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The Laffer Curve in action
Comments
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the_flying_pig wrote: »Yes but there's a clear (and nonsensical) implication of causation.
There is in your mind.0 -
The people leaving France are just one side of the coin & probably the smaller side. Don't forget all the people/Companies who might have gone there who now won't.
A catastrophic move from the moron in charge. Good for the UK though.0 -
the_flying_pig wrote: »Yes but there's a clear (and nonsensical) implication of causation.
On a par with 'I wore a parka coat a lot during winter 1983 and also increases my height by a couple of inches - so parkas are a potential alternative to growth hormones'.
some facts:
1) the top rate was cut from 83% to 60%
2) the top rate was then cut again from 60% to 40%
3) in the tax years when the cuts were effected, the amount of tax collected from the highest earners increased, when the rate was cut to 40% i believe the tax take from the top 1% of earners doubled (relative to what it had been at 83%).
so, what do you think the cause of this was if it wasn't the tax cut. the same pattern has been repeated in several other countries as well iirc.
what would you say the reason for that was?0 -
chewmylegoff wrote: »some facts:
1) the top rate was cut from 83% to 60%
2) the top rate was then cut again from 60% to 40%
3) in the tax years when the cuts were effected, the amount of tax collected from the highest earners increased, when the rate was cut to 40% i believe the tax take from the top 1% of earners doubled (relative to what it had been at 83%).
so, what do you think the cause of this was if it wasn't the tax cut. the same pattern has been repeated in several other countries as well iirc.
what would you say the reason for that was?
firstly : complete madness to say because two trends are in unison there is a causal relationship.
secondly ; one clear trend has been the relative growing gap between the richest and the average incomes which would (all other things being equal) contribute towards a growing tax take from the richest
thirdly: in the period you are discusssing, the UK had a one off bonanza of north sea oil and gas.
and many other economic effects0 -
firstly : complete madness to say because two trends are in unison there is a causal relationship.
secondly ; one clear trend has been the relative growing gap between the richest and the average incomes which would (all other things being equal) contribute towards a growing tax take from the richest
thirdly: in the period you are discusssing, the UK had a one off bonanza of north sea oil and gas.
and many other economic effects
so, in two particular tax years the top rate was cut and the tax take increased in the relevant tax year and it is "madness" to suggest a causal relationship. madness? surely it's a reasonable observation which makes logical sense and is explained by the laffer curve.
it might be the wrong observation (although i don't think that any of the factors you list, even taken together, would explain the effect in one tax year - although the figures not being inflation adjusted might, due to the high rate of inflation in the period), but it's hardly madness to subscribe to a taxation theory which is pretty widely universally accepted.0 -
chewmylegoff wrote: »so, in two particular tax years the top rate was cut and the tax take increased in the relevant tax year and it is "madness" to suggest a causal relationship. madness? surely it's a reasonable observation which makes logical sense and is explained by the laffer curve.
it might be the wrong observation (although i don't think that any of the factors you list, even taken together, would explain the effect in one tax year - although the figures not being inflation adjusted might, due to the high rate of inflation in the period), but it's hardly madness to subscribe to a taxation theory which is pretty widely universally accepted.
in a reasonably complex economy and in a period of rapid change it is indeed sensible to note the way variables change and to suspect that there may be a causal relationship between correlations; however is is madness to say with certainty and little else that the relationship is causal.
the laffer theory is widely accepted: but what does it say?
have you read the excellent article that generali was kind enough to post?0 -
chewmylegoff wrote: »some facts:
1) the top rate was cut from 83% to 60%
2) the top rate was then cut again from 60% to 40%
3) in the tax years when the cuts were effected, the amount of tax collected from the highest earners increased, when the rate was cut to 40% i believe the tax take from the top 1% of earners doubled (relative to what it had been at 83%).
so, what do you think the cause of this was if it wasn't the tax cut. the same pattern has been repeated in several other countries as well iirc.
what would you say the reason for that was?
er
up till 1979 you paid 83% on 'top rate' income over £24k. from 1989 you paid 40% on 'top rate' income over £19.3k.
in £ terms GDP easily doubled during that period. i'm guessing that wages did something similar & that this may have had a teeny-tiny something to do with any increase in the nominal tax take.
although BTW i probably would expect that 83% is a fair old way to the right of the revenue-maximising rate. it's just not something that other countries seem to be doing.FACT.0 -
Whats Frances tax at now, income plus others like sales must be near 80%
When you get robbed of most of your money on the way to the bank you start taking a different route, change banks or just stay home even, commonsense logic right
This idea is not unique, its been there for donkeys years. Look at economies of scale or mass production.
We all accept you can supply a great many people and its (more) profitable for all, its not much different.
Revenue rising is perfectly reasonable when it costs less per person, its a main strand to modern society? World trade even which is why France sees out flows from foreign competition to host their business.
UK itself will benefit from France's actions, we advertise there telling them to come to London for less tax
The parka example is a straw man type argument I think where something obviously incorrect is used a label for the whole subject to try and dismiss it.
Art Laffer was adviser to Reagan hence seen as a successful man ?
http://fliiby.com/file/311438/by14vav6k8.html
http://www.youtube.com/watch?v=plSBom3xzRY
http://www.youtube.com/watch?feature=player_detailpage&v=RIhJjFDewGs#t=260s0
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