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Quick Hits
Posted by: Jon Henke on Friday, December 23, 2005

Paul Krugman makes a good point:

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It's true. Unless and until politicians will match tax cuts with near-equivalent spending cuts, there's just not a lot of coherent justification left for more tax cuts.

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Fortunately, there is at least one Republican with some interest in restraining spending. Pejman Yousefzadeh takes note of Mike Pence...
Whatever one thinks about the "Republican rejuvenation," the need for said rejuvenation and the policies underlying it, it is clear that Pence is a mover and a shaker in the best sense of the word. People may agree or disagree with him, but they are bound to take him seriously as a man of ideas and as a public figure with a serious interest in the issues. Of course, this interest comes with his responsibilities as the head of the RSC and of course, pragmatism will oftentimes have to triumph over ideological purity should Pence ascend to further heights in the House Republican leadership.

Still, it could fairly be said that Republicans could do worse in any upcoming leadership race than to turn to Pence.
More commentary about Mike Pence can be found at Human Events and the Washington Post. He's too theocratic for my tastes, but he's also a rare bird: a Republican taking an occassional stand against profligate spending. It would be good to see an ascendant Mike Pence in the House. (it doesn't hurt that he's been free speech-friendly on behalf of bloggers)

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David Sirota tries to teach us a lesson in economics...
You can't simultaneously argue that the workers are absolutely essential to the city's way of life, while also arguing that they should accept pension/benefit cuts. Because if something is that valuable to you, then you need to actually pay a premium for it.

Let's put it all in basic supply and demand economics - because that's what it really is. When a commodity is at a premium or "essential" to the market, the market pays a premium for it. ... But when that "invisible hand" suddenly starts working for workers, well, that's portrayed as treasonous.
This is a remarkably tendentious argument Sirota makes. Certainly, when demand is high and supply is limited, prices rise. And certainly, in New York, demand for transit is very high. But just how limited is the supply of people who can be trained to operate a bus, train or subway car? We're not talking about jobs that require Doctorate degrees here.

And you know what? I doubt David Sirota even believes what he writes. Unless Sirota is paying a "premium" for every meal he eats, every head of lettuce he buys, every glass of water he drinks—food and water is incalculably more essential than urban transit—then Sirota operates on the same laws of supply and demand as the rest of us, and not on those about which he writes.
 
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Comments
It’s easy for Krugman to propose off-sets and a balanced budget. He’s just an unaccountable editorialist for some East Coast newspaper. And not a very good one either.

He will feel no pain if he is wrong, his reputation is immune to his mistakes (he is not one to admit or correct them), and his anti-capitalist economics books will continue to sell.

Talk is cheap - Krugman should take a real chance, and run for office.
-Steve
 
Written By: Steve
URL: http://
It’s true. Unless and until politicians will match tax cuts with near-equivalent spending cuts, there’s just not a lot of coherent justification left for more tax cuts.
One wonders just where Krugman was during the Regana administration, where Congress, promised to cut spending, to match the tax cuts. During the Reagan years the Democrat-run Congress tacked up a buck sixty five for every dollar of increased tax revenue.

For it’s part, the revenue bolted up during those years, as you may recall because of the economic boom that the Reagan tax cuts brought about, of course.

Which may be the answer to your question, by the way... tax cuts as a rule, stimulate the economy.



 
Written By: Bithead
URL: http://bitheads.blogspot.com
during the Regana administration, where Congress, promised to cut spending, to match the tax cuts.
Citation, please. When did Congress promise to cut spending to match the tax cuts?
During the Reagan years the Democrat-run Congress tacked up a buck sixty five for every dollar of increased tax revenue.
Yeah, well, a significant portion of that was defense spending, insisted upon by Republicans. Let’s not pretend that Democrats were alone. Each was willing to spend in line with their priorities, and Reagan was willing to accept additional domestic spending, in exchange for additional defense spending.

I’d also note that Reagan raised taxes, if I recall correctly, for 5 years running.
For it’s part, the revenue bolted up during those years, as you may recall because of the economic boom that the Reagan tax cuts brought about, of course.
I was previously unaware of the period during the 1980s in which correlation was causation. I guess that means the Clinton tax hikes caused the boom in the 1990s! Huzzah!
tax cuts as a rule, stimulate the economy.
Of course they do. But deficits can cause economic problems. And—it’s remarkable that so-called fiscal conservatives need to be reminded of this so often—unless you cut spending, it’s only a tax shift, not a tax cut.
 
Written By: Jon Henke
URL: http://www.QandO.net
"Unless and until politicians will match tax cuts with near-equivalent spending cuts, there’s just not a lot of coherent justification left for more tax cuts."
It bears keeping in mind that not all tax cuts are created equal. The fact that the supply-siders oversold their product doesn’t mean there’s nothing to the concept. Cutting marginal tax rates on capital, for example, when combined with a modest increase in the income tax would increase the government’s budget while simultaneously making people better off. Once we move beyond this kind of facile "tax cuts GOOD!", "no, tax cuts BAD!" stuff and actully get into the nitty grity details, things aren’t as simple as either side would like them to be.
 
Written By: Matt McIntosh
URL: http://conjecturesandrefutations.net
Good point, Matt. There’s certainly room for tax reform in some specialized areas. I thought the dividend tax cut was a good idea, for instance, regardless of the deficit issues, because they had a direct efficiency impact on economic decision-making.
 
Written By: Jon Henke
URL: http://www.QandO.net
Citation, please. When did Congress promise to cut spending to match the tax cuts?
Wasn’t Gramm-Rudman about spending cuts? I’ll do a little more research, but Bithead’s comment rings true to me.
 
Written By: Steverino
URL: http://steverino.journalspace.com
Correct, Steve.
It was.

Further, Jon,
I’d also note that Reagan raised taxes, if I recall correctly, for 5 years running.
Depends on how you call that one. Tax revenue went up, in dramatic fashion, but only after the marginal tax rates... the percentages paid on various incomes, went down.
I was previously unaware of the period during the 1980s in which correlation was causation. I guess that means the Clinton tax hikes caused the boom in the 1990s! Huzzah!


No.
As a rule, economic slowdowns are slower in appearing, than are booms, where taxes going up or down are the stimulus. No, the Clinton boom was two things; He inherrited a stable economy... and the Bullshit dot-com craze... you know, the one Al Gore invented. You will note that by the end of the Clinton years, we were in a resession as a result of his policies, and Bush had to work hard to bail us out of it. Woulda done it, too, but for 9/11... which I suspect is part of the reason for the timing of the attack; Logical; Attack the US by attacking it’s wealth; Attack world financial institutions when they’re they’re at their weakest.
 
Written By: Bithead
URL: http://bitheads.blogspot.com
Two things have recently happened:
First, Congress passed an approximately $40 billion spending cut. I’m too busy to look up the exact figure. If my memory is off by several orders of magnitude, well, I think the important thing is that Republicans passed a modest budget cut and Democrats shrieked, showing their true colors.

Revenue has increased under Bush’s tax cuts, as well.

What has been the biggest expense on our budget since 2001? The GWOT, and especially the counter-insurgency battle in Iraq.

And despite that HUGE expenditure, the deficit didn’t turn out as bad as predicted, and continues to actually reduce (again, no time to look it up, but that’s what I remember reading over the last 6 months).

Second, as you point out right here on your blog online magazine, we are beginning to cut troops in Iraq below the baseline. It’s a small amount, true, but I think we will reduce further throughout 2006. That also reduces expenditures, no? And we need less and less to rebuild Iraq’s infrastructure...

As much as you complain about Republicans (and for good reason), I think you’ll see a vastly improved budget/fiscal situation by the summer/fall of 2008. The tax cuts are providing reason for the spending cuts, even if modest at this time, and our biggest expense should be way down by 2008. That’s the right direction.

GoooOOOO, GOP!
 
Written By: nathan
URL: http://chieflymusing.com/
Wasn’t Gramm-Rudman about spending cuts? I’ll do a little more research, but Bithead’s comment rings true to me.
Yes, Gramm-Rudman-Hollings was about cutting spending. It did nothing to do it, it was struck down and Congress made no real attempt to cut spending. And it didn’t even hit Congress until 1985, long after the bulk of the spending increases.

Bear in mind that the ruling of unconstitutionality did not prevent Congress from cutting spending, and yet they did not. Congress made some noise about fiscal discipline, and then did absolutely nothing about it.
Depends on how you call that one.
What are you talking about? Reagan participated in some enormous tax increases. He signed tax increases in 1982, 1983, 1984, etc, etc—almost every year of his administration, Reagan signed a tax increase.
Tax revenue went up, in dramatic fashion, but only after the marginal tax rates... the percentages paid on various incomes, went down.
Yes, taxes went up a little bit, but what methodology are you using to bifurcate out the revenue increases as a result of tax cut stimulus from revenue increases due to other effects? Oh, right, you’re not.

And if you adjust for inflation, tax revenue actually didn’t go up that much. According to the CBO [PDF] revenues were $1077.4b in 1981. In 1989, revenues were $1298.9.

Growth during the 80s was good, and the tax cuts certainly helped in a variety of ways that continue today. But the idea that tax cuts necessarily increase revenue is just pure idiocy. They can under some circumstances, but no serious analyst—to include the Bush administrations Bureau of Economic Analysis—argues that the current tax cuts would do so.
You will note that by the end of the Clinton years, we were in a resession as a result of his policies
Well, I’m certainly familiar with your habit of ascribing all bad things to Democrats and all good things to Republicans. The recession—which was not due to Bush, of course—did not start until March of 2001. It was not in existence during the Clinton administration.
Woulda done it, too, but for 9/11... which I suspect is part of the reason for the timing of the attack;
9/11 had no appreciable impact on the dates of the recession. It ended in November of 2001. You should really look these things up.
 
Written By: Jon Henke
URL: http://www.QandO.net
Yes, Gramm-Rudman-Hollings was about cutting spending. It did nothing to do it, it was struck down and Congress made no real attempt to cut spending. And it didn’t even hit Congress until 1985, long after the bulk of the spending increases.

Bear in mind that the ruling of unconstitutionality did not prevent Congress from cutting spending, and yet they did not. Congress made some noise about fiscal discipline, and then did absolutely nothing about it.
As backhanded an admission of my being correct as I’ve ever seen, Jon. Almost as good as:
Yes, taxes went up a little bit,

A little bit? How about tripled the treasury income?
Well, I’m certainly familiar with your habit of ascribing all bad things to Democrats and all good things to Republicans.
In your fantasy, perhaps. Ascribing bad things to Democrats is my habit because it’s the truth. As to always ascrtibig good things to Republicans, no, not hardly as I recently demonstarted to you. But it is true that they’re correct far more often than the Democrats.
The recession—which was not due to Bush, of course—did not start until March of 2001. It was not in existence during the Clinton administration.
There’s much in the way of hard evidence that the economic slowdown had already stated by the start of q3 of 2000, even if in your frothing you can’t pronounce ’recession’.


 
Written By: Bithead
URL: http://bitheads.blogspot.com
As backhanded an admission of my being correct as I’ve ever seen, Jon.
They didn’t actually do that, though. They passed a bill that stipulated spending cuts if "targets" were not met—though that didn’t require equivalence. And then they proceeded to ignore it. If your argument is that some few members of congress would have cut spending....so what?
A little bit? How about tripled the treasury income?
I’ll stand by the numbers I presented. Adjusted for inflation, tax revenue increased somewhat, but far below the "doubling" that most supporters claim—(not to mention the "tripled" you assert)—and far below the growth during the 90s, after multiple tax increases.
There’s much in the way of hard evidence that the economic slowdown had already stated by the start of q3 of 2000, even if in your frothing you can’t pronounce ’recession’.
Do you even know what a recession is and how it is labeled? The recession officially started in March of 2001. Quibbles about various data points are irrelevant. The official dates of the recession were March-November 2001.
 
Written By: Jon Henke
URL: http://www.QandO.net
The recession officially started in March of 2001. Quibbles about various data points are irrelevant.
I’m aware of the ’official’ Dates. I’m also aware they don’t mean much. THe economy as a whole was showing signs of going in the crapper long before the career policy wonks decided they didn’t have much choice but to call it a resession. July, in fact.


And I stand corrected on tripled... the income to the treasury only doubled... from $550b in 1981 (When the top marginals were running around 70%) to 991b in 1989 (when they were at around 27 or 28 percent).
They didn’t actually do that, though. They passed a bill that stipulated spending cuts if "targets" were not met—though that didn’t require equivalence. And then they proceeded to ignore it. If your argument is that some few members of congress would have cut spending....so what?
No, Jon, my argument is that the Democrats running Congress WOULDN’T cut spending. And it wasn’t only Graham- Rudman. Remember that tax hike as you mentioned? Apparently, you don’t recall very much about it...(I doubt you’d have even mentioned it, if you did) ...because incidental to that deal, Congress pledged $2 of spending cuts for each dollar of increased tax revenue. And as you point out, that didn’t happen either. They started picking it apart one bit at a time, usually in joint resolutions.... like this one, for example.

 
Written By: Bithead
URL: http://bitheads.blogspot.com
Do you even know what a recession is and how it is labeled? The recession officially started in March of 2001. Quibbles about various data points are irrelevant. The official dates of the recession were March-November 2001.
Jon, 2000Q3 showed a shrinking GDP. Even if the economy wasn’t in recession then, surely it was slowing down.
 
Written By: Steverino
URL: http://steverino.journalspace.com
I’m aware of the ’official’ Dates. I’m also aware they don’t mean much.
Christ on a stick. You want to call it a recession, but you don’t think the official recession-date means much.

Yes, the economy had slowed prior to the actual recession. Well, so what? Slowing GDP growth is not a recession.
And I stand corrected on tripled... the income to the treasury only doubled... from $550b in 1981 (When the top marginals were running around 70%) to 991b in 1989 (when they were at around 27 or 28 percent).
Man, if nominal growth of almost 100% impresses you, then you must have loved the 1970s. Between 1977 and 1979, receipts grew from $187b to $463b. That’s WAY more than 100%!

Why do you suppose receipts only doubled between 81-89, when they grew by far more than that between 71-79?
No, Jon, my argument is that the Democrats running Congress WOULDN’T cut spending.
NObody would cut spending. I realize that, in Bizarro Bithead world, only the Democrats can make decisions you don’t like, but in reality, the President proposed budgets loaded up with all the spending HE wanted, at which point Congress loaded it up with all the spending they wanted. Then each side approved what the other wanted in order to get their own spending. Reagan—and Republicans, generally—ultimately signed every one of those budgets.

And Reagan raised taxes almost every year, too.
 
Written By: Jon Henke
URL: http://www.QandO.net
Christ on a stick. You want to call it a recession, but you don’t think the official recession-date means much.
And they said you wouldn’t be able to understand it. I am impressed.

Why do you suppose receipts only doubled between 81-89, when they grew by far more than that between 71-79?


Because taxes were going up. But guess what? It was killing the economy.
NObody would cut spending. I realize that, in Bizarro Bithead world, only the Democrats can make decisions you don’t like, but in reality, the President proposed budgets loaded up with all the spending HE wanted, at which point Congress loaded it up with all the spending they wanted
Two major differences you seem to be missing, however.

The first one being that defense is actually a constitutionally mandated function of the Federal government whereas the vast majority of what the Congress wanted a loaded up on had nothing to do with the Federal government’s constitutional functions.

Secondly, and perhaps more importantly, the budgets that Reagan proposed were dead on arrival at the hill, and were substantially lower in spending than what the Democrats proposed, and certainly lower than what they actually spent.

Further let’s remember that the increase spending on defense was needed because defense had been ignored for so long. This is not a function of Republican Excess; This is a function of Republicans... Ronald Reagan particularly, recognizing the need to perform their constitutional function, and actually DOING it.

So, gee, Jon, In a tossup between spending more on stuff that isn’t covered under the constitution or spending less on stuff that is an needed attention, this is an easy choice, wouldn’t you say? Which pattern would you say was the more responsible leadership?
 
Written By: Bithead
URL: http://bitheads.blogspot.com
Because taxes were going up. But guess what? It was killing the economy.
It’s because you’re not adjusting for inflation. Once you do that, receipts didn’t grow by that damned much during the Reagan administration.

As for the rest, your beef is not that Reagan was a spartan spender, but that—deep down inside—Reagan would have liked to spend a lot of money on programs you like, and not on programs you didn’t like. Ultimately, however, Reagan signed off on all of it. And then he raised taxes almost every year.
 
Written By: Jon Henke
URL: http://www.QandO.net
It’s because you’re not adjusting for inflation
Actually, that is adjusted for inflation.. in fy1989 dollars, if I recall right.

And even if it wasn’t,the objections that you’re raising to spending increases doesn’t seem to add inflation in, either. Hmmm. I guess that one got by us, huh?

Look, let’s remember we were not dealing with the 21% inflation of the Carter years, after the first couple of years of Reagan’s being in office. Thereby, inflation wasn’t so big a factor to the overall 81-89 timeframe, as you seem to be weighing it here.
As for the rest, your beef is not that Reagan was a spartan spender, but that—deep down inside—Reagan would have liked to spend a lot of money on programs you like, and not on programs you didn’t like.
What I like or dislike has nothing to do with the issue that goes wanting in this discussion every time... that being constitutional functions of the Federal government the first one of which is defense. (You do remmeber the Constitution, right, Jon?) Defense is a function that was completely ignored during the peanut farmers term, and that money was redirected to an unconstitutional entitlement spending spree that was directed like it or not , by the Democrats.

 
Written By: Bithead
URL: http://bitheads.blogspot.com
Actually, that is adjusted for inflation.. in fy1989 dollars, if I recall right.
Did you even glance at the CBO link I gave you? Even a little bit? Receipts between 81-89 went up almost 100% in nominal dollars—but only about 26% in locked dollars.
And even if it wasn’t,the objections that you’re raising to spending increases doesn’t seem to add inflation in, either. Hmmm. I guess that one got by us, huh?
Again, take a look at inflation adjusted spending growth.
Thereby, inflation wasn’t so big a factor to the overall 81-89 timeframe, as you seem to be weighing it here.
You are, indeed, the stupidest fucking person on the face of the earth. Adjusted for inflation, here are the receipts:

1981—$1077.4b
1989—$1298.9


How, Bithead, does that look like a "doubling" in receipts?
that money was redirected to an unconstitutional entitlement spending spree that was directed like it or not , by the Democrats.
And signed by President Reagan. And, more recently, trumped by an entitlement binge led by President Bush and the Republicans.
 
Written By: Jon Henke
URL: http://www.QandO.net
Did you even glance at the CBO link I gave you? Even a little bit? Receipts between 81-89 went up almost 100% in nominal dollars—but only about 26% in locked dollars.
Did you forget who was running Congress at the time the report was issued?
THe Democrats. And don’t give me the song and dance about the CBO being non-partisan. We both know better.
And signed by President Reagan.
Mostly because he didn’t have the votes to suport a veto, nor did Bush Sr.
 
Written By: Bithead
URL: http://bitheads.blogspot.com
Tell us, Book. How many families are subsisting on minimum wage? I’m willing to bet you don’t know.

And since when he is asking the government to stick to its constitutionally mandated functions, and cheering when we get someone to do that, "partisan bickering"?



 
Written By: Bithead
URL: http://bitheads.blogspot.com
Did you forget who was running Congress at the time the report was issued?
THe Democrats. And don’t give me the song and dance about the CBO being non-partisan. We both know better.
Are you seriously suggesting that CBO cooked the books? Really? Can you really suggest that CBO somehow got together with the Treasury Department and the Bureau of Labor Statistics to fake both tax revenues and the inflation rate?

I don’t think I’ve ever seen a stupider comment. You’re a paranoid conspiracy fuckwit. Please seek psychiatric help.
 
Written By: Jon Henke
URL: http://www.QandO.net
Two more things:

1) The report I cited was issued in 2005. Republicans ran Congress. So, you were saying?

2) Please feel free to find me the "real" budget numbers.
 
Written By: Jon Henke
URL: http://www.QandO.net
1) The report I cited was issued in 2005. Republicans ran Congress. So, you were saying?
Ah. So, we are to assume they re-generated the numbers for this report instead of using numbers generated THAT YEAR.

Sure.
Are you seriously suggesting that CBO cooked the books? Really? Can you really suggest that CBO somehow got together with the Treasury Department and the Bureau of Labor Statistics to fake both tax revenues and the inflation rate?
So, presenting data so as to make yourself look good, or the opposite party look bad, doesn’t happen in government? Gee, Jon... I’ll have to remember that. And you call yourself a libertarian why, again? Oh, that’s right. (snicker) You don’t trust government, huh?

(snort!) Must..... hit.... preview.... button... before.... breaking down.... in.... laughter.......



 
Written By: Bithead
URL: http://bitheads.blogspot.com
And by the way, Jon... are you looking at Total tax revenues or INCOME tax revenues?

 
Written By: Bithead
URL: http://bitheads.blogspot.com
Ah. So, we are to assume they re-generated the numbers for this report instead of using numbers generated THAT YEAR.
They’re using numbers generated by the OMB. The OMB is a part of the Executive Branch.
And by the way, Jon... are you looking at Total tax revenues or INCOME tax revenues?
Total tax revenue. You’re welcome to look up the income tax revenue, though. You’ll find that, between 81-89, income tax as a percentage of total revenue declined almost 3%. So, the increase in revenue was not due to a compositional increase in income tax revenue.
 
Written By: Jon Henke
URL: http://www.QandO.net
Yeah, well, in this case, we’ll consider the source.

We’ll also have to do that here, I guess;
Incidentally, the claim that unrealistic supply side Reagan Administration revenue projections caused large budget deficits during the 1980s is false. Nonetheless, this false allegation is often used against current tax reform proposals. The official Reagan revenue projections immediately following enactment of ERTA did not assume huge revenue increases, and were actually quite close to the CBO revenue projections. Even the Democrat-controlled CBO projected that deficits would fall after the enactment of the Reagan tax cuts. The real problem was a recession that neither CBO nor OMB could foresee. Even so, individual income tax revenues rose from $244 billion in 1980 to $446 billion in 1989.
Source:
http://www.house.gov/jec/fiscal/tx-grwth/reagtxct/reagtxct.htm

Hmmm. A lot closer to the figures I provided than those Jon did.
So much for that one.
You’ll find that, between 81-89, income tax as a percentage of total revenue declined almost 3%. So, the increase in revenue was not due to a compositional increase in income tax revenue.
Well now, that’s interesting, but where have I ever made THAT claim? More, where have I ever said that dropping taxes as a percentage of total income was a BAD thing?
I find it annoying that you refuse to accept the fact that marginakl rate tax cuts spur the economy and, thereby raise the income at the coffers. You’re already on record as being in denial over this. And again. and even in this blog, yet.

But the fact is, under Kennedy, Reagan, and now under Mr. Bush, marginal tax rate cuts have done precisely that. raising marginal tax rates as precisely the opposite effect, as we found out under Mr. Clinton. the facts backing this point are all laid out in the first link in this response. As they put it:
The Reagan tax cuts, like similar measures enacted in the 1920s and 1960s, showed that reducing excessive tax rates stimulates growth, reduces tax avoidance, and can increase the amount and share of tax payments generated by the rich. High top tax rates can induce counterproductive behavior and suppress revenues, factors that are usually missed or understated in government static revenue analysis. Furthermore, the key assumption of static revenue analysis that economic growth is not affected by tax changes is di sproved by the experience of previous tax reduction programs. There is little reason to expect static revenue analysis to evaluate the economic or distributional effects of current tax reform proposals much better than it evaluated the Reagan tax program 15 years ago.
They’re using numbers generated by the OMB.
Fine. And those figures were generated in what year, Jon?

 
Written By: Bithead
URL: http://bitheads.blogspot.com
Hmmm. A lot closer to the figures I provided than those Jon did. So much for that one.
Your steadfast refusal to adjust for inflation is evidence that you have no clue what you’re talking about.
Well now, that’s interesting, but where have I ever made THAT claim? More, where have I ever said that dropping taxes as a percentage of total income was a BAD thing?
If revenues rose as a result of the tax cut, then—Ceteris paribus—income taxes would have risen as a percentage of revenue.

Revenue—including revenue from income taxes—has almost always risen. You’ve provided zero evidence that revenue rose as a result of the tax cuts. I’ve actually very little doubt that 70% was on the right side of the Laffer Curve, and that 28% is on the left side of the Laffer Curve. But you’ve offered no evidence that—in toto—the tax cuts resulted in increased revenue. (vs what revenue would have been in 89 in the absence of tax cuts)
I find it annoying that you refuse to accept the fact that marginakl rate tax cuts spur the economy and, thereby raise the income at the coffers.
I find your lack of reading comprehension annoying. You’ll recall that in this same thread you wrote that "tax cuts as a rule, stimulate the economy" and I responded with "Of course they do". But whether tax cuts spur the economy and whether they raise the income tax revenue are two very different things. And trying to get you to see the difference is a bit like explaining economics to a first grader. You appear to be unfamiliar with some very basic conceptual issues.
raising marginal tax rates as precisely the opposite effect, as we found out under Mr. Clinton.
Oh yeah? Show us the years in which revenue declined under Clinton.
Fine. And those figures were generated in what year, Jon?
You’re such a fucking douchebag. When I first noted the numbers, you claimed they’d been generated when Democrats controlled Congress. Now that I point out they originated with OMB, you’re suddenly uncertain about when they were generated?

It’s effectively impossible to generate partisan revenue numbers, because they have to be checked by the Treasury, the OMB, the CBO, etc. If you’ve got specific evidence that hundreds of billions of dollars have been pilfered and hidden in secret bank accounts, show us. Otherwise, stop. It’s embarrassing, and if you continue, I’m inclined to eventually make a post out of it so readers can all point and laugh at you.
 
Written By: Jon Henke
URL: http://www.QandO.net
So the argument against tax rate cutting isn’t that it LOWERS tax revenues but that it increases them less than some people claim? I guess you could call that a win.....

The fact is that every time marginal tax rates have been cut, 1924, 1964, 1981, 1997, 2003, under democrats or republicans, the economy has grown, tax revenues have increased and the actual revenue collected has exceeeded the predictions made under static budget procedures.

Unfortunately, in every case the congress has taken their windfall and spent even more money than the additional revenues brought in. That is NOT an argument for raising tax rates, it is an argument that, in the words of PJ O’Rourke, Congress is a Parliament of Whores.

Anybody who thinks that the increase in revenues during the 1990’s was due to a small marginal tax rate increase in 1993 misses this point: during the entire 1990’s the average top marginal tax rate was LOWER than all but 2 years of Reagan’s presidency. During the first 2 years of Reagan’s term the top rate was 70%, the next 4 it was 50% and the last 2 years it was 28%. Even after raising the top rate slightly to 39% (the real killer was Bush’s tax increase in ’90) it was still lower than most of the 80’s. Meanwhile both Bush’s and Clinton’s tax rate increases collected less revenue than predicted. The capital gains cut in 1997 was the real catalyst for tax revenue increases due to the dot-com bubble.

Given that Congress controlled by any party will spend all that it gets and then some, this isn’t really a taxation argument. The percentage of GDP that the treasury takes in has been very stable over the past century, about 18% +/- 2%. This has remained about the same from a top marginal rate of 95% down to 28% and everywhere in between.

If you are concerned about budget deficits tax revenues are not the problem, nor are they the solution. It is and always will be the proportion of GDP spent by the government, which is today at an all-time high. Government spending crowds out private sector economic activity and decreases economic growth. It makes little difference whether that money comes from taxes or borrowing, it has the same effect.

It’s the spending, stupid.
 
Written By: DS
URL: http://
Oh yeah? Show us the years in which revenue declined under Clinton.
You didn’t bother to read the link that I put up, did you?
The 1993 Clinton tax increase appears to having the opposite effect on the willingness of wealthy taxpayers to expose income to taxation. According to IRS data, the income generated by the top one percent of income earners actually declined in 1993. This decline is especially significant since the retroactivity of the Clinton tax increase in that year limited the ability of taxpayers to deploy tax avoidance strategies, temporarily resulting in an increase in their tax burden. Moreover, according to the FY 1997 Clinton budget submission, individual income tax revenues as a share of GDP will be lower during the first four years of the Clinton tax increase, which include the effects of the 1990 tax increase, than under the last four years of the Reagan tax changes (FY 1986-89). Furthermore, according to a study published by the National Bureau for Economic Research,[2] the Clinton tax hike is failing to collect over 40 percent of the projected revenue increases.
You’re such a fucking douchebag. When I first noted the numbers, you claimed they’d been generated when Democrats controlled Congress. Now that I point out they originated with OMB, you’re suddenly uncertain about when they were generated?
What I have been trying rather desperately to elicit from you Jon is whether or not those numbers have been altered since they were first generated.

The CBO has a habit of going back and redoing the numbers based on additional information collected since the original numbers were generated. Those revised numbers, however, are used to draw conclusions, which as a rule have a tendency to slide toward the point of view of the party in power at the time the numbers are regenerated.

So once again, I ask,when were these numbers you’re citing, generated? Your unwillingness to answer strongly suggests you don’t know. Which, by the way, is an OK answer.



 
Written By: Bithead
URL: http://bitheads.blogspot.com
But whether tax cuts spur the economy and whether they raise the income tax revenue are two very different things.
Well, maybe this economic stuff is a little beyond your ability Jon. But the last I knew, when incomes, go up taxes on those incomes go up. I know my income tax is certainly went up as my income went up through the eighties.

Now, I did take home more, so my actual income overshot the increased taxes I paid, but the fact is I did pay more in taxes... and so did the majority of Americans through that period.
 
Written By: Bithead
URL: http://bitheads.blogspot.com
You didn’t bother to read the link that I put up, did you?
How a retroactive tax could cause a decline in income would be an interesting study. In any event, the author does not posit a decline in tax revenue—just a decline in revenue from one narrow group, and that during a year in which income actually declined for that group. (which, natch, would make tax receipts from that same group decline as well)

Now, that decline may—or may not have—been a function of the new tax rates, but it did not apply widely and did not produce a general decline in income tax receipts from the top marginal rate.
What I have been trying rather desperately to elicit from you Jon is whether or not those numbers have been altered since they were first generated.
I certainly can’t prove a negative, but you’re welcome to offer evidence that they have. It’s preposterous on its face, but good luck. It might make for an interesting post.
But the last I knew, when incomes, go up taxes on those incomes go up.
Let’s put this in simple terms:

Tax rate: 15% // GDP: 1000 = receipts: $150

Tax rate: 10% // GDP: 1200 = receipts: $120

Incomes went up, but taxes on those incomes went down. This is not exactly advanced Econ.

Look, let’s shorten this whole thing: you’re positing that a reduction in taxes will increase tax revenues. That necessarily assumes that the tax rate is on the Right side of the Laffer Curve. The fact that the tax hikes of the early to mid 90s (and those of the 80s, as well) did not produce lower tax receipts provides empirical evidence to the contrary.

Your task is to substantiate your argument by providing evidence that we are somewhere to the right side of the Laffer Curve. Plus, please tell us where the inflection point actually is.
 
Written By: Jon Henke
URL: http://www.QandO.net
Written by Arthur Laffer himself:

http://www.heritage.org/Research/Taxes/bg1765.cfm

 
Written By: DS
URL: http://
"Did you even glance at the CBO link I gave you? Even a little bit? Receipts between 81-89 went up almost 100% in nominal dollars—but only about 26% in locked dollars."

So.....tax rates were cut and REAL tax revenues increased. Then its settled, nobody disputes that fact, even the person disputing that fact.

Side note: these numbers include 1981 and 1982 BEFORE the tax cuts were in place, when the top rate was 70%. Also note that during the entire decade of the 1990’s marginal tax rates were lower than the entire decade of the 1980’s. Tax revenues before or after inflation SHOULD have been higher, and they were. Looks like a pretty sound theory to me. The historical numbers are clear and are not in dispute.



 
Written By: DS
URL: http://

 
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