Occupy Wall Street protest in New-York

[OmCheeto]

Focus!

Me: The antidote to apathy
...
We play an important role in developing our relationship with political change, mainly by ignoring politics and focusing on celebrities and scandals.
...

Sorry!...(not really)

On Thursday I put together a spreadsheet projecting the 1986 tax rates superimposed over the income levels of people in 2009, corrected for inflation of course.

I was surprised to find that even if we had the 1986 tax rates in place today, there would only be $279 billion difference. (It was greatly simplified, as I don't have all the numbers, so that number is just wild ballpark)

But anyways, the graph kind of tied in with the "tax the rich" mentality of the OWS movement. An article I read this morning said there's some guy who's now worth $15.5 billion, and he just broke a billion 4 years ago. I of course plugged his average income into my super duper tax calculator and discovered that his tax reduction amounted to ~$580 million dollars a year. Not really that much, considering that the 14+ million people who averaged making $7400 that year benefited with a tax reduction of $95 per year, totaling ~$1.3 billion.

So in fact, it's true what the conservatives are saying. This guy banked an extra $2.32 billion in tax cuts over 4 years, while the poor people banked an extra $5.2 billion in the same period. 5.2 > 2.32

But the funny part was, he took all his money, and bought gold, and of course, that's where he made much of his bank over these 4 years.

So what's my point? hmmm... (think Om think!)

Ok. How is this guy creating jobs?

$580,000,000 per year could have created ~15,000 $39k/yr jobs.
And he was just one person.

Let's see. If he worked 16 hours a day, 7 days a week, for 4 years, that comes out to about $663,000 per hour.

hmmm...

Could I do that? What if everyone did that?
hmmm... $3.875billion/year * 150million workers = $585 quadrillion a year gdp.

ah ha! Now I understand the derivatives market.

But anyways, I'm all over the place this morning, with voodoo economics numbers. I should get serious.

I saw in http://www.businessweek.com/news/2011-10-23/real-grievances-fuel-occupy-wall-street-protests-Albert-r-hunt.html" that Newt Gingrich said the protests were a

natural outcome of a bad education system teaching them really dumb ideas.

Can anyone point out the really dumb ideas for me? (And please don't quote the stupid fantasy commie list.)

...Angelo Mozilo, the chief executive officer of Countrywide, who Gingrich didn’t mention, had to settle a Securities and Exchange Commission suit alleging securities fraud for misleading investors even as he made $140 million through stock sales and was driving his company into the ditch. It was the fact that Mozilo and his ilk created devastation for so many people and walked away free and rich that fuels so much of the populist sentiment.

bolding mine

Since when is fighting fraud a dumb idea, Newt?
Since when is putting crooks in jail a dumb idea, Newt?
Since when is raising the taxes on someone who makes almost a million freaking dollars an hour a dumb idea, Newt?

Didn't Jefferson once say that we should have a revolution every 20 years.
I'd say we are 215 years overdue.

Ah ha! And I've finally learned what that quote was referring to. (I suck at history)

http://en.wikipedia.org/wiki/Shays%27_Rebellion"
was an armed uprising in central and western Massachusetts (mainly Springfield) from 1786 to 1787. The rebellion is named after Daniel Shays, a veteran of the American Revolutionary War.
...
The financial situation leading to the rebellion included the problem that European war investors (among others) demanded payment in gold and silver; there was not enough specie in the states, including Massachusetts, to pay the debts; and throughout the state, wealthy urban businessmen were trying to squeeze whatever assets they could get out of rural smallholders. Since the smallholders did not have the gold that the creditors demanded, everything they had was confiscated, including their houses.

Sounds familiar.

 

[edward]

Focus!



Sorry!...(not really)

On Thursday I put together a spreadsheet projecting the 1986 tax rates superimposed over the income levels of people in 2009, corrected for inflation of course.

I was surprised to find that even if we had the 1986 tax rates in place today, there would only be $279 billion difference. (It was greatly simplified, as I don't have all the numbers, so that number is just wild ballpark)

But anyways, the graph kind of tied in with the "tax the rich" mentality of the OWS movement. An article I read this morning said there's some guy who's now worth $15.5 billion, and he just broke a billion 4 years ago. I of course plugged his average income into my super duper tax calculator and discovered that his tax reduction amounted to ~$580 million dollars a year. Not really that much, considering that the 14+ million people who averaged making $7400 that year benefited with a tax reduction of $95 per year, totaling ~$1.3 billion.

So in fact, it's true what the conservatives are saying. This guy banked an extra $2.32 billion in tax cuts over 4 years, while the poor people banked an extra $5.2 billion in the same period. 5.2 > 2.32

But the funny part was, he took all his money, and bought gold, and of course, that's where he made much of his bank over these 4 years.

So what's my point? hmmm... (think Om think!)

Ok. How is this guy creating jobs?

$580,000,000 per year could have created ~15,000 $39k/yr jobs.
And he was just one person.

Let's see. If he worked 16 hours a day, 7 days a week, for 4 years, that comes out to about $663,000 per hour.

hmmm...

Could I do that? What if everyone did that?
hmmm... $3.875billion/year * 150million workers = $585 quadrillion a year gdp.

ah ha! Now I understand the derivatives market.

But anyways, I'm all over the place this morning, with voodoo economics numbers. I should get serious.

I saw in http://www.businessweek.com/news/2011-10-23/real-grievances-fuel-occupy-wall-street-protests-Albert-r-hunt.html" that Newt Gingrich said the protests were a

Can anyone point out the really dumb ideas for me? (And please don't quote the stupid fantasy commie list.)

bolding mine

Since when is fighting fraud a dumb idea, Newt?
Since when is putting crooks in jail a dumb idea, Newt?
Since when is raising the taxes on someone who makes almost a million freaking dollars an hour a dumb idea, Newt?

Didn't Jefferson once say that we should have a revolution every 20 years.
I'd say we are 215 years overdue.

Ah ha! And I've finally learned what that quote was referring to. (I suck at history)





Sounds familiar.

Great post Om

 

[WhoWee]

Focus!



Sorry!...(not really)

On Thursday I put together a spreadsheet projecting the 1986 tax rates superimposed over the income levels of people in 2009, corrected for inflation of course.

I was surprised to find that even if we had the 1986 tax rates in place today, there would only be $279 billion difference. (It was greatly simplified, as I don't have all the numbers, so that number is just wild ballpark)

But anyways, the graph kind of tied in with the "tax the rich" mentality of the OWS movement. An article I read this morning said there's some guy who's now worth $15.5 billion, and he just broke a billion 4 years ago. I of course plugged his average income into my super duper tax calculator and discovered that his tax reduction amounted to ~$580 million dollars a year. Not really that much, considering that the 14+ million people who averaged making $7400 that year benefited with a tax reduction of $95 per year, totaling ~$1.3 billion.

So in fact, it's true what the conservatives are saying. This guy banked an extra $2.32 billion in tax cuts over 4 years, while the poor people banked an extra $5.2 billion in the same period. 5.2 > 2.32

But the funny part was, he took all his money, and bought gold, and of course, that's where he made much of his bank over these 4 years.

So what's my point? hmmm... (think Om think!)

Ok. How is this guy creating jobs?

$580,000,000 per year could have created ~15,000 $39k/yr jobs.
And he was just one person.

Let's see. If he worked 16 hours a day, 7 days a week, for 4 years, that comes out to about $663,000 per hour.

hmmm...

Could I do that? What if everyone did that?
hmmm... $3.875billion/year * 150million workers = $585 quadrillion a year gdp.

ah ha! Now I understand the derivatives market.

But anyways, I'm all over the place this morning, with voodoo economics numbers. I should get serious.

I saw in http://www.businessweek.com/news/2011-10-23/real-grievances-fuel-occupy-wall-street-protests-Albert-r-hunt.html" that Newt Gingrich said the protests were a

Can anyone point out the really dumb ideas for me? (And please don't quote the stupid fantasy commie list.)

bolding mine

Since when is fighting fraud a dumb idea, Newt?
Since when is putting crooks in jail a dumb idea, Newt?
Since when is raising the taxes on someone who makes almost a million freaking dollars an hour a dumb idea, Newt?

Didn't Jefferson once say that we should have a revolution every 20 years.
I'd say we are 215 years overdue.

Ah ha! And I've finally learned what that quote was referring to. (I suck at history)





Sounds familiar.

The question you should be asking is this - WHY would the rich guy in your example choose to buy gold rather than re-invest in a US based business and create jobs?

 

[Vanadium 50]

The question you should be asking is this - WHY would the rich guy in your example choose to buy gold rather than re-invest in a US based business and create jobs?

Um...because he's rich and therefore eeeeeevvvvilllll!

 

[DoggerDan]

Great quote, Laurie. In addition to the point you made, I love the reference to divine providence and "the Supreme Judge of the world." In light of these and similar documents of recorded history, it's a wonder how anyone can rationally maintain the roots of our country were non-religious.

 

[OmCheeto]

The question you should be asking is this - WHY would the rich guy in your example choose to buy gold rather than re-invest in a US based business and create jobs?

Good question. How did he make is initial fortune?

http://www.forbes.com/profile/john-paulson/" became a billionaire in 2007 shorting subprime securities and earning a $3.5 billion payout.

What did someone say a while back about shorting?

It [shorting] makes the market efficient and rewards those that have the best perception

Well, we know why he shorted the securites; Because he had the best perception, and wanted to make the market more efficient. Admirable.

I actually don't know why he invested in gold. His perception is different than mine. He was probably uncertain about the future and simply got lucky. Though, given that he made is first bundle in 2007, and the market crashed in 2008, he probably could have made a whole lot more if he had started shorting everything, if he really had better perception than the rest of us fools. Maybe he just needed a rest, after working so many hours, for so many years.

Interesting that someone from that forum I was discussing yesterday was predicting this kind of money being made:

Sep20-08
hmmmm... let's see. get washington to deregulate to the point of absurdity by telling them that only commies would regulate the market. inflate the bubble. pop the bubble. sell short. make several trillion dollars.

man I want to see the list of next years Forbes 400...

My apologies if my post is a bit naive. I've only been studying wall street for about 3 days.

Got his wish. A couple years late, but it's no matter.

Here's a modified version of his cow story. I'm sure Evo will like this one too:

My interpretation of short selling:

Frank owns a sick cow worth $50, but advertises it for $1000, just because.
Suzy wants a healthy cow, and is willing to pay $1000.
Bill knows Suzy wants a healthy cow, so he rents the sick cow from Frank for $10, and sells it to Suzy $1000.
Nobody tells Suzy the cow was sick. (shhhhh...)
Suzy eventually finds out the cow is sick, and sells it back to Bill for $50, even though Bill never owned the damn cow.
Bill takes the cow back to Frank.
Suzy's out $950.
Frank has his $50 sick cow plus $10 = $60
Bill has made $950, even though he only started with $10.

But it made the market more efficient!
A $50 cow selling for $1000 = market inefficiency =
A $50 cow selling for $50 = perfect market efficiency =

Frank and Bill conspiring to fleece Suzy out of $950 should = fraud.

But it's known as "best perception", because Wall Streeters are too honest to fleece anyone = Cha-Ching!

 

[ParticleGrl]

The question you should be asking is this - WHY would the rich guy in your example choose to buy gold rather than re-invest in a US based business and create jobs?

What ACTUALLY creates jobs? Let's say instead of buying gold, he bought stock in Apple. Would that have created jobs? Let's say he donated it all to a non-profit? Would that create jobs? If he gave it to a hedge fund to manage, does that create jobs? I know plenty of "rich people" who have moved most of their holdings away from equity markets and into US treasuries? Did that create jobs? Why didn't buying gold create jobs?

People throw "job-creation" around, but never stop to think about what it means, and the result is mushy-headed handwaving. What actually creates jobs?

I'll be fair and give my answer:
1. I can't find a single macro model where marginal tax rates have a first-order effect on job creation. The reason is pretty simple- whatever maximizes your profit before taxes ALSO maximizes your profits AFTER taxes. To first order, a well managed company should hire just as many workers before taxes as after taxes.

2. I can't find a single macro model where spent money DOESN'T have a first-order effect on job creation. If someone wants to buy more of my products I HAVE to build more factories and hire more workers.

Therefore, it seems to me that fiddling with marginal tax rates has little to do with jobs. Fiddling with government spending, however, can have big impacts.

 

[OmCheeto]

What ACTUALLY creates jobs? Let's say instead of buying gold, he bought stock in Apple. Would that have created jobs? Let's say he donated it all to a non-profit? Would that create jobs? If he gave it to a hedge fund to manage, does that create jobs? I know plenty of "rich people" who have moved most of their holdings away from equity markets and into US treasuries? Did that create jobs? Why didn't buying gold create jobs?

People throw "job-creation" around, but never stop to think about what it means, and the result is mushy-headed handwaving. What actually creates jobs?

I'll be fair and give my answer:
1. I can't find a single macro model where marginal tax rates have a first-order effect on job creation. The reason is pretty simple- whatever maximizes your profit before taxes ALSO maximizes your profits AFTER taxes. To first order, a well managed company should hire just as many workers before taxes as after taxes.

2. I can't find a single macro model where spent money DOESN'T have a first-order effect on job creation. If someone wants to buy more of my products I HAVE to build more factories and hire more workers.

Therefore, it seems to me that fiddling with marginal tax rates has little to do with jobs. Fiddling with government spending, however, can have big impacts.

I have not a clue what you just said. And you asked 9 questions.

There should be a rule...

I think he may have put all his money into gold, because he was retiring.

Wait! On second inspection, you asked 7 questions, but utilized 9 question marks. There should be a rule against that also.

 

[mheslep]

...

I'll be fair and give my answer:
1. I can't find a single macro model where marginal tax rates have a first-order effect on job creation. The reason is pretty simple- whatever maximizes your profit before taxes ALSO maximizes your profits AFTER taxes. To first order, a well managed company should hire just as many workers before taxes as after taxes.

Lets hear it for the 99% corporate tax rate, which will have no effect on the private economy!

 

[mheslep]

Why soaking the rich won't work
https://www.youtube.com/watch?v=Wi-D24oCa10

 

[WhoWee]

What ACTUALLY creates jobs? Let's say instead of buying gold, he bought stock in Apple. Would that have created jobs? Let's say he donated it all to a non-profit? Would that create jobs? If he gave it to a hedge fund to manage, does that create jobs? I know plenty of "rich people" who have moved most of their holdings away from equity markets and into US treasuries? Did that create jobs? Why didn't buying gold create jobs?

People throw "job-creation" around, but never stop to think about what it means, and the result is mushy-headed handwaving. What actually creates jobs?

I'll be fair and give my answer:
1. I can't find a single macro model where marginal tax rates have a first-order effect on job creation. The reason is pretty simple- whatever maximizes your profit before taxes ALSO maximizes your profits AFTER taxes. To first order, a well managed company should hire just as many workers before taxes as after taxes.

2. I can't find a single macro model where spent money DOESN'T have a first-order effect on job creation. If someone wants to buy more of my products I HAVE to build more factories and hire more workers.

Therefore, it seems to me that fiddling with marginal tax rates has little to do with jobs. Fiddling with government spending, however, can have big impacts.

He could have funded the start up of a solar energy company - like Solyndra. He could also have funded the re-opening of the closed auto factory in Delaware to build electric autos. Unfortunately, the US Government beat him to both of those money makers.

In all seriousness - direct investment into a start-up or expansion of an existing business create jobs. However, the business model has to be realistic.

 

[Bacle2]

What ACTUALLY creates jobs? Let's say instead of buying gold, he bought stock in Apple. Would that have created jobs? Let's say he donated it all to a non-profit? Would that create jobs? If he gave it to a hedge fund to manage, does that create jobs? I know plenty of "rich people" who have moved most of their holdings away from equity markets and into US treasuries? Did that create jobs? Why didn't buying gold create jobs?

People throw "job-creation" around, but never stop to think about what it means, and the result is mushy-headed handwaving. What actually creates jobs?

I'll be fair and give my answer:
1. I can't find a single macro model where marginal tax rates have a first-order effect on job creation. The reason is pretty simple- whatever maximizes your profit before taxes ALSO maximizes your profits AFTER taxes. To first order, a well managed company should hire just as many workers before taxes as after taxes.

2. I can't find a single macro model where spent money DOESN'T have a first-order effect on job creation. If someone wants to buy more of my products I HAVE to build more factories and hire more workers.

Therefore, it seems to me that fiddling with marginal tax rates has little to do with jobs. Fiddling with government spending, however, can have big impacts.

I remeber a study by the non-partisan CBO that concluded that cutting taxes at the top non only did not lead to the creation of jobs, but also created deficits, while cutting the taxes at the bottom actually helped. The reason given was that those at the top can already afford what they want and need, so they tend to either use the extra money to speculate. Those at the bottom and middle do not, so most of any new money that comes in will be spent to buy clothes, pay for food, other expenses.

 

[WhoWee]

Lets hear it for the 99% corporate tax rate, which will have no effect on the private economy!

I remeber a study by the non-partisan CBO that concluded that cutting taxes at the top non only did not lead to the creation of jobs, but also created deficits, while cutting the taxes at the bottom actually helped. The reason given was that those at the top can already afford what they want and need, so they tend to either use the extra money to speculate. Those at the bottom and middle do not, so most of any new money that comes in will be spent to buy clothes, pay for food, other expenses.

What do you think cutting the payroll deduction - that funds Social Security - does for the economy?

 

[edward]

What do you think cutting the payroll deduction - that funds Social Security - does for the economy?

People can buy more products to stimulate the economy. Unfortunately it will probably be the Chinese economy.

 

[WhoWee]

People can buy more products to stimulate the economy. Unfortunately it will probably be the Chinese economy.

Isn't the estimate about $10 - $20 per week average?
http://taxes.about.com/od/payroll/a/Reduced-Social-Security-Withholding-For-2011.htm

On the other hand, can the Social Security system REALLY take a hit of $500 to $1,000 per year per worker? Does this make sense to anyone?

 

[Char. Limit]

Lets hear it for the 99% corporate tax rate, which will have no effect on the private economy!

Way to ride the slippery slope there.

 

[John Creighto]

I remeber a study by the non-partisan CBO that concluded that cutting taxes at the top non only did not lead to the creation of jobs, but also created deficits, while cutting the taxes at the bottom actually helped. The reason given was that those at the top can already afford what they want and need, so they tend to either use the extra money to speculate. Those at the bottom and middle do not, so most of any new money that comes in will be spent to buy clothes, pay for food, other expenses.

Why would you consider speculation good for the economy? Also can you provide a link to the study.

 

[Bacle2]

John Creighto:
The point was actually the opposite: a lowering of taxes at the top would not help, because the additional money would likely be only used for speculation, which does not, in general create many jobs. Extra money at the bottom center would lead to the hiring of plumbers, electricians, etc. , to do repair jobs, to buying clothes, school supplies,etc which would help keep many employed, while someone who already makes, say, $1M after taxes would likely speculate with the extra $ , while, at best, buying of one-time luxury items, which does not help long-term employment.
I will look for a link, ref.

And, yes, others' point on Social Security is well-taken. Still, while not perfect, at least lowering payroll taxes may produce some benefit, arguably a larger overall benefit across society as a whole, than cutting at the top.

 

[ParticleGrl]

Lets hear it for the 99% corporate tax rate, which will have no effect on the private economy!

Obviously, if you nearly triple rates you can expect to second (and higher) order effects to matter. You didn't really answer the point, do you know a macro model that suggests marginal tax rates have a first-order effect on unemployment? Is there such a model?

 

[OmCheeto]

People can buy more products to stimulate the economy. Unfortunately it will probably be the Chinese economy.

I went to Ace Hardware a few weeks ago to buy some garden stuff. Tried not to buy Chinese. Didn't have a choice.

China $25
America $0

multiply that by 3E8 * other sundries and you get a big American...

FAIL!

Maybe we should all join Cantor, and start shorting the dollar...

hmmm... There's an interesting market problem. What if everyone shorts everything?
Shorting is supposed to make the market more efficient.

Gads.

Thank you Edward. Solution to our problem. 100% participation in the market shorting mechanism will make the markets 100% efficient!

Where's Char? I'm sure he can verify my maths.



We just need to get a hold of Soros and figure out how he convinced the French banks to buy $50 billion dollars worth of British Pounds for $100 billion dollars. (whatever...)

(see above if you don't understand the shorting mechanism.
or you can google: site:physicsforums.com short cow fraud
it's the first link)

 

[WhoWee]

Obviously, if you nearly triple rates you can expect to second (and higher) order effects to matter. You didn't really answer the point, do you know a macro model that suggests marginal tax rates have a first-order effect on unemployment? Is there such a model?

If you want a tax policy that creates jobs - the incentive/credit must be focused on new (domestic) investment into either expansion or start-up ventures. At the same time, the Government should try not to dictate where to start the business (ref empowerment zones), what type of business is acceptable (ref green), who to hire (ref union or diversity), what level of wages to pay, or delay development with years of environmental studies.

A serious "jobs plan" will need 2 basic components - 1.) tax incentives for direct investment into new domestic ventures (including a specific plan to bring capital back into the country) and 2.) the Government will need to lift it's foot from the throat of business - reign in regulatory initiatives.

 

[mheslep]

Obviously, if you nearly triple rates you can expect to second (and higher) order effects to matter. You didn't really answer the point, do you know a macro model that suggests marginal tax rates have a first-order effect on unemployment? Is there such a model?

At the moment I'm not really interested in the model. Empirically we know that long term tax rates impact output significantly, and thus sooner or later employment.

The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks, Christina Romer, David Romer.
U. Cal Berkeley, March 2007
www.econ.berkeley.edu/~cromer/RomerDraft307.pdf[/URL]

[QUOTE=Romer][...]we find that a tax increase of one percent of GDP lowers real GDP by about 3 percent, implying a substantial multiplier
[...][/QUOTE]

[QUOTE=Romer]In terms of consequences, there are six main findings. First, tax changes have very large effects on output.[/QUOTE]

Christina Romer is (was) Obama's chief econ adviser.

 

[ThomasT]

A serious "jobs plan" will need 2 basic components - 1.) tax incentives for direct investment into new domestic ventures (including a specific plan to bring capital back into the country) ...

Elaborate please. I'm asking, not disputing anything you've said. My experience is strictly small scale. But you learned about the 'big picture' in college, didn't you?

... and 2.) the Government will need to lift it's foot from the throat of business - reign in regulatory initiatives.

What will this entail?

 

[WhoWee]

Elaborate please. I'm asking, not disputing anything you've said. My experience is strictly small scale. But you learned about the 'big picture' in college, didn't you?

What will this entail?

There is about $1 Trillion in capital parked off-shore - basically sitting on the sidelines - waiting. That is the big picture.
http://www.reuters.com/article/2011/07/20/us-usa-debt-tax-offshore-idUSTRE76J79G20110720

"Unlike many nations, the United States taxes U.S.-based corporations' profits no matter where they are earned, with an important exemption. Taxes on active profits earned overseas do not have to be paid right away. Instead, they can be deferred as long as the profits are not brought home, or repatriated.

At present, an estimated $1 trillion in profits is being held offshore by U.S. companies. They pay taxes on those profits to the countries where the profits are held but not to the United States under the complex deferral system."

IMO - regulations are like weeds. They grow and grow, choking out healthy uses of capital and time. Legislation such as Sarbanes-Oxley (SOX) was well intentioned - but (again IMO) an over-reaction to Enron.
http://www.sec.gov/about/laws.shtml

The cost of compliance is considerable.
http://www.cmswire.com/cms/enterprise-cms/the-cost-of-compliance-sarbanesoxley-000474.php

"A recent survey of corporate boards by RHR International reveals annual Sarbanes-Oxley compliance costs average $16 million—a jump of 77 percent from last year.
Sarbanes-Oxley requirements have caused companies such as GE to spend a reported $30 million on internal control requirements alone. Last May, AIG chairman and CEO Maurice “Hank” Greenberg indicated that the world's largest insurer was spending $300 million a year fulfilling the new requirements."

 

[Bacle2]

At the moment I'm not really interested in the model. Empirically we know that long term tax rates impact output significantly, and thus sooner or later employment.

The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks, Christina Romer, David Romer.
U. Cal Berkeley, March 2007
www.econ.berkeley.edu/~cromer/RomerDraft307.pdf[/URL]





Christina Romer is (was) Obama's chief econ adviser.[/QUOTE]

How do you then explain overall economic/GDP growth between 1947-1975 , when marginal tax rates were as high as 70%? How about Sweden's consistent economic growth, while having a similarly-high tax rate?

Besides, at least from what I understood, it is stated in p.2, that the negative impacts on economic activity are restricted to the exogenous increases in taxes, and not to all types of increases.

 

[WhoWee]

How do you then explain overall economic/GDP growth between 1947-1975 , when marginal tax rates were as high as 70%?

After WWII - how many major countries had 100% of their manufacturing base still intact, raided the German scientific community, and maintained a military presence in former hot spots - then geared up for the Cold War (and were not Communist)?

 

[Bacle2]

After WWII - how many major countries had 100% of their manufacturing base still intact, raided the German scientific community, and maintained a military presence in former hot spots - then geared up for the Cold War (and were not Communist)?

But then it would seem that under some conditions a high tax rate either helps economic growth, or at least it does not impede it, and that a higher tax rate alone is not necessarily hurtful (maybe even helpful) to the economy. Maybe the tax rates were not based on the exogenous factors referred-to in the paper.

 

[WhoWee]

But then it would seem that under some conditions a high tax rate either helps economic growth, or at least it does not impede it, and that a higher tax rate alone is not necessarily hurtful (maybe even helpful) to the economy. Maybe the tax rates were not based on the exogenous factors referred-to in the paper.

Or perhaps the economy grew in spite of the tax rate?

 

[Bacle2]

Or perhaps the economy grew in spite of the tax rate?

Yes, you're right; it may be necessary to see more papers that try to carefully isolate the impact of different factors. Maybe some factor analysis of some sort, or more case studies in different countries.

 

[mheslep]

How do you then explain overall economic/GDP growth between 1947-1975 , when marginal tax rates were as high as 70%?

Rates were as high as 90% until Kennedy's cuts in the 60's. I argue the following:

1. Given that federal revenue http://www.census.gov/statab/hist/HS-47.pdf" , I conclude that much income in that period was sheltered from the top rate by tax shelters and deductions. Reagan's dramatic marginal rate cuts did not come into effect until ~1982-3, so the low growth stagflation period 75-82 should also be included in an examination of the US high tax rate period.
2. State and local tax burdens were lower prior to the 70's. NJ for instance http://en.wikipedia.org/wiki/New_Jersey#20th_century"; today it has one of the highest income tax rates in the US. Connecticut had no income tax on wages and so on.
3. Federal regulation was much less burdensome. EPA, OSHA, NIOSH were all created in the 70's. In general the rule making, law enforcement and administrative arms of the federal government have greatly increased since the 1960s.

How about Sweden's consistent economic growth, while having a similarly-high tax rate?

Has Sweden had consistent economic growth? http://www.wolframalpha.com/input/?i=sweden+real+GDP"

 

[MarcoD]

Rates were as high as 90% until Kennedy's cuts in the 60's.

The tax rates are nonsense. During the middle sixties [hmm that may have been fifties, forgot] half of agriculture was still done with horses. In the period 50-90 there was just an enormous 'internal space' in the economy for mechanization, industrialization, and later automization. That 'internal space' is now saturated, there is no room anymore for growth except 'delusional' monetary growth (like housing bubbles).

If the US wants jobs, they need to close borders and start manufacturing their own goods again; the tax rates don't matter.

 

[mheslep]

The tax rates are nonsense. During the middle sixties half of agriculture was still done with horses. In the period 50-90 there was just an enormous 'internal space' in the economy for mechanization, industrialization, and later automization. That 'internal space' is now saturated, there is no room anymore for growth except 'delusional' monetary growth (like housing bubbles)...

How does that theory explain Apple, now the most valuable company in the world, with a market capitalization roughly equal to Austria's entire annual income?

 

[MarcoD]

How does that theory explain Apple, now the most valuable company in the world, with a market capitalization roughly equal to Austria's entire annual income?

Well, how many jobs does Apple create? And how many jobs were lost in the car industry?

 

[mheslep]

Well, how many jobs does Apple create? And how many jobs were lost in the car industry?

Whatever the number, do you think that Apple employment and, say, 3rd party developer jobs for iPhone applications (+500K apps) would increase or decrease if American were to "close borders" as you suggest? Should the US government close all the foreign owned US based auto plants including Toyota's (http://www.businessweek.com/magazine/content/07_10/b4024071.htm"

http://www.google.com/finance?hl=en...l212l731l1.2.2l5l0&um=1&ie=UTF-8&sa=N&tab=we"
IBM 426,751
HP 324,600
Verizon Communications 195,900
Oracle 109,388
Dell 100,300
Intel 99,900
Microsoft 90,000
Apple 46,600

 

[MarcoD]

Whatever the number, do you think that Apple employment and, say, 3rd party developer jobs for iPhone applications (+500K apps) would increase or decrease if American were to "close borders" as you suggest?

Not a lot would happen. IPhones would just be build in the US, you'ld need to sponsor them, probably though.

Should the US government close all the foreign owned US based auto plants including Toyota's (http://www.businessweek.com/magazine/content/07_10/b4024071.htm" )?

Yes. Why not? In a few years, it'll close and end up in China anyway.

Should the US government cut off crude oil imports from Canada (#1) and Mexico (#2)?

No. You need to trade goods for oil.

Should it also cut off US corn exports to the worldhttp://www.indexmundi.com/agriculture/?commodity=corn&graph=production"

Maybe. You need ethanol in the long run anyway.

http://www.google.com/finance?hl=en...l212l731l1.2.2l5l0&um=1&ie=UTF-8&sa=N&tab=we"

IBM 426,751
HP 324,600
Verizon Communications 195,900
Oracle 109,388
Dell 100,300
Intel 99,900
Microsoft 90,000
Apple 46,600

World wide numbers I guess. Which brings us to the original question: How many people does Apple employ in the US?

[ Anyway. I expect the number of Apple employees to be round 15-25% range, so around 10,000. Most of the profit will be parked outside of the US, most of the investment/costs goes into building the (foreign) factories, buying (foreign) components, paying foreign and local salaries. Some of the dividend, some marketing money, ends up in the US. How much does Apple do for the US? ]