off-topic CovidTalk

I enjoyed what you wrote, but didn't fully understand what you meant here. Can you explain this for me. Thanks.
The fundamental purpose of capitalism is to ensure the efficient use of capital. The more you take out of a system, the less there is to grow and the more efficient each system needs to be to remain competitive.

The more you want to spend, the more you have to tax. If you tax more to redistribute to social programs, that's less that's remaining to grow but it also reduces opportunities. Part of the issue you need to take into consideration, tax isn't only paid on profits. There are goods and services taxes, tariffs, sales taxes, licences, permits, medicare, pension contributions and the list goes on (I'm trying to list what you have there, so forgive me if I got some of the terms incorrect for your area). The more of these taxes exist, the the more efficient businesses need to be to remain an efficient use of capital. Variable and fixed cost of goods also needs to be taken into consideration. A balancing act needs to occur. If the cost of doing business is too high, opportunities tend to move to places where capital would gain more returns.

It's why you can tax at a lower rate, attract more investment, and over time, earn more to spend on social programs.

All this is an oversimplication but I hope it makes some sense.

Speaking of communism...
Every system has its pros and cons.
 

mlesemann

Staff Member
Moderator
And I think that re low tax and more revenue has been disproved by the experience of the US over the 40 years since Ronald Reagan took office - the so-called Laffer curve. Here's The Economist on that subject: The Economist on Laffer curve

Tax rates get cut. Revenue declines. Social spending gets cut as a direct result. Tax rates get cut again - supposedly in an attempt to stimulate the economy but really with the goal of making the rich richer and corporations more profitable. Then the decline in revenue is used as an excuse to further cut social spending.

Lather, rinse, and repeat. And that's why the US has a badly frayed security net compared with the rest of the developed world.
 
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sfoster

Staff Member
Moderator
this is all i wanted to happen when the crisis struck... FINALLY
trump went on tv yesterday and said everyone should wear a mask
 
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And I think that re low tax and more revenue has been disproved by the experience of the US over the 40 years since Ronald Reagan took office - the so-called Laffer curve. Here's The Economist on that subject: The Economist on Laffer curve

Tax rates get cut. Revenue declines. Social spending gets cut as a direct result. Tax rates get cut again - supposedly in an attempt to stimulate the economy but really with the goal of making the rich richer and corporations more profitable. Then the decline in revenue is used as an excuse to further cut social spending.

Lather, rinse, and repeat. And that's why the US has a badly frayed security net compared with the rest of the developed world.
I'm making a guess that you're talking mostly about income tax.

That's why it's complicated and the sub-title is kind of correct. It's tough to balance right. You'd be correct if you had only one government world wide. Problem is we don't. Covid19 aside, we're living in an ever increasing global world. People with in demand skills and resources that are easily mobile are more than capable to move businesses and earnings off shore and many countries would compete to welcome them.

The tax cuts are less about making the rich richer/corporations more profitable. The rich will get richer and corporations will make more profit regardless of whether they do business in your country or find another place to do their business. The question becomes, what part of the taxable pie do you want. If companies like Google or Apple can set up their profit centers anywhere, why would they set it up in your country if it's in their best interest to do it elsewhere?

It seems to be a common opinion that the rich don't pay their fair share of tax. The richest 1% of your country pay about 39% of your taxes. The next richest 4% of your country pay an additional 21%. That brings it up to your richest 5% pay for 60% of your income tax. That's the reality of a decent progressive tax system in the modern world.

Opportunities are more global these days. What do you think will happen if you try and go back to the old system and tax them back to the stone age? Would they leave your country looking for more suitable opportunities? What happens when you tax them less? You might attract other rich people who can contribute to your social programs. You don't have to reduce it for the sake of reducing it. You adjust the rates up or down to get a desired outcome.

Take Greece at the moment. They've put a deal on the table to try to attract well off people with international income tax rate of 7% for 10 years in the hope they make Greece their home for the rest of the life.

I'm not 100% sure, but I'm fairly sure, your income tax rates have declined since 40 years ago. Hell, I looked it up and google said you had a 90%+ tax rate in the mid 40's, lasting for 20 years. It's an interesting correlation that your federal government revenue has increased steadily (not including hiccups) in the last 40 years from 517 billion dollars to your current 3460 billion dollars. That's an average increase of almost 100 billion dollars per year.

You usually see a short term downfall when tax rates go down, but they also often go hand in hand with a recession. I think the long term numbers don't support your argument, but it's complex. Tax rates are only one factor with finance and economics. There are many other factors.

To your last part. Yes, you have a really bad security net. I think I read recently that your unemployment hit about 17 or 18%. It's sad to see. You can afford a better social security system. You are one of the richest countries (per capita) and the biggest tax base in the world. Your country has different priorities.
 
The fundamental purpose of capitalism is to ensure the efficient use of capital. The more you take out of a system, the less there is to grow and the more efficient each system needs to be to remain competitive.

The more you want to spend, the more you have to tax. If you tax more to redistribute to social programs, that's less that's remaining to grow but it also reduces opportunities. Part of the issue you need to take into consideration, tax isn't only paid on profits. There are goods and services taxes, tariffs, sales taxes, licences, permits, medicare, pension contributions and the list goes on (I'm trying to list what you have there, so forgive me if I got some of the terms incorrect for your area). The more of these taxes exist, the the more efficient businesses need to be to remain an efficient use of capital. Variable and fixed cost of goods also needs to be taken into consideration. A balancing act needs to occur. If the cost of doing business is too high, opportunities tend to move to places where capital would gain more returns.

It's why you can tax at a lower rate, attract more investment, and over time, earn more to spend on social programs.

All this is an oversimplication but I hope it makes some sense.



Every system has its pros and cons.
You're wrong on several pints. The fundamental purpose of capitalism is the private ownership of capital. Whether or not that is an "efficient use of capital" is neither here nor there with regards to the concept of capitalism. And is up for debate. The purpose of capitalism isn't.

Secondly, as had been mentioned recently, your lower tax rate point has been disproved countless times. I could send links to show this if needed.

As an additional criticism of a capitalist, profit driven world, and probably the greatest criticism there is, we only have to look at climate change, and our impending extinction. But sadly most people have their heads in the sand regarding that.
 
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this is all i wanted to happen when the crisis struck... FINALLY
trump went on tv yesterday and said everyone should wear a mask
Then... (and this should come as no surprise to anyone) he was seen at a fundraising event at his Trump International Hotel in Washington, D.C., not wearing a mask and not social distancing.
 
You're wrong on several pints. The fundamental purpose of capitalism is the private ownership of capital. Whether or not that is an "efficient use of capital" is neither here nor there with regards to the concept of capitalism. And is up for debate. The purpose of capitalism isn't.

Secondly, as had been mentioned recently, your lower tax rate point has been disproved countless times. I could send links to show this if needed.

As an additional criticism of a capitalist, profit driven world, and probably the greatest criticism there is, we only have to look at climate change, and our impending extinction. But sadly most people have their heads in the sand regarding that.
You're right on the first point. Private ownership of capital is one of the fundamental elements concepts too. I also should have said, efficient use of resources. Remember, this was all an oversimplication. You're going to be able to find holes left, right and center. If you didn't notice, competition, a fundamental concept in capitalism wasn't included in the discussion either.

I'd love to see your links to how a higher tax rate equates to more efficient capitalism (which was the topic we were discussing)...

I do suspect you're talking about the link between a higher tax rate = more money to spend on social causes. In the short term, this will always be the case... until you kill your golden goose, or have it fly away. You only need to look at Venezuela to see how short term thinking combined with a little bad luck can bring one of the richest countries in the region crashing down into a disaster. Capitalism has a similar potential for disaster. You only need to dig a little under the hood of 2008/2009 and see that Wall Street almost sunk the global banking system.

One thing you have to remember. It's a discussion. Not everything is going to be correct. Some of the smartest people get things wrong. Economic theories that have thought to have been true are being called into question. Take for instance the relationship with reserve bank interest rates and economic activity. Increased rates lead to a slow down in economic activity and a decrease in rates leads to an increase in economic activity... Well that's what was the believed. However, over the last 10 to 12 years, rates have been lowered and lowered to stimulate the economies. Before moving into Covid, they were the lowest we've ever seen and many countries were moving towards a recession. It had a very strange effect allowing corporates to borrow cheap and purchase their competitors, lay off workers and consolidate.

As for your last point, we live in a profit driven world, however it's not the only driving factor. There is no country where there's pure capitalism and profit is the only driving factor. I'm glad there isn't. Every country has some sort of rules and regulations. I believe capitalism allowed to run unchecked would be very dangerous. In life, you'll find that most things, driven to excess are bad.
 

sfoster

Staff Member
Moderator
Oh DAMNNNN these guys are funny as hell. Just a perfect attitude and timing for the comedic delivery they've got going on.
This reminds of the old "jay walking" videos on the tonight show where they would go and find the dumbest people and then put them on Tv.

 
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Well, Covid hits home.

My daughter is working as a counselor in a local summer camp to make money for her first year at college. Late last week one of the older counselors tested positive for Covid-19. So the camp has been closed and everyone has been tested. My daughter should get her results in the next day or so.

My daughter initially freaked out, but now she's just resigned to wait for the test results. Her biggest question is will she get paid for the days the camp is closed.
 
I will say a little prayer for you, your family, and your daughter.
hopefully your daughter doesn’t have to go through it
Fingers and toes crossed for your daughter!
Thank you all! My wife and I are not overly worried. My daughter feels just fine so far, as do my wife and myself. If any of us gets it we have an excellent hospital nearby if anything occurs, I'm not worried there.

Once again, my most profound thanks!
 
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