More Bad News For Libs

Discussion in 'Economy' started by red states rule, Sep 20, 2006.

  1. red states rule
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    red states rule Senior Member

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    Once again it has been proven tax cuts are good for any economy. Tax cuts spur economic growth, which in turn brings more money into the US Treasury.

    Libs will be scratching their head wondering how the hell can this happen. Bush cut taxes, how can revenues be up?

    Libs need to review Economics 101.



    US Treasury Sets New 1-Day Tax Receipt Record Of $85.8 Billion
    Tuesday September 19th, 2006 / 0h04


    WASHINGTON -(Dow Jones)- The U.S. government recorded record-high overall and corporate tax receipts on Sept. 15, which was a quarterly deadline for tax payments, the Treasury said Monday.
    Total tax receipts were $85.8 billion on Friday, compared with the previous one-day record of $71 billion on Sept. 15 of last year, the Treasury said.
    Within the overall figure, corporate tax receipts Friday were $71.8 billion, up from $63 billion in September of last year.
    Treasury Undersecretary for Domestic Finance Randal Quarles said Friday's numbers provided a "continuing demonstration of the strength of the U.S. economy."
    "In fact, Friday's gross receipts were the largest in a single day in the nation's history - 20% higher than receipts on the same quarterly tax payment date last year," Quarles said in a statement.
    -By Benton Ives-Halperin, Dow Jones Newswires; 202-862-9255; Benton.Ives-Halperin@dowjones.com
     
  2. insein
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    insein Senior Member

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    No this news isnt good. How can the Dems promote class envy and increase control over the poorer have-nots if the poor are begining to make enough money to pay their own taxes?

    I think they realize it too. Alot of Dems are steering completely clear of tax cut question where before they would talk alot about repealing Bush's "tax cuts on the rich." None of them will touch it now that the election is 48 days away.
     
  3. Kagom
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    Kagom Senior Member

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    Tax cuts can work if they're done right. It worked for Reagan. Democrats didn't like tax cuts because it's not what they would've done in the financial area. And don't ask me what they would do, because I'll be up front and say I don't know.
     
  4. insein
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    insein Senior Member

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    Democrats are about growing the government at every turn. The higher the taxes, the less money people have, the more dependent they become on the government to help them. Its as simple as that. It was never about generating more revenue. It was more about control. To offset the anger faced by higher taxes on the populace, they create a class warfare by saying that they tax the rich more because they deserve it and this quells most of the anger from the poor. It also quells their anger when the poor receive a majority of the handouts from the government.

    All about controlling the poor and keeping them poor so that they remain dependent on government.
     
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  5. Hamiltonian
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    This is making tax cuts look more promising, although looking at it from an economic growth perspective, tax revenue as a percent of GDP is still below pre-tax cut levels so you can't conclude for cetain that we moved the correct direction down the Laffer curve to balance tax rates and the rate of growth for the GDP.
     
  6. red states rule
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    red states rule Senior Member

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    Not to mention record home ownership, low unemployment, low inflation, good GDP numbers, strong consumer spending, and strong construction spending.

    The Dow may set an all time high. People will love their 401K statements when they look at them

    All this is bad news for the libs
     
  7. JeffWartman
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    JeffWartman Senior Member

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    That is not true. Tax cuts only help in certain circumstances, and in 2001 - 2003, there weren't good circumstances.

    You need to review some economics. The Laffer Curve, and the opinion of nearly every economist on the planet, differs with the idea that tax cuts are good for any economy whatsoever.

    Now, if tax revenues are getting so high, why can't we pay down the national debt? Because Bush and the GOP congress spend money like drunken sailors. Bush and the GOP Congress are anything BUT Conservative.

    How about we cut spending while this revenue growth continues and then we can pay down the debt? Sound like a plan?

    Why can't the fake Conservatives (GOP) see this?
     
  8. MtnBiker
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    MtnBiker Senior Member

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    Just for review;



    Taxes, Revenues, and the "Laffer Curve"

    JUDE WANNISKI
    Associate Editor
    The Wall Street Journal
    JUNE, 1978



    As Arthur Laffer has noted, "There are always two tax rates that yield the same revenues." When an aide to President Gerald Ford asked him once to elaborate, Laffer (who is Professor of Business Economics at the University of Southern California) drew a simple curve, shown on the next page, to illustrate his point. The point, too, is simple enough -- though, like so many simple points, it is also powerful in its implications.

    When the tax rate is 100 percent, all production ceases in the money economy (as distinct from the barter economy, which exists largely to escape taxation). People will not work in the money economy if all the fruits of their labors are confiscated by the government. And because production ceases, there is nothing for the 100-percent rate to confiscate, so government revenues are zero.

    On the other hand, if the tax rate is zero, people can keep 100 percent of what they produce in the money economy. There is no governmental "wedge" between earnings and after-tax income, and thus no governmental barrier to production. Production is therefore maximized, and the output of the money economy is limited only by the desire of workers for leisure. But because the tax rate is zero, government revenues are again zero, and there can be no government. So at a 0-percent tax rate the economy is in a state of anarchy, and at a 100-percent tax rate the economy is functioning entirely through barter.

    In between lies the curve. If the government reduces its rate to something less than 100 percent, say to point A, some segment of the barter economy will be able to gain so many efficiencies by being in the money economy that, even with near-confiscatory tax rates, after-tax production would still exceed that of the barter economy. Production will start up, and revenues will flow into the government treasury. By lowering the tax rate, we find an increase in revenues.

    On the bottom end of the curve, the same thing is happening. If people feel that they need a minimal government and thus institute a low tax rate, some segment of the economy, finding that the marginal loss of income exceeds the efficiencies gained in the money economy, is shifted into either barter or leisure. But with that tax rate, revenues do flow into the government treasury. This is the situation at point B. Point A represents a very high tax rate and very low production. Point B represents a very low tax rate and very high production. Yet they both yield the same revenue to the government.

    The same is true of points C and D. The government finds that by a further lowering of the tax rate, say from point A to point C, revenues increase with the further expansion of output. And by raising the tax rate, say from point B to point D, revenues also increase, by the same amount.

    Revenues and production are maximized at point E. If, at point E, the government lowers the tax rate again, output will increase, but revenues will fall. And if, at point E, the tax rate is raised, both output and revenue will decline. The shaded area is the prohibitive range for government, where rates are unnecessarily high and can be reduced with gains in both output and revenue.



    Tax rates and tax revenues

    The next important thing to observe is that, except for the 0-percent and 100-percent rates, there are no numbers along the "Laffer curve." Point E is not 50 percent, although it may be, but rather a variable number: it is the point at which the electorate desires to be taxed. At points B and D, the electorate desires more government goods and services and is willing -- without reducing its productivity -- to pay the higher rates consistent with the revenues at point E. And at points A and C, the electorate desires more private goods and services in the money economy, and wishes to pay the lower rates consistent with the revenues at point E. It is the task of the statesman to determine the location of point E, and follow its variations as closely as possible.

    This is true whether the political leader heads a nation or a family. The father who disciplines his son at point A, imposing harsh penalties for violating both major and minor rules, only invites sullen rebellion, stealth, and lying (tax evasion, on the national level). The permissive father who disciplines casually at point B invites open, reckless rebellion: His son’s independence and relatively unfettered growth comes at the expense of the rest of the family. The wise parent seeks point E, which will probably vary from one child to another, from son to daughter.

    For the political leader on the national level, point E can represent a very low or a very high number. When the nation is at war, point E can approach 100 percent. At the siege of Leningrad in World War II, for example, the people of the city produced for 900 days at tax rates approaching 100 percent. Russian soldiers and civilians worked to their physical limits, receiving as "pay" only the barest of rations. Had the citizens of Leningrad not wished to be taxed at that high rate, which was required to hold off the Nazi army, the city would have fallen.

    The number represented by point E will change abruptly if the nation is at war one day and at peace the next. The electorate's demand for military goods and services from the government will fall sharply; the electorate will therefore desire to be taxed at a lower rate. If rates are not lowered consistent with this new lower level of demand, output will fall to some level consistent with a point along the prohibitive side of the "Laffer curve." Following World War I, for example, the wartime tax rates were left in place and greatly contributed to the recession of 1919-20. Warren G. Harding ran for President in 1920 on a slogan promising a "return to normalcy" regarding tax rates; he was elected in a landslide. The subsequent rolling back of the rates ushered in the economic expansion of the "Roaring Twenties." After World War II, wartime tax rates were quickly reduced, and the American economy enjoyed a smooth transition to peacetime. In Japan and West Germany, however, there was no adjustment of the rates; as a result, postwar economic recovery was delayed. Germany's recovery began in 1948, when personal income-tax rates were reduced under Finance Minister Ludwig Erhard, and much of the government regulation of commerce came to an end. Japan's recovery did not begin until 1950, when wartime tax rates were finally rolled back. In each case, reduced rates produced increased revenues for the government. The political leader must fully appreciate the distinction between tax rates and tax revenues to discern the desires of the electorate.

    The easiest way for a political leader to determine whether an increase in rates will produce more rather than less revenues is to put the proposition to the electorate. It is not enough for the politician to propose an increase from, say, point B to point D on the curve. He must also specify how the anticipated revenues will be spent. When voters approve a bond issue for schools, highways, or bridges, they are explicitly telling the politician that they are willing to pay the high tax rates required to finance the bonds. In rejecting a bond issue, however, the electorate is not necessarily telling the politician that taxes are already high enough, or that point E (or beyond) has been reached. The only message is that the proposed tax rates are too high a price to pay for the specific goods and services offered by the government.

    Only a tiny fraction of all government expenditures are determined in this fashion, to be sure. Most judgments regarding tax rates and expenditures are made by individual politicians, Andrew Mellon became a national hero for engineering the rate reductions of the 1920s, and was called "the greatest Treasury Secretary since Alexander Hamilton." The financial policies of Ludwig Erhard were responsible for what was hailed as "an economic miracle" -- the postwar recovery of Germany. Throughout history, however, it has been the exception rather than the rule that politicians, by accident or design, have sought to increase revenues by lowering rates.

    [​IMG]

    http://www.polyconomics.com/searchbase/02-12-99.html
     
  9. Hamiltonian
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    It's a pretty good article, but I disagree at a key point.

    The idea of the Laffer Curve is to maximize revenue. I made it percent of GDP to analylze it in this short term and it's growth rate. In an ideal world, people would maximize the GDP for the government, but as with most ideal cases, this isn't true. People don't ask what they can do for this country. People will always want lower taxes, unless they see them being put to stem some impending doom like a Nazi Army surrounding their city, because they want to maximize their own utility instead of maximizing the government's. Therefore I see the government basically never maximizing their income (or similarly balancing the budget).

    Now the other option is totalitarianism or a planned economy (Communism) which of course is a much worse evil than government debt, but with a capitalist democratic government I forsee budget defecits and low taxes, excluding exception circumstances, but no exceptional circumstances that I can see as possible for the US. If we do have a surplus like we did breifly under Clinton, the next president will come along and say, why not cut taxes, and who is going to vote against cutting taxes?
     
  10. red states rule
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    red states rule Senior Member

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    I agree, spenidn ned to be cut. Why should taxpayer money be going to the Rock and Roll Hall of Fame?

    However, tax cuts do work everytime. They worked for JFK, Ronald Reagan, and they are workign for Pres Bush.

    It drives libs nuts to see a booming economy, falling gas prices, increasing consumer confidence, and low unemployment.

    I know Republicans are working when the liberal media "reports" falling gas prices might spur inflation. I thought rising gas prices would cause inflation.
     

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