Is low Taxation the cause of the current economic Depression?

[Richard-H]

It seems to me that investors choose their investments according to the risk vs. profit ratio.

Everyone wants low risk and high profits. Low taxation has created an investment environment that investors can obtain reasonably good profit with low risk.

The problem with this is that low risk investments are usually not the type that cause economic growth. They are usually investments in tried and true companies that have secured a market share in a fully developed market.

Higher taxation means lower profit which forces investors into higher risk investments - the type that develops new products and exploits new and expanding markets. These are the type of investments that cause economic growth.

So the result of low taxation is that while investors have the capital to invest, they do not invest in anything risky. Why would they?

 

[Two Thumbs]

This is the 2nd worst reason I have ever heard in support of increasing taxes.

#1 is 'fairness'

 

[Richard-H]

This is the 2nd worst reason I have ever heard in support of increasing taxes.

#1 is 'fairness'

Bummer...I never get to be #1 :-(

 

[Mr. H.]

This is the 2nd worst reason I have ever heard in support of increasing taxes.

#1 is 'fairness'

I don't think he's making an argument for increasing taxes, simply stating the effects of artificially induced low interest rates.

 

[Truthseeker1]

No, the Government simply needs to learn how to balance it's checkbook, like the rest of us. They could start by not giving away money [we borrow from China]] to every hell hole on Earth.

 

[Richard-H]

This is the 2nd worst reason I have ever heard in support of increasing taxes.

#1 is 'fairness'

I don't think he's making an argument for increasing taxes, simply stating the effects of artificially induced low interest rates.

I was making an argument for increased taxes, but now that you mention it, it seems that artificially induced low interest rates would also have a similar effect.

 

[Richard-H]

No, the Government simply needs to learn how to balance it's checkbook, like the rest of us. They could start by not giving away money [we borrow from China]] to every hell hole on Earth.

There doesn't seem to be a relationship between high federal debt and poor economic performance. The only way that high federal debt would cause economic problems is if the government were not able to make the interest payments on the debt - we're many years from that.

The conservative argument that our current economic doldrums are because of federal debt is purely contrived for political purposes.

However, of you can explain exactly why high federal debt is causing us economic problems, I'm listening.

 

[HenryBHough]

There comes a point where taxation can reduce tax income to zero.

For example, if capital gains are taxed at 50% then many owners of things like real estate decide not to sell - just to hang on. If no deal is done; no sale is made then there is nothing to tax, hence no tax revenue.

But it gets worse. Property owners taxed heavily enough not only hang onto property they really don't want anymore but stop paying all taxes, including property taxes, and allow the property to degenerate. Then they walk away.

Think it doesn't happen?

Then you never visited Detroit.

 

[Quantum Windbag]

It seems to me that investors choose their investments according to the risk vs. profit ratio.

Everyone wants low risk and high profits. Low taxation has created an investment environment that investors can obtain reasonably good profit with low risk.

The problem with this is that low risk investments are usually not the type that cause economic growth. They are usually investments in tried and true companies that have secured a market share in a fully developed market.

Higher taxation means lower profit which forces investors into higher risk investments - the type that develops new products and exploits new and expanding markets. These are the type of investments that cause economic growth.

So the result of low taxation is that while investors have the capital to invest, they do not invest in anything risky. Why would they?

Which explains why the stock market is so low, while T-Bills continue to deliver a high interest rate.

Wait...

 

[Quantum Windbag]

This is the 2nd worst reason I have ever heard in support of increasing taxes.

#1 is 'fairness'

I don't think he's making an argument for increasing taxes, simply stating the effects of artificially induced low interest rates.

I don't think you read the same OP everyone else is seeing.

 

[Quantum Windbag]

This is the 2nd worst reason I have ever heard in support of increasing taxes.

#1 is 'fairness'

I don't think he's making an argument for increasing taxes, simply stating the effects of artificially induced low interest rates.

I was making an argument for increased taxes, but now that you mention it, it seems that artificially induced low interest rates would also have a similar effect.

The theory behind the low interest rates is that the increased investment opportunities for rich people will result in a trickle down effect that will benefit the middle class. Funny how progressives hate trickle down economics, until they love it.

 

[Truthseeker1]

No, the Government simply needs to learn how to balance it's checkbook, like the rest of us. They could start by not giving away money [we borrow from China]] to every hell hole on Earth.

There doesn't seem to be a relationship between high federal debt and poor economic performance. The only way that high federal debt would cause economic problems is if the government were not able to make the interest payments on the debt - we're many years from that.

The conservative argument that our current economic doldrums are because of federal debt is purely contrived for political purposes.

However, of you can explain exactly why high federal debt is causing us economic problems, I'm listening.

I'll turn that question around to you. Please qualify your statement.
I'll add to mine....this country no longer produces any significant quantity of goods. Perhaps we could start manufacturing again.

 

[Richard-H]

There comes a point where taxation can reduce tax income to zero.

For example, if capital gains are taxed at 50% then many owners of things like real estate decide not to sell - just to hang on. If no deal is done; no sale is made then there is nothing to tax, hence no tax revenue.

But it gets worse. Property owners taxed heavily enough not only hang onto property they really don't want anymore but stop paying all taxes, including property taxes, and allow the property to degenerate. Then they walk away.

Think it doesn't happen?

Then you never visited Detroit.

The disaster in Detroit happened because real estate values across the whole country dropped like a rock. Properties were so far under water that selling made no sense. I'm sure that taxes didn't help, but saying that taxes were the cause isn't right.

 

[Richard-H]

No, the Government simply needs to learn how to balance it's checkbook, like the rest of us. They could start by not giving away money [we borrow from China]] to every hell hole on Earth.

There doesn't seem to be a relationship between high federal debt and poor economic performance. The only way that high federal debt would cause economic problems is if the government were not able to make the interest payments on the debt - we're many years from that.

The conservative argument that our current economic doldrums are because of federal debt is purely contrived for political purposes.

However, of you can explain exactly why high federal debt is causing us economic problems, I'm listening.

I'll turn that question around to you. Please qualify your statement.
I'll add to mine....this country no longer produces any significant quantity of goods. Perhaps we could start manufacturing again.

In other words...you don't have an answer. There is no relation between the federal debt and the current economic depression.

I agree that we need to increase manufacturing, but that's a different discussion.

 

[Richard-H]

It seems to me that investors choose their investments according to the risk vs. profit ratio.

Everyone wants low risk and high profits. Low taxation has created an investment environment that investors can obtain reasonably good profit with low risk.

The problem with this is that low risk investments are usually not the type that cause economic growth. They are usually investments in tried and true companies that have secured a market share in a fully developed market.

Higher taxation means lower profit which forces investors into higher risk investments - the type that develops new products and exploits new and expanding markets. These are the type of investments that cause economic growth.

So the result of low taxation is that while investors have the capital to invest, they do not invest in anything risky. Why would they?

Which explains why the stock market is so low, while T-Bills continue to deliver a high interest rate.

Wait...

Stock investments are, for the most part, low risk investments - especially now that corporate profits are high and corporations are sitting on huge sums of cash. Companies are not taking risks. The reliability of the market has been excellent except for the disaster in 2007. Most people believe that will never happen again.

 

[Quantum Windbag]

It seems to me that investors choose their investments according to the risk vs. profit ratio.

Everyone wants low risk and high profits. Low taxation has created an investment environment that investors can obtain reasonably good profit with low risk.

The problem with this is that low risk investments are usually not the type that cause economic growth. They are usually investments in tried and true companies that have secured a market share in a fully developed market.

Higher taxation means lower profit which forces investors into higher risk investments - the type that develops new products and exploits new and expanding markets. These are the type of investments that cause economic growth.

So the result of low taxation is that while investors have the capital to invest, they do not invest in anything risky. Why would they?

Which explains why the stock market is so low, while T-Bills continue to deliver a high interest rate.

Wait...

Stock investments are, for the most part, low risk investments - especially now that corporate profits are high and corporations are sitting on huge sums of cash. Companies are not taking risks. The reliability of the market has been excellent except for the disaster in 2007. Most people believe that will never happen again.

If stock was a low risk investment it would deliver a lower yield. For example, even though they were protected by law, every pension fund that invested in GM was fucked because of the way Obama handled the bankruptcy. Does that sound low risk to you?

By the way, the market has crashed 5 times since 2007. Anyone that thinks crashes aren't going to happen must have been asleep all that time.

 

[Mr. H.]

This is the 2nd worst reason I have ever heard in support of increasing taxes.

#1 is 'fairness'

I don't think he's making an argument for increasing taxes, simply stating the effects of artificially induced low interest rates.

I don't think you read the same OP everyone else is seeing.

Roger that. Got it.

 

[expat_panama]

... Higher taxation means lower profit which forces investors into higher risk investments ...

Seriously?

I mean, you can't be saying that there's some super big tax hike that's big enough to make you want to go right out and invest all your money in some exceptionally high risk business.

 

[Truthseeker1]

There doesn't seem to be a relationship between high federal debt and poor economic performance. The only way that high federal debt would cause economic problems is if the government were not able to make the interest payments on the debt - we're many years from that.

The conservative argument that our current economic doldrums are because of federal debt is purely contrived for political purposes.

However, of you can explain exactly why high federal debt is causing us economic problems, I'm listening.

I'll turn that question around to you. Please qualify your statement.
I'll add to mine....this country no longer produces any significant quantity of goods. Perhaps we could start manufacturing again.

In other words...you don't have an answer. There is no relation between the federal debt and the current economic depression.

I agree that we need to increase manufacturing, but that's a different discussion.

I've noticed that our bankruptcy courts are full of individuals that 'serviced' the interest on their debt and continued deficit spending until their creditors cut them off. How is National spending any different? I disagree with your statement that we are years away from being unable to service our debt. And please don't counter with the quanitative easing argument, that's paramont to counterfeiting in my book.
Also, you didn't qualify your statement, you simply repeated it.

 

[Richard-H]

I'll turn that question around to you. Please qualify your statement.
I'll add to mine....this country no longer produces any significant quantity of goods. Perhaps we could start manufacturing again.

In other words...you don't have an answer. There is no relation between the federal debt and the current economic depression.

I agree that we need to increase manufacturing, but that's a different discussion.

I've noticed that our bankruptcy courts are full of individuals that 'serviced' the interest on their debt and continued deficit spending until their creditors cut them off. How is National spending any different? I disagree with your statement that we are years away from being unable to service our debt. And please don't counter with the quanitative easing argument, that's paramont to counterfeiting in my book.
Also, you didn't qualify your statement, you simply repeated it.

There is a huge difference between the federal government's finances and the finances of individuals. Whenever conservatives compare some example of an individual's finances and then ask why there is any difference between that and the federal government, I have to laugh.

It shows that you do not have any understanding of economics:

The federal government can print money in any quantity it wants - no individual or institution or government can do that. The federal government can also issue bonds, and those bonds are the single staple of the world's economy. They are the world's most secure investment. (As long as the Tea Party doesn't fuck that up).

Financially, there is no individual government or institution that compares with the Federal government.