Why do higher taxes on the rich historically correlate to higher economic growth

[nevafuse]

Because high taxes on the rich means overall less taxes.

The lower the overall taxes the higher economic growth, it's as simple as that.

taxing the rich more does work, without penalising the poor

If the rich work less because it isn't worth the money after tax, then it does penalize the poor.  That is less money for the rich to loan to the poor or to pay the poor to work for them.  There are consequences.

Keep believing the party line all you want, it's what they want you to believe, that is why so many loop holes exist in the first place.
You really think any of the fortune 500 companies actually pay total taxes of 40, 30 or even 20%? No, they don't.
In the past 10 years, a good portion of those, have paid from total tax in single digits, to tax rebates, worth millions or even billions.
Doesn't sound like they are paying their fair share to me. Especially if they are suppose to be some of the most profitable companies in the world.

Fact is, the super rich, boast massive million or even billions of Net profits when it comes to pleasing their shareholders.
However, when it comes to taxing season, will find any way possible to make out they companies profits are low or obscured so can't be taxed or are owed a refund etc.

So no, when a company can make out business is booming, I don't see anything wrong with taxing them properly and getting rid of all these loop holes.

Who cares how much the rich/businesses are taxed?  As someone that does not own a business, I have to rely on someone fronting me the money to work for them.  Whether that is a millionaire or a billion dollar corporation, it doesn't matter to me.  What does matter is the number on my paycheck.  If taxes increase for that person or business, that is less money to go around & smaller numbers on my paycheck. 

The only people that pay taxes (no matter how high or low) are the people that can't pass it off - poor & middle class.

[Pteppic]

Rich people have tend to spend a smaller proportion of their income than poor people (its called the marginal propensity to consume). Presumably because the poor people can't afford to save...

Anyway, by taxing the rich and giving to the poor, you are taking money from people who only spend say 70% of their income to give to people who spend 99% of their income. That is going to have the effect of increasing consumption. Western economies are heavily dependent on consumer spending, so increasing consumption increases economic growth. It's probably not the only factor, but it might contribute to it.

It then gets more complicated because an economy that consumes too much and doesn't save enough will have lower consumption in the long run because it becomes less productive through under-investment. But then China is saving too much and is exporting its savings to the US, which increases investment despite high consumer spending. In the best traditions of economics, it could probably be argued either way.

[farlack]

The main reasoning from the top comment is that the rich hoard their money preventing it from being re-circulated into the economy.  But wouldn't that decrease the supply & increase demand aka making your money worth more?  Assuming making your money worth more is a bad thing ("then everyone would hoard!"), why is giving it to the government a good thing?  Am I the only skeptic that believes the government is just a bunch of talking heads that give tax revenue to their rich friends?  And even if the government perfectly reallocated money, what would be the point of working?  If I'm getting money from not working...I'm not going to work.

It would not make your money worth more. You need to look at it in this view, someone who is mega rich, they're going to buy huge 10 million dollar yachts. Lets do some hypothetical here.. These companies might only employ 5 people for 20 orders a year. Say there is 50 yacht companies doing equal work.
If the rich stop hoarding money, and they buy yachts, and now these 50 companies are making 40 boats a year, thus needing to double their staff.
Now there is need for 250 more college graduates who have studied the field of making yachts.. Who are getting a very good pay, they cant afford to buy a Ferrari, but they can afford to buy a 4-wheeler/quad/atv type deal from a guy working off commission.


In between all that, hundreds of other people will benefit, the people who make the yacht parts, truck drivers, the atv parts, then the people who who those people spend their money on. The government taxes them all when they get paid, and when they spend the money, thus making the government more on the money the rich are holding. In Florida taxes are 6.5%, (1) 10m boat will make 650k in revenue.

I don't think it will be worth more, because it will be spread around, and the guys at the bottom still wont be able to buy everything the rich can.

[SgtSpike]

Rich people have tend to spend a smaller proportion of their income than poor people (its called the marginal propensity to consume). Presumably because the poor people can't afford to save...

Anyway, by taxing the rich and giving to the poor, you are taking money from people who only spend say 70% of their income to give to people who spend 99% of their income. That is going to have the effect of increasing consumption. Western economies are heavily dependent on consumer spending, so increasing consumption increases economic growth. It's probably not the only factor, but it might contribute to it.

That's actually some pretty solid reasoning...

[ElectricMucus]

Rich people have tend to spend a smaller proportion of their income than poor people (its called the marginal propensity to consume). Presumably because the poor people can't afford to save...

Anyway, by taxing the rich and giving to the poor, you are taking money from people who only spend say 70% of their income to give to people who spend 99% of their income. That is going to have the effect of increasing consumption. Western economies are heavily dependent on consumer spending, so increasing consumption increases economic growth. It's probably not the only factor, but it might contribute to it.

That's actually some pretty solid reasoning...

Still not convinced that taxing only consumption instead of income, profit, property and consumption is a good thing?

[SgtSpike]

Rich people have tend to spend a smaller proportion of their income than poor people (its called the marginal propensity to consume). Presumably because the poor people can't afford to save...

Anyway, by taxing the rich and giving to the poor, you are taking money from people who only spend say 70% of their income to give to people who spend 99% of their income. That is going to have the effect of increasing consumption. Western economies are heavily dependent on consumer spending, so increasing consumption increases economic growth. It's probably not the only factor, but it might contribute to it.

That's actually some pretty solid reasoning...

Still not convinced that taxing only consumption instead of income, profit, property and consumption is a good thing?

Yes, I am still not convinced.

[ElectricMucus]

Rich people have tend to spend a smaller proportion of their income than poor people (its called the marginal propensity to consume). Presumably because the poor people can't afford to save...

Anyway, by taxing the rich and giving to the poor, you are taking money from people who only spend say 70% of their income to give to people who spend 99% of their income. That is going to have the effect of increasing consumption. Western economies are heavily dependent on consumer spending, so increasing consumption increases economic growth. It's probably not the only factor, but it might contribute to it.

That's actually some pretty solid reasoning...

Still not convinced that taxing only consumption instead of income, profit, property and consumption is a good thing?

Yes, I am still not convinced.

You are not arguing about it either?  
Even while income taxes are considered illegal and were only implemented during draconian periods and kept. Even while property taxes are a relic out of pre-republic times.
Even while profit taxes applied selectively to those who aren't in with the cronies.

Another point: If the states only income comes from consumption which is by definition the motor of economic health it's main incentive becomes to keep the economy healthy.

[SgtSpike]

Rich people have tend to spend a smaller proportion of their income than poor people (its called the marginal propensity to consume). Presumably because the poor people can't afford to save...

Anyway, by taxing the rich and giving to the poor, you are taking money from people who only spend say 70% of their income to give to people who spend 99% of their income. That is going to have the effect of increasing consumption. Western economies are heavily dependent on consumer spending, so increasing consumption increases economic growth. It's probably not the only factor, but it might contribute to it.

That's actually some pretty solid reasoning...

Still not convinced that taxing only consumption instead of income, profit, property and consumption is a good thing?

Yes, I am still not convinced.

You are not arguing about it either?  
Even while income taxes are considered illegal and were only implemented during draconian periods and kept. Even while property taxes are a relic out of pre-republic times.
Even while profit taxes applied selectively to those who aren't in with the cronies.

It would equate to the rich and the wealthy paying a smaller percentage of their income in taxes vs the middle class and poor.  Doesn't make much sense to me.

I really don't care what the history of various taxes are.  Just because income taxes were only implemented during draconian periods doesn't mean they are a bad way to tax people.

[mobodick]

And in those cases where people end up with nothing, those people die off.  What's the big deal?

Well, most people on earth realize that our society can only exist if we take care of everyone.
We are social animals and thus feel compassion for others because everyone knows that there is a good chance that they themselfs may need help at some point.
If everyone thought like you then we would not live in this relatively nice and stable world.
It would be dog eat dog and only assholes would survive.
Now, would you want to live in a world composed primarily out of assholes or is it enough for you to look in the mirror in the morning?

[ElectricMucus]

You are not arguing about it either?  
Even while income taxes are considered illegal and were only implemented during draconian periods and kept. Even while property taxes are a relic out of pre-republic times.
Even while profit taxes applied selectively to those who aren't in with the cronies.

It would equate to the rich and the wealthy paying a smaller percentage of their income in taxes vs the middle class and poor.  Doesn't make much sense to me.

I really don't care what the history of various taxes are.  Just because income taxes were only implemented during draconian periods doesn't mean they are a bad way to tax people.

Again I suggested taxing wealthy people higher than the middle class and a negative tax for the poor. The extent could be governed by either by the amount of total consumption (including employing people and what is now usually written of as "investment") or the accumulative wealth (just add).
And only because rich people consume less of their total wealth doesn't mean they aren't still the biggest consumers per person, either way they would still pay the highest taxes in absolute value. And wealth can only be expressed by consumption, if not it's just money.

The reason why I am so argumentative about this is that is a simple system which allows for a reduction of bureaucracy otherwise not archive able.

[SgtSpike]

And in those cases where people end up with nothing, those people die off.  What's the big deal?

Well, most people on earth realize that our society can only exist if we take care of everyone.
We are social animals and thus feel compassion for others because everyone knows that there is a good chance that they themselfs may need help at some point.
If everyone thought like you then we would not live in this relatively nice and stable world.
It would be dog eat dog and only assholes would survive.
Now, would you want to live in a world composed primarily out of assholes or is it enough for you to look in the mirror in the morning?

I don't see how society depends on taking care of EVERYONE.  Please elaborate.

You misunderstand me.

I do not believe individuals should be FORCED to help other individuals.  I believe they should do it out of the kindness of their heart.  I make donations to local organizations and give to individuals to help them out.  Especially if a family member or friend needs some help, I give it to them.  I make donations to charities that help people in other countries too.

But I do NOT believe in using tax dollars to "help" people.  It should be voluntary.  And yes, some people need to die off to avoid being too much of a burden on the people.  I'm not trying to be an asshole, that's just reality.

Let me ask you this - how much is it worth paying, out of taxpayer dollars, to save a person's life?  $5?  $10?  $1,000?  $1M?  $100M?  Think about it...

[SgtSpike]

You are not arguing about it either?  
Even while income taxes are considered illegal and were only implemented during draconian periods and kept. Even while property taxes are a relic out of pre-republic times.
Even while profit taxes applied selectively to those who aren't in with the cronies.

It would equate to the rich and the wealthy paying a smaller percentage of their income in taxes vs the middle class and poor.  Doesn't make much sense to me.

I really don't care what the history of various taxes are.  Just because income taxes were only implemented during draconian periods doesn't mean they are a bad way to tax people.

Again I suggested taxing wealthy people higher than the middle class and a negative tax for the poor. The extent could be governed by either by the amount of total consumption (including employing people and what is now usually written of as "investment") or the accumulative wealth (just add).
And only because rich people consume less of their total wealth doesn't mean they aren't still the biggest consumers per person, either way they would still pay the highest taxes in absolute value.

The reason why I am so argumentative about this is that is a simple system which allows for a reduction of bureaucracy otherwise not archive able.

I don't understand... how would you tax people on sales based on income levels?  That doesn't make any sense... why not just tax them based on income levels to begin with?

[ElectricMucus]

I don't understand... how would you tax people on sales based on income levels?  That doesn't make any sense... why not just tax them based on income levels to begin with?

Because savings shouldn't be taxed, at least not on an individual basis. This happens with inflation or demurrage, or in case of bitcoin: NONE!

[SgtSpike]

I don't understand... how would you tax people on sales based on income levels?  That doesn't make any sense... why not just tax them based on income levels to begin with?

Because savings shouldn't be taxed, at least not on an individual basis. This happens with inflation or demurrage, or in case of bitcoin: NONE!

And why shouldn't savings be taxed?

[ElectricMucus]

I don't understand... how would you tax people on sales based on income levels?  That doesn't make any sense... why not just tax them based on income levels to begin with?

Because savings shouldn't be taxed, at least not on an individual basis. This happens with inflation or demurrage, or in case of bitcoin: NONE!

And why shouldn't savings be taxed?

Because I don't think the state has any business issuing money, or supplying money or even have information on the amount of money I own. The system I am proposing would even work with bitcoin, see the colored coins concept.

To be honest I'm not fond of the idea of tying it to the accumulated wealth (not income, but it is affected), I find the system where only consumption is taxed by the amount over time as of demising returns much more beautiful.

[SgtSpike]

I don't understand... how would you tax people on sales based on income levels?  That doesn't make any sense... why not just tax them based on income levels to begin with?

Because savings shouldn't be taxed, at least not on an individual basis. This happens with inflation or demurrage, or in case of bitcoin: NONE!

And why shouldn't savings be taxed?

Because I don't think the state has any business issuing money, or supplying money or even have information on the amount of money I own. The system I am proposing would even work with bitcoin, see the colored coins concept.

To be honest I'm not fond of the idea of tying it to the accumulated wealth (not income, but it is affected), I find the system where only consumption is taxed by the amount over time as of demising returns much more beautiful.

Income tax != savings tax.

And I have no idea what you were trying to say with your second paragraph.

[mobodick]

And in those cases where people end up with nothing, those people die off.  What's the big deal?

Well, most people on earth realize that our society can only exist if we take care of everyone.
We are social animals and thus feel compassion for others because everyone knows that there is a good chance that they themselfs may need help at some point.
If everyone thought like you then we would not live in this relatively nice and stable world.
It would be dog eat dog and only assholes would survive.
Now, would you want to live in a world composed primarily out of assholes or is it enough for you to look in the mirror in the morning?

I don't see how society depends on taking care of EVERYONE.  Please elaborate.

You misunderstand me.

I do not believe individuals should be FORCED to help other individuals.  I believe they should do it out of the kindness of their heart.  I make donations to local organizations and give to individuals to help them out.  Especially if a family member or friend needs some help, I give it to them.  I make donations to charities that help people in other countries too.

But I do NOT believe in using tax dollars to "help" people.  It should be voluntary.  And yes, some people need to die off to avoid being too much of a burden on the people.  I'm not trying to be an asshole, that's just reality.

Let me ask you this - how much is it worth paying, out of taxpayer dollars, to save a person's life?  $5?  $10?  $1,000?  $1M?  $100M?  Think about it...

Well, the problem is that you say these things standing on the shoulders of society.
A lot of people that you don't care about helped the world get to this place.
Most charities are there to help wealthy people get rid of their guilt and are actually artrociously inefficient.

In our current society noone has to die because they are a burden. There is enough room to take care of these people.

The point is also that the world economy turned for the better when we started to take care of people as an integral part of society.
As i said before, we are social animals so once you start this kind of stratification there is no end.
Paris Hilton would propably shit on your head whenever she felt like because, you know, she is clearly the better human because she is in a better position than you. What would be her motivation to not put a bullet in your sorry head for not being as successfull in society as her?
So you have to realise that there are even greater assholes than you and they would think the same way about you as you about the people you want to leave for dead.

Fortunately this is not how most people think and actually most people realize we need each other. Economy is highly connected.
But what's even more crucial is that genetics are highly connected.
The whole pure genes/perfect human thing is a myth.
In our daily life we as a species completely fail at judging people on this level of connectedness altho it plays a major role in social dynamics.

If you want to look at humanity strictly as a tool for creating an economy then you can swap them out like light bulbs. But that is a groce oversimplification as the economy has a lot of symbiotic caracteristics that can only happen in these highly connected meshes of social relations.
A single idea from a disabled person can start a whole industry.

So the very least i can say is that things are not so simple that you can just say "let them die".
Of course you can have your opinion but i'm just telling you that it is not a healthy one for society.
What do you think will happen to the mental health of people that are for some reason near to the survival barrier? They will live under constant stress and think about their survival all the time. These people will have a much harder time participating in society because of the angst that may not have any food the next day.

'let them die' is just a very crude and uneducated opinion.

[farlack]

The more money you tax, the more government jobs can be made, which in turn makes more jobs because those government workers are standing in line at walmart in turn making walmart hire more people, which in turn makes more tax revenue for the government as each get paid and taxed, then taxed when they spend their pay.

[farlack]

Because high taxes on the rich means overall less taxes.

The lower the overall taxes the higher economic growth, it's as simple as that.

taxing the rich more does work, without penalising the poor

If the rich work less because it isn't worth the money after tax, then it does penalize the poor.  That is less money for the rich to loan to the poor or to pay the poor to work for them.  There are consequences.

Keep believing the party line all you want, it's what they want you to believe, that is why so many loop holes exist in the first place.
You really think any of the fortune 500 companies actually pay total taxes of 40, 30 or even 20%? No, they don't.
In the past 10 years, a good portion of those, have paid from total tax in single digits, to tax rebates, worth millions or even billions.
Doesn't sound like they are paying their fair share to me. Especially if they are suppose to be some of the most profitable companies in the world.

Fact is, the super rich, boast massive million or even billions of Net profits when it comes to pleasing their shareholders.
However, when it comes to taxing season, will find any way possible to make out they companies profits are low or obscured so can't be taxed or are owed a refund etc.

So no, when a company can make out business is booming, I don't see anything wrong with taxing them properly and getting rid of all these loop holes.

Who cares how much the rich/businesses are taxed?  As someone that does not own a business, I have to rely on someone fronting me the money to work for them.  Whether that is a millionaire or a billion dollar corporation, it doesn't matter to me.  What does matter is the number on my paycheck.  If taxes increase for that person or business, that is less money to go around & smaller numbers on my paycheck. 

The only people that pay taxes (no matter how high or low) are the people that can't pass it off - poor & middle class.

Wrong, you think if your boss is making 50k a month profit, and he gave 4k extra in taxes, it will hurt your paycheck? Probably not.

[mobodick]

The more money you tax, the more government jobs can be made, which in turn makes more jobs because those government workers are standing in line at walmart in turn making walmart hire more people, which in turn makes more tax revenue for the government as each get paid and taxed, then taxed when they spend their pay.

Moreover, these people now gain working experience and pull society to a higher overall level of productivity.