Posted by Tina
In January Forbes featured a story about Francois Hollande, a socialist, and his conversion to supply side principles:
François Hollande is not just the President of France; he is a socialist who had until this week campaigned boldly on a platform defending government spending, maintaining social benefits, and high taxes on the wealthy. France has the highest ratio of government spending to GDP of any developed economy, at 57 percent. So when President Hollande announced he now wanted tax cuts on businesses and cuts in government spending, the news caused tremors throughout the world of economic policy makers.
Even more devastating for those pushing for more government spending as the solution, President Hollande specifically said that only businesses could create jobs and revive growth. Somewhere, Paul Krugman probably cried.
In particular, President Hollande is proposing to lower the payroll taxes that businesses pay on all their workers. This is not only a big win for businesses, but also recognition that making labor less expensive will encourage business to use more of it. For a previously committed liberal to admit that incentives (particularly taxes) matter is a victory for supply-siders who believe that lower taxes on businesses can help create jobs and increase economic growth. It is almost as if he has recognized that jobs exist to bring profit to businesses not to bring income to workers.
Turns out France’s leaders are serious about getting people to work and their economy thriving:
PARIS (Reuters) – New Prime Minister Manuel Valls won a vote of confidence in parliament on Tuesday after unveiling planned tax and public spending cuts, vowing to bring France’s public deficit down while resisting outright austerity.
In a keynote speech to the National Assembly after being chosen last week by President Francois Hollande, Valls said an over-strong euro was damaging economic recovery, complaining that the monetary policy of the independent European Central Bank was “less expansionist” than that of its international counterparts.
Deputies backed his government by 306 votes to 239 in a test of his authority that, despite grumbling from leftist allies that he is too centrist, was never in question given the absolute majority of ruling Socialists in the lower house.
Follow the link for details…and tell your leftists friends to stay tuned, reports of growth and falling unemployment in France will follow.
I’m curious: What exact payroll tax rate is Hollande suggesting? All I can tell from the Forbes piece is that it will be lower than it is now. Will it be lower than it is currently in America? If not, then I’m not sure how any potential growth as a result proves that we should also lower our payroll tax rate.
In contrast there’s a report in the Washington Post today about the business climate in the US:
Of course this is the Post so they had to find a way to make it George Bush’s fault. the authors conclude:
President Obama and crew have taken every possible step to make sure this condition has persisted and grown. High energy costs, high regulation costs, threats of more to come to force both up and the total piece of crap Obamacare! My heavens it couldn’t be more obvious that this administration and his radical buddies in congress are responsible for one of America’s worst periods for business and JOBS!
Gotta go…more later
Tina:
“Of course this is the Post so they had to find a way to make it George Bush’s fault. the authors conclude:
If the decline persists, “it implies a continuation of slow growth for the indefinite future.” This lack of economic dynamism, particularly the steep drop since 2006, may be one reason why our current recovery has felt like much less than a recovery.”
Stating a basic fact is now equivalent to “making it George Bush’s fault?” You’re projecting.
Chris: “Will it be lower than it is currently in America? If not, then I’m not sure how any potential growth as a result proves that we should also lower our payroll tax rate.”
The point is taxes are being lowered…the tax burden on business is being lowered…business expenses are being lowered.
If the power company suddenly decided you didn’t have to pay as much for energy as you do now would you have more money to spend on other things?
I know you aren’t dense so there must be something you believe that keeps you from realizing that when expenses go down there is more flexibility not to mention optimism about the future.
It is simple common sense.
“particularly the steep drop since 2006”
I want to see the graph because there is no reason after five years of Obama policies to go back to 2006 except to imply that something Bush did started this OR that it’s not Obama’s fault we have lousy growth and a sluggish economy. (Democrats had charge of the House the last two years under Bush too.)
Which brings me to the GDP chart the Post ignored or didn’t bother to consult. GWB inherited the Clinton recession and growth in 2001 at 3% reflects that. It was at 3% for 2002 but ticked up to 5% in 2003 after the Bush tax cuts then went as follows:
2004 7%
2005 6%
2006 6%
2007 5%
2008 3% (recession)
2009 -1% (recession over in June)
2010 5%
2011 4%
2012 4%
According to this chart by quarter the only somewhat steep drop occurred in 2010. I notice they give credit to the Japanese Tsunami…GWB never caught a break for 911…or the natural disasters that didn’t help his economy, there were several.
Where is the “steep drop” since 2006? There was no “steep drop” starting from 2006. There was the recession and the housing and banking crisis as reflected by the 3% and -1% but the economy wanted to recover when the recession ended in June 2009 (back up to 5% in 2010)…and then Obama’s policies kicked in.
The left media has been doing this for the entire Obama presidency…nothing is ever attributed to his policies and failures.
Quarter four 2013 growth was 2.6%
The first quarter this year was a lousy .1%
Its damn time someone called the media on this misleading type of reporting…and held Obama responsible!
You are incapable of seeing the obvious.
Re #4 Tina : “You are incapable of seeing the obvious.
Precisely.
From the Brookings Institute. Cover page with chart. Link to full report.
It’s not good if things don’t change.
Declining Business Dynamism in the United States: A Look at States and Metros:
http://www.brookings.edu/research/papers/2014/05/declining-business-dynamism-litan
Completely on subject, or completely off, depending on your point of view —
http://www.marcandangel.com/2013/12/08/7-smart-ways-to-deal-with-toxic-people/#more-692
Tina: “The point is taxes are being lowered…the tax burden on business is being lowered…business expenses are being lowered.”
So there you have it: you’re actually admitting that you don’t care what taxes are actually lowered to…as long as they are lowered, at all times, forever and ever, amen. Until when? Until the tax rate is zero?
“If the power company suddenly decided you didn’t have to pay as much for energy as you do now would you have more money to spend on other things?”
Yes, and it would be wonderful for me if my energy bill were lowered to zero dollars. That doesn’t mean our country will be better off if we lower everyone’s tax rates that far. This is a stupid comparison, and you should feel stupid for making it.
Chris: “So there you have it: you’re actually admitting that you don’t care what taxes are actually lowered to…as long as they are lowered, at all times, forever and ever, amen. Until when? Until the tax rate is zero?”
Chris you are determined to make me and business people seem both stupid and unreasonable. Why is that? It’s like you have a giant chip on your shoulder and it makes no sense for two reasons: 1. Since the history of the tax code they have never been lowered to zero nor suggested to be lowered so…even under republican control, and 2. Both individuals and government depend on business and a strong economy so it’s important that rates are structured to encourage business activity…its stupid to have such a contentious attitude toward the people the entire nation depend upon. There’s another reason. You hate straw man arguments. Isn’t the suggestion that I would suggest or favor zero rates a straw man argument? One could say you are simply grasping at straws because you don’t really have a good argument for improving conditions.
Here’s the thing. As Peggy’s link will tell you, we are losing businesses faster than we are creating them. Unemployment, underemployment and non-participation rates are high…the situation is very bad and CALLS FOR extreme measures to turn this around. Anything that would do that is smart at this point.
Taking more money from business in the form of added taxes, costing business more money in the form of increased regulation, and adding regulations that cause higher energy, food, and commodity prices is what we have been doing. The result has been a disaster. The alternative is needed.
All of the straw men arguments in the world will not change these conditions or make the policy that has led to them any more workable or smart.
Time for the left to admit they don’t know $h!@ about making the economy work!
Time for the left to admit they have been wrong about the policies that Ronald Reagan stood firmly behind and that caused a boom in our nation and caused nations around the world to be inspired to move toward greater freedom for the individual and capitalism!
I don’t expect an apology or honesty from you or anyone else on the left, however.
“This is a stupid comparison, and you should feel stupid for making it.”
You are certain that it can’t be that simple. But you are a stupid for thinking there is something magical about what makes the economy grow and absolutely moronic to think that big government solution will ever do anything other than place a big fat damper on business, economic growth, and the opportunity that is the ONLY REAL HOPE for the people.
There is no hope for you, Chris…none…as long as you hang on to that arrogant, radical progressive posture! Your ideology has created this mess…admit it and then resolve to learn! It will set you free.
It wasn’t a strawman argument. I am asking you what you think the tax rate should actually be, and you’re avoiding telling me. I’ve said before that Reagan’s tax cuts had positive effects. But I’ve also shown you Reagan’s own advisers explaining that tax cuts today won’t help. Even after that you dishonestly accused me of only relying on “leftist” sources.
I’m not avoiding telling you! It would be dumb for me to pick a number out of a hat.
We are not talking about specifics anyway. We are talking about policy in very general terms.
You are trying to avoid the effects of policy. You don’t want to face the practicality of administering those articulated by the left as opposed to those articulated by the right.
I won’t comment on the remarks made by Reagan’s advisers especially since I don’t have any idea about the context or what else they might have said that would make sense taken all together.
This is what I know. The current policy is NOT creating an atmosphere that encourages business to invest in growth, innovation, or jobs. There are many policy decision that are impacting business negatively and not all of them are high corp tax rates.
I have said corporate rates should be competitive. If we were smart we would make them among the lowest in the world.
As an example Canada’s rate is 15% + provincial taxes up to 16%. Ours is currently 39% with state tax as high as 12%.
Australia’s is 30% but will drop to 28.5% next year…no province or state tax. Germany is 29.8%, also no other tax listed. Hong kong is 16.5%. Israel 26.5%. The United Kingdom just lowered their rate to 21% with plans to drop again in April 2015 to 20%.
Our corporations also pay taxes in other countries where they have offices. Other countries do not tax their companies with offices in other countries twice in this manner.
So it looks like if we are going to compete with our peers we would have to find a number between 15% and 20%…even at that the low tax states will continue to be a magnate for business. Being taxed at or near 50% for federal and state taxes and going through the hassles and expense every year to file is a huge drag on American business in the world market.
Tina: “We are not talking about specifics anyway. We are talking about policy in very general terms.”
And that’s your problem.
“You are trying to avoid the effects of policy.”
Please don’t lie.
“I won’t comment on the remarks made by Reagan’s advisers especially since I don’t have any idea about the context or what else they might have said that would make sense taken all together.”
This despite the fact that I have provided the full context to you literally DOZENS of times on this blog. You could also easily Google Bruce Bartlett and find out the full context of his remarks any time you wanted to. But you don’t want to. You simply don’t want to know anything that might contradict your narrative. You want to dismiss anyone who disagrees with you as a radical leftist, even when the source is the architect behind what you see as one of America’s greatest achievements. Amazing.
“I have said corporate rates should be competitive. If we were smart we would make them among the lowest in the world.”
They already are. You are still using the marginal tax rates as evidence, as if you think I am stupid enough to fall for that. You know by now that I am not. The marginal rates don’t matter. What matters are the effective rates.
Currently, the average effective corporate tax rate is 12%, which is the lowest it’s been in decades.
http://online.wsj.com/news/articles/SB10001424052970204662204577199492233215330
This is lower even that your proposed 15-20%! If corporations actually started paying the rate you suggest, that would constitute a tax increase!
Can you even digest that irony, Tina? Without knowing it, you actually believe that our corporate tax rate, in practice, should be higher than it is now!
Chris: “And that’s your problem.”
It’s a problem to articulate and defend overall policy? Why is that a problem?
“Please don’t lie.”
Please don’t accuse me of lying to continue to avoid looking at the effects of current and progressive policy.
“You simply don’t want to know anything that might contradict your narrative.”
What is the problem since you did articulate what you wanted to promote?
Why is my agreement so important to you?
Why are you unwilling to admit to the utter failure of the current tax and regulatory policy to create a strong economy and plenty of jobs?
Why do you refuse to acknowledge that Reagan’s polices (And Kennedy’s, Clinton’s…really Newt Gingrich’s) did work even after the evidence has been provided?
“You want to dismiss anyone who disagrees with you as a radical leftist, even when the source is the architect behind what you see as one of America’s greatest achievements. Amazing.”
I haven’t dismissed him or called him radical. That he is one of Reagan’s architects doesn’t matter to me. I simply don’t agree with him. I agree with Art Laffer who was also one of Reagan’s architects. The entire population was better off but the real individual gains made by minorities and women were truly impressive:
I also believe that the one issue isn’t all that is needed today.
A very prominent Democrat knew the value of sound tax policy. He knew the private sector had to be supported rather than exploited by government for the economy to grow:
He would not recognize the party today.
“You are still using the marginal tax rates as evidence”
And you continue to compare the marginal rates of other countries and the effective rates paid by a few companies in America and call it an apples to apples comparison.
“the average effective corporate tax rate is 12%, ”
That’s a lefty pile of steaming BS. Tax returns are a snapshot on a specific day and occur year after year. The effective rate for any company can change wildly depending on the circumstances for that year and changing laws. Some companies occasionally pay an effective rate that is that low but it is not the norm nor the average.
a report from the Tax Foundation from 2013 blows a big hole in the liberal talking point:
What do you have to say now?
Tina: “Why do you refuse to acknowledge that Reagan’s polices (And Kennedy’s, Clinton’s…really Newt Gingrich’s) did work even after the evidence has been provided?”
So, this would be another example of you lying. See comment #10, as well as numerous comments I have made over the years saying that Reagan’s tax cuts did have positive effects.
“And you continue to compare the marginal rates of other countries and the effective rates paid by a few companies in America and call it an apples to apples comparison.”
Another lie. I have not compared the U.S.’s effective rates with other country’s marginal rates.