have the tax cuts caused tax revenues to go up?

[TrophyHusband 0]

i've heard repeatedly that this is the case, but haven't seen actual numbers to back it up. i've just believed it because if it were false, the libs would be pointing and jumping up and down screaming how much the tax revenues went down since the tax cuts. the truth is i really don't know and am just provideing a pot for someone to come and stir.

"Your scrotum is quite nice" - Skymama
www.kjandmegan.com

[billvon 3,119]

> have the tax cuts caused tax revenues to go up?

Tax revenues go up when the economy is doing well and go down when the economy is doing poorly. Tax cuts, of course, decrease tax income on a direct basis. The argument by many conservatives is that tax cuts improve the economy, thereby _eventually_ increasing tax income. To prove that you'd have to demonstrate that tax cuts were VERY good for the economy (to overwhelm the initial loss of revenue) and that high tax rates harmed the economy.

Some data:

First graph is the DOW average, which is a rough indicator of how well our economy is doing, vs time (last two presidencies highlighted.)

Second graph is total tax burden as a percentage of GDP.

[NCclimber 0]

I think there has to be some equalibrium level in which the most taxes are collected, while not dramatically impeding the health of the economy.

As far as the question in the OP, I have no clue. I've heard arguements for both sides. Seems like this is something the smartern'shit economists to figure out. Preferably those without an agenda to promote.

[kelpdiver 2]

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As far as the question in the OP, I have no clue. I've heard arguements for both sides. Seems like this is something the smartern'shit economists to figure out. Preferably those without an agenda to promote.

Which ones would those be?

It's not very hard to normalize to a given year's dollar and population.

[NCclimber 0]

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As far as the question in the OP, I have no clue. I've heard arguements for both sides. Seems like this is something the smartern'shit economists to figure out. Preferably those without an agenda to promote.

Which ones would those be?

It's not very hard to normalize to a given year's dollar and population.

The tricky part if figuring out the impact those dollars that remain in the hands of the public have on the overall economy, which effects the GDP, which impacts the tax revenues.

[rehmwa 2]

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As far as the question in the OP, I have no clue. I've heard arguements for both sides. Seems like this is something the smartern'shit economists to figure out. Preferably those without an agenda to promote.

1 - If they were that smart, they wouldn't be economists

2 - Good luck finding one without an agenda to promote

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Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[lawrocket 3]

There seems to be a correlation. The Laffer curve was not the invention of Charles Laffer, but he popularized it.

See, if the government's tax rate is 0%, the government will bring in exactly $0 in taxes. The theory is that the other side is true, as well: if the government's tax rate is 100%, then the government, in theory, will eventually bring in $0 in taxes, because nobody will do anything because there is no incentive to do so.

This is pretty common sensical. The problem is finding where along that range of tax rates the maximum tax revenues will be brought. If the tax rate is too low you need to raise the tax rate. If the tax rate is too high, you need to lower the tax rate.

It's always an educated guess whether to raise or lower. Of course, think about the government trying to figure out how to maximize the amount of money it gets. The greatest money-machine out there is a government. Forget Microsoft or Haliburton or Shell Oil. The Government is where to find the money.

My wife is hotter than your wife.

[rehmwa 2]

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This is pretty common sensical. The problem is finding where along that range of tax rates the maximum tax revenues will be brought. If the tax rate is too low you need to raise the tax rate. If the tax rate is too high, you need to lower the tax rate.

"If MY tax rate is zero, and everybody else's is huge, the government takes in plenty to take good care of me."

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Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[joedirt 0]

Think of a graph that looks like an upside down "U". X axis is tax rate and y axis is tax revenue. The idea is to be at the top of the graph where tax payers will produce the most money. Now someone making 8 bucks an hour is probably well under the threshold on the left side of the graph, while the wealthy and the corporations are well over the threshold on the right side of the graph. So when you lower taxes you see a difference because the wealthy and the corporations are paying the bulk of the tax, not the low wage earners.

[kallend 2,150]

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I think there has to be some equalibrium level in which the most taxes are collected, while not dramatically impeding the health of the economy.

As far as the question in the OP, I have no clue. I've heard arguements for both sides. Seems like this is something the smartern'shit economists to figure out. Preferably those without an agenda to promote.

Here the opinions of some smart guys, some of them being Bush appointees:

"Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that."
Alan D. Viard, a former Bush White House economist currently at the conservative American Enterprise Institute, 10/23/06

“It is very rare and very few economists believe that you can cut taxes and you will get the same amount of revenues.”
– Former Federal Reserve Chairman
Alan Greenspan
Testimony before House Budget Committee
September 8, 2004

“I don’t think that, as a general rule, that tax cuts pay for themselves.”
–Federal Reserve Chairman Ben Bernanke
Testimony before Joint Economic Committee
April 27, 2006

“As a general matter, most tax cuts do not pay for themselves.”
; OMB Director Nominee Rob Portman
Written Response to Questions Submitted
Prior to Senate Budget Committee
Nomination Hearing
May 10, 2006

“[There is] no credible evidence that tax
revenues ... rise in the face of lower tax rates.”
“[An economist claiming tax cuts pay for
themselves is like a] snake oil salesman who
is trying to sell a miracle cure.”
– Former Chairman of President Bush's Council of
Economic Advisers N. Gregory Mankiw
Introductory college economics textbook,
“Principles of Economics,” 1998


And from the Bush family itself:

"Voodoo economics", George H.W. Bush

Of course, if they don't agree with YOUR opinion I'm sure you'll just discount them. The "evolution" thread today illustrated your tactics very nicely.

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The only sure way to survive a canopy collision is not to have one.

[billvon 3,119]

>if they don't agree with YOUR opinion I'm sure you'll just discount them.

I don't think he's expressed an opinion yet (although you definitely have.)

[kallend 2,150]

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>if they don't agree with YOUR opinion I'm sure you'll just discount them.

I don't think he's expressed an opinion yet (although you definitely have.)

All have been posted previously. See today's "DOW" thread to see his dismissal.

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The only sure way to survive a canopy collision is not to have one.

[NCclimber 0]

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if they don't agree with YOUR opinion I'm sure you'll just discount them.

Just go ahead and tell someone they're full of shit before they even say anything? Is that the new thing among college professors, Dr. Kallend?

Thanks Bill.

[kallend 2,150]

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This is pretty common sensical. The problem is finding where along that range of tax rates the maximum tax revenues will be brought. If the tax rate is too low you need to raise the tax rate. If the tax rate is too high, you need to lower the tax rate.

It's always an educated guess whether to raise or lower. Of course, think about the government trying to figure out how to maximize the amount of money it gets.

Washington Post, October 17, 2006

"Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that," said Alan D. Viard, a former Bush White House economist now at the nonpartisan American Enterprise Institute. "It's logically possible" that a tax cut could spur sufficient economic growth to pay for itself, Viard said. "But there's no evidence that these tax cuts would come anywhere close to that."

Economists at the nonpartisan Congressional Budget Office and in the Treasury Department have reached the same conclusion. An analysis of Treasury data prepared last month by the Congressional Research Service estimates that economic growth fueled by the cuts is likely to generate revenue worth about 7 percent of the total cost of the cuts, a broad package of rate reductions and tax credits that has returned an estimated $1.1 trillion to taxpayers since 2001.

Robert Carroll, deputy assistant Treasury secretary for tax analysis, said neither the president nor anyone else in the administration is claiming that tax cuts alone produced the unexpected surge in revenue. "As a matter of principle, we do not think tax cuts pay for themselves," Carroll said.

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The only sure way to survive a canopy collision is not to have one.

[kallend 2,150]

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if they don't agree with YOUR opinion I'm sure you'll just discount them.

Just go ahead and tell someone they're full of shit before they even say anything? Is that the new thing among college professors, Dr. Kallend?

Thanks Bill.

Every one of these statements has been previously posted in SC, yet just TODAY in the DOW thread you claimed that there was nothing to back up my statement on tax revenues.

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The only sure way to survive a canopy collision is not to have one.

[billvon 3,119]

>The problem is finding where along that range of tax rates the maximum
>tax revenues will be brought.

. . . . and what sort of administration of said tax rates results in the greatest tax revenues. Hence the progressive tax rate.

But I think the center of the discussion is whether or not reducing tax rates has such a great effect on the economy that tax returns increase even given their lower rates, and even given the normal cyclical nature of the economy. Reducing tax rates may indeed spur the economy a bit, and may make an incipient recovery slightly stronger. However, if they reduce revenues by 10%, and the economy increases by 13% over a few years instead of 12%, you end up with less tax income than you would have gotten by maintaining the tax. (Overall revenues in both cases, of course, still go up.)

I definitely don't buy that tax cuts are the only thing that drives an economy, or are even a major factor. High tax rates have, historically, often been associated with a booming economy - and low rates have accompanied some crushing depressions.

[dorbie 0]

It's all in the presentation, see attached. I think my graphs are fairer and point out a couple of minor events. I know you're not saying the internet bubble was sustainable, you'd lose all credibility.

And as for the extrapolation of the tax burden ?!. The facts show that tax reached record levels under Clinton and I have been paying attention to Democrat objections to tax cuts, you can't have it both ways. If the Democrats get in we can blame them when the tax burden increases during their tenure, it hasn't happened yet.

You should stick with deficit spending, Bush et.al are burning through cash like drunken sailors in a brothel.

[lawrocket 3]

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I definitely don't buy that tax cuts are the only thing that drives an economy, or are even a major factor.

This depends on the involvement of the government in the economy. I believe taxes are a major factor. This is not necessarily because of the taxes themselves, but because in most instances the largest single member of an economy is the government.

If the government budget is 1.5 trillion dollars, you can see that a 6 trillion dollar economy is pretty much driven by that government. The taxes go TO the government, who decides how and where to spend it.

The government has a difficult time controlling all facets of an economy. But if the government can control the availability of monetary resources and use those resources to shore up certain portions of the economy, then we find that taxes to play an extremely important role!

When the S&L bust occurred in the 80's, the Federal Government bailed out most of them to the tune of $125 billion. Of course, many - including me - give some credit to the 1986 Tax Reform Act for the S&L problem. The TRA eliminated most of the real estate tax shelters, which made these investments significantly devalued.

Thus, the tax structure created wealth where it did not otherwise exist and when it was subject to taxation, it caused the assets to drop in value. Many find that a number of the deficits came as a reult of this bailout.

Just look at what taxes did for real estate and S&L's, and the absolutely huge effect on the economy that it had!

p.s. - we won't see flat taxes or national sales taxes in the place of income taxes. There's no way that the feds will make a move that basically destroys the CPA industry. And how much money is spent in mere tax compliance? In 2001, it was estimated to be 140 billion dollars - for individual tax payers! Not corporations, etc.

Taxes have huge effects on the economy.

My wife is hotter than your wife.

[mirage62 0]

Does anyone REALLY think the gov needs MORE money to spend?? I mean one can certainly say "we need to spend it differently" but raise TAXES??? Cut programs and spend the money better (whatever that may be) but raise more taxes. Thats nuts.

Kevin Keenan is my hero, a double FUP, he does so much with so little

[lawrocket 3]

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economic growth fueled by the cuts is likely to generate revenue worth about 7 percent of the total cost of the cuts, a broad package of rate reductions and tax credits that has returned an estimated $1.1 trillion to taxpayers since 2001.

Now I'll go to my personl "feelings." Whose money is it? The governments or the people's?

I personally find it pretty sickening to say, "Hey, this tax cut is gonna cost the US government 100 million dollars. But we can expect to recover 7 billion from increased productivity of the economy. To us, this doesn't pay for itself."

It is true that businesses cannot survive by merely letting money stay in the hands of consumers. But why is government runnign like a business in trying to find ways to squeeze as much as possible out of its people?

Does it pay for itself? Even if it doesn't, to me that's not the point. If any other business operates in the red for 40 years it goes out of business. Not the govt, which will get its money...

My wife is hotter than your wife.

[kallend 2,150]

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Does anyone REALLY think the gov needs MORE money to spend?? I mean one can certainly say "we need to spend it differently" but raise TAXES??? Cut programs and spend the money better (whatever that may be) but raise more taxes. Thats nuts.

No doubt about that. Here's $10Billion/month that should never have been spent.

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The only sure way to survive a canopy collision is not to have one.

[billvon 3,119]

>This is not necessarily because of the taxes themselves, but because
>in most instances the largest single member of an economy is the
>government.

I agree that the government, as a _participant_ in the economy, has a big impact on overall economic health. Note, though, that that lends credence to the argument that HIGHER tax rates improve the economy, by increasing economic activity in one of its larger sectors. As you mentioned, though, there is probably an ideal level of stimulus. Too low and you get a small government that does not participate much; too high and you have a tax structure that makes investment/development cost prohibitive.

Which effect is larger? I'd say it depends on the economy and how much deficit spending you're willing to do. If you went entirely to deficit spending while increasing governmental spending you'd be able to bolster the economy a great deal - indeed, we're seeing some of that now. Unfortunately it's not a sustainable model.

>Thus, the tax structure created wealth where it did not otherwise exist
>and when it was subject to taxation, it caused the assets to drop in value.

Agreed. But in general favored tax status gives one sector an advantage over other sectors (as investment options, ability to hire talent etc etc.) and thus helps one sector to the detriment of others. The classic example would be homeowner tax breaks hurting landlords. So that's an example of a tax used as a way to bolster one part of the economy over another, not as a way of improving the economy overall.

[billvon 3,119]

> Does anyone REALLY think the gov needs MORE money to spend?

Yes. We're at war. That takes a lot of money.

Now, it would have been a good decision to not go to war. But once you're in a war, complaining about government spending is like complaining about how much it costs to have a kid two years after you and your wife stopped using birth control. Sure, you can complain, but the time to decrease your expenditures was two years ago.

[kallend 2,150]

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economic growth fueled by the cuts is likely to generate revenue worth about 7 percent of the total cost of the cuts, a broad package of rate reductions and tax credits that has returned an estimated $1.1 trillion to taxpayers since 2001.

Now I'll go to my personl "feelings." Whose money is it? The governments or the people's?

I personally find it pretty sickening to say, "Hey, this tax cut is gonna cost the US government 100 million dollars. But we can expect to recover 7 billion from increased productivity of the economy. To us, this doesn't pay for itself."

It is true that businesses cannot survive by merely letting money stay in the hands of consumers. But why is government runnign like a business in trying to find ways to squeeze as much as possible out of its people?

Does it pay for itself? Even if it doesn't, to me that's not the point. If any other business operates in the red for 40 years it goes out of business. Not the govt, which will get its money...

In theory at least, the government IS us.

I think you made a typo above (highlighed).

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The only sure way to survive a canopy collision is not to have one.

[joedirt 0]

Well I agree with you if nooneelse does. This used to be a country where people took care of themselves. Have you ever read Frederick Turner's frontier thesis?