Well...Canada's corporate tax cut of 50% (from over 32 down now to about 16% ) has really stimulated our economy. Just look at all the jobs!

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    Apr 05, 2013 2:53 PM GMT
    http://ca.finance.yahoo.com/blogs/balance-sheet/canada-loses-55-000-jobs-march-unemployment-rate-125317238.html

    icon_lol.gif
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    Apr 05, 2013 3:07 PM GMT
    Sorry, any Canadian thread has to have some news about the US too. See how the payroll tax cut expiration did to the March employment numbers:

    http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/05/todays-jobs-report-is-a-disaster-but-why/
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    Apr 05, 2013 3:24 PM GMT
    *winks warmly at Q*

    2% eh?

    Retailers up here in Canada are poised to reap a great benefit, to the tune of about 6 billion dollars collectively and annually with the following, and this is going to give retailers in the US a giant pump as well;



    http://consumerist.com/2012/07/13/visa-mastercard-agree-to-let-merchants-charge-extra-to-credit-card-customers/

    I can barely imagine how much money those card co.s were raking in from US retailers, who were forbidden to pass the fees onto the card user. =O


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    Apr 05, 2013 8:56 PM GMT
    q1w2e3 saidSorry, any Canadian thread has to have some news about the US too. See how the payroll tax cut expiration did to the March employment numbers:

    http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/05/todays-jobs-report-is-a-disaster-but-why/


    Oh, tax increases reduce employment? *shocked* Well, no, not really.

    Thank you though for the context as it provides a good comparison to the US where unemployment is so much higher despite having lower minimum wage.

    For further context, despite these massive tax cuts, corporate taxes as a percentage of overall government revenues have remained stable... Let's restate this - corporate taxes went down, revenues from corporate taxes stayed pretty much the same.

    Laffer curve anyone?

    http://www.cato.org/blog/corporate-tax-low-rates-high-revenues
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    Apr 05, 2013 9:02 PM GMT
    riddler78 said
    q1w2e3 saidSorry, any Canadian thread has to have some news about the US too. See how the payroll tax cut expiration did to the March employment numbers:

    http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/05/todays-jobs-report-is-a-disaster-but-why/


    Oh, tax increases reduce employment? *shocked* Well, no, not really.

    Thank you though for the context as it provides a good comparison to the US where unemployment is so much higher despite having lower minimum wage.

    For further context, despite these massive tax cuts, corporate taxes as a percentage of overall government revenues have remained stable... Let's restate this - corporate taxes went down, revenues from corporate taxes stayed pretty much the same.

    Laffer curve anyone?

    http://www.cato.org/blog/corporate-tax-low-rates-high-revenues


    Austerity is austerity, whether in the form of tax increases or cuts, and it's going to dampen the economy when it's weak. No surprise there. When the economy improves, I'll be all for the payroll tax cut to lapse.

    And thank god you don't believe in THIS Laffer curve.

    mythlaffer2.jpg
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    Apr 05, 2013 9:05 PM GMT
    q1w2e3 said
    riddler78 said
    q1w2e3 saidSorry, any Canadian thread has to have some news about the US too. See how the payroll tax cut expiration did to the March employment numbers:

    http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/05/todays-jobs-report-is-a-disaster-but-why/


    Oh, tax increases reduce employment? *shocked* Well, no, not really.

    Thank you though for the context as it provides a good comparison to the US where unemployment is so much higher despite having lower minimum wage.

    For further context, despite these massive tax cuts, corporate taxes as a percentage of overall government revenues have remained stable... Let's restate this - corporate taxes went down, revenues from corporate taxes stayed pretty much the same.

    Laffer curve anyone?

    http://www.cato.org/blog/corporate-tax-low-rates-high-revenues


    Austerity is austerity, whether in the form of tax increases or cuts, and it's going to dampen the economy when it's weak. No surprise there. When the economy improves, I'll be all for the payroll tax cut to lapse.

    And thank god you don't believe in THIS Laffer curve.

    mythlaffer2.jpg


    Um that's not a curve. So you're saying that tax increases are a form of austerity? Why would an increase when the economy is strong make a difference in dampening the economy?

    It is odd that as a corrollary related to the discussion of this thread that you would therefore suggest that tax breaks are "stimulus" - when it's really letting people spend and keep more of their own money.
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    Apr 05, 2013 9:15 PM GMT
    Of course tax increases are a form of austerity. See what's going on in Britain? And since people in Congress are obsessed about the deficit rather than jobs, the lapse in the payroll tax break is just what they wanted. When the economy is better, that'll be the time to talk deficit reduction and higher taxes on everyone. Right now, only the rich can afford them.

    Funny, I thought most Republicans in Congress think of the Laffer curve as what I just posted.icon_lol.gif

    And most economists surveyed think that the Laffer curve, if it even exists as a curve, is a joke.

    http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_2irlrss5UC27YXi
    http://insights-foresight.blogspot.com/2011/03/myth-of-laffer-curve.html
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    Apr 05, 2013 9:25 PM GMT
    q1w2e3 saidOf course tax increases are a form of austerity. See what's going on in Britain? And since people in Congress are obsessed about the deficit rather than jobs, the lapse in the payroll tax break is just what they wanted. When the economy is better, that'll be the time to talk deficit reduction and higher taxes on everyone. Right now, only the rich can afford them.

    Funny, I thought most Republicans in Congress think of the Laffer curve as what I just posted.icon_lol.gif

    And most economists surveyed think that the Laffer curve, if it even exists as a curve, is a joke.

    http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_2irlrss5UC27YXi
    http://insights-foresight.blogspot.com/2011/03/myth-of-laffer-curve.html


    Of course? Yes, let's look at what's going on in Britain. The reason some people are more obsessed with the deficit is because of the massive spending problem that's wildly unsustainable and adding additional risk and costs to the economy. Funny, you'd probably be wrong that most Republicans think the Laffer curve was what you posted. But I think that's not a reflection of Republicans.

    As for your statement "And most economists surveyed think that the Laffer curve, if it even exists as a curve, is a joke." I'm sure you actually believe that, but the "proof" you provide says nothing of the sort given that it's a curve. You do know what a curve is right? And it is dependent on where you think the relationship sits on the curve.

    And for what it's worth, I also tend not to think that you will get more revenues - or see a direct relationship - but over time this stabilizes because yes, economic systems are complex. Another relationship that liberals often don't seem to understand is that forecast new taxes never generate what governments forecast and often create unintended consequences.

    Further, as for "austerity" what do you expect when you stop spending a lot of money in an economy on borrowed money? Whenever you turn off the juice, obviously there's going to be some consequences, but at least this lets markets figure out the sustainable equilibrium so you can grow again.
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    Apr 05, 2013 9:42 PM GMT
    riddler78 said
    q1w2e3 saidOf course tax increases are a form of austerity. See what's going on in Britain? And since people in Congress are obsessed about the deficit rather than jobs, the lapse in the payroll tax break is just what they wanted. When the economy is better, that'll be the time to talk deficit reduction and higher taxes on everyone. Right now, only the rich can afford them.

    Funny, I thought most Republicans in Congress think of the Laffer curve as what I just posted.icon_lol.gif

    And most economists surveyed think that the Laffer curve, if it even exists as a curve, is a joke.

    http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_2irlrss5UC27YXi
    http://insights-foresight.blogspot.com/2011/03/myth-of-laffer-curve.html


    Of course? Yes, let's look at what's going on in Britain. The reason some people are more obsessed with the deficit is because of the massive spending problem that's wildly unsustainable and adding additional risk and costs to the economy. Funny, you'd probably be wrong that most Republicans think the Laffer curve was what you posted. But I think that's not a reflection of Republicans.

    As for your statement "And most economists surveyed think that the Laffer curve, if it even exists as a curve, is a joke." I'm sure you actually believe that, but the "proof" you provide says nothing of the sort given that it's a curve. You do know what a curve is right? And it is dependent on where you think the relationship sits on the curve.

    And for what it's worth, I also tend not to think that you will get more revenues - or see a direct relationship - but over time this stabilizes because yes, economic systems are complex. Another relationship that liberals often don't seem to understand is that forecast new taxes never generate what governments forecast and often create unintended consequences.

    Further, as for "austerity" what do you expect when you stop spending a lot of money in an economy on borrowed money? Whenever you turn off the juice, obviously there's going to be some consequences, but at least this lets markets figure out the sustainable equilibrium so you can grow again.


    The second question in the survey--most economists disagree that decreasing taxes will raise revenue in the US. There's the consensus in that survey.

    And here's the Canadian Laffer curve:

    663px-Neo-Laffer-Curve.svg.png
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    Apr 05, 2013 9:52 PM GMT
    Q you let riddler derail. icon_lol.gif

    The fact is, cutting corp taxes in half to create jobs is a huge bottle of Dr Good Snake Oil. icon_lol.gif


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    Apr 05, 2013 10:00 PM GMT
    meninlove said Q you let riddler derail. icon_lol.gif

    The fact is, cutting corp taxes in half to create jobs is a huge bottle of Dr Good Snake Oil. icon_lol.gif




    Maybe it's because taxation (whether as statutory tax rates or effective tax burdens--the US corporate tax burden is really low now, compared to the past) has little direct influence on job creation, period.icon_lol.gif

    2-28-11tax-f1-infocus.jpg
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    Apr 05, 2013 10:12 PM GMT
    q1w2e3 said
    meninlove said Q you let riddler derail. icon_lol.gif

    The fact is, cutting corp taxes in half to create jobs is a huge bottle of Dr Good Snake Oil. icon_lol.gif




    Maybe it's because taxation (whether as statutory tax rates or effective tax burdens--the US corporate tax burden is really low now, compared to the past) has little direct influence on job creation, period.icon_lol.gif

    2-28-11tax-f1-infocus.jpg


    But, but...I thought cutting corporate taxes would mean the gov't would get more revenues. You know, pay the gov't less taxes and the gov't will get wealthier. Yeah, that's it.
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    Apr 06, 2013 3:30 AM GMT
    edwards2.jpg

    edwards1.jpg

    This despite the fact that Canadian corporate tax rates have dropped by half.
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    Apr 06, 2013 3:32 AM GMT
    q1w2e3 saidThe second question in the survey--most economists disagree that decreasing taxes will raise revenue in the US. There's the consensus in that survey

    And yet this is still not evidence for your original overreach. Again, this depends on where you think the US is on the curve. I would also agree with the above "consensus" - but this doesn't mean I think that the Laffer curve doesn't exist. Have you heard of Hauser's law?
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    Apr 06, 2013 6:13 AM GMT
    riddler78 said
    q1w2e3 saidThe second question in the survey--most economists disagree that decreasing taxes will raise revenue in the US. There's the consensus in that survey

    And yet this is still not evidence for your original overreach. Again, this depends on where you think the US is on the curve. I would also agree with the above "consensus" - but this doesn't mean I think that the Laffer curve doesn't exist. Have you heard of Hauser's law?


    Yes, and here's what wikipedia says about criticism of said "law":
    [url]http://en.wikipedia.org/wiki/Hauser%27s_law[/url]Forbes.com columnist Daniel J. Mitchell has argued that Hauser's Law has been observed due to the fact that the U.S. does not have a national sales tax and instead collects taxes in a federalist system, in contrast to many other Western nations. He also stated that the U.S. has an inherently more progressive system as well. Thus, he concluded that the Law represents a socio-political policy trend rather than a true economic law and that the trend could change rapidly if value-added taxes are imposed at the federal level.[8]

    Economist Mike Kimel, writing for the Angry Bear website, has stated that Hauser's Law is misleading as it sweeps large differences under the table. He wrote that tax revenue is higher in the years following a tax increase and lower in the years following a tax cut. He defined the time periods 1951-1953, 1967-1968, and 1991-2001 as "tax hike eras", and 1953-1967, 1969-1991, 2001-2010 as "tax cut eras", and points out that tax revenues increase in "tax hike eras" and that tax cuts lead to lower revenues.[9]

    Zubin Jelveh, writing for Portfolio.com, criticized the Wall Street Journal editorial for failing to adequately separate social insurance taxes from other types of tax revenues (such as income tax and corporate tax revenue). Because social insurance taxes go directly into the Social Security trust fund, revenue that is not earmarked for pension checks has actually fallen over the last 50 years. Jelveh points out that the main reason for this decline is a dramatic decline in corporate tax revenues, from more than 5% of GDP to less than 2%. Jelveh uses these facts to critique editorialist David Ranson's use of Hauser's Law to argue that raising tax rates on the rich will be ineffective at raising revenue.[10]

    Journalist Jonathan Chait has written in The New Republic that "swings are fairly dramatic" through U.S. history for tax receipts as a percent of GDP. He stated that the George H. W. Bush and Bill Clinton administrations received "massive" extra revenues as the result of tax increases while the George W. Bush administration tax cuts lead to a "massive" drop in revenues. He labeled the idea of static, flat revenues as a "scam".[11]


    The only time in recent history when there was a surplus and not a deficit was when taxes were above 20% of GDP during the latter half of the Clinton years. That is one big reason why the federal debt keeps piling up, and here's where David Stockman is right:

    http://www.nytimes.com/2010/08/01/opinion/01stockman.html?partner=rss&emc=rss&_r=0This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts.
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    Apr 06, 2013 6:27 AM GMT
    Let me clarify when I say the Laffer curve is a joke:
    The problem with the Laffer curve as typically represented is that people take it as a static curve, when in real life there are probably short term and long term curves. Having said that, the Clinton/Bush years show that we're almost certainly to the left of the short term curve, and very much so (see Saez' answer in the following):
    http://voices.washingtonpost.com/ezra-klein/2010/08/where_does_the_laffer_curve_be.html

    When Republicans invoke the Laffer curve, they invariably assume we're to the right of the curve (whereas evidence in the US is exactly the opposite), and I posted the exaggerated "mythical" Laffer curve as a way to summarize this.

    So yes, as used by Republicans, the Laffer curve is a joke.

    David Autor in that survey: "Not aware of any evidence in recent history where tax cuts actually raise revenue. Sorry, Laffer. "
    Austan Goolsbee: "Moon landing was real. Evolution exists. Tax cuts lose revenue. The reasearch has shown this a thousand times. Enough already."
    Michael Greenstone: "All evidence that I'm aware of suggest that cutting tax rates "marginally" from their current levels would DECREASE revenues, even 5 yrs out."
    Anil Kashyap: "May look plausible on a cocktail napkin (or at a cocktail party), but not true empirically in the US. "
    Richard Thaler: "That's a Laffer!" icon_lol.gif
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    Apr 06, 2013 6:40 AM GMT
    And here's a joke of a curve-fitting by AEI when a straight line would fit much nicer, after you take out Norway as an outlier:

    i-52f10b92b127efe3b084854fd413e78e-ED-AG
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    Apr 06, 2013 2:17 PM GMT
    As much as you try you laughably still don't meet the threshold of any sort of evidence that suggests that the Laffer curve is a "joke". Quite the opposite - given that academics point to different points in time where this has been the case - given that you sit at different points in the curve. You really don't seem to understand the Laffer curve...

    Look up Laffer curve and evidence on google and one of the first results is Goolsbee - and even he points out that there were points that it was relevant - but as other studies point out, it's not a simple system and different countries have different forces affecting tax revenues. Again, have you heard of Hauser's law?

    In the case of Canada however, what is clear is that despite the massive drop in corporate tax revenues, they have remained relatively stable.

    edwards2.jpg

    edwards1.jpg

    As even you point out however raising taxes would seem to hurt the economy - as it has for employment and payroll taxes. Not sure why you are for increasing taxes elsewhere then if you agree that the economy is not performing well now.
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    Apr 06, 2013 3:02 PM GMT
    Canadian corporate tax revenues as a percent of GDP have not decreased as a result of lower rates. But they haven't increased substantially, have they, even though the economic environment of the last 2 years have improved? I.e. you would potentially have had much more corporate revenue had the tax rate not been lowered. You haven't demonstrated the right side of your Laffer curve for Canada.

    Oh yes, I understand enough about the Laffer curve as imagined by Republicans. They imagine it's
    1. static (as if it doesn't change with the economic environment)
    2. lopsided with a large part of the right curve after, say, 30% (when history and economists like Saez say it's more like 60-70%)
    3. one-size-fits-all (hence the AEI graph above collecting a bunch of countries in 2004 and calling it a Laffer curve, which is completely different from what the original Laffer curve concept was)
    4. purely unaffected by other things such as loopholes, tax breaks and other distortions. The effective corporate tax rate in the US is 12-13% currently, for example.

    It's like plotting the temperature of patients and mortality. Yes, you can plot such a curve, but then to go around and say that lowering temperatures by itself will improve mortality is laughable, since there are so many other variables that affects the latter.

    And to glorify the political dysfunction regarding tax revenue that is a major cause of the US federal debt with the title "law" is just dandy.

    And yes, increasing taxes RIGHT NOW hurts the economy, but to address the deficit later when the economy is better, you got to increase taxes. Right now, only the richest can tolerate such a tax increase.
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    Apr 06, 2013 3:05 PM GMT
    So back to the topic: Canadian employment has not improved with lower corporate tax rates. Indisputable, no?icon_lol.gif
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    Apr 06, 2013 3:09 PM GMT
    q1w2e3 saidSo back to the topic: Canadian employment has not improved with lower corporate tax rates. Indisputable, no?icon_lol.gif


    Which is hardly surprising, because as we all know the problem in the current crisis, across a lot of countries, is lack of demand.

    It's amazing that so many people continue to fail to understand elementary economics!
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    Apr 06, 2013 3:11 PM GMT
    TigerTim said
    q1w2e3 saidSo back to the topic: Canadian employment has not improved with lower corporate tax rates. Indisputable, no?icon_lol.gif


    Which is hardly surprising, because as we all know the problem in the current crisis, across a lot of countries, is lack of demand.

    It's amazing that so many people continue to fail to understand elementary economics!


    Bingo.

    *licks gold stars, pastes them on Tiger's nips*

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    Apr 06, 2013 3:12 PM GMT
    q1w2e3 saidCanadian corporate tax revenues as a percent of GDP have not decreased as a result of lower rates. But they haven't increased substantially, have they, even though the economic environment of the last 2 years have improved? I.e. you would potentially have had much more corporate revenue had the tax rate not been lowered. You haven't demonstrated the right side of your Laffer curve for Canada.

    Oh yes, I understand enough about the Laffer curve as imagined by Republicans. They imagine it's
    1. static (as if it doesn't change with the economic environment)
    2. lopsided with a large part of the right curve after, say, 30% (when history and economists like Saez say it's more like 60-70%)
    3. one-size-fits-all (hence the AEI graph above collecting a bunch of countries in 2004 and calling it a Laffer curve, which is completely different from what the original Laffer curve concept was)
    4. purely unaffected by other things such as loopholes, tax breaks and other distortions. The effective corporate tax rate in the US is 12-13% currently, for example.

    It's like plotting the temperature of patients and mortality. Yes, you can plot such a curve, but then to go around and say that lowering temperatures by itself will improve mortality is laughable, since there are so many other variables that affects the latter.

    And to glorify the political dysfunction regarding tax revenue that is a major cause of the US federal debt with the title "law" is just dandy.

    And yes, increasing taxes RIGHT NOW hurts the economy, but to address the deficit later when the economy is better, you got to increase taxes. Right now, only the richest can tolerate such a tax increase.


    Thanks for interpreting a concept that you don't apparently understand - I mean if you are going to claim that you understand it the way Republicans do, I'm going to say you actually do not. Further, you seem to also ignore the plethora of evidence of the Laffer curve in the other direction. Why do you suppose it is that taxes never raise the amounts politicians and policymakers claim they will? It's persistent. Again, have you heard of Hauser's law?
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    Apr 06, 2013 3:13 PM GMT
    TigerTim said
    q1w2e3 saidSo back to the topic: Canadian employment has not improved with lower corporate tax rates. Indisputable, no?icon_lol.gif


    Which is hardly surprising, because as we all know the problem in the current crisis, across a lot of countries, is lack of demand.

    It's amazing that so many people continue to fail to understand elementary economics!


    Saying the problem is demand is like saying nothing at all - even worse is the claim that government can some how increase demand in any substantive or sustainable way. So yes, it is amazing so many people fail to understand elementary economics!
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    Apr 06, 2013 3:33 PM GMT


    "even worse is the claim that government can some how increase demand in any substantive or sustainable way."

    Take that up with conservative blow-hards in gov't that say it does, by cutting corporate taxes.

    However...:

    http://www.guardian.co.uk/politics/2011/may/28/corporation-tax-tuc-job-creation

    Del Mastro disagrees and says lowering corporate taxes will guarantee job creation. icon_lol.gif