Proof from Track & Field that high taxes decrease economic activity

Blowing.Rock Master wrote:

Really? You're using a study based on a tax rate of 8.97% and calling it high?

It's higher than neighboring states - which shows that states don't need to trip over themselves to have the lowest tax rates on the rich. For once I agree with you - it's not "high". But usually people of your ilk fight any tax increase regardless of the size. Anybody who tries to point out how small it is historically is automatically called a communist.

So are you admitting that tax rates only have a negative effect on actions of people when it is above a certain percentage? If so, I'd love to hear your ideas about what % you think is appropriate. It would be much more productive than the usual taxes = theft argument.

DontFeedTheTroll wrote:

The UK tax law is pretty stupid, but I'm wondering why it doesn't affect other sports. Tennis players and golf players can make some serious bank from endorsements and people still play The Open and Wimbledon.

I think there are a few things going on that make Bolt unique, but would love to see someone from the UK chime in.

First Bolt competes much less than a golfer/tennis player. Bolt will likely compete less than 10 times this year. (A golf tennis player will compete 20+ times.) Say one of those is in Britain. The UK authorities are not only going to tax Bolt's appearance fee/prize money they are going to say "We want to tax 1/10th of your endorsement income as well".

And the second thing going on is he has way more endorsement income than other track athletes.

So say Bolt gets $250k to show up at a meet. The UK wants 50% off the top. If he has $5 million a year in endorsement income, 1/10th of that is $500,000. UK tax people want half so for Bolt to show up and run in the UK getting $250k, he ends up paying $125 tax on the appearance fee, $250k tax on his endorsement income so a total of $375k in taxes to get $250k and he loses money.

I wonder if for Wimbledon and the British Open if endorsement income is not taxed. Perhaps it is and the players figure they have to show up. But you don't see Tiger playing any other events in Britain.

My question is why this doesn't apply to lesser stars. Do the UK authorities not bother looking into what Andrew Wheating gets in endorsement income? A US distance star like Andrew Wheating likely makes way more from Nike than he will from appearance fees/prize money. I guess Wheating can easier argue that Nike is not sponsoring him to reach the British market so it doesn't matter if he competes in Britain or not and thus his endorsement income shouldn't be taxed by the UK. That's all speculation.

Why don't we have a conversation about holding government accountable for their spending, using REALISTIC assumptions for pension benefit plans, and what kinds of taxes we are talking about? Erskin-Bowles proposed a tiered structure with higher taxes and draconian spending cuts, and the president roundly ignored it and appointed a new commission. Why don't we talk about taxing consumption rather than production and capital? Why need there be any sacred cows?

Sagarin wrote:

Trickle-up poverty is the goal BRM -- the wider, fatter pyramid. I seriously doubt any of these intellectuals have ever started a business or been responsible for employees. The left doesn't have the monopoly on empathy. They just think they do.

You mean like Buffet, Soros, and Gates? Yea - those guys have no practical experience creating jobs.

Nope, I'm referring to the pseudo-intellectuals like yourself and the others that lurk here.

I realize that Buffet and Soros have their sharehloders to answer to, but it's interesting that they, along with Bill Gross, aren't buying US bonds. Says all you need to know.

Soros? Seriously? Is that your icon?

Sagarin wrote:

Why don't we have a conversation about holding government accountable for their spending, using REALISTIC assumptions for pension benefit plans, and what kinds of taxes we are talking about? Erskin-Bowles proposed a tiered structure with higher taxes and draconian spending cuts, and the president roundly ignored it and appointed a new commission. Why don't we talk about taxing consumption rather than production and capital? Why need there be any sacred cows?

I would love for that to happen. But democrats learned their lesson during the healthcare debate. Republicans were successful because they took positions normally reserved for those on the left. They scared voters by talking about death panels and lower medicare payments. They might have talked about "big government" - but it was only in the context of what "big government" might take away from people - even if it was taking away gov't issued entitlements - that gained any political traction.

I think Obama will eventually support something like Erskin-Bowles, but first he needs to make sure that republicans are going to actually engage in a serious debate rather than just outflank him. The medicare modifcation proposition by Ryan was also helpful in showing that the only way to get true cost control is through bi-partisan support. some democrats used Ryan's plan as an opportunity to bash republicans - with some success. Anybody can play the "let's scare old people" card. Nothing is going to stick unless both parties support it - republicans are too worried about giving Obama poltical victories to actually support any solutions he proposes at this point.

Sagarin wrote:

Nope, I'm referring to the pseudo-intellectuals like yourself and the others that lurk here.

Which would only be an effective argument if us "pseudo-intelletuals" were the only people who support a more progressive tax policy.

Nice cherry-picked example. From the article -

"Bolt claims he could lose more money than he would actually earn from running here.

International athletes who compete in Britain are currently taxed at 50 per cent on their appearance fee, winnings and a proportion of their worldwide endorsement earnings.

So if Bolt were to take part in 10 meetings worldwide, with one in Britain, the Inland Revenue could tax him on one-10th of his worldwide earnings."

Now that that's cleared up, let's rename your subject line.

It should read "Proof from Track & Field that high taxes *CAN* decrease economic activity."

The Federal Reserve is responsible for implementing the most regressive tax of all and providing more "charity for the wealthy" than any fiscal maneuvering you are talking about. Perhaps you should direct your ire there.

It’s not only high taxes that decrease economic activity - I offer this I read in a recent article.

I would like to relate my recent experience trying to start a Carbon Fibre manufacturing company in a Northeastern U.S. State.

After meeting for three weeks with the economic development offices of the State and City, it was determined that after I located and acquired a facility, at my cost and risk, even if it were properly zoned, it would have to be approved for a special use exception.

Thereafter we were told to budget in excess of $300K for pre-approval EPA, environmental, and other studies.

The studies would take about 6 months at minimum -- with no guarantee of a successful outcome.

Even if we were approved, and in spite of the fact that at opening we would be hiring approximately 25 technically competent people in a high unemployment region, we would have to go to the Union hall and negotiate a trades contract before hiring the first employee. I would be forced to unionize and hire more expensive, "senior union members."

I am not allowed to go to Craigslist and hire younger, entry level trainees. My cost of operation becomes higher before even opening my doors and I have no choice in this matter. Unbelievable!!!

Even if I am willing to take the time, spend the money, and successfully navigate the bureaucratic hurdles, what additional risks do I face? How about this: OSHA arbitrarily decides I'm not in compliance with one clause in their multi-thousand page regulatory bible. Or, an employee-union member decides he is not being treated fairly or that the benefits package is not equal to that of federal or state employees, and files a grievance How about the EPA deciding, retroactively, that in the event of a power outage there is a chance my factory might leak a "toxic" substance? I will be sued, shut down and possibly prosecuted criminally.

Now, consider my experience the last time I visited China. I was escorted by the governor of Tianjin State to one of his new cities and shown the process to open a manufacturing facility.

I was led into a room with a series of desks. You start at the first desk where you present your plan. Thereafter you proceed from one to the next obtaining approvals or agree to modifications on the spot until at the last table where you are shown what lots and buildings are available that best suit your needs and the price of each.

The total timeline for permits, from beginning to approval, takes about 3 hours.

At the end of the line you pay your fee, get your permit, and choose your construction manager if a new building is necessary.

The city designates the building team to come the following day and begin construction.

Generally you are guaranteed that you will be able to move your equipment in within 5 months.

There are no restrictions on importation of equipment, state officials help with marketing and sales inside the country and do not restrict exportation of the manufactured goods or profits.

Now, this is China so the government and the state share 30% of your business, but considering the ease of entry, increased in-country sales and helpful attitude, this is a small price to pay, especially considering America's 35% plus corporate tax rates. Also, if the price of the lot or building seems high, and they like your project, they will negotiate the price and terms.

This is why our balance of trade is so out of whack. This is why many companies move out of the United States for foreign environs. This is why the United States is losing its position as the greatest manufacturing country in the world.

The greatest threat to our American future doesn't come from other nations, it comes from within. We have become our own worst enemy.

WTC wrote:This is why our balance of trade is so out of whack. This is why many companies move out of the United States for foreign environs.

I thought it was the cheap, sweatshop labor and non-existant standards that allow investors to externalize their real costs. Guess I'm wrong.

Mr.Price wrote:

It should read "Proof from Track & Field that high taxes *CAN* decrease economic activity."

Glad to see you agree with me.

To be honest, I dont see how anyone woulden't. It's no surpize. Then again anything remotely political will always make someone disagree.

Blowing.Rock Master wrote:

Glad to see you agree with me.

Is this some backhanded way of arguing that the US federal tax rates shouldn't be raised? There is no evidence whatsoever that going from ridiculous low (what we have now) to just low (by taxing the rich more) will do anything detrimental to the economy. None, nil, zip, zero, nyet. No evidence that any sort of trickle down economics works for economic benefit of anyone other than the rich. Even those who originally argued for it back in the 80's have largely rejected it. The OP is a sheep who can't think for himself.

Swollen Rabbit Head wrote:

The OP is a sheep who can't think for himself.

You nailed it.

Mr.Price wrote:

Nice cherry-picked example. From the article -

"So if Bolt were to take part in 10 meetings worldwide, with one in Britain, the Inland Revenue could tax him on one-10th of his worldwide earnings."

I really don't understand this concept. If Bolt works hard all year (based mostly in Jamaica) to get in tip top shape, and then spends one day in the UK, how can they claim that 10% of his annual income as taxable in their country?

great article.. do you have a link to the entire one?

I think you addressed the matter of golfers and tennis players. They compete so often that the % is small. However, how does GB calculate the endorsement percentage? Does someone track that and at the end of the year send a bill? I mean who knows how many times an athlete will compete until the year is over?

I think that in the US, athletes get taxed a part of their income when they play an away game. So if the Atlanta Braves go to New York to play the Mets 16 times, a Braves player gets 16*(1/162) of his salary taxed in NYC.