US Presidential Candidates

Thanks greatly Biochem for your hard work. Very informative.

On our Australian radio yesterday a leading DJ was saying that he watched the debate as he found it the funniest show around, then at the end he suddenly thought that one of these may end up the most powerful man in the world, so he had to be coaxed out from under his bed.

Do they really think they can run a modern economy (with a powerful military) on 10-28% income tax with much less for business?

Daryl wrote:Thanks greatly Biochem for your hard work. Very informative.

On our Australian radio yesterday a leading DJ was saying that he watched the debate as he found it the funniest show around, then at the end he suddenly thought that one of these may end up the most powerful man in the world, so he had to be coaxed out from under his bed.

Do they really think they can run a modern economy (with a powerful military) on 10-28% income tax with much less for business?

Republicans generally come in two flavors on this subject.

1. Those that have, despite literally *all* evidence to the contrary, convinced themselves that cutting taxes = massive economic boom = made up lost tax revenue. They believe it like an article of religious dogma.

2. The guys who know that's delusional bullshit but don't care because them and their buddies are the ones profiting off of it and who cares if it plunges the government into debt. They'll just blame it on those Liberal social programs and the sheep will eat it up with enthusiasm.

Daryl wrote:Thanks greatly Biochem for your hard work. Very informative.

On our Australian radio yesterday a leading DJ was saying that he watched the debate as he found it the funniest show around, then at the end he suddenly thought that one of these may end up the most powerful man in the world, so he had to be coaxed out from under his bed.

Do they really think they can run a modern economy (with a powerful military) on 10-28% income tax with much less for business?

Well in theory most of these plans are suppose to produce the same total revenue as the current tax scheme, although the talking heads keep arguing whether or not the numbers add up. Rand Paul's is the most extreme but his is suppose to balance when you take into account that he's factoring in a cut of 50%+ in government spending. I think that most of them have potential as first drafts. If they are tinkered with a bit properly and the numbers are shored up they will probably genuinely be value neutral. However if past performance is any guide to what will actually happen: the "good" proposals such as increases in the child tax credit etc will survive the tinkering while the "bad" proposals i.e. any proposal that increases taxes on anyone will die in committee resulting in a net increase in the national debt unless the economic growth they are promising also takes place.

Most of the corporate tax proposals are probably OK. The exact percentage may need to be altered. But the basic concept is that corporate tax is officially 35%. But no one really pays that, most companies pay about 12%. However that varies from 0% to 30% depending on the company. Generally large companies with top notch highly paid accountants are on the lower end of the scale while small companies tend to pay on the high end. So the proposals to eliminate all the deductions/exemptions/loopholes etc and just have everyone pay 15% are quite reasonable, produce the same net income at the end of the day and are much fairer to the smaller entities.

gcomeau wrote:

Daryl wrote:Thanks greatly Biochem for your hard work. Very informative.

On our Australian radio yesterday a leading DJ was saying that he watched the debate as he found it the funniest show around, then at the end he suddenly thought that one of these may end up the most powerful man in the world, so he had to be coaxed out from under his bed.

Do they really think they can run a modern economy (with a powerful military) on 10-28% income tax with much less for business?

Republicans generally come in two flavors on this subject.

1. Those that have, despite literally *all* evidence to the contrary, convinced themselves that cutting taxes = massive economic boom = made up lost tax revenue. They believe it like an article of religious dogma.

- Cutting taxes can lead to an economic boom. It really depends if taxes are one of the key rate limiting steps toward economic growth. When that is true tax cuts lead to economic growth, however when other things are even more rate limiting tax cuts don't lead to economic growth. You are somewhat right. Most of the time right now taxes per se aren't the rate limiting step. Most economistd believe that the biggest national government caused rate limiting step now is regulations. Locally high tax rates are often a problem and high rates are one of the problems some of the cities have attracting/keeping businesses/population (companies & individuals locate just outside the city in the suburbs to get lower tax rates).

As far as the current tax code the biggest problem is fairness. That is huge in the corporate part as the big companies are using their lawyers/accountants/clout to pay as low as 0% tax while smaller companies get clobbered. If they actually follow through with the proposals to create a 15% flat corporate tax without all of the loopholes that will be a boost to smaller companies.

Similar fairness problems play out on the individual side that is why the flat tax with a floor proposals are so attractive to so many Republican primary voters. In general they eliminate most or all of the deductions/exemptions/loopholes and everyone pays a flat rate on any dollar earned above the floor. So if the floor is $50000 any family earning less than $50000 pay $0, a family earning $60,000 pays tax on $10,000, a family making $1 million pays tax on $950,000 and a family making $1 billion pays tax on $999,950,000. Right now the families making the big $$$$ pay very low effective rates because of all of the loopholes, these proposals would correct that.

Exact tax rates may need to be subject to discussion.

2. The guys who know that's delusional bullshit but don't care because them and their buddies are the ones profiting off of it and who cares if it plunges the government into debt. They'll just blame it on those Liberal social programs and the sheep will eat it up with enthusiasm.

Always some of those on both sides of the aisle. Hilary is one on the Democratic side, different delusions same end result. (Bernie is a true believer).

biochem wrote:

So, Trump, Carson, Cruz, Paul, Huckabee, Jindal and maybe Santorum are out of the race as long as you want realism as part of the candidates promises.

So, Rubio, Bush, Kasich and Christie understands primary school math while Fiorina is unknown.

biochem wrote:Rand Paul's is the most extreme but his is suppose to balance when you take into account that he's factoring in a cut of 50%+ in government spending.

Which isn´t even in the realm of realistic if he still wants a functional society of some kind. 50% from now? That´s no longer a quibble about "large government" or whatever, that´s just laughable.

biochem wrote: If they are tinkered with a bit properly and the numbers are shored up they will probably genuinely be value neutral.

Unlikely.

biochem wrote:Most of the corporate tax proposals are probably OK. The exact percentage may need to be altered. But the basic concept is that corporate tax is officially 35%. But no one really pays that, most companies pay about 12%. However that varies from 0% to 30% depending on the company. Generally large companies with top notch highly paid accountants are on the lower end of the scale while small companies tend to pay on the high end. So the proposals to eliminate all the deductions/exemptions/loopholes etc and just have everyone pay 15% are quite reasonable, produce the same net income at the end of the day and are much fairer to the smaller entities.

In theory yes. But how likely is it that the taxcheats will actually be removed?

biochem wrote:- Cutting taxes can lead to an economic boom. It really depends if taxes are one of the key rate limiting steps toward economic growth. When that is true tax cuts lead to economic growth

It ALSO very much depends on where you take the money to cut taxes with from.

USA doesn´t have any real room for tax cuts. Or realistically, it has negative room for tax cuts.

And the "economic boom" is NEVER as big as economists promise.

Sweden in early 90s had in theory one of THE most extreme potentials for tax cuts causing economic boom.

Well, mid 90s, tax cuts of 200bn SEK/year resulted in tax increase from the mostly nonexistant "boom" of 30bn/y. Net loss of 170bn/y(that´s around 18bn$).

That was also one of those marvellous "fiscally neutral" tax cuts that so many politicians loves to promise.

Outside the heads of economists, it doesn´t work.

biochem wrote:Most economistd believe that the biggest national government caused rate limiting step now is regulations.

Another strawman. Economists seems to have been very quick and creative in forgetting what happened in their "free economy" paradise created by Jeltsin and his horde of US neocon wannabe economic "geniuses".
Removing regulations pretty much just turned it into chaos and mayhem(sometimes literal).

biochem wrote:As far as the current tax code the biggest problem is fairness. That is huge in the corporate part as the big companies are using their lawyers/accountants/clout to pay as low as 0% tax while smaller companies get clobbered. If they actually follow through with the proposals to create a 15% flat corporate tax without all of the loopholes that will be a boost to smaller companies.

Then, oh my horrible suggestion, why not begin by removing loopholes, and THEN, after the effects of that is actually known, reduce the taxrate to compensate.
Or, shocking idea, maybe even pay off on the national debt instead?

biochem wrote:Similar fairness problems play out on the individual side that is why the flat tax with a floor proposals are so attractive to so many Republican primary voters. In general they eliminate most or all of the deductions/exemptions/loopholes and everyone pays a flat rate on any dollar earned above the floor.

Flat rate with a floor IS one of the better tax setups, problem is everyone who suggests it have wildly insane ideas about how low a rate it can support.

Daryl wrote:Thanks greatly Biochem for your hard work. Very informative.

On our Australian radio yesterday a leading DJ was saying that he watched the debate as he found it the funniest show around, then at the end he suddenly thought that one of these may end up the most powerful man in the world, so he had to be coaxed out from under his bed.

Do they really think they can run a modern economy (with a powerful military) on 10-28% income tax with much less for business?

Take a look at US History.

Historically the "modern" economy that won the cold war had an effective entire government revenue of ~19% of GDP.

That includes such things as actually getting a man to the moon. And so forth.

Really do dislike that word "modern". In 10 or 20 years it will be ancient. Also it tends to be used by both sides to say it is much better.[addendum] How can it be a modern society if we can't do what we could do half a century ago?[end addendum.]

Just think the modernist in the 60's said we were going to have better living through chemicals. Which was right and incredibly wrong at the same time.

All a government tax on corporate earnings boils down to is a tax on the people. Minus the amount of raised through trade to other countries. Just another expense on the balance books.

The other HUGE thing not included is Social Security. Which amounts to a ~14% additional income tax. It counted as normal government revenue. Oh yeah, somewhere they will pay it back.

Very much depends on what you want that modern government to do.

Have fun,
T2M

PS Sad thing is in a lot of ways I agree with that DJ.

biochem wrote:Rand Paul's is the most extreme but his is suppose to balance when you take into account that he's factoring in a cut of 50%+ in government spending.



Which isn´t even in the realm of realistic if he still wants a functional society of some kind. 50% from now? That´s no longer a quibble about "large government" or whatever, that´s just laughable.

Based upon what he said in the debate, he and his supporters appear to want a return to the US government of the 19th century. And they wish to eliminate most (not all) major government programs created after 1900. I don't actually think this is a particularly good idea but since the USA had a very effective and functional government in the 19th century it's not laughable either.

biochem wrote:- Cutting taxes can lead to an economic boom. It really depends if taxes are one of the key rate limiting steps toward economic growth. When that is true tax cuts lead to economic growth



It ALSO very much depends on where you take the money to cut taxes with from.

USA doesn´t have any real room for tax cuts. Or realistically, it has negative room for tax cuts.

And the "economic boom" is NEVER as big as economists promise.

Sweden in early 90s had in theory one of THE most extreme potentials for tax cuts causing economic boom.

Well, mid 90s, tax cuts of 200bn SEK/year resulted in tax increase from the mostly nonexistant "boom" of 30bn/y. Net loss of 170bn/y(that´s around 18bn$).

That was also one of those marvellous "fiscally neutral" tax cuts that so many politicians loves to promise.

Outside the heads of economists, it doesn´t work.

Tax cuts work to create an economic boom when taxes are one of the rate limiting steps. When other things are rate limiting taxes won't work or won't work as well as hoped. US cities are one good example some of the cities have very serious middle class and business flight problems with those critical parts of society leaving for the suburbs. High taxes are often one of the rate limiting steps causing this but they are not the only one. Excessive regulation of the crony capitalist kind is another. As is high crime. etc. Fixing taxes only fixes one of the problems but to truly fix the situation all of the problems must be fixed. Fixing taxes will help some since it is indeed one of the problems but as a stand alone it won't work as well as hoped.

biochem wrote:Most economistd believe that the biggest national government caused rate limiting step now is regulations.



Another strawman. Economists seems to have been very quick and creative in forgetting what happened in their "free economy" paradise created by Jeltsin and his horde of US neocon wannabe economic "geniuses".
Removing regulations pretty much just turned it into chaos and mayhem(sometimes literal).

Historically government deregulation schemes have had mixed results. Mostly because politicians are lazy. Some regulations are needed to provide rules for a functional society. But now we have piles and piles of the things. So many that no one actually knows how many regulations the Federal government has! We desperately need to deregulate. But we need to deregulate in a thoughtful careful manner, working closely with experts in the individual areas to remove/reduce regulations which are outdated and/or ineffective but keeping regulations with actually work. Many times politicians are lazy and throw the baby out with the bathwater.

Politicians have also allowed the bureaucracy way too much rule making authority. The bureaucrats are supposed to just make rules that implement policy passed by laws. Many of those bureaucrats are now making policy. Politicians have allowed this because they don't want to be on the record as having a position. Voting either way on some of these controversial issues is a good way not to get re-elected. So they punt to the bureaucracy.

biochem wrote:As far as the current tax code the biggest problem is fairness. That is huge in the corporate part as the big companies are using their lawyers/accountants/clout to pay as low as 0% tax while smaller companies get clobbered. If they actually follow through with the proposals to create a 15% flat corporate tax without all of the loopholes that will be a boost to smaller companies.



Then, oh my horrible suggestion, why not begin by removing loopholes, and THEN, after the effects of that is actually known, reduce the taxrate to compensate.
Or, shocking idea, maybe even pay off on the national debt instead?

If the estimate that the average company pays about 12% is correct, then 15% is actually a tax increase.

biochem wrote:Similar fairness problems play out on the individual side that is why the flat tax with a floor proposals are so attractive to so many Republican primary voters. In general they eliminate most or all of the deductions/exemptions/loopholes and everyone pays a flat rate on any dollar earned above the floor.



Flat rate with a floor IS one of the better tax setups, problem is everyone who suggests it have wildly insane ideas about how low a rate it can support.

Most economists seem to think that a flat tax rate would need to be in the high teens to to low twenties be revenue neutral depending on what the floor is and how many deductions/exemptions/credits etc are allowed. Most of these plans are on the low side but that's to be expected from campaign promises. Politicians on both sides exaggerate.

Daryl wrote:On our Australian radio yesterday a leading DJ was saying that he watched the debate as he found it the funniest show around, then at the end he suddenly thought that one of these may end up the most powerful man in the world, so he had to be coaxed out from under his bed.

This is the first debate which was more about the issues than the personalities. All the talking heads here appear to be in a state of shock. But for the first time the candidates were talking policy policy policy and so your DJ got the first look at what Republicans are thinking and what the internal debates within the party are.

https://www.youtube.com/watch?v=jC0wgWnvL6c

biochem wrote:Historically government deregulation schemes have had mixed results. Mostly because politicians are lazy. Some regulations are needed to provide rules for a functional society. But now we have piles and piles of the things. So many that no one actually knows how many regulations the Federal government has! We desperately need to deregulate. But we need to deregulate in a thoughtful careful manner, working closely with experts in the individual areas to remove/reduce regulations which are outdated and/or ineffective but keeping regulations with actually work. Many times politicians are lazy and throw the baby out with the bathwater.

Politicians have also allowed the bureaucracy way too much rule making authority. The bureaucrats are supposed to just make rules that implement policy passed by laws. Many of those bureaucrats are now making policy. Politicians have allowed this because they don't want to be on the record as having a position. Voting either way on some of these controversial issues is a good way not to get re-elected. So they punt to the bureaucracy.

The regulations are fueled by a complex tax code. Reforming regulations without removing the incentives to insert more regulations via the tax code will result in very little lasting change. Lobbyists have large budgets to influence congress to make select additions/adjustments to the tax code because the effect on the effected industries is huge. The best way to remove that complexity is to go to a consumption tax. Not value added, but consumption or sales tax. Tax the final product once at the retail level. Have the States collect and eliminate the IRS.

Amend the 16th Amendment to mandate a sunset of 5 years for any income tax so that it MUST be renewed every 5 years. I would also stipulate that any income tax must be flat. The purpose should be to fund limited scope projects, like wars or debt reduction. Dividends and capital gains should be taxed at some flat rate. The poor should have a rebate or a tax exempt card that is renewed.

Fiorina's zero based budget strikes me as a good check against agencies encouraging regulatory creep. If every dollar of an agency's budget has to be justified, any expansion of their mandate has to be specifically granted by Congress. Current budgeting allows for some baseline growth regardless of any need. It is assumed that the agency WILL need more money, so why justify it?

I tend to agree with you, biochem, on most of these issues. I believe I might be a bit more libertarian than you. Not sure by how much. You display a remarkable degree of diplomacy that sound very much like an establishment republican. That of course could be my own prejudice speaking.

Daryl wrote:Do they really think they can run a modern economy (with a powerful military) on 10-28% income tax with much less for business?

One thing most people forget, including Americans, when they talk about the % of income that the Federal government would tax at, is that State and Local governments combined is at account for another $2.9 Trillion. Currently the Federal government is under $3.3 Trillion. And most of the services that people are worried about are paid for by those State and Local revenues, police, fire, education, etc.