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WSJ Op-Ed on 91 Percent Income Tax


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#1 Daniel

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Posted 07 December 2012 - 12:46 PM

http://online.wsj.co...1554982808.html

Very convincing debunking of the argument that the enormous top marginal tax rates of 1950s went hand in hand with prosperity, although with me, it's preaching to the choir. He also could have mentioned that the rest of the developed world had not yet fully rebuilt its infrastructure from the war, so the US was basically the manufacturer for the entire industrialized world. Nevertheless, it doesn't really speak to whether a relatively modest uptick in tax rates for earners above $250k will be a good or bad thing overall.

Curious if people of the left-wing persuasion find the article persuasive, and if not, why?
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#2 squishyx

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Posted 07 December 2012 - 05:14 PM

To me, this article basically just confirmed what I thought, rich people were more effective at evading tax laws then they do today.

I think its interesting to look at historic tax rates, but I don't think they have any real comparable value to today though. I think the better argument is "look at what the rates were under Clinton and how we were still able to have a thriving economy".
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#3 devilsadvoc8

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Posted 12 December 2012 - 10:00 AM

(1) Looking at Clinton rates is mired with errors anyway. A person making over $250 then was much more wealthy then than now. Inflation is being manipulated by both parties to be underreported. There is no fixed basket of goods now being compared within the CPI.

(2) Different world economy now

(3) Different US economy now

(4) Tax rates on the weathly is a red herring anyway. Tax it all (which won't happen) and we still have BIG issues. Spending is the problem. Without fundamental change in our spending habits, the rest is just putting lipstick on the pig. It is still a pig.
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#4 Daniel

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Posted 12 December 2012 - 10:13 AM

(1) Looking at Clinton rates is mired with errors anyway. A person making over $250 then was much more wealthy then than now. Inflation is being manipulated by both parties to be underreported. There is no fixed basket of goods now being compared within the CPI.

(2) Different world economy now

(3) Different US economy now

(4) Tax rates on the weathly is a red herring anyway. Tax it all (which won't happen) and we still have BIG issues. Spending is the problem. Without fundamental change in our spending habits, the rest is just putting lipstick on the pig. It is still a pig.


Exactly. Howard Dean got it right that if we want to spend as much as we do and only carry a modest deficit, taxes have to go up for everyone.

Also, $250k means different things in different parts of the country. If you live and work in NYC and have two kids, $250k pretax a year does not make you rich. In a lot of other places in the country, you can buy yourself a nice McMansion with a workable mortgage.

(Also, it's spelled Christopher Hitchens not "Hitchins").
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#5 devilsadvoc8

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Posted 12 December 2012 - 01:36 PM

(Also, it's spelled Christopher Hitchens not "Hitchins").


You are absolutely right. Fixed. Thanks.
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#6 mouse

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Posted 12 December 2012 - 10:57 PM

The issue is always timing, though. I think government spending needs to cut, just not during a catastrophic recession. The New Deal created the national debt, but it got the country through the Depression. The problem is we kept spending after we no longer needed to. Unfortunately, much as we like to talk about the national debt, people don't understand it, which leads to a lot of rhetoric/empty promises. At this point, we spend too much when we don't need to, so when we have a catastrophe, there's no money to spend, and we do a half assed job solving problems.
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#7 squishyx

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Posted 13 December 2012 - 12:06 PM

Exactly. Howard Dean got it right that if we want to spend as much as we do and only carry a modest deficit, taxes have to go up for everyone.

Also, $250k means different things in different parts of the country. If you live and work in NYC and have two kids, $250k pretax a year does not make you rich. In a lot of other places in the country, you can buy yourself a nice McMansion with a workable mortgage.

(Also, it's spelled Christopher Hitchens not "Hitchins").

Yea but if you are making exactly 250k a year, your taxes aren't going to go up anyway because the increased tax would only apply to every dollar above that mark.

Someone making 300,000k for example is in the proposed bracket that is going from 33 to 35% and it's only going to affect (assuming you believe they will start it at 250k) the 50k difference, or about $1,000 more in taxes. That's not chump change but it's not even half one 1 percent of their income, and that's before you factor in deductions and the like.

For comparison sake my taxes (and I am well under 100k) are going to go up by that much if and when the payroll taxes break elapses.

And that's another thing I don't understand, the bush "tax cuts" were temporary. 10 years and then 2 years extended. They were designed to lapse why is everyone having a fuss over it? Your "break" is ending.
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#8 Daniel

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Posted 13 December 2012 - 12:29 PM

Yea but if you are making exactly 250k a year, your taxes aren't going to go up anyway because the increased tax would only apply to every dollar above that mark.

Someone making 300,000k for example is in the proposed bracket that is going from 33 to 35% and it's only going to affect (assuming you believe they will start it at 250k) the 50k difference, or about $1,000 more in taxes. That's not chump change but it's not even half one 1 percent of their income, and that's before you factor in deductions and the like.

For comparison sake my taxes (and I am well under 100k) are going to go up by that much if and when the payroll taxes break elapses.

And that's another thing I don't understand, the bush "tax cuts" were temporary. 10 years and then 2 years extended. They were designed to lapse why is everyone having a fuss over it? Your "break" is ending.


Ok then, even $300k per year in NYC does not make you rich. That's especially the case if you have kids that aren't gifted enough to get into a magnet school. Otherwise, you don't want to have anything to do with the NYC public school system.

And I do object to the idea that, well the tax cuts were temporary anyway, so you were always getting the break. Frankly it's the trouble with the left-wing mindset that, everything you make presumptively belongs to the government, and we'll be really nice and let you keep more of what you make.
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#9 squishyx

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Posted 13 December 2012 - 04:13 PM

Ok then, even $300k per year in NYC does not make you rich. That's especially the case if you have kids that aren't gifted enough to get into a magnet school. Otherwise, you don't want to have anything to do with the NYC public school system.

And I do object to the idea that, well the tax cuts were temporary anyway, so you were always getting the break. Frankly it's the trouble with the left-wing mindset that, everything you make presumptively belongs to the government, and we'll be really nice and let you keep more of what you make.

I never said it made you rich, it's silly to deal with such terms when its subjective. You have to draw a line somewhere so that's the important part and at 250k and up I think is a decent boundary.

"everything" be a little more dramatic. the effective tax rates for the top two brackets will go up 1%. yea. EVERYTHING.
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#10 Daniel

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Posted 13 December 2012 - 04:36 PM

I never said it made you rich, it's silly to deal with such terms when its subjective. You have to draw a line somewhere so that's the important part and at 250k and up I think is a decent boundary.

"everything" be a little more dramatic. the effective tax rates for the top two brackets will go up 1%. yea. EVERYTHING.


More than $250k a year is rich according to the President, and most of the powers that be in the Democratic party, who, evidently aren't paying their "fair share". For one year of my life I was "rich", and I handed over more than 35 percent of my income to the city of New York, the State of New York and Uncle Sam. I'm not complaining, and maybe it was necessary, but I would appreciate it if a guy who never worked a day in his life wouldn't repeat on national TV that I was a freeloader.

In any event, even if he's right, taking another 10 percent from the "rich" will not come close to bringing the budget under control, which is the point that Howard Dean was making, which I happen to agree with.
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#11 squishyx

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Posted 13 December 2012 - 05:08 PM

More than $250k a year is rich according to the President, and most of the powers that be in the Democratic party, who, evidently aren't paying their "fair share". For one year of my life I was "rich", and I handed over more than 35 percent of my income to the city of New York, the State of New York and Uncle Sam. I'm not complaining, and maybe it was necessary, but I would appreciate it if a guy who never worked a day in his life wouldn't repeat on national TV that I was a freeloader.

Are you talking about Obama? when did he call you a freeloader, and you don't count what he did as a community organizer, state senator, US senator and president as "work"? Why? because it's government? that means someone doesn't work as hard as you?

In any event, even if he's right, taking another 10 percent from the "rich" will not come close to bringing the budget under control, which is the point that Howard Dean was making, which I happen to agree with.

If only we could get 10% from the rich.... by my math that would be 240B a year, a lot more then the 70B they are having a pissing contest over at the moment. Right now that's a drop in the bucket but looking at both CBO projections for the future a 1/4T dollar tax revenue increase would be huge in terms of bringing us closer to a balanced budget. If we do nothing but keep the status quo we will be back around 4% GDP deficits by 2015, if we enacted that fictional 10% tax increase, we would probably halve that to 2%.

Ofcourse raising taxes on the rich is not the complete solution. Our massive deficits of today are due to BOTH higher spending and lower tax revenues. Usually we spend about 20-21% of GDP and collect about 18-19% revenues and deal with a growing 2-4% deficit gap. Right now we are spending too much (23-24%) and collecting to little (15-16%) and that gives us the much wider gap of 8% which we are stuck with right now. Some of that will fix itself with a recovering economy, but we also need to cut spending and raise taxes back.

I don't consider this a "left-wing mindset". It's a practical approach. I appreciate that the rich pay substantially more of the tax burden then they even possess, but the reality is we have cut taxes too low, we've past an inflection point and now we need to get them back to more modest rates.

Edited by squishyx, 13 December 2012 - 05:12 PM.

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#12 devilsadvoc8

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Posted 14 December 2012 - 09:27 AM

Its not the f'n taxes. It simply isn't. We are in a world of hurt b/c of (1) the way the government has "managed our economy" over the last 12 years, (2) we are now a consumer economy and (3) the government and the US consumer spends more than their revenue.

I repeat taxes are not the issue. Sure raise them by 70bil but this president has indicated he wants to spend that. :doh1:

I am ready for the fiscal cliff: dive over it and cut spending with mandatory cuts, It will be the first productive thing Washington has done in 20 years.

Edited by devilsadvoc8, 14 December 2012 - 09:27 AM.

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#13 Daniel

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Posted 14 December 2012 - 10:02 AM

Are you talking about Obama? when did he call you a freeloader, and you don't count what he did as a community organizer, state senator, US senator and president as "work"? Why? because it's government? that means someone doesn't work as hard as you?


If only we could get 10% from the rich.... by my math that would be 240B a year, a lot more then the 70B they are having a pissing contest over at the moment. Right now that's a drop in the bucket but looking at both CBO projections for the future a 1/4T dollar tax revenue increase would be huge in terms of bringing us closer to a balanced budget. If we do nothing but keep the status quo we will be back around 4% GDP deficits by 2015, if we enacted that fictional 10% tax increase, we would probably halve that to 2%.

Ofcourse raising taxes on the rich is not the complete solution. Our massive deficits of today are due to BOTH higher spending and lower tax revenues. Usually we spend about 20-21% of GDP and collect about 18-19% revenues and deal with a growing 2-4% deficit gap. Right now we are spending too much (23-24%) and collecting to little (15-16%) and that gives us the much wider gap of 8% which we are stuck with right now. Some of that will fix itself with a recovering economy, but we also need to cut spending and raise taxes back.

I don't consider this a "left-wing mindset". It's a practical approach. I appreciate that the rich pay substantially more of the tax burden then they even possess, but the reality is we have cut taxes too low, we've past an inflection point and now we need to get them back to more modest rates.


By definition someone who isn't paying their "fair share" is a freeloader.

And I mean it when I say that he hasn't worked a day in his life in that he really has never gone out and had to earn a living or put his ass on the line financially. Being a legislator is not a real job. It's kissing ass, promising things you know you can't deliver on and doling out money. In other words, having no skin in the game, at all. I don't know what a "community organizer" does, except, in Obama's case, go around and strong-arm banks to make subprime loans. I'll kind of compare it to what Donald Trump does these days. He really doesn't own any of that real estate that bears his name, or at least not that much of it. He parlays his name and personality into money. That isn't a job in my opinion. Don't get me wrong, a lot of presidents, even some good ones, (Jefferson, FDR, JFK, Bush I) never really went out and earned a living or even attempted to. I just resent it when someone in that position has the gall to say that someone who does work who gives 30 percent of their income to the government isn't paying their "fair share".

Whether taxes are too low depends on how much the government spends, period. The purpose of the tax code ought to be raise revenue, and apportion it in the most efficient and equitable manner. By equitable, I mean moderately progressive in that a wealthier person can more easily afford to go without 30 percent of his income rather than a poorer person. By efficient, I mean having a tax code that doesn't create a multi-billion industry that tells people how they ought to pay their taxes. However, it isn't to achieve "social justice", redistributing wealth just for its own sake, or any other sort of mumbo jumbo. While you seem like a fairly reasonable liberal type who sees it basically the same way, I am certain that Obama, Pelosi, Elizabeth Warren (the spookiest of them all) et al., see it quite differently. And, what I find quite frightening, is that an ever growing proportion of the electorate sees it that way, or is even more extreme, to the point where a lot of the country sees wealth as a trough that they try and take as much as possible from.
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#14 squishyx

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Posted 14 December 2012 - 10:25 AM

Its not the f'n taxes. It simply isn't. We are in a world of hurt b/c of (1) the way the government has "managed our economy" over the last 12 years, (2) we are now a consumer economy and (3) the government and the US consumer spends more than their revenue.

I repeat taxes are not the issue. Sure raise them by 70bil but this president has indicated he wants to spend that. :doh1:

I am ready for the fiscal cliff: dive over it and cut spending with mandatory cuts, It will be the first productive thing Washington has done in 20 years.

You can repeat but it doesn't make it true. There is a historical precedent that you are ignoring because it doesn't fit your argument. I agree spending is too high (and most of that spending is on autopilot anyway that will naturally come back down as the economy recovers) but the amount of taxes we collect is too low.

I repeat:

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#15 squishyx

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Posted 14 December 2012 - 10:37 AM

By definition someone who isn't paying their "fair share" is a freeloader.

Well maybe in your dictionary. I don't agree with the president when he says the rich aren't paying their fair share, they are clearly paying more. But that's hardly the same as calling you or them a free loader.

And I mean it when I say that he hasn't worked a day in his life in that he really has never gone out and had to earn a living or put his ass on the line financially. Being a legislator is not a real job. It's kissing ass, promising things you know you can't deliver on and doling out money. In other words, having no skin in the game, at all. I don't know what a "community organizer" does, except, in Obama's case, go around and strong-arm banks to make subprime loans. I'll kind of compare it to what Donald Trump does these days. He really doesn't own any of that real estate that bears his name, or at least not that much of it. He parlays his name and personality into money. That isn't a job in my opinion. Don't get me wrong, a lot of presidents, even some good ones, (Jefferson, FDR, JFK, Bush I) never really went out and earned a living or even attempted to. I just resent it when someone in that position has the gall to say that someone who does work who gives 30 percent of their income to the government isn't paying their "fair share".

Well, having a government is in the constitution, and we elect people to run the country so it's kind of required. You can be bitter if you want but quite frankly we need people to have these "jobs" so that we can have the country we have today.

Whether taxes are too low depends on how much the government spends, period. The purpose of the tax code ought to be raise revenue, and apportion it in the most efficient and equitable manner. By equitable, I mean moderately progressive in that a wealthier person can more easily afford to go without 30 percent of his income rather than a poorer person. By efficient, I mean having a tax code that doesn't create a multi-billion industry that tells people how they ought to pay their taxes. However, it isn't to achieve "social justice", redistributing wealth just for its own sake, or any other sort of mumbo jumbo. While you seem like a fairly reasonable liberal type who sees it basically the same way, I am certain that Obama, Pelosi, Elizabeth Warren (the spookiest of them all) et al., see it quite differently. And, what I find quite frightening, is that an ever growing proportion of the electorate sees it that way, or is even more extreme, to the point where a lot of the country sees wealth as a trough that they try and take as much as possible from.

This is the bread and butter. You are absolutely right, because we could just cut spending. The problem is no one actually thinks that's a good idea or wants to deal with the true repercussions of such action. We could basically scrap the entire government budget, every entitlement program every law and basically collect just enough money to pay off our debt and run a small military and probably congressional salaries and let them argue if we should but 3 F-15 fighters this year or 2.

We would have about 15 million people lose their jobs directly, probably another 30 or 40 million indirectly from all the government contracts that no longer exist but hey who cares, we aren't paying for unemployment insurance, or food stamps or WIC or other programs that would have otherwise helped people who have lost their jobs through no real fault of their own but hey at least your taxes will come down so you can maybe decide to give it to charity.

But that doesn't happen. And it doesn't happen because this is a country and as defined by the constitution we, the people get to decide how we want to operate this country. And every 2 years we get to vote if we want to change the national direction of where we are going. That is democracy, and as of now democracy likes having safety nets, it likes feeding poor people (to the extent that it does) it likes giving people a chance to recover when they lose a job, and most recently it wants to make sure that every citizen has health care. It has decided that to pay for these services we will have a progressive tax structure, and right now that structure has been pared down too thin to pay for the services the people want. You make it seem like the rich are being shook down for every penny they own when what we are talking about in reality is a modest increase to what rich people (and yes we had rich people) were taxed at just a decade ago.

And I'm not a liberal. I don't find the need to label myself anything, that just boxes you into a corner of being unreasonable and unable to compromise. When I see spending at 24% of GDP and tax revenues at 16% of GDP, I say they both need to be adjusted back to their historical norms.
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#16 Daniel

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Posted 14 December 2012 - 11:47 AM

We would have about 15 million people lose their jobs directly, probably another 30 or 40 million indirectly from all the government contracts that no longer exist but hey who cares, we aren't paying for unemployment insurance, or food stamps or WIC or other programs that would have otherwise helped people who have lost their jobs through no real fault of their own but hey at least your taxes will come down so you can maybe decide to give it to charity.


This is the classic broken window fallacy. That is, I'll break a window in your house, which will create a job for the person that has to fix it. I guess you were just going to stick that money you used to pay the guy who fixed your window under your mattress.

It's a good thing that government spends money on things like schools (which the federal government ought to have no part of), supports scientific research. And I'm willing to live with a welfare system that does its best to make sure people aren't sleeping under bridges or starving. Whether this system is sustainable in the long run is difficult to gauge. (Keynes said, "in the long run, we're all dead"). But this spending is not done to give people a job for its own sake. Public schools are good, but increased spending on public schools that gives only a marginal return is not good, even if it gives something for a person to do. It's the equivalent of paying someone to dig a hole and refill it. Or, in California, where they're going to spend hundreds of billions of dollars on a high speed rail system that no one will use.

If your revenue chart shows anything, it's that revenue is tied more to economic growth. Since no one can really predict economic growth, I find revenue projections fairly useless.

That we live in a democracy is besides the point. I'm not saying that Obama's, or whoever's, economic policies are legally illegitimate. It's only that I personally approve or disapprove of them. Democracy, it's the worst form of government, except for all others.

Edited by Daniel, 14 December 2012 - 11:58 AM.

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#17 devilsadvoc8

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Posted 14 December 2012 - 11:59 AM

You can repeat but it doesn't make it true. There is a historical precedent that you are ignoring because it doesn't fit your argument. I agree spending is too high (and most of that spending is on autopilot anyway that will naturally come back down as the economy recovers) but the amount of taxes we collect is too low.

I repeat:

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Sigh. As I stated in my post : Sure raise them [taxes] by 70bil. That doesn't solve the F'N issue.

Just take a gander at the first couple of pages of the following: http://www.fms.treas...mts/mts1112.pdf

In November 2012 alone the US ran a deficit of $172 billion. No matter how you'd like to paint the picture that taxes are the issue, they aren't. Double the tax increases to 140billion if you'd like and a year's worth of tax increases doesn't cover November's shortfall.

Not to mention the downtick in revenue shown in your graph is a combination of tax cuts, underemployment & our economy sucking as a whole.
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#18 squishyx

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Posted 14 December 2012 - 12:10 PM

Sigh. As I stated in my post : Sure raise them [taxes] by 70bil. That doesn't solve the F'N issue.

Just take a gander at the first couple of pages of the following: http://www.fms.treas...mts/mts1112.pdf

In November 2012 alone the US ran a deficit of $172 billion. No matter how you'd like to paint the picture that taxes are the issue, they aren't. Double the tax increases to 140billion if you'd like and a year's worth of tax increases doesn't cover November's shortfall.

Not to mention the downtick in revenue shown in your graph is a combination of tax cuts, underemployment & our economy sucking as a whole.

because you are fixated at the current massive deficits which are the result of 24% spending and 16% tax revenue of GDP. That 8% gap is generating record deficits that can't be touched by any given tax increase, or any given spending cut. That will only go down with a recovering economy. period.

These tax increases, and I agree they are small at that, are part of a larger picture solution for long term stability. You are looking at things right now, and right now there is no cure all fix, we need to ride of this storm and start making policy for the future.
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#19 squishyx

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Posted 14 December 2012 - 12:16 PM

This is the classic broken window fallacy. That is, I'll break a window in your house, which will create a job for the person that has to fix it. I guess you were just going to stick that money you used to pay the guy who fixed your window under your mattress.

It's a good thing that government spends money on things like schools (which the federal government ought to have no part of), supports scientific research. And I'm willing to live with a welfare system that does its best to make sure people aren't sleeping under bridges or starving. Whether this system is sustainable in the long run is difficult to gauge. (Keynes said, "in the long run, we're all dead"). But this spending is not done to give people a job for its own sake. Public schools are good, but increased spending on public schools that gives only a marginal return is not good, even if it gives something for a person to do. It's the equivalent of paying someone to dig a hole and refill it. Or, in California, where they're going to spend hundreds of billions of dollars on a high speed rail system that no one will use.

If your revenue chart shows anything, it's that revenue is tied more to economic growth. Since no one can really predict economic growth, I find revenue projections fairly useless.

That we live in a democracy is besides the point. I'm not saying that Obama's, or whoever's, economic policies are legally illegitimate. It's only that I personally approve or disapprove of them. Democracy, it's the worst form of government, except for all others.

It's not about some analogy about breaking windows. People with government jobs do real, meaningful work. But even if they didn't, you are completely ignoring the economic impacts of what happens when all those people are laid off.

And I don't know the particulars about the rail in CA you are taking about, but I bet there were a lot of people like you saying the interstate system was going to be a wasteful spending project no one would ever use only to have it become vital arteries of our society. You say revenue projects are fairly useless but claim to know the value of high speed rail is nil?
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#20 Jimmy Leeds

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Posted 15 December 2012 - 06:48 PM

Blew through all this. We get more money in the treasury when we cut taxes. It's proven.
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