Lets make fun of Obama while he is still relevant.

[David Horn]

(12-11-2016, 06:27 PM)Warren Dew Wrote:

(12-11-2016, 04:33 PM)Mikebert Wrote:

Warren Dew Wrote:From the standpoint of desirability, as discussed at the links I provided, we need to start with the need to increase the labor force participation rate, or at least keep it from decreasing any faster than necessary, to maintain living standards.  As discussed at the links I provided, that involves either or both of increasing incentives to work or reducing subsidies for not working.

The obvious way to increase incentives to work is to reduce income tax rates.  Past a certain point, reductions in income tax rates will increase the deficit and thus the debt.  That's a reason increased debt would be desirable.

This makes no sense. You give an example of a plumber who if you cut his taxes, we will be incented to lower his prices to drum up more business (i.e. more hours). That is if you subsidize the plumber so that he can maintain his standard of living while working for less money per hour, he will opt to do this. Why?  Why not just use the extra income from the tax cut to pay down debt, sock more away for retirement, pay for the kid’s college or increase his standard of living? Why would he choose to work more to less money (per hour)?  Would YOU do that?

Why in the world do you think he's making less money?  Do you understand the difference between cutting his taxes and cutting his tax rate?  They aren't synonymous.

Since words aren't working, let's use numbers.  Suppose the plumber is in a 35% marginal tax bracket, state plus federal.  He charges $100 per hour, and takes home $65 per hour.

Now reduce his marginal tax rate to 20%.  Now he can charge $90 per hour - less than before - while taking home $72 per hour - more than before.  With a 10% discount, I have an incentive finally to hire him to do the bathroom work I've been putting off.  With him making 11% more per hour, he has an incentive to schedule me in addition to his other work, working more hours.

Would I do that?  Absolutely I would do that.

Galen, if you are reading this, can I ask a question, since you know people here a lot better than I do?  Is there any chance of getting Mikebert to understand supply curves and demand curves and how they interact?  Obviously he's not going to understand supply side economics without understanding how the supply curve acts.

Butting in here, but I have to go with Mike.  If you cut my tax rates, it will merely take me less time to achieve the amount of after-tax income I need to be comfortable.  I may elect to work as much and use the extra for <insert savings or spending preference of your choice>.  I could also use the subsidy to work less for the same income.  The only time your model works well is when demand is already high and more income is needed.  Even then, the odds aren't high at the rates you're discussing.  If the cuts were temporary, then there may be a real incentive to 'get while the getting is good'.  Otherwise, why hurry?  The money can be earned later if needed.