No, tax cuts do not increase overall revenue more than they cost, for the last time

The BBQ Pit
1

http://www.washingtonpost.com/wp-dyn/content/article/2006/10/16/AR2006101601121_pf.html

It’s true that growth means that tax revenues will be higher than they would have been without growth.

It’s also true that tax cuts can increase growth.

But implying that Bush’s tax cuts created higher overall tax revenues, or that they ever could under real world conditions, is simply dishonest.

Simply put, Bush and his speakers have long played a game of doublespeak on this issue, both having to conceed to actually informed people that tax cuts cannot pay for themselves, but repeatedly misleading the public by using ambiguous language that implies exactly that. For example:

http://www.whitehouse.gov/news/releases/2006/07/20060711-1.html

In other words, Bush is implying that without his tax cuts, revenues wouldn’t be as high as they are. This is simply false. Note how suddenly ALL the growth becomes attributed to the tax cuts when there isn’t an economist on the planet who would actually agree with that in an academic circle, no matter how conservative they were.

The bait and switch, more clearly:

http://www.whitehouse.gov/news/releases/2006/02/20060208-7.html

See the lie again?

Again, what Bush is implying over and over is that by cutting taxes, we ended up with more revenue than we otherwise would have, the implication being that 100% of the growth in the economy is due to tax cuts. That’s a flat out lie. No economist could honestly support that idea. And yet that’s clearly what he wants his listeners to believe.

The fact is, if Bush had not cut taxes, the government WOULD be taking in more tax revenue. It wouldn’t be taking in as much revenue as it would if the economy had grown as MUCH as it has, because part of that growth IS attributable to the tax cuts. But no one seriously believes that the US economy is at the point where a relatively minor tax cut could cause so much growth that it would “pay for itself.” They just want the ignorant voting public to believe it.

2

[QUOTE=Apos]

See the lie again?

. . . That’s a flat out lie.
[/QUOTE]
OMG, Bush lied? :eek:

3

I don’t disagree with your specific arguments but I do disagree with your general argument as stated in your subject, that is, “No, tax cuts do not increase overall revenue more than they cost, for the last time”.

That isn’t true, tax revenue will actually go down if taxes are too high. I’m not saying taxes were anywhere near that point when Bush entered office. However, at one point the highest tax bracket was set at something ridiculous like 90%. People in that bracket did pretty much everything legally and somethings illegaly to avoid paying such ludicrous taxes. Not only did tax revenues increase as that tax rate went back down to “normal” levels, the overall share of tax revenue paid by the top 1% and top 10% increased in relation to the rest of the taxpayers.

I’d say 35% or 40% for the top income tax bracket is nowhere close to being so high that it’s hurting tax revenues. I’d wager you could knock the top rate up to around 65% before that starts happening. However, there’s no clear-cut reason in my mind to maximize government tax revenue. Eventhough I think we could set taxes to 65% or so before we stopped seeing an increase in revenue, I don’t necessarily think that is something the government should be doing.

4

I’d also elaborate on my last point. There is an automatic assumption that it’s “bad” if we haven’t “maximized” the treasury’s revenue.

Why is that? Taxes are taken from people who have worked, usually pretty damn hard, to make their money. A lot of the people in the highest income bracket are doctors and lawyers who work a huge number of hours and have devoted many years of their life to become who they are, and they’ve also typically ran heavily into debt in that process as well.

Keep in mind, the top income tax rate doesn’t discriminate between a doctor making $200,000 a year and a CEO of a multi-billion dollar company making $50 million a year. In fact that CEO may actually be taxed at a much lower rate than that doctor when you consider CEOs compensation packages are often structured in such a way that a lot of their income can be counted as “capital gains” which is only taxed at 15% maximum.

Just because government could make more money, to me that isn’t justification to steal more money from its citizens. Taxes really are just a form of accepted theft for the good of society. They serve an essential purpose, and they “pay” for services that benefit everyone. But nonetheless, you pay them no matter what, you don’t get a choice in the matter. When the mafia offers you “services” for a cut of your business, that’s more or less a type of theft because you have no option to say no without suffering serious consequence. Even if you really do gain some benefit from their “protection.”

Before we start to take more money from our citizens through taxation I think we should probably analyze how we’re spending our money, and decide if increased spending is always justified and whether or not some spending could be cut.

5

I believe the weapons of mass deficit reduction have been moved, possibly to Syria. And of course you have to expect some looting.

6

[QUOTE=Martin Hyde]

I’d say 35% or 40% for the top income tax bracket is nowhere close to being so high that it’s hurting tax revenues. I’d wager you could knock the top rate up to around 65% before that starts happening. However, there’s no clear-cut reason in my mind to maximize government tax revenue. Eventhough I think we could set taxes to 65% or so before we stopped seeing an increase in revenue, I don’t necessarily think that is something the government should be doing.
[/QUOTE]

You might remember that during the '90s the higher rate in the top bracket didn’t seem to stop anyone from wanting to make money. I was in the top bracket for a while, and was damn happy to be there. Would I trade a higher tax rate for the economic conditions and the state of my stocks back then? In a New York second.

No one is talking about maximizing tax revenue. Getting it to the point of balancing spending might be nice, though. Let’s decide what we need to do, (hint - does not include throwing money down a shithole in Iraq) and spend the money to do it.

7

[QUOTE=Martin Hyde]

Just because government could make more money, to me that isn’t justification to steal more money from its citizens. Taxes really are just a form of accepted theft for the good of society. They serve an essential purpose, and they “pay” for services that benefit everyone. But nonetheless, you pay them no matter what, you don’t get a choice in the matter. When the mafia offers you “services” for a cut of your business, that’s more or less a type of theft because you have no option to say no without suffering serious consequence. Even if you really do gain some benefit from their “protection.”

Before we start to take more money from our citizens through taxation I think we should probably analyze how we’re spending our money, and decide if increased spending is always justified and whether or not some spending could be cut.
[/QUOTE]

Gee, Martin, I don’t know where you’ve been the past 225 years, but I get to vote on who represents me. In California, through initiatives, I vote directly on some taxes. So this taxation = theft thing is total bullshit. You have a perfect opportunity to say no to paying US taxes - leave the country.

And, I guess no body in Congress has ever analyzed or debated how we spend our money. So nice for you to give them that suggestion. It’s like the lamebrains who say the simple way to balance the budget is to cut waste - as if any large entity could work with 100% efficiency. Large corporations have plenty of waste too. Notice nothing ever happens when someone actually looks at the situation.

8

All I know is that tax cuts under Reagan, Bush I and Bush II have been accompanied by big increases in federal deficits. Under Kennedy the tax cuts didn’t increase the deficit so maybe a different economic group got tax cuts.

When rich people get tax cuts they tend to save it, when middle class people get tax cuts they tend spend it in order to improve their standard of living.

9

It’s not whether the deficit went up or down, it’s whether it went up or down relative to what would have happened in the absence of the policy.

10

[QUOTE=Martin Hyde]
That isn’t true, tax revenue will actually go down if taxes are too high.
[/quote]

And if we are standing on the surface of the sun, it isn’t true that air conditioning will keep you comfortable.

WHAT IS YOUR POINT? Tax rates haven’t been anywhere near those levels in decades, and that simply isn’t relevant to any current debate over tax policy.

11

The overall point is that whatever the trend and history, for some people it is never the time to stop believing, instanter, everything someone tells you, providing they have a GOP affiliation.

12

[QUOTE=Voyager]
Gee, Martin, I don’t know where you’ve been the past 225 years, but I get to vote on who represents me. In California, through initiatives, I vote directly on some taxes. So this taxation = theft thing is total bullshit.
[/quote]

Just because a majority approves theft does not make it any less theft. It’s not as if these votes are whether or not taxes should be increased for only those who approve of the increase. No, the votes are for taxes to be increased for everyone, regardless of his or her consent. Since I don’t want to pay them, and the government says that I must do that or be imprisoned or killed, I’d say that has a lot in common with the robber who approaches me and demands my money or my life.

A lof of people do – they move their assets offshore. And, of course, they get blasted for doing so.

13

[QUOTE=hawthorne]
It’s not whether the deficit went up or down, it’s whether it went up or down relative to what would have happened in the absence of the policy.
[/QUOTE]
I don’t think you can ever really know what would have happened if you hadn’t done a certain thing. I think those who claim otherwise are just waving their arms and talking in jargon with big words.

Those who would claim that the deficit under Reagan, Bush I and Bush II would have been even higher had taxes not been lowered haven’t a leg to stand on.

14

[QUOTE=Renob]

A lof of people do – they move their assets offshore. And, of course, they get blasted for doing so.
[/QUOTE]

Seems obvious, but I’ll say it anyway. Moving your assets offshore is not leaving the country - it’s staying in the place that best suits you, but using the mechanism of tax avoidance to avoid paying for the privilege.

15

[QUOTE=Renob]
Just because a majority approves theft does not make it any less theft. It’s not as if these votes are whether or not taxes should be increased for only those who approve of the increase. No, the votes are for taxes to be increased for everyone, regardless of his or her consent. Since I don’t want to pay them, and the government says that I must do that or be imprisoned or killed, I’d say that has a lot in common with the robber who approaches me and demands my money or my life.

[/QUOTE]

The Republicans have had a rock solid majority for the last four years. Why hasn’t the tax rate fallen to zero? Well, at least government spending has gone way down since the Republican party has been in charge.

Also, please indicate which places on earth you can get similar standard of living and pay lower taxes. Or indicate which of the following we should be rid of:

  1. Military/defense
  2. Coast guard
  3. Highways
  4. Police
  5. Food inspection
  6. Schools
  7. Social Security

Damned thieves, taking your hard-earned money. They should be ashamed.

16

[QUOTE=ShibbOleth]
The Republicans have had a rock solid majority for the last four years. Why hasn’t the tax rate fallen to zero? Well, at least government spending has gone way down since the Republican party has been in charge.

Also, please indicate which places on earth you can get similar standard of living and pay lower taxes. Or indicate which of the following we should be rid of:

  1. Military/defense
  2. Coast guard
  3. Highways
  4. Police
  5. Food inspection
  6. Schools
  7. Social Security

Damned thieves, taking your hard-earned money. They should be ashamed.
[/QUOTE]
Don’t forget the overwhelming importance of the fight against terrorism which has to be paid for.

What? We are borrowing the money to carry on that fight? Shocking.

17

How many people have been executed for failure to pay taxes?

What is the ratio of crazy hyperbole to reasonable point that is acceptable before credence drops to insignificance?

18

[QUOTE=Apos]
It’s true that growth means that tax revenues will be higher than they would have been without growth.

It’s also true that tax cuts can increase growth.

But implying that Bush’s tax cuts created higher overall tax revenues, or that they ever could under real world conditions, is simply dishonest.

The fact is, if Bush had not cut taxes, the government WOULD be taking in more tax revenue. It wouldn’t be taking in as much revenue as it would if the economy had grown as MUCH as it has, because part of that growth IS attributable to the tax cuts. But no one seriously believes that the US economy is at the point where a relatively minor tax cut could cause so much growth that it would “pay for itself.” They just want the ignorant voting public to believe it.
[/QUOTE]

Another pretty important factor to consider is the tax gap. There is a huge gap (on the order of 350 billion dollars a year). This is how much people are cheating on their taxes. The IRS is one situation where the beast has been starved and it hasn’t really worked out that well. Now they want to fire half the estate tax examiners and outsource collection activity, pretty soon we will see the tax code fully transistion to the honor system.

19

[QUOTE=Martin Hyde]
I don’t disagree with your specific arguments but I do disagree with your general argument as stated in your subject, that is, “No, tax cuts do not increase overall revenue more than they cost, for the last time”.

That isn’t true, tax revenue will actually go down if taxes are too high. I’m not saying taxes were anywhere near that point when Bush entered office. However, at one point the highest tax bracket was set at something ridiculous like 90%. People in that bracket did pretty much everything legally and somethings illegaly to avoid paying such ludicrous taxes. Not only did tax revenues increase as that tax rate went back down to “normal” levels, the overall share of tax revenue paid by the top 1% and top 10% increased in relation to the rest of the taxpayers.

I’d say 35% or 40% for the top income tax bracket is nowhere close to being so high that it’s hurting tax revenues. I’d wager you could knock the top rate up to around 65% before that starts happening. However, there’s no clear-cut reason in my mind to maximize government tax revenue. Eventhough I think we could set taxes to 65% or so before we stopped seeing an increase in revenue, I don’t necessarily think that is something the government should be doing.
[/QUOTE]

I don’t think anyone is trying to say we should maximize government revenue but when these tax cuts are sold as revenue neutral because the cuts will generate enough taxable economic activity to make up for any loss in revenue, we have to say bullshit. If you want tax cuts, you have to cuts costs or admit that you are financing the tax cuts with additional debt.

This administration looks at the deficit and says “whew, imagine what the budget deficit would have been if we didn’t have those tax cuts”

I think anything up to 50% has negligible economic effect and will increase the tax reciepts and maybe we will be able to get the national debt under control.

20

[QUOTE=Martin Hyde]
I’d also elaborate on my last point. There is an automatic assumption that it’s “bad” if we haven’t “maximized” the treasury’s revenue.

Why is that? Taxes are taken from people who have worked, usually pretty damn hard, to make their money. A lot of the people in the highest income bracket are doctors and lawyers who work a huge number of hours and have devoted many years of their life to become who they are, and they’ve also typically ran heavily into debt in that process as well.

Keep in mind, the top income tax rate doesn’t discriminate between a doctor making $200,000 a year and a CEO of a multi-billion dollar company making $50 million a year. In fact that CEO may actually be taxed at a much lower rate than that doctor when you consider CEOs compensation packages are often structured in such a way that a lot of their income can be counted as “capital gains” which is only taxed at 15% maximum.

Just because government could make more money, to me that isn’t justification to steal more money from its citizens. Taxes really are just a form of accepted theft for the good of society. They serve an essential purpose, and they “pay” for services that benefit everyone. But nonetheless, you pay them no matter what, you don’t get a choice in the matter. When the mafia offers you “services” for a cut of your business, that’s more or less a type of theft because you have no option to say no without suffering serious consequence. Even if you really do gain some benefit from their “protection.”

Before we start to take more money from our citizens through taxation I think we should probably analyze how we’re spending our money, and decide if increased spending is always justified and whether or not some spending could be cut.
[/QUOTE]

Where do you suggest we cut the fat?