Tim was on the right track. His whole point was to illustrate that there is an upper limit to tax rates…as in a point at which tax revenue actually decreases as the tax rate increases. This is undeniable. There is also a point at which lower tax rates lead to lower tax revenue. This is illustrated quite nicely by the charts in that link Douglas Jones gave. It’s interesting the title of that post claims it “debunks” the Laffer Curve, when in fact it agrees with everything the curve says. The only debate is where exactly those points are…which is almost impossible to tell. (Again, as the post admits).
But going back to Douglas Jones’ first comment, first off you have to notice he’s falling into the same trap we covered earlier…namely that the level of government spending is a given. He says “To fix the problem easily you just cut out the Bush tax cut loop hole subsides for corporations and oil companies that can afford their jet airplanes and dinners!” Notice again we hear nothing about simply not spending so much. But notice also what he says…he calls tax cut loopholes (which, I’m not even sure what that means, as I thought the tax cuts were the problem, but apparently there’s loopholes in tax cuts that allow you to pay less taxes?)…but anyway he calls them “subsidies”…again, as in, letting people keep more of their money is a “handout”. But this is actually even worse because by definition a “subsidy” actually is a handout. Meaning it is money taken from one person and handed over to another. This is the exact opposite of a tax cut. He may not be meaning to say this, but if you go by what he wrote, he’s claiming that letting people keep more of their own money is literally taking money from someone and handing it to someone else. I doubt he realizes this error, but it just goes to show how much he really knows.
His next sentence is equally rich: “They are NOT creating jobs or we wouldn’t have a lack or revenue or a recession would NOT have happened!” We can take it in parts. First of all, “they are not creating jobs”. I assume he’s going by the unemployment numbers. So we can get this straight…A company either does not expand (and hire more people) because it simply cannot (i.e. it doesn’t have (or at least have the access to) the resources to do so) or it does have the resources and simply decides not to expand because it realizes it wouldn’t be profitable. (I would hope he would at least agree to this…I would think we could assume that a company is interested in more profit.) The question is, why doesn’t the company have access to the resources it needs, or in the latter case, why wouldn’t more profit be generated from expanding operations? I would love to hear his attempted answer to those questions, but I’ll give you the real one: because government intervention in the market makes it that way.
First, there isn’t any capital available for small firms because the government is crowding everyone out of the market. Second, regulation and taxes make it such that expanding operations (and hiring more employees) is actually so costly that the company would lose money on the operation. This is why jobs aren’t being created. The resources and climate necessary to do so are being destroyed by government interference. (For a deeper look into this, here is a recent source.)
Next we can look at his assertion that if jobs were being created “we wouldn’t have a lack of revenue”. Well…if one takes “a lack of revenue” to mean taking in less than what is spent (i.e. a deficit), obviously we’ve had a “lack of revenue” for the vast majority of the 20th century. (Even the Clinton “surpluses” were legerdemain. I.E. the national debt actually increased during the entirety of Clinton’s tenure). So here again, we obviously can’t blame tax rates or the greedy businessmen of modern times. The government is collecting more money in taxes than ever in history, and we have bigger deficits than any time in history. Obviously revenue is not the problem.
Then he claims that “a recession would NOT have happened!”. This one he is pretty sure about, as illustrated by his exclamation point. But this is obviously nothing less than idiocy. He’s essentially saying “if the guy wasn’t pushed off the bridge, he wouldn’t have fallen.” Yes, technically if somehow millions of jobs were created throughout the late 2000s, there wouldn’t have been a recession. But technically if a pig had wings it wouldn’t be pig. The point is his statement is obviously useless, as it assumes that jobs somehow could have been created, but just weren’t (because job creaters are evil or something I guess).
If you’re interested, I would definitelly check out Meltdown by Thomas Woods. It would be impressive if you could get any of those guys to read it, but obviously if you read it, you would better understand what really happened and the reasonings for it, so that you might better explain and debate.
And although you may not be able to get them to read a book (even though it’s quite short) you may be able to get them to watch a movie…
Overdose: The Next Financial Crisis is possibly the best I’ve seen for explaining the crisis. It’s based on Johan Norberg’s book Financial Fiasco and includes interviews with Peter Schiff, Gerald Celente, Vernon Smith, and even a former chief economist for Freddie Mac saying the regulatory structure was “spotty”. It introduces the concept of low interest rates created by the Federal Reserve creating booms and uses the analogy of spiking a punch bowl at a party. It’s here on YouTube in its entirety.