Nobel Prize-Winning Economist Joseph Stiglitz says:

[piezoe]

Quote from jem:

We always have heavy govt spending.
Thats what the traitors in congress keep doing.

Revenues went up after Reagans tax cut. We agree.
Now your spin is that it had nothing to do with the tax cuts and supply side economics has been discredited by pinko socialists.

And I will tell you cutting tax rates contributed in large part to the unprecedented boom which followed for 20 years. You want to have people invest in business... you make it worth their time and money to keep their profits.

I too am all for low taxes. In fact if you think about it, every one is for low taxes. So if it were really true that reducing taxes increases revenue then of course everyone would be for reducing taxes. But everyone is not, because it is not true in general, but might be in some very specific cases.

However, Jem, these tax decreases, focused at the upper tax brackets that are so popular with the Republican leadership, have been accompanied by massive deficits and government borrowing, so it is rather ridiculous to then look only at revenue two years hence, find it has risen, and then conclude that the rise in revenue was caused by a reduction in the tax rate. That's an absurd conclusion in an atmosphere of unbridled government spending on borrowed money. It's government spending that is driving revenue up, not lower taxes.

What needs to happen is reduced government spending
in areas that are excessive and unproductive, i.e., defense. And a way must be found to bring medical costs in line with other developed countries. Also it would seem there is a great deal of unproductive spending in Homeland Security, and drug enforcement. And there is absolutely no reason, other than purely political, that the CIA budget is not public. Those are all potential areas for cuts. If spending is brought under control, then tax cuts will be possible and that will make us all very happy.

But we must guard against the temptation to make cuts in areas that would ultimately harm productivity., Areas such as education, advanced research and mass transit need to be fully funded.

Cuts in military spending can be partially compensated by some increase in spending on mass transit and infrastructure and the defense industry gradually switched over to useful engineering projects.

If the government cuts spending, someone is going to make less money. That impact must be focused on those already well off, because we are in great danger of losing more of our shrinking middle class.

 

[jprad]

Quote from jem:

You want to have people invest in business... you make it worth their time and money to keep their profits.

If that's the case then explain why the economy grew more often than not during the 200+ years prior to Reagan's tax cuts.

 

[jem]

Quote from jprad:

If that's the case then explain why the economy grew more often than not during the 200+ years prior to Reagan's tax cuts.

we were a zero or low income tax country for a very long time.
Our tax rates started grinding our economy to halt... along with oil prices in the 70s.

----
The nation had few taxes in its early history. From 1791 to 1802, the United States government was supported by internal taxes on distilled spirits, carriages, refined sugar, tobacco and snuff, property sold at auction, corporate bonds, and slaves. The high cost of the War of 1812 brought about the nation's first sales taxes on gold, silverware, jewelry, and watches. In 1817, however, Congress did away with all internal taxes, relying on tariffs on imported goods to provide sufficient funds for running the government.

In 1862, in order to support the Civil War effort, Congress enacted the nation's first income tax law. It was a forerunner of our modern income tax in that it was based on the principles of graduated, or progressive, taxation and of withholding income at the source. During the Civil War, a person earning from $600 to $10,000 per year paid tax at the rate of 3%. Those with incomes of more than $10,000 paid taxes at a higher rate. Additional sales and excise taxes were added, and an “inheritance” tax also made its debut. In 1866, internal revenue collections reached their highest point in the nation's 90-year history—more than $310 million, an amount not reached again until 1911.

The Act of 1862 established the office of Commissioner of Internal Revenue. The Commissioner was given the power to assess, levy, and collect taxes, and the right to enforce the tax laws through seizure of property and income and through prosecution. The powers and authority remain very much the same today.

In 1868, Congress again focused its taxation efforts on tobacco and distilled spirits and eliminated the income tax in 1872. It had a short-lived revival in 1894 and 1895. In the latter year, the U.S. Supreme Court decided that the income tax was unconstitutional because it was not apportioned among the states in conformity with the Constitution.

In 1913, the 16th Amendment to the Constitution made the income tax a permanent fixture in the U.S. tax system. The amendment gave Congress legal authority to tax income and resulted in a revenue law that taxed incomes of both individuals and corporations. In fiscal year 1918, annual internal revenue collections for the first time passed the billion-dollar mark, rising to $5.4 billion by 1920. With the advent of World War II, employment increased, as did tax collections—to $7.3 billion. The withholding tax on wages was introduced in 1943 and was instrumental in increasing the number of taxpayers to 60 million and tax collections to $43 billion by 1945.



Read more: History of the Income Tax in the United States — Infoplease.com http://www.infoplease.com/ipa/A0005921.html#ixzz1MiwDDCaQ

 

[good ole boy]

Quote from Tsing Tao:

it is obvious that austerity causes a slowdown. but what keynesian economics ignore is that spending is supposed to be cut back when times are good. but instead, modern day economists like stiglitz just want to spend during both good and bad times.

so while it is nice that stiglitz says austerity causes slowdown, and he's right, what does he propose we do when we cannot afford to pay the bills we have? borrow more? throw more debt on the pile?

He doesn't promote deficit spending during times of prosperity. You just invented that (after one too many Tsing Taos)
The Reagan and Bush eras set the stage for the enormous debt we have now. 90% of our current debt was accumulated under their regimes.

 

[good ole boy]

Quote from jem:

clinton took the advice of dick morris and triangulated gringrich and the house republicans.

Republican or Democrat we don't care... they have all been spending like assholes intent on destroying our children's futures.

Now its about time every american tells them to stop it.

Well, Americans did speak up, with the backlash to the Ryan plan. The problem is that most Americans want services from the government but don't wish to pay for them. They want a free lunch, just like traders.

 

[good ole boy]

Quote from toc:

no offense to the economist but then if financial matters are not tightened the debt levels soar and then government is paying a bigger chunk of the revenues to pay off the interest each month. this means spending in other areas is cut down which means fewer jobs.

there are tons of jobs in the US that regular Americans do not want to do and hence illegal immigrants are all around.

wonder why Germany has its books in stronger side of the sheets. Fiscal discipline or Austerity?

Neither really. The krauts run a trade surplus. And their taxes as a percent of GDP is 39%. Our is 28%, and we run a big deficit. The krauts
spend a significant amount, but tax to do so. And they can do that because their economy is extraordinarily productive.

 

[jem]

Quote from good ole boy:

He doesn't promote deficit spending during times of prosperity. You just invented that (after one too many Tsing Taos)
The Reagan and Bush eras set the stage for the enormous debt we have now. 90% of our current debt was accumulated under their regimes.

you seem partisan... you do not seriously think that democrats do not spend like hell do you?

 

[Chicago_CTA]

We've spent over $3,000,000,000,000.00 ("THREE TRILLION DOLLARS") and haven't created any jobs for it, save a handful as part of the swollen federal government.

If this simple mathematics doesn't tell you what you need to know, nothing will.

THE SLOW CREEP OF EUROPEAN SOCIALISM CONTINUES....

 

[jem]

Quote from piezoe:

I too am all for low taxes. In fact if you think about it, every one is for low taxes. So if it were really true that reducing taxes increases revenue then of course everyone would be for reducing taxes. But everyone is not, because it is not true in general, but might be in some very specific cases.

However, Jem, these tax decreases, focused at the upper tax brackets that are so popular with the Republican leadership, have been accompanied by massive deficits and government borrowing, so it is rather ridiculous to then look only at revenue two years hence, find it has risen, and then conclude that the rise in revenue was caused by a reduction in the tax rate. That's an absurd conclusion in an atmosphere of unbridled government spending on borrowed money. It's government spending that is driving revenue up, not lower taxes.

What needs to happen is reduced government spending
in areas that are excessive and unproductive, i.e., defense. And a way must be found to bring medical costs in line with other developed countries. Also it would seem there is a great deal of unproductive spending in Homeland Security, and drug enforcement. And there is absolutely no reason, other than purely political, that the CIA budget is not public. Those are all potential areas for cuts. If spending is brought under control, then tax cuts will be possible and that will make us all very happy.

But we must guard against the temptation to make cuts in areas that would ultimately harm productivity., Areas such as education, advanced research and mass transit need to be fully funded.

Cuts in military spending can be partially compensated by some increase in spending on mass transit and infrastructure and the defense industry gradually switched over to useful engineering projects.

If the government cuts spending, someone is going to make less money. That impact must be focused on those already well off, because we are in great danger of losing more of our shrinking middle class.

Without data - your argument about the effect of tax decreases is guess work.

Even with data and regression analysis it will still be guess work.

What we had was tax cuts - and govt spending... and we had a 20 year boom.

Its clear we can't spend.
it should also be obvious that raising taxes is likely to drive more business out of the country as CA drives business out of CA to the point where only 36% of CA pays income tax.

So the answer is cut spending by trillions and consider lowering taxes in areas which might gain more income.

For me the answer is pretty obvious... lower or eliminate income taxes and --- raise tariffs around industries which could create jobs or enhance national security.

We should also cease subsidizing the depletion of our acquifers.
And before someone says that raising tariffs is a problem consider that we are an importer country and that many if not all of competitor protect their own export industries.

 

[jprad]

Quote from jem:

we were a zero or low income tax country for a very long time.
Our tax rates started grinding our economy to halt... along with oil prices in the 70s.

No, it wasn't the 70's when tax rates took off. Like most things the government interferes with, unintended consequences creep in. In the case of income tax it only took three years after it was enacted for the top tax rate to skyrocket well beyond it's initial 6% on income above $500K:

http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#History_of_federal_income_tax

As your text points out, prior to the income tax the government's income came from tariffs, that was the case from the late 1700's until WWI. Except, of course, for the period during and right after the Civil War.

However, the whole sorted history of tariffs was a lot more involved than what you quoted makes it seem:

http://en.wikipedia.org/wiki/Taxation_history_of_the_United_States