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PeakTrader said...
"Intrade odds for the Republicans to control the House after the November elections is now up to a contract-high of 60%."

If the Republicans win the House and Senate, will they know what to do? Introducing a flat tax (completed on a postcard), reducing government spending, and scaling-back regulations would get us out of this rut (so far, we squandered trillions of dollars to mostly spin our wheels in this rut and now can't afford to get out of the next rut).

Squeezing the Rich Is Poor Way to Spur Growth: Commentary by Caroline Baum
Aug 4, 2010

Why, after all this time and an extensive body of data, are we still questioning whether reductions in marginal and capital- gains tax rates increase economic activity enough to generate more revenue for the federal government?

“Because they don’t like the answer,” Arthur Laffer says of the doubters. “Tax cuts on the poor cost you lots of money. Tax cuts on the rich pay for themselves. Rich people can afford lawyers, accountants, and can defer income.”

What we do know, empirically, is this: Over time, federal revenue as a share of gross domestic product has stayed fairly constant at 17.9 percent. That’s true if the top marginal tax rate is 91 percent (1950s), 50 percent (early 1980s) or 35 percent (2000s). Recessions are the one exception.

So, if the government’s tax take varies little, why create uncertainty over how much of our income we’ll have to fork over to Uncle Sam three, five, 10 years down the road? Why not flatten the rate, fix it and forget about it?

Fairness, for one. The government wants to take money from the rich and give it to the poor.

“They are wrong,” Laffer says. “It doesn’t work that way. The rich can change the volume, timing, composition and location of their income. Poor people can’t.”

The rich have the luxury to respond to incentives, to opt for more work and less leisure when the return on work is greater. They are motivated to take risks, maybe start a business, invent something, and get even richer while giving others the opportunity, through hiring, to do the same.

The opposite is true for low-income workers. When the government raises taxes, someone struggling to put food on the table for his family may have to go out and get a second job to maintain his level of take-home pay. For this socio-economic group, higher taxes translate to more work.

I, for one, would like to see the debate shift from class warfare over tax rates and targeted tax relief to tax reform. Either scrap the tax code and introduce a simple flat tax with no deductions, or scrap the IRS and move to a consumption tax.

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sethstorm said...

...while giving others the opportunity, through hiring, to do the same.

Make it impossible for them to refuse the unemployed on secure, non-contracted, direct, permanent terms. How can they dodge what cannot be refused or dodged?

You don't change ideology by trying to starve someone out of one by withholding jobs. You do so by providing secure, permanent work.

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PeakTrader said...
Seth says: "You don't change ideology by trying to starve someone out of one by withholding jobs. You do so by providing secure, permanent work."

If you make your employer money, you'll earn secure, permanent work. Otherwise, become a tax collector or a mortician.

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PeakTrader said...
Seth says: "You don't change ideology by trying to starve someone out of one..."

Who's trying to starve who?:

Fed's Hoenig: Recovery on track despite stumbles
Jul 13, 2010

Uncertainty about what will happen when tax cuts expire, whether the government will cut spending or raise taxes to address the budget deficit, and what health care and financial regulatory laws mean has kept businesses on the sidelines, Hoenig said.

My comment: If you want to help the poor, we need to promote growth and tax it, not prevent growth and tax it even more.

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Outlook darkens for economy
Aug. 5, 2010

Thirteen months into recovery from a deep recession, this is disappointing. The economy must add 13 million private sector jobs by the end of 2013 to bring unemployment down to 6 percent. U.S. President Barack Obama's policies aren't creating conditions for businesses to hire those 320,000 workers each month, net of layoffs.

Net of inventory adjustments, the economy demand for goods and services is growing at only 1.3 percent a year.