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Luis Palau
Giuliani on Taxes
I am more interested in a recent report that says Giuliani expects the Democrats to raise taxes by 20-30 percent from the perspective that it reveals more about Giuliani than the Democrats. We all know that the Democrats plan to raise taxes if they take control of the White House as well as Congress, but it is comforting to know that even though Giuliani has some moderate to liberal leanings on some matters, tax policy isn’t one of them. He further stated that John Edwards had promised to double the current Long-Term Capital Gains tax [talk about a bright move that is directed at populist appeal notwithstanding the damage to the economy]. Rudy correctly noted that the last time Capital Gains was raised by the Democrats that revenue from this source fell by 40%.
I am really frustrated here, I don’t know why it is so hard for these lame Democratic politicians to get it through their thick skulls that their tax policy is counter productive and reduces federal revenues (and economic growth) while tax cuts (as in the most recent example by Bush) have always increased federal revenues.
You must be smoking something if you are reading this and don’t conclude that the only conceivable explanation for this is the desire for the Democrats to maintain a perpetual campaign strategy which is a politics of envy. It seems that they would rather keep a club in their bag to beat the Republicans over the head with than actually do something for the economy. I realize they have much invested in this line of argument and its continued success depends on their ability to repeatedly lie about it and have that lie believed by the masses.
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12 Responses to “Giuliani on Taxes”
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Democrats don’t understand that the economy is not static. They cannot take more of the pie and expect that the pie will remain the same size.
LTCG tax is imperfect, but the appropriate remedy would be to do something like tie the tax break to the CPI. If you bought your house in 1975 for $100,000, that $100k is now worth $400k. So you should get the first $400k tax-free.
The point of LTCG is that money loses value over time. In my house example above, a person who sold it for $450k is actually not making very much profit (especially if he has done repairs to it).
Given the lousy savings rate of this nation, shouldn’t we encourage people to buy property and to make long-term investments in the stock market?
Bridget…….. “Democrats don’t understand that the economy is not static.”
Their tax policy is based upon it and depends upon it. They need to understand that what Congress does affect what people do in response. This is called Dynamic Scoring. The D’s hate that concept as much as they hate zero based budgeting. They much rather measure spending from base line than from zero. This is why government programs turn into such boondogles. But that boondogle is the currency of votes…….steve
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I’d think that the Dems would rather increase the population that depends on them for their bread and circuses rather than actually help people get back on their feet. It’s wrong, disgusting, and damn near treason to the Flag if you ask. Unfortunately, nearly 1/2 the US buys the lie.
bd…..votes are votes whatever the cost……..steve
“politics of envy”
I like that Frank… I mean Steve.
Compare the GNP with the rate of taxation over the last fifty years (e.g. the boom years of the ’50s with their 90% marginal tax rate) and continue to practice explaining that high tax rates discourage investment until you can do it with a straight face.
M2………Who, Frank Luntz? …….You are correlating tax rates with economic activity (not even relative economic activity) and that’s a mistake. We’re talking about optimizing tax revenues here. Have you looked and the change in flow of funds to the Treasury when rates of various sorts are changed? If you have you’ll note that revenues to treasury have increased when you lower the rates. It happened under Kennedy, Reagan, Bush II and others relative to Capital Gains Taxes. The Capital Gains Rate in particular holds the capacity to impact the cost of capital to the whole financial structure of the country both public and private.
The boom years had much more to do with Post War and Baby Boomer issues than 90% marginal tax rates (but for which the economy most likely would have been even better). Bridget (Sunshine) even captures part of it in the leading and lagging nature of stimulus and response due to War Spending and debt, but………cummon M2, you aren’t cutting out turf that 90% marginal rates will increase revenues to the Treasury are you???? I may have to send you to the back of the class. After the early years of the 1950’s the blow off came and the world entered a steep recession with particularly heavy declines in the capital investment side of the formula.
I wrote ad nauseaum to Matt on a prior post about maximizing tax receipts versus using tax increases to try fund desired spending programs. I’ll reference my (off topic) comments here
http://nextstoplauderdale.com/2007/07/16/cheney-pushes-bush-to-act-on-iran/
under my response to Matt who posted on 7/18/07 at 4:58 PM GMT. …steve
The Libs treatment of taxes is one of the reasons their worldview sickens me so much. They either don’t understand the concepts -which would be really bad - or they understand them and cynically raise taxes just to look good - which is even worse.
Neil……they use taxes as a mechanism for income redistribution. Thats a mistake. They should first optimize revenues and then fight over the spending priorities. The redistribution that they will otherwise get is likely to be at a much lower playing field for all…….steve
I will let Steve field this one, but I will say that there are leading and lagging indicators. I imagine that the economic results of increased taxes would not be immediately apparent. Ergo, the ’50s capital gains tax rates would affect the economy in the ’60s.
Bridget…….Not only this, but the overwhelming deficit spending during the war (wars) and the impact of increased industrialization due to the war and baby boomers, etc. I have never heard a single economist defend 90% marginal rates as being good for the economy. I doubt Bernie Sanders would take that position today………steve
M2…….. You have said elswhere……..”I do think that the rich get more from the government & have more at stake thus should pay more taxes. Drive a bigger car, own a bigger house, pay more for insurance.”
I’m going to surprise you here, I agree, but they do pay higher taxes by any measurement. Aggregrate amount, percent of income, share of Government spending, share of Government revenue, and here is one you like “percent of GDP.” I even believe that the progressive nature of the tax code is acceptable policy, ………but please stay on the left hand side of the Lafer Bell Curve if you want to deliver the most to the least………steve
Okay first off, dad I don’t really agree with the progressive nature of the tax code…. (like you said above) but you are the math genius not me
I wish our whole society had a mindset change because much less money given personally to both organizations that help the poor and helping the poor ourselves is a far better way to maximize dollar usage. But- we just keep adding screwed up solutions to screwed up systems because it seems so hard to turn back- once we have socialized health care we will be stuck in that without turning back as well. I will personally thank all my liberal friends.
The democratic politicians will always be boneheaded in this as long as there are boneheads to think so “in the moment” opposed to long run to vote for them.
I personally would like to see the whole thing change- and republicans may not eve like this one. I think we should nix income tax, capital gains all together….. and have a consumption tax. That way people would be encouraged to be wise with their money… prudent. Encouraged to save money instead of spend.
Our society has a disease of materialism that runs so deep. Evne those with little have it and shop impulsively at walmart. I have struggled my whole entire life with it. I think if we had a consumer tax system only It would curb spending more.
What i would add to that is this though- if you make under a certain income or are government dependent for reasons such as disability or mental illness you would be exempt… and if you are someone that has never been on support that falls on hard times (like a single mom whose man left her high and dry) then you would be able to apply for an exemption that would have to be renewed to keep).
Also their could be exemptions for certain products… like basics… milk, eggs, veggies, non-junk related food from the store…. so that those working low wage jobs aren’t penalized for needs but people on food stamps also aren’t out buying nikes.
MZ………..Don’t get too carried away with me on the Progressive Tax thing. Although I said I am for it there is an inherent limitation to that support. First of all even the flat tax itself is “progressive” in the sense that they have a zero bracket amount (i.e. tax threshold) and a flattened tax rate after that. I do think that we should sort of graduate out of the zero bracket to a small degree without merely a sudden no tax then tax when you exceed the exemption. This too would be progressive. I think in all there could be 3 tax brackets after the zero bracket, but it shouldn’t be a radical curve, which is why I cautioned M2 that my support of progressivity would be limited to the left hand side of the tax curve described by Arthur Laffer of Stanford University.
You have asked me before about my views on the flat tax and my support for that is unresolved at this time. Inherently that means that we would be taxing capital and investment at the same rate of other sources of income. I think this could be dangerous in a capitalistic economy. I am not sure that this would serve us very well in creating jobs and optimizing federal revenues. Contrary to the liberal mindset in this country, capital should be taxed less than labor (that is if you want to insure that there are enough jobs for labor). It may not make much sense to them, but I assure you it makes dollars……dad
PS i submitted you to digg again. another fine post.
MZ…….thanks…..dad
This is one of the few things that Massachusetts does well. Groceries do not get taxed. (I do think that the hassle of determining what is “junk food” would be greater than the revenues from taxing it.) Any single item of clothing, up to $175, is not taxed. Every dollar over $175 is taxed at a 5% rate. (If your suit jacket costs $200, you pay $1.25 in taxes.) Restaurant meals and all other purchases are taxed at 5%.
Bridget……Like I told MZ above, these exemptions become a “progressive” treatment in an otherwise inherrently “regressive” area such as sales tax……….steve
hi there..I dont know who to put my faith in any longer..sigh
Hi Angel………Not exactly sure what you are saying. Help me out a bit.
……steve
Dad…
I didn’t say flat tax this time though… I was talking the consumption tax idea.
MZ……your are right, I really miss addressed your point. My sentiment is about the same though. A Consumption tax is another regressive tax, not that I hate regressive taxes, but I’m still out on this one. Maybe my hesitation is trust. If we went to a consumption tax (i.e. like a national sales tax depending what type of implementation you are referring to) I would be very suspicious that nothing would change in Congress. They could at any point add a parallel tax based on income. It would be sold very cheaply and when the concept is in place it could skyrocket every time the Democrats cried about “fairness.” That is what happened with the original tax code. It was something like starting at 1/2% only on income over $50,000 (which was probably like $200,000 today, maybe more). After the tax structure is in place they can play around with the percentages until marginal rates might reach 90% as in years gone by.
You will note that M2 commented how prosperous the economy was in the 1950’s with 90% marginal tax rates. Well the economic prosperity came from reindustrialization, GI’s buying homes and cars, and the baby boomers following World War II. By the time we got to 1958 the impact of the wind down of the “post war” and the impact of high tax rates threw us into a serious recession. And just think a consumption tax would throw tax practitioners like me out of business.
yeah! ………………dad