Assuming that the private sector doesn't export it's labor to third world countries or find ways to make the extra revenue it generates with the money that isn't taxed not taxable.

Furthermore, some economic activities are beneficial in the short term, but nefarious in the long term (usually due to externalities).

These factors tend to push to the right of the curve (ie, they might not use the extra money in a manner that benefits society).

And finally, not all benefits of taxes can be measured in direct economical terms.

Affordable healthcare might not raise government revenues past the cheapest, most basic services (those that can't afford it are not well off to start with and are not a big source of revenue for the government), but it is the humane thing to do.

Imho, having a good mean prosperity with the lowest quantiles not too far from the mean is a higher priority than maximizing government profits as long as the state's budget is in the green.

For lowering taxes during a recession, that assumes that pre-recession tax rates weren't too low to begin with (or in your parlance, too much on the left of the Laffer Curve).

I'll just throw these in here, re the debate :

http://www.alternet.org/news-amp-politics/why-pundits-are-wrong-about-debate?akid=9486.270413.RXVElN&rd=1&src=newsletter721717&t=11

http://www.politicususa.com/mitt-romney-obama-lies-hang.html

http://www.cps-news.com/archives/gop-jobs-bill-everything-except/

Von Clausewitz : The problem for Obama in this debate is he failed to mention once, that the jobs situation is all down to Republicans constantly voting against bills to create jobs, including the sole bill they proposed in the last 3 or 4 years, as oon as he said it looked good, and would get the Dems to vote for it....
Also, Romney sounded fairly credible....until you realise he said nothing of substance, just a lot of hand-waving and vague soundbites...the rednecks and the lazy will eat that shit up with a spoon.

And Sweden has one of the highest taxation rates in the world.

The main part where I disagreed with you earlier was on the assertion that it's always the case. By the time it becomes a certainty you're talking about taxes that are excessively high. The difference between an effective tax of 20% and one of 10% is just not going to make much impact on people making that kind of money.

And Magnitus is dead on when it comes to over seas investments. If they aren't paying tax on that already, changing the rates isn't going to make much of a difference at all.

When you look at economic growth in the US versus tax rates over the last 80 or so years, you'll notice that the correlation isn't particularly good. Sometimes we've had prosperity with high taxes on the rich, sometimes as high as 70% and other other times we've had much lower taxes.

And yes, when it comes down to it, over the long run, the taxes must be balanced with the spending. Right now, though, the bigger issue is that we have a glut in several markets in the US and lowering taxes on the wealthy is just going to make that worse. As they'll either take their investment over seas or over produce domestically. Neither of which are particularly efficient in resolving the current situation.

You shouldn't blidnly look at rates.

45% rate in Sweden is tolerable, if you raised taxes this much in Poland the economy would collapse.

What Sweden did was to see the taxation was too high for the moment, so they lowered it. Polish govt. does the opposite and we are going on a happy slide towards deep shit. They raised the taxes expecting it will give more income and it's the opposite. And guess what.. They plan to raise them even more....

Hm. True. I guess most people only watch the first debate.

Here in Sweden it's different. The political parties is not reflecting what most Swedes want any more.
For example when people are asked about what they think are most important they constantly say Welfare (Health care, educational system, benefits for those that can't work or don't have jobs and so on.) and Jobs. We don't mind high taxes if our tax money go to that. Since the nineties no Swedish government have listened. All we hear from our politicians is that they say that they think those things and a balanced budget are important but what they really do is cut down on welfare and do some crazy experimental stuff about creating jobs which they seem to think is the most fun part of their job. Oh and experiment on the school system. That's the second most fun for them.

Yes they say they'll do things that'll make those things better so they tell a lot of tales. The truth is that if those things are to get better they have to start spending more on them and that's the one thing that they'll never do. The only thing they do is make sure the budget have a surplus and spend our tax money on other things.

All this is doing is making ordinary Swedes sick of the high taxes because they don't feel they are getting anything back from them. Absurdly enough this is starting to make people want lower taxes when the high taxes isn't the problem. It's politicians not doing what the people want.

Yeah there are political parties that truly do want to really change things but they aren't big enough to have a real say in the matter.

So we Swedes have started to not care. The percentage that's voting is falling fast which is making it even harder for the people to make its voice heard so the politicians listen even less. A vicious circle.

That's why I say my vote doesn't matter any more.

Now that USA will vote soon it would be interesting to know if my views are shared by someone from USA. Maybe we're not that different?

I don't want to start a argument but I for one would like to hear your take on it. In every media I hear economists say basically the same thing. Would be nice to hear something new (Or maybe old. :) ).
Unfortunately I know almost nothing about economy but it's fun to read about it sometimes anyway. :)

Fair enough,although the last time lowering rates actually worked for us in the US was the early '80s when the rates were dropped from 73% down to about 32%.

It's also worth noting that the US is a large enough country that things which wouldn't work in Poland would work there.

Also, raising taxes during a recession tends to be a bad idea in general. However, right now if we were going to raise taxes, doing so on the capital gains would be the right move. The US has an excess in investment at the moment and a deficiency in the amount of goods being purchased by consumers. Ultimately that's going to have to be taken care of.

I'm not familiar enough with the current situation in Poland to have any idea what the correct move there would be. But, in general, economic systems move to remove the stress that's been placed on them. And as long as the stress is there you'll have dysfunction of one sort or another.

The "real" Obama and the "real" Romney? Those that rehearsed their answers, appearance, when to smile etc. for weeks before the debate? I'm not sure what you mean by "real".

Looking at the war record, debt and social inequality casts a poor light on humanity if the current US government is the best in human history. Large party donations and gigantic election budgets seem questionable to me.

The Laffer curve was reasonable when it was created. But, it makes ludicrous assumptions and ultimately fails to deliver on the goods.

If you have extremely high taxes in one area compared with another, and you have quality enforcement of the tax code and you have a difficult or impossible time moving money about, then the Laffer curve is a reasonable model.

In practice though, it doesn't work. And we've seen it not working in the US for 30 years now. And you still see people saying it works when the evidence is non-existent for it working in a reasonably healthy economy. It only works in situations like I outlined earlier and where there is a deficit of investment.

Right now in the US, using the Laffer curve as a model is effectively economic suicide. What the US has is a glut in several markets and inadequate consumer spending. We can still kill the recovery with this sort of foolish tax cutting and spending cuts. Look what it did in Europe.

The correct course of action is to have more stimulus. It was a grave error on the part of the government not to do so the first time. Lowering capital gains is definitely not going to help the problem of the glut in the market. We already have stock and other bubbles formed at the present. The housing market will burst again within the next 10 years or so. There is still excessive valuations in the housing market due to the government intervention and that will play out eventually. Either through stagnation or more likely through another housing bust.

What's more, the Federal reserve needs to stop fucking up the economy. They're incompetent policy of purposefully causing inflation has seen the largest redistributions of wealth in the world's history. Both during the post WWII era and more recently during the '80s, '90s and into the '00s. There's no point in saving money in a bank account if you're getting a fraction of what the inflation is in terms of interest. Investments only become viable in most cases when you have a few thousand dollars available.

I totally disagree; the trouble is that Supply-Side Economics (what is implied by the Laffer Curve) has never been properly implemented. Just like Keynsian Economics (Demand-Side Economics) has never been properly implemented. Neither work when half-assed, but that is what Congress tends to do most of the time. They also most often fail to account for the secondary effects of their changes.

Demand-Side Economics and Supply-Side Economics work off the same basic formula; they just change different variables to, hopefully, force the economy at large to re-balance to fit the equilibrium of the equation. One can argue that one method is more efficient than the other at accomplishing this re balancing, but one cannot outright dismiss either method as not working entirely.

Agreed. 100%. Every time I hear the term 'Quantitative Easing' now it puts me in a bad mood. The shortened version that those in the financial industry use (i.e. QE, QE2, QE3) annoys me even more, because they make it sound so cutesy and innocuous.

THIS.

From what I've read, Europe has yet to make meaningful spending cuts. Germany is fiscally responsible and all, but many countries in the EU aren't and don't seem to have changed their budgets that much. Greece keeps trying, but doesn't seem to be getting very far, and other countries also seem to not be doing a lot. I can't blame politicians for backing down when voters are striking and rioting, but the idea that striking is an OK response to a very overdue budget cut just seems ludicrous and arrogant to me. Huge entitlement mentality, I guess.

And I don't think that we have inadequate consumer spending in the US. Unbalanced spending, yeah - too much on disposable things that don't really add value. And every-day spending shouldn't usually be financed with reverse mortgages and unpaid credit card balances. People have been living beyond their means for quite a while in the US, and I think that what we're seeing now is the natural reaction to that.

This so much. Long-running inflation isn't a good state for the economy to be in, and encourages too much debt. And it hurts the people who can least afford price increases, since wages rarely go up at the same rate.

It also hurts those of us who are in our prime money making years and saving for retirement. When returns are so tepid and not keeping up with inflation due to QE infinite there's no point to even investing money.

I have to note that a couple of posters have mentioned that tax cuts and curbing spending in the US would be "economic suicide." I just have to point out that such a position is economically ludicrous. In an economy growing at 1.3% when we consider 3.5%-5% to be average cutting taxes and federal spending is the only effective way to spur growth.

It also really depends on what "taxes" we're talking about here. There are many different types of taxes such as sales taxes, income taxes, capital gains taxes, property taxes, ect. Bundling all types of taxes into one category severely understates the complexity of the effects of taxes on the economy.

We had a similar discussion on my friend's FB page.

His post was: "Hey Mitt........You are full of shit!!"

My response was: Romney IS full of shit, but I have to say that President Obama is playing the timid card in the debate way too much. It's like Romney handed the debate a platter full of his BS, but Obama, instead of taking that platter of BS and throwing it back at Romney, he just steps to the side and gives a speech about bipartisanship and a sales pitch to the middle class.

President Obama is a good man, but seriously need to go into those debates with fire in his heart and a flaming aluminum bat.

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By the way, do you pronounce it Aloo Min Nium or Aloom Min Num?