I don't buy into Trickle Down Economics ?

[tradeunionsupporter]

I have heard Democrats say that higher taxes on the Rich/Wealthy means that the Wealthy business owners will keep his money and or profits inside his businesseses and that will create Jobs could anyone explain how this works with the corporate tax I have heard Thom Hartmann say this ? I know this is not a Democrat forum but I still would rather have Democrats in office than Republicans I don't buy into Trickle Down Economics ?

http://www.thomhartmann.com/blog/2010/10/transcript-thom-hartmann-asks-c... (http://www.thomhartmann.com/blog/2010/10/transcript-thom-hartmann-asks-c...)

Higher taxes on corporations encourage reinvesting profits into expanding the companies. As it is now, it makes more sense to take that money out of the company in the form of bonuses for executives, dividends, etc.

http://politicalirony.com/2011/04/09/do-we-need-a-20-tax-cut/

A corporate tax rate that is too low actually destroys jobs. That's because a higher tax rate encourages businesses (who don't want to pay taxes) to keep the profits in the business and reinvest, rather than pull them out and have to pay high taxes.

http://www.bohemian.com/bohemian/04.13.11/feature-1115.html

[RGacky3]

I have heard Democrats say that higher taxes on the Rich/Wealthy means that the Wealthy business owners will keep his money and or profits inside his businesseses and that will create Jobs could anyone explain how this works with the corporate tax I have heard Thom Hartmann say this ? I know this is not a Democrat forum but I still would rather have Democrats in office than Republicans I don't buy into Trickle Down Economics ?

It works with personal income tax, because they are less likely to take aboe the neccessary compensation for themselves because they know it will be taxed.


Higher taxes on corporations encourage reinvesting profits into expanding the companies. As it is now, it makes more sense to take that money out of the company in the form of bonuses for executives, dividends, etc.


Exactly, taxes on corporations means taxes on profit, reinvestment means less profit, meaning less taxes, but it could also mean they'd be more likely to take more compensation for themselves, but if you have income tax as well that leaves re-investment as the best case senario when you only take taxes into account.


A corporate tax rate that is too low actually destroys jobs. That's because a higher tax rate encourages businesses (who don't want to pay taxes) to keep the profits in the business and reinvest, rather than pull them out and have to pay high taxes.


You got it.

[Jazzratt]

I can't really believe anyway buys into trickle down dross. It's just so obviously shit.

[krazy kaju]

That entire argument is ignoring the fact that you invest for a reason... more profit in the future. By increasing taxes, you're actually reducing that incentive to invest, as higher taxes means less profits in the future.

Also, there's the problem that corporate income is double taxed in the United States... first it's taxed at the corporate level (the corporate income tax) and then when the earnings go out to investors, it's taxed at the personal level (the personal income tax). Your argument doesn't address this problem. As such, IF your argument were true, THEN it would apply at the personal level... however, there still would be no reason to even have a corporate income tax. The corporate income tax simply takes money from where it can be the most useful in terms of investing in the economy and causing economic growth.

And when it comes to the corporate income tax, there's pretty universal sentiment among economists in favor of reducing or even completely eliminating it. Partly because it's a double-tax and partly because it taxes investment directly. Also, due to the overwhelming evidence of how harmful this tax is. See, for example, this econometric study which showed that reducing the corporate income tax by 10% would increase economic growth by 1.1% each year: http://www.sciencedirect.com/science/article/pii/S0047272704001343#SECX11

^ BTW, that econometric study shows that eliminating the corporate income tax in the United States would increase economic growth so much that living standards would literally double in less than 20 years.

[danyboy27]

That entire argument is ignoring the fact that you invest for a reason... more profit in the future. By increasing taxes, you're actually reducing that incentive to invest, as higher taxes means less profits in the future.

Also, there's the problem that corporate income is double taxed in the United States... first it's taxed at the corporate level (the corporate income tax) and then when the earnings go out to investors, it's taxed at the personal level (the personal income tax). Your argument doesn't address this problem. As such, IF your argument were true, THEN it would apply at the personal level... however, there still would be no reason to even have a corporate income tax. The corporate income tax simply takes money from where it can be the most useful in terms of investing in the economy and causing economic growth.

And when it comes to the corporate income tax, there's pretty universal sentiment among economists in favor of reducing or even completely eliminating it. Partly because it's a double-tax and partly because it taxes investment directly. Also, due to the overwhelming evidence of how harmful this tax is. See, for example, this econometric study which showed that reducing the corporate income tax by 10% would increase economic growth by 1.1% each year: http://www.sciencedirect.com/science/article/pii/S0047272704001343#SECX11

^ BTW, that econometric study shows that eliminating the corporate income tax in the United States would increase economic growth so much that living standards would literally double in less than 20 years.

giving more money to big buisness to stimulate the economy dosnt work, beccause increased profit dosnt mean more job created, on the contrary, more profit mean less worker paid less money and producing more wealth.

Dont worry tho, i dont think any form of taxation could fix the problem, rich people have always found new inventive way to dodge those; Tax heaven, building factory in the third world, put it in bogus investements, lobby politician to have those taxes removed etc etc.

Personally, i think the solution is to pry the mean of production from the cold dead hands of the capitalists and build a better world.

[krazy kaju]

giving more money to big buisness to stimulate the economy dosnt work, beccause increased profit dosnt mean more job created, on the contrary, more profit mean less worker paid less money and producing more wealth.

Dont worry tho, i dont think any form of taxation could fix the problem, rich people have always found new inventive way to dodge those; Tax heaven, building factory in the third world, put it in bogus investements, lobby politician to have those taxes removed etc etc.

Personally, i think the solution is to pry the mean of production from the cold dead hands of the capitalists and build a better world.

Cutting taxes incentivizes investment into new factories, capital machinery, etc. This alone would create more demand for labor, in other words, more jobs. Further more, increased investment would increase long-term economic growth, which would raise living standards and real wages for everyone, including "the poor" and "the workers."

[Thirsty Crow]

Cutting taxes incentivizes investment into new factories, capital machinery, etc. This alone would create more demand for labor, in other words, more jobs. Further more, increased investment would increase long-term economic growth, which would raise living standards and real wages for everyone, including "the poor" and "the workers."
I find it very telling that a self-professed "misesian" is compelled to put two categories describing social inequality and class into inverted commas.
Sorry, that was just a comment I couldn't resist.

[danyboy27]

Cutting taxes incentivizes investment into new factories, capital machinery, etc. This alone would create more demand for labor, in other words, more jobs. Further more, increased investment would increase long-term economic growth, which would raise living standards and real wages for everyone, including "the poor" and "the workers."

you dont need subsidies for machinery when you can ''hire'' 100 indonesian or 1000 african do the job for a piss poor salary.

[krazy kaju]

I find it very telling that a self-professed "misesian" is compelled to put two categories describing social inequality and class into inverted commas.
Sorry, that was just a comment I couldn't resist.

Reason why I put "the poor" and "the workers" in commas:
1. Our "poor" are incredibly wealthy by historical standards.
2. Many workers are simultaneously capitalists, as they own stocks, bonds, etc. At least that's the case in the United States. So there really is little distinction between "worker" and "capitalist" in an advanced capitalistic society.


you dont need subsidies for machinery when you can ''hire'' 100 indonesian or 1000 african do the job for a piss poor salary.

People in the developing world are paid less because developing countries have less capital. Capital improves the productivity of labor, which means that more capital means more labor productivity, which in turn means higher wages are needed to compensate labor. Therefore, decreasing taxes on capital (not subsidizing it) is the path towards increasing wages.

[danyboy27]

People in the developing world are paid less because developing countries have less capital. Capital improves the productivity of labor, which means that more capital means more labor productivity, which in turn means higher wages are needed to compensate labor. Therefore, decreasing taxes on capital (not subsidizing it) is the path towards increasing wages.

People in third world countries are paid less beccause the guy going there with their factories decide to pay them less, it have nothing to do with the fact that there are less money in the country.

And you dont need to pay people more when they are in a dire situation, the prospect of starvation is more than enough to ensure full productivity.

decreasing taxes only mean more money for the capitalist to do more of the same, wich mean pay people in the third world, or in the first world piss poor wages to produce more for the same price beccause the only prospect for them if they refuse to take the job is misery and starvation.

and dont get fooled by those chart showing ''better'' living standard in certain developping countries, if you look them closely you will notice that the rise in living standard is extremely localized, those developping economies need a ''middle'' class to become a buffer between the rich and the poor to divide the working class and decrease their abilities to properly fight.

[krazy kaju]

People in third world countries are paid less beccause the guy going there with their factories decide to pay them less, it have nothing to do with the fact that there are less money in the country.

And you dont need to pay people more when they are in a dire situation, the prospect of starvation is more than enough to ensure full productivity.

decreasing taxes only mean more money for the capitalist to do more of the same, wich mean pay people in the third world, or in the first world piss poor wages to produce more for the same price beccause the only prospect for them if they refuse to take the job is misery and starvation.

and dont get fooled by those chart showing ''better'' living standard in certain developping countries, if you look them closely you will notice that the rise in living standard is extremely localized, those developping economies need a ''middle'' class to become a buffer between the rich and the poor to divide the working class and decrease their abilities to properly fight.

"Capital" doesn't refer to money. It refers to machinery, factories, education, etc. Read this: http://en.wikipedia.org/wiki/Capital_%28economics%29

Capital increases worker productivity - a worker working with (say) a machine can produce x times the amount of goods as a worker working without. Increased worker productivity means that employers are willing to pay more wages to those more productive workers. This means that employers will compete among each other, trying to steal each others' workers, until the wages are set equal to productivity.

So, yes, more capital means higher wages. Thus, it should be in the interest of everyone to reduce taxes on capital.

[danyboy27]

"Capital" doesn't refer to money. It refers to machinery, factories, education, etc. Read this: http://en.wikipedia.org/wiki/Capital_%28economics%29

Capital increases worker productivity - a worker working with (say) a machine can produce x times the amount of goods as a worker working without. Increased worker productivity means that employers are willing to pay more wages to those more productive workers. This means that employers will compete among each other, trying to steal each others' workers, until the wages are set equal to productivity.

So, yes, more capital means higher wages. Thus, it should be in the interest of everyone to reduce taxes on capital.
not really. plenty of capital in china right now, workers still paid like shit.

[Klaatu]

The recession is not carrying on due to lack of investment.

The recession is carrying on due to lack of demand.

Solution: tax the rich at a 95% rate and distribute the funds to the unemployed workers.
Result: demand will rise, and the recession is over in three months.

Better yet, overthrow capitalism altogether. (and then no more recessions, poverty, or unemployment, ever!)

[krazy kaju]

not really. plenty of capital in china right now, workers still paid like shit.

Plenty of capital relatively to what? There is more capital per worker here in the United States. That is why the US is wealthier than China.


The recession is not carrying on due to lack of investment.

The recession is carrying on due to lack of demand.

Solution: tax the rich at a 95% rate and distribute the funds to the unemployed workers.
Result: demand will rise, and the recession is over in three months.

Better yet, overthrow capitalism altogether. (and then no more recessions, poverty, or unemployment, ever!)

The recession is not at all due to a lack of demand. JB Say proved that recessions are not caused due to a lack of demand back in the 19th century. Recessions have been shown to be caused by a misallocation of resources on the microeconomic level, not at the macroeconomic level. If you want to understand what I'm talking about, I suggest checking these two lectures out (they are just introductory to this subject) :

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Ironically, Marx agreed with me.

In either case, don't forget that an increase in investment spending is an increase in demand for investment goods, and thus for the labor that produces those goods. So, even if you fall for the Keynesian demand-side arguments, then you should support a reduction in taxes on capital in order to increase economic growth over the short-run AND the long-run.

[danyboy27]

http://www.youtube.com/user/AntiBullshitMan?blend=1&ob=5#p/u/7/lvANcGUJndM

[RGacky3]

That entire argument is ignoring the fact that you invest for a reason... more profit in the future. By increasing taxes, you're actually reducing that incentive to invest, as higher taxes means less profits in the future.


10% rather than 20% in taxes won'nt encourage more investment, any investment will ONLY be done if there is demand and thus profit avaialbe in the first place, any investor knows this.


Your argument doesn't address this problem. As such, IF your argument were true, THEN it would apply at the personal level... however, there still would be no reason to even have a corporate income tax. The corporate income tax simply takes money from where it can be the most useful in terms of investing in the economy and causing economic growth.


Thats because its not a problem, btw, corporate tax taxes PROFIT, not re-investment into the company.

the most useful money is the money being spent by consumers, because it creates demand.


And when it comes to the corporate income tax, there's pretty universal sentiment among economists in favor of reducing or even completely eliminating it. Partly because it's a double-tax and partly because it taxes investment directly. Also, due to the overwhelming evidence of how harmful this tax is. See, for example, this econometric study which showed that reducing the corporate income tax by 10% would increase economic growth by 1.1% each year: http://www.sciencedirect.com/science...4001343#SECX11 (http://www.sciencedirect.com/science/article/pii/S0047272704001343#SECX11)

^ BTW, that econometric study shows that eliminating the corporate income tax in the United States would increase economic growth so much that living standards would literally double in less than 20 years.

I'll find you hundreds of economists that say differently, as well as tons of examples of social-democratic countries that work much better than private capitalist countries.

BTW, its not just taxes, infact imo, thats the worst option, the best is strong unions, co-determination laws, and nationalizing profitable national industry and recources.


The recession is not at all due to a lack of demand. JB Say proved that recessions are not caused due to a lack of demand back in the 19th century. Recessions have been shown to be caused by a misallocation of resources on the microeconomic level, not at the macroeconomic level. If you want to understand what I'm talking about, I suggest checking these two lectures out (they are just introductory to this subject) :


The misallocation of recources happens due to the creation of bubbles, when inflating a bubble becomse more profitable, (which is generally due to lack of natural demand), they end up blowing up.


Ironically, Marx agreed with me.

In either case, don't forget that an increase in investment spending is an increase in demand for investment goods, and thus for the labor that produces those goods. So, even if you fall for the Keynesian demand-side arguments, then you should support a reduction in taxes on capital in order to increase economic growth over the short-run AND the long-run.

Marxes theory of collapse is that there is not enough surplus value to keep the system going, which when taken with Keynsian insights brings a pretty good idea of how capitalism goes into a recession.

Investment spending IS NOT demand, when you buy a stock, your expecting a return, that is not the same as purchasing a good or purchase where the return is the good or service not more money, thats what drives the economy.

When it comes to labor many times the need for a higher return requires that labor costs be cut if the revenue (by demand for goods and services) is not high enough for a significant profit, which is what ALWAYS happens, especially when you increase productivity.


"Capital" doesn't refer to money. It refers to machinery, factories, education, etc. Read this: http://en.wikipedia.org/wiki/Capital_%28economics%29 (http://en.wikipedia.org/wiki/Capital_%28economics%29)


In modern capitalism it basically is money.


Capital increases worker productivity - a worker working with (say) a machine can produce x times the amount of goods as a worker working without. Increased worker productivity means that employers are willing to pay more wages to those more productive workers. This means that employers will compete among each other, trying to steal each others' workers, until the wages are set equal to productivity.


ARE YOU KIDDING ME? Ok this is the dumbest thing I've ever heard and shows that you know NOTHING about economics.

Why on earth would a capitalist want to pay higher just because the workers are more productive? If anything it means that less workers can produce the same amount with the same effort, meaning you can fire some workers, meaning competition amung workers increases meaning you can pay them less.

This is the exact reason wages stagnated in the 1970s.

employers will ALWAYS pay their workers the least possible, their productivity has nothing to do with it, its not like they'll just decide to be nice guys and pay more because they get more profits, what world do you live in?


So, yes, more capital means higher wages. Thus, it should be in the interest of everyone to reduce taxes on capital.

learn some real economics, you don't know what your talking about, or you don't even need to do that, just look out a window.

[Thirsty Crow]

Reason why I put "the poor" and "the workers" in commas:
1. Our "poor" are incredibly wealthy by historical standards.
2. Many workers are simultaneously capitalists, as they own stocks, bonds, etc. At least that's the case in the United States. So there really is little distinction between "worker" and "capitalist" in an advanced capitalistic society.

1. "Our" poor? Why the exclusive reference to one part of the planet?
Also, historical standards are something which cannot be used to justify the existing relations of power which result in specific living conditions of a certain part of the population. Such an argument can only be used from a specific position, that of an apologist whose aim is to ensure specific effects by engaging in such a discourse.

2. This does not cover the specificity of wage labour in capitalism. While it is true that a certain part of the working class does own tiny amounts of shares in social capital, they nevertheless are forced to live off their labour, meaning that this ownership is not sufficient for sustenance and that they are still forced to sell their labour power for a wage.
Another thing, you seem to be divorcing the notion of control from that of ownership. An important fact is that these workers in most cases do not own controlling shares which would allow them to participate in decision making with respect to the process of capital accumulation.


"Capital" doesn't refer to money. It refers to machinery, factories, education, etc. Read this: http://en.wikipedia.org/wiki/Capital_%28economics%29

It is not meaningful to conclude that education is not capital. If you wish to argue so, you have to demonstrate how education produces value above what its expended value amounted to. That demonstration would amount to stating that there is a definite identity between production and education, blurring the specificity of each.
You basically tried to smuggle in the nonsensical concept of human capital here.

Also, the basic premise of your argument is that capital is a natural, eternal category, and by extension, a natural, eternal occurrence in human societies. Machinery and factories are what's broadly called means of production, and they did in fact exist in every kind of human society we know. Thus, by positing that the notion of capital is to be used with reference to things, your arguing for an ahistorical view of specific ways human societies organized their production.

I don't even have to say that I don't agree with this. First, as I've said, the explanatory power of such a postulate is very weak since it collapses the historical distinctions which can also be used to explain the specificity of the ways in which economic activity in capitalism functions.
Secondly, the political implications, the assumption that was withheld from the very beginning of your writing, the intended effect (whether conscious or unconscious) is apologist in nature, aimed at conserving the existing relations of power (myself being caught in these relations, I cannot say that I don't have an interest in their radical transformation).

[gendoikari]

^ BTW, that econometric study shows that eliminating the corporate income tax in the United States would increase economic growth so much that living standards would literally double in less than 20 years.

Correct, the average standard of living would double, while the mean standard of living would go to shit. Capitalism in any form is inherently flawed based on the fact that A) it's price system is over redundant, it's based on demand which is based on average wage, which in turn is a commodity. B) that commodity called wage is flooded and will always be flooded.

[Klaatu]

The recession is not at all due to a lack of demand. JB Say proved that recessions are not caused due to a lack of demand back in the 19th century. Recessions have been shown to be caused by a misallocation of resources on the microeconomic level, not at the macroeconomic level. If you want to understand what I'm talking about, I suggest checking these two lectures out (they are just introductory to this subject) :

Sorry I do not subscribe to The Austrian Theory (von Mises) I HAVE read one of his books, and it did not seem to make much sense.
As Marx had observed: The Capitalist bases his theory upon flawed foundations, insisting that it is the "natural order" of things. And then he builds a house of cards around these flawed theories. That is one important reason for the inherent instability of an unplanned, 'wild-west' capitalist economy, with it's recessions and 'boom-and-bust cycles.'

And whatever "causes" the recession is not the issue here in the world today (we only need that information to avoid future recessions) For now, we need to get out of the present one, and a massive government spending program is needed to increase demand (this plan worked well during the 1930s)




In either case, don't forget that an increase in investment spending is an increase in demand for investment goods, and thus for the labor that produces those goods. So, even if you fall for the Keynesian demand-side arguments, then you should support a reduction in taxes on capital in order to increase economic growth over the short-run AND the long-run.

What rubbish. CUT taxes? That is backward-thinking.

use a little common sense. The wealthy are sitting on piles of cash (assets) Since the national treasury is broke, we need to commandeer this mountain of money (raise taxes) to distribute to the unemployed (thus hiring them) so they can spend, create demand, and revive the economy. There are armies of workers ready to work, but no one is hiring. With money to spend, this huge group of people (now with money in their pocket) gets everything going again. If THIS is what you meant by 'investment spending,' then let's do that. But public-sector wise, where it can be watched and controlled.

CUTTING taxes will only make the problem worse. Case in point:
(A) George Bush massively cut taxes
(B) then the economy collapsed.

So despite your vonMises theories, the real-world evidence speaks for itself.

And the REAL problem is Capitalism itself, with it's "misallocation of resources." In a planned economy (Socialism) recessions/ high unemployment are much less likely to occur (case in point; during the 1930s Great Depression, the Soviet union had NO recession at all!)

[Klaatu]

^ BTW, that econometric study shows that eliminating the corporate income tax in the United States would increase economic growth so much that living standards would literally double in less than 20 years.

They reduced the capital gains tax from 30% down to 15%
They reduced the top income tax from 50% down to 35%

And the economy still crashed (just look around you for proof)

The real problem is the rich capitalist sucking more and more wealth out of the pockets of the working poor, whether directly (by busting unions and shipping good-paying jobs to low-wage countries) or indirectly (by dipping into the national treasury via subsidies, by favors given, by 'privatization', e.g. Enron, or by inflation)

conclusion: reducing taxes on corporations is
(A) just an excuse for the profiteering capitalist to get ever richer (no 'trickle-down' actually happens)
(B) not going to 'create jobs' because we have a lack of demand problem (business owners admit this too; and they know nothing of vonMises' flawed theories)

[RichardAWilson]

I happen to disagree on the corporate income tax matter.

Corporate Capital in a high tech world is much more mobile and will flow from higher taxed economies to lower taxed economies.

America and Japan have the most burdensome Marginal Corporate Tax Rates in the entire industrialized world. Even the Scandinavian countries (I.e. Finland, Norway and Sweden) maintain a much lower tax rate on the corporate sector.

Note: There's a difference between marginal tax rates and effective tax rates.

There's a reason why Microsoft, Dell and Pfizer located in Ireland. There's a reason why Fortune 500 Companies in America are located in states that maintain a lower corporate income tax burden. Businesses have been relocating from California to Nevada and Washington State.

Furthermore, one shouldn't be too prepared to penalize smaller shareholders. Millions of Americans own stock via an IRA. Millions more own stock via Mutual Funds and the 401. Why should one favor taxing them? After all, a corporate tax will reduce the profits that are available for distribution to them.

Instead of an anti-growth indiscriminate tax, we should be looking toward taxing personal income. In other words, non-reinvested capital gains and dividends should subjected to the standard income tax rate, which in turn should be restored to the Post-War norm. - I.e. 70% This method would ensure a more equitable distribution of wealth via progressive taxation, while ensuring that working class families can earn fair returns on their savings and investments.

http://www.oecd.org/dataoecd/30/16/41069272.pdf

[RichardAWilson]

As for the Austrian nonsense:

Can you explain Tulip Mania?

Can you explain the Long Depression?

Economic downturns and financial bubbles were common even during the Gold Standard (when self-correcting markets should have prevented them.) Economies are like ecosystems in the sense that they will move toward disequilibrium.

Classical Economics is like Efficient Market Theory. (One could even add that it's like a Religion)

They're both overly simplistic generalizations =)

[Judicator]

They reduced the capital gains tax from 30% down to 15%
They reduced the top income tax from 50% down to 35%

And the economy still crashed (just look around you for proof)


I spy a post hoc fallacy.


The real problem is the rich capitalist sucking more and more wealth out of the pockets of the working poor, whether directly (by busting unions and shipping good-paying jobs to low-wage countries) or indirectly (by dipping into the national treasury via subsidies, by favors given, by 'privatization', e.g. Enron, or by inflation)

The majority of the poor aren't working (5 million working poor vs. 40 million in poverty), and the majority of workers aren't poor (150mil in the labor force vs. 5 million working poor).

[tradeunionsupporter]

According to this article Sweden in the 1970's had a income tax rate above 100% which was a 102% marginal tax rate my question is did the Rich/Wealthy really pay this rate or did the keep the profits in their businesses and reinvest the profits ?

A corporate tax rate that is too low actually destroys jobs. That’s because a higher tax rate encourages businesses (who don’t want to pay taxes) to keep the profits in the business and reinvest, rather than pull them out as profits and have to pay high taxes.

http://wweek.com/portland/article-17350-9_things_the_rich_do.html

Thom Hartmann: But it seemed, just common sense. I remember back in the ‘80s, I owned a business, International Wholesale Travel in Atlanta, Georgia. That business has, since we sold it done over 200 billion dollars in business. And there was a year when we were doing really, really well and I could either write a big check to myself or not. And I decided not to, because I didn’t want to pay the increased taxes. I put it back into the business. How can cutting taxes on rich people, on high income people, do anything other than encourage them to take the money out of their companies, out of their businesses, and buy fancy paintings or yachts or put it in Swiss bank accounts? How conceivably could that help the economy?

http://www.thomhartmann.com/blog/2010/10/transcript-thom-hartmann-asks-curtis-dubay-keeping-bush-tax-cuts-will-create-jobsreally'

Pomperipossa in Monismania

From Wikipedia, the free encyclopedia
"Pomperipossa in Monismania" (also called Pomperipossa in the World Of Money) is a satirical story written by the Swedish children's book author Astrid Lindgren in response to the 102% marginal tax rate she incurred in 1976. It was published starting on 3 March 1976 in the Stockholm evening tabloid Expressen and created a major debate about the Swedish tax system.
The marginal tax rate above 100% which was dubbed the 'Pomperipossa effect' was due to tax legislation which required self employed individuals to pay both regular income tax and employer's fees.
The story, a satirical allegory about a writer of children's books in a distant country, led to a stormy tax debate and is often attributed as a decisive factor in the defeat of the Swedish Social Democratic Party - for the first time in 40 years in the elections later the same year.
en.wikipedia.org...

[tradeunionsupporter]

Thank you for your answers.

[tradeunionsupporter]

Please if anyone has an answer please reply thank you very much.

[tradeunionsupporter]

Please reply to this thread.

[tradeunionsupporter]

What does everyone think ?

[tradeunionsupporter]

You are not grasping the purpose of that legislation....which is very "American" of you, LOL, so don't feel too bad!

Taxes serve TWO purposes, but most Americans don't realize that; the obvious one is to "raise revenue", right? But a secondary purpose of taxation is to encourage/discourage certain behaviors, and this is the purpose of any tax rate over 100%; there is always a way to avoid the tax by doing something the government allow that is "good for the economy"...

This is the purpose of the Corporate Income Tax in the USA....people whine it is "too high", but in reality, no 'well-run' business pays ANY* Income tax (so the 'rate' does not matter!), the system is structured such that employers can avoid it altogether by hiring additional workers (who then pay Income tax)....and in fact LOWERING the Corporate tax rate too much might encourage Corporations just to pay it, and not worry about hiring people for the tax break, leading to MORE unemployment, not less!

http://answers.yahoo.com/question/index;_ylt=AnqvWhUaBB1YmWgw9gC0ySirDH1G;_ylv=3?qid =20110819083157AAn8DzS

[tradeunionsupporter]

Please anyone reply thanks.

[tradeunionsupporter]

I think trickle down economics is nonsense.

[Judicator]

Stop bumping your own thread.

[tradeunionsupporter]

How do the Rich/Wealthy keep getting Rich you know the saying the Rich get Richer my question is how do the Rich stay Rich if they are paying themselves less to avoid higher taxes ?
Raising Taxes Is Good for the Economy
by Adam Eran –
Observes Beinhart: “With high taxes, the only way to retain the bulk of the wealth created by a business is by reinvesting it in the business — in plants, equipment, staff, research and development, new products and all the rest.
http://www.laprogressive.com/political-issues/raising-taxes-is-good-for-the-economy

Thom Hartmann: But it seemed, just common sense. I remember back in the ‘80s, I owned a business, International Wholesale Travel in Atlanta, Georgia. That business has, since we sold it done over 200 billion dollars in business. And there was a year when we were doing really, really well and I could either write a big check to myself or not. And I decided not to, because I didn’t want to pay the increased taxes. I put it back into the business. How can cutting taxes on rich people, on high income people, do anything other than encourage them to take the money out of their companies, out of their businesses, and buy fancy paintings or yachts or put it in Swiss bank accounts? How conceivably could that help the economy?
http://www.thomhartmann.com/blog/201...ate-jobsreally

If we didn't really need the money, that was an incentive to keep it in the company and to find ways to spend it that took it out of the taxable profit column but increased the value of the company.
High taxes create an incentive to reinvest profits into long-term growth.
With high taxes, the only way to retain the bulk of the wealth created by a business is by reinvesting it in the business -- in plants, equipment, staff, research and development, new products and all the rest.
http://www.alternet.org/economy/106979/

[Rafiq]

Our goal as Marxists is not to revive the capitalist economy.

Our goal is to crush it completely.