove your case you have to make a better argument.

Also, I might question of the wisdom of someone who insists, “there is no difference between Republicans and Democrats.” A lack of political wisdom might call into question wisdom in other areas - such as economics.

Actually, what I said was that they were both big government parties. They both believe in lots of government spending, which is supported by the empirical evidence. After all, the republicans did not propose to cut food stamp spending.

That is your opinion. Do you always present your opinion as fact? Or did the folks at JPE contact you (being a PhD and all) and tell you why “Tom” didn’t get published?

It is my opinion because the Sowell piece has no where near the level of rigor required for publication in the JPE. Now, I am sure he never submitted it there, but if he did he be highly likely to get a desk reject. But you can cling to the fantasy that his essay is a nobel prize winning essay.

When did I say Thomas Sowell was wrong and Greg Mankiw was right? All I said was Greg Mankiw was okay in my book because he angered the march on wallstreet/99% folks.

Ishii

But both Sowell and Mankiw cannot both be right can they when they say the opposite thing?

 

[Ridgerunner]

Crowding out the truly poor? A person who cannot afford the treatment their illness requires is NOT poor, at least with regard to health care? A person who goes into bankruptcy due to medical bills is what, rich?

The truly poor had Medicaid, though providers did limit the number of Medicaid patients they would take. It was perhaps a creaky system, but it worked. Obama is adding 17 million more people who are not “poor” to that overcrowded system. How does that benefit the poor?

Most people who go into bankruptcy due to medical bills (or for any other reason) are not “poor” people. Not before the bankruptcy and not after. You ought to talk to a bankruptcy lawyer about that. I have. People who are truly “poor” don’t need bankruptcy because the creditors quickly figure out that they can’t collect and write it off.

But you also need to realize that a lot of people go into bankruptcy for other reasons. It isn’t limited to people with medical bills. Divorce is a really big cause. So, do we need a new “Obamadivorce” program in which taxpayers will be called upon to pay the debts of people who, because of divorce, can no longer pay them?

 

[SamH]

It isn’t limited to people with medical bills. Divorce is a really big cause. So, do we need a new “Obamadivorce” program in which taxpayers will be called upon to pay the debts of people who, because of divorce, can no longer pay them?

Oh please don’t give them any ideas.

 

[Ridgerunner]

Oh please don’t give them any ideas.

Yeah, you’re right. It could lead to “Obamabusinessfailurecare”, or “Obamagamblingaddictioncare” or “Obamabuyingahouseyoucan’taffordcare”, or any number of the other causes of bankruptcy.

 

[stinkcat_14]

Yeah, you’re right. It could lead to “Obamabusinessfailurecare”, or “Obamagamblingaddictioncare” or “Obamabuyingahouseyoucan’taffordcare”, or any number of the other causes of bankruptcy.

Isn’t that what Bush did with the bank bailout?

 

[Ridgerunner]

Isn’t that what Bush did with the bank bailout?

I guess one could say that simplistically.

In reality, though, TARP1b (the version actually implemented by Bush) was designed to unlock the inter-bank freeze-up occasioned when derivatives became so uncertain in value that no bank could possibly know whether its “fed funds” would be returned. That was a resolution of a liquidity crisis, not a bailout.

In addition, it allowed (forced in some cases) banks to borrow money from the government and call it “equity”. In most cases, it wasn’t needed and banks hurried to get rid of it. In the handful of “too big to fails”, it might have been needed if the derivatives, swaps, etc, in their portfolios were “marked to market”, since nobody knew what a reasonable “market” actually was and for a time there was no market. It additionally allowed solvent banks to acquire failing banks, which saved the FDIC from going insolvent. In that sense, it was the FDIC that was “bailed out”, not the acquiring banks.

But it was not, at that point, a “bailout” of banks except in the sense that it prevented (poorly conceived) “mark to market” rules from causing a catastrophic liquidity crisis.

I will readily agree, however, that TARP got morphed into other things that truly were “bailouts”.