Way Better Television

[Andrew D]

Coulter tries to drag Hannity from right-wing Fantasyland into reality.

[rubato]

Wha?

I don't have time to watch the whole thing but Coulter's first comments are pure R-W bullshit. She is as systematically dishonest and divorced from reality as ever.

yrs,
rubato

[Joe Guy]

The video shows the difference between Ann Coulter and Sean Hannity that I've never spent much time analyzing because I usually can't listen to either of them for over a minute.

Ann is attempting to deal with reality and Sean is blinded by his narrow minded & thick headed devotion to his party. He doesn't think. He just waits for Obama to support something and then he opposes it.

Ann is correct. It is republicans who think like Sean that have shredded their party into a stinking pile of GOP rubble oozing with slimy members spewing effluvia to the masses and destroying their own group from within.

Even Ronald Reagan would wince at the thought of being represented by the likes of Sean Hannity.

Or not.

Probably wouldn't wince.

Not sure.

I can't speak for Ronny.

Maybe LJ could chime in.

[Lord Jim]

That was a particularly poor performance on Hannity's part....

Hannity is a master at telling his audience what he knows they want to hear, (both on his TV show and his syndicated daily four hour radio program that has a much bigger audience...say what you want about Sean, he's one of the hardest working guys in show business) and this skill has made him a very wealthy man....

Frequently he gets lumped together with Limbaugh, but that's really not fair. He is nowhere near as vicious as Limbaugh, nor (to the best of my knowledge) has he blatantly pandered to racists in the way Rush has on occasion.

He's generally a much more low key and affable person than Limbaugh and I believe also somewhat less cynical, (I think Sean may actually sincerely believe a lot of what he says, whereas I've always gotten the impression with Limbaugh that he doesn't really have any beliefs at all; he's just out to make a buck.)

[Lord Jim]

systematically dishonest and divorced from reality

Gee it's a shame you're married rube....

If that's what Ann is, the two of you would make a perfect match....

[Andrew D]

I don't have time to watch the whole thing ....

You probably should before commenting on it.

[dgs49]

One of the more interesting things about Coulter is not about her at all, but about the LW idiots who constantly claim - with no gogent support whatsoever - that she is full of shit. Exhibit A, of course being our own rubato-person.

In addition to being intentionally provocative, Coulter generally bases her statements and positions on facts: verifiable statistics, historical events, and reputable opinions of others. In this video, among many other things, she points out that Barry's "tax on the rich" is not a tax on the rich at all, but rather a tax on high earners - who may or may not in fact be wealthy. Barry's nonsense might not sell as well on "Main Street" if it were stated as a "tax on our most productive people."

It is no wonder that Libs hate her.

[Joe Guy]

Calling it a "tax on the rich" or "tax on the wealthy" is misleading, but "restoring a tax to our country's highest earners in this country" (the 2%) sounds okay to me.

Although I've heard and read many claims that it will have a negative effect on our economy, I've never heard a good explanation of why that is true.

[Long Run]

Although I've heard and read many claims that it will have a negative effect on our economy, I've never heard a good explanation of why that is true.

For the same reason even Obama agreed for the past three years not to raise the tax -- (i) it sucks money out of the economy and (ii) it adds to the disincentive to make high wages. The reason most economists believe that the "fiscal cliff" will lead to an immediate recession is that the combined impact of increasing taxes and reducing spending will take away so much economic activity that it will cause a recession given the very weak economy (note, some economists believe that we are already falling back into a recession based on purchasing orders and other leading economic indicators). Understanding this, Obama is seeking to just hit upper-end earners with a 12-15% take hike on the money they earn over $200,000. While this will take money out of the economy, it will only be a little money, since as we have discussed ad nauseum, there will be very little tax revenues created by bumping the top rate from 35 to 39.6%. The benefit of reducing the deficit from this will be minor, about a 3% reduction ($40 billion of revenue to attack a $1.2 trillion deficit)

The main conservative argument -- and I think Lord Jim has done a good job of explaining it -- is that higher tax rates create larger disincentives with respect to whatever activity is being taxed. Thus, a higher income tax rate will discourage making higher wages; instead, a percentage of such income earners will seek to reduce taxable income by getting more in tax-free benefits, deferred compensation, stock options and other strategies to avoid or defer taxes. As LJ said, going from 35 to 39.6 percent is a modest increase so the resulting disincentives will not be huge, but when added to other proposed tax increases could be substantial. If you have an economy roaring back to life, like the one Clinton inherited, the slowdown from such a tax increase is minor and not really noticed. If you have an economy that may already be heading back into a recession, such a tax increase may well help push us there.

[Lord Jim]

Tax Increases Reduce GDP

"Tax changes have very large effects: an exogenous tax increase of 1 percent of GDP lowers real GDP by roughly 2 to 3 percent."

How do changes in the level of taxation affect the level of economic activity? The simple correlation between taxation and economic activity shows that, on average, when economic activity rises more rapidly, tax revenues also are rising more rapidly. But this correlation almost surely does not reflect a positive effect of tax increases on output. Rather, under our tax system, any positive shock to output raises tax revenues by increasing income.

In The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks (NBER Working Paper No. 13264), authors Christina Romer and David Romer observe that this difficulty is just one manifestation of a more general problem. Changes in taxes occur for many reasons. And, because the factors that give rise to tax changes often are correlated with other developments in the economy, disentangling the effects of the tax changes from the effects of these underlying factors is inherently difficult.

To address this problem, Romer and Romer use the narrative record -- Presidential speeches, executive-branch documents, Congressional reports, and so on -- to identify the size, timing, and principal motivation for all major tax policy actions in the post-World War II United States. This narrative analysis allows them to separate revenue changes resulting from legislation from changes occurring for other reasons. It also allows them to classify legislated changes according to their primary motivation.

Romer and Romer find that despite the complexity of the legislative process, most significant tax changes have been motivated by one of four factors: counteracting other influences on the economy; paying for increases in government spending (or lowering taxes in conjunction with reductions in spending); addressing an inherited budget deficit; and promoting long-run growth. They observe that legislated tax changes taken to counteract other influences on the economy, or to pay for increases in government spending, are very likely to be correlated with other factors affecting the economy. As a result, these observations are likely to lead to biased estimates of the effect of tax changes.

Tax changes that are made to promote long-run growth, or to reduce an inherited budget deficit, in contrast, are undertaken for reasons essentially unrelated to other factors influencing output. Thus, examining the behavior of output following these relatively exogenous tax changes is likely to provide more reliable estimates of the output effects of tax changes. The results of this more reliable test indicate that tax changes have very large effects: an exogenous tax increase of 1 percent of GDP lowers real GDP by roughly 2 to 3 percent.

These output effects are highly persistent. The behavior of inflation and unemployment suggests that this persistence reflects long-lasting departures of output from its flexible-price level, not large effects of tax changes on the flexible-price level of output. Romer and Romer also find that the output effects of tax changes are much more closely tied to the actual changes in taxes than to news about future changes, and that investment falls sharply in response to exogenous tax increases. Indeed, the strong response of investment helps to explain why the output consequences of tax changes are so large.

Romer and Romer also examine the behavior of output following changes in other measures of taxes. Using broader measures of tax changes, such as the change in cyclically adjusted revenues or all legislated tax changes, the estimated output effects are substantially smaller than those obtained using the new measure of exogenous tax changes. This leads the researchers to conclude that failing to account for the reasons for tax changes can lead to substantially biased estimates of the macroeconomic effects of fiscal actions.

When they consider the two types of exogenous tax changes separately, Romer and Romer find suggestive evidence that tax increases to reduce an inherited budget deficit have much smaller output costs than other tax increases. This is consistent with the idea that deficit-driven tax increases may have important expansionary effects through expectations and long-term interest rates, or through confidence.

Romer and Romer find interesting changes in the motivations for tax changes over time. Countercyclical changes were frequent from the mid-1960s to the mid-1970s, but were unheard of before that time and from the mid-1970s until 2001. Tax changes motivated by spending changes were commonplace in the 1950s, 1960s, and 1970s, but have virtually disappeared since then. Tax increases to address inherited deficits were common from the late 1970s to the early 1990s, but rare before and after this period. Only tax changes motivated by long-run considerations have been a constant feature of the fiscal landscape since World War II.

This analysis might be extended to investigate the importance of the characteristics of tax changes for their macroeconomic effects. There are strong reasons to expect the effects of a tax change on output to depend on such features as its perceived permanence, its impact on marginal tax rates, and how it affects the tax treatment of investment. Romer and Romer plan to extend their analysis to see if the output consequences of tax changes depend not only on their size, but also on these other characteristics.

http://en.wikipedia.org/wiki/Christina_Romer

Christina Romer, by the way is a Democrat who served as Obama's Chairman of the Council Of Economic Advisors.

Joe, I have not heard a single responsible, reputable economist try to claim that the proposed tax increase won't have some negative effect on GDP. (Well, perhaps that lying moron Krugman would try to claim that, but I don't include him in the category of "responsible, reputable")

I have seen some on the left who claim the negative impact would be short term and only as little as one tenth of one percent, others at different points on the political spectrum who say it will be worse, but none who have claimed that there won't be any negative impact on GDP.

[Andrew D]

Although I've heard and read many claims that it will have a negative effect on our economy, I've never heard a good explanation of why that is true.

For the same reason even Obama agreed for the past three years not to raise the tax -- (i) it sucks money out of the economy and (ii) it adds to the disincentive to make high wages.

That would be more convincing if real income were going up. But according to the CBO, since 1979, the income of the top 1% has gone up by $700,000, whereas the income of the bottom 90% has gone down by $900.

The Republican argument founders on the imperturbable boulder of the facts.

[Andrew D]

Far and away the most importantly relevant paragraph of the quoted article:

When they consider the two types of exogenous tax changes separately, Romer and Romer find suggestive evidence that tax increases to reduce an inherited budget deficit have much smaller output costs than other tax increases. This is consistent with the idea that deficit-driven tax increases may have important expansionary effects through expectations and long-term interest rates, or through confidence.

[Joe Guy]

...it adds to the disincentive to make high wages.

That's one part of the explanation that is difficult for me to grasp.

Why would someone who suddenly begins to be taxed at a higher rate not want to increase his net income?

Are you saying that everyone with earnings currently higher than 98% of our population will suddenly want to become a '98 percenter' and have a less effluent lifestyle (with little or no time on their hands - ) just because their tax rate went up?

[rubato]

I don't have time to watch the whole thing ....

You probably should before commenting on it.

Not in this case.

She ran basically to form.

She and the other moron argued about tactics but basically agreed about their underlying delusions.

Too dishonest and too stupid to listen to. Yes, I know a lot of people are too stupid to know any better. If a benevolent god only made them all move to buttfuck Mississippi where their daughters could all get knocked up at 17 because their parents are too stupid to tell them about birth control then we could just sever them from the rest of the country.

yrs,
rubato

[Lord Jim]

Too dishonest and too stupid to listen to

Yep, it would be a match made in Heaven....

[dgs49]

Joe Guy:

Basically, what you fail to grasp is that the highest earners - investors and small business owners - have a great deal of discretion in how and when they "take" their income. They are not like, say, highly paid athletes (or employees of any kind), who can defer some income, but generally do not.

When someone in those situations believes that the tax code is picking on them, they will keep their money in the business, defer their income, or distribute it to family members, in order to decrease the "contribution" to government.

Thus, when the top marginal tax rate goes up significantly, the total revenue flowing into government does not significantly increase - only generalized prosperity does that.

The frustrating thing about this whole public argument now is that Barry has been able to take the public's eye off the real problem (out-of-control public sector spending), and focus it on something that is relatively insignificant: the income tax rate on high earners.

I totally agree with Coulter: the Republicans in both houses ought to simply give Barry what he wants, then he will OWN the depression that follows.

[Joe Guy]

dgs,

Part of the problem as I see it is that one side of the argument says that people who earn over $250,000 per year are not rich (and I agree). It's people like Warren Buffet that are truly rich (and he supports the idea of higher taxes for himself).

So aren't you making the assumption that these not-really rich top earners are not managing their income as well as they could be presently?

Everyone should be taking full advantage of the tax code. Why would people who are earning $250,000 or more not be doing that now?

[Long Run]

Everyone should be taking full advantage of the tax code. Why would people who are earning $250,000 or more not be doing that now?

You certainly get this, no? The higher the tax rate, the more incentive there is to take advantage of tax laws that allow deferring and avoiding taxes. If the tax rate on your next dollar is 35%, you may take it in cash, defer some or all of it, or otherwise seek to convert it to a tax-free benefit; in other words, you will balance your desire to have cash now with the desire to utilize tax code benefits to defer or avoid taxes (by taking the income in a prescribed benefit). But if the tax rate on your next dollar earned goes up to 99%, you are going to try to find a way to defer that income or have that income paid in a non-taxable form; in short, you will do everything you can to take advantage of the tax code.

[Andrew D]

So let's make the tax code right.

[Long Run]

Your right or my right, knowing that two rights usually make a wrong?