tag:blogger.com,1999:blog-3574536238757003081.post5264214179263655408..comments2022-11-05T02:51:26.210-05:00Comments on Christian Economics: Republicans Want Tax IncreaseAlex Binderhttp://www.blogger.com/profile/07081761484559249129noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-3574536238757003081.post-31403876064016693892011-08-26T09:30:54.168-05:002011-08-26T09:30:54.168-05:00It seems that there are many more firms out there ...<i>It seems that there are many more firms out there suffering from sales low enough they won't hire despite having access to historically cheap funds.</i><br /><br />Though typically businesses don't borrow in order to meet basic operating expenses (such as labor) except perhaps during an initial expansion. Lower labor costs (even temporary ones) make it possible to extent hours, reduce prices to drive demand, etc. in ways that low borrowing costs would not necessarily lead to.<br /><br /> <br /><i> I'm a critic of marginal analysis and don't think decisions are made at the margin, but that's a much larger argument.</i><br /><br />Ah, see, this is probably the big divergence. I'm a pricer -- the very existence of my job is based on the ability to make highly profitable improvements in a business by driving decisions made at the margins. Since I know of areas in which it's very applicable, I tend to lean heavily on "at the margins" explanations.Darwinhttps://www.blogger.com/profile/08572976822786862149noreply@blogger.comtag:blogger.com,1999:blog-3574536238757003081.post-57466783040708617562011-08-25T22:57:42.161-05:002011-08-25T22:57:42.161-05:00I agree with your political expediency comments......I agree with your political expediency comments...I wish politics weren't so political...<br /><br />As for wages, I do think there has been a trend toward inequality, which is okay as long as justice is being met. So if the demands of both commutative and distributive justice are being met then I would have no issue with lack of growth in wages, but I don't think those demands are being met in our country and especially not worldwide.<br /><br />Im glad to hear your firm is doing well, I do not claim that there aren't others out there. It seems that there are many more firms out there suffering from sales low enough they won't hire despite having access to historically cheap funds. I'm a critic of marginal analysis and don't think decisions are made at the margin, but that's a much larger argument.<br /><br />So I don't think cash will help businesses hire if they don't see higher sales. A noticeably Keynesian demand driven view as opposed to a Say's law 'supply creates its own demand' view.Alex Binderhttps://www.blogger.com/profile/07081761484559249129noreply@blogger.comtag:blogger.com,1999:blog-3574536238757003081.post-46450142186164968942011-08-25T14:42:12.234-05:002011-08-25T14:42:12.234-05:00Progressives are also fond of pointing out the non...<i>Progressives are also fond of pointing out the nonexistent growth in wages for the bottom 60% over the past 4 decades. So in after-tax terms, the bottom 60% are worse off.</i><br /><br />Yes, they are fond of pointing that out, but to be honest it's a claim I don't buy. It's based on a number of assumptions about how to index prices, whose wages to look at, etc. and of course it ignores the fact that we're looking at wages only here and not benefits: Most people would rather get circa 2011 health care than circa 1970 health care, even if the result is higher costs.<br /><br />Plus, those crazy Republicans have brought it to the point where the bottom 60% pay virtually no income taxes (unlike in 1970) so even with "flat" wages people take more home.<br /><br /><i>Why would they hire?! They won't if they aren't selling their products! Who would expand business no matter how much cash you had when the outlook for sales is terrible?</i><br /><br />They are selling their products, though. Not as much as they might like, perhaps, but they are. Like anything else, it's something that gets decided at the margins. Take a few percent out of the cost of labor and there are products that can be sold profitably and businesses that can be run profitably which can't be now. <br /><br />The QSR chain that I work for, for instance, has been launching new products, growing market share, and thus putting out "Now Hiring" signs at new and expanding locations. <br /><br /><i>And you still didn't answer my questions about Republicans' inconsistency. Either they consistently favor the wealthy or they are inconsistent on their stand on tax increases. </i><br /><br />Can't say that I have mind reading abilities for all GOP policy actions -- I'm not always an orthodox Republican myself, but I imagine a lot here is just political expediency. The GOP has fought hard to preserve the "Bush tax cuts" because they were <i>their</i> tax cuts, and keeping them thus counts as a GOP victory and an Obama defeat. This is Obama's tax cut, so they don't care so much about it.<br /><br />On the flip side of that cynical approach: Obama has kept blasting the GOP for wanting to keep the top rate cut out of the Bush tax cuts, and the administration has put out all sorts of charts showing the huge "cost" of the whole Bush tax cut package. What they haven't been clear on is the fact that Obama himself wants to keep the vast majority of the cost of the Bush tax cuts -- rolling back just the top rate doesn't net nearly as much money as rolling back the cuts for the middle class would. <br /><br />Both sides are more out to score points on this than they are to form good policy.Darwinhttps://www.blogger.com/profile/08572976822786862149noreply@blogger.comtag:blogger.com,1999:blog-3574536238757003081.post-73557267433328877452011-08-25T13:33:42.038-05:002011-08-25T13:33:42.038-05:00Okay, I agree with your "readjustment" a...Okay, I agree with your "readjustment" argument. I think that part of the reason there was such a large run up of PRIVATE debt before the crisis was because wages weren't growing and people were trying to maintain or even better their standard of living.<br /><br />Progressives are also fond of pointing out the nonexistent growth in wages for the bottom 60% over the past 4 decades. So in after-tax terms, the bottom 60% are worse off.<br /><br />Many progressives still don't understand government finances either.<br /><br />But come on Darwin! You say "If anything, one could consider decreasing payroll taxes for businesses in an attempt to stimulate hiring."<br /><br />Why would they hire?! They won't if they aren't selling their products! Who would expand business no matter how much cash you had when the outlook for sales is terrible?<br /><br />And you still didn't answer my questions about Republicans' inconsistency. Either they consistently favor the wealthy or they are inconsistent on their stand on tax increases.Alex Binderhttps://www.blogger.com/profile/07081761484559249129noreply@blogger.comtag:blogger.com,1999:blog-3574536238757003081.post-56631011201054333352011-08-25T08:45:33.266-05:002011-08-25T08:45:33.266-05:00Well, I wouldn't support cutting income taxes ...Well, I wouldn't support cutting income taxes right now either. As progressives are fond of pointing out, income taxes are at historic lows and we're running some of the highest deficits we've ever done outside wartime. Indeed, progressives have mostly been arguing for _increasing_ taxes.<br /><br />I'd be against decreasing income taxes or payroll taxes temporarily for individuals. If anything, one could consider decreasing payroll taxes for businesses in an attempt to stimulate hiring.<br /><br />The reason, however, why I think that the payroll tax holiday is particularly corrosive is precisely what you point out: it messes with people's paycheck amounts rather than giving them an extra large refund at the end of the year. For people living paycheck to paycheck, an extra large tax refund will let them pay off debt or go do some extra spending, either one of which will help with the economic hang over. However, if you temporarily increase their paycheck, people living check to check will generally increase their spending -- however much they're trying not to. (Definitely been there, not so many years ago.) Then when their paycheck suddenly goes down again, they're going to go through a painful readjustment. I really don't think it's doing people any favors to put them through that.Darwinhttps://www.blogger.com/profile/08572976822786862149noreply@blogger.comtag:blogger.com,1999:blog-3574536238757003081.post-26844225033562888632011-08-24T11:57:55.855-05:002011-08-24T11:57:55.855-05:00I agree, but doesn't an income tax do the same...I agree, but doesn't an income tax do the same thing to wages? The only difference I see is that the income tax break is once a year, the payroll tax break is every paycheck.<br /><br />And wouldn't you agree that it's inconsistent to say 'no tax hikes' including closing loopholes the wealthy use and refusing to end the Bush tax cuts for the highest brackets, but then turn around and say no to extending a payroll tax break? The only consistency I see in that is favoring the wealthy who don't spend their money like poorer people do, they invest it in stocks, bonds, etc. which further drives down interest rates and increases their wealth in stocks, but does nothing for the economy.Alex Binderhttps://www.blogger.com/profile/07081761484559249129noreply@blogger.comtag:blogger.com,1999:blog-3574536238757003081.post-76624039291403200632011-08-24T08:09:51.316-05:002011-08-24T08:09:51.316-05:00I would agree this is not necessarily a great time...I would agree this is not necessarily a great time to let payroll taxes pop back to their normal levels. At the same time, I'm not sure the appealingly wonkish idea of giving people a payroll tax holiday to stimulate demand is a good idea. (I didn't even support the current reduction.) The reason is that there will be a strong incentive to keep the holiday permanently, since when the payroll taxes are applied again what people will experience is an immediate wage cut. For lower wage workers, it could be a wage cut that it takes them a couple years worth of normal raises to make up.<br /><br />However much it makes sense on paper to give people more money when we want more demand, and then ratchet it back when we don't, I think that whipping around people's paychecks is probably going to create more trouble in the long run. And since politicians get elected by not making people angry, their incentive will be to try to not re-apply a tax that we don't really have a good way to fund Social Security right now without.Darwinhttps://www.blogger.com/profile/08572976822786862149noreply@blogger.com