(no subject)

[enders-shadow.livejournal.com]

On a recent Daily Show episode, Jon Stewart played a clip of Bill O'Reilly talking about how raising the taxes may dis-incentivize people to work--cause if over 50% of his pay-check is going to the govt, Bill O might just up and quit.

And Stewart plays that off to comedic effect, of course. But let's assume, for a moment, that Bill O is right about how people will quit if taxes go up to above 50%.

Here's something Billy should remember from economics: supply and demand.

If Bill O and others who make lots of money, decide to stop working cause they are being taxed too high, there will be less labor and with the same demand the wages for those replacing Billy will be raised and even if they are taxed higher, with hire wages they will be taking home boatloads of money that they can spend to feed their families, through the nannies.

So even if Billy is right that some folks will stop working, like himself, there's an upside to it! Wages for those still employed will go up! and given that only those making big enough amounts of money to be hit by the higher tax bracket will stop working, nobody who's becoming unemployed this way will actually suffer due to their unemployment.

Comments

[meus-ovatio.livejournal.com]

Nobody in the history of the world in any era stopped working because of taxes.

[notmrgarrison.livejournal.com]

Did nobody, in the history of the world, work less because of taxes too? After making enough to get get by, they didn't bother adding to that, or adding as much, due to the work/reward ratio?

Did nobody, in the history of the world, not risk starting a small business because reward wasn't as big due to higher taxes?

Did nobody, in the history of the world, not hire as many people because they didn't have the money to due to higher taxes?

Under L sez:

[underlankers.livejournal.com]

The answer to all of the above is no. Even to the first. As we're talking the long-term 6,000 year view here, not the fantasies of ideologies that create make-believe that has nothing to do with what humans have actually done over the long haul.

[mrbogey.livejournal.com]

Wesley Snipes. Al Capone?

[anfalicious.livejournal.com]

Not paying taxes is different than not working to avoid taxes.

[luvdovz.livejournal.com]

Billy's stupid and disingenuous rant aside, we all know he won't actually quit his job any time soon (unless he goes down the Hannity road of course and gets fired first). He's just a partisan hack and a mouthpiece of those same people who have on their agenda that they should protect the precious rights of the top wealthiest segment of the oligarchy at any cost.

[notmrgarrison.livejournal.com]

People making over $250,000 a year are members of the top wealthiest segment of the oligarchy? (of course by taxing capital gains more you're affecting a lot of people making $50,000 a year as well).

[luvdovz.livejournal.com]

People making over $250,000 a year are members of the top wealthiest segment of the oligarchy?

Nope. The top wealthiest segment of the oligarchy are making over 250K. There's a difference.

[ytterbius.livejournal.com]

You make a great argument for how the world would be better if Bill Oreilly were retire!

[mahnmut.livejournal.com]

That would kill 1.5 trillion MegaLulz, so, no thanks!

[mikeyxw.livejournal.com]

While there might be some benefits to Bill O'Reilly retiring, this isn't one of them.

Fewer people working means less stuff, meaning the GDP will shrink. This isn't the way to have others make boatloads of money. If this were the case, we'd all be celebrating our 9.1% unemployment rate.

O'Reilly also did a hatchet job on why higher tax rates are a bad idea. The problem isn't that people will quit their jobs, its is that the incentive to increase their earnings will decrease while the costs of increasing their earnings will stay the same. This will lead more people to work less than they otherwise would have. Those in the higher income brackets are more likely to be two income families... it's a lot easier for two people to each make $125K than for one person to make $250K after all. If the top tax rate goes too high, more of those two income couples will become single income couples. Since Obama is talking about increasing the top tax rate from 35% to 39.5%, this probably won't happen too much. If we were to follow England's example and go to 50%, it might be a real issue.

Luckily there is a better way to go about this, get rid of deductions. Since the rich pay most of the taxes and get most of the deductions, this would still result in a progressive tax increase. It doesn't add the disincentives to increasing ones income that higher tax rates do, and it would simplify our tax code. Unfortunately each deduction has an interest group attached to it.

[eracerhead.livejournal.com]

So what is the problem? One family with two earners becomes two families with one earner.

[the-s3ntinel.livejournal.com]

I read a very interesting paper (elsa.berkeley.edu/~cromer/RomerDraft307.pdf) (pdf) the other day, co-authored by the same economist (David Romer) who did that analysis of NFL fourth down decision-making, discussed here not long ago.

The Romers used historical records to classify tax changes according to why they were done - whether in response to current economic conditions ('endogenous') or off the tops of politicians' heads, for airy-fairy philosophical reasons ('exogenous').

They find that exogenously raising (resp. lowering) the tax burden by 1% of GDP causes the economy to contract (resp. expand) by nearly 3% over a period of about 3 years. Not because it causes people not to work, but because it discourages investment.

The full picture that emerges is a lot more complicated than that summary suggests - in fact I'd call it unreadable. For instance:

(i) The effect seems to be lower in recent times (more like 2%).
(ii) Tax increases that were designed to mitigate a budget deficit don't appear to reduce GDP as much / at all.
(iii) Tax changes prompted by spending changes also have a much smaller effect on GDP.
(iv) By looking at the effects on inflation and unemployment, the Romers tentatively conclude that the effect on GDP is on the 'demand-side'. (Which I don't really understand, except that it means you can't view this study as a vindication of Reaganomics.)

[underlankers.livejournal.com]

I have no problem with BillO deciding to quit if he were to do it.

I saw that segment.

[sophia-sadek.livejournal.com]

Here (http://www.thedailyshow.com/watch/wed-september-21-2011/moneybrawl---the-extinction-of-subway--bill-o-reilly---the-super-rich) is the segment in question. I took interest in the interview with John Fleming over his Subway sandwich shop franchise. Not only do special interests have a voice in the lobbies of Congress, they are in Congress.

Re: I saw that segment.

[enders-shadow.livejournal.com]

yeah, fuck John Fleming.

it takes him 200K to feed his family. i wonder how families with only 20K get by....

[kardashev.livejournal.com]

He won't quit. He'll just move more of his money to an overseas account.

[dreadfulpenny81.livejournal.com]

I think Bill was talking about people flat-out leaving the country, not just quitting their jobs.

[underlankers.livejournal.com]

Good riddance to people who have such a deficit of patriotism that they value their own dicksize-er ego-more than they do their country. With such people the USA's better off without them.

[enders-shadow.livejournal.com]

I believe you are mistaken and he was talking about quitting his job.
He attempted to tie that into there being less jobs for others, cause the "job-creators" will stop investing cause it's not worth it.

Check the clip out, see for yourself. Sophia links to the episode in question a few comments up.

[politikitty.livejournal.com]

And if everyone agrees to take longer vacations and utilize more lavish benefits, how does supply and demand work then? Company jets don't just show up because stockholders like paying for them.

Europe doesn't have higher employment just because people work shorter hours. And the last fifty years have seen an explosion of benefits as a share of the compensation package. Even weighting for healthcare, Americans are shying away from salary as the prime motivator of their compensation package.

And it's understandable. After 75k a year, more money fails to make you happier. So why should you negotiate strongly for something if you see minimal benefits from it? Moving to California, I've doubled my effective tax rate in the last five years. I didn't see any of my last (~20%) raise because of the tax implications of covering my domestic partner.

I'm not planning on dropping out of the market. But my employer knows that I'm looking for more life/work balance out of my job, rather than angling for the next open managers position. And people make that decision every day, despite the fact that my decision magnified means less competition, lower wages, lower disposable income and slower economic growth. People make that decision every single day. (hint: going to grad school for philosophy, so did you) It hasn't led to higher employment yet, and I haven't heard of a good economic argument as to why it should.

(I'm very much on the fence about whether I prefer the freedom to be frugal and leisurely or if we should adopt a more strident protestant work ethic that leads to the disposable income that would support both full employment and higher taxes. But I recognize that there's a fundamental philosophical disconnect between the policies we want to enact, and the decisions we make for ourselves every day.)

[enders-shadow.livejournal.com]

"hint: going to grad school for philosophy, so did you"

hint: you assume too much. I got my BA in philosophy, and then began working.

As for the rest of your post, I don't understand how it relates to the OP.

[sandwichwarrior.livejournal.com]

I think the real threat is not so much that people will stop working but that they will stop paying.

I think you'll see a lot more proffessional and semi-proffesional jobs being down "under the table" or payment in the form of "perks" instead of cash.

[enders-shadow.livejournal.com]

a) some folks wont be able to do that
b) tax-evasion should be taken seriously, whether we are changing the %'s or not.

[enders-shadow.livejournal.com]

as for perks, those can, more-or-less, be quantified.

dont give someone much $$ but you give them houses, boats and cars? well, we can figure out how much those are worth, again, generally.