Been watching this forum for a while but this is my first time jumping in.
Anyway, I am sure most everyone here has heard the conciet in media coverage and politician talking points that tax cuts have to be “paid” for. Of course there are a few false assumptions with this claim…
There is no linear correlation between tax rates and tax revenue.
tax rate changes also change incentive structures
as tax rates increase, incentives to hide income and/or transfer tax burdens increase (essentially, behavioral changes in response to tax rate changes are ignored in the various "estimates).
Essentially, this thinking reduces economics to mere accounting where a little from column “A” can be taken to offset losses in column “B”.
My question is, are there any assumptions I am missing?
Also, what examples are there of the estimated change in revenue from a change in tax rate being far different then the actual effect of the change in revenue?
The two examples I am aware of are the increase in capital gains tax rate in 1986 and the decrease in capital gains tax rate in 1978 and 1997.
I guess I am more focused on how the argument that we have to “pay” for tax cuts is self defeating. In the context of that issue, the issue of property rights is tangential and can undercut efforts to make headway, at first. If you jump to the bigger picture right away, it is very easy to be labeled too “radical” by those who might otherwise agree if they are walked back from conventional wisdom to look at the broader picture more slowly.
My thinking is more to discredit the “pay for tax cuts” argument first by showing how it doesn’t meet the given goal (pretext) of increasing revenue. Once there is agreement on that, you can move to bigger issues and eventually get to the most fundamental issues property rights.
Essentially, for the sake of argument, I guess I am trying to provide a foundation for agreement by conceeding (at least initially) the goal of revenue increase as legitimate on it’s face and going with the angle that we do not have any reliable means to achieve that goal.
I get what you’re doing, but I do not agree that is a useful way of going about achieving the goal of persuading people. I elaborated on this (and illustrated how Rothbard shared my sentiments on this) in this post. I do not agree that it is advantageous to “concede” a point that you actually do not believe to be valid, or to pretend you agree with something you don’t simply because you think it will help someone listen to you. There are other ways to get that result without essentially lying.
And I’m not sure you fully appreciate the point about the implications made by saying things like we need to “pay for tax cuts”. I elaborated on this quite extensively in this post. Especially in the final paragraph.
I assume you are talking about this quote of Rothbard’s that you cite?:
It is not incumbent on the libertarian to always proclaim his full “anarchist” position in whatever he writes; but it is incumbent upon him in no way to praise taxation or condone it; he should simply leave this perhaps glaring vacuum, and wait for the eager reader to begin to question and perhaps come to you for further enlightenment. But if the libertarian says, “Of course, some taxes must be levied,” or something of the sort, he has betrayed the cause.
That is, in many ways what I am attempting to do. Not so much stating that taxing to increase revenue is legitimate, more “if your goal is to increase revenue, tax rate increases are a highly uncertain means to that end.” Once that point is made, there are much bigger things that can be sequed into.
Found this quote when rereading that second post you linked to.
Notice how they tie the dirty word of “debt” to the notion of cutting taxes. Again, they are asserting that when you let people keep more of their money, it equates to increasing the national debt. The key point here is it is a total neglect of the true cause of any debt: spending.
So, essentially, the assumption of tax cuts increasing debt is a loaded question because, among other things, it reframes things in such a way that dodges the causes of debt.
Bingo. That’s one of the better ways to go about it. You’ll notice that is essentially the main theme of that post. Notice how I bring that up in the paragraph where I address exactly what you are talking about…and the implication that the government owns all of your income is mentioned second:
Then you have to understand the implication of this notion that a tax cut is a “handout” that is “expensive”, and would “cost” a lot of money that we would have to “borrow” to give them. Seriously. Not kidding. Listen to Austan Goolsbee, Obama’s former head of the Council of Economic Advisers.
Think about that. We have to borrow money, to let people keep more of their own. Here again we see the exact same mentality that the level of government spending is a given. But more importantly, notice what this also implies. This notion that cutting taxes (letting people keep more of their own money) is a “handout” literally implies that the government owns 100% of everyone’s income and it decides how much we can keep. I would love to hear a Leftist own up to that. (And I bet if you push them enough, they’ll finally just break down and admit that they believe yes, the government does own your income.)
Notice I even addressed your point about the relation between tax rates and tax revenue…
But let’s put that statement into simpler terms. “If people are allowed to keep more of their own money, that will be the largest contribution to the nation’s loan obligations.” In other words, somehow, letting people keep more of their money contributes to the government going into debt. […]
This of course assumes two things: (1) the tax cuts reduced tax revenue, (2) the current level of government spending (and the level of growth in spending) is completely unchanagable (as in, it is impossible for the government to function while spending less money).
I think number 2 is where the focus needs to be. Because if you make the argument about how the state should/would be able to acquire more funds, for one thing you, as I said, imply that you agree the state and taxes are legitimate, but more importantly you miss the entire point (i.e. the entire problem) and end up completely wasting your time. This is what Ron Paul has been trying to wake people up to for many years. The whole argument becomes whether we should be sending 30,000 troops or 40,000 troops…or increase government spending by half a trillion or a full trillion…not about whether we should be doing those things at all. And that is what the argument should be about.
@JJ: No, I think shagdrum is right on the mark. There’s nothing wrong with saying “a little taxation is better than a lot of taxation” - you don’t have to concede that taxation is morally legitimate in order to say we should prefer less taxation to more taxation. So, wherever it is useful to making the case for liberty, there’s nothing wrong with espousing improvements to the status quo that are not, in themselves, fully consistent with liberty.
For someone who espouses a Presidential candidate that is proposing a $2T+ Federal budget, I’m surprised that you disagree.
The ultimate point is to show that we are on a path that is unsustainable and calls for doubling down on those same short sighted policies that got us here are foolish. However, throwing everything out at once can be overwhelming and is easily dismissed.
Start small and work up to the big ideas. Taylor the argument to the person you are talking to. Talking at them only loses their consideration.
But it is true, Government DOES own all your property that is inside its borders. And “property rights” of its citizens are merely de facto rental of country’s possessions to citizen, with the goal of giving citizens the illusion of freedom to increase their productivity for the good of future of state. Those states that give less of an illusion of that, tend to be less productive, same with the historic trend of moving from direct slavery to money based rental. That is what the monopoly of violence means: that it can do whatever it wants, as violence is the means for taking any property at will. Such is the implicit agreement of being inside a country.
You seem to be so focused on your own idea that you’re refusing to hear what I’m saying. I’m not disagreeing with the idea of not revealing (or advocating) the full anarchist position all the time, in everything. In fact I thought I made it quite clear it is not incumbent on the libertarian to do so. (You know, especially in the part where I quoted Rothbard saying “It is not incumbent on the libertarian to always proclaim his full “anarchist” position in whatever he writes”.) I know you saw that part because you picked it out and quoted it yourself. So you can stop pretending as if you’re telling me something new by saying “throwing everything out at once can be overwhelming and is easily dismissed” because that not only goes right along with exactly what I already said (twice in this thread alone), but also because it has absolutely nothing to do with my point here.
You asked if there was any assumption that you were missing. I pointed out the most glaring assumption you were missing. You replied by saying you were more focused on accepting, conceding and going along with the premise that increasing government revenue was a legitimate and worthy goal, so that whomever you are talking to would be more likely to listen to you. I’ll say that again. You literally said that you would rather focus on and debate the efficacy of how government revenue is increased, rather than raise the question of whether it should be increased in the first place.
And my whole point is (a) that is dishonest (provided of course that you don’t actually believe government revenue should be increased…if you do believe it should be increased, then I’m not sure what your issue is)…but more importantly, (b) it is an ill-conceived, unproductive, and ulitmately ineffective way of attempting to persuade someone that having less government is better. You talk about the tax cut argument being “self-defeating”…but that’s exactly what your strategy is…self-defeating. You are allowing the statist to make the argument be about a technicality, instead of forcing them to debate the real issue, and consider another point of view. (I thought this was illustrated extremely well in the Ron Paul clip I linked for you at the end of the last post). You are literally allowing yourself to be drawn into a debate about the most efficient way for the state to expropriate funds. This has to be one of the most unproductive, malinvested uses of a libertarian’s time.
You asked if there were any assumptions you were missing. So I answered that question. When you replied and expressed your concern that pointing out that assumption would turn the listener off, I pointed out another glaring assumption that is made in that argument…one of a more technical nature, like you were wanting to focus on. I pointed out that the “pay for tax cuts” position assumes that the current level of not only government spending, but also of government spending growth is a given…a complete necessity, and cannot possibly be reduced or even slowed. I linked to a post I made that included actual data on this point, noting, among other things, that revenue has never been higher and that just 10 years ago federal spending was (inflation adjusted) half of what it is today.
The “pay for tax cuts” argument assumes that that is completely and utterly necessary…that any reduction in that would lead to total collapse of the world government and economic structure. I do not think this is “too much” for even a statist to follow along with. I do not think this is a “big idea” to try to grasp. If you are actually talking to someone who cannot come up with one nickel that shouldbe (yes, according to them) cut out of federal spending (let alone will not admit than a nickel could be cut out), then you are wasting your time entirely and would be better serving the cause by talking to someone else.
Ultimately my point is there are other (and more effective) ways to get the result you’re looking for without essentially lying and leading people to believe the statist position of more government is a valid one, but there are just more efficient methods to make that growth happen.
Oh spare me. I can’t actually tell if you actually believe that libertarians don’t understand their property can be taken by the state (when ironically they are probably the ones who understand that the most), or if you’re just trolling. But the point in bringing up the property rights notion is in getting people to think about their beliefs about the role of government. It is a philosophical point, and the de facto reality of the guy with the gun making the rules has absolutely no bearing on it…and I would be surprised if you failed to see this even before you made that ignorant post.
Still learning how to use the functions on this forum and not exactly sure how to quote accurately here, so I’ll fake it for now.
“You seem to be so focused on your own idea that you’re refusing to hear what I’m saying.”
I think there is more of that going on here then you may want to admit.
I was simply looking to point out the flaws in the argument for raising revenue through taxes. After that is established, and faith in the wisdom of the political establishment is shaken a bit, other possibilities open up.
It may not be the approach you would take, but I see nothing inherently dishonest about it.
There are only three ways I know of in which the government gets money to pay for things…taking it from people against their will (usually called “taxation”), borrowing it from foreign countries, and printing it out of thin air. The latter two of which are ultimately paid for with more of the first. So if you know of some other way of raising government revenue other than taxes, I would be really interested to hear it.
After that is established, and faith in the wisdom of the political establishment is shaken a bit, other possibilities open up.
Like what?..
You asked if there was any assumption that you were missing. I pointed out the most glaring assumption you were missing. You replied by saying you were more focused on accepting, conceding and going along with the premise that increasing government revenue was a legitimate and worthy goal, so that whomever you are talking to would be more likely to listen to you.[…]
You asked if there were any assumptions you were missing. So I answered that question. When you replied and expressed your concern that pointing out that assumption would turn the listener off, I pointed out another glaring assumption that is made in that argument…one of a more technical nature, like you were wanting to focus on.
Please tell me what it is you’ve said that I haven’t heard (or even directly responded to, for that matter).
You see nothing dishonest about pretending you believe something is valid and worthy of debate on its technical details, when in actuality it is a debate you don’t even think is relevant or necessary…just for the purpose of tricking someone into listening to you?
I am simply looking to avoid a moral argument for the moment (which the property rights angle would turn the debate into).
When discussing things with the ignorant Left, there is a huge sense of moral superiority to overcome. I have never had any luck confonting that head on. I have had sucess lowering defenses by turning the discussion to economic reality. After that, they are more open to questioning the basic premises their world view stems from.
Again, it is simply a matter of tactics. No reason to start throwing around accusations of dishonesty simply because I don’t take the same approach you would.
It’s like you haven’t read a word I’ve said. I’ll make this very simple.
Please tell me what is “moral” about pointing out the implied assumption in the “pay for tax cut” position that the current level of not only government spending, but also of government spending growth is a complete necessity, and cannot possibly be reduced or even slowed, lest the world economy would collapse.
You see nothing dishonest about pretending you believe something is valid and worthy of debate on its technical details, when in actuality it is a debate you don’t even think is relevant or necessary…just for the purpose of tricking someone into listening to you?
Please tell me what it is you’ve said that I haven’t heard (or even directly responded to, for that matter).
I see nothing dishonest about avoiding opening the pandora’s box of a moral argument (which is what the property rights point would turn it into) against a Progressive sense of moral superiority.
The only sucess I have had in confronting that sense of superiority directly is getting dismissed in a childish temper tantrum. Focusing on economic reality first lowers the defenses and allows for circumventing that sense of superiority.
You seem to assume that because I don’t blow the argument up into a moral issue, I am agreeing with increasing revenue (this is where you seem to be refusing to hear what I am saying). Not contesting the notion for the moment if far different then agreeing with it.
“If your goal is to raise revenue, tax increases are counter productive”. That doesn’t mean that the goal is legitimate. It is simply challenging the economic means to an end who’s moral worth is left ambiguous for the moment in order to set up a broader discussion.
I don’t see how this is inconsistent with the Rothbard quote . It is simply a different approach then what you would take.
Questions of political values are moral question. Private property is a political value.
I am not pretending to do anything. Again, you keep making that false assumption and act shocked when I point out that you are missing what I am saying.
Trying to ground a discussion in economic reality before any moral discussions is not “pretending” to agree to something you don’t. It is simply choosing your battles.
I am pretty convinced you are more interested in making a personally gratifying argument then a persuasive one. That is a waste of time.