The Great Tax Lie

[Toro]

Tax rate reductions increase tax revenues. This truth has been proved at both state and federal levels, including by President Bush's 2003 tax cuts on income, capital gains and dividends. Those reductions have raised federal tax receipts by $785 billion, the largest four-year revenue increase in U.S. history. In fiscal 2007, which ended last month, the government took in 6.7% more tax revenues than in 2006.

These increases in tax revenue have substantially reduced the federal budget deficits. In 2004 the deficit was $413 billion, or 3.5% of gross domestic product. It narrowed to $318 billion in 2005, $248 billion in 2006 and $163 billion in 2007. That last figure is just 1.2% of GDP, which is half of the average of the past 50 years.

Lower tax rates have be so successful in spurring growth that the percentage of federal income taxes paid by the very wealthy has increased. According to the Treasury Department, the top 1% of income tax filers paid just 19% of income taxes in 1980 (when the top tax rate was 70%), and 36% in 2003, the year the Bush tax cuts took effect (when the top rate became 35%). The top 5% of income taxpayers went from 37% of taxes paid to 56%, and the top 10% from 49% to 68% of taxes paid. And the amount of taxes paid by those earning more than $1 million a year rose to $236 billion in 2005 from $132 billion in 2003, a 78% increase.

Finally, another inconvenient truth is that there have been 49 consecutive months of job growth as a result of the economic expansion induced by President Bush's 2003 tax rate reductions.


http://opinionjournal.com/columnists/pdupont/?id=110010798

http://www.treas.gov/press/releases/reports/revenue growth.jpg

http://www.cato.org/testimony/ct-sm03182003.html

http://www.freedomworks.org/informed/issues_template.php?issue_id=2685

Revenues increased ....

All your sources are from partisan cheeerleaders, so there is no surprise there.

This stuff just drives me crazy.

Here's the image from the Treasury

Tax cuts have a lagged effect. What this means is that when you get your tax cut, growth does not immediately began turning around. It takes 6 to 18 months before the stimulus kicks in. So the fact that the economy started turning before the lagged effect kicks in validates that the Bush tax cuts did not turn around the economy.

And I'll repeat Arthur Laffer - the father of supply-side economics - doubts the Bush tax cuts increased revenues.

I also find a disturbing lack of faith regarding the American people by the supply-side evangelicals. Its not the industriousness and the inventiveness of the American people that is the reason for an economy growing out of a cyclical decline. No, its when you cut marginal tax rates 3%.

 

[Toro]

That's more a testament to the overall lack of influence ANY Federal fiscal policy has on the economy. These checks are going to have a depressingly SMALL impact on the economy because they don't represent enough money injected into the system to make a difference. Tax cuts DO, over time, INCREASE Federal revenue, but not by much, because these cuts don't ever amount to much. Cutting Capital Gains tax, for instance from 28% to 15% is really pissing into the wind. American marginal tax rates are low, and don't move much. Now moving those marginal rates from today back to 50% would probably put is in a depression rivaling that of the 1930's, because they likely wouldn't open up all the deductions we used to enjoy back in the 1980's...

Bottom line, for fiscal policy to have a real impact it needs to be applied in doses for beyond what politicians are ever willing to do. The economy is largely INDEPENDENT of any one country's economic policy because it is so huge that no one country, even the US, can really impact enough to matter by their country's economic policy.

I only cringe when I hear people blaming this President or that Congress for whatever economic ill they perceive, because those people simply don't matter. The Federal Reserve has about the only real power over the economy and even that is limited as we have seen as these rate cuts have had almost NO intended effect on anything other than to tank the dollar.

Thank you. I agree with everything you write here and am repping you for it.

 

[jreeves]

All your sources are from partisan cheeerleaders, so there is no surprise there.

This stuff just drives me crazy.

Here's the image from the Treasury

Tax cuts have a lagged effect. What this means is that when you get your tax cut, growth does not immediately began turning around. It takes 6 to 18 months before the stimulus kicks in. So the fact that the economy started turning before the lagged effect kicks in validates that the Bush tax cuts did not turn around the economy.

And I'll repeat Arthur Laffer - the father of supply-side economics - doubts the Bush tax cuts increased revenues.

I also find a disturbing lack of faith regarding the American people by the supply-side evangelicals. Its not the industriousness and the inventiveness of the American people that is the reason for an economy growing out of a cyclical decline. No, its when you cut marginal tax rates 3%.

Of course they are partisian because they don't agree with your viewpoint. I showed you actual evidence, you show me for the most part projections. Which of these is more convincing....

 

[JeffWartman]

Tax rate reductions increase tax revenues. This truth has been proved at both state and federal levels, including by President Bush's 2003 tax cuts on income, capital gains and dividends. Those reductions have raised federal tax receipts by $785 billion, the largest four-year revenue increase in U.S. history. In fiscal 2007, which ended last month, the government took in 6.7% more tax revenues than in 2006.

These increases in tax revenue have substantially reduced the federal budget deficits. In 2004 the deficit was $413 billion, or 3.5% of gross domestic product. It narrowed to $318 billion in 2005, $248 billion in 2006 and $163 billion in 2007. That last figure is just 1.2% of GDP, which is half of the average of the past 50 years.

Lower tax rates have be so successful in spurring growth that the percentage of federal income taxes paid by the very wealthy has increased. According to the Treasury Department, the top 1% of income tax filers paid just 19% of income taxes in 1980 (when the top tax rate was 70%), and 36% in 2003, the year the Bush tax cuts took effect (when the top rate became 35%). The top 5% of income taxpayers went from 37% of taxes paid to 56%, and the top 10% from 49% to 68% of taxes paid. And the amount of taxes paid by those earning more than $1 million a year rose to $236 billion in 2005 from $132 billion in 2003, a 78% increase.

Finally, another inconvenient truth is that there have been 49 consecutive months of job growth as a result of the economic expansion induced by President Bush's 2003 tax rate reductions.


http://opinionjournal.com/columnists/pdupont/?id=110010798

http://www.treas.gov/press/releases/reports/revenue growth.jpg

http://www.cato.org/testimony/ct-sm03182003.html

http://www.freedomworks.org/informed/issues_template.php?issue_id=2685

Revenues increased ....

Irrelevant. If you care about limited government, increasing tax revenues should be the last thing you care about.

 

[Zoomie1980]

Thank you. I agree with everything you write here and am repping you for it.

Bill Clinton was no more responsible for the Tech Boom and Bush was for it's INEVITABLE bust. Bush was also not the reason why housing prices defied all reason on both coasts nor why lenders gave out so many dubious loans, nor is he responsible for its consequences.

Fiscal policy simply DOES NOT MATTER. Obama proved what an idiot he was by trying to blame the recession on Bush's "economic leadership". Presidents don't have "economic leadership". They don't have "economic impact" either.

Berancke was apparently quoted at a typical Washington evening cocktail gathering to be "depressed" that his interest rate cuts appear to have been ignored by the lenders not lowering mortgage rates in kind to spur the real-estate market... Meaning he is going through the humbling experience of yet another federal bureaucratic hack coming to the realization that they really don't matter... The ONLY thing he's done is tank the dollar....

You know what I'm going to do with the rebate check? Put on a credit card balance..all of it. Just what they DON'T want you do. Clue to the politicians!!! We are in a recession because WE HAVE OVER BORROWED. What are going to be doing for a while now? PAY DOWN OUR CREDIT!!!! If you gave us all 30,000 instead of 1200 or so we might spend some, but IT ISN'T ENOUGH TO MATTER, which is ALWAYS THE CASE!!!!

 

[Larkinn]

Of course they are partisian because they don't agree with your viewpoint. I showed you actual evidence, you show me for the most part projections. Which of these is more convincing....

Wait, what?

http://usmessageboard.com/showpost.php?p=652644&postcount=2

Pot, kettle.

 

[jreeves]

Wait, what?

http://usmessageboard.com/showpost.php?p=652644&postcount=2

Pot, kettle.

Weak, real weak....that was one site....my evidence was mutiple sites.

 

[Larkinn]

Weak, real weak....that was one site....my evidence was mutiple sites.

Actually that was a nobel prize winning economist which you called partisan because you didn't like the findings. And now you are accusing other people of that. Hence my comment.

 

[jreeves]

Actually that was a nobel prize winning economist which you called partisan because you didn't like the findings. And now you are accusing other people of that. Hence my comment.

A Nobel prize winning economist that didn't take into account the revenues generated by the war.

 

[Larkinn]

A Nobel prize winning economist that didn't take into account the revenues generated by the war.

When discussing expenditures? No, he didn't. Gee, I wonder why.

 

[jreeves]

When discussing expenditures? No, he didn't. Gee, I wonder why.

Well if you spend 10 dollars and it generates 5 dollars the cost is 5 dollars not 10 dollars....

 

[Toro]

Of course they are partisian because they don't agree with your viewpoint. I showed you actual evidence, you show me for the most part projections. Which of these is more convincing....

It ain't me who is the political partisan in this discussion.

You have not shown any empirical evidence. Instead, you linked to articles by people with a very strong political pre-disposition engaging in spin and who do not understand or are misrepresenting the causal link you are trying to pawn off as evidence.

And I'll repeat

Republican economists do not believe what you are saying.
Bush's former economic adviser says that lost revenues from tax cuts are not generated by higher economic activity.
The father of supply-side economics - Arthur Laffer - doubts the efficacy of Bush tax cuts regarding fiscal revenues.

 

[Toro]

Bill Clinton was no more responsible for the Tech Boom and Bush was for it's INEVITABLE bust. Bush was also not the reason why housing prices defied all reason on both coasts nor why lenders gave out so many dubious loans, nor is he responsible for its consequences.

Fiscal policy simply DOES NOT MATTER. Obama proved what an idiot he was by trying to blame the recession on Bush's "economic leadership". Presidents don't have "economic leadership". They don't have "economic impact" either.

Berancke was apparently quoted at a typical Washington evening cocktail gathering to be "depressed" that his interest rate cuts appear to have been ignored by the lenders not lowering mortgage rates in kind to spur the real-estate market... Meaning he is going through the humbling experience of yet another federal bureaucratic hack coming to the realization that they really don't matter... The ONLY thing he's done is tank the dollar....

You know what I'm going to do with the rebate check? Put on a credit card balance..all of it. Just what they DON'T want you do. Clue to the politicians!!! We are in a recession because WE HAVE OVER BORROWED. What are going to be doing for a while now? PAY DOWN OUR CREDIT!!!! If you gave us all 30,000 instead of 1200 or so we might spend some, but IT ISN'T ENOUGH TO MATTER, which is ALWAYS THE CASE!!!!

Political people generally over-emphasize the importance of politicians in the economy but I disagree that fiscal policy never matters for two reasons. First, countries that run a disciplined fiscal policy attract more capital. Second, countries that borrow and spend do incur a stimulus, but the effectiveness of that stimulus varies widely. For example, if demand is frozen, then government spending can be enormously effective. But if demand is not a problem, then it is often ineffective or counter-productive and inflationary, which is harmful over the long-run.

Clinton (and the Republican Congress) get credit for moving the country's fiscal balance in the right. Even if they had not been a beneficiary of the tech boom and the abnormal capital gains receipts, they still improved the structural position of the country.

I do agree in general with your argument that people over-state the importance of politicians in the health of the economy. The recession was not Bush's fault. And the recession we are going into is not Bush's fault either. But the limited flexibility the government now has to deal with the upcoming recession is Bush's fault, because governments do have some influence.

 

[Dr Grump]

Presidents don't have "economic leadership". They don't have "economic impact" either

Total naive poppycock stated by someone who can only be a Bush apologist. You think if Bush mentions any kind of economic statement with regard to the US economy, economists and banks et al are just gonna sit there scratching their arses? Bush so much as farts an economic opinion there is going to be a reaction. Christ, do you actually believe some of the crap you post??

 

[jreeves]

It ain't me who is the political partisan in this discussion.

You have not shown any empirical evidence. Instead, you linked to articles by people with a very strong political pre-disposition engaging in spin and who do not understand or are misrepresenting the causal link you are trying to pawn off as evidence.

And I'll repeat

Republican economists do not believe what you are saying.
Bush's former economic adviser says that lost revenues from tax cuts are not generated by higher economic activity.
The father of supply-side economics - Arthur Laffer - doubts the efficacy of Bush tax cuts regarding fiscal revenues.

It's simple, I made a statement, that the tax cuts generated more tax revenue. It is clearly shown in the posts that I have posted that tax reciepts increased. It is a Fact, tax revenue grew after the tax cuts. You can argue that the tax revenue growing wasn't due to tax cuts, but it is a fact tax revenue increased after the Bush tax cuts.

 

[Toro]

It's simple, I made a statement, that the tax cuts generated more tax revenue. It is clearly shown in the posts that I have posted that tax reciepts increased. It is a Fact, tax revenue grew after the tax cuts. You can argue that the tax revenue growing wasn't due to tax cuts, but it is a fact tax revenue increased after the Bush tax cuts.

Sure. And the tax cuts and increased spending increased economic activity. That's classic Keynesian economics. But it is a fact that revenues went up because the economy went up. It is not a fact that the government revenues are higher today had there been no tax cut. The tax cuts have to at least some extent increased growth after the economy was coming out of a recession.

The simple fact is that the American economy has grown by about 2% per capita after inflation since WWII, whether taxes went up or down. Why? Because the American people are remarkably dynamic and industrious, and this country has institutions and a culture that are pro-growth. That is a testament to the American people, not to tax policy, which has effected growth only on the margins.

 

[jreeves]

Sure. And the tax cuts and increased spending increased economic activity. That's classic Keynesian economics. But it is a fact that revenues went up because the economy went up. It is not a fact that the government revenues are higher today had there been no tax cut. The tax cuts have to at least some extent increased growth after the economy was coming out of a recession.

The simple fact is that the American economy has grown by about 2% per capita after inflation since WWII, whether taxes went up or down. Why? Because the American people are remarkably dynamic and industrious, and this country has institutions and a culture that are pro-growth. That is a testament to the American people, not to tax policy, which has effected growth only on the margins.

Well if the economy has grown by 2% since WWII after inflation is factored in, then what would you say about a.....

Those reductions have raised federal tax receipts by $785 billion, the largest four-year revenue increase in U.S. history. In fiscal 2007, which ended last month, the government took in 6.7% more tax revenues than in 2006.

Don't you think the growth of 6.7% could be partially due to the fact of Tax cuts.

 

[JeffWartman]

Well if the economy has grown by 2% since WWII after inflation is factored in, then what would you say about a.....

Those reductions have raised federal tax receipts by $785 billion, the largest four-year revenue increase in U.S. history. In fiscal 2007, which ended last month, the government took in 6.7% more tax revenues than in 2006.

Don't you think the growth of 6.7% could be partially due to the fact of Tax cuts.

I don't think you're understand what Toro is saying:

Arthur Laffer, the man who is credited with popularizing the idea that cuts in tax rates, to a point, will increase revenues, is on record stating that the Bush tax cuts were not the reason the revenues increased.

If you read Laffer, or just look at the goddamn curve, you'd know that cutting tax rates to a certain point will increase revenues. What the Laffer Curve does not illustrate is the idea that every time you cut tax rates, revenues will increase.

Again, you miss the point: if you claim to favor limited government, you shouldn't give a rats ass about tax revenues. I believe in restoring government to it's Constitutional limits...therefore, I could care less about increasing revenues, and it's intellectually lazy to claim to want to reduce government but scream to high heaven about increasing revenues. It reeks of brainwashing.

 

[jreeves]

I don't think you're understand what Toro is saying:

Arthur Laffer, the man who is credited with popularizing the idea that cuts in tax rates, to a point, will increase revenues, is on record stating that the Bush tax cuts were not the reason the revenues increased.

If you read Laffer, or just look at the goddamn curve, you'd know that cutting tax rates to a certain point will increase revenues. What the Laffer Curve does not illustrate is the idea that every time you cut tax rates, revenues will increase.

Again, you miss the point: if you claim to favor limited government, you shouldn't give a rats ass about tax revenues. I believe in restoring government to it's Constitutional limits...therefore, I could care less about increasing revenues, and it's intellectually lazy to claim to want to reduce government but scream to high heaven about increasing revenues. It reeks of brainwashing.

I never stated that endless tax cuts will increase tax revenue. I stated that the Bush tax cuts increased tax revenue. She stated that there is a "lag effect" well you can look at the previous posts to see where the greatest increase in tax revenues. Approximately 12 months after the Bush Tax cuts. I am for smaller government, I agree governmental spending needs to be held in check. But saying that the tax cuts didn't increase tax revenues is simply not based on fact. Yes I do care about tax revenues, you can't say you don't care a rat's ass about them. If you don't balance the budget wether it be through a decrease in governmental spending or increased tax revenue then the interest of the national debt will consume this country.

 

[JeffWartman]

Yes I do care about tax revenues, you can't say you don't care a rat's ass about them. If you don't balance the budget wether it be through a decrease in governmental spending or increased tax revenue then the interest of the national debt will consume this country.

We're talking about cutting government. You can't express a desire to cut government and a desire for the government to increase tax revenues at the same time. It's counterproductive.