"Tax Cuts Don't Pay for Themselves" - GOP Economists

[KissMy]

Once you earn above standard deduction amount you should have to pay just like earned income. This tax money goes to pay someone else who will in turn invest it just as the tax payer would have. the investment is not lost.

too stupid!! that is identical to saying the money is not lost when it goes to China or Saudi Arabia because it is ultimately spent in America. You want the people who know how to earn capital gains to have more not less capital to invest.

People who get welfare checks don't make investments you blind dumb liberal illiterate!!

Not all tax money goes to welfare checks. A lot goes to middle class who put it into their savings account, IRA's or pensions which wind up right back in the hands of professional investors. Also money spent by the poor also winds up back in investors hands through various routs.

10 Wallstreet investment bank CEO's are not nearly as capible of investing to advance civilization as the minds of mulitple millions of middle class investors are. People who actually work or research for a living discover better ways to do things thus inventing a better life for everyone. A Wallstreet banker behind a desk invents nothing except schemes to defraud workers of their earnings & inventions. Please name something a Wallstreet banker invented that advanced civilization. All they do is invest in already proven sucessful business.

Friends, family & fools are the ones who provide the seed money for the R&D of invention. If these people have no excess money to invest, there would be a lot less innovation. You must build the middle class to advance civilization & wealth for all. Steve Wozniak, Steve Jobs, Bill Gates, Elon Musk, Nikola Tesla, Mark Zuckerberg, George Washington Carver & Henry Ford did not come from money & were not rich when they changed the world for the better. They got rich after they changed the world. Giving rich people money destroys innovation. Investing in hungry inventors is the secret to success. Wall street's "financial innovations" have wrecked the economy. To much money in to few hands kills productivity & innovation. To much greed is not good.

[ame="http://www.youtube.com/watch?v=u6XAPnuFjJc"]The surprising truth about what motivates us[/ame]

 

[kiwiman127]

As you can see, total and per capita income tax revenues adjusted for inflation were lower in 2008 than they were at the end of 2001.

tax.com: Tax Revenues: Awful, Any Way You Look at the Numbers

Even if we take your chart at face value Toro, there are factors in there that have to be considered.

1. 9/11 triggered a deep but fairly short lived recession.
2. Katrina also had a recessionary effect on several aspects of the economy.
3. The housing bubble burst and resulting market crash would send the best of economies into a tail spin.

Obama has had none of these situations to deal with, but he did inherit the recession. He has cut some taxes yes, but not in any areas that would have significantly stimulated economic activity that creates jobs, and he continues to threaten the kinds of taxes that kills jobs, most especially in periods of recession or stagnant economic growth.

It is obvous if you look at behavior that the Bush tax policies did have a very real positive affect on the economy and it was going very well until the housing bubble started losing air by early 2008 and completely burst that fall. The Bush era is not totally blameless in all that, but the Bush administration was not the origin of it, nor the author of the policies that created it.

It gets rather complicated, but a study of macroeconomics (with a decent instructor) will show that the kinds of tax relief the Bush policies provide do generate economic activity and promote economic growth, but not forever. There will be a surge of activity, sort of like water sloshing back and forth in a basin, but it will eventually level out and lose momentum. However, the level that it settles out will almost always be at a higher level than when the stimulus started.

Government spending (Keynesian) also has to be specifically targeted at areas in which economic growth promotes hiring and jobs, must be short lived and must be quickly repaid with new revenues generated. Obama's stimulus package was promoted as Keynesian, but it wasn't because there was no plan to repay the money. And because almost none of it was spent in areasthat generate economic activities that promote hiring, almost all of it was completely wasted,the unacceptable deficit created cost us our stellar credit rating, and the irreponsible spending has not abated. And as more and more people drop out of the workforce, the treasury revenues decrease even as the spending increases.

There is zero reason to believe a second stimulus would have any different effect.

And it is a fact that the Bush tax cuts did not create the deficits or the recession that Obama inherited in January 2009. Bush had near full employment for most of the time and that is how you generate treasury revenues. Excess spending and irresponsible government guarantees and funding created both the deficits and the 2008 recession.

Does the below graph look like anything like "near full employment"? Look at the participation rate in 2000 and then look at GWB's at it's highest peak. Sorry, it's just a myth.

 

[Quantum Windbag]

Personally, I think the idea that we have to pay for tax cuts is the single most bizarre and surreal aspect of the political aspect. Anyone that thinks we need to pay for tax cuts probably refuses to shop at any store that has a 50% off sale.

This is an argument about semantics and not relevant to the underlying issue.

It is not semantics to argue that you have to pay for tax cuts. You can easily argue that cutting taxes does not always increase revenue without ever using the word pay. In fact, I actually agree that cutting taxes does not always mean an increase in revenue, just like raising them does not always lead to a decrease.

The simple truth is we have to pay for spending, not revenue.

 

[Rozman]

Let's keep spending like we have the money to spend.
And let's take more money out of the private sector and give it to government to spend.
Yeh this makes a lot of sense.

 

[editec]

Government spending increases economic output by raising GDP. Whether this is the best means of increasing GDP, best for the economy, best for the taxpayer, what's the opportunity cost etc. etc. is a more complicated question, but without question, government spending has a positive effect on GDP.

You do know what the 'P' in GDP stands for don't you? What exactley does the government produce that spurs the economy?

Couple things...the government social services produces consumers, and those consumers buy from private businesses thus shoring up their economies,

And then, too, consumers who consume and businesses that provide to those consumers both help create public CONFIDENCE which then generates still more spending AND still more investments to create still more businesses and thus still more economic activity.

That's the theory and in some cases (like cases of deflationary depression) such investmenting into the PEOPLE makes good sense.

 

[Toro]

Personally, I think the idea that we have to pay for tax cuts is the single most bizarre and surreal aspect of the political aspect. Anyone that thinks we need to pay for tax cuts probably refuses to shop at any store that has a 50% off sale.

This is an argument about semantics and not relevant to the underlying issue.

It is not semantics to argue that you have to pay for tax cuts. You can easily argue that cutting taxes does not always increase revenue without ever using the word pay. In fact, I actually agree that cutting taxes does not always mean an increase in revenue, just like raising them does not always lead to a decrease.

The simple truth is we have to pay for spending, not revenue.

You just made a semantic argument. You are arguing what the word "pay" means.

The empirical evidence is that income tax cuts don't pay for themselves except perhaps from extremely high levels.

 

[Wiseacre]

Another way to look at it - value. Our economy is essentially based on trade, giving up something to get something, with each side of the transaction getting what they perceive is equal or higher value. In this case, the gov't gets less revenue for more benefit to it's citizens. So - what is the value of a tax cut?

Well, there's a political benefit to the politicians, no doubt about that but what good does it do to the rest of us? Lefties have long advocated that theory that putting more money into the hands of the middle and lower income folks would result in more spending and economic growth. Which is precisely what a tax cut is, more spending money for those who pay less to the gov't in taxes. So, the question becomes "can the gov't do a more effective job of spending that money than the people who earned it?". I think not, I would argue that society will get more benefit if they get to keep more of their own money than if they give it to the gov't.

The other part of the equation is how much less revenue does the gov't get? That answer is not linear, you cannot say that a 5% reduction or increase in the tax rates means the revenue received will be exactly 5% plus or minus. That's because people's behavior changes as the tax rate goes up or down. As the rate goes up, people will find ways to avoid paying more taxes, legally or otherwise. And as the rate is dropped they are more likely to use it more productively to make a profit and thereby grow the economy. It is true that the extent to which this phenomena play out depends on other factors than just the tax rate, but in general terms a change in the tax rate does incentivize or disincentivize investments and economic growth.

The other part of this is which tax rates you change. If you raise the marginal tax rate, Warren Buffet won't care, cuz the vast majority of his income is capital gains. But if you raise the cap gains tax, he'll care a lot about that, as will most of the other millionaires and billionaires. Same deal as the marginal tax rate if you lower it except in reverse, you incentivize more investment in starting new businesses or expanding existing ones. As before, the extent to which that happens depends on other factors besides the cap gains tax rate. There were times like in the early 90s when the marginal rate or the cap gains rate was raised and it made little difference, people were gung ho to make some moola and the effects of the Clinton tax hike was minimal.

But that may not be the case today, in this economy it makes little sense to enact tax hikes that could detract from economic growth and more jobs. Likewise I am not too sure a tax cut would help a whole lot either, we've got plenty of money out there and very low interest rates; there's gotta be some other factors weighing us down. We need to be looking at the big picture and see what we can do to change attitudes for business and consumption.

 

[Foxfyre]

As you can see, total and per capita income tax revenues adjusted for inflation were lower in 2008 than they were at the end of 2001.

tax.com: Tax Revenues: Awful, Any Way You Look at the Numbers

Even if we take your chart at face value Toro, there are factors in there that have to be considered.

1. 9/11 triggered a deep but fairly short lived recession.
2. Katrina also had a recessionary effect on several aspects of the economy.
3. The housing bubble burst and resulting market crash would send the best of economies into a tail spin.

Obama has had none of these situations to deal with, but he did inherit the recession. He has cut some taxes yes, but not in any areas that would have significantly stimulated economic activity that creates jobs, and he continues to threaten the kinds of taxes that kills jobs, most especially in periods of recession or stagnant economic growth.

It is obvous if you look at behavior that the Bush tax policies did have a very real positive affect on the economy and it was going very well until the housing bubble started losing air by early 2008 and completely burst that fall. The Bush era is not totally blameless in all that, but the Bush administration was not the origin of it, nor the author of the policies that created it.

It gets rather complicated, but a study of macroeconomics (with a decent instructor) will show that the kinds of tax relief the Bush policies provide do generate economic activity and promote economic growth, but not forever. There will be a surge of activity, sort of like water sloshing back and forth in a basin, but it will eventually level out and lose momentum. However, the level that it settles out will almost always be at a higher level than when the stimulus started.

Government spending (Keynesian) also has to be specifically targeted at areas in which economic growth promotes hiring and jobs, must be short lived and must be quickly repaid with new revenues generated. Obama's stimulus package was promoted as Keynesian, but it wasn't because there was no plan to repay the money. And because almost none of it was spent in areasthat generate economic activities that promote hiring, almost all of it was completely wasted,the unacceptable deficit created cost us our stellar credit rating, and the irreponsible spending has not abated. And as more and more people drop out of the workforce, the treasury revenues decrease even as the spending increases.

There is zero reason to believe a second stimulus would have any different effect.

And it is a fact that the Bush tax cuts did not create the deficits or the recession that Obama inherited in January 2009. Bush had near full employment for most of the time and that is how you generate treasury revenues. Excess spending and irresponsible government guarantees and funding created both the deficits and the 2008 recession.

Does the below graph look like anything like "near full employment"? Look at the participation rate in 2000 and then look at GWB's at it's highest peak. Sorry, it's just a myth.

Unemployment rate

Bureau of Labor Statistics Data

And we know Obama's unemployment figures aren't really kosher because we are still losing more jobs every single week than are being created. We have almost 50% of the work force idle or severely underemployed. In a real recovery, that should be substantially better.

This chart reflects the mild recession we were entering when George W. Bush was inaugurated, and it was much exacerbated by 9/11 eight months into his administration. Katrina was also a setback. Nevertheless the Bush economic policy did generate jobs and economic growth once it kicked in and sustained that growth until the housing bubble burst of 2008. Take 9/11, Katrina, and the housing bubble burst out of the equation and the Bush economic record would look very good. And I would still have criticied President Bush for how he spent my money in a lot of areas.

Obama has had none of those scenarios to deal with. If his policies were at all workable, starting from such a low point in 2009 he should have produced significant improvement. He hasn’t.

 

[Quantum Windbag]

This is an argument about semantics and not relevant to the underlying issue.

It is not semantics to argue that you have to pay for tax cuts. You can easily argue that cutting taxes does not always increase revenue without ever using the word pay. In fact, I actually agree that cutting taxes does not always mean an increase in revenue, just like raising them does not always lead to a decrease.

The simple truth is we have to pay for spending, not revenue.

You just made a semantic argument. You are arguing what the word "pay" means.

The empirical evidence is that income tax cuts don't pay for themselves except perhaps from extremely high levels.

Simple question, how do we "pay" for lost revenue?

 

[Toro]

It is not semantics to argue that you have to pay for tax cuts. You can easily argue that cutting taxes does not always increase revenue without ever using the word pay. In fact, I actually agree that cutting taxes does not always mean an increase in revenue, just like raising them does not always lead to a decrease.

The simple truth is we have to pay for spending, not revenue.

You just made a semantic argument. You are arguing what the word "pay" means.

The empirical evidence is that income tax cuts don't pay for themselves except perhaps from extremely high levels.

Simple question, how do we "pay" for lost revenue?

We "pay" for not having the services the taxes paid for.

The typical conservative argument now is "It's the people's money, not the gubmint's!" But that demonstrates a limited understanding of language. Contrary to what those who make that argument think, the term "pay" is used in many contexts. "Pay" doesn't just mean the monetary exchange of goods and services under a legal code that defines physical and intangible property. It also means "to compensate for." So, when you go out on a bender on one night getting hammered, you "pay" for it the next day by being hung over. If you cheat on your wife, you "pay" for it when she catches you. If you cut taxes to zero and get rid of the police department, you "pay" for it in an increase in crime. In the English language, the term "pay" means the same thing in many different contexts. It doesn't just apply to a narrow monetary exchange nor within the confines of a political philosophy.

 

[Quantum Windbag]

You just made a semantic argument. You are arguing what the word "pay" means.

The empirical evidence is that income tax cuts don't pay for themselves except perhaps from extremely high levels.

Simple question, how do we "pay" for lost revenue?

We "pay" for not having the services the taxes paid for.

The typical conservative argument now is "It's the people's money, not the gubmint's!" But that demonstrates a limited understanding of language. Contrary to what those who make that argument think, the term "pay" is used in many contexts. "Pay" doesn't just mean the monetary exchange of goods and services under a legal code that defines physical and intangible property. It also means "to compensate for." So, when you go out on a bender on one night getting hammered, you "pay" for it the next day by being hung over. If you cheat on your wife, you "pay" for it when she catches you. If you cut taxes to zero and get rid of the police department, you "pay" for it in an increase in crime. In the English language, the term "pay" means the same thing in many different contexts. It doesn't just apply to a narrow monetary exchange nor within the confines of a political philosophy.

Not having services.

This is not a conservative/liberal position here, this is simply common sense. You don't save money by buying something on sale, you save money by saving money. If you buy something on sale, and then spend that money on something else, you still have no money.

The same principle applies to government.

We do not pay for tax cuts, we pay for spending.

That does not mean the government should spend more money that it takes in, it just means that we need to pay for the spending, not the tax cuts.

By the way, government money is the money of the people. You can spin that all you want, but the simple fact is that unless the government takes money from people it doesn't have any.

 

[Toro]

Not having services.

This is not a conservative/liberal position here, this is simply common sense. You don't save money by buying something on sale, you save money by saving money. If you buy something on sale, and then spend that money on something else, you still have no money.

The same principle applies to government.

We do not pay for tax cuts, we pay for spending.

That does not mean the government should spend more money that it takes in, it just means that we need to pay for the spending, not the tax cuts.

By the way, government money is the money of the people. You can spin that all you want, but the simple fact is that unless the government takes money from people it doesn't have any.

Then you don't understand what the word "pay" means in its entirety. You are using it in a narrow and political context, as I stated above. If there is a jacket on sale, the sale ends and you buy it full price, you "pay" for waiting and not buying it on sale. "Pay" can be used in many contexts. People who make your argument only understand it one way.

And BTW, I agree with you that it is not the government's money.

 

[EdwardBaiamonte]

there's gotta be some other factors weighing us down. .

how about an anti business communist president who voted to the left of Bernie Sanders

How about Obamacare which mandates that business pay health insurance for full time employees?? IS it any wonder 2/3 of the new jobs in the last BLS report were part time!

how about a huge deficit that encourages foreigners to buy our debt instead of our products

how about liberal unions that have driven 30 million jobs off shore

how about the highest corporate taxes in the world??

how about a lying liberal government that wants higher and higher taxes as if liberal government can invent products and grow the economy!!

 

[Quantum Windbag]

Not having services.

This is not a conservative/liberal position here, this is simply common sense. You don't save money by buying something on sale, you save money by saving money. If you buy something on sale, and then spend that money on something else, you still have no money.

The same principle applies to government.

We do not pay for tax cuts, we pay for spending.

That does not mean the government should spend more money that it takes in, it just means that we need to pay for the spending, not the tax cuts.

By the way, government money is the money of the people. You can spin that all you want, but the simple fact is that unless the government takes money from people it doesn't have any.

Then you don't understand what the word "pay" means in its entirety. You are using it in a narrow and political context, as I stated above. If there is a jacket on sale, the sale ends and you buy it full price, you "pay" for waiting and not buying it on sale. "Pay" can be used in many contexts. People who make your argument only understand it one way.

And BTW, I agree with you that it is not the government's money.

I am not using it in a political context, you are. Here are all the definitions of the word pay that exist, I challenge you to find any of them that come close to paying for tax cuts.

Pay | Define Pay at Dictionary.com

Pay - Definition and More from the Free Merriam-Webster Dictionary

pay, n. : Oxford English Dictionary

pay, v.1 : Oxford English Dictionary

pay, v.2 : Oxford English Dictionary

 

[EdwardBaiamonte]

Couple things...the government social services produces consumers, and those consumers buy from private businesses thus shoring up their economies,

too stupid but 100% liberal.

1) If tax and spend worked recessions and depressions would be a thing of the past.

2) taking from the productive and giving to the unproductive depresses an economy obviously

3)an economy grows one way and way only and that is from new or improved products from the productive class.

See why we are positve a liberal will be slow, so very very slow?

 

[KissMy]

Couple things...the government social services produces consumers, and those consumers buy from private businesses thus shoring up their economies,

too stupid but 100% liberal.

1) If tax and spend worked recessions and depressions would be a thing of the past.

2) taking from the productive and giving to the unproductive depresses an economy obviously

3)an economy grows one way and way only and that is from new or improved products from the productive class.

See why we are positve a liberal will be slow, so very very slow?

When the productive become unproductive & start hording cash causing recession then tax & spend works. Tax cuts little to stimulate spending & hiring for someone bent on hording cash.

 

[EdwardBaiamonte]

When the productive become unproductive & start hording cash causing recession then tax & spend works.

too stupid!! why would stealing from the productive and giving to the unproductive work????? Its 100% idiotic but 100% liberal!!

Tax cuts do little to stimulate spending & hiring for someone bent on hording cash.

1) Its smart to hoard when you have a anti business communist president who had two communist parents and voted to the left of Bernie Sanders

2) if you steal from the productive class that hoards they will feel even more insecure, hoard even more, and be even less productive.
Now even a liberal can see how FDR and Obozo kept depressions going for so long!!

 

[Toddsterpatriot]

I must admit that I used to believe that tax cuts could pay for themselves;

they absolutely can. For example, you reduce the capital gains tax on venture capitalists, they have more money to fund more new ventures like Apple Google Intel and Facebook and the government has tons and tons of new revenue for eternity!!

There is no tax on investing. Only on gains at the end of an investment when it is sold. Investors do not reduce investing due to capital gains. I thought the market would soar when Bush cut capital gains tax in half, but it did not. The market & investment went down & money flowed into housing. Capital gains should be taxed just like ordinary income. Once you earn above standard deduction amount you should have to pay just like earned income. This tax money goes to pay someone else who will in turn invest it just as the tax payer would have. the investment is not lost.

This tax money goes to pay someone else who will in turn invest it just as the tax payer would have.

Yes! The increased tax revenues will go to Obama and will be invested in great companies.....like Solyndra!

 

[Toddsterpatriot]

Yeah tax revenuse were up during some of the Bush years due to the "investment" bubbles.
Not due to real growth.

Yeah tax revenuse were up during some of the Clinton years due to the "internet" bubbles.
Not due to real growth.

 

[Toro]

Not having services.

This is not a conservative/liberal position here, this is simply common sense. You don't save money by buying something on sale, you save money by saving money. If you buy something on sale, and then spend that money on something else, you still have no money.

The same principle applies to government.

We do not pay for tax cuts, we pay for spending.

That does not mean the government should spend more money that it takes in, it just means that we need to pay for the spending, not the tax cuts.

By the way, government money is the money of the people. You can spin that all you want, but the simple fact is that unless the government takes money from people it doesn't have any.

Then you don't understand what the word "pay" means in its entirety. You are using it in a narrow and political context, as I stated above. If there is a jacket on sale, the sale ends and you buy it full price, you "pay" for waiting and not buying it on sale. "Pay" can be used in many contexts. People who make your argument only understand it one way.

And BTW, I agree with you that it is not the government's money.

I am not using it in a political context, you are. Here are all the definitions of the word pay that exist, I challenge you to find any of them that come close to paying for tax cuts.

Pay | Define Pay at Dictionary.com

Pay - Definition and More from the Free Merriam-Webster Dictionary

pay, n. : Oxford English Dictionary

pay, v.1 : Oxford English Dictionary

pay, v.2 : Oxford English Dictionary

You are very much arguing from a political context. From a Marxist standpoint, the collective has a right to your labour, and that the collective pays when the individual receives a tax cut. Even if I agree with your political argument - which I do - it is still wrong from a linguistics standpoint.

From Webster

4
a : to make compensation for

To pay for our tax cuts, we will have to cut our police force and will have higher crime.

In the English language is the same as

To compensate for our tax cuts, we will have to cut our police force and will have higher crime.

Definition of COMPENSATE
transitive verb
1
: to be equivalent to : counterbalance

Compensate - Definition and More from the Free Merriam-Webster Dictionary

The counterbalance of tax cuts are fewer police. We "pay" for tax cuts by having less police. The term "pay" does not just fit within the political context of individual private property ownership, as you imply.