100th Debate: Taxes Should be Raised on the Rich

What I want to explain is that round 1 is specifically for presenting your arguments. Round 2, the refutation is period, is to attack and disprove my argument as I will do to yours. The third is a defense of your own case, any final refutations you would wish to make, and a conclusion as to why you won the debate (usually just a paragraph or a few detailed sentences). Semantics are used by some debaters to distort words in a way to win and make the debate not what it was supposed to be, but I do not think I will have that problem with you since you don't know what it is, so just ignore that word. Anyway, let's begin. My CaseI. Laffer CurveOne of the most important things to understanding why taxes should not be raised on the rich is the Laffer curve, created and promoted by economist Arthur B. Laffer. The Laffer curve is quite simple to understand. If you have no taxes, then no money comes in to the government. Likewise, 100% tax rates don't make sense either since no one would work if they are not getting any benefit out of their work. This means that higher taxes makes people work less since there is no incentive to work more. In other words, as the tax rate gets lower from 100%, more people come back to work since they can get something out of it. Ideally, a low rate is wanted so people can work as much as they wish while giving the government more money as a result of a higher incentive to work through less taxes. Here's a nice graph: It is a fact that taxes hurt the economy since money is taken away that can be used in the private sector to expand. When people have less money, they will spend or save less, depending on what they intended to do with that money that is now given to the government. Even Christina Romer, who served as an economic adviser to President Obama, knows this. She and her husband worked on a study that was published in 2010: "The Romers’ baseline estimate suggests that a tax increase of 1% of GDP (about $160 billion in today’s economy) reduces real GDP by 3% over the next 10 quarters. In addition, the Romers used a variety of statistical tests to take into account other factors that could influence economic growth at the time of the tax changes, including government spending, monetary policy, the relative price of oil, and even whether the President was a Democrat or Republican (it doesn’t matter much). A summary of the statistical work estimates that a tax increase of 1% of GDP would lead to a fall in output of 2.2% to 3.6% over the next 10 quarters. " [1] The Laffer curve is very important to understanding the economy and I do have more studies to back it up. Ideally, lower tax rates spring economic growth and with that expansion of capital more money is given to the government. II. HistoryHave the policies that I am promoting, supply-side economic policies, worked in practice? The answer is yes. There were three specific times in which policies were largely supply-side and they worked perfectly. a. Harding/Coolidge Tax CutsAn economic depression hit the United States in 1920 as a result of a wartime to peacetime transition following World War I, increased agressiveness among labor unions, and a high top income tax rate of 73 percent under the Democrat Woodrow Wilson. Republicans won the 1920 election by a landslide with candidate Warren G. Harding. What did Harding do? He enacted largely supply-side policies. The top income tax rate was reduced to 58 percent by 1923. After his death that year, his sucessor Calvin Coolidge signed more tax reductions that brought the top rate down to 25 percent. As we can see from the unemployment rate using a graph I made, we know why the Harding/Coolidge era became known as the Roaring Twenties: What about the always important real growth in gross domestic product (GDP)? During Wilson's presidency, which created the income tax, from 1913 to 1921, real GDP growth was just 1.43 percent, but during the Harding/Coolidge era it was 4.80 percent. Clearly, we understand why the Roaring Twenties was the Roaring Twenties. [2]And the wealth did trickle down, as can be noted from the ownership of new goods during the period: b. JFK's Tax CutAfter temporary economic growth from World War II, the economy went back into a slow mode even with the world adjusting back to normal. To prove this, go to the real GDP numbers which find that growth during Truman's presidency was 1.87 percent and during Eisenhower's it was 2.72 percent. Both did not perform well and did not reach over 3 percent. Keep in mind, because of the war, the top income tax rate was raised to 91 percent. It was kept this way under Truman and Ike, but JFK wanted to cut taxes and after his death got his wish of a reduction to 70 percent. Real GDP growth during the JFK/LBJ years was 5.01 percent. [2]Here's the unemployment rate: c. Reagan's Tax CutsRonald Reagan is probably the most famous example of a supply-side recovery because it is the most textbook and at the same time the only after the term "supply-side economics" was invented. Additionally, it is the most recent. JFK's rate remained at 70 percent until Reagan, but presidents after Kennedy decided to raise capital gains, which lowered economic activity especially during stagflation. Reagan decided to launch his own supply-side cuts that brought the top rate down to 50 percent and then to 28 percent. We once again found a quick recovery from the peak unemployment rate in 1982: Once again, here's the real GDP numbers: 2.75 percent from 1977 to 1981 (Jimmy Carter) to 3.61 percent from 1981 to 1989 (Ronald Reagan). [2]Wealth did trickle down. The number people with an income over $1 million went from 5,000 to 35,000 and the number of billionaires rose to over 50 by the end of the 1980s. The fact is that lower taxes creates more growth in government revenue and at the same time increases economic growth. III. Capital GainsI am wrapping this up with capial gains. Here's my argument, basically. Economist and historian Amity Shlaes wrote this about a study on getting rid of the capital gains tax:"The study was published in 2010, and Sinai says he still stands by it. The results are dramatic. Right now, economists say the economy needs to create about 2.4 million jobs a year. Sinai found that eliminating the capital-gains tax alone, with no other policy change, would create 1.3 million per annum, or more than half the total sought. Real gross domestic product would increase by 0.23 percentage point a year. The jobless rate would drop by as much as 0.7 percentage point in a year. And productivity gains would increase by 0.5 percentage point a year. " [4]The capital gains tax hinders the expansion of business and entrepreneurship which is necessary for every free market capitalist economy to expand, but taxes has hindered them. George Gilder writes about the history of the tax that:"Government tax policies have done their best to deter innovation and promote mergers, creating a capital blight in which smaller companies that were attempting to expand suffered most throughout the 1970s. " [5]Sources1. Kadlec, Charles. "Christina Romer Knows Tax Hikes Will Kill the Recovery. "Forbes. Forbes Magazine, 23 Apr. 2012. Web. 06 Apr. 2015.2. . http://www.measuringworth.com...3. D'Souza, Dinesh. Ronald Reagan: How an Ordinary Man Became an Extraordinary Leader. New York: Free, 1997. Print.4. Shlaes, Amity. "Want to Create Jobs? First Cut Capital-Gains Taxes. " Bloomberg. com. Bloomberg, 26 Oct. 2011. Web.5. Gilder, George. Wealth and Poverty: A New Edition for the Twenty-First Century. Washington D. C. : Regnery, 2012. Print.