Tax Cuts and Revenue
- Thread starter Spike Trader
- Start date
Subtract out the part time job gains and it gets far worse.
We certainly know some of the factors, but that doesn't make it any easier for people having to spend more to get less.
http://www.dispatch.com/content/sto...12/04/revenue-was-up-under-bush-tax-cuts.html
What both the statistical tables in the âEconomic Report of the Presidentâ and the graphs in Investorâs Business Daily show is that (1) tax revenues went up â not down â after tax rates were cut during the Bush administration, and (2) the budget deficit declined, year after year, after the cut in tax rates that have been blamed by Obama for increasing the deficit.
Indeed, The New York Times reported in 2006: âAn unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year.â
While The New York Times may not have expected this, there is nothing unprecedented about lower tax rates leading to higher tax revenues, despite automatic assumptions by many in the media and elsewhere that tax rates and tax revenues automatically move in the same direction. They do not.
The Congressional Budget Office has been embarrassed repeatedly by making projections based on the assumption that tax revenues and tax rates move in the same direction. This has happened as recently as the Bush administration and as far back as the Reagan administration. Moreover, tax revenues went up when tax rates went down as far back as the Coolidge administration, before there was a Congressional Budget Office to make false predictions.
What both the statistical tables in the âEconomic Report of the Presidentâ and the graphs in Investorâs Business Daily show is that (1) tax revenues went up â not down â after tax rates were cut during the Bush administration, and (2) the budget deficit declined, year after year, after the cut in tax rates that have been blamed by Obama for increasing the deficit.
Indeed, The New York Times reported in 2006: âAn unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year.â
While The New York Times may not have expected this, there is nothing unprecedented about lower tax rates leading to higher tax revenues, despite automatic assumptions by many in the media and elsewhere that tax rates and tax revenues automatically move in the same direction. They do not.
The Congressional Budget Office has been embarrassed repeatedly by making projections based on the assumption that tax revenues and tax rates move in the same direction. This has happened as recently as the Bush administration and as far back as the Reagan administration. Moreover, tax revenues went up when tax rates went down as far back as the Coolidge administration, before there was a Congressional Budget Office to make false predictions.
Report on CNBC this AM revealed part-time jobs increased by 800K-ish while full-time jobs decreased by 550K -ish.
Lemme see.... 'ODUMBOCARE??"
That was the non-farm payrolls released on the 3rd.
Here I shall quote Quiggin<sup>*</sup>:
Wanniski christened this graph the "Laffer curve", but as Laffer himself was happy to concede, there was nothing original about it. It can be traced back to the fourteenth century Arabic writer Ibn Khaldun. Laffer credited his own version to...John Maynard Keynes. And while few economists had made much of the point, that was mainly because it seemed too obvious to bother speling out.
What was novel in Laffer's presentation [ to Wanniski, Cheney, and Rumsfeld] was what might be called the "Laffer hypothesis", namely that the United States in the early 1980s was on the descending part of the curve, where higher tax rates produced less revenue.
Unfortunately, as the old saying has it, Laffer's analysis contained a mixture of correctness and originality. The Laffer curve was correct but unoriginal. The Laffer hypothesis was original but incorrect.
_________________________________
<sup>*</sup>John Quiggin, "Zombie Economics," Pg. 142, Princeton University Press, 2010.
Here I shall quote Quiggin<sup>*</sup>:
Wanniski christened this graph the "Laffer curve", but as Laffer himself was happy to concede, there was nothing original about it. It can be traced back to the fourteenth century Arabic writer Ibn Khaldun. Laffer credited his own version to...John Maynard Keynes. And while few economists had made much of the point, that was mainly because it seemed too obvious to bother speling out.
What was novel in Laffer's presentation [ to Wanniski, Cheney, and Rumsfeld] was what might be called the "Laffer hypothesis", namely that the United States in the early 1980s was on the descending part of the curve, where higher tax rates produced less revenue.
Unfortunately, as the old saying has it, Laffer's analysis contained a mixture of correctness and originality. The Laffer curve was correct but unoriginal. The Laffer hypothesis was original but incorrect.
_________________________________
<sup>*</sup>John Quiggin, "Zombie Economics," Pg. 142, Princeton University Press, 2010.
History for the win. By the way, I loved that quote from Will Rogers you posted earlier.
nothing like an academic being pithy and disingenuous at the same time.
I explained why Quiggen's critique is based on models .... not reality.
He is not arguing that revenues did not go up after tax cuts... he is arguing that revenues did not go up as much as his model suggested they could.
again here is his quote...
"For the Laffer Hypothesis to be supported,
tax cuts would have to increase revenue more
rapidly than would be expected as a result of
normal income growth."
The reason for the tax cuts is that the economy was not experiencing normal economic growth... the models are fantasy.
Quiggen's entire thesis is baloney.
I also note... if you read his work he speaks of wonderful liberal economics and Keynes...
Well Keynes was the original supply sider...
I explained why Quiggen's critique is based on models .... not reality.
He is not arguing that revenues did not go up after tax cuts... he is arguing that revenues did not go up as much as his model suggested they could.
again here is his quote...
"For the Laffer Hypothesis to be supported,
tax cuts would have to increase revenue more
rapidly than would be expected as a result of
normal income growth."
The reason for the tax cuts is that the economy was not experiencing normal economic growth... the models are fantasy.
Quiggen's entire thesis is baloney.
I also note... if you read his work he speaks of wonderful liberal economics and Keynes...
Well Keynes was the original supply sider...
Here I shall quote Quiggin<sup>*</sup>:
Wanniski christened this graph the "Laffer curve", but as Laffer himself was happy to concede, there was nothing original about it. It can be traced back to the fourteenth century Arabic writer Ibn Khaldun. Laffer credited his own version to...John Maynard Keynes. And while few economists had made much of the point, that was mainly because it seemed too obvious to bother speling out.
What was novel in Laffer's presentation [ to Wanniski, Cheney, and Rumsfeld] was what might be called the "Laffer hypothesis", namely that the United States in the early 1980s was on the descending part of the curve, where higher tax rates produced less revenue.
Unfortunately, as the old saying has it, Laffer's analysis contained a mixture of correctness and originality. The Laffer curve was correct but unoriginal. The Laffer hypothesis was original but incorrect.
_________________________________
<sup>*</sup>John Quiggin, "Zombie Economics," Pg. 142, Princeton University Press, 2010.
http://www.nationalreview.com/articl...-thomas-sowell
In his 1919 address to Congress, Woodrow Wilson warned that, at some point, âhigh rates of income and profits taxes discourage energy, remove the incentive to new enterprise, encourage extravagant expenditures, and produce industrial stagnation with consequent unemployment and other attendant evils.â
In a 1962 address to Congress, John F. Kennedy said, âit is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.â
This was not a new idea. John Maynard Keynes said, back in 1933, that âtaxation may be so high as to defeat its object,â that in the long run, a reduction of the tax rate âwill run a better chance, than an increase, of balancing the budget.â And Keynes was not on âthe far rightâ either.
In his 1919 address to Congress, Woodrow Wilson warned that, at some point, âhigh rates of income and profits taxes discourage energy, remove the incentive to new enterprise, encourage extravagant expenditures, and produce industrial stagnation with consequent unemployment and other attendant evils.â
In a 1962 address to Congress, John F. Kennedy said, âit is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.â
This was not a new idea. John Maynard Keynes said, back in 1933, that âtaxation may be so high as to defeat its object,â that in the long run, a reduction of the tax rate âwill run a better chance, than an increase, of balancing the budget.â And Keynes was not on âthe far rightâ either.