CBO: Budget deficit shrinks

[Said1]

More money=more spending=more taxes collected.

Thank-you. I would think it's obvious, but some still want to argue.

 

[Max Power]

Since the tax revenues HAVE increased, which has been replicated each time taxes have been cut,

Proof?

a logical hypothesis would be that they are at the very least partially causative in nature.

Well, first I'd like to see your proof, but aside from that, if you have any knowledge of economics, you know that running a deficit requires borrowing money.

If the government is borrowing money from people, then there is less money in circulation, which will hurt the economy. Since the tax cuts are (essentially) borrowed money, they will help just as much as they will hurt the economy.

 

[Max Power]

More money=more spending=more taxes collected.

As I pointed out in the last post - there is no more money... because money is being borrowed.

So,
Same money = same spending = same taxes collected.

 

[Said1]

As I pointed out in the last post - there is no more money... because money is being borrowed.

So,
Same money = same spending = same taxes collected.

Ah-ha. A false sense of security, in a sense.

 

[5stringJeff]

Proof?

Well, first I'd like to see your proof, but aside from that, if you have any knowledge of economics, you know that running a deficit requires borrowing money.

If the government is borrowing money from people, then there is less money in circulation, which will hurt the economy. Since the tax cuts are (essentially) borrowed money, they will help just as much as they will hurt the economy.

Incorrect. Under the current monetary system, as money is loaned out by the Federal Reserve, more money is issued out. The money supply is not tightening, it is growing.

And you still have yet to give a substantial reply to Kathianne's data: the economy is growing at a roughly 4% annual rate, tax rates have dropped (top rate from 39.6% to 33%), yet tax revenues have increased 15%. How else would you account for this, except for the fact that tax rate decreases = tax revenue increases on the right side of the Laffer curve, which is where we currently are?

 

[Max Power]

Incorrect. Under the current monetary system, as money is loaned out by the Federal Reserve, more money is issued out. The money supply is not tightening, it is growing.

Issuing out more money does nothing but deflate the value of the dollar.

And you still have yet to give a substantial reply to Kathianne's data: the economy is growing at a roughly 4% annual rate, tax rates have dropped (top rate from 39.6% to 33%), yet tax revenues have increased 15%. How else would you account for this, except for the fact that tax rate decreases = tax revenue increases on the right side of the Laffer curve, which is where we currently are?

Most of the increase in individual tax receipts appears to have come from higher stock market gains and the business income of relatively wealthy taxpayers.

So, like I said before, it's because the economy is doing better.

 

[5stringJeff]

Issuing out more money does nothing but deflate the value of the dollar.

Agreed. But there are still more dollars available.

So, like I said before, it's because the economy is doing better.

Again, a 4% upswing in the economy would translate into a 4% increase in tax revenues, all other things being equal. However, there is a 15% increase in tax revenue, so there has to be something else besides the economy at work to account for the other 11%.

 

[Max Power]

Agreed. But there are still more dollars available.

But those more dollars are worth the same amount as the less dollars. That's like trading in a $10 for 10 $1's and claiming that you have more money. It's the same.

Again, a 4% upswing in the economy would translate into a 4% increase in tax revenues, all other things being equal. However, there is a 15% increase in tax revenue, so there has to be something else besides the economy at work to account for the other 11%.

4% is only an average, no? Stock prices could play a huge role in the difference.
Besides, it's not like these tax cuts are NEW, so shouldn't our tax revenues from last year be higher as well?

 

[rtwngAvngr]

Besides, it's not like these tax cuts are NEW, so shouldn't our tax revenues from last year be higher as well?

Let no straw be left ungrasped.

 

[ThomasPaine]

Proof?

Well, first I'd like to see your proof, but aside from that, if you have any knowledge of economics, you know that running a deficit requires borrowing money.

If the government is borrowing money from people, then there is less money in circulation, which will hurt the economy. Since the tax cuts are (essentially) borrowed money, they will help just as much as they will hurt the economy.

would have been removed, by taxation, from its' capitalist ability to create money by investing money in new businesses or business growth, then the resultant capital input increases the overall economy resulting in more tax revenues for government. Like most liberals you assume it's a zero sum game. However, nothing could be further from the truth. Money returned, or not withheld initially by direct taxation of individuals or corporate taxes, builds further wealth. Consequentially the overall economy grows and, despite a lower overall taxation rate, the revenues of government increase. See how this works? Prolly not...

 

[KarlMarx]

would have been removed, by taxation, from its' capitalist ability to create money by investing money in new businesses or business growth, then the resultant capital input increases the overall economy resulting in more tax revenues for government. Like most liberals you assume it's a zero sum game. However, nothing could be further from the truth. Money returned, or not withheld initially by direct taxation of individuals or corporate taxes, builds further wealth. Consequentially the overall economy grows and, despite a lower overall taxation rate, the revenues of government increase. See how this works? Prolly not...

Well put, it is not a zero sum game.....

It's not a TAX CUT it's a TAX RATE CUT......

Taxes are not levied on people, but on their economic activity. Thus, taxation is the price we pay to the government for engaging in economic activity, e.g., investment. A "tax cut" is actually like a "sale" on economic activity. An analogy can be drawn between a department store e.g. Wal-Mart or Target and the government. Why do department stores have sales? And when do sales increase? Answer: when goods are on sale. In fact, GM and the "big three" auto makers have all reported large increases in sales recently due to their price cuts on cars. Similarly, the government actually realizes a revenue increase whenever there is a tax cut.

Those that are in favor of tax increases usually favor them for reasons other than balancing the government's books. Mostly the reasons given are along the lines of redistributing wealth ("we have to help the poor") or other socialist line of thinking ("we need another government program to help out 'at risk' youth" etc).

The role of taxes is to run the government, but the government can't do everything, and does only a very few things well. In the private sector, companies specialize along their "core competencies"... you don't see IBM making beer, and Molson's doesn't make computers. Yet, for some reason, we have become accustomed to believing that government can defend the country, build roads, regulate the economy, provide for people's retirement, solve social ills, end racial bigotry, keep our air and water clean, deliver the mail, manage railroads, run school districts, determine the "fair price" of goods on the market, and the list goes on and on. No one who actually stops and thinks about this seriously for a few minutes actually believes this. The government does few things well, the rest it does with varying degrees of mediocrity or poorly.

 

[Markainion]

Proof?

If the government is borrowing money from people, then there is less money in circulation, which will hurt the economy. Since the tax cuts are (essentially) borrowed money, they will help just as much as they will hurt the economy.

You’re not considering the global economics factors. A high percentage of the money the government borrows is foreign owned. The US saving for the last few years is at record lows.

 

[remie]

Can you establish that the tax cuts have increased tax revenues, and not the growing economy itself?

I actually posted on the Laffur curve some time ago. Here it is
http://www.usmessageboard.com/forums/showthread.php?p=22564#post22564

Keep in mind that part of Reagans administration took place after several years of poor economy and recession.

 

[remie]

Decreasing the intake of money (cutting taxes) without decreasing the spending, cannot reduce the deficit.

It's really quite simple.

*To make things clearer, I understand what is being said... tax more money, but at a lower rate; but it isn't working. Government revenue was higher under the higher tax rate than the lower one. (We're not yet on the 100% tax rate side of that Laffer curve yet)

Cutting income tax works too.
http://www.heritage.org/Research/Taxes/BG1414.cfm