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View Full Version : Another leftist myth dies on the blade of truth!



LWW
08-10-2011, 01:44 AM
Remember the myth that tax cuts don't stimulate the economy:

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">(Reuters) - Arkansans shopped until they dropped on Saturday, braving temperatures deep into the triple-digits to take advantage of the state's first sales tax holiday weekend.

"I have never seen anything like this," said Clancy Graham, a manager at Little Rock's RK Collections Boutique, an independently owned store. "If we could do this three times a year, it would be amazing. It has done crazy good stuff for our business."

Arkansas lawmakers approved the holiday in February to give parents a tax break on their back-to-school shopping for items such as uniforms, clothing and school supplies.

The tax-holiday also covers items not necessarily needed for school including wedding apparel, girdles and costumes.

Officials have estimated it would cost Arkansas about $2 million in revenue.

Texas, Mississippi, Florida and other states have had such a holiday for several years to ease the tax burden on families just before the school year, and to encourage consumers.

Rebecca Simpson of Little Rock braved the crowds and heat to buy school uniforms for her five-year-old son. The thermometer stood at 107 degrees Fahrenheit Saturday evening.

"I had to get them there so it seemed like a good idea to wait for the tax holiday," Simpson said. "If I hadn't been limited in where I could get his school clothes, I probably wouldn't have been out in the insanity today. It took forever to check out because they all had special codes to enter to remove the tax."

Graham said sales were phenomenal on Saturday.

"We have tripled our daily goal," Graham said. "We've made more today than we have made in this whole month because it's been so hot no one is getting out."

Graham said customers visited the store earlier in the week to "pre-shop" and returned Saturday to buy their favorites. The store also put summer items on sale to lure buyers. </div></div>

Wow ... just WOW! (http://www.reuters.com/article/2011/08/08/us-arkansas-taxholiday-idUSTRE7773GY20110808)

Soflasnapper
08-10-2011, 09:03 AM
Another dead fail from a considerably dull knife in the drawer.

(There, I fixed it for you!)

It's long been a standard Democratic position that tax cuts are stimulative of economic activity. It's Keynesian theory 101, and showed up in JFK's lowering of the top marginal rate from over 90% to 70%.

The question is, WHOSE taxes being cut are more stimulative, and what KIND of tax cuts are more stimulative. The argument is that tax cutting for the top bracket isn't very stimulative.

And that, these kinds of one-off highly limited tax holidays aren't very stimulative. Why? Because they are not.

This is a zero sum game, and does not represent any actual economic expansion, despite appearances. What they are doing is robbing Peter to pay Paul, with really no net effect overall on economic levels or jobs.

I see it every year in my business. Back to school time is a down time for the business, because people have a finite amount of money and willingness to purchase on debt.

When a lot of families are stocking up on school supplies, they are not spending so much money elsewhere as they usually would. (Same thing with popular gift-related holidays.)

So as people are induced to buy still more of the school supplies than normal because of the tax holiday, they will buy less than even normal of other kinds of purchases, netting out therefore no net gain overall.

Maybe the retailers will put on some temp cashiers (a famously low paying position), and actually, maybe they won't. (Working your retail staff like slaves is also a famous strategy.) But if they do, it will be for this weekend or week, however long the tax sale goes for, and then whatever temporary job was briefly created will go away. Same with any increased work force at the school supply manufacturers or suppliers. It's all one-off, or one and done.

Just as other vendors will drop in sales because of this extra spending in this sector, those school supply retailers themselves will see a drop in their own sales over the near term, after this sale, for a month or more, as people will have used up their available cash (from their current paycheck), and topped up their credit cards, until another paycheck comes in, some weeks or a month from now.

LWW
08-10-2011, 03:23 PM
So the fact that business volume increased dramatically following the tax cuts doesn't mean that business volume increased dramatically following the tax cuts?

cushioncrawler
08-10-2011, 05:20 PM
"....to take advantage of the state's first sales tax holiday weekend...."
THIS IZ IN A WAY WHAT I HAV BEEN SAYING IZ NEEDED. MACKENOMIX 101.
REPLACE "STATE" WITH THEUSOFA.
REMOOV "SALES", IE MAKE IT A TOTAL TAX HOLIDAY.
REPLACE "WEEKEND" WITH FOR EVER.

There, now the poor and the rich kan take advantage every day. Simple.
mac.

Soflasnapper
08-10-2011, 05:26 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">So the fact that business volume increased dramatically following the tax cuts doesn't mean that business volume increased dramatically following the tax cuts? </div></div>

Not experienced in retail, I see.

What happened was that a certain segment of retail's business increased dramatically, but briefly, and at the expense of other retail businesses' business, and at the expense of durable goods sellers' business, at the expense of service business providers' business, and at the expense of these same retailers' own gross business in the near term.

The 'back to school' business always hurts any company not selling back to school stuff, and the universe of what people buy remained the same, just shifted around more than would normally be the case into this sector.

If you want a net gain somewhere, it would be as when NJ does this sales tax furlough for BTS stuff, when NY doesn't, which DOES enrich NJ, but reduces business in NY by the same figure. Same analysis applies on a macro scale.

Sales don't typically add to net sales over a year, but simply rejuggle when those sales take place. Selling extra now just takes away from demand later (when considering that consumers are as strapped as they now are).

Cash for clunkers, and the special first time home buyer program did the same shifting of demand, for no true net increase (showing me once again attacking an Obama program as a mirage, when you say all I do is defend him at all times).

LWW
08-10-2011, 05:49 PM
Not experienced at reading I see.

On licking the spoon clean of propaganda however, you are an all star.

Soflasnapper
08-11-2011, 11:48 AM
Such a reasoned response backed with evidence! Well, not either of those, of course. (I jest).

Who do you think you've fooled by such a weak rejoinder as that?

I haven't seen the analysis I gave above anywhere. It is no one's line of propaganda.

It is from my own 34-year plus experience running a business, and a little common sense.

If you have nothing to say to credibly criticize that analysis, just admit it.

It's ok. You can slink away without a response, as you've done so often, and then spam the board with 2 dozen new 'posts' to hide the train wreck of your 'logic.'

Better to remain silent and thought a fool than to open ones mouth, and remove all doubts. (Old expression)

LWW
08-11-2011, 12:00 PM
Again you display your ability at self delusion.

The facts speak loudly ... that you decide to stuff your head in a nether orifice to not hear them is your personal problem and not mine.

Soflasnapper
08-13-2011, 06:01 PM
Here's a very conservative source, the Tax Foundation, saying the same thing I said about how ineffective tax holidays are.

If you question whether this source is conservative, go to this link, hit the home button, and see the tenor of their articles (very conservative, anti-tax, anti-Obama, anti-Dem, etc.)

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">July 28, 2011
Sales Tax Holidays: Politically Expedient but Poor Tax Policy

by Mark Robyn, Micah Cohen and Joseph Henchman

For a PDF of the full study, click here. A summary of the report and the key findings are below.

Tax Foundation Special Report No. 193

Executive Summary

Sales tax holidays are periods of time when selected goods are exempted from state (and sometimes local) sales taxes. Such holidays have become an annual event in many states, with exemptions for such targeted products as back-to-school supplies, clothing, computers, hur*ricane preparedness supplies, products bearing the U.S. government's Energy Star label, and even guns. High-tax New York State sparked the trend in 1997 as a way to discourage border shopping. In 2011, 16 states will conduct sales tax holidays, down from a peak of 19 states in 2010.

<span style='font-size: 14pt'>At first glance, sales tax holidays seem like great policy. They enjoy broad political support, with backers arguing that holidays are a highly visible form of tax cut and provide benefits to low-income consumers. Politicians and other supporters routinely claim that sales tax holi*days improve sales for retailers, create jobs, and promote economic growth.</span>

<span style='font-size: 14pt'>Despite their political popularity, sales tax holidays are based on poor tax policy and distract policymakers and taxpayers from real, permanent, and economically beneficial tax reform. Sales tax holidays introduce unjustifi*able government distortions into the economy without providing any significant boost to the economy. They represent a real cost for busi*nesses without providing substantial benefits. They are also an inefficient means of helping low-income consumers and an ineffective means of providing savings to consumers.</span>

Key Findings

16 states will hold a sales tax holiday in 2011, down from a peak of 19 states in 2010.

<span style='font-size: 17pt'> Sales tax holidays do not promote economic growth or significantly increase consumer purchases; the evidence shows that they simply shift the timing of purchases. Some retailers raise prices during the holiday, reducing consumer savings.
</span>
Sales tax holidays create complexities for tax code compliance, efficient labor allocation, and inventory management. However, free advertising for what is effectively a paltry 4 to 7 percent sale leads many larger businesses to lobby for the holidays.

<span style='font-size: 14pt'> Most sales tax holidays involve politicians picking products and industries to favor with exemptions, arbitrarily discriminating between products and across time, and distorting consumer decisions.</span>

While sales taxes are somewhat regressive, this is often exaggerated to sell the idea that sales tax holidays are an effective way of providing relief to the poor. To give a small amount of tax savings to low-income individuals, holidays give a large amount to others.

<span style='font-size: 14pt'> Political gimmicks like sales tax holidays distract policymakers and taxpayers from genuine, permanent tax relief. </span>If a state must offer a "holiday" from its tax system, it is a sign that the state's tax system is uncompetitive. If policymakers want to save money for consumers, then they should cut the sales tax rate year-round. </div></div>

This is a link to the executive summary quoted from above. (http://www.taxfoundation.org/publications/show/26533.html)

cushioncrawler
08-13-2011, 07:44 PM
Yes. This allso reminds me of silly tax stuff (not calling the abov silly) that i kum akross all the time.
With tax the bottom line iz fixed (say), hencely if some stupid prick pushes for less of one sort of tax, then that same stupid prick iz aktually pushing for more of some other tax.
Stupid prick.
mac.

LWW
08-14-2011, 04:36 AM
So if you buy into the shifting argument ... by logic you must agree that boondoggles such as "CAH FOR CLUNKERS" was ridiculous?

Also that argument. which is ridiculous on the face of it in this case, is false because eliminating a 7% +/- sales tax is de facto giving folks a raise.

Are you contending that giving the US public more after tax income won't result in it being spent?

Please ... your party line boiler plate answers are tedious and prima facie evidence of political brainwashing.

You are smarter than that.

Qtec
08-14-2011, 05:31 AM
Its called a 'sale'. They have them after Christmas and they slash prices and sell a lot.

Its a <u>temporary</u> bargain for the public.

Q

Qtec
08-14-2011, 05:34 AM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Officials have estimated it would cost Arkansas about <span style='font-size: 26pt'>$2 million</span> in revenue. </div></div>

GEEZ!!!!!!!!!!!!!!!! Sorry LWW, I didn't think the number was that HIGH!!!!!!!!!!!!!!!




Q /forums/images/%%GRAEMLIN_URL%%/crazy.gif...crumbs to the plebs.

LWW
08-14-2011, 05:48 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Qtec</div><div class="ubbcode-body">Its called a 'sale'. They have them after Christmas and they slash prices and sell a lot.

Its a <u>temporary</u> bargain for the public.

Q

</div></div>

You almost get it.

When the vendor reduces it's cost ... sales increase, when the state reduces it's cost ... sales increase.

BRAVO!

LWW
08-14-2011, 05:50 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Qtec</div><div class="ubbcode-body"> <div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Officials have estimated it would cost Arkansas about <span style='font-size: 26pt'>$2 million</span> in revenue. </div></div>

GEEZ!!!!!!!!!!!!!!!! Sorry LWW, I didn't think the number was that HIGH!!!!!!!!!!!!!!!




Q /forums/images/%%GRAEMLIN_URL%%/crazy.gif...crumbs to the plebs. </div></div>

Thanks.

1 - This minimal tax reduction caused a much larger increase in sales, probably enough to pay for the decrease in sales tax revenue.

2 - Your true opinion of the people has again been expressed.

Soflasnapper
08-14-2011, 11:29 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">So if you buy into the shifting argument ... by logic you must agree that boondoggles such as "CAH FOR CLUNKERS" was ridiculous?

Also that argument. which is ridiculous on the face of it in this case, is false because eliminating a 7% +/- sales tax is de facto giving folks a raise.

Are you contending that giving the US public more after tax income won't result in it being spent?

Please ... your party line boiler plate answers are tedious and prima facie evidence of political brainwashing.

You are smarter than that. </div></div>

I ALREADY SAID cash for clunkers was a mirage program. And noted it at the time as yet another time I've criticized something O did, as you claim I never do. I know you have such facts on permanent ignore, so it doesn't surprise me you don't remember that.

As a reminder, back in the mists of time on August 10th, ON THIS VERY THREAD, I said:

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> Sales don't typically add to net sales over a year, but simply rejuggle when those sales take place. Selling extra now just takes away from demand later (when considering that consumers are as strapped as they now are).

Cash for clunkers, and the special first time home buyer program did the same shifting of demand, for no true net increase (showing me once again attacking an Obama program as a mirage, when you say all I do is defend him at all times).</div></div>

When it is known that a school supply tax free period will be soon coming, it reduces the amount of school supply sales until that time. And reduces the amount of school supply sales after that time.

The benefit? Likely the consumers may use the 6-7% savings to buy that same slight percentage amount more than they would have otherwise. (Slightly more, because of the way the math works out.) If however, as is said in the study I referenced, the stores raise their prices in advance of the sale, there is no such effect, or it is a diminished effect.

However, the point is that there is no significant economic gain, and not even much of a sale. Think it through. There is no company that advertises a 6-7% off sale. Why? Because it would be ineffective at even boosting gross sales.

Soflasnapper
08-14-2011, 11:54 AM
1 - This minimal tax reduction caused a much larger increase in sales, probably enough to pay for the decrease in sales tax revenue.

This sounds incoherent.

A larger increase in school supply sales will mean the same sales tax revenue comes in, even though the school supply sales are all tax-free? How would that work?

Perhaps you mean that the people will only buy the same amount of school supplies as they would before the tax cut, and then because they saved that extra amount, use the SAVINGS to buy other things that do carry a sales tax?

You can't mean that, as the math doesn't work.

Plainly enough, for your claim to be true, a small sales tax savings on school supply purchases would need to cause... how MUCH extra sales, in order to make up the difference?

If the cost of foregoing sales tax on school supply sales is $2 million, then the total sales of those items amounts to $28.57 million. To recoup that lost sales tax money would require a boost in other items' sales (that did carry a sales tax) of the same amount, $28.57 million.

Is there evidence that a sale on one type of dry goods increases sales in other areas by 100%? Of course not. We wouldn't expect that a meager 7% savings would increase sales even of the on-sale products by 100%.

LWW
08-14-2011, 02:59 PM
This was not a tax abatement for school supplies only, but thanks for playing.

Now, a couple of simple questions ...

1 - Is a tax reduction not a raise in disposable income?

2 - Will Americans not, when taken as a whole, spend any additional disposable income they happen upon?

BTW ... kudos on the cash 4 clunkers, I did miss that.