Forum Post: There's No Escaping Hauser's Law Tax revenues as a share of GDP have averaged just under 19%, whether tax rates are cut or raised. Better to cut rates and get 19% of a larger pie.
Posted 12 years ago on Nov. 1, 2011, 8:31 p.m. EST by figero
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Revenue as a percent of GDP, 1980 - 2010:
http://www.usgovernmentrevenue.com/revenue_chart_1980_2010USp_13s1li011mcn_F0t_Revenue_As_Percent_Of_GDP
you didn't have it clicked on Fed.
Go ahead. It's currently 14% then. The lowest in 60 years.
http://www.angrybearblog.com/2010/11/hausers-law-is-extremely-misleading.html
I think we should cut taxes to 0 and see the GDP go to infinity to obey Hauser's Law.
We have been mislead by Reagan, Bush Sr, Clinton, Bush Jr, Obama, and nearly every other public figure. Economic growth, job creation, and actual prosperity are not necessarily a package deal. In fact, the first two are horribly misunderstood. Economic growth/loss (GDP) is little more than a measure of wealth changing hands. A transfer of currency from one party to another. The rate at which it is traded. This was up until mid ’07′ however, has never been a measure of actual prosperity. Neither has job creation. The phrase itself has been thrown around so often, and in such a generic politicali manner, that it has come to mean nothing. Of course, we need to have certain things done for the benefit of society as a whole. We need farmers, builders, manufacturers, transporters, teachers, cops, firefighters, soldiers, mechanics, sanitationi workers, doctors, managers, and visionaries. Their work is vital. I’ll even go out on a limb and say that we need politicians, attorneys, bankers, investors, and entertainers. In order to keep them productive, we must provide reasonable incentives. We need to compensate each by a fair measure for their actual contributions to society. We need to provide a reasonable scale of income opportunity for every independent adult, every provider, and share responsibility for those who have a legitimate need for aid. In order to achieve and sustain this, we must also address the cost of living and the distribution of wealth. Here, we have failed miserably. The majority have already lost their home equity, their financial security, and their relative buying power. The middle class have actually lost much of their ability to make ends meet, re-pay loans, pay taxes, and support their own economy. The lower class have gone nearly bankrupt. In all, its a multi-trillion dollar loss taken over about 30 years. Millions are under the impression that we need to create more jobs simply to provide more opportunity. as if that would solve the problem. It won’t. Not by a longshot. Jobs don’t necessarily create wealth. In fact, they almost never do. For the mostpart, they only transfer wealth from one party to another. A gain here. A loss there. Appreciation in one community. Depreciation in another. In order to create net wealth, you must harvest a new resource or make more efficient use of one. Either way you must have a reliable and ethical system in place to distribute that newly created wealth in order to benefit society as a whole and prevent a lagging downside. The ‘free market’ just doesn’t cut it. Its a farce. Many of the jobs created are nothing but filler. The promises empty. Sure, unemployment reached an all-time low under Bush. GDP reached an all-time high. But those are both shallow and misleading indicators. In order to gauge actual prosperity, you must consider the economy in human terms. As of ’08′ the average American was working more hours than the previous generation with far less equity to show for it. Consumer debt, forclosure, and bankruptcy were also at all-time highs. As of ’08′, every major American city was riddled with depressed communities, neglected neighborhoods, failing infrastructures, lost revenue, and gang activity. All of this has coincided with massive economic growth and job creation. Meanwhile, the rich have been getting richer and richer and richer even after taxes. Our nation’s wealth has been concentrated. Again, this represents a multi-trillion dollar loss taken by the majority. Its an absolute deal breaker. Bottom line: With or without economic growth or job creation, you must have a system in place to prevent too much wealth from being concentrated at the top. Unfortunately, we don’t. Our economy has become nothing but a giant game of Monopoly. The richest one percent already own 40% of all United States wealth. More than double their share before Reagan took office. Still, they want more. They absolutely will not stop. Now, our society as a whole is in serious jeapordy. Greed kills.
define "reasonable incentives"
A relatively free market with caps on income and bottom line wealth OR a very progressive tax structure which makes it near impossible for any one man or woman to reap more than 10 times the after tax income within a society.
Unfortunately, neither of us will live to see a true recovery. The days of shared prosperity are over.
so 10 times what ? So when I reach that 10 times I stop producing - hence stagnation - less production - less taxes - less revenue. Just history.
The vast majority would never reach that point. Those who did would end up trading some potential with others. Fluctuations in production and revenue would be far less severe. Also less relevant because the vast overwhelming majority would always have a reasonable share of relative buying power.
Sounds nice. Just not supported by history.
It's never been done.
right - so OWS is going to do what's never been done in the history of the world. Put down the crack pipe and get a job man !
Got one. I'm not here to save the world. I'm here to address a profound injustice and make as many people as possible understand. Greed kills. It will be our downfall.
God damn it. You die hard winner take all bloodthirsty capitalists and filthy rich pigs absolutely refuse to understand the following: First, that record high charges in health care, energy, and finance also mean record high profits and record high dividends. 40% of which are paid to the richest one percent. This causes more hardship and more concentration of wealth. At the same time, more financial aid in the form of welfare, Medicare, and Medicaid becomes necessary. Especially with those record high charges and profits. As even more wealth is concentrated, the lower majority go into debt and lose their relative buying power. This results in less demand, layoffs, and higher unemployment. This results in even more legitimate need for financial aid, a slower economy, less revenue, and higher national debt. It's a downward cycle tied directly to the relentless concentration of wealth.
I'm not making excuses for those who sit on the couch, make no attempt to find work, and sponge off the government. I'm not calling for a welfare state. But God damn it. You die hard conservatives and filthy rich pigs need to stop being such cowards, open your god damn eyes, and finally admit that there is a downside as more and more wealth becomes concentrated.
The richest one percent now own 40 percent of all United States wealth. This is true even after you account for all taxes, charity, and financial aid.
Mark my words: this equation will get worse.
THERE IS A DOWNSIDE AS YOU GET RICHER AND RICHER!
A word for my critics: I'm no expert but I'm no fool. I predicted this socio-economic crisis in writing 6 years ago. I'm aware of all the conservative and liberal talking points. Of course, I hate politicians. But I don't hate liberals or conservatives. I agree with both on some issues. For example: I agree that we need an adequate safety net for those in need. Not for those who sit on the couch and watch TV.I agree with tax cuts for small business. But not for Wall Street and not for those making $500,000 and up. A heavy concentration of wealth is what got us here. A gradual and partial redistribution of wealth is vital.
I don't want socialism, communism, or marxism. I want modest capitalism. A reasonable scale of income opportunity for all those willing and able to work. An adequate safety net for those in need.
A word for the rich: I have received quite a bit of negative feedback from you one percent club pigs. I must be doing something right. After all, you took time away from your money bath just for me. You might want to check your ass crack for soggy bills. In the meantime, let me just say this for the record:
You can't intimidate me. You can't embarrass me. You can't make me feel uneducated, unintelligent, or otherwise insignificant. You can't confuse me. You can't divert my attention. You can't exhaust me and you sure as hell can't break my will. I know I'm getting to you because you're here with another lame psychological trick. You're here in an attempt to shut me up. It won't work. I've had it with all of you.
I won't break any laws. I would never discredit the cause with a criminal act. But I'm telling you right now that I'm virtually impossible to stop. It's a big world and I have a lot to say. If you want to break my will, you're going to have to break my neck first.
If you pull a stunt like that, a lot of people will know what happened to me and why.
Now get out of my face. I have work to do.
Wrong. This ratio depends largely on the distribution of wealth and income. As wealth and income become more and more concentrated, the lower majority run low on relative buying power. This decreases demand along with revenue and increases the need for financial aid.
The most profitable industries in the world (energy, healthcare, finance) have been given billions in government handouts and tax breaks. Meanwhile, they keep raising charges causing hardship for millions. With all those massive handouts, tax breaks, and obscene charges, profits rise to record high levels. Millions in bonuses are paid to the executives. With record high profits, record high dividends are paid. 40% of all dividends in the United States are paid to the richest one percent. All of this causes a gradual concentration of wealth and income. This results in a net loss for the lower majority who find it more and more difficult to cover the record high cost of living, which again, is directly proportional to record high profits for the rich. As more and more people struggle to make ends meet, more and more financial aid becomes necessary. Most of which goes right back to the health care industry through Medicare, Medicaid, and a very expensive prescription drug plan. This increases government spending. This has been happening for 30 years now. During the same time, tax rates have been lowered drastically for the richest one percent. Especially those who profit from investments. These people pay only 15 percent on capital gains income. As even more wealth concentrates, the lower majority find it more difficult to sustain there share of the consumer driven economy. Demand drops as more and more people go broke. Layoffs results. Unemployment rises. This results in less revenue and more government debt.
Massive subsidies and tax breaks for Wall Street, massive tax breaks for the super rich, heavy concentration of wealth, record high charges along with record high profits and record high cost of living, more hardship for the lower majority, more government spending in the form of financial aid to compensate, more concentration of wealth, less demand, layoffs and unemployment. All of this results in slower economy and less tax revenue. At the same time more and more financial aid becomes necessary. It's a horrible downward cycle which gradually pushes the national debt higher and higher.
The other big factors are the wars in the Middle East.
This post is not intended to excuse those who sit on the couch collecting welfare, make no attempt to find work, or squease out kids they can't provide for.
Broad tax cuts won't work. Not this time.
No redistribution. No recovery.
so- when exactly have we captured more than 20% of GDP with taxes?
Never. But the ratio of revenue to GDP depends on the direction in which the money flows and the distribution of wealth.
that's the whole point. when you try to impose higher taxes you wind up just shrinking the pie. the proportions stay the same. If you want greater prosperity for the 80% - you need to increase the size of the pie. It has never worked by taking from some to give to others because people stop producing, stop investing, shelter their money etc. So you raise taxes and you never get more than 20% of GDP. The pie just shrinks. Stop worrying what other people have, grow the pie - and consequently you will have more.
Taxes were raised drastically in the early '40's. They were raised primarily on the rich. The economy grew for over 30 years. The middle class ended up with a net gain. The rich, with a net loss.
Which pie are you referring to? The economy or the available wealth and resources within the economy?
Either way, when the income and bottom line become too concentrated, the pie shrinks.
Taxes don't necessarily shrink the pie. It depends entirely on the circumstances. But a heavy concentration of income and/or bottom line wealth is an absolute deal breaker. Play a game of Monopoly.
Was the revenue collected above 20% of GDP ?
No. I am almost certain it never has been.
so then whats the point of raising taxes if you don't collect more revenue?
You would shift the burden and gradually redistribute a portion of existing wealth by raising taxes exclusively on the rich. This would reduce the need for financial aid thereby reducing the need for revenue. This would gradually reduce debt and eventually create a surplus. Along the way, we could fix our crumbling infrastructure.
point to an example of this
The first two points in my last response were proven after the Great Depression. Taxes were raised on many but much higher on the rich. This along with a public works program and WWII resulted in a massive redistribution of wealth and a stronger middle class. Even minorities were gaining ground. I believe the third point was proven (to some extent) in the '90's. We still haven't even begun to repair our crumbling infrastructures.
again - what was the revenue?