Labour Plans to Cut Taxes Paid by Rich

Generali

The curve I linked to in The Spectator was derived empirically according to the article. I don't know why that is so hard for you to understand.

CLAPTON

Generali wrote: »

The curve I linked to in The Spectator was derived empirically according to the article. I don't know why that is so hard for you to understand.

There was no evidence;
no data
no facts

I can understand that you don't understand mathematics and you don't understand that tax take is a function of many variables,
as you don't understand what 'many variables' means.

Did you actually study economics or was it book keeping and accountancy?
Was mathematics a pre-requisite?

I understand you have great respect for 'authority' as in 'Spectator article' or from a 'Harvard Ph.d' but in most sciences that sort of worship went out of fashion about 14th century, when evidence and observation replaced 'divine, received' knowledge.

You are merely making yourself ridiculous: I can recommend some decent economics books if that would help you.

Generali

If I want to be patronised I can go see my old boss.

The Spectator doesn't publish the data but it publishes the graph derived from those data. So either:

The data exist and were used to create the graph
or
The data do not exist and The Spectator are making it all up

The latter is possible however as it claims to be a serious publication it probably wouldn't last long if it just published any old thing to back up its claim on a regular basis.

Laffer's work on the Laffer curve in the UK is published in journals which are available for a fee via Google scholar.

CLAPTON

Generali wrote: »

If I want to be patronised I can go see my old boss.

The Spectator doesn't publish the data but it publishes the graph derived from those data. So either:

The data exist and were used to create the graph
or
The data do not exist and The Spectator are making it all up

The latter is possible however as it claims to be a serious publication it probably wouldn't last long if it just published any old thing to back up its claim on a regular basis.

Laffer's work on the Laffer curve in the UK is published in journals which are available for a fee via Google scholar.

do you believe that the tax take in a country is solely determined by the general tax rate?
if so would the same curve apply in all societies or at least the class of western style countries? if not why not?

do you believe that the tax take in a country is determined by a multitude of factors of which one may be the a tax rate? If so do you accept that the Laffer curve will simply be a relationship between the tax take and tax rate holding the other variables constant or at least insignificant variability? In other words that Laffer construct is a simply one dimensional model of the situation?

Generali

CLAPTON wrote: »

do you believe that the tax take in a country is solely determined by the general tax rate?

Of course not! I have never said that.

CLAPTON wrote: »

if so would the same curve apply in all societies or at least the class of western style countries? if not why not?

Countries and indeed individuals will have their own Laffer curves. Each person has their own take on what rate of tax is not worth paying.

CLAPTON wrote: »

do you believe that the tax take in a country is determined by a multitude of factors of which one may be the a tax rate?

Of course. That is self evident.

CLAPTON wrote: »

If so do you accept that the Laffer curve will simply be a relationship between the tax take and tax rate holding the other variables constant or at least insignificant variability? In other words that Laffer construct is a simply one dimensional model of the situation?

Not really. The Laffer curve represents a very important concept and one which is absolutely crucial to setting marginal tax rates. Labour want to increase taxes to a point where we can state that empirical evidence shows tax take will fall. The only reason can be what used to be called Class War.

ukcarper

Although I understand the principle of Laffer curve I have not read about it. What I would like to know is has it been subject to the same scrutiny as a scientific theory would be subject to before being accepted ie fully tested and those test duplicated.

Andy_L

Generali wrote: »

If you look at The Spectator link I provided, he did make a stab at producing a curve and he saw the maximum being at 40% in the 1980s. That's why Lord Lawson set the top rate of tax at 40%.

That graph was produced by the IFS in 2010 and only refers to income over £150k (higher than Lawson set the limit iirc)
Unfortunately the link to their paper no longer works (and a google image search finds it nowhere else) but there's no indication that it was produced by Laffer, either as a prediction or after the event, it also contains another Laffer curve (attributed to that Government) that the peak is at 60%

Generali

ukcarper wrote: »

Although I understand the principle of Laffer curve I have not read about it. What I would like to know is has it been subject to the same scrutiny as a scientific theory would be subject to before being accepted ie fully tested and those test duplicated.

It's not as simple as that. Generally when you test a scientific theory you can keep every variable but one or two constant. When testing an economic theory, everything is moving at the same time which makes things hard.

CLAPTON

Generali wrote: »

Of course not! I have never said that.



Countries and indeed individuals will have their own Laffer curves. Each person has their own take on what rate of tax is not worth paying.




Of course. That is self evident.



Not really. The Laffer curve represents a very important concept and one which is absolutely crucial to setting marginal tax rates. Labour want to increase taxes to a point where we can state that empirical evidence shows tax take will fall. The only reason can be what used to be called Class War.

the empirical evidence is lacking and there is no reasonable data that shows it's 40-50%

the is no reason to believe (and indeed every reason to believe the opposite) that the values of the curve will change over time and something that may or may not have been true in the 80s will be true now.

Whether its 'absolutely crucial' or not is pretty irrelevant if there is no way of determining the equation of the Laffer curve and anyway it a function of evolving situations.


a simple consideration of a function of several variables, will show that for the curve not to have more than one maxima is unlikely: the fact that Harvard economics Ph.D doesnot know what every maths graduate of any half decent UK universty knows is rather sad.

The Laffer curve, like many simplifications and rules of thumb is undoubtedly a very useful qualitative device to explain to both politicians and the general population some truths about how the taxpayers respond to taxation changes.

Generali

CLAPTON wrote: »

the empirical evidence is lacking

Utter twaddle of the highest order. The Laffer curve probably has more empirical evidence to back it up of any economic theory except Marshall's.

http://www.sciencedirect.com/science/article/pii/S105353579690013X

This paper re-examines the Laffer curve for the U.S. based on time-series data during 1959–1991. Total personal income tax revenue is specified as a quadratic function of the income tax rate. Different functional forms such as the linear, the log-log, and the semi-log forms are considered. Major findings show that the bellshaped Laffer curve is statistically significant and that the revenue-maximizing tax rate is between 32.67% and 35.21%. The increase in the maximum personal income tax rate from 31% to 36% in the Budget Reconciliation Bill recently passed by the Congress is expected to push the U.S. position on the Laffer curve toward the maximum point and may reduce income tax revenue collected from the highest income group.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2235697

[FONT=Myriad Roman, Arial, Helvetica, Sans-serif;]strong statistical evidence of a Laffer curve [i.e. emp[FONT=Myriad Roman, Arial, Helvetica, Sans-serif;]irically derived][/FONT][/FONT]

http://www.sciencedirect.com/science/article/pii/S030439321100064X

New tax rate data is provided. [empirical evidence]

http://www.jstor.org/discover/10.2307/2534678?sid=21105900696923&uid=2&uid=3737536&uid=4

It then examines the empirical approach of the NTR literature and the existing estimates from the 1980s and 1990s

http://books.google.com.au/books?hl=en&lr=&id=bJNPBYCBZj4C&oi=fnd&pg=PA177&dq=laffer+curve+empirical+evidence&ots=MuCxM9zuMm&sig=K-s8aS0EMOQm2jTp6QA_XhBZL6A#v=onepage&q&f=false

Empirical evidence on the responsiveness of evasion to elements of the tax system is presented

There is masses and masses of empirical evidence for the Laffer Curve. The reason? Tax data are freely and widely available and the idea is a simple and compelling one which is of importance to policy makers.

I'm not sure why you'd possibly think anything else would be the case. You may be a better economist than me (in your own mind anyway) but you don't seem to have much of a clue about what drives the behaviour of economists.

Perhaps you can stop patronising me and start being right.