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07/15/2012

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On behalf of liberals and progressives, I am glad to welcome Judge Posner to our group.

William

Here is a question I have thought about for sometime since the Debate about tax rates always involves comparisons to the 90s. Did the "Bush-era" tax rates actually prevent the economic downturn from being more catastrophic than it was? That is, would things have been worse if the tax rates were never reduced? Everything I understand about taxes states that it is true that at some point you reach a tax rate that actually reduces government revenue meaning that lowering taxes will increase the government's revenue. If that is true, it seems to me that it is possible that without the Bush-era reduced taxes, the "Great Recession," as many people called, it could have been the "Second Great Depression."

As to the last paragraph I think more appropriately hits the nail on the head. Raising taxes on the "rich" is more about punishment than anything else. A true policy debate would not focus on phrases like "fair share" and the "rich", it would focus on whether raising taxes puts will increase revenue or are the rates already as high as they can go, that is, which side of the Laffer Curve are we on? This I think would be a legitimate debate.

Thomas Rekdal

I share Judge Posner's skepticism about the disincentive effects of the Obama taxes on work effort, but I do not share his expectation (or is it hope?)that such taxes may assuage class resentment over income inequality. More likely it will simply strengthen the false belief that squeezing the rich is the solution to our fiscal problems. This is like encouraging people to bring water pistols to a forest fire.

Our real problem is massive overspending, particularly massive overspending on the elderly, and until the public is prepared to accept the pain that reduced spending or substantial taxes will cause, there is no "way forward." Indeed, there is no hope at all.

Some political problems are so difficult there is no real solution. Like slavery, our debt dilemma may be one of them. We may just have to wait for the bond market to break the deadlock. And make no mistake, after it is through ravaging Europe, it will surely come for us.

Richard Mason

Although it is incidental to the main point, I would comment that for Americans, fame is a source of prestige and self-worth at least as potent and probably more potent than money.

I think most Americans would rather be the football quarterback than the owner of the football team; would rather meet the quarterback; would be more likely to accord the quarterback reverence and respect if they met him; and so on.

Of course, celebrities often have good incomes caused by or correlated with whatever made them famous, but their social prestige is greatly disproportionate to that.

Unlike the distribution of income, the distribution of fame is said to be becoming more equal with time (cf. Warhol, 1968).

Happy to Pay My Taxes

I agree with Judge Posner's analysis for the most part. However, I wish that Obama had taken the page from Bowles-Simpson and coupled the not-unimportant Populist appeal of "income equality" and "everyone-pay-your-fair-share" [I'm down with these] with long-term entitlement reform.

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Tax is the country's economic resources, but too many tax increases our burden.

A concerned citizen

The analysis that Judge Posner presents here is solid, and I agree with nearly every word of it. However, he misses a significant economic point that is promoted by nearly every economics professor in their most basic economics course: namely, the notion of opportunity cost.

While I share the belief that raising the marginal tax rates on the rich will have a very small (virtually negligible) deleterious effect on their productive behaviors (it may even have a positive effect if they decide to work more to make up for the decrease in their after tax income!), I have to question the wisdom of the allocation of those additional taxed resources in promoting wealth. Hayek, in particular, makes this point several times and won his Nobel Prize for his work on this subject. Those dollars that are taxed will be spent on something whether they are taxed away from the people who earned them or not. Absent a vested, monetary incentive to spend those dollars in an economically efficient manner (as opposed to just a technically efficient manner), there's simply no guarantee that wealth will actually be generated, just that things will be done.

The point I'm making essentially boils down to the following. We have clear and demonstrable evidence that the private individuals who are going to be taxed additionally can take resources and transform them into higher valued resources: their salaries. They would not be paid such high salaries (and therefore be subject to the highest marginal tax rate) if this were not the case. However, we lack this clear and demonstrable evidence in the case of political actors. This last point cuts against what is "known" by the vast majority of people, but the vast majority of people are not economists. The lesson is perhaps best summed up in the Tale of the Roman Emperor and what I'm advocating is simply letting the second singer sing.

Given relative certainty on one hand and relative uncertainty on the other, personally I am inclined to side with the certainty. Let those who earned the dollars keep the dollars and spend them in a competitive environment that is subject to monetary profit and loss as opposed to political profit (reelection) and loss (impeachment/defeat).

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I am glad to welcome Judge Posner to our group

Christopher Calton

A decrease in disposable income would have some effect on equilibrium prices in the economy, who knows what the net effect will be.

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I agree with Judge Posner's analysis for the most part. However, I wish that Obama had taken the page from Bowles-Simpson and coupled the not-unimportant Populist appeal of "income equality" and "everyone-pay-your-fair-share" [I'm down with these] with long-term entitlement reform.www.diesel-generatorset.com

pan

Given relative certainty on one hand and relative uncertainty on the other, personally I am inclined to side with the certainty. [url ="www.diesel-generatorset.com"]diesel generator set[/url]Let those who earned the dollars keep the dollars and spend them in a competitive environment that is subject to monetary profit and loss as opposed to political profit (reelection) and loss (impeachment/defeat).

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EJR (U of Chicago AB '82)

"A tax increase limited to high earners might assuage this resentment somewhat". Huh???

Why is the fear of resentment a basis for tax policy? Why stop at "tax the rich"; why not "shoot the rich"? That should really reduce resentment (although probably not for the rich).

This is the kind of dopey, egg-head thinking that most reasonable, working Americans reject.

A policy promoting wealth re-distribution (as an end in itself) is immoral. Dick Posner should know better.

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