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    Homeopathic Tax-cutting

    By MrSmith1 on Mon, 04/18/2011 - 4:39pm |

    Every time I see pea-brain Republicans like Joe Walsh talk about how cutting taxes will raise revenues ... 

    http://www.huffingtonpost.com/2011/04/17/joe-walsh-cut-taxes-revenue-up_n_850192.html

    I'm reminded of Homeopathy. A quack industry whose product defies the laws of physics.

    The theory that cutting taxes produces more revenue has the same legitimacy and proof as homeopathy.  Both require magical thinking to work and both suggest that by taking ever increasing amounts away, you end up with more rather than less....

    Thus, the patient (the nation) gets well (solvent again) by increasingly diluting the medicine (lncreasing tax cuts which lowers revenue more and more) until voila, we're (we're) suddenly all better. 
    The triumph of Snake Oil salesmen. 

    Comments

    More like homeopathetic!


    by Richard Day on Mon, 04/18/2011 - 4:46pm

    Actually, I disagree with you on the homeopathy issue.  I KNOW, I KNOW, it is not explainable, but Arnica has helped my family and me more than I can write; homeopathic Bushmaster Snake Venom (Lachesis Mutus) cured my hot flashes; homeopathic poison ivy (Rhus Toxicodendron) did more for my son's severe reactions than his previous treatments with Predisone.  

    That said, the Republicans' absurd DECLARATION IN THE FACE OF YEARS OF DOCUMENTATION is about as accurate as the 6,000 year-old Earthers, or the Birthers. or the other goof-ball things they seem to embrace.

    BTW, just out of curiosity, what's your take on Acupuncture?  I want you to know also that if you ever have a splinter, an abcess, or something foreign that you want to get rid of without doing an I&D, or even surgery, try SILESIA.  But NOT if you have an orthopedic pin, or anything else unnatural that you want to keep!


    by CVille Dem on Mon, 04/18/2011 - 8:36pm

    I've never tried acupuncture, the closest I got was acu-pressure, which I tried once about 20+ years ago.  It used different sized needles. (They were very thin and I kept melting them, but never mind that...)  I didn't see any relief from the acu-pressure.  As for homeopathy helping your family, I'm glad for anything that helps someone's health, but, to my mind, it has more to do with the placebo effect than any actual curative stimulis from the homeopathy meds... But hey, whatever works.


    by MrSmith1 on Mon, 04/18/2011 - 10:01pm

    OK, see this is how it works. Obviously, if you tax at 100%, there'll be no incentive to work, so there'll be no income to tax and hence no revenues. If you drop it to 90%, some people might find it worthwhile to work, so there'll be more revenue. Thus, if 90% tax rate provides more revenue than 100%, than an 80% tax rate would provide even more revenue. Seems like a pretty reasonable assumption, no? Now, keep iterating on that logic and you'll see that obviously revenue will be highest if we drop the tax rate to 0%! (Assuming we're not allowed to tax at negative rates, which would be even better!)


    by Verified Atheist on Mon, 04/18/2011 - 8:41pm

    Except that tax rates are not as you explain them.  We all (ALL REAL AMERICANS!)  pay the same amount of tax on our basic income.  If we make MORE than that, the tax rate goes up ONLY ON THE AMOUNT ABOVE that original amount that we all pay in to.  Back when Ike was Pres, that HIGHEST amount left over (that only included millionaires -- back when millionaires were the rich ones) was above 90%.  Keep in mind that this was NOT a 90% TAX; it was a tax that applied to the excess over and above the income of all of the rest of us after those others had been subtracted.

    This whole thing is so obvious if anyone just looks at the history of taxation and the economy.  Truth is the enemy of the Republicans.  Unfortunately, they are happy to listen to talking points instead of facts,  Surprise, surprise.



    by CVille Dem on Mon, 04/18/2011 - 9:01pm

    Funny. But it's interesting to ask where that story goes wrong, right? And imho, it's at that first step:

    Obviously, if you tax at 100%, there'll be no incentive to work, so there'll be no income to tax and hence no revenues.

    Not so obvious, actually. It's obviously false actually. Say taxation is 100%, i.e. all goods and services you receive are government benefits, you 'keep' none of your labor income. You are given according to your needs, and you provide - in the form of work - to the community according to your abilities. In short, socialism. Well, there are a lot of real world people, now and in the past, whose income - goods and services received - was in this sense totally independent from their labor contribution. And yet ... they work. Actually alot of such people work quite hard despite being 'taxed at 100%'.

    And then there are all the hedge fund managers - taxed at 0% - who, sure, "do stuff", but in many cases they aren't doing anything socially useful. It's actually often very socially destructive "work" they are providing. So all in all, there would be more value created if they ... just stopped.


    by Obey on Mon, 04/18/2011 - 10:25pm

    I think the homeopathy analogy was that if you keep cutting taxes, and insist that doing so increases revenue, then by logic, if you cut taxes entirely, so nobody pays anything, the revenue should be at it's highest.


    by MrSmith1 on Mon, 04/18/2011 - 11:05pm

    Yeah, I got that. Just when people bring up that whole Laffer curve, they always concede the premise that 100% taxation gets you no revenue. In which case it could only go up. But one really shouldn't concede that, komrade I mean, my friend. 


    by Obey on Mon, 04/18/2011 - 11:30pm

    That's a good point. Although what I wrote was obviously in jest, I did assume that first part to be true, and you're right that it's not. I do think that 90% taxation would probably bring in more revenue than 100% (à la the Laffer curve), but I agree that my original assumption was flawed (as my conclusions were obviously meant to be).


    by Verified Atheist on Tue, 04/19/2011 - 8:45am

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