actually, I took that quote directly from an Amazon bookreview.

Perhaps if you could provide us with the full, unedited quote in context, we can see how the quote was chopped up and re-arranged. I'm sure we would all like to see that. I certainly would.

I already did. Thanks for paying attention.

Oh, so you did. I don't see any chopping up and re-arranging. I simply extracted the last, stand-alone sentence. The preceding portion is irrelevant, unless you are saying that this statement was only made with reference to rental home income. I don't think there is anything magic about rental home income. I don't see a distinction between rental home income, Business investment income, securities investment income or Lottery ticket winnings income. Is there something special about rental-home income that Adam Smith thought that only taxes on this kind of income should be progressive? Please explain to us why this last sentence would apply only if we are discussing rental home income. (BTW. You were correct when you said that proportional=flat).

What smith is describing in the passage that you cited is exactly the predicament that flat taxes present to the less wealthy and is why they are always regressive. .This is why Smith leaned toward a Progressive tax, as described in the last sentence.

He clearly didn't. When that sentence is read in CONTEXT, you see the he thought all income streams (not just from jobs) should be taxed. Progressive taxes discourages innovation, reduces the total number of jobs and cause the rich to move out of the area of taxation. Look at how the rich have been fleeing NY. If everyone is taxed FAIRLY (ie in proportion to everyone else) and we reduced the corporate taxes to the individual level or all the way to 0%, we would see quite a bit more jobs being created. If we eliminated the loop holes, so that all corporations and rich people pay their fair share (GE paid 0 in taxes last year, the owner of Dell Computers uses deer feeders on his property to have himself declared a deer farmer and reduce his taxes to almost nothing), we could lower the total tax burden on the Middle Class and completely exempt the poor.

Your model has failed every time it has been tried. Lower taxes has improved the GDP within 2 years of being implemented EVERY SINGLE TIME it has been done. It's very simple...

1) Lower taxes, means that everyone has more money.
2) People spend that money on things they want and need.
3) That increased economic activity drives companies to add employees.
4) Those employees who were previously in lower paying jobs open up those jobs for those below then in payscale. Those employees who were Unemployed or on welfare reduce the total burden on the system.
5) Repeat steps 2-4 until an equilibrium is reached.

2/3's of the US budget is used for benevolence. From Welfare, Medicare, Unemployment, SSI, Food stamps all the way to tax cuts for movies and aid to foreign countries.

Let's eliminate tax breaks completely, make everyone above the poverty level pay a flat tax, reduce or eliminate aid to foreign countries and eliminate Welfare, Medicare, Unemployment, SSI and Food Stamps and institute a negative income tax.

http://www.foxnews.com/politics/2011/03/01/government-waste-numbers-report-identifies-dozens-duplicative-programs/

Then we should eliminate all overlapping or competing government programs (Example: we have subsidies for Tobacco farmers and we pay for anti-smoking campaigns. One or the other PLEASE!) Then look at what's left and if there is a private sector alternative, eliminate the government program and hire a private company. Finally, we look at departments throughout the government and determine if they are needed or if those functions are better performed by the market.

The "context" that you talk about doesn't say any of that stuff, at least not the "context" that you presented.

We were discussing the statements of Adam Smith. It you want to discuss the theories of the Chicago School of Economics, we can do that, but not right now. I have other things I need to be doing.



Just one comment. As I've cited again and again and again. I wouldn't call the period between Truman and Reagan a failure.

Maybe you missed the fact that JFK was a fiscal conservative. He cut taxes which raise the GDP. Kennedy was the 35th President. By the time we got to our 39th President, the economy was in shambles, our economy wasn't growing, but we were experiencing double digit inflation. Unemployement was at 16.26% and the misery index was at the all time record level of 21.98%. Yeah, your policies fail every time they are tried.

Well, look at the glee and joy and prosperity that your policies have brought us now. Way to go, guys! You are absolute geniuses.

JFK lowered taxes for everybody, then closed loopholes for the rich so that they were paying similar taxes as before. (Conservatives don't seem to know the difference between published tax rates and taxes actually paid.) The struggles of the Carter era were caused by all those bonds expiring that were issued to pay for the Viet Nam War. Eisenhower supported strong Labor Unions and built an Interstate highway system, which facilitated commerce. Everybody got richer.

Kennedy spearheaed the civil rights era, so that people who had never earned a living were now able to join unions, get educations and hold good paying jobs, Everybody got richer.

Lyndon Johnson's Great Society almost eliminated poverty. Everybody got richer.

Richard Nixon created the Environmental Protection Agency an Entire new environmental enterprises came into being. Everybody got richer.

Jimmy Carter guaranteed Chrysler a loan that saved thousand of jobs. Everybody got richer.

Contrast that with what Conservative policies have done for us.

The bankers wrecked the entire economy then the tax payers bailed them out, they got richer.

For the most part I agree with what is said here, but not all.

What I disagree with most is what was said in the post following the one above. That is, eliminating entitlements. I believe that is much too regressive. I do believe that entitlement programs need restructuring though. They shouldn't be regarded as hand outs, but rather as a service which all citizens pay into and the government provides to them in return. We can actually afford these entitlement programs if we restructure the tax code appropriately. Right now, it is such a mess that it needs to be reset.

In fact, prior to the 1930s, long term inflation was fairly low compared to modern day. The reason is because depressions often had a way of correcting values because of deflation. Economic systems since the Great Depression greatly reduce the chances of a depression occurring, and so prices constantly rise without any correcting factor. Stock market crashes also help to reset stock values, just as stock splits do. To maintain a proper and healthy balance, all areas of economics, taxes included, need a correcting factor....a reset button, if you will.

Keynes economics has provided a slippery slope for politicians because it encourages deficit spending at the government level to bolster the economy during an economic downturn. Politicians whole-heartedly have embraced this slippery slope by using Keynes philosophy as justification to overspend and then tell their constituents about how they have benefited them. Truth is, Congress is supposed to be the correcting factor for taxes.

Deficit spending was meant to be used only during times of financial crisis, and even then only for short term....not several decades. When politicians ignore this, then eventually we reach the point of diminishing returns. That's when we need to hit the reset button, to do away with the policies and practices which undermine our fiscal health. To create new practices, new habits, which will help stabilize the economy and undo the damage that has been done. The first step towards this is to make our will known as a people, to unseat politicians who promote the old system, vote in those committed remake the system, and to unseat any first term politician who betrays that trust.

I said get rid of those programs and replace them with a negative income tax. A negative income tax would keep every adult in the USA at the poverty level, without the huge bureaucracies that dominate the country today. There are over 20,000 employees in the Welfare system alone. Think about what eliminating those salaries would mean to the taxpayers. Right now, people who are on welfare or assistance are afraid to get a job, because if they lose that job, it would take months for them to get back on assistance. With a negative income tax, if they don't bring in a paycheck, they get one in the mail from the Government. If they bring in a paycheck, but it's less than the poverty level, it would be supplemented with a negative incoming tax check equal to the difference between their salary and the poverty level. It would reduce the number of people on welfare, it would reduce welfare fraud, it would give some dignity back to the people who are suffering and allow them to get back on their feet.

That's basically - in an over-simplified way - how Unemployment is here in Connecticut. So, I guess I don't really see that as an issue. Then again, I've never lived in another State for any extended period of time (except for college, which shouldn't really count for this).

This scenerio breaks down in the very first step. Lowering taxes for the consumer classes should, indeed, increase aggregate demand. Marginal rates are now the lowest they've been since Harry Truman. It doesn't seem to be having any positive effect on aggregate demand. this is because it hasn't encouraged the wealthier people to consume any more goods. They all ready have all the new cars and boats and vacation homes they want. So, what do they do with the extra money they are allowed to keep? They invest it in the stock market, which does abslotutely nothing for aggregate demand.

Law makers learned long ago that income taxes are only part of the pie. We are all taxed on numerous levels and the end result is that there is less economic activity.

No, it isn't. The reason is that every dollar that goes through Government is destined to become somebody's income. When it goes through Government, it is more likely to end up in the pockets of consumers, and less likely to end up in the stock market. That means it is more likely to stimulate aggregate demand and, thus, stimulate economic activity. This is kindergarten Economics.

And it should stay in Kindergarden. Huge amounts of tax money go to research programs that don't benefit anyone but a couple scientists. Lots of the money is spent on Government salaries. Lots of the money is lost. Lots of the money is spent on competing or duplicate programs. The Government is so incredibly inefficient at it's job, I can't believe that anyone looks at it and says "Yeah, that's the best use for our money". According to the White House, they spent $92K / stimulous job created. It would be laughable if it wasn't so heart breaking.

What is it with leftists hating the stock market. Most people's retirements are in the stock market, so do you want people to lose their retirement money?

Our elected officials have the right to tax us, but to run a deficit that will effect our children and grand children is criminal. It's actually taxation without representation, because the children both born and unborn don't have the ability to vote for these deficit programs or the legislators who create them.

So, you don't think scientists are consumers? You don't think that Government workers spend their money in the stores? I know that W lost 8 billion dollars in Iraq, but I don't see how money put in the pockets of consumers can be considered "lost".

What is it with rightists who think that people who point out that the stock market does little for aggregate demand hate the stock market? I wish I had more money i the stock market.



That's why taxes need to be raised on the wealthy. It's very simple. Expenditures minus Revenues equals deficits. The American people have voted to have services. Only Conservatives want less revenues.

You are just like John Kerry when he was looking for a wife...always looking to screw the rich.

Conservatives do not believe in a descent society. They want you poor and pit the poor against each other to see who will work for less.

You guys haven't changed your script since the 70's.

With a negative income tax, anyone who was willing to settle to live at the poverty level without working, could. Those who had aspirations of a better life and wanted more dignity could get jobs secure in the knowledge that if they lost their jobs, their negative income tax check would be in the mail soon.

But you know Democrats, they gotta keep their voters on the plantation and humiliate them by forcing them to use food stamps and coupons and live in projects, so that everyone knows they don't have a job.