High Tax Rates Hurt the Economy

Pro 1. Reduced reward means less productivityThe assumptions of the individual utility model are ridicliously unrealistic and demonstrably untrue. People actually do care about the education system, for instance, even if they do not directly benefit from it. If other people do well, we do well too - and we know it. This is why the individual utility model needs to be supplemented with the collective utility model. But if what he says is true, surely countries with lower tax revenues (as a % of GDP) should have lower outputs per working hour, as well as lower competitiveness. In fact, the opposite relationship is true, as has been confirmed by numerous studies [1]. He mentions the free rider problem. The first problem is that many government services aren't technically public goods. Electricity, water, wastewater and so on are not non-excludible. The second problem is that even truely public goods, such as free-to-air television or roads, are not harmed by free riders. There is no (significant) marginal cost associated with a free rider and therefore there is no problem. Increasing the number of roads has never been shown in any study to increase unemployment - indeed, it creates employment as people build the road, and entrepreneurs use their road to expand their operations. My claim of debt funding the growth bubble in the United States is not unsupported, as I gave a source. If you believe CIA figures, the US is well behind France in terms of debt as a percentage of GDP - if you believe the IMF, the conclusion is the opposite [2]. The same is generally true of all Europe when compared to the United States. The difference is that the CIA is sponsored by the American government, who have an interest in fostering positive outlooks for their economy, as this encourages spending which leads to growth. The IMF is sponsored by nobody, and has numerous checks and balances to ensure this [3]. Therefore the IMF figures are more reliable. Now we turn to some academia. First, the Reinhart and Rogoff study, which is not influential but infamous. It made no allowance for an impact over time, was based on a tiny dataset (during which time tax rates were also high), did not prove or even provide evidence for causality, and worked on gross debt rather than public debt [4]. Second, Raj Chetty's top-down study. What this proved is that with fewer tax brackets (which produce "kinks"), people look more actively for jobs that puts them closer to the top end of a tax bracket, incurring switching costs and affecting the elasticity of labour supply. It does not have anything to do with increasing taxes if you read it properly, unless those fewer tax brackets put a worker in a higher tax bracket. This would therefore be an argument for making taxes more progressive, not less. Third, I couldn't open the link to your third study. It appears to be broken. Please provide a working link. My opponent claims that the studies look at how the economies performs when taxes are high or low, and therefore account for how the spending happens. This is a non sequiter. Spending on a potentially productive sector may not have a performance impact now, but it may ensure long-term prosperity (by which time taxes may have decreased and the whole thing is ascribed to lower taxes). Spending on producing more hamburgers now may boost performance, but it may ensure long-term costs (such as healthcare expenses - by which time taxes may have increased and the costs are ascribed to higher taxes). None of my opponent's studies take this into account. Pro 2. Incentive for tax evasionLooks like my opponent has dropped this point. Pro 3. EmigrationMy opponent now claims that taxes are very important. Can I assume this means he will be packing his bags for the Bahamas or Afghanistan? Seriously voters, how relevant is the tax rate when making your decision to move somewhere? Wouldn't you rather look to the crime rate, the quality of the healthcare and education systems, the level of pollution, whether you have a job there, and so on? Wouldn't firms rather look to the market size, cost of infrastructure, local cultural factors, local household income, and so on? It's about the profitability, as I say. Taxes are only a small consideration when assessing the profit potential of a market. Con 1. Govt makes better decisionsApparently the government does not respond to people's demands. Corporations certainly don't because profit can come without concensus (which is the measure of the demand of the people as a whole). Government cannot form without consensus, therefore they need to respond to what people want - or else people will vote in somebody who does give them what they want. In this way government does meet public demands. Con 2. EquityAverage income is a poor measure of standard of living and absolutely does not account for the middle class. In a country where one person earns a million dollars and ten people earn ten cents, the average income is about $91,000. In a country where 11 people have the some money divided equally between them, the average income is the same. However, in the former scenario there is a much higher standard of living than in the latter. Median income is also bad because it ignores everyone but the middle man - in a country of 5 people, it doesn't matter how poor persons 1 and 2 are so long as person 3 is reasonably well-off. Social injustice and poverty resulting from this inequality increases the crime rate, litters the streets with homeless and reduces standard of living. Getting them off the street and away from crime increases it. Con 3. Govt more efficientGovernments do have competition - other people who want political power capitalise on present government's mistakes. Politicians and corporations alike fall from grace. Con 4. Govt investments more likely to bolster external sources of standard of livingMy opponent tells you this is predicated on Con 1. This is false, but it doesn't matter because I won that point. Good luck for the final round! Sources1 - . http://cupe.ca...2 - . http://en.wikipedia.org...3 - . http://www.imf.org...4 - . http://www.epi.org...